Holzman v. De Escamilla
86 Cal.App.2d 858, 195 P.2d 833 (Ct. App. 1948).
Hacienda Farms was a limited partnership that was comprised of De Escamilla as the general partner, and Russell and Andrews as limited partners. The partnership went into bankruptcy and Holzman was appointed as trustee of the estate.
Whether Russell and Andrews were limited partners or general partners.
- If they were deemed general partners they would liable to the creditors.
Section 2483 of the Civil Code provides as follows:
- “A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business.”
- “The two men had absolute power to withdraw all the partnership funds in the banks without the knowledge or consent of the general partner.”
- “Either Russell or Andrews could take control of the business from de Escamilla by refusing to sign checks for bills contracted by him and thus limit his activities in the management of the business.”
- “They required him to resign as manager and selected his successor.”
- “They were active in dictating the crops to be planted, some of them against the wish of de Escamilla.”
- Thus, the evidence clearly proved that they took part in the control of the business.
Rule: A limited partner can be held liable as a general partner if he exercises sufficient control of the business.