Central Savings Institution v. Walker

12 N.Y. Sup. Ct. 34

• Court: New York Supreme Court
• Decided: June 15, 1875
• Status: Published

Opinion

E. DarwiN Smith, J.:

This action is for the recovery of the amount of a promissory note of $3,000, signed by Peter Ologher, one of the defendants, as agent for the Utica Steam Woolen Mills Company, dated June 3, 1867. The charter of the said Woolen Mills Company, under the general manufacturing act, expired by limitation of the statute, on the 27th of February, 1866. Upon the expiration of the charter of said corporation, the title to its property and the control of its affairs vested in the directors of said company, as trustees, under the provisions of the Revised Statutes in respect to the general powers and liabilities of corporations. (Sec. 9, tit. 3¿ chap. 18, vol. 2, p. 660.) These' trustees took said property for the benefit of the creditors and stockholders of the said corporation, to settle its affairs, and collect and .pay its debts, and divide among the stockholders the moneys and other property that should remain after payment of its debts. The stockholders had no individual rights in respect to said company, except to receive their pi'o rata share 'of its assets, after payment of its debts.

The business carried on by the officers and agents of said corporation, after the expiration of its charter, must, I think, in law, be deemed carried on by and under the authority of the directors of said corporation, acting in the capacity of trustees. Persons dealing with said officers must be deemed to have had knowledge of the actual status of said trustees and of such officers, and must be considered as contracting with such trustees in their representative capacity, and to have relied upon their responsibility in such capacity. These trustees were in no sense partners, nor was the relation of the stockholders of said corporation inter se changed from that of stockholders to that of partners. In respect to the business transacted by the officers of said company after such expiration of its charter, it was in effect, as I conceive, substantially the same as if said company had continued in lawful existence, or, supposing themselves to be duly incorporated, the stockholders, through their customary and proper officers, were exercising the franchises of a corporation, with the rights and immunities of a corporation defaeto. The stockholders of said corporation never formed or entered into any copartnership. They never agreed to put their money or credit into any copartnership business. Copartnerships do not arise by operation of law. They are creatures of express agreement, where two or more persons voluntarily contract to place their money, effects, labor, skill and credit, or some or all of them, in lawful commercial business, with the understanding that there shall be a communion of the profits thereof between them. (Story on Partnership, § 2, p. 4.) Actual intention is requisite to constitute a partnership inter se. (3 Kent Com., 28; Hazard v. Hazard, 1 Story C. C., 371.) In Story on Partnership (§ 3), it is said that, “ a partnership is founded in the voluntary contract of the parties, as contradistinguished from the relations which may arise between the parties by mere operation of law, independent of such contract.”

The ease of Fuller v. Rowe (57 N. Y., 28), where it is laid down by Gray, 0., as a conceded rule of law, “that parties assuming to act in a corporate capacity without a legal organization as a corporate body, are liable as partners to those with whom they contract,” does not appear to have been brought to tne attention of the court on the argument of the present appeal. — [Rep.

These defendants are clearly not liable in this action as copart-ners. They became stockholders in the woolen company, a corporation duly incorporated. They never voluntarily changed that relation to each other, or intended to assume any other liability, as between themselves, or toward the public. They never held themselves out as partners, and never in fact, it appears, knew thát their charter had expired till their company was put into bankruptcy.

I do not see any principle upon which these defendants, upon the facts as they appeared at the trial, could have been held liable to the plaintiff in this action, and think the nonsuit at the Circuit was properly granted, and that a new trial should be denied.

Present — Mullin, P. J., Smith and Gtlbe'KT, JJ.

New trial denied, and judgment ordered on the verdict.