Court Opinion

ID: 9515158
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:54:17.930708+00
Date Added: 2024-06-11T09:06:25.669205
License: Public Domain

SABERS, Justice
(dissenting).
[¶ 28.] The trial court erred in concluding that there was no joint venture agreement. There was a joint venture agreement between Johnson and Bauman. The facts support all six elements necessary to joint venture as follows:
1) Intent to enter into a joint venture.
2) An agreement, express or implied, among members.
3) Common purpose.
4) A joint pecuniary interest in that purpose.
5) An equal right to a voice in the direction and control of the group.
6) A right to share in the profits and a duty to share in any losses.

1. Intent to enter into a joint venture and; 2. An agreement, express or implied, among members.

[¶ 29.] According to Johnson’s deposition testimony, he and Bauman entered into an agreement whereby Johnson would provide the land and personally guarantee the development loan and Bauman would provide his expertise and services to develop the land. Johnson was to receive 25% of the profit from sale of the developed lots and Bauman was to receive 75% of the profit to pay off his development loan. No agreement was made as to the proceeds from the sale of any houses constructed thereon. This was a typical joint venture where one person, Johnson, provided the capital, and another, Bauman, provided the labor and materials to develop the lots. This is fully supported by Johnson’s deposition, his representations to the bank and the engineer, and the behavior of the parties throughout the course of the joint venture.

S. Common purpose.

[¶ 30.] Both Johnson and Bauman had the common purpose to develop the land and sell the lots. The majority’s assertion that Johnson and Bauman had different motivations is irrelevant. The question is whether the parties had a common purpose, not what their motivation was for pursuing that purpose. Their reasons for doing so are immaterial to this discussion. The majority attempts to differentiate the motives of the parties by referring to the fact that Bauman eventually wished to build houses on the lot. While this is true, the joint venture agreement between Johnson and Bauman only dealt with the *299issues of development and sale of the lots. The liability at issue pertains to the costs of developing the land. The fact that Bau-man or some other contractor might eventually build houses on the lots is also irrelevant to determine whether there was a joint venture for the purpose of developing the land.

k- A joint pecuniary interest in that purpose.

[¶ 31.] Upon sale of each lot, Johnson received 25% of the profit and Bauman received 75% of the profit by having it applied directly to his development loan. Neither party to the joint venture agreement would have profited but for the agreement to develop the tract. The pecuniary interest of both parties was directly tied to development of the land. This is sufficient to show a joint pecuniary interest in their common purpose.

5. An equal right to a voice in the direction and control of the group.

[¶ 32.] Johnson had an equal right to control the direction of the development. First, Bauman could not develop the land without Johnson’s permission. Second, as the majority states, the documents signed by Johnson needed to be signed “so Bau-man could move forward with his project.” This was paperwork that “had to be completed by the property owner” in order for development to take place. Third, when Johnson declined Bauman’s proposal to purchase and include the DeVille tract, Bauman’s going forward with that purchase on his own does not eliminate the joint venture. When Bauman went beyond the bounds of the agreement, it may have changed who was liable for debts arising from the DeVille tract, but it did not change the existence of the joint venture agreement.
[¶ 33.] Likewise, the fact that Bauman may receive some of the benefits of developing the DeVille tract does not preclude a finding of joint venture as to Johnson’s land. First, the money used to purchase the DeVille tract was drawn from the development loan secured by Johnson. Second, at least three of the platted lots encompassed land on both the Johnson and DeVille tracts. Johnson would have been entitled to profits from the sale of those portions of his land that were combined with the DeVille land to make up those three lots, despite Bauman’s possible breach of the joint venture agreement. Third, Johnson states in his deposition that there had not been any discussion regarding what his share of the profits would have been from those lots. The majority errs when it states as settled fact that Johnson would not have received any profits from development of the DeVille tract in connection with the Johnson land. In fact, Johnson signed the plat and the letter that combined the two parcels.
[¶ 34.] Although he disputes it now, Johnson did take an active role in the development of the property. His own words indicate that he believed he had control in this joint venture. For example, on May 15, 1998, Johnson signed a letter to the Watertown City Engineer which began with the sentence, “I Earle D. Johnson, owner/ developer of the above described parcel agree to develop this property ...” (emphasis supplied). On October 23, 2000, Johnson writes an email to the engineer stating, “I do not condone [Bauman’s] conduct and will appreciate some developers you may recommend if it comes to that,” indicating that he is willing to replace Bauman and continue the development. On October 27, 2000, Johnson writes another email to the engineer stating, “[i]t is quite apparent to me that Bob Bauman can no longer have anything to do with the project ... I would appreciate *300your thoughts as to who might be capable of replacing Bob and how you recommend to proceed.” On November 2, 2000, he writes yet another email to the engineer stating, “I feel it would be in all of our best interest at this time to not inform Bob of my decision to remove [him] from the Westview Acres project ...” Finally, on the same day, Johnson sends another email to the engineer stating, “[a]s I mentioned over the telephone, Bob Bauman is no longer associated with Westview Acres ...” If Johnson had no right to control in this joint venture, why would he think he could unilaterally remove Bauman as the developer and replace him with another developer?
[¶ 35.] It is true that the contractors dealt primarily with Bauman. However, this arrangement was per Johnson and Bauman’s joint venture agreement that Bauman would do all of the “leg work” since Johnson resided in Colorado and in Mexico. Johnson retained interest and control in the development as shown by the facts that he 1) was involved in negotiations with the bank 2) took part in platting the property (a necessary element of “developing” land) and 3) requested that the engineer keep him up to date on the progress of development by sending him pictures. The fact that Johnson chose to delegate the authority to enter into the contracts and do the other leg work necessary for development does not detract from the fact that there was a joint venture agreement between Johnson and Bau-man.

6. A right to share in the profits and a duty to share in any losses.

[¶ 36.] The parties had a right to share in the profits of this joint venture. Neither of them would profit until the lots were sold. Once sold, the parties agreed that 75% of the profit would be paid toward the development loan in Bauman’s name and 25% of the profit would be paid to Johnson. There is no requirement that profits be shared equally, nor is there a prohibition against payment against a loan rather than directly to the individual holding the loan. This joint venture agreement is sufficient to show a right to share in the profits and a duty to share in the losses.
[¶ 37.] The development loan was taken in Bauman’s name and guaranteed by Johnson. Default on that loan left them both responsible for payment. Likewise, both had a duty to share in the losses.
[¶ 38.] It is unfortunate for Johnson that his business associate was incapable of performing his end of the joint venture agreement, but that does not justify a determination that no joint venture agreement existed or denying A.P. & Sons payment for its work. The trial court erred in so concluding and we should reverse.