Bynum v. Sands, Inc.
70 Nev. 191, 264 P.2d 846, 1953 Nev. LEXIS 41 (1953)
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Rule of Law:
Under the Uniform Partnership Act, an assignment of an interest in a partnership conveys only a right to receive a share of the profits and surplus; it does not grant the assignee an ownership interest in specific partnership property.
Facts:
- On November 21, 1945, a partnership between George W. Frisby and Dave Anderson leased certain lands in Clark County, Nevada.
- The partnership constructed and operated a business known as 'Club Kit Carson' on the leased land.
- On April 1, 1946, the partnership entered into an agreement with Harvey A. Bynum, assigning him a 'twenty percent (20%) interest' in the partnership as compensation for past services.
- The agreement explicitly stated that Bynum was not a partner, had no management rights, but was entitled to receive 20% of the profits after the partners recouped their initial $62,500 capital contribution.
- In November 1949, the partnership dissolved when Anderson sold his entire interest in the partnership assets to Frisby.
- On August 12, 1950, Frisby and his wife leased the property formerly held by the partnership to the respondent.
Procedural Posture:
- Harvey A. Bynum (plaintiff) filed an action in the Eighth Judicial District Court of the State of Nevada, in and for the County of Clark, against the respondent (lessee).
- Bynum sought to recover possession of an undivided one-fifth interest in the land and for rents and profits received by the respondent.
- The trial court entered a judgment denying all relief asked by Bynum.
- Bynum (appellant) appealed the judgment to the Supreme Court of Nevada.
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Issue:
Does the assignment of a percentage 'interest in a co-partnership' to a non-partner convey an ownership interest in specific partnership property, such as a leasehold, making the assignee a tenant in common?
Opinions:
Majority - Eather, C. J.
No. The assignment of a percentage interest in a partnership does not convey an ownership interest in specific partnership property. The Uniform Partnership Act distinguishes between a partner's rights in specific partnership property and a partner's 'interest in the partnership,' which is defined as a share of the profits and surplus and is considered personal property. The agreement's language, which explicitly denied Bynum management rights and limited his entitlement to a share of profits, mirrors the statutory definition of an assignee's rights. Bynum received only a right to one-fifth of the partnership profits and any surplus upon dissolution, not an interest in the leasehold itself. As such, he did not become a tenant in common and has no possessory rights to the property.
Analysis:
This decision clarifies the fundamental distinction under partnership law between owning a share of the business entity (an 'interest in the partnership') and owning the assets held by that entity. It reinforces that an assignee of a partnership interest receives only a passive economic right, not a property right in the partnership's specific assets. This principle is crucial for maintaining the stability of partnerships, as it prevents assignees from interfering with management or asserting control over partnership property, thereby protecting the original partners' operational control.
