INTHE SUPREME COURT OF THE STATE OF MONTANA 1983

CHARLES A. NORICK and GWENDALYN E. NORICK, Plaintiffs and Appellants,

DOVE COI!STRUCTION, A Partnership, Defendant and Respondent.

Appeal from: District Court of the Eleventh Judicial District, In and for the County of Flathead Honorable Robert Sykes, Judge presiding. Counsel of Record: For Appellants: Hash, Jellison, O'Brien and Bartlett, Kalispell,

Montana James C. Bartlett argued, Kalispell, Montana For Respondent: Garlington, Lohn and Robinson, Missoula, Montana Paul C. Meismer argued, Missoula, Montana

Submitted: January 14, 1983

> ;:; ;j'i Filed: :ij.& Y A ii

,,*.<J 2Mr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. Charles and GwendalynNorick brought suitagainstDove Construction, a general partnership in which Charles Norick and GordonLister were general partners, for the destruction of a partially-constructed home. The Flathead County District Court granted summary judgment in favor of Dove Construction. The Noricks appeal. We reverse and remand for furtherproceedings. In 1977 Charles Norick and Gordon Lister formed a partnership called Dove Construction. Their purpose was to build Rustic Log Homes. Norick and Lister were equal partners. The partners agreed to build log homes as personal residences for themselves. Norick alleged that the homes

were to be used as showplaces for their business and that Dove Construction was the general contractor. In 1978 appellants began building their log home on some Kalispell property they owned as joint tenants. All of the money for the home came out of appellants' personal funds. Although a Rustic Homes designwas employed,regular logs rather than Rustic Home logs were used to build the home. The building of the house was essentially supervised by appellant CharlesNorick. At various times employees and subcontractors of the partnership and the other partner, Lister,were involved in thebuilding of the residence. In the summer of 1978 appellants sought to borrow money to complete the house. The shell of the house had been completed, and the roof was decked but no shakes had been nailed. The wiring was installed but was not hooked up to a power source. Appellants approached Empire FederalSavings and Loan of Kalispell for a loan but were told no funds would be released without a general contractor, so Norick and Lister agreed thatDove Constructionwould be the general contractor. A formal agreement was signed with the lender for a $30,000 loanonOctober 19, 1979. Thehome was destroyedby fire the night of November 14, 1979. Although the exact

cause of the fire is unknown, Norick speculated that it could have been caused by anoverloaded extension cord or by some space heaters placed in the basement by the chimney subcontractor, Butterfield Masonry, and the District Court

so held in granting summary judgment to the partnership. The subcontractor was being paid from Norick's personal funds. Because of the fire, the funds from the lender were never released. On February 25, 1980,Dove Construction was dissolved by written agreement. The construction enterprise, the Rustic Log Homedealership,various tools and equipment, and the remainderof the savings and checking account were given to Gordon Lister on dissolution. Lister was also to honor all debts and obligations incurred by the partnership. Appellant was to have various tools, equipment and materials. Appellant stated that the reason for the dissolution was that the partnership was not generating income. It also appears the dissolutionwas amicable. On May 14, 1981, appellants filed suit against the partnership for negligence in constructing the home which resulted in the fire. Specifically, they alleged that the partnership breached its duty to supervise the chimney subcontractor and further that thepartnership, as ageneralcontractor,was liable for not building a completedproject. Appellants asked for $50,000 in damages. The partnership

was insured against liability for its negligence by Transamerica InsuranceCorporation. Respondent partnership, through its insurancecompany, denied any involvement in the construction and consequently denied that it was negligent. It asserted that appellant Norick's own negligencewas the cause of the fire. Moreover, respondent partnership alleged that these issues were moot because appellant Norick, as general partner, cannot maintain an action at law against the partnership of which he

was a general partner. Respondent partnership moved for summary judgment. The District Court granted the partnership's motion for summary judgment on the basis that the partnership was not involved in the construction of appellants

## ' home,would receive no benefit from the project, and that the partnership could incur no liability for the destruction of the home as the negligence of the appellant Norick caused the fire. We summarize the issues on appeal in thismanner: 1. May one partner in 

### a general partnership sue the partnership in tort forhis individual property loss? 2. May the spouse of one partner in a general partnership sue the partnership in tort for her individual property loss? 3. Are there any genuine issues of material fact precluding summary judgment? Without resolution of the underlying factual conflicts, we cannot say with assurance whether appellantNorick may sue the partnership in tort for his individual property loss. Procedurally, an action may be maintained against thepartnership entity. AMontana statuteprovides: "Action aqainst business association.



### -------- 

### --- When two or more persons associated in a business transact such business under a common name, whether it comprised the name of such persons or not, the associates may be sued by such common name

# . .." Section 25-5-104,MCA. Substantively, there is a substantial question whether or not apartner has a right to sue the partnership. As ageneral rule,apartner cannotbring an action at law against the partnership of which he is a member. 60 Am.Jur.2d Partnership,B 350 at 237; 68C.J.S. Partnership, 109 at 552. The Uniform Partnership Act, which Montana hasenacted, leaves this question unresolved. However, some courts have established exceptions to this general principle. An example was recognized by the Kentucky Court of Appeals in Smith v. Hensley (Ky.Ct.App. 1961), 354 S.W.2d 744. There,plaintiff partner was allowed to bring an action at law against the partnership for negligence which caused damage to his individually-owned property which was being used in the business of the partnership. There, the negligencewas committed by a partnership employee and thus was imputed to the partnership from which the plaintiff partner was allowed recovery. See, Annot., 98ALR2d 340 (1964). The reasons for allowing this exception are manifold. The court first reasoned that apartner who paid an obligation of the partnership may obtain contribution from the partnership. Secondly, the court considered an individual loss suffered by apartner as an ordinary business loss andtherefore that partner should be given the opportunity to recover such loss. Thirdly, if one partner negligently

causesdamage to theproperty of another partner, the latter may recover from the former so the rule shouldbe nodifferent if the property is used in the partnership business. Finally, when a partner allows his property to be used in conducting partnership affairs,he should notbe required to

assume the risk of the entire loss individually. The Smith court dealtwith the problems where a partner, in suing his partnership, in reality is suing himself and that the alleged negligence of the partnership is imputed to all partners including the plaintiff partner by balancing such problems against a realistic approach which would ordinarily allow a partner to secure contribution or reimbursement for a loss incurred in the ordinary course of business. We hold, therefore, that the action by appellant Norick shouldgo forward to thepoint ofdetermining whether the partnership was negligent in causing the fire loss and whether Noricks' property was being used to further the business of thepartnership. He should not be foreclosedby summary judgment. Directing our attention to the second issue, we hold that the spouse of one general partner may sue the partnership in tort for her individual property loss. Here, it appears that GwendalynNorick is a co-owner of real property upon which the home was being built as a joint tenant with her husband. We reject the defense of interspousal tort immunity for property damage claims by one spouse against the other. The rationale behind our holding is well articulated in followingpassage:"Since the primary object of these statutes (married women's acts and emancipation acts)was tofree the wife from the husband's control of her property, the courts have generally agreed that they enable her to maintain an action against him for any tort against her property interest. Thus shemay recover from him for conversion or detention of chattels, for fraud, for trespass to land, for waste, fornegligentdamaqe to property, or inanactionof ejectmentor unlawful detainer. Likewise, since the statutesdestroy the unityof thepersons and place them upon an equality, it is held that the husband may recover from the wife for similar torts as to his property." Prosser onTorts, S 122 at 861 (4th Ed. 1971), and cases cited therein. (Emphasisadded.) Also see, 41 Am.Jur.2d Husband andWife, SS 531 and 532; Annot., 109 ALR 882 (1937); cases collected in Personal Injury: Actions, Defenses, Damages, V. 4D, Husband and Wife S 5.02 (1981); Karell, TowardAbolitionof InterspouseTort Immunity, 36 Mont. L. Rev. 251 (1975). The Restatement of Torts, second edition, S 895F, has repudiated thedefenseof interspousaltortimmunityby providing as follows: "(1)A husband or wife is not immune from tort liability tothe other solely by reason of that relationship." The cases adopting this position are collectedatAnnot., 92ALR3d 901 (1979). Finally, there are genuine issues of material fact precluding summary judgment in this case. We have already mentioned one, whether the partnership was liable for any negligence in causing the fire that destroyed the home. Others arewhether or notNorick wasnegligent, whether the partnership was in fact the general contractor, and most importantly, what caused the fire. Until these issues are resolved factually, no determination as to the correct outcome of thisactioncanbemade.For these reasons, we vacate the award of summary judgment to the partnership and remand this cause to the DistrictCourt for furtherproceedings.

Chief Justxce 

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We concur:Mr. Justice FrankB. Morrison,Jr. dissenting. Irespectfully dissent. There is little, if any,evidence that the log house in questionwas being constructedby thepartnership. In fact, it appears that plaintiffs were personally constructing the residence and that Dove Constructiononly became involved in order to facilitate a loan. The involvement of the partnership occurred at a time subsequent to any alleged negligence. However,assuming arguendo that there isevidenceof the partnership's involvement,liability still would not exist in favor of CharlesA. Norick. A partnership is not an entity and the members of the partnership are individually liable. The New York Court of Appeals in Caplan vs. Caplan (1935), 268 N.Y. 445, 198N.E. 23, 25, 101ALR 1223, 1225,said: "In the field of liability for torts it is especially apparent that a partnership cannot be regarded as an entity independent of the persons who compose it

# . . ." The Uniform Partnership Act, section 35-10-305, MCA, provides as follows: "Partnership liable for partners' wrongful act. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority ofhis co-partners, lossor injury is caused 

### -- to any person not being a partner in the partnership or 

### -- any penalty is incurred, the partnership is liable therefore to the same extent as the partner so acting or omitting to act." (emphasis supplied) The genera.1rule haswide acceptance. A partnership is not liable for an injury to a partner. A. Bromberg, Crane and Bromberg on Partnership (19681,554,p. 314-315. Narrow exceptions to the general rule have been recognized in Smithv. Hensley cited in the majority opinion. However, the Smith case is not applicable. In the case atbar plaintiff Charles A. Norick seeks to recover against the partnership for his own negligence. No case has ever recognized sucha right. Here the plaintiff seeks to recover against himself for his own negligence. The absurdity of suchaposition seemsapparent. I would permit the case of Gwendalyn E. Norick to go forward. Because this isapropertydamage case interspousal immunity does not apply. However, I would abolish interspousal immunity inMontana and hold thatone spousemay sue another spouse for damage resulting from negligent acts whether thatdamage is propertydamage or is in the nature of personal injury. I would affirm the District Court's summary judgment entered against plaintiff Charles A. Norick and vacate the summary judgment against Gwendalyn E. Norick remanding her case for trial in accordancewith the viewsherein expressed.

Mr. Justice DanielJ. Shea will fileadissent inpart later.