Muddied Waters: A Review of Joint Venture Jurisprudence in Missouri.

AuthorByrd, Colin W.

    Nearly four decades ago, the Supreme Court of Missouri issued an opinion that continues to generate confusion on what constitutes a joint venture. Johnson v. Pacific Intermountain Express Co. not only distorted the elements required to establish a joint venture but also provided for the business organization's wrongful creation by operation of law through implication. (1) Upon this shaky foundation, corporate law jurisprudence in Missouri has grappled for decades with the same essential questions of what constitutes a joint venture and how this species of partnership may come into existence.

    Within the past decade alone, Missouri courts have entertained several suits brought by plaintiffs relying on the flawed law espoused in Johnson (2) Not only does this expose corporate entities to recurring litigation over the same or similar issues, but it also provides for uncertainty at the crucial intersection of law and business in which these entities pursue their economic aspirations. It is time for the Supreme Court of Missouri to disavow the faulty reasoning and bad law for which Johnson stands.

    This Note discusses the development of joint venture law within Missouri jurisprudence. Part II of this Note considers the facts and holding of Johnson (3) within the context of the legal background in which it was decided. Part III then highlights the trend found in lower courts of ignoring the holding of Johnson in light of the recent developments in joint venture jurisprudence. Part IV discusses how the Johnson holding was wrong at the time it was decided, and how its flawed reasoning has allowed for confusion and conflicting case law for Missouri courts and litigants. This Note concludes by illustrating the need for the Supreme Court of Missouri to address the confusion perpetuated by Johnson and provide the clarification necessary for entrepreneurs and corporations to conduct business in reliance on firmly established law once again.


    In Missouri, it is generally agreed upon that a joint venture is an association of two or more persons to carry out a single business enterprise for profit. (4) Essentially, a joint venture is a species of partnership that lasts for a specific duration of time or until the completion of a particular project or goal. (5) Therefore, a joint venture satisfies the traditional elements of a partnership business organization. (6)

    In analyzing the formation of a joint venture, "there must be a community of interest in the accomplishment of a common purpose, a mutual right of control, a right to share in the profits and a duty to share in the losses as may be sustained." (7) Thus, the three elements that constitute a joint venture are: (1) multiple persons; (2) sharing managerial control or the right of managerial control; and (3) sharing in the profits and losses of the organization. (8)

    These three elements, or a variety of the same, were primarily introduced by Jeff-Cole Quarries, Inc. v. Bell! (9) and continue to be referenced as indications of the existence of a joint venture. (10) Furthermore, Jeff-Cole highlighted the fact that Missouri courts were hesitant to imply the existence of joint ventures where a different arrangement was expressly created. (11) This is especially the case where a joint venture is alleged when a business organization is in operation for a period of years. (12) This was the legal background at the time Johnson was decided. (13)

    Johnson presented the issue of whether or not two corporate entities created a joint venture by implication where a freight broker contracted a shipping entity to transport a load of steel across the country. (14) During the transport, the tractor trailer struck and killed a motorist. (15) The establishment of a joint venture between the two entities would enable the plaintiff to hold the broker vicariously liable for the negligence of the driver in causing the accident. (16)

    Thomas Johnson was killed on November 19, 1978, in an automobile collision with a tractor trailer unit, leased by Tabor, and driven by Brown. (17) Johnson's widow, Cathy, obtained a judgment against Pacific Intermountain Express Company ("P.I.E.") and Marlo Transport Corporation ("Marlo") for $750,000. (18) The defendants appealed to the Missouri Court of Appeals, Southern District, which subsequently affirmed the judgment. (19) The case was transferred to the Supreme Court of Missouri, which heard the case as an original appeal. (20)

    Tabor owned and leased two tractors which operated with eighteen-wheel trailer units. (21) Brown and Singleton were employed as drivers of the tractor trailers. (22) None of the three men possessed a common carrier license for the transportation of freight from the Interstate Commerce Commission ("ICC") or any state authority. (23) Their operation consisted of picking up a load of produce on the West Coast and then hauling it to the East Coast. (24) After the eastbound produce was delivered, the drivers would look for a westbound load, which usually involved the leasing of the equipment to a common carrier possessing ICC authority. (25)

    The load for the fatal trip was arranged by Marlo in its capacity as a freight broker. (26) Marlo did not operate trucks for shipping purposes, nor did it possess any ICC authority. (27) Marlo arranged for a load of steel to be hauled from Franklin Stainless Corporation in New York to Broken Arrow, Oklahoma by Brown in the 1978 Kenworth. (28) The tractor trailer unit, in addition to operating without the required ICC authority, carried a load that was over the weight limit for several states on the route. (29) Consequently, the drivers selected a route designed specifically to avoid weigh stations. (30) There was no evidence Marlo knew of the overload, selected the desired route, or knew of the effort to avoid possible involvements with "the law." (31)

    Prior to embarking on the journey, Marlo paid an advance to the drivers. (32) Marlo was to collect the freight charges from the shipper, or consignee, and retain a twenty-five percent fee for its brokerage services. (33) The remainder of the shipping fee was to be remitted to Tabor for the drivers' services and use of the 1978 Kenworth. (34) However, the freight was never delivered. (35)

    P.I.E.'s involvement in the case at hand is not significant to the focus of this Note; however, a brief discussion of P.I.E.'s role is necessary for a more complete understanding of Johnson's holding. P.I.E. was a major interstate carrier of freight at the time of the accident in 1978. (36) Singleton and Tabor testified to several dealings with P.I.E. prior to the accident, in which they transported cargo under the aforementioned equipment-lease regulatory scheme. (37) While P.I.E. disclaimed any knowledge of any lease or dealings with Brown, Tabor, or Singleton, a P.I.E. sign was still affixed to the Kenworth at the time of the accident from a previous shipment. (38)

    Nonetheless, the court, while admitting the evidence was "sketchy," stated that the jury, in finding P.I.E. liable for negligence, could have found: (1) the 1978 Kenworth made its last westbound trip under P.I.E.'s operating authority ten or twelve days before the accident; (2) it carried signs previously furnished by P.I.E.; (3) P.I.E. made no effort to collect the signs at the end of the run; and (4) at least one sign was on the tractor at the time of accident. (39) Despite the court's hypothetical jury findings, there was no evidence that the fatal trip was made under P.I.E.'s authority or with its knowledge, or that P.I.E. had any interest in the revenues of the shipment. (40) Therefore, the plaintiff's claim against P.I.E. depended upon a constructive agency theory derived from the federal statutes and ICC regulations. (41)

    The dispute in Johnson centered on the jury instructions for both Marlo and P.I.E. concerning their vicarious liability. (42) The liability of P.I.E. was affirmed based upon "statutory policy rather than a conventional respondeat superior [principal-agent] theory." (43) However, this Note is only concerned with the liability imposed upon Marlo by the court's characterization of the arrangement between Marlo and Tabor-Singleton as a joint venture.

    Marlo's vicarious liability was put forth in "Jury Instruction Number 8:"

    Lee Brown, Jr., was operating the Kenworth Truck within the scope and course of his agency for Marlo Transportation Corporation at the time of the collision, and Acts were within the "scope and course of agency" as that phrase is used in this instruction if: There were performed by Lee Brown, Jr. to serve the interests of Marlo Transportation Corporation according to an express or implied agreement with Marlo Transportation Corporation, and Marlo Transportation Corporation either controlled or had the right to control the physical conduct of Lee Brown, Jr. (44) Marlo argued that under the arrangement it had no control, or right of control, over Brown as he headed west in the tractor trailer. (45) Instead, Marlo asserted that it properly retained the proprietor of the tractor trailer, as an independent contractor, to achieve a particular result but not the method by which the delivery was accomplished. (46) Therefore, Marlo argued there was no basis for its vicarious liability. (47)

    The court first considered the "practicalities of the situation rather than the legalities." (48) By this reference, the court highlighted the facts used to find that an implied joint venture existed between the two entities. (49) In the typical practice of a freight broker, Marlo was in touch with a customer who needed to transport a load of steel. (50) Marlo then fulfilled this need by entering into an arrangement with Brown and Singleton, as lessees of Tabor's tractor trailer, to transport the shipment to Oklahoma. (51) Marlo and the truckers did not memorialize their agreement in writing but "rather operated informally." (52) Marlo was...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT