Keister v. Lewis

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
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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.
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