2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 8 - Partnerships
§ 14-8-25. Incidents of Tenancy in Partnership

1. A partner is co-owner with his partners of specific partnership property holding as a tenant in partnership.
2. The incidents of the tenancy are such that:
   1. A partner, subject to the provisions of this chapter and to any agreement between the partners, has an equal right with his partners to possess specific partnership property for partnership purposes; but he has no right to possess such property for any other purpose without the consent of his partners;
   2. A partner's right in specific partnership property is not assignable except in connection with the assignment of rights of all the partners in the same property;
   3. A partner's right in specific partnership property is not subject to attachment, judgment lien, execution, or other enforcement of a claim except on a claim against the partnership. When partnership property is attached for a partnership debt the partners, or any of them, or the representatives of a deceased partner, cannot claim any right under the homestead or exemption laws;
   4. On the death of a partner his right in specific partnership property vests in the surviving partner or partners, except where the deceased was the last surviving partner, when his right in such property vests in his legal representative. Such surviving partner or partners, or the legal representative of the last surviving partner, has no right to possess the partnership property for any but a partnership purpose;
   5. A partner's right in specific partnership property is not subject to the year's support provided for in former Code Sections 53-5-1 and 53-5-2 as such existed on December 31, 1997, if applicable, or in Code Sections 53-3-1, 53-3-2, 53-3-4, 53-3-5, and 53-3-7.
3. Nothing in Code Section 14-8-24 and this Code section shall modify, affect, or act in derogation of any portion of this chapter concerning the manner of vesting title to property (including, without limitation, real property) in the name of the partnership or the ownership of such property by the partnership.

(Code 1981, §14-8-25, enacted by Ga. L. 1984, p. 1439, § 1; Ga. L. 1998, p. 128, § 14; Ga. L. 2011, p. 752, § 14/HB 142.)

- For article surveying real property law in 1984-1985, see 37 Mercer L. Rev. 343 (1985).

Note to Uniform Partnership Act Subsection (a) defines a partner's interest in specific partnership property as a tenancy in partnership. Although this appears to be consistent with ownership by the individual partners rather than by the partnership entity, subsection (b) clarifies that partners do not have individual rights in partnership property by negating with respect to such property each important attribute of individual ownership: Possession (paragraph (b)(1)); assignability (paragraph (b)(2)); rights of creditors of individual partners (paragraph (b)(3), first sentence); partners' claims under the exemption laws (paragraph (b)(3), second sentence); descendability (paragraph (b)(4)); and applicability of the year's support provision (paragraph (b)(5)). Subsection (c) further clarifies that partnership property is owned by the partnership entity rather than by the individual partners by reconfirming that the partnership may own and hold title to partnership property.

Prior Georgia Law Subsection (a): There was no comparable provision. Although it has been said that partners own partnership property as tenants in common (see, e.g., Bloodworth v. Bloodworth, 226 Ga. 898, 178 S.E.2d 198 (1970)), this has been qualified by an "equitable rule . . . designed to give substantial justice between the partners themselves and the firm creditors of the partners, in the adjustment of the partnership affairs." Taylor v. McLaughlin, 120 Ga. 703, 706, 48 S.E. 203, 204 (1904). The extent to which the tenancy in common approach was qualified in the prior Georgia cases will appear from the discussion of subsection (b), below.

Paragraph (b)(1): There was no comparable provision. Prior O.C.G.A. § 14-8-41 provided that the partners "have joint possession" but this was not elucidated in the cases.

Paragraph (b)(2): There was no comparable provision. Although the case law has permitted partner assignments of their interests in partnership property, these assignments have been held subject to the claims of partnership creditors. See Taylor v. McLaughlin, supra; Shaw v. McDonald, 21 Ga. 395 (1857); Carpenter v. Cornwall, 133 Ga. App. 797, 213 S.E.2d 56 (1975). Thus, the partners were, in effect, permitted to assign what is defined in new § 14-8-26 as their interests in the partnership rather than their interests in specific partnership property.

Paragraph (b)(3): O.C.G.A. § 18-3-6, prohibiting attachment of joint property in cases of joint contractors and partners, and prior O.C.G.A. § 14-8-74, permitting only garnishment of a partner's interest in the partnership, were consistent with the first sentence. However, case law under the exemption provision (Georgia Constitution Article I, section 1, paragraph XXVI and O.C.G.A. § 44-13-1) is inconsistent with the second sentence of paragraph (b)(3). See Citizen's Bank & Trust Co. v. Pendergrass Banking Co., 164 Ga. 302, 138 S.E. 223 (1927); Blanchard, Williams & Co. v. Paschal, 68 Ga. 32 (1881); Harris v. Visscher, 57 Ga. 229 (1876).

Paragraph (b)(4): Prior O.C.G.A. § 14-8-47 was consistent in providing that control of the partnership property passed upon death of a partner to the surviving partners. However, prior O.C.G.A. § 14-8-48 provided that the surviving partners could convey the property only to the extent necessary to pay debts.

Paragraph (b)(5): There was no comparable provision. Georgia case law under the year's support provisions (O.C.G.A. §§ 53-5-1 and53-5-2) was consistent in holding that the year's support is payable only out of the surplus after payment of debts - that is, only out of what is defined as the partner's interest in the partnership under § 14-8-26. See Ferris v. Van Ingen & Co., 110 Ga. 102, 35 S.E. 347 (1900); Loftin v. Dooley, 68 Ga. App. 203, 22 S.E.2d 612 (1942).

Official UPA This section is substantially the same as the official version except for the added references to "judgment lien" and "other enforcement of a claim" in paragraph (b)(3), the substitution in paragraph (b)(5) of the reference to the year's support provisions for "dower, curtesy, or allowances to widows, heirs, or next of kin," and the addition of subsection (c).

Cross-References What is partnership, as distinguished from individual property: § 14-8-8(a)-(e). Vesting title and ownership of partnership property in partnership: § 14-8-8(f)-(g). Effect of a conveyance by one or more partners of all of the partnership property: §§ 14-8-9 and14-8-10. Conveyance of legal title to property held in the name of a deceased partner: § 14-8-10. Assignment of partner's interest in the partnership: § 14-8-27. Creditor's rights in partner's interest in the partnership: § 14-8-28.

ANALYSIS

• General Consideration
• Death of Partner

General Consideration

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Code 1882, § 1907, Civil Code 1895, §§ 2647, 2648, Civil Code 1910, §§ 1010 - 1087, 3162, 3176, 3177, Code 1933, §§ 3-305, 75-202, 75-208, 75-209, 75-210 and former Code Sections 14-8-41, 14-8-47, 14-8-48, and 14-8-74, in effect prior to the 1984 repeal and reenactment of this chapter, are included in the annotations to this Code section.

- When parties are partners, each of them is equally entitled to possession of a car as an asset of the partnership. Bush v. Smith, 77 Ga. App. 329, 48 S.E.2d 582 (1948) (decided under former Code 1933, § 75-202).

- At common law, when real estate was conveyed to a partnership, title vested in individual partners as tenants in common, but, in equity real estate of the firm is considered personal property to the extent necessary to pay debts. Hasty v. Wilson, 223 Ga. 739, 158 S.E.2d 915 (1967) (decided under former Code 1933, § 75-210).

- There is no provision for garnishment of a partner's interest in undivided partnership assets in the hands of a third party. Grande Carpet Co. v. Bedco Assocs. No. 1, 171 Ga. App. 33, 318 S.E.2d 767 (1984) (decided under former § 14-8-74, relating to garnishment of partner's interest in partnership assets).

Cited in Harris v. Escoe (In re Woolston), 147 Bankr. 279 (Bankr. M.D. Ga. 1992).

Death of Partner

Control by surviving partner.

- Upon death of partner, surviving partner has right to exclusive control of partnership assets and may bring suit on a promissory note, property of the partnership, without joining as party plaintiff the personal representative of the deceased partner. This is true although no debts of the partnership exist at the time of the institution of the suit. Bone v. Faircloth, 52 Ga. App. 23, 182 S.E. 400 (1935) (decided under former Code 1933, § 75-208).

Upon death of a partner, partnership assets rightfully belong in possession of the surviving partner, and none of the assets can ever belong to the estate of the deceased partner until all debts of the partnership are paid, including what may be due to the surviving partner. Kinney v. Robinson, 181 Ga. 837, 184 S.E. 616 (1936) (decided under former Code 1933).

For purpose of winding up affairs of a partnership consisting of two members, one of whom dies, the surviving partner, being primarily liable to creditors of the partnership, has right to control assets belonging to the firm, to exclusion of the legal representative of the deceased partner. Cook v. Cochran, 42 Ga. App. 478, 156 S.E. 465 (1931) (decided under former Civil Code 1910, §§ 3176, 3177); Bone v. Faircloth, 52 Ga. App. 23, 182 S.E. 400 (1935) (decided under former Civil Code 1910, §§ 3176, 3177).

On death of partner, title to personal assets of firm is cast upon survivor, who is charged with their administration - first, for payment of partnership debts, and secondly, for paying over deceased partner's share in surplus to the deceased's legal representatives. Roberts v. First Nat'l Bank, 61 Ga. App. 284, 6 S.E.2d 88 (1939) (decided under former Code 1933, § 75-208).

Surviving partner has right to control assets of firm, to exclusion of administratrix of deceased partner, for payment of debts; and after debts are paid, assets are divided. Kirk v. Hasty, 239 Ga. 362, 236 S.E.2d 667 (1977) (decided under former Code 1933, § 75-208).

A surviving partner has the entire title and sole control of the property, and represents the power of the former partners. August v. Calloway, 35 F. 381 (S.D. Ga. 1888) (decided under former Code 1882, § 1907).

- The administrator of a deceased "surviving partner," may collect and distribute partnership assets and this includes choses in action. Juhan v. Juhan, 104 Ga. 253, 30 S.E. 779 (1898) (decided under former Civil Code 1895, § 2647).

Appointment of legal representative gives representative no authority to exercise control of property of other persons or copartnerships; ordinarily it only authorizes seizure of such property of the estate as representative must and is entitled to have for the purpose of paying debts of the estate and expenses of administration. Kinney v. Robinson, 181 Ga. 837, 184 S.E. 616 (1936) (decided under former Code 1933).

- Until the interest of the deceased partner in partnership assets is ascertained, and his portion is turned over to his representative, the latter can maintain no suit for recovery of joint effects. Cook v. Cochran, 42 Ga. App. 478, 156 S.E. 465 (1931) (decided under former Civil Code 1910, §§ 3176, 3177); Bone v. Faircloth, 52 Ga. App. 23, 182 S.E. 400 (1935) (decided under former Civil Code 1910, §§ 3176, 3177).

- When executors of a deceased partner, having sufficient power under the will, agree with the surviving partner to hold assets of the partnership as tenants in common, the executors, in the absence of fraud, accident, or mistake, cannot thereafter question the right of the surviving partner to convey the partner's undivided interest in the property to secure that partner's own preexisting debt nor can they enjoin the grantee from exercising power or sale contained in the security deed, on the ground that the partnership property should be first devoted to the payment of partnership debts. Fagan v. Gress, 179 Ga. 616, 176 S.E. 763 (1934) (decided under former Code 1933).

- One year is reasonable time within which to settle partnership accounts. Huggins v. Huggins, 117 Ga. 151, 43 S.E. 759 (1903) (decided under former Civil Code 1895, §§ 2647, 2648).

Refusal of administrator of deceased partner to accept settlement is no excuse for delay. The surviving partner should settle the debts and proceed as provided by statute. Huggins v. Huggins, 117 Ga. 151, 43 S.E. 759 (1903) (decided under former Civil Code 1895, §§ 2647, 2648).

- The surviving partner has, at least in case of insolvency, the power to transfer property to an assignee for the benefit of the partnership creditors, in order to wind up the partnership. However, the surviving partner cannot make an assignment with preferences unless both the surviving partner and the partnership are insolvent. August v. Calloway, 35 F. 381 (S.D. Ga. 1888) (decided under former Code 1882, § 1907).

- Real estate of the partnership may be disposed of by the surviving partner to the extent necessary to pay debts. Kirk v. Hasty, 239 Ga. 362, 236 S.E.2d 667 (1977) (decided under former Code 1933, § 75-210).

- Surviving partner is trustee for share of deceased partner's interest after payment of debts. Bone v. Faircloth, 52 Ga. App. 23, 182 S.E. 400 (1935) (decided under former Code 1933, §§ 75-208, 75-209).

- Unless there is surplus, none of assets of partnership constitute any part of estate of deceased partner, and consequently are not chargeable with year's support allowed to widow. Roberts v. First Nat'l Bank, 61 Ga. App. 284, 6 S.E.2d 88 (1939) (decided under former Code 1933, §§ 75-208, 75-209).

Year's support awarded to partner's widow could only be carved out of or set aside or apart from the estate, or assets of the estate, of the decedent, and his estate would derive none of the assets of the partnership except by proper distribution after it appeared that a surplus existed. Roberts v. First Nat'l Bank, 61 Ga. App. 284, 6 S.E.2d 88 (1939) (decided under former Code 1933, §§ 75-208, 75-209).

- After the dissolution of a partnership by death of one of the partners, the statute of limitations does not commence to run in favor of the surviving partner against the estate of the deceased partner as long as there are debts due by the partnership to be paid, or debts due it to be collected, or until a sufficient time has elapsed since the dissolution of the firm to raise the presumption that all debts due from the partnership have been paid, and that all debts due to it have been collected. Purvis v. Johnson, 163 Ga. 698, 137 S.E. 50 (1927) (decided under former Civil Code 1910, §§ 3176, 3177).

It will be presumed that, before the expiration of a period of nine years, all debts due by the firm had been paid and those due to the firm had been collected; and tolling from the statute of limitations the five years allowed for the taking out of administration upon the estate of the deceased partner, the suit as to an accounting for the personal assets of the partnership, which was not brought within four years of the expiration of the five-year period, was barred. Purvis v. Johnson, 163 Ga. 698, 137 S.E. 50 (1927) (decided under former Civil Code 1910, §§ 3176, 3177).

- There is no validity to the contentions that the control of the assets by the surviving partner must be both for the purpose of "paying debts" and "making distribution"; if there are no debts, the surviving partner has no right to sue on a chose in action of the partnership without making the personal representative of the deceased partner a party thereto. Bone v. Faircloth, 52 Ga. App. 23, 182 S.E. 400 (1935) (decided under former Code 1933, §§ 75-208, 75-209).

- Assuming that after death of one partner it would be technically proper to bring or prosecute the action only in the name of the surviving partner, if suit is brought in the partnership name, the suit is not fatally defective for failure to observe such formality, since it can be corrected by amendment. Central of Ga. Ry. v. George P. Greene & Co., 41 Ga. App. 794, 154 S.E. 809 (1930) (decided under former Civil Code 1910, § 3176).

- In an action, brought individually, by the wife of a deceased partner against the surviving partner, on a promissory note of the partnership, signed in the name of the partnership by both partners, and payable on demand to the wife of the deceased partner, it is no defense to her action against the surviving partner that no administrator of the estate of the deceased partner has been appointed and joined as a party defendant in the action. She is at liberty to proceed against the surviving partner alone at her election. Florence v. Montgomery, 89 Ga. App. 363, 79 S.E.2d 431 (1953) (decided under former Code 1933, § 3-305).

Fact that fieri facias is issued against partnership instead of against surviving partner is immaterial; for if, after the death of a partner, the business is continued by the surviving partner, it is properly listed for taxation in the firm name. Ledbetter v. Farrar Lumber Co., 177 Ga. 779, 171 S.E. 374 (1933) (decided under former Civil Code 1910, §§ 1010 - 1087, 3162).

- Surviving partner cannot set off against the wife, suing as an individual creditor of the partnership, the eventual liability of the deceased partner's estate for contribution on the partnership debt. Florence v. Montgomery, 89 Ga. App. 363, 79 S.E.2d 431 (1953) (decided under former Code 1933, § 3-305).

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 266 et seq.

- 68 C.J.S., Partnership, §§ 135, 136, 138.

- Partnership land as real or personal property for purposes of descent and distribution, 25 A.L.R. 389.

Remedy where additional assets or liabilities are discovered after settlement of partnership affairs as at law or in equity, 41 A.L.R. 1454.

Partner's lien on or interest in assets of partnership as affected by dissolution agreement, 43 A.L.R. 95.

Right of partnership creditor to proceed against estate of deceased partner, 61 A.L.R. 1410.

Validity, construction, and effect of agreement for disposition of interest in partnership in event of death of partner, 73 A.L.R. 983.

Power of surviving partner or member of joint adventure to grant or sell oil and gas lease or other mineral rights covering land belonging to partnership or joint adventure, 89 A.L.R. 588.

Right to judgment, levy, or lien against individual in action under statute permitting persons associated in business under a common name to be sued in that name, 100 A.L.R. 997.

Construction and application of statute requiring surviving partner to give bond as condition of his right to manage and settle partnership affairs, 121 A.L.R. 860.

Death of one of two or more judgment creditors under a joint or partnership judgment as affecting judgment, 122 A.L.R. 752.

Waiver or estoppel predicated upon surviving partner's surrender of possession of partnership property to personal representative of deceased partner, 137 A.L.R. 1024.

Applicability of statute of nonclaim or limitation statute as between surviving partner and estate of deceased partner, 157 A.L.R. 1114.

Meaning and coverage of "book value" in partnership agreement in determining value of partner's interest, 47 A.L.R.2d 1425.

Conclusiveness of statement or decision of accountant or similar third person under contract between others requiring property to be valued by him, 50 A.L.R.2d 1268.

Rights in profits earned by partnership or joint adventure after death or dissolution, 55 A.L.R.2d 1391.

Rights as to business unfinished or fees uncollected upon withdrawal or death of partner in law firm, 78 A.L.R.2d 280.

Relative rights of surviving partner and the estate of the deceased partner in proceeds of life insurance acquired pursuant to partnership agreement, 83 A.L.R.2d 1347.

Partner's breach of fiduciary duty to copartner on sale of partnership interest to another partner, 4 A.L.R.4th 1122.