Court Opinion

ID: 3837965
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:06:57.115334+00
Date Added: 2024-06-11T14:22:49.473024
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 518 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 519 
Suit by James W. McIver against Willmar A. Norman, also known as William S. Norman, for the dissolution of a joint adventure, an accounting and other relief. *Page 520 
The Circuit Court, Multnomah County, James W. Crawford, J., held that the plaintiff was barred by laches, and that the case fell within the principle of speculative delay and entered a decree dismissing the suit, and the plaintiff appealed.
The Supreme Court, Lusk, C.J., adhering to the conclusions in the original opinion by Kelly, J., held that plaintiff did not abandon his right to or his interest in the joint adventure, that plaintiff was not barred by laches, that the principle of speculative delay did not apply, and that plaintiff was entitled to an accounting and reversed the decree and remanded the cause for further proceedings.
On September 5, 1941, the parties hereto, plaintiff and defendant, executed the following written agreement:
    "This is an agreement between William Norman and James W. McIver.
    Wherein they have entered into an agreement for the sole and exclusive purpose and restricted to title holding of a certain piece of property known as Lot 1 and the westerly fifteen (15) feet of Lot Two (2), in Block Two (2), situated in Arlington Heights, City of Portland, Oregon;
    Wherein said parties are to share equally in the profit or loss resulting from the sale of a residence to be constructed on said property by Equitable Service Inc., said profit shall be the net return after payment of $500.00 to Equitable Service Inc. for the construction of and supervision of construction of said residence, and after the payment of the actual cost of construction and any sale or loan costs incident to the construction and sale of the aforementioned residence.
    Mutually agreed to and signed this 5th day of September, 1941, Portland, Oregon." *Page 521
The Equitable Service Inc., mentioned in the foregoing agreement, was a corporation controlled by plaintiff.
At the time the foregoing agreement was executed, namely on September 5, 1941, defendant and his wife held a contract with Properties Incorporated, a corporation, owner of the real property mentioned in said agreement, whereby the parties, defendant and his wife and said Properties Incorporated agreed that defendant and his wife would purchase and Properties Incorporated would sell said real property; and on October 3, 1941, said Properties Incorporated executed a deed thereto wherein said corporation was grantor and defendant and his wife were grantees.
On or about October 3, 1941, defendant and his wife executed a mortgage on the premises in suit for the sum of $5,000.00 to the First Federal Savings  Loan Association of Portland, Oregon, the proceeds from which were to be expended in payment of the costs of construction of the building in suit. The note secured by said mortgage was dated October 3, 1941, and was signed by plaintiff and by defendant and his wife as the joint and several makers thereof.
During the progress of constructing the building on the premises in suit, it became necessary to change the plans and specifications which was done.
Plaintiff contends that the First Federal Savings and Loan Association refused to honor requisitions properly made by Equitable Service Inc., which necessitated withholding further work of construction when the building was practically completed.
On the 9th day of September, 1942, the Equitable Service Inc. filed a purported notice of mechanics' lien against the property in suit. Later, in a suit institued *Page 522 
by defendant and his wife, a decree was entered by consent discharging and satisfying of record said mechanics' lien and claim.
On November 3, 1942, defendant and his wife moved into the house upon the premises in suit and ever since have been living and making their home therein.
Three grounds are relied upon by defendant in support of his contention that plaintiff is not entitled to an accounting, namely: (1) That plaintiff abandoned the enterprise; (2) that an accounting was had; and (3) that plaintiff has been guilty of laches.
The trial court also applied the equitable doctrine of speculative delay.
At the outset of our discussion of these contentions, we think it necessary to mention the status of the parties plaintiff and defendant in reference to each other. Plainly that status was that of coadventurers in a speculative joint adventure.
The most direct and definitive statement of this status and the principles of law and procedure applicable to it, is to be found in a decision of this court by the late Mr. Justice HENRY J. BEAN as follows:
    "The modern decisions indicate that the courts regard the right of joint adventurers, in matters between themselves, as governed by the principles constituting and controlling the law of partnership: 15 R.C.L. p. 500, sec. 1. We quote from page 501, Section 3, of that volume:
    `The relation between joint adventurers is fiduciary in its character, and the utmost good faith is required of the trustee to whom the deal or property may be intrusted, and such trustee will be held strictly to account to his coadventurers and he will not be permitted, by reason of the possession of the property or profits, whichever the case may be, to enjoy an unfair advantage, or have any greater *Page 523 
rights in the property, by reason of the fact that he is in possession of the property or profits as trustee, than his coadventurers are entitled to. The mere fact that he is intrusted with the rights of his co-adventurers imposes on him the duty of guarding their rights equally with his own, and he is required to account strictly to his coadventurers, and if he is recreant to his trust, any rights they may be denied are recoverable.'" Thimsen v. Reigard,  95 Or. 45, 54, 186 P. 559.
The purported abandonment, upon which defendant relies, depends upon the fact that, as stated, plaintiff did not entirely complete the construction of the house in suit; that he failed to make his contribution to some of the installments of interest due upon the mortgage from the proceeds of which funds were secured to carry on the joint adventure; that he stated to a third party, who was attempting to collect a small bill for plumbing, that he had no interest in the building, and he verified the foregoing mentioned mechanics' lien on the premises in suit which purported lien was in favor of Equitable Service Inc. of which corporation plaintiff was president and the principal stockholder. As stated, a consent decree was entered discharging and satisfying of record that mechanics' lien. Plaintiff testified that his purpose in filing it was to protect the enterprise against purported impending liens against the property.
Plaintiff testified, as shown above, that the mortgagee refused to honor requisitions for money to pay the Equitable Service Inc. for material and labor, hence plaintiff refrained from paying his part of the interest and did not require the Equitable Service Inc. to proceed further with construction.
We think the record does not support defendant's *Page 524 
claim that plaintiff abandoned the enterprise. We think the defendant's course in taking possession of the residence in suit, in refusing to meet with plaintiff for a consideration of the accounts in which they were mutually interested, and in failing to offer to account for a reasonable rental charge for occupancy of the premises were contributing causes of the disagreement between plaintiff and defendant.
Defendant's ground for saying that there was an accounting between the parties plaintiff and defendant is based upon a written statement furnished plaintiff by defendant. This document discloses defendant's version of the status of the account between them. There was no concurrence therein by plaintiff, and in no sense could it be deemed an accounting wherein a balance was struck and the respective interests of the parties determined.
As to the defense of laches, we have but to refer to the statement of Mr. Justice BAILEY as follows:
    "It has been held a number of times by this court that `mere delay itself does not constitute laches unless the delay works to the injury of another.'"  City of Pendleton v. Holman, 177 Or. 532, 547,  164 P.2d 434, 162 A.L.R. 249, citing American Surety Company of New York v. Multnomah County, 171 Or. 287,  324, 138 P.2d 597, 148 A.L.R. 926; Wills v. Nehalem Coal Company, 52 Or. 70, 90, 96 P. 528;  Wilson v. Wilson, 41 Or. 459, 464, 69 P. 923;  State of Oregon v. Warner Valley Stock Company,  56 Or. 283, 106 P. 780, 108 P. 861.
We adhere to the principle thus so often approved by this court. In other words, delay alone is not sufficient to justify the interposition of the defense of laches, but it must be prejudicial delay. 2 Pomeroy's *Page 525 
Equity Jurisprudence (5th Ed.) pp. 177-179, Section 419d.
Defendant cites Section 1-206, O.C.L.A., which is a provision of the Oregon Code prescribing two years as the time within which an action at law may be instituted for assault, battery, false imprisonment, for criminal conversation or for any injury to the person or rights of another not arising on contract and not therein especially enumerated and also upon a statute for a forfeiture or penalty to the state or county.
This being a suit in equity as distinguished from an action at law, and not being a proceeding based upon battery, false imprisonment, criminal conversation or for any injury to the person or rights of another not arising on contract, or for a forfeiture or penalty to the state or county, obviously, the citation is not germane to any issue presented by the instant case. (Italics supplied.)
Included in Livermore v. Beal, 18 Cal. App. 2d 535,64 P.2d 987, cited by defendant, are four suits to quiet title. The parties thereto were not joint adventures or partners. The holding therein gives effect to the judicial knowledge of the court with reference to the orders made by the Secretary of the Interior and Commissioner of the General Land Office of the United States, in determining whether plaintiff's complaint was demurrable and applying such judicial knowledge in support of defendant's demurrers. It is there stated that laches may be shown by a demurrer. In the instant case, no fact appears to have been supported by the judicial knowledge of the court not affirmatively shown in the record before it. The facts are that plaintiff and defendant entered into a written contract by the express terms of which they became joint adventurers. One of *Page 526 
those joint adventures, the plaintiff, seeks an accounting with the other, the defendant. Since that relationship of the parties was established no such change of circumstances has occurred as to render the defendants prejudiced or damaged and hence the defense of laches is not available to defendant. The value of the property has increased so that a substantial profit would be assured upon the sale thereof.
The case of Bower v. Stein, 177 Fed. 673, affirming 165 Fed. 232, is a suit to set aside a sale of real property upon execution issued upon a judgment and decree of foreclosure. The court gave effect to the constructive knowledge of the record of muniments of title and sustained a demurrer to plaintiff's complaint. The muniment of title to the property involved in the instant case, being the deed thereto of defendant, cannot have the effect of depriving plaintiff of the right to an accounting. Plaintiff is not seeking to set defendant's deed aside.
Moreover in none of the cases, cited by defendant to the point that plaintiff has been guilty of laches, is the relationship of the parties plaintiff and defendant shown to be that of joint adventurers.
We think that the defense of speculative delay suggested by the learned trial judge is not applicable to a joint enterprise having for its avowed purpose speculative profits to be realized some time in the unknown future by the sale of a house yet to be built and sold.
This court is committed to the view that regardless of when a partnership has been dissolved, it remains in force for the purposes of winding up its affairs. Carrey v. Haun, et al,111 Or. 586, 227 P. 315, citing Riggen Investment Co., 31 Or. 35,38, 47 P. 923; McKinnis v. Dodge, 103 Or. 9, 13, 203 P. 876; and *Page 527 Houser v. Irvine, 3 Watts  Serg. (Pa.) 345, 38 Am. Dec. 768.
Applying this principle to the instant case, which, as stated, is a suit for an accounting instituted by plaintiff against his coadventurer, we are constrained to hold that the relationship of joint adventurers remains in force regardless of differences between them for the purpose of winding up the affairs of such joint adventure.
For these reasons, the decree of the circuit court is reversed and the cause is remanded in order that an accounting may be had between the plaintiff and defendant, and for such further proceedings as may not be inconsistent herewith.