Devine v. Melton

Laughlin, J.:

This is a suit in equity to have it decreed that the defendant Melton holds a judgment in trust for himself and the other parties to the action, and for the dissolution of a joint adventure agreement and for the division of the property after the payment of the debts.

The plaintiff alleged that on the 12th day of May, 1913, the parties agreed upon a joint adventure by which the defendant Melton was to enter into a contract with the firm of Havemeyers & Elder for wrecking a building at the corner of Kent avenue and North Third street, borough of Brooklyn, New York, and plaintiff was to pay to said firm the sum of $7,000 as the purchase price of the materials, and was to deposit with the firm the sum of $5,000 as a guaranty for the due performance of the contract by Melton and was to furnish the necessary money for payrolls and the profits were to he divided forty per cent to the plaintiff and thirty per cent to each of the defendants; that Melton made the contract with Havemeyers & Elder on the 21st day of May, 1913, and plaintiff paid the $7,000 and delivered the $5,000 required to be paid and delivered under the contract between Melton and Havemeyers & Elder, but they refused to permit Melton to perform the contract, and on the 10th day of June, 1913, he brought an action against Havemeyers & Elder in the Supreme Court to recover damages for their alleged breach in refusing to permit him to perform, and on the 11th day of November, 1914, recovered a judgment against them for $12,153.98, damages and costs, which has not yet been paid; that Melton is financially irresponsible and that there has been no accounting between the parties in the premises; that plaintiff has duly performed the joint adventure agreement on his part and has no adequate remedy at law to obtain his interest in the judgment so recovered by Melton.

The defendants in the action brought by Melton for breach of the contract to wreck the building appealed to this court, where the judgment was affirmed without opinion. (Melton v. Havemeyer, 168 App. Div. 941.) The record on that appeal was not introduced in evidence on the trial of the issues in this action, but we may take judicial notice of its contents. We find that it appears thereby that Melton sought to recover the profits —claimed to be $25,010.80— which he would have made had he been permitted to perform the contract, and the court instructed the jury, in effect, that he was entitled to recover the difference between the cost of the contract to him and the amount he would have realized thereon over and above the expenses of performance had he been permitted to perform, plus the $5,000 deposited as security. It was shown in that action that the purchase price of the materials, namely, the $7,000, had been paid. The evidence was conflicting with respect to the profits that would have been realized on the contract. The verdict was for $12,000; 06, which plainly indicates that the jury determined to award merely nominal damages as the loss of profits, for the $12,000 represented the $5,000 deposited as security and the $7,000 which had already been paid under the contract. If the agreement had been executory with respect to the payment of the $7,000, it is manifest that the verdict would have been less by just that amount.

The respondent Melton takes the position in this action that the plaintiff has no interest in the judgment recovered against Havemeyers & Elder, although it entirely, with the exception of six cents, represents the moneys advanced by this plaintiff under the joint adventure. The theory on which Melton makes this contention is, that the plaintiff abandoned the joint adventure and forfeited his rights thereunder by contracting with Havemeyers & Elder for the demolition of the same building, and by defending the action by Melton against them, and by undertaking to indemnify them against and save them harmless from any action on the Melton contract. It appears that Havemeyers & Elder terminated the contract between Melton and them on the 6th day of June, 1913, pursuant to the provisions of a notice given to Melton by letter on the third day of the same month, in which they complained of his failure to give a bond for $20,000 and to personally supervise the work. It was conceded on the trial of this action that Havemeyers & Elder broke their contract with Melton by ref using to permit him to perform, and of course that was necessarily so adjudicated in his action against them. The next day after Havemeyers & Elder terminated the contract with Melton the plaintiff entered into a contract with them for the performance of the same work on the same terms, and on the same day entered into a separate contract with them by which it was agreed that the $7,000, which they had already received, should be retained by them as the purchase price of the material under their contract with him, and that the $5,000 which they held as security for the performance of Melton’s contract should be held as security for the performance of plaintiff’s contract, and by which plaintiff agreed to indemnify them against and save them harmless from any claim or action by Melton for the return of said moneys or for damages arising out of their contract with him. When Melton sued Havemeyers & Elder the appellant assumed the defense of the action, and it was conducted by counsel employed by him, and by the answer interposed it was denied that they had broken the contract. The appeal from the judgment against them was also conducted by counsel for the appellant herein.

It was not shown that the appellant did anything to influence Havemeyers & Elder with respect to breaking their contract with Melton, nor was it shown that the negotiations for the contract which was subsequently made between plaintiff and Havemeyers & Elder were opened prior to the termination of the Melton contract. There is no material evidence, other than as I have stated, with respect to the circumstances attending the making of the contract between plaintiff and Havemeyers & Elder. There is evidence tending to show that prior to the time plaintiff entered into the contract for the performance of this work there were negotiations between him and Melton with respect to the assignment of the Melton contract to the plaintiff; and the evidence also tends to show that plaintiff entered into the contract for the performance of this work for the' benefit of all the parties to the joint adventure on the basis of the original arrangement. He testified that he had an express understanding to that effect with the defendant Pritchett, and that is not controverted. He also testified that he informed Melton that he “ would go on with the job and give him his share of his profit,” and this is not specifically denied by Melton. Melton, however, denies that appellant offered to allow him to share in any profit under the contract on the original terms provided he would assign his contract to plaintiff. On these points evidence that might have had a material bearing was, I think, erroneously excluded. Shortly after the plaintiff and Havemeyers & Elder entered into their contract and after work was commenced, plaintiff organized a corporation for the sole purpose of performing the work in question, and he testified that the contract was assigned to the corporation, although the assignment is not in the record. The stockholders were appellant, defendant Pritchett, and a brother of appellant’s attorney, but in what proportion the stock was divided between them does not appear. Appellant testified that the corporation has never done any other business, and that he “ forgot all about the corporation because it did not amount to nothing.” There is a finding to the effect that after the performance of the contract of demolition made by plaintiff the $5,000 deposited as security was returned by Havemeyers & Elder to the corporation or to the plaintiff, but the evidence shows that it was returned to plaintiff, and the record on the other appeal shows it was returned to him personally.

We are of opinion that in the circumstances the court erred in ruling that the plaintiff forfeited his right to participate in the recovery in the action by Melton against Havemeyers & Elder. The evidence tends to show that no profits were made by plaintiff or by the corporation on the contract which plaintiff made for this work, but no finding was made with respect thereto. The evidence is insufficient to enable us tq decide whether or not the other parties would be entitled to share in such profits if any had been made. We think that justice requires that the judgment should be reversed. On a full presentation of the case the plaintiff may be chargeable with Melton’s costs and expenses of the action against Havemeyers & Elder, provided it is decided that he is entitled to share in the recovery, and Melton may be entitled to share in the profits, if any, made on plaintiff’s contract with Havemeyers & Elder; but.on the evidence in this record it cannot be held that plaintiff has forfeited all right to the recovery of the $12,000.06, which represents the money he advanced under the joint adventure. It appears by the requests to find and by the points, that the contention of appellant’s counsel both on the trial and on the presentation of the appeal was that his client has a forty per cent interest in the judgment recovered by Melton against Havemeyers & Elder. Without deciding more favorably than appellant claims, with respect to a construction of the joint adventure agreement orna point on which respondent was not called upon to argue, it may be observed that it is not clear to us that the $5,000 deposited as security, which was to be returned on completion of the contract, was to be deemed profits, nor is it plain that appellant was not to be reimbursed for the $7,000 before the division of profits; and if so, then the only profits of the joint adventure represented by the judgment against Havemeyers & Elder are the six cents, and in that view the decisions on which respondent relies (Denver v. Roane, 99 U. S. 355; Miller v. Chambers, 73 Iowa, 236; Campbell v. Mims, 149 Ky. 101; Westwood v. Cole, 66 Misc. Rep. 53; sub nom. Westwood v. Crissey, 139 App. Div. 841) are authority for depriving plaintiff of sharing in the profits of the joint adventure recovered from Havemeyers & Elder, but not for that part of the recovery which represents the money he advanced, provided it was not to be deemed part of the profits.

It follows that the judgment should be reversed and a new trial granted, with costs to appellant to abide the event.

Scott and Dowling, JJ., concurred; Ingraham, P. J., and McLaughlin, J., dissented.