Crowley v. Thomson

SHENK, J.

Defendant appeals from a judgment for the plaintiff which ordered the dissolution of their partnership and the distribution of its assets. The appeal is on the judgment roll.

Plaintiff and defendant entered into a partnership agreement for the purpose of redrilling an oil well known as “Bowles No. 1.” The agreement in part provided that: (1) Defendant would transfer an oil lease to the partnership subject to an overriding royalty of 7½ per cent. (“Bowles No. 1” was on the property covered by this lease.) (2) Plaintiff would contribute 75 per cent and defendant 25 per cent of the monies necessary to restore and operate the well. (3) Each partner would have a one-half interest in the partnership and share equally in the profits and losses. (4) All questions of control, management, and operation would be determined by the mutual understanding of the partners.

Pursuant to the agreement defendant assigned the lease to the partnership. Plaintiff contributed $9,000 and defendant $3,000 to the partnership. After this, plaintiff consulted certain petroleum engineers who advised him that the project upon which the partnership was embarking was economically not feasible. Relying on this information plaintiff refused to consent to further operations of the partnership. The defendant refused to voluntarily dissolve the partnership and distribute its assets and plaintiff brought this action. In the meantime the lease expired because the partnership did not commence drilling operations in time. The defendant cross-complained for damages alleging that plaintiff had wrongfully frustrated the purpose of the partnership.

The trial court found the material allegations of the complaint to be true and those of the cross-complaint to be untrue.

[638]

It ordered the partnership dissolved. It further ordered that plaintiff be awarded $9,000 and defendant $3,000 (certain partnership expenses were deducted from these amounts— each partner contributing one-half of the total deducted.) The now worthless lease was ordered returned to the defendant.

The principal question presented on appeal is whether the distribution of assets ordered by the trial court was correct.