Law School Case Brief
In re Fulton - 43 B.R. 273 (Bankr. M.D. Tenn. 1984)
The intent of the partners determines what property shall be considered partnership property as distinguished from separate property. Such intention of the partners must be determined from their apparent intention at the time the property was acquired, as shown by the facts and circumstances surrounding the transaction of purchase, considered with the conduct of the parties toward the property after the purchase.
The plaintiff, Padgett Caroll, and the debtor operated a trucking business under the name of C&F Trucking. Carroll contributed a semi-truck which the debtor drove for the business. In 1982, with a loan obtained from a third party, Caroll purchased a used trailer from Fruehaf Corporation for C&F Trucking. The seller’s invoice for the trailer listed C&F Trucking as the purchaser of the trailer. The Arkansas certificate of title for the trailer was signed by the debtor and listed C&F Trucking as the owner. In 1982, the debtor filed a voluntary Chapter 7 bankruptcy petition. The debtor’s schedule listed the trailer with a value of $4,000 as an asset of the debtor, listed the full value of the trailer as exempt pursuant to 11 U.S.C. § 522(d)(5) and listed the plaintiff, Mattie Holcomb, as an unsecured creditor in the amount of $4,000.00. Thereafter, the plaintiff filed an action against the debtor, claiming that the debtor wrongfully scheduled the trailer as an asset.
Did the debtor wrongfully schedule the trailer as an asset?
The court determined that the trailer was partnership property. According to the court, the intent of the partner and the debtor at the time they acquired the trailer was that it was partnership property. The court further noted that under 11 U.S.C.S. § 541, the estate consists of all legal or equitable interest of the debtor in property as of the commencement of the case. Since a partnership was a legal entity separate from its partners, a partner cannot claim title in partnership property. The partner may only claim the rights in specific partnership property as bestowed upon the partner under partnership law. When a partner files for bankruptcy, the partner's estate obtains whatever partnership interest was held by the filing partner. In the case at bar, the court determined that the debtor's interest in the trailer was to be determined under Tenn. Code Ann. § 61-1-139(2) (1980) which established the priority for the payment of partnership liabilities upon dissolution of the partnership.
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