COLUMBIA LAND & CATTLE CO. v. DALY. SAME v. MURKINS. (Supreme Court of Kansas, 1891. 46 Kan. 504, 26 Pac. 1042.) HORTON, C. J. The same questions are presented in both cases, and therefore we consider them together. The Columbia Land & Cattle Company is a corporation organized under the laws of Colorado. In the first case Thomas Daly brought his action against that corporation to recover the value of certain goods, wares, and merchandise alleged to have been purchased by D. B. Powers, as a "special partner" of the corporation, and also for the amount of certain sight drafts made by D. B. Powers upon H. S. Halley, the general manager of the corporation. The total amount of these claims is $529.70. In the second case Joseph Murkins brought his action against the corporation and D. B. Powers, the "special partner," to recover $224.50 for use of a pasture. The corporation in both cases filed verified. answers containing general denials, and also denials that D. B. Powers was a "special partner" or any other partner of the corporation. There was no further appearance on the part of the corporation, and judgment was rendered against it for the several amounts claimed. The case is brought here by the corporation upon the ground that, under the pleadings, the plaintiffs below were not entitled to recover. Both of the petitions, as amended, allege that D. B. Powers is a "special partner" of the corporation, and as such partner made the corporation liable for the amount sued for. A pleading is always construed most strongly against the pleader, and the allegation in the amended petitions concerning D. B. Powers, as a "special partner," under the provisions of paragraph 3992, Gen. St. 1889, renders the petitions fatally defective: "A special partner may, from time to time, examine into the state and progress of the partnership concerns, and may advise as to their management; but he shall not transact any business on account of the partnership, nor be employed for that purpose as agent, attorney, or otherwise. If he shall interfere, contrary to these provisions, he shall be deemed a general partner." Gen. St. 1868, c. 74, § 16. The corporation could not be made liable upon the contract or purchase of D. B. Powers as a "special partner." He had no author. ity, under the allegations of the amended petitions and the statutes, to bind the corporation or partnership; therefore, upon the amended petitions, the plaintiffs below were not entitled to recover. The judgments will be reversed, and the causes remanded. GIL.PART.-40 * JAFFE v. KRUM. (Supreme Court of Missouri, 1886. 88 Mo. 669.) BLACK, J. The agreed facts, show that O. M., Jaffe and William Robertson made a limited partnership under the statute of this state, the business to be conducted under the name of William Robertson; Jaffe being the special partner. All the statutory prerequisites were complied with. The special partner thereafter advanced to the firm $15,503.96 as a loan, having previously paid in his entire contribution, as agreed upon in the written partnership agreement. Thereafter the partnership became insolvent, and Robertson, for the firm, made a deed of voluntary assignment. Jaffe, who had his demand allowed by the assignee, now claims to be entitled to share pro rata with the other creditors as to his demand arising from the loan. The assignee denied to him this right, and so did the trial court. The general scope of the statute with respect to limited partnerships is to provide how they may be formed, to exempt the special partner from personal liability for the debts, to deprive him of all power to manage the affairs, and to determine when and under what circumstances he shall be held as a general partner. Section 3409 is as follows: "If the partnership becomes insolvent, no special partner shall be paid as a creditor of the firm, or receive the benefit of any lien in his favor as such until the other creditors of the firm are satisfied." The common law determines the rights and liabilities of partners in general, and that law governs in those limited partnerships where no contrary provision is made by the statute. Marshall v. Lambeth, 7 Rob. (La.) 471; Ames v. Downing, 1 Bradf. Sur. (N. Y.) 326. Now there is no room for doubt as to what the section of the statute above quoted means. In case of insolvency of the partnership it ́excludes, or rather postpones, the special partner as a creditor until the other creditors are satisfied. Advances made by him to the partnership by way of a loan are clearly within its terms. It cannot be confined in its operation to the advances made by way of contribution to the capital under the articles of partnership. That would render the section wholly useless, for without it there is nothing in the statute which would permit the special partner to share with the other creditors as to his part of the capital invested. The whole scope of the act is to the effect that he subjects that to the hazards of the enterprise. The lawmakers have used emphatic language, and we have nothing to do but abide by their words. Other courts have reached the same conclusion upon statutes in substance the same as the one under consideration. White v. Hackett, 20 N. Y. 179; Mills v. Argall, 6 Paige (N. Y.) 577; Ward v. Newell, 42 Barb. (N. Y.) 482; Dunning's Appeal, 44 Pa. 150. The judgment in this case is affirmed.1 1 In Clapp v. Lacey et al., 35 Conn. 463 (1868), it was held that the special partner could prove and share ratably with other firm creditors for all claims except his claim for capital. TILGE et al. v. BROOKS et al. (Supreme Court of Pennsylvania, 1889. 124 Pa. 178, 16 Atl. 746, 2 L. R. A. 796.) PAXSON, C. J. The defendant below, Matthew Brooks, was sued as a copartner with W. Howard Brooks and A. May Stevenson for a debt admittedly due by the firm of W. Howard Brooks & Stevenson. The grounds upon which this claim rested are these: Matthew Brooks had intended and attempted to form a partnership with W. Howard Brooks and A. May Stevenson, in 1871, as a special partner. This special partnership was in fact a renewal of one made in 1866. The renewed partnership expired in 1876, when Matthew Brooks retired from the firm. The sales for which it is sought to make him liable were made in 1881, or about five years after dissolution of the firm of which he had been a member. When he retired, no notice was given of the dissolution. It was claimed-and I do not understand it to be disputed-that there were such irregularities in the formation. of the special partnership as to make the special partner liable to the penalties provided by the act of Assembly in such cases. The eighth section of the act of 21st of March, 1836 (P. L. 1835-36, 143), in regard to limited partnerships, provides that, "if any false statement be made in such certificate or affidavit, all the persons interested in such partnership shall be liable for all the engagements thereof as general partners." There can be no doubt that during the time the defendant Brooks was a member of this firm he was liable for its engagements by reason of his noncompliance with the statute. The plaintiffs below claim that he was in point of fact a general partner, and was liable, after he left the firm, to creditors, by reason of his failure to give notice of his withdrawal; and a number of authorities are cited in support of this proposition, among others, Andrews v. Schott, 10 Pa. 47, where it was said by this court: "For, unless the conditions of the act are substantially observed, all the defendants are general partners." The language quoted from Andrews v. Schott would seem to be justified by the phraseology of the act of 1836, as, for instance, "if the special partner transact any business on account of the partnership, or be employed for that purpose as agent, attorney,, or otherwise, he shall be deemed a general partner." Like instances might be given from other sections of the act. But, when the act declares that under certain circumstances a special partner shall be deemed a general partner, it certainly does not mean that he is in fact. a general partner; indeed, there is in the language an implication that he is not. Nor do I see how the Legislature can make a man a member of a firm without his consent and the consent of the firm. It may, indeed, make him liable for the debts of a firm as though he were a general partner; and this is all the Legislature probably intended to do. The confusion upon this subject may be occasioned by the inaccurate language sometimes employed in referring to it. A man who is not a member of a firm may yet make himself liable to its creditors by holding himself out to such creditors as a partner. Yet in fact he does not become a partner. He is merely liable as a partner. There being no general partnership, so far as Brooks was concerned only a liability on his part for the debts of the limited partnership because of its irregularities-we see no reason why he should have given notice of the dissolution of a partnership which never existed. Haviland v. Chace, 39 Barb. (N. Y.) 283, was decided upon the New York statute, and is not consistent with our own act of 1836; nor are authorities elsewhere of much service to us in construing it. Under our statute no general partnership was formed. It does say that an omission to comply with its requirements shall have the effect of creating a partnership not intended by the parties. Judgment affirmed. INDEX. [THE FIGURES REFER TO PAGES.] ACCOUNTING AND DISTRIBUTION, in general, 484-498. without dissolution, 472, 480. in illegal partnerships, 139. ACTIONS, between partners, at law, 71, 451-470. independent transactions, 462. for breach of partnership agreement, 461. for deceit, 464. between partners, in equity, 470-483. accounting without dissolution, 472, 480. specific performance of partnership agreement, 479, 480. by firm creditors, of partner's separate property, 499, 503. BANKRUPTCY, application of assets, 558-587. collateral, proof by creditor holding, 563, 564, 566 n discharge in, what debts barred, 584. dissolution, cause for, 603. double proof, 561, 563. limited partnership, proof by special partner, 626. of firm, right of solvent partner to control assets, 578, 583. of one partner, effect on actions against firm, 581. proof between firms having common member, 572. by firm against separate partner, 573. by firm creditors against separate partner, 541, 545, 584. by partner against partner, 576. |