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Seventy-Three Land, Inc. v. Maxlar Partners

Decided: February 7, 1994.

SEVENTY-THREE LAND, INC., PLAINTIFF-RESPONDENT,
v.
MAXLAR PARTNERS, A NEW JERSEY PARTNERSHIP AND LARRY LEVY, JANE LEVY, NANCY LEVY, DEFENDANTS, AND MAX ODLEN, DEFENDANT-APPELLANT



On appeal from Superior Court of New Jersey, Law Division, Burlington County.

Brody, Stern and Keefe. The opinion of the court was delivered by Brody, P.J.A.D.

Brody

We hold that a contract creditor of a partnership may in a single action sue the partnership and its general partners for the debt. Judgment for a sum certain, which shall be deemed final, may be entered only against the partnership. Initially, judgment against the partners shall be limited to liability only, and shall not be entered as a final judgment for a sum certain until there is proof that the partnership cannot satisfy the judgment.

Plaintiff brought this action for the balance due on a note it holds that was made by defendant Maxlar Partners, a partnership. The other defendants are Maxlar's general partners, all of whom but Max Odlen have filed for bankruptcy. Odlen appeals from a judgment in the amount of $800,274.72 that was entered without opposition against Maxlar, him and another partner who later filed for bankruptcy. The trial court had previously denied Odlen's

motion to strike the complaint, rejecting his argument that the complaint failed to state a claim upon which relief may be granted against him because plaintiff did not allege that the note was uncollectible from the partnership. Plaintiff had successfully argued on the motion that a general partner is liable for a partnership's contract debt even in the absence of proof that the debt cannot be collected from the partnership.

We begin with the Uniform Partnership Act (UPA), adopted by our Legislature as the Uniform Partnership Law, N.J.S.A. 42:1-1 to -43. The section dealing with the liability of partners, N.J.S.A. 42:1-15, reads as follows:

All partners are liable:

a. Jointly and severally for everything chargeable to the partnership under sections 42:1-13 [partnership bound by partner's wrongful act] and 42:1-14 [partnership bound by partner's breach of trust] of this title.

b. Jointly for all other debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract. [Emphasis added.]

A promissory note is evidence of one of the "other debts and obligations of the partnership" for which a partner is liable jointly and not jointly and severally. La Mar-Gate, Inc. v. Spitz, 252 N.J. Super. 303, 308, 599 A.2d 928 (App.Div.1991).

The distinction between "joint and several" liability and "joint" liability in the present context has not been treated in any reported New Jersey opinion, but it has in other jurisdictions that have adopted the UPA. We must regard those cases as authority. "This chapter shall be so interpreted and construed as to effect its general purpose to make uniform the law of those states which enact it." N.J.S.A. 42:1-4.4.

The Alabama legislature modified the UPA by rendering partners jointly and severally liable for all partnership debts. In explaining the effect of ...


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