Discussion Question: Partnership Problems

After the untimely death of his partner Anthony Autumn, Scott Schroder continued his San Francisco agency under the name of Scott Schroder. Several years later, one Sarah Schroder visited his office claiming to be his daughter. Sarah demanded that Scott make him a partner in his agency, but Scott refused. Scott told Sarah, "I'll never take on another partner as long as I can walk. But if you want to work for me, I'll buy you a yellow trench coat and all pens you want and pay you $20 a week plus expenses and 20% of the profits."

Scott Schroder continued to carry on the agency's business in the name of Scott Schroder. Nevertheless, when occasional bills arrived in the name of Schroder & Schroder, he was as likely to pay those bills as any others. Sarah never complained. Maybe some day he'll really treat me like a partner after all, she mused.

Ten years later, Scott is often absent from work and when he is there doesn't do any work.Business fell off quickly and creditors began to call frequently. After Scott had hounded Sarah for weeks to pay the creditors, Sarah began paying the creditors with her personal funds. One day when Scott was particular difficult, Sarah finally left. On her way through the door, she yelled, "You were never a father to me, you faked the agency books for years, and you never did any work.I know you've siphoned off thousands of dollars, and I'll get my share of it. Send my lawyer a certified check for my share of this business or I'll see you in court."

Discussthe following questions based upon the above facts:

(a) Is Sarah entitled to any share/funds of the agency business?Explain why.

(b) The agency business has no funds, and Scott has disappeared.Under what circumstances do you think creditors should be able to collect from Sarah?