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Pegg v. Kohn

Supreme Court of North Dakota

April 3, 2015

Eugene Pegg, Plaintiff and Appellee
v.
Kelly Kohn and Kohn Electric, L.L.C., Defendants and Appellants

Appeal from the District Court of Barnes County, Southeast Judicial District, the Honorable Jay A. Schmitz, Judge.

Jordan B. Weir (argued) and Robert G. Manly (on brief), Fargo, N.D., for plaintiff and appellee.

Lawrence P. Kropp, Jamestown, N.D., for defendants and Appellants.

Daniel J. Crothers, Lisa Fair McEvers, Dale V. Sandstrom, Robin A. Schmidt, D.J., Gerald W. VandeWalle, C.J. Opinion of the Court by Crothers, Justice. Honorable Robin A. Schmidt, D.J., sitting in place of Kapsner, J., disqualified.

OPINION

Page 765

Crothers, Justice.

[¶1] Kelly Kohn and Kohn Electric, LLC, appeal from a judgment awarding Eugene Pegg $11,299 for breach of an oral partnership agreement. Because the district court's challenged findings of fact are not clearly erroneous, we affirm.

I

[¶2] Pegg has been an electrician for more than 30 years and has had several employers throughout his career. In 1999, Sungold, a sunflower seed processing facility, became Pegg's customer, and Pegg brought the Sungold account with him when he changed employers. Kohn has been an electrician since 1996 and became a partner in each of the companies in which he was employed. In 2009, both Pegg and Kohn worked at Enterprise Electric in Valley City. In March 2009, Kohn left Enterprise Electric and started Kohn Electric.

[¶3] In June 2009, Pegg was dissatisfied with his job at Enterprise Electric because the company refused to pay him a percentage of the substantial revenue generated by the Sungold account. Pegg testified he approached Kohn and proposed that they become partners in Kohn Electric, with Pegg contributing the Sungold account and $10,000 in capital. In return, Pegg would receive 10 percent of the gross revenue generated by the Sungold account, 10 percent of Kohn Electric's net revenue, and an hourly wage. Pegg stated he agreed to the same wage he received from Enterprise Electric and agreed to no paid vacations or overtime pay. Although no written agreement existed about the alleged partnership, Pegg testified he and Kohn " shook hands on it," and Pegg began working at Kohn Electric in July 2009. Pegg paid $9,152.49 for a pickup truck titled in Kohn Electric and paid for tools and equipment for the business.

[¶4] After Kohn denied he and Pegg were partners, Pegg quit Kohn Electric and in 2011 brought this action for breach of the oral partnership agreement, seeking recovery of proceeds due under the agreement. Before trial, Kohn paid Pegg $9,152.49 for his contributions to the business. Following a bench trial, the district court found the parties entered into an oral partnership agreement, Pegg substantially performed his obligations under the agreement by contributing the pickup, equipment and the Sungold account, and Kohn breached the agreement. The court found no agreement existed giving Pegg 10 percent of Kohn Electric's net income from all accounts, but it awarded Pegg $11,164 representing 10 percent of the gross revenue generated from the Sungold account during Pegg's employment. Judgment of $11,299, including costs and disbursements, was entered against Kohn and Kohn Electric.

II

[¶5] Kohn and Kohn Electric argue the district court erred in determining an oral partnership agreement existed entitling Pegg to ...


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