Thompson v. Williams

SCHOTTKY, J.

James Edwin Williams has appealed from an adverse judgment in an action brought by W. C. Thompson to collect on a promissory note dated May 20, 1958, in the amount of $6,000. The note was executed by R. L. Gunn on behalf of Alamo Builders, a copartnership composed of Williams and Gunn. A default judgment was entered against Gunn and apparently is final. Gerald G. Thompson, as executor of the last will and estate of W. C. Thompson, has been substituted for W. C. Thompson.

In 1956 Thompson and Gunn formed a partnership under the name of Gunn Construction Company. Gunn was a licensed building contractor. Thompson contributed the capital and Gunn managed the business. This partnership was terminated August 31, 1957.

Alamo Builders was a partnership formed by Gunn and Williams early in 1957. Alamo Builders was also engaged in the general construction business. The agreement between Williams and Gunn was that 50 per cent of the profits would go to Williams and 50 per cent to Gunn Construction Company. Thompson was unaware of this arrangement until May 30, 1957, when he learned of the existence of Alamo Builders. Alamo Builders constructed four homes. The bulk of the funds necessary for the construction of three of the four homes came from Gunn Construction Company.

The basis of the $6,000 note was the balance due on advances to Alamo Builders, plus a percentage of the overhead costs of Gunn Construction Company.

In May 1958, Gunn, on behalf of Alamo Builders, signed a promissory note for $6,000 after Thompson threatened suit against Alamo Builders for the balance allegedly due for advances. There is evidence in the record that Alamo Builders was dissolved prior to the time that the note was executed. Thompson testified that he had no knowledge of the dissolution.

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As stated, the trial court entered judgment in favor of Thompson and awarded $1,200 in attorney fees. This appeal followed.

The first contention of appellant is that Alamo Builders was dissolved at the time Gunn executed the note on its behalf and therefore Gunn had no authority to sign the note and that Thompson knew this fact. However Thompson testified that he did not know of the dissolution, and it is stated in section 15035 of the Corporations Code that a partner can bind a partnership to a person who had extended credit to the partnership and had no notice or knowledge of the dissolution. The record reveals that no notice of dissolution was ever published and that no notice of dissolution was mailed to Thompson. This is a question of fact, and in the face of Thompson’s testimony that he had no notice, Gunn could bind the Alamo Builders even if it had been dissolved. Furthermore, the record supports the statement of the trial judge that “One of the partners, Gunn, was still, as of the date of trial, unable to state that the partnership was dissolved. Thus, the Court must find that not only was there no notice of dissolution, actual or constructive, but that there was in actual fact no dissolution as of May 20, 1958.”