Case ID: nj-eq_99/html/0014-01.html
Source: Caselaw Access Project
Author: {"author": "Leaming, V. C.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Harvey K. Partridge, complainant, v. William H. Cummings and George S. Cummings, trading as Cummings Brothers, and Seagate Beach Company, defendants.
    [Submitted December 22d, 1925.
    Determined January 11th, 1926.]
    1. A parol contract of joint adventure for speculation in real estate in which one party engages to acquire in his own-name a contract of purchase of certain land and to hold the contract of purchase and to cause operations under it in equal interest with the other party who advanced no money — Held, to be within the fifth section of our statute of frauds, which provides that no action shall be brought upon a contract concerning an interest in land unless the contract shall be in writing- signed by the party to be charged, as well as within the third section of our statute of frauds, which requires that express trusts in land shall be manifested and proved by writing.
    2. Equitable as well as legal interests in land — Held, to be embraced in the statute of frauds.
    3. The parol contract here in question cannot be classed as a contract for profits in real estate as distinguished from a contract for an interest in real estate.
    On final hearing on bill, answers, replications and proofs.
    
      The primary inquiry herein is whether our statute of frauds is a bar to the relief sought by the bill.
    The foundation of this suit is a parol agreement made between complainant and William H. Cummings and George S. Cummings, partners, trading as Cummings Brothers, to the effect that if the Cummings Brothers succeeded in procuring from the Avalon Company a contract in which that company would agree to convey to Cummings Brothers certain real estate consisting of building lots the Cummings Brothers would associate complainant with them, in equal interests of one-third for each of the three, in a proposed enterprise of acquiring title to the lots and selling them ,at a profit. The contemplated enterprise, as between Cummings Brothers and complainant, was for the Cummings Brothers to procure from the Avalon Company a long-term contract which would require no immediate payment of money, but under which the Cummings Brothers would be privileged to improve the lots and then sell lots so improved and pay the Avalon Company for the lots, as they were sold, the amounts specified in the schedule of prices forming a part of the Avalon Company contract. As between Cummings Brothers and complainant the proposed plan of practical operations was for the three to form a corporation which was to operate under the Avalon Company contract in the manner above stated, and each of the Cummings and complainant were to have one-third of the capital stock of that corporation.
    The contract between the Avalon Company and Cummings Brothers was thereafter executed under date of March 11th, 1924. The Seagate Beach Company was formed to operate under the Avalon Company contract, and a resolution was passed by its board of directors which was designed to enable that company, in effect, to take over the Avalon Company contract and issue its entire authorized capital stock for the property so purchased. Although no transfer of the rights of the Cummings Brothers or complainant under the Avalon Company contract appears to have been made to the Seagate Beach Company, and no stock was issued for the purchase price, operations were conducted as contemplated during the summer of 1924, and a number of lots were improved and sold and title taken by the purchasers, and the scheduled purchase price of each lot so sold was then paid to the Avalon Company. Differences then arose between Cummings Brothers and complainant and further operations were suspended.
    By this bill complainant seeks an accounting from the Cummings Brothers, and also seeks to compel the Seagate Beach Company to issue to him part of its capital stock.
    Cummings Brothers and the Seagate Beach Company have pleaded the statute of frauds as a bar to relief against them.
    
      Mr. Lewis Starr, for the complainant.
    
      Messrs. Bleakly, Stockwell & Burling (for whom appeared Mr. Harvey F. Qarr, of Messrs. Carr .<& Oarroll), for the defendants.
   Leaming, V. C.

Complainant urges that his parol contract of joint adventure with Cummings Brothers was not a contract for an interest in real estate, but was merely a contract for an interest in the profits to be derived from the purchase and sale of the real estate, .and, hence, does not fall within the-provisions of our statute of frauds.

The authorities in this country are in conflict as to whether a parol agreement of joint adventure in the nature of a partnership to speculate in real estate falls within the provisions of a statute of frauds similar to the statute of frauds of this state. Some of the authorities adopt the view that when the parol agreement may be said to contemplate only an interest in the profits, as distinguished from an interest in the land, on the part of the party seeking relief, the statute does not afford a bar. Other authorities repudiate that view, and hold that a partnership to> speculate in real estate for profit necessarily carries with it an interest in land within the meaning of the statute of frauds. In 18 A. L. R. 484, an extended note collects the authorities of the several states on this general subject.

But it seems unnecessary to here consider whether in any circumstances a joint enterprise in the nature of a partnership of this general nature could be said to contemplate only an interest in profits as distinguished from an interest in the land from which the profits were to be derived, and for that reason free from the operation of our statute of frauds. The parol contract here under consideration was that complainant should become equally interested with the two members of the firm of Cummings Brothers in the contract wherein the Avalon Company agreed to convey to the Cummings Bro; thers the real estate described in that contract. While ultimate profits necessarily was the primary object of the joint enterprise, equality of interest in the equitable title of Cummings Brothers under the Avalon Company contract was a distinctive feature of the parol agreement; that parol agreement contemplated no rights, powers or interests of Cummings Brothers not equally to be shared by complainant. Accordingly, it seems impossible to contemplate the parol agreement here sought to be enforced as merely an agreement touching profits to be derived from the purchase and sale of land as distinguished from an agreement for an interest in land.

Mr. Justice Story, in Smith v. Burnham, 3 Sumn. 435 (Fed. Cas. No. 13,019), not only repudiates as unsound a distinction between a contract for the sale of land and one for the sale of an interest in the profits to be acquired by its purchase and sale, but also expresses the view, which seems unanswerable, that the trust provisions of the statute of frauds are applicable to all such cases because title is held by one for the benefit of another under agreements not manifest in writing, excepting, of course, resulting and constructive trusts. No resulting trust can be here suggested, since no money of complainant’s was used in the acquisition by Cummings Brothers of the Avalon Company contract. That view also appears to have been entertained by Vice-Chancellor Pitney in Schultz v. Waldons, 60 N. J. Eq. 71. Alike by the terms and spirit of the parol agreement here involved the equitable title of the Cummings Brothers under the Avalon Company contract was to be held by them for complainant as to an equal one-third interest therein; this constitutes complainant’s present claim an attempt to establish an express trust in land by an agreement not manifest by writing. A trust as to an equitable title in land in no way differs in this respect from a trust as to a consummated legal title. Richards v. Richards, 9 Gray 313.

Complainant further urges that there has been sufficient part performance of the parol contract to remove it from the operation of the statute of frauds. In suits for relief by means of specific performance of parol contracts for the sale of land, delivery of possession to the vendee and permanent and valuable improvements made by the vendee have long been regarded as elements affording grounds for that form of relief notwithstanding the statute of frauds. But the utmost that complainant has done, which can be said to be referable to the parol agreement with Cummings Brothers, is in the nature of personal services. Payment in cash or by contribution of personal services are not regarded as part performance within the rule stated. It also is apparent that specific performance of the parol agreement here under consideration is now impossible by reason of changed conditions; nor can this court award money damages where specific performance has become impossible prior to suit.

No relief can be awarded against the Seagate Beach Company. If complainant’s contract is to be deemed void or unenforceable against the Cummings Brothers it cannot be made the foundation of relief against the Seagate Beach Company. Any requirement that the Seagate Beach Company issue its capital stock to complainant or for complainant’s use, would, necessarily, be based upon an interest of complainant in the land covered by the Avalon Company contract. Nor does the resolutions of the Seagate Beach Company, to which reference has already been made, in any way recognize any interest of complainant in the land.

A decree will be advised dismissing the bill.