Caplan v. Caplan

198 N.E. 23, 268 N.Y. 445, 101 A.L.R. 1223, 1935 N.Y. LEXIS 958

• Court: New York Court of Appeals
• Decided: October 1, 1935
• Status: Published

Opinions

Lehman, J.

The plaintiff has brought an action against the members of a partnership, jointly and severally, to recover damages caused by the negligence of one partner while driving an automobile in the business of the partnership. The pleadings disclose that the negligent partner was the husband of the plaintiff. On that ground the plaintiff’s right to bring the action has been challenged.

“ A wife may not maintain an action against a husband nor a husband against a wife, for personal injuries, whether negligent or willful.” (Schubert v. Schubert Wagon Co., 249 N. Y. 253, 255; Schultz v. Schultz, 89 N. Y. 644; v. Allen, 246 N. Y. 571.) To that extent the common-law doctrine still prevails that in marriage the persons of husband and wife become merged, and neither is hable for injuries wrongfully inflicted upon the other. The immunity does not extend to others who wrongfully inflict personal injuries upon a wife even though the husband be used as agent. (Schubert v. Schubert Wagon Co., supra.) All the members of a partnership are jointly and severally hable for torts committed in the course of the partnership business by an employee (Roberts v. Johnson, 58 N. Y. 613), or by a partner (Kavanaugh v. McIntyre, 210 N. Y. 175; affd., 242 U. S. 138). In all the cases where, heretofore, liability has been imposed for the acts of an agent or partner, the defendant has been a person, natural or artificial, other than the husband of the plaintiff. Now the problem arises whether a wife may sue the members of a partnership which includes her husband, upon a cause of action which she could not maintain against her husband if sued alone.

A partnership is not, like a corporation, an artificial person created by law and existing independent of the persons who create or control it. We have said that “ the acts performed in the name of a partnership cannot ordinarily be considered apart from the persons composing it. A partnership is not like a corporation, which is a legal entity having certain rights and subject to defined liabilities. * * * It has a name by which individuals conduct a joint business and in which their accounts as such are kept, and through which certain established equitable rights in marshaling assets are of Peck, 206 N. Y. 55, 60.) True, because a partnership conducts a joint business and holds its property jointly; because ordinarily it keeps accounts of that business, and because its members are jointly hable upon its obligations, and its creditors may look primarily to the joint property for satisfaction of its obligations, a partnership is regarded among business men as possessing some of the attributes of a separate entity (Hartigan v. Casualty Co., 227 N. Y. 175; Jones v. Blun, 145 N. Y. 333); but it appears even from these cases that in law it is not a separate entity. It is defined by the Partnership Law (Cons. Laws, ch. 39), section 10, as “ an association of two or more persons to carry on as co-owners a business for profit.” Its obligations are the. joint obligations of its members, but like other joint obligations may at times be satisfied by proper proceedings out of their separate property, and, when sued, all the joint debtors must be named as parties defendant.

In the field of liability for torts it is especially apparent that a partnership cannot be regarded as an entity independent of the persons who compose it. In that field it has been said often that liability is joint and several. Perhaps it would be more accurate to say that the members of a partnership are treated like other persons who jointly commit a tort, either in person or by the hand of an agent. All may be held jointly for the tort so committed, or each may be sued individually. So we have said that “ the plaintiff may proceed against any one, all, or such number of the wrongdoers as he may choose.” (Roberts v. Johnson, 58 N. Y. 613, 616; Kavanaugh v. McIntyre, 210 N. Y. 175; affd., 242 U. S. 138.)

The joint liability is, at least, analogous to a true partnership liability and entitles the injured person to payment out of the partnership assets in preference to the individual creditors of the partners; the individual liability of each partner gives rise to a preference to payment out of his separate estate over other creditors of the partnership. Thus a judgment against all the members of a partnership jointly and individually may be satisfied out of the joint assets of the partnership or the separate assets of each partner, and upon insolvency and marshaling of assets the judgment creditor is preferred in the distribution of both joint and separate estates. (Matter of Peck, 206 N. Y. 55.)

The argument that a husband, though immune from liability to his wife for injuries inflicted by him upon her person, should still be liable to her jointly or individually for injuries when inflicted by a partnership of which he is a member, is without substantial foundation. Certainly if the others who joined in the tort are disregarded and the husband is sued individually for his own wrong he cannot be held liable. Nor is the situation different when the husband is sued as a member of a copartnership to enforce his joint and individual liability for acts committed through an agent by the partnership. There, as we pointed out in the Schubert case, liability must not be confused with culpability. The liability of a principal for his wrong committed through the hand of an agent upon the person of the wife exists though the relationship of husband and wife disables the wife from suing her husband. Conversely a wife may not sue a husband for a trespass upon her person, whether committed by the husband in person or through his agent. Upon no principle, based either on reason or tradition, can immunity of a husband for wrong committed in person be reconciled with liability for wrong committed by a husband through the hand of an agent.

Here also there can be no distinction between liability that is joint and liability that is individual. The quality of the wrongful act is not changed by the circumstance that others may have joined in its commission, nor is the nature of the liability of those who have joined in it. The injured party has the right to choose those against whom liability is to be enforced and may join those selected as defendants in one action. Right to select those against whom liability is to be enforced does not embrace a power to impose liability against one to whom the law grants immunity nor does it remove any disability to sue. Thus no action may be maintained by a wife against a husband, either individually or jointly, for a trespass upon her person by her husband, and since he is not hable for such a wrong jointly with his partners, it follows that no judgment can be rendered against all the members of the partnership and in consequence against the partnership itself; for a partnership liability is a joint liability of all tbe partners and there can be no judgment against the partnership except in an action against all the partners to enforce their joint liability.

The question remains whether another partner may be held individually liable in such case. Doubtless if the trespass had been committed by an employee rather than a partner who was immune from liability, an action might be maintained against any partner individually. (Roberts v. Johnson, supra; Schubert v. Schubert Wagon Co., supra.) Does the circumstance that the trespass was committed by a partner who is himself immune from liability dictate a different rule? Though culpability should not be confused with liability, it seems unfair that one partner should be held responsible for the wrong of another partner who enjoys a personal immunity. Nevertheless an injured party should not be deprived of right to compensation from any person who through an agent has wrongfully injured her, because she rests under a disability to maintain an action against all those who were parties to the wrong.

We have assumed, so far, that the husband acted as the agent of the partnership when he injured his wife, because he was then driving an automobile in the business of the partnership. For most purposes a partner may be regarded as the agent of the partnership in connection with all acts performed by him in the course of the partnership business, yet in some respects that is not entirely true. (Cf. Partnership Law, § 4, subd. 3; § 20, subd. 1.) Perhaps it would be more accurate to say that “ each partner acts, as to himself, as a principal, having a joint interest in the partnership property, and, as to each other partner, as a general agent.” (First Nat. Bank v. Farson, 226 N. Y. 218, 221.) Even insofar as a partner acts as general agent of his partners, the circumstance that he at the same time acts as principal as to himself produces some complications, and the rules of agency cannot always be applied as if no such complications existed. (See Burdick on the Law of Partnership [3d ed.], p. 210; Guarantee Trust & Safe Deposit Co. v. Drew Investment Co., 107 La. 251, at p. 256.)

The responsibility of all the partners for the act of a partner in the course of its business flows from the relationship of copartners. Each has actual or apparent authority to bind all the partners by acts in the course of the partnership business, and ordinarily all are responsible for torts committed in the course of the joint business. Where the law grants to a partner immunity from liability for his own acts there can be no partnership liability asserted against all the partners, and the foundation of liability arising from a joint venture fails. Then, to hold the other partners individually liable for fault of a copartner, though the erring partner is immune, would create an anomaly. Freedom from liability by all the parties in such case is not an extension of the personal immunity of the erring partner. It arises from the fact that partners are hable for the acts of a copartner in a business carried on by them jointly only within the field where liability is joint. For these reasons the plaintiff cannot maintain an action against the defendants or any of them jointly or severally for the wrong committed by her husband.

The distinctions we have pointed out are, indeed, embodied in the Partnership Law. Section 24 provides: “ Partnership bound by partner’s wrongful act. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership, or with the authority of his copartners, loss or injury is caused to any person, not being a partner in the partnership * * * the partnership is liable therefor to the same extent as the partner so acting or omitting to act.” Section 25 is entitled: “ Partnership bound by partner’s breach of trust,” and provides that the partnership is bound to make good the loss where moneys received are misapplied by a partner. Section 26 then provides:

“ Nature of partners’ liability. All partners are liable 1. Jointly and severally for everything chargeable to the partnership under sections twenty-four and twenty-five. 2. Jointly for all other debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract.”

The liability of a partnership for a partner’s wrongful acts, as defined by section 24, is thus limited to liability “ to the same extent as the partner so acting or omitting to act.” Where that partner is not liable for a wrongful act, this section imposes no liability upon the partnership or its members. It is said, however, that these sections of the Partnership Law are merely declaratory of the common law, and were not intended to extend or limit the common-law rules of liability. Though that be true, they represent a legislative codification of the common law, and we have found no case in any jurisdiction where a liability has been successfully asserted against a partnership for the wrongful act of a partner where the partner who performed the wrongful act was not hable.

It is true that in the case of Schubert v. Schubert Wagon Co. we expressly rejected the decisions of other States that a principal is not hable for the act of an agent who is himself immune from habihty, and in those States no action could be maintained the rules of agency against a partnership or its individual members for wrongful acts committed by a partner who was himself not hable. Other obstacles and disabilities, long since removed by statute or decisions in this State, also barred, at common law, actions by a wife against a partnership in which her husband was a partner. These obstacles may explain to some extent the absence of any case in which a partnership or any of its members has been held hable for an act of a partner for which he is not hable. The fact still remains that there is no authority sustaining a common-law habihty of a partnership broader than the habihty defined by the Partnership Law, literally con strued, and in two recent cases it has been decided that there is no broader rule of liability. (David v. David, 161 Md. 532; Belleson v. Skilbeck, 185 Minn. 537.) Reason, authority and statutory codification of the common law alike dictate that conclusion.

The judgment should be affirmed, with costs.