Martin v. Peyton (N.Y. 1927)
FACTS
-Lenders to an investment firm wanted many conditions to protect their investments.
RULES
Trustees [lenders] may inspect the firm books and veto any business they think is
highly speculative or injurious without incurring partnership liability.
A lender contracting for an ‘option’ for membership may be suspicious but is not
dispositive.
ANALYSIS
In modern times, this wouldn’t end up in court because the defendants were clearly
creditors and not partners. However, in the early years of the UPA, courts weren’t
sure how lenders and partners, as opposed to lenders and corporations, mixed.
Even though the lenders weren’t liable, being a partnership rather than a corporation
put them at more risk.
FACTS
-Lenders to an investment firm wanted many conditions to protect their investments.
RULES
Trustees [lenders] may inspect the firm books and veto any business they think is
highly speculative or injurious without incurring partnership liability.
A lender contracting for an ‘option’ for membership may be suspicious but is not
dispositive.
ANALYSIS
In modern times, this wouldn’t end up in court because the defendants were clearly
creditors and not partners. However, in the early years of the UPA, courts weren’t
sure how lenders and partners, as opposed to lenders and corporations, mixed.
Even though the lenders weren’t liable, being a partnership rather than a corporation
put them at more risk.
No comments:
Post a Comment