STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5497

June 25, 1979

PROFESSIONAL SERVICE CORPORATIONS:

Becoming partner in a partnership

PARTNERSHIPS:

A professional service corporation as a partner

A professional service corporation may not become a partner in a partnership.

Ms. Pauline Guy

Associate Director

Corporations and Securities Bureau

Michigan Department of Commerce

6546 Mercantile Way

Lansing, Michigan 48909

You have requested my opinion as to whether a professional service corporation organized pursuant to the Professional Service Corporation Act, 1962, PA 192, MCLA 450.221 et seq; MSA 21.315(1) et seq, may become a partner in a Michigan partnership performing the same services as the corporation.

1962 PA 192, supra, Sec. 2(b) defines a 'professional service corporation' to mean:

In addition, 1962 PA 192, supra, Sec. 7 provides:

Thus, at the outset it is clear that the Legislature has, in positive terms in 1962 PA 192, Sec. 2(b), supra, and in negative terms in 1962 PA 192, Sec. 7, supra, made its intent clear that the purpose for which a professional service corporation may be organized is limited to the rendering of the professional service for which its shareholders are duly licensed or otherwise legally authorized to render in this state.

As to the nature of a partnership, the Uniform Partnership Act, 1917 PA 72, Sec. 6, MCLA 449.6; MSA 20.6, defines a partnership as:

It may also be noted that a co-partnership is a separate and distinct legal entity from that of its component members, Scott v Alsar Company, 336 Mich 532; 58 NW2d 910 (1953), Lobato v Paulino, 304 Mich 668; 8 NW2d 873 (1943), and that the essence of the partnership relationship is mutual agency and joint liability, Moore v Du Bard, 318 Mich 578; 29 NW2d 94 (1947), Pennar v De Nike, 288 Mich 488; 285 NW 33 (1939).

A partnership is based upon mutual trust and confidence and the utmost good faith is a requisite of the partnership relationship. Pennar v De Nike, supra. Thus, co-partners are obligated to render true and full information to each other concerning matters associated with the partnership. Van Stee v Ransford, 346 Mich 116; 77 NW2d 346 (1956). Also, a partner has a duty to use his best efforts and judgment in promoting the firm's business. Heath v Waters, 40 Mich 457 (1879).

It is also important to consider the proprietary nature of a partnership interest. A partner is a co-owner with his partners of the partnership property which is held as a tenancy in partnership, Uniform Partnership Act, 1917 PA 72, Sec. 25(1), MCLA 449.25(1); MSA 20.25(1), and any real property acquired in the partnership name may only be conveyed in the partnership name. Uniform Partnership Act, Sec. 8(3). In addition, section 26 of the Uniform Partnership Act provides:

See Jones v Simmons, 47 Mich App 654; 209 NW2d 840 (1973).

It will thus be seen that the incidents of a co-partnership are incompatible with the prohibitory language of 1962 PA 192, Secs. 2 and 7, supra, which unequivocally state that a professional service corporation is one organized 'for the sole and specific purpose of rendering professional service' (Section 2) and shall not 'engage in any business other than the rendering of the professional services for which it was specifically incorporated.' (Section 7).

The fact that 1962 PA 192, Sec. 7, supra, authorizes a professional services corporation to invest its funds 'in real estate, mortgages, stocks, bonds or any other type of investments' is further evidence of legislative intent that such a corporation may not become a partner in a co-partnership, albeit one which performs the same services as the corporation.

In the first place, there is no mention of investments in co-partnerships in 1962 PA 192, Sec. 7, supra, and, in such cases, the canon of statutory construction to be applied is that inclusion by specific mention excludes what is not mentioned. Van Sweden v Sweden, 250 Mich 238; 230 NW 191 (1930); Sebewaing Industries, Inc v Village of Sebewaing, 337 Mich 530; 60 NW2d 444 (1953). Secondly, with respect to the phrase 'any other type of investments' following the list of permissible investments by professional service corporations, the rule of statutory construction used to aid in discerning legislative intent is that when general words follow designation of particular subjects, the meaning of the general words will be restricted to include only things of the same kind, class, character or nature as those specifically enumerated. Healy v Toles, 266 Mich 584; 254 NW 213 (1934), People v Smith, 393 Mich 432; 225 NW2d 165 (1975). Applying this rule to 1962 PA 192, Sec. 7, supra, it will be noted that the list of permissible investments by professional service corporations includes only those which do not require the exercise of managerial responsibilities nor the assumptions of fiduciary obligations. Thus, an investment in a partnership is not to be included in the list as an 'other type of investment'.

It is, therefore, my opinion that a professional service corporation may not become a partner in a partnership.

Frank J. Kelley