Law School Case Brief
Vohland v. Sweet - 433 N.E.2d 860 (Ind. Ct. App. 1982)
Under Ind. Code § 23-4-1-7(4), receipt by a person of a share of the profits is prima facie evidence that he is a partner in the business. Lack of daily involvement for one partner is not per se indicative of absence of a partnership. A partnership may be formed by the furnishing of skill and labor by others. The contribution of labor and skill by one of the partners may be as great a contribution to the common enterprise as property or money. It is an established common law principle that a partnership can commence only by the voluntary contract of the parties. To be a partner, one must have an interest with another in the profits of a business as profits. There must be a voluntary contract to carry on a business with intention of the parties to share the profits as common owners thereof.
Sweet, as a youngster, started working in 1956 for Charles Vohland, father of defendant Paul Vohland (Vohland), as an hourly employee in his nursery, Clarksburg Dahlia Gardens. In approximately 1963 Charles Vohland retired, and Vohland commenced what became known as Vohland's Nursery, the business of which was landscape gardening. At that time Sweet's status changed: he was to receive a 20 percent share of the net profit of the enterprise after all of the expenses were paid. After the expenses had been deducted from the income, Sweet would receive a check for 20 percent of the balance. No partnership income tax returns were filed. Vohland and his wife, Gwenalda, filed a joint return in which the business of Vohland's Nursery was reported in Vohland's name on Schedule C. Money paid to Sweet was listed as a business expense under "Commissions." Sweet's tax returns declared that he was a self-employed salesman at the nursery. Vohland handled all of the finances and books and did most of the sales. Sweet managed the physical aspects of the nursery and supervised the care of the nursery stock and the performance of the contracts for customers. After Vohland's father died, Sweet sought dissolution of the partnership and an accounting of the business. Vohland argued that there was no partnership. The trial court entered judgment in Sweet's favor.
Was the evidence sufficient to support the conclusion of law of the trial court that the business relationship of Vohland and Sweet was a partnership, and was Sweet entitled to dissolution and an accounting?
The court affirmed the judgment that dissolved a partnership and awarded plaintiff his interest in the business. The court held that there was evidence from which it could be inferred that the parties intended to do the things that amounted to the formation of a partnership, regardless of how they later characterized the relationship. The fact that Sweet did not contribute to capital was not controlling because contributions of labor and skill sufficed.
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