Wolf v. Murrane

Decision Date29 June 1972
Docket NumberNo. 54531,54531
Citation199 N.W.2d 90
PartiesDean WOLF and Helen Wolf, Appellees, v. Janelle MURRANE and Thomas Murrane, Appellants.
CourtIowa Supreme Court

M. Gene Blackburn, Maxwell, Thomas L. McCullough, Sac City, Roland D. Peddicord and Ronald L. Sutphin, Peddicord, Simpson & Sutphin, Des Moines, for appellants.

W. A. Singer, of Pasley, Singer, Seiser & Pasley, Ames, for appellees.

REES, Justice.

This appeal is from: an order of the district court finding that a partnership composed of plaintiffs and defendants, known as Trans-Travel Agency, engaged in business at Ames, was dissolved in October 31, 1968; the order of the trial court allocating the interest of the partners, and establishing the value of the same; an order appointing a receiver of the partnership property; the alleged sale of the partnership property to the defendants, which defendants contend did not constitute a public sale as the property was not held out for sale to the public generally; and from an order approving the sale of the same by the receivership to the defendants. We are also concerned with the assessment of the costs of the action, the costs of the receivership, and orders of the trial court overruling defendants' motion to set aside the order of the trial court prescribing instructions to the receiver and overruling defendants' objections to the receiver's final report.

In June of 1966, plaintiffs Dean and Helen Wolf and defendants Janelle and Thomas Murrane entered into a partnership arrangement for the purposes of conducting a business to be known as Trans-Travel Agency, located in Ames. The initial capital was in the amount of $10,000, plaintiffs contributing $5,000, and defendants a like amount. The partnership agreement contemplated net profits and losses were to be shared equally and the account of each partner was to be debited or credited according to the apportionate shares of interest. The partnership was to continue at will and a manner of distribution of the assets upon voluntary dissolution was provided for in the partnership agreement.

On January 8, 1969 plaintiffs filed their petition in equity in the district court, seeking a declaration that the partnership had been terminated as of October 31, 1968, and asking that an accounting be made and a receiver be appointed to take charge of the assets of the partnership until a final distribution could be effected. Defendants, in answer, asserted plaintiffs had voluntarily withdrawn from the partnership and had been in charge of the books of the enterprise and had failed to produce an accounting demanded by defendants. Plaintiffs then amended their petition incorporating a statement as of the close of business--October 31, 1968--showing estimates of the fair market value of the property of the partnership. Defendants denied the accuracy of the statement of financial condition, and demanded a certified audit.

An appraiser called to testify at the trial, after stating his qualifications, testified the fair market value of the partnership as of October 31, 1968 was $9,670.00. Objection was lodged by the defendants to this testimony of the appraiser on the basis the appraisal figure was based on the facts supplied the appraiser by plaintiffs and as such was hearsay. This objection was overruled, and the defendants assert such ruling as one of the propositions upon which they rely for reversal.

The parties were unable to agree on an accountant to audit the partnership, and the trial court appointed one Hoover to act in such capacity. Thereafter, the accountant filed his report with the court showing the financial status of the partnership books as of October 31, 1968, and indicating the value of the partnership as of that date to be $4,761.13, which figure did not include any amounts for pending but unfinished business of the partnership at that date. The entitlement of plaintiffs to participate in any profits realized from such unfinished business is the subject of another of the defendants' propositions relied upon for reversal.

The findings of facts and conclusions of law filed by the trial court embraced the following provisions:

(1) The fees of court-appointed accountant were to be divided equally;

(2) The partnership was dissolved on October 31, 1968, and the value of the assets of the partnership at that time was $8,601.60;

(3) A receiver would be appointed to dispose of the business.

The findings of fact and conclusions of law were not in the form of a final judgment. However, the trial judge, subsequent to the preparation of the findings of fact and conclusions of law, endorsed upon plaintiffs' copy a notation that the findings of fact and conclusions of law constituted a final order.

A receiver was appointed by the trial court on December 12, 1969. In a report subsequently filed, the receiver recommended plaintiff be paid $4,300.80 plus statutory interest from October 31, 1968 such amount being one-half of the value of the partnership as found by the trial court.

Later, on January 21, 1970, an order was entered by the trial court which in effect is the final order appealed from here. Such order provided, among other things:

(1) Receiver's fees were to be paid from the receivership estate.

(2) Court costs of $127.68 were to be paid from the receivership estate.

(3) The receiver was to pay $4,300.80 to the plaintiffs as their share of the partnership, plus interest at five percent per annum from October 31, 1968.

Defendants thereupon filed a motion to set aside the last above referred to order on the grounds:

(1) The order was entered ex parte;

(2) No notice was given of the filing of the receiver's report;

(3) The sum of $4,300.80 did not represent the value of one-half interest in the partnership;

(4) The proper method of liquidation was by public sale, not sale to a continuing partner;

(5) The manner of assessing costs was in effect an assessment against the interests of the defendants.

A resistance to the receiver's final report was later filed, and after hearing the motion to set aside the order of January 21, 1970, and the resistance to the receiver's report were overruled.

Defendants rely upon eleven separate propositions for reversal. While we regret unduly extending this opinion, we see no alternative but to refer to all of the propositions. They are:

(1) The finding of fact that the total combined value of the partnership interest was $8,601.60 was erroneously based upon testimony of an appraiser who testified to the fair market value of the partnership assets basing his opinion solely upon hearsay evidence supplied him by plaintiffs.

(2) The court's finding of fact that the value of the partnership was $8,601.60 is necessarily based upon a finding from a balance sheet which in itself is insufficient as an accounting to strike a balance between the partners.

(3) A partnership is not terminated until its affairs are wound up by an accounting between the partners, and the court was incompetent to determine the value of the partners' interest until the affairs of the partnership were concluded, including the completion of work then in progress.

(4) The only competent testimony as to value of the partnership is the testimony of the court's witness, an accountant, who based his testimony on profit and loss statements and testified without contradiction that the total value of the partners' combined capital account was $4,761.13.

(5) By accepting the appraiser's method of evaluation, the court adopted an accrual method of accounting which was contrary to the only competent evidence in the record of the partnership agreement which provided for an accounting on a cash receipts and disbursements method.

(6) The uncompleted work or contracts of a service partnership on a cash basis is treated as income and not capital, and a partnership is not terminated until the work is completed, the debts paid and the net income credited to the partnership account.

(7) The court's appointment of receiver without notice and hearing and the actions of the receiver in transferring monies from the receivership assets to plaintiffs without notice and hearing; the court's order prescribing instructions for receiver without notice and hearing: the receiver's application for allowance of fees and the order of court approving same without notice and hearing; and the receiver's final report and court's order approving final report without notice and hearing to the defendants, were void.

(8) Receiver's sale of plaintiffs' one-half interest to defendants without offering the assets to the highest bidder, such sale being conducted without notice and hearing was, in effect, a forced sale to defendants and was an improper method of winding up partnership affairs;

(9) The ex parte sale of plaintiffs' one-half interest to defendants without an allocation of all costs between the parties is in effect an assessment against the defendants of all costs of dissolution, and is contrary to the proper methods of winding up the affairs of a partnership.

(10) The receiver acted beyond the authority delegated him by the court and by the laws of the state of Iowa when he forced defendants to purchase the property without offering the same to the highest bidder.

(11) The receiver was without authority to charge defendants' capital account with costs and interest from the date of termination of the partnership for the reason there was no judgment decreeing payment of interest.

I. We must first determine whether trial court's 'Findings of Fact and Conclusions of Law' and the subsequent endorsement thereon by the trial judge that it was a 'Final Order' constitutes such final judgment as comes under the purview of Rule 331, Rules of Civil Procedure. In this respect, plaintiffs maintain trial court rendered a valid final judgment on December 8, 1969, and that notice of appeal not having been filed within thirty days, as required by rule 335, R.C.P., is not...

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    ...City, 254 Iowa 22, 116 N.W.2d 466 (1962). It is only the decretal portion of the decree that constitutes an adjudication. Wolf v. Murrane, 199 N.W.2d 90, 95 (Iowa 1972). The mere fact a party has prevailed on the immediate issue decided by the decree does not preclude his right of appeal if......
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