First, I want to start off by saying that I'm not looking to take this to court, and also by saying that I'm not looking for an answer that is ENTIRELY "by the law". I'm looking for an answer on what is right in terms of BUSINESS, AND SEPARATELY, what is right in terms of LAW.
The situation is that 4 years ago, I was approached by three other people to go into business with them on a new venture. The proposition was that the 4 of us would become partners. They wanted to be silent partners (no direct involvement in the company), while I would manage, run and operate the company on a day-to-day basis. The initial agreement was that they would be able to provide the capital for the company as investors (non-salaried), and I would be salaried, albeit at much lower than my market-rate. My (agreed-upon) market rate being about $120,000/year at the time, I agreed to take $70,000/year. In exchange for this, and for me running the company, I would be made a 20% partner, with the other 3 taking 80%. As these were 3 people I knew and trusted, we initially did not have a formal legal partnership agreement.
Firstly, six months into the new business, as their "investment" grew to close to $100k, they decided to inform me that the terms suddenly changed so that their money was not actually a capital investment, but instead a LOAN. This was a shock to me as I didn't know why I would do all the work in a company, give them 80% of it, and in the end have to repay all the money they are "loaning". Why would I ever give 80% of my company for a loan? To top it off, since I was the minority partner, I also had to do their bidding, even though suddenly they were only "loaning" money. While upset and confused, I kept my mouth shut.
Fast forward two years. As I continued running the company, and the 3 other partners continued with shady business practices, I decided I needed a formal written contract in order to protect myself. I began to ask the controlling partner (Zack) for a formal contract. He said "no problem", but kept stringing me along and never producing anything. I asked every month for two years. After two years, the company folded. In the end, I never received a contract despite 20-30 attempts at asking for one. However, when the company closed, we had inventory that was sold to a liquidator for $400k. When that money came in, the 3 other partners promptly proceeded to pay themselves out (which just so happened to cover 100% of their "loans"), and didn't give me anything.
My questions are:
1. What actually is the recourse when the 3 other partners changed the terms of the agreement 6 months into the business, without my input or consent?
2. What is the recourse for the fact that I asked the controlling partner for a formal contract for two years, and was jerked around without ever getting one?
3. I believe that the "loan" is nonsense. If anything, the 3 others can say that they put money into the company for those 4 years, and that's why they took the money when the $400k came in. However, if we follow that logic, as my market-value was $120k, and I only took $70k because the original agreement was an INVESTMENT, doesn't that mean that technically I also put in $50k/year into the company? Meaning, at the end of the 4 years, I invested more than them ($200k of my money, vs $200k of their TOTAL money for the 3 of them)? Shouldn't I then be owed AT LEAST 20% of the $400k?