No. 86-187

IN THE SUPREME COURT OF THE STATE OF MONTANA
1987

ROSS PULLIAM,Plaintiff and Appellant,-vsJAMES PULLIAM and FRED PULLIAM, d/b/a PULLIAM CONSTRUCTION,
Defendants and Respondents.

APPEAL FROM: District Court of the FourthJudicialDistrict, In and for the County of Ravalli, The Hon. Jack L. Green, Judgepresiding.
COUNSEL OF RECORD:

ForAppellant:

Kammerer Law Offices; Clinton Kamrnerer,Missoula, Montana
For Respondent: Garlington, Lohn & Robinson; Lawrence F. Daly, Missoula, Montana

Submitted on Briefs: Jan. 22, 1987 Decided: March 11, 1987Mr. Justice John Conway Harrison delivered the Opinion of the Court.

This is an appeal from the District Court of the Fourth Judicial District, in and for Ravalli County,Montana. The appellant (Ross) appeals from a finding that he is not a one-third partner in Pulliam Construction with two other brothers. We affirm. Jim, Fred and Ross Pulliam are brothers. Jim and Fred formed Pulliam Construction, a partnership, in 1967, in Missoula,Montana. The twobrothers acquired parcels of real property and began building both "spec" and custom houses. The two brothers agreed to share equally the profits, losses, ownership and management of Pulliam Construction. The partnership purchased a farm near Stevensville, Montana, as an investment in 1969. At the time of trial Jimhad lived in the farmhouse since 1971. Each of the brothersdrewwhatever cash he needed for living expenses from the partnership account. Jimhandled the record keeping and financial affairs of the business and Fred did the design layouts and prepared bids. The two brothers worked equally on construction projects, shared in the management of the business, dealt with subcontractors, financial institutions and customers. In 1971 Pulliam'smother arranged with Jim and Fred for

a younger brother, Ross, to come to Montana fromMissouri to work for their constructionbusiness for awhile. Ross lived in Fred's house and began working as a laborer. He had no business or building experiencewhen he began working, owned

no tools or equipment,had no special skills,and nomoney to contribute to thepartnershipbusiness. It was originally understood Ross would be working in Missoula for only about sixmonths. During this time he wasto be provided with a place to live, food and living expenses,with the agreement Jim and Fred would settle with him when he moved back to Missouri. Ross decided not to return to Missouri, however, and the living and compensation agreementwas continued. None of the brothers receivedwages and there was no fixed rate of pay, but each had a drawing account. Ross's name was added to thepartnership signature card allowing him towrite checkson the Pulliam Construction account. In November 1971,Rossmoved into the house on the farm property where Jim lived. Ross married in December 1974,and he and hiswife lived there until theywere divorced in June, 1981. During this time everything Ross and his wife needed

was provided by the partnership. Ross worked his last construction shift in May 1977, and became involved in various unsuccessful business enterprises. Ross filed a complaint in May 1981, alleging his brothers had excluded him from the partnership business and demanded, among other things, the partnership be dissolved and an accounting be had. After a bench trial, the court found that Rosswas not apartner in Pulliam Constructionand

was not entitled to the relief sought. He appeals. Findings of Fact of the DistrictCourt will not be set aside unless they are clearly erroneous. Rule 52(a) M.R.Civ.P. Nor will, [t] his Court

# . .. substitute its judgment for that of the trier of fact. We will consideronlywhether substantial credible evidence supports the findings and conclusions. Findings will not be overturned unless there is a clear preponderance of evidence against them, recognizing that evidencemay be weak or conflicting, yet still support the findings.Round v. Reikofski (Mont. 1985), 699 P.2d 72, 74, 42 St.Rep. 634, 636. Therefore, the only question before us here is whether there is substantial evidence to support the District Court's findings that a partnership did not exist between Ross and his twobrothers. Under S 35-10-201(I), MCA, "[a] partnership is an association of two or more persons to carry on as co-owners a business for profit." We have set forth the elements necessary to establish a partnership in Bender v. Bender

(1965), 144 Mont 470, 480, 397 P.2d 957, 962: [Iltis necessary to determine the intent of the parties;

# ...There must be some contribution by each co-adventurer or partner of something promotive of the enterprise. There must be a joint proprietary interest and a right of mutual control over the subjectmatter of the enterprise or over the property engaged therein, and there must be an agreement to share the profits.
See also First National Bank of Twin Bridges v. Sant (1973)

## , 161Mont. 376, 506 P.2d 835. Ross argues at least five indicia indicate that he was an equal partner: (1) the bank card signed by all three brothers; (2) the Pulliam Construction ledgers which enumerate a separate drawing account for each brother;

(3) the partnership K-1 tax returns for the years 1974-1978 which are signed by each brother and which list Ross as an equal partner for purposes of sharing profits and losses;

(4) the failure of Pulliam Construction to take any tax, accounting or record keeping steps which would indicate Ross

was an employee, independent contractor or joint venturer; and (5) the absence of any time record for all threebrothers which bears any correlation to hourly rate or to the amounts actuallywithdrawn from PulliamConstruction's funds. None of these, however, meets the test set out in Bender, supra,nor the statutory rules determining rights and duties ofpartners pursuant to 5 35-10-401,MCA. "No person canbecome amember of a partnership without the consent of all thepartners." Section 35-10-401(7),MCA. Further, the intention of the parties must be clearly manifested. Bender, supra at 480, 397 P.2d at 962. The record shows no such manifestation. The only witness to testify therewas an intentionto forma partnership was Ross himself. The twowitnessesproduced by Ross inhis case-in-chief did nothing to support his partnership claims. They were fellow workers who testified that Ross had never said he was
an equal partner. One of the witnesses assumed he was a partner,but had not been told so. Jim and Fred's denial of intentionwas corroboratedby other witnesses. Regardless of intention, there are certain acts which result in a partnership,orwhich negate the intention of the parties. Superimposed upon the rule of intent, it is frequentlyheld that where there is no express agreement to form a partnership, the question of whether such a relationship exists must be gathered from the conduct, surrounding circumstances and the transactions between the parties.

[Citations omitted.] There is no automatic solutionto the question of the existence of a partnership but it turns upon the facts and circumstances of association between the parties.

[Citationsomitted.] No single fact may be stated as the complete and final test of a partnership. [Citations omitted.] Even awritten agreement, designating the partners as partners and providing for asharing of the profits, is only evidential and not conclusive of the existence of apartnership.

P & M Cattle Co. v. Holler (Wyo. 1977), 559 P.2d 1019, 1022. In Truck InsuranceExchange v. Industrial IndemnityCo. (Mont. 1984), 688 P.2d 1243, 41 St.Rep. 1835,we found the acts of the parties created a partnership in fact, and contrary intentions of the parties were ignored. BY splitting the net profits equally, the parties established a prima facie case of partnership under S 35-10-401(1)

## , MCA. In this case,where there is conflictingevidence the parties intended to form apartnership, the actions of the parties to the contrary defeats any inference a partnership existed. We find no evidence of an agreement to share the profits. The money which Ross was entitled to draw for his living expenseswere aswages of an employee. The receiptby aperson of a share of the profits of a business is prima facie evidence that such a person is a partner in the business, but no such inference shall be drawn if such profits were received inpayment:

(a)

# . . . (b) aswages of an employee

# . .

# . Section 35-10-202(4),MCA. There is no evidence Ross contributed anything promotive of the enterprise, or that he had a proprietary interest or a right of control. As noted above, he had no business or building experiencewhen be began working, owned

no tools or equipment,had no special skills,and nomoney to contribute to the partnership business. He relied upon Jim and Fred to make all business decisions. He did not handle arrangements with subcontractors. Fred and Jim bouqht andsold numerous pieces of property during the time he was associated with them and his name never appeared on any of the documents of conveyance. He never dealt with any financial institution concerning the partnership loans. The District Court correctly found: [tlhere is conflicting testimony as to the intention to form a partnership, however the courthereby finds that there was no contribution by Ross Pulliam of something promotive of the partnership enterprise, that Ross Pulliam had no joint proprietary interest in or right of mutual control over the Pulliam Construction business enterprise or its assets, and that tax wise Ross Pulliam received a share of the net profits and losses of Pulliam Constructionaspayment as wages of an employee. That Ross was an employee of Pulliam Construction and upon termination of his employmentwas to be paid wages, less draws, and living expenses as set forth in paragraph XVII above.
Thedecision of the DistrictCourt is affirmed.

We Concur: 

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