
    Supreme Court of Pennsylvania.
    PUSEY, EXECUTOR, v. DUSENBERRY.
    The 2Xrit and 22d sections of limited partnership act of March 21st, 1836, a'jpply to existing partnerships only.
    Error to the Court of common Pleas of Bradford County,
   Opinion of the Court by

Agnew, C. J.

Delivered July 2d, 1874,

This was a proceeding before a referee under an- act of April 6th, 1869, P. L., p. 725, application to Bradford county, alone,

A limited partnership existed between John G. Ganney and Wm. B. ■Wightman as general partners, and Joshua Simmons and Jesse Lane as special partners. The referee finds that this partnership expired by its own limitation on the first day of May, 1856. After this Ganney, Wightman and Lane continued the business, Simmons having withdrawn after termination of the partnership on the xst of May. In January, 1857, Simmons being unable to obtain a settlement of the affairs of the late firm, filed his bill in equity, setting out the partnership and its dissolution and charging fradulent appropriation of the assets of the firm. A receiver was appointed and an injunction issued to restrain the defend-ents from collecting and receiving the assets. Subsequently, and after a rule on the defendents to plead, answer or demur, the parties came to a settlement whereby Simmons obtained from his partners a bond and mortgage for $2,450, given by Owen Clarke to Jesse Lane, and by Lane assigned to Simmons; and a note made to Ganney & Wightman to the order of Darnell Braddock, endorsed by him, and partly paid by him to Simmons. On this state of the facts, the referee found that Simmons had, by the receipt of these claims, made himself liable as a general partner under the 21st and 2 2d sections of the limited partnership act of 21st March, 1836. 2 Brightly, 938, pi. 23 and 24. The 21st section makes

void every sale, assignment and transfer of any of the property or effects of the general or special partner, made by him when insolvent or in con - templation of insolvency, with interest to prefer a creditor of his own, or of the partnership, over the partnership creditors. The 22d section declares that every special partner who shall violate any of the provisions of the preceeding section, or concur in, or assent to, any such violation shall become liable as a general partner.

We think the conclusion of the referee was erroneous. These sections evidently relate to the affairs of an existing partnership. They are intended to prevent the partners from disposing of their property to the prejudice of the partnership creditors. They do not apply the case of a partnership already dissolved, where legal proceedings have been instituted by the special partner to enforce settlement of the partnership affairs. A bona fide compromise of such a proceeding and the receipt by the special partner of what he believes to be justly due to him, ought not to have the effect of turning him back by relation into a partnership expired by its own limitation, and from which he had, in fact, withdrawn. The law certainly never intended this result. It would be a penalty for the prosecution of what he supposed to be his just rights, inequitable and destructive of the formation of limited partnerships. His receipt of assets should go to the payment of partnership creditors might be void, so far as to enable these creditors to follow these assets, though this we do> not decide, but certainly ought not to operate to make him liable generally to all the creditors. If during the entire existance of the partnership., he has obeyed the law and not made himself amenable as a general partner, it would be a harsh interpretation of the law, that he is thrown backward into a relation long since terminated, and converted into a general partner by the mere pursuit of his rights.

Judgment reversed and z, procedente awarded.  