Smith v. Kelley

Brief Fact Summary. Smith, (Appellant), brought suit against Kelley and Galloway, (Appellees), alleging he was entitled to a fixed percentage of the profits as a partner of their accounting firm. Appellant appeals judgment in favor of Appellees.

Synopsis of Rule of Law. A partnership is a contractual relationship and the intention to create it is necessary.

Facts. Appellant came to work for Appellees as an accountant. He was paid $1,000 per month plus a small bonus out of the profits of the business for three years during his employment. While working at the firm, Appellant was held out to the public as a partner. However, he made no contribution to the assets of the partnership, did not share in the losses, took no part in the management, nor did he have the authority to do any hiring or purchasing. After the termination of his employment, Appellant brought this suit, alleging for the first time that he was entitled to a fixed percentage of the profits.

Issue. Whether the parties intended to and did create a partnership entitling Appellant to share in the profits.

Held. No. No partnership relationship was intended to be and was not created.

Discussion. The lower court found that the original partners had at no time agreed that Appellant would be entitled to share in a percentage of the profits. This finding is not clearly erroneous. The conduct of the parties for three years confirms this conclusion.