McCormick v. Brevig

2004 MT 179, 322 Mont. 112, 96 P.3d 697

 

RULE:

When a partnership's dissolution is court-ordered pursuant to Mont. Code Ann. § 35-10-624(5), the partnership assets necessarily must be reduced to cash in order to satisfy the obligations of the partnership and distribute any net surplus in cash to the remaining partners in accordance with their respective interests. 

FACTS:

Joan McCormick ("Joan") brought an action against her brother, Clark Brevig ("Clark"), and their Partnership, Brevig Land Live and Lumber (hereinafter, "the Partnership"), seeking a Partnership accounting and dissolution. Clark counterclaimed for fraud, deceit, negligent misrepresentation, and to quiet title. He also filed a third-party complaint against several accounting defendants for professional negligence and against his sister for breach of fiduciary duty. Joan moved for partial summary judgment in relation to Clark's counterclaim and third-party complaint, and Clark moved for partial summary judgment on the issue of liability raised in his counterclaim and third-party complaint against Joan. Clark also moved for partial summary judgment on the issue of liability against the third-party accounting defendants. The District Court of the Tenth Judicial District, Fergus County, granted Joan's motion for partial summary judgment on her claims and denied Clark's motion for partial summary judgment against Joan. The trial court additionally dismissed Clark's claims for fraud, deceit, negligent misrepresentation, and breach of fiduciary duty against Joan. The trial court ordered the dissolution of the partnership, found that liquidation would be inequitable, and ordered Joan to sell her partnership interest to Clark following an appraisal.

ISSUE:

Was it proper for the trial court to require Joan to  sell her partnership interest to Clark?

ANSWER:

No.

CONCLUSION:

The court held that when dissolution was ordered pursuant to Mont. Code Ann. § 35-10-624(5), the statute required that the partnership assets be reduced to cash in order to satisfy the obligations of the partnership and distribute any net surplus in cash to the remaining partners in accordance with their respective interests. The plain meaning of "liquidation" under the statute was to reduce the partnership assets to cash. The trial court erred in ordering the buy-out of Joan's partnership interest. The trial court did not err in accepting a special master's report under Mont. R. Civ. P. 53, although the master's determinations were not stated as findings of fact and conclusions of law. The evidence supported a ruling that the brother did not dissociate from the partnership pursuant to Mont. Code Ann. § 35-10-616. Although certain cattle owned by the brother and his sons had been included in the partnership's tax returns, this did not rebut the presumption under Mont. Code Ann. § 35-10-203 that the cattle were not partnership assets. An altered tape recording was properly excluded for lack of authentication under Mont. R. Evid. 901.

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