:: From Stu ::

After taking MGT 330 a bunch of years ago, Stu realized he and Rush needed to put some structure to their for-profit trip business. So, Stu got together some paperwork that he and Rush signed. That was a long time ago, though, so he doesn't remember what the paperwork was. He is sure, however, that he did not set up a corporation.

Around that same time, Stu set up a bank account for the business. It was just a regular checking account with both their names on it. Stu thought it would make it easier for them to pay for trip expenses and bank their profits. Over time, however, each had also used the account to pay for a variety of individual personal expenses such as tuition, rent and groceries. As of their last trip (a graduation blowout to the Bahamas), there was about $2,500 in the account.

After the frustrating meeting with Rush yesterday, Stu called a business person he knew named Illgotten Gaines. Stu knew Illgotten had made his money selling some shady products that Stu wasn't sure were totally legal, but Stu just needed Illgotten's money, not his character or products, so he was willing to overlook it. Illgotten, however, was so interested in the party bus idea that he demanded to be fully involved in the business. He didn't want to just give money, he wanted to help make decisions. And, since he was putting up the lion's share of the actual dollars, he wanted half of the profits. Moreover, he wanted to sell some of his shady products on the party bus.

Stu didn't like the sound of that, but with Illgotten's money, they could start with several buses and a real marketing plan. So, he agreed to let Illgotten in on the business with a 50% say in decisions (Rush and Stu would each have a 25% say) and a 50% interest in the profits (Rush and Stu would each have a 25% interest). In exchange, Illgotten handed Stu a cashier's check for $500,000. Elated, Stu got back in his car, drove straight to the bank where he deposited the check into the shared bank account, and began to drive home. As he pulled away from the bank, he noticed it was 11:30am.

:: From Rush ::

Rush's day was a touch more exciting than Stu's.

The party bus idea spawned from a refurbished school bus Rush and Stu saw a few days ago in a used car lot in nearby Thomasville, NC. Eager to act, Rush withdrew $2,100 from the business bank account in what turned out to be only a few minutes after Stu's deposit. Rush never noticed that the balance in the account had soared.

He then hurried over to that lot in Thomasville, arriving at noon and buying the bus about 45 minutes later. He paid $2,000 in cash from the bank account and financed the remaining $4,000 through a car loan. The bus was not in the best shape, but it was serviceable. Plus, they were going to make so much money that they would quickly be able to pay off the loan and upgrade the bus. You have to start somewhere!

After picking up a styrofoam cooler, some beer, and a couple bags of ice with the remaining $100 he withdrew from the business account, Rush called a friend, Minnie Vandriver. Minnie often drove rental vans for him on their for-profit college trips and Rush asked her to drive the party bus. Minnie, however, was reluctant to drive for Rush again. The last time she drove for Rush, she had to be held back from punching a student who complained about her driving. She didn't trust her temper, but Rush promised her that this was the last time and that these students wouldn't be as irritating as that last group. Hurting for cash, Minnie agreed, and then reminded Rush that, though she could drive a bus, she lacked the commercial driver's license required to do so. "That's just a technicality. Don't worry about it," Rush replied.

Minnie regretted her decision the moment she saw the bus. "This is a piece of @?#!, Rush! What are you thinking?" Too busy to respond, Rush just said, "It's going to be fine. Just keep your phone on and answer all my calls." Then he raced off, leaving Minnie with the keys.

Minnie boarded the bus and walked up and down the aisle to get a feel for it. She was again disappointed. There were couches along the sides and a few poles along the aisle that you could hold onto while you stood, but other than that, it was just an old school bus with a pungent mildew smell. While walking back towards the front of the bus, Minnie felt the floor sag beneath her. Looking down, she noticed a quarter-sized hole in the floor. It had rusty edges and, if you kneeled down and got your eye near it, you could see the pavement beneath the bus. "Gee whiz," grumbled Minnie, "I sure hope this floor holds up." She noticed some duct tape in the open glove compartment and taped over the hole.

About that time, her phone rang. It was Rush with her first two jobs - pick up 15 students just outside of campus and take them to a party a couple of miles away; then pick up 12 recent graduates at one bar and take them to another. She had no idea how Rush got those jobs lined up so quickly.

The first group of students were not impressed, to say the least. But they were eager to get to the party and appreciated the onboard beer. Minnie was certain that at least one student was too young to drink legally, but that wasn't her problem. Her hands were full enough just trying to steer the giant bus in and out of small streets lined with parked cars.

She was not entirely successful. About halfway to the party, she scraped the side of a car. The owner was in the yard and screamed at her. Minnie stopped the bus and apologized to the owner, giving him Rush's cell phone number to contact about the incident.

After dropping off the students, Minnie noticed that the bus had almost no gas left. Irritated, she realized that she and Rush had not talked about who would pay for the gas. She could tell Rush was intentionally declining her calls and reading but not responding to her texts, so she decided to get the gas and argue with Rush about it later. There was a gas station directly on her route to pick up the recent grads, but she really wanted to pick up some of her favorite craft beer, which is only sold at a gas station in the opposite direction. She had plenty of time, so she drove to the station that sold the craft beer.

Along the way, she noticed some friends walking out of a house party. She stopped to talk and learned they were heading to the craft beer gas station as well. Minnie said she'd drive them for $15, so they hopped on for the ride. They paid her $15 in cash, which Minnie happily put in her wallet with her personal money.

Unfortunately, she scraped another car as she pulled into the cramped parking lot of the craft brew gas station. Again, she apologized to the owner and gave her Rush's cell phone number. She then pumped some gas, picked up her favorite craft brew, and headed back out to pick up the recent grads. Along the way, she guzzled down two of the craft beers. No one would notice she was driving while drinking since all of the bus windows had been tinted and there were already beer cans in the onboard trash cans.

Minnie arrived a minute or so early, so she checked her phone. She had several missed calls and texts from Rush. He had heard from the owner of the first car she scraped and was livid. Each of the messages said the same thing: she was fired and should immediately park the bus and leave the keys in the glove compartment. "Screw that," she thought. "I'll make this last run, keep the money, and then park the bus." Rush must not have bothered to tell the recent grads that Minnie was no longer supposed to be driving, because they were clearly expecting her.

The recent graduates had started their party much earlier in the day. By the time they came out to the bus, they were loud and stumbling. One, in particular, was exceptionally rude and obnoxious to Minnie. Minnie told him to leave her alone if he knew what was good for him and, before it could go further, someone pulled the recent graduate to the back of the bus.

Fifteen minutes later, as Minnie pulled to a stop at their destination, she noticed the obnoxious student jumping up and down in the middle of the bus. Suddenly, there was a loud crunch and a scream. The obnoxious student's foot had gone through the weak place in the floor where the quarter-sized hole was! Angry, the student jerked free from the clutches of his friends and, his leg bleeding, hobbled towards Minnie. Minnie had had enough of this guy and this stupid bus. She took two steps towards the student and knocked him out cold with one punch to his chin. To everyone's amazement, she then calmly wrote out Rush's cell phone number on a napkin, laid it on the knocked out student's chest, tossed the bus keys onto the driver's seat, and walked away.

By this time, the student Minnie punched had woken up. The recent grads all looked at one another, shrugged their shoulders, and filed out of the bus and into the bar. Just as the last student entered the bar, the bus burst into flames. By the time the Greensboro Fire Department got there, the fire had spread to three nearby cars, one of which was a $2 million Bugatti. It turns out that Minnie had parked right next to an outdoor smoking area and, back at the craft brew station, forgotten to put the gas cap back on. The fumes escaping from the open gas tank were lit by a smoldering cigarette butt left in an ashtray.

As Minnie strolled down the sidewalk, clueless about the fire, she ordered an Uber. On the way home, the driver was playing an NPR article about how Russia and Japan are still technically at war, never having signed a peace treaty after World War II (this is true, but don't Google it right now!). Minnie, a Japanese immigrant and still a citizen of that country, was intrigued, particularly since Rush is a Russian immigrant who is also still a citizen of that country. They were at war over more than just the bus!

:: Their Questions ::

Here are the questions on which Rush and Stu want your advice. They know it's a tangled web, so they're keen to have you explain and apply all the possible law that is relevant.

1. What kind of small business organization might Stu have set up and what are the differences between the possible types?
2. Is Illgotten a part of the business? In the event that he is, can he really have 50% of the decision making power and 50% of the profits? Who owns what's left of the bus and who's responsible for paying back the car loan?
3. What is Minnie's relationship with the business and what authority did that relationship give Minnie? Did the nature of that authority change at all over the course of the evening? What duties did Minnie's relationship with the business create between her and Rush? Did she or Rush fail to live up to any of these duties?
4. Who is responsible for the things that happened before Rush messaged Minnie that she was fired: Minnie's driving the bus without a proper license, the underage drinking on the bus, the car Minnie scraped during the first trip, the car she scraped when she got gas and beer, and Minnie's drinking while driving?
5. Who is responsible for the things that happened after Rush messaged Minnie that she was fired: the obnoxious person's leg injuries, Minnie's subsequent punching of that person, and the burned up Bugatti?