Opinion
No. 130099
Decided February 16, 1970.
Partnership — Causes for dissolution — R. C. 1775.30 — Contract for particular undertaking — Statute of frauds — Contract to be in writing — R. C. 1335.05 — Part performance sufficient to remove contract from operation of statute — Dissolution effected, how — Notice of intention and refusal to participate in business.
1. A contract by which two persons agree jointly to purchase two cemeteries from another, together with the oral agreement between the purchasers to sell the cemetery lots to the public at a profit, with sufficient funds set aside for development, improvement, and maintenance, establishes a partnership for a "particular undertaking," as that term is used in R. C. 1775.30 concerning dissolution of partnerships.
2. Although no written articles of partnership are executed between the parties, the purchase of two cemeteries, the joint conduct of sale of the lots of such cemeteries, with the keeping of records of such business and the withdrawal by each participant of a portion of the profits of the enterprise is a sufficient part performance to take the matters from the operation of the Statute of Frauds, R. C. 1335.05.
3. When one partner, based on actions of the other which indicate incompatibility but no breach of contract, gives notice of intention to dissolve the partnership, it is his notice and subsequent refusal to participate in the conduct of the business that effects a dissolution of the partnership in contravention of the agreement between the partners, and the resulting accounting pursuant to judicial order must reflect his improper withholding of his services from the business.
Mr. C. Dino Gianuglou, for plaintiff.
Mr. Robert C. Alexander, for defendant Terebinski.
Mr. Harry P. Jeffrey and Mr. Stanley Greenberg, for defendants Duff et al.
The court has held in abeyance its final decision in this case pending efforts by the opposing parties to arrive at a settlement.
However, the court was informed, in early December 1969, that the parties had not been able to arrive at an agreement. The court has also been awaiting a brief from counsel for defendant, Westday Development Company, which brief counsel for such defendant finally decided not to submit.
The court after consideration of all the evidence, particularly the documentary exhibits, is of the opinion that the partnership entered into between plaintiff and defendant Terebinski in August 1966, was a partnership for a particular purpose as set forth in R. C. 1775.30, titled "causes of dissolution," which in its pertinent parts states:
"Dissolution is caused:
"(A) Without violation of the agreement between the partners;
"(1) By the termination of the definite term or particular undertaking specified in the agreement.
"(2) By the express will of any partner when no definite term or particular undertaking is specified."
No other paragraph or subdivision thereof in the section is applicable excepting paragraph (F) which states:
"By decree of the court under Section 1775.31 of the Revised Code."
R. C. 1775.31 (A) (6) states:
"(A) On application by or for a partner the court shall decree a dissolution whenever:
"* * *
"(6) Other circumstances render a dissolution equitable."
Counsel for defendant Terebinski contends that paragraph (A) (2) of R. C. 1775.30, controls, and that the dissolution in this case is governed by such paragraph, to wit, by the express will of any partner when no definite term is specified.
On the contrary, the court is of the opinion that although there was no written contract or articles of partnership, the verbal agreement or arrangement between plaintiff and defendant Trebinski involved a partnership for a particular undertaking, which undertaking comprised the entire business of the partnership. The purpose thereof was two-fold — first, to purchase the two cemeteries in issue, and second, to sell the cemetery lots or plots contained therein to the public at a profit with sufficient funds set aside for development, improvement and maintenance. The partnership was not concerned with any other type of undertaking or business. Obviously, the original contract dated August 29, 1966, between defendants, Loring R. Duff, Henrietta R. Duff and Westday Development Company, sellers on the one hand, and plaintiff and defendant Terebinski on the other, required the purchasers to pay the total sum of $165,000 in installments of $1,500 per month for the first three years, $1,800 per month for the next two years, and $2,000 per month thereafter until the total purchase price was paid in full, which clearly indicates that plaintiff and defendant Terebinski contemplated that the particular undertaking would involve a partnership for the purpose of purchasing the cemeteries for a period of many years during which period it was necessary for the partnership to sell to the general public the cemetery lots or plots in said cemeteries in order to finance the purchase thereof, to make a profit on the undertaking and to create a reserve fund for improvement and maintenance.
There being no contract or articles of partnership in writing, the question arises as to whether R. C. 1335.05, commonly known as the Statute of Frauds, prohibits this court from determining the existence of a partnership for a particular purpose for the reason that neither the partnership agreement nor any memorandum or note thereof was in writing signed by defendant Terebinski. In this case both partners, the plaintiff and defendant Terebinski, bound themselves by written contract to acquire the two cemeteries in issue, which acquisition under the terms of the contract would require normally many years in excess of five years, which contract is in writing and is not only binding on both partners with relation to the sellers, codefendants herein, but is binding as between the partners who obligated themselves jointly and severally to perform the provisions of the contract. In addition, the partnership maintained an office, written records and books of all transactions involving the payment of money for the cemeteries and the purchase of cemetery lots and plots by persons contracting with the partnership. The business of the partnership involved also the employment of salesmen of the cemetery lots, the payment of commissions for their services in effecting sales, and financial arrangements and the execution thereof for the improvement and maintenance of the cemeteries.
Furthermore, the plaintiff and defendant Terebinski recognized each other's interest in the partnership business by receiving drawing accounts and an equal division of the net profits of such business from time to time, all of which is evidenced by book entries and cancelled checks. Consequently, we are of the opinion that there was sufficient part performance of the business of the partnership for the particular purpose for which it was created, evidenced by the written contract of purchase of the two cemeteries, the sales and conveyances of cemetery lots and plots, the improvement and maintenance of the cemeteries, evidenced by business records in the office of the partnership, and further evidenced by a bank account into which money was deposited and from which money was withdrawn, to remove the partnership from the operation of the statute of frauds either on the ground that it was not in writing or was not to be performed within one year. 25 Ohio Jurisprudence 2d, Statute of Frauds, 173, Section 81; 49 American Jurisprudence, Statute of Frauds, 853, Section 550; 171 A.L.R. 198.
Further, the court finds from the evidence that plaintiff's conduct of his share of the business and his relationships and dealings with defendant Terebinski, although indicating incompatibility and disagreement to some extent, did not amount to conduct terminating or breaching the partnership agreement. Terebinski, consequently, was not justified, under the facts and the applicable law, in attempting to terminate the partnership by the written notice of termination mailed to the plaintiff after he was hospitalized, and such written notice did not as a matter of law effect the termination of the partnership on the theory that it was a partnership at will. Such letter of February 24, 1967, indicating defendant Terebinski desired to dissolve the partnership, therefore, was no more than an expression on the part of Terebinski of his desire to have the partnership dissolved, which required under the circumstances plaintiff's consent to such dissolution.
Although orders have been filed in this case permitting defendant Terebinski to continue the partnership business and requiring him to conserve the assets thereof, subject to his right to draw money therefrom for his services rendered, and no receiver has been appointed to operate the business, as the court was satisfied as a result of several conferences with counsel and the parties that the assets were being and would be conserved by defendant Terebinski pending the final adjudication of this suit, nevertheless plaintiff has never been prohibited or enjoined from continuing to participate in the partnership business as a partner. Since there is no evidence indicating that plaintiff has tendered his services in or offered to participate in the partnership business for the remainder of 1967 subsequent to the receipt of the letter of February 24 from defendant Terebinski, nor has he offered to participate in, nor has he participated in the partnership business during the years 1968 and 1969, we are required to treat such failure to tender his services, and his non-participation in the partnership business as an election on plaintiff's part to terminate and dissolve the partnership, which dissolution date the court will fix as of December 31, 1969, the end of the same month in which the court was notified by counsel for both parties that a settlement between them could not be effected.
In view of the finding of the court that the partnership was for a particular purpose, and not terminable at the will of the parties, the court will require that the accounting to be ordered herein be based in part upon the original contract of purchase by plaintiff and defendant Terebinski of the two cemeteries referred to in the written contract of August 29, 1966, as if the contract had not been terminated and cancelled since payments thereon were not at the time of the attempted dissolution of the partnership by letter dated February 24, 1967, in arrears, and further since there was no provision in the written contract of purchase treating any termination of the partnership as a breach thereof.
Consequently, the court orders that there be a complete accounting of the partnership business for the years 1967, 1968 and 1969 so that there might be an equitable division of the property thereof in accordance with the provisions of R. C. 1775.07, 1775.23, 1775.25, 1775.37 and 1775.42, and such other sections of the Uniform Partnership Law as may be applicable.
It is further ordered that such final accounting between the parties be submitted to this court on some suitable date and time between April 15 and April 30, 1970, either in chambers and in conference between the court and the respective parties through counsel, or by evidence in open court, the method of presentation to be hereafter determined by opposing counsel and the court at the time the date and time of hearing is definitely fixed.