Opinion ID: 2639199
Heading Depth: 2
Heading Rank: 2

Heading: dissolution of the partnership

Text: ¶ 14 Likewise, Buchi and Parduhn's transaction with Blackett eliminated the object of and purpose for their partnership. Partnership is defined as an association of two or more persons to carry on a business for profit. Utah Code Ann. § 48-1-3 (1998) (emphasis added). Buchi and Parduhn agreed to form their partnership to conduct a service station business. Based on the sale of the business in 1997, the trial court correctly ruled that the partnership was dissolved. See Utah Code Ann. § 48-1-26 (1998) (The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on, as distinguished from the winding up, of the business.) see also 59A Am.Jur.2d Partnership § 808 (1987) (In short, dissolution designates the point in time when the partners cease to carry on the business together.); Cave v. Cave, 81 N.M. 797, 474 P.2d 480, 484 (1970); Hansen v. Kiernan, 159 Mont. 448, 499 P.2d 787, 789-92 (1972) (reasoning that sale of critical assets of the partnership dissolved the partnership); cf. 68 C.J.S. Partnership § 303 (1998) (stating conduct inconsistent with the continuance of the partnership results in dissolution of the partnership); 59A Am.Jur.2d Partnership § 824 (1987) (same, citing Cave, 81 N.M. 797, 474 P.2d 480); Kruse v. Vollmar, 83 Ohio App.3d 378, 614 N.E.2d 1136, 1140 (1992) (same); Lindsay v. Bevins, 204 Va. 74, 128 S.E.2d 920, 922-923 (1963) (same). ¶ 15 Parduhn and Buchi agreed that their buy-sell agreement would be triggered in the event of death of either of the partners, and nowhere did the partners agree that the buy-sell agreement would remain in effect after dissolution of the partnership. Because the partnership was dissolved prior to Buchi's death, the buy-sell agreement was rendered ineffective. See Girard Bank v. Haley, 460 Pa. 237, 332 A.2d 443, 446 (1975) (If... dissolution occurred during the lifetime of [a partner], those portions of the agreement, which are concerned solely with the effect of the death of a partner, are not germane.); Goergen v. Nebrich, 12 Misc.2d 1011, 174 N.Y.S.2d 366, 369 (N.Y.Sup.Ct. 1958) ([T]he partnership was dissolved from the date of the decree. It cannot now be said that the death of the defendant ... caused the dissolution of the partnership so as to make applicable the provisions of the buy and sell agreement.); see also 59A Am. Jur.2d Partnership § 814 (1987) ([T]he effective date of dissolution is the date of the first effective act of dissolution. Subsequent acts or causes of dissolution are irrelevant.). We reverse the trial court's legal conclusion that the buy-sell agreement survived the sale of the business and the dissolution of the partnership because: (1) Buchi and Parduhn rescinded or discharged [the buy-sell agreement] by [their] acts or conduct ... inconsistent with the continued existence of the buy-sell agreement, 17A Am.Jur.2d Contracts § 558, and (2) the dissolution of the partnership prior to Buchi's death also rendered the buy-sell agreement ineffective. Accordingly, we also reverse the trial court's award of the insurance proceeds to Buchi's survivors because it was premised on the validity of the buy-sell agreement at the time of Buchi's death.