Medline Indus. v. All-Med Supply & Equip. - 94-1504 ( La. App. 1 Cir 4/7/95), 653 So. 2d 830

Rule:

Regarding the debts of a partnership, the partnership as principal obligor is primarily liable for its debts. La. Civ. Code Ann. art. 2817. However, a partner is bound for his virile share of the debts under the law. In determining whether a partnership exists, the court notes that a partnership is a juridical person, distinct from its partners, created by a contract between two or more persons to combine their efforts or resources in determined proportions and to collaborate at mutual risk for their common profit or commercial benefit. Art. 2801. To be considered a partnership, a business relationship must meet the following established criteria: (1) the parties must have mutually consented to form a partnership and to participate in the profits which may accrue from property, skill, or industry, furnished to the business in determined proportions by them; (2) all parties must share in the losses as well as the profits of the venture; and (3) the property or stock of the enterprise must form a community of goods in which each party has a proprietary interest. These criteria require findings of fact. When findings are based on determinations regarding the credibility of witnesses, the manifest error, clearly wrong standard demands great deference to the trier of fact's findings. Such findings of fact may not be set aside absent manifest error.

Facts:

The alleged debtor and an acquaintance contemplated forming a business to sell medical supplies. The acquaintance contacted the creditor, and the alleged debtor signed an application that identified the two as partners of a company and included a list of the debtor's trade references. The creditor declined to extend credit and the acquaintance signed a personal guaranty. He solely conducted business with the creditor. The creditor filed suit against the debtor on open account. The trial court dismissed the claim. The creditor appealed. 

Issue:

Under the circumstances, could the debtor be held liable for the loan obtained by the acquaintance? 

Answer:

No.

Conclusion:

The court affirmed the decision of the trial court. According to the court, the debtor did not bind himself to the creditor to fulfill the company's obligation. The credit application merely authorized the creditor to contact the listed references. Nor did the court find that a partnership had existed. The parties' proposed partnership was contingent on its ability to obtain credit. Because the debtor was unaware that the creditor had agreed to extend credit, the mutual consent necessary for a partnership was lacking. The evidence failed to support the claim that a partnership was created by estoppel. The creditor did not rely to its detriment on any outward manifestation by the debtor.