50 A.D.2d 54
PROCEDURAL POSTURE: Plaintiff partners appealed from the Supreme Court in New York County (New York), which granted summary judgment to defendants, partners and company. Plaintiffs asserted that the partnership agreement expressly authorized the entry of their adult children into the partnership, but defendants urged that the agreement only provided for the right of assignments or transfers of shares of the profits of the partnership.
-Plaintiffs entered into a partnership agreement with defendants and formed defendant company. -Plaintiffs assigned a percentage of their share in the partnership to their adult children and requested an amended agreement to reflect the change, but the partners refused.
-The trial court found that the partnership agreement was ambiguous, and that there was a triable issue with respect to the intent.
-On appeal, the court held that the agreement was not ambiguous, and that, pursuant to the terms of the agreement and of the Partnership Law, consent of the other partners was required in order to admit the others to the partnership.
-The court stated that a reading of the agreement indicated that the parties intended to observe the differences between assignees of a partnership interest and the admission into the partnership itself of new partners.
-The court held that N.Y. Partnership Law § 40(7) provided that no person could become a member of a partnership without the consent of all the partners, that the partnership agreement was intended to limit a partner with respect to his right to assign a partnership interest, and that plaintiffs' children had interests as assignees.
An assignee of an interest in the partnership is not entitled to interfere in management/administration of partnership, but is merely entitled to receive the profits to which the assigning partner would otherwise be entitled.
OUTCOME: The court modified the trial court's order to grant summary judgment in favor of defendants to the extent of declaring that the partnership agreement did not permit entry into the partnership of new partners, including the adult children of plaintiffs who had reach their majority, without the consent of all the partners.
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