Court Opinion

ID: 4760746
Source: CourtListenerOpinion
Date Created: 2021-08-12 17:56:04.635961+00
Date Added: 2024-06-11T08:09:01.252488
License: Public Domain

Penoyar, J.
¶29 (dissenting) — Unencumbered by legal representation, the parties succeeded in creating and operating a successful business but now must seek clarification of their relative legal rights. I part ways early with the majority because I believe substantial evidence supports the trial court’s finding that a partnership was formed. I also agree with the trial court that this partnership was dissolved by Gary Woempner’s assertion of full ownership and that Gary Chevalier was entitled to be awarded the value of Ronald Bequette’s interest in the partnership. I would affirm and, therefore, respectfully dissent.
I. Finding of Fact 10
¶30 While Woempner assigns error to several findings of fact and conclusions of law, he specifically argues that substantial evidence does not support finding of fact 10. Finding of fact 10 is crucial because it is the primary basis for the trial court’s conclusion that a partnership was formed. Because substantial evidence supports finding of fact 10, I conclude that the trial court did not err by concluding that a partnership was formed between Woempner and Bequette.
*481¶31 Finding of fact 10 reads:
In early 1994, Chevalier, Bequette and Woempner met at a restaurant in Bothell, Washington to discuss starting the business that would eventually be known as Alki. During that meeting, and in subsequent telephone conversations between them, Bequette and Woempner agreed that they would “be 50/50 partners” and split the profits of Alki (no written document on the discussion of this meeting); that the business would be run out of the same offices as the other A-Team businesses; that Woempner would establish a corporation, obtain necessary business licenses, and open a company bank account; that Woempner would use a lawyer in Washington, D.C. whose name was provided by Bequette to obtain the bond, Interstate Commerce Commission permit, and assist with other regulatory issues; that both Bequette and Woempner would advance funds to cover start-up costs; that Bequette’s name would not appear on any of the “paperwork;” that Bequette would provide to Alki the list of port agents and shipping agents developed and used by [his companies]; that Chevalier would be responsible for contacting agents on Bequette’s list to establish them as Alki agents; and that Chevalier would prepare and file the initial [letters of intent] LOI’s for Alki while remaining on [Bequette’s company’s] payroll until such time as Alki had revenues sufficient to pay Chevalier’s salary. In subsequent telephone conversations, Bequette also informed Woempner that Bequette intended to sell, and Chevalier intended [to] buy, Bequette’s one-half interest in Alki at some time in the future. Woempner and Bequette did not agree to a specific term during which their agreement was to be performed.
Clerk’s Papers (CP) at 373-74.
¶32 Woempner argues that no substantial evidence shows that an agreement was made and that there was no meeting of the minds regarding sharing ownership or splitting the profits. Woempner summarizes the differing accounts to show the conflicting testimony.
¶33 But the trial court issued finding of fact 25:
Woempner’s testimony at trial was directly contrary to the testimony of Chevalier, Bequette, Fullaway, Kelly, and Roy *482Bequette on nearly every issue material to this case. The Court specifically finds that overall, [Chevalier’s] version of facts are more credible. In particular, Woempner’s testimony that he engaged Bequette as a “consultant” to assist him with the formation and start-up of Alki and that Bequette was to be paid a fee for his consulting work to be determined in Woempner’s “sole discretion” was not credible.
CP at 382-83. We do not review credibility determinations. Recreational Equip., Inc. v. World Wrapps Nw., Inc., 165 Wn. App. 553, 568, 266 P.3d 924 (2011). Chevalier testified that the three men met at a restaurant to discuss the formation of a freight forwarding business: Bequette and Woempner would be “50/50 partners,” Chevalier would run the company, and eventually, Chevalier would purchase Bequette’s share. Report of Proceedings (RP) (Oct. 22, 2003) at 237. Bequette testified that they discussed Alki International’s formation at the restaurant and that the agreement “didn’t come to fruition in any single event” but in a series of subsequent phone conversations. RP (Oct. 21, 2003, afternoon) at 33. Bequette added that he and Woempner agreed to be “50/50 partners” and that he told Woempner that he wanted to eventually sell his share to Chevalier. RP (Oct. 21,2003, afternoon) at 80. The restaurant meeting and telephone conversations occurred before Woempner filed the articles of incorporation.
¶34 Regarding Woempner’s contention that no agreement occurred at the restaurant and that the agreement was never reduced to writing, finding of fact 10 concludes that the agreement to be partners developed over the meeting and subsequent telephone conversations, and the finding acknowledges that there was no written documentation. Further, “the existence of a partnership depends upon the intention of the parties. That intention must be ascertained from all of the facts and circumstances and the actions and conduct of the parties.” Malnar v. Carlson, 128 Wn.2d 521, 535, 910 P.2d 455 (1996). Substantial evidence supports finding of fact 10.
*483II. The Partnership and Alki, The Corporation
¶35 Woempner contends that the trial court erred because the Revised Uniform Partnership Act, chapter 25.05 RCW, precludes the existence of a partnership where a business entity has been formed under another statute such as the Washington Business Corporation Act, Title 23B RCW. Chevalier responds that the formation of a corporation within a partnership does not preclude the partnership’s existence. Because I agree with the trial court that the parties formed a partnership before Alki was formed, the question is whether Woempner’s incorporation of Alki replaced the partnership with a corporation.
¶36 Woempner argues that the only business formed was Alki, the corporation. “The business existed as a corporation from that point forward and could not be a partnership.”9 Appellant’s Br. at 26. RCW 25.05.055 does state that another business entity, such as a corporation, is not a partnership. But the question here is not whether a corporation can ever be a partnership. The question here is whether these parties formed a partnership and whether it continued to exist after the incorporation of Alki and until Woempner disassociated himself.
¶37 Woempner’s argument starts and ends with his incorporation of Alki. But he fails to articulate how his incorporation of Alki terminated the partnership. The association of Bequette and Woempner was not formed under Alki; it was a partnership that predated Alki. Bequette was not issued shares or even mentioned in the incorporation documents. The trial court made no finding that the parties intended for Alki’s formation to replace the partnership, nor was any evidence offered to support that notion.
*484¶38 Once formed, a partnership continues to exist until it is dissolved under RCW 25.05.300.10 The trial court found that dissolution was required after Woempner gave notice to Chevalier of his express will to withdraw as a partner. See RCW 25.05.225(1), .300. Woempner advances no other dissolution-causing event under the statute, relying instead on the argument that the Alki corporation was the parties’ intended form. Having rejected that proposition, I agree with the trial court that the partnership continued to exist until Woempner and Chevalier parted ways.11
III. Void for Illegality
¶39 Woempner argues that the trial court erroneously concluded that he failed to prove his illegality-of-contract affirmative defense. He contends that any partnership between Bequette and Woempner was void because “the whole purpose and intent behind the purported partnership was illegal and against public policy.” Appellant’s Br. at 34. Because there is no evidence that violating the Military Traffic Management Command (MTMC) regulation amounts to an illegality and because the Woempner/Chevalier partnership did not violate the regulations, I would reject. Woempner’s argument.
¶40 In general, courts “will not aid either party to an illegal agreement where a partnership is formed to carry out an illegal business or to conduct a lawful business in an illegal manner, the courts will refuse to aid any of the parties thereto in an action against the other.” Williams v. Burrus, 20 Wn. App. 494, 497, 581 P.2d 164 (1978). An agreement violating a statute or municipal ordinance is generally void, but “this is not necessarily true where the *485agreement is neither immoral nor criminal in nature and the statute or ordinance subjects violators merely to a penalty without more.” Sienkiewicz v. Smith, 97 Wn.2d 711, 716, 649 P.2d 112 (1982). Recovery should not be denied if the promise sued upon is only remotely or collaterally related to the illegal transaction and not illegal in and of itself. Sherwood & Roberts-Yakima, Inc. v. Cohan, 2 Wn. App. 703, 710, 469 P.2d 574 (1970).
¶41 Here, the agreement itself was not illegal. The regulations provide that a person having common financial administrative control of two or more forwarding companies could simply be disqualified from doing business where those companies compete. The existence of the companies does not become void. And criminal liability would attach to Woempner only for falsely representing to the Department of the Army that he was not in a business relationship with Bequette. Thus, although Bequette’s involvement would perhaps have precluded Alki from obtaining a license, the association was not in and of itself illegal. And the partnership between Chevalier and Woempner did not violate MTMC regulations, where neither owned another freight forwarding company. Because the partnership agreement was not illegal, the trial court did not err by rejecting Woempner’s illegality of contract defense.12
IV. The Effect of the Bequette-Chevalier Sale
¶42 The majority concludes that the Bequette/Chevalier sale agreement was ineffective. On its face, this document, *486with the strange title of “49 Shares of Option for Alki Int’l,” has little more legal clarity than “50 Ways to Leave Your Lover.”13 But Woempner has not argued that this sale agreement itself was ineffective and even if he did, and even if it was, Woempner’s obligations would remain the same.
¶43 The parties’ oral discussions clarified that they agreed: Bequette was selling a 49 percent interest in the business to Chevalier, and Woempner was agreeing to the sale so long as he retained a 51 percent ownership interest. Woempner does not argue about the substance of the sale agreement; he argues only that “no partnership was ever formed. Mr. Bequette never had any partnership interest that he could transfer to Mr. Chevalier. Mr. Chevalier never obtained any interest in Alki [the corporation].” Appellant’s Br. at 33. Thus, he argues that (1) Bequette had no partnership interest to sell and (2) the agreement could not act to transfer shares in the Alki corporation. Notably, Woempner does not argue the agreement’s efficacy as a sale of a partnership interest.
¶44 Because I agree with the trial court that a partnership was formed, I am given no reason to disagree with the trial court’s conclusion of law 4, which states that the agreement effected a sale of a 49 percent partnership interest to Chevalier. Even if the sale was ineffective, Bequette would still have had his interest in the partnership. When Woempner dissolved the partnership, he would still have had the obligation to wind up the partnership, disgorge partners’ profit shares, and settle partners’ accounts. The funds owed would simply be owed to Bequette instead of Chevalier. Since the record clearly reflects that Bequette assigned any interest he had in the business to Chevalier, there is no reason to remand on this basis. Finally, the result does not blur the line between a partner*487ship and a corporation. Any interest in Alki, the corporation, remains Woempner’s.
¶45 Though the parties’ impressionistic legal expressions are inexact, their actual agreements are clear: A partnership was formed between Bequette and Woempner. Woempner formed a corporation to be the public face of partnership operations. The business flourished. Bequette sold a 49 percent interest in the partnership to Chevalier, and Woempner agreed to the sale so long as he retained a 51 percent ownership interest. Woempner acted to dissolve the partnership, and he must account to Chevalier as Bequette’s successor. The trial court properly ascertained the parties’ actual intent throughout their dealings and awarded judgment to Chevalier. I would affirm.

 Woempner also posits, “While Petitioner Woempner denies that any agreement was ever formed, his position is that even if one had been, it would have been void because it did not comply with the Statute of Frauds. RCW 19.36.010(1).” Appellant’s Br. at 23 n.2. But I decline to address this argument, as he does not develop it on appeal, contrary to RAP 10.3(a)(6). See Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992).

 RCW 25.05.300 addresses the events causing dissolution and winding up of a partnership.

 The parties have cited other cases where the line between an association as a partnership and/or a corporation was blurred. I do not find these authorities helpful because they are so different factually, none involving a validly formed partnership with two partners and the later formation of a corporation by only one of the partners.

 Woempner relies primarily on Williams, but that case is inapposite. There, contrary to a statute forbidding awarding liquor licenses to partnerships with an unqualified member, the plaintiff, who was unqualified, formed a partnership with the defendant to purchase a restaurant with a liquor license. Williams, 20 Wn. App. at 495-96. When the plaintiff sought to dissolve the partnership, the court concluded that the agreement was illegal and unenforceable. Williams, 20 Wn. App. at 496. The court noted that the case was “not one wherein the promise sued upon is only remotely or collaterally related to the illegal transaction and not illegal in and of itself.” Williams, 20 Wn. App. at 497. Here, by contrast, if there were an illegal agreement, it was between Bequette and Woempner, not between Chevalier and Woempner.

 See Paul Simon, 50 Ways to Leave Your Lover, on Still Crazy After All These Years (Warner Bros. Records 1975).