## Facts

- Two brothers formed an oral partnership in 1949 to operate a linen supply business in Santa Maria, California.
- Each partner contributed about $43,000 toward land, equipment, and linen to start the business.
- From 1949 to 1957, the business lost about $62,000.
- The partnership’s major creditor was a corporation wholly owned by one partner (George), which supplied linen and equipment and held a $47,000 partnership demand note.
- The business improved in 1958 and early 1959, generating modest profits.
- George sought to terminate the partnership after profitability improved.
- The other partner (H.B.) resisted dissolution, asserting the partnership was for a term lasting a “reasonable time” necessary to repay certain partnership debts from profits.
- H.B. supported his view with testimony about earlier business arrangements in which profits were retained until obligations were paid, though one such arrangement was a limited partnership with a defined five-year term and different terms.
- H.B. argued George’s financial control and creditor position could enable a dissolution designed to force H.B. out and allow George to capture future profits.

## Issues

1. Whether the parties’ oral agreement created a partnership for a term (until repayment of debts from profits) or a partnership at will.
2. If the partnership was at will, whether a partner may dissolve it for the purpose of excluding the other partner and appropriating the business and its future profits without fair compensation.

## Decision

- The court reversed the judgment that declared the partnership to be for a term.
- The court held the partnership was at will because the evidence did not support an agreement to continue until debts were repaid from profits.
- The court held that although a partner has statutory power to dissolve an at-will partnership by express will when no definite term or undertaking is specified, that power must be exercised in good faith.
- The court remanded for further proceedings consistent with its view that dissolution aimed at appropriating the business may constitute a breach of fiduciary duty and justify relief.

## Legal Principles

- When no definite term or particular undertaking is specified, a partnership is dissolvable by the express will of any partner under California’s partnership statute.
- A claimed “term” must be supported by an actual agreement; general expectations to recoup investments or pay debts do not, without more, establish a term partnership.
- Partners owe fiduciary duties of utmost good faith in partnership matters, including dissolution.
- A partner may have the power to dissolve an at-will partnership but may lack the right to do so if dissolution is in bad faith.
- Dissolution used as a device to appropriate the business and its future opportunities for the dissolving partner, without fully compensating the other partner, can be wrongful and may support damages or other remedies.

## Conclusion

The court classified the brothers’ oral business arrangement as an at-will partnership and rejected a term based on hoped-for repayment of obligations from profits, while holding that any at-will dissolution remains constrained by fiduciary duties and cannot be used in bad faith to take over the business without fair compensation to the copartner.


Page v. Page, 55 Cal. 2d 192, 359 P.2d 41 (Cal. 1961)