Implied Partnership – Ownership of Partnership Property

Penney v. Penney, [Ms. 1200086, Aug. 27, 2021] __ So. 3d __ (Ala. 2021). The Court (Stewart, J.; Parker, C.J., and Bolin, Wise, and Sellers, JJ., concur in the result) affirms the Marshall Circuit Court’s judgment entered after bench trial, concluding that Sandra Penney, Michael Shay Penney (“Shay”), and Emily Penney had been partners in an implied partnership to operate a poultry-farming business.

The Court first explains

This Court has stated that “[t]here is no arbitrary test as to whether a partnership exists.” McCrary v. Butler, 540 So. 2d 736, 739 (Ala. 1989)(citing Adderhold v. Adderhold, 426 So. 2d 457 (Ala. Civ. App. 1983)). Instead, this Court looks to all the attendant circumstances in determining the existence of a partnership. Id. “A partnership arises only from an express or implied agreement among the parties and is never established by implication or by operation of law.” Id. Indicia of the existence of a partnership can include intent and agreement to be partners, sharing of profits and losses, sharing management and community of interest, as well as other surrounding circumstances. See Adderhold, 426 So. 2d at 460.

Ms. **16-17. The Court holds “[t]here is sufficient evidence in the record to support the trial court’s finding that an implied general partnership existed.” Ms. *24.

The Court also affirms the circuit court’s judgment that the land where the poultry farm was operated, though titled in Sandra and her late husband Thomas was partnership property, and explains

[T]he fact that title to property is in the name of an individual, and not the partnership, does not preclude the property from being treated as partnership property. See Norman v. Bozeman, 605 So. 2d 1210, 1213 (Ala. 1992). If, in viewing the surrounding circumstances of the transaction, it appears to be the intention of the parties that the property was purchased for and treated as partnership property, then “ ‘that presumption of ownership arising from the face of the deed will be overcome, and the property will be treated as belonging to the partnership.’ ” Strother, 436 So. 2d at 849 (quoting Goldthwaite v. Janney, 102 Ala. 431, 438, 15 So. 560, 562 (1894)).

Ms. *27. Citing Section 10A-8A-2.04, Ala. Code 1975, “[p]roperty acquired by a partnership is property of the partnership and not of the partners individually,” the Court rejects Sandra’s alternative argument that she was entitled to an elective share of the property as Thomas’s widow. “Sandra’s elective-share rights apply only to property owned exclusively by Thomas, not to the Windmill Road farm which belongs to the partnership.” Ms. **30-31.

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