Marsh v. Gentry

STEPHENSON, Justice,

dissenting.

In my view the majority opinion misses the point as found by the trial court in this case.

I will divide the case into two parts, Excitable Lady and Champagne Woman, since the facts surrounding the two transactions are different.

Considering Excitable Lady the majority opinion does not set out what in my opinion are the findings of fact by the trial court that are controlling here. These findings, which are not challenged, are as follows:

“34. During the early part of August, 1979, Mr. Gentry had seen Mr. Marsh at the Saratoga yearling sales and had told him of his efforts to sell Excitable Lady. On August 20, 1979, Marsh called Mr. Gentry wanting his money on Excitable Lady. Subsequent to that Mr. Marsh called again wanting his money on the sale of Excitable Lady. Mr. Gentry had not been able to sell the horse, but on September 7,1979 forwarded to Marsh an advancement on the sale the sum of $62,-500. Mr. Marsh knew that the horse had not been sold when he received the $62,-500. After paying the $62,500 to Mr. Marsh, Mr. Gentry continued in his efforts to sell Excitable Lady but was unsuccessful. In October 1979, Barbara Stone informed Mr. Gentry it was doubtful there would be a sale in California to that prospect.
“On September 28, 1979, Mr. Marsh wrote Mr. Gentry reminding him that Mr. Gentry had promised Marsh that he would be paid his share on the sale of Excitable Lady by August 15, 1979. On October 6, 1979, Mr. Gentry forwarded a check in the sum of $2,517.61 to Mr. Marsh as the balance due Marsh on the sale of Excitable Lady for the sum of $150,000. An accounting was made at that time to Mr. Marsh on the expenses of Excitable Lady. (These are a part of Defendant’s Exhibit 1). Mr. Marsh thought that Mr. Gentry had sold Excitable Lady to some purchaser. After Excitable Lady won the Debutante Stakes in 1980 on Derby Day he discovered that Tom Gentry owned Excitable Lady.” (Emphasis added.)

I fail to see the relevance of the additional facts the majority opinion regards as significant. This is testimony not included in the findings of fact and not necessarily overlooked by the trial court.

Here we have a case where one partner, Marsh, knowing that Excitable Lady had not been sold, demanded pay for his share and received all but a small portion of it. Later he demanded and received the balance. Marsh wanted his money whether or not the horse had been sold and in effect demanded that Gentry buy his share of the horse. Gentry was thus left with 100% of the horse. It was his risk from then on, and I cannot understand the thinking of the majority that concludes that KRS 362.-250(1) applies at all. The fact that Marsh thought later that Gentry had sold the horse is not relevant.

The trial court found Gentry had been unable to sell the horse; and after one partner insists the other partner buy his share, I cannot see where the partner has any further claim on what was partnership property.

*578The record does not support the recitation of facts in the majority opinion that Marsh consented to a sale to the prospective purchaser in California. The statement that “Gentry informed Marsh that a purchase would be made, and advanced Marsh a portion of the anticipated sale price” does not reflect the findings of the trial court that Marsh demanded his share of the price they had agreed to sell the horse for knowing the horse had not been sold. These findings are not shown to be clearly erroneous and further the statement “he withheld and misled his partner” (alluding to Gentry) is contrary to the unchallenged findings of the trial court.

Marsh asked for what he got and the pious statement that he would not have agreed had he known Gentry would not sell the horse smacks of infallible hindsight.

The factual situation present in the Champagne Woman transaction is different. Again, the majority opinion misses the point. The trial court made the following pertinent findings:

“It is common practice in the action of horses for owners to bid on their own horses secretly by the use of agents. The practice of bi-bidding is an accepted practice in the horse industry. It is also common practice for owners to dissolve their partnership in horses by selling same at public auctions and to bid on partnership property. Occasionally a partner will bid on the sale of partnership property secretly through an agent. This is an accepted practice in the horse industry.
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“Bi-bidding by an owner of a horse being auctioned is an accepted practice in the horse industry and occurs very frequently at horse sales.
“30. It is not uncommon for partnerships in the horse industry to be dissolved by selling the horse at the auction sales at Keeneland or Fasig-Tipton. It is a usual custom and understanding that the partners can bid on the partnership horses being sold. A partner might or might not know of the bidding by the other partner or the partnership property.”

The majority opinion states that the record does not support these findings. I had no difficulty in finding the testimony upon which the trial court based the findings. The recitation of other testimony by a witness who testified that he had never engaged in the practices is irrelevant to the findings of fact by the trial court.

Then the majority opinion arrives at the conclusion that “where accepted business practice” conflicts with existing law, the law whether statutory or court ordered is controlling.” It is not argued that there is conflict. The argument is that the “accepted business practice” waived a civil right embodied in the statute. It is astonishing for the majority opinion to conclude that this court is proceeding to tell the Keene-land Sales how it should conduct its business, and that a business practice cannot constitute a waiver. The principle of “waived’ is sprinkled throughout civil law. We even approve the waiver of constitutional rights.

Further as to Champagne Woman, the majority states that Gentry misled Marsh in clear contradiction of findings by the trial court to the contrary. Again we have the pious statement by Marsh that he would not have consented if he had known Gentry was the purchaser. Marsh did sit by at the auction and see the bid falter at $60,000. Gentry’s agent then bid up to $135,000, the selling price. Marsh was considerably better off financially with Gentry being the purchaser rather than if the horse had been sold off at $60,000. This illustrates the rationale of one of the witnesses who testified as to the “business practice” and testified that auction was by far the best way to dissolve a partnership for the reason the horse sold for true market value.

The Keeneland rules provide that the “right to bid is reserved for all sellers in this sale unless otherwise announced at the time of sale.”

I am not aware of any principle of civil law in any of our cases that holds a civil right cannot be waived. That is the situation here.

*579The tenor or the majority opinion is that bad faith is present although the trial court found otherwise.

To sum up, the record reveals and the trial court found that both Marsh and Gentry were experienced horsemen, they owned, bought, and sold horses, and they attended many horse sales. They knew or are charged with knowledge of “accepted business practices at the Keeneland Sales.”

The statute merely codifies the common law rules of partnership law which insure fair dealing between partners. Here the trial court found fair dealing and no advantage taken of Marsh.

The curious concurring opinion speaks of “chicanery” and “questionable dealing,” none of which was found here. The trial court found no breach of good faith, and that Marsh received fair value. I do not believe we are wise enough to regulate Keeneland Sales according to a rigid and too narrow application of KRS 362.250(1).

I would affirm the trial court, accordingly I dissent.

STERNBERG, J., concurs in this dissent.