Sunday, February 03, 2008

Nebraska Supreme Court announces simplified test to determine whether courts should consider parties business associations to be partnerships and holds that the standard would be a preponderance of the evidence whether in a dispute between business associates or between buseinss associates and outside parties. In re Dissolution & Winding Up of KeyTronics, S-06-690, 274 Neb. 936. The parties to the dispute worked together to market and operate automatic payment systems for automatic carwash stations. After the business failed one of the business associates sought an accounting and winding up of the operation claiming they had a partnership under Uniform P artnership A ct. S ection 67-410(1) RRS Neb. The district court denied the putative partners accounting complaint. Nebraska Supreme Court on denovo review of this equity action reverses, finding that the Plaintiff proved by a preponderance of the evidence that a partnership existed. Willson admits he is not pursuing an action for an accounting of a partnership that would be limited to the development of a key dispenser-revalue station. T hat product was never produced and did not independently garner any profits to account for. We are instead asked to determine whether K ing and Willson were partners in an enterprise that involved both the development of the key dispenser-revalue station and the sales and maintenance of the regular QuikPay line. If so, Wilson claims that K ing must account to Willson for any profits relating to all QuikPay business. The elements disputed by the parties are whether there was an “association” formed for QuikPay business, and whether such association, if created, was as “co-owners.” We have never explained, nor is there any reasoning to support, the confusing myriad of standards we have applied to what is, effectively, the same legal issue. T hus, we believe that the tenuous distinction between actions by alleged partners inter sese and actions by a third party against the alleged partnership should be abolished. By eliminating any common-law distinctions as to the burden of proof between actions alleging a partnership inter sese and actions by third parties, we bring greater predictability and consistency to partnership determinations. In our de novo review, we thus determine whether Willson established by a preponderance of the evidence that he and King were partners in a business that entailed both the development of the key dispenser-revalue station and regular QuikPay sales and maintenance 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. H aving already concluded that there was an association for the same, we conclude that Willson proved that he and K ing had formed a partnership for the business of selling, maintaining, and developing QuikPay.Because Willson has proved a partnership relationship with King, he is entitled to a winding up and an accounting in accordance with the A ct. T he district court erred in concluding otherwise. A ccordingly, we reverse the decision and remand the cause for further proceedings.

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