First National Bank v. Huber

The defendants’ testator, Otto Huber, was in his lifetime a member of the partnership of P. Lent & Co., which incurred the liability which this action is brought to recover. An action was first brought against the several members of the partnership, including defendants’ testator, but, he having died before the trial, it was revived against the surviving partners, and prosecuted to judgment. Executions issued thereon having been returned wholly unsatisfied, this action was commenced against the defendants, as executors of the last will and testament of Huber. He did not intend to become a general partner in the firm of P. Lenk & Co., but a limited partner, and the papers by which the limited partnership was sought to be created were on their face conformable to the statute authorizing such creation. But the evidence contained in the record shows that he did not comply with § 7 of the limited partnership act, (1 Rev. St. p. 765, §7), which requires uhat the sum contributed by the special partner to the common stock shall be paid in cash. The testator, Huber, was a member of a limited partnership, with the same general partners, prior to the attempt to create the partnership in question, and to the common stock of such limited partnership he had contributed $30,000, and, in addition, had loaned to' the firm $20,000. Upon the creation of the present partnership, it was agreed that the indebtedness of the firm to him, and the amount of his original contribution of capital, should be accepted as a contribution of $50,000, which the articles of partnership required him to pay in as special partner, but in so doing he did not conform to the statute, which nothing satisfies except a payment in cash. Durant v. Abendroth, 69 N. Y., 152 ; Van Ingen v. Whitman, 62 N. Y., 516 ; Kohler v. Lindenmeyr, 129 N. Y., 498 ; 42 St. Rep., 98 . The certificate and affidavit, while regular upon their face, contained a false state

The defendants do not deny that the evidence upon which the court based its decision brought Otto Huber within the provision of § 8; but their contention is that while Huber, during his lifetime, was liable to the creditors of the firm, as if he was a general partner, the cause of action was penal in character, and died at the same time as did he. An attempt is made to show that this provision of the statute is analogous to the one which charges the trustees of a manufacturing corporation with all of its liabilities for the nonfiling of its annual report—a cause of action which it is now well settled does not survive the death of the party. But we do not think that the analogy contended for exists, for; whether § 8 be regarded as penal in its character or not, the language employed not only manifests an intention to continue the liability beyond the death of such a party as it describes, but it is appropriate and effective to accomplish that result. If it had provided that, in case any false statement be made in the certificate or affidavit, all persons interested in the partnership should be liable for its debts, some support might be presented for defendants’ contention. But the statute does not stop there. It goes further, and characterizes the kind of liability which shall arise in such event. The character and quality given to it is such that no opportunity for discussion concerning its survivorship is presented. It declares “ that in such event the persons interested in such partnership shall be liable for all the engagements thereof as general partners.’’ Thus, he is not only made liable to pay the debts of the partnership, but he is made liable in the same measure and manner as general partners ; and, as the liability of a general partner for the engagementsof his firm survive his death, so, necessarily, does the liability of a special partner when it is founded on a violation of §8. _ 1

_ ■ Defendants further insist that the court erred in receiving in evidence the books of account of the firm of P. Lenk & Co.,which, expired on the day that the new firm of P. Lenk & Co., which contracted the liability in question, came into existence. Kohler v. Lindenmeyr, supra, is relied on to support defendants’ contention. In the attempt which was made to form the limited partnership of P. Lenk & Co., now the subject of controversy, Lindenmeyr, as well as Otto Huber, was named as a special partner, and in that case the books were introduced to show that Lindenmeyr did not pay in $20,000 in cash, on its formation, but, instead, a loan made to the old firm of P. Lenk & Co., was accepted in lieu of such contribution, and it was held that inasmuch as he was not a member of the old firm, and it did not appear that he was cognizant of the entries, they were inadmissible as against him. In this case the facts were quite different. Huber was a special partner in the original firm of Lenk & Co., and the entries in the books of his firm were competent evidence in favor of third persons, as in the, nature of admissions of the facts stated. Kohler v. Lindenmeyr, supra.

All concur.