Beers v. Reynolds & Maginnis , 1851 N.Y. App. Div. LEXIS 91 ( 1851 )

By the Court,

King, J.

The first question/presented in this case is, whether the special partnership between the defendants, Reynolds & Maginnis, is to be considered as existing, or dissolved, at the time of the sale, by the plaintiff to Maginnis, of the goods for the recovery of the price of which this action is brought.

The special partnership, by its terms, was to continue from the 16th day of July, 1847, until the 16th day of July, 1849. On the 17th day of April, 1848, the defendants filed and had recorded in the proper office, a notice of the dissolution of their partnership ; and notice of the dissolution was published in the newspapers, and for the period required by the statute; the publication of such notice commencing, in the newspaper printed in the county where the defendants transacted business, on the first day such paper was published, after the filing of the notice in the county clei-k’s office; and in the state paper, as soon as the notice could be received by such paper, after the day it had been filed in the county clerk’s office; but at the time the plaintiff made the sale to the defendant, the notice had not been published for the full period of four weeks, required by law.

The statute relative to limited partnerships, (2 R. iS. 3d ed. p. 52, § 24,) is in these words: “ No dissolution of such partnership by the acts of the parties, shall take place previous to the time specified-in the certificate of its formation, or in the certificate of its renewal, until a notice of such dissolution shall have been filed and recorded in the clerk’s office in which the original certificate was recorded, and published once in each, week for four weeks, in a newspaper printed in each of the counties where the partnership may have places of business, and in the state paper.”

It seems to me that this statute will admit of but one construction—-that in the case proposed, of a dissolution, by act of the parties, before the expiration of the term for which the partnership was formed, the notice must not only have been filed and recorded, but the full period of publication must also have elapsed, before the partnership can be considered to be dissolved: that the parjjnership continues until the notice has been published for four weeks.

The notice thus prescribed is similar in its nature to that by which the special partnership may be created. The period for which the partnership was. to continue, has been made known to the public, by the filing of the original certificate, and its publication in the newspapers; the notice thus given, the statute allows the parties to retract, by another notice made public in a . similar manner; and until the provisions of the statute, respecting this second notice have been complied with, the public are authorized to rely upon the terms of the first notice.

In this case, the sale was made by the plaintiff, to Maginnis, before the notice of the dissolution of the firm of Reynolds & Maginnis had been published for the period required by the statute; and was, consequently, made whilst the special partnership continued in full force, according to the terms of its creation.

The next question is, whether the mortgage, and confession of judgment, given by Maginnis to Reynolds, during the continuance of the special partnership, was such an alteration of the capital, or shares of the partnership, or in any other matter specified in the original certificate, as would dissolve the special partnership, and render the special partner liable as general partner, under the provisions of the statute.

Section 12 of the act above referred to (2 R. S. 50, 3d ed.) is in these words : “ Every alteration which shall be made in the names of the partners, in the nature of the business, or in the capital or shares thereof, or in any other matter specified in the original certificate, shall be deemed a dissolution .of the partnership ; and every such partnership, which shall in any manner be carried "on, after any such alteration shall have been made, shall be deemed a general partnership, unless renewed as a special partnership, according to the provisions of the last section.”

The case then presented is this, that during the continuance of the special partnership, the special partner sells out' his interest in the concern to the general partner, for a sum exceeding the amount of the capital he has placed in the business, and for the price of his interest so sold receives a security, pledging to him all the personal property of the partnership. This, in effect, amounts to a withdrawal, by him, of the capital he originally contributed to the partnership. He has secured to him that which, by the terms of the certificate of copartnership, he has contributed in cash, and without security, to be employed in the business, and to stand as indemnity to those who shoull deal with the partnership; and the transaction is, in effect, an alteration of the capital of the partnership. The consequence prescribed by the statute ensues ; that if the business is carried on he is thereafter liable as general partner.

In this view of the case, the charge of the judge, upon the trial, was correct; the question of the intent with which the mortgage was given, not arising, as would be the case under the 20th, 21st and 22d sections of the statute.

The only remaining question is, whether the judge erred in directing the jury to allow interest on the amount of the bill, from the time it was presented to Maginnis—it never having been presented to Reynolds—it being contended that after the dissolution of the partnership the act of one partner can not bind the other.

The account was proved in the case, independent of any evidence to be derived from the fact that it was presented to one of the partners, and not objected to.

In Walden v. Sherburne, (15 John. 424,) an account due by a partnership was rendered to one of the partners after the dissolution of the partnership, and admitted to be correct; the items of the account were proved to be correct by other evidence in the case. The supreme court say, that “ one partner can not, after a dissolution, bind his copartner by acknowledging an account, any more than he can give a promissory note to bind him.” But they further held, “ that after an account has been liquidated, it carries interest, and that an account is to be considered liquidated after it has been rendered, if objections are not made to it;” and that in that case, “ the account was rendered to one of the defendants on the 15th of September, 1808, and not objected to a,nd that from that time, the plaintiffs were entitled to interest. In that case it also appeared that the account had not been presented to the other defendant until long subsequent to the time from which interest was allowed.

Upon the authority of this case the judge was correct in his charge respecting the interest—and as even after dissolution, unless by special agreement between themselves, each partner has the right in winding up the partnership to pay partnership debts, it would seem sufficient to present an account the items of which are in fact, correct, to either partner, so as to-charge both, in case of non-payment, with, interest from that time as upon a liquidated account. ' •

[New-York General Term, December 1, 1851.

The omission, by either partner, to pay a debt justly due- by the partnership, is an omission' for which it would seem, even after dissolution of the partnership, the other partner continues liable; for if, without the usual restriction upon a dissolution, that one or more specified members of the firm shall wind up the concerns of the partnership, the delegated power £o apply partnership property to'pay partnership debts, continues, the responsibility of the constituent, for the acts of the agent, must still continue, and this latter’s breach of duty renders the former liable.

The other questions arising upon the trial were not urged on the argument of the bill of exceptions.

The motion for a new trial should be denied, and judgment given for the plaintiff.

EdmondSj Mitchell and King, Justices.]