Drashner v. Sorenson

• Decision Date: 09 March 1954
• Docket Number: No. 9356,9356
• Citation: 75 S.D. 247,63 N.W.2d 255
• Parties: DRASHNER v. SORENSON et al.
• Court: South Dakota Supreme Court

Page 255

63 N.W.2d 255

75 S.D. 247

DRASHNER v. SORENSON et al.

No. 9356.

Supreme Court of South Dakota.

March 9, 1954.

Thos. G. Wall, Sturgis, for plaintiff and appellant.

J. H. Bottum, Jr., Rapid City, for defendants and respondents.

SMITH, Presiding, Judge.

In January 1951 the plaintiff, C. H. Drashner, and defendants, A. D. Sorenson and Jacob P. Deis, associated themselves as co-owners in the real estate, loan and insurance business at Rapid City. For a consideration of $7500 they purchased the real estate and insurance agency known as J. Schumacher Co. located in an office room on the ground floor of the Alex Johnson Hotel building. The entire purchase price was advanced for the partnership by the defendants, but at the time of trial $3,000 of that sum had been repaid to them by the partnership. Although, as will appear from facts presently to be outlined, their operations were not unsuccessful, differences arose and on June 15, 1951 plaintiff commenced this action in which he sought an accounting, dissolution and winding up of the partnership. The answer and counterclaim of defendants prayed for like relief.

The cause came on for trial September 4, 1951. The court among others made the following findings. VII. 'That thereafter the plaintiff violated the terms of said partnership agreement, in that he demanded a larger share of the income of the said partnership than he was entitled to receive under the terms of said partnership agreement; that the plaintiff was arrested for reckless driving and served a term in jail for said offense; that the plaintiff demanded that the defendants permit him to draw money for his own personal use out of the moneys held in escrow by the partnership; that the plaintiff spent a large amount of time during business hours in the Brass Rail Bar in Rapid City, South Dakota, and other bars, and neglected his duties in connection with the business of the said partnership. * * * That the plaintiff, by his actions hereinbefore set forth, has made it impossible to carry on the partnership.' The conclusions adopted read as follows: I 'That the defendants are entitled to continue the partnership and have the value of the plaintiff's interest in the partnership business determined, upon the filing and approval of a good and sufficient bond, conditioned upon the release of the plaintiff from any liability arising out of the said partnership, and further conditioned upon the payment by the defendants to the plaintiff of the value of plaintiff's interest in the partnership as determined by the Court.' II 'That in computing the value of the plaintiff's interest in the said partnership, the value of the good will of the business shall not be considered.' III 'That the value of the partnership shall be finally determined upon a hearing before this Court, * * *' and IV 'That the plaintiff shall be entitled to receive one-third of the value of the partnership property owned by the partnership on the 12th day of September, 1951, not including the good will of the business, after the payment of the liabilities of the partnership and the payment to the defendants of the invested capital in the sum of $4,500.00.' Judgment was accordingly entered dissolving the partnership as of September 12, 1951.

After hearing at a later date the court found: I 'That the value of the said partnership property on the 12th day of September, 1951, was the sum of Four Thousand Four Hundred Ninety-eight and 90/100 Dollars ($4498.90), and on said date there was due and owing by the partnership for accountant's services the sum of Four Hundred Eighty Dollars ($480.00), and that on said date the sum of Four Thousand Five Hundred Dollars ($4500.00) of the capital invested by the defendants had not been returned to the defendants.' and II 'That there is not sufficient partnership property to reimburse the defendants for their invested capital.' Thereupon the court decree 'That the plaintiff had no interest in the property of the said partnership', and that the defendants were the sole owners thereof.

The assignments of error are predicated upon insufficiency of the evidence to support the findings and conclusions. Of these assignments, only those which question whether the court was warranted in finding that (a) the plaintiff caused the dissolution wrongfully, and (b) the value of the partnership property, exclusive of good will, was $4498.90 on the 12th day of September, 1951, merit discussion. A preliminary statement is necessary to place these issues in their framework.

The agreement of the parties contemplated an association which would continue at least until the $7500 advance of defendants had been repaid from the gross earnings of the business. Hence, it was not a partnership at will. Vangel v. Vangel, 116 Cal.App.2d 615, 254 P.2d 919; Zeibak v. Nasser, 12 Cal.2d 1, 82 P.2d 375. In apparent recognition of that fact, both plaintiff and defendants sought dissolution in contravention of the partnership agreement, see SDC 49.0603(2) under SDC 49.0604(1)(d) on the ground that the adverse party had caused the dissolution wrongfully by willfully and persistently committing a breach of the partnership agreement, and by so conducting himself in matters relating to the partnership business as to render impracticable the carrying on of the business in partnership with him.

By SDC 49.0610(2) of the Uniform Partnership Act it is provided:

'When dissolution is caused in contravention of the partnership agreement the rights of the partners shall be as follows:

'(a) * * *

'(b) The partners who have not caused the dissolution wrongfully, if they all desire to continue the business in the same name, either by themselves or jointly with others, may do so, during the agreed term for the partnership and for that purpose may possess the partnership property, provided they secure the payment by bond approved by the Court, or pay to any partner who has caused the dissolution wrongfully, the value of his interest in the partnership at the dissolution less any damages recoverable under clause (2)(a)(2) of this section and in like manner indemnify him against all present or future partnership liabilities.

'(c) A partner who has caused the dissolution wrongfully shall have:

'(1) * * *

'(2) If the business is continued under paragraph (2)(b) of this section the right as against his copartners and all claiming through them in respect of their interests in the partnership, to have the value of his interest in the partnership, less any damages caused to his copartners by the dissolution, ascertained and paid to him in cash, or the payment secured by bond approved by the Court, and to be released from all existing liabilities of the partnership; but in ascertaining the value of the partner's interest the value of the good will of the business shall not be considered.'

The foregoing are the remedial provisions by which the trial court was guided in its proceedings. Their validity was not drawn in question, and is not before us. Cf. Zeibak v. Nasser, 12 Cal.2d 1, 82 P.2d 375.

From this background we turn to a consideration of the evidence from which the trial court inferred that plaintiff caused the dissolution wrongfully.

The breach between the parties resulted from a continuing controversy over the right of plaintiff to withdraw sufficient money from the partnership to defray his living expenses. Plaintiff was dependent upon his earnings for the support of his family. The defendants had other resources. Plaintiff claimed that he was to be permitted to draw from the earnings of the partnership a sufficient amount to support himself and family. The defendants asserted that there was a definite arrangement for the allocation of the income of the partnership and there was no agreement for withdrawal by plaintiff of more than his allotment under that plan. Defendants' version of the facts was corroborated by a written admission of plaintiff offered in evidence. From evidence thus sharply in conflict, the trial court made a finding, reading as follows: 'That the oral partnership agreement between the parties provided that each of the three partners were to draw as compensation one-third of one-half of the commissions earned upon sales made by the partners; that the other one-half of the commissions earned on sales made by the partners and one-half of the commissions earned upon sales made by salesmen employed by the partnership, together with the earnings from the insurance business carried on by the partnership, was to be placed in a fund to be used for the payment of the operating expenses of the partnership, and after the payment of such operating expenses to be used to reimburse the defendants for the...