The statute is a codification; so far as not otherwise provided, the common law governs (section 5); it left much still open. The Court of Appeals of New York has at least twice had before it syndicates much like these (Jones v. Gould, 209 N.Y. 419, 103 N.E. 720; Byrnes v. Chase National Bank, 225 App. Div. 102, 232 N.Y.S. 224, affirmed 251 N.Y. 551, 168 N.E. 423), and held that they were not partnerships. The differences between those syndicates and that at bar are of no moment, except that each expressly provided that the subscribers should not be partners, which this does not.
The courts below have held that the instrument constitutes a trust agreement, creating what is commonly known as a business or Massachusetts trust; that the trustees are the owners as well as the managers of the money put into the pool; that the subscribers are mere beneficiaries and that the promissory note for borrowed money, signed by the chairman of the syndicate, created a legal liability against the managers only and not against the subscribers to the agreement. The exemption of the members of a business trust from personal liability for its debts has been recognized in New York. ( Jones v. Gould, 209 N.Y. 419; Byrnes v. Chase Nat. Bank, 225 App. Div. 102; affd., 251 N.Y. 551.) The leading Massachusetts case ( Williams v. Inhabitants of Milton, 215 Mass. 1) is cited with approval in Crehan v. Megargel ( 234 N.Y. 67, 79) for the proposition that business trusts may be utilized as substitutes for corporations and that such trusts raise an "insurmountable barrier" (HISCOCK, Ch. J., in Crehan v. Megargel, supra, p. 79) between the subscribers and the creditors.
Nor is the award of summary judgment to plaintiff precluded by Garassi's misplaced argument that plaintiff lacks the capacity to commence this action because it is operating as a business trust without having filed a certificate of designation. Plaintiff is the trustee of a trust fund conveyed by the relevant pooling and serving agreement; it is not a business trust, as that term is defined in General Association Law § 2(2) (see Brown v. Bedell, 263 N.Y. 177, 186–189, 188 N.E. 641 [1934] ; Byrnes v. Chase Natl. Bank, 225 App.Div. 102, 108, 232 N.Y.S. 224 [1928], affd. 251 N.Y. 551, 168 N.E. 423 [1929] ). Accordingly, as defendants failed to raise a triable issue of fact in opposition to plaintiff's motion, Supreme Court properly granted summary judgment to plaintiff.