Gates v. Houston
| Decision Date | 09 December 2008 |
| Docket Number | No. 82A01-0804-CV-198.,82A01-0804-CV-198. |
| Citation | 897 N.E.2d 532 |
| Parties | Samuel L. GATES, Appellant/Plaintiff/Counter defendant, Third-Party Defendant, v. George J. HOUSTON III, Appellee/Defendant/Counterclaimant, and Houston Properties, LLC, Appellee/Third-Party Plaintiff.<SMALL><SUP>1</SUP></SMALL> |
| Court | Indiana Appellate Court |
Appellant/Plaintiff Samuel Gates appeals the trial court's judgment in favor of Appellee/Defendant George Houston III following Gates's declaratory judgment action against Houston. Upon appeal, Gates challenges the trial court's judgment. We affirm.
In the spring of 2004, Houston acquired a partnership interest in AAA Roofing, which at that time was owned and operated by Gates. In exchange for his partnership interest, Houston paid $10,000, and he acquired materials for the company using his credit cards. Gates and Houston agreed to share the profits, with each of them receiving fifty percent.
Beginning in late 2004, Houston purchased various properties, many from tax sales. These properties were purchased by Houston in his name or the name of his company, Houston Properties. Houston's plan was to repair and either rent or sell the properties. The parties dispute the source of the funds used to purchase these properties. According to Houston, he purchased the properties with his own credit and funds, including his share of the profits from AAA Roofing. Gates contended that the properties were purchased with jointly-owned AAA Roofing funds.
AAA Roofing did a great deal of the repair work on the properties, for which it was compensated. In addition, Gates individually worked on the properties and collected rents. Houston paid Gates by dividing equally with him the profits from rents generated by the properties. Houston and Gates shared in these rents from approximately 2005 until February 2007. In February 2007, Gates gave Houston the rents he had collected, which according to Houston did not reflect a proper accounting of the rent due and was thousands of dollars short. Thereafter, Gates's involvement with the properties terminated, and he did not receive a share of the rents.
On April 26, 2007, Gates filed a complaint against Houston requesting, inter alia, a declaratory judgment declaring him to be co-owner of the properties.2 On January 17, 2008, the trial court conducted a bench trial and granted Gates's request for findings of fact and conclusions thereon. Following the parties' submissions of their proposed findings and conclusions, the trial court entered judgment in favor of Houston. This appeal follows.
Gates challenges the trial court's judgment by claiming that the uncontroverted evidence compels the conclusion that Houston's real estate operation was part of his AAA Roofing partnership with Gates. Where a trial court has entered findings of fact and conclusions thereon pursuant to a party's request, we engage in the following two-tiered standard of review:
We must first determine whether the evidence supports the findings of fact and then whether the findings support the judgment. We will not reverse the trial court's findings and judgment unless they are clearly erroneous. Findings of fact are clearly erroneous when the record lacks any facts or reasonable inferences from the evidence to support them. The judgment is clearly erroneous when it is unsupported by the findings of fact and conclusions entered on the findings. In making these determinations, we will neither reweigh the evidence nor judge witness credibility, considering only the evidence favorable to the judgment and all reasonable inferences therefrom.
While we defer substantially to findings of fact, we do not do so for conclusions of law. We apply a de novo standard of review to conclusions of law and owe no deference to the trial court's determination of such questions.
Mueller v. Karns, 873 N.E.2d 652, 657 (Ind.Ct.App.2007), reh'g denied (citations omitted).
We define the clearly erroneous standard based upon whether the party is appealing a negative judgment or an adverse judgment. Fowler v. Perry, 830 N.E.2d 97, 102 (Ind.Ct.App.2005). Where, as here, the party who had the burden of proof at trial appeals, he appeals from a negative judgment and will prevail only if he establishes that the judgment is contrary to law. Id. A judgment is contrary to law when the evidence is without conflict and all reasonable inferences to be drawn from the evidence lead to only one conclusion, but the trial court reached a different conclusion. Id.
In determining whether Houston's real estate operation was part of his and Gates's AAA Roofing partnership, we look to Indiana Code section 23-4-1-6 (2006), which defines a partnership as "an association of two (2) or more persons to carry on as co-owners a business for profit...." A companion statute, Indiana Code section 23-4-1-7(2006), lists rules for determining whether a partnership exists, including subsection (4), which provides as follows:
The receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business, but no such inference shall be drawn if such profits were received in payment for the following:
(a) As a debt by installments or otherwise.
(b) As wages of an employee or rent to a landlord.
(c) As an annuity to a widow or representative of a deceased partner.
(d) As interest on a loan though the amount of payment varies with the profits of the business.
(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.
(Emphasis supplied.)
As Gates acknowledges, the existence of a partnership is generally a question of fact. Copenhaver v. Lister, 852 N.E.2d 50, 58 (Ind.Ct.App.2006). To form a partnership, parties must join together to carry on a trade or adventure for their common benefit, each contributing property or services, and having a community of interest in the profits. See id. In addition, to establish a partnership relation between parties, there must be: (1) a voluntary contract of association for the purpose of sharing profits and losses, which may arise from the use of capital, labor, or skill in a common enterprise; and (2) an intention on the part of the parties to form a partnership. Id. The intention that controls in determining the existence of a relationship is the...
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...Cincinnati would result in a disproportionate forfeiture, and "forfeitures are generally disfavored by the law." Gates v. Houston , 897 N.E.2d 532, 536 (Ind. Ct. App. 2008).[33] For its part, Cincinnati relies on Maplehurst Farms I , in which a divided panel of this Court stated that "where......
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...Whether a partnership exists is controlled by state law. The existence of a partnership is a question of fact. Gates v. Houston, 897 N.E.2d 532, 535 (Ind. Ct. App. 2008). Indiana has enacted the Uniform Partnership Act, Ind. Code § 23-4-1-1 et seq., which defines a partnership as "an associ......
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...Whether a partnership exists is controlled by state law. The existence of a partnership is a question of fact. Gates v. Houston, 897 N.E.2d 532, 535 (Ind. Ct. App. 2008). Indiana has enacted the Uniform Partnership Act, Ind. Code § 23-4-1-1 et seq., which defines a partnership as "an associ......
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