John Szymanowski and Michael Wheeling entered a partnership with Robert Brace and BCD Properties, Inc. The partnership,
Question:
John Szymanowski and Michael Wheeling entered a partnership with Robert Brace and BCD Properties, Inc. The partnership, known as BSW, was to drill two gas wells in Erie County, Pennsylvania, on leaseholds held by Brace. Their one-page agreement provided:
"BCD Properties, Inc. (owner Robert H. Brace), and Michael A. Wheeling and John Szymanowski have entered into an agreement on this 1st day of October, 2002, involving two new gas wells being drilled. The two new gas wells, Dougherty #1, and Danylko #1 are located in McKean Twp. Each of the two parties entering this agreement with BCD Properties, Michael A. Wheeling and John Szymanowski, have agreed to purchase into a portion of the wells at $15,000 per well, each, making a total of $30,000 received from each contributor. This amount will be due BCD Properties at the signing of this contract. This total will account for 10% from each contributor per well. Each contributor will then receive 10% net profit after royalties, well tending fees, and operating expenses are deducted from the wells production each month.
The Gas Well Agreement did not make any express or implied reference to any other oil and gas ventures on the Danylko or Dougherty leases or elsewhere or any other kind of undertaking. The parties did discuss the possibility of additional gas well projects or ventures but no commitments of any kind were made.
Danylko #1 production peaked in October 2003 and began a steady decline thereafter until it ceased and the well was disconnected in February 2005. In April 2004, BCD drilled the two additional wells, Danylko #2 and Danylko #4, each on the same Danylko leasehold and approximately 1,100 to 1,200 feet from Danylko #1, and each modestly successful. Szymanowski and Wheeling contend that the partnership either owned the Danylko #2 and Danylko #4 gas wells or that Brace and BCD breached a fiduciary duty by drilling the wells and claiming profits from the new wells for Brace and BCD. Did the trial court require Brace and BCD to account to Szymanowski and Wheeling for the profits from these two wells?
PartnershipA legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Business Law The Ethical Global and E-Commerce Environment
ISBN: 978-1259917110
17th edition
Authors: Arlen Langvardt, A. James Barnes, Jamie Darin Prenkert, Martin A. McCrory