178.27
178.27
Dissolution by decree of court. 178.27(1)
(1) On application by or for a partner the court shall decree a dissolution whenever any of the following applies:
178.27(1)(a)
(a) A partner has been declared a lunatic in any judicial proceeding or is shown to be of unsound mind.
178.27(1)(b)
(b) A partner becomes in any other way incapable of performing the partner's part of the partnership contract.
178.27(1)(c)
(c) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business.
178.27(1)(d)
(d) A partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself or herself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him or her.
178.27(1)(e)
(e) The business of the partnership can only be carried on at a loss.
178.27(1)(f)
(f) Other circumstances render a dissolution equitable.
178.27(2)(a)(a) After the termination of the specified term or particular undertaking; (b) at any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued.
178.27 History
History: 1993 a. 482.
178.28
178.28
Dissolution terminates agency of partner. Except so far as may be necessary to wind up partnership affairs or to complete transactions begun but not then finished, dissolution terminates all authority of any partner to act for the partnership, with respect to the partners, when the dissolution is not by the act, bankruptcy or death of a partner; or when the dissolution is by such act, bankruptcy or death of a partner, in cases where
s. 178.29 so requires, and with respect to persons not partners, as declared in
s. 178.30.
178.29
178.29
Liability of dissolving partner to partners continues until knowledge of dissolution. If a dissolution is caused by the act, death or bankruptcy of a partner, each partner is liable to the other copartners for the partner's share of any liability created by any partner acting for the partnership as if the partnership had not been dissolved unless any of the following applies:
178.29(1)
(1) The dissolution being by act of any partner, the partner acting for the partnership had knowledge of the dissolution.
178.29(2)
(2) The dissolution being by the death or bankruptcy of a partner, the partner acting for the partnership had knowledge or notice of the death or bankruptcy.
178.29(3)
(3) The liability is for a debt, obligation or liability for which the partner is not liable as provided in
s. 178.12 (2).
178.29 History
History: 1993 a. 482;
1995 a. 97.
178.30
178.30
Partner's agency after dissolution. 178.30(1)
(1) After dissolution a partner can bind the partnership except as provided in
sub. (3):
178.30(1)(a)
(a) By any act appropriate for winding up partnership affairs or completing transactions unfinished at dissolution.
178.30(1)(b)
(b) By any transaction which would bind the partnership if dissolution had not taken place, provided the other party to the transaction
178.30(1)(b)1.
1. Had extended credit to the partnership prior to dissolution and had no knowledge or notice of the dissolution; or
178.30(1)(b)2.
2. Though he had not so extended credit, had nevertheless known of the partnership prior to dissolution and, having no knowledge or notice of dissolution, the fact of dissolution had not been advertised in a newspaper of general circulation in the place (or in each place if more than one) at which the partnership business was regularly carried on.
178.30(2)
(2) The liability of a partner under
sub. (1) (b) shall be satisfied out of partnership assets alone when such partner had been prior to dissolution:
178.30(2)(a)
(a) Unknown as a partner to the persons with whom the contract is made; and
178.30(2)(b)
(b) So far unknown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to the partner's connection with it.
178.30(3)
(3) The partnership is in no case bound by any act of a partner after dissolution if any of the following applies:
178.30(3)(a)
(a) The partnership is dissolved because it is unlawful to carry on the business, unless the act is appropriate for winding up partnership affairs.
178.30(3)(c)
(c) The partner has no authority to wind up partnership affairs, except by a transaction with any of the following:
178.30(3)(c)1.
1. A person who had extended credit to the partnership prior to dissolution and had no knowledge or notice of the partner's want of authority.
178.30(3)(c)2.
2. A person who had not extended credit to the partnership prior to dissolution, and having no knowledge or notice of the partner's want of authority, the fact of the partner's want of authority had not been advertised in the manner provided for advertising the fact of dissolution in
sub. (1) (b) 2.
178.30(4)
(4) Nothing in this section shall affect the liability under
s. 178.13 of any person who after dissolution represents himself or herself or consents to another representing him or her as a partner in a partnership engaged in carrying on business.
178.30 History
History: 1993 a. 482.
178.31
178.31
Discharge of existing liabilities on dissolution. 178.31(1)(1) The dissolution of the partnership does not of itself discharge the existing liability of any partner.
178.31(2)
(2) A partner is discharged from any existing liability upon dissolution of the partnership by an agreement to that effect between the partner, the partnership creditor and the person or partnership continuing the business; and such agreement may be inferred from the course of dealing between the creditor having knowledge of the dissolution and the person or partnership continuing the business.
178.31(3)
(3) Where a person agrees to assume the existing obligations of a dissolved partnership, the partners whose obligations have been assumed shall be discharged from any liability to any creditor of the partnership who, knowing of the agreement, consents to a material alteration in the nature or time of payment of such obligations.
178.31(4)
(4) The individual property of a deceased partner shall be liable for those obligations of the partnership incurred while the deceased partner was a partner and for which the deceased partner was liable under
s. 178.12 but subject to the prior payment of the deceased partner's separate debts.
178.31 History
History: 1993 a. 482;
1995 a. 97.
178.31 Annotation
Notwithstanding agreement between partners, both partners were liable for prior partnership obligation since there was no agreement under (2). Fox Valley Builders Corp. v. Day, 71Wis. 2d 785, 238N.W.2d 748.
178.32
178.32
Right to wind up. Unless otherwise agreed, the partners who have not wrongfully dissolved the partnership or the legal representative of the last surviving partner, not bankrupt, has the right to wind up the partnership affairs; provided, however, that any partner, the partner's legal representative, or the partner's assignee, upon cause shown, may obtain winding up by the court.
178.32 History
History: 1993 a. 482.
178.33
178.33
Application of partnership property on dissolution. 178.33(1)(1) When dissolution is caused in any way, except in contravention of the partnership agreement, each partner, as against the other copartners and all persons claiming through them in respect of their interests in the partnership, unless otherwise agreed, may have the partnership property applied to discharge its liabilities, and the surplus applied to pay in cash the net amount owing to the respective partners. But if dissolution is caused by expulsion of a partner, bona fide under the partnership agreement, and if the expelled partner is discharged from all partnership liabilities, either by payment or agreement under
s. 178.31 (2) the expelled partner shall receive in cash only the net amount due the expelled partner from the partnership.
178.33(2)
(2) When dissolution is caused in contravention of the partnership agreement the rights of the partners shall be as follows:
178.33(2)(a)
(a) Each partner who has not caused dissolution wrongfully shall have all the rights specified in
sub. (1), and the right, as against each partner who has caused the dissolution wrongfully, to damages for breach of the agreement.
178.33(2)(b)
(b) The partners who have not caused the dissolution wrongfully, if they all desire to continue the business in the same name, either by themselves or jointly with others, may do so, during the agreed term for the partnership and for that purpose may possess the partnership property, provided they secure the payment by bond approved by the court, or pay to any partner who has caused the dissolution wrongfully, the value of his or her interest in the partnership at the dissolution, less any damages recoverable under
par. (a), and in like manner indemnify him or her against all present or future partnership liabilities.
178.33(2)(c)
(c) A partner who has caused the dissolution wrongfully shall have, if the business is not continued under the provisions of
par. (b), all the rights of a partner under
sub. (1) subject to the provisions of
par. (a), and, if the business is continued under
par. (b), the right as against the other partners and all claiming through them in respect of their interests in the partnership, to have the value of his or her interest in the partnership, less any damages caused to the other partners by the dissolution, ascertained and paid to him or her in cash, or the payment secured by bond approved by the court, and to be released from all existing liabilities of the partnership; but in ascertaining the value of the partner's interest the value of the goodwill of the business shall not be considered.
178.33 History
History: 1993 a. 482;
1997 a. 254.
178.33 Annotation
Partner who had not wrongfully dissolved partnership had right under sub. (1) to force sale of assets, in absence of contrary agreement. Dreifuerst v. Dreifuerst, 90Wis. 2d 566, 280N.W.2d 335 (Ct. App. 1979).
178.33 Annotation
Business run for 8 years by surviving partner held to be winding up under s. 178.33 (1), not continuing under s. 178.37. In Matter of Trust Estate of Schaefer, 91Wis. 2d 360, 283N.W.2d 410 (Ct. App. 1979).
178.33 Annotation
A deceased or withdrawing partner has no claim to post-dissolution profits where those profits are related to the skill and services of the remaining partners. Fees from work in progress at the time of dissolution constitute partnership assets allocated to each partner according to the partnership formula without any additional compensation to the partner who performs the work. Gull v. Van Epps, 185Wis. 2d 609, 517N.W.2d 531 (Ct. App. 1994).
178.34
178.34
Adjustment of rights on dissolution for fraud. If a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled to all of the following:
178.34(1)
(1) A lien on, or right of retention of, the surplus of the partnership property after satisfying the partnership liabilities to third persons for any sum of money paid by the party entitled to rescind for the purchase of an interest in the partnership and for any capital or advances contributed by the party entitled to rescind.
178.34(2)
(2) To stand, after all liabilities to third persons have been satisfied, in the place of the creditors of the partnership for any payments made by the party entitled to rescind in respect of the partnership liabilities.
178.34(3)
(3) Indemnification by the person guilty of the fraud or making the representation against all debts and liabilities of the partnership.
178.34 History
History: 1993 a. 482.
178.35
178.35
Settlement and distribution on dissolution. In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary:
178.35(1)
(1) The assets of the partnership are all of the following:
178.35(2)
(2) The liabilities of the partnership shall rank in order of payment, as follows:
178.35(2)(a)
(a) Those owing to creditors other than partners.
178.35(2)(b)
(b) Those owing to partners other than for capital and profits.
178.35(2)(c)
(c) Those owing to partners in respect of capital.
178.35(2)(d)
(d) Those owing to partners in respect of profits.
178.35(3)
(3) The assets shall be applied in the order of their declaration in
sub. (1) to the satisfaction of the liabilities.
178.35(4)
(4) Except as provided in
s. 178.12 (2), the partners shall contribute, as provided by
s. 178.15 (1), the amount necessary to satisfy liabilities, and if any, but not all, of the partners are insolvent, or, not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities, and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.
178.35(5)
(5) An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contributions specified in
sub. (4).
178.35(6)
(6) Any partner or the partner's legal representative shall have the right to enforce the contributions specified in
sub. (4) to the extent of the amount which the partner has paid in excess of the partner's share of the liability.
178.35(7)
(7) The individual property of a deceased partner shall be liable for the contributions specified in
sub. (4).
178.35(8)
(8) When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors as heretofore.
178.35(9)
(9) If a partner has become bankrupt or the partner's estate is insolvent, the claims against the partner's separate property shall rank in the following order:
178.35(9)(c)
(c) Those owing to partners by way of contribution.
178.35 History
History: 1993 a. 482;
1995 a. 97.
178.36
178.36
Rights and liabilities on continuing business after dissolution without liquidation. 178.36(1)
(1) If any new partner is admitted into an existing partnership, or if any partner retires and assigns, or the representative of the deceased partner assigns, that partner's rights in partnership property to 2 or more of the partners, or to one or more of the partners and one or more 3rd persons and if the business is continued without liquidation of the partnership affairs, the creditors of the first or dissolved partnership are also creditors of the partnership so continuing the business.
178.36(2)
(2) 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.
178.36(3)
(3) If any partner retires or dies and the business of the dissolved partnership is continued as set forth in
subs. (1) and
(2), with the consent of the retired partners or the representative of the deceased partner, but without any assignment of the retired or deceased 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.
178.36(4)
(4) 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.
178.36(5)
(5) When any partner wrongfully causes a dissolution and the remaining partners continue the business under the provisions of
s. 178.33 (2) (b), 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.
178.36(6)
(6) 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.
178.36(7)
(7) The liability of a 3rd 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.
178.36(8)
(8) If 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.
178.36(9)
(9) Nothing in this section shall be held to modify any right of creditors to set aside any assignment on the ground of fraud.
