Opinion
No. 72-084.
April 24, 1973. Not Selected for Official Publication.
Action between partners concerning distribution of assets. The District Court of Weld County, Hugh H. Arnold, J., rendered judgment from which appeals were taken. The Court of Appeals, Coyte, J., held, inter alia, that award to defendant partner of sum for wages was error absent specific finding that plaintiffs had agreed to pay for services rendered.
Affirmed in part and reversed in part and remanded with directions.
1. Partnership 311(1)
Evidence supported finding that there had been no final settlement or agreement between partners.
2. Partnership 328(3)
Evidence in action between partners supported findings adverse to defendant's claims that he was entitled to certain adjustments in division of assets and supported finding as to fair and reasonable value of pasture furnished to defendant by partnership.
3. Partnership 342
Award to defendant partner of sum for wages was error absent specific finding that plaintiffs had agreed to pay for services rendered. C.R.S. `63, § 104-1-18(7).
4. Partnership 75
Plaintiff partners were not liable to defendant partner for interest on difference between their contributions and defendant's contribution, in absence of agreement, despite claim that deficiency in plaintiffs' contributions obliged partnership to pay interest to third party.
5. Interest 44
Defendant partner was liable for interest on amount withheld from plaintiff partners from date received where all of defendant's claims to sum were denied or improperly allowed. C.R.S. `63 § 73-1-2.
Karowsky, Witwer and Oldenburg, Stow L. Witwer, Jr., Greeley, for plaintiffs-appellees and cross-appellants.
Rector Melat, Leo W. Rector, Colorado Springs, for defendant-appellant and cross-appellee.
Defendant contacted plaintiffs, his brothers-in-law, concerning their joining with him as partners in the purchase of a ranch in Weld County, which he had contracted to purchase. They joined the defendant as equal partners and title to the ranch was taken in the name of all three parties. Shortly thereafter the partners entered into an agreement to sell the ranch to Kodak Company at a substantial profit. The partnership operation was then liquidated and this litigation arose because of a dispute between the parties over distribution of the partnership assets. The parties stipulated that defendant had $21,753.65 in his possession which plaintiffs claim was partnership funds owed to them.
The trial court found that defendant should be paid $5,000 in wages for services performed to the partnership, that he was entitled to interest on a deficiency of capital contribution by plaintiffs, and that he owed the partnership a pasturage and feed bill of $3,356, of which two-thirds, or $2,237.34, was owed to plaintiffs. Judgment was entered in favor of plaintiffs in the amount of $13,932.78. Defendant appeals, asserting that there had been a settlement of all matters in controversy between the parties, that the pasturage bill was unreasonable, that he should have a finder's fee and a special profit from the sale of the main ranch house, payment for the use of his machinery, and reimbursement for board and room furnished employees. Plaintiffs filed a cross-appeal, contending that the court erred in awarding interest to defendant because of the deficiency in capital supplied by plaintiffs and in awarding $5,000 to defendant as extra compensation for his labor.
Defendant initially argues that the partnership affairs had been finally compromised and settled when defendant and one plaintiff went to the bank and directed the bank officer to deposit certain portions of the amount received for the ranch into the respective accounts of the parties. He further contends that plaintiffs had the burden of showing by clear and convincing evidence that no agreement had been reached.
There were exhibits introduced into evidence which had figuring and computations thereon, but there was no testimony that these deposits made into the respective accounts of the parties constituted a final settlement between the parties. There was a conflict between the parties as to any agreement by them on any settlement of matters in controversy. The court, on conflicting evidence, determined that no settlement had been agreed upon between the parties as to final disposition of partnership assets and that, therefore, there was no final settlement or agreement upon which defendant could rely. That determination being supported by the record will not be disturbed on review.
The parties stipulated at the commencement of the trial that they were equal partners, each owning an undivided one-third interest in the partnership, and that profits and losses were to be borne in this same ratio. Defendant contends, however, that certain adjustments should be made before the equal division is made. Specifically, he maintains that he is entitled to a finder's fee, a special profit from the sale of the main ranch house, payment for the use of his machinery, and reimbursement for board and room furnished to employees. The court on conflicting evidence found in favor of plaintiffs on these issues. Such findings all involve a determination of factual issues based on conflicting testimony. Where there is evidence, as here, to support the judgment of the trial court it will not be disturbed on review. Rutherford v. Scarborough, 28 Colo.App. 352, 472 P.2d 721.
Defendant pastured some of his personal livestock on the partnership property and the court determined upon the evidence presented that the fair and reasonable value of the pasture furnished to the defendant during the term of the partnership was $3,356, and that plaintiffs were entitled to reimbursement for two-thirds of this amount, or $2,237.74. The evidence supports the award and the reasonableness of the amount. Accordingly, it will not be disturbed on review.
Turning to plaintiffs' contentions, they allege that defendant is not entitled to $5,000 wages awarded by the court. The court in its findings stated: "[T]hat defendant is entitled to wages in the amount of Five Thousand Dollars ($5,000.00). . . ." C.R.S.1963, 104-1-18(7), provides:
"No partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs."
The court in its oral remarks from the bench justified its findings on the theory of quantum meruit and found that $5,000 was the reasonable value of the services rendered. However, the court made no finding that plaintiffs had agreed either expressly or impliedly to pay defendant extra remuneration for his services to the partnership. Without a specific finding that plaintiffs had agreed to pay defendant for services rendered, it was error for the court to find for defendant on this issue. C.R.S.1963, 104-1-18(7). Peck v. Alexander, 40 Colo. 392, 91 P. 38.
Plaintiffs next contend that the court erred in awarding interest to defendant based upon the fact that each plaintiff contributed less cash to the partnership than the defendant. After the original agreement for the purchase of the ranch by the partners was executed, the parties to the agreement modified it by reducing the cash down payment and by giving a note and a mortgage to the seller of the property in lieu of the cash called for in the original contract. Plaintiffs contributed some cash and also some cattle to the partnership. However, defendant contends that the partnership paid interest to the seller of the property which it would not have been required to pay had the other two partners put up cash and livestock equal to defendant's contribution and that plaintiffs should pay defendant interest due to the deficiency in their capital contributions to the partnership. We disagree.
There was no agreement that plaintiffs would pay interest on the discrepancy between their contributions to the partnership and the contribution of defendant. In the absence of an agreement to the contrary, one partner cannot be charged with interest upon the capital of his copartners in the partnership above the amount furnished by him. 60 Am.Jur.2d Partnerships § 286. The court thus erred in awarding defendant interest on the excess of his cash contribution over that of plaintiffs. Plaintiffs finally contend that the court erred in disallowing them interest on the amount withheld from them by defendant after the dissolution of the partnership. We agree. C.R.S.1963, 73-1-2, provides that:
"Creditors shall be allowed to receive interest, when there is no agreement as to the rate thereof, at the rate of six per cent per annum, for . . . money received for the use of another and retained without the owners' consent, expressed or implied, from the receipt thereof;. . . ."
The parties stipulated that defendant held $21,753.65 belonging to the other partners against which defendant claimed certain adjustments. All claims of defendant were denied or improperly allowed, so the money held by the defendant was due plaintiffs. Defendant should therefore pay interest on the money improperly withheld by him from the date he received it. Morris v. Redak, 124 Colo. 27, 234 P.2d 908.
The judgment of the trial court disallowing defendant's claim for a finder's fee, his claim for profit on the sale of the residence house, his claim for rental on machinery, and his claim for room and board furnished to employees is affirmed, as is the award for pasturage furnished by the partnership for defendant's cattle. The finding and judgment that defendant was entitled to $5,000 for labor, and the finding that defendant was entitled to interest on his excess capital investment are reversed; the judgment disallowing interest to plaintiffs on the amounts due them on the final judgment is reversed; and this cause is remanded with directions to the trial court to redetermine the amount of the judgment to be entered in favor of plaintiffs and against defendant in accordance with this opinion.
Judgment affirmed in part, reversed in part and remanded with directions.
PIERCE and SMITH, JJ., concur.