Title: Leavell v. Linn

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Leavell v. Linn1994 WY 128884 P.2d 1364Case Number: 93-189, 93-190Decided: 11/18/1994Supreme Court of Wyoming
Harold N. LEAVELL and 
Connie Linn Leavell, husband and wife,

Appellants 
(Plaintiffs),

v.

Bennie L. LINN and Mary 
Pat Linn, husband and wife; Peter V. Linn and Trudy Linn, husband and wife; 
Eugene A. Linn and Ellen W. Linn, husband and wife,

Appellees 
(Defendants).

 

Bennie L. LINN and Mary 
Pat Linn, husband and wife; Peter V. Linn and Trudy Linn, husband and wife; 
Eugene A. Linn and Ellen W. Linn, husband and wife,

Appellants 
(Defendants),

v.

Harold N. LEAVELL and 
Connie Linn Leavell, husband and wife,

Appellees 
(Plaintiffs).

 

Appeal from District 
Court, Teton County, Kenneth Hamm, J. (retired).

 

Representing 
Appellants in No. 93-189 and cross-appellees in No. 
93-190:

William P. Schwartz of 
Ranck & Schwartz, Jackson.

Representing 
Appellees in No. 93-189 and cross-appellants in No. 
93-190:

Lea Jacobs Kuvinka and 
George Kuvinka of Kuvinka & Kuvinka, Jackson. 

Before 
GOLDEN, C.J., THOMAS, MACY* and TAYLOR, JJ., 
and McEWAN, District Judge (Retired).

*Chief 
Justice at time or oral argument.

McEWAN, District Judge 
(Retired).

[¶1]      On February 4, 
1980, the principal parties to this action purchased ranch property from their 
parents. The conveyance was made to the parties as tenants in common. They also 
executed a Co-Ownership Agreement which provided, inter alia, that 
each owned a 1/6 interest in the property.1 The agreement also provided that 
none of the parties to the agreement would institute an action to partition or 
divide the property without the written consent of all other parties. 
Nonetheless, Connie Leavell (nee Linn) and her husband brought an action to 
partition. In the first appeal, they contend the district court should have 
found that a partnership existed and then entertained an action to dissolve that 
partnership, and, hence, divide the real property among the partners despite the 
terms of the agreement. Connie's brothers opposed her action and sought 
attorney's fees. In the second appeal, they challenge the district court's 
determination that the Leavell's lawsuit did not constitute a breach of the 
co-ownership agreement, thus precluding the brothers' claim for an award of 
attorney's fees.

[¶2]      We 
affirm.

ISSUES

[¶3]      A brief paragraph 
introducing the parties is necessary. Connie Linn Leavell is sister to Bennie L. 
Linn, Peter V. Linn, and Eugene A. Linn (Linn brothers). Harold Leavell is 
Connie's husband. Mary Pat Linn, Trudy Linn, and Ellen W. Linn are the spouses 
of the Linn brothers. Connie Leavell and her brothers owned a ranch in Teton 
County as tenants in common. The Leavells initiated this litigation, seeking to 
establish that the relationship between Connie Leavell and her brothers, as it 
related to ownership of the ranch, was a partnership. Her goal was to dissolve 
the partnership and/or to partition the ranch property. The Linn brothers viewed 
her action as a breach of the provision of the agreement they had jointly 
executed which waived partition of the ranch for a period of forty years. Based 
on that alleged breach of contract, the Linn brothers sought to recover 
attorney's fees incurred in the defense of this lawsuit.

[¶4]      As appellants in 
Case No. 93-189, the Leavells ask that this court reverse the district court's 
conclusion that no partnership was formed and remand the case to the district 
court for supervision of the dissolution and winding up process under the 
Uniform Partnership Act, Wyo. Stat. §§ 17-13-101 (1989) et seq. The Linn 
brothers respond that the district court did not commit reversible error in 
holding that no partnership existed between the cotenants of the Linn 
Ranch.

[¶5]      As appellants in 
Case No. 93-190, the Linn brothers state this issue: Did the district court err 
in failing to grant them attorney's fees because the Leavells initiated an 
action for partition even though their agreement prohibited such action. The 
Leavells contend they did not breach the non-partition provision of the 
agreement and, therefore, the Linn brothers are not entitled to recover 
attorney's fees.

FACTS

[¶6]      Eugene B. and 
Lilly L. Linn, husband and wife, owned a small ranch located in Teton County. 
The ranch was acquired by patent in 1913, after Eugene B. Linn's father had 
successfully completed the applicable homestead requirements. Over the years, 
parts of the ranch had been sold in order for the family to make ends meet and 
to acquire capital for other investments. In 1979, the children of Eugene B. and 
Lilly L. Linn became increasingly concerned that the family homestead would be 
sold, slowly but surely, until it was gone. Thus, they began devising a plan by 
which they could acquire the ranch from their parents, "in order to keep all or 
some significant portion of that land within family ownership." The elder Linns 
agreed to sell the ranch to their children for $237,000 and the ranch was 
conveyed to them on February 4, 1980, as tenants in common. The children 
borrowed $60,000 as a down payment and gave their parents a promissory note and 
mortgage, with a term of forty years, in the amount of $177,000. The mortgage 
was, of course, recorded. The children did weigh the possibility of forming a 
partnership in order to facilitate purchase and management of the ranch but, 
ultimately, what each of them agreed to, and executed, on April 22, 1980, was a 
Co-Ownership Agreement. The $60,000 loan was repaid through the sale of a 
small parcel of the ranch, as well as by payments made by the children, but over 
the years they have barely managed to keep current on the interest due the 
parents on that note. The parents have never contemplated 
foreclosure.

[¶7]      The relationship 
between the children has deteriorated significantly as the years have passed. 
Part of the deterioration has been because of the inability of the siblings to 
reach anything resembling an agreement on what to do with the ranch. However, 
the heart of the controversy has been the Leavells' desire to have a significant 
portion of the habitable part of the ranch conveyed to them as a site for their 
home. Mrs. Leavell had lived on the ranch for many years before she and her 
brothers purchased it, and she had improved a cabin on the ranch as her home. 
She and her husband continued to use that cabin as their home, but they wanted 
to improve the building and believed they needed to "own" a significant parcel 
surrounding the cabin in order to justify making costly improvements.2 The group was simply unable to 
reach an agreement on what should be done to accommodate the Leavells' requests. 
Of course, the Leavells perceive that the Linn Brothers were being unreasonable 
and the brothers perceived that, not only were the Leavells being unreasonable, 
but also that accommodation of the Leavells' request for a homesite would have 
served to frustrate the future possibilities of subdividing the ranch. It is the 
Linn brothers' contentions that what Mrs. Leavell really wanted all along was to 
have the ranch partitioned. However, the agreement Mrs. Leavell signed in 1980 
contained this provision:

In order to effectuate 
the liquidation of the mortgages to which the Property is currently subject, 
each Party, for himself and his heirs and assigns, covenants and agrees that he 
will not institute or cause to be instituted any partition or division of the 
Property without the written consent of all other Parties or their heirs or 
assigns for a period of forty (40) years. This restriction against partition 
during the period aforesaid does not deprive any Party of his right to convey or 
transfer his interest in the Property to any other person or entity.3

[¶8]      The agreement 
also provided a detailed procedure whereby any of the parties could sell their 
interest in the ranch, whether that sale is to a third party or to a member of 
the family4. The significance of this provision 
is that the Leavells could have left the family arrangement at any time. Of 
course, the record bears out quite clearly that the ranch was worth more (at 
least to outsiders) as a single parcel than it was in the form of ownership 
opted for by Mrs. Leavell and the Linn brothers.

DISCUSSION

[¶9]      In 1991 the 
Leavells filed a complaint seeking dissolution of the partnership known as the 
Linn Ranch Partnership and, eventually, a sale of the ranch or, in the 
alternative, a declaration that the non-partition provision of the 
Co-Ownership Agreement was null and void,5 thus enabling an action for 
partition of the ranch to go forward. While it cannot be denied that the 
agreement in question has many of the characteristics which might also be found 
in a partnership agreement, on its face it is not a partnership agreement. It 
does not use the words "partner" or "partnership," and the record contains 
evidence that the parties specifically decided not to form a partnership. On the 
other hand, the parties routinely referred to themselves as partners and to 
their group as a partnership. For each year they owned the ranch, they filed a 
partnership tax return with the Internal Revenue Service. There was a 
considerable body of correspondence, minutes of meetings, etc., in which each of 
the co-owners used the term partner or partnership. Of course, the Leavells 
contend that the terms partner and partnership were used in a technical legal 
sense, and the brothers contend they were used in a much more informal sense 
("associate, colleague" vs. "one joining in an enterprise with a view toward 
profit"). See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1648 
(1986).

[¶10]   After a trial, the district court 
found that the agreement between the parties was not a partnership. The 
principal issue in this appeal is whether the district court erred in reaching 
that conclusion. The Leavells contend the district court did not employ the 
correct standard of review in reaching its decision. Our standard for review 
under circumstances such as these is at least partially set out in Murphy v. 
Stevens, 645 P.2d 82, 85 (Wyo. 1982). Murphy, however, did not 
involve a circumstance where there was an agreement in writing. Therefore, our 
point of embarkation must be to look at the agreement itself, which the parties 
voluntarily executed. The district court could have readily inferred that the 
agreement, on its face, was not a partnership agreement. As noted above, neither 
"partner" nor "partnership" are used anywhere in the agreement. The Leavells 
appear to argue that any "expressed" intention in the agreement is "wholly 
irrelevant" to the question of whether a partnership was formed. They cited 
no authority for that proposition and we have found none. Virtually all of the 
authorities relied upon by the Leavells, and the thrust of their argument, 
concern situations where the agreement is oral, or if in writing, ambiguous in 
its terms as to how the partnership is to be governed. See Edler v. 
Rogers, 817 P.2d 886 (Wyo. 1991); 4 AM.JUR. POF.2d 355, Status as 
partners, proof of partnership inter se § 7 (1975). We agree that an 
expressed intention is not necessarily determinative, but clearly it is relevant 
to the question of what the parties intended. Indeed, a written partnership 
agreement is the best evidence of an intent to create a partnership relation. 
Curtis v. Hanna, 143 Kan. 186, 53 P.2d 795, 796 (1936); 4 AM.JUR. POF.2d 
355, § 3 (1975). Under most circumstances, however, even a written agreement may 
be subject to modification by a course of actual performance. Rosen Trust v. 
Rosen, 53 A.D.2d 342, 386 N.Y.S.2d 491, 499 (1976); and see UNIF. 
PARTNERSHIP ACT § 7, 6 U.L.A. 100 n. 96 (1969 & Supp. 1994). Given the 
unambiguous expressions contained in the contract and the conflict in the 
testimony, we can only conclude that the district court's ultimate findings are 
clearly sustained by the evidence. Moreover, we are persuaded that, even if the 
agreement were construed to be a partnership agreement for the purposes of 
resolving this dispute, between these parties, then the terms of that agreement 
would still govern. That is, partition is waived for a period of forty years - 
unless the outstanding mortgage is paid - whether the agreement is taken at face 
value or deemed to be a partnership agreement.

[¶11]   The Leavells also ask that we 
reject the district court's finding that the agreement was "clearly and 
unambiguously" not a partnership agreement. We think very little more need be 
said than what we said above, i.e., that the document relied upon by the 
Leavells does not purport to be a partnership agreement. See, e.g., 14 
AM.JUR. Legal Forms 2d 324, Partnership §§ 194:81-88 (1994). The 
Leavells' contentions in this regard are not aided by their insistence that the 
agreement clearly fits the definition of a partnership; "[A]n association of two 
(2) or more persons to carry on as co-owners a business for profit." WYO. STAT. 
§ 17-13-201(a) (1989). Based on the totality of the evidence, the most obvious 
inference which might be drawn from the evidence by a fact finder is that the 
agreement entered into by this family was not one intended to be a business for 
profit. The principal function of their association was to preserve a family 
heritage and a unique way of life that had been rapidly disappearing from Teton 
County - the family ranch. To the extent there were "profits" (and if there were 
any at all, they were very minimal) they resulted from the fact that the 
principal mortgage was not being paid and that no family member was paid for any 
work done on the ranch, whether that work was general cleanup, bookkeeping, 
letter writing, management, etc. Likewise, no member of the family paid anything 
to the group for use of the property, and all family members made considerable 
use of it. To the extent the parties engaged in discussions about profits, and 
to the extent there was testimony about profits at trial, that term was used in 
the loosest sense. Virtually every witness joined into the confusion between the 
term "income" and the term "profit." See WEBSTER'S THIRD NEW 
INTERNATIONAL DICTIONARY, 1143, 1811 (1986). The idea of "profits" appears to 
have become more and more important only after the real estate market in Teton 
County transformed the ranch into a "gold mine." Thus, the district court might 
well have concluded that the association of these family members lacked an 
essential ingredient of a partnership. Also, the filing of partnership tax 
returns is significant evidence of the existence of a partnership, but it is 
only one factor to be weighed in the balance. See Wilder v. Hobson, 101 
N.C. App. 199, 398 S.E.2d 625, 627 (1990).

[¶12]   The Leavells testified that a 
partnership was intended and the Linn brothers testified that no partnership was 
intended. The district court was the fact finder and, given the circumstances of 
this case, the rather onerous task assigned to it was to resolve the conflicts 
in the evidence. Murphy, 645 P.2d  at 85. A specific factual finding will 
not be disturbed unless the finding is clearly erroneous or against the great 
weight of evidence. Id. The findings of the district court were not 
clearly erroneous or against the great weight of the evidence. Moreover, our 
conclusion in this regard is further bolstered when it is also considered that 
the Leavells' only goal, insofar as seeking to establish the existence of a 
partnership, was to dissolve that partnership and avoid the consequences of the 
agreement Mrs. Leavell had signed in 1980. As noted above, the Leavells had a 
convenient way out of the agreement, if they chose to leave. Rather than 
exercise their options under the agreement they sought to avoid even the most 
utterly unambiguous of its provisions. Under circumstances such as these, unless 
the intent is clearly proved, this court will not construe a family arrangement 
as a partnership. See First Nat'l Bank of Eugene v. Williams, 142 Or. 
648, 20 P.2d 222, 226 (1933). Finally, we agree with the district court that the 
sentiments we expressed in Quin Blair Enter., Inc. v. Julien Constr. Co., 
597 P.2d 945, 951-52 (Wyo. 1979), are applicable here. It is in just such 
circumstances of disagreement and disarray as those in which this family finds 
itself that it is especially important to read and strictly construe formal 
agreements.

[¶13]   In the second appeal, the Linn 
brothers contend the district court erred in finding they had suffered no 
damages as the result of this action and in not conducting a hearing concerning 
an award of attorney's fees.6 From our review of the briefs and 
the record, there is no apparent basis upon which an award of attorney's fees 
could be premised. Therefore, we hold the district court did not err in this 
regard.

[¶14]   The judgment of the district court 
is affirmed in all respects.

Footnotes

1 The four children who 
are party to this action purchased the interests of two of their siblings so 
that the parties now each hold a 1/4 interest in the ranch.

2 We think it prudent to 
note at this juncture that the Leavells' circumstances do not appear to improve 
in this regard, i.e., the power to force the three brothers to agree to a 
homesite, merely because the agreement is transformed into a partnership. 
See 2 ALAN R. BROMBERG AND LARRY E. RIBSTEIN, Partnership § 
6.03(c) (1994). This fundamental problem (requirement of a majority of the four 
siblings) was exacerbated by the Linns having regularly included all spouses, 
including Mr. Leavell, in the decision-making process.

3 Such an agreement is 
generally enforceable. No real contention is made in this appeal that the 
provision was not, on its face, enforceable. See Annotation, 
Contractual provisions as affecting rights to judicial partition, 37 
A.L.R.3d 962 (1971); Schultheis v. Schultheis, 36 Wn. App. 588, 675 P.2d 634 (1984).

4 Indeed, as we have 
noted, infra, two of the six Linn children did sell their interests to 
the other four children.

5 The Leavells do not 
pursue the alternative argument in this appeal.

6 The Co-Ownership 
Agreement between the parties does not have an attorney's fee provision and 
the Linns do not cite any statutory authorization for an award of attorney's 
fees for a breach of the Co-Ownership Agreement.