The sun. [volume] (New York [N.Y.]) 1833-1916, 1910-08-30
A SPECIAL PAKrNER's STATUS.

Il partner In a limited partnership could
continue in the old partnership ana al 'hr
same time engage - special partner IN
new partnership. which IN the Pf"seri case
Vas IN active competition WIN W" "'d
The action vas brought Nv Joseph SAolnv
- al. against Max Richter Tor dissolution
Of the partnership The special Term gave
judgment for the plaintiffs The Appellate
Division has nos reversed the judgment bN
vote of three To two ana has de"iheh
that the obligations of y special partner
are not Of such a character az vii proven,
him from becoming special partner "'
anot her firm
These facts among others are NJ interest,"
The oriEsnsl limited partnership VAS formed
IN February 1879 Richter. tho special
part ner. contribute 81 So OS-l 10 the 'apfsl
| pon this contribution he WAS 10 receive
interee' a. the rate Of per cent ana one
sixth 81 The pToht, The contract vas 10
terminate on December !. 1911. u provided
among other things that the statutes relai'
ing 10 limited partnerships should he con
I sicered q part Of the agreement and should
| govern ~ The evidence showed that some
\ time an ipos David u Sinclair and Lewis D.
, Remington, Who we're employees 1T y
SkoIny co determined 10 form
/ partnership for The carrying on Of stint
| lar business TO vii. 'he manufHotrr" ~
juvenile clothing They approached kI'h-
ter Who agreed 10 contribute a. u'si -
| special pa r. ner IN he new concern Before
! finally sCcepiinE. Richter advised he gsu-
ersl partners Of ne old fTm of N. proposed
| ArTsn cement and % his disposition 'o ar-
! cept unless he ~ olnvs would consent 10 an
! extension Of their copaft neTsh,p agreement
They refused and subsequently, brought sui
| for the dissolution of the part neTshlp
| Justice Scott. who writes the OF MON
| for the Appellate Division. holds that the
real question resolve. its~lf 10 this Wh"'h"r
/ q special pa rtuer in = limited partnership
commits breach Of his oopar'ner-h'p
obi Ratlon by becoming oontemporaneousiv
| Q special partner in another limited part
nership conducting q similar or competing
basineae. and whether such = breach =
suf1cient TO Justify q dissolution of the frsi
partnership at the request ~ the genera
partners
The court IN deciding this question nd-
versely TO the general partners sos- INTO
an elaborate discussion 81 the status oi
special pa rtners and also ~ general par
ners comparing the Two relationships ana
holding that dissolution - y most Tar TeaCh-
ing and radical remedy between partners
and . court 81 equity vii not force partners
INTO dissolution 4 Justice can hs done
! without resoTttns - ms extreme -'ep
Justice Scott save
speaking generally dissolution Win ro' he
decreed except Tor -oss mi ,cord Ic' iArk % GOOD
faith. or some cause which IL p-odueuv, Of serious
and permanent injury 10 the partnership con
cernsd or renders " ir'prArtrsh- Ia cArrN o. ne
business
The plaintiffs Seak 10 sustain their posi- on
on the theory mat tho utmost good isth
toward each other - indt-psn-sNle an no
relation between partn@r- ami that engAg-
ing m competing business without ~"
an rmstiVe consent ~ the other roparfrsr-
- . breath ~ good faith The court on
appeal nnds that such sn a. would Ne an
at Of bad iAiih on the par Of a general
partner. but that The same rule j. not to ne
applied To spe al partner In 'ra,tnt
NE history Of limited psrtpSr-h - IN thIs
state TIE coYrr FRO, ee,is 20 show iho' they
are solely creatures ~ sts'ure unknown 10
me common lsv. an not kuoNn IN Euglaut
untIl the at ~ ipo7 authorizing fh-. r. forma-
ton in that country Tho ,ht". purpose
~ the statute enacted IN ms STATE va 20
bring into irads art ,oTuer,a funds 81
those no. inclined ~ engage m hu-in.>.
Who we've disposed to furnish capital upon
limited liability wuh view 20 the share Of
pron's y hich might ~ sNpe~'sd 10 re- ul'
20 them from their nee
The two most prom inen' and Distinguish.
ing "haracIcnstics Of a general pAttnHr-h,p
are that each parnsr q. liable for an me
debts Of the frm and - the agent Of The rrfn
and competent 10 hind u in all Transactions
within The - ope 81 the par'ncr-rip business
/ \ SPECIAL partner has neither ~ thes.
characteristic he - liable only ~ doe
tent 81 his confirmation of capital and an
MOI bind The firm in any way there = h'tle
y" h@ found IN The books a. - 'he relations
and obligations ~ genera and -p~, tAl mart
ner- as bet Neen themselves
! u" most striking feature - tho relation
/ Of = special partner 20 he copartnershtpts
itsdeiaehed IND i'm personal character which
ACcentdate- sbHrplV 10 ds.imllSrity from
the relations OF general partn-r
| Justice Scot' hen proceeds 10 e,arrtn.
the various sections Of 'h- limited partner
chip laU. from Which EXAMINATION he forms
ne conclusion that the sole pafr 'h.. A
special partner NAV take IN ~. coudr,' ~
frs business which Any stranger cuuI. No,
take - 10 eIAmine from time To 'ir.- INTO
the stat" at purposes ~ the hu- uc.. and
| advise a. 10 i's mansgeman' A. % aa,I,.
'hs statute merely alloNs him 20 tender -
| and imposes no "bl Esr ION upon MIN 10 oH.r
or upon The E~neral partners 10 sc,.p, :,
! tie NAV MOI sign FOR the VaItrership nor
! hiud u. nor trnnsa,' anv bis,ns-s nn IT.
| account. nor he employed fu- hat rurpos.
a. agent. attorney ~ otherwise lie may
nes"'ia'" sales. purchases snd other fus
I ness. bat cannot carry -uch nrsotraff,rs
to tho point - finding no FIRM en- b,s
dea'S me rrm i not disSo'v ed Asin'te cas-.
OF general partner. hr' continue. IN.
las further prov des thal
ANY special partner ~ tt- I~ss' -~rrcssr,,,i,.
OF anr such sneciA partner deceased ira, ...r
rs interest N ne psrtn-rship Without uo-klns
s@olluon thereof Or -eni.r,rg 20 p.r'r,-.b,r
Een"Tsi n nou'r NJ sucr ,a'r W ri.. Ur,pf, 80, /
dhS. 'herea'ier In the orc~ ~ ne rr.rs a. "a,
whom me orignal cerufcAie ~ rsr,-r-.tl, -. /
Med and n" psrrhssef 'nerepf thrrr4po, 10
comes >peeiA' per 'nsr Win the ssnr rsht - ~
| Original partner
The court pro- esd- ~ s.v thai a., .,.
| cial partner or his reprc--utatt,cs u.v -
his in'ere-s IN The hrm "a anv stranger With
out the consent % tho general rnrtr.,s 10
| certainly folloes that no clement Of p,,i,,..I
trn" aud confidence enters into tn. r.la.
non-hip between special partner and his
senersi partners. for no. only NAV tho in
| terest be sold. but the purchase, ,s..sr,.- |
the position Of the vendor and nv the ACT
OF purchase becomes . special partner -
the firm The limited partner.hip ne,
treats the special partner throuEhout a
mere contributor % capital V,th none ,f
L -. 49, -.