Yes , the relationship between Mr C and Mr M was that of partnership.
Both of them had an oral agreement that the firm will one day be given to Mr M after death of Mr C. Mr C also used to share a part of the profit for the services of Mr M. Even the land where the junkyard existed was written over to Mr M. All these factors constitute a partnership relation between them.
Yes , Mr M is entitled to a part of Mr C's share as he was one of the heirs to the property of Mr C. Also as a partner he was promised part of the property and hence after paying of the fiduciary duty to other heirs of Mr C, Mr M can have his share from Mr M's part.
The assets will be distributed as per the partnership contract. Ms S will receive 40 percentage of the asset and the heir of Mr D will receive the remaining 60 percentage, after the business first pays off the debt of $8,000. The loan provided by Ms S will be taken as a debt taken in the normal course of action and not as a partner's contribution to business.
Thus the loan provided by Ms S will not affect the percentage of assets to be received by her from the business.
Mr B will be liable to the firm on the basis that he cheated the Company C by claiming to be partner of the the sports bar Company A. He had no relationship with the bar and yet he presented himself as a partner which made the Company C feel comfortable to provide loan to the sports bar.
Company C has to prove that it was duped into providing loan as it felt comfortable with Mr B and was under the impression that he was one of the partners. Mr B also was not an employee or member of the bar. Thus his representation as lawyer was a fraud which makes him liable for the payment.