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G & S Invs. v. BELMAN - 145 Ariz. 258, 700 P.2d 1358 (Ct. App. 1984)

Rule:

There are three elements of equitable estoppel, or "estoppel in pais", (a) conduct by the party to be estopped by which he intentionally or negligently induces another to believe in a certain state of facts; (b) justifiable action by the party so induced in reliance, and (c) injury to the party relying on that conduct. It is not essential that the actor actually intend to deceive, defraud or mislead another.

Facts:

A general partnership, the deceased, who was a general partner, and two other limited partners were engaged in a limited partnership. The deceased started using cocaine and caused enormous problems. The partnership, deciding that he was incapable of making rational business decisions, sought dissolution of the partnership; however, shortly after filing the complaint, the deceased died. The general partners filed a supplemental complaint invoking their right to continue the partnership and acquire the deceased's interest under the articles of limited partnership. The lower court entered judgment in favor of the general partnership. 

Issue:

Were the partners correct in invoking their right to continue the partnership although they earlier filed a complaint for its dissolution?

Answer:

Yes

Conclusion:

On appeal, the court affirmed. The filing of the original complaint did not cause dissolution because dissolution occurred only when decreed by the court. The partnership did nothing to cause estoppel; it was apparent from the face of the complaint that there was no guarantee that the partnership's assets would be liquidated. Because there was independent evidence to corroborate the transactions of decedent, the court did not err in admitting testimony concerning transactions with or statements by the decedent.

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