O.C.G.A. § 14-8-18 (2019)

Annotations

COMMENT Note to Uniform Partnership Act This section states basic rules regarding financial and management rights and duties as between the partners, subject to their contrary agreement. Prior Georgia Law Subsection (1): Prior O.C.G.A. § 14-8-45 was generally consistent. Subsection (2): There was no precisely comparable provision. The general provision regarding contribution, O.C.G.A. § 23-2-71, is consistent, except that it permits the paying partner to recover from individual partners instead of the partnership and applies only to sums actually paid. Subsection (3): There was no comparable provision. Prior case law was inconsistent. See McAllister v. Payne, 108, Ga. 517, 34 S.E. 165 (1899). Subsection (4): There was no comparable provision. Prior case law was consistent. See Tutt v. Land, 50 Ga. 339, 350 (1873). Subsection (5): There was no comparable provision. Prior O.C.G.A. § 14-8-41 provided generally that partners had ‘‘joint possession’’ of partnership effects. This term was not clearly defined in the case law.

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Subsection (6): There was no comparable provision. Prior case law was consistent as to compensation for pre-dissolution services. See Maynard v. Maynard, 147 Ga. 178, 93 S.E. 289 (1917). Subsection (7): Prior O.C.G.A. § 14-8-43 was consistent. Subsection (8): Prior O.C.G.A. § 14-8-42 was consistent. Official UPA This section is the same as the official version. Cross-References Definition of ‘‘interest’’: § 14-8-2(5). Power of Partners to bind the partnership in transactions with third parties: § 14-8-9. Partner’s liability for partnership obligations: § 14-8-15. Partner’s management rights as property right of partner: § 14-8-24. Partner’s share of profits as interest in partnership: § 14-8-26. Partner’s right to contribution with respect to post-dissolution debts: § 14-8-34. Right to control the firm during winding up: § 14-8-37. Assignment of partner’s interest in the partnership: § 14-8-27. Right to indemnification where partnership dissolved for fraud: § 14-8-39. Rights of withdrawing or estate of deceased partner to share in profits when partnership continued after dissolution: § 14-8-42. JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION LIABILITY FOR LOSSES ACCOUNTING IN EQUITY General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, §§ 3155 and 3156, former Code 1933, § 75-206 and former Code Sections 14-8-40, 14-8-41, 14-8-43, and 14-8-45, in effect prior to the 1984 repeal and reenactment of this chapter, are included in the annotations to this Code section. Agreements between partners as to unequal shares to be given effect. - If partners have made an agreement that their shares shall be unequal, or that one shall pay to or for another partner a certain sum for acquiring a stated interest in the partnership assets, such an agreement will be given effect in a final settlement and accounting between the partners. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206). Rights subject to agreement. - The right of a partner to recover net capital contributions to the partnership upon dissolution was subject to an agreement lim-

iting returnable equity to profits realized upon the initial investments of the parties. Hayden v. Sigari, 220 Ga. App. 6, 467 S.E.2d 590 (1996). Coequal partner has no right to lien on partnership property. - Coequal partner does not have right to common-law materialman’s or contractor’s lien on partnership property. Stephens v. Clark, 154 Ga. App. 306, 268 S.E.2d 361 (1980) (decided under former Code 1933, § 75-206). A partnership which gives security to a partner for a loan cannot enforce the partnership duties owed it by the secured partner if those duties will impair the rights of the secured partner. Westminster Properties, Inc. v. Atlanta Assocs., 250 Ga. 841, 301 S.E.2d 636 (1983) (decided under former § 14-8-40). Jury question as to whether duty of good faith breached. - Jury question was presented as to whether two trustees of their children’s trusts acted against the interests of the beneficiaries (their children) in bad faith by amending a partner-

ship agreement to concentrate all voting power in themselves to the exclusion of the beneficiaries, who otherwise would have become partners when they turned 45. Likewise, the trustees as partners owed duties to the trusts as partners in the partnership. Rollins v. Rollins, 338 Ga. App. 308, 790 S.E.2d 157 (2016). Liability for Losses Existence of partnership not being in dispute, each partner is liable for business losses of the firm. Todd v. Waddell, 120 Ga. App. 20, 169 S.E.2d 351 (1969) (decided under former Code 1933, § 75-206). Joint judgments possible. - If there is joint liability by two or more partners, a joint judgment may be rendered, and the respective liabilities of the defendants may be adjudged. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206). Right of contribution and set off. - When the business of a copartnership entails loss and no part of the copartnership debt has been paid, no right of contribution arises, and no right to set off partnership liabilities against a suit on a note by one of the partners against the other partners. The only liability of members is to creditors. Brinson v. Franklin, 177 Ga. 727, 171 S.E. 287 (1933) (decided under former Civil Code 1910, §§ 3155, 3156). Personal judgment rendered when partnership without assets. - When

after payment of partnership debts no assets remain from which respective debts and interest of partners may be adjusted and paid, it is proper that the final decree fix the amounts due to and by each partner, and that a personal judgment be rendered against those indebted. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206). Accounting in Equity Jurisdiction. - Court of equity has jurisdiction in all cases of accounting and settlement between partners, where partnership has not been dissolved. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206). When equity has assumed jurisdiction of partnership accounting, it will retain jurisdiction so as to afford complete relief between partners as to all controversies growing out of the partnership. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206). After payment of partnership debts, petitioning partner is entitled to accounting without necessity of showing any exact amount as due, if the petitioning partner alleges and shows facts sufficient to indicate that something will be found to be due to that partner. Johnson v. Townsend, 192 Ga. 522, 15 S.E.2d 790 (1941) (decided under former Code 1933, § 75-206).

RESEARCH REFERENCES Am. Jur. 2d. - 59A Am. Jur. 2d, Partnership, § 269 et seq. C.J.S. - 68 C.J.S., Partnership, § 120 et seq. ALR. - Right of individual partner to exemption in partnership property, 4 ALR 300. Power of partner to dispose of good will of business, 5 ALR 1182. Authority of member of farming partnership to execute negotiable paper, 9 ALR 372. Actions at law between partners and partnerships, 21 ALR 21. Right to setoff claim of individual part-

ner against claim against partnership, 55 ALR 566. Right of other partners or partnership creditors in respect of insurance on interest of one of the partners, 61 ALR 1201. Right of partners inter se in respect of interest, 66 ALR 3. Relative rank of judgment, attachment, or execution based on partnership liability and judgment, attachment, or execution based on liability of individual partner, 75 ALR 997. Partition of partnership real property, 77 ALR 300. Accountability of partner or joint adven-

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turer for profits earned subsequently to death or dissolution, 80 ALR 12; 55 ALR2d 1391. Right of one partner in action at law against him by another partner on a personal claim to set up by counterclaim or otherwise claim arising out of partnership transactions, 93 ALR 293. Right of partner or member of joint adventure to share in misappropriated money or property, or secret profits, for which he is required to account, 118 ALR 640. Discharge or settlement by, or payment to, one partner or co-obligee, as affecting rights of others, 142 ALR 371. Provision of partnership agreement giving one partner option to buy out the other, 160 ALR 523. Liability of partner for failure to perform personal services, 165 ALR 981. Actions at law between partners and partnerships, 168 ALR 1088. Duty of former partner, acquiring property occupied by partnership business, to renew lease, 4 ALR2d 102. Delay as defense to action for accounting between joint adventurers, 13 ALR2d 765. Powers, duties, and accounting responsibilities of managing partner of mining partnership, 24 ALR2d 1359. Right of partner or joint adventurer to accounting where firm business or transactions are illegal, 32 ALR2d 1345. Constructive trust in favor of partnership where one partner purchases real estate with his own funds, 44 ALR2d 519. When real estate owned by partner before formation of partnership will be deemed to have become asset of firm, 45 ALR2d 1009.

Meaning and coverage of ‘‘book value’’ in partnership agreement in determining value of partner’s interest, 47 ALR2d 1425. Rights in profits earned by partnership or joint adventure after death or dissolution, 55 ALR2d 1391. Construction and effect of agreement relating to salary of partners, 66 ALR2d 1023. Construction and application of § 18(f ) of Uniform Partnership Act as to surviving partner’s right to compensation for services in winding up partnership, 81 ALR2d 445. Validity and construction of contractual restrictions on right of medical practitioner to practice, incident to partnership agreement, 62 ALR3d 970. Construction of agreement between real-estate agents to share commissions, 71 ALR3d 586. Construction and application of expulsion provision in partnership agreement between attorneys, 72 ALR3d 1226. Evaluation of interest in law firm or medical partnership for purposes of division of property in divorce proceedings, 74 ALR3d 621. Embezzlement, larceny, false pretenses, or allied criminal fraud by a partner, 82 ALR3d 822. Rights of attorneys leaving firm with respect to firm clients, 1 ALR4th 1164. Partner’s breach of fiduciary duty to copartner on sale of partnership interest to another partner, 4 ALR4th 1122. Joint venturers’ comparative liability for losses, in absence of express agreement, 51 ALR4th 371.