Pre-2000 Opinions

Site.YearPre2000ChargingOrderOpinions

Pre-2000 Charging Order Opinions

Windom National Bank v. Klein, 254 N.W. 602 (Minn., 1934).

Tupper v. Kroc, 88 Nev. 146, 494 P.2d 1275 (Nev., 1972).

♦ Lloyd G. Tupper and Ray A. Kroc entered into limited partnerships to hold and lease real estate, with Tupper as general partner and Kroc as limited partner, each holding a fifty percent interest. Kroc alleged Tupper mismanaged and misappropriated partnership funds, leading to the appointment of a receiver and subsequent litigation. Kroc paid partnership debts when Tupper could not, accepting interest-bearing notes in return, and later obtained a summary judgment against Tupper. To satisfy the judgment, the court issued a charging order under NRS 87.280, directing the sale of Tupper’s partnership interests, which Kroc purchased at a sheriff’s sale. Tupper challenged the sale and the discharge of the receiver, arguing procedural errors, inadequate sale price, and violation of partnership agreements. The Nevada Supreme Court affirmed the trial court’s orders, holding that the charging order and sale were proper, the sale price was determined by public auction, and Tupper’s interest consisted only of profits and surplus, not partnership assets. The court rejected claims of procedural irregularity and found that after the sale, Tupper had no remaining rights or equity in the partnerships, justifying the termination of the receivership. ♦

Chrysler Credit Corp. v. Peterson, 342 N.W.2d 170 (Minn.App., 1984).

♦ Chrysler Credit sought to collect an unsatisfied judgment against Donald P. Peterson by obtaining a court order “charging” Peterson’s limited partnership interest in Cedar Riverside Properties, after learning through discovery that he owned four partnership units. Before the hearing on Chrysler Credit’s application, Peterson assigned his partnership interest to his wife and his attorney, and additional liens/security interests were placed on the units; Chrysler Credit argued these transfers were fraudulent and asked the court both to void them and to issue a charge order for the remaining debt. The trial court denied all requested relief, but the Court of Appeals affirmed in part and reversed in part: it agreed that whether the assignments were fraudulent could not be decided on motion and instead required a separate plenary action with the assignees joined as parties (since they might be bona fide purchasers). However, the appellate court held the trial court erred in denying the charge order merely because ownership of the partnership interest had not yet been determined. Reading Minnesota’s charge-order statute under the Uniform Limited Partnership Act together with remedies available to a judgment creditor under the Uniform Fraudulent Conveyances Act, the court concluded that when a judgment creditor alleges a fraudulent conveyance of a debtor’s limited partnership interest, the creditor is entitled to a charge order that attaches to whatever partnership interest is later determined to exist.Chrysler Credit sought to collect an unsatisfied judgment against Donald P. Peterson by obtaining a court order “charging” Peterson’s limited partnership interest in Cedar Riverside Properties, after learning through discovery that he owned four partnership units. Before the hearing on Chrysler Credit’s application, Peterson assigned his partnership interest to his wife and his attorney, and additional liens/security interests were placed on the units; Chrysler Credit argued these transfers were fraudulent and asked the court both to void them and to issue a charge order for the remaining debt. The trial court denied all requested relief, but the Court of Appeals affirmed in part and reversed in part: it agreed that whether the assignments were fraudulent could not be decided on motion and instead required a separate plenary action with the assignees joined as parties (since they might be bona fide purchasers). However, the appellate court held the trial court erred in denying the charge order merely because ownership of the partnership interest had not yet been determined. Reading Minnesota’s charge-order statute under the Uniform Limited Partnership Act together with remedies available to a judgment creditor under the Uniform Fraudulent Conveyances Act, the court concluded that when a judgment creditor alleges a fraudulent conveyance of a debtor’s limited partnership interest, the creditor is entitled to a charge order that attaches to whatever partnership interest is later determined to exist. ♦

City of Arkansas City v. Anderson, 752 P.2d 673 (Kan.,1988).

Leventhal v. Five Seasons Partnership, 84 Md.App. 603 (1990). Charging Order and Receiver

♦ Judgment creditor Stephen Leventhal and receiver Stephen Trattner appealed after the Montgomery County Circuit Court dismissed with prejudice their complaint seeking dissolution and winding up of Five Seasons Partnership. Leventhal had obtained a charging order against the interests of judgment debtors Juan and Lelia Imas Gruner in various partnerships, including Five Seasons, and Trattner was appointed receiver under that order. Five Seasons, a Maryland general partnership, included as partners entities associated with the Gruners and an Argentine corporation (SKB) whose principals allegedly overdrew the partnership capital account by $300,000 and improperly received over $1 million, while partnership counsel held in escrow funds owed to Five Seasons by a related entity. The trial court dismissed on the view that the charging-order procedure was the proper remedy, but the Court of Special Appeals held this was error. Relying on Maryland’s Uniform Partnership Act and prior Maryland precedent (Rector v. Azzato), the appellate court explained that a receiver appointed under a charging order “stands in the shoes” of the debtor-partner and may seek court action, including dissolution and winding up; it also noted statutory authority allowing a holder of a charging order to petition for dissolution. The court reversed and remanded for the trial court to determine whether dissolution and/or winding up should be ordered, with costs assessed against appellees. ♦

Hellman v. Anderson, 233 Cal. App. 3d 840, 284 Cal. Rptr. 830 (Cal.App.Dist.3 08/26/1991).

Union Colony Bank v. United Bank, 832 P.2d 1112 (Colo., 1992).

Chandler Medical Building Partners v. Chandler Dental Group, 855 P.2d 787, 175 Ariz. 273 (Ariz.App.Div.1, 1993).

First Union Nat'l Bank v. Craun, 853 F.Supp. 209 (W.D.Va. 1994).

♦ The U.S. District Court for the Western District of Virginia considered whether a post‑judgment charging order against a debtor’s limited partnership interests could take priority over a security interest perfected after judgment but before the charging order was entered. The plaintiff bank obtained a consent judgment against Nancy Craun and sought a charging order under Virginia law to reach her interests in two limited partnerships, while one partnership claimed priority based on an earlier assignment and a later‑perfected security agreement securing an antecedent debt. The court held that although Virginia law permits issuance of a charging order without first issuing a writ of execution, a charging order alone does not establish priority over a perfected security interest when no execution has issued. The court reasoned that priority would have been fixed had the creditor issued and delivered a writ of execution before the security interest was perfected, but absent execution the debtor remained free to encumber her intangible distribution rights. Accordingly, the court entered the agreed charging order but denied the bank’s request to give it priority over the perfected security interest, underscoring that a judgment, without execution, does not itself secure priority over later‑perfected liens. ♦

Madison Hills LTD v. Madison Hills, Inc., 644 A.2d 363 (Conn.App. 06/06/1994).

Nigri v. Lotz, 453 S.E.2d 780 (Ga.App. 02/01/1995).

Christensen v. Oedekoven, 95 Wy. 3 (Wyo.App., 1995).

Dispensa v. University State Bank, 951 S.W.2d 797 (Tex.App., 1997).

♦ Dispensa sought appellate review by writ of error of a trial court’s post‑judgment charging order that attempted to apply his partnership interest in Gulf Properties Partnership toward satisfaction of University State Bank’s unsatisfied default judgment on a promissory note (about $281,000). After the bank obtained a default judgment in 1990 and later pursued collection efforts in 1995, the trial court—following a noticed hearing that Dispensa did not attend—issued an order directing the partnership to pay Dispensa’s share of profits (and other monies due him) to the bank until the judgment was satisfied. The court of appeals dismissed the appeal for lack of jurisdiction, holding the charging order was interlocutory and thus not appealable because it did not dispose of all issues raised at that stage of the enforcement proceeding (notably, it failed to address the bank’s request for an accounting and did not mention the separate turnover/receiver application) and lacked the clarity and definiteness required of a final, appealable order (it did not specify Dispensa’s partnership interest, provide a method to determine it, or state how and when payments should be made). ♦