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Case Brief5.
Read the following court decisionnational v. ADC – (attached)
Review and analyze the court opinion and BRIEF the case. Following the format for “Case Briefing” on p. 1047-48 (Appendix A1 – A2) in your textbook.
[Opinion edited for Law II]
732 S.W.2d 840
NATIONAL LUMBER COMPANY, Appellant,
v.
ADVANCE DEVELOPMENT CORP., Vermont Place Properties, et al.,
Appellees.
Supreme Court of Arkansas.
July 13, 1987.
HOLT, Chief Justice.
This appeal concerns a real estate development in Fort Smith known as
Vermont Place Properties, the liability of general partners in a limited
partnership, and priorities among mortgagees, mechanics and
materialmen involved in the project.
Pat McGowan, Val Somers, and Brent Roberson were general partners in
Vermont Place, a limited partnership, formed on January 20, 1984, for
the purpose of developing a tract of land in Fort Smith by constructing
duplexes on it to be either sold or rented. The partnership mortgaged the
property for construction purposes. McGowan’s separate company,
Advance Development Corp., (Advance) was in charge of developing the
project, including contracting with the materialmen and mechanics,
hereinafter referred to as “suppliers.” On September 3, 1984, Somers
and Roberson discovered that McGowan had not been paying the
suppliers nor making interest payments on the mortgages. Five separate
lawsuits, filed by the banks holding the mortgages and by the suppliers,
were consolidated for trial. On February 14, 1986, the trial court found
that McGowan, Advance, and the partnership had so merged their affairs
that they were one and the same person. Therefore, appellant, National
Lumber Company (National), and various other suppliers, were found to
have valid liens because notice was not required pursuant to
Ark.Stat.Ann. section 51-608.5. These liens, however, were held inferior
to the bank’s construction mortgages. Furthermore, the court held
McGowan and his wife were individually liable for the debts but that
Somers and Roberson were only liable to the extent of their original
capital contributions. It is from that order that National brings this
appeal. In addition, a cross-appeal was filed by Vermont Place and by
some of the suppliers. We reverse the trial court’s holding limiting the
liability of Somers and Roberson and dissolve two of the supplier’s liens.
We affirm the remaining issues raised in both the appeal and the crossappeal. The appeal will be discussed separately from the cross-appeal.
DIRECT APPEAL
1. LIABILITY OF SOMERS & ROBERSON.
The chancellor held in pertinent part as follows:
1. That Pat McGowan, Advance Development Corporation and Vermont
Place Properties Partnership so merged their affairs to the extent that
they were one and the same person or entity when dealing with the lien
holders in this action …
….
10. That the lien holders are entitled to personal judgments against
Advance Realty Corporation and Pat McGowan and his wife for any
deficiency owing after the property is sold and the proceeds distributed….
11. That it would be inequitable and unfair to hold Brent Roberson, Val
Somers and their wives personally liable for all the deficiency, if any,
after the property is sold and the proceeds divided. However, they will be
personally liable apart from the partnership jointly and severally for the
amount of their purported capital contributions to the partnership in the
amount of $33,333.34. The lenders and lien holders had a right to rely
on the partnership agreement to the extent of this purported
contribution by these two partners. Under the circumstances of this
case and the facts developed at trial, they should be personally liable for
no more than that amount but should not escape liability altogether
because they should have kept more control over the affairs of the
partnership. National argues that the trial court’s holding limiting the
personal liability of Somers and Roberson is contrary to Arkansas law
which makes partners individually liable for partnership debts. We
agree.
The following provisions under the Uniform Partnership Act apply to this
situation:
65-113. Partnership bound by partner’s wrongful act. Where, by any
wrongful act or omission of any partner acting in the ordinary course of
the business of the partnership or with the authority of his copartners,
loss or injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable therefor
to the same extent as the partner so acting or ommitting (omitting) to act.
65-115. Nature of partner’s liability. All partners are liable,
(a) Jointly and severally for everything chargeable to the partnership
under sections 13 and 14 (sections 65-113, 65-114).
(b) Jointly for all other debts and obligations of the partnership; but any
partner may enter into a separate obligation to perform a partnership
contract.
(1-3) Applying the provisions of the Uniform Partnership Act to the case
at bar, when the partners of Vermont Place charged McGowan and his
company, Advance, with the responsibility of developing Vermont Place,
they effectively made McGowan and Advance agents of the partnership.
A partnership is bound by the acts of a partner when he acts within the
scope or apparent scope of his authority. Smith v. Dixon, 238 Ark. 1018,
386 S.W.2d 244 (1965). The power of one partner to bind another by his
acts is limited to transactions within the scope of the partnership
business. May v. Ewan, 169 Ark. 512, 275 S.W. 754 (1925). Here, the
partnership agreement provided in part that the purpose of the
partnership was to acquire real estate and construct apartment buildings
and duplexes for lease or sale. In furtherance of this purpose, the
partners agreed that McGowan and Advance would see to the
construction of the duplexes. When McGowan acquired labor and
materials and then failed to pay for them, he was acting within his
apparent authority as a partner and his acts bound the other two
partners. That the partners intended to be so bound is exemplified by
their actions once they discovered that McGowan had not paid the
suppliers. They removed him from the partnership and took over the
construction of the duplexes. In doing so, they not only profited from the
labor and materials already furnished, but assumed responsibility for the
debts attached to the property. McGowan’s failure to pay the suppliers
was an omission within the meaning of section 65-113, supra, rendering
the partnership liable and the individual partners jointly and severally
liable pursuant to section 65-115, supra. The chancellor, in his ruling,
acknowledged that the affairs of Advance and Vermont Place were so
merged that they had become one entity. Applying this finding
consistently necessitates a holding that all three partners were jointly
and severally liable, rather than finding only McGowan to be fully liable.
Accordingly, the holding of the chancery court that Somers and Roberson
were liable only to the extent of their original capital contributions is
reversed.
*************************
Costs are only awarded to correct a deficiency in the appellant’s abstract,
not to supply proof for the appellee’s own claims. Accordingly, the
request for costs is denied.
Reversed in part; affirmed in part.
How to Brief Cases and Analyze Case Problems
How to Brief Cases
Analyzing Case Problems
To fully understand the law with respect to business, you In addition to learning how to brief cases, students of
need to be able to read and understand court decisions. business law and the legal environment also find it help-
To make this task easier, you can use a method of case ful to know how to analyze case problems. Part of the
analysis that is called briefing. There is a fairly standard study of business law and the legal environment usu-
procedure that you can follow when you “brief” any ally involves analyzing case problems, such as those
court case. You must first read the case opinion care- included in this text at the end of each chapter.
fully. When you feel you understand the case, you can For each case problem in this book, we provide the rel-
prepare a brief of it.
evant background and facts of the lawsuit and the issue
Although the format of the brief may vary, typically it before the court. When you are assigned one of these
will present the essentials of the case under headings problems, your job will be to determine how the court
such as those listed below.
should decide the issue, and why. In other words, you
1. Citation. Give the full citation for the case, including will need to engage in legal analysis and reasoning. Here,
the name of the case, the date it was decided, and the we offer some suggestions on how to make this task less
court that decided it
daunting. We begin by presenting a sample case problem:
2. Facts. Briefly indicate (a) the reasons for the lawsuit; While Janet Lawson, a famous pianist, was shop-
(b) the identity and arguments of the plaintiff(s) and ping in Quality Market, she slipped and fell on a wet
defendant(s), respectively, and (c) the lower court’s floor in one of the aisles. The floor had recently been
decision-if appropriate.
mopped by one of the store’s employees, but there
3. Issue. Concisely phrase, in the form of a question, the
were no signs warning customers that the floor in
essential issue before the court. (If more than one that area was wet. As a result of the fall, Lawson
issue is involved, you may have two or even more-
injured her right arm and was unable to perform
questions here.)
piano concerts for the next six months. Had she
4. Decision. Indicate here with a “yes” or “no,” if
been able to perform the scheduled concerts,
she would have earned approximately $60,000 over
possible—the court’s answer to the question (or
questions) in the issue section above.
that period of time. Lawson sued Quality Market
for this amount, plus another $10,000 in medical
5. Reason. Summarize as briefly as possible the reasons expenses. She claimed that the store’s failure to
given by the court for its decision (or decisions) and warn customers of the wet floor constituted negli-
the case or statutory law relied on by the court in
gence and therefore the market was liable for her
arriving at its decision
injuries. Will the court agree with Lawson? Discuss.
For a case-specific example of what should be
included under each of the above headings when brief- Understand the Facts
ing a case, see the review of the sample court case pre- This may sound obvious, but before you can analyze
sented in the appendix to Chapter 1 of this text. or apply the relevant law to a specific set of facts, you
A-1
Legal Analysis and Reasoning
4. Once you have completed Step 3 in the IRAC method,
you should be ready to draw your conclusion. In our
Once you understand the facts given in the case prob-
sample problem, Quality Market is liable to Lawson
lem, you can begin to analyze the case. The IRAC method for her injuries because the market’s breach of its
is a helpful tool to use in the legal analysis and reasoning duty of care caused Lawson’s injuries.
process. IRAC is an acronym for Issue, Rule, Application,
Conclusion. Applying this
method to our sample problem this text are not always as simple as those presented
The fact patterns in the case problems presented in
would involve the following steps:
in our sample problem. Often, a case has more than one
1. First, you need to decide what legal issue is involved plaintiff or defendant. A case may also involve more
in the case. In our sample case, the basic issue is than one issue and have more than one applicable rule
whether Quality Market’s failure to warn customers of law. Furthermore, in some case problems the facts
of the wet floor constituted negligence. Negligence may indicate that the general rule of law should not
is a tort-a civil wrong. In a tort lawsuit, the plain- apply. Suppose that a store employee told Lawson about
tiff seeks to be compensated for another’s wrongful the wet floor and advised her not to walk in that aisle,
act
. A defendant will be deemed negligent if he or she butLawson decided to walk there anyway. This fact could
breached a duty of care owed to the plaintiff and the alter the outcome of the case because the store could
breach of that duty caused the plaintiff to suffer harm. then raise the defense of assumption of risk. Nonetheless,
2. Once you have identified the issue, the next step a careful review of the chapter should always provide
is to determine what rule of law applies to the issue. you with the knowledge you need to analyze the problem
To make this determination, you will want to carefully thoroughly and arrive at accurate conclusions.
Page
–
A-2
APPENDIX A: How to Brief Cases and Analyze Case Problems
must clearly understand those facts. In other words, you review the text discussion relating to the issue invol-
should read through the case problem carefully—more ved in the problem. Our sample case problem involves
than once, if necessary
to make sure you understand the tort of negligence. The applicable rule of law is the
the identity of the plaintiff(s) and defendant(s) in the case tort law principle that business owners owe a duty to
and the progression of events that led to the lawsuit. exercise reasonable care to protect their customers
In the sample case problem just given, the identity (business invitees). Reasonable care, in this context,
of the parties is fairly obvious. Janet Lawson is the one includes either removing—or warning customers
bringing the suit; therefore, she is the plaintiff. Lawson is of—foreseeable risks about which the owner knew or
bringing the suit against Quality Market, so it is the defen- should have known. Business owners need not warn
dant. Some of the case problems you work on may have customers of “open and obvious” risks, however. If
multiple plaintiffs or defendants. Often, it is helpful to use a business owner breaches this duty of care (fails to
abbreviations for the parties. To indicate a reference to exercise the appropriate degree of care toward cus-
a plaintiff, for example, the pi symbol-0—is often used, tomers), and the breach of duty causes a customer
and a defendant is denoted by a delta——a triangle. to be injured, the business owner will be liable to the
The events leading to the lawsuit are also fairly customer for the customer’s injuries.
straightforward. Lawson slipped and fell on a wet floor, 3. The next-and usually the most difficult-step in
and she contends that Quality Market should be liable analyzing case problems is the application of the rel-
for her injuries because it was negligent in not posting a evant rule of law to the specific facts of the case you
sign warning customers of the wet floor.
are studying. In our sample problem, applying the tort
When you are working on case problems, realize that the
law principle just discussed presents few difficulties.
facts should be accepted as they are given. For instance, An employee of the store had mopped the floor in the
in our sample problem, it should be accepted that the floor
aisle where Lawson slipped and fell, but no sign was
was wet and that there was no sign. In other words, avoid present indicating that the floor was wet. That a cus-
making conjectures, such as “Maybe the floor wasn’t too
tomer might fall on a wet floor is clearly a foreseeable
wet,” or “Maybe an employee was getting a sign to put up.”
risk. Therefore, the failure to warn customers about
or “Maybe someone stole the sign.” Questioning the facts
the wet floor was a breach of the duty of care owed
as they are presented only adds confusion to your analysis. by the business owner to the store’s customers.
