Business Associations, Pages 194–197

Head v. Henry Tyler Construction Corp.

Supreme Court of Alabama, 1988

Facts:

HTCC, a construction company, entered a construction contract with Atrium, a limited partnership. Atrium paid under half of the construction cost however. To recover the balance, HTCC sued Atrium; its sole general partner, Birmingham One; its sole general partner, Land Company; and its general partners, the individual defendants. All the limited partnerships had filed for bankruptcy however.

Procedural History:

Trial court granted summary judgment in favor of HTCC against the individual defendants.

Issue:

Can HTCC collect from the individual defendants?

Defendant's Argument:

While defendants are liable for the debts of Atrium, HTCC must first exhaust efforts to obtain payment from the partnership or prove that it has no assets before proceeding against the individual defendants directly.

Rule:

The general common law rule is that partnership contracts only create a joint liability, and partners are only individually liable if the assets of the partnership are inadequate. However, Alabama law unequivocally states that partners are "jointly and severally" liable for all debts and obligations of the partnership.

Explanation:

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Several liability is "[l]iability separate and distinct from liability of another to the extent that an independent action may be brought without joinder of others."

Reasoning:

As defendants are severally liable and several liability imposes no conditions precedent to holding one liable, it was proper for HTCC to sue defendants individually before their partnerships.

Holding:

Yes, HTCC can collect from the individual defendants. Affirmed.

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