Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Office of the Revisor of Statutes

323.40 Liability of persons continuing the business in certain cases.

Subdivision 1. Admission. When any new partner is admitted into an existing partnership, or when any partner retires and assigns, or the representative of the deceased partner assigns, the partner's rights in partnership property to two or more of the partners, or to one or more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs, creditors of the first or dissolved partnership are also creditors of the partnership so continuing in the business.

Subd. 2. Retirement or death. When all but one partner retire and assign, or the representative of a deceased partner assigns, their rights in partnership property to the remaining partner, who continues the business without liquidation of partnership affairs, either alone or with others, creditors of the dissolved partnership are also creditors of the person or partnership so continuing the business.

Subd. 3. Continuation on retirement or death. When any partner retires or dies and the business of the dissolved partnership is continued, as set forth in subdivisions 1 and 2, with the consent of the retired partners or the representative of the deceased partner, but without any assignment of the partner's right in partnership property, rights of creditors of the dissolved partnership and of the creditors of the person or partnership continuing the business shall be as if such assignment had been made.

Subd. 4. Assignment to third person. When all the partners or their representatives assign their rights in partnership property to one or more third persons who promise to pay the debts and who continue the business of the dissolved partnership, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

Subd. 5. Wrongful dissolution. When any partner wrongfully causes a dissolution and the remaining partners continue the business under the provisions of section 323.37, subdivision 2, clause (2), either alone or with others, and without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

Subd. 6. Expulsion of partner. When a partner is expelled and the remaining partners continue the business, either alone or with others, without liquidation of the partnership affairs, creditors of the dissolved partnership are also creditors of the person or partnership continuing the business.

Subd. 7. Third person a partner, liability. The liability of a third person becoming a partner in the partnership continuing the business, under this section, to the creditors of the dissolved partnership shall be satisfied out of partnership property only.

Subd. 8. Rights of creditors. When the business of a partnership after dissolution is continued under any conditions set forth in this section, the creditors of the dissolved partnership, as against the separate creditors of the retiring or deceased partner or the representative of the deceased partner, have a prior right to any claim of the retired partner or the representative of the deceased partner against the person or partnership continuing the business, on account of the retired or deceased partner's interest in the dissolved partnership or on account of any consideration promised for such interest or for the retired or deceased partner's right in partnership property.

Subd. 9. No modification of creditors' rights. Nothing in this section shall be held to modify any right of creditors to set aside any assignment on the ground of fraud.

Subd. 10. Use of partnership property. The use by the person or partnership continuing the business of the partnership name, or the name of a deceased partner, as part thereof, shall not of itself make the individual property of the deceased partner liable for any debts contracted by such person or partnership.

HIST: (7424) 1921 c 487 s 41; 1986 c 444

Official Publication of the State of Minnesota
Revisor of Statutes