Kovacik v. Reed case brief

Kovacik v. Reed case brief summary
315 P.2d 314 (1957)

CASE SYNOPSIS
Defendant labor partner appealed from a judgment of the Superior Court of the City and County of San Francisco (California), which ruled plaintiff financial partner was to recover from the labor partner one half of the losses of the venture.

DISCUSSION

• The court concluded that inasmuch as the parties agreed that the financial partner was to supply the money and the labor partner the actual work required to carry on the venture, the labor partner was correct in his contention that the trial court erred in holding him liable for one half the monetary losses. 
• The financial partner lost only some $ 8,680 - or somewhat less than the $ 10,000 that he originally proposed and agreed to invest. 
• The court concluded that the evidence to support the essential findings and conclusions had to be found in the settled statement, or the judgment must fall. It followed that the conclusion of law upon which the judgment in favor of the financial partner for recovery from the labor partner of one half the monetary losses was untenable, and that the judgment should be reversed.

CONCLUSION
The court reversed the lower court's judgment that awarded half of joint venture's financial losses to the financial partner.


NOTES
This is a case about sharing losses, not about dissolution.
The holding is that one partner cannot collect from another partner for losses when 1st
partner supplies capital and 2nd partner supplies labor.
Intangible assets are traditionally considered part of a partner’s capital account.
Kovacik says that this should go one step further and contributions of labor after the
establishment should also count. [but why should this affect distribution of profits and
losses? I thought capital accounts didn’t matter for these.]
RUPA explicitly rejects this view and says that equal partners must pay equal shares
of losses.