8182 MARYLAND ASSOCIATES, LIMITED PARTNERSHIP, APPELLANT, v. KATHRYN SHEEHAN, ADMINISTRATRIX FOR THE ESTATE OF RICHARD SHEEHAN, ET AL., RESPONDENTS.

No. ED74028.Missouri Court of Appeals, Eastern District, DIVISION ONE.
FILED: March 2, 1999.

[1] [EDITORS’ NOTE: THIS OPINION IS SUBJECT TO MODIFICATION OR TRANSFER TO THE SUPREME COURT.]

APPEAL FROM THE CIRCUIT COURT OF THE ST. LOUIS COUNTY, HON. ROBERT G. J. HOESTER.

John S. Sandberg, and Stephen P. Niemira, One City Centre, 15thFloor, St. Louis, MO 63101, for appellant.
David Wells, One Mercantile Center, St. Louis, MO 63101, andJeffrey N. Klar, 7777 Bonhomme, 24th Floor, St. Louis, MO 63105,for respondent.

James A. Pudlowski, P.J., concurs.

William H. Crandall, Jr., J., concurs.

CLIFFORD H. AHRENS, Judge

[2] 8182 Maryland Associates, L.P. (“8182 Maryland”) appeals from the summary judgment entered against it and in favor of defendants on a claim of breach of contract. We affirm in part and reverse and remand in part.

[3] On April 5, 1984, the partnership of Popkin, Stern, Heifetz, Lurie, Sheehan, Reby Chervitz[1] entered into a lease agreement with 8182 Maryland for the use of two floors and space in the parking garage of an office building which had yet to be constructed. The term of the lease was 120 months and commenced on the date at which the premises was “ready for occupancy.” The partnership agreed to pay rent “on the first day of each calendar month.” The lease agreement called for the partnership to reimburse 8182 Maryland for building operating expenses and parking garage expenses. The lease provided that should the partnership default on its agreement, 8182 Maryland could choose to (a) terminate the lease and the partnership’s right of possession or (b) terminate only the partnership’s right to possession. The lease also provided that should 8182 Maryland choose solely to terminate the partnership’s right of possession, the present value of damages at the time of the default, including the amount of rent for the balance of the lease “over the then reasonable rental value of the Leased Premises,” would be immediately due and payable. The partnership moved into the leased premises on April 26, 1986.

[4] Defendant Richard Sheehan[2] joined the firm in August 1973. Sheehan signed the lease on April 5, 1984 as an agent of the partnership. Sheehan entered into an agreement to assign his partnership interest on December 31, 1985 and withdrew from the firm on January 31, 1986, three months before the partnership occupied the leased premises. Notice of his withdrawal was given through the announcement of the firm’s change of name and articles in “various St. Louis newspapers.” The partnership mailed an announcement of name change and a copy of Sheehan’s assignment of partnership interest to 8182 Maryland no later than February 1986.

[5] Defendants Timothy Noelker and Douglas Burdette became partners in the firm on January 1, 1985. Neither defendant signed the lease. Noelker withdrew from the firm on November 30, 1986. Burdette withdrew on December 31, 1987.

[6] Defendants Barbara Lageson[3] and Jeffrey Klar became partners in the firm on January 1, 1986. Neither defendant signed the lease. Lageson withdrew from the firm on or about March 10, 1987. Klar withdrew on December 1, 1989.

[7] In September 1991, the partnership failed to pay rent and defaulted on the lease. Pursuant to the lease agreement, 8182 Maryland terminated the firm’s right to possession of the premises, but did not terminate the lease.

[8] The third amended petition, filed on January 13, 1993, alleged that the partnership had failed to pay rent for the months of September, October, November and December 1991 as well as January, February, March, April and May 1992. The petition alleged that 8182 Maryland suffered damages in the amount of $856,488.53 for past-due rent and the partnership’s pro rata share of the building’s operating expenses and parking garage expenses. The third amended petition also claimed damages in the amount of $4,891,975.91 for the “present value of the Premises for the remainder of the stated term [forty-six months] over the reasonable value of the Premises for the remainder of the stated term[.]” 8182 Maryland named as defendants all past and present general partners of the firm.

[9] The trial court entered an order of partial summary judgment in favor of Noelker on January 22, 1993, and in favor of Klar on February 10, 1993. In these orders, the trial court found that any recovery by 8182 Maryland with respect to Noelker and Klar was limited to their interests in partnership property. On November 17, 1993, in separate orders, the trial court granted motions for summary judgment in favor of defendants Sheehan, Noelker, Lageson and Burdette. The trial court entered an order of summary judgment in favor of Klar on December 29, 1993.

[10] On February 20, 1998, the trial court found that there was no reason for delay of plaintiff’s appeal and certified its judgment as final under Rule 74.01(b).[4] Rothermich v. Weber’s St.Charles Lanes, Inc., 957 S.W.2d 509, 510 (Mo.App. 1997). This appeal followed.

[11] We will review the trial court’s grant of summary judgment denovo. Id. The party moving for summary judgment has the initial burden of showing that there are no genuine disputes as to any material facts in issue so that it is entitled to judgment as a matter of law. Id. A genuine dispute exists if the movant requires an inference to establish its right to judgment as a matter of law. ITT Commercial Fin. Corp. v. Mid-American SupplyCorp., 854 S.W.2d 371, 381 (Mo. banc 1993). Once the moving party has established that it is entitled to judgment as a matter of law, then the burden shifts to the non-moving party to create a genuine dispute as to one of the facts in issue by proffering competent materials beyond the mere allegations contained in its pleadings. Rothermich, 957 S.W.2d at 510; Rule 74.04(e). We may affirm the order of summary judgment if it is sustainable as a matter of law under any theory. Bartareau v. Executive BusinessProducts, Inc., 846 S.W.2d 248, 249 (Mo.App. 1993).

[12] We must first address the question of jurisdiction raised by defendants Noelker and Klar. This court has jurisdiction only over final judgments. Perniciaro v. McDonald, 974 S.W.2d 620, 621
(Mo.App. 1998). A final judgment is one which disposes of all claims as to all parties, or certifies there exists no just reason for delay. Rule 74.01(b). Here, Noelker and Klar allege that the “issue of [their] individual liability under the lease is not properly before this court in that [8182 Maryland] has not appealed from the orders resolving this issue.” Noelker and Klar claim that the trial court should have certified as final the rulings on their first motions for summary judgment dated January 22, 1993 and February 10, 1993, respectively. In the absence of the express determination required by Rule 74.01(b), the trial court’s rulings on the Noelker and Klar first motions for summary judgment were “subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.” Rule 74.01(b); Kliefoth v.Fields, 828 S.W.2d 714, 717 (Mo.App. 1992). The trial court’s order dated February 20, 1998 certified that the November 17, 1993 and December 29, 1993 orders of the trial court, with respect to the parties named therein, were “final.” Rule 74.01. The question of the individual liability of Noelker and Klar is properly before this court.

[13] In its point relied on, 8182 Maryland asserts that the trial court erred in granting defendants’ motions for summary judgment. It argues that defendants were general partners of the firm and are therefore personally liable for “unpaid rents due under the lease.”

[14] Defendant Sheehan occupies a position similar to that of defendants Noelker, Klar, Lageson and Burdette in that all withdrew from the partnership before the default. Sheehan differs in that he was a member of the partnership at the time the lease was entered. We will first discuss Sheehan’s liability under the Uniform Partnership Law. Section 358.010, et seq., RSMo 1994.[5] As a partner at the time the firm entered into the lease, Sheehan was jointly and severally liable for the obligation of the partnership on the lease contract. Section 358.150; Thompson by Thompson v. Gilmore, 888 S.W.2d 715, 716
(Mo.App. 1994).

[15] Contrary to the assertion in his brief, when Sheehan withdrew from the firm, the partnership was dissolved and succeeded by a new partnership. Section 358.290; Ohlendorf v. Feinstein, 636 S.W.2d 687, 689 (Mo.App. 1982). A partnership is not necessarily terminated by dissolution; its creditors become the creditors of the partnership continuing in business. Sections 358.300, 358.410.1. Dissolved partnerships may continue in business for an indefinite period of time, so long as the rights of the creditors are not jeopardized and none of the partners insist upon a winding up and final termination of the partnership. Schoeller v.Schoeller, 497 S.W.2d 860, 867 (Mo.App. 1973). The dissolution of a partnership does not of itself discharge the existing liability of any partner. Section 358.360.1.

[16] The Uniform Partnership Law provides a means by which a partner may insulate himself from personal liability for partnership debts and obligations at the time of his withdrawal.

A partner is discharged from any existing liability upon dissolution of the partnership by an agreement to that effect between himself, the partnership creditor and the person or partnership continuing the business; and such agreement may be inferred from the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business.

[17] Section 358.360.2 (emphasis added). Although no Missouri courts have interpreted this section, we receive some guidance from the decision in Wester Co. v. Nestle, 669 P.2d 1046 (Colo.Ct.App. 1983). The pertinent section of Colorado’s partnership act is virtually identical to section 358.360.2. See Colo. Rev. Stat. section 7-60-136(2) (1973). In Nestle, the defendant was a member of a partnership at the time the firm entered into a lease contract with the plaintiff. 669 P.2d at 1047. The defendant withdrew from the partnership and transferred his entire interest to an incoming partner. Id. The continuing partnership agreed to assume all liabilities and indemnify the defendant. Although the assignment and release agreement had been mailed to the plaintiff, the plaintiff “did not object to a change in parties, or request that [the defendant] remain liable” under the lease.Id. The payment on the lease was not in default until over two years after the defendant withdrew from the partnership. Applying Colorado’s analog to section 358.360.2, the trial court concluded from the parties’ course of dealing that the plaintiff had consented to the defendant’s discharge from liability. Id. at 1047-48. The Colorado court of appeals affirmed the judgment of the trial court based, in part, upon the inferential language found in both Missouri and Colorado partnership acts.[6] Id. at 1048; see also Victoria Air Conditioning v. Southwest Texas Mech.Insulation Co., 850 S.W.2d 720, 724-25 (Tex.Ct.App. 1993).

[18] In Nestle, the terms of the assignment and release agreement were before the reviewing court. In this case, we do not find in the record on appeal the terms of the assignment of partnership interest into which Sheehan and the remaining partners entered on December 31, 1985. Section 358.360.2 provides for the discharge of the withdrawing partner upon an agreement between three parties: the departing partner, the continuing partnership and the partnership creditor. The inference required to find such an agreement on these summary judgment facts places the issue into genuine dispute. See ITT Commercial Fin. Corp., 854 S.W.2d at 381. On the record before us, summary judgment for Sheehan was improper. Accordingly, we must reverse and remand the summary judgment entered in favor of Sheehan to determine the nature and effect of any agreement or course of dealing between the parties.

[19] As for the liability of Noelker, Klar, Lageson and Burdette, we note that the partnership was bound by the lease as it was signed by partners, as its agents, in furtherance of partnership business. Section 358.090. The Uniform Partnership Law addresses the liability of incoming partners:

[a] person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission as though he had been a partner when such obligations were incurred, except that this liability shall be satisfied only out of partnership property.

[20] Section 358.170. The lease was entered into before the admission of these defendants as partners in the firm. The obligation to pay rent for the entire term of the lease cannot be satisfied by proceeding against the personal assets of Noelker, Klar, Lageson or Burdette. Section 358.170; 59th Park Assoc. v. Inselbuch,68 A.D.2d 838, 839, 414 N.Y.S.2d 537, 539 (N.Y.App.Div. 1979).

[21] “[R]ent is in no sense a debt before the day on which it is covenanted to be paid.” Elms Realty Co. v. Wood, 285 Mo. 130, 225 S.W. 1002, 1003 (1920); Stevens v. Stevens, 172 Mo. 28, 72 S.W. 542, 544 (1903); see also 49 Am. Jur. 2d Landlord and Tenant
section 713 (1995). The lease agreement called for rent to be paid “on the first day of each calendar month.” There were no summary judgment facts adduced which would demonstrate that the firm had not paid its rent obligation at the time defendants withdrew from the firm. The rent payments upon which the partnership defaulted were not yet due at the time of defendants’ withdrawal. At the time of default, these defendants had no control or right of control over the partnership business. OxfordMall Co. v. K B Mississippi Corp., 737 F. Supp. 962, 966 (S.D. Miss. 1990). Absent an express assumption of the lease obligations, a party subsequently admitted into the partnership, and not a member at the time of default, is not individually liable. C.E. Hooper, Inc. v. Perlberg, Monness, Williams Sidel, 72 A.D.2d 687, 421 N.Y.S.2d 353, 354 (N.Y.App.Div. 1979). In light of our analysis, we need not decide the impact of section 358.360.2 on the liability of Noelker, Klar, Lageson or Burdette. We hold that the trial court correctly entered summary judgment in favor of defendants Noelker, Klar, Lageson and Burdette.

[22] 8182 Maryland relies upon the statement that “[f]ormer members of a dissolved partnership may be held liable under its lease with a third party, despite the fact that the withdrawal of other partners and dissolution of the partnership renders performance of the lease impossible for the partnership and frustrates its original purposes.” 59A Am. Jur. 2d Partnership section 907 (1987). This statement is inapposite to the facts before us. The above quoted statement was derived from the facts in Smalley v.Juneau Clinic Bldg. Corp., 493 P.2d 1296 (Alaska 1972). In that case, the lease expressly “provided that individual partners would continue to be liable under the lease should dissolution, by partnership withdrawal, occur.” Smalley, 493 P.2d at 1303. 8182 Maryland points to no summary judgment facts which suggest that Noelker, Klar, Lageson and Burdette were bound in a individual capacity to the terms of the lease.

[23] Additionally, 8182 Maryland points to In re Securities Group1980, 74 F.3d 1103 (11th Cir. 1996), for the proposition that59th Park should not be followed “in light of strong public policy mandating [the] liability of individual withdrawing partners on lease obligations entered into by [a] partnership.” This reliance is misplaced. In re Securities Group 1980 dealt with the bankruptcy proceedings of a limited partnership and the application of the Uniform Limited Partnership Act of 1916 as adopted by New York. See N.Y. Partnership Law section 106 (McKinney 1988).[7] The summary judgment facts do not reflect that the firm was anything other than a general partnership. Furthermore, in In re Securities Group 1980, the limited partners had signed a publicly recorded certificate of limited liability in which each agreed to pay up to three times the limited partner’s original investment if necessary to satisfy the partnership’s recourse obligations. In re Securities Group 1980, 74 F.3d at 1107. The court held that under New York’s limited partnership law, a limited partner is “personally liable to a partnership creditor who `extended credit’ to the partnership prior to the amendment of [a publicly filed] limited partnership certificate — even if the creditor’s claim `arises’ after the certificate is amended.” Id. at 1112 (emphasis theirs). Such is not the record before us.

[24] Defendants Noelker, Klar, Lageson and Burdette filed a motion to impose sanctions on 8182 Maryland under Rule 84.19 for filing a frivolous appeal. An appeal is frivolous if it presents no justiciable question and is so recognizable as devoid of merit on the face of the record that there is little prospect that it can ever succeed. Hutchings v. Waxenberg, 969 S.W.2d 327, 330
(Mo.App. 1998). We will impose sanctions for filing a frivolous appeal with extreme caution to avoid the chilling of an appeal of even slight, colorable merit. Id. The arguments of 8182 Maryland as to these defendants are not so devoid of merit as to warrant the imposition of sanctions. Defendants’ motion is denied.

[25] The judgment of the trial court as to Noelker, Klar, Lageson and Burdette is affirmed. The judgment entered in favor of Sheehan is reversed and remanded for further proceedings in accordance with this opinion.

[1] In May 1986, the partnership took the name “Popkin
Stern.”
[2] Sheehan passed away on March 11, 1996. His wife and estate administrator, Kathryn Sheehan, has been substituted as a party in this suit.
[3] Barbara Lageson is now known as “Barbara Lageson-Harris.” For ease of reference, and not out of disrespect, we shall refer to her by her maiden name only.
[4] The orders certified as final by the trial court in relation to Noelker and Klar were those entered on November 17, 1993 and December 29, 1993, respectively.
[5] All further Missouri statutory references are to RSMo 1994 unless otherwise indicated.
[6] The Nestle court also found a second basis to affirm the trial court in that, under language similar to section 358.360.3, the continuing partners had materially altered the lease agreement and had therefore discharged the defendant from liability 669 P.2d at 1048-49.
[7] Although New York has also adopted the Uniform Limited Partnership Act of 1976 without the repeal of the 1916 act, Missouri has only enacted the 1976 act. See section 359.010 etseq.