Court Opinion

ID: 9573562
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:56:51.785447+00
Date Added: 2024-06-11T12:41:37.203707
License: Public Domain

JUSTICE LACY, with whom CHIEF JUSTICE CARRICO and JUSTICE KEENAN join,
concurring in part and dissenting in part.
I concur with the majority opinion in all respects but one. Skretvedt sought interest on the monies he advanced to the partnership. His claim is based on § 50-18 of the Uniform Partnership Act, which states that:
[t]he rights and duties of the partners in relation to the partnership shall be determined, subject to any agreement between them, by the following rules: . . . (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. (Emphasis added.)
The commissioner found that Skretvedt had advanced $10,385.51 to the partnership in excess of his capital contributions, but declined to award Skretvedt interest on that advance. In affirming the findings of the commissioner, the majority construes this statute as merely setting the date from which interest will run but not as establishing the right to the interest; rather, the majority says that the right to the interest itself must be established by the partnership agreement. Finding that the agreement is inconclusive on the issue of the payment of interest, the majority denies interest.
*38I read this section differently. In the areas of corporate law and partnership law, it is not unusual for the legislature to establish certain rights or responsibilities of corporations, directors, shareholders, or partners. In so doing, the statutes operate not only to create rights or establish methods of operation, they also operate to “fill in the blanks” of the operating authority of the legal entity. In some instances, such as this one, the legislature authorizes the legal entity to deviate from the statutory norm by adopting another method of operation by express agreement, by-law, or charter. See, e.g., Code §§ 13.1-698, -702. In my opinion, the provision in issue here establishes the right of a partner to receive interest for advances to the partnership, subject to any agreement to the contrary between the partners, and also establishes the right of a partner to receive that interest from the date of the advance, subject to any agreement to the contrary.
In my view, the cases relied on by the majority do not support the majority’s position, but in fact support the position I posit. In Hodge v. Kennedy, 198 Va. 416, 424, 94 S.E.2d 274, 280-81 (1956), the issue was whether the sums advanced were payments beyond the capital contribution. After determining that the evidence was sufficient to establish that the payments were advances beyond capital, the Court concluded that “there is nothing to indicate that the allowance of interest should be denied.” Id. This case, in my opinion, correctly applied the statute. The provisions of the statute were applied because there was no showing that the parties had agreed to act otherwise. The majority turns the traditional application of statutes of this type on its head by holding that the statute does not apply unless the terms of the agreement between the partners in this regard can be determined.
The primary issue in the second case cited by the majority, Nogueras v. Maisel & Assoc., 369 N.W.2d 492 (Mich. App. 1985), also was whether certain property was given to the partnership as a gift or capital contribution entitling the defendant only to recovery of the land cost without interest after all liabilities were paid. There was no written agreement which characterized the transaction. The trial court found that the plaintiff failed to carry its burden of proving the transaction to be a gift of property or capital contribution to the partnership. In affirming the trial court’s conclusion, the appellate court relied on the evidence of the intention that interest be paid as support for the finding that the land was not a gift or capital contribution. The evidence of intent *39was not utilized to establish the right to interest; only to establish that the transaction was not a gift or contribution to capital. Id. at 497.
Nogueras also stands for the proposition that once an advance or loan to the partnership is established, the statute provides that interest shall be due. The right to interest may be altered by the agreement of the parties, but the right is established initially by the statute itself.
Accordingly, I would reverse that portion of the judgment denying interest on the advance to the partnership made by Skretvedt and award interest to Skretvedt in accordance with the provisions of § 50-18 on the amount of the advance found by the commissioner.