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District Court of Appeal, Third District, California.

MAZZERA v. WOLF et ux.

Civ. 7278.

Decided: October 10, 1946

Gumpert & Mazzera and Charles A. Zeller, all of Stockton, and C. Ray Robinson, of Merced, for appellant. Oscar C. Parkinson, of Stockton, for respondents.

Appellant herein alleged in a complaint filed in the Superior Court of San Joaquin County that on or about April 19, 1944, he and defendants orally agreed that defendants should purchase and take and hold title to a certain lot in Stockton, for the joint account and mutual benefit of plaintiff and defendants; that defendants were then to convey to plaintiff an undivided half interest therein upon payment to them of one-half of all legitimate expenditures made by defendants in consummating the purchase; that pursuant to said agreement defendants purchased the lot, plaintiff tendered to them the said one-half of the costs thereof, but that defendants refuse to accept said tender or to make conveyance. In a second count plaintiff alleges ownership and right to possession of an undivided one-half interest in said lot. His prayer is that it be decreed that defendants hold title to an undivided one-half interest in trust for plaintiff, that upon payment to them of one-half of their expenditures they be compelled to convey such undivided one-half interest to plaintiff, and that plaintiff's title to such interest be quieted. Defendants demurred to said complaint and said demurrer having been overruled, answered thereto, denying the aforesaid allegations except that they admitted they had purchased the lot, that plaintiff had requested a conveyance of an undivided half interest therein and that his request had been refused.

After trial by the court without a jury, findings of fact were filed, as follows: At and prior to April 19, 1944, the lot in controversy was owned by one Gilbeau. Plaintiff owned improved real property bordering it on one side. Defendants owned similar property on the opposite side, upon which Wolf was operating a business, neither party having any interest in or business connection with the operations conducted by the other. On April 19, 1944, plaintiff and Wolf met casually upon the lot in suit, and in the course of a general conversation plaintiff proposed to Wolf that the latter endeavor to purchase the lot, taking title in his own name, and that they would then ‘go fifty-fifty’ in the property, each taking an undivided one-half interest. To this proposal Wolf assented. Mrs. Wolf was not present, was not told about the conversation, and did not know it had taken place until served with process in this action. Wolf took no steps toward the purchase of the property until October, at which time Gilbeau wrote to him urging him to make an offer for the lot. Wolf offered $2,500 which offer was rejected, and thereafter offers and counter-offers having been made defendants agreed to pay $4,500 for the property, and in February, 1945, secured a deed thereto, making payment of the $4,500 out of their own funds. Subsequently plaintiff offered to pay Wolf one-half of the purchase price and costs of acquisition and demanded a conveyance of an undivided half interest, which was refused.

Conclusions of law from these findings were that the conversation between plaintiff and Wolf on April 19 ‘did not create an enforceable contract because same was not in writing’; no partnership existed between plaintiff and defendants or either of them and the conversation of April 19 did not effectuate a partnership; Mrs. Wolf did not authorize her husband to act for her in connection with said property; the oral agreement is barred by section 1624, subd. 4, of the Civil Code, and section 1973, subd. 4, of the Code of Civil Procedure; no trust was created by said conversation or the conduct of the parties; and defendants are entitled to have their title quieted as against the claims of plaintiff.

From a judgment in favor of defendants plaintiff has perfected this appeal. In his opening brief before us appellant asserts that this action was commenced ‘to establish a constructive trust and a partnership interest,’ in the property described; that the agreement in the case ‘had the effect of making the respective parties partners in the enterprise of buying and holding the property which was the subject of the agreement; that the existence of the relationship created by virtue of the agreement, placed the respective parties in confidential relations toward each other with respect to the property in question thus making the respondent Wolf a trustee with respect to his negotiations with respect to the purchase of the property and his purchase thereof’; and in his closing brief states that he does not rely upon an express or resulting trust. Also he submits that the entire case and the legal problem involved is ‘completely disposed of’ by the case of Koyer v. Willmon, 150 Cal. 785, 90 P. 135.

Respondents challenge appellant's assertion that the facts in the Koyer case are the same as those in the instant case, assert that plaintiff's action is barred by the statute of frauds, that there can be no recovery on the theory of an express trust, a resulting trust or a constructive trust, that no partnership between plaintiff and defendants was created, and, finally, that the alleged agreement cannot be enforced specifically for the reason that Mrs. Wolf was not a party to it and the property was purchased with community funds.

Section 1624 of the Civil Code provides that a contract ‘for the sale of real property, or of an interest therein’ is invalid unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent. Section 1973 of the Code of Civil Procedure is to the same effect, and further provides that evidence of the agreement cannot be received without the writing or secondary evidence of its contents. Section 852 of the Civil Code provides that no trust in relation to real property is valid unless created or declared (1) by a written instrument subscribed by the trustee or by his agent thereto authorized by writing; (2) by the instrument under which the trustee claims the estate affected, or (3) by operation of law. Section 2400 of the Civil Code defines a partnership as ‘an association of two or more persons to carry on as co-owners a business for profit’; and section 2401, subd. (2), of that Code provides that ‘Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such co-owners do or do not share any profits made by the use of the property.’

Appellant impliedly admits that if the oral agreement which he relies upon did not create a partnership or create a confidential relationship between the parties it could not be enforced or proven, because of the Statute of Frauds. His contention therefore seems to be that the oral agreement to convey real property, though ineffective for that purpose because of the statute, may, nevertheless, be construed as creating a partnership—which may be created orally—that the resulting partnership relationship creates a confidential relationship which makes defendant a constructive trustee and compels him to do under the oral contract just what the Statute of Frauds says he may not be compelled to do under an oral contract, to wit: make a conveyance of real property. He thus, in effect, argues that the oral agreement creates a partnership agreement the enforcement of which would result only in a tenancy in common between the parties which section 2401(2) of the Civil Code provides does not constitute a partnership.

We are of the opinion that to so hold would be to destroy the effect of the Statute of Frauds; and we are further of the opinion that Koyer v. Willmon, supra, relied upon by appellant, does not so hold. While there is certain language used in the opinion in that case which if isolated from the context may give some support to appellant's contention, a reading of the whole opinion makes the decision clearly inapplicable to the facts in the case before us. There the question before the Supreme Court was whether a nonsuit was properly granted. The evidence in the case, which was brought up in a bill of exceptions, showed that prior to the particular transaction plaintiff and defendant had often had business dealings together, and their relations were intimate. Plaintiff had been in that habit of buying property and letting the title stand in the name of Willmon. He testified that on the day he brought suit he had recorded deeds made to him by Willmon for property which had stood in the latter's name for over a year, and that they had had other transactions in which Willmon had bought land in his own name for plaintiff. It also appears that Willmon made the proposition to Koyer that they buy a parcel of land on the San Pedro water front which he thought was good. They talked over the proposition, consulted maps and secured advice as to whether they could maintain the water frontage if filled in or washed out; and they visited the land. Originally one parcel, consisting of three lots, was under consideration, but plaintiff discovered another, lot 14 in block 93, just beyond the first parcel, which they agreed they would have to have in order to ‘control the situation’; and they discussed its possibilities for the purpose of putting in a pier. It was then agreed that they would buy both parcels, and the first one was purchased by Willmon through agents, and, as agreed as to the whole property, title was taken in the name of Lydia B. Shields and both parties paid a part of the deposit, and eventually the balance due. On returning to Los Angeles after visiting the property, plaintiff secured the name of the record owner of lot 14, and defendant agreed to write to her. Later defendant reported that the owner would not sell, and had given an option to some one in San Pedro. Thereupon plaintiff gave defendant a ten ride ticket for transportation to San Pedro and requested him to go there and find the holder of the option. Willmon went to San Pedro, and eventually found the holder of the option. He bought the lot for himself and some time later advised plaintiff that he had secured it in his own name and intended to keep it; and he thereafter refused to convey any interest therein to Koyer. Koyer testified that they would not have bought the first parcel if they had not found they could control the water front; that lot 14 was necessary for their purposes, and that they were buying the property for its water privileges, with the expectation of selling at a profit. The foregoing testimony was undenied, and it was upon same that the Supreme Court made its decision that the evidence was sufficient to sustain plaintiff's contentions and to support a conclusion that a partnership relation existed between the parties, and that it was therefore error to grant the nonsuit.

The facts in that case are clearly distinguishable from those in the case before us. Here there had been no previous business transaction between plaintiff and Wolf and none was contemplated. The alleged purpose of buying the lot in controversy was not for a speculation or in contemplation of making a profit or carrying on a business between the parties. The most that can be said in plaintiff's behalf is that there was a mere oral agreement that defendant Wolf should purchase the lot and sell a half interest to plaintiff. And the finding of the trial court that no partnership between the parties existed or was created, is amply supported by the evidence. That a partnership is the association of two or more persons for the purpose of carrying on business together, and that their joint participation in the management and control of such business is an essential element of the partnership, and that the same element is necessary to constitute the parties joint adventurers, is held in Spier v. Lang, 4 Cal.2d 711, 716, 53 P.2d 138; Auditorium Co. v. Barsotti, 40 Cal.App. 592, 596, 181 P. 413; Martin v. Sharp, etc., Co., 34 Cal.App. 584, 588, 168 P. 373. Plaintiff did nothing upon his part, contributed nothing, risked nothing, and gave no consideration to support the contract. It follows that no confidential relationship growing out of any partnership relationship was created. The oral agreement, if we assume that the testimony shows that a contract was actually effected, was that defendant would purchase the lot and convey a half interest therein to plaintiff. Such contract is within the Statute of Frauds and unenforceable. It is said in 42 A.L.R. at page 63: ‘Ordinarily, oral agreements to join in the purchase of land do not give one party any enforceable right to claim the benefit of the purchase by the other. Viewed as agreements to transfer an interest in the land to be acquired, they are clearly within the Statute of Frauds; nor can they be given effect as a promise to hold for the benefit of another, save in those jurisdictions where express trusts need not be evidenced by writing. Except in those jurisdictions, therefore, the complainant cannot obtain relief unless he can establish a resulting trust, growing out of the use of his money in making the purchase, or a constructive trust, based upon the fraud of the defendant in procuring the title, or the abuse of some confidential relationship. The mere breach of the agreement that the complainant may share in the benefit of the purchase is not fraud in obtaining the title, and so will not give rise to a constructive trust.’

Among cases which support this statement and in which the facts are comparable are: Dunphy v. Ryan, 116 U.S. 491, 497, 6 S.Ct. 486, 29 L.Ed. 703, 705; Schultz v. Waldons, 60 N.J.Eq. 71, 47 A. 187, 190; Abraham v. McSoud, 188 Okl. 409, 109 P.2d 822, 823; McDonald v. Conway, 254 Mass. 429, 150 N.E. 200; Mancuso v. Rosso, 81 Neb. 786, 116 N.W. 679; Norton v. Brink, 75 Neb. 566, 106 N.W. 668, 110 N.W. 669, 7 L.R.A.,N.S., 945, 121 Am.St.Rep. 822. Compare Silberman v. Angert, 100 N.J.Eq. 477, 138 A. 529, 530; Ewing v. Clore, 219 Ky. 329, 292 S.W. 824; Kelly v. Lehmann, 297 Ill. 33, 130 N.E. 375, 385; Meyer v. E. G. Spink Co., 76 Ind.App. 318, 124 N.E. 757, 127 N.E. 455, 457; Stamos v. Portland Elec. Power Co., 128 Or. 310, 274 P. 915; Gates Hotel Co. v. C. R. H. Davis Real Estate Co., 331 Mo. 94, 52 S.W.2d 1011, 1014, 1015.

California cases supporting the rule stated above are Roberts v. Ware, 40 Cal. 634, 636; Taylor v. Kelly, 103 Cal. 178, 37 P. 216; Neet v. Holmes, 25 Cal.2d 447, 464, 154 P. 854; Bauman v. Wuest, 32 Cal.App. 217, 219, 162 P. 434; Bradley v. Duty, 73 Cal.App.2d 522, 166 P.2d 914.

The judgment is affirmed.

ADAMS, Presiding Justice.

PEEK and THOMPSON, JJ., concur.

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