Law School Case Brief
Palmer v. Mellen - 2017 IL App (3d) 160022, 412 Ill. Dec. 111, 74 N.E.3d 1034
Section 801 of the Uniform Partnership Act provides: Events causing dissolution and winding up of partnership business. A partnership is dissolved, and its business must be wound up, only upon the occurrence of any of the following events: (5) on application by a partner, a judicial determination that: (i) the economic purpose of the partnership is likely to be unreasonably frustrated; (ii) another partner has engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with that partner; or (iii) it is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement, 805 ILCS 206/801(5) (2014).
Plaintiffs, Martha E. Palmer and other relatives, filed a complaint seeking dissolution of a family land trust and partnership against the remaining partners, Chris E. Mellen and his siblings. The trial court granted summary judgment in favor of plaintiffs. On appeal, defendants argue that the trial court erred in (1) ruling, as a matter of law, that the partnership should be dissolved, (2) ignoring provisions of the partnership agreement, (3) denying their motion to strike plaintiffs' affidavits, and (4) ordering the trust property sold at public auction by a named auctioneer
Did the trial court err in in dissolving the partnership under section 801(5) of the Uniform Partnership Act at the summary judgment stage?
The court held that the partners engaged in conduct relating to the partnership that made it not reasonably practicable to carry on the partnership and it was not otherwise reasonably practicable to carry on the land trust business in conformity with the family's partnership agreement. Nothing in the partnership agreement gave the relatives the ability to force the partnership or the remaining partners to "buy out" their shares. The terms of the agreement did not prevent the partners from filing a petition to judicially dissolve the partnership or the court from entering a dissolution order. The trial court's denial of the partners' motion to strike was affirmed because all of the relatives' affidavits established several material facts that were disputed. The trial court's supervision of the winding up of business was proper the sale of partnership property was appropriate.
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