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Lupien v. Malsbenden - 477 A.2d 746 (Me. 1984)

Rule:

The Uniform Partnership Act, Me. Rev. Stat. Ann. tit. 31, §§ 281-323 (1978 & Supp. 1983-1984), defines a partnership as an association of two or more persons to carry on as co-owners a business for profit. Me. Rev. Stat. Ann. tit. 31, § 286 (1978). Whether a partnership exists is an inference of law based on established facts. A finding that the relationship between two persons constitutes a partnership may be based upon evidence of an agreement, either express or implied, to place their money, effects, labor, and skill, or some or all of them, in lawful commerce or business with the understanding that a community of profits will be shared. No one factor is alone determinative of the existence of a partnership. If the arrangement between the parties otherwise qualifies as a partnership, it is of no matter that the parties did not expressly agree to form a partnership or did not even intend to form one. It is possible for parties to intend no partnership and yet to form one. If they agree upon an arrangement which is a partnership in fact, it is of no importance that they call it something else, or that they even expressly declare that they are not to be partners. The law must declare what is the legal import of their agreements, and names go for nothing when the substance of the arrangement shows them to be inapplicable.

Facts:

In 1980, plaintiff Robert Lupien entered into a written agreement with Stephen Cragin, doing business as York Motor Mart, for the construction of a Bradley automobile. Plaintiff made a deposit of $500 towards the purchase price of $8,020 upon signing the contract, and made a further payment of $3,950 a week later. Thereafter, plaintiff made visits to York Motor Mart to check on the progress being made on his car. During those visits, plaintiff generally dealt with defendant Frederick Malsbenden because Cragin was seldom present. Plaintiff never received the Bradley he had contracted to purchase. Plaintiff then filed an action, praying that Malsbenden, as the alleged partner of Cragin, be held liable for the partnership’s breach of contract. In his defense, Malsbenden contended that he was only a creditor of the business. The trial court, finding Malsbenden a partner in the business, held him liable for the partnership’s breach of contract. On appeal, Malsbenden argued that the trial court’s finding that he was a partner was erroneous.

Issue:

Was Malsbenden a partner of Cragin in the business, and as such, can be held liable for the partnership’s breach of contract?

Answer:

Yes.

Conclusion:

The Court affirmed the judgment of the lower court, stressing that § 286 of the Uniform Partnership Act, Me. Rev. Stat. Ann. tit. 31, § 286 (1978), defined a partnership as an association of two or more persons to carry on, as co-owners, a business for profit. According to the Court, whatever may be the intent of Malsbenden and Cragin as to their respective involvements in the business of making and selling Bradley cars, there was no clear error in the lower court’s finding that the Bradley car operation represented a pooling of Malsbenden’s capital and Cragin’s automotive skills, with joint control over the business and intent to share the fruits of the enterprise. As a matter of law, that arrangement amounted to a partnership under the Uniform Partnership Act.

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