COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 89
(By Senators Burdette, Mr. President, and Wooton)
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[Originating in the Committee on the Judiciary;
reported January 28, 1994.]
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A BILL to amend and reenact sections two, six, fifteen, eighteen,
thirty-four, thirty-six and forty, article eight-a, chapter
forty-seven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; and to further amend said
article by adding thereto four new sections, designated
sections forty-six, forty-seven, forty-eight and forty-nine,
all relating to registered limited liability partnerships;
recognizing that a registered limited liability partnership
is a general partnership; providing that a partner in a
registered limited liability partnership shall not be
personally liable for the debts and obligations of a
partnership arising from negligence, wrongful acts or
misconduct committed by another partner conducting
partnership business or by any employee, agent or other
representative of the partnership unless such employee,
agent or other representative acted under first partner's
direct supervision or control; addressing rights and
liabilities of partners in connection with the dissolution
of a registered limited liability partnership; requiring
that registered limited liability partnerships file
applications and annually file renewal applications with the
secretary of state and setting forth required content of
such applications; requiring that the names of such
partnerships contain the words "registered limited liability
partnership" or the words "R.L.L.P." as the last words or
letters in the partnership's name; requiring that a
registered limited liability partnership carry a minimum of
one million dollars in liability insurance or create, in
lieu thereof, a segregated fund consisting of an insurance
bond or other specified collateral, either of which shall be
used to satisfy judgments against the partnership and its
partners; and stating that the existence of all such
partnerships, and the right and liabilities of partners
therein, shall be governed in all cases by the laws of this
state.
Be it enacted by the Legislature of West Virginia:
That sections two, six, fifteen, eighteen, thirty-four,
thirty-six and forty, article eight-a, chapter forty-seven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that said article be
further amended by adding thereto four new sections, designated
sections forty-six, forty-seven, forty-eight and forty-nine, all
to read as follows:
ARTICLE 8A. UNIFORM PARTNERSHIP ACT.
§47-8A-2. Definition of terms.
In this article, "court" includes every court and judge
having jurisdiction in the case.
"Business" includes every trade, occupation or profession.
"Person" includes individuals, partnerships, corporations
and other associations.
"Bankrupt" includes bankrupt under the Federal Bankruptcy
Act or insolvent under any state insolvent act.
"Conveyance" includes every assignment, lease, mortgage or
encumbrance.
"Real property" includes land and any interest or estate in
land.
"Registered limited liability partnership" means a
partnership formed pursuant to an agreement governed by the laws
of this state, which is registered under section forty-six of
this article and complies with sections forty-seven and forty-
eight of this article.
§47-8A-6. Partnership defined.
(1) A partnership is an association of two or more persons
to carry on as coowners a business for profit and includes, for
all purposes of the laws of this state, a registered limited
liability partnership.
(2) But any association formed under any other statute of
this state, or any statute adopted by authority, other than the
authority of this state is not a partnership under this article,
unless such association would have been a partnership in this
state prior to the adoption of this article; but this article
shall apply to limited partnerships except insofar as the
statutes relating to such partnerships are inconsistent herewith.
§47-8A-15. Nature of partner's liability.
(a) Except as otherwise provided in this section, allpartners are liable:
(1) Jointly and severally for everything chargeable to the
partnership under sections thirteen and fourteen of this article.
(2) Jointly for all other debts and obligations of the
partnership; but any partner may enter into a separate obligation
to perform a partnership contract.
(b) Subject to subsection (c) of this section, a partner in
a registered limited liability partnership is not liable for
debts and obligations of the partnership arising from negligence,
wrongful acts or misconduct committed in the course of the
partnership business by another partner or by any employee, agent
or other representative of the partnership.
(c) Subsection (b) of this section does not affect the
liability of a partner in a registered limited liability
partnership for his own negligence, wrongful acts or misconduct
or that of any employee, agent or other representative of the
partnership under his direct supervision and control.
(d) Subsection (b) of this section does not affect the
liability of partnership assets for partnership debts and
obligations.
§47-8A-18. Rules determining rights and duties of partners.
The rights and duties of the partners in relation to the
partnership shall be determined, subject to any agreement between
them, by the following rules:
(a) Each partner shall be repaid his contributions, whether
by way of capital or advances to the partnership property and
share equally in the profits and surplus remaining after all
liabilities, including those to partners, are satisfied; and,except as provided in subsection (b), section fifteen of this
article, each partner must contribute towards the losses, whether
of capital or otherwise, sustained by the partnership according
to his share in the profits.
(b) The partnership must indemnify every partner in respect
of payments made and personal liabilities reasonably incurred by
him in the ordinary and proper conduct of its business, or for
the preservation of its business or property.
(c) A partner, who in aid of the partnership makes any
payment or advance beyond the amount of capital which he agreed
to contribute, shall be paid interest from the date of the
payment or advance.
(d) A partner shall receive interest on the capital
contribution by him only from the date when repayment should be
made.
(e) All partners have equal rights in the management and
conduct of the partnership business.
(f) No partner is entitled to remuneration for acting in the
partnership business, except that a surviving partner is entitled
to reasonable compensation for his services in winding up the
partnership affairs.
(g) No person can become a member of a partnership without
the consent of all the partners.
(h) Any difference arising as to ordinary matters connected
with the partnership business may be decided by a majority of the
partners; but no act in contravention of any agreement between
the partners may be done rightfully without the consent of all
the partners.
§47-8A-34. Right of partner to contribution from copartners
after dissolution.
Where the dissolution is caused by the act, death or
bankruptcy of a partner, each partner is liable to his copartners
for his share of any liability created by any partner acting for
the partnership as if the partnership had not been dissolved
unless:
(a) The dissolution being by act of any partner, the partner
acting for the partnership had knowledge of the dissolution,
(b) The dissolution being by the death or bankruptcy of a
partner, the partner acting for the partnership had knowledge or
notice of the death or bankruptcy, or
(c) The liability is for a debt or obligation for which the
partner is not liable as provided in subsection (b), section
fifteen of this article.
§47-8A-36. Effect of dissolution on partner's existing
liability; liability of individual property of deceased
partner.
(1) The dissolution of the partnership does not of itself
discharge the existing liability of any partner.
(2) A partner is discharged from any existing liability upon
dissolution of the partnership by an agreement to that effect
between himself, the partnership creditor and the person or
partnership continuing the business; and such agreement may be
inferred from the course of dealing between the creditor having
knowledge of the dissolution and the person or partnership
continuing the business.
(3) Where a person agrees to assume the existing obligationsof a dissolved partnership, the partners whose obligations have
been assumed shall be discharged from any liability to any
creditor of the partnership who, knowing of the agreement,
consents to a material alteration in the nature or time of
payment of such obligations.
(4) The individual property of a deceased partner shall be
liable for those obligations of the partnership incurred while he
was a partner and for which he was liable under section fifteen
of this article, but subject to the prior payment of his separate
debts.
§47-8A-40. Rules for settling accounts between partners.
In settling accounts between the partners after dissolution,
the following rules shall be observed, subject to any agreement
to the contrary:
(a) The assets of the partnership are:
(I) The partnership property,
(II) The contributions of the partners specified in
subsection (d) of this section.
(b) The liabilities of the partnership shall rank in order
of payment, as follows:
(I) Those owing to creditors other than partners,
(II) Those owing to partners other than for capital and
profits,
(III) Those owing to partners in respect of capital,
(IV) Those owing to partners in respect of profits.
(c) The assets shall be applied in the order of their
declaration in subsection (a) of this section to the satisfaction
of the liabilities.
(d) Except as provided in subsection (b), section fifteen of
this article:
(I) The partners shall contribute, as provided by section
eighteen (a) of this article, the amount necessary to satisfy the
liabilities, and
(II) If any, but not all, of the partners are insolvent, or,
not being subject to process, refuse to contribute, the other
partners shall contribute their share of the liabilities, and, in
the relative proportions in which they share the profits, the
additional amount necessary to pay the liabilities.
(e) An assignee for the benefits of creditors or any person
appointed by the court shall have the right to enforce the
contributions specified in subsection (d) of this section.
(f) Any partner or his legal representative shall have the
right to enforce the contributions specified in subsection (d) of
this section, to the extent of the amount which he has paid in
excess of his share of the liability.
(g) The individual property of a deceased partner shall be
liable for the contributions specified in subdivision (d) of this
section.
(h) When partnership property and the individual properties
of the partners are in possession of a court for distribution,
partnership creditors shall have priority on partnership property
and separate creditors on individual property, saving the rights
of lien or secured creditors as heretofore.
(i) Where a partner has become bankrupt or his estate is
insolvent the claims against his separate property shall rank in
the following order:
(I) Those owing to separate creditors,
(II) Those owing to partnership creditors,
(III) Those owing to partners by way of contribution.
§47-8A-46. Registered limited liability partnerships.
(a) Any partnership wishing to become a registered limited
liability partnership shall file with the secretary of state an
application stating the name of the partnership; the address of
its principal office; if the partnership's principal office is
not located in this state, the address of a registered office and
the name and address of a registered agent for service of process
in this state which the partnership shall be required to
maintain; the number of partners in the partnership; a brief
statement of the business in which the partnership engages; and
that the partnership thereby applies for status as a registered
limited liability partnership.
(b) Any registered limited liability partnership wishing to
maintain its status as a registered limited liability partnership
shall annually file with the secretary of state a renewal
application stating the same types of information required in the
partnership's original application, except that instead of
stating that it is applying for status as a registered limited
liability partnership, the partnership shall state that it is
applying for renewal of its status as a registered limited
liability partnership.
(c) The application or renewal application shall be executed
by a majority in interest of the partners or by one or more
partners authorized to execute an application or renewal
application.
(d) The application and each renewal application shall be
accompanied by a fee of one hundred dollars for each partner.
(e) The secretary of state shall register as a registered
limited liability partnership, and shall renew the registration
of any registered limited liability partnership, any partnership
that submits a completed application or renewal application with
the required fee.
(f) Registration is effective for one year after the date an
application is filed, unless voluntarily withdrawn by filing with
the secretary of state a written withdrawal notice executed by a
majority in interest of the partners or by one or more partners
authorized to execute a withdrawal notice. Registration as a
registered limited liability partnership, whether pursuant to an
original application or a renewal application, is renewed if,
during the sixty-day period preceding the date the application or
renewal application otherwise would have expired, the partnership
files with the secretary of state a renewal application. A
renewal application expires one year after the date an original
application would have expired if the last renewal of the
application had not occurred.
(g) The status of a partnership as a registered limited
liability partnership shall not be affected by changes after the
filing of an application or a renewal application in the
information stated in the application or renewal application.
(h) The secretary of state may provide forms for application
for or for renewal of registration.
§47-8A-47. Name of registered limited liability partnerships.
The name of a registered limited liability partnership shallcontain the words "Registered Limited Liability Partnership" or
the abbreviation "R.L.L.P." as the last words or letters of its
name.
§47-8A-48. Insurance or financial responsibility of registered
limited liability partnerships.
(a) A registered limited liability partnership shall carry
at all times at least one million dollars of liability insurance
of a kind that is designed to cover the kinds of negligence,
wrongful acts and misconduct for which liability is limited by
subsection (b), section fifteen of this article and which insures
the partnership and its partners.
(b) If, in any proceeding, compliance by a partnership with
the requirements of subsection (a) of this section is disputed,
that issue shall be determined by the court, and the burden of
proof of compliance shall be on the person who claims the
limitation of liability in subsection (b), section fifteen of
this article.
(c) If a registered limited liability partnership is in
compliance with the requirements of subsection (a) of this
section, the requirements of this section shall not be admissible
or in any way be made known to a jury in determining an issue of
liability for or extent of the debt or obligation or damages in
question.
(d) A registered limited liability partnership shall be in
compliance with subsection (a) of this section if the partnership
provides one million dollars of funds specifically designated and
segregated for the satisfaction of judgments against the
partnership or its partners based on the kinds of negligence,wrongful acts and misconduct for which liability is limited by
subsection (b), section fifteen of this article, by:
(1) Deposit in trust or in bank escrow of cash, bank
certificates of deposit or United States Treasury obligations; or
(2) A bank letter of credit or insurance company bond.
§47-8A-49. Applicability of article to foreign and interstate
commerce.
(a) A partnership, including a registered limited liability
partnership, formed and existing under this article may conduct
its business, carry on its operations and have and exercise the
powers granted by this article in any state, territory, district
or possession of the United States or in any foreign country.
(b) It is the intent of the Legislature that the legal
existence and internal affairs of partnerships, including
registered limited liability partnerships, formed and existing
under this article, be recognized outside the boundaries of this
state and that, subject to any reasonable requirement of
registration, a partnership, including a registered limited
liability partnership, formed and existing under this article and
transacting business outside this state be granted the protection
of full faith and credit under the United States Constitution.
(c) The liability of partners in a partnership, including a
registered limited liability partnership, formed and existing
under this article, including the liability of partners for the
debts and obligations of the partnership, shall be governed
solely and exclusively by the laws of this state.
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(NOTE: The purpose of this bill is to permit the general
partners of a general partnership organized under state law to
limit the scope of their personal liability for certain
obligations and liabilities of the partnership. Under present
law, each partner in a general partnership is personally liable,
jointly and severally with all other partners in the partnership,
for the negligence, misconduct or wrongful acts of another
partner or representative of the partnership. The bill would
permit a general partnership to register as a registered limited
liability partnership and thereby limit a partner's personal
liability to those partnership obligations and debts arising from
such partner's negligence, wrongful acts or misconduct.)