Spotswood v. Morris, 12 Idaho 360 (Idaho 6/13/1906)

• Decision Date: 13 June 1906
• Citation: 85 Pac. 1094,12 Idaho 360
• Parties: A. T. SPOTSWOOD et al., Respondents, v. J. B. MORRIS, as Administrator, et al., Appellants.
• Court: Idaho Supreme Court

Page 360

12 Idaho 360

85 Pac. 1094

A. T. SPOTSWOOD et al., Respondents, v. J. B. MORRIS, as Administrator, et al., Appellants.

Supreme Court of Idaho.

June 13, 1906.

CONSTITUTIONAL LAW—UNINCORPORATED ASSOCIATIONS AND JOINT STOCK COMPANIES—ARTICLES OF ASSOCIATION—REAL ESTATE—PARTNERSHIP—POWERS OF OFFICERS AND SHAREHOLDERS—LISTING REAL ESTATE FOR SALE WITH AGENTS—PROCURING A PURCHASER.

1. Under the provisions of sections 2 and 16, article 11, of the constitution of Idaho, an unincorporated association or joint stock company may be formed by individuals for the purchase of a single tract of real estate, the title to which may be taken in a trustee, and the articles of agreement of the association may provide that the death of a shareholder shall not result in the dissolution of the association, and may so limit the liability of the association and may provide that either or any of the officers or shareholders shall not sell or dispose of any of the property of the association without the concurrence of the shareholders.

2. Said association does not have or exercise any of the powers or privileges of corporations not possessed by individuals or partnerships.

3. To legally possess or exercise powers or privileges of corporations requires a sovereign grant.

4. Under the common law, joint stock companies are legal, and are not prohibited by the constitution and statutes of this state, provided they do not have or exercise any of the powers or privileges of corporations not possessed by individuals or partnerships.

5. As the constitution of Idaho and the statutes of the state do not prohibit the organization of joint stock associations having transferable stock, and which do not usurp the functions of a corporation nor exercise any of the powers or privileges of corporations not possessed by individuals or partnerships, the common-law rule as to their legality prevails in this state.

6. In the organization of said association there is the absence of the delectus personae, which characterizes ordinary partnerships from corporations; and the death of one of its members or the sale of the interest of one of the shareholders does not dissolve it.

7. The limitation of the agency of the members of the association is an incident of such associations, under the common law, resulting from the lack of the right of delectus personae, and not an incident of the corporation not possessed by a partnership.

8. Such an association is a partnership, but not a general partnership wherein one of the partners has plenary power to sell and otherwise dispose of the property of the association or create indebtedness beyond that provided for in the articles of association.

9. While some of the principles of partnership may apply to such associations, they cannot, from the very nature of the organization thereof, be entirely controlled by the legal rules and principles that control ordinary partnerships.

10. Held, under said articles of incorporation, the vice-president or secretary have no authority to list the association's real estate with respondents for sale.

11. Held, that the respondents failed to show that the shareholders of said association ever authorized the vice-president or secretary to list said real estate for sale with the respondents or ratified the same.

12. Held, under the evidence, that respondents did not procure a purchaser for said land.

(Syllabus by the court.)

APPEAL from the District Court of the Second Judicial District for Nez Perce County. Hon. Edgar C. Steele, Judge.

Action to recover commissions for procuring a purchaser for an alleged sale of real estate. Judgment for plaintiffs. Reversed.

James E. Babb and Daniel Needham, for Appellants.

I. N. Smith, for Respondents.

SULLIVAN, J.

This is an action to recover $2,350, and interest for commission as real estate brokers, for the sale of certain land situated in Idaho county. The sufficiency of the complaint was sustained by this court on a former appeal (10 Idaho, 129, 77 Pac. 216). After filing the remittitur in the court below, the administrator and administratrix of the Benjamin F. Morris estate answered, as did also the defendants, John P. Vollmer and Robert Schleicher. The other defendants were not served with summons and did not appear in the action.

It is alleged, among other things, in the complaint, that the appellants were copartners engaged in general real estate brokerage and commission business at the town of Moscow, Latah county, and were engaged, among other things, in procuring purchasers for lands belonging to third persons, and buying and selling real estate for others; that Benjamin F. Morris was a resident and inhabitant of Lewiston, Idaho, and that on the fourth day of June, 1902, he died intestate, leaving surviving him certain heirs, and that the said J. B. Morris and Harry F. Morris were duly appointed administrator and administratrix of the estate of said deceased; that during the lifetime of said Morris, in the year 1895, he and the defendants, Dernham, Kauffman, Vollmer, Schleicher and Scott, associated themselves together by an instrument in writing dated September 18, 1895, in a syndicate to purchase of and from said Morris, now deceased, certain real estate, describing it, consisting of 2,720.80 acres of land, situated in Idaho county, for the purpose of reselling the same and dividing the profits thereof, in which syndicate each of said persons, except said Morris, deceased, acquired and was the owner of and entitled to a one-eighth part of said land and the profits thereof, and that said Morris, deceased, acquired in said association a three-eighths interest and was entitled to three-eighths of the profits thereof; that by said article of agreement the said Morris, now deceased, was required to, and did, deed in trust for said syndicate said lands to the said Robert Schleicher, and that by the terms of said articles to facilitate the accomplishment and purpose of said syndicate, the said Schleicher was appointed secretary of said association under the following agreement, which was signed by each of said defendants:

"This instrument, made this 18th day of September, 1895, witnesseth, that whereas, Benjamin F. Morris, was the owner of the following lands in Idaho county, Idaho, to-wit: (Here follows a description of said 2720 80-100 acres) . . . . and he agreed with the following persons, to-wit: Henry Dernham and William Kauffman, of Moscow, Idaho, John P. Vollmer and Robert Schleicher, of Lewiston, Idaho, and Wallace Scott of Mt. Idaho, Idaho, to join them in a syndicate to purchase said lands of him and resell the same and divide the profits thereof, in which syndicate each of said persons should take and pay for a one-eighth share and be the owner of and entitled to a like portion of the profits thereof, and said Benjamin F. Morris should take and pay for a three-eighth share, and be the owner of and entitled to a like portion of the profits thereof. . . . . And whereas, said Benjamin F. Morris has by deed of even date herewith conveyed to Robert Schleicher in trust for this syndicate according to these articles of agreement said 2720.80 acres, all except the 166 acres last above described, subject to a mortgage on which there is due of principal nine thousand dollars besides interest and to the payment by the syndicate, including Benjamin F. Morris, of 4320.00-100 dollars of the purchase money, with interest thereon from the 1st day of May, 1895, at the rate of 10 per centum per annum until paid.

"Now, therefore, in order to facilitate the accomplishment of the purposes of said syndicate, we, the said parties, hereby organize ourselves into an association and agree as follows: 1. That the name of said association shall be the Denver Townsite Company, and the principal office of said association shall be at Lewiston, Idaho. 2. That the members of the association and their executors, administrators, heirs and assigns, shall, in proportion to their interests therein, pay the obligations thereof, and share in the profits thereof. 3. That the title to said lands is to be subject to all the terms and provisions, powers and trusts of these articles of agreement and the amendments and alterations thereof which may be made from time to time. 4. That this association shall not be dissolved or any of the powers herein given or which may be given, be revoked by any transfer at any time of the interest of any member thereof, or any part thereof, whether by act of the party or by operation of law, or by the death of any member or members thereof, or their successor or successors at any time. 5. That in order to maintain and continue this association no member or members, or successor or successors thereof shall for five years from date hereof have any right of partition of said lands or any of them, but shall have such right thereafter. These articles of agreement shall be binding upon the parties, their assigns, whether by act of party or operation of law, and their heirs, devisees, executors and administrators. 6. The interests of the members of this association in the property thereof shall be represented by eight certificates which shall be and are hereby agreed to be personal property. The members have only a right to the avails or proceeds of said property, the title thereto both legal and equitable remaining and being in said trustee, his successor or successors in trust. (Here follows a form of a shareholder's certificate.) . . . . 8. The certificate of shares in and interests of members of this association in its property can only be transferred in the manner prescribed in the form of certificate last above set forth and not then unless all obligations of the assignor to the association are paid. No transfer shall be made for five days immediately before a meeting of the shareholders or for five days immediately before the time when a dividend is payable. 9. That the annual meeting of the shareholders...