Silliman v. DuPont

• Decision Date: 29 December 1972
• Citation: 302 A.2d 327
• Parties: Mariana DuPont SILLIMAN, Plaintiff, v. F. I. DuPONT et al., Defendants.
• Court: Delaware Superior Court

Page 327

302 A.2d 327

Mariana DuPont SILLIMAN, Plaintiff, v. F. I. DuPONT et al., Defendants.

Superior Court of Delaware, New Castle County.

Dec. 29, 1972.

Henry N. Herndon, Jr., of Morris, James, Hitchens & Williams, Wilmington, for plaintiff.

James M. Tunnell, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, for defendant, Edmond DuPont.

Januar D. Bove, Jr., and Arthur G. Connolly, Jr., of Connolly, Bove & Lodge, Wilmington, for defendant F. I. DuPont, Glore Forgan & Co.; Peter Gruenberger and James W. Quinn, of Weil, Gotshal & Manges, New York City, of counsel.

OPINION

WALSH, Judge.

Plaintiff, Mariana DuPont Silliman, filed this action on April 27, 1971 under the provisions of 10 Del.C. Chapter 65 (Declaratory Judgments), seeking an adjudication concerning the responsibility of defendants relative to a loan secured by her from the Wilmington Trust Company. The complaint originally named as defendant F. I. DuPont, Glore Forgan & Co., a New York limited partnership (DGF) and sixty-eight individuals characterized as general partners of DGF. Included among the individual defendants was Edmond DuPont (Edmond) at whose behest the plaintiff secured the loan for the apparent purpose of permitting Edmond to invest the proceeds in the partnership at a time when DGF was in financial difficulty. Plaintiff alleges that since said loan was for the benefit of DGF and made upon its urging and representations, the partnership should share the responsibility for its repayment. On the date this suit was entered, the plaintiff filed a companion action in the Supreme Court of the State of New York seeking parallel relief against the same defendants.

DGF, which maintains an office in this State, was served with process and thereafter filed an answer within 20 days generally denying plaintiff's claim and raising as affirmative defenses: lack of subject matter jurisdiction, failure to state a claim upon which relief can be granted and Statute of Frauds. ¹ On the same day a motion to dismiss for lack of personal jurisdiction was asserted on behalf of all individual defendants except Edmond. While the matter was being briefed, plaintiff voluntarily dismissed the complaint as to those moving defendants.

Shortly after the filing of suit, plaintiff had initiated certain discovery measures which were held in abeyance by agreement of the parties pending the resolution of DGF's efforts in the New York action to stay further proceedings in Delaware. The matter lay dormant for more than a year awaiting the decision in New York. That ruling, made on September 18, 1972 denied DGF's motion, which had the effect of reactivating this proceeding. ²

Shortly after the New York order was entered plaintiff moved in this Court to compel discovery whereupon DGF filed a motion for judgment on the pleadings in accordance with Superior Court Rule 12(c), Del.C.Ann., and sought, as well, a stay of discovery. ³ These cross-motions are now before the Court for determination. The thrust of DGF's motion is that upon the voluntary dismissal of the individual general partners, the plaintiff transformed her action into one against a non-jural entity, i.e., the partnership, which cannot be sued in its own name. Plaintiff counters, that preliminarily DGF has waived its right to so move through the filing of an answer not raising that defense and in any event DGF as a limited partnership is subject to suit in its partnership name alone without the joinder of its individual partners. Simply stated, the primary issue in this case is whether a limited partnership exists separate from its component partners for purpose of suit.

I

A threshold issue is also posed. Plaintiff contends that DGF has waived any objection concerning its capacity to be sued by its common name, through failure to raise that issue as required by Civil Rule 9(a) which provides in pertinent part:

'When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, he shall do so by specific negative averment, supported by affidavit when required by Rule 8(dd), which negative averment shall include such supporting particulars as are pecuiarly within the pleader's knowledge.'

Not only was the issue of capacity not raised as part of its answer, plaintiff argues, but DGF admitted its partnership existence, the doing business in this State and the fact that certain of its general partners were also named defendants. Moreover, through the same counsel the individual defendants, except Edmond, filed motions attacking both service of process and lack of personal jurisdiction. DGF, thus armed with knowledge of the jurisdictional problem of the individual defendants cannot plead ignorance of the capacity issue at the time its answer was filed. DGF counters that the issue of lack of capacity to be sued did not arise until June 11, 1971, when plaintiff dismissed the action as to all individuals except Edmond. From that date until the filing of the motion (October 2, 1972) the Delaware action lay dormant while the parties litigated in New York. Thus, DGF argues, the issue has not been waived and may be asserted now in its Rule 12(c) motion which includes a Rule 12(b)(6) defense of failure to state a claim upon which relief can be granted. In addition to, and in support of, its principal defense of capacity to be sued DGF raises the argument that the remaining partners are indispensable parties and their presence is essential to the disposition of this lawsuit.

Capacity to sue or be sued while required initially to be raised by negative averments in responsive pleadings as required by Rule 9(a) are not irrevocably lost as defenses where incapacity appears on the face of the complaint. Klebanow v. New York Produce Exch., C.A.2d, 344 F.2d 294 (1965); Hershel California Fruit Prods. Co. v. Hunt Foods, Inc., D.C.Cal., 119 F.Supp. 603 (1954). The primary purpose for the 'negative averment' requirement in a responsive pleading is to place the opposite party on notice at the earliest practicable stage in the litigation, that capacity is in issue. 5 Wright & Miller, Federal Practice and Procedures, Section 1295. Moreover, if the pleading party is unaware of the capacity issue at the time of the pleading, he may raise lack of capacity under a motion to dismiss when he becomes aware of such fact. Pasos v. Eastern S.S. Co., D.Del., 9 F.R.D. 279 (1949). In Pasos, Judge Rodney dismissed a Jones Act proceeding upon motion of the defendant filed after it became aware that the plaintiff had died prior to the initiation of the action. In holding that absence of a legally existent plaintiff was essential to the Court's ability to take cognizance of the matter, he commented 'that it would be an unnecessary refinement to require an amended answer' to raise that issue and permitted it to be raised despite the language of Rule 9(a).

In the present case the complaint on its face appeared to encompass all the general partners, as well as the partnership entity itself, and, while it is unclear how plaintiff intended secure service over the individual defendants, nonetheless, at the time DGF filed its answer the general partners were still named as parties defendant. Upon the dismissal by plaintiff of the individual defendants, except Edmond, the issue of capacity of DGF, standing along, was sharply in focus. I find accordingly that under the circumstances it was not foreclosed from raising that issue under a Rule 12(c) motion. Moreover, DGF's 12(c) motion involves Rule 12(h)(2) which permits adjudication of legal issues by the pleadings, including capacity to sue. Whatever doubt existed prior to 1966 has been resolved by the recent change which one authority has characterized as follows:

'Instead of the broadly worded waiver provision that existed before 1966, Rule 12(h) now specifically lists the defenses that are subject to waiver at each stage of the litigation. Want of capacity is not among those enumerated. Arguably, therefore, objections to capacity should be governed by the defense of failure to state a claim for relief, which continues to be preserved until after trial on the merits by Rule 12(h)(2), in the absence of more specific guidance.' Wright & Miller, Federal Practice and Procedure: Civil § 1295.

It is noteworthly that plaintiff in dismissing the sixty-seven individual defendants, in effect, amended her complaint. This is an additional reason why DGF should not be foreclosed from raising jurisdictional defenses subsequent to the filing of the original answer. Finally, there is no prejudice here since this litigation is still in the pleading stage and plaintiff has not lost any jurisdiction she otherwise would have obtained.

Having determined that DGF may properly raise at this juncture its capacity to be sued as a limited partnership, I now turn to the merits of its motion.

II

Historically, a partnership, unlike a corporation did not enjoy 'entity' status, I.e., it had not been considered a jural person but a collection of persons with aggregate rights. The aggregate concept of partnership was universally accepted at common law and, indeed, was entirely consistent with the functioning of common law partnerships. Rowley on Partnerships, 2d Ed., Sec. 1.3. In early times, firms or associations were small in membership and their creditors or other parties dealing with them had little difficulty in ascertaining the identity of the members. With the advent of large mercantile partnerships and unincorporated associations comprising many members, such as labor unions, it became burdensome to identify, much less secure effective service on, all the members of the association. It was against this background that the so called 'common name' statutes were enacted. The basic purpose of these statutes was to permit a non-corporate entity to be sued in the name it presented to...