(a) Except as otherwise provided in Subsection (b), the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.
(b) An association formed under a statute other than the Uniform Partnership Act (1994) [54-1A-101 to 54-1A-1206 NMSA 1978], a predecessor statute or a comparable statute of another jurisdiction is not a partnership under that act.
(c) In determining whether a partnership is formed, the following rules apply:
(1) joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property;
(2) the sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; and
(3) a person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment:
(i) of a debt by installments or otherwise;
(ii) for services as an independent contractor or of wages or other compensation to an employee;
(iii) of rent;
(iv) of an annuity or other retirement or health benefit to a beneficiary, representative or designee of a deceased or retired partner;
(v) of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds or increase in value derived from the collateral; or
(vi) for the sale of the goodwill of a business or other property by installments or otherwise.
History: Laws 1996, ch. 53, § 202.
Articles of partnership necessary. — Under former law, when a truck operator and a service station operator applied to gasoline company for credit to be given the latter, and were told such credit could be given only if they were partners, to which they agreed, they were not general partners without any written articles of partnership. Texas Co. v. Dickson, 1935-NMSC-058, 39 N.M. 371, 47 P.2d 899.
Lease as partnership agreement. — A contract, whereby one leased to another a mill on agreement of other to conduct business, hire and pay employees, keep mill in repair, furnish accounts of receipts and expenditures and pay to lessor one-half of the net receipts, the stock on hand at the termination of the lease to be the property of the lessor, who was to pay the lessee one-half of its value, was a partnership agreement. Willey v. Renner, 1896-NMSC-027, 8 N.M. 641, 45 P. 1132.
Name of one of the partners may be used as a firm name, and parol evidence may be admitted to show that the name of a party, mentioned as grantee in a deed, is a partnership name. De Cordova v. Korte, 1895-NMSC-005, 7 N.M. 678, 41 P. 526, aff'd sum nom. Naeglin v. De Cordoba, 171 U.S. 638, 19 S. Ct. 35, 43 L. Ed. 315 (1898).
Pattern of conduct sufficient to show partnership. — A pattern of conduct, such as the sharing of profits and expenses of the business, filing of partnership tax forms, previous execution of contracts on behalf of the partnership and control of a partnership bank account will suffice to show the creation of a partnership relationship even in the absence of a written agreement. Dotson v. Grice, 1982-NMSC-072, 98 N.M. 207, 647 P.2d 409.
Pattern of conduct indicated that partnership relationship never existed. Armstrong v. Reynolds, 1985-NMSC-007, 102 N.M. 261, 694 P.2d 517.
Acts, circumstances indicating partnership. — Had the parties to the contract not treated it as constituting a partnership agreement, it might have been at most a brokerage agreement, but all of the acts of the parties, and circumstances in evidence, from the time of making the contract until the conclusion of the sale, plainly showed that the parties all recognized that a partnership existed between them, by virtue of the contract, and treated each other accordingly. Fraser v. State Sav. Bank, 1913-NMSC-086, 18 N.M. 340, 137 P. 592.
Receipt by a person of a share of profits in a business is prima facie evidence of the existence of a partnership. Vaughan v. Wolfe, 1969-NMSC-019, 80 N.M. 141, 452 P.2d 475.
Evidence was sufficient to establish existence of partnership where party denying relationship had knowledge of filing of partnership income tax returns, claimed loss attributable to partnership on personal income tax return, signed documents executed on behalf of partnership and exercised some control over company bank account. Goodpasture Grain & Milling Co. v. Buck, 1967-NMSC-072, 77 N.M. 609, 426 P.2d 586.
Sharing of profits element applicable to joint ventures. — Although Subsection D (now Subsection C(3)) of Section 54-1-7 NMSA 1978 to partnerships, it was related equally applicable to a joint venture, since the latter is generally considered to be a partnership for a single transaction. Hansler v. Bass, 1987-NMCA-106, 106 N.M. 382, 743 P.2d 1031, cert. denied, 106 N.M. 375, 743 P.2d 634.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Community Property § 4; 59A Am. Jur. 2d Partnership § 142 et seq.
Lease or tenancy agreement as creating partnership relationship between lessor and lessee, 131 A.L.R. 508.
Partnership as distinguished from employment (where rights of parties inter se or their privies are concerned), 137 A.L.R. 6
What creates partnership relation between cotenants of property, 150 A.L.R. 1003.
Salaries of partners, contract as to, 66 A.L.R.2d 1023.
68 C.J.S. Partnership § 1.