Credit Bureaus of Merced County, Inc. v. Shipman

334 P.2d 1036, 167 Cal. App. 2d 673, 1959 Cal. App. LEXIS 2388
CourtCalifornia Court of Appeal
DecidedFebruary 6, 1959
DocketCiv. 9496
StatusPublished
Cited by4 cases

This text of 334 P.2d 1036 (Credit Bureaus of Merced County, Inc. v. Shipman) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Credit Bureaus of Merced County, Inc. v. Shipman, 334 P.2d 1036, 167 Cal. App. 2d 673, 1959 Cal. App. LEXIS 2388 (Cal. Ct. App. 1959).

Opinion

SCHOTTKY, J.

Donald E. Davis has appealed from the judgment entered in the above-entitled actions which were consolidated for trial. By the judgment Davis was held liable for a debt incurred by a partnership of which he was a member and attorney’s fees, and for two other debts, one of which was incurred in the name of the partnership after the entity was dissolved.

Donald Davis and Russell Shipman formed a partnership in 1954 under the name of Shipman & Davis Lumber Company. On September 20, 1955, the partnership was dissolved by written agreement. A notice of dissolution was published *676 in a newspaper of general circulation in the county where the business was conducted, and an affidavit of publication was filed with the county clerk. No actual notice of dissolution was given to firms which had extended credit to the partnership at the time of dissolution. By the agreement Shipman, who was to continue the business, was to pay all the debts of the entity. Shipman continued the business as a sole proprietorship for a short time until a successor corporation, Shipman Lumber Servaes Company, was formed. In March, 1955, the partnership had purchased a calculator from the Valley Typewriter Company. The contract of sale provided that the unpaid balance of $457.20 would be paid in 12 installments of $38.10. At the time of dissolution the sum of $255.40 was owing to the Laird Welding and Manufacturing Company. The sum of $255.40 was paid to Laird Welding and Manufacturing Works on November 17, 1955, but this amount did not include the item of $54.48 for repairs made on November 3, 1955, but which was not entered on the books of the Laird Welding and Manufacturing Works until after the payment on November 17th, nor did it cover charges for demurrage on oxygen or acetylene cylinders furnished by Laird Welding and Manufacturing Works, or charges for cylinders which were either lost or not returned, said charges amounting to $135.33.

Commencing in 1956, Merced Hardware and Implement' Company, a firm which had previously done business with the partnership, sold merchandise on credit to the successors. The charge for this merchandise, amounting to $538.38, was entered on the books of Merced Hardware and Implement Company in the name of Shipman & Davis Lumber Company.

At the time of dissolution eight payments were due on the calculator. Five were made prior to the institution of this suit. A check in the amount of $76.20 drawn by Shipman Lumber Servaes Company on June 20, 1956, was accepted by Valley Typewriter Company as was a check of $38.10 dated October 26, 1956, which was also drawn by Shipman Lumber Servaes Company.

The accounts were assigned to the above-named plaintiff, and two separate actions were brought against Davis and Shipman and the partnership. Shipman failed to answer and a default was entered against him. Davis filed an answer denying any indebtedness to plaintiff. The two actions were consolidated for trial; and the court found that plaintiff was entitled to recover from defendant Davis the sum of $189.81 *677 on the Laird account, the sum of $538.38 on the Merced Hardware account, and the sum of $114.30 plus $100 attorney’s fees on the Valley Typewriter account. The court also found that neither plaintiff nor plaintiff’s assignors had notice of dissolution of said partnership until after their accounts had been incurred, and that neither plaintiff nor plaintiff’s assignors agreed to discharge any of the defendants named herein from liability. In accordance with said findings, judgment for $842.49 principal and attorney’s fees in the sum of $100 was entered in favor of plaintiff and defendant has appealed from said judgment.

Appellant makes a vigorous attack upon the judgment. He contends (1) that he has no legal responsibility as to any existing liabilities on the date of dissolution of the partnership; (2) that he is not liable on any obligations which were obligations incurred after the date of dissolution by defendant and appellant’s expartner or any other successor entity; and (3) that the allowance of any attorney’s fees was error and that the amount of attorney’s fees allowed was an abuse of discretion.

Appellant argues first that at the time of the suit he was not liable for the debts sued upon. He contends that no liability exists as to Laird Welding and Manufacturing Works because the amount which was due at the time of dissolution was subsequently paid, and, therefore, no liability existed at the time of suit. However, as hereinbefore noted, the payment of $255.40 to Laird Welding and Manufacturing Works on November 17, 1955, did not include the item of $54.48 for repairs made on November 3, 1955, nor the charge for demur-rage. The items of demurrage represented a continuing liability which originated prior to the dissolution, and appellant as the retiring partner would not be relieved from liability for them unless the creditor consented. As to the repair item incurred on November 3, 1955, which was after the date of the dissolution, appellant would not be liable therefor if Laird Welding and Manufacturing Works had notice of the dissolution. While the evidence is conflicting as to whether the Welding Works had notice of the dissolution at the time the repairs were made, it is sufficient to support the finding of the court that the company did not have notice. The burden is on a defendant relying on dissolution to prove notice of dissolution. (Epley v. Hiller, 128 Cal.App.2d 100 [274 P.2d 696].) Appellant cannot rely on the provisions of section 15035.5 of the Corporations Code to show actual knowl *678 edge. This section provides for publication of notice of dissolution of a partnership. However, as to firms having prior credit dealings with the partnership, actual notice of dissolution is necessary. While publication may be evidence from which actual knowledge could be inferred, publication alone would not compel a finding of actual knowledge. A retiring partner is not justified in placing sole reliance upon the publication of notice of dissolution, but should assure himself that existing creditors who have extended credit to the partnership receive actual notice of such dissolution.

As to the Merced Hardware account it is clear that the debt for the items sued upon were all incurred after February, 1956. Appellant contends that he is not liable for these items of debt because they were incurred after the dissolution of the partnership. Respondent in reply points out that section 15035 of the Corporations Code provides that after a dissolution a partner can bind the partnership “By any transaction which would bind the partnership if dissolution had not taken place, provided, the other party to the transaction: I. Had extended credit to the partnership prior to dissolution and had no knowledge or notice of the dissolution.” Here again the evidence is conflicting as to whether Merced Hardware and Implement Company had notice of dissolution of the partnership, and we are bound by the court’s finding that it did not. There is also evidence that Merced Hardware and Implement Company had previously extended credit to the partnership. The credit reference on the contract of the Ship-man & Davis Lumber Company with Valley Typewriter Compan3r, dated March 15, 1955, and signed by Russell C.

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Bluebook (online)
334 P.2d 1036, 167 Cal. App. 2d 673, 1959 Cal. App. LEXIS 2388, Counsel Stack Legal Research, https://law.counselstack.com/opinion/credit-bureaus-of-merced-county-inc-v-shipman-calctapp-1959.