decided: January 27, 1975.
GIRARD BANK AND EDWARD FEILKE, CO-EXECUTORS OF THE ESTATE OF ANNA REID, APPELLANTS,
HARRY C. HALEY ET AL.
Raymond Jenkins, Ambler, for appellants.
Jack A. Rounick, Pechner, Sacks, Dorfman, Rosen & Richardson, Norristown, for appellees.
Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Jones, C. J., did not participate in the consideration or decision of this case.
[ 460 Pa. Page 239]
OPINION OF THE COURT
This suit in equity was brought by appellants' decedent, Anna Reid, who averred in her complaint that she had dissolved a partnership between herself and the defendants, and prayed that the business of the firm be wound-up and its assets distributed. During the course of the proceedings Mrs. Reid died and the executors of her estate were substituted as parties plaintiff. The
[ 460 Pa. Page 240]
principal question for decision is whether the partnership was dissolved during Mrs. Reid's lifetime, as she averred and her personal representatives urge, or upon her death, as the trial court found.
The following facts are not in dispute. On September 28, 1958, Mrs. Reid and the three defendants, appellees here, entered into a written partnership agreement for the purpose of leasing for profit certain real property located in Montgomery County, Pennsylvania. Mrs. Reid was to manage the property, and the defendants were to perform the physical labor necessary to maintain the premises in good condition. The initial partnership assets consisted of real estate valued at $50,000 and $10,000 in cash, both contributed by Mrs. Reid, and an additional sum of $10,000 in cash contributed in equal shares by the three other partners. By letter addressed to her partners, the defendants, Mrs. Reid notified them that she was dissolving the partnership and requested that the partnership assets be liquidated as soon as possible.*fn1 Meetings between the partners following receipt of this letter failed to produce agreement for a plan for liquidation or as to the respective rights of the parties in the assets of the partnership. This suit praying for a winding up of the affairs of the partnership and a liquidation of its assets was then brought.
[ 460 Pa. Page 241]
The chancellor found that the partnership had been dissolved, not by Mrs. Reid's letter, but rather by her death, and concluded that the defendants, as surviving partners, were entitled to exercise their option under the partnership agreement to purchase the interest of the deceased partner.*fn2 Having determined that the defendants had in fact exercised their option to purchase Mrs. Reid's interest, the chancellor entered a decree nisi ordering the defendants to pay the estate in discharge of the purchase price the sum of $29,165.48*fn3 plus seventy per cent of the
[ 460 Pa. Page 242]
income of the partnership for the calendar year 1971. Exceptions filed by the executors to the adjudication were dismissed and the decree nisi was adopted as the final decree. This appeal followed.*fn4
None of the parties disputes the chancellor's conclusion that the partnership has been dissolved; the dispute, as indicated at the outset, is when that event occurred. Dissolution of a partnership is statutorily defined as "the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on, as distinguished from the winding up, of the business." Uniform Partnership Act § 29 ("the Act").*fn5 There is no doubt that dissolution of a partnership will be caused by the death of any partner, § 31(4) of the Act, 59 P.S. § 93 (1964), and if Mrs. Reid's death was the cause of the dissolution here involved, the chancellor was quite correct in looking to the provisions of paragraphs 11 and 12 of the agreement, note 2, supra, as defining the rights and obligations of the surviving partners on the one hand and the estate of the deceased partner on the other. If, however, dissolution occurred during the lifetime of Mrs. Reid, those portions of the agreement, which are concerned solely with the effect of the death of a partner, are not germane. The agreement being otherwise silent as to winding up and liquidation, the provisions of the Act will control.
The chancellor was impressed with the fact that the decedent "was a strong willed person" who dominated
[ 460 Pa. Page 243]
the partnership enterprise (Adjudication, R. 421a), that the defendant partners had each contributed many thousands of hours of hard work and planning to the "joint venture", and that neither Mrs. Reid (who testified at the first hearing, but who then, according to the adjudication, "appeared confused and feeble") nor her personal representatives had offered "evidence to justify a termination." (Opinion, R. 437a). In supposing that justification was necessary the learned court below fell into error. Dissolution of a partnership is caused, under § 31 of the Act, 59 P.S. § 93 (1964), "by the express will of any partner." The expression of that will need not be supported by any justification. If no "definite term or particular undertaking [is] specified in the partnership agreement", such an at-will dissolution does not violate the agreement between the partners; indeed, an expression of a will to dissolve is effective as a dissolution even if in contravention of the agreement. Ibid.*fn6 We have recognized the generality of a dissolution at will. See Lacey v. Rutter, 358 Pa. 502, 57 A.2d 679 (1948); 60 Am.Jur.2d Partnership § 175 (1972). If the dissolution results in breach of contract, the aggrieved partners may recover damages for the breach and, if they meet certain conditions, may continue the firm business for the duration of the agreed term or until the particular undertaking is completed. See § 38 of the Act, 59 P.S. § 100 (1964).
[ 460 Pa. Page 244]
There is no doubt in our minds that Mrs. Reid's letter, see note 1, supra, effectively dissolved the partnership between her and her three partners. It was definite and unequivocal: "I am terminating the partnership which the four of us entered into on the 28th day of September, 1958." The effective termination date is therefore February 10, 1971, and Mrs. Reid's subsequent death after this litigation was in progress is an irrelevant factor in determining the rights of the parties.
The remaining question is whether or not the unilateral dissolution made by Mrs. Reid violated the partnership agreement.*fn7 The agreement contains no provision fixing a definite term, and the sole "undertaking" to which it refers is that of maintaining and leasing real property.*fn8 This statement is merely one of general purpose, however, and cannot be said to set forth a "particular undertaking" within the meaning of that phrase as it is used in the Act. A "particular undertaking" under the statute must be capable of accomplishment at some time, although the exact time may be unknown and unascertainable at the date of the agreement. Leasing property, like many other trades or businesses, involves entering into a business relationship which may continue indefinitely; there is nothing "particular" about it.*fn9 We
[ 460 Pa. Page 245]
thus conclude, on the record before us, that the dissolution of the partnership was not in contravention of the agreement.
In light of our conclusion that an inter-vivos dissolution took place, the provisions of the Act rather than the post-mortem provisions of the agreement, will govern the winding-up of the partnership affairs and the distribution of its assets.*fn10 Because compliance with the Act requires findings and conclusions which were not made by the chancellor in view of his disposition of the case,*fn11 we must remand for further proceedings.
Decree vacated; case remanded for further proceedings consistent with this opinion. Each party to pay own costs.