Court: No, One Person Can’t Be a “Partnership”

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I’m a strong believer that in legal writing, an introduction should pretty much tell you everything you need to know. This one does.

The parties to this appeal, a partnership dispute, agree on one issue. They want us to assume a partnership can consist of one person. Having carefully studied the idea of a one-partner partnership in light of the Revised Uniform Partnership Act, we conclude that no such animal exists. If a partnership consists of only two persons, the partnership dissolves by operation of law when one of them departs.

The trial judge in this case had a truly unenviable task before him as he pondered his decision. He found none of the key witnesses credible and had virtually no independent corroboration on which to rely. He was confronted with partnership books and records kept, not by GAAP (generally accepted accounting principles), but by “winging it.” He probably developed severe neck pain from constantly shaking his head over the way the participants ran their business.

The parties have now brought this matter to us, and we have reluctantly concluded it has to go back to the long-suffering judge…. Both parties seem to have proceeded on their assumption of the vitality of a one-person partnership, which we conclude cannot exist under California law. Since that assumption underlies the monetary portion of the judgment, we remand to allow the application of the correct dissolution procedure.

Corrales v. Corrales, No. G044598 (Cal. App. 4th Dist. Aug. 10, 2011) (Bedsworth, J.)