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Law School Case Brief

Page v. Page - 55 Cal. 2d 192, 10 Cal. Rptr. 643, 359 P.2d 41 (1961)

Rule:

A partner at will is not bound to remain in a partnership, regardless of whether the business is profitable or unprofitable. A partner may not, however, by use of adverse pressure "freeze out" a copartner and appropriate the business to his own use. A partner may not dissolve a partnership to gain the benefits of the business for himself, unless he fully compensates his copartner for his share of the prospective business opportunity. In this regard his fiduciary duties are at least as great as those of a shareholder of a corporation.

Facts:

Two partners entered into an oral partnership agreement. The supplying partner owned a corporation that supplied the linen and machinery necessary for the business. When the partnership suffered losses for eight years, the supplying partner wanted to terminate the partnership, despite a slight improvement in the next two years. At issue was whether the partners had provided that the partnership would stay in business until the business paid itself out. The Superior Court of Santa Barbara County (California) held that the partnership between plaintiff supplying partner and defendant remaining partner was for a term, namely, such reasonable time as was necessary to enable the partnership to repay from partnership profits, indebtedness incurred for the operation of such business. The supplying partner appealed the decision.

Issue:

Was the partnership between the partners for a term rather than at will?

Answer:

No

Conclusion:

Under Cal. Corp. Code § 15031(1)(b), a partnership was dissolved by express will of any partner when no definite term or particular undertaking was specified. The court found that there was no partnership for a term. The remaining partner failed to prove any facts from which an agreement to continue the partnership for a term could have been implied. There was no bad faith by the supplying partner, and there was no showing that the improved profit situation was more than temporary.

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