## Facts

- Wolfgang and Renate Schymanski and Minna Huss (the Schymanskis) and Klaus and Christa Conventz (the Conventzes) formed an oral 50–50 partnership to build and operate a fishing lodge at Lake Iliamna, Alaska.
- Under the oral arrangement, the two groups were to contribute equal shares of cash, and each group was also to contribute personal services: the Conventzes would oversee construction and advertising in Alaska, while the Schymanskis would handle the promotional campaign in Germany.
- On May 24, 1980, the partners signed two written agreements drafted by Klaus Conventz.
- The Conventzes contended the written documents modified the oral arrangement so that they would provide architectural, construction-supervision, and first-season managerial services and would stop making further cash contributions.
- The Schymanskis signed the documents but later asserted they did not examine them and that the papers were represented as a formality connected with incorporation; they also maintained there was no agreement entitling the Conventzes to compensation or “capital credit” for personal services.
- The lodge project experienced delays and higher-than-expected costs, and disagreements grew over construction progress, standards, and finances.
- The Conventzes sought to terminate the partnership and sell the lodge to a subcontractor involved in the project; the Schymanskis refused.
- Litigation followed to dissolve the partnership and determine the parties’ financial rights, including how to account for the Conventzes’ personal services.
- The trial court dissolved the partnership and treated the Conventzes’ personal services as $70,000 in noncash capital contributions, but did not clearly state whether it found an agreement authorizing that treatment.
- The Schymanskis appealed to the Alaska Supreme Court.

## Issues

1. In a partnership dissolution accounting, may a partner’s personal services be treated as noncash capital contributions or as separately remunerable services absent a clear agreement among the partners?
2. Did the trial court err by assigning a $70,000 value to the Conventzes’ services without first determining whether the partners agreed those services would be credited as capital or otherwise compensated?
3. Did the trial court commit reversible error in evidentiary rulings relating to valuation of the lodge and the dissolution accounting?
4. Did the trial court err by declining to find partner misconduct warranting damages?

## Decision

- The Alaska Supreme Court reversed in part and remanded for further proceedings concerning the personal-services/noncash-capital issue.
- The court held that the trial court could not treat the Conventzes’ services as noncash capital contributions (or otherwise award special remuneration) without a clear finding that the partners agreed to that arrangement.
- Because the trial court was silent on whether such an agreement existed, the $70,000 service credit and the resulting accounting required reconsideration on remand under the proper legal standard.
- The court did not order broader reversal beyond what was necessary to resolve the services-as-capital question, leaving other matters largely intact except as they might be affected by the required recalculation.

## Legal Principles

- A partner is not entitled to compensation for services performed for the partnership beyond the partner’s share of profits unless the partners agree otherwise.
- Personal services are not treated as partnership capital by default; crediting services as a capital contribution requires proof of an agreement (express or clearly implied) among the partners.
- When dissolution allocations depend on whether services were meant to substitute for cash or be separately paid, the trial court must make explicit findings on the parties’ agreement before assigning a dollar value and reallocating interests.
- In dissolution and accounting, the distribution must reflect the parties’ actual bargain; a court may not recharacterize services as capital (or grant extra pay) without a contractual basis.

## Conclusion

Schymanski v. Conventz holds that, on dissolution of a partnership formed to build and operate a fishing lodge, a partner’s personal services cannot be credited as noncash capital contributions or otherwise specially compensated unless the partners clearly agreed to that treatment; because the trial court valued the Conventzes’ services at $70,000 without an explicit finding of agreement, the Alaska Supreme Court reversed in part and remanded for findings and a recalculated accounting.


Schymanski v. Conventz, 674 P.2d 281 (1983)