McDonough v. Saunders

• Decision Date: 15 November 1917
• Docket Number: 448a.,6 Div. 448
• Parties: McDONOUGH et al. v. SAUNDERS. SAUNDERS v. McDONOUGH et al.
• Court: Alabama Supreme Court

78 So. 160

201 Ala. 321

McDONOUGH et al. v. SAUNDERS.

SAUNDERS v. McDONOUGH et al.

6 Div. 448, 448a.

Supreme Court of Alabama

November 15, 1917

On Application for Rehearing, February 16, 1918

Appeal from Chancery Court, Jefferson County; A.H. Benners Chancellor.

Bill by Warwick Saunders against R.N. McDonough and others to restrain and enjoin the selling, pledging, or transferring of certain stock and bonds of the Self-Fluxing Ore & Iron Company, and for an accounting and other relief. From a decree for plaintiff, both parties appeal. Modified and affirmed.

Garber & Garber and Percy, Benners & Burr, all of Birmingham, for appellants and cross-appellees.

Tillman Bradley & Morrow, John S. Stone, and William B. White, all of Birmingham, for appellee and cross-appellant.

MAYFIELD J.

Most all of the equities of the bill and questions of law involved in this appeal were stated and settled on the former appeal and it is therefore unnecessary to restate them on this appeal. See report of that appeal and opinion in 191 Ala 119, 67 So. 591. The questions involved on this appeal, and upon which the rights of the parties thereto depend, are mainly, though not exclusively, disputed questions of fact.

The appellee sought by his bill, and obtained a decree in the lower court, an accounting between the appellants and himself as to the proceeds of a joint adventure in the purchase and sale of a body of land rich in iron ore--the main defense relied upon being that complainant was not a member of the adventure when the land was bought or sold by them; that, by a failure to perform his part of the joint adventure contract or agreement, the joint adventure, so far as he was concerned, terminated by his breach or failure to perform, as agreed, and his rights to further participate with appellants in the purchase and sale of the lands were forfeited; that, after complainant had thus forfeited his right in the joint adventure, the complainants entered into another and a subsequent agreement between themselves and the owners of the land, whereby the lands were purchased and sold; that complainant was not a party to this agreement, and therefore not entitled to share in the profits. There can be no doubt that a joint adventure once existed between the parties as alleged in the bill, for the purpose of buying and selling these lands, the subject-matter of the suit.

There is likewise no doubt about the fact that all parties operated for several months as partners under their joint adventure agreement; that all parties contributed more or less time, labor, and means to the adventure, and that the adventure ultimately succeeded, and large profits were, or will be, realized by each of the appellants--the much disputed question being whether or not complainant is entitled to share these profits with the appellants, and that question is made to depend almost, if not entirely, upon the question as to whether or not he forfeited his rights under the joint adventure agreement by failing or refusing to perform his part of the agreement. Appellants contend that he did so forfeit his rights to further participate in the enterprise, while he contends, and the chancellor so found, that he had not so forfeited his rights, and that he was entitled to participate in the proceeds of the adventure; that he was required to bear his pro rata share of the burdens, and was entitled to share in the profits.

It is conceded by appellant that if the lands had been acquired on the 2d day of January, 1913, under an agreement then existing, that complainant would be entitled to share with appellants in the adventure. Appellants, however, insist that the lands were not acquired on that day, or under the then existing agreement or contract with the owners, for the sole reason that complainant failed to pay, or even to offer to pay, his part of the purchase price required to be in cash; that on account of this failure of complainant, the appellants were entitled to terminate the joint adventure, and so notified complainant, and the next day appellants under a new and different contract with the owner acquired the lands, and that complainant was not a party to this agreement, and had no legal or equitable right to participate in the last agreement, which was consummated. If the joint adventure, in which complainant was interested, was lawfully terminated on January 2d, then of course he would have no right to an accounting as for a purchase and sale of the lands by the appellants on the 3d day of January, as to which he was not a party, whatever rights he might have to other remedies against appellants or the owners of the land. We, however, agree with the chancellor that the evidence fails to show that the joint adventure was lawfully terminated on January 2, 1913, so as to eliminate the complainant from his right to share with appellants in the purchase and resale of the lands.

It may be that one particular contract or agreement which the joint adventurers had with Aldrich and Towers, the owners of the land, to acquire it by purchase, expired on January 2, 1913, and it may be conceded that this particular agreement to purchase from the owners was not consummated because complainant failed to meet his part of the agreement, but this did not in law or fact terminate the joint adventure to acquire the lands. It only necessitated the remaking of a new agreement or contract by the joint adventurers with the owners, which was in fact done by four of the five joint adventurers. The complainant was given no opportunity to join with them in this last agreement, by which they acquired the lands. There is no claim that he declined or failed to join with them in this last contract or agreement of January 3d, by which the lands were acquired; the contention of appellants being that, having failed to perform his part under the contract with the owners which expired on January 2d, that this, without more, ended the joint adventure, so far as complainant was concerned, or, if it did not ipso facto terminate it, that it was sufficient grounds for appellants to terminate the joint adventure by electing so to do and giving notice thereof to complainant that it was so terminated, and he thereby eliminated.

If the joint adventure had consisted solely and exclusively of the contract of November 26th, if that had been its inception and its end, then a failure on the part of complainant to perform his part of the agreement would be ground for his coadventurers to terminate the first adventure and to eliminate complainant when this was done, and his coadventurers could have alone entered into new compacts with Aldrich and Towers, the owners, as to purchasing the lands. The contract or agreement of November 26th, however, was not the beginning nor the end of the first adventure between the parties to acquire the lands in question. It was merely one of several plans by which the joint adventurers were to acquire the lands from Aldrich and Towers. The failure of that plan or scheme did not alone end the joint adventure any more than did the failure to exercise the option to purchase of August 8th, or the failure to sell by November 15th. Each of these was really one of several plans, schemes, or modes by which all of the joint adventurers had planned and hoped to realize large profits from the purchase or sale, one or both, of the lands. The joint adventure between the five parties to this suit, the two McDonoughs, Shannon, Porter, and Saunders, had its inception, by letter agreement of July 5, 1912, while one plan or scheme of the joint adventure expired November 15, 1912, another scheme or plan only began on that date, and unlike the first did not provide when it should end, but, so far as the language of the contract was concerned, was to continue indefinitely, or until the end desired was attained; that is, until the land was acquired by a purchase thereof and resold, or operated by them jointly. The reporter will set out this letter contract of July 5th in full. By the terms of this joint adventure Saunders was given the exclusive option to sell the lands under the option held by his coadventurers until November 15, 1912. This exclusive right to sell, however, expired by its terms on November 15, 1912, but this did not end the joint adventure. If the first plan did not succeed, the contract provided that after November 15, 1912, another or other plans should be adopted or pursued to promote and accomplish the desired end; that is, to purchase and resell the lands for a profit, or to operate them after being acquired. To this effect the letter contract of July 5th provided:

"This agreement will be considered in force and effect until the 15th day of November, 1912. We will further agree that in the event we decide it is to the best interest of all parties to this agreement to form a corporation with the view of purchasing the lands mentioned above, we will allow you the privilege of bonding the lands to enable us to develop and mine the ore. If you are successful in this undertaking, we will give you 33 per cent. of the corporation's stock after all incumbrances, including our profits, together with your pro rata, are paid on the properties. In the event we should sell either tract of the land by November 15, 1912, or no sale be effected, we will give you the option or right to join us in the purchase of either or both tracts of land at the same rate per acre as we pay, to the extent of 20 per cent. of same."

So the plan or scheme by which the lands were acquired could not begin until after November 15, 1912, when the original agreement of joint adventure was changed. This agreement, as before stated, did not provide when the first adventure should end, no matter what plan should...