PARTNERSHIP LAW

Callahan v. Fenimore (In Re Heirs of the Estate of Fenimore)

KIGER, MASTER with her brother was in fact that of partners rather
mortgagor and mortgagee.
This is a report on proceedings to distribute the
share of Donald Fenimore in the proceeds of the Mrs. Serge entered the courtroom while Mr.
partition sale of real estate that he inherited from Villabona was testifying. She testified in her own
his mother Annie F. Fenimore. The claimants are behalf. Her discourse was rambling and hard to
Audrey Fenimore, Watt Serge, Donald follow. It gave the impression that Mrs. Serge was
Fenimore's sister, and two of his creditors, J. David speaking in a stream of consciousness fashion that
Villabona and Frank P. McGinnis (referred to was intelligible to her, but hard at times for anyone
collectively sometimes hereafter as "Villabona"), else to follow. Much of her testimony as I
who together have a judgement against him. understand it can be summarized by saying that
she and her brother have always been close and
Background she has indulged him more than was wise to the
Annie Fenimore died intestate on April 30, 1988, at point that he has ruined her financially. They have
which time title to her real estate descended to her little contact any more because he importunes her
ten children. Donald Fenimore is one of those for money and she finds it hard to refuse him, and
children and Audrey Fenimore Watt Serge is so she prefers not to have contact with him at all
another. Nothing could be done with the real estate because, in her words, "I can't afford him any
until after Mrs. Fenimore's estate was closed. more."
Eventually a partition sale was held. In a report Mrs. Serge's story is a very sad one. She testified
dated September 18, 1997, the other shares of the that after the death of her first husband, whose last
proceeds were allocated. That report held that it name was Watt, she owned her own home in
was not possible to do the same with the share of Hockessin and the home was debt free. As time
Donald Fenimore at that time because there was a passed, Donald Fenimore asked her for money to
conflict between two of the claimants, judgement get him out of a variety of scrapes, leading her to
creditor Villabona and Mrs. Serge, a mortgagee of mortgage her home.
Donald Fenimore's. Villabona's judgement is for $
32,050.00 (New Castle County Prothonotary No. Issues
91J-11-274J). Mrs. Serge's mortgage on Donald's
interest in the real estate is for $ 100,000.00 (New A. The partnership issue. Villabona addresses the
Castle County Recorder of Deeds Mortgage financial relationship between Mrs. Serge and her
Record Book 1826, Page 77). The value of Donald brother. It argues that if the 1989 agreement is
Fenimore's share of these proceeds is less than indicative of anything, it is a partnership between
$ 20,000.00. Mrs. Serge and Donald Fenimore. Villabona notes
that the agreement gives their "understanding of
The questions raised by Villabona in these [their] business arrangements." It specifically does
proceedings are whether the mortgage was not characterize the $ 12,500.00 as a loan, but
obtained fraudulently or otherwise improperly and, states that Mrs. Serge "advanced" this money to
therefore, should be set aside in favor of its lien, her brother "for him to conduct the business of
and whether Mrs. Serge's business relationship buying and selling of motor vehicles." (Emphasis

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supplied.) of liability of Donald Fenimore to Audrey Serge.

The real thrust of this discussion is the For all these reasons, I recommend that Donald R.
consequence of a finding that a partnership Fenimore's share of the proceeds of the sale of his
existed. The money referred to in the 1989 mother's real estate be awarded to Villabona in
agreement amounts to an investment in the
partnership. It is part of a "business arrangement",
but nowhere in that document or elsewhere is it
partial satisfaction of its judgement.
characterized as a loan. If Mrs. Serge is to claim
priority status as a creditor because of the Respectfully submitted,
agreement, she must show that she was not a
partner and thereby convert the investment to a Richard Kiger
loan to her brother. Once a determination has been
made that she is a partner, the provisions of 6
Del.C. § 1540 come into play.

There are compelling reasons to conclude that the

Meinhard v. Salmon
164 N.E. 545 (N.Y. 1928)

On April 10, 1902, Louisa M. Gerry leased to equally. Salmon, however, was to have sole power
the defendant Walter J. Salmon the premises to "manage, lease, underlet and operate" the
known as the Hotel Bristol at the northwest corner building.
of Forty-second street and Fifth avenue in the city
of New York. The lease was for a term of twenty When the lease was near its end, Elbridge T. Gerry
years, commencing May 1, 1902, and ending April had become the owner of the reversion. He owned
30, 1922. The lessee undertook to change the much other property in the neighborhood, one lot
hotel building for use as shops and offices at a adjoining the Bristol Building on Fifth avenue and
cost of $ 200,000. Alterations and additions were four lots on Forty-second street. He had a plan to
to be accretions to the land. lease the entire tract for a long term to some one
who would destroy the buildings then existing and
Salmon, while in course of treaty with the lessor as put up another in their place. In the latter part of
to the execution of the lease, was in course of 1921, he submitted such a project to several
treaty with Meinhard, the plaintiff, for the capitalists and dealers. He was unable to carry it
necessary funds. The result was a joint venture through with any of them. Then, in January 1922,
with terms embodied in a writing. Meinhard was to with less than four months of the lease to run, he
pay to Salmon half of the moneys requisite to approached the defendant Salmon. The result was
reconstruct, alter, manage and operate the a new lease to the Midpoint Realty Company,
property. Salmon was to pay to Meinhard 40 per which is owned and controlled by Salmon, a lease
cent of the net profits for the first five years of the covering the whole tract, and involving a huge
lease and 50 per cent for the years thereafter. If outlay. new lease until such time as the new
there were losses, each party was to bear them building had been completed and fully paid for.

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