Vargo v. Clark

• Decision Date: 24 June 1998
• Docket Number: No. 97CA37.,97CA37.
• Citation: 128 Ohio App.3d 589,716 NE 2d 238
• Parties: VARGO, Appellee, v. CLARK et al., Appellants.
• Court: Ohio Court of Appeals

128 Ohio App.3d 589

716 NE 2d 238

VARGO, Appellee, v. CLARK et al., Appellants.

No. 97CA37.

Court of Appeals of Ohio, Fourth District, Lawrence County.

Decided June 24, 1998.

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David Reid Dillon, for appellants.¹

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KLINE, Judge.

Wayne and Nancy Clark appeal the judgment in favor of Ruth Vargo, following a bench trial in the Lawrence County Court of Common Pleas. The Clarks assert that the trial court erred in finding that the Clarks and Vargo formed a joint venture. We disagree because the trial court's decision is supported by competent, credible evidence. Alternatively, the Clarks argue that the trial court erred in dividing the Clarks' real estate as an asset of the joint venture. We disagree because we find competent, credible evidence to support the Clarks' intention to contribute the real estate to the joint venture. The Clarks also contend that the trial court erred by failing to consider the monetary debt they incurred. We agree because the record contains competent, credible evidence that the Clarks incurred debt which the trial court did not consider in dividing the assets and liabilities of the joint venture. Finally, the Clarks contend that the trial court erred in holding them liable to Vargo. We disagree, because the trial court did not err in implying a contract between the Clarks and Vargo.

Accordingly, we affirm in part and reverse in part the decision of the trial court, and we remand this case to the trial court for further proceedings consistent with this opinion.

I

Nancy Clark and Vargo are sisters. The Clarks and Vargo discussed opening a grocery store in Arabia, Ohio. The Clarks owned real estate, and Nancy had worked in the grocery business, but they lacked the financial resources to build and run a grocery. Vargo sent the Clarks an initial investment to begin construction on the grocery store. The Clarks deposited the money in an account for C&C Grocery. Vargo quit her job and moved from Michigan to Ohio to live with the Clarks. The Clarks and Vargo never entered into a written contract.

Vargo provided funds, mainly by incurring debt on her credit card, for building the store and buying inventory and equipment. Vargo also paid some of the Clarks' bills. On April 1, 1996, C&C Grocery opened for business. Vargo and each of the Clarks spent about the same amount of time in the store. However, due to personal and/or financial difficulties between Vargo and the Clarks, Vargo returned to Michigan in July 1996. The Clarks paid on Vargo's credit card from approximately July 1996 until March 1997. Vargo then filed an action for breach of contract.

At trial, the Clarks asserted that Vargo volunteered all of the funds she contributed to their business but also testified that they agreed to give her one third of the business. Wayne Clark testified that he never entered into a written contract with Vargo because he did not want anyone to have an interest in his land. The Clarks' home and their daughter's home also sit on the six-acre tract that they used for the grocery. Wayne testified that the real estate (the store and the land it occupies) is worth approximately $75,000, the inventory $10,000 to $12,000, and the equipment $20,000.

Nancy testified that she and her husband borrowed approximately $22,000 from American General and $35,000 from Wayne's father to contribute to the business. The Clarks presented no other evidence of their expenses.

Vargo testified that she and the Clarks agreed that she would contribute to C&C Grocery and receive fifty percent of the business in return. Vargo presented evidence of cash disbursements to the Clarks and C&C Grocery and of her credit card and other debt incurred in financing the grocery.

The trial court found that the Clarks and Vargo formed a joint venture to carry out their grocery store plan, and Vargo provided funds for the business, incurring $35,081 in debt. The trial court further found that the Clarks contributed their land and Nancy contributed her knowledge of the grocery business.

The trial court found that the assets of C&C grocery include the store and land, worth $75,000, inventory worth $10,000 to $12,000, and equipment worth $20,000. The court totaled C&C's assets at a value of $106,000 and found debts of $35,081.

The trial court then divided the assets and debts based upon Vargo's contention that her share equaled fifty percent jointly and severally as follows:

                50% of Assets of $106,000.00    =   $53,000.00
                50% of Debts of $35,081.00      =   $17,540.50
                                                    __________
                Total judgment                      $70,540.50
                

The Clarks appeal the judgment of the trial court, asserting the following assignments of error:

"I. A joint venture was not created between the parties, as found by the trial court, because there was no evidence that there was a contract among the parties.

"II. Even assuming that the court was correct in holding that a joint venture existed between the parties, the trial court erred to the prejudice of appellants in holding that the real estate and other assets were assets of the joint venture and subject to division between the parties.

"III. The trial court erred in determining the losses of the alleged joint venture by failing to consider contributions made by defendants-appellants to the alleged joint venture.

"IV. The trial court erred in failing to find that defendants-appellants were not liable to plaintiff-appellee for moneys expended by her."

II

In their first assignment of error, the Clarks contend that the trial court erred in finding that the parties formed a joint venture because the Clarks and Vargo did not form a valid contract. Specifically, the Clarks assert that they did not agree on their salaries, the interest paid to Vargo, or how they would divide the invested money or work. Therefore, the Clarks argue that the contract must fail for a lack of definiteness.

A finding of a joint venture depends on the facts and circumstances of each case. Kahle v. Turner (1979), 66 Ohio App.2d 49, 51, 20 O.O.3d 111, 112-113, 420 N.E.2d 127, 129-130. A factual finding of the trial court will only be reversed by a reviewing court if the reviewing court finds it is against the manifest weight of the evidence. See Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 80, 10 OBR 408, 410-411, 461 N.E.2d 1273, 1276-1277. Findings supported by some competent credible evidence will not be reversed as being against the manifest weight of the evidence. Id.

The Ohio Supreme Court defines a "joint venture" as follows:

"`An association of persons with intent, by way of contract, express or implied, to engage in and carry out a single business adventure for joint profit, for which purpose they combine their efforts, property, money, skill and knowledge, without creating a partnership, and agree that there shall be a community of interest among them as to the purpose of the undertaking, and that each coadventurer shall stand in the relation of principal, as well as agent, as to each of the coadventurers.'" Al Johnson Constr. Co. v. Kosydar (1975), 42 Ohio St.2d 29, 71 O.O.2d 16, 325 N.E.2d 549, paragraph one of the syllabus, quoting Ford v. McCue (1955), 163 Ohio St. 498, 56 O.O. 410, 127 N.E.2d 209, paragraph one of the syllabus. See, also, Kahle, supra.

The major distinction between a joint venture and a partnership is that a joint venture relates to a single enterprise and a partnership relates to a continuing business. Ford at 502-503, 56 O.O. at 412-413, 127 N.E.2d at 212-213. Thus, courts generally apply partnership law to joint ventures. Al Johnson Constr. Co. at 32, 71 O.O.2d at 18, 325 N.E.2d at 552-553, Members of a joint venture need not share expenses equally or expressly contract to share losses. Kahle at 52, 20 O.O.3d at 113, 420 N.E.2d at 130, quoting Albina Engine & Machine Works, Inc. v. Abel (C.A.10, 1962), 305 F.2d 77, 82. In the absence of an express agreement to share losses, a court will imply that the parties intended to share losses in the same proportion as profits. Kahle at 52, 20 O.O.3d at 113, 420 N.E.2d at 130, citing 46 American Jurisprudence 2d (1994), 66, 67, Joint Ventures, Section 47. See, also, Spitznaugle v. Green (1930), 8 Ohio Law Abs. 213.

Generally, courts recognize three types of contracts: express, implied in fact, and implied in law. Legros v. Tarr (1989), 44 Ohio St.3d 1, 6, 540 N.E.2d 257, 262-263, citing Hummel v. Hummel (1938), 133 Ohio St. 520, 525, 11 O.O. 221, 223, 14 N.E.2d 923, 925-926; Sabin v. Graves (1993), 86 Ohio App.3d 628, 633, 621 N.E.2d 748, 751-752, appeal dismissed on application of appellant in (1993), 66 Ohio St.3d 1503, 613 N.E.2d 648. In an express contract, the parties assent to the terms as actually expressed through the offer and acceptance. Id. In a contract implied in fact, the meeting of the minds is shown by the surrounding circumstances that demonstrate that a contract exists as a matter of tacit understanding. Id. In contracts implied in law, civil liability attaches by operation of the law upon a person who receives benefits that he is not entitled to retain. Id. Contracts implied in law are not true contracts, but quasi-contracts or constructive contracts imposed by courts to prevent unjust enrichment. Id.

In order to determine whether a court can enforce a contract, a court must be able to determine the terms of the contract. Vagueness of expression, indefiniteness, and uncertainty as to any of the essential terms of an agreement prevent the creation of an enforceable contract. Rulli v. Fan Co. (1997), 79 Ohio St.3d 374, 376, 683 N.E.2d 337, 338-339, quoting 1 Corbin on Contracts (Rev.Ed. 1993) 525, Section 4.1.

Here, in light of the accompanying factors and circumstances, competent, credible evidence supports the trial court's finding that the Clarks and Vargo entered into a valid contract to form a joint venture....