## Facts

- Charles R. Latimer and Mike Kelber co-owned two parcels of real property, including the “7th and Mountain” property and an “airport” property.
- During Latimer’s marriage, Latimer entered a written agreement with Joseph L. Connolly and Forde C. Seward stating the three would share equally (one-third each) in net profits from subdividing and selling the parcels.
- Connolly and Seward did not contribute purchase money; they claimed they provided services such as locating opportunities, promoting the projects, and assisting with financing and transactions.
- After Latimer died, Connolly and Seward filed creditors’ claims against Latimer’s estate based on the agreement; the estate rejected the claims.
- The estate’s administrator (the Bank of California) filed a declaratory-relief action to determine the parties’ rights; the actions on the rejected claims were consolidated for trial.
- Mildred Louise Latimer (Latimer’s spouse) asserted Latimer’s interests were community property and that the agreement could not bind her community interest.
- Evidence showed lenders relied primarily on Latimer and Kelber’s personal credit in financing acquisitions, even where separate-property collateral was also provided.

## Issues

1. Whether the profit-sharing agreement created a joint venture or partnership entitling Connolly and Seward to one-third of Latimer’s profits.
2. Whether the agreement was enforceable as a contract for one-third of profits based on consideration or promissory estoppel.
3. Whether the agreement was enforceable as an equitable assignment of profits, and if so, the proper measure of recovery.
4. Whether Latimer’s interests in the parcels were community property, and the effect of that classification on enforcement.
5. Whether Connolly and Seward could obtain a present trust-based remedy against Kelber for their claimed share of profits.

## Decision

- The Court of Appeal affirmed the judgment in substance.
- The agreement did not create a joint venture or partnership because Connolly and Seward lacked joint control or management rights over the enterprise.
- The agreement was not enforceable as a contract granting Connolly and Seward a full one-third share of profits; the evidence did not establish adequate consideration for that promise, and promissory estoppel did not justify enforcing the full promise.
- The writing was enforceable only as an equitable assignment of an interest in future profits, limited to the reasonable value of services Connolly and Seward rendered in connection with the agreement.
- Latimer’s interests were properly characterized as community property, given acquisition during marriage and reliance on personal credit; the community-property presumption was not rebutted.
- Connolly and Seward were not entitled to a present trustee remedy against Kelber because any right to profits was contingent on future sales and realized profits.

## Legal Principles

- A joint venture or partnership requires more than an agreement to share profits; it generally requires a right of joint control or management over the enterprise.
- A promise of a specified share of profits is not enforceable as a contract absent proof of bargained-for consideration supporting that allocation.
- Promissory estoppel requires proof that the promise induced reliance of a type and degree making enforcement necessary to avoid injustice; weak or unconnected reliance does not justify enforcing the full promise.
- An agreement concerning uncertain, future profits may operate as an equitable assignment, with equitable relief limited to a fair measure tied to the value of services rendered rather than the stated profit percentage.
- Property acquired during marriage is presumptively community property; acquisition on the basis of spouses’ personal credit supports community characterization even if separate-property collateral is used.

## Conclusion

The court upheld a narrow enforcement of the profit-sharing writing: it neither created a partnership nor supported a full one-third contractual entitlement, but it could be treated as an equitable assignment of future profits limited to the reasonable value of services, while the parcels remained community property and no present trust claim lay against the co-owner for contingent profits.


Bank of Cal. v. Connolly, 36 Cal. App. 3d 350 (Ct. App. 1973)