Norman v. B. v. Christie & Co.

• Decision Date: 29 November 1962
• Docket Number: No. 13997,13997
• Citation: 363 S.W.2d 175
• Court: Texas Court of Appeals
• Parties: W. L. NORMAN, Appellant, v. B. V. CHRISTIE & CO. et al., Appellees.

Page 175

363 S.W.2d 175

W. L. NORMAN, Appellant, v. B. V. CHRISTIE & CO. et al., Appellees.

No. 13997.

Court of Civil Appeals of Texas, Houston.

Nov. 29, 1962.

Rehearing Denied Dec. 20, 1962.

John H. Jenkins and Herbert Finkelstein, Houston, for appellant.

Milas C. Bradford, Jr., Houston, attorney, and Baker, Botts, Shepherd & Coates, Houston, of counsel, for appellees.

COLEMAN, Justice.

This is a suit for contribution between joint venturers arising by reason of a judgment against appellee, B. V. Christie & Co., in favor of the City of Houston.

The case was tried to the court without a jury and no findings of fact or conclusions of law were requested or filed. The parties stipulated that B. V. Christie & Co. paid to W. L. Norman $4,000.00 in cash, which amount represented one-half of the fee received by B. V. Christie & Co., after deducting expenses, for services rendered as fiscal agent to Harris County Fresh Water Supply District No. 23.

Appellant has conceded that the facts set out in appellees' pleadings, and quoted, or summarized below, are true: 'W. L. Norman was associated with B. V. Christie & Co. under a contract by virtue of which he was entitled to a percentage of the net profit on any transactions or business which he originated and were accepted by B.V.Christie & Co.' It was through the efforts of W. L. Norman that B. V. Christie & Co. secured a contract with Harris County Fresh Water Supply District No. 23 to act as its fiscal agent and financial adviser. B. V. Christie & Co. was paid $9,750.00 by the District and 'delivered to W. L. Norman fifty per cent of that amount (less certain expenses) which represented Norman's share of the Fiscal Agent's fee in accordance with the contract between Norman and Christie.' Thereafter the District sued Christie and in Cause No. 426,876-C, which, on appeal, is reported in Tex.Civ.App., 317 S.W.2d 219, recovered 9,750.00 plus interest from June 28, 1957.

In Cause No. 426,876-C in the District Court of Harris County, Texas, the trial court found as a fact that the contract between Christie and the District resulted in granting to Christie a discount on the bonds issued by the District which Christie purchased. The District bonds were sold to Ketcham & Nongard. Christie participated in the purchase and thereafter received and sold some of the bonds at a profit. The trial court concluded as a matter of law that the payment by the District to Christie of the $9,750.00 fiscal agent's fee violated Article 7939, Texas Revised Civil Statutes, requiring such bonds to be sold at not less than their face value and accrued interest. These findings and conclusions were introduced into evidence apparently by agreement. Norman was not joined as a defendant in the suit for recovery of this fee and judgment was rendered against Christie only. The Court of Civil Appeals affirmed the judgment of the trial court. Christie has paid the judgment.

It is not questioned that the agreement between Norman and Christie constituted them partners or joint venturers. Ordinarily a partnership or a joint venture implies a community of interest both as to profits and losses, if any. Brown v. Cole, 155 Tex. 624, 291 S.W.2d 704, 59 A.L.R.2d 1011. The judgment paid by Christie was a result of liability incurred in the prosecution of the joint venture, and the rule is well established that one partner paying a firm debt has a right to contribution from the other members of the partnership. 32 Tex.Jur., Partnership, Sec. 57, pp. 308-310.

Appellant contends that since appellees by this suit seek to recover profits arising from the sale of water district bonds in violation of Art. 7939, T.R.C.S., and the public policy of the State of Texas, the court erred in failing to leave the parties where it found them and in entertaining this suit.

The Supreme Court of Texas considered the rules of law applicable to such cases in Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146, where the Court said:

'The general rule that denies relief to a party to an illegal contract is expressed in the maxim, In pari delicto potior est conditio defendantis. 17 C.J.S. Contracts Sec. 272, p. 656. The rule is adopted, not for the benefit of either party and not to punish either of them, but for the benefit of the public. 12 Am.Jur. p. 729, Sec. 214. In many cases relief is granted to the party who is not in pari delicto. American National Ins. Co. v. Tabor, 111 Tex. 155, 230 S.W. 397; Pioneer Mutual Compensation Corp. v. Diaz, 142 Tex. 184, 177 S.W.2d 202; Graham v. Dean, 144 Tex. 61, 188 S.W.2d 372; 12 Am.Jur. pp. 734, 735, Sec. 217. It has been said that even where the parties are in pari delicto relief will sometimes be granted if public policy demands it. 12 Am.Jur. pp. 729, 730, Sec. 214. There is often involved, in reaching a decision as to granting or withholding relief, the question whether the policy against assisting a wrongdoer outweighs the policy against permitting unjust enrichment of one party at the expense of the other. The solution of the question depends upon the peculiar facts and the equities of the case, and the answer usually given is that which it is thought will better serve public policy. Graham v. Dean, 144 Tex. 61, 188 S.W.2d 372; Scott's The Law of Trusts, Vol. 3, pp. 2196-2197, Sec. 422; Benefits under Illegal Transactions, by John W. Wade, 25 Tex.Law Review, pp. 31-62.'

The contract tainted with illegality is the contract between Christie, acting for the joint venture, and the Water District. The agreement between Christie and Norman establishing the basis for joint participation in the venture was not illegal. This agreement, however, did not form a general partnership. The parties were to be associated only in items of business originated by Norman and accepted by Christie. Proof of this agreement, the judgment against Christie, and of the release showing payment could not establish that Norman was liable for contribution. Introduction into evidence of the contract between Christie and Norman would not establish that Norman participated in the particular transaction out of which liability to the District arose. It was necessary that evidence be produced showing that the employment of Christie & Co. by the District resulted from negotiations begun by Norman, and that the judgment against Christie was an obligation of the joint venture.

In Stone v. Robinson, Tex.Com.App., 234 S.W. 1094, the court said:

'* * * To determine if a demand connected with an illegal act can be enforced, the test is...