Nichols v. Emerson

Cochrane, P. J.: The plaintiff in his brief states his position as follows: “ The plaintiff’s theory of recovery is that James A. Emerson is liable as a general partner to the creditors of the branch office at Albany, for the reason that the certified copy of the Certificate of Copartnership was not filed in Albany County Clerk’s office as required by Section 90 of the Partnership Law.” In support of this proposition he relies on the case of O’Connor v. Graff (186 App. Div. 116; affd., 230 N. Y. 552) where it was held that a failure to file a certified copy of the limited partnership certificate in a county where the partnership has a branch place of business rendered the limited partner liable as a general partner to creditors transacting their business at such branch office. The plaintiff then urges, as of course he must, that the proceedings in the bankruptcy court were a nullity or in other words that such court had no jurisdiction to make the order authorizing a settlement by the trustee in bankruptcy with these defendants. With the wisdom or propriety of that order we are not concerned, but if that court had jurisdiction to authorize the settlement such action was conclusive on the firm creditors. That the bankruptcy court was acting within its power is firmly established by authority. (Armstrong v. Fisher, 224 Fed. Rep. 97; Fort Pitt Coal & Coke Co. v. Diser, 239 id. 443; Carter v. Whisler, 275 id. 743; Bear v. Liberty Nat. Bank, 285 id. 703; Meek v. Centre County Banking Co., 292 id. 116.) The case last cited, like the present one, involved the estate of a partner who died before the bankruptcy proceedings. It was there held that the [284] bankruptcy court could draw to itself any surplus of the estate of the deceased partner applicable to the payment of the partnership debts. The plaintiff has no reply to these authorities except to call our attention to section 1, subdivision (6), of the Bankruptcy Law (30 U. S. Stat. at Large, 544) which defines corporations as including “ limited or other partnership associations organized under laws making the capital subscribed alone responsible for the debts of the association,” and to argue therefrom that as this limited partnership under the statute is to be treated as a corporation the authorities above cited are not applicable. In this argument the plaintiff Is strangely inconsistent. In order to bring himself within the O’Connor Case (supra) he argues that this limited partnership was not “ organized under laws making the capital subscribed alone responsible ” for its debts. As above mentioned, he states his theory that Emerson “ is liable as a general partner.” He so alleges in his complaint. It is because the partnership did not comply with the laws limiting its liability that Emerson became liable if at all as a general partner. If, as the plaintiff contends, Emerson was a general partner within the doctrine of the O’Connor case, which is a very essential element of the plaintiff’s case, his status must remain the same under each phase of the plaintiff’s case. Plaintiff cannot claim in order to establish one branch of his case that Emerson was a general partner and in order to establish another branch of his case that he was a limited partner. Furthermore, the bankruptcy court had jurisdiction to determine the status of Emerson as a partner. In Francis v. Mc Neal (228 U. S. 695) Francis denied that he was a partner, but the bankruptcy court held that he was and ordered his separate estate to be turned over to the trustee in bankruptcy for administration. This order was affirmed. That case, therefore, is a clear authority to the effect that the bankruptcy court in this case was acting within its power. The defendants did not question its jurisdiction. They voluntarily went into that court with the assets of their estate for the purpose of settlement. The court assumed jurisdiction as under the authorities it had a right to do. The plaintiff was a party and participated in that proceeding. He now tells us he objected thereto, but it nowhere appears that he objected to the jurisdiction of the court. His objection may have been to the inadequacy of the settlement. But his objection, however made, is now of no consequence. That was a matter for the consideration of that court. No appeal was taken and its action became binding on the creditors including the plaintiff. The judgment should be affirmed, with costa. Judgment unanimously affirmed, with costs.