Bohn v. Bohn Implement Co.

Decision Date25 October 1982
Docket NumberNo. 10176,10176
Citation325 N.W.2d 281
PartiesJoAnn BOHN, Personal Representative of the Estate of Clyde M. Bohn, Deceased, Plaintiff, Appellee, and Cross-Appellant, v. BOHN IMPLEMENT COMPANY, a Partnership, and Graydon J. Bohn, Sr., Defendants, Appellants, and Cross-Appellees. Civ.
CourtNorth Dakota Supreme Court

Lamb, Schaefer, McNair, Larson & Olson, Moorhead, Minn., and Fargo, for plaintiff, appellee, and cross-appellant; argued by Bruce H. Carlson, Moorhead, Minn.

Leland F. Hagen, of Ohnstad, Twichell, Breitling, Arntson & Hagen, West Fargo, and R.E.T. Smith, of Smith & Strege, Wahpeton, for defendants, appellants, and cross-appellees; argued by Mr. Hagen.


This is an action arising out of a disagreement over the validity and meaning of a partnership agreement entered into by two brothers, Clyde M. Bohn and Graydon J. Bohn, Sr. The trial court determined that the agreement was ambiguous and that the section of the agreement referring to the terms of payment upon an election to purchase a deceased partner's interest was unconscionable. The trial court held that Graydon Bohn could purchase his deceased brother's interest in the partnership, but only at the fair market value. We affirm.

Clyde and Graydon were the only children of Harry and Matilda Bohn. They were born and raised in Richland County, North Dakota. In 1960 Harry and his two sons signed a partnership agreement to farm and to do business as Bohn Implement Company. In 1964 the implement dealership was closed, and Harry, Clyde, and Graydon farmed together. After Harry Bohn's death in 1968, Clyde and Graydon continued to farm as partners. Their mother, Matilda, retained a 35-percent partnership interest in the farm in trust.

Prior to Matilda's death on June 5, 1979, she made periodic gifts to Clyde and Graydon of portions of her interest in the partnership. After Matilda's death, Clyde and Graydon became sole equal partners. Their partnership received long-term financing from the Federal Land Bank and short-term financing from the Production Credit Association. In the fall of 1979 representatives of the Production Credit Association recommended to Clyde and Graydon that they should obtain more long-term financing and use it to reduce their short-term indebtedness. Before Clyde and Graydon could obtain a new loan from the Federal Land Bank they were required to produce an updated partnership agreement.

Clyde went to see attorney Mildred Johnson, of Wahpeton, North Dakota, in November 1979 for assistance with the Federal Land Bank loan and an updated partnership agreement. Mildred Johnson's associate prepared a draft of a partnership agreement which is similar to the 1960 agreement. The major difference between the two agreements is that a financial statement was attached to the 1979 agreement. The 1979 agreement referred to "Schedule A," which was supposed to be attached; however, the financial statement attached to the agreement was not so entitled.

On December 28, 1979, attorney Johnson discussed the agreement with Clyde and Graydon, and the brothers signed the agreement. Clyde died unexpectedly on April 18, 1980. After Clyde's death Graydon gave notice to Clyde's widow, JoAnn Bohn, that he elected to purchase Clyde's interest in the partnership. Graydon's net offer to JoAnn was $134,497.96. Graydon determined the amount of his offer by taking the stated value of the farmland on the balance sheet attached to the partnership agreement and dividing it in half. He assumed the total debt of the partnership, $309,320, and reduced JoAnn's share. Graydon then calculated the annual payment at six percent interest over 25 years. JoAnn rejected Graydon's net offer of $134,497.96 and commenced an action on behalf of Clyde's estate.

The case was tried without a jury. Earl Oliver, an appraiser, testified that the partnership's property had a fair market value of $1,452,410. After hearing the evidence, the trial judge concluded that the 1979 partnership agreement was ambiguous and that the portion of the agreement containing the terms of payment for the purchase of a deceased partner's interest was unconscionable. He determined that the purchase price of Clyde's interest should be 50 percent of the net fair market value of the partnership, $750,000. The trial judge also determined that the terms of Graydon's purchase would include a 15-percent cash downpayment with the remainder payable in equal annual installments over 20 years with six percent simple annual interest. Graydon has the option to elect to purchase at these terms. If he decides not to purchase, the partnership will be liquidated. Graydon appealed from the trial court's decision.

In addition to his appeal on the merits, Graydon moved that the action be remanded pursuant to Rule 35(b) of the Rules of Appellate Procedure. Rule 35(b) provides, in part "If, in the consideration of any appeal, it becomes apparent to the supreme court that some issue involved in the case has not been tried, or if tried has not been determined by the trial court, and that it is necessary or desirable to proper disposition of the case on appeal that the issue be determined, the supreme court may remand the case to the trial court for the determination of the issue, ..."

Graydon contends that the trial judge did not make a specific finding of fact regarding what Clyde and Graydon actually agreed to, if anything. Graydon urges that we remand this case for a determination of this issue. The trial judge did not specifically state if he found that Clyde and Graydon had agreed to a specific buy-out price. However, he did conclude the agreement was ambiguous. Because the trial judge found an ambiguity in the partnership agreement, we assume that he found an agreement existed, but that a specific purchase price was not established.

In this case few, if any, facts are in dispute. It would serve no necessary purpose to remand for further findings. Although the findings of fact are not so complete as Graydon would like, we understand the rationale of the trial judge and agree with his conclusions. Even if the trial judge's reasoning were incorrect, we will not reverse the proper judgment on that basis. See KFGO Radio, Inc. v. Rothe, 298 N.W.2d 505, 509 (N.D.1980). We deny Graydon's motion for remand.

The central conflict in this dispute involves the validity and terms of the clauses in the partnership agreement regarding the option to buy a partner's interest upon his death. Paragraph 14 of the agreement is entitled "Death," and it states that the surviving partner has the right to purchase the deceased partner's interest or to liquidate the partnership. Paragraph 14A states that upon a surviving partner's election to purchase, the purchase price shall be as set forth in paragraph 15 and the price shall be paid according to paragraph 13A.

Paragraph 15 is entitled "Purchase Price," and it provides, in part:

"A. The value of the partnership interest of Clyde M. Bohn or Graydon J. Bohn, Sr., for the purpose of this agreement, shall be:

"a. The capital amount of the decedent's interest as shown by the books of the partnership as of the end of the last fiscal year before his death, plus

"b. the decedent's share of profits, or less the decedent's share of losses, of the partnership computed to the last day of the month in which his death occurred less all withdrawals prior thereto during such fiscal year. It is agreed that there is no value for goodwill or firm name and no such value has been included in the price arrived at hereinabove."

Paragraph 13 provides that the "purchase price shall be paid in monthly installments of not less than Two Hundred Dollars ($200.00) plus interest, the balance from time to time remaining to bear interest at the rate of six percent (6%) per annum."

The trial court concluded and the parties admitted the partnership agreement is ambiguous. According to paragraph 15 the value of a partner's interest for the purpose of a buy-out is "the capital amount." However, accountant Harris Widmer testified at trial that the term "capital amount" has no known definition in the accounting profession. The buy-out value cannot be ascertained from the agreement. Because of this ambiguity, we must look to other evidence to understand the agreement between Clyde and Graydon. When the...

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11 cases
  • Estate of Bolinger, In re
    • United States
    • Montana Supreme Court
    • December 8, 1998
    ...Silo Co. (Minn.1976), 310 Minn. 288, 246 N.W.2d 45, 46-48; Bohn v. Johnson (N.D.1985), 371 N.W.2d 781, 788-89; Bohn v. Bohn Implement Co. (N.D.1982), 325 N.W.2d 281, 285. ¶52 Here, the agreement establishes a value ($47,790.30) for the partnership and states that that value shall control in......
  • State v. Jensen, 892
    • United States
    • North Dakota Supreme Court
    • April 19, 1983
    ...held in the past that a judgment will not be reversed merely because it rests upon inapplicable reasons. See, e.g., Bohn v. Bohn Implement Co., 325 N.W.2d 281, 283 (N.D.1982); KFGO Radio, Inc. v. Rothe, 298 N.W.2d 505, 509 (N.D.1980); McGuire v. Warden of State Farm, Etc., 229 N.W.2d 211, 2......
  • Bohn v. Johnson
    • United States
    • North Dakota Supreme Court
    • July 23, 1985
    ...of the partnership if he elected to purchase Clyde's interest. This court affirmed the trial court's judgment in Bohn v. Bohn Implement Company, 325 N.W.2d 281 (N.D.1982). Graydon Bohn brought the instant legal malpractice action against Johnson for damages allegedly resulting from Johnson'......
  • State v. Fridley, Cr. N
    • United States
    • North Dakota Supreme Court
    • June 24, 1983
    ...court has held that a judgment will not be reversed merely because it rests upon inapplicable reasons. See, e.g., Bohn v. Bohn Implement Co., 325 N.W.2d 281, 283 (N.D.1982); KFGO Radio, Inc. v. Rothe, 298 N.W.2d 505, 509 (N.D.1980); McGuire v. Warden of State Farm, etc., 229 N.W.2d 211, 217......
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