Kohler v. Lindenmeyr

The object of this action was to establish the liability of the defendant as a general partner of the firm, of P. Lenlc & Company, wine dealers. An attempt was made on the 16th of November, 1885, to establish a limited partnership with the defendant Lindenmeyr and Otto Huber as special partners. The action was originally brought against both of these persons, but Huber having died it was continued against the present defendant, a suggestion of Huber’s death having been made upon the record at the time of the trial. The gravamen of the plaintiff’s case is the alleged falsity of the statement that the capital furnished by the defendant was contributed in cash as stated in the certificate and affidavit filed under the statute . relating to the subject. Upon the trial the plaintiffs sought to establish the averment of falsity suggested, and when they rested a motion was made to dismiss the complaint; but no grounds were stated of which that motion could be predicate and on which it should be granted. The counsel for the defendant then produced and read in evidence the affidavit of publication from the World and Register of the statutory certificate and other documents to establish the validity of that performance; in other words compliance with the statute relating to the subject, and rested his case. No question was raised about the regularity of that proceeding, the plaintiff’s counsel, as already suggested, resting entirely upon the proposition that the statement of capital contributed was false, the same not having been paid in cash as required by the statute and the adjudications relating to the subject.

The objections interposed on behalf of the defendant relate only to the sufficiency and competency of the proof to establish the asserted falsity of the certificate.

It appears conclusively that before the special partnership mentioned was formed there had been in existence another partnership ■ of a like character under the same name of P. Lenk & Co., in which Otto Huber was a special partner, but the defendant was not; that on the 12th of -August, 1885, the defendant lent or advanced to that firm $7,000 and received a promissory note of the firm for that amount, and further that on the 28th of September following he lent or advanced to the firm the further sum of $13,000 and received another promissory note of the firm for that amount; and it appears from, the testimony given on behalf of the plaintiffs that when the new partnership of which the defendant was a special partner was formed, he appropriated the notes already mentioned, held by him, amounting, as we have seen, to $20,000, as his capital in the firm, and this was the mode in which he attempted to comply with the statute and to contribute cash to

The learned counsel for the defendant thinks that these entries were erroneously admitted, inasmuch as the defendant was not a member of the old firm; but they were entries relating to his transactions with the old firm and to his advantage and benefit, and from which, in the absence of any proof to the contrary, it should be presumed that the notes mentioned were issued and delivered to him as stated upon the books. At all events they were prima facie evidence thereof, and there is nothing in the case to gainsay its truthfulness. It may be said in addition that if the capital was not contributed in the manner stated according to the books of the new firm as shown by Mr. Davidson, sworn on behalf of the plaintiffs and who was an attorney at law and an accountant, it was not paid at all, because, as already suggested, he shows that the cash on hand on the 16th of November, 1885, and the bank balance united, amounted to but forty-six hundred and twenty dollars and eighty-three cents only. And this evidence was quite sufficient to put the defendant to his answer, which was made only by showing, as already stated, the publication of the notice and other papers required by the statute relating to the formation of special partnerships nothing more. Under these circumstances the evidence properly received seems to show conclusively that the sum the defendant purports to have contributed in cash was not paid in cash, and he therefore became, as a result, a general partner.

It is idle to urge the proposition upon which the counsel for the appellant lays some stress, that the books of the partnership of which the defendant became a member on the 16th of November; 1885, were not under his control, and that he could not direct the making, altering or erasing of any entry in the books, even under the original statute, as amended by § 17 of chapter 414 of the Laws of 1857.

He could not employ or discharge a clerk or bookkeeper or govern him in the performance' of any duty or service to the firm perhaps, but he had a right under that section from time to time to examine into the state and progress of the partnership concerns and might advise as to their management and should have the same rights and remedies in the respects named in the statute as any other creditor. He might also negotiate sales, purchases and other business of the partnership. He was prohibited, it is true, from transacting business on account of the partnership except as

It is well established that the entries in partnership books áre prima facie as between the parties. Cheever v. Lamar, 19 Hun, 130 ; 1 Phillips on Evidence, 449; 2 Wharton on Evidence, § 1132. And it is said by a learned writer that in the absence of an express agreement to the contrary every partner has a right without the permission of his co-partners to inspect, examine and make extracts from all the books of the firm. 1 Bindley on Partnership, 404 ; Bates on Partnership, § 378.

As a special partner, as we have seen, he might from time to time examine into the state and progress of the partnership concerns and advise as to their management, 1 E S., 766, § 17; vol. 4, 8th ed., p. 2495, and he certainly could look after his capital and he was bound so to do. Strict compliance with the statute in reference to special partnerships is demanded. As said by Judge Folger in Van Ingen v. Whitman, 62 N. Y., 520 : “The statement of the amount of the cash payment is required so that the public may guage thereby the extent of its dealings with the firm. The affidavit is called for that the public may have reliance upon the existence of the fact of payment.

The statute is thwarted, the public is misled, and its reliance is misplaced and deceived, as much when there is an unintentional untruth as when there is an intentional one. This statute does not set out to deal with motives, but with acts and their results; and it guards the public, not by requiring good intentions, but a certain act done in a certain mode, and a true statement that it has been done thus.” When the supposed true statement therefore is fairly and successfully impugned as false, it behooves the assailed partner to establish by reasonable evidence that the assault is unwarranted, and the statement true in fact.

For these reasons the exceptions should be overruled and judgment upon the verdict ordered for plaintiff.

Daniels, J., concurs.

I think that the admission of the entries in the books of the old firm was error. The defendant had nothing to do with those books or the entries therein contained. He was not a partner of the firm whose books they were, and because he subsequently became a special partner he did not become chargeable with notice of the entries which had been made previously in the books of the firm. I therefore dissent.

Exceptions overruled and judgment upon the verdict ordered for plaintiff.