ASSIGNMENT
1.Donald Petersen joined his father, William Petersen, in a chicken hatchery business William had previously operated as a sole proprietorship. When the partnership was formed, William contributed the assets of the proprietorship, which included cash, equipment, and inventory having a total value of $41,000. Donald contributed nothing. They agreed to share the profits equally. For fifteen years, Donald took over the operation of the hatchery with very little help from his father. When the business was terminated, William contended that he was
entitled to the return of his capital investment of $41,000 before Donald could recover anything. Donald asserted that he is entitled to one-half the value of the business. Explain who is correct in his contention.
2. Smith, Jones, and Brown were creditors of White, who operated a grain elevator known as White’s Elevator. Heavily in debt, White was about to fail when the three
creditors agreed to take title to his elevator property and pay all the debts. It was also agreed that White should continue as manager of the business at a salary of $1,500 per month and that all profits of the business were to be paid to Smith, Jones, and Brown. It was further agreed that they could dispense with White’s services at any time and that he was free to quit when he pleased. White accepted the proposition and continued to operate the business as before. The agreement worked successfully and for several years paid substantial profits, enough so that Smith, Jones, and Brown had received nearly all that they had originally advanced. Were Smith, Jones, and Brown partners? Explain.
3. Virginia, Georgia, Carolina, and Louis were partners doing business under the trade name of Morning Glory Nursery. Virginia owned a one-third interest, and Georgia, Carolina, and Louis owned two-ninths each. The partners acquired three tracts of land for the purpose of the partnership. Two of the tracts were acquired in the names of the four partners, “trading and doing business as Morning Glory Nursery.” The third tract was acquired in the names of the individuals, the trade name not appearing in the deed. This third tract was acquired by the partnership out of partnership funds and for partnership purposes. Who owns each of the three tracts? Why?
4. Charles and L. W. Clement were brothers who had formed a partnership that lasted forty years until Charles discovered that his brother, who kept the partnership’s books, had made several substantial personal investments with funds improperly withdrawn from the partnership. He then brought an action in equity seeking dissolution of the partnership, appointment of a receiver, and an accounting. Should Charles succeed? Explain
