## Facts

- In 1979, the parties were involved in producing the show “Lewis J. Stadlen as Groucho!”
- Lewis J. Stadlen was the producer and star of the show, and Flinn was the director and choreographer (and a coauthor of the play).
- Richard Brodsky, an attorney (who taught entertainment law), performed legal work, conducted negotiations, ran the office, and acted as general manager for the production.
- The production operated under the name “Diana Enterprises,” and certain documents referred to Diana Enterprises as a “partnership.”
- There was no written partnership agreement among Brodsky, Stadlen, and Flinn.
- Brodsky did not make management decisions in the play’s production in a manner consistent with co-ownership control.
- Brodsky was paid a fixed weekly salary for each week the show was performed during his employment and was also entitled to 2% of the gross profits.
- There was no indication that Brodsky agreed to share, or was liable for, the losses of the enterprise.
- Brodsky did not contribute capital to the production.
- Brodsky advanced money to the production, but Stadlen repaid those advances, treating them as loans.
- Brodsky sued Stadlen and Flinn claiming he was a partner in Diana Enterprises; the trial court found no partnership and characterized Brodsky as an employee, and Brodsky appealed.

## Issues

1. Whether, in the absence of a written partnership agreement, the parties’ conduct, intent, and relationship created a partnership-in-fact among Brodsky, Stadlen, and Flinn in connection with Diana Enterprises.

## Decision

- The Appellate Division affirmed the order insofar as appealed from, without costs or disbursements.
- The court agreed with the trial court that no partnership-in-fact existed and that the relationship between Stadlen and Brodsky was employer–employee rather than a partnership.

## Legal Principles

- When there is no written partnership agreement, whether a partnership-in-fact exists is determined from the parties’ conduct, intention, and relationship.
- No single characteristic is determinative of partnership status under New York law (see Partnership Law § 11).
- Courts consider multiple factors in deciding whether a partnership exists, including: profit sharing; loss sharing; ownership of assets; joint management/control; joint liability to creditors; the parties’ intent; compensation structure; capital contributions; and whether advances were loans.
- Receipt of a salary plus a small percentage of profits may be consistent with employee compensation rather than partnership, particularly where the claimant has no obligation to share losses.
- Failure to contribute capital and advancing money that is repaid as a loan weigh against finding a partnership.

## Conclusion

The court affirmed the finding that Brodsky was not a partner in Diana Enterprises because, despite documents using the word “partnership” and Brodsky’s receipt of a salary plus 2% of gross profits, the overall relationship showed employment rather than co-ownership: Brodsky did not share losses, did not contribute capital, and his cash advances were repaid as loans.


Brodsky v. Stadlen, 138 A.D.2d 662 (1988)