Case ID: misc_70/html/0532-01.html
Source: Caselaw Access Project
Author: {"author": "Delany, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Henry M. Black, Trading as H. M. Black & Company, Appellant, v. New York Life Insurance Company, Respondent.
    (Supreme Court, Appellate Term,
    February, 1911.)
    Partnership — Statutory regulation — Prohibiting fictitious firm names ■—Effect of violation.
    A violation of section 22 of the Partnership Law (Consolidated Laws, chap. 39') which merely prohibits the transaction of the business of a partnership in the name of one not interested in the firm works neither a forfeiture nor a disability.
    One who transacts. business in his own name with the addition “ & Company ” which does not represent any individual may recover upon a policy of life insurance assigned to him in his firm name, and the prohibition' of section 22 of the Partnership Law is no defense to the action.
    Appeal by the plaintiff from a judgment of the Municipal Court of the city of New York, borough of Manhattan, first district, after a trial before the court without a jury.
    Beeves, Todd & Swain, for appellant.
    George W. Hubbell, for respondent.
   Delany, J.

The facts were stipulated. The New York Life Insurance Company, the defendant, had issued a policy to one Broms and, by later indorsements thereon, converted it into paid-up insurance for $315 which sum was due and payable September 14, 1910. In April, 190'8, said Broms and his wife assigned their interest in the policy to II. M. Black & Company; -and defendant, by indorsement upon the assignment, admitted service of duplicate on April 11, 1908. At the time of assignment plaintiff was the sole party conducting business as said “ H. M. Black & Company,” and the words & Company ” did not represent any individual. Plaintiff had not filed the certificate required by statute until July, 1910. Demand was made for payment; and defendant refused, claiming the assignment was illegal because of tike failure of plaintiff to file the certificate. The assignor Brons acknowledged that he had no claim to the money.

The question herein raised is not a new one, although the compilation known as the “ Consolidated Laws ” appears to furnish the basis of its interjection now, where a portion of the pre-existing statute has 'been transferred to the Penal Law and a portion to the Partnership Law.

The law has a history beginning in 1833. It appears as chapter' 2-81 of the Laws of 1833 and reads as follows:

“ Sec. 1. Ho person shall hereafter transact business in the name of a partner not interested in his firm and where the designation and Company ’ or ‘and Co.’ is used it shall represent an actual partner or partners.”
“ Sec. 2. Any person offending against the provisions of this act ishall upon conviction thereof be deemed guilty of a misdemeanor and be punished by a fine not exceeding $1,000.”

Here we have a penal statute which, eliminating any other objection to it, should 'be strictly construed in favor of the one against whom it is invoked. Gay v. Seibold, 97 N. Y. 472; Lovejoy v. Weil, 48 Misc. Rep. 611; Sinnott v. Germa-American Bank, 164 N. Y. 386. It did not take the courts long by construction and interpretation to take from it any efficiency- except against one who designed to use s-uch name to deceitfully procure credit or injuriously mislead people by means of it. A long line of judicial opinions and decisions seems to -have fixed the legal meaning and scope of the statute. Gay v. Seibold, 97 N. Y. 472, held that it was intended “ to protect persons giving credit on -the faith of a fictitious designation, not to -protect those obtaining credit from s-uch a firm,” and this view persisted whenever the question arose. Taylor v. Bell & Bogart Soap Co., 18 App. Div. 175; Sinnott v. German-American Bank, supra, p. 391; Loeb v. Firemen’s Ins. Co., 78 App. Div. 113; Kennedy v. Budd, 5 id. 140; Vandegrift v. Bertron, 83 id. 548; McLean v. Wohltjen, 25 Misc. Rep. 742; Doyle v. Shuttleworth, 41 id. 42.

The statute of 1833 was 'amended by chapter 262, Laws of 188-6, which read: “ Ho person shall hereafter transact business in the name of a partner not interested in his firm, and when the designation ‘ and Company ’ or ‘ and Co.’ is used, it shall represent an actual partner or partners; hut a violation of this section shall not he a defense in an action or proceeding brought by an assignee for the benefit of creditors or by a receiver of the property of or by an executor or administrator of a person who has violated the same.”

The .amendment, however, did not seemingly change the attitude of the courts toward the statute; for a later case, not within the exception raised, held that the pleading setting, up the doing of business under an assumed name and the failure to file the certificate is demurrable. Doyle v. Shuttleworth, 41 Misc. Rep. 42.

When the Consolidated Laws were compiled, section 2 of chapter 281 of the Laws of 1833 wias collocated in the Penal Law, becoming section 924 thereof; and section 1 as amended became section 22 of the Partnership Law.

On this -appeal we have to consider only that portion which now forms section 22 of the Partnership Law. The respondent claims that, by reason of that provision, the assignment to Black is void and, under certain conditions and for a certain time, the payment to Black now by the defendant would not he an extinguishment of the debt.

This is the language of the act, section 22, Partnership Law: “No person shall hereafter transact business in the name of a partner not interested in his firm, and when the designation and company ’ or 1 and Co.’ is used, it shall represent an 'actual partner; but a violation of this section shall not be a defense in an action or proceeding brought by an assignee for the benefit of creditors or by a receiver of the property of or by an executor or -administrator of a person who has violated the same.”

The statute as it now stands in the Partnership Law merely prohibits the transacting of business in the name of a partner not interested in the firm. It works neither forfeiture nor disability. Loeb v. Firemen’s Ins. Co., 78 App. Div. 117; Wood v. Erie R. Co., 72 N. Y. 200; McArdle v. Thames Iron Works, 96 App. Div. 139. The legal status of one ignoring it remains unchanged. The courts are riot deprived of jurisdiction to adjudicate on the rights of one violating it; Their power in that regard is as before its enactment. This remnant of the statute contains no provisions to make its prohibition effective, and the common-law right of a person to do 'business in a certain name will not he made a vice, nor will a prohibition of its use work a disability by implication.

Accordingly, this expression in the statute does not incapacitate the plaintiff from recovering in an action for money due him.

Judgment for defendant reversed and judgment for plaintiff ordered, with costs in this court and in the court below.

Hendbick and Lehman, JJ., concur.

Judgment reversed.