McDonald v. Rogers
| Decision Date | 07 September 1972 |
| Docket Number | 27286,Nos. 27166,s. 27166 |
| Parties | Cecil McDONALD v. Marion ROGERS. Marion ROGERS v. Cecil McDONALD. |
| Court | Georgia Supreme Court |
Syllabus by the Court
In this action for accounting between partners, no reversible error is shown by the errors enumerated. The judgment decreeing a termination of the partnership, and an amount due by the partner retaining the business and its assets to the other partner, is affirmed.
McDonald, McDonald & McDonald, Ernest McDonald, Dalton, for appellant.
Frank M. Gleason, Rossville, for appellee.
The petition of Marion Rogers against Cecil McDonald, filed on June 22, 1966, alleged in part: On January 1, 1960, the parties entered into a written partnership agreement to operate a hardware store in the City of Ringgold under the partnership name of Ringgold Hardware Company. Rogers bought a one-third interest in the partnership, paying $6,000 in cash and giving his note for $26,079.04. The yearly profits of the business have more than paid his debt to McDonald, but McDonald has failed and refused to give him an accounting. The parties jointly engaged in the operation of the business from the date of the formation of the partnership until February 21, 1966, on which date McDonald wrongfully and illegally took charge of the assets of the partnership and excluded Rogers from the premises under threats of physical violence. Rogers is unable to comply with the terms of the contract requiring him to give his whole time and attention to the business, because McDonald refuses to permit him to do so. He has made constant demands for a settlement of his interest in the partnership, but McDonald refuses to make an accounting with him. McDonald has had complete control and custody of the accounts of the partnership since its formation. Since the date of his exclusion from the partnership premises, McDonald has been guilty of specified acts without Rogers' consent, which are in violation of his rights under the partnership agreement. The books of the partnership are in the hands of a named bookkeeper, and Rogers does not know the financial condition of the business. He is entitled to an accounting as to the true financial condition of the partnership. There is no legal or contractual obligation on the part of either of the parties to make an offer to buy or sell until the respective rights and liabilities of each are determined.
There were prayers for injunction, receivership, an accounting, and other relief.
The written partnership agreement provides that Rogers purchased from McDonald, subject to the terms of a bill of sale from Rogers to McDonald, a one-third interest in the listed assets of the business of 'Ringgold Hardware Company,' formerly owned by McDonald, for the purchase price of $32,079.04. Article 5 provides that the partnership commenced on January 1, 1960, and would continue until terminated in the manner provided in the contract, unless terminated in the manner provided for in a bill of sale of the same date given by Rogers to McDonald. Article 9 provides certain conduct of the partners (not involved in this case) which would authorize a dissolution of the partnership. Article 13 provides that: Article 7 provides that each partner shall give his whole time and attention to the business of the partnership, for which each shall draw a salary of $60 per week. Article 8 provides that if, after paying the expenses of the business and the salaries of the parties, any profits remain to be divided, they shall be divided and paid, one-third to Rogers and two-thirds to McDonald. Article 10 provides that complete, accurate and true books of account shall be kept by the partnership, to which each of the partners shall have free access at all times, and account or inventory of the assets of the partnership shall be taken and entered upon the books of the partnership at the end of each calendar year. Article 14 provides that the terms of the agreement are specifically made subordinate to the terms of the bill of sale given by Rogers to McDonald.
On April 20, 1967, Rogers filed an amendment to his petition, alleging that: At a hearing in the case the parties agreed in open court to themselves inventory the assets before any further action was taken in the litigation. An inventory was made by each party, but there was a substantial difference in the values placed on the inventory, and the dispute can only be settled by a jury trial. Rogers desires to terminate the partnership by selling the property at public sale, paying the debts of the partnership, and dividing the remainder of the proceeds between the partners in accordance with the terms of the partnership agreement.
On April 11, 1969, Rogers struck the allegations of his amendment of April 20, 1967, in which he asserted that he wanted the partnership business sold and the partnership terminated, and alleged that he is entitled to have an accounting made and the profits and losses of the business determined by a jury, to have the partnership continued, and to have a determination made of the assets, liabilities, and profits of the business from its commencement until April 12, 1969.
McDonald in his answer alleged that: The rights of the partners were controlled by the partnership contract and the bill of sale given by Rogers to McDonald. No net profits in the sense referred to in these documents have accumulated, been declared, or been drawn out by McDonald, resulting in his receiving no payment of the indebtedness of $26,070.04, plus interest owed by Rogers to him. On the occasion of February 21, 1966, he attempted to discuss with Rogers the fact that Rogers had taken unnecessary time to transact business of little value, whereupon Rogers became angry, announced that he had quit devoting his time to the business, and took his keys to the various buildings used in the business off his belt and threw them at McDonald. Rogers then left the premises and has since voluntarily and wilfully refused to participate in its operation, leaving McDonald with no alternative but to continue the business himself. Rogers has never been refused access to the records of the business or the inspection of any of its assets. Rogers has approached McDonald only once with regard to a settlement of the partnership affairs. This was in the latter part of March, 1966. Rogers at that time agreed to consult with the bookkeeper to determine the financial worth of the business so that he might decide what he wanted to do. In June, 1966, McDonald had a letter from Rogers' attorney, advising that the attorney had been employed to collect a one-third interest in the business for Rogers, pointing out the provision of the partnership contract for a withdrawing partner to make an offer to buy or sell to the other partner, and insisting that he should be advised what the assets, liabilities and net profit of the business were. McDonald's attorney replied to this letter, but heard nothing further in the matter until McDonald was served with the present suit. Rogers' wrongful withdrawal from the business on February 21, 1966, and continued refusal to participate in the business, authorizes McDonald to make demand in full on the note given by Rogers to him. The share of profits of Rogers is wholly insufficient to retire this indebtedness, which authorizes McDonald to make demand of Rogers for full payment under the terms of the partnership agreement. Such demand is made, and upon failure of Rogers to pay the indebtedness of $38,091.09, McDonald will pursue the remedy provided in the bill of sale, that is, cause an inventory to be made of the assets of the partnership based on current wholesale market value; take charge of the assets of the business as his own, giving Rogers credit for one-third of the value of the assets, less one-third of the outstanding obligations against the business; or if one-third of the assets shall exceed the amount of indebtedness, deliver the balance thereof to Rogers; and if the net value of one-third of the assets is insufficient to pay the indebtedness, then he will call upon Rogers to pay the balance. In order to show a willingness to do complete equity, McDonald offers to take an inventory of the assets of the business, and to determine the net value of the respective interests of the parties, make these known to Rogers, and then to either buy or sell for cash the business, at the option of Rogers, within a period of 10 days after the values are made known to Rogers.
On May 11, 1967, an amendment was filed to McDonald's answer, which alleged that Rogers had failed to pay the note, or to participate with McDonald in determining the financial status of the...
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