Opinion ID: 282320
Heading Depth: 1
Heading Rank: 2

Heading: joint enterprise

Text: 14 The defendants urge that the district judge's finding that the plaintiffs were engaged in a joint venture was contrary to the evidence, or that it was at least a fact issue that should have been submitted to the jury. 15 This suit is founded in tort. 1 The plaintiffs' complaint is that they were fraudulently misled. The evidence was uncontroverted that the plaintiffs finally decided to make their investment on May 29, 1959. The defendants' representations were made before then, at a time when Gear was an empty shell, and none of the plaintiffs except Madden had any interest in it. 16 The material issue then is whether, when the defendants' representations were made, the relationship among the plaintiffs was such that communication of the representations to one of them constituted communication to all. This would not, of course, be the case if they were a group of individuals acting separately. On the other hand, a representation to one might be a representation to all if the plaintiffs were partners or joint adventurers. 17 The writers agree that the joint venture is a type of partnership, not a separate kind of business unit, 2 but the concept of joint venture, or as the trial court chose to call it, joint enterprise, 3 was created by the American courts 4 to meet the need they felt for a special term to describe an enterprise undertaken jointly by several participants that lacked some of the characteristics usually found in a partnership. 5 Like other American courts, Texas courts recognize the joint venture concept. 6 In Texas, as in other states, whether a joint venture exists depends upon the intention of the parties who compose it. 7 Texas considers a joint adventure 'in the nature of a partnership engaged in the joint prosecution of a particular transaction for mutual profit.' Brown v. Cole, 1956, 155 Tex. 624, 291 S.W.2d 704, 709, 59 A.L.R.2d 1011. See also Holcombe v. Lorino, 1935, 124 Tex. 446, 79 S.W.2d 307. 8 18 The evidence with respect to the plaintiffs' intention and agreement before Gear was revived was uncontroverted. The inferences to be drawn from this evidence all point the same way. When the defendants' representations were made, the plaintiffs had a joint interest in seeking an investment. Before they breathed life into Gear, they had an agreement to share profits and losses; they were to have joint control of the investment although day-to-day management was to be committed to one of their group who had previously assumed such responsibility for other investments made jointly by the group. That their relationship among themselves was fiduciary and that they had a right to an accounting was implied. The relationship at the moment before Gear was reborn met all the requirements of a joint venture. 9 19 Whether or not a group of persons constitute a joint venture is usually a question of fact, to be resolved by the jury. 10 But determination of the legal consequences that flow from uncontroverted facts is a question of law to be decided by the court. 11 'It is a well established rule in the courts of the United States that where the evidence is so overwhelmingly on one side as to leave no room for doubt as to what the facts are, the court should give a peremptory instruction to the jury. Atchison, Topeka, etc. R. Co. v. Toops, 281 U.S. 351, 50 S.Ct. 281, 74 L.Ed. 896; Gunning v. Cooley, 281 U.S. 90, 50 S.Ct. 231, 74 L.Ed. 720.' Evans v. Teche Lines, 5 Cir. 1940, 112 F.2d 933, 934. 20 In Texas, it is the duty of a court to direct a verdict, though there is slight testimony, if its probative force is so weak that it raises only a mere surmise. If the jury could not reasonably infer the existence of a fact, and there in no room for ordinary minds to differ as to the conclusion to be drawn, the question is for the court. 12 21 There was no evidence in this case from which the jury could properly have concluded that, at the time the defendants' representations were made and at the time the plaintiffs decided to act on them, the plaintiffs did not comprise a joint venture. The joint venturers did decide to employ a corporation as a medium for their investment. But this does not negate the existence of the joint venture at the moment the alleged tort was committed. 13 22 The authorities cited by the defendants do not deal directly therefore with the issue actually involved in the court's alleged error. Instead, they deal only with the question whether a joint venture may continue to exist contemporaneously with a corporation formed to carry out its purposes. 23 There is authority that, when parties choose to do business as a corporation and thus gain the advantages of the corporate business form, including limited liability, they cease to be joint venturers and thereafter have only the rights, duties and obligations of stockholders. 14 These cases reason that the investors 'are not at one and the same time joint venturers and stockholders, fiduciaries and nonfiduciaries, personally liable and not personally liable.' 15 However, there is also persuasive and well-reasoned authority that a joint venture agreement continues in effect following the formation of a corporation created to implement it if the parties' intention to this effect is clear. 16 24 Apparently, the Texas courts have never had occasion to adopt either view. The Texas Court of Civil Appeals has defined a 'joint adventure' 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.' Griffin v. Reilly, Tex.Civ.App., 1925, 275 S.W. 242, 246. But this definition does not necessarily imply that formation of a corporation to carry out the purposes of a joint venture would cause the venture to cease. 25 However, it is not necessary for us to attempt to divine what Texas courts would do if confronted with this question. Here the factual evidence of the plaintiffs' intention was uncontroverted and the trial judge correctly concluded that, as a matter of law, the plaintiffs had established the existence of a joint venture at the time the alleged tort was committed. 17 Once this was clear, we think that Texas would hold, as do the other states, that communication to one joint venturer is communication to all. 18