Title: State v. Peterson
Citation: 232 La. 931, 95 So. 2d 608
Docket Number: N/A
State: Louisiana
Issuer: Louisiana Supreme Court
Date: May 6, 1957

95 So. 2d 608 (1957) 232 La. 931 STATE of Louisiana v. Eric PETERSON. No. 43391. Supreme Court of Louisiana. May 6, 1957. *609 Jack P. F. Gremillion, Atty. Gen., M. E. Culligan, Asst. Atty. Gen., J. St. Clair Favrot, Dist. Atty., Ralph L. Roy, Asst. Dist. Atty., Baton Rouge, for appellant. Major &amp; Ponder, Baton Rouge, for appellee. HAMLIN, Justice ad hoc. The State of Louisiana appeals from a judgment of the trial court sustaining a motion to quash the information filed against the defendant. By amended bill of information, the defendant, Eric Peterson, was charged with the theft of $7,000 from the Baton Rouge Millworks, a partnership composed of Eric Peterson and Herman Green. He applied for a bill of particulars, praying for the following information: 1. Was the money in the possession of Herman Green? 2. Under what circumstances did he take or come into possession of the money? 3. If money was not in the possession of Green, in what bank and under whose name was it deposited? 4. What business relationship existed between Green and defendant prior to the alleged theft? 5. Was the partnership agreement written or oral, and when was the partnership formed and when was it dissolved? The State answered that the partnership was formed on February 20, 1956, by oral agreement of the partners, Eric Peterson and Herman Green; that the money was deposited in the Capital Bank and Trust Company, Baton Rouge, Louisiana, in the names of Eric Peterson and Herman Green; that the alleged theft, consisting of one misappropriation from the Capital Bank and Trust Company, occurred on or about May 18, 1956; and, that there had been no accounting or dissolution of the partnership. The defendant then filed a motion to quash, averring that "* * * the bill of information charges the theft of partnership funds in the amount of $7,000.00; that the answers to the motion for the bill of particulars specifically admit, among other things, that the said funds were partnership funds deposited in the name of Eric Peterson and Herman Green; that the basis of the charge is the withdrawal of said alleged partnership funds on or about May 18, *610 1956, by the said Eric Peterson; that the State admits that no accounting has ever been made or demanded with respect to the partnership property and that no dissolution of the alleged partnership has ever been had. This being true under the Louisiana Law and decision pertaining thereto, the bill of information considered along with the answers to the motion for a bill of particulars does not charge an infraction of the law or commission of any crime." To a request for a second bill of particulars, the State answered that the partnership was a commercial one; that the alleged theft occurred when the accused withdrew money of the alleged commercial partnership from the Capital Bank and Trust Company, for the purpose of converting said funds to his personal use; and, that the alleged misappropriation was by means of fraudulent conduct and practices. Since it is conceded by appellee that the partnership was a commercial one, we are considering it as such. In sustaining the motion to quash, the trial court stated: LSA-Revised Statutes 14:67 provides: The following comment is found in the footnotes to the above section: It is incumbent that we decide whether the word "another", employed in the above statute, includes a commercial partnership of which the accused is a partner. In the case of Henderson's Estate v. Commissioner of Internal Revenue, 5 Cir., 155 F.2d 310, 314, we find the following interpretation of a commercial partnership: It is the contention of the State that since a partnership is a legal entity, it necessarily follows that a personin this particular case, Eric Petersoncan commit a theft from a partnership. It argues that under LSA-Revised Statutes 14:2 a partnership falls under the definition of the word "another".[1] Partnerships are divided, as to their object, into commercial partnerships and ordinary partnerships. LSA-Civil Code, Article 2824. LSA-Civil Code, Article 2872, sets forth the extent of liability of partners as follows: The above article was interpreted as to commercial partners, in the case of E. B. Hayes Machinery Co. v. Eastham, 147 La. 347, 84 So. 898, 900, as follows: Although the liability of the individual partners of a commercial partnership comes into existence and becomes enforceable after the dissolution of the partnership, it follows that they are still eventually liable for unpaid partnership debts. Since the liability is in solido, any commercial partner is faced with the eventual obligation of having to pay all outstanding claims against a dissolved partnership. Therein lies the difference between a partner of a commercial partnership and a stockholder of a corporation whose liability is limited (LSA-C.C., Article 437). Therefore, if a man can be held liable for an entire debt of a commercial partnership of which he is a member, the commercial partnership cannot be classed as "another" apart from himself. In the case of State v. Hogg, 126 La. 1053, 53 So. 225, 226, this Court held: We feel, as the Court felt in the Hogg case, supra, that to give LSA-Revised Statutes 14:67 the interpretation contended for by the State would have the effect of enlarging and amending the scope of the statute. A member of a partnership, who believes that his co-partner is withdrawing partnership funds and appropriating them to his own use, has his remedy by bringing a suit for an accounting and a dissolution of the partnership; or, in certain exceptional cases, by direct action against his partner. Ingersoll Corporation v. Rogers, 217 La. 79, 46 So. 2d 45; Parker v. Davis, 225 La. 359, 72 So. 2d 877; Riley v. Riley, 150 Neb. 176, 33 N.W.2d 525; Cook v. Barrier, Tex.Civ.App., 73 S.W.2d 623. His recourse is not by instigating a criminal prosecution against one who can be held equally liable with him on any partnership obligation. 21 A.L.R., p. 124(b); 68 C.J.S. Partnership § 88, p. 528; 40 Am. Jur., p. 469, sec. 495. His remedy is specifically provided for in the LSA-Civil Code, Book 3, Chapter 3, Sec. 1Of The Obligations of Partners Towards Each OtherArticles 2858, 2859, 2860, 2861, 2862, and 2865. For the reasons assigned, the judgment of the trial court, sustaining the motion to quash and discharging the defendant, is affirmed. FOURNET, C. J., concurs in the decree. McCALEB and SIMON, JJ., dissent. HAWTHORNE, J., absent. FOURNET, Chief Justice (concurring). The defendant having been furnished with a bill of particulars on an information charging him with theft of $7,000, the property of the partnership composed of himself and Herman Green, showing that the money involved was deposited in the Capital Bank &amp; Trust Company, Baton Rouge, in the names of the partners jointly and subject to withdrawal by either without restriction, and that no accounting had been made or demanded,[1] the State is bound by these particulars;[2] consequently, the trial judge properly sustained the motion to *614 quash[3] because the facts recited in the bill of particulars, even if proved, fail to constitute the crime charged. McCALEB, Justice (dissenting). I cannot subscribe to the holding that a partner, who is charged with having taken and misappropriated the funds belonging to the partnership of which he is a member, is not amenable to the penal statute, R.S. 14: 67. It is well settled that a partnership, under our law, is a legal entity separate from the partners who compose it. As recently as last year, we were called upon to determine in Trappey v. Lumbermen's Mutual Casualty Co., 229 La. 632, 86 So. 2d 515, 516, whether a partner could become an employee of a partnership and entitled, as such, to compensation under our Workmen's Compensation Act. It was argued there, just as here, that a partner could not be an employee, as he would occupy a dual status of employer and employee. This contention was flatly rejected on the ground that the partnership, being a legal entity and "Under our civil law system, unlike that of the common law, a partnership is an abstract ideal being with legal relations separate and distinct from those of its individual members; * * *", it not only had the capacity to employ one of its own members but that, when it did, the relationship of employer and employee came into existence. Accordingly, since a partnership occupies a separate status as an ideal being, I see no good reason, and none is suggested by the majority opinion, why one of the partners cannot commit theft of its funds just because he happens to be one of the members composing the legal entity. The conclusion reached in the majority opinion appears to be predicated on certain dicta contained in State v. Hogg, 126 La. 1053, 53 So. 225, 226, 29 L.R.A.,N.S., 830 and it is also observed by the majority that the penal law (R.S. 14:67) does not apply in this case because the other partner may proceed civilly against the defendant for his alleged misappropriation of the partnership funds. Insofar as the civil liability of one partner to the other is concerned, I find it difficult to perceive that this affords any basis for the conclusion that a criminal statute has or has not been violated. And, it should be readily apparent that the cited dicta from State v. Hogg cannot be reconciled with the well-established jurisprudence to the contrary. In the Hogg case, wherein the defendant had been convicted of embezzlement, defense counsel had requested the judge to charge the jury that, if it found that the check (which was the subject of the theft) represented partnership funds belonging to defendant and Lizzie Hall, he would not be guilty. The judge refused this charge and, in considering on appeal whether error was committed in this respect, it was concluded that the ruling was correct because there was nothing in the record to indicate that any evidence was offered tending to show a partnership between defendant and Lizzie Hall. However, before reaching this result, the Court gratuitously engaged in a dissertation as to whether a partner could be guilty of embezzling the property of the firm of which he was a member and resolved that he could not because "* * * he could not be the agent, clerk, or servant of such firm * * *". This dicta, as I have pointed out, is in direct conflict with the ruling in the Trappey case. I respectfully dissent. *615 SIMON, Justice (dissenting). Being in full accord with the views expressed by my colleague in his dissenting opinion and fully concurring with his analytic application of the penal statute, LSA-R.S. 14:67, I am unable to subscribe to the holding announced in the majority opinion and am convinced that it is repugnant to our laws and jurisprudence on the subject of partnerships, the interrelationship of the partners towards the partnership, the classification of the rights of ownership in and to partnership property and the amenability of partners to the said penal statute LSA-R.S. 14:67, which serves as a basis for this prosecution. Under LSA-R.S. 14:67, theft is the misappropriation or taking of anything of value which belongs to another, either without the consent of the owner or by means of fraudulent conduct, practices or representations with the essential element being the intent to deprive the other of what may be taken or misappropriated. I do not agree with the majority opinion in its holding that a partnership is not "another" in the eyes of the penal statute. It is elementary in law that a commercial partnership is a fictitious person. It is a civil person possessing the peculiar rights and attributes of a natural person. In contemplation of law it is a separate legal entity, distinct from the individuals composing it and capable of suing and being sued in the partnership name. This fundamental law, with reference to commercial partnerships, is stated by us in the Succession of Pilcher, 39 La.Ann. 362, 1 So. 929, 932 as follows: "In Smith v. McMicken, 3 La.Ann. [319] 322, the court said: `The partnership, once formed and put into action becomes, in contemplation of law, a moral being, distinct from the persons who compose it. It is a civil person which has its peculiar rights and attributes. * * * Hence, therefore, the partners are not the owners of the partnership property. The ideal being, thus recognized by a fiction of law, is the owner; it has the right to control and administer the property to enable it to fulfill its legal duties and obligations; and the respective parties who associated themselves for the purpose of participating in the profits which may accrue, are not owners of the property itself, but of the residuum which may be left from the entire partnership property, after the obligations of the partnership are discharged.' City of New Orleans v. Gauthreaux, 32 La.Ann. [1126] 1128." See also Raymond v. Palmer, 41 La.Ann. 425, 6 So. 692, 17 Am.St.Rep. 398; Sherwood v. His Creditors, 42 La.Ann. 103, 7 So. 79; Darden v. Garrett, 130 La. 998, 58 So. 857; Southwestern Gas &amp; Electric Co. v. Liles, 16 La.App. 500, 133 So. 835. I respectfully submit that a partnership, being a legal entity and "under our civil law system, unlike that of the common law, * * * is an abstract ideal being with legal relations separate and distinct from those of its individual members; * * *" (Trappey v. Lumbermen's Mutual Casualty Co., 229 La. 632, 86 So. 2d 515, 516), and is by law endowed with the rights, attributes, privileges and immunities of that which under LSA-R.S. 14:67 is styled "another." Under the principles propounded in the above cited cases, all assets of the partnership being owned by the partnership are not owned by the individual partners, and a partnership being a legal civil being with all rights and attributes of others under our law, it is indubitable that a partner may be charged with and held responsible for the theft or misappropriation of the property owned by said partnership. A partner is not deprived of any ownership of property by its illegal taking or other misappropriation by an offending partner; it is the partnership itself, a legal being, which is occassioned the illegal and criminal loss and deprivation. I respectfully dissent. [1] "Another" refers to any other person or legal entity including the State of Louisiana or any subdivision thereof. [1] In the absence of a showing that a demand had been made for an accounting and for restitution, the State could never have shown that there had been a conversion. [2] Such a bill, when furnished, operates "to limit the scope of proof on the trial by restricting the introduction of evidence to the proof of those facts set out in the bill of particulars." 31 C.J. 752, Verbo Indictments and Informations, Sec. 310; 42 C.J.S. Indictments and Informations, § 156, p. 1092; 27 Am.Jur. 672, Sec. 112; annotations, 8 A.L.R. 550 and 10 A.L.R. 982; State v. Bienvenu, 207 La. 859, 22 So. 2d 196; State v. Bessar, 213 La. 299, 34 So. 2d 785; State v. Masino, 214 La. 744, 38 So. 2d 622. [3] "* * * the court in considering the motion to quash the indictment must construe those facts as set out in the bill of particulars to be true and determine whether or not, if proved, they constitute the crime charged." State v. Bessar, 213 La. 299, 310, 34 So. 2d 785, 789.