The complaint herein is filed by the plaintiffs, on behalf of themselves as creditors, and such other persons as shall come in and contribute to the expenses of the suit, being also creditors of a limited copartnership heretofore existing under the name of “Lord & Brown,” for an injunction and receiver, and for the distribution of the property of the copartnership among the creditors. The complaint is founded upon the alleged insolvency of the firm, its voluntary dissolution, a sale, or pretended sale, by the persons composing the firm—both general and special partners—to the general partners of all of the assets of such firm; the illegal withdrawal of large sums of money by the special partner in fraud of the rights of the copartnership creditors prior to such alleged sale; the improper appropriation of the assets by the general partners to their own use, and the payment by them of debts due to some of the creditors of such film for the purpose of giving such creditors preference over the plaintiff and other creditors, and the alleged wasting and squandering of the assets by the general partners. And, besides the relief above mentioned, the plaintiffs pray that the alleged sale and transfer by the limited copartnership to the two general partners be decreed and adjudged null and void.
An order for an injunction and receiver having been made at the special term, the defendants have appealed, and it is now insisted by them that the order was improperly granted, because only the late general partners, Lord & Brown, are
The statement in the bill is, that in August, 1854—the special partnership being then insolvent—and prior to the expiration of the term for which the same was created, the general and special partners united in a notice of dissolution; and, in connection therewith, the general partners, Lord & Brown, also gave notice that they had purchased the interest of Marks, the special partner, and had formed a partnership—they, Lord & Brown, alone being its members—under the same name of Lord & Brown, and would continue the business. But the plaintiffs deny that the steps were taken which the statute points out to make the dissolution a valid termination of the special partnership.
If the complaint herein had only alleged the existence and insolvency of the special partnership, and prayed for an injunction, the appointment of a receiver and the distribution of the assets among the creditors, the first inquiry would be, whether the 14th section of the statute relating to limited partnerships, (in these words, “ Suits in relation to the business of the partnership may be brought and conducted by and against the general partners, in the same manner as if there were no special partners,” 1 Eev. St. 766,) applies to such a suit, brought for the practical termination of the partnership, to commit the administration of the assets to other hands than the general partner’s, and for their distribution among creditors ? And this question does not appear to me free from doubt. It seems to be giving an unreasonable latitude of construction to the words, “ suits in relation to the business of the copartnership,” to apply them to a suit brought for the subversion of the partnership itself. A suit brought to compel the performance of whatever is, under the statute, within the proper authority and duty of the general partners, is within the fair scope of the business of the copartner
The late chancellor, in Mills v. Argell, 6 Paige, 577, intimated a doubt whether the general partners could make an assignment of all the copartnership effects to a trustee—even for the payment of debts—ratably or otherwise, or indeed for any other purpose, without the assent of the special partner. It is not in conformity with the design of the copartnership ; it is not consistent with the contract between them. In committing his capital to their care and management, it cannot reasonably be implied that he authorized them to delegate to another the power, discretion and duty of winding up the business, in relation to all which he has a right by the statute to advise, regarding his and their interests. If, in a general partnership, the power of each partner to transact any and all business appertaining to the scope of the partnership, does not involve an authority to one or more to make an assignment of all the property to a trustee, without the consent of all, I do not perceive how the exclusion of the special partner from the former power can be taken to confer upon the general partners authority to make such an assignment. (Havens v. Hussey, 5 Paige, 30; Fisher v. Murray, 1 E. D. Smith, 341.)
If no such authority is vested in the general partners, it would seem that a suit brought to compel such a transfer, and effect a practical termination of the copartnership, and thus destroy the existing contract between the copartners, and create a new administration of its assets, excluding the special partner from even advising in respect to then* disposition, however largely his interests are involved therein, he should be made a party, that he may be heard on the subject.
But, however this may be, the plaintiffs here have gone much further in their attack upon the rights and interests of the special partner. They allege that the pretended sale by him of his interests to the defendants, Lord & Brown, is void, and pray that it be so adjudged. And more than that, they
But it does not, I think, become necessary to settle the question upon this appeal, for it would not, I think, follow that the order appealed from ought not to have been granted, however that question was decided.
The second question remains, Is the want of a proper party a sufficient reason for withholding an injunction and denying a receivership % There are undoubtedly cases in which it would be, .and in which the want of a proper party would be ground for dissolving an injunction.
But the granting of injunctions and the appointment of a receiver rest very largely in the discretion of the court, not to be exercised, it is true, without just cause, and never, if possible, to the prejudice of any one who may be affected by it; certainly not to the prejudice of one who is not a party to the suit.
The case would be quite different where the property was in the possession or under the control of the absent party; or where the receivership would interfere with some interest of his immediately affected.
And, again, it has for more than thirty years been the rule in equity in this state, that where a bill is demurred to for want of parties, the complainant may amend, of course, on payment of costs; and where an injunction has already been granted, it would not be affected by such an amendment. Where the objection, if well taken, can be so easily cured, and where no prejudice will result to the party not summoned, and especially where the necessity of making him a party is at least doubtful and worthy of consideration, upon deliberate argument and consideration I think the order may be providently granted, and the parties left to present the objection in the subsequent stages of the cause, if so advised.
For this reason I think the order appealed from should be affirmed. It seems to me that the principles of the decision
How far it may be necessary" to make a special partner a party to an action against a limited partnership, where the action is brought to collect a debt due to the firm, even after insolvency, and where the plaintiff seeks to set aside an assignment made by the general partners, with the assent of the special partner, is not necessarily to be decided on this appeal. I do not feel prepared to yield an assent to the proposition that relief cannot be obtained without making the special partner a party.-
"Where the object of the action is to collect a note given by the firm, in the course of their business, I think such action may be said to be in relation to the business of the partnership. The injunction and receivership are merely incidental aids to enforce the recovery and secure the funds from being wasted before judgment, not necessary to the maintenance of the action or to the recovery of a judgment. Nor does the fact, that an assignment sought to be set aside as fraudulent, or illegal in any way, show that the action is not in relation to the business of the firm.
The sole object is to obtain payment of a debt due by the firm; and all the other objects proposed fall, and cease to be any ground of complaint the moment the debt due to the plaintiffs is paid. They are merely auxiliary towards enforcing payment.
Whether or not the special partner was so far interested in the preservation of the assignment as to render it proper that he should be made a party, so as to have notice of these
I concur, however, with my brother, Woodruff, in the opinion that the order appealed from should be affirmed, for the reasons given by him in his opinion.
Daly, J., concurred in affirming the order.
Order of injunction and for the appointment of a receiver affirmed, with costs.
(a).
This refers to a decision, at the January special term, 1855, of a motion to vacate an order of injunction, and for the appointment of a receiver in that case. The opinion delivered then is printed in a note to the report of the final decision of the cause upon the merits. Post, December term.—Rep.