Fry v. Ashley

• Decision Date: 12 July 1961
• Citation: 363 P.2d 555,228 Or. 61
• Parties: Joe W. FRY, Respondent, v. Larry L. ASHLEY, Appellant.
• Court: Oregon Supreme Court

Page 555

363 P.2d 555

228 Or. 61

Joe W. FRY, Respondent, v. Larry L. ASHLEY, Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Jan. 18, 1961.

Decided July 12, 1961.

Alfred J. Laue, Salem, argued the cause for appellant. On the brief were Williams & Skopil, Salem, and J. Wallace Gutzler, Woodburn.

Asa L. Lewelling, Salem, argued the cause for respondent. On the brief were Lewelling & Gies, Salem.

Before McALLISTER, C. J., and WARNER, SLOAN, O'CONNELL and LUSK, JJ.

WARNER, Justice.

On February 14, 1959, plaintiff and defendant entered into a written partnership agreement for the operation of an automobile body repair and garage business in Woodburn, Oregon, known as Ashley's Safety Service, in which they were to be equal owners. For approximately five years prior to that time Ashley had operated the same business as sole proprietor.

In October, 1959, plaintiff instituted this suit, wherein he sought a dissolution of the partnership, an accounting and the appointment of a receiver. Otto J. Halter was appointed as receiver on December 29, 1959, and subsequently, pursuant to stipulation of the parties, the receiver sold the assets at public auction and paid the partnership bills. After the receiver had filed his account and report a trial was had on the issues framed by the pleadings and the objections made by plaintiff to the receiver's accounting. From a decree favorable to plaintiff, Fry, defendant, Ashley, appeals.

We summarize defendant's assignments of error as follows:

1. Denial to defendant of compensation for his services in winding up the partnership affairs subsequent to September 15, 1959;

2. The holding that $335.93 received by Ashley for repair of the Wantz automobile were moneys of the partnership;

3. The holding that no additional sum of money was due from plaintiff to defendant as the balance due on the purchase price of plaintiff's one-half interest in the partnership;

4. The court's failure to charge the amount of $650 to plaintiff for the services of the accountants, Windedahl & Caldwell, instead of making it a partnership expense; and

5. The court's action in charging the partnership instead of plaintiff the sum of $750 for receiver's and attorney's fees.

We deem it of importance to note at the outset that shortly before the beginning of the trial the parties stipulated in open court that the partnership had been voluntarily dissolved as of September 17, 1959. This voluntary dissolution is a circumstance which bears upon some of our after conclusions and tempers the force of some of appellant's argument. We believe that paragraph 10 of the partnership agreement, providing for a dissolution of the partnership, as well as the language of the stipulation referred to, warrants the conclusion that the term 'voluntary dissolutionment [sic]' as used in the stipulation and its equivalent words as employed in the partnership agreement meant a dissolution by the mutual agreement of both partners.

As we read defendant's argument assailing the court's failure to grant him compensation for services in winding up the partnership, we understand that he is seeking an allowance in addition to the drawing account which he enjoyed subsequent to the dissolution date.

Paragraph 5 of the articles of partnership provided a drawing account of $100 per week for each partner. Ashley from and after September 17, 1959, drew $1,900 for 10 weeks of labor, i. e., up to January 30, 1960, in the winding up of the business. Fry did not draw any money from the partnership during that time, although he rendered some minor services during the same period.

Defendant recognizes the general rule that the remaining partner, in the absence of an agreement to the contrary, is not entitled to compensation for his services in winding up the business. See ORS 68.310(6) (Section 18 of the Uniform Partnership Act) which is a statutory embodiment of the foregoing common-law rule. See, also, United Brokers' Co. v. Dose, 143 Or. 283, 285, 22 P.2d 204; Duncan v. Bartle, 188 Or. 451, 482, 216 P.2d 1005. But, as defendant points out, there is no provision in the articles upon which he can justify this claim for additional compensation. He seeks, however, to circumvent this by arguing that he falls within an exception which 'operates where one member of a firm, by his voluntary act, dissolved the partnership.' We recognize the exception but find it inapplicable here because, as we have above noticed, the instant dissolution was by common consent of the parties.

We find no merit in defendant's first assignment of error.

Referring to the charges accruing in the amount of $335.93 by reason of repairs to the automobile of one Wantz, we find ourselves confronted with a close question of fact. The Wantz car was returned to the owner fully repaired on February 16, 1959. The partnership was formed February 14, 1959. Fry contends that the proceeds from this work belong to the partnership, which, if true, means that it was delivered for repair work on or after February 14. It is Ashley's position it was received by him before February 14 and, therefore, the money paid on that account belongs to him.

In addition to the testimony of the parties, we have the testimony of the car owner, Wantz, and Hair, an employee at the garage both before and after the parties entered into their partnership agreement. All were vague or uncertain in their recollections as to when the repair work began.

We note that no one attempted to testify to the character of the damage to Mr. Wantz's car or offered any data from whence a determination might be made of what might be the reasonable length of time required to complete the $335.93 job. We mention this because the testimony indicates a written estimate of the cost of the work was first made based upon the survey of damage made by Mr. Hair and Mr. Ashley. This estimate was then supplied to Mr. Wantz, ostensibly for the information of himself and his insurance carrier, with a copy retained in the garage office file. If itemized it might have been of some real value in establishing the time element for the work.

Based on a reading of the record alone, we find it difficult to come to a firm conclusion as to the merits of the respective claims of the parties. It, therefore, presents a situation where we must defer to the judgment of the trial judge who had the additional opportunity to see and hear the witnesses as they testified (Reeves v. Dickenson, 208 Or. 360, 364, 300 [228 Or. 67] P.2d 458, and cases there cited) and abide by his judgment, which we do.

As previously indicated, defendant's third assignment relates to the claim of Ashley that Fry owes him a balance of $575 under their partnership agreement.

The articles of partnership were drawn by an attorney who was not one of counsel for either party at the time of trial. He completed and delivered them sometime during the latter part of December, 1958, or forepart of January, 1959, in contemplation of their execution sometime during that month. As so prepared Fry obligated himself to pay Ashley $5,750 for a one-half interest in the firm. Fry experienced some delay in raising funds necessary to complete his part of the agreement. This detail was not accomplished until February 14, 1959, when both parties signed the articles of partnership in a Woodburn bank and without any change in the terms as originally drafted. At the same time and place Fry handed Ashley $5,175, an amount $575 less than the stipulated price for his share of the partnership assets. It is the court's holding with reference to the disposition of this amount that Ashley asserts error.

It is plaintiff's contention that between the drawing of the articles of partnership in early January, 1959, and their execution on February 14, 1959, Ashley had disposed of certain asserts of the prospective partnership which in effect reduced the value of his investment by $575, and that defendant's acceptance of the lesser amount of $5,175 on February fourteenth reflected their mutual agreement that plaintiff's contribution to the partnership should be so reduced and no further payments would be required of him.

Defendant admits the sales to which plaintiff refers, concedes that the originally planned contribution of Fry as a partner was reduced because of this, but represents the figure of $5,750 provided in the articles as originally drawn reflects this discount from the originally planned figure that Fry was to pay for his one-half interest. Ashley, therefore, argues Fry continues to owe him a balance of $575.

For the reasons which follow we find it unnecessary to formulate a conclusion as to the merits of these conflicting claims of the parties.

Fry in reply to defendant's answer alleging nonpayment of all the purchase price for plaintiff's partnership interest entered only a general denial to Ashley's claim. He did not allege a mutual mistake as to the stipulated amount of $5,750 nor did he seek to have the partnership articles reformed to recite the amount of $5,175 as the true measure of his obligation to Ashley.

Notwithstanding the absence of a pleading setting up the claim of Fry as to a reduction in the purchase price or a prayer for reformation, both plaintiff and defendant gave oral testimony in support of their respective contentions concerning the alleged balance of $575 due without objections made by either party to the admission of oral testimony tendered by the other as bearing upon that issue.

To sustain his third assignment Ashley asserts, and we think correctly, that the parol evidence given by Fry does violence to the parol evidence rule (ORS 41.740) inhibiting the reception or consideration of such testimony as tending to vary the terms of a written instrument except where a mistake or imperfection of the writing is put in issue by the pleadings. Nor is the party seeking a modification of the writing through the avenue of oral evidence...