Summary
In Tilberry v. Body (1986), 24 Ohio St.3d 117, 24 OBR 308, 493 N.E.2d 954, this court recognized that a substantial right of a party to a contract is affected where "the trial court's action greatly alters the agreement and the rights provided therein that were propounded by the parties * * *."
Summary of this case from General Electric Supply v. WardenOpinion
No. 85-606
Decided June 18, 1986.
Appellate procedure — Judicial dissolution of law partnership is final, appealable order — R.C. 2505.02.
APPEAL from the Court of Appeals for Cuyahoga County.
Between 1970 and 1982, plaintiff-appellee, James H. Tilberry, and defendants-appellants, Alfred C. Body, Robert V. Vickers and Edward Kent Daniels, Jr., practiced as a partnership specializing in patent and copyright law under the name "Meyer, Tilberry Body."
Serious differences arose between the parties in December 1981 and January 1982, and on January 29, 1982, the parties commenced negotiations for their mutual separation. Such negotiations extended between January and November 1982.
On November 26, 1982, plaintiff instituted this action in the court of common pleas seeking a dissolution of the partnership, an accounting, equitable relief and damages. Defendants counterclaimed, alleging that plaintiff converted partnership property, interfered with defendants' business relationships with clients, converted receivables, and overdrew $26,600 from the partnership account.
During the course of the instant proceedings, plaintiff has maintained that he was forced out of the partnership. Defendants, on the other hand, claim that the plaintiff voluntarily withdrew from the partnership arrangement. The record indicates that in November 1982, the defendants began practicing law under the name "Body, Vickers Daniels."
In January 1984, the trial court conducted a hearing, and received evidence and testimony. Thereafter, the court instructed both sides to draw up their own findings of fact and conclusions of law for the court's consideration.
On November 28, 1984, the trial court granted judgment in favor of the plaintiff, and rendered the following conclusions of law:
"1. The [U]niform Partnership Act, Chapter 1775 of the Revised Code, governs the creation, operation, dissolution, winding up and termination of partnerships in Ohio.
"2. Meyer, Tilberry and Body is a patent, trademark, trade secret and copyright law firm subject to the Ohio Uniform Partnership Act.
"3. Plaintiff could not be expelled or terminated from Meyer, Tilberry and Body by virtue of the 1974 Partnership Agreements, paragraphs 1 and 14.
"4. To effect a dissolution by agreement or conduct, the partners need not use the word `dissolve' or expressly agree `to dissolve.' Dissolution occurs when the partners agree they will not practice law together as a firm any longer.
"5. The Court finds Plaintiff Tilberry did not withdraw from Meyer, Tilberry and Body but was forced to leave by Defendants. Plaintiff's departure from the Meyer, Tilberry Body office came after months of negotiation and the Defendants began practicing as `Body, Vickers Daniels,' The law does not require forcible resistance by a partner to constitute an involuntary departure.
"6. Judicial dissolution of Ohio partnerships is authorized pursuant to R.C. 1775.30(F) and 1775.31.
"7. R.C. 1775.31 provides that a court of equity may dissolve a partnership for practicable or equitable considerations without finding fault or breach * * *.
"8. The Court further finds the partners effected a dissolution of Meyer, Tilberry Body by agreement and conduct in January, 1982.
"9. Courts construing Section 32 of the Uniform Partnership Act have held that:
"`* * * Courts of equity may order the dissolution of a partnership where there are quarrels and disagreements of such a nature and to such extent that all confidence and cooperation between the parties has been destroyed. * * *
"` Mayhew v. McGlothlin (1937), 260 [ sic 269] Ky. 184, 106 S.W.2d 643, 644. Accord: Cooper v. Isaacs (D.C. Cir., 1971), 448 F.2d 1202 and Wallace v. Sinclair (1953) [ sic 1952], 114 Cal.App.2d 220, 250 P.2d 154, 159.
"`When the purposes of a business relationship are being defeated by deadlock, a court can declare the business relationship at an end. * * * Dissolution of a partnership is proper where relations existing between partners rendered it impracticable for them to conduct business beneficially. * * *'
" Mandell v. Centrum Frontier Corp. (1980), 86 Ill. App.3d 437, [41 Ill. Dec. 323,] 407 N.E.2d 821, 830. Accord: Susman v. Venture (* * * 1982), [ 114 Ill. App.3d 668, 70 Ill. Dec. 269,] 449 N.E.2d 143, 148.
"10. A partnership dissolution may be deemed to occur prior to the decree date if the equities so warrant.
"11. The Court finds the dissolution of Meyer, Tilberry and Body occurred in January, 1982 pursuant to R.C. 1775.31(A)(4) and (6) and the authorities cited in Conclusion No. 9 and Conclusion No. 10.
"12. Plaintiff and Defendants carried on negotiations from January to November, 1982. The negotiations were part of the winding up process which was never completed. The Court will hereafter supervise the winding up process and termination of Meyer, Tilberry and Body.
"Judgment for Plaintiff at Defendants' costs."
Upon an appeal perfected by defendants, the court of appeals dismissed the action upon plaintiff's motion which stated that "(1) [t]he trial court's order of partnership dissolution constitutes a partial disposition which does not satisfy the requirements for a `final judgment' under Civ. R. 54(B) and Local Rule 20; and (2) the trial court's order is not a final, appealable order pursuant to R.C. 2505.02 * * *."
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Eugene I. Selker and Mark A. Selker, for appellee.
Calfee, Halter Griswold, Terence J. Clark and James C. Vanderwist, for appellants.
The sole issue presented for our determination is whether the trial court's judicial dissolution of the instant partnership is a final, appealable order pursuant to R.C. 2505.02.
The plaintiff-appellee submits that the order of dissolution rendered below is interlocutory in nature, and does not determine the action and prevent a judgment. Appellee further argues that the trial court's order was not made in a special proceeding and was not an order affecting a substantial right.
The defendants-appellants contend that the trial court's order of a judicial dissolution was rendered in contravention of the Uniform Partnership Act, and clearly affected their substantial rights, thus making such a dissolution (short of the winding-up phase) immediately appealable. Appellants argue that the trial court's order was made in a "special proceeding" under R.C. 2505.02, since the partnership dissolution was ordered pursuant to R.C. 1775.31(A). Appellants further contend that the trial court's disposition amounts to a final, appealable order because the dissolution rendered by the court "determine[d] the action" and "prevent[ed] a judgment."
For the reasons that follow, we hold that the instant judicial dissolution of the partnership does present a final, appealable order under R.C. 2505.02. Accordingly, we reverse the court of appeals' dismissal, and remand the cause to that court for the purpose of considering defendants' appeal on the merits.
R.C. 2505.02 provides in pertinent part:
"An order affecting a substantial right in an action which in effect determines the action and prevents a judgment, an order affecting a substantial right made in a special proceeding or upon a summary application in an action after judgment, or an order vacating or setting aside a judgment and ordering a new trial is a final order which may be reviewed, affirmed, modified, or reversed, with or without retrial. * * *"
In recent years, this court has been presented with numerous cases concerning the appealability of orders made by trial courts in the context of the foregoing statute. Our determinative inquiry involves whether the judicial dissolution of the partnership order by the trial court amounts to an order affecting substantial rights made in a special proceeding.
In the seminal case of Amato v. General Motors Corp. (1981), 67 Ohio St.2d 253 [21 O.O.3d 158], we stated that:
"* * * [W]hether an order is made in a special proceeding is resolved through a balancing test. This test weighs the harm to the `prompt and orderly disposition of litigation,' and the consequent waste of judicial resources, resulting from the allowance of an appeal, with the need for immediate review because appeal after final judgment is not practicable." Id. at 258. See, also, Bernbaum v. Silverstein (1980), 62 Ohio St.2d 445, 447 [16 O.O.3d 461]; and State, ex rel. Celebrezze, v. K S Circuits, Inc. (1983), 6 Ohio St.3d 354, 355-356.
Our review of the precedent in this area reveals that this court has been reluctant to allow immediate review of rulings made during the pendency of a case. Columbus v. Adams (1984), 10 Ohio St.3d 57, 60.
While the prompt and orderly disposition of litigation has been described as the "paramount" factor to be considered in most civil proceedings, State, ex rel. Celebrezze, supra, at 356; State v. Port Clinton Fisheries, Inc. (1984), 12 Ohio St.3d 114, 116, this court has held that "* * * a prime determinant of whether a particular order is one made in a special proceeding is the practicability of appeal after final judgment." Bernbaum, supra, at 447.
Thus, we must endeavor to weigh both factors in order to arrive at a fair and just resolution. The underlying issue which is not properly before this court, but which is nevertheless a crucial consideration in applying the Amato balancing test to the cause sub judice, is whether the terms of the partnership agreement or the terms of R.C. 1775.30(F) and 1775.31 should apply in this action brought by plaintiff with respect to the instant partnership.
In light of the factors set forth in Amato, supra, we note that the appellants attack the court-ordered dissolution as an improper remedy in light of the specific terms of the partnership agreement dealing with the withdrawal of a partner and the dissolution of the partnership entity. Based on Amato, we believe it is clear that the trial court's order of dissolution affects the substantial rights of all the partners, as well as the partnership itself, as an ongoing enterprise. The assets and proportions of each partner's interest in the partnership are definitely affected by the order of dissolution rendered below, because the trial court's action greatly alters the agreement and the rights provided therein that were propounded by the parties at the beginning of the partnership.
Likewise, we find that the trial court's order was one which was made in a special proceeding, since the court ordered a dissolution of the partnership pursuant to R.C. 1775.31(A), rather than according to the terms providing for the same in the partnership agreement. Additionally, we believe that a balancing of the Amato factors weighs in favor of immediate appealability in the instant case, because an appeal after final judgment would not be practicable.
Final judgment in the partnership dissolution ordered here will not occur until after the winding-up, accounting and distribution of the partnership ship assets have been completed. If an appeal is not permitted until after the winding-up, accounting and distribution of partnership assets have been completed, a reversal of the trial court's dissolution on appeal would require the trial court to undo the entire accounting and to return all of the asset distributions. Such a set of circumstances would be chaotic at best, and virtually impossible to accomplish. As appellants point out, the disposition of partnership assets would result in irreparable harm ( e.g., termination of the partnership leasehold). On the other hand, the allowance of immediate appeal at this time would minimize the possible waste of judicial resources and would increase the likelihood that only one accounting and wind-up will take place, since such wind-up and accounting will be governed by either the partnership agreement or the Ohio Revised Code. In our view, judicial resources will actually be conserved by the allowance of an appeal at this juncture in the litigation because the crucial issue underlying the cause ( i.e., whether the Revised Code provisions should apply instead of the terms of the partnership agreement) will be satisfactorily adjudicated, and this will allow the court to proceed with a fair and equitable disposition of the instant controversy.
Therefore, based upon the foregoing analysis and precedent, we hold that where a partnership is ordered to be dissolved by a court order pursuant to R.C. 1775.31(A), even though there exists a valid agreement providing for the dissolution of such a partnership, such an order is a final, appealable order affecting a substantial right made in a special proceeding, pursuant to R.C. 2505.02.
Accordingly, the judgment of the court of appeals is reversed and the cause remanded to that court for further proceedings.
Judgment reversed. and cause remanded.
CELEBREEZE, C.J., SWEENEY, HOLMES, C. BROWN and WRIGHT, JJ., concur.
LOCHER and DOUGLAS, JJ., dissent.
I believe this to be a prime example of the type of trial court determination that presents a final, appealable order of which I spoke in Amato v. General Motors Corp. (1981), 67 Ohio St.2d 253 [21 O.O.3d 158]. As well stated by the majority in correctly applying Amato, an appeal after final judgment would not be practicable, in that after a partnership dissolution here "* * * a reversal of the trial court's dissolution on appeal would require the trial court to undo the entire accounting and to return all of the asset distributions." A valid application of the doctrine of judicial economy reasonably dictates the immediate appeal of all issues presented within this dissolution-of-partnership action.
I respectfully dissent. The majority essentially employs a three-step analysis in concluding that the trial court's November 28, 1984 order was final and appealable. First, the majority states "* * * that the trial court's order was one which was made in a special proceeding, since the court ordered a dissolution of the partnership pursuant to R.C. 1775.31(A), rather than according to the terms providing for the same in the partnership agreement." Second, the majority asserts that since this is a special proceeding, the Amato factors must be balanced to determine whether there is a need for an immediate review because an appeal after a final judgment would be impractical. Third, the majority concludes, "[i]f an appeal is not permitted until after a winding-up, accounting and distribution of partnership assets have been completed, a reversal of the trial court's dissolution on appeal would require the trial court to undo the entire accounting and return all of the asset distributions."
I do not agree that this case involves a "special proceeding." Civ. R. 2 states, "[t]here shall be only one form of action, and it shall be known as a civil action." Civ. R. 1 states that the Civil Rules prescribe the procedure to be followed in all civil courts, except:
"(C) * * * (1) upon appeal to review any judgment, order or ruling, (2) in the appropriation of property, (3) in forcible entry and detainer, (4) in small claims matters under Chapter 1925, Revised Code, (5) in uniform reciprocal support actions, (6) in the commitment of the mentally ill, (7) in all other special statutory proceedings; * * *."
In my view, a "special proceeding" is one where the step-by-step procedures to be utilized are statutorily set forth. R.C. Chapter 1775 establishes no such scheme. It merely sets forth the substantive lawof partnership. Thus, this case is simply an ordinary civil action. Even if I were to assume, for the sake of argument, that this case involved a "special proceeding," I would still be required to dissent, as I cannot accept the majority's view that "* * * an appeal after final judgment would not be practicable."
App. R. 7 provides that any party desirous of maintaining the status quo during the pendency of an appeal can apply for a stay of the trial court's final judgment. In my opinion, there should be no interlocutory appeal, and this case should proceed to final judgment in the trial court. Then, before execution of that judgment, appellants should apply for a stay. No irremediable harm would occur unless the application for a stay were to be denied, and we have no reason to believe that it would be denied.
Admittedly, the rule against interlocutory appeals can, at times, produce harsh results. But the rule is supported by four strong policy considerations. One, the rule prevents parties from engaging in costly delaying tactics at trial by appealing each adverse ruling as it is entered. Two, the losing party on a particular motion may ultimately prevail at trial, and not seek an appeal, thus saving appellate court time. Three, a single appeal in which all objections to the trial court's rulings are raised will be much more efficient than numerous appeals, each requiring its own set of briefs, record, oral argument and appellate opinion. Finally, by avoiding interlocutory appeals, the trial court process can move rapidly and will not have to be stalled while waiting for the court of appeals to rule on some point. Friendenthal, Kane Miller, Civil Procedure (1985) 581, Section 13.1.
I am sorry to say that today's decision and the court's recent holding in Humphry v. Riverside Methodist Hosp. (1986), 22 Ohio St.3d 94, have so substantially eroded the rule against interlocutory appeals, that the rule is in danger of extinction.
For all of the foregoing reasons, I respectfully dissent.
LOCHER, J., concurs in the foregoing dissenting opinion.