(1) Every partner shall account to the partnership for any benefit and hold as trustee for it any profits derived by such partner without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use by such partner of its property.
(2) This section applies also to the representatives of a deceased partner engaged in the liquidation of the affairs of the partnership as the personal representatives of the last surviving partner.
Source: L. 31: p. 656, § 21. CSA: C. 123, § 21. CRS 53: § 104-1-21. C.R.S. 1963: § 104-1-21. L. 2004: (1) amended, p. 1425, § 81, effective July 1.
ANNOTATION
Law reviews. For article, "The Fiduciary Duties of General Partners", see 17 Colo. Law. 1959 (1988).
Where a partner exchanges property which belongs to the partnership for real estate and he takes the deed to the real estate in his own name but refuses to transfer any part of the land to the partnership, the land belongs to the partnership and is held by the exchanging partner in trust for the use and benefit of the partnership. Payne v. Martin, 39 Colo. 265, 89 P. 46 (1907) (decided prior to the earliest source of § 7-60-121).
"Benefit" and "profit" would be the rental value of the partnership equipment wrongfully used, not the value of the property upon which it was used. Thompson v. McCormick, 169 Colo. 151, 454 P.2d 934 (1969).
Partner who excluded other partner from partnership business breached fiduciary duty to wind up partnership expeditiously by: Failing to wind up the partnership in a reasonable period of time; allowing an accumulation of $200,000 in interest on a loan guaranteed by the partnership; allowing various oil and gas leases to expire; and unilaterally including his children in the partnership without the other partner's consent. Tucker v. Ellbogen, 793 P.2d 592 (Colo. App. 1989).
Liabilities that accrued after reasonable time for winding up partnership are to be assessed against the partner responsible for winding up the partnership, as are liabilities affected by the partner's breach of his fiduciary duty in unilaterally bringing his children into partnership without the other partner's consent. Tucker v. Ellbogen, 793 P.2d 592 (Colo. App. 1989).
Partner did not breach fiduciary duty by participating in a personal capacity in the purchase and sale of a lease where the partners had previously agreed to such action by the partner. Tucker v. Ellbogen, 793 P.2d 592 (Colo. App. 1989).
Section does not per se create the level of fiduciary duty required under federal bankruptcy laws for purposes of dischargeability; however, coupled with Colorado case law, a fiduciary obligation is imposed upon partners. In re Winden, 120 B.R. 570 (Bankr. D. Colo. 1990); In re Schwenn, 126 B.R. 351 (Bankr. D. Colo. 1991).
Applied in Yoder v. Hooper, 695 P.2d 1182 (Colo. App. 1984), aff'd, 737 P.2d 852 (Colo. 1987).