## Facts

- Nathan Couch and J.R. Cude formed a partnership in 1965 to operate a laundromat.
- The laundromat operated in a building owned by Couch, rented by the partnership on a month-to-month basis.
- In 1973, Couch sued to dissolve the partnership; a receiver operated the laundromat for several months.
- The court ordered a publicly advertised sale of the partnership’s assets, consisting of the laundromat equipment.
- At the sale, Couch stated he would not lease the premises to anyone who wanted to continue operating the laundromat there, requiring any purchaser to remove the equipment.
- The equipment sold at public auction for $800 to Louis Platkin, who was later revealed to have been acting as Couch’s agent.
- After the sale, Couch and his son continued operating a laundromat at the same location using the purchased equipment.
- The administratrix of Cude’s estate sought to set aside the sale or recover damages, alleging Couch depressed the price and secretly repurchased the assets, breaching fiduciary duties.

## Issues

1. Whether a partner breaches fiduciary duties by purchasing partnership assets at a court-ordered liquidation sale through an undisclosed agent.
2. Whether a partner/landlord breaches fiduciary duties by refusing to lease partnership premises to prospective buyers, allegedly depressing the liquidation price of partnership equipment.
3. Whether the circumstances showed unfair advantage or prejudice sufficient to set aside the sale or award damages.

## Decision

- The Tennessee Supreme Court affirmed the judgment denying relief to Cude’s estate.
- The court held Couch did not breach fiduciary duties in connection with the liquidation sale.
- The court concluded the undisclosed agency purchase and Couch’s refusal to lease the premises did not, on these facts, result in unfairness or prejudice to the partnership or the other partner.

## Legal Principles

- Partners owe each other fiduciary duties in matters relating to the partnership, and those duties continue through dissolution and liquidation.
- A partner’s purchase of partnership assets at a court-ordered, publicly advertised liquidation sale is not invalid per se; liability turns on proof of actual unfair advantage, self-dealing that prejudices the partnership, or conduct that affects the fairness of the sale.
- Use of an undisclosed agent to purchase at a public sale does not establish breach absent a showing that nondisclosure caused harm (such as suppressing bids or affecting price).
- A partner’s legitimate control over separate, individually owned property (such as a building leased to the partnership) generally does not constitute a fiduciary breach merely because it confers an “inherent advantage,” absent proof of resulting unfairness to the partnership in the liquidation process.
- In assessing claimed price depression at a public sale, courts focus on evidence of manipulation or prejudice; open bidding under disclosed conditions supports treating the auction price as the best evidence of value under those conditions.

## Conclusion

The court held that, although partners remain fiduciaries during liquidation, Couch’s conduct—refusing to lease his building to a continuing laundromat operator and repurchasing equipment at a court-supervised public sale through an agent—did not breach fiduciary duties because no unfair advantage or prejudice to the partnership was shown.


Cude v. Couch, 588 S.W.2d 554 (Tenn. 1979)