TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 8. Partnerships, 14-8-1 through 14-8-64.

ARTICLE 3 CORPORATIONS ORGANIZED FOR RELIGIOUS, FRATERNAL, OR EDUCATIONAL PURPOSES

14-8-16. Liability of person representing himself as a partner.

When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making the representation or consenting to its being made.
1. When a partnership liability results, he is liable as though he were an actual member of the partnership.
2. When no partnership liability results, he is liable jointly with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately.
When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. Where all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation.

(Code 1981, §14-8-16, enacted by Ga. L. 1984, p. 1439, § 1.)

COMMENT

Note to Uniform Partnership Act This section provides that where one represents himself or consents to being represented as in partnership with another, he is liable to a relying creditor as if the other were his partner and had all of the agency power of an actual partner. If all of the partners of an existing partnership consent to the representation, a partnership liability results and all are liable as if they were actually in partnership with the represented partner. Otherwise, there is only a joint obligation between the person acting and those consenting to the representation, and the obligation does not bind the existing partnership and its assets.

Prior Georgia Law Prior O.C.G.A. § 4-8-1(2) providing for the liability of an "ostensible partner" was generally consistent. New § 14-8-16 clarifies that the ostensible partner is not liable unless he at least consents to the representation of partnership. This reverses Shapleigh Hardware Co. v. McCoy & Son, 23 Ga. App. 265, 98 S.E. 102 (1919). With respect to a purported partner's agency power to bind the partnership, see The Barnett Line of Steamers v. Blackmar & Chandler, 43 Ga. 98 (1874) and Davis v. Citizens'-Floyd Bank & Trust Co., 37 Ga. App. 275, 139 S.E. 826 (1927). There were no prior Code provisions or cases dealing with the effect of the other partners' lack of consent to the representation or with the rights of creditors of the purported partnership to the assets of a business that is not an existing partnership.

Official UPA This section is the same as the official version.

Cross-References Rules for determining the existence of an actual partnership: §§ 14-8-6 and14-8-7. Actual partner's power to create partnership liabilities: §§ 14-8-9,14-8-13 and14-8-14. Nature of partner's liability for partnership obligations: § 14-8-15. Priorities among creditors of the partnership and of individual partners: §§ 14-8-36(d) and14-8-40(8)-(9).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the provisions, decisions under former Civil Code 1910, §§ 3157, 3158, Code 1933, § 75-104, and former Code Section 14-8-1, which existed prior to the 1984 repeal and reenactment of this chapter, are included in the annotations to this Code section.

One held out as partner may become liable upon partnership obligations to one who relied on representation to that person's detriment. Chambliss v. Hall, 113 Ga. App. 96, 147 S.E.2d 334 (1966);(decided under former Code 1933).

One may be bound as a partner, though having no interest, but one is liable as a partner only to those persons who have acted on the faith of the truth of the appearance. American Cotton College v. Atlanta Newspaper Union, 138 Ga. 147, 74 S.E. 1084 (1912) (decided under former Civil Code 1910, §§ 3157, 3158).

Estopped from denying partnership relationship.

- One who tacitly permits oneself to be held out to the public as a partner, though that person in fact has no interest in the partnership, will be estopped from denying a connection with the firm, and will be bound if the opposite party was misled by the putative status and acted thereon. Shapleigh Hdwe. Co. v. McCoy & Son, 23 Ga. App. 265, 98 S.E. 102 (1919) (decided under former Civil Code 1910, § 3157). See also Roberts v. Curry Grocery Co., 18 Ga. App. 53, 88 S.E. 796 (1916) (decided under former Civil Code 1910, § 3157).

Third party, transacting business under a trade name, introduced the defendant to the plaintiff as the third party's partner and represented that the defendant was backing the third party in the business; because defendant made no denial of these affirmations, and plaintiff, by reason of believing this, sustained a loss by endorsing a check for such third party, verdict holding defendant liable was supported by the evidence. Clarke v. Woodward, 76 Ga. App. 181, 45 S.E.2d 473 (1947) (decided under former Civil Code 1910, § 3157).

Inducing extension of credit by representation of self as partner.

- Actual contract by which partnership is formed is not always essential to support liability of one person as partner of another; as to third persons, one may assume such liability by inducing them to extend credit upon faith of representations made by that person, either express or implied, to effect that the person was a partner and, as such, liable. Pope v. Triangle Chem. Co., 157 Ga. App. 386, 277 S.E.2d 758 (1981) (decided under former Code 1933, § 75-104).

Applicability.

- As in a corporate alter ego action or a limited partnership action, a claim under O.C.G.A. § 14-8-16(a) may be available to all creditors without respect to reliance by or course of dealing with any particular creditor or class of creditors. Stamps v. Knobloch (In re City Communications, Ltd.), 105 Bankr. 1018 (Bankr. N.D. Ga. 1989).

O.C.G.A. § 14-8-16 is available only to individual creditors harmed by the representation of a partnership. The latter part of O.C.G.A. § 14-8-16(a), however, makes clear that a continuing course of conduct can result in liability as a general partner even though no express representation was made to a specific creditor. Stamps v. Knobloch (In re City Communications, Ltd.), 105 Bankr. 1018 (Bankr. N.D. Ga. 1989).

Partnership or no partnership is generally a mixed question of law and fact, and cannot be resolved as a matter of law unless verdict one way or the other is demanded by evidence. Pope v. Triangle Chem. Co., 157 Ga. App. 386, 277 S.E.2d 758 (1981) (decided under former Code 1933, § 75-104).

Whether third party relied upon acts of ostensible partner is question of fact. Pope v. Triangle Chem. Co., 157 Ga. App. 386, 277 S.E.2d 758 (1981) (decided under former Code 1933, § 75-104).

Whether person has held self out and has been relied upon as partner is question of fact. Chambliss v. Hall, 113 Ga. App. 96, 147 S.E.2d 334 (1966) (decided under former Code 1933, § 75-104); Pope v. Triangle Chem. Co., 157 Ga. App. 386, 277 S.E.2d 758 (1981) (decided under former Code 1933, § 75-104).

In a medical malpractice action, in which the appellant physicians contended that the evidence could not support the verdict against them because there was no evidence of partnership and no proof of causation, since it was undisputed that the appellants were members of a professional corporation and held themselves out to others as partners, the evidence supported a finding of ostensible partnership under such circumstances. Kaplan v. Gibson, 192 Ga. App. 466, 385 S.E.2d 103 (1989).

Consent to being held out as partner required.

- Ostensible partnership of a father and son was not established because the father offered direct evidence that he had no partnership arrangement with his son and never held himself out as his son's partner or consented to be held out as a partner. Lane v. Spragg, 224 Ga. App. 606, 481 S.E.2d 592 (1997).

Creditor must know of ostensible partnership.

- An ostensible partner in a partnership of which one is not a member cannot, by virtue of this relation, become bound for a partnership debt which that person did not contract for unless the creditor had notice of this ostensible relation and believed that the person holding self out as a partner was in fact a member of the partnership when extending credit. Davis-Washington Co. v. Vickers, 41 Ga. App. 818, 155 S.E. 92 (1930) (decided under former Civil Code 1910, § 3157); Pope v. Triangle Chem. Co., 157 Ga. App. 386, 277 S.E.2d 758 (1981) (decided under former Code 1933, § 75-104).

Declarations made by one person after an extension of credit to another to the effect that the former is either a partner or an ostensible partner with the latter, are incompetent to make the declarant liable as an ostensible partner for debt, when the declarations are never communicated to or known by the person who extended the credit. Davis-Washington Co. v. Vickers, 41 Ga. App. 818, 155 S.E. 92 (1930) (decided under former Civil Code 1910, § 3157).

Representation must induce timely reliance.

- When the evidence showed that plaintiff did not meet defendant until after the closing of a residence sale, plaintiff could not have entered into the purchase of the residence in reliance upon defendant's words or conduct. Andrews v. Messina, 206 Ga. App. 742, 426 S.E.2d 641 (1992).

Cited in Southeastern Whsle. Supply Co. v. Guevara, 191 Ga. App. 600, 382 S.E.2d 685 (1989); Young v. Higingbotham, 226 Ga. App. 164, 486 S.E.2d 382 (1997).

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