Blumer Brewing Corp. v. Mayer
269 N.W. 693, 111 A.L.R. 1087, 223 Wis. 540 (1936)
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Rule of Law:
Under the Uniform Partnership Act, when a partner dies and the business is continued by the surviving partner with the consent of the deceased partner's representative, the deceased partner's interest in the partnership property becomes liable for debts incurred by the continuing business, just as if an assignment of that interest had been made.
Facts:
- Charles R. Einbeck and Hugo Einbeck were partners in a business named Einbeck Brothers.
- Hugo Einbeck died, which by law dissolved the partnership.
- Charles R. Einbeck, the surviving partner, was also appointed the administrator of Hugo Einbeck's estate.
- As the surviving partner, Charles R. Einbeck did not liquidate the partnership but instead continued to operate the business.
- As the administrator of Hugo's estate, Charles R. Einbeck permitted Hugo's interest in the partnership property to remain in the continuing business.
- The business incurred new debts after Hugo Einbeck's death.
- The heirs of Hugo Einbeck did not protest or object to the continuation of the business.
Procedural Posture:
- A creditor of the Einbeck Brothers partnership initiated a legal action in a Wisconsin trial court.
- The trial court held that the interest of the deceased partner, Hugo Einbeck, was not liable for debts incurred by the partnership business after his death.
- The plaintiff creditor, as the appellant, appealed the trial court's judgment to the Supreme Court of Wisconsin.
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Issue:
Does the consent of a deceased partner's representative to the continuation of the partnership business subject the deceased partner's interest in the partnership to liability for debts incurred after the partner's death, even when the representative is also the surviving partner?
Opinions:
Majority - Rosenberry, C. J.
Yes. The consent of a deceased partner's representative to the continuation of the partnership business subjects the deceased partner's interest in the partnership property to liability for debts incurred after the dissolution. The Uniform Partnership Act (UPA), specifically sec. 123.36(3), gives legal effect to the representative's consent, treating it as equivalent to an assignment of the deceased's interest to the continuing partnership. The purpose of this provision is to avoid the disruption and confusion that resulted at common law when a partnership dissolved, thereby protecting creditors and promoting business continuity. An administrator has the power to sell the personal property of an estate, which includes the partnership interest, without a court order; therefore, an administrator also has the lesser power to consent to the retention of that interest in the continuing business. The fact that the administrator and surviving partner are the same person does not negate this power, as the UPA focuses on the act of consent and acquiescence, not a formal contract, to trigger the liability of the deceased partner's interest.
Analysis:
This decision clarifies a key provision of the Uniform Partnership Act, establishing that a representative's 'consent' to the continuation of a partnership business can be implied through acquiescence and does not require a formal court order or contract. By doing so, the court prioritizes the stability of the business and the protection of creditors over the common law's rigid dissolution requirements. The ruling solidifies the principle that a deceased partner's interest remains at risk in the continuing enterprise if their representative allows it, even when a potential conflict of interest exists because the representative is also the surviving partner. This precedent provides clarity for creditors dealing with a partnership that has continued after the death of a partner.
