ASSIGNMENT
John Palmer and Henry Morrison formed the limited partnership of Palmer & Morrison for the management of the Huntington Hotel and filed an appropriate certificate in compliance with the limited partnership statute. The limited partnership agreement provided that Palmer would contribute $400,000 and be a general partner and that Morrison would contribute $300,000 and be a limited partner. Palmer was to manage the dining and cocktail rooms, and Morrison was to manage the rest of the hotel. Nanette, a popular French singer, who knew nothing of the limited partnership’s affairs, appeared for four weeks in the Blue Room at the hotel and was not paid her fee of $8,000. Subsequently, the limited partnership became insolvent. Nanette sued Palmer and Morrison for $8,000.
a. For how much, if anything, are Palmer and Morrison liable?
b. If Palmer and Morrison had formed a limited liability limited partnership, for how much, if anything, would Palmer and Morrison be liable?
c. If Palmer and Morrison had formed a limited liability company with each as a member, for how much, if anything, would Palmer and Morrison be liable?
d. If Palmer and Morrison had formed a limited liability partnership with each as a general partner, for how much, if anything, would Palmer and Morrison be liable?
2. A limited partnership was formed consisting of Webster as general partner and Stevens and Stewart as the limited partners. The limited partnership was organized in strict compliance with the limited partnership statute. Stevens was employed by the partnership as a purchasing agent. Stewart personally guaranteed a loan made to the partnership. Both Stevens and Stewart consulted with Webster with respect to partnership business, voted on a change in the nature of the partnership business, and disapproved an amendment to the partnership agreement proposed by Webster. The partnership experienced serious financial difficulties, and its creditors seek to hold Webster, Stevens, and Stewart personally liable for the debts of the partnership. Who, if anyone, is personally liable?
3. Fox, Dodge, and Gilbey agreed to become limited partners in Palatine Ventures, a limited partnership. In a signed writing, each agreed to contribute $20,000. Fox’s contribution consisted entirely of cash, Dodge contributed $12,000 in cash and gave the partnership her promissory note for $8,000, and Gilbey’s contribution was his promise to perform two hundred hours of legal services for the partnership.
a. What liability, if any, do Fox, Dodge, and Gilbey have to the partnership by way of capital contribution?
b. If Palatine Ventures had been formed as a limited liability company (LLC) with Fox, Dodge, and Gilbey as members, what liability, if any, would Fox, Dodge, and Gilbey have to the LLC by way of capital contribution?
4. Madison and Tilson agree to form a limited partnership with Madison as general partner and Tilson as the limited partner, each to contribute $12,500 as capital. No papers are ever filed, and after ten months, the enterprise fails, its liabilities exceeding its assets by $30,000. Creditors of the partnership seek to hold Madison and Tilson personally liable for the $30,000. Explain whether the creditors will prevail.
5. Kraft is a limited partner of Johnson Enterprises, a limited partnership. As provided in the limited partnership agreement, Kraft decided to leave the partnership and demanded that her capital contribution of $20,000 be returned. At this time, the partnership assets were $150,000 and liabilities to all creditors totaled $140,000. The partnership returned to Kraft her capital contribution of$20,000.
a. What liability, if any, does Kraft have to the creditors of Johnson Enterprises?
b. If Johnson Enterprises had been formed as a limited liability company, what liability, if any, would Kraft have to the creditors of Johnson Enterprises?
