Court Opinion

ID: 9601811
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:49:48.104447+00
Date Added: 2024-06-11T15:01:05.731246
License: Public Domain

ROSE, Justice,
dissenting in part and concurring in part, with whom McCLIN-TOCK, Justice, joins.
I will dissent on the ground that Norton did not satisfactorily carry his burden of proving the oral liquidation agreement — as it was his obligation to do.
Partnership law is generally applicable to joint ventures. P & M Cattle Co. v. Holler, Wyo., 559 P.2d 1019.
The definition of the terms with which we are concerned are properly stated as follows:
“ . . . ‘Dissolution’ designates that point in time when the partners cease to carry on the business together, ‘termination’ is the point in time when all the partnership affairs are wound up; and ‘winding up’ (often called ‘liquidation’) is the process of settling partnership affairs after dissolution.” 60 Am.Jur.2d, Partnership, § 171, at p. 91.
It is said in Crane & Bromberg, Law of Partnership, HB, § 86, p. 489:
“After dissolution, a partnership continues until liquidated. Unless there is a right to continue the business, the remaining partners have the right and duty to wind up and liquidate the firm. Fiduciary duties persist during this period.”
In this case, by oral agreement of mid-January, 1975, the partnership was dis*1122solved but it was not then liquidated. It is the winding up or liquidation of the partnership with which we are here concerned, and the “winding up” was to be effected according to the intent of the parties as gleaned from their expressions, actions and by operation of law.
The nature of the burden of proof required to effect an oral winding up of a joint adventure is scantily dealt with in the law. Certainly, the burden is with him who asserts the terms and conditions by which the adventure will be liquidated. It is said in Hurst v. Papierz, 129 Ill.App.2d 277, 262 N.E.2d 773, 778 (1970):
“Ordinarily, in an action between joint adventurers, the burden of proof as to a certain fact rests on the party who affirmatively alleges or claims that it exists, this being true in respect ⅛> such matters as the existence of a joint adventure, the termination of the venture,
The question, however, becomes more acute when we are assigned the task of inquiring into the factual circumstances which must be present before courts will be able to say that the burden of proof has been discharged. Is it sufficient that the party asserting the terms of the liquidation agreement be charged with satisfying the ordinary burden of proof which, even though the weight of the evidence is almost balanced, would permit a fact-finder to reach the conclusion that termination has been effected? Or is the burden heavier than that?
One court has commented upon the subject of abandoning a joint adventure:
“Abandonment [of a joint venture] is a voluntary thing, and there must be a clear, unequivocal and decisive act of the party to constitute abandonment in respect of a right secured. (Citations). . . ” McIver v. Norman, 187 Or. 516, 213 P.2d 144, 150 (1949). [Bracketed and parenthetical matter supplied] Another court has said:
“ . . .In our opinion, there is no ‘clear, unequivocal and decisive evidence’ contained in this record, such as is required to establish the affirmative defense of an abandonment of a joint adventure. . . . ” McCartney v. McKendrick, 116 Miss. 562, 85 So.2d 164, 169 (1956).
These cases state the correct standard of proof necessary to establish termination of a joint adventure. A fiduciary relationship exists among joint adventurers until the moment of liquidation. In the interests of promoting honest dealings among partners and creating the sort of trust which is necessary for economic progress in a complex society, the law imposes a number of duties and rules governing the conduct of fiduciaries. These not only proscribe activity ma-lum in se, but they also proscribe activity conducive to wrongful activity or to the appearance of wrongful activity. For example, a trustee is not only enjoined from stealing the money of the trust’s beneficiary, but he is also enjoined from placing the beneficiary’s money with his own in a common bank account, even if he intends to keep scrupulous account of how much belongs to each.
Similarly, it is necessary, in order to avoid fraud or the appearance of fraud among partners, that a burden of clear, unequivocal and decisive proof be imposed on a joint adventurer who claims an agreement entitling him to exclusive exploitation of a business opportunity which he has come by as a fruit of the joint venture.
Norton testified that in mid-January he met with Madrid to discuss friction that had developed between the two of them and that Madrid offered to “terminate any arrangement we have right now,” whereupon Norton agreed. Except for three particular leases which they each identified, it is clear that this is the point in time when dissolution of their association took place. This conversation reveals that each joint adventurer contemplated pursuing new leases for his own account in the Converse County, Wyoming, area, without including the other in such future endeavors. During this conversation the partners agreed to continue their joint venture with respect to three named leases, and the Sullivan lease was *1123not one of the three mentioned. With respect to the remaining business of the partnership, the liquidation agreement gets pretty fuzzy, the terms of which are far from being “clear, unequivocal and decisive.” McIver v. Norman, supra; and McCartney v. McKendrick, supra.
Norton says that the intention was to terminate the partnership with respect to everything that wasn’t imminent. In this regard, Norton’s part of the dialogue at the trial went like this:
“A He [Madrid] says, well, Ed, we are working on some things and let’s talk about those and see what we have got going, because, he says, I intend to lease in the same area in which we have been involved in before. And I said, fine, I will do the same, and he said, what have you got going in here —I can’t recall the exact words, but the intent both with him and with me, since we were talking about leasing immediately in the same area from that date forward, was, you know, what things do we have that we are working on that look emminent [sic] to us that we are involved in.” [Emphasis and bracketed matter supplied]
Madrid interprets the conversation as follows:
“A ‘Q: Okay, did you advise him that you intended to lease for your own account in the Powder River Basin after that?
“ ‘A: From that day forward as to anything new that I could develop on my own and anything new that he could develop on his own, that we would go our separate ways.’ ” (Redirect examination by Mr. Brown — Madrid reading from Madrid deposition).
For me, it is significant that Norton admits that Madrid sought the information (which was logically within Norton’s knowledge) with respect to what partnership business Norton had been developing in the area in question. The record shows that Norton responded that he had just two leases, which did not include the Sullivan lease. (Madrid had been working on the third lease specifically excluded from the termination agreement.) In the same breath, however, Norton concedes that Madrid was asking him for information concerning any lease possibilities with which the partnership was involved and which were then imminent. Norton also testified that he didn’t think there was much left to be said after they discussed the three named leases. Arguably, this means that Norton didn’t consider the Sullivan lease imminent and, therefore, did not disclose to Madrid any pertinent information with respect to it. Norton also answers “yes” to a question from Madrid’s counsel to the effect that they agreed to go their separate ways relative to anything except the three named leases. But, of course, this answer has to be considered in the context that Norton had told Madrid that the three discussed leases, one of which Madrid was working on, were the only pieces of business that were imminent.
But the question is — were the two named leases the only pieces of imminent business which, during the partnership, Norton had been pursuing in the area? Norton says, yes they were, but he has to prove this (in my judgment) by “clear, unequivocal and decisive” evidence because this fact is essential to his contention that the parties’ minds had met concerning the terms of the liquidation arrangements. McCartney v. McKendrick, supra; and McIver v. Norman, supra.
The majority opinion sets out a number of reasons for the conclusion that the Sullivan lease was not imminent in mid-January, even though it was signed January 29 and negotiations for the lease had begun the previous October. Against a backdrop which requires clear, unequivocal and decisive evidence that the oral agreement of mid-January was intended to exclude the Sullivan lease from those which could fairly be considered imminent, I do not find support for the majority’s statement that
“[t]here was nothing imminent about the Sullivan lease, when plaintiff and defendant decided to go each his own way. The last contacts had been made in October, 1974 and early November. . . ”
*1124On October 1,1974, when the joint adventure was in effect, Norton was examining records in the Converse County Courthouse concerning lands in the area agreed upon by Madrid and Norton. Norton located a half section of land in this area which was leased to Woods Petroleum Company, and he made notations on a lease card reflecting that the mineral-interest-owner was Cecelia Macken, a widow, who owned 100% of the minerals. The expiration date of the Woods Petroleum Company lease was January 29, 1975.
On October 14, 1974, Norton wrote to Joseph Sullivan in Douglas, Wyoming, stating that he was attempting to contact a Mrs. Cecelia Macken, a widow, with reference to a possible oil and gas lease on her lands in Converse County. Norton requested advice as to her current address. On October 15, 1974, Mr. Sullivan replied to Norton informing him that Mrs. Macken had passed away on July 6, 1974, and that Mr. Sullivan’s wife, Margaret E. Sullivan, was the Executrix of the will and one of the devisees under the will. The other dev-isees of the mineral interest were Father Colm Woods and Father Terence McGovern. On October 18, 1974, Norton wrote Mr. Sullivan stating that he was interested in leasing the acreage for oil and gas and was willing to pay $25 per net acre for a five-year lease. Norton wrote that he was in Douglas quite often and suggested that they discuss the matter further at the Sulli-vans’ convenience.
Norton noted on his lease card that on November 8, 1974, he transmitted a lease offering $25 per net acre. The Sullivans did not accept those terms. But if the terms were advantageous to them, they indicated they would be interested in leasing to Norton.
While Norton was negotiating with the Sullivans, there was competition from Woods Petroleum Company, who was the holder of the underlying lease. Woods Petroleum Company had made a higher offer than Norton’s offer.
Norton concedes that he may have visited the Sullivans every time he was in Douglas because he was interested in obtaining the lease. Norton pursued his negotiations from the first time in October when he got in touch with Joe Sullivan and eventually obtained the lease.
In her deposition, Mrs. Sullivan offers this explanation of the fact that there is no record of written correspondence between her husband and Norton during the period from October 18, 1974 through January 29, 1975:
“So, since there was no further correspondence, apparently, on this would probably mean during that time he [Norton] was staying in Douglas quite a lot. I know his wife was there with him he told me, part of the time.”
The following Norton testimony bears on this matter:
“Q. You had kept in touch with Mrs. Sullivan through the period from late October until the time that the lease was executed, had you not?
“A. I saw them several times during that period, yes, sir.
“Q. Is it a fact that you stopped and called on them every time you were in Douglas?
“A. I couldn’t swear to that, but it’s quite possible that I did, yes, sir.”
Perhaps it can be said that in mid-January the obtaining of the Sullivan lease whs not certain, but it cannot be disputed that, in mid-January, the negotiations which would win or loose the Sullivan lease were very imminent.
The record is clear that the parties, in their mid-January meeting, contemplated further meetings to wind up the affairs of the partnership business and a subsequent meeting was, in fact, held, but other partnership leasing in the Converse County area was not discussed.
In coming to this dissent, I am perfectly comfortable with the application of all the appropriate rules of appellate practice having to do with the judge being the trier-of-fact and the evidence and its inferences being viewed in favor of the successful party. These guidelines do not change the substantive rules which say that the court must base its decision upon such substantial evidence as will sustain the judgment. The evidence of liquidation must be, under the *1125rules of proof cited from various courts above, “clear, unequivocal and decisive.”
Norton conceded that he and Madrid were to continue as partners with respect to leases that were imminent. In light of all the facts referred to above, and taking into account the fact that this partnership continued until liquidation, during which time the fiduciary relationship between the partners continued — I fail to see how courts can conclude that the required standard of proof is met when he who must prove the conclusiveness of the liquidation agreement can represent the terms of the liquidation agreement to be no more “clear, unequivocal and decisive” than that the partners would liquidate as to everything except that which is imminent. For me, this does not meet the standard of proof.
I would have reversed the trial court insofar as it ordered and decreed that Madrid “take nothing by his Complaint herein filed, insofar as he claims an interest in the oil and gas leases described” in his complaint.
I agree with the majority opinion insofar as it directs amendment of the money judgment in favor of Madrid and against Norton.