DAVID A. STONE, APPELLANT/CROSS-APPELLEE,
v.
LEON N. STONE, APPELLEE/CROSS-APPELLANT
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Two brothers who formed an informal general partnership to purchase and manage Florida real property disputed the accounting of partnership profits and expenses. The trial court determined the partnership existed with a 2/3 to 1/3 profit split, but its accounting was riddled with errors departing from generally accepted accounting practices. The appellate court affirmed the partnership structure and profit allocation but reversed and remanded for a corrected accounting performed by a qualified accountant.
The court affirmed that the brothers' relationship constituted a general partnership with David entitled to 2/3 of profits and Leon 1/3, and that David's mortgage interest expenses were personal expenses, not partnership expenses. However, the court reversed the trial court's accounting because it departed from generally accepted accounting practices, and remanded for a corrected accounting by a qualified accountant.
[1] A general partnership can be established by the conduct of the parties, even without a precise written agreement.
[2] Partnership profits may be divided disproportionately based on the agreement of the partners.
Previewing 2 of 6 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“The trial court ruled that the two brothers' relationship is a general partnership. In that partnership, Leon has been responsible for locating and managing property, and David has been responsible for providing the funds necessary to purchase property.”
Establishes the court's determination of partnership status and respective roles of the parties.
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Join FLexlaw to unlock all legal intelligenceDavid and Leon Stone, brothers, purchased several parcels of real property in Florida beginning in the early 1970s. David provided the financing (usin…
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ALTENBERND, Judge.
The parties to this appeal are brothers. In the early 1970s, they purchased several parcels of real property in Florida. They have experienced great difficulties in this business relationship, in large part, because the terms of their relationship were never reduced to a precise written agreement.
In an effort to resolve this long disagreement, the trial court ruled that the two brothers’ relationship is a general partnership. In that partnership, Leon has been responsible for locating and managing property, and David has been responsible for providing the funds necessary to purchase property. Pursuant to the brothers’ agreement, the trial court ruled that David should receive two-thirds of the partnership profits and Leon should receive one-third of those profits. Because David had used mortgages to finance most of the acquisitions, the trial court accepted an earlier decision of an arbitrator that David’s interest expense was a personal expense and not a partnership expense. We affirm all of these decisions.
The brothers could not agree on the proper resolution of an accounting. Accordingly, the trial court conducted an accounting pursuant to section 620.665, Florida Statutes (1993). The trial court attempted to account for capital contributions, advances, partnership expenses, interest, and partnership profits. See § 620.645, Fla.Stat. (1993). Neither brother retained an accountant to assist the trial court. The resulting final judgment is the best effort of a general jurisdiction judge to serve as an accounting specialist. Unfortunately, the order departs from generally accepted accounting practices.
Following oral argument, we initially affirmed the judgment without written opinion, because we were convinced that the accounting errors were minimal, tended to offset one another, and thus were harmless. In light of the motion for rehearing, we realize that the errors may be more substantial. Moreover, the partnership still owns a valuable parcel. It is apparent that the confusion in the trial court’s accounting will inadvertently encourage ongoing disputes between the brothers over the ownership and ultimate disposition of that property. An accurate partnership accounting is needed at this time.
Accordingly, we reverse the final judgment and strike the accounting set forth in exhibit “A” to that judgment. We remand for an accounting in accordance with generally accepted accounting practices. On remand, we strongly encourage the parties to agree to the appointment of a qualified accountant as a special master to perform the accounting pursuant to Florida Rule of Civil Procedure 1.490.
Affirmed in part, reversed in part, and remanded with directions.
PATTERSON, A.C.J., and LAZZARA, J., concur.
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