359 P.2d 41
George B. Page and H.B. Page formed an oral partnership in 1949 to operate a linen supply business in Santa Maria, California.1 Each partner contributed approximately $43,000 within the first two years to purchase land, machinery, and linen for the business.2
From 1949 to 1957 the partnership lost approximately $62,000.3 The partnership's primary creditor is a corporation owned entirely by plaintiff that holds a $47,000 demand note issued by the partnership.4
The business earned profits of $3,824.41 in 1958 and $2,282.30 in the first three months of 1959.5 Plaintiff then sought to end the partnership.6
Defendant testified that the partnership terms were intended to be similar to prior partnerships between the parties, under which the business would pay for itself.7 On cross-examination, however, defendant stated that there had been no discussion about continuing the business in the event of losses.8
The trial court determined that the partnership was for a term consisting of the reasonable time needed to repay the partnership's debts from profits.9 Plaintiff appealed from this judgment to the Supreme Court of California.10
Whether the evidence supports the trial court's finding that the partnership was for a term rather than at will?11
Under the Uniform Partnership Act, a partnership may be dissolved by the express will of any partner when no definite term or particular undertaking is specified.12 To establish a partnership for a term by implication, the evidence must demonstrate a specific understanding that the partners would continue until a particular objective, such as repaying loans from profits, is achieved.13
No. The testimony established only a common hope that earnings would cover expenses and recoup investments if the business succeeded.14 Defendant conceded there had been no discussion of continuation in the event of losses.15 This evidence does not match the specific implied agreements in precedent cases where partners understood that loans would be repaid from profits before dissolution.16 The trial court's finding of a term therefore lacks support in the record.17