Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

تمرين 7

Byker v. Mannes 641 N.W.2d 210 (Mich. 2002)*
Dumb and Dumbfounded
Facts
In 1985, David Byker (plaintiff) was doing accounting work for Tom Mannes (defendant). The two talked about going into business together because they had complementary business skills. Mr. Mannes could locate certain properties because of his real estate background, and Mr. Byker could raise money for their property purchases.
The two had investment interests in five real estate limited partnerships. They shared equally in the commissions, financing fees, and termination costs of all the partnerships. The two also personally guaranteed loans for these investments from several financial institutions.
The business relationship between the parties began to deteriorate after they created Pier 1000 Ltd. in order to own and manage a marina. The marina had serious financial difficulties, and Byker and Mannes placed their profits from another partnership, the M B Limited Partnership II, into Pier 1000 Ltd. and borrowed money from several financial institutions.
When Mr. Mannes refused to make any additional monetary contributions, Mr. Byker continued to make loan payments and incurred accounting fees on behalf of Pier 1000 Ltd. Mr. Byker also entered into several individual loans for the benefit of Pier 1000 Ltd. Mr. Mannes had no knowledge of these extra transactions.
The marina was returned to its previous owners in exchange for their assumption of Mr. Byker's and Mr. Mannes's business obligations. Mr. Byker and Mr. Mannes ended their business ventures together. Mr. Byker then approached Mr. Mannes to obtain his share of the payments of the losses from the various businesses. Mr. Mannes testified that he was "absolutely dumbfounded" by the request for money.
Mr. Byker then filed suit for the payments, saying that the two had a partnership. The court determined that the two had created a general partnership that included all of the business entities. The Court of Appeals reversed that decision. Mr. Byker appealed.
Judicial Opinion
MARKMAN, Justice
"[T]here is no necessity that the parties attach the label 'partnership' to their relationship as long as they in fact both mutually agree to assume a relationship that falls within the definition of a partnership."
[T]he focus is on whether individuals intended to jointly carry on a business for profit regardless of whether they subjectively intended to form a partnership.
Stated more plainly, the statute does not require partners to be aware of their status as "partners" in order to have a legal partnership.
With the language of the statute as our focal point, we conclude that the intent to create a partnership is not required if the acts and conduct of the parties otherwise evidence that the parties carried on as co-owners a business for profit. Thus, we believe that, to the extent that the Court of Appeals regarded the absence of subjective intent to create a partnership as dispositive regarding whether the parties carried on as co-owners a business for profit, it incorrectly interpreted the statutory (and the common) law of partnership in Michigan.
Accordingly, we remand this matter to the Court of Appeals for analysis under the proper test for determining the existence of a partnership under the Michigan Uniform Partnership Act.
Case Questions
1. What type of relationship did Mr. Byker and Mr. Mannes have?
2. What does the court say about the type of intent the parties must have for a partnership?
3. What lessons should Mr. Mannes learn from his experience in having to pay Mr. Byker when he thought the partnership was over?