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White v. Caesar

302 N.J. Super. 318, 695 A.2d 350 (App. Div. 1997)

PARTNERSHIPS; DISSOLUTION—An oral partnership agreement gave a 5% interest to one of three partners. Upon dissolution, that partner claimed that a New Jersey statute gave him an equal (one-third) share in the proceeds. He was wrong. This provision is subject to the agreement which provided otherwise and a profit share of 5% means a dissolution share of 5%.

In February, 1992, three attorneys formed a partnership, but never entered into a written partnership agreement. All agree that one of the terms of their oral agreement was that one of the three attorneys, White, was entitled to 5% of the partnership profits. In April, 1993, the other two attorneys left to form their own firm. White filed a complaint seeking unpaid salary and distribution of one-third of the assets of the dissolved partnership. The motion judge held that since the parties orally agreed that White was entitled to 5% of the ongoing partnership, he is limited to 5% upon dissolution. The judge granted the request for involuntary dismissal of White’s claim for unpaid salary. White appealed.

The Appellate Court agreed that White was only entitled to 5% of the assets of the partnership. The applicable statute requires equal sharing of profits unless the partners agree otherwise. Since the existence of the oral agreement for 5% was uncontested, White had no basis for claiming a one-third share. As to unpaid salary, White claimed there was an oral agreement to pay him $100,000 and that this salary was carried as a debt on the books of the partnership without objection from the other partners. The motion judge held that White failed to prove the existence of such an agreement or to establish that any unpaid salary was treated as a debt of the partnership. However, the Appellate Court held that a motion for involuntary dismissal must be denied if there is any evidence which could sustain a judgment in White’s favor. The Court concluded that White’s allegations were sufficient to defeat an involuntary dismissal motion, and remanded the issue for trial.

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