Daily Development for Wednesday, December 6, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

JOINT VENTURES; STATUTE OF FRAUDS: A joint venture agreement to share in the proceeds of real property investments need no be in writing, even though the ultimate remedy in resolving the joint venture is to declare interests in the real estate that was the subject of the joint venture agreement.

Lightsey v. Marshall, 992 P.2d 904 (N.M.App. 1999).

Plaintiff brought an action to quiet title to two parcels of property. Title was in her name, but the properties were the subject of a business arrangement that Plaintiff had with Defendant whereby Defendant would repair and maintain the properties and find tenants for them. In fact, Defendant had carried out these projects, and had rented the first property for three years, using the proceeds from such rentals to pay the costs of the repairs and some of the surplus to acquire the second property. By the time of the lawsuit, Plaintiff lived in one of the properties and Defendant in the other.

Defendant's answer to the quiet title action was that the parties owned the two properties as tenants in common, and he demanded a partition and accounting. Plaintiff responded that the Statute of Frauds barred introduction of any parole evidence supporting the understandings of the parties with regard to their interests in the parcels.

The court treated the claim for a declaration of cotenancy as, in effect, a request to recognize and enforce a joint venture agreement, even though the Defendant had not pleaded that such an agreement existed. The court found that a joint venture exists when two or more parties: (i) enter into an agreement; (ii) combine their money, property, or time in the conduct of some particular business deal; (iii) agree to share, jointly, in the profits and losses of the venture; and (iv) have the right of mutual control over the subject matter of the enterprise or of the property. Here, the court held that a joint venture did exist because the parties' relationship met the four tests, and, therefore, partitioned the property that was the subject of the joint venture and ordered an accounting. The court found that the parties did not intend to transfer title to real property through their oral agreements and, therefore, the interests in the joint venture were not voided by the fact that the joint venture agreement did not satisfy the Statute of Frauds.

Comment: Even if the Statute of Frauds did apply to this relationship, it would appear abundantly clear that the part performance doctrine would have taken the agreement out of the Statute of Frauds. That strikes the editor as a cleaner approach, since many, many real estate agreements especially leases and lease/options conceivably could be characterized as joint ventures and consequently the protection of the Statute of Frauds could be removed even when there is no part performance or estoppel. The editor likes the certainty that the Statute of Frauds requirement provides to real estate agreements, and hence doesn't like to see the Statute completely ignored.

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Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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