## Facts

- Minute Maid sold frozen citrus products to United, an “authorized direct buyer,” on terms that included volume-based allowances and discounts tied to large-quantity purchases.
- United sought to profit from buying in bulk (capturing discounts) and reselling later as market prices rose, but lacked sufficient capital and ordinary credit to carry large inventories.
- Cold Storage operated a cold-storage warehouse and agreed to fund United’s bulk purchases of Minute Maid products and store the goods.
- United and Cold Storage executed a written agreement under which Cold Storage advanced 100% of the purchase price for goods United bought from Minute Maid and stored at Cold Storage, with interest and security in inventory and (sometimes) receivables.
- The agreement created a “Special Account” on Cold Storage’s books, credited with Minute Maid allowances/discounts and resale profits and debited with warehouse and other charges.
- At year end, the Special Account would be closed and any credit or debit balance would be split equally between United and Cold Storage, reflecting sharing of gains and losses from the arrangement.
- The agreement ended early; the Special Account had a credit balance of about $22,000, which the parties divided.
- United remained the named purchaser from Minute Maid, and Minute Maid extended credit to United without knowing the internal details of the United–Cold Storage arrangement.
- United failed to pay Minute Maid $143,141.66 for product purchases made during the period of the agreement.
- Minute Maid sued United and Cold Storage, asserting that United and Cold Storage were partners, making Cold Storage jointly liable for the unpaid purchase price.

## Issues

1. Whether, under Texas law, United and Cold Storage’s financing, storage, and Special Account arrangement created a partnership, making Cold Storage jointly liable for United’s trade debt to Minute Maid.

## Decision

- The Fifth Circuit reversed the bench judgment for Cold Storage.
- The court held the United–Cold Storage relationship constituted a partnership under Texas law.
- Because Cold Storage was a partner, it was jointly liable for the unpaid purchase price owed to Minute Maid.

## Legal Principles

- Texas partnership status depends on the substance of the relationship, not the label used by the parties.
- Profit sharing, and arrangements that also contemplate sharing losses or risk of loss, are strong indicators of a partnership rather than a mere debtor-creditor relationship.
- Joint participation and control over the enterprise—such as control tied to funding, inventory, and accounting mechanisms—supports a finding of partnership.
- A party may be treated as a partner even if it also charges interest, takes security, or provides services (e.g., warehousing), when the overall arrangement reflects co-ownership of a business venture.
- Once a partnership exists, a partner may be liable to third-party creditors for obligations incurred in the ordinary course of the partnership business, even if the creditor was unaware of the partners’ internal agreement.

## Conclusion

The court treated Cold Storage’s 50/50 participation in the Special Account’s gains and losses, combined with its role in funding and controlling inventory, as establishing a Texas-law partnership with United; as a result, Cold Storage was jointly liable for United’s unpaid debt to Minute Maid.


Minute Maid Corp. v. United Foods, Inc., 291 F.2d 577 (5th Cir. 1961)