The opinion of the court was delivered by: POLLACK
Plaintiff sues to compel defendant to account for a 50 percent share of the fees, commissions or profits received by the defendant in connection with the finding and promoting of an opportunity to acquire and assisting the acquisition by another corporation of the stock of Paddington Corporation. The latter was the exclusive American distributor of Scotch Whiskey and other liquor products under the brand name Justerini & Brooks, Ltd., commonly referred to as J & B.* The plaintiff claims that it entered into an agreement of joint venture with defendant in respect of the above subject matter and reached an understanding to share its fruits equally. The action was tried to the Court without a jury.
This Court has jurisdiction herein by reason of diversity of citizenship and requisite amount in controversy.
At the nub of the plaintiff's case is an alleged oral joint venture agreement. Plaintiff expressly disclaimed on the record any alternative theory of claim on which to recover.
The facts are as follows:
Defendant is a major investment banking firm, carrying on a wide variety of activities in the securities industry. Among such activities are the giving of investment banking advice; management of tender offers; underwriting of publicly offered securities; handling a retail securities business; and finding, advising and assisting others in connection with corporate acquisitions and mergers.
The plaintiff was organized as a California corporation in March 1964 by its principal officer, Mr. Allen Chase, who apparently is also the sole or principal stockholder. He has properly been characterized herein as a "promoter-type" individual. Prior to incorporating and in 1962, Allen Chase was introduced to Harmon L. Remmel, one of the general partners of the defendant. Chase informed Remmel of an opportunity for the acquisition of Signal Oil Company. Chase contends as background for this suit that there was to be a "finder's fee," in the oil company transaction if it eventuated and that an agreement was made to share the prospective fee equally between the defendant and another investment banker, Forest Tanzer of San Francisco. Chase was to be a subparticipant in Tanzer's share. However, no business transaction developed from this opportunity.
Although the issue to be decided in this case does not turn on it, the fact is that the plaintiff from its inception in 1964 was an organization of little corporate substance. It never was much more than an incorporated set of books; it had no income or expenses during 1964, 1965 and 1966, nor did it even have a telephone or an office with a sign on the door. Admittedly, its financial reports showed assets of only a few hundred dollars and liabilities in excess of that amount and a continuous state of insolvency. It did not even have corporate stationery printed until July, 1966 which was well after the transaction that forms the basis of this suit. The business of the plaintiff was then styled on its stationery as "Corporate Finance". Until the filing date of this lawsuit which was in 1968, the plaintiff had never consummated any business transaction, in corporate finance or involving an acquisition or merger.
Some years after their initial meeting and in August, 1965 Chase and Remmel met again. This time Chase told Remmel of the formation of the plaintiff for the purpose of engaging in the business of finding, promoting and advising others in connection with corporate acquisitions and mergers. Chase mentioned that one of his associates, a Mr. McDonald, was a director in some thirty odd corporations, which fact it was hoped would provide some very good opportunities for business deals and that another of his associates was Mr. Ross Corbit, who formerly was president of Hiram Walker, Inc., one of the major companies in the liquor industry and who could expect acquisition opportunities in that industry to be called to his attention. Chase also mentioned some Australian land-owning corporations in which he was interested as good possibilities for investment by defendant's clients.
Remmel agreed to look into such situations as Chase would mention, both parties agreeing that each situation would have to be approached differently. Chase gave Remmel the names of some companies that he thought might be acquisition opportunities. Either in August or at a later meeting in December, 1965, Chase mentioned the availability of Paddington, i.e., J & B, for acquisition. As of December, 1965, it was known within the liquor industry that J & B might be available for acquisition. At that time approximately 40 percent of the stock of Paddington was owned by Star Industries, Inc., a wholesale liquor distributor.
The only things Chase told Remmel about Paddington were the name; that it was a liquor company which sold J & B scotch whiskey; that it might be available for acquisition; and that Ray Revit, a senior officer of Hiram Walker, would furnish information and provide an introduction for Remmel to Paddington.
Through Chase, a meeting was arranged with Revit in mid-December, 1965 for Remmel and James A. Martens, an associate of the defendant, to discuss various liquor situations, including J & B. Revit, on behalf of Hiram Walker, had had negotiations with Abe Rosenberg, the president of Star and with Charles Guttman, the president of Paddington, as to a possible acquisition of J & B by Hiram Walker but these negotiations had terminated shortly before Revit's meeting with Remmel and Martens.
At this mid-December meeting, Revit furnished information to Remmel which he had learned of concerning Star and Paddington and explained that he was furnishing such information only because of his friendship and long association with Corbit. However, Revit failed (he says he refused) to introduce Remmel to the principals in the J & B picture. He considered that such an act would be incompatible with his position at Hiram Walker. After the meeting and during the first part of January, 1966, repeated telephone calls from the defendant to Revit to set up an introduction to principals of liquor companies, were ignored. Revit failed (he says he refused) to respond to these telephone calls from the defendant, plainly evidencing his resolute refusal to assist in furthering any approach of the defendant to J & B's principals or to any others.
At no time did Chase or Corbit introduce or arrange for the introduction of the defendant or any of its representatives to J & B's principals.
Neither plaintiff nor Remmel did anything further with respect to an acquisition of J & B after mid-January, 1966.
As we shall see in a moment, control of Star Industries and Paddington was acquired by Liggett & Myers Tobacco Company (L & M hereafter) in May, 1966 and defendant acted as the investment banker of L & M in the deal. It has been expressly stipulated that the acquisition by L & M did not result directly or indirectly from anything done by Remmel. And it has been expressly further stipulated that the ...