Wiley v. Wirbelauer

• Decision Date: 31 July 1934
• Parties: WILEY v. WIRBELAUER et al.
• Court: New Jersey Court of Chancery

174 A. 20

WILEY

v. WIRBELAUER et al.

Court of Chancery of New Jersey.

July 31, 1934.

Syllabus by the Court.

1. A joint venture is a special combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation.

2. The relation of parties to a joint adventure is like that of copartners—is fiduciary, one of trust and confidence, calling for the utmost good faith, permitting of no secret advantages or benefits.

3. A joint adventure may exist where persons embark in an undertaking without entering on the prosecution of the business as partners strictly, but engage in a common enterprise for their mutual benefit.

4. Parties to a joint adventure each have a right to demand and expect from their associates good faith in all that relates to their common interests.

5. As a general rule, fraud consists in anything calculated to deceive, whether by single act or combination, or by suppression of truth, or a suggestion of what is false, whether it be by direct falsehood or by innuendo, by speech or silence, word of mouth, or look or gesture. It is any artifice by which a person is deceived to his disadvantage. To establish it, the proof must be clear and convincing.

6. Held, that there were acts, omissions, and concealments on the part of the defendant, Wirbelauer which involve a breach of legal or equitable duty, and that he took an undue and unconscientious advantage of the trust reposed in him.

Bill of complaint by James A. Wiley against William L. Wirbelauer and another.

Decree for plaintiff in accordance with opinion.

John Milton, of Jersey City, for complainant.

Purst & Furst, of Newark, for defendants.

EGAN, Vice Chancellor.

Some time in June, 1928, four silk-dyeing establishments, which had been engaged in business in this state, merged into one company and now exist under the name of Associated Dyeing & Printing Corporation of Paterson. The defendant Wirbelauer became its president, and Wiley, the complainant, became its treasurer. The complainant alleges Wirbelauer collected part of a commission paid Abraham Axelrod, a promoter and broker, for services in effecting the merger, and fraudulently retains such proceeds, despite an agreement to pay him 33 1/3 per cent. of the same. The defendant Wirbelauer denies any agreement with complainant.

At the outset of the hearing, the defendant moved to strike the bill of complaint upon the following grounds: "1. That it does not set forth a cause of action cognizable in this court. 2. That complainant has an adequate, certain, complete and sufficient remedy at law. 3. That it does not sufficiently disclose that complainant is entitled to the relief prayed for, or any equitable relief. 4. That it does not set forth a good and sufficient equitable cause of action. 5. That complainant is not entitled to any equitable relief against defendant, Wilgus Corporation, until the complainant first establishes his cause of action in a court of law, and recovers a judgment in a court of law against defendant, William L. Wirbelauer." The motions were all denied.

The complainant alleges a joint adventure between him and the defendant Wirbelauer, and the proof sustains him; therefore his action is one that is clearly cognizable in a court of equity. An agreement of joint adventure is certainly a subject of equitable jurisdiction. It carries with it, among other things, a right of discovery and an accounting. Braddock v. Hinehman, 78 N. J. Eq. 270, 79 A. 419. A joint venture has been defined as a special combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation. 33 Corpus Juris, 841, § 1. The relation of parties to a joint adventure is like that of copartners; is fiduciary, one of trust and confidence, calling for the utmost good faith, permitting of no secret advantages or benefits. Bowne and Mertz v. Windsor, 106 N. J. Eq. 415, 151 A. 124. While a business carried on by two or more persons for a profit, with a community of interest and a share of profits and losses, is essentially a partnership, these requirements may exist without creating a partnership, and there can be no partnership unless the agreement contemplates an agency whereby each is the agent for the other or others. Jackson v. Hooper et al., 76 N. J. Eq. 185, 74 A. 130. A joint adventure, on the other hand, may exist where persons embark in an undertaking without entering on the prosecution of the business as partners strictly, but engage in a common enterprise for their mutual benefit; they each have the right to demand and expect from their associates good faith in all that relates to their common interests. Though there is a distinction between a partnership and a joint adventure, they are of a similar nature, and the rules applicable to partnerships apply to joint adventures, and equity will wind up a joint adventure because of misconduct of one of the parties and order an account, and in case of disagreement either party may sue for the dissolution of the agreement and obtain an injunction to protect his rights. Jackson v. Hooper et al., supra.

Wiley, the complainant, and Wirbelauer, the defendant, from the early part of 1921, were employed by a silk-dyeing concern known as the Royal Piece Dye Works, Inc., of Paterson, N. J. Wirbelauer was president of the concern, while Wiley was its chief accountant and also assistant to the treasurer. Subsequently Wiley became secretary and chief financial officer of the company. He and Wirbelauer were closely associated, not only in business affairs, but in matters socially. Wirbelauer took him into his confidence, discussed with him many personal matters, and relied upon his aid and judgment in much of his private affairs.

Wiley claims credit for initiating the plan and assisting in effecting the proceedings which led to the merger of the different companies mentioned in the bill. He testified that through one Henry Smith, a lawyer, he met Axelrod, the promoter or broker in the merger, who, on other occasions, had discussed the question of the consolidation of the companies with Wirbelauer, but the discussion was without successful result. It appears from the testimony of complainant and his witnesses Wiley arranged for and brought about a meeting between Axelrod and Wirbelauer at which...