Disotell v. Stiltner

Supreme Court of Alaska · 2004 · Corporations

100 P.3d 890 (2004)

Updated August 22, 2026

CorporationsPartnership dissolutionWinding upBuyout valuationpartnershipdissolutionbuyoutliquidation

Facts

Disotell and Stiltner formed an equal oral partnership in 1997 to convert Stiltner's building into a hotel, with Stiltner contributing the hotel property and later deeding a half interest to Disotell. They agreed Disotell would pay $137,500 for that half interest only from hotel profits, but they later reached an impasse in May 1998 over how the project should proceed, and the venture never produced profits. Stiltner thereafter exclusively occupied the hotel property for personal purposes during the post-dissolution period. In winding up the partnership, the superior court allowed Stiltner to buy out Disotell based on assumed tax-appraised values, although no admissible valuation evidence had been introduced.

Issue

Whether Alaska's former Uniform Partnership Act required liquidation of partnership assets upon dissolution, or instead allowed the superior court to permit one partner to buy out the other. Also, whether the buyout and accounting rulings were valid without admissible evidence of asset value, with Disotell's payment obligation treated as partnership debt, and without compensation for Stiltner's personal post-dissolution use of partnership property.

Rule

A court winding up a dissolved partnership under AS 32.05.330(a) is not absolutely required to liquidate partnership assets and may permit a partner buyout in appropriate circumstances. But a buyout is proper only at fair market value established by admissible, objective evidence. A partner's personal obligation to pay for his capital contribution is not partnership debt absent agreement that the partnership assumed it, and a partner who personally uses partnership property after dissolution but before termination must account to the partnership for the benefit derived from that use.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Alvarez and Owen Price formed an equal partnership in Portland, Oregon to renovate a warehouse for event rentals. After the partners reached an impasse and dissolved the partnership, the trial court found that appointing a receiver and publicly marketing the property would likely consume a substantial portion of the property's value in fees and delay, so it ordered that Owen could buy Nina's interest for fair value if value were properly established.

Under the majority rule, which is the strongest argument that the court acted within its authority?

Explanation. The majority held that liquidation is not mandatory in every lawful dissolution. A court may permit a buyout in appropriate circumstances, such as avoiding receiver and sale costs and reducing economic waste, so long as the departing partner receives fair value. The statute does not create an absolute right to force liquidation.