Campbell v. Miller

161 S.E.2d 546 (1968)

274 N.C. 143

I. Taylor CAMPBELL v. A. C. MILLER and wife, Ruth Miller.

No. 440.

Supreme Court of North Carolina.

June 14, 1968.

*550 Booker & Sapp, Winston-Salem, for defendant appellants.

William E. Hall, Mocksville, for plaintiff appellee.

LAKE, Justice.

It is clear from the evidence introduced by the plaintiff that he and the defendants entered into an agreement substantially in accordance with the allegations of the agreement was to bring into existence a complaint. Indeed, this is not controverted by the defendants. The effect of that partnership to operate a meat packing business and to construct upon the land of the defendants a building in which that business would be operated. "A partnership is an association of two or more persons to carry on as co-owners a business for profit." G.S. § 59-36(a). The agreement in question was very similar to the one involved in Southern Fertilizer Co. v. Reams, 105 N.C. 283, 11 S.E. 467, where Shepherd, J., speaking for this Court, said:

"In our case the usual elements of partnership are present. Morehead advances the capital and Reams is to contribute the services to the joint undertaking, which is the purchase and sale of tobacco. No personal liability is contracted by Reams for the money advanced, and the said capital is to be paid out of the partnership stock, and the balance, after the payment of expenses, &c., is to be equally divided as profits between the parties. This, in our opinion, constitutes a partnership * * *"

It is immaterial that the parties intended to reduce their agreement to writing at a later date. A partnership may be formed by an oral agreement. Eggleston v. Eggleston, 228 N.C. 668, 47 S.E.2d 243. *551 That the parties understood the partnership was already in existence prior to the completion of the building, and prior to the reduction of their agreement to writing, is shown by the plaintiff's testimony, "I wasn't working with Mr. Miller as a laborer but as a partner."

There is nothing whatever in the record to indicate any agreement between the parties that their partnership was to continue for a specified term. On the contrary, the plaintiff testified that their understanding was that the site of the building would be leased to the partnership by the defendants "for as long as we wanted it." A partnership is a partnership at will unless some agreement to the contrary can be proved. Lindley on Partnerships, 10th ed., ch. 8, p. 170; 68 C.J.S. Partnership § 62; 40 Am.Jur., Partnership, § 233.

"The significance of the partnership being one at will, i. e., without any definite term or undertaking to be accomplished, is that the termination by the election of a partner is not a breach of contract. Having the legal right to terminate, it would seem that there is no liability for its exercise whatever the motive, and whatever may be the injurious consequences to co-partners, who have neglected to protect themselves by an agreement to continue for a definite term." Crane on Partnerships, 2d ed., § 74(b). "According to the majority view, the only difference, so far as concerns the rights of dissolution by one partner, between a partnership for an indefinite period and one for a specified term is that in the case of a partnership for a definite term a dissolution before the expiration of the stipulated time is a breach of agreement which subjects such partner to a claim for damages for breach of contract if the dissolution is not justified, whereas the dissolution of a partnership at will affords the other partner no grounds for complaint; in either case the action of one partner actually dissolves the partnership." 40 Am.Jur., Partnership, § 236. Similarly in 68 C.J.S. Partnership § 108, it is said, "In view of the rule * * * that a partner may exercise his right to dissolve a partnership at will for any reason which he deems sufficient, or even arbitrarily, he is not liable for damages which have resulted to his copartners by reason of such action." The Uniform Partnership Act, G.S. § 59-61, provides that dissolution of the partnership is brought about "without violation of the agreement between the partners * * * by the express will of any partner when no definite term or particular undertaking is specified."

It is apparent from the testimony of the plaintiff that, pursuant to the agreement, he and his children, together with Miller and his children, worked upon the construction of the building, which was to house the proposed business, for a total of 14 weeks and drew therefor from the partnership $1,500. He testified that for this work the agreement originally was that he would draw $100 per week, but this was changed, by consent, to $75 per week. Under any view of the agreement, the plaintiff has shown no breach of it in this respect since he drew more than $100 per week.

The plaintiff's contention that the agreement was broken by Miller's termination of the association is equally without foundation. The only evidence of termination of the association is that there was a disagreement between the plaintiff and Miller on 25 August 1964, resulting from the plaintiff's refusal to remain at the plant for work that evening. As a result, according to the plaintiff's testimony, Miller said, "The thing for you to do is to get your stuff and get out of here." Thereupon, the plaintiff, without comment, gathered up some of his tools and left, never to return. This is slender evidence upon which to rest a finding that Miller dissolved the partnership. It strongly suggests that the plaintiff, who had that day received an advancement of $200 against his drawing account, had tired of the *552 association and took the first opportunity to dissolve it. Be that as it may, the partnership was a partnership at will and, if Miller dissolved it, he did not break the agreement thereby. There is, therefore, no evidence whatever in the record to show a breach of contract by Miller and, consequently, it was error to deny the defendants' motion for judgment of nonsuit, this being an action to recover damages for breach of contract. This being true, it is not necessary to consider the remaining assignments of error by the defendants.

For the same reason, if it be true, as the defendants allege, that the plaintifff dissolved the partnership by his action on 25 August 1964, he did not thereby violate any right of the defendants, and their counterclaim on the ground of breach of the contract by him is without merit. The defendants offered no evidence to support their allegation that the plaintiff fraudulently misrepresented his past experience and qualifications. Consequently, the defendants are not entitled to recover of him upon their allegations of breach of contract and deceit.

Upon the dissolution of a partnership, it continues in existence until the winding up of its affairs is completed. G.S. § 59-60. Our decision that the plaintiff is not entitled to recover in this action for breach of contract and that the defendants are not entitled to recover upon their counterclaims for breach of the same contract and for deceit in its procurement is without prejudice to the right of either, if so advised to seek an accounting for partnership funds and properties as of the date of the dissolution of the firm. See: Pentecost v. Ray, 249 N.C. 406, 106 S.E.2d 467; Moseley v. Taylor, 173 N.C. 286, 91 S.E. 1035, L.R.A.1917E, 875; G.S. § 59-52.

The judgment of the superior court is hereby reversed, and the cause is remanded for the entry of a judgment of nonsuit as to the plaintiff's cause of action and as to the counterclaim of the defendants.

Reversed and remanded.

HUSKINS, J., took no part in the consideration or decision of this case.