Page v. Page

Supreme Court of California · 1961 · Corporations

359 P.2d 41 (Cal. 1961)

Updated August 22, 2026

CorporationsPartnershipsDissolutionFiduciary Dutiespartnership at willdefinite termparticular undertakinggood faith

Facts

Plaintiff and defendant were partners in an oral 1949 agreement to operate a linen supply business in Santa Maria, California. Each contributed about $43,000 in the first two years for land, machinery, and linen, and the business lost about $62,000 from 1949 to 1957. The partnership's major creditor was plaintiff's wholly owned corporation, which held a $47,000 demand note and supplied the linen and machinery used in operations. After the business became modestly profitable in 1958 and early 1959, plaintiff sought to terminate the partnership, while defendant argued the partnership had to continue until debts and investments were repaid from profits.

Issue

Whether the evidence supported the trial court's finding that the partnership was for a term, rather than at will, because the parties allegedly understood that partnership profits would repay indebtedness and investment. Also, whether a partner in an at-will partnership may dissolve while still owing fiduciary duties to the copartner.

Rule

Under Corporations Code section 15031, subdivision (1)(b), a partnership may be dissolved by the express will of any partner when no definite term or particular undertaking is specified. An agreement to continue for a term may be implied only when the evidence supports an understood objective such as repayment of a loan, recoupment of investment, payment of specific debts, or disposition of property on favorable terms; a mere hope that profits will cover expenses and make the business successful is insufficient. Even in an at-will partnership, the power to dissolve must be exercised in good faith, and a partner may not dissolve to appropriate the business opportunity for himself without adequately compensating the copartner.

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

In Portland, Oregon, Nina Patel and Owen Brooks orally formed a custom furniture partnership. They never discussed how long it would last, but both said they expected the shop's earnings would eventually cover rent, tools, and their startup contributions if the business succeeded.

If Nina now gives express notice that she is ending the partnership, which is the strongest argument about the partnership's status?

Explanation. Under the majority rule, a partnership is at will unless the evidence shows an express or implied agreement for a definite term or particular undertaking. A mere hope or expectation that the business will become profitable and pay its expenses is insufficient. Here, the facts show only an ordinary expectation of success, so express notice can dissolve the at-will partnership.