Carle v. Carle Tool & Engineering Co.

• Decision Date: 02 June 1955
• Docket Number: No. A--259,A--259
• Citation: 36 N.J.Super. 36,114 A.2d 738
• Parties: John CARLE, Plaintiff-appellant, v. CARLE TOOL & ENGINEERING CO., Ltd., Defendant-Respondent. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 36

36 N.J.Super. 36

114 A.2d 738

John CARLE, Plaintiff-appellant, v. CARLE TOOL & ENGINEERING CO., Ltd., Defendant-Respondent.

No. A--259.

Superior Court of New Jersey.

Appellate Division.

Argued May 16, 1955.

Decided June 2, 1955.

Martin Simon, Newark, for appellant.

Henry F. Hoey, Jr., Newark, for respondent (Braun & Hoey, Newark, attorneys).

Before Judges CLAPP, JAYNE and FRANCIS.

The opinion of the court was delivered by

FRANCIS, J.A.D.

The sole question in this appeal is whether a working member of a statutory limited partnership association (R.S. 42:3--1, N.J.S.A.) is an employee within the meaning of the Workmen's Compensation Act. N.J.S.A. 34:15--36. Both the Division and the County Court, 33 N.J.Super. 469, 110 A.2d 568 (1954), held that he could not be considered as such.

The facts are agreed upon. The Carle Tool & Engineering Co., Ltd., was organized as a limited partnership association under R.S. 42:3--1, N.J.S.A. The officers (managers, R.S. 42:3--4, N.J.S.A.) and members are Louis Carle, chairman, John Carle, vice-chairman, and Henry Carle, secretary-treasurer.

Petitioner John Carle was regularly employed by the association and was paid a regular hourly wage. It was specifically conceded on the oral argument that he occupied the status of a 'working' member of the association, that is, although he was vice-chairman of the managers, his duties were not solely executive; he was an active workman in the ordinary sense of the word. Goldmann v. Johanna Farms, Inc., 26 N.J.Super. 550, 556, 98 A.2d 142 (Cty.Ct.1953); 1 Larson, Workman's Compensation Law, § 54.00 (1952). The parties stipulated also that Carle suffered an accidental injury which arose out of and in the course of his duties as a workman and that he is entitled to compensation if he qualifies as an employee.

The decisions in the Division and County Court were to the effect that for the purpose of this action the partnership association cannot be considered an entity distinct from the partners who compose it; that Carle is a co-owner and as such enjoys a right of control of the association which fastens upon him the status of an employer.

A limited partnership association is a Sui generis creature of statutory creation. The statute has existed in New Jersey since 1880 (L.1880, c. 204). Substantially similar enactments came into being in Pennsylvania in 1874, (L.1874, P.L. 271; Purdon's Digest, p. 937; 59 Purdon's Statutes, § 341) and in Michigan in 1887 (Staver & Abbott Mfg. Co. v. Black, 111 Mich. 282, 69 N.W. 508, 38 L.R.A. 798 (Sup.Ct.1896)).

Under our act (R.S. 42:3--1 et seq., N.J.S.A.) any three or more persons may form a partnership association designated as a limited partnership association 'for the purpose of conducting any lawful business or occupation * * * by subscribing and contributing capital thereto, either in money or in real or personal property * * *, at a valuation to be approved by all the members subscribing to the capital * * * which capital shall Alone be liable for the debts of such association.' Section 1.

Persons forming such an association are required to file a certificate very much like that of a corporate charter in the office of the clerk of the county where its principal place of business is to be located. The certificate Must set forth the names of the members; the amount of capital subscribed by each; the character of the subscription; the total amount of capital and when and how it is to be paid; the character of the business; the name of the association with the word 'limited' added as part thereof; the duration of the association, not to be in excess of 20 years; and the names of the officers selected as required by section 4 of the act. Section 2.

It is mandatory that the word 'limited' appear as the last word of the name. Failure in this respect renders any person who participates or acquiesces in such omission liable for any indebtedness arising therefrom. Section 3.

The affairs of the association are conducted by not less than three nor more than five managers who must be elected annually. Section 4. Debts cannot be contracted or liability incurred except by one or more of the managers and no liability in excess of $500 can be incurred unless in writing and signed by at least two managers. Section 5. It may purchase, hold and sell real estate in the firm name (Section 6), and shall sue or be sued in that name. Section 8. The individual members are not liable for any association judgment or debt, subject to the qualification that if its assets are not sufficient to satisfy an execution thereon, they shall be liable to the extent of their unpaid subscriptions to capital. Section 9.

The respective interests of the members of the association are personal estate, and may be transferred as its rules provide. Neither transfer, nor death, nor insolvency of a member causes termination; but no transferee or representative of a deceased or insolvent member can participate in the subsequent business of the association unless elected thereto by a vote of the majority of the members in number and value of their interests. If not elected, such person can demand only his monetary interest as mutually agreed upon, or if not agreed upon, at a price fixed by an appraiser appointed by the County Court and approved by such court. Section 11.

This analysis of the statute plainly indicates that an association formed thereunder attains corporateness; it becomes an entity separate and apart from its members. Staver & Abbott Mfg. Co. v. Blake, supra (111 Mich. 282, 69 N.W. 508, 38 L.R.A., at page 803). It takes on practically every substantial attribute of a corporation. As an artificial being it is endowed with the capacity of suing and of being used, of acquiring, holding and conveying property in that character; the members do not act as individuals or as partners but through and in the name of the corporate body; disposal of a member's interest or his death or insolvency does not bring about dissolution. The members do not conduct its affairs as individual partners who in ordinary partnerships have equal rights in the management and conduct thereof (R.S. 42:1--18(e), N.J.S.A.). The operations are placed in the hands of three to five managers, and an individual member not a manager cannot bind the association.

Such a company is a hybrid creature; it might be called a quasi-corporation. Cf. Hibbs v. Brown, 190 N.Y. 167, 82 N.E. 1108, 1115 (Ct.App.1907). The Pennsylvania Supreme Court, in dealing with the act of that state,...