Court Opinion

ID: 9621954
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:10:04.155006+00
Date Added: 2024-06-11T13:33:47.959426
License: Public Domain

JACOBSON, Judge
(specially concurring).
I concur with the majority of this Court that this case must be reversed. I am unable, however, to concur in the reasons reached by a majority of this Court in arriving at that decision or the disposition after reversal.
In addition to the facts set forth in the majority opinion, the following facts are necessary:
In June of 1966, when the plaintiff took over the active management of the partnership business, he informed his accountant that the partnership had been terminated and that he was operating the business as a sole proprietorship. Pursuant to this instruction his accountant prepared a final partnership return as of July 1, 1966, and transferred the inventory value of the stock-in-trade from the partnership books to the plaintiff’s individual account, showing the transaction as a sale by the partnership. In the latter half of 1966 the former partnership business showed an operating loss which plaintiff’s accountant duly set off against the operating profit of plaintiff’s mattress business. In May of 1967 plaintiff voluntarily closed the former partnership business and, after the business had been closed for approximately two weeks, *136informed defendant that he was terminating the business’s lease. At this time defendant paid to plaintiff the sum of $480.00 as a purchase of the stock-in-trade and various fixtures in the business which plaintiff claimed were his sole property. At this time plaintiff had paid the disputed bank loan, but no demand was made on the defendant to contribute his proportionate share of this indebtedness. Only after May of 1967, after defendant had been operating the business for some period of time and plaintiff’s bank account was attached by the Internal Revenue Service, did this action between the parties ensue.
The majority opinion would reverse in this matter based upon the principle of law that an action between partners would not lie at law without first an accounting having been struck between them. As a general proposition I do not agree that, at least in the State of Arizona, this should be the law. This common law principle is founded primarily upon two common law concepts: (1) That an accounting could only be had in a court of equity and that therefore an action based upon debts between partners cannot be instituted in a court of law because an accounting is necessary to show the amount of the debt, if any, Bailey v. Starke, 6 Ark. 191 (1845) ; Weidig v. Moore, 11 Ohio Dec. 83 (Common Pleas 1890); Boehme v. Fitzgerald, 43 Mont. 226, 115 P. 413 (1911) ; and (2) That at common law the liabilities of partners were joint only and therefore a suit by one partner against another would result in a suit against himself. Kalamazoo Trust Co. v. Merrill, 159 Mich. 649, 124 N.W. 597 (1910).
Arizona has eradicated both of these common law theories. In Arizona the distinction between courts of chancery and law has been abolished. Ariz. Rules of Civil Procedure, Rule 1, 16 A.R.S. (1956) ; Manor v. Stevens, 61 Ariz. 511, 152 P.2d 133 (1944) ; Claypool v. Lightning Delivery Co., 38 Ariz. 262, 299 P. 126 (1931) ; Rees v. Rhodes, 3 Ariz. 235, 73 P. 446 (1890). Moreover, the Arizona Uniform Partnership Act has changed the common law liability of partners from that of joint liability only to liability both joint and several. A.R.S. § 29-215 (1956).
The substance of the rule having been removed in Arizona, we should no longer be required to do worship to the empty form. This is especially true under the liberal pleading rules of the Arizona Rules of Civil Procedure. (See Rule 18(b) “Joinder of Remedies” Rules of Civil Procedure). Admittedly, a plaintiff-partner would not be able to collect against his defendant-partner until he had in essence proved by a proper accounting that a debt was due him. However, I would view this problem as a matter of proof of the debt rather than an impairment to his right to maintain the action in the first instance. I am more than aware that the Arizona Supreme Court has spoken on this issue and this Court has no jurisdiction to overrules these prior decisions. By comparison of facts and rulings, it is possible to reach a conclusion that these prior decisions were not applicable to this case and it could be demonstrated that, at least since 1950, these pronouncements were merely dicta. However, since a more basic reason exists for a reversal in this matter, there is no necessity to engage in these judicial gymnastics.
A reading of the transcript clearly shows there is no reasonable basis in the evidence to support the trial court’s judgment.
As indicated by the facts in both the majority opinion and in this concurring opinion, the partnership between the parties terminated in June of 1966. In fact, plaintiff’s complaint alleges this to be the case. The only evidence that plaintiff was continuing the business for the purpose of winding up the affairs of the partnership comes from the mouth of the plaintiff himself. His actions, however, belie his words.
There is no evidence at all that plaintiff took any actions consistent with winding up the affairs of the partnership. On the contrary, the evidence is uncontradicted that plaintiff took over and operated the business after June, 1966, as a sole pro*137prietorship — he informed his accountant to prepare a final partnership tax return, he took the business loss as an offset against his own personal income, he closed the business entirely when it was apparent it was uneconomical to remain open, he informed the landlord that he was terminating the business lease, and then after the business had been closed he sold the stock-in-trade and fixtures as his sole property back to his former partner. After June of 1966, he kept no partnership books, he made no partnership tax returns, and he made no final partnership accounting of the business nor made demand upon his former partner for contribution at the time of sale to that former partner.
To me the conclusion is inescapable that defendant’s affirmative defense, that is, that in fact a balance had been struck between the parties in June of 1966 whereby plaintiff took the assets of the business along with the liabilities and defendant was released therefrom, is correct.
For the foregoing reasons, I would reverse the judgment of the trial court with instructions to enter judgment in favor of the defendant.