Shirley v. Straub

198 N.W. 675 | N.D. | 1924

Appeal and error — where organization treated as partnership at trial,it will be assumed such on appeal.

1. Where all the parties, including the trial court, treated an organization as a partnership, it will, for the purposes of the appeal, be assumed that such organization was a partnership.

Partnership — denial of partner's hearing onpetition for contribution for loss of capital helderroneous.

2. Where a receiver has been appointed for a partnership in a proceeding for an accounting and a dissolution of the firm, and where a member of the partnership in the receivership action files a petition asking that members of the firm be required to contribute among themselves, on account of losses of capital, it is held, for reasons stated in the opinion, that it is error to deny the petitioner a hearing thereon.

Judgment — nonmembership in partnership held resjudicata in subsequent action for contribution topartnership losses.

3. For reasons stated in the opinion, it is held, that the judgment of the trial court in independent actions brought by certain respondents against the receiver of the Lake Region Oil Company, in which it was decreed that such respondents did not become members of the company or partnership, is res adjudicata as to such respondents.

Partnership — shares of partners in profits orlosses equal notwithstanding contributions ofcapital, in absence of specific agreement.

4. In the absence of an agreement on the subject, the shares of the partners in the profits or losses are equal, though the contributions of capital may have been unequal.

Partnership — scope of accounting andreceivership stated.

5. A decree of accounting in a receivership action should apportion the losses, if any, and should determine what, if any, one partner should pay to the other in order that all cross claims may be fully settled. The court may, in its final decree in the receivership action, determine the rights and liabilities of the partners among themselves, and in a proper case the decree may include an adjudication that a balance is due from one partner to another.

Partnership — intention of parties governs.

6. Whether the members of the original association were partners is to be determined from the intention of the parties, as expressed in the partnership agreement or gathered from the acts and circumstances. Whether the association was in fact a partnership is not decided, for reasons stated in the opinion.

Partnership — partner failing to contributeproportionate may be required to contribute forloss of capital.

7. When parties enter into a partnership agreement, they agree to put, at the risk of profit or loss, money as capital. If, in the enterprise, capital be lost or absorbed by debts, the partner who failed to comply with his engagement and has brought in nothing may be required, in a proper case, to contribute the proportionate share he agreed to furnish, or share equally with the other partners in the loss of the capital.

This is an appeal from an order of the district court of Ramsey county, dated March 20, 1923, dismissing the petition of the defendant and appellant, Jorgenson, asking that the receiver of the Lake Region Oil Company, a copartnership, of which the petitioner was a member, be directed to require the codefendants of this appellant and other members of the copartnership to contribute to losses sustained and further asking for an accounting of the partnership affairs and a winding up of the partnership.

The facts are as follows: Sometime during the year 1920, one Mitchell, a resident of Oklahoma, came to Devils Lake, North Dakota, and represented that he was the owner of a lease covering oil bearing land in that state. It appears that he succeeded in persuading a large number of persons, mostly farmers, to subscribe for shares in a concern to be organized for the purpose of exploiting these oil interests. A form of certificate was issued by him but the "company" was not organized as a corporation. It was known as the Lake Region Oil Company. Some of the subscribers paid their subscriptions in cash, while others gave notes or paid part cash and gave notes for the balance. The promoter collected $73,575 in cash and promissory notes amounting to $147,825. The defendant and appellant, Jorgenson, contributed $5,000 in cash. In February, 1921, the amount paid in cash had all disappeared, when application was made to the district court of Ramsey county for the appointment of a receiver. In the complaint it was alleged that the company formed was "in fact a partnership." Many of the notes given by members to the partnership were outstanding and uncollected, some, it seems, had been returned and perhaps some were in litigation or, at least, became subjects of litigation shortly after the receivership proceedings were instituted. The plaintiff in the receivership action asked for an accounting among the members of the association and for the dissolution thereof, and, on the 14th of February, 1921, one Ziebach was appointed temporary receiver. It does not appear that a hearing was ever had upon the order to show cause why such receivership should not be made permanent and the person appointed has since been acting as receiver without objection. The receiver was in active charge until the 27th of January, 1922, when the defendant and appellant, Jorgenson, filed his petition asking that a call be made for contribution upon the other members of the partnership towards the losses sustained and praying that the receiver be directed to make an assessment upon the members of the association who have not paid their notes and to require such members to contribute cash to meet the losses sustained by the association so that contribution may be made to the petitioner and to all other members of the association similarly situated who have paid in cash for their subscriptions to the capital of the copartnership, and further asking that a full accounting be had thereof before the receiver is discharged or released and that upon such final accounting a contribution be ordered and a judgment of dissolution be entered herein and for such other and further relief as may be necessary to accomplish justice between the parties. An order to show cause was issued upon this petition and made returnable on February 15, 1922. On the return day, no testimony was taken, but affidavits were filed by several respondents, including the receiver, resisting the petition and motions were made by counsel representing the receiver and other defendants for a dismissal of the petition. This motion was granted and the order made, from which this appeal is prosecuted.

During the month of May, 1921, judgments were entered in actions commenced by several individuals against the receiver and others, some of whom apparently had had some relations with the original association or copartnership, for the recovery of the possession or the cancellation of the notes given when they subscribed to the stock in the association at the instance of Mitchell, the promoter. In the judgments entered in these cases, to which the defendant Jorgenson was not a party, it is decreed, in substance, that the defendant banks have no interest in or right to the notes in suit; that the Lake Region Oil Company and the receiver have no title or interest in the notes; that the plaintiffs did not become members of the Lake Region. Oil Company; that the plaintiffs are entitled to have the notes cancelled and that the notes be cancelled accordingly. The plaintiffs in these actions appeared by their counsel, Adamson Thompson, on the return day, February 15, 1922, and moved for a dismissal of the petition of the appellant Jorgenson, on the ground that the matter was res adjudicata because of the judgment entered, heretofore referred to, and upon other grounds. The other respondents and former members of the Lake Region Oil Company, an unincorporated association, made their motions to dismiss upon the ground that Jorgenson had consented to the organization of a corporation, to be known as the Lake Region Oil Company, to be organized under the laws of the state of North Dakota and that he had agreed to take stock therein in lieu of his shares or interest in the voluntary association or partnership and to accept an equivalent amount of stock from the corporation to be organized and which was, in fact, organized. The motion to dismiss was supported by affidavits of persons, the majority of whom had signed the agreement to return notes and exchange shares heretofore referred to, in which it was recited, in substance, that they were stockholders in the Lake Region Oil Company, a copartnership, and also in the Lake Region Oil Company, a corporation, and familiar with the facts; that Jorgenson was present and participated in the various meetings of the members of the copartnership and of the corporation; that Jorgenson was present at a meeting of the members of the partnership when the proposition of exchanging or surrendering the interest of the members in the partnership for interest in a corporation of the same name, to be organized in furtherance of a scheme to purchase an oil interest of some sort from the Caler Oil Company, was considered; that at that meeting Jorgenson either remained silent or, according to some of the affiants, expressly stated that he wanted the proposition to go through and that fifty shares in the new corporation of stock were ultimately issued to Jorgenson, altho he never accepted the same. The attorney for the receiver also filed an affidavit of somewhat similar import.

The respondents claim that the appellant, Jorgenson, is estopped from now asking for an accounting or from questioning in any way the action taken when the members of the partnership agreed to exchange