Opinion,
Mr. Chief Justice Paxson:
The Keystone Coal Company, Limited, was organized under the act of June 2, 1874, P. L. 271, and the several supplements thereto, as a limited partnership. The business of said association, as defined in the articles of association, “ shall be the buying and selling of coal lands, mining, selling, and shipping of coal, and the manufacturing and selling and shipping of coke, and all other necessary incidents pertaining to the mining, manufacturing, selling, and shipping of coal and coke, and the carrying on and conducting of a general store at the mines of said association.” The amount of capital was five hundred thousand dollars, and was contributed in the shape of coal lands and leases, etc. No capital appears to have been contributed in cash. Each tract of land so conveyed to the company appears to have been carefully described by metes and bounds, the portion contributed by each member valued, and the lands as a whole were valued at five hundred thousand dollars. In order to obtain money to carry on or extend its business, the company issued two hundred seventy-five, thousand dollars of coupon bonds, secured by a mortgage upon its real estate. Soon after the company was organized it appears to have become insolvent. This suit was brought by the holder of a portion of the bonds referred to, against the defendants as general partners, his contention being that the association was not organized in accordance with the act of assembly. It is well settled that, if the members of a limited partnership seek to shelter themselves from personal liability behind the act of 1874, they must show a substantial compliance with its terms: Maloney v. Bruce, 94 Pa. 249; Hill v. Stetler, 127 Pa. 145.
The only two assignments of error which require comment are the third and the eighth. The third alleges that the court below erred in rejecting the evidence referred to therein. The offer is too voluminous to repeat here, but in substance it was an offer to show that, after the company had become insolvent, it appointed liquidating trustees for the purpose of closing [339]*339out and settling its affairs ; that, in pursuance of an order of the Court of Common Pleas of Washington county, the mortgaged premises were sold subject to the lien of said mortgage by which the bonds were secured, including the bonds in suit; that, at said sale, the real estate was purchased for the bondholders, and is now held in trust for them; and that this arrangement was approved by said bondholders, including the plaintiff in this suit. It may be the defendants’ offer was fully as broad as their means of proof, but for present purposes we must assume they could have made it good. It would then appear that the bondholders have purchased, through a trustee designated by them, the mortgaged premises subject to the lien of the mortgage. Having thus obtained the property, can they now proceed upon the bonds, and collect the amount thereof from the company, or from the defendants as individuals? If so, they will be twice paid; that is to say, they will have both the money and the land. That this cannot be done is plain, both upon reason and authority. Having purchased the property subject to the lien, the bonds became a part of the purchase money withheld at the time of the sale; in other words, they were a part of the bid: Carpenter v. Koons, 20 Pa. 222; Dollar S. Bank v. Burns, 87 Pa. 491. We are of opinion that it was error to reject this offer.
The eighth assignment alleges that the court below erred in refusing the defendants’ sixth point. This point is as follows: “ Under the records and evidence in this ease, there was no personal liability on the part of the defendants as members of the Keystone Coal Co'., Limited, to pay the bonds in suit.”
This raises the question of the validity of the organization of the company. It does so, however, by indirection merely, as the court below was not asked squarely to rule upon the validity of the articles of association. No charge of the court below is given, beyond the answers to points and a peremptory instruction to find for the plaintiff. This instruction could not have been given if the association had been organized in conformity to the acts of assembly. This question lies directly in the way, and must be disposed of.
The act of June 2, 1874, P. L. 271, in regard to limited partnerships, provides for a cash capital. The supplement to said act, passed May 1, 1876, P. L. 89, allows the members “to [340]*340make contribution to the capital thereof in real or personal estate, mines or other property, at a valuation to be approved by all the members subscribing to the capital of such association : provided, that, in the statement required to be recorded by the first section of said act, subscriptions to the capital, whether in cash or in property, shall be certified in this respect according to the fact; and, when property has been contributed as part of the capital, a schedule containing the names of the parties so contributing, with a description and valuation of the property so contributed, shall be inserted.” It will thus be seen that it is now lawful to contribute property as well as cash in the formation of a limited partnership. The only restriction upon this right is that the property contributed must be described, scheduled, and valued. The object of this, as was said in Maloney v. Bruce, 94 Pa. 249, “is to enable creditors to ascertain precisely of what the property consisted, and to judge of its value.” The main point is the description. That should be sufficiently accurate to identify it. The valuation is a minor matter. The company can put it in at its own value, so that it be agreed upon. There is nothing in the act to restrict the amount of the valuation. If it is excessive, the creditor can decline to give the company credit; while, if the description is accurate, he can only be misled by his own want of prudence. But, if the description be so defective or inaccurate that the creditor may be misled, he has no means of forming an accurate judgment.
In the case in hand, the articles of association set forth the name of each member, his residence, and the amount of capital contributed by him. The articles then proceed to state that “ the sum subscribed by each one of said parties is by the transfer to said association of real estate, coal property, coal rights and privileges, leases, etc., situate in the states of Pennsylvania and West Virginia, as set forth at length in schedules A, B, and C, and the interest of each of said parties is fully set forth in said schedules, which schedules are made a part of these articles of association.” The schedules referred to contain a full description, by metes and bounds, of each piece of property contributed by each member, with a valuation thereof. The valuation is not of each tract as described, but the contribution of each is valued as a whole, and the contributions of all are [341]*341valued at the sum of five hundred thousand dollars, the amount of the capital. We see no objection to this. Where one member of a coal-mining company contributes as his share of the capital, say, two or more tracts of coal lands, the separate tracts constitute one entire tract, and a valuation as one tract does no violence to the act, and misleads, no one; and being property of the same description, one acre may be fairly regarded as the equivalent of any other acre.
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Opinion,
Mr. Chief Justice Paxson:
The Keystone Coal Company, Limited, was organized under the act of June 2, 1874, P. L. 271, and the several supplements thereto, as a limited partnership. The business of said association, as defined in the articles of association, “ shall be the buying and selling of coal lands, mining, selling, and shipping of coal, and the manufacturing and selling and shipping of coke, and all other necessary incidents pertaining to the mining, manufacturing, selling, and shipping of coal and coke, and the carrying on and conducting of a general store at the mines of said association.” The amount of capital was five hundred thousand dollars, and was contributed in the shape of coal lands and leases, etc. No capital appears to have been contributed in cash. Each tract of land so conveyed to the company appears to have been carefully described by metes and bounds, the portion contributed by each member valued, and the lands as a whole were valued at five hundred thousand dollars. In order to obtain money to carry on or extend its business, the company issued two hundred seventy-five, thousand dollars of coupon bonds, secured by a mortgage upon its real estate. Soon after the company was organized it appears to have become insolvent. This suit was brought by the holder of a portion of the bonds referred to, against the defendants as general partners, his contention being that the association was not organized in accordance with the act of assembly. It is well settled that, if the members of a limited partnership seek to shelter themselves from personal liability behind the act of 1874, they must show a substantial compliance with its terms: Maloney v. Bruce, 94 Pa. 249; Hill v. Stetler, 127 Pa. 145.
The only two assignments of error which require comment are the third and the eighth. The third alleges that the court below erred in rejecting the evidence referred to therein. The offer is too voluminous to repeat here, but in substance it was an offer to show that, after the company had become insolvent, it appointed liquidating trustees for the purpose of closing [339]*339out and settling its affairs ; that, in pursuance of an order of the Court of Common Pleas of Washington county, the mortgaged premises were sold subject to the lien of said mortgage by which the bonds were secured, including the bonds in suit; that, at said sale, the real estate was purchased for the bondholders, and is now held in trust for them; and that this arrangement was approved by said bondholders, including the plaintiff in this suit. It may be the defendants’ offer was fully as broad as their means of proof, but for present purposes we must assume they could have made it good. It would then appear that the bondholders have purchased, through a trustee designated by them, the mortgaged premises subject to the lien of the mortgage. Having thus obtained the property, can they now proceed upon the bonds, and collect the amount thereof from the company, or from the defendants as individuals? If so, they will be twice paid; that is to say, they will have both the money and the land. That this cannot be done is plain, both upon reason and authority. Having purchased the property subject to the lien, the bonds became a part of the purchase money withheld at the time of the sale; in other words, they were a part of the bid: Carpenter v. Koons, 20 Pa. 222; Dollar S. Bank v. Burns, 87 Pa. 491. We are of opinion that it was error to reject this offer.
The eighth assignment alleges that the court below erred in refusing the defendants’ sixth point. This point is as follows: “ Under the records and evidence in this ease, there was no personal liability on the part of the defendants as members of the Keystone Coal Co'., Limited, to pay the bonds in suit.”
This raises the question of the validity of the organization of the company. It does so, however, by indirection merely, as the court below was not asked squarely to rule upon the validity of the articles of association. No charge of the court below is given, beyond the answers to points and a peremptory instruction to find for the plaintiff. This instruction could not have been given if the association had been organized in conformity to the acts of assembly. This question lies directly in the way, and must be disposed of.
The act of June 2, 1874, P. L. 271, in regard to limited partnerships, provides for a cash capital. The supplement to said act, passed May 1, 1876, P. L. 89, allows the members “to [340]*340make contribution to the capital thereof in real or personal estate, mines or other property, at a valuation to be approved by all the members subscribing to the capital of such association : provided, that, in the statement required to be recorded by the first section of said act, subscriptions to the capital, whether in cash or in property, shall be certified in this respect according to the fact; and, when property has been contributed as part of the capital, a schedule containing the names of the parties so contributing, with a description and valuation of the property so contributed, shall be inserted.” It will thus be seen that it is now lawful to contribute property as well as cash in the formation of a limited partnership. The only restriction upon this right is that the property contributed must be described, scheduled, and valued. The object of this, as was said in Maloney v. Bruce, 94 Pa. 249, “is to enable creditors to ascertain precisely of what the property consisted, and to judge of its value.” The main point is the description. That should be sufficiently accurate to identify it. The valuation is a minor matter. The company can put it in at its own value, so that it be agreed upon. There is nothing in the act to restrict the amount of the valuation. If it is excessive, the creditor can decline to give the company credit; while, if the description is accurate, he can only be misled by his own want of prudence. But, if the description be so defective or inaccurate that the creditor may be misled, he has no means of forming an accurate judgment.
In the case in hand, the articles of association set forth the name of each member, his residence, and the amount of capital contributed by him. The articles then proceed to state that “ the sum subscribed by each one of said parties is by the transfer to said association of real estate, coal property, coal rights and privileges, leases, etc., situate in the states of Pennsylvania and West Virginia, as set forth at length in schedules A, B, and C, and the interest of each of said parties is fully set forth in said schedules, which schedules are made a part of these articles of association.” The schedules referred to contain a full description, by metes and bounds, of each piece of property contributed by each member, with a valuation thereof. The valuation is not of each tract as described, but the contribution of each is valued as a whole, and the contributions of all are [341]*341valued at the sum of five hundred thousand dollars, the amount of the capital. We see no objection to this. Where one member of a coal-mining company contributes as his share of the capital, say, two or more tracts of coal lands, the separate tracts constitute one entire tract, and a valuation as one tract does no violence to the act, and misleads, no one; and being property of the same description, one acre may be fairly regarded as the equivalent of any other acre. The fact that the contributing member has acquired the title by different conveyances has no bearing upon their value, while their description as separate tracts is in the interest of creditors, as such description enables them to fin'd and examine them the more readily. If, when examined, the creditor considers the valuation too high, he has the privilege, as before observed, of declining to give a credit upon such valuations.
It is to be observed that all the property described in the schedules is of a nature suitable for the use of the company, and germane to the business proposed to be carried on. It is true there was no cash capital provided by the articles of association, but this is not required by the act of assembly, and such fact appears upon the face of the papers. No one was or could have been misled by this. The association had the right to mortgage its property to raise money needed in its business, and if creditors gave credit where it was not deserved, such fact does not affect the validity of the organization.
It was alleged, however, that the articles contained a false statement, viz., that the ninth described piece of land in schedule B (called in the testimony the Mellon landing) had been contributed by the defendants; whereas, in fact, the defendants had no title to said land at the date of the execution of the articles of association. We do not understand the fact to be that the defendants had no title to the land at the time referred to. It is true they had not then the legal title, but they had the equitable title. The legal title was unexpectedly delayed by the loss of a deed by Mr. Mellon, the grantor, and by this accident the making of the full legal title was delayed. An equitable title is property in this state. The act of 1876 does not limit the property to be contributed to such as is held by a legal title, and we cannot amend the act. This remark applies equally to such property contributed as was encumbered [342]*342by liens. That some of it was a mere equity of redemption could have misled no one, as it was so described in the articles.
The further objection was made that some of the lands lie in West Virginia, and it was urged .that lands so situated could not be contributed as part of the capital. The act of assembly does not say so. It is true, if the property is so located as to be beyond the reach of creditors, we might be driven to hold that such property was not in the contemplation of the framers of the act. But property in an adjoining state is not beyond the reach of creditors, and as it is fully described, the creditors must be presumed to have considered the inconvenience of resorting to it, when they gave the credit.
We need not notice the minor objections. Upon the whole, we are of opinion that there has been a substantial compliance with the statutes in the formation of this company, and that the defendants are not liable as general partners. It was never intended that these acts should be used as a trap to catch persons who have honestly complied with their substantial requisites, and impale them upon a meaningless technicality. Where parties fail utterly to comply with their essential features, as in Maloney v. Bruce and Hill v. Stetler, supra, they must, of course, be held to the liability of general partners.
Judgment reversed.
—Seven other cases, to wit, Lilley, Foster, McKnight, McKnight’s Admr., Morrow, McGowan, and Frisbee v. J. M. Bailey, et ah, Nos. 20-26 October Term 1891, were ruled upon the foregoing case, and the judgments reversed.