Limited Partnership: What Does It Take to Exist?
By In Tanner v. Whiteco, L.P., et al., 2010 WL 1956733 (Tenn. Ct. App. May 17, 2010), the Tennessee Court of Appeals considered what constitutes a limited partnership under Tennessee law. In that case, Mr. Thomas filed a certificate of limited partnership with the Secretary of State, told his children while he was doing his estate planning that they had an interest in the limited partnership, and after his death the children signed a written acknowledgement that they had an interest in the limited partnership. Despite these facts, the trial court held that there was no limited partnership.
Citing In re Taylor & Assoc., L.P., 249 B.R. 431, 467 (E.D. Tenn. 1997), the Court of Appeals held that, in Tennessee, “people wanting to a form a limited partnership cannot just stumble into one.” They must satisfy three statutory requirements: (1) the filing of a properly executed certificate with the Secretary of State; (2) the existence of one or more general partners and one or more limited partners; and (3) an agreement between the partners.
The Court of Appeals held that there was not sufficient proof regarding the second and third elements. Specifically, at trial, there was no proof that anyone other than Mr. Thomas had been involved in the entity. So, there was no evidence of more than one person being involved during Mr. Thomas’s life. Similarly, there was no proof at trial regarding any agreement or understanding between partners. Thus, the trial court properly concluded there was no agreement between the parties. The circumstantial evidence regarding the children signing acknowledgements of their alleged interests after their father’s death was not sufficient to prove an agreement or the existence of more than one partner. For these reasons, the Court of Appeals affirmed the trial court’s ruling that there was no limited partnership.
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