Renda v. Fela

A-4335-96T1 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: August 24, 1998

PARTNERSHIPS; LOANS; LIABILITY—A loan made by a third party to one of two partners for the benefit of the partnership is a partnership debt and the “non-borrowing” partner is also liable for the debt.

The non-defaulting defendant Fela and defaulting defendant James formed a partnership. James needed money to invest in the venture so she turned to plaintiff Renda, with whom she was romantically involved at the time. Renda gave her $5,300, which was deposited into James’ personal bank account. Renda also worked 420 hours for the partnership. Fela and James filed a trade name certificate that contained only their own names. They did not open a partnership bank account. When the partnership failed, Renda filed suit seeking $10,000 in damages. Renda asserted that he was promised a one-third interest in the partnership and that the other two parties were unjustly enriched by his $5,300 cash contribution and his 420 hours of labor. The lower court denied Renda’s claim by finding that the money and labor constituted a loan to James out of his affection for her and was not a business investment. The Court also found the monies given to James to pay for her share of the partnership did not give Renda an interest in the partnership. The Appellate Division agreed with the lower court that Renda did not hold a partnership interest. Deviating from the lower court’s judgment, however, the Appellate Division held that both partners were liable to repay the loan because it was a debt incurred by James on behalf of the partnership.