ASSIGNMENT
1. Lynn and Jack jointly own shares of stock of a corporation, have a joint bank account, and have purchased and own as tenants in common a piece of real estate. They share equally the dividends paid on the stock, the inter- est on the bank account, and the rent from the real estate. Without Lynn’s knowledge, Jackmakes a trip to inspect the real estate and on his way runs over Samuel. Samuel sues Lynn and Jack for his personal injuries, joining Lynn as defendant on the theory that Lynn was Jack’s partner. Is Lynn a partner of Jack? Explain.
2. James and Suzanne engaged in the grocery business as partners. In one year, they earned considerable money, and at the end of the year, they invested a part of the profits in oil land, taking title to the land in their names as tenants in common. The investment was fortunate, for oil was discovered near the land, and its value increased many times. Is the oil land partnership property? Why or why not?
3. Sheila owned an old roadside building that she believed could be easily converted into an antique shop. She talked to her friend Barbara, an antique fancier, and they executed the following written agreement:
a. Sheila would supply the building, all utilities, and $100,000 capital for purchasing antiques.
b. Barbara would supply $30,000 for purchasing anti- ques, Sheila would repay her when the business terminated.
c. Barbara would manage the shop, make all purchases, and receive a salary of $500 per week plus 5 percent of the gross receipts.
d. Fifty percent of the net profits would go into the pur- chase of new stock. The balance of the net profits would go to Sheila.
e. The business would operate under the name “Roadside Antiques.” Business went poorly, and after one year, a debt of $40,000 is owed to Old Fashioned, Inc., the principal supplier of antiques purchased by Barbara in the name of Roadside Antiques. Old Fashioned sues Roadside Antiques, and Sheila and Barbara as partners. Decision?
4. Clark, who owned a vacant lot, and Bird, who was engaged in building houses, entered into an oral agreement by which Bird was to erect a house on the lot. Upon the sale of the house and lot, Bird was to have his money first. Clark was then to have the agreed value of the lot, and the profits were to be equally divided. Did a partnership exist?
5. Grant, Arthur, and David formed a partnership for the purpose of betting on boxing matches. Grant and Arthur would become friendly with various boxers and offer them bribes to lose certain bouts. David would then place large bets, using money contributed by all three, and would collect the winnings. After David had accumulated a large sum of money, Grant and Arthur demanded their share, but David refused to make any split. Can Grant and Arthur compel David to account for the profits of the partnership? Why or why not?
6. Teresa, Peter, and Walker were partners under a written agreement made in January that the partnership should continue for ten years. During the same year, Walker, being indebted to Smith, sold and conveyed his interest
in the partnership to Smith. Teresa and Peter paid Smith $50,000 as Walker’s share of the profits for that year but refused Smith permission to inspect the books or to come into the managing office of the partnership. Smith brings an action setting forth the above facts and asks for an account of partnership transactions and an order to inspect the books and to participate in the management of the partnership business.
a. Does Walker’s action dissolve the partnership?
b. To what is Smith entitled with respect to
(1) partnership profits, (2) inspection of partnership books, (3) an account of partnership transactions, and (4) participation in the partnership management?
7. Horn’s Crane Service furnished supplies and services under a written contract to a partnership engaged in operating a quarry and rock-crushing business. Horn brought action against Prior and Cook, the individual members of the partnership, to recover a personal judgment against them for the partnership’s liability under that contract. Horn has not sued the partnership itself, nor does he claim that the partnership property is insufficient to satisfy its debts. What result? Explain.
8. Cutler worked as a bartender for Bowen until they orally
agreed that Bowen would have the authority and responsibility for the entire active management and operation of the tavern business known as the Havana Club. Each was to receive $300 per week plus half of the net profits. The business continued under this arrangement for four years until the building was taken over by the Salt Lake City Redevelopment Agency. The agency paid $30,000 to Bowen as compensation for disruption. The business, however, was terminated after Bowen and Cutler failed to find a new suitable location. Cutler, alleging a partnership with Bowen, then brought this action against him to recover one-half of the $30,000. Bowen contends that he is entitled to the entire $30,000 because he was the sole owner of the business and that Cutler was merely his employee. Cutler argues that although Bowen owned the physical assets of the business, she, as a partner in the business, is entitled to one-half of the compensation that was paid for the business’s goodwill and going concern value. Who is correct? Explain.
