2018 New Mexico Statutes
Chapter 54 - Partnerships
Article 1A - Uniform Partnerships
Section 54-1A-504 - Partner's transferable interest subject to charging order.
(a) On application by a judgment creditor of a partner or of a partner's transferee, a court having jurisdiction may charge the transferable interest of the judgment debtor to satisfy the judgment. The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor in respect of the partnership and make all other orders, directions, accounts and inquiries the judgment debtor might have made or which the circumstances of the case may require.
(b) A charging order constitutes a lien on the judgment debtor's transferable interest in the partnership. The court may order a foreclosure of the interest subject to the charging order at any time. The purchaser at the foreclosure sale has the rights of a transferee.
(c) At any time before foreclosure, an interest charged may be redeemed:
(1) by the judgment debtor;
(2) with property other than partnership property, by one or more of the other partners; or
(3) with partnership property, by one or more of the other partners with the consent of all of the partners whose interests are not so charged.
(d) The Uniform Partnership Act (1994) [54-1A-1202 NMSA 1978] does not deprive a partner of a right under exemption laws with respect to the partner's interest in the partnership.
(e) This section provides the exclusive remedy by which a judgment creditor of a partner or partner's transferee may satisfy a judgment out of the judgment debtor's transferable interest in the partnership.
History: Laws 1996, ch. 53, § 504.
Cross references. — For form for claim of exemptions on executions, see Rule 4-803 NMRA.
For form for order on claim of exemption and order to pay in execution proceedings, see Rule 4-804 NMRA.
For form for application for writ of garnishment and affidavit, see Rule 4-805 NMRA.
For form for notice of right to claim exemptions from execution, see Rule 4-808A NMRA.
For form for claim of exemption from garnishment, see Rule 4-809 NMRA.
Limits of partnership insurance coverage. — The obligation of a liability insurer is contractual and is to be determined by the terms of the policy. Where neither the partners nor the insurance company intended to protect the partners individually from their own tortious acts which were outside the scope of the partnership business, nor did they intend to create a new liability in the partnership when none previously existed, but intended protection only from liability because of accidents arising out of partnership operation, there is no coverage for claim for unlawful and malicious assault committed by one partner personally. Jones v. Harper, 1965-NMSC-136, 75 N.M. 557, 408 P.2d 56.
Garnishment proceedings may be used to attach an individual partner's interest, which is profits remaining after partnership debts are paid, and the accounts are settled between the partners. Behles v. Ellermeyer (In re Lucas), 107 Bankr. 332 (Bankr. D.N.M. 1989).
A charging order is not the exclusive method of levy for the debt of a partner where the state law provides for garnishment. Service of a writ of garnishment on any general partner, other than the debtor partner, would require only that profits payable to the debtor partner be paid to the garnishor instead. Behles v. Ellermeyer (In re Lucas), 107 Bankr. 332 (Bankr. D.N.M. 1989).
Law reviews. — For article, "Attachment in New Mexico - Part II," see 2 Nat. Resources J. 75 (1962).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 59A Am. Jur. 2d Partnership § 790 et seq.
Right of individual partner to exemption in partnership property, 4 A.L.R. 300.
Right of partner to preference over creditors of copartner, 6 A.L.R. 160.
Chattel mortgage on partner's interest in firm, 54 A.L.R. 534.
Relative rank of judgment, attachment or execution based on partnership liability, and judgment, attachment or execution based on liability of individual partner, 75 A.L.R. 997.
Appointment of receiver of property of individual debtor or partnership on application of simple contract creditor without lien, 109 A.L.R. 279.
Ex parte appointment of receiver for partnership, 169 A.L.R. 1127.
68 C.J.S. Partnership §§ 194, 218.
