Lipinski v. Lipinski

• Decision Date: 28 January 1949
• Docket Number: 34752.
• Citation: 35 N.W.2d 708,227 Minn. 511
• Parties: LIPINSKI et al. v. LIPINSKI et al.
• Court: Minnesota Supreme Court

35 N.W.2d 708

227 Minn. 511

LIPINSKI et al. v. LIPINSKI et al.

No. 34752.

Supreme Court of Minnesota

January 28, 1949

Syllabus by the Court.

1. Findings of fact of a trial court are entitled to the same weight as the verdict of a jury and will not be reversed on appeal unless manifestly and palpably contrary to the evidence. This rule applies whether the appeal is from a judgment or from an order granting or denying a new trial.

2. The relationship between partners or joint enterpreneurs is one of mutual trust and confidence, and the law imposes upon them the highest standard of integrity and good faith in their dealings with each other. However, this does not prevent a party from investing his capital in ventures outside the one in which he is jointly engaged, provided there is no fraud or deceit practiced upon his associates. Where parties associate to engage in fishing operations, it is permissible for one of the parties to purchase land in his own behalf, even though such land may be used in the fishing operations, provided he does so in good faith and without taking advantage of his position in the association. Evidence Held sufficient to sustain the trial court's conclusion that defendant acted in good faith and did not violate a fiduciary duty owed plaintiffs, and therefore that defendant did not hold the land purchased as a constructive trustee for the benefit of the association.

3. No fraud is shown where money is withdrawn from funds of an association by an associate for his personal use and properly accounted for on the books of the association.

Appeal from District Court, Winona, County; Karl Finkelnburg, judge.

John R. Foley, of Wabasha, for appellants.

Stafford & Stafford, of Chippewa Falls, and G. L. Pattison, of Alma (John J. Sexton, of St. Paul, of counsel), for respondents.

FRANK T GALLAGHER, Justice.

Appeal from an order of the district court denying a new trial in an action for the dissolution of a partnership and an accounting.

Prior to his death on June 15, 1943, Mike Lipinski, a commercial fisherman, was the owner of some real estate on the shores of Lake Pepin in Wisconsin. Situated on this land were a commercial fish pond, icehouse, packing shed, and dwelling used in connection with the business. On or about April 15 1943, defendant Martin Lipinski, Mike's brother, and one Henry C. Jezewski entered into an oral agreement with Mike for the use of the property owned by the latter and for the commercial fishing of the waters of Lake Pepin and the furnishing of capital for the activity. Pursuant to this oral agreement, fishing operations were commenced and carried out during the summer of 1943, before as well as after Mike's death on June 15 of that year. It appears that Martin and a crew did most of the actual work of fishing; that Jezewski furnished some of the capital, but was not too active in the fishing operations, which consisted principally of seining carp, buffalo, and other commercial fish for the market.

The operations continued after Mike's death without a written agreement until November 24, 1943. On that date, plaintiffs who are the heirs at law of Mike Lipinski, entered into a written agreement with Martin and Jezewski. Among other things, in this agreement plaintiffs demised and let to Martin and Jezewski, as parties of the second part, the real estate owned by Mike's estate, including the commercial fish pond, icehouse, packing shed, and dwelling, for a term of four years from April 15, 1943. The second parties agreed to keep and maintain the premises in as good condition as they were on April 15, 1943, and to pay all minor repairs and upkeep, which was to be an expense of the fishing operations. Mike's heirs were to make any permanent improvements to structures at their own expense. The second parties to the agreement agreed also to properly and aggressively fish the waters of Lake Pepin, to supervise and manage the fishing operations, to hire all necessary employes in the conduct of the business, and to deliver to and market from the leased premises all fish caught. They agreed also to sell such fish to the best advantage of all parties, to pay all expenses incurred in the operation of the enterprise, including wages, from the gross receipts of fish sold, and to keep accurate account books of fish caught or disposed of and disbursements made in the operations. It was also agreed that they were to furnish and use in the operations any nets or equipment they then owned without charge, but that any repairs or replacements should be paid as an expense of operation of the enterprise, and that at the expiration of the term all nets or other equipment on hand would become the property of all the parties in the proportions set forth in the agreement. It was also provided that on December 1 and April 15 of each year during the term of the agreement an accounting would be made, and that the receipts from the fishing operations, less expenses, should be divided one-fourth to plaintiffs and three-fourths to the second parties, except that $2,000 was to be retained in the business from such receipts for working capital. The agreement also contained certain provisions incidental to operation of the business and change of personnel, not particularly material in connection with this case.

For many years prior to 1943, a narrow strip of land adjoining the Mike Lipinski property and owned by one Bengtson had been used as a 'haul' by Mike in connection with his fishing operations. This land is a narrow strip along the shore of the lake consisting of about 3.61 acres adjacent to and north of Mike's land, now owned by plaintiffs. In November 1943, about nine days prior to the time Mike's heirs entered into the agreement with Martin and Jezewski, Martin purchased this strip of land from Bengston. This action arose, among other things, out of a dispute in connection with this purchase.

At the time Martin purchased the land from Bengtson, he drew a check for $200 out of the commercial fishing funds and charged the amount to himself. It had been Martin's practice to withdraw funds from time to time in advance of the division of profits, and any such advancements were deducted from his share of the profits at the next accounting. The withdrawal of the $200 was made on or about November 15, 1943, at which time Bengtson and his wife conveyed the strip of land in dispute to Martin and his wife, defendants in this action. The books of the fishing enterprise showed only that the check was drawn for Martin's personal use and did not show the purpose for which the money was used. The land purchased by defendants from Bengtson had been used from the time of Mike's death, and prior thereto in connection with the commercial fishing operations of the parties and continued in use up to the end of such operations in 1946. Martin contends in his testimony that at the time he bought this real estate he did not try to keep it a secret from anyone; that he had suggested several times to some of his associates that they should buy some of this land along the lake, because if they did not someone else would get it, but that 'they didn't seem to pay any attention to it.' However, he admitted on cross-examination that he did not say anything about acquiring this particular land from Bengtson at the time he signed the contract with plaintiffs on November 24, 1943. He explained that his reason for acquiring the land at the time he did was because some of the plaintiffs had suggested that one or more of the parties to the fishing operations be let out so that the profits would be greater for those remaining; that he was not in favor of such a change and feared that he would be the next one to be let out; and that he thought it would be desirable for him to acquire the land so that it would be less convenient for the others to oust him.

Plaintiffs contend that Martin purchased this land (which they claim was very desirable for use in connection with the business) without their knowledge, approval, or consent, and that he paid for it out of commercial fishing funds without disclosing on the books the purpose of the expenditure or that the check was made payable to Bengtson.

Plaintiffs raised the questions on appeal as to whether the relationship between the parties to the fishing enterprise was that of a partnership or joint venture; whether there was a fiduciary relation between the parties at the time of the purchase of the land; whether Martin purchased the land in violation of his obligations to his associates arising out of any relationship of mutual trust and confidence; and whether defendants are constructive trustees of the title to the land in question.

The trial court found that Martin became associated in a commercial fishing enterprise with his brother Mike in March 1943; that the enterprise was continued after the death of Mike under an informal arrangement with his widow and children for a time, and that on November 24, 1943, the rights and relations of the parties were defined and established by a written agreement; that defendants purchased the land in dispute from Bengtson on November 15, 1943, for $200; that the money was derived from the fishing enterprise, but was withdrawn by Martin for his own use; that although the land in dispute had been used for many years by Mike, and after his death by the parties to this action, in connection with their commercial fishing enterprise, none of these persons ever had any right, title, or interest in the land, nor had any of them ever claimed any right, title, or interest until title was acquired by defendants. Thereupon, the court concluded that plaintiffs were not entitled to any remedy or relief.

In its order of March 25, 1948, the court partially...