Partner pulled 5k out of account without letting me know.Many checks bounced. Is this legal? Also, had to scramble to make payroll.

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Partner pulled 5k out of account without letting me know.Many checks bounced. Is this legal? Also, had to scramble to make payroll.

Months back, partner in corporation put some capital in business account. Not sure how much. The other day he decided to take out 5k for himself saying that the company owed it to him and he wasn’t waiting for it any longer.By doing this many pre writen checks bounced and I was unable to pay other creditors that I had promised to pay. Our business is a corporation and me and my partner each own 50 percent.

Asked on June 30, 2009 under Business Law, Massachusetts

Answers:

J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I am a lawyer in CT and practice in this area of the law.  It sounds like your partner was not being very ethical or loyal to the company.  Was the capital contribution to the company a loan with a note?  It sounds like your partner put in money that he thought he would get back.  Taking the money out of the company like that was wrong and hurt the company.  I do not know what your policy is regarding taking out money from the business, but partners may do this without the other's notice unless it is specifically stated otherwise.  I suggest that you re-evaluate who you are working with and make up some policies so this doesnt happen again.


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