Fox Valley Builders Corp. v. Day

• Decision Date: 02 March 1976
• Docket Number: No. 663,663
• Citation: 71 Wis.2d 785,238 N.W.2d 748
• Parties: FOX VALLEY BUILDERS CORPORATION, a Wisconsin Corporation, Appellant, v. Thomas L. DAY, Respondent. (1974).
• Court: Wisconsin Supreme Court

Page 748

238 N.W.2d 748

71 Wis.2d 785

FOX VALLEY BUILDERS CORPORATION, a Wisconsin Corporation, Appellant, v. Thomas L. DAY, Respondent.

No. 663 (1974).

Supreme Court of Wisconsin.

Submitted Jan. 7, 1976.

Decided March 2, 1976.

Roy G. Stohlman, Appleton, for appellant.

Jeffrey F. Snyder, Neenah, for respondent.

ROBERT W. HANSEN, Justice.

Shucks aside, the nubbin of this case is whether the dissolution agreement between the defendant, Day, and his partner, Williams, insulated Day from liability to plaintiff, Fox Valley Builders Corporation, for double payments made to the partnership before it was dissolved. We hold that it did not so insulate him.

Sec. 178.12, Stats., makes all partners in a partnership jointly liable for debts and obligations of the partnership which are not due to wrongful acts or breaches of trust. The double billing of and double payment by Fox Valley was admittedly a mistake of Day and Williams as partners. Therefore there was here a joint obligation of partners Day and Williams for which they were jointly sued.

Sec. 178.31, Stats., governs the discharge of existing liabilities on dissolution of a partnership. Sub. (1) provides that such dissolution '. . . does not of itself discharge the existing liability of any partner.' Sub. (2) provides that, upon dissolution of a partnership, a partner is discharged from any existing liability '. . . by an agreement to that effect between himself, the partnership creditor and the person or partnership continuing the business.' Sub. (3) provides that, where a person agrees to assume the existing obligations of a dissolved partnership, the partners whose obligations have been assumed shall be discharged from any liability to any creditor of the partnership who '. . . knowing of the agreement, consents to a material alteration in the nature or time of payment of such obligations.'

Thus the withdrawing partner's liability on existing partnership obligations may be discharged by an agreement to that effect between him, his continuing partner and the partnership creditor or by a material alteration in nature or time of payment of the obligation between the continuing partner and the creditor who had notice of an agreement to assume the obligations of the partnership.

The trial court instructed the jury on the issue presented as follows:

'It is for you to determine from the evidence and in accordance with the instructions previously given to you on the burden of proof whether or not an obligation of the partnership of which the defendant, Thomas L. Day, was a partner, existed in favor of the plaintiff, Fox Valley Builders Corporation, as of the date of dissolution of the Modern Builders partnership business on or about February 29, 1972.

'If you find from such evidence that the plaintiff has met the burden of proof as to the existence of such liability as of such date, the defendant, Thomas L. Day, would then have the burden of proof on the establishment of any discharge from such liability, either through the agreement of or course of conduct on the part of the plaintiff, Fox Valley Builders Corporation.'

The first problem in connection with this instruction is that, on this record, there can be no room for doubt and no dispute that an obligation to repay the plaintiff on the basis of a double payment existed on the date of dissolution of the partnership. The action here for money had or received is one based on a theory of quasi-contract, usually termed an action for unjust enrichment. (See: Hicks v. Milwaukee County (Wis.1976), 238...