The legal issues presented in this case will be displayed here.

This section contains the nature of the case and procedural background.

D was an authorized direct buyer of products packaged by P. P's terms of sale for retail size packages to authorized direct buyers included discounts based upon the volume of goods included in a single order, which discounts were generally, referred to as 'quantity allowances' or 'freight allowances,' or described in the price list as 'truckload storage allowances' and 'carload storage allowances.' P stored a substantial amount of frozen foods in Dallas, Texas, through arrangements with D, paying D at the rate of 20 cents per hundred-weight for such storage. Cold Storage owned and operated a cold storage warehouse in Dallas, Texas. D did not have the financial ability to finance the carrying of a large inventory of frozen food products. Cold Storage was willing to make funds available to assist D in buying P products in quantities that permitted the maximum discounts. The market conditions affecting frozen food products are such that the price of such goods tends to rise from the month of May to the end of the year, and such increases in price as to citrus food products is as high as 50% In years when weather conditions adversely affect citrus production a direct buyer of frozen foods products was protected against price declines to the extent of inventories representing goods received during the last thirty day period. D, without the knowledge of P, operated so as to obtain an additional thirty days' protection against price declines by taking goods owned by P from warehouses approximately thirty days prior to notifying P of the withdrawal. Under this system, it is possible for a direct buyer, by buying large quantities, to profit as much as 50% on inventories by receiving notice from P of proposed price increases a considerable time in advance of the price increase, whereas there was practically no risk of a loss on such inventories by reason of the sixty days protection against price declines above referred to. On May 1, 1957, D and Cold Storage entered into an agreement that spelled out their relationship with each other. Cold Storage made $300,000 in credit available to P at 6%. Warehouse charges were 15 cents/100 lbs. handling and 12 1/2 cents/100 lbs. per month storage, based on the gross weight of the package and contents, and a lot delivery charge of 50 cents as current at each plant. Costs and charges were to be paid monthly, and at the end of the year, the accounting was to be closed, and ½ of the credit balance was to be paid to D. If a debit, ½ of that amount would be paid by D to Cold Storage. The agreement was amended to increase the credit to $500,000. On December 9, 1957, there was a credit balance of approximately $22,000, and the parties entered into a termination agreement terminating the contract effective December 31, 1957. P did not know of the relationship between D and Cold Storage. D was indebted to Minute Maid Corporation in the sum of $143,141.66, representing the purchase price of frozen food products sold to D. P sought to collect and sued, claiming that D and Cold Storage were in a partnership and that Cold Storage was liable on the sum owed. Cold Storage claimed that the agreement created at most a debtor-creditor relationship. The trial court found that Cold Storage was to be repaid the principal amount of its advances to D regardless of the success or failure of the enterprise. The parties could, in advance, know exactly how much by way of special allowances and discounts would be paid into the special fund, and, of course, the charges would bear a direct relation to these same items. If there was a deficit in this special fund, it was to be shared by the parties equally. The advance of 100% Of the invoice price of the merchandise was not a normal credit arrangement. Both D and Cold Storage would profit by increasing the purchases of D made possible by the arrangement between the two parties. Cold Storage was both a creditor of P and a bailee for hire. The trial court held there was no partnership. P appealed.

The applicable rule of law for this case will be displayed here.

The court's holding and decision will be displayed here.

Legal analysis from Dean's Law Dictionary will be displayed here.