Court Opinion

ID: 6548292
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:21:33.359113+00
Date Added: 2024-06-11T15:56:02.026470
License: Public Domain

Hart, J., (after stating the facts). Did the original agreement between Shock and Olentine create a partnership for the purchase and sale of lands? In the case of Lacotts v. Pike, 91 Ark. 26, the court held: “1. In order to constitute a partnership, it is necessary that there shall be something more than a joint ownership of ■property. “2. While an agreement to share in profits is not a test of partnership, it is an essential element in one.” And in the case of Buford v. Lewis, 87 Ark. 412, the court said: “To determine whether a given agreement amounts to a •partnership between the parties themselves is always a question ■of intention.” About one month before the contract of the daté of January 31, 1905, between Jeff and Wallace Hughes and Olentine and Shock was entered info, Olentine had proposed to Shock that they purchase the lands designated in that contract. The testimony shows that the lands were valuable chiefly for the timber that was on them, and that they were to be purchased for the •profits to be derived from a sale of the timber and of the lands themselves. The lands, the purchase and sale of which was contemplated, comprised in the aggregate some 2,000 acres, and they were owned by various persons. Shock himself testifies that each was to pay one-half of the money, and each to share one-half of the final profits. Thus we see they entered into a contract to purchase jointly, for the purpose of speculation, numerous tracts of land, and each was to pay an equal amount of the purchase price and to share equally in the final profits arising from future sales; and in furtherance of this purpose they made the contract with Wallace and Jeff Hughes to purchase lands for them. It was evidently their intention to form a partnership for the purchase and sale of timber lands in Pike County, and we so hold. Each owed to the other the utmost good faith and openness of dealing with regard to the carrying out of their joint venture. Neither had a right to secure any secret advantage over the other out of the transaction, and such acts would be a fraud upon his associate, which equity will defeat. It is apparent that Shock did not act in good faith towards Olentine. The testimony of both Olentine and Hughes shows that at the very inception of their enterprise Shock deceived Olentine. Shock promised him that he would furnish him all the money he needed in excess of one thousand dollars, which Olentine at the time paid, yet in one week thereafter he entered into an agreement with Beebe to take the title in the lands and divide with him the profits arising from a resale of the lands, and this agreement was kept secret from Olentine. Eater on in May, in furtherance of his fraudulent design, he told Olentine that Beebe had agreed to advance the money for the purchase of lands and charge 8 per cent, interest thereon; but that Beebe, instead of talcing a mortgage on the lands to secure himself, desired to take the title to them in his own name as security. Olentine, knowing that he would receive his money from Ohio in time to pay out his interest, readily agreed to this, and joined with Shock in directing Hughes to have the deeds to the lands made to Beebe. Shock had told Olentine that he represented Beebe in making him the loan; and, when Olentine received his own money from Ohio, he went to Shock to pay the money advanced by Beebe and the accrued interest, Shock for the first ■time told him that he had no interest. It is perfectly apparent that Shock from the beginning formed the design to defraud Olentine. Shock told him that he represented Beebe, and that the latter was advancing Olentine the money to pay for his interest in the lands, and was merely taking the title in himself as security. Equity will not permit Shock to hold the fruits of his fraud.' The case as between Shock and Olentine then stands as if Shock had advanced the money and taken the title in his own name for the benefit of both; and Olentine is entitled to one-half of the net profits. The amendment to his complaint asks for an equal share of the profits, and, thejrelation between Olen-tine and Shock being that of partners, the statute of frauds does not enter into the case. McClintock v. Thweatt, 71 Ark. 323. See, also, Chester v. Dickerson 54 N. Y. 1; Richards v. Grinnell, 63 Iowa 44, 50 Am. Rep. 727; Hulett v. Fairbanks, 40 Ohio St. 233; Newett v. Cochran, 41 Minn. 374; Davenport v. Buchanan, (S. D.) 61 N. W. 47; Heard v. Wilder (Iowa), 61 N. W. 1075. Beebe admits that Shock acted as his agent in the purchase and sale of the lands, but states that he told him that Olentine had abandoned the contract, and he says that, acting upon this representation, he purchased the lands for his own use and benefit; but he filed a joint answer with Shock in which they admitted that the net profits were to be divided equally between them. Having admitted that he is only entitled to one-half of the profits, he cannot complain that the other half was awarded to Olentine. It will be noted that the decree of the chancellor divided the net profits between Beebe and Olentine. We find the issues against the appellee on the cross-appeal, and think that the decree of the chancellor dividing the net profits between Beebe and Olentine was right.