Opinion ID: 1304454
Heading Depth: 4
Heading Rank: 2

Heading: Failure to Obtain Consent to Borrowings

Text: (7a) Petitioner also quarrels with the State Bar's findings that he neglected to notify or obtain the consent of John T., and failed to procure Bernie L.'s consent, before taking out various loans encumbering the properties. Again, we adopt the State Bar's resolution of the conflicting testimony. The department made findings regarding various loans not discussed by the panel. It is true that the department merely reviewed the hearing transcripts and did not view the witnesses as they testified. Thus, the department was in no better position than this court to resolve conflicting testimony. However, our review of the record reveals no reason why the testimony regarding the various loans should be distinguished. The panel doubted petitioner's sincerity with regard to certain encumbrances, and it was reasonable for the department to conclude his testimony with regard to various other loans was not credible. The recap of the testimony provided by petitioner and amicus does not persuade us to amend these findings. Amicus correctly states that the written terms of the agreement between petitioner and John T. did not require that petitioner inform his coventurer before mortgaging the Eagle Pass property. However, petitioner's obligation to inform John T. arose from his duties as fiduciary. Petitioner owed the same fiduciary duties to his coventurer that a partner owes to his fellow partners. ( Nielsen v. Wong (1960) 182 Cal. App.2d 582, 586 [6 Cal. Rptr. 266].) (8) It is undisputed that a partner has no right to use partnership property for purposes unrelated to the partnership. ( Prince v. Harting (1960) 177 Cal. App.2d 720, 727 [2 Cal. Rptr. 545].) Furthermore, `every partner is bound to act in the highest good faith to his copartner and may not obtain any advantage over him in the partnership affairs by the slightest misrepresentation [or] concealment....' [Citations.] ( Ibid., quoting Llewelyn v. Levi (1909) 157 Cal. 31, 37 [106 P. 219].) (7b) Here, petitioner used the Eagle Pass property to secure financing to pay for expenses unrelated to the joint venture. By failing to notify and obtain the consent of John T. before encumbering that property with these loans, petitioner breached his fiduciary obligations. Amicus also stresses the fact that the department did not find Bernie L. was unaware of any loans encumbering the Bonsall property. However, assuming arguendo that Bernie L. knew of these loans, petitioner still is subject to discipline because he failed to obtain Bernie L.'s consent, as required by both the express terms of the written agreement and the fiduciary relationship between the parties.