Peed v. Peed, 849SC140

• Decision Date: 05 February 1985
• Docket Number: No. 849SC140,849SC140
• Citation: 325 S.E.2d 275,72 N.C.App. 549
• Parties: Darlene PEED (now Bennett) v. William Linton PEED.
• Court: North Carolina Court of Appeals

Page 275

325 S.E.2d 275

72 N.C.App. 549

Darlene PEED (now Bennett) v. William Linton PEED.

No. 849SC140.

Court of Appeals of North Carolina.

Feb. 5, 1985.

Watkins, Finch & Hopper by William L. Hopper, Oxford, for plaintiff-appellant.

Edmundson & Catherwood by R. Gene Edmundson, Robert K. Catherwood, and John W. Watson, Jr., Oxford, for defendant-appellee.

ARNOLD, Judge.

The plaintiff contends that the trial court erred by granting the defendant's motion for a directed verdict on the issue of whether or not the plaintiff and defendant were partners. A directed verdict motion concerns whether evidence is sufficient to go to the jury. Rappaport v. Days Inn of America, Inc., 296 N.C. 382, 384, 250 S.E.2d 245, 247 (1979). In passing on such a motion, the trial judge must consider the evidence in the light most favorable to the non-movant (in this case, the plaintiff), resolving all conflicts and giving to her the benefit of every inference reasonably drawn in her favor. Summey v. Cauthen, 283 N.C. 640, 647, 197 S.E.2d 549, 554 (1973). The trial judge should grant a motion for directed verdict only if the evidence is insufficient, as a matter of law, to support a verdict for the plaintiff. Husketh v. Convenient Systems, Inc., 295 N.C. 459, 461, 245 S.E.2d 507, 509 (1978).

Under the North Carolina Uniform Partnership Act, a "partnership" is defined as "an association of two or more persons to carry on as co-owners a business for profit." G.S. 59-36(a). The statute, G.S. 59-37, sets out factors to be considered in determining whether a partnership exists:

(2) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such co-owners do or do not share any profits made by the use of the property.

(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived.

(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

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 vary 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.

Thus, for example, if a person merely makes repayable advances and loans of money to another, it cannot be inferred from that fact that they are partners. McGurk v. Moore, 234 N.C. 248, 253, 67 S.E.2d 53, 56 (1951). Further, if one person is an employee of another, and receives wages, then the two are not partners. Williams v. Biscuitville, Inc., 40 N.C.App. 405, 253 S.E.2d 18 (1979), disc. rev. denied, 297 N.C. 457, 256 S.E.2d 810 (1979).

We stress that the determination of whether a partnership exists, and whether the parties are co-owners, involves examining all the circumstances. As the court in Eggleston v. Eggleston, 228 N.C. 668, 47 S.E.2d 243 (1948), wrote:

"Partnership is a legal concept but the determination of the existence or not of a partnership, as in the case of a trust, involves inferences drawn from an analysis of 'all the circumstances attendant on its creation and operation,' " [citations omitted].

Not only may a partnership be formed orally, but "it may be created by the agreement or conduct of the parties, either express or implied," [citations omitted].... "A voluntary association of partners may be shown without proving an express agreement to form a partnership; and a finding of its existence may be based upon a rational consideration of the acts and declarations of the parties, warranting the inference that the parties understood that they were partners and acted as such." [Citation omitted].

228 N.C. at 674, 47 S.E.2d at 247, quoted in Reddington v. Thomas, 45 N.C.App. 236, 240, 262 S.E.2d 841, 843 (1980).

Considering all the evidence in the light most favorable to the plaintiff, we find that the plaintiff did present evidence sufficient to carry the matter of partnership to the jury. The plaintiff testified that she and the defendant conducted the farming operation together. At the time of their marriage, both were employed off the farm, and used their earnings to pay farm expenses. Plaintiff brought her savings of around $3,000 into the marriage, and invested that into the farming operation. The farm was in considerable debt at the time the Peeds were married. Plaintiff testified that she discussed the finances of the farm with her husband, saying that she was not going to continue putting her earnings into the farm and signing notes, when she had no part of it, and received no share of the profits.

Plaintiff testified further that she and defendant reached an agreement that they would become partners in the dairy, that the dairy cows would be registered in both their names, and that the title of the farm would be changed to contain both their names. Defendant quit his public job in 1958 to devote more time to the farm. Plaintiff testified that they discussed from time to time the progress of the farm, and farm purchases, that plaintiff went to the farm almost daily, and that she wrote checks on a joint account kept for the dairy farm. She testified that she and her husband, although separated, discussed the need to sell the dairy cattle, and the price of sale. Plaintiff testified that she did not know whether she and defendant filed a partnership income tax return, and that income tax matters were handled by defendant and accountants.

Defendant testified that he changed the registration of the cows to contain both his and plaintiff's names because the plaintiff had said that if she were the owner, the defendant's family could not take them if something happened to defendant. Defendant also testified that he changed the registration not so much to protect plaintiff, as to stop her from talking to him about it each day. Yet, defendant also testified that the joint registration showed that both he and plaintiff were owners of the cows. He testified that he changed the deeds of the land on which the dairy was operated to add plaintiff's name. Defendant testified that plaintiff did not have much time to work on the farm, with her job at Liggett & Myers; that her earnings from Liggett & Myers were spent on groceries and clothes; and that his wife could have signed notes in the dairy operation back through the years, although he had difficulty remembering. Finally, defendant testified that the money from sale of the cows was his, although he admitted that the cows were bought partly through the sale of milk produced by cows owned by him and plaintiff.

Considering this evidence in the light most favorable to the plaintiff, and therefore believing plaintiff's testimony as true, we find that a jury could infer from the registration of the cattle, the financing of the dairy operation, plaintiff's description of her conversations with defendant, concerning a partnership arrangement, and of her contribution of time and money to the dairy operation that a partnership, an association of two or more persons to carry on as co-owners a business for profit, existed. The evidence was sufficient to produce a question for the jury, and we therefore hold that the trial judge's grant of a directed verdict against plaintiff on the partnership issue was reversible error.

We note that while the registration certificates do not give title, nonetheless, they are evidence of ownership. Indeed, the defendant conceded that by changing the certificates he made himself and his wife co-owners.

Further, we reject defendant's argument that the jury's finding that the parties were not co-owners of the dairy herd made the judge's error on the directed verdict harmless. The partnership statute provides that a partnership is an association of persons as co-owners of a business. The fact that one partner owns certain property in the business, or provides the capital, while the other performs certain services, does not mean that they are not co-owners of the business. Southern Fertilizer Co. v. Reames, 105 N.C. 283, 11 S.E. 467 (1890). The plaintiff testified that she told her husband that since she contributed her money to the dairy expenses and debts, she wished to have a part in the operation and a share of the profits. He agreed that they would become partners, that the dairy cows would be re-registered in both their names, and that title to the farm would be changed to both their names. The plaintiff contributed considerable money to the operation as well as her time in managing and doing bookkeeping. Even if the defendant were sole owner of the herd, the plaintiff's testimony provides evidence of an agreement which gave her an interest in the operation and a share of the profits, as well as evidence of her contribution in money and effort to the business. This was sufficient as a matter of law to take the issue to the jury.

The plaintiff claims that the trial court abused its discretion and committed reversible error in refusing to grant plaintiff's motion to amend her complaint under Rule 15(b) to conform the complaint to the evidence by stating an additional cause of action, that the plaintiff owned a one-half undivided interest in the cattle, farm equipment, and milk base. The defendant claims that the trial court did not abuse its discretion, because the defendant would have been prejudiced by the amendment. Prejudice, the defendant asserts, would have arisen because the pleadings did not alert the defendant that the issue of joint ownership was crucial to plaintiff's case, and that evidence such as the registration...