Partnership Property. Two brothers, Eugene and Marlowe Mehl, ...

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Partnership Property. Two brothers, Eugene and Marlowe Mehl, operated their family farm as a partnership. Property held by the partnership consisted primarily of farming equipment and machinery. The partnership did not own any real property but leased land from the family and other people. The brothers had agreed to split all profits on an equal basis, but there had never been a written partnership agreement. In 1973, Eugene withdrew 7,200 from the partnership bank account and bought the Dagmar Bar, located in Dagmar, Montana. The warranty deed and the liquor license to the bar were held in the names of Eugene Mehl and his wife, Bonnie. In 1980, Eugene and Bonnie were divorced, and Bonnie received the bar and liquor license as part of the property settlement. In 1983, Marlowe gave written notice to Eugene that he was dissolving the partnership. Eventually a district court in Montana distributed the assets of the partnership. The court concluded that the Dagmar Bar was a partnership asset. On appeal, Eugene contended that the bar was not partnership property and entered into evidence a number of documents that tended to indicate that he was the owner of the bar. What should the appellate court decide? Discuss fully.

Question 2

A major duty of principals to their agents is to indemnify them under most circumstances for liabilities incurred in completing the purpose of the agency.
 a. True
  b. False
  Indicate whether the statement is true or false

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Answer to Question 1

Partnership property
The trial court held that the bar was partnership property. Citing Montana's equivalent of UPA 203, the appellate court found that nless a contrary intention appears, property acquired with partnership funds is partnership property. Therefore, the burden was on Eugene to show that the bar did not belong to the partnership. Eugene attempted to do this by introducing into evidence the deed to the bar and the liquor license, which were in his and his wife's name, as well as bank statements, employment registrations, and other financial records indicating that he owned the bar. On the other hand, Marlowe submitted tax records and the property settlement agreement between Eugene and his ex-wife Bonnie that designated the bar as partnership property. Although the evidence was conflicting, the appellate court could find no reason to disturb the trial court's ruling on the issue.

Answer to Question 2

TRUE

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Gracias!

[AmberC1996]

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