## Facts

- David G. Byker (an accountant) and Thomas J. Mannes (a real-estate businessman) collaborated beginning around 1985 in real-estate and investment ventures.
- The parties stipulated they agreed to engage in an ongoing business enterprise, contribute capital/labor/skill, raise investment funds, and share profits, losses, and expenses equally.
- To facilitate outside investment, they formed multiple separate entities (including corporations and partnerships/limited partnerships) and served as general partners or shareholders in operating each entity.
- As ventures encountered financial difficulty, funds were moved among entities and the parties sometimes made personal contributions to cover losses.
- Mannes eventually stopped contributing while Byker continued funding losses.
- Byker sought “equalizing” payments from Mannes, claiming an overarching general partnership covered their joint activities; Mannes denied any general partnership and asserted they did not intend to be partners in the legal sense.

## Issues

1. Under the Michigan Uniform Partnership Act, does a partnership require the parties’ subjective intent to form a “partnership,” or only an intent to carry on as co-owners a business for profit?

## Decision

- The Michigan Supreme Court reversed the Court of Appeals and remanded.
- The Court held that subjective intent to form a partnership is not required under MCL 449.6(1).
- The proper inquiry is whether the parties intended to jointly carry on, as co-owners, a business for profit within the statute’s meaning.
- The Court of Appeals erred by treating the lack of subjective intent to be “partners” as controlling.

## Legal Principles

- A partnership under MCL 449.6(1) is “an association of 2 or more persons … to carry on as co-owners a business for profit.”
- Partnership formation is determined by the parties’ objective intent and conduct showing co-ownership of a business for profit, not by whether they used the label “partners” or subjectively understood the legal consequences.
- Parties cannot avoid partnership obligations solely by disclaiming an intent to form a partnership when their agreement and conduct otherwise satisfy the statutory definition.

## Conclusion

Michigan partnership law applies an objective standard: if parties intend to jointly carry on, as co-owners, a business for profit, a partnership may exist regardless of whether they subjectively intended to create a “partnership” or would have called themselves partners.


Byker v. Mannes, 465 Mich. 637, 641 N.W.2d 210 (Mich. 2002)