Butler v. Forker, 20205

• Decision Date: 01 December 1966
• Docket Number: No. 2,No. 20205,20205,2
• Parties: Arthur BUTLER, Appellant, v. Kenneth FORKER, the Board of Commissioners of the County of Elkhart, Appellees
• Court: Indiana Appellate Court

Page 570

221 N.E.2d 570

139 Ind.App. 602

Arthur BUTLER, Appellant, v. Kenneth FORKER, the Board of Commissioners of the County of

Elkhart, Appellees.

No. 20205.

Appellate Court of Indiana, Division No. 2.

Dec. 1, 1966.

Gerald Deller, Angola, Robert Hollowell, Indianapolis, Deller, Dygert & Friend, Angola, Hollowell, Hamill & Price, Indianapolis, of counsel, for appellant.

Edgar A. Grimm, Kendallville, Merritt Diggins, Kendallville, Grimm & Grimm, Emerick & Diggins, Kendallville, of counsel, for appellees.

HUNTER, Judge.

The original action filed by the appellee below sought a recovery of an unpaid balance on a contract with the Board of Commissioners. The appellant was also joined as a party defendant in the appellee's complaint which alleged an oral partnership between the appellee and the appellant and a loss therefrom seeking a judgment for one-half the loss.

The appellant answered by a denial and filed a cross-complaint alleging that he was working for the appellee on a time and material basis, seeking amounts due from the appellee. The court found against the appellant on his cross-complaint, and for the appellee on his complaint rendering an Eight Thousand Five Hundred ($8,500.00) Dollar judgment against the Board of Commissioners and a judgment of Two Thousand Two Hundred Twenty-One and Eighty-Two one-hundreths ($2,221.82) Dollars against the appellant.

A motion for new trial was overruled and the appellant brought thsi appeal assigning such as error. In the lower court appellant and appellee filed a joint petition excluding the defendant-Board of Commissioners from this appeal which was granted by the lower court. Therefore all the issues on this appeal are between the appellant and appellee only.

Within the motion for new trial, the appellant asserts three (3) errors which are argued here on appeal.

The appellant's first contention relates to the form of the action brought in the lower court by the appellee. The appellant presents alternative arguments in this regard. First, assuming the validity of the partnership agreement, he states that the lower court proceedings represented an action at law for debt and that there was no prior accounting and settlement of the partnership affairs. The appellant contends that one partner cannot sue another partner in an action at law without such a prior accounting or settlement, so the decision and judgment of the lower court is contrary to law and unsupported by sufficient evidence. In the alternative, the appellant argues that even if this were an action in equity for an accounting and settlement of the partnership affairs, there were no allegations to the effect that all the partnership claims were settled or that its debts were paid. Also, he contends that there was no evidence of these facts within the record. Consequently, the appellant contends that in this alternative view the decision and judgment of the lower court is again unsupported by sufficient evidence and contrary to law.

It is the law within this jurisdiction that in order for one partner to sue another in an action at law there must have been a settlement and final accounting between the partners. If this has not been done through some prior agreement between the partners, then an action at law will not lie. In an action to account and settle a partnership, the issues and matters aer not for a jury to decide but for a court of equity. Horn v. Lupton (1914), 182 Ind. 355, 359, 105 N.E. 237, 106 N.E. 708. Therefore without a previous settlement and agreement between the partners, the proper action to recover profits or losses based on partnership business is to sue in equity 'for an accounting and for a recovery of whatever may be found due upon a settlement of the partnership affairs.' Douthit et al. v. Douthit (1892), 133 Ind. 26, 33, 32 N.E. 715, 717. See also Thompson v. Lowe (1887), 111 Ind. 272, 12 N.E. 476 and Lange v. Oppenheim (1884), 96 Ind. 47. This is the general rule. However, there are well recognized exceptions to this rule. See Annotations, 21 A.L.R. 1088, 1098. For the purposes of this decision we need not consider whether appellee's action falls within one of these well recognized exceptions.

It should be noted that the appellant filed no demurrer, motion to make more specific, or a motion to separate the complaint into legal paragraphs. Also, the cause was not tried before a juyr, so we cannot assume per se that it was an action at law.

Certainly some language of teh complaint would indicate that it was an action for debt. However, this same language might be taken as conclusions of fact, i.e., that if the partnership could be settled by the court, the appellant would be indebted to the appellee as a result.

His remedy in face of these conclusions of facts which might make the complaint ambiguous is a motion to make more specific. § 2--1005, Burns' 1946 Repl. provides in part:

'* * * all conclusions stated therein shall be considered and held to be the allegation of all the facts required to sustain said conclusion when the same is necessary to the sufficiency of such pleading, paper or writing:

Provided, That, as against such conclusions, only the following remedy is given, that a motion may be made to require the party filing such pleading, paper or writing to state the facts necessary to sustain the conclusion alleged, * * *'

In view of this reasoning, we find that the complaint stated an action in equity for an accounting and settlement of the partnership affairs.

Furthermore, assuming that the complaint failed to properly allege such an action, the appellant's remedy was a demurrer. § 2--1007, Burns' 1946 Repl. Having failed to do this, the appellant cannot now be heard to challenge the legal sufficiency of the complaint. A failure of the complaint in thsi regard shall be deemed amended an appeal to conform to the evidence. §§ 2--1068, 2--3231 Burns' 1946 Repl.

However, the appellant contends that there is no evidence in the record to sustain such an accounting or settlement. We find from the record that all outstanding claims were represented and settled by the suit. The Board of Commissioners owed Eight Thousand Five Hundred ($8,500.00) Dollars, and was a party. This was the only outstanding claim, and it was settled as a result of the lower court's action. The liabilities of the partnership beyond those claimed by each partner as to himself were non-existent. Both the appellant and the appellee presented their expense statements and each testified that such were paid. (For the appellee, his bookkeeper so testified.) Therefore, the only outstanding liabilities of the partnership were those claimed by the partners for their own services, which were settled by the court.

The partnership was dissolved as soon as the bridge was completed. § 50--431(1)(a), Burns' 1964 Repl. A county representative testified that the bridge was completed to their satisfaction. Any insufficiency of the pleadings to state a valid cause of action for an accounting and settlement is cured by this evidence. We consider the pleadings to be amended to conform to the evidence which demonstrated that the only outstanding claim was settled in the action, that the partnership was dissolved, that there were no outstanding liabilities to third parties, and that the partner's claims as to each other were also settled in the lower court's decision. The above is sufficient to sustain the general finding and judgment of the lower court in that a final accounting and settlement of the partnership was effected.

The second argument of the appellant relates to a claimed admission within the appellee's answer to appellant's cross-complaint. The first allegations within the cross-complaint are as follows:

'1. That on or about the 28th day of June, 1961, the Plaintiff herein talked to the Defendant herein in reference to establishing a partnership agreement between the Plaintiff and this Defendant on a certain bridge construction that the Plaintiff herein had bid on with the Defendant, the Board of County Commissioners of the County of Elkhart, in that the Plaintiff had the earth moving personnel and equipment to complete said proposed contract, and the Defendant, Arthur Butler, had the necessary concrete knowledge and equipment to complete the same.

2. That the daid time and place the parties herein discussed the matter in reference to entering into a partnership agreement orally wherein the parties were to share equally therein the profits and losses of said construction upon the condition that said partnership contract be reduced to writing and signed by both said parties.'

The appellee's answer was:

'He admits that the parties hereto had negotiations concerning the formation of a partnership, all as contained in rhetorical paragraphs 1 and 2 of the cross-complaint of defendant, Arthur Butler.'

The answer would seem to be an admission by the appellee that the contract to form a partnership was conditioned on it being put in writing. Therefore, unless the condition precedent was completed, there could be no valid contract. However if this were true, then the allegation in the appellee's complaint as to an oral partnership contract would fall. Additionally, in his answer to the third paragraph of the appellant's cross-complaint the appellee denied such, which in effect denied what was possibly admitted in the prior instance. Therefore, we have one possible admission in the answer to the cross-complaint but the complaint and another denial in the answer to the cross-complaint are both to the contrary.

The appellee does not concede that it was an admission. However, under the language there is only one reasonable interpretation. As shown above, if the lower court had found such to be a binding admission, the entire action of the appellee should have fallen. Any decision to the opposite effect would be contrary to law. However, if the lower court found that it was not a binding...