This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).





Terry Lee Douglas,

Respondent (C1-97-1778),

Appellant (CX-97-2301),


Beverly Aubol,

Appellant (C1-97-1778),

Respondent (CX-97-2301).

Filed June 9, 1998


Toussaint, Chief Judge

Anoka County District Court

File No. C0929718

Frank T. Mabley, Greenstein, Mabley & Wall, LLC, Rosedale Square Office Center, 2803 Lincoln Drive, Suite 300, Roseville, MN 55113 (for Terry Lee Douglas)

Thomas A. Foster, Thomas A. Foster & Associates, Ltd., 600 Lumber Exchange, 10 South Fifth Street, Minneapolis, MN 55402 (for Beverly Aubol)

Considered and decided by Harten, Presiding Judge, Toussaint, Chief Judge, and Amundson, Judge.


Toussaint, Chief Judge

In this consolidated appeal, Beverly Aubol (appellant in CX-97-1778) challenges the trial court's final accounting of partnership assets that resulted in an award of $46,844.41 to her former partner, Terry Lee Douglas, alleging the trial court erred in: (1) failing to find the lack of a written agreement precluded Douglas from having any interest in the contract for deed, or claims of labor and commissions; and (2) holding Aubol personally responsible for the losses of the partnership. Terry Lee Douglas (appellant in CX-97-2301) appeals from the entry of judgment, alleging the trial court erred in: (1) allocating partnership profits and losses; (2) calculating the final awards; and (3) failing to award sanctions and damages for Aubol's breaches of fiduciary duty. Because the evidence in the record sufficiently supports the trial court's factual findings and the trial court did not err in its application of the law, we affirm.


Terry Lee Douglas, the owner of Terry Lee Realty, and Beverly Aubol formed a 50/50 partnership (D-A partnership) for the purpose of entering into real estate transactions. Aubol, Douglas, and another, formed a second partnership, Terry Lee Homes (TLH), to build homes on the properties purchased by the D-A partnership.

Although, no written agreement existed for either of the two partnerships,[1] Aubol was in charge of the bookkeeping and accounting for both partnerships, and she ran their finances from her personal checking account.

Douglas filed suit against Aubol, claiming: (1) Aubol owed him $126,673.64; (2) he was not paid for commissions earned, profits made, or labor performed; and (3) Aubol used assets of both partnerships for her own purposes. Aubol filed a counterclaim for $4,559.53, in which she claimed Douglas owed her money on a personal loan and for losses incurred by the partnerships.

Without the benefit of any expert testimony, the trial judge completed the difficult task of accounting for the assets and losses of the partnerships. In so doing, the trial court judge: (1) found the contract for deed constituted a partnership asset; (2) concluded Douglas was entitled to bonus claims for those properties for which he could demonstrate evidence of an agreement by the TLH partners to pay a bonus; (3) distributed the losses between the partners based upon the "responsibility of all partners to contribute to the partnership losses"; and (4) found, although Aubol violated her fiduciary duty to Douglas, Douglas failed to prove to the court that it should apply an alternative valuation figure to lots sold by Aubol following dissolution of the partnership.


The appellate court will not set aside a trial court's findings of fact unless clearly erroneous and will afford due regard to a trial court's opportunity to judge witness credibility. Minn. R. Civ. P. 52.01. We need not defer to its decision on purely legal issues. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

A trial court's finding that a partnership exists must be sustained if the evidence as a whole reasonably shows the parties have entered into a contractual relation whereby they have combined their property, labor, and skill in an enterprise or business as co-owners for the purpose of joint profit. Cyrus v. Cyrus, 242 Minn. 180, 184, 64 N.W.2d 538, 541 (1954).


Aubol argues the lack of a written agreement precludes Douglas from claiming an interest in the contract for deed. See Minn. Stat. § 513.04 (1996) (providing no interest in land created unless by operation of law, or by deed or conveyance in writing). However, if in dispute, the existence and terms of a contract are questions for the fact-finder. Morrisette v. Harrison Int'l Corp., 486 N.W.2d 424, 427 (Minn. 1992). Moreover, real estate purchased with partnership funds is presumed to be partnership property. Minn. Stat. § 323.07 (1996).

In deciding that the contract for deed constituted a partnership asset, the trial court found Aubol's credibility had been compromised, concluded Douglas's version of the events was more credible, and awarded Douglas an interest in the contract for deed. Because credibility determinations are within the province of the trial court, we cannot say that the trial court erred in designating the contract for deed a partnership asset. See Minn. R. Civ. P. 52.01 (mandating reviewing court afford due regard to trial court's credibility determinations); see, e.g., Anderson v. Property Developers, Inc., 370 F. Supp. 1205, 1208 (D. Minn. 1974) (concluding oral agreement to carry on business of purchasing and selling real estate for speculation, profits of which were to be divided among parties, may become effectual without writing), aff'd, 555 F.2d 648 (8th Cir. 1977).


Aubol also argues the absence of a written agreement precludes Douglas's claim for commissions. See Minn. Stat. § 82.33, subd. 2 (1996) (providing real estate broker cannot bring action for commissions unless there is written agreement). However, the trial court found: (1) Douglas was not entitled to "commissions" because he did not meet the statutory requirements of Minn. Stat. § 82.33, subd. 2; (2) the partnership orally agreed to pay "bonuses" to an individual who secured a sale; (3) Aubol admitted to the payment of those "bonuses," did not object to the amount of Douglas's labor claims, and did not argue that Douglas failed to perform most of the work; (4) Douglas is entitled to bonus claims for those properties on which he can demonstrate existence of an agreement by the partners to pay such a "bonus"; and (5) Douglas produced several cancelled checks and ledger entries purporting to be "bonus" or "commission" payments. Because these findings are based on the trial court's credibility determination of oral and documentary evidence, we cannot say the trial court clearly erred in granting Douglas's claims for bonuses. See Morrisette, 486 N.W.2d at 427 (holding, if in dispute, existence and terms of contract are questions for fact-finder).


Aubol argues the trial court erred in holding her personally responsible for the debts of the partnership. We disagree. The record clearly demonstrates the trial court did not hold Aubol solely responsible for partnership debts, but rather ruled that it was the responsibility of all partners to contribute to the losses. Cf., Maras v. Stilinovich, 268 N.W.2d 541, 544 (Minn. 1978) (concluding actions for partnership accounting and partnership dissolution are equitable actions).

Douglas argues the trial court erred in allocating losses because it failed to follow the statutory requirements. In the absence of an agreement otherwise,

[e]ach partner shall be repaid contributions, whether by way of capital or advances to the partnership property and share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied; and must contribute towards the losses, whether of capital or otherwise, sustained by the partnership according to each partner's share in the profits.

Minn. Stat. § 323.17(1) (1996). Questions of losses and a partner's sharing of those losses are to be determined from the evidence in the particular case. Kitzman v. Postier & Kruger Co., 204 Minn. 343, 346-47, 283 N.W. 542, 544 (1939).

Douglas argues the trial court erred in its allocation of profits and losses because the court "lost track" of certain figures, and asks us to correct certain errors in the trial court's calculation of the final award. Specifically, Douglas argues: (1) equitable treatment of the partner's investments in the Wall Street property requires an additional award to him of $2,548.06; (2) profits for the Pinewood Lots should be adjusted to provide Douglas with an additional $1,525; and (3) he should not be required to assume losses incurred in the Walesch Estates property. However, we decline to engage in such a piece-meal examination of the myriad of figures provided by the parties. Instead, as an error-correcting court, we review the substantive evidence to determine if it supports the trial court's factual findings. See Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (holding court of appeals exceeded scope of review where it failed to defer to trial court's factual findings and, instead, reviewed factual record de novo). Here, neither party provided the trial court with testimony from a certified public accountant to explain the figures. Instead, the parties submitted parol evidence to the trial court to establish the terms of their oral partnership agreement and provided the court with incomplete records of the partnership business. Furthermore, Douglas agrees the trial court "deserves considerable credit for its ability to sort through the maze of legal issues and factual issues." Snesrud v. Instant Web, Inc., 484 N.W.2d 423, 428 (Minn. App. 1992), review denied (Minn. June 17, 1992). Based on the substantive evidence in the record, we conclude the trial court did not clearly err in calculating the profits and losses of the partnership or in calculating the final award.

Douglas also asks us to debit $2,500 from the amount owed to Aubol on her partnership loans. We decline to do so because the trial court did not make specific findings on this issue, and we cannot be certain the trial court failed to consider this sum when it calculated the final award. Cf. Maloney v. Ketter, 408 N.W.2d 865, 868-69 (Minn. App. 1987) (holding trial court did not err where it estimated partnership's profit on the basis of incomplete records and did not specifically calculate its inferred profit), review denied (Minn. Sept. 18, 1987). We similarly decline to address Douglas's allegation of error involving his role in the resolution of financial discrepancies and the collection of debt from the third partner because the issue is not properly before us.


Douglas finally argues that, in view of Aubol's breach of fiduciary duty, the trial court erred: (1) in valuing lots disposed of after dissolution; and (2) in failing to award sanctions and damages against Aubol. However, the trial court concluded Douglas failed to prove to the court that it should apply an alternative valuation for those lots. Where no credible evidence of market value's offered, an equitable division of partnership property based on cost, which was the only value before the trial court, is proper. Because we agree that Douglas failed to meet his burden on this issue, we will not disturb the trial court's valuation of those lots at "cost." See, Schoenborn v. Schoenborn, 402 N.W.2d 212, 215 (Minn. App. 1987) (holding where no credible evidence of market value offered trial court may make equitable division of partnership property based on cost, which was the only evidence before it). Because we conclude the trial court is in the best position to determine whether sanctions should be imposed, we will not award any sanctions on appeal. Cf. Stacker & Ravich v. Simon, 411 N.W.2d 217, 222-23 (Minn. App. 1987) (concluding, in case of withdrawing law partner, trial court in best position to determine credibility, and this court will not upset trial court's findings or decision to impose sanction), review denied (Minn. Nov. 13, 1987).


[1] The trial court concluded that, although the parties may have called "TLH" a corporation, it was, by default, really a partnership because there were: (1) no corporate record books; (2) no corporate taxes filed; (3) no corporate checkbook; (4) no corporate meetings; (5) no corporate notices; and (6) no corporate filings. Moreover, all corporate finances were run out of Aubol's checkbook, in their briefs and arguments both parties referred to Douglas, Aubol and Iacono as "partners", and the parties stipulated that TLH was either a partnership, a corporation or a joint venture.