## Facts

- Darlene Peed and William L. Peed married in 1955 and operated a dairy business during the marriage, centered on land and cattle owned by William.
- Darlene contributed approximately $3,000 in savings and additional earnings used for the farm, and she worked in the dairy operation.
- Darlene testified she would not continue contributing without an ownership interest or share of profits, and the parties agreed to operate the dairy as partners.
- The farm land title and dairy herd registration were changed to list both spouses as co-owners.
- The parties separated in 1977; William sold the dairy cows for $38,000, and Darlene did not receive the one-half share she claimed.
- After their 1979 divorce, Darlene filed a civil action asserting entitlement to half the cow-sale proceeds and related interests, alleging partnership (and, alternatively, loan, joint venture, and constructive trust).

## Issues

1. Whether the trial court erred by directing a verdict for defendant on plaintiff’s partnership claim regarding the dairy business.
2. Whether the trial court erred by denying plaintiff’s motion to amend the complaint to add an express ownership claim in dairy-related assets.
3. Whether the trial court erred by failing to instruct the jury, on the constructive-trust claim, about the confidential relationship between husband and wife.

## Decision

- The Court of Appeals held the trial court erred by granting a directed verdict against plaintiff on the partnership claim because plaintiff’s evidence, viewed favorably to her, could support a jury finding of partnership.
- The court held the trial court erred by denying plaintiff leave to amend where the amendment would not unfairly surprise or prejudice defendant.
- The court held the trial court erred by failing to instruct the jury on the confidential marital relationship in evaluating the constructive-trust theory.
- The court reversed and remanded for a new trial.

## Legal Principles

- On a directed-verdict motion, evidence must be taken in the light most favorable to the nonmoving party, with conflicts resolved and reasonable inferences drawn in that party’s favor; a directed verdict is proper only when evidence is legally insufficient to support a verdict for the nonmovant.
- A partnership is an association of two or more persons to carry on as co-owners a business for profit under North Carolina’s partnership statute.
- Joint ownership of property and sharing gross returns, standing alone, do not establish a partnership; however, combined evidence (including an agreement, capital contributions, shared management, and ownership indicia) may be sufficient to submit partnership to the jury.
- Leave to amend pleadings should be granted when the opposing party will not be unfairly surprised or prejudiced.
- In assessing equitable claims between spouses such as constructive trust, the jury should be instructed on the confidential relationship between husband and wife when supported by the evidence and theory of the case.

## Conclusion

The court ordered a new trial because plaintiff presented enough evidence for a jury to decide whether the spouses formed a partnership in the dairy business, the complaint should have been amendable without prejudice to defendant, and the jury should have been instructed on the confidential marital relationship when evaluating the constructive-trust claim.


Peed v. Peed, 72 N.C. App. 549, 325 S.E.2d 275 (N.C. Ct. App. 1985)