Opinion ID: 1197637
Heading Depth: 1
Heading Rank: 14

Heading: Dissolution of partnership.

Text: The decree of the trial court also provides that:    Leo Gorger Ranches partnership is dissolved and all proceedings under this decree pertaining to said partnership shall be proceedings in winding up said partnership. Defendants assign this as error, contending that although the partnership between Leo and Ruth Gorger was dissolved on her death, a new (de facto) partnership continued after her death; that if no such new partnership existed, Leo Gorger is then in the position of a continuing partner of the original partnership and the trust is in the position of a creditor, by reason of the provisions of ORS 68.640; that if such a partnership did exist after Ruth's death, Leo Gorger desires to continue it, but that if the partnership (either old or new) must be dissolved, dissolution must be in accordance with the provisions of ORS 68.600. Plaintiffs recognize that a de facto partnership existed after the death of Ruth Gorger for the purpose of continuing the business formerly conducted by Leo and Ruth Gorger as partners under the name Leo Gorger Ranches. Indeed, plaintiff Donald Gorger testified that he elected to waive the provisions of the partnership agreement for dissolution of the partnership because he believed    that something    has been handled a certain way, this was a long time ago and    should remain as it is   . Plaintiffs' complaint, however, prayed for an order: Dissolving business relationships of the Ruth J. Gorger trust from the business operation known as Leo Gorger Ranches and distributing assets of trust therefrom as alleged herein. Plaintiffs' position is that the order of the trial court was not in error for the reason that:    [S]ince this is a trust case the powers of the equity court control the disposition of the trust assets involved in this situation and the trial court is not bound by the terms of the partnership statutes in determining solutions to dissolution and winding up of the affairs of the trust. It may be that an equity court may control the disposition of trust assets. Plaintiffs cite no authority, however, in support of their apparent contention that when trust assets include assets previously owned by a deceased partner in a partnership, a court of equity can disregard provisions of statutes which would otherwise provide the manner in which such a partnership must be dissolved. Cf. Niagara Mohawk Power Co. v. Silbergeld, 58 Misc.2d 285, 294 N.Y.S.2d 975 (1968), holding that the rights of a deceased partner are governed by partnership law, rather than by probate law. It would appear to us that upon the death of Ruth Gorger the previously existing partnership was dissolved, as a matter of law; that whether or not Leo Gorger, in continuing the operation of the business, did so as a de facto partnership or as a continuing partner, is not controlling in deciding the questions now at issue, namely: (1) whether plaintiffs are entitled to demand that this business relationship now be discontinued and that its assets be distributed and, if so (2) whether the dissolution of the partnership and the liquidation of its assets must be done in accordance with the provisions of the Uniform Partnership Act, ORS ch. 68, including ORS 68.600 and 68.640, or whether a court of equity is not bound by such provisions. We agree with the holding of the trial court to the effect that under these circumstances the plaintiffs were entitled to demand a dissolution of this business relationship and a distribution of its assets. We do not agree, however, that in doing so the trial court is not bound by the provisions of ORS 68.600 and 68.640. On the contrary, we hold that the partnership previously existing between Leo and Ruth Gorger was legally dissolved upon her death and that the winding up of its affairs and the liquidation of its assets must now be done under and in accordance with the provisions of ORS ch. 68, including ORS 68.600 and 68.640. Accordingly, this case is remanded to the trial court for that purpose. In doing so we do not now decide whether, in that process, and in the absence of some further agreement between the parties, all of the assets of the partnership must be sold and the proceeds, after payment of its liabilities, distributed to Leo Gorger and to the beneficiaries of the trust established under the will of Ruth Gorger (as would appear to be the position of the defendants), or whether such assets, including the Pendleton ranch, may be distributed as property jointly owned as tenants in common (as would appear to be the desire of the plaintiffs). That question, however, has not been presented for decision on this appeal in that it has not been briefed or argued by either party. But see ORS 68.600(1). [14]