54 N.Y.S. 89 | N.Y. App. Div. | 1898
On the trial of this action a verdict was directed for the plaintiff upon the .'whole case after the submission to the juiy of a particular question of fact, respecting which they' found for the plaintiff. From the judgment entered upon the verdict and from the order-denying a motion for a new trial,, this appeal is taken.
The action was brought by one special partner of the firm of Kugelman & Co. against a general partner with whom was joined as defendant another special .partner upon ail allegation that such other special partner had become liable as a general partner for an indebt
Kugelman and Vasquez put in separate answers, which differ in some respects, but it is only necessary now to consider that of the defendant Vasquez, He denies that a limited partnership was formed, as alleged in the complaint or otherwise. He also denies that there was an account stated between the firm of Kugelman & Co. and the plaintiff for moneys advanced or loaned to the limited partnership, and also denies the allegations of the complaint concerning the provisions of the law of Maryland respecting such limited partnerships, and also that he became a general partner by reason of any violation of the law of Maryland relating to limited partnerships, and also that the firm of Kugelman & Co. was insolvent in September, 1894, or that he is liable to the plaintiff by reason of the matters alleged in the complaint. He admits that on the 1st of September, 1894, at the city of Hew York, the defendant Kugelman, on behalf of Kugelman & Co., made and delivered to him, the defendant Vasquez, an assignment or transfer of a large and valuable portion of the assets of the limited partnership of Kugelman & Co., but he denies that the same was done with any knowledge of the insolvency of Julius Kugelman or of the firm of Kugelman & Co.
It would appear that the action was brought on an account stated of
It is claimed by the defendant, and strenuously argued, that the plaintiff is not entitled to maintain this action, for the reason that the liability which accrues to a special partner by violating the provisions of the law of Maryland referred to, is in the nature of a penalty, and that the courts of this State will not enforce penal provisions of the statutes of other jurisdictions. The fundamental error connected with his proposition arises from the misapprehension of the true relation of a special partner to the partnership. While the statutes of the different States relating to and regulating; the establishment of limited partnerships may differ in detail and in essential features, .the general scheme of all limited partnerships in all jurisdictions is the same. They are creatures of the statute,, but they are nevertheless partnerships, except in so far as there are limitations of liability or special protection given- to special partners. ' The often-quoted remark in Ames v. Downing (1 Bradf. 326) states- in a few words the precise status of a. limited partnership: “ By the statute it is, termed a partnership, and both as to the rights, of the parties to the contract and as to the world it.is in itself a. proper partnership, except as it limits the liability of the special
The object to be accomplished by the institution of a limited partnership is to protect the special partner and exempt him from, á general liability and to place his capital alone at the peril of the business. Nevertheless, there is a fully-constituted partnership which, but for the statute, would make the special partner liable as a general partner. Those .provisions of the statute which make him liable as a general partner in certain contingencies merely operate to withdraw from him the protection which a limited partnership would otherwise give him. They do not impose upon him a liability which would not exist at the common law — they withdraw the shield the statute affords whenever acts interdicted by it are done. The special partner is exempted from liability as a general partner until he does something which removes from him the protection accorded him by the statute. There is nothing in the nature of a penalty in this. The defendant Yasquez, therefore, became liable as a general partner to the creditors of the partnership, and the plaintiffs claim to be one of those creditors.
It is not denied that the plaintiff made loans and advances of money to the partnership. The allegation in the answer of Yasquez is only a denial of the statement of an. account of such loans and advances. The question is not distinctly raised in this case by the pleadings, nor was the court below directly called upon to consider the point whether, under the law of the State of Maryland, a special partner could recover for loans and advances made to the special partnership independently. By the Partnership Law of the State of New York (Laws of 1897, chap. 420, § 3.7) a special part
There was an accounting between these parties concerning the only thing as to which it was necessary to state an account. The plaintiff, although a partner, was still a special partner, was not liable to contribute "to the partnership debts, nor did he seek to recover anything of the capital contributed or of the. assets. The objection to his right to sue urged.here is tlie want of an accounting and that there was such an accounting the proof shows. That
It is further urged on behalf of the defendant Vasquez that the court should have submitted to the jury the question whether or not the firm of Kugelman & Co. was insolvent at the time the transfer was made. The ruling of the court on that subject was right, inasmuch as the evidence was very complete to show the insolvency, and the court did not err in refusing to submit to the jury the question whether the firm of Kugelman & Co. had its principal place of business in Maryland. An offer was made on behalf of the defendant to show that there never was a complete formation' of a limited partnership under the laws of the State of Maryland, because the certificate did not state, in what county in Maryland the principal place of business of the partnership was' to be located, and it did state that the principal place of business was the city of Kew York. It was sufficient for the purposes of the plaintiff in this case that the parties agreed to create a limited partnership and did, in fact, conduct their business as a limited partnership, and as was said • by the General Term of the Supreme Court in this very case on a former appeal, the copartners by an agreement having assumed to form a copartnership' fixing the liability of each as between themselves, cannot now be heard to say in an action between themselves that their rights were not controlled by such agreement. (85 Hun, 314.)
It was found by the jury that the contribution of capital called for by the article of association was, as matter of fact, actually made by the special partners, and the evidence upon that subject was sufficient to authorize that finding. There is nothing in the case requiring further' consideration.
The judgment must be affirmed, with costs. '
Van Brunt, P. J., Barrett, Rumsey and O’Brien, JJ., concurred.
Judgment affirmed, with costs.