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Todd v. Waddell

Court of Appeals of Georgia
Jul 2, 1969
169 S.E.2d 351 (Ga. Ct. App. 1969)





Dissolution of partnership. Fulton Superior Court. Before Judge Etheridge.

Armstrong Fuller, Ronald J. Armstrong, for appellant.

William E. Spence, George F. Wheeler, Jr., for appellees.

1. A motion to dismiss for failure to state a claim on which relief may be granted, made and granted in a jury case at the close of the plaintiff's evidence where the trial judge certified that he considered both pleadings and evidence in entering the order, is considered as a motion for directed verdict.

2. Where the evidence on behalf of the plaintiff shows that a partnership between the plaintiff and the defendant existed, in fact, that it sustained losses, that it ceased to do business prior to the filing of this action, and that nothing remained to be done except for an accounting and winding up of the partnership affairs, it was error to dismiss an action for contribution against the defendant as to sums properly paid out on behalf of the partnership by the plaintiff.

3. The dismissal of the co-defendant employee, Norma Waddell, as a party to this suit is without error.

SUBMITTED MAY 29, 1969 — DECIDED JULY 2, 1969.

Todd brought an action in the Superior Court of Fulton County against Waddell and his wife alleging that he and Waddell had entered into an oral partnership agreement on September 1, 1965, to be known as Todd Waddell Forklift Co. for the purpose of servicing, repairing and selling forklifts; that they agreed to share equally in profits and losses; that it was agreed that plaintiff would contribute the money to commence business which would constitute a loan to the corporation repayable by it but borrowed by plaintiff personally and Waddell would furnish his full time and special knowledge to the business and be reimbursed by a salary of $600 per month; that the partnership executed a five-year lease and began to do business in September, 1965; that from time to time it became obvious that the business could not proceed without more capital, which the plaintiff obtained for it, all of the money for this purpose having been borrowed by the plaintiff on his personal credit, and payments made out of partnership funds during the time it was doing business; that the firm name was changed in May, 1966, to Ponce de Leon Equipment Company; that the defendants prevented him from examining the partnership books, were guilty of certain acts of fraud, and that on October 28, 1966, he was informed that the partnership was insolvent; that Waddell has refused to participate in marshaling assets or winding up the business and has publicly disavowed any interest therein, but has proceeded to commingle his equipment with that of the partnership and to carry on his individual business with partnership funds. Plaintiff has paid partnership debts out of personal funds in the sum of $5,457.19. He initially prayed for a decree of dissolution of the partnership, receiver, production of partnership records, a money judgment, accounting, and injunction. During the trial of the case he added by amendment without objection prayers for (a) 50% of all sums found to have been fraudulently diverted by the defendants from the partnership and (b) 50% of sums paid out by the plaintiff for partnership debts and operating capital.

The petition was filed in November, 1966. When the case was called for trial in January, 1969, the plaintiff testified substantially in accordance with the allegations of the petition. The defendant was called for cross examination. He agreed with the plaintiff that the parties had in fact entered into an oral partnership on an agreement that he would give full time to the business, receiving $150 per week, that he had testified in a deposition that the agreement was "50-50 as far as profits were concerned"; that there had been no discussion of losses; that the plaintiff put money in the business which he considered to be the plaintiff's individual contribution, although the partnership paid the notes to the bank while it was operating; that two invoices to other companies during the time the partnership was in existence were paid after the partnership was dissolved, and that he placed these payments in a personal account but used them to pay salary or other partnership debts. He further testified, as did the plaintiff, that the partnership ceased to function after October 28, 1966.

At the close of the plaintiff's evidence the court on motion entered an order dismissing the case "for failure to state a claim on which relief could be granted," certifying that his decision was based upon a consideration of both pleadings and evidence. From this judgment the plaintiff appeals.

1. The first question for decision is the scope of the judgment of dismissal. The remedy of nonsuit as formerly available under Code § 110-310 no longer exists. Code Ann. § 81A-201 (dd). A motion for judgment on the pleadings, where factual material is considered by the trial judge without objection, should be treated as a motion for summary judgment ( Code Ann. § 81A-112) but such a motion should be made "within such time as not to delay the trial" and accordingly would be inappropriate here. Code Ann. § 81A-141 (b) provides for a motion to dismiss at the close of the plaintiff's evidence where "upon the facts and the law the plaintiff has shown no right to relief" but only in non-jury cases. Under Code Ann. § 81A-150 (a) the defendant in jury cases has the analogous right to move for a directed verdict at the close of the plaintiff's evidence, and it is stated of the parent Rules 41 (b) and 50 (a) of the Federal Rules of Civil Procedure that, regardless of the terminology used, a motion couched in the language of 41 (b) in a jury case should be treated as a motion for a directed verdict. Sano v. Pennsylvania R. Co., 282 F.2d 936; Federal Practice and Procedure, Barron Holtzoff, Vol. 2B, § 1074, p. 372. Since the judgment of dismissal here has every attribute of finality and was entered after consideration of evidence, it will be so considered leaving as the only question for this court whether, construing the pleadings and evidence in the plaintiff's favor, we could say that a verdict for him for any amount would not be authorized. Dennis v. Griswold, 142 Ga. 114 ( 82 S.E. 519); Sattler v. Great A. P. Tea Co., 18 F. R. D. 271.

2. The partnership not being in dispute, each partner is liable for the business losses of the firm. Code § 75-206. A partnership at will may be dissolved by the giving of three months' notice to the partner ( Code § 75-106) or it may be dissolved immediately by mutual consent or by the extinction of the business for which it was formed. Code § 75-107. Dissolution may occur although there has been no prior accounting and although a general windup of the business affairs is still necessary. Code § 75-109. Third persons, however, have generally a right to look to the firm until notice of dissolution or dissent or until the commencement of a legal action for dissolution. Code § 75-302. Dissolution of the partnership as such, however, as between the partners, may be implied from their acts and conduct (Johnson v. Inman, 223 Ala. 513 (137 S 293)) and here, where it appears without dispute that by October, 1966, one partner had taken steps to eject the other from the property and the other had commenced carrying on an individual business, it is fairly clear that nothing remained of the partnership business as such except a determination of losses, payment of debts, and other like acts involving a general accounting and winding up of the business. Therefore, those cases holding that during the pendency of the partnership "one of the partners can not maintain against the other an action at law" do not apply here. See Miller Son v. Freeman, 111 Ga. 654 (1) ( 36 S.E. 961, 51 LRA 504). At the least, the affairs of the partnership must be in a position where the jury can ascertain what is justly due as a balance by one partner to the other. Paulk v. Creech, 8 Ga. App. 738 (5) ( 70 S.E. 145). The difficulty so far as the trial of this case was concerned appears to be that the allegations of the original petition suggested a situation where the partnership still existed as a business concern whereas the proof showed without dispute that it had in fact ended over two years before the trial. The amendment offered by the plaintiff during the trial seeking a money judgment for one half of the business losses which had actually been paid by him personally was relevant to the facts as the plaintiff's evidence showed them to be. "After payment of the partnership debts, the petitioning partner is entitled to an accounting without the necessity of showing any exact amount as due, if he alleges and shows `facts sufficient to indicate that something will be found to be due him'; and he is entitled to a personal money judgment against the indebted partner for such amount as may be shown by the proof. Bowman v. Chapman, 179 Ga. 49 (2) ( 175 S.E. 241); Ferrell v. Wight, 187 Ga. 360, 367 ( 200 S.E. 271); Gould v. Barrow, 117 Ga. 458 ( 43 S.E. 702)." Johnson v. Townsend, 192 Ga. 522, 524 ( 15 S.E.2d 790). The pleadings and evidence made a jury question here at the very least as to certain admitted partnership debts which had been paid by the plaintiff and for which he was entitled to reimbursement of one half of the payment from the defendant partner.

As to the money advanced by the plaintiff for the firm either initially or during the course of the business, it remains a jury question depending on the agreement between the parties as to his entitlement to reimbursement of the one half for which he prayed. It is perfectly true that as to the lender, the plaintiff alone was responsible. Floyd v. Wallace, 31 Ga. 688 (5). He contended, however, that the funds were placed in the firm under an agreement to repay them to him on demand. The rule that a joint obligor cannot have contribution for a voluntary payment does not apply to a necessary payment of a firm obligation. In re Pangborn, 185 F 673. These were all matters properly before the jury within the framework of the amended pleadings, and as to which it can not be said that the plaintiff failed to produce evidence which would authorize a verdict in his favor in any amount. The trial court in dismissing the case apparently felt that the figures presented were too intricate or too confused to allow the jury to return an intelligent verdict; if this is in fact true it will of course be possible prior to another trial to refer the matter to an auditor if the parties so desire. At that time the issues should be narrowed to a consideration of the amount of the firm losses for which the defendant would be properly chargeable on a 50% basis, the evidence being undisputed that there were in fact losses.

3. The verdict in favor of the defendant Mrs. Waddell was properly directed in her favor.

Judgment reversed in part; affirmed in part. Bell, P. J., and Eberhardt, J., concur.

Summaries of

Todd v. Waddell

Court of Appeals of Georgia
Jul 2, 1969
169 S.E.2d 351 (Ga. Ct. App. 1969)
Case details for

Todd v. Waddell

Case Details

Full title:TODD v. WADDELL et al

Court:Court of Appeals of Georgia

Date published: Jul 2, 1969


169 S.E.2d 351 (Ga. Ct. App. 1969)
169 S.E.2d 351

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