No. 86-187
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
ROSS PULLIAM,
Plaintiff and Appellant,
-vs-
JAMES PULLIAM and FRED PULLIAM,
d/b/a PULLIAM CONSTRUCTION,
Defendants and Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Ravalli,
The Hon. Jack L. Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Kammerer Law Offices; Clinton Kamrnerer, Missoula,
Montana
For Respondent:
Garlington, Lohn & Robinson; Lawrence F. Daly,
Missoula, Montana
Submitted on Briefs: Jan. 22, 1987
Decided: March 11, 1987
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
This is an appeal from the District Court of the Fourth
Judicial District, in and for Ravalli County, Montana. The
appellant (Ross) appeals from a finding that he is not a
one-third partner in Pulliam Construction with two other
brothers. We affirm.
Jim, Fred and Ross Pulliam are brothers. Jim and Fred
formed Pulliam Construction, a partnership, in 1967, in
Missoula, Montana. The two brothers acquired parcels of real
property and began building both "spec" and custom houses.
The two brothers agreed to share equally the profits, losses,
ownership and management of Pulliam Construction. The
partnership purchased a farm near Stevensville, Montana, as
an investment in 1969. At the time of trial Jim had lived in
the farmhouse since 1971. Each of the brothers drew whatever
cash he needed for living expenses from the partnership
account.
Jim handled the record keeping and financial affairs of
the business and Fred did the design layouts and prepared
bids. The two brothers worked equally on construction
projects, shared in the management of the business, dealt
with subcontractors, financial institutions and customers.
In 1971 Pulliam's mother arranged with Jim and Fred for
a younger brother, Ross, to come to Montana from Missouri to
work for their construction business for a while. Ross lived
in Fred's house and began working as a laborer. He had no
business or building experience when he began working, owned
no tools or equipment, had no special skills, and no money to
contribute to the partnership business.
It was originally understood Ross would be working in
Missoula for only about six months. During this time he was
to be provided with a place to live, food and living
expenses, with the agreement Jim and Fred would settle with
him when he moved back to Missouri. Ross decided not to
return to Missouri, however, and the living and compensation
agreement was continued. None of the brothers received wages
and there was no fixed rate of pay, but each had a drawing
account. Ross's name was added to the partnership signature
card allowing him to write checks on the Pulliam Construction
account.
In November 1971, Ross moved into the house on the farm
property where Jim lived. Ross married in December 1974, and
he and his wife lived there until they were divorced in June,
1981. During this time everything Ross and his wife needed
was provided by the partnership. Ross worked his last
construction shift in May 1977, and became involved in
various unsuccessful business enterprises.
Ross filed a complaint in May 1981, alleging his
brothers had excluded him from the partnership business and
demanded, among other things, the partnership be dissolved
and an accounting be had. After a bench trial, the court
found that Ross was not a partner in Pulliam Construction and
was not entitled to the relief sought. He appeals.
Findings of Fact of the District Court will not be set
aside unless they are clearly erroneous. Rule 52 (a)
M.R.Civ.P. Nor will,
[t]his Court ... substitute
judgment for that of the trier of fact.
its
We will consider only whether substantial
credible evidence supports the findings
and conclusions. Findings will not be
overturned unless there is a clear
preponderance of evidence against them,
recognizing that evidence may be weak or
conflicting, yet still support the
findings.
Round v. Reikofski (Mont. 1985), 699 P.2d 72, 74, 42 St.Rep.
634, 636.
Therefore, the only question before us here is whether
there is substantial evidence to support the District Court's
findings that a partnership did not exist between Ross and
his two brothers.
Under S 35-10-201 (I), MCA, "[a] partnership is an
association of two or more persons to carry on as co-owners a
business for profit." We have set forth the elements
necessary to establish a partnership in Bender v. Bender
(1965), 144 Mont 470, 480, 397 P.2d 957, 962:
[Ilt is necessary to determine the intent
of the parties; ... There must be some
contribution by each co-adventurer or
partner of something promotive of the
enterprise. There must be a joint
proprietary interest and a right of
mutual control over the subject matter of
the enterprise or over the property
engaged therein, and there must be an
agreement to share the profits.
See also First National Bank of Twin Bridges v. Sant (1973),
161 Mont. 376, 506 P.2d 835.
Ross argues at least five indicia indicate that he was
an equal partner: (1) the bank card signed by all three
brothers ; (2) the Pulliam Construction ledgers which
enumerate a separate drawing account for each brother;
(3) the partnership K-1 tax returns for the years 1974-1978
which are signed by each brother and which list Ross as an
equal partner for purposes of sharing profits and losses;
(4) the failure of Pulliam Construction to take any tax,
accounting or record keeping steps which would indicate Ross
was an employee, independent contractor or joint venturer;
and (5) the absence of any time record for all three
brothers which bears any correlation to hourly rate or to the
amounts actually withdrawn from Pulliam Construction's funds.
None of these, however, meets the test set out in
Bender, supra, nor the statutory rules determining rights and
duties of partners pursuant to 5 35-10-401, MCA.
"No person can become a member of a partnership without
the consent of all the partners." Section 35-10-401(7), MCA.
Further, the intention of the parties must be clearly
manifested. Bender, supra at 480, 397 P.2d at 962. The
record shows no such manifestation. The only witness to
testify there was an intention to form a partnership was Ross
himself.
The two witnesses produced by Ross in his case-in-chief
did nothing to support his partnership claims. They were
fellow workers who testified that Ross had never said he was
an equal partner. One of the witnesses assumed he was a
partner, but had not been told so. Jim and Fred's denial of
intention was corroborated by other witnesses.
Regardless of intention, there are certain acts which
result in a partnership, or which negate the intention of the
parties.
Superimposed upon the rule of intent, it
is frequently held that where there is no
express agreement to form a partnership,
the question of whether such a
relationship exists must be gathered from
the conduct, surrounding circumstances
and the transactions between the parties.
[Citations omitted. ] There is no
automatic solution to the question of the
existence of a partnership but it turns
upon the facts and circumstances of
association between the parties.
[Citations omitted.] No single fact may
be stated as the complete and final test
of a partnership. [Citations omitted. ]
Even a written agreement, designating the
partners as partners and providing for a
sharing of the profits, is only
evidential and not conclusive of the
existence of a partnership.
P M Cattle Co. v. Holler (Wyo. 1977), 559 P.2d 1019, 1022.
&
In Truck Insurance Exchange v. Industrial Indemnity Co.
(Mont. 1984), 688 P.2d 1243, 41 St.Rep. 1835, we found the
acts of the parties created a partnership in fact, and
contrary intentions of the parties were ignored. BY
splitting the net profits equally, the parties established a
prima facie case of partnership under S 35-10-401 (1), MCA.
In this case, where there is conflicting evidence the parties
intended to form a partnership, the actions of the parties to
the contrary defeats any inference a partnership existed.
We find no evidence of an agreement to share the
profits. The money which Ross was entitled to draw for his
living expenses were as wages of an employee.
The receipt by a person of a share of the
profits of a business is prima facie
evidence that such a person is a partner
in the business, but no such inference
shall be drawn if such profits were
received in payment:
(a) ...
(b) as wages of an employee . . .
Section 35-10-202 (4), MCA.
There is no evidence Ross contributed anything
promotive of the enterprise, or that he had a proprietary
interest or a right of control. As noted above, he had no
business or building experience when be began working, owned
no tools or equipment, had no special skills, and no money to
contribute to the partnership business. He relied upon Jim
and Fred to make all business decisions. He did not handle
arrangements with subcontractors. Fred and Jim bouqht and
sold numerous pieces of property during the time he was
associated with them and his name never appeared on any of
the documents of conveyance. He never dealt with any
financial institution concerning the partnership loans.
The District Court correctly found:
[tlhere is conflicting testimony as to
the intention to form a partnership,
however the court hereby finds that there
was no contribution by Ross Pulliam of
something promotive of the partnership
enterprise, that Ross Pulliam had no
joint proprietary interest in or right of
mutual control over the Pulliam
Construction business enterprise or its
assets, and that tax wise Ross Pulliam
received a share of the net profits and
losses of Pulliam Construction as payment
as wages of an employee. That Ross was
an employee of Pulliam Construction and
upon termination of his employment was to
be paid wages, less draws, and living
expenses as set forth in paragraph XVII
above.
The decision of the District Court is affirmed.
We Concur: I \