Keister v. Lewis

• Court: Court of Appeals of Tennessee
• Decided: January 28, 1999
• Docket: 03A01-9807-CH-00225
• Status: Published

Opinion

FILED IN THE COURT OF APPEALS OF TENNESSEE January 28, 1999

Cecil Crowson, Jr. AT KNOXVILLE Appellate C ourt Clerk

EARL L. KEISTER , JR., and ) C/A NO. 03A01-9807-CH-00225 CHARLOTTE KEISTER, ) ) KNOX CHANCERY Plaintiffs-Appellants, ) ) HON. H. DAVID CATE, v. ) CHANCELLOR ) J. HARRY LEW IS and ) ERWIN A. COLLINS, ) AFFIRMED ) AND Defendants-Appellees. ) REMANDED

MA RY JA NE B ORD EN, E GER TON , McA FEE, A RM ISTE AD & DAV IS, P.C ., Knoxville, for Plaintiffs-Appellants.

DONA LD K. VO WELL, and K ENNET H E. MOR ROW, Kn oxville, for Defendants- Appellees.

O P I N IO N

Franks, J.

This is an action to recover under a contract of sale for the purchase of

real estate entered between plaintiffs and a limited partnership against defendants,

genera l partner s of tha t partner ship.

The partn ership agre ed to return th e real estate to th e plaintiffs w ho, in

turn, rele ased th e partne rship “f rom an y further lia bilities un der the c ontract o f sale”.

The Trial Judge held that the release of the partnership, released the defendant partners from any liability, and plaintiffs have appealed.

The dispo sitive issue on appeal is w hether the re lease of the partnership

released the partners fro m any contra ctual liability under th e sales agree ment.

The contract of sale was entered in 1982 between the plaintiffs and

Northside Properties Ltd., a limited partnership. The contract was executed by the

buyer, as Northside Properties, Ltd., by each of the defendants herein who executed

the agreement as a “general partner”.

At the time of the release of the partnership, which was court-approved,

because the partnership was in receivership, it was agreed by the partnership and the

plaintiffs that the release would not “affect any claims” which the plaintiffs “may have

against the g eneral partn ers.” The p laintiffs’ theo ry in their comp laint, is that:

“pursuan t to Tenne ssee law, the defenda nts, as gener al partners, are personally liable

for the term s of the C ontract of S ale.” They fu rther point to th e Unifor m Partner ship

Act in this jurisdiction where it is stated that all partners are liable, jointly and

severally, for everything chargeable to the partnership.” T.C.A. §61-1-114. This is a

correct statement of the law but does not address the Trial Judge’s holding which

essentially states that since the partners’ contractual liability is vicarious by the terms

of the A ct, the rele ase of th e partne rship rel eases th e partne rs.

We believe the Trial Judge reached the proper result, and we affirm.

It is widely held th at where th e partnersh ip entity is released f rom all

liability, the partners’ liability for the partnership’s acts and omissions is also released,

becau se such liability is vic arious. See, e.g.,Kinetics, Inc. v. El Paso Products Co., 99

NM 22 , 653, P.2d 522 (198 2); M.A. Shaw, Individually and d/b/a Contractors Co-op

Co., and d/b/a 3C Roofing v. Kennedy Ltd., et al., 879 S.W.2d 240 (Ct. App. TX.

1994). Th ere can be no doub t that these par tners signed the contrac t in their

representative capacity as general partners, and on this record have no personal

2 liability to plaintiffs independent of the Contract. Accordingly, the release having

extinguished their vicarious liability, the judgment entered for the defendants was

appropriate and the Trial Court is affirmed.

The cost of the appeal is assessed to appellants.

__________________________ Herschel P. Franks, J.

CONCUR:

___________________________ Houston M. Godd ard, P.J.

___________________________ Charles D. Susano, Jr., J.