Hobdey v. Wilkinson

Sobeloff, C. J., delivered the opinion of the Court. Questions as to the law of joint adventures and partnership, and as to pleading in equity, are raised by this record. For an understanding of the issues a somewhat detailed recital of the facts is unavoidable. In January 1946 Ernest L. Wilkinson and wife (the appellees) and Orrice L. Murdock, a licensed real estate broker, entered into an oral agreement to engage in a real estate development.

The agreement was never precisely and comprehensively reduced to writing but its ⁵²⁰ terms may be gathered, in part at least, from a written instrument signed by the appellees and Murdock on August 27, 1948, when they endeavored to settle certain disputes which in the meantime had arisen between them. In that writing the earlier oral agreement is repeatedly referred to as a “joint adventure”. Here we learn that the 1946 arrangement was for the Wilkinsons “to supply the capital for said adventure in an amount to be determined from time to time by them and Orrice L. Murdock was to supervise the purchase of the necessary lots and act as general contractor for the supervision and construction of whatever number of homes and dwellings were decided upon by Ernest L. Wilkinson and Alice L. Wilkinson and that the profits and losses were to be shared equally.” Pursuant to their understanding, Murdock negotiated for the purchase of a piece Of land in the Kensington area in Montgomery County. It was paid for with appellees’ money and title was taken in their names.

Murdock supervised construction, and at least some of the contracts for materials were made in Murdock’s name. There was no arrangement for Murdock to be paid any determined price to erect houses on the land, as would normally occur when an owner deals with a building contractor. Nor was there any agreement to pay Murdock a fee for his services in supervising construction or any brokerage for sale of the houses. Up to a certain point, when losses became imminent and appellees and Murdock quarrelled, they turned money over to him as needed, and he paid construction bills as they came due.

Murdock apparently advanced some money of his own, but the amount is sharply in dispute between him and the Wilkinsons. In all, seventy houses were built. Sixty-eight were sold and conveyed. The record indicates that the printed form of sales contract used in each instance had the name of O. L. Murdock at the top, and contained provision for a signature above a line bearing the printed words “O. L. Murdock, Agent”.

The form provided a ⁵²¹ place for ratification by the “Purchaser” and by the “Seller” and “Wife of Seller”. The appellees’ names appear nowhere in the form. In actual practice the sales contracts were signed by Murdock in the space intended for the “Seller”, and no signature was customarily sought or obtained from the appellees. The body of the sales contract reads as a broker’s form and provides for payment of commissions to O. L. Murdock, but it is clear that no commission was ever paid or agreed to be paid by or demanded of the appellees.

The equal sharing in profits and losses, it is conceded by both sides, was the controlling arrangement as evidence in the written agreement of 1948. As Mr. Wilkinson was away from home for long periods the practice was adopted for the appellees to sign deeds and to leave them with Murdock. Wilkinson testified that Murdock’s instructions were to deliver such deeds to the purchasers at date of settlement upon payment of the full purchase price in cash. The record fails to disclose any instance of the appellees formally ratifying a sales contract by signing same; but ratification of contracts without signature by appellees may be presumed from their turning over signed deeds to Murdock.

The standard price was controlled by the Federal Housing Administration, which had established priorities governing sale of the houses, and in instances where extras were furnished the additional price was arrived at by negotiation between the purchasers and Murdock, never with Wilkinson. The last two of the seventy houses were sold to the appellants who were employed by Murdock as salesmen on this very project. The present litigation concerns the contracts for the sale of these two houses. In accordance with customary practice in the sale of houses in this project Murdock signed the sales contracts with the appellants.

They made the down payments to him, as the sixty-eight other purchasers had done. The appellants had seen contracts with other purchasers made in the same way; they had in fact ⁵²² been salesmen in some of these transactions and were thus familiar with the procedure that was followed. Appellants swear that when they made their payments they were actually of the belief that Murdock was.the owner of the entire operation, and there, is no reason to doubt their statements. Murdock supports them in his testimony; he says appellees never questioned the finality of the contracts he made in his own name with the numerous other purchasers.

There is no evidence to the contrary. Appellees’ names never appeared on any of the seventy contracts, their names were never mentioned in any advertising. While, according to Murdock, Wilkinson on. several occasions asked for and received lists, showing deposits he never challenged any contract signed by Murdock, although he knew that he (Wilkinson) had signed none either as contracting-seller or to ratify Murdock’s sale. Copies of the contracts were customarily sent to the Title Company and not to appellees, and it does not appear that appellees ever. asked for copies of the contracts or challenged in any way any of the contracts made by Murdock...

Appellants were permitted by Murdock early in 1948 to take possession of the houses they respectively had purchased. These houses being, not quite finished, they, proceeded to finish them and to make improvements,, not suspecting that Murdock had any less authority t'o deal with these houses than. he. appeared to have in respect to the other houses- in the development. Appellants’ open and notorious possession from January, to October 1948 was not challenged by appellees but appellants were permitted to remain in possession and to spend money for improvements. Months later, on October 9, 1948, the dispute between appellees and Murdock coming to a climax, the appellants were ordered by the appellees to quit the premises.

Appellants then obtained the deeds from Murdock or his secretary and recorded them with the avowed purpose of preventing eviction of their families, although.it is not denied that the purchase price had not been fully paid.. ⁵²³ Later each of the appellants went to the Title Company to make settlement, but they claimed certain credits which the Title Company under advice from the appellees rejected. The appellant Hobdey demanded a discount of $450.00 allowed him by Murdock under the following circumstances: When appellees stopped their payments to Murdock, the latter, needing working capital for the building project, offered to accept $1,500.00 for the balance of $1,950.00 then still owed by Hobdey. Accordingly, appellant Hobdey paid $1,500.00 in advance of the normal time and before completion of the house. Certain credits also were claimed by appellant Stone, for commissions acknowledged by Murdock to be due.

It is not clear from the record how much of this is for services in connection with the Wilkinson-Murdock development, and how much for brokerage services rendered by Stone to Murdock in respect to business in which Wilkinson had no interest. Wilkinson brought suit in the Circuit Court for Montgomery County to have the cloud removed from his title. The appellants filed no cross-bill but in their answer prayed relief by way of specific performance of the contracts on the theory that Murdock made them as joint adventurer or partner on behalf of the Wilkinsons as well as for himself. After testimony, the Court declared the deeds to appellants null and void.

It found, moreover, that there was no joint venture between appellees and Murdock. The trial court referred the case to an auditor to state an account between the parties. The order of