198 Misc. 826 | N.Y. Sup. Ct. | 1950
Official Eeferee. In the main action before the court, plaintiff, a domestic corporation, contends that in or about July, 1947, it entered into an oral agreement with the defendants whereby they became copartners and joint venturers in the purchase of premises 12 West 46th Street, borough of Manhattan, New York City. Approximately three years thereafter the defendants purchased the property and took title thereto in the name of a corporation, the stock of which is owned by them alone. Thereafter, plaintiff instituted the instant action to impress a trust upon the property on the ground that the defendants had violated the alleged partnership and joint venture agreement. A pending Municipal Court summary proceeding for dispossess, instituted by the defendants in the main action, as landlords, against the plaintiff, as tenant, was consolidated with this action by order of Mr. Justice Botein, dated September 26, 1950. At the conclusion of the trial of the main action, the summary proceeding was discontinued by defendants without objection by plaintiff.
There is nothing in the record to establish that a joint venture or partnership was formed between the parties. At the very most, the testimony of the witnesses called on behalf of the plaintiff indicates that the alleged oral arrangement merely provided for the purchase of the property by the parties as tenants in common. In the case at bar, the oral agreement remained executory. Plaintiff never put up any of the moneys for the
In any event, it is to be noted that although there is no specific statute in reference thereto, the general consensus of legal authority and opinion in this State prohibits a corporation from entering into a partnership agreement. If a corporation were permitted to become a party to a partnership, the possibility exists that it might be bound by the acts of any other member of the partnership. In such event, no other member of the partnership would be acting as an officer or agent of the corporation but as a principal in an association or partnership in which all are equal, and in which each is capable of legally binding other members of such association or partnership by his individual acts. It is a fundamental principle of the laws of this State governing corporations that the management and affairs of each corporation are to be guided by the officers provided for or authorized in its charter. This management must be separate and exclusive, and any arrangement by which control of the affairs of a corporation may be taken from its stockholders and authorized officers and agents would be hostile and in opposition to the established policy of our general corporation statutes (1935, Atty. Gen. 230). Assuming, arguendo, therefore, that the parties actually entered into an agreement of partnership, such agreement would, nevertheless, be void and unenforcible, inasmuch as one of the parties thereto, namely the plaintiff, is a corporation.
The authorities cited by plaintiff in support of its contention that a corporation may enter into a joint venture, as opposed to a partnership, do not require lengthy discussion. In view of the court’s holding herein that neither a joint venture nor a partnership was entered into between the parties, it is sufficient to note that the cases cited by plaintiff indicate that a joint venture entered into by a corporation must not deviate from the business for which it was organized (Red Robin Stores v. Rose, 274 App. Div. 462). In the instant action, plaintiff corporation’s
Judgment is rendered for the defendants dismissing the complaint upon the merits. No costs are awarded.
The foregoing are the facts found by me and constitute the decision of the court as required by section 440 of the Civil Practice Act.
Submit decree within ten days on three days’ notice.