Karrick v. Hannaman

Hannaman (plaintiff) and Karrick (defendant) were partners in a mercantile and laundry business. The partnership agreement provided that the partnership would exist for five years. The partners agreed that Hannaman would manage the business and that Karrick would put up most of the business capital. The partners also agreed to share in the profits and losses equally. Karrick took exclusive possession of the business and prevented Hannaman from receiving the profits. Hannaman filed suit, claiming that Karrick’s misconduct dissolved the partnership before the five-year term expired and seeking to recover Hannaman’s share of the profits that the partnership received after Karrick took control of the business. Karrick admitted taking possession of the business but denied any wrongdoing. Karrick alleged that the business became insolvent due to Hannaman’s mismanagement, and he argued that Hannaman was not entitled to the additional profits because both partners consented to dissolve the partnership. The trial court determined that the partnership could not be dissolved prior to the five-year term, but because the five-year term had expired by the time the trial court made its ruling, the trial court found that the partnership had terminated. The trial court ordered the profits to be divided equally after crediting the partners for their respective capital contributions to the partnership. Karrick appealed. The intermediate appellate court agreed that the partnership could not be dissolved before the five-year term expired and that Hannaman was entitled to a share of the profits, but it issued a decree reducing Hannaman’s award to account for money previously advanced to Hannaman from the partnership for personal expenses. Karrick appealed.