Patterson v. Youngs

Bijur, J. This action is brought against the three defendants as general partners. On January 2, 1900, a limited partnership certificate was filed which recited that Wm. E. Marsh and Herbert F. McClennen were the general partners and the firm of Wm. P. Young's & Bros, the special partner, , for a term of one year, and that the special partner had contributed the sum of $25,000. One year later a new certificate .was filed, reciting that the persons named therein were desirous of continuing" a limited partnership, the certificate for the formation of which had been duly filed in 19'00. It further recited that the general partners were Marsh and McClennen,e as above, and that the special partners were the three defendants in this action, and that they had contributed $8,333.33 each. It is conceded that these three sums were not paid in cash, but represented the one-third interest of each of the three defendants in the original contribution (to the previous limited partnership) of the firm of W. P. Youngs & Bros, (the special partners). It seems clear that a new partnership had been formed, and that in place of the one former special partner—a firm — three new . special partners — individuals —■ had been taken in; and that, as they did not actually pay in any cash contribution, as recited in the certificate, they must be held liable as general partners. Partnership Law, § 34. The cases cited by respondents are not authority for the proposition that the facts in this case constituted a substantial compliance with the provisions of the Partnership Act. In White v. Eiseman, 134 N. Y. 101, a certified check was deposited before the papers were filed, although not actually paid to the depository bank till the next day. This was held to be a cash contribution. [93] Fifth Avenue Bank v. Colgate, 120 N. Y. 381, holds merely that a renewal certificate need not state that the original capital is'unimpaired; and, if such a statement is made in good faith, even if untrue, it gives rise to no ground for action, since it is technically surplusage. The further claim is made by respondents that the recitals in both certificates as to the identity of the special partner were substantially the same, and that the divergence is negligible and harmless, particularly' as the new certificate on its face purported to be only one of continuance of a previous partnership. There would be more force in the contention were not the requirement of the statute so plain. The same argument could be advanced in favor of the validity of the second certificate if it had recited incorrectly the name of an entire stranger as the special partner. In Waters v. Goldberg, 124 App. Div. 511, cited by respondent, a notice of a mechanic’s lien for work done by a copartnership was held sufficient, although.it did not mention the copartnership, but was filed on behalf of all the partners named. The court held that” this was notice of a joint claim and served every purpose of the statute. The judgment in the previous action of Patterson v. Marsh & McClennen is not, as claimed by respondents, res judicata as to whether or not these defendants were special partners, because these defendants were not parties to that action. For is it conclusive on plaintiffs as an election, or rather a determination, not to hold defendants as general partners. The cases of Terry v. Munger, 121 N. Y. 161, and Droege v. Ahrens & Ott Mfg. Co., 163 id. 466, cited by respondents on this point, .are cases in which there was an election between inconsistent remedies and are manifestly inapplicable to the case at bar. See Henderson v. Bartlett, 32 App. Div. 435, 440. Judgment reversed and new trial ordered, with costs to appellants to abide the event. Seabury and Lehman, JJ., concur. Judgment reversed and new trial ordered.