Credit Bureaus of Merced County, Inc. v. Shipman

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

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

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

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. Shipman, lists Merced Hardware Company; and the items in dispute were charged to Shipman & Davis Lumber Company on the books of Merced Hardware and Implement Company. The evidence supports the implied finding that Merced Hardware and Implement Company had previously extended credit to Shipman & Davis Lumber Company.

As to the Valley Typewriter Company account, the record shows that five payments were made on this account after the date of the dissolution of the partnership. Two checks in favor of Valley Typewriter Company, both signed by Shipman Lumber Servaes Company, one dated June 20, 1956, for $76.20 and one dated October 26, 1956, for $38.10. Appellant contends that this is overwhelming evidence of a novation and conclusive proof that he was discharged from the obligation under subdivision (2) of section 15036 of the

Appellant also argues that he is entitled to a reversal of the judgment as to the Valley Typewriter account under the following provision of section 15036 of the Corporations Code: “(3) Where a person agrees to assume the existing obligations of a dissolved partnership, the partners whose obligations have been assumed shall be discharged from any liability to any creditor of the partnership who, knowing of the agreement, consents to a material alteration in the nature or time of payment of such obligations.” But here again knowledge of the dissolution of the partnership is required, and the court found upon sufficient evidence that none of the creditors here involved had notice or knowledge of the dissolution of the partnership. Furthermore, the fact that the Valley Typewriter Company accepted delayed payments under the contract does not compel a finding in accordance with appellant’s argument that the creditor had consented to a material alteration in the nature or time of payment of the obligation.

Appellant also contends that the allowance of any attorney’s fee of $100 was improper, and if proper, the allowance was excessive. The Valley Typewriter Company contract provided for attorney’s fees if suit was brought. In this case the action was vigorously contested. An appellate court will not disturb an award of attorney’s fees of a trial court in the absence of a manifest abuse of discretion. (Biaggi v. Sawyer, 75 Cal.App.2d 105 [ 170 P.2d 678 ] ; State v. Westover Co., 140 Cal.App.2d 447 [ 295 P.2d 96 ].) In view of the