Suits may be brought by or against a partnership as such, or against all or either of the individual members thereof; and a judgment against the firm as such may be enforced against the partnership's property, or that of such members as have appeared or been served with summons; but a new action may be brought against the other members in the original cause of action. When the action is against the partnership as such, service of summons on one of the members, personally, shall be sufficient service on the firm.
History: Laws 1880, ch. 6, § 6; C.L. 1884, § 1886; C.L. 1897, § 2943; Code 1915, § 4077; C.S. 1929, § 105-111; 1941 Comp., § 19-605; 1953 Comp., § 21-6-5.
Bracketed material. — The bracketed material was inserted by the compiler and is not part of the law.
Cross references. — For actions on joint obligations or assumptions by partners generally, see 38-4-3 NMSA 1978.
For service of process generally, see Rule 1-004 NMRA.
Partnership is a distinct legal entity in the sense that it may be sued as such in the partnership name. Loucks v. Albuquerque Nat'l Bank, 1966-NMSC-176, 76 N.M. 735, 418 P.2d 191; Nat'l Sur. Co. v. George E. Breece Lumber Co., 60 F.2d 847 (10th Cir. 1932).
Liability of copartner for punitive damages. — Absent a finding of ratification, authorization, or participation in the fraudulent conduct, punitive damages may not be recovered from copartners for one partner's fraudulent conduct. Duncan v. Henington, 1992-NMSC-043, 114 N.M. 100, 835 P.2d 816.
Copartners of partner found liable for fraud were liable to plaintiff jointly and severally for the award of compensatory damages, attorney fees, and costs; however, only partner committing fraudulent acts was liable to plaintiff for the award of punitive damages. Duncan v. Henington, 1992-NMSC-043, 114 N.M. 100, 835 P.2d 816.
Suit in name of all partners. — Although a partner is a general agent of the partnership, a partner may not sue alone on a cause of action belonging to a partnership; instead, the action must be brought in the names of the partners. Daniels Ins., Inc. v. Daon Corp., 1987-NMCA-110, 106 N.M. 328, 742 P.2d 540.
A partner cannot bring suit as an individual on a claim belonging to the partnership, nor does an individual partner have a separate cause of action for a proportionate share of a partnership claim. First Nat'l Bank v. Sanchez, 1991-NMSC-065, 112 N.M. 317, 815 P.2d 613.
Partner served with summons not party to suit. — A partner does not become a party to a suit against the partnership solely by virtue of being served with summons in the case; the partner must also be identified as a party in the complaint. Lava Shadows, Ltd. v. Johnson, 1996-NMCA-043, 121 N.M. 575, 915 P.2d 331, cert. denied, 121 N.M. 644, 916 P.2d 844.
Partner's verification of complaint not appearance. — Since the complaint named only the partnership as the plaintiff, a partner's verification of the complaint, even taken together with the partner's authorization of the suit, did not constitute an appearance by the partner and he was not a party at the time of trial. Lava Shadows, Ltd. v. Johnson, 1996-NMCA-043, 121 N.M. 575, 915 P.2d 331, cert. denied, 121 N.M. 644, 916 P.2d 844.
Judgment not authorized against nonparty. — Since the partner was not a party to the suit at the time of trial, the judgment could not be entered against him even if he was made a party in a proceeding to contest the judgment after the trial. Lava Shadows, Ltd. v. Johnson, 1996-NMCA-043, 121 N.M. 575, 915 P.2d 331, cert. denied, 121 N.M. 644, 916 P.2d 844.
Partner may sue another at law on a promissory note, executed by the partnership to him, in view of this section. Mayer v. Lane, 1927-NMSC-079, 33 N.M. 24, 262 P. 180; Lane v. Mayer, 1927-NMSC-080, 33 N.M. 28, 262 P. 182.
In action against a partnership in its own name, judgment may be rendered against a partner individually if he has been served with process or has appeared in the action. Nat'l Sur. Co. v. George E. Breece Lumber Co., 60 F.2d 847 (10th Cir. 1932).
Partner settling claim that is not usual to the business. — While a partner acting within his or her actual authority may execute a valid release of a partnership claim, it is questionable whether there could be implied actual authority or apparent authority for a partner to settle any part of a partnership claim that was not usual to the business. Of course, an individual partner may release personal claims based upon damage to personal property and interests. First Nat'l Bank v. Sanchez, 1991-NMSC-065, 112 N.M. 317, 815 P.2d 613.
Effect of answer by member upon entry of default judgment against partnership. — In an action against a partnership, an answer purporting to be merely the personal answer of one member of a partnership, and not in behalf of the partnership, did not prevent a default judgment against the partnership. Kempner v. McMahan, 1931-NMSC-005, 35 N.M. 313, 296 P. 802.
Persons bound by judgment in action against individual members of firm. — Actions are authorized against the firm by the firm name, but where the action is against the individual members of the firm and not against the firm as such, only those served can be bound by the judgment. Good v. Red River Valley Co., 1904-NMSC-019, 12 N.M. 245, 78 P. 46.
Effect of judgment against firm upon subsequent action against individual member. — A judgment against the firm in an action where only one of its members was a party cannot extend its lien against the property of the other partner who is entitled to his day in court to present any defense which he may have to the original cause of action in a new action. Lewinson v. First Nat'l Bank, 1902-NMSC-025, 11 N.M. 510, 70 P. 567.
A judgment which was taken on a judgment on a note of a firm against a partner who was not served and did not appear in the first action was not obtained on the same cause of action as the note and was no bar to a later action on the note under this section. First Nat'l Bank v. Lewinson, 1904-NMSC-009, 12 N.M. 147, 76 P. 288.
Amendment of judgment on appeal. — Where action was brought against named persons as copartnership, and judgment was rendered against the copartnership and not against the individuals, the supreme court, on appeal, supplied the omission of the individual names by ordering them inserted in the judgment. Wirt v. George W. Kutz & Co., 1910-NMSC-039, 15 N.M. 500, 110 P. 575.
Law reviews. — For note, "Commercial Law - The New Mexico Supreme Court Answers a Moot Question of Partnership Law: First National Bank in Albuquerque v. Sanchez," see 23 N.M.L. Rev. 251 (1993).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 59A Am. Jur. 2d Partnership §§ 698, 700, 702, 708, 709, 712, 713.
Structure New Mexico Statutes
Section 38-4-2 - [Several persons liable on contract, judgment or statute; parties defendant.]
Section 38-4-5 - [Suits against partners; joinder; enforcement of judgment; service of process.]
Section 38-4-6 - [Married woman.]
Section 38-4-7 - Infant; suits between spouses.
Section 38-4-8 - [Infants; bond of next friend.]
Section 38-4-9 - Costs in suit brought by certain representatives of infant.
Section 38-4-10 - Guardian ad litem for infant defendant.
Section 38-4-11 - Failure to apply for appointment of guardian ad litem.
Section 38-4-12 - Liability of guardian ad litem for costs.
Section 38-4-13 - Definition of "infant" as used in Sections 38-4-7 through 38-4-12 NMSA 1978.
Section 38-4-14 - Incapacitated person; definition.
Section 38-4-15 - Appointment of guardian ad litem to defend suit.
Section 38-4-16 - Compromise by guardian ad litem.