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Dwinell's Central Neon v. Cosmopolitan Chinook Hotel

November 22, 1978

DWINELL'S CENTRAL NEON, RESPONDENT,
v.
COSMOPOLITAN CHINOOK HOTEL, ET AL, APPELLANTS



McInturff, J. Munson, C.j., and Green, J., concur.

Author: Mcinturff

Cosmopolitan Chinook Hotel (Cosmopolitan) appeals from a summary judgment, holding it liable as a general partnership -- and not as a limited partnership -- in connection with an action brought by Dwinell's Central Neon (Dwinell's) for breach of contract.

On October 25, 1972, Cosmopolitan and Dwinell's entered into three separate agreements for the lease-sale of neon signs. Dwinell's was represented by one of its salesmen and Cosmopolitan was represented by two of its partners. The contracts contained an acceleration clause in the event of Cosmopolitan's default and a provision for a reduction in the monthly payment should Dwinell's fail to properly maintain the signs.

In October 1976, Cosmopolitan was behind on its payments and Dwinell's brought suit to accelerate the balance due under the contract. The complaint averred that Cosmopolitan was a general partnership due to its failure to comply with the statutory filing requirements of the limited partnership act. Cosmopolitan, on the other hand, claimed limited partnership status and stated that their status was known by Dwinell's at the time of contracting and was a matter of common knowledge in the community.

We are asked to consider whether summary judgment was proper in light of the following alleged factual issues left unresolved:

(1) Whether Dwinell's had actual knowledge of Cosmopolitan's limited partnership status at the time of contracting;

(2) Whether the court erred in concluding that Cosmopolitan was a general partnership;

(3) Whether Cosmopolitan is entitled to a discount under the contract, reducing the amount of the lease payments, because the neon signs were not in operation;

(4) Whether the court improperly shifted the burden of proof to Cosmopolitan when Dwinell's was the moving party for summary judgment.

At the time Dwinell's and Cosmopolitan entered into the lease-sale agreements, Cosmopolitan had taken no steps to

comply with the filing requirements of RCW 25.08.020.*fn1 It was not until February 1973, several months following execution of the contract with Dwinell's, that the certificate of limited partnership was filed. Cosmopolitan argues, however, that it was widely known in Yakima that a limited partnership had purchased the Chinook Hotel. Further, Cosmopolitan states that this fact was communicated to Dwinell's via its salesman. This information was allegedly

communicated in the following manner -- the word "partnership" was circled as identifying the "user" under the contract and the contract was signed, "Evan Bargman, V.P., R. Powers, President." According to Cosmopolitan, circling the word "partnership" best indicated its status as a limited partnership and the signatures clearly indicated that Bargman and Powers were not signing as general partners but as corporate officers of the general partnership.

[1] Basic rules have evolved in the area of summary judgment.

(1) The object and function of the summary judgment procedure is to avoid a useless trial; however, a trial is not useless, but is absolutely necessary where there is a ...


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