Meyer v. Lofgren

• Decision Date: 22 April 1997
• Docket Number: Nos. WD,s. WD
• Citation: 949 S.W.2d 80
• Parties: Joyce E. MEYER, Appellant, v. Don K. LOFGREN and Lofgren and Company, P.C., Respondent. 52282, WD 52428.
• Court: Missouri Court of Appeals

Page 80

949 S.W.2d 80

Joyce E. MEYER, Appellant, v. Don K. LOFGREN and Lofgren and Company, P.C., Respondent.

Nos. WD 52282, WD 52428.

Missouri Court of Appeals Western District.

April 22, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied May 27, 1997.

Application to Transfer Dismissed

Aug. 19, 1997.

Stephen Wayne Nichols, Kansas City, for Appellant.

Kevin J. Driscoll, Kansas City, for Respondent.

Before BRECKENRIDGE, P.J., and SMART and EDWIN H. SMITH, JJ.

EDWIN H. SMITH, Judge.

This is an appeal and cross-appeal from a judgment in a bench-tried case for an equitable accounting upon the dissolution of an accounting partnership. The trial court found a partnership existed between Don Lofgren (Lofgren) and Joyce Meyer (Meyer), and that the dissolution of the partnership entitled Meyer to an equitable accounting and distribution of her partnership interest. Lofgren asserts two points on appeal. ¹ He asserts that the trial court erred: 1) in finding the existence of a partnership; and 2) in failing to sustain his motion for a jury trial on the issue of whether a partnership existed between the parties. Meyer asserts two points on her cross-appeal. She asserts that the trial court erred: 1) in its accounting and distribution of her partnership interest by failing to include goodwill in its determination of the fair market value of the partnership assets at the time of dissolution; and 2) in apportioning the special master's fees.

We affirm in part and reverse in part.

Facts

Lofgren, appellant/cross-respondent, and Meyer, respondent/cross-appellant, had known each other for a number of years before they decided in May, 1990, to merge their C.P.A. practices. At trial, Meyer testified that she and Lofgren determined to form a partnership under the name Don K. Lofgren, C.P.A. The court found that the partnership officially began on May 25, 1990. Around that time, she and Lofgren circulated announcements indicating the formation of their practice, with Meyer designated as partner in charge of personal financial planning. Meyer testified at trial that Lofgren held her out to third parties as a partner, evidenced by the business cards they gave clients and his personal introductions.

Meyer was to contribute some equipment and client files, and Lofgren was to provide office space in addition to the use of his already existing practice. Meyer also made an initial capital contribution of $5,000 on May 24, 1990, followed by another loan and her personal guarantee to establish a line of credit for the partnership. Meyer testified that although the terms of their partnership were not reduced to writing, management of the partnership was to be shared, and profits and losses were to be divided proportionately based upon their individual gross billings for the year. She later testified that since Lofgren had refused to produce accounting records, she believed that their default agreement provided for equal partnership. Lofgren and Meyer agreed that beginning in August, 1990, she was to receive a $700 draw every other week.

In late 1990, the partnership was changed to a professional corporation, to be named Lofgren & Co., P.C. Although Meyer was listed as vice-president in the incorporation documents, she was not issued any shares in the corporation to reflect her partnership interest. A few months later, in April, 1991, the relationship between Meyer and Lofgren began to deteriorate. Meyer drafted a memorandum to Lofgren concerning her perception that he was preventing her from participating in the management of the firm, and she demanded access to the accounting records. She followed the memorandum with a letter on May 14, 1991, again demanding financial information about the partnership. In late May, 1991, Lofgren directed the bank to release Meyer from her personal guarantee, and he told her that he was recasting her capital contribution as a loan. On May 21 or 22, 1991, Lofgren told Meyer that she was fired and demanded she turn over her keys.

Meyer filed her amended petition for equitable relief and damages on May 29, 1991, naming Lofgren and Lofgren & Co., P.C., as co-defendants. The parties proceeded on Meyer's claims for a mandatory injunction, for an accounting, and for restitution and unjust enrichment. Hearings were held on December 27, 1991, February 21, 1992, and July 31, 1992. The court issued an order on August 17, 1992, which found the existence of a partnership, the need for an accounting and the appointment of a special master. The special master issued three reports. The trial court had two more hearings on January 23, 1995, and February 10, 1995. On September 11, 1995, the court issued its final judgment. Incorporating its August 17 1992, order, the court found the partnership interests to be divided equally between Lofgren and Meyer. It held that Meyer should be returned her $5,000 capital contribution, as well as $38,708.97, which represented one-half of the value of the partnership at the time of dissolution. Finally, the court entered judgment in favor of the special master against Meyer and Lofgren, jointly and severally, in the amount of $13,500.00. Both Meyer and Lofgren appeal from the judgment.

Standard of Review

Appellate review of a court-tried civil case is governed by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); Cunningham v. Hughes, 889 S.W.2d 864, 866 (Mo.App.1994). The judgment of the trial court will be affirmed unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law.

Zumalt v. Boone County, 921 S.W.2d 12, 14 (Mo.App.1996). The appellate court reviews the evidence in the light most favorable to the prevailing party, giving it the benefit of all reasonable inferences and disregarding the other party's evidence except as it supports the judgment. Marro v. Daniels, 914 S.W.2d 16, 17 (Mo.App.1995). It does not weigh the evidence and must give due deference to the trial judge in determining the credibility of witnesses. Siragusa v. Park, 913 S.W.2d 915, 917 (Mo.App.1996). The trial court is free to believe all, part or none of the testimony of any witness. McLain v. Johnson, 885 S.W.2d 345, 348 (Mo.App.1994). When the trial court does not make any specific factual findings, "the fact issues are found in accordance with result reached and the judgment must be affirmed under any reasonable theory supported by the evidence." Siragusa, 913 S.W.2d at 917.

Lofgren's Appeal

I. Existence of Partnership

In his first point, Lofgren claims that the trial court erred in finding the existence of a partnership between the parties. In support of his claim, he alleges that there was insufficient evidence from which to establish the necessary elements of a partnership, specifically, the requisite element that the parties agreed to share the profits and bear the losses of the accounting firm. We disagree.

A partnership is statutorily defined as "an association of two or more persons to carry on as co-owners a business for profit...." § 358.060.1. ²

A partnership has been judicially defined as "a contract of two or more competent persons to place their money, effects, labor and skill, or some or all of them, in lawful commerce or business and to divide the profits and bear the loss in certain proportions." Stuart v. Overland Medical Center, 510 S.W.2d 494, 497 (Mo.App.1974). The partnership agreement need not be written but may be expressed orally or implied from the acts and conduct of the parties, Id. at 497, with the intent of the parties serving as the primary criterion for determining whether such a relationship exists. Brotherton v. Kissinger, 550 S.W.2d 904, 907 (Mo.App.1977).

Kielhafner v. Kielhafner, 639 S.W.2d 288, 289 (Mo.App.1982). See Grissum v. Reesman, 505 S.W.2d 81, 86 (Mo.1974) (holding that "a partnership agreement may be implied from conduct and circumstances"); see also Bernard McMenamy Contractor, Inc. v. Kitchen, 692 S.W.2d 817, 820 (Mo.App.1985) (holding that "[a] partnership agreement may be oral or written, express or implied from the acts and the conduct of the parties"); Fischer v. Brancato, et al., 937 S.W.2d 379, 382 (Mo.App.1996) (citing Bernard ). The requisite intent to find a partnership is not the intent to form a partnership, but the intent to enter a relationship which in law constitutes a partnership. Schreibman v. Zanetti, 909 S.W.2d 692, 701 (Mo.App.1995); Bernard McMenamy Contractor, Inc., 692 S.W.2d at 820; Brancato, 937 S.W.2d at 382.

Meyer had the burden of proving the existence of a partnership by clear, cogent, and convincing evidence. Nesler v. Reed, 703 S.W.2d 520, 523 (Mo.App.1985). The Missouri Supreme Court has construed this evidentiary standard to mean that

the court should be clearly convinced of the affirmative of the proposition to be proved. This does not mean that there may not be contrary evidence. The word "cogent" adds little, if anything; it means impelling, appealing to one's reason, or convincing.

Grissum, 505 S.W.2d at 86. Section 358.070 provides rules for determining the existence of a partnership. This section provides in pertinent part:

(2) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such coowners do or do not share any profits made by the use of the property;

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived;

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installments or otherwise;

(b) As wages of an employee or rent to a landlord;

...

(d) As interest on...