Opinion
No. 105.
Argued March 28, 1972. —
Decided May 2, 1972.
APPEAL from an order of the circuit court for Milwaukee county: JOHN A. DECKER, Circuit Judge. Affirmed.
For the appellant there was a brief and oral argument by William H. Bowman of Milwaukee.
For the respondent there was a brief and oral argument by William A. Ketterer of Milwaukee.
This is an action for an accounting, commenced by appellant Christine Anderson against her mother-in-law, respondent Josephine Anderson. Appellant's complaint alleges that in the year 1946, appellant and respondent and their respective husbands purchased approximately six acres of real estate in the city of Oak Creek with money contributed by each. It was allegedly agreed between the parties to the purchase that the property would be used as a trailer park, to be known as Veteran's Delux Trailer Court, and that the profits from the operation of the trailer park would be divided equally among the four cotenants. William Anderson and his son were designated proprietors of the park, although it was anticipated that all four co-owners would participate in the work to be done in running the park.
Appellant alleges a breach of the agreement whereby each cotenant was to share equally in the profits generated by the operation of the park. It is alleged that in 1949 and in 1955, William and Josephine Anderson secretly diverted income from the venture and used it to buy two additional parcels of land. The complaint further alleges that, although the operation of the trailer park yielded profits of approximately $210,748.90 over the years, appellant was paid only $800, rather than her one-quarter share of $52,687.22. Appellant's husband, however, received annual payments of "rent" and "salary" from the business. The complaint reveals that respondent's husband is now deceased, although there is no indication of the disposition of his estate. Appellant asks for an accounting and for payments of her share of the profits.
Respondent demurred to the complaint on the ground of a defect in parties plaintiff or defendant, arguing that the complaint on its face shows the existence of a partnership, which would make all owners of the property, including appellant's husband, indispensable parties. The trial court sustained the demurrer; appeal is taken from that order.
The sole issue presented upon this appeal is whether there is a defect in parties such that the demurrer was properly sustained.
There is no question but that all parties to the agreement are proper parties to this lawsuit. However, a complaint is not demurrable merely because proper parties are not before the court; the demurrer will be sustained only if necessary or indispensable parties have not been joined. Elliott v. Indemnity Ins. Co. (1930), 201 Wis. 445, 448, 230 N.W. 87; Borde v. Hake (1969), 44 Wis.2d 22, 30, 170 N.W.2d 768. If, as respondent alleges, a partnership was created by the agreement, all the partners are indispensable parties and must be joined. DeWit v. Lander (1888), 72 Wis. 120, 39 N.W. 349; Karp v. Coolview of Wisconsin, Inc. (1964), 25 Wis.2d 299, 304, 305, 130 N.W.2d 790.
The burden of proving the existence of a partnership rests with respondent. Morris v. Resnick (1955), 268 Wis. 410, 415, 67 N.W.2d 848. Sec. 178.03 (1), Stats., defines the term partnership as "an association of 2 or more persons to carry on as co-owners a business for profit." The receipt of a share of those profits is deemed prima facie evidence that a person is a partner in the business. Sec. 178.04 (4). However, under sec. 178.04 (2), a partnership will not be implied merely because of common ownership of property, whether or not profits are shared by the co-owners. Schleicker v. Krier (1935), 218 Wis. 376, 379, 261 N.W. 413. As stated in 68 C.J.S., Partnership, p. 435, sec. 20 c (2):
"A mere community of interest in property, such as exists between tenants in common or joint tenants of real or personal property, does not make such owners partners or raise a presumption that a partnership exists, and this is so even though they cooperate in making improvements on their property and in realizing and sharing the profits or the losses and expenses arising therefrom.
"The adoption of an assumed name, as a convenient mode of designating all the joint owners, in transactions relating to the common property, does not change the legal relationship of the several owners, with respect to the common property, from a tenancy in common to one of partnership. . . ."
Whether or not the co-owners of the trailer park have entered into a partnership cannot be determined merely through an examination of the complaint. The allegation which describes the agreement between the parties reads as follows:
"5. That at the time the above-described property was obtained, it was mutually agreed between all four of the owners that they would each contribute equally toward the acquisition of the property, that they would all work to establish and maintain a trailer park upon said property, and would share equally in the profits to be realized from the operation of the trailer park."
This allegation alone does not establish that the cotenants intended their venture to be a partnership. Also, the allegation is silent as to whether all the parties to the agreement were to have an equal voice in the management of the trailer park, which is an essential element of partnership. Thomas v. Department of Taxation (1947), 250 Wis. 8, 15, 26 N.W.2d 310. Therefore, further proof is needed before it can be determined whether or not a partnership did exist by virtue of the agreement. Since the husbands of the respective parties cannot be said to have been partners as a matter of law, based only on the allegations of the complaint, they are not indispensable parties on that ground.
Appellant contends that this is merely an action by one cotenant for the recovery of rent held by another, which does not require the joinder of other cotenants. We do not agree. We think that all cotenants are necessary, if not indispensable, parties in an action of this nature.
In line with equitable principles, this court has held that all those who are jointly liable on a chose in action must be sued together. Bank of Verona v. Stewart (1937), 223 Wis. 577, 582, 270 N.W. 534. Likewise, in an action for an accounting by one member of an enterprise against another, it was held that all those having an interest in the enterprise should be made parties. Sullivan v. Ashland Light, Power Street Ry. Co. (1914), 156 Wis. 445, 450, 451, 146 N.W. 506.
There is no question that a complete determination of this action requires the presence of both appellant's husband and the estate of respondent's deceased husband. The trial court will have to determine the total profits realized from the operation of the trailer park, which finding will affect the interests of all four of the cotenants. The effect of the "rent" and "salary" paid to appellant's spouse must also be considered. We conclude that the absent cotenants are necessary, if not indispensable, parties in this action and that the trial court properly sustained the demurrer.
By the Court. — Order affirmed.