Potucek v. Blair

• Decision Date: 08 May 1954
• Docket Number: No. 39321,39321
• Citation: 270 P.2d 240,176 Kan. 263
• Parties: POTUCEK v. BLAIR.
• Court: Kansas Supreme Court

Page 240

270 P.2d 240

176 Kan. 263

POTUCEK v. BLAIR.

No. 39321.

Supreme Court of Kansas.

May 8, 1954.

Syllabus by the Court.

1. A single definition of a partnership or a joint adventure which is accurate, comprehensive and exclusive for all purposes is extremely difficult. The existence of their essential elements, including the power of joint control, may be determined from the over-all facts, including an oral agreement, the conduct of the parties and the peculiar circumstances of each particular case.

2. The requirement that joint adventurers shall have a joint interest in property, where there is property to be held as a part of the venture, is satisfied if one of them holds an equitable interest therein while the other holds the legal title. But it is possible for one of them to have a sufficient equitable interest in an executed joint adventure, not based on joint ownership of property, to entitle him to an accounting of the profits.

3. Although oil and gas leases as between a lessor and lessee are within the statute of frauds because they involve real estate that statute does not apply to personal relations and obligations created by an agreement of partners or coadventurers to deal in such instruments between themselves and to divide the profits resulting from the venture.

4. The fact a coadventurer does not agree in writing to contribute leases and leasehold properties which he owned prior to entering into a joint venture does not destroy the validity of the transaction. The interest of the coadventurer who contributes his services attaches to those properties at the time of the oral agreement which included them and to all others when procured.

5. Mutual promises or acceptance by one coadventurer of valuable service rendered by another in the development of a joint venture constitutes adequate consideration for an enforceable contract.

6. Absence of inceptive mutuality constitutes no defense to the enforcement of an executed contract.

7. A court of equity will not deny specific performance of an oral contract on the ground of indefiniteness if the terms thereof, together with the conduct of the parties in the full performance thereof, disclose the manifest intentions of the parties.

8. In order to prevent a decree for the specific performance of a contract on the ground a remedy at law exists the latter remedy must be as plain, adequate, complete and efficient as the remedy of specific performance and not circuitous or doubtful.

9. The relationship of joint adventurers is a fiduciary one, based on mutual confidence and trust.

10. The statute of limitations does not begin to run against an action for breach of trust until the trust is repudicated, nor even then unless and until the benficiary had notice or knowledge of facts which would or should apprise him fo such breach and the cause of action is not barred earlier by laches.

11. The amended petition examined and held, the demurrer thereto was properly overruled.

Verne M. Laing, Wichita, argued the cause, Lester L. Morris, Ferd E. Evans, Jr., Ralph R. Brock, Wichita, on the briefs for appellant.

Harold Goodwin, Wichita, argued the cause, W. D. Jochems, J. Wirth Sargent, Emmet A. Blaes, Roetzel Jochems, Robert G. Braden, Guy L. Goodwin, Wichita, John Potucek, Wellington, on the briefs for appellee.

The opinion of the court was delivered by

WEDELL, Justice.

Plaintiff sought specific performance of an oral contract for a joint adventure in oil and gas operations and for an accounting.

Defendant appeals only from the order overruling his demurrer to the amended petition. In view of his various contentions the pertinent portions of the amended petition are appended hereto for reference and made a part hereof.

The demurrer was based on the grounds (a) several causes of action were improperly joined; and (b) the amended petition did not state facts sufficient to constitute a cause of action.

We shall refer to the amended petition as the petition.

Relative to the first ground it is urged two separate, distinct and incompatible agreements were attempted to be alleged, the first being that of September, 1946, and the other that of December 15, 1949. We find nothing inherently incompatible between what is alleged to have transpired on those occasions. We think a fair interpretation of the entire petition is that it constitutes a narrative of the conduct of the parties and events over the designated period of approximately five years. That it must be so construed is particularly true where, as here, there has been full and complete performance of the alleged understandings by appellee and apparently also by appellant until he repudiated the alleged agreements.

Appellant argues the petition does not directly state he agreed to appellee's proposal in 1949 and hence there was no mutuality of contract. The allegations of agreement were sufficient when challenged by demurrer. (See p 10 & p11 of petition.) Moreover, absence of inceptive mutuality constitutes no defense to the enforcement of an executed contract. Heckard v. Park, 164 Kan. 216, 188 P.2d 926, 175 A.L.R. 605.

It is claimed the petition is not drawn on any definite theory; that it is more consistent with a claim for salary under an employment contract than with the theory of joint adventure. We do not think it constitutes a claim on an employment contract. Grannell v. Wakefield, 172 Kan. 685, 242 P.2d 1075. When fully considered it discloses an effort to state a cause of action for relief on the theory of joint adventure.

Appellant, however, asserts the facts alleged do not constitute a joint adventure. We shall not repeat the allegations of the petition but refer the reader thereto. The evidence on the trial may prove insufficient to establish that relationship but the allegations of the petition when challenged by demurrer were sufficient. Shoemake v. Davis, 146 Kan. 909, 73 P.2d 1043; Flitch v. Boyle, 147 Kan. 600, 78 P.2d 9; Potts v. Lux, 161 Kan. 217, 166 P.2d 694; Grannell v. Wakefield, 169 Kan. 183, 217 P.2d 1059; Grannell v. Wakefield, 172 Kan. 685, 242 P.2d 1075; Beech Aircraft Corporation v. Ross, 10 Cir., 155 F.2d 615. In the second Grannell case we held [172 Kan. 685, 242 P.2d 1077]:

'A single definition of a partnership or a joint adventure which is accurate, comprehensive and exclusive for all purposes is extremely difficult. The existence of their essential elements, including the power of joint control, may be determined from the over-all facts, including an oral agreement, the conduct of the parties and the peculiar circumstances of each particular case.' (Syl. par. 11.)

'The requirement that joint adventurers shall have a joint interest in property, where there is property to be held as a part of the venture, is satisfied if one of them holds an equitable interest therein while the other holds the legal title. But it is possible for one of them to have a sufficient equitable interest in an executed joint adventure, not based on joint ownership of property, to entitle him to an accounting of the profits.' (Syl. par. 8.)

In Crawford v. Forrester, 108 Kan. 222, 194 P. 635, the court said:

'It is perfectly clear that we have here a consummated contract, acted on and partially carried out by both parties. It was of no consequence that preparation of formal evidence of the contract was postponed, or that the particular status of the venture at the time the writing was to be signed could not be known. The subject-matter of the contract--acquisition of a block of leases, development, sale of some leases, retention of others, disposition of proceeds of sale, and division of interest in leases retained--was perfectly definite.' 108 Kan. at page 223, 194 P. at page 635.

See, also, the Beech Aircraft Corporation case on sufficiency of definiteness of contract.

Appellant contends the oral agreement is void under the statute of frauds. We do not think so. The contract did not deal with the sale of real estate but with the personal relations of the coadventurers with respect to the properties involved and was not affected by the statute of frauds. Duncan v. Johnson, 89 Kan. 21, 130 P. 655; Crawford v. Forrester, supra, 108 Kan. at page 223, 194 P. 635. Although oil and gas leases as between a leasor and lessee are within the statute of frauds because they involve real estate that statute does not apply to personal relations and obligations created by an agreement of partners or coadventurers to deal in such instruments between themselves and to divide the profits resulting from the venture. Bird v. Wilcox, 104 Kan. 799, 180 P. 774; Goodrich v. Wilson, 106 Kan. 452, 454, 188 P. 225.

Appellant assets if the oral contract be held valid as to oil and gas leases and leasehold estates to be acquired after the commencement of the joint adventure it must be held invalid as to such interests in and to which he held the entire title prior to the agreement. It has been held otherwise. Crawford v. Forrester, supra; Shoemake v. Davis, supra; Griffin v. Reilly, Tex.Civ.App., 275 S.W. 242; Motter v. Smyth, 10 Cir., 77 F.2d 77, 79.

In the Shoemake case we cited the Motter case, which latter case cited our Crawford case and we quoted from the Motter case as follows:

"It is not necessary to 'joint adventure' that parties furnish capital or services in equal amount, and fact that one contributes property previously acquired does not destroy validity of arrangement'. (Headnote 2.)' 146 Kan. at page 913, 73 P.2d at page 1045. (Italics supplied.)

Appellant admits appellee also seeks recovery of his share of the proceeds or profits from lease operations. It is not contended such part of the cause of action is barred by the statute of frauds. If appellee is entitled to any relief the demurrer was properly overruled.

The demurrer further admits appellant has fully performed under the contract. Appellant concedes the established rule that full performance takes a case out of the...