The plaintiffs brought an interpleader claim regarding $2,857,831.58 held in escrow following the sale of a real estate development property under a power of sale.
The funds represented a portion of the remaining sale proceeds after the discharge of a first mortgage.
The court found that the joint venturers had structured their investment as a loan to defer capital gains tax, which operated as an equitable charge on the limited partner's interest.
The court held that the plaintiffs were entitled to priority distribution of the escrowed funds over the defendants' claims for partnership set-off, pursuant to the trust obligations and section 44 of the Partnerships Act.
