## Facts

- Northmon Investment Company and Milford Plaza Associates were partners in a partnership whose only asset was a single parcel of real property.
- Milford sought to bind the partnership to a 99-year lease of the property, characterizing the transaction as within the ordinary course of the partnership’s business.
- Northmon objected and attempted to prevent the partnership from entering into the lease without its consent.
- The partnership agreements provided for termination of the partnership in 2075, before expiration of the proposed 99-year lease.

## Issues

1. Whether Milford had authority, over Northmon’s objection, to bind the partnership to a 99-year lease of the partnership’s sole asset.
2. Whether Northmon’s efforts to stop the proposed lease could support counterclaims for tortious interference with prospective business relations and breach of fiduciary duty, or were legally justified.
3. Whether Milford was entitled to leave to amend counterclaims based on newly discovered partnership agreements.

## Decision

- The Appellate Division affirmed the trial court’s orders in all respects.
- Milford lacked authority to impose the 99-year lease on the partnership over Northmon’s objection.
- Milford’s counterclaims for tortious interference and breach of fiduciary duty were properly dismissed because Northmon’s conduct was privileged.
- Leave to amend the counterclaims based on newly discovered partnership agreements was properly denied.
- Costs were awarded to Northmon.

## Legal Principles

- A partner’s apparent authority to bind the partnership in transactions that appear to be in the ordinary course (Partnership Law § 20(1)) does not eliminate partners’ rights, as between themselves, to prevent contemplated transactions and to exercise equal management rights (Partnership Law § 40(5)).
- One partner (or group of partners) cannot compel a nonconsenting partner to accept a contested transaction where the partnership relationship allocates equal management rights and the transaction is not properly authorized under the partners’ internal rights (including under Partnership Law § 40).
- A partner’s interference with a partnership contract or prospective contract may be legally privileged when undertaken to protect legitimate partnership interests, defeating tortious interference and related fiduciary-duty theories.
- A long-term lease that extends beyond the partnership’s contractual termination date is not an ordinary-course transaction for purposes of binding a nonconsenting partner; proposed amendments resting on agreements that still end the partnership before lease expiration do not cure the authorization defect.

## Conclusion

The court held that equal management rights allowed a partner to block a 99-year lease encumbering the partnership’s sole asset, treated the objecting partner’s interference as privileged and therefore not tortious or disloyal, and upheld denial of leave to amend where the partnership agreements terminated before the proposed lease would expire.


Northmon Inv. Co. v. Milford Plaza Assocs., 284 A.D.2d 250, 727 N.Y.S.2d 419 (1st Dep’t 2001)