Fenwick v. Unemployment Compensation Commission

FENWICK v. UNEMPLOYMENT COMPENSATION COMMISSION 133 N.J.L. 295, 44 A.2d 172 (1945) FACTS: Parties: Appellant: Unemployment Compensation Commission Appellee: Fenwick (Δ) Procedural History:  Appeal from a judgment of the Supreme Court reversing a determination of the Unemployment Compensation Commission Relevant Facts:   Δ opened beauty shop and employed Chesire as cashier and reception clerk Chesire wanted more money so Δ and Chesire contract that: o The parties associated themselves into a partnership o The business shall be the operation of a beauty shop o The name shall be United Beauty Shoppe o That no capital investment shall be made by Mrs. Chesire o Control and management shall be vested in Fenwick o Chesire is to act as cashier and reception clerk for $15/week and 20% of the net profits at the end of the year o Fenwick alone is liable for the debts of the partnership o Books open to inspection by each party o Fenwick gets $50/week and 80% of the net profits o Must give 10 days’ notice to terminate partnership ISSUE:  Whether Arline Chesire was an employee or partner PARTIES’ ARGUMENTS: Plaintiff:  Defendant:  DISPOSITION OF THE COURT:  Reversed RULE OF LAW:      Parties must have the intent to form a partnership The right to share in profits Obligation to share in losses Ownership and control of the partnership property and business Sharing of profits is prima facie evidence of partnership but “no such inference shall be drawn if such profits were received in payment…as wages of an employee” HOLDING:  Chesire was not a partner because the co-ownership requirement was missing COURT’S REASONING:       The statements surrounding the partnership evince the parties’ intent Δ wanted to retain Chesire in the same capacity just could afford to pay her more There was a right to share in profits, but no obligation to share in losses and Δ retained all ownership and control Language of the agreement excludes Chesire of most of the rights of a partner Trade name was never registered as a partnership Although for tax purposes both filed as a partnership, they never held themselves out to be a partnership