Court Opinion

ID: 3596418
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:43:41.873294+00
Date Added: 2024-06-11T13:57:13.146252
License: Public Domain

The court having refused to submit the case to the jury, all intendments must be for the appellant; and he must be considered as having done all that the statute required of him up to and including the act of depositing with the county clerk the papers which, under the provisions of the law, were to be filed in his office. The appellant's counsel contends that after depositing with that officer the certificate of the formation of the limited partnership and the affidavit of the payment of the sum contributed as special capital, the party, seeking to avail himself of the provisions of the statute in question, has done all that is required of him and that he cannot in fact file them, nor can he record the certificate, the performance of those acts being a duty devolved by law upon the county clerk. It is claimed that the precise point upon which our judgment is thus asked is without precedent in this state. It may be that the words of the statute, to which counsel particularly directs our attention, have not precisely received judicial exposition; but the controlling principles for the construction of the statute have been sufficiently laid down to support the views we shall express, if its plain reading were not sufficient for that purpose.
The statute, upon the construction of which appellant's case must succeed or fail, after stating for what purposes a limited partnership may be formed and the contents of the certificate which the persons proposing to enter that relation shall make, in its sixth section, requires that "the certificate * * * *Page 598 
shall be filed in the office of the clerk of the county in which the principal place of business of the partnership shall be situated, and shall also be recorded by him at large in a book kept for that purpose, open to public inspection." In its seventh section it requires to be filed in the same office, and at the same time of filing the certificate, an affidavit of a general partner as to the actual cash payment of the special capital. Its eighth section is as follows: "No such partnership shall be deemed to have been formed until a certificate shall have been made, acknowledged, filed and recorded, nor until an affidavit shall have been filed, as above directed." (See §§ 6, 7 and 8, tit. 1 of Chap. 4 of part 2 of Revised Statutes.)
Obviously our consideration of these provisions of the law is confined to the force and effect to be given to the language of the eighth section, and to the extent to which we shall literally interpret the expressions of the legislature. The words themselves are plain and unambiguous, and the language does not seem to be lacking in strength. It is argued for the appellant that because of the omission in the revision of the statutes of a provision of the act of 1822 (Chap. 244 Laws of 1822, from which act the different sections of the title of the Revised Statutes referred to, with one exception and with some variations, were originally taken), making it the duty of all the partners to see that the requirements of the act are complied with, the failure of the county clerk to perform the duty of recording the certificate, which is cast upon him by virtue of his office and by direction of the statute, should not prejudice the party availing himself of its provisions; inasmuch as what had previously been made a duty of the party was by the legislature dispensed with in the revision of the statutes. It is insisted that this omission indicates an intent to change the law. The provisions of the act of 1822 are, in the sixth section, that "before any partnership under this act shall be carried into effect, the name or firm under which the same is to be conducted and the names of all the general and special partners interested therein, distinguishing them and their places of residence, shall be registered in a *Page 599 
book to be kept for that purpose at all times open to public inspection, in the office of the clerk of the county in which the principal business of the partnership shall be carried on."
The seventh section required the registry to designate certain other facts relating to the proposed limited partnership. The eighth section made it "the duty of all the partners interested in any such partnership to see that the requirements of the sixth, seventh, eighth and twelfth sections of the act are complied with," and further provided that "in case the same shall be neglected or a false registry be made, all the parties interested in such partnership shall be liable for all the engagements thereof as general partners."
The twelfth section provided "that the registry required by this act shall not be made by the clerk of the county, or be considered valid, unless all the partners general and special * * * shall make and sign a certificate or declaration * * * containing the statements required by the sixth and seventh sections of this act, which shall be filed of record in the said clerk's office." It will be observed that while in the revisions of the statutes the certificate itself must be recorded at large in a book kept for that purpose, in the act of 1822 the corresponding book was to register the composition, terms and conditions of the partnership, and the certificate was to be filed as the clerk's warrant for making the registry. None the less, however, the provision was explicit that the registry must be made before any partnership under the act could be carried into effect. The provision in the eighth section of the act of 1822, making it the duty of all the partners to see that the requirements of the law were complied with, did not impair the force of the previous language, which made the registration a condition, upon the strict performance of which the existence of the limited partnership was to depend. At most, the provision of the eighth section was declaratory, and added nothing to the effect of the failure to register the matters mentioned. It imposed no penalty as such. It simply declared the effect of the neglect of a compliance with the provisions of the act. It was wholly unnecessary to the objects of that *Page 600 
act, that any such declaration should be made, and its omission in the revision of the laws cannot be regarded as any evidence of the intention of the legislature to relax the statutory requirements.
The enactment was intended to relax the common law rule only upon well defined and prescribed conditions, and is for the benefit and protection of the special partner; but like many other statutes in derogation of the common law, its provisions are to be construed strictly and should not be extended beyond their express words or clear import. (McClusky v. Cromwell,11 N.Y. 593-601.) In the construction of statutes, effect is to be given to the intention of the legislature and the object of the enactment, with the necessary qualification, that the intention must be such as the legislature have used fit words to express. (Potter's Dwarris on Statutes, 192.) And in Maxwell's work on the Interpretation of Statutes (page 4), it is well said "when once the intention is plain, it is not the province of the court to scan its wisdom or policy. Its duty is not to make the law reasonable, but to expound it as it stands, according to the real sense of the words." Or as Judge DENIO said of legislative acts in People v. Board of Supervisors of New York (16 N.Y. 432), "it is by the written language that their sense is to be ascertained."
I think the object of the statute we are considering is plainly expressed in apt words to convey the legislative intent. A certificate stating the composition, duration, terms and conditions of the proposed limited partnership shall be recorded at large in a book kept for that purpose, open to the inspection of all whose interest it may be to acquaint themselves with such facts. And when, after providing for the making and recording of such a certificate, the legislature say: "No such partnership shall be deemed to have been formed until a certificate shall have been made, acknowledged, filed and recorded, or until an affidavit shall have been filed," their plain intent is unmistakable that the recording of the certificate, as well as the filing of the affidavit, should precede as facts a legal existence of the limited partnership and a legal exemption *Page 601 
of special partners from the common law liability attaching to general partners. That the legislature did attach a vital importance to the recording of the certificate and intend that proof of its having been done should be a prerequisite to any claim to immunity under the statute is also clear, from the distinction, created in the provision in question, between the filing and recording of papers. The certificate must be not only filed, but it must be recorded, while the affidavit, spoken of in the same sentence, is to be simply filed. Nor is this view open to criticism for harshness or injustice. To hold otherwise would render nugatory a plain provision of the law made for the benefit of all and designed for publicity and security, compliance with which is possible to effect. I see no inconvenience in requiring of those who propose to unite in the formation of limited partnerships, that before contracting obligations in their new relation they should ascertain if the provisions of the statute, whose protection they seek, have been in all respects strictly complied with. They should see that the prescriptions of the statute, which confers the privileges and the immunities, have become accomplished facts. It is the province of the court in cases arising under the statutes to execute the law as it is written, where not in conflict with the Constitution, and it is to be governed by strict rules of law and should not be moved by considerations of the peculiar hardships of a case to usurp the function of the legislature. The current of judicial opinion in this state bears out our views of the necessity for a strict construction of the provisions of this statute. Reference to the decisions of other courts seems needless for us upon a question arising under one of our own statutes.
In Madison County Bank v. Gould (5 Hill, 309), Judge BRONSON held that partners "are all alike answerable to third persons for the debts of the firm, unless a limited partnership was formed * * * in the manner prescribed by the statute." InVan Ingen v. Whitman (62 N.Y. 513), Judge FOLGER says of this statute, that it "does not set out to deal with motives, but with acts and their results, and it guards the *Page 602 
public, not by requiring good intentions, but a certain act done in a certain mode and a true statement that it has been done thus."
In re Merrill (12 Blatchf. Cir. Ct. Rep. 221), a case arising under our statute, Judge WOODRUFF says, "we are bound by the statute and the parties cannot claim under the statute, which derogates from the general rule of law, without showing a strict compliance with the statute."
In Haviland v. Chace (39 Barb. 283) Judge PECKHAM in a well considered opinion held that "in the statute under consideration the mode and manner in which a person may become a special partner are carefully pointed out, and it is obviously the general purpose of the statute to make such person a general partner if he fail to comply with those provisions. In fact it would seem to follow as a matter of course that such person would be a general partner if he failed to comply with the provisions that make him a special partner, though no express declaration to that effect were contained in the statute. It is only by forceof the statute that his liability is limited." And see Argall
v. Smith (3 Denio, 435); and Bell v. Merrifield (28 Hun, 219, 222).
The appellant's position is not helped by reference to decisions under the manufacturing act of 1848. Section 10 of that act provides that "all stockholders of every company incorporated under this act shall be severally individually liable to the creditors of the company, in which they are stockholders, until the whole amount of capital fixed and limited by such company shall have been paid in and a certificate thereof shall have been made and recorded, as prescribed in the following section." The following section requires that "the president and a majority of the trustees, within thirty days" shall "record" in the county clerk's office a certificate stating the amount of the capital fixed and paid in.
The distinctions between the two acts are very obvious. Under the statute relating to the formation of limited partnerships the partnership is not "deemed to have been formed until the certificate shall have been made, acknowledged, filed and *Page 603 
recorded," while under the manufacturing act the corporation must have been, as a fact, formed and its stockholders are deemed to be at all times members of it and retain all the privileges and benefits pertaining to that relation, despite the failure to record the certificate. The manufacturing act simply imposes an additional liability upon, but does not affect the corporate relations of the stockholders. The provision as to recording is clearly only directory. I am quite unable to understand the force of any reasoning founded on analogy of the statute, whose provisions we are construing, with the manufacturing act of 1848. The opening language of the limited partnership act conveys the notice that such partnership may be formed "upon the terms, with the rights and powers, and subject to the conditions and liabilities herein prescribed." In this language, taken with that of the other sections of the statute which we have cited, this statute speaks with no uncertain sound and the most casual reading makes it obvious that its purpose is not to extend its immunities and privileges unless every one of its terms and its conditions shall have been strictly complied with. Certainly where one seeks its shelter, desiring exemption from a general liability resting upon all partners at common law, is it assuming too much that he should be required to scrupulously follow the plain requirements of that act, and to ascertain if compliance can at all times be shown by him to have been had with all of its terms and conditions? But in the manufacturing act of 1848, there are no terms or conditions precedent upon which the status of the members of the corporation is made to depend. The corporation becomes such upon the filing of the certificate of incorporation, and the further clauses of the statute regulate the mode of management of the corporate affairs in its relations to its members and to the government. The obligation to execute and record the certificate of payment of the capital stock which is imposed upon the company's president and trustees, is a direction in the act to them; non-compliance with which exposes them, in common with all other stockholders, to an additional liability as such, but in no sense *Page 604 
affects their incorporation or legal existence as a corporate body or the powers and privileges conferred upon such corporation by the laws of the state.
Lord MANSFIELD said "there is a known distinction between circumstances which are of the essence of a thing required to be done by an act of parliament and clauses merely directory." (Rex v. Loxdale, 1 Burr. 447.)
The opinion of the court in Veeder v. Mudgett (95 N.Y. 295), arising as it does under the manufacturing act, is therefore inapplicable and it becomes unnecessary to consider the various views which led the majority of the members of the court to decide as they did.
We think no legal error was committed in refusing to submit the case to the jury, and that the judgment should be affirmed.
All concur for reversal except RUGER, Ch. J., and GRAY, J., dissenting.
Judgment reversed.