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Head v. Henry Tyler Constr. Corp. - 539 So. 2d 196 (Ala. 1988)

Rule:

The major impact of making partners not merely jointly liable but also severally liable is that if a creditor chooses to bring an action against one of the partners, that partner is liable for all of the partnership debts, regardless of whether the creditor first attempted to recover the debt from the partnership or prove that the partnership had no assets. Several liability is liability separate and distinct from liability of another to the extent that an independent action may be brought without joinder of others. The individual liability associated with partners that are jointly liable is not separate and distinct from the liability of all the partners jointly. Rather, the individual liability arises only after it has been shown that the partnership assets are inadequate. No direct cause of action may be maintained against the individual partners until the above condition is met. Several liability, on the other hand, imposes no such conditions precedent before one can be held individually liable.

Facts:

Plaintiff Henry Tyler Construction Corporation ("HTCC") brought an action in Alabama state curt against defendants Beverly P. Head, Jr., James R. Forman, Jr., and other partners and various partnerships ("Partnerships") Head and Foreman were affiliated with, seeking to recover the balance due on a construction contract and to enforce a materialman and mechanic's lien. After learning that the Partnerships had filed for bankruptcy protection, HTCC filed a motion for summary judgment against Head, Foreman and other partners for the indebtedness. The lower court granted the motion. Head and Forman appealed. On appeal, they conceded that they were liable for the outstanding debt. However, they asserted their obligation only arose after HTCC had exhausted efforts to satisfy the debt from the Partnerships or prove that the Partnerships did not have any assets, which, they alleged HTCC failed to do.

Issue:

Did the obligation of Head and Forman arise only after HTCC had exhausted efforts to satisfy the debt from the Partnerships or prove that the Partnerships did not have any assets?

Answer:

No.

Conclusion:

The state supreme court affirmed the trial court's judgment. The court found that the Alabama Partnership Act held partners jointly and severally liable for the debts of the partnership. Therefore, HTCC was not required to exhaust its collection efforts from the bankrupt Partnerships. The court emphasized that the ruling did not place an undue burden on Head and Forman.

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