The parties to this action together own property located at 172–174 Shrewsbury Street in Worcester (property). The plaintiff, Gail F. Sullivan, holds her twoninths interest as the result of a property division incident to her divorce from her former husband (Louis DiNatale), who purchased the property with the defendant, Philip P. Palmieri, in 1986. As the relations between the owners, Sullivan and Lawlis deteriorated, Sullivan filed a petition in the Land Court, seeking to partition the property. In response, the defendants challenged the jurisdiction of the Land Court, claiming that the property is ineligible for partition because the relationship among the parties is in substance and actuality as partners in a partnership, and jurisdiction over dissolution of a partnership is in the Superior Court rather than the Land Court. A judge of the Land Court agreed with the defendants, dismissing the plaintiff’s petition for want of subject matter jurisdiction.
Sullivan appealed. The issue here, then, is whether Sullivan and Palmieri owned the property in a partnership.
Chief Justice Green Partition is historically an equitable remedy rooted in common law that has since been reformed and modified by statute. It is a division between two or more persons of property, effected by the setting apart of their interests so that they can enjoy and possess the property in severalty, or by a sale of the whole and the awarding to each their share of the proceeds. Properties owned in trust are not subject to partition, nor are those held in partnership. For cotenants, however, partition is a matter of absolute right; it is not dependent on the consent of any of the cotenants or the discretion of the court.
In the present case, the deed under which the parties acquired their title to the property did not specify how they would hold their title. In the absence of language in a deed specifying otherwise, a conveyance of land to two or more persons creates “an estate in common and not in joint tenancy.” However, the form of property ownership may be other than as provided under the deed itself, based on evidence of a contrary intent of the parties. In particular, title to property acquired with partnership funds for partnership purposes is presumed to be partnership property, even though the deed conveys title in the names of one or more individuals.
To determine whether or not a partnership exists, the Legislature has enacted a set of rules that may be applied to the circumstances. In addition, other factors may be considered on the issue of the existence or nonexistence of a partnership. Those factors include, among others, (1) an agreement by the parties manifesting their intention to associate in a partnership (2) a sharing by the parties of profits and losses, and (3) participation by the parties in the control or management of the enterprise.
The evidence in the record of the present case leaves us with considerable doubt whether the parties are in a partnership. To be sure, there are numerous indicia consistent with the existence of a partnership, including the shared ownership and operation of the property and the sharing of profits therefrom. However, the presence of such factors does not by itself establish the existence of a partnership. And there are a variety of indicia calling into question whether a partnership existed, including the manner in which the parties held themselves out to others, including tenants and taxing authorities, and the policy of title insurance Palmieri and DiNatale obtained when they first acquired the property, insuring their interests as tenants in common. In particular, the like-kind exchange by which Lawlis’s father acquired his interest in the property is incompatible with a conclusion that the property was owned by a partnership rather than by Palmieri and DiNatale as cotenants; under the Internal Revenue Code in effect at the time, partnership property was ineligible for a like-kind exchange.
Viewing the evidence, as we must, in the light most favorable to the plaintiff, and drawing all inferences in her favor, we conclude that genuine issues of material fact preclude a conclusion that the property is held by the parties in partnership as a matter of law.
CRITICAL THINKING
What actions could Palmieri and DiNatale have taken that would have altered the court’s decision about whether the property in question was owned by a partnership?
ETHICAL DECISION MAKING
Notice that business ethics requires that we think beyond ourselves. Use the universalization test to explain why one should not attempt to avoid partnership responsibilities.