Page:United States Statutes at Large Volume 76.djvu/694

 646

PUBLIC LAW 87-709-SEPT. 27, 1962

[76 STAT.

SEC. 40. RULES FOR DISTRIBUTION.—In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary: (a) The assets of the partnership are— (I) the partnership property, ( II) the contributions of the partners necessary for the payment of all the liabilities specified in clause (b) of this paragraph. ^;, (b) The liabilities of the partnership shall rank in order of • • payment, as follows: (I) Those owing to creditors other than partners, ( II) Those owing, to partners other than for capital and profits, ( III) Those owing to partners in respect of capital, ( IV) Those owing to partners in respect of profits. (c) The assets shall be applied in the order of their declaration in clause (a) of this paragraph to the satisfaction of the liabilities. (d) The partners shall contribute, as provided by section 18(a), the amount necessary to satisfy the liabilities; but 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. (e) An assignee for the benefit of creditors or any person appointed by the court shall have the right to enforce the contributions specified in clause (d) of this paragraph. (f) Any partner or his legal representative shall have the right to enforce the contributions specified in clause (d) of this paragraph, to the extent of the amount which he has paid in excess of his share of the liability. (g) The individual property of a deceased partner shall be liable for the contributions specified in clause (d) of this paragraph. (h) When partnership property and the individual properties " of the partners are in possession of a court for distribution, part,' nership creditors shall have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors as heretofore. (i) Where a partner has become bankrupt or his estate is insolvent the claims against his separate property shall rank in the following order: (I) Those owing to separate creditors, ( II) Those owing to partnership creditors, ( III) Those owing to partners by way of contribution. SEC. 41. LIABILITY OF PERSONS CONTINUING THE BUSINESS I N CERTAIN CASES.—(1) When any new partner is admitted into an existing

partnership, or when any partner retires and assigns (or the representative of the deceased partner assigns) his rights in partnership property to two or more of the partners, or to one or more of the partners and one or more third persons, if the business is continued without liquidation of the partnership affairs, creditors of the first or dissolved partnership are also creditors of the partnership so continuing the business.

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