1. Is it the law that individuals must be aware of their status as “partners” in order to have a legal partnership?

2. In a footnote to the state supreme court’s decision, the court reported that the parties stipulated that the alleged partnership was never memorialized in a written partnership agreement, had no formal name, no tax identification number, and no income tax filings. Based on these facts and the other facts of record, is it nevertheless possible for a partnership to exist?

3. Assess the fairness of Mannes’s contention that he merely invested in separate business ventures and that no other understanding existed.

David Byker, an accountant, and Tom Mannes, an individual with a real estate background, stipulated to the following facts in a lawsuit brought by Byker against Mannes: [T]he Plaintiff … and Defendant … agreed to engage in an ongoing business enterprise, to furnish capital, labor and/or skill to such enterprise, to raise investment funds and to share equally in the profits, losses and expenses of such enterprise.___In order to facilitate investment of limited partners, Byker and Mannes created separate entities wherein they were general partners or shareholders for the purposes of operating each separate entity.

Over the years, the parties pursued various business enterprises, including five limited partnerships, where they served as general partners or shareholders in order to operate each separate entity. With regard to these entities, they shared equally in commissions, financing fees, and termination costs, and they personally guaranteed loans from financial lenders. A subsequent entity, Pier 1000, Ltd., created by Byker and Mannes to own and manage a marina, was not successful, and they took profits from a prior entity and borrowed money from financial institutions to continue its operations. Mannes subsequently refused to make any additional contributions. Thereafter, the unsuccessful marina venture was returned to its previous owners in exchange for assumption of Byker’s and Mannes’s direct obligations to that business. The nine-year business relations between Byker and Mannes ceased. Subsequently, Byker approached Mannes for him to share equally in the payments resulting from losses incurred from their various entities. Mannes was in his words “absolutely dumbfounded” by Byker’s request for money, and he refused payment. Byker sued, contending that the obligations between him and Mannes were not limited to their formal business relationships established by the individual partnerships and corporate entities, but that there was a “general” partnership underlying all their business affairs. In response, Mannes asserted that he had merely invested in separate business ventures with Byker and that there were no other understandings between them.

The trial court decided in favor of Byker as follows:

Having weighed the credibility of the witnesses, principally plaintiff and defendant, we conclude that they began their relationship with a general agreement that they were partners and would share profits and losses equally. Whether understood or not they had a general or super partnership. The evidence supports that both understood it.

The Court of Appeals reversed, finding that no underlying partnership existed because the parties did not intend to form a partnership. The case was thereafter heard by the state supreme court.

JUDICIAL OPINION

MARKMAN, J.…

A. Uniform Partnership Acts In 1917, the Michigan Legislature drafted the Michigan Uniform Partnership Act. 1917 PA 72. In this act, a partnership was defined as “an association of two [2] or more persons to carry on as co-owners a business for profit.…” at §6, codified in 1929 CL 9846. Over the years, the definition has remained essentially constant. At present, partnership is defined as “an association of 2 or more persons, which may consist of husband and wife, to carry on as co-owners a business for profit.…” M.C.L. §449.6(1). This definition, as well as its predecessors, was modeled after the definition of partnership set forth in the 1914 UPA. In 1914, the UPA had defined a partnership as “an association of two or more persons to carry on as owners a business for profit.” Uniform Partnership Act of 1914, §6. In construing §6, courts had “universally” determined that a partnership was formed by “the association of persons whose intent is to carry on as co-owners a business for profit, regardless of their subjective intention to be ‘partners.’” ……………………