Legal Question in Business Law in California

My business partner withdrew all our company funds

My business partner withdrew all our company funds without my authorization and changed the locks at our office (a residential home which I am on the title for). Please advise.

Thank you.

Asked on 10/02/06, 11:53 am

4 Answers from Attorneys

Todd Stevenson Stevenson Law Office

Re: My business partner withdrew all our company funds

If your partner will not communicate with you, you will need to hire a civil litigation attorney with a background in business litigation to protect your interests. How much money was taken? What was the form of your partnership? Etc. You need to discuss these issues with a qualified attorney as soon as possible.

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Answered on 10/02/06, 12:24 pm
J. Caleb Donner Donner & Donner

Re: My business partner withdrew all our company funds

Sounds like you've got a BIG problem. You need to gather all documentation that you have in relation to your partnership INCLUDING any and all emails, etc.

You should then have a consultation with a business litigator as soon as possible. You need to act quickly before your partner causes more damage.

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Answered on 10/02/06, 1:03 pm

Re: My business partner withdrew all our company funds

He has dissolved the partnership by his actions, demand an accounting, sue for damages. Call me directly at 16192223504.

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Answered on 10/02/06, 3:53 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: My business partner withdrew all our company funds

The first line of questions an attorney would ask is whether this is a true partnership, or perhaps a corporation (often, co-founders of small corporations inaccurately refer to themselves as "partners"). Then, is there a partnership agreement? Are the two of you the only partners, or are there others?

Next, the attorney should verify that the withdrawal of funds and changing of locks required your authorization. It probably did, I hasten to add, but partnership arrangements differ widely.

I disagree that the partner's acts caused the partnership to dissolve. It is not even clear that the partner has left the partnership, or "dissociated" to use the legal term. A voluntary dissociation requires notice to the partnership of the partner's "express will" to withdraw. Then, even if such notice is given (or the partner dissociates involuntarily by, for example, dying), the remaining partner or partners may elect to continue the reports of the demise of the partnership may be premature.

The Corporations Code contains California's basic partnership statutes. You might want to look up the California Uniform Partnership Act of 1994, Corporations Code sections 16100 to 16962. The most relevant provisions are those at 16401 et seq. dealing with the relationship of partners to each other and to the partnership; 16601 et seq. regarding dissociation; and the sections beginning with 16701 and 16801 dealing with winding up a partnership's business and settling its accounts.

Keep in mind that as a partner you are liable to the public for its debts, although you may have a counterclaim against the other partner(s).

As to the house, unless it has become partnership property through contribution to the partnership's capital - which, to the surprise of some can happen without a deed! - you are at least a cotenant and probably entitled to possession. If necessary, one of several legal actions may be necessary to recover possession. The actions are ejectment, quiet title, or possibly others (but probably not trespass or unlawful detainer).

I have handled similar cases in both partnership and real-property law, and your being in Southern California would not be a problem to representing you efficiently and economically, if you care to contact me.

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Answered on 10/02/06, 6:08 pm

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