Father and son have been in property investment business together for the past 20 yrs. Father has made the son President of the corporation, with son's name alone on all legal documents. Father and son have always had the agreement that all profits in business ventures would be split equally, and have been making decisions on the business jointly for the past 20 yrs.
Recently the son was hospitalized and diagnosed as manic depressive and has been making very bad business decisions such as buying multiple properties without the possibility of being able to finance, maxing out every credit he could get his hands on, trying to sell his father's portion of the property that was mutually agreed upon that was father's to come up with cash to purchase more properties without Father's consent. Father trusted the son to make the right decisions for the last 20 yrs, and now the son is assuming everything belongs to him without taking into consideration the father's rights as a silent partner.
Does the father have rights to his share of the business? What does he need to do?

Wish he had it all in writing.
What counts is what legal documents are in writing.

Quote:

---

Originally Posted by sandracutcliffe

What does he need to do?

---

See an attorney.

Quote:

---

Originally Posted by sandracutcliffe

Father and son have been in property investment business together for the past 20 yrs. Father has made the son President of the corporation, with son's name alone on all legal documents. Father and son have always had the agreement that all profits in business ventures would be split equally, and have been making decisions on the business jointly for the past 20 yrs.
Recently the son was hospitalized and diagnosed as manic depressive and has been making very bad business decisions such as buying multiple properties without the possibility of being able to finance, maxing out every credit he could get his hands on, trying to sell his father's portion of the property that was mutually agreed upon that was father's to come up with cash to purchase more properties without Father's consent. Father trusted the son to make the right decisions for the last 20 yrs, and now the son is assuming everything belongs to him without taking into consideration the father's rights as a silent partner.
Does the father have rights to his share of the business? What does he need to do?

---

To establish father's rights, the father has to provide evidence:
1. That he is one of the partners (silent or active) - whether in writing or verbally
2. He has shared the profits equally in the past - from accounting records
3. He has made joint decisions in the past - from business records
4. the circumstances in which the son was made president such as a legal notice appointing son as the president
5. The son acted mala fide
6. The son exceeded his duties by acting without father's consent

If he can establish that he is in fact a sleeping partner then his liability for losses due to improper decisions of the president may be reduced, but his claim for his rights will stand.

These are just preliminary suggestions. There might be more if the evidence comes forward.

Quote:

---

Originally Posted by rehmanvohra

...
If he can establish ... then his liability for losses due to improper decisions of the president may be reduced, but his claim for his rights will stand ....

---

I don't see an issue of liability of the father. Instead it appears that what the father needs to do is to assert or establish his authority so that ongoing losses cease.

To do so, he needs to take multiple steps, such as:

Remove the son as president of the corporation.

File suit against the son for misfeasance as president.

Record notice to would-be bona fide purchasers that will put them on notice that the son doesn't have the right to encumber or sell corporate assets. A lis pendens, for example.

Notify the charge card companies that the son is no longer authorized to use the charge card accounts. Get the son's cards cancelled.