Drashner v. Sorenson

C. H. Drashner (plaintiff), A. D. Sorenson (defendant), and Jacob Deis (defendant) formed a partnership to operate a real estate, loan, and insurance business. Sorenson and Deis fronted $7,500 to purchase the business from its original owner. The parties had no written partnership agreement but orally agreed that the $7,500 would be repaid to Sorenson and Deis from partnership earnings. They also agreed on percentages that each partner would receive in commissions from his respective sales. Disagreements soon arose. Drashner neglected his duties by spending time in bars. Drashner also requested extra cash distributions from the partnership, which Sorenson and Deis refused to grant. In order to cash out his share of the partnership, Drashner sued Sorenson and Deis, seeking to dissolve the partnership. At that point, Sorenson and Deis had recouped only $3,000 of their $7,500 loan. The trial court decided that Drashner had wrongfully caused the dissolution of the partnership. The court held that Sorenson and Deis were entitled to continue the partnership after paying Drashner the value of his share. The court further found that Drashner’s share (1) was one-third of the value of the partnership property after payment of liabilities and (2) did not include any part of the business’s goodwill value. The court valued the partnership property at $4,500. After deducting the $4,500, the partnership still owed Sorenson and Deis for the initial startup capital and additional money for debts. The court concluded that the value of Drashner’s partnership share was $0. Drashner appealed to the South Dakota Supreme Court.