Court Opinion

ID: 5500011
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:58:03.115506+00
Date Added: 2024-06-11T08:33:54.323955
License: Public Domain

Barrett, J.,
(dissenting.) I am unable to concur with my Brother Bartlett in this case. It seems to me that the strict letter of the statute should not be applied against a special partner where every essential has been complied with. Here the special partner’s certified check for the amount of his contribution to the capital was actually on deposit in the firm’s bank at the time when the certificate and affidavit were filed. Every statement contained in these papers was true at the moment of such filing. If this affidavit, just as it stood, verbatim, et literatim, had been reverified a moment before the filing, it is not pretended that the special partner would have been liable. A special partner cannot make this affidavit; that must be done by one or more of the general partners. If the affidavit is false, the special partner is nevertheless liable. Thus the burden is put upon him to see to it that a truthful affidavit is filed. If here the special partner had read the affidavit at the moment of filing, he would have seen that the exact truth was stated therein. Yet be is sought to be held because he did not happen to observe the precise date of the jurat. Upon this construction of the statute, even lynx-eyed observation of the date of the jurat would not always avail the special partner; for, as a matter of fact, the affidavit might have been sworn to upon the very day when the cash was actually paid in, but yet a few hours before such payment. Such a claim, if allowed, would sacrifice substance to form, and, if pursued with regard to the statute generally, would ruin innocent people upon pure technicalities. In my judgment, the false statement contemplated by the statute, whether made in the certificate or in the affidavit, is a statement which, when it meets the eye of the public, is in any particular misleading. “The object of the statute,” said Folger, J., in Van Ingen v. Whitman, 62 N. Y. 520, “is, by the payment into the capital of a specified sum in cash, to give reasonable security to the portion of the public likely to deal with the partnership; and, to insure the payment of that sum thus, it requires the affidavit that the payment thereof has been thus made before the partnership can start as a limited one. The statement of the amount of the cash payment is required so that the public may gouge thereby the extent of ifs dealings with the firm. The affidavit is called for that the public may have reliance upon the existence of the fact of payment.” That the statute should receive *888a.reasonable construction was held ,by the court of appeals in President v. Laimbeer, 108 N. Y. 578, 15 N. E. Rep. 712. In that case, Peckham, J., speaking of the plaintiff’s contention that the statute must be strictly construed, and, all its provisions fully, and even technically, complied with before exemption from general liability can be claimed, observed: “Acts providing for the formation of a limited partnership should receive a reasonable construction, not such as to make its formation almost impossible, and not such that, where the slightest and most innocent, and, to third persons, an entirely harmless, deviation from the strictest construction that can be given to a statute shall work results to the special partner of possibly a most disastrous and utterly ruinous nature, including liability for enormous debts incurred by the general partners, where the credit given was not in the least based upon any assumed liability of the special partner greater than the capital he had contributed.” In Durant v. Abendroth, 69 N. Y. 148, the certificate and affidavit were actually filed on the 23d of December, 1870, and the partnership did not commence until the 1st of the following January, nor was the capital actually paid in until the 2d of January. Both the certificate and affidavit, therefore, were untrue at the time when they were filed, but, even with reference to that state of facts, Peckham, J., in the Laimbeer Case, supra, said: “I think it was a very stern and technical application of the statute, because, confessedly before one particle of business was transacted by the firm, and on the earliest possible day after the commencement of the term of partnership at which it could be done, the check was paid, and the cash contributed by the special partner to the general fund. It does not seem to me as if the principle of that case should be extended. ” The Laimbeer Case seems to be a distinct authority against a technical construction of the statute, especially in non-éssentials and in favor of the sufficiency of a substantial compliance with its terms.
I see no distinction in principle between the present case and Ropes v. Colgate, 17 Abb. N. C. 136. In that case Justice Brown said that “ what is required of parties desirous of availing themselves of the privileges conferred by the statute in question is a substantial compliance with its terms. Of what importance is it whether the capital contributed by the special partner is paid in a few minutes before or a few minutes after the certificate is signed, so long as it is paid in good faith before the partnership comes into existence? In my judgment, if, at the moment the partnership is formed, by the act of filing the certificate, all its statements are true, there is both a substantial and a literal compliance with the statute, and the special partner is not liable to the creditors of the firm.” The statute in this respect makes no distinction between the certificate and the affidavit. If either is false, the specified consequences follow. In one case, there is a false statement, in the other, a false oath. If either tends to thwart the statute, mislead the public, or induce any one to rely upon a fact which does not exist at the moment of the filing of the papers, the liability of general partner follows. It is not until that moment that the partnership becomes complete, and it is hot until that moment that the affidavit becomes material. It is not a question of the criminal law, nor yet of moral obliquity; it is simply a question of a statement placed on file for the inspection and advice of persons about to deal with the firm. What difference can it possibly make to such persons whether the truthful facts placed before them on the files were sworn to on the day of filing or the day before? on the day when the check was cashed, or the day before? Where, then, the special capital has been paid in in cash prior to the filing of the certificate and affidavit, and these documents so state, everything essential or substantial has been done. To hold a special partner liable under these circumstances is simply to fine him the debts of the firm, not because of his own perjury, but because of an anticipatory statement made by another person, technically inaccurate at the time it was verified, but true when used, pursu*889ant to the requirements of tlie law, and which could not possibly have affected any person who ever had dealings with the firm. I think the exceptions should be sustained, and a new trial ordered.