Barron v. Koenig
| Decision Date | 17 April 1958 |
| Docket Number | No. 8578,8578 |
| Citation | 80 Idaho 28,324 P.2d 388 |
| Parties | Lloyd F. BARRON and Veronica H. Barron, Plaintiffs, Cross-Defendants and Respondents, v. David J. KOENIG and Rebecca Koenig, Defendants, Cross-Complainants, Cross-Defendants and Appellants (Von A. Robbins and Mary A. Robbins, Defendants, Cross-Complainants, and Cross-Defendants). |
| Court | Idaho Supreme Court |
Rayborn & Rayborn, Lloyd J. Webb, Blandford & Blandford, Lawrence B. Quinn, Twin Falls, for appellants.
Branch Bird, Gooding, Charles Scoggin, Fairfield, for respondents.
February 1, 1953, the parties entered into the following agreement:
'This agreement, Made and entered into this 1st day of February, 1953, by and between David J. Koenig and Rebecca Koenig, husband and wife, hereinafter referred to as the parties of the first part, and Lloyd F. Barron and Veronica H. Barron, husband and wife, and Von A. Robbins and Mary A. Robbins, husband and wife, hereinafter referred to as the parties of the second part.
'Witnesseth: That for and in consideration of the covenants and agreements herein contained the parties have and do agree as follows:
'I.
'That the parties of the first part are the owners of 160 acres of farm land in Twin Falls County, Idaho, described as follows, to-wit:
'Southwest Quarter of Section 20, Twp. 10 South, Range 19, East of the Boise Meridian; and the parties of the second part are the owners of a herd of registered Aberdeen-Angus cattle, and that the hereto attached Exhibit A contains the name and registration number of each individual animal, and the total reasonable value of the said herd is the sum of $160,000.00; and the reasonable value of the real estate belonging to the parties of the first part is the sum of $120,000.00.
'II.
'That the parties hereto desire to engage in a joint operation on the following basis and conditions:
'A. That the profits or losses of the operation shall be shared on a basis of one-third to the parties of the first part and two-thirds to the parties of the second part.
'B. That the parties of the first part are to furnish the land above described, together with improvements, and to maintain said land and improvements, and to bear the upkeep on the said real property, and parties of the first part are to furnish necessary machinery and equipment to properly operate said farm.
'C. That the parties of the second part are to furnish the cattle heretofore referred to in Exhibit A.
'D. That all the expenses of operating the business and including the ordinary expense of operating the farm and caring for the cattle shall be treated as operating expenses chargeable to the operating expense of the business.
'E. It is agreed and understood that the herd of cattle shall be kept up and cared for in a manner as is required of a herd of high grade registered cattle. And it is understood by the parties that this herd is recognized as one of the best herds in the intermountain country, and that the care required and the attention to be given to the said cattle by the parties will be the greatest of care, and the parties of the second part being experienced in the handling of registered cattle are to be the judges of when the stock is to be replaced and as to what changes are to be made in the herd.
'F. That the net income from the operations is to be divided between the parties on the basis of two-thirds to the parties of the second part and one-third to the parties of the first part, or in the event of loss the loss is to be shared on the same basis.
'G. That the said cattle are to be kept on the said premises above described at all times except such times as some of them may be moved for show or other necessary purposes.
'H. This Agreement is to continue for a period of ten years, unless sooner terminated by mutual agreement of the parties.
'I. It is agreed that the parties will hire and appoint a general manager to operate the business as covered and specified in this Agreement, and that he shall keep a proper and adequate set of books and records which will be available to the parties hereto at all times.
'J. That the accounting period shall be the 15th day of December of each year, following the end of the fiscal year, which it is agreed will be from December 1st to December 1st each year.
'K. It is specifically agreed and understood that this is to be a limited venture of the parties and is not to be construed as involving the parties in any general partnership, but is to pertain to the operating venture as covered by this Agreement, and nothing more, and is to in no way involve any other properties or business dealings of the parties hereto.
'L. That upon the termination of this Agreement it is agreed that the parties of the second part are to have no interest in the farm lands or improvements covered by this Agreement, and that the parties of the second part are to have a number of registered cattle equal to the number of cattle that they put into the business, as shown by Exhibit A attached to this Agreement, that is, they are to have cattle equal in quality and number to those put into the business as shown by Exhibit A hereto attached, and any cattle in excess of said number are to be divided between the parties on the basis of two-thirds to the parties of the second part and one-third to the parties of the first part. And, further, if at the time of the termination of this Agreement there should be a smaller number of cattle than as shown by the said Exhibit A to this Agreement, then the parties of the second part would receive from the parties of the first part a sum equal to one-third of the difference in average per head value of the remaining herd.
'M. That proper and accurate books and records of all operations covered by this Agreement are to be kept by the parties and the expense of the said bookkeeping is, as well as any and all other expense of operation, whether or not herein covered, to be paid by the parties from the general operating expense, or if the business should show a loss then to be shared on the same pro rata basis as heretofore mentioned in this Agreement.
'N. It is further agreed and understood between the parties that on any and all business undertakings of a major nature pertaining to the operation of this joint venture, the parties hereto will confer with each other.
'The parties hereto respectfully bind themselves, their heirs and legal representatives by this Agreement.
/s/ 'David J. Koenig
/s/ 'Rebeca Koenig
'Parties of the First Part.
/s/ 'Lloyd F. Barron
/s/ 'Veronica H. Barron
/s/ 'Von A. Robbins
/s/ 'Mary A. Robbins
'Parties of the Second Part.'
Whether the legal entity created by the agreement is a joint venture or limited partnership is of no importance here. See 48 C.J.S. Joint Adventures § 1 b(6), p. 806. The rights, duties and liabilities of the parties are determined by the agreement. Use herein of the terms 'venture', 'partnership', or 'partner', is not intended to extend or limit the agreement, or the rights or obligations of the parties thereunder.
The parties operated under this agreement from its date until some time in October, 1954. Dissatisfaction and disagreements arose early in 1954 and in May and June of that year negotiations were had between the partners in an effort to agree upon a dissolution. All agreed to dissolve the partnership, but there being no partnership funds for the payment of outstanding debts and no assets which could be sold advantageously at that time to raise money for that purpose, it was agreed that final dissolution would await the annual fall sale of cattle later held October 11, 1954.
The proceeds of the October, 1954, sale were insufficient to pay the outstanding debts of the partnership and negotiations continued. An accounting firm was employed by the partners, and a preliminary report was made by the auditor under date of January 3, 1955. The auditor conferred with the partners as to the proposed division of cattle between Barron and Robbins, also as to the division of other capital assets, and as to approval or rejection of specific items in the financial transactions of the partnership concerning which there was or might be disagreement. A second report was then prepared by the auditor and submitted under date of January 21, 1955. From this it appeared there was a net loss resulting from the partnership operations of $15,964.29. After adjusting the capital account of the respective partners, charging and crediting as required by the agreed division of capital assets and other items, the auditor reported the amount of the contribution which each of the three groups of partners should make to a fund for the payment of the deficit.
Koenig refused to pay the portion allocated to him. Robbins claimed he had been relieved of the obligation by an agreement reached in June, 1954. Barron was willing to pay his share of the loss according to the contract. The cattle were actually divided between Barron and Robins. Koenig indicated that any division of the cattle which Barron and Robbins agreed upon was satisfactory to him. His only stated objection was that the cattle should not be disposed of or released until the debts were paid. Additional obligations of the partnership were presented and recognized subsequent to the auditor's reports.
This action was commenced by plaintiffs (respondents) Barron and wife against defendants (appellants) Koenig and wife and defendants Robbins and wife, May 18, 1955, to secure a dissolution of the partnership, for the liquidation and application of its assets to the payment of its debts, and for an accounting, and that the respective partners be required to contribute individually to the payment of the remaining obligations of the venture.
Robbins and wife answered, denying liability and setting up the alleged agreement of June, 1954, as a discharge of any liability on their part. The court found against them on this contention,...
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