Lexis Nexis - Case Brief

Not a Lexis Advance subscriber? Try it out for free.

Law School Case Brief

Northmon Inv. Co. v. Milford Plaza Assocs. - 284 A.D.2d 250, 727 N.Y.S.2d 419 (App. Div. 2001)

Rule:

A partner's authority to bind the partnership to transactions apparently in the ordinary course of the partnership's business, N.Y. Partnership Law § 20 (1), does not affect the right of partners as between themselves to prevent contemplated transactions with third parties, or otherwise to assert their equal rights in the management and conduct of the partnership business. N.Y. Partnership Law § 40(5).

Facts:

The case was a dispute between partners concerning the binding partners' authority to enter into a 99 year lease of real property, which constituted the partnership's only asset. The objecting partners sought to prevent the binding partners from entering into the lease. The appellate court affirmed, finding that the objecting partners had a right to assert their equal rights in the management and conduct of the partnership business. The binding partners could not impose their decision to enter into the lease upon the objecting partners. In addition, because the partnership agreement terminated the partnership years before the contemplated lease would expire, the lease was not in the ordinary course of the partnership's business, and the objecting parties could not have been bound by it.

Issue:

Did the Appellants lack authority to enter into the contemplated 99-year lease even if such lease was to be deemed in the ordinary course of the partnership's business?

Answer:

Yes.

Conclusion:

Appellants cannot impose their decision to enter into this lease upon respondents (see, Riley v Maran, 82 Misc 2d 702, 706-707see also, Partnership Law § 40 [8]), and, indeed, respondents' right to interfere with this or any other contract or prospective contract involving the partnership is "absolute" and "privileged, excusable and justified" Nor do the newly discovered partnership agreements avail appellants. Assuming such agreements are not, as the motion court found, merely reflective of Partnership Law § 20 (1), and can be fairly construed to preclude respondents' interference with a contemplated or consummated long-term lease, it remains that the agreements, on their face, terminate the partnership in 2075, many years before the contemplated 99-year lease would expire. Since such a lease cannot be deemed ordinary, respondents would not be bound by it. Accordingly, appellants' motion to amend their counterclaims so as to assert these agreements was properly denied.

Access the full text case Not a Lexis Advance subscriber? Try it out for free.
Be Sure You're Prepared for Class