O.C.G.A.
Code text and O.C.G.A. statutory annotations on this page reflect the 2019 Official Code of Georgia Annotated (Public.Resource.Org Release 73, 2019-08-21; public domain per Georgia v. Public.Resource.Org, 2020). The Syfert case-law annotations in Notes of Decisions, below, are current.
(a) Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by him of its property. (b) This Code section applies also to the representatives of a deceased partner engaged in the liquidation of the affairs of the partnership as the personal representatives of the last surviving partner.
History
(Code 1981, § 14-8-21, enacted by Ga. L. 1984, p. 1439, § 1.)
Annotations
COMMENT Note to Uniform Partnership Act This section states the partners’ liability for deriving unauthorized benefits from the partnership. Prior Georgia Law There was no precisely comparable provision. This section is consistent with the general provision on acquisition of antagonistic rights in a confidential relationship, O.C.G.A. § 23-2-59. A confidential relationship is defined in O.C.G.A. § 23-2-58 to include ‘‘the relationship between partners.’’ Section 14-8-21, by imposing a duty in connection with formation and liquidation, clarifies prior Georgia case law. Compare Hancock v. Gunter, 195 Ga. 646, 24 S.E.2d 772 (1943) (no fiduciary duty to speak where partnership had not commenced at the time of the nondisclosure) with Bennett v. Smith, 108 Ga. 466, 34 S.E. 156 (1899) (fiduciary duties recognized in connection with dissolution of a partnership). Section 14-8-21 also clarifies prior Georgia law by providing that a partner holds wrongfully appropriated funds as a trustee. Official UPA This section is the same as the official version. Cross-Reference Actions against the partners to enforce the right in this section: § 14-8-22(3). JUDICIAL DECISIONS Construed with § 23-2-59. - O.C.G.A. § 23-2-59, when construed in conjunction with O.C.G.A. § 14-8-21, applies only to partnership rights acquired by one partner without the consent of the
other partners; thus, there was no breach of fiduciary duty when all limited partners and the general partner acquired their rights at the same time by entering into an agreement. Consolidated Equities
Corp. v. Bird, 195 Ga. App. 45, 392 S.E.2d 276, cert. denied, 195 Ga. App. 45, 392 S.E.2d 276 (1990). Fiduciary relationship favors partnership, not partner. - O.C.G.A. § 14-8-21, construed with O.C.G.A. § 14-8-14, does not create a fiduciary relationship between partners as contemplated by the federal bankruptcy law provision relating to debts nondischargeable for fraud or defalcation. Any fiduciary relationship created is in favor of the partnership and not in favor of an individual partner. Betz v. Gay, 117 Bankr. 753 (Bankr. M.D. Ga. 1989). Partner must account to the partnership. - Since one general partner directly derived benefits from the conduct of the partnership without the other gen-
eral partner’s consent, the trial court did not err in granting to the general partner an accounting as to partnership affairs. Williams v. Tritt, 262 Ga. 173, 415 S.E.2d 285 (1992). Trust ex maleficio. - O.C.G.A. § 14-8-21(a) does not establish an express or technical trust. The trust under that statute arises only when the partner derives profits without partnership consent. Thus, the trust created is a trust ex maleficio and does not create a fiduciary relationship within the meaning of the federal bankruptcy law. Blashke v. Standard, 123 Bankr. 444 (Bankr. N.D. Ga. 1991). Cited in DM II, Ltd. v. Hospital Corp. of Am., 130 F.R.D. 469 (N.D. Ga. 1989).
RESEARCH REFERENCES C.J.S. - 68 §§ 150, 154, 155.
Partnership,
Notes of Decisions
Blashke v. Stand. (In Re Stand.), 123 B.R. 444 (Bankr. N.D. Ga. 1991).
· cites it 19× “1989), where the bankruptcy court in the Middle District of Georgia held that O.C.G.A. § 14-8-21 and O.C.G.A. § 14-8-14 do not create the fiduciary relationship between partners required by § 523(a)(4).”
Rolley v. Spector (In Re Spector), 133 B.R. 733 (Bankr. E.D. Pa. 1991).
· cites it 4× “1989), here the bankruptcy court in the Middle District of Georgia held that O.C.G.A. § 14-8-21 and O.C.G.A. § 14-8-14 do not create the fiduciary relationship between partners required by § 523(a)(4).”
Williams v. Tritt, 415 S.E.2d 285 (Ga. 1992).
· cites it 6× “Tritt, individually and on behalf of CMA, sued and moved for a formal pre-dissolution accounting under OCGA § 14-8-21. During a *174 hearing on his motion for an accounting, Tritt also asked for a dissolution of the limited partnership and removal of the management company as…”
King v. King, Jr, 888 S.E.2d 166 (Ga. 2023).
· cites it 4× “, OCGA § 14-8-21 (partner); OCGA § 14-11-305 (4) (member or manager of a limited liability company); OCGA § 29-4-22 (guardian); OCGA § 53-12-261 (trustee of an express trust).”
McMillian v. McMillian, 713 S.E.2d 920 (Ga. Ct. App. 2011).
· cites it 2× “See OCGA § 14-8-21 (a) (“Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership…”
Time Warner Ent. Co. v. Six Flags Over Georgia, LLC, 537 S.E.2d 397 (Ga. Ct. App. 2000).
· cites it 2× “92, 95 (1) ( 179 SE2d 88 ) (1970); see also OCGA § 14-8-21 (“Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from .”
Chaney v. Burdett, 560 S.E.2d 21 (Ga. 2002).
· cites it 2× “OCGA § 14-8-21; see Murphy v. Murphy, supra.”
DM II, Ltd. v. Hosp. Corp. of Am., 130 F.R.D. 469 (N.D. Ga. 1989).
· cites it 3× “In addition, because § 14-8-22 provides a cause of action to enforce § 14-8-21 to “any partner,” the court finds that the controlling substantive law vests the right of action in each partner independent of the partnership.”
Singleton v. Terry, 584 S.E.2d 613 (Ga. Ct. App. 2003).
· cites it 2× “; see also OCGA § 14-8-21 (“Every partner must account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from .”
Rollins v. Rollins, 766 S.E.2d 162 (Ga. Ct. App. 2014).
· cites it 2× “See OCGA § 14-8-21 (a) (a partner “hold[s] as trustee” any partnership-related profit derived without the other partners’ consent).”
Tweedie v. Hermoyian (In re Hermoyian), 466 B.R. 348 (Bankr. E.D. Mich. 2012).
“21 (1), did “not establish an express or technical trust” and instead “the trust created is a trust ex maleficio and does not create a fiduciary relationship within the meaning of § 523(a)(4)”).”
Consol. Equities Corp. v. Bird, 392 S.E.2d 276 (Ga. Ct. App. 1990).
· cites it 2× “OCGA § 23-2-59, when construed in conjunction with OCGA § 14-8-21, applies only to partnership rights acquired by one partner without the consent of the other partners.”
— 14-8-21(a) — 4 cases
Blashke v. Stand. (In Re Stand.), 123 B.R. 444 (Bankr. N.D. Ga. 1991).
“1989), where the bankruptcy court in the Middle District of Georgia held that O.C.G.A. § 14-8-21 and O.C.G.A. § 14-8-14 do not create the fiduciary relationship between partners required by § 523(a)(4).”
Rolley v. Spector (In Re Spector), 133 B.R. 733 (Bankr. E.D. Pa. 1991).
“1989), here the bankruptcy court in the Middle District of Georgia held that O.C.G.A. § 14-8-21 and O.C.G.A. § 14-8-14 do not create the fiduciary relationship between partners required by § 523(a)(4).”
DM II, Ltd. v. Hosp. Corp. of Am., 130 F.R.D. 469 (N.D. Ga. 1989).
“In addition, because § 14-8-22 provides a cause of action to enforce § 14-8-21 to “any partner,” the court finds that the controlling substantive law vests the right of action in each partner independent of the partnership.”
Tweedie v. Hermoyian (In re Hermoyian), 466 B.R. 348 (Bankr. E.D. Mich. 2012).
“21 (1), did “not establish an express or technical trust” and instead “the trust created is a trust ex maleficio and does not create a fiduciary relationship within the meaning of § 523(a)(4)”).”
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