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Zachary
Zachary, Attorney
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Experience:  Lead trial/International commercial attorney licensed 11 yrs
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I am being sued by a fellow sales rep who is alleging that

Customer Question

I am being sued by a fellow sales rep who is alleging that we are business partners. I have worked for the same manufacturer for over 20 years. I am a 1099 independent sales contractor. 6 years ago I asked the CEO of the manufacturing company if we could bring another independent rep to help with a large acct I opened. He agreed and after a falling out resulting from many issues including a alcohol problem, it was decided to terminate her. We worked jointly on the accountant and shared commissions. The manufacturer paid each of us every month directly. We had no joint bank accounts, did not file 1065s or K1 and she filed in the state of Washington as a sole proprietor. The manufacturer paid and invested millions in marketing and other expenses on the acct although she and I did split fuel and traveling expenses when traveling together. How can I prove that we never entered into any business partnership and were only paid wages in the form of commissions from the manufacturer?
Submitted: 1 year ago.
Category: Legal
Expert:  Zachary replied 1 year ago.
Hi,

Thank you for your question.

You state it was "decided" to terminate her.

Who made that decision?
Customer: replied 1 year ago.
The manufacturer terminated her and took away the email address they owned
Customer: replied 1 year ago.

the manufacturer terminated her and took away her email address that they owned

Expert:  Zachary replied 1 year ago.
Thanks,

Let me start by saying you are in a good position on this case to successfully defend. I'm going to put together a more lengthy response which explains Washington State law on this subject and lists your defensive points and will be back to you in 20-30 minutes.

Thanks for your patience.

-ZDN
Customer: replied 1 year ago.

I appreciate this very much!

Expert:  Zachary replied 1 year ago.
A partnership may be implied even though there is no express contract or agreement of partnership. In re Estate of Thornton, 81 Wn.2d 72, 76 (Wash. 1972).

The law of implied partnership is accurately stated in Nicholson v. Kilbury, 83 Wash. 196, 202, 145 P. 189 (1915):

"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. While a contract of partnership, either expressed or implied, is essential to the creation of the partnership relation, it is not necessary that the contract be established by direct evidence. The existence of the partnership may be implied from circumstances, and this is especially true where...the evidence touching the inception of the business and the conduct of the parties throughout its operation, not only tends to show a joint or common venture but is in the main inconsistent with any other theory. It is well settled that no one fact or circumstance will be taken as the conclusive test. Where, from all the competent evidence, it appears that the parties have entered into a business relation combining their property, labor, skill and experience, or some of these elements on the one side and some on the other, for the purpose of joint profits, a partnership will be deemed established."

"One of the essential elements of a partnership is an agreement to share profits. When parties admit that they did not share profits and their conduct is inconsistent with the formation of a partnership, it is appropriate for the trial court to find that, as a matter of law, a partnership did not exist. "

Honarkhah v. Nelson, 2004 Wash. App. LEXIS 630 (Wash. Ct. App. Apr. 12, 2004).

"An express or implied contract is essential to a partnership relationship and must contemplate a common venture uniting labor, skill or property of the partners for the purpose of engaging in lawful commerce for the benefit of all the parties, a sharing of profits and losses, and joint right of control of its affairs."

Honarkhah v. Nelson, 2004 Wash. App. LEXIS 630 (Wash. Ct. App. Apr. 12, 2004).

In addition to the case law stated above, Washington State operates under the Revised Uniform Partnership Act, which provides in relevant part:

RCW 25.05.055
Formation of partnership.

(1) Except as otherwise provided in subsection (2) of this section, the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.

(2) An association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter.

(3) In determining whether a partnership is formed, the following rules apply:

(a) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property;

(b) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; and

(c) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment:

(i) Of a debt by installments or otherwise;

(ii) For services as an independent contractor or of wages or other compensation to an employee;

(iii) Of rent;

(iv) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner;

(v) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or

(vi) For the sale of the goodwill of a business or other property by installments or otherwise.

In your case, there are several factors which weigh against the finding of an implied partnership.

First of all, there is a direct independent contractor relationship between the manufacturer and you, and the manufacturer and her. Further, she was paid directly from the manufacturer. Thus, although there was a share in travelling expenses, there was no major investment by either of you that could constitute the founding of a partnership, nor was there a receipt of shared profits. Rather, the manufacturer made most of the investment furthering your sales efforts and there were no joint profits. The fact that the commissions were split on the account does not arguably support the split of profits because the split in commission was made by the manufacturer and paid to each of you separately. Thus, there was no actual partnership profit received. You were both being paid independently from each other. There is simply no evidence that there was an agreement to share the profits, as there was no joint receipt of profits to be shared.

This combined with the fact that she filed as a sole proprietor and did not file partnership tax returns, did not have the ability to hire or fire employees, and did not have a joint bank account shows inconsistency with the existence of a partnership. Further, there is no evidence that there is an agreement to share in any losses, or in fact that there were joint losses that could be shared in the first place.

The above statements are your legal argument as to why there is no partnership. However, the next issue is how you need to proceed to establish this defense.


The best way to proceed here would be to hire an attorney to file an answer and proceed with your defense. An assertion of a partnership is not one that may be simply defeated and dismissed immediately. She will have the opportunity to conduct discovery to prove her case.

After the discovery period, you would file a Motion for Summary Judgment which essentially lays out the argument stated above and says there are no facts in existence which can show that there was a share of profits, and her actions and the proceedings of the parties in general is inconsistent with the existence of a partnership. At this point, she would be given the opportunity to respond to raise an evidentiary point to show that there are facts in dispute which would tend to prove her side of the story and thus there must be a jury trial. Assuming that she cannot raise this kind of evidence, the judge would then dismiss her case on your summary judgment motion.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am compensated by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Best Regards,
ZDN
Customer: replied 1 year ago.

Thank you for your detailed answer. Can you tell me how a judge can decipher if the monies she received were wages in the form of commissions or partnership profits as she is pleading?

Expert:  Zachary replied 1 year ago.
To me, that is the key issue. She is being paid 1099 wages from the manufacturer. This is not a partnership profit. You are being paid separately. She is attempting to say that because there is a split on the commission, this is thus a joint profit and gives rise to a partnership. This is simply not the case. A partnership profit would be a payment received by both of you at the same time and then divided by you. What is going on with the commission is something else. This is where she loses the case, as there is no evidence of a share in profits.
Customer: replied 1 year ago.

Thank you very much. I am so frightened of this situation! She is suing for mil and it would absolutely ruin me. I am a single mom putting 2 great daughters thru law and biology degrees and cant loose this! thank you for your help!

Expert:  Zachary replied 1 year ago.
You are very welcome.

Please remember to rate my answer positively. Otherwise, I won't be paid at all for my work on your question.

Please also let me know if there is anything else I can do for you.

-ZDN
Zachary, Attorney
Category: Legal
Satisfied Customers: 3985
Experience: Lead trial/International commercial attorney licensed 11 yrs
Zachary and 8 other Legal Specialists are ready to help you
Customer: replied 1 year ago.
An attorney in WA today told me that I have a very large chance to loose this case. He said they will argue that the commissions we received were the profits of our combined efforts and therefore we were in a partnership. Do you think this is possible?

Thank you,
Cindee
Expert:  Zachary replied 1 year ago.
I respectfully XXXXX XXXXX attorneys will always disagree with each other.

You didn't receive combined profits. You received two separate payments from your efforts working on the same account for a company who hired you both as contractors. If you were partners, why wouldn't the company pay you a single amount and you would split it separately? It's because the arrangement that is important is not the agreement between you and her (which to my understanding there was none). In fact, her share of the commission was not established by you, it was established by the company. There was only a contract between her and company, not between you and her.

Of course, there is a chance that if you do not put up a strong defense that the other person could win. I would definitely not call it a strong case against you however. There simply is no intention that there be a partnership.

I've reviewed Washington case law back to 1909. There are several cases where real estate agents are fighting over commissions and the courts will find that there is a partnership where the parties were acting together as a joint venture for the sale of the property and had an agreement between themselves, usually orally, regarding the manner in which the commission from the sale would be split. Based on what I know from your facts, your case is different and does not fall under this line of cases.
Customer: replied 1 year ago.
Thank you! I just added 40 dollars as a bonus to you. Is it possible to see if there is any case law that would cover a situation closer to mine? A case where it was determined that co reps were paid commission but found not to be in a partnership?
Expert:  Zachary replied 1 year ago.
I've looked for that case and could not locate it.

Here are the cases about the real estate commission (which is probably what the lawyer you were talking to is basing his argument on):

128 Wn.2d 521, *; 910 P.2d 455, **;
1996 Wash. LEXIS 13, ***

ROBERT F. MALNAR, Petitioner, v. ROBERT CARLSON, ET AL., Respondents.

No. 62974-9

SUPREME COURT OF WASHINGTON

128 Wn.2d 521; 910 P.2d 455; 1996 Wash. LEXIS 13

October 27, 1995, Oral Argument
February 1, 1996, Filed


CASE SUMMARY
PROCEDURAL POSTURE: Petitioner individual sought review of the order of the Court of Appeals, Washington, which affirmed the dismissal of petitioner's action for an accounting of partnership assets based on the statute of limitations.

OVERVIEW: Petitioner individual brought an action against respondent broker alleging that a partnership existed between them to purchase, develop and resell real estate, and to share in the profits. Respondent moved for summary judgment, and the trial court granted summary judgment holding that the statute of limitations had run in the action. The court reversed the grant of summary judgment, and remanded the case for trial. The court held that there was no evidence that indicated petitioner was being excluded from the alleged partnership at the time of the purchase of the property. The court held that a material dispute of fact existed as to when the partnership was dissolved. There was nothing in the alleged partnership in the present case to bring it within the statute of frauds. The determination whether a partnership existed in this case could not have been determined on summary judgment because of the existence of material disputes of fact.

OUTCOME: The court reversed the grant of summary judgment in favor of respondent broker and remanded for trial. The court determined that dismissal based upon a statute of limitations defense was premature because a material dispute of fact existed as to date when partnership was dissolved.


CORE TERMS: partnership, partner, summary judgment, statute of frauds, statute of limitation, dissolution, oral agreement, accounting, real estate, partnership agreement, real estate, cause of action, material fact, limitation period, easement, nonmoving party, joint venture, began to run, resale, buy, verbal, partnership property, buying and selling, present case, favorable, credibility, contract law, cause of action accrues, begins to run, review denied


LEXISNEXIS® HEADNOTES Hide

Contracts Law > Defenses > Statutes of Limitations

Governments > Legislation > Statutes of Limitations > Time Limitations

HN1 The statute of limitation for an action on a contract or liability, express or implied, which is not in writing and does not arise out of any written instrument is three years. Wash. Rev. Code § 4.16.080(3). More Like This Headnote | Shepardize: Restrict By Headnote

Governments > Legislation > Statutes of Limitations > Time Limitations

HN2 The statute of limitation time period generally runs from the time an action has accrued. A cause of action accrues when a party has a right to apply to a court for relief. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > General Overview

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Winding Up > Accounting

Business & Corporate Law > General Partnerships > Management Duties & Liabilities > Rights of Partners > General Overview

HN3 In an action for an accounting of the affairs of a partnership, the time of accrual is governed by the Uniform Partnership Act. Wash. Rev. Code § 25.04. In Washington, a cause of action for the accounting of a partnership interest accrues at "dissolution." More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Winding Up > Accounting

HN4 See Wash. Rev. Code § 25.04.430.

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > Breach of Agreement & Expulsion

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Winding Up > Accounting

Business & Corporate Law > General Partnerships > Management Duties & Liabilities > Rights of Partners > General Overview

HN5 Wash. Rev. Code § 25.04.220 provides that any partner shall have the right to a formal account as to partnership affairs if he is wrongfully excluded from the partnership business. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > Breach of Agreement & Expulsion

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Winding Up > Accounting

Governments > Legislation > Statutes of Limitations > Time Limitations

HN6 The statutory period of limitation does not begin to run against an action for an accounting prior to the dissolution of the partnership, or the exclusion of the complaining partner from participating in the affairs of the partnership. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > General Overview

HN7 Dissolution of a partnership is defined by statute. More Like This Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > General Overview

HN8 See Wash. Rev. Code § 25.04.290.

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > General Overview

HN9 Partnerships are presumed to continue until evidence shows a dissolution has occurred. More Like This Headnote

Civil Procedure > Summary Judgment > Burdens of Production & Proof > General Overview

Governments > Legislation > Statutes of Limitations > Pleading & Proof

Governments > Legislation > Statutes of Limitations > Time Limitations

HN10 The party moving for summary judgment based on the statute of limitation has the burden to show there is no material dispute of fact regarding the date of dissolution. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Formation > General Overview

HN11 A partnership may be found to exist even though title to the alleged partnership property is held in the name of only one of the alleged partners. More Like This Headnote | Shepardize: Restrict By Headnote

Contracts Law > Statutes of Frauds > General Overview

Contracts Law > Types of Contracts > Oral Agreements

Real Property Law > Purchase & Sale > Contracts of Sale > Enforceability > Statutes of Frauds

HN12 In Washington an oral agreement of partners for the purpose of buying and selling real estate, whereby lands are purchased and held in the name of one partner for profit and resale, is not within the statute of frauds. Such agreements are not contracts for the sale or transfer of interests in land and need not be in writing. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Summary Judgment > Motions for Summary Judgment > General Overview

Civil Procedure > Summary Judgment > Standards > Appropriateness

Civil Procedure > Summary Judgment > Standards > Genuine Disputes

HN13 A summary judgment motion can be granted only when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. The court must consider the facts in the light most favorable to the nonmoving party, and the motion should be granted only if, from all the evidence, reasonable persons could reach but one conclusion. The burden of showing there is no issue of material fact falls upon the party moving for summary judgment. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Formation > Partnership Agreements

Contracts Law > Types of Contracts > Partnership Agreements

HN14 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. While a contract of partnership, either expressed or implied, is essential to the creation of the partnership relation, it is not necessary that the contract be established by direct evidence. A partnership may be found to exist even though title to the alleged partnership property is held in the name of but one of the alleged partners. Where, from all the competent evidence, it appears the parties have entered into a business relation combining their property, labor, skill and experience, or some of these elements on the one side and some on the other, for the purpose of joint profits, a partnership will be deemed established. More Like This Headnote | Shepardize: Restrict By Headnote


HEADNOTES / SYLLABUS Show


COUNSEL: James E. Graham, for petitioner.

Robert S. Felker and Felker, Lazares & Johnston; and Ross E. Taylor, for respondents.

JUDGES: Guy, J., Durham, C.J., Dolliver, XXXXX, XXXXXson, Madsen, Alexander, Talmadge, J.J., Pekelis, J. Pro Tem., concurring. Sanders, J. (did not participate)

OPINION BY: GUY

OPINION


[*523] [**456] En Banc. Guy, J. -- The trial court dismissed this action for an accounting of partnership assets based on the statute of limitation. We reverse and remand for trial.

FACTS

On January 17, 1992, Ronald Malnar (Plaintiff) sued Robert Carlson (Defendant) alleging that a partnership existed between them to purchase, develop and resell real estate, and to share in the profits. The Plaintiff sought an accounting of the profits of the joint venture. 1 The Defendant [*524] moved for summary judgment based on three grounds: (1) the case was not filed within the statute of limitation, (2) the verbal partnership agreement was unenforceable under the statute of frauds, and (3) there were no issues of material fact regarding the existence of a verbal partnership agreement [***2] between the parties. The trial court granted summary judgment based on the statute of limitation. The Court of Appeals affirmed, holding that the statute of limitation had run on the action. It therefore declined to reach the issues involving the statute of frauds or the sufficiency of facts to show the existence of the partnership. Malnar v. Carlson, No. 16722-1-II (Apr. 20, 1995).

FOOTNOTES

1 Although the original complaint referred to a "joint venture" between the parties, all of the other documents and briefing address the issue whether there was a partnership. Washington case law indicates that a joint adventure is in the nature of a partnership and the rights, duties and liabilities of joint adventurers are generally subject to the rules applicable to partnerships. E.g., Rains v. Walby, 13 Wn. App. 712, 720, 537 P.2d 833 (1975), review denied, 86 Wn.2d 1009 (1976); Barrington v. Murry, 35 Wn.2d 744, 752, 215 P.2d 433 (1950); Rayonier, Inc. v. Polson, 400 F.2d 909, 914 (9th Cir. 1968).


[***3] [1] Since this case involves review of a summary judgment, the facts must be considered in the light most favorable to the Plaintiff, the nonmoving party. Simpson Tacoma Kraft Co. v. Department of Ecology, 119 Wn.2d 640, 646, 835 P.2d 1030 (1992).

From approximately 1977 to 1984, the Plaintiff worked for the Defendant as a sales manager and salesperson in the Defendant's real estate brokerage firm. After the Plaintiff ceased working for the Defendant's brokerage firm, he set up his own firm; but the two men continued to work together in real estate ventures. The Plaintiff's Declaration states that from early in their business relationship, the two men had an oral agreement to put together pieces of property and share in the profits as partners. The Plaintiff states that, pursuant to an oral agreement, he was to locate properties that were economically viable for development. The Defendant was to put up the earnest money and finance the acquisition and the Plaintiff was to participate in developing and selling the property. The Plaintiff states they were to split profits after the Defendant received the return of his investment money. The Defendant denies the existence of any [***4] such partnership [*525] but does admit the two men were partners in the purchase, development and resale of three separate properties. There is no dispute about the sharing of profits from these three properties. The parties agree that those three partnerships were in writing, although the Plaintiff states the written agreements were not executed until after the purchase of each piece of property.

This case arises out of the purchase of 80 acres of land known as "Golden Valley." On December 27, 1984, the Defendant signed an agreement to buy this property from Charles [**457] Richardson. The Golden Valley property was adjacent to property which the parties agree they owned together. In a sworn statement by the Richardson brothers dated March 5, 1988, the Richardsons state the Plaintiff made the original contacts with them to offer to buy their land, and because of those contacts they called the Plaintiff when they decided to sell the property. They also stated that the Plaintiff set up a meeting to introduce them to "his partner . . . Bob Carlson," and that the meeting was the first time they had ever seen or heard from Mr. Carlson. They further stated that "t has always been our understanding that [***5] Mr. Malnar and Mr. Carlson were equal partners in this purchase."

Almost a year later, the Defendant obtained a contradictory sworn statement from XXXXX XXXXX stating that he had met Mr. Carlson and Mr. Malnar together and that he had sold the property to Mr. Carlson as Golden Valley, Ltd. In light of this obvious dispute of fact, the Defendant concedes for purposes of summary judgment it must be assumed the Plaintiff brought the Richardsons into contact with the Defendant. The Plaintiff claims, and the Defendant does not deny, that the purchasing documents were drafted by the Plaintiff. The Defendant admits that no commission was ever paid to the Plaintiff for the sale of the property and offers no explanation for the Plaintiff's involvement in the transaction.

The Real Estate Purchase and Sale Agreement was signed by "Robert Carlson (Gen. Partner) for Golden Valley [*526] Ltd and or Assigns." However, the real estate contract lists the purchaser as "Golden Valley Ltd., a Washington corporation. " The record shows that Golden Valley Ltd. was not incorporated until some time after the purchase of the property. The Defendant is the sole shareholder and officer of that corporation. [***6] The Plaintiff's Declaration states he was not ever aware that "Golden Valley Ltd" was later incorporated, and that he believed this was the name of the partnership that he and the Defendant were going to use to hold the property. He asserts that not until he received a letter from the Defendant dated January 18, 1989, denying the existence of the partnership agreement, was he told that Golden Valley was a corporation.

The Plaintiff declares that he arranged the purchase of the property, prepared most of the documents, and performed a great deal of work developing the property for resale. His Declaration states he worked with surveyors, heavy equipment operators, real estate agents, and bankers to help develop the land. He states he submitted to the Defendant 1,300 pages of documents and logs showing the time spent developing the property. The Defendant states the Plaintiff did not submit the documents to the court but does not deny having received them. The Defendant's Affidavit states that he has not accepted money, labors or other deeds from the Plaintiff so as to confer interest in the property. However, the Defendant submitted copies of checks, dated from October 1985 to January [***7] 1986 payable to the Plaintiff as reimbursement for "diesel gas," "blasting bill" and "cat parts" on Golden Valley. There is no indication why the Plaintiff was involved with the purchase or development of the property if he was not the real estate agent receiving a commission and was not at all involved in developing the property or in any partnership relationship. The Plaintiff was no longer working for the Defendant's real estate firm after February 1984, and the checks were dated after that date.

The record contains a copy of an easement granted from [*527] a third party that benefits the Golden Valley property. Both the Plaintiff and the Defendant are named as grantees of the easement. The Plaintiff claims, and the Defendant does not deny, that Mr. Malnar obtained the easement which benefits the Golden Valley property. The Defendant states that the easement names the Plaintiff only because it also benefits the adjacent property which is owned by both parties. However, the Plaintiff disputes this, and this issue remains an unresolved factual dispute. From the face of the easement, it is only possible to determine that the benefited property included the Golden Valley land.

According [***8] to the Plaintiff, he repeatedly asked the Defendant to put their partnership agreement on the Golden Valley property in writing, as had been done after purchase of [**458] property in their prior partnerships, but that the Defendant had made excuses and promised to do so at a later date.

On May 11, 1988, the Plaintiff and the Defendant had a meeting at which the Defendant left angry and shouting. There is no information in the record to indicate what the meeting was about or why the Defendant was angry. It does appear the parties were also involved in a dispute over the sale of some unrelated property. The Plaintiff alleges the May 11 meeting was a dispute over this other partnership property and did not even involve the present dispute. When asked in his deposition whether he met with the Defendant after this meeting, the Plaintiff responded that he did not know and that the Defendant had been at the office building a time or two and that he had "seen him out there." The Plaintiff also states that since the Defendant had run out of money to continue development of the Golden Valley property, there was no reason for meetings and that their prior course of conduct on other partnerships had [***9] not included meetings. The Defendant does not deny that active development had ceased on the property because of lack of funds or that the parties had not had meetings during prior partnerships.

[*528] On January 5, 1989, the Plaintiff wrote a letter to the Defendant regarding a variety of disputed matters. The Defendant responded by letter dated January 18, 1989, in which he discussed a number of disputed matters and concluded by denying he had ever entered into a partnership agreement with the Plaintiff regarding the Golden Valley property. The Defendant stated that the Plaintiff was not entitled to any commission for the sale of that property, that they had no verbal partnership, and that the Plaintiff had no interest in Golden Valley. On January 17, 1992, one day short of three years later, the Plaintiff filed this action.

The trial court granted the Defendant's motion for summary judgment and dismissed the suit, finding the statute of limitation had run. Although the trial court's reasoning is not part of the record, the parties appear to agree the trial court found the statute of limitation began to run on the date the Golden Valley property was purchased. The Court of Appeals, in [***10] an unpublished opinion, affirmed the dismissal on statute of limitation grounds but found the limitation period began to run on May 11, 1988, the date the parties "had a heated argument over their relationship." Malnar v. Carlson, No. 16722-1-II, slip op. at 6. We accepted review.

ISSUES

1. Is Plaintiff's claim barred by the statute of limitation?

2. Does an oral agreement between partners to buy and sell real estate and to divide the profits violate the statute of frauds?

3. Did the Defendant meet his burden of proof to demonstrate the absence of any genuine issue of material fact regarding the existence of a partnership or joint venture between the parties?

[*529] DISCUSSION

Statute of Limitation

HN1The statute of limitation for an action on a contract or liability, express or implied, which is not in writing and does not arise out of any written instrument is three years. RCW 4.16.080(3). The parties here do not dispute that the three-year statute of limitation applies to this action involving an oral contract to form a partnership. The dispute involves when this statute of limitation period began to run.

[2] HN2The statute of limitation time period generally runs from the time [***11] an action has accrued. Rice v. Dow Chem. Co., 124 Wn.2d 205, 211, 875 P.2d 1213 (1994). A cause of action accrues when a party has a right to apply to a court for relief. E.g., U.S. Oil & Ref. Co. v. Department of Ecology, 96 Wn.2d 85, 91, 633 P.2d 1329 (1981).

HN3In an action for an accounting of the affairs of a partnership, the time of accrual is governed by the Uniform Partnership Act. RCW 25.04. See also Russell G. Donaldson, Annotation, When Statute of Limitations Commences to Run on Right of Partnership Accounting, 44 A.L.R.4th 678, 684 (1986). In Washington, a cause of action for the accounting [**459] of a partnership interest accrues at "dissolution." RCW 25.04.430 provides:
HN4The right to an account of his interest shall accrue to any partner, or his legal representative, as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence of any agreement to the contrary.
See also Taplett v. Khela, 60 Wn. App. 751, 754-58, 807 P.2d 885 (1991) (under RCW 25.04.430, the right to a partnership accounting accrues at dissolution); Washington State Bar Ass'n, [***12] Washington Partnership Law and [*530] Practice Handbook § 6.2.2, at 6-3 (1984). Additionally, HN5RCW 25.04.220 provides in relevant part:
Any partner shall have the right to a formal account as to partnership affairs:

(1) If he is wrongfully excluded from the partnership business . . . .


[3] HN6The statutory period of limitation does not begin to run against an action for an accounting prior to the dissolution of the partnership, or the exclusion of the complaining partner from participating in the affairs of the partnership. Davis v. Alexander, 25 Wn.2d 458, 467, 171 P.2d 167 (1946); see also Finkelstein v. Security Properties, Inc., 76 Wn. App. 733, 736, 888 P.2d 161 (exclusion and dissolution each give rise to a cause of action for an accounting of a partnership), review denied, 127 Wn.2d 1002, 898 P.2d 307 (1995); see also Colwell v. Eising, 118 Wn.2d 861, 867, 827 P.2d 1005 (1992). HN7Dissolution of a partnership is defined by statute. HN8RCW 25.04.290 provides:
The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from winding up of the business.
[***13] [4] [5] Washington cases hold that HN9partnerships are presumed to continue until evidence shows a dissolution has occurred. Alaska Banking & Safe Deposit Co. v. Simmons, 67 Wash. 673, 678, 122 P. 319 (1912); see Carstens v. Earles, 26 Wash. 676, 694, 67 P. 404 (1901). HN10The party moving for summary judgment based on the statute of limitation has the burden to show there is no material dispute of fact regarding the date of dissolution. See Finkelstein, 76 Wn. App. at 736.

In the present case, there is no evidence of the dissolution of the partnership or the exclusion of the Plaintiff from the partnership until the Plaintiff received the Defendant's letter dated January 18, 1989.

The trial court's apparent holding that the cause of action [*531] for an accounting of the partnership accrued on the date the property was acquired is not supported by any evidence in the record. The purchase of the Golden Valley property is allegedly the beginning, and not the dissolution, of the partnership.

There is no evidence that indicates the Plaintiff was being excluded from the alleged partnership at the time of the purchase of the property. Although the real estate contract was ultimately signed by [***14] the Defendant as "Golden Valley Ltd., a Washington corporation, " there is evidence in the record which shows that such a corporation did not exist at the time of the purchase. More importantly, the Plaintiff's Declaration states he was not aware Golden Valley had been incorporated after the purchase and that he was not aware of the existence of Golden Valley as a corporation until January 18, 1989, when the Defendant informed him in writing that he was denying the existence of the partnership. The Plaintiff relies on the Real Estate Purchase and Sale Agreement in which the Defendant signed as "Robert Carlson (Gen. Partner) for Golden Valley Ltd and or Assigns." The Defendant offers no explanation as to why he signed as a "general partner" if no partnership existed. He claims he was always the sole owner of the property and had no partners in the acquisition or development of the property. Although the Defendant does not deny that the Plaintiff located the property and introduced him to the seller and prepared the real estate documents, he offers no explanation for the Plaintiff's participation in the purchase. Additionally, it is undisputed that the Plaintiff and the Defendant had [***15] prior partnerships for the development of property where the property was held in the name of another entity or where only the Defendant signed the real estate documents in his own name.

[6] [**460] The Defendant appears to be arguing that the fact the Plaintiff had no legal ownership in the corporation which the Plaintiff asserts owns the property proves there is no partnership. However, HN11a partnership may be found [*532] to exist even though title to the alleged partnership property is held in the name of only one of the alleged partners. E.g., Davis, 25 Wn.2d at 463-66; In re Estate of Thornton, 81 Wn.2d 72, 499 P.2d 864 (1972).

The record also does not support the conclusion by the Court of Appeals that the statute of limitation began to run on the date the parties had a heated argument over their relationship. There is no evidence in the record about the substance of the argument which occurred on May 11, 1988. The Plaintiff alleges the meeting involved a dispute about a different piece of property which the parties owned together. There is nothing in the record which would indicate otherwise. The Defendant does not allege that the May 11 meeting was concerning the Golden Valley [***16] property, and neither party alleges that any statement was made that either party considered their partnership to be terminated. Since there is no evidence that the partnership regarding the Golden Valley property was even discussed at the May 11 meeting, it is error to conclude a dissolution of the partnership occurred on that date.

We hold the Court of Appeals erred in holding as a matter of law that the partnership dissolved on May 11, 1988. As noted, in a motion for summary judgment the facts must be considered in the light most favorable to the nonmoving party. E.g., Simpson Tacoma Kraft Co., 119 Wn.2d at 646. Taking the evidence in the light most favorable to the Plaintiff, the nonmoving party, a material dispute of fact exists as to when the partnership was dissolved. The only evidence in the record which shows a denial of the existence of the Golden Valley partnership is contained in the letter from the Defendant to the Plaintiff dated January 18, 1989. Within three years of that date the Plaintiff filed suit. Since a material dispute of fact exists on when the statute of limitation time period began to run, the factual issue must be decided by the finder of fact on [***17] remand.

Statute of Frauds

The Defendant argues that even if the statute of limitation [*533] has not run on the cause of action, the verbal partner ship agreement is unenforceable because it violates the statute of frauds. We disagree.

[7] The Defendant relies on RCW 64.04.010 which generally requires conveyances of real estate to be by deed. This statute does not apply to the present case. HN12In Washington an oral agreement of partners for the purpose of buying and selling real estate, whereby lands are purchased and held in the name of one partner for profit and resale, is not within the statute of frauds. Such agreements are not contracts for the sale or transfer of interests in land and need not be in writing. Davis, 25 Wn.2d at 463-66; Froiseth v. Nowlin, 156 Wash. 314, 287 P. 55 (1930); see King v. Northern Pac. R.R., 27 Wn.2d 250, 177 P.2d 714, 171 A.L.R. 190 (1947); Washington Partnership Law and Practice Handbook, supra, § 3.5.2. This law is in accord with settled contract law. E.g., 2 Arthur L. Corbin, Corbin on Contracts § 411 (1950) (a contract between two persons to go into the business of buying and selling real estate as partners or as joint adventurers, [***18] sharing the profits and losses thereof, is not within the statute of frauds unless there is a provision for the transfer of specific land from one party to the other); see also 2 Lawrence A. Cunningham & Arthur A. Jacobson, Corbin on Contracts § 123 (Supp. 1994); John D. Calamari & Joseph M. Perillo, Contracts 797 (3d ed. 1987) (a contract between partners to buy and sell real estate and to divide the profits is not within the statute of frauds section relating to interests in land); Claire M. Dickerson, Partnership Law Adviser § 2.1.1, at 27 (1991) (a partnership formed for the purpose of buying real estate need not be in writing).

[8] [9] The Defendant also argues that the partnership agreement is unenforceable because it violates the portion of the statute of frauds which requires a writing for an agreement that by its terms is not to be performed [**461] in one year. The Defendant relies on RCW 19.36.010. We rejected this argument in a case with similar facts to the present case. In Davis v. Alexander, 25 Wn.2d 458, 171 P.2d 167, this Court was [*534] considering a case where two parties had an oral agreement to form a partnership for the purpose of buying and reselling real estate [***19] and to divide the profits, the plaintiff contributing his skill in buying and selling the properties and the defendant contributing the purchase money. We held that the provision of the statute of frauds invalidating an oral agreement which by its terms is not to be performed within one year had no application to the oral partnership because it was for an indefinite length of time and terminable at will. Davis, 25 Wn.2d at 466. This holding is in accord with established contract law. Calamari & Perillo, supra, § 19-18 (if, by its terms, performance is possible within one year, however unlikely that may be, the agreement is not within the statute of frauds; and it is also legally immaterial that the actual period of performance exceeded one year).

There is nothing in the alleged partnership in the present case to bring it within the statute of frauds. The partnership did not involve the transfer of the land from one of the partners to another, and the agreement could by its terms have been performed within a year. According to Washington law and black letter contract law, the alleged oral agreement was not violative of the statute of frauds.

Summary Judgment on the Existence [***20] of the Partnership

The Defendant argues that he met his burden of showing the absence of any genuine issue of material fact regarding the existence of a joint venture or partnership relationship between the Plaintiff and himself and that summary judgment was properly granted. The record does not support this contention.

[10] When reviewing an order of summary judgment, this Court engages in the same inquiry as the trial court. HN13A summary judgment motion can be granted only when there is no genuine issue as to any material fact, and the [*535] moving party is entitled to judgment as a matter of law. The court must consider the facts in the light most favorable to the nonmoving party, and the motion should be granted only if, from all the evidence, reasonable persons could reach but one conclusion. Marincovich v. Tarabochia, 114 Wn.2d 271, 274, 787 P.2d 562 (1990); CR 56. The burden of showing there is no issue of material fact falls upon the party moving for summary judgment. Hash v. Children's Orthopedic Hosp., 110 Wn.2d 912, 915, 757 P.2d 507 (1988).

[11] The pivotal issue in this case is whether the parties entered into a partnership agreement regarding development of the Golden Valley [***21] property. This Court has explained that HN14the 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. While a contract of partnership, either expressed or implied, is essential to the creation of the partnership relation, it is not necessary that the contract be established by direct evidence. A partnership may be found to exist even though title to the alleged partnership property is held in the name of but one of the alleged partners. Where, from all the competent evidence, it appears the parties have entered into a business relation combining their property, labor, skill and experience, or some of these elements on the one side and some on the other, for the purpose of joint profits, a partnership will be deemed established. E.g., In re Thornton, 81 Wn.2d at 79 (citing Nicholson v. Kilbury, 83 Wash. 196, 202, 145 P. 189 (1915)); Kintz v. Read, 28 Wn. App. 731, 734, 626 P.2d 52 (1981); see also Goeres v. Ortquist, 34 Wn. App. 19, 22, 658 P.2d 1277 (where no express agreement exists, whether the parties have entered into a joint [***22] venture is a question of fact), review denied, 99 Wn.2d 1017 (1983); Ocean View Land, Inc. v. Wineberg, 65 Wn.2d 952, 400 P.2d 319 (1965) (whether there existed an oral agreement of partnership or joint venture involved factual dispute).

[*536] [12] [**462] The determination whether a partnership existed in this case cannot be determined on summary judgment because of the existence of material disputes of fact. The Plaintiff states under oath in his Declaration that he and the Defendant had a verbal partnership for the acquisition, development and sale of the Golden Valley property. While the Defendant admits the existence of other prior partnerships to buy and sell land between the parties, he denies the existence of a partnership regarding the Golden Valley land. The Defendant signed the earnest money agreement as a "general partner," and there is an easement in favor of the subject property granted in the names of both the Defendant and the Plaintiff. There are receipts in the record for reimbursement to the Plaintiff for "cat parts," "diesel gas," and "blasting." The Defendant does not deny that the Plaintiff drafted the purchase documents or that the Plaintiff submitted to him 1,300 [***23] pages of documents showing work the Plaintiff alleges he performed in developing the property for resale. The Defendant has offered no explanation for the Plaintiff's involvement in the purchase or alleged development of the property. There are contradictory statements from the seller of the property, one of which states that he understood that the Plaintiff and Defendant were equal partners in the purchase of the property. Essentially, this case rests on the credibility of the parties who make conflicting statements of fact. Determinations of matters of credibility are for the trier of fact. The Defendant has failed to carry his burden to show there is no material dispute of fact. Hence, summary judgment dismissing the cause of action was improper.

CONCLUSION

We reverse the grant of summary judgment and remand for trial. We hold that a material dispute of fact exists on the issue of when the statute of limitation started to run on the cause of action, that the alleged oral agreement is not within the statute of frauds, and that there are material [*537] disputes of fact regarding the existence of the alleged partnership which prohibit summary judgment.

Durham, [***24] C.J., Dolliver, XXXXX, XXXXXson, Madsen, Alexander, and Talmadge, JJ., and Pekelis, J. Pro Tem., concur.

25 Wn.2d 458, *; 171 P.2d 167, **;
1946 Wash. LEXIS 410, ***

A. C. Davis, Respondent, v. A. P. Alexander, Appellant 1


1 Reported in 171 P. (2d) 167.

No.XXXXXof Washington, Department One

25 Wn.2d 458; 171 P.2d 167; 1946 Wash. LEXIS 410


July 18, 1946


CASE SUMMARY
PROCEDURAL POSTURE: Defendant partner sought review of a judgment of the Superior Court of King County (Washington), which found in favor of plaintiff partner in an action in equity brought to establish a special partnership by oral agreement between plaintiff and defendant to purchase and sell real estate.

OVERVIEW: The trial court found for plaintiff and ordered the dissolution of the partnership, an accounting, and recovery of his net share of the profits. Defendant appealed. On review, the court affirmed and found that that the partnership agreement to share profits and losses arising from the purchase and sale of real estate was not a contract for the sale or transfer of interests in land and did not need to be in writing. The argument of defendant that plaintiff acted as a real estate broker under Wash. Comp. Stat. §§ 8340-4, 8340-20 and could not recover because of the absence of a written agreement was without merit. Plaintiff entered into a partnership for the acquisition and sale of real estate. Hence, he was not a real estate broker under the statutory definition in Wash. Comp. Stat. § 8340-4. A real estate broker was one who dealt in real estate for the purchase, sale, and the like, or interest therein, for another person.

OUTCOME: The court affirmed the trial court's order awarding plaintiff the dissolution of the partnership with defendant.


CORE TERMS: partnership, partner, oral agreement, real estate, accounting, dissolution, real estate, hundred dollars, broker, statute of frauds, special partnership, buying and selling, bid, real properties, satisfaction, dollars, equally divided, resale, real estate, tract, deed, partnership agreement, own name, personal property, acquisition, indefinite, void, divided equally, purchase price, begin to run


LEXISNEXIS® HEADNOTES Hide

Business & Corporate Law > Agency Relationships > Authority to Act > Contracts & Conveyances > Formation & Negotiation

Contracts Law > Types of Contracts > Oral Agreements

Real Property Law > Brokers > Right to Commissions

HN1 Wash. Comp. Stat. § 5825 provides that (a) every oral agreement that, by its terms, is not to be performed within one year from the making of the agreement, and (b) an oral agreement authorizing an agent to sell or purchase real estate for compensation, shall be void. More Like This Headnote | Shepardize: Restrict By Headnote

Civil Procedure > Appeals > Standards of Review > Substantial Evidence > General Overview

HN2 It is a rule, which e Supreme Court of Washington has so consistently followed as to obviate the necessity of citation of sustaining authority, that, if there is evidence to support same, the trial court's findings will not be disturbed on appeal. More Like This Headnote

Civil Procedure > Appeals > Standards of Review > General Overview

Contracts Law > Statutes of Frauds > General Overview

Real Property Law > Purchase & Sale > Contracts of Sale > Enforceability > Statutes of Frauds

HN3 When the evidence on behalf of an appellant is in conflict with the evidence adduced in favor of a respondent, but it does not preponderate against the findings, then the findings will not be disturbed. More Like This Headnote

Business & Corporate Law > General Partnerships > General Overview

Estate, Gift & Trust Law > Trusts > Constructive Trusts

Real Property Law > Trusts > Holding Trusts

HN4 If one of two partners purchases land in his own name with partnership assets for partnership purposes, a trust results in favor of the partnership. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > Management Duties & Liabilities > Rights of Partners > General Overview

Contracts Law > Formation > Execution

Contracts Law > Statutes of Frauds > General Overview

HN5 A partnership agreement between two persons that they should be jointly interested in a speculation for the buying and improving of lands for sale may be proved without being evidenced in writing signed by, or by the authority of, the party to be charged therewith and is not within the statute of frauds, and such an agreement being proven, either of the partners may establish his interest in the land subject to the partnership without such interest being evidenced by any writing. More Like This Headnote

Real Property Law > Purchase & Sale > Contracts of Sale > Formalities

HN6 It is generally held that agreements to share profits and losses arising from the purchase and sale of real estate are not contracts for the sale or transfer of interests in land and need not be in writing. More Like This Headnote | Shepardize: Restrict By Headnote

Business & Corporate Law > General Partnerships > General Overview

Real Property Law > Purchase & Sale > Contracts of Sale > General Overview

HN7 Where land is purchased for sale and profit, it may, in equity, be regarded as personalty as among the partners. More Like This Headnote

Civil Procedure > Jurisdiction > Personal Jurisdiction & In Rem Actions > In Rem Actions > True in Rem Actions

Civil Procedure > Pleading & Practice > Defenses, Demurrers & Objections > Affirmative Defenses > General Overview

Governments > Legislation > Statutes of Limitations > Time Limitations

HN8 Wash. Comp. Stat. § 159 provides that an action upon a contract or liability, express or implied, which is not in writing and does not arise out of any written instrument, shall be commenced within three years after the cause of action shall have accrued. More Like This Headnote

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Dissolution > Breach of Agreement & Expulsion

Business & Corporate Law > General Partnerships > Dissolution & Winding Up > Winding Up > Accounting

Business & Corporate Law > General Partnerships > Management Duties & Liabilities > Rights of Partners > General Overview

HN9 A partner is ordinarily not entitled to maintain an action for an accounting during the existence of the partnership, therefore the statutory period of limitation does not begin to run against an action for an accounting prior to the dissolution of the partnership, or the exclusion of the complaining partner from participation in the affairs of the partnership. More Like This Headnote | Shepardize: Restrict By Headnote


HEADNOTES / SYLLABUS Show


COUNSEL: Venables, Ballinger & Clark, for appellant.

James R. Chambers, for respondent.

JUDGES: Millard, J. Beals, C. J., Steinert, Simpson, and Mallery, JJ., concur.

OPINION BY: MILLARD

OPINION


[*459] [**168] In this suit in equity, which was [***4] brought to establish a special partnership by oral agreement between plaintiff and defendant to purchase and sell real estate, plaintiff prayed for dissolution of the partnership, for an accounting, and for recovery of his net share of the profits.

Defendant denied the agreement and pleaded as affirmative defenses: (1) payment of only claim plaintiff had against defendant; (2) invalidity of the agreement under the statute [**169] (HN1Rem. Rev. Stat., § 5825 [P.P.C. § 577-3]), which provides that (a) every oral agreement that, by its terms, is not to be performed within one year from the making of the agreement, and (b) an oral agreement authorizing an agent to sell or purchase real estate for compensation, shall be void; and (3) that recovery on the claim for share of the profits from the sale of the real property in question is barred by the statute (Rem. Rev. Stat. (Sup.), § 159 [P.P.C. § 73-1]), which provides that an action upon an unwritten agreement, such as alleged by plaintiff, shall be commenced within three years.

Trial to the court resulted in findings, summarized as follows, which are in harmony with the allegations of the complaint and are amply sustained by [***5] the evidence:

Plaintiff was engaged in the business of buying and selling tax titles in Seattle

[*460] ". . . and was skilled in that business with a knowledge of properties available and knowledge of the value of properties of this kind and the sale of same at a profit."

In November, 1938, plaintiff and defendant entered into an oral agreement of special partnership in which it was agreed that plaintiff should select and bid in two pieces of tax title properties, designated herein as the Ashworth property and the Seashore property, from King county. It was agreed by the parties that title to the properties was to be taken in the name of defendant, who was to supply the money therefor and to furnish all money to pay assessments, taxes, and other expenses thereof and then resell the properties with the assistance of plaintiff, and defendant was to receive back the money he advanced with six per centum interest. The profits derived from the sales were to be divided equally between plaintiff and defendant.

Pursuant to the oral agreement, plaintiff selected and bid in, defendant furnishing the money therefor, the Ashworth property and the Seashore property. The net profits [***6] from the sale of the two properties amounted to $ 3,536.48 of which plaintiff was entitled to one half, less one hundred dollars paid on the account by defendant to plaintiff.

Decree was entered granting prayer of plaintiff and awarding him recovery in the amount of $ 1,668.24 against defendant, who has appealed therefrom.

[1] HN2It is a rule, which we have so consistently followed as to obviate the necessity of citation of sustaining authority, that, if there is evidence to support same, the trial court's findings will not be disturbed on appeal. The evidence, briefly, is as follows:

Respondent testified that, from 1917 to 1921, he was associated with three persons in Seattle in the purchase of certificates of delinquency. In that association, his duties were to visit the courthouse, select properties against which the taxes were delinquent, purchase certificates of delinquency, draw maps of the properties for submission to his three employers or associates, and check the records in the county treasurer's office.

[*461] Following the passage in 1921 of a resolution by the county commissioners to sell no more certificates of delinquency but to proceed with tax foreclosures [***7] themselves, respondent was engaged, until the year 1942, in tax title foreclosure business; that is, he purchased the properties for himself and for others on a partnership basis, thereby becoming familiar with the value and marketability of the property. From 1921 to 1942, he bought and sold approximately five hundred tracts. His procedure was to bid in the properties and assist in making sales of same by listing the properties with real estate firms.

In November, 1938, respondent discussed with appellant the subject of profits to be made in the purchase and resale of properties sold by the county for taxes. Respondent remarked to appellant that the latter was familiar with the experience of the former in this line of endeavor, and that, if appellant would supply the money, respondent would make the purchases. It was agreed that the profits derived from resales would be divided equally between the partners. Respondent further testified that he informed appellant he would draw plats of the properties to be sold by the county and would conduct appellant to the properties for inspection of same, and that, if satisfactory to appellant, respondent would bid in the property at the [***8] foreclosure sale. To this appellant agreed, "So I went ahead [**170] and selected properties, drew quite a number of plats."

From eight to twelve pieces of property were shown by respondent to appellant, who selected two tracts -- the Seashore property and the Ashworth property. Respondent examined the record in the treasurer's office and obtained statements of the amount of taxes and assessments against the properties. Pursuant to his agreement with appellant, respondent bid in the two properties mentioned, paid the amount of his bid in each instance to the cashier in the county treasurer's office, and directed that official to show that the purchase was made by appellant. The deeds were mailed to appellant as directed by respondent, who, at the request of appellant, filed those deeds for record with the [*462] county auditor. Respondent listed the two properties with four real estate firms for sale.

The Ashworth property was sold by a real estate agent. The last payment on the purchase price of that property was made November 15, 1944. The real estate agent and respondent went to appellant and obtained his signature on the earnest money receipt, which was followed [***9] by the contract of sale, which was signed by appellant. Prior to final payment on that contract by the purchaser, respondent requested appellant for a portion of the proceeds derived from the sale of the Ashworth property. Appellant gave to respondent one hundred dollars on account and stated that, when the final installment on the purchase price was paid, a computation would be made of the profits, and appellant would pay to respondent one half thereof.

In June, 1945, respondent discovered that appellant sold the Seashore property in December, 1943. Other than the amount of one hundred dollars received in 1944 from appellant, nothing has been received by respondent from the partnership.

Within a few days following receipt of information in June, 1945, that appellant sold the Seashore property in December, 1943, respondent commenced this action for dissolution of the partnership and for an accounting.

The testimony of the realtors with whom the properties were listed for sale corroborates respondent's testimony respecting the oral agreement with appellant. From that testimony, it is clear that appellant admitted to at least one realtor that respondent had an interest in the [***10] properties; that is, appellant admitted he had purchased the tax title properties through respondent, with whom he would divide the net profits from the sales.

Appellant testified that he never made any agreement with respondent. He further testified that respondent, as an act of friendship, showed tax title properties to him, and that respondent made a demand for two hundred fifty dollars as his share of profits from the sales but accepted from appellant one hundred dollars in full settlement of any claim respondent may have had against appellant.

[*463] [2] HN3The evidence on behalf of appellant is in conflict with the evidence adduced in favor of respondent, but it does not preponderate against the findings; therefore, the findings will not be disturbed.

Appellant invokes the rule that an oral agreement to purchase and sell land is in contravention of the statute of frauds (Rem. Rev. Stat., § 5825) and cannot, therefore, be enforced.

[3] HN4If one of two partners purchases land in his own name with partnership assets for partnership purposes, a trust results in favor of the partnership. Case v. Seger, 4 Wash. 492, 30 Pac. 646.

In the case at bar, respondent [***11] and appellant pooled their resources for the purpose of purchasing tax title property and reselling same, the profits from the sale of the properties to be equally divided between the partners. The skill of respondent in the business of buying and selling tax title property and his knowledge of property available and his knowledge of the value of such property were the resources, the assets, which he contributed to the partnership. The money was contributed by appellant.

[4] The oral agreement in the case at bar is not one to transfer to respondent an interest in the land to be acquired, hence the agreement is not within the statute of frauds. The tax title properties were purchased for the benefit of the partnership [**171] by and with the pooled resources of appellant and respondent, the two partners, who agreed with each other that the properties were to be sold for the benefit of the partnership, and that the profits were to be equally divided between the partners after return to appellant of his investment plus interest thereon, notwithstanding the fact that the title to the real properties was taken in the name of appellant.

In Case v. Seger, supra, we held [***12] that HN5a partnership agreement between two persons that they should be jointly interested in a speculation for the buying and improving of lands for sale may be proved without being evidenced in writing signed by, or by the authority of, the party to be charged therewith and "is not within the statute of frauds, [*464] and such an agreement being proven," either of the partners may establish his interest in the land subject to the partnership without such interest being evidenced by any writing. That case affected specific real estate, the title to which at the time of the making of the agreement was not in the name of either of the partners and was acquired subsequently. The title to the land was taken in the name of one partner.

In Case v. Seger, supra, which is on all fours with the case at bar, we held that the agreement was valid and directed dissolution of the partnership and distribution of the partnership profits to the partners.

In Smith v. Imhoff, 89 Wash. 418, 154 Pac. 793, we held that a special partnership in real property is created where it is orally agreed that one party should purchase certain property and pay the cost of platting it, and that the other [***13] party to the agreement should forego his commissions, have the land surveyed, and sell it, the profits to be equally divided. Such an agreement, we held, is not within the provisions of the statute of frauds requiring such agreements to be in writing.

In the case cited, plaintiffs, who were engaged in the real estate business, -- there is no showing they were licensed real estate brokers -- had listed with them a certain piece of real property. Plaintiffs made an oral agreement with the defendant that the latter supply the money for the purchase of the real property in question and for its platting and subdividing, the property thereafter to be sold and the profits divided between plaintiffs and defendant. Defendant took the deed in his own name. The property was later sold at a profit, and plaintiffs brought an action to recover their portion of the profits derived from the sale. We held that the parties entered into a special partnership for the purchase and sale of real estate; that plaintiffs' foregoing of their commission of ninety dollars was an investment by plaintiffs of ninety dollars in the purchase price of the property, and that it was not necessary that the partnership [***14] agreement be in writing. We quoted with approval the following language from 20 Cyc. 237:

[*465] "HN6It is generally held that agreements to share profits and losses arising from the purchase and sale of real estate are not contracts for the sale or transfer of interests in land and need not be in writing."

The case cited is indistinguishable from the case at bar. There the real property was acquired with the funds of the defendant partner, the deed taken in his name and the property sold at a profit. The other partners (plaintiffs) had the information and contributed their skill and assistance in buying and selling the property.

In Froiseth v. Nowlin, 156 Wash. 314, 287 Pac. 55, which was an action for the dissolution of a partnership and an accounting, we held that an oral agreement of partners for the purpose of buying and selling real estate, whereby lands were purchased and held in the name of one partner for profit and resale, is not within the statute of frauds; since the property, as between the parties, is considered as personal property. We quoted with approval 27 C. J. 220 to the effect that an oral agreement between two or more persons for joint acquisition [***15] of real property from a third person and not contemplating any sale or conveyance between the parties is not a contract for the sale of land within the meaning of the statute of frauds. We said:

"HN7'Where land is purchased for sale and profit, it may, in equity, be regarded as [**172] personalty as among the partners.' [47 C. J. 766.]"

"Here, we have a co-partnership formed by oral agreement for the purpose of buying and selling real estate, not just one tract, but generally any and all tracts or parcels that the partners might from time to time consider available for the exercise of their merchandising abilities and efforts. Property thus purchased, though the title be taken in the name of one partner only, becomes, in equity, merchandise for resale and therefore, as between the parties, personal property. The purpose is not to finally vest title in the partners according to their several interests, but to re-sell and divide the profits. If a re-sale had been made before dissolution of the partnership, equity would compel an accounting for the profits; and where, as here, there has been no re-sale, but the thing which equity regards XXXXX XXXXX is left undisposed of, [***16] equity will divide what remains just [*466] as it would decree the division of any other merchandise or asset of the partnership."

See, also, Hatupin v. Smith, 21 Wn. (2d) 132, 150 P. (2d) 675.

[5] Appellant further contends that, as the oral agreement by its terms was not to be performed within one year from the making of the agreement, the agreement is void under the statute (Rem. Rev. Stat., § 5825). The statutory provision invoked by appellant is inapplicable; it does not apply to an oral agreement which is for an indefinite length of time and is terminable at will. Sargent v. Drew-English, Inc., 12 Wn. (2d) 320, 121 P. (2d) 373. See, also, 37 C. J. S. 574.

[6] [7] The argument of appellant that respondent acted as a real estate broker and, under the statute (Rem. Rev. Stat., §§ 8340-4, 8340-20), cannot recover because of the absence of a written agreement, is without merit. Respondent entered into a partnership for the acquisition and sale of real estate, hence he was not a real estate broker under the statutory definition (Rem. Rev. Stat., § 8340-4) that a real estate broker is one who deals in real estate for the purchase, sale, etc., or interest [***17] therein, for another person. Respondent was not working for another person. He was working for himself first and, second, for the partnership of which he was a member. The land of the partnership is regarded in equity as personalty, and, when either partner handled it, either in purchasing or selling, he was not dealing in real estate for another, he was representing the partnership and disposing of a real estate asset of the partnership the same as if it were personal property.

[8] Appellant insists that there was a complete accord and satisfaction of respondent's claim. That contention is not sustained by the evidence. At the time appellant paid to respondent one hundred dollars, the latter's share of the profits from the sale of the Ashworth property was in excess of two hundred fifty dollars, the amount appellant testified respondent demanded. Respondent was not then aware of the fact that appellant had sold the Seashore [*467] property. The trial court did not believe, nor do we, that respondent agreed to accept one hundred dollars in satisfaction of a total claim of approximately seventeen hundred dollars. In one breath appellant denies there was any contract [***18] of partnership to share profits, and in the next he insists that he paid one hundred dollars in satisfaction of all claims under that contract.

[9] [10] Finally, appellant contends that respondent's claim for a share of the profits under the agreement is barred by the statute (HN8Rem. Rev. Stat., § 159) which provides that an action upon a contract or liability, express or implied, which is not in writing and does not arise out of any written instrument, shall be commenced within three years after the cause of action shall have accrued.

HN9A partner is ordinarily not entitled to maintain an action for an accounting during the existence of the partnership, therefore the statutory period of limitation does not begin to run against an action for an accounting prior to the dissolution of the partnership, or the exclusion of the complaining partner from participation in the affairs of the partnership. 47 C. J. 1207.

When he paid one hundred dollars to respondent on the profits from sale of the Ashworth property, appellant agreed [**173] to pay to respondent the remainder of his share of the profits on that deal when the purchaser of the Ashworth property paid the final installment [***19] under the contract of purchase. That contract was completed in 1944.

The Seashore property was sold in December, 1943. Respondent did not discover until June, 1945, that appellant had sold the Seashore property. There never was any accounting for the profits from that sale, nor was there any dissolution of the partnership, or exclusion of respondent from the partnership affairs until this action was instituted in July, 1945.

It is not material whether the agreement was one of partnership or a simple contract to share in the profits. In either event, the period of three years from December 6, 1943, when one property was sold and the period of three years from November, 1944, when the sale of the other [*468] property was completed, had not expired when this action was brought.

We have examined all of the authorities cited and find they are either distinguishable from the case at bar or are in harmony with this opinion.

The judgment is affirmed.
Zachary, Attorney
Category: Legal
Satisfied Customers: 3985
Experience: Lead trial/International commercial attorney licensed 11 yrs
Zachary and 8 other Legal Specialists are ready to help you
Customer: replied 1 year ago.
Thank you. Would it be of any importance to look at cases in other states? I will continue to pay you as I know your time is valuable.

Cindee
Expert:  Zachary replied 1 year ago.
At this point it would not be. You've only had the threat of suit come up against you as I understand it.

This sort of detailed research can be done down the road if she actually files suit during the summary judgment segment of the case.

Further, cases from other states are "merely persuasive" and are not binding as precedent in your state.

The real truth of the matter is that if she file the suit, you will have to fight it. You should prepare yourself for that. I think you have a very good chance of winning during summary judgment. However, if there is any evidence that is on her side, the court will probably make you go to trial. The courts will allow a plaintiff the opportunity to attempt to prove their case, even when it is not a very good chance that they will win.

If you really want me to dig around and find some other case law from some other state, let me know and I'll do it.
Customer: replied 1 year ago.
Please dig. I will pay you again for your time. I'll add 40 again now and more for your time for looking for similar cases of any kind that could help.

Thanks!
Cindee
Expert:  Zachary replied 1 year ago.
OK. I'm here to serve! I'll start looking now and get back to you periodically as I find cases that support your position.
Customer: replied 1 year ago.
I appreciate you! Just added another 80 to your acct.

Expert:  Zachary replied 1 year ago.
Thank you very much for that! I'm going to log off for a few hours and get some rest and will be updating my answer periodically as the day proceeds with cases for you. It takes a while to dig through the entire US case law for this type of case, so I thank you for your patience.
Customer: replied 1 year ago.
I appreciate you!

Thanks,
Cindee
Expert:  Zachary replied 1 year ago.
Hi,

I'm still searching and will have something to you within several hours. Thanks for your patience and no need to reply.

-ZDN
Customer: replied 1 year ago.
Any luck with finding anything yet?
Thanks do much-Cindee
Expert:  Zachary replied 1 year ago.
Yep. Here's what I've found so far. These are cases which are similar to yours in that there was an asserted partnership based on sharing revenue and/or commissions, and the courts have found that it is not enough.

I'm continuing my search and hope to find a case that is directly on point with your fact pattern.

The cases are much to big to put on line here, so I'm getting you a drop box link so you can see them:

https://dl.dropboxusercontent.com/u/94048806/Cases%20for%20Cindee.docx

I'll be adding more to this as my search progresses.
Customer: replied 1 year ago.
Thank you! I will pay you well for your time!
Expert:  Zachary replied 1 year ago.
You're welcome. I'll be updating periodically to give you everything else that I find that is relevant.

I'm also going through WA law again to make sure I did not miss any case that could help you.

Don't reply to this message. Thanks.
Expert:  Zachary replied 1 year ago.
Hi,

Here is a link to my updated search. https://dl.dropboxusercontent.com/u/94048806/Cases%20for%20Cindee.docx

After looking through case law from all 50 states, I have been unable to locate a case exactly on point with your case.

That does not mean that one has not occurred, it only means that a case like yours has never been appealed.


I've also discussed this with my colleagues. We all feel that the fact that you did not fully share in the expenses which were incurred in gaining the commission, and the fact that you were both independently hired by the company to act as independent contractors, defeats your opponents claim for partnership.
Customer: replied 1 year ago.
Thanks for the work you did for me! I'm adding another bonus to your account now. If you come across anything else you feel has some value please let me know . I'll always be interested in paying you for revelent info.

Thanks,
Cindee
Expert:  Zachary replied 1 year ago.
Your welcome. I hope it helps.

Just curious. You are retaining counsel to defend you right?
Customer: replied 1 year ago.
Yes
Expert:  Zachary replied 1 year ago.
Good! OK. I'll keep my eye out for case law that might help you out.

Best Regards,
ZDN
Customer: replied 1 year ago.
Hi ZDN,

Come across any more info for me?

Thanks!
Expert:  Zachary replied 1 year ago.
Hi,

Nothing new as of yet.

-ZDN
Customer: replied 1 year ago.
Wanted to check in to see if any new revelent info has come up. The claim has been filed and they are alleging that the commissions paid by the manufacturer are evidence of shared partnership profits.
I appreciate any info you might share and will pay you for your time. You are the most knowledgable person I have found on this site!
Expert:  Zachary replied 1 year ago.
Thanks for the compliment. It's good to hear from you again. I think you need to prepare yourself for a long legal battle.

I have not seen any other applicable law other than what I've found for you earlier. The Plaintiff's argument is not surprising.

The question is whether or not there was an agreement to be partners and whether there was the possibility of an implied partnership. The Plaintiff has the burden to prove this. You have the evidence that shows that you never claimed to be partners, never held yourself out to the manufacturer as partners, did not share in full expenses of the business, and did not share in losses. Your attorney needs to move for dismissal in summary judgment. If this is not successful, then you will have to go to a jury trial and put your evidence up against the Plaintiff's evidence, and a jury will decide if this was a partnership or not.
Customer: replied 1 year ago.
Do you think we have a good chance of a favorable summary judgement?
Expert:  Zachary replied 1 year ago.
Well, that's a bit beyond what I can tell you. I think you have a good argument, but it is often really dependent on the judge in your case. Some judges are very reluctant to ever grant summary judgment and would rather simply let the case go to trial, as there is less of a chance that they will be overturned by the appellate court that way.
Customer: replied 1 year ago.
Ok, what about getting a favorable verdict overall? Thanks
Expert:  Zachary replied 1 year ago.
Again, this is not a question I can answer. It entirely depends on your credibility as a witness, whether there are other witnesses that are willing to testify for you, whether there is documentary evidence which is on your side, and the skill of your lawyer versus your co-worker's lawyer.

I'd love to tell you that you are going to win, but if I did that, it would not be honest, as the truth is, I do not know.

I think you have a potentially strong defense case if you develop the evidence correctly and fight hard.
Customer: replied 1 year ago.
How can I add an additional tip for you?
Expert:  Zachary replied 1 year ago.
Hi,

I'm not sure.

There's not need at this juncture anyway. I don't feel I've give you any additional information which would justify it. :-)

Thanks for thinking of me though.

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