Schymanski v. Conventz, 6585

Citation674 P.2d 281
Decision Date14 October 1983
Docket NumberNo. 6585,6585
PartiesWolfgang SCHYMANSKI, Renate Schymanski and Minna Huss, Appellants, v. Klause CONVENTZ and Christa Conventz, Appellees.
CourtAlaska Supreme Court

Ernest Z. Rehbock, Rehbock & Rehbock, Anchorage, for appellants.

Thomas E. Fenton, Fairbanks, for appellees.

Before BURKE, C.J., RABINOWITZ, MATTHEWS and COMPTON, JJ., and SERDAHELY, Judge. *

OPINION

SERDAHELY, Judge.

This is an appeal from a decree of the trial court ordering the dissolution of a partnership formed to construct and operate a fishing lodge. Appellants challenge (1) the lower court's determination to treat appellee's personal services as non-cash capital contributions, and/or as services for which appellees were entitled to special remuneration; (2) the specific valuations given by the court to such services; (3) the court's evidentiary rulings regarding the valuation of the lodge; and (4) the court's failure to find misconduct by one partner and to award damages as a result. For the reasons set forth below, we reverse and remand the case for further proceedings in connection with the personal services/non-cash contribution issue.

FACTUAL BACKGROUND

Appellants Wolfgang and Renate Schymanski and Minna Huss [Schymanskis], and appellees Klaus and Christa Conventz [Conventz], entered into an oral partnership agreement for the purpose of building and operating a fishing lodge at Lake Illiamna. The partnership was on a 50-50 basis as between the two groups. Initially, the two groups were to contribute equal shares of cash and, in addition, each group was to contribute personal services according to their respective expertise--Conventz

through supervising the construction of the lodge and advertising in Alaska; the Schymanskis by handling the promotional campaign in Germany

On May 24, 1980, the partners signed two agreements drafted by Conventz. Conventz' contend that these documents reflect a modification of the original agreement whereby they would play a more significant role in construction and would manage the lodge for the first season in lieu of making further cash contributions. The Schymanskis claim that they never knowingly acquiesced in such an arrangement and that they did not examine the language of the document because it was represented to them to be a mere formality necessary for incorporation. The Schymanskis also interpret the language contained therein as not conferring a right to compensation upon Conventz, and insist that there was never an agreement to compensate Conventz for his architectural efforts.

The lodge building project suffered delays. The costs of construction ran higher than anticipated and misunderstandings and disagreements arose between the partners. In August of 1980, Wolfgang visited the lodge and was dissatisfied because the interior of the lodge was not yet completed and the lodge failed to meet several health standards. The Schymanski group was also dissatisfied with the accuracy and completeness of Conventz' financial record-keeping. After learning that the partnership funds were being kept in Conventz' personal bank account, the Schymanskis refused to provide further funds until they received a comprehensive accounting of all funds already advanced.

On September 2, 1980, Conventz expressed his desire to terminate the partnership in a letter to the Schymanskis. He also announced to partnership creditors that he would not be liable for any future debts incurred by the partnership.

Lloyd Oatman, a sub-contractor and partner in a Tucson real estate company, made repeated offers to purchase the lodge from the partnership for $350,000 on private credit terms. The Schymanskis refused the offer.

On September 9, 1980, the Schymanskis brought suit seeking a declaratory judgment that certain real estate was partnership property and that a contract regarding it was void as written; an accounting of debts incurred, funds used and earnings received by Conventz; contribution for expenditures made in winding up partnership business; dissolution of the partnership; and damages for financial loss suffered as a result of Conventz' allegedly wrongful breach of the fiduciary partnership relationship and fraudulent dealings.

After a bench trial, the lower court found that the total amount paid out by the partnership for the construction of the lodge was $173,496.64. Of that amount, the trial court further found that the Schymanski group had contributed $133,838.06 in cash and that Conventz had contributed $39,658.48 in money and property plus $70,000 of non-cash contributions, consisting of $50,000 worth of architectural services and $20,000 worth of managerial services, for a total of $109,658.48. The court further declared the partnership dissolved as of September 1, 1980 due to constant disagreement between the partners rather than to any wrongful conduct by any partner, and ordered the lodge to be either sold to Oatman for $350,000 or listed with a real estate agent for $400,000. Partnership proceeds were to be divided so that the Schymanskis would receive the first $24,179.48 with the remainder of the sales proceeds being split equally. The court also found that neither partner group prevailed below.

This appeal ensued with the Schymanskis challenging the trial court's determination to treat Conventz' architectural and managerial services as a $70,000 non-cash capital contribution to the partnership. The Schymanskis also attack the trial court's evidentiary rulings admitting into evidence an unaccepted offer to purchase the lodge and lay opinion as to the value of the lodge, as well as the court's failure to find misconduct on the part of Conventz and further failure to award damages to the Schymanskis.

CONVENTZ' NON-CASH CAPITAL CONTRIBUTION

To begin with, in reviewing the trial court's challenged findings of fact, we are bound by Civil Rule 52(a), which provides that findings of fact will not be set aside unless clearly erroneous and that due regard must be given to the trial court's opportunity to judge the credibility of the witnesses.

Turning to the Schymanskis' first specification of error, appellants challenge the trial court's finding regarding Conventz' "non-cash contribution" to the partnership. Specifically, Finding of Fact No. 29 provided:

29. The value of Conventz' non-cash contributions is as follows:

                a.    Architect of both the fishing camp
                    and the subsequent lodge including
                    superintendence of construction and
                    construction work                     $50,000
                b.    Manager and operator and
                    including defendant Christa
                    Conventz as cook and hand             $20,000
                                                          -------
                                                          $70,000
                

Appellants argue that the record fails to support any finding that the parties had agreed to treat Conventz' personal services as non-cash capital contributions or to otherwise remunerate him for such services. Appellants also argue that the evidence fails to support the trial court's valuation finding of $70,000 regarding Conventz' personal services.

This court has previously recognized that the contribution of personal services by a partner may create a right to share in partnership profits. Thus, in B.B. & S. Construction Co., Inc. v. Stone, 535 P.2d 271, 274 (Alaska 1975), this court quoted approvingly from Craig v. Hamilton, 213 Kan. 665, 518 P.2d 539, 542 (1974) as follows:

Neither law nor custom exalts one type of contribution above another. One partner may put up skill and service as against the money or property provided by the other and be entitled to share equally in the profits of the partnership.

(Emphasis added).

Similarly, this court has previously noted that under appropriate circumstances, personal services of a partner also may constitute a capital contribution to the partnership. Thus, in Coleman v. Lofgren, 633 P.2d 1365 (Alaska 1981), this court noted, in a footnote accompanying a discussion regarding non-cash capital contributions to a partnership, that:

Contribution by parties to a partnership enterprise need not always be in the form of tangible assets or capital. Partnerships are often formed where one party provides the money and the other party provides labor or services.

Id. at 1368 n. 7 (citation omitted).

The general rule is that, in the absence of an agreement to such effect, a partner contributing only personal services is ordinarily not entitled to any share of partnership capital pursuant to dissolution. See e.g. Larsen v. Claridge, 23 Ariz.App. 508, 534 P.2d 439, 440 (1975); Beaman v. DeShazor, 197 Or. 669, 255 P.2d 157, 163 (1953); Hillock v. Grape, 111 A.D. 720, 97 N.Y.S. 823, 826 (1906). Personal services may, however, qualify as capital contributions to a partnership where an express or implied agreement to such effect exists. Id. Thus, in Craig v. Hamilton, supra, discussed in B.B. & S. Construction Co., Inc. v. Stone, supra, a provision of a written partnership agreement expressly referred to two partners' "contributions" to the partnership in the form of "equipment, technical knowledge, skill and experience" and one partner's "contribution" in the form of cash. Id. at 542. 1

To be distinguished from non-cash capital contributions to a partnership is compensation or remuneration for a partner's personal services performed in the course of day-to-day affairs of the partnership. In the absence of an agreement to provide for such compensation, remuneration for a partner's services performed in

the course of partnership affairs is prohibited by statute. Specifically, Alaska's Partnership Act, AS 32.05.130(6), provides

[N]o partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs.

The distinction between non-cash capital contributions and remuneration for ordinary services was...

To continue reading

Request your trial
3 cases
  • In re Keytronics
    • United States
    • Nebraska Supreme Court
    • 1 Febrero 2008
    ...Id.; Callison & Sullivan, supra note 5, § 5.11. 31. See Bromberg & Ribstein, supra note 5, § 2.07(a). 32. See, e.g., Schymanski v. Conventz, 674 P.2d 281 (Alaska 1983); Huffman Technical Drilling, Inc. v. Smith, 424 So.2d 435 (La.App. 1982). 33. Bromberg & Ribstein, supra note 5, § 2.07(c).......
  • Corley v. Ott
    • United States
    • South Carolina Supreme Court
    • 18 Febrero 1997
    ...agreement to the contrary, a partner's services are not considered capital contributions upon dissolution. See, e.g., Schymanski v. Conventz, 674 P.2d 281 (Alaska 1983); Larsen v. Claridge, 23 Ariz.App. 508, 534 P.2d 439 (1975). We adopt this same rule. In this case, there is no evidence of......
  • Foster v. US, 95-CM-1283.
    • United States
    • D.C. Court of Appeals
    • 31 Julio 1997
    ...in light of this opinion. See Ross v. Hacienda Cooperative, Inc., 686 A.2d 186, 191-92 (D.C. 1996); see also Schymanski v. Conventz, 674 P.2d 281, 287 (Alaska 1983).5 So 1 The trial court sentenced Mr. Foster to one hundred days in prison, execution of sentence suspended for all but time al......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT