Manhattan Co. v. Laimbeer

• Citation: 108 N.Y. 578,15 N.E. 712
• Parties: MANHATTAN CO. v. LAIMBEER.
• Decision Date: 31 March 1888
• Court: United States State Supreme Court (New York)

108 N.Y. 578

15 N.E. 712

MANHATTAN CO.

v.LAIMBEER.

Supreme Court, New York County, New York.

March, 1888.

Appeal by defendant Laimbeer from a judgment of the general term of the superior court of the city of New York overruling exceptions of the defendant ordered to be heard in the first instance at the general term, and directing a judgment in favor of the plaintiff with costs.

The action was brought upon promissory notes given by a firm of which the defendant Richard H. Laimbeer was a member, it being claimed in his behalf that the firm was a limited partnership in which he was a special partner.

The material facts are stated in the opinion.

B. F. Tracy ( R. H. Laimbeer, Jr., attorney), for the appellant.

Stern & Myers, for the respondent.

PECKHAM, J.

Unless the courts below were right in holding that the filing of the certificate with the county clerk, in the absence of the recording thereof, was insufficient in order to form a limited partnership under the act, this judgment must be reversed, because there was undoubtedly evidence enough in the case to go to the jury upon the question of fact, whether or not the certificate and affidavit provided for in the act were filed with the county clerk, and the certificate left with him for the purpose of being recorded and the fee therefor prepaid. Enough was done to make the filing of the papers complete, if the evidence of the boy was to be believed. A paper is said to be filed in a public office when it is delivered to the proper officer and by him received to be kept on file ( Bouvier's Law Dict., Vol. I, page 587). It is not necessary that the party handing the paper to the officer should see that he makes the proper endorsement or entry.

A verdict was directed by the court in favor of the plaintiff in this action, based upon the assumption that the failure of the county clerk to record the certificate provided for in the act, and which was to be filed and recorded in his office, prevented the formation of a limited partnership, and left the parties who attempted to form the partnership liable as general partners. Under this holding the defendant has been made liable, to the extent of nearly $60,000, for debts incurred by the general partners after the special partner had done all that he could do to comply with the terms of the statute; or, in other words, after the certificate required by the statute had been acknowledged, and after the necessary affidavit had been made, and after they had both been filed in the office of the county clerk, and after, as matter of fact, the amount of money required to be contributed by the special partner had been paid in cash.

Under such circumstances to hold the defendant liable as a general partner for the failure of a public officer to do an act, the doing of which at any particular moment the defendant had no power to compel, works a very severe administration of the statute, and is a construction not called for by the language used when reasonably interpreted, and is contrary to what it seems to me is a fair public policy, as it makes one man liable for the default of another, and he a public officer, over whose actions he has no control.

It is said that this special partnership is a privilege granted and is an exemption from the general liability for partners at common law, and so the statute must be strictly construed and all its provisions fully and even technically complied with before such exemption can be claimed. In one aspect, of course, it is a privilege, because at common law no such partnership could be formed; but, at the same time, the granting thereof accords with the policy of a commercial community, because it tends to the enlargement of business transactions to permit men under certain reasonable conditions to do business with a restricted liability, who, without such restriction, would suffer a portion of their capital to remain unemployed rather than risk their whole possessions under the broad liability of a general partnership. Therefore acts providing for the formation of a limited partnership should receive a reasonable construction--not such as to make its formation almost impossible and not such that where the slightest and most innocent (and to third persons an entirely harmless) deviation from the strictest construction that can be given to a statute shall work results to the special partner of possibly a most disastrous and utterly ruinous nature, including liability for enormous debts incurred by the general partners where the credit given was not in the least based upon any assumed liability of the special partner greater than the capital he had contributed.

The earliest statute upon the subject of the formation of limited partnerships is that of the act of 1822. It may be well to compare the provisions of that act with the one enacted in the Revised Statutes for the purpose of seeing what, if any, change has been made by the latter act.

The important provisions contained in the act of 1822, in relation to the formation of such partnerships are, that before such a partnership can be formed there must be a certificate signed by the partner containing (1) the name of the firm, (2) the names of all the general and all the special partners, (3) the amount of the capital furnished by the special partner, (4) the period when the partnership is to commence and terminate. There is also to be an affidavit made by one or more of the general partners, stating the actual payment in cash of the sum advanced by the special partner. The certificate above mentioned is to be registered in a book to be kept for that purpose, at all times open for public inspection in the office of the clerk of the county in which the principal business of the partnership shall be carried on; but this registry shall not be made by the clerk of the county, or be considered valid unless all the partners, general and special, associated together in any such partnership shall make a certificate containing the statements above set forth, which certificate is to be filed of record in the clerk's office. It is made the duty of the partners to publish the terms of such partnership, so registered, for at least six weeks after such registry in two papers. By the 8th section of this statute, it is, among other things, specially made the duty of the partners interested in any such partnerships, to see that the requirements of the 6th, 7th, 8th and 12th sections of the act (which required the certificate and affidavit and registry, etc.) are complied with, and in case the same shall be neglected or a false registry be made, all the parties interested in such partnership shall be liable for all the engagements thereof as general partners. By the 6th section of this act, it is seen that the registering of the certificate mentioned in the 12th section is to be made in a book to be kept for that purpose, at all times open to public inspection, in the office of the clerk of the county, and the 8th section of the act specially casts upon the partners interested in the partnership, the duty of seeing that this registry is made, upon pain of making all the partners interested therein liable for all the engagements of the firm as general partners.

From the time of the passage of this act of 1822 it remained substantially in that condition until the adoption of the Revised Statutes, when the act was recast. But in the Revised Statutes, although different language is used in many parts of it, yet the same general requirements are made for the formation of such a partnership. The certificate is to be made as provided for in the act of 1822, and the same information is to be given in it, with the addition that there is also to be stated the general nature of the business intended to be transacted by the copartnership. This certificate is to be acknowledged as provided for in the act of 1822; an affidavit is also to be made by one of the general partners, and to be filed in the office of the county clerk, stating that the sums specified in the certificate have been contributed by each of the special partners to the common stock, and in good faith and actually paid in cash. But instead of the simple provision for the registering of the certificate in a book in the office of the clerk of the county, the Revised Statutes (§ 6) provide that the certifieate thus acknowledged, etc., shall be filed in the office of the county clerk and shall also be recorded by him, at large, in a book to be kept for that purpose open to public inspection, and the duty is not in terms cast upon the partners of seeing that such record is made. In this respect it seems to me there is a very material difference in the requirements of the two acts.

The act also provides for the publication in two newspapers of the terms of the partnership as provided for in the act of 1822, and there are other provisions in both acts relating to the workings of the partnership, which are substantially similar, and in almost the same language. The 6th section of the act of 1882, provides that before any partnership under that act shall be carried into effect, the things above provided for shall be done; and among them is the registering of the certificate. The duty to see that the registry is made, having been specifically and in plain terms cast upon the partners, it might, perhaps, be justifiable to hold them liable under this section until such registry is made. Under the Revised Statutes, however, the question is entirely different. It is true that the 8th section states that no such partnership shall be deemed to be formed until a certificate shall be made, acknowledged, filed and recorded, nor until the affidavit shall have been filed as above directed. But the question is: What was the real meaning of the Legislature in using that language while leaving out the provision making it the duty of the partners themselves to see to the recording of the certificate? Did it...