Business Associations, Pages 205–208

Rapoport v. 55 Perry Co.

Supreme Court of New York, Appellate Division, 1975

Facts:

The Rapoports and the Parnes were in a partnership whereby each family owned 50% of the partnership interest. The Rapoports assigned a 10% interest to their adult children, but the Parnes refused to execute the amended partnership agreement. The Rapoports then brought suit, seeking a declaration that they had an absolute right to assign their interests without the Parnes' consent and for their children to be declared partners.

Procedural History:

Despite the parties' agreement to the contrary, the trial court found that the partnership agreement was ambiguous and that there was a triable issue of fact as to the parties' intent.

Issue:

Can one assign his partnership interest without the consent of the other partners?

Reasoning:

The clause in the partnership agreement that the Rapoports claim support their position merely allows for the assignment of one's financial interest in the partnership, not actual admission into the partnership. Such an assignee has no right "to interfere in the management or administration of the partnership business."

Rule/Holding:

Unless there is an agreement to the contrary, no person can become a member of a partnership without the consent of all the partners.

Judgment:

Summary judgment granted to the defendants.

Dissenting Opinion:

Nunez:

The partnership agreement is indeed ambiguous and a trial is needed to determine the intent.

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