SCHWAB, Chief Judge.
This is an appeal from a decree of the circuit court ordering specific performance of a partnership agreement. We affirm.
In 1958, the decedent and the defendant entered into a partnership agreement for the operation of a clothing store. The terms of the agreement relevant to this dispute read as follows:
The wife of the defendant served as the bookkeeper and accountant for the partnership from its inception in 1958. In July 1975, when the decedent was very ill, the defendant's wife and the decedent's licensed certified public accountant (CPA) met in order to discuss the requirements of paragraph 14.A of the partnership agreement. During the course of this discussion, the decedent's CPA indicated to the defendant's wife that a financial statement prepared by her would satisfy the provisions of paragraph 14.A of the partnership agreement, in spite of the fact that she was not a licensed public accountant.
The decedent died on October 1, 1975. Several days thereafter, the decedent's CPA and the defendant's wife had a further conversation regarding the terms of paragraph 14.A. The decedent's CPA indicated to the defendant's wife that he was not going to prepare the financial statement required by paragraph 14.A and that she should go ahead and prepare the statement. Subsequently the defendant's wife prepared an inventory of the assets of the partnership and a financial statement of the assets, liabilities and net profits of the partnership. On or about October 10, 1975, these items
Subsequently, the defendant gave timely notice to the personal representative that he intended to exercise his option to purchase the decedent's share of the partnership as provided for by paragraph 14.B of the partnership agreement. On December 24, 1975, the defendant delivered to the personal representative a check representing the decedent's share of the partnership. In February 1976, the personal representative's attorney notified the defendant that he believed the amount tendered was insufficient in that it failed to take into account an allowance for good will and the continued use of the partnership name. The personal representative cashed the tendered check in May 1976, but notified the defendant that he did so with the understanding that the final amount of the decedent's interest in the partnership was still to be negotiated.
The parties were apparently unable to agree on a final figure representing the decedent's interest in the partnership and, in October 1976, the personal representative filed a petition with the probate court for determination of the decedent's partnership interest. The petition contended that because the defendant failed to have the financial statement required by paragraph 14.A of the partnership agreement prepared by a public accountant, the defendant was required to exercise paragraph 14.C of the partnership agreement, providing for a liquidation of the partnership. The probate court, sitting in equity by stipulation of the parties,
The personal representative appeals, alleging that the court erred in allowing the defendant to purchase the decedent's share of the partnership when the defendant failed to conform to the requirement of paragraph 14.A of the partnership agreement regarding the preparation of a financial statement by a public accountant. The personal representative contends that to permit the defendant to now have a public accountant prepare a financial statement works a substantial change in the partnership agreement, because paragraph 14.B of the agreement provides for payment of the purchase price within 90 days. Consequently, the personal representative argues, the partnership must be liquidated as provided for by paragraph 14.C.
Plaintiff is not entitled to any rights under paragraph 14.C absent a material breach of paragraph 14.A. See Mohr v.
The defendant's failure to conform to the "public accountant" provision of paragraph 14.A cannot be characterized as a material breach of the partnership agreement. The defendant substantially performed all of his duties under paragraph 14.A of the partnership agreement. He forwarded an inventory of the assets of the partnership and a financial statement to the personal representative within the 10-day period set forth in paragraph 14.A. He then tendered a check for the purchase price of the decedent's share of the partnership within the 90-day period set forth in paragraph 14.B. Although the personal representative questioned the amount of this check because he believed it did not reflect the monetary value of good will and use of the partnership name, he never once disputed the right of the defendant to purchase the decedent's partnership share. The purpose of paragraphs 14.A and 14.B of the agreement was to allow the defendant to purchase the decedent's share of the partnership — a purpose not frustrated by the defendant's behavior here. The defendant's actions here did not prevent the personal representative from obtaining substantial benefit from what he reasonably could have anticipated under paragraphs 14.A and 14.B of the agreement. The defendant's failure to utilize a public accountant was innocent behavior on his part, for he acted in good faith when he relied on the statements made by the decedent's CPA. Any monetary damage suffered by the personal representative will be remedied by the terms of the circuit court decree allowing for a valuation of the partnership by an independent public accountant.
Because the defendant did not commit a total material breach of paragraph 14.A of the partnership agreement, the personal representative is not entitled to specific performance of the alternative procedure provided for by paragraph 14.C.