Volpe v. Schlobohm

614 S.W.2d 615 (1981)

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Nature of the Case

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Facts

Charles and Joneen Schlobohm (Ps) were engaged in the food distribution business and operated various distributorships with companies in the prepared food business. Volpe (D) and Wright became associated with Ps, and eventually, all three met to discuss the formation of a partnership. The agreement that was made was accepted by all parties on February 1, 1978, even though it was never signed. At the inception of the partnership, Ps were franchisees of Pepperidge Farms, D of Stella D’Oro, and Wright of Pepperidge Farms. Ps brought suit against D seeking a rescission of the partnership agreement. During the trial, Ps’ testified that their Pepperidge Farm franchise was to be excluded from the partnership. Wright testified that his franchise was to be excluded as well. The revenues from these franchises were deposited into the partnership account and were divided among the partners according to their percentage interest. D testified that he understood all franchises were to be contributed into the partnership. Wright withdrew after four months taking his franchise with him. Wright's interest in the partnership was purchased by Ps with their own funds. D testified that he was not given a chance to purchase his pro rata share of Wright’s interest. Ps’ testified that D had his chance but declined when Ps would not let him use partnership funds to purchase his pro rata share. D still claimed a right to Wright’s share of the profits, and this gave rise to this suit on rescission. Ps plead a mutual mistake of material substance in that the parties were unable or unwilling to work together to fulfill the intended purpose of the partnership. They then testified at trial that a mistake was made relating to the ownership of the franchise assets and that mistake is enough for the court to grant rescission of the agreement. Ps got the verdict and rescinded the partnership with title in them of all partnership assets, and D was given the value of his 30% interest in the partnership. D appealed.