Syllabus
by the Court.
An oral
partnership agreement to share in the profits and losses
arising from the purchase and sale of real estate is not
within the statute of frauds; and the existence of such
partnership, and the interest of the members of the firm
therein, may be established by parol evidence.
Error
from Superior Court, Oklahoma County; Edward Dewes Oldfield
Judge.
Action
by W. A. McKee against W. J. Thompson and H. F. Carter.
Judgment for plaintiff, and defendants bring error. Modified
and remanded.
BLEAKMORE
J.
This is
an action brought in the court below by defendant in error
as plaintiff, against the plaintiffs in error, as defendants,
for the dissolution of a partnership entered into for the
purpose of dealing in lands, and for an accounting. The
parties are referred to here as they appeared in the trial
court.
The
cause was submitted to the court and a jury, to which jury
interrogatories were propounded and answered as follows:
"Interrogatory No. 1. Was there ever a partnership
contract or agreement entered into by and between the
plaintiff and defendants, by the terms of which the plaintiff
and defendants were to be equal partners for the general
buying and selling of real estate for profit? If so, give the
date of such agreement. Answer: Yes, early part of March.
Interrogatory No. 2. Was there a partnership contract or
agreement entered into for the purchase of this particular
land, to wit, the northeast quarter of section 15, in
township 12, north of range 3 west of the Indian meridian,
known as the Gardner tract, and, if so, give the date of such
agreement. Answer: Early part of May, 1908. Interrogatory No.
3. If you answer interrogatory No. 1 in the affirmative, that
is (that there was a partnership agreement for the general
buying and selling of real estate for profit), then state
whether or not such partnership was ever dissolved by mutual
consent, or otherwise, and, if it was dissolved, give the
date of the dissolution. Answer: No."
The
court adopted the findings of the jury, and adjudged that a
partnership existed between the parties, and--
"that the said real estate cost, as returned by the
jury, $16,000; that the present value of the real estate was
$37,280, and that the net interest of the plaintiff, W. A.
McKee, was and is $5,000; that the said real estate, if the
judgment herein rendered is not paid off, discharged, or
satisfied by the defendant Thompson within 60 days of this
date by the payment to the plaintiff, McKee, by the defendant
Thompson, of the sum of $5,000, the amount returned and found
by the jury to be McKee's net interest in said real
estate, then upon failure of said defendant Thompson to pay
off the said $5,000, together with the costs of action,
within 60 days, then that execution issue by the clerk of the
court under seal to the sheriff, commanding him to advertise
and sell said real estate, after appraisement, and to return
the proceeds of the same into court for the purpose of
satisfying this judgment. It is further adjudged that if the
defendant Thompson shall pay or cause to be paid said $5,000
within 60 days, for the use and benefit of the plaintiff,
McKee, to the clerk of the court, then and in that event the
judgment herein rendered shall be fully satisfied."
The
facts as disclosed by the record, the special findings of the
jury adopted by the court, and the decree are that the
plaintiff and defendants, who for some time prior thereto had
been partners in the real estate business, buying and selling
lands for profit, in the month of May, 1908, entered into a
parol agreement among themselves for the purchase and sale of
the particular land described in the complaint, each to share
equally in the profits or losses upon a disposition thereof;
that the land was bought for $16,000, the defendant Thompson
advancing the whole of the purchase price and taking title to
the same in his own name; that the land increased in value,
and at the time of the trial was worth $37,280; that prior to
the institution of this action the defendant Carter had
conveyed his share in the profits arising by reason of the
enhanced value of the land to his codefendant Thompson for
the sum of $4,750; that the defendant Thompson,
notwithstanding the advance in the price of said property and
demand made upon him by plaintiff to dispose of said property
for the purpose of realizing the profits which had accrued
thereon, refused to sell the same, repudiated the partnership
agreement, and declined to recognize any interest of the
plaintiff in the transaction. While there is considerable
conflict in the testimony, yet there is evidence sufficient
to sustain the special findings of fact by the jury and the
decree of the court thereon; and such findings of fact will
not be disturbed in this court.
There
are numerous assignments of error, but a determination of
this cause requires an examination of but two material
questions presented, to wit:
(1) Is
a partnership formed by parol agreement for the purpose of
dealing in lands void under the fifth subdivision of section
941, Rev. Laws 1910, which provides:
"Sec. 941. The following contracts are invalid, unless
the same, or some note or memorandum thereof, be in writing
and subscribed by the party to be charged, or by his agent. *
* * Fifth. An agreement for the leasing for a longer period
than one year, or for the sale of real property, or of an
interest therein. * * *"
And (2)
should the court have rendered a personal judgment against
defendant Thompson for a specific sum, prior to a sale of the
land involved?
It will
be noted that the partnership between the parties to this
suit did not contemplate the purchase of real property for
the purpose of permanent investment, or the conveyance of
real estate from one of the parties to the firm or the
members thereof, but that said partnership was formed for the
purpose of dealing in land for speculation, and sharing
equally the profits arising out of the purchase and sale of
lands.
"It is generally held that agreements to share profits
and losses arising from the purchase and sale of real estate
are not contracts
for the sale or transfer of interests in land and need not be
in writing." 20 Cyc. 237.
While a
decision of the question presented in this cause is not
without difficulty, and the
holdings of the courts are not in harmony, it appears that
the great weight of modern authority sustains the doctrine
above quoted.
In
Chester v. Dickerson, 54 N.Y. 1, 13 Am. Rep. 550, it is
said:
"Most of the conflict in the authorities has arisen in
controversies about the title to real estate after the
dissolution of the partnership or the death of one of the
partners. But suppose two persons, by parol agreement, enter
into a partnership to speculate in lands, how do they come in
conflict with the statute of frauds? No estate or interest in
land has been granted, assigned, or declared. When the
agreement is made no lands are owned by the firm, and neither
party attempts to convey or assign any to the other. The
contract is a valid one, and in pursuance of this agreement
they go on and buy, improve and sell lands. While they are
doing this, do they not act as partners and bear a
partnership relation to each other? Within the meaning of the
statute in such case neither conveys nor assigns any land to
the other, and hence there is no conflict with the statute.
The statute is not so broad as to prevent proof by parol of
an interest in lands; it is simply aimed at the creation or
conveyance of an estate in lands without a writing."
In
Pennybacker v. Leary, 65 Iowa, 220, 21 N.W. 575, a case
very similar to the one at bar, involving a partnership
entered into by parol, the facts were stated by the court:
"By the terms of the agreement, plaintiff was to
purchase the lands in defendant's name, who should
advance the whole of the purchase money, and be allowed
interest thereon at the rate of 10 per cent. per annum. The
lands, or the profits remaining, after deducting from the
proceeds of the sale of the land the purchase money, interest
thereon, and taxes, were to be divided equally."
And the
court said:
"But defendant insists, and pleads as a defense in his
answer, that, as the contract was for the purchase of an
interest in lands, and was wholly oral, it cannot be enforced
under the statute of frauds. The contract, to be truly
stated, amounted to a parol agreement for the
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