Court Opinion

ID: 9726153
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:34:47.253823+00
Date Added: 2024-06-11T18:25:23.763432
License: Public Domain

JUSTICE STOUDER, concurring in part and dissenting in part: I generally agree with the result of the majority. I cannot, however, accept the majority’s conclusion the defendant is entitled to retention of the patents. The Uniform Partnership Act (UPA) is the result of an attempt to codify and make uniform the common law. Partners must act pursuant to the provisions of the Act which apply when partners have not agreed how they will organize and govern their ventures. These UPA provisions are best viewed as “default” standards because they apply in the absence of contrary agreements. The scope of the Act is to be determined by its provisions and is not to be construed to extend beyond its own proper boundaries. When the partnership contract contains provisions, imposing on one or more of the partners obligations differing from those which the law ordinarily infers from the partnership relation, the courts should strive to construe these provisions so as to give effect to the honest intentions of the partners as shown by the language of the contract and their conduct under it. See Hillman, Power Shared and Power Denied: A Look at Participatory Rights in the Management of General Partnerships, 84 U. Ill. L.E 865 (1984); 59 Am. Jur. 2d Partnership secs. 33 through 38. The plaintiff (PSC) brought this action at law seeking dissolution of the partnership before expiration of the agreed term of its existence. Under the Uniform Partnership Act where dissolution is caused by an act in violation of the partnership agreement, the other partners are accorded certain rights. The partnership agreement is a contract, and even though a partner may have the power to dissolve, he does not necessarily have the right to do so. Therefore, if the dissolution he causes is a violation of the agreement, he is liable for any damages sustained by the innocent partners as a result thereof. The innocent partners also have the option to continue the business in the firm name provided they pay the partner causing the dissolution the value of his interest in the partnership. Ill. Rev. Stat. 1983, ch. 106½, pars. 38(1), (2). The duties and obligations of partners arising from a partnership relation are regulated by the express contract as far as they are covered thereby. A written agreement is not necessary but where it does exist it constitutes the measure of the partners’ rights and obligations. While the rights and duties of the partners in relation to the partnership are governed by the Uniform Partnership Act, the Uniform Act also provides that such rules are subject to any agreement between the parties. (See Ill. Rev. Stat. 1983, ch. IO6V2, pars. 8, 9, 18, 27, 37, 38, 40, 42, 43). It is where the express contract does not cover the situation or question which arises that they are determined under the applicable law, the Uniform Partnership Act. 59 Am. Jur. 2d Partnership sec. 33, at 955-56. The partnership agreement entered into by PSC and Vasso, in pertinent part, provides: “3.B.(2) [PSC] grants to the partnership exclusive license without charge for its patent rights *** for the term of this agreement. *** [I]t being understood and agreed that same shall remain the property of [PSC] *** and shall be returned to [PSC] at the expiration of this partnership ***.” The majority holds this provision in the contract is unenforceable. The only apparent reason for such holding is that its enforcement would affect defendant’s option to continue the business. No authority is cited to support such a rule. The partnership agreement further provides: “11. *** If either party shall terminate or dissolve said [partnership], the terminating party shall pay to the other party as liquidated damages [$384,612].” This provision becomes operative at the same time as the provision relating to the return of the patents. Partnership agreements are governed by the same general rules of construction as are other written agreements. If their provisions are explicit and unambiguous and do not violate the duty of good faith which each partner owed his copartners, the courts should carry out the intention of the parties. The Uniform Partnership Act should not be construed to invalidate an otherwise enforceable partnership agreement entered into for a legitimate purpose. Adams v. Jarvis (1964), 23 Wis. 2d 453,127 N.W.2d 400. Here, express terms of the partnership agreement deal with the status of the patents and measure of damages, the question is settled thereby. I think it clear the parties agreed the partnership only be allowed the use of the patents during the term of the agreement. The agreement having been terminated, the right to use the patents is terminated. The provisions in the contract do not conflict with the statutory option to continue the business and even if there were a conflict the provisions of the contract should prevail. The option to continue the business does not carry with it any guarantee or assurance of success and it may often well be that liquidation rather than continuation would be the better option for a partner not at fault. As additional support for my conclusion, it appears the liquidated damages clause was insisted upon by the defendant because of earlier conduct of the plaintiff withdrawing from a former partnership. Thus, the existence of the liquidated damages clause recognizes the right of plaintiff to withdraw the use of his patents in accordance with the specific terms of the partnership agreement. Since liquidated damages depends on return of the patents, I would vacate that part of the judgment providing defendant is entitled to continue use of the patents and provide that use shall remain with plaintiff.