Two individuals form a partnership. One dies, and his spouse seeks to dissolve the partnership and distribute its assets. The surviving partner objects, seeking to continue the business after dissolution pursuant to a provision of the partnership agreement allowing the “remaining partners” to purchase the interest of a deceased partner. What happens? The answer turned on a rule of contract interpretation for singular and plural references.
The case is Garlock v. Silver Dollar Camp
, 3d Dist. Hancock No. 5-20-35, 2021-Ohio-1690. The spouse noted that Ohio law defines a partnership as “an association of two or more persons to carry on as co-owners of a business for profit…” R.C. 1776.01. The dissolution, winding up, and liquidation provision of the partnership agreement consistently used plural language- “partners,” “they,” and “themselves.” One is less than two, and the plain language of the agreement referred to the rights of the remaining partners
to continue the business.
So, the spouse had a slam dunk of a case.
Not so fast my friend. The court interpreted the partnership agreement applying a rule of construction that “[t]he singular includes the plural and the plural includes the singular.” Id
. at ¶ 14. Quoting an earlier decision, the court stated:
The singular and the plural forms [of terms] are often used in
contracts interchangeably, and courts should construe the plural
and singular forms interchangeably so long as such a construction
is consistent with the evident purposes of the contract. * * * That
principle obtains with even greater force where, as here, the noun
number selected, plural or singular, is intended to cover
hypothetical situations that have not yet arisen.
at ¶ 14, quoting Grange Life Ins. Co. v. Bics
, 9th Dist. Lorain No. 01CA007807, 2001 WL 1044081, *3 (Sept. 12, 2001) (internal quotation omitted). Applying this rule, court concluded there was no clear indication that the use of the plural was intended to impose a limitation on the right of a partner (singular) to continue the business. Id.
at ¶ 18.
The whole dispute could have been avoided if the partnership agreement had specifically addressed the parties’ rights if there was a sole surviving partner. Garlock
provides a cautionary tale about the importance of clear contract drafting and avoiding resort to rules of interpretation that could lead to results not intended by the parties.