Ohlendorf v. Feinstein, 42613
| Decision Date | 13 July 1982 |
| Docket Number | No. 42613,42613 |
| Citation | 636 S.W.2d 687 |
| Parties | Howard C. OHLENDORF, Plaintiff-Appellant, v. Bernard FEINSTEIN and Fred Whaley, Defendants-Respondents. |
| Court | Missouri Court of Appeals |
Jack H. Ross, Harold P. Heitmann, Clayton, for plaintiff-appellant.
Jerome A. Gross, Irl Baris, St. Louis, for defendants-respondents.
Plaintiff, Howard C. Ohlendorf, is appealing a judgment against him in a court tried case on a cross-claim to wind up a partnership in which the plaintiff and the defendants, Bernard Feinstein and Fred Whaley, were partners. The facts are as follows:
On May 23, 1974, the Missouri State Highway Commission offered seven tracts of land in Jefferson County for sale at auction. Defendant Feinstein submitted the highest bid for all seven tracts. This bid of $568,703.25 was subsequently accepted by the State Highway Commission. Feinstein signed a sales agreement on May 23, and delivered a check for ten percent of the purchase price ($56,870.32) to the State Highway Commission. Immediately after the bidding, Ohlendorf, Feinstein and Whaley discussed the formation of a partnership. On May 25, 1974, all three parties executed a notice of assignment documenting the partnership agreement. Ohlendorf subsequently recorded this assignment. Pursuant to the formation of the partnership Ohlendorf and Whaley each transferred $18,956.77 to Feinstein. The purpose of the partnership was to obtain purchasers (including themselves) for the seven tracts, so that when the purchase from the State Highway Department was closed, the partnership could immediately resell the tracts for a profit. The three partners were to share equally in the expenses and profits of the partnership.
The parties endeavored to find individual buyers for the tracts. Ohlendorf undertook to purchase tract 3 himself, for $150,000. Prior to August, 1974, the parties were partially successful at finding buyers for the other tracts. In August, however, there was a falling out among the parties. Ohlendorf informed the other parties that the partnership was dead as far as he was concerned. Ohlendorf stated that he had no intention of purchasing tract 3. He subsequently notified the State Highway Commission that the partnership would not complete the purchase of the seven tracts. There is no doubt that Ohlendorf wrongfully breached the partnership agreement causing a dissolution of the partnership.
Ohlendorf filed suit against Feinstein and Whaley seeking recovery of the $18,956.77 he transferred to Feinstein at the inception of the partnership. Defendants filed a cross-claim to wind up the joint venture pursuant to § 358.370, RSMo (1969). Defendants sought damages in the form of lost profits for Ohlendorf's wrongful breach of the partnership agreement. § 358.380 RSMo (1969). The trial judge dissolved the partnership under § 358.320 RSMo (1969). Judgment was entered in favor of Feinstein against Ohlendorf in the amount of $50,932.25, and in favor of Whaley against Ohlendorf in the same amount. This appeal followed.
In his first point on appeal plaintiff contends that the defendants failed to prove that the lost profits were a direct and proximate result of plaintiff's breach of the partnership agreement. This position is based upon the assertion that the defendants would not have suffered any damages if they had proceeded with the purchase and sale of the seven tracts on their own account. We find plaintiff's position unpersuasive.
Dissolution of a partnership results when any partner ceases to be associated with the carrying on of the partnership business. § 358.290 RSMo (1969). In this case, dissolution was recognized by decree of the trial court upon its finding that the plaintiff willfully breached the partnership agreement. § 358.320 RSMo (1969). Dissolution, however, is not a termination of the partnership business. The partnership business continues until the winding up of the partnership affairs is complete. § 358.300 RSMo (1969). The partners who have not wrongfully dissolved the partnership have the right to wind up the partnership business. § 358.370 RSMo (1969). The partners, however, are not required to exercise their right to wind up the business. "The Uniform Partnership Law contemplates that dissolved partnerships may continue in business for a short, long or indefinite period of time, ... so long as none of the partners insist on a winding up and final termination of the partnership business." Schoeller v. Schoeller, 497 S.W.2d 860, 867 (Mo.App.1973). Thus, when a dissolution is caused by the wrongful act of a partner, the innocent partner(s) have an election of remedies. They may: wind up the partnership business, and seek damages from the wrongful partner; continue the business in the same name, either by themselves or jointly with others, or, continue the business and seek damages. § 358.380 RSMo (1969).
This review of the law clearly demonstrates that when a partnership is dissolved due to the wrongful conduct of a partner, the innocent partner(s) have the option of winding up the partnership business or continuing it. By statute, the right to terminate the business and seek damages is unconditional. § 358.370 RSMo (1969). Plaintiff's position here is really a backhanded attempt to impose a limitation upon the defendants' right to wind up the partnership. Plaintiff asserts that the defendants' damages are not a proximate result of his wrongful conduct, because the defendants would have obtained their profits if they had continued the business. The practical effect of adopting this position would be to impose a duty upon the defendants to continue the partnership business if there is a reasonable certainty that it will be profitable. We refuse to impose a duty which is clearly contrary to the provisions of the Uniform Partnership Law. Thus, the defendants' damages in this case become a direct and proximate consequence of the plaintiff's wrongful conduct, once the defendants elected to wind up the partnership business.
In his next point on appeal plaintiff contends that the testimony of Feinstein and Whaley regarding alleged oral offers to purchase tracts 1, 2, 6 and 7 was inadmissible because the testimony is hearsay. Therefore, the trial judge erred when he relied upon this testimony in making his award of damages. Furthermore, plaintiff asserts that the...
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