*1 251 Argued September December 1950 reversed remanded al. v. JANICEK FOUCHEK et (2d) 225 P. *3 Healy and H. Heltsel,
Frank J. Charles of Salem, argued appellants. the cause filed briefs for Spaulding George
Bruce A. Bhoten, Salem, argued respondent. Spaul- cause With Bruce ding on the brief were Bhoten &> Bhoten, Salem. Acting Chief Justice,
Before Brand, Bailey*, Justices. Warner, Hay, Latourette J. WARNER,
This is a suit to establish constructive trust in the *4 compel him to hands defendant account for arising profits therefrom.
* Bailey, J., 15, retired November Harry Stephen McBurnett, L. Fouchek and J. they appellants, allege in that were and re- copartners defendant Janicek, with Duane J. spondent, doing firm name the assumed under business (hereinafter Jobbing Company of Salem General They Company). that claim while the Salem called relationship breached faith with subsisted, Janicek profit by turning personal a account to them belonged opportunity properly which valuable business Company. transaction referred the Salem The alleged acceptance springs from secret Janicek’s partnership carried the an offer to the made Company’s promise of or more for the use $50,000.00 surplus supplies joint buying in war a adventure arrangement Company a would be wherein fifty party slightly per an interest with excess espousal (which cent. referred Janicek’s the offer offer) shall we hereinafter call Hickok resulted arrangement the formation of a adventure known Oregon, (herein- Ltd. Mercantile as the Cascade Co., Company) after called in which the Cascade defendant fifty-one per owns cent interest exclusion of pray plaintiffs. Plaintiffs that Janicek be decreed to hold of his interest in the Cascade two-thirds as a trustee for their use and he be benefit, required all to account to them for monies received capacity. by him in that Defendant’s answer denies any partnership plaintiffs. relation with ad- Janicek parties made what mits, however, that he calls a agreement whereby tentative future at a follow- time, August ing 1946, would associate himself partner arrangements but that the them as denies for the formation of that com- ever pleted. He denies that also he breached faith with plaintiffs. trial the circuit court After entered a decree *5 they
dismissing plaintiffs’ complaint, from whence appeal. August plain
Prom 28, 1946, 10, 1946, March to partners operated tiffs as the sole same business under name. a the same It was wholesale and retail enterprise principal Oregon, office Salem, Taft, and from 21, 1946, June with a retail branch in Oregon. August as well as Then, 10, after 1946, sporting engaged selling goods firm was surplus they, substantial lines of war items which as preferential able veterans, war were to obtain on status. operated by plaintiffs, pros business,
The as so pered that it to need for seemed dictate the additional operation assistance in the of its affairs. This prompted to solicit them the services of defendant, they a fellow war veteran whom had known before employed Washington. who then in Seattle, was response plaintiffs’ In invitation, to Janicek to came August, Oregon, surveyed Salem, 1946. Here he ’ plaintiffs accept business establishment declined but to join employee. Instead, their them invitation as an accepted partner. he offered come if a full This readily agreed parties August was on 10, eager help 1946. Indeed, the were so his they him association that included as the owner demanding any present of a one-third interest without capital part, agreeing might contribution on his that it by withholdings be made from share of the future profits. August 21, 1946, On Janicek assumed an active firm, place up including in This continued to and 1946, November when the between the parties terminated. three being above
We have referred to Janicek as advisedly, being firm. done so of the We have member clearly persuaded that the in this matter sustains record McBurnett and Janicek Fouchek, the conclusion that copartners August 10 November unnecessary, opin- however, We deem it to extend this by giving our that conclusion in view ion reasons for position taken and made concessions *6 following his brief. we find defendant in There statement:
“* * * long that so as the business relations parties continued, whether those relations partners, were as venturors otherwise, or parties each owed to the other duties similar to partnership those in a owed relation.” Thus reason of our conclusion on the issue of partnership, fiduciary we relationship find that a ex- parties isted between all the between last dates men- tioned and that their conduct as between themselves is amenable to and should measured be the rules partners. applicable to Partnership,
In 40 Am. Jur., 137, 17, we read: part- “It is also a fundamental characteristic nership existing that the relation between partners is one of trust and confidence deal- when ing partnership with each other in relation mat- partner ters. Each is, sense, one a trustee and que at the same time a cestui trust.” proceeding plaintiffs’ Before to discuss contentions respecting alleged Janicek’s unfaithfulness aas co- partner, pause we here to relate the circumstances giving rise to the Hiekok offer and its content. Guy
At all the times above to, referred W. Hiekok manager of the Salem Branch of First (Oregon). National Bank of It Portland was the bank deposits where the maintained occasionally money. Mr. on Hickok, where it borrowed thereafter, and for some time 3,1946, about October np including at creation least the time group Company, agent for a the Cascade was the attrac- who were anxious to enter the then investors surplus prin- tive market. The Hickok’s war names of cipals plaintiffs until after did not become known to Janicek, their the termination of Capi- incorporated they they when learned presi- Properties, Mr. Hickok was its Inc., tal refer these and one its directors. We shall dent principals. potential investors as Mr. Hickok’s Shortly plain- Hickok called the before October place and asked tiff, at of business McBurnett, stop inwas he, McBurnett, at his desk when him to did This McBurnett on October bank. asked time, the bank at that Hickok at conference obtaining some he would be interested McBurnett if scope opera- capital which to increase the funds with *7 Upon Company. receiving McBur- tion of reply, proceeded tell him that he to affirmative nett’s money available, sum “a considerable of there was they represented, by I that individuals controlled .that going some sort into of interested were Jobbing deal and the Salem General venture profits di- with the to he business, the would conduct equally.” approximately He indicated that the vided “probable represented a maximum of funds available “the amount funds was not neces- but $50,000” Company, accepted sarily If limited.” firm to meet with Hickok’s partners details. The principals out the statement work paragraph, proposal, in this as outlined Hickok’s what has been heretofore and re- will be hereinafter ferred to as the Hickok offer.
Immediately proposal, after Mr. Hickok’s hearing copartners, McBurnett carried the information to his recognized part- Fouchek and Janicek. It was as a real nership opportunity upon and was seized with no small display avidity. of interest and We learn from Janicek that when McBurnett returned from the bank, was up” “all steamed about what he had learned from Hickok and that “we all talked about it and decided good Any anybody that it would be a deal. time offered thought good $50,000, we be a would deal use.” agreed learnWe from McBurnett that “the three of us accept I and went it, back the bank and informed ’’ acceptance Mr. Hickok effect. to that This was trans- evening Hickok on mitted to of October 3 or morning of October
According partners proceeded Janicek, then subject appropriate to address themselves to the ways They the funds when available. to invest inclined purchase parkas for a of rain while to the at a sale surplus supplies be war soon to held the Govern- City; Janicek, ment at Salt Lake at the instance copartners, City called of his Salt Lake to learn more prospective Although they parka about sale. con- after abandon cluded, consideration, to investment in parkas, says, offer, rain the Hickok Janicek “was subject quite of conversation for some time.” receipt In interim between the of the offer and significant thirty termination —a days far as the instant suit is so concerned—McBurnett conferences with Hickok, had further who tells us that they space “two numbered or three” over a “a days two weeks.” week or ten Coincident with these *8 Hickok, and further conferences McBurnett between partners preparing apparently themselves to opera- plan profitable have some constructive principals present antici- when the tion to Hickok’s pated meeting negotiation held. This borne was prior by recital their activities Janicek’s own out opportunity was 1946. This to November valuable yet by partners active an abandoned was never subject up firm Janicek left the of concern time be read with on last statement must that date. Our understanding in continued interest that Janicek’s opportunity, dem- as a Hickok offer presence by co- in the his onstrated his conduct very partners, pretense which deceived soon became nego- cloaking plaintiffs, his then the self-interest of with Hickok. tiations copartners
Paralleling the after Oc- activities of above, another force was set 3, as outlined tober strip destined to motion which was prospective the Hickok offer of the benefits of alone. it a of enrichment to Janicek Just make source began put surreptitiously his self- when Janicek serving design operation, into we do not but know; peradventure began beyond that it are convinced we long Hickok offer was first unfolded after the not associates and later to his business was McBurnett point brought time November where to a some before definitely not alone, assured Janicek was unity copartners him as Salem Com- beneficiary pany, avail- be the sole funds principals. through We are induced Hickok’s able testimony and Hickok of Janicek to conclude negotiations produced that had favorable end for their emphasize November YCe that fact before Janicek reprehensible opinion the features our because
361 activity place plain- took before Janicek’s he bade tiffs farewell. certainly operated prior
So well and had Janicek closing his to the of that he quickly days to and within four able thereafter arrangements bring principals his with Hickok’s place days step- the ping on November ten after where, 12, Company, joint he
out was an active newly them adventurer with in the formed Cascade fifty-one percent and the owner of a interest company. in that
Those are the circumstances form which the basis plaintiffs’ against for claim the defendant. principal question and
The last which remains is: Did unanswered Jancek’s acts with reference obligations Hickok offer constitute a-breach his copartners him as so to make accountable to them as a trustee? constructive Jur., Trusts,
In Am. 167, 218, 54 is said: frequently “A trust, constructive as it or, called, a ex maleficio, trust ex delicto, a trust de son involuntary implied or an or tort, trust is a trust by operation contrary of law which arises to in- against by tention and in invitum, one who, fraud, by actual or constructive, duress or abuse of confi- by wrong, any or dence, commission of or form of unconscionable conduct, artifice, or concealment, questionable any way against means, or who in equity good either conscience, has obtained right legal property ought holds the in to conscience, which not, he equity good enjoy. hold It by equity satisfy jus- is raised the demands of tice.”
Also see The First National Bank North v. Bend Fidelity Guaranty United States Co., & 147, Or. P. 57. 157, 271 adopt and terse words our own the forceful
We obligations defining Cardozo, late Justice copartners them as between adventurers reported Salmon, in Meinhard v. find we selves, R. 5, E. 62 A. L. 1, 164 N. Y. 458, 249 N. says: where copartners, to one like owe adventurers, “Joint duty enterprise continues,
another, while Many per loyalty. conduct forms of finest acting workaday at in a world those missible length fidu those bound are forbidden to arm’s *10 something ciary A held to stricter ties. trustee is honesty place. Not morals of the market than the punctilio an the the honor most sensi alone, but to this behavior. As is then the standard of tive, there and unbending developed that is a tradition has rigidity Uncompromising has been inveterate. equity petitioned to when the attitude courts of loyalty by of undivided the the rule undermine .‘dis exceptions. particular integrating erosion’ of Y. 154 N. E. 439, 243 N. Fisher, Wendt v. Only for has level of conduct fiduciaries thus the by by higher kept than at a level that trodden been consciously It will not be lowered crowd. any judgment of this court.” fiduciary part character of a
The essence of by Cardozo and the remedies ner defined Justice flowing Am. Jur., as stated in 54 breach, from by succinctly captured § and were 218, are Trusts, pertinent, § L. A. As far as into O. C. 79-404, written reads: that section partner- “Every partner account must any any
ship it benefit, and hold as trustee for profits him without consent of the derived partners any from transaction connected with other liquidation part- formation, or of the conduct, the nership any property.” him of its or use section The foregoing part is of the Uniform So, Law. are all Partnership too, the Code sections hereinafter cited. O. L. 79-404, A.,
Section C. the standard furnishes by which we must determine whether or not Janicek’s is conduct answerable to its provisions.
Before one can successfully invoke the penalty which 79-404 on an imposes erring business associate, it must be demonstrated that: (1) associate copartner we have already suit; found this —this the transaction is one a kind (2) that the partnership can legally embrace and act upon; the transaction (3) is connected with the or formation, conduct liquidation or use partnership property accused by the this suit copartner our need inquiry —in whether go conduct no further * * * the transaction is “connected with the of the business”; under this head (4) than to determine the transaction is * [*] * of such nature be said to be may within firm; business of the scope (5) the transaction complained of value comprehends something whether or not it is of a partnership, value present of a it is prospective value, which believed presently *11 accrue may to the future partnership the if and when it elects to act and thereon; (6) transaction is that the accused one has acted partner upon or apparent sole without the full advantage knowledge or consent of his other partners.
We shall now Hickok proceed weigh the offer actions with Janicek’s reference to it in terms itemized, just necessarily the elements not though in the presented. order above first is: the Hickok inquiry
Our Was as offer, 26é Company, a connected “transaction
made to the Salem * * * * * * partnership”? conduct with necessarily transaction, follows, such a it To he upon among things, must which the that it be one other legally competent partnership, is to act. We such, as connection two fundamental elements recall in this (1) They McBurnett. are: Hiekok offer as made to Company part- as a addressed to the Salem it was by joint (2) implemented nership; was to be a it arrangement and between Salem Com- adventure necessarily pany principals. Mr. Hiekok’s This Company, have such,' would meant that the Salem joint quasi adventurer in a new business to become a accepted entity, be the Hiekok offer was to if upon. prompts query: partnership It Can a acted joint copartner a adventurer another become or with partnership If adventurer? then cannot, or obviously beyond power of offer was the Hiekok accept Company and, therefore, could the Salem as a transaction connected with the never be viewed partnership. On the other if it hand, conduct Company legally is is in- found that the Salem not becoming joint another, a with adventurer hibited a transaction did constitute then offer legally upon, pro- if embrace and act which it could scope posals the firm’s business. were within eventuality, is, That destroy becoming joint as such adventurer, does not a impair as a the Hiekok offer transaction contem- authority plated § L. A. C. We find 79-404, O. § C. L. 79-201, A., O. conclusion defines this per- partnership as “an association of or more two profit,” carry on as co-owners business for sons conjunction read in 79-102, that section when
265 “person,” L.C. wherein the word as A., O. used in Partnership including is defined Law, Uniform as partnerships, corporations, “individuals, and other ’’ Eowley, associations. See Modern Law of Partner- ship, § said: 197, 192, where it is “The Uniform Part- nership permits part- Act to enter into a nership partner,” citing as a the sections of the Uni- Partnership promulgated by form Law as the Confer- ence of Commissioners Uniform State Laws, which §§ Oregon are 79-201and identical 79-102of the Act. Draper construction is also Our confirmed William author of the final Lewis, draft of the Uniform Part- nership subject appearing Act, in his article on that in 29 Harv. L. Rev. 293. foregoing gleaned §§
The rule, from 79-201and 79- L. A., O. C. neither nor new novel. Those sec recognize adopt more than principle tions do no long Rowley, settled law. See 1 Modern Law of Partnership, § (4th Partnership ed.) 192; Parsons, Partnership (3d ed.) 28, § 25; Burdick, 171, § 7; 1 Partnership, Law Bates, 158, 150; 47 C. J., Part nership, 750, § 175; In Hamilton, re 1 Fed. 800, 804; Cheap Cramond, v. 4 Barn. & Ald. 663. as
If, we have shown, legally competent participate party as a to a arrangement, adventure inquire then we must further whether Hickok offer involved a transaction within scope partnership enterprise. of the We address meaning ourselves first to consideration of the employed word “transaction” in §79-404, O. C. L. A. The word “transaction,” has been has said, subject any judicial never been the exact definition given any very meaning by nor definite the courts. The interpreted justice courts have “transaction” as the by any rather demanded than abstract of each case *13 compre given a broad, and have word definition, meaning necessary to inten whenever meet the hensive purpose em of the statute in it was tion and § ployed. Transaction, 1. “Transaction” J., 63 C. ordinary popular been as sense has defined in the any signifying doing performing affair; “the or of ’’ being process or done, which is done in the that of completed again “a matter or affair either or in (Italics ours.) completion.” v. Chance Car course of P. 947. ter, 229, 236, 158 81 Or. foregoing definitions, the boundaries
Within offer is a “transaction” in the we think the Hickok § 79-404, C. L. A. word is used O. sense that the argues partner- brief that: “The Defendant tangible prop- ship and held have owned asset or must withdrawing partner erty have must taken that property pre- to the detriment of the valuable asset (Italics ceding ours.) accept partnership.” We cannot It is narrow construction. neither consonant with that § provisions nor can it be 79-404, reconciled with authorities. species preemptive a offer Hickok was The preemptive opportunity privilege a that better, was or, enterprise as the known an incident Com- supra. not pany. Salmon, v. It is a sufficient Meinhard say presented the offer the chance which answer to present had no value made, when to the Salem necessarily acceptance would to be have because by negotiations of uncertain if result; and, followed stage successful, the new adventure profitable. probabili- might “Such a calculus of be not equity.” beyond v. ties is science Meinhard enough given supra. a It is to constitute trans- Salmon, under a business O. C. 79-404, transaction action, prospect a it carries reasonable of future A., L. if though anticipated may advantage, values be even negotiations designed subsequent bring lost in it to though present This also even it has no true, fruition. partnership the hands of the market value in or cannot legal against parties a made the basis of claim out- be may firm. Present value an side the be incident of it, necessarily so. but not belongs
Information
in the sense
property
right,
in which it
has valuable
if
isit
might
employed
partner-
the character which
be
to the
ship advantage.
’s
Such information cannot be used
private
partner
gain.
one
for his
Latta v. Kilbourn,
*14
Sup.
37 L. ed.
14
524, 550,
1169,
150 U. S.
201;
Ct.
App.
L.
Stewart,
Cassels v.
6 R.
Cas.
73.
64,
opportunity
Company,
or
The chance
of the Salem
by
profit by
the Hickok
offer,
tendered
make a
becoming
party
arrangement
adventure
prospective
capital up
new
with
to $50,000.00,was an
Company
of the
in
asset
Salem
that sense until the
repudiated by
copart-
offer
withdrawn or until
acting
ners
in concert.
v. Reed,
Mitchell
61 N. Y. 123,
Rep.
Am.
v.
252;
Henderson,
19
Waller
135
Okla.
it was actions with to determine whether Janicek’s remains the consent Hiekok offer were without reference to the fiduciary obliga- derogation of his and to them. tions begin- period upon again focus attention
We receipt ning McBurnett Hiekok offer with ending the dissolution with on October already have reviewed on November We part- conjured response in the three it terms of the acceptance acting and noted their in unison ners capital prospective plans new use of the ultimate for the give consider- Now, them. we received funds when separate of the defend- and secret activities to the ation subject matter and the same ant with reference to record, from the can determine so far as we which, parallel in time to his ostensible less ran more copartners cooperation gestures in the his Company. phase approach are matter, this we When we difficulty, find with some we times confronted at testimony vague equivo- often is too that Janicek’s expect that it be reason to should we have where cal, testimony Taking positive. as a whole, clear escape the inference that defendant we cannot hearing shortly offer Mc- of the Hiekok after *15 becoming idea of sole bene- the conceived Burnett, referring ficiary; his conversations to with indeed, says: “I him he told I was on Fouchek October surplus my- endeavoring get war business into the to that those “endeavors” on his feel certain self.” We desgin early began he, and that part in October subtlety, promoted the various conferences that and during month he had with Hickok at the bank sug- destroying by purpose and with the October gestion faith and confidence and innuendo Hickok’s copartners, and MeBurnett, Janicek’s Fouchek and in Mr. Hickok’s at same time advance himself regard.
There three conferences between Janicek possibly Hickok, and more. The are told first, we upon was when he him Janicek, called Hickok and told go surplus he “wanted a to into the loan, business, war —a at loan,” GI he “I time, added, said that setup [referring Company] to was such continuing I couldn’t see on with it and that I away myself.” up wanted break and set for We worthy think it is of note that at the time it was not Dempsie Mr. Hickok but Mr. of the bank who handled loans to I.Gr. borrowers. bank’s day On occasion their second “a conference or two Janicek later,” went Hickok to ask “what thought he Mr. Fouchek and Mr. MeBurnett,” him for advice on whether or not would be wise copartners. as one of their continue This he did only notwithstanding day or two before he had first at conference informed Hickok that continuing” “couldn’t see with the Salem away.” to break and “wanted Just how far Hickok unconsciously persuaded by Janicek at these times say; but we we cannot do note that more or less coin- of these cident with time talks between defendant expressed latter Hickok, was, as he “losing it, Company] [Salem setup” in their confidence ’’ away “beginning back them. difficulty accepting find explana- We Janicek’s objective calling his true tion that at Hickok’s desk *16 money get at that time was to borrow or to the banker’s concerning advice and counsel his Fouchek associates, difficulty and McBurnett. This is enhanced when we testimony, already find, Janicek’s own that he had independently discovered sufficient reasons to partnership warrant his withdrawal from association plaintiffs apparently with the and had concluded to do seeking so before the further advice or counsel of Mr. Hickok. significant meeting
The third between Janicek days Hickok was “four or five or a week later,” is, the after second conference above referred to. This third conference October as stated was, defendant, Sporting (a “before I left Barb’s Groods,” retail outlet operated by Company). It was at this meet- ing finally the scales were turned in favor of against copartners. Janicek and his It was then that opportunity pre- Hickok him offered which had viously Company through been tendered the Salem Upon acceptance by McBurnett. its immediate defendant, were out and Janicek was in, so far as the Hickok offer was concerned. in the fulfilment
Success of Janicek’s ambition to go surplus into the war business on his own account appears to this to have Court been matter of delib- previous erate and careful consideration; first to dis- copartners; Hickok from further suade traffic with his persuade accept Hickok to then to him in their stead potential prin- as a adventurer with Hickok’s being cipals; then, after thus first assured of a light, speak, place surplus so to in the war market, terminate to thereafter relations with shortly very placed him men so who, before, had vantage position of from which he could and did expense at achieve, of their faith and confidence hoped ultimately retrospect, him, for. In end pattern departure ways of Janicek’s fiduciary appears complete, rectitude now obvious and although performance at the time deviousness *17 apparent working and craftiness were not so to those him. closest to supplant
Our conclusion that Janicek’s efforts to by oblique in the favor of Hickok, and crafty approach win for himself the fruits of the Hickok support offer, finds in his secretive attitude toward respect them. His conduct in this does not meet the fiduciary good required copart- standards of faith of a spirit either in ner, or in fact. pertinent,
Section 79-403, O. C. L. A., so far as reads: “Partners shall render on true demand and full things affecting all information of * * * (Italics ours.) only requires faith not partner Good that a any should not make false partners, statement to his any but should abstain also false conceal ment. Sorenson v. Nielson, 240N. S. 250,255; Y. v. Poss N. Gottlieb, 193 Y. S. 418, 421; Goldsmith v. Loeb,
N. Y. S. 527.
When we view Janicek’s conduct in terms of the foregoing very rules, we find in it antithesis to the they standards mandate. The Government’s sale goods surplus of war part scheduled for the latter important an October, 1946, was event in the life Company, particularly made acceptance so prospect greater offer the Hickok with its capital for planned that time. invest at The firm had to send representative. as its Janicek He go, later refused to assigning any without reason therefor. On October home of told 30, 1946, Fouchek, while at the Janicek “he other irons in the fire and that he him that had relationship him best for his felt was discontinue withdrawing, partnership,” and was but he with the gave no hint as to his conferences with Mr. Hickok or entry impending into what later to be known Company. evening On October 31 as the Cascade suspicions whose 1946, Fouchek, had or November meantime, in the confronted defendant been aroused concerning departure reasons his imminent meeting, reference to this from the firm. With Fouchek testified: (Mr. Rhoten) you say did
“Q. “A. What to him? Harry [to] [McBurnett] him, ‘Jan, I said and I to know whether or not this iron want other you night any mentioned fire that last was in way connected with Mr. Hickok, of the First through or obtained him.’ Bank, National Those precise my carefully words, were almost I because question. phrased the *18 say “Q. he to that? What did ’ ” ‘‘A. He waited a and then told me while ‘No. learning negative Upon reply, of Janicek’s McBur- morning upon 2 November called Hickok, on the nett money “that that had him been available told who Mr. made available to Janicek.” been This had spirited partners by all a conference followed pressure day. under of Mr. Janicek, Hickok’s admitted time McBurnett, first disclosures dealings undisclosed with Hickok. The theretofore his firm was its natural aftermath. of the dissolution surreptitious trafficking with the Janicek’s ques evasions and concealment his when offer, Hickok flagrant by plaintiffs, a evidence breach tioned open-handed dealing good and want of with faith his
273 warranting a court of the condemnation of associates by application provided equity of the remedies and the repeat L. A. from Meinhard v. 79-404, O. C. We supra: honesty punctilio alone, “Not but the Salmon, is then the sensitive, of an honor of most standard obligation partners to act of behavior.” The with good dealings faith in their the utmost candor between themselves is not lessened the existence of them or the strained relations between existence of might, justify any which in and of itself, condition fiduciary obligations part- The of a firm’s dissolution. relationship ner remain until the is terminated. John (2d) Tex. 120 Peckham, son v. S. W. following page R.
A. L. 720 and annotations at Respondent argues duty that the of a former partner profits former to share with his associates ex only earnings accruing tends before termination partnership. partner of the The true rule is: When a wrongfully opportunity snatches seed from the granary of his he firm, cannot, thereafter, excuse him sharing copartners self his the fruits of though planting, they even the harvest occurs after stewardship their association. have terminated The erring appropria member dates from the of the initial by proper until he is and continues exonerated tion accounting. put otherwise: If a Or member of a copartnership himself avails of information obtained in the course of transaction of him scope is within the business firm’s busi applies it to his and thereafter own ness, account with knowledge the consent out he associates, any the firm for may to account benefit liable *19 use of such from the information. obtain Latta v. supra; Eng. Benham, v. Aas Kilbourn, Rul. Cas. By Partnership, 40 Am. 582, 589; Jur., can “information” information which be used meant purposes partnership. for the This is true no wrongful enterprise springs matter when his into though profitable operation, happens even after firm from termination whence he obtained it. supra. Mitchell v. Reed, possession that
It if came follows Janicek into partnership opportunity, a blossom did not into thing personal profit a to him until some time after Company retired on November 2, delayed 1946,the fact such a benefit himto does not accountability copartners him from exonerate his employment oppor- his thereafter, if seizure that during tunity Company existence of Salem was copartners without the consent in the Salem Com- pany. represented by
In this suit the information already affirmatively upon had Hickok been offer acted Company advising the extent of acceptance. Hickok of the interest firm’s More engaged was over, October in mak ing plans possible profitable as to the best and most arrangements if uses of new funds when perfected principals. partici with Hickok’s Janicek pated preliminary in all these consider arising out of ations the Hickok offer. He knew of them Hickok he conferred with at when the bank. He knew Company eminently that the Salem at that time history it had oper had of successful solvent; competent arrangement to enter ation and was into the offer che Hickok necessitated. He knew, too, step, far as the Salem next so was concerned, arrange meeting principals. with Hickok’s was to He *20 legal duty copartners to so inform under a to Ms was Company’s plans activities and Hickok of the Salem treating acceptance before with of its in furtherance for sole use his, Janicek’s, Mr. Hickok alone by the before us, far as disclosed record benefit. So such matters. His atti- remained silent on defendant meetings plaintiffs after his conduct toward tude and suggestion the that he dealt with Hickok belie during any period more candor the Hickok with copart- negotiations than he exhibited toward Ms their during ners the same time. hold that the information embodied in the
We Hickok offer was obtained the defendant in the course of the transaction of the business of the Salem employed by him for his use own copartners; of his and benefit without consent under L. must, 79-404, A., reason thereof C.O. plaintiffs. account therefor have above referred to the First
We National Bank frequently and more of Portland have used word only say nothing “bank.” is fair to that It there is litigation of tMs the record identifies that insti- directly indirectly, with the Hickok tution, offer at repeated any time. The use of the word “bank” primarily many meetings to indicate the situs of the premises were had on the and conferences wMch branch with reference to the its Salem offer. Mr. manager appears branch, of that at all Hickok, acting solely agent Capital been have for times to an appellants Properties, respondent Neither nor Inc. representations contrary. any to makes unavoidably upon come We situation which necessity suggests strongly amplifying to us the accounting beyond scope lower court prayer plaintiffs’ complaint. It will be recalled alleged that of a the existence that between them and defendant and this was denied. partnership. We have found there was The accounting record indicates no has ever had been parties growing out of their between the relations August November The 10, 1946, between importance accounting final of a between them is em- phasized by plaintiffs’ No. 2, Exhibit which is a letter *21 signed under 9, 1946, date of Janicek as a October partner and to a San Francisco addressed mercantile a house. It financial enclosed statement of the Salem August Company of 25, as 1946. This financial state- ment shows a worth close $60,000.00 net as that of signed by parties all date and is the to this This suit. part plaintiffs’ proof exhibit offered as a was of that copartners Janicek was in fact one of their at the times parties indicated. Whether or not the have made a satisfactory accounting between themselves or have way asserting right in some barred themselves from accounting, say we to an do not undertake to from the us. record now before We feel, however, that it would inequitable compel accounting
be for court to an plaintiffs defendant and between as to defendant’s interest the and at Cascade the same time plaintiffs liquida- to retain suffer the avails the Company, any tion of the if as realized operations during period result of its the August to November 1946. 10, 1946, 2, Under the cir- opinion are of the we that cumstances, the lower court parties they should accord hereto —if so desire— opportunity respective pleadings an to amend their encompass by appropriate allegations so as to herein respective they rights to be their conceive what with accounting an growing between them reference out
277 Company during the operations their of of ending August beginning period Novem- 1946, 10, course, of made, shall, if amendments, Such 2,1946. ber subject discre- lower court to such terms be privilege may proper. to amend is This deem tion equity upon predicated familiar rule that where jurisdiction purpose, it will for one retain it takes justice parties. complete Public Market do between the City Portland, 522, 595, 171 Or. Portland v. Co. of (2d) (2d) 916; Smith, P. Nelson v. 157 P. 138 624, Surety (2d) 1072; American 321, 69 P. Co. 292, Or. (2d) 3 P. Hattrem, 358, 364, 1109, v. 138 Or. York New (2d) P. lower The decree court reversed and proceedings not for further inconsis- cause remanded opinion. with this tent concurring in result. J., A.
BRAND, C. majority agree opinion I that the demonstrates guilty defendant, before November obligation fidelity to the a breach position partner. During he of a whom stood negotiations time entered into his own *22 private partner- a in advancement in matter which the ship interested, and failed to make was disclosures partners. agree scope to his I also his activities the upon pro- inquiry remand of for the case further enlarged, party ceedings be if it, should either desires dealings accounting concerning part- for an during period nership in which defendant was I am that the thereof. content matter should a member attempted circuit for an to the court be remanded grave accounting, as to but I have doubts a whether legal satisfactory accounting basis of an can be fiduciary in a the breach of where, here, case found duty by during the defendant consisted in the fact that period one month he withheld information from partners negotiated for his own benefit with parties, third and then from withdrew agreement financing and entered into some for parties. the third presented materially
The case here differs partner purchases which a one for his own piece property, oppor- benefit a of land or other tunity belonged purchase partnership. which, to his opportunity at In the bar, case for a business arrangement whereby parties third furnish but under finances, what terms and conditions, long period appears time, how be uncertain. concurring By by majority, result reached I agreeing do not to be wish understood as in advance legal satisfactory accounting that a for an basis subse- quent to November can 2, 1946, be found the trial judge. briefs have whieh been The submitted are exclusively establishing almost devoted the breach fiduciary obligation. The difficulties which will judge accounting trial an confront the were not, and perhaps be could not considered at this time. Therefore, notwithstanding my possibility doubts as to the of a satisfactory accounting, I concur in the decision attempt should be made.