Smith v. Argall — 6 Hill & Den. 479

Majority

p. 479

Smith, adm’x &c. vs. David C. Argall and William Argall.

Headnote

In the formation of a limited partnership the requirements of the statute must he substantially complied with ; but defects of mere form, may be overlooked. Per Beardsley, J.

Where the terms of the partnership wpre published in two newspapers, but in one of them the sum contributed by the special partner was stated to be five thousand dollars, when in fact it was only two thousand ; held, that though this occurred through the mere mistake of the printer, and the other requisites of the statute had been fully complied with, the associates were liable as general partners.

To maintain an action against the associates as general partners in such case, the plaintiff need not prove that he was actually misled by the error in publishing the terms of the partnership.

Assumpsit, brought by the plaintiff as administratrix of John G. Smith deceased, for goods sold and delivered to the defendants by her intestate. The cause was tried at the New-York circuit in December, 1842, and the jury found a special verdict stating the following facts:

On the 31st of August, 1835, the defendants made and signed

p. 480

the certificate required by statute to constitute them special partners under the name of David C. Argali. The certificate stated, among other things, that William Argali, the special partner, had contributed the sum of two thousand dollars capital toxvards the common stock. Notice of the terms of the partnership was published in the New-York' Times, and in the Evening Post; but the notice in the latter paper, by a mistake of the printer, stated the sum contributed by W. Argali to be jive instead of two thousand dollars. The verdict stated that the plaintiff’s intestate “was not a subscriber for the Evening Post; that no evidence was offered by or on behalf of the plaintiff to show that the intestate had ever seen or heard of the same;” and that the copy of the notice which was left for publication at the office of the Evening Post was correct, the sum therein set forth being two thousand dollars. The verdict further stated that the goods in question were sold and delivered to the firm of David C. Argali.

C. Judson, for the plaintiff,

insisted that, inasmuch as the defendants had not strictly complied with the provisions of the statute in regard to the publication of notice, they were liable as general partners; and that the plaintiff was therefore entitled to judgment.

J: Anthon, for the defendants.

According to the certificate made by the partners, William Argali contributed two thousand dollars and no more, but in one of the notices required to be published, and which was published in the Evening Post, it was stated that he had contributed jive thousand dollars as such partner. This mistake in the notice, for it was a mere mistake, is relied upon as decisive evidence to charge William as a general partner, and that is the point to be determined.

In order to form a limited partnership, with the rights and exemptions secured to that condition by the statute, a proper certificate must" be made, acknowledged, filed and recorded, as

p. 481

the statute directs; and an affidavit that the special partner has actually paid in his capital in cash, must also be filed. (1 R. S. 765, § 8.) These acts were done in this instance, and thereby the partnership was duly formed. But the statute also provides that “ the partners shall publish the terms of the partnership, when registered, for at least six weeks immediately after such registry, in two newspapers” &e,; and it declares that “ if such publication be not made, the partnership shall be deemed general.” (Id. § 9.)

The statute authorizing limited partnerships must be substantially complied with, or those who associate under it will be liable as general partners, (Bowen v. Argall, 24 Wend. 496 .) Defects of mere form may be overlooked and disregarded, but those of substance cannot,^[1] The statute is rigorous in its terms, and those who claim its benefits must show a substantial conformity to its requirements.

That the amount contributed by the special partner is an essential part of the terms of the partnership, can hardly admit of a question. (1 R. S. 764, §§ 1, 2,4.) It is a vital element in determining the responsibility of the firm, and in fixing its credit. The object of the notice is publicity; that all who deal with the partnership may know the names of the persons composing it, and, so far as respects the special partners, the extent of its capital actually paid in. It is made the business and duty of the partners, and they are bound at their peril, not only to see that all the necessary papers are filed and recorded, but also that correct notices are published. (Id. §§ 6, 8,9.) In this instance, the mistake in the notice was one of substance, and could not fail to mislead those who relied upon it. “ The terms of the partnership” were not, as they should have been, truly published; and the statute declares as a consequence that “ the partnership shall be deemed general.” (§ 9.)

This is a conclusion of law which follows from the defective notice found by the jury, and the consequence is not averted by

(a) (a) See The Madison County Batik v. Gould and others, ( 5 Hill, 309 , 311 et seq.)

p. 482

their finding the additional facts that the deceased “ was not' a subscriber for the Evening Post,” and “ that no evidence was offered by or on behalf of the plaintiff to show that the intestate had ever seen or heard of the same.” These, of themselves, are wholly immáterial, and do not show, if that could be essential, that the deceased was not in fact misled by the notice. In the absence of absolute notice on the part of the deceased that the true sum was two thousand, and not five thousand dollars, his rights are to be determined by the sufficiency or insufficiency of the publication under the statute. The partners rely upon the statute for protection, and they must show a compliance with what it requires. This they nave failed to do, and the plaintiff is entitled to judgment on the verdict.

Judgment for the plaintiff.