Taylor v. Lewis

• Decision Date: 16 May 1977
• Docket Number: No. 8748,8748
• Citation: 553 S.W.2d 153
• Parties: Alton R. TAYLOR, Appellant, v. H. C. LEWIS, Individually and as Independent Executor of the Estate of Elaine Lewis, Deceased, Harold Chapman and Ray Chapman, Appellees.
• Court: Texas Court of Appeals

Page 153

553 S.W.2d 153

Alton R. TAYLOR, Appellant, v. H. C. LEWIS, Individually and as Independent Executor of the Estate of Elaine Lewis, Deceased, Harold Chapman and Ray Chapman, Appellees.

No. 8748.

Court of Civil Appeals of Texas, Amarillo.

May 16, 1977.

Second Rehearing Denied June 13, 1977.

Smith & Baker, Inc., Edward R. Smith, Lubbock, for appellant.

Crenshaw, Dupree & Milam, J. Orville Smith and Cecil C. Kuhne, Lubbock, for appellees.

ON MOTION FOR REHEARING

REYNOLDS, Justice.

In affirming the trial court's judgment on original consideration, we held that the record failed to reflect that certain of appellant's points of error were preserved for review. Accompanying appellant's motion for rehearing is appellees' concession of a procedural correctness that, together with our erroneous computation as to the time the judgment became final, causes us to withdraw our 18 April 1977 opinion, together with the resulting judgment, and to substitute the following:

Plaintiff Alton R. Taylor failed to convince a jury that he became a partner with defendants H. C. Lewis, Harold Chapman and Ray Chapman in a motel venture or that the defendants had breached his employment agreement. Because no reversible error is presented, we affirm the trial court's take-nothing judgment.

Harold Chapman and Ray Chapman owned land in Lubbock, Texas, on which contractor H. C. Lewis was to construct the Lubbock Inn Motel. Considering the land and construction at cost, the Chapmans were to own fifty per cent and Lewis was to own the other one-half of their partnership venture.

As the construction was beginning in November of 1971, Alton R. Taylor expressed to Harold Chapman his interest in managing the motel. After a series of meetings, it was orally agreed that Taylor would manage the motel. For his management services, Taylor was to be furnished an automobile, was to receive a salary of $800 each month during the construction, a $1,000 monthly salary after the motel opened, and at such time as there were profits, Taylor was to receive ten per cent of the profits to be applied toward the purchase of a ten per cent interest in the motel as determined by the cost of the land and the construction.

Taylor began his services in January of 1972. The Lubbock Inn Motel became operational in September of that year. The operation had not produced any net profits up to 21 May 1973 when, upon execution of an agreement between the parties, Taylor ceased to manage the motel. The agreement, reciting that a dispute has arisen whether Taylor is a partner and has properly managed the Inn and that defendants demand that Taylor relinquish management, provides that Taylor, upon receipt of his accrued salary and without recognizing the propriety of the demand, shall peacefully relinquish management without waiving any of his rights.

Thereafter, Taylor filed this suit against H. C. Lewis, individually and as independent executor of the estate of Elaine Lewis, deceased, and the Chapmans to establish the existence of a partnership and for an accounting, settlement and winding up of the partnership affairs. Alternatively, he sought damages for breach of his employment agreement.

The litigants are in accord with respect to their basic understanding, which is merely an executory agreement to form a partnership in the future when the condition precedent i. e., the realization of net profits is fulfilled. Buzard v. McAnulty, 77 Tex. 438, 14 S.W. 138, 139 (1890). Notwithstanding, Taylor contends, and the defendants deny, that they intended, as shown by their expressions and implied from their conduct and the surrounding circumstances, to enter into a relationship which included the essential elements of a partnership so that, in fact, their association became a partnership. See Howard Gault & Son, Inc. v. First National Bank of Hereford, 541 S.W.2d 235, 237 (Tex.Civ.App. Amarillo 1976, no writ).

To evince the partnership, Taylor produced evidence that he left a job of long standing to go with defendants at a sacrifice in regular monthly income, hoping and expecting to make some money in the new venture. He went to Chicago to purchase furniture with the defendants, who publicly referred to him on occasions in Lubbock as a partner. He and defendants signed applications for a beverage cartage permit, a mixed beverage permit, a mixed beverage late hours permit, a sales tax permit and a caterer's permit in which he was listed as a partner as well as in the permits issued pursuant thereto. Taylor was shown as an owner in an application for a store license. Three newspaper items referred to him and the defendants as either the builders or operators of the motel and none of the defendants voiced any objection. He, together with the defendants, executed a bank renewal note in the sum of $200,000 for interim financing of the motel. He was listed on a certificate of assumed name supplement as one of the parties conducting the business of The Lubbock Inn. An insurance policy issued to the Lubbock Inn as a partnership showed Taylor to be one of the partners. Although he was reported on the quarterly employer's reports for 1972 as an employee, he was not so reported for 1973. In the United States Partnership Return of Income for 1972, he was listed as a partner with a ten per cent interest in the net operating loss of The Lubbock Inn. The general ledger of the motel showed him as a partner and the stubs for the checks issued to him in 1973 were marked "Partner's Withdrawal."

Taylor acknowledged that the agreement failed to provide what should be done in the event of a loss instead of a profit and failed to provide a date for the conveyance of his ten per cent interest. Although he said it was "discussed" that he might "buy in" by assuming ten per cent of the indebtedness if defendants were able to borrow the money for the entire project, he did not testify that such was a part of the agreement between the litigants.

It was the defendants' position that their basic agreement was never changed; that there was no agreement, and no testimony by Taylor, or anyone else, that he could become a partner simply by assuming ten per cent of the partnership debts; and that the relationship never ripened into a partnership with Taylor. Their testimony was that Taylor was included on the liquor applications because they were advised the Liquor Control Board required everyone with an interest, direct or indirect, to be shown, and Lewis was of the opinion that Taylor had the applications for the liquor permits, as well as the applications for the store license and sales tax permit, filled out. The county clerk prepared the certificate of assumed name supplement. The accountant who prepared the tax return stated he never was told by defendants that Taylor was a partner, and he prepared the return showing Taylor as an income tax partner without any concern whether he was a legal partner. There was testimony that Taylor signed the bank renewal note at the request of the banker; that no one told the banker that Taylor was a partner; that the designation "partner," which was adjacent to the signatures of the signing defendants, was not placed by Taylor's signature on the note; that the bank note was paid, but that Taylor made no payment on the note; and that Taylor did not execute the original bank note or the final note for $1,550,000 to finance the motel venture.

It was the testimony of Harold Chapman that he and Taylor never used the word "partnership" and Taylor never claimed to be a partner before May of 1973. He further said that neither he nor, so far as he knew, any of the other defendants, had any knowledge that the motel books showed, or authorized the books to be changed to show, Taylor's salary as a partner's withdrawal account. Ray Chapman's summary of the relationship was: "We assumed that sometime down the road that when we got the thing finished we would establish a purchase price and by that time he (Alton Taylor) would either give us a note for a hundred and fifty or sixty-five thousand, 10 per cent of whatever the thing cost, or have something to work into to let his bonus apply on the purchase of, but a partnership was never mentioned, it wasn't thought of in that sense."

Alternatively, Taylor pleaded a "wrongful discharge" generally; he did not plead that his employment was for a definite period of time or that there were specific contractual limitations on discharge. Taylor acknowledged that nothing had been said in the pre-employment discussions about defendants' right to fire him at any time or his right to quit at any time. After mentioning some problems of operation of the motel, Taylor stated that on or about 15 or 16 May 1973, Ray Chapman made objections to the operation and finally said, "If this thing isn't changed, we want you to leave;" and then added, "The fact of the business, we do want you to leave." Taylor asked, "When?" He was told, "The sooner the better." When asked by his counsel, Taylor responded that he did not quit, but that he was fired.

The Chapmans testified that no term of Taylor's employment was discussed or agreed on. Harold Chapman, with whom Taylor first discussed management employment but who was not present when the relationship was terminated stated that, regardless of the recitations in the 21 May 1973 agreement, Taylor was not discharged, but that he quit. On this issue, Lewis' testimony was that, although there was cause to discharge Taylor, he gave no ultimatum to Taylor, that he neither demanded nor participated in making any demand that Taylor leave, and that Taylor was not fired. Ray Chapman reported that in the 14 or 15 May 1973 conversation with Taylor about Taylor's management shortcomings, Taylor became irritated and said, "If you think you can get somebody else to run this place better, you ought to do it." Ray Chapman testified that he did not reply that Taylor was fired, but said, "I think it's come to...