Thank You For Submiting Feedback!
A party's receipt of a share of the net profits of a business is prima facie evidence that he is a partner, unless the money was paid to him as wages. Ark. Stat. Ann. § 65-107.
Appellee George Harris and appellant Carl A. Zajac agreed to go into business together to run a car salvage operation. They did not consult a lawyer or attempt to reduce their agreement to writing. Appellee subsequently brought an action against appellant to compel him to account for the profits of the business as an alleged partnership. The trial court held that appellee met his burden of proving a partnership relationship and referred the case to a master for a statement of partnership accounts. Appellant sought review, arguing that the trial court's holding was against the weight of the evidence and that appellee was merely an employee in appellant's business.
Did the trial court err in holding that a partnership existed in the present case?
The Court initially noted that the business association known as a partnership was not one that could be defined with precision; the ultimate question was whether the parties intended to become partners. The Court held that although the parties did not expressly agree to form a partnership, the trial court did not err in finding that a partnership existed based on the evidence, including appellee's receipt of a share of the net profits and his investment of substantial sums of his own money into the acquisition of cars for the business. According to the Court, a party's receipt of a share of the net profits of a business is prima facie evidence that he was a partner, unless the money was paid to him as wages.