Murphy v. Stevens

• Decision Date: 23 April 1982
• Docket Number: 5566,Nos. 5565,s. 5565
• Citation: 645 P.2d 82
• Parties: W. J. MURPHY, Appellant (Plaintiff), v. Eugene STEVENS, Appellee (Defendant). Eugene STEVENS, Appellant (Defendant), v. W. J. MURPHY, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 82

645 P.2d 82

W. J. MURPHY, Appellant (Plaintiff), v. Eugene STEVENS, Appellee (Defendant).

Eugene STEVENS, Appellant (Defendant), v. W. J. MURPHY, Appellee (Plaintiff).

Nos. 5565, 5566.

Supreme Court of Wyoming.

April 23, 1982.

Rehearing Denied June 1, 1982.

John Burk, Casper, for W. J. Murphy.

William T. Schwartz and Cameron S. Walker of Schwartz, Bon, McCrary & Walker, Casper, for Eugene Stevens.

Before ROSE, C. J., and RAPER, THOMAS, ROONEY and BROWN, JJ.

BROWN, Justice.

This case arose out of an action by W. J. Murphy (Murphy) against Eugene Stevens (Stevens) for a determination that a partnership existed and that an accounting should be had. The trial court ruled that:

1. Murphy, Stevens, and Ralph Schauss (Schauss) were engaged in a partnership and that all properties in contention were partnership properties;

2. Proceeds from the McCoy Mountain project had already been distributed to the partners and need not be included in the accounting;

3. Stevens' motion for a new trial based on newly discovered evidence be denied;

4. Proceeds from the Penbar Mine project had already been distributed to the partners and need not be included in the accounting 5. Murphy was estopped by laches from asserting an interest in coal permits, even though they were determined to be partnership assets; and

6. Murphy had also waived his right to assert any rights in the coal permits.

Schauss settled with Murphy and was, therefore, not a part of the suit for accounting. Stevens appeals from the first four rulings set out above. We affirm (1) that a partnership existed; (2) that proceeds from the McCoy Mountain project had already been distributed to the partners; and (3) that Stevens' motion for a new trial was properly denied. We will reverse the determination (4) that proceeds from the Penbar Mine project had already been distributed to the partners. Murphy appeals from the findings set out in (5) and (6) above that laches and waiver apply. We will reverse these findings.

I

Stevens contests the finding that a partnership existed. He specifically contests the finding that the Zig and Poe uranium claims were partnership property, and that the Mexican copper project was partnership property. At oral argument, Stevens' counsel also indicated that Stevens was appealing from the finding that the coal permits were partnership assets.

There is no automatic solution to the question of the existence of a partnership. P & M Cattle Company v. Holler, Wyo., 559 P.2d 1019 (1977). Section 17-13-201, W.S.1977, defines a partnership as an association of two or more persons to carry on as co-owners a business for profit. Section 17-13-202(a)(iv), W.S.1977, says that the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business. The prima facie evidence can be rebutted by a showing that there was no intent to create a partnership, since intent of the parties is controlling. P & M Cattle Company v. Holler, supra. That intent, however, is the intent to do the things which determine whether a partnership relation exists. Nelson v. Seaboard Surety Company, 269 F.2d 882 (8th Cir. 1959). Persons who intend to do the things that constitute a partnership are partners whether their expressed purpose was to create or avoid the relationship. Taylor v. Lewis, Tex.Civ.App., 553 S.W.2d 153 (1977); and Wyatt v. Brown, 39 Tenn.App. 28, 281 S.W.2d 64 (1955).

On conflicting evidence, the question of whether a partnership exists is one for the trier of fact. Pacific General Contractors v. Slate Const. Co., 196 Or. 608, 251 P.2d 454 (1952). A specific factual finding will not be disturbed unless the finding is clearly erroneous or against the great weight of the evidence. Shores v. Lindsey, Wyo., 591 P.2d 895 (1979).

In 1967, the parties orally agreed to enter into a business relationship. Murphy contended that the arrangement was a partnership; Stevens contended that the arrangement was for a joint venture, to be followed by other joint ventures if the arrangement worked out satisfactorily.

Murphy testified that they agreed to join each other in mineral exploration and development. Any consideration they received would be split equally three ways. They were also to split the expenses equally at an accounting each year, although the expenditures were initially to be carried separately. Each partner was to claim separate income tax deductions for his expenses. Schauss testified that the agreement was to share one-third, one-third, and one-third of profits and expenses on whatever properties were acquired, and that the partners generally had a meeting of minds before going in on new projects, although not always. He also testified that they discussed projects at their irregularly timed, informal meetings, and that during the association he felt he would have had an obligation to discuss proposed projects with Murphy and Stevens before he acquired anything in his own name. Stevens testified that he had never been in a partnership with anyone in his life. Stevens contends that Murphy and Schauss and he only "agreed to agree" on projects concerning uranium exploration and mining. There was sufficient evidence for the trial court to find that a partnership existed. We will refer to the men as partners and to the business as a partnership in the rest of this opinion.

-A-

Although Stevens conceded that he engaged in joint ventures with Murphy and Schauss on other uranium claims, he argued that the Zig and Poe claims were staked after the three had agreed not to associate further on any projects. According to Schauss and Murphy, the partnership agreed to stop associating on any new projects after September 24, 1969. The claims were acquired on September 13, 1969, and December 26, 1969, respectively, by Schauss and Stevens working through a group of nominees.

The Zig and Poe claims were, however, a part of a Red Desert project, a continuous project that lasted over three years of staking uranium claims. They were in the same formation as the other Red Desert claims staked by the partnership. They were also in a geologic trend of uranium deposits, and were a continuation of previous stakings that Schauss was trying to establish in the Red Desert. Murphy testified that although the claims were staked in December, they were an extension of an earlier claim; Schauss testified that they agreed that projects still in progress would be completed if possible. There was ample evidence for the trial court to find that the Zig and Poe claims belonged to the partnership.

Stevens argues that if this court upholds the findings on the Zig and Poe claims, we should nevertheless reverse the trial court's award to Murphy of one-third of the number of shares of stock received by Stevens for the Zig and Poe claims. We will not address the argument, as it is unsupported by authority and without merit.

-B-

Stevens contends that since the Mexican copper project did not involve uranium, there was never any agreement among the three of them to participate in it. The evidence that we have already set out concerning the existence of this partnership and its terms also applies to the Mexican copper project. In addition, Murphy testified that before he went to Mexico he talked the project over with Stevens. Schauss testified that all three of them consulted on the Mexican copper project, and that Stevens was consulted at least twice and was in favor of the project.

-C-

Stevens next disputes the trial court's finding that certain coal exploration permits were partnership property. Early in 1968, according to both Murphy's and Schauss' testimonies, Stevens suggested that the partnership should acquire some coal prospecting permits. Murphy testified that the three of them had a "dozen or so" conversations about the coal permits. Stevens actually prepared permit applications in each of the partner's names, together with a coal permit in Nuclear Reserves' name, so that the partnership could acquire an entire area which would be four times as large as the area for which one individual could apply. The applications that Stevens prepared were both for Murphy in the name of Nuclear Reserves and in Murphy's name individually. Stevens then suggested that it would be futile to file the applications because the Bureau of Land Management was delaying issuance of prospecting permits. Both Murphy and Schauss testified that they did not file their permit applications because of Stevens' advice.

Sometime during the same year, Stevens filed coal permit applications in his own name for the same area. He said that he had prepared the permits for Nuclear Reserves, but had never prepared any applications for Murphy or Schauss. His testimony directly contradicted Murphy's and Schauss'. The question of the credibility of the witnesses is for the determination of the trial court which can best observe their demeanors. Shores v. Lindsey, supra. The trial court determined in this instance that Murphy and Schauss were to be believed, while Stevens was not.

We have considered that the parties here and Schauss may have entered into a scheme to defraud the government, and that perhaps Kennedy v. Lonabaugh, 19 Wyo. 352, 117 P. 1079 (1911), mandates that this court should not enforce such a contract. This would leave the parties where they placed themselves; that is, the coal interests would be left in Stevens. The facts of Kennedy v. Lonabaugh, supra, were different and can be conceptually distinguished from this case. In Kennedy v. Lonabaugh, supra, the partnership was formed for the illegal purpose of defrauding the United States of title to its coal land. For that reason, the court would not grant an accounting. The partnership here, however, was not formed for the purpose of carrying on an illegal business, nor was it formed for the purpose of conducting a lawful business in an unlawful manner.

It is true that the scheme...