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Elec. Contrs., Inc. v. Goldberg & O'brien Elec.

JUNE 10, 1975.




APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.


The case before us arises from a controversy between two companies concerning a subcontract which one claims but the other denies was a joint venture between them. On the complaint of one, the trial court, after hearing the parties, found that there was a joint venture. It ordered an accounting, heard evidence, passed on objections, and ruled that the venture made a profit in which the plaintiff was entitled to share. In this appeal we are asked to decide whether the trial court erred in finding that there was a joint venture that was never terminated, and in making the rulings by which it determined the amount of money defendant had to pay the plaintiff.


In June 1966, United Airlines was planning to construct an executive office building at O'Hare International Airport in Chicago, Illinois. Electrical Contractors, Inc., and Goldberg & O'Brien Electric Co., both Illinois corporations, had for some years been electrical contractors in the Chicago area. *fn1 Sometime after June 1, 1966, requests were sent out inviting the construction trade to submit bids on various aspects of the projected building. ECI received word of these requests; and through one of its employees, it obtained the plans and specifications from which an estimate for the electrical subcontract could be made. Within a short time, however, ECI was informed that it was not a qualified bidder for the job, it was not on the prequalified list of bidders. *fn2 Consequently, ECI's president decided to obtain a qualified partner with whom a bid could be submitted. As a result, an authorized ECI employee called Henry Goldberg, president of G&O, to inquire if his company would be interested in a joint venture bid for the United Airlines electrical subcontract. Goldberg said that because of other commitments, the company could not prepare as estimate. The employee informed Goldberg that ECI had already begun making one and would finish it in time for the bid date. The employee did not mention ECI's disqualifications as a bidder for the United Airlines job. But after another telephone conversation, Goldberg, on behalf of G&O, agreed to make a joint venture bid with ECI. Then, using ECI's estimates, a price was agreed on; and on behalf of the two corporations, a bid was submitted to the companies who were competing for the general contract.

On June 27, 1966, after the general contract was awarded, ECI's president received a telephone call from a representative of the general contractor who told him that United Airlines would not accept as a subcontractor a joint venture in which there was an unqualified bidder. In that same conversation, ECI was informed that on the following day, in the offices of the architects for the projected building, there was going to be a meeting concerning the electrical subcontract. ECI's president then called Henry Goldberg of G&O and informed him of the problem concerning the ECI-G&O bid because of ECI's disqualification as a bidder. There was also a discussion about the meeting on the following day in the offices of the architects.

Goldberg agreed to attend the meeting, but asked that someone with knowledge of the estimate accompany him. Consequently, the ECI employee who had assembled the data, made the take-off sheets, and completed the estimate, went to the meeting on behalf of ECI, bringing with him the plans, specifications and other related documents. At the meeting, a spokesman for the architects told all of those present that United Airlines did not want its electrical work done by a joint venture which included an unqualified bidder. The spokesman said the architects wanted to be assured that no joint venture which included an unqualified bidder would seek to do the work. Goldberg for G&O gave the assurance. He returned to his office later that day, called ECI's president on the telephone and told him that they could not get the electrical subcontract. Then, on or about July 11, 1966, based on the take-off sheets, the estimate and the data assembled by ECI, G&O was awarded the $1,000,000 electrical subcontract on the projected building.

Throughout their discussions, the parties had never expressly agreed on the terms of the joint venture. G&O had never participated in such an undertaking; ECI had done so on one occasion. However, it was understood by the parties that details concerning contribution of finance, labor, materials, and the percentage of participation by each, would be worked out if they obtained the subcontract. As to existence of a joint venture agreement, ECI relies on custom and usage of the electrical construction trade under which joint venturers share equally in the burdens and the benefits of such undertakings. G&O denies there existed any custom and usage which gave specificity to the oral understanding of the parties concerning their combined efforts to obtain the subcontract. In any event, G&O furnished all the finance, all of the labor and equipment, completed the job and performed the subcontract to its completion. It did not permit ECI to devote any labor to or money in the job. The only items contributed to the performance of the subcontract by ECI was a trailer which it delivered to the job site late in July or August of 1966. After its delivery, ECI billed G&O for it, and the bill was paid.

On July 18, 1967, ECI filed the suit in this case against G&O for an accounting alleging that the $1,000,000 electrical subcontract was a joint venture from which they made a profit, entitling ECI to one-half. The complaint was answered, a trial without a jury was had, and the court ruled that the subcontract was the subject of a joint venture entered into by the parties on or about June 15, 1966, and not terminated. Later, after an accounting by G&O, ruling on objections, and hearing of evidence, the court ordered G&O to pay $131,977 to ECI as its share of the profits made by the venture.


• 1 A joint venture is an association of two or more persons to carry out a single enterprise for profit. (Ditis v. Ahlvin Construction Co., 408 Ill. 416, 97 N.E.2d 244; In re Estate of Sugar, 22 Ill. App.3d 484, 317 N.E.2d 685; 48 C.J.S. Joint Adventures § 1.) It is a relation voluntarily assumed; it is created when two or more persons, either expressly or by implication, manifest the intention to become so associated. Carroll v. Caldwell, 12 Ill.2d 487, 147 N.E.2d 69.

The relation of joint ventures can be established without formal agreement. (Reese v. Melahn, 53 Ill.2d 508, 292 N.E.2d 375.) Evidence of the surrounding circumstances can prove the existence of a joint venture. (Polikoff v. Levy, 55 Ill. App.2d 229, 204 N.E.2d 807.) Thus, the conduct of the parties, or the facts and circumstances of a given case, may show that the persons involved did in fact assume such a relation. 46 Am.Jur.2d Joint Ventures § 68; see Sorkin v. Lazarus, 102 Ill. App.2d 484, 243 N.E.2d 450.

• 2 But, a contract, that is an agreement of some kind, is essential to the relation known as joint venturers. (Richton v. Farina, 14 Ill. App.3d 697, 303 N.E.2d 218; 46 Am.Jur.2d Joint Ventures § 8.) In other words, there must be a meeting of the minds; there must be an agreement, express or implied, one which shows the parties intended to embark on a joint venture. (See Hyman v. Regenstein (5th Cir. 1958), 258 F.2d 502; Annot., 138 A.L.R. 968.) And as to proof of its existence, the burden is on the party who claims the relation exists. (Hurst v. Papierz, 129 Ill. App.2d 117, 262 N.E.2d 773; Alden v. Stromsem, 347 Ill. App. 439, 106 N.E.2d 837.) In this case, it was ECI who claimed that the electrical subcontract on the United Airlines building was the subject of a joint venture with G&O.

The undisputed evidence in the record, however, discloses that on or about June 15, 1966, ECI and G&O agreed to bid for the electrical subcontract on the projected United Airlines office building. ECI furnished the estimate, prepared the data, and did all the preliminary work that enabled the two companies to make the bid. G&O furnished its name; it was needed because ECI was not a qualified bidder. The parties intended that if their bid was successful, the electrical subcontract was to be the subject of a joint venture. They did not discuss how the subcontract was to be performed. They did not agree to the terms of the venture which was contingent on their success as bidders. They did not agree on the percentage each was to have; they did not agree on the contribution each was to make in money or labor; nor was there a meeting of the minds on what share of the profits each was to earn. Their understanding, as G&O admitted in its answer, was only concerning their joint venture to obtain the subcontract.

• 3 ECI, having the burden of proof, and lacking evidence that it and G&O ever agreed on a joint venture involving the carrying out of the subcontract, relies on what it claims were customs and usages in the electrical construction trade. Customs and usages, however, cannot create a contract or bring one into being where without them none exists. (Currie v. Syndicate Des Cultivators Des Oignons a'Fleur, 104 Ill. App. 165; Hedenberg v. Seeberger, 140 Ill. App. 618; compare Hufford v. National Retailer-Owned Grocers, Inc., 16 Ill. App.2d 1, 147 N.E.2d 437.) Moreover, to constitute a joint venture, there must be a community of interest and the right to joint control. (Finn v. Drtina (1948), 30 Wn.2d 814, 194 P.2d 347; 46 Am.Jur.2d Joint Ventures § 12.) Some courts have said that the most important criterion of a joint venture is joint control and management of the property used in accomplishing its aims. (Detachable Bit Co. v. Timken Roller Bearing Co. (6th Cir. 1943), 133 F.2d 632, 635; Chisholm v. Gilmer (4th Cir. 1936), 81 F.2d 120.) In fact, one court went to the extent of saying that "* * * there can be no joint venture or common enterprise of legal import unless there be a community of interest in the objects or purposes of the ...

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