Putnam v. Shoaf
620 S.W.2d 510 (Ct. App. of Tenn., Western Section, at Jackson, 1981).
Putnam was part owner of a business with the Charltons. It was operating at a loss and had a lot of debt, so she conveyed her interest in the partnership to Shoaf by quit claim deed. It turned out that while Putnam was still a partner, the old bookkeeper was embezzling money.
- Lawsuits were filed and the partnership was awarded around $68,000.
- Half of the money went to the Charltons, and the other half is the subject matter of this suit – i.e., does it go to Putnam or Shoaf?
Does Putnam’s conveyance of her interest in the partnership preclude her from receiving the money?
When partner gave quitclaim deed conveying her partnership rights, she must have intended to convey her interest in the partnership, as she had no other interest to convey.
- Thus, if the partnership had an unknown asset at the time of the transfer of partnership interest, such as an untapped oil reservoir, the former partner has no right to it.
Uniform Partnership Act Section 501: Partner not co-owner of partnership property
A partner is not a co-owner of partnership property and has no interest in partnership property which can be transferred, either voluntarily or involuntarily.
Uniform Partnership Act Section 503: Transfer of partner’s transferable interest
(b) A transferee of a partner’s transferable interest in the partnership has a right:
(1) to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled;
(2) to receive upon the dissolution and winding up of the partnership business, in accordance with the transfer, the net amount otherwise distributable to the transferor;