Business Associations, Pages 210–215

Hellman v. Anderson

Court of Appeal of California, 1991

Facts:

Anderson owned 80% of RMI, a general partnership, but owed $494,885 in unpaid judgments. To satisfy his debt, the court authorized the foreclosure and sale of Anderson's interest in RMI.

Judgment:

Remanded to determine whether foreclosure will unduly interfere with partnership business of the partnership.

Issue:

Can a court foreclose upon a judgment debtor's partnership interest without the other partners' consent?

Reasoning:

One's partnership interest is separate and distinct from his rights in specific partnership property and his right to participate in the management. The "interest in the partnership" means only the partner's share of profits and surplus.

[A bunch of arguments about specific little sections of law]

If the legislature wanted to require a partner's consent, it knows how to do so. It does so concerning redemption, but not with foreclosure. Thus, it is not required for foreclosure.

As foreclosure does not affect partnership assets nor grant the right to participate in management, it will not always unduly interfere with the partnership to the extent of requiring the other partners' consent. It must be determined on a case-by-case basis.

Rule/Holding:

A judgment debtor's interest in a partnership may be foreclosed upon and sold without the other partners' consent, provided the foreclosure does not unduly interfere with the partnership business.