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Pan American Trade & Investment Corp. v. Commercial Metals Co.

Court of Chancery of Delaware, New Castle County

February 11, 1953

PAN AMERICAN TRADE & INVESTMENT CORP. et al.
v.
COMMERCIAL METALS CO.

Action for accounting. On defendant's motions to dismiss and to compel plaintiffs to elect whether they would pursue their action in the law court or in the Court of Chancery. The Court of Chancery, New Castle County, Bramhall, Vice-Chancellor, held that the complaint disclosed a joint adventure which gave rise to such a fiduciary relationship as would confer jurisdiction on Court of Chancery, and that plaintiffs would be required to elect whether to pursue their remedy in such court, or in the Superior Court where they had filed an action against defendant based on same cause of action.

Order in accordance with opinion.

Page 701

[33 Del.Ch. 426] Action for accounting by Pan American Trade and Investment Corporation, a Delaware corporation, American Rail and Steel Co., a Delaware corporation, and Milton E. Canter, against Commercial Metals Company, a Delaware corporation.

Motion to dismiss and motion to compel plaintiffs to elect whether they would pursue their action in the law court or in this court.

Henry van der Goes, of the firm of Young & Wood, of Wilmington, for plaintiffs.

David F. Anderson, of the firm of Berl, Potter & Anderson, of Wilmington, for defendant.

BRAMHALL, Vice-Chancellor.

The complaint alleges that plaintiffs and defendant agreed that plaintiffs would reveal to defendant where certain steel rail, cast-iron pipe, and steel pipe could be [33 Del.Ch. 427] purchased and that if the defendant should be successful in purchasing said materials, the purchase and resale thereof would be handled between plaintiffs and defendant on a joint account basis, each sharing equally in expenses, investment, and profit or loss. It is further alleged in the complaint that plaintiffs subsequently learned that defendant had purchased these materials and had resold them at a substantial profit. Plaintiffs aver that they are entitled to one-half of these profits but that defendant has failed and refused to account to plaintiffs therefor.

One day prior to the institution of the proceedings in this court, plaintiffs filed an action against defendant, based upon the same cause of action, in the Superior Court. Defendant filed a motion to dismiss, alleging that equity had no jurisdiction. Subsequently defendant also filed a motion to compel plaintiffs to elect whether or not they would pursue their remedy in the law court or in this court.

Defendant contends that this court has no jurisdiction because there is no averment in the complaint of any ground upon which equity would take jurisdiction. Defendant does not dispute that the allegations contained in the complaint, if accepted as correct, as they must be for the purpose of considering defendant's motions, would make plaintiffs and defendant joint adventurers. All of the elements of that relationship are present in this case. This allegation of the complaint relates to a single transaction. Both plaintiffs and defendant were each to perform a service or make a contribution towards the furtherance of the relationship; they were each to participate in the furtherance of the transaction and were to share equally in the profits or losses. See 30 Am.Jur., Joint Adventures, § 3, p. 677, and 48 C.J.S., Joint Adventures, § 1, p. 801. Under a somewhat similar relationship it was held in the case of Garber v. Whittaker, 6 W.W. Harr. 272, 174 A. 34, that the agreement between the parties created a joint undertaking. In the Garber case there was an agreement between the defendants, who were husband and wife, and the plaintiff, to build and sell a house on the lot of the wife, she to be paid a certain sum from the proceeds from the sale of the lot, the husband and the plaintiff to receive a fair compensation for work upon the house and the [33 Del.Ch. 428] balance, if any, to be divided between the husband and the plaintiff.

Equity will not entertain jurisdiction in an action for an accounting except: (1) where there are mutual accounts between the parties; (2) where the accounts are all on one side but there are circumstances of great complication; and, (3) where a fiduciary relationship exists between the parties and a duty rests upon defendant to render an account. Pomeroy's Equity Jurisprudence, (5th Ed.), Vol. 1, § 1421. Plaintiffs do not allege mutual accounts. It does not appear that the accounting would be of so complicated a nature as to make it difficult or impossible for a court of law to determine the matter. I shall consider, therefore, only the question

Page 702

as to whether or not the relationship of the parties was a fiduciary one.

I am unable to find any satisfactory definition of a joint adventure. However, joint adventure has been broadly defined as an enterprise undertaken by several persons jointly to carry out a single business enterprise for profit, without an actual partnership or corporate designation, in which they combine their property, money, effects, skill and knowledge. It has also been defined as a partnership limited both as to its scope and duration. See Annotations in 48 A.L.R. 1056, and 63 A.L.R. 910.It has many, although sometimes not all, of the ...


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