Michigan Court of Appeals affirms probate court’s decision: Partnership’s dairy farm doe

State Bar of Michigan E-Journal #57852

In re Estate of Mark E. Moon (Unpublished)

“[This] case involved “a prolonged dispute between appellant and appellee regarding whether certain property belongs in decedent’s estate. Decedent and his father, appellee, ran a dairy farm together. During the course of these proceedings, it was determined that the two of them created a partnership.” The probate court found that the property was the appellee’s sole property. It did not fall under the UPA’s definition of partnership property, “as appellee owned the property before the partnership was created, he did not acquire it with partnership funds, and he did not convey it to the partnership.” Where land is taken in the name of one of the partners, to determine whether it “is in fact partnership property ‘always depends upon the intent of the parties and the understanding and design under which they acted.'” The court concluded that unlike in McCormick, the record here showed that “appellee and decedent did not treat the real property as if it belonged to both of them.” It was titled solely in the appellee’s name, but was used for the dairy farm operation by both appellee and decedent. However, the appellee testified that he owned the property “well before decedent began using it for the dairy farm operation.” While he “acknowledged that he supplied the real estate for decedent to use and that the ‘use of it was for the benefit of the partnership,’ he also testified that he never intended for the land to become partnership assets. Most significantly, appellee charged decedent rent to use the land,” and not only did the PR admit that decedent paid rent to appellee, but appellee’s income tax returns showed that he received rent. The property tax bills were addressed to him and there was no evidence that they were paid by decedent or the partnership. “With the other partnership property, it is clear from the record that the parties shared the costs and maintenance associated with the property, such as making improvements to the buildings and maintaining the equipment.” However, with the property at issue, there was “no evidence that decedent shared in the costs and maintenance associated with the property….Thus, the court affirmed the probate court’s order denying the appellant-PR’s motion for summary disposition, which requested a determination that the estate had a 50% partnership interest in real property titled in the appellee’s name.”

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