Clark v. Allen

• Decision Date: 21 January 1959
• Citation: 215 Or. 403,333 P.2d 1100
• Parties: Justin Harvey CLARK, Respondent, and Cross-Appellant, v. W. Gordon ALLEN, John B. Truhan, and KGAE, an Oregon corporation, Appellants.
• Court: Oregon Supreme Court

Page 1100

333 P.2d 1100

215 Or. 403

Justin Harvey CLARK, Respondent, and Cross-Appellant, v. W. Gordon ALLEN, John B. Truhan, and KGAE, an Oregon corporation, Appellants.

Supreme Court of Oregon, Department 2.

Argued and Submitted Dec. 18, 1958.

Decided Jan. 21, 1959.

Laurence Morley, Lebanon, argued the cause for appellant W. Gordon Allen. On the briefs were W. C. Winslow, Salem, and Morley & Thomas, Lebanon.

Asa L. Lewelling, Salem, argued the cause and filed briefs for appellant John B. Truhan.

Bruce Williams, Salem, argued the cause for respondent and cross-appellant. On the brief were Williams & Skopil, Salem.

Before PERRY ^*, C. J., and WARNER, SLOAN and O'CONNELL, JJ.

SLOAN, Justice.

This case involves the dissolution of a partnership formed to establish and operate radio station KGAE in Salem. The initial complaint alleged violation of the partnership contract and sought an accounting, dissolution and liquidation of the partnership. The defendants, by answer, denied violation of the agreement. They also alleged that Clark's action in filing his complaint constituted a 'voluntary dissolution' of the partnership, which, by the terms of the contract hereinafter set forth, gave them the right to purchase his interest at its then value. Defendants then tendered plaintiff what they considered to be the value of plaintiff's interest in the business and prayed the court decree the partnership thereby dissolved and terminated. After an extended hearing the trial court, by preliminary order, appointed an accountant to audit the books and records and report to the court. Following the filing of this report the court entered a decree which dissolved the partnership and attempted to adjudicate the rights of the parties. All of the parties appeal from various provisions of the decree. Our disposition of this case renders it unnecessary to consider all the issues presented. As we later indicate we believe the only issue we are required to consider is presented by the finding and decree of the trial court allowing the plaintiff to continue to share in partnership profits after the date of dissolution fixed by the court. The defendants have at all times been in possession and operation of the station. A brief statement of the facts is necessary.

The partnership was formed by the plaintiff Clark and the defendants Allen and Truhan by a written agreement dated June 26, 1951. The contract provided that each would be a one-third owner of the partnership assets and that each would contribute $6,000 to the partnership to provide its capital. The contributions of plaintiff Clark and defendant Truhan were to be in cash. The defendant Allen was to contribute $2,500 in cash and assume the full responsibility of obtaining a permit from the Federal Communications Commission, and if successful in that, to build and install the necessary buildings, facilities and equipment essential to the operation of a radio station. The management chores were to constitute the remainder of the contribution of defendant Allen.

The paragraph of the contract most pertinent to our inquiry provided as follows:

'Upon voluntary dissolution of the partnership by any partner, or by reason of death of one of the parties, the remaining parties shall have first right to purchase the interest of such partner in the business, assets and goodwill, by paying the value of such interest as determined by current accounting and inventory. Upon such payment the retiring party or his representatives, shall execute and deliver to the other parties all necessary conveyances of such interest.

'None of the parties shall sell, assign or incumber his interest in the partnership without the written consent of the other parties to the agreement.'

It was anticipated that the station would be able to begin actual broadcast operation about December 1, 1951. Numerous complications appear to have prevented this anticipated event and the station did not commence operation until about June 1, 1952. Prior to the formation of the contract Allen held interests in lesser or greater amount in other radio stations and was a trained engineer in the technical aspects of the business. Truhan was likewise an engineer, but during most of the time pertinent here was in Honolulu and other areas of the Pacific and had little personal contact with the affairs of this partnership. The plaintiff resided in Camas, Washington, and had no previous experience with this type of business and, as expressed in the contract, placed the sole management responsibility on defendant Allen.

During the interval of time which elapsed between the formation of the partnership and the commencement of actual broadcasting, the plaintiff and his wife appear to have become restless and made frequent inquiry of Allen as to the progress being made. The response to these inquiries did not satisfy plaintiff and differences developed. About the time the station 'went on the air' plaintiff caused his then legal counsel to call upon Allen and demand certain accountings. Various efforts were made to present an accounting to plaintiff or his counsel but these were of no avail. On November 3, 1952, plaintiff filed his complaint herein for a dissolution of the partnership, an accounting and winding up of its affairs by the appointment of a receiver to take charge of and liquidate the business.

The grounds alleged in the original complaint were baseless and essentially abandoned upon subsequent hearings and trial. Later the plaintiff filed an amended complaint charging various violations of the partnership contract on the part of defendant Allen. We find that these allegations were not supported by satisfactory evidence in the course of the subsequent hearings before the court. We must, and do, conclude, therefore, that the original attempted action for dissolution was wholly without adequate cause and was unjustified at the time it was filed. Nor did the subsequent amended complaint and evidence, in its support, cure plaintiff's failure to justify the abortive dissolution.

By our view of the evidence, the defendant Allen was perhaps guilty of some unwise methods in the handling of partnership funds. There is no evidence, however, of misuse of such funds nor that they were not expended for the purposes required by the partnership contract. He did successfully obtain a Federal Communications Commission permit despite strenuous opposition, build and equip a radio station that all available evidence indicates has been a financial success. This has been in spite of persistent harassment on the part of plaintiff. There is even some evidence to indicate that plaintiff has assisted competing radio stations in efforts to cause the Federal Communications Commission to withdraw...