Page v. Page
55 Cal.2d 192, 10 Cal.Rptr. 643, 359 P.2d 41 (1961).
The Page brothers each contributed $43,000 and started a linen supply business. For the first 8 years or so, the business was unprofitable and lost around $62,000. Just when business started to pick up, the plaintiff wanted to terminate the partnership.
- D is arguing that the partnership was for a term, because if so, his brother wouldn’t have the power to dissolve at will.
The business’ major creditor was a corporation, which was owned by P, and held a $47,000 demand note against the partnership.
The trial court held that the partnership was for a term.
- The term was for such time as “reasonably necessary” for the partnership to repay its indebtedness.
Was the partnership at will or for a term?
At will. Case reversed.
The court found that while partners sometimes can impliedly agree to continue business until a certain sum of money is earned, there was no evidence to support that finding here.
- “The understanding to which defendant testified was no more than a common hope that the partnership earnings would pay for all the necessary expenses. Such a hope does not establish even by implication a ‘definite term or particular undertaking’.”
However, the court also noted that even though the Uniform Partnership Act provides that a partnership at will may be dissolved by the express will of any partner, this power, like any other power held by a fiduciary, must be exercised in good faith.
- Thus, if plaintiff attempts to appropriate to his own use the new prosperity of the partnership without adequate compensation to his co-partner, the dissolution would be wrongful and the plaintiff would be liable for violation of the implied agreement not to exclude defendant wrongfully from the partnership business opportunity.
Basically, if you’re in a partnership at will and not for a term, you can dissolve the partnership, provided there was notice and good faith.