## Facts

- Two individuals formed an oral partnership (no fixed duration) to operate a bowling alley in Burbank, California.
- One partner advanced $6,986.63 to the partnership as a loan for equipment, to be repaid from profits as soon as reasonably possible.
- The business opened in March 1940, was initially profitable, and each partner drew a weekly salary; some indebtedness was repaid.
- Disputes soon arose regarding management, duties, and financial withdrawals; the relationship became persistently hostile and unworkable.
- The trial court found one partner refused to perform his share of manual work, acted quarrelsomely and dominantly, treated the other partner harshly in front of customers and employees, and withdrew partnership funds beyond agreed amounts.
- A major policy conflict arose when one partner sought to add a gambling room and the other opposed it.
- The partner seeking exit proposed reasonable buy-out alternatives; the other refused and insisted the business continue on his terms.
- An equity action sought dissolution, sale of assets, and winding up; a receiver was appointed, and the trial court ordered dissolution and sale, repayment of the loan, and equal division of remaining net proceeds.

## Issues

1. Whether a court may order judicial dissolution when a partner’s repeated misconduct and refusal to cooperate make it not reasonably practicable to carry on the business together.
2. Whether the partnership was for a term (because repayment of a partner loan was tied to future profits) or was an at-will partnership.

## Decision

- The California Supreme Court affirmed the decree of dissolution, receivership sale, and winding up.
- The Court held the partnership was at will because the parties did not expressly fix a definite duration.
- The Court held dissolution was also justified under the statutory ground allowing dissolution when a partner’s conduct makes it not reasonably practicable to continue the business with him.
- The Court upheld treating the $6,986.63 advance as a loan payable from sale proceeds and then dividing remaining net proceeds equally between the partners.

## Legal Principles

- A partnership with no expressly fixed duration is generally an at-will partnership, even if the parties anticipate continuing operations and repaying advances out of future profits.
- Judicial dissolution is proper when a partner’s willful or repeated breaches, financial misconduct, refusal to perform agreed duties, or oppressive behavior makes it not reasonably practicable to continue the partnership relationship.
- In assessing impracticability, courts may consider the cumulative course of conduct and persistent friction rather than isolating individual disputes.
- Dissolution and liquidation (including appointment of a receiver and sale of assets) is an appropriate remedy when partners cannot cooperate in management and winding up.
- Partner loans are partnership liabilities payable before distribution of residual value, and dissolution does not necessarily entail forfeiture of a partner’s basic equity share.

## Conclusion

The court affirmed dissolution and liquidation of an at-will bowling-alley partnership because one partner’s repeated misconduct and noncooperation made continued joint operation impracticable, and it approved winding up through a receiver with repayment of a partner loan before equal division of remaining proceeds.


Owen v. Cohen, 19 Cal. 2d 147, 119 P.2d 713 (Cal. 1941)