Crowe v. Smith, 89-CA-0228

• Decision Date: 03 June 1992
• Docket Number: No. 89-CA-0228,89-CA-0228
• Citation: 603 So.2d 301
• Parties: Larry D. CROWE v. James W. SMITH.
• Court: Mississippi Supreme Court

Page 301

603 So.2d 301

Larry D. CROWE v. James W. SMITH.

No. 89-CA-0228.

Supreme Court of Mississippi.

June 3, 1992.

Stephen L. Beach III, Beach Luckett & Ross, T.E. Davidson, Jackson, for appellant.

Franklin C. McKenzie, Jr., Laurel, for appellee.

Before HAWKINS, P.J., and PRATHER and SULLIVAN, JJ.

PRATHER, Justice, for the Court:

I. INTRODUCTION

This case addresses the authority of the chancery court to authorize sale of Louisiana realty on dissolution of a Mississippi partnership. Larry Crowe appeals from the August 16, 1988, million-dollar judgment of the Chancery Court of Warren County in favor of complainant James Smith of Jones County, Mississippi, granting Smith a cash judgment and costs and ordering Louisiana realty sold. On appeal, Crowe questions, first, whether the trial court had subject-matter jurisdiction over Louisiana realty; second, whether the court properly asserted subject-matter jurisdiction; third, whether the Louisiana lands were partnership assets; and fourth, whether the chancellor erred in assessing costs. Because Crowe does not demonstrate the merit of his challenges, the decision of the chancellor is affirmed.

FACTS

On March 22, 1983, Smith and Crowe entered into a partnership agreement for operating a farming and cotton-ginning business in Warren County, Mississippi, and Madison Parish, Louisiana. The agreement of March 22 stated:

1. The name of the partnership shall be "Australia Island Farm," and it shall be established for the purpose of conducting the primary business of farming.

...

3. Said parties have entered into a Contract to Purchase certain lands in Mississippi and Louisiana, commonly known as "Australia Island", with both of said parties being equally jointly and severally liable for the purchase price thereof, with record title to be vested, upon consummation of the contract in the partnership, Australia Island Farm.

The parties agreed that, should dissolution occur, it would be governed by the laws of Mississippi.

On February 19, 1984, Crowe borrowed $250,000 from Smith and signed a promissory note to be repaid in three weeks and an assignment to Smith of his partnership interest in the Australia Island Farm. On February 18, 1985, Crowe renewed this note with a demand note in the amount of $285,005.69 and secured it with a deed of trust on all partnership realty. In March of 1985, the parties executed an interim partnership operating agreement that included the following paragraph:

Crowe shall execute and deliver unto Smith a promissory note representing ... the balance on a loan previously made from Smith to Crowe on or about February 19, 1984.... This note will be secured by a deed of trust on the fee simple interest of Crowe on lands owned by the partnership in Madison Parish Louisiana and Warren County, Mississippi, known as "Australia Island"

....

Under this agreement, the partners' capital contributions were to be maintained daily on an equal basis. In 1986, interest payments, including mortgage payments, appeared as expense items on the Australia Island Farm income statement and partnership income tax return. On November 6, 1985, Smith demanded payment of the February 18, 1985 note.

When Crowe failed to honor the demand, Smith filed a complaint on December 9, 1985, against Crowe for $309,305.28 plus accrued interest of $90.11 per day for defaulting on loan agreements and Crowe's failing to maintain his share of the partnership capital account. For relief, Smith asked for a money judgment, foreclosure of Crowe's deed of trust to Smith, disbursement of the foreclosure proceeds to satisfy Crowe's and the partnership's indebtedness, attorney's fees pursuant to the terms of Crowe's promissory note, and enforcement of an assignment and pledge of Crowe's partnership interests to Smith, and dissolution of the partnership.

On March 11, 1986, Smith moved for summary judgment on the issue of Crowe's alleged $602,938.20 indebtedness and asked for authority to sell property covered by the deed of trust and foreclose on the collateral mortgage. Crowe alleged the existence of issues of fact regarding his indebtedness, and the chancellor overruled the motion.

On May 7, Crowe amended his answer with a counterclaim in which he alleged that Smith was delinquent in his capital account contributions and that Crowe was entitled to credit for the value of Crowe's services and expenditures. On September 24, the chancellor preliminarily enjoined Smith from foreclosing on any of Crowe's property under the February 20, 1985 deed of trust, but authorized him to advertise a foreclosure sale two weeks after the appointment of a master. The next day the chancellor appointed a master to prepare an accounting of the partnership.

The special master filed his report on December 15, 1986. Both parties objected to the report, and the case was recommitted to the master on January 2, 1987, who filed an amended report in May. The complaint was heard in the Chancery Court, and on December 8, the court issued a partial judgment. In that judgment, the court found jurisdiction over the parties and subject matter of the case, and that the Australia Island Farm was partnership property. The chancery court held that the laws of Mississippi governed the dissolution of the partnership.

On August 16, the chancellor found that "[this] partnership adopted the name Australia Island Farm and acquired the lands and equipment comprising the initial partnership assets." Crowe appealed to this Court on October 5, 1988.

On October 20, 1988, Judge Charles R. Brackin of Louisiana ordered that the Mississippi judgment of August 16 be given full faith and credit. On March 29, 1989, Judge Brackin issued a judgment ordering the disposition of partnership assets in Louisiana. The Louisiana court expressed concern that it could find "no instrument wherein Crowe and Smith actually transferred their interest in the property into any Mississippi partnership." The Louisiana court also noted that the Mississippi partnership had not registered in Louisiana, in compliance with Louisiana law. Judge Brackin did observe that Crowe admitted under cross-examination that he had represented the Louisiana land as a partnership asset in his Mississippi testimony.

In the chancellor's final ruling, he dissolved the partnership and ruled on all partnership claims and operating expenses and income during the dissolution proceedings. The final judgment granted to Smith from Crowe was for $1,064,596.64, and that accounting is not in issue on this appeal. The chancery court ordered the sale of the partnership assets, with the right of both former partners to bid at the sale. This appeal addresses the authority of the Mississippi Court to authorize sale of the partnership assets in Louisiana.

II. ANALYSIS

In a case such as this, the Court must let stand a trial judge's findings of evidentiary or ultimate fact when substantial evidence in the record supports those findings, or when the findings are not "clearly erroneous." Matter of Estate of Varvaris, 528 So.2d 800, 802 (Miss.1988).

A. Issue # 1

Was the Louisiana property a partnership asset?

Crowe disputes the Louisiana land's status as partnership property. He contends instead that Crowe and Smith's ownership of the land as tenants in common defeated its characterization as a partnership asset. Thus, Crowe claims that the partnership dissolution should not have affected the Louisiana land.

Crowe claims to have earlier disputed the status of the land as partnership property, but he offers as evidence only the comment of the Louisiana court that it could find no instrument whereby Crowe and Smith transferred their co-tenancy interest into a partnership interest. Crowe offers no other evidence that he had previously disputed the partnership status of the Louisiana land.

Under Mississippi law, an appellant is not entitled to raise a new issue on appeal, since to do so prevents the trial court from having an opportunity to address the alleged error. Cooper v. Lawson, 264 So.2d 890, 891 (Miss.1972) (citing Clark v. State, 206 Miss. 701, 39 So.2d 783, suggestion of error overruled, 206 Miss. 701, 40 So.2d 591 (1949); Howard v. State, 507 So.2d 58, 63 (Miss.1987).

If Crowe believes that the Louisiana property should not have been included among the assets of his partnership with Smith, he should have introduced that contention with supporting evidence in the trial court. However, the status of the property does not change the court's subject matter jurisdiction over the matter of dissolution.

Looking to applicable law, the controlling rule appears in Mississippi's adoption of the Uniform Partnership Act. In the section entitled "What constitutes partnership property," the code states:

(1) All property originally brought into the partnership stock or subsequently acquired by purchase or otherwise, on account of the partnership, is partnership property.

(2) Unless the contrary intention appears, property acquired with partnership funds is partnership property.

...

(4) A conveyance to a partnership in the partnership name, though without words of inheritance, passes the entire estate of the grantor unless a contrary intent appears....

Miss.Code Ann. Sec. 79-12-15 (Supp.1988); U.P.A. Sec. 8 (1969). In their treatise, Dean Reuschlein and Professor Gregory state:

[t]he determining factor as to whether a specific piece of property constitutes partnership property or the individual property of one or more of the partners is the intention of the parties in most instances.... [I]f it appeared by all the circumstances surrounding the transaction that the parties for which it was purchased intended it to be partnership property and treated it as such, the presumption of ownership arising from the face of the deed could be overcome, and the property could be treated as belonging to the partnership.

H. Reuschlein & W. Gregory, The Law of Agency and Partnership Sec. 212 (2d ed....