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2018 Georgia Code 14-8-41 | Car Wreck Lawyer

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

14-8-41. Relations with creditors following withdrawal, expulsion, or death of existing partners or assignment of partnership rights to third parties.

  1. When any partner withdraws, is expelled, or dies and the business of the dissolved partnership is continued by one or more of the partners, either alone or with others, without liquidation of the partnership affairs, creditors of the first or dissolved partnership are also creditors of the person or partnership continuing the business.
  2. When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.
  3. The liability of a third person becoming a partner in the partnership continuing the business, under this Code section, to the creditors of the dissolved partnership shall be satisfied out of partnership property only.
  4. When the business of a partnership after dissolution is continued under any conditions set forth in this Code section the creditors of the dissolved partnership, as against the separate creditors of the withdrawing or deceased partner or the representative of the deceased partner, have a prior right to any claim of the withdrawn partner or the representative of the deceased partner against the person or partnership continuing the business, on account of the withdrawn or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for his right in partnership property.
  5. Nothing in this Code section shall be held to modify any right of creditors to set aside any assignment on the ground of fraud.
  6. The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner as part thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership.

(Code 1981, §14-8-41, enacted by Ga. L. 1984, p. 1439, § 1; Ga. L. 1985, p. 1436, § 6.)

COMMENT

Note to Uniform Partnership Act Subsection (a) permits pre-dissolution creditors to share on an equal basis with post-dissolution creditors in the assets of a new partnership carried on by one or more members of the old firm even without an assignment of assets or consent by the new partnership. Pursuant to subsection (b), where the business is carried on by wholly new owners (which would include continuation by a corporate entity) the assets of the new firm are not subject to pre-dissolution debts unless the new owners consent. Subsection (c) provides that incoming partners are not personally liable for old firm debts unless they expressly assume such liability. Subsection (d) provides that where a retiring partner or estate of deceased partner continues to receive payments as a creditor of the firm (see new § 14-8-42), he is subordinated to the other creditors of the firm. Subsection (e) preserves such creditors' rights as those arising under the Uniform Fraudulent Conveyance Act. Finally, subsection (f) provides that an estate of a deceased partner does not become liable for post dissolution debts merely because the deceased partner's name is used as part of the firm's name.

Prior Georgia Law Prior O.C.G.A. § 14-8-44 was consistent with new subsection (c) to the extent that it provides that a new partner is not personally liable for pre-existing debts. Prior case law was consistent with new subsection (b). See Taylor Lumber Co. v. Clark Lumber Co., 33 Ga. App. 815, 127 S.E. 905 (1925). Prior Georgia law was inconsistent with subsection (a). See the Comment to new § 14-8-17. There were no provisions or cases on point with respect to the matters covered by subsections (d)-(f).

Official UPA The section has been changed from the official version by the coverage in subsection (a) of all of the situations covered by official subsections 41(1)-(3) and (5)-(6). The effect of this change, apart from simplification, is to preserve the rights of pre-dissolution creditors against the assets of a new firm carried on by one or more of the old members regardless of whether the new firm consented or whether there was an assignment of property rights.

Cross-References Partners' liability for post-dissolution debts: §§ 14-8-16 and14-8-35. Liability of incoming partner: § 14-8-17. Changes in membership as causes of dissolution: § 14-8-31. Personal liability of partners of pre-dissolution firm for pre-dissolution debts: § 14-8-36. Retired partner or estate of deceased partner as creditor of new partnership: § 14-8-42.

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, §§ 715, 750 et seq.

C.J.S.

- 68 C.J.S., Partnership, §§ 232 et seq., 343 et seq., 434, 435.

ALR.

- Construction and application of expulsion provision in medical partnership agreement, 87 A.L.R.3d 328.

Cases Citing Georgia Code 14-8-41 From Courtlistener.com

Total Results: 2

Chaney v. Burdett

Court: Supreme Court of Georgia | Date Filed: 2002-02-25

Citation: 560 S.E.2d 21, 274 Ga. 805

Snippet: consistent with prior Georgia case law." OCGA §§ 14-8-41(a) and 14-8-42 do not require a different interpretation

Holmes v. Henderson

Court: Supreme Court of Georgia | Date Filed: 2001-06-25

Citation: 549 S.E.2d 81, 274 Ga. 8, 2001 Fulton County D. Rep. 1985, 2001 Ga. LEXIS 526

Snippet: Goldberg, 99 A2d 474, 476 (Pa. 1953). See also OCGA § 14-8-41 (a). Where title to real property is in the name