Summers v. Dooley

Brief Fact Summary. Summer’s (P) action is against his partner Dooley (D) for reimbursement of $11,000 that Summers used to hire an employee. Dooley (D) contends that because he, as a majority of partners, did not agree to the hiring, that Summers (P) should not be reimbursed for his unilateral hiring decision.

Synopsis of Rule of Law. If no other agreement between partners speakers for the issue, then business differences between partners must be decided by the majority of partners.

Facts. Summers (P) and Dooley (D) had a partnership in trash collection. Both men operated the business personally. When one of them was unable to work, the non-working partner hired a replacement at this own expense. Dooley (D) could not work, so Summers (P) at his own expense hired a replacement for Dooley (D) Four years later, Summers (P) wanted to hire another employee, but Dooley (D) refused. Without Dooley (D), Summers (P) hired another person and paid that person out of pocket. Dooley (D) refused to pay for this person out of partnership funds. Summers (P) filed an action against Dooley (D) for reimbursement of the $11,000 used to hire the new person. Summers (P) also kept the new person employed. Dooley (D) argues that Summers (P) should not be reimbursed since the majority of partners did not agree to the hiring. The trail court denied Summers’ (P) claim, and he filed an appeal.

Issue. If no other agreement between partners speaks for the issue, are business differences between partners decided by the majority of partners?

Held. (Donaldson, J) Yes. If no other agreement between partners speaks for the issue, then business differences between partners must be decided by a majority of partners. The record shows here that Dooley (D) did not acquiescence to Summers’ (P) request for a new hiring. Dooley (D) clearly “voted noâ€. The trial court was correct in applying Idaho law and in disposing of the issue, since a majority did not give consent. Dooley (D) did not sit idly by and acquiesce to Summers’ (P) actions, Dooley (D) consistently said no to the hiring. Thus, allowing Summers (P) to recover would not be fair to Dooley (D), as the benefit and expense was for a single partner. Affirmed.

Discussion. Any differences arising in ordinary matters connected with a partnership’s business may be decided by a majority of partners. The rule on this subject is subject itself to any agreement between them. Often, there are provisions in partnership agreements vesting management in a supervisory partner or management committee. The same result may also be reached without explicit agreement based off of the course of conduct.