### No. 14946 IN

### THE SUPREME COURT OF 

### THE STATE OF MONTANA 1980

GREGORY J. WALSH, Plaintiff and Respondent,

ELLINGSON AGENCY, a Montana Corporation, and FOUR SEASONS MOTOR 

### INN, a Montana Corporation, Defendant and Appellant.

Appeal from: 

### DistrictCourt of theEleventh Judicial District, Honorable Robert 

### Holter, Judge presiding. Counsel of Record: ForAppellant: Murray, Kaufman, Vidal and Gordon, Kalispell, Montanp 

# -,- ./'*.;'/ 

# . r- 

### . ,



## . , 

# -- For Respondent: Warden, Christiansen and Johnson, Kalispell, Montana

Filed: Submitted on briefs: April 

### 25 1980 ~ecided: July 

### 22, 1980

ClerkMr. Chief JusticeFrank I. Haswell delivered theOpinion of the Court. Plaintiff-respondent Gregory Walsh brought this action for specificperformance of a real estate sales contract in the Flathead County District Court. The court awarded specific performance and the two corporate defendants appeal. InlateFebruary or earlyMarch of 1977 Gregory Walsh contacted Chet Ellingson at theEllingsonAgency, an insurance and real estatecorporation, concerning an advertised parcel of real estate. After finding the price prohibitive on this piece of property, he detailed his needs toMr. Ellingson. Walsh was looking for a lot 150' by 300' or larger located near a grocery store inorder toconstruct an apartment complex. Mr. Ellingson showed Walsh a lot that he thought might meet Walshls needs. The lotwas on the southeast side of Kalispell near Roseaurs' and the Outlaw Inn. Ellingson told Walsh that he owned the property with

IIsome partners1' and that 

### it was for sale for $30,000. On March 17, 1977, Walsh returned totheEllingsonAgency and told Chet Ellingson that he wished tobuy the property for $29,000 cash. 

### A buy-sell agreement was drafted and signed by both parties, and Greg Walsh gave Ellingson $1,000 inearnest money. A closing date of April 5, 1977 was set. Prior toMarch 17 the other owners of the property had not been disclosed. Walshls testimony reveals that on the day he first saw the property Chet Ellingson said, 

### "I and my partners

own the piece of property" and "that [$29,000] was the lowest we

cango." Ellingson testified, "Ihad told him [Walsh] that I didhave some partners and I just saidI thought 

### it would be okay." Mr. Ellingson also testified that he never toldGregory Walsh that he had authority tobind others and that he implied that corporate resolutions from the other people were necessary. -2-Shortly afterMarch 17, 1977, Walsh received a title insurance policy which revealed that thepropertywas owned by the EllingsonAgency and Four Seasons Motor Inn as tenants in

common. This isthe first time that Walsh learned who the other "partners" were. On April 5, 1977, Gregory Walsh went to the Ellingson Agency and toldMr. Ellingson that he was ready towrite a check pursuant tothebuy-sell agreement. Mr. Ellingson told Walsh that he could not get his partners to sell, and he offered to return the $1,000. Walsh would not accept the return of his earnestmoney. The Four Seasons Motor Inn is a corporation owned by three brothers, Con, Dan and Everett Lundgren. Con Lundgren, a vice-president and director of Four Seasons, testified that Chet Ellingsonhad no authority to sellthe property and had never approached Four Seasons concerning a sale of the property. Chet Ellingson also testified that he had no authority to act for the Four Seasons but that he thought the salewould be acceptable tothe Four Seasons. He also stated that he never told Walsh thathe would have todeal or talk tohis co-owner to make arrangements for the sale as far as the buy-sell agreement isconcerned. Mr. Ellingson further testified that he 

### is a licensed real estatebroker and that he has been inbusiness inthe Kalispell area for twenty years. Testimony was alsoadduced concerning a prior land holding between EllingsonAgency and Four Seasons. According to the testimony, the two corporationshad purchased another parcel of land which was sold in 1975. Chet Ellingson was approached by

an individual concerning the sale of the firstparcel. He testified that he talked 

### it over with Con Lundgren and they decided on a price tooffer the prospective buyer. The offerwas accepted and the proceeds were equally divided between the Ellingson Agency and the Four Seasons. Ellingson testified that both real estatedealingswere investments for profit between long-time friends.The subject property alsohas a building on 

### it which 

### is suitable for a residence. Chet Ellingson testified that he manages the property, "so to speak." He receives rent and keeps ledgers of the receiptswhich are used topay taxes and maintenance. Plaintiff Gregory Walsh filed a complaint on November 18, 1977, seeking the execution and delivery of a warranty deed to the subject property or inthe alternative a quitclaimdeed of Ellingson's interest inthe property and actual damages as reimbursement for expenses occasioned as a result of the defendants' refusal toperform. Plaintiff alleged that Chet Ellingson represented that he was the agent of the other owners and was authorized tocontract to sellthe property. It was further alleged that Chet Ellingsonhad apparent authority to sellthe property by reason of his status as the president of Ellingson Agency and as a licensed real estatebroker. The trialbefore theDistrict Court, sittingwithout a jury, was concluded on April

### 5, 1979. The court's findings and conclusions were entered on May 23, 1979. The court made the following relevant findings and conclusions: that Chet Ellingson made reference tohis ownership of the property with his "partners" without identifying them; that plaintiff did not know nor could he infer that the "partners" referred towere "persons

or entitiesextraneous toEllingsonAgency"; that the buy-sell agreement was draftedby Chet Ellingson and was duly executed and

I1appears clear and complete on 

### its face and does not appear to require the signature of any additional party"; that plaintiff tendered the $28,000 balance due under the buy-sell agreement but Mr. Ellingson refused totender a deed tothe property; that the defendants "are engaged ina partnership involving the purchase of real estateon a parcel by parcel basis for later sale at a profit"; that Chet Ellingson acted as an agent of the partnership and had the "ostensible authority" of both defendants to contract tosellthe subject property; that thebuy-sell agreement 

### is complete on itsface and specifically enforceable as against 

### -4-the interests of both defendants inthe subject property. Judgment was entered against the defendants on May 30, 1979. The defendants were ordered to specifically perform the terms of the buy-sell agreement by conveying their interests in the subject property by warranty deed. Two issues are presented on appeal: (1) Whether there was sufficient evidence to support a finding that defendants were a partnership as tenants incommon owners of certain real property; and (2) Whether Chet Ellingsonhad authority tocontract to sellthe subject property on behalf of both defendants. If theDistrict Court was correct in concluding that a partnership exists between the appellants, the second issue is answered by section35-10-301(1), MCA, which provides: "Every partner 

### is an agent of the partnership for the purpose of 

### its business, and the act of every partner, including the execution inthe partnership name of any instrument, for apparently carrying on intheusual way the business of the partnership of which he is a member binds the partnershipunless the partner soactinghas infact no authority to act for the partnership inthe particularmatter and the person with whom he 

### is dealing has knowledge of the fact that he has no such authority.'I Chet Ellingson represented that he and his partners owned theproperty, and the respondent had no knowledge that he did not have authority to sellthe property. Thus, if a partnership exists, 

### it 

### is bound by the contract drafted and signed by Chet Ellingson on behalf of theEllingsonAgency. Consequently, we must address the sole issue of whether or not therewas substantialevidence to support the trial court's determination of the existence of a partnership. It 

### is well established that a partnershipmay be created for the purchase and sale of real estate for a profit. Harmon v. Martin (19471, 

### 71N.E.2d 74, 395 Ill. 595; 

### 68 C.J.S. Partnership 56. Pursuant tosection35-10-202(2), MCA, the holding of property as tenants incommon isnot initself sufficient to establish the existence of a partnership, however, 

### "it 

### is wellsettled, that a partnership can acquire real estateby having the partners take title as cotenants." Robertson v. Robertson (19781, Mont. 

## , 590 P.2d 113, 116, 35 St.Rep. 1889, 1892. In general a partnership requires an agreement between the parties which may be oral orwritten, express or implied by conduct. Gustafson v. Taber (19511, 125Mont. 225, 234 P.2d 471; Robertson

v. Robertson, supra. There need be no partnership name and a partnership

### willbe found if persons engage ina venture for theirmutual benefit or profit, Cutler v. Bowen (Utah, 19751, 543 P.2d 1349, and if persons enter intoan informal agreement to purchase and later sellland there need be no evidence that they discussed any terms of the agreement other than equal ownership of the property purchased for later sale. See Mathis v. Meyeres (Alaska 19781, 574 P.2d 447. The evidence reveals that the appellant corporations had previously bought and sold an unimproved lot. The property was held as a tenancy in common and the corporationsmade equal contributions and received equal distributions of the proceeds. The subject property was alsoowned by the appellants as tenants incommon with each contributing equal shares of the purchase price. The purpose of both purchases was to sell the property for a profit, and Chet Ellingson represented that he and "partners" owned the subject property. The EllingsonAgency collected rent from the subject property and kept records of the amounts collected. The rent proceeds were used to pay property taxes and maintain the structure'. No rent distributionswere made to eitherof the tenants in common. On the basis of this evidence theDistrict Court concluded that the appellants "are engaged in

a partnership involving the purchase of real estate on a parcelby parcel basis for later sale at a profit'' and that "Chet Ellingson acted as an agent of the partnership for the purpose of carrying on thepartnership business." With regard to the standard of review, this Court has repeatedly stated 

### it 

### willnot overturn findings of fact andconclusions of law if supportedby substantialevidence and by the law. Evidence 

### willbe viewed inthe light most favorable to theprevailing party. Rule 52, M.R.Civ.P.; Luppold v. Lewis (19771, 172Mont. 280, 563 P.2d 538; Morgen & Oswood Construction Co. v. Big Sky of Montana, Inc. (19761, 171Mont. 268, 557 P.2d 1017. The judgment of theDistrict Court 

### is presumed tobe correct and 

### willbe upheld unless clearly shown tobe erroneous; theburden of such showing isupon the appellant. Kamp v. First National Bank and Trust Co. (19731, 161Mont. 103, 504 P.2d 987. Inviewing the evidence inthe lightmost favorable to the respondent, we cannot find thejudgment of the District Court tobe clearly erroneous. There was substantial evidence to support a findingof the existence of a partnershipby reason of the appellants' conduct with regard tothe past and present real estate transactions. As a result of the existence of a partnerhip and section35-10-301(1), MCA, the appellants are bound by the buy-sell agreement executed by the EllingsonAgency. The appellants strongly rely on this Court's findingof

no partnership inIvins v. Hardy (19471, 120Mont. 35, 179 P.2d 745. InIvins theDistrict Court found a partnership existed between tenant-in-common owners of real estate; however, this Court reversed, finding that the partnershipwas formed after the purchase of the interest inland. Were we facedwith the same facts today, we would find sufficient evidence to support the District Court's finding inIvins that the real estatewas held as partnership property. We distinguished Ivins on the facts in Robertson v. Robertson, supra, however; today we are compelled to expressly overrule Ivins tothe extent of the finding of no partnership inexistence with respect tothe purchase and ownership of real estate. The judgment of the District Court 

### is affirmed.

Chief Justice \

### We concur: