Jones v. . Gould , 209 N.Y. 419 ( 1913 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] We are of opinion that under the syndicate agreement the relation between the subscribers and the managers (the defendants, appellant) was not that of principal and agents (though doubtless fiduciary), but that the managers themselves became the principals in any contract which they might make. The agreement recites that it was proposed by the defendants Gould, Ramsey and Guy to purchase the Little Kanawha railroad, a line extending from Parkersburg, West Virginia, up the Little Kanawha river, to extend the same eastwardly, to purchase and build a railroad from Parkersburg to Zanesville, Ohio, and to purchase coal lands in West Virginia. The defendants were to do all acts necessary to construct or purchase said properties, and for that purpose "to absolutely control the property so to be constructed or purchased as fully in all respects as if they were the absolute owners thereof." The enumeration of the specific powers was not to be construed as limiting the general powers conferred upon the managers. By the agreement the defendants contracted to purchase the properties on such terms as they thought the best obtainable, and on the other hand, the subscribers agreed with each other and with the defendants to pay the amounts of their respective subscriptions from time to time as called for by the latter, but they were to be liable only to the defendants, and then only to the amount of the subscription.

It was provided that should the defendants in carrying out the agreement sell and dispose of the properties, the net proceeds of such sale should be divided pro rata to the subscribers from time to time in the discretion of the syndicate managers. Should such railroad properties not be sold, but be capitalized by the formation of a new company or new companies, and the transfer thereto of such properties, the securities received by the defendants for the same should be distributed pro rata to the subscribers or their assigns.

It will thus be seen that at least as to all those cognizant of the terms of the agreement, the defendants were not empowered to bind the subscribers beyond the terms of their respective subscriptions, but it was contemplated that the necessary contracts for the carrying out of the project were to be made by the defendants on their own responsibility. Under the agreement the subscribers had no right, title or interest as such in the properties acquired, but only the right upon the termination or closing out of the syndicate to their respective shares of the securities or moneys received by the managers for the property. Such an agreement did not constitute the parties thereto partners as between themselves (Salter v. Ham, 31 N.Y. 321), and the agreement before us expressly provides that nothing therein contained shall "constitute the syndicate subscribers partners with the syndicate managers or with one another." The defendants at least cannot be allowed to deny the efficacy of the agreement in this respect, and, hence, there were no principals for whom the defendants could contract as agents.

The work which the defendants undertook to carry out was not the prosecution of any general business, but was limited to a single enterprise — the acquisition of a particular railroad, its extension, the building of another road, the acquisition of coal properties along the routes of such roads, their sale or transfer to a corporation and the division of the money or securities received therefor among the syndicate subscribers. This was not strictly a partnership, though it had many of the features of such a relation. (Williams v. Gillies, 75 N.Y. 197.) It was what is now generally known as a joint venture rather than a commercial partnership. The authorities in some of the states hold that in the prosecution of the venture each party has the same full power to bind his associates in any contract in regard to the venture that an ordinary commercial partner would have. We are not now inclined to hold that doctrine in its full integrity, but such a ruling is not necessary to the disposition of the case. Assuming that none of the defendants could be held liable for the action of the others unless with his consent or acquiescence, the evidence in the case tended to show that the defendants Gould and Guy committed the whole prosecution of the venture to the defendant Ramsey, permitting him to negotiate and contract for the purchase of properties acquired for the enterprise, and when the enterprise was finally terminated, committing it to him to dispose of the properties. In short, they intrusted him with the whole management and control of the enterprise. If such authority was conferred on Ramsey by his associates, they became responsible with him for liabilities incurred by him in the prosecution of the enterprise (Downey v. Finucane, 205 N.Y. 251), and, indeed, there is little or no evidence in the case tending to contradict the proposition that such authority was conferred on Ramsey. It also appeared that Ramsey in furtherance of the enterprise made contracts for the purchase of coal lands in Ohio along the route of the proposed road to Zanesville and that the expenses incurred in the examination of such lands and the disbursements incident thereto were paid out of the syndicate fund. The plaintiff testified that when he made demand upon defendant Gould for repayment of his advances, the authority of Ramsey was not repudiated, but he was referred to that defendant. For these reasons the separate motions of the defendants Gould and Guy made at the close of the case to have the complaint dismissed as to each of them were properly denied.

Nor do the exceptions taken by the defendants at the close of the charge of the court present any error requiring reversal. The plaintiff made several requests of the court to charge, all of which were granted. All of those presented by the defendants were likewise granted. Thereupon the defendants' counsel excepted to the court's granting and giving to the jury the plaintiff's requests. This general exception pointed out no error and was, therefore, not available.

The defendants also excepted to the charge of the court "with respect to the copartnership of the defendants, and also to the submission to the jury of the question of partnership under the evidence in this case." The only materiality of the question of partnership was as to the authority of Ramsey to bind his co-defendants. That the evidence in the case was sufficient to justify the jury in finding that the other defendants had conferred such authority on Ramsey (if it did not require the court to so charge) we have already said. The exception was, therefore, unavailable. Nor is it saved by the fact that in the charge the court instructed the jury that the defendants were liable as partners instead of submitting that question to the jury for their determination as a question of fact. Moreover, the exception fails for another reason. The request was made on behalf of all the defendants and the exception taken jointly. Plainly the charge, if erroneous at all, was erroneous only as to the defendants Gould and Guy, not as to the defendant Ramsey. The exception taken was a joint one, and such an exception, if not good as to one, is not available to the others. (Bosley v.Nat. Machine Co., 123 N.Y. 550; Central City Savs. Bank v.Walker, 66 id. 424.) For the same reasons the exception to the charge of the court that the syndicate managers had authority to purchase land in Ohio, if such purchase was or became necessary to carry out the syndicate plans, also fails.

It was not required that the plaintiff should have made a tender of the lands purchased or of the stock of the corporation to which these lands had been conveyed before bringing the action. The cause of action is not based on the failure to carry out a contract for the purchase and sale of land, nor is it one for specific performance but for moneys laid out and expended for the defendants at their request and for services rendered. If the plaintiff had disposed of or incumbered the land acquired so that he could neither convey the same to the defendants nor transfer the stock of the corporation to which he claimed he was directed to transfer the title, that was a breach of the contract on his part which should have been set out as a defense, but was not pleaded. The other points raised by counsel do not require discussion.

The judgment appealed from should be affirmed, with costs.

CULLEN, Ch. J., GRAY, WILLARD BARTLETT, HISCOCK, CHASE and HOGAN, JJ., concur; MILLER, J., not sitting.

Judgment affirmed.