Court Opinion

ID: 6415836
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:56:05.965539+00
Date Added: 2024-06-11T15:51:33.067534
License: Public Domain

Colt, J.
Upon the agreed statement of facts, the defendant Foster must be held liable as a general partner in the firm of Barnes & Carpenter. In the formation of the special partnership under the statute, there was a failure to comply with one requisition which is made necessary in order to secure exemption from such liability.
By the Gen. Sts. c. 55, §§ 2-4, the special partner is required to contribute to the common stock a specific sum in actual cash *19payment as capital; all the partners must make and severally sign a certificate, which shall contain, among other things, the amount of the capital stock which each special partner has contributed; and if a false statement is made, all the persons interested in the partnership shall be liable as general partners for all the engagements thereof.
It is unnecessary to consider all the modes in which Foster attempted to complete his contribution as special partner. His liability as general partner is fixed, if within the true construction of the statute any one of the methods adopted is not to be regarded as an actual cash payment of any part of the amount. It is wholly immaterial that the transaction at the time was honestly intended and understood by the parties to be sufficient; that the securities actually transferred afforded the means by which their cash value was in fact subsequently realized; or that creditors were not actually defrauded. The statute is plain and explicit. It requires payment to be made when a certificate is signed, acknowledged and recorded as the foundation of the partnership; and this certificate must recite what has been done, not that which is executory. Its object is to provide a fund, on the day the company is formed, to be thereafter subject to no contingencies or losses, except those which come from the proper business of the partnership. The use of the phrase “ actual cash payment,” is emphatic and significant. It is wisely intended to exclude a construction, by which commercial securities, of any description short of cash, may be regarded, by the aid of mercantile usage or otherwise, as substantially equivalent to cash ; and to remove from all parties the tempta= "ion to evade its requirements in this respect.
In the cases at bar, it appears that, on the day when the articles of copartnership were entered into, the Attleborough Bank had in its custody two obligations of the United States for one thousand dollars each, payable to bearer, which belonged to the defendant Foster and were deliverable to him or his order on demand, and which he authorized Carpenter, dealing with him as a member of the proposed firm, to take, sell and apply, as a part of his contribution, to the capital. These obligations *20were worth, at the time, somewhat more than their par value, and were in fact taken and sold by Carpenter some time in the month of September following, and applied to the use of the firm as it had occasion for the money. Assuming that the authority given to Carpenter to make this appropriation was sufficient, yet it does not appear that any action was taken under it by Carpenter, or any notice of the transaction given to the bailee of these secui-ities, before they were finally taken and sold by him.
A majority of the court are unable to regard this as a compliance with a provision, which demands an actual cash payment, and requires it to be certified, acknowledged and recorded, before the partnership is formed. These securities were at best but the agreement of a third party to pay money at a future day; they cannot be treated as cash; they were not so treated by the bank, in whose safekeeping they were placed, and which held them as a special deposit; nor were they so regarded by the parties themselves, who expressly provided for their future sale and conversion into money. If considered as equivalent to cash, yet there was no delivery of them valid as against the individual creditors of Foster, who for some considerable time afterwards held the legal title to them. Pierce v. Bryant, 5 Allen, 91. Foquet v. Hoadley, 3 Conn. 534.
It is not necessary to consider the manner in which the remaining part of Foster’s contribution was made. It is sufficient that the certificate, to the extent indicated, contained a statement, which, though made in good faith by him, was a false statement within the meaning of the law. The statute cannot be construed so as to meet the hardships of individual cases. And judgment must be rendered against Foster, according to the agreement of the parties, in both cases.

Judgment for the plaintiffs.