Larson v. Tandy Corp., 75879
| Decision Date | 05 July 1988 |
| Docket Number | No. 75879,75879 |
| Citation | 187 Ga.App. 893,371 S.E.2d 663 |
| Parties | LARSON v. TANDY CORPORATION. |
| Court | Georgia Court of Appeals |
Morgan M. Robertson, for appellant.
Everette L. Doffermyre, Jr., for appellee.
Larson appealed the grant of summary judgment against him in his suit arising from Tandy Corporation's termination of the business relationship between them.
Tandy is a nationwide retailer of electronic goods to the consumer market through a chain of stores doing business under the registered name "Radio Shack," a division of Tandy. On November 1, 1974, Larson entered into a Special Manager Incentive Agreement (SMIA) with Tandy whereby Larson agreed to manage a store for compensation equal to one-half of the adjusted gross profit of the store as computed by a specified formula and to provide the company with a $20,000 "security deposit." The agreement was for a period of two years, automatically renewable annually until either party gave notice of termination 30 days prior to the end of a fiscal year. A right of termination before the two-year period expired was also included.
After the original agreement expired in October 1976, there followed a succession of renewal agreements much like the first SMIA. The last one was for a six-month period from November 1, 1982 to April 30, 1983. Larson received written notice of his termination on June 22, 1983 for what the company stated to be difficulty in following management policies. Larson's view was that the company simply wanted to replace SMIA managers with company managers so as to increase the company's profits.
Larson sued Tandy, alleging that the SMIA was a partnership agreement, that it was terminated without notice or justification on terms which were prejudicial and damaging to him and deprived him of "his equity ownership in the business as a going concern." He maintained that Tandy's actions constituted a breach of contract, fraud in inducing him to enter into the SMIA, and unfair and deceptive business practices in violation of the Fair Business Practices Act of 1975, OCGA § 10-1-390 et seq.
1. Larson asserts that his business relationship with Tandy was a partnership because there were shared risks, expenses, and interest in profits and losses, so that Tandy could not be allowed to "arbitrarily" dismiss him with no offer of compensation for the value of the enterprise as a going concern and for his lost benefits in future profits and income. He maintains that the unlawful termination of the partnership relationship entitles him to an accounting from Tandy based upon his fair and reasonable share in the value of the enterprise.
The original SMIA expressly provided, The SMIA also provided that the Manager would at no time have any ownership of the store's assets other than those provided by the Manager.
This original SMIA and subsequent written agreements expressly stated the nature of the business relationship was that of employer-employee and Larson signed the documents acknowledging this. Larson's compensation by sharing in the profits would not of itself create a partnership relationship. 1
While it is true that a partnership exists where there is a joint enterprise, a joint risk, a joint sharing of expenses, and a joint interest in the profits and losses, Smith v. Hancock, 163 Ga. 222, 231(2), 136 S.E. 52 (1926), a partnership is not created solely by an agreement to share profits. See Elliott v. Floyd, 85 Ga.App. 416, 69 S.E.2d 620 (1952); Falk v. LaGrange Cigar Co., 15 Ga.App. 564, 84 S.E. 93 (1915); Dawson Nat. Bank v. Ward & Gurr, 120 Ga. 861, 48 S.E. 313 (1904); Sankey & Shorter v. Columbus Ironworks, 44 Ga. 228 (1871).
Under the SMIAs, Larson was responsible for furnishing the security deposit and for equipment which in his opinion was necessary in the operation of the store other than that furnished by the company, while Tandy was responsible for selection and lease of a site for the store premises, selection and delivery of store fixtures, the petty cash fund, all operating and merchandising policies, merchandise inventory, selection of media and time for national and local advertising, the bank checking account, exterior signage, store hours, and the filing of all matters pertaining to the labor force including payroll preparation and compliance with labor and tax laws. Tandy and Larson were jointly responsible for selection of a local bank and for the final right of approval in determining disputes as to operating or personnel matters.
The ultimate decision-making was Tandy's. What might be termed Larson's only "risk" in the enterprise was any negative impact on the profits of the store and therefore on his compensation. The undisputed evidence is that Larson held no title, jointly or severally, to the real and personal assets of the enterprise other than that which he furnished, and that he had no right of control as owner over the profits. Sankey, supra. Although Larson contends that the initial $20,000 security deposit was actually used to purchase store inventory, the only evidence as to the purpose and use of the security deposit was that it was to provide the company with security for its investment, to insure the manager's faithful performance of his obligations under the agreement, and to induce the manager to obtain the best profits possible. The security deposit along with salary due were paid to Larson following the termination.
The undisputed evidence shows that the relationship was not that of a partnership as a matter of law.
2. Is there any evidence that Larson's termination constituted a breach of contract?
All written SMIAs relied upon by Larson expired by their own terms prior to his termination. Thus the claim of breach of a written agreement fails.
As for a claim of breach of any oral employment agreement, insofar as Larson maintains that to induce him to enter the original SMIA, the company represented that he would be the store manager so long as he operated the business in a profitable manner, such an oral employment agreement cannot support a claim for the recovery of damages or compensation for services not performed or for any breach of contract....
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