Law School Case Brief
Farnsworth v. Deaver - 147 S.W.3d 662 (Tex. App. 2004)
When settling accounts between partners, a statute prescribes that generally, a partner shall contribute to the partnership an amount equal to that partner's negative balance in the partner's capital account. Tex. Rev. Civ. Stat. Ann. art. 6132b-8.06(b) (Supp. 2004-2005). So, a partner is required only to reimburse the partnership an amount equal to the negative balance.
Johnny and Janie Farnsworth (the Farnsworths) and John and Carol Deaver (the Deavers) were partners in a partnership whose business failed. At the time of dissolution, the Farnsworths had a capital account of $22,080.68 and the Deavers had one of $34,349.41. The parties did not enter into a written partnership agreement. The partnership had no assets after paying other creditors. A dispute arose in the settling of accounts which led to a trial to determine what each party was entitled to. The trial court ordered the Farnsworths to pay the Deavers $6,134.37, representing half of the difference between the two capital accounts. The Farnsworths appealed.
Must losses be satisfied by the partners in direct proportion to their share of the profits?
The judgment was modified and affirmed as modified. That portion of the judgment awarding couple one $ 6134.37 against couple two was modified to reduce the sum to $ 5694.36. The issues concerned repayment of capital accounts, removal of partnership property, breach of fiduciary duties, and fees. The balance sheet created by the partnership's own accountant and entered into evidence reflected capital balances identical to those found by the jury. Couple two contended the evidence was insufficient to support the finding of civil theft as there was neither evidence of their intent to contribute their personal items to the cottage nor evidence of any intent to deprive the partnership. In perusing the record for only that evidence supporting the jury's answers to the questions as written and submitted by the trial court, legally sufficient evidence was encountered. The facts pivotal to the cause upon which fees could be recovered, i.e. the theft claim, were also the same facts used to defend against couple two's claim of breached contract. The blanket of authority arising from the demand for declaratory relief and granted by Tex. Civ. Prac. & Rem. Code Ann. § 37.009 encompassed the discretion to award fees to any party, including couple one. Couple one did not neglect to segregate recoverable from unrecoverable fees.
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