B-161821 November 28, 1967

B-161821: Nov 28, 1967

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Was certified to be indebted to the United States in the principal amount of $5. Elliott have been fully advised in the matter but payment of the amount due has not been made. The Government's claim is referred to you for collection. Were adjudged bankrupt in the United States District Court for the Northern District of California. While 11 U.S.C. 23 23(i) provides that where all the general partners are adjudged bankrupt. That section further provides where not all of the general partners are adjudged bankrupt. The discharge of one or several partners under an individual adjudication can have no effect upon the liabilities of another partner. Since as a general rule a partner's individual assets may be held liable for the payment of partnership debts provided such individual assets are not consumed in payment of individual liabilities.

B-161821 November 28, 1967

The Honorable Edwin L. Weisl, Jr. Assistant Attorney General Civil Division Department of Justice

Dear Mr. Weisl:

SUBJECT: Indebtedness of Mr. Edward W. Elliott in the sum of $5,317.29, representing the value of loss and/or damage to Government property plus unearned freight charges in the amount of $5,051.35, and overpayments in transportation charges of $265.94.

By two General Accounting Office Certificates of Indebtedness dated November 3, 1967, two copies of each enclosed, Edward W. Elliott, partner, North Sacramento Freight Lines, of 158 Balla Vista, Belvedere-Tiburon, California, was certified to be indebted to the United States in the principal amount of $5,317.29, representing the value of loss and/or damage to Government property incurred incident to its transportation during the years 1962 to 1964 inclusive by North Sacramento Freight Lines, $5,051.35, and for transportation overcharges, $265.94, made in 1964 by that company. The debtor company and Mr. Elliott have been fully advised in the matter but payment of the amount due has not been made. The company, a partnership, has apparently ceased operations and no offset from current revenues h as been possible. Accordingly, the Government's claim is referred to you for collection.

The debt arose while Mr. Elliott and three others, Gordon Serpa, Edmond Santos and Richard Wright, did business under the name North Sacramento Freight Lines, a partnership. The other partners of the enterprise, Serpa, Santos and Wright, were adjudged bankrupt in the United States District Court for the Northern District of California, on April 12, 27 and June 4, 1965, in Bankruptcy Actions 37,8282 38,018 and 38,475 respectively, leaving Mr. Elliott as the only remaining solvent partner.

While 11 U.S.C. 23 23(i) provides that where all the general partners are adjudged bankrupt, the partnership shall also be adjudged bankrupt, that section further provides where not all of the general partners are adjudged bankrupt, the general partners not adjudged bankrupt shall settle the partnership business as expeditiously as possible. And the discharge of one or several partners under an individual adjudication can have no effect upon the liabilities of another partner. Kimmel v. State, 128 N.E. 708, 130 N.E. 239.

Accordingly, and since as a general rule a partner's individual assets may be held liable for the payment of partnership debts provided such individual assets are not consumed in payment of individual liabilities, Beaver Board Co. v. Tabris, 47 F. 2d 271, it appears on the present record that the individual assets of Edward W. Elliott, in excess of his individual debts, are available to satisfy the debts of the partnership to the Government.

Notices of overcharge, General Accounting Office Forms 1003, setting forth the basis for the overcharges with complete tariff authorities therefore, have been furnished North Sacramento Freight Lines along with claims relating to loss and/or damage of Government property while being transported by the bankrupt company. Also, demand was made on Mr. Elliott for the amounts involved.

There are enclosed two copies of Dun and Bradstreet, Inc., credit report dated January 6, 1967, relative to the financial standing of Mr. Elliott and of report of August 23, 1967, on the North Sacramento Freight Lines. While the report of January 6, 1967, indicates the Freight Lines went bankrupt in June 1965, the August 23, 1967, reports and other information of record here indicate the partnership merely suspended operations and ceased doing business.

In the event it becomes necessary to institute suit to recover the amount due, our Office will, upon request, furnish copies of any available documents or additional information which may be required for the preparation of the complaint. Information as to how any amount collected should be deposited will be furnished upon receipt of notice that collection has been affected or the amount collected may be transmitted here for deposit.

Sincerely yours,

N.J. Nevins Assistant General Counsel

Enclosures