Opinion
Rehearing Denied July 22, 1975.
Page 1300
Mason, Reuler & Peek, P.C., Rosanne M. Hall, Maurice Reuler, Denver, for plaintiffs-appellees.
Hackenthal, McNeill & Aucoin, P.C., George C. Aucoin, Lakewood, for defendants-appellants.
ENOCH, Judge.
Defendants appeal from a judgment of the district court holding them jointly and severally liable on a contract for the purchase and sale of a business entered into by plaintiffs and one of the defendants. We affirm in part and reverse in part.
On March 25, 1971, plaintiffs entered into a contract with defendant Gary Jensvold to purchase a business known as 'Starliner Camper Sales' which was engaged in the manufacture and sale of campers for pick-up trucks. This action was brought on October 5, 1972, by plaintiffs who sought damages for breach of the contract and an injunction to enforce a non-competition clause contained in that contract. The two other defendants were joined with Gary on the theory that all three were engaged in a joint venture.
After a trial to the court it was determined that defendants were engaged in a joint venture to manufacture and sell campers and camper parts. Concluding that defendants were jointly and severally bound by the March 25, 1971, contract, the court found that they had materially breached the contract in several respects: by promising to sell plaintiffs a 'special patented door' when in fact the camper door was never patented; by failing to sell plaintiffs doors at the promised 'competitive wholesale price;' by denying plaintiffs the right to continue to buy the promised doors; and by opening a competitive business two blocks away from the premises of plaintiffs' business in violation of the contractual promise not to compete for five years. The court further found that plaintiffs had been damaged as a result of defendants' interference with plaintiffs' lease. The court also permanently enjoined defendants from competing with plaintiffs in Colorado until April 15, 1976, five years from the date of sale.
On appeal defendants argue that the finding of a joint venture was error and therefore only Gary Jensvold should be liable on the contract. In addition they contend the damages awarded were excessive, that the failure to provide a patented door was not a material breach, and that the promise not to compete should be limited to a geographical area smaller that the entire state of Colorado. I.
Several years ago defendant Russell Jensvold developed a sliding door for campers, a design which represented an improvement over existing doors. Since that time Russell and his two sons, defendants Gary and Roger, have been engaged at various times in the manufacture and sale of campers and parts which incorporate this door, operating at different locations in Colorado and other western states. There is conflicting evidence in the record concerning to what degree the three defendants cooperated during this time. Each of the defendants has at some time engaged individually, at different locations and under different names, in manufacturing and selling campers with this distinctive door. At other times two or more of the defendants have worked together in the same business.
It is not disputed that the only defendant to sign the contract in question was Gary Jensvold, and that at the time of the sale plaintiffs thought they were dealing only with Gary. The evidence further indicated that for some time Gary alone had been operting the business in question. For these reasons the other two defendants can be bound by the contract only if they were engaged in a joint venture with Gary and he was acting on their behalf.
Whether a joint venture existed is a question of fact for the trial court to determine from the facts and circumstances in evidence. Garrett v. Kimbrel, 151 Colo. 95, 376 P.2d 376. But where the findings of the trial court are predicated on a misapplication of the law, this court is not bound by those findings. Realty Development Co. v. Feit, 154 Colo. 44, 387 P.2d 898.
It is well established that a joint venture arises not from mere operation of law but from the voluntary agreement of the parties. All three of the following cirteria must be shown; 1) Joint interest in the property by those sought to be held as joint venturers, 2) Agreements, express or implied to share the profits and losses of the venture, and 3) conduct showing cooperation in the project. Realty Development Co. v. Feit, supra; McNeill v. Allen, Colo.App., 534 P.2d 813; Bainbrich v. Wells, 28 Colo.App. 432, 476 P.2d 53, Aff'd 176 Colo. 503, 491 P.2d 976. It has been said that the chief characteristic of a joint venture is 'a joint and not a several profit.' Realty Development Co. v. Feit, supra; Fedderson v. Goode, 112 Colo. 38, 145 P.2d 981.
There is evidence in the record to support the conclusions that the three defendants cooperated in the manufacture and sale of campers, and that each of the defendants made use of the special door feature, suggesting a joint interest in that design. What is missing, however, is any evidence whatsoever which would show an agreement, express or implied, to share the profits and losses of the venture.
This defect was noted by the trial court during argument on defendants' motion to dismiss at the close of plaintiffs' evidence. At that time the court said that 'there is no evidence showing that there was a joint venture, sharing of any profits with Gary,' adding that plaintiffs' allegations concerning share and control of the venture were 'left up in the air.' In its written findings and order the court does not refer further to this problem, nor does it make any specific findings concerning conduct from which could be inferred an agreement to share profits.
Plaintiff Charles Wolfe testified that at the sale they gave Gary Jensvold cash plus a promissory note payable only to Gary. No evidence was presented from which it could be inferred that the other defendants shared in these proceeds in any manner. In one finding the court stated, '(t)hat pursuant to this contract, a promissory note was executed by the Plaintiffs, in favor of the Defendants.' However, this finding is clearly erroneous since the only evidence introduced at trial on this point establishes that the note was in favor of only Gary Jensvold.
Plaintiffs do not identify any specific evidence of an agreement regarding joint profits, rather they argue that it is sufficient to show that defendants cooperated in various business operations over a substantial period of time. While the evidence may support an inference that there was joint interest and cooperation, no evidence appears in the record to support an inference that the defendants had agreed to share profits and losses. Absence of any evidence establishing this essential element of a joint venture is fatal to proof of that theory.
II.
Since only Gary Jensvold signed the contract for the sale of Starliner Camper Sales, and since neither of the other defendants can be held to the contract on the theory of joint venture, the trial court erred in awarding damages for loss of profits incurred when Roger Jensvold started a competitive business two blocks from plaintiffs. The trial court found that establishment of this competitive business by Roger was a breach of the promise not to compete contained in the contract with plaintiffs. However, there was no finding, nor evidence to support a finding that Gary was involved in that business aside from the alleged relationship of joint venturer. Hence, since a joint venture was not shown, Roger was not bound by the non-competitive provision of the contract and the award of damages for lost profits based on Roger's competitive operation must be reversed.
III.
The trial court found that the sales contract had been materially breached by defendants' failure to provide a patented door, failure to provide the special door at a 'competitive wholesale price,' and refusal to provide the door at all. There is evidence in the record from which the trial court could conclude that Gary breached the contract in these respects, and the court's findings will be upheld as to Gary, though not as to the other defendants.
Defendants argue on appeal that the damages awarded for breach of the contract were excessive. They have not contested the award of $8,684.84 for the costs plaintiffs incurred to produce a door themselves to replace the one Gary no longer provided after September 1971, and that award is upheld. However, the award of $2,000 for loss resulting from the failure to sell doors to the plaintiffs at a 'competitive wholesale price' cannot be upheld.
In making that award, the trial court made the finding that plaintiffs had purchased approximately 400 camper doors from defendants at a price averaging $5 more per door than the price paid by another buyer. However, although there was testimony that plaintiffs paid from $30 to $36 per door depending on size, while another buyer purchased the doors for prices ranging from a low of either $28.50 or $28.80 to $34.50 depending on size, and although there was testimony that plaintiffs bought a total of approximately 800 doors at the higher price, and that 400 of these doors were purchased at the time Gary Jensvold stopped making doors, nevertheless, there was no evidence as to how many doors were purchased at a given price. Hence, while the evidence supports a finding that plaintiffs were injured by having to pay a higher price for the doors, it does not support the finding that the injury amounted to $5 per door. Accordingly, we remand this issue to the trial court to recompute the amount of damages on the basis of evidence now before the court.
Additional damages were awarded plaintiffs in the amount of $780 for interference with their lease resulting from an increase in their rent after defendant Roger Jensvold offered plaintiffs' lessor a higher rent for the premises then leased by plaintiffs. Defendants have not addressed this issue on appeal except as it relates to their liability as joint venturers. We hold that Roger Jensvold is personally liable for interference with the lease, though since there is no joint venture the other defendants are not liable for these damages.
The non-competition clause in the contract covered several states. The court modified the geographic area to encompass only the state of Colorado. Defendants argue on appeal that the court should have limited the promise not to compete to a smaller geographical area than the entire state of Colorado. This argument was not raised in defendants' motion for new trial and consequently is not properly before us on review. C.R.C.P. 59(f); Furer v. Allied Steel Co., 174 Colo. 171, 483 P.2d 212.
In summary, the judgment is affirmed as to the award of $780 against Roger Jensvold, individually, for interference with plaintiffs' lease; the judgment is affirmed against Gary Jensvold, individually, for $8,684.84, the cost of reproducing the door; and the judgment is affirmed in its enforcement of the non-competition clause, as modified by the trial court, as to Gary Jensvold individually. The award of $2,000 damages to plaintiffs against Gary Jensvold for failure to provide doors at a competitive price is reversed and remanded to the trial court for new findings in regard to the amount for damages. The cancellation of the note given by plaintiffs to Gary Jensvold is also reversed; however, the amount finally determined as due from Gary Jensvold to plaintiffs may be set off against the balance due on the note. The other parts of the judgment based on joint liability due to the erroneous conclusion of the existence of a joint venture are reversed.
SMITH and STERNBERG, JJ., concur.