Schaefer v. Bork, C3-87-503
| Decision Date | 20 October 1987 |
| Docket Number | No. C3-87-503,C3-87-503 |
| Citation | 413 N.W.2d 873 |
| Parties | Joseph SCHAEFER, Appellant, Diane Schaefer, Involuntary Plaintiff, v. Charles O. BORK, Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1.A jury's determination that a partnership existed will only be disturbed if it is manifestly and palpably contrary to the evidence, giving consideration to the jury's opportunity to judge the credibility of the witnesses.
2.The statute of frauds is not applicable to an oral partnership contract, where no definite time was fixed for the continuance of the partnership that would make it incapable of performance within one year, or where the contract was no longer executory because both parties performed under the contract.
3.A partner who contributes only services to the partnership is not deemed to have made a capital contribution such as to require capital repayment upon dissolution.The trial court properly distributed the partnership assets in an equitable manner, consistent with the statute and the parties' agreement.
4.For actions commenced prior to July 1, 1984, pre-judgment interest is required from that date to the date of the judgment.
Tracy R. Eichhorn -Hicks, Meshbesher, Singer & Spence, Minneapolis, for appellant.
Ronald O. Ylitalo, St. Paul, for respondent.
Heard, considered and decided by POPOVICH, C.J., and NORTON and LOMMEN*, JJ.
In this action for the dissolution and an accounting of a partnership, appellantJoseph Schaefer questions the trial court's determination of his partnership interest.Schaefer further alleges error in the court's disallowance of pre-judgment interest.RespondentCharles Bork challenges the sufficiency of the evidence to sustain the jury's finding that a partnership existed, alleges that any partnership agreement is void under the statute of frauds, and asserts error in evidentiary rulings and jury instructions.We affirm on all substantive issues, but reverse the court's disallowance of pre-judgment interest.
Since 1958, respondentCharles Bork has been involved in the commercial growing and selling of Christmas trees in Minnesota.In the early 1960s, under an oral agreement, Bork formed a partnership with a brother-in-law, Neil Stuempges, for the purpose of expanding this business.The partnership was commonly known as B & S Timber Company.In 1967, Bork and Stuempges dissolved their partnership by written agreement.
Bork then formed another partnership, again by oral agreement, with George Olson and John Currell.This partnership was later expanded to include other persons who owned land upon which some of the trees were grown.Olson and Bork separately entered into yet another oral agreement to form a partnership that succeeded B & S Timber Company, called the B & S Tree Company.Olson and Bork disbanded their partnership in late 1969.The other partnership agreements were also terminated, and by January 1970, Bork was sole owner of B & S Tree Company.
At that time, the business consisted of several hundred acres of wholly owned real estate, upon which were planted between 500,000 and 750,000 evergreen trees, together with trees growing on rented land, with the total number of growing trees approximating one million.In addition, between 1969 and 1975, Bork acquired the right to harvest several hundred thousand trees in the name of B & S Tree Company.
On June 1, 1970, Bork entered into an oral agreement with appellantJoseph Schaefer.Schaefer had previously been an employee of B & S Tree Company.The parties agreed that Bork would contribute the existing assets of B & S Tree Company, and Schaefer would contribute labor and services.The parties further agreed that for the first five years, Schaefer would receive $8200 per year, and thereafter would share equally in the B & S profits.They made no other agreements with regard to the sharing of property, the return of capital, payment of liabilities, methods of dissolving their agreement, or the management of the business.
On October 8, 1982, following a disagreement between the parties, Schaefer withdrew from the business.He then brought suit against Bork on the grounds that their agreement had constituted a partnership.Schaefer asked the court to dissolve the alleged partnership, make an accounting, and enter a money judgment for his share of B & S property and profits.Bork counterclaimed denying the existence of a partnership and claiming sole entitlement to all assets of the B & S Tree Company.
The case was heard by a jury in the fall of 1985.By special verdict, the jury found a partnership existed between the parties from June 1, 1970 to October 8, 1982.The jury found that as of October 8, 1982, the partnership had the following net assets: real estate, $254,000; personal property, $264,231; and inventory, $985,536.The jury also found that since 1975 there had been a disparity (to Schaefer's detriment) in the distribution of partnership income.
The trial court adopted the jury's answers to the special verdict interrogatories and made additional findings of fact.Using the amounts found by the jury, the court found the disparity in distribution of profits for the years 1975 through 1982 totaled $428,603.
In addition, the court found that B & S Tree is a "major retailer and wholesaler of Christmas trees throughout Minnesota and the Upper Midwest," that it has a "considerable" business reputation, and that "without the efforts of defendantCharles O. Bork, B & S Tree Company would not enjoy its favorable position in the various markets in which it participates."The court found that Bork was:
primarily responsible for acquiring real estate, whether owned or rented, seeing to it that great numbers of seedlings were planted and tended to a point that they become saleable Christmas trees, and further directing the expenditure of capital and labor so that the trees would be in marketable condition and would be harvested in such a fashion that they could be marketed during each planting season, growing season, and selling season.
The court concluded that:
all management decisions, including the expenditure of funds for capital replacement, capital expenditure and all other decisions, were to be made by the authority of defendantCharles O. Bork, exclusively.
The court found that Schaefer's contribution:
was confined to the directing of the labor force, often at the direct suggestion or order of defendantCharles O. Bork, together with contributing to the partnership by assuring that various items of machinery were maintained in proper working order so that trees might be harvested and prepared for sale from time to time when defendant Bork directed that they be made ready for harvesting and eventual sale.
The court also found that only two parcels of the total property controlled by B & S Tree Company were purchased after the partnership began.The court found that Bork supplied the entire purchase price for one of the two parcels, the "Conklin" property, and that he had also contributed all but $15,000 of the purchase price for the other parcel, the "Harmon" property.Further, the court found that as of May 7, 1975, there was a $10,500 mortgage balance on the Harmon property.Finally, the court found that in 1976, over Schaefer's objections, the B & S Tree Company constructed a $35,000 home on the Harmon property as a residence for Schaefer and his family.
Using the jury's findings on the disparity in income distributions, the court awarded Schaefer one-half of that amount, or $214,301.50.The court also awarded Schaefer one-half the mortgage balance on the Harmon property ($5250) and one-half the cost of the residence constructed on the Harmon property ($17,500).The court awarded Bork all right and interest in the partnership property and inventory, which the jury found had a total net value of $1,503,767.
Upon denial of cross-motions for a new trial, Schaefer appealed, and Bork filed a notice of review.
1.Does the evidence support the jury's finding that there was a partnership?
2.Does the statute of frauds prevent enforcement of the oral partnership agreement?
3.Did the court properly distribute the partnership profits and property?
4.Was there error in evidentiary rulings or jury instructions that warrants a new trial?
5.Is appellant entitled to pre-judgment interest?
1.Respondent challenges the sufficiency of the evidence to support the jury's finding that there was a partnership.In reviewing jury verdicts, all testimony "must be considered in the light most favorable to the prevailing party," and "a verdict will only be disturbed if it is 'manifestly and palpably contrary to the evidence.' "Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 256(Minn.1980)(citations omitted)."Review is even more limited when the jury verdict must consider the demeanor of the witnesses."Id.
In its memorandum, the trial court addressed the sufficiency of the evidence question:
The first issue addressed by the jury was the question of whether a partnership existed between plaintiff and defendantCharles O. Bork.The jury answered the question in the affirmative.There was a great deal of evidence supporting this finding, and practically no evidence supporting any other finding.For example, beginning shortly after June of 1970, defendantCharles Bork represented to many other persons, either directly or indirectly, that Joseph Schaefer was a partner in B & S Timber or B & S Tree.Some of the representations were made personally at what were called "tree meetings," as well as in literature associated with the business such as sales receipts and price tags.In addition, heavy support can be found for the jury's finding on the partnership issue from the fact that defendant Bork had been involved with numerous partnerships while in the tree business, including partnerships with at least two other peo...
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