Citation. Adams v. Jarvis, 23 Wis. 2d 453, 127 N.W.2d 400
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Brief Fact Summary.
Dr. Adams, a partner in a three person medical partnership withdraws from the partnership and seeks to dissolve the partnership to obtain his one-third interest in the partnership.
Synopsis of Rule of Law.
The withdrawal of one partner from a partnership does not dissolve the rights and duties of the remaining partners in the partnership if the partnership agreement contemplates otherwise. Absent evidence of unequal bargaining power, the withdrawing partner is entitled to his interest as set forth under the partnership agreement.
Facts.
Dr. Adams seeks to dissolve the entire partnership to obtain his one-third distributive share. Although his partnership agreement contemplates otherwise, Dr. Adams contends that sec.123.25 terminates a partnership in the event that any partner withdraws from it. The trial court agreed with Dr. Adams. It ordered the dissolution of the partnership and granted him his one-third share in the partnership. Defendants appeal.
Issue.
Does Dr. Adam’s withdrawal dissolve the partnership under sec. 123.25, Stats.,?
What interest in the partnership is Dr. Adam’s entitled upon his withdrawal from the partnership?
Held.
Judgment reversed. Remanded back to determine accounting in conformity with this opinion.
No. Sec123.25 dissolves Dr. Adam’s interest in the partnership but does not terminate the rights and duties of the remaining partners where there exists a partnership agreement that states otherwise.
Dr. Adam’s is entitled to his share as set forth under paragraph 15 and 16 of a properly negotiated partnership agreement which includes: “(1) any balance to his credit on partnership books, (2) his proportionate share of profits calculated on a fiscal year basis, and (3) his capital account as of the date of his withdrawal.”
Discussion.
Upon the withdrawal of a partner, sec. 123.25 does not necessarily dissolve the entire partnership if there exists a fairly negotiated partnership agreement that allows for the continuation of the partnership despite the partner’s withdrawal and protects the withdrawing partner’s and creditors’ interests.
