Zeibak v. Nasser

Supreme Court of California · 1938 · Corporations

12 Cal. 2d 1 (1938)

Updated August 22, 2026

CorporationsJoint venturesPartnership dissolutionjoint venturepartnershipwrongful dissolutionCivil Code section 2432Civil Code section 2425(b)

Facts

Plaintiff and defendants entered into an oral joint venture to acquire and operate three San Francisco theatres, with the expectation that they would later form a corporation and contribute funds as needed. The parties agreed that the Nassers would have primary general management and administration, but no corporation was ever formed because the parties could not agree on final supplemental terms. The trial court found that after defendants signed a proposed final agreement, plaintiff refused on or about December 11, 1932, to exchange his executed copy, refused to contribute his share of a deficit, and failed to cooperate in agreed repairs and alterations. Plaintiff claimed defendants excluded him and denied access to information, but the court found defendants had supplied him available business information and permitted inspection of records.

Issue

Whether Civil Code section 2432 applies to a joint venture such that defendants could continue the business after plaintiff wrongfully caused dissolution, with plaintiff entitled only to the value of his interest excluding goodwill. Also, whether this venture was at will or instead for a definite term or particular undertaking, and whether Dolliver's death automatically dissolved the venture.

Rule

The rights and liabilities of joint adventurers, as between themselves, are governed by the same principles as partnerships. Civil Code section 2432 applies when dissolution is caused in contravention of the partnership agreement, including where a court decree effects dissolution because one partner's wrongful conduct made continuation impracticable; in that event, the nonwrongful partners may continue the business upon paying the wrongful partner the value of his interest at dissolution, less damages if any, and excluding goodwill. A venture to operate leased property for a particular business, though lacking an express duration, is impliedly to continue during the lease term and is not dissolvable at will under section 2425(b).

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

In Portland, Maya Soren, Daniel Kline, and Olivia Mercer orally agree to acquire and operate a leased music venue together, with Daniel handling day-to-day management. After disputes arise, Maya sues, arguing that because the enterprise was called a joint venture rather than a partnership, the statutory rules governing wrongful dissolution of partnerships do not apply.

Which is the strongest response?

Explanation. The majority held that, as between the parties, joint adventurers are governed by the same principles as partners. Thus the wrongful-dissolution provisions applicable to partnerships may be applied to a joint venture, even if the parties contemplated later forming a corporation and never did so.