[I]n the absence of an agreement to such effect, a partner contributing only personal services is ordinarily not entitled to any share of partnership capital pursuant to dissolution. Personal services may, however, qualify as capital contributions to a partnership where an express or implied agreement to such effect exists.
Schymanski v. Conventz
The parties entered into an oral equal partnership to build and operate a fishing lodge. Each was to contribute equal cash and labor, with Conventz handling the supervision of construction and advertising in Alaska and the Schymanskis handling the promotion in Germany. The parties signed agreements which gave the Conventzs more work in construction and managing the lodge in exchange for having to contribute less cash, although the Schymanskis claimed that they believed them to merely be formalities for incorporation.
The construction suffered delays and ran more expensive than expected, and disagreements arose between the partners. Schymanski visited and was disappointed with Conventz's financial practices. The Schymanskis refused to provide further funds until Conventz gave a comprehensive accounting. Conventz then terminated the partnership.
Trial court ordered the dissolution of the partnership and ordered the sale of the lodge. It found that the Schymanskis contributed $133,838.06 in cash and that Conventz contributed $39,658.48 in cash and $70,000 in services.
Do services provided for a partnership count as capital contributions and/or are they otherwise to be remunerated?
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Remuneration for a partner's services in the absence of an agreement to provide compensation is prohibited by statute.
It is unclear whether the trial court found an agreement between the partners to treat Conventz's services as capital contributions and/or to remunerate him for them.
Remanded to determine whether an agreement existed to treat Conventz's services as partnership capital and/or to remunerate him for such services.