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ALASKA BANKING AND SAFE DEPOSIT COMPANY, Appellant, v.

Philip V. R. VAN WYCK and Others, Respondents.

First Department, July 7, 1911.

Appeal – dismissal of complaint - offer of proof - action against partnership - parties defendant — failure to make all partners defendants - complaint charging persons not partners with liability praotice – waiver of defect of parties.

On an appeal froin a judginent dismissing the complaint it will be assumed that the plaintiff could have established all facts which he

offered to prove.

The common-law rule that in an action upon an alleged joint contract plaintiff must fail unless he establish the joint liability of all the defendants has been changed by the Code of Civil Procedure. Thus, in an action against alleged partners upon a promissory note it is error to dismiss the complaint because certain of the defendants were not shown to be partners and no cause of action against them was established, if the plaintiff offered to prove that some of the defendants were liable. Vor does the failure of the plaintiff to make all the members of the part

nership parties defendant justify a dismissal of the complaint. A partner sued upon a partnership obligation alleged to create a joint liability is entitled to have his copartners joined in the action, but he waives this right by failing to take objection by demurrer or answer. If he wishes to take such defense he must show by his pleading exactly who the omitted parties are. A partner sued on a partnership obligation does not take the defense of defect of parties by a general denial or thereby put in issue the personnel of the partnership.

APPEAL by the plaintiff, the Alaska Banking and Safe Deposit Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 9th day of March, 1911, upon the dismissal of the complaint by direction of the court as to certain defendants at the close of plaintiff's case on a trial at the New York

Trial Term.

H. Snowden Marshall, for the appellant.

Archibald C. Shenstone, for the respondents.

First Department, July, 1911.

[Vol. 146. MCLAUGHLIN, J.:

This action was brought to recover against the defendants, as copartners doing business under the name Chicago Creek Coal Company, upon a promissory note made by the defendant Solomons, and signed by him individually and as manager of such company. Upon the trial evidence was offered showing the formation of a syndicate under the name Chicago Creek Coal Company, of which the defendant Solomons was manager, and tending to show that at least some of the defendants besides Solomons were liable upon the note. The trial court was of the opinion, however, that the plaintiff had failed to prove the cause of action alleged and dismissed the complaint at the close of plaintiff's case, except as to the defendant Solomons. Judgment was entered to this effect, from which the plaintiff appeals.

It appears that one Church and one Hart had originally been members of the syndicate, but had died prior to the commencement of this action. That fact, however, did not appear in the complaint, which contained only a general allegation that the defendants were partners, but was brought out by the plaintiff's proof. Their executors were made parties defendant and it is conceded by the appellant's counsel that they did not become partners and no cause of action against them was established. It also appeared there were other members of the syndicate who were not mentioned in the complaint or made parties to the action. The answers of the different defendants contained only general denials of the allegations of the complaint, and this defect in parties was not disclosed until developed by the evidence. The trial court was of the opinion that the plaintiff could not, in any event, recover against any of the defendants except Solomons without amending the complaint so that it would show exactly who were members of the syndicate at the time the note was given. The plaintiff's counsel declined to amend the complaint, and, in order to avoid prolonging the trial unnecessarily, offered to prove facts which would establish the liability of all the defendants upon the note. The defendants' counsel objected to the proof of such facts on the ground that such proof would not tend to establish the cause of action set out in the complaint because it appeared that at least two of the defendants were not copartners and two who were had not

App. Div.)

First Department, July, 1911. been made parties. The objection was sustained, an exception taken, and the complaint was then dismissed, to which an exception was also taken.

For the purposes of this appeal it must be assumed that the plaintiff's counsel would have been able to prove the facts which he offered to prove, had he been permitted to do so. Upon this assumption, therefore, the complaint included among the alleged partners two defendants who had never been partners and who were concededly not liable. It also failed to mention some of the partners who were liable, two of whom it appeared had died prior to the commencement of the action. The question presented is whether, upon this complaint, the plaintiff could recover against the defendants who were liable upon the note. So far as the two executors were concerned, it is obvious that their joinder, under the allegation that they were partners, would not have prevented a recovery against the other defendants. The common-law rule that in an action upon an alleged joint contract the plaintiff must fail unless he establishes the joint liability of all the defendants has been changed by the Code of Civil Procedure. (Pruyn v. Black, 21 N. Y. 300; McIntosh v. Ensign, 28 id. 169; Stedeker v. Bernard, 102 id. 327; Lawton v. Partridge, 111 App. Div. 8.)

The case of McIntosh v. Ensign (supra), followed in the later case, is directly in point. There, the plaintiff had alleged the joint liability of five defendants. The proof established that only two were liable, and it was held that the plaintiff was nevertheless entitled to judgment against those two.

It follows that the dismissal of the complaint on this ground was error, for under the offer the plaintiff's proof might, conceivably, have shown that the other defendants, or some of them, were jointly liable upon the note and were the only members of the syndicate who were liable. In that event, under the authorities cited, the plaintiff would have been entitled to recover against those defendants despite the misjoinder of the thers. A fair construction of the offer, however, is that the proof would have shown that all the members of the syndicate at the time the note was given, including Church and Hart, were jointly liable, and it remains to be seen whether the failure to allege in the complaint who all those members were

First Department, July, 1911.

[Vol. 146. would have prevented a recovery. As already stated, the fact that the complaint charged too many persons as partners would not have prevented a recovery against the actual partners, and on principle it would seem clear that the fact that the complaint charged too few as partners ought not to prevent a recovery. The variance between the pleading and proof is as great in the one case as in the other. That this is the correct rule a very

brief review of the authorities will show. The Code of Civil Procedure provides that where there is a defect of parties, either plaintiff or defendant, appearing on the face of the complaint, the defendant may demur. ($ 488.) If such objection does not appear on the face of the complaint, it may be taken by answer ($ 498); and if not taken by demurrer or answer, defendant is deemed to have waived it. ( +99.) Of course, a partner is entitled, as claimed by the respondents, to have his copartners joined in an action upon a partnership liability, but it is established that in such an action this right is waived by failing to raise the objection by demurrer or answer. (Seligman v. Friedlander, 199 N. Y. 373; Hotopp v. Huber, 160 id. 524; Amsterdam Electric Light Co. v. Rayher, 43 App. Div. 602; Strobel & Wilken Co. v. Wiesen, 11 id. 149.)

There are authorities to the effect that in an action against a single defendant, the complaint not alleging a joint liability, the plaintiff cannot recover upon proof that the defendant was jointly liable with others. (Wildrick v. Heyshem, 96 App. Div. 515; Sparks v. Fogarty, 93 id. 472; New York Fastener Co. v. Wilatus, 65 id. 467; Rich v. Wright, 57 id. 236.) But it by no means follows that where the complaint alleges a joint liability the plaintiff must fail unless all of the persons jointly liable are made parties. If the defendant wishes to rely upon such a defense, then he must show by his pleading exactly who the omitted parties are. (Mittendorf v. N. Y. & Harlem R. R. Co., 58 App. Div. 260; Wigand v. Sichel, 3 Keyes, 120; Kingsland v. Braisted, 2 Lans. 17.)

In the last case cited it was said: “Considering the members as partners, the liability was a joint one and all the defendants should be joined; but where an action is brought against partners and some are omitted, those who are sued can only take advantage of such omission by pleading it. It is not

App. Div.]

First Department, July, 1911. enough to set up, as is done in this answer, that there are others who are liable, but the names must be given, so as, in the language of the old cases, to give the plaintiff a better writ.” This statement of the rule applies exactly in the present case. The same rule has been applied in many cases where a partner was omitted as a party plaintiff. (Sullivan v. N. Y. & R. Cement Co., 119 N. Y. 348; Merritt v. Walsh, 32 id. 685; Zabriskie v. Smith, 13 id. 322; Frazier v. Gibson, 15 Hun, 37.) As a question of pleading it is impossible to make any logical distinction between parties plaintiff and parties defendant.

It is at least doubtful if the case of McIntosh v. Ensign (supra) is not decisive of this question as well as the question of misjoinder. In that case WRIGHT, J., said that while it might be implied that there were other persons jointly liable with the two partners, there was no proof of that fact, but ENOTT, J., in his opinion said: “It was admitted that Ensign and Holt were part owners of the vessel.

But it was proved that there were other owners of the vessel who were, of course, also bound by the same agreement upon which Ensign and Holt were liable.” After showing that the plaintiff would not be prevented from recovering because he had joined three other defendants who were not liable, he continued: “Nor will he be defeated because if he had sued Holt and Ensign alone they might have pleaded the non-joinder of other parties in abatement. They have not done so, and they stand on the record jointly liable to the plaintiff, while it is immaterial in this action whether others could have been sued or not." If the statement of EMOTT, J., that the proof showed that others were jointly liable with the two partners sued is a correct statement of the facts, then the case is on all fours with the case at bar, viz., the complaint charging certain defendants as partners who were not partners and failing to mention some of the actual partners.

But any possible doubt upon the question is removed by the recent decision of the Court of Appeals in Jones v. Gould (200 N. Y. 18). In that case the complaint alleged the formation of a syndicate of which the three defendants were managers. A copy of the blank form of syndicate agreement was annexed to the complaint without disclosing the names of the subscribers.

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