Kessler v. Antinora

Superior Court of New Jersey, Appellate Division · 1995 · Corporations

279 N.J. Super. 471 (1995)

Updated August 22, 2026

CorporationsJoint venturePartnership lossespartnership agreementloss sharingN.J.S.A. 42:1-18aagreement controlscapital contribution

Facts

Kessler and Antinora executed a written "JOINT VENTURE PARTNERSHIP AGREEMENT" to buy a lot, build a single-family house, and sell it. Kessler agreed to provide all necessary funds and disburse payments, while Antinora agreed to construct the dwelling and serve as general contractor; after sale, Kessler was to be repaid his expenditures plus interest and costs from the sale proceeds, and any net profits would be divided 60% to Kessler and 40% to Antinora. The agreement was silent about losses and provided no separate compensation to Antinora for his services. The house ultimately sold for less than the total project cost, leaving Kessler unreimbursed for part of his advances, and he sought to make Antinora pay 40% of that monetary shortfall.

Issue

When a joint venture agreement provides that one party contributes all money, the other contributes labor, profits are to be divided after the money contributor is repaid from sale proceeds, and the agreement is silent on losses, may the money contributor recover a share of the monetary loss from the labor-only venturer under N.J.S.A. 42:1-18a?

Rule

The default partnership loss-sharing rule in N.J.S.A. 42:1-18a applies only subject to the parties' agreement. Where the agreement shows that the money contributor is to be repaid from the venture's sale proceeds and does not provide for reimbursement by the labor contributor, and one venturer contributes money while the other contributes only labor, each bears the loss of his own contribution and the money contributor has no right of contribution from the labor-only venturer absent a specific agreement to the contrary.

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In Newark, Owen Mercer and Luis Pardo signed a written joint venture agreement to renovate and sell a duplex. Owen agreed to provide all purchase and construction funds, while Luis agreed to manage the renovation and perform all on-site supervision. The agreement stated that, upon sale, Owen would first be repaid all sums advanced plus stated carrying costs from the sale proceeds, and any net profits would then be split 65% to Owen and 35% to Luis. The property sold at a loss.

If Owen sues Luis for 35% of Owen’s unrecovered cash investment, what is the best result?

Explanation. The controlling rule is that the statutory default loss-sharing rule applies only subject to the parties’ agreement. Where one venturer contributes money, the other contributes only labor, the agreement provides that the money contributor is repaid from sale proceeds, and the agreement is silent on losses, the money contributor cannot obtain contribution from the labor-only venturer for the unrecovered cash shortfall. Each bears the loss of his own contribution.