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Brand v. Elledge

Supreme Court of Arizona

March 15, 1961

Violet Rector BRAND, dealing with her sole and separate property, Appellant,
Kaye A. ELLEDGE, a single person, Appellee.

Rehearing Denied May 9, 1961.

Page 214

[89 Ariz. 201] Bayham & Huffsteter, and Stanley Z. Goodfarb, Phoenix, for appellant.

Stahl, Murphy & Blakley and James M. Smith, William L. McClain, Phoenix, for appellee.

JENNINGS, Justice.

This is an appeal from the judgment of the superior court dismissing an action for accounting and dissolution of a partnership. The parties herein, as in the court below, will be referred to as plaintiff and defendant.

Early in 1941 plaintiff, a married woman who was then pregnant, came from New York City to Phoenix and purchased a home with funds received from her husband who either directed or acquiesced in the move. Plaintiff's husband, a member of the Royal Air Force, continued remittances to her until he was killed in action early in 1942.

Defendant, a single woman, moved into and resided in plaintiff's home until plaintiff remarried in 1942. Defendant, an impecunious tavern worker, persuaded plaintiff to purchase the 'Broadway Inn' located in Phoenix, and to invest several thousand dollars more to acquire a liquor license, fixtures, etc., and generally remodel the establishment. A copartnership was effected. The defendant brought to the business her experience and was delegated the responsibility of operation and management. The tavern's name was changed to Happy Landings.

Together, on August 13, 1941, the partners met with the superintendent of the liquor department and made application for the transfer of the license in their joint names. After inquiry as to qualifications, he advised that because plaintiff had not resided in Arizona a sufficient length of time to become a qualified elector, the license would have to be taken in the name of the defendant. He further suggested that when plaintiff had been a resident of the state one year that the partners should return and the license would then be issued in their joint names. Plaintiff at that time paid the transfer fee of $25 and the license was issued in the name of the defendant.

Upon leaving the superintendent's office the parties, at the suggestion of the defendant, went to the county recorder's office and signed and filed a certificate of partnership between themselves, reciting that they

Page 215

were doing business under the style and fictitious name of Happy Landings, located [89 Ariz. 202] at 3815 South Central Avenue, Phoenix, Arizona. The certificate did not recite the terms of the copartnership.

Between the date of possession and January 12, 1942, $11,797.35 of plaintiff's funds were invested in the business. This was acknowledged by the defendant through a statement furnished to plaintiff.

Upon fulfilling residence requirements plaintiff suggested compliance with the previous suggestion of the superintendent concerning the liquor license transfer to their joint names. Defendant stated that such formality was unnecessary as they were partners of record with full confidence in each other.

Plaintiff made periodic inquiries of defendant concerning the business' welfare and was shown various improvements, including new land purchased, a new tavern building and apartments under construction on the original property, together with a swimming pool. Defendant advised that all profits were being reinvested in the business to finance the additional improvements.

Plaintiff continued to live in Phoenix until she divorced her second husband in February, 1945, at which time she returned to New York with her children until 1949. Through frequent correspondence plaintiff kept abreast of the business. In 1949 she returned to Phoenix for a few weeks. Upon inspecting the premises she was again advised by defendant concerning various improvements and that all profits were being reinvested in the business.

Plaintiff then went to San Diego, married John Brand, a navy man, and returned to Phoenix where she lived from 1951 to 1953. In 1953, with her three children, plaintiff accompanied her husband to Tokyo, Japan. She returned to Phoenix the latter part of 1955. At that time or early in 1956 plaintiff asked defendant for an accounting and was advised by defendant that she (plaintiff) had no interest whatsoever in the place and that no accounting would be made. After consulting with several attorneys, formal demand for an accounting was made in July 1956. This litigation followed defendant's refusal to account.

Defendant filed a general denial, specifically denied that a partnership existed, plead the four-year statute of limitations, A.R.S. ยง 12-550, and laches. At the trial, upon close of plaintiff's case, the court dismissed the action upon defendant's motion on the ground that the partnership agreement was illegal and void, in that the law as ...

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