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Robertson v. Jacobs Cattle Co.

Supreme Court of Nebraska

August 15, 2014

JAMES E. ROBERTSON ET AL., APPELLANTS,
v.
JACOBS CATTLE COMPANY, A PARTNERSHIP, ET AL., APPELLEES

Page 326

Appeal from the District Court for Valley County: KARIN L. NOAKES, Judge.

Patrick J. Nelson, of Law Office of Patrick J. Nelson, L.L.C., for appellants.

David A. Domina and Megan N. Mikolajczyk, of Domina Law Group, P.C., L.L.O., and Gregory G. Jensen for appellees.

HEAVICAN, C.J., CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ. WRIGHT, J., not participating.

OPINION

Page 327

[288 Neb. 847] Heavican, C.J.

INTRODUCTION

Four of the partners in the Jacobs Cattle Company partnership sought dissolution and liquidation of the partnership. The remaining partners filed a cross-claim seeking judicial dissociation of the four partners instead of dissolution. The distinction between dissolution and dissociation is discussed later in this opinion. The district court dissociated the four partners and ordered the partnership to buy out their interests.

In a previous appeal,[1] we held that judicial dissociation was proper, but determined that the district court erred in calculating the proper distributions to buy out the dissociated partners. On remand, after an evidentiary hearing, the district court determined that the profit from the hypothetical capital gain should be credited to the partners' capital accounts, rather than their income accounts. Due to the account distributions required under the partnership agreement, crediting the capital gain to the dissociated partners' capital accounts results in a lower buyout amount than crediting the capital gain to the partners' income accounts. The dissociated partners now appeal the judgment on remand, arguing that the district court again erred in determining what they are owed by the partnership. We reverse, and remand with direction.

FACTUAL BACKGROUND

Jacobs Cattle Company is a family-owned partnership in the farming and livestock business. The partnership was formally organized on January 1, 1979. Seven partners of the Jacobs Cattle Company--Dennis Jacobs, Duane Jacobs, Carolyn Sue Jacobs, James E. Robertson, Patricia Robertson, Ardith Jacobs as trustee of the Leonard Jacobs Family Trust, and Ardith Jacobs as trustee of the Ardith Jacobs Living Revocable Trust--entered into the operative partnership agreement on June 19, 1997.

The partnership agreement provides that each partner shall have an individual capital account and an individual income account. The capital accounts are to be proportional to the [288 Neb. 848] partners' contributions. Net profits and net losses are to be distributed to the partners' income accounts in proportion to the partners' managing votes. As per the partnership agreement, Ardith and Dennis are each entitled to two votes, while the other partners each have one vote. The ...


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