[83 Ariz. 380] Gust, Rosenfeld, Divelbess & Robinette, Phoenix, for appellant.
Brice I. Bishop and Donald R. Kunz, Phoenix, for appellee.
This is an action instituted by Alfred Knight against J. G. Rice to recover an amount claimed to be due as the result of a joint venture between the two. The trial court, after making findings of fact and conclusions of law, rendered judgment in favor of defendant Rice, and this appeal follows.
On August 15, 1939, the parties entered into a written agreement whereby they agreed to purchase a tract of land for $40,000, payable $5000 down and $35,000 on or before October 1, 1939. The property was to be subdivided for resale and the proceeds from such sales after commissions and expenses were to be paid to the Phoenix Title and Trust Company, as escrow agent, and applied to the payment of the $35,000. The agreement also provided that after Knight had been repaid for certain advances any further proceeds from sales should be equally divided, and when the full purchase price was paid the property would be conveyed to the Phoenix Title and Trust Company, as trustee for the parties under such terms as the parties agreed.
On the 22nd day of August, 1939, a trust agreement was executed by the parties
and the Phoenix Title & Trust Company became trustee. So far as material herein the proceeds from sales were to pass through the trustee, and after the payment of certain expenses the balance was to be paid to the parties as their respective interests appeared upon their written authorization signed by both.
Thereafter, on July 3, 1942, plaintiff and defendant delivered written instructions to the trustee, authorizing payment to Knight in the sum of $7500. Following that instruction to the trustee all money received by the trustee was, upon the written authorization of both parties, distributed equally until May, 1949, when by written instrument the trust was closed.
That instrument recited that the purpose of the trust had been fulfilled, ratified all actions of the trustee, admitted satisfaction in full of all claims of the parties in the trust, and released the trustee.
The court appointed a special master to render an account from the books and [83 Ariz. 381] records. There is no dispute between the parties concerning the correctness of the figures as reflected in the report of the master. It shows that Knight did not receive from the trust the full amount of the advances he made on the original purchase price. It shows that if distribution had been made in accordance with the parties' written agreement when the venture was started Rice collected $8,587.03 which should have gone to Knight.
The evidence shows and the trial court found that the books and records of the Knight-Rice venture were maintained in the office of the plaintiff, that entries in the books were made by his secretary, and the defendant Rice testified that he never saw the books. Knight's secretary testified that in April, 1945, she was familiar enought with her employer's business to know that the capital accounts of the parties should have been equal and that they were not, and that she so advised Knight of such discrepancy. Knight, however, testified that when he and Rice signed the authorization of July 3, 1942, for the trustee to pay him the $7,500, he supposed he had been paid in full for the advances made.
The evidence is undisputed that Knight knew as early as April, 1945, that there was a discrepancy in the accounting and that something was wrong. In spite of this knowledge he continued to sign written authorizations to the trustee directing equal payments to himself and the defendant.
There was a corporation, Eureka Investment Company, which the parties owned in equal shares. Rice testified that the money he received from the trust went to Eureka Investment Company, and that between $25,000 and $35,000 was put in that company. He later sold his interest and he said because it was so long ago he was uncertain about the trust situation concerning the investment in the Eureka Investment Company; they did not lose money but he did not think they made a great deal of money.
It also appears, and the court found from the evidence, that the receipts from the trust were reported to the federal internal revenue office in a partnership return and in the individual returns from 1940 through 1949.
On the basis of the foregoing the trial court ruled that the plaintiff was estopped to make further claims against the defendant. The correctness ...