JOINT VENTURES: MEMBERSHIP, TYPES AND TERMINATIONt

Walter H. E. Jaeger*
MEMBERSHIP

IN a preceding article,' the origin, nature and development of joint ventures, and the distinctions and differences the courts have made between these associations and partnerships were discussed. In the present article, members of joint ventures, their rights and duties,2 usual types 3 and termination4 of the venture will be examined. An important aspect of membership in a joint venture is that, according to the decisions, the same rules as to contractual capacity which govern other simple contracts also apply to those by which joint ventures are created. 5 Without a contract, there can be no joint venture as between the participants: 6 "The sine qua non of the relationship is a contract, whether it be express or implied. As a legal concept, a joint adventure is not a status created or imposed by law, but7 is a relationship voluntarily assumed and arising wholly ex contractu.11 The joint venture contract does not need to be either formal or express but there must be a consensus ad idem. In short, the parties must have the intention of associating for a common purpose, and this intent may be implied from the actual conduct of the parties s Doubts have been expressed as to whether a joint venture can continue to exist when its members organize a corporation to complete a joint undertaking. In fact, "It has been said that a joint venture could never exist when the parties entered into a partnership or created a corpot This is the second part of this article on Joint Ventures; the first part was published in 9 Am. U.L. Rev. 1. * A.B., Columbia University; M.S., LL.B., Ph.D., Juris.D., Georgetown University; Diploma, University of Paris, Faculty of Law, and Academy of International Law, The Hague. Member, District of Columbia Bar and Bar of the Supreme Court of the United States. Professor of Law and formerly Director of Graduate Research, Georgetown University Law Center. 1 Jaeger, Joint Ventures: Origin, Nature and Development, 9 Am. U.L. Rev. 1. 2 Williston, Treatise on the Law of Contracts (3d ed. 1959) 318C Who May Be Joint Venturers; Rights and Duties.
Ibid., 319 et seq. Types of Joint Ventures. Ibid., 319C Termination of Joint Ventures. Teas v. Kimball, 257 F.2d 817 (CA. 5). Nelson v. Abraham, 29 Cal. 2d 745, 177 P.2d 931; Kowal v. Sang Corp., 318 Mich. 312, 28 N.W.2d 113, where the court held that "a contract is essential to create the relation of joint adventure" as between the parties. 7 Carboneau v. Peterson, 1 Wash. 2d 347, 95 P.2d 1043. 8 J. Leo Johnson, Inc. v. Carmer, (Del.) 156 A.2d 499; McRoberts v. Phelps, 391 Pa. 591, 138 A.2d 439, quoting 30 Am. Jur., Joint Adventures 3. 3 4 5 6

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ration."9 However, the majority view definitely inclines to the conclusion that the formation of such a corporation will not prevent the survival of the joint venture,' nor relieve the venturers of their attendant liability." In a leading case, 2 the court said, "if it be the manifest intention of the parties to enter upon a joint venture, the employment of the corporate mechanism and the issuance of stock do not negative the existence of 3 such relationship.'
CORPORATIONS MAY BE MEM1BERS

Probably the most significant aspect of the joint venture is the admissibility of corporations to membership.' 4 This has been held to be one of the principal distinguishing characteristics of joint ventures and partnerships 5 since it is generally held that corporations cannot become members of partnerships:'" "According to the prevailing view, a corporation has no implied power to become a partner with an individual or another corporation. This limitation is based on public policy, since in a partnership the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers, which would be entirely inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively."' 7 Conversely, an ever-increasing number of cases' 8 hold that a corporation may properly engage in a joint venture with individual persons,10 partnerships,20 joint ventures, " and other corporations.2 2 This rule has also been held applicable to municipal corporations:
9 United States v. Standard Oil Co. of California, 155 F. Supp. 121 (D.C.S.D.N.Y.); Ault & Wiborg Co. of Canada v. Carson Carbon Co., 181 La. 681, 160 So. 298. 10 Enos v. Picacho Gold Mining Co., 56 Cal. App. 2d 765, 133 P.2d 663; De Boy v. Harris, 207 Md. 212, 113 A.2d 903, noted joint Adventure Survives Incorporation, 16 Md. L.R. 348; also in 69 Harv. L.R. 565 and 34 N.C. L.R. 437. 11 P. S. & A. Realties v. Lodgegate Forest, 205 Misc. 245, 127 N.Y.S.2d 315. 12 Hathaway v. Porter Royalty Pool, 296 Mich. 90, 296 N.W. 571, 299 N.W. 451, 138

A.L.R. 955. '3 United States v. Standard Oil of California, supra note 9, quoting Hathaway v. Porter Royalty Pool, supra note 12. 14 Williston, op. cit., 318C, p. 619; part 1, this article, 9 Am. U.L. Rev. p. 1, at p. 18. 35 Part 1, this article, supra note 1, at pp. 17 et seq. 16 Pearce v. Madison & I.R. Co., 21 How. (U.S.) 441, 16 L.Ed. 184; Kasisbke v. Baker, 146 F.2d 113 (CA. 10), cert. den. 325 U.S. 856. 17 Nelson v. Seaboard Surety Co., 262 F.2d 189 (CA. 8). 18 Cush v. Allen, 56 App. D.C. 327, 13 F.2d 299, 54 A.L.R. 261; Excelsior Motor Mfg. & Supply Co. v. Sound Equipment, Inc., 73 F.2d 725 (CA. 7), cert. den. 294 U.S. 706. '9 Camden Fibre Mills, Inc. v. Lush Cotton Products Co., 75 (Pa.) D. & C. 468. 20 Wheatley v. Carl M. Halvorson, Inc. (Or.) 323 P.2d 49; Port Arthur Trust Co. v. Muldrow, 155 Tea. 612, 291 S.W.2d 312. 21 McRoberts v. Phelps, 391 Pa. 591, 138 A.2d 439. 22 Shell Oil Co. v. Prestidge, 249 F.2d 412 (C.A. 9), reh. den.; Dundlck, Inc. v. UtahIdaho Concrete Pipe Co., 7 Idaho 499, 295 P.2d 700; Nolan v. J. & M. Doyle, 338 Pa. 398, 13 A.2d 59.

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There seems to be no reason in law which prevents two or more municipal corporations from engaging in a joint enterprise or project, except as they may be limited by constitutional or statutory provisions of the particular jurisdiction in which they are located. The right of municipal corporations to join with each other, or with the state or other political subdivisions thereof, in such enterprises as erecting and maintaining city halls, sewage disposal systems, airports, and schools is generally upheld, except where it is prevented by constitutional or statutory prohibition, such as a provision that municipal corporations shall not give money or property, or loan money or credit, to or in aid of any individual, association, or corporation, or where the particular enterprise would require the taxation of property within the municipal corporation for an improvement outside 23 the municipal limits in violation of a constitutional provision.
RIGHTS AND DUTIES OF MEMBERS,

As has been suggested,24 the rights and duties of the respective joint venturers will be determined by the joint venture contract.2" Within its purview, the duties of the parties are mutual and reciprocal and contractual obligations must be carried on "in utmost good faith and with scrupulous honesty. ' 26 In their relationship with each other, there is a close resemblance between joint venturers and partners,2 7 and the courts have frequently signalized this resemblance: "The modern decisions indicate that the courts regard the right of joint adventurers,28 in matters between themselves, as governed by principles constituting and controlling the law of partnerships. 29 Many similar expressions from judicial opinions could readily be adduced, but for the purposes of this article, the most celebrated of these utterances will suffice: Joint adventurers, like copartners, owe to one another, while the enterprise continues, the duty of the finest loyalty. Many forms of conduct permissible in a workaday world for those acting at arm's length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the "disintegrating erosion" of particular exceptions 3 Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court.31
Upper Penns Neck Township v. Lower Penns Neck Township, (N.J.) 89 A.2d 727. Williston, op cit., 318C. 25 J.Leo Johnson, Inc. v. Carmer, supra note 8; Jones v. Galleher & Co., 187 Va. 602. 26 Jones v. Galleher & Co., supra note 25.
23 24

Milton Kauffman, Inc. v. Superior Court, 98 Cal. App. 2d 8, 219 28 "A joint venture is a joint adventure." Myers v. Lillard, 215 Ark. 608; the more recent judicial opinions show a preference for the term than "adventure." 29 McIver v. Norman, 187 Or. 516, 205 P2d 137. 3o Wendt v. Fisher, 243 N.Y. 439, 154 N.E. 303. 31 Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545; this passage
27

P.2d 88. 355, 220 S.W.2d "venture" rather

is quoted with

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Proceeding to an examination of the individual rights of joint venturers, it will be seen that the fiduciary relationship mentioned in the above-quoted excerpt gives rise to rights while at the same time imposing duties. Thus, parties to such a venture join in the control and management of the undertaking,3 2 share in the profits,8 3 or, if these are improperly withheld, they have the right to bring an action in breach of contract,3 4 or to sue in equity for an accounting. 35 Also, should one joint venturer attempt to obtain a property interest or other advantage8" for his sole benefit without full disclosure to the other venturers, 7 equity will impress a constructive trust upon the property so acquired,88 and the deceitful party will be declared a constructive trustee for the benefit of the other participants. 9
approval in Smith v. Bolin, 153 Tex. 486, 271 S.W.2d 93, overruling the Court of Civil Appeals of Texas, 261 S.W.2d 352, where the court, holding that a joint venturer owes a fiduciary duty to his co-venturers, said: "In the case of Meinhard v. Salmon, supra, Salmon negotiated and obtained for himself a new lease on certain property which had been under lease by Salmon and Meinhard operating under a joint venture agreement. Salmon was the sole manager of the property. The new lease included some adjoining property not included in the original lease. The court sustained Meinhard's suit to establish his interest in the property, both the original and the adjoining property, on the theory of constructive trust for his benefit." The passage quoted in text and the above quoted excerpt were quoted in a very recent case, namely, Omohundro v. Mathhews, (Tex.) 317 S.W.2d 771, holding that defendant acted in bad faith in acquiring an oil lease from the Slick Oil Corporation in an area marked out for the joint venture; accordingly, the court impressed a constructive trust thereon. 32 Re Taub, 4 F.2d 993 (CA. 2) ;1 Chisholm v. Gilmer, 81 F.2d 120 (C.A. 4), aff'd 299 U.S. 99; Tompkins v. Commissioner, 97 F.2d 396 (C.A. 4); Porter v. Cooke, 127 F.2d 853 (CA. 5), cert. den. 317 U.S. 670, reh. den. 317 U.S. 710; Joe Balestrieri & Co. v. Commissioner of Internal Revenue, 177 F.2d 876; Shell Oil Co. v. Prestidge, supra note 22. 33 McRoberts v. Phelps, supra note 21. 34 Joring v. Harriss, 292 F. 974 (CA. 2) ; Elledge v. Hotchkiss, 22 Ala. 129, 130 S. 893; Johanik v. Des Moines Drug Co., 235 Ia. 679, 17 N.W.2d 385; Lawrason v. Richard, 16 La. App. 434, 129 S. 250, aff'd 172 La. 696, 135 S. 29. Mitchell v. Reolds Farms Co., 268 Mich. 301, 256 N.W. 445; Pine Building Co. v. Grossman, 102 N.J. Eq. 189, 140 A. 251; Hoffman v. Mittlemann, 147 Misc. 442, 263 N.Y.S. 899; Bigelow v. McMillin, 251 A.D. 456, 296 N.Y.S. 533. Just Mfg. Co. v. Falck, 354 Pa. 421, 47 A.2d 659; King v. Meabon, 128 W. Va. 263, 36 S.E.2d 211; Pownall v. Cearfoss, 129 W. Va. 487, 40 S.E.2d 886. App. 367, 35 Elledge v. Hotchkiss, 222 Ala. 129, 130 S. 893; Brooks v. Watson, 287 Ill. 4 N.E.2d 876; Berwin v. Cable, 313 Mass. 431, 47 N.E.2d 951; Cooperstein v. Shapiro, 122 N.J. Eq. 238, 192 A. 826; Selwyn v. Waller, 212 N.Y. 507, 106 N.E. 321; Leitner v. Wass (Sup) 63 N.Y.S.2d 350; Bottsford v. Van Riper, 33 Nev. 156, 110 P. 705; Smith v. Bolin, supra note 31; Omohundro v. Matthews, supra note 31. Cf. Hoffman v. Mittlemann, 147 Misc. 442, 263 N.Y.S. 899. 36 McRoberts v. Phelps, supra note 21; J. Leo Johnson v. Carmer, supra note 8; Omohundro v. Matthews, supra note 31. 37 Meinhard v. Salmon, supra note 31; Thimsen v. Reigard, 95 Or. 45, 186 P. 559; MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334, quoting with approval Pomeroy, Equity Jurisprudence 1050, describing the duties of a trustee, actual or constructive, as fiduciary. 38 Van Stee v. Ransford, 346 Mich. 116, 77 N.W.2d 346, quoting Meinhard v. Salmon, supra note 31; see cases cited in preceding note. 39 Chisholm v. Gilmer, supra note 32; Williston, op. cit., 318C, at page 628.

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4 In a typical case, Wyoming Pacific Oil Company v. Preston,0 the complaint alleged facts showing that the appellant had violated his fiduciary obligations to his co-venturer, the plaintiff in the case. The court said: "It is settled law of this state [California] that where a joint adventure is alleged, and it is claimed that one of the joint adventurers received a secret profit, then relief can only be had by way of 41 an accounting." 4 But in an even more instructive case, J. Leo Johnson, Inc. v. Carmer,2 the Court of Chancery of Delaware concluded that an accounting was essential under the following facts: An agreement had been made between a railroad company and a joint venture whereby the joint venture was to buy ballast and ties from the railroad for the purpose of reselling these and realizing a profit which they were to split. When the work on the first section of the railroad had been completed, one of the venturers (the defendant) obtained from the railroad a contract for the purchase of ballast and ties on the second section without notifying his co-venturer, the plaintiff. Chancellor Seitz, following an able opinion in which he reviewed the authorities, ordered defendant to account to the plaintiff for the profits resulting from operations dealing with the second section. Affirming the Chancellor's decree, 43 the high court of Delaware said: The relationship of joint adventurers is fiduciary in character and imposes upon all of the participants the utmost good faith, fairness and honesty in dealing with each other with respect to the enterprise. It forbids one joint adventurer from acquiring solely for himself any profit or secret advantage in connection with the common enterprise. This is particularly true in the case of one to whom is entrusted the conduct of the enterprise.44 The court held that the deceitful joint venturer would be regarded as a trustee and his duty as such would be as great as in any fiduciary relationship and would preclude him "from dealing with property relating to the enterprise, either for himself or another, in the absence of full ' 45 disclosure to his associates. Although there may be a lack of uniformity in the cases defining the

(Cal.) 341 P.2d 732. Wyoming Pacific Oil Company v. Preston, supra preceding note, quoting Austin v. Turrentine, 30 Cal. App. 2d 750, 87 P.2d 72, 88 P.2d 178, and citing numerous California precedents including Milton Kauffman, Inc. v. Superior Court, supra note 27; Smith v. Bolin, supra note 31; Omohundro v. Matthews, supra note 31.
40 41

42
43

Carmer v. J. Leo Johnson, Inc., (Del. Ch.) 150 A.2d 621, aff'd 156 A.2d 499; see comments in Jaeger, Joint Venturd, 9 Am. U.L. Rev. 1, at pages 19 and 21. 44 J. Leo Johnson, Inc. v. Carmer, supra note 8. 45 Ibid.

Supra note 8.

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relationship of joint venturers, 48 there is virtual unanimity of judicial opinion as to the similarity of their relations where third parties are 47 concerned. The courts have said that in this particular joint ventures and partnerships are well-nigh identical. Above all, the agency aspect of the joint venture has been stressed repeatedly, but with this distinction48 that "many of the courts show an inclination to limit this mutual agency principle rather narrowly when applying it to the joint venture.1 49 In fact, quite recently, after first pointing out that "The relationship of joint venturers is that of a mutual agency, akin to a limited partnership," 0 the court held that "the negligence of one joint venturer or of his employes acting in connection with the joint venture is imputed to the other joint venturers.""1 This means in effect that each member of the joint venture has a dual status: That of principal for himself, and at the same time as agent for the other joint venturers in the performance of acts that are within the general scope of the joint undertaking.52 And although it has 3 been said that one joint venturer may not bind his associates," the 5 4 as demonoverwhelming weight of authority is opposed to this view, strated by the following statement: It is the rule established by the great majority of decided cases that there is the same element of mutual agency in joint adventures as in partnerships and that a member of a joint adventure can bind his associates, whether disclosed or undisclosed (as can a partner), by such contracts 5 as are reasonably necessary to carry on the venture. 5 It is also the general rule that when third parties deal with a joint venturer in good faith and with no knowledge of any limitation placed upon his authority, he will be presumed to have the necessary power and authority to bind his fellows by entering into such contracts as are
46

Jaeger, op. cit., pages 19 et seq.

v. Manley's Estate, 106 Vt. 356, 175 A. 14; Williston, op. cit. 318C. 48 Williston, op. cit., 318C, at page 629. 49 Ibid; Rae v. Cameron, 112 Mont. 159, 114 P.2d 1060; Jones v. Gould, 209 N.Y. 419, 103 N.E. 720; P.S. & A. Realties v. Lodgegate Forest, supra note 11; Manatee Loan & Mortgage Co. v. Manley's Estate, supra note 47. 50 Leming v. Oilfields Trucking Co., 44 Cal. 2d 343, 282 P.2d 23, 51 A.L.R.2d 107. 51 Buckley v. Chadwick, 45 Cal. 2d 183, 288 P.2d 12. 52 O.K. Boiler & Welding Co. v. Minnetonka Lumber Co., 103 Okla. 226, 229 P. 1045. 53 Wren v. Moskin, 226 A.D. 563, 235 N.Y.S. 405. 54 Chisholm v. Gilmer, supra note 32; Myers v. Lilard, supra note 28; Proctor v. Hearne, 100 Fla. 1180, 131 S. 173; Bond v. O'Donnell, 205 Iowa 902, 218 N.W. 898; Kennedy v. Conrad, 91 Mont. 356, 9 P.2d 1075; Reynolds v. Patrick, 198 Misc. 201, 97 N.Y.S.2d 126; Vrabel v. Acri, 156 Oh. St. 467, 103 N.E.2d 564, 30 A.L.R.2d 853; Ford v. McCue, 163 Oh. St. 498, 56 Oh. Ops. 410, 127 N.E.2d 209; De Marco v. Lucas (App.) 61 Oh. L. Abs. 182, 103 N.E.2d 583; Priestley v. Peterson, 19 Wash. 2d 820, 145 P.2d 253. 55 State ex rel. Crane Co. v. Stokke, 65 S.D. 207, 272 N.W. 811, 110 A.L.R. 761.

47 Chisholm v. Gilber, supra note 32; Manatee Loan & Mortgage Co.

JOINT VENTURES reasonably necessary to carry on the business in which the joint ven-

turers are engaged and they become liable on such contracts even though
they may have expressly agreed inter sese that they are not to be liable. TYPEs OF JOINT VENTURES
6

A great variety of undertakings have been carried on by means of

joint ventures. These include the exploitation of coal, oil, gas, and other mineral rights,57 land, including its development,58 and options

for its purchase,5 0 shipping, fishing and all forms of commercial enterprise. 60

Personal service agreements often take the form of joint ventures,

particularly where one person furnishes knowledge, skill and experience,

while the other provides the financial and economic backing, as in Rae 6 v. Cameron," a classic case in which a syndicate gave a partnership the
necessary financial backing, and the partners supplied the land, experi-

ence and skill to undertake "placer mining operations" with a view to

producing gold and silver. Land and Mineral Rights

Joint ventures have been organized for the purpose of farming land,62
56 Kennedy v. Conrad, supra note 54; Rae v. Cameron, supra note 49. 57 People v. Rankin, (Cal.) 325 P.2d 10, uranium mining claim; Hathaway v. Porter Royalty Pool, 296 Mich. 90, 295 N.W. 571; Sample v. Romine, 193 Miss. 706, 8 S.2d 257, 9 S.2d 643, 10 S.2d 346; McCartney v. McKendrick, 226 Miss. 562, 85 S.2d 164, noted joint Adventurers-Relationship of the Parties, 27 Miss. L.J. 244, development of oil wells. Rae v. Cameron, 112 Mont. 159, 114 P.2d 1060. Rockett v. Ford, (Okla.) 326 P.2d 787; McRoberts v. Phelps, 391 Pa. 591, 138 A.2d 439. Cf. Von Ree v. Carminati (Tex. Civ. App.) 311 S.W.2d 729 reh. den. held, joint venture with respect to mineral interest in land not proved. Castleberry, Protecting The Oil and Gas Lessor, 30 Rocky Mtn. L.R. 441. 58 Saunders v. McDonough, 191 Ala. 119, 67 S. 591, real estate development; Bryce v. Bull, 106 Fla. 336, 143 S. 409, land purchase venture; Fitzhugh v. Thode, 221 Ia. 533, 265 N.W. 893; Adams v. Bruce, 265 Mich. 137, 251 N.W. 328; Swan v. Ispas, 325 Mich. 39, 37 N.W.2d 704, the court said: "Joint adventurers take title to real estate purchased by them as tenants-in common . . ."; Grabendike v. Adix, 335 Mich. 128, 55 N.W.2d 764, joint oil development venture; Summers v. Hoffman, 341 Mich. 686, 69 N.W.2d 198, 48 A.L.R.2d 1033, joint real estate venture held not within statute of frauds. Cecil v. Montgomery, 95 Okla. 184, 218 P. 311. 50 Russell v. Thielen, (Fla.) 82 S.2d 143 reh. den. citing Bryce v. Bull supra. In Simpson v. Richmond Worsted Spinning Co., 128 Me. 22, 145 A. 250, the court said: "What were the interests of Pond and Simpson in the option? "The sitting Justice found that Pond was a co-owner of the option with Simpson. We think this is fairly supported by the evidence, and that they had acquired and were holding the option with the relation of joint adventurers, a doctrine which has become well recognized in American courts . . . and is now considered by this court for the first time." 0 Infra p. 119 et seq. 61 Supra note 49. 02 Re Taub, 4 F.2d 993 (CA. 2), fruit marketing joint venture; Larson v. Robinson, 136 F. Supp. 469 (D.C. D. Mont.), held, husband and wife joint farming venture equivalent to partnership for tax purposes. Myers v. Lillard, 215 Ark. 355, 220 S.W.2d 608, one party

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raising and selling cattle, 3 or other livestock, such as turkeys,"' hogs,"8 or mink. 66 A prolific use of joint ventures has been the purchase, development and sale of real estate; 7 any number of subdivisions with their individual shopping centers, roller rinks, bowling alleys, and other recreational facilities, owe their existence to the organization of joint ventures.68 The same is true of the construction and operation of hotels, apartments and similar projects.6 9 These have generally been held not to be "interests in land" within the meaning of the statute of frauds:1 "Agreements of the character of this one, where the trust is imposed and the arrangement partakes of the character of a partnership, do not violate the terms of the statute of frauds."' And in Wooten v. 7 Marshall,2 the court said:
furnished bean seed and fertilizer, the other made available land and labor and amount received from sale was to be divided equally; held, joint venture. Kilgore Seed Company v. Pearce, (Fla.) 103 S.2d 112, joint venture to grow one hundred acres of tomatoes; Titus v. Empire Mink Corp., 17 N.Y.S.2d 909. Reynolds v. Patrick, 198 Misc. 201, 97 N.Y.S.2d 126, operation of farm on a sharing of expenses and profits basis held joint venture. United States Fidelity & G. Co. v. Dawson Produce Co., 200 Okla. 540, 197 P,2d 978; Johnson v. Koyle, 5 Utah 2d 9, 295 P.2d 834, joint venture for exploitation of irrigated land; State ex rel Ratliffe v. Superior Court, 108 Wash. 443, 184 P. 348, 7 A.L.R.2d 810. Cf.George W. Haxton & Son v. Rich, 267 AD. 492, 47 N.Y.S.2d 501, plaintiff advanced seed to defendant and obtained title to the resultant crop, but without risk of loss; held, no joint venture. Pestin v. Haxton Canning Co., 274 A.D. 144, 80 N.Y.S.2d 869 aff'd 299 N.Y. 477, 87 N.E.2d 522, relationship of landlord and tenant did not create joint venture even where landlord was to receive part of the crop grown by tenant and to bear certain expenses. P. S. & A. Realties v. Lodgegate Forest, 205 Mic. 245, 127 N.Y.S.2d 315. 63 Barron v. Koenig, (Idaho) 324 P.2d 388; Reynolds v. Patrick, 198 Misc. 201, 97 N.Y.S.2d 126, contract for lease of farm whereby each party was to furnish 18 cows and profits and losses were to be shared equally was held joint venture. 64 Waldman v. Shoemaker, 367 Pa. 587, 80 A.2d 776. 65 Hey v. Duncan, 13 F.2d 794 (CA. 7). 66 Titus v. Empire Mink Corp., supra note 62. 67 Tompkins v. Commissioner of Internal Revenue, 97 F.2d 396 (CA. 4), purchase of real property by joint venture organized by a partnership which received 60 per cent interest and corporation which acquired 40 per cent interest. Saunders v. McDonough, 191 Ala. 119, 67 S. 591, land development; Commercial Bank v. Weldon, 148 Cal. 601, 84 P. 171, joint venture for purchase of realty; James v. Herbert, 149 Cal. App. 2d 741, 309 P.2d 91, joint venture for development and sale of real property and holding that sharing of losses was not essential. Lindsay v. Marcus, (Colo.) 325 P.2d 267, joint venture for development and promotion of real estate; Bergen v. Kelly, 115 Conn. 292, 161 A. 337, husband and wife jointly building garage constituted joint venture with mutual agency. Bryce v. Bull, 106 Fla. 336, 143 S.409, land purchase venture; Price v. Nellist, 316 Mich. 418, 25 N.W.2d 513, oral contract; oral agreement for development and sale of real estate; held, joint venture; Koffman v. Mathews, (Mich.) 89 N.W.2d 756. 68 For example, Prince Georges Shopping Center; Williston, op. cit., 319. Cf. Hutchinson v. Elder, (Colo.) 344 P.2d 1090. 69 Kaufman v. Superior Court, supra note 27, housing construction; Mcinhard v. Salmon, supra note 31; Zech v. Bell, 94 Wash. 344, 162 P. 363. 70 Lasry v. Lederman, 147 Cal. App. 2d 480, 305 P.2d 663; Price v. Nellist, 316 Mich. 418, 25 N.W.2d 512; Summers v. Hoffman, 341 Mich. 686, 69 N.W.2d 198; Dean v. Dean, (Ohio) 152 N.E.2d 296. Williston, op. cit., 489. 71 Dexter & Carpenter v. Houston, 20 F.2d 647 (CA. 4). 12 Wooten v. Marshall, 153 F. Supp. 759 (D.C.S.D.N.Y.).

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The joint venture need not relate to commercial business or to dealings

in personal property. It may be formed as well for the purchase and resale

of land and the sharing of profits or losses in such a transaction ... The real property acquired and dealt with by the venturers takes on the character of personal property as between the partners in the enterprise, and hence is not covered by these statutes [of frauds].

But probably the most common of all joint ventures, certainly the ones most frequently encountered in litigation, involve the discovery, exploitation and development of mineral resources. 73 Of these, one of the oldest was the joint venture organized to prospect for gold, silver and similar precious metals.74 In recent times, in addition to large-scale coal, gas and oil exploitation,75 the discovery of atomic energy has developed a demand for fissionable materials such as uranium, the sources of which have been frequently discovered and developed by joint ventures. Also, many of the nuclear energy furnaces and power reactors have been built and operated by such associations, organized for this ad hoc purpose.78
Commercial Transactions

Among the typical examples of commercial ventures are joint undertakings to engage in seafaring enterprises.7 7 Ofttimes, one party supplies

the vessel, the crew, and his time and skill, while the other party contributes the necessary funds.78 In other instances, the master and crew

form the joint venture; in one such fishing expedition, the question arose
as to whether a seaman was entitled to his pro rata share of the catch

when he was unable to complete the voyage because of illness. The court 79 in "an able and carefully considered opinion, ' 1 Vitco v. Joneick,8 held
he was so entitled. In another case, the fishing venture agreement re73 Goldberg v. Paramount Oil Co., 143 Cal. App. 2d 215, 300 P.2d 329; Shoemake v. Davis, 146 Kan. 909, 73 P.2d 1043; McCartney v. McKendrick, 26 Miss. 562, 85 So. 2d 164; Rae v. Cameron, supra note 49; Feusner v. Farley (Wyo.) 338 P.2d 835, uranium prospecting. 74 Rae v. Cameron, supra note 49; cf. Embola v. Tuppela, 127 Wash. 285, 220 P. 789. Cf. Cascaden v. Dunbar, 2 Alaska 408, 157 Fed. 62, cert. den. 212 U.S. 572. Williston, op. cit., 319. 75 Dexter & Carpenter v. Houston, supra note 71; Saunders v. McDonough, supra note 67; Sample v. Romine, supra note 57; Rockett v. Ford, supra note 57; Great Western Oil & Gas Co. v. Mitchell, (Okla.) 326 P.2d 794. Dayvault v. Baruch Oil Corp., 211 F.2d 335 (C.A. 10). 70 Williston, op. cit., 319; cf. People v. Rankin, (Cal.) 325 P.2d 10; Jaeger, op. cit., pp. 17 et seq. 77 Sherover v. United States, 137 F. Supp. 778 (D.C.S.D.N.Y.), aff'd 239 F.2d 766 (2d Cir.). Kraemer v. World Wide Trading Co., 195 A.D. 305, 187 N.Y.S. 16. 78 Bass v. Warren Fish Co., 146 F. Sup. 742, rev'd 245 F.2d 43 (D.C.N.D. Fla.) citing Vitco v. Joneich, D.C. 130 F. Supp. 945. 79 So described in Bass v. Warren Fish Co., supra preceding note. 80 Supra note 78.

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quired the plaintiff to furnish the seines, twine and similar material while the defendant contributed the vessel and crew. The bill in equity for an accounting resulted in a decree for the plaintiff; it was affirmed on 81 appeal. Although the joint venture does not actually require the presence of a "icommercial element, '82 numerous joint undertakings have been organized for the purchase and sale of securities,83 commodities,84 and other items of personal property, such as automobiles, 5 television sets, furniture, and household appliances generally. 6 Personal Services Personal service agreements often take the form of joint ventures; a leading case is Barnes v. Alexander.7 Here, a law firm and an independent practitioner entered into a contingent fee-sharing arrangement with another firm of attorneys whereby each of the three parties was to receive a one-third share in the fee. The attorneys were to cooperate in perfecting and prosecuting certain mining claims in Arizona. Upon recovery of judgment in the amount of $75,000, the successful claimants, who were the original clients, paid the contingent fee of one-fourth of this amount, namely $18,750, to the individual attorney whom they had originally retained. The latter retained his one-third as agreed, and paid the balance to his associates, the first law firm, who, however, failed to pay their fellow-venturers, the other law firm. Thereupon, this action was brought for $6,250, or one-third of the contingent fee. After judgment for plaintiffs in the courts below,88 the defendant appealed to the Supreme Court of the United States. In affirming judgment, the Court, after discussing Trist v. Chil 9 upon which appellants had placed considerable reliance, remarked: We start, however, with the principle that an informal business transaction should be construed as adopting whatever form consistent with the facts is most fitted to reach the result seemingly desired .... it is one of the familiar rules of equity that a contract to convey a specific object even before it is acquired will make the contractor a trustee as soon as he gets a title to the thing.
81 Allen v. Kent, 153 Me. 275, 136 A.2d 540, quoting extensively from the leading case of Simpson v. Richmond Worsted Spinning Co., 128 Me. 22, 145 A. 250, as to the rights and duties of joint venturers. 82 Wooten v. Marshall, supra note 72; Willlston, op. cit., 319A at page 641. 83 Chisholm v. Gilmer, supra note 32; Lesser v. Smith, 115 Conn. 86, 160 A. 302. 84 Waldo Lumber Co. v. Metcalf, 132 Me. 374, 171 A. 395; Montenegro v. Roxas (Misc.) 141 N.Y.S.2d 681. 85 Roberts v. Weiner, 137 Conn. 668, 81 A.2d 115. 86 Just Mfg. Co. v. Flack, 354 Pa. 421, 47 A.2d 659. 87 232 U.S. 117. 88 Alexander v. Barnes, 13 Ariz. 338, 114 P. 952. 89 91 Wall. (U.S.) 441.

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9 In a similar case, Ellis v. Frawley," a firm of lawyers requested another attorney to circulate among certain flood sufferers and persuade them to employ the firm to prosecute their damage claims. The attorney agreed and was successful in persuading a number of litigants to retain the firm. From these suits, the firm received upwards of $20,000 (on a 607%-40 % contingent fee arrangement), of which half should have been paid to the lawyer for bringing in the clients according to the terms of the joint venture agreement. When the firm refused the request of Ellis (the lawyer) for his share of the fee, the latter brought this action and recovered judgment. However, on appeal, the court reversed on the ground that "the arrangement between the parties was against public policy"; it amounted to an officious stirring up of litigation. This reversal, based as it is on public policy, is comparable to the outcome in Trist v. Child, supraf 1 In a similar case,92 much more recently decided, a lawyer, about to be elected to the judgeship of a circuit court, made an agreement with another attorney to divide certain fees to be received in connection with handling a case by the latter in the court in which the first-mentioned lawyer was to sit as judge. When the fees were received by the attorney handling the case, he refused to split them with the judge; the latter brought suit for an accounting. He was successful in the lower court, 9 but the Supreme Court of Ilinois reversed on the ground of illegality, 3 4 very much as in the case of Ellis v. Frawley, supra. In the case of Bunn v. Lucas, Pino and Lucas, 5 several attorneys were associated in a common legal endeavor, but there was no agreement as to how the fees were to be divided; the court held this to be a joint venture. This has also been the holding in a number of cases 'where lawyers have jointly undertaken to represent a client 9 And an agreement by one lawyer to pay another a percentage of any contingent fee if he is retained by a given client whom the second lawyer is seeking to obtain for him, and in which they promise each other mutual assistance, is a joint venture 9 7 Also, where several lawyers hold title to land as tenants in common, and they employ a lawyer on a contingent fee basis

90 165 Wis. 381, 161 N.W. 364; Jaeger, Law of Contracts, p. 526. 91 Supra note 89. 92 Schnackenberg v. Towle, 351 Ill. App. 497, 115 N.E.2d 813, reversed 4 InI. 2d 561, 123 N.E.2d 817, cert. den. 348 U.S. 939. 93 Schnackenberg v. Towle, 4 Ill. 2d 561, 123 N.E.2d 817, supra preceding note. 94 Supra note 90. 95 (Cal.) 342 P.2d 508, citing Lasry v. Lederman, supra note 70. 9 Underwood v. Overstreet, 188 Ky. 562, 223 S.W. 152, 10 A.L.R. 1352; McCann v. Todd, 203 La. 631, 14 So. 2d 469. 97 Berke v. Murphy, 280 Mich. 633, 274 N.W. 356.

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to represent them to clear title to their land, and they participate in the legal research incident thereto, the entire transaction has been described as a joint venture." Finally, where two members of a law firm which is being dissolved agree that all unfinished business will receive their joint attention, their further association in this endeavor constitutes a joint venture.9 Patents, Copyrights, Plays and Television
00 The development, promotion, and sale of patents, 1 trade names,' 2 are frequently the subject matter and copyrights of joint venture contracts. Thus, an agreement between a manufacturer and an inventor whereby the former undertook to manufacture and sell certain articles designed by the inventor, who was to receive a salary and a share of the net profits, was held to be a joint venture. 3 A similar arrangement according to which the inventor placed his invention at the disposal of certain parties who were to produce it for commercial purposes at their expense, and to market it, was held a joint venture. 4 Likewise, the production of plays, 5 and other forms of entertainment such as television," is often accomplished by the use of joint ventures. For example, licensing a person to produce a play with the understanding that the receipts are to be divided with the licensor is considered to 7 create the type of fiduciary obligation identified with joint ventures. This form of association also arises when one party lends another money to finance a theatrical production with the promise that the backer ("the angel") will receive an undivided half interest in the proceeds.' And the holding was to the same effect where a producer had already acquired the rights to the production but was in need of financing with which to carry out his plans, and his associates received pro rata shares of the profits to be earned from producing the play. Where the agreement

98 Manning v. Owens, 277 Ky. 40, 125 S.W.2d 753. 99 Creason v. Deatherage, 325 Mo. 661, 31 S.W.2d 1. 100 Ragan v. Sirigo, (Cal.) 326 P.2d 26; Schlesinger v. Regenstreif, 135 N.Y.S.2d 858; Hayton v. Appleton Mach. Co., 179 Wis. 597, 192 N.W. 168.
'

Franks v. Markson, (Mass.) 149 N.E.2d 619.

2 Williston, op. cit., 319B; annotations: 48 A.L.R. 1070, 138 A.L.R. 990.

3 Hayton v. Appleton Mach. Co., supra note 100. 4 United Tool and Mfg. Co. v. Gray, 264 Mich. 566, 250 N.W. 312. 5 Nowell v. Oswald, 96 Cal. App. 536, 274 P. 423; Selwyn & Co. v. Waller, 212 N.Y.
106 N.E. 321.

507,

6 Finney v. Miller, (Ky.) 273 S.W.2d 805; cf. Woodward v. Campbell, 134 F. Supp. 258 (D.C.S.D. Ind.). 7 Underhill v. Schenck, 238 N.Y. 7, 143 N.E. 773, 33 A.L.R. 303. 8 Nowell v. Oswald, supra note 5 (second series). 9 Oakland v. Rosen, 76 Cal. App. 2d 310, 173 P.2d 55.

1960]

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provided that plaintiff rent his title to certain films, the income to be divided among his associates, and plaintiff promised to do what was necessary to obtain additional motion pictures, for which he was to be paid a fixed sum per month for personal and living expenses, the arrangement was held to be within the definition of a joint enterprise, meaning joint venture. 10 When the contract involves personal services, the question often arises: Is it an agency, a partnership, or a joint venture?" In arriving at a resolution of this question the courts examine, and take into consideration, the elements and characteristics of these forms and methods of business enterprise. Thus, the sharing of profits, although an important factor, is not determinative. An essential test is participation in management, operation and control.' But here again, other factors must be considered since there may be a delegation of management to one joint venturer or, there may be a "silent" or "dormant" partner who merely supplies funds, but does not participate in partnership decisions. A proprietary interest in the venture is another significant criterion distinguishing the venture from a mere agency relationship. 13 In a recently decided case, Williston Oil & Gas Company v. Phoenix Insurance Company, 4 the court had occasion to point out that "a co-ownership is insufficient to establish a mining partnership or a joint venture." The case concerned an action to determine liability for fire damage to a truck. During the course of cleaning out and making repairs to certain oil wells, it was agreed that Williston Oil and Gas Company "shall be responsible for loss of or damage to . . . Contractor's equipment"; the Contractor recovered a judgment against Phoenix Insurance Company for fire damage to his truck and the Insurance Company, as subrogees of the Contractor, sought recovery against Williston Oil and Gas Company and Petroleum Operators Corporation as joint venturers in "cleaning and making repairs" to the aforementioned oil wells. The court, holding that "There must be cooperation in the project"' 5 stated: "The evidence is insufficient to sustain a finding that Claygore [a Petroleum Operators' employee] had any authority to speak or act for Williston. ... In this state of the record there is no substantial evidence to sustain the finding of joint operations .... In the absence of a joint operation
10 Murphy v. Community Motion Picture Bureau, (Sup.) 190 N.Y.S. 849.
11 Williston, op. cit., 318B.
12

Williston Oil & Gas Co. v. Phoenix Insurance Co., 271 F.2d 745 (CA. 10); Williston,

op. cit., 318A, 318B. 13 Williston, op. cit., 318A, pp. 568 et seq. 14 Supra note 12. 15 Citing Hartney v. Gosling, 10 Wyo. 346, 68 P. 1118, 1121; Gilroy v. White Eagle Oil Co., 10 Cir., 201 F.2d 113, 116; 4 Summers, Oil and Gas, 2d ed., 723, p. 150.

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there is no basis for any judgment against Petroleum [Operators Corpo-

ration]

. 16

'

The cases demonstrate that all of these factors are considered before the nature of the association is determined. Construction Projects On various types of construction jobs, prime contractors and subcontractors are not infrequently associated on a joint venture basis. That is, one contractor will obtain a contract for an entire operation and then farm out various parts on a profit and loss participation arrangement. To distinguish this from a mere agency or independent contractor undertaking requires some degree of management and control of the entire venture, although it has been held that so long as the right to such participation exists, it may be delegated to one of the joint venturers. Typical of these construction projects are highways, parkways, toll roads, tunnels, bridges, and other structures such as monuments like the Jefferson Memorial.' 7 Others include housing developments, office and apartment buildings, garages,' public utilities 0 and television transmission systems.20 While here, perhaps more than in any other type of joint venture except possibly those organized for the exploitation and development of mineral resources, the great advantage of a business association in which two corporations,2 1 or a corporation and a partnership, 2 2 may join becomes apparent, there are cases which have failed to recognize this.2 3 Seaboard Surety Company v. H & R Construction Corporation is such a case2 4 Here the court used the terms "partnership" and "joint venture" as synonyms and found that a "partnership or joint venture" had been established by plaintiff Surety Company as existing between
16 Williston Oil & Gas Co. v. Phoenix Insurance Co., supra note 12. 17 Wheatley v. Carl M. Halvorson, 213 Or. 228, 323 P.2d 49; Williston, op. cit., 318

et seq.; Jaeger, joint Ventures, 9 Am. U.L. Rev. 1. 18 Matanuska Valley Bank v. Arnold, 223 F.2d 778 (CA. 9), garage and storage building; Bergen v. Kelly, 115 Conn. 292 161 A. 337; Valentine v. Catskill Bridge & Iron Works, 174 N.Y.S.2d 927; O.K. Boiler & Welding Co. v. Minnetonka Lumber Co., supra note 52; Walls v. Gribble, 168 Or. 542, 124 P.2d 713; Zech v. Bell, supra note 69. 19 Smith, Landeryou & Co. v. Hollingsworth, 218 Ia. 920, 251 N.W. 749. 20 Finney v. Miller, supra note 6 (second series). 21 Shell Oil Co. v. Prestidge, supra note 22; Dunclick, Inc. v. Utah-Idaho Concrete Pipe Co., 77 Idaho 499, 295 P.2d 700; Nolan v. J. & M. Doyle, 338 Pa. 398, 13 A.2d 59. 22 Kincade v. Jeffey-De Witt Insulator Corp., 242 F.2d 328 (C.A. 5); Wheatley v. Carl M. Halvorson, Inc., supra note 17 (second series); Port Arthur Trust Co. v. Muldrow, 155 Tex. 612, 291 S.W.2d 312. Cf. Seaboard Surety Corp. v. Nelson, supra note 17. 23 Ault & Wiborg Co. of Canada v. Carson Carbon Co., 181 La. 681, 160 So. 298; Weisman v. Awnair Corp.,'3 N.Y.S.2d 444, 144 N.E.2d 415, 165 N.Y.S.2d 745. 24 153 F. Supp. 641 (D.C. D. Minn.); also, supra note 17.

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H & R Construction Corporation and H. C. Nelson Investment Company, a partnership, ignoring entirely the inhibition which precludes the organization of a partnership between a corporation and a partner2 ship. 5 Upon appeal, H.C. Nelson Investment Company v. Seaboard Surety Corporation," the eighth circuit reversed on the ground, inter alia, that this was not a permissible association, saying: A corporation is an entity authorized by statutory law. It is governed by a board of directors elected by its stockholders, and by officers in turn elected by its directors. Its officers and directors alone control and have the sole authority of controlling the action of the corporation. If the corporation could become a partner with individuals or with another corporation, its actions would be subject to control by the vote of such partnership, and this, manifestly, would be contrary to public policy...27

We conclude that the court erred in finding as a matter of fact and concluding as a matter of law that a partnership existed between the appellants and the H & R Construction Corporation.2 8 When the case came up again,2 9 the court of appeals concluded that the facts supported the trial court's findings that a partnership relation existed betwen the Nelson partnership and the H & R Corporation, but decided the case against Seaboard on the ground that the latter, by continuing to issue surety bonds even after Nelson had refused to sign them, had waived any rights it might have had as to Nelson and elected to hold H & R exclusively. It is submitted that the court, conformably to the weight of authority 0 and its own previous decision, 31 could quite simply have held that the "partnership" between a corporation and a partnership being contrary to public policy could have no legal existence and, as H & R could not bind Nelson under those cicumstances, the trial court's decision would be reversed. Had the joint venture been established, then the ratio decidendi of the court's decision would seem more appealing. Matrimonial Ventures While those who embark upon the seas of matrimony certainly engage upon a venture which is a joint undertaking, it cannot be said that with25 Kasisbke v. Baker, 146 F.2d 113 (CA. 10); and cases cited in Williston, op. cit., 318C. 26 Supra note 17. 27 H.C. Nelson Investment Co. v. Seaboard Surety Co., 262 F.2d 189 (CA. 8), at p. 193. 28 The court also said: "A corporation has no implied capacity to become a partner with another corporation or an individual [authorities omitted]." 29 269 F.2d 882 (CA. 8). 30 Williston, op. cit., 318C, at p. 619. 31 Supra note 27.

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out more it amounts to a joint venture.32 As in the case of agency, "the marital relationship standing alone" does not create any presumption 3 of joint venture in the sense that this term has been used herein.1 However, in a number of cases,34 it has been held that a joint enterprise exists,3 5 but even here, there must be something more than the matrimonial tie." And as Williston says, "the maintenance of a home by husband and wife, even if the joint responsibility of both will not, without more, create a joint venture."3 7 But in the absence of a statutory prohibition, there is nothing to prevent husband and wife from engaging in a joint venture with each other; there are a number of cases which demonstrate this fact.38 This should be especially true where the law forbids the spouses from engaging in a partnership relation with one another.3 9 A good example of a husband and wife joint venture is furnished by the case of Vaszauskas v. Vaszauskas, where the spouses for many years combined their money to engage in business. Subsequently, the husband purchased a farm with the proceeds of the business but declined to give his wife any interest therein. She thereupon sought to have the property impressed with a trust, and the court said: "Real estate belonging to joint adventurers whether the legal title is in one or more partners, is impressed with a trust for the benefit of the joint adventurers which follows it until it passes into the hands of a bona fide purchaser."'" Where a husband and wife built a garage jointly, the court held this to be a joint venture accompanied by mutual agency. 42 And in Brooks v. Brooks,43 where the spouses participated jointly in the purchase and operation of a liquor store, there was a like holding. Finally, it has even been held that when a husband and wife pool their financial resources
32 Tufts v. Mann, 116 Cal. App. 170, 2 P.2d 500; State ex rel. McCrory v. Bland, 355 Mo. 706, 197 S.W.2d 669, 168 A.L.R. 92; Williston, op. cit., 319B. 33 Williston, op. cit., 270A, 277 et seq. 34 Sherman v. Korff, 353 Mich. 387, 91 N.W.2d 485; Painter v. Lingon, 193 Va. 840, 71 S.E.2d 355. 35 Carroll V. Harrison, 49 F. Supp. 283 (D.C. D. Va.) aff'd 139 F.2d 427; Sherman v. Korff, supra preceding note. 36 Painter v. Lingon, supra note 34 (second series). 37 Williston, op. cit., 319B, at p. 645. 38 Dolan v. Dolan, 107 Conn. 342, 140 A. 745; Vaszauskas v. Vaszauskas, 115 Conn. 418, 161 A. 856. 39 Edgerly v. Equitable Life Assurance Soc. of United States, 287 Mass. 238, 191 N.E. 415. 40 Supra note 38 (second series). 41 Vaszauskas v. Vaszauskas, supra note 38 (second series). 42 Bergen v. Kelly, 115 Conn. 292, 161 A. 337. 43 357 Mo. 343, 208 S.W.2d 279, 4 A.L.R.2d 826.

JOINT VENTURES

to maintain their home and pay the joint obligations of the household they become joint venturers. 44
TERMINATION OF THE JOINT VENTURE

The joint venture may terminate in the same manner as most any other contract; 45 for example, by complete performance, breach, abandonment, rescission, or mutual agreement.46 As the joint venture usually contemplates the accomplishment of but one objective, 47 such as the building of a dam,48 the construction of a bridge,49 or the development of a real estate subdivision,-" the completion of the project ends the venture. 5 ' If the joint venture does not state any period of time, or that the participants are bound for the duration of the project,52 each member has the right to withdraw at will without being in breach of contract.5 3 54 But if a time period is expressly stated or is necessarily implied, a refusal to continue by one of the venturers without cause is held a breach of contract.55
44 Dolan v. Dolan, supra note 38 (second series).

45 Williston, op. cit., Ch. 53, Methods of Discharge. 40 Williston, op. cit., 319C Termination of Joint Ventures.

47 Jaeger, Joint Ventures, 9 Am. U.L. Rev. pp. 17 et seq. 48 Dam v. General Electric Company, 265 F.2d 612 (CA. 9), summary judgment granted after 22 years elapsed since joint venture. 49 Valentine v. Catskill Bridge & Iron Works, supra note 18 (second series). 50 Summers v. Hoffman, supra note 58. 51 Saunders v. McDonough, supra note 58. 52 Fuller v. Laws, 219 Mo. App. 342, 271 S.W. 836; cf. Eagle-Picher Co. v. Mid-Continent Lead & Zinc Co., 209 F.2d 917 (CA. 10). 53 Alexander v. Turner, 139 Neb. 364, 297 N.W. 589; Upper Penns Neck Township v. Lower Penns Neck, (N.J. Super.) 89 A.2d 727, holding that where no time is specified, agreement is terminable at will. 54 Hoyt v. Smith, 23 Conn. 177, where court found that although no time was specified, a two-year period was implied. 55 Book v. Justice Mining Co., 58 F. 106, oral agreement to locate mining claim, holding that "If a party . . . locates the claim in his own name, he holds the legal title to the
ground in trust for the benefit of the party for whom the location was made . . ." Cas-

caden v. Dunbar, 157 F. 62 (CA. 9), 2 Alaska 408, cert. den. 212 U.S. 572; s. c. 191 F. 471 (CA. 9), 3 Alaska 671, defining and discussing "grub stake" contract and holding it not within the statute of frauds. In Dayvault v. Baruch Oil Corp., 211 F.2d 335 (C.A. 10), the court said: "The pleadings and the evidence ... establish a rather typical joint venture to acquire, explore and develop oil and gas leases. . . . While not good business practice, it is not uncommon for the joint adventurers to orally agree that one of them shall hold title to the leases in order to expedite the promotion of the joint enterprise. [Citations]" Held, that equity would treat these leases as personal property or, "equity may impress a trust" or "a constructive trust upon the real property for the benefit of the joint adventurers to prevent unjust enrichment and to enforce restitution." Wyoming Pacific Oil Co. v. Preston, supra note 40; Sime v. Malouf, 95 Cal. App. 2d 82, 212 P.2d 946, 213 P.2d 788; Carmer v. Leo Johnson, Inc., supra note 43; 20th Century Coal Co., Inc. v. Taylor, (Ky.) 275 S.W.2d 72, reh. den.; Kennedy v. Innis, (Mass.) 158 N.E.2d 334; Futernick v. Cutler, (Mich.) 95 N.W.2d 838, joint venture followed by loan agreement; Welland v. Huber, 8 Nev. 203; Lind v. Webber, 36 Nev. 623, 134 P. 461, 135 P. 139, 141 P. 458;

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What are the remedies available in case of such breach? In contrast to the situation in partnership law, the courts have quite uniformly held that joint venturers may sue each other on the contract in an action at law for damages:," "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. 57 This right, however, is qualified where the financial affairs of the joint venture are complex and have become 8 a tangled skein. 5 Then xecourse is had to a suit for an accounting.,' This is also the remedy where one joint venturer overreaches his associates: It is settled law of this state [California] that where a joint adventure is alleged, and it is claimed that one of the joint adventurers received a secret profit, then relief can only be had by way of an accounting. 0 By analogy to the rights of partners, joint venturers are also held to have a right to contribution from their associates for necessary expenditures, 6 1 and a right to restitution or quasi-contractual recovery for necessary work and labor incidental to the joint venture. Thus, in a leading case, West v. Peoples First National Bank and Trust Colpany, 2 it was held that when the accomplishment of a joint venture land development and building sub-division contract became impossible because the land was taken by condemnation under eminent domain proceedings, the active entrepreneur was entitled to restitution, since he had partly performed the contract and "justice requires the imposition of a quasi-contractual obligation on the party receiving such performance."M
Nusom v. Fromm, (Or.) 340 P.2d 186; West v. Peoples First National Bank & Trust Co., (Pa.) 106 A.2d 427; Smith v. Guy, (Tenn.) 144 S.W.2d 702; Omohundro v. Matthews, supra note 31; Feusner v. Farley, (Wyo.) 338 P.2d 835. Cf. Leboire v. Royce, (Cal.) 344 P.2d 386; Hutchinson v. Elder, (Colo.) 344 P.2d 1090. 56 Johanik v. Des Moines Drug Co., 235 Ia. 679, 17 N.W.2d 385; Lawrason v. Richard, 172 La. 696, 135 S. 29; Pine Building Co. v. Grossman, 102 N.J. Eq. 189, 140 A. 251; Hoffman v. Mittlemann, 147 Misc. 442, 263 N.Y.S. 899. Just Mfg. Co. v. Falck, 354 Pa. 421, 47 A.2d 659; King v. Meabon, 128 W. Va. 263, 36 S.E.2d 211. 57 Joring v. Harriss, supra note 34. 58 Cooperstein v. Shapiro, 118 R.J. Eq. 337, 179 A. 29; Langford v. Delalle, 136 Misc. 62, 239 N.Y.S. 107; Leitner v. Wass, (Sup.) 63 N.Y.S.2d 350. 59 Cascaden v. Dunbar, supra note 55; Dayvault v. Baruch Oil Corp., supra note 55; Wyoming Pacific Oil Co. v. Preston, supra note 40; Carmer v. J. Leo Johnson, Inc., supra note 43; 20th Century Coal Co. v. Taylor, supra note 55; Meinhard v. Salmon, supra note 31; Feusner v. Farley, supra note 55. 60 Wyoming Pacific Oil Co. v. Preston, supra note 40, quoting Austin v. Turrentine, supra note 41; Berwin v. Cable, 313 Mass. 431, 47 N.E.2d 957, held that action on the contract could not be maintained by one joint venturer against the others where evidence disclosed the necessity of a complete accounting to establish the profits. 61 Lewis v. Firestone, (Cal. App.) 338 P.2d 953; Williston, op. cit., 345 Contribution. 62 Supra note 55. 63 Quoting Williston, op. cit., 1972, at p. 5536.
3

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While the courts have made much of the fact that partners may not sue each other at law, 4 and that joint venturers may, this difference is sometimes more apparent than real.6 5 The distinction seems to be based on the fact that the joint venture is regarded by the courts as essentially contractual; 6 "While there must be some sort of contractual relationship between the parties, it may be implied or proven by facts and circumstances showing that such an enterprise was in fact entered 8 into."1 7 The articles of partnership, on the other hand, create a relationship governed by well-crystalized principles of law embodied in a massive collection of precedents or even codified in a uniform statute 8 This is recognized by the court in the following language: Though it is the general rule that one partner cannot maintain an action at law against his co-partner for any matters connected with the partnership affairs until there has been a final settlement of the account between them, in cases of a joint adventure where the agreement is merely to share the profits of a single transaction and there is no necessity of adjustment of joint debts and mutual accounts, an action at law may be maintained by one of the adventurers against the other to recover his 69 proportionate share of the profits of the venture. In conclusion, an extensive examination of the cases demonstrates that the joint venture today is a form of organization which, while resembling a partnership in many respects, has achieved a niche of its own in the law of business associations. It possesses certain advantages and is free from some of the inhibitions which attend the formation of a partnership such as the exclusion of wives and corporations. Nor have the latter been slow to appreciate the advantages to be gained by the joint venture. This is illustrated by the far flung and widespread character of the operations undertaken, and the diversity of their objectives. It can no longer be successfully argued that this legal concept "of purely American origin" 0 is merely a form of partnership; as the Supreme Court of Delaware has recently said: "The widely recognized
7 legal relationship of joint adventure is of modern origin."m In short,

the joint venture has become a distinct form of business organization, a legal relationship.
04 Hoffman v. Mittlemann, 147 Misc. 442, 263 N.Y.S. 899.

G5 Rae v. Cameron, supra note 49; Williston, op. cit., 319C. 66 Joseph v. Donover Company, 261 F.2d 812 (CA. 9), where the court emphasizes the necessity of a contract describing it as a "meeting of the minds," and holding that the plaintiff had failed to establish the existence of a joint venture contract. As to criticism of the expression "meeting of the minds," see Williston, op. cit., 2, note 12, and Radin, Contract Obligation and the Human Will, 43 Columbia L. Rev. 575. 67 J. Leo Johnson, Inc. v. Carmer, supra note 43. 68 Uniform Partnership Act, Williston, op. cit., 307A, 318B. 60 Hoffman v. Mittlemann, supra note 64. 70 State ex rel. Crane Co. v. Stokke, supra note 55. 71 J. Leo Johnson, Inc. v. Canner, supra note 43.