Columbia Bank v. Berolzheimer

McLaughlin, J.: On the 20th of August,.1888, the defendants entered into an. agreement for the purpose of forming and continuing, until July 15, 1889, a limited copartnership, under the name of “ Max Schoertthal,” and, in pursuance thereof, á. few days later proceedings were taken under the statute necessary to accomplish that object. In the certificate filed the defendant Schoenthal was described as the general, and the defendant Berolzheimer as the special partner, and the period therein fixed for the continuance of the copartnership was the same as that stated in the agreement. The firm at once entered upon the prosecution of the business for which it was formed, and continued the same until it made a general assignment for the benefit •of creditors, about November 1, 1892. On the 15th day of July, 1889, the copartnership was not renewed or continued, and no effort was made to that end until the eighth of .August following, or twenty-four days after the expiration of the time fixed in the certificate above mentioned for its- termination, when a renewal certificate was filed which stated that the firm was renewed, and was to continue Until the 15th of July, 1892. On the 15th of July, 1892, no effort was then made to renew or continue the firm, but on - the twenty-eighth of that month an attempt ivas made to do so by filing a renewal certificate, in which’ was incorporated a statement that the parties had theretofore “ formed a limited copartnership,” not on the 24th of August, 1888, but “ on the 15th day of July, 1889,” and that said copartnership was renewed and was to continue until the 15th day of July, 1894. ■ On the 17th day of October, 1892, the plaintiff loaned to this firm $10,000, for which it gave its promissory note, payable ten days later. ■ The note was not paid, and on or about the day that it fell [237] due the firm, made a general assignment for the benefit of creditors. The plaintiff then instituted this action to recover the amount of the note, and sought to hold both defendants liable on the ground that the firm of “ Max Schoenthal,” at the time the note was given, was a general and not a limited copartnership. The defendant Berolzheimer resisted payment, principally upon the ground that he was a special and not a general partner, and, therefore, not liable. The issues formed by the pleadings were sent to a referee to hear and determine, and after hearing the evidence, he gave judgment against Schoenthal, but dismissed the complaint as to Berolzheimer, holding that the copartnership was a limited one in which Berolzheimer was a special partner, and, therefore, not personally liable to the plaintiff on the note in suit. From the judgment entered on the report of the referee, the plaintiff has appealed from so much and such part .of it as dismissed the action against Berolzheimer. We are of the opinion that the learned referee erred in dismissing the complaint, A limited Copartnership exists, if at all, solely by virtue of the statute. It is unknown to the common law. Therefore, one who seeks by virtue of the statute to limit his liability must see that every provision of it is strictly complied with. A failure in any respect to comply with the statute, either in the formation or in the renewal of a limited copartnership, deprives the special partner of - the protection sought to be obtained. Thus it has been held where a special partner contributed the capital to be contributed by him by a post-dated check, that this did not comply with that provision of the statute requiring the contribution to be in cash. (Durant v. Abendroth, 69 N. Y. 148 ; S. C., 97 id. 132.) It has also been held that a contribution in credits is insufficient. ( Van Ingen v. Whitman, 62 N. Y. 513.) Also, a contribution in goods. (Haviland v. Chace, 39 Barb. 283.) These authorities have no direct bearing upon the question here presented except in so far as they indicate the views heretofore expressed by our courts as to the necessity of complying strictly with the statute in the formation of a limited copartnership. But the necessity of complying with the statute m the formation of a limited copartnership is no greater than it is in the renewal or continuance of one when formed. The statute in reference to renewals (1 R. S. 765, § 11) provides as follows : “ Every renewal or continuance of such part [238] nership beyond the time originally fixed for its duration shall be certified, acknowledged and recorded, and an affidavit of a general partner be made and filed, and notice be given in the manner herein required for its original formation; and every such partnership which shall be otherwise renewed or continued shall be deemed a general partnership.” In the case at bar the limited copartn ership was formed on the 24th of August, 1888, and it was, not only by agreement, but by the express terms of the certificate filed, to terminate on the 15th dap of July, 1889. And it terminated on that day. It then died, and it thereafter was beyond the power of legal resurrection. It could not be renewed or continued twenty-four days after it had ceased to exist. Once a limited copartnership has ceased to exist, once the continuity is broken, no matter for how short a space of time, it cannot thereafter be renewed or continued. (Andrews v. Schott, 10 Penn. St. 47; Grinnell Mfg. Co. v. Haddock, 16 Wkly. N. Cas. 96.) In order to renew action must be taken at or prior to the time fixed for its termination; something must be done before it passes out of existence; the continuity must not be broken. A corporation ceases to exist at the expiration of the time specified in its charter (Sturges v. Vanderbilt, 73 N. Y. 384), and a limited copartnership ceases at the time mentioned in the certificate-unless it be renewed at or prior thereto. In this case the - copart-nership was not renewed at or prior to the 15th day of July, 1889, When, as we have already seen, it expired by limitation, and it not having been renewed or continued, it follows that the special partner became liable as a general one, for all the debts contracted by the firm thereafter. At the time the note in suit was executed and •delivered by the -firm to the plaintiff the defendant Berolzheimer was a general partner, and, as such, liable for the payment of the same. The referee, therefore, erred in dismissing the .action-as to him, and for such error the judgment, or so much thereof as Was appealed from, must be reversed, the referee discharged and a new trial granted, with the costs to the appellant to abide the event. Van Brunt, P. J., O’Brien and Ingraham, JJ., concurred; Patterson, J., concurred in result. Judgment reversed, new trial ordered before another referee, •costs to appellant to abide event.