Larkin v. Jesberg

STONE, J. pro tem.* Defendant appeals from an adverse judgment in a partnership accounting action. Respondent, a trenching machine operator, and appellant, an engineer and licensed general contractor, carried on a trenching and excavating business from August 1, 1956, until October 9, 1957. The agreement was oral, but the parties executed a written dissolution agreement. Aside from an accounting to determine the gross income and operating expenses, the principal issue raised by the pleadings was whether the sum of $130 per week paid to respondent constituted wages for his services or was simply a drawing account which would entitle appellant to an equal amount. The dissolution agreement provided. .it [274]is agreed that as part of the operating expenses of said partnership business to be paid from the proceeds of said business after payment of all third party claims against said business, wages shall be allowed to the said Robert Larkin in accordance with the agreement of the parties for the amount of $130.00 per week from the date of commencement of said partnership to and through July 24, 1957, and thereafter, from July 25, 1957, to the date of termination of said partnership at the prevailing union hourly wage rate for trencher operators, for time actually worked by the said Robert Larkin.” The trial court, sitting without a jury, found the dissolution agreement controlling and allowed respondent wages at the rate of $130 per week as an expense of the partnership. The finding appears to be supported by the written dissolution agreement, but appellant contends it cannot support the finding because respondent failed to comply with its terms, thus making it ineffective. He bases this argument upon a clause in the dissolution agreement which provides: “Upon rendering of said accounting in full, if accepted by both of the parties hereto, amounts found to be due thereunder shall be paid within ninety (90) days of the acceptance of said accounting. If said accounting be not accepted by both parties, each of the parties shall have the right to choose an accountant and the two accountants so chosen shall chose a third accountant to settle the accounting between the parties before resorting to the courts.” Each partner appointed an accountant pursuant to the agreement but the accountants could not agree. Respondent then filed this action without complying with the requirement that a third accountant be appointed, alleging in his complaint “. . . that the difference of opinion between said Robert Larkin and said E. G. Jesberg concerning settlement of accounts are of such a nature that they could not be resolved by further accounting outside of court, and that no future accounting could settle said differences.” Appellant argues that the failure of the accountants of the respective parties to agree does not excuse compliance with the accounting provision ; that respondent’s failure to arbitrate vitiates the dissolution agreement and renders a finding based thereon a nullity. He cites the case of Tas-T-Nut Co. v. Continental Nut Co., 125 Cal.App.2d 351 [270 P.2d 43], which held that compliance with an arbitration clause in an agreement is a condition precedent to filing an action thereon. There is this difference, however; in Tas-T-Nut, the defendant raised the failure to comply by way of demurrer and when the trial court