Opinion ID: 1677025
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Heading: Missouri Partnership Law

Text: Partnership law in Missouri is governed by the Uniform Partnership Law (UPL). Sections 358.010 to 358.430, RSMo 1994. The UPL is nearly identical to the Uniform Partnership Act (UPA), adopted in most states. See 6 Uniform Laws Annotated. The UPL shall be so interpreted and construed as to effect its general purpose to make uniform the law of those states which enact it. Section 358.040.4. Central to the determination of personal liability for Defendant Sheehan and Defendants Noelker, Burdette, Lageson, and Klar is the legal effect the withdrawal of existing partners and the addition of incoming partners has on a partnership. The withdrawal of an existing partner dissolves the partnership. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. Section 358.290; see also Warren v. Warren, 784 S.W.2d 247, 256 (Mo.App. 1989). Dissolution, however, is not a termination of the partnership business. On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed. Section 358.300; see also Schoeller v. Schoeller, 465 S.W.2d 648, 654 (Mo. App.1971). A partner's personal liability is not discharged merely by the dissolution of the partnership. Section 358.360.1. However, a partner may be 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. Section 358.360.2. Under certain circumstances, such an agreement may even be inferred. Id. The remaining partners may choose not to terminate and wind up, but to continue the partnership business. The Uniform Partnership Law contemplates that dissolved partnerships may continue in business for a short, long or indefinite period of time, ... so long as none of the partners insist on a winding up and final termination of the partnership business. Schoeller v. Schoeller, 497 S.W.2d 860, 867 (Mo.App.1973). The result is that the old firm continues until its affairs are wound up and a new partnership is formed, consisting of the remaining members of the old partnership. Ohlendorf v. Feinstein, 636 S.W.2d 687, 689 (Mo.App.1982). Any creditors of the old partnership also become creditors of the new partnership continuing the business. Section 358.410. The UPL does not expressly make the admission of a new partner a ground for dissolution. However, [i]t is universally admitted that any change in membership dissolves a partnership, and creates a new partnership. Comment, UPA section 41; see 59A Am.Jur.2d Partnerships section 824; see also Ellingson v. Walsh, O'Connor & Barneson, 15 Cal.2d 673, 104 P.2d 507, 509 (1940). A partnership is a contractual and fiduciary relation, dependent on the personality of its members, and the withdrawal or admission of a member changes so radically the contractual rights and duties inter se as to produce essentially a new relation, even though the parties contemplate no actual dissolution of the firm and continue to carry on business under the original articles and with the same account books. 59A Am.Jur.2d Partnerships section 826 n. 37 (citing Snyder Manufacturing Co. v. Snyder, 54 Ohio St. 86, 43 N.E. 325 (1896)); see also Ellingson v. Walsh, O'Connor & Barneson, 104 P.2d at 509. Moreover, it is generally accepted that since the Uniform Act only incorporated in part the common law on dissolutions, other means of dissolution known to the common law are not precluded by the Act. Weeks v. McMillan, 291 S.C. 287, 353 S.E.2d 289, 291-92 (App.1987) (citing Fenner & Beane v. Nelson, 64 Ga.App. 600, 13 S.E.2d 694 (1941)). Under Missouri common law, a partnership is dissolved by the admission of a new partner. Mudd v. Bast, 34 Mo. 465, 468 (1864).