Tindel v. Park

• Decision Date: 03 April 1893
• Docket Number: 221
• Citation: 26 A. 300,154 Pa. 36
• Parties: Tindel v. Park, Appellant
• Court: Pennsylvania Supreme Court

26 A. 300

154 Pa. 36

Tindel v. Park, Appellant

No. 221

Supreme Court of Pennsylvania

April 3, 1893

Argued March 23, 1893

Appeal, No. 221, Jan. T., 1893, by defendant, James H. Park et al., from decree of C.P. No. 2, Phila. Co., Dec. T., 1890 No. 601, on bill in equity in favor of plaintiff, Adam Tindel.

Bill in equity for an account and receiver.

The bill also asked for an injunction to restrain the use of the word "imperial" unless said trade mark and good will be accounted for by defendants as part of the assets. There was no specific finding or exception upon this point or appraisement or allowance for good will, etc.

The facts of the case appear by the opinion of the Supreme Court. The master, Carroll R. Williams, Esq., reported in favor of plaintiff, and his report was, upon exception, confirmed by the court below.

Errors assigned were, among others, (1) in not dismissing the bill (6) in not decreeing that there could be no distribution except according to § 9 of the act of June 5, 1874, P.L. 271.

John G. Johnson, for appellant. -- The decree is erroneous, because parties, viz., creditors, were not before the court.

There should have been no decree of distribution of the assets of the association until after a proper opportunity had been offered for the creditors primarily interested in the assets to present their claims in a proceeding in rem, in which the decree would protect all defendants compelled to pay over moneys.

The act points out a method by which distribution can be made in such a way as to enable all parties interested to be heard.

A joint stock company, upon the expiration of the term of years fixed for its existence, is within the provisions of the act.

Hunn Hanson, for appellee. -- When the association runs the course marked out for it when it was created, and ends at the time its recorded statement sets forth, there is nothing in this behalf for those interested that they do not know; and hence no need of the machinery of publication and of liquidating trustees.

Each partner undoubtedly has a right, as to the six months after the expiration of the term of partnership under the articles, to a bill for account and distribution. The entire subject-matter is cognizable in equity upon the familiar ground expressed generally in 1 Story, Eq. Jurisp. §§ 64, 67, that where a court of equity has jurisdiction of a cause it will decide all that is equitable cognate to it, a principle followed in Wilhelm's Ap., 79 Pa. 120.

Before WILLIAMS, McCOLLUM, MITCHELL, DEAN and THOMPSON, JJ.

OPINION

MR. DEAN, JUSTICE

The bill of plaintiff in this case sets out that he and defendants on the 17th of July, 1885, formed a partnership under act of 2d of June, 1874, authorizing the formation of "Limited Partnerships." The purpose of the partnership was the manufacture of steel. The business was to be located in Philadelphia. The amount of capital was $25,000, and each of the three partners was to contribute one third. The duration of the partnership was to be five years; at the expiration of the term the partners voluntarily, without written agreement, continued the business six months longer, when by mutual consent the partnership ceased. That it had been very successful, large profits had been realized, and there was no indebtedness to third persons. That the defendants had in their possession all the assets of the association or partnership, as well as the books and papers showing its transactions from its commencement. He therefore prayed that defendants be directed to fully account, and that a proper person be appointed to collect outstanding debts and take charge of all the assets of the partnership and make distribution thereof among the partners as the court might order.

The defendants answered, by admitting, substantially, the material averments of plaintiff's bill, except that, as to indebtedness, they said: "We do not know of any considerable indebtedness owing by it" -- the association. And they further, under advice of counsel, denied plaintiff's right to an account by bill, and averred that the only method of settlement was that prescribed in the act of 1874, under which the partnership was organized, which they had fully tendered plaintiff and were at all times willing to adopt.

The court appointed Carroll R. Williams, Esq., examiner and master, who, in a very clear and concise report, determines amount and character of the assets, and makes distribution; to which report, assuming that he had jurisdiction, there was not, nor could there have been, any well founded exception. His report was approved and final decree made as suggested by him.

From this decree, the defendants took this appeal. Of the seven assignments of error, the determination of the sixth disposes of the case here, for all of them are really included in this one.

It is as follows: "6th. The court erred in not decreeing that there could be no distribution of assets amongst the members of the association, excepting through three liquidating trustees, appointed in accordance with the provisions of the 9th section of the act of the 2d of June, 1874."

So far as the merits of the case are disclosed in the averments of the bill and answer, as also in the report of the master, it would accord with our inclinations to dismiss the appeal. The association owes no debts known to any of the members; it is highly probable there is not a single unpaid creditor; the findings of the master are true; the distribution made by him is in accordance with these facts. But, if the court had no jurisdiction by bill in equity over the subject of the complaint, the decree must be reversed.

This association was organized under the act of June 2, 1874, providing for the organization of "Joint Stock Companies or Limited Partnerships." The members of an association under this act are as rigidly protected against general liability as the stockholders of any corporation. If the provisions of the law be strictly observed, the individual loss cannot exceed the individual contribution to the joint capital. The sale of the partnership interest is not so easily made as the transfer of a certificate of stock by a member of a corporation, nor is the membership the subject of sale or testamentary disposition, as a matter of legal right. No certificates, representing the fractional interest of the members, under a seal of the association, are issued for purposes of transfer. In these and a few other particulars, the joint stock company is distinguishable from a stock corporation; but in the essential feature, the immunity of the members from individual liability for debts of the association and the exclusive liability of the assets of the association for such debts, they are the same.

They are a sort of halfway association between a voluntary partnership of unlimited individual liability, and a corporation aggregate. Its existence, with all its rights and...