Judgment Creditor of a Partner Against Debtor Partner's Interest in Partnership

1. Law
2. Georgia Code
3. Corporations, Partnerships, and Associations
4. Partnerships
5. Judgment Creditor of a Partner Against Debtor Partner's Interest in Partnership

1. On due application to a competent court by any judgment creditor of a partner or of any assignee of an interest in the partnership, the court which entered the judgment, order, or decree, or any other court, may charge the interest of the debtor partner or such assignee with payment of the unsatisfied amount of such judgment debt with interest thereon and may then or later appoint a receiver of his share of the profits, and of any other money or other assets due or to fall due to him in respect of the partnership, and, subject to subsection (b) of this Code section, make all other orders, directions, accounts, and inquiries which the debtor partner or such assignee might have made, or which the circumstances of the case may require.
2. An interest charged pursuant to subsection (a) of this Code section is not liable to be seized and sold by the judgment creditor under execution.
3. The interest charged may be redeemed or purchased without thereby causing a dissolution:
   1. With separate property, by any one or more of the partners; or
   2. With the partnership property, by any one or more of the partners with the consent of all the partners whose interests are not so charged or sold.
4. Nothing in this chapter shall be held to deprive a partner of his right, if any, under the exemption law, as regards his interest in the partnership.
5. In addition to the remedy conferred by subsection (a) of this Code section, the interest of a partner in the partnership may be reached by a judgment creditor by process of garnishment served on the firm, provided that the complaint upon which the judgment was obtained was personally served upon such partner.
6. Subject to subsection (b) of this Code section, the remedies conferred by subsections (a) and (e) of this Code section shall not be deemed exclusive of others which may exist.

(Code 1981, §14-8-28, enacted by Ga. L. 1984, p. 1439, § 1; Ga. L. 1987, p. 1444, § 2.)

Law reviews.

- For annual review of Georgia Corporation and Business Organization Law, see 15 (No. 7) Ga. St. B. J. 20 (2010).

COMMENT

Note to Uniform Partnership Act This section provides a procedure by which an individual partner's creditor may reach the partner's interest in the partnership, as distinguished from his interest in specific partnership property. Specifically, the creditor may obtain a charging order against the partner's interest, and thereby obtain money or other assets due the partner from the partnership. The partner's interest is protected against creditor claims under the exemption laws. While creditors may not foreclose on a partner's interest, the other partners may redeem the interest.

Prior Georgia Law The garnishment procedure made available under prior O.C.G.A. § 14-8-74 is similar to the charging order under new § 14-8-28, except that § 14-8-28 permits appointment of a receiver and other appropriate court action. Pursuant to new § 14-8-28(e), the garnishment remedy under the general garnishment statute, O.C.G.A. §§ 18-4-40, et seq., will remain available, except that, as under prior O.C.G.A. § 14-8-74, pre-judgment garnishment is not permitted.

Official UPA Subsection (a) is slightly more expansive than the official version in granting rights to creditors of assignees and subjecting "other assets" in addition to "money" to the charging order. The former change is consistent with the Texas and Mississippi versions of § 28, Tex. Civ. Stat. Ann., Art. 6132b, § 28 (Vernon, 1970) and Miss. Code Ann. § 79-12-55 (Supp. 1982). The latter change is consistent with the Alabama version of § 28, Ala. Code § 10-8-42 (Michie, 1975) and with O.C.G.A. § 18-4-20, which subjects "all property, money or effects" to garnishment.

Cross-Reference Creditors' rights regarding the partner's interest in the partnership: § 14-8-25(b)(3).

JUDICIAL DECISIONS

Limitations on actions.

- Trial court improperly granted summary judgment to judgment debtors on a judgment creditor's claim under O.C.G.A. § 14-8-28 upon finding that the limitations period under O.C.G.A. § 18-2-79 barred the claim as there was no legal basis to conclude that the limitation period in § 18-2-79 was applicable to the creditor's claim. Morris v. Nexus Real Estate Mortg. & Inv. Co., 296 Ga. App. 477, 675 S.E.2d 511 (2009).

Res judicata.

- Prior judgment that resolved a judgment creditor's claims against a partnership did not have a res judicata effect on the creditor's later action under O.C.G.A. § 14-8-28 against individual debtors, as assignees of a deceased partner-debtor's partnership interest, as the partnership and the individual debtors were not in privity and did not have the same interest. Morris v. Nexus Real Estate Mortg. & Inv. Co., 296 Ga. App. 477, 675 S.E.2d 511 (2009).

Foreclosure of charged interest of limited partner.

- The prohibition against sale of a charged interest by O.C.G.A. § 14-8-28 is inconsistent with the charging remedy provisions of § 14-9A-52 of the Uniform Limited Partnership Act and does not apply to prohibit foreclosure of the charged interest of a limited partner. Nigri v. Lotz, 216 Ga. App. 204, 453 S.E.2d 780 (1995).

Cited in Prodigy Centers/Atlanta v. T-C Assocs., 269 Ga. 522, 501 S.E.2d 209 (1998); Mahalo Invs. III, LLC v. First Citizens Bank & Trust Co., 330 Ga. App. 737, 769 S.E.2d 154 (2015); Gaslowitz v. Stabilis Fund I, LP, 331 Ga. App. 152, 770 S.E.2d 245 (2015).

RESEARCH REFERENCES

Am. Jur. 2d.

- 59A Am. Jur. 2d, Partnership, § 391 et seq.

C.J.S.

- 68 C.J.S., Partnership, § 278 et seq.

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