McIver v. Norman

• Decision Date: 20 December 1949
• Citation: 213 P.2d 144,187 Or. 516
• Parties: McIVER v. NORMAN.
• Court: Oregon Supreme Court

213 P.2d 144

187 Or. 516

McIVER v. NORMAN.

Supreme Court of Oregon.

December 20, 1949

This is a suit by one of two joint adventurers against the other for dissolution of the joint adventure, an accounting, and other relief. The Circuit Court, in a memorandum opinion held that the plaintiff was barred by laches, that 'the case falls within the principle of speculative delay' and entered a decree dismissing the suit. Plaintiff appeals.

On or about September 5, 1941, the plaintiff, James W. McIver, and the defendant, William Norman, entered into an agreement of joint adventure to build a house on a lot in the city of Portland which Norman and his wife were purchasing on contract, sell the house when built and divide the profits. This agreement was evidenced by a writing signed by the parties on that date, of which the following is a copy:

'This is an Agreement between William Norman and James W. McIver:

'Wherein they have entered into an agreement for the sole and exclusive purpose and restricted to title holding of a certain piece of property known as Lot I and the westerly fifteen (15) feet of Lot Two (2) in Block Two (2), situated in Arlington Heights City of Portland, Oregon;

'Wherein said parties are to share equally in the profit or loss resulting from the sale of a residence to be constructed on said property by Equitable Service Inc., said profit shall be the net return after payment of $500.00 for the property, after payment of a fee of $500.00 to Equitable Service Inc. for the construction of and supervision of construction of said residence, and after the payment of the actual cost of construction and any sale or loan costs incidental to the construction and sale of the aforementioned residence.

'Mutually agreed to and signed this 5th day of September, 1941, Portland, Oregon.'

McIver's business was building homes. He operated through Equitable Service, Inc., a corporation (hereinafter called Equitable), which, under the terms of the above agreement, was to construct the residence in question. McIver and his wife were the principal stockholders in this corporation at the time the agreement was entered into; by March, 1942, they were the sole stockholders and McIver at all times controlled the corporation. Norman was an employee in the building permit department of the city of Portland.

To finance the project McIver arranged for a $5,000.00 construction loan from First Federal Savings & Loan Association, secured by a mortgage on the lot which was executed by Mr. and Mrs. Norman. The Normans and McIver signed the note. Payments of principal and interest on the note in installments of $34.90 each were to commence in March, 1942. These documents are dated October 3, 1941.

Equitable (which was at the time building several other houses for McIver) commenced the work of construction shortly thereafter, and by June, 1942, had brought the house to approximately ninety-eight per cent completion. In the meantime differences had arisen between the partners, mainly, it would appear, because of McIver's failure to pay his share of the monthly installment on the mortgage. The loan company wrote letters to the parties threatening to foreclose. The last of such letters was written on June 4, 1942, demanding payment of $125.43, then delinquent. Norman refused to sign vouchers authorizing First Federal to make further payments out of the mortgage fund for materials and labor, and Equitable quitted the job early in July. Norman then undertook completion of the house himself, and the loan company paid out further sums both for work previously ordered by Equitable and presently ordered by Norman. On September 1 the sum of $8.62 remained in the loan account. The house was still unfinished.

Sometime in August Norman asked permission of McIver to look at Equitable's records. The actual cost of building the house was exceeding the previously estimated cost, and it was apparent that the loan would not cover such cost, and Norman suspected that improper charges had been made by Equitable. McIver readily complied with Norman's request, and Norman from the records and from other sources, prepared a detailed statement of the costs of the job. In this statement corrections were made of what Norman claimed to be errors shown by Equitable's records. For illustration, Norman claimed that certain lumber appearing by these records to have been charged to the joint adventure was actually delivered to another house that McIver was building.

The net result of this computation was that, according to Norman's view, Equitable had been overpaid $452.10, and had not been paid $296.43 to which it was entitled. On September 1 Norman delivered a copy of this statement to McIver with a letter signed by Norman and his wife, and reading as follows:

'In regards to a settlement of our written agreement for your portion in building 3040 S.W. Cascade Drive, which states that you were to receive a fee as your only profit for such service aside from that which may be derived from its sale and further that we each were to share alike in the profit or loss until such time as this residence would be sold, therefore taking into consideration the following:----

'1. The job being started Oct. 7th. 1941 and still not finished by June 1942 or a period of 9 months.

'2. Having had to finish the job that you contracted to perform.

'3. Having found irregularities in bills presented me by you and paid by me.

'4. Having had to pay your share of Mortgage and Interest payments in order to keep the above dwelling out of litigation in respect to foreclosure.

'I find in weighing the above facts, and feeling that I have been most lenient in already having made your share of five (5) monthly Mortgage and Interest payments, I find it necessary to hereby notify you that I do not intend to make any further payments for you. The August payment as you know is now past due. If your share is not paid by Sept. 10th. 1942, along with $125.40 due me for Mortgage payments already made by me for you, and if such payments are made by you, if any following payments should lapse over 30 days from date due, I shall consider this as your intention for breaking all agreements signed by us.

'If you should fail to make any of these payments, I agree to pay you for your partial services in building this residence, Two hundred and Fifty Dollars ($250.00), providing overpayments made to you (figured on the basis of all bills and labor presented me by you) are used to pay outstanding bills as itemized in enclosed statement of account.

'I will assume the unpaid Linoleum bill of $120.57.'

McIver never answered the letter in writing. He testified that he told Norman that the account was grossly in error. In the meantime (exactly when it is not clear) Norman had made up the delinquent payments on the mortgage and put it in good standing. Norman proceeded with what remained to be done in the building of the house at a cost of $198.00 or more over and above the amount of the mortgage loan.

On September 9 Equitable filed with the county clerk of Multnomah County its notice and claim of lien against the property for $1,090.37, made up of $585.37 balance due for labor and material, $500.00 fee for services, and $5.00 statutory filing fee. The notice was signed and sworn to by McIver as president of the corporation. At that time there were of record and unpaid two other mechanic liens against the property totalling $377.00. McIver testified that the filing of the lien notice 'wasn't directed at the joint enterprise but it was more directed to protect against the mortgage company filing a foreclosure suit in view of their position which I felt was very unfair at the time.' He testified before this, however, that while he knew First Federal had threatened to foreclose, he 'was satisfied they wouldn't.'

In the meantime both parties, by newspaper advertising and otherwise, made efforts to sell the house. McIver testified that he communicated to Norman an offer which he had received of $7,600.00, $200.00 down with the balance payable in a year, but that Norman rejected it because he wanted a substantial down payment. Norman at first fixed the selling price in his newspaper advertising at $7,950.00; he finally went as low as $6,800.00. The last of Norman's ads was published on October 18, 1942. The market was not good and no sale was made.

On several occasions in October McIver asked Norman 'to get together and settle this thing and get it out of the way.' Norman would respond by telling McIver to see his attorney. McIver heard that Norman intended to occupy the house himself, and on October 23 mailed him a letter of which the following is a copy:

'Referring to our partnership concerning the residence known as 3040 S.W. Cascade Drive, I wish to inform you that there is a sale impending that involves a small down payment at this time and an outright purchase as of February 1, 1943, in the amount of $7600.

'The Electric Company advises me that it was their understanding that you were going to occupy the house. This is quite contrary to our agreement, and I wish to take this opportunity and this means to definitely protest any such action on your part as it would, first, markedly depreciate the value of the house, and it might also so seriously injure the property that it would prevent its sale at any reasonable figure. Further, it might also present a problem to you that at the time of the sale, you might find it difficult to find living quarters, yourself.

'It is my suggestion that we place the house in the hands of some responsible real estate firm or broker and request that they sell it at the best price obtainable.

'I am so determined that you should not occupy the house that...