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Bohmfalk v. Vaughan

Supreme Court of Arizona

December 7, 1960

Marlin BOHMFALK and Dorothy Bohmfalk, his wife, Appellants,
Ralph VAUGHAN, Appellee.

Page 618

Page 619

[89 Ariz. 35] Beer, Seaman & Polley, Phoenix, for appellants.

John Pintek, Bisbee, for appellee.

PHELPS, Justice.

This is an appeal by appellants, defendants below from a judgment entered in favor of the appellee-plaintiff. The parties will be referred to as defendants and plaintiff as they appeared in the trial court. The cause was submitted to the jury on interrogatories. The court then made findings of fact and conclusions of law on the request of the defendants.

From the record it appears that prior to August 1953 the plaintiff was operating a [89 Ariz. 36] service station business in Douglas, Arizona, in a service station owned by Standard Oil Company, and leased to him. Thereafter negotiations began between the plaintiff and defendants to set up a partnership. On August 19, 1953, the parties entered into a written partnership agreement for the operation of said service station in Douglas, Arizona. This partnership agreement in the part material for our review here provides:


'6. The capital of said firm to be $7,000.00 to be contributed and paid into the firm equally by the partners.

'9. Quarterly, beginning on October 1st, 1953, a full and complete inventory of stock shall be taken, and a complete statement of the partnership shall be made, and an accounting between the partners shall be had, * * *. Neither partner shall be permitted to withdraw any profits or funds from said business for his own personal use during any three month period in advance of the above mentioned accounting date except that each partner may draw as wages an amount mutually agreed.

'12. This partnership may be terminated at any time by a written instrument, the terms of which are mutually agreed.'

On the same date the plaintiff sold to the defendants an undivided one-half interest in said business together with the merchandise, gasoline and oil, trade fixtures and equipment, four trailers and miscellaneous items for the sum of $3,500. This sale was accomplished by the execution of a bill of sale as of that date and the payment by defendants to plaintiff of $2,000 on the purchase price with the $1,500 balance to be evidence by a promissory note which said note was to be signed at a later date by the defendants. Said note, however, was never signed by the defendants. At the time of the negotiations and sale of the one-half interest, the plaintiff disclosed to the defendants the true facts relating to the business and of the cost to him of the merchandise, inventory and equipment.

The defendants claim that on September 4, 1953, the plaintiff by a bill of sale transferred and sold to the defendants the whole business including the plaintiff's interest, a certain Chevrolet pick-up truck and bank account for $3,000. They further claim that the $3,000 has been fully paid by the $2,000 on the 19th of August and by the payment on September 8th of the remaining $1,000 to the plaintiff. This contention, however, was not supported by the evidence. The court and the jury found that this purported sale, claimed to have been made [89 Ariz. 37]

Page 620

by the plaintiff to the defendants during the month of September 1953, was without consideration and that the transfer of property to the defendants was made by the plaintiff because of the fraudulent representation made by the defendant Marlin Bohmafalk that the property described in the said bill of sale should be conveyed to him to protect him against the plaintiff's creditors, or against persons who might sue plaintiff. There was no evidence adduced at the trial that the plaintiff feared his creditors nor was there any evidence that he attempted to defraud same.

On September 3, 1953, the plaintiff transferred the equity of his Chevrolet pick-up truck to the defendant and continued to use said truck as a partner in the business. The transfer of the truck made it the property of the partnership. At the time of transfer the plaintiff had an equity in the truck of $500. The defendant has never paid anything for the equity of the truck since it has become the property of the partnership.

The plaintiff and defendant continued to operate said service station in Douglas, Arizona, as a partnership, and held themselves out as partners during the months of October, November and December of 1953 and during the month of January 1954. On or about February 21, 1954, the defendants demanded that they have sole possession and control of said service station business and then wrongfully excluded the plaintiff therefrom. On or about July 25, 1954, the defendants purported to sell the business to one Mark Anthony. Before this purported sale the plaintiff served notice and claim upon Mark Anthony to the effect ...

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