Ziegler v. Dahl - 2005 ND 10, 691 N.W.2d 271

Rule:

 A partnership is an association of two or more persons to carry on as co-owners a business for profit. N.D. Cent. Code § 45-13-01(18). The formation of a partnership in North Dakota is governed by N.D. Cent. Code § 45-14-02.

Facts:

Defendants Steve Dahl, David Tronson, and James Legacie began marketing an ice fishing guide service named Perch Patrol on Devils Lake after the ice fishing season. Defendant testified in his affidavit that each member of the guide service agreed to be an independent contractor, responsible for obtaining his license and equipment. But they equally shared clients and marketing expenses. Defendant asked for help from Plaintiffs Michael Ziegler and Jack Kitsch to help their business guide ice fishermen on the lake. Plaintiff testified that he considered an employee of the Perch Patrol as they were paid for their service. Defendant presented to plaintiff a document which contained sections called Employee Proposal and Partnership Proposal. The partnership proposal provided that plaintiffs would be their separate entity and that both parties shall share equally in both the costs and the efforts in these endeavors. The parties did not adopt either proposal. The parties later agreed but never reduced their agreement to writing. The district court granted the motion for summary judgment dismissing the plaintiffs’ claim that they were in a partnership. Plaintiff argued that the district court erred in dismissing their claim that they were in a partnership. The employees argued that the district court erred by requiring intent as an element of a partnership.

Issue:

Did the district court err when it granted the summary judgment dismissing plaintiffs’ claim that they were in partnership?

Answer:

No. The judgment was affirmed.

Conclusion:

The appellate court determined that the phrase "whether or not the persons intend to form a partnership" in N.D. Cent. Code § 45-14-02 did not change the elements of partnership formation. The court held that the phrase’s purpose was to clarify that a partnership could be created regardless of the parties' subjective intent, making it possible for individuals to inadvertently create a partnership despite their expressed subjective intent not to do so. In this case, there was no evidence that the owners intended to engage in activities that would form a partnership with the employees. The employees failed to demonstrate that the discussions they had with the owner were about the management and control of the business and that their discussions affected the activities of the business. The business's fee structure correlated more closely with an independent contractor payment system than with profit-sharing among partners. The business was operated to generate client fees.