## Facts

- Norman E. Sweet worked at a nursery business beginning in 1956, initially as an hourly employee for Charles Vohland.
- After Charles retired around 1963, Paul Eugene Vohland continued the business as “Vohland’s Nursery,” and Sweet’s compensation arrangement changed.
- Under the new arrangement, Sweet was to receive 20% of the nursery’s net profits after all expenses were paid; expenses included operating inputs such as labor, fuel, supplies, and stock.
- Periodically, the parties computed income and expenses since the last settlement and Sweet received a check equal to 20% of the remaining balance; no payroll withholding was taken from these payments.
- Vohland handled finances and sales while Sweet managed day-to-day nursery operations and supervised work at the nursery.
- The parties did not file partnership tax returns; Vohland reported the business on Schedule C and categorized payments to Sweet as “commissions,” while Sweet reported himself as a self-employed salesman associated with the nursery.
- Profits were frequently retained and reinvested into nursery stock (inventory). Sweet asserted his 20% interest extended to the value of that inventory; Vohland treated such reinvestment as business expense and denied that Sweet had any ownership interest.
- Sweet sued for dissolution of an alleged partnership and an accounting; the trial court entered judgment for Sweet for $58,733.

## Issues

1. Whether Sweet’s right to receive 20% of net profits and his role in operating the business established a partnership rather than a commission-based employment relationship.
2. If a partnership existed, whether Sweet was entitled to a 20% interest in the nursery’s inventory, including stock grown on land owned by a third party.

## Decision

- The Indiana Court of Appeals affirmed the trial court’s judgment for Sweet.
- The court held that the parties’ arrangement constituted a partnership.
- The court held Sweet was entitled to a 20% interest in the nursery inventory and its value upon dissolution.
- The court treated the tax characterization and “commission” label as relevant but not controlling compared to the substance of the parties’ agreement and conduct.

## Legal Principles

- Receipt of a share of net profits is prima facie evidence of a partnership, especially where payment is contingent on profitability after expenses rather than a fixed wage or a percentage of gross receipts.
- A partner’s contribution need not be capital; labor, skill, and management services can constitute sufficient consideration to support partner status.
- Partnership existence turns on the parties’ manifested intent and conduct, including a community of interest in the business’s profits and capital value, not solely on labels or tax reporting choices.
- Property produced or held for sale by the business may constitute partnership personal property (inventory) even if produced on land owned by another; a partner is entitled to a proportional share of that inventory value on dissolution.

## Conclusion

The court affirmed a dissolution-and-accounting award after finding that a long-term arrangement paying 20% of net profits, combined with operational responsibility, created a partnership despite contrary tax treatment, and that the partner’s share included 20% of the nursery’s inventory value.


Vohland v. Sweet, 433 N.E.2d 860 (Ind. Ct. App. 1982)