Opinion ID: 2545293
Heading Depth: 2
Heading Rank: 2

Heading: Proportionate Share

Text: Colantuno argues that his proportionate share of the supplemental attorney fees award should be calculated based upon his percentage interest in the E & A partnership, rather than on a per capita basis. Tenenbaum argues that a per capita calculation is more appropriate. We agree with Tenenbaum that the court of appeals correctly held that Colantuno's proportionate share under the Act should be calculated on a per capita basis, by dividing the award evenly among the debtors. The Act does not set forth the method by which a debtor's proportionate share should be calculated. Nor does legislative history provide guidance on the issue. [2] While the Uniform Contribution Among Tortfeasors Act provides that the pro rata shares of liability of joint tortfeasors should be calculated based upon their relative degrees of fault, no such guidance is provided with regard to calculating the proportionate shares of liability for joint debtors, whose common obligation is defined by contract. See § 13-50.5-103, 5 C.R.S. (2000) (The relative degrees of fault of the joint tortfeasors shall be used in determining their pro rata shares.). The promissory note at issue in this case contractually imposed joint and several liability on the debtors. Thus, upon default, Tenenbaum could have sought full payment on the note from one or all of the debtors. See Bohrer v. DeHart, 961 P.2d 472, 475 (Colo.1998) (noting that under the common law rule of joint and several liability, any one responsible party may be liable for all losses incurred by a plaintiff). As the court of appeals correctly noted, however, the joint and several liability contractually imposed on the defendants by the promissory note was severed by operation of law when Tenenbaum released Isham from liability. § 13-50-102; Tenenbaum, 3 P.3d at 458-59. Thus, the remaining debtors were no longer jointly liable, but were only liable for their proportionate shares of the debt. § 13-50-103. The Act, however, did not provide for a method of calculating the proportionate shares. [3] Moreover, we have not previously directly addressed the issue as to how a non-settling debtor's proportionate share of a remaining obligation should be calculated. However, in Simpson v. Morgan, 124 Colo. 441, 444, 238 P.2d 200, 202 (1951), this court held that a released joint debtor who had been assigned the unsatisfied portion of a creditor's judgment, was entitled to the half of the judgment owed by the other debtor, reasoning that the creditor was the owner of the judgment and thus had the right to assign it to anyone. Id. In so holding, this court cited language from a California case stating that, [The creditor was] entitled to execution against appellant for an aliquot part of the debt based on the whole number of cosureties. [4] Id. This language supports our conclusion that a non-settling debtor's proportionate share of a joint debt should be calculated on a per capita basis. We also find statutes in other jurisdictions similar to the Act persuasive. For example, under a Minnesota statute, a creditor may release one obligor without impairing its right to collect the remainder of the debt from his co-obligors. Minn.Stat. § 548.21 (2000). That statute also provides that the discharge shall have the effect of a payment by the party discharged of the party's equal share of the debt, according to the number of debtors, aside from sureties. Id. Similarly, the Ohio Revised Code provides that when a partnership dissolves, a partner may be released from obligations arising from his association with the partnership. Ohio Rev.Code Ann. § 1779.09 (Anderson 2001). Such a release, however, does not affect the obligations of the remaining partners. Id. The Ohio Supreme Court has determined that the liability of the released joint debtor should be calculated based upon the number of other debtors, and not upon any agreement between them fixing a ratio of liability. Walsh v. Miller, 51 Ohio St. 462, 38 N.E. 381, 388 (1894). These statutes thus require that a released debtor's share of the debt be calculated on a per capita basis. It follows that the remaining debtors' proportionate shares should be calculated similarly. We are therefore persuaded that the appropriate method of calculating a joint debtor's proportionate share under the Act is by dividing the total award by the total number of debtors. Finally, we conclude that any perceived unfairness in a per capita calculation is mitigated by a debtor's common law right to sue a joint debtor for contribution that arises when a debtor has paid more than his share. Humphrey v. O'Connor, 940 P.2d 1015, 1020 (Colo.App.1996) (holding that a right of common law contribution exists for a co-obligor when the co-obligor pays more than his or her share of the original common liability); see Schiffer v. United Grocers, Inc., 329 Or. 86, 989 P.2d 10, 14 (1999) (noting that the rule providing for the release of all co-obligors when one is released, rather than for apportionment of the remaining debt among non-settling debtors is most prevalent in jurisdictions without a right of contribution). Under our approach, a debtor who believes, based on an agreement among his co-debtors concerning their relative liabilities, that he has paid more than his fair share of an obligation, may enforce such an agreement in a contribution suit. In this case, the E & A partnership agreement would govern the relative obligations of Isham, Colantuno and Dikeou in a contribution suit. [5] Thus, questions as to the partners' liability in relation to their percentage interests in the partnership are properly resolved in a contribution suit by applying the partnership agreement. In contrast, the present suit involves the enforcement of a promissory note by a creditor. The promissory note governs the rights and obligations of Tenenbaum with respect to the former partners of E & A, not the obligations of the partners relative to each other. Indeed, as discussed above, the promissory note contractually imposed joint and several liability on the former E & A partners for the original debt. The debtors had thus agreed with the creditor to be jointly and severally liable for the debt, irrespective of their relative ownership interests in the partnership or their relative liability for common obligations under the partnership agreement. Therefore, it would be inappropriate for a trial court to determine the apportionment of the judgment arising from the note based on the E & A partnership agreement. Rather, the partnership agreement should be interpreted in the context of a contribution suit between the partners, while the judgment here should be apportioned on a per capita basis. In summary, we hold that a joint debtor's proportionate share under the Act should be calculated on a per capita and not a percentage interest basis by dividing the obligation by the total number of debtors. In doing so, we recognize that a nonsettling debtor may seek contribution against his co-debtors when the non-settling debtor has paid more than his share of the obligation.