Sandberg v. Scougale

• Decision Date: 08 September 1913
• Citation: Sandberg v. Scougale, 75 Wash. 313, 134 P. 1051 (Wash. 1913)
• Parties: SANDBERG et ux. v. SCOUGALE et al.
• Court: Washington Supreme Court

134 P. 1051

75 Wash. 313

SANDBERG et ux. v. SCOUGALE et al.

Supreme Court of Washington

September 8, 1913

Department 1. Appeal from Superior Court, Snohomish County; W. P. Bell Judge.

Action by Peter Sandberg and wife against Frank J. Scougale and wife and Dominic Cavalero and wife. From a judgment in favor of the defendants Cavalero, the plaintiffs and the defendants Scougale appeal. Modified.

Bates Peer & Peterson and Fogg & Fogg, all of Tacoma, for appellants.

Coleman Fogarty & Anderson, of Everett, for respondents.

PER CURIAM.

In the summer of 1906 Dominic Cavalero, Norval McGhie, and Frank Scougale purchased 360 acres of timber land; also bought 720 acres of timber on a stumpage basis. The land was situate near Gig Harbor in Pierce county, Wash. The land, timber, and subsequent purchases of the right of way, and expenses incidental to logging the land and putting the product in booms in tidewater, involved an expenditure of over $200,000. Scougale had no money and Cavalero advanced his one-third without security. The amount due from Scougale to Cavalero on account of the purchase price is not in dispute, although Scougale denies the right of Cavalero to recover interest. He contends that it was agreed that he was not to pay interest while Cavalero and McGhie testified that it was agreed that he should pay bank interest, or 8 per cent. It was the intention of all parties that the work of logging should be begun within a reasonable time after the partnership had been entered into. The time limit for removal of most of the timber bought on a stumpage basis was two years. The work was not begun immediately, for several reasons which we find to be sufficient, and was not begun until the year 1909, when Cavalero, who was a practical logger and engaged in the logging business, went about the work on his own account. He built a logging road and equipped it, made boom grounds, bought donkeys, cables, boom sticks, and other paraphernalia of the camp. Scougale, although invited, if not requested, to participate in the work of logging, did nothing. He afterwards brought suit against Cavalero ( State ex rel. Scougale v. Superior Court, 55 Wash. 328, 104 P. 607,

133 Am. St. Rep. 1030), for damages in the sum of $42,000 alleged to have been suffered because the work of logging was not promptly done and certain options had been permitted to lapse. This action seems to have been abandoned. Reference to the former case is material only in so far as it shows Scougale's willingness to subscribe to the acts of Cavalero and to take his compensation in damages. Scougale afterwards mortgaged his interest in all of the partnership property to Sandberg, who foreclosed and bought the interest of Scougale at sheriff's sale. In 1909, and before Cavalero began the work of removing the timber, McGhie sold out to Cavalero. This action was finally begun by Sandberg, who sets up the history of the venture and prays for one-third of the amount of the proceeds of the logs and piles, with legal interest, less Scougale's one-third of the original cost price of the property; that the property of the partnership be sold; and that the proceeds be divided. He is supported and sustained by Scougale. While the argument in the briefs is directed to specific findings of the court which are attacked and defended by counsel, we think the true result may be the more quickly arrived at by reference to the legal propositions involved, with such incidental reference to the facts as may be necessary to illustrate them.

It is first contended that the court erred in refusing to find as a fact that Cavalero agreed early in 1907 to log the timber at $5.50 per thousand. Appellant undertakes at this time to charge Cavalero with all timber at $8 per thousand and give him credit for $5.50 per thousand. We have examined the testimony with some care and are of the opinion that the finding that there was no such contract should be sustained. If there ever was a contract of that kind, it was not acted upon, and the subsequent negotiations of the parties, as well as their conduct, indictate that all thought of it was abandoned. In anticipation of this holding, appellant contends that the original partnership was dissolved by the sale of McGhie's interest to Cavalero. Story on Partnership (7th Ed.) § 307; Parsons on Partnerships (3d Ed.) pp. 433, 434; Shumaker on Partnerships, p. 416; 22 Am. & Eng. Ency. of Law (2d Ed.) p. 206; 30 Cyc. 653; and many cases to be found in the footnotes of these texts. He further contends that after such dissolution Cavalero could do nothing that could bind the partnership; that, by reason of the sale by McGhie of his interest, Cavalero and Scougale became tenants in common, and as such Cavalero must account for the value of the timber without diminution for the expenses and cost of removal. To sustain this contention appellants cite Foster v. Weaver, 118 Pa. 42, 12 A. 313, 4 Am. St. Rep. 573; Everson v. Seller, 105 Ind. 266, 4 N.E. 854; Sligo F. Co. v. Hobart-Lee Tie Co., 153 Mo.App. 442, 134 S.W. 585; Wright v. Skinner, 34 Fla. 453, 16 So. 335; Bailey v. Hayden, 65 Wash. 57, 117 P. 720.

The general rule is that the sale of a partner's interest dissolves the partnership. This rule is not without its qualifications, and reference to the books will show that as between partners the qualification or explanation planation which is stated in all the texts-- 'The expenses and outlays of a partner continuing the business after dissolution for mutual benefit are allowed; and expenses by a surviving or liquidating partner in winding up' (Bates on Partnership, § 769; 30 Cyc. p. 659; 22 Am. & Eng. Ency. of Law, 205, 11-12)--is as often applied as is the general rule.

Upon the sale of a partner's interest a dissatisfied partner may concur with the remaining partner or partners, or may himself close up the partnership business. If he is unwilling to do this, he may resort to a court of equity and have a receiver appointed. It does not follow that, because a technical dissolution is worked by the sale of a partner's interest, the business of the firm is paralyzed and the surviving or remaining partners are powerless to protect their investment or their interest in the concern. '* * * Notwithstanding the dissolution of the partnership, there still remain certain rights, duties powers, authorities, and relations between them which the law recognizes and supports, because they are, or may be, indispensable to the complete arrangement and final settlement of the affairs of the partnership; and therefore, in a qualified and limited sense, the partnership may be said for those purposes to continue between the parties until such arrangement and settlement take place. * * * And the consequence, therefore, must be that, for the purpose of making good outstanding engagements, of taking and settling all the accounts and converting all the property, means, and assets of the partnership, existing at the time of the dissolution, as beneficially as may be for the benefit of all who were partners, according to their respective shares and proportions, the legal interest must subsist, although for all other purposes the partnership is actually determined. * * * Moreover, it is plain that if a total extinction of all rights, powers, and authorities of the partners to deal with the partnership property, funds, and effects, immediately followed upon the dissolution of the partnership, it would amount to a complete suspension of all right and...