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Prentiss v. Sheffel - 20 Ariz. App. 411, 513 P.2d 949 (1973)

Rule:

The method of conducting and the confirmation of a judicial sale lie within the sound discretion of the court ordering the sale.

Facts:

Plaintiffs brought an action seeking dissolution of the parties' partnership on the grounds that defendant had been derelict in his partnership duties, and that he had failed to contribute the balance of his proportionate share of the operating losses incurred by the partnership property. Defendant counterclaimed seeking a winding up of the partnership and the appointment of a receiver, contending that his rights as a partner were violated in that he had been wrongfully excluded from the partnership. The receiver and the trial court proceeded with the liquidation and sale of the partnership property, and plaintiffs were the high bidders. Defendant challenged the sale of the business to Plaintiffs, and claimed that the repurchase was done in bad faith. The trial court confirmed the sale of the partnership property to plaintiffs, and defendant appealed.

Issue:

Was plaintiff allowed to successfully bid for their former business after they excluded defendant from the management of the business?

Answer:

Yes

Conclusion:

The appellate court affirmed, concluding that plaintiffs were allowed to purchase the partnership and exclude defendant where there was no indication that such exclusion was done for the wrongful purpose of obtaining the partnership assets in bad faith. The court held that defendant failed to demonstrate how he was injured by the participation of the plaintiffs in the judicial sale. The defendant cited no cases, nor did the appellate court found any, which would have prohibited a partner from bidding at a judicial sale of the partnership assets. The rights of a partner with respect to the partnership property upon dissolution are contained in A.R.S. § 29-238.

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