Holzman v. De Escamilla
Court of Appeal of California
195 P.2d 833 (1948)
Limited partners Russell and Andrews, along with general partner Escamilla (all defendants), ran Hacienda Farms together; Escamilla always had to confer with Russell and Andrews about what crops to plant and was sometimes overruled, every check on the partnership's account required at least two signatures (preventing Escamilla from acting alone), and Russell and Andrews ultimately forced Escamilla out as manager. When Hacienda Farms went bankrupt, trustee Lawrence Holzman (plaintiff) sued all three on behalf of creditors, and the lower court found Russell and Andrews had become general partners through their direct control of the business.
Whether limited partners who take part in business decisions and exercise veto power over spending become liable to partnership creditors as general partners.