ASSIGNMENT
Martin, Mark, and Marvin formed a retail clothing partnership named M Clothiers and conducted a business for many years, buying most of their clothing from Hill, a wholesaler. On January 15, Marvin retired from the business, but Martin and Mark decided to continue it.
As part of the retirement agreement, Martin and Mark agreed in writing with Marvin that Marvin would not be responsible for any of the partnership debts, either past or future. On January 15, the partnership published a notice of Marvin’s retirement in a newspaper of general circulation where the partnership carried on its business. Before January 15, Hill was a creditor of M Clothiers to the extent of $10,000, and on January 30, he extended additional credit of $5,000. Hill was not advised and did not in fact know of Marvin’s retirement and the change of the partnership. On January 30, Ray, a competitor of Hill, extended credit for the first time to M Clothiers in the amount of $3,000. Ray also was not advised and did not in fact know of Marvin’s retirement and the change of the partnership. On February 1, Martin and Mark departed for parts unknown, leaving no partnership assets with which to pay the described debts. What is Marvin’s liability, if any, (a) to Hill and (b) to Ray?
12. Ben, Dan, and Lilli were partners sharing profits in proportions of one-fourth, one-third, and five-twelfths, respectively. Their business failed, and the firm was dissolved. At the time of dissolution, no financial adjustments between the partners were necessary with reference to their respective partners’ accounts, but the firm’s liabilities to creditors exceeded its assets by $24,000. Without contributing any amount toward the payment of the liabilities, Dan moved to a destination unknown. Ben and Lilli are financially responsible. How much must each contribute?
13. Ames, Bell, and Cole were equal partners in the ABC Construction Company. Their written partnership agreement provided that the partnership would dissolve upon the death of any partner. Cole died on June 30, and his widow, Cora Cole, qualified as executor of his will. Ames and Bell wound up the business of the partnership, and on December 31, they completed the sale of all of the partnership’s assets. After paying all partnership debts, they distributed the balance equally among themselves and Mrs. Cole as executor. Subsequently, Mrs. Cole learned that Ames and Bell had made and withdrawn a net profit of $200,000 from July 1 to December 31. The profit was made through new contracts using the partnership name and assets. Ames and Bell had concealed such contracts and profit from Mrs. Cole, and she learned about them from other sources. Immediately after acquiring this information, Mrs. Cole made demand upon Ames and Bell for one- third of the profit of $200,000. They rejected her demand. What are the rights and remedies, if any, of Cora Cole as executor?
14. The articles of partnership of the firm of Wilson and
Company provide the following: William Smith to contribute $50,000; to receive interest thereon at 13 percent per annum and to devote such time as he may be able to give; to receive 30 percent of the profits. John Jones to contribute $50,000; to receive interest on same at 13 percent per annum; to give all of his time to the business and to receive 30 percent of the profits. Henry Wilson to contribute all of his time to the business and to receive 20 percent of the profits. James Brown to contribute all of his time to the business and to receive 20 percent of the profits. There is no provision for sharing losses. After six years of operation, the firm is dissolved and wound up. No distributions to partners have been made since the partnership was formed. The partnership assets are sold for $400,000 with a loss of $198,000. Liabilities to creditors total $420,000. What are the rights and liabilities of the respective parties?
15. Adam, Stanley, and Rosalind formed a partnership in State X to distribute beer and wine. Their agreement provided that the partnership would continue until December 31, 2020. Which of the following events would cause the ABC partnership to dissolve? If so, when would the partnership be dissolved?
a. Rosalind assigns her interest in the partnership to Mary on April 1, 2018.
b. Stanley dies on June 1, 2020.
c. Adam withdraws from the partnership on September 15, 2019.
d. A creditor of Stanley obtains a charging order against Stanley’s interest on October 9, 2017.
e. In 2018, the legislature of State X enacts a statute making the sale or distribution of alcoholic beverages illegal.
f. Stanley has a formal accounting of partnership affairs on September 19, 2019.
