292 F. 974 | 2d Cir. | 1923
Lead Opinion
(after stating the facts as above). We shall not dwell on the pleadings, though argument has been based thereon, but prefer to meet the larger question; — whether on the facts shown plaintiffs have any right, in any form of action, to any share of the profits 'of selling the cotton in Spain.
Whatever rights plaintiffs enjoy obviously arise out of the agreements they made. Those written agreements consist of the contracts
It is assigned for error that certain oral evidence said to be explanatory or illuminative of the meaning of these writings, was-excluded. No error was committed. It is true that these documents bristle with trade words, the meaning of which is known only to those dealing in cotton. But these terms required no explanation to the parties. The testimony was offered, not to explain words, but to fix the legal relation created by the agreements between plaintiffs, defendants and/or Frierson.
On this point the written contracts (which are to be construed together) offer no ambiguity; their language is plain and simple. Therefore it is conclusively presumed that the parties meant what the words which they used mean, and no oral' evidence was permissible. What they meant, and all that they meant, must be spelled out of the plain words they wrote. It is sufficient to refer to our decisions in Watkins v. Mulkey, 225 Fed. 739, 141 C. C. A. 11; Bijur, etc., v. Eclipse, 243 Fed. 600, 156 C. C. A. 298; and Schnerb v. Holt Co. (C. C. A.) 289 Fed. 1001 (April 9, 1923), and cases cited.
The. facts presented, which were fairly summed up in defendants’ application to the War Trade Board (supra), raise two questions: (1) What was the nature and extent of plaintiffs’ interest in the subject-matter of agreement, and (2) what was the effect upon that agreement of the declaration of war on April 6th, or the Trading with the Enemy Act, effective October 6th.
As to the first point it is asserted, and may be conceded, that the written agreements show a “joint adventure.” This comparatively modern phrase means no more than a commercial enterprise by several persons jointly. Its vogue arises from a. desire to find words descriptive of a joint enterprise yet not amounting to a partnership. A distinctive characteristic of the joint adventurer is his right of suing at law for his share; he is not obliged to resort to an accounting as is a partner. The distinction is pointed out in Felbel v. Kahn, 29 App. Div. 270, 51 N. Y. Supp. 435, where a transaction fundamentally similar to the one at bar is described as a “joint adventure to share in the profits of a contemplated speculation in real estate, which were ascertainable by a simple calculation.” Consequently plaintiff’s demand for “his share” was entertained at law. These plaintiffs have pursued the same course.
Assuming now that this was a joint adventure, what did the joint adventurers respectively contribute, and what was the subject-matter of their joint action?
The plaintiffs contributed a customer, viz. the Austrians. Frierson contributed the management of the enterprise, including especially the care and custody of the cotton in Barcelona. The defendants contributed all the money, capital, or credit required for the transaction. The subject-matter of the adventure was very simple, namely the keeping and selling to certain Austrians (and to no one else) 10,000 bales of cotton.
Thus we deem it apparent that never at any time did plaintiffs have any interest in or title to the cotton as cotton; Frierson had the legal title, but it was security to defendants for their advances and expenses.
As to the question of the effect on the adventure of the declaration of war and/or the Trading with the Enemy Act, we entertain no doubt. On April 6th, Austria became an ally of the enemy, and on and after October 6th, it became unlawful for any person in the United States to trade directly or indirectly for the benefit of any other per- ' son with the knowledge, or with reasonable cause to believe, that such other person was an ally of the enemy. Act, § 3a (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%b)._
As was well pointed out by the trial judge, delivery after peace (although such peace plainly referred to peace between warring European powers) was not the “whole performance because it included retention of the cotton at Barcelona during the remainder of the war.” Thus, since trading by the statute (section 2 [section 3115%aa]) included “carrying on” any contract, agreement or obligation, defendants and Frierson found themselves in the position of carrying on this agreement for the benefit of certain Austrians. Therefore the Trading with the Enemy Act completely excused, and indeed forbade, performance by defendants and/or Frierson. Result is that by statute this contract came to an end as soon as defendants were refused their license or permission to complete the agreement.
We might go farther, as we are of opinion that this agreement became against public policy on April 6, 1917. The effect of the contracts made was that the money, property, and credits of certain citizens of the United States were tied up or engaged in the carrying or keeping of 10,000 bales of cotton for the ultimate benefit of an ally of an enemy.
The contract may be called executory; it was so in the usual sense of the term, but there was nothing executory about the absorption of defendants’ money and credits in the carrying of this cotton for Austrians. As was well said by Lord Sumner in Ertel v. Rio Tinto (1918) A. C. 260, at 290:
“It is incidental to the conduct of war that the sovereign should be free to bring pressure to bear on the enemy by crippling his commerce and exhausting his resources. It is incidental to the conduct of war that the resources of the sovereign’s subjects should be free to be employed lawfully in preserving and extending the resources of the realm.”
If, as we now hold, the whole agreement or joint adventure came to an utter end not later than October 6, 1917, it obviously became impossible for plaintiffs to sue upon the contract, for that contract no longer existed; it had been wiped out by sovereign authority.
But if, and only if, plaintiffs were co-owners in the cotton, they would still have a right to share, in proportion to their interest, in the proceeds of that cotton whenever lawfully obtained.
But this just claim would arise, not by breach or performance of contract, but by virtue of ownership in the cotton. As we have already pointed out, plaintiffs never had any such ownership; their only interest in the joint adventure was in profits obtained from sale to certain specified persons of their procurement, to wit, the Austrian spinners.1 That interest, because of its Austrian origin and taint, was wiped out, and with it vanished all right of recovery in plaintiffs.
Judgment affirmed, with costs.
Dissenting Opinion
(dissenting). I can agree with the prevailing opinion in the conclusion that the transaction here was a joint adventure, and, further, that the terms of the contract between the parties must be found within the memorandum set forth in the opinion. Reading the agreement, it will be found that the parties contracted to purchase cotton and sell it to the plaintiffs’ customer, but delivery was to be made only after peace was declared. In the meanwhile, the cotton was to be kept in a warehouse at Barcelona, Spain. The agree-ment and delivery of the cotton at Barcelona, Spain, was all prior to our entry into the war or the effective date of the Trading with the Enemy Act. Up to this stage, there was nothing illegal or contrary to public policy in the transaction. I take it the prevailing opinion concedes this. The contract provides:
“The parties of the second part are to arrange with the firm of Frierson Bros, to ship the 10,000 bales of cotton to Barcelona, and to carry same in their name until final delivery after peace has been arranged.”
And it is further provided:
“There shall also be entered on the credit side of said statement the carrying charges collected from the buyers for the period intervening between May 1, 1917, and the date of eventual delivery.”
_ “There shall further be entered on this statement, on the debit or credit side, as the case may be, any losses or profits accruing through the transferring of exchanges from dollars to pesetas, or vice versa.”
Their contract further provided for an equal division of the .profits after certain deductions named therein were made. It will be noted that in the memorandum of agreement between Erierson Bros, and the plaintiffs set forth in the prevailing opinion, the carrying charges were provided'for until “peace had been officially concluded.” Booking solely to the agreement'between the parties set forth; it is1 very appar
Assuming, as the prevailing opinion does, that this was a justifiable abandonment of the adventure by one of the parties, can it be doubted that the profits or losses sustained up to that time must be shared equally by all the parties ? Here were profits by the sale of the cotton, and there should be an adjustment thereof which may be had either by an accounting between the parties or by an action at law with the burden of proof upon the appellants to establish their case. Brooks v. Martin, 69 U. S. (2 Wall.) 70, 17 L. Ed. 732; McBlair v. Gibbes, 58 U. S. (17 How.) 232, 15 L. Ed. 132; Felbel v. Kahn, 29 App. Div. 270, 51 N. Y. Supp. 435. While the cotton was to be in the name of Erierson Bros., this must be deemed to have been for the benefit of all the parties, and upon the resale all parties are entitled to the benefits accruing, just as all parties would be obligated to the losses subsequently sustained. Burhans v. Jefferson, 76 Fed. 25, 22 C. C. A. 25; Stover v. Flack, 30 N. Y. 64.
■ It is quite true that the party making the advances of money and the other of labor may fix the terms upon which the profits may be divided, and such terms are binding upon those accepting them. Gordon v. Boppe, 55 N. Y. 665. And here the parties provided for such division. It has been held that where property is purchased as a joint adventure, it is not material in whose name the title is taken, as any one holding the title is regarded as a trustee for his associates. Hubbell v. Buhler, 43 Hun (N. Y.) 82. Just as property paid for out of the receipt of the joint adventure becomes joint property of all the parties. Hayden v. Eagleson, 15 N. Y. St. Rep. 200. While a joint adventure is not identical with a partnership, it is regarded as if of a similar nature and governed by the same rules of law. Marston v. Gould, 69 N. Y. 220; Chester v. Dickerson, 54 N. Y. 1,. 13 Am. Rep. 550. The principal distinction is that in most jurisdictions one party may sue the other at law for breach of the contract or a share of the profits or losses or a contribution for advances made in excess of his share. But his right will not preclude a suit in equity for an accounting. Even if the contract be against public policy, if it is closed, the party receiving the profits must account to his associates. Wann v. Kelly (C. C.) 5 Fed. 584; McMullen v. Hoffman (C. C.) 75 Fed. 547. But there was no illegality in maintaining the cotton in Barcelona in a warehouse until peace was declared when again it might be lawful to deal with Austrian spinners. This was what should have been done to carry out the terms of the contract. It was the defendants who sold without the consent or approval of the plaintiffs. This was an abandonment of the adventure, and the parties sustaining a loss by reason of this breach should be entitled to receive their share at least of what the one committing the breach profited by the resale.
Because of this, I think the plaintiffs in error are entitled to a re-' versal of the result below, and I therefore dissent from the judgment about to be announced. .
