Stump v. Tipps

VAN DYKE, P. J.

Plaintiff and respondent Horace A. Stump brought this action against defendants and appellants, Frank Tipps, L. D. Crain and David Hartman, and other defendants not appealing. By his complaint respondent sought to have his title quieted to certain assigned claims against Bank of America National Trust and Savings Association and Mercantile Acceptance Corporation of California as against the claims of defendants to an interest therein. Frank Tipps and one M. R. Bickham had been copartners conducting an automobile sales business in Grass Valley, and in the conduct of that business had sold commercial paper, representing unpaid amounts on the purchase of automobiles to the bank and the acceptance corporation. This was done under agreements whereby sums were withheld by the acceptors against possible losses through failure of purchasers to complete their payments. The partnership got into financial difficulties and in early August of 1949 Bickham approached respondent with the suggestion that he come to

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the financial aid of the business. This respondent was willing to do, provided, as he testified, Tipps would be no longer associated with the business as partner or otherwise and that the money advanced by respondent should be used exclusively for the payment of partnership obligations then existing, it being contemplated by him that he would advance money enough to pay all such obligations. On August 6, 1949, Tipps and Bickham made an agreement providing for the dissolution of the partnership, the purchase by Bickham of Tipps ’ interest in its assets and the payment by Bickham of all partnership obligations. Bickham was to pay Tipps what would, upon audit, be determined to be the value of his interest in the partnership assets. He was to make certain payments and delivery of assets in kind at once and the balance in monthly installments commencing when the audit was complete. Tipps executed a bill of sale of his interest to Bickham and the same was escrowed for delivery against full payment. The immediate possession of all of the partnership business and assets was given to Bickham and the agreement declared that “Said partnership shall be hereby dissolved. ’ ’ Upon being shown this signed agreement respondent began advancing money and in a short time had advanced nearly $12,000. On October 11, 1949, he received from Bickham a promissory note for that sum, purporting to be the note of the partnership. He testified that his loans were made to the partnership, as did Bickham. He received as security for the payment of the note a chattel mortgage upon certain shop equipment and an assignment of the reserve funds held by the bank and the acceptance corporation. Bickham and Tipps proceeded along the lines of their agreement and appellant Hartman was employed as auditor. But on December 8, 1949, Tipps sued Bickham, filing what he denominated a “Complaint for Accounting after Dissolution of Partnership.” Therein he charged various fraudulent conduct upon the part of Bickham and breaches of his duty as partner in control after dissolution and he prayed that the August 6, 1949, agreement be declared null and void; that an account be taken of all partnership transactions and that Bickham account for transactions as to property of the firm “since its purported dissolution under the agreement of August 6, 1949.” He asked that the partnership .assets be sold, the debts paid and the surplus divided. Respondent intervened in that action, but subsequently and before trial, he dismissed his complaint and was not a party to the suit