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Law School Case Brief

Fairway Dev. Co. v. Title Ins. Co. - 621 F. Supp. 120 (N.D. Ohio 1985)

Rule:

It is a fundamental principle of law that any change in the personnel of a partnership will result in its dissolution.

Facts:

Plaintiff partnership and defendant title insurance company filed motions for summary judgment in the partnership's action seeking to recover against the company for an alleged breach of contract under a title guarantee insurance policy. The partnership alleged that the company breached that contract by failing to reference an easement granted in favor of a gas company for the purpose of maintaining a gas line over the property. The company argued in its defense that it had contracted with a different partnership and that the partnership had no standing to maintain an action against the company. The complaint of the partnership was dismissed.

Issue:

Did the change in the personnel of plaintiff partnership end its contract with the insurance company?

Answer:

Yes.

Conclusion:

The Court affirmed the decision of the trial court that when two of the original three partners left and sold their shares to the remaining partner and a new partner, a new partnership was created. The common law rule that a dissolution occurred and a new partnership was formed whenever a partner retired or a new partner was admitted survived the enactment of the Ohio Uniform Partnership Law. The partnership with which the company had contracted ceased to be in existence under Ohio law. The new partnership had no standing to sue the company.

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