Brief Fact Summary. Appellant, Fred Belman, is a representative of the estate of a deceased partner, Thomas Nordale. Appellant is challenging a lower court judgment that allowed Appellee partners (G & S Investments et al.) to continue the partnership and buying out Nordale’s share.
Synopsis of Rule of Law. Until a court decrees a dissolution, the dissolution has not yet taken effect and partners are still able to take advantage of any buyout provisions under the agreement.
Issue. The issue is whether the partnership was dissolved or whether the Appellees utilized the buyout provisions in the partnership agreement to take over Nordale’s share.
Held. Appellees are entitled to utilize the buyout provision because there was never a court-ordered dissolution. Appellant argued that the dissolution filing may have caused Nordale to rely upon the filing to his detriment, but Nordale could not have reasonably relied upon an act that was never affirmed by a court. The court then followed the buyout article of the agreement, which entitled the estate to Nordale’s capital account. Although Appellant argued for the fair market value, the court held that it was Nordale’s capital contribution plus profits and minus losses.
The court noted that even the Appellants own witness admitted that a partner’s capital account is maintained on a cost basis rather than a fair market value.
The provisions of a bargained-for partnership agreement are given a lot of weight in determining the fates of partnerships. The court clearly wanted to follow provisions of an agreement that each party bargained for rather than rely upon fall-back statutes. It would clearly be judicially efficient to enforce provision the parties contemplated rather than apply the statutes.