*1 Brenden, Edithe BRENDEN and Harold Appellees,
Plaintiffs J.
Marvin G. ANDERSON Delores
Anderson, Appellants. Defendants 13530.
No.
Supreme Court
Argued Jan. 1982.
Decided Dec.
pellees that sufficient cash did not exist for 3, 1979, draws. A March financial state- ment revealed that the partnership had $38,347.38 profits 20, 1978, from March through December 1978. In May appellees inquiry profit made of this mat- Appellant ter. Mr. Anderson indicated that this discrepancy of, would be taken care but this eventuality did not occur. It appears money exist appel- did draws, lees’ appellants (who were in control of the matters) books and financial Johnson, Rick John- Charles Johnson of chose to company profits use for other mat- Eklund, son Gregory, plaintiffs & Appellees, believing ters. appellees. beneficial, longer was no sold their Oviatt, Green, Ronald L. Schulz Schulz interest to appellants. after the Sometime Watertown, Roby, & for defendants and sale, a partnership ap- tax return came to appellants. pellees’ attention. This tax return revealed significant discrepancies draws and led HENDERSON, (on reassign- Justice appellees to sep- institute this action. Five ment). arate issues are treated herein. ACTION (appellees)
Harold and Edithe Brenden ISSUES Marvin and De- lores dam- (appellants) seeking Anderson I. ages on the sale of a THE WAS VERDICT RENDERED BY 20, 1978,
dated based December THE JURY SUFFICIENT TO SUP- representations Both at the time of sale. THE PORT JUDGMENT BELOW? WE parties Coding- consented to a trial before a HOLD THAT IT WAS. ton County jury. Although appellees $15,446.72, sought verdict of $6,250.00 was returned in favor II. appellees. appeal This We af- ensued. DID THE AL- TRIAL COURT ERR IN firm. LOWING A TAX RETURN AND FI- NANCIAL STATEMENT INTO EVI- FACTS WE THAT IT DID DENCE? HOLD Appellees appellants entered into NOT. partnership agreement
written to sell mo- Watertown, bile homes in
According III. monthly were to receive a $900.00 IN- WAS THE JURY PROPERLY $1,400.00 monthly draw and BY THE TRIAL STRUCTED COURT? However, company. appel- draw from the WE HOLD THAT IT WAS. twice, only monthly lees received their draw $1,800.00, appellants, for a total of while $10,-
during period question, received IV. 600.00 in draws. al- Appellees apparently PROPER- WERE DEPOSITION COSTS lowed this to exist because discrepancy LY TAXED WE HOLD knowledge not BELOW? did have full represented draw and THAT THEY WERE. However, another law or aspect
V.
question lingers.
In Munce v.
equity
TRIAL COURT CORRECT
THE
WAS
594, 598,
MO-
APPELLANTS’
IN DENYING
(1959) (Munce),
we held:
JUDGMENT,
FOR SUMMARY
TIONS
STRIKE,
VERDICT,
IN
TO
As a
rule in the absence of stat-
DIRECTED
LIMINE,
JUDGMENT
NOTWITH-
ute one
cannot maintain an ac-
*3
VERDICT,
NEW
AND
THE
STANDING
against
tion at law
recover
other to
IT WAS.
THAT
TRIAL? WE HOLD
by
by
an amount claimed
reason of
him
partnership transactions until there has
DECISION
been a final settlement of the affairs of
liabilities,
by discharging
the concern
its
I.
assets,
collecting
ascertaining
its
validity
of the
address
Initially, we
up
share to which each is entitled and
on the basis of
in this action
jury verdict
partner’s only remedy
that
time a
is to
Gardner, 320 N.W.2d
Black v.
holding
our
apply
equity
to a court of
for dissolution
exists
(Black).
question
A
(S.D.1982)
Volin,
Ellenbecker v.
accounting.
in law
sought relief
as to whether
Excep-
[1955].
complaint
Although appellees’
equity.
or
this
rule are set out in a
tions to
breached
and brief
in 168 A.L.R.
supplementing annotation
complaint
obligations, appellees’
1088.
upon
rep-
damages based
sought
also
part-
the time of sale
resentations at
rule of Munce
The rationale for the
awarded the
jury
and the
nership interest
is drawn from 68 C.J.S.
damages.
remedy of
Volin,
(1950) and Ellenbecker
(1955) (Ellen
Black,
light
held in
As we
becker),
held:
wherein we
lS-fr-Si^c),1
equity ques
law or
SDCL
regard to
role in
between
paramount
tion has lost its
“An
and settlement
tri
jury
on consensual
precedent
verdicts based
to an
jury
copartners is a condition
verdict
Black,
jury
we addressed a
als.
In
another on
by
action
and held:
equity
on an
the fol-
ship claims and transactions for
(1)
lowing principal
dispute
reasons:
A
15-6-39(c)
We now hold
ordinarily
taking
involves the
this nature
and that
full effect
should be
account, for,
is
a
until that
after
by
jury
verdic rendered
taken,
plain-
it cannot be known but that
trial is all
parties had consented
even more
judg-
may
be liable to refund
support
tiff
is
(2)
holding
particular
suit.
the extent that
than he claims
ment. To
Nieuwenhuis,
transactions
inconsistent with [State
(1926)] and the
181,
further reflects: any authority, been unable find verdict, strike, limine, n.o.v., judgment such business records proposition trial, new and we were not for- and find because
are excludable summary without merit. At a business. claims sale of in time mulated stage, the pleadings appellee could to see how We are unable genuine Brenden’s affidavit raised a routine rec- Mr. by these prejudiced have been material fact. Sioux Falls Con- these records issue ords of Falls, City repre- struction Co. Sioux inquiry of false pertinent were (S.D.1980); whether evi- N.W.2d Wilson Great question sentations. Co., Railway immaterial, Northern 83 S.D. conjectural or remote dence is practical judgment of N.W.2d must be left to the largely rests in its discre-
the trial court and
Appellants’ motion for a directed
Corp., 315
Geigy
tion. Durham
Ciba
placed
verdict failed
Perfection,
Drier v.
(S.D.1982);
substantial, credible evidence
into evidence
Inc.,
(S.D.1977). We find
ment for did This is an IV. However, action. there is no evi- equitable in the record that were dence Appellants request next this Court manner required by waived in the to hold deposition only costs should 15-6-52(b). requires remanding This taxed when depositions actually are used at that the trial case with direction court enter disagree. trial. We depositions When findings, conclusions and based taken in an unfrivolous manner and are thereon. trial, preparation for counsel’s expense of such is part includable as (appellees) Harold and Edithe Brenden 4; a judgment. Grady SDCL 15-17 — (appel- Marvin and Delores Anderson and Felker, lants) partners were in the business equal Here, appellees’ we are satisfied that coun known as B & B Mobile Homes at Water- good depositions sel had cause to take in town, In December 1978 preparation for trial. appellants purchased appellees’ partnership $12,000. In appel- interest for this action V. lees claim breached their fiduci- ary duty by failing fully We have to disclose the appellants’ reviewed claims that incorrectly the trial court denied financial condition of the and them an summary judgment, consequently appellants motions for directed owe $15,446.72. account, for, The a of a additional returned until that is $6,250 taken, it cannot be appellees. verdict of known but plain- may be tiff liable to refund even more Appellee’s request for a trial was particular than he claims in the (2) suit. unopposed granted. appears and While it In partnership transactions a case as was treated an action at does not rule become the creditor or pleadings, relief, requested evidence of a copartner, the debtor but of the firm. arguments clearly shape it as an a (3) suit would necessitate that the equity. Staab, Skoglund 312 N.W.2d complained of be both (S.D. 1981); Kneip, Orr defendant. One does not own (S.D.1979). complaint part alleges a right any specific portion or have to nership; part a sale contract of appellees’ the partnership property’. nership appellants; a breach approval In Munce we cited with a West misrepresentation duty as decision Virginia which discusses the excep- partners; consequent detriment tions to above rule. $15,446.72. amounting Although appel- demand, though ‘If the even it relates in “damages” lees asked for com matters, some measure to partnership plaint, they argument maintained in specific yet so and distinct that the really seeking were not damages, cannot in event any recover be affect- proper rather their share of the partnership ed state of Appellees assets. in effect trial asked the accounts, it is suable at law. Thus an contract, to pierce the sale damages lie will when it does alleged misrepresentations, award any inquiry not involve into the affairs of them what they coming equal part agreed the firm. So an action lies for an in B ners & B Mobile re Homes. That of certain stock. So quired rescission of the contract and an express promise to furnish a affairs. capital amount of or to pay for In Munce v. on particular express articles. And (1959), we said: promise pay specific half of sum As a rule absence stat joint for a required certain adventure. *6 ute one partner cannot maintain an ac a promissory So on note executed one tion at law against the other to recover partners copartner, or of the more an amount claimed him by reason of although in given payment the note is for partnership transactions until has there partnership stock or for the use is been a final settlement of the affairs firm, may separat- and one item the liabilities, the concern by discharging its the rest of the trans- partnership ed from assets, collecting ascertaining its the adjusted independently actions and so as share to which each is up entitled and to an support to action. So will lie that time a partner’s only is to remedy given on a partnership on a note settle- apply to a court of equity for dissolution In the case of Newman Ruby, ment.’ Volin, and accounting. Ellenbecker v. 75 172, 46 an 54 W.Va. S.E. action at 71 N.W.2d partner against law was allowed one Munce follows the rule in 68 stated for money another advanced the for- the for reason payment of mer in the share the latter in expressed Ellenbecker, which we supra at capital of the Judge firm. Poffen- (citation omitted). barger, delivering quotes the opinion, ap- ‘An accounting and settlement between part from Dr. in provingly Minor as fol- copartners precedent is a condition to ‘But, an adjustment where lows: no such action by one against partner- another on is to reach partnership requisite ship claims and transactions fol- case, partner for the may merits as lowing principal reasons: dispute sue a in a court of readily ordinarily nature taking stranger.’ involves the
n Thus
disclose,
picture
true
ted,
failed to
is not
see that
as claimed. Without exam-
from an action at law
the business
always precluded
contract,
accounts it would
partner upon
partnership
ining
another
against
the relief
impossible
grant
such
certain circumstances
been
under
have
but that
Accordingly,
when
rule we
at law
be maintained
sought.
an
adjustment
applies.
or set-
Munce and Ellenbecker
not involve an
adopted
it does
business or
partnership
tlement of
fact that there
disputes the
Neither
accounts,
subject-matter has
where the
or
accounting and set-
a final
has never been
the partnership
from
separated
been so
fact,
affairs.
tlement of
(Em-
part
to be a
of it.
business as not
maintained
consistently
appellants
supplied).
phasis
dissolved ac-
been
that had
Burleson, W.Va.
S.E.
Crockett
cording to the
omitted).
(1906) (citations
to their
have been entitled
pellees would
is, argue appellants,
an ac-
plaintiff
As it
In Crockett
half interest.
his former
their inter-
simply
tion at law
sold
fraud,
the debts he had taken
claiming
$12,000
transac-
arm’s-length
in an
est for
when he sold his interest
seemingly ig-
over for value
Appellants’ position
tion.
charges
either false
the defendant were
law in this
long-established
State
nores
collected.
already
had
been
On
relationship
debts that
fiduciary
are in
partners
dismissing
appeal
from
is considered
and thus a
each other
suit,
West
Supreme
Court of
plaintiff’s
it
property, holding
a trustee of
court, holding
the trial
Virginia reversed
partnership. Betts v.
benefit
properly bring
could
plaintiff
(1890);
Letcher,
N.W. 193
at law because
48-1-13;
55-1;
48-
SDCL
ch.
SDCL
-14;
48-4-1,
not in-
wrong complained
-12,
Applica-
does
-2.
3-11,
[t]he
or read-
reopening
in this action the
requires
volve
the trial
principles
these
tion of
establish,
business or
justment
accounting,
of an
by way
The contract of settlement
accounts.
whether
breached
rescission.
dissolution stands
settle the
duty
partners
and to
con-
way
of action is
no
ground
accordingly.
accounts
with the state of the
nected
eq
actions are
Rescission
business,
the de-
except
accounts or
verdict
in nature and thus
uitable
practiced in
to have been
ceit
advisory only. Black v.
this case was
to the state of the indebtedness
relation
(Fosh
Gardner,
(S.D.1982)
to the firm before the dissolution.
owing
eim, J.,
Rodway,
dissenting); Heiser
prove
could
Id. The
Crockett
Roth,
(1976); Holzworth v.
charges or
been
the debts were false
(1960);
State v.
*7
people
paid by
testimony
from
Nieuwenhuis,
49
none exists. Neither can the failure of herein urge
either the conclusion
reached that courts requirement affect jurisdictional
take notice of deficiencies.
Black, Add’n, supra; Re Mackrill’s