Zajac v. Harris
Arkansas Supreme Court
231 Ark. 737, 410 S.W.2d 593 (1967)
- Written by Brianna Pine, JD
Facts
George Harris (plaintiff) brought suit against Carl Zajac (defendant) to compel an accounting of profits and assets from an automobile salvage business that Harris claimed the men operated as a partnership over a two-year period. Zajac denied that a partnership existed, claiming that Harris was merely an employee working on a commission basis. At trial, Harris testified that he and Zajac agreed to go into business together and split the profits equally. Harris borrowed $9,000 from a bank, secured by his own property, and used the funds to purchase vehicles for the business. As cars were bought, rebuilt, and resold, the men divided the profits equally, regardless of who conducted the transaction. Zajac maintained control over the business’s books and records, paid taxes on Harris’s share as if Harris were an employee, and never filed a partnership income tax return. However, Harris was illiterate and likely unaware of the legal implications of these accounting practices. The trial court found that a partnership existed and ordered an accounting to be conducted. Zajac appealed.
Rule of Law
Issue
Holding and Reasoning (Smith, J.)
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