Consortium Management Co. v. Mutual America Corp.

• Court: Georgia Supreme Court
• Writing for the Court: CLARKE
• Citation: Consortium Management Co. v. Mutual America Corp., 246 Ga. 346, 271 S.E.2d 488 (Ga. 1980)
• Decision Date: 17 September 1980
• Docket Number: No. 36288,36288
• Parties: CONSORTIUM MANAGEMENT COMPANY et al. v. MUTUAL AMERICA CORPORATION et al.

Page 488

271 S.E.2d 488

246 Ga. 346

CONSORTIUM MANAGEMENT COMPANY et al. v. MUTUAL AMERICA CORPORATION et al.

No. 36288.

Supreme Court of Georgia.

Submitted May 30, 1980.

Decided September 17, 1980.

Frank B. Wilensky, Dennis M. Hall, Atlanta, for appellants.

John A. Chandler, John H. Parker, Jr., Randall A. Constantine, Atlanta, for appellees.

CLARKE, Justice.

Irondale Motel Associates is a limited partnership organized in DeKalb County, Georgia, in 1977. Under the original partnership agreement, Consortium Management Company was named as the general partner. However, on the day of its execution, the agreement was amended to add Guy D. Cleveland as a second general partner. Guy D. Cleveland is also a limited partner. Under the terms of the partnership agreement, a general partner may be removed by a vote of 75% of the partnership interest.

In 1979, Mutual America Corporation, the holder of 80% of the partnership interest, notified all of the partners that it was exercising its privilege of removing the general partners and replacing them with itself and Gary W. Carr. When the remaining partners refused or failed to execute the amendment to the certificate of limited partnership which showed the change in the general partners, the present action was brought in the Superior Court of DeKalb County, Georgia. Mutual America Corporation and Irondale Motel Associates are the plaintiffs here, and all of the former general partners and limited partners are named as defendants. In their action, the plaintiffs prayed for the court to direct the clerk of the court to record an amendment to the partnership agreement reflecting the general partner change and for an injunction restraining and enjoining the former limited partners from refusing to turn over Irondale's records to the new general partners and from interfering with the operation of the business of Irondale. The record indicates that considerable effort was made to secure personal service of former general partner Guy D. Cleveland, who is a resident of Alabama. However, such service was never perfected. A rule nisi was entered and a hearing was conducted in accordance with it. At the conclusion of the hearing, the court entered orders directing the clerk to record the amendments to the certificate of limited partnership and restraining Consortium and its officers, agents and employees from refusing to turn over Irondale's records to the new general partners.

Defendants contend the trial court erred in ordering the clerk to record the amendment to the partnership certificate. They argue that this amendment removed Guy D. Cleveland as a general partner and, therefore, personal service upon him was necessary before the trial court could act. We conclude that personal service is not required in this instance.

Mutual America Corporation, the holder of 80% interest in the partnership, voted to replace the general partners. Although Code Ann. § 75-426(1)(b) directs that the writing to amend a partnership shall be signed and sworn by all members, the defendants refused or failed to sign the amendment substituting the general partners. At first glance, it would appear that this creates a situation under which the general partners could prevent the accomplishment of a transaction to which they had agreed in the original partnership agreement by simply refusing to sign a document.

The dilemma, however, is not insoluble. Code Ann. § 75-426(3) provides that in the event a person whose signature is necessary refuses to sign the amended certificate, the party desiring the amendment may petition the superior court of the county wherein the principal place of business of the partnership is located. The section further provides that...