Girard Bank v. HALEY
332 A.2d 443, 460 Pa. 237, 1975 Pa. LEXIS 630 (1975)
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Rule of Law:
Under the Uniform Partnership Act, a partnership that does not specify a definite term or a particular undertaking is a partnership-at-will, which can be dissolved immediately by the express will of any partner without justification and without breaching the partnership agreement.
Facts:
- On September 28, 1958, Anna Reid and three defendants entered into a written partnership agreement to lease and manage real property.
- Reid contributed real estate valued at $50,000 and $10,000 cash, while the defendants contributed a combined $10,000 cash and their physical labor.
- The partnership agreement did not specify a definite term for its duration.
- The agreement's stated purpose was the general operation and leasing of a tract of land, without reference to a more specific, completable goal.
- The agreement contained a provision allowing surviving partners the option to purchase a deceased partner's interest upon their death.
- On February 10, 1971, Reid sent a letter to the defendants unequivocally stating, 'I am terminating the partnership...'.
- After Reid sent the letter, the partners met but could not agree on a plan for liquidation.
- Sometime after filing suit to wind up the partnership, Anna Reid died.
Procedural Posture:
- Anna Reid brought a suit in equity in the trial court against her partners, seeking to have the partnership wound up and its assets distributed.
- During the proceedings, Anna Reid died, and the executors of her estate were substituted as plaintiffs.
- The trial court chancellor found that the partnership was dissolved by Reid's death, not by her earlier letter.
- Based on this finding, the trial court ruled that the surviving partners were entitled to purchase Reid's interest under the terms of the partnership agreement and entered a decree ordering them to pay her estate.
- The executors (plaintiffs/appellants) filed exceptions to the trial court's adjudication, which were dismissed.
- The executors appealed the final decree to the Supreme Court of Pennsylvania.
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Issue:
Does a partner's unequivocal written notice expressing their will to terminate the partnership immediately dissolve a partnership-at-will, even if the partnership agreement contains separate provisions for dissolution upon a partner's death?
Opinions:
Majority - Pomeroy, Justice
Yes. A partner's unequivocal written notice immediately dissolves a partnership-at-will. Under Section 31 of the Uniform Partnership Act, dissolution is caused 'by the express will of any partner' and requires no justification. Mrs. Reid’s letter was a definite and unequivocal expression of her will to dissolve the partnership, making the dissolution effective on the date of the letter, February 10, 1971. Because the partnership agreement specified no definite term and its purpose of leasing property was a general business objective rather than a 'particular undertaking,' the partnership was at-will. Therefore, Reid's dissolution did not breach the agreement, and the provisions of the Act, not the post-mortem buyout clauses in the agreement, govern the winding-up of the partnership's affairs. Her subsequent death is irrelevant to determining the date of dissolution.
Analysis:
This decision reinforces the fundamental principle that a partnership is a consensual relationship that cannot be maintained against the express will of a partner if the agreement is silent on duration. It clarifies the distinction between a general business purpose and a 'particular undertaking,' establishing that an ongoing business like leasing property does not qualify as a particular undertaking that would prevent at-will dissolution. This holding provides certainty for partners in at-will agreements, confirming their power to dissolve the entity at any time without cause and triggers the application of statutory winding-up procedures over any contractual provisions that are contingent on other events, like death.
