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Gateway Potato Sales v. G.B. Investment Co.

Court of Appeals of Arizona
822 P.2d 490 (1991)


Sunworth Packing Limited Partnership (SPLP) consisted of one general partner, Sunworth Corporation, and one limited partner, G.B. Investment Co. (defendants). Gateway Potato Sales (Gateway) (plaintiff) sold potato seeds to SPLP and was never paid. Gateway had been wary of the transaction but agreed to it after Sunworth Corporation’s president informed Gateway that they were in partnership with G.B. Investment, a respected institution, and that G.B. Investment had approved the transaction. Gateway never interacted directly with G.B. Investment. Nevertheless, Gateway was aware that G.B. Investment was controlling the operations of the partnership and believed it to be a general partner, based on statements made by Sunworth Corporation's president. When SPLP failed to pay the amount owed, Gateway sued SPLP, Sunworth Corporation, and G.B. Investment. G.B. Investment moved for summary judgment on the grounds that, as a limited partner, it was not personally liable for partnership debts. Evidence at trial suggested that G.B. Investment participated at least to some degree in the control of the partnership. The trial court nonetheless granted summary judgment in favor of G.B. Investment, on the grounds that G.B. Investment had not dealt directly with Gateway. Gateway appealed.

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