Gateway Potato Sales v. G.B. Investment Co.,

822 P.2d 490 (1991)

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Nature of the Case

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Facts

Gateway (P) was a creditor of Sunworth Packing Limited Partnership. P sued Sunworth Corporation as a general partner and G.B. Investment Company as limited partner under Arizona statute 29-319. G.B. (D1) moved for a summary judgment as it claimed there was no evidence that the circumstances under 29-319 had occurred in this case. Sunworth (D2) and D1 had formed Sunworth Packing in November 1985 for the purpose of potato farming in Arizona. The agreement filed recited that D1 would not participate in the control of the business and stated that the limited partner would not become liable to the creditors of the partnership except to the extent of its initial contribution and or any liability it may incur with an Arizona Bank as a signatory party or guarantor of a loan or line of credit. D2 contracted with P to supply seed potatoes. P was reluctant to supply products to D2 as it had gone bankrupt once before. P was assured by D2 that he was in partnership with a large financial institution and that that company, D1, was actively involved and had approved the purchase of the seed potatoes. P then sold substantial quantities of potatoes to Sunworth Packing. P was never aware of the true nature of the D1-D2 business relationship; even the sales documents do not specify the partnership as a limited partnership. P never contacted D1. At trial, D1 testified that it had never exerted any type of control over Sunworth Packing, but D2 issued contrary testimony in that D1's employees controlled the day to day affairs and made D2 account to them for everything they did. P confirmed this side of D2 story. The trial court agreed with D1 and granted it summary judgment, P appealed.