Benedict & Burnham Manufacturing Co. v. Hutchinson

In this case the jury rendered a verdict for the plaintiff, on the direction of the trial judge, and judgment was entered thereon, from which defendant

This action is brought against David J. Hutchinson, Alexander Hogg and Alexander Patterson, as co-partners, to recover $4,207.83, being the aggregate amount remaining due on account of certain promissory notes made by the firm of “Hogg & Patterson,” and payable to the plaintiff.

Of this firm the plaintiffs claim that Hutchinson was a general partner, by reason of his having falsely stated, in a certificate of special partnership filed by him, that he had contributed, as special partner, $10,000 to the common stock of the partnership, whereas, in fact, he then contributed only the sum of $8,000.

The main defense relied on by the defendant Hutchinson is, that the plaintiffs are estopped from maintaining this action, because in certain proceedings, had in the court of common pleas, relating to a general assignment made by Hogg & Patterson, as general partners, and purporting to be for the benefit of the creditors of the firm of “ Hogg & Patterson,” as a limited partnership, the plaintiffs had presented the claim now in suit to the assignee for payment, and, during the pendency of this action, had received and accepted from the assignee $1,696.06 on account of their claim.

The evidence is sufficient to sustain the plaintiff’s contention, that the defendants were general partners for the cause set forth in the complaint.

Of the amount of $10,000, stated to have been paid into the funds of the firm by Hutchinson, only $8,000 were actually paid, and as to the remaining $2,000, he returned a note made by Hogg individually for that amount, which was put to the credit of Hutchinson or on the books of the new firm.

This is not a compliance with the requirements of the law. Sharp v. Hutchinson, 100 N. Y., 534 ; Durant v. Abendroth, 97 id., 138; Maginn v. Lawrence, 45 Superior, 235.

The only material question which remains is whether the plaintiffs are not estopped from taking advantage, in this action, of the defendant’s failure to create a limited partnership.

The proceedings in the court of common pleas, on which defendant Hutchinson relies, proceeded necessarily on the assumption that the assignment made by Hogg and Patterson as general partners, was a valid assignment.

A referee was appointed to take proof, who found, among other things, that Hogg, Patterson and Hutchinson were engaged in business under the firm name of “Hogg & Patterson,” but that the issue as to whether Hutchinson was a

The plaintiff appeared on this reference, and offered to prove the failure of Hutchinson to comply with the requirements of the law as to the creation of special partnership, which proof was excluded by the referee, on the objection of counsel for Hutchinson, and on the ground that the question whether or not Hutchinson was hable to creditors as a general partner, could not be tried on that reference.

On the return of the citation, duly issued, requiring the creditors of the firm to appear in court and attend to the final settlement of the assignee’s accounts, the plaintiffs appeared by counsel, but “without prejudice to their right to claim in any suit or proceeding, that the firm of ‘ Hogg & Patterson ’ was not a special or limited partnership, but a general one, and without waiving any right to proceed against the general partnership.”

In the order of the court of common pleas, confirming the referee’s report, it is set forth that the issue as tó whether Hutchinson was a general or special partner in said firm, was not tried or determined by the referee, and was not passed on by the court.

There is here, therefore, direct and ample evidence that the question was not only not litigated, but was expressly excluded from the consideration of that court and of the referee.

_ Indeed, _ the consideration of any question as to the validity or invalidity of the assignment, was foreign to his functions, which were only to ascertain how the provisions of the assignment should be legally carried out. Re Holbrook, 99 N. Y., 546 .

The objection that plaintiffs have by electing to take advantage of the proceedings to give effect to the assignment, and by accepting and receiving from the assignee payment of a part of their claim, have disabled themselves from maintaining this action, is without merit.

The plaintiff’s contention here is, that the proceedings in the court of common pleas were, strictly speaking, in rem; that the assignment was void because all the general partners had not joined in executing it; that the property in the hands of the assignee was still the property of the firm of “ Hogg & Patterson,” and that the plaintiffs have always expressly reserved all their rights to all remedies against the partners in another action.

Their acceptance of money from the assignee of two of the partners, in part payment of the indebtedness of the firm to them, is not, under the circumstances of this case, a waiver of any other claim, nor does it preclude them from suing all the partners in another action and recovering any

• The judgment and 'order must be affirmed, with costs.