Business Associations Keyed to Hamilton
Smith v. Kelley
Facts
Smith (P) worked for an accounting firm as a salaried employee. Kelley (D) and Galloway (D) were partners in the firm. Smith put not assets into the firm, held no authority to make purchases, nor hire or fire personnel, nor execute promissory notes for the firm, nor hold managerial authority, and was not liable to bear losses of the firm. According to Kelley (D), another employee, and Galloway (D), there was no agreement that Smith (P) would be a partner and/or share in the firm’s profits. Smith (P) however was introduced to members of the public, listed on the firm’s tax returns, and mentioned in a statement to a state agency as a partner in the firm. He was also listed as a partner in a contract the firm entered, and a lawsuit the firm filed. At the end of a three year tenure with the firm, Smith (P) claimed to have been a partner of the firm and entitled to 20% of its profits. Kelley (D) and Galloway (D) disputed his entitlement, so Smith (P) sued for an accounting. The Chancellor dismissed the action, concluding that no partnership had existed. Smith (P) filed an appeal.
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