Case Name: Jennings's Appeal
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1888-10-29
Citations: 2 Monag. 184
Docket Number: Appeal, No. 197
Parties: Jennings’s Appeal.
Judges: 
Reporter: Cases in the Supreme Court of Pennsylvania; being those cases not designated to be reported
Volume: 2
Pages: 184–188

Head Matter:
Jennings’s Appeal.
The supreme court will not reverse a preliminary injunction to restrain the removal of the works of a limited partnership, from one comity to another, said partnership having been formed under the Act of June 2, 1874, for the manufacture and sale of steel, and the bill alleging a fraudulent attempt to destroy the business, etc.
Oct. 18, 1888.
Appeal, No. 197, Oct. T. 1888, from C. P. Armstrong Co., to review a decree, granting a preliminary injunction on a bill in equity by Jos. G. Beale against Benjamin F. Jennings, John Davis, Robert Flcnnikcn and T. D. Jennings, at Sept T., 1888, No. 89. Green, J., absent.
The bill averred that the complainant, together with the defendants, constituted a partnership, under the Act of June 2, 1874, known as Jennings, Beale & Co., Limited; and that the defendants have commenced to tear down and remove a furnace owned by the company, out of Armstrong county, without the consent and against the pi'otest of the complainant; that the removal will do irreparable damage and render the plaintiff liable as a general partner. The bill further averred a fraudulent attempt to destroy the business and swindle plaintiff out of his property. The prayers were for an injunction, the appointment of a receiver, and general relief.
The certificate of partnership, which was made part of the bill, contained the following clause: “ 3. The character of the business to be conducted by the said association is the manufacture and sale of steel, and generally the transaction of all matters pertaining to said business, and the location of said business and the principal office or place of business is in the borough of Leechburg, in the county of Armstrong, and state of Pennsylvania, and a branch office is in the city of Pittsburgh, county of Allegheny, and state aforesaid.”
The articles of agreement, signed by the parties, and made a part of the bill, contained the following clause: “ The majority in number and value shall decide all questions in relation to the business of said association.”
Affidavits were filed in support of the bill. Affidavits were also filed on behalf of defendants, admitting that they proposed to remove the works of the company to Pittsburgh, and averring that the certificate of partnership had been amended so as to read, “ the principal place of business shall be in the city of Pittsburgh, or in the city of Allegheny, county of Allegheny, and the works in the county of Armstrong or the county of Allegheny, or both, as may be determined by the majority in number and value of stock- , holders.” This amendment was adopted by a vote of the appellants, against the vote of the appellee, the latter owning approximately a one-third interest in the partnership.
On June 26, 1888, the court granted a preliminary injunction restraining the defendants from destroying, tearing down, or removing any part of the property of the company described in the bill. The defendant moved the court to dissolve the injunction, and the plaintiff moved to continue it. On the hearing, the affidavits set forth more fully the following averments :
The plant consisted of two departments, one with open hearth Sieman’s furnace, with its necessary connections and appliances for the manufacture of steel ingots by the open-hearth process; the other, a mill for the rolling of sheets of steel from these ingots; each departments being run in connection with the other, on the same piece of ground. Mr. Beale, in his affidavit, averred that the furnace department was built by him in 1880, before the formation of the partnership, at an expense of about $55,000. The structure is 40 by 20 feet, with solid foundations, with a frame building 70 by 120 feet. To remove the smelting department, as it is proposed, and erect it elsewhere, would entail an expense of from $25,000 to $30,000, exclusive of the cost of the ground; that it would require the expense of a double superintendent, clerical work, etc., whereas the whole of the work can be done by one set of men as at present situated. If carried to Allegheny county, greater taxes will be entailed, as well as a business tax of about $2,500 from which the firm is now exempt. The operation of the new plant Would involve an additional and needless expense of $23 per day for labor. No site was obtained for the relocation of the furnace, but the dismantling had actually commenced. The affidavits of a number of steel manufacturers were filed condemning the change.
The defendants, by their affidavits, further averred that the reasons for the removal of the furnace to Allegheny city, or the neighborhood thereof, was that there would be a considerable saving in the way of freights; that competent men were more abundant, and could be more readily obtained, and that the supply of gas was uncertain and irregular. They further stated that it was their intention eventually to remove the whole plant for the reasons heretofore given. B. F. Jennings, in his affidavit, averred that “ it could be more economically and profitably managed in the immediate vicinity of deponent’s residence [Pittsburgh] and under his personal supervision.” He further averred that the expense of the removal of the open-hearth furnace, and other things connected with it, would not exceed $10,000 or $12,000, exclusive of the cost of the land. Defendants further denied all fraudulent intent. They did not assert, however, that a site had been secured upon which to rebuild the works. *
On July 12, 1888, the preliminary injunction was continued by the court, in the following opinion, by Neale, P. J.:
“ The facts in this case present but a single question. It is, whether the majority of the co-partnership of Jennings, Beale & Co., Limited, have authority to change the location of their works, against the will of the minority. The partnership was formed for the manufacture and sale of steel, and the location of their works was stated, in their certificate of association, to be Leechburg, Armstrong county, Pa.
“ It seems evident that the location of the works for the manufacture of steel is not a matter of indifference. Any business, to be successful, must be properly surrounded. This is so much the case with the manufacture of steel that few places in our whole land are adapted for it, and, therefore, few are chosen for such works. This being a palpable truth, a court, in construing an instrument intended as the basis of such co-partnership, could not regard the place mentioned for the location of the works as a matter of indifference, or in any other light than a material element in the .contract of the parties. If that be true, it could, of course, be changed only with the consent of all the members.
“If a majority were determined to abandon the works in Leechburg, and erect new works in some part of Allegheny county, it would plainly be a new enterprise, and yet no distinction in principle can, to our mind, be made between that and what is here proposed..
“The majority of Jennings, Beale & Co., Limited, are about to remove part of their works from Leechburg, to some place in Allegheny county, with a view to the removal of the entire works thither in the future. Thus they would undertake a venture to which the plaintiff never committed himself, and would destroy the works they have agreed to operate.
“ In our opinion, this is such a departure from the enterprise contemplated in the agreement of the parties, that constitutes such an irreparable injury to the property and right of the plaintiff, as entitles him to the injunction heretofore granted. The injunction is therefore continued until further order of the court.”
The assignment of error specified the action of the court in granting the preliminary injunction.
W. K. Jennings, of Jennings & Willson, with them W. D. Patton, for appellants,
In all ordinary matters of partnership business, the majority have complete control. Peacock v. Cummings, 46 Pa. 434; Bates, Partnership, § 432. There is no reason why the majority cannot sell the real estate, including'buildings and machinery. The Act requires the title to the real estate to be in the name of the association; and a majority in number and value are authorized to dissolve the association, by the election of liquidating trustees, who are to dispose of the property. Jennings, Beale & Co.’s, Limited, Appeal [the next case,] decides that the majority controls in limited partnerships.
If the court below is right, the holder of one share of stock might control, on the question of removal, although the interests of the partnership opposed it. The effect of such doctrine on a company to develop oil-wells or to mine coal, on failure of the product, would be disastrous.
The place of business, designated in the certificate, is where the corporate functions are performed, it is not necessarily where the employees do their work. It is immaterial where they operate. Mann Mining Co., Meredith &Tate, Corp. 126; s. c. 2 Ches. Co. 90, construing the Act of April 29, 1874. Besides, the certificate here was amended.
However, the certificate it not the partnership agreement, nor is the subscription to stock mentioned in the first paragraph of the Act, but is merely the statutory notice to the public of the general feature of the organization. The article of agreement of partnership. provided that a majority should decide. That such stipulation governs the parties is recognized in Peacock v. Cummings, supra; and Story on Partnership, c. 7, § 123.
In Natusch v. Irving, 2 Cooper Ch. 358, and Zabriskie v. R. R., 18 N. J. Eq. 178, the undertakings were such as the stockholders never contemplated at the time they subscribed and were manifestly not within the scope of the partnership business, and contrary to the declared objects of its formation.
Jos. Buffington, of Buffington & Buffington, with them McClain & Leason, for appellees.
The granting of the preliminary injunction rested in the sound discretion of the court below. The bill and injunction affidavits showed that the removal of the works would cause the firm to incur great indebtedness; that its operation would involve additional expense; that the firm had no other site upon which to rebuild. The defendants’ affidavits did not deny these facts. No tangible reason was given for the removal, and no estimate made of the cost of a new site or of the advantage to be gained.
In matters of administration of the business of a partnership, the majority must of necessity control, but the tearing down and removing an entire manufactory is, we think, outside of the general management of the firm, and cannot be forced upon the minority.
The objects and business of a partnership or corporation cannot be changed or abandoned or sold out, without the consent of all the partners or corporators, and this is so, although, by law, a majority can control or manage the business against the will and interest of the minority, so long as it is within the scope of the partnership or charter. Zabriskie v. R. R., 18 N. J. Eq. 178. And the scope or necessity of the business is what is usual, not a peculiar exigency. 1 Bates, Part. § 320. Articles which have been agreed upon to regulate a partnership cannot be altered without the consent of all the partners. Natusch v. Irving, 2 Cooper Ch. 358; Const v. Hands, Lindley, Part, 2d Am. ed., pp. 316-19.
The filing of a certificate not signed by all .the partners is invalid, and ceases to be a protection to any of the partners and renders them all liable as general partners. See Singer v. Kelly, 44 Pa. 145 ; VanRiper v. Popperhausen, 4 Hand, 68; 43 N. Y. 68.
The contract provided for the location of the business, in ac cordance with the imperative provision of the Act of June 2, 1874. It is the “ location of the business,” not of “ the principal office or place of business,” which the Act requires.. On the importance to be attached to the place of business in a contract of partnership, see Clements v. Morris, 8 Ch. D. 129; 2 Lindley, Part, p. 412.
Oct. 29, 1888.
The removal of the business to another county, without the consent of all the partners, is a violation of the contract of partnership, and will render all the partners liable as general partners.
If the removal of the plant requires the investment of more capital than is now invested, or requires the firm to go in debt, the so doing by the majority is not within the scope of their general authority, and cannot be done without the consent of all.
For all these reasons, the court was right in granting the injunction, and this court will not disturb it unless for good reasons.

Opinion:
Per Curiam,
Decree affirmed at cost of appellants.
At the end of the syllabus of the above case should be added the following : " although the bill was filed by a minority of the stockholders."
See, also, the next case.