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Engelbrecht v. McCullough

Supreme Court of Arizona

January 31, 1956

Arthur ENGELBRECHT, Appellant,
v.
John McCULLOUGH and George Gilling, Appellees.

[80 Ariz. 78] John J. McCullough, Phoenix, for appellant.

Kramer, Roche & Perry and F. Haze Burch, Phoenix, for appellees.

STRUCKMEYER, Justice.

This appeal questions the propriety of a denial of certain ancillary relief sought by the appellant in an action for a dissolution and accounting of partnership affairs. Appellant, whom we shall hereafter call plaintiff, and appellees, whom we shall call defendants,

Page 846

on February 23, 1954, entered into a written partnership agreement to carry on the business of cesspool drilling and servicing for a period of two years. Differences arose between the partners resulting on April 8, 1954, in a written notice of dissolution addressed to plaintiff by defendants. By paragraph 11 of the partnership agreement it was provided:

'11. It is mutually agreed by the partners hereto that in the event of the withdrawal of a partner or partners for any reason, or the termination of this partnership by death or any cause, the partners wishing to continue the business shall have the right to purchase the assets of the partner retiring from the business, based on the book value of the partnership at the time of the termination of said partnership, and the partner or partners purchasing said assets of the other partner or partners shall have a period of twenty-four months in which to pay for said assets.'

The defendants elected to buy out plaintiff and continue the business under the provisions of the foregoing paragraph. Seemingly they have taken possession of the partnership assets and have continued the business under its original name.

This action was commenced on June 11, 1954, originally seeking a dissolution and an accounting. On the same day plaintiff obtained from the lower court an order directing the defendants to appear and show cause why an accounting should not be had of all the dealings and transactions of the partnership. The hearing on this order to show cause was continued from time to time until October 14, 1954. On [80 Ariz. 79] October 1st plaintiff filed a second amended complaint from which it appears that in addition to asking for a decree of dissolution of the partnership and an accounting, the court was petitioned to 'order the defendants to restore the plaintiff to his work and activities under the partnership agreement.' It is apparent from the contents of the second amended complaint that plaintiff now seeks to treat the dissolution of April 8, 1954, as wrongful and the partnership as continuing. A third order to show cause was secured primarily directed to obtaining mandatory orders of the court to enforce a continuation of the partnership agreement. This third order to show cause was consolidated for hearing with the original order. At the hearing on October 14th the court directed the defendants to file a full and complete accounting from the beginning of the partnership to the then 'present time' and an inventory of all stocks and materials on hand, debts outstanding and contracts to be completed, and further ordering that plaintiff be allowed a full and complete inspection of all books of account. All other relief requested in both orders to show cause was denied including all those matters which sought to restore the plaintiff to his 'work and activities' under the partnership agreement.

It should be emphasized that it is now plaintiff's theory that because of the alleged wrongful dissolution, the partnership agreement is still in existence and that he is entitled to invoke the power of the court to specifically enforce its terms. The lower court repudiated such theory, apparently treating the partnership as dissolved on April 8th, whether wrongfully or rightfully and issuing only such orders as were consistent with the winding up of its affairs.

Plaintiff sets forth six assignments of error directed to the failure of the court to hear evidence designed to support the theory of his second amended complaint and the additional relief requested in the third amended order to show cause. We think there are several reasons why plaintiff cannot prevail. First, by express terms of the agreement each partner agreed to 'diligently employ himself in the business of said partnership.' As such it is a contract for personal services. By statute in this jurisdiction, Section 26-104, A.C.A.1939, an injunction cannot be granted to prevent the breach of a contract, performance of which would not be specifically enforced. A contract for personal services will not be specifically enforced. Miller v. City of Phoenix, 51 Ariz.

Page 847

254, 75 P.2d 1033. Hence the ancillary relief sought was beyond the power of the court to grant.

Second, while plaintiff argues that the partnership is still in existence because a partnership for a fixed term may not be terminated by notice, we think that the better reasoned cases and the weight of authority are to the contrary. Darrick v. Hannaman, 168 U.S. 328, 18 S.Ct. 135, [80 Ariz. 80] 42 L.Ed. 484; Atha v. Atha, 303 Mich. 611, 6 N.W.2d 897; Lunt v. Van Gorden, 224 Iowa 1323, 278 N.W. 631; McCollum v. McCollum, Tex.Civ.App., 67 S.W.2d 1055. For example, in Michigan where the Uniform Partnership Act permitting a dissolution at any time has been adopted, the court nonetheless pointed out:

'* * * this partnership can be dissolved at the instance of either partner at any time, under the statute and the rule as stated in Solomon v. Kirkwood, 55 Mich. 256, 21 N.W. 336, 337, as follows:

"The right of a partner to dissolve, it is said, 'is a right inseparably incident to every partnership. There can be no such thing as an indissouble partnership. Every partner has an indefeasible right to dissolve the partnership, as to all future contracts, by publishing his own volition to that effect; and after such publication the other members of the firm have no capacity to bind him by any contract. Even where the partners covenant with each other that the partnership shall continue for several years, either partner may dissolve it the next day by proclaiming his determination for this purpose; the only consequence being that he thereby subjects himself to a claim for damages for a breach of his contract. The power given by one partner to another to make joint contracts for them both ...


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