RNR Investments Limited Partnership v. Peoples First Community Bank

RNR Investments Limited Partnership v. Peoples First Community Bank
812 So. 2d 561 (Fla.Dist.Ct.App.2002)

Synopsis: Mortgagee brought foreclosure action after limited partnership, as mortgagor, defaulted under terms of note and mortgage.

Facts: Peoples First Community Bank (P) sought foreclosure of a construction project after RNR Investments (D) defaulted on its construction loan.

Issue: Is a partnership bound by the unauthorized acts of a partner when the third party neither knew nor should have known of restrictions on the partner’s authority?

Rule:
-A general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.

Holding:
-Yes.
-Under the Revised Uniform Partnership Act, a general partner’s authority to act on behalf of the partnership in the ordinary course of partnership business is established, notwithstanding any limitation on the general partner’s actual authority, if a third party did not know or have reason to know that the general partner in fact lacked authority to bind the partnership.
-Although a third party has no duty to inspect the partnership agreement to detect any limitations on a general partner’s authority, the partnership may file a statement of partnership authority to restrict a partner’s authority. 




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