In Re Estate of Fenimore
Delaware Court of Chancery
1999 WL 959204 (1999)
Audrey Serge (plaintiff) advanced $12,500 to her brother Donald Fenimore (defendant) under a written agreement to share in the profits of his car-buying-and-selling business; Fenimore became insolvent, and separate judgment creditors, Villabona (plaintiff), obtained a $32,000 judgment against him. When Fenimore inherited $20,000, both Villabona and Serge sought to recover from it, with Villabona arguing Serge's 1989 agreement was actually a partnership (not a loan), giving Villabona priority as a separate creditor over Serge's claim as Fenimore's partner.
Whether a written agreement in which one party advances money to another in exchange for a share of the resulting business profits creates a partnership, rather than a loan, thereby subordinating the advancing party's recovery rights to the other party's separate creditors.