Court Opinion

ID: 5152893
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:04:41.625915+00
Date Added: 2024-06-11T08:25:09.247254
License: Public Domain

Chief Justice MULLARKEY,
dissenting.
As a matter of law, adverse possession could not have taken hold had the three groups of friends who were in possession of the 120 acres at issue from 1974 to 1988 been engaged in a joint venture. As the majority correctly states, this court established the legal standard for the formation of a joint venture in Realty Dev. Co. v. Feit, 154 Colo. 44, 45, 387 P.2d 898, 899 (1963):
(1) There must be joint interest in the property by the parties sought to be held as partners; (2) there must be agreements, express or implied, to share in the profits and losses of the venture; and (8) there must be actions and conduct showing co-operation in the project. None of these elements alone is sufficient.
(emphasis in original).
The majority finds that the Feit test was not met in this case.1 In my opinion, the trial record shows that the three parties, Charles and June Ashby, Al Stuck, and Bob Perkins (who later represented the "Perkins Group") owned the 120 acre parcel at issue as a joint interest, sharing in profits and losses, and acting in a cooperative manner. For this reason, I respectfully dissent.
I begin by recognizing that the formation of a joint venture does not require a written agreement; it can be established by the conduct of the parties. Richardson v. Keely, 58 Colo. 47, 55-57, 142 P. 167, 170 (1914); Hirschfeld Press, Inc. v. Weston Group, Inc., 824 P.2d 44, 46 (Colo.App.1991), aff'd, Weston Group, Inc. v. Hirschfeld Press, Inc., 845 P.2d 1162 (Colo.19983); Stratman v. Dietrich, 765 P.2d 608 (Colo.App.1988). A joint venture is governed by the substantive law of partnerships. Hooper v. Yoder, 737 P.2d 852, 857 n. 4 (Colo.1987); In re S & D Foods, Inc., 144 B.R. 121, 158 (Bankr.D.Colo.1992).
Although Perking's intent is relevant, it is not dispositive. A partnership or joint venture may be formed without the parties expressly intending it. Common Sense Alliance v. Davidson, 995 P.2d 748, 762 (Colo.2000) (Scott, J., dissenting) ("A partnership is formed upon 'the association of two or more persons to carry on as co-owners of a business for profit' regardless of whether the partners formalize their agreement with a written document.") (quoting § 7-64-202(1), C.R.S.)2; Richardson, 58 Colo. at 55-57, 142 P. 167.
The majority's analysis turns on two factors. First, it concludes that Perkins did not intend to participate in a joint venture involving the entire 120 acre parcel. Rather, Perking only intended to use his 40 acres for hunting and recreation. Second, the majority finds there was an oral contract between Perkins and the Ashbys, that Perkins was purchasing a distinct 40 acre parcel. Maj. op. at 1070-71. This analysis is not persuasive for two reasons. First, Perkins's testimony about his subjective intent is not dis-positive of the joint venture issue. Second, the trial court found that there was no contract.
I agree with the majority that there was conflicting evidence of the parties' intent. Maj. op. at 1070. I disagree with the conclusion the majority draws from this evi*1072dence. The facts and documents showing the parties' conduct were sufficient evidence of intent to form a joint venture. The best evidence in favor of finding intent was the conduct of the parties contemporaneous with the two friends assuming the responsibility to help the Ashbys perform the contract to purchase 120 out of 800 acres from the superior landowners. On the other hand, the best evidence negating a finding of intent was the self-serving trial testimony of Perkins regarding mutual understandings that may have been discussed, but not set to paper, approximately thirty years ago. In this case, the intent of the parties was shown by the course of their conduct, not the self-serving testimony, based on faded memories, of Mr. Perkins.
The Ashbys were purchasing the 120 acre parcel under a land contract in 1973 when they had financial difficulties making the payments. Two friends, Stuck and Perkins, "stepped in" to help. The documents that exist and the parties' course of conduct show that they treated the 120 acres as a single parcel until the land contract was paid and title passed to the Ashbys. The parcel then was divided into three 40 acre parcels, and Ashby conveyed two of the parcels to Perkins and Stuck. The documentation supporting the existence of a joint venture was a certificate of limited partnership, correspondence among the three parties, and grazing leases for the entire 120 acre parcels3
The Certificate of Limited Partnership of "Uncompahgre LTD." dated June 14, 1974, states that the "Character of the Business" was "[tlo acquire certain unimproved property" and describes the 120 acres to be acquired. The agreement contains a section detailing how "Profits or Other Compensation" would be shared by the three parties. The certificate expressly treats the 120 acres as a joint interest, evidence that the first element of the Feit test was met here.
The second Feit element is satisfied by the grazing income derived from the 120 acres shared among the three parties since the inception of their joint interest in the property. There is evidence of this shared revenue in a letter dated April 10, 1975, written by June Ashby to Perkins and Stuck. Mrs. Ashby's letter was addressed "Dear Partners." It detailed the grazing revenue received from the Kinneys, one of the superior landowners, in 1974.
The "Dear Partners" letter shows that taxes on the 120 acre parcel were assessed collectively, that the annual payment for the entire parcel was charged to the parties in one lump sum and then split in thirds, and that the Ashbys checked with the IRS on the "necessity of submitting partnership forms." The letter also shows that the grazing income was not distributed among the three parties, but used in a lump sum to offset the property taxes on the 120 acres. The remainder was equally applied to each partner's portion of the annual payment to the superior landowners. Attached to the letter is a balance sheet detailing the revenues, expenses, taxes, and payments due on the 120 acres. The balances given reflect the entire 120 acres, not 40 acre parcels.
Furthermore, in 1990, another grazing lease was forged between SIR, the petitioner here, and Perkins, Stuck, and Emilia Vargas, Charles Ashby's second wife and successor in interest. The lease gave SIR the right to use the entire 120 acres for grazing without distinguishing among the three 40 acre parcels. Perkins, Stuck, and Vargas signed the document together on the "Lessor" line.
The leasing documents indicate that the three parties considered the 120 acres of land a single, jointly-owned pareel from which they split profits and shared costs. These practices began when the land was purchased in 1974 and continued through the years. The more recent grazing contract is again consistent with the intent that the three parties would share in the revenue gained from the full 120 acre parcel. These documents and the "Dear Partners" letter also evidence the cooperative nature of the *1073conduct, including the pooling of funds and making of payments as a single entity. This conduct satisfies the third element of the Feit test4
My second disagreement with the majority is on the existence of an oral contract. An oral contract is only evidenced here by the testimony of an interested party, Perkins, and tangential communications among the Ashbys, Perkins, and Stuck5 Even Perking's own testimony was ambivalent concerning his agreement with the Ashbys. He remarked that his purchase of the property "was always somewhat of an enigma." Maj. op. at 1065. Perking's lack of understanding about the agreement leads to the conclusion that there could not have been a meeting of the minds to enter into a contract, written or oral, between Perkins and the Ashbys. The trial court found specifically that there was no such contract.
For the reasons discussed above, I believe the evidence in the trial record shows that a joint venture was established by the Ashbys, Perkins, and Stuck. Furthermore, in my opinion, the majority errs in asserting the existence of an oral contract between the parties. The trial court explicitly found that Perkins and the Ashbys had not entered into a contract, written or oral, and there is not sufficient evidence to overturn that finding. Because adverse possession could not have occurred under these circumstances, I respectfully dissent.

. Initially, the majority states that there was "no evidence" supporting any of the three elements of the Feit test. Maj. op. at 1070. It later concedes that there was evidence of profit-sharing going to the second element. Maj. op. at 1070.

. § 7-64-202. Formation of partnership:
(1) Except as otherwise provided in subsection (2) of this section, the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership. A limited liability partnership is for all purposes a partnership. (Emphasis added.)

. The trial court found that the three parties did not establish a partnership as to the 120 acres. The trial court, however, focused on "indicia of a formalized partnership." My opinion is that the three friends entered into a joint venture resulting from their course of conduct, not due to an express contract. The certificate of limited partnership is evidence of the parties' cooperation in the management of the entire 120 acre parcel even if they did not meet all the elements of a formal partnership.

. - Moreover, while each party had primary use of one 40 acre parcel out of the 120 acres and no doubt expected to acquire legal title when the purchase of the 120 acres was completed, they showed a healthy indifference to boundaries, never bothering to survey the 120 acres or determine accurate subdivisions. (Such indifference to individual property lines ultimately caused this dispute.) This conduct is consistent with joint ownership in the property. The majority cites [clorrespondence from the Ashbys [that] described individual tracts with specificity." Maj. op. at 1070-71. In fact, this "correspondence" was an attachment to the Uncompahgre Certificate of Limited Partnership, which also states that the "Character of the Business" was to acquire the entire 120 acres (see discussion of the certificate above).

. - Part of the correspondence the majority cites in support of the formation of an oral contract is the attachment to the Certificate of Limited Partnership, discussed in this dissent at note 4. Maj. op. at 1070-71.