Thursday, February 14, 2013

Creel v. Lilly case brief

Creel v. Lilly case brief summary 

354 Md. 77

SYNOPSIS: Petitioner personal representative of the estate of a deceased partner sought review of a judgment from the Court of Special Appeals (Circuit Court for Charles County) (Maryland), which held that respondent surviving partners were under no duty to liquidate the partnership on demand by petitioner and that there was no basis for "continuation" damages.

FACTS:
-On June 1, 1993, Mr. Creel began a NASCAR memorabilia company.
-On September 20, 1994, Mr. Creel expanded his business by incorporating partners and moving out of the floral shop of his wife's and into his own space.
-Mr. Creel passed away and in this case his wife is asking for the surviving partners to liquidate all partnership assets because there is no provision in the partnership agreement providing for the continuation of the partnership upon a partners death and the estate has not consented to the continuation of the business.- The court affirmed a judgment holding that respondent surviving partners were under no duty to liquidate the partnership on demand by petitioner personal representative of the estate of a deceased partner.
- Petitioner claimed respondents had a duty to liquidate all partnership assets because the partnership agreement did not provide for continuation of the partnership upon a partner's death and the estate had not consented to continuation.

ANALYSIS:

-Respondents were under no duty, however, to "liquidate on demand" because the applicable Uniform Partnership Act did not mandate a forced sale of all partnership assets in order to ascertain the true value of the business.
-To hold otherwise vested excessive power and control in the deceased partner's estate.
-Further, a forced sale of all partnership assets was unwarranted where respondents in good faith wound up the business and provided petitioner with an accurate accounting allowing for payment of a proportionate share of the business.
-Finally, there was no basis for "continuation" damages because respondents' subsequent partnership was a successor partnership.

RULES: 
-A partnership is either (1) for a definite term or particular undertaking, or (2) at-will, which means the business has no definite term or particular undertaking.
-An at-will partnership continues indefinitely and can be dissolved by the express will of any partner or automatically by the happening of a specific event mandated by the UPA, such as death of partner.
-UPA, may avoid automatic dissolution upon death of a partner by providing for its continuation in the partnership agreement (aggregate theory).

OUTCOME: The court affirmed a judgment holding that respondent surviving partners had no duty to liquidate the partnership on demand by petitioner personal representative of a deceased partner's estate, because the applicable Uniform Partnership Act did not mandate a forced sale of all partnership assets in order to ascertain the true value of the business. Further, there was no basis for "continuation" damages for respondents' successor partnership.

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