Vangel v. Vangel

• Decision Date: 23 December 1955
• Citation: 45 Cal.2d 804,55 A.L.R.2d 1385,291 P.2d 25
• Court: California Supreme Court
• Parties: , 55 A.L.R.2d 1385 Nick VANGEL and Ernest Vangel, Plaintiffs and Respondents, v. Charles VANGEL, Defendant and Appellant. L. A. 23289.

Page 25

291 P.2d 25

45 Cal.2d 804, 55 A.L.R.2d 1385

Nick VANGEL and Ernest Vangel, Plaintiffs and Respondents, v. Charles VANGEL, Defendant and Appellant.

L. A. 23289.

Supreme Court of California, In Bank.

Dec. 23, 1955.

Pacht, Tannenbaum & Ross, Isaac Pacht, Rudolph Pacht, Jerry Pacht, Pacht, Ross, Warne & Bernhard and Clore Warne, Los Angeles, for appellant.

J. Howard Sullivan and Joseph T. Enright, Los Angeles, for respondents.

EDMONDS, Presiding Justice.

A judgment dissolving the partnership of Nick, Ernest and Charles Vangel and determining their respective financial interests in it was reversed with directions to take an accounting and enter a judgment in accordance with the views expressed in the opinion. Vangel v. Vangel, 116 Cal.App.2d 615, 254 P.2d 919. Upon the retrial, the values of the respective shares to which the former partners are entitled was determined and the profits accruing between the dissolution and the winding up of the partnership apportioned between them. The present appeal is from that judgment.

In 1944, the three brothers purchased a citrus ranch pursuant to a written partnership agreement. After the commencement of operations, a dispute arose which culminated in an action by Nick and Ernest to dissolve the partnership. By the prior judgment, a dissolution was decreed effective as of June 15, 1950. The court found that Charles wrongfully caused the dissolution and concluded that Nick and Ernest were privileged to purchase his interest. The value of the ranch was fixed at $235,000, and a finding was made as to the value of Charles' interest in the partnership. According to another finding, he was entitled to participate in profits accruing between the date of dissolution and January 1, 1951.

Upon the prior appeal, findings as to the value of the ranch property and Charles' fault in causing the dissolution were approved. It was held that the trial judge properly allowed the plaintiffs to purchase Charles' interest, but that he erred in failing to include certain items in his valuation of it. Furthermore, said the District Court of Appeal, the right of Charles to participate in profits accumulated by joint use of the partnership assets should not have been terminated as of January 1, 1951. That period, it was determined, should extend so as to include the proceeds from fruit substantially matured and soon ready for marketing, the final date to be left to the sound judgment of the chancellor. As to those matters, the judgment was reversed with directions for an accounting.

The amounts of profits from the operation of the ranch after dissolution of the partnership and of set-offs, claims and advances, as determined upon the retrial, are not now disputed. The value of Charles' interest in the partnership at the time of dissolution based upon those amounts, was found to be 23.96% of the partnership net worth. The court also declared that Charles is entitled to that percentage of the profits from the operation of the ranch accruing between the date of dissolution and the winding up of the partnership affairs. Another finding is that 'whatever services defendant may have rendered toward the conduct of the partnership affairs, from the date of the dissolution of the partnership * * * was voluntary on his part and against the wishes and directions of the plaintiffs.'

The judgment gives Nick and Ernest, inter alia, the right to purchase Charles' interest in the partnership for its value as determined at the retrial, plus interest on that amount from September 8, 1953. Charles is allowed 23.96% of the profits accruing prior to that date and the same percentage of certain proceeds from sales of crops. He is denied any wages for services performed after the dissolution of the partnership and must pay 23.96% of the costs of the audit.

Charles contends that the trial judge erred in his computations of the values at the time of the dissolution of the respective partnership interests and of the partners' shares of the profits accruing between dissolution and the winding up of the partnership affairs. He also challenges the finding that his post-dissolution services were 'voluntary' and 'against the wishes and directions of the plaintiffs' as being without support in the evidence. Finally, he contends that he should not have been taxed any of the costs of conducting the audit upon the retrial.

With regard to the value of the partnership interests Charles argues that the trial judge erred in including in the partners' capital accounts items which properly are personal obligations of the partners inter sese. He objects particularly to the inclusion of an item of $25,000, advanced to him by the other partners upon the purchase of the ranch, and another one of $42,000, which his brothers assertedly withdrew improperly from partnership funds.

Upon the former appeal, however, it was held that these items were, respectively, an obligation owing to the partnership and a distribution of profits. By including those items in his computations of the values of the partners' interests in the partnership, the trial judge followed the mandate of the District Court of Appeal: 'In ascertaining such interest not only is the value of the ranch to be considered as of that date (June 15, 1950) as well as other capital assets, liabilities and expenses, but also the claims which the partnership had against the brothers and their set-offs among themselves should have been computed as of June 15, 1950, with interest to that time.' Emphasis added, 116 Cal.App.2d 629-630, 254 P.2d 928. The court further said 'in determining the respective financial interests in the partnership business as of that date consideration must be given to the $25,000 which plaintiffs advanced for defendant, and to the $42,000 which plaintiffs improperly withheld and distributed, together with interest on said sums to date of dissolution. All other assets and liabilities of the partnership, together with any claims of the parties inter se, must be included in the ascertainment of the respective interests of the plaintiffs and the defendant.' 116 Cal.App.2d at page 633, 254 P.2d at page 930.

In attacking the portion of the judgment limiting him to 23.96% of the post-dissolution profits, Charles has presented several theories as justifying a larger amount. It is unnecessary to consider all of them, however, because the computation of his share was made upon an erroneous basis.

Upon the former appeal it was held that the trial judge was correct in concluding that the partnership had been dissolved by reason of Charles' breach of the partnership agreement and that the remaining partners had exercised their privilege of continuing the partnership business. Corp. Code, § 15038(2) (b). In that situation, Charles was entitled to have computed the...