Central Trust Co. v. Creel

| Ky. Ct. App. | May 2, 1919

Opinion op the Court by

William Bogers Clay, Commissioner

'Affirming.

In the year 1901, C. L. Moreheacl purchased, for the sum of $1,600.00 cash, the surface of 200 acres of land near Central City, and entered into a written contract with B. F. Creel and M. P. Creel upon the following terms: The Creels were to subdivide the property into small tracts and lay off the necessary streets and alleys; the lots were to be sold at private sale at prices to be agreed on by the Creels and Morehead; out of the first sales the expense of subdivision was to be paid to the Creels and the purchase price of the property was then to be paid to Morehead; after the payment of the taxes, etc., Morehead, B. F. Creel and M. P. Creel were each to receive one-third of the net proceeds; the Creels were to superintend the subdivision, sell all lots, attend to all the business connected therewith, free of charge; More-head was to execute the deeds to th purchasers; after Morehead was paid the $1,600.00 and interest, any loss was to be borne equally by the parties to the contract; the contract was to continue until all the land was sold, and after all expense was paid the net proceeds were to be equally divided.

Morehead died in the year 1904, leaving a last- will and testament, by which he devised his interest in the land in controversy to his nieces, Fanny Morgan and Clara M. Blocher, and appointed the Central Trust Company of Owensboro as executor. Prior to his death, a number of sales were made by the Creels and deeds therefor executed by Morehead to the purchasers. After his death, other sales were made and deeds executed by the executor.

Claiming that the transaction was a partnership, and that he and his brother had made several sales at advantageous prices which the Central Trust Company, as executor, had declined to carry into effect by executing the proper deeds, plaintiff, B. F. Creel, brought this suit in the Muhlenberg circuit court against the Central Trust Company as executor, Fannie Morgan and her husband, I. E. Morgan, Clara Blocher and her husband, John J. Blocher, and his brother, M. P. Creel, for a settlement of the partnership, a sale of the lots left unsold, and a division of the proceeds. The defendants, with the exception of M. P. Creel, were served with process in Daviess county, and questioned the jurisdiction of the Muhlenberg circuit court by both a special demurrer and a motion to quash the process, both of which were overruled. On final hearing the chancellor adjudged that plaintiff was entitled to the relief prayed for, and ordered the land sold and directed the proceeds to be equally divided among the parties to the coijtraet, or tbeir representatives, after paying to the Central Trust Company the sum of $745.28, paid for taxes. The trust company appeals.

The solution of the several questions presented depends on the character of the transaction and the relation of the parties. It appears that Morehead purchased and paid for the land. The Creels agreed to subdivide the land and bear the expense. The Creels were to sell the land at prices to be agreed on by them and Morehead, and Morehead was to make the deeds. After the Creels were paid the expense of subdividing the land, and Morehead was paid the purchase price, and after the payment of other incidental expenses, the proceeds of the sale were to be equally divided between the parties and the losses were to be divided in certain proportions. Since the parties did not engage in a general business of a particular kind, but in a single transaction, i. e., the purchase and sale of a particular tract of land, it would seem that under the modern rule the undertaking was not a technical partnership but a joint adventure, which, though not identical with a partnership, is of a similar nature and is covered by the same rules of law. Marston v. Gould, 69 N.Y. 220" court="NY" date_filed="1877-04-10" href="https://app.midpage.ai/document/marston-v--gould-3595690?utm_source=webapp" opinion_id="3595690">69 N. Y. 220; Green v. Higham, 161 Mo. 333" court="Mo." date_filed="1901-03-26" href="https://app.midpage.ai/document/green-v-higham-8013876?utm_source=webapp" opinion_id="8013876">161 Mo. 333, 61 S. W. 798, 23 Cyc. 453. It remains to determine whether the Creels have an interest in the profits only, or in the land itself. Had the activities of the Creels been confined to their services in selling the land, they would have had an interest in the profits only and not in the land. 15 R. C. L., sec. 6, p. 504; Smith v. Watson, 2 B. & C. 401, 9 R. C. L. 122; Scudder v. Budd, 52 N. J. Eq. 320, 26 Atl. 904; Moore v. Hunington, 7 Hun. (N. Y.) 425; Boss v. Willett, 76 Hun 211" court="N.Y. Sup. Ct." date_filed="1894-02-16" href="https://app.midpage.ai/document/ross-v-willett-5506197?utm_source=webapp" opinion_id="5506197">76 Hun. 211, 27 N. Y. 785. Such is not the case, however. In addition to agreeing to sell the land, they agreed to superintend its subdivision and bear the expense. Not only so, but the sales were to be made under the joint direction of Morehead and the Creels. Hnder these circumstances the Creels were more than mere agents and had an interest in the land as well as in the profits. 15 R. C. L., sec. 6, p. 504; Irvine v. Campbell, 121 Minn. 192" court="Minn." date_filed="1913-04-18" href="https://app.midpage.ai/document/irvine-v-campbell-7976581?utm_source=webapp" opinion_id="7976581">121 Minn. 192, 141 N. W. 109, Ann. Cases 1914c, 689; Bonner v. Cross County Rice Co., 113 Ark. 54, 167 S. W. 80.

Since the plaintiff and the defendants were joint owners of the land in controversy, plaintiff had the right to bring an action for an accounting and for a sale of the land in the county where the land was located. Sub-sec. 2, sec. 62 and sec. 490 Civil Code. That being true, the service of process outside of the county on the defendants, other than M. P. Creel, was sufficient to bring them before the court.

But it is insisted not only that the petition was defective but that the facts were insufficient to authorize the relief granted by the chancellor. With respect to the first proposition it is argued that the petition should have alleged that plaintiff had made sales at reasonable prices, and that the defendant had arbitrarily refused to make deeds to the purchasers. While the petition did not in terms allege that the action of the trust company was arbitrary,-or that the prices at which sales had been made were reasonable, it did allege that the sales were made at advantageous prices and that the trust company, for some reason unknown to plaintiff, refused to execute the sales. In our opinion these allegations were sufficient, for if the prices were advantageous and the trust company declined to execute the sales, its action was arbitrary. With respect to the second contention that the proof was insufficient to authorize the relief granted, we find the facts to be as follows: Though the trust company claims that it declined to execute only two deeds, which were to the Creels themselves, we think the weight of the evidence is to the effect that there 'were other deeds which it declined to execute. Indeed, that company seems to have deferred to Morehead’s devisees, and to have been guided by their wishes in the matter. It further appears that the prices of the lots sold were all reasonable, but the executor and tlie devisees considered ihem too low. Indeed, it is clear from the record, considered as a whole, that the executor and the Creels are unable to agree upon the prices at which the remaining lots should be sold. Considering the fact that the transaction has been going on for about seventeen years, that Mr. Morehead has been dead about twelve years, that the trust company has refused to execute sales a.t prices that were fair and reasonable, and that it seems impossible for it and the Creels to agree upon the prices at which the lots should be sold, we conclude that the equities of the case demand that the joint adventure be terminated by a sale of the remaining lots and a division of the proceeds.

In distributing tbe proceeds, tbe chancellor will see that tbe trust company is reimbursed for any taxes paid by it and not covered by tbe original judgment.

Judgment affirmed.