Horn's Crane Service v. Prior
Horn's Crane Service v. Prior
Dissenting Opinion
dissenting.
The asserted obligations of the partnership are the kind for which members of a firm are liable jointly under the Uniform Partnership Act, § 67-315 (b), R. R. S. 1943. Plaintiff alleged painstakingly that C. E. Piper, the one partner not made a party defendant, was beyond the jurisdiction of Nebraska. Laying aside momentarily the features of the entity theory announced by the court, I think that causes of action were stated. See, Bowen v. Crow, 16 Neb. 556, 20 N. W. 850; Winters v. Means, 25 Neb. 241, 41 N. W. 157, 13 Am. S. R. 489; Restatement 2d, Conflict of Laws, Tent. Dr. No. 3, § 87, Comment f; Restatement 2d, Contracts, Tent. Dr. No. 2, § § 112 and 117.
Plaintiff is denied an adjudication on the merits because the firm is presumably solvent. That formula strangely enough derives color of support from equitable rules written into' statutes a century ago. Writ of execution on a judgment against the firm itself is issued against partnership property. If the judgment is not satisfied, the creditor may file a bill in equity against the partners. The prescribed allegations of the bill are the judgment and the insufficiency of partnership property. §§ 25-313, 25-314, and 25-316, R. R. S. 1943. An alternative remedy for the creditor’s benefit —not an obstacle to a direct action against partners—
The problem is complicated by a variant of the partnership definition in the uniform act. A partnership is ¡an association of persons organized as a separate entity to carry on a business for profit. § 67-306, R. R. S. 1943. The definition, which is associated with an entity-aggregate dichotomy, emphasizes quasi-corporate relations. The provision for joint liability of members to partnership creditors strongly suggests a primary liability. In any event the ambiguities of procedural and substantive law should be considered in light of the justification offered in the majority opinion.
Does the businessman intend primarily to extend credit to the firm? Two writers gave negative answers in 1915. See, Williston, “The Uniform Partnership' Act * * *,” 63 U. Pa. L. Rev., 196, 209; Lewis, “The Uniform Partnership Act * * *,” 29 Harv. L. Rev., 158, 166; Lewis, “The Uniform Partnership Act,” 24 Yale L. J., 617, 639. An affirmative answer is not obvious even in 1967.
The need of a partner for protection against inroads on firm assets: should be evaluated with other considerations. By hypothesis the firm is solvent in some sense. A general partner runs the risk that he will be compelled ultimately to pay all partnership debts. The partnership creditor in pursuit of a remedy will at times view this need with a healthy skepticism, which I share.
Opinion of the Court
The district court sustained a general demurrer and a motion to dismiss an amended petition, dismissed the action, and plaintiff appeals. We affirm the judgment.
Plaintiff, a seller of equipment and supplies:, in two causes of action in his amended petition seeks a personal judgment against the defendants, and' each of them, for
The detailed allegations of the original and amended petition are too lengthy to set out herein. In neither the original nor amended petition is it alleged, either directly or by inference, that the partnership- or joint adventure property was insufficient to satisfy its debts, or that there, was no partnership property, and there is no allegation of dissolution or insolvency o-f said joint adventure or partnership. This was fatal.
In an action seeking a personal judgment against the individual members of a partnership or a joint adventure the petition does not state a cause of action if it fails to state that there is no partnership property or that it is insufficient to satisfy the debts of the partnership or joint adventure. Ruth v. Lowrey, 10 Neb. 260, 4 N. W. 977; Leach v. Milburn Wagon Co., 14 Neb. 106, 15 N. W. 232; State v. Pielsticker, 118 Neb. 419, 225 N. W. 51; Lindell v. Deere, Wells & Co., 66 Neb. 87, 92 N. W. 164.
In Ruth v. Lowrey, supra, it is said: “Must they not allege sufficient facts in their petition to show their right to proceed against the members individually? We think they must. This, in effect, is a proceeding to charge the individual property of the persons composing the firm, and in order to maintain the action the peti
In Leach v. Milburn Wagon Co., supra, an action was brought to recover a personal judgment against an individual partner on a judgment against the partners as a firm. In sustaining the demurrer to the petition this court said: “The petition (referring to a cited Ohio, case) also set out the names in full of the individual ment against them individually. * * * This was what members of the firm, and contained a prayer for judgwas attempted to be done in this case, but the petition fails to show that the partnership property had been exhausted. * * * There is no allegation, claim, or pretense that the partnership property in this state had been exhausted.”
In State v. Pielsticker, supra, this court said: “This court is committed to the doctrine that a partnership' is a legal entity by a long line of cases. * * * However, the partnership' relation is. such that the separate property of a partner cannot be subjected to the payment of partnership debts until the property of the firm is exhausted. Leach v. Milburn Wagon Co., 14 Neb. 106. Firm property must also be subjected to the payment of the firm debts before it can be applied to the debts of the individual members of the firm. Roop v. Herron, 15 Neb. 73; Steele v. Kearney Nat. Bank, 47 Neb. 724. The partners, are personally, jointly, and severally responsible for partnership liabilities. But the benefits and liabilities of a partner arise from and are the result of the partnership, relation. Therefore in this state a partnership is an entity, distinct and apart from the members composing it, for the purpose for which the partnership exists. First Nat. Bank v. Sloman, 42 Neb. 350.” See, also, In re Estate of Zents, 148 Neb. 104, 26 N. W. 2d 793; Svoboda & Hannah v. Board of Equalization, 180 Neb. 215, 142 N. W. 2d 328.
There are several reasons for the rule. One of the
No problem arises out of the plaintiff’s allegation that this is a joint adventure. Both parties consider it as a partnership in their briefs. Plaintiff alleges that the defendants and Piper jointly entered into an enterprise for the purpose of acquiring and operating a business; that they contributed money and property thereto; that they all exercised control but that Piper was the manager; and that the plaintiff entered into said contracts on the representation of the defendants that they were an existing partnership. The substance of plaintiff’s theory, which he affirms in his brief, is that defendants were members of a partnership and individually and jointly liable on that basis. We further note that section 67-306, R. R. S. 1943, defines a partnership as “an association of persons organized as a separate entity to carry on a business for profit.” Under the facts alleged and the theory presented by the plaintiff, the law of partnership applies. With reference to joint adventures, this court, in Soulek v. City of Omaha, 140 Neb. 151, 299 N. W. 368, said as follows: “The principal distinction between a partnership and a joint adventure is that the latter may relate to a single transaction. * * * The law of partnership applies to the questions arising between the parties and among the parties in relation to third parties.” The district court was correct in sustaining the demurrer and dismissing the action on the ground that the petition did not state a cause of action.
Although not necessary for a disposition of this case the general demurrer was sustainable because of the bar
The trial court also sustained a motion to dismiss on the ground that the court had no jurisdiction because there was no service of process upon the partnership or joint adventure. As we have pointed out the plaintiff here had elected to proceed against the members individually and did not sue or issue process against the partnership. This it may do. The remedies against the partnership and the individual members are cumulative and there is no requirement that the firm or entity be sued and process served on it in order to acquire jurisdiction over individual members in order to establish their separate liability. Herron v. Cole Bros., 25 Neb. 692, 41 N. W. 765; Hanna v. Emerson, Talcott & Co., 45
The judgment of the district court in dismissing the action is correct and is affirmed.
Affirmed.
Reference
- Full Case Name
- Horn’s Crane Service, a Corporation, Appellant, v. Wendell H. Prior Et Al., Appellees
- Cited By
- 10 cases
- Status
- Published