Opinion ID: 1111799
Heading Depth: 1
Heading Rank: 2

Heading: The Bennett Claim

Text: Harold Bennett was originally made a party to this action because of his claim to one of the lots purchased by the Rogers. The trial court quieted title to the disputed lot in the Rogers; that decision has not been challenged on appeal. Bennett cross-claimed against Bitner Company alleging fraud in the assignment of certain real estate contracts to him. Alonzo Badger, a defendant in the lower court who has not appealed the trial court's default ruling against him, is an associate of Douglas Monson, principal of Westcor. Badger, as a result of a transaction not at issue here, owed Bennett approximately $81,000. In early August 1979, Monson and Badger approached Bennett and suggested an arrangement under which Bennett would loan Badger and Westcor an additional $50,000, which would be repaid by the assignment to Bennett of land sale contracts in the subdivision that Bitner Company and Westcor were developing. The land sale contracts were purportedly to be sold to a financial institution by Badger and Westcor for an amount sufficient to pay Bennett the $131,000 owed to him together with interest. According to Bennett, Monson told him that the contracts were free and clear but asked him not to record his interest in them because the contracts were going to be sold quickly by Monson and Badger. In reliance on these representations, Bennett advanced $50,000 to Westcor and did not record his interest. Included among the contracts assigned to Bennett was a contract purportedly representing money owed by William Rogers on Lot 29. Lot 29 had not, however, been sold to the Rogers. Other contracts in the group given to Bennett had already been assigned to a commercial institution. Monson and Badger then took the contracts assigned to Bennett and assigned them to other parties without the knowledge or consent of Bennett. Monson testified that the money obtained from Bennett was to be used to pay debts of the subdivision. The trial court determined that these activities constituted fraud against Bennett and awarded him judgment for compensatory and punitive damages and attorney fees against Bitner Company. The damages were awarded against Bitner Company on two theories: its status as a joint venturer with Westcor; and a determination that Bennett was a third-party beneficiary of the 1980 trust agreement entered by Bitner Company and Westcor. For the reasons explained above, we agree with the trial court that Westcor and Bitner Company were joint venturers. Joint venturers stand in the same relationship to each other as partners. Kemp v. Murray, 680 P.2d 758, 759 (Utah 1984). Principles governing the liability of one partner for a fraudulent assignment of partnership assets for the benefit of the partnership therefore apply. Utah Code Ann. § 48-1-10 (1981) provides: Where by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his copartners loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so acting or omitting to act. We believe that the record supports the conclusion that Monson was acting in the ordinary course of the partnership business when he made the assignments to Bennett. The record indicates that Westcor and Bitner Company were sued before the commencement of this action because of an assignment of certain real estate contracts. The assignment resulted in a diversion of income from the land contracts to projects other than the installation of improvements in the subdivision. That action culminated with a trust agreement under which Bitner Company and Westcor agreed to use best efforts to reobtain certain real estate contracts previously assigned by Westcor by a designated date, after which Bitner Company would hold Westcor harmless. The contracts were apparently not retrieved, but the existence of the trust agreement and the apparent lack of effort to retrieve the assigned contract are indicative of Bitner Company's knowledge or consent to Westcor's assignment of the real estate contracts. We note that Blaine Bitner's construction company took contracts from Westcor as payment for the excavating work it did. We think it is too late for Bitner Company to disclaim connection with Westcor's assignment of contracts on the subdivision. We also reject Bitner Company's argument that Utah Code Ann. § 48-1-6(3)(a) (1981), which forbids assignment of partnership property to creditors without the agreement of all partners who have not abandoned the partnership business, renders them not liable to Bennett. This issue was not raised before the trial court and is not therefore properly before us on appeal. See, e.g., Madsen v. Brown, 701 P.2d 1086, 1088 (Utah 1985).