284 Cal. Rptr. 830 (1991)
- RMI is a general partnership business.
- The general partners are Anderson who is the defendant and holds 80% interest in RMI, and Tallstrom, who holds 20% stake in RMI.
- Anderson owed the Hellman creditors a lot of money, who then get a charging order to garnish Anderson’s profits.
- However, there are essentially no profits and there were expected to be no profits in the future.
- Hellmans then filed a motion requiring the foreclosure sale of the partnership, but only for Anderson’s share.
- Whether the applicable statutes “authorize the foreclosure of a charged partnership interest.”
- “… a judgment debtor’s interest in a partnership (meaning the right to share in the profits and surplus) may be foreclosed upon and sold, even though other partners do not consent to the sale, provided the foreclosure does not unduly interfere with the partnership business.”
- The partnership isn’t necessarily dissolved because Anderson lost his interests. The only thing removed is his future right to profits.
- The creditors (Hellmans) in this case would have no ability to run or manage the daily affairs of the company in the future.
- The partner’s rights in a property of the partnership are the following:
- “His interest in the partnership
- His rights in specific partnership property
- His right to participate in the management”
- Anderson’s concern that the sale of his partnership interests will hurt his ability to pay other creditors is not legitimate. The court should adhere to the line of creditors, with the Hellmans being higher in line in terms of security and repayment.
- In terms of policy, a foreclosure of a partner’s interest doesn’t always “unduly interfere with the business of the partnership.” As long as the court limits the sale to “interests in partnership” specifically related to rights to share in profits and losses, there is not interference.