Agency, Partnership and the LLC · the Law of Unincorporated Business Enterprises, Cases, Materials, Problems by Hynes, J. Dennis -- Read -- Imperial Library of Trantor

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Prefatory Material LexisNexis Law School Publishing Advisory Board Title Page Copyright Page Terms of Use Dedication Preface Glossary Table of Contents Introduction — THE LAW OF UNINCORPORATED BUSINESS ENTERPRISES A. THE CORPORATION B. THE DIFFERENT FORMS OF UNINCORPORATED BUSINESSES 1. The Sole Proprietorship 2. The Business Trust 3. The Partnership 4. The Limited Liability Partnership (LLP) 5. The Limited Partnership 6. The Limited Liability Limited Partnership (LLLP) 7. The Limited Liability Company (LLC) Chapter 1 — THE AGENCY RELATIONSHIP; THE AMBIGUOUS PRINCIPAL PROBLEM; SUBAGENCY CARRIER v. McLLARKY UNITED STATES v. BONDS NOTES A. AGENCY OR SALE HUNTER MINING LABORATORIES, INC. v. MANAGEMENT ASSISTANCE, INC. NOTES UNITED STATES v. GENERAL ELECTRIC CO. NOTES B. AGENCY OR DEBTOR-CREDITOR RELATIONSHIP A. GAY JENSON FARMS CO. v. CARGILL, INC. NOTES C. AGENCY OR BAILMENT JONES v. TAYLOR NOTES D. AGENCY AND THE LAW OF TRUSTS DIERKSEN v. ALBERT NOTES E. AGENT OR ESCROW HOLDER NOTES KING v. FIRST NATIONAL BANK NOTES F. AGENCY DISTINGUISHED FROM OTHER RELATIONSHIPS 1. The Franchise Relationship 2. The Marriage Relationship 3. Property Relationships a. Co-ownership b. Landlord-Tenant 4. Corporate Relationships a. The Agency Status of Corporate Directors b. The “Mere Instrumentality” or “Alter Ego” Doctrine Contrasted with Traditional Agency Liability G. THE AMBIGUOUS PRINCIPAL PROBLEM THAYER v. PACIFIC ELECTRIC RAILWAY NOTES KILBOURN v. HENDERSON NOTE NORBY v. BANKERS LIFE CO. NOTES H. SUBAGENCY NOTES I. THE HISTORY OF AGENCY AND OTHER MATTERS PROBLEMS Chapter 2 — RIGHTS AND DUTIES BETWEEN PRINCIPAL AND AGENT A. DUTIES OF PRINCIPAL TO AGENT 1. Duty of Exoneration and Indemnification ADMIRAL ORIENTAL LINE v. UNITED STATES NOTES 2. Duty to Pay Compensation a. Express Contract Between Principal and Agent ROBERTS ASSOCIATES v. BLAZER INTERNATIONAL CORP. b. Implied-in-Fact Contract McCOLLUM v. CLOTHIER NOTES McKNIGHT v. PEOPLES-PITTSBURGH TRUST CO. NOTE 3. Duty of Care NOTES 4. Social Legislation a. Worker’s Compensation Legislation b. Other Social Legislation 5. Duty to Deal Fairly and in Good Faith TAYLOR v. CORDIS CORP. DEONIER & ASSOCIATES v. PAUL REVERE LIFE INSURANCE COMPANY NOTES B. DUTIES OF AGENT TO PRINCIPAL 1. Duty of Good Conduct and to Obey 2. Duty to Indemnify Principal for Loss Caused by Misconduct 3. Duty to Account 4. The Fiduciary Duties of Agents a. Commencement of Fiduciary Relationship b. Duty of Care CARRIER v. McLLARKY NOTES c. Duty of Disclosure ESTATE OF ELLER v. BARTRON NOTE d. Duty of Loyalty i. Loyalty During the Relationship GELFAND v. HORIZON CORP. NOTES ii. Post-Termination Competition TOWN & COUNTRY HOUSE & HOME SERVICE v. NEWBERY NOTES ROBBINS v. FINLAY NOTES iii. Dealing at Arm’s Length PAPPAS v. TZOLIS NOTE PROBLEMS Chapter 3 — VICARIOUS TORT LIABILITY A. THE MASTER-SERVANT RELATIONSHIP 1. The Concept JONES v. HART NOTES a. The History of Respondeat Superior Liability i. The Holmes Thesis ii. The Wigmore Rebuttal b. Is an Employment Relationship Necessary to Respondeat Superior Liability? HEIMS v. HANKE SANDROCK v. TAYLOR NOTES c. Rationale for Respondeat Superior i. Arguments Questioning the Theory ii. Arguments in Favor of or Explanations for the Theory d. Imputed Contributory Negligence e. Limitation to Losses Caused by Tortious Behavior f. Direct Tort Liability of an Employer 2. The Independent Contractor Exception a. The Concept KANE FURNITURE CORP. v. MIRANDA NOTE LAZO v. MAK’S TRADING CO. NOTES SODERBACK v. TOWNSEND HUNTER v. R.G. WATKINS & SON, INC. NOTES SANDROCK v. TAYLOR NOTE b. Limitations to the Independent Contractor Exception HIXON v. SHERWIN-WILLIAMS CO. NOTES KLEEMAN v. RHEINGOLD NOTES PROBLEMS 3. Borrowed Servants CHARLES v. BARRETT NOTES ATS, INC. v. BEDDINGFIELD SPARGER v. WORLEY HOSPITAL, INC. NOTE PROBLEMS 4. The Scope of Employment Limitation a. Negligent Acts JOEL v. MORISON NOTES FIOCCO v. CARVER NOTES CLOVER v. SNOWBIRD SKI RESORT NOTE SPENCER v. V.I.P., INC. b. Intentional Torts BREMEN STATE BANK v. HARTFORD ACCIDENT & INDEMNITY CO. NOTE i. The Assault on § 228(1)(c) IRA S. BUSHEY & SONS v. UNITED STATES NOTES LISA M. v. HENRY MAYO NEWHALL MEMORIAL HOSPITAL NOTES ii. Restatement (Second) § 219(2)(d) COSTOS v. COCONUT ISLAND CORP. NOTES iii. The Implied Contract Theory NAZARETH v. HERNDON AMBULANCE SERVICE ADAMS v. NEW YORK CITY TRANSIT AUTHORITY iv. Punitive Damages v. Non-Physical Torts B. THE PARTNERSHIP RELATIONSHIP C. THE UNINCORPORATED NONPROFIT ASSOCIATION RELATIONSHIP 1. Liability of the Members 2. Liability of the Association a. In General b. For the Actions of Its Affiliates and Chapters c. To Its Members D. THREE UNUSUAL EXAMPLES OF VICARIOUS TORT LIABILITY 1. Vicarious Liability by Estoppel 2. The “Family Car” Doctrine 3. Owner Consent and Other Legislation E. THE EFFECT ON VICARIOUS LIABILITY OF A RELATIONSHIP BETWEEN SERVANT AND INJURED PARTY SCHUBERT v. AUGUST SCHUBERT WAGON CO. NOTES KLATT v. COMMONWEALTH EDISON CO. PROBLEMS Chapter 4 — CONTRACTUAL POWERS OF AGENTS A. AUTHORITY 1. Express Authority KING v. BANKERD LAMB v. SCOTT NOTES 2. Implied Authority a. Delegation of Authority NOTES b. Incidental Authority B. APPARENT AUTHORITY H. H. TAYLOR v. RAMSAY-GERDING CONSTRUCTION COMPANY SMITH v. HANSEN, HANSEN & JOHNSON, INC. NOTES SAUBER v. NORTHLAND INSURANCE CO. FOLEY v. ALLARD NOTES AND QUESTIONS HERBERT CONSTRUCTION CO. v. CONTINENTAL INSURANCE CO. CONTINENTAL INSURANCE CO. v. GAZAWAY NOTES C. ESTOPPEL ESTATE OF CORDERO v. CHRIST HOSPITAL NOTES D. THE INHERENT AGENCY POWER CONCEPT AUTOXCHANGE.COM, INC. v. DREYER AND REINBOLD, INC. NOTE PROBLEMS Chapter 5 — FRAUDULENT ACTS OF AGENTS A. THE UNSCRUPULOUS AGENT GREASE MONKEY INTERNATIONAL, INC. v. MONTOYA NOTES ENTENTE MINERAL CO. v. PARKER HYDROLEVEL CORP. v. AMERICAN SOCIETY OF MECHANICAL ENGINEERS, INC. NOTES ROTHMAN v. FILLETTE NOTE B. LIMITS TO LIABILITY FOR FRAUD LIGHT v. CHANDLER IMPROVEMENT CO. NOTES LEAFGREEN v. AMERICAN FAMILY MUTUAL INSURANCE CO. NOTES PROBLEMS Chapter 6 — THE UNDISCLOSED PRINCIPAL A. RIGHTS OF THE UNDISCLOSED PRINCIPAL 1. Assertion of Rights by the Undisclosed Principal 2. Parol Evidence Rule 3. Sealed Contracts 4. Exceptions KELLY ASPHALT BLOCK CO. v. BARBER ASPHALT PAVING CO. FINLEY v. DALTON NOTES B. LIABILITIES OF THE UNDISCLOSED PRINCIPAL 1. Authorized Transactions a. Remedies of the Third Party b. The Election Rule 2. Unauthorized Transactions WATTEAU v. FENWICK NOTE SENOR v. BANGOR MILLS NOTES C. PAYMENT AND SETOFF 1. Payment by the Third Party 2. Payment to the Third Party 3. Setoff OIL SUPPLY COMPANY, INC. v. HIRES PARTS SERVICE, INC. NOTE QUESTION PROBLEMS Chapter 7 — LIABILITY OF THE AGENT TO THIRD PERSONS A. LIABILITY ON THE CONTRACT 1. Liability When the Principal Is Unintentionally Undisclosed JENSEN v. ALASKA VALUATION SERVICE NOTES 2. Liability When the Principal Is Disclosed: Special Circumstances COPP v. BRESKIN NOTES 3. Liability When the Principal Is Partially Disclosed or Unidentified VAN D. COSTAS, INC. v. ROSENBERG NOTES B. THE AGENT’S WARRANTY OF AUTHORITY HUSKY INDUSTRIES v. CRAIG INDUSTRIES NOTES C. HARM TO THE ECONOMIC INTERESTS OF OTHERS COKER v. DOLLAR NOTE D. LIABILITY IN TORT PROBLEMS Chapter 8 — THE DOCTRINE OF RATIFICATION A. THE CONCEPT EVANS v. RUTH DEMPSEY v. CHAMBERS 1. Justification for the Concept NOTES 2. Implied Ratification MANNING v. TWIN FALLS CLINIC & HOSPITAL, INC. NOTES B. THE KNOWLEDGE REQUIREMENT LEWIS v. CABLE COMPUTEL, INC. v. EMERY AIR FREIGHT CORP. INN FOODS, INC. v. EQUITABLE COOPERATIVE BANK C. CAN SILENCE CONSTITUTE AFFIRMANCE? BRUTON v. AUTOMATIC WELDING & SUPPLY CORP. NOTES D. THE NO PARTIAL RATIFICATION RULE RAKESTRAW v. RODRIGUES NOTES E. CHANGED CIRCUMSTANCES NOTES PROBLEMS Chapter 9 — NOTICE AND NOTIFICATION; IMPUTED KNOWLEDGE A. INTRODUCTION B. NOTIFICATION MONTANA RESERVOIR & IRRIGATION CO. v. UTAH JUNK CO. NOTE C. IMPUTED KNOWLEDGE CONSTANT v. UNIVERSITY OF ROCHESTER NOTES BIRD v. PENN CENTRAL CO. SHAPIRO v. AMERICAN HOME ASSURANCE CO. FIRST AMERICAN TITLE INSURANCE CO. v. LAWSON QUESTIONS D. THE ADVERSE INTEREST QUALIFICATION KIRSCHNER v. KPMG LLP NOTES E. THE SOLE ACTOR DOCTRINE MUNROE v. HARRIMAN NOTES PROBLEMS Chapter 10 — TERMINATION OF THE AGENCY RELATIONSHIP A. TERMINATION BETWEEN THE PARTIES TO AN AGENCY RELATIONSHIP 1. Termination by Will a. Some Consequences of Termination of an Agency Relationship WANT v. CENTURY SUPPLY CO. b. Irrevocable Powers Phrased in Agency Terms 2. Termination by Operation of Law a. Death HUNT v. ROUSMANIER’S ADMINISTRATORS NOTES b. Loss of Capacity IN RE BERRY’S ESTATE CAMPBELL v. UNITED STATES NOTES c. Bankruptcy d. War B. NOTICE OF TERMINATION TO THIRD PARTIES 1. Termination by Will 2. Termination by Operation of Law PROBLEMS Chapter 11 — THE CREATION OF A PARTNERSHIP A. INTRODUCTION B. THE LIMITED LIABILITY PARTNERSHIP (LLP) C. THE PARTNERSHIP RELATIONSHIP DEFINED AND DISTINGUISHED FROM OTHER RELATIONSHIPS 1. Historical Background 2. An Early Test of Partnership QUESTIONS 3. The Uniform Partnership Act (1914) and the Revised Uniform Partnership Act (1997) NOTES AND QUESTIONS MARTIN v. PEYTON NOTES BYKER v. MANNES NOTES NOTE ON NON-EQUITY PARTNERS D. THE UNDERLYING THEORY OF PARTNERSHIP — AGGREGATE OR ENTITY? FAIRWAY DEVELOPMENT CO. v. TITLE INSURANCE CO. OF MINNESOTA NOTES E. INCOME TAX CONSIDERATIONS — A BRIEF SUMMARY F. CONTRIBUTIONS OF PROPERTY TO THE PARTNERSHIP 1. Ambiguities Concerning Ownership of Particular Property NOTES 2. The Special Matter of Title to Real Property 3. The Property Rights of a Partner GROFF v. CITIZENS BANK OF CLOVIS NOTES PUTNAM v. SHOAF NOTE PROBLEMS Chapter 12 — THE OPERATION OF A PARTNERSHIP A. CONTRACTUAL POWERS OF PARTNERS 1. Actual Authority ELLE v. BABBITT SUMMERS v. DOOLEY NATIONAL BISCUIT CO. v. STROUD NOTES 2. Apparent Authority BURNS v. GONZALEZ NOTES RNR INVESTMENTS LIMITED PARTNERSHIP v. PEOPLES FIRST COMMUNITY BANK NOTE 3. Liability of Purported Partner a. Is There a Duty to Speak? b. The Reliance Conundrum c. The Release Conundrum NOTE B. TORT LIABILITY FOR THE WRONGS OF PARTNERS 1. In General 2. The Fraudulent Partner a. The Traditional View ROUSE v. POLLARD b. A Conflicting View COOK v. BRUNDIDGE, FOUNTAIN, ELLIOTT & CHURCHILL C. THE NATURE OF A PARTNER’S LIABILITY — JOINT AS OPPOSED TO JOINT AND SEVERAL LIABILITY D. SUITS AGAINST THE PARTNERSHIP E. SUITS BY THE PARTNERSHIP ADAMS v. LAND SERVICES, INC. NOTE F. NOTICE AND NOTIFICATION TO THE PARTNERSHIP FEDERAL DEPOSIT INSURANCE CORP. v. BRAEMOOR ASSOCS. QUESTION G. KEEPING TRACK OF THINGS — A BRIEF LOOK AT PARTNERSHIP ACCOUNTING H. RIGHTS AND DUTIES AMONG PARTNERS 1. Fiduciary Duties a. The Duty of Loyalty i. Duty During Formation of Partnership CORLEY v. OTT NOTE ii. Pre-Empting Business Opportunities MEINHARD v. SALMON NOTES iii. Leaving the Business MEEHAN v. SHAUGHNESSY NOTE GIBBS v. BREED, ABBOTT & MORGAN iv. Dealing with Conflicts of Interest J & J CELCOM v. AT&T WIRELESS SERVICES, INC. NOTE v. Fiduciary Duties and Freedom of Contract LABOVITZ v. DOLAN QUESTION SINGER v. SINGER NOTES b. The Duty of Care DUFFY v. PIAZZA CONSTRUCTION, INC. NOTES MOREN v. JAX RESTAURANT NOTE c. The Duty of Full Disclosure WALTER v. HOLIDAY INNS, INC. d. The Duty of Good Faith and Fair Dealing HOLMAN v. COIE NOTE BOHATCH v. BUTLER & BINION CADWALADER, WICKERSHAM & TAFT v. BEASLEY NOTE 2. The Right to an Accounting and Suits Among Partners QUESTION I. CLAIMS BY CREDITORS OF THE PARTNERSHIP 1. Rights Against Partnership Assets 2. Rights Against the Personal Assets of Individual Partners J. CLAIMS BY PERSONAL CREDITORS OF A PARTNER AGAINST THE PARTNERSHIP INTEREST OF THE PARTNER TUPPER v. KROC NOTES BAUER v. BLOMFIELD CO./HOLDEN JOINT VENTURE K. THE LLP SHIELD EDERER v. GURSKY NOTES PROBLEMS Chapter 13 — DISSOCIATION OF A PARTNER AND DISSOLUTION OF A PARTNERSHIP DREIFUERST v. DREIFUERST NOTES A. CAUSES OF DISSOLUTION UNDER UPA AND RUPA 1. Dissolution at Will GIRARD BANK v. HALEY PAGE v. PAGE NOTES 2. Judicial Dissolution HORIZON/CMS HEALTHCARE CORP. v. SOUTHERN OAKS HEALTH CARE, INC. NOTE 3. Wrongful Dissociation SAINT ALPHONSUS DIVERSIFIED CARE, INC. v. MRI ASSOCIATES, LLP NOTES 4. Judicial Expulsion BRENNAN v. BRENNAN ASSOCIATES NOTES B. NOTICE OF DISSOLUTION AND TERMINATION OF AUTHORITY AMONG PARTNERS 1. Termination of Authority 2. Notice of Dissolution — Lingering Apparent Authority NOTE C. CONTINUING THE BUSINESS 1. The Buy-Sell Agreement ESTATE OF COHEN, EX REL. PERELMAN v. BOOTH COMPUTERS NOTE 2. Continuation Clauses HUNTER v. STRAUBE NOTES 3. Liability of an Incoming Partner 4. Liability of a Withdrawing Partner REDMAN v. WALTERS MUNN v. SCALERA NOTES 5. Creditors’ Claims ELLEBRACHT v. SIEBRING NOTES CASE v. PAUL TROESTER MASCHINENFABRIK 6. Rights of a Retired Partner or the Estate of a Deceased Partner Under UPA When the Business Is Continued ESTATE OF MATTESON v. MATTESON BLUT v. KATZ NOTES 7. The Treatment of Good Will DAWSON v. WHITE & CASE NOTES 8. Calculation of Buy-out Price Under RUPA § 701 NOTE D. WINDING UP; LIQUIDATION; TERMINATING THE BUSINESS 1. Winding Up and Liquidation RESNICK v. KAPLAN NOTES MARR v. LANGHOFF OHLENDORF v. FEINSTEIN 2. Termination a. Settlement of Accounts b. The Judicial Sale PRENTISS v. SHEFFEL c. The Losing Venture: Claims Among Partners KOVACIK v. REED NOTES PROBLEMS Chapter 14 — THE LIMITED PARTNERSHIP A. HISTORICAL BACKGROUND B. ORGANIZATIONAL DEFECTS BRIARGATE CONDOMINIUM ASS’N v. CARPENTER C. THE AGREEMENT OF LIMITED PARTNERSHIP NOTE D. THE LIMITED PARTNER 1. The Control Question a. In General HOLZMAN v. DeESCAMILLA NOTE GATEWAY POTATO SALES v. G.B. INVESTMENT CO. NOTES b. Control of the Corporate General Partner ZEIGER v. WILF c. Piercing the Veil of a Limited Partnership CANTER v. LAKEWOOD OF VOORHEES QUESTION 2. Removal of the General Partner a. Removal by the Limited Partners for Cause DV REALTY ADVISORS v. POLICEMEN’S ANNUITY b. The Problem of RULPA § 801(4) OBERT v. ENVIRONMENTAL RESEARCH & DEVELOPMENT CORP. NOTE OBERT v. ENVIRONMENTAL RESEARCH & DEVELOPMENT CORP. NOTES 3. Suits by Limited Partners ANGLO AMERICAN SECURITY FUND v. S.R. GLOBAL INTERNATIONAL FUND NOTES 4. Limitations on Distributions and Transfer of Interests TEMPLE v. WHITE LAKES PLAZA ASSOCS., LTD. 5. Duties of Limited Partners KE PROPERTY MANAGEMENT, INC. v. 275 MADISON MANAGEMENT CORP. NOTE 6. Mandatory Capital Contributions: The Voting Rights of Limited Partners and the Relationship of the Partnership Agreement to the Partnership Certificate 7. Rights of Personal Creditors of Limited Partners BAYBANK v. CATAMOUNT CONSTRUCTION, INC. NOTES 8. Withdrawal Rights of a Limited Partner 9. Merger of a Limited Partnership into Another Entity 10. Inspection Rights of Limited Partners 11. Dissolution of a Limited Partnership E. THE GENERAL PARTNER 1. Powers of a General Partner 2. Fiduciary Duty of the General Partner APPLETREE SQUARE I LIMITED PARTNERSHIP v. INVESTMARK, INC. NOTES GOTHAM PARTNERS, L.P. v. HALLWOOD REALTY PARTNERS, L.P. NOTES BRICKELL PARTNERS v. WISE NOTES 3. The General Partner’s Obligations Under the Implied Covenant of Good Faith and Fair Dealing 4. Withdrawal of General Partner PROBLEMS Chapter 15 — THE LIMITED LIABILITY COMPANY A. INTRODUCTION B. TAX MATTERS 1. The Kintner Regulations 2. The Check-the-Box Regulations C. SECURITIES LAWS ISSUES D. THE CREATION OF AN LLC NOTES ELF ATOCHEM NORTH AMERICA, INC. v. JAFFARI NOTES E. THE ENTITY THEORY AND THE LLC LITCHFIELD ASSET MANAGEMENT CORPORATION v. HOWELL NOTES ABRAHIM & SONS ENTERPRISES v. EQUILON ENTERPRISES, LLC NOTES TURNER v. ANDREW QUESTIONS NOTE WEBER v. U.S. STERLING SECURITIES, INC. NOTES F. THE OPERATION OF AN LLC 1. The Management of an LLC PINNACLE DATA SERVICES, INC. v. GILLEN NOTE a. Authority and Apparent Authority of Members TAGHIPOUR v. JEREZ NOTES b. Fiduciary Duties of Members McCONNELL v. HUNT SPORTS ENTERPRISES NOTES VGS, INC. v. CASTIEL NOTES KATRIS v. CARROLL NOTE 2. Claims Among Members a. Derivative Claims WOOD v. BAUM NOTES CML V, LLC v. BAX b. Direct Claim for Oppression POINTER v. CASTELLANI NOTES 3. Limitations on Distributions 4. Transferability of Interests CONDO v. CONNERS 5. Exit Privileges 6. Expulsion of a Member WALKER v. RESOURCE DEVELOPMENT COMPANY LIMITED, L.L.C. NOTE 7. Claims of Creditors of Members 8. Inspection of Books and Records 9. Bankruptcy of a Member G. SERIES LLCS H. THE L3C I. LLCS AS ESTATE PLANNING DEVICES J. DISSOLUTION OF AN LLC HALEY v. TALCOTT R & R CAPITAL, LLC v. BUCK & DOE RUN VALLEY FARMS, LLC. NOTES HOLDEMAN v. EPPERSON HURWITZ v. PADDEN NOTES PROBLEMS TABLE OF CASES A B C D E F G H I J K L M N O P Q R S T U V W Y Z INDEX A B C D E F I L M N P R S T U V

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