Court Opinion

ID: 8832451
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:07:36.842835+00
Date Added: 2024-06-11T17:04:57.661660
License: Public Domain

MANTON, Circuit Judge
(dissenting). I can agree with the prevailing opinion in the conclusion that the transaction here was a joint adventure, and, further, that the terms of the contract between the parties must be found within the memorandum set forth in the opinion. Reading the agreement, it will be found that the parties contracted to purchase cotton and sell it to the plaintiffs’ customer, but delivery was to be made only after peace was declared. In the meanwhile, the cotton was to be kept in a warehouse at Barcelona, Spain. The agree-ment and delivery of the cotton at Barcelona, Spain, was all prior to our entry into the war or the effective date of the Trading with the Enemy Act. Up to this stage, there was nothing illegal or contrary to public policy in the transaction. I take it the prevailing opinion concedes this. The contract provides:
“The parties of the second part are to arrange with the firm of Frierson Bros, to ship the 10,000 bales of cotton to Barcelona, and to carry same in their name until final delivery after peace has been arranged.”
And it is further provided:
“There shall also be entered on the credit side of said statement the carrying charges collected from the buyers for the period intervening between May 1, 1917, and the date of eventual delivery.”
_ “There shall further be entered on this statement, on the debit or credit side, as the case may be, any losses or profits accruing through the transferring of exchanges from dollars to pesetas, or vice versa.”
Their contract further provided for an equal division of the .profits after certain deductions named therein were made. It will be noted that in the memorandum of agreement between Erierson Bros, and the plaintiffs set forth in the prevailing opinion, the carrying charges were provided'for until “peace had been officially concluded.” Booking solely to the agreement'between the parties set forth; it is1 very appar*981ent that the parties did not intend a delivery until peace was declared, and that, in the meantime, the joint adventure continued. The fact is that the joint adventure was ended before peace was declared by the action of the defendants.
Assuming, as the prevailing opinion does, that this was a justifiable abandonment of the adventure by one of the parties, can it be doubted that the profits or losses sustained up to that time must be shared equally by all the parties ? Here were profits by the sale of the cotton, and there should be an adjustment thereof which may be had either by an accounting between the parties or by an action at law with the burden of proof upon the appellants to establish their case. Brooks v. Martin, 69 U. S. (2 Wall.) 70, 17 L. Ed. 732; McBlair v. Gibbes, 58 U. S. (17 How.) 232, 15 L. Ed. 132; Felbel v. Kahn, 29 App. Div. 270, 51 N. Y. Supp. 435. While the cotton was to be in the name of Erierson Bros., this must be deemed to have been for the benefit of all the parties, and upon the resale all parties are entitled to the benefits accruing, just as all parties would be obligated to the losses subsequently sustained. Burhans v. Jefferson, 76 Fed. 25, 22 C. C. A. 25; Stover v. Flack, 30 N. Y. 64.
■ It is quite true that the party making the advances of money and the other of labor may fix the terms upon which the profits may be divided, and such terms are binding upon those accepting them. Gordon v. Boppe, 55 N. Y. 665. And here the parties provided for such division. It has been held that where property is purchased as a joint adventure, it is not material in whose name the title is taken, as any one holding the title is regarded as a trustee for his associates. Hubbell v. Buhler, 43 Hun (N. Y.) 82. Just as property paid for out of the receipt of the joint adventure becomes joint property of all the parties. Hayden v. Eagleson, 15 N. Y. St. Rep. 200. While a joint adventure is not identical with a partnership, it is regarded as if of a similar nature and governed by the same rules of law. Marston v. Gould, 69 N. Y. 220; Chester v. Dickerson, 54 N. Y. 1,. 13 Am. Rep. 550. The principal distinction is that in most jurisdictions one party may sue the other at law for breach of the contract or a share of the profits or losses or a contribution for advances made in excess of his share. But his right will not preclude a suit in equity for an accounting. Even if the contract be against public policy, if it is closed, the party receiving the profits must account to his associates. Wann v. Kelly (C. C.) 5 Fed. 584; McMullen v. Hoffman (C. C.) 75 Fed. 547. But there was no illegality in maintaining the cotton in Barcelona in a warehouse until peace was declared when again it might be lawful to deal with Austrian spinners. This was what should have been done to carry out the terms of the contract. It was the defendants who sold without the consent or approval of the plaintiffs. This was an abandonment of the adventure, and the parties sustaining a loss by reason of this breach should be entitled to receive their share at least of what the one committing the breach profited by the resale.
Because of this, I think the plaintiffs in error are entitled to a re-' versal of the result below, and I therefore dissent from the judgment about to be announced. .