Court Opinion

ID: 9527774
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:34:07.708985+00
Date Added: 2024-06-11T13:26:11.596073
License: Public Domain

ZIMMERMAN, Justice
(concurring):
I write separately to state my reasons for joining in the Court’s finding that the fraudulent assignment of real estate contracts to Harold Bennett was part of the joint venture between Bitner Company and Westcor, thus making Bitner Company liable for losses flowing from those assignments. I think the majority’s conclusory holding on this point glosses over significant factual and legal issues and fails to provide satisfactory guidelines for future litigants.
Bitner Company argues that the development of the Park City subdivision and the assignment of sales contracts are separate and distinct activities. It reasons, therefore, that even if it was involved in a joint venture with Westcor to develop the property, that venture did not include transactions intended to finance the installation of improvements. Bitner Company further claims that the conceded Monson-Badger partnership was the entity responsible for and benefitted by the fraudulent assignments. Moreover, Bitner Company points to its lack of participation in or knowledge of Monson and Badger’s dealings with Bennett as additional support for its claim that it should not be liable for the damages resulting from those assignments.
I think that whether the Bitner Company-Westcor joint venture was broad enough in purpose to permit the imposition of vicarious liability on Bitner Company for the Monson-Badger dealings is a close question and one on which I might differ with the trial judge. It is, however, a question of fact, Strand v. Cranney, 607 P.2d 295, 296 (Utah 1980), and one that the district court resolved against Bitner Company. Rule 52(a) of the Utah Rules of Civil Procedure, which was amended in 1987, provides that on appeal, “[fjindings of fact ... shall not be set aside unless clearly erroneous.” Because I cannot say that the trial court’s finding in this regard was clearly erroneous, I concur in upholding that finding.
The district court found that the uniform real estate contract and its attached exhib*1036its and supplemental agreement demonstrate that Bitner Company and Westcor had a shared interest in developing the Park City property. Specifically, the court found that the sale price of the land was based on an anticipated share of profits from the sale of lots in the completed development; that the principals of Bitner Company and Westcor were permitted to sell lots and were entitled to a commission for any lots sold; that Westcor was responsible for arranging the financing for construction of the improvements; and that if it were able to do so for less than the estimated amount, then Bitner Company was entitled to receive one-half of the savings. A supplemental agreement which is part of the record on appeal indicates that Westcor was permitted to assign to Bitner Company contracts for the sale of lots to be credited as payments on the “sale price” of the land.
With regard to financing, the district court found that Harold Bennett previously had lent Alonzo Badger approximately $81,000 and that Monson and Badger were partners who had agreed to provide assistance to each other in the funding of West-cor. From the record, it appears that Badger and Monson agreed to split Mon-son’s share of the profits from the Park City development. Apparently, Badger, who owned a mortgage company, arranged for a false certification of the escrow required by Summit County. He and Monson then planned to utilize the money obtained from lot sales to cover the cost of improvements. In this way, no out-of-pocket expenditures would be required of either partner. To aid in the initial financing of the Monson-Badger partnership, the district court found that Badger induced Bennett to lend the partnership an additional $50,000 by offering to secure the entire $131,000 loan plus interest with contracts for sale of the Park City lots. The district court found that the $50,000 received by Monson and Badger was used in the development of the subdivision.
Based on the foregoing, the district court found that the Bitner Company-Westcor joint venture did comprehend financing the installation of improvements and the related fraudulent assignment of contracts to Bennett. The facts can be viewed as supporting this conclusion. Certainly the parties had a mutual interest in the sale of Park City lots. Either they would split the proceeds or Westcor would assign contracts of sale to Bitner Company. The agreement permitting Westcor to assign contracts to Bitner Company shows that by so doing, Westcor was acting with express authority and in the ordinary course of the joint venture’s business. With respect to the Bennett assignment, of course, West-cor assigned contracts to a third party rather than to Bitner Company. Still, assigning contracts for sale is a common method of real estate financing.
Considering Westcor’s express authority to sell Park City lots and the district court’s finding that Westcor had financial responsibility for installing improvements, it was not clear error to find that the assignment of contracts to third parties for the purpose of financing the subdivision improvements qualified as conduct in the ordinary course of the venture's business.1 Although Monson and Badger clearly had their own agenda as to how they could profit from the Bitner Company-Westcor venture without expending any out-of-pocket sums, the district court could have concluded that the relationship between Mon-son and Badger did not limit or interfere with the joint venture between Bitner Company and Westcor and that their relationship was in the nature of a subpartnership.
A subpartnership is a so-called partnership formed between a member of a partnership and a third person for a division of the profits coming to him from the partnership enterprise, by an agreement *1037of such a character as to disclose the essentials necessary to a partnership between the partner and the third person.... The subpartners are partners inter se, but a subpartner does not become a member of the partnership since there is no agreement between him and the other partners_ Consequently, a subpartner is not liable for the debts of the partnership. However, the subpart-ner may be held liable for debts which may be regarded as debts of the subpart-nership.
59 Am. Jur. 2d Partnership § 16, at 941-42 (1971). In light of the district court’s finding that the loan from Bennett was used to pay for improvements in the Park City subdivision, one of Westcor’s express obligations under its joint venture agreement with Bitner Company, the burden to repay the debt justifiably may be placed on the joint venturers.
Finally, Bitner Company’s lack of participation in or knowledge of the Bennett assignments does not negate its liability as a joint venturer. As the majority correctly points out, joint venturers stand in the same relationship to each other as partners, and the principles governing partners’ liability also apply to joint venturers. Partnership law clearly requires that the partnership is liable for the wrongful acts of a partner acting in the ordinary course of the partnership business, even though the co-partners had no knowledge of the conduct and did not participate in it. Utah Code Ann. § 48-1-10 (1981); see, e.g., Saikin v. New York Life Insurance Co., 45 Ill. App. 3d 1019, 4 Ill.Dec. 477, 360 N.E.2d 413 (Ill. App. Ct. 1977).
For these reasons, I join the majority in affirming the trial court’s finding imposing joint and several liability upon Bitner Company for the damages Bennett suffered as a result of Monson and Badger’s fraudulent assignment to him of sales contracts.

. I expressly disagree with the majority's rationale for finding that Monson acted in the ordinary course of business by assigning contracts to Bennett. Bitner Company’s subsequent knowledge of Monson’s fraudulent assignments of sales contracts to third parties and its agreement to release Westcor for liability concerning the subdivision if the contracts were recovered do not have any relevance to the question whether the conduct should be considered to fall within the ordinary course of the venture’s business.