[Agency & Partnership] 12. Infusaid Corp v. Intermedics Infusaid, Inc.

[sulwing]

12. Infusaid Corp. v. Intermedics Infusaid, Inc.

US Court of Appeals, 1st circuit, 1984 — 739 F.2d 661

FACTS

Infusaid Corporation(Appellant), Intermedics(Appellee) established joint venture, Infusaid Company. In their agreement, Intermedics had an option to purchase Infusaid after certain required provisions are fulfilled. Its management committee consists 5 members - 3 members from Infusaid Corporation, 2 memebers from Intermedics - however, if Infusaid should at any time be in material default, Intermedics would have the right to appoint the majority of the committee until the default were removed or cured. During the beginning of their joint venture, Representative of CCC presented his company’s work to Mr. Tucker who was a president of Infusaid Company at that time. However, the meeting with Mr. Tucker was very unsuccessful and then Intermedics invited the CCC representative to give his presentation to work out the relationship with CCC. As a result, these two companies entered into an arrangement. Intermedics never hid the fact that it was dealing with Consolidated Controls. The district court found this was a beneficial to the joint venture. In 1982, Infusaid Corp. filed suit in the district court alleging that Intermedics had breached both the joint venture agreement and its fiduciary obligations to the Appellants, allegations that state a cause of action for dissolution under §32 of UPA. The district court did not agree to this contention and judged that the party who breached the agreement was Infusaid, therefore intermedics is entitled to continue on the path towards the option they were given in the agreement to purchase the Infusaid business. And ordered Intermedics to take seats of majority in the management committee. Infusaid appealed. 

ISSUE

Whether the district court’s denial of the request for dissolution and ordering special performance was inappropriate. 

RULE

Mass. Gen. Laws ch. 108A, §31(2); Dissolution per se

Dissolution may be caused by the express will of any partner at any time even in contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this section. 

3 Kent’s Commentaries on American Law 56 (O.W. Holmes, Jr. ed., 12th ed. 1873)

Each partner has a power to dissolve the connection at any time, notwithstanding any convention to the contrary, and that the power results from the nature of the association…it is for the public interest that no partner should be obliged to continue in such partnership against his will, inasmuch as the community of goods in such a case engenders discord and litigation. 

Karrick v. Hannaman, 168 U.S, 328, 18 S.Ct. 135, 42 L.Ed. 484 (1897)

It will seldom, if ever, specifically compel subsequent performance of the contract by either party, the contract of partnership being of an essentially personal character.

APPLICATION

Appellants are seeking to use the fact that Infusaid Corporation ousted Intermedics from the partnership to apply §31(2) for “dissolution per se”. According to the Karrick v. Hannaman, 168 U.S, 328, 18 S.Ct. 135, 42 L.Ed. 484 (1897), “Wrongful expulsion of a partner from the partnership is a de facto dissolution” and that all that remains for a court was without the power to order the continuation of the partnership. In 3 Kent’s Commentaries on American Law 56 (O.W. Holmes, Jr. ed., 12th ed. 1873), each partner has a power to dissolve the connection at any time. Also, Texas Uniform Partnership Act codifies that every partner has the inherent power to dissolve his partnership even though the partnership agreement might attempt to limit that partner’s right. An ouster of Infusaid Corp is a sufficient expression‎ of will to dissolve the partnership under a §31(2) even if there was no formal notice. 

 The dissolving partner is liable for damages resulting from the breach. When legal remedies have explicitly been found inadequate, a court may order specific performance of the agreement if the relationship is found to be without a significant personal service component. However, the fact that all parties to the agreement are corporations does not mean that the relationship is without a significant personal service. And 3 Kent’s Commentaries 56 stated the joint venture can be maintained without obliging officer to continue the business against the will.  

  The Court remand this case to the district court. If the district court is unable to make the findings necessary to sustain the remedy of specific performance, then that portion of its order must be reversed. 

CONCLUSION

The Court remand this case to the district court. 

동영상 NOTE

파트너십을 해체할 수 있는 경우

*Judicial Decree

*Dissolution per se

(Dissolution at will)

해체한 다음에는

Dissolution - winding up(liquidation) - termination

Joint venture Partnership 에 차이가 별로 없고-

Intermeids Company 도 혼용해서 썼다. 

When the parties intended for partnership law to govern their joint venture agreement. 

• the venture shall be deemed to be and will file its income tax returns as a partnership. 
• Different from the cases which refused to apply partnership law to joint ventures. 
• Shain Investment Co. v. Cohen, 15 Mass. App/ 4, 443 N.E.2d 126, 129-31 (1982); Estern Electrical, 414 N.E.2d at 1024-28