Opinion ID: 2034968
Heading Depth: 1
Heading Rank: 8

Heading: co-ownership

Text: Still, King asserts that any reference he made to Willson as the other half of Secure Data Systems was an insignificant figure of speech. Most importantly, according to King, there was no partnership because Willson never had co-ownership of the QuikPay business. King claims that he started selling and maintaining QuikPay by himself and asserts that he maintained full control of that business line. According to King, Willson simply did what King asked him toapparently for free. [7-9] Being co-owners of a business for profit does not refer to the co-ownership of property, [27] but to the co-ownership of the business intended to garner profits. It is co-ownership that distinguishes partnerships from other commercial relationships such as creditor and debtor, employer and employee, franchisor and franchisee, and landlord and tenant. [28] Co-ownership generally addresses whether the parties share the benefits, risks, and management of the enterprise such that (1) they subjectively view themselves as members of the business rather than as outsiders contracting with it and (2) they are in a better position than others dealing with the firm to monitor and obtain information about the business. [29] [10] The objective indicia of co-ownership are commonly considered to be: (1) profit sharing, (2) control sharing, (3) loss sharing, (4) contribution, and (5) co-ownership of property. [30] The five indicia of co-ownership are only that; they are not all necessary to establish a partnership relationship, and no single indicium of co-ownership is either necessary or sufficient to prove co-ownership. [31] The district court found that King and Willson had pooled resources, money and labor. This is significant evidence of contribution. The record demonstrates that Willson contributed his time and expertise not only to the business of developing the key dispenser-revalue station, but also to the continued operations of the regular QuikPay product line. And even if Willson had not more directly contributed to regular QuikPay business, we again note that the business of QuikPay and the business of developing a peripheral product that would ensure QuikPay's continued viability in the marketplace were inextricably commingled. This was especially true with regard to Willson's contribution when King emphasized that Willson had to help keep the QuikPay system running because, otherwise, the development of the key dispenser-revalue station would lose its customer base and become irrelevant. The continuing investment of one's labor without pay is generally considered a strong indicator of co-ownership. [32] It is evidence that, as Willson testified he explicitly understood, the party is not an outsider contracting with the business. [33] Valid consideration for an ownership interest in a partnership may take the form of either property, capital, labor, or skill, and the law does not exalt one type of contribution over another. [34] In this case, Willson contributed his time and expertise without any compensation for approximately 1 year. Conservatively, Willson estimated his contribution as totaling over 2,000 hours. King did not present evidence of how many hours he had spent in the QuikPay venture. But more importantly, we conclude on our review of the record that without Willson's technical assistance, King would have been unable to continue QuikPay's viability after Datakey abandoned the product. That King could have dealt with certain issues by hiring contractors or employees is irrelevant. He chose not to do sopresumably because the promise of the key dispenser-revalue station made a partnership relationship more worthwhileand saved himself the expense of paying for this labor. We also find that despite King's protestations to the contrary, the evidence shows that King and Willson shared control over QuikPay business. We note that control is elusive because of the many gradations of control and because partners often delegate decision-making power. [35] Still, Willson testified that he and King consulted with each other over what appropriate pricing would be as they picked up Datakey's equipment and customers. This is evidenced by an e-mail of the price list that King sent to Willson. Under King's theory of the case, the e-mail would have been completely unnecessary, because according to King, Willson contributed very little and had no direct contact with customers or their billing. Willson testified that he and King made joint decisions to cut certain costs. Willson set up the invoice system they used to bill QuikPay customers, and there is no indication that such a system was anything other than that of Willson's independent initiative and design. Willson made technical decisions on how best to assemble, repair, or maintain various aspects of the QuikPay system. The June 2003 e-mail written by King illustrates King's understanding that he and Willson would jointly address QuikPay customer issues as they arose and jointly evaluate Secure Data Systems' priorities as they went along. Willson also testified that he had an agreement with King to share profits, although King denies this. Of the five indicia of co-ownership, profit sharing is possibly the most important, and the presence of profit sharing is singled out in § 67-410(3)(c) as creating a rebuttable presumption of a partnership. [36] However, what is essential to a partnership is not that profits actually be distributed, but, instead, that there be an interest in the profits. [37] Wilson's testimony that they agreed to share in the profits of the business is, in light of all the evidence, simply more credible than King's statement that compensation was never discussed. And even King vaguely admits that they had an understanding to share profits of the key dispenser-revalue station, if that were developed. It seems reasonable to assume that this same understanding would apply to Willson as his participation and the scope of the venture expanded to encompass all QuikPay business. We do not find any evidence that King and Willson had an agreement for loss sharing. But we find this of little import, since purported partners, expecting profits, often do not have any explicit understanding regarding loss sharing. [38] Likewise, although King and Willson admittedly do not own any joint property, in an informal relationship, the parties may intend co-ownership of property but fail to attend to the formalities of title. [39] Moreover, in this case, it is unclear that there is much QuikPay property at all. Certainly, as King's counterclaim alleged, Willson has possession of some QuikPay equipment. To the extent that a bank account is property, we note that although Willson had delegated financial matters to King and was not a signatory to the bank account where Secure Data Systems' revenues were deposited, Willson testified that King did keep him abreast of the financial status of that account. Willson believed he had an ownership interest in the funds in that account. We conclude that the objective, as well as subjective, indicia are sufficient to prove co-ownership of the business of selling, maintaining, and developing QuikPay. Having already concluded that there was an association for the same, we conclude that Willson proved that he and King had formed a partnership for the business of selling, maintaining, and developing QuikPay.