Court Opinion

ID: 6615084
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:21:29.207037+00
Date Added: 2024-06-11T15:58:29.937591
License: Public Domain

Ellison, J.,
Dissenting. — I do not agree to any portion of the opinion of the majority. The fact that the statute is an important one and has not before been considered in this state, justifies me in giving my reasons for non-concurrence. If one desires to enter into a business association with others he may do so at his pleasure, but if he wishes to secure to himself certain *466exemptions not common to an ordinary partnership, he may do so only “upon the terms and subject to the conditions and liabilities in this chapter.” Section 3401. This statute “of limited partnerships ” is in derogation of the common law and must, therefore, receive a strict construction, if indeed there be room for construction of a statute so positive, so plain and so explicit in all its parts. It is but the plain arbitrary expression of the legislative will, and “equitable constructions are 'never given to mere arbitrary regulations of matters of public policy.” Sedgwicks Construction of Statutes, 251. “ The rule is, as we shall constantly see, cardinal and universal, that if the statute is plain and unambiguous, there is no room for construction or interpretation. The 'legislature has spoken; their intention is free from doubt, and their will must be obeyed.” It. 194. The Supreme Court of the United States has said in Fisher v. Blight (2 Cranch 358 399), that ‘‘ where a law is plain and unambigous, whether it be expressed in general or limited terms, the legislature should be intended to mean what they have plainly expressed, and, consequently, no room is left for construction.”
The admitted facts in this case are that the defendant and his associates made the statement, set out in the opinion, under solemn oath.
The further admitted fact is, that all the material portions of this statement are false. It will be surprising to those who may examine this case to say it is admitted that the sworn statement was false and known to be so by the affiants, when made. Yet it is nevertheless true, that instead of their having contributed $2,500 each, as they each made oath, there was not a farthing contributed, or set apart, or pretended to be, either directly or indirectly. The statement was made March 10, 1883, while the payments therein sworn to have been already paid in, were not made till the latter part of the following month; when on April 23, Ross paid in his $2,500, April 18, defendant paid in six hundred dollars, *467and April 24, $1,900, and by Glessner on said last date $1877.65 ; $1103.80 of which was not in cash.
It is said the statute does not require a statement of what the general partners contribute, nor what they will draw out, and that this portion of the statement should be treated as surplusage. Passing that for the present, I will look merely to what has been stated, and what is required to be stated, by defendant, relating to himself as a special partner. He says, at the time he is making the statement and swearing to its being the truth, that he contributed, that is, he has already contributed, $2,500.00; the word/‘contributed,” refers to the past, something already done. He says the “cash capital paid up ” is $7,500.00, of which his forms one-third. No portion of this statement was true, and he knew it was untrue when he subscribed and swore to it. But it is said it was substantially true. This expression can mean nothing else than that the substance of it was true, when in fact it was false in every particular. The substance of the statement and the literal statement here, are one and the .same. He swore he paid it and had not, that was all there was of it.
He recorded this sworn statement April 19, when he had only paid six hundred dollars of the $2,500, the day before; he, therefore, recorded the falsehood. He published the statement April 20, and he did not pay the balance of the $2,500, till April 24; he, therefore, published the falsehood. So I repeat, that notwithstanding the statute is so particular to have this statement contain the truth, that it holds ajar the gates of the penitentiary for him who falsifies it, yet a statement, conceded to be false in every material particular, is held to be sufficient.
An affidavit that money was paid on March 10 is not rendered true by a payment six weeks later. It irresistibly follows from the majority opinion that neither statement nor affidavit is necessary, for I feel safe in asserting my brethren would much more quickly grant immunity to this defendant, if he had made no affidavit *468at all, but had paid the money, than they have in this case, where he makes a false one. For any one will see that it is better not to swear at all, than to swear falsely. I take it, the opinion of the majority stands alone in all judicial history in holding, that where an affidavit is a necessity, a false one will'suffice.
The fact is, there is no statement or affidavit, as to defendant’s payments, in evidence. His affidavit refers to payments on March 10 or prior, while the testimony is as to payments made in the latter part of April. I must assume that the payments spoken of in the affidavit and those in the testimony are not the same. In the first place they cannot in fact be the same ; that is impossible ; and they cannot have been meant to be the-same, for that would convict defendant, of perjury.
But while, as before stated, this statute has not been considered in this state, it has frequently been presented to the courts of other states.
In the case of Smith v. Argall (6 Hill, 479), it was decided by the supreme court of New York that “ where the terms of the partnership were published in two newspapers, but in one of them the sum contributed by the special partner was stated to be five thousand dollars, when, in fact, it was only two thousand; held, that though this occurred through the mere mistake of the printer, and the other requisites of the statute had been fully complied with, the associates were liable as general partners. To maintain an action against the associates as general partners in such, case, the plaintiff need not prove that he was actually misled by the, error in publishing the terms of the partnership.” That decision was rendered in 1844. The case went to the court of errors, and the decision of that court affirming the judgment of the supreme court may be found in Argall v. Smith (3 Denio, 435.) It was there said that, “if they fail in this (publication) the consequence is declared in plain terms : ‘ the partnership shall be deemed general.’ In this the courts have no discretion. They have only to. *469declare the will of the legislature. The publication of •different terms ’ in two papers, in one of which they are untruly stated, can be no better than to omit a publication altogether. Where a statute creates new rights, exemptions, and immunities, dependent upon a compliance with precedent conditions; that such 'conditions must be substantially and even strictly complied with needs the citation of no authority to prove.”
In the case of Van Ingen v. Whitman (62 N. Y. 513), in giving judgment against the defendant, Folger, J., used the following significant and explicit language: “The amount contributed by the special partner is an essential part of the terms of the partnership. (Id.) The mode of contribution is just as explicitly fixed as .that there shall be a contribution; and it is just as .explicitly required that the mode of contribution prescribed by the statute shall be followed, and shall be averred in the affidavit, as that there shall be an amount of contribution, and that the true amount shall be stated. To guard against unsafe practices, and to secure the public against even innocent deception or mistake, the statute demands this.”
In that case the same argument was urged before the court as to the statement being substantially true as is made by the majority here. In that case there was much more reason to say the statement was substantially true than in this, for there the sum was actually contributed, at the time stated, in credits admitted to be good and convertible into cash. In this case there was no truth in the statement whatever, and, as stated, before, there was no money or other things paid, directly or indirectly. The italics in this quotation are my own, .and it is to call attention > to the fact that the mode of contribution must be followed explicitly.
Again, before the same court, this question was considered in Durant v. Abendroth (69 N. Y. 148). In that case the facts were as follows: The defendant, Abendroth, defended on the ground that he was a *470limited partner in the firm of Griffith & Windramy while the plaintiff, who was a creditor of the firm, claimed that defendant was a general partner with the other two members of the firm. The certificate for the formation of the limited partnership was made, acknowledged, sworn to and filed December 23, 1870, and stated .that the partnership was to commence on the-first day of January, 1871. The payment of the-special partner’s contribution was made by a check drawn by him for the amount thereof the same-day the certificate and affidavit were made, but the check was post-dated to December 31, 1870, and was paid as soon as the check was sent to bank, January 2, 1871, 'the first day of January, 1871, being on Sunday. The New York court of appeals, per Rapallo-, J., in giving judgment against the defendant, used the-following language: “The certificate and affidavit speak as of the day of their date. They are not promissory, but state what had been done. Unless, therefore, the capital had on that day been actually paid in cash, the statements cannot be said to be true. ' Neither the honest intention of the parties that it should be paid at or before the time appointed for the commencement of the partnership, nor their good faith manifested by the actual payment in-cash at that time can remedy the defect, if the paymant had not been actually made in cash when the certificate and affidavit were made and filed. The statute peremptorily requires an affidavit that the capital has been actually paid in cash, and withholds its protection from the special partner if the affidavit be not true. However honest the intentions of the parties may be, if this affidavit is not absolutely true the consequences prescribed by the statute must follow, and they cannot be averted by a subsequent payment, nor by the consideration that no injury resulted to any creditor from the affidavit not being true when made. The payment in this case was made by a check of the *471special partner, dated, and, therefore, payable, on the thirty-first of December, 1870. This clearly was not cash on the twenty-third, when it was delivered to the general partners and the affidavit was made. The capital was in fact paid on the second of January, but no affidavit of that payment was filed as required by the statute. The affidavit prematurely made on the twenty-third could not be' made true by that subsequent payment. The parties have made a careless, though no doubt innocent, mistake; but they have failed to comply with the statute, and the special partner is, therefore, deprived of its protection.”
This case, if possible, more emphatically than the others meets every argument advanced in the case before us. Notwithstanding the check given was actu ally paid on the day the partnership began and that no injury resulted to any creditor, the defendant was held liable as a general partner. The question has also arisen in the supreme court of Massachusetts, in the case of Haggerty v. Foster (103 Mass. 17), where it was held that, “it is wholly immaterial that the transaction at the time was honestly intende 1 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.”
But it is said that the statutes of New York and Massachusetts are not like ours, and by this assertion the majority relieve themselves of the obligation to follow the interpretation given to these statutes. For it is familiar law, that when a statute of another state is incorporated in our law, we adopt its construction. A perusal of our statute in connection with that of New *472York will show them, to be identical in object and meaning, though not literal copies. The St. Louis court of appeals so thought in 10 Mo. App. 185, It is literally true that every requisite toa special partner’s exemption from general liability prescribed by the New York statute is demanded by our statute. Our statute in addition, says that if the money is not actually paid by the special partner when the statement is made, he shall state when it will be paid. And while each requires an affidavit, our statute adds, that if it be false when made, the affiant shall be guilty of perjury, a consequence which would have followed without being here inserted.
Our statute does also' say that the partnership shall not be deemed formed until publication is made, while the New York statute says it shall not be deemed formed until the statement is recorded and the affidavit filed. Yet the succeeding New York section requires publication Avhen recorded. It is apparent that the special partner in New York would have no exemption from his general liability except the publication be made as required; indeed, such is the express decision in 6 Hill, supra, and so far as exemption from liability as a general partner is concerned it does not take place in either state until publication. From this, then, it will be seen that the statutes are identical, except that ours permits payments after making the statement, but requires it to be so stated and sworn to.
Again, in the statement defendant made oath to the following:
“Each of the partners hereto, both general and special, Avill, if they select so to do, draw annually out of the earnings and income of said partnership business, one-third of said earnings and income for his individual use, after deducting all necessary expenses incurred in conducting the said limited partnership business.”
Yet on the same day, these same affiants privately enter into a secret agreement containing the following provision:
*473“ It is agreed hereby that the general partners shall draw annually a salary of nine hundred dollars per year for each of them, but that each general partner shall be charged up for each day not actually engaged in the transaction of the firm business at the rate of three dollars per day. ”
This latter stipulation is in direct violation of section 8405, which provides that:
“The partnership formed under this chapter shall be deemed to be dissolved when there is a change in its partners or in the nature of its business, or a .withdrawal of any of its capital, or a diminution thereof, otherwise than by losses in its business and the drawing out of its means the annual amount allowed to each partner for his use, as originally agreed upon and set forth in said ■statement, and if the partnership be carried on after such an act of dissolution, every special partner cognizant thereof shall be deemed a general partner and be liable as such.”
This secret agreement is positive in its terms and permits the withdrawal of eighteen hundred dollars per annum by Grlessner & Hoss regardless of whether the concern is making or losing money.
The secret agreement is in direct violation of the sworn statement, for, by the latter, they could only elect to withdraw one-third each of the net earnings and income, leaving the original capital intact; by the secret agreement they could each draw nine hundred dollars a year regardless of whether there is a net income; and thus sap the original capital. They had the same right and power to make the sum $2,500 each, as. well as nine hundred dollars, and thus, if there were no net earnings, wipe out the whole capital the first year and let creditors make the most of it.
It is, however, said in the majority opinion, that the statute does not require a statement from the general partners as to what they will draw out, nor as to what they contribute and that the statement made may be regarded *474as surplusage. But it must be borne in mind that it is a statement made by defendant; he states what the others will do, and by a contemporaneous writing agrees in effect to nullify it. I hold this to be fraud upon his part, which withdraws from him the privileges of a special partner. It is a deception to the public and a most material one. In the public statement he says the original capital shall not be touched by either of them. In the secret one, he says they may gradually draw out all the original capital and run the business without it.
So while the statute does not demand that the statement shall contain the amount contributed by the general partners, yet defendant for some purpose, does so state. The opinion excuses him for the statement in regard to his own payments because he did afterwards make them. But defendant makes affidavit on March 10, that Grlessner has paid $2,500; when, in fact, he has not paid that amount to this day. He has only paid, in cash, $773.85, and this on April24. He paid, in goods, which does not satis f'y the law or the statement, $1,103.80; leaving $622.35 not yet paid. This portion of the statement can not be treated as surplusage. It is common knowledge that the fact of any business institution having paid up capital gives it position, standing, and credit with the business world and enhances the security of those dealing with it. This is so well known and recognized that laws are passed requiring many institutions to have certain paid up capital. Here we have defendant advertising under his oath that there was a certain amount of paid up capital, not true when the affidavit was made, not true when it was recorded, not true when it was published, and not yet true. This was a fraud practiced under the forms of the statute and has the effect of withdrawing from defendant the immunity the statute only gives to those who comply with its terms.
Since the above was-promulgated, the concurring opinion by Philips, P. J., has been filed. I deem it proper to add that I discover nothing in it to change the views already expressed. The illustrations given do not, *475in my judgment, add to the force of the position taken. If Hebrews or Grentiles were debt paying commodities, as money is, the illustration would be more apropos. So with the illustrations as to the payment of one thousand dollars at given times, it might well be said that a payment is a continuing thing. An obligation paid or discharged yesterday, is still paid and discharged to-day while an obligation paid to-day, may not have been paid' yesterday. But if it should be conceded, which I by no means do, that there was no good reason for following a plain, unambiguous legislative act, yet, heed given to the maxim, so often called upon by the supreme court of this state, that “the statute stands for a reason,” would solve this question with ease, as well as render obedience to a proper exercise of legislative power.