Street v. Fourth Judicial District Court, Utah County

• Decision Date: 26 March 1948
• Docket Number: 7045
• Citation: 191 P.2d 153,113 Utah 60
• Court: Utah Supreme Court
• Parties: STREET et al. v. FOURTH JUDICIAL DISTRICT COURT, UTAH COUNTY et al

191 P.2d 153

113 Utah 60

STREET et al. v. FOURTH JUDICIAL DISTRICT COURT, UTAH COUNTY et al

No. 7045

Supreme Court of Utah

March 26, 1948

Original mandamus proceeding by Evan E. Street and Max Siegel, to compel the Fourth Judicial District Court, Utah County, State of Utah, and Honorable William Stanley Dunford, Judge thereof, and Arthur Graham, to strike certain paragraphs from an amended and supplemental complaint in an action pending before it. Peremptory writ denied, and alternative writ recalled.

Skeen Thurman & Worsley, Owen, Beless, Ward & Burnham and White Wright & Arnovitz, all of Salt Lake City, for plaintiffs.

George B. Stanley, of Heber City, for defendants.

McDONOUGH C. J., and PRATT, WADE and LATIMER, JJ., concur.

OPINION

WOLFE, Justice.

Original mandamus proceedings in this court to compel defendant judge to make an order striking certain paragraphs from the amended and supplemental complaint of defendant Graham in the case of Graham v. Street and Siegel. In this opinion we shall refer to the applicants for the writ as plaintiffs, the Fourth District Court as defendant court, Hon. William Stanley Dunford as defendant judge, and Arthur Graham as defendant Graham.

This proceeding is another phase of the case of Graham v. Street and Siegel, reported in 109 Utah 460, 166 P.2d 524. To furnish the necessary background for a proper understanding of this case, it is necessary to review briefly the facts of that case.

Defendant Graham commenced an action against the plaintiffs herein, alleging that defendant Graham and plaintiff Street had entered into an oral partnership agreement for the purpose of acquiring and operating certain machinery, and for dividing the profits equally between them; that plaintiff Street wrongfully applied partnership moneys to other than partnership purposes; and that plaintiffs conspired together to withhold from Graham and to misappropriate the partnership funds, and to exclude Graham from any management or control of of the partnership business. Graham prayed that the partnership between him and plaintiff Street be dissolved, and that an accounting be had of all the monies collected by the defendants and each of them from the dealings and transactions and operation of the partnership property and from the sale of the said partnership property. He also prayed for general relief and costs.

At the conclusion of that trial, which was had in defendant court before defendant judge, the judge made findings of fact and conclusions of law, and made and entered an interlocutory decree in which it was decreed, insofar as material here, that Graham and Street had entered into a partnership agreement which was still in full force and effect, and further providing as follows:

'3. That the defendants [plaintiffs here] and each of them are hereby ordered to file in this court within twenty days from the entry hereof an accounting as follows:

'(a) That said account set forth all monies which they and each of them have received from the operation of the partnership capital assets set forth in paragraph 2 herein, and any other assets purchased or leased by the partnership or by the use of partnership funds since August 6, 1943, to date, said account to state from whom said payments were received and the date of the receipt of payment;

'(b) That said account set forth the date of the purchase of any equipment purchased or leased for partnership purposes herein, and the costs of the same, and from whom purchased or leased;

'(c) That said account set forth all expenditures made for operating and maintaining the partnership capital assets, the date of each expenditure, for what expended, to whom paid and the amount thereof;

'(d) That said account set forth all monies received from any sale of any and all of the partnership capital assets hereinabove set forth;

'(e) That said account set forth the capital assets, if any, other than money, now in the possession of the defendants, or either of them, which belong to the said partnership; * * *.'

It will be noted that that part of the decree requiring an accounting made no reference whatsoever to fair rental value of the partnership capital. This is important, and, as will be shown hereafter, gives rise to the action now before us. The decree further provided that defendant court should retain jurisdiction of the case 'to settle all accounts between the parties * * *, to dissolve the partnership * * *, and to make such further orders, judgments and decrees' as might be just and equitable, 'to the end that a full and complete settlement of the entire controversy existing between' the parties should be made. (Italics ours.)

Under the authority of Attorney General v. Pomeroy, 93 Utah 426, 73 P.2d 1277, 114 A.L.R. 726, we entertained an appeal from the above mentioned interlocutory decree, and the findings of fact in support thereof. The case being in equity, we carefully re-examined the evidence, and, independently, arrived at the same result as the court below (defendant court). Our affirmance was in this language [109 Utah 460, 166 P. 2d 536]:

'The decree of the lower court, dated June 15th, 1945, is affirmed.'

The paragraph of the opinion next immediately preceding the order of this court was as follows:

'If the partnership ceased to exist in fact by the conduct Street brought home to Graham or by the answer of Street denying the partnership filed May 29th, 1944, which must be considered notice to Graham, or after the sale of the property on Jan. 12, 1945, equity will nevertheless treat the partnership as existing and require an accounting of the profits or of the rental value, whichever may be the greater. Equity will not permit a party in a relationship of trust and confidence to profit from his own wrong.' (Italics added.)

On petition for rehearing, the italicized portion of the above quotation was ordered stricken from the opinion and the petition was denied.

The case was remitted to the defendant court and plaintiffs filed their accountings pursuant to the interlocutory decree affirmed by us. To these accountings defendant Graham filed a pleading denominated 'Objections to Accounting by Defendants and Supplemental Complaint,' in which he adopted all of the allegations of his amended complaint (upon which the case was tried), and further alleged that defendant court had made its findings, conclusions, and interlocutory decree; affirmance of the interlocutory decree of this court; the order of defendant court ordering plaintiff to file their accountings; and that plaintiffs had filed accountings. He then set forth specific objections to the accounting filed by plaintiffs. Graham then further alleged in substance as follows (Numbers are paragraph numbers of the supplemental complaint):

9. The plaintiffs were unskilled in the operation of the partnership business.

10. If plaintiffs had been skilled in the management of the business, and fully accounted to the defendant court as ordered, they should have made in excess of the fair rental value of the partnership equipment.

11. That Graham was skilled in the management of the partnership business, and by the fraudulent acts of the plaintiff he was deprived of the management of the business, and of profits which would have exceeded the fair rental value of the partnership equipment.

12-15. That the fair monthly rental value of all of the partnership equipment was $ 1,193.

16, 17. That because of the fraudulent acts of the plaintiffs the partnership was damaged (to the date of filing the pleading) in the sum of $ 43,758.50, and that it had been deprived of its assets and business to its damage in the sum of $ 88,773.33.

18. That a reasonable attorney's fee for establishing, maintaining, and dissolving the partnership was $ 5000.

19. 'That in equity and good conscience the accountings made by the defendants * * * should be rejected * * *, and the accounting made on a rental basis; * * *.'

From these allegations Graham, in his Second Amended and Supplemental Complaint, prayed that plaintiffs' accounting be rejected and that plaintiffs be required to account for damages in the sum of $ 43,758.50 and for the additional sum of $ 1,193 per month from the date of filing until the account was fully settled; for damages for loss of future rents, issues and profits in the sum of $ 88,773.33; for attorney's fees in the sum of $ 5000, and for general relief.

Plaintiffs interposed a motion to strike paragraphs 9 to 19, inclusive, and the motion was denied by defendant judge. Plaintiffs moved to reconsider the motion and to vacate the order denying the motion to strike. This motion was also denied, with leave to plaintiffs to file any pleading they deemed advisable in answer to Graham's Second Amended and Supplemental Complaint.

Plaintiffs thereupon commenced this action in this court, praying for a writ of mandamus ordering defendant judge to strike from Graham's Second Amended and Supplemental Complaint the paragraphs numbered 9-19 inclusive. We granted the alternative writ ex parte.

Summarizing briefly: Graham commenced an action against plaintiffs for an accounting of partnership profits and for general relief. The trial court, by its interlocutory decree found that a partnership existed between Graham and Street, that plaintiffs had wrongfully deprived Graham of the management and control of the partnership assets, that Graham was entitled to equitable relief, and that plaintiffs should account to Graham for profits of the partnership and for the partnership assets. That decree was affirmed by this court. After remittitur from this court was received in defendant court, Graham was permitted by defendant court to amend his complaint to demand an accounting on...