        OFFICE       OF THE ATTORNEY    GENERAL      OF TEXAS
                               AUSTIN




Honoreble Orrfll4 S, Carprntsr
Chalraan and Exeoutire Dlreotor
Tsxar Unemployment Compensation        Comml4sion
Auetln, Terar

Dear Sir:




                                                    tlnulng   oo-partnerehlp,

            'I   am attaoh                      tloles   ot oopart-
                                                114, an emplo~lng
                                                  employment com-
                                                  at these artdoles
                                                 ng partnership.
                                                  hip 4unlre4    all
                                          T withAraw41, addition


                                                   neation Aot,
                                                   an employing
                                              Eaah tlma 4 now
                                        stkios (if it8 status 1s
                                        oyor*r aooount number 14
                                         rot up for it.      The
                                         44 refleoted    by tho
                                                  ion of suoh
                                                    employer, thers-
                                                  reoord. That
                                                  other employer
      nor can lt bo oharged     against any other employer.'
,




    Ron. Orville      S. Carpenter,   Page 2


                Our attention  is ilrst   Socueed on paragraph     S of   the
    Articles     o? Copartnership,   vthlch reads as followe:
               "8.   That upon the death or wlthdraral o? any mem-
          ber o? the copartnershlp,          the copartnerehlp    shall not
          terminate,     and the estate o? the deceased partner or
          withdrawing partner       shall be deemed to have assigned,
          transierred     and set over to the oontinoing         partner8
          411 of hla right,      title,     and interest   in and to the
          said    copartnerahip   kitbout     any iurther   act upon the
          part o? the estate o? a Aeoaaaed partner or o? such
          ulthdrawing partner.          The contlnulng copartnership      may
          be under this agreement or by executing 4 new agree-
          ment. Upon the admission o? a new member or member8
          to tbia copartnershlp         either under thls agreement or
          by a separate copartner&hip agreement, it shall be
          deemed that all of the right,           title  and interest o?
          the parties hereto       in end to the said copartnership
          are assigned, transierred          and set over to the newly
          constituted     and/or continuing       copartnership,   which
          shall assume 411 the obligations o? tble oopartner-
          ship without any Surther act.             The execution OS a new
          oopartnerahlp     agreement shall constitute 4 tendnation
          o? tbia agreement without any iurther act.=
              The effortrr o? the copartners to establish 4 continuing
    partnerehlp   arrangement must be oonsldered in the light of the
    pertinent   provisions  o? our Texas Unemployment Compensation XAW,
    Article   52321-b,Section 17 (a) o? Vernon*8 Revised Cirll Statutes,
    1925, which reads in part:
               "(e) *kmploying unit* means 4x1~~lndlvldual or type
           o? organization,'     ineludlng any partnership,   association,
           trust,   estate,   joint-atook  oompany, lneuranae company,
           or corporation,     whether Aomestlo or foreign,     or the
           ireceiver,   trustee in bankruptcy,    trustee or euaceasor
           thereof,    or the legal representative     o? a Aeoeased
           person, which has or subsequent to January 1, 1936,
           bad in Its employ one or more individuals        periormlng
           services    tar it within thle State. . .*
                Article  5221-b, Section 6 (A),     Vernon's   Revised Ci~ll
    Statutes,      1925, provides as iollows:
                                                                             256



Ron.   Orville   S. Carpenter,   Page ?I



           “(d)  by employing unit rblcb is or become6 an
       employer subject to this Act, and which under the pro-
       visions  of this subseotlon   ceases to be 4n employer
       subjeot to this Act and subsequent to such time be-
       oomes an employer subjeot to this Act by reason o?
       any of the provlslons   hereof,   shall upon again be-
       ooming an employer subject to this Aot be considered
       4 new employer without regard to any rights aoqulred
       by it during the time that it had theretofore     been
       an employer .s
           The ConStNCtiOn o? your Commission that every new legal
identity    must be taken into oonslderatlon      appears to be based
upon sound principles,      the llabillty~  of an Employing Unit being
assessed against the members o? that unit.          The law is well
settled    that a retiring   partner reroains liable   to existing
oreditors,    notwithstanding    an assumption of debts by his succes-
sor or other partners,      32 Tex. Jurifa. p. 773; Reed VS. Shave,
274 t. Vi. 274; Shaw T. Green, 99 S. Yi. (26) 893.        h?ter the
death of a partner, his estate 1s liable        for partnership    obll-
gations created prior to his death.         See Shaw Ts. Kc)illlan,
24 E. PT. (26) 556; Rlgglns vs. Rettor,       46 Tex. 961; note 79
A.L.R. 153S, 1539.
           In this factual sltnetlon    the Articles   of Copartnership
eridence    4 desire of the parties-that     death or wlthArAwa1 autc-
matlcally    transfer the interest   of the Aeoeased or withdrawing
  artnsr.    The transfer of the interest     may be so aocompllshed,
#iut does not clear this partner’s      acaount.    The Legislature    has
erldenoed an intention ‘that ,any ohange in the ownership of a
business operating under any assumed name, 48 do Easklns and
bells,    shall file an assumed name oeitl?iaater       Artlele   5924,
Vernon’s Revised Clril Statutes,       1925. ,-The legislature    aldo
thought that any change of ownership should be made lmown and
required it by Article ,6925, Vernon*8 Revised Clrll Statutes.
A penalty for failure     to oomply with these provisions       1s pro-
Tided in Article 1070 of our Penal Code.
         The purpose of the above legislation  1s for the pro-
tection  of the public ln.deallng  with suah 4 business.  For the
determination  of past and Suture obligations  under the agreement
itself  a new and different  firm 82%6tS.
          The agreement ?alls.to    provide the method and propor-
tion of descent    to surviving   partners of the deceased or with-
drawing partners interest.       X6 believe   suah 4 situation
necessitates   4 new copartnership     sgreenwnt.   The wording of
.’   .




     Eon. Orville       %, Csrpenter,     Ye&e 4


     paragraph  8 smlfosts 4 rsallutlon of the partlea to the agree-
     nent tbbat sew Artlolss of Copartnero&ip will doubtleas be ces-
     essary upon death or *llthdr4ii41.
                   Paragraph   LO of t&e Artlalos      of Copartnereblp       reads es
     ?ollows   :
                   '10. That thls
                             agrsewnt   SLlhll be In Suil Soroe and
           etfaot until tendnsted by mutual consoat or the
           parties horoto, or 44 hereinaboro >rovlAeA, or by the
           glvlng   of thirty    doye* written notloe by two or mre
           partlea   holding 4 Eejority     of Intorest,   4s boroln
           provided,   to the cther portles,     and 4~ party hcreto
           say withdraw trek tbe copertnrrshlp         upon glrihg
           thlrty Qys* written hotlce o? suah lntentlon            to tho
           other partit      bcreto.*

              Tho abeve 3rovleion     etatoe t&et it shall remain *In full
     Some and s??eot until terzinatod       by Irutual oonocnt o? the
     partlos  hereto* or by withdraw41 o? two or rcore parties holding
     a nmis)orlty of interest.        0411 attention
                                  'Il'e               to the partner
     Arthur E. C4rter who owns elxty per 0e)nt of the partnership.
     X?~this partner    should withdraw to &horn and in what proportion
     uould his fntereot pass.      The obvious ?aZlure to attompt to dls-
     pops o?thls   snd other fact 8ltuat:ons     that oen 4rlse *vlnoe
     ths thought that 4 now 8gretumnt would bo drown up0
                   Thers lo 4 gener4lly      reoogulssd     priociplo     of Zau that
     tho business of 4 partnership my eontlnue arter death or Slth-
     tlraral Q? 8 partner by spsol?lo  agreemact or lnstruotlon in the
     %-Illo? a Aeouised prtnsr. Howmr, the often cltod Texas
     0484 on this point   P.ltgslt v. 0. Sullivan 8nA Co.,' 99 T8xas
     395, does not purport to ray that 4 oontlnuanoe                    of a baelness
     1s tho sass partnarshlp.
             M iDvestlg4tion             of tbls prioofple  and Its 4ppllcatlon
     in other ~urisdlotions,            wo tbltk, negetlvos  any thought that it
     18 the aaze partnership.  Foople 1. Zanigan, 193 3. E. 70s;
     hndrews v. E;tlnson,90 H. E. P2%. %'obelleve  the len6uage
     o? Chle? Justloe Carter of the Suprucs Court o? illlbol8   In the
     laast olted      0480 1s most pcrtlnent        hors.    Ge quota;
               *Were   there are provisionsin the artlolsci   of
           agreement   or will for tbi oontlnuanoe  a? the busi-
           ness after   the death of oDe of the partners,   it 1s
           sometimes lhaecorately    said that the death of the
           partxr    does not dlssolTa the partnership. I? the
.
    Bon. Orville      S. Carpenter,   Page 5


          business IS aarrlea on artsr the death of the
          partner under such arrangement or by the agreement
          OS the heirs or personal represautatlves        of the
          deceased,    there is, In atteot ana in law, a new
          partnerahlp,     of vihloh the survivors   and the exeou-
          tom or heir8 are the meuberrs, the new embers be-
          eomlng liable,     as the old, to the creditors     of the
          ii=.     22 Am. E Eng. Eney. of Law (ea Ed.) 201, ma
          ca888 oited;     1 'i;oerner*s Am. Law oi AdmInIstration
          (26 Ed.) e 1231 Exchange Bank v. TraoF, 77 ~0.
          594; mGrath v. Cowen, 57 Ohio St. 5S5, 49 R. E.
          558; Kattfson V. Farnhaz, 44 tiM. 95 46 K. K.
          547; JOMS A Cunnlnghamqs Pr. (2d Ed.1 82; T. Pars.
          Partn.   (Sd xa.) 459.       See, also, 1Bates on Part-
          nership,    8 52; Owens v. kackall,     S5 kd. 582.
            The great weight oi authority   is to tkls effeot and to
    U8 18 ConVinCiI@y  Sound. Any atteniptbp    these Article8 or co-
    partnership for the remaining partner8 to a8sume the interest,
    asset8 and llablllties of e deceased or withdrawing party over-
    looks the right8 of oreditors.   A further thought is that pereons
    contracting mith thie firm may have done so because of the ability
    of a partloular member.   Thus, the oontract is one for personal
    eervice   and does not survive         the rltharawalof    a certain   partner.

              Via,   therefore,   advise    you that   a ohange in the person-
    nel of the partnership rashlons a new partnership and should be
    88t Up a8 a lleW GElpl‘OyilIfJ
                                unit.

                                                        Your8 very truly

                                                   ATTORMEYGl5WIALOF TEEAS


                                                   BY
                                                                      A88iStMt




                   ATTORNEY
                          GENERAL
                                OF TEXAS




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