177 Pa. 270 | Pa. | 1896
Opinion by
In this case, it was successfully contended by plaintiff bank that defendants were liable as general partners because of their failure to comply with some of the provisions of the act of June, 1874, and its supplements under which, in March, 1880, they undertook to organize themselves into a partnership association limited; and judgment was accordingly entered against them.
In October, 1879, the three defendants, above named, formed a general copartnership in the name of Creveling, Miles & Co., and soon thereafter they purchased, on credit, the property known as the Chulaski Furnace. For the entire consideration, $20,000, a purchase money mortgage was given, payable in quarterly installments of $1,250 each. The first installment was paid, but before the second became due, the partners undertook to change their general partnership into a partnership associa
To this is appended the certificate of the defendants, Creveling, Levis and Miles, in which they “ certify and declare that the foregoing schedule is a true and correct description of the real estate contributed by us to the association of Creveling, Miles & Co., Limited, at a valuation of $75,000, approved by us who are all the members subscribing to the capital of said association.”
Not a word is said as to the purchase money mortgage incumbrance of $20,000 on which only $1,250 had been paid. It requires neither argument nor citation of authority to show that there was a manifest failure to comply with the provisions of the act in this regard. The statement not only fails to furnish any notice to creditors of the existence of the mortgage lien, but it is positively misleading in that it does not certify the character of the property “ according to the fact.”
Those who seek to have all the advantages of a general partnership and yet limit their liability to creditors, as contemplated by the act, must comply with all its provisions; otherwise they will be liable as general partners. The object, in requiring a schedule of property contributed in lieu of cash, was to enable creditors to ascertain precisely of what the property consisted, and to judge of its value: Maloney v. Bruce, 94 Pa. 249; Van-
The contributed real estate, as correctly stated by the learned referee, “ was in effect an equity of redemption, in the Chulasld Furnace property, which might have been set forth and described in any one of several forms. The mere description of the real estate was accurate enough if the statement had also been made that it was subject to a purchase money mortgage of $20,000 of which $1,250 had been paid. The failure to do this leaves even the valuation doubtful, for it may be thought, on the one hand, that the whole property is worth $75,000 considered clear of incumbrances; or, on the other hand, that the equity of redemption is worth $75,000. If the valuation of the whole property were $75,000, the effect of it, in this case, would be to render the whole statement false, because as the $75,000 would be subject to a deduction of $18,750, it would follow that the net value of the property as put into the association was but $56,250; and as the additional capital subscribed was but $24,000, the whole capital would be $80,250 instead of $99,000 as set forth in the articles.”
For those and other reasons, the learned referee rightly concluded that the certificate is ineffective to create a valid partnership association, limited, under the act. He and the court below were also right in holding that the defendant also failed in other respects to comply with the requirements of the act in question.
We find nothing in the record that would justify us in sustaining any of the specifications of error, nor do we think that either of the questions therein presented requires further notice.
Judgment affirmed.
