Opinion
54179.
ARGUED JULY 6, 1977.
DECIDED JULY 12, 1977. REHEARING DENIED JULY 27, 1977.
Action on note. Fulton Superior Court. Before Judge Holt.
Horton Ransom, Carl T. Horton, for appellants.
McClain, Mellen, Bowling Hickman, Arthur Gregory, Thomas W. Thrash, for appellee.
Under the circumstances of this case it was error to hold the defendants who had contributed to the formation of a limited partnership liable as general partners because of the late recordation of the certificate.
ARGUED JULY 6, 1977 — DECIDED JULY 12, 1977 — REHEARING DENIED JULY 27, 1977 — CERT. APPLIED FOR.
On November 23, 1973, certain articles of partnership were executed naming Dimentia Corporation and its president, Ronald W. Wilson, as the general partners, and the appellants here as limited partners. Prior to this "Dimentia Corporation by Ronald W. Wilson, President" entered into a land purchase contract with appellee Rigg. The sale was not closed, however, until December 12, 1973, all documents showing that the parties involved were Rigg as grantor and "Dimentia Limited, a limited partnership" as grantee. The loan deed was signed "Dimentia Limited, a limited partnership, by Ronald W. Wilson, general partner." The first installment on the accompanying note, due April 1, was not tendered until April 12, at which time Rigg refused the tender on the ground that interest was not included, and accelerated the entire debt by letter dated April 18. The partnership did not file the certificate required by Code § 75-403 (b) for recordation in the superior court of its principal place of business until April 19, 1974. Rigg brought suit against Dimentia Corp. and Wilson, obtained a judgment which was not appealed, and spent some time thereafter on settlement efforts.
The present action was filed in February, 1976, naming the appellants here as general partners of Dimentia, Ltd. and seeking judgment against them on the debt. The plaintiff's motion for summary judgment, based on the proposition that the appellants were in law general rather than limited partners because of the delay in filing the certificate of recordation, was granted and the defendants appeal.
Code § 75-403 states in part: "(1) Two or more persons desiring to form a limited partnership shall: (a) Sign and swear to a certificate [contents stated]. (b) File for record the certificate in the office of the clerk of the superior court of the county in which the principal place of business of the partnership shall be situated," etc. This section is a part of the Uniform Limited Partnership Act, and is admittedly vague as to the time when the existence of the partnership commences. In fact, § 201 (b) of the model has been redrafted in the proposed new Limited Partnership Act of 1976 to read: "A limited partnership is formed at the time of the filing of the certificate of limited partnership in the office of the Secretary of State," etc. and is accompanied by the commission comment that the purpose of the change is "to clearly delineate the time at which persons become general partners and limited partners."
In the absence of such language the courts must construe each case according to its own circumstances. The Uniform Limited Partnership Act as adopted in Georgia is obviously intended as remedial legislation, one of its main purposes being to ensure that, where there has been substantial compliance with the law, limited partners do not find themselves exposed to the liability of a general partnership because of a mere technicality. Lewis, Limited Partnerships, 71 U. Pa. L. R. p. 150. Code § 75-403 (2) states specifically that a limited partnership is formed if there has been substantial compliance in good faith with the requirements of paragraph (1). Cases in other jurisdictions, none of them exactly similar to the facts here, have held or stated that the late filing of the certificate will not ipso facto enlarge the liability of the limited partners. See Holvey v. Stewart, 509 P.2d 17 (where, however, no third parties were involved); Tiburon National Bank v. Wagner, 265 Cal.App.2d 868 (71 Cal.Rptr. 832) (dicta); Stowe v. Merrilees, 6 Cal.App.2d 217, 221 ( 44 P.2d 368) (certificates should be filed within a reasonable time); Solomont v. Polk Dev. Co., 245 Cal.App.2d 488 (54 Cal.Rptr. 22) (dicta); Giles v. Vette, 263 U.S. 553 ( 44 SC 157, 68 LE 441) (certificate filed before firm actually commenced business). On the other hand, as in Tiburon National Bank v. Wagner, supra, and Arrow Petroleum Co. v. Ames, 128 Ind. App. 10 ( 142 N.E.2d 479), where the certificate is not filed at all, or at least not until after suit is filed, the partnership is to be considered as general, not limited.
Limited partners are not liable to creditors. Code § 75-408. One erroneously believing himself a limited partner will not be held to be a general partner if he promptly renounces his interest in the business profits. Code § 75-412. This latter section indicates the general tenor of the Act, which is remedial and drawn with the purpose of protecting investors where there is a substantial compliance on their part.
It is obvious in the present case that the plaintiff was in no way harmed by the late filing of the certificate. He dealt initially with a corporation which became a general partner of the purchaser, and with its president who was the other general partner. It originally sued on the debt naming only these two defendants. Only after almost two years had passed from the alleged default, and the filing of the certificate, did it raise the issue of a limited partnership vel non. During that time the appellants had renounced their (nonexistent) profits, and the appellee had obtained a judgment against the general partners. We therefore apply to Code § 75-403 the rule that where a specific time is not fixed an act is sufficient which is done within a reasonable time. The certificate here was filed slightly over four months after the initial sale and almost two years prior to this suit. The plaintiff was in no way harmed by the delay. Under the circumstances we hold that the defendants did not lose their status as limited partners.
Judgment reversed. Webb and Marshall, JJ., concur.