G & S Investments v. Belman
145 Ariz. 258, 700 P.2d 1358 (1984)


PROCEDURE: Appeal from Superior Court of Pima County


FACTS:G & S Investments (P), Nordale, and others entered into a partnership to own and operate a multi-unit apartment complex. As a result of drug abuse, Nordale became easily agitated and suspicious of others. He stopped going to work and began threatening his partners for acts he alleged they committed. During his divorce, Nordale was permitted to live temporarily in the apartment complex. He disrupted the tenants and refused to pay rent or vacate the apartment. Nordale also repeatedly insisted on unreasonable business decisions that the other partners did not support. As a result, G & S Investments (P) filed suit under the Uniform Partnership Act (UPA) to seek dissolution of the partnership to allow it to buy out Nordale's interest and carry on the partnership business.

ISSUE: Whether a partner’s capital account be calculated by reference to the fair market value of their contributions?

RULE: Under the UPA, a court may dissolve a partnership when a partner becomes incapable of performing under the partnership agreement, when a partner's conduct tends to affect the business prejudicially, or when a partner willfully breaches the partnership agreement's terms.

HOLDING: The Superior Court, entered judgment for plaintiffs, and appeal was taken. The Court of Appeals,held that: (1) mere filing of original complaint did not act as dissolution of partnership, requiring liquidation of assets and distribution of net proceeds to partner; (2) trial court did not abuse its discretion in admitting certain testimony contrary to dead man statute; (3) testimony of attorney concerning conversation he had had with now deceased general partner was not admitted in violation of attorney-client privilege; (4) consent of personal representative was not required to carry on business; and (5) buy-out provision of partnership agreement which provided for payment based upon capital account as it appeared on books of partnership was not unenforceable despite disproportion between capital account and fair market value of property.