Court Opinion

ID: 5833153
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:30:46.40116+00
Date Added: 2024-06-11T08:43:30.725880
License: Public Domain

Murphy, P. J. (concurring).
I agree with the majority opinion except that portion which promulgates liability under subdivision (4) of section 106 of the Partnership Law. I would reverse the judgment upon a different theory.
Black Watch Farms, the limited partnership, was originally capitalized for $1,000,000; the limited partners initially contributed $860,000 of that total amount. When, in 1968, the general arid limited partners transferred their interests in the limited partnership for shares of Bermec, the assets of the limited partnership had grown to over $25,000,000. There is no dispute in this record that, at the time of both purchases in 1968, both Bermec and the limited partnership were solvent entities. The evidence indicates that the 1968 purchases were arm’s length transactions.
When the limited partners sold their interests to Bermec, no part of their original capital contribution of $860,000 was ever returned to them. The limited partners were merely paid the appreciated market value of their limited partnership interests. The original capital contributions of the limited partners together with all other assets of the limited partnership were eventually transferred through Bermec to its subsidiary, Black Watch Farms, Inc. Since the limited partners did not receive the return of any portion of their capital contribution, liability cannot be predicated against them under subdivision (4) of section 106 and subdivision (7) of section 108 of the Partnership Law.
Section 96 of the Partnership Law provides:
"§ 96. Limited partner not liable to creditors.
"A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights and *110powers as a limited partner, he takes part in the control of the business; and the exercise of the rights and powers granted by subdivision three of section ninety-nine of this chapter shall not constitute taking part in the control of the business. The commencement of or other participation by a limited partner in an action brought pursuant to section one hundred fifteen-a of this article shall not be deemed to be a taking part in the control of the business within the meaning of this section.”
This section is aimed at relieving a limited partner from liability in the day-to-day operation of the limited partnership. However, it was not intended to cover the unique situation presented in this proceeding. The limited partnership entered into the finder’s agreement with the plaintiff so that the general and limited partners could transfer their interests to an appropriate purchaser. As Justice Levy has previously determined, the general and limited partners were only able to transfer their interests to Bermec through the efforts of plaintiff. Since both the general and limited partners directly benefited from the finder’s agreement, both should be directly held liable for its breach.
For this reason, I agree that the judgment should be reversed.
Kupferman, Lane and Lynch, JJ., concur with Fein, J.; Murphy, P. J., concurs in an opinion.
Judgment, Supreme Court, New York County, entered on September 15, 1978, reversed, on the law, defendants’ cross motion for summary judgment denied and plaintiff’s motion for summary judgment as against defendants Daniel T. Alagna, Fania Friedman and Phemie Goldman granted on the issue of liability.
Settle order providing for a hearing if necessary to determine the respective amount of each of said defendant’s contribution, with appropriate interest. Appellant shall recover of respondents $75 costs and disbursements of this appeal.