Court Opinion

ID: 5515070
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:28:55.092695+00
Date Added: 2024-06-11T08:34:16.752525
License: Public Domain

By the Court,

Cowen, J.
The objection taken for the first lime on the argument, that this association was illegal as being in the nature of a corporation issuing scrips and providing for a transfer of its stock, is not well founded. The act of associating in this way is, we think, properly characterized, by the first exception taken on the trial. It constituted a partnership, valid as being formed for the purposes of a lawful and honest enterprize. Colly, on Part. 624, Am. ed. and the cases there cited.
It is, we think, clear that if this action will lie at all, it must be in the names of the plaintiffs, the original trustees to whom the promise was made. Such promise is not negotiable, and although the beneficial interest may have passed to the successors of the plaintiffs, and thence to the corporation created by the charter, no agreement contained in the articles could work a transfer of the legal right of action to others, to be pursued in their own names. They took but an equitable right as assignees, and have very properly proceeded and brought their suit in the name of the original promisees, their assignors. The promise being to pay to the trustees or their successors, is but an agreement that the successors should be considered and have all the rights of assignees, without a formal assignment. The same may be said as to the directors of the incorporated company. It may be that the calls should have been madé by the successors or assignees respectively holding the beneficial in*428terest at the time; yet, in legal effect, they "would be the calls of the original promisees, and should be so treated in pleading. No question is made in the case, however, but t^lat t*ie ca^s vvere made by the right persons.
The more nice question in the cause is the one first stated in the bill of exceptions, viz. that the plaintiffs themselves being stockholders, are co-partners with the defendant, and therefore can not maintain assumpsit. That the plaintiffs or either of them were stockholders does not appear in the bill of exceptions,- though it was assumed and agreed on the argument, that some or one of them are, and a desire mutually expressed that the question should be considered by us in reference to numerous other causes pending upon the articles wherein the fact would appear. We have accordingly looked into the question. No objection was made that if the articles were of a nature to raise a partnership, but that such a connection has been formed. The parties have subscribed ; all conditions in the way of the articles becoming absolutely obligatory, are removed; and the declaration avers that the trustees, the agents of all, have proceeded to action in the business of the company. Colly, on Part. 626, 7. It was denied, on the argument, however, that a joint stock company constitutes a partnership, and it was said this was so held by the late Chancellor Kent, in Livingston v. Lynch, 4 Johns. Ch. R. 573, 592, of The North River Steam Boat Company. The contrary is " extremely well settled by a long and well considered train of authority, both English and American, unbroken, as far as I have been 'able to find by a single judicial opinion beside that of Chancellor Kent. Colly, on Part. 626, 651, and the cases there cited. 3 Kent’s Comm. 26, 3d ed. and the cases there cited. Considering the question a priori, we. do not see how there can be any serious doubt. The stockholders became jointly interested in the subject of their dealings ; and their first article declares the object to be a fair return for their investments. The amount to each must of course depend on a general account of mutual profit and loss. Colly, on Part. 8, 14.
*429It is true, that the law will not imply a promise from one partner to another in respect to their common concerns. Colly, on Part. 143. But I am not aware of any thing in this relation which precludes them from making a valid express contract inter se, and in respect to any branch of their partnership business if they choose. Several examples of this are given in the books. It was held that though a partner in a joint stock company go on and perform services and expend money as an agent in its forniation, he shall not have an action at law to recover it, even though the company in contemplation were never actually formed. Both plaintiff and defendant were shareholders having subscribed the articles. The defendant was chairman. Yet, Abbot, C. J. said, “ if he [the defendant] had given any ;personal undertaking to pay the expenses incurred by the plaintiff, that might entail a liability upon him.” Holmes v. Higgins, 2 Dowl. & Ryl. 196; 1 Barn. & Cress. 74, S. C. Accordingly in Venning v. Leckie, 13 East, 7, the defendant having agreed with the plaintiff his partner to take one-hall share of certain flax bought by the plaintiff on joint account, and to furnish the plaintiff with one-half the amount, in time for the payment thereof, in case he should require it, the K. B. held that the plaintiff might recover at law on this promise. Lord Ellenborough, C. J. said, “ There are many deeds of copartnership in which the partners covenant each to advance a certain sum at first, and can it be said that no action would lie by one to enforce that covenant against another, because there are accounts between them afterwards, which require unravelling in a court of equity ?” Le Blanc, J. said, “ The respective sums were to be paid by each before there could be any account of profit or loss between them as partners upon the goods.” In Neale v. Turton, 4 Bing. 149, Best, C. J. admitted that if one partner were to draw on other partners by name, and they were individually to accept, he might recover against them, because by such an acceptance, a separate right is acknowledged to exist. And Preston v. Strutton, I Anstr. 50, seems to have been decided on this principle. A specific promise or arrangement between partners, though *430in respect to a part of the common fund, therefore, takes it oui °f the general account in equity and makes it the subject of an action at law. Coffey v. Brian, 10 Moore, 341; 3 Bing. 54, S. C. And it was not denied in Davies v. Hawkins, 3 Maule & Sel. 4S8, but on the contrary seems to have been conceded, that it is competent for the parties to declare in advance by their articles of copartnership, the persons in whose name actions may be brought in behalf of the firm against a member of the firm, for goods sold to him by the partnership.
In the case at bar we have an express promise to pay a specific amount to the plaintiffs, which was to constitute so much of the original stock upon which the business of the company was to proceed. The money subscribed never made a part of the general account of the partners ; but even if it had, I find no case which holds that it might not have been taken out and made the subject of an action at law by an express agreement. The short of the agreement here is, that in consideration of the plaintiffs incurring certain duties as trustees, the defendant would pay them the sum subscribed by him, to enable them to carry on the common concern. ■Jale v. Lockie, 2 Stark. Rep. 107, will also be found a case in point. One partner agreed to furnish manuscript for a work to be printed by the other; but stopped after the print of 336 pages. Assumpsit was held to lie for the breach; and Lord Ellenborough, C. J. held that the defendant had no right arbitrarily to break off from the contract. He said “ the action is not brought to recover partnership profils, but for not contributing his labor towards the attainment of profits to be subsequently divided.” The motion for a new trial must be denied.
New trial denied.