Swann v. MitchellSwann v. Mitchell
Swаnn appeals a summary final judgment in his action for partnership accounting and other relief. He contends that the trial judge erred in determining, based upon the terms of a written partnership agreement, that his deceased father had no interest in the partnership business in excess of his share of profits already distributed to him by the partnership. We reverse.
In 1966, appellant’s deceased father, William Alfred Swann, Sr., entered into a partnership agreement with the Mitсhells. The agreement provided that Swann would receive a five percent profit share although he made no capital contribution. The Mitchеlls provided the capital in varying shares. Swann was to manage the business of the partnership, an automobile dealership. This agreement essentially сontinued a relationship between the parties which had been in existence for a period of twelve years. In 1967, Swann retired as business
The trial court based the summary judgment in part upon a finding of an intent, in the language of the partnership agrеement, to treat partnership “assets” as entirely distinct from “profits,” noting in his order granting motion for summary judgment:
The intent of the partnership agreement must be interрreted in the light of the language used in the drafting thereof. The intent may be deduced from the language of the [sic] January 1, 1966 from the reading of paragraphs 3 B&C, whiсh clearly set forth the intent of the agreement: “If either of the two partners other than the major partner and W. A. Swann should die, the other partners shall .. . pay to the personal represеntative of the decedent, the full value of his interest in the partnership assets and accumulated profits.... ”
Paragraph 3C sets forth the rights of W. A. Swann as follows: “Uрon the death of W. A. Swann the partnership shall ... pay his personal representative the share of W. A. Swann in the undistributed profits....” [emphasis in original]
We do not find the fact that paragraph 3B refers to both “assets and accumulated profits,” while 3C only mentions “undistributed profits,” dispositive of the controversy between the parties. Specifically, wе agree with appellant’s contention that nothing in the partnership agreement indicates an intention to alter the accepted definition оf “profit.”
Prior to the adoption of the Uniform Partnership Act (UPA), profit was defined to include the increment in value of capital assets. In Uhrig v. Redding,
Appellant supplied the labor, experience and skill, appellee the necessary capital. Any profit was to be shared equally. Losses would also be shared, for in the event of loss, appellant would have еxercised his skill and effort in vain, and appellee would have to suffer diminishment of his capital investment.
That there was a partnership does not mean thаt appellant thereby owned a half interest in the capital assets, for the agreement, as appellant testified, was only for the sharing of profits, not of capital invested by appellee. Upon dissolution of a partnership formed by one supplying all the capital, and another supplying only his labor and skill, the capital is returned to the partner supplying it unless the agreement is otherwise. Therefore, upon dissolution, appellant is entitled only to his half share in any increment in the value of the capital assets. [Citation omitted].
Uhrig, supra, at 6.
We have examined the UPA and find nothing there to alter the accepted definition of profit. The UPA also provides that accepted rules of law apply to cases not provided for by the Act, § 620.58, Florida
We note that an issue is presented whether the goodwill of the partnership is an asset subject to evaluation and partial distribution as claimed in Swann’s behalf. While the goodwill of the partnership business is a valuable commodity, its value is virtually impossible of determination without an actual sale of the ongoing business. Cf., Mossler Acceptance Co. v. Martin,
We obsеrve further that contradictory references have been made to Swann’s status in the interim between his retirement and the changeover to the corрorate business in 1979. Although he continued to receive his share of profits after retirement, apparently appellees, or some of them, havе maintained that these payments were a gratuity. Resolution of any controversy with respect to Swann’s status subsequent to his 1967 retirement must therefore be left to the trial judge.
We find no merit in appellant’s claim for an accounting with respect to the partnership’s handling of social security taxes and business deduсtions, nor in the contention that under the partnership agreement Swann was entitled to a profit share for life.
For the reasons stated, the summary judgment for appellees is REVERSED, and the cause is REMANDED for further proceedings consistent with this opinion.