## Facts

- Joan K. McCormick and her brother, Clark A. Brevig, were equal partners (50/50) in Brevig Land, Live and Lumber, a Montana ranching partnership.
- The partners’ relationship deteriorated to the point that they could not cooperate in operating the partnership.
- In 1995, Joan sued for a partnership accounting and judicial dissolution; Clark asserted counterclaims and third-party claims.
- In an earlier appeal, the court affirmed summary judgment disposing of Clark’s claims against Joan and confirmed Joan’s entitlement to dissolution and an accounting; the matter later proceeded after remand.
- Following a bench trial, the district court dissolved the partnership and directed a special master to recommend a winding-up method and perform an accounting.
- The special master recommended valuing Joan’s interest and having Clark purchase it rather than selling partnership assets; the district court adopted that recommendation and ordered Clark to pay Joan about $1.107 million for her interest.
- Joan appealed, arguing dissolution required liquidation and cash distribution and that the accounting was inadequate; Clark cross-appealed valuation and asset-classification rulings, including whether certain Charolais cattle were partnership property.

## Issues

1. Whether, after judicial dissolution, the winding up had to proceed by liquidation of partnership assets with cash distribution to partners rather than a court-ordered buyout of one partner’s interest.
2. Whether the accounting adopted by the district court was legally sufficient for winding up, given its reliance on tax returns and lack of transaction-level analysis.
3. Whether certain Charolais cattle were partnership assets or separate property.

## Decision

- The court affirmed in part, reversed in part, and remanded.
- The district court erred by ordering a compelled buyout of Joan’s partnership interest instead of liquidating partnership assets and distributing surplus in cash as required by Montana’s partnership statute.
- The accounting used for winding up was insufficient and required a more complete review of partnership transactions and partner accounts.
- The Charolais cattle at issue were not partnership assets and had to be treated as separate property for purposes of the winding-up accounting.

## Legal Principles

- Upon dissolution and winding up under Montana’s version of RUPA, the default method requires liquidation (sale) of partnership property, payment of creditors, and distribution of any surplus to partners in cash, absent an agreement providing otherwise.
- A court may not substitute a valuation-based transfer of a partner’s interest (a forced buyout) for statutory liquidation when the statute calls for sale of partnership assets and cash distribution.
- A dissolution accounting must be detailed enough to identify partnership assets and liabilities, determine partner capital accounts, and allocate profits, losses, contributions, and withdrawals based on underlying transactions; tax returns alone are not an adequate substitute.
- Property used in a partnership business is not necessarily partnership property; classification turns on contribution, agreement, and consistent treatment in records and transactions.

## Conclusion

The court required liquidation and cash distribution as the statutory default for winding up a dissolved partnership, rejected a compelled buyout as inconsistent with that scheme, ordered a more complete dissolution accounting, and held that disputed Charolais cattle were separate property rather than partnership assets.


McCormick v. Brevig, 96 P.3d 697 (Mont. 2004)