## Facts

- 55 Perry Co. was a New York real-estate partnership owned 50/50 by the Rapoport family and the Parnes family under a written partnership agreement.
- The agreement restricted transfers of a partner’s “share” unless approved in writing by a majority of partners, but exempted transfers to “members of his immediate family who have attained majority” from any consent requirement.
- In December 1974, Simon and Genia Rapoport assigned a 10% interest out of their 50% share to their adult children, Daniel and Kalia.
- The Parnes family was notified, and an amended partnership certificate was filed reflecting the children’s 10% interest.
- The Rapoports demanded an amendment to the partnership agreement naming the children as partners; the Parnes refused, asserting that admission of new partners required consent of all existing partners.
- The dispute turned on whether the family-member exception permitted only an assignment of economic rights or also allowed admission of the assignees as partners with governance rights.

## Issues

1. Whether the agreement’s consent exemption for transfers to adult immediate family members permitted the transferees to become partners without the other partners’ consent.
2. Whether, absent clear contractual language, New York partnership law permits admission of a new partner without unanimous consent of existing partners.
3. Whether the transfer provision was ambiguous such that intent required trial, or sufficiently clear to be decided as a matter of law on summary judgment.

## Decision

- The Appellate Division reversed the trial court’s determination that the agreement was ambiguous.
- The court held that the family-transfer clause authorized assignment of an economic interest only and did not confer partner status on the assignees.
- The court applied the rule that, unless otherwise agreed, no person becomes a partner without the consent of all partners.
- Summary judgment was granted for the defendants (the Parnes), rejecting the Rapoports’ demand to treat the children as partners.
- A dissent would have found ambiguity and required a trial on the parties’ intent.

## Legal Principles

- An assignment of a partnership interest transfers only the assignor’s economic rights (e.g., share of profits and distributions) unless the agreement clearly provides otherwise.
- An assignee, as such, does not obtain membership in the partnership and has no right to participate in management or administration.
- Absent an express agreement to the contrary, admission of a new partner requires the consent of all existing partners.
- Contract language permitting “sell, transfer, [or] assign” of a “share,” without express admission language, is construed as addressing economic transfers rather than creation of new partners.

## Conclusion

The court treated the adult children as assignees entitled to economic distributions but not as partners, holding that the agreement’s family-member transfer exception did not override the default unanimity requirement for admitting new partners.


Rapoport v. 55 Perry Co., 50 A.D.2d 54 (N.Y. App. Div. 1st Dep’t 1975)