Schultz v. Waldons

• Decision Date: 12 October 1900
• Parties: SCHULTZ v. WALDONS.
• Court: New Jersey Court of Chancery

47 A. 187

60 N.J.E. 71

SCHULTZ

v. WALDONS.

Court of Chancery of New Jersey.

Oct. 12, 1900.

Bill by Charles Schultz against Hugo P. Waldons. Plaintiff moved to set aside a decree dismissing the bill, and for a rehearing, on the ground of newly-discovered evidence. Motion denied.

Edgar H. Loverldge, for the motion. Albert Leuly, opposed.

PITNEY, V. C. The bill in this cause was filed for the purposes—First, of obtaining an account of cash profits derived by the defendant from the purchase of two lots of land in West Hoboken, the erection of two houses thereon, and the sale thereof, and a decree that the complainant was entitled to one-half thereof; and, second, for a declaration that the defendant holds a certain house and lot, which was conveyed to him in exchange for the houses and lots first mentioned, in trust, as to an undivided one-half thereof, for the complainant. The basis of complainant's claim, as stated in his bill, is a parol agreement entered into by him with the defendant prior to the purchase of the two lots first mentioned, by which the defendant agreed to make the purchase on joint account with the complainant, and that everything done in the way of the purchasing, building, selling, and exchanging was so done on joint account. The allegation of the bill is that the complainant "did enter into an oral agreement" with the defendant, and in consideration of money to be advanced by the complainant to the defendant, and of the indorsement of the notes of the defendant in order to raise money for the purpose of buying said lands and building thereon, the defendant "should take and hold the title of said lands and buildings, and sell or exchange the same to others for the best possible price he could obtain, and for the best and mutual gain and advantage of himself and your orator, as a joint venture, and that he would well and faithfully account to your orator for one-half of any profit derived from said venture." The bill does not pray for an answer either under or without oath. The defendant answered under oath, denied any such agreement as that set up in the bill, and answered in detail all the specific charges in the bill, and also set up the statute of frauds.

At the hearing I held, for reasons then stated orally, that the complainant had not made out the allegation of his bill that there was a contract between the parties for a joint venture, and advised a decree dismissing the bill. Not a particle of written evidence was produced in support of complainant's allegation of the alleged contract. Shortly after that decree was made, a motion to open the decree, and for a rehearing of the cause, based upon affidavits of newly-discovered evidence, was made. Those affidavits were made by several persons, and stated admissions made by the defendant in affiants' hearing that the transaction was a joint venture. The admissions were of the same character as those relied upon by the complainant on proof at the final hearing in the case of Smith v. Burnham (1838) 3 Sumn. 4.35, Fed. Cas. No. 13,019, and were disallowed probative force by Mr. Justice Story. The motion might well be refused upon that ground, upon the authority of that case. But, admitting, for the purposes of the motion, that the evidence after the affiants were subjected to the test of cross-examination would establish the fact of a joint venture in this case, there still remains to be dealt with the question of the application to the transaction of the statute of frauds. And if it should be found upon the examination of the question, upon principle and authority, that that statute is a defense, it is not worth while to open the case to produce the proofs in open court. I have looked into the authorities with some care, and come to the conclusion that the statute is a bar to the complainant's relief. It may be conceded that a partnership may be formed for the purpose of dealing in real estate; and it may be further admitted that if the members of a going partnership, with a partnership fund, shall, in pursuance of a parol agreement between them, purchase with partnership funds real estate for the purpose of being used, not as an incident in the ordinary business of the partnership, but purely for speculative purposes, the title being taken in the name of one member of the firm, he will be held to hold it for the benefit of the firm; but this holding will not be based upon the parol agreement between the parties, but upon a trust resulting from the fact that the partnership funds and partnership credits were used for the purchase thereof.

The question still remains whether if two persons, not theretofore engaged in business jointly as partners or otherwise, and having no joint or partnership funds, shall agree that they will go into a single joint venture of the purchase of real estate, upon a parol agreement that the profit, if any, shall be equally divided between them, and the title be taken in the name of one, the other, without having contributed anything towards the purchase price, can claim a benefit from the purchase. And that is the present case. There was here no previous general established partnership or joint operations between the parties, nor any joint fund; nor did the complainant advance any money whatever towards the purchase. The facts show that all he did was to indorse the note of the defendant upon which money was raised to make the first payment on the purchase of the lots, and then, afterwards, when further money was needed by the defendant in the erection of the houses, the complainant indorsed one or more notes for him. The defendant, however, paid these notes, and the complainant contributed no money whatever. It is not necessary to cite authorities for the position that if A. employs B. to purchase a certain piece of real estate for him, and furnishes him with the money to pay for it, and B. negotiates for and purchases the premises, takes the title in his own name, and pays for it with his own money, A., in the absence of any writing signed by B., by reason of the statute of frauds, can have no remedy against him. On the other hand, if A. employs B. to purchase a certain piece of real estate for him, and gives him the money for that purpose, and B. negotiates for and takes the title in his own name, but pays A.'s money for it, B. holds the title in trust for A., though there be no writing signed by him, on the ground that such trust resulted from the circumstances of the case. In each of these supposed cases the title was taken in the name of B., contrary to the parol understanding between A. and B.; but in either case, if the original parol agreement had been that the title should be taken by B. for the benefit of A., the result would have been the same. In the one case B. could hold the title against A. If he did not use A.'s money in payment of the purchase money; in the other case, B. holds the title for A., because he did use A.'s money in payment of the purchase money. But it is alleged, and there is some appearance of authority for the position, that if such a contract, resting wholly in parol, were made for a joint enterprise in the nature of a partnership, the result would be otherwise. I am unable to adopt that view, and I think it is not sustained by any weight of authority. The two cases principally relied upon in...