If It Looks Like a Duck, and Walks Like a Duck…

Posted by William J. Piercy on

Aaron Rents v. Fourteenth Street Venture, LP, 243 Ga. App. 746 (2000).  The Court of Appeals affirmed the trial court’s determination that a partnership existed where an association formed by agreement between a judgment debtor and another individual constituted a “partnership,” though the agreement referred to the association as a joint venture, and where the agreement provided that the association was formed to acquire property for profit, that both parties to agreement had to consent to any other business by association, that neither party had any authority to act alone on behalf of association, that both parties had a fifty percent interest in the association’s assets and profits and losses, that both parties each contributed $25,000 in capital to the association, and that each of them bore the risks of the association’s business.  The Court made this finding despite the fact that the written agreement between the parties expressly characterized their relationship as not being a partnership, but instead as that of a joint venture.  In so doing, the Court held that it is the substance of the agreement and not the title of the agreement between the parties that defines the relationship.

The Court’s finding of the existence of a partnership was important because one of the putative partners had contributed property to the partnership before a judgment was entered against the putative partner in favor of a third party.  Because the Court found a valid partnership to exist, the contributed property belonged to the partnership and not to the partner at the time the judgment was entered.  As a result, the property was protected from attachment by the judgment creditor.  It is also interesting to note in this case that the Court of Appeals found that there is no difference between a joint venture and a partnership when the parties purchase property jointly and participate in the losses and profits; such a venture is a “partnership.”