TCA § 61-1-804 — Partner's power to bind partnership after dissolution

Subject to § 61-1-805 , a partnership is bound by a partner's act after dissolution that: Is appropriate for winding up the partnership business; or Would have bound the partnership under § 61-1-301 before dissolution, if the other party to the transaction did not have notice of the dissolution. Acts 2001, ch. 353. Textbooks. Tennessee Law of Evidence (2nd ed., Cohen, Paine and Sheppeard), § 803(1.2).4. Decisions Under Prior Law 1. In General. 2. Notice of Dissolution. 3. —Burden of Proof. 4. Liability of Deceased Partner's Estate. 1. In General. This section as it relates to notice or knowledge, is but an enactment of the common-law rules. Letellier-Phillips Paper Co. v. Fiedler, 32 Tenn. App. 137, 222 S.W.2d 42, 1949 Tenn. App. LEXIS 86 (Tenn. Ct. App. 1949). In winding up partnership affairs, the liquidating partner owes a continuing fiduciary duty to the other partners, and has an obligation to act equitably toward them. However, these obligations run between partners and do not absolve any partner from being bound by the liquidating partner's actions in winding up partnership affairs. Jefferson Ins. Co. v. Curle, 771 S.W.2d 424, 1989 Tenn. App. LEXIS 30 (Tenn. Ct. App. 1989). Cancellation of the partnership insurance policy and collection of unused premiums are within the liquidating partner's authority in winding up the partnership affairs. Jefferson Ins. Co. v. Curle, 771 S.W.2d 424, 1989 Tenn. App. LEXIS 30 (Tenn. Ct. App. 1989). 2. Notice of Dissolution. Registration of cabs owned by partnership in name of individual partner did not discharge other partner from partnership debt in absence of actual notice. Johnson Tire Co. v. Maddux, 188 Tenn. 626, 221 S.W.2d 948, 1949 Tenn. LEXIS 380 (1949). The dissolution of a partnership does not necessarily terminate the liability of the retiring partner to third persons who subsequently deal with the remaining partner on the assumption of the continued existence of the firm, since third persons who have previously dealt with the firm must have actual knowledge of the dissolution and third persons who have not previously dealt with the firm but who knew of its existence must be given constructive notice. Third Nat'l Bank v. Keathley, 35 Tenn. App. 82, 242 S.W.2d 760, 1951 Tenn. App. LEXIS 117 (Tenn. Ct. App. 1951). 3. —Burden of Proof. If partner denies liability on alleged partnership debt following dissolution, the burden is upon him to show creditor had notice of dissolution. Johnson Tire Co. v. Maddux, 188 Tenn. 626, 221 S.W.2d 948, 1949 Tenn. LEXIS 380 (1949). 4. Liability of Deceased Partner's Estate. Where a partner of the deceased renewed notes of the partnership in the name of the partnership after the death of the deceased, the renewal notes could not bind the estate of the deceased; however, this does not necessarily mean the estate could not be bound on the original notes for which the renewal notes were executed. First Nat'l Bank v. Hunter, 22 Tenn. App. 626, 125 S.W.2d 183, 1938 Tenn. App. LEXIS 63 (Tenn. Ct. App. 1938).