Producer's Livestock Marketing Ass'n v. Christensen , 588 P.2d 156 ( 1978 )

ELLETT, Chief Justice:

This is an appeal from a money judgment for $50,235 in favor of plaintiff based on two drafts drawn on plaintiff by defendant. Defendant does not contest the judgment as to plaintiff’s complaint, but asserts the district court erred in denying defendant relief on four counts of his counterclaim. The court awarded defendant $4,000 on count five of his counterclaim, which plaintiff does not dispute on appeal.

Because the dispute in this case centers around defendant’s counterclaim, only the facts pertaining to it are set forth.

Since 1954 the plaintiff and defendant have engaged in joint ventures whereby the plaintiff would furnish the cash and the defendant would furnish the expertise and “know how” in buying, selling, feeding and manipulating cattle. When the defendant would finally dispose of the stock, adjustments would be made for interest on the money each had advanced, and the profits would be divided. This was the procedure until 1973 when the market price of cattle fell.

The defendant bought 2,282 head of cattle and paid for them with plaintiff’s money in the amount of $611,605.38. This was exactly as he had done for many years prior thereto. The defendant sold 994 head of cattle for $237,429.05 and turned the money over to the plaintiff. The remaining 1,288 head were to be sold to another party, but he could not make contemplated arrangements to raise the necessary cash and so the sale to him did not materialize. The trial court, sitting without a jury found that the parties up to this point had acted as joint venturers.

The defendant always dealt with one J. L. Lindsay, the division manager of the plaintiff. Mr. Lindsay instructed the defendant to purchase the animals in question based upon defendant’s own judgment. Despite the fact that both Lindsay and the defendant testified to the contrary the trial judge found that the joint venture ended at this point.

The price of cattle was falling and Lindsay and the defendant agreed that the stock should be placed in a feed lot until the next spring at which time they hoped and expected that they could sell the cattle and avoid a loss.

The defendant and Mr. Lindsay agreed that the cattle should be placed in a feed lot operated by Johnsons. Johnsons could not feed all of the herd so 86 calves were left on defendant’s ranch. The defendant pursuant to the agreement placed the remainder of the herd with Johnsons under a written agreement whereby Johnsons would pay $250 per head and defendant would re-purchase the cattle the next spring for that sum plus 42$ per pound of weight increase.

The Johnsons paid $283,500 upon delivery of the cattle which sum was delivered to the plaintiff by the defendant.

The situation then was:

Original cost of cattle $611,605.38

Less sold to Waitt $237,429.05

Cash from Johnsons 283,500.00 520,929,05

Cash paid by Plaintiff and not reimbursed $ 90,676.33

The price of cattle continued to fall drastically and the plaintiff on its books carried the un-reimbursed figure as an account receivable.

Mr. Lindsay, the division manager of plaintiff testified as follows:

A. ... I told him to get the money gathered up and get it in. We were short of money.

Q. Why?

A. Why? Because it was going to get paid from Johnsons and I wanted the accounts receivable straightened up.

Q. Well why would you want to clean up the accounts receivable when they were Producers’ cattle?

A. Well, Producers was participating in the buy-back just like Mr. Christensen was.

Q. Isn’t it in fact that the reason Mr. Christensen paid that off is because he actually purchased those cattle?

A. No.

Q. Now what was the nature of your buy-back agreement with the Johnson Brothers?

A. The nature of the deal as I remember it, was so much a pound gained and a certain price. This was three or four years ago.

Q. Now why did you have a buy-back agreement with the Johnson Brothers?

A. Well, the Johnson Brothers wanted something to feed. They could raise the money and we thought the deal would be straightened out. Now that’s why, no other reason.

Q. What was the nature of your relationship with Mr. Christensen as to the buy-back?

A. I told him we would participate.

Q. On what basis?

A. Oh, fifty-fifty is what the whole deal done.

Q. Did you have anything in writing on that?

A. No sir, we didn’t have anything in writing on a lot of things that made money as well as losses.

Q. So at the point in time when those cattle were placed into the Johnson feed-yard and that deal sheet is made up by Mr. Christensen paying it off, you consider that a sale?

A. I consider that a clean up.

Q. Well do you consider it a sale?

A. No.

Q. Doesn’t a sale buy-back imply that that’s a sale?

A. Well, I consider it a clean up of that particular deal to that point. And, Mr. Christensen knew that there was a loss there as well as I did and Mr. Christensen was wanting to get out of a loss just as well as Producers was. So consequently all I could tell you, is he cleaned the deal up. We knew we was going to have to settle up sooner or later.

Mr. Lindsay sent one of his employees down to check on the condition of the cattle in the feed lot. He testified as follows:

A. Well, of course, I hadn’t seen the cattle for some time and I wanted to see what kind of flesh they were in. I wanted to have him take a look at them because we were trying to sell the cattle and we wanted to know what flesh they was in.

Q. Now, did you participate at all in the negotiations between the Johnson Brothers in the settling up of this account?

A. No.

Q. You left that completely to Mr. Christensen’s discretion?

A. That’s true.

Because Mr. Christensen at the request of Mr. Lindsay raised the $90,676.33 and paid it to the plaintiff to relieve it from financial distress the trial court thought that the joint venture was at an end and thereby saddled Mr. Christensen with all of the loss on the deal which amounted to $209,614.17.

Next spring because of financial distress Christensen made a different arrangement with the Johnsons and put up more of his own money to pay for the feed bill.

A joint venture should remain joint whether it results in a gain or in a loss, unless the parties otherwise contract. The record does not reveal any contract other than the joint venture. The loss in the instant matter resulted from the decline in the value of cattle together with the death of some animals. The defendant in attempting to avoid the loss to the venture, as was his duty, is entitled to be treated as a joint venturer and not to be saddled with the entire loss. The judgment is reversed and the case remanded to the trial court with directions to treat the matter as a joint venture; and to adjust the accounts to show the amount due each party for money advanced together with interest thereon and to divide the loss in the same proportion which over the years the parties have used in dividing the gains. The defendant should then have judgment against the plaintiff to equalize the loss between the parties and the plaintiff should have the judgment reduced by the two drafts sued upon in the complaint together with interest thereon.

The appellant is awarded his costs.

CROCKETT and HALL, JJ., concur.