Giving a Partnership to One Partner

Case: The plaintiff (=pl) and defendant (=def) jointly opened a retail meat business. They have now decided to end the partnership, with def getting the business. They have asked beit din to do "express adjudication" to determine how to compensate pl. The two had opened an osek mursheh (app., a personal business) and took a large bank loan, for which they have been making monthly payments. Based on their written agreement, def worked five days a week in the store and received an 8,000 shekel a month salary; pl worked twice a week and received 1,800 shekels. Due to a dispute, pl stopped working in the store in Oct. 2017. Pl claims that the business is worth today 300,000 shekels, and since there is close to 100,000 shekels of debt, his half share for giving def full control should be at least 100,000 shekels. He claims to not be responsible for loans def took on the business without pl’s agreement. He claims there are also various payments that def improperly took from the business account. Def claims that the business is not presently worth anything, including because it does not presently have a license to operate as it is. He wants the value of the business to be estimated based on the time that pl stopped working at it. He therefore wants pl to pay 40,000 shekels of debt before leaving the business.

Ruling: The two sides agreed in the hearing to have Mr. B, who is not an appraiser but owned a supermarket in their region, to appraise the business’s value. Mr. B estimated the value of the business at 235,000 shekels, which took into account the fact that it does not yet have a license. He also took into account the present equipment and inventory.

Because this is "express adjudication," we will estimate the value based on Oct. 2017. This is the only way (on technical grounds, mainly because pl is unaware of what transpired financially since then) to do a simple estimation.

P'ninat Mishpat (704)

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It is true that Mr. B is not a professional appraiser and one can disagree with the way he used to appraise the business’s value. However, because there was logic in using him, because he is objective, and especially because the sides agreed to use him, the claim of one of the sides that he could have used a different system for appraisal is to be rejected.

Def claims that the business’s debt is 86,037 shekels. Pl does not know exactly but estimates it at 85,000 shekels. Since the difference between the sides is small and def has an exact number and a definite claim, we will follow it, just rounding it down to 86,000 shekels. Therefore, the value of pl’s half of the business is (235,000-86,000) /2 = 74,500 shekels.

Both sides argue that the amount of salary that they received from the business was unfairly low. Beit din rejects the relevance of both claims. As long as previous agreements were followed, that is the arrangement which should be binding.

The expert’s fee was paid by pl and by the business (instead of def) in equal parts. Since at this point, the business is owned by def, there is no need for def to have paid from his "private pocket."