Court Opinion

ID: 9790498
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:54:01.57345+00
Date Added: 2024-06-11T07:37:29.927683
License: Public Domain

WALTERS, Justice (dissenting); SOSA, Senior Justice (concurring in dissent). I dissent from the majority’s opinion because the record does not support the trial court’s submission of the partnership issue to the jury. See, NMSA 1978, Civ.P.R. 50 (Repl.Pamp.1980); Owen v. Burn Construction Co., 90 N.M. 297, 563 P.2d 91 (1977); State Farm Fire and Casualty Co. v. Price, 101 N.M. 438, 684 P.2d 524 (Ct.App.), cert. denied, 101 N.M. 362, 683 P.2d 44 (1984). I am persuaded by Stuckman’s basic contention that had proper instructions been given, no reasonable jury could have concluded under the evidence presented in this case that Nichols was Mills’s subcontractor. The trial court erred in twice refusing Stuckman’s request for a ruling that Mills and Nichols were partners or joint venturers as a matter of law. This, in conjunction with the incomplete and erroneous jury instructions, require that this case be reversed and remanded for trial on Stuckman’s counterclaim. Cf. Kinney v. Luther, 97 N.M. 475, 641 P.2d 506 (1982). I. NMSA 1978, § 54-1-6, defines a partnership as, “an association of two or more persons to carry on as co-owners a business for profit.” In the absence of an express agreement, a pattern of conduct, including sharing of profits and expenses of the business, execution of contracts on behalf of the business, and control of the partnership bank account, will suffice to show creation of a partnership relationship. Dotson v. Grice, 98 N.M. 207, 647 P.2d 409 (1982). A joint venture has been held to include the following elements: (1) a community of interest to perform a common purpose; (2) a joint proprietary interest in the subject matter; (3) a mutual right to control; (4) a right to share in the profits; and (5) a duty to share in the losses. Cooper v. Curry, 92 N.M. 417, 421, 589 P.2d 201, 205 (Ct. App.), cert. quashed, 92 N.M. 353, 588 P.2d 554 (1978). Intent to create a partnership or joint venture may be implied from the parties’ conduct; therefore, it is immaterial that the parties do not designate their relationship as a partnership or joint venture, or even realize that they are partners or joint venturers. Anderson Hay and Grain Co. v. Dunn, 81 N.M. 339, 467 P.2d 5 (1970). The facts in this case demonstrate that the Mills-Nichols business arrangement satisfied the legal definition of both a partnership and a joint venture. Early in 1981, Mills was an employee and consultant of Chava & Co. Nichols, dealing through Mills, had supplied financial assistance to Chava & Co. on other projects. As shown by Nichols’s annual audit exhibits, these contracts with Chava were treated by Nichols’s accountant as “joint ventures, with Nichols as the financing arm.” In the spring of 1981, Mills sought to acquire Chava’s subcontract with Stuckman on the Lovington project. At that time, Mills requested that Nichols provide to Mills the same type of financial assistance which he had supplied to Chava in the past, and Nichols agreed to do so. Nichols and Mills established a bank account in the name of “Molino & Co.” Nichols testified that the account was to serve as a depository for Stuckman's monthly estimate payments to Mills, and to give Nichols sufficient control to assure Nichols that he would be reimbursed for his expenses on the Lovington project. The evidence disclosed that Nichols endorsed checks for Mills, and signed most of the checks that were drawn on the Molino account. At trial, Nichols testified that he and Mills expected only a l-to-2 percent profit on the subcontract, but that they were planning to make their profit by crushing and selling the excavated material. The record reflects that funds from the Molino account were used to pay expenses for both the Chava subcontract and the crushing operation, and that both the crushing expenses and subcontract expenses were charged to a single account on Nichols Corporation’s books. There was other reinforcing evidence of partnership or joint venture in that Nichols gave Mills a Nichols Corporation credit card to use for travel, food, lodging and other business-related expenses. Nichols authorized Mills to incur debts in the name of the Nichols Corporation for equipment repairs. At Mills’s request, Nichols executed an equipment lease in the name of “Molino & Co.,” and paid freight charges for transporting equipment to the job site. Mills, on the other hand, supplied fuel for both the excavation and crushing operation, supplied equipment for excavation, and paid the rent on the crusher and other excavating machines. While Mills never billed Nichols for any of those items, most of those expenses were paid with checks signed by Nichols and drawn on the Molino account. Nichols testified that he retained exclusive control of excavation, while Mills retained exclusive control of sludge pumping, demolition and the crushing operation. Delegation of control is permissible between joint venturers. Fullerton v. Kaune, 72 N.M. 201, 382 P.2d 529 (1963). Nichols admitted that in many instances, he and Mills jointly decided how and what expenses were to be incurred on both the subcontract and the crushing operation projects. They continuously made a joint decision whether to use Molino funds to pay operational expenses. The evidence indisputably establishes that as far as Mills and Nichols were concerned, the Chava subcontract, the crushing operation, and the Molino account were inseparable components of a single venture or enterprise. Just as clearly, the elements of a joint venture, as articulated in Cooper, were fully shown. Accordingly, the trial court erred in submitting the partnership issue to the jury. Owen v. Burn Construction Co. II. Even if evidence of partnership or joint venture were not patently clear, we should remand on the basis of error in the jury instructions and the special interrogatory relating to a partnership or joint venture. Kinney v. Luther. Instruction 12 told the jury, in essence, that an essential element in the creation of a partnership is the specific intent to create the partnership. That statement is contrary to Anderson Hay and Grain Co., which unequivocally decided that “intent may be implied from ... acts.” Id. 81 N.M. at 341, 467 P.2d at 7. The trial court also erred in refusing defendant’s requested instruction that a partnership or joint venture may be created or implied by the conduct of the parties. That requested instruction is supported by Dotson v. Grice and Anderson Hay and Grain Co. Refusal to give the instruction was particularly prejudicial to the defendant in light of the language in instruction 12. Additionally, because Instruction 12 advised that partners have a joint right of management and control, it was error to refuse another of defendant’s requested instructions that the jury be told that joint venturers may delegate responsibility and control between themselves. See Fullerton v. Kaune. The most glaring error is found in special interrogatory No. 1. There the jury was instructed that if Nichols’s relationship to Mills was anything other than that of a lender, and Nichols had not been paid in full, Nichols could recover on the bond. Neither this interrogatory nor the instructions which preceded it told the jury that if Mills and Nichols were partners or joint venturers, then payment to Mills was payment to Nichols. See NMSA 1978, § 54-1-8(A). The record contains overwhelming evidence that Mills and Nichols were partners or joint venturers on the Lovington project. Stuckman’s estimate payments to Mills (i.e., payments to the partnership or joint venture and deposited in the Molino account), exceeded Nichols’s expenses; consequently, Nichols had no cause of action under Little Miller Act. See NMSA 1978, §§ 13-4-18 to -19 (Repl.Pamp.1985). For the above stated reasons, this case should be reversed and remanded for a trial on Stuckman’s counterclaim. The majority concluding otherwise, I respectfully dissent. SOSA, Senior J., concurs.