Frey v. Hauke

• Decision Date: 17 March 1961
• Docket Number: No. 34873,34873
• Citation: 108 N.W.2d 228,171 Neb. 852
• Parties: John H. FREY, Appellant-Cross-Appellee, v. Albert P. HAUKE, Appellee-Cross-Appellant.
• Court: Nebraska Supreme Court

Page 228

108 N.W.2d 228

171 Neb. 852

John H. FREY, Appellant-Cross-Appellee, v. Albert P. HAUKE, Appellee-Cross-Appellant.

No. 34873.

Supreme Court of Nebraska.

March 17, 1961.

Syllabus by the Court.

1. When a question of fact is once determined on its merits, that question is settled so far as the litigants are concerned and it may not be relitigated between the same parties.

2. The burden of proof is upon the plaintiff to prove an oral contract of partnership for a fixed term by clear, satisfactory, and unequivocal evidence.

3. The fact that a partnership incurred debts and charged its assets for their payment is no proof of an agreement that the partnership shall continue until its debts are paid, for those debts may be paid as well after as before dissolution.

4. A managing partner who acquiesces in the matter of the depreciation relating to the partnership business as set up by an accountant is in no position to complain about such depreciation.

5. If a partner claiming an interest in the profits earned after the dissolution of the partnership has no interest in the assets or capital of the partnership after dissolution, he is not entitled to share in the profits earned.

6. The good will of a partnership consists of every possible advantage acquired by it in carrying on its business.

7. The chief elements of value in partnership good will are continuity of name, place, and organization

8. Actions in equity, on appeal to this court, are triable de novo, subject, however, to the rule that when evidence on material questions of fact is in irreconcilable conflict, this court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying, and must have adopted one version of the facts rather than the opposite.

Wright & Simmons, James R. Hancock, Robert M. Harris, Scottsbluff, for appellant.

Lyman & Winner, Scottsbluff, Stubbs & Metz, Alliance, for appellee.

Heard before CARTER, MESSMORE, YEAGER, WENKE, SPENCER and BOSLAUGH, JJ.

MESSMORE, Justice.

This is an action in equity brought by John H. Frey as plaintiff in the district court for Scotts Bluff County, against Albert P. Hauke, defendant, for an accounting between the respective parties as partnrs, and for damages for the breach of a partnership agreement entered into by them.

We set forth certain findings of the trial court pertinent to this appeal: The decision in the case of Hauke v. Frey, 1967 Neb. 398, 93 N.W.2d 183, 185, was the law in this action, and the statement appearing therein, as follows: '* * * indicated a partnership which was to continue until plans could be worked out and a corporation organized to take its place' was binding upon the trial court; that a partnership for a definite term or particular undertaking as described in paragraph 1(b) of section 67-331, R.R.S.1943, existed between the parties prior to March 14, 1957; that the partnership was not a partnership at will at the time of its commencement; that the partnership became a partnership at will on March 14, 1957, by reason of a writing designated exhibit No. 25; that the partnership being a partnership at will on March 19, 1957, the defendant had a right to terminate the same, and plaintiff was not entitled to damages for the wrongful termination thereof; that the depreciation figure used in the accounting procedure of the firm's accountant was proper; that prior to the dissolution of the partnership the profits of the same were $5,722.92, one-half of which or $2,861.46, was awarded to the plaintiff; that the good will of the partnership at the time of dissolution was valued at $10,000, one-half of which or $5,000 was awarded to the plaintiff; that the income and expense statements prepared by the accountant for the partnership, shown by exhibits, accurately represented the income and expense of the partnership from September 1, 1956, through March 31, 1957; that the obligation of the plaintiff on the conditional sales contract should thereafter be defendant's separate obligation and plaintiff held harmless from this and all other obligations of the partnership; that the plaintiff drew no salary for that part of March 1957 prior to March 19, 1957, and was entitled to 19/31 of $425, or $260.49 for the period from March 1 to March 19, 1957; and that the plaintiff was entitled to interest at the rate of 6 percent per annum from March 19, 1957, on all sums found due on that date. In all, the trial court awarded the plaintiff $8,241.95 plus interest at 6 percent per annum from March 19, 1957, until paid, and taxed the costs to the defendant.

The plaintiff filed a motion for new trial; the defendant filed a motion for new trial; and the trial court overruled both of these motions. The plaintiff perfected appeal to this court.

The plaintiff's petition alleged in substance that on or about March 27, 1956, he and the defendant orally entered into a partnership agreement for the construction, purchase, and operation of equipment for a bowling alley to be housed in a building to be built by the defendant and owned by him; that the defendant was to advance the funds necessary for the commencement of the business; that the plaintiff was to manage the business and receive a salary of $425 a month; that the defendant was to receive $500 a month for the rent of the building; and that each party was to share evenly in the partnership assets, that is, the profits, and in the same degree as to the losses. The petition further alleged that the agreed life of the partnership was the life of the parties; that the business was established in conformity with the oral agreement between the parties; that the paties individually and as partners executed notes and other instruments obligating them to pay large sums of money in behalf of the business; that the partnership agreement was complied with in all respects until March 19, 1957; that since March 19, 1957, the defendant has had exclusive possession of the business, dealt with it as his own, received the profits, failed to account to the plaintiff, and had therefore breached the partnership agreement; and that the defendant wrongfully dissolved the partnership and converted the partnership property to his own use and deprived the plaintiff of expected profits and salary during the life of the partnership, to the plaintiff's damage.

The defendant's amended answer denied the allegations of the plaintiff's petition except those specifically admitted, and alleged that any partnership agreement between the parties was dissolved and terminated not later than March 14, 1957; that no profit was made from the partnership business prior to that date; that any agreement for the partnership did not fix any term for the continuance of the same; that it was a partnership at will; that the plaintiff did not contribute any capital to the business; and that insofar as any personal obligations the plaintiff had assumed relating thereto, if any, the defendant offered to hold the plaintiff harmless with respect thereto.

The plaintiff's reply to the defendant's amended answer alleged certain facts in addition to those set forth in his petition, and prayed for an accounting for the period of time from the commencement of the partnership business to and including the date of any decree that might be entered and the time thereafter during which such matter might be pending upon appeal until a full accounting was made; for damages for breach of the partnership agreement; and for such other relief as may be just and equitable.

The plaintiff set forth numerous assignments of error. We will hereinafter discuss those deemed pertinent to a determination of this appeal.

The plaintiff testified that he and the defendant talked about going into the bowling alley business together on different occasions, and discussed how much cash it would take to get into the business and the length of the finance plan with reference to purchasing equipment. The plaintiff further testified that he and the defendant went to Denver to talk to the Brunswick-Balke-Collender people, hereafter referred to as the Brunswick Company, about going into the bowling alley business; that on March 27, 1956, he and the defendant ordered bowling alley equipment, and both of them signed the order as partners. This order was later modified. He further testified that he and the defendant had an oral agreement that the defendant was to receive $500 a month for the rental of a building; that the plaintiff who to receive $425 a month as salary for managing the business; that the Brunswick Company was to be paid for the bowling equipment out of the proceeds of the business; and that after the Brunswick equipment was paid for there would be money available to reinvest in other bowling equipment and expand the business which both the plaintiff and defendant agreed could occur. No length of time was specified as to how long the plaintiff was to manage the business. It was agreed that the business would be called the Bowl Arena. The building was to be constructed to accommodate 12 bowling alleys. An order was signed for 10 bowling alleys.

The plaintiff had an agreement with Terry Carpenter reciting that Carpenter would not start in the bowling alley business, and that the plaintiff would not sell any alcoholic liquor or beer in Terrytown.

The defendant owned lots near Terrytown, between Scottsbluff and Gering, which were in a suitable location for a bowling alley and upon which the building was to be constructed. The defendant hired a contractor to build the building. The defendant used his own funds to pay for the construction of the building. The business was commenced on August 31, 1956. The plaintiff acted as manager, kept the daily records, and advised the firm's accountant with respect to keeping the books. The plaintiff, by his promotion of the business, succeeded in establishing 96 bowling teams in 7...