Collins v. Lewis Tex. Ct. Of Civil App.,

283 S.W.2d 258 (1955)

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Nature of the Case

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Facts

Lewis (D) and Collins (P), after co-signing a 30-year lease in 1948, formed a partnership where P would provide all funds necessary to build, equip and open a cafeteria for business, while D was to plan and supervise such construction and manage the operations of the cafeteria after opening. D guaranteed that moneys advanced by P would be repaid at the rate of at least $30,000, plus interest, in the first year of operation, and $60,000 per year, plus interest, thereafter, upon default of which D would surrender his interest to P. D also guaranteed P against loss to the extent of $100,000. Problems arose, and the opening of the cafeteria did not occur until 1952, at an initial cost (fronted by P) of $600,000, vastly exceeding the initial estimate. Things did not go well upon opening. The cafeteria was initially operating at a loss and P would advance no more money until the cafeteria showed a profit. P then sued for dissolution of the partnership. The jury found that D was competent to manage the business, that there was not a reasonable expectation of profit under the continued management of D, that but for the conduct of P there would be a reasonable expectation of profit under the continued management of D; that such conduct on the part of P was not that of a reasonably prudent person acting under the same or similar circumstances; and that such conduct on the part of P materially decreased the earnings of the cafeteria during the first year of its operation. The court denied P relief. P appealed claiming that the right to dissolution exists when there is no reasonable expectation of profit.