King v. Sarria

The findings of fact by the referee are sustained by the evidence, and the question presented by this appeal is,-whether the defendant Sarria can avail himself of his rights secured by the character of the compact which he made with the other defendants, at his domicile in the island of Cuba, where his relations with them were established.

The general characteristics of that arrangement are, that the other defendants should carry on the business, and that he should be liable for losses only to the extent of the capital which he contributed, unless by some act of his, which would produce such a result, he incurred the responsibility of a general partner. There •is, in the code of commerce of Spain, of which extracts were put iin evidence, nothing which by any of its articles entails such a liability, either for any omission made or acts done by him.

He omitted nothing under the code, which was necessary to his security, and did nothing by which it was forfeited. This result is not only warranted by the code itself properly considered, but by ■the evidence of the experts called to testify upon the subject. The *169effect of not observing the particular forms and solemnities especially established by the code is to impair, perhaps, the obligations of the contract of the parties inter se, and therefore affects their rights, each as to the other, and further to endanger their success in any action commenced by them for the enforcement of their rights. (Arts. 28, 236, 285.) The liability of special partners is, by article 273, limited to the funds which they have contributed except in case of violation of article 271, which declares that they cannot include their names, in the firm names of the copartnership. Nor can they (art. 272) perform any act of administration touching the interests of the copartnership, nor act even in the capacity of attorneys in fact, of the general partners. They must be special partners in fact as well as by form, and not mislead by a false position which would induce the conviction that they were general partners. While the various articles of the code relating to the subject authorize the formation of limited partnerships, they do not fail to wind about the special partner the cords by udiich he shall be kept in place and prevented from departing from it without serious consequences. The contract, therefore, between Sarria and the other defendants forming the partnership, was authorized by the law of the land where it was made, and his liability has not by any act or omission of his been enlarged. It seems to have been a subject of discussion, whether the character of the obligations of a special partner has any existence beyond the territory, by the laws of which it was created, but upon what just principle it is difficult to understand.

If foreign traders seek commercial relations, for example, with the people of this State, and they present themselves as a firm, it rests with our citizens to ascertain the persons who form, and the nature of the copartnership, and then to determine whether or not they will enter into transactions with them. It may be that the spirit of enterprise or barter cannot be impaled on such conservative notions, and that “nothing venture nothing win ” is more in harmony with the business life of our people; but when a transaction is viewed from the standpoint of natural justice and equity, it seems to be inevitable sthat no man shall incur a responsibility against which he protected himself by the laws of his country without some overt act of his own. This reasonable appreciation and adjustment of the question appears to have commended itself *170to Wharton (Conflict of Laws, §§ 468, 469, 470); Judge Redfield (Story’s Conflict of Laws [7th ed.], § 320; and Westlake’s Private International Law, articles 211, 212), and the latter writer suggested that when the copartnership is to be assailed, it seems impossible to set it up at all, without at the same time importing the limit, to which the liability was restricted. The question has received consideration also in Rhode Island, in the case of Barrows v. Downs, affecting a Cuban firm (reported in 9 R. I. Rep., 446), and decided in favor of the special partner. These views express a result which is thought consonant with justice and equity, and' ought to be sustained by this court.

If a foreign firm, organized under the laws of its domicile, cannot deal with any other people without subjecting the special partners, by the mere effect of their relation to it, to liabilities of a general character, in derogation of the rights secured by the compact which they lawfully make, the effect must be to restrict commercial enterprise and intercourse, and in effect inhibit to some extent at least mercantile dealings. This is against public policy, and, therefore, public good; against the laws of natural justice and equity, and therefore in violation of the honorable principles which should distinguish the administration of justice.

It would be giving tribute to the abandonment of that ordinary prudence which leads men to investigate and to ascertain who are the persons with whom they are dealing, and the liability of each, according to the relation which he may occupy. It is quite apparent, for example, that if the plaintiffs had sought to know who was the company of the defendant’s firm, they would have been advised that the designation was ornamental only, and therefore that they must look to Gran and Lopez in their dealings.

Having arrived at these conclusions, it becomes a duty to affirm the judgment, for there is no other element in this case sustained by facts or bv law, which would warrant us in disturbing it.

Judgment affirmed.