Kt
/SIS'
Cornell University Law Library
The Moak Collection
PURCHASED FOR
The School of Law of Cornell University
And Presented February 14, 1893
IN HEnORY OF
JUDQE DOUQLASS BOARDMAN
nR3T DEAN OP THE SCHOOL
By his Wife and Daughter
A. M. BOARDMAN and ELLBN D. WILLIAMS
i
Cornell University Library i0
KF 1375.S88 1855
Commentaries on the law of partnership, a
3 1924 019 206 220
dflrnpll 2Iaui i>rlyflol ffiibraty
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tine Cornell University Library.
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LITTLE, BROWN & GO'S
LAW ADYEETISEE
112 vrASBzzroTosr stheet, bostoxt.
JULY, 1855.
JUDGE CURTIS 's ;;^:
EDITION OF THE
DECISIONS
OP THE •
SUPREME COURT OF THE UNITED STATES
Now in Press, and will shortly be Published, the Decisions of the
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Hon. Benjamin R. Cuetis, one of the Associate Justices of the
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/-^^^^JA'
COMMENTAEIES ^. ^^
ON THE
LAW OF PAETNERSHIP,
AS A BRANCH OF
COMMERCIAL AND MARITIME JURISPRUDENCE,
OCCASIONAL ILLUSTRATIONS -FROM THE CIVIL
AND FOREIGN LAW. ,, ^,s,
By JOSEPH JXORY, LL. D.
ONE OF THE JUSTICES OF THE SUPREME COimT OF THE UNITED STATES, AND
DANE PROFESSOR OF LAW IN HARVARD TINIVERSITT.
" In Societatis Contractibus Fides exuberet."— Ooi. Lib. 4, tit, 37, 1. 3.
" Semper eiiim, non id, quod pri-vatim interest unius ex Sociis, servari solet, sed quod
Societati expedit."— Z)i^. Lib. 17, tit. 8, 1. 65, a. S.
" Gaudeo nostra juraadnatuTam accommodaTij^Majorumque Sapientia admodum delector.'
— Cie, de Legibus, Lib. 2, ch. 25.
FOURTH EDITION.
BOSTON:
LITTLE, BROWN AND COMPANY.
1855.
Entered according to Act of Congress, in the year 1855, by William W.
Stoet, in the Clerk's Office of the District Court of the District of Massa-
chusetts.
KIVEESIDE, CAMBKIDQE;
rniNTEDBY H. O. HOUGHTOlf AND COMPANY.
ADYERTISEMENT TO THE FOURTH EDITION.
In the preparation of tKis edition, the Editor was desired
to confine himself to references to the cases decided in
England and America, since the publication of the last
edition. He has not therefore undertaken to reexamine
the ground covered by former editions, but has cited the
recent cases, so far as they were accessible. To avoid dis-
figuring the page by a doyble bracket, the. new matter is
distinguished from the original text, in the same manner
as in the last edition, without attempting to separate it
from the labors of the last Editor.
EDMUND H. BENNETT.
Boston, April, 1855.
ADYURTISEMENT TO THE THIRD EDITION.
The present edition of the Commentaries on the Law
of Partnership, contains the illustrations and authorities
furnished by the cases decided in England and America,
since the publication of the second edition. With the
view of preserving the original text, as left by the author,
all additions, except of the names of cases, are marked by
brackets; thus [ ].
CHARLES SUMNEK.
Boston, July, 1850.
PEEFACE TO THE SECOND EDITION.
The present edition of t^e Commentaries on Partnership
was prepared principally from the private copy of the late
Author, and will be perceived to have been considerably
enlarged by him from the previous edition. To his man-
uscript notes the Editor has merely added such other notes
and citations as have grown out of the more recent cases.
W. W. STORY.
TO THE HONOEABLE
SAMUEL PUTNAM, LL. D.,
ONE OF THE JUSTICES OF THE SUPREME JUDICIAL COURT
OF MASSACHUSfiTTS.
Sir:
It is with great satisfaction that I dedicate this work to
you. It is devoted to the exposition of a branch of that
great System of Commercial Law, which constituted a
favorite study in your early professional life, and which,
since your elevation to the Bench, you have administered
with eminent ability and success. No one, therefore, is
better qualified than yourself, to appreciate the importance
and difl5culty of such a task, and th6 indulgent considera-
tion, to which even an imperfect execution of it may be
fairly entitled. But I desire, also, that this Dedication may
be deemed, on my part, a voluntary tribute of respect to
your personal character, adorned, as it is, by the virtues,
which support, and the refinements, which grace, the un-
sullied dignity of private life. I recollect with pride and
pleasure, that I was your pupil in the close of my prepara-
tory studies for the Bar ; and, even at this distance of time
I entertain the most lively gratitude for the various instruc-
tion, ready aid, and uniform kindness, by which you
smoothed the rugged paths of juridical learning, in master-
ing which, an American student might then well feel no
little discouragement, since his own country scarcely afford-
ed any means, either by elementary Treatises or Reports,
X DEDICATION.
to assist him in ascertaining what portion of the Common
Law was here in force, and how far it had been modified
by local usages, or by municipal institutions, or by positive
laws.
I trust that you may live many years to enjoy the honors
of your present high station ; and I may be allowed to add)
that, out of the circle of your own immediate family, no
one will be more gratified than myself, in continuing to be
a witness 'of the increasing favor, with which your judicial
labors are received by the public, and of your possession of
that solid popularity, which (to use the significant language
of Lord Mansfield) follows, and is not rUn after, in the
steady administration of civil justice.
I am, with the highest respect, truly
Your obliged friend,
JOSEPH STORY.
Cambkidge, Massachusetts,
November, 1841.
PREFACE.
In offering another volume of the series of my profeSf
sional labors to the indulgent consideration of the Profes-
sion, I desire to say a few words in explanation of the plan
and its execution. The subject is one confessedly of a
complicated nature, containing many details, and not unat-
tended with difficulties in its exposition, sometimes from
the character of the abstruse and subtile doctrines belonging
to it, and sometimes from the occasional conflict, more or
less direct, of various adjudications to be found in English
and American Jurisprudence. I have endeavored, as far
as I could, to ascertain and state the true result of the
authorities, and the reasoning, by which they are respec-
tively supported ; and I have added . explanatory commen-
taries, sometimes briefly in the text, but in general more
largely and critically in the notes, in order to assist the
student in his inquiries, and to aid the younger members
of the Profession, who may be desirous of extending their
researches beyond the boundaries of their own limited
libraries. I have not hesitated, upon important occasions,
to make large extracts in the notes from the opinions of
eminent Judges and elementary writers, believing, that it
is the most effectual mode of making the reasoning, upon
which particular doctrines are founded, as well as the
learning, by which they are supported, more clear, exact
and satisfactory, than the necessary brevity of the text
would allow. I trust, also, that I shall not be deemed to
have misused the privilege of a commentator, by occasion-
xii PREFACE.
ally questioning, in the notes, the authority of a particular
case, or the soundness of a p.articular doctrine, or by sug-
gesting the importance of a more critical inquiry into the
true bearing and value thereof. Unambitious, and even
facile and superficial, as this- portion of my labors may
seem, it has been attended with much embarrassment and
exhaustion of time and thought ; far more, indeed, than a
careless observer might suppose could properly belong
to it.
J have in the present, as in my former works, endeavored
to illustrate the principles of our jurisprudence by a com-
parison of it with the leading doctrines of the Roman Law,
and with those of the systems of the modern commercial
States of Continental Europe, and especially with that
of France, which may fairly be deemed to represent and
embody the main principles of all the others in a precise
and elaborate form.' Pothier and Valin, among the earlier
Jurists, and Pardessus, Boulay-Paty, Duranton, and Dnver-
gier, among the later Jurists, in their -Comments upon the
Civil and Commercial Codes of France, have furnished
many highly useful materials. Mr. Bell's excellent Com-
mentaries upon the Commercial Law of Scotland are at
once learned, comprehensive, and exhausting, an(^ have
afforded me very great assistance. I have also freely used
the able treatises of Mr. Watson, Mr. Gow, and Mr. Collyer
on the subject of Partnership, and have everywhere cited
the pages of the latest editions of their works. in the mar-
gin, so that the learned reader may have the means of
verifying the citations, and of extending his own researches
by the farther lights afforded by the diligence of these
accomplished authors. Mr. Chancellor Kent's Commen-
taries have upon this, as upon all oth^r occasions, been
diligently consulted by me ; and I need scarcely add, that
they have never failed to instruct me, as well as to lighten
my labors..
PEBPAOB. XUl
The Roman Law is an inexhaustible treasure of various
and valuable learning ; and the principles applicable to the
Law of Partnership are stated with uncommon clearness
and force in the leading title of the Institutes (De Socie-
tate), and those of the Digest and the Code of Justinian
(Pro Socio), and in the very able Commentaries of Vinniusj
Heiueccius, and John Voet thereon. A slight glance at
them will at once show the true origin and basis of many
of the general doctrines, incorporated into the modern
jurisprudence of Continental Europe, as well as into that
of the Common Law. Indeed, it would be matter of sur-
prise, if the Homan Law, which may be truly said to be
the production of the aggregate wisdom and experience of
the most eminent Jurists of a vast Empire, did not, upon
this subject, abound with principles, not only founded in
natural justice, but well adapted to the convenience and
policy of commercial' nations in all ages. It is curious to
observe, how distinctly many of these principles may be
traced in the early Ordinances of the Maritime States of
modern Europe, and especially in that venerable collec-
tion of the laws and usages of the sea, the Consolato del
Mare.
But, after all, the Law of Partnership owes its present
comparative perfection and comprehensive character and
enlightened liberality mainly to the learned labors of the
English Bar and Bench. America, while it has derived
from the parent country all the elements of that law, has
also contributed its own share^ towards expounding and
enlarging them, so as to meet the new exigencies and pro-
gressive enterprises of a widely extended international
commerce.
Cambridge, Massachusetts,
November, 1841.
PAHTN. b
CONTENTS.
THE FIGDKES KEFEK TO THE SECTIONS.
Index to Cases Cited . page xvii
^ CHAPTER I.
SECTION
Partnership — What constitutes 1-6
CHAPTER n.
Who may be Partners 7-14
CHAPTER m.
Partnership between the Parties — Community of Interests 15 - 29
CHAPTER IV.
Partnership as to ThircJ Persons . . . ■ 30-70
CHAPTER V.
Partnership — Different sorts of 71-87
CHAPTER VI.
Rights and Interests of Partners in Partnership Property 88 - 100
CHAPTER VII.
Powers and Authorities of Partners 101 - 125
XVI CONTENTS.
CHAPTER "Vail.
Liabilities and Exemptions of Partners as to Third
Persons 126 - 168 a
CHAPTER IX-.
Rights, Duties, and Obligations of Partners between
themselves 169-186
CHAPTER X.
Eights, Duties, and Obligations of Partners under the
Articles thereof 187-215
CHAPTER XI.
Remedies between Partners 216-233
CHAPTER Xn. i§
Remedies by Partners against Third Persons . . . 234 - 264
CHAPTER Xin.
Dissolution of Partnership, when and how it may be . 265 - 31 9 a
CHAPTER XIV.
Effects and Consequences of a Dissolution, as between
the Partners 320-356
CHAPTER XV.
Dissolution — Effects and Consequences of a, as to the
Rights of Creditors - 357-411
CHAPTER XVI.
Partowners of Chattels — Rights, Powers, and Liabilities of 412 - 463
Index p^oe 717
INDEX TO CASES CITED.
THE FIGUEES KBFER TO THE SECTIONS.
A.
Abbott V. Dexter
V. Smith
114
219, 222, 260
160
Abel V. Sutton
Abell, Ex parte 376, 377, 379, 536
Acherley v. Roe 233a
Adams v. Bankart 114, 115
, Ex parte 388, 390, 394, 405
V. Liardet 290
Adamson v. Jarvfe 220
Addison v. Overend 256, 454
Agace, Ex parte 102, 110, 132, 133,
154
Akhurst v. Jackson .203
Albrecht v. Susman 240
Alcock V. Taylor ' 84
Alder v. Fouracre 98, 331
Alderson v. Pope 130
V. Temple 238
Alexander v. Barker 241, 242, 243
Allen V. Center Valley Com-
pany 326, 361
V. Kilbre 329
V. Wells 261, 262, 262a, 311,
363
Anderson v. Lemon 1 74
V. Maltby 163
». Tompkins 92, 101, 122,
310
V. Wallace 212
Andrew v. Boughey 155
Anonymous v. Layfield .123
Ansel! v. Waterhouse 219
Apollo (The) 418, 428, 438
Apsley, Ex parte 368
Arden v. Sharpe . 132
Arlington v. Merrick 250
Armstrong v. Robinson 114
Arnold v. Brown 298, 313
Arthur v. Dale 141
b*
Astley V. Weldon
Atkins V. Hunt
V. Tredgold
215
150
323, 324a
242
416
Attorn.-Gen. v- Burges 166
V. Davy 125
Ault «. Goodrich 233o, 334, 357
Atkinson v. Laing
V. Maling
B.
Bachoz V. Grandjean 114
Bagshaw v. Parker 297a
Bailey v. Banker 234, 236, 237
V. Clark 34, 56
V. Ford 228, 231
V. Vincent 338
Baker v. Charlton 106
V. Jewell 454
V. Stackpole 324
Ball V. Dunsterville 120
Balmain v. Shore 93, 196, 199
Band V. Cochran 133
Bandier, Ex parte 377
Bank of Australasia v. Briellat 126
Bank of Rochester u. Bowen 127
Bank, Ex parte . 384
Bank of U. States v. Binney 101,
' 104.
(See U. S. Bank v. Binney)
Barber v. Barber 233a
V. Hartford Bank 263
Barclay v. Lucas 250
Bardwell v. Perry 263a
Baring v. Crafts _ 63
V. Dix 275, 290
V. Lyman 1
Barker u. Goodair 263, 264, 314,
337, 340
V. Parker 70, 250
V. Richardson 252
XVIU
INDEX TO CASES CITED.
Barklie v. Scott
70
Barnardiston v. Chapman
449
Barr v. Spiers
290
Barrow, Ex parte
5, 307
Barry v. Nesham
36
Barton v. Harrison 58
141, 154
V. Williams
101
Bass V. Bass
233a
Baxter v. Kodman
42, 45
Baylis v. Dineley
7
Beach v. Sute Bank
102, 108
Beacham v. Eckford 182a
, 192, 349
Beak v. Beak , 331
346, 349
Beal V. Mouls
152
Beamont v. Meredith
290
Beard v. Webb
10
Beokford v. Wade
233a
Beckham v. Drake
103, 120
Bedford I'. Deakin
155, 158
103 120
Belknap v. Abbott
362
Bell V. Ansley ,
242
V. Humphreys
446
V. Morrison
107, 324
V. Newman
363
V. Phyn
93
Bellairs v. Hobworth
251
Belote V. Wynne
324
Benjamin v. Porteus
32,41
Bennett, Ex parte
208, 289
V. Stickney
114
Benson, Ex parte
388
w.Hadfield
155
Bentley v. Bates
229
Berkeley v. Hardy
117
Besch V. Frolick
295, 297
Bettel V. Williams
111
Bevan v. Lewis
140, 263
, Ex parte
386
Biddledome v. Bond
214
Bignold V. Waterhouse
107, 130
Bishop V. Breckles
275
Bladney v. Ritchie
455
Blair v. Agar
232
V. Bromley
L07, 108a
Blake v. Dorgan
288
V. Nutter
92
Blake's Case
268, 271
Blakeney v. Dufaur
228
Bland, Ex parte
455
. V. Haslering
323
Blandy v. Hubert 152
Blanshard, In the matter of 417, 428
Blew V. Wyatt 158
Blisset u. Daniel 214
Bloxam v. Fourdrinier 68
V. Hubbard 256, 449, 454
Blundell v. Winsor 164
Boardman v. Gore 108
Bodenliam f. Purchas 253
Boggett V. Frier 10
Bolitho, Ex parte 106, 140, 142
Bolton, Ex parte 379
V. PuUen 154, 369, 376
Bonbonus, Ex parte 132, 133, 388
Bond, Ex parte . 384,385
V. Pittard 19, 21, 23, 31, 34,
42, 55, 56, 59, 60, 61, 64, 69
Bonfield v. Smith 64, 134
Booth i>. Parks 198,343
Bosanquet, Ex parte 117, 122
V. Wray 221, 235
Bourne v. Freeth 150, 151
Boussmaker, Ex parte 9
Bovill V. Hammond 219
V. Wood • 361
Bowden, Ex parte 389
Bowles's (Lewis) Case 422
Boyce v. Costar 92
Boyd V. Emerson 114
Boydell v. Drummond 323
Boyington v. Boyington 114
Bradford f.Kimberley 182, 185, 331
Bradley v. Chamberlin 198
V. White 41, 43
Braithwaite v. Britain 323, 325
= :«. Schofield 150
Brandon v. Kobinson 208
Brandram v. Wharton 322
Brassington v. Ault 241
Brewster v. Hammett 263, 264
Bridges V. Mitchell 233a
Brierly v. Cripps 219
Brisban v. Boyd 107, 322, 324
Brooke u. Enderby 253,334
V. Washington 63, 83
Brooks V. The Seneca 437, 439
Broom v. Broom 93
Broome, Ex parte 232
Brophy V. Holmes 27
Brown, Ex parte 367
V. De Tastet 329, 341, 343,
349
V. Gibbons 148
V. Gordon 324c
V. Leonard 130, ISO
V. Litton 173, 229, 233, 343,
348, 349
V. Tapscoffc 219, 221
Bruen u. Marquand 114,115
Bryson v. Whitehead 99
Buchanan v. Curry 114
Buchan v. Sumner 93, 94
Buckley v. Buckley 93
INDEX TO CASES CITED.
XIX
Buckley v. Barber 828, 342, 344
V. Cater 290
Buckner v. Lee 68, 105, 106, 139
Bulkley v. Dayton 115
Burckle v. Eckhart 41
Burden v. Burden 182, 185, 331,
344, 349
Burke v. Winkle 10
Burleigli v. Scott 107.
Burn V. Burn 120
Burnside v. Merrick 92
Burrall v. Acker 262
Burrell, Ex parte 390
Burton, Ex parte 403
V. Wookey 175, 177, 178,
348
Burwell v. Mandeville's Exrs. 201a,
319a
V. Springfield 132
Bury V. Allen 203, 233
Busli V. Steinman 461
Bushell, Ex parte 132
Buxton V. Lister " 189
Byers v. Van Deusen 215, 300
C.
Cady V. Shepherd 120, 122, 324
Caldicott V. Griffiths 219
Caldwell v. Lieber 182, 233, 330,
331
Campbell v. Mullett . 358, 360, 362
V. Steen 446
CsCrd V. Hope 418, 428, 432
Carr v. Smith 219
Carrell v. Blencow 10
Carroll v. Walters 456
Carron Company (Case of the) 277
Carter v. Whalley 160
V. Home 174
Carthaua v. Ferrer 114
Carver v. Miller 422
Catesby, Ex parte 394
Catlin V. Evans 114
Catskjll Bank v. Still 127
Chambers v. Howell 343
Champion v. Bostwick 38, 58
Chapman v. Beach 231, 242, 243, 288
V. Durant 455
V. Korfs 261, 262, 263
Chappie V. Cadell 213, 231
Chandler, Ex parte 379, 381
Charlton v. Poulter 225, 227, 228,
229, 231, 288
Chase V. Barrett 34, 36
Chauncey v. May 229
Chavany v. Van Sommer 275
Cheap u. Cramond
41, 44,
Christie, Ex parte
Chuck, Ex parte
Church V. Sparrow
V. Knox
Clark V. Blackstock
V. Bradshaw
Clarke v. Price
Clarkson v. Carter
Clavering v. Westley
Clay, Ex parte 363,376,377,379
Cleghorn v. The Insurance Bank
377
Clement v. Brush
V. Hadlock
15, 16, 34, 36,
56, 59, 60, 61
454
59, 70
126, 140
263, 264a
143
323
146, 148
241
106
Cleveland v. Woodward
Cleworth v. Pickford
Clowes, Ex parte
Cobbam, Ex parte
Coekburn v. Thompson
Coffee V. Brian
Coles V. Coles
V. Trecothick
Collins V. Barrett
Golt V. WoUastan
Coftibs V, Boswell
Commercial Bank of Lake Erie
V. Western Reserve Bank 363
Conro V. Port Henry Iron Co. 334
117
27, 32
134
114
368, 370
377, 379
229
219
92, 94, 98
117
257
285
328
Const V. Harris
Converse v. Sims
Cook V. Arthur
V'. Batchelor
V. Beach
V. CoUingridge
— — , Ex parte
Cooke, Ex parte
Cookson V. Cookson
Coomer v. Bromley
123, 192
454
264a
257
358
207, 350, 351
363, 376
208
82, 93, 207
168a
Coope V. Eyre 3, 19, 30,45, 63, 148
Cooper D. Watson
Copeman v. Gallant
Copland, Ex parte
V. Toulman
Coppard V. Page
Corbet v. Poelnitz
Coryton v. Lithebye
Cosio V. De Bernales
Coster V. Murray
Coslake v. Till
Cothay v. Fennell
Cottam V. Partridge
Cowell V. Sikes
Cox V. McBurney
V. Reid
Coxwell I'. Bromet
210
372
377
157, 253
42, 59
10
257, 258
247
233a
99
241, 242,243
233a
363
92
455
349
XX
INDEX TO CASES CITED.
Crallan v. Oulton 324a, 360
Crawshay v. Colling 350, 351
V. Maule 277, 292, 317,
318, 322, 324, 329, 346, 350, 351,
356
Crawford v. Hamilton 196
«. Sterling 127
Cremer v. Higginson 245
Crispe, Ex parte 379
Crofit V. Pyke " 97
Cruikshank v. M'Vioar 221, 325
Cruttwell u. Lye . 99
Cullum V. Bloodgood 101
Cumming v. Forrester 242
Cumpston V. M'Nair 280
Cust, Ex parte 392
Cutler V. Winsor 34, 41, 44, 45
Cutt w. Howard 152
D.
Dacie v. John
Dale V. Hamilton
Dana v. Lull
V. Stearns
Dance v. Girdler
Daniel v. Cross
Davenport v. Eackstraw
David V. Eloi
V. Ellice 155,
Davies v. Hawkins
Davis V. Allen
V. Johnston
De Berenger v. Hammell
De Berkom v. Smith
Dechart v. Filbert
De Gaillon v. L'Aigle
De Lovio V. Boit
Deming v. Coet
Denny v. Cabot
— ■ V. Metcalf
Depeyster v. Wheelwright
De Tastet v. Shaw
V. Bordenare
Delauney v. Strickland
De Mautost v. Saunders
Denton v. Rodie
Desha V. Smith
bevaynes w.Noble 156, 157, 253, 362
Dexter v. Arnold 182a
Dickerson v. Wheeler 117
Dickinson v. Legare 101
V. Valpy 113, 126, 151
Digby, Ex parte 55
Dixon V. Cooper 41, 45, 56
Doane v. Badger 422
Dob V. Halsey 15, 27, 36,43, 56, 58,
127, 132, 133
329, 330
15, 82, 83
101,310
7
250
158
241
456
156, 370
125
160
446
288
132
101
10
438, 439
101
34,41
234
454
221, 234
329, 330
144
134
140, 154
182a
Doddington v. Hallett 417, 442, 444
Doe V. Miles 268
Dolman v. Orchard 160
Dommett v. Bedford 208
Donner v. Staffer 268
Doremas v. M'Cormick 108
Doty V. Bates 102
Doubleday v. Muskett 150
Dougherty v. Van Nostrand 99, 174,
^ 185
Downs V. Collins 190, 199, 201, 224
Drake, Ex parte 407
Drury v. Roberts 328
Dry V. Boswell 19, 32, 34, 41, 44,
45, 46, 56
V. Davy 245, 247, 249
Duff V. East India Company 403
Duncan v. Lyon 218, 222
V. Lowndes 111, 127, 133
Dunham ». Jarvis 417,444
V. Rogers 43
Dutton V. Morrison 260, 261, 262,
263, 311, 314, 337,340, 377, 379
Dwinel v. Stone 44
Dyer v. Clark 92
Edmondson v. Davis
Edwards, Ex parte
V. University
167
384
233a
Egberts v. Wood ' 101
Eggleston and wife v. Clipsham 454
Elizabeth and Jane (The) 428,434,
435, 439
Ellicott V. Nichols ' 323
Elliot V. Brown 98, 331
V. Davis " 119
Ellison V. Darell 115
Elton, Ex parte 365, 377,-379
Emanuel v. Bird 363
V. Draugh 61
Emly, Ex parte 134, 140, 367
V. Lye 136, 140, 154
Enderby, Ex parte 371, 403, 404
England v. Curling 192
Estwick V. Conin^sby 344
Etheridge v. Binney 63, 105, 139
Evans v. Drummond 165, 156, 158,
159, 334, 370
V. Evans ' 324&
V. Silverlock 254
Evernghim v. Ensworth 132, 133
Everett v. Chapman 27, 31, 68
V. Coe 55, 68
Everit ri. Strong 122
Eyre, Ex parte 166, 168a
INDEX TO Cases -CITED,
XXI
F.
Fairthorne v. Weston 22.9
Faith V. Raymond 202, 243
V. Richmond 102, 136, 142
FarHe, Ex parte 370
V. Hastings 323
Farlow, Ex parte 377
Farr v. Pearce ^ 99
Farrar v. Beswick 24
v. Deflinne 156, 159
— V. Hutchinson 110, 132
Fauntleroy (^Case of) 304
Faver v. Brings 114
Fawc'ett V. Whitehouse 174, 232
Featherstonhaugh v. Fen-wick 84,
98, 99, 174, 176,- 198, 207, 269,
279, 351
Feliohy v. Hamilton 18, 147
Fells, Ex parte 326, 358, 360, 401
402, 403
Fennings v. Lord Granville 42
Fereday v. Hordern 23," 45
V. Wightwick 82, 93, 231,
350, 407
Field, Ex parte 376
Figes V. Cutler 215
Filley v. Phelps 261
Finkle v. Stacy 18, 30, 59
Fintum, Ex parte 377
Fisher v. Taiylor 102, 122a
Fisk V. Herrick 264'a
Fitz V. Hall 7
Fleming v. Hector 144
Flyn, Ex parte 372
Foote V. Sabin 127, 133
Fofkner v. Stuart . 101
Forman v. Homfray 222
Forrester v. Bell 151
Forster v. Lamson 256
Foster v. Alanson 218, 219
Fex V. Clifton 64, 150, 151
V. Hanbury 94, 126, 261, 311,
313, 314, 328, 339, 351
Frankland v. McGusty 133
Franklin v. Lord Brownlow 336, 338
V. Robinson 182, 185, 331
(The) 9, 316
V. Thomas 264
Freeman, Ex parte 359, 368, 370,
394
French u. Backhouse 446
r V. Chune 263
Friendschaft (The) 316
Fromont v. Copland 5^, 5», 219
Fry, Ex parte . 370
Furnival v. Weston
Furze v. Sherwood
G.
114
103, 106
Gage V. Rollins 241
Gaines v. Catron 92
Gainsborough i7.- Stark 190
Galeu.L'eckie 219
Galway (Lord) v. Mathew 102, 123,
^ 130, 143
Gannett v. Cunningham 328
Gansevoort «. Williams 132,133
Gardiner v. Childs
Gary v. Pike
Garland, Ex parte
Garret v. Taylor
Garrett v. Handley
Garth M. Howard
Gaulding, Ex parte
Geddes v. Wallace
147, 149
32
70, 201a, 319a
155
242, 243
323
132, 133
30, 32, 59, 61,
63, 191, 219
27, 59, 389
Cellar, Ex parte
Geortner v. Trustees of Cana-
joharie 322, 325
German Mining Company, in re
182a
Gibbons v. Wilcox 41
Gibson V. Lupton ■ 3, 30, 145
Gillespie w. Hamilton 317
Gilpin V. Enderby 23, 55, 60, 61, 69
Glassington v. Thwaites 178, 179,
209, 213, 222, 227, 231, 288
Glossop V. Colman
/ 241
Godfrey v. TurnbuU
65, 160
Godson V. Good
361
Goodburn v. Stevens
343
Goode V. Harrison
7,64
Goodman, Ex parte
389
V. Whitcomb
181, 218,
225, 227, 231, 287, 288, 356
Gordon, Ex parte 126
V. Howden 6
Gorham r. Thompson 160
Gough V. Davis 158
Gould V. Gould 24
U.Horner 198
Gouthwaite v. Duckworth 147, 148,
150
Grace v. Smith 19, 36, 48, 56, 58,
59, 60, 66, 67, 68
Graham v. Robertson 219, 338
V. Hope 65, 160
Gram v. Caldwell 132
V. Seson 120, 122 .
Grant v. Austin 254
xxu
INDEX -TO CASES CITED.
Gratz V. Bayard 195, 196, 288
Gray v. Chiswell 362, 363
Grazebrook, Ex parte 406
Griswold V. Waddington 9, 65, 240,
269, 280, 281, 290, 296, 303, 305,
306, 312, 313, 315, 316, 336
Green v. Barrett • 232, 285
V. Beales 117
u. Beesley 19,41,42,45,55,
57, 58, 60
V. Briggs 441, 442
V. Deakin 132, 133
V. Miller 125
V. Tanner , . 134, 140
V. Waring 215, 301
Greenslade v. Dower 126, 147
Greenwood's Case 164
Gregory v. Paul 10
Gridley v. Dole 219
Grindley v. Barker 125
Grove v. Dubois 242
Guidon !). Kobson 65,241,242
H.
Hackley v. Patrick
Hagar v. Stone
Hagedorn v. Oliverson
Hague V. Kolleston
Halfhide v. Penning
Halket, Ex parte
Hall V. Digby
, Ex parte
V. Hall
V. Leigh
V. Smith
Halsey v. Whitney
Hambridge v. De la Crouee 114, 115
Hartersley v. Lambert 362
Hamilton v. Hamilton 219
V. Purvis 127
V. Stokes 232
Hammond v. Douglas 99, 100, 322,
343, 349
Hamper, Ex parte
323
135
242
314, 339
215
416
90
406
229
3, 27, 30
102, 143, 242
115, 120
Hankey v. Garrett
Hannay v. Stewart
Harding v. Foxcroft
V, Glover
Hargrave v. Smee
Hargreaves, Ex parte
Harman v. Fisher
Harrington v. Higham
Harris v. Beverington
I'. Farwell
V. Lindsay
27, 35, 36, 38,
45, 69, 263
362
323
30, 45
329, 330
248
394
238
114
256
155, 156, 158
158, 254
Harris, Ex parte 130, 390, 391, 392,
403
Harrison v. Armitage, 222, 229, 231
V. ■Gardner 99, 211
P.Jackson 114,117,119,
121, 126
101, 121
156, 158
455
344,347
221, 2'63, 314,
328, 339, 341
150, 157
114
219
233a
113
101, 310
264a
101,126
108
V. Sterry
Hart u. Alexander
V. Fitzgerald
Hartz V. Schrader
Harvey v. Crickett
V. Bay
Harwood v. Edwards
Haskell v. Adams
Hasell, Ex parte
Hasleham v. Young
Havens v. Hussey
Hawes v. Waltham
Hawker v. Bourne
Hawkins v. Appleby
Hawkshawu. Parkins 115, 119, 252,
264
Hawtayne v. Bourne
Hay, Ex parte
Hay don. Ex parte
Haythorne v. Lawson
Hazard v. Hazard
Heath v. Hall
V. Hubbard
— ^ V. Sansom
126
370
377
257
30, 32, 55
387
449
160, 269, 272,
299, 308, 334
Heatheote v. Hulme 329, 330, 343
Hedley v. Bainbridge
Heimstreet v. Howland
Helme v. Smith
Helsby v. Mears
Henton, Ex parte
Henecy, Ex parte
Henley v. Soper
Herbert v. Hanrick
Hercy v. Birch
Hernis v. Jameson
Hesham, Ex parte
Hesketh v. Blanchard
102a
. 41
219
107, 152
208
208
219
122
189
260
394
16, 27, 40,
Heydon v. Heydon
Hiand v. Bigg
Hibbert v. Hibbert
Hichens v. Congreve
Hickman v. M'Eadden
Higinbotham jj. Holme
Hill V. Burnham
, Ex parte
43, 45, 53, 57, 58, 63
261
141, 154
189
174, 229
329
208
349
208,377,380
Hitchcock V. St. John 101, 310
Hoare v. Dawes, 3, 19, 30, 65, 63,
64,80,138
INDEX TO CASES CITED.
XXUl
Hobey v. Roebuck
Hodges V. Parker
Hodgkinson, Ex parte
153
182a
53, 55, 56,
370
Hodgson, Ex parte 208, 377, 379
Hogg V. Kirby 259
Holderness v. Shackels 326, 360,
400, 407, 408
Holmes v. Blogg 7
V. Hawes 329
— V. Mentze 261, 263, 441
V. U. Insurance Co. SO, 55,
56
V. Williamson
219
201
311
68
182a
Holland v. King
Holroyd u. Wyatt
Holyland v. De Mendez
Honore v. Colmesnil
Hood V. Aston 133, 227, 259
Hoop (The) 315, 316
Hooper v. Lusby 102, 446
Hope w. Cust 102,111,127,133
Hopkins v. Forsyth
Hopkinson i. Smith
Hornblower v. Proud
Horton's Appeal
Hosack V. Rogers
Houghton V. Houghton
Houser v. Irvine
Houston V. Darling
Howard v. Priest
Howell w^Brodie
Hoxie V. Carr
Hubbard, Ex parte
V. Guild
Hunt V. Bridgham
Hunter, Ex parte
V. Parker
Hume V. Ballard
Hutchinson :;: Smith
Hyatt V. Hare
Hyling v. Hastings
Hynes v. Stewart
I.
Indian Chief (The)
Inglis V. Haigh
Innes v. Dunlop
Irvine v. Forbes
417
59
403
307
255
93
323
42
92
150, 151
82,92, 339
381
341
323
140, 367, 390
120, 121,122
108
344
126
323
285
9,316
233a
244
164
Jacaud v. French
Jackey v. Butler
Jackson v. Stopherd
u. Jackson
V. Robinson
236, 252
,261
219
90, 91, 98
3,80
J9,ckson, Ex parte
V. Sedgwick 191,
V. Fairbank
Jacomb v. Harwood
Jaggers v. Binnings
James v. Bixby
Janson, Ex parte
Jaques v. Ii^rquaild
Jarvis v. Brooks
Jeffreys v. Smith
V. Small
82,
Jervis v. White
Jestons t>. Brooks
John of London (The)
Johns, Ex parte
Johnson v. Peck
Jones V. Clayton
V. Dwyer
V. Gibbons
V. Jones
V. Maund
V. Moore
V. Noy
V. Yates
Jonge Pieter (The)
Tobias (The)
Jordan v. Wilkins
Joseph V. Pilfrer
Judson V. Adams
Julia (The)
K.
292
221, 232,
9,
152, 368
192, 213,
349
323
362
453
455
363, 380
140, 142
263a
183, 231
90, 342
227, 259
18
428
394
238
260
399
403
l82a
253
323
295, 297
234, 238
9
447
31, 61
164
41,43
240, 315
Kay V. Duchess de Pienne
Keating'!). Marsh
Kean v. Boycott
Keble v. Thompson
Kelley v. Hurlbert
V. Wilson
Kemble v. Kean
Kemis v. Richards
Kendall, Ex parte 253,
362,
Kensington, Ex parte 245,
Kenshaw v. Mathews
Ketchum v. Durkee 134,
■ V. Clark 160,
Kieran v. Sanders
KifBn V. Willis
Kilby V. Wilson
Kilgour V. Finlyson
Kill V. Hollister
V. Nainby
Kimball v. Blanc
10
108
7
368
138
238
224
132
S60, 361,
364, 405
363,377,
380
201
146, 153,
357
307, 308
241
168
166
160, 396
215
241, 242
456
XXIV
INDEX TO CASES CITED.
Kimberly v. Jennings 224
King V. Smith 254
(The) V. Beeston 125
; — V. Collector of the
Customs 417
Kingman v. Spurr 307
Kirby v. Carr 295
I'. IngersoU 101
V. Sehoonmaker 97, 326
Kirk u. Blurton 102
V. Hodgson 123
Kirkham v. Newstead 155
Kirkley v- Hodgson 403
Kirwan v. Kirwan 152, 155
Knebell v. White 222, 229
Knowles r. Houghton . 229
Knox V. Summers 263
Lacy w. McNeil 107
V. Woolcott 336, 339
La Forest, Ex parte 388
Lake v. Cradock 92
. V. Duke of Argyll 150a
Lamb v. Durant 416
Lampier u. Creed 11
Lancaster Bank v. Myley 81
Lane v. Williams 362
Lang V. Waring 132
Langdale, Ex parte 19, 35, 36, 56,
60, 61, 64
Lansing v. Gains and Ten
Eyck 127, 133, 160
Laverty v. Burr 127
Lawrence v. Trustees of
Orphan House
Lawson v. Morgan
Lay field, v.
Leaf w. Coles
, Ex parte
Lean v. Shultz
Lee V. Lashbrooke
Leonard v. Harrington
362
227
123
295
380
10
182,182a
465
Le Koy v. Johnson 102
Levy V. Cadet
Leveek v. Shaftoe
Lewis u. Langdon
V. Moffatt
Liardet v. Adams
Lingen v. Simpson
Litflewood v. Caldwell
Livingston v. Cox
J— i: Hastie
V. Lynd .
126, 130,
134, 160
324
241
100, 202, 329,
346
182
•288
329
227, 288
81
127, 133
125
Livingston v. Roosevelt 102, 126,
12'7, 132, 133
Lloyd V. Archbowle 241
V. Ashby 153
V. Freshfield 130, 133, 134,
140
u. Loring 123,125
Lobb, Ex parte 370
Lockyer v. Savage 208
Lodge V. Dicas 155, 156
Ex parte, 390
Long%. Majestre 178
Loomis V. Marshall 34, 35, 45
Lord V. Baldwin 241, 263
Loscombe v. Russell 222, 229, 288
Lovelace's (Lord) Case 120
Low V. Mumford ^ 458
Lucas V. De la Cour 107
Lucena v. Crawford 242
Lyndon v. Gorham 264a
Lyth V. Ault 155
M.
Mackay w.Bloodgood 120
Macy B. De Wolf 417, 421
Maddeford v. Austwick 133
Mainwaring v. Newman 221
Mair v. Glennie 27, 32, 41, 42, 45,
56
Major V. Hawkes 328
Manuf. and Mechanics' Bank
V. Winship 106
V. Gore 108
March v. Ward 143
Marchington v. Vernon 242
Marquand v. New York Man-
ufac. Co. 269, 272, 275,
307, 308, 813
V. Webb ■ 455
Marsh v. Hutchinson 10
V. Robinson 242
Marshall v. Coleman 202, 226, 228,
229
V. Marshall 277
Martin i: Crompe 346
, Ex parte 403
V. Heathcote 233a
Marwick, In re 380
Mason v. Ramsay 102
Master v. Kirton 227, 269, 288
Mather v. Smith 264
Mawman v. Gillett 241
McConnel v. Hector 240, 316
McDougall V. Banks 192
McGuire v. Ramsay 92
Mclver v. Humble 36, 55, 64
INDEX TO CASES CITED.
xxy
McLanalian v. EUery 254, 255, 367
McNaughton v. Partridge 117
Meaghaii, In the matter of 208
Merrell v. Neil 263a
Merryweather v. Nixon * 219, 220
Metcalf w. Bruin 250
— «. Rycroft 115,119
Meyer v. Sharp 15, 27, 41, 55, 56
Mifflin V. Smith 106, 138, 139, 279
Milbank v. Revett 228, 231
Milburn v. Codd 219
Miles V. Thomas 202, 223, 225, 227,
229, 269
Millar v. Bartlett 35, 41, 45
Craig 182a
Miller t). Sims .7
Millett a. Hutchinson 126
Millington v. Fox 100, 259
Mills u. Barber 101
Milne v. Bartlett , ' 295
Minett v. Whinnery 123, 130
Mitchell V. Tarbutt 166
Mobly V. Lombal . 264a
Moffat V. Van Millengen 221, 234
V. Farquharson 449
Mohawk and Hudson Bail-
road Co. V. Niles 41, 85a
MoUen v. Lambert 250
Monro, Ex parte • 403
Moody V. Payne 264, 311
Moore, Ex parte 406
V. Hill 269
V. Smith 46
Moravia v. Levy 219
Moreton v. Hardern 166
Morley w. Gaisford 166
— : V. Newsotne 215
Morris v. Barrett 93
V. Colman 224
, Ex parte S76
V. Harrison 201
— V. Kearsley 93
Morrison v. Blodgell 262
Morrow v. Riley 219
Morse V. Wilson 69
Motley V. Dowman ■ 100, 259
Mnmford v. NicoU 56, 444
Murdon v. Whitlock 455
Murray v. !66gert 307
V. Mumford 325, 328
V. Murray 339, 363
V. Somerville 134
Murrill V. Neill 376
Musier v. Trompour 27, 31
Mnzzy^v. Whitney 32, 43, 45
Myers v. Edge 245
PABTN. C
N.
Napier v. Catron
V. Rapelie
117
115
National Bank v. Norton 322, 334
Natusch V. Irving. 193, 222, 326
Neal V. Sheaffield
Neale v. Turton
Nerot V. Burnard
Nesbitt V. Meyer
New Draper (The)
Newman v. Bean
— : V. Bagby
Newmarch v. Clay
117
219, 221, 234
269, 306, 356
289
445
262
262
155y, 159
New Orleans (The Steamboat)
427, 428
Newsome v. Coles 160
Newton V. Boodle 102, 142, 202
New York Fire Ins^ Co. v.
Bennett
127
130
NicoU V. Glennie
166
307,
311,
417
Niven v. Spikeman
.221
Nockels V. Crosby
219
Nokes, Ex parte
84
Nolte, Ex parte
111
,127
Norfolk, Ex parte
393
Northern Coal Mining Com-
pany, in re
201a
Norway v. Koe
228
,231
0.
Oakley v. Pasheller 156
,158
370
Oaden v. Aster
343
Ohlt;. The Eagle Ins. Co.
416
417
Oleott V. Wing
84
Oldaker v. Lavender
206
232
Oldknow, Ex parte
377
Oliphant v. Matheivs
139
Oliver V. Hamilton
228,
231
Ord V. Portal
244
Osborne v. Ha,rper
244
Otis V. Sill
98
Ouston V. Hebden
437
438
V. Ogle
449
Owen V. Body
70
V. Van Uster
86
Oxley, Ex parte
P.
Page, Ex parte
208
377
V. Carpenter
262
Palmer v. Stephens
142
XXVI
INDEX TO CASES CITED.
Parker v. Barker 64
, Ex parte 390
V. Gossage 214
V. Morrell 326
V. Parton 263
V. Peston 264
V. Kamsbottom 163
Parkhurst v. Muir 228
Parkin v. Carruthers 65, 140, 160,
334, 335
Parkney v. Hall 132
Parr, Ex parte 387, 389
Parry, Ex parte 444
Parsons v. Crosby 241
Patten v. Gurney 458
Patterson v. Brewster 83, 93, 862
V. Gandasequi 455
Pattison v. Blanchard 40, 58, 58a
Payne v. Matthews 363
V. Wood 127
Peacock, Ex parte 389
V. Peacock 15, 24, 59, 84,
181, 231, 269, 275, 322, 325
Peake, Ex parte 163, 358, 377, 380
Pearce v. Chamberlain 196, 295
Peare v. Hirst 244, 248
Pearson ti. Skelton 61, 219, 220,
222, 408
Peck V. Fisher 92
Peele, Ex parte 359, 368, 370
Peirce v. Piper 290, 316
Pemberton v. Oakes 246, 253
Ferrine v. Hankinson 43
Perrott v. Bryant 41, 42, 55, 59
Perry v. Jackson 252
Pettes V. Spalding , 264a
Pettyt V. Janeson 191, 349
Peyton v. Lewis 158
Phillips V. Ackerson 344
V. Phillips 147
Pichard u. Sears ' 328
Pierce v. Jackson 253, 261
V. Wood 108
Pierson y. Hooker 115
Pierpont v. Graham 101, 275, 310
Pigott V. Bayley 201
Pine, Ex parte 390
Pitchford v. Davis 150
Pitkin V. Pitkin 319a
Pitt (The) 428
Pittam V. Foster 107
Pitts V. Waugh 83, 138
Plummer v. Phillips 385, 387, 389
Pollock V. Patterson 295
Ponton V. Dunn 200
Pope V. Hayman 261
Porter v. McClure ' 3, 45
Post V. Kimberley 30, 45, 56, 64,
147, 280
Pott V. Eyton 36, 41, 43
Potts V. Bell 315
Powles V. Page 160a, 164
Preston v. Stratton 219
Price V. Groom 70
V. Williams 215
Putnam v. Wise 5
K.
126
268
244, 254
82
315
107, 108, 166
Eabar v. B,ylard
Eackstraw v. Imber
Eadenhurst v. Bates
Randall v. Eandall
Rapid (The)
Rapp V. Latham
Rawlinson v. Clarke 27, 41, 43, 47,
49, 221
Read v. Bowers 231
R«ed V. White 155, 156, 158, 370
II. Shepardson 261
Reeve v. Parkins 290
Ex parte 390, 405, 406, 408
350
392, 393
15, 16, 27,
126
455
166
166
166
166
166
182
. 44, 56
Regden v. Pierce
Reid, Ex parte
V. HoUingshead
V. White
Rex V. Almon
t'. Marsh
V. Pearce
V. Stannyworth
V. Toppan
Reynolds v. Neardis
V. Toppan
Rice V. Austin ' 41, 42, 43, 45, 261
— ;- V. Barnard 72, 93, 360, 381
V. Shute 454
Rich V. Coe 455
Richards v. Davies 222, 232
V. Hunter 361
Richardson v. Bank of England
229, 348
, Ex parte 201a, 319a,
339
Richmond v. Heapy 238
Ricketts v. Bennett ' 126
Ridgley v. Carey 97
Ridgway's Appeal 92
Ridley v. Taylor 133
Rigden v. Pierce 207
Ripley V. Waterworth 93
Roberts v. Eberhardt 229
Robertson o. Lockie 297
V. Wilkinson 138
INDEX TO CASES CITED.
xxvu
Kobinson v. Crowder 101
V. Marchant 257
V. Robinson 233a
V. Taylor 328
Eobson B. Drumniond 243, 244, 249
Rochester, Bank of, v. MonteatH
142a
Rodriguez v. Heffeman 272, 307,
311
Roe V. Galliere 208
Rogers v. Batchelor 132, 133
RoUeston v. Hibbert 416
Rollins V. Stevens 127
Roosevelt v. Marks 323
Rooth V. Quin 123
Ross V. Drinker 45
r.'Decy ' 241
Rothwell V. Humphreys 126
Rowe V. Wood 181
Rowlandson, Ex parte 35, 45, 53,
55, 56, 368, 384, 385
Roxby, Ex parte 370, 385
Ruddock's Case 115
Ruffin, Ex parte 97, 260, 263, 325
326, 347, 357, 358, 360, 361, 362,
372, 373,401,403
Russell V. Austwick 1 74
V. Perkins 247
Rutland's (Countess of) Case 268,
271
Ryal V. Rowles 403
Ryan v. Mackmath 329
Saddler v. Lee
Sadler, Ex parte
». Mixon
S.
168a
363, 386
219
Sage V. Sherman 82, 92, 103
Sale V. Dishman's Ex'rs 122
Salmon v. Davis 115
Sampson (The) 316
Sander v. Sander 295, 297a
Sandilands v. Marsh 102, 103, 111,
127, 131
Sands «. Childs 454
San Jose Indiano (The) 316
Saville V. Robertson 34, 56, 138,
146, 147, 148
Sayer v. Rennet 295, 316
Schemerhorn v. Loines 455
Seholefield v. Eichelberger 9, 195,
315, 317
V. Heafield 346
V. Taylor 31 7.
S'eddon, Ex parte 370
Sedgworth v. Overend 256, 434
Seeley v. Boehm 231
Selkrigg v. Davies 93
Seneca (The) 437, 439
Senhouse v. Christian 231
Servante «. James 449
Shakle v. Baker 99
Sharp V. Warren 219
Shelton v. Cocke . 323
Sheriff 1-. Wilks 127, 132, 133, 152
Shipton V. Thornton
Siffken v. Walker
Sigourney v. Munn
Sillitoe, Ex parte
Simpson t>. Felts
V. Morrison
262
136, 140, 154
82, 350
390, 394
182a
323
418
108
247, 250
157, 250, 253
119, 120, 122,
275
241, 242, 454
Skip V. Harwood 97, 261, 263, 264,
311
Skrine v. The Sloop Hope
Slater, Ex parte
V. Samson
Sims V. Britain
V. Brutton
Simson v. Copke
V. Ingham
Skinner v. Dayton
V. Stocks
Sleiglitz ». Egginton
Smith V. Barrow
V. Burnham
V. Cooker
V. Craven
V. Danvers
V. De Silva
, Ex parte
V. Fromont
, In the matter of
V. Jamieson
V. Jeyes
«. Kerr
V. Ludlow •
V. Mules
V. Oriell
V. Rogers
V. Smith
V. Tarlton
V. Watson
439
370
324a
121
219
83, 138
257
142, 147
441, 444
313, 814, 399
^29, 231
261
^ 368
288
122
323
328
158
363
83
27, 30, 40, 41, 42,
53
120
^
Snaith v. Burridge 132
Somerville v. Mackay 233
Southard v. Steele 114
South Carolina Bank v. Case 102,
106, 139, 140, 142
Sparrow v. Carruthers 10
V. Chisman 237
Speight V. Peters 228
■ V. Winter
• V. Wright
XXVUl
INDEX TO CASES CITED.
Spiers v. Houston 245
Spring V. Gray 233a
Staata v. Hewlett 143
Stables v. Ely 65
Stainer v. Tyson 128
Stansfield v. Levy 134
St. Barbe 394, 405
Stead «. Salt 114,115
Steamboat New Orleans v.
Phoebus 427, 428
Sterndale v. Hankinson 233a
Stevens v. The Sandwich 439
Stewart v. Forbes 24, 191, 192
V. Hall 455
Stocken v. Dawson 360, 372
Stocker v. Brookebank 27, 32, 41,
56
Stockton V. Frey 166
Stone V. Marsh 108, 166
Story V. Lord Winsor 82, 231
Storrs V. Barber 398
Storer v. Hunter 399
Stonghton v. Lynch 1 73, 1 78, 229
Strange v. Lee 246, 250
Strangfordu. Greene 114
Street v. Rigby 215, 299
Sutnner v. Powell 362
Sutton V. Irving 127
V. Back 416
Swan V. Steele 102, 103, 106, 126,
' 133
Sweetser u. French 127
Sylvester v. Smith 134
Taggard v. Loring 41, 44, 416
Tait, Ex parte 279, 381, 382
Tapley w. Butterfield 101,122,310
Tappan v. Blaisdell
Tassey v. Church
TTatam v. Williams
Tate, Ex parte
Tattersall v. Groote
Taylor v. Coryell
V. Davies
263
324
233a
378
215, 232, 285
114
229
B. Field 261, 263, 264, 407
V. Salmon 229
Teague v. Hubbard 219, 234
Teed v. Baring 455
V. Elworthy 241, 255
Tench v. Roberts 56, 59, 61
Tennant v. Goldwin 422
Terrell, Ex parte 407
The Elizabeth and Jane 428, 434,
435, 439
Thicknesse v. Bromilow 106, 126
Thomason v. Frere 314, 336, 337,
338
Thompson v. Andrews 319a
V. Davenport 139, 455
V. Finder 455
— '■ V. Hoskins 454
V. Lacy 7
V. Lewis 263
w. Percival 155, 156,
157, 173, 370
V. Snow 34, 45^
V. Williamson 24
Thornton v. Dixon 93
1'. lUingworth 255
V. Proctor 182, 185, 331
Thorpe v. Jackson 362
Tiernan v. Jackson 244, 254
Tobias v. Blinn 41
Todd, la re 371,404
Tombeckbee Bank v. Dumell 160
"Tomlins v. Lawrence 252
Townshend v. Devaynes 93
V. Townshend 233a
Travis v. Milne 343
Tredwen v. Bourne 126
Trueman v, Loder 134, 142
Tucker (Lessee of) v. More-
land , 7, 255
V. Oxley 363
Tupper u. Haythorne 126
Turner v. Bissell 32, 34, 35, 36, 41,
42, 43, 45, 46
Twiss V. Massey 363, 376, 379
U.
Union Bank v. Knapp 233a*
United States v. Astley 117
United States Bank v. Binney 72,
80, 101, 102, 103, 105, 106, 126,
138, 139, 198, 278, 279
University of Cambridge v. Bald-
win 250
Upham V. Naylor 264a
Usborne, Ex parte 403
Vance t>. Blair 219
Vanderburgh v. Hall 47
Van Keuren v. Parmelee 324
Van Sandau v. Moore 189
Van Valen v. Russell 263
Venning ?'. Leckie 219
Venus (The) 316
Vere v. Ashby 152, 153
, Ex parte 208
INDEX TO CASES CITED.
XXIX
Vice V. Anson
151
».' Fleming
123
Vigers V. Pike
133(z
Vigilantia (The)
314
Voguel, Ex parte
VuTliamy v. Noble
■ 377
162,195,317,
319, 336, 343
w.
Waggoner v. Gray 182a
Wait, In the matter of 261, 262,
, 337, 34Q
Waithman v. Miles 275
Walburn v. Ingilby 164, 229
Walden v. Sherburne 324
Walker, Ex parte 388
Wallworth v. Holt 222, 228, 230
Walmsley v. Cooper 115
Walton V. Dodson 242, 243
■* V. Sherburne 59
Wardwell v. Haight 160
Warren, In re 75, 83, 142, 202
Washburn v. Bank of Bellows ^
Falls 263o, 376
Waterman v. Hunt 358
Waters u. Taylor 228, 231, 262,
275, 288, 290, 292, 295
Watson, Ex parte 32, 35, 36, 41,
45, 64, 251, 368, 393
V. Fletcher 6
Waugh V. Carver 2, 15, 16, 18, 30,
34, 36, 48, 53, 55, 58,59, 60, 61,
64, 66, 67, 147
Way V. Bassett 324o, 325
Wayland v. Elkins 59
Webster ». Bray 24
V. Webster 100, 202, 329
Wedderburn v. Wedderburn 180
Weller v. Baker 258
Wellington t). Mcintosh 215
Wells w. Masterman 102
West V. Skip 90, 97, 261, 401
Westerdell v. Dale 455
Weston V. Barton 246
Wetmore v. Baker 58
Wheeler, Ex parte 69
D.Rice 133
Whitaker#. Brown 132
Whitcomb v. Whiting 107, 323,324
Whitewright v. Stimpson 228
Whitman v. Leonard 298, 305, 322
Whitmore, Ex parte 370
Whitney v. Dutch 255
I!. Munroe 264a
Whittle D. McFarlane 122, 185, 331
Wighfman v. Townroe 70
Wilbraham v. Snow
Wilcox V. Kellogg
Wildman, Ex parte
Wildes V. Fessenden
Wilkinson v. Frazier
V. Henderson
263
361
385
155
42
362
103
215
182a
Wilkins v. Pearce
Wilks V. Davis
Willandon v. Sylvestre
Willett V. Blanford 329, 343, 349
V. Chambers 74, 75, 108,
132
Williams v. Attenborough 82, 231
V. Bingley 227
V. Everett 254
Ex parte 97, 263, 322,
324, 326, 346, 358, 360,
361, 362, 368, 370, 372,
394,401,402,403
V. Jones 146, 158, 194
V. Keats
■ V. Williams
Williamson v. Johnson
Willings V. Blight
Willis V. Dyson
Wilsford V. Wood
Wilson V. Conine
V. Cutting
V. Dickson
V. Greenwood
' V. Reed
V. Wallace
V. Whitehead
V. Williams
Winch V. Keely
Winship v. Bank of U. States
160, 335
212
142
428, 434
124, 130
244, 254
261
219, 449
453
351
449
241
148, 149
127, 132,133
372
55,
Winsor v. Savage-
Winter u. Crowther
V. Innes.
V. White
63, 102, 105
182a
133
253, 323, 3244
219
41,45
125
228
324, 344
150a
267
133
328
Withington v. Herring
Withnell v. Gartham
Wolbert v. Harris
Wood V. Braddick
V. Duke of Argyll
V. Gault
V. HoUenbeck
Woodbridge v. Swan
Woodward v. Trustees of Dart-
mouth College 76
Worralli?. Grayson 220
Wray v. Hutchinson 218, 287, 288,
292
V. Milestone 218, 219
Wren v. Kirton 82
Wrexham v. Huddleston 292, 295
XXX
INDEX TO CASES CITED.
Wright V. Hunter
V. Pulliam
V. Russell
454
160
250, 251
Wyatt V. Marquis of Hertford 455
Y.
Yarnell v. Alexander
158
Yates V. Bell
Young V. Axtell
, Ex parte
V. Hunter
Younge, Ex parte
254
64, 65, 68
181, 208, 417,
442, 443, 444
147, 150, 387
392
LAW OP PARTNERSHIP
COMMENTARIES
PARTNERSHIP.
CHAPTER I.
PARTNERSfflP — WHAT CONSTITUTES.
§ 1. Having completed our Review of tlie Law of
Agencj'', we are naturally conducted, in the next place,
to the consideration of the Law of Partnership ; for
every Partner is an agent of the Partnership ; and
his rights, powers, duties, and obligations, are in
many respects governed by the same rules and prin-
ciples, as those of an agent. A partner, indeed, vir-
tually embraces the character both of a principal and
of an agent. So far as he acts for himself and his
own interest in the common concerns of the partner-
ship, he may properly be deemed a principal ; and so
far as he acts for his partners he may as properly be
deemed an agent.^ The principal distinction between
him and a mere agent is, that he has a community of
interest with the other partners in the whole property
and business and responsibilities of the partnership ;
whereas an agent, as such, has no interest in either.
Pothier considers Partnership, as but a species of
— ,
1 Baring v. Lyman, 1 Story, R. 371.
PAETN. 1
2 PARTNERSHIP. [CH. I.
mandate, saying; Contractus societatis, non secus ac
contractus mandati}
§ 2.. Partnership, often called copartnership, is usu-
ally defined to be a voluntary contract between two
or more competent persons to place their money,
effects, labor, and skill, or some or all of them, in
lawful commerce or business, with the understanding,
that there shall be a communion of the profits thereof
between them.^ Puffendorf has given a definition
substantially the same. Contractus societatis est, quo
dvx) pluresve inter se pecuniam, res, aid operas con-
ferunt, eo fine, ut quod inde redit lueri inter singulos
pro rata dividatur.^ Pothier says, that partnership is
a contract, whereby two or more persons put, or con-
tract to put, something in common to make a lawful
profit in common, and reciprocally engage with each
other to render an account thereof: * or, as he has ex-
pressed it in another place, JSocietas est cordraetus de
conferendis bond fide rebus aiit operis, animo lucri,
quod honestum sit ac^ licitum in commune faciendi.^
Domat says, that partnership is a contract between
two or more persons, by which they join in common
either their whole substance or a part of it, or unite
in carrying on some commerce, or some work, or some
other business, that theymay share among them all
the profit or loss, which they may have by the joint
1 Pothier, Pand. Lib. 17, tit. 2, In trod.
2 3 Kent, Comm. Lect. 43, p. 23, 24, 4th edit.; Watson on Partnership,
p. 1, 2d edit. ; Gow on Partn. p. 1, 3d edit. ; Collyer on Partn. B. 1, ch. 1,
p. 2, 2d edit.; Montague on Partn. B. 1, Pt. 1, p. 1, 2d edit.
3 Puffend. Law of Nat. and Nat. B. 5, ch. 8, S 1 ; Watson on Partn.
p. 2, 2d edit.; Gow on Partn. ch. 1, p. 1, 3d edit.; Waugh v. Carver,
2 H. Bl. 235, 246.
* Pothier, De Societ(S, art. prelim, n. 1.
5 Pothier, Pand. Lib. 17, tit. 2.
CH. I.] WHAT CONSTITUTES. 3
stock, which they have put into partnership.^ Vin-
nius says; Sodetas est conir actus, qw Mer aliquos res
ant operce communicardur, lucri in commune faciendi
gratia? The Civil Code of France defines it thus;
Partnership is a contract, by which two or more per-
sons agree to put something in common, with a view
of dividing the benefit, which may result from it.^
Language nearly equivalent has been adopted by
many other foreign writers.*
§ 3. Let us consider some of the more important
ingredients, which are involved in this definition or
description of partnership, and may be said to con-
stitute its essence. In the first place, it is founded in
the voluntary contract of the parties, as contradistin-
guished from the relations, which may arise between
the parties by mere operation of law, independent of
such contract.^ Vinnius on this point says ; Sodetas
est consortium voluntarium ; nisi enim consensu et' tractatu
de ea re habito communio suscepta sit, non est sodetas.^
There are many cases in which a community of
interest is created by law between parties, as, for
example, in cases of joint tenancy or tenancy in com-
1 Domat, Civ. Law, B. 1, tit. 8, § 1, art. prelim.
2 Vinn. ad Inst. Lib. 3, tit. 26, Introd.
3 Code Civil of France, art. 1832.
4 J. Voet, Comm. Lib. 17, tit. 2, § 1; Ersk. Inst. B. 3, tit. 3, § 18;
Tapia, Elementos de Jurisp. Mercantil. p. 86, § 1, edit. Madrid, 1829;
Duvergier, Droit Civil Franc. Tom. 5, tit. 9; Contr. de Society, oh. 1,'n.
17, p. 31, 32; Persil, Des Sooidteg, Comm. n. 2, p. 6, 7; 2 Bell, Comm.
B. 7, p. 611, 5th edit.; Pardessus, Droit Comm. Vol. 4, art. 966 ; Van
Leeuwen's.Comm. ch. 23, § 1 ; Asso & Manuel, Instit. of Laws of Spain,
B. 2, tit. 15.
5 Pardessus, Droit Comm. Vol. 4, art. 969, 973 ; Duvergier de Soeietfe,
Vol. 5, n. 33, 39, 40, 65 ; Duranton, Droit Franc. Liv. 3, tit. 9, Vol. 17,
art. 320 ; CoUyer on Partn. B. 1, ch. 1, § 1, p. 4, 2d edit.; Watson on
Partn. ch. 1, p. 5, 6, 2d edit; Id. 27.
, 6 Vinn. ad Inst. Lib. 3, tit/ 26, Introd.
4 PARTNERSHIP. [CH. I.
mon in lands, or goods, or chattels, under devises and
bequests in last wills and testaments, and deeds and
donations inter vivos, and inheritances and successions.
But no partnership arises therefrom; for they 4re not
strictly founded in contract, although they may exist
by the original or subsequent consent of the parties,
who receive the benefit thereof.^ It has been well
said by Pothier, that partnership and community are
not the same thing. La societe et la communauti ne
sord' pas le meme chose? The first is founded upon the
contract of the parties, which thus creates the com-
munity; the last may exist independent of any con-
tract whatsoever. And Pothier goes on to illustrate
the distinction by putting the cases of joint heirs and
joint legatees, where there is a community of interest,
but there is no partnership.^ Another illustration
may be seen in the case of the part-owners of a ship,
who are treated as tenants in common thereof, each
having a distinct although an undivided interest in
the whole. They thus may properly be said to have
an undivided interest in the ship ; and yet that inte-
rest does not make them partners.* So, if two joint
owners of the merchandise should consign it for sale
abroad to the same consignee, giving him separate in-
1 See 2 Black. Comm. 180 to 188 ; Id. 399, 400; Comm. Dig. Estates,
K. 1, K. 6 ; Story on Agency, § 39 ; Watson on Partn. ch. 1,. p. 5, 6,
2d edit. ; 3 Kent, Comm. Lect. 43, p. 25, 4th edit.
2 Pothier, De Sooietfe, n. 2. See Duvergier, De Societ6, Vol. 5, n. 33,
34, 35, 40 ; Pardessus, Droit Comm. Vol. 4, art. 969 ; Duranton, Droit
Franc, Vol. 17, art. 320.
3 Pothier, De Societe, n. 2, n. 182, 183, 184 ; Voet, ad Pand. Lib. 17,
tit. 2, n. 2, Tom. 1, p. 748.
4 Abbott on Shipp. Pt. 1, ch. 3, p. 68, edit. 1829 ; Watson on Partn.
ch. 1, p. 5, 6 ; Id. ch. 2, p. 67, 2d edit.; 3 Kent, Comm. Lect. 43, p. 25,
4th edit.; Ersk. Inst. B. 3, tit. 3, § 18 ; 2 Bell, Comm. p. 655, 5th edit.;
1 Stair, Inst. B. 1, tit. 16, § 1, p. 156 ; Porter v. McClure, 15 Wend. 187.
CH. I.] WHAT CONSTITUTES. 5
structions, each for his own share, their interests are
several, and they are not to be treated as partners in
the adventure.^' The same result takes place, where
a purchase is made for several distinct persons by a
broker or other agent of certain goods, each being to
take a certain portion, or quantity, but they are not
to be sold for their joint account or profit. In such
a case no partnership exists, although there is a com-
munity of interest in the goods purchased.^ In short,
every partnership is founded in a community of inte-
rest ; but every community of interest does not consti-
tute a partnership ; or, as Duranton expresses it :
La sociSte aussi produit una communauU ; en un mot,
toute sociStS est Men una communaidS ; mats toute com-
munauti n'est point une sociStS. 11 faut pour cela la
vohrde des parties?
§ 4. The Roman Law has recognised the same
ditinction ; Ut sit pro socio actio, societatem intarce-
dare oportet ; nee enim safficit rem esse communetn,
nisi sociatas intercedit. Communitar autem res agi po-
test etiam citra societatem; ut puta, cum non affectione
societatis incidimus in communi^nem, ut evenit in re
duobus legatd ; item si a duobus simul empta res sit;
aid si hcereditas vel don/dio communiter nobis obvenit ;
aut si a duobus separatini emimus partes eorum, non
socii ftduri.^ Nam cum tradatu habito societas cdita est,
pro socio actio est; cum sine tractatu in re ipsa at
' Hall V. Leigh, 8 Cranch, 50; Jackson v. Kobinson, 3 Mason, R. 138.
2 Hoare v. Dawes, Doug. K. 371; Coope v. Eyre, 1 H. Black. 37; 3
Kent, Comm. Lect. 43, p. 25, 4th edit. ; Gibson u. Lupton, 9 Bing. R. 297 ;
Holmes v. Unitlnsur. Co. 2 Johns. Cas. 329, 331.
3 Duranton, Droit Franc. Vol. 47, art. 320; Pothier, De Society, n. 2.
< Dig. Lib. 17, tit. 2, 1. 31 ; Pothier, Pand. Lib. 17, tit. 2, n. 30; Vinn
ad Inst. Lib. 3, tit. 26, Introd.
1*
6 PARTNEKSHIP. [CH. I.
negotio, communiter gestum videtur} And again ; Qui
nolufit inter se contendere, solent per nuntium rem emere
in commune, quod a societate longe remotum est? .
§ 5. Hencfe it is an established principle of the
common law, that as a partnership can commence
only by the voluntary contract of the parties; so,
when it is once formed, no third person can be after-
wards introduced into the firm, as a partner, without
the concurrence of all the partners, who compose the
original firm. It is not sufficient to constitute the new
relation, that one or more of the firm shall have as-
sented to his introduction ; for the dissent of a single
partner will exclude him, since it would, in effect,
otherwise amount to a right of one or more of the
partners to change the nature, and terms, and obliga-
tions of the original contract, and to take away the
delectus persmice, which is essential to the constitution
of a partnership.^ So stubborn indeed is this rule,
that even the executors and other personal represent-
atives of a partner do not, in that capacity, succeed
to the state and condition of that partner.* The Ro-
man law is direct to the same purpose. Qui admit-
titur socius, ei tantum socius est, qui admisit; et Yecte;
cum enim societas consensu contrahitur, socius mihi esse
non -potest, quern ego socium esse nolui. Quid ergo, si
socius meus cum admisit ? Ei soli socius est? It even
' Dig. Lib. 17, tit. 2, 1. 82; Pothier, Pand. Lib. 17, tit. 2, n. SO. See
also iSwanst. R. 509, note (a).
2 Dig. Lib. 18, tit. 2, 1. 33.
3 CoUyer on Partn. B, 1, ch. 1, § 1, p. 4, 5, 2d edit. ; Ex parte Barrow,
2 Rose, Cas. 252, 255 ; Crawshaj- v. Maule, 1 Swanst. R. 508, 509, and
the learned note of the Reporter, n. ('a), p. 509 ; Putnam v. Wise, 1 Hill,
N. Y. Rep. 234.
* Ibid.
5 Dig. Lib. 17, tit. 2, 1. 19 ; Pothier, Pand. Lib. 17, tit. 2, n. 28 ; 1 Do-
CH. I.] WHAT CONSTITUTES. 7
pressed the rule to a still further extent, and held,
that a positive stipulation between the partners at the
commencement of the partnership, that the heir or
personal representative of a partner should succeed
him in the partnership, was inoperative and incapable
of being enforced. Adeo morte socii solvitur socidas,
ut nee ab initio pascisci possumus, ut hceres succedat
societati} Nemo potest societatem hceredi sua sic parere,
ut ipse hceres socius sit? The common law, however,
treats such a stipulation as valid and obligatory.^ This
also, according to Pothier, was the doctrine of the old
French law ; * and the modern code of France has
expressly adopted it, in opposition to the Roman law.^
Such also is the law of Scotland.®
§ 6. It is also upon the like ground, that partner-
ship is a contract founded purely upon the consent
of the parties, that jurists are accustomed to attach
to it the ordinary incidents and attributes of contracts.
It is accordingly treated by them, as in its very na-
ture and character a contract arising from and go-
verned ,by the principles of natural law and justice.
Accordingly, it must, in the first place, be founded in
mat, B. l,tlt. 8, § 2, art. 5; Pothier, de Society, n. 145. See 1 Swanst.
R. 509, note (a).
1 Dig. Lib. 17, tit. 2, 1. 59 ; Pothier, Pand. Lib, 17, tit. 2, n. 56 ; 1 Do,-
mat, B. 1, tit. 8, § 2, art 4.
2 Dig. Lib. 17, tit. 2, 1. 35; Pothier, Pand. Lib. 17, tit. 2, n. 35 ; 1
Domat, B. 1, tit. 8, § 2, art. 4.
3 Collier on Partn. B. 1, ch. 1, § 1, p. 5, 6, 2d edit.; 2 Bell, Comm. p.
634, 5th edit.
* Pothier, de Society, n. 145.
5 Locr6, Esprit du Code de Comm. Vol. 1, tit. 3, art. 18, n. 3, p. 106 ;
Code Civil of France, art. 1868 ; Duranton, Cours de Droit Franc. Tom.
17, De Societfe, n. 471 ; Duvergier, Droit Civil Franc, de Societ6, Tom. 5,
n. 433, 444.
6 2 Bell, Comm. 620, 5th edit.
8 PARTNERSHIP. [CH. I.
good faith and the positive consent of the parties;
secondly, it must be for a lawful object and purpose ;
and thirdly, it must be between parties sui juris and
competent to enter into such a contract. John Voet
therefore affirms; Societas est contractus juris gentium,
honce fidei, consensu constans, super re honestd, de lucri
et damni communione ; quam inire possunt omnes llhe-
r(tm habentes rerum -suarum administrationem} Hence,
if the contract be founded in fraud or imposition,
either upon one of the parties, or upon third persons,
it is utterly void.^ And on this point the Roman law
speaks the general sense of nations. Societas, si dolo
malo, aid fraudandi causa co'ita sit, ipso jure nullius
momenti est ; quia fider bona contraria est fraudi et dolo?
And again; Quia nee societas, aut mandatum flagitio-
scB rei, ulhs vires hdbet} The same rule applies to
cases, where the partnership is for immoral or illegal
purposes, or is in contravention of the positive law,®
or of the public policy of the country. Thus, if the
partnership be, for illegal gaming,® or illegal insur-
ances,^ or wagers, or to carry on contraband trade, or
to support a house of ill fame or debauchery ; in these
and the like cases, the contract will be deemed a mere
nullity, and is equally denounced, as such, by the Ro-
man law, and the foreign law, and the common law.'^
1 1 Voet, Comm. ad Dig. Lib. 17, tit. 2, § 1. See also Pothier, De
Society, n. 4.
2 1 Story on Eq. Jurisp. § 222 to 240.
3 Dig. Lib. 17, tit. 2, 1. 3, § 3 ; Pottier Pand. Lib. 17, tit. 2, n. 1.
4 Dig. Lib. 18, tit. 1, 1. 3^5, § 2 ; Pothier, Pand. Lib. 18, tit. 1, n. 15 ;
Id. Lib. 17, tit. 2, n. 5; Voet, ad Pand. Lib. 17, tit. 2, n. 7, Tom. 1,
p. 750.
5 Gordon V. Howden, 12 CI. & Finn. 237.
6 See Watson v. Fletcher, 7 Gratt. 1.
7 Gow on Partn. ch. 1, p. 4, 5, edit. 1837 ; Collyer on Partn. B. 1, ch.
CH. I.] WHAT CONSTITUTES. '9
The Roman law is very expressive on this point.
Nee enim ulla sodetas maleficioriim, vel eommunicatio
justa damni ex malificio est} Again; Quod autem ex
furto vel ex alio maUficio quoesitum est, in sodetatam
non oportere conferri, palam est ; quia delictorum turpis
atque foeda communio est?
1, § 1, p. 29 to p. 34, 2d edit. ; Watson on Partn. ch. 1, p. 35 to p. 46 ;
3 Kent, Comm. Lect. 43, p. 28 ; Pothier, De Society, n. 14 ; Story on
Conflict of Laws, § 244 to 260 ; 1 Bell, Comm. p. 297 to 306, 5th edit.".
Code Civil of France, art. 1833 ; Duranton, Droit Civil Franc. De Society,
Tom. 17, tit 9, oh. 1, § 1, n. 327; Duvergier, Droit Civil Franc. Tom. 5,
tit 9, De Societd, ch. 1, n. 24, 25.
1 Dig. Lib. 27, tit. 3, 1. 1, § 14 ; Pothier, Pand. Lib. 17, tit. 2, n. 5.
s Dig. Lib. 17, tit. 2, 1. 53 ; Pothier, Pand. Lib. 17, tit. 2, n. 18.
10 PARTNEKSHIP. " [CH. 11.
CHAPTER II
WHO MAY BE PAETNEES.
§ 7. In the next place, as to the persons who are
capable of entering into a partnership. The general
rule of the common law is, that every person of
sound mind, siii juris, and not otherwise restrained
by law, may enter into a contract of partnership.^
As sto infants, they are not by the common law incapa-
ble of entering into a partnership, since it cannot
be universally affirmed, that it may not be for their
benefit.^ And here we have another illustration of
the analogy between partnership and other common
contracts; for although the contract of partnership
by an infant is not absolutely void ; yet it is not, on
the other hand, positively binding upon him, but is
voidable, and may be avoided by him, when he comes
of age, according ta the known distinction, so well
stated by Lord Chief Justice Eyre, that such con-
tracts made by an infant, as the Court may pronounce
to be to his prejudice, are merely void ; such as are
of an uncertain nature as to the benefit or prejudice,
are voidable only, and it is at the election of the
infant to affirm them or not ; and such as are clearly
for his benefit, (as a contract for necessaries,) are
valid and obligatory.^ If an infant, however, engages
' CoUyer on Partn. B. 1, ch. 1, § 1, p. 8, 2d edit,; Gow on Partn. ch. 1,
p. 1, 2, 3d edit. 1837; 1 Story on Eq. Jurisp. § 222 to 239.
2 See Goode v. Harrison, 5 Barn. & Aid. 147, 156 to 159; 1 Story on
Eq. Jurisp. § 240 to 243 ; Dana v. Stearns, 2 Gush. 372.
3 Keane u. Boycott, 2 H. Bl. 511, 514, 515 ; Comyns, Dig. Enfant, B.
5, 6, C. 1, 2, 3, 4, 9 ; Holmes v. Blogg, 8 Taunt. K. 85 ; Id. 508 ; 1 Story
CH. II.] WHO MAY BE PARTNERS. 11
in a partnership, he must at or within a reasonable
time after his arrival of age notify his disaffirmance
thereof, otherwise he will be deemed to have con-
firmed it, and will be bound by subsequent contracts
made on the credit of the partnership. If, upon his
arrival of age, he elects to continue the partnership,
and does continue it, he will be then held liable as a
partner.^ Indeed, if an infant should hold himself
out as a partner during his infancy, although in
reality not so, and should not after his arrival of age
notify his disaffirmance thereof, he would be liable to
third persons, trusting the partnership, to the same
extent, as if he were actually a partner ; for his con-
duct would, under such circumstances, amount to a
delusion or deceit upon such third persons; and
where one or two innocent parties must suffer, he
ought to do so, whose negligence or misconduct has
occasioned the loss.^
§ 8. The like principle will be found recognized
in the foreign law. The essence of the contract of
partnership, like that of other contracts, consisting
in consent, it follows, that" if a person is incapable of
giving his consent, he is not bound by the contract.*
And Pothier says, that this rule equally applies to
cases of partnership, as to other cases of contract.*
onEq. Jurisp. § 240 to 242; Baylis v. Dineley, 3 Maule & Selw. 477;
Lessee of Tucker v. Moreland, 10 Pet. K. 58, 66 to 70; 2 Kent, Comm. -
Lect. 31, p. 233 to p. 245, 4th edit.
1 Goode V. Harrison 5 Barn. & Aid. 147, 156 to 160; Holmes v. Blogg,
8 Taunt. K. 35 ; Thompson v. Lay, 4 Pick. E. 48 ; 2 Kent, Comm.^ Lect.
31 , p. 233 to 245 ; Miller v. Sims, 2 Hill, (S. C.) K- 479.
2 Goode V. Harrison, 5 Barn. & Aid. 147, 152, 157, 158. See aho
Fitts V. Hall, 9 N. Hamp. R. 441 ; Bingham on Infancy (Bennett's ed.)
and note.
3 Pothier, Oblig. n. 49 to n. 53.
• * Pothier, De Society, n. 77; Duranton, Droit Franc. Tom. 17, n. 321.
12 PARTNERSHIP. [CH. II.
Hence persons of unsound mind, or in a state of
drunkenness, or under guardianship, or otherwise
incapable, as are lunatics, minors, and prodigals, can-
not become partners.^ • The French law holds minors
and persons under guardianship as rather incapable
of binding themselves by contract, than incapable of
contracting. They may oblige others to them; al-
though they cannot oblige themselves to others ; ^
and so is the doctrine of the Institutes. Namque pla-
cuit meliorem quidem condilionem licere eis facere, etmm
sine tutoris awtoriiate? The Scottish law adopts a
similar doctrine.''
I 9. As to aliens, there is no doubt, that alien
friends may lawfully, contract a partnership in one
country, although some . or all of the partners are
resident in another country. But alien enemies are
disabled during war from enteiing into any partner-
ship with each other, as indeed they are from enter-
ing into any other commercial contract.^ A state of
hostility puts an end to the rights of commercial
intercourse, trade, and business between the respec-
tive subjects of the belligerent nations, who are domi-
ciled therein.® Nay, the principle goes farther, and
an antecedent partnership, existing between persons
domiciled in different countries, is dissolved by the
» Pothier, Oblig. n. 49 to n. 53.
2 Pothier, Oblig. n. 52.
3 Inst. Lib. 1, tit. 21,Introd.
4 2 Bell, Coram. 624, 5th edit.
5 CoUyer on Partn. B. 1, ch. 1, p. 9, 2d edit.
6 1 Kent, Coram. Lect. 3, p. 66 to 69, 4th edit. ; Potts v. Bell, 8 Term
K. 548 ; Willison v. Patteson, 7 Taunt. 439 ; The Indian Chief, 3 Rob.
E. 22 ; The Jonge Pieter, 4 Kob. 79 ; The Franklin, 6 Rob. 127 ; Gris-
wold «. Waddington, 15 Johns. R. 53; S. C. 16 Johns. R. 438; Ex parte
Boussmaker, 13 Ves. 71; The Rapid, 8 Cranoh, 155; The Julia, Id.
181 ; Soholefield v. Eichelberger, 7 Peters, R. 680.
CH. II.] WHO MAY BE PAETNEES. 13
breaking out of war between those countries ; for the
whole rights, duties, obligations, relations, and inte-
rests of the partnership, as such, become changed
thereby, and the objects of the partnership are no
longer legally attainable, or capable of execution.^
§ 10. As to married women, they are by the com-
mon law incapable of forming a partnership, since
they are disabled generally to contract, or to engage
in trade.^ It sometimes, however, happens in prac-
tice, that, with the consent of their husbands, they
become entitled to shares in banking partnerships,
and other commercial establishments; but in such
cases their husbands are entitled to their shares, and
become partners in their stead.® There are, however,
some exceptions to this rule, even at the common law.
Thus, for example, by the custom of London, a mar-
ried woman is authorized to carry on trade as a feme
sole; and thence it has been inferred, that she may
enter into a partnership in her trade in that city.*
So, a wife may acquire a separate character and
power to contract by the civil death of her husband,
as by his exile, banishment, profession, or abjuration
of the realm.® The same rule has been applied.
' Griswold V. "Waddington, 16 Johns. K. 438. — The masterly judgment
of Mr. Chancellor Kent in this case examines and exhausts the whole
learning on the subject. See also 1 Domat, B. 1, tit. 8, § 5, art. 11, 12,
15.
2 2 Kent, Comm. Lect. 28, p. 54 to 64.
3 Gow on Partn. p. 2, 3d edit. 1837; CoUyer on Jartn. B. 1, ch. 1, § 1,
p. 9, 10, 2d edit. ; Cosio v. De Bernales, 1 Carr. & Payne, 265 ; S. C.
Ryan & Mood. K. 102; 1 Story, Eq. Jur. § 243; 2 Ibid. § 1367 to 1373;
1 Black. Comm. p. 442 to 444 ; Watson on Partn. ch. 7, p. 384, 2d edit.
4 Collyer on Partn. B. 1, ch. 1, § 1, p. 10. See Beard v. "Webb, 2 Bos.
& Pull. 93 ; Burke v. Winkle, 2 Serg. & Rawle, E. 189 ; 2 Roper on
Husb. & Wife, ch. 16, § 5, p. 126, 127.
6 Beard v. Webb, 2 Bos. & Pull, 93, 105 ; Lean v. Schultz, 2 Wm.
PARTN. 2 ,
].4 PARTNERSHIP. [CH. II.
where the husband has, in pursuance of a criminal
sentence, been transported to foreign parts for a term
of years.^ The ground of these exceptions is, that,
by operation of law, the husband is disabled to
return ; and his matrimonial rights are therefore
consequently suspended during' his exile, banishment,
or transportation.^ In the cases of abjuration and
profession he is treated as civiliter mortuus? The
same rule has also been applied in England to the
case of a woman, the wife of a foreigner, who had
never been in England, who was thereby held enti-
tled to coiitract, and to sue and be sued as a feme
sole}
§ 11. Such is the doctrine of the common law in
respect to married women. But a far more extended
rule is adopted in Courts of Equity, where, if the
wife possesses or is entitled to any property for her
sole and separate use, either by agreement with her
husband, or otherwise, she is generally treated, as to
such property, as a fmne sole, and may dispose of the
same accordingly, and bind herself by contract touch-
ing the same.® A full discussion of this topic pro-
Bl. 1195 ; 1 Bl. Comm. 443 ; 2 Roper on Husb. & Wife, ch. 16, § 5, p. 123,
124.
1 2 Eoper on Husb. & Wife, ch. 16, § 5, p. 123, 124; Sparrow v. Cav-
ruthers, cited 2 Wm. Black. K. 1197, and in Corbctt v. Poelnitz, 1 Term
K. 6, 7, and in De Gaillon v. L'Aigle, 1 Bos. & Pull. 359 ; Carrell v.
Blencow, 4 Esp. R. 27 ; S. C. cited in Boggett v. Frier, 11 East, R. 302;
Marsh v. Hutchinson, 2 Bos. & Pull. 231 to 233 ; Claneey on Married
Women, ch. 4, p. 54 to 56, 63; Co. Litt. 183 a, 133 b; Gregory v. Paul,
15 Mass. R. 31 ; 2 Kent, Comm. Lect. 28, p. 154 to 164.
a Ibid,
3 Marsh v. Hutchinson, 2 Bos. & Pull. 231.
4De Gaillon v. L'Aigle, 1 Bos. & Pull. 357; Kay u. Duchease de
Pienne, 3 Campb. R. 123 ; Gregory v. Paul, 15 Mass. R. 31 ; Abbott v.
Bayley, 6 Pick. R. 89.
5 2 Story on Eq. Jur. § 1370 to 1402 ; 2 Kent, Comm. Lect. 28, p. 162
to 172, 4th edit.
CH. II.] WHO MAY BE PARTNERS. 15
perly belongs to a treatise on the jurisdiction of Courts
of Equity.^ It may, however, be proper here to state,
that if, by an antenuptial or postnuptial agreement
for a valuable consideratioU, the husband contracts to
allow his wife to carry on trade for her sole and.
separate use, if the property is vested in trustees it
will be held secure against the husband and his
creditors even at law ; and, if no trustees are inter-
posed, it will be open to the like protection in equity.^
If the agreement is voluntary, it will be good, and
will be enforced in equity against the husband ; but
not against his creditors.^ In like manner, if a hus-
band should desert his wife, and she should be
enabled, by tJbe aid of her friends, to carry on a
separate trade (such as that of a milliner) for her
own support, and that of her family, her earnings in
that trade will, in equity, be held to belong to her
separate use, and be enforced accordingly against the
claims of her husband.*
§ 12. Although, as we have seen,® it has been
thought, that a feme covert^ having authority to carry
on trade, as a feme sok, by the custom of London,
may enter into a partnership in such trade; yet it
does not appear ever to have J)een decided, that the
authority of a feme covert to carry on trd,de, as a feme
sok, arising from the consent or agreement of her
1 2 Story on Eq. Jur. § 1370 to 1402.
2 2 Story on Eq. Jur. § 1385, 1387 ; 2 Roper on Husb. & Wife, ch. 18,
§4, p. 167 to 175.
3 2 Story on Eq. Jur. § 1386, 1387 ; 2 Roper on Husb. & Wife, ch. 18,
§4, p. 167 to 175.
* 2 Story, on Eq. Jur. § 1387 ; 2 Eoper on Husb. & Wife, ch. 18, § 4,
p. 174, 175; Cecil v. Juxon, 1 Atk. 278; Lamphir v. Creed, 8 Ves. R.
599; Com. Dig. Chancery, 2 M. 11.
5 Ante, § 10.
16 PARTNEKSHIP. [CH. H.
husband, positively entitles her to engage in a part-
nership in the trade. If, indeed, the trade cannot
otherwise be carried on, either necessarily, or con-
veniently, or beneficially, his consent to the partner-
ship might, perhaps, be inferred. But the consent
of the husband, that his wife may carry on trade for
her sole and separate use, does not necessarily import, ,
that She may involve herself in the complex transac-
tions, responsibilities, and duties - of partnership. In
cases where the law treats the marriage as suspended,
and entitles her to act as a feme sole, (as in cases of
banishment, abjuration,, or transportation,) there may,
be just ground to presume, that, as she is thereby
generally restored to her rights, as a/eme sole, she may
enter into a partnership in trade. But the question
never having undergone any direct adjudication, must
be deemed still open for discussion and decision.
§ 13. In the Roman law the same positive union
and unity of rights and interests between husband
and wife are not recognised, which exist under the
common law;^ for in the Roman law, the husband
and wife constitute separate and distinct persons, and
are separately capable of contracting, under certain
limitations and restrictions, with each other, as well
as with third persons.^ Mr. Justice Blackstone has
expressed the same doctrine stiU more broadly, and
says, " In the civil law the husband and wife are .con-
sidered as two distinct persons, and may have sepa-
rate estates, contracts, debts, and injuries."* Hence,
1 1 Burge on Col. & For. Law, Pt. 1, ch. 7, § 1, p. 263, 264 ; Pothier,
Pand. Lib. 1, tit. 6, n. 9, n. 21.
2 See 1 Domat, B. 1, tit. 9, § 6, art. 1 to 7 ; 1 Black. Comm. 444 ; Ay-
liffe's Pand. B. 2, tit. 6, p. 81, 82 ; 1 Bro. Civ. & Adm. Law, 82 ; 1 Burge
on Col. & For. Law, B. 1, Pt. 1, ch. 7, § 1, p. 263, 269, 272 to 274.
3 1 Black. Comm. 444.
CH. n.] WHO MAT BE PARTNERS. 17
the contracts of the husband did not hind the wife,
unless she expressly assented thereto. Frustra dispw-
tas (says the Code) de cordractibm, cum marito tuo habUis,
virumque jure steteniii, an minime ; turn tibi suffleiat, si
propria nomine nullum contractum habuisti, quo minus pro
marUo tuo conveniri possis}
§ 14. In the modern foreign law the same princi-
ple has" been adopted with various modifications,
adapted to local institutions^ usages, and policy.
The law of Scotland most nearly approaches the
English law. Independently of special contract, the
husband and wife, by entering into marriage, are
joined in the strictest society or partnership, which
draws after it a communication of their mutual civil
interests, styled, in that law, the communion of goods,
and, in the foreign law generally, the property in com-
munity. During the marriage, the wife is placed
under the direction of the husband, who has, Jure
mariti, the sole authority of administering the pro-
perty in communion ; and so absolute is this right,
that he may solely dispose of the property, and it may
be attached by his creditors. In consequence of this
right and power, the husband becomes liable also to
the personal debts of his wife.^ The wife does not
seem entitled to enter into any contract independent
of his consent. The law of France recognises still
more' extensively the distinct characters and rights
of the husband and wife. The husband and wife,
independently of any special convention, hold their
property in community, and the husband is the sole
1 Cod. Lib. 4, tit. 12, 1. 1.
2 Erskine's Inst. B. 1, tit. 6, § 12 to 18 ; 1 Bell, Comm. 631 to 635, 5th
edit. ; 1 Burge on Col. & For. Law, Pt. 1, ch. 7, p. 423 to 462.
■ 2*
18 PARTNERSHIP. [CH. II.
administrator of the property of the community.^
The wife cau do no act in law without the authority '
of her husband, even though she shall he a public
trader, or. not in community, or separate in her pro-
perty.^ Hence, she is incapable of contracting without
his authority and consent.^ She cannot become a sole
trader without -his consent.* But if authorized by ,
him to act as a sole trader, she may make herself
liable for all the concerns of her mercantile transac-
tions ; and in that case she also renders her husband
liable, if there be a community of goods between
them.* It has thence been supposed, that his consent
and authority may extend to a contract of partnership
by her in trade.^ The law of Louisiana coincides
with that of France.'' The law of Holland and of
Spain, and probably that also of most of the conti-
nental states of Europe, contains provisions, in many
respects similar.^
1 Code Civil of Prance, art. 1400, 1421.
2 Code Civil of France, art. 215, 217 ; Loor6, Esprit du Code de Comm.
art. 4, p. 27 to 30.
3 Pothier, Oblig. n. 52.
* Locr6, Esprit du Code de Comm. tit. i, art. 4, p. 26 to 29, 36 to 38,
42.
5 Code of Comm. of France, art. 4, 5 ; Code Civil of France, art. 220.
6 Pothier, De Society, n. 77.
'' Code of Louisiana, 1825, art. 121 to art. 131.
3 1 Burge on Col. & For. Law, Pt. 1, ch. 7, § 2, p. 276, 293 to 303 ;
Id. § 4, p. 413, 418 to 423.
CH. III.] COMMUNITY OF INTEKESTS. 1 9
CHAPTER in.
PARTNERSHIP BETWEEN THE PARTIES — COMMUNITY OF
INTERESTS.
I 15. In the nex^t place, every partnersliip pre-
supposes that there must he something brought into
the common stock or fund by each party .^ But it is
not necessary, that each should contribute or contract
to contribute money, goods, eflfects, or other property,
towards the common stock ; for one may contribute
labor or skill, and another may contribute property,
and another may contribute money, according as they
shall agree.^ And for this there is good reason ; and
it is well put in the Roman law: Plerumque enim
ianta est industria socii, ui plus societati conferat,
quam pecunia. Item, si solus naviget, si solus pere-
grinetur, pericula subeat solus? Sometimes it hap-
pens, that each partner contributes only skill or labor,
or services for the common benefit ; as, for example,
house Wrights, or shipbuilders, or riggers, who are
partners ; or commission merchants, brokers, or other
agents, whose partnership only extends to the profits
of their business, and who have no / capital stock
1 3 Kent, Comm. Lect. 43, p. 24, 25, 4th edit.
2 CoUyer on Partn. B. 1, ch. 1, § 1, p. 10, 2d edit. ; Peacock v. Pea-
cock, 16 Ves. 49; Raid v. Holliushead, 4 Barn. & Cresw. 878; Meyer
V. Sharpe, 5 Taunt. 74 ; Waugh w. Carver, 2 H. Bl. 235, 246 ; 2 Bell,
Comm. B. 7, ch. 1, p. 614, 5th edit. ; 1 Stair, Inst. B. 1, tit. 16, § 2;
Domat, B. l,tit. 8, § 1, art. 7; Dob v. HalSey, 16 John. R. 34; Dale v.
Hamilton, 5 Hare, R. 393.
3 Dig. Lib. 17, tit. 2, 1. 29, § 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 3 ; Inst.
Lib. 3, tit. 26, § 2 ; 1 Domat, B. 1, tit. 8, § 1, art. 7.
20 PAETNERSHIP. [CH. III.
embarked in the enterprise.^ But all must contribute
something; and thus join together either money, or
goods, or other property, or labor, or skill ; ^ or, as
Pothier expresses it; 11 est de F essence du contrat de
socieU, que chaewie des parties apporte ou s'oUige
d'apporter quelque chose a Id societe ; ou Targemt, ou
d'autres effets, ou son travail, et son industrie? The
Roman law pronounces the same rule ; Societatem,
uno pecuniam conferente, alio operam, posse cordrahi,
magis oUinuit.^ And, indeed, it may be said to be
universally adopted in modern times.^
§ 16. In the next place, from what has been al-
ready said,*' it is apparent, that in every case of part-
nership there is a community of the property of the
partnership between the parties, as soon as it becomes
part of the common stock, although it may before
that time have exclusively belonged to one or more of
them.'^ In this case, however, it is to be understood,
that we are speaking of a partnership, designed to be
1 CoUyer on Partn. B. 1, ch. 1, § 1, p. 10, 11, 2d edit. ; Cheap v. Cra-
mond, 4 Barn. & Aid. 663 ; Waugh v. Carver, 2 H. Bl. 235.
2 CoUyer on Partn. B. 1, ch. 1, § 1, p. 10, 11, 2d edit. ; 8 Kent, Comm.
Leet. 43, p. 24, 25, 4th edit. — In Waugh v. Carver, 2 H. Bl. 235, 246,
Lord Chief Justice Eyre said ; "A case may be stated, in which it is the
clear sense of the parties to the contract, that they shall not contribute ;
that A. is to contribute neither labor nor money, and to go still farther,
not to receive any profits. But if he will lend his name as a partner, he
becomes as to all the rest of the world a partner."
3 Pothier, De Society, n. 8, 9, 10 ; Pardessus, Droit Comm. Tom. 4,
art. 983, 984.
4 Cod. Lib. 4, tit. 37, 1. 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 2; Inst. Lib.
3, tit. 26, § 2 ; Vinn. ad Inst. Lib. 3, tit. 26, § 2, n. 3.
5 See 2 Bell, Comm. B. 7, p. 611, 5th edit. ; Pothier, De Sooietd, n. 8,
9, 10 ; Vinn. ad Inst. Lib. 3, tit. 26, Introd. p. 693 ; Domat, B. 1, tit. 8,
§ 1, art. 7.
6 Ante, § 3.
7 3 Kent, Comm. Lect. 43, p. 24 to 26 ; Pardessus, Droit Comm. Tom.
■4, art. 969 to 972.
CH. m.] COMMUNITY OF INTERESTS. 21
such between the parties themselves ; and not merely
of a partnership, which may by construction of law
exist as to third persons, although not intended
- between the parties, of which more will presently be
said.-' Partners, therefore, are to be treated, in a
qualified sense, as joint-tenants of the partnership
property, having an interest therein per my et per tout,
(as the phrase of our ancient law is,) that is, having
an interest therein by the half or moiety, and by all,
or more accurately speaking, they, each of them, have
an interest in, and the entire possession, as well of
every parcel} as of the whole.^
§ 17. This principle is equally recognised in the
foreign law ; and indeed seems to result directly from
the nature of the contract of partnership, which
supposes, that, the property brought into it is put
into community by the joint consent of the parties.
Accordingly Pothier insists upon this as a leading dis-
tinction. La societe est le contrai par lequel deux ou
plusieurs personnes conviennent de mettre quelque chose
en commun ; ^ and the same distinction is fully sup-
ported by other jurists.* Mr. Bell says, that the
property of the partnership is common, and held pro
indiviso by all the partners as a stock and in trust.^
So, Vinnius says ; Ut sit societas, necesse aliquid
' Waugh V. Carver, 2 H. Bl. 235, 246 ; Hesket.B. Blanchard, 4 East,
R. 144; Cheap v. Cramond, 4 B. & Aid. 663; Eeid w. HoUinshead, 4
Barn. & Cressw. 867. '
3 2 Bl. Comm. 182.
3. Pothier, De Society, n. 2; Pothier, Pand. Lib. 17, tit. 2, In trod, to
n. 1.
* Duvergier, Droit Civ. Franc. Tom. 5, tit. 9, n. 33 to n. 40 ; Vinn. ad
Inst. Lib. 3, tit. 26, p. 693, Introd.
5 2 Bell, Comm. B. 7, eh. 1, p. 612, 613, 5th edit.; Stair, Inst. B. ],
ch. 16, § 1.
22 PAKTNEESHIP. [CH. III.
miduo conferri d communicari ; nisi quid utrinque
commune conferatur, societas non inieUigiiur} The
Roman law adopted the same principle. In societate
omnium lonorum omnes res, quae coeuntium sunt, con-
tinuo commumcantur?
§ 18. In the next place, every real partnership, so
intended between the parties themselves, imports, ex
vi termini, a community of interest in the , profits of
the business of the partnership, that is to say, a joint
and mutual interest in the profits thereof, or a com-
munion of profit. And this is of the very essence of
the contract ; for, without this communion of profit, a
partnership 'cannot, in the contemplation of law,
exist.* And so, Pothier has laid down the doctrine.
1 Vinn. ad Inst. B. 3, tit. 26, Introd. p. 693.
2 Dig. Lib. 17, tit. 2, 1. 1 ; Id. 1. 3, § 1 ; Pothier, Pand. Lib. 17, tit. 2,
n. 13, 14 ; 1 Domat, B. 1, tit. 8, § 1, art. 2.
3 CoUyer on Partn. B. 1, ch. 1, § 1, p. 11, 2d edit. ; Pardessus, Droit
Comm. Tom. 4, art. 969 ; Duvergier, Droit Civ. Franc. Tom. 5, tit. 9,
n. 11 ; 3 Kent, Comm. Lect. 43, p. 24, 25, 4tli edit. ; Watson on Partn.
ch. 1, p. 33 to 35 ; Id. p. 56, 57, 2d edit.'; Pelichy v. Hamilton, 1 Wash.
Cir. R. 491 ; Gow on Partn. ch. 4, p. 153, 154, 3d edit. — Mr. Collyer
expresses the doctrine in the following terms. " To constitute a partner-
ship between the partners fhemselves, there must be a communion of profit
between them. A communion of profit implies a communion of loss ; for
every man, who has a share in the profits of a trade, ought also to bear his
share of the loss." Again ; " By a communion of profit is intended a
joint and mutual interest in profit." Collyer on Partn. B. 1, ch. 1, § 1,
p. 11, 2d edit. By joint interest, as he afterwards explains, he means a
joint interest in the profits arising from the sale of the goods ; and by
mutual interest, that each party has a specific interest in the profits, Os a
principal trader. Id. p. 11, 17. Mr. Collyer afterwards states a curious
case from Select Cases in Chancery (p. 9), where work was jointly under-
taken by two persons, and they were to divide the money therefor ; and
they were held not to be partners. His language is ; " Again upon prin-
ciples similar to those of the foregoing cases, if two persons jointly agree
to do a particular piece of work, but the money received for such work is
not to be employed on their joint account, the persons so contracting are
not partners. Thus, in the case of Finckle w, Stacey, (Sel. Ca, Ch. 9),
QBE. III.] COMMUNITY OF INTERESTS. 23
11 est de Vessence de ce contrat, que le societe soii
contractee pow Vinteret commun des parties} If the
contract be for the sole and exclusive benefit of one
party, it is not properly a case of partnership, but
must fall under some other denomination, such as a
mandate.^ Hence, if in a pretended contract of part-
nership, it should be agreed, that one of the parties
should take all the profit, without the others having
any share thereof, it would be a mere nullity, and con-
stitute no partnership.^ The Roman jurists branded
joint articles were entered into by the plaintiff and defendant for doing a
particular piece of work for the Duke of Marlborough, on account of which
several sums of money had been jointly received by them, and immediately
.divided between them. There being a sum demanded by them in arrear,
which the Duke refused to pay, as being unreasonable, Stacey applied to
Finckle to join him in a suit to recover what was in arrear ; which he
refused to do, declaring that he had several advantageous works under the
Duke, which he should lose should he join in a suit ; on which Stacey,
applied, and got his own half of the sum, which was due to the two. A
bill was then brought for a moiety of the money so received ; and it was
insisted it should be considered as a partnership in trade, and this money as
so much received on the joint account. But the Court were of opinion it
was not to be considered as a partnership, but only an agreement to do a
particular act, between which there is great difference ; and that it is so is
plain, for the money, which they had received, they immediately divided,
and did not lay out on a common account. The bill was dismissed with
costs. Upon this case, however, it is to be observed, that if no application
had been made to the plaintiff to sue the Duke, a bill for an account,
supposing an account necessary, would clearly have been sustainable
against the defendant on other grounds, than those of partnership. Here,
however, the plaintiff, for his own private ends, had absolutely refused to
join in suing for the money ; and the Court observed : ' It is pretty extra-
ordinary, that he should come here to have the benefit of another's act, in
which he refused to join ; which refusal was with a corrupt view for his
own advantage, and not on a common account, the money due on which he
would rather sacrifice than forego his own particular advantages And here
is no insolvency in the Duke ; if there had been, perhaps it would have
deserved consideration.' "
1 Pothier, De Soeietfe, n. 12.
= Pothier, De Society, n. 12 ; Waugh v. Carver, 2 H. Bl. 235, 246.
3 Pothier, De Society, n. 12 ; 3 Kent, Comm. Lect. 43, p. 29, 30, 4th
24 PARTJJEESHIP. [CH. III.
such a contract with the odious epithet of Sodetas
Leonina, in allusion to the fable of the Lion, who,
having entered into a partnership with the other wild
beasts for hunting, appropriated the whole prey to
himself^ And the Roman law declared, Societatem
talem cdiri non posse, ut alter lucrum tantum, alter
damnum sentiret ; et hanc Societatem Leonwam solitum
appellare. Et nos coiisentimus talem societatem nullam
esse, -ut alter lucrum sentiret, ixtter vero nullum lucrum,
sed damnum sentiret; Iniquissimum enim genus Socie-
tatis est, ex qua quis damnum, non enim lucrum, spectet?
The modern Code of France has expressly promul-
gated the same doctrine. It declares, that the con-
tract, which shall give to one of the partners the.
entirety of the profits, is nuU.^ Nay, it has gone
further, and added, that it is the same of a stipulation,
which shall free from all contribution to losses the
moneys or effects brought into the partnership fund
by one or more partners.*
§ 19. So strong and inflexible is this rule, that it is
often laid down in elementary works, as well as in
the common law authorities, that to constitute a part-
nership there must be a communion of profits and
losses between the partners.^ And this in a qualified
edit.; Dig. Lib. 17, tit. 2, 1. 30 ; Pothier, Pand. Lib. 17, tit. 2, n. 3 ; Vinn.
ad Inst. Lib. 3, tit. 26, Introd. p. 693 ; Jestons v. Brooke, Cowp. R. 793. —
In many cases of this sort the contract would be treated as a mere cover
for usury. Ibid. ; Pothier, De Society, n. 22.
1 Pothier, De Societd, n. 12; 3 Kent, Comm. Lect. 43, p. 29, 30.
3 Dig. Lib. 17, tit. 2, 1. 29, § 2; Pothier, Pand. Lib. 17, tit. 2, n. 3;
Pothier, De Society, n. 19; Domat. B. 1, tit. 8, § 1, art. 6 to art. 10 ; Id.
§ 2, art. 12.
3 Code Civil of France, art. 1855.
4 Code Civil of France, art. 1855.
5 See Collyer on Partn. B. 1, ch. 1, § 1, p. 11 ; Gow on Partn. ch. 1,
p. 1, 3d edit. ; 3 Kent, Comm. Lect. 34, p. 23, 24 ; Mont, on Partn. B. 1,
CH. in.] COMMUNITY OF INTERESTS. 25
sense is perfectly true, when it is understood with the
proper limitations belonging to the statement. The
doctrine will be found in the Roman law. Societas
cum contrahitur, tarn lucri quam damni commwnio
initur} SicuU lucrum ita damnum quoque commune
esse oportet? Modem foreign jurists often use expres-
sions to the same effect.^ The Roman law carried
this equitable presumption still farther, and declared,
that if the partners expressly mentioned their shares
in one respect only, either solely as to the profit, or
solely as to the loss, their shares of that, which was
omitted, should be regulated by what was expressed.
Illud expeditum est, si in una causa pars fuerit ex-
pressa, veluti in sdlo lucro, vel in solo damno, in altera
vera omissa, in eo quoque,. quod prcetermissum est,
eandem partem servari.^ • But all this language is to
be interpreted in a limited and qualified sense ; and
so understood, it admits of no real dispute,
§ 20. In the first place, every partnership imports,
in the absence of all contrary stipulations, that the
profit and loss are to be borne by all the partners,
Pt. 1, p. 2 ; Grace w. Smith, 2 "W. Bl. 998; Wataon on Partn. ch. 1, p. 1 ;
Id. p. 56, 2d edit. ; Ersk. Inst. B. 3, tit. 3, § 18 ; 1 Domat, B. 1, tit. 8, § 1,
art. 1; Pothier, De Society, n. 19, 20 ; 1 Stair, Inst. B. 1, tit. 16, § 3 ;
Coope V. Eyre, 1 H. BI. E. 37 ; Bond v. Pittard, 3 Mees. & Welsh. 357,
360; Pardessus, Droit Comm. Tom. 4, n. 996; Duvergler, Droit Civ.
Franc. Tom. 5, n. 17 ; Ex parte Langdale, 18 Ves. 300 ; Green v. Bees-
ley, 2 Bing. N. Gas. 112; Dry v. Boswell, 1 Campb. K. 330; Hoare v.
Dawes, Doug. R. 371.
1 Dig. Lib. 17, tit. 2, 1. 67; Pothier, Pand. Lib. 17, tit. 2, n. 38 ; 1 Do-
mat, B. 1, tit. 8, § 1, art.. 1.
2 Dig. Lib. 17, tit. 2, 1. 52, § 4 ; Pothier, Pand. Lib. 17, tit. 2, n. 39 ;
1 Domat, B. 1, tit. 8, § 1, art. 1.
3 Duvergiei:, Droit Civ. Franc. Tom. 5, tit. 9, n. 13 to n. 18; Pardessus,
Droit Comm. Tom. 4, art. 996.
4 Inst, Lib. 3, tit. 26, § 3 ; Vinn ad Inst. Lib. 3, tit. 2, § 3 ; Domat, B. 1,
tit. 8, § 1, art. 5.
PAETN. 3
26 PARTNERSHIP, [,CH. III.
according to their respective proportions thereof.^
And the question was much discussed in the Roman
law, whether a stipulation, that one partner only
should bear all the losses, and b6th should share the
profits, was valid or not. It was finally settled,
according to the opinion of Servius Sulpitius', that it
was valid, and that one partner might, by agreement,
be entitled to share in the profits, and not be account-
able for any part of the loss.^ But then every such
stipulation was understood to be with this reserve,
that the losses were first to be deducted from the
profits; and that if profits accrued from one species
of things, and losses from another, what remained
only after the losses were deducted was to be deemed
profits.^ So that, in fact, each partner in this way,
who shared a part of the profits, shared, by deduc-
tion from the gross profits, his proportion of the
losses also, as far as there were any profits. lia coiri
sodetatem posse, (says the Digest,) ui nullius partem
damni alter sentiat, lucrum vera commune sit, Cassius
putat. Quod ita demum valeKt, [ut et tSabinus scribit,)
si tanti sit opera, quunti damnum est.* And again;
Mucins scribit, non posse sodetatem coiri, ut nliam
damni, aliam lueri partem sodus ferat. Servius in
notatis Mucii ait, nee posse sodetatem ita coiitrahi ;
neque enim lucrum intelligitur, nisi omni damno deduc-
io ; neque damnum nisi omni hero deducto. Bed
potest coiri sodetas ita, ut ejus lucri, quod reliquum in
' Watson on Partn. ch. 1, p. 59, 60, 2d edit. ; CoUyer on Partn. B. 1,
eh. 1, § 2, p. 105, 106, 2d edit. ; Voet ad Pand. Lib. 17, tit. 2, n. 8, Tom.
1, p. 751 ; Domat, B. 1, tit. 8, § 1, art. 7, 8.
2 Inst. Lib. 3, tit. 26, § 2 ; Watson on Partn. ch. 1, p. 56, 57, 2d edit. ;
Domat, B. 1, tit. 8j § 1, art.' 6 to art. 9.
3 Domat, B. 1, tit. 8, § 1, art. 7, 8.
4 Dig. Lib. 17, tit. 2, 1. 29, § 1; Potliier, Pand. Lib. 17, tit. 2, n. 3.
CH. m.] COMMUNITY OF INTERESTS. 27
societate sit, omni damno dedudo, pars, alia feraiur ; et
(g'us danini, quod similiter relinquatur, pars alia capia-
tur} The Institutes express the same doctrine still
more succinctly; M adeo, contra Qidntii Mutii senten-
Ham oMinuit, ut iUud quoque eonstiterit, posse convenire,
ut quis lucri partem ferai, de damno non teneatur.
Quod tamen ita intelUgi oportet, vt si in alid re lucrum,
in alid damnum illaium sit, compensatione facta solum
quod superest, inielli^atur hero esse?
■ § 21. It is in this sense, that the proposition has
been generally understood by jurists in modern times,
and adopted into the common law ; that each partner
must at all events share in the* losses, so far, at least,
as they constitute a charge upon, and diminution or
deduction from the profits; and in this sense it is
regularly true.^
§ 22. Pothier states this doctrine with uncommon
clearness and accuracy. After remarking, that, con-
sistently with equity, it may be agreed between the
partners, that one should bear a less proportion, or
even no part of the loss of the partnership, he adds,
that this is not to be understood in the sense, that
one partner is to have a share of the profit of each
particular transaction, which shall be advantageous
to the partnership, without contributing any thing to
the losses, which the partnership may sustain from
other transactions, which shall be unprofitable to it;
' Dig. Lib. 17, tit. 2, 1. 30 ; Pothier, Pand. Lib. 17, tit. 2, n. 3 ; Pothier,
De Society, n. 21 ; Domat, B. 1, tit. 8, § 1, art. 7, 8, 9.
3 Inst. Lib. 3, tit. 26, § 2.
3 CoUyer on Partn. B. 1, ch. 1, § 1, p. 11, 2d edit. ; Pothier, De Society,
n. 13, 19, 21 ; Duvergier, Droit Civ. Franc. Tom. 5, n. 13 to n. 18 ; Id. n.
220 to 222; Bond v. Pittard, 3 Mees. & Wels. 859, 3B0 ; Vinn. ad Inst.
Lib. 3, tit. 26, § 2 ; Pardessus, Droit Comm. Tom. 4, n. 996 to 999 ; 1 Stair,
Inst. B. 1, tit. 16, § 3.
28 PARTNEESHIP. [CH. ni.
for that would manifestly be unjust. But it is to be
understood in this sense, that after the dissolution of
the partnership, an account is to be taken of all the
profits of the partnership, and a like account of all
the losses on all the business undertaken by the part-
nership; and if the totality of the profits exceeds the
totality of the losses, the partner shall take his share
of the excess. And if, on the contrary, the totality of
the losses exceeds that of the profits, the partner shall
have neither profit nor loss.-* And this is in accord-
ance with the Ronian law; Neque enim lucrum irdel-
Ugitur, nisi omni damno deSucto ; neque damnum, nisi
omni lucro deducto?
§ 23. Hence it may be laid down, as a general rule
of the common law, that, in order to constitute a part-
nership, it is not essential, that the partners should
equally share the profits and losses. It is sufficient,
if they are to share in the profits of the business, after
a deduction of the losses ; or, in other words, that
they should share in the net profits according to their
respective proportions. , It is, therefore, competent for
the partners by their stipulations to agree, that the
profits shall be divided, and if there be no profits, but
a loss, that the loss shall be borne by one or more of the
partners exclusively, and that the other shall, inter
sese, be exempted therefrom.^ So, the proportion, in
which they are to share the profits, or losses, may be
varied at their pleasure, whether they contributed
equally to the common stock, or not ; and the same
1 Pothier, De Societe, n. 21. See Duvergier, Droit Civ. Franc. Tom. 5,
n. 13 to 18.
SDig. Lib. 17, tit. 2, 1. 80; Pothier, Pand. Lib. 17, tit. 2, n. 3.
3 CoUyer on Partn. B. 1, ch. 1, § 1, p. 11, 2d edit. ; Gow on Partn. ch.
1, p. 9, 8d edit. 1837 ; Bond v. Pittard, 3 Mees. & Wels. 357, 359 ; Gilpin
V. Enderby, 5 Barn. & Aid. 954.
CH. m.] COMMUNITY OF INTERESTS. 29
rule is applicable to the proportions, in which they
are to bear the losses.^ Thus, they may agree, that
one or more partners shall take a greater proportion
of the profits than the others, and shall, if there be
no profits, share a less proportion of the losses, or
even be wholly exempted therefrom? The reason of
all this is, that the inequality of skill, of labor, or of
experience, which the partners may bring into the
particular business, may not only justify, but posi-
tively require this inequality of compensation, and of
exemption from loss, as a matter of justice and
equity between the parties. And the law has, there-
fore, wisely not prohibited it; but has left it to the
parties to exercise their own discretion in these ,mat-
ters, taking care, that no fraud, imposition, or undue
advantage is taken of the other side.^ In fact, (as
has been well observed by a learned writer,) by the
common law, the various stipulations and pro.visions
■ relating to the commencement of the partnership, the
manner, in which the business is to be conducted, the
space of time, for which the partnership is to endure,
the capital, which each is to bring into the trade, the
proportion, in which the profits and losses are to be
divided, the time and manner agreed upon for settling
the accounts, the powers and duties of the partners,
in regard to conducting the business, and entering
into engagements, which may a£fect the partnership,
1 Watson on Partn. ch. 1, p. 56, 57, 2d edit.
2 Collyer on Partn. B. 1, ch. 1, § 1, p. H, 2d edit.; Gow on Partn. ch.
1, p. 9, 3d edit. 1837 ; Gilpin v. Enderby, 5 Barn. & Aid. 954, 964 ; Bond
V. Pittard,, 3 Mees. & Wels. 357, 360 ; Watson on Partn. ch. 1, p. 56, 57,
2d edit. ; Fereday v. Hordern, Jacob, R. 144. ^ ,
" See Pothier, De Society, n. 18, 19. See also Duvergier, Droit Civ.
Franc. Tom. 5, n. 13 to 18 ; Pardessus, Droit Comm. Tom. 4, n. 997 ; Van
Leeuwen's Comm. B. 4, ch. 23, § 10.
3*
30 PARTNERSHIP. [CH. IH.
the mode, in which the partnership may be dissolved,
together with the various covenants adapted to the
circumstances of each particular case, are purely and
entirely the subject of personal and private agreement
and arrangement; and in whatever way they may
ultimately be settled, they cannot be impeached, un-
less they interfere with, or contravene some rule or
principle of law.-'
§ 24. In the absence, however, of all precise stipu-
lations between the partners, as to their respective
shares in the profits and losses, and in the absence of
all other controlling evidence and circumstances,, the
rule of the common law is, that they are to share
equally of both j for in such a case equality would seem
to be equity.^ And the circumstance, that each part-
ner has brought an unequal amount of capital into
the common stock, or that one or' mor6 has brought in
the whole capital, and the others have only brought
industry, skill, and experience, would not seem to fur-
nish any substantial or decisive ground of difference,
as to the distribution. On the contrary, the very
silence of the partners, as to any particular stipula-
tion, might seem fairly to import, either, that there
was not, all things considered, any real inequality in
the benefits to the partnership in the case, or that
the matter was waived upon grounds of good will, or
affection, or liberality, or expediency.^ It is true, that
1 Gow on Partn. ch. 1, p. 9, 3d edit. 1837.
2 Watson on Partn. ch. 1, p. 59, 60, 2d edit.; CoUyer on Partn. B. 1,
ch. 1,§ 2, p. 105, 106, 2d edit. ; 3 Kent, Comm. Lect. 43, p. 28, 4th edit.;
Gould V. Gould, 6 Wend. R. 263. But see Thompson v. Williamson,
7 Bligh, R. 432 ; S. C. 5 Wilson & Shaw, 16 ; 2 Moreau & Carl. Partidas,
Pt. 5, 1.3, 4, p. 766, 767.
3 CoUyer on Partn. B. 2, ch. 1, § 2, p. 105 to p. 107, 2d edit.; 3 Kent,
Comm. Lect. 43, p. 28, 4th edit. ; Watson on Partn. ch. 1, p. 56 to p. 60,
CH. in.] COMMUNITY OF INTERESTS. 31
it has sometimes been asserted, that in cases of this
sort, there is no natural presumption, that the part-
ners are to share equally ; and that it is a matter of
fact to be settled by a jury, or by a Court, according
to all the circumstances, what would be a reasonable
apportionment. Thus, it was held by Lord Ellen-
borough, that if a father and son should be partners,
no presumption would arise, that they were to share
in moieties in the absence of all positive stipulations ;
but, that the shares were to be ascertained by a jury,
if the case were at law.^ But this doctrine was after-
wards positively disapproved of by Lord Bldon, who
held, that even in the case of a father and son, who
are partners, if no distinct shares are ascertained by
force of any express contract, they must of necessity
be equal partners, and are entitled to moieties.^
2d edit. ; Gould v. Gould, 6 Wend. R. 263. See Van Leeuwen's Comm.
B. 4, ch. 23, § 10.
1 Peacock v. Peacock, 2 Camp. K. 45.
2 Peacock v. Peacock, 16 Ves. 49, 56 ; Webster v. Bray, 7 Hare, R.
179; Farrar v. Beswick, 1 Mood. & Rob. 527; CoUyer on Partn. B. 1,
ch. 1, § 2, p. 105, 106, 2d edit.; Gow on Partn. ch. 1, p. 8, 9, 3d edit.
1837; 2 Bell, Comm. B. 7, ch. 1, p. 614, 615, 5th edit.— In Farrar v.
Beswick, 1 Mood. & Rob. 527, Mr. Justice Parke held the same doctrine
as Lord Eld'on, and said ; " Where a partnership is found to exist between
persons, but no evidence is given to show in what proportions the parties
are interested, it is to be presumed, that they are interested in equal moie-
ties." It is true, that in the case of Thompson v. Williamson, 7 Bligh, R.
432 ; S. C. 5 Wils. & Shaw, 16, a doubt was thrown upon this doctrine,
as a doctrine of the common law, by Lord Winford and Lord Brougham ;
but I cannot think, that it is successfully maintained by the reasoning con-
tained in their opinions. Each of these learned Judges admitted on that
occasion, that if there is nothing to guide the judgment of the Court to
give unequal shares, there is no rule for them to go by, but to give in
equal shares. What is this but affirming, that in the absence of all
controlling circumstances, leading to a different conclusion, the presump-
tion of law is, that the partners are to take in equal shares ? But it is not
an irresistible presumption; for where there are circumstances, which
demonstrate, that the partners in the particular case did in fact intend, or
32 PAETNERSHIP. [CH. HI.
However; it must be still deemed an open question
in England, since a recent decision in the House of
from the general habit and custom of- their trade and business, under the
like circumstances, must be fairly presumed to have intended to share in a
diflferent proportion, there is not the slightest difficulty in admitting, that
the presumptionof law ought to yield to the presumption of fact, as legally
presumptions ordinarily do in other cases. And this is what seems to have
been intended by Lord Eldon, in his opinion in Peacock v. Peacock, 16
Ves. 49, 56 ; and was explicitly avowed by Mr. Baron Parke, in Farrar v.
Beswick, 1 Mood. & Kob. 527. The real difficulty lies in holding, that,
where there is an inequality in the stock, or skill, or services, or expe-
rience of the different partners, any one or more of those circumstances
alone, or in conjunction with other circumstances, equally indeterminate
and eqmvocal, should overcome the ordinary presumption of law of
equality of shares between the partners. Now, Lord EUenborough, in
Peacock v. Peacock, 2 Camp., E. 45, seems to have acted upon the
ground, that, in every such case of inequality, there was no such presump-
tion of law -whatever to govern it ; but that it was open for the jury to
take into consideration all the circumstances, if the suit were at law, or for
the Court, if the suit were in Equity, and to adjudge the proportions, not
upon any supposed contract between parties actually established, bui as it
were ex aequo et bono, as upon a quantum meruit. It was in this view,
that Lord Eldon seems to have expressed his disapprobation of the doc-
trine ; because it assumed to overthrow a presumption of law, (and it
would not have been materially different, if it were a presumption of fact,)
upon indeterminate circumstances, which might be urged with more or less
effect to a jury, but which carried no certainty, as to the positive intent or
contract of the parties. His Lordship on that occasion said ; " The father
employed his son in his business ; and, as is frequently done by a father,
meaning to introduce his son, the business wa9 carried on in the name of
' Peacock and Co.' It appeared to me, that the son, insisting, that he
had a beneficial interest, must be entitled to an equal moiety, or to nothing;
that, as no distinct share was ascertained by force of any express contract
between them, they must of necessity be equal partners, if partners in any
thing. In that view the result of the issue, that was directed, appears to
be extraordinary. The proposition being, that the son was interested in
some share, not exceeding a moiety, the jury in some way, upon the foot-
ing of quantum meruit, held him entitled to a quarter. I have no con-
ception, how that principle can be applied to a partnership. The parties,
however, consider themselves bound by that verdict." If, by the custom
of any particular trade or business under the like circumstances, the rule
was general to give a fixed proportion, as, for example, a fourth to one
partner, and three fourths to another, on account of the inequality of
capital, or skill, or experience, or age, or the relation of parent and child,
CH. in.]
COMMUNITY OP INTERESTS. 33
Lords has questioned, if it has not shaken the doctrine
of Lord Eldon, and affirmed that of Lord EUenbor-
ough.-^ In America the authorities, as far as they
that might properly control the presumption of Jaw ; for it would amount
to strong presumptive evidence, that the partners intended to contract upon
the usual terms. But where there are no such circumstances, and nothing
determinate in the evidence, but all rests upon conjecture, at best admitting
of various force and application, what ground is there to presuihe a con-
tract for a quantum meruit ? The more reasonable ground would seem to
be, that the parties meant to treat with each other upon a footing of
equality, or to waive the inequality, as a matter of liberality, or bounty, or
parental or filial affection, or proximity of blood or personal friendship.
There seems also to be very great uncertainty in the application of the
doctrine ; for from such indeterminate and vague circumstances very
different conclusions might be drawn by different juries and different
courts ; and it seems far more convenient to adopt a general rule of inter-
pretation of the intention of the parties, in the absence of any express or
implied agreement or usage, as to the apportionment of the profits. Cases
may indeed arise, where the presumption fairly would be, that the parties
were to share the profits only in moieties, and not the capital ; as, for
example, in the case of a partnership between a father and a son, where
the father supplied the whole capital. However this may be, the Judges
of the Scottish Court of Session adopted the doctrine of Lord Eldon, in
the case of Thompsons. Williamson, (7 Bligh, 432; S. C. 5 Wilson &
Shaw, 16; 7 Shaw & Dunton, No. 338;) but it was overturned in the
House of Lords by the decision of Lords Wynford and Brougham. Mr.
Bell and Mr. Erskine maintain the same doctrine as the Court of Session,
(2 Bell, Comm. B. 7, ch. 1, p. 614, 615, 5th edit.; Ersk. Inst. B. 3, tit. 3,
§ 19.) Nor does it appear to me that the doctrine of Lord Stair, (1 Stair,
Inst. B. 1, tit. 16, § 3,) is intended to be different, notwithstanding the
suggestion of Lord Wynford. In Gould v. Gould, (6 Wend. K. 263,) the
Court of Errors of New York held, that, in the absence of all proof to
the contrary, partners will be presumed to be equally interested in the
partnership funds. See Harrison v. Sterry, 5 Cranch, 289.
1 Thompson v. Williamson, 7 Bligh, K. 432 ; S. C. 5 Wils. & Shaw, 16.
[But see a later decision by Vice-Chancellor Wigram, Webster v. Bray, 7
Hare, R. 177, and another by Lord Cottenham, Stewart v. Forbes,
1 Hale & Twells, R. 472; S. C. 1 Macnaghten & Gordon, R. 137.
In the latter case the Lord* Chancellor refers to Peacock v. Peacock,
and says; "In that case it was properly held, that, in the absence
of any contract between the parties, or any dealing from which a
contract might be inferred, it would be assum^, tfeat the parties had
carried on business on terms of an equal partnership. « « »
But what would have been the decision in Peacock v. Peacock, if the
A PAETNERSHIP. [CH. III.
;o, seem decidedly to favor the doctrine of Lord
adon.^
§ 25. The Roman Law promulgates the like doc-
rine. If no express agreement were made by the
)artners concerning their shares of the profit and
OSS, the profit and loss were shared equally between
hem. If there was any such agreement, that was to
le faithfully observed. M qutdem, (says the Insti-
utes,) si nihil de partibus lucri et damni nominatim
onvenerit, ceqvMles scilicet partes et in lucro et in damno
pectantur. Quod si expressce fuerint partes, hcec ser-
ari debcTit? So the Digest. Si non fuerint partes
odetati adjectos, mquas eas esse constat? This also
eems to be the rule adopted into the modern com-
nercial law ; but then it is received, not without some
Qodifications and qualifications.* Thus, Vinnius says,
hat this doctrine is commonly and rightly understood
0 be true, when the partners have contributed an
squal amouint to the capital stock ; for if they have
jontributed unequal amounts, then they are to share
iccording to the proportions furnished by each. Puf-
endorf and Noodt adopt the like interpretation;^
looks and accounts, instead of absolute silence as to the shares of the
lartners in each year, had described the shares in which the partners were
aterested in the business, and had attributed to the plaintiff four-sixteenths
inly of the shares of the business ? These entries are as conclusive of
he rights of the parties, as if they had been found prescribed in a regular
lontract."]
1 3 Kent, Comm. Lect. 43, p. 28, 4th edit. ; Gould v. Gould, 6 Wend.
1. 263.
s Inst. Lib. 3, tit. 26, § 1 ; Voet, ad Pand. Lib. 17, tit. 2, n. 8, Tom. 1,
). 751 ; Vinn. Sel. Quest. Juris, ch. 63, M ; Domat, B. 1, tit. 8, § 1,
irt. 4.
3 Dig. Lib. 17, tit. 2, Lib. 29 ; Pothier, Pand. Lib. 17, tit. 2, n. 7.
* See Vinn. ad Inst.%dit. Heinece. Lib. 3, tit. 26, § 3, p. 695, Comm. i
V&u Leeuwen's Comm. B. 4, ch. 23, § 10.
5 Puffendorf on Law of Nat. and Nat. B. 5, ch. 8, § 1, 2 ; Noodt, Opera,
CH. III.] COMMUNITY OF INTERESTS. 35
although it must be admitted, that there are other
jurists, who construe the Roman law as indiscrimi-
nately applicable to all cases, whether of equal or of
unequal contributions, either in capital or stock, or in
labor or services, or in a mixed proportion of each.-^
§ 26. Pothier himself, while he admits the correct-,
ness of the general rule of the Roman law, suggests
some modifications,, or rather qualifications of it, in
its actual application.^ Where each partner has con-
tributed money or effects of a value fixed between
them at the time, there, he says, that they are to share
in proportion to the value so fixed ; and that they are
to share equally, only when no such value is fixed.
Where the money or effects, brought into the partner-
ship, are so estimated at a fixed value, his opinion is,
that it ought to make no difference as to the partners
sharing in proportion to such value, although one/
may also bring a higher, or peculiar skill or industry
into the firm.^ The Civil Code of France provides,
that the share of each partner in the profits or losses
is in the absence of any other agreement in the arti-
cles of partnership, tobejn proportion to what he
brings into the partnership funds; and in the like
Comm. ad Dig. Lib. 17, tit. 2, 1. 29, Tom. 2, p. 297, 298, edit. 1767. But
see Viun. Sel. Quest. Juris. <:li. 53, 54 ; Vinn. ad Inst. Lib. 3, tit. 26, § 2.
See Asso & Manuel's Inst, of Laws of Spain, B. 2, tit. 15.
iJbid.; Duvergier, Droit Civ. Franc. Tom. 6, n. 224. — Heineccius
pays this beautiful tribute to the memory of Noodt, speaking of his then
recent death ; " Quern eximium jure consultum, dum hoec scribo, ad Supe-
ros exeessisse, non sine dolore audio. Mortuum saltern nemo dixerit, qui
tot egregiis operibus immortalem sibi gloriam peperit, et jam vivus, quo-
dammodo interfuit posteritati." Hein. Vinn. ad Inst. Lib. 3, tit. 26, § 1,
note.
2 Pothier, De Society, n. 15 to 20 ; Id. n. 73.
3 Pothier, De Society, n. 15 to 21 ; Id. n. 73. See also Duvergier, Droit
Civ. Franc. Tom. 5, n. 12, n. 224 ; Toullier, Droit Civ. Franc. Tom. 13,
n. 411,412.
36 PARTNEKSHIP. [CH. HI.
case, if one partner brings skill only, his share of the
profits or losses is regulated, as if what he brought
in had been equal to that of the partner, who has
brought the least.^ The Code of Louisiana more
closely adheres to the Roman Law, and declares,
that when the contract of partnership does not de-
termine the share of each partner in the profits or
losses, each one shall be entitled to an equal share
of the profits, and must contribute equally to the
losses.^
1 Code Civil of France, art. 1853.
2 Code of Louisiana, (1825,) art. 2896. — Mr. Watson has made some
remarks on this subject, which show the difficulty of making a suitable ap-
portionment of profits, in many cases, where there is no express agreement
between the parties, and that presumptions of very different force and
importance may arise from the circumstances, often nicely balancing each
other. " But with respect to the profit and loss," (says he,) " to be
derived from a partnership, the subject of which comprises the capital,
stock, and interest of each partner therein, together with the labor and skill
to be employed, and the division thereof, what naturally occurs on point of
distribution seems to be this, that if each partner contributes an equal pro-
portion of capital, stock, and labor, and skill, then each must, according to
justice, receive an equal share in the profit and loss ; but where they
contribute unequally, certain rules should be prescribed according to the
circumstances of the partnership, fo»the purpose of adjusting the respective
shares of all the partners. For instance, if one partner furnishes labor,
and the other money, whatever the produce of such partnership trade may
amount to, it should seem right to divide it, after deducting the sum ad-
vanced, in the proportion of the interest of the money to the wages of the
labor, allowing such a rate of interest as money might be borrowed for
upon the same species of security, and such wages or allowance as a skilful
workman would be entitled to, for the same degree of labor and a similar
trust, according to the -principle laid down in the civil law, which says,
that no man doubts, but that partnership may be entered into by two
persons, when one of them only finds money, inasmuch as it often happens,
that the work and labor of the other amounts to the- value of it, and
supplies its place. For in partnerships, where on the one side labor is
contributed, and on the other, only the use of money, that partner, who
contributed the money, does not always admit the other to a share of the
principal, but only to his share of the profit, which such labor and money
joined together might produce. And if A. for instance, who furnishes
CH. ni.] COMMUNITY OF INTERESTS. 37
§ 27. These two circumstances, that there is a com-
munity of interest in the capital stock, and also a
labor only, hath no title to any part of the money advanced upon dissolving
the partnership, so B. alone should be liable to the risk of the money, as
owner thereof; for in such a case it is not the money -itself, but the risk,
■which it runs, and the probable gain, which may accrue from it, that are'
to be compared with the labor. Therefore, when the profits of such a
partnership are to be shi^ed, it would be out of all proportion in point of
reciprocal advantage, if the labor were to be compared with the principal
sum advanced ; and the only fair criterion to judge by is a true comparison ^
between the value of the labor on one side, and the risk and hazard which
the money advanced is exposed to on the other. And perhaps the better
way in forming partnerships of this sort, is to rate the risk of the princi-
pal, and the hopes of the profit, according to the interest, that is generally
given for money so borrowed upon risk. Supposing, then, this interest
to be £5 per cent. ; if one party contributes labor worth £50, and the
other advances £1000 in money, each partner will share equally of the
profit. According to this rule, if there should be nothing gained by the
partnership concern, A. would lose his labor, and B. his interest, which
would be equal and just. And should the original stock be diminished,
by the same rule A. loses only his labor, whereas B. would lose his interest
and a part of the principal ; for which eventual disadvantage B. is com-
pensated by having the interest of his money computed at five pounds per
cent, in the division of the profits, where there are any. But it sometimes
happens in partnership concerns, that labor and money are so blended or
interwoven together, as to give to him, that contributed only his labor, a
share in the principal ; the labor contributed by one partner, and the
money advanced by the other, being so intermixed as to make one general
mass. As for example, one partner spends the money advanced by him
in buying up unwrought materials, and the other furnishes personal skiU
and labor to work them up and manage them, which very often happens
m large manufaoturing towns. Thus, again, if I supply a weaver with
£100 to buy wool, and he makes cloth of it, computing his labor at
£100, it is manifest, that here both of us have an equal interest in the
cloth, and when it is sold the money must be equally divided ; nor in
fairness could I deduct the £100 contributed at first, and then divide the
remainder with him. This rule obtains in other things as well as money ;
as when one allows ground for a building, on condition that he, who
builds thereon, shall have a moiety ; or, when one trusts a flock to be fed
on condition, that, if it be sold within a limited time, the money shall be
proportionably divided amongst the partners. Therefore, the profit or
loss to be"derived from trade by partners ought always to be arranged and
provided for at the commencement of their partnership, according to cer-
tain agreed proportions." Watson on Partn. ch. 1, p. 57 to 59, 2d edit.
PAETN. 4
38 PARTNERSHIP, [CH. III.
community of profit and loss, in the sense already
stated, in all the partners, where they exist, are deci-
See also on the same point Voet, ad Pand. Lib. 1 7, tit. 2, n. 8 ; and Vinn.
Sel. Quest. Jur. ch. 53, 54; Duvergier, Droit Civil Franc, n. 244 to 288;
Duranton, Droit. Civil Franc. Tom. 17, n. 415 to 433 ; Pothier, De Soci-
ety, n. 15 to 20; CoUyer on Partn. B. 2, ch. 1, § 2, p. 106, 107, 2d edit.,
cites Puffendorf, Lib. 5, ch. 8 ; Van Leeuwen's Comm. B. 4, ch. 23, § 10 ;
Asso & Manuel's Instit. of Laws of Spain, B. 2, tit. 15. Mr. Ruther-
forth, in his Institutes, (B. 1, ch. 13, § 32 to 36,) has fully discussed the
' subject; and his remarks are so just and appropriate, that they are here
cited. " In partnerships of trade, goods, or money, or labor, under which
I include skill, or management, are, by the consent of their respective
owners, united into one common stock. Each partner has in view a benefit
to be received for a benefit, which he gives. The separate stock of any
of the partners alone might be too small to trade with, in the manner pro-
posed; or the nature of the undertaking may require not only more
goods or more money than any one of them could supply, but more
labor or more skill than any one of them, is equal to. The gain, arising
from the common stock of goods or money, is the price obtained for
the use of those goods or money ; and the gain, arising from their joint
labor, is the wages obtained for such labor. If we consider the gain in
this view, it is easy to determine what proportion of it each partner
ought to receive. In whatever proportion the use of one partner's goods
is more valuable than the use of the other partner's goods, so much
more of the gain belongs to the former, than to the latter. I do not
mean, that in dividing the gain, any regard is to be had to the particular
share of it, which arose accidentally from the goods contributed by this
or that partner ; but that after the goods are united in a joint stock by
agreement, each partner has a claim to the gain arising from it, in pro-
portion to what was the probable value of the use of his goods, if he
had traded with them separately. And as the probable value of the use
is in proportion to the value of the goods themselves, each partner's
claim upon the gain will be in the same proportion. In like manner,
where there is a joint labor, since the profits arising from it are the
wages of that joint labor, each partner has a claim, not to that particular
part of the gain, which his labor earned, for then it would be no partner-
sjiip, but to such a comparative share out of the common wages or gain,
as is proportional to the value of his labor, when compared with the
labor of the other. As the gain of each partner, so likewise the loss
of each ought to be proportionable to the value of what he contributes.
As much as the goods, which one partner contributes, exceed in their
value the goods, which the other contributes, so much greater is the
claim of the former upon the joint stock, than "the claim of the latter.
Since, therefore, their respective claims upon the whole stock are in
CH. III.] COMMUNITY OF INTERESTS. 39
sive that the case is one of real partnership between
the parties themselves.^ But it is not essential in all
proportion to the share of that stock, which came originally from
each cff them, their claim upon each part of the whole must be in the
same proportion. And, consequently, if any part Of the stock is lost,
each partner, having a claim upon such part lost in proportion to his ori-
ginal share, loses a claim in the same proportion, that is, the loss of each is
in proportion to the original share which he contributed towards the com-
mon stock. This, then, is the rule for adjusting the gain and loss in
partnerships, where no express agreement has been made to the contrary.
Each partner is to receive such a share of the gain, or to bear such a
share of the loss, as has the same proportion to what any other of the
partners receives or bears, that the share contributed by the former has to
the share contributed by the latter. The interest or claim of each upon
the whole stock is in this proportion ; and, consequently, the interest or
claim of each in the increase or decrease of it, in any part added to it by
way of gain, or in any part taken from it by way of loss, ought to be in
the same proportion. If the parties agree, that one, of them shall have a
share in the gain, but shall bear no share in the loss, the contract is a
mixed one ; it is partly partnership, and partly insurance. As they are
all of them to have a share in the gain, it is partnership ; but he or they,
who are to bear all the Toss, insure the principal stock of him who is to
bear none of it. To adjust the shares, which each party, in such a mixed
contract, is to receive in the gain, we are to consider what it is worth
to insure his principal, who is not subject to any loss. And when the
value of such' insurance is deducted from the whole gain, and assigned to
those who were to have borne all the loss, if there had been any, the
remaining portion is to be divided in proportion to each party's share in
the capital stock. It is generally maintained to be contrary to the nature
of partnerships, that, where a capital stock is made by mutual consent, the
parties so forming a capital stock should agree, that one of them should
have all the gain, and the other bear all the loss. And certainly such an
agreement is contrary to the nature of partnership, if we define partnership
to be a contract, which gives the parties a common claim to the joint stock ;
because, where they have a common claim to the stock, they must, in con-
sequence, have a common claim to the gain arising from it,, and to the
losses sustained in it. But such an agreement, though it may be incon-
,sistent with the nature of partnership, is not inconsistent with the law of
common justice. A man wants five hundred pounds capital stock, to enter
' Dob V. Halsey, 16 John. K. 34 ; 3 Kent, Comm. Lect. 43, p. 24, 4th
edit. ; Collyer on Partn. B. 1, ch. 1, § 1, p. 11 to 17 ; 2d edit. ; Ex parte
Gellar, 1 Rose, K. 297. See also Rawlinson v. Clarke, 15 Mees. &
Welsh. K. 292.
40 PARTNERSHIP. [CH. III.
cases, to constitute such a partnership, that both
should concur, that is, that there should exist, as be-
upon a certain branch of trade; he has only three hundred pounds of his
own! I agree to let him have two hundred pounds to make up his capital,
upon condition, that he shall have all the advantage arising from the
whole ; that, if he saves the whole capital, my money shall be returned,
but that if any part of it is lost, I will bear the loss, as far as the two
hundred pounds, which I have advanced. There can, I think, be no ques-
tion, whether the law of nature would allow of such an act of humanity as
this. You may say, that such an agreement is contrary to the law of part-
nership. I grant it is, and therefore am satisfied, that it should not be
called a partnership. I only insist, that the agreement is not contrary to
the law of nature, and leave it to you to call it by what name you please.
Perhaps you may have no name for it ; but a contract is not the more un-
lawful for wanting a name. In partnership, where work is contributed on
one side, and money on the other, the partner, from whom the money
comes, may contribute either the use only of the money, or the property of
it. If he contributes only the use of it, and still keeps his property in the
principal, so that the joint- stock is to be considered, as made up of the
labor of one partner and of the use of the other's money ; it is plain, that,
supposing the principal to be safe, it belongs to him, and that, supposing
it to be lost, he^alone is to bear such loss. The other partner, who con-
tributes work, since, as the case is put, he had no claim to the principal
money, or to any part of it, cannot be obliged to make good any part of
that loss, or to bear any share in it. But if he contributes the property of
his money, so that the joint stock, upon which each of them has a common
claim, is made up of his principal money and of the other's labor, then
the partner, who labors, has a claim upon the principal money itself; and,
consequently, whenever the partnership is dissolved, if the principal
money or any part of it is safe, he ought to have a share in it; and if the
principal is lost, he is a sufferer by losing such share. In the former case,
where he, from whom the money comes, still keeps his property in it, and
has a right to the whole principal, you may ask, what it is, which he
contributes. But the answer is obvious. He contributes the use of his
money ; that is, he contributes the clear gain, which he might probably
have made of it himself. This, however, is not all. He contributes, besides
this, the hazard of his principal ; because, ;f the whole or any part of it
should be lost, the loss is his. In order, therefore, to adjust the share
which each partner ought to have in the gain, if there is any, you are to
value the work of one, and the use and hazard of the other's money ; and
in proportion to the value contributed by each of them, upon such an esti-
mate, their respective gains are to be settled. In the other case, where
he, from whom the money comes, contributes the property of it, and the
other contributes his labor, in adjusting their respective shares of the
CH. m.] COMMUNITY OF INTERESTS. 41
tween the parties themselves, a community or com-
munion of interest in the capital stock, and also in
the profit and loss. For, if the whole capital stock,
emharked in an enterprise or adventure, belongs to,
and is, by agreement, to remain the exclusive pro-
perty of one of the parties ; yet, if there is a commu-
nity of profit, or of profit and loss, in the enterprise
or adventure, between all the parties, they will be
partners in the profit, or the profit and loss between
themselves, as weU as to third persons, although not
partners in the capital stock.^ The one does not
necessarily include the other, and therefore we are
carefully to distinguish between the cases. Where
there is a positive agreement between the parties on
this point, that will gqvern ; where there is no such
agreement, and no implication from the circumstances
of the particular case, leading to a different conclu-
sion, there wUl be presumed to be a community of
interest in the property, as well as in the profit and
loss.^ Wheiie the property of one partner only is, by
agreement, actually put into community, as partner-
ship property, there, in the absence of any controll-
ing stipulations, the like community in the profit and
loss will be intended to exist between the parties, as
incident to the community of property.^ But where
the agreement merely in terms expresses, that the
property is furnished by one partner, and the parties
are to have a community of interest, and share in the
gain, you are to value the money of one and the labor of the other. And
when the comparative values of what each has contributed are thus settled,
their respective shares in the gain are to be in the same proportion."
' Ex parte Hamper, 17 Vea. 404.
2 CoUyer on Partn. B. 2, ch. 1, § 2, p. 106 to 113, 2d edit. See Brophy
V. Holmes, 2 Molloy, K. 1. '
«* Keid V. HoUinshead, 4 Barn. & Cressw. 867.
4*
42 PARTNERSHIP. [CH. HI.
profit and loss, the like inference is not ordinarily or
necessarily deducible.-' And accordingly it has been
held, at the common law, that if A. is the owner of
goods, and agrees with B., that B. shall be interested
in a particular portion of the profit and loss of the
adventure or voyage abroad, in which the goods are
to be embarked, such an agreement will not alone
make A. and B. partners in the goods, as between them-
selves, but only partners in the profits? But, if the
goods themselves are purchased on joint account,
or are treated as a joint concern, or both parties are,
by their agreement, to be interested therein ; there, a
very different inference wUl arise, and the parties wiU
be treated as partners in the goods, as well as in the
profits and 'losses.® The like doctrine will apply,
where each of the parties contributes labor and ser-
vices and materials in the manufacture of any articles
of trade, and the articles, when made, are to be equally
or proportionably shared between them ; they will be
deemed partners, Mer sese ; for the articles manufac-
tured; and so to be divided, may well be- deemed tlie
profits or losses of .their joint undertaking and business.
It is not a mere division of a capital stock jointly pur-
chased, but of a capital stock in new prpceeds or pro-
ducts.*
> CoUyer on Partn. B. 2, eh. 1, § 2, p. 106 to 112, 2d edit; Mair v.
Glennie, 4 M. & Selw. 240.
2 Meyer v. Sharpe, 5 Taunt. K. 74 ; Smith v. Watson, 2 Barn. & Cress.
401 ; CoUyer on Partn. B. 2, oh. 1, § 2, p. 107 to 112, 2d edit. ; Heskett
V. Blanchard, 4 East, R. 144; Ex parte Hamper, 17 Ves. 404; Mair v.
Glennie, 4 M. & Selw. 240 ; [Explained in Stocker v. Brockebank, 5 Eng.
Law and Eq. K. 74] ; Hall v. Leigh, 8 Cranoh, R. 60 ; Clement v. Had-
loek, 13 New Hamp. R. 185.
3 Reid V. HoUinshead, 4 Barn. & Cressw. 867 ; Collyer on Partn. B. 2,
ch. 1. § 2, p. 112, 113, 2d edit. ; Ex parte Cellar, 1 Rose, R. 297.
4 Musier v. Trumpour, 5 Wend. R. 274 ; Everett v. Chapman, 6 CoillS.
R. 347 ; 3 Kent, Comm. Lect. 43, p. 24, 25, 4th edit.
CH. m.] COMMUNITY OF INTERESTS. 43
§ 28. The like distinction is recognised and main-
tained by foreign jurists. Puffendorf says; "Upon
breaking up of partnership, if each party only con-
tributed mon^y, it is plain, upon a division, that each
must receive according to his. contribution. But if
both money and labor were contributed, it must be
considered after what manner the contribution or
collection was made; for when labor is contributed
on one side, and only the use of money on the other,
he who contributed the money, does not admit the
other to a share in the principal, but only to his pro-
portion of the gain, that might be made of the
money and labor joined together. And in this case,
as he^ that contributed only labor, has no title to any
part of the money, when they break off partnership,
so the other alone, as owner, is concerned in the risk
that the money is exposed to 5 and in such a partner-
ship as this, not the money itself, but the risk, that
it runs, and the gain, that may be probably expected,
from it, is compared with the labor." ^ He afterwards
adds; "But sometimes the labor and money are so
interwoven together, as to give him, that contributed
only his labor, a share even in the principal; the
labor of the one, and the money of the other, being
in a manner united into one mass. As when one
lays out his money upon unwrought commodities,
and another spends his labor in working them up,
and managing them. Thus, if I give a weaver
£100 to buy wool, and he makes cloth of it, com-
puting his labor at £100, it is manifest, that here
both of us have an equal interest in the cloth;
1 Puffendorf on Law of Nat. and Nat. B. 5, ch. 8, ^ 2, by Kennet, and
Barbeyrao's note.
44 PARTNERSHIP, [CH, III.
and, when it is sold, the money must be equally di-
vided. Nor ought I to subtract the money, ,that I
contributed at first, and then divide the remainder
with him." ^
*
§ 29. The like distinction is asserted by Pothier.
"When" (says he) "two persons contract a partner-
ship between themselves, to sell in common certain
goods, which ' belong to one of them, and to share the
proceeds, it is necessary carefully to examine what
is ' their intention. If the intention is to put the
very goods into partnership, the partnership will
extend to the same ; and if a part of the goods
perish before the sale proposed by the parties is
made, the loss wUl be borne as a common loss. But,
if the intention is to put into partnership, not the
goods themselves, but the price which shall be ob-
tained therefor, the entire loss will fall upon the part-
ner, to whom the, goods belonged."^ And Pothier
adds, that the like rule will apply to the case of two
merchants, who are associated for the sale of merchan-
dise, which each of them has in his own shop. It
will depend upon the nature of their agreement, as to
the goods being brought into partnership, or only the
proceeds, when sold, whether, if a loss takes place,
it is to be borne by both, as a common loss, or by the
original owner only.® The Roman law was equally
direct and expressive. Oum ires equos haieres, et ego
unum, societatem coimus, id, dccepto equo meo, quadri-
gam venderes, et ex pretio quartam mihi Hdderes. Si
igitur ante venditionem equus mens mortuus sit, non
1 Puffendorf on Law of Nat. and Nat. B. 5, ch. 8, § 2, by Kennet, and
Barbeyrac's note.
2 Pothier, de Societ6, n. 54.
3 Ibid.
CH. III.] COMMUNITY OF INTERESTS. 45
putare se, Celsus ait, societatem manere, nee ex pretio
equorum iuonim partem deheri ; nee enim habendce
quadridgce, sed vendendce eoitam soeietatem. Ccete-
rum, si id aetum dieatur ut quadriga fieret, eaque
communiearetur, tuque in ea ires partes hdberes, ego
quartam, non duhie adhuc socii simus} We here see
the distinction clearly laid down between a partner-
ship in the capital stock, and a partnership in the
profits or losses, arising from the sale. Ulpian also
says ; '• Ooiri societatem et simpliciter lieet ; et si non
fuerit distinetum, videtur coita esse universorum, quce
ex qucestu veniunt ; hoc est, si quid lucrum ex emptione,
venditione, hcatione, conductione, descendit? Yinnius
has put the same distinction in a clear light ; Pos-
sunt igitur duo societatem sic coire, ut unus pecuniam
conferat, unde merces emantur et negotiatio exerceatur ;
alter operam duntaxat, qui profidscatur^ ad merces eniendas,
emat et vendat, ut sic deinde lucrum commune sit. Ccete-
rum h(Bc collatio non uno modo fit ; nam aut opera confertur
cum solo pecunice usu, quo casu sors domino peril, et si
salva est, domino salva est; aut opera confertur cum ipso
dominio pecunice, quo casu qui operam impendit, particepsfit
sortis. In prima specie comparatur cum opera non sors,
sed periculum amittendce sortis, et lucrum, quod ex ea pro-
laUUter sperari poterat. In altera operce pretium hahetur,
quasi sorti adjectum, et pro eo, quod valet, in ipsa sorte
partem habet, qui operam prcestai." ^
1 Dig. Lib. 17, tit. 2, 1. 58 ; Id. 1. 58, § 1 ; Pothier, Pand. Lib. 17, tit. 2,
n. 22; Domat,B. 1, tit. 8, § 4, art. 14 ; CoUyer on Partn. B. 1, ch. 2, § 2,
p. 109, 2d edit. ,
2 Dig. Lib. 17, tit. 2, 1. 7; Pothier, Pand. Lib. 17, tit. 2, n. 20; Doraat,
B. 1, tit. 8, § 3, art. 2. '
3 Vinn. ad Inst. Lib. 3, tit. 26, § 2, n. 3, p. 697.
46
PARTNERSHIP. [CH. IV.
CHAPTER IV.
PARTNERSHIP AS TO THIRD PERSONS.
§ 30. In considering the question, when and under
what circumstances a partnership may exist, as to
third persons, although not between the parties
themselves, we are led to the remark, that there may
be a community of interest in property, without any
community in the profits thereof, as well as a com-
munity of interest in the profits, without any com-
munity in the property, out of which they are to arise.
The absence of both ingredients is necessarily de-
cisive that no real partnership exists. But a nice
and diflSicult question may arise, and, indeed, often
does arise ; When and under what circumstances,
notwithstanding the absence of one of these ingre-
dients, the presence of the other will still be deemed
to create a partnership between the parties them-
selves ; or, if not between themselves, yet it will be
deemed to exist, as to third persons.^ It may be
laid down as a general rule, that in all such cases no
partnership wiU be created between the parties them-
selves, if it would be contrary to their real intentions
and objects. And none will be created between
themselves and third persons, if the whole transac-
tions are clearly susceptible of a different interpre-
tation, or exclude some of the essential ingredients of
1 See Gibson v. Lupton, 9 Bing. K. 297; Post v. Kimberley, 9 Johns.
E. 470; Geddes v. Wallace, 2 Bligh,R. 270; Hazard v. Hazard, 1 Story,
E. 371. See 1 Smith, Lead. Caa. p. 504, &c., 2d edit., note to V7augh v.
Carver ; 2 H. Bl. 235.
CH. IV.] AS TO THIRD PERSONS. 47
partnership. Thus, for example, as has been already-
intimated, if two persons should agree to purchase
goods on joint account in certain proportions, with-
out any intention to sell them on joint account, or to
be jointly concerned in the future sale, this will give
them a community of interest in the property, when
purchased, but will not make them partners; and
they will be joint tenants or tenants in common
thereof, according to circumstances.-"- And it will
make no difference, whether the purchase is made in
their joint names, or in the name of one of them, or
through the instrumentality of an agent.^ In cases
of this sort one essential ingredient, that- of a com-
munion of profit and loss, is wanting.^ Upon similar
principles, if two persons agree to do a particular
piece of work, but the money received for the work is
not to be employed on their joint account, or for their
joint benefit, the persons so contracting are not
partners, but merely joint contractors.* So, if two
joint OAvners of merchandise should consign it to the
same consignee for sale, informing him, that each
owns a moiety thereof, and should give him separate
and distinct instructions, each for his own share, as
1 Ante, § 3; 3 Kent, Comm. Lect. 43, p. 25, 26; Coopei). Eyre, 1 H.
Bl. 37 ; Gow on Partn. ch. 1, p. 10, 11, 3d edit. ; Id. ch. 4, p. 153, 154 ;
Smith V. "Watson, 2 Barn. & Cress. 401 ; Harding v. !Foxcroft, 7 Greenl.
S. 76 ; Jackson v. Kobinson, 3 Mason H. 76.
3 3 Kent, Comm. Lect. 43, p. 25, 26; Hoare v. Dawes, Doug. R. 371 ;
Coope V. Eyre, 1 H. Bl. 37 ; Post v. Kimberley, 9 Johns. R. 470 ; Holmes
V. -[Jnited Insur. Co., 2 Johns. Cas. 329 ; Harding v. Eexcroft, 6 Greenl.
R. 76.
3 Coope V. Eyre, 1 H. Bl. 37; Gow on Partn. ch. 1, p. 10, 3d edit. ;
CoUyer on Partn. B. 1, oh. 1, § 1, p. 11 to 15, 2d edit. ; Gibson v. Lupton,
9 Bing. R. 297.
* Collyer on Partn. B. 1, ch. 1, § 1, p. 15, 16, 2d edit. ; Einckle v.
Stacey, Sel. Cas. in ch. 9.
48 PARTNERSHIP. . [CH. IV.
to the sales and returns, they would not be partners
in the adventure ; hut each would be deemed enti-
tled to a separate account, and a separate action
against the consignee, if he should disobey his own
orders.-^
§ 31. But cases may nevertheless occur, where a
community of interest in the property ^ay draw after
it the establishment of a partnership between the
parties, although a sale of the property for the joint
profit may not be contemplated by the parties. Thus,
as in the example already suggested, if two persons
should agree together, to furnish an equal quantity
of materials to manufacture articles of a particular
description, and to employ their mutual skUl, labor,
and services, in manufacturing the articles ; and then
the articles were to be equally divided between them,
and sold by each on his separate account, there, a
partnership in the property and manufactured articles
would be deemed to exist.^
§ 32. On the other hand, there may be a commu-
nity of interest in the profits between the parties,
without any community of interest in the property
itself [Thus when two mercantile firms agree to «hare
profits and loss upon contracts for the purchase or sale
of merchandise in a particular' branch of their bu-
siiiess,-to be made by each firm separately in its own
name, and to be executed with its separate fund, this
does not constitute them partners, either as between
themselves or to third persons; since each firm would
1 Hall V. Leigh, 8 Cranch, 50 ; Jackson v. Robinson, 3 Mason, R. 138.
s Ante, § 27; Musier v. Trumpour, 5 Wend. R. 274 ; Everett v. Chap-
man, 6 Conn. R. 347 ; Bond v. Pittard, 3 Mees. & Welsh. 357 ; 3 Kent,
Comm. Lect. 43, § 24, 25, 26, 4th edit. See also Jordan v. Wilkins,
3 Wash. Cir. R. 110.
CH. IV.] AS TO THIRD PERSONS. 49
be separately bound to fulfil its own contracts, and
there would be no union of funds, services, or property,
but only a division of profit and loss.^] But this par-
ticipation in the profits will not (as we have seen^)
1 Smith V. Wright, 5 Sandf. 113.
2 Ante, § 27, 28; Hazard v. Hazard, 1 Story, R. 371. In this case
the Court said ; " Now, upon the point, whether there was a partnership
or not between these parties in the factory business, under the agreement,
it is necessary to take notice of a well known distinction between cases,
where, as to third persons, there is held to be a partnership, and cases
where there is a partnership between the parties themselves. The former
may arise between the parties by mere operation of law against the
intention of the parties ; whereas, the latter exists qnly when such is the
actual intention of the parties. Thus, if A. and B. should agree to carry
on business for their joint profits, and to divide the profits equally between
them, but B. should bear all the losses, and should agree, that there should
be no partnership between them ; as to third persons dealing with the
firm, they would be held partners, although inter sese, they would be held
not to be partners. This distinction is often taken in the authorities. It
was very fully discussed and recognized in Carver v. Waugh (2 H. Bl.
235) ; Cheap v. Cramond (4 Barn. & Aid. 663) ; Peacock v. Peacock
(16 Ves. 49); Ex parte Hamper (17 Ves. 404); Ex parte Hodgkinson
(19 Ves. 291); Ex parte Langdale (18 Ves. 300); Tench v. Tench
(6 Madd. R. 145, note) ; Hesketh v. Blanchard (4 East, R. 144) ; Muzzy
V. Whitney (10 Johns. R. 226) ; Dob v. Halsey (16 Johns. R. 34.)
The question before us is, not as to the liability to third persona ; but it is
solely whether between themselves the agreement was intended to create
and did create a partnership. I have looked over the agreement carefully,
and my opinion is, that no partnership whatsoever was intended between
the parties ; but that Benjamin Hazard was to be employed as a mere
superintendent, and not as a partner ; and was to be paid the stipulated
portion of the profits for his services as superintendent. This, it is said,
in the agreement, was to be the sole reward for his services ; and, if there
were no . profits, then he was to submit to iose the value of his services.
It is not anywhere said imthe agreement, that the parties are to be part-
ners in the business ; nor that Benjamin Hazard is to pay any part of the
losses. But* language is used, from which, I think, it may fairly be
inferred, as the full understanding of the parties, that the whole capital
stock was to be held by T. R. Hazard, as his sole and exclusive property,
and that the stock was to be furnished by him, and the proceeds thereof
was to be delivered and sold by him, and charged to him, as his individu£d'~
property, and debts and credits. Now, if this be so, there is no pretence
to say, that the parties' intended a partnership. A mere participation in
- PABTN. 5
50 PARTNEESmP. [CH. IV.
create a partnership between the parties themselves,
as to the property, as well as the profits, contrary to
their intention^.-^ Nor will it necessarily create such
a partnership in all cases, as to third persons. The
%
the profits -will not make the parties partners inter sese, whatever it may
do as to third persons, unless they so intend it. If A. agrees to give B.
one third -of the profits of a particular transaction in business, for his
labor and services therein, that may make both liable to third persons as
partners; but not as between themselves. This was the very point ad-
judged in Hesketh v. Blanchard (4 East, 144,) where Lord Ellenborough
said ; ' The distinction taken in Waugh v. Carver and others, applies to
this case. Quoad third persons it was a 'partnership, for the plaintiff was
to share half the profits. But, as between themselves, it was only an
agreement for so much, as a compensation for the plaintiff's trouble and
for lending E. his credit.' The same doctrine was fully recognized in
Muzzy V. Whitney (10 Johns. R. 226.) It is not necessary in the present
case, to decide, whether Benjamin Hazard was, under the agreement, a
partner as to third persons. That question may be left for decision, until
it shall properly arise in judgment. And before it is decided, it might be
necessary to examine a very nice and curious class of cases, standing,
certainly, upon a very thin distinction, if it is a clearly discernible distinc-
tion, between cases of partnership as to third persons, and cases of mere
agency, where the remuneration is to be by a portion of the profits. This
distinction is alluded to by Lord Eldon, in Ex parte Hamper (1 7 Ves. 404,)
and by Lord Chief Justice Abbott in Cheap v. Cramond (4 Bam. & Aid.
668, 670.) In the latter case, the Chief Justice said ; ' Such an agreement
is perfectiy distinct from the cases, put in the argument before us, of remu-
neration made to a traveller, or other clerk or agent, (in proportioa to the
profits,) by a portion of the sums received by the master or principal, in
lieu of a fixed salary, which is only a mode of payment adopted to in-
crease or secure exertion.' It was also acted upon in Muzzy v. Whitney
(10 Johns. R. 226) ; Dry v. Boswell (1 Camp. K. 329) ; Wish v. Small
(Ibid, note); Benjamin v. Porteus (2 H. Bl. 590); and Wilkinson i-.
Frazier (4 Esp. R. 182); and Mair v. Glennie (4 Maule & Selw. 240,
244.) My judgment is, that in the present case the parties never intended
any partnership in the capital stock ; but a mere participation of interest
in the profits ; and that the one third or one fourth of the promts, allowed
by the agreement to Benjamin Hazard, was merely a mode of paying him
as agent for his superintendency of the factories."
1 Wish V. Small, 1 Camp. K. 331, note ; Dry v. Boswell, 1 Camp. E.
329, 330 ; Mair v. Glennie, 4 Maule & Selw. 240 ; [Explained in Stocker
V. Brockelbank, 5 Eng. Law and Eq. K. 74]; Clement ». Hadlock, 13
New Hamp. R. 186 ; Post, § 41, 42. •
CH. IV.] AS TO THIRD PERSONS. , 51
various cases, in which a partnership may exist, as to
third persons, although not between the parties them-
selves, win presently come under our consideration ; ^
and therefore, what is here said, will principally re-
spect the question, when no partnership is created
either way. Thus, if a party has no interest whatso-
ever in the capital stock, and as between himself
and the other parties, has also no rights as a partner,
or no mutuality of powers and duties, but is simply
employed as an agent, and is to receive either a given
sum Out of the profits, or a proportion of the profits,'
or a residuum of the profits beyond a certain sum, as
a compensation for his labor and services, as agent o*f
the concern, and not otherwise ; he will not be deemed
a partner in the concern from that fact alone ; not a
partner with the oth'fers inter sese, for that would be
contrary to their intentions and objects;^ nor as to
third persons, because the transaction admits of a dif-
ferent interpretation, and may justly be deemed a
mere mode of ascertaining and paying the compensa-
tion of an agent, as in a naked case of agency. In such
a case, it may be properly enough said, that the agent
is entitled to a share or portion in the profits, liqui-
dated or unliquidated, and, therefore, that he has, in a
certain sense, a community of interest therein, with the
actual partners. But he does not participate therein as
an owner j»)"o tavto, or as possessed thereof jper myetper
tout, or as clothed with the rights, and powers, and duties
1 Post, § 53 to 70.
2 Gow on Partn. ch. 1, p. 10, 11 ; Geddes v. Wallace, 2 Bligh, R. (O. S.)
270 ; Benjamin v. Porteus, 2 H. Black. 590 ; Dry v. Boswell, 1 Camp.
R. 829, 330; Wish v. Small, 1 Camp. R. 331, note; Ex parte Watson,
19 Ves. 461 ; Muzzy v. Whitney, 10 Johns. R. 226 ; Turner v. Bissell,
14 Pick. R.'l92. See Garey e. Pike, 10 Adol. & EUis, 512 ; Post, § 33
to 36, 38 to 40.
52 PAETNERSHIP. [CH. IV,
of a partner. He has only a limited interest therein,
either as entitled to a fixed sum, to be paid out of the
profits, or as entitled to a lien therein, or as possessed
of an undivided portion thereof as a tenant in common.
§ 33. The distinction between the cases, where a
participation in the profits will make a man liable to
third persons, as a partner, .or not, is sometimes laid
down by elementary writers in different language.
Thus it has been said by a learned writer ; " A dis-
tinction, however, prevails between- an interest in the
profits themselves, as profits, and the payment of a
given sum of money in proportion to a given quan-
tum of the profits, as the reward of, and as a com-
pensation for labor and services."-^ Another learned
writer has expressed himself in the following terms ;
"In order to constitute a communion of profit be-
tween the parties, the interest in the profit must be
mutual, that is, each person must have a specific in-
terest in the profits as a principal trader. He is not
a partner, if he merely receives out of the profits a
compensation for his trouble, in the character of an
agent or servant of the concern." ^
§ 34. The distinction, as thus presented, does, cer-
tainly wear the appearance of no small subtlety and
refinement, and scarcely meets the mind in a clear
and unambiguous form;^ for the question must still
recur ; when may a party properly be said to have
" an interest in the profits, as profits ? " When also
may it properly be said, that ^ the . interest in the
profits is mutual," and that " each person has a spe-
cific interest in the profits, as a principal trader ? " No
' Gow on Fartn. ch. 1, p. 18, Sd edit.
2 CoUyer on Partn. B. 1, cli. 1, § 1, p..l7, 18, 2d edit.
3 Collyer on Partn. B. 1, ch. 1, § 1, p. 23, 2d edit.
CH. IV.j AS TO THIRD PERSONS. 53
absolute test is given to distinguish the cases from
each, other, and it is not easy to grasp it, when stated
in so abstract a form. The true meaning of the lan-
guage, "an interest in the profits, as profits," (which
has probably been borrowed from the subtle and
refined statement of an eminent judge,) ^ seems to be,
that the party is to participate/ indirectly at least, in
the losses, as well as in the profits, or, in other words,
that he is to share in the net profits, and not in the
gross profitsi^ If he is to share in the net profits^
which supposes him to have a participation of profit
and loss, that will constitute him a partner ; if in the
gross profits, then it will be otherwise.^ Thus, where
an agreement was made between the owner of a
lighter, and B., a lighter-man, that, in consideration
of his working the lighter, he should have half her
'gross earnings, it was held to be only a mode of pay-
ing B. wages for his labor, and not a partnership;
but, that if the profits were to be equally divided be-
tween them, there the participation of the parties of
the profit and loss would make the agreement a part-
nership.*
1 Lord Eldon.
2 Post,-§ 56.
3 Bond V. Pit^ard, 3 Mees. & Wels. 357 ; S. C. 1 Tyrw. & Grang. R.
.848 ; post, § 220, and note ; post, § 42, 48.
■* Dry V. Boswell, 1 Camp. R. 329, 330 ; Cheap v. Cramond, 4 Barn.
& Aid. 663, 670. See also Waugh v. Carver, 2 H. Bl. 235, 246, 247 ;
SavUle V. Robertson, 4 Term R. 720 ; Bond v. Pittard, 3 Mees. & Wels.
R. 357. See also Cutler v. Winsor, 6 Pick. R. 336 ; Bailey v. Clark,
6 Pick. R. 372 ; Turner v. Bissell, 14 Pick. R. 193 ; Chase v. Barrett,
4 Paige, R. 148, 159 ; S. P. Pearson v. Shelton, 1 Mees. & Wels. 504 ;
S. C. Tyrwh. & Grang. 848 ; Post, § 53 to 69, § 220. — In this case the
distinction is clearly pointed out between participation in the gross profits
and participation in the net profits. * See post, § 220, note. See 1 Smith,
Lead. Cas. p. 504, 2d edit., note to Waugh v. Carver, 2 H. Black. 235.
The case of Thompson v. Snow, 4 Greenl. R. 264, seems to be contrary ^
5*
54 PAETNERSHIP. [CH. IV.
§ 35. . Lord Eldon has adverted to the like dis-
tinction, and disapproved of it in strong terms. On
one occasion his Lordship said; "The cases have
gone further to this nicety, upon a distinction so thin,
that I cannot state it as established upon due con-
sideration; that if a trader agrees to pay another
person, for his labor in the concern, a sum of money,
even in proportion to the profits, equal to a certain
share, that "wiU not make him a partner ; but, if he
has a specific interest in the profits themselves, as
profits, he is a partner."-^ On another occasion, he
said, referring to the case before him, " That it was
impossible to say, that as to third persons, they (the
parties) were not partners, the ground being settled,
that if a man, as a reward for his labor, chooses to
stipulate for an interest in the profits of a business,
instead of a certain sum proportioned to those profits,
he is, as to third persons, a partner ; and no arrange-
ment between the parties themselves could prevent
it.'"'
§ 36. But however nice the distinction may be in
itself, and however difficult it may be successfully to
apply it to the circumstances of particular casesj it is
for it makes no distinction between sharing the net earnings and sharing
the gross earnings ; post, 44, and Reynolds v. Toppan, 16 Mass. K. 370.
See also Loomis v. Marshall, 12 Conn. R. 69; post, § 45; Denny v.
Cabot, 6 Met. R. 82 ; Bradley v. White, 10 Met. R. 303.
1 Ex parte Hamper, 17 Ves. 404 ; CoUyer on Partn. B. 1, ch. 1, § 1,
p. 23, 24, 2d edit.; Ex parte Watson, 19 Ves. 461 ; Turner v. Bissell, 14
Pick. R. 192 ; Loomis v. Marshall, 12 Conn. R. 69; 1 Smith, Lead. Cas.
504, note 2.
8 Ex parte Rowlandson, 1 Rose, R, 89, 91, 92 ; Collyer on Partn. B. 1,
ch. 1, § 1, p. 24 to 29, 2d edit.; Ex parte Langdale, 18 Ves. 300. See
also the remarks of Mr. Chief Justice Gibson in Miller v. Bartlett, 15
Serg. & R. 137. See Hazard v. Hazard, 1 Story, R. 371 to 376 ; Ante,
§ 32, note.
CH. IV.] AS TO THIKD PERSONS. 65
by no means clear, that there is not a very just and
satisfactory foundation on which it may well rest.^
The question in all this class of cases is first to ar-
rive at the intention of the parties irder sese; and
secondly, if between themselves there is no intention
to create a partnership, either in the capital stock, or in
the profits, whether there is any stubborn rule of law,
which wUl nevertheless, as to third persons, make a
mere participation in the profits conclusive, that there
is a partnership. If there is any such rule of law, the
next inquiry is, as to the nature, and foundation, and
true extent thereof. Now, it is incumbent upon those
who insist that a partnership exists between the par-
ties, as to third persons, by mere operation of law, in
opposition to their own intention, to establish, that in
the given case, under all the circumstances, there is
such a rule, and that it is strictly applicable. What
then is the rule of law relied on for the purpose?
It is said, that the true criterion is, whether the par-
ties are to participate in profit ; ^ or, according to the
language used on another occasion, " Every man, who
has a share in the profits of a trade, ought also to
bear his share of the loss as a partner."^ In a just
sense this language is sufficiently expressive of the
general rule of law; but it is assuming the very point
in controversy to assert, that it is universally true, or
that there are no qualifications, or limitations, or ex-
ceptions to it. On the contrary, the very cases alluded
to by Lord Eldon, in the clearest terms establish,
1 See 3 Kent, Comm. Leot. 43, p. 33, 34, 4th edit.
2 Lord Eldon in Ex parte Langdale, 18 Ves. 300.
3 Grace v. Smith, 2 W. Black. K. 998, 1000; Ex parte Hamper, 17
Ves. 404 ; Ex parte Watson, 19 Ves. 461 ; Waugh v. Carver, 2 H. Bl.
247 ; Turner v. Bissell, 14 Pick. K. 192.
56 PARTNERSHIP. [CH. IV.
that such qualifications, limitations, and exceptions
do exist; and are either contemporaneous with the
promulgation of the general rule, or are necessary to
its just application and use. It is, therefore, far from
being universally true, that a mere participation in
the profits, constitutes the party a partner ; at most,
it is true only siib modo. Indeed, as an original
question, it might admit of very grave doubt, whether
it would not have been more convenient, and more
conformable to true principles, as well as to public
policy, to have held, that no partnership should be
deemed to exist at all, even as to third persons, unless
such were the intention of the parties, or unless they
had so held themselves out to the public.^ But the
common law has already settled it otherwise ; and
therefore it is useless to speculate upon the subject.^
1 See the remarks of Mr. Chancellor Walworth, in Chase v. Barrett,
4 Paige, E. 148, 159, 160; Post, § 48, 49.
2 The ground upon which the participation in the profits of a trade,
although no partnership, is intended to exist between the parties, shall
make them partners as to third persons, is thus stated by Lord Chief Jus-
tice De Grey, in Grace v. Smith (2 V7. Black. 998, 1000.) "Every
man, who has a share of the profits of a trade, ought also to bear
his share of the loss. And if any one takes part of the profits, he
takes a part of that fund on which the creditor relies for his pay-
ment. If any one advances or lends money to a trader, it is only lent
on his general personal security, and yet the lender is generally interested
in those profits. He relies on them for repayment." Now, to 'say the
least of it, this reasoning is very artificial ; for if the creditor trusts to
the personal security of his debtor generally, for advances made, or goods
sold, and he has no lien on the property or profits of the trade for repay-
ment, it seems difficult to perceive why other persons should be liable to
him on account of their receipt of a portion of the profits, there being no
privity of contract and no partnership existing in the advances of money
or goods sold between the parties. Why should a mere participant in the
profits, contrary to the intent of the agreement between himself and his
co-contractor, be held responsible to a creditor of the latter, when the
latter has trusted to his personal security, and only had a general confi-
dence, that he was doing a profitable business ? Why should the creditor's
CH. IV.J AS TO THIRD PERSONS. 57
§ 37. The Eomau law, and the modern foreign law
do not appear to have created a partnership between
the parties, as to third persons, without their consent,
or against the stipulations of their own contract ; and,
therefore, the common law seems to have pressed its
principles on this subject to an extent not required by.
contract displace the contract of the immediate parties ? The rule might
have some show of equity, if the party were only held liable to the extent
of the profits received by him. But the rule makes him liable to pay all
the losses, and all the debts, whether he has receiyed any profits or not.
There is great force on this point in the argument of the counsel for the
defendants in Waugh v.. Carver, 2 H. Black. 244, 245. It was there
said; " The profits are not a capital, unless carried on as capital, and not
divided. Ship agents are not traders, but their employment is merely to
manage the concerns of such ships in port as are addressed to them.
Suppose -two fishermen were to agree to share the profits of the fish that
each might catch, one would not be liable for mending the nets of the
other. So, if two watermen agree to divide their fares, neither would be
answerable for repairing the other's boat. Nor would any artificers,
who entered into similar agreements to share the produce of their separate
labor, be obliged to pay for each other's tools or materials. And this is
not an agreement as to the agency of all ships, with which the parties
were concerned, for such as came to the particular address of one, were to
be the sole profit of that one. It was, indeed, clearly the intent of the
parties to the agreement, and is so expressed, that neither should be
answerable for the losses, acts, or deeds of the other, and that the agree-
ment should not extend to their separate mercantile concerns. It must,
therefore, be a strong and invariable rule of law, that can make the parties
to the agreement responsible for each other, against their express intent
But all cases of partnership, which have been hitherto decided, have pro-
ceeded on one or other of the following grounds: — (1). Either there has
been an avowed authority given to one party to contract for the rest ;
(2). Or, there has been a joint capital or stock; (3). Or, in cases of
dormant partners, there has been an appearance of fraud in holding out
false colors to the world." See also post, § 48 to 52. However, the
doctrine is (as is fully stated in the text) completely established, upon the
very ground asserted in Grace v. Smith. See Waugh v. Carver, 2 H.
Black. 235, 246, 247; Cheap c. Cramond, 4 Barn. & Aid. 663; Dob v.
Halsey, 16 Johns. R. 34 ; Mclver v. Humble, 16 East, R. 169, 174, 175;
3 Kent, Comm. Lect. 43, p. 24, 25, 27, 4th edit.; Ex parte Langdale, 18
Ves. 300 ; Pott v. Eyton, 3 Manning, Granger & Scott, R. 32 ; Barry v.
Nesham, 3 Ibid. 641.
58 PARTNERSHIP. [CH. IV.
even if it is consistent with, natural justice.^ Indeed,
the Roman law deemed aU contracts to be made only
between the immediate parties thereto ; and no direct
remedy was generally furnished to or against third
persons, even where one of the immediate parties
was a mere agent of such third persons, and it re-
q^uired the interference of the Prsetor to enlarge the
remedy by an equitable extension to reach them,^
§ 38. Admitting, however, that a participation in
the profits wUl ordinarily establish the existence of a
partnership between the parties in favor of third per-
sons, in the absence of all other opposing circumstan-
ces, it remains to consider, whether the rule ought to
be regarded, as any thing more than mere presumptive
proof thereof, and therefore liable to be repelled, and
overcome by other circumstances, and not as of itself
overcoming or controlling them. In other words, the
question is, whether the circumstances, under which
the participation in the profits exists, may not qualify
the presumption, and satisfactorily prove, that the por-
tion of the profits is taken, not in the character of a
partner, but in the character of an agent, as a, mere
compensation for labor and services. If the latter be
the true predicament of the party, and the whole trans-
action admits, nay, requires, that very interpretation,
where is the rule of law, which forces upon the trans-
action the opposite interpretation, and requires the
. Court to pronounce an agency to be a partnership.
I See Domat, B. 1, tit. 8, § 2, art. 1 ; Id. § 4, art. 18 ; Civil Code of
France, art. 1862 to art. 1865 ; Vinn. ad Inst. Lib. 3, tit. 26, § 2, n. 3 ;
Duranton, Droit Civil, Tom. 17, n. 328 to 331; Duvergier, Droit Civ.
Franc. Tom. 5, n. 45 ; Id. n. 385 to 387 ; Fardessas, Droit Comm. Tom. 4,
n. 969 ; Post, § 50.
s Story on Agency, § 165, 261, 271, 425.
CH. IV.] AS TO THIBD PERSONS. 59
contrary to the truth of the facts, and the intention of
the parties ? Now, it is precisely upon this very
ground, that no such absolute rule exists, and that it is
a mere presumption of law, which prevails in the ab-
sence of controlling circumstances, but is controlled by
them, that the doctrine in the authorities alluded to is
founded. If the participation in the profits can be
clearly shown to be in the character of agent, then the
presumption of partnership is repelled. In this way
the law carries into effect the actual intention of the
parties, and violates none of its own established rules.
It simply refuses to make a person a partner, who is
but an agent for a compensation payable out of the
profits ; and there is no hardship upon third persons,
since the party does not hold himself out as more than
an agent. This qualification of the rule (the rule it-
self being built upon an artificial foundation) is, in
truth, but carrying into effect the real intention of the
parties, and would seem far more consonant to justice
and equity, than to enforce an opposite doctrine, which
must always carry in its train serious mischiefs or
ruinous results, never contemplated by the parties. In
this view the distinction, taken in the authorities
above alluded to, has a reasonable and just foundation,
and is entirely consistent with the equities, which ought
to prevail in all reciprocal contracts.^
i Mr. Chancellor Walworth has expressed himself in favor, of the dis-
tinction as well founded, in the case of Champion v. Bostwick, 18 Wend.
175, 184. He there said; "There is ,a class of cases, in which it has
been held that a person, who merely receives a compensation for his labor
in proportion to the gross profits of the business in which he is employed,
is not a partner with his employer even as to third persons. The distinc-
tion appears to be between the stipulation for a compensation proportioned
to the profits, and a stipulation for an interest in such profits, so aa to enti-
tle him to an account as a partner; (1 Bose, B. 91) ; a distinction, which
60 PARTNERSHIP. [CH. IV.
§ 39. Keeping this distinction, in Yie\y, all the sup-
posed repugnancy or difficulty of the various decided
Lord Eldon says is so thin, that he cannot state it as settled upon due con-
sideration. But he says, it is clearly settled as to third persons, though he
regrets it, ' that if a man stipulates, that as the reward of his labor he shall
have, not a specific interest in the business, but a given sum of money,
even in proportion to the quantum of profits, that will not make him a part-
ner ; but if he agrees for a part of the profits, as such, giving him a right
to an account, though having no property in the capital, he is as to third
persons a partner ; and no arrangement between the parties themselves
can prevent it.' Ex parte Hamper, Stark's Law of Partn. 137. Gary,
however, defends the principle, upon which this distinction is based. He
insiste, that as the person, who is to receive a compensation for his labor
in proportion to the profits of the business, without having a specific lien
upon such profits to the exclusion of other creditors, it is for their interest
that he should be compensated in that way, instead of receiving a ^xed
compensation, whether the business produced profits or otherwise ; on the
other hand, that if he stipulates for an interest in the profi.ts of the busi-
ness, which would entitle him to an account, and give him a specific lien
or a preference in payment over other creditors, and giving him the fuU
benefit of the increased profits of the business, without any corresponding
risk in case of loss, it would operate unjustly as to other creditors ; and
therefore that it is perfectly right in principle, that he should be holden to
be liable to third parties, as a partner in the latter case, but not in the first.
Gary on Partn; 11, note i. I am inclined to think this distinction is a
sound one, as regards the rights of third persons. But as between the
parties themselves, it is perfectly competent for them to agree, that one
shall have his full share of the anticipated profits, as a compensation for
his labor or ^kill, without running any risk of absolute loss, except as to
third persons, if instead of producing profits the business should prove a
losing concern. Many of the cases, cited by the counsel for the plaintiffs
in error, were those, in which the question arose between the immediate
parties to the agreement, which was supposed to make them partners as
between themselves,; and they may therefore be reconciled with other
cases, in which they were held to be liable as partners to third persons
upon the principles before stated." Mr. Gary in the passage alluded to
says ; " It is not within the original object of this work to enter into any
contested points, or to broach an opinion not immediately sanctioned by
judicial decisions. In the present case, however, it may be allowable to
depart from this rule, as the principle, on which the above distinction is
grounded, seems to the author of this work perfectly clear and just. On
the one hand, suppose a person is to receive a proportion of a given quan-
tum of profits, by way of recompense for his labor, this cannot be pro-
CH. IV.] AS TO THIRD PERSONS. 61
cases vanishes, and they are in harmony with each
other, as well as with common sense.^ Let us proceed
then to illustrate the doctrine by adverting to some
of the more striking cases, in which it has been ju-
diciously racognized and confirmed.
§ 40. Thus, where A., having neither money nor
credit, offered to B., that if he would order certain
goods to be shipped with A., upon adventure to foreign
parts, if any profit should , arise therefrom, B. should
have one half for his trouble ; and B. accepted the
ductive of injustice to any of the creditors of the trader, for the trader's
own interest will not suffer him to give a greater proportion of the profits
than the particular adyenture will well afford. As if the risk is worth ten
per cent, he will not be satisfied with securing five per cent, only as his own
return, but willprobably offer an equal share of the profits above the five
per cent. But suppose the adventure fails, and there is none or very little
profit to be divided, the creditor is obviously in a better condition than if
a sum certain had been given as wages ; for as every undertaking must
be attended with some expense, and it is usual to pay agents or servants
before any return of profit can be fairly calculated upon, it would be
unreasonable to say, that an agent or servant shall not be paid, until the
trader's other creditors are satisfied, and whether those wages are paid by
a proportion of the profits, or by a sum certain, which must be deducted
from the profits, cannot be very material to the creditors. On the other
hand, if the agent agrees for a part of the profits as such, and stipulates
for an interest in the profits of a business, instead of a certain sum propor-
tioned to those profits, he obtains the right of an account, and to the preju-
dice of the creditors may institute a suit against his employer, not for the
recovery of his wages, but for an account of profits ; and supposing him
not to be thereby constituted a partner, might take his full share of the
profits, having an obvious advantage over the other creditors; for in case
of the trader's insolvency, his claim (still supposing him not to be a part-
ner) would be prior to that of other creditors, whereas in the former case
he has not a determinate interest in the profits, but on the event of the
trader's becoming bankrupt, would be on the same footing with other
simple contract creditors." See also Perrine v. HankerSon, 6 Halst. 2,
181 ; 3 Kent, Coram. Lect. 43, p. 25, note (b), 4th edit., where the learned
commentator adopts with approbation the doctrine of Mr. Chancellor
Walworth. See also Story on Contracts, § 352, 353, 357, and note.
1 See Montag. on Part. B. 1, Pt. 1, p. 10 to 12, 2d edit., where many of
the cases are collected.
PARTN. 6
62 PARTNERSHIP. [CH. IV.
offer, and the goods were purchased accordingly, and
charged to both A. and B. as joint debtors ; and B.
having been afterwards compelled to pay the whole
debt, brought a suit against A.'s executors, to recover
the value of the goods so purchased ; on an objection
taken, that A. and B. were partners in the adventure,
and the action was not therefore maintainable, the
court overruled the objection, and held, that qmad
third persons, this was a partnership, for the plaintiff
B. was to share half the profits ; but, as between them-
selves, it was only an agreement for so much, as a
compensation for the plaintiff's trouble, and for lending
A. his credit.-' In this case the purchase was on joint
account, for the purpose of selling the same goods and
dividing the profits ; and therefore it might well be
deemed a partnership, as to third persons, as for exam-
ple, in favor of the seller of the goods, consistently
with the distinction above stated. [So where several
persons were engaged in running a line of stages from
A. to B. and by the agreement between them one was
to run at his own expense a portion of the route, and
the others, in like manner, the residue ; each being
authorized to- collect fare over the whole or any part of
the route ; the parties to settle monthly, and the fare
so received to be divided in proportion to the length
of each one's route, the party found to have received
more than his share, to pay over to the other the ba-
lance on each monthly settlement, this was held not to
constitute a partnership between th^ parties, whatever
it might be as between them and third persons.^]
I 41. But a case, bringing the distinction to its
1 Hesketh v. Blanchard, 4 East, K. 144, 146 ; Smith v. Watson, 2 B.
& Cressw. 401 ; post, § 56, and note.
3 Pattison v. Blanchard, I Selden, 186.
CH. IV.] AS TO THIRD PERSONS. 63
strictest test, may easily be put, of factors, brokers,
and other agents, who are employed to sell goods on
account of their principals, and are to receive a com-
mission out of the J)rofits, or a proportion of the
profits, or a particular percentage out of the price,
or a part or the vphole of the price, beyond a certain
sum, for which the goods are sold, as a compen-
sation for their services. In all such cases it has been
constantly held, that the factors, brokers, and other
agents, are not partners with their principals, as to
third persons, and ci fortiori, not between themselves
and their principals.^ It might be different, as to third
persons, (as we shall hereafter see,) if the factor,
broker, or other agent, were not only thus to receive a
proportion of the profits, but also to bear a proportion
of the losses.^ So, where a lighter-man agreed with the
owner of a lighter to work the lighter, and to receive
half of the gross earnings, as his compensation there-
for, he was held not to be a partner, even as to third '
persons ; but it was merely a mode of compensation of
his services.^ So, where a person agreed to give his
1 CoUyer on Partn. B. ch. § 1, p. 18 to 29. See Dixon v. Cooper,
3 Wila. 40; Benjamin v. Porteus, 2 H. Black. 590 ; Meyer v. Sharpe, 5
Taunt. K. 74; Rice v. Austin, 17 Mass. E. 197, 206; 3 Kent, Comm.
Lect. 43, p. 33, 4th edit. ; 2 Bell, Comm. B. 7, p. 623, 5th edit. ; Withing-
ton V. Herring, 3 Moore & Payne, 30 ; Gibbons v. Wilcox, 2 Starkie, R.
45 ; Tobias v. Blinn, 21 Verm. 548 ; Gow on Partn. oh. 1, p. 18 to 20, 3d
edit.; Ex parte Watson, 19 Ves. 461 ; Turner u. Bissell, 14 Pick. E. 192;
Denny v. Cabot, 6 Met. E. 82 ; Bradley v. White, 10 Met. E. 305 ; Judson
V. Adams, 8 Cush. 556 ; Pott v. Eyton, 3 Manning, Granger & Scott, E.
32; Burckle v. Eckart, 1 Denio, R. 337.
2 Smith V. Watson, 2 B. & Cressw. 401 ; CoUyer on Partn. B. 1, ch.
1, § 1, p. 19, 2d edit; Green v. ^eesley, 2 Bing. N. Cas. 108. But see
Mair v. Glennie, 4 M. & Selw. 240 ; [Explained in Stocker v. Brockel-
bank, 5 Eng. Law & Eq. E. 74] ; Perrott v. Bryant, 2 Younge & CoU-
yer, 61, 67, 68.
3 Ante, § 34 ; Dry v. BosweU, 1 Camp. E. 330 ; CoUyer on Partn. B.
1, ch. 1, § 1, p. 21, 2d edit. ; Gow on Partn. p. 19, 20, 3d edit.; Taggard
64 PAETNBESHIP. [CH. IV.
attendance and services in a grocery store, and for
such attendance and services he was to receive a fixed
salary, and also a commission of seven per c^n't., upon
the profits of the business, from the owners, it was
held, that this did not constitute him a partner, upon
the ground, that a commission on the profits was dis-
tinct from an interest in the profits.^ It might per-
haps be more accurately said, that it was a mere mode
of compensation for an agency. The like rule would
apply, where a person should agree to depasture cat-
tle on the lands of another, who was to be repaid for
fattening the same, by equally dividing all the profits
with the owner, above £20, the estimated value of the
cattle, upon a resale.^ [So, where a patentee 6f an ar-
ticle contracted with the defendant to act as manager
of the business of manufacturing the article which was
to be marked with the patentee's name, the defendant
furnishing all the capital, but the patentee having the
"Management of the work, employing the workmen,
making the purchases, &c., and was to receive a remu-
neration equal to forty per cent, on the capital stock, de-
ducting all liabilities, but by express terms was not to
be a partner with the defendant, this was held not to
maike the patentee a partner with the defendant al-
though his remuneration depended distinctly upon the
amount of profits.^ ]
§ 42. It is upon the like ground, that, if the master
V. Loring, 16 Mass. R. 336 ; Cutler v. Winsor, 6 Pick, R. 335 ; Cheap v.
Cramond, 4 Barn. & Aid. 663, 670 ; Heimstreet v. Rowland, 5 Denio, R.
68. See also Mohawk and Hudson Railroad Co. v. Niles, 3 Hill, N. Y.
R. 161. •
1 Miller V. Bartlett, 15 Serg. & R. 137; Pott v. Eyton, 3 Manning,
Granger & Scott, R. 32.
a Wish V. Small, 1 Camp. R. 331, note ; Gow on Partn. p. 19, 20, 3d
edit. ; Rawlinson v. Clarke, 15 Mees. & W^lsb. R. 292.
3 Stocker v. Brockelbank, 5 Eng. Law & Eq. R. 67.
CH. IV.]
AS TO THIRD PERSONS. 65
of a ship contracts with the owner to receive a cer-
tain proportion of the profits of the voyage, in lieu
of wages and primage, this alone will not constitute
him a partner with the owner in the adventure inter
sese, whatever may be the case as to third persons.-'
I Mair v. Glennie, 4 M. & Selw. 240. — In this case, by agreement the
master of the ship was to have, in lieu of wages, primage, &c. one fifth
share of the profit or loss of the intended voyage on ship and cargo
and was to follow the instructions of the owner of the ship and cargo,
and do all the business himself that he could do, and for the rest make the
best bargains he could. The voyage was to Havana, and to take in a
return cargo for the Baltic. The owner became bankrupt during the
voyage, and had %iortgaged the ship to A. & Co. for advances ; who had
not taken possession of the ship upon her return, and had also become
bankrupts. The ship and cargo had been sold, and the suit was by the
assignees of the owner against the assignees of the mortgages, for the
proceeds. One question was, whether the master, under the agreement,
was a partner in the ship and cargo, for the voyage. The Court held that
he was not. On this occasion Lord EUenborough said ; " And upon this
point, it has been contended, that the captain was virtually a partner
But on what ground has it been so contended ? The ground is, because
payment of the captain's wages was to depend, as to its amount, upon a
reference to [the value of the cargo, but, according to that mode of argu-
ment, every seaman in a Greenland voyage would become a partner in a
fishing concern. There is no pretence, therefore, for saying, that the
captain was a partner, because his wages were to be regulated and paid
by reference to a calculation on the profits of the adventure." [This case
was commented upon and approved in Stocker v. Brockelbank, 5 Eng.
Law & Eq. B,. 74. ] This language is certainly very general ; and per-
haps in its application it ought to be limited to the very case before
the court, which involved the point only whether there was a partner-
ship between the parties ; not whether there was a partnership as to third
persons. It is indeed difficult, even with this qualification, to reconcile this
case with the doctrine promulgated in some other cases ; for as the master
was to share both in the profit and losses of the voyage, it would seem
that the owner and master were, irder sese, partners in the ship and cargo
for the voyage, as well as in regard to third persons. At least there are
authorities which sustain this view of the matter. See Ante,^§ 27, 32, 34,
41 ; Post, § 43, 44, 55 to 58 ; Smith v. Watson, 2 Barn. & Cressw. 401;
Bond V. Pittard, 3 .Mees. & Welsh. 357 ; Green v. Beesley, 2 Bing. N.
Cas. 108 ; Perrott v. Bryant, 2 Y. & Coll. 61, 68 ; Cpllyer on Partn. B. 1,
ch. 1, § 1, p. 20 to 24, 2d edit.
6*
66 . PAETNERSHIP. [CH. IV.
So, seamen engaged in the whale fisheries, who are
to receive a certain proportion of the profits or pro-
ceeds of the voyage after the sale thereof, in lieu of
wages, are not deemed inter sese, or as to third persons,
partners with the owner and master therein ; but their
shares are treated, as in the nature of wages, unli-
quidated at the time, but capable of being reduced to
a certainty,, on the sale of the oil or fish, when it has
taken place ; and thus they become entitled to wages
to the extent of their proportion in the produce of the
voyage.^ It would be manifestly against the common
understanding in all such voyages, to consider them
partners inter sese? And it would be equally against
the common usage to treat them as partners as to third
persons, and liable thereby for the outfits, advances,
and other charges for the voyage to third persons, who
should give credit for them. On the contrary, in all
such voyages the owner of the ship is treated as solely
responsible therefor, and the masters, officers, and crew
are not even deemed tenants in common in the voyage,
but are rather deemed entitled to several and distinct
proportions of the proceeds thereof, as in the nature of
wages, and in no sense as partners.^ The case there-
1 Wilkinson v. Frazier, 4 Esp. E. 182 ; Baxter v. Kodman, 3 Pick. R.
435, 438, 439 ; Turner v. Bissell, 14 Pick. E. 192, 195.
2 Eice V. Austin, 17 Mass. E. 197, 205, 206. — Mr. Justice Putnam in
delivering the opinion of the Court in this case said ; " It cannot, however
be true, that all who participate in the profits are to be considered as part-
ners, in, respect to the concern or adventure, from which the profits of the
voyage arise. Seamen, for example, who are employed in the whale
fisheries, are usually compensated for their services by a certain part of
the profits of the voyage. Nevertheless, it has not been supposed, that
this circumstance made the mariner a partner with the ship-owner, so as
to render it lawful for a creditor of the mariner to take the whole cargo of '
oil for his private debt." See also Turner v. Bissell, 14 Pick. B. 192.
3See Fennings v. Lord Grenville, 1 Taunt. R. 241. -r- In Baxters.
CH. IV.] AS TO THIRD PERSONS. 67
fore is one -where the seamen are to participate in the
the profits, if any, but are to bear no part of the losses,
if the profits are not sufficient to repay the owner.^ In
like manner, where persons, who are engaged as dredg-
ers in the oyster fisheries, have no interest in the
boats, nor in the fish caught, but the latter belong whol-
ly to the owners of the boats ; and the dredgers are to
Hodman, (3 Pick. R. '435, 438,) Mr. Chief Justice Parker, in delivering
the opinion of the Court, it being a case growing out of a contract for a
whaling voyage, said ; " The first objection is, that as by virtue of the
contract, on which the master and crew engage in the voyage, they are to
receive their pay out of the proceeds of the oil, they are joint owners and
quasi partners, and so ought all to have joined in the action. If this were
the law, it would be found to be exceedingly inconvenient, and would, no
doubt, entirely break up the peculiar mode of conducting these voyages,
which have been found to be so beneficial to those who carry them on,
and to the country. That every seaman should be tenant in common with
all the other seamen, the master, and the owners of the vessel, in all
the oil, which may be taken on a whaling veyage, so that no action could
be brought respecting it without joining all, and none could be sued
without the whole, giving every seaman a right to discontinue the action,
or to release the claim, or to receive payment for the whole, would be a
state of things not suspected by the wise and enterprising men who have
carried on the whale fishery. But we think it is not the law. The
owners of the vessel and projectors of the voyage are the owners of the
product of the voyage. The true meaning of the shipping contract is,
that the men shall be paid out of the proceeds, in a stipulated proportion.
It. is an agreement as to the mode of compensation, and gives them no
property in the oil, but only regulates the amount of compensation."
In the common cod fisheries a different usage seems to prevail. There
the fishermen generally share the fish caught, and the proceeds thereof,
when sold by the owner, in certain fixed proportions. This has never
been supposed to constitute them partriers inter sese, or as to third persons,
in the adventure. At most they could be deemed no more than tenants in
common of the fish caught with the owner. The act of Congress mani-
festly contemplates them as having rights and interests in severalty^ and
gives each fisherman a several remedy against the vessel for his share of
the fish caught, and of the proceeds when sold. Act of 19 June, 1813,
ch. 2. See Houston v. Darling, 4 Shepl. R. 413.
1 See Coppard v. Page, Forest, R. 1 ; Perrott v. Bryant, 2 Younge &
Collyer, R. 61, 67, 68.
68 PARTNERSHIP. [CH. IV.
receive a share of the profits; such persons are not
deemed partners in the adventurej either inter sese, or
as to third persons; but it is treated as a mere mode of
calculating the amount of wages due to them from the
owners of the boats.-' But it might be otherwise, if
the dredgers were to share in the profits and losses
according to certain agreed proportions.^
§ 43. In America the doctrine has been applied to
other analogous cases, and pressed somewhat farther.
Thus, where a party was to receive, by way of rent,
a portion of the profits of a farm or tavern, let to hire
by him, it was held, that he ought not to be deemed
a partner in the concern ; but that it was to be treated
as a mode of receiving compensation only.^ Upon
the like analogy, where A. advanced his funds to be
invested by B. in live oak in Florida, to be procured,
cut, and transported |t the expense of B., but on ac-
count and risk of A., to the navy yard of the United
States, and for his services and disbursements, B. was
to receive half the profits, and A., for his risk and
advances, was to have the residue of the profits; it
was held, that the parties were not partners in the
timber, nor could third persons be at liberty to treat
it as partnership property. On that occasion the
Court said, that it was not true, that aU, who par-
ticipated in the profits, are to be considered as part-
ners in respect to the concern or adventure, from
which the profits arise.* And the case was put of
> Perrott v. Bryant, 2 T. & Coll. K. 61, 67.
2 Coppard v. Page, Forest, R. 1 ; Perrott v. Bryant, 2 Y. & Coll. R.
61, 68. But see Mair v. Glennie, 4 M. & Selw. R. 240. Stoeker v.
Brockelbank, 5 Eng. Law & Eq. R. 74.
3 Perrine ». Hankinson, 6 Halst. R. 181 ; 3 Kent, Comm. Lect. 43,
p. 33, 4tli edit.
* Rice V. Austin, 17 Mass. R. 197, 206.
CH. IV.] AS TO THIRD PERSONS. • 69
shipments to India upon half profits, (which are so
generally practised in this country,) in which it has
never been supposed, that thereby the shippers and
the owners of the ship became answerable for^each
other, or were in any way interested, as partners, in
respect to the property, which constituted the original
adventure, and which was undertaken to be carried
to India for half profits, or in the return cargo, in
which the proceeds were invested ; but that the half
profits were treated only as a mode of compensation
for freight, disbursements, and charges in the course
of the voyage.' [So, where an agreement was entered
into between D. and W., under wfcich D. was to
furnish goods for a store, apd pay all the expenses,
and W. was to transact the business of the store,
and receive half of the profits, as a compensation for
his service, it was held that they were not partners,
and that D. only was liable for goods furnished.^ The
like rule was followed, where A. agreed to manufacture
articles for B., who agreed to furnish the raw materials,
and to pay A. such amount as should arise from the
profits of the business, deducting the materials and
incidental expenses of B., together with ten per cent,
on the amount of sales.^] So, where. A. and B. having
entered into a contract with a turnpike company to
make and complete a certain road, afterwards agreed
with C. to let him have a share of the profits, if any,
in making the second ten miles of the road, in propor-
' Rice V. Austin, 17 Mass. K. 197, 206; Turner v. Bissell, 14 Pick. R.
192, 195 ; 3 Kent, Comm. Lect. 43, p. 34, 4th edit.
2 Bradley v. White, 10 Mete. R. 303. See also Pott v. Eyton, 3 Man-
ning, Granger & Scott, R. 32 ; Dunham v. Rogers, 1 Barr, R. 255 ;
Rawlinson B. Clark, 15 Mees. & Welsh. R. 292.
3 Judson V. Adams, 8 Cush. 556.
70 . PARTNERSHIP. [CH. IV.
tion to the help he afforded in completing the same, the
one half to he taken from A.'s part, and the other half
from B.'s part ; it was held, that this agreement did not
create a partnership between A., B., and C, but was
only a mode of paying C. for his help and labor.^
§ 44. So, where the master of a ship agreed with
the owner to take her for the purpose of getting
employment in the freighting business, and engaged
to victual and man her, and pay half the port
charges, pilotage, &c. ; and the owner was to pay the
other half, together with eight dollars per month for
one man's wages, and to put the vessel in sufficient
order for business ; and all the money so stocked in
the vessel was to be equally divided between the
master and the owner, each party accounting for the
above ; it was held, that the master was, pro hac vice,
owner for the voyage undertaken, and the owner was
not a partner, even as to third' persons; for the
agreement amounted to no more than a compensation
out of the earnings of tjie vessel, after deducting cer-
tain fixed charges.*" In this case the deduction was
from the gross earnings. In atiother case the same
principle was applied to the case of the net eattiings.
Thus, where the vessel was let to charter to the master
for the season, and she was by the agreement to be at
1 Muzzy V. Whitney, 10 Johns. R. 226. — In this last case, as in Hes-
keth V. Blanchard, (4 East, 144,) the real question before the .Court was,
whether the parties were partners inter sese; and the Court did not decide,
whether the parties were partners as to third persons, as the Court did in
Hesketh v. Blanchard. But the inference deducible from the language of
the Court leads to the conclusion that they were not partners either way.
8 Kent, Comm. Lect. 43, p. 34, 4th edit. But see Dob v. Halsey, 16
Johns. E. 34.
2 Cutler V. Winsor, 6 Pick. R. 335 ; Taggard v. Loring, 16 Mass. R. 336.
See Dry v. Boswell, 1 Camp. R. 329, 330 ; Dwinel v. Stone, 30 Maine,
388.
CH. IV.] AS TO THIRD PERSONS. 71
the risk of the owner, and after deducting the first
cost of the luniber, or whatever she might carry, the
' ownef was to receive two fifths of the net proceeds,
and the master was to purchase the cargoes at his
own expense, to victual and man the vessel, and to
pay the two fifths at the end of each trip ; it was
held, that the master was, pro hac vice, owner for the
season; and that the general owner was not liable
to third persons, as a partner on account of other
shipments, not made within the scope of the agree-
ment.-'
§ 45. Other cases have arisen, where the same
distinction has been still more strikingly adopted.
Thus, where A., residing at a distance from a factory
of cloths, occupied by B., entered into an agree-
ment with • B., in substance as follows : A. was to
furnish a full supply of wool for the factory for two
years; and B. was to manufacture such wool into
broadcloths and satinets, in a good and workmanlike
manner, according to the directions of A., and to de-
vote the entire use, of his factory to that purpose
for the term ; and the net proceeds of the cloths, after
deducting the incidental expenses and charges of sale,
were to be divided, so that A. should have fifty-five
per cent., and B. forty-five per cent, thereof; and in
the manufacture of satinets from such wool, A. was to
pay fifty-five per cent., and B. forty-five per cent, of
1 Reynolds v. Toppan, 15 Mass. E. 370. — This case seems to have
turned upon its own peculiar circumstances ; otherwise, it might not seem
easy at first view to reconcile it with the doctrine of Lord EUenborough,
in Dry v. Boswell, 1 Camp. K. 329, 330, where the distinction is expressly
taken between sharing the gross earnings and sharing the net earnings.
The former is not, the- latter is, the [case of a partnership. Ante, § .34,
and note ; Post, § 56. See also Oheap v. Cramond, 4 B. & Aid. G63, 668,
cited post, § 56, note.
72 PARTNERSHIP. [CU. IV.
the cost of the warp ; and the expense of insurance
on the work and cloth was to be borne by A. and B.,
in the same ratio as their interest was in the final*
division of the avails of the cloths ; and in case of the
destruction of any work or cloth by fire, the amount
received pf the insurers was to be divided between A.
and B., according to the loss sustained by each ; it was
held, that under this agreement, A. and B. were not
partners, either inter se, or as to third persons, and that
B. had no other interest in the profits, than a compen-
sation for his labor and materials by a percentage on
the avails of the cloths.-^
^ Loomia v. Marshall, 12 Conn. K. 69. — The general reasoning of the
cases on this subject was so fully gone into upon this- occasion, that it
may be acceptable to the learned reader to have an opportunity to examine
it. Mr. Justice Huntingdon, in delivering the opinion of *the Court, said ;
" That the parties to this agreement did not intend to create a partnership,
either as between themselves or third persons, Js, we think, very obvious
from the facts set forth in the motion, connected with the stipulations con-
tained in the agreement ; and if they are liable as partners, they are made .
so by construction of law. Those who were to furnish the wool, supposed
they alone were responsible for the purchase-money ; and those who were
to perform the labor and provide the materials necessary to complete the
manufacture of it, believed they alone were liable for the price of the labor
and materials. If they are all jointly liable, their liability arises from the
fact, that they have entered into a contract, which as between themselves
and the plaintiff, controls their clear intention, if not express stipulation, to
the contrary. And it is undoubtedly true that a person may expressly
refuse to be responsible as partner, and yet, in the same instrument, which
contains that refusal, may agree to such terms as will in law constitute him
a partner. Whether these defendants have entered into such terms, is to
be determined by a fair construction of the agreement which they have
executed. While, on the one hand, we should be careful to adopt no rule
of construction, which would enable parties, who are interested in the
profits of business, as profits, to deprive the creditors of any portion of the
fund, on which they have a just claim for the payment of the debts due to
them ; ,so, on the other hand, (to use the language of Kent, Ch. J., in
Post V. Kimberley, 9 Johns. R. 504,) ' we must be careful not to carry
the doctrine of constructive partnership so far as to render it a trap for the
unwary.' We must in this, as other cases, look to the entire transaction,
CH. IV.] AS TO THIRD PEESONS. 73
§ 46. The like decision was made under the fol-
lowing circumstances. By a written agreement A.
in order to judge correctly of its nature and tendency. And we think, (as
is said by Gould, J., in Coope et.al. v. Eyre et al. 1. H. Bla. 44,) ' Cases
of this nature should stand on broad lines, not on subtleties and refinements,
the source of litigation and disputes;' A community of interest in land,
does not of itself, constitute a partnership ; nor does a mere community of
interest in personal estate. There must be some joint adventure, and an
agreement to share in the profit of the undertaking. Porter v. McClure et
al. 15 Wend. 187; Green v. Beesley, 2 Bing. N. C. 108; Fereday «.
Horden, Jacob, 144. This community of profit is the test to determine
•whether the contract be one of partnership; and to constitute it, a partner
must not only share in the profits, but share in them as a principal ; for the
rule is now well established, that a party, who stipulates to receive a sum
of money in proportion to a given quantum Of the profits, as a reward for
his labor, is not chargeable as a partner. The cases are collected and well
arranged by CoUyer in his Treatise on Partnership, 14, 15, et seq. and by
Gary, (on Partn.) 8, 9, 10, 11. They embrace factors and brokers, who
receive a coflimission out of the profits of the goods sold by them ; masters
of vessels, who share in the profit and loss of the adventure in lieu of
wages; seamen employed in the whale fisheries; shipments from this
country to India on half profits; those, who receive, in the form of rent, a
portion of the profits of a farm or tavern ; and a variety of other adventures,
to which it is unnecessary particularly to refer. Dry v. Boswell, 1 Camp.
330 ; Wish v. Small, lb. note ; Hesketh v. Blanchard, 4 East, 143 ; Mair
et al. V. Glennie et al., 4 M. & S. 240 ; Dixon v. Cooper, 3 Wils. 40 ;
Withington v. Herring et al. 5 Bing. 442 ; Kice v. Austin, 17 Mass. K.
197; Baxter et al. v. Bodman, 3 Pick. 435; Cutler et al. v. Winsor, 6
Pick. 335 ; Turner v. Bissell et al. 14 Pick. 192 ; Muzzy v. Whitney, 10
Johns. K. 226; Ross v. Drinker, 2 Hall, '415; Harding u. Foxcroft, 6
Greenl. 76 ; Thomson v. Snow, 4 [,Greenl. 264 ; Miller v. Bartlett, 15
Serg. & fiawle, 137. The rule, which these and other cases establish, is
founded on the distinction which has been taken between agreements, by
which the parties have a specific interest in the profits themselves, as profits,
and such as give to the party sought to be charged as a partiier, not a spe-
cific interest in the business or profits, as such, but a stipulated proportion
of the profits, as a compensation for his labor and services. Ex parte
Chuck, 8 Bing. 499. We are aware that this distinction has not received
the approbation of Lord Eldon, who says, in Ex parte Hamper, 17 Ves.
404 ; ' The cases have gone farther to this nicety, upon a distinction so
thin, that I cannot state it as established upon due consideration,. that if a
trader agrees to pay another person for his labor in the concern, a sum of
money even in proportion to the profits, equal to a certain share, that will
not make him a partner ; but if he has a specific interest in the profits
PAKTN. 7 ■ •
74 PAETNEESHIP. [CH. IV.
agreed to furnish B. for one year with wool to be
worked into satinets, and B. was to deliver to A. all
the satinets, which the wool would make, and to find
and pay for warps for the same ; A. was to pay B. for
working the wool, finding the warps, &c., forty per cent,
on the sale of the satinets ; each was to pay half the
charges; A. was to have the whole direction of the
sales, and if he should make sales himself, he was to
have one and a half per cent, upon forty per cent, of
themselves, as profits, he is a partner. It is clearly settled, though I regret
it, that if a man 'stipulates, that, as the reward of his labor, he shall have,
not a specific interest in the business, but a given sum of money, even in
proportion to a given quantum of the profits, that -will not make him a part-
ner ; but if he agrees for a part of the profits, as such, giving him a right
to an account, though having no property in the capital, he is, as to third
persons, a partner.' Id. 112; Ex parte Rowlandson, 1 Bose, 91; Ex
parte Watson, 19 Ves. 458. We do not propose to examine the reason-
ableness of the doubts expressed by this distinguished Judge. Such in-
quiry we consider closed by a series of precedents, wTiich we do not feel at
liberty to disregard. . They have settled principles, which have for a long
period, regulated the agreements of parties, in cases to which they are
applicable ; and they ought not now to be questioned. The distinction, to
wlfich we have referred in our opinion, embraces the present case. The
object of Marshall and his associates was, to have the wool manufactured
into cloth. They resided at a distance from the factory, occupied by French
and Hubbell, and were unacquainted with the business of manufacljiring.
They were willing to avail themselves of the opportunity, which the pos-
session of the factory by French afforded, of having their wool worked into
cloth, and of the skill of French and Hubbell, to prepare it for market.
To secure and increase exertion, they agreed to give them, as a reward
for their services and the materials, which they should furnish, a certain
proportion of the ' net proceeds of all the cloths, after deducting incidental
and necessary expenses of transporting and other proper charges of sale.'
It is not expressed, in terms, to be for such compensation ; but this is its
legal meaning. In many of the cases, to which we have referred, the
language of the agreements was not more explicit than in the one now
under consideration ; but looking at the entire transaction, such was con-
sidered the obvious meaning of the parties. French and Hubbell had no
other interest in the profits, than such as arose from the agreement to pay
them for their labor, &c., in a specific proportion of the amount of the sale
of the manufactured article."
CH. IV.] AS TO THIRD PERSONS. 75
the sales. It was held, that A. and B. were not
partners inter sese, or as to third persons.^ [So where
A. agreed to serve B. as overseer on his farm for
one year, A. to furnish a certain number of hands and
horses, and to defray his and their expenses himself,
and they were to be worked on B.'s farm in connection
' Turner v. Bissell, 14 Pick. K. 192. — On this occasion Mr. Justice
Wilde, in delivering the opinion of the Court, said, " The question sub-
mitted is, whether the defendants>are liable in this suit as partners. It is
admitted, that they were not partners inter sese ; for by the terms of their
agreement, they had not a mutual interest in the profits and loss of the
business, to which it related, which is essential to render a partnership
complete. But the plaintiff's counsel contend, that both of the defendants
participated in the profits of the business, and were thereby chai^eable
with respect to third persons. Anid it is certainly a well-established prin-
ciple, that whoever participates in the profits of a trade, or has a specific
interest in the profits themselves, as profits, is chargeable as a partner with
resp&t to third persons. Gow on Partn. 14. But it is equally well esta-
blished, that, where a party is entitled to or receives a given sum of
money, in proportion to a given quantum of the profits, as a compensation
for his labor and services, he is not thereby liable to be charged as a
partner. Gow on Partn. 19. Thus, in Dry v. Boswell, 1 Camp. 329, the
proprietor of a lighter agreed with a person to work his lighter, and to
allow him therefor one half of the gross earnings, as a compensation for
his labor ; and it was ruled by Lord EUenborough, that such an agreement
did not constitute a partnership. The cases of the seamen employed in
the whale fisheries, and of shipments to India on half profits, come within
the same distinction. So factors and other agents, who receive commis-
sions in proportion to the amount of sales, are interested in the profits, but
as they have no interest in them, excepting so far as they may determine
the amount of compensation for their services, they do not thereby become
partners. And we are of opinion, that the present case falls within this
distinction. The object of Bissell was to have his wool worked into cloth,
and he agreed to allow Kbot, as compensation for manufacturing, an
amount of money to be regulated by the amount of sales ; and in no other
manner was Root interested in the profits. The circumstance, that Boot
was to find warps, does not affect the principle, upon which the distinction
as to compensation is founded. If Bissell had agreed with Koot to pay
him a certain sum for his services, and for supplying the warps, there could
be no pretence for holding them as partners ; and we can peTceive no
differepce in principle, arising from the circumstance, that the compensa-
tion was to be determined according to the' amount of sales."
•76 PARTNERSHIP. [CH. IV.'
with B.'s hands and horses, and A. was to have one
fourth of the crop for his compensation, this was held
to constitute no partnership inter sese, as A. was to
share only in the ffross profits, and not at aU in the
loss.] -^
§ 47. So, where a person was employed as an agent in
conducting the business of a foundry for iron castings,
at a fixed salary of $300, and in addition thefeto, he
was to receive one third of the profits of the foundry,
if any were made, and he had nothing to do with the
losses ; and his employers were to find all the capital
stock, and he was to give his services ; it was held,
that the agent was not, either as to his employers, or
as to third persons, a partner ; hut that the case fell
within that class of decisions, where the agent was to
receive a share of the profits as a compensation for his
labor and services.^
§ 48. These may sufiice as illustrations of the dis-
tinction above alluded to. The whole foundation, on
which it rests, is, that no partnership is intended to be
created by the parties infer sese ; that the agent is not
clothed with the general powers, rights, or duties of a
partner ; that the share in the profits given to him is
not designed to make him a partner, either in the
capital stock, or in the profits, but to excite his dili-
gence, and secure his personal skill and exertions, as
an agent of the concern, and is contemplated merely
as a compensation therefor. It is, therefore, not only
susceptible of being treated purely as a case of agency ;
but in reality it is positively and absolutely so, as far
' Moore V. Smith, 19 Ala. 774.
a Vanderburgh v. Hall, 20 Wend. K. 70. See 1 Smith, Lead. Cas. 404,
and note, 2d edit.; Kawlinson v. Clarke, 15 Meeson & Welsby, 292.
CH. IV.] AS TO THIED PEESONS. 77
as the intention of the parties can accomplish the
object. Under such circumstances, what ground is
there in reason, or in equity, or in natural justice, why
in favor of third persons this intention should be over-
thrown, and another rule substituted, which must work
a manifest injustice to the agent, and has not operated
either as a fraud, or a deceit, or an intentional wrong
upon third persons? Why should the agent, who is by
this very agreement deprived of all power over the
capital stock, and the disposal of the funds, and even
of the ordinary rights of a partner to "a levy thereon,
and an account thereof, be thus subjected to an un-
limited responsibility to third persons, from whom he
has taken no more of the funds or profits, (and, indeed,
ordinarily less so,) than he would have taken, if the
compensation had been fixed and absolute, instead of
being contingent ? ^ If there be any stubborn rule of
law, which establishes such a doctrine, it must be
obeyed ; but if none such exists, then it is assuming
the very ground in controversy to assert, that it flows
from general analogies or principles. On the contrary,
it may be far more correctly said, that even admitting^
(what as a matter unaffected by decisions, and to be
reasoned out upon original principles, might well be
doubted,^) that where each party is to take a share of
the profits indefinitely, and is to bear a proportion of
the losses, each having an equal right to act as a prin-
cipal, as to the profits, although the capital stock
might belong to one only,^ it shall constitute, as to
third persons, a ' case of partnership ; yet that rule
1 Gary on Partn. p. 11, note (i) ; Ante, § 37, note (l.)
2 Ante, § 36, 37.
3 Grace v. Smith, 2 W. Bl. 998 ; Waugh v. Carver, 2 H. Bl. 235 ; Ante,
§ 27; 28.
7*
78 PAETNEBSHIP. [CH. IV.
ought not to apply to cases, where one party is to act
ma,nifestly as the mere agent for another, and is to
receive a compensation for his skill and services only,
and not to share as a partner, or to possess the rights
and powers of a partner.
■ § 49. In short, the true rule, ex aequo el horn, would
seem to be, that the agreement and intention of the
parties themselves should govern all the cases. If they
intended a partnership in the capital stock, or in the
profits, or in both, then, that the same rule should
apply in favor of^third persons, even if the agreement
were unknown to them. And on the other hand, if no
such partnership were intended between the parties,
then, that there should be none as to third persons,
unless where the parties had held themselves out as
partners to the public, or their conduct operated as a
fraud or deceit upon third persons. It is upon this
foundation, that the decisions rest, which affirm the
truth and correctness of the distinction already con-
sidered, as a qualification of the more general doctrine
contended for. And in this view it is difficult to per-
ceive, why it has not a just support in reason, and
equity, and public policy. Wherever the profits -and
losses are to be shared by the parties in fixed propor-
tions and shares, and each is intended to be clothed
with the powers, and rights, and duties, and responsi-
bilities of a principal, either as to the capital stock, or
the profits, or both, there may be a just ground to
assert, in the absence of all controlling stipulations and
circumstances, that they intend a partnership. But
where one party is stripped of the powers and rights
of a partner, and clothed only with the more limited
powers and rights of an agent, it seems harsh, if not
unreasonable, to crowd upon him the duties and
CH. IV.] AS TO THIKD PERSONS. 79
responsibilities of a partner, ■which, he has never
assumed, and for which he has no reciprocity of reward
or interest. It has, therefore, been well said by Mr.
Chancellor Kent, in his learned Commentaries, that
"to be a partner, one must have such an interest in
the profits, as will entitle him to an account, and give
him a specific lien or preference in payment over other
creditors. There is a distinction between a stipulation
for a compensation for labor proportioned to the profits,
which does not make a person a partner ; and a stipu-
lation for an interest in such profits, which entitles the
party to an account, as a partner." -^ And Mr. CoUyer
has given the same doctrine in equally expressive
terms, when he says, that in order to constitute a com-
munion of profits between the parties, which shall
make them partners, the interest in the profits must be
mutual; that is, each person must have a specific inte-
rest in the profits, as a principal trader.^
§ 50. The Roman law fully recognized the same dis-
tinction, treating the case as a mandate, and not as a
partnership, unless the latter was the intention of the
parties themselves, where one person was employed to
sell the goods of another, and was to receive for his
services a portion of the profits, or the whole or a part
of the excess of price beyond a given sum.^ iSi mar-
garita tibi vendenda dedero, id, si ea decern vendidisses,
redderes mihi decern ; si pluris, quod excedit tu haberes ;
miU videtur (says Ulpian) si animo cordrahendoB socidatis
id actum sit, pro socio actionem ; si minuSfprcescriptis ver-
1 3 Kent, Comm. Lect. 43, p. 25, note (b,) 4th edit. ; Gary on Partn. p.
11, note (i) ; Ante, § 37, note (1) ; Post, § 57. See Kawlinson v. Clarke,
15 Mees. & Welsb, K. 292.
.2 CoUyer on Partn. B. 1, ch. 1, § 1, p. 17, 2d edit. ; Id. p. 11 ; Id. p. 28.
3 Ante, § 37.
80 PARTNERSHIP. [CH. IV.
his} In short, the Roman law seems principally, if
not altogether, to have treated the case of partnership
only as between the parties themselves, and does not
even affect to give rights to third persons against them,
founded upon any responsibility not contemplated by
the partnership contract.^ Voet, in speaking on the
subject, manifestly deems every partnership, whether
express or implied, to be a matter of consent between
the parties. Societas dividiiur prhno (says he) in ez-
pressam, quce expressd conveiitione fit, et taciiam, quce con-
trahi didtur, dum rebus ipsis et factis, simul emendo, ven-
dendo, lucra et da/nma dividendo, socii ineundce societatis
voluniatem declarant?
\ 51. The same distinction ife well known and
fuUy recognized in the French law. Pothier has
not, indeed, spoken with his usual clearness, or ex-
actness, on the subject.* But Pardessus has expressed
his opinion in the most direct and satisfactory man-
ner. Thus, (he says,) whenever a merchant, instead
of a fixed salary, agrees to give to his agent a certain
part of the' annual profit, the agent is a letter of
his services under an aleatory condition; but he is
not a partner. He cannot make claim in that qual-
ity to any proprietary interest in the merchandise,
bought with the funds of his principal, although
he partakes of the profits thereof. He cannot, at-
1 Dig. Lib. 17, tit. 2, 1. 44 ; Pothier, Pand. Lib. 17, tit. 2, n. 4, and note,
ibid. ; Duranton, Droit Franc. Tom. 17, De Society, n. a32 ; Pothier, De
Society, n. 13 ; Duvergier, Droit Civil Franc. Tom. 5, n. 45.
2 See Duranton, Droit Franc. De Societd, Tom. 17, n. 334; Pothier,
Pand. Lib. 17, tit. 2, n. 30 to 40 ; Ante, § 37.
3 Voet, ad Pand. Lib. 17, tit. 2, § 2.
* See Pothier, Pand. JLib. 17, tit. 2, n. 4, and Pothier's notes, ibid.
Pothier, De Sooietd n. 13 ; Duvergier, Droit Civ. Franc. Tom. 5, n. 45 ; .
Ante, § 37.
CH. IV.] AS TO THIED PERSONS. 81
least, without an express stipulation, have any voice
in the deliberations of the partnership; and he
will not be subjected to the contracts of the part-
nership in respect to third persons, unless, indeed,
he has exceeded his powers, and then he is responsible
as a mandatary.^ So, when one person has trusted
goods to another to be sold for him, and has agreed
to give him the whole or a part of the price, which
shall exceed a certain sum, this will not create a part-
nership between them ; but only be a salaried mandate,
or commission to the agent, thus undertaking the
business.^ Duvergier holds the same- opinion, and has
reasoned out the grounds thereof with uncommon
acuteness and ability.^ And, indeed, it seems to be
1 Pardessus, Droit Comm. Tom. 4, n. 969 ; Id. Tom. 2, n. 560.
' 8 Pardessus, Droit Comm. Tom. 4, n. 969. See also Id. Tom. 2, n.
306; Id. Tom. 3, n. 702.
3 Duvergier, Droit Civ. Franc. Tom. 5, n. 48 to 56. — The following
quotation clearly exhibits his views. " Enfin, .il y a un usage fort r6pandu
parmi les commercans, qui consiste k donner, 4 titre d'appointemens, ^
leur commis ou employes, une quote part des b^n6ficds de leur commerce.
Cette stipulation semble, au premier coup-d'ceil, r^unir tous les 616mens
de la'societ6; elle a d'un autre c6t6, beaucoup d'analogie avec le mandat
salari^. On comprend combien il est utile de savoir Si laquelle de ces
deux classes de contrats elle appartient r6ellement. II est inutile de
citer d'autres exemples. Ceux que je viens de presenter piontrent assez,
qu'il est trds difficile de d^mgler le veritable carac6tre de ces conventions
qui paraissent participer 6galement de la society, du mandat salari6, et du
louage d'ouvrage. Recherchons maintenant les principes, qui doivent
diriger dans cette appreciation. La definition qui a 4t^ pr6c6demment
donnde du contrat de society, me semble jeter sur ces d^licates questions
une lumi^re suffiante. Elle prdsente deux id6es principales; elle
montre dans le contrat de societe deux fl^mens essentiels; d'abord, un
fonds commun compost des mises particuli^res ; en second lieu, une
participation aux benefices produits par le fond social ainsi formd.. Si
done j'analyse une convention, et que je ne voie point, qu'elle ait fait
des choses, dont chacun des contractans dtait propridtaire exclusif, une
chose commune h tous, je suis autoris4 a conclure, qu'elle n'est point
une society. Je suis conduit k la meme consequence, quoique un droit
82 PARTNERSHIP. [CH. IV.
the established doctrine of the French tribunals. This
coincidence of doctrine, founded upon general reason-
de propridtd soit ^tablL par I'effet de la stipulation, si les contraotans
n'ont point eu en vue de se partager des b&dfices resultant de I'etat de
communaut^, qu'ils ont cr^e. II ne sufSt done pas, qu'ils aient mis leurs
propri6t63 en contact, sans les confondre, et qu'ils se soient procur6
par 14 certains avantages, pour qu'ils soient assocife; il ne suffit pas
mdme, que les propri6tds soient confondues, et que cette communication
de droits ait accidentellement des r6sultats profitables; iljaut que ce
soit pr6cistoent en vue de ces rdsultats que la convention ait He fonn6e.
T/application de ces principes aux diverses hypotheses, dont il vient
d'etre parM, montre que, dans aucune d'elles, il n'y a society. Entre le
propri6taire de pierreries ou d'autres objets, et celui qui se charge de-
les vendre, moyennant la portion du prix, qui exc6dera une limite d^ter-
min6e, il n'y a point de propri6t6 commune. L'industrie de I'un s'exerce
sur une chose, qui ne cesse point d'appartenir k I'autre. II n'y a point,
a proprement parler, de bdnfifice, qui se partage entre eux ; la somme
totale, moyennant laquelle la vente est faite, est le prix des objets ven-
dus ; elle est la representation, d'abord de la valeur intrins6que de ces
objets, et en second lieu des peines, des soins et meme 'des frais qui
ont pu 6tre n6cessaires pour les faire parvenir k un acheteur. Dans
toute vente, le prix ' se compose de ces deux dl^mens ; lorsque les mar-
ches se coneluent, sans interm6diarie entre I'acheteur et le vendeur, ce
dernier touche les deux parties du prix ; au cas contraire, I'une est per-
cue par le propri6taire, I'autre par I'entremetteur. On devrait en dire
autant, alors m§me, que le salaire de I'agent plac6 entre le vendeur et
I'acheteur, consisterait en une certaine quotit6 du prix, h. quelque somme
qu'il s'^levSt. C'est pr6cis6ment ce qui se passe, tons les jours, dans les
ventes ou autres nfegociations, qui se font par I'intermfediaire de courtiers.
La commission ou droit de courtage est de tant pour cent sur le produit
des operations ; et Ton n'a jamais song6 h voir 1^ des societfes, parce
qu'on a bien senti, que la chose dont la vente est faite, ne devient point la
coproprietfe du vendeur et du courtier ; qu'il n'y a point de benefices pro-
prement dits dans une pareille operation, car il n'y a point augmentation
de valeur produite par I'effet d'une mise en communaute; que seule-
ment, il y a vente et distribution du prix entre deux personnes, qui y ont
droit, k titre diffferent. Loresque quatre chevaux appartenant h, deux
maitres sont r6unis pour §tre vendus, la propri6t6 de chacun restant sdparfee,
il est egalement Evident, qu'il n'y a point de societ6 ; car il n'y a rien de
mis en commun, il n'y a point de copropri6t6 form6e par la reunion de
propri6t6s distinctes. A la v6rit6, la combinaison des contractans a pour
but et pour rSsultat d'augmenter la valeur vdnale des choses, qui leur
appartiennent ; mais la sociitfe suppose I'existence d'une masse commune
CH. IV.] AS TO THIRD PEESONS. 83
ing, between foreign jurists and the municipal juris-
prudence of the? common law, as to the propriety of
de b^n^&ces, h, laquelle chacun yient puiser selon son droit. Ici, chacun
est restd propri^taire de ce, qui lui apparteuait avant la convention, il
profite seulement de I'excidant de valeur, qui est survenu k sa chose.
Dans la troisitoe espfece, ou I'on a voulu voir une soci6t6, il n'y a rfeelle-
ment qu'un mandat, ou I'^tablissement d'un ^tat de communaute transi-
toire. Le fait, sur lequel s'explique la loi romaine cit^e par Pothier, n'est
pas pr6sent6 avec une precision parfaite, et lorsqu'on veut indiquer ses
consequences avec I'exactitade convenable, on est obHg6 d'admettre une
distinction. Si les deux voisins, qui ont eu la pens6e d'achetur un fonds
plac6 prfes de leurs heritages, sont d'accord sur la portion, que chacun y
doit prendre ; oelui qui fait I'acquisition agit, pour partie, en son nom per-
sonnel, et, pour partie, comme mandataire. H n'e pas I'apparence d'une so-
ciety ; il n'y a pas m6me communautfi, puisque le partage est fait k I'avance.
Si le lot de chacun n'est pas determinfe, la propriite, du fonds sera indivise ;
mais, on le sait, I'indivision ne suffit point pour constituer la society ; elle
^tablit seulement une communaut6. Ge n'est pour les contractans qu'un
6tat transitoire ; leur but est le partage, et non la perception des benefices,
que la chose commune peut produire. L'avantage que trouve chaque ache
teur, dans la reunion k son h^ritdge d'une partie du fonds acquis en com-
mun, n'est pas un veritable b^n^fice social. II est m€me possible, qu'il y
ait pour eux perte mat6rielle dans I'acquisition, que le fonds ne vaUle pas
ce qu'ils I'ont paye et qn'ils aient sciemment fait un marchd d6savantageux,
pour doigner un voisinage d6sagr6able, ou pour ex^cuter des am^liora-
tions'purement voluptuaires. On ne saurait tropinsister sur la n6cessite
de conserver au mot bdnffices son sens exact et regoureaux ; car c'est
parce que Ton regarde benefices et avantages comme des expressions £qui-
valentes, que Ton se mfeprend sur le caraotere d'une foule de conventions.^
Si toutes celles qui procurent quelques avantages aux contractans, 6taient
des soci6tes, cette qualification conviendrait k un nombre infini de con-
trats. L'arrangement que font les commer^ans avec leurs commis, lorsqu'ils
donhent k ceuxci, au liem d'appointemens, une portion des b^n^fic6s de
leur maison, parait, plus que tout autre, r6unir les ^Ifemens constitutifs de
la societ6. L'industrie du commis ne forme-t-elle pas sa mise ? 'No prend-'
il point part aux bdn6fices, dans la veritable acception du mot ? Me con-
court-H pas aux pertes, puisque s'il n'y a pes de b6n6fices il perd sou
travail ? Malgr6 cette reunion de circonstances, les auteurs et les tribunaux
decident, qu'il ne faut pas confondre'un commis int6ress6 avec un venitable
associd. lis font ressortir les difi{&rences, qui existent entre leur position
et leurs droits. Le cominis n'a point, disent-ils, la copropri6t6 du fonds
social; il n'en dispose point librement et en matire; il reste soumis k '
I'autoritfe et aux ordres de son patron; il peut §tre renvoy6 par lui, sauf
didommagement ; il ne participe point aux pertes ; il n'est point person-
84 PARTNERSHIP. [CH. IV.
the distinction above stated, certainly affords no
slight confirmation of its accuracy and entire con-
formity to the true principles, which ought to regulate
the subject.
§ 52. Thus much, at least, seemed proper to be said
in vindication of the distinction at the common law,
and the cases in support of it, v?hich have been -treated
nellement tenu envers les tiers ; ainsi il n'a ni les prerogatives, ni les obli-
gations d'un associ^. Ces observations sent justes ; cependant seules elles
ne seraient pas d^cisives et I'on pourrait, h, la rigueur, concevoir un associ6
riduit, par des conventions particulifires, h. une situation k peupr^s sem^
blable h celle qui vient d'Stre- ddcrite. Kein n'empgelie, en effet, de atip-
uler, que les choses mises dans la socidtd resteront la proprifetd de I'un des
assoeifis, et que I'administration lui sera exclusivement rfiservfee ; que
I'autre participera aux pertes, en ne recevant rein pour son travail ; et
qu'en cas d'insuffisance du fonds social, il ne sera point personnellement
oblige au paiement des dettes. Mais la reunion de ces clauses fort ex-
traordinaircis n'etablirait pas encore une ^similitude parfaite entre I'associfi
et le commis. D'une part, lors meme que les choses mises en soci6t6
restentla propriety de celui, qui' les y apporte, leur jouissance au moins
est mise en commun et cliaeun des associ6s y a droit. Or le commis
int6reas6 n'est point copropri6taire des capitaux de celui qui I'emploie,
quoique ces capitaux soienl fburnis en pleine propridt6, et non pas seule-
ment pour la joissance. D'un autre c6t6, 1'associ^, qui donne son Indus-'
trie comme mise sociale, s'engage h faire uu travail d^terminfe mais inde-i
pendant ; il a, des devoirs h remplir envers la society, mais il n'a point
d'ordres k recevoir de ces co-associ6s. Le commis, au contraire s'oblige
k executor la volontd du chef de la maison ; il est, relativement h lui/
dans un 6tat d'inf6riorit6 et de subordination incompatible avec le carao-'
tfere et les droits d'un assoei6. Ce rapprochement, qu'il serait facile de
pousser plus avant, montre que, sous des apparences semblables, sont
caoh^es des diiKrences bien tranch6es ; qu'il ne faut pas, encore une fois
voir dans la participation k des b6n6fices, un signe infallible de I'existence
d'une soci6t6. L'associ6 et le commis int6ress6 ont cela de commun, qu'ils
sont I'un et I'autre apples k recueillir une portion de b6n6fices ; mais la
nature de leurs droits et la source k laquelle ils les puisent, n'en restent
pas moins distincte set separdes ; I'un participe au gain, parce qu'il est
copropriitaire de la chose qui le produit ; et I'autre, parce qu'il a fait un
' travail pour lequel on lui a promis cette espAce ^e salaire." See also the^
decisions of the Fi^ench tribunals, cited by Duvergier, Id. p. 68, n. (2).-
See also Duranton, Droit Civ. Pranc. Tom. 17, n. 329, 330, 331.
CH. IV.] AS TO THIRD PERSONS. 85
by some learned minds, (as we have seen,) as founded
in too much subtlety and refinement, and as not recon-
cilable with acknowledged principles, or just juridical
reasoning.^ The charge might be fairly retorted, and
the reasoning pressed, that the rule itself, to which
the distinction is applied as an exception, is open
to the same objection, and to others of a more serious
nature.
§ 53. But waiving all such discussions, let us now
proceed to the consideration of the various cases, in
which the parties have been held to be partners, as to
third persons, even when they were clearly not so, as
between themselves. It is unnecessary to consider
the cases, where the parties intend a partnership
between themselves j for in such cases they clearly
are, or at least may be held to be partners, as to third
persons.^ The converse rule, however, does not
reciprocally apply at the common law ; for persons
are often held partners, as to third persons, where,
either expressly or by just implication, they are not to
be deemed partners between themselves.^
1 Ante, § 48 to 51.
2 Ex parte Hodgkinson, 19 Ves. 291, 294.
3 Mr. CoUyer seems to entertain some doubt as to the terms, nature and
extent of the doctrine on this point, and says ; " In the preceding cases,
although the parties manifested, by their agreement, an intention not to
contract the relation of partnership, yet it was held, that such intention
could not prevail against an express stipulation to share the profits ; a
stipulation, which as we have already seen, is the primary test of a part-
nership between the parties, and renders them liable to third persons.
But the authorities have gone still further, and it has even been held, that
an agreement to share the profits of an adventure, although not so
expressed, as to create a partnership' between the parties, may neverthe-
less, create a partnership, as between them and the world. In Waugh v.
Carver, there are several expressions of Lord Chief Justice Eyre, which
lead to this conclusion ; and on the authority of those expressions, the
case of Hesketh|)V. Blanchard was decided, in which it was held, that the
PABTN. 8 •
86 PARTNERSHIP. [CH. IV.
§ 54. The cases, in which this liability as partners
as to third persons exists, may be distributed into the
following classes. First, where, although there is no
community of interest in the capital stock, yet the
parties agree to have a community of interest or par-
ticipation in the profit and loss of the business or
adventure, as principals, either indefinitely, or in fixed
proportions. Secondly, where there is, strictly speak-
ing, no capital stock, but labor, skill, and industry are
to be contributed by each in the business, as principals,
and the profit and loss thereof are to be shared in like
manner. Thirdly, where the profit is to be shared
between the parties, as principals, in like manner, but
the loss, if any occurs beyond the profit, is to be borne
exclusively by one party only. Fourthly, where the
parties are not in reality partners, but hold themselves
out, or at least are held out by the party sought to be
charged, as partners to third persons, who give credit
anreeinent might constitute the parties as partners, quoad third persons,
although under the circumstances it did not place them in that situation
inter se." And again ; " Upon the whole, notwithstanding the doctrine
laid down in Hesketh v. Blanchard, and some other cases, the general
result of the authorities seems to be, that persons, who share the profits of
the concern, are prima facie liable as partners to third persons, but they
may repel the presumption of partnership by showing, that the legal
relation of partnership inter sese does not exist. With reference to the
last of these two positions, it may be observed, that, in Hoare v. Dawes,
the defendants, who were charged as dormant partners, rebutted the pre-
sumption of partnership by showing, that they had no communion of
profit with the broker. So, where a person was charged as a dormant
partner in the profits of a lighter, but it turned out, that he was to have
only half the gross earnings as wages, it was held, that he was not a part-
ner with the lighter-man, and therefore not liable for the repairs." CoU-
yer on Partn. B. 1, ch. 1, § 8, 4, p. 59, 60, 2d edit. It does not appear to
me, that the authorities quite justify the concision of Mr. CoUyer, how-
ever reasonable it may seem to be. See post, § 56 to 59 ; Ex parte
Rowlandson, 1 Rose, B. 89 to 91 ; Wau^h v. Carver, 2 H. Bl. 235,
246. •
CH. IV.] AS TO THIRD PERSONS. 87
to them accordingly. Fifthly, where one of the parties
is to receive an annuity out of the profits, or as a part
thereof.
§ 55. And first, as to cases, where there is no com-
munity of interest in the capital stock ; but there is a
community of interest or participation in the profit
and loss of the business or adventure, as principals.^
It is this circumstance, that the parties are to act and
share, as principals, which forms a prominent distinction
between this class of cases and that where an agency
exists, with a compensation therefor out of the profits.
But the other circumstance is also important, that the
parties ate to share in the loss, as well as in the profit.
Indeed, this is ordinarily laid down, as the true test of
partnership in this class of cases.^ A communion of
pr(At 'generally implies a ^ communion of loss in the
limited sense already suggested, that is, that there can
be no ascertained profits, untU after all the losses are
deducted therefrom.' There may, however, be, and often
is, a stipulation in partnership contracts, that all the
losses, beyond what the profits wiU meet, shall be
borne by one party only, or borne in a different pro-
portion between the parties, from what they take in
the profits.* But where the agreemenj; either expressly,
' Coll. on Parte. B. I, oh. 1, § 1, p. 25 ; Id. § 2, p. 53, 54, 55, 58, 2d
e^jt. ; Watson on Parte, ch. 1, p. 11, 12, 2d edit.; Id. p. 33 ; Ex parte
Djgby, 1 Deacon, E. 341 ; S. C. 2 Mont. & A. 735 ; 3 Kent, Comm. Lect.
43, p. 31, 32, 4th edit.; Ex parte Hodgkinson, 19 Ves. 291; Winship v.
Bank of United States, 5 Peters, R. 529, 561 ; Ex parte Kowlandson, 1
Rose, E. 89 ; Hazard v. Hazard, 1 Story, E. 371.
2 Green v. Beesely, 2 Bing. N. Cas. 108; Waugh v. Carver, 2 H. BI.
235, 247; Holmes v. United Ins. Co. 2 Johns. Cas. 329, 331 ; Perrott v.
Bryant, 2 Younge & Coll. Gl, 68 ; Meyer v. Sharpe, 5 Taunt. E. 74.
3 Ante, fj 20 to 23.
4 Ante, ^ 23, 24 ; CoUyeronPartn.B. l,ch. 1,§ 1, p. 11, 2d edit.; Gilpin
V. Enderhyj5 Barn. & Aid. 954 ; Bond u. Pittard, s'Mees. & Wels. 357.
88 PARTNERSHIP. [CH. IV.
or by fair implication, admits, that the parties are to
share in losses, as well as in profits, that circumstance
will ordinarily, at the common law, be held to make
them partners as to third persons, and in many cases
also between themselves, upon the ground, that such
is the proper and essential accompaniment of a part-
nership, and that it is inconsistent with the notion, that
the share of the profits is designed to "be a mere remu-
neration for services.-'
§ 56. A few examples may serve to illustrate the
principle. Thus, if the owners of a ship, owned by
them as tenants in common, should employ the ship in
a particular trade or adventure upon joint account, and
were to participate in proportion to their interests in
the profits and losses of the trade or adventure ; they
would be partners in the adventure iTder sese, as well
as to third persons, although they might still remain
tenants in common of the ship.^ The like result
would arise, if several tenants in common of goods
should ship them, to be sold on joint account, and their
respective shares in the proceeds were to be invested
in other goods on their several and not joint account,
on the return voyages, they would be partners ifl the
adventure on the outward voyage, but not in the
return voyage, unless the return goods were to be sold
on joint account.^ So, if the owner of a ship should
agree with the master, that the vessel should be
employed on a particular adventure or voyage for the
1 Collyer on Partn. B. 1, ch. 1, § 1, p. 19 ; Green v. Beesley, 2 Bing.
New Cas. 108; Mclver «. Humble, 16 East, E. 173; 3 Kent, Comm.
Lect. 43, p. 26, 4tli edit.; Everett v. Coe, 5 Denio, R. 180.
2 Munford v. NichoU, 20 Johns. K. 611 ; Post u. Kimberly, 9 Johns. K.
470; Saville v. Robertson, 4 Term R. 720, 725 ; Collyer on Partn. B. 1,
ch. 1, §1, p. 16,17, 2d edit.
3 Holmes v. United Insur. Co. 2 Johns. Cas. 331, 332.
CH. IV.] AS TO THIKD PERSONS. 89
benefit of both parties, and they were to share the
profits and losses, (not the gross profits or proceeds,)
indefinitely, or in certain fixed proportions ; there,
although the owner would still remain sole owner for
the adventure, or the voyage, yet as both were to
share the losses, as well as the profits thereof, they
would be deemed partners.^ The same doctrine would
apply, if the parties were to share the profits or the
net profits ; for in each of these cases there must be a
deduction first made of all the charges and losses.^
So, if two persons should enter into an agreement, that
i Ante, § 34, 42, 44 ; Dry v. Boswell, 1 Camp. K. 329, 330. But see
Mair v. Glennie, 4 M. & Selw. 240 ; Stocker v. Brockelbank, 5 Eng. Law
& Eq. R. 74; Cheap w. Cramond, 4 Barn. & Aid. 663, 668 to 670. —In
this last case (which was one of sharing commissions,) Lord Chief Justice
Abbott, in delivering the opinion of the Court, said ; " And such an agree-
ment is perfectly distinct from the cases, put in the argument before us,
of remuneration made to a traveller, or other clerk or agent, by a portion
of the sums received by or for his master or principal, in lieu of a fixed
salary, which is only a mode of payment adopted to increase or secure
exertion. It is distinct also from the case of a factor receiving for his
commission a percentage on the amount of the frice of the goods sold by
him, instead of a certain sum proportioned to the quantity of the goods
sold, as was the case of DLxon v. Cooper, (3 Wils. 40,) wherein it was
held, that the factor was a competent witness to prove the sale. It differs
also from the case of a person receiving from a trader an agreed §um, in
respect of goods sold by his recommendation, as one shilling per chaldi-on on
coals, or the like, for there there is no mutuality ; and such a case resembles
a payment made to an agent for procuring orders, and has no distinct
reference in the terms of the agreement to any particular coals purchased
by the coal merchant for resale, upon which a third person may become a
creditor of the coal merchant, and probably could not in any instance be
shown to apply in its execution to any such particular purchase." But
see KejTiolds v. Toppan, 15 Mass. R. 370, cited ante, § 44, note.
2 Cheap V. Cramond, 4 B. & Aid. 668 to 670 ; Ex parte Rowlandson, 1
Rose, K. 89, 91, 92 ; Ex parte Hodgkinson, 19 Ve9. 291, 294 ; Grace v.
Smith, 2 W. Black. 998, 1000; Tench v. Roberts, 6 Madd. R. 145, note;
Bailey v. Clark, 6 Pick. R. 872; Dob v. Halsey, 16 Johns. R. 34;
Ante, § 34 ; Post, § 57, 68 ; Bond v. Pittard, 5 Mees. & Welsh. 357, 360,
861.
8*
90 PARTNERSHIP. [CH. IV-
the one should buy goods on account of the other, and
should proceed abroad with them, and there sell them,
and they were to be equally interested in the profit
and loss of the adventure ; this would constitute a
partnership between them.^ So, if a person should
agree with a broker, that the latter should purchase
goods for the former, and should receive for his trouble
a certain proportion of the profits arising from the sale
of the goods, and should bear a certain proportion of
the losses ; such an agreement, although it would riot
vest any property in the broker in the goods so pur-
chased, or in the proceeds thereof, would yet, by
reason of his participation in the profits and losses,
render him liable, as a partner, to third persons.^
§ 57. Upon the like ground, where A., having
neither money nor credit, oifered to B., that if he
would order with .him certain goods from C. to be
shipped upon a foreign adventure, and sold by A.
abroad, if any profits should arise from them, B.
should have half the profits for his trouble; and
the goods were "accordingly ordered and charged
by C. to their joint account; it was held, that B.
was jointly liable with A., as a partner to C. .And
the Court there took the distinction, that quoad third
persons it was a partnership, for B. was to share half
the profits ; but as between themselves, it was only
1 Ex parte Rowlandson, 1 Rose, R. 89 to 91. — In this last case Lord
Eldon said; It was impossible to say, as to third persons, they were not
partners, the ground being settled, that if a man, as a reward for his labor,
chooses to stipulate for an interest in the profits of a business, instead of a
certain sum proportioned to those profits, he is as to third persons a part-
ner, and no arrangement between the parties themselves could prevent
it."
2 Smith V. Watson, 2 B. & Cressw. 401 ; Meyer v. Sharpe, 5 Taunt. E.
74 ; Ex parte Langdale, 18 Ves. K. 300 ; S. C. 2 Rose, E. 444.
CH. IV.] AS TO THIRD PERSONS. 91
an agreement for so much, as a compensation for B.'s
trouble, and lending A. his credit.^ So, where A.
agreed with B. to convey by horse and cart the mail
.between particular places, at a certain price per an-
num, and to pay his proportion of the expense of the
cart, &c.; and the money received by the carriage of
parcels was to be divided between the parties, and
the damage occasioned by the loss of parcels was
to be borne in . equal proportions ; it was held, that
they were partners inter sese, as well as to third
persons. And upon that occasion Lord Chief Justice
Tindal observed ; ^' I have always understood the
definition of partnership to be a mutual participation
of profit and loss." ^
§ 58. Upon the like ground, where one person
advanced funds for carrying on a particular trade,
and another ' furnished his personal services only in
carrying on the trade, for which he was to receive
a proportion of the net profits; it was held, that
they were partners inter sese, as wfell as to third
persons.^ And the principle was there fully recog-
nized, which had been established in prior cases,
that Ife, who is - to take a part of the profits, shall
1 Hesketh v. Blanchard, 4 East, K. 144, 146 ; S. C. ante, § 40 ; Meyer
V. Sharpe,% Taunt. E. 74. See Collyer on Partn. B. 1, ch. 1, § 2, p. 50
59, 60, 2d edit. — Mr. Collyer thinks, that in Hesketh v. Blanchard,
(4 East, R. 144,) the parties were partners inter sese, as well as to third
persons ; and there is certainly, in other authorities,, strong ground to
support that dpinion. Ante, § 42, and note ; Post, § 68.
2 Green v. Beesley, 2 Bing. New Cas. p. 108. See also Fromont v.
Coupland, 2 Bing. E. 170; Collyer on Partn. B. 1, ch. 1, § 1, p. 19,
2d edit.
3 Dob V. Halsey, 16 Johns. E. 34, 40 ; Everett v. Coe, 5 Denio, E.
180 ; 3 Kent, Cojnm. Lect 43, p. 24, 25, 4th edit. ; Collyer on Partn.
B. 1, ch. 1, § 2, 2d edit. ; Ante, § 34.
92 PARTNERSHIP. [CH. IV.
by operation of law be made liable to losses, as to
third persons ; because by taking a part of tbe profits,
he takes from the creditors a part of that fund, which
is the security for the payment of their debts.-^ So, •
where A., B., and C. entered into partnership in the
business of tanning hides, and it was stipulated that
A. should furnish one half of the stock, to keep the
tannery m operation, and should market and receive
one half the leather, and that B. and C. should furnish
the other half of the stock, and receive and market for
the other half of the leather, and that in making pur-
chases each should use his own credit separately; it
was held, that they were partners as to third persons,
a*s well as between themselves, as to stock sold to one
of the partners ; for the stipulation, as to the division
of the manufactured article specifically among the
partners, was equivalent to a participation of profit
and loss.^ So, where three persons ran a line of coach-
es from one place to another, the route being divided
among them into three sections, the occupant of each
section furnishing his own carriages and horses, hiring
drivers, and paying the expenses of his own section,
and the money received from the passengers, ^ fare,
deducting the tolls of the turnpike gates, was divided
among them in proportion to the number of miles of
the route run by each ; it was held, that they were
partners as to third persons, as well for torts, as upon
contracts.^
' Ibid.; Grace J). Smith, 2 W. Black. 998, 1000; Waugh v. Carver,
2 H. Black. 245 ; Hesketh v. Blanchard, 4 East, R. 144 ; Ante, § 27,
30, 32.
2 Everetu. Chapman, 6 Conn. R. 347.
3 Cham V. Bostwick and Wife, 18 Wend. R. 175. [Explained in
Pattison v. Blanchard, 1 Selden, 186]. — Mr. Chancellor Walworth on
CH. IV.]
AS TO THIRD PERSONS. • 93
§ 58 a. On. the other hand, where there was an
agreement by a Railroad Company with certain per-
this occasion said ; " It is not necessary to constitute a partnership, that
there should be any property constituting the capital stock, which shall be
jointly owned by the partners. But the capital may consist in the mere
use of property, owned by the individual partners separately. It is suffi-
cient to constitute a partnership, if the parties agree to have a joint in-
terest in, and to share the profits and losses arising from the use of property
or skill, either separately or combined. Here the capital, which each
contributed or agreed to contribute to the joint concern, was the horses, ■
carriages, harnesses, driversj &c., which were necessary to run his part of
the route, and to be fed, repaired, and paid at his own expense. The
only debts or expenses, for which they were to be jointly liable as between
themselves, were tie tolls upon the whole line ; and the joint profits,
which they were to divide, if any remained after paying the tolls, was the
whole passage money received upon the entire line. Although it may be
fairly inferred, that each party supposed, that the expenses of running
his part of the line, exclusive of the tolls, would be equal to the distance-
run by him, it by no means follows, that, any of them supposed, that the
actual passage .money or profits of the different parts of the line, would be
i§ the same proportion ; as it is a well known fact, that the number of
passengers, who travel in public conveyances, increase as you approach
large market towns, or other places of general resort. The only object of
the agreement to divide the passage money earned upon the whole line,
among the different proprietors, must have been to give to those, who run
that part of the line, where there was the least travel, a portion of the
passage money on other parts of the route, as a fair equivalent for their
equal contribution of labor and expense for the joint benefit of all. And
as all the owners of the line were thus interested in every part of the
route, and were liable to the passengers, if they were unreasonably de-
'tained on the way, I am inclined to think, that, if the driver of either had
refused to carry on the passengers over his part of the line without any
sufficient excuse, either of the other parties, who happened to be present)
might have employed another driver at the common expense to proceed
with the team to the end of that route, although as between themselves
the owner of that part of the line would be bound to pay such extra ex-
pense. And the same right would have existed, if the driver, by reason
of intoxication or otherwise, was incapable of discharging his duty with
safety to the passengers. Although the title to the coach and horses for the
time being might not be so far vested in the partners, as to authorize any of
them to take them out of the general owner himself under similar circum-
stances, the passengers might unquestionably be sent on by either of the
others at his expense ; or at the expense of all the owners of the line,
•
94 PAETNERSHIP. [CH. IV.
sons, who were 'engaged in transporting .merchandise
from New York to various places in the West, by
way*of Hudson River and canals, that these car-
riers should deliver up their freight to the company
at particular places, and the company should trans-
port the goods from thence to their destination, and
that the carriers should pay the company therefor a
certain portion of the freight, according to certain dis-
tances; it was held, that this agreement did not make
the company partners with the carriers in the transport-
ation of the goods, either iiiter sese, or as to third per-
sons.^ The ground of this decision seems to have been,
that there was no community of interests, or division
of the profits of a joint concern, between the parties-
The Railroad Company had no interest in the profits
or losses of the Transportation Company, on that part
of the route which the latter were'to accomplish; nor
the Transportation Company, in the profit or loss in
the railroad -portion of the transportation. Each
company was to receive a fixed proportion of the
freight, whether the other would lose or gain on its
own portion of the route, so that there was no com-
munity of profit or loss. Many other cases might be
cited to the same effect ; but those, which have been
referred to, are sufiicient to illustrate the doctrine al-
ready suggested under this head.
§ 59. In the next place, as to the class of cases.
who were interested in having it done, if he was unable to paythe ex-
pense." See also Wayland v. Elkins, 1 Starkie, K. 272, and Barton v.
Harrison, 2 Taunt. R. 49 ; Wetmore v. Baker, 9 Johns. R. 807. See Fre-
mont V. Coupland, 2 Bing. E. 1 70 ; Green v. Beesley, 2 Bing. New Gas.
108. [See the last two cases commented upon, in Pattison v. Blanchard,
1 Selden, 186.]
1 Mohawk and Hudson Kailroad Co. v. Niles, 3 Hill, N. Y. R. 162.
CH. IV.] AS TO THIED PERSONS. 95
where, strictly speaking, there is no capital stock, hut
labor, skai, and industry are to he contributed hy each
party in the trade or husiness, as principals, and the
profit and loss are to be shared in certain proportions
between them. In this class of cases the like rule ap-
plies ; and the parties are treated as partners, not only
as to third persons, but also inter sese, upon the plain
ground, that it is a trade or business carried on upon
joint account, and that there is a complete communion
of interest, both in the profit and loss thereof between
them. It has, therefore, every distinctive mark of
partnership. One or two cases wiU abundantly serve
to present this doctrine in a clear and satisfactory
light.^ Thus, if A. and B. should agree to employ
their joint labor and services and skill in business, as
insurance brokers, and to divide the profits and losses
between them, they would to all intents and purposes
be held partners in that business. So, if A. and B.
should agree to carry on the business of solicitors upon
joint account, and to divide the profits and losses there-
of in certain proportions between them, this would
make them partners, not only as to third persons, but
inter sese? ifor would the result be varied, if the par-
ties agreed to share the profits between them, omitting
any express provision as to losses ; for in such cases
they could by mere operation and intendment of law
share the losses, upon the ground, that the losses must
first be deducted before the profits can be ascertained ;
and also upon the more general ground which is so of-
ten recognized in the authorities, that every man who
1 See the reasoning of Lord Chief Justice Eyre in Waugh v. Carver,
2 H. Black. 235.
2 See Hopkinsonr. Smith, 1 Bing. R. 13; Tench ». Roberts, 6 Madd.
R. 143.
96 PAETNERSHIP. [CH. IV.
has a share of the profits of a trade or business, ought
also to bear his shiare of the loss.-' Indeed, all the
authorities at the common law take the rule to be, that
sharing the losses and the profits constitutes such a
■ communion and mutuality of interest therein, as cre-
ates a clear partnership, as to third persons ; and, in
the absence of all contrary or inconsistent stipulations,
as between themselves also.^ Hence all the adventurers
in a fishing voyage, who are to share in the profits and
losses of the adventure according to certain proportions,
and to contribute towards the outfit, are deemed part-
ners in the adventure to all intents and purposes.^ , So,
where a merchant in London was by agreement to re-
commend consignments to a merchant abroad, and the
commissions on aU sales of goods, reconimended by
the one to the other, were to be equally divided be-
tween them, without allowing any deduction for ex-
penses; it was held, that they were not only partners
in that business^ as to third persons, but also as be-
tween themselves.*
§ 60. In the next place, as to the class of cases,
where the parties are to share the- profits between
them, if any, as principals ; but the losses are to be
1 Grace v. Smith, 2 W. Black. 998, 1009 ; Ex parte Gellar, 1 Kose, E.
297 ; Waugh v. Carver, 2 H. Black. 235; Cheap v. Cramond, 5 Barn. &
Aid. 663; Bond v. Pittard, 3 Mees. & Welsh. K. 857, 360, 361. See
Findle V. Stacy, Sel. Cas^ in Ch. p. 9 ; Gow on ' Partn. eh. 1, p. fl4, 15, 3d
edit. ; CoUyer on Partn. B. 1, ch. 1. § 2, p. 54, 2d edit.; Ante, § 19
to 24.
2 Geddes v. Wallace, 2 Bligh, K. 270 ; Peacock v. Peacock, 2 Camp. 45 ;
Gow on Partn. 12, IS, 8d edit.
3 See Coppard v. Page, Forr. K. 1 ; Perrott v. Bryant, 2 Y. & Coll. 61,
68 ; ante, § 42.
* Cheap V. Cramond, 4 Barn. & Aid. 663, 669, 670; Walton v. Sher-
burne, 15 Johns. R. 409, 421, 422.
CH. IT.] AS TO THIRD PERSONS. 97
borne exclusively by one party .^ It is here that the
pressure of the general doctrine, that a participation
in the profits, as profits, creates a partnership between
them, is most severely felt, and is most difficult to
maintain upon general reasoning. In all this class of
cases it is the intention of the parties, that no partner-
ship should exist between themselves ; and the common
law, in this respect, gives full force and effect to that
intention. But in regard to third persons, the common
law holds, that the mere right to participate in the
profits creates a partnership between the parties, not-
withstanding there is no participation in the losses,
uttrd the profits, and it is not their intention to be
partners. The doctrine here seems to be founded in
part upon the consideration, that even in such a case
there is incidentally, and to a limited extent, a partici-
pation in the losses, as well as in the profits; for
before it can be ascertained, that there are any profits,
the losses must first be deducted, and the residue only
shared as jrofits.^ But the main reason is, that, which
has been already adverted to, as the first foundation of
the doctrine, to wit, that every man, who has a share
of the profits of the trade or business, ought also to
bear his share of the loss ; for if any one takes part of
the profit, he takes a part of the fund, on which the
creditor of the trade relies for his payment.^ Without
1 Watson on Partn. oh. 1, p. \7 to 27, 2d edit. ; Ante, § 57.
a Ante, § 19 to 25, 55, 56, 57; Cheap v. Cramond, 4 Barn. & Aid.
470 ; Gilpin v. Enderby, 5 B. & Aid. 954 ; Ex parte Langdale, 2 Koae,
K. 444 ; S. C. 18 Ves. 300, 301 ; Bond v. Pittard, 3 Mees. & Wels. 357.
3 Ante, § 27, 28, 32, 36, note (2) ; Grace v. Smith, 2 W. Black. 998,
1000.— Lord Eldon, in Ex parte Langdale, (18 Ves. 300, S. C. 2 Eose,
K. 444,) said ; " The true criterion is, whether they (the parties) are to
participate in the profit. That has been the question ever since Grace v.
Smith." Lord Chief Justice Eyre, in Waugh v. Carver, 2 H. Black. 235,
PARTN. 9
98 PARTNERSHIP. [CH. ^V.
inquiring into the true force of this mode of reasoning,
a task, which would be a matter of supererogation,
since, so far as the authorities go, it seems absolutely
established, it may be useful to illustrate it by reference
to some of the leading cases, in which it has been dis-
cussed and recognized.
§ 61. Thus, for example, if one person should engage
with another in any trade or business, under an
arrangement to divide the profits between them ; but
if there should not be any profits, but a loss, then that
the loss should be borne by one only; that would
make them partners, as to third persons, at all events,^
On the like ground, if two solicitors should carry on
business on joint account, and one should be entitled
to receive a fixed sum, and also a share of the profits,
and not be liable for any losses, they would be part-
ners Mer sese, as well as to third persons.^ So, where
two merchants agreed to enter into partnership for a
certain term of years, and each was to furnish the
same amount of capital, and one was to receive a cer-
tain annual sum out of the profits, if any, and if none,
out of the capital, and at the expiration of the term
he was to receive his full original capital by instal-
ments ; it Was held, that they were partners inter sese,
247, approved the doctrine', so promulgated in Grace v. Smith, as stand-
ing upon the fair ground of reason. Whether it does so, may certainly,
if the question were new, admit of a good deal of argument. See ante,
§ 48, 49, 50, 51, and note 3. The point, however, now stands dryly upon
the maxim, Ita Lex scripta est. See Green i>. Beesley, 2 Bing. N. Cas.
108; -Ante, §57.
' Ex parte Langdale, 18 Ves. 300, 301; Geddes v. Wallace, 2 Bligh,
R. 270 ; Jordan v. Wilkins, 2 Wash. Cir. R. 483 ; Gow on Partn. ch. 1, p.
16, 3d edit. ; Gilpin v. Enderby, 5 B. & Aid. 954 ; Bond v. Pittard, 3
Mees. 55 Welsh. 357.
2 See Bond v. Pittard, 3 Mees. & Welsh. R. 357, 360; Tench w. Roberts,
e Madd. R. 145, note.
CH, IV.] AS TO THIRD PERSONS. 99
and also as to third persons.^ So, where two ship
agents, at different ports, entered into an agreement
with each other to share in certain proportions the
profits of their respective commissions, and discount
on tradesmen's bills, employed by them in repairing
ships confided to their care, but neither was to be
answerable for the acts or losses of the other, but each
was to bear his own; it was held, that they were part-
ners as to third persons, although not as between
themselves.^ So, where a commission merchant in
1 Gilpin V. Enderby, 5 Barn. & Aid. 954.
2 Waugh V. Carver, 2 H. Black. 235 ; Cheap v. Cramond, 4 B. & Aid.
663, 668 ; Emanuel v. Draugh, 14 Ala. 303. — In Waugh w. Carver, Lord
Chief Justice Eyre said ; " Whether these persons were to interfere more
or less with their advice and directions, and many small parts of the
agreement, I lay entirely out of the case ; because it is plain upon the
construction of the agreement, if it be construed only between the
Carvers and Giesler, that they were not nor ever meant to be partners.
They meant each house to carry on trade without risk of each other, and
to be at their own loss. Though there was a certain degree of control at
one house, it was without an idea that either was to be involved in the
consequences of the failure of the other, and without understanding
themselves responsible for any circumstances that might happen to the loss
of either. That was the agreement between themselves. But the ques-
tion is, whether they have not, by parts of their agreement, constituted
themselves partners in respect to other persons? The case therefore is
reduced to the single point, whether the Carvers did not entitle them-
selves, and did not mean to take a moiety of the profits of Giesler's house,
generally and indefinitely as they should arise, at certain times agreed
upon for the. settlement of their accounts. That they have so done is
clear upon the face of the agreement ; and upon the authority of Grace
V. Smith, he who takes a moiety of all the profits indefinitely, shall, by
operation of law, be made liable to losses, if losses arise, upon the prin-
ciple that, by taking a part of the profits, he takes from the creditors a
part of that fund which is the proper security to them for the payment of
their debts. That was the foundation of the decision in Grace v. Smith,
and I think it stands upon the fair ground of reason. I cannot agree,
that this was a mere agency, in the sense contended for on the part of the
defendants, for there was a risk of profit and loss : a ship agent employs
tradesmen to furnish necessaries for the ship, he contracts with them, and
100 PARTNERSHIP. [CH. IV. ,
London agreed with another commission merchant in
Rio Janeiro, equally to divide between them the com-
missions on the sale of all goods recommended by the
one house to the other ; it was held, that as to third
persons, they were partners in this business.^
is liable to them, he also makes out their bills in such a way as to deter-
mine the charge of commission to the ship owners. With respect to the
commission indeed, he may be considered as a mere agent, but as to the
agency itself, he is as much a trader as any other man, and there is as
much risk of profit and loss to the person with whom he contracts, in the
transactions with him, as with any other trader. It is true he will gain
nothing but his discount, but that is a profit in the trade, and there may be
losses to him as well as to the owners. If therefore the principle be true,
that he who takes the general profits of a partnership must of necessity be
made liable to the losses, in order that he may stand in a just situation
with regard to the creditors of the house, then this is a case clear of all
difficulty. For though, with respect to each other, these persons were
not to be considered as partners, yet they have made themselves such with
regard to their transactions with the rest of the world." In this case, it
seems that the Court considered " commissions to mean profits ; and that
the net commissions, and not the gross commissions, were divisible." CoU-
yer on Partn. B. 1, ch. 1, § 1, p. 30.
1 Cheap V. Cramond, 4 B. & Aid. 663. — In this case, it is not clear,
whether the Court treated the case as one where the gross commissiolis, or
the net commissions were to be divided, although the commissions were
treated as if the word had been profits, and therefore undistinguishable
from profits. The language of Lord Chief Justice Abbott, in delivering
the opinion of the Court, was as follows ; " And in support of this propo-
sition, the case of Waugh v. Carver was cited and relied on. And we are
all of opinion, that the present case cannot be distinguished in principle
from that, and that our decision must be governed by it. It is true, that
in that case a definite part of the commission was, by agreement of the
parties, to be deducted as compensation for the charges and expenses
before a division took place ; and also that each party was to share in some
specified measure with the other, in other parts of the profits of their
respective business, such as warehouse rent, and discount upon trades-
men's bills. And it was contended, in this case, on the part of the plain-
tiffs, that the bankrupts and Ruxton were to be considered as dividing the
gross proceeds only, and not the net proceeds or profits of each other's
agency or factorage ; and that a division of gross proceeds does not con-
stitute a partnership. We think, however, that the previous deduction of
a definite part of the commission before the division in the case cited, is
CH. IV.] AS TO THIRD PERSONS. 101
§ 62. We may conclude this head with the remark,
that the Roman law did not (as we have seen) ordina-
an unimportant fact. It cannot have the effect in all cases of leaving the
remainder as clear profit, because the expense arid charge cannot be in all
cases uniformly the same, but must vary with the particular circumstances
of each transaction ; so that in effect a part only of the gross commission,
or proceeds of the agency, and not the ■whole, was to be divided in that
case ; and taking the definite deducted part at a fifth, or any other aliquot
part, the absent house, instead of receiving one half, as in the case at bar,
would, by the agreenLent, receive two fifths, or some other definite part of
the whole gross sum, and not an indefinite part thereof, depending upon
the actual and clear profit of the transaction. And although, in the case
of Waugh V. Carver, the agreement was not confined to a division of the
commission, but extended also to the moneys received in certain other
parts of the transactions of the two houses, yet the principle of the deci-
sion is not affected by that circumstance, the principle being, that where
two houses agree that each shall share with the other Ijhe money received
in a certain part of the business, they are, as to such part, partners with
regard to those who deal with them therein, though they may not be part-
ners inter sese. By the effect of such an agireement, each house receives
from the other a part of that fund on which the creditors of the other rely
for payment of their demands, according to the language of Lord Chief
Justice De Grey, in the ease of Grace v. Smith. And such an agreement
is perfectly distinct from the cases put in the argument before us, of remu-
neration made to a traveller, or other clerk or agent, by a portion of the
sums received by or for his master or principal in lieu of a fixed salary,
which is only a mode of payment adopted to increase or secure exertion.
It is distinct also from the case of a factor receiving for his commission a
percentage on the amount of the price of the goods sold by him, instead
of a certain sum proportioned to the quantity of the goods sold, as was the
case of DLxon v. Cooper, wherein it was held, that the factor was a com-
petent witness to prove the sale. It differs also from the case of a person
receiving from a trader an agreed sum, in respect of goods sold by his
recommendation, as one shilling per chaldron on coals, or the like, for
there is no mutuality ; and such a case resembles a payment made to an
agent for procuring orders, and has no distinct reference in the terms of
the agreement to any particular coals purchased by the coal merchant for
resale upon which a third person may become a creditor of the coal mer-
chant, and probably could not in any instance be shown to apply in its
execution to any such particular purchase. But it is to be observed, that,
even on a case of this nature, the inclination of Lord Mansfield's opinion,
in Young v. Axtell, cited 2 Hen. Black. 242, was, that such an agreement
might constitute a partnership. Of the case of Muirhead v. Salter, referred
9*
102 PARTNERSHIP. [CH. IV.
rily contemplate cases to be cases of partnership, except
where the parties intended to create a partnership, and
the losses, as well as the profits, were to be shared in
some proportions by each of them. The usual inter-
pretation was, that if the agreement provided either
for a distribution of the profits alone, or of the losses
alone, in certain proportions, the other, which was
omitted, would be presumed to be intended to be
shared in the same proportion, lllud expeditum est, si
in una causa pars fuerit expressa [yeluti in soh lucro, vel
to in the argument, we have neither the facts nor the ground of decision
brought before us with sufficient accuracy, to enable, us to consider it as
an authority on the present question. It may have been, that the division
of the commission between the two insurance brokers was a solitary
instance ; that the assured had recognized the second broker, as being the
person employed by himself; or that the Court did not think fit, under all
the circumstances of the particular case, to disturb the verdict of a jury
of merchants, as to ihe effect of a division of the commission in that par-
ticular species of agency, the divided commission being, as I understand,
payable for effecting the policy, and not for receiving the money from the
underwriters, in the event of the loss, and payable whether any loss had
occurred or not. So that we cannot consider that case as having contra-
vened or weakened the authority of the decision in Waugh v. Carver.
Upon the authority of this latter case, and for the reasons already given,
we ihink the direction of the learned Judge at the trial, and the verdict
of the jury, are right, and that the rule for a new trial ought to be
discharged." There is certainly some obscurity in that part of the opinion,
which refers to the question as to the gross or the net commissions. If
the learned Judge meant to say, that a division of the gross commissions
would make them partners, the case certainly is in conflict with other
authorities. But if he meant, that the division was to be of the net com-
missions, deducting all charges, then it would be in harmony with those
authorities. See ante, § 34, 44, 55 to 60. See Pearson v. Skelton, 1
Mees. & Welsh. 504. The same case is much more fully repor^d in 1
Mann. & Grang. R. 848, where the distinction between an interest in the
gross profits, and that in the net profits, is clearly stated. His language
on that occasion is quoted, post, § 220, note. Mr. CoUyer understands
Cheap V. Cramond, 4 B. iS: Aid. R. 663, to have decided that there is no
difference between a division of the gr9ss and a division of the net com-
nussions.
CH. IV.] AS TO THIRD PERSONS. 103
in solo damno) in alter a vero omissa ; in eo quoque quod
prcetermissum est, eand^m partem servari? And unless
some provision was found in the agreement itself,
touching the matter, the Roman law presumed, as a
natural result from the contract, that the partners were
to share in both, and to share equally. Nam sicuii
lucrum, ita damnum quoque commune esse oportet,;^ quod
non culpa socii continffit. Quoniam socieias, cum contra^
Mtur, tarn lucri, quam damni communis initur? Still, how-
ever, (as we have seen,) the Roman law, if the parties
clearly intended a partnership, did not prevent them
from agreeing; in consideration of peculiar services or
credit in aiding the partnership, that the partners
should "share the profits between them, if any, and that
the one rendering such services, or credit, might be
exempted from all losses beyond tile profits.* But it
does not« appear, that the Roman law ever established
a partnership in favor of third persons, against the
intention of the parties, from the mere participation of
profits, and a fortiori, where there was an express pro-
vision against one party being liable for any losses.^
§ 63. The principles established in these three
classes of cases® are commonly applied to dormant
and secret partnerships, where the ostensible partners
only are known or act, and yet other persons, who are
to share the profits, are held responsible as partners to
1. 2 Inst. Lib. 3, tit. 26, § 3 ; Domat, tit. 8, § 1, art. 5 ; Ante, § 27, 60.
3 Dig; Lib. 17, tit. 2, 1. 52, § 4 ; Pothier, Pand. Lib. 17, tit. 2, n. 39 ;
Domat, B. 2, tit. 1, § 1, art. 1.
3 Dig. Lib. 17, tit. 2, 1. 67, Introd.; Domat, B. 1, tit. 8, ^ 1, art. 1,
3,4.
4 Dig. Lib. 17, tit. 2, 1. 29, § 1 ; Domat, B. 1, tit. 8, § 1, art. 9 ; Ante,
§ 37, 50.
5 Ante, § 50.
6 Ante, § 55, 59, 60.
104 PARTNERSHIP. [CH. IV.
third persons, although they may not be so chargeable
inter sese? Thus, for example, if A. and B. should
agree to carry on any trade or business for their* joint
and mutual account, to divide the profits and losses
between them, and A. alone was to be known in the
trade and business, and to be solely responsible for the
debts and contracts thereof, and B. was to' be a secret
■dormant partner, B. would, nevertheless, be deemed a
partner as to third persons, and responsible to them for
all the debts and contracts growing out of such trade
or business.^ The same rule would apply to a case,
where it was even expressly agreed between the
parties, that there should be no partnership between
them, but they were merely to share the profits and
losses, or the profits only, and one was to bear all the
losses.^
§ 64. In the next place, as to the class" of cases,
where the parties are npt in reality partners, but are
held out to the world as such in transactions affecting
third persons. In such cases, they will be clearly held
partners, as to such persons.* This doctrine turns
• 3 Kent, Comm. Leot. 43, p. 33, 4tli edit. ; Winship v. Bank of United
States, 5 Peters, K. 529 ; Etheridge v. Binney, 9 Pick. 272.
2 Hoare v. Dawes, 1 Doug. K. 371 ; Winship v. Bank of U. States, 5
Peters, E. 529 ; S. C. 5 Mason, B. 176 ; Coope v. Eyre, 1 H. Black. 37 ;
Geddes u. Wallace, 2 Bligh, R. 270 ; Baring v. Crafts, 9 Pick. K. 381 ;
Brooke v. Washington, 8 Gratt. 248.
3 Gow on Partn. eh. 1, p. 12 to 18, 3d edit.; Collyer on Partn. B. 1,
oh. 1, § 1, p. XI to 27, 2d edit. ; Id. § 2, p. 53 to 67 ; Id. B. 3, ch. S, § 3,
p. 368, 370, 371 ; Watson on Partn. ch. 1, p. 17 to 27, 2d edit.; Hesketh
V. Blanohard, 4 East, R. 144.
43 Kent, Comm. Lect. 43, p. 32, 33, 4th edit; Post v. Kimberly,
9 Johns. R. 489 ; Ex parte Watson, 19 Ves. K. 458, 461 ; Fox v. Clifton,
8 Bing. E. 776 ; Collyer on Partn. B. 1, ch. 1, § 2, p. 60 to 64, 2d edit, j
Parker v. Barker, 1 Bro. & Bing. R. 9 ; Goode v. Harrison, 5 B. & Aid.
147; Bond v. Pittard, 3 Mees. & Welsb. R. 357; 2 Bell, Comm, B. 7,
CH. IV.] AS TO THIRD PERSONS. 105
upon no peculiar principles of municipal jurisprudence ;
but is founded in the enlarged principles of natural
law and justice, ex aequo et bono. For, wherever one of
two innocent persons must suffer from a false confi-
dence or trust reposed in a third, he who has been the
cause of that false confidence, or trust, and is to be
benefited by it, ought to suffer, rather than the other ;
and this must apply a fortiori, where the credit is
given to a party solely upon the faith of the fraudu-
lent allegation of a fact, which is known to such party
at the time to be untrue. The reason of the doctrine
is fully 'expounded by a late eminent Judge in the fol-
lowing terms. " The . definition of a partnership cited
from Puffendorf is good, as between the parties them-
selves, but not with respect to the world at large. If
the question were between A. and B., whether they
were partners, or not ; it would be very well to inquire,
whether they had contributed, and in what proportions,
, stock, or labor, and on what agreements they were to
divide the profits of that contribution. But in all
these cases a very different question arises, in which '
the definition is of little service. The question is
generally, not between the parties, as to what shares
they shall divide, but respecting creditors, claiming a
satisfaction out of the funds of a particular house, who
shall be deemed liable in regard to these funds. Now,
a case may be stated, in which it is the clear sense of
the parties to the contract, that they shall not be
partners; that A. is to contribute neither labor nor
money, and, to go still farther, not to receive any
eh. 2, p. 623, 624, 5tli edit. See Bonfield v. Smith, 12 Mees. & Welsh.
R. 405, the converse case, where the firm name was A. & Co., and the
defendant held himself out as the sole partner then in the firm.
106. " PARTNERSHIP. [CH. IV.
profits. But if lie will lend his name as a partner, he
becomes, as against all the rest of the world, a partner,
not upon the ground of the real transanction between
them, but upon principles of general policy, to prevent
the frauds, to which creditors would be liable, if they
were to suppose, that they lent their money upon the
apparent credit of three or four persons, when in fact
they lent it only to two of them, to whom, without the
others, they would have lent nothing."^ Upon so clear
and natural a doctrine, it seems unnecessary to cite at
large the authorities in its support. They are uniform
and positive to the purpose.^
§ 65. This last class of cases, may arise from the
express acknowledgments of the parties, or by impli-
cation or presumption from circumstances. Thus, if a
person should expressly hold himself out as a partner,
and thereby should induce the public at large, or par-
ticular persons, to give credit to the partnership, he
would be liable as a partner for the debts so contracted,
although he should in reality not be a partner.' On
the other hand, if a known partner should silently
withdraw from the partnership, without giving any
notice thereof, he would still remain liable to persons,
who should continue to deal with it upon the faith and
1 Lord Chief Justice Eyre in Waugh w.tarver, 2 H. Black. 235, 246.
2 Collyer on Partn. B. 1, eh. 1, § 2, p. 53 to 64 ; Gow on Partn. ch. 1,
p. 10, 3(1 edit.; Watson on Partn. p. 33, 34, 2d edit; 3 Kent, Comm.
Leet. 43, p. 31 to 33, 4th edit. ; Hoare v. Dawes, 1 Doug. K. 371 ; Young
V. Axtell, cited 2 H. Black. 242; Ex parte Langdale, 2 Rose, R. 444;
S. C. 18 Ves. 300, 301 ; Mclver v. Humble, 16 East, R. 169 ; Bond v.
Pittard, 3 Mees. & Welsh. R. 357, 359.
3 Watson on Partn. ch. 1, p. 6, 2d edit. ; Id. p. 33 ; Gow on Partn. ch.
.1, p. lOto 13, 3d edit. ; Id. p. 23, 24; Collyer on Partn. B. 1, ch. 1, § 2,
p. 63 to 67, 2d edit. ; Guidon v. Robson, 2 Camp. R. 302 ; Young v.
Axtell, cited 2 H. Black. 242.
CH. IV.] AS TO THIED PERSONS. 107
confidence, that he still remained a partner; for his
silence, under such circumstances, would be equivalent
to an affirmation of a continuing partnership.^ But
this subject will naturally'occur in other connections
in a subsequent part of these Commentaries, and needs
not here be further dwelt upon.
§ 66. In the next place, as to the class of cases
where one of the parties is to receive an annuity out
of the profits, or as a part thereof. And here it may
be generally stated, that a person, who lends money to
a firm, and is to receive, therefor a fixed int-erest,
(whether usurious, or otherwise, is not material,) or an
annuity, certain, as to amount and duration, will not
thereby become, as to third persons, a partner in the
firm ; for, in such a case, there is no mutuality of profit
with the firm, and no general participation in the
casual and indefinite profits, which, as we have seen,
constitutes one of the ingredients of partnership.^
Cases of this kind often occur upon the retirement of
a partner, leaving money or funds in the hands ,of the
firm, and upon the decease of a partner, who bequeaths
an annuity to his widow out of the profits ; and in
neither case will the retiring partner, or the widow, be
held a partner as to third persons, as he or she cer-
tainly is not, as to the partners themselves.^ It is
true, that it may be said, that the retiring partner or
widow has, in a certain sense, an interest in the profits.
1 CoUyer on Partn. B. 3, ch. 3, § 3, p. 368 to 376, 2d edit. ; Godfrey v.
TurnbuU, I Esp. K. 371 ; Whitman v. Leonard, 3 Pick. 177 ; Griswold v.
Waddington, 15 Johlis. R. 57 ; Parkinson v. Carruthers, 3 Esp. R. 248 ;
Stables v. Eley, 1 Carr. & P. 514 ; Graham v. Hope, 1 Beake, E. 154.
2 CoUyer on Partn. B. 1, ch. 1, § 1, p. 26, 2d edit.
3 CoUyer on Partn. B. 1, ch. 1, § 1, p. 26, 27, 2d edit. ; Grace v. Smith,
2 W. Black. K. 998, 1000 ; Waugh v. Carver, 2 H. Bl^ck. E. 2.35, 245.
108 PARTNERSHIP. [CH. IV.
But the same suggestion, may be made as to creditors
of the firm. If any one advance or lends money to a
trader, it is only lent on his general personal security.
It is no specific lien upon the profits in the trade ; and
yet the lender is generally interested in those profits.
He relies on them for rep'ayment. And there is no
difierence, whether money be lent de novo, or be left
behind in the trade by a retiring partner ; or, whether
the terms of the loan be kind, or be luirsh.-^
§ 67. The true criterion, by which we are to distin-
guish cases of this kind from cases in which there is a
partnership as to third persons, is to ascertain, whether
the retiring partner, or lender, or annuitant, is to
receive a share of the profits, as profits, or, whether the
profits are relied on only as a fund of payment ; or, in
other words, whether the profit, or premium, or annuity,
is certain and defined,' or is "casual, indefinite, and
depending on the accidents of trade. In the former
case, it is a loan; in the latter, a partnership. The
hazard of profit or loss is not equal and reciprocal, if
the retiring partner, or lender, or annuitant, can receive
a limited sum only for the profits of the loan or other
fund ; and therefore the law will not deem him or her
a partner, since there is an utter want of mutuality of
right and interest in the profit.^
§ 68. There may be, and indeed sometimes is great
nicety in the application of the doctrine ; but, never-
theless, the distinction itself is ordinarily clear and
satisfactory. Thus, if a person is to receive an annuity
in lieu of profits, he will not be held to be a partner as
1 Grace t). Smith, 2 W. Black. R. 998, 1000.
3 Grace V. Smith, 2 W. Black. E. 998, 1000; Waugh v. Carver, 2 H.
Black. E. 235, 247.
CH. IV.] • A3 TO THIRD PERSONS. 109
to third persons ; because such words negatiye the
presumption, that the annuity is to be paid out of the
profits; since it is not to vary in its amount with the
profits, nor to depend, as to its duration, on the term
or continuance of the partnership.^ But if he is to
receive a certain percentage on the profits, or on the
amount of the business done, he will clearly be, as to
third persons, a partner, since the amount to be
received would rise and fall with the amount of the
profits or business.^ So, (it has been said,) if a retiring
partner is entitled to receive a certain interest on the
funds, which he leaves in the partnership, and also a
fixed annuity for a certain number of years, if the
partner shall so long live, in lieu of the profits of the
trade, with a right to inspect the books of the partner-
ship, he will be deemed a partner; for, taking the
whole transaction together, it is apparent, that he is to
be paid out of the profits.^
1 CoUyer on Partn. B. 1, ch. 1, § 1, p. 27, 28, 2d edit.
2 Young V. Axtell, cited 2 H. Black. K. 242 ; Waugh u. Carver, 2 H.
Black. K. 235, 246, 247 ; Buckner v. Lee, 8 Georgia, 288.
3 Bloxam v. Fourdrinier, cited 2 W. Black. R. 999 ; CoUyer on Partn.
B. 1, ch. 1, § 1, p. 28, 2d edit, ; Id. § 2, p. 54. — This case seems to stand
upon the utmost verge of the law, even if it be at all maintainable. It
differs from Grace v. Smith, (2 W. Black. R. 999,) principally in the cir-
cumstance, that the annuity was determinable upon the' contingency of
the death of the partner^ and there was a right to inspect the books. But
as the interest was fixed, and the annuity for a determinate teim, although
liable to be defeated by the happening of the contingency of the death of
the party, it does not seem easygto see; how either the interest or the
annuity can be properly treated as a payment to be made exclusively out
of the profits. The right to inspect the books may seem more strongly to
indicate a partnership ; but ought it to be decisive ? See Gow on Partn.
ch. 1, p. 21, 22, 3d edit.; Gary on Partn. p. 3, 14, 171. Certainly an
annuity of a fixed sum, determinable on the death of the annuitant, or of
the partner, cannot, per se, be treated as creating a partnership as to third
persons, when payable in lieu of the profits of tlie trade ; for there is no
PARTN. 10
110 PARTNERSHIP. ' [CH. IV.
§ 69. It is upon a similar ground, that, wherfe a
person is to receive an annuity of a fixed sum out of
the profits of a trade or business, he is held to be a
partner ■ as to third persons ; for in such a case the
annuity will be payable out of the net profits, and will
rise and fall according to the profits, if there be not
enough profits to pay the annuity ; and there will also
be a lien on the profits therefor.-^ In short, in aU cases
of this kind, the real question to be solved is, whether
the party is in efiect to participate in the rise or fall of
the profits, and has an interest in the profits, as such ;
or, whether he only looks to profits as a fund for pay-
ment of the annuity ; but not exclusively to that fund.
In the former case he is a partner ; in the latter he is
not. * Questions of this sort also sometimes arise in
cases, where a simulated partnership is resorted to,
in order to disguise a loan upon usurious interest;
and then the Court will look astutely to the real
nature of the transaction. It may be clearly a case
of usury between the parties, which will create no
legal partnership as between themselves, although,
they may as clearly be liable as partners to third
persons.^
§ 70. We may conclude this part of our subject with
mutuality in the profits, and no sharing of profit and loss ; as it is not
made payable out of the profits exclusirely. See Ex parte Chuck, 8
Bing. R. 469 ; Young v. Axtell, cited 2 H. Black. R. 242 ; Holyland
V. De Mendez, 3 Meriv. R. 184; A'V^tson on Partn. ch. 1, p. 11, 12,
2d edit.
1 Bond V. Pittard, 3 Mees. & Welsh. R. 357, 361 ; Ex parte Wheeler,
Buck's R. 48 ; Ex parte Chuck, 8 Bing. R. 469 ; Ex parte Hamper, 17
Ves. R. 404, 412 ; Ante, § 66, 67.
2 Gilpin V. Enderby, 5 Barn. & Aid. 954 ; Morse V. Wilson, 4 Burn. &
East, R. 353 ; CoUyer on Partn. B. 1, ch. 1, § 1, p. 88 to 41, 2d edit. See
also Pothier, De Societfe, n. 22 to 27.
CH. IV.] AS TO THIRD PERSONS. Ill
the remark, that persons may not only be partners as
to third persons, but also inter sese, where they are not
interested personally, but are concerned in an official
capacity only, in the partnership, for the use and
benefit of others. Thus, where a trustee for third
persons is concerned in a partnership, but derives no
profit personally therefrom, or an executor or adminis-
trator is, in pursuance of partnership articles, admitted
into the partnership after the death of a deceased
partner, he will be deemed to all intents and purposes,
as to the other partners, as well as to third persons, a
partner.^ But if a person is not in the firm, and has
no control or authority or interest, either in the capital
stock or in the profits thereof,^ and his cestui que trust
is the party in interest, (whether he be an infant fir an
adult,) the mere reservation to such person of a right
to an account of the profits, and that the partn'ership
shall be governed by his advice, will not (it^ should
seem) constitute him a partner in any respect f whatso-
ever. Thus, where it appeared, that a father, on the
formation of a partnership, invested a sum of money
in the partnership firm on behalf of his son, who was
a minor ; and it was stipulated, that the other partners
should account with the . father, as the trustee of his
son, for one third profit of his son's capital, or any loss,
that might accrue, and should be governed and directed
by his advice in all matters relative to the business ; it
was determined, that this did not constitute the father
' Gow on Partn. ch. 1, § 1, p. 16, 3d edit. ; V^igttman v. Townroe, 1 M.
& Selw. 412 ; Ex parte Garland, 10 Ves. 110 ; Barker v. Parker, 1 Term
E. 295 ; Collyer on Partn. B. 3, ch. 3, § 4, p. 427, 428, 2d edit. ; Owen v.
Body, 5 Adol. & Ellis, E. 28.
^ See Price v. Groom, 2 Welsby, Hurlstone & Sordon, 542.
112 PARTNERSHIP. [CH. IV.
a partner, the jury having found, that the money was
not invested by him for his own benefit, and that he
had not reserved to himself the power of drawing out
the principal or profits, as trustee for his son.^
' Barklie v. Scott, 1 Hudson & Brooks, Irish R. 83, cited Gow on Partn.
Supplement, London, 1841, oh. 1, § l,p. 1.
CH. v.] DIFFERENT SORTS OF. 113
CHAPTER V.
PARTNERSHIP — DIFFERENT SORTS OF.
§ 71. Having thus ascertained the true nature of the
contract of partnership ; the persons who are in law
capable of being partners, or not; and what will con-
stitute a partnership inter sese, and what merely as to
third persons ; we may now proceed to other considera-
tions touching the subject, which seem necessary to be
adverted to, as preliminaries to the more full discussion
of the rights, duties, interests, powers, and responsibili-
ties of partners, as well inter sese, as in respect to third
persons.
§ 72. Partnerships then at the common law may, in
respect to their character and, extent, be divided into
three classes ; universal partnerships ; general partner-
ships; and limited or special partnerships. By uni-
versal partnerships we are to understand those, where
the parties agree to bring into the firm all their
property, real, personal, and mixed, and to employ all
their skill, labor, services, and diligence in trade or
business, for their common and mutual benefit, so that
there is an entire communion of interest between them.
Such contracts are within the scope of the common
law ; but they are of very rare existence.^
' [Rice V. Barnard, 20 Verm. R. 472. — In this ease the partnership
was said to be, " not strictly a partnership, but rather a universal hotchpot
of all the property and liabilities, present and prospective, of both the
persons concerned."] In U. States Bank u. Binney, 5 Mason,' R. 176,
183, the Court said ; "In respect to the general law regulating partner-
10*
114 PARTNERSHIP. [CH. V.
§ 73. The Roman law fully recognized the same
classification. Societates coiitrahuntur, sive universorum
honorum, sive ne'gotiationis alicujus, sive vectigalis, sive
eiiam rei unius} And in neither case was it necessary
that the parties should contribute ^in equal proportions.
Societas autem cdiri potest, et valet eiiam inter eos, qui
non smii ceqiiis faciiltaiibvs, cum plerumque paiiperior opera
suppleat, quantum eiper comparationem patrimonii deest? In
that law universal partnerships were distinguished into
two sorts; first, those, which were of all the property of
the parties, present and future, ( Universorum honorum ; ^)
and secondly, those, which extend only to all the
gains, earnings, and profits of all the business done by
them. (Zfniversorum, quce ex qucestu veniurdS) The former
sort was never deemed to be intended, unless it was ex-
plicitly stipulated ; the latter was ordinarily presumed
from the mere formation of a partnership.^ In societate
omnium honorum omnes res, quce coeuntium sunt, continuo
skips, tliere does not seem any real dispute or difficulty. Partnerships are
usually divided into two sorts, general and limited. The former is, where
the parties are partners in all their commercial business ; the latter, where
it is limited to some one or more branches, and does not include all the
business of the partners. There is, probably, no such thing as a universal
partnership, if, by the terms, we are to understand, that every thing done,
bought or sold, is to be deemed on partnership account. Most men own
some real or personal estate, which they manage exclusively for them-
selves."
1 Dig. Lib. 17, tit. 2, 1. 5; Pothier, Pand. Lib. 17, tit. 2, n. 11 ; Inst.
Lib. 8, tit. 26.
2 Dig. Lib. 17, tit. 2, 1. 5 ; Pothier, Pand. Lib. 17, tit. 2, n. 12.
3 Pothier, de Society, n. 28, 29,43; Dig. Lib. 17, tit. 2, 1. 5 to 12;
Pothier, Pand. Lib. 17, tit. 2, n. 13 to 18 ; Domat, B. 1, tit. 8, § 3, art. 1, 4.
* Pothier, de Societd, a. 43 ; Domat, B. 1, tit. 8, § 3, art. 2 ; Voet, ad
Pand. Lib. 17, tit. 2, n. 4, Tom. 1, p. 749 ; Vinn. ad Inst. Lib. 3, tit. 20,
Introd.
5 Pothier, de Sooieti, n. 29, 43 ; Domat, B. 1, tit. 8, § 3, art. 2, 3 ;
Pothier, Pand. Lib. 17, tit. 2, n. 20, 21.
CH. v.] DIFFERENT SORTS OF 115
communicantur} Com societatem et simpUdter Meet. Et
si non fuerit distinctum, videtur co'ita esse umversorum, quce
ex qucesiu v,eniunt ; hoc est, si quod lucrum ex emptione,
venditione, hcaiione, conductione descendit? Qucestus enim
irdeUigitur, qui ex operd cujusque descendit? Sed et si
adjiciatur, ut et qucestus et lucri socii sint, verum est, non
ad alium lucrum, quam quod ex qucestu venit, hanc quoque
adj'ectionem periinere^.
§ 74. General partnerships are properly such, where
the parties carry on all their trade and business, what-
ever it may be, for the joint benefit and profit of all
the parties concernecj, whether the capital stock be
limited or not, or the contributions thereto be equal or
unequal.* But where the parties are engaged in one
branch of trade or business only, the same appellation
is ordinarily applied to it. Thus, if two merchants are
engaged in mercantile commerce and business on joint
account, and also in manufacturing and other business
solely on joint account, it is properly a general partner-
ship. But, if the same merchants carry on no other
business than that of commerce on joint account, they
would be usually spoken of as engaged in a general
partnership. The former case approaches very nearly
to that of a general partnership in the Roman law,
Universorum, quce ex qucestu veniurd^ The latter would
be distinguished by the Roman Ie^w, as a particular
1 Dig. Lib. 17, tit. 2, 1. 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 13.
2 Dig. Lib. 17, tit. 2,-l. 7 ; Pothier, Pand. Lib. 17, tit. 2,n. 20 ; Pothier,
de Societ6, n. 29, 43.
3 Dig. Lib. 17, tit. 2, 1. 8 ; Pothier, Pand. Lib. 17, tit. 2, n. 20.
*Dig. Lib. 17, tit. 2, 1. 13 ; Pothier, Pand. Lib. 17, tit. 2, n. 20 ; Domat,
B. 1, tit. 8, § 3, art. 2, 3 ; Pothier, de Society, n. 43, 44, 45.
5 Willet V. Chambers, Cowp. R. 814, 816 ; 2 Bell, Comm. B. 7, ch. 2,
p. 621, 6th edit.
6 Ante, ^ 73 ; Pothier, de Societ6, n. 43.
116 PARTNERSHIP. [CH. V.
partnership, Negotiationis aliciijiis} The like distinc-
tions prevail in the foreign law.^
§ 75. Special partnerships, in the sense of the com-
mon law, are those which are' formed for a special or
particular branch of business, as contradistinguished
from the general business or employment of the
parties, or of one of them.^ They are more c9mmonly
called limited partnerships, when they extend to a
single transaction or adventure only ; such as the pur-
chase and sale on joint account of a particular parcel
of goods, or the undertaking of a voyage or adventure
to foreign parts Upon joint account. But the appella-
tion may be applied indifferently, and without discri-
mination to both classes of cases. They therefore fall
within the denomination of the Roman law, Societas
sive negotiationis alicvjus, sive vedigalis, sive etiam rd
uniiis}
§ 76. At the common law partnerships are also some-
times divided into other kinds. (1.) Private partner-
ships, which are composed of two or more partners for
some merely private undertaking, trade, or business ;
and (2.) Public companies, where a large number of
persons are concerned, and the stock is divided into a
1 Ante, § 73 ; Pothier, de Society, n. 54 ; Domat, B. 1, tit. 8, § 3, art.
1; Watson on Partn. ch. 1, p. 1, 2d edit.; 2 Bell, Comm. B. 7, ch. 2,
p. 621, 5tli edit.; Voet, ad Pand. Lib. 17, tit. 2, n.'5, Tom. l,p. 750;
Vinn. ad Inst. Lib. 3, tit. 26, Introd. ; 3 Kent, Comm. Lect. 43, p. 80,
note (a), 4tli edit.; Civil Code of France, n. 1836 to 1842; Civil Code
of Louisiana, art. 2800 to 2805 ; Id. 2795 to 2799 ; Potbier, de Sooietfe,
n. 54, 55.
2 Ibid.
3 Willett V. Chambers, Cowp. E. 814, 816 ; 2 Bell, Comm. B. 7, ch. 2,
p. 621, 5th edit.; In re Warren, Daveis, K. 323.
4 Ante, § 73 ; Pothier, de Society, n. 54 ; Voet, ad Pand. Lib. 17, tit. 2,
n. 5, p. 750.
CH, v.] DIFFERENT SORTS OF. 117
large number of shares, the object of the undertaking
being of an important nature, and often embracing
public, as well as private interests and benefits.' The
latter are also subdivided, (1.) into unincorporated com-
panies, or associations ; and (2.) into incorporated com-
panies, fraternities, (or guilds, as they were anciently
called,) and corporations existing under a charter of
the crown or government, and having special powers
and rights conferred thereby.^ In both cases, however,
the partnership, although commonly called a public
company or association, is not, in contemplation of law,
more than a mere private partnership ; for in the sense
of the law no company is a public company or associa-
tion, whose interests do not exclusively belong to the
public, and are not exclusively subject to the regula-
tion and government of the legislature, or other proper
public functionaries. Thus, for example, a college; a
bank, a turnpike company, a bridge company, a manu-
facturing company, a company for mining, or for
foreign trade or commerce, whether incorporated or not,
is still but a mere private association.^ Whereas a
town, a parish, a hundred, a board of trade, or a trea-
sury department, created by the government for pub-
lic purposes, and exclusively regulated thereby, would
be strictly a public company, whether incorporated or
not.
§ 77. Unincorporated companies and associations
differ in no material respect, as to their general powers.
1 Watson on Partn. ch. 1, p. 3, 4, 2d edit. ; CoUyer on Partn. B. 5, ch.
1 to 3, p. 721 to 793, 2d edit. ; Gow on Part. Ch. 1, p. 2, 3, 4, 3d edit.
8 Watson on Partn. ch. 1, p. 3, 4, 2d edit. ; Comyn's Dig. Trade, B. D.
3 Woodward v. Trustees of Dartmouth College, 4 Wheat. E. 618 ;
Terrett v. Taylor, 9 Cranch, R. 43, 52.
118 PARTNERSHIP. [CH. V.
rights, duties, interests, and responsibilities, from mere
private' partnerships, unless otherwise expressly pro-
vided for by statute, except that the business thereof
is usually carried on by directors, or trustees, or other
officers, acting for the proprietors or shareholders ; and
they usually extend to some enterprise, in "which the
public have an ultimate concern.^ But incorporated
companies, or corporations, are governed strictly, as to "
their powers, rights, duties, interests, and responsibili-
ties, by the terms of their respective charters; and
the shareholders, or stockholders, are not personally or
individually liable in their private capacities, unless
expressly so declared by their charters, for the acts,
or doings, or contracts of the officers, or members of
the company, or corporation ; ^ whereas in unincorpo-
rated companies and associations the shareholders and
stockholders are personally responsible in their indi-
vidual capacities for all acts of the officers and com-
pany, or association, in the same manner, and to the
same extent, as private partners are.^
§ 78. In the French law, partnerships are distin-
guished into three sorts. (1.) Partnerships under a
collective name, that is, where the trade or business of
the partnership is carried on under a particular social
name or firm, containing the names of some or of all of
1 Watson on Partn. ch. 1, p. 3, 4, 2d edit. ; CoUyer on Partn. B. 5, ch.
1, § 4, p. 764, to 771, 2d edit. ; Id. ch. 1, § 2, p. 734; 2 Bell, Comm. B.
7, ch. 2, p. 627, 628, 5th edit.
2 Watson on Partn. ch. 1, p. 4, 2d edit.
3 Watson on Partn. ch. 1, p. 8, 4, 2d edit.; Collyer on Partn. B. 5, ch.
1, § 1 to 4 ; Id. ch. 2 ; Id: ch. 3, p. 721 to 783, 2d edit. — Mr. Collyer, in
the chapters above cited, has given a very full view of joint-stock com-
panies, both at common law, and by statute, as well as of mining com-
panies. Sefe also 2 Bell, Comm. B. 7, ch. 2, p. 627 to 630, 5th edit.
CH. v.] DIFFERENT SOKTS OF. 119
the partners.^ (2.) Partnerships in eommandiU, ov in
coM«?wewc?aTO; that is, limited partnersl^ps, where the con-
tract is between one or more persons, who are generaJ
partners, and jointly and severally responsible, and one
or more other persons, who merely furnish a particular
fund or capital stock, and thence are called commandor
iaire, or commendataires, or partners in commandiie ; the
business being carried on under the social name, or firm
of the general partners only, composed of the names
of the general or complementary partners, the partners
in commandite being liable to losses only to the extent
of the funds or capital furnished^by them.^ (3.)
Anonymous partnerships are, where all the partners
are engaged in the common trade or business, but
there is no social name or firm, but a name designating
the objects of the association, and the trade or business
is managed by directors.^ They correspond with our
ordinary joint-stock companies, and other unincorpora-
ted associations. Similar distinctions are adopted in
many other foreign countries, and in the Laws of Louis-
iana.^ Special partnerships in commandite have also
been recently introduced by statute into the jurispru-
dence of several States in the Union.^ But the regu-
lations applicable to such partnerships vary in different
countries and States, and are strictly local, and there-
1 Code of Commerce of France, art. 20, 21 ; Watson on Partn. ch. 1,
p. 2, 2d edit. ; Pothier, de Society, n. 57.
2 Code of Commerce of France, art. 23, 24; Watson on Partn. ch. 1,
p. 2, 2d edit. ; Pothier, de Societe, n. 60, 102.
3 Code of Commerce of France, art. 29, 30; Watson on Partn. ch. 1,
p. 2, 2d edit.
* Code of Louisiana, art. 2796, 2810, 2883.
5 3 Kent, Comm. Lect. 43, p. 34, 35, 4th edit.
120 PARTNEKSHIP. [CH. V.
fore seem unnecessary to be brought farther under
examination in the present Commentaries.
§ 79. In the Scottish law, partnerships are some-
times divided into ordinary partnerships, acting under
a social name or firm j and joint adventures, where no
firm is used ; and public companies.^ But in truth the
two former are generally governed by the same rules.
And therefore it may be properly said, that, in the
Scottish law, partnerships are divisible into three
classes; (1.) Ordinary partnerships; (2.) Joint-stock
companies; (3.) Public companies.^ In the former,
the firm constitutes a distinct person in contemplation
of law, capable independently of maintaining with
third persons, as well as with the individual partners,
the relation of debtor and creditor ; and the partners,
although jointly and severally liable for all the debts
and contracts of the firm, are so, not as primary or
principal debtors or contractors, but rather as guarantors
or sureties of the firm.^ Such a partnership may be
either general or special. By general partnership the
Scottish law does not intend the Sodetas iiniversorum
bonorum of the Roman law, but a partnership in the
whole trade or manufacture carried on by the parties.*
By special partnership, in the Scottish law, is intended
a partnership limited to a particular branch of business,
or excluding a particular branch, which would otherwise
be included in a general partnership.® The second class,
joint-stock companies, differs in several respects from
i 2 Bell, Comm. B. 7, p. 612, 621, 649, 656, 5th edit.
s 2 Bell, Comm. B. 7, p. 612, G21, 649, 656, 5th edit.
3 2 Bell, Comm. B. 7, p. 619, 620, 6th edit.
* 2 Bell, Comm. B. 7, p. 621, 5th edit.
5 2 Bell, Coram. B. 7, p. 621, 5th edit.
CH. v.] DIFFERENT SORTS OF. 121
the former class. (1.) By tlie credit raised with the
public being placed entirely on the joint stock of the
company, as indicated by its descriptive name. (2.)
By a difference in the management and operation of the
association, as conducted, not by the shareholders per-
sonally, but by directors or other officers appointed by
the association, and made publicly known. (3.) By the
shares being made transferable. In joint stock com-
panies, the liability of the shareholders to creditors is,
by the common law of Scotland, limited to the amount
of their respective shares, and they are not, as in or-
dinary partnership, jointly and severally responsible for
all the debts of the firm.^ The third class, public
companies, embraces such as are created by royal or
parliamentary authority ; and therefore they have con-
ferred upon them such powers, privileges, and exemp-
tions only, as by the charteT and by law properly
belong to them.^
§ 80. In this connection it seems proper also to ad-
vert to the various denominations given to partners,
and which in our subsequent inquiries should be kept
steadily in view, to prevent any mistakes and embar-
rassments in the application of cases and principles.
Partners, then, are ordinarily divided as follows ; (1.)
Ostensible partners, or those, whose names are made
known and appear to the world as partners, and who
in reiality are such.' (2.) Nominal partners, or those,
who appear, or are held out to the world as partners ;
1 2 Bell, Comm. B. 7, p. 627, 628, 6th edit.
2 2 Bell, Comm. B.'7,p. 656, 5th edit.
•^ CoUyer 'on Partn. B. 1, ch. 1, § 1, p. 3, 2d edit. ; 1 Mont, on Partn.
ch. 2, § 1, 2; Gow on Partn. ch. 1, p. 12, 3d edit.; 3 Kent, Comm. Lect.
43, p. 31, 4th edit.
PARTN. 11
122 PARTNERSHIP. [CH. V.
but who have no real interest in the firm or business.-'
(3.) Dormant partners, or those, whose names are not
known, or do not appear as partners, but who never-
theless are silent partners, and partake of the profits,
and thereby become partners, either absolutely to all
intents and purposes, or at all events, in respect to
third persons.^ Dormant partners, in> strictness of
language, mean those, who are merely passive in the
'firm, whether known or unknown, in contradistinction
to those, who are active, and conduct the business of
the firm, as principals. Unknown partners are proper-
ly secret partners ; but in common parlancOj they are
usually designated by the appellation of dormant part-
ners.^ Similar designations also prevail in the Scottish
law.*
1 Collyer on Partn. B. 1, eh. 1, § 1, p. 3, 2d edit. ; 1 Mont, on Partn-
ch. 2, § 1, 2 ; Gow on Partn. ch. 1, p. 12, 3d edit.; 3 Kent, Comm. Lect.
43, p. 31, 4th edit
2 Ibid.
3 Ibid.; Hoare v. Dawes, 1 Doug. R. 371 ; U. States' Bank v. Binney,
5 Mason, B. 176, 185. — In this last case the Court said; "It has been
said, that this is the case of a secret partnership ; that it was the intention
of the Binneys, that their connection with it should be kept secret, and
that the management of the business in the name of ' John Winship '
shows this intention. In point of fact, there is no covenant or declara-
tion in the articles of copartnership, by which the partners have bound
themselves to keep it secret ; or that the name of the Binneys should
never be disclosed to any persons dealing with Winship in the partnership
concerns. In point of fact, too, if the evidence is believed, Winship,
immediately after its formation, and during its continuance, constantly
avowed it, and made it known, and obtained credit in the business of the
firm thereby. He stated the Binneys to be partners ; and this statement
was generally known and believed by the public, and especially by per-
sons dealing with Winship in respect to the business of the firm. If the
jury believe this evidence, then in point of fact, whatever was the original
intention of the parties, this was not a secret partnership in the common
meaning of the terms. I understand the common meaning of secret part-
4 2 Bell, Comm. B. 7, ch.^, p. 622, 623, 6th edit.
CH. v.] DIFFERENT SORTS OF. 123
§ 81. In respect to the objects of partnerships, it
may be generally stated, that they are not confined to
mere commercial business or trade ; but may extend to
manufactures, and to all other lawful occupations and
employments, and to professional and other business ; ^
as, for example, they may embrace the business of
attorneys, solicitors, conveyancers, surgeons, apotheca-
ries, physicians, mechanics, artisans, engineers^ owners
of stage-coaches, farmers, drovers, brokers, bankers,-
factors, consignees, and even of artists and sculptors
and painters. They may extend to all the business of
the parties ; or to a single branch thereof, or to a
single adventure, or even to a single thing.^ And so
nership to be, -where the existence of certain persons as partners is not
avowed or made known to ihe public by any of the partners. Where all
the partners are publicly made known, whether it be by one, or all the
partners, it is no longer a secret partnership; for this is generally used in
contradbtinction to notorious and open partnership. And it makes no
difference in this particular, whether the business of the firm be carried
on in the name of one person only, or of him and company. Even if
some of the partners intend to be such secretly, and their names are dis-
closed against their wishes .and intentions ; still, when generally known
and avowed by any other of the partners, the partnership is no longer a
secret partnership. If, therefore, in the present case, Winship, against
the wishes and intention of the Binneys, did in the course of the business
of the firm make known that they were partners, and who all the partners
were, so that they became public and notorious, I should say, it was no
longer a secret partnership in the common sense of the term. If secret
in any sense, it must be, under such circumstances, in a peculiar sense.
Sometimes dormant and secret partners are used as synonymbus. But I
take it, that dormant is generally used in contradistinction to active, and
secret to open or notorious. However, nothing important turns in this
case upon the accuracy of definitions, since it must be decided upon the
principles of law applicable to such a partnership, as this in fact was, and
is proved to be, whatever may be its denomination."
' 3 Kent, Comm. Lect. 43, p. 28, 4th edit.; Collyer on Partn. B. 1, ch.
1, § 1, p. 29 to 32, 2d edit. ; Gow on Partn. ch. 1, p. 5, Sd edit. ; Livingston
V. Cox, 6 Barr. R. 364.
2 .Ante, § 73.
124 PARTNERSHIP. [CH. V.
(as we have seen) stood the doctrine in the Roman
law. Societates contrahuntur sive universorum ionomm,
' . . . . .
sive aUcujus negotiaiionis, sive vedigalis, sive etiam r&t
unius} But there cannot lawfully be a partnership in
a mere personal office, especially when it is of a public
nature, and involves a distinct personal confidence in
the skill and integrity of the particular party .^
§ 82. There may also be a partnership in some cases
touching interests in lands, or in a single tract of land,
which will be governed by the ordinary rules, appli-
cable to partnership in trade or commerce. Thus, for
example, there may be a partnership ia»the working of
a mine; for Courts of Equity constantly treat the
working of a mine, as a species of trade ; and apply
the same remedial justice to such cases, as they do to
ordinary partnerships.^ So, real estate, held for gene-
ral partnership purposes, has attributed to it the com-
mon qualities of partnership property, in whosesoever
name the title may stand in law.* In short, (as has
been well observed,) in the working of mines, (such as
a colliery,) it seems difficult to establish, that there is
an interest in the land, distinct from the partnership
1 Dig. Lib. 17, tit. 2, 1. 5 ; Pothier, Pand. Lib. 17, tit. 2, n. 11 to 26.
2 CoUyer on Partn. B. 1, ch. 1, § 1, p. 31, 32, 2d edit.
3 Collyer on Partn. B. 5, ch. 3, p. 783, 784, 2d edit. ; Williams v. Atten-
borough, Turner & Eus. K. 70, 73 ; Story v. Lord Windsor, 2 Atk. 630 ;
Wren v. Kirton, 8 Ves. 502 ; Crawshay v. Maule, 1 Swanst. E. 495 ;
Fereday v. Wightwick, Tamlyn, E. 250 ; Sage v. Sherman, 2 Comstook,
E. 417; Jeflfreys v. Smith, 1 Jac. & Walk. 298; 1 Story, Eq. Jur.
§674.
4 Gow on Partn. ch. 1, p. 32 to 35, 3d edit. ; Id. ch. 5, § 2, p. 232 ; Id.
§ 4, p. 340; Collyer on Partn. B. 2, ch. 1, § 1, p. 82 to 102, 2d edit.; 3
Kent, Comm. Lect. 43, p. 37 to 39, 4th edit. ; Eandall v. Eandall, 7 Sim.
E. 271 ; Cookson v. Cookson, 8 Sim. E. 529 ; Sigourney v. Munn, 7 Conn.
E. 11 ; Hoxie v. Carr, 1 Sumn. R. 182, 186 ; Dale v. Hamilton, 5 Hare,
R. 369 ; Lancaster Bank v. Myley, 1 Harris, 544.
CH. v.] DIFFERENT SORTS OF. 125
in trade ; a mere interest in land, in which a partition
could take place. For, when persons, having purchased
such an interest, manufacture and bring to market the
produce of the land, as one common fund, to be sold
for their common benefit, it may fairly be contended,
that they have entered into an agreement, which gives
to that interest the nature, and subjects it to the doc-
trines, of a partnership in trade.^
I 83. But although there is no positive incompe-
tency at the common law of creating a partnership in
the buying and selling of lands on joint account, and
for the joint benefit of the parties, by way of commer-
cial speculation and commercial adventure ; yet such a
contract must, from the nature of the case, and the
positive rules of law and the Statute of Frauds, be
reduced to writing; and then the stipulations of the
parties will constitute the sole rule to ascertain their
intent, and to enforce their respective rights.^ The
general rules of law, applicable to ordinary commercial
partnerships, are not applied to them;' nor are the
ordinary remedies thereof enforced either at law, or in
equity, inier sese, or as to third persons.* Thus, for
1 Per Lord Eldon, in Crawshay v. Maule, 1 Swanst. K. 518, 523, 526,
527. — Mr. Collyer has a valuable chapter on the subject of partnerships'
in mines, which contains a summary of the general doctrines of Courtsof
equity touching them. See Collyer on Partn. B. 5, ch. 3, p. 783 to 792,
2d edit.
2 Smith V. Burnham, 3 Sumner, K. 485, 458 to 471 ; In re Wairen,,
Daveis, R. 323. [In England, the Vice-Chancellor, in an elaborate judg-
ment, reyiewing the authorities, has sustained an agreement for such a
partnership, without any writing within the Statute of Frauds. Dale v.
Hamilton, 5 Hare, K. 369. See also Smith ». Tarlton, 2 Barbour, Ch. R.
336.]
3 Patterson v. Brewster, 4 Edw. Ch. K. 352.
■* [In Olcott w. Wing, 4 McLean, 15, it was held that the same principles
governed partnerships for buying and selling land as ordinary partner-
11*'
126 PARTNERSfflP. [CH..V.
example, the ordinary doctrine of the liability of dor-
mant partners does not extend to partnerships formed
for speculations in the purchase and sale of lands.^
The present Commentaries are designed to treat prin-
cipally of partnerships in the ordinary business of
trade, navigation, commerce, manufactures, and arts,
and other cases, will be incidentally discussed by way
of illustration only, or to distinguish them from the
general rules belonging to common partnerships.
§ 84. And here it may be proper to say a few words,
as to the extent and duration of partnerships in point
of time, and also as to the different modes, in which
they may be formed. As to the first point, as partner-
ships are formed by the voluntary consent of the
parties, they may be for life, or for a specific period of
time, or conditional, or indefinite in their duration, or
for a single adventure or dealing ; and therefore de-
pendent upon the mutual will or pleasure of the
parties ; ^ The period may be fixed by express stipu-
lation, or it may be implied from circumstances.^ If
no particular period is fixed by the parties for the
duration of a partnership, it is deemed to exist during
their mutual pleasure only, and of course is dissoluble
by either of them, at any time when he chooses to
ships, and that a Court of Equity would decree a sale of the lands afler
dissolution, and a division of profit or loss, according to the terms of the
partnership.]
i^Pitts V. Waugh, 4 Mass. E. 424 ; Smith v. Bumham, 3 Sumn. R. 435,
470, 471. [But see Brooke v. Washington, 8 Gratt. 248, contra.]
2 Watson on Partn. ch. 7, p. 379, ^ edit.; CoUyer on Partn. B. 1, ch.
2, § 1, p. 68, 2d edit.; Gow on Partn. ch. 5, p. 219 to 226, 3d edit.;,
Pothier De Society, n. 64 ; 3 Kent, Comm. Lect. 43, p. 52 to 54 ; 2 Bell,
Comm. B. 7, ch. 2, p. 630 to 633, 5th edit
3 CoUyer on Partn. B. 1, ch. 2, § 1, p. 68, 2d edit. ; Crawshay v. Maule,
1 Swanst. K. 521, 525 ; Alcock v. Taylor, Tamlyn, E. 506.
CH. v.] DIFFERENT SOETS OP. 127
ft
witlidraw therefrom.^ When a partigular term is fixed,
it is presumed to endure until that period has elapsed ;
when no term is fixed, it is presumed to endure fi)r the
life of the parties, unless previously dissolved by some
act or notice of one of the parties, or by operation of
law. But in no case will the law presume, that the
partnership is intended to continue beyond the life of
the parties ; and therefore if such is the object, it must
be provided for by some express stipulation.^ The
causes, which will constitute a dissolution, or a cause of
dissolution, will nlaturally come under review in our
subsequent pages.
§ 85. The Roman law fully recognized the like prin-
ciples. Tamdiu societas dwat, quamdiu consensus partium
integer perseverat? So, in the Institutes it is said;
Manet autem societas eo- usque, donee in eodem consensu
perseveraverint. At, cum aliquis renunciaverit societati,
solvitur sodetas.^ And again in the Digest; Societas
co'iri potest vel in perpetuum, id est, dum vivunt, vel ad
tempus, vel ex tempore, vel sub conditioned Th,e Roman
law went farther than ours ; and positively prohibited
the duration of any partnership beyond the life of the
parties ; 'and therefore a provision, that the heir of one
should share in the partnership, was held wholly void.
ilbld. ; Featheretonhaugh v. Fenwick, 17 Ves. 229, 307, 308; Craw-
ahay v. Manle, 1 Swanst. B. 522, 523 ; Ex parte Nokes, cited in Watson
on Partn. ch. 7, p. 380, 2d edit.; Peacock v. Peacock, 16 Ves. R. 49 ; 2
Bell, Comm. B. 7, ch. 2, p. 630 to 634, 5th edit.
3 Crayrahay v. Maule, 1 Swanst. R. 521 ; S. C. 1 J. Wils. R. 181.
3 Cod. Lib. 4, tit. 37, 1. 5 ; 1 Domat, B. 1, tit. 8, § 5, art. 1, 2 ; 1 Domat,
B. 1, tit. 8, § 3, art. 8, 9.
4 Inst. Lib. 3, tit. 26, § 4.
5 Dig. Lib. 17, tit. 2, 1. 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 10 ; Pothier,
De Society, n. 64, 65 ; 1 Domat, B. 1, tit. 8, § 6, art. 1, 2 ; Id. § 13, art.
8, 9. *
128 PARTNERSHIP. [CH. V.
Nulla socidas in cdernum coitio est} Nemo potest societa-
tem hoeredi suo sic parere, ut ipse hceres socius sit? Idem
{Papinianus) respondit, societatem non posse ultra mortem
porrigi? The French law, and in general the law of
the other nations of continental Europe, adopt similar
principles.^
§ 86. In the next place, as to the different modes, in
which partnerships may be formed. At the common
law, no particular forms or solemnities are required to
constitute a partnership between the parties. It is
sufficient, that it is formed by the voluntary consent of
the parties, whether that be express or implied;
whether it be by written articles, or by unsolemn
writings ; or whether it be by tacit approbation, or by
parol contract, or even by mere acts.^ [And it is suffi-
cient evidence to prove a person to be in partnership,
that he and others had agreed to form a company, and
that business had been carried on, on the basis of such
agreement.] ® It is indeed usual to have some writings
pass between the parties, when a partnership is formed
for a specific term, or even during the pleasure of the
parties, if the business is expected to be of a perma-
nent nature, or of long duration. But this is' a matter
resting in the mere discretion and choice of the par-
1 Dig. Lib. 17, tit 2, 1. 70; Pothier, Pand. Lib. 17, tit. 2, n. 10; 1
Swanst. E. 509, note (a) ; Vinn. ad Inst. Lib. 3, tit. 26, § 4, n. 1, p. 698.
2 Dig. Lib. 17, tit. 2, 1. 35 ; Pothier, Pand. Lib. 17, tit. 2, n. 56 ; 1 Do-
mat, B. 1, tit. 1, § 2, art. 2 to 5.
3 Dig. Lib. 17, tit. 2, 1. 52, § 9 ; Pothier, Pand. Lib. 17, tit. 2, n. 56, 57.
4 Civ. Code of France, art. 1865 to 1871 ; Pothier, De Society, n. 64,
65 ; Id. n. 146 to 1^.
5 Collyer on Partn. B. 1, ch. 1, § i, p. 2, 3, 2d edit.; Watson on Partn.
ch. 1, p. 4, 5, 2d edit.; Gow on Partn. ch. 1, p. 4, 5, Sd edit. ; 2 Bell,
Comm. B. 7, ch. 2, p. 621 to 623, 5th edit.
6 Owen V. Van Uster, 1 Eng. Law & Eq. K. 396.
CH. v.] DIFFERENT SORTS OF. 129
ties, and is by no means made indispensable by the
law. And this also seems' to have been the rule of the
Roman law. Soddatem coire et re, d verbis, et per nun-
tium, posse nos, duhium non est? Voet has expressed
the same doctrine in broader language. Socidas dividi-
tur primo in expressam, quae ex expressa conventione fit, et
tacitam, quae re contrahi dicitur, dum rebus ipsis et factis,
simul emendo, vendendo, liccra d damna dividendo, socii
ineundce socidaiis voluntatem declarant?
§ 87. The old French law required, that all general
partnerships and partnerships in commandite should be
reduced to writing and registered, unless when the
concern was under one hundred livres in value.^ And
this continues in substance to be the rule under the
modern Code of France.* Similar regulations are to
be found in the laws of some other nations ; but the
Roman law seems more generally to have been fol-
lowed.®
1 Dig. Lib. 17, tit. 2, 1. 4 ; Pothier, Pand. Lib. 14, tit. 2, n. 6 ; 1 Domat,
B. 1, tit. 8, § 3, art. 6.
2 Voet, ad Pand. Lib. 17, tit. 2, § 2, Tom. 1, p. 748 ; Ante, § 50.
3 Pothier, De Societfe, n. 79, 80, 81.
* Code of Commerce of France, art. 39 to 44>
5 3 Kent, Comin. Leet. 43, p. 24, note (a), 4th edit. ; 2 Bell, Comm. B.
7, ch. 2, p.i21 to 623, 5th edit. ; Voet, ad Pand. Lib. 17, tit. 2, § 2, Tom.
1, p. 748 ; Tapia, Elem. de Jurisp. Mercant. Tom. 1, Lib. 2, cap. 2, § 1, .
p. 83, 84 ; Van Leeuwen's Comm. B. 4, ch. 28, § 1, 3.
130 PARTNERSHIP. [CH. VI.
CHAPTER VI.
RIGHTS AND INTERESTS OF PARTNERS IN PARTNERSHIP
PROPERTY.
§ 88. Having disposed of these preliminary matters,
we shall next proceed to the consideration of the rights
and interests, powers and authorities, duties and obli-
gations, liabilities and exemptions, of partners between
themselves, as well as in relation to third persons. In
treating of these points, so far as respects the partners
themselves, we shall keep mainly in view cases, where
a real partnership exists according to the intention of
the parties, and there is a community of interest in the
property, as' well as in the profits of the trade or busi-
ness, without any special stipulations, which may vary
the application of the general principles of law. Of
course, where any such stipulations exist, which are
lawful in their nature or character, they properly con-
stitute exceptions to those principles, and fro tanto
may create new and peculiar relations and obligations.-"-
§ 89. And first, in relation to the rights and inte-
rests of the partners inter sese, in the partnership capital,
stock, funds, and effects. Partners differ from mere
part-owners of goods and chattels in several respects.
The latter are either joint owners, or tenants in com-
mon, each having a distinct, or at least an independent,
although an undivided interest. in the property; and
neither can transfer or dispose of the whole property,
1 Ante, § 16 to 29.
CH. VI.] PARTNERSHIP PROPERTY. 131
or act for the others in relation thereto ; hut merely for
his own share, and to the extent of his own several
right and interest.^ In cases of joint-tenancy of goods
or chattels, indeed, the joint-tenants are said to be seised
or possessed fer my d per tout, by the half or moiety
and by all ; that is, they each of them have the entire
possession, as well of every parcel, as of the whole ; ^
or, as Bracton has expressed it ; Quilihet iotum tenet, et
nihil tenet.; scilicet, iotum in commum,et nihil separatimper
se? Hence it is said, that in joint-tenancy .there is a four-
fold unity, unity of interest, unity of title, unity of time, •
and unity of possession ; * and the right to the whole be-
longs to the survivor.^ But still each joint-tenant has an
independent, and, in a certain sense, a distinct right and
interest in the property during his lifetime, which can-
not be disposed of by the other joint-tenant, but which
he may severally himself dispose of, and thus sever
the joint-tenancy ; and he may now by statute, although
not at common law, have an action of account against
the other for his share of the profits derived froni the
common property.® On the other hand, tenants in
1 Com. Dig. Estate, K. 1 to K. 10 ; Litt. § 321 ; Co. Litt 200, a.
2 2 Black. Comm. 182 ; Id. 399 ; Litt. § 288 ; Co. Litt. 186, a; Bac. Abr.
Joint-tenancy and Tenancy in Common, (C).
3 Bracton, Lib. 5, tr. 5, c. 26, p. 430; Co. Litt. 186, a.
* 2 Black. Comm. 180, 399.
5 2 Black. Comm. 183, 184 ; Com. Dig. Estate, K. 3, BT. 4 ; Litt. § 281,
282; Co. Litt. 181, 182, a.
6 2 Black. Comm. 183; Com. Dig. Accompt, B. — There is no small
subtlety in the language of our Law Books on this subject. Thus, Black-
stone uses language to the effect, that the interest of two joint-tenants is
not only equal or similar, but it is one and the same ; that survivorship is
the natural and necessary consequence of the union and entirety of their'
•interests; that one has not a distinct moiety from the other; and that if
by any subsequent act, as by alienation or forfeiture of .either, the interest
becomes separate and dbtinct, the joint-tenancy instantly ceases. 2 Black.
132 PARTNERSHIP. [CH. VI.
common hold undivided portions of the property by
several titles, or in several rights, although by one
title ; but they have their possession in common and
undivided ; so that there may be an entire disunion of
interest, of title, and of time among them.^ Hence it
is said, that tenants in common properly take by dis-
tinct moieties, and have no entirety of interest; and
therefore there is no survivorship between them ; but
the share of the deceased tenant in common goes to
his personal or real representative.^
§ 90. From the resemblances thus existing between
cases of joint-tenancy and tenancy in common and part-
nerships, it has been sometimes said, that partners are
either tenants in common of the partnership eiFects, or
joint-tenants without the benefit of survivorship.^ But
Comm. 1 83, 1 84. And yet it is palpable, that one joint -tenant may transfer
or alien his own right severally, and thereby sever the joint-tenancy. And
therefore it has been well observed by Lord Coke, after quoting the lan-
guage of Bracton, (already cited,) that joint-tenants hold per my et per tout ;
" And albeit they are so seized, yet to divers purposes each of them hath
but a right to a moiety, as to enfeoflf, give or demise, or to forfeit" Co.
Litt. 186, a. And afterwards he adds ; " And where all the joint-tenants
join in a feoffment, every one of them in judgment of law doth but give
his part. If an alien and a subject purchase land jointly, the king upon
office found shall have a moiety ; and Littleton afterwards in this chapter
(§ 291) saith, that one joint-tenant hath one moiety in law, and the other
the other moiety." Co. Litt. 186, a. Now, what is this but admitting,
that joint-tenants have in reality distinct and independent interests, capable
of a distinct alieiiation ; and that each has but a moiety, concurrent and
undivided, with the other in the property, with a right of survivorship in
case no severance takes place ?
1 Com. Dig. Estate, K. 8 ; 2 Black. Comm. 192 ; Litt. § 292 ; Co. Litt.
188, b.
s Com. Dig. Estate, K. 8 ; 2 Black. Comm. 194, 399 ; Abbott on Shipp.
ch. 3, p. 68, Amer. edit. 1829.
3 Watson on Partn. ch. 2, p. G5, 2d edit. ; Gow on Partn. ch. 2; § 1, p.
32, 3d edit. ; West v. Skip, 1 Ves. R. 242 ; 3 Kent, Comm. Leot. 43, p. 36,
37.
CH. VI.] PARTNERSHIP PROPERTY. 133
this language is by no means accurate ; and perhaps
no case could better exemplify the truth of the maxim,
Nullum simile est idem. Partnership differs .from joint-
tenancy in two important particulars. In the first
place, joint-tenants, cannot dispose of the interest of
each other in the joint property, although they hold
per my et per tout; but each has the sole power of dis-
posing of his own interest therein;^ whereas, in cases
of partnership, each partner is not only a joint owner
with the others of tUb partnership property, but he
also has full power to dispose of the entire right of all
the partners therein for the purposes of the partner-
ship, and in the name of the firm. In the next place,
there is no survivorship in cases of partnership, as there
is in joint-tenancy. This has been the doctrine of the
common law for more than three centuries, and indeed
is probably coeval with the business of joint trade and
commerce in England. Thus, Lord Coke, in speaking
of joint-tenancy in chattels and debts, contracts and du-
ties, where the right of survivorship ordinarily exists,
adds ; " An exception is to be made of two joint mer-
chants ; for the wares, merchandises, debts, or duties,
that they have as joint merchants, or partners, shall
not survive, but shall go to the executors of him, that
deceaseth; and this is per hgem mercatoriam, which (as
hath been said) is a part of the laws of this realm
for the advancement and continuance of commerce and
trade, which is pro bono publico ; for the rule is, that
Jus accrescendi Oder mercatores pro leneficio commercii
^Co. Litt. 186, a; Litt, § 291; Ante, § 89, note b; West w. Skip,
1 Ves. R. 240, 242.
PAETN. 12
134
PARTNERSHIP. [CH. VI.
bcum non habet." ^ It migM be added, that otherwise
partnerships would never have been formed for pur-
poses of trade, since the death of either partner might
bring want or ruin upon his family, and the whole busi-
ness would be full of perils and hazards, which might
occasion losses far beyond any hope of reasonable gains
and profits. Within the benefit of the rule, all persons
engaged in any trade, foreign or domestic, were origin-
ally deemed merchants;^ and now it is applied to all
employments and business belJWeen two or more per-
sons on joint account . and benefit, whether they fall
under the denomination of merchants, or not.^ So
strong is this doctrine, that even where persons are
clearly joint-tenants of any property, and it is after-
wards by them deliberately embarked in trad« and
business on joint account, as partners, such property
wiU cease to be held by them in joint-tenancy, and will,
in case of the decease of either, be no longer subject to
the jus accrescendt ;^ for the joint-tenancy is thereby
severed, and a partnership established in the property
in lieu thereof.* Partnership differs quite as much
from a tenancy in common ; for in a tenancy in com-
mon each party has a separate and distinct, although
an undivided interest, and possesses (as it is technically
1 Co. Litt. 182, a ; Com. Dig. Merchant, D. ; 2 Brownlow, R. 99 ; Coll-
yer on Partn. B. 2, ch. 1, § 1, p. 80, 81, 2d edit. ; Jackson o. Jackson, 7
Ves. R. 535 ; 9 Ves. 591.
2 2 Brownlow, K. 99 ; Com. Dig. Merchant, A.
3 Jackson «. Jackson, 9 Ves, 596, 597; Jeffreys v. Small, 1 Vern. K.
217; Collyer on Partn. B. 2, ch. 1, § 1, p. 76, 77, 80, 81, 82, 2d edit.; 2
Black. Comm. 404.
* Ja,ckson v. Jackson, 7 Ves. 535 ; 9 Ves, 591 ; Hall v. Digby, 4 Bro.
Pari. B. 224; S. C. 4 Bro. Pari. Cas. by Tomlins, 577 ; Collyer on Partn.
B. 2, ck 1, § 1, p, 80, 81, 2d edit,
5 Ibid.
CH. VI.] PABTNERSHIP PROPERTY. 135
expressed) the whole of an undivided moiety of the
property, and not an undivided moiety of the whole
property;'^ whereas in partnership the partners are
joint owners of the whole property. A tenant in com-
mon can dispose only of his own share in the property ;
whereas, (as we have seen,) each partner may, in the
partnership name, dispose of the entirety of the pro-
perty for partnership purposes.
§ 91. The true nature, character, and extent of the
rights and interests of partners in the partnership cap-
ital, stock, funds, and effects, is, therefore, to be ascer-
tained by the doctrine^f law applicable to that rela-
tion, and not by the mOTe analogies furnished by joint-
tenancy, or by tenancy in common. It may, therefore,
be said, that in cases %f real partnerships, unless other-
wise provided for by their contract, partners are joint
owners and possessors of all the capital, stock, funds,
and effects belonging to the partnership, as well those
which are acquired during the partnership, as those
which belong to it at the time of its first formation and
establishment.^ So, that, whether its stock, funds, or
effects be the product of their labors or manufactures,
or be received or acquired by sale, barter, or otherwise,
in the course of their trade or business, there is an en-
tire community of right and interest therein between
them ; each has a concurrent title in the whole, or, as
Bracton says. Tenet Mum in communi, et nihil separatim
per se?
' 2 Black. Comm. 182, 191, 192, 193.
* 3 Kent, Comm. Lect 43, p. 36, 37, 3d edit. ; Collyer on Partn. B. 2,
ch. 1,§ 2, p. 76, 77, 2d edit.; Watson on Partn. cL. 2, p. 66, 2d edit.
3 Ante, \ 89 ; Bracton, De Legibus, ch. 26, p. 430 ; Collyer on Partn.
B. 2, ch. 1, § 2, p. 78, 2d edit.
136 PARTNERSHIP. [CH. VI.
§ 92. Nor is there in reality, as between the partners
themselves, any difference, whether the partnership
property, held for the purposes of the trade or busi-
ness, consists of personal or movable property, or of
real or immovable property, or of both, so far as their
ultimate rights and interests therein are concerned.-^
It is true, that at law, real or immovable property is
dgemed to belong to the persons, in whose name the
title by conveyance stands. If it is in the name of a
stranger, or of one partner only, he is deemed the sole
owner at law ; ^ if it is in the names of aU the partners,
or of several strangers, they are deemed joint-tenants,
or tenants in common,® accoraing to the true in-
1 Watson^ on Partn. ch. 2, p. 72 to p. 7^; Gow on Partn. ch. 2, ^ 1, p.
82 to p. 36, 3d edit.; Sage v. Sherman, 2 Comstook, R. 417. — There are
some differences, however, 'arising from the very nature and character of
the particular property. Each partner, as we shall presently see, (and
indeed, as has been already intimated,) may sell or dispose of the entirety
of any personal property of the partnership in the name of the firm. But
if real estate has been conveyed to both partners for the partnership
account, they ordinarily become tenants in common thereof at law, and
each can convey by deed only his own- share or moiety, and not that of
the other. So, that while one partner may in the name of the firm sell
the whole of any goods or articles belonging to the partnership, both must
join in order to convey the entirety of the real estate thereof. Coles v.
Coles, 15 Johns. R. 159, 161 ; Watson on Partn. ch. 2, p. 72, 73, 2d edit. ;
2 Bell, Comm. B. 7, ch. 1, p. 618, 614, 615, 5th edit.; CoUyer on Partn.
B. 2, ch. 1, § 1, p. 82 to p. 101, 2d edit.
2 Cox V. M'Burney, 2 Sandf. 561. — [In Equity he might be considered
as holding in trust for the partnership, if the property is paid for from
partnership funds. M'Guire v. Bamsay, 4 Eng. R. (Ark.) 518 ; Peck v.
Fisher, 7 Cush. 886.]
3 See Lancaster Bank v. Myley, 1 Harris, 544. [In Massachusetts it is
settled that real estate conveyed to and held by partners as tenants in
common, although purchased with partnership funds, and for partnership
use, is to be considered at law as the several property of the individual
partners, and liable to be levied on for their separate debts ; but if so
taken, it will be considered in equity as held by the creditor in trust, to be
applied, so far as may be necessary, to the payment of partnership debts.
CH. VI.] PARTNEESHIP PROPERTY. l37
terpretation of the terms of the conveyance.^ But,
however the title may stand at law, or in whose-
soever name or names it may be, the real estate
belonging to the partnership will in equity be treat-
ed, as belonging to the partnership, like its per-
sonal funds, and disposable and distributable accord-
ingly ; and the parties, in whose names it stands, as
owners of the legal title, wUl be held to be trustees of
the partnership, and accountable accordingly to the
partners, according to their several shares and rights
and interests in the partnership, as cesiuts- que trust, or
beneficiaries of the same.^ Hence in equity, in case *
of the death of one partner, there is no survivorship in
the real estate of the partnership; but his share will
go to his proper representatives.^
§ 93. Indeed, so far as the partners and their cre-
ditors are concerned, real estate, belonging to the part-
nership, is in equity treated as mere personalty, and
governed by the general doctrines of the latter.* And
Pecks. Fisher, 7 Cush. 386 ; see Bumside v. Merrick, 4 Met. 537 ; Dyer
V, Clark, 5 Met. 562 ; Howard v. Priest, 5 Met. 582.]
' Anderson v. Tompkins, 1 Brock. Cir. R. 456, 465. See Blake v.
Nutter, 1 Appleton, E. 16. [And parol evidence is inadmissible to show
that real estate conveyed to two as tenants in common was purchased and
paid for by them as partners, and was partnership property. Kidgway'g
Appeal, 3 Harris, 177.]
2 1 Story on Eq. Jurisp. ^ 674 j CoUyer on Partn. B. 2, ch. 1, § 1, p. 82,
83, 2d edit.; Hoxie v. Carr, 1 Sumner, R. 173; Gaines v. Catron, 1
Humph. R. 514 ; Smith v. Dan vers, 5 Sandf. 669 ; Boyce v. Costar, 4
Strobh. Eq. 25.
3 Lake v. Craddock, 3 P. Will. 158; S. C. 1 Eq. Cas. Abridg. 291;
Morris v. Barrett, 3 Younge & Jer. 384; Jackson v. Jackson, 9 Ves. 591 ;
CoUyer on Partn. B. 2^ch. 1, § 1, p. 82 top. 102, 2d edit.; Watson on
Partn. eh. 2, p. 72 to p. 77, 2d edit.; 1 Story Eq. Jurisp. § 674 ; 3 Kent,
Comm. Lect. 43, p. 37, 38, 4th edit.
4 Thornton v. Dixon, 3 Bro. Ch. R. 199, and Mr. Belt's note (1) ; Bal-
main v. Shore, 9 Ves. 501, 507, 508, 509 ; Ripley v. Waterworth, 7 Ves.
12*
138 PARTNERSHIP. [CH. VI.
SO it will be deemed in equity, to all other intents and
purposes, if the partners themselves have, by their
agreement or otherwise, purposely impressed upon it
the character of personalty. But a question has been
made, whether, in the absence of any such agreement,
"or other act, affecting its general character, real estate,
held as a part of the partnership funds, or stock, ought
to devolve upon, or descend, as real estate, to the heir
or devisee, or ought to belong as personalty to the ex-
ecutor or administrator, upon the death of the partner.
Upon this point there has been a diversity of judicial
• opinion, as well as of judicial decision ; some judges
holding, that in such a case it retained its original
character of real estate, and passed to the heirs or de-
visees accordingly ; and others holding, that it was to be
treated throughout, as partnership property, and there-
fore as personalty, and belonged to the executor or ad-
ministrator. The doctrine under these circumstances
must be considered, as open to many distressing
doubls.^
425 ; Rice v. Barnard, 20 Verm. 479; Cookson u. Cookson, 8 Sim. E.
529 ; Fereday v. V\^iglitwick, 1 Euss. & Mylne, R. 45 ; Houghton v.
Houghton, 11 Simons, E. 49 ; Buehan v. Sumner, 2 Barbour, Ch. E. 200 ;
1 Story, Eq. Jurisp. § 674.
' Lord Thurlow held the former opinion in Thornton v. Dixon, 3 Bro.
Ch. R. 199, and Belt's note (1) ; and Sir Wm. Grant, in Bell v. Phyn, 7
Ves. 453, and Balmain v. Shore, 9 Ves. 501, adopted the same opinion.
On the other hand. Lord Eldon, in Selkrigg v. Davies, 2 Dow, Pari. R.
231, 242, held the Opposite opinion, that all property, involved in a part-
nership concern, ought to be considered as personal; and again affirmed
it in Townshend v. Devaynes, reported in 1 Montagu on Partn. 97 ; 3 Bro.
Ch. R. 199, Belt's note (1). Sir John Leach, in Pereday v. Wightwick,
1 Euss. k Mylne, R. 45, and Phillips v. Phillips, 1 Mylne & Keen, 649,
and Broom v. Broom, 3 Mylne & Keen, 443, was of the same opinion as
Lord Eldon. Mr. Baron Alderson, in Morris e. Kearsley, 2 Younge &
Coll. 139, acted on the same opinion. More recently, the present Vice-
Chancellor (Sir L. Shad well) has upheld the doctrine of Sir "Wm. Grant.
CH. VI.] PARTNERSHIP PROPERTY. 139
§ 94. In virtue of this community of rights and in-
terests in the partnership stock, funds, and effects, each
Cookson V. Cookson, 8 Sim. R. 529. Mr. Collyer, in his valuable Treatise
on Partnership, has discussed at large the whole learning applicable to this
point. See Collyer on Partn. B. 2, ch. 1, ^ 1, p. 82 to p. 102. Mr. Bell
has summed up the Scottish law on these points as follows : " The pro-
perty of the company is common ; held pro indiviso by all the partners, as
a stock, and in trust ; responsible for the debts of the concern ; and sub-
ject, after the debts are paid, to division among the partners according to
their agreement. This is a great point in the doctrine c/f partnership, and
important consequences are deducible from it. The common stock in-
cludes all lands, houses, ships, leases, commodities,* money ; whatever is
contributed by the partners to the company use. It comprehends also
whatever is created by the joint exertions of the company, or acquired in
the course of the employment of their capital, skill, apd industry. All
this, by the operation of law, and the nature and effect of the contract,
becomes common property ; is held by all the partners jointly for the uses
of the partnership ; and is directly answerable as a stock for the payment
of its debts. (1.) Vesting of the Stock. — The stock or common
fund is held by the partners pro indiviso.. And, — (1.) This pro indiviso
right implies, as between the parties themselves, a right of retention in
each partner over the stock, for any advances, which he may have made
to the company, or for any debt due by the company, for which he may
be made responsible. (2.) It also implies, in relation to the public at
large, creditors of the company, a trust in the several partners, as joint
trustees for payment, in the first place, of the company debts. And on
this point rests (1.) the preference, which the creditors of the company
have over the company funds ; none of the partners, nor any one in their
right, as individual creditors or otherwise, being entitled to more than the
reversion after the purposes of the trust are fulfilled. And (2.) the pecu-
liarity, that hereditable subjects belonging to and held by.a company, are
considered not as hereditable in succession, but as movable ; consisting of
the jus crediti only. (3.) In this respect, the contract of partnership has
the effect of a direct conveyance of property to the company, of whatever
is engaged to be given, or by clear evidence is contributed to the use of
the company by any of the partners, to whom it belongs. The contract
does not indeed supersede tTie necessity of the completion of the transfer-
ence by tradition or otherwise ; but it operates as a conveyance, (titulus
iransferendi dominii,') which, when followed by tradition, possession, inti-
mation, and the other methods of completing a transference by law, vests
the property in the partners, jointly for the purposes already expressed.
• Society,' says Lord Stair, ' is not so much a permutative as a commutative
contract, whereby the contractors communicate to each other some stock,
140 PAKTNEBSfflP. [CH. VI.
partner possesses full power and authority to seU,
pledge, or otherwise to dispose of the entirety of any-
work, or profit. The effect of society is, that thereby something, -which
before was proper, becometh, or is continued to be, common to the copart-
ners.' He adds, ' Yet this communication is not effectual to transfer the
property in part, or to communicate it without delivery or possession, by
which property by positive law is transferred.' This distinction is of some
consequence. Where the question is between the parties and their repre-
sentatives, as to what shall be considered as the estate of the company, but
without involving any competition with third parties, whatever falls under
the fair construction of the contract will, as a personal right, belong to the
company and its creditors. But where there arises a competition depend-
ing on the question of real right, it will be determined according to that
criterion of real right, which the law has appointed in eases of transfer-
ence. • But in determining, what shall amount to an engagement to con-
tribute, and consequent conveyance of a particular subject, it is not always
the use of the subject, that will settle the point. In one case, certain sub-
jects, of which the use was given to the company, were held to be fairly
intended as part of the stock, from the way in which they were mentioned
in the inventories. In another nearly similar case, the same inference was
avoided, the partnership not being of a permanent character, but a mo-
mentary joint adventure merely. In respect to movables, all commodities
comprehended within the partnership, and in possession of the partner, to
whom they previously belonged, are held, as by tradilio brevis manus, to
be vested in the company ; for the partners having power to hold for the
company as prcspositi, their possession will be presumed to be for the
common behoof. But money due by a third party to an individual part-
ner, or commodities in the handg of third parties, contributed by the owner
as part of his stock, will not be transferred without delivery or intimation.
The creditors of the owner, using attachment by diligence before intima-
tion of the partnership, would attain a preference over the company.
Ships must be transferred according to the directions of the statute. (4.)
As to land and other property, which, by the forms of territorial convey-
ance, require to be transferred by deed, the partnership will acquire by
the contract nothing more than the jus ad ren^. If, for example, a cotton-
mill is, by the agreement, contributed as his share of stock on the part of
the owner, this will not feudally transfer to the company the property of
the mill, so as to entitle them to exclude the adjudication of the separate
creditors of the proprietor trusting to the record. But it will, like a gene-
ral disposition, confer on the company a jtis ad rem, by virtue of which
they may, in a declarator and adjudication in implement, have that pro-
perty declared and adjudged to the partners jointly, or to a trustee, as part
CH. VI.]
PAETNEKSHIP PKOPERTT. 141
particular goods, wares, merchandise, or other personal
effects belonging to the partnership, and not merely of
of the stock of the concern. (5.) Such personal property as may have
been acquired in the name of the society, becomes eo ipso the property of
the partnership, although purchased by an individual partner -with his own
money. He is prcepositus of the company, and entitled to advance money
and acquire property directly for the common behoof. (6.) Such personal
property as a partner acquires, even in his own name, provided it be
beneficial acquisition and in the company's line of trade, is according to
the spirit of the contract of partnership, to be held as acquired for the
company ; and the company will be entitled to claim it. But it would
rather seem, that in such a case the property would pass to the partner in
real right, with a jus ad rem to the company and its creditors. (7.) A
partner, who binds himself to pay a sum or fungible into the stock, is
debtor to the company ; and the loss of the money or fungible, before
being put into stock, is his private loss. If he has engaged to put in a
specific subject into stock, and it perish, the loss is to the company, unless
the partners shall be in mora.'' 2 Bell, Comm. B. 7, ch. 1. p. 613 to p.
615, 5th edit. Mr. Chancellor Kent, in his learned Commentaries, (Vol.
3, p. 37 to p. 40, 4th edit.,) has discussed the subject at large ; and after
referring to the American authorities, which are as much in conflict with
each other as the English, he expresses his own opinion to be, that the
weight of authority is, that equity will consider the person, in whom the
real estate is vested, as trustee for the whole concern, and the property
will be entitled to be distributed as perspnal estate. 3, Kent, Comm. Lect.
43, p. 37, 38, 39, 4th edit.; and the authorities cited in the notes, ibid.
See Gow"on Partn. ch. 2, p. 32 to p. 35, 3d edit. ; Watson on Partn. ch. 2,
p. 81 to p. 89, 2d edit.; Gow on Partn. Supplement, 1841, to 3d edit. ch. 2,
§ 1,'p. 8 to p. 13. [See also Buchan v. Sumner, 2 Barbour, Ch. E. 165,
where all the cases are ably reviewed. In the course of his judgment
Chancellor Walworth remarks as follows ; " The American decisions in
relation to real estate purchased with partnership funds, or for the use of
the firm, are various and conflicting. But I think they may generally be
considered as establishing these two principles : First, that such real estate
is, in equity, chargeable with the debts of the copartnership, and with any
balance which may be due from one copartner to another upon the winkl-
ing up of the affairs of the firm. Secondly, that, as between the personal
representatives and the heirs at law of a, deceased partner, his share of
the surplus of the real estate of the copartnership, which remains after
paying the debts of the copartnership, and adjusting all the equitable
. claims of the difiierent members of the firiii as between themselves, is con-
sidered and treated as real estate." See also Buckley v. Buckley, 11 Bai>
142 PAETNEESHIP. [CH.
"VI.
his own share thereof, for purposes within the scope of
the partnership.^ In respect to his own share thereof,
hour, 43 ; Patterson v. Brewster, 4 Edw. Ch. 352. In the former case,
Hand, J. observed, " The authorities in England upon this point are
very conflicting. An elaborate examination of them will be found in the
recent edition of Collyer on Partnership by Mr. Perkins. That writer
and Mr. Bissett, in his late work on the same subject, found it difficult to
ieooncile the decisions. Mr. Gary hardly pretends to give an opinion;
though he says ' opinions, however, preponderate in favor of its being
treated as personal estate.' (Gary on Partnership, 27.) In Lake v.
Craddock, (3 P. Wms. 158,) before Ld. Gh. King, in 1732, five persons
purchased land for £5000, and went on for several years trying to drain
it, then Graddock abandoned the concern. The other four continued the
work and also purchased other lands. After Graddock died one of the
four filed a bill for account and division. The master of the rolls decided
that the parties were tenants in common, and against survivorship. He
also decided that the defendant, who was son and heir, and executor of
Graddock deceased, should pay enough with interest, to make his father's
share equal to the others in all the lands, and have an equal share, or in
default of ?uch payment, have nothing. The defendant appealed, and
the decree was affirmed. In Thornton v. Dixon, (3 Bro. C. C. 199,)
three persons owned land in fee and entered into copartnership as paper
makers, and built upon the land. Three years after, they look four
others into the firm for twenty-one years, andby the deed of copartnership,
the three first were to stand seized of the land in trust for the uses of the
copartnership, in proportion to their several interests, and in case of a
desire by one to sell, the others were first to have notice, so that they
might buy. The time limited for the partnership expired, and Ihey still
continued business until one died. During the second copartnership they
had purchased other lands for the better carrying on of their business.
All the lands were used for the purposes of their trade. Thurlow, Ld.
1 Watson on Partn. ch. 2, p. 91 to 93, 2d edit. ; Gow on Partn. ch. 2,
§ 2, p. 51 to 54, 3d edit. ; Gollyer on Partn. B. 3, ch. 1, § 1, p. 263 to 268,
2d edit.; Id. B. 2, ch. 1, § 2, p. 113 ; Fox v. Hanbury, Cowp, R. 445 ; 3
Kent,*Gomm.- Lect. 43, p. 44, 4th edit. — Of course we are to except
from this doctrine all cases, where, althgugh the property originally be-
longed to the partnership, it has become the property of an individual
partner by the consent of the firm ; for in such cases, the property is to
all intents and purposes to be treated as the private property of that part-
ner, and is disposable by him alone accordingly in the same manner, as if
it never had belonged to the partnership. Collyer on Partn. B. 2, oh. 1,
§"2, p. 113, 114, 2d edit.
CH. VI.]
PARTNERSHIP PKOPEBTY. 143
he may be properly deemed to do all acts of this sort,
as owner ; in respect to the shares of his copartners, he
Ch. considered the land as realty ; but said if there had been an agree-
ment to value and sell, it ■would have been considered as personalty of the
partnership. Bell v. Phyn,-(7 Ves. 453,) -was decided in 1802, by Sir
Wm. Grant. Three persons, merchants and partners, with another, pur-
chased a plantation in New Grenada, and before the death of one of them,
had nearly paid for it out of partnership funds. All the accounts in
relation to it were, kept in the partnership books. One of the residuary
legatees of a deceased partner, filed a bill, and it was held that the planta-
tion was real estate. The master of the rolls said there was no occasion
to call for it for any of the purposes of the partnership. Kipley v. Water-
worth, decided the same year by Ld. Eldon, (7 Ves. 425,) and Smith v.
Smith, by Ld. Loughborough, (5 Ves. 189,) turned upon contract; the
deeds evincing an intention of the parties to have the property converted
into personal estate. Balmain v. Shore, decided in 1804 by Sir Wm.
Grant, (9 Ves. 600,) also turned upon the articles of copartnership, and
the recitals in the conveyances. If was held, that the firm had a right to
the use of the property during its existence, and that, subject to this use
the property was real estate. The property was purchased after the
formation of the copartnership, and was a china and pot manufactory, the
firm carrying on the business of potters. This case is hardly in conso-
nance in all respects with Eipley v. Waterworth. In Eandall v. Kandall,
(7 Sim. 271,) decided in 1835, the Vice Chancellor, Sir Lancelot Shad-
well, reviewed many of the authorities. Two brothers, one a land sur-
veyor, and the other a grocer, became copartners in the business of farm-
ing. Soon after, they became partners, also, in the business of making
malt; and again soon after that, in the manufacture of biscuit. The
malting business continued about thirteen, and the biscuit making about
twenty years. The farming business continued in all nearly thirty-five
years, until the death of one of the brothers. When they began, they
were tenants in common with others of property partly freehold and partly
leasehold, consisting of a house, barn, lands, &c., their father's estate.
There the farming and malting business were carried on, and the baking
business there and on the separate land of one of them. They began in
1792, and in 1802, bought out one of their co-tenants with partnership
funds. In 1803, they purchased and paid for another parcel in the same
way, and in 1805, another ; all of which were used for their farming and
agricultural purposes. In 1808, certain allotments of lands were made to
them, which they improved with partnership funds, and they were used
as the other property. In 1820, they purchased some other lots with part-
nership funds, which they let to tenants. It was held that these parcels
144 . PARTNERSHIP. [CH. VI.
may be properly deemed to do such acts, as their agent,
and as the accredited representative of the firm. The
were not personal estate. Cookson v. Cookson, was decided by the same
judge in 1837, (8 Sim. 529.) In that case Cookson the father, who was a
bottle manufacturer, was seized of certain estates in fee. He formed a
partnership with Cookson the younger for twenty-four years, and conveyed
to him in fee nearly one fifth of this real estate. After the partnership
had continued about fifteen years, the father conveyed another portion to
the son, which made him owner in fee of nearly an equal undivided one
third of the whole. The consideration of these conveyances, as expressed,
was love and afiection. The conveyances also included an equal share of
the trade, stock, capital and business of the firm. It was agreed that the
hereditaments should be used as a manufactory for carrying on the trade,
and should be considered as part of the joint stock of the business. And
it was to be had, taken and enjoyed as part of the joint stock in the part-
nership business. And they did, for themselves and their respective
heirs, &c. covenant with each other and their several heirs and executors,
&c. " that the freehold hereditaments should at all times thereafter be held
and occupied as partnership property, and be considered and treated as
part of the joint stock of the partnership trade, according to the several
shares and interests of the parties therein.'' And if either partner should
wish to sell, or if he should die without having bequeathed or assigned to
a son or sons, then twenty days' notice should be given to the survivor, of
such devise or death, who might purchase the interest of the other at such
valuation as they had put to the shares at their last annual account, &c.
If not purchased, it might be sold to others who should be admitted part-
ners. After the partnership had existed twenty-four years, they continued
on about four years longer, as before, without new articles and until the
death of the father. During the whole twenty-eight years, they held and
used this freehold property for fJie purposes of their trade alone ; and its
estimated value was entered in the books and accounts of the firm as part
of the joint stock or capital, and was considered and treated, in all
respects, as part of it. Over $8000 were expended out of the funds of
the partnership, in erecting new buildings, and making other improve-
ments upon the premises. The bill was filed to have the interest of the
elder Cookson in the freehold, declared stock in trade of the partnership,
and that the eldest son had no interest as heir, and that the surviving
partner had no right of preemption, and that the estate be sold, &c. In
the course of the argument, the Vice Chancellor asked if there was any
case where real estate had been declared personal, where the land was not
purchased with p^tnership funds, nor was required to be sold for partner-
ship purposes ? In delivering his opinion, he considered the clause in
CH. VI.] PAETNERSHIP PEOPERTT. 145
law, however, treats each partner, without any nicety
of discrimination of this sort, as possessing a domin-
relation to preemption, as not continuing after the first twenty-four years.
He laid stress on the fact that it -was not suggested, that when the part-
nership terminated, there was ' any necessity for a sale of a particle of the
assets for the purpose of paying the partnership debts.' Nor was the
property purchased with partnership funds. He approved of the reason-
ing of Sir Wm. Grant in Bell v. Phyn, (supra,) and decided there was no
conversion. If these cases declare the law, there has been no conversion
in this case. But there are contrary decisions. Ripley v. Waterworth,
we have noticed. It was decided in 1802 by Lord Eldon; and turned
upon the construction of the deed of partnership, which, it was held, was
a conversion of the real estate out and out. Leigh & Dalzell put the
case as one of contract of sale. (Leigh & Dal. on Eq. Conv. 21.) This
case is said by Mr. CoUyer, to have paved the way for the modern
doctrine and the leading case of Lord Eldon favorable to equitable con-
version in cases 6f partnership. (Coll. on Partn. 72, Perk. ed. § 142.)
But he says it was placed upon express agreement, and I think Lord
Eldon expressly put it upon that ground. There was a right of pre-
emption, and one of the partners elected to purchase, and did so. So tijje
agreement to purchase was executed. The property was both freehold
and leasehold ; and was conveyed to trustees to the use of such persons
as the partners should respectively appoint, and, in default of appoint-
ment, to the use of the partner and to sell and pay partnership debts, and
divide or convey, &c. The same chancellor is said to have gone further
in Townsend v. Devaynes, (1 Mont, on Part. App. 96.) As reported in
that work, he decided that real estate consisting in part of paper mills,
purchased by paper makers, who were partners, and paid for out of part-
nership capital, an,d held for the uses of the partnership, was, on the
death of one of the firm, and as between heir and execiitor, to be consi-
dered personal estate. But Mr. Jacob seems to think" there was an
agreement between the partners for a conversion of the property. (See 1
Koper on Hus. and Wife, 346, n. Jac. ed. and the opinion of the V. Chan,
in Bandall v. Handall, supra.) Mr. Eickersteth, in his argument in the
case of Philips v. Philips, says, nothing existed of this case except a
brief statement extracted from the pleadings ; that there was no judgment
in the case, and it was doubtful whether there was not an agreement, and
that Lord Eldon six years after, in^Crawshay v. Maule, (1 Swanst. 521,)
treated the point as unsettled. This last remark it seems, is warranted by
the report of Crawshay v. Maule. Fereday v. Wightwicfc came on before
Sir J. Leach, M. E. in 1829. (1 Euss. & My. 45 ; S. C. J Taunt. 250.)
Six persons took a lease for years of certain mines, for the purpose of
PARTN. 13
146 PARTNERSHIP. [CU. VI.
ion over the. entirety of the property, and not merely
over his own share, and, therefore, as clothed vrith all
working them in partnership. One, who had been manager, assigned his
shares by way of security for money advanced, and then became bank-
rupt, greatly indebted to the concern. The bill was filed by the other
persons interested therein ; prayer for sale of partnership property, and
to have accounts taken and copartnership dissolved and that the shares of
the bankrupt te applied in payment of the' debt to the partnership he had
incurred in managing^ its affairs. The court so held. The master of the
rolls is reported by Tamlyn to have said : ' It is a principle that all
property, whether real or personal, is subject to a sale, on a dissolution of
the partnership. This is property acquired by the partnership for the
purposes of the concern, and it is subject to all the debts of the partnership
property, and to the debts of one partner to the other partners in respect
of the partnership.' By Russell & Mylne, that ' the general principle is,
that all property acquired for the purposes of trading concerns, whether
it be of a personal or real nature, is to be considered ad partnership pro-
perty, and is to be ^rst applied accordingly in satisfaction of the demands
of the partnership.' The same judge in Philips v. Philips, (1 My. & K.
649, 1832,) went a step farther and said, with respect to the question,
' whether the freehold and copyhold property purchased with partnership
capital, and conveyed to the two partners and their heirs for the purposes
of partnership trade, is to be considered as personal estate only for the
payment of the partnership debts, or is generally to be considered, to the
extent of a moiety, as personal estate of the deceased partner, I confess I
have for some years, notwithstanding older authorities, considered it to be
settled that all property, whatever might be its nature, purehaspd with
partnership capital for the purposes of partnership trade, continued to be
partnership capital, and to have, to every intent, the quality of personal
estate ; and in the case of Pereday v. V^ightwick, I had no intention to
confine the principle to the payment of partnership demands. Lord
Eldon has certainly, upon several occasions, expressed such an opinion ;
the case of Townsend v. Devayues, is a clear decision to that effect ; and
general convenience requires that this principle should be adhered to.'
The case was this : John Philips devised his freehold and copyhold estates
to his executors for sale and to turn into money, and provided for the dis-
tribution of the proceeds. The testator was a brewer, and carried on that
lausiness in partnership with his relation, John Philips, but there were no
articles of copartnership between them. In the course of their business,
and after the date of the will, they purchased freehold and copyhold
public houses for the purposes of their trade, with partnership moneys.
Their uncle had also devised to them other copyhold estates, which they
CH. VI.] PARTNERSHIP PROPERTY. 147
the ordinary attributes of ownership.^ This doctrine,
indeed, seems indispensable to the security and con-
also used in their business. He also devised to them mortgages of other
public houses, and the nephews out of the partnership funds purchased
the equity of redemption. The history of the case seems not complete in
Mylne & Keene, but additional facts have been given by Mr. Bisset in
his work on partnership. (Bisset" on Partn. 50. And see jerkins' Coll.
on Partn. § 145, and n.) As reported by Mylne & Keene, one question
was ; whether the interest of the testator in the public houses purchased^
after the' date of the will; by the copartners, was to be considered a part
of bis general personal estate, or only personal estate so far as required to
discharge the debts and engagements of the trade. The bill was filed by
the co-heiresses at law against the executrix and surviving residuary lega-
tees, and the decision was against the plaintiffs. It appears from the cor-
rections of this case by Mr. Bisset, that the public houses devised by the
uncle, and the land upon which were the mortgages devised to them by
the uncle, and of which they afterwards purchased the equity of redemp-
tion with paertnership funds, were declared not to be part of the capital
and effects of the partnership. (Bisset on Part. 50, n. Perk. Coll. on
Part. 145, n.) . The court, then distinguished between the lands purchased
with partnership funds, and those not purchased with partnership funds,
or only in part. For the equity of redemption was paid for out of the
partnership funds, and all was used for partnership purposes. Broom v.
Broom, (3 Myl. & Keen, 443,) was decided by the same judge, ten years
after Philips v. Philips. On the strength of the latter case, as between the
heir and administratrix, it was held that real estate, purchased by partners
1 3 Kent, Comm. Lect. 43, p; 41, 4th edit. — Mr. Chancellor Kent here
says ; " With respect to the power of each partner over the partnership
property, it is settled that each one, in ordinary cases, and in T;he absence
of fraud bn the part of the purchaser, has the complete jus disponendi of
the whole partnership interests, and is considered to be the authorized
agent of the firm. He can sell the effects, or compound or discharge the
partnership debts. This power results from the nature of the business,
and is indispensable to the safety of the public, and the successful opera-
tions of {he partnership. A like power in each partner exists in respect
to purchases on joint account; and it is no matter with what fraudulent
views the goods were purchased, or to what purposes they are applied by
the purchasing partner, if the seller be clear of the imputation of col-
lusion. A sale to one partner, in a case within the scope and course
of the partnership business, is, in judgment of law, a sale to the part-
nership."
148 PARTNERSHIP. [CH. VI.
venience of the public, as well as to the facility of_
transacting commercial business. But in respect to real
witb partnership funds, for partnership uses, was, in equity, personalty-
The same judge who decided Kandall v. Randall and Cookson v. Cookson,
decided Houghton v. Houghton, (11 Sim. 491.) Two partners purchased
land for the purposes of their trade, and borrowed money to do it, for
which they gave a mortgage upon the land. They erected trade buildings
on it and paid for them, for insurance, and the intere^ on the mortgage,
with partnership funds; and one died. The survivor took another
%)artner and they did the same, and finally paid the mortgage out of the
partnership property, and took a reconveyance of the land to themselves,
and the survivor of the first firm died. Held, against the heir of both of
the first partners, that the land was personalty. There are other cases
bearing upon this question. (Smith v. Smith, 5 Ves. 189. Bolmaln v.
Shore, 9 Id. 500. Eowley v. Adams, 1 Beav. 548. Custance v. Bradshaw,
4 Hare, 315.) But I have referred to enough to shpw it may well be
considered qucesiio vexata in England. Supposing the law laid down by
Lord Thurlow and Sir Wm. Grant to be overruled by the decisions of
Lord Eldon and Sir John Leach, still it seems that, where there is no
express agreement, there is but one case in which the real estate is
converted, out and out, into personal ; that is, where it is purchased with
partnership funds, for partnership purposes. (Perkins' Coll. § 154.) As
between individual and partnership creditors, perhaps it might be diflfer-
ent had property in severalty been greatly improved with the partnership
funds. The decisions in this country are as unsatisfactory as in England.
Most of them are collected by Mr. Perkins in his edition of CoUyer's
■jvork on partnerships. In this State, the question has arisen but a few
times. Coles v. Coles was a case at law, and was decided in 1818. (15
Johns. 159.) There is no doubt but the property descends to the heir,
who is tenant in common with the survivors. (Broom v. Broom, supra.
Perkins' Colly. § 133. Howard v. Priest, 5 Mete. 582. Buchan v. Sum-
V ner, 2 Barb. S. C. Kep. 165.) But the dicta of the court went further,
in Coles v. Coles, than to put the case cto mere legal grounds. It was an
action of assumpsit by the administratrix of a deceased partner, against
the survivor, for a moiety of the avails of real estate conveyed by the
partners, and which they had used in their partnership trade.' It was
contended that it was a partnership transaction, and required the investi-
gation of partnership accounts. But the plaintifiF recovered. The court
say ' the principles and rules of law, applicable to partnerships, and which
govern and regulate the disposition of partnership property, do not apply
to real estate.' ■ And it is added that ' there may be special covenants and
agreements entered intb between partners relative to the use and enjoy-
CH. VI.]
PARTNERSHIP PROPERTT. 149
estate a different rule prevails, founded upon the nature
of the property and the provisions of the common law
ment of real estate owned by them jointly, and tlie land would be consi-
dered as held subject to such covenants, but nothing of that kind appears
in the present case ; and in the absence of such special covenants, the
real estate owned by the partners must be considered and treated as such,
without any reference to the partnership ; ' and they rely upon Thompson
V. Dixon and Bolmain v. Shore, both cases in chancery. M'Cbun, V. C,
in Smith v. Jackson, decided in 1833, (2 Ed. Eep. 28,) reviewed Hiany of
the authorities. Lands, which had been purchased by partners with
partnership funds, and part of which was on speculation, were sold on
mortgages given by the partner who had become insolvent, and the
struggle was for the surplus money. The court held that it was liable to
be applied to partnership purposes, and that the creditors of the firm were
_ entitled to it ; subject to an equitable right of dower in favor of the widow
of a deceased partner, who had joined her husband in the mortgage.
The vice-chancellor treated the property as real estate, except that it was
liable for the debts of the firm. He notices the English cases of Thorn-
ton V. Dixon, Bell v. Phyn, Bolmain v. Shore, and Smith v. Smith, and
says it depends upon the agreement of the parties whether the property
is to be considered, in equity, real, or converted into personal estate. In
Delmonico v. Guillaume, (2 Sandf. Ch. K. 366, in 1845,) Assistant Vice-
Chancellor Sandford held that real estate, purchased with partnership
funds and for partnership purposes, and so used, was liable for the debts
of the firm. He declined giving any opinion how it would be between
the real and personal representatives. Chancellor Walworth examined
the subject very fully in Buchan v. Sumner, (2 Barb. Ch. Rep. 198 to
207.) The rule, as found in Thornton v. Dixon, Bell v. Phyn, and Bol-
main V. Shore, he thought overruled. by Lord Eldon in Townsend v.
Devaynes; and that, unless otherwise expressed in the partnership
articles, in England, real estate is considered in equity as personal pro-
perty, and goes to the personal representatives; and cited Selkirk v.
Davis, (2 Dow's P. C. 231,) and Philips v. Philips, Broom v. Broom,
Houghton V. Houghton, and Morris v. Kearsley, (2 Young & Coll. 139,)
before Mr. Baron Alderson-. He however mentioned the later cases of
Rowley v. Adams, Randall v. Randall, and Baxter v. Newman, (1 Lutw.
Reg. Cas. 287,) as departures from this rule. But he considers the
American decisions as establishing these two principles ; that where real
estate is purchased with, partnership funds, or for the use of the firm, in
equity it is chargeable with the debts of the copartnership, and with any
balance which may be due from one copartner to another upon winding^
up the affairs of the firm. But that, as between the personal representa-
13*
150 PARTNERSHIP. [CH. VI.
applicable thereto. Each partner is required, both at
law and in equity, to join in every conveyance of real
estate, in order to pass the entirety thereof to the
grantee ; and if one partner only executes it, vrhether
it be in his own name, or in that of the firm, the deed
tives and the heir at law of a deceased partner, his share of the surplus
of the real estate of the copartnership, which remains after paying the
debts of the copartnership, and adjusting all the equitable claims of the
different members of the firm as between themselves, is considered and
treated as real estate. These cases leave no doubt as to the law in this
State ; and this is reasonable. It is clear that all depends upon the Jnten-
tion of the parties. And in the absence of any expressed intention to
that effett, how can it be presumed that a man intends to convert real
estate into personal, and break the descent, merely because a portion of
the partnership funds are appropriated for the purchase of real estate ? '
If a member receives a portion of those funds as his dividend, and so
appropriates it, clearly no such presumption arises. It is due to the
creditors and the members of the firm that' the property should not be
withdrawn until the partnership affairs are adjusted. But as between
heir and executor, the reason of the rule fails. Nor is it clear that the
law of England differs so much from that of this State. All the earlier
cases, at least, plaim to put the conversion upon the intention manifested
by the contract or will. And Lord Eldon, to-whom the paternity of the
new rule is ascribed, so decided in Ripley v. Waterworth. The grounds
upon which he decided Townsend v. Devaynes, are at least doubtful ; and
in Stewart «. Marquis of Bute, (U Ves. 665, 1804, 6; S. C. 3 Id^ 212,)
he said : ' In cases where persons engaged in partnership have bought
freehold estates, the difficulty of distingjaishing and arranging property of
different natures, partly personal, partly real, has never, except by the
effect of the contract, or the will, been held sufficient against the heir.'
The case was one on the constructron of a will, but related to a colliery
carried on by tenants in common in partnership. True in Salking v.
Davies, (2 Doug. 242,) he thought all property involved in a partnership
concern, ought to be personal ; but he appeared to have doubts in the
later case of Crawshay v. Maule, (1 Swanst. 508.) The change in the
law, if any, is therefore more attributable to Sir John Leach ; and recent
cases seem returning to the former rule, which we have adopted. This
is, that real estate owned by partners, remains so, unless an equitable
adjustment of the concern requires its conversion, or the owner has
expressed his intention that it be converted into personalty. (See Dyer
II. Clark, 5 Metcalf, 677.) " ]
OH. VI.] PARTNEESHIP PKOPEETY. 151
will not ordinarily convey ^ny more than his own share
or interest therein.^
§ 95. The Roman law does not seem, ordinarily, to
have conferred upon partners the same extensive
powers and mutual rights ' over the disposition of
the partnership property, as is given hy the common
law, unless indeed a particular partner was specially
clothed with. the authority of all the partners, as the
general agent of the partnership in the administration
of its affairs. Hence, one partner could not ordina-
rily, in virtue of that relation alone, contract debts,
which would be binding on all the partners, or alien-
ate more than his share of the partnership property.
Accordingly it is laid down in the Digest; Nemo ex
sociis plus parte sua potest alienare, etsi totorum low-
rum socii sint? And again; In re communi neminem
dominorum jure facere quicquam, invito altero, posse j unde
manifestum est prohibendi jus esse? Those, who were
specially appointed to administer -the affairs of the
partnership, were called Magistri JSocietatis — lia Magis-
tri appelhrdur.^ Similar principles prevail in our day
in the foreigii law of many countries, whose jurispru-
dence is founded on the Roman law ; and especially in^
that of France.^ However, by the modern code of
France, the partners are deemed to have given recipro-
cally to each other the power of administering one for
the other, in d.efault of any special stipulations, as to
1 Coles V. Coles, 15 Johns. K. 159, 161 ; Ante, § 93, note (1).
2 Dig. Lib. 17, tit. 2,1.68; Pothier, Pand. Lib. 17, tit. 2, n. 26, 27;
Pothier, de Societ6, n. 89 ; 1 Domat, B. 1, tit. 8, § 4, art. 16.
3 Dig. Lib. 10, tit. 3, 1. 28 ; Pothier, Pand. Lib. 17, tit. 2, n. 27.
* Dig. Lib. 2, tit. 14, 1. 14 ; Id. Lib. 50, tit. 16, 1. 67 ; 1 Domat, B. 1,
tit. 8, § 4, art. 16 ; 2 Bell, Comm. B. 7, p. 615, 5th edit.
5 Pothier, de Societi, n. 66 to 72.
152
PAETNEESHIP. [CH. VI.
the mode of administration# This, of course, leaves
the rights of the partners to he governed by the gene-
ral law, of France, where such stipulations exist,
although they may be unknown to third persons, and,
of course, it may expose the latter to some hazards of
loss or inconvenience, if they trust to their confidence
in a single partner, not notoriously authorized to ad-
minister for the partnership.
§ 96. The Scottish law has avoided this difficulty,
and followed the general doctrine of the common law.
By the Scottish law, it is implied from the very nature
of partnership, that each partner is clothed with the
complete power of administering the property and
affairs of the partnership, as prepositus negotiis sodetatis,
to the effect not only of holding possession of the
property for the company, and of acquiring property
for them in the course of their trade and business, but
also to the effect of entering into contracts on behalf
of the company, and binding the company by all acts
in the ordinary administration of such trade and busi-
ness.^ And it will make no difference in this respect,
that there are private stipulations between the partners
'themselves prohibiting or restraining this right or
authority ; for, as a general institorial power, it will
still be. deemed to exist in favor of third persons, who
are ignorant of any such prohibitions or restrictions.®
§ 97. Besides this community of interest in the
capital stock, funds, and effects of the partnership,
each partner has certain rights, liens, and privileges
thereon. In the first place, no one partner has any
1 Code Civil of France, art. 1856 to 1860.
3 2 Bell, Con^m. B. 7, p. 615, 5th edit.
3 Ibid.
CH. TI.] PARTNERSHIP PROPERTY. 15S
right or share in the partnership property, except
what remains thereof after the full discharge and pay-,
ment of all debts and liabilities of the partnership ;
and, therefore, each partner has a right to have the
same applied to the due discharge and payment of all
such debts and liabilities, before any one of the part-
ners, or his personal representatives, or his individual
creditors, can claim any right or title thereto.^ In
short, as between the partners themselves, the debts
and liabilities of the firm to creditors and third per-
sons are a fund appropriated, in the first instance, to
the discharge and payment of such debts and liabili-
ties, and there is, properly speaking, as between them,
a lien thereon, or at least an equity, which may be
worked out through the partners in favor of the credit-
ors, although it may not directly attach in the creditors
by virtue of their original claims, in all cases.^ Each
1 CoUyer on Partn. B. 2, cli. 1, § 1, p. 77, 2d edit. ; West v. Skip,
2 Ves. 142 ; Ex parte Buffin, 6 Ves. E. 119.
2 Ex parte Kuffin, 6 Ves. R. 119, 126. — In this case Lord Eldon said;
' It is the case of two partners, who owed several joint debts, and had
joint effects. Under these circumstances their creditors, who had a de-
mand upon them in respect of those debts, had clearly no lien whatsoever
upon the partnership effects. They had power of suing, and by process
creating a demand, that would directly attach upon the partnership effects.
But they had no lien upon or interest in them in point of law or equity.
If any creditor had brought an action, the action would be joint; his
execution might be either joint or several. He might have taken in
execution both joint and separate effects. It is also true, that the separate
creditors of each, by bringing actions, might acquire a certain interest
even in the partnership effects ; taking,them in execution in the way, in
which separate creditors can effect such property. But there was no lien
in either. The partnership might dissolve in various ways; first, by
death ; secondly, by the act of the parties; that act extending to nothing
more than mere dissblution; without any special agreement as to the dis-
position of the property, the satisfaction of the debts, much less any
agreement for an assignment from either of the partners to the others.
The partnership might also be dissolved by the bankruptcy of one or of
154 PARTNEESHIP. [CH. VI.
partner also has a specific lien on the present and future
property of the partnership, not bnly for the debts and
liabilities due to third persons, but also for his own
amount or share of the capital, stock, and funds, and for
all moneys, advanced by him for the use of the firm, and
also for all debts due to the firm for moneys abstracted
by any other partner from such stock and funds beyond
both, and by effluxion of time. If it is dissolved by death, referring to
the law of merchants, and the well known doctrine of this Court, the
death being the act of God, the legal title in some respects, in all the
equitable title, would remain, notwithstanding the survivorship ; and the
executor would have a right to insist, that the property should be applied
to the partnership debts. I do not know that the partnership creditors
would have that right; supposing both remained solvent. So, upon the
bankruptcy of one'of them there would be an equity to say, the assignees
stand in the place of the bankrupt ; and can take no more than he could ;
and consequently nothing until the partnership debts are paid. So, upon
a mere dissolution, without a special agreement, or a dissolution by efflux-
ion of time ; to wind up the accounts the debts must be paid, and the
surplus be distributed in proportion to the different interests. In all these
ways the equity is not that of the joint creditors, but that of the partners
with regard to each other, that operates to the payment of the partnership
debts. The joint creditors must of necessity be paid, in order to the
administration of justice to the partners themselves. When the bank-
ruptcy of both takes place, it puts an end to the partnership certainly ;
but still it is very possible, and it often happens in fact, that the partners
may have different interests in the surplus ; and out of that a necessity
arises, that the partnership debts must be paid ; otherwise the surplus
cannot be distributed according to equity ; and no distinction has been
made with reference to their interests, whether in different proportions, or
equally. Many cases have occurred upon the distribution between the
separate and joint estates ; and the principle in all of them, from the great
case of Mr. Fordyce, has been, that if the Court should say, that what has
ever been joint or separate property shall always remain so, the conse-
quence would be; that no partnership could ever arrange their affairs.
Therefore a honS, fide transmutation of the property is understood to be
the act of men acting fairly, winding up the concern, and binds the'
creditors; and therefore the Court always lets the arrangement be, as
they stand, not at the time of the commission, but of the act of bankrupt-
cy." S. P. Ex parte Williams, 11 Ves. 3, 5; Kirby v. Schoonmaker,
3 Barbour, Ch. R. 46.
CH. VI.] PARTNEKSHIP PKOPEETY. 155
his share.^ It follows from this principle, that if any
partner takes the whole or a part of- his share out of
the partnership stock, the stbofc so taken, if identified,
is applicable to the payment of what shall, upon an ac-
count taken, be found due from him to the partnership,
before any of it can be applied to the payment of his
debts, due to his own separate creditors ; for such part-
ner has an interest in the stock only to the amount of
the ultimate balance due to him, as his share of the-
stock.^ The same rule will apply to any other property,
into vhich the partnership property may have been
converted, so far and so long as its original character
and identity can be distinctly traced.^ Hence it may
be stated, as a general corollary from the foregoing
considerations, that no separate creditor of any partner
can acquire any right, title, or interest, in the partner-
ship stock, funds, or effects, by process or otherwise,
merely in his character as such creditor, except for so
much as belongs to that - partner, as his share or bal-
ance, after all prior claims thereon are deducted and
satisfied. *
I 98. What properly constitutes partnership property
may be, in some particular cases, an inquiry of no in-
considerable embarrassment and difficulty, although,
when all the facts are established, the principles of law
applicable to it are generally clearly defined. So far
as personal property is concerned, not only the capital,
1 Collyer on Partn. B. 2,"ch. 1, ^ 1, p. 77, 2d edit. ; VTest v. Skip,
1 Ves. R. 139^ 142 ; Ex parte Kuffin, 6 Ves. K. 119.
3 Collyer on Partn. B. 2, ch. 1, § 1, p. 78, 79, 2d edit.; West v. Skip,
1 Ves. R. 139, 240, 242 ; Skip v. Harwood, 2 Swanst. R. 686 ; Croft v.
Pyke, 3 P. Will. R. 180 ; Watson on Partn. ch. 2, p. 66, 2d edit.
3 Collyer on Partn. B. 2, ch. 1, § 1, p. 78, 79, 2d edit. ; Kidgley v. Carey,
4 Harr. & MoH. 167.
156 PAETNERSHIP. [CH. VI.
stock, funds, and other effects originally put into the
partnership, but all the property subsequently acquired
by the firm, by sale, barter, or otherwise, and all the
debts and other claims arising in the course of the
trade and business thereof, are deemed part of the part-
nership capital, stock, funds, and effects.-^ So, all real
estate, purchased for the partnership, and paid for out
of the funds thereof, in whosesoever name it stands,^ is
treated in the same manner.^ Leases of land, also,
originally granted to or for the partnership, or subse-
quently renewed during the partnership, for' the* pur-
poses thereof, fall under the like predicament.* In
short, whatever property, whether real or personal, or
mixed, is purchased for the use and purposes of the
partnership, and is chargeable to the same, is in the
contemplation of courts of equity, even if not of courts
of law, treated as a p4rt of the effects thereof.^
§ 99. There is a peculiar species of interest, which
arises in cases of partnership, and is often treated as
in some sort a part of the partnership property. It is
what is commonly called the good-'^ill of the trade or
business. This good-will may be properly enough de-
scribed to be the advantage or benefit, which is acquired
by an establishment, beyond the mere value of the
1 CoUyer on Partn. B. 2, ch. 1, § 1, p. 76, 77, 78, 2d edit.
2 But see Otis v. Sill, 8 Barbour, 122, as to such a rule at law, if the
title is in only one partner.
3 CoUyer on Partn. B. 2, ch. 1, § 1, p. 82, ^3, 2d edit. ; Jackson v. Jack-
son, 7 Ves. R. 535 ; 9 Ves. E. 591.
4 CoUyer on Partn. B. 2, ch. 1, ^ 1, p. 83, 84, 101, 2d edit.; Elliott v.
Brown, 9. Ves. K. 597 ; 3 Swanst. R. 490, note; Alder v. Forracre, 3
Swanst. K. 489; Featherstonehiugh v. Fenwick, 17 Ves. B. 398; Gow
on Partn. ch. 2, § 1, p. 32 to 34, 3d edit.; Coles v. Coles, 15 Johns. R.
159, 161.
5 Story on Eq. Jurisp. § 674.
CH. VI.] PARTNERSHIP PROPERTY. 157
capital, stock, funds, or property employed therein, in
consequence of the general public patronage and en-
couragement, which it receives from constant or habit-
ual customers, on account of its local position, or com-
mon celebrity,T)r reputation for skill or affluence, or punc-
tuality, or from other accidental circumstances or ne-
cessities or even from ancient partialities, or prejudices.-^
Thus, an inn, a nursery of trees and shrubs, a favorite
fashionable stand, or a newspaper establishment, may,
and often does enjoy a reputation, and command a price
beyond the intrinsic value of the property invested
therein, from the custom, which it has obtained and
secured for a long time ; and this is commonly called
the good-will of the establishment.^ Lord Eldon upon
one occasion said, that a good-will of this sort Avas no-
thing more than the probability, that the old customers
will resort to the old place.^ It is certainly not a
visible, tangible interest, or a commodity, upon which
a definite or fixed allowance can be made ; ■* nor, per- ,
haps, would a contract, touching, the conveyance there-
of, be decreed to be specifically performed in equity.^
It is not, therefore, strictly speaking, a part of the
partnership effects, of which, upon a dissolution thereof, a
division can be compelled, unless, indeed, in cases, where
a sale of the whole premises and stock will be ordered ;
1 Cruttwell V. Lye, 17 Ves. E. 336; Dougherty v. Van Nostrand, 1
Hoffm. K. 68, 69, 70. See also an able review of the doctrine in 16 Am.
Jurist, p. 87 to 92.
2 See Cruttwell v. Lye, 17 Ves. R. 336 ; Coglake v. Till, 1 Russ. E. 376 ;
Dougherty v. Van Nostrand, 1 Hoffm. R. 68, 69.
3 Cruttwell V. Lye, 17 Ves. R. 336, 346.
4 Collyer on Partn. B. 2, ch. 1, § 1, p. 102, 103, 2d edit.
5 Baxter v. Conolly, 1 Jac. & Walk. 556 ; Coslake i;. Till, 1 Rusa. K.
876, 378 ; Shakle v. Baker, 14 Ves. R. 468.
PARTN. 14 .
158 PARTNERSHIP. [CH. VI.
and then the good-will will accompany such sale, and
may create a speculative value in the mind of a pur-
chaser, of which each partner will be entitled to his
share of the benefit.^ But the term " good-will " is
sometimes applied to another case, where a retiring
partner contracts not to carry on the same trade or
business at all, or not within a given distance. This is
an interest, which may be valued between the parties,
and may therefore be assigned with the premises and
the rest of the effects to the remaining partner, as an
accompaniment of the ordinary good-will of the estab-
lishment.^ Good-will, in the former sense, is therefore
1 Collyer on Partn. B. 2, ch. 1, § 1, p. 102, 103, 2d edit.; Id. ch. 3,
§ 4, p. 214 to 218 ; Crawshay v. Collins, 15 Ves. R. 218, 227 ; Cruttwell
V. Lye, 1 Eose, R. 123; Featherstonehaugh v. Fenwick, 17 Ves. R. 298,
309, 310; Dougherty v. Van Nostrand, 1 Hoffm. K. 68, 69, 70; Gow on
Partn. ch. 5, ^ 4, p. 349, 350, 3d edit. — Lord Rosslyn, in Hammond v.
Douglas, (5 Ves. 589,) held, that the good will of a trade, carried on
without articles, survives, and is not to be considered as partnership stock,
to which the representatives of a deceased partner have any right. But
Lord Eldon, in Crawshay v. Collins, (15 Ves. 227,) expressed doubts of
the propriety of that deterfhination, considering it difficult to draw any
solid distinction between the lea^e of the partnership premises, and the
good-will, which consists in the habit of the trade being condutjted on
those premises. Gow on Partn. ch. 5, § 4, p. 349, 3d edit. ; Collyer on
Partn. B. 2, ch. 1, § 1, p. 102, 103, 2d edit.
2 Collyer on Partn. B. 2, ch. 1, § 1, p. 102, 103, 2d edit; Id. ch. 3, § 4,
p. 214 to 218, and note; Bryson v. Whitehead, 1 Sim. & Stu. 74; Harri-
son V. Gardner, 2 Madd. R. 198 ; Cruttwell v. Lye, 17 Ves. E. 336 ; Gow
on Partn. ch. 5, § 4, p. 349, 3d edit. — Lord Eldon, in Kennedy v. Lee,
(3 Meriv. R. 441, 452,) speaking on this subject, used the following lan-
guage. " W^here two persons are jointly interested in trade, and one by
purchase becomes sole owner of the partnership property, the very cir-
cumstance of sole ownership gives him an advantage beyond the actual
value of the property, and which may be pointed out as a distinct benefit,
essentially connected with the sole ownership. In the case of the trade
of a nursery-man, for instance, the mere knowledge of the fact, that he is
sole owner of the property, and in the sole and exclusive management of
the concern, gives him an advantage, which the other partner, supposing
CH. VI.] PAKTNERSHIP PEOPEETY. 159
an advantage arising from the mere fact of sole owner-
ship of the premises, stock, or establishment, without
reference to other persons, as rivals ; and in the latter
sense, as an advantage arising from the fact of exclud-
ing the retiring partner from the same trade or busi-
ness, as a rival.^ It seems that good-will can constitute
a part of the partnership effects or interests only in
cases of mere commercial business or trade ; and not
in cases of professional business, which is almost neces-
sarily connected with personal skill and confidence in
the particular partner.^
him to carry on the same trade, with other property, not the partnership
prd^ertj', -would not possess. In that sense, therefore, the good-will of a
trade follows from, and is connected with, the fact of sole ownership.
There is another way, in which the good-will of a trade may be rendered
still more valuable ; as by certain stipulations entered into between the
parties at the time of the one relinquishing his share in the busiiiess ; as
by inserting a condition, that the withdrawing partner shall not carry op
the same trade any longer, or that he shall not carry it on within a certain
distance of the place, where the partnership trade was carried on, and
where the continuing partner is to carry it on upon his own sole and sepa-
rate account. Now it is evident, that in neither sense was the good-will
of this trade at all considered, as among the subjects of the valuation to
be made by either party. It was not so considered by the plaintiff, when
he wrote his letter of the 21st of October. The words ' concern ' and
' inheritance ' are used inartificially, and cannot be construed as having
any reference but to the actual subjects of valuation. And, when the
plaintiff offers to take the business himself, he could not have forgotten,
that the defendant's own estate of Butterwick lay contiguous to the part-
nership property, and therefore his introducing no stipulation, with refer-
ence to the fact of its contiguity, is a clear intimation, that when he wrote
this letter, he had no intention, in offering to take the partnership pro-
perty, to purchase with it the good-will, in the sense of restricting the
defendant from carrying on the trade in its vicinity. In that sense, at
least, therefore, the good-will of the trade was not the subject of contract,
or treaty even, between the parties."
' Collyer on Partn. B. 2, ch. 1, § 1, p. 102, 103, 2d edit. ; Gow on Partn.
ch. 5,^ 4, p. 349, 350, 3d edit.
2 Farr v. Pearce, 3 Madd. R. 75, 76 ; Collyer on Partn. B. 2, ch. 1, § 1,
p. 103, 104, 2d edit.; Gow on Partn. ch. 5, § 4, p. 349, 350, 3d edit.
160 PARTNERSHIP. [CH. YI.
§ 100. Under this head a curious question has
arisen; and that is, whether the right to use the firm
name is a part of the good-will belonging to the part-
nership, or whether in case of the dissolution thereof
Jiy the death of the partner, it belongs to the survivors.
That the right to use the name of a known and cele-
brated firm, especially in the case of manufactures, is
often a very valuable possession, is unquestionable j
and, therefore. Courts of Equity will often interpose to
protect the right against the abuse of third persons, in
using it for their own advantage.^ But it has been
thought, that this right, however valuable, does not fall
within the true character and nature of good-will ; but
that it belongs to the surviving partner.^
1 Eden on Injunct. oh. 14, p. 314, 315 ; Motley v. Dowman, 3 Mylne &
Craig, R. 1, 14, 15 ; Millington v. Fox, 3 Mylne & Craig, E. 338 ; 2 Story,
Eq. Jur. § 951; Knott v. Morgan, 2 Keen, E. 213, 219; Webster v.
Webster, 3 Swanst. E. 490, n.; Gow on Partn. cb. 2, § 4, p. 109, 3d
edit.
^ Lewis V. Langdon, 7 Sim. E. 421. — In tbis case tbe Vice-Cbancellor
(Sir L. Sbadwell) said ; " Tbe question in tbis case depends on tbe rigbt,
in tbe surviving partner, to carry on tbe business under tbe name of tbe
partnersbip. Lord Eldon, certainly, bas expressed a doubt, in tbff case
of Crawsbay v. Collins, (15 Yes. 227,) upon what has been understood to
be tbe proposition laid down by Lord Eosslyn, in tbe case of Hammond
V. Douglas, (5 Ves. 539.) It is true, that the question might have been,
to a certain degree, whether, having regard to what had taken place, tbe
money should be considered to belong to one party, rather than to another;
and it is also observable, that Lord Eldon might have been throwing out
his observations with reference to a supposed connection between the
place, where the business was carried on, and tbe good-will. But it occurs
to me, that, if the good-will is to be considered as a salable article, which
belongs to the partnership, then this consequence must follow, namely,
that the surviving partner must be under an obligation to carry on tbe
trade for some time after his partner's death, in order that the thing,
which is said to be salable, may be preserved until it can be sold. If a
partnership were carried on between A. and B. under the name of Smith
& Co., and the sui'viving partner chose to discontinue tbe business, and
CH. VI.]
PARTNERSHIP PROPERTY. 161
to ■write to the customers, and say, that his partner was dead, and that the
business was at an end, the effect would be, that that, which is said to be
salable, would cease to exist. Now, what po^er is there in a Court of
equity, to compel a partner to carry on a trade after the death of his co-
partner, merely that, at a future time, the good-wiU, as it is called, may
be sold ? It is plain, that, unless there is such a power in this Court, it
must be in the discretion of the surviving partner to determine, what shall
be done with the good- will; and, if .that is the case, it must be his pro-
perty. I cannot but think, when two partners carry on a business in
partnership together under a given name, that, during- the partnership, it
is the joint right of them both to carry on the business under that name,
and that, upon the death of one of them, the right, which they before had
jointly, becomes the separate right of the survivor." See also Webster v.
Webster, 3 Swanst. E. 490, n.
14*
162 PARTNERSHIP. [CH. VII.
CHAPTER Vn.
POWERS AND AUTHORITIES OF PARTNERS.
§ 101. As to the powers and authorities of the part-
ners during the existence of the partnership, (for their
powers and authorities upon the dissolution thereof will
be considered hereafter, in another place,) they have
been in part already suggested. In the first place, when-
ever there are written articles, or particular stipulations
between the partners, these will regulate their respect-
ive powers and authorities iTiter sese, although not, if un-
known, in their dealings with third persons.^ But,
independently of any such articles or stipulations ex-
pressed, each partner is Prceposiius negotiis societatis,
and each partner, virtute officii, possesses an equal and'
general power and authority in behalf of the firm, to
transfer, pledge, exchange, or -apply or otherwise
dispose of the partnership property and effects, for
any and all purposes within the scope and objects
of the partnership, and in the course of its feade
and business.^ Or, as was said by a learned Judge
upon a recent occasion, "One partner by virtue
of that relation (of partnership) is constituted a gene-
ral agent for another as to all matters within the scope
1 3 Kent, Comm. Lect. 43, p. 40, 41, 42, 4th edit.; U. States Bank v.
Binney, 5 Mason, R. 176 ; S. C. 5 Peters, R. 529 ; CoUyer on Partn. B. 3,
ch. 1, p. 259, 260, 2d edit.
2 3 Kent, Comm. Lect. 43, p. 40 to 46, 4tli edit. ; Story on Agency,
§ 37, 39, 124 ; CoUyer on Partn. B. 2, ch. 2, § 1, p. 129, 2d edit. ; Grow
on Partn. ch. 2, § 2, p. 36, 51 to 53, 3d edit. ; 2 BeU, Comm. B. 7, ch. 1,
p. 615, 616, 5th edit.
CH. VII.] POWERS AND AUTHORITrES. 163
of the partnersiiip dealings, and has. communicated to
him by virtue of that relation all authorities necessary
for carrying on the partnership, and all such as are
usually exercised by partners in that business, in which
they are engaged. Any restriction which, by agree-
ment amongst the partners, is attempted to be imposed
upon the authority which one possesses as a general
agent for the other, is operative only between the
partners themselves, and does not limit the authority
as to third persons, who acquire rights by its exercise,
unless they know that such restrictions have been
made." ^ The power extends also to assignments of
property of the firm, as a security for antecedent debts,
as well as for debts thereafter to be contracted on ac-
count of the firm.^ Nor will it make any difference,*
whether the assignment be for the benefit of one cre-
ditor, or of several, or of all of the joint creditors.^ But it
may well admit of some doubt, whether this power
extends to a general assignment of all the funds and
effects of the partnership by one partner, for the
benefit, of creditors; for such an assignment Would
seem to amount of itself to a suspension or dissolution
of the partnership itself.* The doctrine, however, is
1 Hawker v. Bourne, 8 Mees. & Welsb. 710.
2 Harrison v, Sterry, 5 Cranoh, R. 289 ; Anderson v. Tompkins, 1
Brook. Cir. E. 456 ; Tapley v. Butterfield, 1 Mete. E. 515.
S Ibid.
* Pierpont v. Graham, 4 V^^ash. Cir. E. 232 ; Dana ». Lull, 17 Vermont
R. 390 ; CuUum v. Bloodgood, 15 Ala. 42 ; Deming v. Coet, 3 Sandf. 284 ;
Kirby v. IngersoU, Haw. Ch. E. 172 ; Dechart v. Filbert, 3 Watts, & Serg.
454. — In this case, it was held, that after a dissolution of partnership, one
partner could not make a voluntary assignment of the effects of the
partnership for the benefit of creditors against the express dissent of his
copartner. In Anderson v. Tompkins, 1 Brook. E. 456, Mr. Chief Justice
Marshall affirmed the authority of one partner to assign all the part-
164 PAKTNEKSHIP. [CH. YII.
strictly confined to personal property, and does not ex-
tend to real estate held by the partnership ; for in such
nership eflfects for the payment of the creditors thereof. On that occasion,
he said ; " It will be readily conceded, that a fraudulent sale, whether
made by deed or otherwise, would pass nothing to a vendee concerned in
the fraud. But, with this exception, I feel much difficulty in setting any
other limits to the power of a partner, in disposing of the effects of the
company, purchased for sale. He may sell a yard, a piece, a bale, or any
number of bales. He may sell the whole of any article, or of any num-
ber of articles. This power certainly would not be exercised in the
presence of a partner, without consulting him ; and if it were so exer-
cised, slight circumstances would be sufficient to render the transaction
suspicious, and, perhaps, to fix on it the imputation of fraud. In this re-
spect, every case must depend on its own circumstances. But with respect
to the power, in a case perfectly fair, I can perceive no ground on which it is
to be questioned. But this power, it is said, is limited to the course of trade.
What is understood by the course of trade ? Is it that, which is actually
done every day, or is it that, which may be done, whenever the occasion
for doing it presents itself ? There are small traders, who scarcely ever,
in practice, sell a piece of cloth uncut, or a cask of spirits. But may not
a partner in such a store sell' a piece of cloth, or a cask of spirits ? His
power extends to the sale of the article, and the course of trade does not
limit him as to quantity. So with respect to larger concerns. By the
course of trade is understood dealing in an article in which the company
is accustomed to deal ; and dealing in that article for the company. Tomp-
kins and Murray'sold goods. A sale of goods was in the course of their
trade, and within the power of either partner. A fair sale, then, of all
or of a part of the goods was within the power vested in a partnea This
reasoning applies with increased force, when we consider the situation of
these partners. The one was on a voyage to Europe, the other in pos-
session of all the partnership effects for sale. The absent partner could
have no agency in the sale of them. He could not be consulted. He
could not give an opinion. In leaving the Country, he must have intend-
ed to confide all its business to the partner, who remained, for the pur-
pose of transacting it. Had this then been a sale for money, or on credit,
no person, I think, could have doubted its obligation. I can perceive no
distinction in law, in reason, or in justice, between such a sale and the
transaction, which has taken place. A merchant may rightfully sell to
his creditor, as well as for money. He may give goods in payment of a
debt. If he may thus pay a small creditor, he may thus pay a large one.
The quantum of debt, or of goods sold, cannot alter the right. Neither
does it, as I conceive, affect the power, that these goods were conveyed to
trustees to be sold by them. The mode of sale must, I think, depend on
CH. Vn.] POWERS AND AUTHORITIES. 165
a case the partner, who executes the deed of convey-
ance, can transfer no more title than he possesses ; and
circumstances. Should goods be delivered to trustees for sale, without
necessity, the transaction -would be examined with scrutinizing eyes,
and might, under some circumstances, be impeached. Bu^ if the
necessity be apparent, if the act is justified by its motives, if the mode of
sale be such as the circumstances require, I cannot say, that the
partner has exceeded his power. This is denominated a destruc-
tion of the partnership subject, and a dissolution of the partnership.
But how is it a destruction of the subject ? Can this appellation be be-
stowed on the application of the joint property, to the payment of the debts
of the company ? How is it a dissolution of the partnership V A part-
nership is an association to carry on business jointly. This association
may be formed for the future before any goods are acquired. It may con-
tinue after the whole of a particular purchase has been sold. But either
partner had a right to dissolve this partnership. The act, however, of
applying the means of carrying on their business to the payment of their
debts, might suspend the dperations of the company, but did not dissolve
the contract, under which their operations were to be conducted." In
Egberts u. Wood, 3 Paige, E. 517, 523, 524, Mr. Chancellor Walworth
said ; " It appears to be the better opinion, that one of the partners, at
any time during the existence of the partnership, may assign the partner-
ship effects, in the name of the firm, for the payment of the debts of the
company, although by such assignment a preference is given to one set of
creditors over another. In the case of Dickinson v. Legare and others,
cited by the complainant's counsel from the Equity Reports of South Car-
olina, 1 Desauss. K. 587, the Court of Chancery of that State decided
against the validity of an assignment of all the partnership efiects, made
by one of the partners, without the knowledge or consent of the other, to
pay the debt of a particular creditor. Chancellor Matthews, who delivered
the opinion of the court in that case, admits, that it was a question of the
first impression, no case analogous to it having come under the view of
the court. That assignment, however, was made under very peculiar cir-
cumstances. The company during the revolutionary war were doing
business in this country. And while one of the partners was on a voy-
age to France, he was taken by a British ship of war, and carried as a
prisoner to England, where he was prevailed upon by a creditor residing
there, to give him a general assignment of all the partnership funds, which
funds were then in this country, to secure the payment of his particular
debt against the firm. Although the decision was put upon the general
ground, that one partner had not the right to assign the partnership funds
in this manner, without the consent of his copartner, there is no doubt
that the particular circumstances, under which that assignment took place,
166 PARTNERSHIP. [CS. YIL
he cannot transfer the property belonging to the firm,
whether it was conveyed directly to the firm, or held
had a very considerable influence in bringing the mind of the Chancellor
to that result. The assignment in that case being made by a citizen of
one of the United States, during the existence of the war, to an alien
enemy and in an enemy's country, was probably void by the laws of war,
so far at least as to prevent its being carried into effect by any of the courts
of this country. And certainly it could not be considered, as made ac-
cording to any mercantile usage. That decision, however, has been re-
cently overruled by the Court of Appeals in the same State, in the case of
Robinson v. Crowder, 4 Mc Cord's L. E. 519 ; where it was held, that an
assignment by one partner of all the effects of the firm in payment of the
partnership debts was valid, as against his copartners. In Pierpont v.
Graham, 4 Wash. C. C. E. 232, in the Circuit Court of the United States
for the district of Pennsylvania, Judge Washington doubted the right of
one of the partners, without the consent of the others, to assign the whole
of the partnership effects in such a manner, as to terminate the partner-
ship. But he declined expressing any decided opinion upon this question,
■ which he considered unnecessary to the decision of the cause then before
him ; as, in that case, the copartner had subsequently assented to the as-
signment. In Mills V. Barber, 4 Day, E. 428, the Supreme Court of
Errors in Connecticut decided, that one partner, without the knowledge
of the other, might make a valid assignment of partnership funds, to se-
cure the payment of a debt due from the firm. See Forkner v. Stuart,
6 Gratt. 197. And in Harrison v. Sterry, 5 Cranch, E. 300, the Supreme
Court of the United States decided, that one of the partners might as-
sign the partnership effects to a trustee, for the security or payment of
the creditors of the firm, without the concurrence of his copartners. I do
not intend, in this case, to express any opinion in favor of the validity of
such an assignment of the partnership effects to a trustee by one partner,
against the known wishes of his copartner, and in fraud of his right to
participate in the distribution of the partnership funds among the credit-
ors, or in the decision of the question, which of those creditors should have
a preference in payi^ent, out of the effects of an insolvent concern. As
a Court of Equity, upon a proper application, would protect the rights of
the several partners in this respect, before an assignment had actually
been made, and if they could not agree among themselves, would appoint
a recei%'er of the effects of the partnership, and would apply them in
payment of all the debts due from the firm ratably, it might perhaps
apply the same rule to the case of an assignment to a trustee for the pay-
ment of the favorite creditors of one of the partners only, where the
equitable rights of the parties had not in fact been changed by any pro-
CH. Vn.] POWERS AND AUTHORITIES. 167
in trust ; for it belongs to the partners as tenants in
common, and neither of the partners can convey more
than his undivided interest.-'
ceedings under the assignment." — But in the subsequent case of Havens
V. Hussey, 5 Paige, R. 30, 31, the Chancellor greatly qualified that opinion.
On that occasion he said; "In the case of Egberts v. Wood, 3 Paige, R.
51 7, 1 had occasion to refer to most of the cases relative to assignments of
partnership effects made by one of the copartners. And I then arrived
at the conclusion, that, from the nature of the contract of copartnership,
one of the partnership might inake a valid assignment of the partnership
effects, or so much thereof as was necessary for that purpose, in the name
of the firm, directly to one or more of the creditors in payment of his or
their debts; although the effect of such assignment was to give a prefer-
ence to one set of creditors over another. But as it was not necessary for
the decision of that case, I did not express any opinion, as to the validity
of an assignment of the partnership effects by one partner, against the
known wishes of his copartner, to a trustee, for the benefit of the favorite'
creditors of the assignor ; in fraud of the rights of his copartner to participate
in the distribution of the partnership effects among the creditors, or in the
decision of the question as to which of the creditors, if any,, should have
a preference in payment out of the effects of an insolvent concern. The
present case presents that point distinctly for the decision of the court.
And upon the most deliberate examination of the question, I am satisfied,
that the decision of the Vice-Chancellor is correct ; that such an assign-
ment isboth illegal and inequitable, and cannot be sustained. The prin-
ciple, upon which an assignment by one partner in payment of a partner-
ship debt rests, is, that there is an implied authority for that purpose from
his copartner, from the very nature of the contract of partnership ; the
payment of the company debts being always a part of the necessary busi-
ness of the firm. And while either party acts fairly within the limits of
such implied authority, his contracts are valid, and binding upon his co-
partner. One member of the firm, therefore, without any express
authority from the other, may discbarge a partnership debt, either by the
payment of money, or by the transfer to the creditor of any other of the
copartnership effects ; altjiough there may not be sufiioient left to pay an
equal amount to the other creditors of the firm. But it is no part of the
ordinary business of a copartnership, to appoint a trustee of all the part-
nership effects, for 'the purpose. of selling and distributing the proceeds
among the creditors in unequal proportions. And no such authority as
that can be implied. On the contrary, such an exercise of power by one
1 Anderson v. Tompkins, 1 Brook. Cir. R, 456, 463.
168 PAETNERSHIP. [CH. VH.
§ 102. Each partner may, in like manner, enter into
any contracts or engagements on behalf of the firm in .
of the firm, without the consent of the other, is in most cases a virtual
dissolution of the copartnership ; as it renders it impossible for the firm to
continue its business. The case of Harrison v. Sterry, 5 Cranoh, R. 300,
which, perhaps, has gone as far as any other on this subject, was not sus-
tained as an assignment of all the partnership effects to a trustee for the
payment of preferred creditors. It professed to be the transfer of a certain
specific portion of the partnership property, for the purpose of saving the
credit of the firm, and to raise funds to carry on the partnership business.
And: upon the ground, that it was not in fact what it professed to be, but
was merely intended to give a preference to particular creditors, the court
held the assignment void, as a fraud upon the bankrupt laws. It was only
upon the supposition, that the assignment was in fact what it professed to
be, that Chief Justice Marshall held it to be within the power usually
exercised by a managing partner." In Hitchcock v. St. John, 1 Hofirn.
E. 511, Mr. Vice-Chancellor Hoflfman decided against the authority of
one partner to make any general assignment, allowing preferences, and
said ; " The power to make a sale of the partnership effects resides in
each partner while the relation exists. The power to bind the firm upon
a purchase equally exists in each, although the goods never came into
joint stock. All these instances of authority, as well as that to make
negotiable paper, flow from the principle, that each is the agent of the
whole. But for what is he such agent ? For the purposes of carrying
on the business of the firm, and because the authority to do the act is
implied from the nature of the business. Best, J., in Barton v. Williams,
5 B. & A. 405. Now a transfer of all the effects of a firm for payment
of its debts, is a virtual dissolution of the partnership.. It supersedes all
the business of the firm, as such. It takes from the control of each all the
property, with which such business is conducted. The purposes of the
business then clearly do not require that such a power should be implied.
What other reason is there for holding, that by the contract of partner-
ship it is to be inferred ? I do not think, that the principle insisted upon
by the counsel for the defendant is the true one, namely, that such a trans-
fer is only invalid, when it operates as a fraud upon the other partner ;
when, for example, it is made against his wishes, and to give preferences,
which he is unwilling to give. It strikes me, that the principle, upon
which the invalidity is established, lies deeper. I consider, that neither,
during the existence, nor after the dissolution of a partnership, can such
a transfer be made, because of want of power in any one partner to maks
it. A direct payment of money, or a transfer of property to an acknow-
ledged creditor, is an admitted and a necessary power, during the exist-
CH. VII.] POWERS AND AUTHORITIES. 169
the ordinary trade and business thereof; as for exam-
ple, by buying, or selling, or pledging goods, or by
paying, or receiving, or borrowing moneys, or by draw-
ing, or negotiating, or indorsing, or accepting bills of
exchange, and promissory notes, and checks, and other
negotiable securities,, or by procuring insurance for the
firm, or by doing any other acts, which are incident or
appropriate to such trade or business, according to the
common course and usages thereof.^ So each partner
ence of the partnership. We probably are compelled by authoritiea to go
so far as to say, that it is a necessary surviving power after a dissolution,
in whatever way that is efltected. All that is requisite to test the transfer
is the amount of debt, and the extent of the fund assigned. But upon an
assignment of the property of a firm to a trustee, a complication of duties
and responsibilities is involved. An agent is appointed to control and
dispose of the whole. The capacity, integrity, and industry of another
are brought to the management ; and the fitness of the party selected is
judged of solely by one member of the firm. From what part or principle
of the partnership relation can such an authority emanate ? It is impos-
sible to uphold a rule, which would rob every member of a firm of a voice
and share in this last, and probably most important act of a failing house.
It is no contradiction of this doctrine, that where the assignment is made
after insolvency, and divides the funds with perfect equality among all the
creditors, it will be supported. It is clear, that either partner might file a
bill, obtain an injunction and receiver, and insure an equal distribution of
all the funds. An assignment fairly securing the same equality is an
object of favor in this court. In the absence of any indication on the
part of the copartner of a contrary intention, it may well be inferred, that
he consents to do justice. A serious question might indeed arise in a case
in which, after such an assignment by one partner, the other should make
a transfer of a specific piece of property, in payment of a just debt of the
firm." There is no small difficulty in supporting the dodtrine, even with
these qualifications, that one partner may, make a general assignment of
all the partnership property.
1 3 Kent, Comm. Leet. 43, p. 40 to 42,4th edit.; Story on Agency,
§ 37, 124; Collyer on Partn. B. 3, ch. 1, ^ 4, p. 282, 2d edit. ; Id. B. 2, ■
ch. 2, § 1, p. 128, 129 ; Id. B. 3^ ch. l.^f. 259 ; Id. ^ 1, p. 263, 268 to
293 ; Gow on Partn. ch. 2, § 2, p. 36 to 69, 3d edit. ; Id. ch. 4, § 1, p.
146, 147 ; Watson on Partn. ch. 4, p. 167, 2d edit. ; Id. p. 195. — The
cases on this subject are exceedingly numerous. Many of them will be
PARIS. 15
170 PARTNEKSHIP. [OH. VII.
may consign goods to an agent or factor for sale on
account of the firm, and give instructions and orders
found collected in the elementary writers in the pages above cited. See
also Swan v. Steele, 7 East, R. 210 ; Hope v. Cust, cited by Lawrence, J.,
in 1 East, 63 ; Sandilands v. Marshy 2 Barn. '& Aid. 673 ; U. S. Bank v.
Binney, 5 Mason, K. 176 ; S. C. 5 Peters, K. 529 ; South Carolina Bank
y. Case, 8 Barn. & Cress. 427 ; Livingston v. Eoosevelt, 4 Johns. R. 251 ;
Fisher v. Taylor, 2 Hare, R. 218, 229. In Winship v. Bank of United
States, 5 Peters, R. 529, 561, Mr. Chief Justice Marshall, in delivering'
the opinion of the Court, said ; " Partnerships for commercial purposes ;
for trading with the world ; for buying and selling from and to a great
number of individuals ; are necessarily governed by many general princi-
ples, which are known to the public, which subserve the purpose of justice,
and which society is concerned in sustaining. One of these is, that a
man, who shares in the profit, although his name may not be in the firm,
is responsible for all its debts. Another, more applicable to the subject
under consideration, is, that a partner, certainly the acting partner, has
power to transact the whole business of the firm, whatever that may be,
and consequently to bind his partners in such transactions, as entirely as
himself. This is a general power, essential to the well conducting of
business; which is implied in the existence of a partnership. When,
then, a partnership is formed for a particular purpose, it is understood to
be in itself a grant of power to the acting members of the company to
transact its business in the usual way. If that business be to buy and sell,
then the individual buys and sells for the company, and every person, with
whom he trades in the way of its business, has a right to consider him as
the company, whoever may compose it. It is usual to buy and sell on
credit; and if it be so, the partner, who purchases on credit in the
name of the firm, must bind the firm. This is a general authority, held
out to the world, to which the world has a right to trust. The articles of
copartnership are perhaps never published. They are rarely if ever seen,
except by the partners themselves. The' stipulations they may contain,
are to regulate the conduct and rights of the parties, as between them-
selves. The trading world, with whom the company is in perpetual
intercourse, cannot individually examine these articles, but must trust to
the general powers contained in all partnerships. The acting partners
are identified with the company, and have power to conduct its usual busi-
ness, in the usual way. This power is conferred by entering into the
partnership, and is perhaps never to he found in the articles. If it is to
be restrained, fair dealing requires that the restriction should be made
known. These stipulations may bind the partners; but ought not to
affect those to whom they are unknown, and who trust to the general and
CH. VII. J POWERS AND A^HOBITIES. 171
relating to the sale.^ All such contracts and engage-
ments, acts and things, he has authority to make and
do in the name of the firm, and, indeed, in order to bind
the firm, they must ordinarily be made and done in the
name of the firm, otherwise they will bind the indi-
vidual partner only, who executes them, as his own
private acts, contracts, or other things.^ And this is
well established commercial law." See also Hooper v. Lusby, 4 Camp-
R. 66 ; Le Roy v. Johnson, 2 Peters, R. 198 ; Ex parte Agace, 2 Cox, R.
312 ; 2 Bell, Comm. B. 7, p. 615 to 618, 5th edit.
i 3 Kent, Comm. Lect. 43, p. 40 to 45, 4th edit.
2 S. P. Kirk V. Blurton, 9 Mees. & Welsh. 284 ; Faith v. Richmond,
1 Adol. & Ellis, R. 339 ; Story on Agency, § 37, 39, 41, 147, 155, 161 ;
CoUyer on Partn. B. 3, ch. 1, ^ 4, p. 277, 278, 282, 2d edit. ; Id. B. 3,
ch. 2, § 2, p. 315 to 323, 2d edit.; Pothier on Oblig. n. 83, and note by
Evans ; 3 Kent,(iComra. Lect. 43, p. 41 to 44, 4th edit. — Mr. Chancellor
Kent in his learned Commentaries, in the passage above cited, has sum-
med up the doctrine in the following terms. " In all contracts concerning
negotiable paper, the act of one partner binds all ; and even though he
signs his individual name, provided it appears on the face of the paper,
to be on partn^ship account, and to be intended to have a joint operation.
But if a bill or note be drawn by one partner, in his own name only, and
without appearing to be on partnership account, or if one partner borrow
money on his own security, the partnership is not bound by the signature,
even though it was made for a partnership purpose, or the money applied
to a partnership use. The borrowing partner is the creditor of the firm,
and not the original lender. If, however, the bill be drawn by one part-
ner in his own name upon the firm, on partnership account, the act of
drawing has been held to amount, in judgment of law, to an acceptance
of the bill by the drawer in behalf of the firm, and to bind the firm as an
accepted bill. And though the partnership be not bound at law in such a
case, it is held, that equity will enforce payment from it, if the bill was
actually drawn on partnership account. Even if the paper was made in
a case, which was not in its nature a partnership transaction, yet it will
bind the firm, if it was done in the name of the firm, and there be evi-
dence, that it was done under its express or implied sanction. But if
partnership security be taken from one partner, without the previous
knowledge and consent of the others, for a debt, which the creditor knew
at the time was the private debt of the particular partner, it would be a
fraudulent transaction, and clearly void in respect to the partnership. So,
if from the subject-matter of the contract, or the course of dealing of the
172 PARTNERSHIP. [CH. VII.
entirely in coincidence with the rule of the Roman law,
as to joint employers of ships, against whom the exer-
partnership, the creditor was chargeable with constructive knowledge of
that fact, the partnership was not liable. There is no distinction in prin-
ciple upon this point, between general and special partnerships ; and the
question, in all cases, is a question of notice, express or constructive.
All partnerships are more or less limited. There is none, that embraces,
at the same time, every branch of business ; and when a person deals with
one of the partners in a matter not within the scope of the partnership,
the intendment of law will be, unless there be circumstances, or proof in
the case, to destroy the presumption, that he deals with him on his private
account, notwithstanding the partnership name be assumed. The con-
clusion is otherwise, if the subject-matter of the contract was consistent
with the partnership business ; and the defendants in that ease would be
bound to show that the contract was out of the regular course of the
partnership dealings. When the business of a partnership is defined,
known, or declared, and the company do not appear to the world in any
other light than the one exhibited, one of the partners cannot make a
valid partnership engagement, except on partnership account. There
must be at least some evidence of previous authority beyond the mere
circumstance of partnership, to make such a contract binding. If the
public have the usual means of knowledge given them, and no acts have
been done or suffered by the partnership, to mislead thena, every man is
presumed to know the extent of the partnership, with whose members he
deals ; and when a person takes a partnership engagement without the
consent or authority of the firm, for a matter that has no reference to the
business of the firm, and is not within the scope of its authority, or its
regular course of dealing, he is, in judgment of law, guilty of a fraud.
It is a well-established doctrine, that one partner cannot rightfully apply
the partnership funds to discharge his own preexisting debts, without the
express or implied assent of the other partners. This is the case, even
if the creditor had no knowledge at the time of the fact of the fund being
partnership property. The authority of each partner to dispose of the
partnership funds, strictly and rightfully, extends only to the partnership
business, though in the case of lona fide purchasers, without notice, for a
valuable consideration, the partnership may, in certain cases, be bound by
the act of one partner. But, if the negotiable paper of a firm be given
by one partner on his private account, and that paper, issued within the
general scope of the authority of the firm, passes into the hands of a hona,
fide, holder, who has no , notice, either actually or constructively, of the
consideration of the instrument ; or if one partner should purchase, on
his private account, an article, in which the firm dealt, or which had an
CH. Vn.] POWERS AKD AtJTHORITIES. 173
citorial action lay. Si plures navem exerceant, cum
quolibet eorum in solidum agi potest. Ne in plures de-
stringatur, qui cum uno contraxerit? Jure societatis
per sodam cere alieno socius non dbligaiur, nisi in com-
munem arcam pecunice versce sunt? This is also the
rule of the French law/ and of the Scottish law*
immediate connection with the business of the firm, a different rule ap-
plies, and one, which requires the Knowledge of its being a private, and
not a partnership transaction, to be brought home to the claimant. These
are general principles, which are considered to be well established in the
English and American jurisprudence." In some cases, however, it is a
matter of great nicety to decide^ whether the partner alone is bound, or
the partnership. Thus, if a bill is drawn upon a firm, and is accepted by
one of the firm in his own name, it will be treated as an acceptance of the
firm. Wells v. Masterman, 2 Esp. B. 731 ; Mason v. Sumsey, 4 Camp. B.
384 ; Beach v. State Bank, 2 Carter, 488 ; Collyer on Partn. B. 3, ch. 1,
§ 2, p. 274, 275, 2d edit. So, where a note was drawn, "i promise," and
was signed "for A. B.'& C. — A.," it was held to bind the partnership.
Hall 11. Smith, 1 B. & Cressw. 407; Collyer on Partn. B. 3, ch. 1, § 2,
p. 277, 278, 2d edit. ; Lord Galway v. Mathew, 1 Camp. R. 403. See also
Story on Agency, § 154, 275, 276 ; Doty v. Bates, 11 John. K. 544 ; Gow
on Partn. ch. 2,^ 2, p. 40 to 42, 3d edit. ; Id. p. 49, 50 ; Watson on Partn.
ch. 4, p. 214, 2d edit. ; U. States Bank v. Binney, 5 Mason, B. 176 ; S. C.
5 Peters, R. 529 ; Faith v. Richmond, 3 Perr. & Dav. 187.
I- Dig.Lib. 14, tit. 1, 1. 25 ; Id. 1. 2 ; Pothier, Pand. Lib. 14, tit. 1, n. 10 ;
1 Domat, B. l,tlt. 16, § 3, art. 6, 7; Dig. Lib. 14, tit. 1, 1. 4, § 1, 2 ;
1 Domat, tit. 8, § 4, art. 16 ; Story on Agency, § 124, note.
2 Dig. Lib. 17, tit. 2, 1. 82 ; 1 Domat, B. 1, tit. 8, § 3, art. 10.
3 Pothier on Oblig. n. 83.
* 2 Bell, Comm. B. 7, ch. 1, p. 615, 5th edit. ; Erks. Inst. B. 3, tit. 3,
§ 20. — Mr. Erskine says ; " It hath been much disputed, how far an obli-
gation, signed by one of the partners, affects the company or copartnery
by the Roman law; as to which, a variety of distinctions hath been
imagined "by Doctors, to reconcile the different expressions of the Roman
jurisconsults. According to our present practice, the partners in private
companies generally assume to themselves a firm or name, proper to their
own company, by which they may be distinguished in their transactions ;
and in all deeds subscribed by this name of distinction, every partner is,
by the nature of copartnery, understood to be intrusted with a power from
the company of binding them. Any one partner, therefore, who signs a
bill, or other obligation, by the company's firm, obliges all the other part-
15*
1^4 PAETNEKSHIP. [CH. YD.
Pothier says ; Whatever may be the authority of a
partner, in order that a debt contracted by him should
bind his partners, it is necessary that it should be
contracted in the name of the firm.'
§ 102 a. In the remarks which have been already
made, in respect to the power of each partner to bind
the firm by bills of exchange, promissory notes,
checks, and other negotiable instruments, we are to
understand that this doctrine is not applicable to aU
kinds of partnership, but is generally limited to part-
nerships in trade and- commerce, for in such cases it
is the usual course of mercantile transactions, and
ners ; but wliere he subscribes a deed by his own proper subscription,
the creditor, who followed his faith alone in the transaction, hath no
action against the company, unless he shall prove, that the money lent or
advanced by him was thrown into the common stock." Lord Stair says ;
" The same question is incident here, that before hath been touched con-
cerning mandates, when one or more of the parties act in the nfetter of
the society, whether thereby the whole society be obliged by the obliga-
tions of these ? Whether obligations, made to these, constitute the society
creditor ? O^r whether real rights, acquired by these, are ipso facto com-
mon to the society, or if there be but an obligation upon the actors to
communicate the property always remaining in the actors, till they effect-
ually cbmmunicate ? The resolution of this being the same with that in
mandates, we refer you thither, and say only this in general, that when
these parties only act in the name of the society, and by its express
warrant, or by what they have been accustomed to do, in so. far they are
not only partners but mandators, and it hath the same effect, as if the
society had acted itself. But when they act not so, there doth only arise
an obligement upon the partners-actors to communicate ; in the mean time
the property remaineth in the actors ; and if transmitted to others before
this communication, the society wiU be thereby excluded, but the actors
will remain obliged for reparation of the damage and interest of the
society. And this will hold, though things be bought or acquired by the
common money of the society ; but all the natural interest, birth, fruits,
and profit of the society, is of itself and instantly, common to the society."
Stoir's Inst. B. 1, tit. 16, s. 6, p. 159.
1 Pothier, de Societe, n. 100, 101. But see Newton v. Boodle, 3 Man-
ning, Granger & Scott, R. 792 ; Post, § 202.
CH. Vn.] POWERS AND AUTHORITIES. 175
grows out of the general customs and .laws of mer-
chants, which is, a part of the common law, and is
recognized as such.^ . But the same reason does not
apply, or at least may not apply to ojfcer partnerships,
unless indeed it is the common custom or usage of
such business to hind the firm by negotiable instru-
ments; or it is necessary for the due tra,nsaction there-
of. Hence, attorneys -who are in partnership have no
implied authority to become parties to negotiable
instruments, and to bind the firm thereby. The
authority to do such acts must in such cases be
either expressly given, or be recognized as proper and
necessary, or in the usual course of the particular
business of that firm.^
§ 103'. This doctrine of the common law, as to the
general right and authority of each partner to bind
the firm, and act for the firm in all partnership trans-
actions, equally applies to all cases of partnership in
trade, whether the partners be all known, or some be
secret or domant partners ; ^ [and it exists so long as
the relation continues, notwithstanding the objection of
1 Hedley ». Bainbridge, 3 Adol. & Ell. N. R. 316, 321.
a Ibid.
3 Dormant partners are bound by tie written unsealed contracts of the
ostensible partners, as much as by their parol contracts. But not, for
technical reasons, by their sealed contracts. Beckham v. Drake, 9 Mees.
6 Welsb. K. 79, 91, 92, 94, overruling the case of Beckham v. Knight,
4 Bing. New Cas. 243 ; 1 Mann. & Gr. 738. See also Swan v. Steele,
7 East, R. 210 ; Sandilands v. Marsh, 2 Barn. & Aid. 673; U. S. Bank
V. Binney, 5 Mason, E. 176 ; S. C. 5 Peters, R. 520 ; CoUyer on Partn.
B. 3, ch. 1, p. 259, 2d edit. The yrhoTfi doctrine is well summed up by
Mr. Chief Justice Marshall, in the case of Binney v. U. States Bank,
5 Peters, R. 529, 561, where he states the reasons of the general rule,
and the application of it to dormant partnership. Immediately after the
passage already cited, (ante, § 102, note,) he added as follows ; " The
counsel for the plaintiff in error supposes, that jliough these principles
176 PARTNERSHIP. [CH. YD.
the other pariaiers.-'] It doubtless has its foundation in
common convenience and public policy in regard to all
commercial operations, if indeed, in" a general Yiew it
might not be deeafted almost a matter of moral necessity
in the enlarged intercourse and. trade of modern nations.
may be applicable to an open avowed partnership, they are inapplicable to
one that is secret. Can this distinction be maintained ? If it could, there
would be a difference between the responsibility of a dormant partner,
and one whose name was to the articles. But their responsibility, in all
partnership transactions, is admitted to be the same. Those, who trade
with a firm on the credit of individuals, whom they believe to be members
of it, take upon themselves the hazard that their belief is well founded.
If they are mistaken, they must submit to the consequences of their mis-
take ; if their belief be verified by the fact, their claims on the partners,
who were not ostensiblej are as valid as on those whose names are in the
firm. This distinction seems to be founded on the idea, that, if partners
are not openly named, the resort to them must be connected with some
knowledge of the secret stipulations between the partners, which may be
inserted in the. articles. But this certainly is not correct. The responsi-
bility of unavowed partners depends on the general principles of commer-
cial law, not on the particular stipulation of the articles. It has been
supposed, that the principles laid down in the third instruction, respecting
these secret restrictions, are inconsistent with the opinion declared, in the
first ; that in this case, where the articles were before the court, the ques-
tion, whether this was in its origin a secret or an avowed partnership,
had become unimportant. If this inconsistency really existed, it- would
not affect the law of the case ; unless the Judge had laid down principles,
in the one or the other instruction, which 'might affect the party injuri-
ously. But it does not exist. . The two instructions were given on differ-
ent views of the subject, and apply to different objects. The first re-
spected the parties to the firm, and their liability, whether they were or
were not known, as members of it ; the last applies to secret restrictions
on the partners, which change the power held out to the world, by the
law of partnership. The meaning of the terms ' secret partnership,' or
the question, whether this did or did not come within the definition of a
secret partnership, might be unimportant ; and yet the question, whether
a private agreement between the^ partners, limiting their responsibility,
was known to a person trusting the firm, might be very important." See
also Watson on Partn. ch. 4, p. 168 to 174, 2d edit.; Furze v. Sherwood,
2 Adol. & Ell. New K. 388, 417.
I Wilkins v. Pearce, 5 Denio, R. 541 ; gage v. Sherman, 2 Comstock,
R. 418.
CH. VII.] POWEES AND AUTHORITIES. 177
If it were not admitted, then, it would be necessary,
that every partner should expressly agree to, or confirm
every transaction affecting the partnership, before it
could acquire any absolute obligation, or be- conclusive
upon the partnership. The absence, or illness, or re-
mote residence, of a single partner might greatly delay
and retard, if it would not prostrate the best concerted
enterprize or bargain; and before any negotiation
could be completed, it would be indispensable, that the
other contracting party should first by inquiry ascer-
tain who all the parties were in any particular firm,
and whether they had all deliberately assented thereto.
The arrangements of commerce, which are now accom-
plished in a single hour or day, might thus require
whole weeks, or even months, before they could be ma-
tured or established.-'^ To avoid this difficulty, the com-
mon law has adopted a very satisfactory, and at the
same time a very facile rule. It decides, that in the
absence of any known, controlling stipulation between
the parties, each partner shall be deemed invested by
the consent of all of them with an equal and complete
power of administration of the whole partnership pro-
perty, funds, and affairs. It gives to all and each of the
partners, what the Roman law allows to be delegated
to one by a special authority, the entire administration
of all the partnership business, and thereby, as such
administrator, he may act for the whole, and in the
name of the whole. Si plures exerceant, unum autem
de numero suo ma^istrwm fecerwt, hujus nomine in
solidum poierunt conveniri?
1 Watson on Partn. ch. 4, p. 166, 167, 2d edit; Gow on Partn. ch. 2,
§ 2, p. 36, 37, 3d edit.; CoUyer on Partn. B. 2, ch. 2, § 1, p. 128, 129.
2 Dig. Lib. 14, tit. 1, 1. 4, ^ 1 ; Civil Code of France, art. 1836, 1857.
178 PARTNERSHIP. [CH. VH.
§ 104. It has, therefore, been well remarked by a
learned writer, that, " Although the general rule of law
is, that no one is liable upon any contract, except such
as are privy to it ; yet this is not contravened by the
liability of partners, as they may be imagined virtually
present at, and sanctioning the proceedings, they singly
enter into in the course of trade ; or, as each is vested
with a power, enabling them to act at once as princi-
pals, and as the authorized agents of their copartners.
It is for the advantage of partners themselves, that they
are thus held liable, as the credit of their firm in the
mercantile world is hereby greatly enhanced, and a vast
facility is given to all their dealings ; insomuch, that
they may reside in distant parts of the country, or in
different quarters of the globe. A due regard to the
interests of strangers is at the same time observed';
for, where a merchant deals with one of several part-
ners, he goes upon the credit of the whole partnership,
and therefore ought to have his remedy against all the
individuals who compose it." -^
§ 105. Whenever, therefore, credit is given to a
firm, within the scope of the business of that firm,
whether the partnership be of a general or of a limited
nature, it will bind all the partners, notwithstanding
any secret reservations between them, which are un-
known to those who give the credit. And no subse-
quent misapplication of the fund by the partner
procuring it, to which the creditor is not a party, or
privy, will exonerate them from liability. Thus, for
example, if one partner should borrow money on the
credit of the firm, whigh he should subsequently mis-
' Watson on Partn. ch. 4, p. 167, 168.' See also Gow on Partn. ch. 2,
^ 2, p. 36, 37, 3d edit.
CH. VII.] POWERS AND AUTHORITIES. 179
apply to his own private purposes without any know-
ledge or connivance on the part of the lender, the firm
would be bound therefor.^
§ 106. Nor will it make any difiference in cases of
this sort, as to third persons, whether the partnership
is carried on for the benefit of the partners themselves
alone, or for the benefit of others, who are the eestuis
que trust, or beneficiaries. In each case the trustees
and the eestuis que trust, or beneficiaries, will be equally
bound by the acts of a single partner, and equally
liable therefor to third persons.^ The same rule ap-
plies, whether the partnership is carried on in a firm or
company name, or in the name of one partner only.
If in the name of the partner only, it will, however, be
necessary to show, that the transaction was in the
business, or upon the credit of the partnership, and
not of that partner alone.^
§ 107. The like rule applies to other acts, done by any
partner, touching the partnership business, and' to any
acknowledgments, representations, declarations, admis-
1 U. States Bank v. Binney, 5 Mason, R. 176, 187, 188 ; Etheridge v.
Binney, 9 Pick. E. 272, 274, 275 ; Winship v. Bank of U. States, 5 Peters,
E. 629 ; Backer v. Lee, 8 Georgia, 291.
2 Collyer on Partn. B. 3, ch. 1, p. 260 ; Tliicknesse v. Bromilow, 2
Cromp. & Jerv. 428; Clavering v. Westley, 3 P. Will. 429; -Furze v.
Sherwood, 2 Adol. & Ell. New E. 388, 417, 418.
3 Collyer on Partn. B. 3, ch. 1, § 2, p. 270 to 277, 2d edit. ; Baker v.
Charlton, 1 Peake, E. Ill; 1 Mont, on Partn. p. 37, note (c) ; 2 Bell,
Comm. B. 7, p. 615 to 618, 5th edit. ; Swan v. Steele, 7 East, R. 210; U.
States Bank v. Binney, 5 Mason, E. 176 ; S. C. 5 Peters, E. 629 ; Buckner
V. Lee, 8 Georgia, 291 ; Etheridge v. Binney, 9 Pick. E. 272 ; Ex parte
Bolitho, Buck's Bankr. B. 100 ; South Carolina Bank v. Case, 8 B. &
Cressw. 427 ; Manuf. & Mech. Bank w. Winship, 5 Pick. E. 11 ; Mifflin
V. Smith, 17 Serg. & E. 165 ; Furze v. Sherwood, 2 Adol. & Ell. New R.
388, 417, 418. This last case involved the same point as was decided in
U. States Bank v. Binney, 5 Mason, E. 176, and it was decided the
same way.
180 PARTNERSHIP. [CH. VII.
sions, or undertakings of aay partner relating thereto.
Thus the representation of any fact, or a misrepresen-
tation of any fact, made in any partnership transaction,
by one partner, will bind the firm.^ So, the acknowl-
edgment of one partner, during the continuance of the
partnership, of a debt, as due by the partnership, will
amount to a promise, binding on the firm. So, the admis-
sion of any fact, by one partner, material as evidence
in a suit, will, under the like circumstances, be deemed
the admission of all the partners. So, a part payment
of a debt of the firm, by one partner, will not only
extinguish fro iardo the partnership debt, but will,
under the like circumstances, operate as an admission
of the existence of the residue of the debt, binding on
the partnership.^ So, the acts of joint proprietors of
stage coaches, in relation to their partnership concerns,
will be deemed the acts of all of them, and binding on
all.^ So, notice to or by one of a firm is deemed notice
to or by all of them.*
1 Gow on Partn. ch. 2, § 2, p. 55, 3d edit.; Id. 129, 130; Eapp v.
Latham, 2 Barn. & Aid. 795; Collyer on Partn. B. 3, ch. 1, § 4, p. 290 ;
Id. § -5, p. 296 to 298, 2d edit. ; Lucas v. De la Cour, 1 Maule & Selw.
250 ; Blair ». Bromley, 5 Hare, R. 559.
2 Collyer on Partn. B. 3, ch. 1, § 4, p. 282 to 286, 290, 2d edit. ; Lacy
t!..M'Neil, 4 DottI. & Kyi. 7; Pittam v. Poster, 1 Barn. & Cressw. 248;
Burleigh v. Stott, 8 B. & Cressw. 36. — The authorities are, all agreed on
this point, during the existence of the partnership. But whether such an
acknowledgment or admission, or promise, or payment by one partner,
after the dissolution of the firm, will bind the others, is a matter upon
■which there are conflicting authorities ; and the point will be hereafter
discussed in another connection. See Bell v. Morrison, 1 Peters, R, 351,
373; 3 Kent, Comm. Lect. 42, p. 49, 50, 4th edit.; Whitcombu. Whiting,
2 Doug. R. 652 ; Brisban v. Boyd, 4 Paige, R. 17.
, 3 Collyer on Partn. B. 3, ch. 1, § 4, p. 287, 288, 2d edit. ; Helsby v.
Mears, 5 B. & Cressw. 504.
4 Collyer on Partn. B. 3, ch. 1, § 4, p. 290 to 292, 2d edit.; Bignold v.
Waterhouse, 1 Maule & Selw. 249.
CH. VII.] POWERS AND AUTHOEITIES. 181
§ 108. The principle extends further, so as to bind
the firm for the frauds committed by one partner in the
course of the transactions and business of the partner-
ship, even vphen the other partners have not the slight-
est connection with, or knowledge of, or participation
in the fraud ; ^ for, (as has been justly observed,) by form-
ing the connection of partnership, the partners declare
themselves to the world satisfied with the good faith
and integrity of each other, and impliedly undertake to
be responsible for what they shall respectively do within
the scope of the partnership concerns.^ Hence, if in
the business of the partnership, money is received, partly
by one of the firm and partly by another, to be laid out
upon a mortgage, and a mortgage is forged by one part-
ner, without the knowledge of the other, the innocent
partner will be liable for the whole money .^ So, if repre-
sentations of certain facts, as existing, are fraudulently
made by one partner, unknown to the others, in the
partnership business, aiyi the facts never existed, but
the whole statement is a mere fiction, the firm will be
bound to the same extent, as if it were true, and the
facts existed.* , [And in BcLuity the limitation in bar
1 Pierce v. "Wood, 3 Foster, 520.
2 Gow on Partn. ch. 2, § 2, p. 55; Id. ch. 4, § 1, p. 146, 147, 148, 8d
edit. ; Collyer on Partn. B. 3, ch. 1, § 5, p. 293 to p. 304, 2d edit. ; Watson
on Partn. ch. 4, p. 175, 2d edit.
3 Willett ». Chambers, Cowp. K. 814 ; Stone v. Marsh, 1 Kyan & Mood.
R. 364 ; 6 Barn. & Cresaw. 561 ; Hume v. Bolland, 1 Ryan & Mood.
371 ; Keating v. Marsh, 2 Clark & Finell. 250 ; Manuf. & Mech. Bank v.
Gore, 15 Mass. R. 75; Boardman v. Gore, 15 Mass. R. 331; Blair v.
Bromley, 5 Hare, R. 542. [But see Sims v. Brutton, 1 Eng. Law & Eq.
R. 446.]
* Rapp V. Latham, 2 Barn. & Aid. 795 ; Hume v. Bolland, 1 Ryan &
Mood. 371 ; Beach v. State Bank, 2 Carter, 488 ; Doremas v. M'Cormick,
7 Gill, 49 ; Hawkins v. Appleby, 2 Sandf. 421.
PABTN. 16
182 PARTNERSHIP. [CH. VH.
of the claim in such cases does not begin to run until
the time of the discovery of the fraud.] ^ This whole
doctrine proceeds upon the intelligible ground, that,
where one of two innocent persons must suffer by the
act of a third person, he shall suffer, who has been the
cause or occasion of the confidence and credit reposed
in such third person.
§ 109. The French law has adopted a rule essential-
ly the same, as that of the common law. The admin-
istration of the affairs of the partnership may be
delegated or entrusted to one or more of the partners.^
But in the absence of any stipulation to this effect, the
partners are deemed to have given reciprocally to each
other the power of administering the one for the other ;
and what each one does is valid even for the share of
his partners, without his having obtained their consent.^
1 Blair v. Bromley, 5 Hare, R. 542. See Sims v. Brutton, 1 Eng. Law
& Eq. R. 446. •
s Code Civil of France, art. 1856, 1857 ; Pothier, De Society, n. 66, 67,
89, 90, 96, 98 ; Pothier. on Oblig. n. 83 ; Code of Louisiana (of 1825) art.
1841.
3 Code Civil of France, art. 1859 ; Pothier, De Societe, n. 90 to n. 100 ;
Pothier on Oblig. n. 83, 89. — Pothier (on Obligations, n. 83)_ has ex-
pounded the reason of this doctrine exactly ka it would be stated at the
common law. " We are also deemed to contract by the ministry of our
partners, when they contract, or are regarded as contracting for the affairs
of the partnership. For, by entering into the partnership with them, and
permitting them to transact the business of it, we are deemed to have
adopted and approved beforehand of all the contracts, which they may
make for the affairs of the partnership, as if we had contracted jointly
with them, and we have acceded beforehand to all the consequent obliga-
tions. A partner is deemed to contract for the affairs of the partnership,
whenever he adds to his signature the words, and Company, although
afterwards the contract does not turn to the benefit of the partnership.
For instance, if he borrows a sum of money, for which he gives a note
with the words, and Company, added to his signature, although he has
employed the money in his private affairs, or lost it at play, he is still
deemed to have contracted for the affairs of the partnership, and conse-
CH. Vn.] POWERS AND AUTHORITIES. 183
In these respects the French law differs (as has been
already suggested) from the Roman law ; for the latter
quently obliges his partners as having borrowed the money jointly with
him, and as having contracted by his ministry. For his partners must
take the consequence of -having entered into their engagement with such
a person ; but those, who contract with him, ought not to be deceived and
suffer by his want of fidelity. The signature, and Company, does not,
however, oblige my partners, if it appears by the very nature of the con-
tract, that it does not. concern the affairs of the partnership ; as if I put
that signature to the lease belonging to myself and not to the Company.
When the partner does not sign and Company, he is deemed to have only
contracted for his own private affairs, and does not bind his partners,
unless the creditor shows by other proof, that he contracted in the name
of the partnership, and that the contract actually related to the partner-
ship affairs." See also Story on Agency, § 124, note (1), and Pothier on
bblig. n. 447, 448; Pothier, De Society, n. 96. Mr. Bell in his learned
Commentaries (2 Bell, Comm. B. 7, p. 611, 5th edit.) has made some very
appropriate remarks on the state of the Roman law. " Partnership is
thus a contract involving important relations to the public, as well as to
the contracting partners. In the infancy of trade it is little regarded or
understood; and no proofs perhaps are more decisive of the low state of
mercantile intercourse in Rome, than the very imperfect state of the
Roman jurisprudence with respect to partnership. In the simple view of
partnerdiip as a mere society, in all that relates to the shares of parties
accidentally associated as joint proprietors, or the rules of contribution
and division in the management of a common stock or concern, there is
no defect in the Roman law. But the subject is never contemplated in
that more delicate and important light, which presents for decision the
interest and dealings of the company with third parties, and the powers
of partners to pledge the stock and credit of the society with the indi-
vidual responsibility of the partners. In modern times, the effect of this
contract, in its relations to third parties, are by far the most important
The question in this view is, not what share or profit, or what proportion
of loss, upon a common stock, each partner is to gain or to suffer ; but
what are the rights of those, wKo deal with the company, in claiming
preferably on its common stock, and what responsibility is undertaken by
the several partners for contracts lona fide entered into by third parties ?
In this inquiry, be the reciprocal rights and liabilities of the partners
what (hey may in respect to each other, they each, in their relation to the
public, hold an authority, which no force of private stipulation can alter
or restrain ; and by means of which, in the face of the most express
injunctions or prohibitions of their contract, the several partners, or even
184 PARTNERSHIP. [CH. Vn.
did not ordinarily clothe one partner (any more than
any other agent) with the power of generally adminis-
tering the affairs of the partnership, unless it was
especially delegated and confided to him. Under other
circumstances, each one could act only for his own
share, and so bind himself^ Nemo ex sociis plus parte
sua potest alienare, etsi totorum honorum socii sint? Item
magistri societatum pactum etprodesse et ohesse constat? Si
socius propriam pecuniam mutuo dedit, omnino creditam [pe-
cuniam\facU, Ucei coeteri dissensennt. Quod, si communem
\_pecumam'\ numeravit, non alias crediiam efficU, nisicosten ■
quoque consentiant ; quia suce partis tantum alienationem
Jiahuii* This delegation of the administration of the
partnership, or assent to any contract made by one
partner, need npt, under the Roman law, be express j
but might be implied from circumstances. But it has
been a matter of no small discussion among the civi-
those perhaps, who may long have left the partnership, may, by the act of
any one of the number, be made responsible to third parties to the whole
extent of their private fortune. It is in this view chiefly, that definitions
of partnership (which, like all others, are proverbially dangerous, seldom
useful,) are to be received with peculiar caution, if borrowed or derived
from the writings of the civilians ; who neglect almost entirely the implied
power and unlimited mandate of the partners to bind the rest. Even in
the Jjyritings of some modern lawyers, this limited character appears in
their definitions of partnership, while their doctrine extends to conse-
quences, which are "not presented prominently in the description." See
post, note (5), of this section.
1 Pothier, Pand. Lib. 17, tit. 2, n. 26 to 29 ; 1 Domat, B. 1, tit. 8, § 4,
art. 16 ; Dig. Lib. 17, tit. 2, 1. 68 ; iStory on Agency, § 124, note (1) ; Id.
§425 to 427; Ante, § 102.
2 Dig. Lib. 17, tit. 2, 1. 68 ; Pothier, Pand. Lib. 17, tit. 2, n. 26, 27.
3 Dig. Lib. 2, tit. 14, 1. 14 ; Pothier, Pand. Lib. 2, tit. 14, n. 46 ; 1 Domat,
B. 1, tit. 8, § 4, art. 16 ; Pothier, De Society, n. 89.
4 Dig. Lib. 12, tit. 1, 1. 16; Pothier, Pand. Lib. 12, tit. 1, n. 12;
1 Domat, B. 1, tit. 8, § 4, art. 16.
CH. Vn.] ' POWERS AND AUTHOEITIES. 185
lians, what circumstances were sufficient for such a
purpose.^
1 Story on Agency, § 124, n. (1); Pothier, De Society, u. 96. — In
these respects the Boman law seems to have followed out its own doctrines
respecting the rights, duties, and obligations of principals and agents.
The following statement of the general provisions of that law on this
subject may not be unacceptable. By the Roman law, as it originally
stood, the principal could not ordinarily sue or be sued on the contract
made through the instrumentality of his agent; but the latter was
generally treated as the proper and sole contracting party. This was
subsequently altered by the edicts of the Prsetor, so far as it respected the
rights of third, persons to institute suits against the principal, in cases
falling within the reach of the exercitorial and institorial actions. But
the exercitorial action did not lie in favor of the owner or employer
(exercitor) against the other contracting party. He was not, however,
without a remedy ; for, if there was a contract of hire with the. master,
the owner or employer might recover the hire in a direct action ex localo ;
if it was a gratuitous contract, he might maintain an action ex mandato.
So the Digest has declared. Sed ex contrario, exercenti navem adversus
eos, qui cum magistro contraxerunt, actio, non poUicetur, quia non eodem
auxilio indigebat ; sed aut ex locato cum magistro, si mercede operam ei
exhibet; aut si gratuitam, mandati'agere potest. The institorial action
was, also, in its terms apparently limited to suits against the principal.
.Xquum Frsetori visum est, sicut commoda sentimus ex actu Institorum,
ita etiam obligari nos ex contractibus ipsorum et conveniri. But no like
action lay against the other contracting by the principal. However, he
was not without remedy; since, by a cession of the right of action from
the Institor, he might, in some eases, maintain a suit founded thereon
against the other party. Sed non idem facit circa eum, qui Institorem
prseposuit, ut experiri possit. Sed, si quidem servum proprium Institorem
habuit, potest esse securus, acquisitis sibi actionibus. Si autem vel
alienum servum, vel etiam hominem liberum, actione deficieter. Ipsum
tamen Institorem, vel Dominum ejus convenire poterit, vel mandati, vel
negotiorum gestorum. It is added; Marcellus autem ait, debere dari
actionem ei, qui Institorem prsposuit, in eos, qui cum eo contraxerint.
And Gains held, that the principal might maintain the suit, if he could
not otherwise vindicate his right ; Eo nomine, quo Institor contraxit, si
modo aliter rem suam servare non potest. In special cases, also, where
the contract, made through an agent, was declared to be directly obligatory
between the principal and the other contracting party, (as, for example,
in case of a sale,) the principal might maintain a direct action thereon.
Thus, the Digest puts it ; Si Procurator vendiderit, et caverit emptori ;
16*
186 PARTNERSHIP. • [CH. 'Vir.
§ 110. The limitations at the common law, upon this
authority of each partner to bind the partnership, may
quasretur, an Domino, vel adversus Dominum actio dari debeat? Et Papi-
nianus, (Lib. 3, Responsorum,) putat, cum Domino ex empto agi posse
utili actione, ad exempt um Instiiorise actionis si modo rem vendendam '
mandavit; ergo et per contrarium, dicendum est, utilem ex emptio actio-
nem Domino competere. But, except in these and a few other cases, the
general rule seems to have prevailed in the Koman law, that reciprocal
actions lay in cases of agency only between the direct and immediate
parties thereto. The modern nations of continental Europe seem, with
great wisdom, to have adopted the general doctrine of allowing reciprocal
actions between the principal and the other contracting parties, where it
is not excluded by the nature, or express terms of the contract. The
rights of principals against third persons, arising from the acts and con-
tracts of their agents; may be further illustrated by the consideration of
payments made to or by the latter. And, first, in relation to payments
made to agents. Such payments are good, and obligatory upon the prin-
cipal in all cases, where the agent is authorized to receive payment, either
by express authority, or by that resulting from the usage of trade, or from
the particular dealings between the parties. In such cases, the maxim of
the Roman law is justly applied ; Quod jussu alterius solvitur, pro eo est,
quasi ipsi solutum esset. But, the principal may intercept such payment,
by giving notice to the debtor not to pay to the agent, before the money
is paid ; and, in such a case, if the a,gent has no superior right, from a
lien or otherwise, any subsequent payment, made to the agent, will be
invalid, and the principal may recover the money from the debtor. Story
on Agency, § 425 to 429 ; Id. § 163, 261, 271. See, also, on this subject,
Pothier on Oblig. n. 54 to 84, and especially n. 82, 83, 447, 448. Pothier
(n. 82) says ; " We contract through the ministry of another, not only
when a person merely lends us his ministry by contracting in our name
and not in his own, as when we contract by the ministry of a tutor,
curator, agent, &c., in theii? quality as such. We are also deemed to
contract by the ministi-y of another, though he contracts himself in his
own name, when he contracts in relation to the ^affairs which we have
committed to his management; for we are supposed to have adopted and
approved, beforehand, of all the contracts, which he may make respecting
the affairs committed to him, as if we had contracted ourselves, and are
held to have acceded to all the obligations resulting therefrom. Upon
this principle is founded the Actio Exeroitoria, which those, who have
contracted with the master of a ship for matters relative to the conduct
of such ship, have against the proprietor, who has appointed the master.
Upon the same principle is founded the Actio Institoria, which those, who
CH. Vn.] POWEES AND AUTHOKITEES. 187
«
be readily deduced from what has been already stated.
The authority can be exercised only in cases falling
within the ordinary business and transactions of the
firm, where the other party has no knowledge or notice,
that the partner is acting in violation of his duties and
obligations to the firm, or for purposes disapproved of
by the firm, or in fraud of the rights thereof.^
§ 111. In the first place, the authority, to be valid,
must be exercised in cases within the scope of the
ordinary business and transactions of the firm.^ Thus,
^ for example, in cases of factorage, it is a common, al-
though not an invariable usage, to guaranty the solven-
cy of the purchasers on sales made by the factor, and
' to receive therefor a commission del credere ; and this
would be deemed an authority within the scope of a
partnership, formed for factorage purposes, although it
could not be shown, that the partners had stipulated
for that power in their articles of partnership, or even
if they had excluded it by such articles, if it was un-
have contracted with the manager of a commercial concern, or a manur
factory, have against the employer (le commettant) ; and the Actio utilis
^nstitoria, which relates to conlracts made with a manager, of any other
kind. Observe, there is a difference between these managers, and tutors,
curators, syndics, &c. When these managers contract, they contract
themselves, and enter into a personal obligation. Their employers are only
regarded as accessary to their contracts, and to the obligations resulting
from them ; whereas the others do not contract themselves, but only afford
their ministry in contracting, and therefore do not obhge themselves, but
only those who contract by their ministry.'' See Ante, note (2) of this
section.
1 CoUyer on Partn. B. 3, ch. 1, p. 259 to p. 2&2, 2d edit; Story on
Agency, § 125 ; Ex parte Agace, 2 Cox, K. 312 ; Watson on Partn. ch. 4,
p. 180, 2d edit. ; Farrar v. Hutchinson, 9 Adol. & Ellis, 641.
2 Watson on Partn. ch. 4, p. 180, 194, 2d edit.; Sandilands v. Marsh,
2 Barn. & Aid. 677, 679.
188 PARTNERSfflP. [CH. Til.
known to the principal, for whom they were dealing.^
So, it is the common course of business for persons
engaged in the purchase and sale of horses, to give a
warranty on sales made by them ; and therefore a war-
ranty, made in the course of such business by one
partner, would bind the partnership, notwithstanding
the articles prohibited such warranty, if the purchaser
were unacquainted therewith.^ On the other hand,
where it is not the common course of the business, in
which a partnership is engaged, to give letters of
guaranty or of credit, if one partner should give such
a letter of guaranty or credit, it would not be binding
on' the firm, although given in the name thereof.^
[And although such guaranty might be convenient
and reasonable for accomplishing the objects of the
partnership, it would, not be binding upon the. other
partners without their recognition or adoption, unless
it was reasonably necessary for the business of the
.partnership.*]
■ § 112. For the like reason, if one partner should in
the name of the firm make purchases of goods, not
connected with the known business of the firm, such
purchases would not bind the partnership. Thusjt for
example, if a partnership is engaged in the mere busi-»
ness of selling dry goods by wholesale or retail, uncon-
' See Sandilands r. Marsh, 2 Barn. & Aid. 678 ; Collyer on Partn. B.
3, ch. 1, § 3, p. 279, 28^, 281 ; Hope v. Cust, 1 East, K. 48 ; Ex parte
Nolte, 2 Glyn & Jam. 306.
8 Collyer on Partn. B. 3, ch. 1, § 260; Sandilands v. Marsh, 2 Barn. &
Aid. 679, per Abbott, C. J.
3 CoUyer on Partn. B. S, ch. 1, § 3, p. 279, 280 ; Hope u. Cust, 1 East,
R. 48; Duncan w. Lowndes, 3 Camp. K. 478; Hasleham v. Young, 5
Adol. & EU. New K. 833.
* Bettel V. Williams, 4 Welsby, Hurlstone & Gordon, 623. Overruling
whatever is contrary in Gardom ex parte, 15 Yes. 286.
CH. VII.] POWERS AND AUTHORITIES. 189
nected with navigation, a purchase of a ship by one
partner, in the name of the firm, would not be binding
on the other partners, unless th€fy should assent thereto.
So, if persons are engaged in the mere business of tal-
low chandlers, as partners, a purchase of a cargo of
flour, or of pepper,. or of coffee, or of other things by
one partner, wholly beside the business of the firm,
would not bind the other partners. But if the articles
were such, as might be applied or called for in the
ordinary course of their business, the -purchase of such
articles would bind the firm, even though they were
unnecessary at the time, or were bought contrary to
the private stipulations between the partners, or were
not designed to be used in the partnership at all, if
the vendor were not acquainted with the facts.
I 113. The real difficulty in many cases of this sort
is to ascertain what contracts, engagements, and acts
are properly to be deemed within the scope of the pa,r-
ticular partnership, trade or business ; for these are not
exactly the same in all sorts of trade or business. On
the contrary, in many cases, rights, powers, and author-
ities over the partnership property and partnership
concerns exist either by usage, or by general under-
.standing, or by natural implication, which are wholly
unknown in others. To answer the inquiry, then, sat-
isfactorily, it is not enough to show, that in other trades
or other business, certain rights, pqwers, and authorities
are incident thereto, and may be lawfully exercised by
each of the partners ; but we must see, that they ap-
propriately belong to, or are, by usage or otherwise,
implied or incidental to the particular trade or business
in which the partnership is engaged.^
1 Dickinson v. Valpy, 10 Barn. & Cressw. 128.
190
PARTNERSHIP. [CH. VH.
§ 114. Having enumerated some of the general
powers and authorities, which ordinarily belong to
partnerships, and the general limitations thereof^ (a
subject which will more fuUy occur hereafter in other
connections,) it may be proper here to state, in further
illustration of the foregoing remarks, what powers and
authorities are not ordinarily deemed to be within the
scope of partnerships, and which therefore require
some special delegation or solemn instrument to confer
them. And, in the first plaqe, it may be laid down as
a generally recognized principle, that one partner has
no power or authority to submit or refer to . arbitration
any matters whatsoever, concerning or arising out of
the partnership business.^ The reason assigned is,
that it is not within the scope of the ordinary business
or of the powers or authorities necessary or proper to
carry on the business of the partnership.^ Another
reason is, that the award may call upon the partners to
do acts, which they might not otherwise be compella-
ble to perform.^ But the soundest reason seems to be.
1 Com. Dig. Arbitrament, D. 2; 2 Bell, Comm. B. 7, p. 618, 5th fdit.;
Stead V. Salt, 3 Bing. K. 101 ; Hambridge v. De la Crou6e, 8 Manning,
Granger & Scott, R. 742 ; Adams v. Bankart, 1 Cromp. Mees, & Rose.
681 ; Karthaus v. Ferrer, 1 Peters, R. 222, 228 ; Strangford v. Green,
2 Mod. R. 228; Bachoz v. Grandjean, 1 Mann. 367; Harrington v.
Higham, 13 Barb. 660; Abbott v. Dexter, 6 Cusb. 108; Armstrong v.
Robinson, 5 Gill & Johns. 412; Buchanan «. Curry, 19 Johns. R. 137 ;
3 Kent, Comm. Lect. 43, p. 49, 4th edit.; Ersk. Inst. B. 3, tit. 3, § 23.—
In Pennsylvania and Kentucky a different doctrine is established ; that
one partner may by an unsealed instrument refer any partnership matter
to arbitration, which will bind the partnership. Taylor v. Coryell, 12
Serg. & R. 243 ; Southard v. Steele, 3 Monroe, R. 483. See Catlin v.
Evans, 1 Dev. & Batt. 284 ; per Lord Abinger in Cleworth v. Piokford,
7 Mees. & Welsh. R. 314, 321.
2 Ibid.
3 Gow on Partn. oh. 2, § 2, p. 66 ; Adams v. Bankart, 1 Cromp. Mees.
s
CH. Vn.] POWERS AOT» AUTHORITIES. 191
that, as it takes away the subject-matter from the
ordinary cognizance of the established courts of justice,
%vhich have the best means to investigate the merits of
the case by proper legal proofs and testimony, and the
means of arbitrators to accomplish the same purposes
are very narrow, and often wholly inadequate, it ought
not to be presumed, that the partners mean to waive
their ordinary legal rights and remedies, unless there
be some special delegation of authority to that effect,
either formal or informal.^
& Eosc. R. 68. [It has been decided, that one partner has no implied
authority to consent to an 6rder for judgment in an action against himself
and his copartner. Hambridge v. De la Crou6e, 3 Manning, Granger &
Scott, K. 742. And service of a writ on one partner, after dissolution,
■wUl not authorize judgment against the other. Farer v. Briggs, 18 Ala.
478. An appearance in a suit entered by an attorney, employed by one
of the partners, will be binding and conclusive upon the other partners.
Bennett v. Stickney, 17 Verm, K. 531.]
1 See Adams v. Bankart, 1 Cromp. Mees. & Bosc. 681 ; Bruen v. Mar-
quand, 17 Johns. R. 58; 3 Kent, Coram. Lect. 43, p. 44, 4th edit.;
Boyington v. Boyington, 10 Verm. 107. — Mr. Gow, in the Supplement to
his Treatise on Partnership, London, 1841, ch. 2, § 2, p. 17, says ; " In the
case of Boyd v. Emerson, (2 Adol. & Ell. 184,) one question was, whether
a partner could bind his copartners by a parol submission to arbitration.
But the case being disposed of on other points, it became unnecessary to
decide that question. However, Sir F. Pollock, who had to maintain the
affirmative, in the course of his argument observed, that the point might
be considered as res Integra, and adn^itted that ' one partner cannot bind
another in a matter of arbitration, where the submission is by deed ;
because, in general, he cannot bind his partner by any deed, (Harrison v.
Jackson, 7 T. R. 207.) But it does not follow that one of several
persons, who are general partners, cannot in any way bind the rest by a
submission to arbitration, upon a ^ecifio matter of partnership right.
One partner may bring, or settle an action on behalf of the rest, (Furni-
val V. Weston, 7 B. Moore, 856 ; Harwood and others v. Edwards, Gow
on Partn. 65, note (g), 3d edit.) TPhy may he not enter into an agree-
ment to refer the subject-matter ? And if so, why may not one agree, on
behalf of the rest, to be governed by an opinion, in which both they and
the opposite party may confide ? In Strangford v. Green, (2 Mod. 228,)
192
PARTNERSHIP. [CH. TIL
§ 115. It may not perhaps seem very easy to see,
since one partner alone may release, or even compound,
or compromise a partnership -debt,^ in what essentia*
respect the latter power differs from that, which re-
spects a submission to arbitration. A release by one
partner certainly binds all the partners, as indeed a
receipt for the debt would ; because, as a debtor may
lawfully pay his debt to one of them, he ought also to
be able to obtain a discharge upon due payment.^
the submission appears to have been by arbitration bond, and therefore
the partner could not be bound. In Stead v. Salt, (3 Bing. 101,) the
parties were not partners generally, but only in the dealings, to -which the
award related ; the matter was twice referred. In the first instance, four
partners signed the agreement of reference ; the arbitration went off, and
the new agreement was signed by three only. In the absence of any
explanation, it was reasonable to suppose, that if both agreements were
signed by the authority of all the partners, the second would havp been
executed by the same number as the first. The passage cited in that ckse,
from Com. Dig. (Arbitrament, D. 2,) from which it was implied, that a
•partner cannot bind his copartner, probably refers to submissions by deed.
There is no ground in reason for saying, that in the case of a general
partnership in a banking firm, one partner cannot submit, on behalf of
all, to such a mode of settling a dispute upon a partnership concern as
was adopted here. Suppose the question had been a practical one, as to
something to be done in the course of business, might not a partner have
agreed to take the judgment of an experienced person, as a custom-house
officer, a dock-master, or an eminent merchant ? And if so, why not the
opinion of counsel in the present case ? To hold, that the opinion could
not be so taken, would throw great impediments in the way of a very
common, useful, and economical mode of settling such disputes." See
post, § 12a, note (1).
1 See Gow on Partn. ch. 2, § 2, p. 61, 3d edit, and Ellison v. Darell,
there cited ; Metcalf v. Kycroft, 6 M. & Selw. 75 ; Collyer on Partn. B.
3, ch. 2, § 1, p. 311, 312, 2d edit.; Hambridge «. De la Crou6e, 3 Man-
ning, Granger & Scott, 742.
2 Stead V. Salt, 3 Bing. E. 101 ; Collyer on Partn. B. 3, ch. 2, § 1, p.
313, 314 ; Id. B. 3, ch. 4, ^ 2, p. 452, 453 ; Id. B. 3, ch. 5, ^ 5, p. 485, 2d
edit. ; Pierson v. Hooker, 3 Johns. K. 68 ; Watson on Partn. ch. 4, p. 225,
2d edit. ; Story on Agency, § 49.
CH. Vn.] POWERS AND ATJTHORITIES. 193
There is another technical reason, applicable to such a
case ; -which is, that the release certainly operates as
against the partner himself; and if so, since no suit
could be brought for the debt, without uniting him as
plaintiff, the release of one plaintiff would necessarily
bar the action as to the others.^ The compromise of.
a, debt, by taking less than its nominal amount, seems
to be an incident to the collection of the debt, and may
fairly, therefore, be deemed within the discretion con-
fided to each partner ; and indeed in practice it is so
ordinarily treated. These cases, therefore, seem clear-
ly distinguishable from that of a submission to arbitra-
tion, since they steer wide of the objections, "which
have been already meniioned, as applicable to the
latter.
§ 116. The Roman law coincides in. many respects
with ours on this subject. It admits a release or dis-
charge by one joint creditor to the debtor, or a release
or discharge to one joint debtor by the creditor, to be
an extinguishment of the entire contract. Cum duo
eandem pectmiam aid promisennt, aid stipulati sunt, ipso
Jure et singuli in solidum dehentur, et singuli dehent. Ideo-
^ See Adams v. Bankart, 1 Cromp. Mees. & Eosc. 681 ; Watson on
Partn. ch. 4, p. 222, 2d edit.; Collyer on Partn. B. 3, ch. 2, § 1, p. 311,
312, 2d edit. ; Hawkshaw v. Parkins, 2 Swanst. R. 542 ; Halsey'tJ. Whit-
ney, 4 Mason, K. 206 ; Pierson v. Hooper, 3 Johns. R. 68 ; Bulkley v.
Dayton, 14 Johns. R. 387 ; Bruen v. Marquand, 17 Johns. E. 58 ; Rud-
dock's Case, 6 Co. R. 25 a ; Salmon v. Davis, 4 Binn. R. 375 ; Napier v.
Rapelie, 9 Wend. E. 120. — But although one partner may release a debt
of the partnership in Iiis own name alone ; yet, if he enters into a cove-
nant in his own name with a debtor of the partnership, not to sue him
therefor, that is no release of the debt ; and will not prevent a suit from
being maintained by a partner, in the names of all the partners for the
debt. The remedy for the debtor in such a case is by a suit against thalt
partner for breach of his covenant. Walmsey v. Cooper, 3 Perr. & Dav.
R. 149 ; S. C. 11 Adol. & Ellis, 216 ; Post, § 323, 324.
PARTN. 17
194 PARTNERSHIP. [CH. VH.
que petitione acceptiMione unius iota solvitur olligatio} And
yet by the Roman law it is not competent for one of
two creditors, or for one of two partners, to compromise
a suit, or to submit a controversy touching their joint
demands to arbitration, without the consent of both;
, for in such a case each can act only as the agent of the
other ; and a general authority is not deemed to include
such a right. Mandato generali non contineri etiam Trans-
actionem, decidendi causa interpositam? The same doc-
trine is fully recognized in the law of Prance,^ and
probably in that of many other nations of continental
Europe.
§ 117. In the next place it is a general rule of the
common law, that one partner, from that mere relation
cannot bind the others by a deed or instrument under
seal, either for ,a debt or any other obligation, even
when contracted in the course of their commercial
dealings and business, and within the scope thereof;
unless indeed the authority be expressly given under
the seals of the other partners, and include the very
act done under seal.* The reason of this rule seems to
be purely technical ; and has its origin in the general
doctrine of agency at the common law; where "it is
held, that an agent or attorney cannot execute a deed
or sealed instrument, in the name of his principal, so
as to bind him thereby, as the proper party thereto,
iDig. Lib. 45, tit. 2,1. 2.
2 Dig. Lib. 3, tit 3, 1. 60 ; Domat, B. 1, tit. 15, ^ 3, art. 11.
3 Pothier, de Societe, n. 68.
< Watson on Partn. ch. 4, p. 218 to 222, 2d edit.; Collyer on Partn.
B. 3, oh. 2, § 1, p. 308 to 312, 2d edit. ; Gow on Partn. ch. 2, § 2, p. 57 to
60, 3d edit.; 3 Kent, Comm. Lect. 43, p. 47 to 49, 4th edit.; Story on
Agency, § 49 to 51 ; Dickerson v. Wheeler, 1 Humph. K. 51 ; Napier v.
Catron, 2 Humph. K. 534 ; McNaughten v. Patridge, 11 Ohio (Stanton)
Kep. 223.
CH. VII.] POWERS AND AUTHORITIES. 195
unless the authority is conferred upon him by an in-
strument of equal dignity and solemnity, that is by
one under seal.^ And yet the common law does not
seem in all cases to follow out its own principle ; for it
is not required to execute any instrument or writing,
not under seal, that the authority to an agent, or attor-
ney, or partner, should be in writing. It may be by
parol, or even be implied from circumstances.^ Ordi-
narily, also, the dissolution of a contract is required by
the common law to be by an instrument of the same
dignity and solemnity, as that by which it is created.^
Eodem modo, qw oritur, eodem modo dissolvitur.^
§ 118. The Roman law seems to have acted upon
one uniform principle, if not in the formation of con-
tracts, at least in the dissolution of contracts ; that is
to say, that they might and ought to be dissolved in
the same mode, in which they were created. Nihil tarn
naturals est, qudm eo genere quidque dissolvere, quo coUigor
turn est. Jdeo verlorum olligcdio verbis tollUur ; nudi con-
sensus ohligaiio contrario consensu dissolvUur.^ Again;
Provi quidque cotdraetum est, Ua et solvi debet ; ut cum re
contrazerimv^, re sqlvi debet.^ And again ; Et cum verbis
aliquid cordraximus, vel re, vel verbis, obligatio solvi debeat ;
' Story on Agency, § 49 ; Co. Litt. 48, b ; Harg. Note 2 ; Harrison v.
Jackson, 7 T. R. 203; Paley on Agency, by Lloyd, 157, 158; 2 Kent,
Comm. Lect. 41, p. 613, 4th edit. ; Id. Lect. 43, p. 47, 48, 4th edit. ; Green
V. Beales, 2 Caines, E. 254 ; Clement w. Brush, 3 Johns. Cas. 180 ; Skinner
K. Dayton, 19 Johns. R. 513 ; Berkeley v. Hardy, 6 B. & Cress. 355 ; Gow
on Partn. ch. 2, § 2, p. 58, 59, 60, 3d edit.; United States v. Astley, 3
Wash. Cir. R. 508 ; Ex parte Bosanquet, 1 De Gex, R. 432.
2 Story on Agency, § 50, 51 ; Coles v. Trecothick, 9 Ves. 250 ; 2 Kent,
Comm. Lect. 41, p. 613, 614, 4th edit.
* Story on Agency, § 49.
* Bac. Abridg. Release, A. ; Neal v. Sheaffield, Cro. Jac. 254.
5 Dig. Lib. 50, tit. 17, 1. 35 ; Pothier, Oblig n. 571 to 580.
6 Dig. Lib. 46, tit. 3, 1. 80 ; Pothier, Pand. Lib. 58, tit. 17, n. 1388.
196 PARTNERSHIP. [CH. VII.
verbis, veluti cum acceptum promissori fit ; re, veluti cum
solvit, quod promisit ; j^que, cum emptio, vel venditio, v'el
hcatio^ contracta est ; quoniam consensu nudo contrahi potest,
etiam dissensu contrario dissolvi potest} But a distinction
was taken in the Roman law between mere consensual
contracts, and other civil obligations, which resulted
from real contracts or stipulations under that law. The
former might be discharged by a simple agreement ;
but to discharge the latter, pleno jure, it was necessary
for the act to be done by the formality of an accepti-
lation.^
1 Dig. Lib. 46, tit. 3, 1. 80.
2 Inst. Lib. 3, tit. 30, § 1, 2. — Pothier has expounded this doctrine in
his Treaties on Obligations, n. 671, and says; "According to the principles
of the Roman law, there was a difference between civil obligations result-
ing from consensual contracts, which were contracted by the mere consent
of the parties, and other civil obligations, which resulted from real con-
tracts, or from stipulations. With respect to those contracted by the con-
sent of the parties, the release might be made by a simple agreement, by
which the creditor agreed with the debtor to hold him acquitted, and such
agreement extinguished the obligation plena jure. With respect to other
civil obligations, for the release to extinguish the obligation pleno .jure, it
was necessary to have recourse to the formality of an acceptilation, either
simple, if the obligation resulted from a stipulation, or Aquilian, if from a
real contract. A simple agreement by the creditor to acquit the debtor,
did not extinguish such obligations pleno jure ; but only gave the debtor
an exception, or jfin de non repevoir, against the action of the creditor,
demanding the payment of the debt, contrary to the faith of the agree-
ment. This distinction and these subtilties are not admitted in the law of
France, in which we have no such form as an acceptilation ; and all debts,
of whatever kind, and in whatever manner contracted, are extinguished,
pleno jure, by a simple agreement of release between the creditor and
debtor, provided the creditor is capable of disposing of his property, and
the debtor is not a person to whom the creditor is prohibited by law from
making a donation. Therefore all that is said in the title, ff. de Accept,
concerning the form of an acceptilation, and particularly that acceptilation
cannot be made under a condition, (L. 4. ff. de Acceptil.) has no applica-
tion in the law of France. With us there is nothing to prevent the
creditor making the release of the debt depend upon a condition, and
the effect of such a release is to render the debt conditional, the same as
CH. VII.] POWERS AND AUTHORITIES, 197
§ 119. Upon the ground of the general principle of
the common law, it has been held, that a bond, signed
by one partner in the course of the partnership busi-
ness, without an authority under seal, binds only the
partner, who signs and seals it, although it is signed
and sealed in the name of the firm.^ Thus, a bond,
given in the name of the firm at this custom-house, for
the, payment of the duties on goods imported for and
belonging to the partnership, will not bind the partner-
ship, but only the partner signing and sealing the
same.^ A fortiori, if a deed be made by one partner in
the name of the firm, conveying away the real estate
of the firm, it will be invalid to convey the title of the
if it had been contracted under the opposite condition to that of the re-
iJn Harrison v. Jackson, 7 Term E. 203, 206, Lord Kenyon said;
" The law of merchants is part of the law of the land ; and in mercantile
transactions, in drawing and accepting bills of exchange, it never was
doubted, but that one partner might bind the rest. But the power of bind-
ing each other by deed is now for the first time insisted on, except in the
nisi prius case cited, the facts of which are not sufficiently disclosed to en-
able me to judge of its propriety. Then it was said, that, if this partner-
ship were constituted by writing under seal, that gave authority to each to
bind the others by deed. But I deny that consequence, just as positively
as the former ; for a general partnership agreement, though under seal,
does not authorize the partners to execute deeds for each other, unless a
particular power be given for that purpose. This would be a most alarm-
ing doctrine to hold out to the mercantile world ; if one partner could bind-
the others by such a deed as the present, it would 'extend to the case of
mortgages, and would enable a partner to give to a favorite creditor a real
lien on the estates of the other partners." See 3 Kent, Comm. Lect. 43,
p. 47, 48, 4th edit.
SMetcalf v. Rycrofl, 6 Maule & Selw. 75; Elliott v. Davis, ?. Bos. &
Pull. 338 ; Hawkshaw v. Parkins, 2 Swanst. K. 543 ; Harrison v. Jackson,
7 Term E. 207 ; Skinner v. Dayton, 19 Johns, E. 513.c- To cure this very
difficulty. Congress have been compelled to pass an act, providing, that
such a bond given and sealed in the name of the firm, or partners, under
his seal, (see Hawkshaw v. Parkins, 2 Swanst. E. 544,) shall be -binding
on all of them. Act of Congress of 1st March, 1823, ch. 149, § 25.
17*
198 PAETNEESHIP. [CH. Vn.
other partners, since the law requires, that every con-
veyance of real estate should be by the deed of the
party himself, who possesses the title ; and another
person cannot, convey it in his name, except by an
authority under seal.
§ 120. This doctrine seem? peculiar to -the common
law ; and, as has been suggested, seems mainly founded
on technical reasoning. It has, however, been some-
times maintained, as founded in public policy ;. and that
it would be a dangerous power, and enable one partner
to give undue preferences to favorite creditors. But
this power now exists,- as to all persbnal property and
funds of the partnership ; and, as an original founda-
tion of the doctrine, seems at once inadequate, and un-
satisfactory. Indeed, a strong inclination has been ex-
hibited in our day to get rid of the doctrine, or to
qualify and limit it so far, that, practically speaking, it
would have little operation and influence. One excep-
tion is, that if the deed is executed by one partner in
the presence of and with the assent of all the partners,
it shall be deemed the deed of all.-^ But, perhaps, this
is not so properly an exception, as it is an application
of an old rule of the common law, which makes a deed,
executed by an agent in the presence of his principal,
the deed of the latter, although the authority to do it
is merely by parol.^ The case of a release by one part-
ner, either in his own name, or in that of the firm, of a
1 Ball V. Dunsterville, 4 Term R. 313 ; Burn v. Burn, 3 Ves. E. 578 ;
Mackay v. Bloodgood, 9 Johns. E. 285 ; Halsey v. Whitney, 4 Mason, K.
232 ; CoUyer on Partn. B. 3, ch. 2, § 1, p. 308, 309, 310, 2d edit. See
Smith V. Winter, 4 Mees. & Welsh. 454. See Hunter v. Parker, 7 Mees.
& Welsh. 322.
2 Lord Lovelace's Case, W. Jones, K. 268 ; Story on Agency, § 51 ;
Gow. on Partn. ch. 2, ^ 2, p. 59, 3d edit.
CH. Vn.J POWERS AND AUTHORITIES. 199
partnersMp debt, may also be thouglit to constitute
anotber exception. But, in fact, it turns, as we shall
presently see, upon another distinct consideration, that
a release by one joint creditor discharges the action as
to both ; and such a deed of one partner is clearly ope-
rative as to himself.-^
§ 121. But the main struggle has been, not so much
to contest the doctrine of the common law, that an au-
thority to execute a sealed instrument does not flow
from the ordinary relation of partnership, as to contest
the doctrine, that it requires a prior authority under
seal, or a subsequent ratification under seal, to make
the execution valid.^ The old authorities, and indeed
the whole current of decisions in England, establish
the rigid doctrine in its fullest extent. They assert,
that no prior authority, or subsequent ratification, either
verbal, or by writing, without seal, is sufficient to give
validity to the instrument, as the sealed contract of the
party.' This is reducing the rule itself to its true
technical character, and stripping it of all pretence of
being founded in public policy. The American Courts
have in this view strongly inclined to repudiate it in all
cases, where an express, or an implied authority or
confirmation could be justly established, not under
1 Gow on Partn. ch. 2, § 2, p. 60, 3d edit. ; Collyer on Partn. B. 3, ch.
2, Mi P- 308 to 312, 2d edit. ; Cady v. Shepherd, 11 Pick. R. 400 ; Gram
V. Seton, 1 Hall, K. 262; Skinner w. Dayton, 19 Johns. K, 513; Story
on Agency, § 49; Ante, 4 114 ; Beckham v. Drake, 9 Mees. & Welsb.
R. 19, 91 to 94; Beckham u. Knights, 1 Mann. & Gftmg. 738; Ante,
§ 103, note.
3 3 Kent, Comm. Lect. 43, p. 47, 48, 4th edit.
3 Gow on Partn. ch. 2, ^ 2, p. 58 to 60, 3d edit.; Sleiglitz v. Egginton,
Holt's N. P. R. 141, (a); Hunter v. Parker, 7 Mees. & Welsb. R. 342 ;
Wallace v. Kelsall, 7 Mees. & Welsb. R. 264, 272.
20.0 PAKTNBKSHIP. [CH. VII.
seal, whether it be verbal, or in writing, or circum-
stantial.-'
§ 122; Some of the American decisions may be sup-
ported upon the general ground, that the act, if done
by an unsealed instrument, would have been within the
scope of the business of the partnership, and the pow-
ers and authorities belonging to each partner.^ In such
cases- there does not seem any solid reason, why the
act, when done, should be vitiated by being under the
seal and signature of the firm. There seems nothing
incongruous in such a case in holding, that it is binding
on the individual partner, as his sealed instrument, and
on the other partners as their agreement or assignment,
made by their authorized agent.^ Thus, a purchase of
1 3 Kent, Comm. Leot. 43, p. 47yiii8, 4th edit.
2 S. P. Tapley v. Butterfield, 1 Mete. K. 515.
3 See Harrison v. Sterry, 5 Cranch, 289; Cady k. Shepherd, 11 Pick
E.400. — In Anderson v. Tompkins, 1 Brock. Cir. E. 462, Mr. Chief
Justice Marshall said ; " It is said, this transfer of property is by a deed,
and that one partner has no right to bind another by deed. For this a
case is cited, which, I believe, has never b^en questioned in England, or
in this country. (Harrison v. Jackson et al. 7 Durnf. & East, 207.) I am
not, and never have been satisfied with the extent, to which this doctrine
has been carried. The particular point decided in it is certainly to be
sustained on technical reasoning, and perhaps ought not to be controverted.
I do not mean to controvert it. That was -an action of covenant on a deed ;
and if the instrument was not the deed of the defendants, the action could
not be sustained. It was decided not to be the deed of the defendants,
and I submit to the decision. No action can be sustained against the
partner, who has not executed the instrument, on the deed of his copart-
ner. No action can be sustained against the partner, which rests on the
validity of such a deed, as to the person who has not executed it. This
principle is settled. But I cannot admit its application in a case, where
the property may be transferred by delivery, under a parol contract,
where the right of sale is absolute, and the change of property is consum-
mated by delivery. I cannot admit, that a sale, so consummated, is an-
nulled by the circumstance, that it is attested by, or that the trusts under
which it is made, are described in a deed. No case goes thus far; and I
CH. VII.] POWEES AND AUTHORITIES. 201
goods, in the course of the trade and business of the
partnership, under the seal of the firm, has been held
binding on the firm.-^ But the more general doctrine,
and indeed, that which is principally relied on, is, that
a prior authority, or a subsequent ratification, not
under seal, but either express or implied, verbal or
written, is sufficient to establish the deed, as the deed
of the firm, and binding upon it as such.^
think such a decision could not be sustained on principle." See also Sale
V. Dishman's Executors, 3 Leigh, K. 548; CoUyer on Partn. B. 3, ch. 2,
§ 1, p. 313, 2d edit.; S. P. Hunter v. Parker, 7 Mees. & Welsh. 322. [In
Ex.parte Bosanqnet, 1 De Gex, E. 439, the Chief Judge in Bankruptcy-
said ; " As to the objection that the security being effected by a deed exe-
cuted by one partner could not bind the firm, it might be true that the
instrument would not take effect as the deed of the firm ; but the transac-
tion itself was one within thS authority of the partner, and the circum-
stance of a deed being executed would not invalidate the contract." See
also Everit v. Strong, 7 Hill, N. Y. E. 585.]
1 Cady V. Shepherd, 11 Pick. R. 400.
2 Skinner v. Dayton, 19 Johns. E. 512; Cady v. Shepherd, 11 Pick. E.
400; Gram u. Seton, 1 Hall, E. 262; Herbert u. Hanrick, 16 Ala. 581;
Smith V. Kerr, 3 Comst. 144. The whole reasoning, on which this doctrine
depends, as well as the authorities, on which it is founded, were most ably
and elaborately reviewed in the case of Cady v. Shepherd, 11 Pick. E.
405, 406, and in Gram v. Seton, 1 Hall, E. 262. In the latter case espe-
cially, all the English, as well as the American authorities, were examined
at great length by Mr. Chief Justice Jones, and his judgment is worthy
of a most attentive perusal. On that occasion he said: "The principle,
that a partner cannot, by virtue of the authority he derives from the rela-
tion of copartnership, bind his copartner by deed, has been too long set-
tled to be now shaken. It is the technical rule of the common law appli-
cable to deeds, which has been ingrafted into the commercial system of the
law of partnership ; and unless the charter-party in question can, under
the circumstances of this case, be construed to be the deed^Df Bunker, the
defence must prevail. The reasons for the restrictions are not very satis-
factory; for all the mischiefs, which the expositors of the rule ascribe to
the authority of members of a copartnership to seal for their copartners,
may flow almost as extensively,, and nearly with equal facility, from the
use of the name and signature of the copartnership. The dangers of
allowing the use of a seal to the members of a copartnership are supposed
202 PARTNERSHIP. [CH. VII.
§ 122 a. In the next place, although one partner
may procure advances of money to carry on the busi-
to consist in these two attributes of the seal ; that it imports a considerar
tion, and that it is competent to convey absolutely, or to charge and en-
cumber real estate. But negotiable paper, by which the partner may
bind the firm, equally imports a consideration with a seal ; and upon gene-
ral principles, the use of the seal of the copartner, equally with the signa-
ture of the copartnership, would, if permitted, be restricted to copartner-
ship purposes and copartnership operations solely ; and the joint deed of
the copartners, executed by the present for the absent members, be held
competent to convey or to encumber the copartnership property alone,
and to have no operation upon the private funds or separate estate of the
copartners. With these restrictions upon the use and operation of the
seal, is not the power of a partner to bind his copartner, and to charge
and encumber his estate, as great and as mischievous, without the authority
to use the seal of the absent partner, as it would be with that authority ?
Those powers undeniably place the fortune of the members of a general
copartnership, to a great degree at the disp'Ssal of any one of the copartr
ners ; but it is necessary to the beneficial management of the joint con-
cern, that extensive powers should be vested in the members, who compose
it ; and when the copartners live remotely from each other, their joint
business concerns-cannot be advantageously conducted or carried on, with,
out a latitude of authority in each, which is inconsistent with the perfect
safety of the other copartners. It cripples the operation of a partner,
whose distant residence precludes a personal cooperation, to deny him the
use of the seal of his copartner for instruments requiring it, and which the
exigencies of their joint concerns render expedient or beneficial to them.
He must be clothed with the'power to execute deeds for his copartner
when necessarily required for the purposes of the trade ; and if that au-
thority is not inherent in the copartnership, it milst be conferred by letter
of attorney, and it must be general, or it will be inadequate to the ends of
its creation. A copartnership, especially, which is employed in foreign
trade, and has occasion to employ ships for the transportation of merchan-
dise, or to borrow money on respondentia, if its members are dispersed, as
is often the case, must be seriously embarrassed in its operations by the
application of .the rule, that requires every copartner, who is to be bound
by the charter-party or the respondentia bond, to seal it personally, or by
attorney duly constituted for that specific purpose, with his own seal.
Similar difficulties would arise out of the same rule, when the operations
of the house required the copartnership to execute other deeds. Can it
then be, that this stern rule of the common law, which has its appropriate
sphere of action, and a most salutary. operation on those relations of socie-
CH. VII.] POWBES AND AUTHORITIES. 203
ness of an establislied . partnership, and thereby hind
the firm ; yet if the partnership is not established, one
partner has not an implied authority to bind the firm
for advances in the incipient state thereof to raise capi-
tal therefor.^
§ 123. These sq^m to be the principal exceptions
to the authority of one partner to bind the partnership
by his own acts and contracts, done within the scope
of partnership trade and business, and for the pur-
poses thereof. But another question may ari^e ; and
that is, whether in cases of partnership the major-
ity is to govern in case of a diversity of opinion be-
tween the partners, as to the partnership business and
ty, where men, not otherwise connected, are the owners of undivided pro-
perty, is to be applied in all its force, and to govern, with unbending
severity, in the concerns of copartners, whose intimate connection and
mutual interest require such large power and ample confidence in the in-
tegrity and prudence of each other, to give to their operations efficiency,
vigor, and success ? The pressure of these considerations has induced a
relaxation of the common-law rule, to adapt it to the exigencies of com-
mercial copartnerships, and other associations of individuals, operating
with joint funds for the common benefit. The rule itself remains; but
the restrictions it imposes are qualified by the application of other princi-
ples. The general authority of a partner, for example, derived from his
relation to his copartners, does not empower him to seal an instrument for
them, so as to make it binding upon them without their assent, and against
their will. This is the fair import of the modern cases, and is, I appre-
hend, the principle- courts are disposed to apply to the use of a seal in
joint contracts for copartnership purposes. An absent partner is not
bound by a deed executed for him by his copartner, without his previous
authority or permission, or his subsequent assent and adoption. But the
previous authority or permission of one partner to another to seal for him,
or his subsequent adoption of the seal as his own, will impart efficacy to
the instrument as his deed ; and that previous authority or subsequent
adoption may be by parol. These are, the results, which I deduced from
the judicial decisions, especially those of our own courts, on the subject ;
and if I am correct in my deduction, the conclusion must be favorable to
the validity of this charter-party, as the deed of both the partners."
1 Fisher v. Taylor, 2 Hare, R. 218, 229.
204 PARTNEESHIP. [CH. VII.
the conduct thereof; or, whether one partner can,
by his dissent, arrest the partnership business, or
suspend the ordinary powers and authorities of the
other partners in relation thereto, against the will
of the majority. Where there is no stipulation in
the partnership articles to control ^ vary the result,
(for if there be any stipulation, that ought to go-,
vern,-*) the general rule would seem to be, that each
partner has an ec[ual voice, however unequal the shares
of the jrespeciive partners may be, because in such a
case, each partner has a right to an equal share of the
profits ; ^ and the majority, acting fairly and bond fide,
have the right and authority to conduct the partner-
ship business, within the true scope thereof, and dis-
pose of the partnership property, jiotwithstanding the
dissent of the minority.^ Where there are but two
1 Const V. Harris, Turn. & Euss. R. 496, 517, 518, 521 ; 3 Kent, Comm.
Lect. 43, p. 45, 4tli edit.
2 See Ante, ^ 24.
3 CoUyer on Partn. B. 2, ch. 2, § 1, p^l29, 130 ; Id. B. 3, ch. 1, § 262,
2d edit. ; 3 Chitty on Commerce and Manuf. ch. 4, p. 236 ; Const u. Har-
ris, Turn. & Russ. K. 496, 517, 518, 524, 525 ; Kirk w. Hodgson, 3 Johns.
Ch. R. 400, 405, 406. -^ It is not easy to say, that this doctrine is so
entirely settled, as to admit of no controversy. The elementary writers
are not all agreed ahout it ; and the dicta of Judges do not always admit
its correctness. Still, it appears to me, that the text states the true doc-
trine, fairly deducible from a just survey of all the leading authorities.
One one occasion. Lord Eldon said; "If I consider them (a lodge of free-
masons) as individuals, the majority had no right to bind the minority."
Lloyd ». Loaring, 6 Ves. 777. But that was not a case strictly of part-
nership ; but rather of a club. Mr. W^atson, in hia Treatise on Partner-
ship, (ch. 4, p. 194, 2d edit.) says ; " We have seen in v. Layfield,
Lord Holt held, that the act of one partner should be presumed the act of
the others, and should bind them, unless they could show a disclaimer.
And it would seem, that even during the subsistence of the partnership,
and in the established course of trade, one partner may to a certain degree
limit his responsibility. If there be any particular speculation or bargain
CH. VII.] P0T7ERS AND AUTHORITIES. 205
persons in the firm, and they dissent from each other,
it would seem a just result, that it amounts to a tem-
porary suspension of the right and authority of each
to carry on or manage the partnership business, or dis-
pose of the partnership property, in respect to all per-
proposecl, which he disapproves of, by giving distinct notice to those, with
whom his copartners are about to contract, that he will not in any manner
be concerned in it, they could not have recourse upon him ; as proof of
this notice would rebut his prima facie liability. The partnership in that
case might either be considered as dissolved, or quoad hoc as suspended.
Where three persons entered into partnership in the trade of sugar-
boiling, and agreed, that no sugars should be bought without the consent
of the majority ; one of them afterwards makes a protest, that he would
no longer be concerned in partnership with them. The other two persons
after make a contract for sugars, the seller having notice, that the third
had disclaimed the partnership, he shaU not be charged." The case in
Salkeld, 292, will not be found to justify the broad conclusion of the
author. It was there held, that partners would be presumed to have
assented to a transaction designed for their benefit, unless they had refused
to be concerned in it. The case in 16 Vin. Abridg. 244, A. pi. 12, is,
indeed, directly in point. But the same case is reported under the name
of Minnet v. Whinuery, 3 Bro. Pari. Rep. 523, (5 Bro. Pari. Cas. by
Tomlins, 489,) where it appears, that the case turned upon very different
considerations, and facts establishing an exclusive credit to the other part-
ners, contracting the debt, and that there had been a dissolution of the
partnership at the time. See CoUyer on Partn. B. 8, ch. 1, p. 261, 2d
edit. In the case of Vice v. Fleming, 1 Younge & Jerv. 227, 230, Mr.
■ Chief Baron Alexander said ; " It is clear that the defendant might, by
an absolute notice, have discharged himself from all future liability,
whether he ceased or continued to be a partner." Mr. Baron Garrow
added ; " All the partners of a firm are liable for the debts of the firm ;
but this responsibility may be limited by express notice by one, that he
will not be liable for the acts of his copartners." It does not seem to me,
that the facts of that case required so strong a statement, or that the point
was positively in judgment. The case of Willis v. Dyson, 1 Starkie, K.
164, is not in point; for there were but two partners, and they dissented
in opinion, and notice was given by one. In Lord Galway v. Mathew,
1 Camp. R. 403, S. C. 10 East, R. 264, a majority of the partners did
not concur in giving the note. See Rooth v. Quin, 7 Price, R. 193 ;
3 Kent, Comm. Lect. 43, p. 45, 4th edit. ; CoUyer on Partn. B. 2, ch. 2,
§ 2, p. 129, 130, 2d edit. ; Gow on Partn. ch. 2, § 2, p. 52, 3d edit., and
note, ibid, of American Editor (Mr. Ingraham) ; Id. ch. 4, § 1, p. 149.
PAETN. 18
206 PARTNERSHIP. [OH. VII.
sons having notice of such disagreement.' But in
every case, where the decision of the majority is to
govern, it would seem reasonable, that the minority, if
practicable, should have notice thereof and be consult-
ed ; and if the majority should choose wantonly to act
without information to, or consultation with the minori-
ty, it would hardly be deemed a bond fide transaction,
obligatory upon the latter.^
§ 124. The Roman law seems to have adopted the
general rule, that no act was binding upon all the part-
ners, unless so far as it was expressly or impliedly
agreed to by aU ; and consequently the refusal or pro-
hibition of one rendered the act a nullity, as to him-
self In this respect, the partner prohibiting was held
to have a superior right against the others. In re
communi neminem dominorum jure facere qukquam, invito
altera, fosse. TInde manifeslum. est prohihendi jm esse ;
in re enim pari potiorem causam esse prohibentis constat.
1 Willis V. Dyson, 1 Stark. R. 164v
2 Const V. Harris, Turn. & Kuss. K. 496, 525, 527. — In this case
Lord Eldon said; "I call that the act of all, which is the act^of the
majority, provided all are consulted, and the majority are acting honSt fide,
meeting not for the purpose of negativing what, when they are met
together, they may, after due consideration, think proper to negative.
For a majority to say, We do not care what one partner may say, we
being: the majority, will do what we please, is, I apprehend, what this
Court will not allow.'' Again; "In all partnerships, whether it is
expressed in the deed or not, the partners are bound to be true and
faithful to each other. They are to act ppon the joint opinion of all, and
the discretion and judgment of any one cannot be excluded. What
weight is to be given to it is another question. The most prominent
point, on which the Court acts, in appointing a receiver of a partnership
concern, is, the circumstance of one partner having taken upon himself
the power to exclude another partner from as full a share in the
management of the partnership, as he, who assumes that power, himself
enjoys."
CH. VIl] POWEE& AND AUTHORITIES. 207
Sed dsi in communi prohiberi socius a socio, ne quid faciat,
potest, ut tamen factum opustollat, ut coginon potest, si cum
proUhere poterat,' prcetermisit} The French law has
adopted the same doctrine, in the absence of all coun-
ter stipulations of the parties.^ But if the adminis-
tration of the partnership he confided to one or more
of the partners, the others cannot recall that authority,
or annul or prohibit its exercise during the existence,
of the partnership, or the pre^med duration' of the
authority.^ Such also is the rule of the Scottish law;*
and of the Louisiana Code.®
§ 125. The doctrine of the common law above stated,
as to the right of the majority to govern in all cases,
where the stipulations of the articles of the partner-
ship do not import the contrary, must be strictly
confined to acts done within the scope of the business
of the partnership, and does not extend to the right to
change any of the article* thereof. In such a change,
it is essential that all should unite ; otherwise it is not
obligatory upon them. This is emphatically true in
cases of joint associations, and joint-stock companies of
an extensive nature, in the constitution of which cer-
tain articles are treated as fundamental, and cannot be
altered or varied without the consent of all the mem-
bers; for the rule, which applies to public bodies,
strictly so called, that the majority is to govern in all
cases, is inapplicable to private associations, where.the
'Dig. Lib. 10, tit. 2, 1. 28; Pothier, Pand. Lib. 17, tit. 2, n. 27;
1 Domat, B. 1, tit. 8, § 4, art. 22. *
2 Pothier, De Society, n. 87 to 91.
3 Pothier, De Society, n. 71, 90.
* 1 Stair, Inst. tit. 16, § 4, p. 157.
5 Code of Louisiana, art. 2838, 2839, 2841.
208 PARTNERSHIP.. [CH. VH.
terms originally prescribed for the association, must
and ought to remain in full force, until abrogated by
the consent of all the associates.''
' Livingston v. Lynch, 4 Johns. Ch. E. 573, 597. — In this case Mr.
Chancellor Kent said ; " Lord Coke (Co. Litt. 181, b.) took the distinction
between public and private associations, and admitted, that in matters
of public concern, the voice of the majority should govern, because it was
for the public good, and the power was to be more favorably expounded
than when it was created for private purposes. In Viner, (tit. Authority,
B.) we have several cases marking the same distinction ; and it is now
well settled, that in matters of mere private confidence, or personal trust
or benefit, the majoHty cannot conclude the minority. But where the
power is of a public or general nature, the voice of the majority will
control, on grounds of public convenfenoe ; and this is also part of the
law of corporations." (Attorney-General v. Davy, 2 Atk. 212 ; The
King V. Beeston, 3 Term Kep. 592 ; Withnell v. Gartham, 6 Term Kep.
388 ; Grindley v. Barker, 1 Bos. & Pull. 229 ; Green v. Miller, 6 Johns.
R. 39 ; 5 Co. 63, a.) In Lloyd v. Loaring, (6 Ves. 773,) there was a suit
by three persons, on behalf of themselves and all the other members of a
lodge of freemasons ; and Lord Eldonji, observed, "that if he considered
them as individuals, the majority had no right to bind the minority. One
individual has as good a right to possess the property as any other, unless
he can be aflFected by some agreement." Mr. Abbott (Law of Shipping,
Part 1, ch. 3, § 2,) admits the extreme inconvenience, under the law of
England, of enjoying personal chattels vested in several distinct proprie-
tors, without a common consent and agreement among them. But the
case most applicable to the one before us, is that of Davies v. Hawkins,
(3 Maule & Selw. 488.) A company was formed for brewing ale, and
by deed they confided the conduct of the business to two persons, who
were to be trustees of the company. General quarterly meetings of the
cpmpany were to be held. It was resolved by the K. B., that one person
only could not be appointed at a general quarterly meeting, in place of the
two originally appointed under the deed, unless such alteration was made
by the consent of all the subscribers. Lord Ellenborough said, that ' a
change had been made in the constitution of this company, which could
not be made without the consent of the whole body of the subscribers.
It was such a substituted alteration in its constitution, as required the
assent of all.' "
CH. Vm.] LIABILITIES AND EXEMPTIONS. 209
CHAPTER Yin.
LIABILITIES AND EXEMPTIONS OP PARTNERS AS TO THIRD
PERSONS.
§ 126. There are certain powers and authorities,
which from long usage and recognition are so generally
attached to all sorts of partnerships, that they wUl be
deemed to exist by presumption of law {presumption^
juris et de Jure,) unless there is clear evidence to repel
the presumption, or some positive contrary stipulation
be agreed upon between the parties. Thus, for exam-
ple, each partner may, as we have seen, buy and sell
goods, belonging to or for the use of the partnership,
or the ordinary business thereof; -^ each partner may
pledge the partnership property, or borrow money for
partnership purposes, on the credit of the firm.^ These
cases are sufficiently clear from what has been already
suggested in a former section.^ But the same doctrine
' CoUyer on Partn. B. 3, ch. 1, § 1, p. 263, 264, 265, 267, 2d edit. ;
Hyatt. V. Hare, Comb. R. 383 ; Thieknesse v. BromUow, 2 Cromp. & Jerv.
431; Ante, § 102; Livingston v. RooSevelt, 4 Johns. E. 251; United
States Bank v. Binney, 5 Mason, E. 176 ; Si C. 5 Peters, E. 529.
2 CoUyer on Partn. B. 3, ch. 1, ^ 1, p. 263, 267; Id. 290, 291, 2d edit.;
Kothwell V. Humphreys, 1 Esp. 406 ; Thieknesse v. Bromilow, 2 Crbmp.
& Jerv. 431; Bank of U. States v. Binney, 5 Mason, E. 176; S. C. 5
Peters, E. 529; Fox v. Hanbury, Cowp. E. 445; Raba v. Eyland, Gow,
E. 132 ; Tupper v. Haythom, Gow, E. 135 ; Eeid> HoUinshead, 4 B. &
Cressw. 867; Church v. Sparrow, 5 Wend. E. 223; Livingston v. Roose-
velt, 4 Johns. E. 251, 265 ; 2 Bell, Comm. B. 7, p. 615, 616, 5th gdit. ; 3
Kent, Comm. Lect. 43 to 46', 4th edit. ; Gow on Partn. ch. 2, § 2, p. 36 to
66, 3d edit. ; Watson on Partn. ch. 4, p. 195 ; United States Bank v. Bin-
ney, 5 Mason, E. 156 ; 8. C. 5 Peters, E. 529.
3 Ante, § 102.
18*
210 , PAETNEKSHIP. [CH. YIH.
cannot be as universally affirmed, as to the right to
draw, or indorse, or accept, or negotiate hills of ex-
change, or to make, or indorse promissory notes, not
being the securities of third persons, held by the firm,
as a part of the funds thereof, and therefore disposable
accordingly. For although, in the ordinary course of
commercial partnerships, these are known and univer-
sally acknowledged operations, which any partner is
competent to transact, because they arise from the
usages of trade, and the previous consent of all the
partners, and from this universality in practice, they
are now adopted as a general rule of law ; -^ yet it by
no means follows, that the like rule prevails in all other
sorts of partnership, or in such as are of a special and
peculiar nature.^ The foundation of any general and
known usage may here altogether fail, and the very
nature, or organization, or objects of the partnership
may show, that it is neither a proper nor a necessary
power to be exercised by a partner.^ Thus, if a part-
nership is organized for mining or for farming purposes,
the directors or active agents thereof wUl not, as inci-
dent thereto, possess a power to draw or accept bills, or
to draw or indorse notes for the company. But *there
1 CoUyer on Partn. B. 3, ch. 1, § 2, p. 268 to p. 279, 2d edit. ; THck-
nesse v. Bromilow, 2 Cromp. & Jerv. 485 ; U. States Bank v. Binney, 5
Mason, K. 176, 184 ; S. C. 5 Peters, K. 529 ; Livingston v. Roosevelt, 4
Johns. E. 251 ; Swan v. Steele, 7 East, E. 210 ; Gow on Partn. ch. 2, ^ 2,
p. 38 to p. 50, 3d edit. ; Le Eoy v. Johnson, 2 Peters, E. 186 ; Harrison »."
Jackson, 7 Term E. 203, 206.
2 Dickinson ». Valpy, 10 B. & Cressw. 128 ; Thicknesse w. Bromilow, 2
Cromp. & Jerv. 425, 430. [But this rule was extended to banking part-
nerships, in Bank of Australasia v. Briellat, 6 Moore, P. C. 152, where the
language of the text is cited with approbation.]
3 Collyer on Partn. B. 3, ch. 2, ^ 2, p. 329, 330, 2d edit. ; Gow on Partn-
ch. 4, ^ 1, p. 149, 150, 3d edit.
CH. Vin.] LIABILITIES AMD EXEMPTIONS. 211
should be some proof, that an express authority is given
for this purpose, or that it is implied by the usa,ges of
the husiness, or the ordinary exigencies and objects
thereof?
1 127. The like observations apply with increased
force to cases of guaranty.^ If one partner gives a
letter of credit or guaranty in the name of the part-
nership, it is not to be treated, as of course binding on
1 CoUyer on Partn. B. 3, ch. 1, § 2, p. 269, 2d edit. ; Dickinson v. Valpy,
10 B. & Cressw. 128 ; MuUett v. Hutchison, 7 B. & Cressw. 639 ; Thick-
nesse ti. Bromilow, 2 Cromp. & Jerv. 435 ; Greenslade v. Dower, 7 Barn.
& Cressw. 635. [In Ricketts v. Bennett, 4 Mann. Granger & Scott, 686,
it was held that one of several co-adventurers in a mine, has not, as such,
any authority to pledge the credit of the general body for money borrowed
for the concern. And the fact that he had the general management of the
mine, makes no difference, in the absence of circumstances from which an
implied authority- for that "purpose can be inferred. See also Tredwen u.
Bourne, 6 M. & W. 461. < Hawtayne v. Bourne, 7 M. & W. 595. Hawken
V. Bourne, 8 M. & W. 703.] Pothier has put several cases illustrative of
an analogous doctrine, in cases of partnerships not commercial. Pothier,
de Society, n. 102, 103, 104. Mr. Chancellor Kent has well summed up'
the doctrine in his Commentaries, (3 Kent, Comm. Lect. 43, p. 46, 4th
edit.) He says : " It was formerly understood, that one partner might
bind his copartners by a guaranty, or letter of credit, in the name of the
firm ; and Lord Eldon, in the case Ex parte Gordon, considered the point
too clear for argument. But a different principle seems to have been
adopted ; and it is now held, both in England and in this country, that
one partner is not authorized to bind the partnership by a guaranty of the
debt of a third person, without a special authority for that purpose, or one
to be imphed from the previous course of dealing between the parties,
unless the guaranty be afterwards adopted and acted upon by the firm.
The guaranty must have reference to the regular course of business trans-
acted by the partnership, and then it will be obligatory upon tile company,
and this is the principle on which the distinction rests. The same general
rule applies, when one partner gives the copartnership, as a mere and
avowed surety for another, without the authority or consent of the firm ;
for this would be pledging the partnership responsibility, in a matter en-
tirely unconnected with the partnership business."
2 2 Bell, Comm. B. 7, p 618, 5th edit.; 3 Kent, Comm. Lect. 43, p. 46,
4th edit.
212 PAKTNEESHIP. [CH. VIII.
the partnership ; for it is nqt a natural or necessary in-
cident in all sorts of partnerships, for one partner to-
possess the power to bind his copartners by a guaranty .■'
It must be shown to be justified, either by the usages
of the particular trade or business, or by the known
habits of the particular partnership, or by the express
or implied approbation of all the j[)artners in the given
case.^ The same rule will apply to cases, where one
1 Sweetser v. French, 2 Gush. 309.
2 Duncan v. Lowndes, 3 Camp. R. 478 ; Sandilands v. Marsh, 2 B. &
Aid. 679 ; Payne v. Wood, 3 Dowl. & Ryl. 664 ; Ex p'arte, Nolte, 2 Glyn
& Jam. 306 ; CoUyer on Partn. B. 3, ch. 1, § 3, p. 279 to p. 281, 2d edit.;
Crawford v. Stirling, 4 Esp. R. 207; Theobald on Prin. and Surety, 29,
30, 31 ; 2 Bell, Comm. B. 7, ch. l,p. 618, 5th edit.; 3 Kent, Comm. Lect.
43, p. 46, 47, 4th edit. ; Sutton v. Irving, 12 Serg. & Eawle, 13 ; Hamil
V. Purvis, 2 Pennsyl. R. 177 ; Gow on Partn. ch. 2, § 2, p. 37, 38, 56, 57,
58 ; Id. ch. 4, ^ 1, p. 148, 149, 3d edit. ; Dob «.*Halsey, 16 Johns. R. 38 ;
RoDins i^. Stevens, 31 Maine, 454; Foot v. Sabin, 19 Johns. R. 154;
New Tork Fire Insur. Co. v. Bennett, 5 Connect. R. 574. There is
some apparent discrepancy in the authorities. But the text contains what
seems to me the just results belonging to the doctrine ; and it is accprd-
ingly adopted by Mr. Chancellor Kent in his Commentaries. (3 Kent, '
Comm. Lect. 43, p. 46, 47, 4th edit.) In Hope v. Ciist, cited by Mr.
Justice Lawrence in Shirreff v. Wilks, 1 East, R. 52, 53, Lord Mansfield
is reported to have said ; " There is no doubt, but that the act of every
single partner in a transaction relating to the partnership, binds all others.
If one gives a letter of credit or guaranty in the name of all the partners,
it binds all." Lord Mansfield was here addressing himself to the case of
bankers, where it might perhaps be within the ordinary scope of their
business. On the other hand. Lord Ellenborough, in Duncan v. Lowndes,
(3 Camp. R. 478,) in the case of a commercial partnership, said; " As it
is not usual for merchants in the common course of business to give colla-
teral engagements of this sort, I think you must prove that Lowndes had
authority from Bateson to sign the partnership firm to the guaranty in
question. It is not incidental to the general power of a partner to bind
his copartners by such an instrument. This case was not, however, a
guaranty in the partnership business, but a guaranty of the acceptances
of a third person, not belonging to the partnership funds. In Sandilands
V. Marsh, (2 Bam. & Cressw. 673,) a guaranty of an annuity by one
partner, the partnership not dealing in annuities, but the dealing in this
CH>Vin.] LIABILITIES AND EXEMPTIONS. 213
partner signs or indorses the name of the firm to a note,
as surety for a third person, in which note the partner-
ship has no interest, and where it is not in the course
of their business.^
annuity being known to tlie other partner, and not disapproved of by Mm,
and lie having no knowledge of the guaranty, was held to bind the part-
nership, upon the ground that the transaction as to the annuity, being
adopted as a part of the business binding on the partnership, the whole
transaction bound the partnership, although the guaranty was not known.
This must have been sustained upon the notion, that dealers in annuities,
in the ordinary course of things, were accustomed to guaranty them ; for
the mere adoption of an act of one partner, where there was a conceal-
ment of material circumstances, might not bind him, if the business were
not within the scope of their ordinary business."
^ Laverty v. Burr, 1 Wend. K. 529, 531 ; Bank of Rochester v, Bowen,
7 "Wend. R. 158; Wilson v. Williams, 14 Wend. 146; Catskill Bank v.
Still, 15 Wend. K. 364. The American cases are very generally agreed
on this point. In Laverty v. Burr, 1 Wend. 529, 531, Mr. Justice Suth-
erland, in delivering the opinion of the Court, said ; " Hosmer, the agent
of the plaintiffs, took the note in question for a debt due from Allen, the
maker, to them. He refused to take Allen's note without security. The
security given was the indorsement of Burr and Baldwin, the defendants,
and of Smith and Jenkins, the second indorsers. The plaintiffs, therefore,
knew, when they took the note, that the indorsement of the defendant
was made by one of th^ partners, in the name of the firm," as security for
Allen, and not for a debt due from the firm. The partner, who did not
sign the note, is not bound by it under such circumstances, unless he was
previously consulted, and assented to the transaction ; and the burden of
proving, that the partner, who did not sign the note, consented to be
bound, is thrown on the creditor. (Dob v. Halsey, 16 Johns. R. 38, and
Foot V. Sabin, 19 Johns. R. 157.) In England, the assent of all the part-
ners is presumed, and the burden of avoiding the security is thrown on
the firm, and they are required to prove, that the note was signed by one
of the partners on his individual account, without the knowledge and
against the consent of the others, and that the creditor knew that fact,
when he took the paper of the firm. Here the onus probandi is thrown
on the creditor. The law upon this subject is very fully considered and
clearly established in the cases referred to, and also in Livingston v. Hastie
& Patrick, (2 Caines, 246,) Lansing v. Gaine & Ten Eyck, (2 Johns. R.
300,) and Livingston v. Roosevelt, (4 Johns. R. 251.) The only distinc-
tion between this case and that of Foot v. Sabin, (19 Johns. R. 157,) is
this. In that case the note was signed by one of the partners in the name
214
PARTNERSHIP. . [cH. Vm.
§ 128. In the next place, every contract in the name
of the firm, in order to bind the partnership, must not
only be within the scope of the business of the part-
nership, but it must be made with a party who has no
knowledge, or notice, that the partner is acting in vio-
lation of his obligations and duties to the firm, or for
purposes disapproved of by the firm, or in fraud of the
firm. Por every such contract, made with such know-
ledge or notice, will be void as to the firm, however
binding it may be upon the individual partner making
it.^ This is a natural result of the principles of justice
and equity applied to every other contract, as well as
to that of partnership contract. It also follows from
the known limitations of the law of agency ; for no
agent can bind his principal in any transaction, in
which he knowingly exceeds his authority, or knowing-
ly colludes with another person, having notice, in any
violation of the rights of his principal.^
of the firm as sureties ; here it was indorsed ; and it was urged upon the
argument of this cause, that in every general pantnership, each member
neeessarilj' possesses the power of signing or indorsing negotiable com-
■ mercial paper in the customary way of business, though the power of
pledging the firm as sureties for third persons may not exist. The form of
the transaction cannot be material, except by way of evidence. When
papej; is signed by one partner in the name of the firm, as sureties for a
third, it carries on the face of it evidence that it was not given for a part-
nership debt, and proof of that fact becomes unnecessary. But when it
is signed or indorsed in the ordinary manner, such proof must be given.
But when the fact is established, that it was not given for a partnership
debt, and that the person to whom it was passed knew it, no matter what
the form of the instrument is, it does not bind the partners, who did not
sign or assent to it. In this case, the assent of Baldwin is not shown, and
he is therefore entitled to judgment."
1 See Stainer v. Tyson, 3 Hill, E. 279.
a Story on Agency, § 125, 165 ; 3 Kent, Comm. Leot. 48, p. 44, 45, 46,
4th edit.; Gow on Partn. ch. 2, § 2, p. 42 ; Id. p. 49 to 56, 3d edit.; Coll-
yer on Partn. B. 3, ch. 1, p. 261, 2d edit.
CH. Vm.] LIABILITIES AND EXEMPTIONS. 215
§ 129. The same principles are incorporated into the
foreign law, of the modern nations of Europe, in re-
spect to partnership. Thus, Pothier says, that in cases
of partnership, the signature of the firm by one part-
ner will not oblige the partnership, if it appears from
the very nature of the contract, that it does not con-
cern the business of the partnership.^ So, Mr. Bell
asserts the like principles to belong to the Scottish law.
When (says he) the party has notice of a stipulated
restraint on the power of the partners ; or when, by
the circumstances, or in its own nature, the transac-
tion is such, as to carry evidence with it of a misap-
plication of the firm to what is an individual concern
only, and not a matter in which the company is inter-
ested, the company and the other partners wiU not be
bound.^
§ 130. This doctrine may be illustrated in various
ways ; but the same principle pervades the whole of
the cases. Thus, if a person should trust a firm, with a
full knowledge that one partner had withdrawn from
it, or that the firm was dissolved, or that the other part-
ners disavowed or repudiated any such transaction; in
each of these cases he would have no remedy against
any of the partners, except the one with whom he had
entered into the contract.^ So, also, if the creditor
1 PotMer on Oblig. n. 83 ; Pothier, De Society, n. 101.
2 2 Bell, Comm. B. 7, p. 616, 5th edit.
3 Minnet v. Whinnery, or Whitney, 5 Bro. Pari. Cas. by Tomlins, 489 ;
S. C. 16 Vin. Abridg. 244; S. C. 2 Bro. Pari. Cas. 323 ; Le Eoy w.
Johnson, 2 Peters, R. 186 ; Gow on Partn. ch. 2, § 2, p. 48, 49, 3d edit. ;
Collyer on Partn. B. 3, chi 1, p. 262, 2d edit.; Willis v. Dyson, 1 Stark.
K. 164; Alderson v. Pope, 1 Camp. E. 404, note ; Gow on Partn. ch. 2,
§ 2, p. 55, 56, 57, 2d edit; Id. oh. 4, § 1, p. 148 to ISOj. — Mr. Gow (on
Partn. ch. 2, p. 48, 49, 3d edit.) has stated the whole doctrine very clearly
and distinctly. " On the subject" (says he) "of negotiable instruments,
216 PARTNEKSHIP. [CH. VIH.
should have notice of any private arrangement be-
tween the partners, by which the power of one part-
ner to bind the j&rm, or his liability on the partnership
contracts is qualified, restricted, or defeated; the cre-
ditor would be bound by such arrangement, and could
not enforce any right in contravention thereof.-^ The
it remains to be observed, that even in transactions, in -which all the part-
ners are interested, the authority of one partner to make, draw, accept, or
indorse promissory notes or bills of exchange in the joint name is only
implied, and may therefore be rebutted by express previous notice, to the
party taking a joint security from one partner, of his want of authority,
or that the others will not be liable upon it. Siich a power is not indis-
pensably essential to the existence of a partnerships the partners may
stipulate between themselves that it shall not be exercised ; and if a
third person, apprised of such stipulation, will take a joint security, he
cannot sue the firm upon it, although it were truly represented to him, by
the partner giving the security, that the money to be advanced on it was
required for the purpose of, and was in fact applied in liquidating the
partnership debts ; much less can he hold the firm responsible on a secu-
rity so obtained, if he take it in defiance of a positive notice, previously
given by one of the members, that he will not be answerable for any bill
or note signed and negotiated by the others. And the power of one
partner to bind the firm by a negotiable security, where it is capable of
being exercised, is only coexistent with the duration of the partnership
itself; for, immediately on its dissolution, the power ceases." But although
a partner has withdrawn from a partnership, and it is known to the other
party, yet if his name is still to continue in the firm for a limited period,
that will create a liability on his part as a partner for that period, since he
thereby holds himself out to the world, as responsible for their engage-
ments for that period, notwithstanding the dissolution of the partnership.
Brown d. Leonard, 2 Chitty, E. 120.
1 CoUyer on Partn. B. 3, ch. 1, p. 261 ; Id. p. 329, 2d edit.; Minnet v.
Whinnery, 2 Bro. Pari. K. 823; S. C. 5 Bro. Pari. K. by Tomlins, 489 ;
Ex parte Harris, 1 Madd. K. 583 ; Bignold v. Waterhouse, 1 Maule & •
Selw. 259 ; Gow on Partn. ch. 2, § 2, p. 54, 55, 56, 3d edit; Id.'ch. 4, ^ 1,
p. 149 to 151. — In Lord Galway v. Mathew, 10 East, R. 264, Lord
Ellenborough said ; " The general authority of one partner "to draw bills
or promissory notes to charge another is only an implied authority ; and
that implication was rebutted in this instance by the notice given by
Smithson, who is now sought to be charged, which reached the plaintiflT,
warning him that Mathew had no such authority. It is not essential to a
CH. VmJ LIABILITIES AND EXEMPTIONS. 217
cases have gone yet further; and it has been held,
that where a note has been made or indorsed by a
partner, in violation of his duty, and authority, if the
holder, who receives it, has been guilty of gross neg-
ligence in receiving it, it will not be binding in his
hands upon the partnership.-^
I 131. The same doctrine applies, a fortiori, to cases
of fraud ; for, although in cases of partnership, a fraud
committed by one partner in the course of the part-
nership business and transactions, without the know-
ledge of the other partners, will bind the firm, and
create a liability coextensive therewith ; ^ yet it would
partnership, that one partner should have power to draw bills and notes
in the partnership firm to charge the others; they -may stipulate between
themselves, that it shall not be done ; and if a third person, having notice
of this, will take such a security from one of the partners, he shall not
sue the others upon it, in breach of such stipulation, nor in defiance of a
notice previously given to him by one of them, that he will not be liable
for any bill or note signed by the others." Mr. Gow, speaking on this
subject, says ; " So if the person, with whom the single partner deals, is at
the time conscious of the misconduct of that partner in pledging the
joint name to a separate transaction, he cannot enforce against the firm
any claim that may arise to him out of such dealings. Neither can he call
upon the firm to -fulfil a contract which has been made by one partner, if
he be privy to a private agreement between the partners themselves, the
effect of which is to throw the responsibility upon the .single partner alone.
Therefore, where four persons are partners in a coach concern, but one
by agreement provides the coaches at a certain rate per mile, he alone is
responsible for repairs done to the coach by a person cognizant of this
arrangement, although the names of all' four appear on the vehicle. So, if
it be notorious, that the proprietors have separate departments and inte-
rests, they must be sued separately by the tradesmen, who may supply
each with goods."
1 Lloyd V. Freshfield, 2 Carr. & Payne, R. 325 ; New York Fire Ins.
Co. V. Bennet, 5 Conn. E. 574.
2 Ante, § 108; CoUyer on Partn. B. 3, ch. 1, ^ 5, p. 293 to 304, 2d
edit. ; Gow on Partn. ch. 2, § 2, p. 55, 3d edit. ; Id. ch. 4, § 1, p. 146, 147,
148.
PAKTN. 19
218
PARTNERSHIP. [CH. Tin.
be absurd to apply this principle to any cases, where
the fraud is known to, or participated in, or connived
at by, the third person, whose interest it affected ; for
that would be to allow him to take advantage of his
own wrong, and would affect the innocent with the
grossest injustice. Thus, for example, if one partnesr
should make a negotiable security in the name of the
partnership, and dispose of it to a third person, who
knew that the proceeds were to be applied in fraud
of the firm, or for purposes not within the scope of
their business, or for illegal purposes, it would not be
binding on the firm. A fortiori, if the whole transac-
tion should be a meditated fraud to accomplish a mere
gaming purpose, or some other illegal purpose, between
the very parties, the same rule would apply .-^
§ 132. Similar principles will apply, although not
always to the same extent, or with the same certainty,
where one partner misapplies the funds, or securities,
or other effects of the partnership in discharge or pay-
ment of his own private debts, claims, or contracts.
In such cases the creditor, dealing with the partner,
and knowing the circumstances, will be deemed to act
maid fide, and in fraud of the partnership, and the
transaction, by which the funds, securities, and other
effects of the partnership have b.een so obtained, will be
treated as a nullity.^ The same rule will ordinarily
1 Collyer on Partn. B. 3, ch. 1, § 5, p. 293 to 303, 2d edit. ; Gow on
Partn. ch. 2, § 2, p. 55, 56, 3d edit. ; Id. ch. 4, § 1, p. 147 to 151 ; San-
dilands v. Marsh, 2 Barn. & Aid. 673.
2 Gow on Partn. ch. 2, § 2, p. 42 to 48, 3d edit. ; 3 Kent, Comm. Lect.
43, p. 42, 43, 4th edit.; Ex parte Agace, 2 Cox, R. 312; Collyer on
Partn. B. 3,,ch. 2, § 3, p. 331 to 347, 2d edit. ; Hope v. Cust, cited 1 East,
K. 53 ; Arden v. Sharpe, 2 Esp. R. 524 ; Shirreff v. Wilks, 1 East, R.
48; Eemys V. Richards, 11 Barbour, 312; Green v. Deakin, 2 Stark. R.
CH. Vin.] LIABILITIES AND EXEMPTIONS. 219
apply to the case of a note, or indorsement, or accept-
ance, given by one partner in the name of the firm
for his own separate debt or contract ; for it is a clear
misapplication of the partnership credit.^ So, a re-
347; Ex parte Goulding, 2 Glyn & Jam. 118; Snaith v. Burridge, 4
Taunt. R. 684; Rogers v. Batchelor, 12 Peters, R. 221; Ex parte
Bushell, 3 Montagu, Deacon & De Gex, R. 615 ; Burwell v. Springfield,
15 Ala. 273.
1 Gow on Partn. ch. 2, § 2, p. 44 to 48, 3d edit. ; Collyer on Partn. B.
3, cL 2, § 3, p. 331 to 347, 2d edit. ; Watson on Partn. ch. 4, p. 196, 197,
2d edit. ; Whitaker v. Brown, 11 Wend. R. 75 ; Gansevoort v. Williams,
14 Wend. 133 ; Wilson v. Williams, 14 Wend. R. 146 ; Dob v. Halsey,
16 Johns. R. 34; Lang v. Waring, 17 Ala. 145. — In Arden v. Sharpe,
(2 Esp. R..524, 525,) Lord Kenyon said; "The bill is indorsed by, one
partner in the name of the firm. One partner certainly may indorse a
bill in the partnership name ; and if it goes into the world, and gets into
the hand of a hona Jide holder, who takes it on the credit of the partner-
ship name, and is ignorant of the circumstances, though in fact the bill
was first discounted for that one partner's own use, in such case the part-
nership is liable. But the case is difierent, where the party, who brings
the action, was himself the person who took the bill with the indorsement
by one partner only, and was informed that the transaction was to be
concealed from the other. He cannot sue the partnership. The transac-
tion indicates that the money was for that partner's own use, and not
raised on the partnership account, therefore he shall not be allowed to
resort to the security of the partnership, to whom in the\original transac-
tion he neither looked nor trusted." In Livingston v. Roosevelt, 4 Johns.
R. 251, 265, Mr. Justice Van Ness said; "The distinction between
general and special partnerships is probably coeval with their existence.
A general rule applicable to both is, that in transactions relating to the
joint concern,^ one of several partners may bind the rest. He may sign
notes, indorse or accept bills for the common benefit, &c., without applying
to the rest in every particular case. But this authority of a single partner
has its limitation. Formerly, as appears by the case of Parkney v. Hall,
(1 Salk. 126, and S. C, 1 Ld. Raym. 175,) it was probably less extensive
than at this day. One partner of the concern has no authority to pledge
the partnership goods for his own debt ; nor can he bind the firm to any
engagements, known at the time to be unconnected with, and foreign to,
the partnership. This has not only been so settled by this Court, but now
is, and always has been, the established law'in England. Not an adjudged
case, nor, I believe, a single dictum can be found the other way. This
220
PARTNEESHIP. [CH. Vm.
lease of a partnership debt by one partner, (which
ordinarily will extinguish the partnership,) will be
held inoperative and void, as to the firm, if it was
taken in discharge of the separate debt of the part-
ner releasing it by his creditor knowing all the cir-
cumstances.-'
§ 133. But although this is the general doctrine in
will appear from most of the cases, which I shall presently have occasion
to mention for another purpose. In special partnerships, however, this
power of the individuals composing them is restricted to still narrower
limits, and can only be legally exercised within the compass of that par-
ticular business to which the partnership relates. It is as circumscribed
as the partnership itself. It is, therefore, analogous to that, which is
conferred on an agent appointed for a special purpose, who if he exceed
his authority, cannot bind his principal. (Fenn and another v. Harrison
and others, 3 Term Rep. 757.) This analogy is complete, in all cases,
where third persons have dealings with a special partner, with notice that
he is such. And, accordingly, it has been repeatedly ruled, that, when-
ever such a partner pledges the partnership funds, or credit, in a transac-
tion, which is known- to b"e unconnected with, and not fairly and reason-
ably within, the compass of the partnership, it is, as to the other partners,
fraudulent and void. They, however, to entitle themselves to the pro-
tection of this rule of law, must not do, or consent to, or suffer any thing
to be done, which may hold them out to the world as general partners ;
and it would always be prudent ' and proper (though I will not say it is
indispensably nefcessary) to give public notice to the community, that the
partnership is special, and of the particular species of traffic or business
to which it is confined. (Willet u. Chambers, Cowp. 8l4; De Berkom v.
Smith and another, 1 Esp. N. P. R. 29 ; Arden o. Sharpe and another, 5
Esp. N. P. R. 524 ; Shirreff and another i>. Wilks, 1 East, 4$.) In the
case. Ex parte Bonbonus, (8 Ves. 540,) Lord Eldon expresses himself
thus ; ' I agree it is settled, that if a man gives a partnership engagement
in the partnership name, with regard to a transaction, not in its nature a
partnership transaction, he, who seeks the benefit of that engagement,
must be able to say, that though in its nature not a particular transaction,
yet there was some authority beyond the mere circumstance of partner-
ship, to enter into that contract, so as to bind the partnership ; and then it
depends upon the degree of evidence.'" See also Ex parte Bushell,
3 Montagu, Deacon &'De Gex, R. 615.
* Gram ii. Caldwell, 5 Cowen, R. 489 ; Evernghim v. Ensworth, 7
Wend. R. 326; Farrar v. Hutchinson, 9 Adol. & Ellis, 641.
CH. VIII.] LIABILIITIES AND EXEMPTIONS. 221
the absence of all controlling circumstances; yet tlie
presumption of any fraud or misapplication may be
rebutted by the circumstances of the particular case.
Thus it may be shown, that the. other partners have
directly or by fair implication authorized or confirmed
the application of the partnership funds, securities,
effects, or credits to the very purpose,^ or that the
partner had acquired^ with the consent of his partners,
an exclusive interest therein, or that, from other cir-
cumstances, the transaction was actually bond fide, and
unexceptionable, although it went to the discharge of
the private debt by one partner only.^ For, it has
been very justly remarked, that the application by a
single partner of a joint security, in discharge of his
individual debt, by no means necessarily establishes,
that it is a fraud upon the firm ; for it may not only
have been expressly authorized^by the firm, but it may
frequently result from prudential considerations and
arrangements, referable to their own business and in-
terests.^ The mere fact, that a- note, or security, or
• Wheeler «. Rice, 8 Cush. 205.
2 Gow on Partn. ch. 2, § 2, p. 44 to 48, 3d edit.; Id. ch. 4, § 1, p. 149,
150, 151 ; 3 Kent, Comm. Lect. 43, p. 42, 43, 44, 4th edit., edlyer on
Partn. B. 3, ch. 1, § 4, p. 287, 288, 289 ; Id. p. 313 to 331 ; Id. ch. 2, § 3,
p. 331 to 338, 2d edit.; Ex parte Agace, 2 Cox, K. 312; Ridley v.
Taylor, 13 East, E. 175, 178, 182; Winter v. Crowther, 1 Cromp. &
Jerv. 316; Baird v. Gochran, 4 Serg. & Eawle, 397.
8 See Gow on Partn. ch. 4, § l,p. 149, 3d edit.; CoUyer on Partn. B.
3, ch. 2, ^ 3, p. 331 to 347, 2d edit; Ex parte Bonbonus, 8 Ves. 540;
Frankland v. McGnsty, 1 Knapp, P. C. R. 274; RidleJ «. Taylor, 13
East, 175, 178, 182 ; Watson on Partn. ch. 4, p. 202, 2d edit. ; Shirreff v.
Wilks, 1 East, R. 42; 2 Bell, Comm. B. 7, p. 616, 617, 5th edit.— In
Ex parte Bonbonus, (8 Ves. 540, 543, 544,) Lord Eldon said ; " This pe-
tition is presented upon a principle, which it is very difficult to maintain ;
that if a partner for his own accommodation pledges the partnership, as the
19* ■
222 PARTNERSHIP. [CH. VIII.
fund of the firm has been taken in discharge or pay-
ment of the separate debt of one partner, is not alone
decisive of collusion, or fraud, or misapplication there-
money comes to the account of the single partner only, the partnership is
not bound. I cannot accede to that. I agree, if it is manifest to the per-
sons advancing money, that it is upon the separate account, and so, that it
is against good faith, that he should pledge the partnership, then they
should show, that he had authority to bind the partnership. But if it is in
the ordinary course of commercial transactions, as upon discount, it would
be monstrous to hold, that a man borrowing money upon a bill of exchange
pledging the partnership, without any knowledge in the bankers that it is
a separate transaction, merely because that money is all carried into the
books of the individual, therefore the partnership should not be bound.
No case has gone that length. It was doubted, whether Hope v. Oust
was not carried too far, yet that does not reach this transaction ; nor Shir-
reffw. Wilks; as to which I agree with Lord Kenyon, that, as partners,
whether they expressly provide against it in their articles, (as they gen-
erally do, though unnecessarily,) or not, do not act with good faith, when
pledging the partnership property for the debt of the individual, so it is a
fraud in the person taking that pledge for his separate debt. The question
of fact, whether this was fair matter of discount, or, being an antecedent,
separate debt of Kogers,.the discount was obtained merely for the purpose
of paying that debt by the application of the partnership funds, which
question is brought forward by the affidavits, though not by the petition,
must lead to further examination. K the partners are privy, and silent,
permitting him to go on dealing in this way, without giving notice, the
question will be, whether subsequent approbation is not for this purpose
equivalent to previous consent. Pumell, therefore, must explain himself
upon this ^ for if he admits all these circumstances to have been in his
knowledge, it will be very difficult to say he is entitled to the benefit of
that principle, which is established for the safety of partners. That expla-
nation, if material in 1793, is much more so now; when one of the part-
ners is dead ; another gone abroad ; the managing clerk dead. Under
these circumstances, if the examination as to the propriety of the proof
made in 1793, which I consider a sort of judgment for the debt, cannot be
gone into but ifhder most unfavorable circumstances to those who made it,
I cannot throw that difficulty upon those who come forward then ; and
permit the inattention of the others, who mig^t have come at any time
since, to be prejudicial to third persons." Again he added; "In For-
dyoe's case. Lord Thurlow and the Judges had a great deal of conversa-
tion upon the law; and they doubted, upon the danger of placing every
man, with whom the paper of a partnership is pledged, at the mercy of
CH. Vin.J LIABILITIES AND EXEMPTIONS. 223
of. Neither is the fact, that the amount thereof has
been passed to the separate private credit on account
of otie partner ; nor that a note or security of the firm
has been in part discounted, or applied to pay a sepa-
rate debt of one partner ; for all these circumstances
may be consistent with entire good faith, and without
gross negligence on the part of the creditor. There
must, therefore, be some other ingredients in the case,
importing some knowledge or suspicion of maid fides,
or some reasonable grounds, which should put the cre-
ditor upon farther inquiry.^ It may however, be taken
as the" general rule, that where a note, or security, or
fund of the firm has been taken in discharge of a sepa-
rate debt of one partner, the burden of proof is on
the holder or creditor to show circumstances, sufficient
one of the partners with reference to the account he may afterwards give
of the transaction. There is no doubt, now, the law has taken this course ;
that if, under the circumstances, the party taking the paper can be con-
sidered as being advertised in the nature of the transaction, that it was
not intended to be a partnership proceeding, as if it was for an antecedent
debt, prima facie, it will not bind them ; but it will if you can show
previous positive authority. In many cases of partnership and different
private concerns, it is frequently necessary for the salvation of the part-
nership, that the private demand of one partner should be satisfied at the
moment ; for the ruin of one partner would spread to the others, who
would rather let him liberate himself by dealing with the firm. The
nature of the subsequent transactions therefore must be looked to, as well
as that at the time. It is impossible now to forget, whatever I might have
thought of it in 1793, that the person, upon whose evidence this joint
demand could be cut down, is Purnell, the bankrupt ; who could not be a
witness at law ; whose duty also it was to protect the partnership against
this proof; and who has permitted it to stand all this time ; and who upon
all the circumstances appearing in these affidavits, if he should deny
notice, could not be believed by a jury." See also Hood v. Aston, 1 Kuss.
K. 412, 415.
1 See Collyer on Partn. B. 3, ch. 2, § 3, p. 331 to 347, 2d edit. ; Rid-
ley w. Taylor, 13 East, 175; Ex Parte Bonbonus, 8 Ves. 540 to 545;
Hood V. Aston, 1 Rusa. R. 412, 415.
224 PARTNERSHIP. [ch. VIH.
to repel every presumption of fraud, or coUusion, or mis-
conduct, or negligence, on his own part, unless indeed
the circumstances, already in proof on the other side,
repel such presumption/ And if the securities or
iFrankland v. McGusty, 1 Knapp, P. C. E. 274, 301, 305, 306; Ex
parte Bonbonus, 8 Ves. 540; CoUyer on Partn. B. 3, ch. 2, § 3, p. 342,
343; Lloyd v. Freshfield, 8 Dowl. & Ryl. 19 ; 2 Carr. & Payne, 325;
Footu. Sabin, 19 Johns. R. 154, 157, 158; Dob w. Halsey, 16 Johns. R.'
34, 38; Gansevoort v. Williams, 14 Wend. 3 33. — In Frankland v
. McGusty, (1 Knapp, K. 315,) Sir John, Leach, (Master of the KoUs), in
delivering the opinion of the Court, said; "I take it to be clear, from all
the cases upon the subject, that it lies upon a separate creditor, who takes
a partnership security for the payment of his separate debt, if it be taken
simpliciter, and there is nothing more in the case, to prove, that it was
given with the consent of the other partners. But there may be other
circumstances attending the transaction, which may afford the separate
creditor a reasonable ground of belief, that the security, so given in the
partnership name, is given with the consent of the other partners ; and
those circumstances occurred in the case, which was cited, and which
seemed to be inconsistent with the other authorities. I refer now to the
case of Ridley v. Taylor. In that case the bill was dated eighteen days
before its delivery by the partner to his separate creditor, and it was not
known by the creditor that it was drawn and indorsed by the debtor alone ;
and the bill was to a greater amount than the separate debt. The Court
therefore were of opinion, that there was reasonable ground for the sepa-
rate creditor believing it not to have been given to him in fraud of the
partnership, and that the general presumption, that a partnership security,
when applied in payment of a separate debt, is in fraud of the partnership,
was repelled by the special circumstances which belonged to that particu-
lar occasion. Upon a consideration, therefore, of all the authorities, I am
of opinion, that the law is, that taken simpliciter the separate creditor
must show the knowledge of the partnership ; but if there are circum-
stances to show a reasonal>le belief, that it was given with the consent of
the partnership, it lies upon the partners to prove the fraud. I think that
will reconcile all the cases.'' And again (Id. p. 305, 496) ; " The coun-
sel seemed to be perfectly satisfied with a reference to one of the members
of the Court to examine what r the law was in that case, it having been
admitted here, that there was no direct evidence, whether these bills had
been given with the assent of the partners, or whether they had not been
given with their assent ; and the question therefore was, when bills had
been given by an individual partner in the name of the partnership firm,
for his individual debt, upon whom the burden of proof lay to show that
CH. Vm.] LIABILITIES AND EXEMPTIONS. 225
funds of the partnership are received in payment of
the separate debt of one partner by his creditor, it
the other partners did not assent to the formation of those bills. Upon
the consideration of that question, and examining aU the authorities, it
appeared to the member of the Court, who had the duty of that examinar
tion, that, simpliciter, bills drawn by one partner for a separate debt in
the partnership name, could not be recovered upon, as against the part-
nership firm ; but that the person claiming payment of the bills must prove
either a direct assent of the other partners to the formation of the bills,
or if not such direct assent, that there were some circumstances in the
transaction, from which the party taking them might reasonably infer, that
they were given with the consent of' the other partners." In Dob v.
Halsey, (16 Johns. K. 34, 38), Mr. Chief Justice Spencer, in delivering
the opinion of the Court, said; " This court has decided, in several cases,
that where a note is given in the name of the firm, by one of the partners,
for the private debt of such partner, and known to be so by the person
taking the note, the other partners are not bound by such note, unless
they have been previously consulted, and consent to the transaction.
(Livingston v. Hastie and Patrick, 2 Gaines, 246 ; Lansing v. Gaine and
Ten Eyck, 2 Johns. R. 300 ; Livingston v. Roosevelt, 4 Johns. K. 251.)
In Ridley and another v. Taylor, 13 East 175, the Court of King's Bench
held, that if one partner draw or indorse a bill in the name of the part-
nership, it ■wiW, prima facie, bind the firm, although passed by one partner
to a separate creditor, in discharge of his private debt, unless there be
covin between such separate debtor and creditor, or, at least, the want
of authority, either express or implied, in the debtor partner, to give the
security of the firm for his separate debt. The only difference between
the decision of this Court, and that of the King's Bench, consists in this :
We require the separate creditor, who has obtained the partnership paper
for the* private debt of one of the partners, to show the assent of the
whole firm to be bound ; the rule of the King's Bench throws the bur-
den of avoiding such security on the firm, by requiring them to prove
that the act was covinous on the part of the partner, for whose private
debt the paper of the firm was given, by showing, that it was done without
the knowledge and against the consent of the other partners, and that the
fact was known to the separate creditor, when he took the paper of the
firm. I can perceive no substantial difference, whether the note of a firm
be taken for a private debt of one of the partners, by a separate creditor
of the partner pled^ng the security of the firm, and taking the property
of the firm upon a purchase of one of the partners, to satisfy his private
debt. In both cases, the act is equally injurious to the other partners ; it
is taking their common property to pay a private debt of one of the part-
226 PAKTNERSmP. [CH. VIII.
will not be necessary for the partners to establish the
ners." The same point was decided in Foot v. Sabin, 19 Johns. R. 154,
157, 158, where the same learned Judge said ; " The plaintiff proved
Holmes's signature to the note, and, also, that Wilson and Foot were part-
ners, and that Wilson signed the name of the firm ; and it appeared on the
face of the note, that they signed as ' sureties ' to Holmes. Whether we ap-
ply this proof to the general issue or to the special plea, the plaintiff has not
maintained either issue. It was incumheni on him to ^how, that all the de-
fendants were liable on the note, and that Wilson executed the note with the
express assent and authority of Foot. In this case, it appearing, that the
signature of the name of the firm, by Wilson, was not for a partnership
debt, Wilson could not bind his partner. Foot. All the cases were reviewed
in Dob V. Halsey, (16 Johns. R. 38,) and the principle established is this,
that where a note is given in the name of a firm, by one of the partners,
for the private debt of such partner, and known to be so by the person
taking the note, the other partner is not bound, unless he has been pre-
viously consulted, and has consented to the transaction ; and t)ie burden
of the proof, that the partner, who did not sign the note, consented to be
bound, is thrown on the creditor. The same principle applies with great-
er force, when one of the partners becomes security for another person,
and attempts to bind his copartners. The creditor is aware, that he is
pledging the partnership responsibility in a matter in nowise connected
with the partnership business ; and that is a fraud on such of the partners
as do not assent expressly that the firm shall be bound. When, therefore,
it appeared, from the plaintiff's own showing, that the note was signed by
Holmes, as principal, and by Wilson, with the name of the firm of Wilson
and Foot, as sureties for Holmes, nothing was shown to bind Foot, apd the
plaintiff failed to maintain the issue. On the motion for a nonsuit, the
Court held, that the plaintiff was bound to prove the authority or consent
of Foot, to the making the note, which the Court considered he had done.
There was no proof of any authority or consent of Foot, except the proof of
the signature of Wilson of the name of the firm. The Court, then, certainly
drew a very incorrect legal inference from the fact proved." Perhaps the
whole doctrine cannot be summed up better than it is done by Mr. Chan-
cellor Kent in his learned Commentaries. "In all contracts," says he,
« concerning negotiable paper, the act of one partner binds all ; and even
though he signs his individual name, provided it appears on the face of the
paper, to be on partnership account, and to be intended to have a joint
operation. But if a bill or note be drawn by one partner, in his own
name only, and without appearing to be on partnership account, or, if one
partner borrow money on his own security, the partnership is not bound
by the signature, even though it was made for a partnership purpose, or
the money appUed to a pai;tnership use. The borrowing partner is the
CH. VIII.] LUBILITIES AND EXEMPTIONS. 227
fact, that the creditor knew at the time, that it was a
creditor of the firm, and not the original lender. If, however, the bill be
drawn by one partner in his own name, upon the firm, on partnership ac-
count, the act of drawing has been held to amount, in judgment of law, to
an acceptance of the bill by the drawer in behalf of the firm, and to bind
the firm as an accepted bill. And though the partnership be not bound
at law in such a case, it is held, that equity will enforce payment from it,
if the bill was actually drawn on partnership account. Even if the paper
was made in a case, which was not in its nature a partnership transaction,
yet it will bind the firm, if it was done in the name of the firm, and there
be evidence that it was done under its express or implied sanction. But
if a partnership security be taken from one partner, without the previous
knowledge and consent of the others, for a debt, which the creditor knew
at the time was the private debt of the particular partner, it would be a
fi:audulent transaction, and clearly void in respect to the partnership. So,
if from the subject-matter of the contract, or the course of dealing of the
partnership, the creditof was chargeable with constructive knowledge of
that fact, the partnership is not liable. There is no distinction in princi-
ple upon this point between general and special partnerships ; and the
question, in all cases, is a question of notice, express or constructive. All
partnerships are more or less limited. There is none that embraces, at
the same time, every branch of business ; and when a person deals with
one of the partners in a matter not within the scope of the partnership,
the intendment of law will be, unless there be circumstances or proof in
the case to destroy the presumption, that he deals with him on his private
account, notwithstanding the partnership name he assumed. The conclu-
sion is otherwise, if the subject-matter of the contract was consistent with
the partnership business ; and the defendants in that case would be bound
to show, that the contract was out of the regular course of the partner^
ship dealings. When the business of a partnership is defined, known, or
declared, and the company do not appear to the world in any other light
than the one exhibited, one of the partners cannot make a valid partner-
ship engagement, except on partnership account. There must be at least
some evidence of previous authority beyond the mere circumstance of
partnership, to make such a contract binding. If the public have the
usual means of knowledge given them, and no acts have been done or suf-
fered by the partnership to mislead them, every man is presumed to know
the extent of the partnership, with whose members he deals. And when
. a person takes a partnership engagement, without the consent or authority
of the firm, for a matter, that has no reference to the business of the firm,
and is not within the scope of its authority, or its regular course of dealing,
he is, in judgment of law, guilty of a fraud. It is a well establisl^ed doc-
trine, that one partner cannot rightfully apply the partnership funds to
228 PARTNERSHIP. [CH. Vm.
misapplication of the securities or funds ; for the very
diacharge his own preexisting debts, without the express or implied assent
of the other partners. This is the case even if the creditor had no know-
ledge at the time of the fact of the fund being partnership property. The
authority of each partner to dispose of the partnership funds strictly and
rightfully extends only to the partnership business, though in the case of
bonaf.de purchasers, without notice, for a valuable consideration, the part-
nership may, in certain cases, be bound by the act of one partner." 3
Kent, Comm. Lect. 43, p. 41 to 43. The question, upon whom the bur-
den of proof lies to show, that the partnership funds or securities have or
have not been misapplied, by the application thereof to the payment of a
separate debt of one partner, has been elaborately discussed in some other
cases in the American Reports ; and the conclusion is uniformly main-
tained, that the burden of proof is on the holder, and not on the other
partners. In Gansevoort v. Williams, 14 Wend. E. 133, 135, Mr. Justice
Nelson in delivering the opinion of the Court examined all the cases at
large. The following extract may not be unacceptable to the learned
reader. " The English cases upon this subject are not always consistent
with themselves ; and even the same court, while they profess to adhere to
their general position, namely, that the partner denying the authority of
his associate must prove affirmatively, that the holder knew the paper was
given in a transaction unconnected with the partnership ; and also, that he
did not assent, sometimes substantially disregard the latter qualification of
the rule in the application of it to the facts. The case of Hope v. Oust,
before Lord Mansfield, in 1774, cited by Lawrence, J., in 1 East, 52, is an
instance. There one Fordyce, who traded largely in his private capacity,
as well as in the business of a banker with others, had considerable deal-
ings in his private capacity with Hope & Co., in Holland, and gave to them
a general guaranty in the partnership name, for money due in his sepa-
rate capacity. The plaintiflfs failed in recovering on the guaranty. Lord
Mansfield, in reporting the case to the Court of Chancery, it being an
issue from that court, said he left it to the jury to say, whether, under the
circumstances, the taking of the guaranty was, in^ respect to the partners,
a fair transaction, or covinous, with sufficient notice to the plaintiffs of the
injustice and breach of trust Fordyce was guilty of in giving it. Chitty
on Bills, 33. The case seems to have been put^ the jury, from the his-
tory given of it, upon the gross negligence of the plaintiffs in not discov-
ering that Fordyce was committing a fraud upon his associates. But it
does not appear, that there was any affirmative evidence showing that the
other partners had not assented, and that this was known to the plaintiffs.
In Ex parte Bonbonus, 8 Ves. 544, Lord Chancellor Eldon says, in For-
dyce's case Lord Thurlow and the judges had a great deal of conversation
upon the law, and they doubted upon the danger of placing evpry man.
CH. Vin.] LIABILITIES AND EXEMPTIONS. 229
nature of sucb, a transaction ought to put him upon
with "whom the paper of the partnership is pledged, at the mercy of one
of the partners, with reference to the account he may afterwards give of
the transaction. But he says, ' there is no doubt now the law has taken
that course ; that if, under the circumstances, the party taking the paper
can be considered as being advertised in the nature of the transaction,
that it was not intended to be a partnership proceeditig, as if it was for an
antecedent dbht,prim& facie it will not bind them.' The case of Shirreff
and another v. Wilks and others, 1 East, 48, is another instance. There
the plaintiff, Oct. 1795, sold a quantity of porter to B. & W., partners,
which was shipped by them to the West Indies. In April, 1796, E. came
into the firm and continued till November following, when it was dissolved.
The balance due for the porter, as settled by W., was £ 78, for which the
plaintiffs drew upon the defendants the bill in puestion, which was ac-
cepted by B. ipthe name of the then firm. The court decided K. was not
bound, and Lord Kenyon says, K. had no concern with the matter, and was
no debtor of the plaintiffs ; that no assent of his was found, and nothing to
show that he had any knowledge of the transac^n ; that the transaction
was fraudulent upon its face. In Kidley v. Taylor, 13 East, 175, the rule
was applied by Lord EUenborough with more strictness. There he re-
qui'red something more than the naked fact, that the bill in the name of
the firm was given for the private debt of the member who drew it, and
that fact known to the plaintiffs.' The court would not infer want of
authority or fraud upon these facts ; and they considered the circumstances
of the ease of Shirreff and another v. Wilks and another, as having fair-
ly authorized such a presumption, and that it was decided upon that
ground. But in Green v. Deakin and others, 2 Stark. 347, a partnership
security (a bill) was given by one member for his private debt to the
plaintiff; and although it appeared expressly, that the plaintiff was not
informed, that the associate had not concurred, yet Lord EUenborough
held, that the nature of the transaction was intrinsically notice, and he
nonsuited him. So, in Wood v. HoUenbeck and others, Chitty on Bills,
33, note z, the action was on a bill against three acceptors, where it ap-
peared they were partners in a tea speculation, and the draper, a wine
merchant, drew it in payment of wine delivered to one of them; the jury
were directed, if they found It was drawn without the knowledge or con-
currence of the other two, they were not liable, omitting the necessity of
bringing home affirmatively notice to the holder. It is not material to
look any further into these cases ; they will be found stated and referred to
in Chitty on Bills, p. 29, 33. They all clearly prove, that while the Eng-
lish courts hold to the position, that the firm^ is liable on a bill or note made
by one out of the partnership business, unless the holder knows that it was
so made, and that the other partners did not concur, the frequent practi-
PARTN. 20
230 PARTNERSHIP. [cH. VIII.
f3,rther inquiry; and however bond fide his conduct
may be, it is a case of negligence on his part, which
cal operation and effect of it under their direction does not essentially
differ from the rule as settled in this Court. They undoubtedly put the
defence of the copartner upon the ground of fraud, committed upon him
by his associate and the holder. But this is sometimes inferred from the
fact, that the bill or note is ^ven for a private debt, and that known to the
holder ; and at other times further proof is required negativing a presumed
concurrence of the copartner. In this Court, the cases are believed to be
uniform from that of Livingston u. Hastie, 2 Caines, 246, down to the
present time, that where a note or other security is given in the name of
the firm, by one partner for his private debt, or in a transaction uncon-
nected with the partnership business, which is the same thing, and known
to be so by the person taking it, the other partners are not bound, unless they
have consented. 11 Johns. K. 544 ; 16 Johns. £. 34 ; 19 Johns. K. 154 ;
3 Wendell, 419 ; 5 Wendell, 223 ; 6 Wendell, 619 ; 7 Wendell, 158, 310.
P'n'm&, facie, the execution of the bill or note in the name of the firm by
one partner binds the whole. The burden, therefore, of proving a pre-
sumptive want of authOTity, and of course fraud, for that necessarily fol-
lows, lies upon the copartners. 11 Johns. K. 544. We hold, that the
fact of the paper of the firm being given out of the partnership business
by one member is presumptive evidence of want of authority to bind the
other members of the firm, and if the,person taking it knows the fact at
the time, he is chargeable with notice of want of authority, and guilty of
concurring i^ an attempted fraud upon the other partners. It may be
asked, why should the partners be bound at all, when the paper is in fact
signed without their authority ? This is no doubt against general princi-
ples, and involves the injustice of subjecting a person to answer fosan act
of another, to which he never expressly or impliedly assented. The an-
swer is founded upon the law merchant. By entering into the partner-
ship, each reposes confidence in the other, and constitutes him a general
agent as to all the partnership concerns ; and the inconvenience to com-
merce, if it were necessary, that the actual consent of each partner
should be obtained, or that it should be ascertained, that the transaction
was for the benefit of the firm in the ordinary transaction of their busi-
ness, suggested the rule, that the act of one, when it has the appearance
of being on behalf of the firm, is considered the act of the rest ; and
whenever a bill is drawn, accepted, or indorsed by one of several partners,
on behalf of the firm during its continuance, which comes into the hands
of a hon&fide holder, the partners are liable to him, though in truth one
partner only negotiated the bill for his own benefit, without the consent
of the copartners. Swan and others «. Steele, 7 East, 210 ; Chitty on
Bills, 30. There appears never to have been a doubt in England or in
CH. VIIL] liUBILITIES AND EXEMPTIONS. 231
will not entitle him to recover against the partner-
ship.'^
this State, in any of the cases, but that all the partners are bound, unless
the bona fides can be impeached. What shall amount to an impeachment
is oftentimes a debatable question, and in England seems to rest very
much upon the circumstances of the case. There is more uniformity and
precision in the application of the rule here. It is undoubtedly the prac-
tice of mercantile firms to indorse the bank paper of each other by the
hand of any one of the members. Upon a strict application of the rule
in this court, and upon some of the cases in England, such paper would
not bind the firm, if the bank had knowledge of the facts. It is not with-
in the purpose and business of a mercantile firm to indorse paper for their
neighbors. Such business is not within the contemplation of the partner-
ship, and therefore no authority is to be implied or attached to any one
of the members. It might well alarm the mercantile community to lay
down the position, that the partnership indorsement of accommodation
paper by one of the firm, for any person that might ask him, would be
binding upon all, whether the holder knew the facts or not. Even the
authority of one partner to sign bills and notes for the firm when inter-
ested, is only implied, and may be rebutted by notice. Chitty on Bills,
33. It would be a strange implication of authority, where the firm had
no interest. But if it should appear, that a house was in the habit of in-
dorsing at the bank or elsewhere for another, such general course of deal-
ing would be sufficient evidence of authority from all the members of the
firm, and such use of it by one would bind all. Duncan v. Lowndes &
Bateman, 3 Campb. 478. The authority would not flow from the partner^
ship, but from facts and considerations independently of it," See also, on the
same point, Wilson v. Williams, 14 Wend. R. 146 ; Rogers v. Batchelor,
12 Peters, R. 221, 229 to 232.
' Rogers V. Batchelor, 12 Peters, R. p. 229 to ■282. — This point came
directly before the Supreme Court of the United States in the case of
Rogers v. Batchelor, (12 Peters, R. 229,) and was much discussed.
Upon that occasion the Court said ; " The first instruction raises these
questions ; whether the fiinds of a partnership can be rightfully applied by
one partner to the discharge of his own separate^preexisting debt, without
the assent, express or implied, of the other partner; and, whether it
makes any difference, in such a case, that the separate creditor had no
knowledge at the time of the fact of the fund being partneirship property.
We are of opinion in the negative, on both questions. The implied
authority of each partner to dispose of the partnership funds strictly and
rightfully extends only to the business and transactions of the partnership
itself; and any disposition of those funds, by any partner, beyond such
purposes, is an excess of his authority as partner, and a misappropriation
of those funds, for which the partner is responsible to the partnership ;
232 PARTNERSHIP. fCH. 7111.
§ 133 «. Upon like principles, if the acting partners
of a firm, or the governing body of a joint-stock
though in the case of bona fide purchasers, without notice, for a valuable
consideration, the partnership may be botind by such acts. Whatever
acts, therefore, are done by any partner, in regard to partnership property
or contracts, beyond the scope and objects of the partnership, must, in
general, in order to bind the 'partnership, be derived from some farther
authority, express or implied, conferred upon such partner, beyond that
resulting from his character as partner. Such is the general principle ;
and, in our judgment, it is founded in good sense and reason. One man
ought not to be permitted to dispose of the property, or to bind the rights
of another, unless the latter has authorized the act. In the case of a
partner, paying his own separate debt out of the partnership funds, it is
manifest, that it is a violation of his duty and of the rights of his partners,
unless they have assented to it. The act is an illegal conversion of the
funds ; and the separate creditor can have no better title to the funds, than
the partner himself had. Does it make any difference, that the separate
creditor had no knowledge at the time, that there was a misappropriation
of the partnership funds ? We think not. If he had such knowledge,
undoubtedly he would be guilty of gross fraud ; not only in morals, but
in law. That was expressly decided in Shirreff w. Wilks, 1 East, K. 48 ;
and, indeed, seems too plain upon principle, to admit of any serious doubt.
But we do not think, that such knowledge is an essential ingredient in
such a case. The true question is, whether the title to the property has
passed from the partnership to the separate creditor. If it has not, then
the partnership may reassert their claim to it in the hands of such creditor.
The case of iiidley u. Taylor, 13 East, R. 172, has been supposed to
inculcate a different and more modified doctrine. But upon a"" close
examination, it will be found to have turned upon its own peculiar circum-
stances. Lord EUenborough in that case admitted, that one partner could
not pledge the partnership property for his own separate debt ; and if he
could not do such an act of a limited nature, it is somewhat difficult to
see, how he could do an act of a higher nature, and sell the property.
And his judgment seed! to have been greatly influenced by the consider-
ation, that the creditor in that case might fairly presume, that the partner
was the real owner of the partnership security'; and that there was an
absence of all the evidence (which existed and might have been produced)
to show, that the other partner did not know, and had not authorized the
act. If it had appeared from any evidence, that the act was unknown to,
or unauthorized by the other partners, it is very far from being clear, that
the case could have been decided in favor of the separate creditor; for
his Lordship seems to have put the case upon the ground, that either
actual covin in the creditor should be shown, or, that there should be
CH. Vm.] LIABILITIES AND KXEMPTIONS. 233
company should unite with a stranger to produce a
fraud against the firm or company for whom they act,
pregnant evidence, that the act was unauthorized by the other partners.
The case of Green v. Deakin, 2 Stark. K. 347, before Lord EUenborough,
seems to have proceeded upon the ground, that fraud, or knowledge by
the separate creditor, was not a necessary ingredient. In the recent case,
Ex parte Goulding, cited in Collyer on Partn. p. 283, 284, 1st edit., the
Vice-Chancellor (Sir John Leach) seems to have adopted the broad
ground, upon which we are disposed to place the doctrine. Upon the
appeal, his decision was confirmed by Lord Lyndhurst. Upon that occa-
sion his Lordship said ; ' No principle can be more clear, than that, where
a partner and a creditor enter into a contract on a separate account, the
partner cannot pledge the partnership funds, or give, the partnership
acceptances in discharge of this contract, so as to bind the firm.' There
was no pretence in that case of any fraud on the part of the separate
creditor. And Lord Lyndhurst seems to have put his judgment upon the
ground, that unless the other partner assented to the transaction he was
not bound ; and that it was the duty of the creditor to ascertain, whether
there was such assent or not. The same question has been discussed in
the American Courts on various occasions. In Dob v. Halsey, 16 Johns.
R. 34, it was held by the Court, that one partner could not apply partner-
ship property to the payment of his own separate debt, without the assent
of the other partners. On that occasion, Mr. Chief Justice Spencer
stated the difference between the decisions in New York, and those in
England to be merely this ; that in New York the Court required the
separate creditor, who had obtained the partnership paper for the private
debt of one of the partners, to show the assent of the whole firm to be
bound ; and that in England, the burden of proof was on the other
partners to show their want of knowledge or dissent. The learned Judge
added ; ' I can perceive no substantial difference, whether the note of ^a
firm be taken for a private debt of one of the partners by a separate
creditor of a partner, pledging the security of the firm ; and taking the
property of the firm, upon a purchase of one of the partners to pay his
private debt. In both cases, the act is equally injurious to the bthef
partners. It is taking their common property to pay a private debt of one
of the partners.' The same doctrine has been, on various occasions, fully
recognized in the Supreme Court of the same State. And we need do
no more than to refer to one of the latest; the case of Evernghim v.
Ensworth, 7 Wend. K. 326. Indeed, it had been fully considered long
before, in Livingston v. Roosevelt, 4 Johns. R. 251. It is true, that the
precise point now before us, does not appear to have received any direct
adjudication ; for in all the cases above mentioned, there was a known,
application of the funds or securities of the partnership to the payment of
20*
234 PAETNEKSHIP. [CH. YHI.
a court of equity might interfere and repudiate such
acts, and ask to be relieved against them.-^
§ 134. There are other cases, which constitute ex-
ceptions to the general liability of partners for acts
or contracts concerning the partnership business,
which deserve special notice in this connection. One
of them is, where in the very transaction, although it
may be for the benefit or use of the partnership, and
in the business thereof, yet the credit is exclusively
given to the partner, transacting it, upon his sole and
separate liability. The law is exceedingly clear and
well settled upon this point. If money is borrowed,
or goods bought, or any other contract is made by
one partner upon his own exclusive credit, he alone
is liable therefor; and the partnership, although the
money, property, or other contract is for their proper
use and benefit, or is applied thereto, will in no manner
be liable therefor.^ [And if the contract is made with
one alone, and credit is given to him, he is liable on
the separate debt. But we think, that the {rue principle to be extracted
from the authorities is, that one partner cannot apply the partnership
funds or securities to the discharge of his own private debt without their
consent ; and that without their cbnsent their title to the property is not
divested in favor of such Separate creditor, whether he knew it to be
partnership property or not. In short, his right depends, not upon his
knowledge, that it was a partnership property; but upon the fact,
whether the other partners had assented to such disposition of it, or
not."
1 Vigers v. Pike, 8 Clark & Fin. 562, 648.
2 Collyer on Partn. B. 3, ch. 2, § 2, p. 319, 2d edit.; Id. p. 342, 343;
Ex parte Emly, 1 Kose, R. 61 ; Ex parte Bonbonus, 8 Ves. K. 540; Syl-
vester V. Smith, 9 Mass. K. 119, 121 ; Gow on Partn. ch. 4, p. 154, 155,
3d edit.; Lloyd v. Preshfield, 2 Carr. & Payne, 325; 9 Dowl. & Kyi. 19;
Ketchum v. Durkee, 1 Hoffm. B» 528 ; Le Eoy v. Johnson, 2 Pet. R. 198,
199, 200. See Trueman v. Loder, 11 Adol. & Ellis, 594, 595; De
Mautost V. Saunders, 1 Barn. & Adol. 398 ; Bonfield v. Smith, 12 Mees.
& Welsb. K. 405 ; Green v. Tanner, 8 Pick. E. 411.
CH. Vin.] LIABltlTIES AND EXEMPTIONS. 235
such contract, without joining his copartners.^ ] For it
is entirely competent for one partner to borrow money,
or to buy goods, or to enter into contracts on his own
sole and exclusive credit with third persons ; and, on
the other hand, it is equally competent for them to
" rely on that exclusive, credit, and either to refuse to
contract with the firm, or to exonerate the firm from
all liability upon any contract, which would otherwise
bind the firm, as being for their account and benefit.
For the maxim of the common law here applies with
its full force ; Modus et conveniio vincuni legem j aiid
either party may at his pleasure waive or relinquish
rights, to which he would otherwise be entitled. It is
but following out the rule of natural justice and the
exposition of the intention of the parties recognized
in the Pandects. Arde omnia enim animadveriendum est^
ne conveniio in alia re, aut cum alia persond, in alia re
alidve persond noceat?
§ 135. This very case was directly put in the Roman
law, in relation to joint employers of ships, where one
acted as the administrator of the concern, and con-
tracted in his own name exclusively. Si plures navem
exerceard adversaries cum quolibet eorum in solidum agi
potest. Ne in plures destringatur, qui cum uno cordraxerii?
The same rule is adopted in the French law; and
accordingly Pothier says; When a partner has not
contracted in the name of the firm, but in his own
name alone, he alone will be bound, although the
^ Hagar «. Stone, 20 Verml 105; Stansfield v. Levy, 3 Starkie, 8;
Murray v. Somerville, 2 Campb. 39 n. ; Cleveland v. Woodward, 15 Verm.
302.
3 Dig. Lib. 2, tit. 14, 1. 27, § 4; Pothier, Oblig. n. 85.
3 Dig. Lib. 14, tit. 1, 1. 25 ; Id. 1. 2; Ante, § 102.
236 PAETNERSHIP. ' [CH. VIII.
contract has been applied to the benefit of the
partnership. Thus, if a partner has borrowed money
in his sole name, for his own account, and then he
applies the money to partnership purposes, the cre-
ditor cannot have any action against the firm; for,
according to the principles of law, a creditor has his
remedy only against the party with whom he has con-
tracted, and not against those who have been benefited
or received profit from it.-^ And this again is but the
dictate of the Roman law. Non adversus te crediiores,
qui mutuam sumpsisti pecuniam, sed ejus, cui hanc credir
deras hceredes experiri, contra juris formam evidenter
§ 136. One illustration may be taken from a case,
which has already passed into judgment. In that
case, one of two partners drew bills of exchange in his
own name, which he procured to be discounted by a
banker through the medium of the same agent, who
procured the discotmt of other bills drawn in the
partnership name, with the same banker ; it was held
by the Court, that the banker had no remedy against
the firm, either upon the bills so drawn in his own
name, or for money, had and received through the
medium of such bills, although the proceeds were
carried to the partnership account. The reason was,
that the money was advanced solely on the security
of the parties, whose names were on the bills by way
of loan to them, and not by way of loan to the part-
nership. And it made no difierence in the case, that
the banker conceived at the time, that all the bills
1 Pothier, De Society, n. 101, 105, 106.
2 Cod. Lib. 4, tit. 3, 1. 15.
CH. VIII.] LIABILITIES AND EXEMPTIONS. • 237
were drawn on the partnership account; since he
did not credit the firm, but only the, names on the
bills.i
§ 137. The French law has followed out the like
doctrine to its legitimate conclusion. Whenever one
partner in a commercial partnership contracts a debt
in his own sole name, he alone will be responsible
therefor; and the creditor will have no recourse
against the partnership, even although the debt may
have been contracted in behalf of, or for the benefit
of the partnership.^ And a fortiori in cases of non-
commercial partnerships, the doctrine is held to
apply ; ^ with the reservation, however, that the other
partners have not made him their agent to contract a
joint obligation m solido, or otherwise.*
§ 138. Still, although the general principle is clear,
it may not always be easy to apply it to the circum-
stances of particular cases ; for it is often a matter of
no inconsiderable difficulty and intricacy at the common
law to ascertain in point of fact, whether there has
been an exclusive credit given to one partner or not.
In the case of a dormant and secret partner, the credit
is manifestly given only to the ostensible partner ; for
no other party is known. Still, however, it is not
treated as an exclusive credit ; for the law in aU cases
of this sort founds its decision upon the ground, that
the creditor has had a choice or election of his debtor,
which cannot be, where the partner is dormant and
1 Emiy V. Lye, 15' East, R. 7 ; Siffkin v. Walker, 2 Camp. K. 308;
Ante, § 102 ; Post, § 142, 243. See Faith v. Kichmond, 11 Adol. & Ell.
B. 339.
2 Pothier, De Society, n. 100, 101.
3 Pothier, De Societ6, n. 105.
•• Pothier, De Society, n, 104, 105. '
238-
PARTNERSHIP. [CH. VIII.
unknown.^ The credit therefore is not deemed ex-
clusive, hut hinding upon all, for whom the partner
acts, if done in their business and for their benefit,
as is the case in cases of agency for an unknown
principal.^
§ 139. Another case may easily be put. Suppose a
partnership to be carried on in the sole name of one of
the partners, and he at the same time should transact
business upon his own separate account ; and he should
borrow money in his own name. In such a case the
question may arise, whether the partnership is bound
for such borrowed money, or the individual partner
only. And it must be resolved by taking into consi-
deration the whole circumstances of the case. Thus, if
the money is in fact borrowed for the partnership busi-
ness, or it is in fact applied to the partnership business,
in the absence of all controlling circumstances, the
partnership will be bound therefor ; since the fair pre-
sumption is, that it was intended, by the partner to
pledge the partnership credit, and not merely his indi-
vidual credit, whether the partnership was known or
unknown to the lender. On the other hand, if the
money was borrowed for the separate use of the indi-
1 Ante, § 63.
2 Story on Agency, § 291, 292; 2 Kent, Comm. Leet. 41, p. 630, 631,
4th edit. ; Paley on Agency, by Lloyd, 245, 250, 8d edit. ; Thompson v.
Davenport, 9 B. & Cressw. 78, 86, 87; Pothier on Oblig. n. 82, 83, 447;
Coilyer on Partn. B. 1, ch. 1, § 1, p. 11, 12, 14, 2d edit. ; Id. B. 3, eh. 1,
p. 259 ; Hoare v. Dawes, Doug. E. 371 ; Gow on Partn. ch. 4, § 1, p.
162, 163, 3d edit.; Saville «. Robertson, 4 Term R. 725; Robertson v.
Wilkinson, 8 Price, R. 538; U. S. Bank v. Binney, 5 Mason, R. 176;
S. C. 5 Peters, R. 529 ; Kelley v. Hurlburt, 5 Cowen, R. 534 ; Mifflin v.
Smith, 1 7 Serg. & Rawle, E. 25. — The law with regard to dormant
partners extends only to commercial partnerships. It has, therefore, no
application to dormant partners in land speculations. Pitts ». Wangh,
4 Mass. R. 421 ; Smith v. Burnham, 3 Sumner^ R. 435.
CH. Vin.] ^ LIABILITIES AND EXEMPTIONS. 239
vidual partner, or actually applied to iJiat use, the con-
trary presumption -would prevail. But, if the business
of the partnership were different from the separate
business of the individual partner, and he should bor-
row expressly of the lender for the one business or for
the other, the lender would be deemed to give credit^to
that particular business, and not to the other business ;
and then the partnership would or would not be bound
according to the fact, whether it was borrowed for their
business or not.^ And, in such a case, it would make
no difference, whether the lender did, or did not know,
that there was any partnership in either business, or
whether the money was actually applied to the business,
for which it was expressly borrowed, or not. But in
the absence of all proofs, as to the purpose, for which
the money was borrowed, or to which it was applied, it
would be deemed to be borrowed upon the separate ac-
count of the individual partner.^
1 [And the declaration by the borrower at the time, that it was on part-
nership account has been held sufficient proof to bind the firm. OJiphant
V. Mathews, 16 Barbour, 608.]
2 See CoUyer on Partn. B. 3, ch. 1, § 2, p. 275, 2,76, 277, 2d edit.;
Etheridge u. Binney, 9 Pick. 272; Mifflin v. Smith, 17 Serg. & Kawle,
165 ; TJ. States Bank v. Binney, 5 Mason, R. 176 ; S. C. 5 Peters, R. 529 ;
Oliphiant v. Mathews, 16 Barbour, 610 ; South Carolina Bank v. Case, 8
B. & C. 427 ; Buckner v. Lee, 8 Georgia, 292.— In United-States Bank
V. Binney, 5 Mason, R. 176, 183, 184, the Court said; "In respect to both
general and limited partnerships, the same general principle applies, that
each partner has authority to bind the firm, as to all things within the
scope of the partnership, but not beyond it. Where the contract is made
in the name of the firm, it will,^n'm^ facie, bind the firm, unless-it is ul-
tra the business of the firm. Where the firm imports, on its face, a com-
pany, as A. B. & Co., or A., B., & C, there the contracts made by the
partners in that name bind the firm, unless they are known to be beyond
the scope and business of the firm. But where the business is carried on
in the name of one of the partners, and his name alone is the name of the
firm, there, in order to bind the firm, it is necessary not only to prove the
signature, but that it was used as the signature of the firm by a party au-
240 PARTNERSHIP. , [CH. VIII.
§ 140. Various other cases may be put to illustrate
the same rule. Thus, if a person should advance money
thorized to use it on that occasion, and for that purpose. In other words,
it must be shown to be used for partnership objects, and as a partnership
act. The proof of the signature is not enough. The plaintiffs must go
fafther, and show, that it is a partnership signature. In the present case,
the signature of ' John Wiuship ' may be on his own individual account, as
his personal contract, or it may be on account of the partnership. Upon
the face of the paper it stands indifferent. The burden of proof, then, is
upon the plaintiffs to establish, that it is a contract of the firm, and ought
to "bind them." And again ; " The notes are all indorsed in the name of
' John Winship.' For aught, therefore, that appears on the face of them,
they were notes only binding him personally. The plaintiffs must, then,
go farther, and show either expressly or by implication, that these notes
were offered by. Winship, as notes binding the firm, and not merely on
himself personally ; or that the discounts were made for the benefit, and
in the course of the business of the firm. It is not suflicient for the plain-
tiffs to prove, that the bank, in discounting these notes, acted upon the be-
lief, that they bound the firm, and were for the benefit and business of the
firm. They must go further and prove,- that the belief was known to and
sanctioned by Winship himself in offering the notes ; and that he inten-
tionally held out to them, that the discounts were for the credit, and on
the account of the firm ; and that his indorsement was the indorsement of
the firm, and to bind them ; and that the bank discounted the notes upon
the faith of such acts and representations of Winship. The jury will
judge from the whole evidence, how the case stands in these respects.
The mere fact, that the discounts so procured were applied to the use of
the firm is not, of itself, suflicient to prove, that the discounts wer& pro-
cured on account of the firm. It is a strong circumstance, entitled to
weight, but not decisive." In Etheridge v. Binney, 9 Pick. K. 274, the
Court said; "Now as the partner, whose name is assumed by the firm,
may also engage in other branches of business, in which he may want
credit on his own private account, if he applies for a loan of money to
one, who is ignorant of the copartnership, and no inforination is given of
its existence, it is a private loan, and does not bind the firm, unless the
creditor shall know, that the money borrowed, or the goods procured, by
the individual, went to the use of the firm. The burden of proof in such
case is upon the creditor, in order to make good his claim upon the firm ;
for he credited the individual, and not the firm, and it will be presumed to
be for the private benefit of the individual, unless the contrary is proved.
But if the existence of the firm is known to the person, who makes the
loan, and representations are made to him by the borrower, that he bor-
rows for the use of the company, and that they are answerable for the
CH. Vm.] LIABILITIES AND EXEMPTIONS. 241
for a firm, and yet take the security of one partner
therefor, the security would bind that partner only.^
And, indeed, under such circumstances, if the separate
security is knowingly taken upon advances for the firm,
it will ordinarily be treated, as an election by the cre-
ditor, to absolve the partnership from responsibility, and
to confine the credit to that partner only.^ Nor will it
debt, so -that credit is given to the company, and not to the individual
partner, the burden of proof is upon the company, when sued, to show
that the power confided to the individual has been abused, and that the
money borrowed was applied to his private use, and also, that this was
known to the lender to be his intention. This principle necessarily follows .
from cases settled. If a purchase is made in the name of a firm, or money
borrowed, and a note given or indorsed in that name, this is primd facie
evidence of a debt from the firm, and it can only be rebutted by proof in
the defence, that this was fraudulently done by the individual partner for
his own private use, and that this was known to the qf editor. So that in
the limited partnership, if the name of the firm had been John Winship &
Co., or Winship & Binney, all notes given to any creditor, in either of
those names, would be company notes, unless disproved, as before stated.
Now, the making and ofiering of such a note is nothing more than a repre-
sentation that the money is wanted for the use of the company, and as
they confide in the individual, they will be bound by his acts. The name
of the firm here being only the name of the individual, a note ofiered in
that name, unaccompanied by any representation, would of course import
only a promise by John Winship alone ; and the 'credit being given to him
alone, the creditor would not recover against the firm, without proving,
that the money actually went into the funds of the firm. But if the bor-
rowing partner states that he is one of a company, and that he borrows
money for the company, or purchases goods for their use, then, as there is
such company, and as they have given him authority to use the company
credit to a certain extent, and as the creditor will have no means of know-
ing whether he is acting honestly towards his associates, or otherwise, if
he lends the money or sells the goods on the faith of such representation,
the company will be bound', unless they prove that the contract was for
his private benefit, and known to be so by the creditor."
1 Collyer on Partn. B. 3, ch. 2, § 2, p. 315 to 324, 2d edit. ; Siff kin v.
Walker, 2 Camp. R. 308 ; Emly v. Lye, 15 East. R. 7.
2 Collyer on Partn. B. 3, ch. 2, § 2, p. 318, 319, 321, 2d edit.; Ex
parte Hunter, 1 Atk. 223 ; Ex parte Emly, 1 Rose, R. 61 ; Gow on Partn.
ch. 4, § 2, p. 154 to 156, 3d edit.
PABTN. 21
242
PARTNERSHIP. [CH. Vllt.
make any difference in such a case, that the money has
not only been borrowed, but has been applied to part-,
nership purposes, 'if the contract has been exclusively
upon the separate credit or security of one partner.-^
On the other hand, if money is actually borrowed on
the credit of the firm in the course of the business of
the firm, it will make no difference in the liability of
the other partners, that it has been misapplied by the
borrowing partner.^ But care must be taken to distin-
guish between cases of this sort, and cases, where the
separate security of one partner has been taken, not as
the primary debt, but merely as collateral security for
the primary debt, as one of the firm ; for, in- the latter
case, the firm wiU undoubtedly be holden, notwithstand-
ing the separate security.^
§ 141. The custom of a particular trade or business
may in some cases also furnish an exemption of the
partnership upon contracts made for t^ieir benefit, and
establish, that the credit is exclusively given to the
contracting partner. Instances, however, of this sort
are of rare occurrence ; and it has been remarked by a
learned writer, that perhaps there is no ordinary trade
or business, except' that of stage-coach proprietors, in
which the firm have been held not liable for repairs
1 Collyer on Partn. B. 3, ch. 2, § 2, p. 319, 320, 2d edit. ; Bevan v.
Lewis, 1 Sim. E. 376 ; Lloyd v. Freshfield, 2 Carr. & Payne, R. 325 ;
Parkin v. Carruthers, 3 Esp. R. 248 ; Jaques v. Murquand, 6 Cowen, E.
497 ; Green v. Tanner; 8 Pick. R. 411.
2 CoUyer on Partn. B. 3, ch. 1, § 1, p. 263 { Id. B. 3, ch. 2, p. 322, and
note, 2d edit. ; Church v. Sparrow, 5 Wend. K. 223 ; U. S. Bank v. Bin-
ney, 5 Mason, E. 176 ; S. C. 5 Peters, E. 529 ; Gow on Partn. ch. 4, § 2,
p. 146, 147, 3d edit.; Id. § 3, p. 282 to 284 ; Ante, ^ 105.
3 CoUyer on Partn. B. 3, ch. 2, § 2, p. 323, 2d edit..; Id. p. 275; Ex
parte Brown, 1 Atk. E. 225 ; Denton v. Eodie, 3 Camp. E. 493 ; South
Car. Bank v. Case, 8 B. & Cressw. 427 ; Ex parte Bolitho, 1 Buck, E.
100.
CH. Vm.] MABILITIES AND EXEMPTIONS. 243
made, or goods supplied, by the order of one partner
for the use of the concern.^ In general, such proprie-
tors are held bound, like all other partners.^ But under
' ' some speciai circumstances, the credit- has been held to
be exclusively given to the partner ordering the repairs
or supplies. Thus, 'where several persons furnished
with horses, which were their several property, the se-
veral stages of a coach, and in the general business and
profits all the proprietors were partners, and shared the
profits, it was held, that the proprietors were not all"
jointly liable for goods furnished to one partner for the
use of his horses, drawing the coach along his part of
the road ; and that the goods must be deemed furnished
upon the exclusive credit of that partner.^
I 142. The general rule is, as we have seen, that if a
bill or note is drawn or indorsed in the name of one
partner only, not being the firm name, it wUl not be a
contract binding on the firm, but on himself only, even
although it may be a transaction for the use or benefit
of the firm.* But, nevertheless, cases might arise, where
the partnership might be held lia;ble, as the drawers or
indorsers of the note or bill, notwithstanding it was
made or indorsed- only in the name 'of one partner.^
But, then, in such cases, in order to bind the firm it
1 Collyer on Partn. B. 3, ch. 3, ^ 3, p. 329, 330, 2d edit.
2 Ibid. ; Arthur v. Dale, cited Collyer on Partn, B. 3, ch. 2, § 3, p. 330.
2d edit.
3 Barton v. Hanson, 2 Taunt. K. 49; 2 Camp. K. 97; Hiard v. Bigg,
Manning's Nisi Prius, Index, 220; Gow on Partn. ch. 4, § 1, p. 149, 150,
3d edit.
* Collyer on Partn. B. 3, ch. 1, ^ 2, p. 277, 2d edit.; Id. B. 3, ch. 2,
§ 3, p. 331 to 847; Jaques v. Marquand, 6 Cowen, R, 497; Smith v.
Craven,! Cromp. & Jerv. 500, 507; Ante, § 136; Trueman v. Loder, 11
Adol. & Ellis, R. 592,; Faith v. Richmond, 11 Adol. & Ellis, 339 ; Ante^
§ 102.'
5 Palmer v, Stephens, 1 Denio, R. 472.
244 PARTNERSHIP. [CH. VIII.
must appear, that the other partners had constantly
treated such note or bill, so made and indorsed, as the
note, or bill, or indorsement of the firm in the adopted
name of the partner, as a firm name, fro hae vice ; or at
least, as the note, or bill, or indorsement made by the
firm by procuration of the partner, so that the holder
would be at liberty to write over the partner's name the
name of the firm by procuration of the partner, (A.
and B. by procuration of B.)' But, whether this would
be so, or not, it has been held, that if one partner
makes use of an assumed firm name, not the real name
> of the firm, and signs it by procuration of the assumed
firm, and the other partners knew his habit of so doing,
and adopted the note, or bill,- or indorsement, as that
of the firm, the partners will be held to have adopted
the new firm name, joro hic vice, and will be bound by
the contract.^
[§ 142 a. This liability of a partnership, notwith-
standing the names of individuals only were used, is
illiistrated in the following case. Where the proprie-
tors of a line of canal boats, by articles between
themselves agreed that the business of -the concern ai
Rochester should be conducted by J. A., one of the- pro-
prietors, in his own name, and that at Albany it should
be conducted by W. M., an agent, in his name, but in
behalf of and upon the responsibility of the defend-
ants, who were two of the proprietors ; that no copart-
nership name should be used, and no paper made.
^ South Car. Bank v. Case, 8 Barn. & Cressw. 427; Ex parte BoUtho,
1 Buck, K. 100.
8 Williamson v. Johnson, 1 .Barn. & Cressw. 146 ; CoUyer on Partn. B.
3, ch. 1, § 2, p. 276, 277, 2d edit. ; Id. B. 3, ch. 2, \ 2, p. 319 to 324 ; In
re Warren, Da veis, K. 325; Newton «. Boodle, 3 "Manning, Granger &
Scott, R. 792; Post, §202.
CH. VIU.] LIABILITIES AND EXEMPTIONS. 245
accepted, or indorsed in the name, or on account of the
copartnership; and that each party should raise his
share of the money needed by the > concern upon his
own responsibility, and the other parties were not to
be liable therefor, but all the parties were to share
equally in the profits ; it was held, that a bill by J. A.
in his own name, to raise money for the business of the
concern, drawn upon and accepted by W. M., in his
name, bound all the proprietors, at once as drawers and
acceptors.-']
§ 143. The doctrine has even been pressed farther ;
and it has been held, that a note or other security may
be so signed, as at once to make the partner signing it
separately liable, and also the firm liable thereon. Thus,
where A. (one of the partners in the firm of A., B., and
C.) made a promissory note in these words ; " Sixty
days after date, I promise to pay D., E., or order," &c.,
and signed the note' "For A.^ B., & C. — A.;" it was
held, that the firm was liable thereon, and also that he
was separately liable ; sp that, in effect, it was treated
as a joint and several security, a joint security of the
firm, and a several one of the partners signing it.^ This
construction of the instrument certainly goes to the
very verge of the law ; and perhaps may be thought to
deserve farther consideration.
1 Bank of Kochester v. Monteath, 1 Denio, K. 402 ; Palmer v. Stephens,
1 Denio, E. 472.
2 Lord Galway v. Mathews, 1 Camp. E. 403 ; Hall v. Smith, 1 B. &
Cressw. 467; Staats w. Hewlett, Denio, E. 559. See Story on Agency,
§ 154, 275, 276; CoUyer on Partn. B. 3, ch. 1, § 2, p. 277, 2d edit. — In
the case of Lord Galway, 1 Camp. E. 403, the firm were held liable. In
the case of Hall v. Smith, 1 Barn. & Cressw. 407, which was a note of this
sort payable to bearer, and was signed A., B., and C. by A., the suit was
against A. only ; and he was held separately liable. Mr. Justice Bayley
on this occasion said ; " In pronouncing judgment for the plaintiff, we .
21*
246 PARTNERSHIP. .[CH, VIII.
§ 144. Cases of a different character may occur, ■
where the question, whether exclusive credit has been
given to one partner, or joint contractor, may admit of
much discussion and difficulty, founded upon the pecu-
liar circumstances thereof. Thus, in case one member
of a club should order goods for the use and benefit of
the club, all the members of the club, who , concurred
in the order, or subsequently ratified it, might be liable
for the amount thereof, although the member, who
ordered the goods, should be made debtor in the
tradesman's boots, unless it clearly appeared, that the
tradesman meant to give exclusive credit to that
member only ; for such entry in the books would not
of itself be decisive of an intent to give such exclusive
credit.^
shall not give to the note any different effect from that, which it appears
upon the face of it to have. The words used are ' I promise to pay,' and
it is signed by the defendant. What then is the import of those words ?
Surely, that W. Smith promises. It is true, that he promises for himself
and others, but he alone promises. Now, there are many oases, where a
party, entering into a contract in his own name on behalf of others, may
be sued, or those, for whom he contracts, may be sued, and e converso, an
agent may sue, or the parties beneficially interested may sue. If any
hardship arise from this construction, it might have been avoided by in-
troducing the pronoun ' we ' instead of ' I ' ; and on the other hand, a great
difficulty may be imposed upqn the plaintiff, if he be compelled to sue all ;
for then Tie would be bound to prove the partnership of all the parties,
whereas in this action it is sufficient to prove the handwriting of the de-
fendant. The cases of March v. Ward, and Clark ti. Blackstock, import,
that the word 'I' creates a several promise by each party that signs, and
here a fortiori that must be the effect of it, for the party sued is the only
person, who actually made the promise. The plaintiff is therefore entitled
to recover."
1 Delauney v. Strickland, 2 Sfarkie, K. 416 ; Flemyng v. Hector, 2
Mees. & Welsb. 172 ; CoUyer on Partn. B. 1, oh. 1, § 1, p. 81, 2d edit.
In the case of Flemyng v. Hector, Lord Abinger said ; " I had thought,
but without much consideration, at the Assizes, that these sort of institu-
tions were of such a nature, as to come under the same view as a partner-
ship, and that the same incidents might be extended to them ; that, where
CH. Vni.] LIABILITIES AND EXEMPTIONS. 247
§ 145. Neither does it necessarily follow, because
two persons, who are not partners, have joined together
there were a body of gentlemen, forming a club, and meeting together for
one common object, what one did in respect of the society bound the others,
if he had been requested and had consented to act for them. Several
cases have been cited in the course of the argument, which do not apply,
with the exception of one of them, to societies of this nature. Trading
associations stand on a very different footing. Where persons engage in a
community of profit and loss as partners, one partner has the right of pro-
perty for the whole. So, any of the partners has a right, in any ordinary
transactions, unless the contrary be clearly shown, to bind the partnership
by a credit; he might accept a bill of exchange in the name of the firm,
and as between the firm and strangers th& partnership would be bound,
although there might be an understanding in the firm that he was not to
accept. It appears to me', that this case must stand upon the ground, on
which the defendant put it, as a case between principal and agent ; and I
am the more inclined to look at it in that light, by an observation, made by
Mr. Piatt, in the course of the argument yesterday, on the subject of bills
of exchange. I apprehend, that one of the members of this club could
not bind another by accepting a bill of exchange, acting as a comBiittee
man, even where there might be an apparent necessity to accept, as in the
case of a purchase of a pipe of wine. The party might draw a bill, but I
do not think he could accept the bill to bind the members of the club. It
is, therefore, a question here, how fer the committee, who are to conduct
the affairs of this club as agents, are authorized to enter into such con-
tracts, as that, upon which the plaintiffs now seek to bind the members of
the club at large ; and that depends on the constitution of the club, which
is to be found m its own rules ; and upon two of the cases, those that were
tried before me at Guilford, looking at these general rules, it certainly
does strike me, that it is impossible to interpret them, so as to give the
committee the power of dealing on credit, even for the purpose of the
club. It appears by the rules, that every member is to pay his subscrip-
tion of ten guineas as entrance money, before he can become a^ member,
and a yearly subscription of five guineas ; so, that by the provisions of the
club, there is tojae a fund in hand in order to bear 'the expenses. But
then, again, every member, who makes- use of the club, who either eats or
drinks there, or takes any sort of refreshment, is to pay ready money.
That shows again, that the club was not disposed, and not intended, to
have any transactions on credit, even with its own members ; and it also
shows, that care was taken to provide ready money to meet every expense ;
so that, if a party, or a gentleman of the club, were to order any particu-
lar thing, that the club did not contain, he is to pay for it inslanter ; so
that no occasion was expected to be necessary for the committee's pledg-
248 PARTNERSHIP. [CH. Tin.
to make a purchase for a joint shipment, that they will
be jointly liable to the vendor for the purchase-money ;
for if the purchase has been made under circumstances
which demonstrate that the vendor gave an exclusive
credit to each of them for a moiety, (as by drawing a
separate bill on each for a moiety,) then each will be
solely and separately liable only for his own share.^
And the same rule may be justly applicable to cases
of partnership, where such a division of the credit is
authorized and acted upon by the vendor, with a clear
understanding that it is to be an exclusive credit, fro
tanto.
§ 146. The case of a debt, contracted prior to the
existence of a partnership, has also sometimes been
treated as a case where exclusive credit is given to the
contracting party, and not to the firm, although they
ultimately receive the benefit thereof.^ But it may be
resolved into the more general principle, that a contract
can be obligatory only upon those who are parties to-
it, or derive a benefit from it at the time of its incep-
tion.^ In short, the joint interest or joint liability
ing the credit of the club, or even their own. Under these circumstances,
as the rules of the club, -which are in ■writing, must be taken to form the
constitution of the club, and are to be construed as matters of law, I do
not see, what there was to go to the jury ; I do not see any thing in these
rules, of which the jury are to be the judges. The words are, ' to man-
age the affairs of the club ^ ' the question then is, what the affairs of the
clul? are. They are to have in their hands a subscription, and they are to
take care, that every member pays it before he comes into the club, and
pays for every thing he has in the club. It therefore appears, that the
members in general intended to provide a fund for the committee to call
upon. I cannot infer, that they intended the committee to deal upon cre-
dit, and unless you infer that that was the intention, how are the defend-
ants bound ? "
1 Gibson v. Lupton, 9 Bing. K. 297.
2 See Ketchum v. Durkee, 1 Hoffm. K. 538.
' Gow on Partn, ch. 4, § 1, p. 150 to p. 153, 3d edit. ; Collyer on Partn.
CH. Vm.] LIABILITIES AND EXEMPTIONS.- 249
must be contemporaneous "with tlie formation of the
contract itself, in order to superinduce the correspond-
ing liability to perform it ; and if there be no partner-
ship then in existence, to be bound, or none which is a
party or privy to the contract, it cannot be deemed
their contract ; but solely that of those who contracted,
and were capable of contracting it at the time.
Otherwise, the law would introduce the extraordinary
anomaly of making a contract,, consummate and perfect
between aU the original parties, expand so as to be in
fact the contract of other parties, who had not, and
perhaps could not, at the time, have any interest in, or
privity, or connection therewith.^
B. 3, ch. 3, § 1, p. 348 to 368, 2d edit. ; Saville v. Robertson, 4 T. K. 720 ;
Ketchum v. Durkee, 1 Hoffm. E. 538. — Where no other time is fixed for
the commencement of a partnership in an agreement between the parties,
it is taken to have commenced on the date of the agreement, as the
presumed intention of the parties. Williams v. Jones, 5 Barn, & Cressw.
108.
1 Gow on Partn. ch. 4, § 1, p. 150, 151, 152, 3d edit. — Mr. Gow has
well stated the principle, and illustrated it by the cause of Saville v.
Robertson, 4 Term, R. 720. Mr. Gow says (p. 151, 152), "A joint
contract, however, entered into by one or more individiifils, is binding
only upon those who have a joint interest in it at the time of its incep-
tion ; for no subsequent act by any person, who may afterwards become
a_partner, not even an acknowledgment that he is liable, will entail upon
that person the obligation of fulfilling such a contract, if it clearly appear,
that a partnership did not exist at the time the contract was made. The
joint interest must be contemporaneous with the formation of the contract
itself, to superinduce the corresponding liability to perform it. If it were
otherwise, the law would, in fact, create a supposed contract, when the
real contract between the parties was consummated, before the joint
interest and consequent joint risk was in existence. Thus, where several
persons agreed upon a maritime adventure, and to provide a cargo of
goods, which should, in the judgment of the majority, be proper for the
voyage ; and permission was given to the supercargo (who was to have a
proportionate profit, and bear an equal_ loss with the respective adven-
turers) to ship, on the joint account, as many goods as he might think fit ;
Such goods being fijst approved by a majority of the persons concerned in
250 PARTNERSHIP, [CH. VIII.
§ 147. This doctrine may easily be illustrated by
a few cases. Thus, if two persons should separately
purchase goods on their own separate accounts, and
afterwards should agree to unite their interests therein,
in one joint commercial adventure for their joint and
mutual profit, this would create a partnership in the
goods for that adventure. But it would not make
the adventure, as proper for the voyage ; and it was afterwards agreed,
that each party was to hold no other share or proportion in the adventure,
than the amount of what each separately ordered and shipped ; and that
the orders given for the cargo and outfit of the ship were to be separately
paid, and that one was not to be bound for any goods or stores ordered or
shipped by the other ; and that the supercargo should have free liberty to
ship what goods were suitable to the voyage, over and above the ship and
outfit, leaving room for those ordered by the adventurers ; and that the
ship should be made over in trust for the general concern ; it was held,
that if the supercargo afterwards purchased goods; as part of the cargo,
and the ship sailed with the goods so purchased, he alone was liable for
them, and not his co-adventurers jointly with him. The reason, on which
this determination proceeded, seems to have been, that, after the purchase
of the goods made by the several adventurers, there was still, before they
became joint property, a further act to be done, which was the putting
them on board the ship, in which they had a common concern for the
joint adventure, and, until that further act was done, the goods purchased
by each remained the separate property of the purchaser. The partner-
ship in the goods did not arise until their admixture in the common
adventure." Again he adds (p. 153); "It is not, however, sufficient to
constitute a joint liability for the capital brought into the trade, that there
is to be a subsequent participation in the profit derived from it. In such
a case, the right to participation can only take its origin from the time of
the introduction of the capital ; and, although communion of profit is a
strong circumstance to explain a contract in itself doubtful, and to show,
as the legal presumption is, that a partnership existed at the time amongst
the participants ; yet; where the nature of the contract clearly appears, it
cannot have such a retrospect as to alter it, and to substitute the responsi-
bility of several for that of an individual contractor. Therefore, if
several persons agree to form a partnership, and that each shall contribute
a certain share of the capital, and any of the persons borrow or purchase
the share, which is by him afterwards brought into the common stock,
the liability for payment to the lender or vendor is not joint, but
personal."
CH. Vin.] LIABILITIES AND EXEMPTIONS. 251
them liable as partners to the vendors of tlie goods;
for they then had no joint interest in the purchase.^
The same rule would apply to a case, where one mer-
chant should purchase goods on his own sole account,
and afterwards should ship them upon a joint adven-
ture for joint profits with other persons, whom he had
subsequently admitted as sub-purchasers, or to whom
he had subsequently sold an undivided interest in the
goods ; for in such a case the original credit was exclu-
sively given to himself; and the other parties could in
no just legal sense be deemed parties or privies to the
contract of purchase.^ It would ordinarily be other-
wise, however, if the joint adventure were agreed
upon before the purchase, and the purchase were to be
made for all the persons concerned therein in the name
of one.^
1 Gow on Partn. ch. 4, § 1, p. 151, 152, 153, Sd edit. ; Saville v. Robert-
son, 4 Term R. 720 ; CoUyer on Partn. B. 3, ch. 3, ^ 1, p. 348 to 358, 2d
edit. ; Id. p. 365, 366 ; Young v. Hunter, 4 Taunt. 582 ; Gouthwaite v.
Duckworth, 12 East, R. 421.
2 Gow on Partn. ch. 4, § 1, p. 151, 152, 153, 3d edit. ; Young v. Hunter,
4 Taunt. E. 582 ; Greenslade v. Dower, 7 B. & Cressw. 635 ; Collyer on
Partn. B. 3, ch. 3, § 1, p. 856, 357, 358, 2d edifc; Id. p. 365 ; Coope v.
Eyre, 1 H. Black. 37; Gardner v. Childs, 8'Carr. & Payne, 345 ; Gouth-
waite V. Duckworth, 12 East, R. 421.
3 Gow on Partn. ch. 4, § 1, p. 151, 152, 153, 2d edit.; Gouthwaite v.
Duckworth,' 12 East, R. 422, 424; Waugh v. Carver, 2 H. Black. E.
235, 246 ; Gardiner v. Childs, 8 Carr. & Payne, 345 ; Smith v. Craven,
1 Cromp. & Jerv. 500; Post v. Kimberly, 9 Johns. R. 470; Felichy v.
Hamilton, 1 Wash. Cir. E. 490 ; Collyer on Partn. B. 3, ch. 3, § 1, p. 349
to 357. — In the text the qualifying word " ordinarily " is inserted with
reference ixj a suggestion of Mr. Justice Gibbs in Young v. Hunter, 4
Taunt. E. 583, 584, where he is reported to have said; "I am by no
means of opinion, that there may not be a case, where two houses shall be
interested in goods from the beginning of the purchase, yet not be both
liable to the -vendor ; as if the parties agree amongst themselves, that one
house shall purchase the goods, and let .the other into an interest in them,
that other being unknown to the vendor ; in such a case the vendor could
252 PARTNERSHIP. [CH. VIII.
• § 148. The same rule will apply to cases, where
there is a separate loan of money to one of several
not recover against him, although such other person would have the
benefit of the goods. In Goulhwaite v. Duckworth, 12 East, K.425, 426,
Lord Ellenborough said ; " It comes to the question, whether, cotemporary
with the purchase of the goods, there did not exist a joint interest between
these defendants. The goods were to be purchased, as Duckworth states
in his eJcamination, for the adventure ; that was the agreement. Then
what was this adventure ? Did it not commence with the purchase of
these goods for the purpose agreed upon, in the loss and profits of which
the defendants were to share ? ■ The case of, Saville v. Eobertson does
indeed approach very near to this. But the distinction between the
cases is, that there each party brought his separate parcel of goods, which
were afterwards to be mixed in the common adventure on board the ship,
and till that admixture the partnership in the goods did not arise. But
here the goods in question were purchased, in pursuance of the agree-
ment for the adventure, of which it has been before settled, that Duck-
worth was to have a moiety. There seems also to have been some con-
trivance in this case to keep out of general view the interest, which
Duckworth had in the goods ; the other two defendants were sent into the
market to purchase the goods, in which he was to have a moiety ; and
though they were not authorized, he says, to purchase on the joint
account of the three ; yet, if all agree to share in goods to be purchased
and in consequence of that agreement, one of them go into the market
and make the purchase, it is the same for this purpose, as if all the names
had been announced to the seller, and therefore all are liable for the value
of them." Mr. Justice Bayley added ; " In Saville v. Robertson, after
the purchase of the goods made by the several adventurers, theig was
still aiiirther act to be done, which was the putting them on board the
ship, in which they had a common concern, for the joint adventure ; and,
until that further act was done, the goods purchased by each remained the
separate property of each. But here, as soon as the goods were purchased,
the interest of the three attached in them at the same instant by virtue of
the previous agreement." See Collyer on Partn. B. 3, ch. 3, § 1, p. 356,
357, 358, 2d edit. ; Gardiner v. Childs, (8 Carr. & Payne, 345,) and
Smith V. Craven, (1 Gromp. & Jerv. K. 500,) where the subject was much
considered. In this last case. A., B., and C., not being general partners,
entered into a joint speculation, for the purchase and importation of corn,
and each was to contribute a third. A. paid his share ; and the bankers
of B. advanced money to B. on his individual credit, which was applied
to the payment of bills drawn by B. in the course of the said speculation.
It was held, that A. was not liable to pay the bankers for the advance ;
since it was manifest, that it was raised on his individual credit. On this
CH. Vm.] LIABILITIES AND EXEMPTIONS. 253
joint adventurers, for the purpose of founding a part-
nership or joint adventure ; the firm, when formed,
■will not be. liable -for the advance; for the case is not
distinguishable from one, where several |)ersops are to
contribute their separate proportions of money towards
a common fund for joint purposes, and each is to
borrow, and does borrow, his own share upon his own
occasion Bayley, J. said ; " If I supply my agent with money, whicli he
misapplies, and raises money elsewhere, can the person, from whom he
obtains the money, sue me for the amount ? If this had been a claim by
the seller of the corn, no doubt he would have been entitled to proceed
against all the parties, and might have called upon them all for payment.
It is not a claim by the seller but by the person, who, as between the
parties themselves, is the mere hand, by which the money is advanced.
Wharton having given collateral security, the plaintiffs, as his agents and
on his credit, not knowing any thing of the other parties, pay the money,
and pay it in discharge of that, which is the individual debt of their prin-
cipal, and of him alone. As agents they had no notice that they made
the payment, except on the individual behalf of Wharton ; he only was
trusted, and the advances were made on his credit alone ; the plaintiffs
were not deluded by the prospect of a partnership security, and the claim
must be restricted to Wharton alone. See what a situation the defendant
Craven would be placed in, were it otherwise. He was justified in sup-
posing, that Wharton's share was raised out of his own funds. He finds,
that all the bills are honored, when they become due, with funds, which
he would naturally conclude were really the funds of Wharton ; and to
my mind, it would be most unjust, if, after a lapse of time. Craven, having
settled the full amount of what, as between himself and Wharton, he was
bound to pay, a third person were allowed to come forward and say, ' I
advanced the money on the credit of Wharton only, but I find, that it
was applied in payment of your liabilities, and therefore I look to you.'
A party is not liable as a partner, except he give to his partner express
or implied authority to pledge his credit in the transaction, out of which
the claim arises. Now, what authority does Craven appear to have given
to Wharton to borrow this money from the plaintiffs ? It is not sufficient
to say, that Craven was relieved from a liability ; for, your payment of
my debt does not make me your debtor, unless the payment be made at
my request. The partnership was not liable, unless Wharton had an
authority from them to borrow; and no such authority, express or implied,
exists in the present case."
PAKTN. 22
2t>4 PABTNEESHIP. [cH. VIII.
separate account and credit.^ In short, in all cases of
this sort, in order to bind the firm, the intended part-
ner must either have had an original authority to
■ purchase goo€s, or borrow money upon the joint
aecount, and have exercised that authority by a pur-
chase or loan on their account, and not on his own
exclusive credit, or the transaction must have been
subsequently ratified and adopted by the firm, as one
for which they were originally liable, or for which they
now elect to give their joint security.^
§ 149. These cases seem sufficiently clear upon prin-
ciple. But others may arise, where the application of
it may involve more complexity of circumstances, and
of course more embarrassment in enunciating it. Thus,
where A. and B., stationers, ordered certain paper-
makers to supply paper to C. and D., printers, for the
purpose of printing certain specified works; and it
turned out afterward in proof, that C. and D. were
interested as partners in the publication of those works,
the question arose, whether C. and D. were liable to
the paper-makers for the paper supplied. The solution
of that question depended upon another, and that was ;
when the partnership in the publication of those works
commenced, whether before or after the paper was
ordered. If before, then all the partners were liable,
and 0. and D. among them; if after, then A. and B.
only were liable. And to arrive at a just conclusion
' Collyer on Partn. B. 3, ch. 3, § 1, p. 357 to 360, 2(1 edit.; Sayille v.
Robertson, 4 T. R. 720; Greenslade v. Dower, 7 B. & Cressw. 635;
Wilson V. Whitehead, 10 Mees. & Welsh. 503.
2 Collyer on Partn. B. 3, ch. 3, § 1, p. 357, 359, 360, 2d edit.; Saville
V. Robertson, 4 Term R. 720; Gouthwaite v. Duckworth, 12 East, R. 421 ;
Brown v. Gibbons, 5 Bro. Pari. R. by Tomlins, 491 ; Gow on Part. ch. 4,
p. 150 to 153, 3d edit.
CH. YIII.] LIABILITIES AND EXEMPTIONS.
255
on the subject, it miglit be material to consider,
whether the ordering of the goods was the exclusive
act of A. and B., and intended to be upon their own
exclusive credit; or was to be on that of the joint
concern, with the approbation' of all who were to par-
ticipate in the publications.^ So, where A., B. and C.
verbally agreed that they should bring out and be
jointly interested in a periodical publication. A. was
to be the publisher, and to make and receive general
payments ; B. was to be the editor ; and C. to be the
printer ; and after payment of all expenses they were
to share the profits of the work equally ; C. was to
furnish the paper and charge it to the account at cost
prices; and no profits were ever made, nor any
accounts settled ; the question arose, whether a third
person, who furnished the paper to A. for the purpose
of being used by him in printing the periodical, could
maintain an aiction therefor against A., B. and C, or
was limited to an action against C. only. The Court
held that A., B. and C. were not jointly liable therefor,
but C. only.^
§ 150i So, in other eases of goods supplied, or work
and labor done, or services performed for persons who
are about engaging in a joint undertaking, and are
taking preliminary steps for establishing the same, it
is often a matter of no small nicety to ascertain who
of the parties are liable therefor.^ In contemplation
'* Gardiner v. Childs, 8 Carr. & Payne, K. 345 ; CoUyer on Partn. B. 3,
ch. 3, ^ 1, p. 356, 357, 2d edit.
'' Wilson V. Whitehead, 10 MeesC & Welsh. K. 503.
3 CoUyer on Partn. B. 3, ch. 3, § 2, p. 365, 2d edit. ; 2 Bell, Comm. B.
7, ch. 3, p. 649 to 652, 5th edit.; Young v. Hunter, 4 Taunt. K. 582 ;
Bourne v. Preeth, 9 Barn. & Creasw. 632 ; Braithwaite v. Scofield, 9 B. &
Cressw. 401; Howell v. Brodie, 6 Bing. New Csis. 44.
256 PAETNEBSHIP. [CH. VHI.
of law, the joint liabilities will of course commence
only from the time when the parties have agreed to
act together for the common purpose, and that precise
time is sometimes difficult to ascertain.-^ There is a
gradual progress even in the formation of schemes of
' [See Atkins v. Huntf 14 New Hamp. R. 206. — Gilchrist, J., here
observed, — "There is of course an essential difference between a mere
proposition to form a partnership, and its actual constitution. Persons
may take a deep interest in the objects to be accomplished by the com-
pany ; may make donatipns to aid its progress ; or may sign their names
to subscription papers for the same end, without being liable for debts
which other persons may contract in the prosecution of the same purpose.
But a difficult quStion often arises, as to where the proposition to make
the contract ends, and the contract itself begins. In Bourne v. Freeth, 9
B. & C. 632, a prospectus was issued, stating the conditions upon which
the company was formed ; that the concern was to be divided into twenty
shares, to be under the management of a committee, and ten per cent, of
the subscriptions to be paid in by a certain date. It was held that this
prospectus imported only that a company was to be formed, and not that
it was actually formed, and that the signature to the prospectus did not
indicate to any person who should read it that the signer had become a
member of a company already formed. So in a case where all the acts
proved and relied on were equally consistent with the supposition of an
intention on the part of the defendant to become a partner in a trade or
business to be afterwards carried on, provided certain things were done,
as with that of an existing partnership, it was held that he was not a
partner. Dickinson v. Valpy, 10 B. & C. 128, per Parke, J. And where
a prospectus for a company was issued, to be conducted pursuant to the
terms of a deed to be drawn up, it was held that an application for shares,
and payment of the first deposit, did not constitute one a partner who had
not othermse interfered in the concern. Fox v. Clifton, 6 Bingh. 776.
It was an important element in that decision, that the deed was not exe-
cuted by the defendant who was sought to be charged as a partner. In
Howell V. Brodie, 6 Bingh. N. C. 44, the defendant, from 1829 until 1833
advanced various sums, with a view to a partnership in a market about
to be erected ; knew that the money was applied towards the erection,
and was consulted in every stage. In October, 1833, it was settled by a
written agreement that he should have a seventh share of it ; but it was
held that he was not liable as a partner until October, 1833, although
profits had been made but not accounted for to him before that time.
Lord C. J. Tindal mentions the fact that no account of profits was rendered
previous to October, 1833, as being in favor of the defendant." ]
CH. Vm.] LIABILITIES AND EXEMPTIONS. 257
this nature ; and preliminary acts are sometimes done,
and orders given by several persons, before they have
absolutely fixed upon being concerned in the joint
undertaking ; and it yet rests in negotiation, whether
they shall, or shall not, become partners.^ In such
' Questions of this sort often arise in cases of unincorporated joint-stock
companies, in wMch every member is liable in solido for the debts con-
tracted on account of the partnership, as every member is in ordinary
commercial partnerships. In joint-stock companies many preliminary acts
are done towards the establishment of the company ; and it often becomes
a matter of nicety to ascertain, when a person is actually a member and
partner, or not. The general doctrine is well summed up by Mr. Collyer»
(CoUyer on Partn. B. 5, ch. 1, § 2, p. 735 to 743.) He says ; " In joint-
stock companies, more than in any other kind of partnership, a variety of
acts are done before the p»rtnership is actually commenced. Notices are
published, prospectuses are distributed, meetings are held, officers are
chosen, deposits are paid, and scrip receipts are given long before the
business is commenced, or the deed of settlement is executed. Indeed,
many of these acts are necessarily done before even the full complement
of the intended shareholders is made up. Hence, although the prime
movers and agitators of the scheme will undoubtedly be liable in respect
of the contracts, into which they enter for the purpose of launching the
company ; yet they cannot by such proceedings bind those who merely
answer their invitation; those for instance', who name themselves sub-
scribers, and even pay deposits, and do other acts showing an intention of
becoming partners, but who, by neglecting to observe' the rules, or to
comply with the demands of the society, never become entitled to share
the profits. The contract of partnership, as regards these passive sub-
scribers, is executory only, and may be abandoned, if the terms of the
partnership are not reasonably fulfilled by the projectors. Under such
circumstances, they never have become actual partners in the concern,
and, consequently, have never rendered themselves liable for its debts.
In the language of a learned Judge, ' If there is a contract to carry on
business by way of present partnership between a certain definite number
of persons, and the terms of that contract are unconditional, or complete,
then the partners give to each other an implied authority to bind the rest
to a certain extent. But if a person agree to become a partner.ata future
time with others, provided other persons agree to do the same, and
advance stipulated portions of capital, or provided any other previous •
conditions are performed, he gives no authority at all to any other indi-
vidual, until all those contracts are performed. If any of the other
intended partners in the mean time enter into contracts, it seems to me to
22*
258
PAETNEESHIP. [CH. .VIII.
cases the question resolves itself ultimately rather into
a question of fact than of law ; and until the partner-
ship is definitively fixed and agreed on, those only are
liable, who have acted and ordered the materials, or
work, or labor, or services.-^
[§ 150 a. Thus where certain persons, proposing to
form a company, applied to the defendant to become
president, to* which he assented, and permitted himself
to be publicly named as such ; but the company was
never formed, though meetings preliminary to its
formation were had, at one of which thp defendant
presided; it was held that the jury might, if they-
thought fit, infer that the defendant held himself out
as contracting for work to be don« in respect of such
preliminary meetings, though the order for such work
was not directly given by the defendant ; and that the
defendant, if he so held himself out, was liable for the
work performed.^]
§ 151. Upon the like ground, where, previous to the
formation of a company, a prospectus, signed by the
defendant, was is sued, indicating that it was in contem-
plation to form the company; and it appeared, that
the defendant solicited others to become shareholders,
be clear, that he is not bound by them, on the simple ground, that he has
never authorized them.' " See also Fox v. Clifton, 6 Bing. K. 776 ;
9 Bing. K. 115; Harvey jj. Kay, 9 Barn. & Cressw. 366; Bourne ti.
Freeth, 9 Barn. & Cressw. 632, 638 ; Dickinson «. Valpy, 10 Barn. &
Cressw. 123, 142; Doubleday w. Muskett, 7 Bing. R. 110, 118; Pitchford
». Davis, 5 Mees. & Welsh. R. 2 ; Howell v. Brodie, 6 Bing. New Cas.
44.
1 CoUyer on Partn. B. 3, ch. 8, § 1, p. 348 to 350, 2d edit. ; Id. 365,
366 ; Id. B. 5, ch. 1, § 2, p. 735 to 743 ; Howell ti. Brodie, 6 Bing. New
•Cas. 44; Gouthwaite «. Duckworth, 12 East, R. 421 ; Young w. Hunter,
4 Taunt. R. 582 ; 2 Bell, Comm. B. 7, ch. 3, p. 649 to 652, 5th edit.
2 Lake v. Duke of Argyll, 6 Adol. & Ellis, New R. 477; Wood e.
Puke of Argyll, 6 Manning & Granger, R. 928.
CH. Till.] LIABILITIES AND EXEMPTIONS. 259
and was present at a meeting of 'the subscribers, when
it was proposed to take certain premises to carry on
the business of the concern, which were afterwards
taken ; but he never paid his subscription ; it was held,
that the defendant was not chargeable, as a partner for
goods supplied to the company ; for he did not hold
himself out to the world, as a partner in a company
already formed, but to one, which was to be, or might
thereafter be formed.^ It would have been otherwise,
' Bourne v. Freeth, 9 B. & Cressw. 632; Dickinson v. Valpy, 10 B. &
Cressw. 128. See Forrester v. Bell, 10 Irish Law & Eq. R. 555 ; Fox v.
Clifton, 6 Bing. R. 776. — In this last case Lord Chief Justice Tindal
said ; " Upon this first question, therefore, whether a partnership was
actually formed, we think, if the right to participate in the profits of a
joint concern is to be taken, as undoubtedly it ought to be, as a test of a
partnership, these defendants were not entitled at any time to demand a
share of profits, if profits had been made ; inasmuch as they had never
fulfilled the conditions, upon which they subscribed. We think the matter
proceeded no further, than that the defendants had offered to become
partners in a projected concern, and that the concern proved abortive
before the period, at which the partnership was to commence ; and,
therefore, with respect to the agency of the directors, which is the legal
consequence of a partnership completely formed, we think the directors
proceeded to act before they had authority from these defendants ; for they
began to act in the name of the whole, before little more than half the
capital was subscribed for, or half the shares were allotted. The persons
therefore, who contracted with the directors, must rest upon the security
of the directors, who made such contract, and of those subscribers, who
by executing the deed have declared themselves' partners, and of any, who
have by their subsequent conduct recognized and adopted the acts and
contracts of the directors. But they have not the security of the present
defendants, who are not proved by the evidence to stand in any one of
such predicaments. It is unnecessary to advert to any of the cases,
which have been referred to, each of which must rest upon its own
peculiar circumstances ; except that with respect to Perring v. Hone,
decided in this Court, we think it right to observe, that the great point,
whether there was a partnership or not, does not appear to have been
made the prominent subject of argument, but to have been rather assumed
than disputed ; for the advertisement or prospectus was not brought to the
attention of the Court, nor is there any argument upon the terms of it.
260 PARTNERSHIP. [OH. VIU.
if he had held himself out as a partner in a company
already formed ; ^ or had contributed to its funds, and
had been present at a meeting of the company, and a
party to a resolution to purchase the goods.^ On the
other hand, if a party supposes himself by mistake to
have an interest in a company already formed, and he
has not ; if he does not hold himself out as a partner,
and no credit is given to him, the contracts of the com-
pany wUl not bind him, although he should afterwards,
acting under the mistake, declare himself to have an
interest therein.^
§ 152. From what has been already stated, it is
apparent, that an incoming partner (that is, a new
partner coming into an existing firm) will not be liable
in respect to debts, contracted by the firm previously
to his entering it.* But although this is the clearly
.established doctrine, yet it does not follow, that an
incoming partner may not become liable for such debts,
by expressly assuming them upon a proper considerar
tion, or otherwise dealing with the creditor in such a
manner as to create an implied obligation and duty to
pay the same in common with the old firm. The pre-
sumption of law, indeed, is against any such liability ;
but the presumption, like many others, may be re-
It is not incompatible with that determination, that the Court might have
held the proof of partnership incomplete, if the same materials had been
brought before them, which are presented to us."
1 Ibid. ; Blandy v. Herbert, 7 B. & Cressw. 401 ; Fox v. Clifton, 6 Bing.
R. 776 I Howell v. Brodie, 6 Bing. New Cas. 44.
2 Ibid.
3 Vice w. Anson, 7 Barn & Cressw. 409. [Explained in Owen v. Van
Uster, 1 Eug. Law & Eq. K. 396.]
■* CoUyer on Partn. B. 3, oh. 3, § 2, p. 361, 2d edit. ; Shirreff v. Wilks,
1 East, B,. 48 ; Williams v. Jones, 5 Barn. & Cressw. 108 ; Veje v. Ashby,
10 Barn. & Cressw. 289.
CH. Vra.] LIABILITIES AND EXEMPTIONS. 261
moved by due and satisfactory proofs of the contrary
intention and agreement.^ , Tlius, for example, if the
balance due from the old firufi be with the consent of
the creditor, and all of the new firm carried to the
debit of the new firm, the latter deriving a benefit^
therefrom, as a credit or deposit, it is very clear, that
the new firm wiU be bound thereby and therefor, as
their own debt.^ A fortiori, the same rule will apply,
where it is an express stipulation of the partnership
between the old firm and the incoming partner, that
the new firm shall assume all the outstanding debts
of the firm, and shall pay the same, and the creditor
shall assent thereto and take the new firm, as his
debtors.^
§ 153. Indeed, it may be generally stated, that, in
all cases of this nature, the primary consideration is,
not so much to ascertain between what parties the ori-
ginal contract was actually made, as it is to ascertain
whether there has subsequently been, with the consent
of aU the parties, any change or extinguishment of
that contract. Where it is established by satisfactory
evidence, that, upon the accession of a new partner, a
new promise has 'been made by the entire new firm, in
respect of the old debt, with the consent of the old
partners, as well as of the creditor, it will amount to a
novation of the debt, as it is called in .the Roman law,
{Novatio deUti,) and the new partner will be chargeable
1 Ibid ; Cutt v. Howard, 3 Starkie, K. 5 ; Ex parte Jackson, 1 Ves. Jr.
R. 131; Kirwin v. Kirwin, 2 Cromp. & Mees. 617; Helsby v. Meara,
5 Barn. & Cressw. E. 584; Beale v. Mouls, 10 Adol. «e Ellis, New R.
976.
sfJoUyeron Partn. B. 3, oh. 3, § 2, p. 361 to 365, 2d edit.; Ex parte
Peek, 6 Ves. 602.
3 Ibid.
262 PARTNEESHIP. [CH. VIH.
with the debt. But such an adoption or ratification of
the new promise by the new partner must be clearly-
shown, otherwise it will not be obligatory upon him ;
and it cannot be inferred from the mere act of joining
in the partnership, without other circumstances in aid
of the inference.^ •
§ 154. Hitherto we have been principally consider-
ing cases, where either an exclusive credit has been
given to one partner in the partnership business, or
where the transaction could not, from its nature and
character, or its period of commencement or origin, be
deemed to bind the partnership. But it is quite pos-
sible for third persons to enter into a contract with one
partner, under an impression that the particular con-
tract is made with and binding on the firm, when in
point of law it has no such obligation. (1.) Thus, in
the first place, (as we have seen,) ^ if a person should
lend and advance money to a firm at the request of one
partner, and take his separate note, or bill, or other
security, for .the amount, not intending thereby to give
an exclusive credit to such partner, it is very clear,
that he cannot sue the partnership on such note, or biU,
or other security, whatever might be his remedy against
the firm for the money lent and advanced.^ (2.) In the
next place, if a third person should contract with one
partner in a matter beyond, or unconnected with the
1 Collyer on Partn. B. 3, ch. 3, § 2, p. 364, 365, 2d edit.; Vere t>. Ash-
by, 10 Barn, & Cressw. 288. See also Lloyd v. Ashby, 2 Barn. & Adol.
K. 23; Hobey ii. Roebuck, 7 Taunt. K. 157; Ketchum v. Durkee, 1
Hoffin. K. 528. •
2 Ante, § 136, 137, 140, 142.
3 Collyer on Partn. B. 3, ch. 2, § 2, p. 315 to 323, 2d edit. ; SiflFkin v.
■Walker,'2 Camp. R. 308; Emly v. Lye, 15 East,R. 7 ; Denton v. Rodie,
8 Camp. R. 493.
CH. Vm.] LUBILITIES AND EXEMPTIONS. 263
partnership business, the firm will not be liable to him
upon such contract, although he may have implicitly
trusted to the credit of the firm, and not to the in-
dividual partner alone.^ (3.) In the next place, a third
person may, upon receiving a consideration, assent to
such private arrangements of a firm, as will deprive
him in point, of law of any remedy against the firm,
or a part of them, although he did not so intend.^ (4.)
And in the next place, (as we have seen, y the custom
of a particular trade may essentially aifect the liability
of the firm to a third person upon a contract, made
with one of the partners, if that person has full notice
of the custom, and is therefore bound by it, whatever
might have been his own private interpretation- there-
of, as to its being an obligation binding on the firm*
§ 155. The liability of the firm to third persons may
thus, in the very origin or progress of the transactions
of one partner, or other person, assuming to act in be-
half of the firm, not only never arise, or it may be
varied, limited, or qualified ; but even when the liability
has clearly attached, and become absolute and binding,
subsequent transactions between such third persons and
one of the partners may work an extinguishment of
such liability,* ither wholly or partially.^ Thus, if a
1 CoUyer onfartn. B. 3, ch. 2, § 2, p. 316, 324, 325, 326; Ex parte
Agace, 2 Cox, K. 512.
2 Collyer on Partn. B. 3, ch. 2, § 2, p. 316, 326 to 329, 2d edit. ; Bolton
V. Pollen, 1 Bos. & Pull. K. 539.
3 Ante, § 141.
* Collyer on Partn. B. 3, ch. 2, ^ 2, p. 316, 329 to 331, 2d edit. ; Bar-
ton V. Hanson, 2 Taunt. R. 49 ; Hiardw. Bigg, Manning's Nisi Prius, Dig.
Index, 220; Gowon Partn. ch. 4, ^ 1, p. 149, 150, 3d edit.
5 Collyer on Partn. B. 3, ch. 3, § 3, p. 376 to 383 ; Id. p. 385 to 389,
2d edit.; Gow on Partn. ch. 3, § 1, p. 129, 3d edit.; Newmareh v. Clay,
14 East, R. 239 ; 2 Bell, Comm. B. 7, ch. 2, p. 638, 639, 5th edit. ; Ante,
§ 146, 150.
264 " PARTNERSHIP. [CH. YIH.
partnership were originally liable to a creditor for a
debt, and he should afterwards accept a security of one
partner, at all events, if it should be a security of a
higher or negotiable nature, for the whole debt, as a
satisfaction thereof, wholly or in part, it will operate
as an extinguishment of the debt of the partnership.^
1 Gow on Partn.-ch. 4, § 1, p. 155, 156, 157, 3d edit. ; Collyer on Partn.
B. 3, ch. 8, ^ 3, p. 385, to 389, 2d edit. ; Reed v. White, 5 Esp. R. 122 ;
Evans v. Drummond, 4 Esp. R. 89, 92 ; Newmarch v. Clay, 14 East," 239 ;
Thompson v. Percival, 5 Barn. & Adol. 925. — It is laid down in Gow on
Partn. (ch. 4, ^ 1, p. 155, 156, 157, 3d edit.) that the security should be
of a higher nature than the original debt, in order to extinguish the part-
nership debt. But that doctrine has since been overturned. The very
question was before the Court in Thompson v. Percival, 5 Barn. & Adol.
925. On that occasion Lord Denman, in delivering the opinion of the
Court, said ; " It appears to us, that the facts proved raised a question for
the jury, whether it was agreed between the plaintiffs and James, that
the former should accept the latter as their sole debtor, and should take
the bill of exchange accepted by him alone, by way of satisfaction for the
debt due from both. If it was so agreed, we think, that the agreement
and receipt of the bill would be a good answer on the part of Charles
Percival to this demand, by way of accord and satisfaction. It is not
necessary to determine, whether the assent of Charles to this agreement
was necessary, in order to give it such an operation ; because if it was,
there is evidence of a delegation by Charles to James to make such an
aoreement ; for James had the partnership effects left in his hands, and
was to pay all the partnership debts. It cannot be doubted, but that, if a
chattel "of any kind had been, by the agreement of theHplaintiffs, and both
the defendants, given and accepted in satisfaction of the debt, it would
have been a good discharge. It is not required, that the chattel should
be of equal value ; for the party receiving it is always taken to be the
best judge of that in matters of uncertain value. Andrew v. Boughey,
Dyer, 75, a. Nor can it be questioned, but that the bill of exchange of
third persons, given and accepted in satisfaction of the debt, would be a
good discharge. But it is contended, that the acceptance of a bill of
exchange by one of two debtors cannot be a good satisfaction, because the
creditor gets nothing, which he had not before. The written security,
however, which was negotiable, and transferable, is of itself something
different from that which he had before ; and many cases may be con-
ceived, in which the sole liability of one of two debtors may be more
beneficial than the joint liability of two, either in respect of the solvency
of the parties, or the convenience of the remedy, as in cases of bankruptcy
CH. "Vm.] LIABILITIES AND EXEMPTIONS. 265
Upon the like ground, if the creditor should receive
the separate security of each partner, for his own share
of the debt, in satisfaction thereof, all joint liability of
the partnership for the debt would henceforth be gone.^
or survivorship, or in various other ways ; and -whether it was actually
more beneficial in each particular case, cannot be made the subject of
inquiry. The cases of Lodge v. Dicas, (3 B. & A. 611,) and David v.
Ellice, (5 B. & C. 196,) are said to be against this view of the law.
[Lodge V. Dicas, may now be considered as overruled. Lyth v. Ault, 11
Eng. Law and Eq. K. 581. See Wilds v. Fessenden, 4 Met. 12 ; Harris v.
Lindsay, 4 Wash. C. C. 271.] In the former, however, no new negotiable
security was given, nor does the difference between the joint liability of
two, and the separate liability of one, appear to have been brought under
the consideration of the Court. In the latter, no bill of exchange was
given, and that decision, on consideration, is not altogether satisfactory to
us. We cannot but think, that there was abundant evidence in that case
to go to a jury, (and upon which the Court might have decided,) of the
payment of the old debt by Inglis, Ellice & Co. to the plaintiff, and a new
loan to the'new firm ; which might have been as well effected by a transfer
of account by mutual consent, as by actual payment of money. The cases
of Evans v. Drummond, (4 Esp. N. P. C. 92,) and Keed v. Wiiite, (5 Esp.
N. P. C. 122,) are authorities the other way. In the former, Lord Kenyon
points out forcibly the altered relation of the parties by the substitution
of the bill of the remaining partner for that of the firm ; and it is difficult
to see on what ground he decided the case, unless upon thisj viz., that
such substitution under an agreement operated as a satisfaction, as far as
regarded the retiring partners; and in Reed v. White, Lord Ellenbo-
rough acted upon that authority, and so directed a special jury of mer-
chants, who entirely agreed with him. These cases were afterwards
brought to the notice of Lord EUenborough, who expi-essed his approba-
tion of them, in Bedford v. Deakin, (2 Stark. N. P. C. 1 78.) That case,
however, (which was also before the Court, in 2 B. & A. 210,) was distin-
guished from them, because the creditor there expressly reserved the lia-
bility of the original debtors. If, therefore, the plaintiffs in this case did
expressly agree to take, and did take the separate bill of exchange of
James in satisfaction of the joint debt, we are of opinion, that his doing so
amounted to a discharge of Charles." See S. P. Kirwan v. Kirwan, 2
Cromp. & Mees. 617 ; Hart v. Alexander, 2 Mees. & Welsb. 396 ; Har-
ris V. Farwell, 15 Eng. Law and Eq. R. 70 ; Benson v. Hadfield, 4 Hare,
R. 37 ; CoUyer on Partn. B. 3, ch. 3, §.3, p. 385 to 398, 2d edit.
» Gow on Partn. ch. 3, § 1, p. 129, 130, 3d edit.; Garret v. Taylor, 1
Esp. N. P. Dig. 117; Kirkham v. Newstead, 1 Esp. N. P. Dig. 118 ; Cd-
PARTN. 23
266 PARTNERSHIP. [CH. VIII.
The doctrine is equally true in the converse case, where
a partnership is a creditor, and the separate and distinct
security of the debtor is taken to each partner several-
ly for his share of the debt.^
§ 156. This question most generally occurs in cases
of a retiring partner, where the creditor, knowing of
his retirement, subsequently gives credit to the re-
maining partners, or to the new firm, and enters into
new and separate contracts with the latter, touching
his debt, or allow-s his property to remain under their
control and management, as, for example, by way of
new deposit, or by carrying the balance to the debit of
the new firm, or by deferring payment of balances
upon receiving additional interest, or by receiving a
separate security therefor, or upon other considerations.
In such cases the general conclusion is, that exclusive
credit is intended to be given to the new firmj and if
so, then the retiring partner is discharged.^ But the
mere striking of the balance, and carrying the same to
Iyer on Partn. B. 3, ch. 5, § 1, p. 467, 2d edit. ; V^atson on Partn. ch. 8,'
p. 420, 2d edit.
ijbid. '
2 Evans v. Drummond, 4 Esp. B. 89 ; Reed v. White, 5 Esp. R. 122 ;
Oakley I). Pasheller, 10 Bligh, N. S. 548; S. C. 4 Clark & Finn. 207;
Hart II. Alexander, 2 Mees. & Welsh. 483 ; Thompson v. Peroival, 3 B.
& Adol. 925 ; Davaynes v. Noble, 1 Meriv. K. 530 ; Parrar v. Deflinne, Car-
rington & Kirwan, N. P. R. 580 ; 2 Bell, Comm. B. 7, ch. 2, p. 638, 639, 5th
edit. ; Gow on Partn. ch. 5, § 2, p. 244, 245, 3d edit. ; CoUyer on Partn. B.
3, ch. 3, § 3, p. 376 to 398, 2d edit. — The cases of David v. EUice, 5 B. &
Cressw. 197, and Lodge v. Dicas, 3 Barn. & Aid. 611, are the other way.
But their authority seems shaken, if not entirely overturned, in the more
recent decisions, and especially in the cases of Thompson v. Peroival, 5
Bam. & Adol. 925, and Hart v. Alexander, 2 Mees, & Welsh. 484 ; Harris
1). Farwell, 15 Eng. Law & Eq. R. 70 ; Lyth v. Ault, 11 Eng. Law & Eq. R.
581. See CoUyer on Partn. B. 3, ch. 3, § 3, p. 383 to 398, 2d edit. ; Id.
B. 3 ch. 3, § 2, p. 826, 327, where all the authorities^are collected and
commented on. See also Gow on Partn. ch. 4, § 1, p. 155 to 159, 3d edit.
(ffl. Vni.] LIABILITIES AND EXEMPTIONS. 267
a new account, opened with the new firm, will not alone
extinguish the original debt against the old firm, un-
less accompanied by other circumstances, which estab-
lish, that a new and exclusive credit is given to the
new firm.^ ^
§ 157. In cases of this sort, where there are running
accounts between the firm and third persons, and one
of the partners retires, the question, as to the appro-
priation of payments, subsequently made by the part-
ners remaining in the firm, often arises, and especially
in relation to banking transactions. As to this the
doctrine has been generally laid down, that, where
divers debts are due from a person, and he pays money
to his creditor, the debtor may, if he pleases, appro-
priate the payment to the discharge of any one or
other of those debts. If he does not appropriate it,
the .creditor may make an appropriation. But if there
is no appropriation by either party, and there is an
account current between them, (as is the case between
banker and customer,) the law makes an appropriation
according to the order of the items of the account, the
first item on the debit side of the account being dis-
charged or reduced by the first item on the credit side.^
To apply these principles to cases of retiring partners :
Where there is a cash account current between a firm
and a customer, and the account is in favor of the
latter, a retiring partner will be liable for the balance
of this account at the time of his retirement. But if
1 CoUyer on Partn. B. 3, ch. 3, § 3, p. 391, 392, 2d edit. ; David v. El-
lice, 5. B. & Cressw. 196 ; Lodge v. Dicas, 3 Barn. & Aid. 611 ; Hart v.
Alexander, 2 Mees. & Welsh. 484.
s CoUyer on Partn. B. 3, ch. 3, § 3, p. 376 to 383, 2d edit, j Davaynes
V. Noble, Clayton's Case, 1 Meriv. E. 572. See Copland v. Toiilman, 1
West, R., H. of Lords, p. 165 ; S. C. 7 Clark & Fin. 350.
268
PARTNERSHIP. • [CH. YIH.
the account be continued, the balance, for which the
retiring partner is liable, will be di'minished by every
payment, which is made by the new firm, supposing
such payment not to be appropriated to the discharge
of any specific item ; because, in sjich case, it is the
first item on the debit side of the account, which is
discharged or • reduced by the first item on the credit
side.^
, 1 Post, § 253 to 256 ; Ibid. — Mr. Collyer has added in another place,
(p. 321,) the following remarks : " To render an appropriation of pay-
ment by the act of the party valid, it must be made at the time, of payment,
if made by the payor, and within a reasonable time after payment, if made
by the payee. Sir William Grant was inclined to hold, according to the
principles of the civil law, that the appropriationj eyen if made by the
payee, must be made at the time of payment. But cases might be stated,
where such a rule, if strictly adhef'ed to, would be productive of injustice ;
and it is manifestly at variance with the decisions on this subject in the
Courts of common law. On the other hand, those Courts have, been
inclined to favor the creditor too much,andliave in many cases ' extended
the proposition — that if the debtor does not apply the payment, the
creditor may make the application to what debt he pleases — much
beyond its original meaning, so as in general to authorize the creditor to
make his election when he thinks fit.' In a recent case, however, the
Court of King's Bench came to a very just decision on this important
subject. Thus, in Simson v. Ingham, an action on a bond was brought by
Bruce & Co., bankers, against the heirs and devisees of Benjamin Iifgham.
The bond was given by Ingham and another, bankers, at Huddersfield, to
the plaintiffs, their London correspondents, conditioned for remitting
njoney to provide for bills, and for the repayment of such sums as Bruce
& Co. might advance on account of persons constituting the Huddersfield
Bank. The damages were assessed by an arbitrator at £13,845, subject
to the opinion of the Court, upon the following facts : The house of
Bruce & Co. were in the habit of sending to the Huddersfield Bank
monthly statements of their accounts. Benjamin Ingham died in Septem-
ber, 1811. The last statement sent previously to his death was for the
month of August. The balance of that account was greatly in favor of
Bruce & Co. No alteration in the account was made in the books of
Bruce & Co. immediately on the death of Benjamin Ingham ; but, during
the residue of that month and a part of October, the remittances made by
the Huddersfield Bank, and the payments made for them by Bruce & Co.,
were entered in continuation of the former account. Before, however,
CH. Vra.] IIABILITIES AND EXEMPTIONS. 269
§ 158. It frequently happens, that upon the retire-
ment of one partner, the remaining partners undertake
to pay the debts and to secure the credits of the firm.
This is a mere matter of private arrangement and
any account yrea transmitted to the Huddersfield Bank, subsequent to
that for August, Bruce & Co., in consequence of a communication with
their solicitor, opened a new account, and in that inserted all the remit-
tances and payments made subsequent to the death of Benjamin ; and in
November, they transmitted to the Huddersfield Bank, statements of two
accounts.- The first of, these accounts was thus entitled: — 'Debtors,
Messrs. B. & J. Ingham & Co. (old account,) in account with Bruce & Co.,
creditors ; ' and the first item on the debit side was the balance of August.
The second account was in the same form, but entitled ' new account.'
This account began on the 16th September," without any balance brought
forward, and contained the remittances and' payments made during that
month, subsequent to the death of Benjamin, and also those made in the
month of October. From this time the old and new accounts were kept
separate in the books of Bruce & Co. The Huddersfield Bank did not
appear to have ever objected to the accounts being kept separately by
Bruce & Co., although in theii: own books they only kept one account.
The arbitrator was of opinion, that, under these circumstances the balance
due on the death of Benjamin Ingham was not discharged by subsequent
payments by the new firm. Accordingly, after making certain allowances
for dishonored bills, he assessed the damages at the sum above awarded ;
and the Court of King's Bench held the award to be right. In the pre-
' ceding case, the Court proceeded on the principle, that the entries, which
had been continued in the creditor's books immediately on the death of
Ingham, not having been communicated to the debtors, were not conclu-
sive on the creditors, and consequently, that the general legal appropria-
tion, of which such entries would otherwise have been evidence, was
incomplete. It is clear from this, as also from the express opinions of the
Judges, that they did not consider it necessary, in order to support any
alleged appropriation on the part of the creditor, that he should prove it
to have been made at the time of payment. On the other hand, if pay-
ment be made to the creditor of any sum in respect of an account current,
the creditor making no appropriation at the time of payment, and if after
such payment the debtor and creditor continue their mutual dealings, or
do any other mutual act in respect of the same account, the creditor will
be barred by such subsequent transactions from establishing an appropria-
tion of the payment."
23*
270 PARTNERSHIP. [CH. Vni.
agreement between the partners;^ and can in no re-
spect be admitted to vary the rights of the existing
creditors of the firm.^ But in all cases of this sort
it may be stated, as a general doctrine, that if the
arrangement is made known to a creditor, and he
assents to it, and by his subsequent act, or conduct, or
binding contract, he agrees to consider the remaining
partners as his exclusive debtors, he may lose all right
and claim against the retiring partner, especially if the
retiring parti^er will sustain a prejudice, and the cre-
ditor will receive a benefit from such act, conduct, or
contract.^ Some illustrations of this doctrine have
been already stated in the cases of an exclusive credit
given to the new firm.* So, if the creditor should give
up the securities of the old firm, and take those of the
new firm in lieu thereof; or should give a prolonged
credit to the new firm for the old debt, receiving from
the latter, in consideration thereof, an additional inte-
rest, or a new security; in all such cases the retiring
partner would be held discharged.^ But the mere fact
of the creditor's taking an additional security from the
new firm without surrendering the old, or of his re-
1 [And if the new firm misapply the assets they will be liable to the
outgoing partner for any payments by him of the old debts. Peyton v.
Lewis, 12 B. Monrbe, 358.]
a CoUyer on Partn. B. 3, ch. 2, § 2, p. 327 to 329, 2d edit.; Id. B. 3,
ch. 3, § 3, p. 383 to 400.
3 Collyer on Partn. B. 3, ch. 3, ^ 3, p. 383 to 398, 2d edit.
i Ante, § 152.
* Collyer on Partn. B. 3, ch. 3, § 3, p. 383 to 398, 2d edit.; Evans v.
lirummond, 4 Esp. K. 89; Reed v. White, 5 Egp. K. 122; Thompson v.
Percival, 5 Barn. & Adol. 593 ; Oakley v. Pasheller, 10 Bligh, R. 548 ;
S. C. 4 Clark & Fin. 207 ; Gough v. Davis, 4 Price, R. 400 ; Harris o.
Lindsay, 4 "Wash. Cir. R. 271 ; Hart v. Alexander, 2 Mees. & Welsb. 484.
But see Yarnell v. Alexander, 14 Missouri, 619.
CH. Vin.] LIABILITIES AND EXEMPTIONS. 271
ceiving interest from the new firm, without varying
from that due on the old debt ; or of his acquiescing
in delay, without contracting upon any new considera-
tion to prolong the credit, will not absolve the retiring
partner from his original responsibility.^
§ 159. In this connection, it seems proper to inquire
into the circumstances, which will or will not exonerate
a retiring partner from future liability for the new
debts and liabilities, contracted by the firm with third
persons, after his retirement. Of course the retiring
partner is not by his retirement exonerated from the
prior debts and liabilities of the firm.^ In the first
place, then, a dormant partner is not liable for any
debts or other contracts of the firm, except for those
which are "Contracted during the period that he remains
a dormant partner. Upon his retirement his liability
ceases, as it began, de jure, only with his accession to
the firm.* The reason is, that no credit is, in fact, in
» CoUyer on Partn. B. 3, ch. 3, ^ 3, p. 383 to 398, 2d edit. ; Feather-
stone V. Hunt, 1 Barn. & Cressw. 113 ; Bedford v. Deakin, 2 B. & Aid.
210; Daniel u. Cross, 3 Ves. 377; Harris v. Lindsay, 4 Wash. Cir. K.
271 ; Blew «. "Wyatt, 5 Carr. & Payne, 397 ; Smith v. Kogers, 17. Johns.
E. 340. [Harris o. Farwell, 15 Eng. Law & Eq. R. 70. In this case a
firm consisted of three members. One of them died in 1837, and a new
partner was admitted. A creditor of the old firm received interest on his
debt from the new firm until 1841, when they became bankrupt. He
then proved his claim against the new firm, swearing they were indebted
to him for money received to his use. The separate estate of the deceased
partner was held not discharged thereby.] All these cases turn upon the >
same general consideration ; whether there has been a new and exclusive
credit given to the new firm in extinguishment of -the debt, or to the
prejudice of the firm.
8 Gow on Partn. ch. 5, § 2, p. 240 to 251, 3d edit. ; CoUyer on Partn..
B. 3, ch. 3, ^ 3, p. 369 to 372, 2d edit.
3 CoUyer on Partn. B. 1, ch. 2, § 2, p. 74, 2d edit. ; Id. B. 3, ch. 3, § 3,
p. 370, 371 ; Gow on Partn. ch. 5, § 2, p. 251, 8d edit.; 3 Kent. Comm.
Lect. 43, p. 68, 4th edit.
272 PARTNERSHIP. [CH. VIII.
any such case given to the dormant partner. His
liability is created by* operation of law, independent of
his intention, from his mere participation in the profits
of the business ; and therefore it ceases by operation
of law, as soon as such participation in the profits
ceases, whether notice of his retirement be given or
not.-^ But this doctrine must be taken with its appro-
priate qualifications ; and it is strictly applicable only,
where the persons dealing with the firm have no know-
ledge whatsoever, that he is a dormant partner. If the
fact of his being a dormant partner be unknown to all
the creditors, no notice whatever of his retirement is
necessary ; if it be known to a few, notice to those
few is necessary ; because they may fairly be presumed
to have given credit to the firm with reference to their
knowledge of the dormant partner.^
§ 160. In the next place, where an ostensible or
known partner retires from the firm, he will stiU
remain liable for all the debts and contracts of the
firm, as to all persons, who have previously dealt with
the firm, and have no notice of his retirement.* This
is a just result of the principle, that where one of two
innocent persons must suffer from giving a credit, he
who has misled the confidence of the other, and has
been the cause of the credit, either by his representa-
tion, or his negligence, or his fraud, ought to suffer,
1 CoUyer on Partn. B. 1, oh. 2, § 2, p. 74, 2d edit.? Id. B. 3, ck 3, § 8,
p. 370, 371 ; Gow on Partn. ch. 5, § 2, p. 251, 3d edit.; 3 Kent, Comm.
Lect. 43, p. 68, 4th edit.
2 Ibid. ; Evans v. Drummond, 4 Esp. K. 89 ; Newmarch v. Clay, 14
East, R. 239 ; Farrar i>. Deflinne, 1 Carr. & Kirw. 580.
3 Collyer on Partn. B. 3, ch. 3, § 3, p. 368 to 371, 2d edit. ; Gow on
Partn., ch. 5, § 2, p. 240 to 252, 3d edit; 2 Bell, Comm. B. 7, ch. 2, p.
640, 641, 5th edit.
CH. Vra.] LIABILITIES AND EXEMPTIONS. 273
instead of the other. And where a person notoriously
holds himself out as a partner, all the world, who deal
with the firm, are presumed to deal with it upon his
credit, as well as upon that of the other members of
the firm ; and his omission to give them notice of his
retirement is equivalent to a continual representation,
that he still remains a member of the firm, and liable
therefor.^ But, as to persons who have had no previous
dealings with the firm, and no knowledge who are or
have been partners therein, a different rule may pre-
vail. In such cases,, unless the ostensible partner, who
has retired, suffers his name still to appear, as one of
the firm, so as to mislead the public, (as by its being
stated, and still remaining in the firm name,) he wUl
not be liable to mere strangers, who have no knowledge
of the persons, who compose the firm, for the future
debts and liabilities of the firm, notwithstanding his
omission to give public notice of his retirement ; for it
cannot truly be said in such cases, that any credit is
given to the retiring partner by such strangers. Every
new creditor or new customer is bound to inquire, who
are the parties really interested at the time in the firm,
if he would be safe in his credit and dealings with
them. Unusquisque debet esse gnarus vonditimiis ejus, cum
quo contrahit? A fortiori, if public notice has been
1 CoUyer on Partn. B. 3, ch. 3, ^ 3, p. 369 to 375, 2d edit. ; 3 Kent,
Comm. Lect. 43, p. 66, 67, 68, 4th edit. ; Gow on Partn. ch. 5, § 2, p. 248
to 251, 3d edit. ; Id. ch. 4, § 1, p. 198 ; Graham v. Hope, Peake's R. 154 ;
Gorham v, Thompson, Pealce's R. 42 ; Wardwell ». Haight, 2 Barbour,
R. 549 ; Watson on Partn. ch. 7, p. 384, 385, 2d edit. ; Davis v. Allen, 3
Comst. 172.
2 2 Bell, Comm. B. 7, p. 642, 5th edit. ; Collyer on Partn. B. 3, ch. 3,
§ 2, p. 369 to 375, 2d edit. ; Parkin v. Carruthers, 3 Esp. R. 246 ; 3 Kent,
Comm. Lect. 43, p. 67, 68 ; Williams v. KeatSj 2 Starkie, R. 290 ; Brown
I). Leonard, 2 Chitty, R. 120;' Newsome v. Coles, 2 Camp. R. 617; Del-
274 PARTNERSHIP. [CH. VUI.
given of his retirement, the retiring partner will not
be liable to new creditors or customers, even if they ^
u\
man v. Orchard, 2 Carr. & Payne, 104 ; Tombeckbee Bank v. Dumell, 5
Mason, R. 56 ; Lansing v. Gaine Se Ten Eyck, 2 Johns. R. 300; Ketcham
V. Clark, 6 Johns. R. 144, 148; Carter v. Whalley, 1 Barn. & Adol. 11 ;
Le Roy D.Johnson, 2 Peters, E. 198, 200.— I am aware, that the doctrine
is sometimes laid down more broadly, and the liability is made to attach,
unless the partner has given public notice of the dissolution. Thijs, in
Parkin v. Carruthers, (3 Esp. E. 248, 249,) Mr. Justice Le Blanc said ;
" The principle on which I proceed is this ; — That there was a partner-
ship subsisting, under the firm of Parkin, Campbell, & Co., which con-
tinued after the retirement of John Campbell. The rule of law is clear,
that where there is a partnership of any number of persons, if any change
is made in the partnership, and no notice is given, any person dealing with
the partnership, either before or after such change, has a right to call
upon all the parties, who at first composed the firm." In summing up to
the jury, his Lordship laid it down as the law on the subject, " That if the
plaintiff advanced the money, even after the time that one of the partners
had retired, if he did not know of such retirement, he had a right to sue
all who before constituted the partnership. In point of fact in this case,
John Campbell had retired ; but still, if this was really a partnership, and
the money was lent to4ihe persons carrying on trade under that firm, all
were liable." But in this case, Campbell's name was in the name of the
firm. See also Gow on Partn. ch. 6, § 2, p. 248, 249, 3d edit. ; Id. p. 251
to 253 ; 2 Bell, Comm. B. 7, ch. 2, p. 640, 641, 642, 5th edit. It strikes
me, however, that the text contains the true principle. Where a partner-
ship is in fact dissolved by the retirement of a partner, who is known, but
whose name is not in the firm, it does not seem right to make him liable
to third persons, who afterwards trust the firm, without knowing who
compose ifat the time, or of the previous connection of the retiring part-
ner. His case does not, under such circumstances, seem essentially to
difier from that of a dormant partner; for such third persons give.no
credit to him, and he receives no share of the profits derived therefrom.
Mr. Watson has stated the true principle ; that " as credit is given to the
whole firm, justice requires, that all those, who belonged to it, should be
bound, while it is supposed to exist." But to whom bound ? Certainly,
to those only, who gave credit to the firm, believing, that the original
partners, whom they knew, still continued in it. The case of Carter v.
Whalley (1 Barn. & Adol. 11) seems directly in point, in support of the
doctrine of the text. There the debt was contracted after the retirement
of one partner, and no public notice had been given thereof. But
although it was known to some persons, that he was a partner, yet it did
not appear, that this creditor knew it, or believed it, or gave credit to the
CH. Vin.J LIABILITIES AND EXEMPTIONS. 275
have never seen sucli notice, or had any knowledge or
information thereof;^ since the retiring partner has
done all, which can be reasonably required to give
public notice of his withdrawal.^
partner. Mr. Justice Parke, on that occasion, said ; " The plaintiff was
bound to^ show an acceptance by four parties ; that is, that Veysey, who
did not accept the bill, was authorized to do so by the three others named
in the declaration. Saunders had given no direct authority ; he was not
a partner at the time. But he may by his conduct have represented him-
self as one, and induced the plaintiff to give him credit as such, and so
be liable to the plaintiff. Such would have been the case, if he had done
business with the plaintiff before, as a member of a firm, or had so
publicly appeared as a partner, as to satisfy a jury, that the plaintiff must
have believed him to be such ; and if he had suffered the plaintiff to
continue in and act upon that belief, by omitting to give notice of his
having ceased to be a 'partner, after he really had ceased, he would be
responsible for the consequences of his original representation, uncontra-
dicted by a subsequent notice. But in order to render him liable on this
ground, it is necessary, that he should have been known as a member of
the firm to the plaintiffs, either by direct transactions, or public notoriety.
In the present instance, that was not so. ' The name of the company gave
no information as to the parties composing it, and the plaintiff did not
show, that Saunders had dealt with him in the character of a jpartner, or
had held himself out ,so publicly to be one, as that the plaintiff must have
known it. Carter, the plaintiff, lived at Birmingham ; it should have
appeared, that there had been such a dealing at that place by Saunders,
or that his connection with the company had been so generally known
there, that a knowledge of it by Carter must have been presumed. There
having been no evidence for the jury on these points, I think the nonsuit
was right."
1 Collyer on Partn. B. 3, ch. 3, § 3, p. 369 to 372, 2d edit. ; Parkin v.
Carruthers, 3 Esp. E. 248; Gow on Partn. ch. 5, §2,-p. 248, 249,3d
edit.; Newsome ». Coles, 2 Camp. B. 617; Godfreys. Turnbull, 1 Esp.
E. 371 ; Wright ». Pulham, 2 Chltty, E. 121 ; S. C. 1 Stark. E. 375.
2 Ibid. — We are of course to understand this doctrine with the qualifi-
cation, that nothing is otherwise done by the retiring partner to continue
his liability ; such, for example, as by authorizing the negotiable securities
of the old firm to be issued and negotiated in the name of the old firm ;
for in such case, he would be bound by such indorsement. Collyer on
Partn. B. 3, ch. 3, ^ 3, p. 372 to 375, 2d edit. See also Abel v. Sutton,
3 Esp. E. 108; Kilgour v. Finlyson, 1 H. Bl. 155 ; Heath v. Sanson, 4 B.
& Adol; 172.
276 PAETNBKSHIP. [CH. VIH.
[§ 160 a. The rules of notice, proper to ordinary
trading, partnerships, are not applicable always to com-
p?inies established under statutes. For instance ; A.,
B., C. and D., who carried on business under the firm
of Gr. P. & Co., in 1840 opened an account with a bank-
ing company, established under the 7 Geo. 4, ch. 46,
.and 1 & 2 Vict. ch. 96. In 1842, A. retired from the •
firm ; but this fact was not advertised in the London
Gazette ; nor was any change made in the pass-book.
It was held, that the mere fact of D., one of the firm ,
of G. P. & Co., being also a director of the banking
company (but haying, as such, no share in the manage-
ment of or interference in the banking accounts) did
not amount to notice — actual or constructive — to the
bank, of the dissolution, so as to discharge A. in re-
spect of a debt subsequently accruing ; a banking com-
pany, so established, diifering in this respect from
an ordinary trading partnership.^]
§ 161. What will amount to due and sufficient notice
of the retirement of a partner is a question of fact, often
' of no small nicety and diflBlculty ; for notice need^ not
.be express ; but it may be constructive, and be implied
from circumstances. A notice in one of the public and
regular newspapers of the city or county, where the
partnership business was carried on, is the usual mode
of giving the information, and may, in ordinary cases,
be quite sufficient. But even the sufficiency of that
notice might be questioned in many cases, unless it is
shown, that the party entitled to notice is in the habit
of reading the paper. Public notice given in some
such reasonable way, will not be deemed actual and
iPowles «. Page, 3 Manning,- Granger & Scott, K. 16.
CH. Vm.] LIABILITIES AND EXEMPTIONS. 277
express notice ; but it will be good presumptive evi-
dence, and sufficient for a jury to conclude all persons,
who have not had any previous dealings with the firm.
As to persons, who have been previously in the habit of
dealing with the firm, it is requisite, that actual notice
should be brought home to the creditor, or at least; that
the credit should be given under circumstances, from
which actual notice may be inferred. If the facts are
all found or ascertained, the reasonableness of notice
may be a question of law for the Court. But general-
ly it wiU be a mixed question of law and fact, to be
submitted to a jury under the direction of the Court,
whether notice in the particular case, under all the cir-
cumstances, has been sufficient to justify the inference
of actual or constructive knowledge of the fact of the
dissolution. The weight of authority seems now to be,
that notice in one of the usual advertising gazettes of
the place, where the business was carried on, when pub-
lished in a fair and usual manner, is of itself notice of
the fact to all persons, who have not been previous
dealers with the partnership.-'
§ 162. The same principles apply to notice in the
case of a dissolution of the partnership by the acts of
the parties, as ordinarily apply to the case of a retiring
partner. Until due notice is given of the dissolution,
e'ach partner will remain liable for the acts and contracts
of the others in relation to the partnership, so far as
they respect persons who have previously dealt with the
1 3 Kent, Comm. Lect. 43, p. 67, 68. — I have followed almost the very
words of Mr. Chancellor Kent, in his excellent Commentaries. See also,
on the same subject, Collyer on Partn. B. 3, ch. 3, § 8, p. 368 to 371, 2d
edit; Gow on Partn. ch. 5, § 2, p. 248 to 251, 3d edit.; Watson on Partn.
ch. 7, p. 884, 385, 2d edit.; 2 Bell, Comm. B. 7, p. 640 to 643, 5th edit.
PAETN. 24
278 PARTNEESmP. [CH. VIII.
firm, or have known the names of the partners, or have
given credit thereto ; although not to mere strangers,
who do not fall under the like predicament.^ But
very different considerations apply in the case of a
dissolution of • a partnership by mere operation of
law, as by the death of a partner ; for in such a case
his estate is not bound or liable for any subsequent
debts or contracts, entered into by the survivors of the
firm.^ This subject, however, will more properly come
under review, when the effects of a dissolution by
death come under consideration, and may therefore be
here dismissed with this brief notice.
§ 163. There is another case, in which a retiring
partner may, notwithstanding notice of his withdraw-
al, be responsible, not only for the past debts of the
old firm, but for the new debts contracted by the new
firm ; and that is, in a case of positive or constructive
fraud. This may take place, when, upon the actual in-
solvency of the firm, known to all the partners, they
permit the retiring partner tonvithdraw a portion of the
partnership funds out of the reach of the joint credit-
ors of the new firm, for the purpose of cheating or
defrauding the latter ; for in such a case the fraUd viti-
ates the whole transaction ; and the retiring partner
will be held liable to the full extent of all the funds
so fraudulently withdrawn.' But the mere fact, that
1 Ante, § 138, 129, 160; Gow on Partn. ch. 5, § 2, p. 248 to 251, 3d
edit. ; CoUyer on Partn. B. 8, ch. 3, § 3, p. 368 to 375, 2d edit. ; Id. B. 1,
ck 2, § 3, p. 75.
2 3 Kent, Comm. Leot. 43, p. 63, 4th edit, j Gow on Partn. eh. 5, ^ 2,
p. 248, note ; Id. ch. 5, ^ 4, p. 362, 3d edit. ; VuUiamy v. Noble, 3 Meriy.
R. 614 ; 3 Chitty on Comm. and Manuf. ch. 4, p. 250.
3 Anderson i». Maltby, 2 Ves. Jr. 244 ; S. C. 4 Bro. Ch. R. 423 ; CoU-
yer on Partn. B. 3, ch. 3, § 3, p. 400 to 404, 2d edit. —In this case Lord
CH. Vra.] LIABILITIES AND EXEMPTIONS. 279
a retiring partner knows attthe time that the part-
nership is insolvent, will not of itself involve him in
any liabilities for the new firm, or vitiate the dissolu-
tion, if it was without any intention of fraud, and en-
tirely consistent in all its circumstances with good
faith.^
Loughborougli said; "The case resolves itself into a plain question
whether in 1784, upon the first of July, the defendant was bond fide a
creditor of the other two then about to enter into a new partnership. If
not, if all this transaction is to be void, under the color, in which it presents
itself to me, it is an imposition, not upon them only, because they were
consenting, but upon the creditors, who must deal with the partnership of
the two contrived upon a certain foresight of bankruptcy at no very
remote period, though the exact time was not certain, managed between
persons of the same family, by which the creditors of the two have been
losers exactly to the amount of what he has received. The only doubt I
have is, whether I should better attain the justice of the case, by directing
an account of all transactions between Brough and George Maltby from
the commencement of their partnership, for it can go no farther back,
and the defendant, with an inquiry into the state of accounts at that period
between them, to see, whe#ier there was any consideration whatsoever,
upon which he could be a creditor ; for if it was all moonshine, and there
was no property, upon which any account could be made out, it is all an
imposition to create a false credit to themselves, and to give him the pame
of a creditor, when in fact he was none, and a mere device to draw the
money of other people from the new Muartnership into his pocket
Whether this should be done in the MasteWolfice, or by discussion of an
issue at law, is a point, upon which I doubt. Consider which will best
attain justice. As to the last, it depends so much upon writing and
accounts, that it will hardly come within the period, in which a trial at
law can be had with advantage. I do not think it a case, in which, if a
trial can be had, I should be unwilling to have the assistance of a jury to
decide it. But I would not let it go to an action, but certainly would
direct an issue ; for I must take care to have the true question tried exactly
upon the merits in equity, which afiect the real justice of the case, and
not upon the points not relating to that, which would be made in an action.
I agree with the defendant, that if any of these payments cannot be
recovered at law, there would be no equity for it. There can be no
difference between a couri of law and of equity as to this. The true
questionfor an issue would be, whether the partnership was indebted to
the retiring partner on account of his share in the partnership."
' CoUyer on Partn. B. 3, ch. 3, § 3, p. 400, 401, 402, 2d edit. ; Parker
280 PARTNERSHIP. [CH. VIII.
§ 164. In joint-stock* and other large companies,
which are not incorporated, hut are a simple, although
an extensive partnership, their liabilities to third per-
sons are generally governed by the same rules and
principles, which regulate common commercial partner-
ships.-' In such companies the fundamental articles
generally divide the stock into shares, and make them
transferable by assignment or delivery ; and the whole
business is conducted by a select board of trustees or
directors. Without undertaking to assert in what cases
such companies may or may not be deemed illegal, and
the members liable to be treated as universally respon-
sible, upon the ground of usurping and attempting to
exercise the proper functions of a corporation, which
the legislature or government is alone competent to
establish ; ^ it may well deserye inquiry, how far any
stipulation in those articles, and which limit the respond
sibility of the members to the mere joint funds, or to a
qualified extent, will be binding upon their creditors,
who have notice of such a stipulation, and contract
their debts with reference thereto. This question,
many years ago, was nresented to the Supreme Court
; Dr(
of the United States ^ut the cause went off without
'v. Eamsbottom, 3 B. & Cressw. 257 ; Ex parte Feake, 1 Madd. B. 846 ;
Gow on Parta. ch. 5, § 2, p. 237, 238, 3d edit.
1 3 Chitty on Comm. and Manuf. ch. 4,, p. 226 ; Collyer on Partn. B. 5,
ch. 1, § I, p. 721 to 734, 2d edit.; 2 Bell, Comm. B. 7, ch. 2, § 2, p. 627
to 630. But see Powles v. Page, 3 Manning, Granger and Scott, R. 31.
[In Irvine v. Forbes, 11 Barbour, 587, it was held that the members of a
telegraph company, formed as a private association, were not partners, but
tenants in common, and that the majority had no power to bind the
minority, except by agreement.]
2 Collyer on Partn. B. 5, ch. 1, § 1, p. 730 to 734, 2d edit. ; Joseph v.
Pebrer, 8 Barn. & Cressw. 639 ; Blundell v. Winsor, 8 Sim. R. 601 ;
Walburn v. IngUby, 1 Mylne & Keen, 61, 76.
CH. Vm.] LIABILITIES AND EXEMPTIONS. 281
any decision upon tlie point. It seems to have been
thought, that such a stipulation can in no wise operate
as a limitation of the general liability of all the part-
ners for all their debts, even though the creditors have
full notice thereof.-^ It may, however, be still deemed
an open question, whether creditors, with such notice,
can proceed against the members upon, their general
responsibility, as partners, where they have expressly
contracted only to look to the social funds; and,
whether, if they have notice of the qualifying stipula-
tion, and contract with reference to it, it may not be
easy to assign a reason, why it does not amount to an
implied agreeinent to be bound by it, as much as if it
were expressly agreed to. There is certainly nothing
illegal in a creditor's agreeing to such a limited respon-
sibility, as a qualification or condition of his contract ;
and in many other analogous cases contracts of this
sort are deemed perfectly proper, and unexceptionable ;
1 See Blundell v. Winsqr, 8 Sim. E. 601 ; Walbum v. Ingilby, 1 Mylne
& Keen, 51, 76. — In tbis last case Lord Brougham said; " The clause
intimating that each subscriber is only to be liable to the extent of his
share, is not enough to make the association illegal. Such a regulation is
wholly nugatory, indeed, as between the company and straligers, and can
serve no purpose whatever, unless to give notice. In that light it is not to
be viewed as criminal, or as a means of deception ; for the publicity of it
may tend to inform such as deal with the company, and a proof of that
publicity in the neighborhood of parties so dealing might go to fix them
with notice. For any other purpose, &r the purpose of restricting the
liability of the shareholders, it would plainly be of no avail; and whoso-
ever became a subscriber upon the faith of the restricting clause, or of the
limited responsibility, which that holds out, would have himself to blame,
and be the victim of his ignorance of the known law of the lahd." This
language does, not seem necessarily addressed to a case, where the creditor
contracts with acknowledge of the restrictive clause ; but may be satisfied
by referring it to cases, where no such knowledge exists. The Vice-
Chancellor's decision, in 8 Sim. R. 601, is susceptible of a like interpreta-
tion. See Greenwood's case, 23 Eng. Law & Eq. R. 422.
24*
282 PARTNERSHIP. [CH. VHI.
as for example, where a commission merchant agrees
to look exclusively to the goods for the reimbursement
of his advances ; or a mortgagee agrees to look exclu-
sively to the mortgaged property for his debt. But
a qualified agreement of this nature must be proved,
and is never presumed without some reasonable proof
thereof
§ 165. The law of Scotland has recognized a distinc-
tion, grounded on these considerations, between the
nature, character, and effect of such joint associations,
arid those of mere private partnerships ; confining the
responsibility of shareholders in such companies to the
extent of three shares. This great question was tried
about the middle of the last century, in the case of the
Arran Fishing Company. The doctrine established in
that case was this ; That there is a clear distinction
between the case of a joint-stock company, and that of
a company trading without relation to a stock. That
in the former case, the managers are liable for the debt,
which they contract, while each partner is bound to
make good his subscription. That there is no ground
of further responsibility against the shareholders ; nei-
ther on their contract, nor on any ground of mandate,
beyond their share ; the very meaning of confining the
trade to a joint stock being, that each shall be liable
for what he subscribes, and no further. That in ordi-
nary partnerships, there is a universal mandate and a
joint prcepositura, by which each partner is institor of
the whole trade to an unlimited extent, each being lia-
ble in selido for the company debts.-' In this respect
the Scottish law seems to have followed the general
1 2 Bell, Comm. B. 7, p. 627, 628, 6th edit.
CH. Vni.] LIABILITIES AND EXEMPTIONS. 283
doctrine of the Roman law, that in all partnerships
each of the partners should be liable, not in soUdo, but
only for his own share.^ And this also is the general
rule of the Erench law in all cases, except of partner-
ships for commercial purposes, where, upon grounds
of public policy, each of the partners is held liable in
mlido}
\ 166. We have thus far considered the liabilities
and exemptions of partners in cases arising under con-
tracts ; and the inquiry next presented is, when, and
under what circumstances, partners are liable for torts,
done in the course of the partnership concerns, or by
any one of the partners under color thereof As to
torts not committed in the course of the partnership
business, it is very clear, that the partnership is not
liable therefor in its social character, unless indeed they
are assented to or adopted as the act of the partner-
ship. But torts may arise in the course of the busi-
ness of the partnership, for which all the partners will
be liable, although the act may not in fact have been
assented to by all the partners.* Thus, for example,
if one of the partners should commit a fraud in the
course of the partnership business, all the partners will
be liable therefor, although they have not all concurred
in the act.* So, if one of a firm of commission mer-
1 Dig. Lib. 45, tit. 2, L 11, § 1,, 2.
8 Pothier, de Society, n. 96, 103, 104.
3 CoUyer on Partn. B. 3, ch. 1, § 6, p. 305 to 307, 2d edit. ; Gow on
Partn. ch. 4, § 1, p. 160, 161, 3d edit.; Ex parte Eyre, 3 Montagu, Dea-
con & De Gex, R. 12. Stocltton v. Frey, 4 Gill, 406.
* CoUyer on Partn. B. 3, ch. 1, § 5, p. 296, 297 ; Id. B. 3, ch. 1, § 6,
p. 305 to 307, 2d edit. ; Gow on Partn. ch. 4, § 1, p. 160, 161, 3d edit.
See Rapp ». Latham, 2 Barn. & Aid. 795 ; Stone v. Marsh, 6 B. & Cress.
551 ; Kilby v. Wilson, Kyan & Mood. 179.
284 PARTNERSHIP. [CH. VIH.
chants should sell goods, consigned to the partnership,
fraudulently, or in violation of instructions, all the
partners would be liable foe the conversion in an act of
trover.-' So, if one of a firm, who are common carriers,
should unlawfully convert the goods intrusted to the
firm for carriage, or should negligently lose or injure
them, all the partners would, or might be held liable in
tort therefor.^ The same doctrine would apply to a
conversion or loss by the negligence or fraud of an
agent of the firm.^ So, if partners own a ship, and by
the negligence of the master, goods, shipped on board
on freight, are negligently injured or lost ; or another
ship is by such negligence injured by a collision with
her, the partners wiU be liable for the loss.* For in all
such cases the maxim applies ; Qui faeii per alium,
facit per se ; and the master in such a case acts n ot
only personally, but as the agent or prcepositus of the
entire firm.® The doctrine has been carried farther ;
and the partnership has been held liable- for a libel,
which was published and sold by ,one partner in the
course of the business of the firm, as, for example, by
a printer or bookseller, one of the firm in that business.®
' Collyer on Partn. B. 3, ch. 1, § 6, p. 305, 306, 2d edit. ; Nicoll v.
• Glennie, 1 Maule & Selw. 588.
2 Gow on Partn. ch. 4, § 1, p. 160, 161, 3d edit. ; Collyer on Partn. B.
3, ch. 1, § 1, p. 305, 306, 2d edit. ; Moreton v. Hardern, 4 Barn. &' Cress.
223.
3 Collyer on Partn. B. 3, ch. 1, ^ 5, p. 296, 297, 2d edit. ; Id. B. 3, ch.
1, 5 6, p. 305, 306 ; Id. B. 3, ch. 6, ^ 5, p. 505 ; Id. § 7, p. 527.
4 Gow on Partn. ch. 4, § 1, p. 160, 3d edit. ; Collyer on Partn. B. 3, ch.
1, § 6, p. 305 to 307, 2d edit. ; Mitehill v. Tarbutt, 5 Term K. 649 ; Morley
V. Gaisford, 2 H. Black. 242 ; Moreton v. Hardern, 4 Barn. & Cressw.
222.
5 Gow on Partn. ch. 4, § 1, p. 160, 3d edit.; Collyer on Partn. B. 3,
ch. 1, § 6, p. 305, 3d edit.; Watson on Partn. ch. 4, p. 235, 2d edit.
6 Watson on Partn. ch. 4, p. 241, 2d edit ; Kex v. Almon, 5 Burr. K.
'CH. VIII.] LIABILITIES AND EXEMPTIONS. 285
The sam& rule might apply to cases of written slander,
as by declaring a rival merchant a bankrupt, or a cheat,
if written in the name, and as the act of the firm. So,
if breaches of the revenue laws by fraudulent importa-
tions, or smuggling, or entries at the custom-house are
committed by one of the firm in the course of the busi-
ness thereof, all the firm would be liable penally, as
well as civilly, therefor.^
§ 167. But, in all cases of this sort, although the
partners are jointly liable as wrong doers, it by no
means follows, that they must all be sued. On the
contrary, as the law treats aU torts as several, as well
as joint, the party injured may, at his election, either
sue all the partners, or any one or more of them for
the tort ; and it wiU constitute no objection, that his
partners were also concerned in it.^ This is a rule by
no means peculiar to partnerships ; but it extends to
aU cases of joint torts and trespasses at the common
law, whether positive or constructive.
1 168. From what has been already suggested, it is
obvious, that a tort committed by one partner, or by
any other agent of the partnership, will not bind the
partnership, unless it be either authorized. Or adopted
by the firm, or be within the proper scope and business
2686 ; CoUyer on Partn. B. 3, ch. 1, § 6, p. 306, 2d edit.; Gow on Partn.
ch. 4, § 1, p. 161, 3d edit. ; Kex v. Pearce, Peake's K. 75; Rex v. Top-
ham, 4 Term E. 426 ; Eex v. Marsh, 2 Bam. & Cressw. 723 ; Rex v.
Stanny worth, Bunb. R. 97.
1 Collyer on Partn. B. 3, ch. 1, ^ 6, p. 306 to 308, 2d edit. ; Gow on
Partn. ch. 4, § 1, p. 161, 3d edit. ; Attor. General v. Surges, Bunb. R.
223.
2 CoUyer on Partn. B. 3, ch. 1, § 6, p. 306, 307, 2d edit. ; Id. B. 3,
ch. 6, § 3, p. 505 ; Id. p. 527; Gow on Partn. ch. i^ ^ 1, p. 160, 161, 3d
edit. ; Edmondson v. Davis, 4 Esp. R. 14 ; Attor. General v. Burgas,
Bunb. R. 223 ; Watson on Partn, ch. 4, p. 235, 2d edit.
286 PAETNEESmP. [CH. VIH,
of the partnership. And, as in either way, partners
may thus all be affected by the tort of . one partner, so
also a discharge or release of one, on account of the
tort, will amount to a discharge or release of all the
other partners. This, again, is the result of a general
rule of the common law, applicable to all cases of joint
torts and trespasses; and has been recognized from
the earliest times.-^
[§ 168 a. The distinction between the liability of the
firm, and of an individual partner for a tortious act,
committed by one partner on property in the custody
of the firm, is illustrated by a recent English decision.
Thus ; a customer deposited a box containing various
securities with his bankers for safe custody, and after-
wards granted a loan of a portion of such securities to
one of the other partners in the banking-house, for his
own private purposes, upon his depositing in the box
certain railway shares, to secure the replacing of the
securities. This partner afterwards, for his own pur-
poses, and without the knowledge of the customer,
subtracted the railway shares, and substituted others
of a less value. It was held, that, as the proceeds of
the railway shares were not applied to the use of « the
partnership, the banking firm were not answerable for
this tortious act of their partner for his own benefit,
nor for any loss occasioned by this subtraction of the
shares, on the ground of negligence.^]
§ 168 I. In respect to what acts of one partner the
1 Co. Litt. 232, a; Bac. Abridg. Release, (G-); Com. Dig. Release, B.
4 ; Id. Pleader, 3 M. 12; Kifan v. Willia, 4 Mod. R. 379.
2 Ex parte Eyre, 3 Montagu, Deacon & De Gex, R. 12. [See another
instance in Coomer v. Bromley, 12 Eng. Law & Eq. R. 307, where Blair
V. Bromley, 2 Ph. 354, is commented upon, and distinguished.]
CH. Vni.] LIABILITIES AM) EXEMPTIONS. 287
others will and ought to be held to have notice, so as
to bind them all by implied consent or acquiescence, it
may be laid down as a general rule, for the protection
of those who deal with partners, that a^ of the part-
ners have such knowledge and notice of the acts of
any of their partners relative to their business, as in
discharge of their plain duty they might or ought to
have obtained.^
1 Sadler u. Lee, The (English) Jurist, June 3, 1843, p. 476 ; S. C. 6
Beavan, R. 324.
288 PAETNERSHIP. [CH. IX.
CHAPTER IX.
RIGHTS, DUTIES, AND OBLIGATIONS OF PABTNERS BETWEEN
THEMSELVES.
§ 169. We come, in the next place, to the considera-
tion of the rights, duties, and obligations of Partners
between themselves. And here it may he stated, that
as the contract itself has its solid foundation in the
mutual respect, confidence, and belief in the entire
integrity of each partner, and his sincere devotion to
the business and true interests of the partnership;
good faith, reasonable skill and diligence, and the
exercise of sound judgment and discretion, are natu-
rally, if not necessarily, implied from the very nature
and character of the relation of partnership. In this
respect, the same doctrine applies, which ordinarily
applies to the cases of mandataries or agents for hire ; -^
and to other cases of bailment for the mutual benefit
of both parties. Hence, if the partnership suffers any
loss from the gross negligence, unskilfulness, fratld, or
wanton misconduct of any partner in the course of the
partnership business, he will ordinarily be responsible
over to the other partners for all the losses, and injuries,
and damages sustained thereby, whether directly, or
through their own liability to third persons.^ Of course
aU losses, injuries, and damages sustained by the part-
nership from the positive breach of the stipulations
contained in the articles of partnership, on the part of
Story on Agency, § 182 to 189; Story on Bailm. ^ 421, 455.
> Ibid.
CH. IX.1 EIGHTS AND DUTIES OF PARTNERS. 289
any partner, are to be borne exclusively by that part-
ner, and he must respond over to them therefor.
§ 170. This is the dictate of common sense and
justice ; and it has been expressly affirmed by the
Roman law. In relation to third persons, that law
declares, that partners are liable, not only for fraud,
but for negligence as well as fraud. ' Thus, in one
place, after enumerating other contracts, it is said;
Sed uU utriusque utilitas vertitur, ut in empto, ut in locate,
ut in dote, ut in pigrwre, ut in Societate, et dolus, et culpa
prcestatur} As between the partners themselves, the
like redress was also given. /Si quid dolo nostra socius
damni ceperit, a nobis repetet? Venit autem in hoc judi-
cium pro socio bdna fides. And again ; JJtrum ergo
tantum dolum, an etiam culpam prcestare socium oporteat,
queeritur ? Celsus ita scripsit. Sopios inter se dolum et
culpam proBstare oportet. Si in coeundd societate (inquit)
artem operamve pollicitus est alter, &c., nimirum ibi etiam
culpa prcestanda est. Quod, si rei communis nocuit, magis
admittit, culpam quoque venire.^ Again ; Socius pro socio
etiam culpce minime tenetur, id est, disidice atque negligentice.^
Again ; Si quis societatem ad emendum coierint, deinde res
alierius dolo vel culpa non empta sit, pro socio esse actionem
constat?' But it ia- added; Damna, quce imprudeniibus
acddunt, hoc est, damna fataUa, sacii non coguwtur prces-
tare? And the general principle, which runs through
1 Dig. Lib. 13, tit. 6, 1. 5, ^ 2; Pothier, Pand. Lib. 13, tit. 6, n. 12 ;
Story on Agency, § 182, 183 ; Pothier, Pand. Lib. 17, tit. 2, n. 27.
3 Dig. Lib. 17, tit. 2, 1. 59, § 1 ; Id. 1. 52, § 1 ; Pothier, Pand. Lib. 17,
tit. 2, n. 36 ; 1 Domat, B. 1, tit. 8, § 4, art. 3, 4, 7, 8.
3 Dig. Lib. 17, tit. 2, 1. 52, § 2 ; Pothier, Pand. Lib. 17, tit. 2, n. 36.
4 Dig. Lib. 17, tit. 2, 1. 52, \ 11 ; Pothier, Pand. Lib. 17, tit. 2, n. 36.
5 Dig. Lib. 17, tit. 2, 1. 52, § 11 ; Pothier, Pand. Lib. 17, tit. 2, n. 36.
6 Dig. Lib. 17, tit. 2, 1. 52, § 3 I Pothier, Pand. Lib. 17, tit. 2, n. 36 ; 1
Domat, B. 1, tit. 8, § 4, art. 3, 4.
PARTN. 25
290 PARTNERSHIP. [CH. IX.
the whole matter, is summed up in the following ex-
pressive words. Culpa autem non ad exactissimam dilir
gerdiam dirigenda est ; sufficit denim, talem diligsntiam
commimibus rebus adhibere, qualem suis relus adhibere
sold ; quia, qui parum diligentem sibi socium adquirit, de
se quceri debet} It would, perhaps, have heen more
exact to say, that in cases of partnership the same
diligence is ordinarily required of each partner, as
reasonable and prudent men generally employ about
the like business; unless the circumstances of the
particular case repel such a conclusion.^
§ 171. The same doctrine runs through the whole
structure of the French law on the same subject.^
Pothier even presses it to a somewhat further extent,
in which he also follows the Roman law, holding, that
a partner cannot absolve himself from losses, occasioned
by his fault and negligence in one business, by placing,
in opposition to such claim, as a compensation, the
profits, which he has brought to the partnership by his
industry and diligence in other business of the firm.
The reason he a,ffirms to be, that the partner, who thus
exerts his industry and diligence, does no more than
his duty thereto; and therefore the firm is not indebted
to him on that account.'' I^on oi- earn rem minus ad
periculmn socii pertind, quod negligentid ejus periisset,
quod in plerisque aliis industrid ejus societas aucta fuissd.
M ideo, si socius qucedam negligenier in societate egisset, in
plerisque autem socidatem auxissei, non compensatur conv-
1 Dig. Lib. 17, tit. 2, 1. 72; Pothier, Pand. Lib. 17, tit. 2, n. 36; 1
Domat, B. 1, tit. 8, § 4, art. 2, 3, 7, 8.
2 Story on Agency, § 182 to 185 ; Story on Bailm. ^ 11, 13, 14, 15,
18 • Id. \ 455; Jones on Bailm. p. 98; Pothier, De Society, n. 124.
3 Pothier, De Societfe, n. 124, 125.
* Pothier, De Society, n. 125.
CH. IX.] RIGHTS AND DUTIES OF PARTNERS. 291
pendium cum negligenlid} The doctrine, tlius stated,
although somewhat strict and austere, may perhaps be
deemed salutary and convenient, as creating a deep
interest in partners to perform all their duties with
fidelity and diligence. It does not, however, seem to
have been held applicable to a series of connected acts,
aU of which form a part of the same entire business
transaction, such, for example, as the sale of a cargo
of goods by one partner, who manages the whole sale,
where, although there may be some negligence, as to
the sale of a part, by which some loss has been incur-
red, yet there has been a great profit upon other parts;
so that the loss is much more than compensaled for by
the extra rate, of profits.
§ 172. The necessity of entire good faith, and of"
the absence of fraud on the part of partners towards
each other, is inculcated by Cicero in terms of deep
import and sound morality. In rebus minoribus socium
fallere, turpissimum est ; neque injuria; propterea quod
auxiliwm sibi se putat adjunxisse, qui cum altera rem com-
municavit. Ad cujus igitur fidem con fugiet, cum per ejus
fidem Iceditur, cui se commiserit ? Atque ea sunt animad-
vertenda peccccta, maxim,e, quce difficillime prcecaventur.
Tecti esse ad alienos possumus ; irdimi mutta apertiora
videant neeesse est. Socium vero cavere qui possumus ?
Quern etiam si metuimus, jus officii kedimus. Becte igitur
majores eum, qui socium fefellisset, in virorum bonorum
numero non putdrunt haberi oportere? The Roman Law
has also, expressed the obligation of good faith in
1 Dig. Lib. 17, tit. 2, 1. 25, 26 ; Pothier, Pand. Lib. 17, tit. 2, n. 29 ; 1
Domat, B. 1, tit. 8, § 4, art. 8.
3 Cicero, Pro Roscio. Amer. ch. 11, cited by Puffendorf, B. 5, ch. 8, § 4,
and by CoUyer on Partn. B. 2, ck 2, p. 117, 2d edit.
292 PARTNERSHIP. [CH. IX.
exceedingly strong language. In sodetatis contradikm
fides exuleret} Good faith not only requires, that
every partner should not make any false representation
to his partners, but also that he should abstain from all
concealments, which may be injurious to the partner-
ship business. If, therefore, any partner is guilty of
any such concealment, and derives a private benefit
therefrom, he will be compelled in equity to account
therefor to the partnership. Upon the like ground,
where one partner, who exclusively superintended the
accounts of the concern, had agreed to purchase the
share of his copartners in the business for a sum,
which he' knew, from the accounts in his possession,
but which he concealed from them, to be for an inade-
quate consideration, the bargain was set aside in
equity, as a constructive fraud; for he could not in
fairness deal with -the other partners for their share of
the profits of the concern without putting them in
possession of all the information, which he himself had
with respect to the state of the accounts and the value
of the concern.^
§ 173. One of the most obvious duties and obli-
gations of all the partners is, strictly to conform
themselves to all the stipulations contained in the
partnership articles;^ and also to keep within the
bounds and limitations of the rights, powers, author-
ities, and acts, belonging and appropriate to the due
discharge of the partnership trade or business. Of
course, every known deviation from, and evei;y excess
in the exercise of such rights, powers, authorities, and
1 Cod. Lib. 4, tit. 87, 1. 3 ; 1 Domat, B. 1, tit. 8, § 4, art. 1, 2.
2 Maddeford v. Austwick, 1 Sim. E. 89.
3 CoUyer on Partn. B. 2, ch. 2, § 2, p. 131 to 161, 2d edit.
CH. IX.] EIGHTS AND DUTIES OP PARTNEES. 293
acts, which produce- any loss or injury to the partner-
ship, are to that extent to he borne by the partner,
who causes or occasions the loss or'injury, and he is
bound to indemnify the other partners therefor.^ The
1 The doctrine here stated is sometimes of great practical importance in
the settlement of partnership accounts. An illustration of it occurred in
the case of Stoughton v. Lynch, (1 Johns. Ch. K. 467,) as to funds, which
one partner had withdrawn from the partnership contrary to the articles.
On that occasion, Mr. Chancellor Kent said; " The articles of copartner-
ship intended to preserve, in a stSte of progressive accumulation, the
funds of the house ; and the clause, upon which the question before me
hasarisen, is to be taken strictly. This is evidently the sense and spirit
of the agreement. It is expressly stipulated, that the capital and profits
of the company were to remain in the house, and to be employed for the
benefit of the concern, during the partnership, with this special exception,
that such part only was to be withdrawn, as might be necessary for private
expenses. And to show the care, with which the parties guarded the
funds from being diverted by either of thep, it was further stipulated,
that neither of them was to do business at New York on their private
account, nor lend any of the capital stock, or enter into acceptances ; but
each party was to do his best to promote' the advantage of the company.
After reading these articles, it is impossible not to view most of the
charges, which the defendant wishes to include under the special excep-
tion, as palpably inadmissible. To consider plate, musical instruments,
carriages and horses, and the whole furniture of a house, as coming
within the permission granted to the parties to withdraw the funds of the
house only when necessary for private expenses, is, in my judgment, an
unreasonable and extravagant pretension. The object of the decretal
order, of last July, was, not to exempt from interest all those moneys
withdrawn, that were not supposed to be employed in land speculations.
I then observed, that, if the funds so withdrawn had been employed in
trade, the party would have had to account, not merely for interest, but
for the profits of that trade ; and we find authority for this in Brown v.
Litton, (1 P. Wms. 140,) and in Crawshay v. Collins, (15 Ves. 218,)
where the principle is stated, that if on^ partner trade alone on a joint
stock, he shall divide the profits. The least that I could do, in this case,
was to make him pay interest on all moneys withdrawn beyond the private
necessity expressed in the contract. The interest of the parties as joint
traders, the obvious policy and meaning of the contract, and that good
faith, which is the animating principle in all mercantile associations,
unitedly concur in recommending us to view the claims set up by either
party, under the exception, with a jealous and scrupulous eye. Without
25*
294 PARTNERSHIP. [CH. IX.
same doctrine is recognized by Pothier, as existing in
the French law ; ^ and it seems, indeed, so clearly the
result of natural* justice, as to require no particular
exposition.^
§ 174. But there are many implied duties and obli-
gations of an equally important, although not perhaps
always of so obvious, a nature. Thus for example, it
is a violation of good faith, for any partner, in conduct-
ing the partnership business, to stipulate clandestinely
with third persons for any private and selfish advantage
and benefit to himself, exclusive of the partnership ;
such a rule of construction, a partnership, like the present, with all its
provisions to preserve the funds of the house untouched, might soon
languish under the carelessness, or dissipation, or discordant and rival
views, of either of the contracting parties. The parties, then, had in
view, that funds were to b^ withdrawn only when necessary for private
expenses ; and when at any time withdrawn, the party must have done it
with a view to that necessity. That must have been the purpose, for
which they were withdrawn. The more safe and regular way would have
been, to have stated, in each case, the object of the appropriation, so that
each party, at, the end of every year, when a fair balance of the books,
according to the articles, was to be made, signed, and approved, might
have known and judged of the requisite appropriation. But it would,
perhaps, be too rigorous to require the production of such an original
entry to justify every such appropriation; and I am willing even to
presume, that a fair and reasonable sum, drawn away in each year, was
necessary for the private expenses of each individual partner during that
year. Beyond this presumption I cannot go. All the European expenses
of the defendant are, therefore, to be laid out of the case ; because, as I
understand from the suggestions of the counsel upon the argument, there
was no concurrent, or any thing like cotemporary, appropriations, or
drafts, with any presumed reference to those expenses. I am to presume,
then, and I do presume and believe, that the defendant never deemed it
necessary, at the time, to recur to the permission granted under these
articles, to meet and defray those expenses. The idea of including them
under this article was an after thought, arising many years after those
expenses had been borne and forgotten."
1 Pothier, De Society, n. 133.
9 Pothier, Pand. Lib. 17, tit. 2, n. 36 ; 1 Domat, B. 1, tit. 8, § 4, art. 3,
4, 7.
CH. IX.] RIGHTS AND DUTIES OF PARTNERS. 295
for all the partnership property and partnership con-
tracts should be managed for the equal benefit of all
partners, according to their respective interests and
shares therein.' If, therefore, any one partner should .
so stipulate clandestinely for any private advantage or
benefit to himself, to the disadvantage, or in fraud of
his partners, he "will in equity be compelled to divide
such gains with them.^ The same principle will apply
to clandestine bargains for his own private advantage
and benefit, made in contemplation of establishing a
partnership with other persons, and as a premium for
his services therein.^ So, if a purchase is made on the
partnership account by one partner, who clandestinely
stipulates and receives any reward or allowance from
the seller, for his own private profit, he will be com-
pelled to share the same with his partners.* So, where
one partner obtains the renewal of a partnership lease
secretly in his own name, he will be held a trustee for
the firm in the renewed lease.^
1 CoUyer on Partn. B. 2, ch. 2, § 1, p. 117 to 120, 2d edit. ; 3 Kent,
Comm. Lect. 43, p. 51, 4th edit.
2 Ibid. ; Russell v. Austwick, 1 Sim. R. 52.
3 Fawcett v. Whitehouse, 1 Russ. & Mylne, 132, 148, 149 ; Hickens v.
Congreve, 4 Russ. R. 562.
* Carter v. Home, 1 Eq. Cas. Abridg. Account, A. pi. 13.
5 Featherstonhaugli v. Fenwick, 17 Ves. 298 ; Hitchens v. Congreve, 1
Russ. & Mylne, 150, note B. ; S. C. 4 Russ. R. 562 ; CoUyer on Partn. B.
2, ch. 2, § 1, p. 120, 121, 2d edit. ; Dougherty v. Van Nostrand, 1 Hoffm.
R. 68, 69, 70; But see Anderson v. Lemon, 4 Sandf. 552. — Lord Eldon,
in Feattierstonfaaugh v. Fenwick, (17 Ves. 311,) said; "It is clear, that
one partner cannot treat privately, and behind the backs of his copartners,
for a lease of the premises, where the joint trade is carried on, for his own
individual benefit. If he does so treat, and obtains a lease in his own
name, it is a trust for the partnership ; and this renewal must be held to
have been so obtained. Consider, what an unreasonable advantage one
partner would, upon a different principle, obtain over the rest. In this re-
spect, there can be no distinction, whether the partnership is for a definite.
296 PARTNERSHIP. [CH. IX.
§ 175. The same doctrine is applied to other analo-
gous cases. In all purchases and sales, made on ac-
count of the partnership, every partner is bound to act
or indefinite period. If one partner might so act in the latter case, he might
equally in the former. Supposing the lease and the partnership to have
different terms of duration, he might, having clandestinely obtained a re-
newal of the lease, say to the other partners, ' The premises, on which we
carried on our trade, have become mine exclusively ; and I am entitled
to delnand from you whatever terms I think fit, as the condition for per-
mitting you to carry on the trade here.' Is it possible to permit one part-
ner to take such an advantage ? When the application was made for a
renewal, no notice of dissolution had been given ; nor had the plaintiff
notice of any intention of renewing the lease. It is not true, as has been
represented, that the impediment to a renewal to the partnership arose
solely from the indisposition of Mr. Wilkinson to any connection with the
plaintiff; as, before any objection had been made on that or any other
ground, the defendant goes with the intention, and for the direct purpose,
of obtaining a renewal for himself and his son exclusively. He makes
the application to Murray ; who says, the proposal was for a renewal for
the benefit of the defendants ; expressly excluding the plaintiff, with
whom it was represented, that George Fenwick was determined to have
no further connection in trade ; and though it may be true, that Wilkinson
afterwards said, he would not have granted a lease to the defendants jointly
with the plaintiff, that declaration had become quite unnecessary, by the
resolution, previously expressed by the defendant, not to take a lease jointly
with him. This clandestine conduct was very unfair towards the plaintiff.
The defendants had not intimated to him, that they would not have any
further connection with him, and that they intended to apply for a lease
on their own account. They ought first to have given him notice, and to
have placed him on equal terms with them ; and then, if Mr. Wilkinson
had thought proper to give them the preference, the case might admit of a
different consideration. Instead of that, they clandestinely obtained an
advantage, which would enable them to dissolve the partnership on terms
very unfavorable to the plaintiff; and they evidently had that object in
view. If they can hold this lease, and the partnership stock is not brought
to sale, they are by no means on equal terms. The stock cannot be of
equal value to the plaintiff, who was to carry it away, and seek some place,
in which to put it, as to the defendants, who were to continue it in the
place where *he trade was already established ; and if the stock was sold,
the same circumstance would give them an advantage over other bidders.
In effect they would have secured the good- will of the trade to themselves,
in exclusion of their partner."
CH. IX.] EIGHTS AlilD BTJTIES OF PAETNEKS. 297
expressly for the benefit of the partnership ; and, there-
fore, he has no right, and cannot, consistently with his
duty, voluntarily place himself in a situation, in which
his bias, as well as his interest, is in opposition to the
interest of the partnership. Thus, if a partner buys
goods for the partnership account, and makes the bar-
gain by a barter of his own private goods on his own
sole account, and charges the partnership with the full
cash value and price of the goods, as if they were
bought for cash ; it will be a constructive fraud upon
the partnership j and he will be compelled in equity to
account for any private profit, so made in the barter.-'
The same rule will apply to the converse case of a sale
of the partnership property under the like circumstan-
ces ; for the general doctrine is, that there is an im-
plied obligation between partners, that they are to use
' Burton v. Wookey, 6 Madd. R. 367; Collyer on Partn. B. 2, ch. 2,
§ 1, p. 122, 2d edit. — On this occasion Sir John Leach (the Vice-Chan-
cellor) said; " It is a maxim of the Courts of Equity, that a person, who
stands in the relation of trust or confidence to another, shall not be per-
mitted, in pursuit of his private advantage, to place himself in a situation,
which gives him a bias against the due discharge of that trust or confi-
dence. The defendant here stood in a relation of trust or confidence
towards the plaintifi", which made it his duty to purchase the hpis ccdami-
naris at the lowest possible price ; when, in the place of purchasing the
lapis calaminaris, he obtained it by barter for his own shop goods, he had
a bias against a fair discharge of his duty to the plaintiff. The more goods
he gave in barter for the article purchased, the greater was the profit,
which he derived from the dealing in store goods ; and as this profit be-
longed to him individually, and as the saving by a low price of the article
purchased was to be equally divided between him and the plaintiff, hie
had plainly a bias against the due discharge of his trust or confidence
towards the plaintiff. I must, therefore, decree an account of the profit
made by the defendant in his barter of goods, and must declare, that the
plaintiff is entitled to an equal division of that profit with the deflndant."
6 Madd. R. 367.
298 PARTNERSHIP. [CH. K.
the partnership property for the benelBt thereof, and
not otherwise.-^
§ 176. This wholesome principle of justice has been
adopted in many other cases, where peculiar relations
exist between the parties, by Courts of Equity.^ Poth-
ier has directly applied it, not only to cases of bargains
during the partnership,^ but also to a case, where a
partner contemplates a dissolution solely to aid his own
sinister and selfish purpos«s. In order (says he) to
enable a partner to dissolve a partnership, two things
must concur; (1.) the renunciation of the partnership
must be made in good faith ; (2.) it must not be made
at an unreasonable time {contre temps.) Deiet esse fdcta
Imd fide et tempestive. The renunciation is not made
in good faith, when the partner renounces to appropri-
ate to himself alone the profits, which the other part-
ners proposed for the partnership, when it was formed.'*
This is the very doctrine inculcated by Courts of Equity
under the like circumstances.® It is also the doctrine
of the Roman law. Si soeietatem ineamus ad aliquam
rem emendam ; deinde solus volueris earn emere, ideoque
renuntiaveris sodetati, id solus emeres ; teneberis quanti in-
terest mea. Sed si idea renuntiaveris, quia emptio tibi dis-
plicelat, non teneheris quamvis ego emero ; quia hie nulla
fraus est.^
§ 177. Upon similar grounds it is the implied obU-
1 Crawshay v. Collins, 15 Vea. 218, 227.
2 1 Story, Eq. Jurisp. ^ 315, 316, 321 ; Id. § 221 ; 2 Story, Eq. Jurisp.
§ 1261, 1265 ; Stoughton v. Lynch, 1 Johns. Ch. R, 470.
3 Pothier, de Societ6, n. 59.
* Pothier, de Society, n. 150.
5 Featherstonhaugh v. Feriwiok, 17 Ves. 298.
6 Dif. Lib. 17, tit. 2, 1. 65, § 4 ; Pothier, Pand. Lib. 17, tit. 2,. n, 64 ;
1 Domat, B. 1, tit. 8, § 4, art. 5, 17.
CH. IX.] EIGHTS AND DUTIES OF PARTNERS. 299
gation and duty of every partner, not to engage in any
other business or speculation, wMch must necessarily
deprive the partnership of a portion of the skill, indus-
try, diligence, or capital, which he is hound to employ
therein.^ In other words, he is not at liberty to deal
on his own private account in any matter or business,
which is obviously at variance with, or adverse to, the
business or interest of the partnership. The object of
this prohibitory rule is, to withdraw from each partner
the temptation to bestow more attention, and to exer-
cise a sharper sagacity in respect to his own purchases^
and sales, and negotiations, than he does in respect to
the- concerns of the partnership, in the same or in a
conflicting line of business.^ It is, therefore, a rule
founded in the soundest policy. Pothier lays down the
same rule, and inculcates it in emphatic language, in-
sisting that no partner has a right to prefer his own
particular interest to that of the firm, or to take away
the profits of a bargain from the firm, and appropriate
them to his own private advantage.^ Boulay Paty
is equally expressive on the same subject ; and he
applies it, as well to cases of masters of ships, as to
partners.*
§ 178. If, therefore, one partner should clandestinely
carry on another trade, or the same trade, for his own
private advantage, and in a manner injurious to the
true interests of the partnership, or should divert the
capital or funds of the partnership to such secret and
sinister purposes, he will be compelled in equity to ac-
? 3 Kent, Comra. Lect. 43, p. 51, 4tli edit.; Burton v. Wookey, 6 Madd.
■R.367.
2 3 Kent, Comm. Lect. 43, p. 51, 4th edit.
3 Potliier, de Society, n. 59.
4 Boulay Paty, Droit Comm. Tom. 2, § 19, p. 94.
300 PARTNERSHIP. [CH. IX.
count for all the profits made thereby.^ So, if one
partner should purchase articles upon his own private
account in some special trade and business, in which
the partnership was engaged, and injuriously to the
partnership, as for example, by purchasing lapis cahmir
naris of neighboring miners, on his own private account,
that being also the business of the partnership, he would
be held to account for the profits made thereby.^ In-
deed, Courts of Equity will go farther in cases of this
sort, and restrain the partner by injunction from carry-
ing on any trade or business, which is thus inconsistent
with the rights and interests of the partnership ; for
(as has been well remarked) the principles of Courts
of Equity will not permit, that parties, bound to each
other, by an express or implied contract, to promote an
undertaking for the common benefit, should any of them
engage in another concern, which necessarily gives
them a direct interest adverse to that undertaking.^
But if there be no such necessary conflict or incom-
patibility of interests, the mere circumstance, that the
partner may thereby be exposed to the temptation to
be dishonest, or to abuse his trust, or to betray his duty,
has not been thought sufficient to justify Courts of
Equity in imposing such restraint by injunction.*
§ 179. The principle and the exception may readily
be illustrated by the case of two rival morning news-
papers, and two eveningl newspapers. All newspapers
1 Long V. Majestre, X Johns. Ch. R. 305 ; Glassington v. Xhwaites, 1
Sim. & Stu. K. 124, 183 ; 3 Kent, Comm. Lect. 43, p. 51, 4th edit. ; Bui>
ton V. Wookey, 6 Madd. E. 367 ; Stoughton v. Lynch, 1 Johns, Ch. R.
467, 470.
2 Burton v. Wookey, 6 Madd. R. 367.
3 Glassington v. Thwaites, 1 Sim. & Stu. 124, 133.
< GlaBsington v. Thwaites, 1 Sim. & Stu. 124, 183.
CH. IX.] BIGHTS AND DUTIES OF PAKTNEES. 301
are, to some extent, rivals; and there is also neces-
sarily some degree of rivalry between a morning and
an evening paper, especially in "the country. The
question may, therefore, very properly arise in many
cases, whether a person, engaged as a partner in the
management of a morning paper, is at liberty to assist
with his skill, labor, and property, the publication of
an evening newspaper, which may affect the interests
of the former; If both papers are published in the
same city, for the like general circulation, it will be
difficult to escape the conclusion, that the interest in
the one is adverse to, and in conflict with that of the
other. But, if one is published in another city, or one
is designed mainly for city circulation, and the other
exclusively for country circulation, or the one is a daily,
and the other a weekly paper, the same conflict and
adversary interests may not arise ; and the nature and
objects of the particular papers, as well as the habits
and usages of the trade, may furnish material ingredi-
ents for a distinction between the cases.^
1 Glassington v. Thwaites, 1 Sim. & Stu. 124, 131, 133. — On this occa-
sioii Sir John Leach (the Vice-Chancellor) said ; " All newspapers are to
some extent rivals. The competition is more immediate between two-
morning papers and two evening papers ; but there is necessarily some
degree of rivalry between a morning and an evening paper, especially in
the country. It might, therefore, have been made a question, whether it
would be a due act of management in the partnership concert of a morn-
ing paper, to assist with its property and its labor the publication of any
other newspaper, so as to enable the majority of the partners in that re-
spect to bind the minority. But the question does not arise ; because the
plaintiff himself is to be considered as a party to the practice, before his
copartners became, the proprietors of the evening paper ; and because .
there is evidence, that the proprietors of other morning papers have
adopted the same practice with respect to other evening papers, so as to
form a sort of usage in the trade to this effect. And it is to be considered,
that the annual sum, paid by the evening paper for ^the accommodation
afforded to it, outweighs the danger of increased competition. The true
PARTN. 26
302 PARTNERSHIP. [CH. IX.
§ 180. Cases of a very delicate and embarrassing
nature sometimes arise in cases of partnership, where
one partner dies, and one or all of the survivors are
appointed his executors, and the partnership is con-
tinued as betweeh the survivors. Under such circum-
question here is, whether it makes any difference, that the other proprie-
tors of the Herald have now become the proprietors of the evening paper ;
and I think it does not make a material difference. It is true, that a con-
siderable part of the expense of a newspaper is occasioned by procuring
information ; and if some of the proprietors of a morning paper are also
the proprietors of an evening paper, they may have a stronger interest to
promote the success of the evening paper than of the morning paper, and
a strong temptation to use the information obtained at the expense of the
morning paper for the benefit of the evening paper. This temptation
forms a powerful objection in all cases to the partner in the concern of one
newspaper being permitted to be a partner in the concern of any other
newspaper. But it is an objection founded on the principle of policy and
discretion, against which parties may protect themselves by their contracts;
and accordingly, it is a common covenant in such partnership articles, that
no partner shall be the proprietor of any other newspaper. In the pre-
sent case, there is actually a covenant, that the proprietors will not be con-
cerned in any other morning paper, which, by implication, affords the
conclusion, that it was the intention of the parties, that they might engage
in the concern of any evening paper. Where there is no such covenant
of restraint, it is clear, that, at law, a partner in one newspaper may be a
proprietor in any other newspaper ; and in this case, equity must follow
law ; and it cannot be intended, that the parties meant to impose a re-
straint, which they might have expressed, and have not expressed! and
where it is plain their attention was directed to the subject. The princi-
ples of courts -of equity would not permit, that parties, bound to each
other by express or implied contract to promote an undertaking for the
common benefit, should any of them engage in another concern, which
necessarily gave them a direct interest adverse to that undertaking. But
the argument here is, not that the defendants, by becoming the proprie-
tors of the evening paper, place themselves in a situation, in which they
are necessarily required to betray their duty to the morning paper ; but
that, if their interest be greater in the evening paper than the morning
paper, they are exposed to a temptation to be dishonest and to betray their
duty to the morning paper. If they act honestly, it is immaterial to the
morning paper, whether the defendants are or not the proprietors of the
evening paper. And for this reason it is, that it makes no difference in
the present case, that the defendants have become the proprietors of the
evening paper."
CH. IX.J RIGHTS AND DUTIES OF ITARTNERS. 303
stances, it may be difficult to say, that there may not
sometimes arise conflicting duties and obligations in
their different acts and characters, as partners and as
executors. StiU greater embarrassments may occur,
where the executors also sustain the character of guar-
dians of the children of the testator, who by the articles
have a right upon arriving at their majority to come
into the firm. It has been weU remarked by a learned
writer, that it is clear, that surviving partners so situ-
ated, have inconsistent duties to perform. It is true,
that the difficulties of this situation are not so obvious,
where the parties claiming under the testator are all
sui juris, as where some of them are infants. But
even in the former case, the surviving partner cannot,
without the full knowledge and consent of these
parties, make his situation of executor a means of
advantage to his copartnership ; and in the latter case,
the difficulties, in the absence of specific contract,
seem to be insuperable, unless the whole partnership
concern be wound up, or recourse be had to a Court of
Equity.^
' Collyer on Partn. B. 2, ch. 2, § 1, p. 123, 2d edit.; Id. B. 2, ch. 3,
§ 4, p. 210, 211. — The case of Wedderburn v. Wedderburn, (2 Keen, K.
722 ; S. C. 4 M. & Craig. B. 41,) demonstrates the truth of these remarks.
In that case the accounts of successive partnerships and retirements of
partners, after the death of the first partner, (the testator,) were over^
hauled in equity, after a lapse of thirty years from the testator's death.
The decretal order in that case contains the form of the proper order to
be made in such cases, and may serve as a valuable precedent. (2 Keen,
R. 752, 753.) This case was affirmed upon the appeal by Lord Cottenham,
who then used the following language. " I have had many occasions to
consider, and have frequently expressed my sense of the difficulties, which
the Court has to encounter in administering equity according to its ac-
knowledged principles in cases of this description. So many decisions
have established the right of parties to participate in the profits of trade,
carried on under circumstances similar to the present, that no question
can be raised as to the duty of the Court in decreeing such relief, when a
304 PAETNEESHIP. [CH. IX.
§ 181. In the next place, there is an implied obliga-
tion and duty upon all the partners, as a matter of
good faith, to which they are mutually pledged to each
other, that the business of the partnership shall be
conducted in such a manner, as that each of the part-
ners may be enabled to see, that it is carrying on foj
their mutual advantage, and not injariously to the
common interest.^ It seems, therefore, the proper duty
of each partner to keep precise accounts of all his own
transactions for the firm, and to have them always
ready for inspection and explanation.^ And if one
partner receives any moneys for the partnership, he
ought at once to enter the receipt thereof in the books
of the firm, so that the same may be open to the in-
spection of all the part^ners.^ This, indeed, is one of
proper case arises for it ; but it is obvious, that very great difficulties exist
in enforcing this right. Great expense, great delay, and great hardship
.upon the defendants frequently attend the prosecution of decrees for this
purpose, and the apparent benefit decreed to the plaintiff is frequently
much diminished, if not lost, in the attempt to enforce it. For these rea-
sons it appears to me, that these are cases, in -which, above all others, it is
for the interest of all parties to settle the matters in contest between them
by private arrangement and compromise; and I earnestly recommend to
the parties to take this into theirserious consideration. I have no doubt
but that a settlement might be effected, which would secure to the plain-
tiffs more than they can possibly obtain from the most successful prosecu-
tion of the decree, and which would, at the same time, protect the
defendants against much of the expense, inconvenience, and hardship, to
which they must be exposed if it be adversely prosecuted. This, however,
is entirely for their private consideration. My duty is only to dispose of
the matters litigated upon this appeal, which, for the reasons I have
before given, I now do by dismissing the appeal with costs." 4 Mylne &
Craig. 55.
1 CoUyer on Partn. B. 2, ch. 2, § 1, p. 126, 2d edit. ; Peacock v. Pea-
cock, 16 Ves. 49, 51 ; 3 Chitty on Comm. & Manuf. ch. 4, p. 236.
2 Collyer on Partn. B. 2, ch. 2, § 1, p. 121, 126, 2d edit. ; Id. B. 2 ch.
2, § 2, p. 142 ; Kowe w.Wood, 2 Jac. & Walk. 553, 558 ; Ex parte Yonge,
3 Ves. & B. 36.
3 Goodman v. Whitoomb, 1 Jac. & Walk. 569, 573.
CH. IX.] EIGHTS AND DUTIES OF PAETNERS. 305
the ordinar J stipulations of partnership articles ; but it
is a mere affirmance of the general doctrine of the law.-'
It follows from these considerations, that one partner
cannot exclude another from a personal interposition,
and an equal management in the concerns of the part-
nership. The powers of all are in this respect coordi-
nate and coextensive, whether the partnership be in
full operation, or be subsisting only for the purpose of
winding up the affairs thereof.^ There may be excep-
tions and limitations growing out of the particular
articles or other incidents of the partnership, a^ where
one partner has sole authority to act in the manage-
ment of the concern ; or where one partner is the sole
owner of the property, and the other partners are only
to share the profits.^ The Roman law inculcated a
similar doctrine ; and if one partner was prevented by
the others from an equal participation in any of the
partnership property, he might, even during the con-
tinuance thereof, maintain an action pro socio.^
% 182. In the next place, as there is an implied
obligation in every partner to exercise due diligence
and skill, and to devote his services dnd labors for the
promotion of the common benefit of the concern, it
hence follows, that he must do it without any reward
or compensation, unless, indeed, it be expressly stipu-
lated for between the partners, as it well may be under
peculiar circumstances.® The reason is, that each
1 CoUyer on Partn. B. 2, eh. 2, § 2, p. 142, 2d edit.
3 CoUyer on Partn. B. 2, ck 2, ^ 1, p. 126, 2d edit.; Bowe w. Wood, 2
Jac. «E Walk. 552, 558.
3 Ibid.
* Dig. Lib. n, tit. 2, 1. 52, § 13 ; Pothier, Pand. Lib. 17, tit. 2, n. 33.
5 Thornton v. Proctor, 1 Anst. B. 94 ; Franklin v. Bobinson, 1 Johns.
Ch. E. 157, 165 ; Bradford v. Kimberly, 3 Johns. Ch. B. 431, 434 ; Cald-
26*
306 PAETNEESHIP. [CH. IX.
partner, in taking care of the joint property, is in fact
taking care of his own interest, and is performing his
own duties and obligations, implied in, and constituting
a part of, the consideration for the others to engage in
the partnership; and the law never undertakes to
measure and settle between the partners the relative
value of their various and unequal services bestowed
on the joint business, for the obvious reason, that it is
impossible to see, how far in the original estimate of
the parties, when the connection was formed, the rela-
tive ex;perience, skill, ability, or even the known cha-
racter and reputation of each, entered as ingredients
into the adjustment of the terms thereof.^
[§ 182 a. Interest, on advances of capital by one of
the partners to the firm, wUl be allowed, where there
is any agreement or understanding to that effect.^
But it has been distinctly declared by an American
court that, in the absence of any such evidence,
neither of the partners will be entitled to interest on
advances before a general settlement or dissolution.®
An eminent English judge has intimated a contrary
opinion. According to him, the law is not clear, that,
where partners are equally laborious and equally atten-
, well V. Lieber, 7 Paige, R. 483 ; Burden v. Burden, 1 Ves. & Beam. 1 70 ;
Lee D. Lashbrook, 8 Dana, R. 219 ; Whittle «. MoFarlane, 1 Knapp, R.
312, 315 ; Lewis «. Moffat, 11 Illinois R. 392.
1 Ibid.
s CoUyer on Partn. (Perkins's edit.) B. 2, eh. 3, § 388, note, p. 309 ;
Winsor v. Savage, 9 Mete. R. 346 ; Hodges v. Parker, 1 7 Vermont R.
242 ; Willandon v. Sylvestre, 8 Curry, (Louis.) 262 ; Reynolds v. Mardis,
17 Ala. 32.
3 Lee V. Lashbrooke, 8 Dana, R. 214; Jones r. Jones, 1 Iredell, Eq. R.
332; Honore v. CoUnesnil, 7 Dana, R. 199 ; Waggoner «. Gray, 2 Hen;
& Munf. 603; Dexter v. Arnold, 3 Mason, R. 284; Desha v. Smith, 20
Ala. 747.
CH. IX.] EIGHTS AND DUTIES OP PARTNERS. 307
tive to the business, interest should not be allowed
on any excess of capital, and the parties thus be put
on equal terms in that respect. " Can one believe," he
says, commenting on the facts of a case in judgment,
" that the party, io whom the whole capital belonged,
renounced his advantage in that respect, and continuing
to take an equally laborious part in the transaction of
the business, should bring in his whole income, both
partnership and private, and yet intend to reserve no
advantage of that income upon the settlement of
accounts between himself and copartner ? I must say,
I have a great diflSculty in coming to such a conclusion
asthat.^"]
§ 183. Nor is good faith alone required in all
partnership acts ; but also the exercise of a sound and
reasonable discretion by each partner, for the mutual
benefit and interest of the concern. It is, therefore,
the duty of each partner to avoid transgressing or-
abusing in any way the ordinary privileges of a
partner in the management of the concern; as, for
example, by profuse, or wanton, or unnecessary ex-
penditures in the partnership business, or by rash and
imprudent speculations, or by negligent or extravagant
sacrifices of the partnership property.^ Even where a
right is reserved to one partner to as'sign his share to
another, who shall thereby be entitled to admission as
a partner, good faith would seem to require, that the
assignment should be to a person of competent skiU
' Millar v. Craig, 6 Beavan, R. 433 ; Hodges v. Parker, 17 Vermont R.
242; Stoughton v. Lynch, 1 Johnson, Ch. R. 467 ; Simpson v. Felts, 1
McCord, Ch. R. 213 ; The German Mining Co. in re, 19 Eng. Law & Eq.
R. 591 ; Beacham v. Eckford, 2 Sandford, Ch. R. 116. See post, § 349,
note 4.
2 Collyer on Partn. B. 2, ch. 2, § 1, p. 127, 2d edit.
308 PARTNBESHIP. [CH. IX.
and hanest}^.and not to a mere insolvent, or to a
known profligate ; for this would seem to be an abuse,
and not a fair exercise of the right of assignment.-'
§ 184. Pothier, in discussing the subject of the
rights, duties, and obligations of partners, in respect
to each other, has laid down a number of general rules,
as guides and principles. First. That each partner may
use the property, belonging to the partnership, accord-
ing to its proper use and destination, and not other-
wise, reciprocally allowing to his other partners the
like use and privilege.^ Second. That each partner
has a right to compel the other partners to bear their
share of the expenses, which are necessary for the
preservation of the common property.^ Third. No
partner has a right ibo make any material change or
innovation upon the common, permanent, or fixed pro-
perty, or inheritable estate of the firm, even though it
may be beneficial to the firm, without the consent of
1 Collyer on Parte. B. 2, ch. 2, § 1, p. 129, 130, 2d edit. ; 2 Bell, Comm.
B. 7, p. 620, 5tli edit. — In the case of Jeffreys v. Smith, (3 Russ. R. 158,
168,) Sir John Copley (Master of the Rolls) seemed to think, that the
insolvency of the assignee constituted no just objection. On that occasion
he said ; " It is said, that the assignment was colorable ; that is, that it was
made for the sake of securing the assignor from future liability. Suppose
he made it with that view, he had a right so to protect himself from future
liability. It is alleged, that the assignee was not a responsible person.
Let it be so ; Guppy, for the purpose of securing himself, had a right to
assign to a person not responsible. The only ground of objection would
be, that, though there was an assignment in form, there was an undei^
standing between the parties, that the assignee should be a trustee for the
assignor. Here there is no pretence for such a supposition. I must hold,
therefore, that, at all events, the assignment, coupled wi^h the notice,
freed Guppy from future liability." But ought not a Court of Equity to
interfere, where an assignment is made to a notoriously incompetent per-
son, or to one of bad and dissolute habits ? See 2 Bell, Comm. B. 7, p.
620, 5th edit.
2 Pothier, de Society, n. 84, 88.
3 Pothier, de Sooiet6, n. 86.
CH. IX. J RIGHTS AND DUTIES OF PARTNERS. 309
his partners ; for this is deemed an authority not dele-
gated by the firm, and which any one may prohibit
from being done.^ Fourth. No partner can alienate
or bind the property of the firm, except to the extent
of his own interest therein.^ These rules may not be
unreasonable in themselves ; but it cannot be affirmed,
that all of them have a just foundation in our law.
On the contrary, as we have seen, some of them are
repudiated.^ Pothier afterwards adds some other obli-
gations of partners inter sese; as for example, that
each partner is bound to account to the others for all
that he ow6s to the firm, deducting what is due to him
by the firm.* So, also, each partner is bound to
account to the extent of the share, which he has in the
partnership, for whatever is due to his other partners
by the firm, deducting whatever those partners owe to
the firm.® These rules seem little more than an
expansion of the principles of the Roman law on the
same subject.®
§ 185. This is but a very summary view of the lead-
ing rights, duties, and obligations of partners inter sese,
implied by law; and indeed a full enumeration of them,
with reference to the circumstances of each particular
kind of partnership, would be found at once tediously
minute, and of little value, even if it were practicable.
The rights, duties, and obligations of partners inter sese
must necessarily be expanded or restrained, to meet
1- Pothier, de Societe, n. 87, 88.
a Pothier, de Societ6, n. 89.
3 Ante, § 95.
* Pothier, de Society, n. 108. to 123.
5 Pothier, de Society, n. 108, n. 126 to n. 132.
6 Pothier, Pand. Lib. 17, tit. 2, n. 26 to n. 29 ; Id. a. 33 ; Id. n. 36. See
also 1 Domat, B. 8, tit. 8, ^ 4, art. 7, art. 10 to art. 16.
310 PAETNEESHIP. [CH. IX.
the exigencies of their peculiar trade and business ;
and general rules can do little more than to point out
the ordinary course in common transactions. We shall
have occasion hereafter to consider the rights, duties,
and obligations, expressed in, and arising under articles
of partnership, and the interpretation thereof. But, in
concluding this part of the subject, it may be remarked,
that partners are entitled inter sese to be allowed all
charges, losses, and expenditures, which they have
properly, or necessarily, or unavoidably, incurred in
transacting the partnership business.-' On the other
hand, (as we have seen,^) no partner is entitled, unless
under some special agreement, to any compensation,
commission, or reward, for his skill, labor, or services,
while employed in the partnership business.^ The
nature of the contract implying, that each partner
shall gratuitously give and exert all his skiU, labor,
and services, so far as they may be properly required
for the due accomplishment and success of the partner-
ship operation.* If any allowance is intended to be
made for extra services or labor, it is a fit matter to be
adjusted in the articles, under which the partnership is
formed.
§ 186. John Voet lays down the like doctrine in
iSee 1 Domat, B. 1, tit. 8, § 4, art. 11, 12 ; Thornton u. Proctor, 1
Anst 94.
s Ante, § 183.
3 CoUyer on Partn. B. 2, eh. 2, § 1, p. 130; Id. § 2, p. 142, 151, 2d
edit. ; Franklin v. Robinson, 1 Johns. Ch. R. 157, 165 ; Whittle v. McFar-
lane, 1 Knapp, Pr. C. R. 312 ; Dougherty v. Van Nostrand, 1 Hoffm. B.
68; Burden v. Burden, 1 Ves. & Beam. 170; Ante, § 183.
* Ante, § 183; Franklin v. Robinson, 1 Johns. Ch. R. 157, 165; Whit-
tle V. McFarlane, 1 Knapp, R. 312 ; Bradford v. Kimberley, 3 Johns. Ch.
R. 433 ; Dougherty v. Van Nostrand, 1 Hofim. R. 68 ; Burden v. Burden,
1 Ves. & Beam. B. 170.
OH. IX.] EIGHTS AND DUTIES OF PAETNERS. 311
expressive terms, admitting at the same time, that, by
custom or special agreement, a compensation may be
allowed to one or more partners for extraordinary
labor, skill, or services. "Sahrium sen honorarium quod
aUinei, licet rariar ejus in societate, quam quidem in man-
data, usus s^, dum partes lucri singulis oivenienies suddens
operw pretium sunt. Nihil tamen impedit, quo minus uni
socio, negatia sodetatis forte potissimum aut unice tractanti
ac promovmdi, cum ad iUam operam supra cceteros prcestarir
dam ex eonventione nan teneretur, vel ab initio solarium
aliquod assignetur, velpostea viri ioni arUtratu aajudiedur,
idque extraordinarid potius magidratus cognUione, quam
ordinarid pro socio acfione inteniatd, argumerdo eorum quce
de salarioin mandato intervmiente dicta sunt. Quod et
morihus hodiernis conveniens esse, patei ex responso Juris-
consultorum et mercaiorum inter Responsa Jurisconsultorum
Hollandice"^ The same doctrine maybe traced back
to the Roman law.^
1 Voet, ad Pand. Lib. 17, tit. 2, § 19, Tom. 1, p. 757.
2 1 Domat, B. 1, lit. 8, § 4, art. 11, 12.
312 PARTNERSHIP. [CH.
CHAPTER X.
RIGHTS, DUTIES, AND OBLIGATIONS OF PARTNERS UNDER THE
ARTICLES THEREOF.
§ 187. Hitherto, we ha-ve been mainly, considering
the rights, duties, and ohligations of partners* «re^e?" sese,
implied by law. But, as written articles often exist
relative to the formation, management, rights, duties,
and obligations of the particular partnership, it may
not be without use to bring together some of the more
important stipulations and arrangements usually con-
tained in those articles, and to ascertain what, in point
of law, is the true interpretation,, application, and
objects thereof; and, incidentally, how far they are
capable of being enforced, either in Courts of Law or
in Courts of Equity.-^
§ 188. At the threshold of these inquiries we are
met with the question, whether Courts of Equity, (for
it is clear, that Courts of Common Law have no juris-
diction, except to give damages,) are competent to
decree the specific performance of a preliminary agree-
ment to enter into a partnership; and if so, under
what circumstances a specific performance will be
decreed. In respect to this matter, it may be at once
perceived how full of delicacy, difficulty, and embar-
1 1 have availed myself throughout this whole chapter mainly of the
materials contained in Mr. Collyer's able work on Partnership, B. 2, ch.
2, § 2, p. 131 to 162, 2d edit. Mr. Bell has also devoted a considerable
space to the examination of the same subject, which will well reward the
attentive examination of the learned reader. 2 Bell, Comm. £. 7, ch. 2,
§ 4, p. 645 to 648, 5th edit.
OH. X.] CONSTRUCTION OF AETICLES. 313
rassment, every attempt to enforce a preliminary
contract of this sort must be. The success of every
partnership is usually so essentially dependent upon
the hearty cooperation and exertions of all the partners
for the common good ; and reluctance, and discontent,
and resistance are so incompatible with such success ;
that at first it would seem, that no Court of Equity
ought to exert any such authority to compel an ob-
servance of a mere treaty to form a partnership. But,
on the other hand, there may be serious evils, resulting
from a total jefusal to interfere in all cases of this sort
under any circumstances ; for one or more of the part-
ners may have incurred responsibilities on account of
the intended firm, or preliminary steps for the business
of the intended partnership may have been taken, and
acts done, putting the same into an inchoate and im-
perfect operation upon the full faith and confidence of
the punctilious discharge of duties by the other side,
so that it may work a most serious, if not an irrepara-
ble mischief and injury, not to enforce the specific
performance of the contract, so as to bind all parties
to the acts so done, and to the responsibilities so in-
curred.
§ 189. Courts of Equity have upon this subject
adopted an intermediate * ground ; while, on the one
hand, they wiU not ordinarily entertain bills for a spe-
cific performance of such a preliminary contract ; they
will, on the other hand, under special and peculiar cir-
cumstances, in order to suppress frauds, or manifestly
mischievous consequences, compel such a performance.-'
i Buxton V. Lister, 3 Atk. 383, 385 ; Hibbert v. Hibbert, cited CoUyer
on Partn. B. 2, ch. 2, § 2, p. 132, 133, 2d edit.; Watson on Partn. ch. 1,
p. 60, 2d edit. ; Anon. 2 Ves. K. 629, 630 ; Gow on Partn. ch. 2, ^ 4,
PAKTN. 27
314 . PARTNERSHIP. [CH. X.
One of the cases, in which Courts of Equity will not
ordinarily interfere, is, where the partnership is to con-
tinue during the mere pleasure of the parties ; for in
such a case it seems utterly nugatory to decree a
partnership, which may be immediately dissolved at
the will of the dissatisfied party .-^ On the other hand,
where the partnership has informally gone into opera-
tion, or it is for a specific term of time, Courts of
p. 109, 110, 3d edit. ; 1 Story on Eq. Jurisp. ^ 666, and note ; Collyer on
Partn. B. 2, ch. 2, § 2, p. 131, 132, 133, 2d edit. — Lord Hardwicke, in
Buxton V. Lister, (3 Atk. R. 385,) arguendo, said; "Suppose two partners
should enter into an agreement by such a memorandum as is in the pre-
sent case, to carry on a trade together, and that it should be specified in
the niemorandum, that articles should be drawn pursuant to it, and before
they are drawn, one of the parties flies off; I should be of opinion, upon
a bill brought by the other in this Court, for a specific performance, that,
notwithstanding it is in relation to a chattel interest, yet a specific per-
formance ought to be decreed."
1 Hercy v. Birch, 9 Ves. 357, 359 ; 1 Madd. Ch. Pract. 411, note (x) ;
Collyer on Partn. B. 2, ch. 2, § 2, p. 133, 134, 135, 2d edit.; Van Sandau
e. Moore, 1 Russ. R. 441, 463. But see Gow on Partn. ch. 2, § 4, p. 110,
111, 3d edit. — Mr. Swanston, in his learned note to Crawshay v. Maule,
(1 Swanst. R. 513,) has remarked; "It seems clear, that, in general, the
Court of Chancery will compel specific performance of an agreement for
a partnership (Buxton v. Lister, 3 Atk. 385; Anon. 2 Ves. 629)? but
Lord Eldon is represented to have held, that this doctrine is not applicable
to partnerships, which may be immediately dissolved. Hercy v. Birch, 9
Ves. 360. See Maddock's Princip. & tract, vol. 1, p. 411, 2d edit. This
distinction, however, must be received, it is presumed, not without qualifi-
cation. In many such cases, though the partnership could be immediately
dissolved, the performance of the agreement, (like the execution of a
lease after the expiration of the term, see Nesbitt v. Meyer, 1 Swanst. R.
p. 226,) might be important, as investing the party with the legal rights,
for -which he contracted." We have already seen, (ante, § 182,)'that,
although in ordihary partnerships the Roman law only gave the action
pro socio after a dissolution of the partnership ; yet in certain peculiar
partnerships for collection of the public revenue, {Caiis& Veciigalium,)
the action pro socio for an account lay during the continuance of the
partnership. Pothier, Pand. Lib. 17, tit. 2, n. 33; Dig. Lib. 17, tit. 2, 1.
65, § 15.
CH. X.] CONSTRUCTION OF ABTICLES. 315
Equity have not unfrequently decreed a specific per-
formance, with the view of investing the parties fully
with all their legal rights.^
§ 190. Passing from these preliminary considera-
tions, let us, in the next place, attend to some of the
more important stipulations usually contained in arti-
cles of partnership. And here it is to he observed,
that the same rules of construction apply, as in ordinary
cases; that is to say, to ascertain, what is the real
intention of the parties in particular stipulations ; and,
when ascertained, to carry it into effect, limiting any
general language, incautiously used, to the particular
purposes and objects and transactions specified.^ On
the other hand, general language, and especially such
as relates to the nature and extent of covenants, may
frequently be applied, and deemed to run through the
whole body of the articles. Thus, for example, the
words of covenant, which usually occur at the com-
mencement, or introductory part of the articles, usually
declare the covenant to be joint and several; and
words of covenant in the succeeding stipulations of
the instrument are on that account usually construed,
although not so expressed, to be also intended to be
joint and several.^
§ 191. It'is not, however, less important, in order to
arrive at correct results, to take into consideration
other matters. Thus, although the articles of part-
' CoUyer on Partn. B. 2, ch. 2, § 2, p. 135, 2d edit. ; Gow on Partn.
ch. 2, § 4, p. 109, 110, 3d edit But see Downs v. Collins, 6 Hare, R.
■118.
2 CoUyer on Partn. B. 2, ch. 2, p. 137; 1 Fonbl. Eq. B. 1, ch. 6, § 16,
and note (1); i&ainsborough v. Stark, Barnard, Ch. R. 312.
3 CoUyer on Partn. B. 2, ch. 2, § 2, p. 139, 2d edit.; Id. B. 2,ch. 3,
§l,p. 169.
316 PARTNERSHIP. [CH, X.
nership, so far as they regulate the rights, duties,
obligations, and interests of the parties thereto, in
certain specified cases ; yet they leave in full force all
the other rights, duties, obligations, and interests,
implied by law, so far as they are not superseded, con-
trolled, qualified, or limited by those articles.-^ In the
next place, in all cases of doubtful interpretation, the
actual construction, adopted by the partners in their
partnership transactions, will be, and indeed ought to
be, adopted, as the true, legitimate, and appropriate
interpretation intended by themselves.^ [Entries in
the books of a partnership have been said to be as
conclusive of the rights of the partners, as if prescribed
in a regular contract.^ ]
§ 192. In the next place, partnership articles in the
view of Courts of Equity, whatever may be the rule at
law, are liable to be controlled, superseded, qualified,
or waived by the acts and transactions of the partner-
ship, in the course of the business thereof, wherever
the assent of all the partners thereto may be fairly
inferred, and however positive, or stringent, those pro-
visions may be. ["Partners," it has been said, "if
they please, may, in the course of the partners'hip,
daily come to a new arrangement for the purpose of
having some addition or alteration in the terms on
which they carry on business, provided those additions
or alterations be made with the unanimous concurrence
1 Collyer on Partn. B. 2, ch. 2, § 2, p. 138, 139 ; Crawshay v. Collins,
15 Ves. 226 ; Jackson v. Sedgwick, 1 Swanst R. 469 ; Pettit v. Janeson,
6 Madd. R. 146.
2 Collyer on Partn. B. 2, ch. 2, § 2, p. 139, 2d edit. ; Geddes «. Wal-
lace, 2 Bligh, R. 270, 271, 297, 298; Beaoham v. Eckford, 2 Sandford,
Ch. R. 116.
3 Stewart v. Forbes, 1 Hall & Twells, R. 461 ; S. C, 1 Macnaghten &
Gordon, R. 137.
CH. X.] CONSTRUCTION OF ARTICLES. 317
of aJl the partners."^] In short, in many ctses of this
kind, looking to the course of conduct of the partners,
and the special circumstances of their business, or to
their general acquiescence, or their positive acts, we
may often have the most satisfactory evidence that the
partnership articles have been laid aside, either pro
tardo, or in whole, and that new articles and arrange-
ments have been entered into in their stead.^ Hence,
' England v. Curling, 8 Beav. R. 129; McDougald v. Banks, 13 Geor-
gia, R. 451.
8 Geddes v. Wallace, 2 Bligh, R. 271, 297, 298; Jackson v. Sedgwick,
1 Swanst. R. 460, 469; England v. Curling, 8 Beav. R. 129: Stewart v.
Forbes, 1 Hall & Twells, R. 461 ; S. C. 1 Macnaghten & Gordon, R. 137 ;
Const V. Harris, Turn. & Russ. R. 496, 523 ; Gow on Partn. ch. 1, § 1, p.
9, 10, 3d edit. —In Const «. Harris, (Turn. & Russ. R. 523,) Lord Eldon
said; "In ordinary partnerships nothing is more clear than this, that
although partners enter into a written agreement, stating the terms, upon
which the joint concern is to be carried on, yet, if there be a long course
of dealing, or a course of dealing, not long, but still so long, as to demon-
strate, that they have all agreed to change the terms of the original
written agreement, they may be held to have changed those terms by
conduct. For instance, if in a common pi,rtnership, the parties agree,
that no one of them shall draw or accept a bill of exchange in his own
name, without the concurrence of all the others ; yet, if they afterwards
slide into a habit of permitting one of them to draw or accept bills, with-
out the concurrence of the others, this Court will hold, that they have
varied the terms of the original agreement in that respect. So, in this-
case, if it can be shown, that in the administration of this property, the
proprietors in general, after 1812, pursued a different course from that
provided for by the deed of March, 1812, they must be taken to have
altered the agreement, and to have substituted the terms, j» which, in
their conduct, they have adhered, instead of the terms contained in the
original agreement. And, with -respect to the present plaintiff, there can
be no doubt, that if, after the deed of 1812 was executed, his testatrix
gave in to a course of administration of the property, different from the
course provided for by the deed ; if her acts, or the acts of others with
her consent, afforded such evidence of departure from the terms of the
written agreement, as to amount to the substitution of a new agreement,
though evidenced only by parol, instead of the written agreement ; he,
claiming under her, must be bound by her acts, and cannot be at liberty
to revert back from those acts, establishing a new agreement, to call into
27*
318 PARTNERSHIP. [CH. X.
it has beefi judicially declared, that, in Courts of
Equity, articles of partnership, containing clauses,
which have not been acted upon by the parties, are
read, as if those clauses were expunged, or were not
inserted therein.-^
§ 193. In respect to the nature, and extent, and
kind of business of the partnership, as stated in the
articles. Courts of Equity construe the articles strictly,
and do not permit the business to be extended by any
of the partners, without the consent of all of them,
either express or implied, to any other business or
branch of business, of a different nature, extent, or
kind J and if it is attempted, they will interpose by
way of injunction to restrain the offending parties.^
§ 194. In the next place, as to the commencement
of the partnership. If no other time is fixed by the
articles, the commencement will take place from the
date and execution of the instrument.^ And this rule
is so inflexible at law, that parol evidence has been
deemed inadmissible to control this intendment, al-
though the partnership would thus be rendered illegal,
at least, if thereby the true construction of the words
of the instrument would be varied.* This is certainly
operation again the old agreement, and to insist, that the non-execution
of the old agreement is, in such circumstances, a breach of trust. So,
again, it is a principle of this Court with respect to partnership concerns,
that a partner, who complains that the other partners do not do their duty
towards him, must be ready at all times, and offer himself to do his duty
towards them."
1 Jackson v. Sedgwick, 1 Swanst. E. 460, 469 ; Collyer on Partn. B. 2,
ch. 2, § 2, p. 139, 2d edit.
2 Natusch V. Irving, Gow on Partn. Appx. 398, 407, 3d edit. ; Id. p. Ill,
112.
3 Collyer on Partn. B. 2, eh. 2, § 2, p. 140, 2d edit.
* Williams v. Jones, 5 Barn. & Cressw. 108. — Perhaps this case re-
quires a more full exposition. The ground, upon which the learned
CH. X.] CONSTRUCTION OF ARTICLES. 319
pressing the law of implied construction to a great,
but perhaps not to an undue extent. It would not
prohahly be acted upon by ^Courts of Equity, unless
the parol evidence was repugnant to the terms of the
written contract, as, for example, by making the- agree-
ment conditional, when upon its face it was absolute ;
and not merely a supplement thereto.
§ 195. In the next place, as to the duration of the
partnership. Although the partnership be fixed to a
particular term or period of time, yet it is always
understood, as an implied condition or reservation,
(unless the contrary is expressly stipulated,) that it is
dissolved by the death of either of the partners, at
any time within that period.^ This doctrine seems an
exception to the ordinary rules of the common law in
the interpretation of contracts ; and it has sometimes
been complained of as unreasonable. But it seems
founded in very equitable principles, and is a natural
result of the peculiar objects qf the contract.^ Every
Judges put it, was, that the evidence made the instrument conditional,
instead of being, as it was in terms, absolute. But, suppose the instru-
ment had been signed on the first day of January, and it was agreed
between the parties by parol, that it should commence on the first day of
the ensuing February, would the like objection have applied ?
1 Collyer on Partn. B. 1, ch. 2, ^ 2, p. 73, 74, 2d edit. ; Id. B. 2, eh.
2, ^ 2, p. 140 ; Crawford v. Hamilton, 3 Madd. R. 254 ; Seholefield v.
Eichelberger, 7 Peters, E. 594; VuUiamy v. Noble, 3 Meriv. E. 614;
Gow on Partn. oh. 5, § 1, p. 219, 220, 3d edit. ; Gratz v. Bayard, 11 Serg.
&E.41. .- ' 5
2 In Crawshay v. Maule, (1 Swanst. «. 509,) Lord Eldon said; " The
doctrine, that death or notice ends a partnership, has been called unrea-
sonable. It is not necessary to examine that opinion ; but much remains
to be considered before it can be approved. If men will enter into a
partnership, as into a marriage, for better and worse, they must abide by
it ; but if they enter into it without saying how long it shall eildure, they
are understood to take that course in the expectation, that circumstances
may arise, in which a dissolution will be the only means of saving them
320 PARTNERSHIP. [CH. X.
partnership is founded upon a Delectus Personce, which
implies confidence and knowledge of the personal
character and skill and ability of the other associates ;
and their personal cooperation, advice, and aid, in all
the transactions thereof. The death of any one part-
ner necessarily puts an end to all such cooperation,
advice, and skill. If, therefore, the partnership were
not, whatever might be the stipulated terms for its
continuance, put an end to by the death of any one
partner, one of two things must follow ; either that the
whole business of the partnership must be carried on
by the surviving partners exclusively, at the hazard of
the estate and interests of the deceased partner ; or
else that the personal representative of the deceased,
toties quoUes, who may be a mere stranger, or even a
woman, wholly unfit for and unacquainted with the
business, must be admitted into the management. We
s§e at once, that either alternative may be highly
inconvenient or injurious to the rights, interests, and
objects of the original concern.-^ The iaw, therefore,
will not force it upon the parties ; but it presumes, in
the absence of all contrary stipulations, that by a tacit
consent, death is to dissolve the partnership, becausfe it
dissolves the power of a personal choice, confidence,
and management of the concern.^
from ruin ; and considering what persons death might introduce into the
partnership, unless it works a dissolution, there is strong reason for saying,
that such should be its effect. Is the surviving partner to receive into the
partnership, at all hazards, the executor or administrator of the deceased,
his next of kin, or possibly a creditor taking administration, or whoever
claims by representation, or assignment from his representative ? "
1 See Pearce v. Chamberlain, 2 Ves. 33, 34 ; Pothier, de Societfe,
n. 144, 145 ; Domat, B. 1, tit. 8, § 4, art. 14; Id. B. 1, tit. 8, § 2, art.
3,4.
s Gow on Partn. ch. 5, § 1, p. 218, 219, 220, 3d edit. ; Mr. Swanston's
note to Crawshay v. Maule, 1 Swanst. R. 509, note (a).
CH. X.] CONSTRUCTION OP ARTICLES. 321
§ 196. The Roman law adopted this doctrine in
its fullest extent, and did not (as we have seen)
even permit the parties by their private stipulations
to agree, that upon the death of a partner, his heir
should he admitted into the partnership, for the rea-
sons before suggested. Solvitur adhuc socieias etiam
morte socii; quia qui soddaiem contrahit, certam personam
sibi eligit. Sed et, d comensus plurium sodetas coniracta
dt, morte nnius socii solvitur, etsi plures superdni ; nisi in
coeundd societate aliter convenerit} This last qualifica-
tion, as we shall presently see, applied only to the con-
tinuance of the partnership by the survivors.^ Nemo
potest sodetatem hceredi suo sic par ere, ut ipse hceres sodus
sit? Idem respond^, soddaiem non posse uttra mortem
porrigi ; et ideo nee libertatem de supremis jvdidis con-
stringere guis poterit, vel cognatum ut^eriorem pro muneri-
hus inferred Again ; Adeo, morte sodi solvitur sodetas, ut,
nee ab initio pacisci possimus, ut hceres diam succedat socie-
tati? Sodetas quern admodum ad hceredes sodi non transit,
ita nee ad adrogatorem ; Ne alvoquin invitws quis sodus
effidatur, cui non vutt? The law of England, as well as
that of France, (as we have seen,) is contrary in this
respect to the Roman law; and permits the parties, by
express stipulation, to provide for the continuance of
the partnership after the death of one partner, and
for the admission thereto of his heir, or other repre-
sentative.^
1 Inst. Lib. 3, tit. 26, § 5.
a Domat, B. 1, tit. 8, § 5, art. 14, 15.
3 Dig. Lib. 17, tit. 2,1. 35.
* Dig. Lib. 17, tit. 2, 1. 52, § 9.
5 Dig. Lib. 17, tit. 2, I. 59.
6 Dig. Lib. 17, tit. 2, 1. 65, § 11 ; Dig. Lib. 3, tit. 2, 1. 6, § 6.
7 Ante, § 5 ; Pearee v. Chamberlain, 2 Ves. R. 33 ; Balmain v. Shore,
9 Ves. 500 ; Crawshay v. Maule, 1 Swanst. R. 495, 508 ; Pothier, de
322 PARTNERSHIP. [CH. X.
§ 197. But, suppose the original term of the part-
nership should expire by the mere effluxion of time,
and still the partnership should (as indeed not unfre-
quently happens) continue to be carried on by the
same parties, without the execution of any new arti-
cles of partnership, or without any express recognition
of the old articles ; the question would arise, as to
what ought, under such circumstances, to be deemed
the terms and stipulations of the continued partner-
ship. Is it to be presumed to be renewed for the like
period of time, and upon the like stipulations and
conditions, as those which were contained in the old
articles ? Or is it to be deemed a mere partnership
during the pleasure of both parties, and dissoluble
instantaneously at the will of either? And, if the
latter be the true predicament thereof, then, are the
interests of the parties, and their shares in the profits,
while it is actually continued, to be governed and
guided by the stipulations of the old articles, or
not?
§ 198. Perhaps these inquiries cannot be answered
universally in the same manner, as equally applicable
to the circumstances of all cases ; for the habits of the
trade, and the conduct of the parties, may often es-
tablish the fact satisfactorily, that some of the articles
have been practically waived, or abrogated, or qual-
ified, while others are necessarily implied, as being in
fuU force and operation. In such cases, the presump-
tion of the actual state of the partnership contract
will necessarily vary with the circumstances, and be
Society, n. 144, 145; Gow on Partn. ch. 5, § 1, p. 219, 220, 3d edit.;
CoUyer on Partn. B. 2, ch. 2, § 2, p. 140, 147, 2d edit. ; Gratz v. Bayard,
11 Serg. &Rawle,41.
CH. X.] CONSTKUCTION OF ARTICLES. 323
governed by them, and not govern them. In the
absence, however, of all presumptions of this nature,
the general rule seems to be, that the partnership is
to be deemed one for no definite period, but dissoluble
at the will of any of the partners ; ^ but that, in other
respects, the old articles of the expired partnership
are to be deemed adopted by implication, as the basis
of the new partnership during its actual continuance.^
[Thus, if by the written agreement one partner is to
receive no compensation for his time and services un-
less a profit is realized from the business, and by the
articles of partnership it was to continue for one year,
but was in fact continued two years without any new
agreement, it was held that the same provision must
apply to the second year.^
§ 199. In this connection, it may be well to say a
few words, as to clauses in articles of partnership.
1 Featherstonhaugh v. Fenwick, 17 Ves. 298, 307. See Gould v. Homer,
12 Barbour, 601.
2 Booth V. Parks, 1 Molloy, R. 466; Crawshay v. Collins, 15 Ves. 218,
228; U. States Bank v. Binney, 5 Mason, R. 176, 185. — In this last case
the Court said ; " Whether the present be a limited or general partner-
ship, is to be determined by the whole evidence in the case. It is certain,
that by the articles it is a limited copartnership, and confined to the soap
and candle business. Those articles expired, by their own limitation, in
two years, and had force no longer, unless the parties elected to continue
the partnership on the same terms. That is matter of evidence upon the
whole facts. The natural presumption is, that as the partnership was con-
tinued in fact, it was continued on the same terms as before, unless that
presumption is rebutted by the other circumstances in the case. There is
no written agreement respecting the extension of the copartnership ; and
therefore it is open for inquiry upon all the evidence. The present notes
were made and indorsed long after the term of two years expired. The
plaintiffs contend, that the partnership was then general ; the defendants,
that it was limited, as before. The jury must determine between them,
upon weighing all the facts and presumptions."
3 Bradley v. Chamberlin, 16 Verm. 613.
324 PARTliTEESmP. [CH. X.
stipulating for the continuance thereof, notwithstand-
ing the death of one or more of the partners. Such
a clause is usually introduced into partnerships for a
long term of years, where the outlay of capital is great
in permanent fixtures and manufacturing establish-
ments, and the locality of the trade renders it im-
portant in point of profit and good-will, that it should
be steadily carried on, as long as may be, under the
same proprietors or their representatives. " In cases
of this sort, the clause commonly empowers the repre-
sentative of the deceased partner to carry on the trade,
in conjunction with the survivors, for the benefit of the
widow and children of the deceased partner ; and fre-
quently, also, for the admission of one or more of his
children into the concern, upon his or their arrival at
majority.-^ Sometimes the provision partakes of the
character of a settlement, giving an interest in the
partnership to the widow, during her life, and divid-
ing her share, after her death, equally among all the
children.^ Under such circumstances, the question
may arise, whether all the children take a vested in-
terest in the partnership trade, from time to time, as
they are born, so that, although they should die during
the lifetime of their mother, yet their shares thereof
will be transmissible ; or, whether such children only,
as are living at the death of the mother, are entitled
to take a vested share or interest. It has been decided,
that the latter is the true interpretation to be put upon
such provisions ; upon the ground, that the primary
object of all such clauses, is the continuance of the
1 CoUyer on Partn. B. 2, ch. 2, ^ 2, p. 147, 148, 2d edit. See Downs
V. Collins, 6 Hare, R. 418.
3 Ibid.
CH. X.] CONSTRUCTION OF AETICLES. 325
partnership; and that all the other proyisions, contained
therein, ought to be treated as subservient to this lead-
ing purpose.^
I CoUyer on Partn. B. 2, ch. 2, § 2, p. 147, 148, 2d edit. ; Balmain v.
Shore, 9 Ves. 500, 506, 607. — The case of Balmain v. Shore was of this
nature ; and'Sir Wm. Grant, in delivering his judgment, said ; " The ob-
ject of these very ill-drawn articles is to constitute a partnership for the
very unusual term of 99 years. As it was not to be expected any of the
parties should live so . long, it was necessary to ascertain in what mode the
partnership was to continue after their death ; and it appears to have been
intended for their own benefit, and that of their families, called, in some
parts of the articles, their sequels in right. From the manner in which
the interests are given in the clause, more particularly ascertaining the
mode of succession to the shares, the question arises, whether the words
are to be construed, as they would be, if applied to dispositions of property
in general ; or a different construction is to be made, from the considera-
tion of the subject. It must be admitted, that if this were a settlement of
a sum of money, or other property, the children would take vested inter-
ests ; and the words, ' after the decease of such widow,' &c. would post-
pone, not the commencement of the interest, but only the commencement
of the possession. Accordingly, it was contended, on the one hand, that
under this instrument all the children took vested interests in the partnei>
ship shares, as they were born ; and though some died before their mothers,
yet their shares were transmissible ; on the other, that the words in the
clause, to which I have alluded,' are to have a different construction ; and
that such children only will be entitled to a share, as shall be living at the
death of the widow. The words, I think, must receive their construction
from the consideration of the particular instrument. The primary object
was to constitute a partnership, and to ascertain the manner in Tiyhich the
shares were to be enjoyed in succession. It was but a secondary object,
and through that medium, to give a benefit to the families ; and it appears
to me, the object of this clause was to designate and ascertain, who are to
supply the vacancies, as they shall happen ; that no interest was intended
by anticipation to any one ; but the object was to provide for the filling up
of that vacancy, which might happen by the death of any partner inte-
rested in the partnership. For instance, where one of the original part-
ners died, and left a widow, she instantly was to succeed to a share ; when
she died, and left children, they were instantly to succeed to that share ;
and, until a vacancy happened, there was no room for ascertaining the
objects, who were to come in the place of the party dying ; and therefore
such children only, as should be living at the time the vacancy happened,
could be intended to succeed upon that vacancy. That is more evident
from the provision as to the sale of a share ; which is perfectly incompati-
PARTN. 28 . ,
326 , PAKTNEKSHIP. [CH* X.
§ 200. Sometimes the clause provides for the con-
tinuance of the partnership, by stipulating, that the
interest of the deceased partner in the conc^n, after
his death, and during the term of the partnership,
shall go to such persons as he shall by his will name
and appoint ; and in default of such appointment, that
it shall devolve on his wife, and in case of her death,
upon his children, in equal shares ; and in case of the
death of all his children, to his executors and adminis-
trators, who are to succeed to all his rights and powers
in the business and management of the partnership.
Now, under such circumstances, the question may arise,
in what manner this power of appointment is to be
construed; whether as a technical power of appoint-
ment, or not. If as a technical power, then it will he
necessary for the testator, in making the appointment
by will, to allude in some distinct manner to the power,
so as to demonstrate, that it is thereby intended to be
executed ; for a general gift of all his estate and effects
to one. or more of his children, will not be deemed a
specific execution of the power. But, if not to be con-
strued technically, then such a gift will amount to a
sufficient designation of the donee or donees, as ap-
pointees of his share and interest in the concern, as
succeeding partners. Upon the same enlarged view of
the objects of this clause, (as to the continuance of the
partnership business,) it has been held, that such a
power of appointment is not to be treated as technical ;
ble with the supposition, that the children, as they -were born, should take
vested interests in the partnership shares of their parents. It was impos-
sible the children, then born, could take such a vested interest, as they
must at all events succeed to. It was only upon the supposition, that the
partner left a share, that there could be any successor ; and the vacancy
must happen, before the succession could be ascertained."
CH. X.] CONSTRUCTION OF ARTICLES. 327
and, therefore, that the appointment is well executed
by such a general giffc.-^
§ 201. Another question may arise under clauses
for the continuance of the partnership, and the admis-
sion of the executor- and administrator of the deceased
partner into the firm, and that is, whether, when the
partnership is intended to be continued after the death
of the partner, it is a matter of election with the
widow, children, appointee, or executor, or administra-
tor, of the deceased, to continue the same, or not ; or
whether it is absolute and peremptory upon them. In
respect to clauses of this nature, the general rule is, in
the absence of all clear and well defined declarations
to the contrary, that they are to be construed, as giving
the executor or administrator an option, so that he may
continue the partnership, or not, as he may think pro-
per ; and of course a reasonable time will be allowed
to him for that purpose.^ Probably the same rule
1 Collyer on Partn. B. 2, ch. 2, § 2, p. 148, 149, 2d edit. ; Ponton v.
Dunn, 1 Russ. & Mylne, 402. — On this occasion Sir John Leach (Master
of the Kolls) said ; " It is true, the words ' name and appoint ' are used in
the deed ; but considering the relation of the parties, I cannot understand
them to be used with a view to create a power of appointment in its tech-
nical sense, and to limit the testator's power of disposition by will over
this part of his property. Without this stipulation, those who claimed
through him, would have had no title to share in the partnership profits
after his death ; and it is a mere bargain with his partner, that he should
have a power of disposition by will, and if he died without a will, that the
property should devolve to his family in the manner stated. This pro-
perty will therefore pass under the description in his will, of ' all other his
estate and effects,'of whatsoever nature or description.' "
2 Collyer on Partn. B. 2, ch. 2, ^ 2, p. 149, 150, 2d edit. ; Pigot v.
Bagley, 1 McClel. & Younge, R. 569 ; Downs v. Collins, 6 Hare, R. 418.
Where the articles provide, that the executors or administrators shall con-
tinue the partnership, if they think fit, they will be considered as partners,
unless they give notice within a reasonable time to the contrary. Collyer
on Partn. B. 2, ch. 2, § 2, p. 151, 2d edit. ; Morris v. Harrison, CoUes,
Pari. R. 157.
328 PARTNERSHIP. [CH. X.
would prevail in the case of a widow, a child, a legatee,
or appointee, unless the language of the provision
clearly established a positive direction, that at all events
the partnership should be continued.-^ If it did, then
it would seem clear, th9,t every such party must take,
if he takes at all, according to the terms of the will,
and not otherwise ; and that he cannot elect to take
the benefit without continuing the partnership? [Where
the option was secured to " the executor or administra-
tor," on giving notice within three months after the
decease of the parties ; and the parties dying intestate,
the widow gave such notice within the three months,
but without taking out lettejrs of administration, till
some time after the three months, it was held, that she
had not effectually complied with the condition, so as
to be admitted into the firm.^]
§ 201 a. Another question of a very important na-
ture may arise out of a provision for the continuation
of a partnership after the death of one of the partners,
as to the extent to which contracts made after the
1 Kershaw v. Matthews, 2 Russ. K. 62 ; Pigot v. Bayley, 1 McClel. &
Younge, R. 609. — In the former case Lord Eldon said; "If there is a
partnership carried on under articles, which stipulate, that, upon the death
of a partner, he shall be succeeded in the business, either by some person,
whom he shall appoint, or by his executors, it may happen, that his ap-
pointees or his executors do not think proper to come into his place on the
same terms on which he was a partner in the concern. In that case, the
death of the party puts an end to the partnership. The stipulation may
be, that the appointee or executor of the deceased partner is to be a
partner only, if he does this or that particular thing. If the executor or
appointee refuses to comply with the proviso, the whole concern must be
wound up. But the dissolution which takes place, is not a dissolution
wrought by the exclusion of the executor or appointee ; for he never be-
comes a partner."
2 CoUyer on Partn. B. 2, ch. 2, § 2, p. 149, 150, 2d edit. ; Crawshay v.
Maule, 1 Swanst. B. 512.
3 Holland v. King, 6 Manning, Granger & Scott, R. 727.
CH. X.] CONSTRUCTION OF ARTICLES. 329
death of that partner bind his assets.-' A testator,
directing the continuance of a partnership, may, if he
so choose, bind his general assets for all the debts of
the partnership contracted after his death. But he
may also limit his responsibility, either to the funds
already embarked in the tra,de, or to any specific
amount to be invested therein for that purpose ; and
then the creditors can resort to that fund or amount
only, and not to the general assets of the testator's
estate, although the partner, or executor, or other
person carrying on the trade, may be personally re-
sponsible for all the debts contracted.'^ And this leads
us to remark, that nothing but the most clear and
unambiguous language, demonstrating in the most
positive manner that the testator intends to make his
general assets liable for all debts contracted in the
continued trade after his death, and not merely to
1 Burwell v. Mandeville's Ex'ors, 2 How. Sup. Ct. R. 576. See also
Ex parte Garland, 10 Ves. 110, 119 ; Ex parte Bichardson in re Hodg-
son, 3 Madd. R. 138; 1 Mylne & Keen, 116; 7 Connect. R. 307 ; 7 Pe-
ters, R. 594; 11 Serg. & Rawle, 41. In re The Northern Coal Mining
Co., 10 Eng. Law & Eq. R. 171.
2 This is clearly established by the case Ex parte Garland, 10 Ves. 110,
where the subject was fully discussed by Lord Eldon, and Ex parte Rich-
ardson, 3 Madd. 138, 157, where the like doctrine was affirmed by Sir
John Leach, (then Vice-Chancellor,) and by the same learned Judge,
when master of the Rolls, in Thompson v. Andrews, 1 Mylne & Keen,
116. The case of Hankey v. Hammock, before Lord Kenyon, when
Master of the Rolls, reported in Cook's Bankrupt Law, 67, 5th edit., and
more fully in a note to 3 Madd. Rep. 148 ; so far as may be thought to
decide that the testator's assets are generally liable under all circumstances,
where the trade is directed to be carried on after his death, has been com-
pletely overturned by other later cases, and expressly overruled by Lord
Eldon, in 10 Ves. 110, 121, 122, where he stated that it stood alone, and
he felt compelled to decide against its authority. The case of Pitkin v.
Pitkin, 7 Conn. Rep. 307, is fully in point to the same effect. See also
Burwell v. XKlandeville's Ex'ors, 2 How. Sup. Ct. Rep. 576, where the
doctrine stated in the text was affirmed.
28*
330 PARTNEKSmP. [CH. X.
limit it to the funds embarked in that trade, would
justify the Court in arriving at such a conclusion, from
the manifest inconvenience thereof, and the utter im-
possibility of paying off the legacies bequeathed by
the testator's will, or distributing the residue of his
estate, without in effect saying at the same time that
the payments may be recalled, if the trade should
become unsuccessful or ruinous. Such a result would
ordinarily be at war with the testator's intention in
bequeathing such legaciefe and residue, and would, or
might postpone the settlement of the estate for a half-
century, or until long after the trade- or continued
partnership should terminate. Lord Eldon^ put the
inconvenience in a strong light, by suggesting several
cases where the doctrine would create the most mani-
fest embarrassments, if not utter injustice; and he
said, that the convenience of mankind required him
to hold, that the creditors of the trade, as such, have
not a claim against the disturbed assets in the hands
of third persons, under the directions in the same wiU,
which has authorized the trade to be carried on for
the benefit of other persons.^
§ 202. In partnership articles it is also often agreed
what shall be the proper style of the firm, as for
example, John Doe and Company; and, under such
circumstances, it is a part of the duty of every partner,
in signing contracts and other instruments, punctil-
iously to observe and follow the very formulary.^ This
may be necessary, not only to bind the firm itself, but
1 10 Ves. 110, 121, 122.
2 This, also, was manifestly the opinion of Sir John Leach in the cases,
3 Madd. Eep. 128 ; 1 Mylne & Keen, 116, and was expressly held in the
case in 7 Conn. Bep. 307.
3 Collyer on Partn. B. 2, ch. 2, § 2, p. 141, 2d edit.
CH. X.] CONSTRUCTION QF AETICLES. 331
also to absolve him from any personal liability, not
only to third persons, but also to his partner.^ It will
be a clear breach of such duty and engagement, to use
another firm name as that of the firm ; as for example,
if the firm name be Doe & Roe, to use the name of
Doe & Company, or Doe & Roe & Company.^ It will
be equally a breach for one partner to sign his own
name, adding « for self and partners ; " because by
those words it can no more be known, who are his
partners, whom he means to bind, than by any other
general words.' This doctrine applies, a fortiori, where
the firm name is intended to express the names of all,
who are partners, as for example, John & Richard Doe;
for in such a case it may be for the benefit of each
partner, that he may be known to the world to be a
member in that concern, and also, that, as between the
partners themselves and the world, it should not be
left as a mere matter of speculation, who are really
partners, or who are not dormant partners; but that
the firm may have the credit, and the public the confi-
dence, resulting from the knowledge of the fact* And
probably a Court of Equity might, in a case of this
sort, iaterfere by way of injunction, to prevent any
mischief to the firm, by thus exposing it to the conse-
" See Ante, § 102 ; Shipton v. Thornton, 9 Adol. & Ellis, 314, 329 to 332 ;
Faith V. Raymond, 11 Adol. & Ellis, 339 ; Ante, ^ 102, 136, 142.
2 CoUyer on Partn. B. 2, ch. 2, ^ 2, p. 141, 2d edit.; Marshall v. Col-
man, 2 Jac. & Walk. 266, 268, 269. [But where a partnership was to be
carried on " in the name of Seymour & Ayres," a signature- of these
names, with the addition of their respective Christian names, was held to
bind the partnership. Newton v. Boodle, 3 Manning, Granger & Scott,
R. 792. But see In re Warren, Daveis, K. 326.]
3 Ibid.
4 Marshall o. Colman, 2 Jac. & Walk. 266, 269.
332 PARTNUESHIP. [CH. X.
quence of being made liable for proceedings of one
partner, to which it did not really assent.^
1 Ibid. — In Marshall v. Colman, (2 Jack. & Walk. 266,) a bill was filed
for such an injunction, not asking for a dissolution. But it was denied
upon special grounds. On that occasion Lord Eldon said ; '*' There is
only this point in the case now before me, which I wish seriously to con-
sider, namely, that although this Court will interfere, where there is a
breach of covenants in articles of partnership, so important in its conse-
quences, as to authorize the party complaining to call for a dissolution of
the partnership, whether (and it is a matter that will deserve a great deal
of consideration before it goes so far) it will entertain the jurisdiction of
pronouncing a decree (for this is what is to be done in the cause, in which
this motion is now made) for a perpetual injunction, as to a particular
covenant, the partnership not being dissolved by the Court. There is
one case, which is constantly occurring, that of a partner raising money
for his private use on the credit of the partnership firm ; and the Court
interferes then, because there is a ground for dissolving the partnership.
But then the danger must be such, there must be that abuse of good faith
between the members of the partnership, that the Court will try the ques-
tion, whether the partnership should not be dissolved in consequence.
But it is quite a difierent thing, and it would be quite a new head of
equity for the Court to interfere, where one party violates a particular
covenant, and the other party does not choose to put an end to the part-
nership ; in that way there may be a separate suit and a perpetual injunc-
tion in respect of each covenant ; that is, a jurisdiction, that we have
never decidedly entertained. All this bill seeks is a perpetual injunction
against using any other than this particular firm and name ; and the ques-
tion would be, if very serious mischief were to arise from not using it,
whether the party would not be obliged to frame his bill differently. I
have no difficulty in saying, that where the members of a partnership
contract by covenant, that the firm shall be A., B., C. and D., that it is a
breach of that covenant for A. to sign those instruments, to which the
covenant refers, in the name A. and Co. ; but it is no less a breach of that
covenant for D. to sign his own name, adding ' for self and partners,'
because by these words it can no more be known, who are his partners,
than by the word Co. When partners enter into such contracts, the
meaning and intent is, that, in the first place, it may be known to the
world, for the benefit of each partner, that he is a partner in that concern,
and also that, as between each partner and the world, it should not be leil
to them to speculate, who are really partners, or who are dormant part-
ners, and so on. It is intended, that each individual may have the credit,
which belongs to his name, and may not be exposed to consequences,
' which might arise from his name not being used. But it must be made
CH. X.] CONSTRUCTION OF ARTICLES. 333
§ 203. In the next place, partnership articles often
contain provisions for the advance of particular amounts
towards the capital stock, at particular periods, or
provisions for the admission of other partners, upon the
payment of particular sums of money, by them, by
instalments. In all such cases the party so contract-
ing is treated as a debtor to the firm, to the full
amount so to be contributed or paid, as 'debitum in
prcBsentt, solvendum in futuro ; and, indeed, he stands, in
equity as to such debts, precisely in the same relation
to them, as if he were a third person, who was a debtor
thereto.^
§ 204. In the next place, partnership articles some-
times provide, that one or more of the partners shall
exclusively manage and administer all the concerns
out to be a case, which goes further than this does, to entitle the Court to
grant an injunction against the breach of such a contract ; it must be a
studied, intentional, prolonged, and continued inattention to the application
of one party calling upon the other to observe that contract. Looking at
the circumstances of this case altogether, recollecting that the application
■was only made by the plaintiff in April last, and even admitting, that
some of the letters, as has been insisted, may amount to contracts binding
on the plaintiff, the question is, whether it was not known wlio were
really partners ? I do not mean to say, that there has been such an exact
performance of the contract as there ought to be ;• and these gentlemen
will do well (if they mean to protect themselves from the interference of
this Court) to use all the names in the concern, — they must do that, or the
Court will be under the necessity of awarding an injunction, or dissolving
the partnership.'' The motion was refused without costs. As to whether
the right to use the partnership firm, after the death of one partner,
belongs to the survivor, or is a part of the good-will of the partnership,
see ante, § 100, and Lewis v. Langdon, 7 Sim. K. 127. See also Webster
V. VP'ebster, 3 Swanst. R. 490, n. In Miles v. Thomas, (9 Sim. K. 607,)
•Sir Launcelot Shadwell (the Vice-Chancellor) thought, that an injunction
might be granted, whenever the act complained of is one that leads to the
destruction of the partnership property, notwithstanding a dissolution ,
thereof may not be prayed.
1 CoUyer on Partn. B. 2, ch. 2, \ 2, p. 141, 2d edit. ; Akhurst v. Jack-
son, 1 Swanst. E. 89. See also Bury v. Allen, 1 Collyer, R. 607.
334 PARTNERSHIP. [CH. X.
thereof, or one or more particular departments of the
business. In cases of this sort. Courts of Equity will
uphold with a steady hand every such stipulation, and
give it full effect during the continuance of the part-
nership, and inhibit the non-competent partners from
intermeddling therewith.^ And this is entirely in
coincidence with the French law on the same subject ;
for by that law, where by the articles one or more
partners are exclusively to administer the affairs of the
partnership, th© power is deemed irrevocable during
the continuance of -the partnership, and cannot be
lawfully interfered with by the other partners.^ The
Roman law seems impliedly to have promulgated the
same doctrine.* The Code of Louisiana has also made
it a part of its own positive regulations.*
§ 205. In the next place, in partnership articles it
is sometimes agreed, that the real estate and fixtures,
belonging to the firm, shall not be treated as partner-
ship property, as between the partners; but that all the
partners shall have a several and individual interest
therein. In such cases, the interests of the partners
will be treated throughout, as their several and separ
rate estate ; and of course, in cases of bankruptcJy of
the partners, it will be distributable to and among
their separate creditors respectively, in preference to
their joint creditors.^ The rule is, or at least may be.
1 Ante, § 173, 182, 193, 202; CoUyer on Partn. B. 5, ch. 1, § 3, p.
753 to 759, 2d edit.
2 Pothier, de Sooietd, n. 71, 72.
3 Dig. Lib. 14, tit. 1, 1. 1, § 13, 14 ; Pothier, Pand. Lib. 14, tit. 1, n. 4.
* Code of Louisiana (1825), art. 2838 to art. 2840.
5 Collyer on Partn. B. 2, ch. 2, § 2, p. 141, 2d edit.; Id. B. 4, ch. 2, § 1,
p. 595, 596, 600 ; Id. B. 2, ch. 1, § 2, p. 113 ; Smith v. Smith, 5 Ves. E.
189 ; Ex parte Smith, 3 Madd. R. 63.
CH. X.] CONSTEUCTIQN OF ARTICLES, 335
different in cases of mere personal property, which still
remains in the reputed ownership of the partnership,
although it will he the same, if the property he clearly
and exclusively in the ownership of one partner, as his
separate personal property.^
§ 206. Connected with this stipulation is ordinarily
another for an annual account, valuation, and balance
of the moneys, stock in trade, and credits of the part-"
nership, and also of the debts due by the partnership -^
and sometimes also for an annual division of the
profits, or of a portion thereof. The annual accounts,
when so settled and balanced, are ordinarily held to be
conclusive, unless some error is shown ; and to guard
against the opening of such accounts, upon suggested
errors at distant periods, it is not unfrequently further
provided, that such annual statements and settlements
of the accounts shall be binding and conclusive upon
all the parties, notwithstanding any errors, unless they
are discovered in the lifetime of the partners, or during
the term of the partnership.^ But all such clauses are
nugatory, in cases where the error has arisen from the
fraud of any of the partners ; for fraud will vitiate any,
even the most solemn transactions.^
§ 207. Another usual stipulation on the articles is
for a general account of ^ all the partnership property
and concerns, upon the dissolution or expiration of the
1 CoUyer on Partn. B. 2, eh. 2,§ 2, p. 141, 2d edit. ; Id. B. 4, ch. 2,
§ 1, p. 595, 596, 600 ; Id. B. 2, ch. 1, § 2, p. 118 ; Smith v. Smith, 5 Ves.
R. 189 ; Ex parte Smith, 3 Madd. R. 63 ; CoUyer on Partn. B. 4, ch. 2,
§ 1, p. 596 to 605, 2d edit.
3 CoUyer on Partn. B*. 2, ch. 2, § 2, p. 144, 145, 2d edit.
3 See CoUyer on Partn. B. 2, ch. 2, § 2, p. 145, 146, 2d edit. ; Oldaker
«. Lavender, 7 Sim. R. 239.
4 Ibid.
336 PARTNERSHIP. [CH. X.
partnership, which is followed up by another, pointing
out the mode of winding up the concerns, and of
dividing and distributing the partnership property and
effects. This is generally provided for in one of two
modes. One mode is, by a general conversion of all
the partnership assets into cash, by a sale, and dividing
the produce thereof, after providing for the payment
of the debts of the firm, among all the parties, in
proportion to their respective shares and interests.
Another mode is by providing, that one or more of the
partners shall be entitled to purchase the shares of the
other at a valuation.^ The former mode is that con-
stantly adopted by Courts of Equity, in the absence of
any express stipulations ; the latter mode can be in-
sisted upon, only when there is an express stipulation
to that very effect.^ A mere stipulation for the division
of the partnership stock and effects, at the end of the
partnership, will not be deemed by Courts of Equity
sufficient to entitle one or more of the partners to pur-
chase them at a valuation ; but merely to provide for a
division in the usual manner, by a sale.^ The same
rule of a sale is applied in all cases, where the mode
prescribed by the partnership articles becomes imprac-
ticable, or cannot otherwise be fairly obtained.*
§ 208. Under the clause in the articles for the pur-
chase at a valuation, upon the dissolution of a part-
nership, the question has arisen, whether that clause
1 CoUyer on Partn. B. 2, ch. 2, § 2, p. 145, 146, 2d edit., which cites 7
Jarman's Convey. 31 ; Cookson v. Cookson, 8 Sim. R. 529.
2 Ibid. ; Wilson v. Greenwood, 1 Swanst. R. 471, 482; Featherston-
haugh V. Fenwick, 17 Ves. 298.
3 Collyer on Partn. B. 2, ch. 2, § 2, p. 146 ; Rigden v. Pierce, 6 Madd.
R. 353 ; Cook v. CoUingridge, Jacob's R. 607.
4 Cook V. Collingridge, Jacob's R. 607.
CH. X.] CONSTEUCTION OF ARTICLES. 337
is applicable to a dissolution by bankruptcy. It has
been thought that it is not, although the point has not
expressly come under decision ; but a strong inclination
of opinion, in that direction, was expressed by Lord
Eldon.^ The question turns upon this, whether a man
can, by contract, or otherwise, provide for a particular
disposition of his .property, in an event which deprives
him of all disposing power over it, and vests that right
in other persons.^
§ 209. We have already seen, that it is an implied
duty and obligation of every partner, not to carry on
any business inconsistent with, or contrary to the true
interest of the partnership.^ But this is ofterf ex-
pressly provided for by a special stipulation in the
partnership articles. Where the language is general,
1 Wilson w. Greenwood, 1 Swanst. R. 481, and the Reporter's note (a) ;
Gow on Partn. eh. 5, § 3, p. 300, 3d edit. ; Collyer on Partn. B. 2, ch. 2,
§ 2, p. 145, 146, 2d edit. ; Post,^§ 396. — Mr. Swanston in his note says ;
" The following are some of the principal authorities applicable to this
point. Lookyer v. Savage, 2 Str. 947; Roe v. Galliere, 2 T. R. 103;
Ex parte Hill, Cook's Bankr. Law, 228 ; 1 Cox, 300 ; Ex parte Bennett,
Cook's Bankr. Law, 229. In the matter of Murphy, 1 Sohoale & Lefr.
44 ; Ex parte Henecy, cit. lb. ; in the matter of Meaghan, 1 Schoale &
Lefr. 179; Dommett C.Bedford, 6 T. R. 684; 3 Ves. 149; Ex parte
Cooke, 8 Ves. 363 ; Ex parte Henton, 14 "Ves. 598 ; Ex parte Oxley, 1
Ball & Beat. 258; Higinbotham v. Holme, 19 Ves. 88; Ex parte Vere,
19 Ves. 93; 1 Rose, 281 ; Ex parte Young, 1 Buck, 179; 3 Madd. 124;
Ex parte Hodgson, 19 Ves. 206. And see Brandon v. Robinson, 18 Ves.
429. The general distinction seems to be, that the owner of property
may, on alienation, qualify the interest of his alienee, by a cpndition to
take effect on bankruptcy ; but cannot, by contract or otherwise, qualify
his own interest by a like condition, determining or controlling it in the
event of his own bankruptcy, to the disappointment or (Jelay of his cre-
ditors ; the Jus disponendi, which for the first purpose is absolute, being, in
the latter instance, subject to the disposition previously prescribed by
law.
2 Ibid.
3 Ante, §178, 179.
PAKTN. 29
338 PAETNEESHIP. [CH. X.
it will, of course, be construed to apply to all other
business, injurious to, or interfering with the interest
and business of the partnership. But if the stipula-
tion be limited to engaging in the same business on
the separate account of the partner, or to engaging in
any other particularly specified business, during the
continuance of the partnership, there, it would seem
to leave the partner free to engage in any other than
the excepted business, upon the known maxim of the
law, that Expressio unius est exclusio aMerius?
§ 210. The like language, in partnership articles,
will also, in some cases, be construed to import a pro-
hibition to engage in the same trade, upon a with-
drawal from the partnership, even when there are no
express words to the purpose, but the prohibition
arises by mere implication. Thus, where by the arti-
cles it was agreed, that the trade of the partnership
(that of a brewer) should continue for eleven years,
with a proviso, that if either of the parties should be
so minded, upon giving six months' notice to the other,
he should be at liberty to quit the trade and mystery
of a brewer, and the other party should be at liberty
to continue the trade upon his own account; it" was
1 Collyer on Partn. B. 2, ch. 2, § 2, p. 143, 2d edit. ; Glassington v.
Thwaites, 1 Sim. & Stu. 182.— Mr. Collyer (Collyer on Partn. B. 2, ch
2, § 2, p. 142, 143, 2d edit.) has remarked ; " If several persons enter into
partnership, under a stipulation, that the copartners, or any of them, shall
not, during the continuance of the copartnership, engage in any business
otherwise than upon the account and for the benefit of the same copart-
nership ; and, after the execution of the articles, one of the partners •with
the consent of the others becomes a partner in a separate firm, the articles
of partnership, coupled with such consent, will not operate to make the
other partners of the original firm partners also in the separate firm. But
a person may, by the decree of a Court of Equity, become a partner in
the separate business of his copartner, entered into without his consent, in
violation of the articles."
CH. X.] CONSTBUCXION OF ARTICLES. 339
held by the Court, that the party giving such notice,
upon the true interpretation of the words, "to be at
liberty to quit the trad« and mystery of a brewer, &o."
was not at liberty to engage in the brewery business
on his own account, but was bound to quit it alto-
gether.^
§ 211. So, where, upon the retirement of one of
two partners from a partnership ip. trade, it was left
to arbitrators to determine (among other things) what
was to be paid to the retiring partner for the good-will
of the trade ; and the arbitrators, upon the under-
standing that the retiring partner would not . set up
the trade in the same skeet or vicinity, awarded to
him a certain sum for his share of the good-wUl thereof,
which was accordingly paid by the other partner ; and
he afterwards set up the trade in the same neighbor-
hood ; the Court, notwithstanding the arbitrators had
laid no express restraint on the retiring partner, in
their award, held, ihat he should be restrained by in-
junction from carrying on the trade there^ as it was a
violation of the implied parol understanding of all
parties at the time.^
§ 212. A fmihri^ an injunction wUl lie in a case,
where, upon the withdrawal of a partner, it is agreed
between the parties, that the business shall be carried
on by the remaining partners alone, if such retiring
partner should act in any manner inconsistent with
such an agreement. Thus, where the plaintiff and
defendant had been partners in stage-ooaches ; and by
an agreement on the dissolution of their partnership,
1 Cooper o. Watson, 3 Dong. K. 413 ; S. C, 2 Chitty, R. 451.
2 Harrison v. Gardner, 2 Madd. K. 198; Gow on Partn. oh. 2, § 4, p.
107, 3d edit.
340 PAKTNEESHIP. [CH. X.
it was stipulated, that the business, so far as it was
carried on between Newbury and London, should belong
to the plaintiiF, and that the defendant should not carry
on the business of coach proprietor between Newbury
and London ; the defendant afterwards set up a stage-
coach, which began its journey at a place a few miles
distant from Newbury, but travelled through Newbury
to London. On a bill filed, and an affidavit in support
thereof. Lord Eldon granted an injunction to restrain
the defendant from carrying on the business between
Newbury and London. So, where a company, in which
A. and B. were partners, contracted with the Post-
master-General for the service of the mail, each part-
ner supplying horses for a distinct part of the road ;
but in consequence of the bad manner, in which A.
horsed the coach, the Postmaster-General had been
frequently obliged to suspend the contract ; it was
held, that B. might maintain an injunction against A.
to restrain him from interfering with B.'s portion of
the road, upon the ground of the irreparable injury to
the partnership, which would ensue from such an inter-
ference.-'
I 213. We have, also, already seen, what the gen-
eral rule of law is, as to the right and authority of a
majority, or of a definite number, to direct and regu-
late the concerns of the partnership.^ This subject,
iij cases of partnerships, composed of numerous per-
sons, frequently constitutes a matter of a special pro-
vision in the articles ; and so far as the provision
1 Collyer on Partn. B. 2, ch. 3, § 5, p. 238, 2d edit. ; Williams v.
Williams, 1 J. Wils. Ch. R. 473, note ; Anderson v. Wallace, 2 Molloy,
E. 540.
3 Ante, § 123 to 125.
CH. X.] . CONSTRUCTION OF ABT1CLE8. 341
extends, it will form the Tule of the partnership.^ But
it will not he extended by implication to any collate-
ral cases, although they may fall within the same, or
even a greater, mischief.^ Thus, for example, if it is
intended, that, in cases of difllculty, the majority shall
have power to wind up or seU the concern, the author-
ity must be expressly given; for it will not be inferred
from the general language of any provision, that the
majority, or any definite number, shall have authority
to direct and regulate the concerns of the partnership.^
And in these, as in the like cases, the provision itself,
so far at least as Courts of Equity may be called upon
to enforce it, may be controlled, or waived by the ac-
quiescence, or action, of the partners habitually in a
different course.*
§ 214. Provision is, also, often made in partnership
articles, for the expulsion of a partner for gross mis-
conduct, or in case of insolvency, or bankruptcy, or
other special enumerated cases. Of course, such a
provision will govern in all cases to which it properly
applies.^ And where a provision is made for insolven-
cy, the question may arise whether it means a techni-
cal insolvency under [the insolvent debtor's act, or a
mere inability to pay just debts, according to the com-
mon use of the phrase in commercial transactions.
The latter, it should seem, is to be deemed the true
sehse.^
I CoUyer on Partn. B. Z, ch. 2, § 2, p. 143, 144, 2d edit,
a Ibid.
3 Ibid. ; Ghapple v. Cadell, Jacob's K. 537.
* Ante, § 192 ; Glaasington v. Thwaites, 1 Sim. & Stu. 124 ; Jackson v.
Sedgwick, 1 Swanst. B. 460.
5 See the late important case of Blissett v. Daniel, 23 Eng. Law & Eq.
R. 105.
6 Collyer on Partn. B. 2, ch. 2, § 2, p. 151, 152, 2d edit. ; Parker v.
29*
342 PARTNERSHIP. . [CH. X.
§ 215. It is also usual to insert in articles of part-
nership, a stipulation that disputes and controversies
between the partners shall be referred to arbitrators,
to be named by the respective partners. It seems,
' that no action at law is maintainable for a breach of
any stipulation of this sort, as it is against the policy
of the common law, and has a tendency ta exclude the
jurisdiction of the Supreme Courts, which are provided
by the Government with ample means to entertain
and decide all legal controversies.' Besides j there is
this additional difficulty, that it would be impractica-
ble for the party to establish at the trial, that, upon
such an arbitration, he would have succeeded, so as to
entitle him to damages.** In either view, the stipula-
tion would seem to be nugatory and futile. But be
this as it may, it is very clear, that no stipulation of
this sort will be decreed to be specifically performed
by a Court of Equity ; not merely upon the ground
of public policy, but also upon the ground of the
utter inadequacy of arbitrators to administer entire
justice between the parties, from a defect of power in
them to examine under oath, and to compel the pro-
duction of papers, as well as upon the ground of the
utter impracticability of a Court of Equity's compel-
ling a suitable performance of such a stipulation be-
tween the parties.^ But, under a clause of this nature,
Gossage, 2 Cromp. Mees. & Rose. 617; Biddlecome v. Bond, 4 Adol. &
Ellis, E. 332.
1 Gow on Partn. ck 2, ^ 3, p. 72, 89, 3d edit. ; Figes v. Cutler, 3
■ Stark. K. 139 ; Collyer on Partn. B. 2, ch. 3, § 1, p. 165, 166, 2d edit. ;
Kell V. HoUister, 1 Wils. K. 129 ; Watson on Partn. ch. 7, p. 383, 2d
edit.
3 Ibid.; Tattersall v. Groote, 2 Bos. & Pull. 131; Street v. Rigby, 6
Ves. 815, 818.
3 Collyer on Partn. B. 2, ch. 3, § 1, p. 165 to 168, 2d edit. ; Street v.
CH. X.] CONSTRUCTION OF ARTICLES. 343
where the partners do actually refer matters to arbi-
trators, questions may arise as to the nature and
Kigby, 9 Ves. 815, 817, 818; Tattersall v. Groote, 2 Bos. & Pull. 131,
135, 136 ; Wellington v. Mcintosh, 2 Atk. 569 ; Gow on Partn. ch. 2, § 4,
p. 103, 104, 3d edit.; 1 Stcty on Eq. Jurisp. § 670. — In the case of
Street v. Rigby, 6 Ves. 815, Lord Eldon discussed the subject at large,
upon a covenant of this nature, and said; " It has occurred to me, that in
almost every case of this sort, the parties have adopted. a fancy, that they
can make any thing, in the contemplation of the Court fit to be considered
matter of dispute, upon which they think proper to dispute. That is not
so. It must be that which a Court will say is fairly and reasonably made
matter of dispute. Another circumstance is, that the parties do not fre-
quently appreciate the effect of such a covenant. First, at law, in the
case in the Court of Common Pleas, the Judges, Heathe and Kooke,
seemed to think it futile, and tantamount to a covenant to forbear suit. I
take notice of the circumstance, as material with regard to Half hide v.
Penning ; for if the meaning of a covenant to refer is to forbear suit
altogether, that covenant to refer, before you bring suit, and to suspend it
in the mean time, would stand upon principles, pro tempore, that, it would
be very difficult td say, do not apply to both those covenants. Suppose
an action brought. The question would be, what the damages would have
been, if the defendant had joined, and named an arbitrator, and evidence
had been produced, (and what would be, could by no means be correctly
proved,) and an award had been made, giving some supposed sum, which
no proof could ascertain. The effect, therefore, of such a covenant is,
that, as the damages are not to be ascertained by evidence, nominal
damages only can be got. Whose fault is it ? There are prudential ways
of drjiwing these articles. There might have been an agreement for
liquidated damages, to enforce a specific performance, if an action could
not produce sufficient damages, or equity would not entertain a bill for a
specific performance. If they had enforced their legal remedy by such a
stipulated security, it would be very difficult to say, they would also have
a remedy in equity. In the case from Astley's Theatre, (Astley v. Wel-
don, 2 Bos. & Pul. 346,) there was no dispute in the Court of Common
Pleas, that the actress might have agreed upon a liquidated sum to be
forfeited for non-attendance, &c. The Court were of opinion, very pro-
perly, that where there was a stipulated sum in the covenant, that was the
stipulated damages; and the general sum of J 200 for breach of any of
the articles was a penalty ; but it was not doubted that sum might have
been made the liquidated damages, if they thought propei*. The party
must put himself in a situation to have substantial damages. In this case,
upon an action, they could have only Is. ; for they could not ascertain
what more they were to have. Then, what can they have in equity ?
344 PAETNERSHIP. [CH. X.
extent of the matters upon -which the arbitrators may
make their award. Thus, for example, if there should
There is considerable weight as evidence of what the law is, in the circum-
stance, that no instance is to be found of a decree for specific performance
of an agreement to name arbitrators ; or thkt any discussion upon it has
taken place in experience for the last twenty-five years. I was counsel in
Price V. Williams, (3 Bro. C. C. 163; 1 Ves. Jun. 365,) a case which
justifies considerable doubts, whether the eulogia upon the domestic forum
of arbitrators are well founded. That was a case before Lord Thurlow,
upon a bill for specific performance of such an agreement, sending parties
to arbitrators, who might or might not be able to come to a decision ; and
Lord Thurlow was of opinion that the Court would not perform such an
agreement. The Court, if it is not part of the agreement, cannot give
them authority to examine upon oath ; and the agreement itself cannot
authorize any person to administer an oath. A difficulty arises from the
want of the conscience of the party. This Court has given credit to
itself, notwithstanding what has passed in the Court of King's Bench, in
their rules upon attachments, as likely to decide as well as arbitrators ;
and it requires a strong case to deprive a person of the right to a decision
here. In Price v. Williams, the account came back very favorably to my
client ; the result being, that a very small sum was due from him. ' A vast
number of exceptions were taken ; and the Court felt that sort of difficulty
of dealing with the exceptions that led to an arbitration ; though at first
the Court would not hear of it ; and the party, who had not been able to
establish any thing before the Master, in that mode gained several
thousand pounds. Then the difficulty occurred about the power of this
Court to review the decision of arbitrators ; and in the end my client
fared much worse than he would have done before the Master. That case
and others led me to adopt a rule never to advise an arbitration after-
wards. If such a bill never has been usually filed in this Court, and if in
that instance Lord Thurlow was of opinion it could not be maintained, the
jurisdiction would stand upon principles not very intelligible, if a party,
who by the imbecility belonging to the covenant could recover only Is.
damages in an action, coming to this Court for substantial justice, to have
an account taken, that person, who could not file a bill for a specific exe-
cution of the agreement to refer, can say, that though be admits, neither
of them could recover more than Is. at law, and he cannot demand the
relief by way of a specific performance, he can have it by pleading the
covenant, if he is brought in the character of a defendant; and can
compel the other to go to that tribunal, to which the defendant, coming in
the character of plaintifi", could not oblige him to resort. It is very
difficult to say, that should be the law of the Court. Then, is it so ? I
look upon the case of Wellington v. Mcintosh as an authority, that at that
CH. X.]
CONSTRUCTION OF ARTICLES. 345
be a submission to arbitrators of all matters in diiFer-
ence between the partners, the question may arise,
time it was not the law of the Court. At that period the distinction,
taken in later cases, had not obtained ; that the plea, though it might have
been good as to the relief, is bad, if bad as to the discovery. As to that,
the course of the. later authorities seems to have altered the law of plead-
ing. But quoad such a point as this, the plea, if good to the relief, must
be good to the discovery ; for this plea means this, if any thing ; that the
parties will not harass themselves by going to Courts of Justice ; but will
state to each other what is in dispute, and refer that to arbitrators ; and
entering into such a covenant they must be taken to mean, that they will
be content with a decision upon such discovery as arbitrators can compel,
without subjecting each other to the necessity for either to be examined
upon oath before arbitrators, who cannot examine them upon oath. They
choose, therefore, that forum, exclusive of the jurisdiction of the country
to all intents and purposes ; meaning that arbitrators shall, from beginning
to end, do that which they are enabled to do, viz., to decide between them
as well as they can. It would be a breach of covenant, that would entitle
them to nominal damages, to file a bill for discovery, as much as a bill for
discovery and relief. In Halfhide v. Fenning, the vfhole of my argument,
according to the report, amounts to taking the distinction between dis-
covery and relief, and putting the case upon that distinction ; and if it was
so argued, I am not surprised, that Lord Kenyon should take it, that the
counsel thought, if not put upon that, it could not be supported. But it is
not to be put upon that distinction, but upon the ground I have stated. It
is said, courts of law think these agreements very wise. Kill v. HoUister,
however, shows, that courts of law are ready enough to say the agreement
of the parties shall not oust their jurisdiction ; though they permit it to
oust the jurisdiction of courts of equity. But they enforce the agree-
ment, not as agreement, but by granting an attachment for breach of the
rule. It is dealing a little imperiously to say, that an agreement which,
made out of Court, would not bar an action, if made in Court, shall bar a
bill. It was justly observed upon the passage in Atkyns, (Wellington v.
Mcintosh, 2 Atk. 569,) that arbitrators cannot administer an oath; and
the agreement will not enable them. We see in daily practice at law, the
Court administers the oath ; and under that the parties go before the
arbitrators. It is said, the party must have discovery some way. But if
the distinction cannot be maintained between a bill for discovery only, and
for both discovery and relief, it must be said, they are bound to go first
before the arbitrators ; and the party must be brought there, and must
refer ; the parties to be examined upon honor, for they cannot upon oath ;
and then it is said, as in the argument of these cases, if it so turns out,
then they are come to this Court ; saying, there is then a failure of the
346 PARTNERSHIP. [CH. X.
whether it is within the competency of the arbitrators
to award a dissolution of the partnership ; and it has
justice, for which they covenanted ; and therefore there is a jurisdiction in
this Court. Till Halfhide v. Penning no such decree was ever heard of.
Next, expressing it in terms of the highest respect and veneration for
that noble and learned person, now no more, I doubt whether it is a very-
wise exercise of the jurisdiction of this Court, recollecting, that it is to
give a relief beyond the law, not to order the parties to go to law to take
the effect of the stipulated remedy, but under a positive covenant, not a
negative covenant, that they will not sue, (upon which there would be
considerable diffidulty,) to send them by way of experiment to that juris-
diction, so likely to miscarry, under the circumstance that it has not,
unless received under the authority of the Court, a power to administer
an oath, where the justice that tribunal can render is so insufficient,
though they have not expressly bound themselves by covenant; and,
whether the Court would not act more discreetly by saying, they are in a
Court, where justice can certainly be done ; and as they have not stipu-
lated to the contrary, their fate shall be decided here, instead of sending
them to so improvident a tribunal. I recollect passages, in which Courts
of Justice, however full of euhgia upon these domestic forums, have recol-
lected their own dignity sufficiently to say, they would not be ancillary to
those forums ; that the parties should not be permitted to take their relief
from them, coming here for discovery. It is enough for me to say, it is
not a necessary consequence of a covenant to refer, that the party thereby
agreed to forbear to sue. I do not enter into the question of the effect at
law of a covenant to forbear to sue. But, supposing it good, in strict law
it cannot be maintained, that having covenanted to refer, the party has
covenanted to forbear to sue ; and if not, he has only left himself open to
an action for damages, if he does not refer ; which the suit does not
prevent, if thought advisable. It would be very strong to say, that, where
the legal reitiedy they have provided for themselves is utterly incompetent
to justice, this Court is precluded from granting its ordinary remedy by a
covenant, which does not in terms express an undertaking not to resort to
this Court, and must hold that doctrine upon a plea ; in that shape permit-
ting the defendant to have in substance a specific performance, which
would have been refused to him as a plaintiff; at the hazard of doing
substantial injustice, of a delay of justice almost of necessity, and where
the examination cannot be addressed to the conscience of either the pai>
ties or the witnesses ; from which the subject cannot be debarred, unless
by express terms, or necessary implication. That this has not the effect
of barring the legal remedy, is clear from the cases at law, which agree
that it is still competent to him to take the legal remedy. Then why not
the equitable ? The competency to take both stands upon the same prin-
CH, X.] CONSTRUCTION OP ARTICLES. 347
been held, that they may.^ So, upon a like broad
submission, and also giving authority to arbitrators to
dissolve the partnership, upon such terms and condi-
tions as they might prescribe, it has been held, that
the arbitrators may provide, that, upon the dissolution,
one partner shall not carry on the trade within a
particular prescribed distance of the place where the
ciple." See also Wilks v. Davis, 3 Meriv. E. 507. Mr. CoUyer has
remarked (Collyer on Partn. B. 2, ch. 3, § 1, p. 167, 168) ; "This leads
us to a more general consideration of clauses of this nature. There are
many covenants, to which such clauses may be added with e£fect; but
there are others, the breach of which does not admit of compensation by
liquidated damages, and to which, therefore, they cannot properly be
applied. Thus, on the one hand, if the covenant be such, that the breach
of it must of necessity be uncertain in its nature and amount, then, if
liquidated damages be reserved, they will be deemed the real damages,
and a verdict in an action on the covevant will be found for the amount
of the liquidated damages. On the other hand, if the breach of covenant
be attended with certain damage, as, for instance, if it consist in the
omission to pay a certain sum of money, in such case, although liquidated
damages be reserved eo nomine, they will be considered by a jury only in
the nature of a penalty, and the real damages will be measured by the
sum omitted to be paid. In a late case, even where the real damage was
•uncertain, yet, as it was evidently far less than the amount of the liqui-
dated damages, the Court of Common Fleas, although the language in
which the liquidated damages were agreed to be paid was the strongest
that could be employed, referred it to the prothonotary, to ascertain what
damages, if any, the plaintiff had sustained, and how much, if any thing,
ought to be paid to the plaintiff. Mr. Jarman, in commenting upon this
case, observes, that, upon the reasoning there adopted by the Court, it is
obvious, that a covenant to pay a sum of money as liquidated damages,
on the breach of any one of a series of stipulations, must in all cases be
nugatory, as the covenant necessarily embraces acts of various degrees of
importance, all which cannot with equal justice be compensated for by
the payment of the same sum ; if it were sufficient in regard to some, it
must be excessive as to others ; the consequence is, that, in order to give
an effectual remedy for the recovery of a sum of money as stipulated
damages in such a case, a distinct and separate amount should be assessed,
as the measure of compensation on the breach of each several contract."
1 Collyer on Partn. B. 2, ch. 2, § 2, p. 152, 2d edit.; Green v. Waring,
1 Wm. Black. 475.
348 PARTNERSHIP. [CH. X.
remaining partners are to carry it on.^ So, upon a
general submission by partners of all actions, notes,
accounts, dealings, controversies, and demands, in law
or equity, it has been held, that it is competent for the
arbitrators to award that one of the partners shall
take aU the joint property, he paying to the other a
sum'in gross, and also discharging all the partnership
debts.^
1 CoUyer on Partn. B. 2, ch. 2, § 2, p. 152, 2d edit. ; Green v. Waring,
1 Wm. Black. 475 ; Moriey v. Newsome, 5 Dowl. & Kyi. 317.
2 Byers v. Van Deusen, 5 Wend. K. 268.
CH. XI.] REMEDIES BETWEEN PAETNERS. 349
CHAPTER XI.
REMEDIES BETWEEN PARTNERS.
§ 216. These are the most material considerations,
which seem proper to he hrought before the learned
reader, as to the true interpretation and construction
of partnership articles, so far as they have, as yet,
come under judicial cognizance and decision. They
are necessarily imperfect ; hut at the same time they
may serve, in some degree, as lights and guides, to
direct our inquiries in analogous cases, and to point
out the difficulties to he surmounted, as well as the
defects to be avoided.
§ 217. The next inquiry naturally presented is, as
to the remedies, which belong to partners themselves,
either at law or in equity, during the continuance of
the partnership, either to enforce the particular stipu-
lations, contained in the articles of partnership, or
other duties and obligations which arise by operation
and implication of law. A full examination of this
topic properly belongs to a treatise on remedies and
pleadings at law and in equity, and is beside the pur-
pose of the present Commentaries; but it may be
found discussed at large in elementary works, devoted
to the consideration of remedies at law and in equity.-'
It may not, however, be without use to bring together,
in this place, some general suggestions and doctrines
I See Collyer on Partn. B. 2, ch. 3, § 1, p. 162 to Id. ^ 5, p. 257, 2d
edit. ; Gow on Partn. oh. 2, § 3, p. 69 to § 4, p. 116, 3d edit.
PARTN. * 30
350 PARTNEKSHIP. [CH. XI.
applicable to the subject, which may serve to explain
other decisions, or to clear away lurking doubts.
§ 218. Wherever there is an express stipulation in
the partnership articles, which is violated by any part-
ner, an action at law, either assumpsit, or covenant,
as the case may require, will ordinarily lie, to recover
damages for the breach thereof.^ In many cases,
indeed, such damages may be merely nominal, and
inadequate for redress. But still we must take the
law as we find it; and in such cases, as in some other
relations in life, we enter into the connection for better
or for worse.^
§ 219. It is sometimes laid down by elementary
writers, that, during the continuance of the partnership,
an action at law will lie by one partner against the
others, for moneys advanced, or paid, or contributed, on
account of the partnership, or of the debts and obliga-
tions incurred thereby.^ But this doctrine, in the
general terms in which it is laid down, is utterly .
1 Gow on Partn. ch. 2, ^ 3, p. 69 to 73, 3d edit.
a CoUyer on Partn. B. 2, ch. 2, ^ 1, p. 131, 2d edit. ; Goodman v. Whit-
comb, 1 Jac. & Walk. 569, 572 ; Wray v. Hutchinson, 2 Mylne & Keen,
235 ; 1 Story on Eq. Jurisp. § 659 to 665 ; Gow on Partn. ch. 2, § 3, p.
69 to 93, 3d edit. — The action of account seems properly applicable only
to cases where the partnership is ended. See 1 Story on Eq. Jurisp.
§ 659 to 665; Gow on Partn. ch. 2, § 3, p. 68, 69, 70; Id. p. 73, 74, 3d
edit. ; Wray v. Milestone, 5 Mees. & Welsh. 21 ; Foster v. Alanson, 2
Term R. 479 ; Duncan v. Lyon, 3 Johns. Ch. R. 351, 361, 362. Actions
of tort can scarcely be maintained at law by one partner against the
other, touching the partnership property; even if one partner should
wilfully destroy the property. Gow on Partn. ch. 2, § 3, p. 89 to 93, 3d
edit. ; CoUyer on Partn. B. ?, ch. 3, § 8, p. 257, 268, 2d edit. The tippro-
priate remedy seems to be in equity.
3 See Gow on Partn. ch. 2, § 3, p. 79, 80, 81, citing Abbott v. Smith, 2
W. Black. R. 947, and what was said by Lord Kenyon in Merryweather
V. Nixon, 8 Term R. 186, and by Mr. Justice Bayley in Ansell v. Water-
house, 6 Maule & Selv- 390, and Holmes v. Williamson, 6 Maule & Selw.
158. See also 1 Montagu on Partn. ch. 4, p. 50 ; Gary on* Partn. 65 ;
Hamilton v. Hamilton, 6 Harris, 20.
CH. XI.] KEMEDIES BETWEEN PAl^TNERS. 351
untenable, and inconsistent with the rights, and duties,
and relations of the partners with each other.^ It is
1 Most of the cases •which are supposed to Jnculcate this doctrine, turn
upon other very distinct grounds. They are nearty all summed up in Mr.
CoUyer's valuable Treatise. CoUyer on Partn. B. 2, oh. 3, § 2, p. 174 to
p. 193. They are cases, (1.) where either the debt was a separate debt
and not a partnership debt. Smith v. Barrow, 2 Term K. 476 ; Gow on
Partn. eh. 2, § 3, p. 75, 76, 77, 3d edit (2.) Or, a separate and distinct
security, or negotiable instrument, was given by one partner to another,
on the partnership account. Preston v. Strutton, 1 Anstr. R. 50 ; Venning
V. Leckie, 13 East, R. 7 ; Gridley v. Dole, 4 Comst. 486. (3.) Or, where
the contract was preliminary to the partnership, and merely in contem-
plation of it; such as a promise to contribute so much to the partnership
funds, in stock or money. Gale v. Leckie, 2 Starkie, R. 107 ; Venning v.
Leckie, 13 East, R. 7 ; Helme v. Smith, 7 Bing. R. 709 ; Vance v. Blair,
18 Ohio, 532. (4.) Or, where the case is one of part-owners or' joint-
contractors, and not of partners. Helme v. Smith, 7 Bing. R. 709 ;
Graham v. Robertson, 2 Term R. 282 ; Sadler v. Nixon, 5 Barn. & Adol.
936. (5.) Or, where the money or funds have been voluntarily separated
from the partnership stock or moneys, and appropriated to one partner,
and he alone is interested in a contract touching the same. Coffee v.
Brian, 3 Bing. R. 54 ; Jackson v. Stopherd, 2 Cromp. & Mees. 361 ; Wil-
son V. Cutting, 10 Bing. R. 436; Sharp v. Warren, 6 Price, R. 132. (6.)
Or, where a balance has been struck, and a separate promise made to pay
the same to one partner. Moravia v. Levy, 2 Term R. 483, note ; Foster
V. Alanson, 2 Term R. 479 ; Preston v. Strutton, 1 Anst. R. 50 ; Brierly
V. Cripps, 7 Carr. & Payne, 709 ; Wray v. Milestone, 6 Mees. & Welsb.
21 ; Henley v. Soper, 8 Barn. & Cressw. 16 ; Winter v. White, 1 Brod. &
Bing. R. 350. See also Gow on Partn. ch. 2, ^ 3, p. 69 to 97, 3d edit. ;
Fromont v. Coupland, 2 Bing. R. 170; Carr v. Smith, 5 Adol. & Ell.
New R, 128, 138. But the mere fact that an account has been taken and
balance struck between partners at a certain period during the partner-
ship, would not entitle any partner to maintain an action therefor, unless
agreed to generally by all the partners. See Morrow v. Riley, 15 Ala.
710. In Carr v. Smith, 5 Adol. & Ell. New R. 138, Lord Denman said ;
" The case of Fromont v. Coupland, and other similar cases, seem to limit
the action to a settlement of accounts on a final close of all partnership
transactions ; but this case does not necessarily raise that question ; for at
all events the settlement, in order to ground an action, must be one which
is binding and conclusive upon the partners. Now it does not appear
here that the adjustment and settlement was ever agreed to by all the
partners, nor indeed by the plaintiff' and the testator ; if, therefore, it were
binding and conclusive on them, it must have been so by reason of the
352 , PARTNERSHIP. [CH. XI.
true, that one partner may maintain an action at law
against the other partners, or any one or more of them,
for moneys advanced, or paid, or contributed, at their
request, for their separate and distinct account and
benefit. But this is upon the plain ground, that it has
no connection with the partnership concerns and liabili-
ties; and that the transactions or contracts are between
the parties in their several, distinct, and independent
capacities, separate from the partnership. For there is
no incompetency in partners to enter into contracts
with each other, as individuals, in matters dehors the
partnership concerns and business.-' But this is very
different from the case of a partner's entering into con-
tracts with the partnership, as such, or of his paying
moneys, or incurring liabilities on account thereof, he
being in all such cases one of the parties in interest,
and, as such, bound jointly with the others to contri-
bute towards the discharge of the common obligations
of the partnership.^
power confided to the persons who drew it up, and in that case it would
be an award, and required a stamp. It would come within the authority
of Jebb ». McKierman, rather than within Boyd o. Emmerson, Sybray v.
White, and similar cases.''
1 Gow on Partn. ch. 2, § 3, p. 75, 76, 3d edit. ; Coffee «. Brian, 3 Bing.
K. 54 ; Smith v. Barrow, 3 Term K. 476 ; Noekels v. Crosby, 3 Barn. &
Cressw. 814; CoUyer on Partn. B. 2, ch. 3, § 2, p. 175 to 178, 2d edit.;
1 Story on Eq. Jurisp. §. 664 to 666 ; Watson on Partn. ch. 8, p. 394 to
409, 2d edit.
2 Gow on Partn. ch. 2, ^ 3, p. 77, 78, 79 ; Holmes v. Higgins, 1 Barn. &
Cressw. 74; Milburn v. Codd, 6 Barn. & Cressw. 419 ; Caldicott v. Grif-
fiths, 22 Eng. Law & Eq. R. 527; Neale v. Turton, 4 Bing. R. 149;
Teague w. Hubbard, 8 Barn. & Cressw. 345 ; Geddes v. Wallace, 2 Bligh,
R. 270 ; CoUyer on Partn. B. 2, ch. 3, § 2, p. 174 to 178, 2d edit. ; Wor-
rall 11. Grayson, Tyrwh. & Grang. R. 477, 480 ; S. C. 1 Mees. & Welsh.
166 ; Brown u. Tapscott, 6 Mees. & Welsh. 119, 123 ; Bovill v. Hammond,
6 Barn. & Cressw. 149 ; Pearson v. Skelton, 1 Mees. & Welsh. 504 ; S. C.
Tyrwh. & Grang. R. 848; Sadler v. Nixon, 5 Barn. & Adol. 936;
Haskell v. Adams, 7 Pick. 59; 1 Story, Eq. Jurisp. § 679, 680, 681.
CH. XI.] REMEDIES BETWEEN PARTNERS. 353
§ 220. This doctrine is not confined to cases of
moneys paid, or debts incurred, or contributions made,
by one partner on account of liabilities of the partner-
ship, resulting from contracts binding the same ; but
it equally applies to moneys paid, and debts incurred,
and contributions made, by one partner on account of
negligences and torts, affecting the partnership.^ In
the ordinary course of things there is not, indeed, as
is well known, any right of contribution allowed by
the common law between joint wrong-doers, where
one has paid the whole damages or expenses occa-
sioned thereby.^ And this rule is just as applicable
to partners as to other persons.^ But, then, the rule
is to be understood according to its true sense and
meaning, which is, where the tort is a known medi-
tated wrong, and not where the party is acting under
the supposition of the entire innocence and propriety
of the act, and the tort is merely one by construction
or inference of law.* In the latter case, although not
in the former, there may be, and properly is, a contri-
bution allowed by law, for such payments and ex-
penses between the constructive wrong-doers, whether
partners, or not.® StiU, -however, the same difficulty
occurs at law in such cases of constructive torts, as in
cases of contracts ; and no remedy at law is maintain-
able therefor between the partners. The remedy, as
we shall presently see, must be administered in another
tribunal.®
1 Pearson v. Skelton, 1 Mees. & Welsb. 504 ; S. C. Tyrwh. & Grang.
R. 848.
2 Merry-weather v. NLson, 8 Term K. 186.
3 Pearson v. Skelton, 1 Mees. & Welsb. 504 ; S. C. Tyrwh. & Grang.
R.848.
4 Adamson v. Jarvis, 4 Bing. R. 66. 5 Ibid.
6 Pearson v. Skelton, 1 Mees. & Welsb. 504 ; S. C. Tyrwh. & Grang.
30*
354 PARTNERSHIP. [CH. XI.
§ 221. The ground, why at law, independent of any-
special covenant, or any distinct several contract, one
partner cannot maintain a sUit against the other part-
ners, for moneys paid, or advanced, or contributed, or
liabilities incurred, on account of the partnership,
may be readily explained in a satisfactory manner. In
the first place, upon the mere technical principles of
the common law, one partner cannot sue the others
for a contribution or payment made for a just partner-
ship liability ; for in such a suit all the partners, in-
cluding himself, must be made defendants ; and it is
clear, upon the acknowledged principles of pleading
at the common law, that a party cannot ,at once be a
plaintiff and a defendant in the same suit ; or, in other
words, he cannot sue himself, either alone, or in con-
junction with others.^ But a reason, far more satisfac-
R. 848. — In this case Mr. Baron Parke is reported, in Tj'rwh. & Gran-
ger, 850, 851, to have said ; " How were the profits divided ? Did the
partners divide the net profits, after the payment of all expenses, or the
gross profits according to the number of miles that each partner horsed
the coach ? If the latter was the case, there was no common fund, and
you will be entitled to a rule ; but if there was a partnership fund, out of
which losses were to be paid, your remedy is in equity. We will consult
the Lord Chief Justice, and ascertain what evidence he has upon his
notes, as to the existence of a partnership fund. With respect to the first
objection taken at the trial, it does not apply." On a subsequent day Parke
B. said, " that on consulting the notes of the Lord Chief Justice, it appeared
that there was a partnership fund, out of which the expenses were first to
be paid, and the residue divided among the partners ; consequently the
nonsuit was right." See Ante, § 61, and note.
1 CoUyer on Partn. B. 2, ch. 3, § 2, p. 188 to p. 193, 2d edit. ; Bosan-
quet V. Wray, 6 Taunt. R. 597 ; Moffat v. Van Millingen, cited 2 Bos
& Pull. 124, note; Mainwaring v. Newman, 2 Bos. & Pull. 1,20; De
Tastet V. Shaw, 1 Bam. & Aid. 664; Neale v. Turton, 4 Bing. R. 149
Teague v. Hubbard, 9 Barn. & Cressw. 532; Brown v. Tapscott, 6 Mees,
& Welsh. 119, 123; Holmes v. Higgins, 1 Barn. & Cressw. 74; Malyne'i
Lex. Merc. p. 810 ; Niven v. Spikeman, 12 Johns. R. 401 ; 1 Story, Eq
Jurisp. § 664, 665, 679; Jones v. Yates, 9 Barn. & Cressw. 532; Rawlinson
CH. XI.] REMEDIES BETWEEN PARTNERS. 355
tory, because it is in no shape founded upon teolinical
principles, is, that until all the partnership concerns
V. Clarke, 15 Mees. & Welsb. R. 292 ; Cruikshank v. Mc Vicar, 8 Beavan,
K.*106. — In this respect the Roman law, the law of France, and the law
of Scotland, present a marked contrast to the common law. In the juris-
prudence of each of these latter countries, the firm is treated, in its aggre-
gate capacity, as having an independent existence, somewhat like a quasi
corporation : and the firm may, therefore, sue and be sued, by a single
partner, without any repugnancy, exactly as a member of a corporation
may sue and be sued by the corporation itself In this respect there is
an analogy to the proceedings in our Courts of Equity, where one partner
is entitled to sue all the^other partiiers, for an adjustment of the partner-
ship concerns, or for any transactions growing out of the same concerns.
Mr. Bell (2 Bell, Comm. B.«7, p. 619, 620, 5th. edit.) states the Scottish
law as follows. " Some lawyers have considered the obligation of the
company as only the joint and several obligations of the partners. But
this is not correct in the law of Scotland. The partnership is held as, in
law, a separate person ; capable of maintaining independently the rela-
tions of debtor and creditor. As a separate person, the company is known
and recognized in obligations and contracts by its separate name or firm,
as its personal appellation. But it cannot hold feudal property in the
social name. It is a consequence of this separate existence of the com-
pany as a person, that an action cannot directly, and in the first instance,
be maintained against a partner for the debt of the company. The. de-
mand must be made, first, against the company ; or the company must
have failed to pay, or have dishonored their bill, before the partner can be
called on. It also follows that the partners are guarantees or sureties for
the company ; not proper or principal debtors. And so, although diligence
may proceed against the partners directly, the company having failed to
pay according to their obligation ; and although personal diligence neces-
sarily can proceed only against the individuals, the estate of the partner
can, in bankruptcy, be charged only with the bailance remaining due, after
what may be drawn from the company estate. Another consequence is,
that the creditors of a partner, if they would attach his share, must arrest
in the hands of the company as a separate person. Action or diliuence
seems to be legally competent by a company firm, or against the partner-
ship by its firm ; though personal execution, of course, is possible only
against the individuals. But so many doubts have been raised of late on
these points, that the safer course is to use the names of the partners.
Sequestration of the company's estate proceeds in the name of the firm.
In England, a doctrine prevails, which does not accord with the law of
Scotland, and which, perhaps, is to be ascribed to a difierence of princi-
. pie, on the point now under discussion. At law, in England, there can
356 PAKTNEBSHIP. [CH. XI.
are ascertained and adjusted, it is impossible to know
whether a particular partner be a debtor or a creditor
of the firm ; for although he may have advanced large
sums of money on account thereof, he may be indebted
to the firm in a much larger amount. Now, a settle-
ment of all the partnership concerns is ordinarily,
during the continuance of the partnership, uriattainar
ble at law; and even in equity it is not ordinarily
enforced, except upon a dissolution of the partnership.
If one partner could recover against the other partners
the whole amount paid by him on account of the part-
nership, they would immediately have a cross action
against him for the whole amount, or his share thereof;
and if he could recover only their shares thereof, then,
in order to ascertain those shares, a full account of
aU the partnership concerns must be taken, and the
partnership itself wound up. This would manifestly
be a most serious inconvenience, as well as a change
of the original contract, from a joint contract of all
the partners, in solido, to a several contract, each for his
own aliquot part of the final balance, due to a par-
ticular partner upon a special transaction.^ And in
be no debt between two partnerships, of each of which one person is a
partner ; and this on the ground, that ' no man can contract with himself,
and, therefore, cannot bind himself in the society of one set of persons to
another, in which he is also a partner.' It is allowed that the contract is
available in equity, but not in law. In Scotland, debts between compa-
nies, in which the same individual is partner, are every day sustained as
quite unexceptionable." See Pothier, de Society, n. 135, 136. The Ro-
man law, while it ordinarily gave the action pro socio only in cases of a
dissolution of the partnership, excepted special cases. Nonnunquam ne-
cessariam est, et manente societate, agi pro socio; veluti, cum societas,
vectigalium caus^, coita est, propterque varios contractus neutri expediat
recedere a societate, nee refertur in medium, quod ad alteram pervenerit.
Dig. Lib. 17, tit. 2,1. 65,§ 15; Id. 1. 52 ; Pothier, Pand. Lib. 17,tit. 2,n.33.
' CoUyer on Partn. B. 2, ch. 3, § 2, p. 174 to p. 193, 2d edit. ; Harvey
CH. XI.] REMEDIES BETWEEN PABTNERS. 357
cases of this sort the maxim may justly apply ; Frus-
tra petis, quod siatim aUeri redder e cogeris ;^ or, as it is
sometimes expressed, Frusira peterit, quod mox rediturus
esset?
% 222. But, although, in cases of the sort above-
mentioned, no remedy lies at law, yet in equity an
appropriate remedy may and will be granted, wherever
it is ex oequo ei lono necessary and proper ; for, in
equity, there is no difficulty in one partner's suing the
other partners for money advanced, or contributions
made, or liabilities incurred, simply on the ground
that it has its foundation in a partnership transaction,
if in other respects the suit is unobjectionable, as no
technical difficulty occurs in equity, as to the joinder
of all the proper parties to the guit.^ Irideed, the ordi-
nary remedy now administered, in matters of account,
or requiring an account between partners, is exclu-
sively in equity.* But this subject, which is rarely
if ever acted upon in Courts of Equity, except upon a
dissolution of the partnership, will more appropriately
occur in another place.*
V. Crickett, 5 Made & Selw. 336 ; Grow on Parte, ch. 2, § 3, p. 69 to p.
77, 3d edit. ; Id. ch. 2, § 4, p. 93 to p. 102.
1 Branch, Maxims, p. 51, Amer. Edit. 1824 ; Jenkins, Cent. 256.
3 CoUyer on Partn. B. 2, ch. 3, § 2, p. 175, 2d edit. ; 1 Story on Eq.
Jurisp. § 664.
3 CoUyer on Partn. B. 2, ch. 3, § 2, p. 174 to p. 193, 2d edit. ; Id. ch. 3,
§ 7, p. 245 to p. 249 ; Abbott v. Smith, 2 Wm. Black. 947 ; Gow on Partn.
ch. 2, § 4, p. 93 to p. 102, 3d edit. ; 1 Story, Eq. Jurisp. § 666 to 674 ; Id.
§ 679, 680 ; Pearson v. Skelton, 1 Mees. & Welsh. R. 504 ; S. C. Tyrwh.
& Grang. R. 848.
« CoUyer on Partn. B. 2, ch. 3, § 4, p. 197 to p. 232, 2d edit: ; Duncan
V. Lyon, 3 Johns. Ch. R. 351, 361, 362, 363 ; Gow on Partn. ch. 2, § 3, p-
73, 74. 3d edit. ; Id. ch. 2, § 4, p. 93 to p. 102.
s Ibid. ; Post, § 228, 229 ; Porman v. Homfray, 2 Ves. & Beam. 329 >
Harrison v. Armitage, 4 Madd. R. 143 ; Richards v. Davies, 2 Buss. R.
347 ; Loscombe v. Russell, 4 Sim. R. 8 ; KnebeU v. White, 2 Younge &
358 PARTNERSHIP. [CH. XI.
§ 223. The Roman law did not to the same extent
or precisely in the same manner as our law, recognize
the distinction between remedies at law and remedies
in equity, although it is very clear, that an analogous
distinction, between suits in the ordinary forum, and
suits ex aequo et lorn before the Praetor's forum, was
well understood, and fully acted upon. But, in cases
of partnership, owing to the complicated nature thereof,
a special remedy was provided, commonly called the
Actio fro socio, the nature, character, and operation
whereof is fully explained in the Digest.-'
§ 224. And, here, a question of a local and general
nature may arise, when, and under what circumstances,
and to what extent, Courts pf Equity will interfere to
enforce either the express or implied duties and obliga-
tions of partners inter sese. In respect to such duties
and obligations as are of a positive and personal na-
ture, it seems difficult 'to perceive how Courts of Equity
can enforce a specific performance of them ; and, there-
fore, in case of a breach thereof, the injured party must
be left to his remedy, if any, at law.^ But the same
objection does not seem to apply to cases where the
relief sought is to enforce the due observance of nega-
tive duties and obligations ; for, here, all that is re-
quired is, that the Court should restrain the partner
from violating them; or, in other words, from doing
Coll. 15 ; Glassington v. Thwaites, 1 Sim. & Stu. 124, and the Reporter's
notes, (a) and (b) ; Natusch v. Irving, Gow on Partn. App. 398, 8d edit. ;
Wallworth v. Holt, 4 Mylne & Craig. 519, 635, 639.
1 Dig. Lib. 17, tit.. 2, 1. 31, 32, 33, 34, &c. ; Pothi^r, Pand. Lib. 17, tit. 2,
n. 30 to n. 54. .
2 Kemble v. Kean, 6 Sim. R. 333 ; Clarke v. Price, 1 Wils. Ch. R. 157 ;
Kimberley v. Jennings, 6 Sim. R. 340 ; Downs v. Collins, 6 Hare, R. 418 ;
CoUyer on Partn. B. 2, ch. 2, § 2, p. 142, 2d edit. ; Id. B. 2, ch. 2, § 1, p.
131 ; 2 Story, Eq. Jurisp. § 722 a.
CH. XI.] REMEDIES BETWEEN PAETNEK3. 359
acts which violate the express or implied obligation
which he is under to forbear. Thus, for example, al-
though a Court of Equity could not compel a partner
to bestow his skill, and diligence, and services faithfully
in the partnership business, yet it may interpose by
injunction to restrain him from wasting the partner-
ship property, from misusing the partnership name,
from interfering to stop the partnership business, or
from fraudulent practices injurious or ruinous to the
partnership, in violation of his express duties or express
contracts.^
' Ibid. ; CoUyer on Partn. B. 2, ch. 3, § 5, p. 233 to 240, 2d edit. ; Id.
B. 2, ch. 2, § 2, p. 142 ; 3 Kent, Comm. Leet. 43, p. 60, 4th edit.; Miles
V. Thomas, 9 Sim. K. 606. — The comments of the Vice-Chancellor (Sir
L. Shadwell) on this subject, in Kemble v. Kean, (6 Sim. R. 333,) are so
important, that they deserve to be cited at large. " In the case of a
mere contract between two persons, who are both carrying on the same
trade, that one shall not carry on his trade within a limited distance in
which the party contracted with intends to carry on his trade, the whole
agreement is of so genuine a kind, that the Court would enforce the
performance of the agreement by restraining the party by injunction from
breaking the agreement so made. In the case where the parties are
partners, and one of the partners contracts that he shall exert himself for
the benefitof the partnership, though the Court, it is true, cannot compel
a specific performance of that part of the agreement, yet, there being a
partnership subsisting, the Court will restrain that party (if he has cove-
nanted that he will not carry on the same trade with other persons) from
breaking that part of the agreement. That is in case of a partnership.
In the case of Morris v. Colman, (18 Ve's. 437,) the bill was ^filed by
Morris against Colman for the purpose of having a question upon the
articles of partnership determined, and for restraining Colman from doing
many acts which he was disposed to do ; and I think, in that ease, (for I
was counsel for Colman from the beginning to the end,) that Colman
always stood on the defensive. The only question was, whether Colman
should be at liberty to do certain acts, which he insisted he was at liberty
to do, and Morris contended that he was not. Now, I apprehend, that
what Lord Eldon says, in giving his judgment upon that point, must be
taken with reference to the subject that was before him ; and I perfectly
well recollect the time when the injunction was granted to restrain Mr.
Colman, but I am not quite sure it is exactly in the way in which the
360 PAETNEESHIP. [CH. XI.
§ 225. A few illustrations of the general doctrine
may be here properly introduced. Courts of Equity,
report represents. Bat Colman insisted, generally, that he had a right to
write dramatic pieces for other theatres; and then there was an injunction
granted to restrain the representation of one of the pieces which he had
written, and which was intended to be represented, I think, at Covent-
garden theatre. In the argument it was said, that the particular provision
which is stated in the case, was a provision restraining Colman from
writing dramatic pieces for any other theatre ; and in the argument it was
said by the counsel for the plaintiff, that that provision was no more
against public policy, than a stipulation that Mr. Garrick should not
perform at any other theatre than that at which he was engaged, would
have been. Now, with reference to what was said by counsel, upon
arguing the case of a partnership, Lord Eldon says ; ' If Mr. Garrick
was now living, would it be unreasonable that he should contract with
Mr. Colman to perform only at the Haymarket theatre, and Mr. Colman
with him to write for that theatre alone ? Why should they not thus
engage for the talents of each other ? ' That mode of putting the question
appears to me to show, that Lord Eldon is speaking of a case whete the
parties are in partnership together ; because it would be a strange thing
that one should contract to perform only at the Haymarket theatre, and
the other to write for that theatre alone, except in the case of a partner-
ship, where both parties would be exerting themselves for their mutual
benefit ; because, if they were not in partnership, the effect of such an
agreement might be, that neither might exert his talents at all. In this
case, however, there, is no partnership whatever between the proprietors
of Coventgarden theatre and Mr. Kean ; but the contract is nothing
more than this, that Mr. Kean shall, for a given remuneratiooi, act a
certain number of nights at Covent^garden theatre, with a proviso, that in
the mean time he shall not act at any other theatre. And it is quite clear,
that this bill is filed for the purpose of having the performance of an
agreement with regard to his contract to act. [His Honor here stated the
substance of the bill, and then proceeded] ; — So that it was an agreement
to act at Covent-garden theatre, a certain number of nights in the season,
1830 - 31, and that, in the mean time, the defendant should not act in
London ; and the bill is filed for the purpose of enforcing the performance
of that agreement, which mainly consists in the fact of his acting ; and it
appears to me, that it is utterly impossible that this Court can execute such
an agreement. In the first place, independently of the difficulty of com-
pelling a man to act, there is no time stated, and it is not stated in what
characters he shall act ; and the thing is altogether so loose, that it is
perfectly impossible for the Court to determine upon what scheme of
things Mr. Kean shall perform his agreement. There can be no pro-
CH. XI.] REMEDIES BETWEEN PARTNERS. 361
in interfering by way of injunction in cases of part-
nership, act upon a sound discretion, and will not
spective declaration or direction of the Court, as to the performance of
the agreement ; and, supposing Mr. Kean should resist, how is such an
agreement to be performed by the Court ? Sequestration is out of the
question ; and can it be said, that a man can be compelled to perform an
agreement to act at a theatre by this Court sending him to the Pleet for
refusing to act at all ? There is no method of arriving at that which is
the substance of the contract between the parties, by means of any pro-
cess, which this Court is enabled to issue ; and, therefore, (unless there
is some positive authority to the contrary) my opinion is, that, where the
agreement is mainly and substantially of an active nature, and is so
undetermined that it is impossible to have performance of it in this ^
Court, and it is only guarded by a negative provision, this Court will
leave the parties altogether to a court of law, and wiU not give partial
relief by enforcing only a negative stipulation. I think, for the reasons
which I have stated, that what Lord Eldon has said in the case of Morris
V. Colman bears upon this case. In Clark v. Price, 2 J. Wilson's C. C.
157, (in which, also, I was counsel,) there was a positive stipulation, by
Price, that he would write reports for Clark the bookseller. Lord Eldon
says, in his judgment, upon that case ; ' The case of Morris v. Colman is
essentially different from the present. In that case, Morris, Colman, and
other persons were engaged in a partnership in the Haymarket theatre,
which was to have continuance for a very long period, as long indeed as
the theatre should exist. Colman had entered into an agreement, which I
was very unwilling to enforce, not that he would write for the Haymarket
theatre, but that he would not write for any other theatre. It appeared to
me, that the Court could enforce that agreement by restraining him from
writing for any other theatre. The Court could not compel him to write
for the Haymarket theatre ; but it did the only thing in its power ; it
induced him, indirectly, to do one thing by prohibiting him from doing
another. There was an express covenant on his part, contained in the
articles of partnership. But the terms of the prayer of this bill do not
solve the difficulty ; for, if this contract is one, which the Court will not
carry into execution, the Court cannot, indirectly, enforce it by restrain-
ing Mr. Price from doing some other act.' His Lordship then proceeds to
.observe upon the express terms of the contract, and says, that he will not,
in that case, interfere to enforce an implied, negative stipulation ; for that
is the utmost that can be made of his Lordship's observations in that
case. For the reasons, which I have stated, I am of opinion, that, if this
cause were now being heard, and the agreement were admitted to be
such, as it appears to be, this Court could not make any decree, but must
PAKTN. 31
362 .PARTNERSHIP. [OH. XI.
interfere to remedy any breaches of duty, unless they
are of such a nature, as may produce permanent injilry
to the partnership, or involve it in serious perils or
mischiefs in future. A mere fugitive, temporary
breach, involving no serious evils or mischiefs, and not
endangering the future success and operations of the
partnership, will, therefore, not constitute any case for
equitable relief^ It is upon this ground, that Courts
of Equity will not interfere in cases of frivolous vexa-
tion, or for mere diiferences of temper, casual disputes,
or other minor grievances between the parties ; but
will deem, as in some olher more important relations
in life, that the parties enter into them with a fair un-
derstanding, that such infirmities are to be borne with,
and that a separation of interests, or an injunction
against acts is not to be decreed, because one of the
parties is more sullen or less good-tempered than the
other.^
§ 226. It was upon the same ground of the fugitive
or temporary nature of the breach of the stipulation,
that, where a covenant in the partnership articles pro-
vided, that the business should be carried on in the
joint names of all the partners, and that all contracts
and engagements on account of the trade, and all
dismiss the bill." See 2 Story on Eq. Jurisp. § 958, and note (4.) See
■also the doctrine of the Roman law on this subject, (Ante, ^ 182,) where
it is stated, that the action ^ro socio for an account did not lie until after a
dissolution of the partnership ; but it did in certain special partnerships,
such as a partnership for collection of the public revenue. (^Causd Vecti-
galium.)
1 Collyer on Partn. B. 2, ch. 8, § 5, p. 236, 2d edit ; Charlton v. Poul-
ter, 19 Ves. 148, n. ; Goodman v. Whitcomb, 1 Jac. & Walk. R. 592 ;
Miles V. Thomas, 9 Sim. R. 606, 609.
2 Goodman ». Whitcomb, 1 Jac. & Walk. 572 ; Collyer on Partn. B. 2,
ch. 2, § 2, p. 131, 2d edit.; Ante, ^ 218.
CH. XI.] REMEDIES BETWEEN PARTNERS. 363
checks and drafts drawn by them, and all receipts of
money paid, should he in the joint names of all the
partners, and some of them afterwards refused to fulfil
the covenant, and to add the name of the plaintiff to
certain contracts, entered into for and on account of
the firm, the Court refused to interfere by way of
injunction.^
§ 227. On the other hand, where one partner has
improperly involved the partnership in debt, or has
himself become insolvent, or has otherwise grossly
misconducted himself, Courts of Equity will interpose,
and restrain him from drawing, accepting, or indorsing,
bills or notes in the name of the firm, or from contract-
ing, or receiving partnership debts.^ So, an injunction
will be granted against a partner, who grossly and
wantonly obstructs, injures, or prevents the carrying
on of the partnership business;^ or who designedly
misapplies the property of the partnership to purposes
not warranted by the articles or the objects of the
trade.* If, therefore, a partnership negotiable security is
misapplied to the payment of the separate debt of one
partner, an injunction will be granted to restrain its
further negotiation, and to require it to be restored to
the partnership, or cancelled, as the case may require.
1 Marshall v. Colman, 2 Jac. & Walk. 268.
2 CoUyer on Partn. B. 2, ch. 3, § 5, p. 233, 234, and note (b), 2d edit. ;
Williams v. Bingley, 2 Vern. K. 278, Mr. Raithby's note; Master v.
Kirton, 8 Ves. Jr. R. 74 ; Lawson v. Morgan, 1 Price, E. 303 ; Hood v.
Aston, 1 Kuss. R. 412; Gow on Partn. ch. 2, § 4, p. 108, 109, 3d edit.; 1
Story, Eq. Jur. § 667 ; Miles v. Thomas, 9 Sim. R. 606.
^ Charlton v. Poulter, 19 Ves. 149, note (c).
* Glassington v. Thwaites, 1 Sim. & Stu. R. 124, and the Reporter's
note (a).
364 PARTNERSHIP. [CH. XI.
unless, indeed, it has passed into the hands of a bond
fide holder, without notice of the misapplication.''
§ 228. Independently of the administration of relief
by Courts of Equity in the cases to which we have
alluded, they will, it seems, in some instances, inter-
pose and appoint a receiver of the joint effects, during
the continuance of the partnership. But to authorize
a partner to call for the appointment of a receiver of
the stock of a subsisting partnership, he must be pre-
pared to show a case of the grossest abuse and the
strongest misconduct on the part of the managing
partner ; for, except under such circumstances, the
Court will not interfere, inasmuch as the probable
result of its interposition will be the destruction of
the trade. Nor Avill a receiver be appointed upon a
summary application, where there is a covenant to -refer,
1 CoUyer on Partn. B. 2, cli. 3, § 5, p. 233 to 236, 245, 2d edit. ; Hood
V. Aston, 1 Euss. E. 412, 413; Ante, \ 132; Jervis v. White, 7 Ves. R.
513 ; Gow on Partn. eh. 2, \ 4, p. 108, 109, 3d edit.; Littlewood v. Cald-
well, 11 Price, E. 97; 1 Story, Eq. Jur. % 667, 669. — In Hood u. Aston,
(1 Euss. E. 412, 415,) Lord Eldon said; " The mere circumstance, that a
partner gives a partnership bill for his separate debt, may, or may not, lay
a ground for the issuing of an injunction against its negotiation ; for the
person who takes it, may or may not have some reason for supposing that
his debtor had a right or authority so to use the partnership name. But
where it appears, that an individual partner, indebted to the partnership,
being unable to pay his separate bill, holden by his bankers, substitutes
for it, by a negotiation with them, a partnership security, made and given
without the consent or knowledge of his copartners, and the bankers are
aware, that it is so given without their consent or knowledge ; — that is a
case, which comes within the principle, upon which the Court has always
been in the habit of interfering by injunction. Where a partnership
negotiable security has been misapplied by a partner, if it is in the hands
of a third person as holder, and relief is sought against him, he also, as
well as the oifending partner, should be made a party to the bill. See
Collyer on Partn. B. 2, ch. 3, § 7, p. 245, 246, 2d edit.
CH. XI.] EEMEDIES BETWEEN PAETNEES. 365
and no attempt has been made to submit the matter in
dispute to arbitration. But if, in the ordinary course
of the trade, any of the partners seek to exclude
another from taking that part in the concern, which he
is entitled to take, the Court will grant a receiver;
because such conduct will warrant a dissolution. The
principle, indeed, upon which the Court of Chancery
interferes between partners, by appointing a receiver,
is merely with a view to the proper relief, by winding
up and disposing of the concern, and dividing the
produce, and not for the purpose of carrying on the
partnership.-"^
§229. But in all cases of this sort, where an in-
junction is sought to restrain improper acts by a
partner, a very serious question may arise, whether the
Court will interfere, unless the bill not only asks for
an injunction, but also for a dissolution of the partner-
ship. Indeed, it has been a matter of no small diversity
of judicial opinion, how far a Court of Equity ought
to interfere in ^ch cases, unless for the purpose of
dissolving the partnership and winding up the whole
concern ; since it may involve the Court in perpetual
controversies to enforce the observance of the articles,
as often as, during the long continuance of a partner-
ship, any specific breach may occur ; which is a species
' Gow on Partn. ch. 2, ^ 4, p. 114, 3d edit. — I have cited almost the'
very language of Mr. Gow, on this occasion. He cites Oliver v. Hamil-
ton, 2 Anst. 453 ; Milbank v. Revett, 2 Meriv. 405 ; Waters v. Taylor, 15
Ves. 10; Wilson v. Greenwood, 1 Swanst. K. 481 ; Charlton v. Poulter,
19 Vea. 148, note (c) ; and Walworth v. Holt, 4 M. & Craig, R. 619, 635,
639. See also Bailey v. Ford, 13 Sim. R. 495 ; Whitewright v. Stimpson,
2 Barbour, R. 379 ; Wolbert v. Harris, 3 Halst. Ch. R. 605 ; Blakeney v.
Dufaur, 15 Eng. Law & Eq. R. 76 ; Parkhurst v. Muir. 3 Halst. Ch. R.
307 ; Speights v. Peters, 9 Gill, 472.
31 »
366 PAKTNEESHIP. [CH. XI.
of jurisdiction, which Courts of Equity are not at all
disposed to entertain.^ [And it is now the established
1 Marshall v. Colman, 2 Jac. & Walk. 266 ; Gow on Partn. ch. 2, § 4,
p. in to 113, 3d edit. ; CoUyer on Partn. B. 2, ch. 3, § 5, p. 236, 237,
238, 2d edit.; Goodman ij. Whitcomb, 1 Jac. & Walk. 669, 572; Los-
combe V. Russell, 4 Sim. E. 8; Knebell v. White, 3 Younge & CoU. 15 ;
Bentley v. Bates, 4 Engl. Jurist, 552 ; Gow on Partn. Suppl. 1841, p. 24,
25; 1 Story, Eq. Jur. § 671.— On this point Mr. Gow|(Gow on Partn.
ch. 2, § 4, p. Ill, 112, 3d edit.) says; " Courts of Equity will likewise
interfere, where a breach of any of the covenants, contained in the articles
of partnership, has been committed, if the breach be so important in its
consequences as to authorize the party complaining to call for a dissolution
of the partnership. One case of constant occurrence, falling under this
head of equitable relief, is that of a partner raising money for his private
use on the credit of the partnership firm. In a case so circumstanced,
the Court interposes, because there is a ground for dissolving the partner-
ship. But then the impending danger must be such, there must be that
abuse of good faith between the members of the partnership, that the
Court will try the question, whether the partnership should not be dis-
solved in consequence. Thus, where it has been covenanted, that all
contracts entered into by any of the firm, and all checks, bills, and receipts
for money, should be signed in the joint names of all the partners, a
Court of Equity will restrain one partner from entering into any engage-
ment in the name of ' himself and company,' or 'himself and partners,' or
will dissolve the partnership. Were the Court not to lay down this rule
for its guidance, separate suits might be successively instituted, praying for
perpetual injunctions in respect of the breach of each particular covenant,
which is a species of jurisdiction the Court has never decidedly entertained.
So, if one partner exclude another from the benefits of the concern, the
Court will interfere and dissolve the partnership ; and it assumes a juris-
diction on this ground, that if the partners will not allow the partnership
to be carried on in the manner in which it ought to be, it is a reason for
putting an end to it altogether. Neither will a Court of Equity assist in
the management of the affairs of a company during its existence ; but if
a sufficient case is made out. to justify its interposition, it will appoint a
manager in the interim, for the purpose of winding up and putting an end
to the concern. But although the general principle of the Court is not to
interfere in a partnership concern, unless the bill prays a dissolution ; yet
there are cases of partnership for a term of years, in which it has been
said the Court will interpose during the term, notwithstanding a dissolution
be not prayed. Thus, where some of the members of a partnership or
company seek to embark one of their body in a business, which was not
originally part of the partnership concern, and they are unable to show
OH. XI.] REMEDIES BETWEEN PAETNEBS. 367
practice of Courts of Equity not to interfere and ap-
point a receiver, unless the object of the suit is to
that sucli partner either expressly or tacitly acquiesced in the proposed
extension of the concern, a Court of Equity would, it is apprehended,
- restrain thein from proceeding in the execution of their intention, without
dissolving the partnership or company. So, where a member of a firm
neglected to enter the receipt of partnership money in the books, and did
not leave the books open for the inspection of the other partners, equity
interfered without dissolving the partnership. So, where there has been
a studied, intentional, prolonged, and continued inattention to the applica-
tion of one partner calling upon the other to observe the contract of
partnership, the Court will grant an injunction against the breach of it.
And, in general, circumstances of the latter description must be disclosed,
to induce a judicial interference on a breach of the articles of partner-
ship, unless a dissolution be prayed."
Mr. Collyer (CoUyer on Partn. B. 2, ch. 3, § 5, p. 236) says ; " It
seems clear, that a Court of Equity will sometimes award an injunction
against one partner, without dissolving the partnership; perhaps even
where the delinquency of that partner is not sufficient to warrant a disso-
lution. At any rate, it certainly seems to have been held, that a Court of
Equity will restrain the gross personal misconduct of a partner, without
compelling a dissolution of the partnership before the expiration of the
term. In Charlton v. Poulter, (19 Ves. 148, n.) a bill was filed by Richard
Charlton, senior, and junior, partners in a brewery, charging great mis-
conduct by the defendant, the third partner, in disobliging and turning
away the customers, prevailing on the servants to leave the brewhouse,
assaulting and obstructing them, causing them to quit their service, lock-
ing up the books, retaining as servants (without the plaintiff's consent)
bruisers and boxers, who obstructed the trade, threatening to ruin the
trade, and refusing to account. The bill prayed, that, at the end of the
partnership, the stock and utensils might be valued, and that the defend-
ant might be compelled to receive one third part of the value, and for an
injunction restraining the defendant from any act to the obstruction or
the damage of the trade. On motion, after answer, for an injunction, it
was ordered, that the defendant be restrained from using force, either by
himself or any other person or persons, to the obstruction or interruption
of the brewing trade in question, and from removing or displacing any of
the servants hired or employed by the partners, or the major part of them,
in carrying on the trade, without leave of the Court ; and from carrying
away or removing out of the counting-house belonging to the partnership
any partnership books or papers relating to the said trade ; and upon the
plaintiff's submission, it was further ordered, that the plaintiffs be restrain-
ed in like manner. The opinion, that a partner's misconduct may be re-
368 PAKTNERSHIP. [CH. XI.
obtain a dissolution of the partnership.^] It is very
certain, however, that, pending the partnership. Courts
strained by injunction, -without the necessity of a dissolution, is sanctioned
by Lord Eldon in the case of Goodman v. Whitcomb, (1 Jac. & Walk.
572.) The parties in that case being partners in the business of carpet
manufacturers, the bill was filed for a dissolution of the partnership, and
the usual accounts. One of the grievances stated in the bill was, that the
defendant had 'sold goods at an under price, and exchanged others for
household furniture, which he had appropriated to his own use. Lord
Eldon said, that trifling circumstances of conduct were not sufficient to
authorize the Court to award a dissolution. It was stated, that the de-
fendant had exchanged carpets for household furniture ; that, perhaps,
might be an improper act ; but still there might be a thousand reasons
why the Court should not do more than restrain him in future from so
doing ; more particularly, as it was stated by the answer, that he did it,
because he thought it the best thing that, could be done. A Court of
Equity, however, will be reluctant to award an injunction against a part-
ner, unless there be grounds for a dissolution ; and in many cases such a
course would be attended with obvious inconvenience to the parties.
[See Hall v. Hall, 3 Eng. Law & Eq. R. 191.] Marshall v. Cdlman, 2
Jac. & Walk. 266. And cases may arise where an injunction cannot with
propriety be granted, whether the parties do, or do not, contemplate a
dissolution of the partnership, and even though the party, against whom
the injunction is sought, may have acted contrary to the spirit of the part-
nership arrangements. Thus, two persons agreed to work a coach from
Bristol to London^ one providing horses for a part of the road, and the
other for the remainder. In consequence of the horses of one having
been taken in execution, the other provided horses for that part which
had been undertaken by the first. He afterwards persisted in providing
horses for the whole journey, and claimed the whole profits. Upon a
motion for an injunction to restrain him from so working the coaches.
Lord Eldon refused the injunction. ' It is difficult)' said his Lordship, ' to
understand, how such a case can be the proper subject of the jurisdiction
of this Court by injunction. If I enjoin the defendant from bringing
horses to convey the coaches between the limits in question, I must enjoin
the plaintiff from not bringing horses there. I cannot restrain the defend-
ant, unless I have the means of assuring him that he shall find the plain-
tiff's horses ready. I should otherwise enjoin him from doing that, which
1 Hall V. Hall, 8 Eng. Law & Eq. K. 191. — Though the Court might
depart from this rule, if it were shown that unless a receiver was appointed,
the partnership concern would be probably destroyed by acts of the
defendant. And see Roberts v. Eberhardt, 23 Eng. Law & Eq. K, 245.
CH. XI.] EEMEDIES BETWEEN PAETNEKS. 369
of Equity will not interfere to settle accounts and set
right the balance between the partners, but await the
regular winding up of the concern.^
if he omits to do, he will be liable to actions by every person -whom he
has undertaken to convey from Bristol to London.' Smith v. Fromont, 2
Swanst. 330. In this case Lord Eldon said, that a question might arise,
whether the plaintiff, showing, that his horses were always ready, would
not be entitled to the same profit, as if they were used." See also Wilson
r. Greenwood, 1 Swanst. R. 481, where Lord Eldon said, that in the ordi-
nary course of trade, if any one partner seek to exclude another from
taking that part in the concern, which he is entitled to take, the Court
will grant a receiver. Mr. Collyer understands this declaration as appli-
cable to cases where a dissolution is not sought. Collyer on Partn. B. 2,
ch. 3, § 6, p. 240, 241, 2d edit. [But this was shown not to be the true
construction of that case, by the Lord Chancellor in Hall v. Hall, 3 Eng.
Law & Eq. E, 196.]
In the case of Loscombe v. Russell, (4 Sim. R. 8,) the Vice-Chancellor
(Sir L. Shadwell) said ; " I take this to be a bill, which purposely avoids
the prayer for a dissolution ; and that it was not in the contemplation of
the plaintiff, that the partnership should be put an end to. It would,
therefore, be a surprise upon the parties to this record, if I were to deal
with it, as if a dissolution were sought. Here the partnership is still
subsisting ; and the bill is filed for an account merely of the dealings and
transactions of the partnership. With respect to the 'law of this Court
upon this subject, there is no instance of an account being decreed of the
profits of a partnership, on a bill which does not pray a dissolution, but
contemplates the subsistence of the partnership. The opinion of Lord
Eldon upon this subject has been, from time to time, expressed both before
and since the decision of Harrison v. Armitage. Suppose that the Court
would entertain a bill like the present, and direct an account to be taken
of the dealings of a partnership, and that it appeared, by the Master's
report, that a balance was due from the defendant to the plaintiff; then,
upon further directions, the plaintiff would ask for an order, that the
balance might be paid to him ; it would, however, be competent to the
defendant to file a supplemental bill, in order to show, that, since the
account was taken, a balance had become due to him from the plaintiff,
after giving the plaintiff credit for the amount found due to him by the
Master; and thus the matter might be pursued with endless changes, and
supplemental bills might be filed every year, that the partnership continued,
and a balance would never be ascertained until the' partnership expired,
' Richardson v. Bank of England, 4 M. & Craig, 165, 172, 173 ; Post,
(j 348, n.
370 PARTNERSHIP. [CH. XI.
§ 230. The Roman law contained doctrine, which in
some measure proceeded upon similar considerations.
or the Court put an end to it. This Court will not always interfere to
enforce the contracts of parties ; but will, in some instances, leave them
to their remedy at law ; as in the cases of agreements for the purchase of
stock, or for the building of houses. With respect to occasional breaches
of agreements between partners, when they are not of so grievous a
nature, as to make it impossible that the partnership should continue, the
Court stands neuter. But when it finds, that the acts complained of are
of such a character as to show, that the parties cannot continue partners,
and that relief cannot be given but by a dissolution, the Court will decree
it, although it is not specifically asked. Here a dissolution is not prayed
for ; and, if the Court were to do what is asked, it would not be final.
Having regard then to the opinion expressed by Lord Eldon, both before
and after the decision in Harrison v. Armitage, my settled opinion is, that
this bill cannot be maintained; and, therefore, the demurrer must be
allowed." In the recent case of Miles v. Thomas, (9 Sim. E. 606, 609,)
the same learned Judge said ; " I am of opinion, that the Court ought to
interfere between copartners, whenever the act complained of is one that
tends to the destruction of the partnership property, notwithstanding a
dissolution of the partnership may not be prayed."
Lord Cottenham in the recent case of Walworth v. Holt, 4 M. & Craig,
619, 635, 639, said ; " When it is said that the Court cannot give relief of
this limited kind, it is, I presume, meant that the bill ought to have prayed
a dissolution, and a final winding up of the afiairs of the company. How
far this Court will interfere between partners, except in cases of dissolu-
tion, has been the subject of much dififerenoe of opinion, upon which it is
not my purpose to say any thing beyond what is necessary for the decision
of this case ; but there are strong authorities for holding that to a bill
praying a dissolution all the partners must be parties ; and this bill alleges
that they are so numerous as to make that impossible. The result, there-
fore, of these two rules would be, — the one binding the Court to withhold
its jurisdiction except upon bills praying a dissolution, and the other
requiring that all the partners should be parties to a bill praying it, — that
the door of this Court would be shut in all cases in which the partners or
shareholders are too numerous to be made parties, which in the present
state of the transactions of mankind, would be an absolute denial of
justice to a large portion of the subjects of the realm, in some of the most
important of their afiairs. This result is quite suflicient to show that such
cannot be the law ; for, as I have said upon other occasions, I think it the
duty of this Court to adapt its practice and course of proceeding to the
existing state of society, and not by too strict an adherence to forms and
rules, established under difl'erent circumsbinees, to decline to administer
CH. XI.]
EEMEDIES BETWEEN PAETNEES. 371
Ordinarily the action Pro Socio did not lie to enforce a
right to a general account between partners until after
justice, and to enforce rights for which there is no other remedy. This has
always been the principle of this Court, though not at all times sufficiently
attended to. It is the ground upon which the Court has, in many cases,
dispensed with the presence of the parties who would, according to the
general practice, have been necessary parties. In Cockburn v. Thompson,
Lord Eldon says, 'A general rule, established for the convenient adminis-
tration of justice, must not be adhered to in cases in which, consistently
with practical convenience, it is incapable of application;' and again,
' The difficulty must be overcome upon this principle, that it is better to
go as far as possible towards justice than to deny it altogether.' If, there-
fore, it were necessary to go much further than it is, in opposition to some
highly sanctioned opinions, in order to open the door of justice in this
Court to those who cannot obtain it elsewhere, I should not shrink from
the responsibility of doing so ; but in this particular case, notwithstanding
the opinions to which I have referred, it wiU be found that there is much
more of authority in support of the equity claimed by this bill than there
is against it. It is true that the bill does not pray for a dissolution, and
that it states the company to be still subsisting ; but it does not pray for
an account of partnership dealings and transactions, for the purpose of
obtaining the share of profits due to the plaintiffs, which seems to be the
case contemplated in the opinions to which I have referred ; but its object
is to have the common assets realized and applied to their legitimate
purpose, in order that the plaintiffs may be relieved from the responsibility
to which they are exposed, and which is contrary to the provisions of
their common contract, and to every principle of justice. But whether
the interest of the plaintiffs, in right of which they sue, arises from such
responsibility or from any other cause, cannot be material ; the question
being, whether some partners, having an interest in the application of the
partnership property, are entitled, on behalf of themselves and the other
partners, except the defendants, to sue such remaining partners in this
Court for that purpose, pending the subsistence of the partnership ; and
if it shall appear that such a suit may be maintained by some partners on
behalf of themselves and others similarly circumstanced against other
persons, whether trustees and agents for the company, or strangers being
possessed of property of the company, it may be asked why the same right
of suit should not exist when the party in possession of such property
happens also to be a partner or shareholder ? In Chancey v. May, the
defendants were partners. In the Widows' Case, before Lord Thurlow,
cited by Lord Eldon, the bill was on behalf of the plaintiffs and all others
in the same interest, and sought to provide funds for a subsisting establish-
ment. In Knowles v. Houghton, 11th July, 1805, reported in Vesey, but
372 PARTNERSHIP. [CH. XI.
a dissolution of the partnership. But in special cases,
as for example, in cases where the partnership was for
more fully in Collyer on the Law of Partnership, the bill prayed an
account of partnership transactions, and that the partnership might be
established; and the decree directed an account of the brokerage business,
and to ascertain what, if any thing, was due to the plaintiff in respect
thereof; and the Master was to inquire whether the partnership between
the plaintiff and the defendant had at any time, and when, been dissolved;
showing that the Court did not consider the dissolution of the partnership
as a preliminary necessary before directing the account. In Cockburn v.
Thompson, the bill prayed a dissolution ; but it was filed by certain pro-
prietors on behalf of themselves and others, and Lord Eldon overruled
the objection that the others were not parties. In Hiehens v. Congreve,
the bill was on behalf of the plaintiff and the other shareholders, against
other shareholders who were also directors, not praying a dissolution, but
seeking only the repayment to the company of certain funds alleged to
have been improperly abstracted from the partnership property by the
defendants ; and Sir Anthony Hart overruled a demurrer, and his decision
was affirmed by Lord Lyndhurst. In Walburn v. Ingilby, the bill did not
pray a dissolution of partnership, and Lord Brougham, in allowing the
demurrer upon other grounds, stated that it could not be supported upon
the ground of want of parties, because a dissolution was not prayed. In
Taylor v. Salmon the suit was by some shareholders, on behalf of them-
selves and others, against Salmon, also a shareholder, to recover property
claimed by the company, which he had appropriated to himself; and the
Vice-ChanceUor decreed for the plaintiff, which was affirmed on appeal.
The bill did not pray a dissolution, and the company was a subsisting and
continuing partnership. That case and Hiehens v. Congreve differ from
the present in this only, that in those cases the partnerships were flourish-
ing and likely to continue, whereas in the present, though not dissolved,
it is unable to carry on the purpose for which it was formed, an inability
to be attributed in part to the withholding that property which this bill
seeks to recover. So far this case approximates to those in which the
partnership has been dissolved ; as to which it is admitted that this Court
exercises its jurisdiction. This case also differs from the two last-men-
tioned cases in this, that the difficulty in which the plaintiffs are placed,
and the consequent necessity for the assistance of this Court, is greater in
this case; — no reason, certainly, for withholding that assistance. How
far the principle upon which these cases have proceeded is consistent with
the doctrine in Loscombe v. Kussell, ' that in occasional breaches of con-
tract between partners, when they are not of so grievous a nature as to
make it impossible that the partnership should continue, the CJourt stands
neuter, will be to be considered if the case should arise. It is not neces-
CH. XI.]
REMEDIES BETWEEN PARTNERS. 373
the collection of the public revenue {causa vectigaliiim,)
which partnership was held, on grounds of public
policy, not to be dissolved, even by the death of one
sary to express any opinion as to that in the present case ; but it may be
suggested that the supposed rule, that the Court will not direct an account
of partnership dealings and transactions, except as consequent upon a
dissolution, though true in some cases, and to a certain extent, has been
supposed to be more generally applicable than it is upon authority, or
ought to be upon principle. It is, however, certain, that this supposed
rule is directly opposed to the decision of Sir J. Leach, in Harrison v.
Armitage, and Richards v. Davies. Having referred to so many cases, in
which suits similar to the present have been maintained by some partners
on behalf of themselves and others, it is scarcely necessary to say any
thing as to the objection for want of parties ; and as to the assignees of
those shareholders who have become bankrupts, those assignees, are now
shareholders in their places, for the purpose of any interest they have in
the property of the company ; and, as such, are included in the number
of those on whose behalf the suit is instituted. A similar objection was
raised and overruled, in Taylor v. Salmon, as to the shares of Salmon.
Upon the authority of the cases to which I have referred, and of the
principle to which I have alluded, if it be necessary (o resort to it, I am
of opinion that the demurrer cannot be supported ; and that the usual
order, overruling a demurrer, must be substituted for that pronounced by
the Vice-Chancellor." [See this case explained, in Hall v. Hall, 3 Eng.
Law & Eq. K. 196.]
In Fairthorne v. Weston, 3 Hare, E, 387, 391, Mr. Vice-Chancellor
Wigram said ; " The argument for the defendant turned whoHy upon the
proposition, that a bill praying a particular account is demurrable, unless
the bill seeks and prays a dissolution of the partnership ; in support of
which, the case of Loscombe v. Russell, and the cases there cited, were
relied upon. That there may be ca^es to which the rule there laid down
is applicable, I am not prepared to deny, but the law as laid down in that
case was never admitted to be a rule of universal application. Harrison
V. Armitage, Richards v. Davies. And the unequivocal expression of the
opinion of Lord Cottenham, in Taylor v. Davies and Walworth v. Holt, of
the Vice-Chancellor of England, in Miles v. Thomas, and of Lord Lang-
dale, in Richardson ». Hastings, shows that there is no such universal rule
at the present day ; and I cannot but add, that it is essential to justice
that no such universal rule should be sustained. If that were the rule of
the Court, — if a bill in no case would lie to compel a man to observe the
covenants of a partnership deed, — it is obvious that a person fraudulently
inclined might, of his mere will and pleasure, compel his copartner to
submit to the alternative of dissolving a partnership, or ruin hjm by a
PAETjST. 32
374 PAKTNEESHIP. [CH. XI.
partner, contrary to the common rule of that law, as
to general partnerships,^ an action joro socio lay for an
account during the existence of the partnership. Non-
nunquam necessarium est, et manenie societcde, agi pro
socio. Veluti qimm societas, vectigalium causA coita est,
(propterque varies contractus neutri expediat reeedere a
societate,) nee refertur in medium, quod ad alterum per-
.venerit?'
§ 231. Independently of the relief, which Courts
of Equity are thus disposed to grant by way of in-
junction, in order to prevent, suppress, or redress acts
of misconduct, and breaches of duty, and positive
engagements by any one partner, during the continu-
ance of the partnership, there is another auxiliary
authority, which is sometimes granted, and which, in-
deed, in many cases, is indispensable to the complete
protection and security of the other partners, and that
is, by the appointment of a receiver to collect the
debts and receive the assets of the partnership.^ But
this course is rarely advisable, and indeed is never
granted by Courts of Equity, unless where a case is
made out of such gross abuse, and misconduct on the
part of one partner, that a dissolution ought to be
decreed, and the affairs of the partnership wound up.*
continued violation of the partnership contract." See also 1 Story, Eq.
Jurisp. ^ 667 to 672.
1 Dig. Lib. 17, tit. 2, 1. 65^ § 9 ; Id. 1. 59, ; Pothier, Pand. Lib. 17, tit. 2,
n. 56, 57. •
2 Dig. Lib. 17, tit. 2, 1. 65, § 15 ; Pothier, Pand. Lib. 17, tit. 2, n. 33 ;
Ante, § 182, 221,note (3).
3 CoUyer on Partn. B. 2, ch. 8, § 6, p. 240 to 644, 2d edit. ; Ante, § 228,
229. See Bailey v. Ford, 13 Simons, K. 495.
4 Collyer on Partn. B. 2, ch. 3, § 6, p. 240 to 243, .2d edit. ; Gow on
Partn. ch. 2, § 4, p. 114, 3d edit. — Mr. Gow has well summed up the lead-
ing doctrines upon this subject, in a passage, a part of which has been al-
CH. XI.] KEMEDIES BETWEEN PABTNEES. 375
§ 232. To the foregoing enumeration of cases of
remedial justice, administered by Courts of Equity-
ready cited, (Ante, § 228.) He says; " Independently of the administra-
tion of relief by a Court of Equity, in the cases to which we have alluded,
it will, it seems, in some instances, interpose ; and, during the continuance
of a partnership, appoint a receiver of the joint effects. But to authorize
a party to call for the appointment of a receiver of the stock of a sub-
sisting partnership, he must be prepared to show a case of the grossest
abuse,, and of the strongest misconduct, on the part of the managing part-
ner ; for, except under such circumstances, the Court will not interfere,
inasmuch as the probable result of its interposition is the destruction of
the trade. Oliver v. Hamilton, 2 Anstr. 453 ; Milbank v. Revett, 2 Meriv.
405. In a note to the case of Glassington v. Thwaites, 1 Sim. & Stu. 130,
it is questioned* by the learned reporters, whether the Court will pver in-
terfere on an interlocutory application for a receiver or injunction, in the
case of a partnership, occasioned by the acts of the parties, unless on cir-
cumstances clearly established, of fraud, entire exclusion, or gross miscon-
duct. Nor will a receiver be appointed upon a summary application,
where there is a covenant to refer, and no attempt has been made to sub-
mit the matter in dispute to arbitration. Waters v. Taylor, 15 Ves. 10.
But if, in the ordinary course of trade, any of the partners seek to ex-
clude another from taking that part in the concern which he is entitled to
take, the Court will grant a receiver, because sugh conduct warrants a
dissolution. Wilson v. Greenwood, 1 Swanst. 481 ; S. C. 1 J. Wilson,
223. See also Read v. Bowers, 4 Bro. C. C. 441 ; Charlton v. Poulter,
19 Ves. 148, n. (c.) The principle, indeed, upon which the Court of
Chancery interferes between partners, by appointing a receiver, is merely
with a view to the relief, by winding up and disposing of the concern, and
dividing the product, but not for the purpose of carrying on the partner-
ship. Waters v. Taylor, 15 Ves, 10. Therefore, a receiver of a part-
nership will not be appointed upon motion, unless it appear that the plain-
tiff will be entitled to a dissolution at the hearing; for otherwise the Court
might make itself the manager of every trade In the kingdom. Goodman
u. Whitcomb, 1 Jao. & Walk. 589 ; Chapman v. Beach, lb. 694; Harri-
son V. Armitage, 4 Madd. 143. And where it seems absolutely necessary
that a receiver should be appointed of partnership property, the Court will
always pause before it takes a step likely to be so ruinous to the parties.
Waters v. Taylor, 15 Ves. 10 ; Peacock v. Peacock, 16 Ves. 57. A Court
of Equity, on an application properly substantiated, will appoint a receiver
of a mine or colliery, as well as of an ordinary partnership in trade ; be-
cause where persons have different interests in such a subject, and manu-
facture and bring to market the produce of the land as one common fund,
to be sold for their common benefit, it is to be regarded rather as a species
376 PAETKERSHIP. [CH. XI.
between partners, during the partnership, or in con-
templation of the dissolution thereof, may be added the
cases, in which relief will be granted, where the psRrt-
nership has been entered into- by one partner, under
circumstances of gross fraud or gross misrepresenta-
tion by the others ; for in such cases Courts of Equity
will not only decree the same to be void, but will also
interpose and restore the injured party to his original
rights and property, as/ar as is practicable.^ In cases
of trade or partnership, than as a mere tenancy in common in the land.
Jefferys v. Smith, 1 Jae. & Walk. 298; 'Story «. Lord Windsor, 2 Atk.
630; Crawshay v. Maule, 1 Swanst. 518 ; S. C. 1 J. Wills. 181 ; Williams
u. Attenborough, 1 Turner, 73; Feredy w. Wightwick, 1 Tamlyn, 250.
But if the claimant to an equitable interest, in such a concern, knowingly
suffers great expense and risk to be incurred before he asserts his equita-
ble right, and, keeping aloof while the undertaking is hazardous, seeks the
interposition of the Court only when it is attended with a profitable re-
sult, the Court will not interfere by appointing a receiver, on motion, and
it is doubtful whether it would interpose in such a case, even by decree.
Norway v. Rowe, 19 Ves. 144; Senhouse v. Christian, cited lb. 157. In
particular cases, equity will restrain the improper conduct of a partner
without appointing a receiver. Seeley v. Boehm, 2 Madd. 1 76 ; but see
Smith V. Fromont, 3 Swanst. 330, and Glassington v. Thwaites, 1 Sim. &
Stu. 124. Where, by the partnership agreement, the concern was to be
managed by a committee, the share of each proprietor dying or retiring,
to be first offered to the committee, to be purchased for the general body,
it was held, that the whole concern could hot be sold but with the consent
of all ; and that, where all but two out of thirty-one had agreed, and sold
the concern, such sale did not pass the share of such two ; but in such a
case there need be no previous offer to the committee. ' Chappie v. Cadell,
Jac. 537." Gow on Partn. eh. 2, ^ 4, p. 114 to 116, 3d edit. See also
Peacock v. Peacock, 16 Ves. 49 ; Oliver v. Hamilton, 2 Anst. 453; Eioh-
ards V. Davies, 2 Russ. & Mylne, R. 347.
' Collyer on Partn. B. 2, ch. 3, § 7, p. 244, 245, 2d edit. ; Gow on
Partn. ch. 2, 5 4, p. 107, 3d edit. ; Tattersall v. Groote, 2 Bos. & Pull. 131 ;
Ex parte Broome, 1 Rose, R. 69 ; Hamilton v. Stokes, 4 Price, R. 161 ;
S. C. Daniel, R. 20 ; Oldaker v. Lavender, 6 Sim. R. 239 ; Green v. Bar-
rett, 1 Sim. R. 45 ; Jones v. Yates, 9 Barn. & Cressw. 532. — If third
persons are interested and connected with such frauds, they also should be
parties to the bill, as well as the offending partners. Collyer on Partn. B.
CH. XI.] REMEDIES BETWEEN PARTNERS. 377.
of this sort, Courts of Equity proceed upon the same
general ground, as in other cases where a fraud has
been perpetrated upon an innocent partner; as, for
example, in the case already suggested, where one
partner sold out to the other for an inadequate con-
sideration, in consequence of the fraudulent conceal-
ment by the latter of the real state of the funds ; ^ for
fraud will infect with a fatal taint every transaction,
however solemn ; arid good faith and confidence, and
frank and honorable dealing are, or ought to be, em-
phatically the groundwork of all partnership engage-
ments. '
§ 233. Upon similar grounds, Courts of Equity will
hold each partner responsible to the others for all losses
and injuries, sustained by his past misconduct, or negli-
gences, or misapplications of the partnership funds or
credit.^ [Compensation will be given, substantially in
the nature of unliquidated damages.^ Hence, if any
partner has withdrawn, or used the partnership funds
or credit in his own private trade, or private specu-
ktions, he will be held accountable, not only for the
interest of the funds so withdrawn, or credit misap-
plied, but also for all the profits which he has made
. thereby.* On the other hand, if there are any losses
3, ch. 2, § 7, p. 245, 246, 2d edit. ; Fawcett v. Whitehouse, 1 Russ. &
Mylne, 143.
1 Ante, § 172; Blair v. Agar, 2 Sim. K. 289; 1 )Story, Eq. Jurisp.
^ 220.
2 Caldwell v. Lieber, 7 Paige, E.*483.
3 Bury V. Allen, 2 Collyer, R. 604.
"* Stoughton V. Lynch, 1 Johns. Ch. E. 467 ; S. C. 2 Johns. Ch. R. 210 ;
Brown v. Litton, 1 P. Will. 140; Crawshay v. Collins, 15 Ves. 218;
Somerville v. Maokay, 16 Ves. R. 382, 387, 389 ; 1 Story, Eq. Jurisp.
^ 667 ; Story on Agency, ^ 207.
3**
378 PARTNEKSHIP. [CH. XI.
incurred by. him thereby, they must be borne exclu-
sively by himself.
[§ 233 a. The Statute of Limitations strictly bars
only legal remedies ; but Courts of Equity, by their
own rules, independently of any statute, give great
effect to length of time, and refer frequently to the
Statute of Limitation as furnishing a convenient
measure for an equitable bar.-' In analogy to the
statute, they have adopted in many cases the limit of
six years.^ Though in cases of direct trust, no length
of time bars the claim between the trustee and cestui-
que trust ; yet' where there is a trust by implication,
it must be pursued within a reasonable time.^ And
.there is high authority for the proposition that a Court
of Equity will not^ after six years' acquiescence, un-
explained by circumstances, nor countervailed by ac-
knowledgement, decree an account between a surviving
partner and the estate of a deceased partner.* The
cases, arising under the exception of Merchants' Ac-
counts, in the Statute of Limitation, have been sup-
posed to afford an analogy on questions between
partner and partner.® But it is doubtful whether this
?Beckford v. "Wade, 17 Ves. K. 96; CoUyer on Partn. B. 2, ch. 3,
^ 374, p. 339, (Perkins's edit. )
2 Sterndale v. Hankinson, X Sim. K. 398 ; Acherley v, Koe, 5 Ves. R.
565, note 6, and cases cited, (Sumner's edit.)
3 Ex parte Hasell, 3 Younge & Coll. E. 617 ; Edwards v. University,
1 Dev. & Batt. Eq. K. 325. See Townshend v. Townshend, 1 Bro. C. C.
554, (Perkin's edit.,) and notes; Beckford v. Wade, 17 "Ves. R. 87, and
note, (Sumner's edit.) "
* Tatan w. Williams, 3 Hare, R. 858 ; Barber v. Barber, 18 Ves. R. 286 ;
Ault V. Goodrich, 4 Russell, R. 430 ; Bridges v. Mitchell, Gilb. Eq. R.
224 ; Martin v. Heathcote, 2 Eden, R. 169. But see Robinson r. Robin-
son, 8 Bligh, (N. S.) 352; S. C. S Clark & Fin. 717.
5 Tatam v. Williams, 3 Hare, R. 347.
CH. XI.] REMEDIES BETWEEN PARTNEKS. 379
exception applies at law, where all dealings have
ceased more than six years.^]
1 IngUs V. Haigh, 8 Mees. & "WelsV> K. 769 ; Cottam v. Partridge, 4
Manning & Granger, K. 271 ; Spring v. Gray, 5 Mason, R. 505 ; Coster
V. Murray, 5 Johns. Ch. R. 522 ; Bass v. Bass, 6 Pick. K. 344 ; S. C. 8
Pick. K. 187 ; Union Bank v. Knapp, 3 Pick. R. 96 ; CoUyer on Partn.
B. 2, ch. 3, § 376, note, (Perkins's edit.)
380 PAETNEKSHIP. [CH. XII.
CHAPTER XII.
EEMEDIES BY PARTNEKS AGAINST THIRD PERSONS.
I 234. We come, in the next place, to the ' remedies
which belong to partners in their collective capacity,
against third persons ; and this will detain us but for
a very short time. And, here, it may be laid down as
a general rule, that, at law, partners in their collective
capacity are entitled to the same remedies, to be ad-
ministered in the same way, as individuals have for
the assertion of their rights, and the redress of their
Avrongs.-^ There are, however, some few exceptions,
one of which is a remarkable exception, and is purely
technical, and stands upon grounds peculiar to the
common law. It is, where the suit is between the
firm and one of its partners, or between one firm and
another, firm, in each of which one and the same per-
son is a partner. In cases of this sort the common
law requires, that all the persons jointly interested in
the contract, or the wrong, should be made parties ;
and it is treated as an unjustifiable anomaly, if not as
an absurdity, that one and the same person should, in
the same suit, at once sustain the twofold character of
plaintiff and of defendant, to enforce a right or re-
dress a wrong, arising either from the contract, or act,
or misconduct of those, with whom he is jointly con-
cerned, or jointly interested.^ It will make no differ-
1 Gow on Partn. cli. 3, § 1, p. 117, 118, 3d edit. ; CoUyer on Partn. B.
2, ch. 3, § 2, p. 177, 188 to 193, 2d edit.; Id. B. 3, ch. 5, p. 457.
3 Gow on Partn. ch. 3, § 1, p. 118, 119, 3d edit.; Ante, § 221; CoUyer
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 381
ence, in cases of this sort, whether the suit is brought
in the lifetime of all the partners, or after the death
of one of them ; because, in contemplation of law, no
Talid legal contract ever existed between the partners ;
and therefore the death of any one of them cannot
make the contract available at law.-^
§ 235. We have had already occasion to take notice,
that this exception is peculiar to Courts of Common
Law, and has no recognition whatsoever in Courts of
Equity.^ In the latter Courts, indeed, all the parties
in interest must join, and be joined in the suit ; but
it is sufficient that aU of them are on one side or the
other side of the record; and they need not be aU
plaintiffs or all defendants in the same suit, even where
the controversy is between two firms, in each of which
some of them are partners.^ We have also had occa-
sion to see, that no such objection was recognized in
the Eoman jurisprudence ; and that it is unknown to
the jurisprudence of Scotland and of France, and
probably also of most, if not of all, of the commercial
nations of continental Europe.*
on Partn. B. 2, ch. 3, § 2, p. 177, 188 to 193, 2d edit. ; Id. B. 3, ch.'S, p.
457 ; Jones v. Yates, 9 Barn. & Cressw. 582 ; Bosanquet v. Wray, 6 Taunt.
K. 598; Moffat v. Van Millingen, 2 Bos. & Pull. 112 ; De Tastet v. Shaw,
1 Barn. & Add. 664 ; Teague v. Hubbard, 8 Barn. & Cressw. 345 ; Har-
vey V. Kay, 9 Barn. & Cressw. 356 ; Neal v. Turton, 4 Bing. R. 149 ;
Denny v. Metcalf, 28 Maine E. 389.
1 Gow on Partn. ch. 3, § 1, p. 119, 120, 3d edit. ; Bosanquet v. Wray,
6 Taunt. K. 597. See Bailey v. Bancker, 3 Hill, R. 183.
2 Ante, § 221, note ; § 222.
3 Ante, § 221 and note ; § 222 ; 1 Story, Eq. Jurisp. § 666 to 674.
4 Dig. Lib. 17, tit. 2, 1. 65, § 15 ; Id. 1. 52 ; Pothier, Pand. Lib. 17, tit. 2,
n. 33 ; 2 Bell. Comm. B. 7, p. 619, 620, 5th edit. ; Pothier, de Societ6, n.
135, 136. — Mr. Bell, in the passage already cited, (Ante, § 221, note
(1,) 2 Bell, Comm. 620, 5th edit.) says; "In Scotland, debts between
companies, in which the same individual is a partner, are every day sus-
tained, as quite unexceptionable." It is to be lamented that the like rule
382 PABTNEESHIP. [CH. XII.
§ 236. Analogous in principle to the case, already-
stated at the common law, is that of one firm, partly
composed of a common partner in another firm, which
seeks by a suit to enforce a security against a stranger,
after satisfaction of that security has been obtained
from the latter firm. In such a case, the money re-
ceived by the one firm being paid, and accepted in
satisfaction of the security, the common partner in
each firm will not be permitted to contravene the
receipt thereof for that purpose, nor will he be allowed
to sue upon such security, as one of the firm, although
he is personally ignorant of the circumstances which
constitute the satisfaction.-^ This turns upon the gene-
ral principle, that the receipt of a partnership debt by
one partner is a full discharge thereof against the firm ;
for each partner is, sui juris, competent to receive it on
behalf of ■ all, and duly to release and discharge the
debtor.^ And when once payment or satisfaction has
been miade to one partner, it can be of no consequence
that he is connected with another firm ; for this does
not enable him to contravene his own act ; and if he
has no personal knowledge thereof, the receipt by his
partners is treated, in construction of law, as his own
receipt, and his. assent is bound up in theirs.^ There-
fore, where A. was a partner with B., in one mercantile
house, and with C. in another, and, after the former
house had indorsed a bill of exchange to the latter, B.,
has not been incorporated into the common law, treating the firm, for the
purposes of the suit, as an artificial body, or quasi corporation. It •would-
be highly- convenient, and certainly conformable to the common sense of
the commercial world.
1 Gow on Partn. ch. 3, § 1, p. 120, 121, 3d edit. See Bailey v. Bancker,
3Hill, B. 153..
2 Ante, § 114, 120, 131.
3 Jacaud v. French, 12 East, E. 317.
CH. XU.] EEMEDIES AGAINST THIRD PERSONS. 383
acting for the firm of A. and B., received securities to
a large amount from the drawer of the hill, upon an
agreement by B., that, the hill should be taken up and
liquidated by B.'s house ; and, if not paid by the ac-
ceptors when due, it should be returned to the drawer;
the Court of King's Bench held, that the deposited
securities being paid, and the- money, therefore, being
received by B. in satisfaction of the billy A. was bound
by this act of his partner B., in all respects ; and, there-
fore, he could not, in conjunction with C, his partner
in the other house, maintain an action, as indorsees and
holders of the biU, against the acceptors, after such
satisfaction received through the medium of, and by
agreement with B., in discharge of the same.-^
§ 237. Upon a similar ground, if a partnership be-
come possessed of a negotiable security, whiclt has
been procured by one partn#, upon the understanding,
that he will punctually provide for the payment thereof
at its maturity, the partnership cannot sue upon such
security; because the same partner must be made one
of the plaintiffs, and, as it is clear in such a case, that he
could not maintain any suit in his own name thereon,
the same objections will avail against him, as a co-
plaintiff. Thus, where one partner in a banking house
drew a bill in his own name upon a third person, who
accepted the same, upon the condition that the partner
would provide funds for the payment thereof at its
maturity ; and the bill was afterwards indorsed to the
partnership, and a suit was thereupon brought by all
the partners against the acceptor ; it was held, that the
action was not ^maintainable ; because all the partners
were bound by the acts of that partner, and as between
' Jaeaud v. French, 12 East, K. 317.
384 PABTNEESHIP. [CH. XD.
him and the acceptor, there was no pretence of any
right to recover.^ So, also, a partner holding a security
of the firm, by indorsement from the payee or other
indorser, cannot sue the indorser thereon.^
§ 238. The same principle will apply to a case where
all the partners sue upon an acceptance, or other
security, procured fraudulently by one partner, without
any participation or knowledge of the fraud by the
other partners; for he must still be made a party
plaintiff in the suit ; and his fraud not only biiids him-
self, but his innocent partners in that suit ,• for, unless
all the plaintiffs are entitled to recover, the suit 'must
fail.^ The case may even be put still more strongly ;
for if the security be a fraudulent contrivance between
the guilty partner and the third person, in fraud of the
partnership, there can be no suit against such third
person at law, founded th#eon, since the guilty partner
is at law a necessary plaintiff in every such suit.*
1 Sparrow v. Chisman, 9 Barn. & Cressw. 241.
2 Bailey v. Banoker, 3 Hill, K. 188.
3 Gow on Partn. ch. 3, § 1, p. 120, 3d edit.; Richmond v. Heapy, 1
Stark. R. 202, 204; Johnson u.Peck, 3 Stark. R. 66. "■ ,
4 Jones V. Yates, 9 Barn. & Cressw. 532; Kelly u. Wilson, Ryan &
Mood. 178. — Lord Tenterden, in delivering the judgment of the Court,
in the case of Jones v. Yates, went fully into the reasoning, on which this
doctrine of the common law is founded ; and, therefore, although some-
what long, the passage is here inserted. " These were two actions brought
by the plaintiffs, as assignees of Sykes & Bury. The first was an action
of trover to recover the value of three bills of exchange, which belonged
to Sykes & Bury, and which Sykes had indorsed to the defendants, witk
whom he had been in partnership, in part payment of a demand, due
from him to the partnership of Sykes, Yates & Young, and by him again
immediately indorsed in the name of that partnership to Alzedo, who was
a creditor of the firm. The second action was to recover money, drawn
by Sykes from the funds of himself and Bury, and paid into the hands of
Yates, in further discharge of the balance before mentioned, without the
knowledge of Bury. Both the transactions were frauds by Sykes, on his
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 385
§ 239. Another exception may arise from the incom-
petency of one of the partners to maintain the suit,
partner Bury, and it must be taken, that Yates (at least when the bills
were indorsed and the money paid) knew the bills and money came from
the funds of Sykes & Bury, without the knowledge of Bury. It may be
doubtful, whether Young was actually privy to either transaction ; but in
our view of the case, that point is not material. On behalf of the defend-
ant it was contended, that Sykes & Bury could not (if they had continued
solvent) have maintained any action against Yates & Young, in respect of
either of these transanctions; and that, if that were so, the plaintiffs, their
assignees, could not sue, they having no better remedy at law than Sykes
& Bury would have had. And we are of this opinion. It is unnecessary,
therefore, to advert to any of the other points, raised in argument at the
bar. We are not aware of any instance, in which a person has been
allowed, as plaintiff in a court of law, to rescind his own act, on the
ground, that such act was a fraud on some other person ; whether the
party seeking to do this has sued in his own name only, or jointly with
such other person. It was well observed on behalf of the defendants,
that where one of two persons, who have a joint right of action, dies, the
riorht then vests in the survivor. So that, in this case, (if it be held that
Sykes & Bury may sue,) if Bury had died before Sykes, Sykes might
have sued alone, and thus for his own benefit have avoided his own act, by
alleging his own misconduct. The defrauded partner may perhaps have
a remedy in equity, by a suit in his own name against his partner, and the
person with whom the fraud was committed. Such a suit is free from the
inconsistency of a party suing on the ground of his own misconduct.
There is a great difference between this case and that of an action
brought against two or more partners on a bill of exchange, fraudulently
made or accepted by one partner in the name of the others, and delivered
by such partner to a plaintiff in discharge of his own private debt. In
the latter case, the defence is not the defence of the fraudulent party, but
of the defrauded and injured party. The latter may, without any incon-
sistency, be permitted to say in a court of law, that although the partner
may for many purposes bind him, yet, that he has no authority to do so
by accepting a bill in the name of the firm for his own private debt The
party to a fraud, he, who profits by it, shall not be allowed to create an
obligation in another by his own misconduct, and make that misconduct
the foundation of an action at law. Then, if Sykes & Bury could not
sue, how could the plaintiffs, who represent them here ? It was said, in
support of the argument, that the property did not pass from Sykes Ijy
his wrongful act, but remained in Sykes & Bury. This was ingeniously
and plausibly put ; but as against Sykes the property did pass at law, and
there was no remedy at law for Bury to recover it back again. He could
PARTN. 33
386 PARTNERSHIP. [CH. XII.
from his or her own peculiar national or other charac-
ter ; for in all cases of suits brought by partners, all
of the firm must be competent to sue. Thus, for
example, it has been said by a learned writer, that,
although the husband and wife are partners in a foreign
country, by whose laws they are competent to carry on
partnership business with each other; yet that they
are incompetent to sue in an English Court of justice,
as partners ; since the law of England does not recog-
nize their capacity so to engage in trade, and enter into
a commercial partnership.^ The doctrine here laid
down is certainly not maintainable, as a doctrine of
not do so without making Sykes a party. Further, the right of the
assignees to sue in this case, was said to be analogous to the right of
assignees to sue for, and recover back, property voluntarily given by a
bankrupt to a particular creditor, in contemplation of his bankruptcy, in
favor of such creditor, and in preference to him, in which case the bank-
rupt could not have sued, if no commission had issued, yet the assignees
are allowed to do so. That is a case, where the representatives could,
where the party represented could not, sue, and it is the only instance of
the kind mentioned at the bar, that has occurred to us. But, if we attend
to the principle on which the assignees are allowed to sue, we shall find
there is no analogy between that case and the case before the Court ; for
the principle, on which assignees have been held entitled to recover in
such cases, is not on the ground of fraud on any particular person, but on
the ground that there has been fraud on the bankrupt laws, which are
made for the purpose of effecting an equal distribution of the insolvent's
estate among all the creditors, and which purpose would be defeated, if a
party on the eve of a bankruptcy, and with a view to it, could distribute
his effects according to his own pleasure among some favorite creditors, to
the total exclusion of the others. This is mentioned by Lord Mansfield, as
the principle of the decisions in the early cases on this subject ; Alderson
V. Temple, 4 Burrow, 2235 ; Harman v. Fisher, Id. 2237 ; S. C. Cowper, R.
117. For these reasons, we think the plaintiffs are not entitled to re-
cover." But see Longman v. Pole, 1 Mood. & Walk. 223. Is this latter
case distinguishable upon the ground that it was case for a tort ?
' Collyer onPartn. B. 3, ch. 5, p. 459, 2d edit., citing Cosio v. De Ber-
nales, Ryan & Mood. R. 102. It is also reported in Carr. & Payne, R.
266.
CH. Xn.] REMEDIES AGAINST THIKD PERSONS. 387
public law ; and the authority cited to support it by-
no means bears it out in its full latitude.-'
I 240. A case far more unexceptionable, to illustrate
the principle of this exception, is that of a partnership
in a belligerent, or in a neutral country, where the suit
is brought, which is composed in part of one or more
partners domiciled in an enemy's country ; for, under
such circumstances, during the war, no suit can be
brought there to enforce any contract whatever in
favor of the partnership. A state of war suspends all
commercial intercourse between the belligerents, and
shuts their Courts against all suits and proceedings,
and all claims of persons, who have acquired and retain
a hostile character.^
I 241. Subject, however, to exceptions of this or a
similar nature, which all stand upon peculiar grounds,
the general rule is, as has been already mentioned,
that partners, in their collective or social capacity, may
bring any suits which it would be competent for any
individual to bring. It is also a general rule, that in
all such suits at law all the partners should join.^ The
rule, however, undergoes, or may undergo, an exception
in cases of dormant partners ; for it is at the option of
the plaintiffs in such cases, either to join the dormant
1 All that Lord Tenterden decided in the case, was, that he would not
presume that a feme covert in a foreign country could engage in a part-
nership with her husband, without some proof that such was the law of
the foreign country ; and no such proof being given, the plaintiffs were
nonsuited. There seems nothing objectionable or inconvenient in this
doctrine.
3 Gow on Partn. ch. 3, § 1, p. 120 ; McConnell v. Hector, 3 Bos. & Pull.
113; Griswold u. -Waddington, 16 Johns. R. 438; The Julia, 8 Granch,
181 ; Albrecht v. Sussman, 2 Ves. & Beam. 323.
3 Gow on Partn. ch. 3, § 1, p. 127, 128, 3d edit. ; Gage v. KoUins, 10
Pick. R. 348.
388 PARTNERSHIP. [CH. XII.
partner in the suit, or to omit him, (as in the corres-
ponding case of the partners' being sued as defendants,
it is at the option of the plaintiff to join the dormant
partner or not,) and the joinder or non-joinder will not
constitute any objection to the maintenance of the suit
in any manner whatsoever.^ The same exception ap-
plies a fortiori, where a man is merely a nominal part-
ner ; for, as he has no real interest, there seems no
necessity of his joining, as a party, in any partnership
suit,^ although there is no doubt that he may so join.^
§ 242. In this respect, perhaps, there may be ground
for a distinction between the cases of common unwrit-
ten contracts, and cases where a written instrument is
made payable to certain persons by name, although
one of them is but a nominal partner. For it may
well be said, that, in the latter case, as the promise is
made to all, the suit thereon may, and should be
1 Gow on Partn. ch. 3, § 1, p. 128, 3d edit. ; Skinner v. Stoclis, 4 Barn.
& Aid. 437; Lloyd u. Arehbowle, 2 Taunt. R. 324; Brassington ». Ault,
2 Bing. K. 177; Wilson u. Wallace, 8 Serg. & Rawle, 55 ; Clarkson v.
Carter, 3 Cowen, R. 85 ; Lord v. Baldwin, 6 Pick. R. 348, 352 ; Leveck v.
Shaftoe, 2 Esp.' R. 468; Ross v. Decy, 2 Esp. R. 470, note; CoUj^er on
Partn. B. 3, ch. 5, § 1, p. 465 ; Id. p. 468 to 470, 2d edit. ; Mawman v. Gil-
lett, 2 Taunt. R. 325, note ; Alexander v. Barker, 2 Cromp. & Jerv. 133 ;
Cothay v. Fennell, 10 Barn. & Cressw. 671. — The authorities here cited
are not all exactly agreed upon this point, where the dormant partner is a
party plaintiff; but they all agree as to the point where such a partner is
a party defendant. It seems exceedingly difficult to state any reasonable
distinction between the cases ; and the text contains what seems to me
the true doctrine, founded upon the weight of authority.
2 Collyer on Partn. B. 3, ch. 5, § 1, p. 470, 2d edit.; Gow on Partn.
oh. 3, § 1, p. 128, 129, 3d edit. ; Parsons v. Crosby, 6 Esp. R. 109 ; Daven-
port u. Rackstraw, 1 Carr. & Payne, R. 89 ; Glossop v. Coleman, 1 Stark.
R. 23; Teed v. Elworthy, i4 East, R. 210 ; Kell v. Nainby, 10 Barn. &
Cressw. 20. But see Guidon v. Robson, 2 Camp. 302 ; Kieran v. Sanders
6 Adol. & Ell. 515.
3 Guidon v. Robson, 2 Camp. R. 302.
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 389
brought in the name of all, as proper parties to the
contract.^ There can he no doubt, that, in a case of
this sort, all the persons named may join in the suit ; ^
but it is quite a different question, whether all must so
join, when aU have not an interest in the contract.^
We all know, that there are many cases of written
contracts, as for example, of policies of insurance, pro-
cured to be underwritten by agents or brokers in their
own names, in which, nevertheless, the suit for a breach
thereof may be brought either in the name of the prin- '
cipal, or of the agents or brokers.* Why the same
rule might not well apply in other analogous cases of
written contracts, it is not easy to say.*^ It is proper,
however, to add, that there is some apparent conflict in
the authorities on this point.®
1 CoUyer on Partn. B. 3, ch. 5, § 1, p. 465, 470, 2d edit.
2 Kill 1). Nainby, 10 Barn. & Cressw. 20.
3 Gow on Partn. ch. 3, § 1, p. 122, 123, 3d edit.
* Story on Agency, § 160 to 162.
5 CoUyer on Partn. B. 3, ch. 5, § 1, p. 465 to 468, 2d edit.; Grove v.
Dubois, 1 Term R. 112; Gumming v. Forrester, 1 Maule & Selw. 497;
Hagedorn v. Oliverson, 2 Maule & Selw. 426 ; Garrett v. Handley, 4
Barn. & Cressw. 664 ; Lucena v. Crawford, 3 Bos. & Pull. 98 ; Gow on
Partn. ch. 3, § 1, p. 122, 123, 3d edit.; Bell w. Ansley, 16 East, R. 141 ;
Skinner v. Stocks, 4 Barn. & Aid. 437 ; Alexander v. Barker, 2 Cromp. &
Jerv. 133, 138 ; Atkinson u. Laing, 1 Dowl. & Ryl. N. P. C. 16.
8 Guidon V. Robson, 2 Camp. R. 302. — On this occasion, the ca«e
being an action by Guidon alone against Robson, upon a bill of exchange,
drawn in the name of Guidon & Hughes (the latter being a mere clerk
of Guidon) on Robson, and accepted by him, Lord Ellenborough said ;
" There being such a person as Hughes, I am clearly of opinion that he
ought to have been joined as a partner. He is to be considered in all
respects a partner, as between himself and the rest of the world. Per-
sons in trade had better be very cautious how they add a fictitious name to
their firm for the purpose of gaining credit. But, where the name of a
real person is inserted with his own consent, it matters not what agree-
ment there may be between him and those who share the profit and loss.
They are equally responsible, and the contract of one is the contract of
33*
390 PARTNERSHIP. [CH. XII.
§ 243. And this naturally conducts us to the more
enlarged consideration, in what cases, and under what
circumstances contracts are to he treated as partnership
contracts, of which the firm may avail itself by way of
suit. We have already seen,-' that in order to bind the
partnership in any contract with third persons, it is
ordinarily necessary that it should be made in the firm
name ; and that, if made by one partner in his own
name only, it will ordinarily be binding only upon
himself, and not upon the partnership.^ There are,
however, exceptions to this rule, where the contract is
made by one partner in his own name, for and on behalf
of the partnership, or for the benefit thereof, and yet
the firm will be bound thereby.^ There is a like en-
largement of obligation in many other cases of written
and unwritten contracts, where the same doctrine will
reciprocally apply in favor of the partnership, as in
the converse case is applied against it. Thus, for
all. In this case the declaration states that the defendant promised to
pay the money specified in the bill to the plaintiff only, whereas she
promised to pay it to the plaintiff jointly with another person. The
variance is fatal." But see Kill v. Nainby, 10 Barn. & Cressw. 20 ; Hall
V. Smith, 1 Barn. & Cressw. 407; Marchington D.Vernon, 1 Bos. & Pull.
101, note ; Marsh v. Robinson, 4 Esp. R 98 ; Walton v. Dodson, 3 Carr. &
Payne, 162 ; Skinner v. Stocks, 4 Barn. & Aid. 437 ; Cothay v. Pennell,
10 Barn. & Cressw. 671. In Alexander «. Barker, 2 Cromp. & Jerv.
133, 138, Mr. Justice Bayleysaid; "I am the less surprised, that the
learned Judge should have considered D. Alexander as the person with
whom the defendant contracted, and who alone could maintain the action,
because I remember that it was at one period the impression of Lord
EUenborough, that where money was lent by a partner, the action must,
in all cases, be brought by the individual with whom the contract was
made. But he was afterwards convinced of what is doubtless the true
rule, viz. that, where a contract is made by one on behalf of others, the
action may be brought in the name of the principals."
' Ante, § 102, 136, 142.
2 Ante, § 102, 136, 142 ; Faith v. Raymond, 11 Adol. & Ellis. 339.
3 Ante, § 102, and note (1), § 142.
CH. Xir.] KEMEDIES AGAINST THIRD PERSONS. 391
example, if a contract of guaranty should be entered
into apparently with one partner, but in reality it
should be intended to be for the indemnity of the firm
for advances to be made by the firm ; an action might
be maintained by all the partners, as upon a joint con-
tract therewith, although the written papers, containing
the guaranty, should be addressed to one partner, and
he alone should conduct the negotiation.-^ The same
1 Gow on Partn. ch. 3, § 1, p. 121 to 123, 3d edit. ; CoUyer on Partn.
B. 3, ch. 4, § 1, p. 446, 447, 2d edit.; Id. oh. 5, § 1, p. 464, 465 ; Garrett v.
Handley, 3 Barn. & Cressw. 463 ; S. C. 4 Barn. & Cressw. 664 ; Walton
V. Dodson, 3 Carr. & Payne, K. 162. — Mr. Gow has summoned up the
authorities on this point as follows. " Partners sometimes seek to enforce
a guarantee, given to secure the repayment of an advance to be made by
the firm. In such a case the action must necessarily be brought by all
the partners to whom the guarantee is given, and by whom the advance
is made. And where a contract of that description is apparently entered
into in favor of one partner only, yet in fact if it be intended as an in-
demnity to the firm, in respect of an advance to be made by them, a joint
action may be maintained. Thus, in the late case of Garrett and another
V. Handley, (4 B. & C. 664,) which was an action on a guarantee by two,
as the survivors of a firm of three partners, it appeared that the guarantee
was addressed to one of the partners, only ; but evidence was produced,
which established that the advance to secure which the guarantee was
entered into, was made by the firm, and that the guarantee was given for
their joint benefi^, and not to indemnify the single partner only. It was
objected at nisi prius, and afterwards insisted upon on a motion to enter a
nonsuit, that there was a misjoinder ; for, as the guarantee was in terms
given to one partner, to whom alone the promise could be construed to
have been made, the action should have been brought by him only. But
the Court of King's Bench held, that as the guarantee was proved to
have been intended for the benefit of the firm, the action was properly
brought by the surviving partners ; and, under such circumstances, is not
competent to the partner, to whom the guarantee may have been ad-
dressed, to treat the advance as one made by himself, on his individual
account, and in that character to support a separate action. This was
determined in a previous action on the same guarantee, and in which the
plaintifi" declared, that, in consideration that he would advance a sum of
money to A. B., the defendant promised that provision should be made
for paying the plaintiff. At the trial it appeared, that the defendant had
given to the plaintiff the guarantee stated in the declaration, and that the
392 PARTNERSHIP. ["CH. XII.
rule would apply to a loan, made by one partner in a
banking establishment, out of the banking fund, al-
though the whole negotiation should be conducted by
and in the name of that partner only.^
latter was a partner with two other persons in a banking-house, and that
the firm had advanced the money, and charged A. B. in account with the
same ; and it was held, that the averment in the declaration, that the
plaintiff had advanced the money, was not sustained by the proof, there
being no evidence to show that the money had been advanced to the
plaintiff by the firm, and by him to A. B. It is not to be collected from
either of the two preceding cases, nor was it in fact necessary to deter-
mine, whether the partner to whom the guarantee was actually given,
could have maintained a separate action upon it, provided his declaration
so truly and correctly stated the facts, as not to have been open to the
objection of a variance between the allegation and the proof. But judg-
ing from analogy to the rule, applicable to a policy of insurance, which
allows the action to be brought, either by the party for whose benefit it
was effected, or in the name of him who effected it, it would seem, that
that partner, as being the party with whom the contract was made, might
have supported such an action." Gow on Partn. ch. 3, § 1, p. 121, 122,
123.
1 Alexander v. Barker, 2 Cromp. & Jerv. 133, 138. See Eobson v.
Drummond, 2 Barn. & Adol. 83. — On this occasion, Mr. Justice Bayley
said ; " I have no doubt in this case-, but that this action is maintainable
by the plaintiffs ; and in that opinion I am fortified by the case of Garrett
V. Handley. Here, D. Alexander stood in the double capacity of an indi-
vidual and a member of the firm. Barker wanted an advance of money,
and to him it was quite immaterial by whom the advance was made,
whether by D. Alexander alone, or by the house of which he was a
member. He applies to T). Alexander to make the advance. He does
not qualify that application, and say, you may be a member of a firm, and
I will deal with you only, and will not be answerable to other persons ;
but he makes his application without any qualification. By thus applying
generally, he entitles D. Alexander, if he makes the advance, to place
him in the situation of being answerable to him in either of his capacities,
according to that in which he makes the advance. From the testimony it
appears, that the advance was made by D. Alexander, not individually,
but with the money of the firm. He accepted, therefore, the application
for the advance, not as an individual, but in his capacity as a member of
the firm. In Garrett v. Handley, the contracting partner first brought
the action in his own name ; but it appeared that the advance was made
by the house, and the Court said, you did not make the advance, and
CH. XII.] REMEDIES AGAINST THIRD PERSONS.
393
§ 244. In the course of partnerships it not infre-
quently happens, that new partners are admitted, or
old partners retire, without any change of the firm
name ; and upon such a change, the contracts and
effects and securities of the existing partnership are
agreed to remain, and become a part of the funds of
the new firm. But in all such cases the contracts and
securities must be sued for in the names of the original
firm, unless, indeed, they are negotiable securities, and
are indorsed over by the old firm to the new firm ; in
which latter case the new firm may sue thereon in
their own names, like any other holders; for in all
other cases no persons are permitted to sue thereupon
at law, except the partners, who originally made the
contract, or had an interest therein.^ A fortiori, the
same rule will be applied with more strictness, in cases
where the contract is under seal ; for, then, ordinarily,
the parties to tl&e deed, and none others, can sue, or be
sued thereon.^ In equity, the case may be far other-
cannot maintain the action. Another action was then brought in the
name of the firm, and the Court being of opinion that the guarantee was
intended to apply to advances made by the firm, thought that the action
was maintainable. The language of that guarantee was much more
pointed than this letter. It was addressed to an individual, and was to
this effect ; — 'I understand from Mr. G., that you have had the goodness
to advance £550, &c., upon my assurance, which I hereby give, that pro-
vision shall be made for repaying you this sum, &c.' But the advance
was not made by the individual alone ; and it was holden, that the firm
by whom the advance was made ought to sue. It appears to me, there-
fore, that the plaintiffs were the persons who might and ought to sue in
this case." See also Cothay v. Fennell, 10 Barn. & Cressw. 671 ; CoUyer
on Partn. B. 3, ch. 4, § 1, p. 446, 447, 448, 2d edit. ; Id. ch. 5, § 1, p. 465.
1 CoUyer on Partn. B. 3, ch. 5, § 1, p. 46] , 462, 463, 465, 466, 2d edit. ;
Osborne v. Harper, 5 East, R. 225 ; Wilsford v. Wood, 1 Esp. R. 182 ;
Pease v. Hirst, 10 Barn. & Cressw. 122, 127 ; Innes v. Dunlop, 8 Term R.
595; Ord v. Portal, B Camp. R. 239 ; Robson v. Drummond, 2 Barn. &
Adol. 301 ; Eadenhurst v. Bates, 3 Bing. R. 470.
2 CoUyer on Partn. B. 3, ch. 5, § 1, p. 463, 464, 2d edit; Metoalf v.
394 PARTNERSHIP. [CH. XH.
wise ; for assignees of equities and equitable interests
are competent to sue in equity in their own names, to
enforce payment of the assigned debts, or other choses
in action, although they may not be competent at
law.^
§ 245. Questions, also, of a very delicate nature
may arise out of contracts and obligations by third
persons, with a partnership, where the contracts or
obligations are of a continuing nature, as to what is
their true extent and operation, when there has been
any change of the partners by the retirement of an
old partner, or the admission of a new one. Thus,
for example, a guaranty for advances to be made, or
credits to be given, from time to time, by a firm to a
third person ; and some new advances or credits may
have occurred, after a change of the original partners,
in the manner above suggested. Under such circum-
stances, the question would arise, whether the guaran-
tor would be liable, either to the old firm, or to the
new firm, for any such advances or credits, after any
such change. It has been held, that the guarantor
would not be liable therefor ; and that no such gua,-
ranty ought to be extended beyond the actual import
Kycroft, 6 M. & Selw. 75. See also Pease v. Hirst, 10 Barn. & Cressw.
122, 127.
1 2 Story on Eq. Juris. § 1039, 1040; Tierman v. Jacobs, 5 Peters, R.
597, 598. — If, after an assignment, the debtor should promise the assignees
to pay them, a suit might then and upon that promise be maintained by
the assignees against the debtor in a Court of Law. CoUyer on Partn.
B. 8, eh. 5, § 1, p. 462, 463, 2d edit.; Wilsford v. Wood, 1 Esp. B,. 182;
Moor V. Hill, 2 Peake, E. 11 ; Innes v. Dunlop, 8 Term K. 595. There
may be cases, also, where, after the contract is made with partners, a seve-
rance may be made by the consent of all the parties in interest, and then
each may sue for his own share. See CoUyer on Partn. B. 3, ch. 5, § 1,
p. 467, 468, 2d edit.
CH. XII.] REMEDIES AGAINST THIED PERSONS. 395
of its terms; but that it ought to be limited to ad-
vances and credits made by the original firm only.^
I 246. The same doctrine will apply to more formal
instruments, such as a bond given by a principal and
surety to a firm, to secure advances made by the firm
to the principal ; for, upon such a bond the surety will
not be liable for any advances made after the with-
drawal or death of one of the partners.^ Nor, is there,
in this respect, any real difference between the deci-
sions of Courts of Law, and those of Courts of Equity,
as to the construction or extent of the terms of the
1 Collyer on Partn. B. 3, ch. 4, ^ I, p. 443, 444, 2d edit; Myers «.
Edge, 7 Term R. 250, 252; Cremer v. Higginson, 1 Mason, R. 323; Gow
on Partn. ch. 3, § 1, p. 1^3, 124, 3d edit; Spiers v. Houston, 4 Bligh, N.
S. R. 515 ; Ex parte Kensington, 2 Ves. & Beam. 79; Dry v. Davy, 10 •
Adol. & Ellis, 30 ; S. C. 3 Perr. & Dav. 249.
2 Strange v. Lee, 3 East, B. 489; Pemberton v. Oakes, 4 Russ. R. 154,
16.7; Weston v. Barton, 4 Taunt R. 673, 682. — In this last case, Sir
James Mansfield, in delivering the opinion of the Court, said ; " It is not
necessary now to enter into the reasons of those decisions ; but there may
be very good reasons for such a construction. It is very probable, that
sureties may be induced to enter into such a security by a confidence
which they repose in the integrity, diligence, caution, and accuracy of one
or two of the partners. In the nature of things there cannot be a part-
nership consisting of several persons, in which there are not some persons,
possessing these qualities in a greater degree than the rest ; and it may
be, that the partner dying, or going out, may be the very person on whom
the sureties relied. It would, therefore, be very unreasonable to hold the
surety to his contract, after such change. And though the sum here is
limited, that circumstance does not alter the case; for although the amount
of the indemnity is not indefinite, yet £3000 is a largo sum; and even if it
were only £1000, the same ground in a degree holds ; for there may be a
great deal of difference in the measure of caution or discretion, with
which different persons would advance even a thousand pounds. Some
would permit one who was almost a beggar, to extend his credit to that
sum ; others would exercise a due degree of caution for the safety of the
surety. And, therefore, we are of opinion, that as to such sums only,
which were advanced before the decease of Goldipg, can an indemnity be
recovered by the plaintifi's ; and as to the sums claimed for debts incurred
since his decease, the judgment must be for the defendant."
396 PARTNERSHIP. [CH. XII.
instrument. In each Court, the interpretation, put
upon the terms of the contract, has precisely the same
extent, and the same limitations.-^
§ 247. These decisions may, at first view, be deemed
somewhat rigid, if not inequitable. But, in reality,
they stand upon grounds capable of an entirely satis-
factory and solid vindication. In the first place, it can
never be said with truth or justice, that a guaranty or
suretyship for advances, to be made by A., B., & C, does
properly extend to any advances made by A. & B., or
by A., B;, & D. ; and therefore the guarantor, or surety,
may, with all good faith and correctness, say, Non in
hcec foRdcra veni. Besides, as has been well observed,
the guarantor or surety may have very good reasons,
why he might be willing to enter into an engagement
with a fixed reliance upon the vigilance, fidelity, discre-
tion, and skill of a particular partner, when he would
not, if that partner were to withdraw, be willing to
enter into, or to prolong any such engagement.^
1 Pembertou v. Oakes, 4 Kuss. K. 154.
2 Weston V. Barton, 4 Taunt. R. 673, 682 ; Simson v. Cooke, 11 Bing.
K. 461. See also Russell «. Perkins, 1 Mason, Cir. R. 368; Stfange v.
Lee, 3 East, R. 484, 490. — Lord EUenborough, in delivering the opinion
of the Court in this last case, said ; " The Court will, no doubt, construe
the words of the obligation according to the intent of the parties to be
collected from them ; but the question is, what that intent was. The
defendants' obligation is to pay all sums due to them, on account of their
advances to Blyth. Now who are ' them,' but the persons before named,
amongst whom is James Walwyn, who then constituted the banking house,
and with whom the defendant contracted ? The words will admit of no
other meaning. And, indeed, with respect to any intent which parties
entering into contracts of this nature may be supposed to have, it may
make a very material difference in the view of the obligor, as to the per-
sons constituting the house, at the time of entering into the obligation, and
by whom the advances are to be made to the party for whom he is surety.
For a man may very well agree to make good such advances, knowing
that one of the partners, on whose prudence he relies, will not agree to
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 397
§ 248. It has been said, that guaranties for the
payment of the debts of third persons are not general
instruments under fieal, and that there is no technical
rule, which, as to them, prevents a Court of Law from
looking at the real justice and merits of the case.^
This is true. But it is equally true, that the language
in every case is to be construed according to its fair
and reasonable meaning, and is not to be strained to
reach cases unforeseen or unprovided for; for that
would be to make, and not merely to construe, con-
tracts. And, indeed, in all cases of this sort, the
guarantor or surety has a right to insist, that he shall
not be presumed to enter into engagements for events,
which were never so submitted to his consideration or
contemplation, and which, if considered or contem-
plated, might have induced him altogether to abstain
from any engagement whatsoever.
§ 249. The same reasoning is equally applicable to
another class of cases, where there is a continuing
contract with a partnership, such as a contract to buy ^
goods, or to hire them of the partnership from year., to
year, for a term of years ; for such a contract could
hardly be entered into without some reference to the
character, skill, and honesty of the existing partners j
and it is scarcely presumable, that any man would be
willing to have his contract, or his patronage, assigned
advance money improvidently. The characters, therefore, of the several
partners may form a material ingredient in the judgment of the obligor
upon entering into such an engagement." See Dry v. Davy, 2 Perr. &
Dav. 249; S. C. 19 Adol. & Ellis, 30.
1 CoUyer on Partn. B. 3, ch. 4, § 1, p. 445, 446, 2d edit.; and the ob-
servations of Mr. J. Park, in Hargrave v. Smee, 3 Moore & Payne, 684 ;
S. C. 6 Bing. K. 244; and of Lord Tenterden, in 5 Barn. & Aid. 192;
Pease v. Hirst, 10 Barn. & Cressw. 122 ; Dry v. Davy, 10 Adol. & Ellis,
30 ; S. C. 1 Perr. & Dav. 149.
PARTN. 34
398 PARTNERSHIP. [CH. XII.
over from time to time to mere strangers, of whom he
knew nothing, and of whose competence and ability and
fidelity he might have no adequate means of inquiry.^
§ 250. But the most striking, as well as the most
usual, illustration of this doctrine, which occurs in
actual practice, is, where bonds are given by sureties
to partners, for the fidelity and good conduct of clerks,
and other officers and agents, in the service and em-
ployment of the partnership. In all cases of this sort,
the uniform rule of construction of the bond is, unless •
some clear language to the contrary is inserted, that
the bond does not apply as a security, after any change
of the members of the partnership by death, or other-
wise.^ But language may be used in a bond, which
shall clearly import a continuing liability; notwith-
standing any change of the firm ; and if it does, there
can be no question, that it will, both at law and in
equity, have the most complete operation.*
1 Bobson V. Drummond, 2 Barn. & Adol. 303. — Quere, whether it
would make any difference, that the retiring partner was a dormant part-
ner 1 and that the ostensible partner still remained in the firm. See Dry
V. Davy, 3 Perr. & Dav. 249 ; S. C. 10 Adol, & Ellis, 30; Kobson v.
Djrummond, 2 Barn. & Adol. 301.
2 CoUyer on Partn. B. 3, ch. 4, § 1, p. 435 to 442, 2d edit. ; Gow on
Partn. ch. 3, § 1, p. 123 to 125, 3d edit.; VTrjght v. Kussell, 3 Wils. E.
532 ; S. C. 2 W. Black. 934 ; Dance v. Girdler, 4 Bos. & PuU. K. 34 ;
Strange v. Lee, 3 East, K. 434 ; Arlington v. Merrick, 2 Saund. K. 412 ;
University of Cambridge v. Baldwin, 5 Mees. & Welsh. 580 ; Simson v.
Cooke, 1 Bing. E. 452, 461.
3 Metcalf V. Bruin, 12 East, E. 400 ; Simson v. Ingham, 2 Barn. &
Cressw. 65; MoUer v. Lambert, 2 Camp. E. 548. — Barclay v. Lucas (1
Term E. 291) was a case, which was supposed to contain language, import-
ing a provision of this character ; but great doubts may well be enteiv
tained, whether the case can be maintained upon any such interpretation.
See CoUyer on Partn. B. 3, ch. 4, § 1, p. 436, 437, 441, 2d edit. ; Barker
V. Parker, 1 Term E. 287 ; Strange v. Lee, 3 East, E. 491 ; Gow on Partn.
ch. 3, § 1, p. 124, 3d edit.; Simson v. Cooke, 1 Bing. E. 452.
CH. xn.] REMEDIES AGAINST THIED PERSONS. 399
§ 251. The like doctrine equally applies to cases,
where a guaranty is given by a firm on behalf of one
person, or by one person on behalf of a firm, and after-
wards another person is introduced into the business
of that person, or a material change takes place in the
firm ; for the guarantor or guarantors will not be liable
thereon for any subsequent advances, made to such a
person or firm, with a knowledge of the change.^
§ 252. Hitherto we have been speaking of the ori-
ginal rights of partners against third persons, arising
under general contracts, or special engagements with
them, and the proper limitations and qualifications
thereof. But many circumstances may subsequently
occur, which will suspend, or defeat, or extinguish or
vary these rights, of some of which it seems proper to
take notice, in this connection. In the first place, if
one of the partners should take an acceptance, or other
security for any debt, payable at a future day, this will
be construed to be an agreement to give time to the
debtor, so as to suspend the right of action of the £rm
for the original debt, until such security shall be dis-
honored or shall become due.^ We have already had
occasion to take notice of the case of a security given
to one firm, of which satisfaction has been obtained by
another firm, each firm having one and the same com-
mon partner, which will operate as an extinguishment
of any further right of recovery upon such security.®
' Grow on Partn. ch.' 3, § 1, p. 123 to 125, 3d edit. ; CoUyer on Partn.
B. 3, ch. 4, § 1, p. 438, 442, 443, 2d edit. ; Wright v. Russell, 3 Wils. K.
530; S. C. 2 Wm. Black. 934; Bellaira ii. Hobsworth, 3 Camp. K. 53 ;
Ex parte Watson, 19 Ves. 459; Simson v. Cooke, 1 Bing. K. 452, 461 ;
Ante, § 245 to 247f
2 Cdllyer on Partn. B. 3, ch. 4, § 2, p. 453, 2d edit. ; Tomlins v. Law-
rence, 3 Moore & Payne, 555.
.3 Ante, § 236 ; Jacaud v. French, 12 East, K. 817.
400 PARTNERSHIP. [CH. XII.
A fortiori, a release of a debt by one partner at least,
if it be not a fraud, will amount to an extinction of
the debt against the partnership.^
§ 253. In the next place, subsequent dealings with
a new firm will in many cases, diminish, or discharge,
or satisfy a debt, due to the old firm by mere intend-
ment and operation of law. Thus, for example, if one
of several partners should die, or retire from the firm,
and a balance should then be due to the firm, such
balance will be gradually diminished, and may be ex-
tinguished, by sums subsequently paid to the remain-
ing partners, unless such sums shall be otherwise spe-
cifically appropriated at the time of the payment.^ It
1 Collyer on Partn. B. 3, ch. 4, § 2, p. 453, 2d edit; Id. B. 3, ch. 2, § 1,
p. 311, 812 ; Id. ch. 5, § 5, p. 485; Watson on Partn. p. 225, 2d edit.;
Perry v. Jackson, 4 Term K. 459 ; Hawkshaw v. Parkins, 2 Swanst. E.
544; Barker v. Kichardson, 1 Younge & Jerv. 362, 365, 3S6 ; Gow on
Partn. ch. 2, § 2, p. 60, 61 ; Ante, § 114.
2 Collyer on Partn. B. 3, ch. 4, § 1, p. 450 to 452, 2d edit.; Id. ch. 3,
§4, p. 422 to 424; Ex parte Kendall, 17 Ves. 514; Clayton's Case, in
Devaynes v. Noble, 1 Meriv. K. 529, 572; Bodenham v. Purchas, 2 B. &
Aid. 39. — In this last case, Mr. Justice Bayleysaid; "I cannot distin-
guish this in principle from Clayton's Case. The decisions in the courts
of law do not break in upon the distinction there taken. The principle
established by those decisions is this, that where there are distinct accounts
and a general payment, and no appropriation made at the time of such
payment by the debtor, the creditor may apply such payment to which
account he pleases. But where the accounts are tifeated as one entire
account by all parties, that rule does not apply. In this case the bond was
given in 1801, for advances made or to be made in Havard's lifetime ; at
his death, the balance due was £4404. The surviving partners might
then have called for payment of that sum, or they might have treated it as
an insulated transaction, and kept that as a distinct and separate account.
But instead of that, they blend it with the subsequent transactions ; for in
the first account delivered after Havard's death, are included several
items, down to the 30th of June, and the payments after his death reduce
the balance, at that time, to £1420., They might even then have treated
this balance as a distinct account, and as money due on the bond, if they
had so chosen. Do they do so ? Look to the next account ; the parties
OH. XII.]' KEMEDIES AGAINST THIRD PERSONS. 401
has been supposed, that the same doctrine will apply
in the case of an account current between a new firm,
composed of the remaining partners of the old firm,
and a new partner ; ^ but, perhaps this may, in the
present state of the authorities, be thought to admit of
doubt, unless the balance is, with the consent of all the
parties in interest, carried to the debit of the. new firm;
for then the ordinary rule as to the appropriation of
payments will apply .^ But the mere fact, that a cre-
balance their accounts every three months ; and in the next quarterly
account, they bring forward the balance of £1420, and make it an item in
one entire account, subsisting between these parties. The account goes
on from 1810 till 1813 ; and the then balance is treated as one entire
balance of one entire account, as the result of all the transactions between
the parties in the intermediate time. The plaintiffs were not bound to
have so treated it at Havard's death ; but having done so, there is not any
authority for saying, that they are now at liberty to apply the several pay-
ments in reduction of the debt incurred by the subsequent advances, to
the exclusion of the bond debt. It certainly seems most consistent with
reason, that where payments are made upon one entire account, that such
payments should be considered as payments in discharge of the earlier
items. Clayton's Case, where all the authorities were fully considered by
the Master of the EoUs, is directly against the plaintiff's right to make
any such appropriation as he desires. That case does not break in upon
any of the cases at law, and ought to govern our decision in the present
instance ; and I am therefore of opinion, that there ought to be judgment
for the defendant."
' Pemberton v. Oakes, 4 Euss. 154, 168.
2 Gow on Partn. ch. 5, § 2, p. 244 to 246, 3d edit. ; Clayton's Case, in
Davaynes v. Noble, 1 Meriv. B. 604. See Copland v. Toulman, 1 West.
R. (H. of Lords) p. 169 ; S. C. 7 Clark & Fin. 350. In Pemberton v.
Oakes, (4 Russ. R. 154, 168,) Lord Lyndhurst said; " The third question
is, Whether the balance, due from Stokes to the bank at the time of Hard-
ing's death, has been discharged by his subsequent payments ; and that
point is decided by Clayton's Case, and Bodenham v. Purchas. It is true,
that the facts here are not, in every respect, precisely the- same with, the
circumstances of these two cases. But the decisions in them proceeded on
a broad general principle, equally applicable to the state of circumstances
existing here. Where divers debts are due from a person, and he pays
money to his creditor, the debtor may, if he pleases, appropriate the pay-
34*
402 PARTNERSHIP. [CH. XH.
ditor of the firm, knowing of the death of one of the
firm, continues to deal as before with the survivors for
any length of time, without requiring payment of the
balance due to him from the firm at the time of the
death, will not deprive such creditor of the remedy
which he has in equity against the assets of the de-
ment to the discharge of any one" or other of those debts ; if he does not
appropriate it, the creditor may make an appropriation ; but if there is no
appropriation by either party, and there is a current account between
them, as between banker and customer, the law makes an appropriation
according to the order of the items of the account, the first item on the
debit side of the account being the item discharged or reduced by the first
item on the credit side. Here it is not pretended, that any distinct appro-
priation of the payments was made by the parties. It was the practice of
the bank to settle their accounts with Stokes quarterly ; transferring, at
the end of each quarter, the balance then due from him to the account of
' the next quarter. Harding died in the middle of a quarter ; but, on that
occasion, no change took place in the mode of settling the accounts. At
the end of the then current quarter, the balance was struck exactly as if
Harding had been alive, and no notice was taken of his death. There
being no distinct appropriation of the payments, either by the one party or
the other, the law makes the appropriation with reference to the order of
the items of the account. If so, the debt which Stokes owed to the bank
at the time of Harding's death, has been discharged by the subsequent
payments. In Bodenham v. Purchas, a Court of Law confirmed the rule,
which Sir William Grant had laid down in a Court of Equity. The point
was again 1)ronght into discussion in Simson v. Ingham, 2 Barn. & Cressw.
65 ; and the principle was again confirmed, though the particular circum-
stances of the transaction produced a different decision. In that case, two
accounts were formed by a London bank at the death of one of the partners
in a country bank, which dealt with them — the one was styled the old
account — the other, the new j and in the latter, the London bank entered
all the payments, made to them by the country bank, after the death of
that partner; so that a distinct^ appropriation was made. The same
question arose in Brooke v. Enderby, before the Common Pleas ; and
there, too, the principle of Clayton's Case was adopted. Feeling myself
bound by the force and authority of these decisions, and acquiescing com-
pletely in the reasoning of Sir William Grant, I must decide that there
was no debt due to Oakes and WiUington under the indenture of the 4th
of January, 1802, at the time when the memorandum was indorsed on the
bond." A somewhat different view seems to have been taken by Lord
Abinger, in Jones v. Maund, (3 Younge & Coll. 347.)
CH. Xn.] REMEDIES AGAINST THIRD PERSONS. 403
ceased partner for the debt ; but tbere must be other
concurring circumstances establishing an abandonment
of his claim against the deceased, and adopting the
responsibility of the survivors for the debt instead
thereof.^
1 Winter v. Innes, 4 Mylne & Craig, 101, 108, 109. In this case Lord
Cottenham said; "The question, therefore, ns. Whether a creditor of a
firm, who, knowing of the death of one of the firm, continues to deal, as
before, with the survivor for any length of time, without requiring pay-
ment of the balance due to him from the firm at the time of the death,
thereby loses the remedy which he had in equity against the estate of the
deceased partner ; — particularly in a case in which there is not only no
evidence of any intention to abandon such claim, and to adopt the indivi-
dual responsibility of the surviving partner in, its stead, but the total
absence of any object or consideration for so doing, and conclusive evi-
dence that the principal object of the forbearance was not to press upon
or prejudice the estate of the deceased, of whose will the creditor was
himself a trustee and executor, though he did not prove. It would, I
think, be extraordinary, if there were authorities to be found in support
of the affirmative of this proposition. I will shortly refer to some of the
principal cases at law and in equity which bear upon this subject. The
cases at law have necessarily arisen where the dissolution of the partner-
ship has taken place by arrangement between the partners, and not by
death. It will be found that in some, even where it was clear that the
creditor intended to take the separate security of the continuing partner
in lieu of the joint liability of the dissolved firm, the retired partner was
held not to be discharged, as in David v. Ellice, and Lodge v. Dicas, in
which the creditor, with a knowledge that the continuing partner had
agreed to pay all the debts, took his personal security for the debt ; but it
was held that he had not thereby released the retiring partner, upon the
ground of want of consideration for his so doing. These decisions have
been considered as carrying the doctrine very far, and undoubtedly they
, do ; and the true ground appears to me to have been acted upon in Bed-
ford V. Deakin, and Thompson v. Percival. In the former, it is laid down,
that to discharge the retiring partner, it must appear that the creditor
accepted the separate security of the continuing partner, in discharge of
the joint debt ; and in the latter case, although the creditor knew that the
continuing partner had agreed to pay" all debts, and, with that knowledge
had taken a bUl from him, for the payment of which, when due, he after-
wards allowed two months, yet the Court, •upon a motion for a new trial,
ordered it, that it might be put to the jury whether the plaintifi" had
agreed to take, and did take, the bill in satisfaction of the joint debt. If,
therefore, the cases in equity of claims against the estates of deceased
404 PARTNERSHIP. [CH. XII.
§ 254. Indeed, it may be laid down, as a .general
rule, that, when a debt is once contracted by a third
person with a partnership, (it not being by a negotiable
security,) no mere private agreement between the part-
ners win A'^ary their rights against such third person,
unless it is assented to by the latter.'' Thus, for exam-
ple, if upon any change of the firm, the existing part-
nership debts should be assigned over to the new firm,
p^ners are to be regulated by the same principle, there can be no doubt
of the right conclusion in the present case, for there was no new security-
given ; and instead of an intention appearing, or any agreement being
proved, to release the estate of Mr. Winter, all the evidence proves
directly the reverse. It cannot be disputed now that the estate of a
deceased partner is liable in equity to the creditors of the firm, although
the legal remedy exists only against the survivors. When and by what
means is that liability to terminate ? Sir William Grant, in Vulliamy v.
Noble, (and he had much considered the question in Sleech's Case in
Devaynes v. Noble,) has answered the question. He says, ' The deceased
partner's estate must remain liable in equity until the debts which affected
him at the time of his death have been fully discharged. There are
various ways in which the discharge may take place, but discharged they
must be before his liability ceases.' The discharge may be by direct pay-
ment, or by dealings with the continuing partner operating as payment of
the joint debt, or, in the terms of Thompson v. Percival, the dealings may
arise from the creditor's having agreed to take, and taking the security of
the survivor in satisfaction of the joint debt ; or there may be an equitable
bar to the remedy, for (as Lord Eldon expresses it in Ex parte Kendall,)
' As the right stands only upon equitable grounds, if the dealing of the
creditor with the surviving partners has been such as to make it inequita-
ble that he should go against the assets of the deceased partner, he will
not upon general rules and principles be entitled to the benefit of the
demand.' In the present case there is a total absence of any such equita-
ble defence to the claim upon the estate of Mr. Winter, as there is of any
intention or contract to abandon it. The more modern cases of CoweU v.
Sikes, Wilkinson v. Henderson and Braithwaite v. Britain, in addition to
the former authorities, leave no doubt that in this case nothing has taken
place which can bar Mr. fiaillie's claim (admitted to have at one time
existed), to compel payment of so much of the debt due to him from the
firm as remains unpaid."
1 Collyer on Partn. B. 3, ch. 5, § 1, p. 466, 467, 3d edit. ; Eadenhurst v.
Bates, 3 Bing. K. 470; Wilsford v. Wood, 1 Esp.K. 182.
CH. XII.J EEMEDIES AGAINST THIED PERSONS. 405
that alone would not give any title to the new firm at
law to sue the debtors therefor. But if in such a case,
after such an assignment, and with full knowledge
thereof, the debtors should assent thereto, and promise
payment to the new firm, that would amount, by opera-
tion of law, to an extinguishment of the liability to
the old firm, and to a transfer of the debts to the new
firm ; so that the old firm would no longer be entitled
to sue therefor; but the right would be exclusively
vested in the new firm.^
§ 255. In like manner, where a contract, originally
made with a firm, is, by the consent of all the parties
thereto, severed, and become a several contract with
one of the parlies, or, by assignment and consent of aU
the parties thereto, has been transferred by way of sub-
stitution to a third person, there would seem to be no
doubt, that the liability to the partnership is extin-
guished by mere operation of law.^ Why, in the case
1 See 2 Story, on Eq. Jurisp. § 1041 to 1046; Williams v. Everett, 14
East, E. 582 ; Tates v. Bell, 3 Barn. & Aid. 643 ; Grant v. Austin, 3 Price,
K. 58 ; Tiernan v. Jackson, 5 Peters, R. 597 to 601 ; Evans v. Silverlock,
1 Peake, E. 21 ; McLanahan v. EUery, 3 Mason, Cir. E. 269 ; Harris v.
Lindsay, 4 Vf'asli. Cir. E. 271. See Gow on Partn. ch. 3, § 1, p. 129, 130,
3d edit. — The case of King v. Smith, (4 Carr. & Payne, 108,) turned
upon other distinct considerations. There it was agreed, upon a disso-
lution of the partnership, that A. (one of the partners) should receive all
the debts due to the firm ; and afterwards B., the other partner, drew a
bill OB C, a debtor of the firm, for the debt due to the firm, who accepted
it; and it was held to be no defence to a suit by B. against C. on the ac-
ceptance, that there was the above stipulation on the dissolution ; for,
notwithstanding such stipulation, either partner might release or collect
the debts due to the firm. But it would have been otherwise, if all the
debts of the firm had been assigned to A., and in consideration thereof C.
had promised to pay the debt to A., and then B. had sued for the same in
the partnership name.
2 See Thompson v. Percival, 5 Barn. & Adol. 925. See McLanahan v.
Ellery, 3 Mason, E. 269 ; Hosack v. Eogers, 8 Paige, R. 229.
406 PARTNERSHIP. [CH. XII.
of an infant partner, who, before any action brought
against a debtor to the firm, has disaflSrmed his original
connection with the firm, the contract should not, upon
principle, be thereafter treated, as a several contract
with the remaining partners, it is not easy to say ; for
thereby the contract would seem, as to the infant, to be
void al inUio. But, upon the footing of authority, the
point does not seem entirely free from difficulty.^
§ 256. Hitherto, we have been considering the rights
of action and remedies at law, which partners may have
against third persons, founded upon contracts made
with the firm, and the manner in which the same may
be qualified, suspended, severed, or extinguished, by the
subsequent acts of one or all of the partners. Let us
now proceed to the consideration of the rights of action
and remedies, which partners may have against third
persons, founded upon the torts of the latter. And,
here, it may be laid down as a general doctrine, that
whenever a joint injury or damage is done to the pro-
perty, or rights, or interests of the partnership by third
persons, whether it be misfeasance, or malfeasance, or
negligence, or omission of duty, or by positive conver-
sion of their property, an action will lie at law, by all
the partners (and, indeed in such an action they ought
all regularly to join) to obtain due recompense and re-
dress in damages.^ Where, indeed, the injury is done
1 The authorities on this subject are not easily reconcilable with each
other. See Teed v. Elworthy, 14 East, K. 210 ; Goode v. Harrison, 5
Barn. & Aid. 157; Thornton v. Illingworth, 2 Barn. & Cressw. 826;
Whitney v. Dutch, 14 Mass. E. 457; Tucker v. Moreland, 10 Peters, R.
68; Kell v. Nainby, 10 Barn. & Cressw. 210.
a Collyer on Partn. B. 3, ch. 5, § 2, p. 473, 474, 2d edit. See also
Addison v. Overend, 6 Term E. 766 ; Bloxam v. Hubbard, 5 East, E.
407 ; Sedgworth v. Overend, 7 Term E, 275, 279 ; Gow on Partn. ch. 3,
§ 1, p. 133, 3d edit.; Id. p. 136.
CH. XII.] REMEDIES AGAINST THIED PIJRSONS. 407
to some, and not to all of the partners, they alone, who
are injured, may bring an action therefor without join-
ing the others ; for torts are, or at least may be, in their
nature, joint, as well as several ; and, therefore, in con-
templation of law, the rights of the parties vary accord-
ingly.^ Hence, if a third person should frauduleltitly
collude with one partner to injure the others, even
though the act might in other respects be an injury to
the partnership ; yet an action will lie by the other
partners alone against such third person, so colluding,
for the special damage occasioned thereby to them-
selves.^ So, where words, which impute insolvency in
trade, are spoken of one of the partners in a firm, (which
cannot fail in many cases to have some tendency to im-
pair the credit of the firm itself,) the injured partner
may maintain a several action for the slander ; and it
is not necessarily to be considered as an injury, for
which a joint action only can be maintained by the
*firm.« '
I 257. On the other hand, there is not the slightest
doubt, that a joint action may be maintained by the
firm for any defamation of the firm, or for any libel
upon the firm ; for this is, justly and properly speak-
ing, a joint tort and injury, applicable to their collective
rights and interests.* But in such a case the damages
1 Collyer on Partn. B. 3, ch. 5, ^ 2, p. 473, 474, 2d edit. See also
Addison v. Overend, 6 Term K. 766; Bloxam'v. Hubbard, 5 East, E.
407 ; Sedgworth v. Overend, 7 Term R. 275, 279 ; Gow oh Partn. ch. 3,
§ 1, p. 133, 3d edit. ; Id. p. 136.
s Longman v. Pole, 1 Mood. & Malk. 223.
3 Harris v. Beverington, 8 Carr. & Payne, R. 708.
* Collyer on Partn. B. 3, ch. 5, § 2, p. 473, 2d edit. ; Cook v. Batchelor,
8 Bos. & Pull. 150 ; Haythome v. Lawson, 3 Carr. & Payne, 196. See
Williams's note to Coryton v. Lithebye, 2 Saund. 117, a.; Forster v.
Lawson, 3 Bing. R. 452. — In this latter case Lord Chief Justice Best
408 PAKTNERSHIP. [CH. XII,
must be strictly limited to the injury sustained by the
firm in their joint trade or business ; and cannot be ex-
said ; "An objection has been made to the declaration in this case, namely,
that the action has been brought by three persons jointly, and that they
could not properly join in such an action. The general rule of law is, as
laid down in the case of Smith v. Cooker, in Cro. Car. 513, namely, that
where several persons are charged with being jointly concerned in a mur-
der, each of them must bring a separate action for it ; and the reason is,
that they have no joint interest to be affected by the slander. Where,
however, two persons have a joint interest affected by the slander, they
may sue jointly ; and the case of Cook v. Batchelor is not the first case
which has determined this point. In the note in Saunders, to which the
Court has been referred, the learned editor states, that two joint tenants or
coparceners might join in an action for slander of the title to their estate ;
and the form of the declaration in such an action is to be found in Brown-
low. This doctrine has also been recently considered and confirmed in
the case of Collins v. Barrett, in which it was holden, that two persons
might bring a joint action for a maliciously holding them to bail, if the
complaint in the declaration was confined to the expenses which they
were jointly put to in procuring their liberty. It has been said, that,
notwithstanding the judgment against the defendants in this action, if
either of the plaintiffs has sustained any separate damage, l),e may still
maintain a separate action. I cannot see how there can be any separate
damage. The business injured is the joint business, and the libel only
affects the plaintiffs through their business. If, however, a copartnership
be libelled, and the libel contains something which particularly affects the
character of one of that firm, I think a joint action may be maintained
against the libeller, who would have less reason to complain of such pro-
ceedings, than he would have if each partner brought a separafc action
for the injury done to the firm. Another objection raised by the defend-
ant's counsel is, that the plaintiffs have not stated the proportion of
interest, which each respectively had in their joint business. It is not
necessary for them to do so ; with their several proportions the defendant
has nothing to do. Any compensation they may recover will belong to
them generally, and it is nothing to the defendant, how it may be divided
among them. ■ It has also been urged, that the words contained in the
paragraph are not actionable. I have no hesitation in deciding, that to
say of any bankers, that they have suspended payment, is actionable.
Tor what can be the meaning of such a statement, except that they are
no longer solvent? Saying that a banker has suspended payment, is
saying that he cannot pay his debts. A temporary inability to pay debts
is insolvency. The charge of suspending payment is a charge of insol-
vency. Such a statement will instantly bring all the creditors of a bank-
CH. XII.] REMEDIES AGAINST THIED PERSONS. 409
tended to the injury done to the private feelings of th&
individual partners.^
§ 258. The same principle will apply to any other
wrong, done by third persons, affecting the partnership
trade or business ; such as obstructing their business
and employment, seducing persons from their service,
or wrongfully soliciting and inducing their customers
to withdraw their patronage from them by fraud, or
threats, or otherwise ; for in all such cases, a joint
damage is done to the firm.^
§ 259. In the next place, as to remedies in equity by
partners against third persons. It may be stated as the
■general doctrine, that the same remedies in equity will
lie for the vindication of the rights, an^ the redress of
the wrongs of the partnership, as ordinarily belong to
private individuals.® Thus, for example, if one partner
ing-house upon it, and completely stop their business by preventing any
one from taking their bills. But here sjiecial damage is stated, and I
think correctly stated. It has been objected, that the special damage is
not set out with sufficient certainty. Even if that were so, advantage
could be taken of it only by a special demurrer. In my opinion, however,
the special damage is clearly and distinctly set out. The plaintiffs state
that they had a number of promissory notes outstanding and in circula-
tion, and that in consequence of these libels they were called upon and
forced and obliged to pay those notes ; how or when was not material, it
being sufficient that they declare that they have thereby lost all the benefit
and advantage which would otherwise have accrued to them in their
trade and business, from the notes remaining outstanding and in circula-
tion. The declaration goes even farther ; it states that the plaintiffs have
suffered and sustained a great loss in raising and procuring sufficient
money to pay and satisfy their several notes. It appears to me, that the
declaration is unobjectionable, and that the plaintiffs are entitled to judg-
ment."
' Haythorne v. Lawson, 3 Carr. & Payne, 196. See Robinson v. Mar-
chant, 7 Add. & Ell. New R. 918.
2 Weller V. Baker, 2 Wils. R. 423 ; Coryton v. Lithebye,. 2 Saund. R.
115, and Williams's note (2), p. 116.
•3 CoUyer on Partn. B. 8, ch. 7, p. 566, 2d edit.
PARTN. 35
410 PARTNERSHIP. [CH. XII.
should collude with a third person to defraud the part-
nership by wrongfully using the partnership name, or
negotiating the securities, or applying the property
thereof for improper purposes, a Court of Equity would,
by an injunction, restrain him from so doing.-' So, if a
third person should violate a copyright or patent right,
belonging to a partnership, an injunction would, in like
manner, lie to restrain him from such illegal conduct.
So, if a separate creditor of one partner should know-
ingly aid in the misapplication of the partnership funds
to the payment of his own debts, a Court of Equity
would restrain him from so aiding in such misbonduct ;
and, if he had so improperly received the funds thereof,
"it would compel him to restore the same to the partner-
ship.^ So, a Court of Equity will restrain a third per-
son by injunction, who is injuring the partnership by
vending an article of trade, similar to that manufactured
by the partnership, falsely, under the name of the part-
nership, and as if manufactured by the same, and thus
misleading the public, and diverting the patronage and
custom from the partnership.^ The same rule will apply
to any other false and wrongful use of the partnership
name and reputation, by deceptive imitations of the
labels, devices, or ornaments used by the partnership
upon their own manufactured cutlery, or vehicles, or
medicinal preparations, or otherwise in the course of
their business.* So, in like manner, an injunction will
1 Gow on Partn. ch. 2, ^ 4, p. 107, 108, 109, 3d edit. ; CoUyer on
Partn. B. 2, ch. 3, § 5, p. 234, 235, 2d edit. ; Hood v. Aston, 1 Kuss. R.
416 ; 1 Story on Eq. Jurisp. § 667, 669 ; 2 lb. § 930 to 935.
3 Ante, § 132, 133 ; Gow on Partn. ch. 2, § 4, p. 108 ; Collyer on
Partn. B. 2, ch. 3, ^ 6, p. 234, 235, 2d edit. ; Jervis v. White, 7 Ves. 413.
3 2 Story on Eq. Jurisp. ^ 951.
* 2 Story on Eq. Jurisp. § 951 ; Motley v. Downman, 8 Mylne & Cra%,
CH. Xn.] EEMEDIES AGAINST THIRD PERSONS. 411
lie for a partnership to prevent a third person from
publishing a magazine, or other periodical, in their
names) after they have ceased to have any connection
with it.^
§ 260. These cases aU stand upon doctrines equally
applicable to all persons, whether they are partners, or
private individuals. But there is one case, which is
peculiar to partnerships, and which, therefore, requires
a distinct consideration in this place ; and that is, the
case of an execution levied upon the partnership pro-
perty by a creditor, under a judgment for a separate
debt against one partner. Where there is a joint suit
and judgment against all the partners for a partnership
debt, there is no doubt, at the common law, that the
execution issuing thereon may be levied upon, and satis-
faction had, either out of the partnership effects, or out
of the separate effects of either of the partners, (exactly,
as in the case of other joint debtors, not partners) ; ^
and if one is compelled to pay or satisfy the whole
debt, his remedy for contribution therefor lies exclu-
sively in equity.^
§ 261. But the question, as to the right of seizure of
partnership property for the satisfaction and discharge
of the separate debt of one of the partners, is a matter
of a more complicated nature, and involves other con-
flicting rights and equities of the other partners. It
1, 14, 15; Millington v. Fox, 3 Mylne & Craig, 338; Knott v. Morgan,
2 Keen, K. 213, 219.
1 2 Story on Eq. Jurisp. § 951 ; Hogg v. Kirby, 8 Ves. 215.
2 Ante, § 179, 189, 261 ; CoUyer on Partn. B. 3, ch. 6, § 10, p. 55?; Ex
parte RuiBn, 6 Ves. 119, 126 ; Herries v. Jamieson, 5 Term R. 551, 554 ;
Abbott V. Smith, 2 Wm. Black. K. 946, 947 ; Jones v. Clayton, 4 Maule &
Seiw. 349 ; Button v. Morrison, 17 Ves. 194, 205, 206.
3 Ibid.
412 PARTNERSHIP. [CH. XII.
seems clear, at the common law, that the sheriflT, upon
an execution upon a judgment against one partner for
his separate debt, may seize in execution the tangible
property of the partnership. In such case, it has been
said, that he should seize the whole or entirety of the
goods, and not merely an undivided moiety or proportion
thereof; for if he should seize only the moiety, or other
proportion, the other partners would be entitled to their
moiety or other proportion thereof^ It would, perhaps, be
more accurate, (at least according to the modern notions
on this subject,) to say, that the sheriff may seize, and
should seize, the interest of the separate partner in the
property of the partnership ; and that, and that alone,
he is at liberty to sell upon the execution.^ What that
interest is, or may be, it is impossible to ascertain in
many cases, until a final adjustment of all the partner-
ship concerns.^ Yet, Courts of Law have said, that the
sheriff may go on to sell that interest under the execu-
tion, however inconvenient it may be, and the purchaser
at the sale must be content to take such an interest
therein, as a tenant in common with the other partners,
as the partner himself had therein.* For in every such
1 Heydon v. Heydon, 1 Salk. 392 ; Chapman v. Koops, 3 Bos. & Pull.
289, 290; Jacky v. Butler, 2 Ld. Raym. 871 ; Skip v. Harwoood, 2
Swanst. R. 586, 587; Dutton v. Morrison, 17 Ves. 194, 206, 206.
2 CoUyer on Partn. B. 8, ch. 6, § 10, p. 559, 560, 561, 2d edit.; Chap-
man V. Koops, 3 Bos. & Pull. 289, 290 ; Dutton v. Morrison, 17 Ves. 193,
206. In the matter of Wait, 1 Jac. & Walk. R. 585, 588 ; Rice v. Austin,
17 Mass. R. 197, 206, 207 ; Wilson v. Conine, 2 Johns. R. 282 ; Filley v.
Phelps, 18 Conn. R. 294; Walsh v. Adams, 3 Denio, R. 125 ; Sutcliffe v.
Dohoman, 18 Ohio, 181.
3 1 Story on Eq. Jurisp. § 667; Skip v. Harwood, 2 Swanst. R. 586;
NichoU V. Mumford, 4 Johns. Ch. R. 522 ; S. C. 20 Johns. R. 611.
* CoUyer on Partn. B. 3, ch. 6, § 10, p. 559 to 562, 2d edit.; Fox v.
Hanbury, Cowp. R. 441 ; Skip v. Harwood, cited in note to 3 Carr. &
Payne, 310; Taylor v. Field, 4 Ves. 396 ; Pope v. Haman, Comb. R. 217;
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 413
case, the other partners have a lien upon the partner-
ship property, as well for the debts due by the firm, as
for their own shares and proportions thereof; and the
judgment creditor, and the purchaser under him, must
take it, subject to all such claims and liens.-^
Ex parte Hamper, 17 Ves. 407; The matter of Smith, 16 Johns. R. 102,
106, and the Eeporter's note ; Skip v. Harwood, 2 Swanst. E. 586 ; S. C.
under the name of West v. Skip, 1 Ves. 239 ; Id. 456 ; Chapman v. Koops,
3 Bos. & Pull. 289; Holmes «. Mentze, 4 Adol. & Ellis, 127; 1 Story,
Eq. Jur. § 677, 678 ; Allen v. Wells, 22 Pick. E. 450.
1 This subject was much considered in the case of Taylor v. Field, 4
Ves. 396. Lord Chief Baron Macdonald on that occasion, in delivering
the opinion of the Court, said ; " The right of the separate creditor under
the execution depends upon the interest each partner has in the joint
property. With respect to that, we are of opinion that the corpus of the
partnership effects is joint property, and neither partner separately has
any thing in that corpus; but the interest of each is only his share of
what remains after the partnership accounts are taken. la Skip v. Har-
wood, 1 Ves. 239, by the name of West v. Skip, we see that whatever the
right of the partnership may be, it is not affected by what may happen
between the individual partners. There is a distinction between the
rights of the partners and the rights of the partnership. As between one
partner and the separate creditors of the other, they cannot affect the
joint stock any farther than that partner whose creditor they are could
have affected it. In Fox v. Hanbury, Cowp. 445, Lord Mansfield was
led to the consideration of a point, that bears much upon this case ; and
adverting to the case of Skip v. Harwood, he states a passage of Lord
Hardwicke's judgment from his own note rather stronger than it appears
in the report ; ' If a creditor of one partner takes out execution against
the partnership effects, he can only have the undivided share of his
debtor ; and must take it in the same manner the debtor himself had it,
and subject to the rights of the other partner.' What is the manner in
which the debtor himself had it ? He had that which was undivided and
could only be divided by first delivering the effects from the partnership
debts. He who comes in as his companion, as joint-tenant with him, ac-
cording to this doctrine of Lord Hardwicke, must take it in the same man-
ner the debtor himself had it, subject to the rights of the other partners.
Lord Mansfield having stated what, according to the course of the common
law, as far as it respects trade between partners, is the rule, that a creditor
taking out execution against a partner, is directly in the place of the
partner debtor, proceeds to show that by the same rule, where a partner
becomes bankrupt, the assignees are put in the place of the partner in
35*
414 PARTNERSHIP. [CH. XII.
§ 262. Strictly, indeed, and properly speaking, the
sale does not, at least in the view of a Court of Equity,
whose right they come in, and by no means, as was argued by Mr. Plumer,
by any rule arising out of the bankrupt laws ; for nothing is said in any
one of those acts as to the creditors of a partnership, and the separate
creditors of one partner ; but they only provide for the case of mutual
debts, and accelerating a debt upon a Security payable at a future day.
But the same common law applied in the case where one partner becomes
a bankrupt, provides that the assignee of the bankrupt shall be in the
same situation as that in which a creditor taking out execution stood
before those acts. This introduces all the cases of bankruptcy which Mr.
Plumer wished to exclude, as not applicable to a case in which there was
no bankruptcy ; and this case is to be considered as if no bankruptcy had
taken place, as the execution was before the bankruptcy. In law there
are three relations ; first, if a person chooses for valuable consideration to
sell his interest in the partnership trade, for it comes to that ; or if his
next of kin or executors take it upon his death; or if a creditor takes it
in execution, or the assignees under a commission of bankruptcy. The
mode makes no difference. But in all those cases the application takes
place of the rule, that the party coming in the right of the partner, comes
into nothing more than an interest in the partnership, which cannot be
tangible, cannot be made available, or be delivered, but under an account
between the partnership and the partner ; and it is an item in the account
that enough must be left for the partnership debts. A great deal has
been said of the inconvenience. What is the inconvenience ? It is true,
the individual trusted to the partnership fund in his idea at the time he
was lending the money ; not that I believe that is very common. But it
may be dangerous in a thousand instances to have any thing to do with a
trader ; as for instance, to purchase an estate ; for an act of bankruptcy
may have been committed five years before, which will reach the estate.
But look to the danger on the other side ; one partner giving a bond, and
the creditors of the partnership looking to the stock itself. It is said, that
in this case the joint creditors had done nothing ; and this meritorious
creditor has a right to be preferred on account of his early diligence.
But what is that to which he is entitled ? The estate of a partner is
debtor to him. The question, therefore, recurs to the consideration, what
it was that partner had ; for the creditor cannot be entitled to any more.
It therefore argues nothing to say, he has the merit of diligence, till we
see upon what that merit can attach. If the partner himself, therefore,
had nothing more than an interest in the surplus beyond the debts of the
partnership upon a division, if it turns out that at common law that is the
whole that can be delivered to, or taken by, the assignee of a partner, the
executor, the sheriff, or the assignee under a commission of bankruptcy.
CH. Xn.] REMEDIES AGAINST THIRD PERSONS. 415
transfer any part of the _ joint property to the pur-
chaser, so as to entitle him exclusively to take it or
all that is delivered to the creditor, taking out the execution, is the inte-
rest of the partner in the condition and state he had it ; and nothing was
due to this partner separately, the partnership being insolvent. The
■whole property was due to the partnership creditors, and not to either
partner." See also Button w. Morrison, 17 Ves. 194, 205, 206. In the
very recent case of Allen v. Wells, (22 Pick. K. 450,) Mr. Chief Justice
Shaw, in delivering the opinion of the Court, said ; " The conflicting
claims of copartnership and separate creditors have been a fruitful source
of litigation in England. The questions more usually have arisen under
the bankrupt law, and the decisions are mostly to be found in the Chan-
cery Reports, but not exclusively so. The great number of cases in
which this question has arisen, shows very clearly, that there could have
been at the time no very well defined general principles, known and
acknowledged as such, applicable to the adjustment of these conflicting
rights. Even as regards the joint property of partners, the rule has
varied. By the rules of law as formerly held in England, the sheriff,
.under an execution against one of two copartners, took the partnership
effects and sold the moiety of the debtor, treating the property as if owned
by tenants in common. Heydon v. Heydon, 1 Salk. 392; Jacky v. But-
ler, 2 Ld. Eaym. 871. But the principle is now well settled in England,
both at law and in equity, that a separate creditor can only take and sell
the interest of the debtor in the partnership property, being his share
upon a division of the suplus, after discharging all demands upon the co-
partnership. Eox V. Hanbury, Cowp. 445 ; Taylor v. Field, 4 Ves. 396.
The same fluctuation in the rule, as to partnership property, has existed
in the United States. The rule of selling the moiety of the separate
debtor in the partnership property on an execution for his private debts,
formerly prevailed in several of the States of the Union. But the later
decisions have changed the rule, and that now more generally adopted is
in accordance with the one prevailing in England, and which has been
already mentioned. The State of Vermont still adheres to the doctrine,
that partnership creditors have no priority over a creditor of one of the
partners, as to the partnership effects. Keed v. Shepardson, 2 Vermont
R. 120. The rule in Massachusetts, giving a priority to the partnership
creditor in such cases, was settled in the case of Pierce v. Jackson, 6
Mass. R. 242, and has been uniformly followed since. The effect of the
rule that the only attachable interest of one of the copartners by a sepa-
rate creditor, was the surplus of the joint estate' which might remain after
discharging all joint demands upon it, necessarily was* to create a pre-
ference in favor of the partnership creditors in the application of the
partnership property ; and this effect would be produced, although the
416 PARTNERSHIP. [CH. XII.
withhold it from the other partners ; for that would he
to place him in a better situation than the execution
partner himself, in relation to the property.-^ [And if he
excludes the other partners from possession, they may
have an action against him.^ ] But it gives him a right
to a hill in equity, calling for an account and settlement
of the partnership concerns, and thus to entitle himself
to that interest in the property, which, upon the final
adjustment and settlement of the partnership concerns,
shall be ascertained to belong to the execution partner ;
and nothing more.^ How utterly inadequate a Court
of Law is to furnish suitable means for taking such an
account, needs scarcely to be suggested ; and, indeed,
the very difficulty of ascertaining what interest can be
conveyed to the purchaser before such an adjustment
and settlement are made, has induced very learned
minds to doubt whether a Court of Law is competent
to order any sale, before the exact amount of the inte-
rest of the partner therein is thus ascertained.*
original purpose of the rule might have been the securing the rights of the
several copartners, as well as those of their joint creditors. Whatever
may have been the object of the rule, the rule itself is now to be con-
sidered as well settled, as to the appropriation of the partnership effects."
' Story on Eq. Jurisp. § 667. But see Burrall v. Acker, 23 Wend. R.
606.
2 Newman v. Bean, 1 Foster, 93 ; Page v. Carpenter, 10 N. H. K. 81 ;
Morrison v. Blodgett, 8 Ni H. K. 245.
3 1 Story on Eq. Jurisp. § 677 ; Chapman v. Koops, 3 Bos. & Pull. 289,
290, 291 ; Button v. Morrison, 17 Ves. 194, 205, 206.
* Waters v. Taylor, 2 Ves. & Beames, R. 300, 301 ; Button v. Morrison,
17 Ves. 193, 206, 207 ; In the matter of Wait, 1 Jac. & Walk. 685, 588.—
In the case of Waters v. Taylor, Lord Eldon said ; " If the Courts of
Law have followed Courts of Equity in giving execution against partner-
ship effects, I desire to have it understood that they do not appear to me
to adhere to the principle, when they suppose that the interest can be sold
before it has been ascertained what is the subject of sale and purchase.
According to the old law, I mean before Lord Mansfield's time, the sheriff,
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 417
§ 263. In cases of this sort, therefore, the real posi-
tion of the parties, relatively to each other, seems to
be this. The partnership property may he taken in
execution upon a separate judgment and execution
against one partner ; but the sheriff can only seize and
sell the interest and right of the judgment partner
therein, subject to the prior rights and liens of the
other partners and the joint creditors therein.^ By
under an execution against partnership effects, took the undivided share
of the debtor without reference to the partnership account ; but a Court
of Equity would have set that right by taking the account and ascertain-
ing what the sheriff ought to have sold. The Courts of Law, however,
have now repeatedly laid down that they will sell the actual interest of
the partner, professing to execute the equities between the parties ; but
forgetting that a Court of Equity ascertained, previously, what was to be
sold. How could a dourt of Law ascertain what was the interest to be
sold, and what the equities, depending upon an account of all the concerns
of the partners for years ? " And again, in the matter of Wait, (1 Jac. &
Walk. 588,) he said; "In my long course of practice, I have never been
able to reconcile all the decisions which have taken place on partnership
property with respect to joint and separate estate ; nor have I ever been
able very clearly to see my way in the application of the doctrine which has
been held in some of the late cases on this subject. I conceive originally
the law was, that if there was a separate creditor of a partner, he might
lay hold of any chattels belonging to the partnership, and take a moiety
of them, or whatever other proportion that partner might be entitled to
in the effects of the partnership. But at law, somehow or other, they now
contrive to take an account which ascertains what is the interest of the
debtor in the effects taken in execution ; and when you put the question,
what is that interest, nothing can be more clear than that it is that which
would result to him when all the accounts of the partnership were taken.
This equity, which has been transferred into the proceedings of a Court of
Law, I apprehend, subsisted here long before ; a separate creditor applying
for satisfaction of his debt out of the partnership estate by means of an
equitable execution, must have taken it upon equitable terms. There has
been a great deal of reasoning as to the rights of partners, with reference
to the execution of a separate creditor ; but it always appeared to me
that the interest of the individual partner was all which a creditor of that
individual could take, and that he must take it subject to all the partner-
ship dealings."
1 Taylor v. Field, 4 Ves. 396 ; Ante, § 261, 262; Skip v. Harwood,
418 PARTNERSHIP. [CH. XII.
such seizure the sheriif acquires a special property in
the goods seized ; ^ and the judgment creditor himself
may, and the sheriff, also, with the consent of the judg-
ment creditor may, £Qe a bill against the other partners
for the ascertainment of the quantity of that interest,
before any sale is actually made under the execution.
The judgment creditor, however, is not bound, i£ he
does not choose, to wait until such interest is so ascer-
tained ; but he may require the sheriff immediately to
proceed to a sale, which order the sheriff is bound by
law to obey.^ In the event of a sale, the purchaser at
the sale is substituted to the rights of the execution
partner, quoad the property sold, and becomes a tenant
in common thereof; and he may file a bill, or a bill
may be filed against him by the other partners, to as-
certain the quantity of interest, which he has acquired
by the sale.^
2 Swanst. 586, 587 ; Holmes v. Mentze, 4 Adol. & Ell. 127 ; Harvey u.
Crickett, 5 Maule & Selw. 336; Button v. Morrison, 17 Vea. 194, 205,
206.
1 Wilbraham v. Snow, 2 Sand. K. 46, c, and Williams's notes. Ibid.
2 Parker w. Pastor, 3 Bos. & Pull.^288; Chapman v. Koops, 3 Bos. &
Pull. 389, 390 ; Holmes a. Mentze, 4 Adol. & Ell. 127.
3 Chapman v. Koops, 3 Bos. & Pull. 389, 390; Ex parte Hamper, 17
Ves. 407 ; Bevan v. Lewis, 1 Sim. K. 376 ; Skip b; Harwood, 2 Swanst.
R. 586, 587 ; Taylor v. Field, 4 Ves. 469 ; Barker v. Goodair, 11 Ves.
78, 85 ; Gow on Partn. oh. 3, § 2, p. 144, 3d edit. ; 1 Madd. Ch. Pr. 131 ;
Eden on Injunct. 31 ; Collyer on Partn. B. 3, ch. 6, § 10, p. 557 to 565,
2d edit. In Massachusetts it has been held, that an attachment of part-
nership goods, on a suit against one partner, is not valid against a subse-
quent attachment on the same goods by a creditor of the partnership.
Pierce «. Jackson, 6 Mass. K. 242. On this occasion Mr. Chief Justice
Parsons said ; " At common law, a partnership stock belongs to the partner-
ship, and one partner has no interest in it, but his share of what is re-
maining after all the partnership debts are paid, he also accounting for
what he may owe to the firm. Consequently all the debts due from the
joint fund must first be discharged, before any partner can appropriate any
part of it to his own use, or pay any of his private debts ; and a creditor
to one of the partners cannot claim any interest, but what belongs to his
CH. XII.] EEMEDIES AGAINST THIRD PERSONS. 419
[I 263 a. It is equally an interesting question whether
the converse of the rule alluded to in the preceding
sections is recognized at law ; that is, whether the pre-
ference of a separate creditor of a partner, to he paid
out of the separate estate of his debtor, before the
creditors of the partnership, can be enforced and se-
cured at law. In some Courts it is held that the lien
acquired by a partnership creditor, by an attachment
of the separate property of one partner, cannot be de-
feated by a subsequent -attachment of the same pro-
perty, by a separate creditor of the partner owning
such property.-^ But a contrary view has been taken in
more recent cases, and it has been thought to be a
branch and member of the same equitable doctrine that
the right of private creditors to look to private pro-
perty, should be paramount to the right of joint credi-
debtor, whether his claim be founded on any contract made with his
debtor, or on a seizing of the goods on execution. There are several
cases, by which these principles, so reasonable and equitable, are recog-
nized and confirmed." The same doctrine prevails in New Hampshire.
Tappan u. Blaisdell, 5 New Hamp. R. 190. See Morton ». Blodgett, 8
New H. R. 238. Thompson v. Lewis, 34 Maine, 167. The doctrine,
however, has not been applied to cases of mere dormant partners, against
the creditors of the ostensible partners. Lord v. Baldwin, 6 Pick. K. 348 ;
French «. Chase, 6 Greenl. R. 166. Van Valen v. Russell, 13 Barbour,
592. See also Church v. Knox, 2 Connect. R. 514 ; Brewster v. Hammett,
4 Connect. R. 540 ; Barber v. Hartford Bank, 9 Connect. R. 407 ; Donner
V. Stuffier, 1 Penn. R. 198 ; Knox v. Summers, 4 Yeates, R. 477. Whether
the like priority would be allowed at law, in favor of an execution by a
joint creditor, against the execution of a separate creditor of one partner
in England, does not appear ever to have been made a question for argu-
ment. But it is probably owing to the fact, that, at all events, in equity
the priority would be sustained, where the partnership is insolvent, in a
proper bill filed for the purpose. Could such a bill be filed by the joint
creditor ? Or, should his rights be worked out through the equities of the
other partners ? See 1 Story on Eq. Jurisp. ^ 675 ; Ante, ^ 97 ; Ex parte
Ruffin, 6 Ves. 119, 126, 127 ; Ex parte Williams, 11 Ves. 8, 5.
1 Allen V. Wells, 22 Pick. 450 ; Newman v. Bayley, 16 Pick. 570.
420 PAETNERSHIP. [CH. XII.
tors, although the latter might have commenced the
first process against the private estate. Accordingly it
was held, in a recent case, that where land of one part-
ner had been sel off on execution for a debt due from
the partnership, and afterwards the same land was set
off on execution for a separate debt of the same part-
ner, the separate creditor of such partner could recover
the land from the creditor of the partnership, by a writ
of entry .-^ Whether such a preference is to be observed
in Equity, is more questionable.^]
§ 264. In cases of the seizure of the joint property
for the separate debt of one of the partners, a question
has arisen, whether a Court of Equity ought to inter-
fere, upon a bill for an account of the partnership, to
restrain the sheriff from a sale, or the vendee of the
shej-ifif from an alienation of the property seized, until
the account is taken, and the share of the partner is
ascertained. Mr. Chancellor Kent has decided, that an
injunction for such a purpose ought not to issue to re-
strain a sale by the sheriff, upon the ground, that no
harm is thereby done to the other partners ; and the
sacrifice, if any, is the loss of the judgment debtor
only.^ But that does not seem to be a sufficient
ground upon which such. an injunction should be de-
nied. If the debtor partner has, or will have, upon a
1 Jarvis v. Brqoks, 8 Foster, 136. And see Merrill v. Neil, 8 How.
414.
2 Bardwell v. Perry, 19 Vermont, 292. Washburn v. Bellows, Id. 278.
In these cases it was held that 'in equity both separate and partnership
creditors have the same rights to the separate estate of the partners, after
the partnership funds are exhausted, and that separate creditors cannot
prevent joint creditors from sharing equally with them in the separate
estate, when there are no partnership funds. See the able judgments of
Kedfield Chancellor.
3 Moody V. Payne, 2 Johns. Ch. K. 5i8, 549.
CH. XII.] REMEDIES AGAINST THIRD PERSONS. 421
final adjustment of the accounts, no interest in the
partnership funds ; and if the other partners have a
Hen upon the funds, not only for the debts of the part-
nership, hut for the balance ultimately due to them ; it
may most materially affect their rights, whether a sale
takes place, or not. For, it may be extremely difficult
to follow the property into the hands of the various
vendees ; and the lien of the other partners may, per-
haps, be displaced, or other equities arise by intermedi-
ate bond fide sales of the property in favor of the
vendees, or other purchasers without notice ; and the
partners may have to sustain all the chances of any
supervening insolvencies of the immediate vendees.^
To prevent multiplicity of suitsj, and irreparable mis-
chiefs, and to insure an unquestionable lien to the
partners, it would seem perfectly proper, in cases of
this sort, to restrain any sale by the sheriff. And be-
sides ; it is also doing some injustice to the judgment
debtor, by compelling a sale of his interest under cir-
cumstances in which there, must generally, from its
uncertainty and litigious character, be a very great
sacrifice to his injury. If he has no right, in such a
case, to maintain a bill to save his own interest, it fur-
nishes no ground why the Court should not interfere
in his favor, through the equities of the other partners.
This seems (notwithstanding the doubts suggested by
Mr. Chancellor Kent) to be the true result of the Eng-
lish decisions on this subject j which do not distinguish
between the case of an assignee of a partner, and that
of an executor or administrator of a partner, or of the
sheriff, or of an assignee in bankruptcy.^
1 See SMp v. Harwood, 2 Swanst. K. 586, 587.
8 See Taylor v. Field, 4 Yes. 396i397, 398; S. C. 15 Ves. 559, note;
Barker v. Goodair, 11 Ves. 85, 86, 87; Skip v. Harwood, 2 Swanst. K.
PARTN. 36
422 PARTNERSHIP. [CH. XII.
[§ 264 a. Another question sometimes arising from
the law of partnership is, how far a person indebted
to a partnership, may be summoned into Court by
process of foreign attachment, and be charged for
goods, effects, or credits in his hands, as the trustee of
one partner, in a suit by a separate creditor. It has
been claimed that since the separate creditor of each
partner may levy his execution against one, upon
the joint estate of the partnership, (when such es-
tate consists of tangible property,) and may sell on
execution, the interest of such partner, whatever it may
be, in the partnership goods, the same rule applies to
proceedings by foreign attachment, and that the inter-
est of each partner in a debt due the partnership
from the trustee may be reached by this process ; and
some decisions countenance this view ; ^ on the other
hand, a juster rule has been more frequently adopted
in other Courts, and it is now held by the current of
authorities, that a trustee, under such circumstances, can
not be charged. To hold otherwise would be creating
a severance of a joint debt, and would lead to great
embarrassment and confusion in determining the rights
of all parties.^]
586, 587; Franklin a. Thomas, 8 Meriv. K. 234; Hawkshaw v. Parkins,
2 Swanst. 548, 549 ; Parker v. Pistor, 3 Bos. & Pull. 288, 289 ; Eden on
Injunct. 31 ; CoUyer on Partn. B. 3, ch. -6, § 10, p. 557 to 565, 2d edit.
1 Madd. Ch. Pr. 112. See also Brewster v. Hammett, 4 Connect. R. 540.
See also Mather v. Smith, 16 Johns. K. 106, and the Reporter's learned
note ; Gow on Partn. ch. 3, ^ ?, p. 142, 3d edit. ; Id. ch. 4, § 1, p. 203 to
211; Id. ch. 5, ^ 2, p. 229 ; Id. \ 3, p. 307, 308. See 1 Story on Eq.
Jurisp. § 678.
, ' Whitney v. Munroe, 19 Maine, 42. And see Thompsoii v. Lewis, 34
Maine, 167.
* risk V. Herrick, 6 Mass. 271 ; Lyndon v. Gorham, 1 Gallison, 367 ;
Hawes v. Waltham, 18 Pick. 451 ; Upham v. Naylor, 9 Mass. 490 ; Church
V. Knox, 2 Conn. 514. Mobley v. Lombat, 7 How. 318. Barber v. Hart-
ford Bank, 9 Conn. 407; Pettes v. Spalding, 21 Verm. 66; Cook ». Ar-
thur, 11 Iredell, 407.
CH. Xra.] DISSOLUTION OF PABTNERSHIP. 423
CHAPTER Xin.
ft
DISSOLUTION OF PAETNERSfflP.
§ 265. Having considered the various topics be-
longing to the original formation of the contract of
partnership, the rights of the partners in and over the
partnership property and eflfects, the powers and
authorities of each of the partners, relative to the
partnership property, efifects, and concerns ; the liabili-
ties of the partners to third persons, and irder sese,
and the v£^rious remedies and modes of redress by and
against partners, existing at law and in equity, we
come, in the next place, to the consideration of the
modes, in which a partnership may be dissolved. And
this part of our subject may be conveniently discussed
under three distinct heads. (1.) Dissolution by the
act or agreement or consent of the parties, or of some
of them ; (2.) Dissolution by the decree of a Court of
Equity; (3.) Dissolution by the mere operation of
law.
§ 266. The Roman law in like manner declared, that
partnership might be dissolved in various ways ; as by
the extinction of the thing held in partnership ; or of
the persoiis forming it ; or of the rights of action grow-
ing out of it ; or of the wOl of the parties to the con-
tinuance of it. Societas solvUur ex personis, ex rebus, ex
volufdate, ex actione. Ideoque, sive homines, sive res, sive
voluntas, sive actio irderierit, distrahi videtur sodetas? Of
course, any partnership whatsoever, whether it be for a
1 Dig. Lib. 17, tit. 2, 1. 63, ^ 10 ; Pothier, Pand. Lib. 17, tit. 2, n. 54,
55, 62, 64, 70 ; Ante, § 84, 85.
424 PARTNERSHIP. [CH. XIU.
definite period, or for an indefinite period, may be at
any time dissolved, at the mutual will and pleasure of
all the partners. Diximus, (says the Digest,) dissensu
solvi societas ; hoc ita est, si omnes dissentiurd} And the
same rule must be recognized in the jurisprudence of
every country, acting upon the mere dictates of reason
and natural justice.
§ 267. According to Pothier, partnership is dissolu-
ble under the old French law, (1.) By the expiration
of the time, for which it is contracted ; (2.) By the
extinction of the thing, or the completion of the busi-
ness ; (3.) By the natural or civil death of some one
of the partners ; (4.) By his failure or bankruptcy ;
or, (5.) By the voluntary expressed intention of being
no longer in partnership.^ Substantially the like dis-
tinction exists in the present Civil Code of France, and
in that of Louisiana.^ The same causes of dissolution
are also recognized in the Scottish law, the Spanish
law, the law of Holland, and probably in that of the
other continental nations, which derive the basis of
their jurisprudence from the Roman law.* This gen-
eral coincidence 'of opinion, in assigning the same
causes for the dissolution of partnership, in so many
countries, shows, that the doctrine has its true founda-
tion in the general principles of natural justice and
reason, rather than in the peculiar institutions of any
particular age or nation.
§ 267 a. Let us, in the first place, consider the cases
of dissolution, at the common law, by the act, or agree-
1 Dig. Lib. 17, tit. 2, 1. 65, § 3 ; Pothier, Pand. Lib. 17, tit. 2, n. 64.
2 Pothier, de Society, n. 138.
3 Code Civil of France, art. 1865 ; Code of Louisiana, art. 2847.
4 Ersk. Inst. B. S, tit. 3, ^ 25 ; Johnson's, Inst, of Laws of Spain, tit. 15,
p. 232 ; Van Leeuwen, Comm. B. 4, oh. 23, § 1.
CH. Xni,] DISSOLUTION OF PAKTNEESHIP. 425
ment, or consent of the parties themselves, or of some
of them ; and this wiU properly include all cases, where
the partnership is merely at will, or is for a prescribed
period, which expires by efflux of time, or otherwise,
according to its own limitation, or is voluntarily dis-
solved by mutual consent within the prescribed or
limited period.
§ 268. In respect to all partnerships, whether they
are for a limited period, or at will, it is very clear, that
they may at any time be dissolved by the mutual plea-
sure clearly expressed of all the parties.^ And this is
so consonant to reason and justice, that it would seem
to require no authority to support it. Nevertheless,
the Roman law has expressly recognized it j and only
put the question, as worthy of inquiry, when and
under what circumstances the partnership might be
dissolved at the wUl of one partner, Diximus (says
the Digest) dissensu solid societaiem ; hoc ita est, si omnes
dmentiunt. Quid ergo si unis renuniiei ? ^ But there is
a technical principle of the common law, which seems
to require, that when the partnership is formed by deed
for a definite period, that it can properly, according to
the common law, be dissolved only by deed ; for here
the maxim is held to apply ; Eodem modo, quo quid ori-
tur, eqdem inodo dissolvitur? The same rule would seem
to ha;Ve been adopted in the Roman law. Thus, it is
1 [Although the partnership agreement be under seal, it seems, it is not
necessary that an agreement for dissolution should be also under seal.
Wood V. Gault, 2 Md. Ch. Dec. 433.]
2 Dig. Lib. 17, tit. 2, 1. 65, § 3 ; Pothier, Pand. Lib. 17, tit. 2, n. 68.
3 Ante, § 117 ; Bao. Abridg. Release, A. 1; 2 Saund. R. 47 (s,) Wil-
liams's edit.; Story on Agency, § 49; Collyer on Partn. B. 2, oh. 2, § 2,
p. 154, 155, 2d edit. ; Doe v. Miles, 1 Stark. R. 181 ; Backstraw v. Iraber,
1 Holt, E. 368 ; Countess of Rutland's Case, 5 Co. E. 26 ; Blake's Case,
6 Co. R.44 ; 1 Montagu on Partn. Pt. 3, ch. 1, p. 90, [113.]
36*
426 PARTNERSHIP. [CH. XIH.
said in the Digest ; Nihil tarn naturale est, qvMm eo genere
quidque dissolvere, quo colligatum est. Ideo verhorum oUi-
gcctio, verbis ioUitur ; nudi consensus oUigatio contram cotv-
sensu dissolvitur? Prout quidque coniradum est, ifa et
solvi delet; ut cum re contraxerimus, re solvi debet? How-
ever this may be, it is very clear, that- a dissolution ac-
tually made by the parties will be held in- equity per-
fect and complete, to all intents and purposes, between
the parties, and also as to third persons, having full
notice thereof.^
§ 269. In respect to partnerships, where no certain
limit of their duration is fixed, they are deemed to be
mere partnerships at will, and, therefore, are ordinarily
at the common law dissolvable at the will of any one
or more of the partners ; for in such cases, as the con-
tract subsists only- during the pleasure ■ of all the part-
ners, it is therefore naturally and necessarily dissolved
by the pleasure of any one or more of them, like every
other contract existing at the mere will of both parties*
The general rule, in all such cases, is, Dissociamur re-
nundationeJ'
1 Dig. Lib. 50, tit. 17, 1. 35 ; Ante, § 118.
2 Dig. Lib. 46, tit. 3, 1. 80; Pothier, Pand. Lib. 50, tit. 17, n. 1388;
Story on Agency, § 49, note (4) ; Ante, § 118.
3 Collyer on Partn. B. 2, ch. 2, § 2, p. 154, 155, 2d edit.
* Ante, § 84; 3 Kent. Comm. Lect. 43, p. 53, 4th edit.; 1 Montagu
on Partn. Pt. 3, ch. 1, p. 90, [113 ;] Watson on Partn. ch. 7, p. 381, 2d
.edit.; Master v. Kirton, 3 Ves. 74; Griswold v. Waddingtan, 15 Johns.
E. 57 ; Heath v. Sansom, 4 Barn. & Adol. 172 ; Marquand v. Ne.w York
Manufaot. Co. 17 Johns. K. 525 ; Miles v. Thomas, 9 Sim. R, 606, 609;
Nerot t>. Burnard, 4 Russ. R. 247, 260. — Mr. Chancellor Kent, in this
place, says ; " It is an established principle in the law of partnership, that,
if it be without any definite period, any partner may withdraw at a mo-
ment's notice, when he pleaseSj and dissolve the partnership. The civil
law contains the same rule on the subject. The existence of engagements
with third persons does not prevent the dissolution by the act of the par-
5 2 Bell, Comm. B. 7, ch. 2, p. 631, 5th edit. ; Pothier, Pand. Lib. 17,
tit 2, n. 54.
CH. Xm.] DISSOLUTION OF PARTNERSHIP. 427
§ 270. The same rule equally prevails in the Roman
law.^ Manet autem societas (say the Institutes) eo
ties, or either of them, though those engagements will not be affected, and
tte partnership will stUl continue as to all antecedent concerns, until they
are duly adjusted and settled. A reasonable notice of the dissolution
might be very advantageous to the' company, but it is not requisite ; and
a partner may, if he pleases, in a case free from fraud, choose a very un-
reasonable moment for the exercise of his right. A sense of common in-
terest is deemed a sufficient securityagainst the abuse of the discretion."
In Peacock v. Peacock, 16 Ves. 56, Lord Eldon said; '' With regard to
what passed, since the question was much- agitated at the Bar, whether
this partnership is now dissolved by the notice in writing from the defend-
ant, that from and after the date of that notice the partnership should be
considered dissolved. The plaintiff insists, that it is not dissolved ; and
that it can be dissolved only upon reasonable notice. I have always taken
the rule to be, that in the case of a partnership, not existing as to its dura-
tion by contract between the parties, either party has the power of deter-
mining it, when he may think proper ; subject to a qualification, that I
shall mention. There is, it is true, inconvenience in this ; but what would
be more convenient ? In the case of a partnership expiring by effluxion
of time, the parties may by previous arrangement provide against the con-
sequences ; but where the partnership is to endure so long as both parties
shall live, all the inconvenience from a sudden determination occurs in that
instance, as much as in the other case. I cannot agree, that reasonable g
notice is a subject too thin for a jury to act upon, as in many cases juries
and courts do determine what is reasonable notice. With regard to the
determination of contracts upon the holding of lands, when tenancy at
will was more known than it is now, the relation might be determined at
any time ; not as to those matters, which during the tenancy remained a
common interest between the parties ; but as to any new contract the will
might be instantly determined. When that interest was converted into
the tenancy from year to year, the law fixed one positive rule for six
months' notice ; a rule, that may in many cases be very convenient ; in
others, that of nursery grounds, for instance, most inconvenient. As to
trades, in general, there is no rule for the determination of partnership •
and I never heard of any rule with regard to different branches of trade •
and, supposing a rule for three months' notice, that time might in one case
be very large j. and in another, in the very same trade, unreasonably short.
I have, therefore, always understood the rule to be, that, in the absence of
express contract, the partnership may be determined, when either party
thinks proper, but not in this sense ; that there is an end of the whole
1 Pothier, Pand. Lib. 17, tit. 2, n. 64 ; Ante, § 84, 85.
428 PARTNERSHIP. [CH. XIH.
usque, donee in eodem consensu perseveraverint. At cum
aliquis renuviiaverit societati, solvitur, socidas ; ^ or, (as it
is expressed in the Code,) Tamdiu socidas durat, quamdiu
consensus partium integer, perseverat? And Vinnius has
remarked upon the coincidence, in this respect, of the
contract of partnership with that of mandate, Societas
et mandatum in eo conveniunt, quod proprio quodam jure,
et suis quihusdam modis solvaniur, quos Justinianus, quoniam
ah iis modis, quibus jure communi olligatio iolMur, remoti
sunt, explicare voluit? And, after alluding to the fact,
that in common contracts the obligation thereof can be
extinguished only by the consent of all the parties, he
adds, that it is otherwise in relation to the contract of
partnership. Sed illud proprium Jiujus contractus {socie-
tatis) est, quod diam postquam res integra esse desiit, id est
postquamjam coUatio et communicatio facta est, ah eo r-ecedi,
et vel unius voluntate potest ; quo modo in specie dicitur
societas dissolvi renuntiatione} This also is the clear re-
concern. All the subsisting engagements must be ■vfound up ; for that
* purpose they remain with a joint interest; but they cannot enter into new
engagements. This being the impression upon my mind, I had some ap-
prehension from the turn of the discussion here, that some different doc-
trine might have fallen fron;i the Court at Guildhall ; but upon inquiry
from the Lord Chief Justice, as to Jiis conception of the rule, I have no
reason to believe, that, if this notice had been given before the trial, the
jury would not have been directed to find that the partnership was, by the
delivery of that paper, dissolved." See also Featherstonhaugh v. Fen-
wick, 17 Ves. 299, 308, 309 ; Crawshay v. Maule, 1 Swanst. K. 495, 608 ;
Heath v. Sansom, 4 Barn. & Adol. 172.
1 Inst. Lib. 3, tit. 26, § 4.
2 Cod. Lib. 4, tit. 37, 1. 5 ; Pothier, Pand. Lib. 17, tit. 2, n. 69 ; Id. n. 64 ;
Domat, B. 1, tit. 8, § 5, art. 1, 2 ; Ante, § 84, 85.
3 Vinn. ad Inst. Lib. 3, tit. 26, § 4.
4 Vinn. ad Inst. Lib. 3, tit. 26, § 4, Comm. Introd. n. 1 ; Pothier Pand.
Lib. 17, tit. 2, n. 64 to 68. — Vinnius proceeds to give the reasons of this
doctrine, and holds that it is so fundamental, that it cannot be varied by
express agreement; "Hoc in contractu societatis jure singulari receptura
est contra regulas communes de dissolvendis obligatipnibus. Idque duplici
CH. XIII.] DISSOLUTION OF PAETNEBSHIP. 429
suit of the French Law, as Pothier has instructed us,
under ordinary circumstances.^ Indeed, to so great an
extent did the Roman law carry its doctrine, that (as
we shall presently see) a positive stipulation against
its dissolution at the will of either of the partners
was held to be utterly void, as inconsistent with
the true nature, and interests, and confidence of that
relation.^
§ 271. A partnership at will is presumed to endure
so long as the parties are in life and have a capacity
to continue it.^ The dissolution of it, either by death
or by a supervenient incapacity, will of course come
under consideration when we speak of dissolution by
mere operation of law. At present it is only neces-
sary to say, that a dissolution may be made not only
by a positive or express renunciation thereof by one
partner, but also by implication from his acts and con-
duct ; or as Vinnius expresses it ; Porro autem renun-
ciatione dissodamur, aut volurdate aperta, ant tacUa}
de causa ; primum, quia socil officium invicem prssstant, ei accipiunt ;
deinde quia non bene convenit cum natura et conditione societatis, quse
rationem quamdam et jus fraternitatis habere creditur, aliquem invitum
retinere in communione ; quippe cujus materia discordias inter non con-
sentientes excitare solet. Adeo autem visum est ex natura esse societatis,
unius dissensu totam dissolvi, ut, quamvis ab initio convenerit, ut societas
perpetuo duraret, aut ne liceret ab ea resilire invitis cseteris ; tamen tale
pactum, tanquam factum contra naturam societatis, cujus in seternum nulla
coitio est. Nam, quod Paulus scribit, sooietatem etiam in perpetuum
coin posse, nihil aliud significat, quam sine uUa temporis praefinitione, aut
donee socii vivant ; quEe conventio non hoc operatur, ut non liceat abire,
sed ut solo lapsu temporis Bon finiatur societas." '
' Pothier, de Societ6, n. 149.
2 Ibid. ; Pothier, de Society, n. 145 ; Ante, § 85 ; Dig. Lib. 17, tit 2, 1.
14; Pothier, Pand. Lib. 17, tit. 2, n. 68.
3 CoUyer on Partn. B. 1, ch. 2, § 1, p. 68, 2d edit. ; 2 Bell, Coram. B. 7,
ch. 2, p. 631, 632, 5th edit.; Pothier, de Society, n. 65 ;' Ante, 84.
. 4 Vinnus, ad Inst. Lib. 8, tit. 26, § 4, Comm. n. 1 ; Ante, § 84, 85.
430 PABTNEKSHIP. [CH. XIII.
Aperta, cum cceteris nuniiatur, id res suas dhi haleard
atque agani} Of express renunciatiou it scarcely
seems necessary to say any thing, when the partner-
ship is merely at will ; since it can make no difference
whether it originated by mere consent, or by verbal
agreement, or by written articles, or by any instrument
under seal ; for in each and every of these cases the
same doctrine will prevail, whether the renunciation
be by parol, or in writing, or by declaration under seal.^
For the rule of the common law already referred to
has here no just application, that the dissolution must
be by an instrument of as high a nature as that by
which it was created, according to the maxim ; Eodem
inodo, quo quid constUuUur, eodem modo dissolvitur;^ or, .as
it is sometimes expressed; MMl tarn conveniens est
nattifaU cequitati, quam unumcumque dissolvi eo ligamine,
quo ligatum est;* which is certainly open to much ques-
tion as a doctrine of natural equity, if we are to
understand thereby that it is the only effectual mode
of working a dissolution thereof
§ 272. As to dissolution by tacit renunciation, or by
implication from circumstances, it may arise in various
ways, as by the withdrawal of a partner from the
business of the partnership, and engaging in other con-
cerns, or by his refusal to act with the other partners
in the business ; or by his assigning over his share in
the partnership ; ^ or by his doing any other act utterly
. ' Vinnius, ad Inst. Lib. 3, tit 26, § 4, Comm. n. 1 ; Ante, § 84, 85.
2 But see Doe dem. Waithman v. Miles, 1 Stark. R. 181.
3 Branch's Maxijps, p. 47, 5th edit. 1824; 6 Co. Kep. 53; Ante,
§268.
* The Countess of Rutland's Case, 5 Co. Rep. 26 ; Blake's Case, 6 Co.
Kep. 44; 2 Inst. 359; Ante, § 268.
5 Marquand v. N. York Manufac. Co., 17 Johns. R. 525 ; Keteham v.
CH. Xni.] DISSOLUTION OF PAETNERSHIP. 431
inconsistent with the continuing relation of partner-
ship. Vinnius has enumerated several modes under
the Roman Law, by which a tacit renunciation took
effect, upon the ground of their inconsistency with the
relation of partnership; (1.) by a novation of the
actioii, Pro socio, effected by one of the partners;
(2.) by an action brought by one partner against the
others for the purpose of dissolving the partnership ;
(3.) by each partner separately engaging in business,
and acting for his own sole account.^ This last ground
is pointedly adverted to in the Roman law. Hague,
cum separatim socii agere cceperUfii, et unusquisque eorum
sibi negotietur, sine dulm Jus societatis dissolvitur?
§ 273. And here the question was greatly discussed
in the Roman law, whether the right of renunciation
of a partnership could be exercised at any time by
any partner at his mere will and pleasure, however
unreasonable, or even injurious it might be to the other
partners. It was held, that it was competent for . any
partner to renounce the partnership, whether it was a
partnership at will, or for a fixed period of time, even
although he had expressly stipulated to the contrary.
Clark, 6 Johns. K. 144 ; Per Lord Ch. Justice Denman, in Heath v.
Sansom, 4 Barn. & Adol. 175 ; Rodriques v. Hefferman, 5 Johns. Ch. R.
417.
' Vinnius, Inst. Lib. 3, tit. 26, ^ 4, Comm. n. 2. — The language of
Vinnius is ; " Tacita voluntas renuntiandi tribus his factis evidenter
arguitur; (1.) novatione actionis fpro socio ab uno ex sociis facta, quod
etiam significat Ulpianus, cum dicit, societatem etiam ab aotione, seu ab
interitu actionis distrahi; (2.) actione pro socio ab uno adversus alios
instituta distrahendse societatis causa ; (3.) cum separatim agere coeperint,
et sibi quisque negotiari; veluti, si Typographi aliquot, qui ahtea com-
munibus sumptibus libros imprimendos curabant, postea singuli domi suae
sibi imprimere coeperint, et commune impendium facere desierint, tacite
renuntiasse societati intelliguntur."
a Dig. Lib. 17, tit. 2, 1. 64 ; Pothier, Pand. Lib. 17, tit. 2, n. 69.
432
PARTNERSHIP. [CH. XHI.
provided he acted with good faith, and withoTit any
sinister motive, and provided, further, that the time
chosen for the purpose was not unseasonable, or injuri-
ous to the interests of the other partners ; in other
words, it was sufficient if the partner renounced for a
reasonable cause, and at a reasonable time, and in a
reasonable manner. JSi convenerit inter socios, ne intra
eertum tempiis communis res dividatur, non videtur con-
venisse, ne sodeiate dbeatur. Quod tamen, si hoc convenit,
ne aheatur ; an valeat ? Eleganter Pomponius scripsif,
frustra hoc convenire, nam dsi non convenit, si tamen intem-
pestive renuncietur societati, esse pro sodo actionem. Sed
etsi convenit, iie intra eertum tempus socidate aheatur, d
' ante tempus rejiuncietur, potest rationem habere renundatio ;
nee tenehitur pro sodo, qui ideo ■ renunciavit, quia conditio
qucedam, qua socieias erat coita, ei non prcestatur; aut quid,
siita [inf-uriosus ef] damnosus sodus sit, ut non. expediat
mm pati?^
1 Dig. Lib. 17, tit. 2, 1. U; Pothier, Pand. Lib. 17, tit. 2, n. 64 to 68 ;
1 Story on Eq. Jurisp. § 668. — Domat has summed up the principal
doctrines of the Koman law on this subject in the following articles.
"(1.) As partnership is formed by consent, so is it in the same manner
dissolved ; and it is free for the partners to break off their partnership,
and to give it over whenever they please, even before the end of the term
which it was to have lasted, if they all agree to it. (2.) The tie which ia
among partners, being founded on the reciprocal choice which they make
of one another, and on the hopes of some profit, it is free for every one of
the partners to break off partnership whenever he pleases ; whether it be
because there is no good agreement among the partners, or that some
necessary absence, or other affairs, make the partnership burdensome to
him who is desirous to leave it ; or that he does not like a commerce
which the partners are about to .undertake ; or that he does not find his
account in the partnership ; or for other reasons. And he may give over
partnership without the consent of the other partners, and that even
before the time at which it was to have ceased, and although it have been
agreed that none of the partners should break off the partnership till the
time agreed on were expired. Provided, that the partner does not break
off with some sinister view ; as if he quits the partnership that he may buy
CH. Xin.] DISSOLUTION OF PARTNEESHIP. 433
§ 274. By the old French law, a partnership, which
was for an indefinite period, or without toy limitation
for himself alone, wbat the whole community had a mind to purchase, or
that he may make some other profit to the prejudice of the other partners,
by his leaving them; or provided he does .not quit after some business is
begun, or at an unseasonable time, ■which may occasion some loss or
damage to the community. (3.) The partner who breaks off partnership
with an unfair design, disengages his copartners from all engagements to
him, but does not disengage himself from his obligations to them. Thus,
he who should withdraw himself from an universal partnership of their
whole estate, present and to come, that he alone might inherit a succession
fallen to him, would bear the whole loss if the succession which he alone
inherits should prove burdensome ; but he would not deprive his copart-
ners of the profit, if the succession should prove advantageous, and they
have a mind to share in it. And in general, if a partner breaks off at an
unseasonable time, which occasions the loss of some profit to the commu-
nity, which otherwise it might have made, or which causes any other
damage, he will be bound to make it good. As if he quits before the
time to which the partnership was to have lasted, abandoning a business
with which he was charged. And he who breaks off the partnership in
this manner, shall have no share in the profits which shall happen to be
made afterwards ; but he shall bear his part of what losses shall afterwards
happen, in the same manner as he would have been bound to do if he
had not quitted the partnership. (4.) The partner who renounces the
partnership at an unseasonable time, not only does not free himself from
his engagements to his copartners, but is answerable for all the losses and
damages which his unseasonable renunciation may have caused to the
society. Thus, if a partner quits whilst he is on a journey, or engaged
in any other business for the community ; or if his quitting obliges the
partners to sell any merchandise before the time ; he shall be bound to
make good the losses and damages which his leaving the partnership
under these circumstances shall have occasioned. (5.) In order to judge
whether the partner withdraws himself at an unseasonable time, it is
necessary to consider what is most profitable for the whole community,
and not for any one of the partners in particular. (6.) If, after a fair
and lawful renunciation, the partner who has quitted the partnership,
begins anew to carry on any commerce from which he reaps some profit,
he will not be bound to share it with his former partners. (7.) A
fraudulent and unseasonable renunciation is never permitted, whether the
contract of partnership has provided against it, or not. For this would
be repugnant to fidelity, which, being essential to the contract of partnei*
ship, is always understood to be comprehended in it. (8.) The renuncia-
tion is of no use to the person who has made it, till it be made known to
PARTN. 37
434 PAETNEESHIP. [cH. XIIL
of time, might be dissolved at the mere pleasure of
any one of the partners, under two qualifications or
restrictions; (1.) that the renunciation should he in
good faith; (2.) that it should not- be made at an
improper time.^ But partnerships, which by the ori-
ginal contract were to endure for a limited period, were.
deemed not to be dissoluble, until the expiration of
that period, unless some just cause of dissolution should
occur.^ In this latter event, any partner might, upon
giving due notice, renounce the partnership. Some
of the just causes here referred to were, that such
partner was to be long absent in the service of the
State ; another was some habitual infirmity, which dis-
abled him from performing his duties.^ The modern
Code of France, and that of Louisiana, have adopted
the same rules.* Substantially the same principles
prevail in the Scottish law.^
the other partners ; and if in the interval after the renunciation, and
before it is known to the other partners, he who has renounced makes any
profit, he will be obliged to share it with his copartners ; but if he suffers
any loss, it will all fall upon himself And if in this space of time the
other partners reap any gain, he will have no share in it; and if they
suffer any loss, he must bear his part of it." Domat, B. 1, tit. 8, § 5, art.
1 to art. 8, by Strahan. See also Mr. Swanston's learned note to Craw-
shay V. Maule, 1 Swanst. K. 609, note (a) ; Pothier, Pand. Lib. 17, tit. 2,
n. B4 to n. 68; 2 Bell, Comm. B. 7, ch. 2, p. 632, 633, 5th edit; 1 Story
on Eq. Jur. § 668.
1 Pothier, de Societe, n. 149, 150.
2 Pothier, de Societ6, n. 152, 153.
3 Pothier, de Society, n. 153, 154. See a like rule in the Roman law.
Pothier, Pand. Lib. 17, tit. 2, n. 68.
* Code Civil of Prance, art. 1869, 1870, 1871 ; Code of Louisiana,
(1825,) art. 2855 to art. 2859. — The French Civil Code expresses the
whole doctrine in the following brief terms. " Dissolution of partnership
by the will of one of the parties applies only to partnerships, the duration
5 Ersk. Inst. B. 3, ch. S, § 26 ; 2 Bell, Commi B. 7, ch. 1, p. 532, 533,
5th edit.
CH. Xni.] BISSOLUTION OF PARTNERSHIP. 435
§ 275. At the common law, there does not seem to
be any such recognized limitation or qualification of
the right of renunciation by any one partner, where
the partnership .is merely at will; for in such cases,
any partner, as we have seen, . may dissolve it at his
pleasure.^ In cases, where the partnership is by the
of ■which is unlimited, and is effected by a renunciation notified to all the
partners, provided such renunciation be hona fide, and not made at an
improper time. Benunciation is not made bona fide, where the partner
renounces in order to appropriate to himself alone the profit, which the
partners proposed to have drawn out in common. It is made at an im-
proper time, where the things are no longer entire, and that it is of con-
sequence to the partnership that its dissolution be deferred. Dissolution
of partnerships for a term cannot be demanded by one of the partners
before the term agreed, unless for just motives ; as where another partner
fails in his engagements, or that an habitual infirmity renders him unfit for
the affairs of the partnerahip, or other similar cases, the lawfulness and
■weight of which are left to the arbitration of judges."
1 Ante, § 269 ; Marquand v. N. York Manufact. Co. 17 Johns. 525. —
Mr. Swanston, in his learned note to Crawshay v. Maule, 1 Swanst. 509
to 514, says ; " The Editor is not apprised of any direct authorities in the
English law, on the distinction between seasonable and unseasonable (Ms-
solution. But in one instance, the Court of Chancery seems to have
assumed jurisdiction to qualify the right of renunciation, by reference to
that distinction. ' An application vras made some years ago to the Court
of Chancery for an injunction to inhibit the defendants from dissolving a
commercial partnership ; the other side proposed to defer it, as not having
had time to answer the affidavits ; but it 'was insisted that this was in the
nature of an injunction to stay waste, and that irreparable damage might
ensue. At length the Court deferred it, the defendants undertaking not
to do any thing prejudicial in the mean time. But no doubt arose con-
cerning the general propriety of such an application. Chavany against
Van Sommer, in Chancery, M. T. 11, G. 3 ;' 3 Wooddeson, Lect. 416,
note. The register contains the following entry of the original application
in this case. Peter Chavany, plaintiff, James Van Sommer, and others,
defendants; 14th November, 1771. 'Whereas Mr. Solicitor-General, of
counsel with the plaintiff, this day moved ^nd offered divers reasons into
this Court, that an injunction may issue to restrain the said defendants,
James Van Sommer, &c. from dissolving or breaking up the copartnership,
now carrying on between the plaintiff and the said defendants, &c. ; or
from doing any act whatever tending thereto, and also to restrain the said
436 PAETNBESHIP. . [CH. XIH.
agreement to endure for a limited period of time, the
question, whether it may within the period he dis-
solved hy the mere act or will of one of the partners,
without the consent of all the others, does not seem
to he absolutely and definitely settled in our juris-
prudence, although it would not seem, upon principle,
to admit of any real doubt or difficulty. Whenever
a stipulation is positively made, that the partnership
shall endure for a fixed period, or for a particular
adventure or voyage, it would seem, to he at once
inequitable and injurious to permit any partner, at his
mere pleasure, to violate his engagement, and thereby
to jeopard, if not sacrifice, the whole objects of the
defendants, &c. from selling, or disposing of, or joining in the sale, con-
veyance, or assignment of the leasehold estate, and interest belonging to
the said copartnership, or contracting for the sale thereof, or joining in
such contract, in the presence of Mr. John Cocks and Mr. Haddock, of
counsel with the defendants, who prayed that the said notice might be
saved ; whereupon, and upon hearing what was alleged by the counsel on
both sideSj it is ordered, that the benefit of the notice of the said motion
be saved till the last day of this term, the defendants consenting not to do
any thing contrary to wh^t the plaintiff now prays, in the mean time ; and
it is further ordered, that the defendants do file their affidavits two days
before.' Reg. Lib. A. 1771, fol. 6. The benefit of the notice was after-
wards saved, till the first general seal ensuing the term, (Id. fol. 7,) and
on the 25th of November, the defendants obtained an order for time to
answer. Id. fol. 147. The register has been searched to the end of
Trinity term, 1775, without discovering any farther trace of this cause.
In another case, the Court qualified the obligation to continue a partner-
ship, by reference to the design of the contract ; and directing an inquiry
whether the business could be carried on according to the true intent and
meaning of the articles, expressed a determination to dissolve the partner-
ship, if the Master reported in the negative. Baring v. Dix, 1 Cox, 213 ;
1 Montagu on Partn. p. 90 ; and in Waters v. Taylor, 2 Ves. & Beam.
299, Lord Eldon declared a partnership dissolved by the conduct of the
parties, rendering it impossible to conduct the undertaking on the terms
stipulated. See Denisart, voce, Societ6, s. 12, p. 539." But the right of
a Court to ^ecree a dissolution of the partnership is a very different thing
from the right of the partner himself to dissolve It sua sponte.
CH. Xm.] DISSOLUTION OF PARTNEESHIP. 437
partnership ; for the success of the whole undertaking
majy depend upon the due accomplishment of the
adventure or voyage, or the entire time be required
to put the partnership into beneficial operation.^ It is
no answer to say, that such a violation of the engage-
ment may entitle the injured partners to a compensa-
tion in damages ; for, independently of the delay and
uncertainty attendant upon any such mode of redress,
it is obviou^, that the remedy may be, nay, must be,
in many cases utterly inadequate and unsatisfactory.
If there be any real and just ground for the abandon-
ment of the partnership, a Court of Equity is competent
to administer suitable redress. But that is exceedingly
different from the right of the partner, sua sponte, from
mere caprice, or at his own pleasure, to dissolve the
partnership.^ In short, the opposite doctrine, although
perhaps in some measure countenanced by the Roman
law, is founded upon reasons exceedingly artificial, if
not indefensible. It proceeds upon a ground which
cannot be maintained in common sense or justice, that
any partner has a right to found his own claim to im-
mediate indemnity and safety upon a known injury to
the rights and interests of his copartners, whatever
may be the nature or extent thereof.*
' Story on Eq. Jurisp. § 668.
2 See 1 Story on Eq. Jurisp. § 668.
3 The opinion here maintained has the apparent support of the most
respectable elementary writers, and has been either taken for granted, or
partially upheld by many eminent Judges. See Gow on Partn. ch. 6, § 1,
p. 218, 219, 226, 3d edit; Collyer on Partn. B. 1, ch. 2, § 2, p. 68, 2d
edit.; Watson on Partn. ch. 7, p. 381, 2d edit; 1 Montagu on Partn. Pt.
3, ch. 1, § 1, p. 90, [113] ; 3 Kent, Comm. liect 48, p. 61, 4th edit. Lord
Eldon in Peacock v. Peacock, 16 Ves. 56, and Crawshay v. Maule, 1
Swanst R. 496, took it for granted that one partner could not, of his
own mere will, dissolve a partnership for a limited period. . Mr. Justice
Washington asserted the same doctrine in positive terms, in Pierpont v.
37*
438 PARTNERSHIP. [CH. XUI.
§ 276. Nor does tlie Eoman law, or tlie foreign law,
founded upon it, in cases of a partnership for a lim-
Graham, 4 Wash. Cir. R. 234. On that occasion he said; "Now it is
perfectly clear, that one partner cannot, by withdrawing himself from the
association before the period stipulated between the partners for its con-
tinuance, either dissolve the partnership, or extricate himself from the
responsibilities of a partner, either in respect to his associates, or to third
persons ; and if this be so, it would seem that he could not produce the
same consequence by any other voluntary act of his own. This is not like
those cases where, by the act of God, or by the operation of law, the
partnership is dissolved, as by the death or bankruptcy of a partner."
The same doctrine seems to have been held in the unreported case of
Chavany v. Van Sommer, 3 Wooddes. Lect. p. 416, note ; 1 Swanst. R.
512, note; Ante, § 275, note. The case of Marquand v. The New York
Manuf. Co. 17 Johns. K. 525, and the dictum of Mr. Justice Piatt, in
Skinner v. Dayton, 19 Johns. K. 538, are indeed to the contrary. Mr.
Chancellor Kent (3 Kent, Comm. Lect. 43, p. 54, 65, 4th edit. ; Id. p. 61)
has summed up the reasoning on this side of the question, without, how-
ever, expressing his own opinion. He says ; " But if the partners have
formed a partnership by articles, for a definite period, in that case it is
said, that it cannot be dissolved without mutual consent before the period
arrives. This is the assumed principle of Law by Lord Eldon, in Peacock
V. Peacock, and in Crawshay v. Maule ; and yet in Marquand v. The New
York Manuf Company, it was held, that the voluntary assignment, by
one partner, of all his interest in the concern, dissolved the partnership,
though it was stipulated in the articles, that the partnership was to con-
tinue until two of the partners should demand a dissolution, and the other
partners wished the business to be continued, notwithstanding the assign-
ment. And in Skinner u. Dayton, it was held by one of the Judges, that
there was no such thing as an indissoluble partnership. It was revocable
in its own nature, and each party might, by giving due notice, dissolve
the partnership, as to all future capacity of the firm to bind him by con-
tract ; and he had the same legal power, even though the parties had
covenanted with each other that the partnership should continue for such
a period of time. The only consequence of such a revocation of the
partnership power, in the intermediate time, would be, that the partner
would subject himself to a claim of damages for a breach of the covenant.
Such a power would seem to be implied in the capacity of a partner, to
interfere and dissent from a purchase or contract about to be made by his
associates; and the commentators on the Institutes lay down the principle,
as drawn from the civil law, that each partner has a power to dissolve the
connection at any time, notwithstanding any convention to the contrary,
and that the power results from the nature of the association. They hold
CH. Xin.] DISSOLUTION OF PAETNEESfflP. 439
ited period of time, properly considered, justify, or
allow one partner to dissolve it at his mere pleasure,
witMn that period. On the contrary, as we have seen,-'
eTery such convention null, and that it is for the public interest, that no
partijer should he obliged to continue in such a partnership against his
■will, inasmuch as the community of goods in such a case engenders discord
and litigation." He afterwards adds ; " In some instances, Chancery -will
restrain a partner from an unseasonable dissolution of the connection, and
on the same principle, that it will interfere to stay waste and prevent an
irreparable mischief. And such a power was assumed by Lord Apsley,
in 1771, without any question being made as to the fitness of the exercise
of it. In the civil law, it was held by the civilians to be a clear point,
that an action might be instituted by, or on behalf of, the partnership, if
a partner, in a case, in which no provision was made by the articles,
should undertake to dissolve the partnership at an unseasonable moment ;
and they went on the ground, that the good of the association ought to
control the convenience of any individual member. But such a power,
acting upon the strict legal right of a party, is extremely difflcult to define,
and I should think rather hazardous and embarrassing in its exercise."
Vinnius has stated the general reasoning of the Roman law on this point
in the passage already cited, ante, 270, note. But his sole ground is, that
otherwise the partnership would be perpetual, which can only apply to a
case where there is a qovenant for its perpetual duration ; and even then
it might be dissolved by a court of justice, for a reasonable cause. In
the recent case of Bishop v. Breckles,*(l Hofim. Ch. K. 534,) the Vice-
Chancellor (Hoffman) of New York examined all the authorities ; and
concluded by saying ; " The law of the Court, then, requires something
more than the mere will of one party to justify a dissolution. But it
seems to me, that but little should be demanded. The principle of the
civil la* is the most wise. Why should this Court compel the continuance
of an union, when dissension has marred all prospect of the advantages
contemplated at its formation ? By refusing to dissolve it, the power of
binding each other, and of dealing with the partnership property remains,
when all confidence and all combination of effort is at an end. The
object of the contract is defeated." In truth, however, the Boman law
carries in its own bosom a qualification, which shows that the dissolution
must be for a reasonable cause, and under reasonable circumstances ; and
then it seems most- fit for the action of a Court of justice, and not for one
of the interested parties. Ante, § 273, and note ; Pothier, Band. Lib. 17,
tit. 2, n. 64, 65 ; Pothier, de Societe, n. 138, 146, 149, 150, 151, 152.
1 Ante, 273, 274 ; Pothier, Pand. Lib. 17, tit. 2, n. 64, 65, 68 ; 2 Bell,
Comm. B. 7, ch. 2, p..632, 633, 5th edit.
440 PARTNERSHIP. [CH. XIII,
it annexes to the exercise of the right a positive con-
dition, that it shall be for a just cause and under rea-
sonable circumstances. Pothier accordingly says, that
in cases of partnership for a fixed period of time, there
is an implied understanding, that it shall not be dis-
solved until the expiration of that period, at least unless
some just cause for the dissolution shall have super-
vened ; and, therefore, one partner cannot, without such
just cause, dissolve the partnership, to the prejudice of
the other partners. He cites the Roman law in sup-
port thereof; Qui in socidatem in tempus coit, earn ante
tempus renunciando, socium a se, non se a socio liberal ; ^
and he then proceeds to enumerate the particular cases
which shall constitute just causes of dissolutipn. More-
over, this important qualification is annexed by the
Roman law to the right of renunciation, that it is
limited to cases where it is for the benefit, not of the
particular partner, but of the partnership itself, that it
should be dissolved ; otherwise it is deemed unseason-
able. Soc ita verum esse, si societatis intersU non dirimi
societatim} semper enim, non id quod privatim interest unius
ex sociis, servari solet, sed quod societate expedit? So that,
in effect, the whole difference in this view between the
Roman and foreign law, and the common law, resolves
itself into this, that in the former the partner may, by
his own act, primarily insist upon a dissolution, which,
however, is not valid, unless it be for a just cause, and
is affirmed to be so by a Court of Justice ; ^ whereas
the common law does not allow the dissolution to be
1 Pothier, de Society, n. 152 ; Dig. Lib. 17, tit. 2, 1. 65, § 6; Pothier,
Pand. Lib. 17, tit. 2, n. 64, 65 ; Ante, § 273, note.
2 Dig. Lib. 17, tit. 2, 1. 65, § 5 ; Pothier, Pand. Lib. 17, tit. 2, n, 65;
Domat, B. 1, tit. 8, § 5, art. 4, 5.
3 Pothier, de Society, n. 154.
CH. Xra.] DISSOLUTION OF PARTNERSHIP. 441
complete or effective, until a Court of Justice has itself
decreed the dissolution for a just cause. In substance,
therefore, the rule is the same in both laws ; although
it is varied in its actual application. The rule of the
common law is, to say the least of it, quite as con-
venient as that of the Roman and foreign law, if, in-
deed, it be not more appropriate, and just, and equitable,
than that of the latter.
§ 277. The question sometimes occurs, whether a
partnership, under all the circumstances of the case, is
properly to be treated as a partnership at will, or as a
partnership for a limited period. It is by no means
necessary, that there should be an express stipulation
either way ; for its intended duration may often be as-
certained by implications or presumptions, arising from
the acts and conduct of the parties, and other accom-
panying circumstances. In the absence, however, of
all acts or circumstancs, which clearly rebut and con-
trol the inference, the conclusion of law is, that the
partnership is intended to be at the mere will and
pleasure of the parties. But acts and circumstances
may greatly qualify or even overturn this conclusion.
Thus, the question has arisen, whether the purchase or
lease of certain premises, for carrying on the trade or
business of the partnership for a limited term of years,
did, of itself, amount to presumptive proof, that there
was an implied agreement between the partners, that
the duration of the partnership should be coexten-
sive with the term of the purchase or lease. It has
been held, that it did not j for, it was not of itself
decisive any way : but was readily reconcilable with
the notion, that it was purchased for the mere accom-
modation of the trade or business, while it should en-
dure, and then to be sold as part of the partnership
442 PARTNERSHIP. [CH. XIII.
effects ; and so it was not intended in any manner to
indicate the period of its duration. Upon any other
ground of reasoning, if the purchase was of an estate
in fee simple, it might be contended, that the partner-
ship was to continue forever, which would be a wholly
inadmissible doctrine.^
§ 278. In the next place, a partnership may expire
.' See Marshall v. Marshall, cited 2 Bell, Comm. B. 7, ch. I, p. 633, note
3 ; Crawshay v. Maule, 1 Swanst. R. 495, 508, 521. In this last case. Lord
Eldonsaid; " The general rules of partnership are well settled. Where
no term is expressly limited for its duration, and there is nothing in the
contract to fix it, the partnership may be terminated at a moment's notice
by either party. By that notice the partnership is dissolved, to this ex-
tent, that the Court will compel the parties to act as partners, in a partner-
ship existing only for the purpose of winding up the affairs. So death
terminates a partnership, and notice is no more than notice of the fact that
death has terminated it. Without doubt, in the absence of express, there
may be an implied contract, as to the duration of a partnership. But I
must contradict all authority, if I say, that wherever there is a partner-
ship, the purchase of a leasehold interest of longer or shorter duration is
a circumstance from which it is to be inferred that the partnership shall
continue as long as the lease. On that argument, the Court holding that
a lease for seven years is proof of partnership for seven years, a:nd a lease
of fourteen of a partnership for fourteen years, must hold, that if the part-
ners purchase a fee simple there shall be a partnership for ever. It has
been repeatedly decided, that interests in lands, purchased for the purpose
of carrying on trade, are no more than stock in trade. I remember a
case in the House of Lords, about three years ago, (the case of the Carron
Company,) in which the question was much discussed, whether, when
partners purchase freehold estate for the purpose of trade, on dissolution,
that estate must not be considered as personalty, with regard to the rep-
resentatives of a deceased partner.'' Again, ho added ; " It has also been
insisted, that the purchase- of leases must be considered as evidence of a
contract for the continuance of the concern. Unquestionably partners
may so purchase leasehold interest, as to imply an agreement to continue
the partnership as long as the leases endure ; but it is equally certain that
there is no general rule, that partners, purchasing a leasehold interest,
must be 'understood to have entered into a contract of partnership com-
mensurate with the duration of the leases. For ordinary purposes a lease
is no more than stock in trade, and as part of the stock may be sold ; nor
would it be material, that the estate purchased by a partnership was free-
OH. XIII.] DISSOLUTION OF PARTNERSHIP. 443
by the mere efflux of the time, which limits and
hounds its duration under the terms of the original
contract, by which it is created. This is the natural,
nay, the necessary, result of the very desigu and terms
of the contract; for the same consent, which origi-
nated, terminates it ; and the consent cannot be pre-
sumed to exist beyond the fixed period, since the pre-
sumption would be directly contradictory to the actual
limitation. Hence, if in fact continued, it must be
continued by a new agreement, and not under the old
one.^ So Pothier lays down the rule. Lorsque la so-
cieie a eti ccmtraetee pour un certain temps limite, elle finit
deplein droit par V expiration de ce temps? And he adds,
that the prolongation of it beyond that period must be
proved by some act in writing, clothed with the proper
formalities, which were required by law in its original
formation.^
§ 279. But the question may arise at the common
law, when a partnership is actually continued by the
parties after the expiration of the original term, pre-
scribed for its duration, what is to be deemed the true
hold, if intended only as an article of stock ; though a question might, in
that case, arise on the death of a partner, whether it would pass as real
estate, or as stock, personal estate in enjoyment, though freehold in nature
and quality. It is impossible, therefore, in my opinion, to hold that there
being many leases, some long, some of short duration, and others interme-
diate, the partnership is to subsist during the term of the leases, or of the
longest lease." SSe also 2 Bell, Comm. B. 7, ch. 2, p. 633, 5th edit.; Col-
lyer on Partn. B. 1, ch. 2, § 1, p. 68, 69, 2d edit. ; Gow on Partn. ch. 5,
§ 1, p. 225, 3d edit.
1 2 Bell, Comm. B. 7, ch. 2, p. 631, 5th edit. ; Id. ch. 3, p. 649 to 655 ;
U. S. Bank v. Binney, 6 Mason, R. 176, 185 ; 3 Kent, Comm. Lect. 43, p.
53, 4th edit.
2 Pothier, de Society, n. 139; Code Civil of France, art. 1865, 1866 ;
Code of Louisiana, 1825, art. 2848, 2849.
3 Ibid.
444
PAKTNEESHIP. [CH. XIII.
effect and interpretation of the act ? Is it to be treat-
ed as a continuation of the partnership^ upon all the
original terms thereof, and for a like period 1 Or, is it
to be deemed a mere continuation of the partnership,
during the will of the parties? The question does
not, perhaps, admit of any uniform or universal an-
swer. It may be affected by various considerations ;
by the acts of the parties ; by the habits and changes
of their business ; by implications from their omission
to act upon certain terms of the original contract, and
from apparent qualification and exceptions and restric-
tions of others, in their dealings and settlements with
each other, or even with third persons. But, in the
absence of all acts and circumstances whatsoever, to
control or vary the original terms of the agreement,
the just legal conclusion seems to be, that the partner-
ship is to be treated as a mere partnership during the
joint will and pleasure of all the parties, and, therefore,
dissoluble at the will of any one of them ; but that in
all other respects it is to be carried on upon the origi-
nal terms thereof, as to rights, duties, interests, liabili-
ties, and shares of the profits and losses.-^
1 See Featherstonhaugh v. Fenwicfc, 17 Ves. 29&; U. S. Bank v. Bin-
ney, 5 Mason, R. 176, 185; 2 Bell, Comm. B. 7, ch. 2, p. 632, 633, 5th
edit. ; Gow on Partn. ch. 5, § 1, p. 224, 225, 3d edit. ; Mifflin v. Smith,
17 Serg. & Rawle, 165.— Sir Wm. Grant (Master of the Rolls) in the
case of Featherstonhaugh v. Fenwick, 17 Ves. 299, 307, discussed the
subject somewhat at large ; and how far presumptions might arise from
circumstances, as to the terms on which the partnership was to be deemed
continued, he said ; " The first question in this cause is, whether the part-
nership was dissolved on the 22d of November, 1804. The plaintift" con-
tends that the defendants had no right to put an end to the partnership
at that period ; and that is contended on several grounds ; first, that as by
the articles which formerly' existed, but had expired, twelve months' no-
tiSS was necessary to enable a partner to withdraw, the same notice was
necessary for withdrawing from the partnership, which continued without
articles." I do not agree to that proposition. The latter partnership was
CH. XIII.] DISSOLUTION OF PAETNEKSHIP. 445
§ 280. In the next place, a partnership may expire
by its own express or implied limitation, whenever the
for an indefinite period, and therefore might be dissolved at the •will of the
parties ; subject to the question, afterwards made, by what notice that -will
must be declared. Another ground on which the plaintiff contends against
the dissolution on the 22d of November, is, that the lease of the premises
in London, used in carrying on the concern, was then unexpired. That
does not oppose any obstacle to the dissolution ; as it is not a necessary
consequence, that partners, taking premises for the use of their trade for a
definite period, contract a partnership for the same period. If any part
of the term is unexpired at the end of the partnership, that is partnership
properly, and js to be distributed as such; but I do not apprehend that
they are bound to continue the partnership on that account. A third
ground is, that there were several contracts subsisting with their workmen,
which had a considerable period of time to run. That argument goes
considerably too far. It would go to this extent, that a partnership could
not be dissolved, until all their contracts were completely ended and wound
up ; and that can hardly be the case at any period, as persons are entering
into contracts from day to day, which cannot all expire at the same period.
It would on that ground be hardly possible to dissolve any partnership, as
there must always be contracts depending. I do not conceive, therefore,
that the existence of engagements with third persons, either for goods to
be worked up, or engagements with their workmen, which had not come
to a conclusion, can form an objection to the dissolution. The partners
cannot, it is true, by a dissolution, relieve themselves from the j>erforin-
ance of any engagements, which they may have contracted with third per-'
sons ; but, as among themselves, the existence of such engagements cannot
prevent a dissolution, either by mutual consent or by notice. The question
then is, what sort of notice ought to be given for this purpose ? Until a
very recent period, it had been, I believe, understood, that a reasonable
notice should be givenj but upon the question, what is reasonable notice,
much difference of opinion may prevail. On the one hand, it may be ex-
tremely disadvantageous to parties to say, that a partnership shall be dis-
solved on a given day ; on the other, it must be extremely difficult for
a Court of Equity, by a general rule, to ascertain what is reasonable
notice ; and the question, whether the particular notice was reasonable or
convenient, would be the subject of discussion in almost every instance of
the dissolution of a partnership. Considerations of that sort, I believe,
have led to a different rule ; that in the case of a partnership, such as
this, subsisting without articles, and for an ipdefinite period, any partner
may say, ' It is my pleasure on this day to dissolve the partnership.' Bt^
considering the principles on which the dissolution must take place, a
partner can very seldom, if ever, have an interest to give notice of dissolu-
PARTN. 38
446 PARTNEKSHIP. [CH, XHI.
event has occurred, which the parties naturally or ne-
cessarily contemplated as its just termination.' This
may arise in two ways ; (1.) by the extinction of the
thing, which constituted the sole subject-matter of the
partnership ; (2.) by the completion or accomplishment
of the entire business, for which the partnership was
formed.^ An example of the first kind may easily be
tion at a period disadvantageous to the general interests of the concern ;
as, where the articles do not prescribe the terms, the law ascertains what
shall be the consequence of dissolution ; viz., that the whole of the joint
property must be sold off, and the whole concern wound up. No partner,
therefore, can derive a particular advantage by choosing an unseasonable
moment for dissolution ; as, upon the principles established in Crawshay
V. Collins, and the authorities there referred to, he must suffer in propor-
tion to the extent of his interest in the trade. I hold, therefore, that the
dissolution of this partnership took place on the 22d of November." In
U. States Bank v. Binney, 5 Mason, R. 176, 185, the Court said; " Those
articles (of partnership) expired by their own limitation in two years, and
had force no longer, unless the parties elected to continue the partnership
on the same terms. That is matter of evidence upon the whole facts. The
natural presumption is, that, as the partnership was continued in fact, it
was construed upon the same terms as before, unless that presumption is
rebutted by the other circumstances in the case. There is no written
agreement respecting the extension of the partnership, and therefore it is
open for inquiry upon all the evidence."
1 3 Kent, Comm. Lect. 43, p. 52, 53, 4th edit.
2 3 Kent, Comm. Lect. 43, p. 53, 4th edit. ; Griswold v. Waddington,
16 Johns. K. 491. — On this occasion Mr. Chancellor Kent, in his most
masterly judgment, used upon this point the following language. " Po-
thier, in his treatise on partnership, says, that every partnership is dis-
solved by the extinction of the business for which it was formed. This
he illustrates, in his usual manner, by a number of easy and familiar ex-
amples. Thus, if a partnership be formed between two or more persons,
for bringing together, and selling on joint account, the produce of their
arms, or of their live stock, and the produce of the stock of one of them
should happen to fail or be destroyed, the partnership ceases, of course ;
for there can be no longer any partnership, when one has nothing to con-
tribute. So, if two persons form a partnership in a particular business,
$^ the one engages to furnish capital, or the raw materials, and the other
Ms skill and labor, and the latter becomes disabled by the palsy, the part-
nership is extinguished, because the object of the partnership cannot be
CH. Xm.] DISSOLUTION OF PAETNERSHIP. 447
suggested by a case, where two persons (not being
otherwise partners) should jointly buy a ship, to be
employed by them for their joint and mutual profit as
partners ; and the ship should afterwards be totally lost
or destroyed. That would constitute a complete termi-
nation of the partnership, not merely by operation of
law, (although that ground might be fairly maintain-
able,) but as an exact exposition of the actual intend-
ment and understanding of the parties.^ An example
of the second kind is readily found in the common case
of a joint enterprise, voyage, adventure, or other com-
mercial speculation, for the joint account and mutual
profit of the parties concerned therein. Thus, for ex-
ample, if two persons (not being otherwise partners)
should hire a ship for a particular voyage, upon their
joint account and for their mutual profit, and the voy-
age should be undertaken and completed, and the busi-
ness thereof closed ; the partnership so foroied would
be dissolved by the mere lapse of time, and the occur-
rence of the event, by which it was originally intended
by the parties that it should terminate.^ The same
fulfilled. So, again, if two or more persons form a partnership to buy and
sell goods at a particular place, the partnership is dissolved, whenever the
business is terminated. Pothier, Trait, du Cont. de Soc. No. 140 - 143.
Extincto subjecto, toUitur adjunctum, is the observation of Huberus, when
speaking on this very point." Duvergier, Droit Civil Fran^. Tom. 5,
§418 to 428.
1 See Pothier, de Society, n. 140, 141. — The Civil Code of France
(art. 1867) declares ; " Where one of the partners has promised to put in
common the ownership of a thing, the loss of it, happened before the
bringing in can be eflfected, operates a dissolution of the partnership in
relation to all the partners. Partnership is in like manner dissolved in all
cases by the loss of the thing, where the enjoyment alone has been put in
common, and the ownership remains in the hands of the partner. But
the partnership is not broken up by the loss of a thing, the ownership o£
which has already been brought into the partnership."
2 Ante, § 27, 30, 65, 267 ; Post v. Kimberley, 9 Johns. R. 470 ; Gow on
448 PARTNERSHIP. [CH. XIII.
doctrine would apply to the case of a joint shipment
of goods, upon the joint account and for the mutual
profit of the shippers on a foreign voyage ; or a joint
purchase of goods, to be sold for the joint benefit and
profit of the purchasers thereof; or a joint undertak-
ing by mechanics, to perform work and labor, and find
materials, to erect a dwelling-house for a third person,
upon their joint account and for their mutual profit.
For, in all such cases, the completion of the voyage, or
adventure, or undertaking, or commercial speculation,
naturally terminates the partnership contemplated by
the parties.-^
§ 281. The same doctrine was formally promul-
gated in the Roman law ; and has been incorporated
into the jurisprudence of all modern commercial na-
tions, as indeed it might naturally be presumed to
be, since it is founded in common sense, and a just in-
terpretation of the intention of the parties. Thus, in
the Roman law it is said, (as we have already seen,)^
Solvitur societas ex personis, ex rebus, ex voluntate, ex
actione. Ideoque sive homines, sive res, sive actio interierit,
distrahi videtur societas? Res vero inlereunt, cum aut
nullce relinquardur, aut conditionem mwtaverint, nequie enim ■
ejus rd, qucejam nulla sit, quisquam socius est ; neqiie ejus,
Partn. ch. 5, § 1, p. 218, 3d edit. ; Watson on Partn. ch. 7, p. 379, 2d edit. ;
Voet ad Pand. Lib. 17, tit. 2, § 26, Tom. 1, p. 761 ; Duvergier, Droit Civ.
Franj. Tom. 5, tit. 9, § 411 to 420.
1 Ante, § 27, 30, 55, 267; Cumpston u. McNair, 1 Wend. R. 457;
Pothier, de Society, n. 143 ; Collyer on Partn. B. 1, ch. 1, § 1, p. 32,
2d edit. ; Watson on Partn. ch. 7, p. 379, 2d edit. ; Voet, ad Pand. Lib.
17, tit. 2, § 26, Tom. 1, p. 761 ; Duvergier, Droit Civil Pran?. Tom. 5,
§431.
9 Ante, § 266.
*3 Pothier, Pand. Lib. 17, tit. 2, n. 54 ; Dig. Lib. 17, tit. 2, 1. 63, ^ 10 ;
Domat, B. 1, tit. 8, § 5, art. 11.
CH. Xm.] DISSOLUTION OP PARTNERSHIP. 449
quae consecraia puhlicatave sit} And again ; Item ; si
alicujus rei contractu societas sit, et finis negotio impositus
est, finitur societas? Pothier, Vinnius, and other learned
jurists, have done little more than to state the same
doctrine, with a few appropriate illustrations.'
§ 282. "In the next place, as to the cases of dissolu-
tion by the decree of a Court of Equity.* It is obvi-
ous, from what has been afready stated, that although
a partnership may, by the original agreement, be formed
for a stipulated period, and on that account may not be
dissoluble at the mere will of either of the partners,
without the concurrence of all the others ; ^ yet, that
various cases may occur, in which it may become the
duty of a judicial tribunal, either to declare the origi-
nal partnership null and void ab initio, or to annul it in
respect to all future operations ; otherwise the grossest
injustice and most mischievous consequences might
occur to some of the partners, without any fault or
impropriety on their own part. Indeed, the remedial
authority of a judicial tribunal, in order to be adequate
1 Dig. Lib. 17, tit. 2, 1. 63, § 10 ; Pothier, Pand. Lib. 17, tit. 2, n. 62.
9 Inst. Lib. 3, tit 26, § 6 j Dig. Lib. 17, tit. 2, 1. 65, § 10 ; Pothier, Pand.
Lib. 17, tit. 2, n. 63; Domat, B. 1, tit. 8, § 5, art. 11.
3 Pothier, da Societfe; n. 140 to 143 ; Vinnius, ad Inst. Lib. 3, tit. 26, § 6,
Comm. ; Johnston's Civil Law of Spain, B. 2, tit. 15, p. 232 ; Van Leeu-
wen's Comm. B. 4, ch. 23, ^ 11, p. 415 ; Moreau & Carlt. Partidas, 5 tit.
10, 1. 10, Vol. 2, p. 773 ; Code Civil of France, art. 1865 ; Code of Louis-
iana, (1823) art, 2847; Griswold v. Waddington, 16 Johns. R. 491, 492,
Per Mr. Chancellor Kent. — Vinnias puts the doctrine in brief but very-
clear terms. " Si societas tertm alicujus negotiationis causa inita sit,
puta vini aut frumenti ad certam quantitatem emendi vendendique, sine ne-
gotio imposito, id est, empto distractoque vino aut frumento, societas extin-
guitur. Sed in eo nihil proprium videtur societatis ; ut pote cui ea lex ab
initio dicta sit. Idem est, si ad certum tempus contracta sit societas ; nam,
exacto tempore, ea expirat."
* 3 Kent, Comm. Lect. 43, p. 60, 4th edit.
5 Ante, § 273, 276.
. 38*
450 PARTNERSHIP. [CH. XIII.
and complete, ought not to stop here ; for many cases
of unforeseen accident, or unsuspected mischief, may
occur, which may make the farther prosecution of the
business of the partnership injurious, or improper,
without the fault of any partner, and, indeed, where
all of them are equally innocent. The Praetor's Fo-
rum at Rome seems ordinarily to have exercised, or
at least to have superintended the exercise of this
authority, by controlling or confirming the acts of the
partners, as to the right of dissolution, as the partic-
ular case required its interposition ; and thus to have
administered the appropriate relief The Roman law
(and the modern continental law has in a great mea-
sure followed it) authorized, as we have seen, any
partner to renounce such a partnership for any just
and reasonable cause. But then the sufficiency of that
cause was ultimately a matter for the decision of the
proper judicial tribunal ; and until that decision was
had, his act could be deemed nothing more than a pre-
liminary step, or conditional assertion of the right of
dissolution.'
§ 283. The Roman law also treated it as a clear
case of dissolution, where action was brought" by one
partner against the others, for an account of the part-
nership business, and a judgment passed accordingly.
[Societas) adione distrahiiur, cum aut stipuMione aut
judim mutata sit causa sodetatis. Proculus enim, aii, hoc
ipso, quod judicium ideo dictaium est, ut societas distrahiiur,
renunciatam societatem, sive totorum bonorum, sive unius rd
societas coita sit?
§ 284. In England and America no jurisdiction
lAnte, § 273,274,276; Pothier, de Society, n. 154; Civil Code of
France, art. 1871 ; Pothier, Pand. Lib. 17, tit. 2, n. 70.
a Dig. Lib. 17, tit. 2, § 65 ; Pothier, Pand. Lib. 17, tit. 2, n. 70.
CH. XIII.] DISSOLUTION OF PARTNERSHIP. 4 51
whatever exists, to decree a dissolution of a partner-
ship, for any cause whatsoever, in the Courts of Com-
mon Law. It is confided exclusively to Courts of
Equity ; and, indeed, as in many cases it must be a
matter resting in the sound discretion of the Court,
it seems most fit and proper to appropriate the juris-
diction to those tribunals which constantly exercise a
very large discretion in matters ex cequo et bono} This
was precisely the case in suits in the Praetor's Forum ;
and for the most part it now also belongs to the higher
tribunals of the different nations of continental Europe,
where the strict distinction between law and equity, so
well recognised in our municipal jurisprudence, is
either unknown, or is repudiated. The principal dis-
tinctions as to the exercise of this jurisdiction between
our Courts of Equity and the tribunals of continental
Europe, seem to be these. In the first place, in the
latter tribunals, it is competent for one partner, in any
case and at any time, to renounce the partnership sub
modo, although not absolutely for any reasonable cause,
which afterwards shall be sanctioned and approved by
the proper tribunal ; whereas, in our law, (as has been
already suggested,)^ a previous decree of the Court is
necessary, however reasonable the cause may be.® In
the next place, in the Roman law and in the modern
foreign law, certain causes are deemed ij)so facto to
amount to an actual dissolution ; whereas, in our law,
they furnish proper grounds only for a decree of disso-
lution. This will become more apparent in the subse-
quent pages.
1 1 Story on Eq. Jurisp. § 673 ; 3 Kent, Comm. Lect. 43, p. 60, 4th
edit.
a Ante, § 273, 274, 276.
3 Gow on Partn. ch. 5, § 1,'p. 221, 3d edit.
452 PARTNERSHIP. [CH. XIII.
§ 285. The jurisdiction exercised by our Courts of
Equity, to decree a dissolution of the partnership,
during the term for which it was originally entered
into, is of a most extensive and beneficial Mature, and
has the strongest tendency to prevent irremediable
injuries, and often utter ruin to some of the partners.
It may be exercised, as has been already suggested, in
the first place, to declare partnerships utterly void ab
initio ^ and, in the next place, to decree a dissolution
from the time of the decree.^ The former remedial
justice is usually applied to cases where there was
fraud, imposition, misrepresentation, or oppression in the
original agreement for the partnership.^ The latter
may arise in very different classes of cases, and be
affected by. very different considerations.
§ 286. Let us then proceed to the examination, in
their order, of the various causes for which a Court of
Equity will, or at least may, decree a dissolution of a
partnership which was unobjectionable in its origin.
They may be distributed under two general heads;
(1.) Causes arising subsequently to the formation of
the contract, founded upon the alleged misconduct, or
fraud, or violation of duty of one partner ; (2.) ^Causes
arising subsequently to the formation of the contract,
where no blame, laches, or impropriety of conduct,
necessarily attaches to any of the partners.
§ 287. Under the first head, that of the misconduct,
fraud, or violation of duty by a partner, it is proper to
1 Ante, § 282.
2 Ante, § 6 ; 1 Story, Eq. Jurisp. § 222, 240 ; CoUyer on Partn. B. 2,
ch. 3, § 7, p. 244, 2(1 edit; Gow on Partn. ch. 3, ^ 1, p. 107, 3d edit.;
Hynes t>. Stewart, 10 B. Monr. 429. See Lord Eldon's remarks in Tat-
tersall v. Grobte, 2 Bos. & Pull. 131, 135; Colt v. WoUaston, 2 P. Will.
154 ; Green v. Barrett, 1 Sim. R. 45.
CH. XIII.] DISSOLUTION OF PAKTNERSHIP. 453
observe, that it is not -for every trivial departure from
duty, or violation of the articles of partnership, or for
every trifling fault or misconduct, that Courts of Equity
will interfere and decree a dissolution. Thus, for
example. Courts of Equity vfill not interfere in cases
of mere defects of temper, casual disputes, differences
of opinion, and other minor grievances, which may be
somewhat inconvenient and annoying, but do not essen-
tially obstruct or destroy the ordinary rights, interests,
and operations of the partnership.-'
§ 288. On the other hand, if a case of gross mis-
conduct, or abuse of authority, or gross want of good
1 Collyer on Partn. B. 2, ch. 2, § ], p. 131, 2d edit.; Id. B. 2, ch. 3, § 3,
p. 193, 196 ; Goodman v. Whitcomb, 1 Jac. & Walk. 569, 572 ; W^ray v.
Hutchinson, 2 Mylne & Keen, 255'; 1 Story on Eq. Jurisp. § 673 ; Gow
on Partn. ch. 3, ^ 1, p. 114, 3d edit. — In Goodman v. W^hitcomb, (1 Jac.
& Walk. E. 569, 572, 573,) Lord Eldon said; "It may be- a question
whether the Court will not restrain a partner, if he has acted improperly,
from doing certain acts in future. But if what he has done does not give
the other party a right to have a dissolution of the partnership, what right
has the Court to appoint a receiver, and make itself the manager of every
trade in the kingdom? Where partners differ, as they sometimes do,
when they enter into another kind of partnership, they should recollect
that they enter into it for better and worse, and this Court has no juris-
diction to make a separation between them, because one is more sullen, or
less good-tempered than the other. Another Court, in the partnership to
which I have alluded, cannot, nor can this Court, in this kind of partner-
ship, interfere, unless there is a cause of separation, which in the one case
must amount to downright cruelty, and in the other, must be conduct
amounting to an entire exclusion of the partner from his interest in the
partnership. Whether a dissolution may ultimately be decreed, I will not
say; but trifling circumstances of conduct are not sufficient to authorize
the Court to award a dissolution. It is said, that the plaintiff has made
larger advances of capital than he was bound to do, and has received
none of the profits. But that is no ground for a dissolution. It is then
stated that the defendant has exchanged carpets for household furniture.
That may perhaps be an improper act; but still there may be a thousand
reasons why the Court should not do more than restrain him in future
from so doing, and more particularly when he states in his answer that he
did it because he thought it the best thing that could be done."
1
454 PARTNEESHIP. [CH. XIH.
•
faith or diligence, such as is and- must continue to be
productive of serious and permanent injury to the suc-
cess and prosperity of the business of the partnership,
or such as renders it impracticable to be carried on, or
as is positively ruinous to its interests. Courts of Equity
will promptly interfere, and decree a dissolution."
Habitual intoxication, gross extravagance, and gross
negligence, and rash and reckless speculation, in the
conduct of the business of the partnership, would pro-
bably lead the Court to a like result.^ To justify such
an extraordinary interposition, however, the Court
always expects a strong and clear case to be made out
of positive or meditated abuse.^ It is not sufficient to
show, that there is a temptation to such misconduct,
abuse, or ill faith ; but there must be an unequivocal
demonstration, by overt acts, or gross departures from
duty, that the danger is imminent, or the injury already
accomplished.* For minor misconduct and grievances,
if they require any redress, the Court ordinarily will
go no farther than to act upon the faulty party by way
of injunction.^
1 1 Story on Eq. Jurisp. § 673; CoUyer on Partn. B. 2, ch..3, § 3,
p. 195, 196, 2d edit.; Goodman v. Whitcomb, 1 Jao. & Walk. 569, 572,
673; Chapman v. Beach, 1 Jac. & Walk. 574, note; Waters r. Taylor,
2 Yes. & Beam. 299 ; Loscombe v. Russell, 4 Sim. K. 8 ; 3 Kent, Comm.
Leot. 43, p. 60, 61, 4th edit.; Gratz v. Bayard, 11 Serg. & Rawle, K. 41,
48, per Ch. Just. Tilghman; 1 Montagu on Partn. Pt. 3, ch. 1, p. 112;
Liardet v. Adams, cited in Waters v.. Taylor, 2 Ves. & Beam. R. 300,
304, and in 1 Montagu on Partn. Pt. 3, ch. 1, p. 99, and in Gow on Partn.
ch. 5, ^^1, p. 227, 3d edit.; Gow on Partn. ch. 3, ^ 1, p. Ill to 115, 3d
edit. See also Littlewood v. Caldwell, 11 Price, R. 97, 99; Watson on
Partn. ch. 7, p. 381, 382, 2d edit.; Smith v. Jeyes, 4 Beavan, K. 503.
2 Ibid. ; 2 Bell, Comm. B. 7, ch. 2, p. 634, 635, 5th edit.
3 See Smith v. Mules, 10 Eng. Law & Eq. R. 103.
* 2 Bell, Comm. B. 7, ch. 2, p. 634, 635, 5th edit.; Glassington v.
Thwaites, 1 Sim. & Stu. 124; Smith v. Jeyes, 4 Beavan, R. 503.
5 Ante, ^ 224 to 228, 287; Marshall v. Colman, 2 Jac. & Walk. 266;
CH. XIII.] DISSOLUTION OF PAETNERSHIP. 455
§ 289. The like doctrine is promulgated in the
Roman law ; which permits any partner, at his election,
Goodman v. Whitcomb, 1 Jac. & Walk. 566, 572, 573 ; Charlton v. Poul-
ter, 19 Ves. 148, note (c); Gow on Partn. ch. 3, § 1, p. Ill to (115, 3d
edit. — Mr. CoUyerhas summed up the whole doctrine on this subject in
the following terms. " Lord Thurlow once said, that as to misbehavior
in one of the partners, he did not see what line could possibly be drawn,
and what degree of misconduct was to be held a sufficient ground for
dissolving the partnership. Liardet v. Adams, 1 Mont. Partn. 112. And
certainly, a Court of Equity will not dissolve a partnership on slight
grounds ; as, for instance, because one partner may have conducted him-
self towards the other in an overbearing and insulting manner. ' The
Court,' to use Lord Eldon's expressions before adverted to^ ' having no
jurisdiction to make a separation between them, because one is more
sullen or less good-tempered than the other.' Goodman v. Whitcomb, I
Jac. & W. 592. See Wray v. Hutchinson, 2 Mylne & Keen, 235 ; Blake
V. Dorgan, 1 Iowa, 537. So, again, want of prudence or ability on the
part of the person seeking relief, is no just ground for a dissolution ; as,
where he has made larger advances of capital than he is bound to do, and
has received none of the profits. Goodman u. Whitcomb, «u^m. However,
it may with safety be laid down, that not only wilful acts of fraud and
bad faith, but gross instances of carelessness and waste in the administra-
tion of the partnership, as well as exclusion of the other partners from
their just share of their management, so as to prevent the business from
being conducted on the stipulated terms, are sufficient grounds for the dis-
solution of the contract by a Court of Equity. See Marshall v. Colman,
2 Jac. & W. 200 ; Goodman v. Whitcomb, 1 Jac. & W. 592 ; Chapman v.
Beach, Id. 594; Norway v. Rowe, 19 Ves. 148 ; Waters v. Taylor, 2 Ves.
& B. 304. So also it seems clear, that a habit on the part of one partner
of receiving moneys, and not entering the receipts in the books, or not
leaving the books open to the inspection of the other partners, whether
such conduct arises from a fraudulent intent or not, is good ground for a
dissolution. Goodman v. Whitcomb, 1 Jac. & W. 593. So if a partner
in a banking-house allows a customer to overdraw, and, by way of security,
takes bonds from the customer, executed to himself separately and not to
the firm, this is such misconduct as will warrant a Court of Equity in
decreeing a dissolution. Master v. Kirton, 3 Ves. 74; R. L. 1796, B. 428.
And although this relief will not be administered for mere defects of
temper in some of the parties, yet violent and lasting dissension seems to
be a ground upon which a Court of Equity will decree a dissolution ; as
where the parties refuse to meet each other upon matters of businesss, a
state of things which precludes the possibility of the partnership affairs
being conducted with advantage. De Berenger v. Hammell, 7 Jarm.
456 PARTNERSHIP. [CH. XIII.
to renounce the partnership, whenever the objects of
the partnership aire no longer attainable, or the mis-
conduct of the other partner is so seriously injurious
or mischievous to the partnership, that it ought not to
be tolerated. Et ante tempus renuncidur, potest ratiomm
Mbere renundatio. Nee tenebitur pro socio, qui ideo renun-
tiavit, quia conditio qucedam, qua societas erat cdita, ei non
prcestatur, aut quid, si ita injuriosus aut damnosus socius
sit, ut non expediat eum pati} Such also is the French
law.^
§ 290. Let us now proceed to the other head, em-
bracing the decree of a dissolution of the partnership
for causes independent of any blame, laches, or impro-
priety of conduct, necessarily attached to any of the
partners. And here, in the first place, it will be a
sufficient ground to decree a dissolution, that there
exists an impracticability in carrying on the under-
taking for which the partnership was formed.^ This
may take place, either from the inability of one or all
of the partners from carrying into effect the terms of
the original contract ; or from the undertaking itself
being in its character visionary, or its operations abso-
lutely impracticable. The case of an Opera House,
Conv. p. 26. And it has been laid down, that though the Court stands
neuter with respect to occasional breaches of agreements between part-
ners, which are not so grievous as to make it impossible for the partnership
to continue ; yet when it finds that the acts complained of are of such a
character, that relief cannot be given to the parties except by a dissolu-
tion, the Court will decree a dissolution, though it is not specifically asked.
Per Sir L. Shadwell, 4 Sim. 11." See also the language of Mr. Chancel-
lor Kent on the same subject, 3 Kent, Comm. Lect. 43, p. 60, 61, 4th
edit. ; Gow on Partn. ch. 5, § 1, p. 227, 3d edit.
1 Dig. Lib. 17, tit. 2, 1. 14 ; Pothier, Pand. Lib. 17, tit. 2, n. 68.
2 See Duvergier, Droit Civil Franc. Tom. 5, § 447 to 452.
3 CoUyer on Partn. B. 2, ch. 8, ^ 3, p. 199, 200, 2d edit.; Gow on
Partn. ch. 5, ^ 1, p. 226, 227, 3d edit.
CH. Xni.] DISSOLUTION OF PARTNERSHIP. 457
where the conduct of the parties rendered it impossible
to carry it on upon the terms originally stipulated, may
serve to illustrate the former part of the position.^
' Waters v. Taylor, 2 Ves. & Beam. 299; Griswold v. Waddington,
16 Johns. K. 438, 491 ; Duvergier, Droit Civil Franc. Tom. 5, § 420 to
428; Id. § 446 to 449. — In Waters v. Taylor, Lord Eldon said; "The
real (Question here is quite different from Adams v. Liardet ; which I take
to be that in which Lord Thurlow's opinion was expressed. This ques-
tion is, whether from the acts of Taylor himself, it is not manifest, that
this partnership cannot be carried on upon the terms for which the parties
engaged ; whether a single act has been done by him of late, that is not
evidence on his part, that he can no longer himself be bound by his con-
tract, so as to observe the terms of it ; when he excludes himself from the
concern and the partnership, as far as it is to be conducted upon the terms
on which it was formed, and says he will carry it on upon other terms.
Taking that to be his conduct, this comes to the common case of one part-
ner excluding the other from the concern ; as if one will not, because he
cannot, continue it upon the terms on which it was formed, the conse-
quence must be, that he says his partner shall not, because he cannot,
carry it on upon those terms. That is the true amount of this case. The
one cannot engage a performer without the other's consent; having
entered into stipulations only with reference to agreement, they have
given me no means of extricating tMem from the difficulties arising from
non-agreement. Suppose an opera at this time requires more than £300
per week, or a new exhibition more than £500,~if the plaintiff differs
upon that, what is a Judge to do but to look at the contract, as the only
thing the Court can act upon ? and if both parties agree that the contract
cannot be acted on, that furnishes the means of saying, there is an end of
it; and their interests' are to be regarded as if no such contract had existed.
The parties, by consent, determine that there is an end of the concern,
which cannot be carried on upon the terms stipulated ; and the Court
cannot substitute another contract." Mr. Chancellor Kent, in Griswold v.
Waddington, (16 Johns. K. 491,) said; "In speaking of the dissolution of
partnerships, the French and civil law writers say, that partnerships are
dissolved by a change of the condition of one of the parties, which disables
him to perform his part of the duty, as by a loss of liberty, or banishment,
or bankrutcy, or a judicial prohibition to execute his business, or by con-
fiscation of his goods. Inst. 3, 26, § 7, 8 ; Vinnius, h. t. 3, 26, 4 ; Huberus
in Inst. Lib. 3, tit; 26, ^ 6 ; Dig. 17, 2, 65 ; Pothier, Cont. de Soc. n. 147,
148; Code Civil, No. 1865; Diet, du Dig. par Thevenot Dessaules, Art.
Society, No. 56. The English law oi partnership is derived from the
same source ; and as the cases arise, the same principles are applied.
The jft^nciple here is, that when one of the parties becomes disabled to
PAETN. 39
458 PARTNERSHIP. [CH. XIII.
The latter part of the position may be readily illus-
trated in the not infrequent case, where the partnership
is to work a mine, which turns out to be wholly unpro-
ductive, and ruinous in its expenses ; or for the intro-
duction of a supposed newly invented machinery or
manufacture, which proves to be a mere delusion, or
incapable of being put into successful operation ; or
for any other scheme of trade or operation, which is a
mere bubble, or wild speculation, or is founded in
fundamental errors.^
§ 291. In the next place, a partnership may be dis-
solved by the decree of a Court of Equity, on account
of the inability or incapacity of one partner to perform
his obligations and duties, and to contribute his skill,
labor, and diligence in the promotion and accomplish-
ment of the objects of the partnership. This inability
or incapacity may arise in various ways ; and whenever
its direct tendency is either necessarily to frustrate, or
essentially to obstruct, or diminish, the objects of the
partnership, it would seem clear upon principle, that it
ought ' to furipsh a complete ground for a dissolution
by a court of justice ; for the further continuance of
the partnership must be productive of serious incon-
venience and injury to the other partners, and may end
in their irremediable ruin, or the utter prostration of
the enterprise.^
act, or when the business of the association becomes impracticable, the
law, as well as common reason, adjudges the partnership to be dissolved."
1 3 Kent, Comm. Lect. 43, p. 60, 4th edit. ; Baring v. Dix, 1 Cox, R.
213; Pierce v. Piper, 17 Ves. 1, and Buckley v. Cater, referred to in 17
Ves. 11, 15, 16, and in Beamont v. Meredith,-3 Vea. & Beames, 180, 181 ;
Keeve v. Parkins, 2 Jac. & Walk. 390 ; CoUyer on Partn. B. 2, ch. 3, ^ 3,
p. 193, 2d edit.; Barr v. Spiers, cited in 2 Bell, Comm'. 633, note (2,) 5th
edit.; Gow on Partn. ch. 5, ^ 1, p. 227, 3d edit.
2 3 Kent, Comm. Lect. 43, p. 62, 4th edit. ; Grow on Partn. ch. 5, ^ 1,
p. 221, 3d edit.; Duvergier, Droit Civil Franc. Tom. 5, § 446 to 450.
CH. XIII.] DISSOLUTION OF PAETNERSHIP. 459
§ 292. Hence, if one of the terms of the partnership
be, that the whole or a large portion of the capital
stock shall be furnished by one partner, and skill and
diligence are mainly relied on in the other, as the
active partner ; and after the partnership is actually
commenced, the partner who is to furnish the capital,
should by misfortune become wholly unable to furnish
it, or if the other partner who is to furnish the skill
and diligence, should be seized with a palsy, or any
other disease, which should permanently inca{)acitate
him from peijforming the required duties, such cir-
cumstances would seem to present a fit case for the
interposition of a Court of Equity to dissolve the
partnership.-^
' 3 Kent, Comm. Lect. 43, p. 62, 4th edit. ; Domat, B. 1, tit. 8, § 5,
art. 12; 2 Bell, Comm. B. 7, ch. 2, p. 634, 635, 5th edit. ; Crawshay v.
Maule, 1 Swanst. 514, the Eeporter's note ; Jones v. Noy, 2 Mylne &
Keen, 125, 129, 130; Wrexham v. Huddleston, 1 Swanst. K. 514, note;
Waters v. Taylor, 2 Ves. & Beames, B,. 299 ; Wray v. Hutchinson, 2
Mylnfe & Keen, 235, 238. — Vinnius (Comm. ad Inst. Lib. 3, tit. 26, ^ 8)
puts the doctrine in its true light, as to inability from poverty or misfor-
tune. — " Postremo etiam egestate unius socii societas solvitur, egestate
scilicet extrema, id est, bonorum omnium, aut tantum non omnium amis-
sione. Nam cum societas contrahatur bonorum in commune quserendorum
causa, non magis bonis sublatis societati locus esse potest, quam sublata
persona socii. Amittuntur bona aut civitate salva, veluti cessione, id est,
si socius, sere alieno oppressus, bonis suis creditoribus cesserit, eaque k
creditoribus distracta fuerint; ac tum etiam societatem dirimi placet, aut
civitate una cum bonis amissa, ut in specie prsecedente ; nam publicatione
bona amitti, ipsum verbum publicationis satis indicat ; eaque consideratione
ilia quoque ad hanc rationem dissolvendse societatis referri potest. Sed et
decoctione bona amittuntur et pereunt. Cseterum decoctione sola socie-
tatem solvi negat Straccha, nisi ea ad manifestam egistatem socium
redegerit. Non puto autem, quod hie traditur de dissolutione societatis
ob amissionem bonorum, locum habere eo casu, quo nihil pecuniae in
societatem coUatum est, aut quo ille, qui operam tantum contulit, bona
salva civitate amisit, nisi forte ob bona amissa speratam operam prsestare
nequeat." See also Voet ad Pand. Lib. 17, tit. 2, § 26, Tom. 1, p. 761.—
Mr. Bell has made the following striking remarks upon this subject. " In-
460 , PARTNERSHIP. [CH. XIII.
§ 293. The same doctrine is f^iUy borne out by the
true spirit and intendment of the Roman law, which
adopts the like provision, enabling any party to re-
nounce the partnership, whenever its objects are no
longer attainable. The passage already cited esta-
blishes this right, whenever the conditions of the part-
nership are not capable of being fulfilled, or the fruits'
thereof cannot be properly enjoyed.-' Quia conditio
capacity by disease. (1.) If the partnership prooeed»in reliance on such
aid from a partner, as any bodily illness he may be affected with may
prevent, it would seem to be a justifiable cause for having the partnership
judicially dissolved, or for renouncing the partnership, although there
should be a fixed term of duration not yet arrived. (2.) Insanity has the
efiect, not only of depriving the partner of the power of aiding the part-
nership by his exertions, but it prevents him from controlling, for his own
safety, the proceedings of his copartners. And, accordingly, where there
are two partners, both of whom are to contribute their skill and industry,
the insanity of one of them, by which he is rendered incapable of contri-
buting that skill and industry, seems to be a good ground to put an end to
the partnership. At the same time it may be observed, that these are
cases of infinite delicacy. There is no line of distinction by which it shall
be ascertained how long a term of inability shall justify measures of this
description. A broken leg, or an accidental blow, may incapacitate a
partner for a time as much as insanity, and the one may be as temporary
as the other ; and, perhaps the nearest approximation to be made to a rule
on the subject is, that a remedy and relief will be given only where the
circumstances amount to a total and important failure in those essential
points on which the success of the partnership dejpends. (3.) Cases may
be supposed of danger so imminent, from bad health, lunacy, habits of
intoxication, &c., as to make the continuance of the partnership likely to
prove ruinous to all concerned ; as in the case of uncontrollable habits of
intoxication in the partner of a gunpowder manufactory. In cases of this
description there can be no doubt that such perils will afford ground for
judicial interfeirence to dissolve the company. But it may be doubted,
whether they would not justify the other partners in entering the act of
dissolution in the books, to be followed up as soon as possible by judicial
measures ; for such a state of things may occur at the commencement of a
long vacation, when no proper opportunity can be had of dissolving by
judicial interposition." 2 Bell, Comm. B. 7, ch. 2, p. 684, 635, 6th edit.
1 Ante, § 273, 289.
CH. XIII.] DISSOLUTION OF PARTNERSHIP. 461
qucsdam, qua societas erat coita, d non prcestatur} Vel
quod ea re frui non liceoet, cujus gratiA negotiatio suscepta
sit? The same doctrine is applied to the case of a part-
ner who is grievously oppressed with debt, at least,
when it amounts to insolvency. Item si quis ex sociis
mole debiti prcBgravatus, bonis suis cesserit, et ideo propter
pvhlica aid privata debita substantia ejus veneat, sotvitur
societas? Another of the causes enumerated in that
law for a dissolution of partnership, is the absolute
poverty or total loss of the property of one partner.
Dissociamur egestate}
§ 294. Pothier fully recognizes the same doctrine.^
He also puts the corresponding case of the partner be-
coming paralytic, or otherwise infirm, whose skill and
diligence are relied on to conduct the business, or man-
ufacture the articles of the trade; and holds, that such
1 Dig. Lib. 17, tit. 2, 1. 14 ; Pothier, Pand. Lib. 17, tit. 2, n. 68 ; Ante,-
§273.
2 Dig. Lib. 17, tit. 2, 1. 15; Pothier, Pand. Lib. 17, tit. 2, n. 68;
Pothier, de Society, n. 152.
3 Inst. Lib. 3, tit. 26, § 8 ; Domat, B. 1, tit. 8, § 5, art. 12. — Domat has
in this place summed up the main principles of the Eoman law on all
these and the like incapacities. " If one of the partners (says he) is
reduced to such a condition, that he cannot contribute to the community
what he is 'obliged to furnish, whether in money, or in labor, the other
partners may exclude him from the society ; as, if his goods are seized on ;
if he has relinquished them to his creditors ; if he labors under any
infirmity or any other inconvenience that hinders him from acting ; if he
is excluded from the management of his concerns, as being a prodigal ; if
he falls into a frenzy. For in all these cases, the partners may justly
exclude from the partnership him, who, ceasing to contribute to it, ceases
to have a right to it. But this is to be understood only for the time to
come ; and the partner who may chance to be excluded for any one of
these causes, ought to lose nothing of the profits which may come to his
share in proportion to the contributions which he had already made."
* Dig. Lib. 17, tit. 2, 1. 4, § 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 54, 62 ;
Domat, B. 1, tit. 8, § 5, art 12.
5 Pothier, de Society, n. 141, 142, 148 ; Domat, B. 1, tit. 8, § 5, art. 12.
39*
462 PARTNERSHIP. [CH. XHI.
an occurrence constitutes a sufficient ground for a
dissolution.^ In each of these cases, however, the as-
serted inability, or incapacity, does not, either in the
Roman law, or the French law, constitute per se a posi-
tive dissolution ; but it only confers the right of elec-
, tion upon the other partners, to do so at their pleasure
by an-open renunciation.^ In this respect it is in per-
fect coincidence with the doctrine of the common law.
§ 295. An incapacity of a different sort, but which
leads directly to the same right of dissolution, is that
of insanity ; for it is obvious, that, under such circum-
stances, the business either cannot be carried on at all,
or not as beneficially for all the parties, as was con-
templated in the formation of the original partnership.
Indeed, theoretically speaking, as insanity amounts to
1 Pothier, de Society, n. 142, 152 ; Civil Code of France, art. 1871 ;
Domat, B. 1, tit. 8, j 5, art. 12.
2 Domat, B. 1, tit. 8, § 5, art. 12, and note. Ibid. ; Pothier, de Society,
n. 142, 152. — Pothier says; " The same thing may be said of the case of
an habitual infirmity or disease, ■which occurs to one of the partners. It
wUI be a just cause for him to renounce the partnership, if the business of
the partnership be such that it requires his personal attention." Pothier,
de Sooiete, n. 152. The Civil Code of France, (art. 1871) declares;
"Dissolution of partnerships for a term cannot be demanded by due of the
partners, before the term agreed, unless for just motives, as where another
partner fails in his engagements, or that an habitual infirmity renders him
unfit for the affairs of the partnership, or other similar cases, the lawfulness
and weight of which are left to the arbitration of Judges." Ante, § 274.
See also Code of Louisia;na, (1825,) art. 2858, 2859, which declares;
" Although the partnership may have been entered into for a limited time,
one of the partners may, provided he has a just cause for the same, dis-
solve the partnership before the time, even although inconveniences might
result for the partners, and although it might have been stipulated, that
the partners could not desist from the partnership before the stipulated
time. There is just cause for a partner to dissolve the partnership before
the appointed time, when one or more of the partners fail in their obligar
tions, or when an habitual infiirmity prevents him from devoting himself to
the affairs of the partnership, which require his presence or his personal
attendance."
CH. XIII.] DISSOLUTION OF PABTNERSfflP. 463
a positive incapacity of the party to contract during
its continuance, and as tlie supposed agency and au-
thority given by each partner to the others to transact
the business of the partnership in the name of all, may
be deemed during the like period to be suspended or
revoked,^ the natural conclusion would seem to be, that
' Story on Agency, § 481. — The following note, appended to that
section, may not be unimportant upon the point here under consideration.
" This is clear, where the party's lunacy is established under an inquisi-
tion, or where he is put under guardianship. But some doubt seems to be
entertained, whether, before such inquisition or guardianship, there is any
implied suspension or revocation of the agent's authority. Mr. Bell, (1
Bell, Comm. § 413, p. 395, 396, 4th edit. ; Id. p. 489,.5th edit.) considers
insanity, not so established, to be no suspension or revocation of the
authority. He says ; ' Insanity is to be judged of differently. There is
here neither an implied natural termination to the authority ; nor is there
an existing will to recall the former appointment ; nor is the act notorious,
by which the public may be aware of such failure of capacity. It was to
this interesting question chiefly, that the metaphysical discussion, to which
I have ajready aUuded, was applied. But the strong practical ground of
good sense, on which the question was disposed of, as relative to the pub-
lic, was, that insanity is contradistinguished from death by the want of
notoriety ;^ that all general delegations of power, on which a credit is once
raised with the trading world, subsist in force to bind the grantor, till
recalled by some public act or individual notice ; and that, while they con-
tinue in uninterrupted operation relied on by the public, they are, in law,
to be held as available generally; leaving particular cases to be distin-
guished by special circumstances of mala fides. The question does not
appear to have occurred in England ; but the opinion of very eminent
English counsel was taken in a case, which was tried in Scotland, and
they held the acts of the procurator to be effectual to the public against
the estate of the person by whom the procuratory was granted.' He
states, in his note (1), the Scottish case, in the following words ; ' Pollock
against Patterson. The case in which this question occurred to be tried,
was compromised, and I had imagined was not reported. But after I had
prepared a note from my own papers, to subjoin here, I found the case
well and ably reported in the Faculty Collection, to which I refer the
reader. The opinions of the Judges are peculiarly worthy of perusal ; not
being confined to the narrow state of the question, as it occurred techni-
cally, but extending to a large and comprehensive discussion of the gene-
ral question, as to the effect of insanity on such powers. 10th December,
1811, 14 Fac. Coll. 369.' In note (2), he refers ta the opinions of coun-
464 PAETNERSHIP. [CH. XHI.
no valid act can ba done, or contract can be made,
during the insanity of any partner, which should be
binding upon the partnership. The common law, how-
ever, does not in this respect follow out the theoretical
principle; but, upon grounds of public policy or con-
venience, holds, that insanity does not ordinarily per se
amount to a positive dissolution of the partnership;
but only to a good and sufficient cause for a Court of
Equity to decree a dissolution.^ We say ordinarily;
sel taken in England, in these words ; ' After stating the terms of the
procuration, as on this and the preceding page, and that, after the insanity
of the grantor, the procurator had continued to carry on the business of a
banker for the principal, the question put was, Whether, in these circum-
stances, the transactions of Mr. John Patterson, under his father's procu-
ration, are good to those who transacted with him from the date of it to
the period of stopping.' The answer by Sir Vicary Gibbs, (afterwards
Lord Chief Justice of the Common Pleas,) Sir Samuel Eomilly, and
Mr. Adam, (now Lord Chief Commissioner of the Scottish Jury Court,)
was, ' We think they are good.' Mr. Chancellor Kent, in his pommen-
taries, inclines to the same opinion. 2 Kent, Comm. Lect. 41, p. 645, 4th
edit. Would a deed or sale, executed personally by a party manifestly
insane at the time, be valid ? If not, can his agent be in a better con-
dition ? "
' Sayer v. Bennet, 1 Cox, R. 107 ; Pearce v. Chamberlain, 1 Ves. R.
34, 35 ; Leof v. Coles, 12 Eng. Law & Eq. R. 117 ; Wrexham v. Huddle-
ston, 1 Swanst. R. 514, note, and see Ibid, the Reporter's note ; Waters v.
Taylor, 2 Ves. & Beames, 299, 302, 303 ; Kirby v. Carr, 3 Younge &
Coll. B. 184 ; Jones v. Noy, 2 Mylne & Keen, 125 ; 1 Story on Eq. Jurisp.
§ 673 ; 3 Kent, Comm. Lect. 43, p. 58, 4th edit. ; Watson on Partn. ch.
7, p. 382, 2d edit. ; Griswold v. Waddington, 15 Johns. R. 57, per Mr. Ch.
Just. Spencer. — In Sayer u. Bennet, (1 Cox, 107,109,) Lord Kenyon
(then Master of the Rolls) said ; " I think, indeed, it may be laid down as
a general rule (without considering the particular circumstances of the
case,) that when partners are to contribute skill and industry, as well as
capital, if one partner becomes unable to contribute that skill, a Court of
Equity ought to interfere for both their sakes ; for both have stakes in the
partnership^ and are interested in having it carried on properly ; and the
Court ought to see, that the property of the party, unable to take care of
himself, should be taken care of for him. It appears, that few people care
to leave the management of their property to other persons ; and as a
lunatic has no power of managing his own property, so a Court of Equity
CH. XIII.] DISSOLUTION OF PARTNERSHIP. 465
for, where the insanity has been positively ascertained,
under a commission of lunacy, or by the regular judi-
■will not deliver it to persons to whom the party himself has not committed
it. If, therefore, the defendant continued in the same situation as he has
been, I should have no difficulty in saying that the partnership ought to
be dissolved, though there may be no precedent for the purpose. As to
•what is said with fespeet to a substitute for defendant, that ia what Sayer
never intended by the partnership ; he never meant to take a partner from
a Court of Equity. The next thing is, how far his present situation ought
to influence the Court. I think I may say, that, if it were clearly estab-
lished, that Bennet had recovered his senses, and there was no probability
of a relapse, it would be too much to dissolve the partnership ; (nor if it
were otherwise, could this Court dissolve it with a retrospect to the time
of the disorder's commencing ; for as his capital has been embarked, dur-
ing all that time, he must have the profits of it.) If I was clearly satis-
fied, that Bennet was restored to a sound mind, and could afibrd the
proper assistance to Sayer, the partnership ought not to be dissolved. In
Huddleston's case it does not appear, what was the extent of the dejection
of mind. Everybody knows that it is very frequent for persons once mad
to recover. And in this case I cannot find what the apothecary forms his
opinion upon, as to the likelihood of Bennefs recovery. I am astonished
that neither party examined Dr. Monro ; he ought to have had frequent
and recent opportunities of seeing him. Every lunatic is supposed to have
lucid intervals; audit might be, that these were selected for his being
seen by these witnesses ; at least it is not made to appear sufficiently to
me. His family, with whom he has lived, ought to have stated it. Under
these circumstances I have great difficulty. On the principle I have no
doubt ; but I cannot tell how the circumstances apply. I must, therefore,
direct a new kind of inquiry, which is, the Master must inquire whether
Bennet is now in such a state of mind as to be able to conduct this busi-
ness in partnership with Mr. Sayer, according to the articles of copartner-
ship ; for if he has merely a ray of intellect, I ought not to reingraft him
in his partnership, and that in mercy to both, for the property of both is
concerned ; and he who cannot dispose of his property by law, must be
restrained here. I have, therefore, no manner of doubt of the principle."
In Waters v. Taylor, (2 Ves. & Beames, 299, 302, 303,) Lord Eldon said ;
"It was supposed, that I had contradicted Lord Kenyon's doctrine in
Sayer v. Bennet. Certainly I did not contradict that doctrine ; nor did I
make any decree, which, duly considered, was an assent to it. The case
was no more than this ; one partner becoming a lunatic, the others thought
proper by their own act to put an end to the partnership ; which they had
no right to do, if he had been sane ; and they continued to carry on the
business with his capital ; not being able to state, what was his, as a ore-
466 PAETNEESfflP. [CH. XHI.
cial appointment of a guardian to the lunatic, it may
deserve consideration, whether it does not ipso facto
ditor, and what was not his, as a partner. That, Lord Kenyon thought,
afforded a sufficient ground for saying the partnership was not determined ;
and he also held, that one partner cannot, on account of the lunacy of
another, put an end to the partnership ; but that object must be attained
through the decree of a Court of Equity. My decisioh was not intended
either to support or impeach that, proceeding upon the particular circum-
stances of the case before me. The question, whether lunacy is to be con-
sidered a dissolution, is not before me. I shall therefore say no more
upon it, than this. If a case had arisen, in which it was clearly estab-
lished, as far as human testimony can establish, that the party was what
is called an incurable lunatic, and he had by the articles contracted to be
always actively engaged in the partnership, and it was therefore as
clear as human testimony can make it, that he could not perform his
contract, there could be no damages for the breach in consequence of the
act of God. But it would be very difficult for a Court of Equity to hold
one man to his contract, when it is perfectly clear that the other could not
execute his part of it. It will be quite time enough to determine that
case, when it shall arise ; for, as we know that no lunacy can be pro-
nounced incurable, yet the duration of the disorder may be long or short ;
and the degree may admit of great variety. I would not, therefore, lay
down any general rule by anticipation, speculating upon such circum-
stances. I agree with Lord Thurlow, that the jusisdiction is most difficult
and delicate, and to be exercised with great caution.'' In Jones v. Noy,
(2 M. & K. 125, 129, 130,) Sir John Leach (Master of the Rolls) said;
" It is clear upon principle, that the complete incapacity of a party to an
agreement to perform that which was a condition of the agreement, is a
ground for determining the contract. The insanity of a partner is a
ground for the dissolution of the partnership, because it is immediate inca-
pacity ; but it may not, in the result, prove to be a ground of dissolution,
for the partner may recover from his malady. When a partner, therefore,
is affected with insanity, the continuing partner may, if he think fit, make
it a ground of dissolution. But in that case, I consider with Lord Ken-
yon, that, in order to make it a ground of dissolution, he must obtain a
decree of the Court. If he does not apply to the Court for a decree of
dissolution, it is to be considered that he is willing to wait to see whether
the incapacity of his partner may not prove merely temporary. If he
carry on t^e partnership business, in the expectation that his partner may
recover from his insanity, so long as he continues the business with that
expectation or hope, there can be no dissolution." See also Gow on Partn.
ch. 5, ^ 1, p, 221, 3d edit ; Besch v. Frolick, 1 Phill. Ch. R. 172 ; Sander
V. Sander, 2 CoUyer, R. 276.
CH. Xin.] DISSOLUTION OF PARTNEESmP. 467
amount to a clear case of dissolution of the partnership
by operation of law ; since it immediately suspends
the whole functions and rights of the party to act per-
sonally.^ The Roman law seems fuUy to have inculca-
ted the same doctrine, upon the ground that a madman
has no capacity to contract.^
§ 296. Under the Roman law the other partners
not only had a right to renounce the partnership,
where any one of the partners was a prodigal or a
madman, if he was put under guardianship on account
of his prodigality or insanity; but his guardian also
was clothed with the like authority, which, however,
as he was at liberty to exercise it as his election, does
not seem to have been understood as amounting per se
to a dissolution.^ Sancimus, (says the Code) veferum
duMtatione semotd, licentiam habere furiosi euratorem dis-
solvere, si maluerit societatem furiosi, et sociis licere d re-
1 Story on Agency, ^ 481. — Mr. Collyer (CoUyer on Partn. B. 2, oh.
3, § 3, p. 195, 2d edit.) seems to think'that a decree for a dissolution is
still necessary, notwithstanding a commission of lunacy has found the
partner a lunatic. The case of Milne v. Bartlett, cited by him from The
-Jurist, (Eng.) Vol. 3, p. 358, certainly seems to support the view which
he takes of the subject. But, at the same time, it cannot escape observa-
tion, that the point was not made at the Bar, and that the decree would
have been equally correct, if it had proceeded to decree an~ account upon
the ground that the dissolution was already complete. I confess myself
to have diflScnlty in comprehending how a partnership can still exist, after
one partner is put under guardianship by reason of insanity. See also
Duvergier, Droit Civil Frang. Tom. 5, tit. 9, § 443 to 446.
^ In negotiis contrahendis alia causa habita est furiosorum, alia eorum,
qui fan possunt, quamvis actum rei non intelligerent ; nam furiosus nullum
negotium contrahere potest ; pupillus omnia, tutore auctore, agere potest.
(Dig. Lib. 50, tit. 17, 1. 5.) Furiosi, vol ejus cui bonis interdictum sit,
nulla voluntas est. (Dig. Lib. 50, tit. 17, 1. 40.)
3 Domat, B. 1, tit. 8, § 5, art. 12, 13.
4 Cod. Lib. 4, tit. 37, 1. 7; Pothier, Pand. Lib. 17, tit. 2, n. 67 ; Domat,
B. 1, tit. 8, § 5, art. 12, 13.
468 PARTNERSHIP. [CH. XIII.
§ 297. But although insanity may thus constitute
a sufficient ground to justify a Court of Equity in de-
creeing a dissolution ; yet we are to understand this
doctrine, and indeed, all other cases of personal infir-
mity or disability, in a qualified sense, and with its
appropriate limitations. It is not the mere fact of the
existence of such insanity, infirmity, or other disability,
supervening, that will justify the Court in the applica-
tion of such an extraordinary remedy. But it must
be of such a character, as amounts to a permanent or
confirmed disqualification to perform the duties of the
partnership. If the insanity, or infirmity, or other
disability, be ■ of a temporary or fugitive nature ; if it
be merely an occasional malady, or accidental illness,
or an insanity, admitting of long lucid intervals, or
mild and gentle in its character, amounting to little
more than a dejection of mind ; if there be a fair
prospect of recovery within a reasonable time ; then,
and in such cases, there is no fit ground for a Court
of Equity to decree a dissolution ; for every partner-
ship must be presumed to be entered int(i, subject
to the common incidents of life, such as temporary
illness, infirmity, or insanity.-' The case must' be far
more stringent; the hope of a recovery. must be re-
mote ; the character of the disease must be permanent
and confirmed; and the impracticability of resuming
the partnership duties, until after a period of indefinite
and doubtful duration, must be apparent and decisive.^
I 2 Bell, Comm. B. 7, ch. 2, p; 634, 5th edit.
S Gow on Partn. ch. 5, § 1, pu 221, 222, 3d edit. ; Id. Suppl. 1841, p.
64 ; Watson on Partn. ch. 7, p. 382, 2d edit. ; Jones v. Noy, 2 Mylne &
K. 125. — Mr. Gow has well said ; "But, as the duration of the disorder
may be protracted or circumscribed, and the degree may admit of variety,
it is imp'ossible speculatively to lay down any general rule on the subject ;
CH. Xm.] DISSOLUTION OF PAETNERSHIP. 469
Even when a Court of Equity will, on account of the
insanity of a partner, dissolve the partnership, it will
not give a retrospective effect to its decree, by carry-
ing hack the dissolution to the time when the insanity
commenced, or even to the time of filing the bill ; but
it will generally confine the dissolution to the time of
the decree.^
[§ 297 a. But where by articles the partnership
between two persons was to be dissolved on either
party giving the other six months' notice ; and one of
the parties becoming deranged in his intellect, the
other gave the required notice ; the partnership was
declared to have been dissolved in pursuance of the
notice, and not merely from the time of the decree, not-
withstanding the insanity of the party to whom it was
addressed.^]
§ 298. There may be, and indeed are, various other
circumstances and changes of state or condition which
may, in like manner, justify a Court of Equity in dis-
solving a partnership ; such, for example, as in the
cases already hinted at,^ of the long absence of one
partner in the public serAdce ; or his protracted ab-
sence abroad for mere personal or private objects ; or
since such a rule, iu its application, must vary according as the malady is
either confirmed insanity, or mere temporary illness, or dejection of mind,
' and according as the prospect of recovery is speedy or remote. Each case
must be governed and decided by its own peculiar circumstances. How-
ever, whatever may be the nature of the disorder, one partner cannot, in
consequence of such an affliction, put an end to the partnership by his
own act ; that object can only be attained through the medium of the de-
cree of a Court of Equity." Sadler v. Lee, 6 Beavan, R. 324.
1 Besch V. Frolick, 1 Phill. Ch. R. 172, 176; Sander ». Sander, 2 Col-
Iyer, R. 276.
s Robertson v. Lockie, 15 Simons, R. 205. See also Bagshaw v. Par-
ker, 10 Beavan, R. 532.
3 Ante, § 274, 291, 292.
PABTN. 40
470 PAETNERSHIP. [CH. Xm.
his change of domicile to another state or country;^ or
his voluntary engagement in any other incompatible
pursuits. In all such cases, if the business and inter-
ests of the partnership will be thereby materially ob-
structed, or suspended, or interfered with, to the preju-
dice of the other partners, it wiU. furnish a just and
reasonable cause for a Court of Equity to dissolve the
partnership. The Roman law on this point speaks a't
once the language of common sense and public conve-
nience.^ There are other incapacities and disabilities,
which operate, ipso facto, a dissolution of the partner-
ship, without any intervention of a Court of Justice ;
but these will come properly under consideration, when
we treat of the cases of dissolution by mere operation
of law.
§ 299. Analogous to the cases of a dissolution by the
decree of a Court of Equity, is that of a dissolution
which is adjudged by the award of arbitrators, upon a
proper submission of the case to them by the consent
of all the partners. Where there is a direct submission
of the very question to arbitrators by the express terms
of the submission, there does not seem to be any, the
slightest difficulty, in holding, that an award in the
premises, directly awarding a dissolution, will, «/>so/«c^o,
if unimpeached and unimpeachable, amount to a posi-
tive dissolution.^ And this is so for two reasons ; the
one of which is, that it is competent, in point of law,
' See Whitman v. Leonard, 3 Pick. K. 177, 179. [Explained and lim-
ited in Arnold v. Brown, 24 Pick. 94.]
2 Dig. Lib. 17, tit. 2,1. 16; Pothier, Pand. Lib. 17,tit.2, n. 68 ; Pothier,
de Society, n. 152.
3 Watson on Partn. ch. 7, p. 383, 884, 2d edit; ; CoUyer on Partn. B.
2, ch. 2, § 2, p. 152, 153, 2d edit. ; Gow on Partn. ch. 5, § 1 , p. 230, 3d
edit. ; Heath v. Sansom, 4 Barn. & Adol. K. 1 72 ; Street v. Eigby, S
Ves. 815.
CH. Xm.] DISSOLUTION OF PARTNERSHIP. 471
for the arbitrators to make such an award obligatory
upon the parties, as the decree of a tribunal of their ,
own choice.^ The other is, that the dissolution of the
partnership may properly be treated, as made with the
consent of all the partners.^
§ 300. The question, however, may arise, and, in-
deed, has arisen, whether, when the arbitrators have
not, in express terms, awarded a dissolution, it may
nevertheless be implied from the very nature and
operation of the actual clauses of the award itself?
And it has been held, that it may, if the award admits
of no other just and reasonable interpretation. Thus,
for example, if it is awarded by the arbitrators, that
the affairs of the partnership shall be wound up, or
that all the partnership property shall be sold and de-
livered to the partner, who shall become the purchaser ;
or that one partner shall take all the property and
pay all the debts of the partnership ; in these and the
like cases, it seems to be clear, that a dissolution of
the partnership is positively intended by the arbitra-
tors.^
§ 301. The only other important question of a prac-
tical nature under this head is. What terms in the
submission will amount to an implied authority to the
arbitrators to dissolve the partnership ? Thus, for ex-
ample, where all matters in difference between the
partners are referred to arbitrators, if they should
award a dissolution of the partnership, it may be made
a question, whether the arbitrators, by such an award,
1 Heath v. Sansom, 4 Barn. & Adol. 172.
2 Ibid.
3 Heath ». Sansom, 4 Barn. & Adol. 172; Byers v. Van Deusen, 5
Wend. R. 268.
472 PARTNERSHIP. [CH. Xni.
have not exceeded their authority. In a case of this
sort, the Court held, that under such a submission it
was clearly within the scope of the authority of the
arbitrators to award a dissolution of the partner-
ship.-^
§ 302. We come, in the next place, to the considera-
tion of the dissolution of partnership by mere operation
of law. And this is divisible into various heads. (1.)
Dissolution by the change of the state (status) or con-
dition of one or more of the partners. (2.) Dissolution
by the transfer of the property of one or more of the
partners, by their own act, or by the act of the law.
(3.) Dissolution by the bankruptcy and insolvency of
"one or more of the partners. (4.) Dissolution by a
public war between the countries, of which the partners
are respectively subjects. (5.) Dissolution by the death
of one or more of the partners. These heads may seem
somewhat to run into each other ; but a distinct con-
sideration of them, in the order stated, may enable us
to see the principles applicable to each in a more exact
and comprehensive manner, than could otherwise be
conveniently done.
§ 308. And first, as to dissolution by the chsfiige of
the state or condition of one or more of the partners.
This, of course, must arise, whenever the incapacity
further to act, sui juris, results by operation of law from
such change of state or condition. To this head we
might refer the case of persons, who, being partners?
are put under actual tutelage or guardianship, and are
by the local law disabled to act, std juris ; such as per-
sons becoming insane, idiotic, spendthrifts, or otherwise,
from excessive weakness or vice, being placed under
1 Green v. Waring, 1 Wm. Black. R. 475.
CH. XIII.] DISSOLUTION OP PARTNERSfflP. 473
tutelage or guardianship;^ for the continuance of the
partnership contract would seem necessarily founded
upon the personal capacity of the partner to act and
bind himself in the partnership transactions. We have
already seen how this subject is dealt with in the Ro-
man and foreign law.^
§ 304. So, again, the same result will arise at the
common law, where a party has lost his capacity to
act sui juris, by reason of his outlawry, or conviction
and attainder of felony, or treason.* These two last
cases are not only founded upon the personal inca-
pacity of the parties ; but also upon the further con-
sideration, that by the attainder the crown becomes
entitled to all the partnership effects, by virtue of its*
prerogative ; that is to say, to the moiety or share of
the convict-partner, by way of forfeiture ; and to the
moiety or shares of all the other innocent partners,
upon the extraordinary (if it does not deserve the
stronger epithets of extravagant and oppressive) tech-
nical doctrine, that it is beneath the dignity of the
crown to become a joint tenant, or a tenant in com-
mon with a subject, and, therefore, the king shall take
the whole by his prerogative.* No such doctrine has
*
1 Ante, § 295, 296; Domat, B. 1, tit. 8, § 5, art. 12, 13 ; Cod. Lib. 4,
tit 37, 1. 7 ; Pothier, Pand. Lib. ) 7, tit. 2, n. 67 ; 2 Bell, Comm. B. 7,
ch. 2, p. 634, 635, 5th edit. ; Griswold v. Waddington, 16 Johns. K. 438,
491.
2 Ante, § 295, 296.
3 Collyer on Partn. B. 1, ch. 2, § 2, p. 71, 2d edit.
* Collyer on Partn. B. 1, ch. 2, § 2, -p. 71, 72, 2d edit.; Watson on
Partn. ch. 6, p. 377, 2d edit. ; Gow on Partn. ch. 5, § 1, p. 216, 217, 3d
edit. — Mr Watson (p. 377, 378) has stated the reasons of the doctrine,
and its hardship, in the following terms ; " Before concluding this chapter
upon the death of partners, it may be proper to consider the consequences
of one partner becoming civilly dead, by outlawry or by attainder for
treason or felony. The outlaw or convict, being dead in law, incapable
40*
474 PARTNERSHIP. [CH. XHI.
ever been promulgated in America ; and even in Eng-
land it has become obsolete in practice, although it is
of entering into any contract, bringing any suit, or holding any property,
it is clear, that a partnership, in which he was, is ipso facto dissolved.
He is as incapable of the functions of a partner in trade, as if the breath
had left his body. The effects of his delinquency are extremely severe
ilpon his copartner, who remains a good and lawful man. And here is
one of those instances, in which by our law the innocent suffer with the
guilty ; which rather shock us at first sight, but which may be well con-
trived for the prevention of crimes, and the general good of the common-
wealth. Upon the outlawry or attainder of one partner, all the partnership
effects become vested in the crown. The share of the partner outlawed
or attainted is, in; the first place, forfeited to the crown ; whereby, if the
king were capable of being so, he would become joint tenant or tenant in
common of the partnership effects with the other partner ; but as this
would be inconsistent with the dignity of the monarch, he is strictly en-
titled to the whole. Sir Wm. Blackstone says ; ' The king cannot have
a joint property with any person in one entire chattel, or such a one as
is not capable of division or separation. But where the titles of the king
and the subject concur, the king is entitled to the whole ; in like manner,
as the king cannot, either by grant or contract, become a joint tenant of a
chattel real with another person; but by such grant or contract shall
become entitled to the whole in severalty. Thus, if a horse be given to
the king and a private person, the king shall have the sole property ; if a
bond be made to the king and a subject, the king shall have Jhe whole
penalty ; the debt or duty being one single chattel ; and so if two persons
have the property of a horse between them, or have a joint debt owing
them on bond, and one of them assigns his part to the king, or is attainted,
whereby his moiety is forfeited to the crown, the king shall have the en-
tire horse and entire debt. For, as it is not consistent with the dignity of
the crown to be partner with a subject, so'neither does the king ever lose
his right in any instance ; but, where they interfere, his is always preferred
to that of another person. From which two principles it is a necessary
consequence, that the innocent, though unfortunate partner, must lose his
share in both the debt and the horse, or in any other chattel in the same
circumstances.' One good effect of this doctrine, with regard to partner-
ship, is, that it may render a man cautious as to the persons with whom he
forms this relation, and that it renders it his interest to strive to preserve
them in the path of loyalty and virtue. Besides ; although such are the
strict rights of the crown, in the mild spirit of modern times, they are not
likely ever to be enforced, either against creditors or deserving partners."
This is perhaps the best apology which can be made for the doctrine ; but
it is impossible to disguise either its gross injustice, or its mischievous tend-
CH. XIII.] DISSOLUTION OP PARTKEESHIP. 475
still a subsisting prerogative, wliich may spring upon
and produce the ruin of the innocent and unwary-
partners.
I 305. The same result, (that is, a dissolution of the
partnership,) without any of the odious features at-
tached to prerogative, is, under the like circumstances,
fully established in the Roman and foreign law, when-
ever, by a change of the state or condition, any one of
the partners is disabled from the performance of the
appropriate deities of the partnership, as by the loss
of his personal liberty and power of action by banish-
ment, or by bankruptcy, or by insolvency, or by a
judicial prohibition to act in his business, or by a eon-
fiscation of his property, or by his civil death.^ In the
Roman law a distinction was taken between the cases
of great, and intermediate, and of small disabilities.
The two former dissolved the partnership ; the latter
did not. Pariter (says Pothier, quoting the Digest)
solvitur societas capitis diminutione socii maxima aut media.
Mnc, " PubUcatione quoqiie distrahi societatem diximus.
Qiwd videtur spectare ad universorum bonorum publicor
tionem, si socii bona publicentur. Nam cum in ejus hcum
alius suecedat, pro mortuo habetur." ^ Minima autem cap-
itis diminutione non solvitur. Quocirca, " Si fiUusfamilias
societatem coierit, deinde emancipatus a patre fuerit^ apud
Julianum quceriiur, an eadem societas, duret, an vero alia
sit, si forte post emancipationem in societate duraium est ?
Julianus scripsit, (Libro 14 Digestorum,) eamdem socieia-
ency. Why should innocent persons be at the mercy of the crown, whether
they are to be involved in positive ruin or not? The case of the late Mr.
Fauntleroy would afford a striking instance of the terrific results of such
a prerogative."
' See Griswold v. Waddington, 16 Johns. R. 4S8, 491.
3 Dig. Lib. 17, tit. 2, 1. 65, § 12 ; Pothier, Pand. Lib. 17, tit. 2, n. 61.
476 PARTNERSHIP. [CH. XHI.
tern durare ; inUium enim in his contractibus impiciendum.
Duabus autem actionibus agendum esse, una adversus pa-
trem, altera adversus filium ; cum patre, de eo, cujus dies
ante emancipationem cessit ; nam ejus temporis, quo post
emancipaiwnem societas duravit, nihil prcestare patrem
oportet ; cum filio autem, de utroque tempore, id est, de tota
societate. Nam et si quid, [inquit,) socius fMi, post emanci-
pationem filii, dolo fecerit, ejus, nan patri, sed filio actio
danda est." ^ Similiter nee adrogatione socii solveiur socie-
tas; non tamen ad adrogatorem transibtt. Hoc docet
Paulus J " Societas quemadmodum ad heredes socii non
transit, ita nee ad adrogatorem; ne alioquin invitus quis
socius effidatur, cut non vult. Ipse autem adrogatus socius
permanct ; nam et si filiusfamilias emancipatus fuerit, per-
manebit socius." ^ Aliud in servo ; nam quum personam
non habeat, nee nisi ex persona domini socius esse possit,
sequiiur quod hujus manumissione aut alienatione solvatur
societas. Hoc docet Vlpianus ; " Si servus mens societa-
tem cum Titio coierit, et alienatus in eadem permanserit,
potest did, alienatione servi et priorem societatem finitam,
el ex integro alteram inchoaiam; atque ideo et mihi et emp-
tori actionem pro socio competere. Item, tam adversus me,
guam adversus emptorem, ex his causis, quce ante aliena-
tionem inciderunt, dandam adionem ; ex reliquis, adversus
emptorem solum."^ PotMer asserts the same to be the
? Dig. Lib. 17, tit. 2, 1. 58, § 2 ; Pothier, Pand. Lib. 17, tit. 2, n. 61.
a Ibid.
3 Pothier, Pand. Lib. 17, tit. 2, n. 60, 61 ; Domat, B. 1, tit. 8, ^ 5, art.
15; Dig. Lib. 17, tit. 2, 1. 65, § 22; Id. 1. 58, § 3. — Vinnius and Hei-
neccius have commented on this subject in their Commentaries to the
Institutes. Lib. 3, tit. 26, § 7, De Publicatione, p. 774, edit. 1777. The
comment is as follows. " Quod Paulus, dictas L. actione, 65, § publica-
tione, 12 hoc tit. unde hip locus desumptus est, dicit, Publicatione bonorum
socii distrahi societatem, hoc Modestinus et Ulpianus dixerunt, societatem
solvi capitis deminutione, L. 4, § 1, d. L. verum. 63, § ult. eod. Intelligunt
CH. xm.] DISSOLUTION OF PARTNERSHIP. 477
doctrine of the French law,^ and it is now positively
affirmed by the Civil Code of France,^ and the Code of
Louisiana.*
§ 306. Again; the marriage of a female partner
will, at the common law, for the like reason, create a
dissolution of the partnership by mere operation of
law ; for, in the first place, by the marriage, all her
personal property and effects are transferred to and
belong to her husband in his own right, unless indeed
there be some reservation or valid contract to the con-
trary ; * and in the next place, the marriage creates a
positive personal incapacity on her part any further to
enter into, or to bind herself by any contract.^
enim capitis deminutionem maximam et mediam, cum socius severitate
sententiae -aut in servitutem redigitur, aut in insulam deportatur, quo casu
bona damnati publicari sclent, L. 1, de bon. damn. L. 8, § 1 & 2, qui
testam fac. Poterat haec species dissociationis etiam ad pr^cedens genus
referri, ad earn videlicet, quas morte socii contingit. Quibus enim libertas
aut civitas adempta est, hi jure civili pro mortuis habentur; eoque per-
tinet, quod dicitur in d. L. verum. 63, § ult. homines interire aut morte,
aut maxima et media capitas deminutione. Sed et alia ratione ad sequens
genus referri potest. Vinn. Atqui si obseratus bonis cedit, bona non
publicantur, sed vendantur; nee is pro mortuo habetur, cujus substantia
veniit, sed cujus bona ob delictum consecrata publicatave sunt. "Vide L.
63, § 10, L. 58, L.65,§ 1 & 2, fiP. pro Soc. Heinecc.
' Pothier, de Societ6, n. 147, 148.
2 Code Civil of France, art. 1865.
3 Code of Louisiana, (of 1825,) art. 2847. —It has been held by the
Supreme Court of Massachusetts, that the absconding of one partner is a
dissolution of the partnership, between the parties, and as to third persons,
who had notice thereof. Whitman v. Leonard, 3 Pick. R. 177, 179.
* 1 Black. Comm. 442, 443, 444; 2 Story, Eq. Jur. § 1367.
s Ibid. ; Gow on Partn. ch. 6, § 1, p. 226, 3d edit. ; Watson on Partn.
ch. 7, p. 384; 2 Bell, Comm. B. 7, ch. 2, p. 634, 5th edit.; Griswold v.
Waddington, 15 Johns. R. 57, 82. — Mr. Gow and Mr. Watson treat the
point as doubtful, although their opinions coincide with that expressed in
the text. The point seems to have been directly decided by Lord Eldon
in Nerot u. Burnand, 4 Russ. R. 247, 260. He there said; "The next
question is. When did the partnership terminate ? It was a partnership
4*78 PARTNERSHIP. [CH. Xm.
§ 307. In the next place, as to dissolution by a
voluntary assignment by one or more of the partners
of all his right, title, and interest in the partnership
property. It seems now well established at the com-
mon law, that if one partner does make such a volun-
tary assignment of all right, title, and interest in the
partnership property and effects, that will at once
dissolve the partnership, and convert the assigiSee or
purchaser into a tenant in common with the other
partners.-' If the assignment be hond fide, and unex-
ceptionable in other respects, this would seem to be
the necessary operation of law upon such an act ; for,
(as we have already seen,) every partnership being
founded in the voluntary consent of all the parties
thereto, and that consent being founded upon a delectus
personarum, no partner has any right whatsoever to in-
troduce a mere stranger into the firm, without the. con-
sent of all the other partners ; ^ and if such consent is
for no definite period ; and either party therefore might, at any moment,
have put an end to it by notice. Miss Nerot married Mr. Burnand, with-
out consulting her brother, or, at least, without his assent. If she chose
so to change her situation, as to make Mr. Nerot, in point of fact, if the
partnership went on, a partner with Burnand, Mr. Nerot had a right,
the moment he received notice of that step, to act upon it, and say, ' Your
marriage has put an end to the partnership.' No delay took place in that
respect; for the bill was filed as early as Hilary term, 1820, the marriage
having taken place towards the close of the preceding year. I agree,
therefore, with the Vice-Chancellor, in saying, that the partnership was
dissolved on the 16th of September, 1819." See also Gow's Supplement,
1841, p. 64.
' Marquand v. President and Directors of N. York Manuf. Co. 17 Johns.
K. 525; Ketchamu. Clark, 6 Johns. R. 144 ; Ante, § 272; 3 Kent. Com.
Lect. 43, p. 59, 4th edit. ; Rodriguez t. Heffernan, 5 Johns. Ch. R. 417,
428; Nicoll v. Mumford, 4 Johns. Ch. R. 522, 525. [But in such case
the other partners may hold possession of the property as against the
assigned, for the purpose of paying the debts and winding up the business
of the concern. Horton's Appeal, 1 Harris, 67.]
2 Ante, § 5 ; Inst. Lib. 3, tit. 26, § 5, 8 ; 3 Kent, Coram. Lect. 43, p.
CH. Xm.] DISSOLtJTION OF PARTNERSHIP. 479
given, then it becomes, to all intents and purposes, the
substitution of a new partnership for the old one. And
this is equally the doctrine of our law, and of the Ro-
man law, and of the modern foreign law.^ The Roman
law states the rule and the reason of it in very succinct
and expressive terms. Cum enim societas consensu con-
trahitur, socius mihi esse non potest, quern ego socium esse
§ 308. Indeed, there never could be any doubt, that
a general assignment by one or more partners will
produce this effect, when the partnership is for an
indefinite period, and determinable at will ; for, in such
a case, the assignment per se operates at once as a dis-
solution, upon due notice thereof by the party making
or receiving the assignment. The only point open for
discussion seems to be, whether the same conclusion
ought to be admitted, when the partnership is for a
fixed or definite period, and the assignment is made
■vyithin that period, in contravention of the partnership
articles. And it has been held, that if the assignment
is made bond fide, it operates, i]pso facto, as a dissolution
of the partnership, since the purchaser is not compel-
lable to become a partner, nor, on the other hand, are
the other partners compellable to admit him as such.^
59, 4tli edit. ; Ex parte Barrow, 2 Rose, E. 252, 253, 254 ; Murray v.
Bogert, 14 Johns. R. 318 ; Kingman v. Spurr, 7 Pick. R. 235.
» Ante, § 5 ; Inst. Lib. 3, tit. 26, § 8.
2. Dig. Lib. 17, tit. 2, 1. 19 ; Pothier, Pand. Lib. 17, tit. 2, n. 28 ; Ante,
§5-
3 Per Lord Denman in Heath v. Sansom, 4 Barn. & Adol. 175 ; Mar-
quand u. Pres. & Directors of N. York Manuf. Co. 17 Johns. R. 525, 529,
535. — On this occasion Mr. Chancellor Kent said ; " The suit was 'for a
settlement of partnership account, on the ground of its dissolution by the
act of Fitch, one of the partners. He became indebted to the New York
Manufacturing Company, in a very large amount, which he was unable to
480 PAKTNEKSfflP. [CH. XIII.
§ 309. The like rule seems to have prevailed in the
Koman law; for there an assignment, by a debtor
pay, and accordingly on the 14th of April, 1814, he assigned oyer to them
all his share, or undivided estate and interest in the copartnership between
him and the appellants. In May following, Fitch actually stopped pay-
ment, and became insolvent. It was contended on the part of the Manu-
facturing Company, that the copartnership was dissolved by the assignment
in April, or, at least, by the insolvency in May. This was denied on the
part of the appellants, on the ground, that by the original articles of
copartnership, it was to continue until dissolved by the death of one of
the parties, or until two of them should demand a dissolution. According
to the construction given to the articles by the appellants, they had a right
to keep the capital of Fitch in their trade or concern, notwithstanding
any assignment of his property to his creditors, and notwithstanding an
actual insolvency on his part. I was of opinion that the partnership was
dissolved by the assignment, and that the appellants were accountable for
all the interest of Fitch in the capital and in the profits of the concern. I
do not mean to say, that a voluntary assignment by Fitch, of his property
to his creditors, may not be a breach of his contract or covenant with his
copartners. The question, as between them, under their articles of agree-
ment, it was not necessary to discuss. But the creditors of one copartner,
who take his property by assignment, or on execution, cannot be involved
against their consent in the responsibilities of a copartnership. The capi-
tal stock, or interest of a partner, is certainly liable to his separate debts.
His creditors are entitled to it without the risk and burden of being
partners. An act of bankruptcy, says Lord Mansfield, (Cowp. 448,) is a
dissolution of the partnership, not only by virtue of the statutes of bank-
ruptcy, but from the necessity of the thing, since assignees cannot carry
on" a trade. According to the doctrine on the part of the appellants, a
party may lock up his capital in a mercantile house by such an agreement
as the one in this case, and it must remain untouched without the consent
of his copartners, during his life. If the creditors take it by assignment,
they must become partners in the firm, and can only touch the yearly
profits, and must be liable to the yearly losses, and for all the engagements
of the firm. This doctrine appears to me to be too unreasonable, and too
inconvenient, to be endured." This decree was affirmed unanimously by
the Court of Errors ; and on that occasion Mr. Justice Wood worth, in
delivering the opinion of the Court, said ; " An assignment made by the
party himself, under circumstances like the present, produces the same
result ; in both cases, they give rise to a state of things altogether incom-
patible with the prosecution of a partnership concern, commenced, and
previously conducted by the bankrupt and his former copartner. It is
perfectly clear, that a new partner cannot be admitted without consent.
CH. XIII.] DISSOLUTION OF PABXNERSHIP. 481
oppressed with debt, of all his title and interest in
the property of the partnership, for the benefit of his
creditors, was deemed a dissolution of the partnership.
Item (say the Institutes,) si guts ex sqctis, mole debiti
prcegravatus, lords suis cesserit, et idea propter puhlica avi
privata dehiia substantia ejus veneat, soMtur societas. Sed,
hoc casu, si adhuc consentiani in sodetatem, nova videtur
incipere societas}
§ 310. The authority of one partner voluntarily to
assign a part of the partnership property in payment
of, or as security for, the debts thereof, has been
already considered, as also has been, the authority of
This, ex vi termini, implies, that even consent would be nugatory, unless
the assignee elected to become a partner ; where he does not so elect, but
(as in the present case) insists on a division of the property, the demand,
according to acknowledged principles, cannot rightfully be denied. That
^ rule of this kind will, in some cases, and probably in the present, bear
hard on the partners opposed to a dissolution, is not to be doubted. But
its inconveniences are more than counterbalanced, by the superior benefits
arising from its application. There is another insuperable difficulty
opposed to a continuance of the partnership, and that arises from the
character in which the respondents are placed. How can they become
partners with Marquand & Barton ? They are a corporate body, and act
as trustees for the benefit of the stockholders. The bank had no power
to become partners with the appellants ; it was not within their corporate
privileges. It will not be pretended, that in the situation Fitch was
placed, he had not a right to assign his interest, and that it passed under
the assignment to the respondents. I conclude, therefore, that the assign-
ment by Fitch, per se, dissolved the partnership. In the case of Ketcham
& Black V. Clark, (6 Johns. K. 144,) where one of the partners had
executed an assignment of all his right in the partnership property and
debts, it is said, that ' This act was, of itself, a termination of the partner-
ship.' But there being no evidence of any public notice of the dissolution,
nor any special notice to the party afterwards dealing with the firm, on
that ground the partners were held, liable. As betvreen themselves, the
point appeared to be conceded." See also 3 Kent, Comm. Lect. 43, p. 59,
4th edit.
1 Inst. Lib. 3, tit. 26, § 8 ; Vinnius, Comment, ad Id., and Ante, § 292,
293 ; Domat, B. 1, tit. 8, § 5, art. 12.
PARTN. 41
482 PABTNEKSHIP. [CH. XIH.
one partner to assign the entire partnership property
for the payment of the debts due to all creditors oi the
partnership.-^ No one can dombt, that the former is
perfectly valid and obligatory ; and that thereby the
property is severed from, and ceases to belong to, the
partnership. If the latter be, (as has been strenuously
contended,) also valid, but of which nevertheless serious
doubts may be entertained, especially where the part-
nership is for a term of years, as yet unexpired, then
it must be admitted, that it will amount by operation
of law, to a dissolution of the partnership ; for the
case then falls within the scope of the doctrine already
stated, in cases where the entire thing, constituting the
foundation and object of the partnership, is extinct.^
§ 311. The next question is as to the operation of
an involuntary assignment, or an assignment in invitum,
under judicial process and proceedings. We have
already seen,^ that a separate creditor of any one
partner may seize and sell the right, title, and interest
of that partner in the partnership goods and effects,
under a separate judgment and execution against him.
The execution may be levied upon the whole of the
tangible goods and effects of the partnership, or upon a
part thereof; and in each case it is good to the extent
of the judgment debtor's right, title, and interest
therein, as it 'shall ultimately appear upon the final
adjustment and settlement of the partnership concerns.*
1 Ante, § 101, and note 3 ; Tapley v. Butterfield, 1 Mete. R. 515.
2 Ante, § 101, and note 3, and § 280, 281 ; Havens v. Hussey, 5 Paige,
K. 30, 31 ; Hitchcock v. St John, 1 Hoffm. E. 511 ; Anderson v. Tomp-
kins, 1 Brock. R. 456 ; Pierpont v. Graham, 4 "Wash. Cir. R. 232 ; Tapley
V. Butterfield, 1 Mete. R. 515 ; Dana v. Lull, 17 Vermont E. 390.
3 Ante, § 261 to 263.
4 Ibid,
CH. Xin.] DISSOLUTION OF PARTNERSmP. 483
But, as soon as the levy and sale are eoittpleted under
the execution, the purchaser of the goods or effects
becomes, by mere operation of law, a tenant in common
thereof with the other partners; if the levy and sale
be of a part only, then of that part ; if of the whole,
then of the entirety.^ But in each case the legal result
is the same, that is to say, it amounts to a dissolution
of the partnership to the extent of the right, title, and
interest, levied upon and sold under the execution. If
the levy is of a part of the partnership property, there
is a severance, pro iardo, of the partnership interest
therein ; if of the whole, then there is a severance of
the entirety.^
1 Ante, § 261 to 263 ; 1 Story, Eq. Jur. § 677, 678 ; Moody «. Payne,
2 Johns. Ch. E. 548 ; Button v. Morrison, 17 Ves. 194, 206; Allen v.
Wells, 22 Pick. R. 450.
2 Gow on Partn. ch. 3, § 1, p. 229, 3d edit. ; 3 Kent, Comm. Lect. 43,
p. 59, 4th edit. ; Fox v. Hanbury, Cowp. K. 445 ; Skip v. Harwood,
2 Swanst. R. 585, 586, note ; Moody ». Payne, 2 Johns. Ch. R. 548 ;
NicoU K. Mumford, 4 Johns. Ch. R. 525; Roderiguez u. HefFernari, 5
Johns. Ch. R. 417, 428 ; Holroyd v. Wyatt, 1 De Gex & Small, R. 125;
Button V. Morrison, 17 Ves. 194, 206. — In this last case Lord Eldon said;
"Another question remains, of far more difficulty, and of as much
importance, as ai^y that has been decided. Where a creditor takes out
execution against the effects of an individual concerned in a partnership,
it seems to be a very difficult thing to determine with certainty, how he is
to take his execution. The old cases, if they are to govern, go in this
simple course ; that the creditor, finding a chattel, belonging to the two,
laid hold of the entirety of it, considering it as belonging to the two ; and
paying himself by the application of one half, he took no further trouble.
It is obvious, that it was very difficult to maintaiii this as an equitable pro-
ceeding, if a due proceeding at law ; that a creditor of one partner should,
without any attention to the rights of the partners themselves, take one
half of a chattel belonging to them ; as if it was perfectly clear that the
interest of each was an equal moiety. On the other hand, it may be
represented, that the world cannot know what is the distinct interest of
each ; and therefore it is better, that the apparent interest of each should
be considered as his actual interest. . But Courts of Equity have long held
otherwise ; and long before the case of Fox w. Hanbury, I understand this
Court to have said that was not equitable ; and to have held, as is the
484 PARTNERSHIP. [CH. XIII.
§ 312. The doctrine, in this view of the matter, as
presented by the common law, stands upon clear and
satisfactory grounds. If the sale is valid under the
execution, it must, of course, subrogate the purchaser
to all the rights of the partner himself in the property.
Now, if such be the legal result, the purchaser is not
bound to become a partner ; nor are the other partners
bound to admit him into the partnership. He must,
therefore, hold a common and undivided interest with
them in the property ; and this can be only by treating
it as a tenancy in common, created by operation of
law. Whether it might not have been better, as an
original question, to have held at the common law, that
no separate creditor should be entitled to execute his
judgment against the partnership property, leaving the
latter exclusively liable to the joint creditors, it is too
late to inquire. Certain it is, that the doctrine has
very many practical difficulties and mischiefs attend-
ing it, independent of the apparent wrong and injury
which may be done to the other partners by a sudden
dissolution of the partnership at the instance of a third
constant course at present, that upon an execution against one partner, or
the quasi execution in bankruptcy, no more of the property, which the
individual has, should be carried into the partnership, than that quantum
of interest which he could extract out of the concerns of the partnership,
after all the accounts of the partnership were taken, and the effects of
that partnership were reduced into a dry mass of property, upon which
no person except the partners themselves had aiay claim. In the case
supposed by Lord Mansfield, a bill filed, where there was an execution at
law, a Court of Equity has no difficulty in managing it ; having the means
of taking the complicated accounts of the partnership, and reducing the
concern into that state, in which the property would be divisible as clear
surplus. But the Court of King's Bench has repeatedly held, with
considerable doubt of late how the object is to be accomplished, that a
creditor taking execution can take only the interest his debtor had in the
property."
CH. Xm.] DISSOLUTION OF PAKTNEBSfflP. 485
person, in violation of the obligations of the partners'
own contract, that it shall endure for a limited period.
It is a strange anomaly in jurisprudence, that third
persons should be entitled to dissolve the solemn bond
fide contracts of partners at their own caprice and
pleasure, however ruinous may be the effects to the
innocent partners; for the partnership may be thus
dissolved in the midst of the progress of the most
successful adventure, and thus irreparable losses may
ensue therefrom. However, this is not a peculiar
feature of the common law; for it is to be found equally
recognized in the Roman law, at least where all the
effects of the partner are sold to his creditors ; for it is
said ; Item, horns a creditonbus venditis unius socii, distrahi
socieiaiem Laheo ait}
§ 313. Passing from this to the next case, which
stands upon a close analogy, that of a dissolution of
the partnership by the bankruptcy or insolvency of
one or more of the partners, it may be remarked, that
this naturally, and, indeed, upon just reasoning, neces-
sarily produces this effect ; for the bankrupt partner is
1 Dig. Lib. 17, tit. 2, § 65 ; Pothier, Pand. Lib. 17, tit. 2, n. 62 ; Domat,
B. 1, tit. 8, § 5, art. 12; 2 Kent, Comm. Lect. 43, p. 59, 4th edit. — No
case of this sort is mentioned by Pothier. He speaks only of the dissolu-
tion of the partnership by the failure or bankruptcy of one partner ; and
(as it should seem) only of a sale of his effects consequent thereon.
Pothier, de Society, n. 148. See also Domat, B. 1, tit. 3, § 5, art. 12,
note. The Code Civil of France, art. 1865, and the Code of Louisiana,
\oi 1825,) art. 2847, speak only of a dissolution by failure or bankruptcy.
See also Duyergier, Droit Civil Franc, torn. 6, § 443, 444, 446. It seems
doubtful, (to say the least,) whether the Boman Law contemplated any
sale of the effects of one partner to be a dissolution of the partnership,
except -where the entirety was ordered to be sold by judicial process at the
instance of his creditors, or by a cessio honorum of all his effects for the
benefit of his creditors. See La Croix, La Clef des Lois Romaines, tit.
Society, tom. 2, p. 585. See also Mr. Chancellor Kent's observations in
Griswold V. Waddington, 16 Johns. R. 491.
41*
486 PARTNERSHIP. [CH. XUI.
thereby disabled to perforin his portion of the partner-
ship contract, since all his property is, by operation of
law, immediately upon the declaration of his bankruptcy
or insolvency, devested out of him ; and it passes by
assignment to the persons who are duly designated as
the assignees thereof, to dispose of the same, and to
distribute the proceeds among his creditors. The
assignees are not, on the one hand, compellable to
become partners, nor, on the other hand, are the other
partners compellable to admit them into the partner-
ship, for the reasons already suggested under the pre-
ceding head. But a more important, and an absolutely
conclusive, ground is, that the farther continuation of
the partnership is utterly incompatible with the whole
policy and objects of the bankrupt and insolvent sys-
tems. These systems contemplate an immediate sale
and distribution of the assets among the creditors ; and
the assignees have no authority whatever to enter into
any further engagements in any trade or business on
account of the creditors, or at their risk.-^ Hence, the
common law, the Roman law, and the modern foreign
law, all concur in the same general result, that bank-
ruptcy or insolvency is, of itself,^ by mere operation of
1 Gow on Partn. ch. 5, § 1, p. 227, 228, 3d edit.; CoUyer on Partn.
B. 1, ch. 2, § 2, p. 69, 70, 71 j Id. B. 4, ch. 1, p. 678, 579, 2d edit. ; Fox v.
Hanbury, Cowp. R. 445 ; Ex parte Smith, 5 Ves. 295 ; VPilson v. Green-
wood, 1 Swanst. R. 471, 482, 483; Crawshay «. Collins, 15 Ves. 217,
223; Marquand v. N. York Manuf. Company, 17 Johns. R. 525; Griswold
V. Waddington, 15 Johns. R. 57, 82; S. C. 16 Johns. 436, 491; 3 Kent,
Comm. Lect. 43, p. 38, 39, 4th edit.
2 [In Massachusetts, the mere insolvency of one or both partners,
meaning thereby their inability to pay their debts, will not, per se, and
without any assignment or legal proceedings, operate as a dissolution of
the partnership, although it might furnish sufficient ground for declaring
a dissolution. Arnold v. Brown, 24 Pick. 93.]
CH. Xm.] DISSOLUTION OF PAETNERSHIP, 487
law, a complete dissolution of the partnership.^ A
fortiori, the like doctrine applies, where all the partners
become bankrupt; for then the whole property is
devested out of all of them.
§ 314. Another question usually arises under this
head ; and jthat is, from what time is the partnership
dissolved by the bankruptcy or insolvency of one or
more of the partners ? Is it from the act of bank-
ruptcy or insolvency ? • Or from the judicial or other
declaration of that /act, under the commission? Or
from the time of the assignment of the property to
the assignees ? The rule now established, at least in
the policy of the British system of bankruptcy, is,
that the dissolution takes effect, immediately upon the
declaration of the bankruptcy under the commission,
by relation back to the time, when the act of bank-
ruptcy was committed ; so that from that period the
bankrupt is deemed devested of all his property and
effects; and, by operation of law, as soon as assignees
are appointed, it is vested in them by relation from
the same period.^ How far, and to what intents and
purposes, it suspends the rights and authorities of the
other solvent partners over the partnership, will come
1 Dig. Lib. 17, tit. 2, 1. 65, § 1 ; Pothier, Pand. Lib. 17, tit. 2, n. 62 ;
Pothier, de Societi, n. 148 ; Civil Code of France, art. 1865 ; Duvergier,
Droit Civil Franc, torn. 5, § 443 ; Code of Louisiana, (1825,) art. 2847;
2 Mor. & Carlt. Partidas, p. 773, 1. 10 ; 2 Bell, Coram. B. 7, ch.' 2, p. 643,
5tli edit.; Vinn. ad Inst. Lib. 3, tit. 26, § 8, Coram.; Ante, § 309.
■2 3 Kent, Comm. Lect. 43, p. 58, 59, 4th edit, ; Watson on Partn. ch. 5,
p. 302 to 312, 2d edit.; Gow on Partn. ch. 5, § 3, p. 298, 299, 3d edit. ;
Collyer on Partn. B. 4, ch. 1, p. 583 to 590, 2d edit. ; Fox v. Hanbury,
Cowp. R. 445 ; Hague v. BoUeston, 4 Burr. 21 74 ; Ex parte Smith, 5 Ves.
295; Harvey v. Crickett, 5 Maule & Selw. 336 ; Dutton v. Morrison, 17.
Ves. 194, 203, 204; Barker v. Goodair, 11 Ves. 78, 83; Thomason v.
Frere, 10 East, 418.
488 PARTNERSHIP. [CH. XIII.
under examination, when we come to consider what
are the consequences of a dissolution.
§ 315. In the next place, as to dissolution by a public
war between the countries, of which the partners are
respectively subjects. Although this point does not
seem to have been discussed in our courts of justice
until a comparatively recent period, yet it would seem
to be a necessary result of principles of public law,
well established, and clearly defined. By a declaration
of war the respective subjects of each country become
positive enemies of each other. They can carry on no
commercial or other intercourse with each other ; they
can make no valid contracts with each other ; they can
institute no suits in the courts of either country; they
can, properly speaking, hold no communication of an
amicable nature with each other ; and their property is
mutually liable to capture and confiscation by the sub-
jects of either country.-' Now it is obvious from these
considerations, that the whole objects and ends of the
partnership, the application of the joint funds, skill,
labor, and enterprise of all the partners in the common
business thereof, can no longer be attained. The con-
clusion, therefore, would seem to be absolutely irresist-
ible, that this mutual supervening incapacity must,
upon the very principles applied to all analogous
cases, amount to a positive dissolution of the partner-
ship.
1 Potts V. Bell, 8 Term R. 561 ; The Rapid, 8 Craneh, 165, 161 ; The
Julia, 8 Craneh, 181, 194; The Hoop, 1 Robin, R. 196; Griswold v.
Waddington, 15 Johns. R. 57 ; S. C. 16 Johns. R. 438. — In this last case
all the existing authorities upon the whole subject, foreign as well as
domestic, were brought together, and critically examined with very great
learning and ability. See also 2 Wheaton's Reports, Appendix, p. 27 to
37; 3 Kent, Comm. Lect. 43, p. 62, 4th edit.; Scholefield v. Eichelberger,
7 Peters, R. 586.
CH. XIII.] DISSOLUTION OF PARTNEESHIP. 489
§ 316. The law of nations does not even stop at the
points already stated; but it proceeds farther. The
question of enemy, or not, depends not upon the natu-
ral allegiance of the partners, hut upon their dqmicile.
If, therefore, the partnership is established, and, as it
were, domiciled in a neutral country, and all the part-
ners reside there, it is treated as a neutral establish-
ment, and is entitled to protection accordingly.^ Oh
the other hand, if any one or more of the partners, in
such a case, is domiciled in an enemy country, he is
treated personally as an enemy, and his share of the
partnership property is liable to capture and condem-
nation accordingly, notwithstanding the paTtnership
establishment is in the neutral country.^ What, then,
is the case, where the partnership is established, and,
as it were, domiciled, in an enemy country ? The rule, ,
then, fully recognized as applicable to the case, is, that
the partnership is to be treated throughout as a hostile
establishment, and the whole partnership property is
liable to capture and condemnation, as enemies' pro-
perty, notwithstanding one or more of the partners
may be domiciled in a neutral country. A fortiori, if
some of the partners are domiciled in one of the hostile
countries, and the rest in the other, it is clear that the
partnership is hostile, and the partners are also person-
ally enemies.'^ The just inference from all these con-
siderations seems, therefore, to be, that, in all these
1 The Venus, 8 Cranch, K. 253; The Indian Chief, 8 Robin. R. 26 ;
MoConnell ». Hector, 1 Bos. & Pull. 113; Griswold v. Waddington, 15
Johns. R. 57 ; S. C. 16 Johns. R. 438.
s The Franklin, 6 Robin. R. 127.
^ The Vigilantia, 1 Robin. R. 1 ; The Sampson, cited in the Franklin,
6 Robin. R. 127; The Friendsohaft, 4 Wheat. R. 105; the San Jose
Indiano, 2 Gallis. R. 268.
490 PARTNERSHIP. [cH. XIII.
cases, there is an utter incompatibility, created by
operation of law, between the partners, as to their
respective rights, duties, and obligations, both public
and private, and, therefore, that a dissolution must
necessarily result therefrom, independent of the will or
acts of the parties.^
J This whole subject came successively before the Supreme Court of
New York, and the Court of Errors of that State, in the case of Griswold
V. Waddington, 15 Johns. R. 57; and S. C. 16 Johns. 438. The masterly
judgments of Mr. Chief Justice Spencer, and STr. Chancellor Kent,
delivered on this occasion, exhaust the whole learning and reasoning upon
it; and are, indeed, judicial discussions of rare and exquisite ability,
research, force, accuracy, and comprehensiveness. — The ultimate decision
was, that the partnership was dissolved, by the occurrence of war between
the countries. The following extract, from the opinion of Mr. Chief
Justice Spencer, presents a clear though brief review of the principle.
He said ; " Upon the fullest reflection which I have been g,ble to give to
the subject, my opinion is, that the declaration of war between the United
States and Great Britain produced a suspension during the war, or, ipso
facto, a dissolution of the partnership previously existing between the
defendants, so that the one is not responsible upon the contract, express
or implied, of the other. It will be perceived, that this proposition
assumes the fact, that the partnership between the defendants had not
become dissolved by the efflux of time, or the acts of either of the part-
ners, although this point is, in itself, very questionable. The better
conclusion from the evidence is, that the copartnership expired by its own
limitation during the war ; and the existence of the war woifld, at all
events, dispense with the public notice, which is, in general, necessary to
the valid dissolution of a partnership. The case discloses, that the firm
of Henry Waddington & Co. consisted of Henry and Joshua Wadding-
ton ; that Henry is a British subject, resident, before and during the war,
in London, conducting the partnership concerns there, whilst the defend-
ant was resident here. The negotiations, which gave rise to the present
suit, took place in England, and exclusively with Henry Waddington,
during the late war between this country and Great Britain. It was
admitted on the argument, and so the fact undoubtedly is, that the propo-
sition I have advanced, is neither supported nor denied by any judicial
decisions or elementary writer of the common law ; but, if I mistake not,
it is supported by the strongest reasons, and by necessary analogy with
adjudged cases. The first inquiry is, what are the objects and ends of
partnerships ? They are entered into with a view, that with the joint
funds, skill, and labor, of the several partners, the interests of the concern
CH. Xni.] DISSOLUTION OF PAETNERSHIP. 491
§ 317. In the next and last place, as to a dissolution
by the death of one of the partners. There is no
may be advanced and promoted. There maj be, and frequently are,
different inducements influencing each partner; one may have more
capital and credit ; another may have more skill, activity, and experience.
The one may choose to be a dormant and inert partner, furnishing an
equivalent for the services and skill of the other, and leaving the business
entirely to his control and management. Bat unexplained as this partner-
ship is, vre must understand it to be an union with a view to the employ-
ment of the joint capital, labor, and skill of both the partners, for the
purposes of internal and external commerce between this country and
Great Britain. That the object of the partnership embraced both these
objects of internal and external trade, would seem to be unquestionable,
from the local position <rf the partners. That the death, insanity, or bank-
ruptcy of one of the partners operates as a dissolution, was not questioned
in the argument ; and a respectable elementary writer, Mr. Watson, is of
opinion, that the marriage of a feme sole partner would produce the same
consequence. The cases of Pearce v. Chamberlain, (2 Ves. 33,) and
Sayer v. Bennet, (Watson, 382,) and several other cases cited by him, all
go to establish the general principle, that death, insanity, and bankruptcy,
work a dissolution of partnerships ; and they proceed on the principle,
that the other partners are not bound to admit the representatives of a
deceased or insane partner into the concern, the confidence having been
originally placed in the personal skill and assistance of those no longer
able to afford it. Let these principles be applied to the present case, and
it would seem that the same result is inevitable. In what situation did
the war put the defendants, as regarded each other ? Most undeniably,
the two nations, and all their citizens, or subjects, became enemies of each
other, and the consequence of this hostility was, that all intercourse and
communication between them became unlawful. This is not only the
acknowledged principle of the law of nations, but is also a part of the
municipal jurisprudence of every country. I need not cite cases in
support of a position, which has so repeatedly been recognized in the
English Courts, and in our own, possessing, as well admiralty, as common
law jurisdiction. Another consequence of the war was, that the shipments
made by each of the partners would be, liable to capture and condemna-
tion by the cruisers of the government of the other. And another very
serious evil attended them ; no debts, contracted in the partnership name,
could be recovered in the courts of either nation ; they not having, in the
language of the law, a persona standi in judicio, whilst they were amenable
to suits in the Courts of both nations. The Hoop, 1 Bob. 201. It is true,
the same disability to sue for debts due the firm, antecedent to the war,
would exist. This, however, does not weaken the objection j it remains
492
PAETNEESHIP. [CH. XIII.
doubt, that, by the principles of the common law, the
death of any one partner will operate as a dissolution
still an important item, in considering whether a partnership exists, when
the new debts created are to be liable to the same disability. It appears,
that Joshua Waddington is a citizen of the United States ; and it has
been already mentioned, that Henry Waddington is a British born subject.
They owed different allegiances ; and it became part of their duty to lend
all their aid in a vigorous prosecution of the war, the one to the United
States, and the other to Great Britain. And, it appears to me, that it
would not comport with policy or morality, that the law should imperiously
continue a connection, when, by its very continuance, it would afford
such strong inducements to a violation of that fidelity which each owes to
his government. Again ; all communication and intercourse being ren-
dered unlawful, and it being a well-established principle, that either
partner may, by his own act, dissolve a partnership, unless restrained to
continue it for a definite period by compact, in what manner could such
intentions be manifested during the war ? It, might, indeed, be made
known to the public of one of the countries, but it could not be notified
to the public of the hostile country ; and thus, unless the war produced a
dissolution, he would be responsible, notwithstanding he had the desire to
dissolve the connection, merely from inability to make known that deter-
mination ; an inability produced by events utterly uncontrollable. When
the objects and intentions of an union of two or more individuals to
prosecute commercial business are considered ; when it is seen, that an
event has taken place, without their fault, and beyond their control, which
renders their respective nations, and, along with them, the defendants
themselves, enemies of each other ; that all communication and intercourse
has become unlawful ; that they can no longer cooperate in the conduct
of their common business, by affording each other advice, and are kept
hoodwinked as to the conduct of each other ; that the trade itself in
which they were engaged, has ceased to exist ; that if they enter into any
contracts, they are incapable of enforcing their performance by an appeal
to the courts ; that their allegiance leads them to support opposite and
conflicting interests ; I am compelled to say, that the law cannot be so
unjust, as to pronounce that a partnership so circumstanced, when all its
objects and ends are prostrated, shall continue ; and, with the clearest
conviction upon my mind, and in analogy to the cases to which reference
has been made, I have come to the conclusion that the partnership
between the defendants was, at least, suspended, and I incline to the
opinion that it was, ipso facto, dissolved by the war, and, consequently,
that the defendant, J. W., is not liable to this action." Mr. Chancellor
Kent's is far more elaborate, and sifts and examines all the authorities, as
well as the reasoning in support of them. It is difficult to abridge it
CH. Xlll.] DISSOLUTION OF PARTNEESHIP. 493
of the partnership, however numerous the association
may be, not only as to the deceased partner, but as
between all the survivors.'^ The reason is, that upon
the theory of this branch of the law, the personal
qualities, skill, diligence, and superintendence of each
one of the partners, are justly presumed to enter into
and to constitute a material consideration with all the
other partners for engaging in the partnership. In
short, it is a mutual and reciprocal engagement of each
partner with all the others, that the partnership shall
be carried on with the joint aid and cooperation of all;
and, therefore, the survivors ought not to be held bound
to continue the connection without a new consent,
when the abilities, skill, and character of the deceased
partner either were, or at least might have been, a
strong inducement to the original formation of the
partnership.^
§ 318. This is precisely the reason given in the
Roman law for the promulgation and support of the
like doctrine, not only as working a dissolution as to
the deceased partner, but as between the survivors.
Morte unius [socit] societas dissolvitur, etsi consensu omni-
um cditd sit, plures vera supersint, nisi in coeunda socieiate
aliter convenerit? And again in the Institutes it is saidj
without diminishing its cogency. He holds the war to be a positive disso-
lution.
1 CoUyer on Partn. B. 1, ch. 2, § 2, p. 72, 73, 2d edit.; Watson on
Partn. ch. 6, p. 358, 359, 360, 2d edit.; Gow on Partn. ch. 5, § 1, p. 219,
220, 3d edit. ; Crawshay v. Maule, 1 Swanst. R. 495, 509 ; Gillespie v.
Hamilton, 3 Madd. K. 254 ; Vulliamy e. Noble, 3 Meriv. R. 614 ; Schole-
field V. Taylor, 7 Peters, R. 586.
2 3 Kent, Comm. Lect. 43, p. 55, 4th edit. ; Watson on Partn. ch. 6, p.
358, 359, 2d edit. ; CoUyer on Partn. B. 1, ch. 2, § 2, p. 72, 73, 2d edit.;
Pearce v. Chamberlain, 2 Ves. 33; Gow on Partn. ch. 5, § 1, p. 219, 220,
3d edit.; Scholefield v. Eichelberger, 8 Peters, R. 586, 594.
3 Dig. Lib. 17, tit. 2, 1. 65, § 9 ; Pothier, de Society, n. 66.
PARTN. 42
494 PARTNERSHIP. . [CH. XIII.
Solvitur adhuc socidas etiam morie socii ; quia qui societor
tern cofdrahit, certam personam sibi elic/it. Sed et si con-
sensu fluriam societas conirada sit, morie unius socii solvi-
tur, dsi plures supersint ; nisi in coeunda socidate aliter
convenerit} So strictly, indeed, was this doctrine held,
that, (as we have seen,) even an express agreement,
that the partnership should be prolonged beyond the
life of a partner, and his heir or other representative
should be admitted into the same, was held in the Ro-
man law to be invalid, as defeating an essential ingre-
dient in partnership, the right of Delectus personce?
The Digest says ; Adeo morte solvitur societas, vt ne ab
initio fadsci possimus, ut hoeres diam succedat societati?
Pothier has still more fully expounded the reasons of
the doctrine, although he admits at the same time,
that, so far as it respects the succession of the heir, or
personal representative, it is not entirely decisive, and
has more of subtilty than of solidity in it.* There is,
1 Inst. Lib. 3, tit. 26, § 5.
2 Ante, ^ 5 ; Crawshay v. Maule, 1 Swanst. 509, tlie Reporter's note
(a) ; Gow on Partn. ch. 5, § 1, p. 220, 3d edit. ; Domat, B. 1, tit. 8, ^ 5,
art. 12.
3 Dig. Lib. 17, tit. 2, 1. 59 ; Pothier, Pand; Lib. 17, tit. 2, n. 56.
4 Pothier, de Societ6, n. 144, 145, 146. — Vinnius also fully explains
the doctrine. " Etiam morte unius socii societas solvitur. Et hoc genus
distrahendaj obligationis societatis proprium est, recedens ab illo communi,
quo placet, hseredem in eandem obligationem et idem jus, quod defuncti
fuit, succedere. Sed admissum in societate ex natura hujus contractus ;
atque eadem ratione, qua in mandato, quoque placet morte mandatarii
solvi mandatum ; nimirum quia in societate non tantum rei familiaris, ut
fere in aliis contractibus, verum insuper etiam fidei et industriaj, qute ad
haredes non transeunt, contemplatio versatur. Nam, ut it textu dicitur,
qui societatem contrahit, certam personam sibi eligit, cujus scilicet fidem,
industriam, res, et facultates sequatur. Usque adeo autem, morte socii
dirimi societatem placet, ut nee ab initio pacisci possimus, ut hseres in
societatem succedat ; quasi et tale pactum naturse societatis repugnet, ut
quis invitus socius efficiatur, cum non vult. Exceptae tamen sunt socie-
tates veotigalium, in quibus hujusmodi conventiones ob publicam utilitatem
CH. XIII.] DISSOLUTION OF PAETNERSHIP. 495
indeed, an exception to this doctrine in the Roman
law, founded upon public policy, and that is, that the
death of one partner does not generally dissolve the
partnership, in cases where the partnership is by the
farmers of the public revenue.^ In soddcde vectigalium
nihilominus manet societas,' et post mortem oHicujus ; sed
ita demum, si pars defuncti ad personam hceredis ejus
adscripta sit, ut hceredi quoque conferri oporteat ; qWad
ipsum ex causa cestimandum est? But then, again, to
this there is, or may be, an exception. Quod enim,
si is mortuus sit, propter cujus operam mazime societas
co'ita sit ? Aut sine quo societas administrari non
possit ? ^
§ 319. And, here, the question may arise, as to the
time from which the dissolution, by the death of any
partner, takes effect; whether it be from the occur-
rence of that event, or from the period when the other
partners have notice thereof. At the common law,
the doctrine seems clearly established, that it takes
admissse ; manetque boc casu societas etiam post mortem, nisi forte is
mortuus sit, cujus contemplatione potissimum societas coita, aut sine quo
ea administrari non possit." Vinn. ad Inst. Lib. 26, § 5, p. 699, edit-
1726. Pothier says, (n. 146;) "La raison est, que les qualites person-
nelles de chacun des associ^s entrent en consideration dans le contrat de
SOci6t6. Je ne dois done pas etre obligd, lorsque I'un de mes associ6s est
mort, a demeurer en soci^tfe avec les autres, parce qu'U se pent faire, que
ce ne soit que par la consideration des qualitds personnelles de celui, qui
est mort, que j'ai voulu contraeter la soci^tfe. Ce principe sonfire excep-
tion k regard des soci6t6s pour la ferme des revenus publies, lesquelles
snbsistent entre les survivans, lorsque I'un dea associ6s vieut Jl mourir ;
hoc ita in privatis societatibus ; in societate vectigalium manet societas et
post mortem alicujus.''
1 Dig. Lib. 17, tit. 2, 1. 59 ; Pothier, Pand. Lib. 17, tit. 2, n. 57 ; Po-
thier, de Societ6, n. 146.
9 Dig. Lib. 17, tit. 2, 1. 59, 63, § 8; Pothier, Pand. Lib. 17, tit. 2,
n. 57.
3 Ibid. ; Vinn. ad Inst. Lib. 3, tit. 26, ^ 5, p. 699, edit. 1726.
496 PAETNERSHIP. [CH. Xin.
ejQFect in respect, as well to the other partners, as to
third persons, from the time of the death, without any
consideration, whether they have notice thereof,, or
not.^ The Roman law, on the other hand, pursued a
different course; and as between the partners them-
selves adopted the same rule, which it applied to cases
of agency or mandate ; that is, the partnership is not
dissolved by the death of any partner, until the other
partners have due notice thereof Quod, si, vdegris
omnibus manentibus, alter decesserit, ddnde tunc sequa-
iur res, de qua societatem co'ierunt, tunc eadem didindione
idimur, qua in mandato ; ut, si quidem ignota fuerii mors
dlterius, valeat societas ; si nota, non valeat? This also
seems the doctrine of the French law, as laid down by
Pothier.^
§ 319 ff. But, although, as we have seen, a dissolu-
tion of the partnership takes place by law upon the
death of any one of the partners, this proposition must
be understood with the limitation, that, by the arti-
cles of copartnership or other agreement between the
partners, it is not otherwise stipulated by the parties.
1 Vulliamy v. Noble, 3 Meriv. R. 593, 614 ; Gow on Partn. ch. 6, § 1,
p. 121, 3d edit. ; CoUyer on Partn. B. 1, ch. 2, § 2, p. 71, 74 ; Id. B. 3,
ch. 3, § 4, p. 419, 2d edit. ; 3 Kent,, Comm. Lect. 43, p. 56, 4th edit. ; 2
Bell, Comm. B. 7, ch. 2, p. 639, 5th edit.
2 Dig. Lib. 17, tit 2, 1. 65, § 10; Pothier, Pand. Lib. 17, tit. 2, n. 58 ;
Story on Bailm. § 203, 204, 205 ; Story on Agency, § 488 to 500 ; Domat,
B. 1, tit. 8, § 6, art. 5.
3 Pothier, de Society, n. 156,157. — It is a curious coincidence, that
the Consolato del Mare, in treating of persons who engage to build a
ship together, treats death before the building is commenced, as a dissolu-
tion of the contract ; and gives, as one reason, not as the sole reason, that
the day that any one dies, from that moment every partnership in which
he is engaged, is dissolved, because a dead man cannot be a partner. See
Consolato del Mare, ch. 4. [49 ;] Pardessus, Collect, de Lois Marit. Tom.
2, p. 51, 52.
CH. Xm.] DISSOLUTION Of PARTNERSHIP. 497
For it is entirely competent for the parties to vary this
general result of law by an express agreement ; and if
such an agreement exists, it wiU depend upon the par-
ticular terms thereof, to what extent the estate of a
deceased partner may be liable for debts contracted on
behalf of the partnership after his death, whether his
estate shall be generally liable for all the debts, or
only to the extent of the property embarked and left
in the partnership to be employed by the survivors.^
The like questions may sometimes arise in cases of
testators, who direct the partnership to be continued
after their death, if assented to by the surviving part-
ners. A testator may so direct the continuance of the
partnership that his whole estate shall be liable for the
postmortuary debts, or only to the amount of his ac-
tual interest in the partnership debts at his decease ;
and this sometimes becomes a question of great nicety
in the construction of his words.^ Nothing, however,
but the clearest and most unambiguous lauguage,
showing in the most positive manner an intention on
the part of the testator to render his general assets
liable for debts contracted after his death, will justify
a Court from extending the liability of his estate be-
yond the actual fund employed therein at the time of
his death. And this rule obtains on account of the
exceeding inconvenience and difficulty which would
otherwise arise in paying off legacies and distributing
the surplus of the property. Thus, where A. died,
1 Burwell v. Mandeville's Ex'rs, 2 Howard, Sup. Ct. K. 560, and the
CEtses there cited.
2 Burwell v. Mandeville's Ex'rs, 2 How. Sup. Ct. E. 560 ; Ex parte
Garland, 10 Ves. 110; Ex parte Richardson, 3 Madd. K. 138, 157;
Thompson v. Andrews, 1 Mylne & Keen, 116; Pitkin v. Pitkin, 7 Conn.
R. 307.
42*
498 PAKTNERSHIP. [CH. XIII
while in partnership with B. ; and in his will, made
during his partnership, he made sundry bequests of
his personal and real estate to different persons, and
added, "And if my personal property should not
cover the entire amount of legacies I have or may
give,, my executors will dispose of so much of my real
estate as will fully pay the same ; " and in a codicil to
his will, made also during the partnership, he said ;
" It is my will, that my interest in the copartnership
sijbsisting between Daniel Cawood and myself, under
the firm, &c., shall be continued therein until the ex-
piration of the term limited by the articles between
us. The business to be continued by the said Daniel
Cawood, and the profit or loss to be distributed in the
manner the said articles provide." But before the
time limited for the partnership expired, Cawood, who
carried on the business, having failed, a bill was
brought against him and the executors of A. by a
creditor of the firm, upon debts contracted with him
by Cawood, on account of the firm, after the death of
A. It was held, that the general assets of the testator
were not bound for the debts contracted after his
death, by Cawood, on behalf of the partnershfp, but
that the rights of any creditor in respect to such debts
were exclusively restricted to the funds actually em-
barked by him in the trade, and to the personal
responsibility of Cawood himself.^ So, also, where the
testator directed by his will that " all his interest and
concern in the hat-manufacturing business, &c., as then
conducted under said firm, should be continued to ope-
rate in the same connection for the term of four years
after his decease ; " it was held, that the general assets
1 Burwell v. Mandeville's Ex'rs, 2 How. Sup. Ct. R. 560.
CH. XIII.] DISSOLUTION OF PAETNEESHIP. 499
of the testator were not liable to the claims of any
creditors of the firm, who became such after the testa-
tor's death, and that such creditors had no lien on the
estate in the hands of the devisees under the will,
although they might eventually participate in the pro-
fit of the trade.^
1 Pitkin V. Pitkin, 7 Conn. K. 307. See also Ex parte Garland, 10 Ves.
Jun. 110, and £x parte Bichardson, 3 Madd. B. 138.
500 PARTNERSHIP. [CH. XIV.
CHAPTER XIV.
EFFECTS AND CONSEQUENCES OF A DISSOLUTION.
§ 320'. Having ascertained the various causes, which
either positively, ipso facto, produce a dissolution of the
partnership, or may justify an application therefor to a
Court of Equity, let us now proceed to the considera-
tion of the eifects and consequences of an actual dis-
solution, as between the partners themselves, and also
as between them and third persons. And first, as be-
tween the partners themselves. Although these effects
and consequences are in all cases of dissolution of
partnership, however occasioned, in many respects gov-
erned by precisely the same rules and principles, and
affected by the same general considerations; yet, as
they are, at the same time, in particular cases, liable to
be variously modified and affected by peculiar circum-
stances attendant upon them, it will here be proper, if
not absolutely indispensable, to a full and accurate view
of all the relations growing out of. the subject, to ex-
amine it under various heads. (1.) Dissolution by the
mere voluntary stipulations or acts of the parj;ies inter
vivos. (2.) Dissolution b*y bankruptcy. (3.) Dissolu-
tion by death. (4.) Dissolution by the decree of a Court
of Equity. In each of these cases, it may be necessary
to examine the effects and consequences as between the
partners themselves, and also as between them and third
persons.
§ 321. In the first place, then, as to a dissolution by
the voluntary acts or stipulations of the parties inter
CH. XIV.] BISSOLUTION — EIGHTS OF PARTNEES. 501
vivos. This may arise in various ways ; as by the re-
tirement of one partner from the partnership, or the
admission of a new partner into the partnership ; or
by the voluntary separation of all the partners, and
their final relinquishment of the whole business thereof.
The former is a virtual destruction of the old partner-
ship, by the substitution of a new one among the part-
ners remaining in, or those coming into the firm ; the
latter is a total destruction or extinguishment thereof.
The same result will arise, (as we have seen,) where
the partnership is dissolved by the mer6 efflux of time,
or by the voluntary change of the state or condition
of one or more of the parties, or by an assignment of
all the rights and interests of one or more of the part-
ners therein.^
§ 322. But in whatever manner the partnership is
actually ended, there are certain effects and conse-
quences of its determination, which necessarily result
from it as between themselves, and wUl equally affect
their transactions with third persons, where the latter
have notice of the dissolution, or where, as in cases of
death and bankruptcy, notice is not by law required.
In the first place, as between the partners themselves,
the diissolution of the partnership puts an end to the
joint powers and authorities of all the partners, any
farther to employ the property, or funds, or credit of
the partnership in the business or trade thereof, sub-
ject to the exceptions hereinafter stated. None of the
partners can create any new contracts or obligations
binding upon the partnership ; none of them can buy,
or sell, or pledge goods on account thereof; none of
them can indorse, or transfer the partnership securities
1 Ante, § 278, 280, 303, 304, 306, 307,
602 PARTNERSHIP. [CH. XIV.
to third persons, or in any other way make their acts
the acts of the partnership. In short, none of them
can do any act, or make any disposition of the part-
nership property or funds, in any manner inconsistent
with the primary duty, now incumbent upon all of
them, of winding up the whole concerns of the part-
nership.-'
1 National Bank v. Norton, 1 Hill, N. Y. Kep. 572 ; Gow on Partn. ch.
5, § 2, p. 230, 240, 3d ed.; Id. p. 251, 252; Ex parte Williams, 11 Ves.
5; Peacock v. Peacock, 16 Ves. 49, 57; Wilson v. Greenwood, 1 Swanst.
R. 480 ; Crawshay v. Maule, 1 Swanst. R. 506 ; Whitman v. Leonard,
3 Pick. R. 177; Coll. on Partn. B. 1, ch. 2, § 3, p. 75, 2d ed. ; Id. B. 2,
ch. 2, § 1, p. 130; 3 Kent, Com. Lect. 43, p. 63, 64, 4th edit. ; 2 Bell,
Com. B. 7, ch. 2, p. 643, 644, 5th edit. ; Kilgour v. Finlayson, 1 H.
Black. R. 155; Brisban v. Boyd, 4 Paige, R. 17; Geortner v. Trustees
of Canajoharie, 2 Barbour, R. 625. — The remarks of Lord Eldon on this
subject, in Crawshay v. Collins, (15 Ves. 218, 226,) present this whole
doctrine in a strong and just light. " Partnerships are regulated (said
he) either by the express contract, or by the contract, implied by law, from
the relation of the parties. The duties and obligations arising from that
relation, are regulated, as far as they are touched, by the express contract ;
if it does not reach all those duties and obligations, they are implied, and
enforced by the law. In the instance of a partnership without articles,
the respective proportions of capital contributed by the partners, and the
trade being carried on either for a certain period, or the connection dis-
solvable at pleasure, the time being expired, or, in the other case, notice
to determine being given, it cannot be contended, that, if the remaining
partners choose to carry on the trade, they can consider the whole property
as their own, to be taken at such valuation as they think proper to put
upon it. That is not the law. The obligation implied among partners is,
that they are to use the joint property for the benefit of all, whose pro-
perty it is. Many complicated cases may arise. There may be a partner-
ship, where, whether the parties have agreed for the determination of it
at a particular period, or not^ engagements must, from the nature of it, be
contracted, which cannot be fulfilled during the existence of the partner-
ship ; and the consequence is, that for the purpose of making good those
engagements with third persons, it must continue ; and then, instead of
being, as it was, a general partnership, it is a general partnership deter-
mined, except as it still subsists for the purpose only of winding up the
concerns. Another mode of determination is, not by efiluxion of time,
but by the death of one partner ; in which case the law says, that the
property survives to the others. It survives as to the legal title in many
CH. XIV.] DISSOLUTI.ON — EIGHTS OF PARTNERS. 503
§ 323. And here the consideration naturally arises,
(which has been already touched in another place/)
whether, since it is incompetent to any of the part-
ners, after a dissolution, by any new acts, duties, or
obligation, to bind the partnership, by any acknowledg-
ments, or declarations, or statements, subsequently
made by any one of the partners, respecting the real
or supposed transactions, or duties, or obligations of
the partnership, during the continuance thereof, are
binding as evidence or otherwise upon the other part-
ners, who have not assented thereto.^ It seems diffi-
cult upon principle to perceive how they can be, any
more than the declarations, or acts, or acknowledg-
ments of any other agent of the partnership would be,
after his agency has ceased.^ In the latter case, they
cases ; but not as to the beneficial interest. The question then is, whether
the surviving partners, instead of settling the accounts, and agreeing
with the executor as to the terms upon which his beneficial interest in
the stock is still to be continued, subject still to the possible loss, can take
the whole property, do what they please, and compel the executor to
take the calculated value. That cannot be without a contract for it with
the testator. The executor has a right to have the value ascertained, in
the way in which it can be best ascertained, by sale. If the implied
obligation is, that partners are to use the property for the benefit of those
whose property it is, where is the hardship ? I concur, therefore, with
the judgment of Lord Eosslyn npon that point, in the case of Hammond
V. Douglas; though I agree with the doubt, expressed by Sir Samuel
EomiUy, upon the other point there determined, that the good-will sur-
vives. If the surviving partners think proper to make that, which is in
equity the joint property of the deceased and them, the foundation and
plant of increased profit, if they do not think proper to settle with the
executor, and put an end to the concern, they must be understood to
proceed upon the principle which regulated the property before the death
of their partner."
1 Ante, § 107 ; Tassey v. Church, 4 Watts & Serg. 141.
s 3 Kent, Comm. Lect. 43, p. 49, 50, 51, 3d edit.; Parker v. Morrell,
2 Phillips, Ch. E. 464, and note.
' See the able case of EUicott «. Nichols, 7 Gill, 86.
504 PARTNERSHIP. [CH. XIV.
are constantly held inadmissible by the Courts of com-
mon law, upon grounds which seem absolutely irre-
sistible.'' And yet the contrary doctrine has been con-
stantly maintained, as to partners, for a great length
of time, in the Courts of common law in England,
founded apparently upon a mere unreasoned decision
in the time of Lord Mansfield ; ^ and it is but recently
that it has been overturned by an Act of Parliament,'
which has remedied some of the mischiefs inherent in
it, but has still left behind some which are as yet with-
out redress.* The doctrine has been especially applied
to, and, indeed, is most forcibly illustrated by cases of
the revival of partnership debts, which are barred by
the Statute of Limitations, by the simple acknowledg-
ment of one partner, even, when made at a great dis-
tance of time after the dissolution of the partnership,
and, indeed, long after all the partnership business has
been closed by an actual settlement thereof inter sese.^
§ 324. In America no small diversity of judicial
opinion has been expressed upon the same subject.
In some of the States the English doctrine has been
' Ante, § 134 to 138. See the reasoning of Sir Wm. Grant, in Fair-
lie V. Hastings, 10 Ves. 126, 127, and of Mr. Justice Kennedy, in Han-
nay V. Stewart, 6 Watts, 489. See also Garth v. Howard, 8 Bing. B. 451 ;
Story on Agency, § 135, 136, and note.
a Whitcomb v. Whiting, Doug. R. 651.
3 See the remarks of Lord Tenterden against the decision in Whitcomb
V. Whiting, (Doug. R. 651,) in his opinion in Atkins v. Tredgold, 2 Barn.
& Cressw. 23, 28, and of Mr. Justice Bayley, Id. p. 24, and of Mr. Jus-
tice Holroyd, Id. p. 31.
4 CoUyer on Partn. B. 3, ch. 1, ^ 4, p. 282 to 285, 2d edit.; Id. B. 3, ch.
3, § 4, p. 417, 418 ; 3 Kent, Comm. Lect. 43, p. 50, 51, and note (b), 4th
edit. ; Stat, of 9 Geo. 4, ch. 14, (9th of May, 1828.) See Braithwaite
V. Britain, 1 Keen, R. 206 ; Winter v. Innes, 4 Mylne & Craig, 111.
6 3 Kent, Comm. Lect. 43, p. 49, 50, 51, 4th edit.; S. P. Houser v,
Irvine, 3 Watts & Serg. 845.
CH. XIV.] DISSOLUTION EIGHTS OF PABTNEES. 505
approved ; in others it has been silently acquiesced in,
or left doubtful ; ^ and in a considerable number it has
been expressly overruled.^ The Supreme Court of the
United States have not hesitated, after a most elabo-
rate discussion, .to overrule it, as unfounded in principle
and analogy. In truth, the whole controversy must
ultimately turn upon the single point, whethei* the
acknowledgment is a mere continuation of the origi-
nal promise, or whether it is a new contract, or promise,
springing out of, and supported by the original con-
sideration. It is upon the latter ground, that the
Supreme Court have deemed the doctrine wholly un-
tenable.^
1 Walton V. Robinson, 5 Iredell, 343.
2 3 Kent, Comm. Lect. 43, p. 49, 50, 51, 4th edit., where the principal
authorities are collected. See also Levy ». Cadet, 17 Serg. & R. 126;
Walden v. Sherburne, 15 Johns. E. 409; Bakery. Stackpole, 9 Cowen,
K. 422, 423; Brisban v. Boyd, 4 Paige, R. 17; Cady v. Shepherd, 11
Pick. R. 400 ; Bell v. Morrison, 1 Peters, R. 351 ; Belote v. Wynne, 7
Yerger, R. 534; Tassey v. Church, 4 Watts & Serg. 141 ; Van Keuren
I). Parmelee, 2 Comstock, R. 523. [In the last case, the decisions of the
different States are reviewed by the New York Court of Appeals, and the
doctrine of Lord Mansfield overruled.]
3 The doctrine was apparently first applied in the case of Whitcomb v.
Whiting, (Doug. R. 652,) in the case of a joint and several note of seve-
ral persons, not partners, upon the supposed analogy to the case of pay-
ment by one joint promisor. On that occasion Lord Mansfield drily and
briefly said; "Payment by one is payment for all, the one acting vir-
tually as an agent for the rest. And in the same manner an admission by
one is an admission by all ; and the law raises the promise to pay, when
the debt is admitted to be due." A more inconclusive and unsatisfactory
mode of reasoning can scarcely be imagined. In the first place, (as we
see in' the text,) payment by an agent, after his authority is withdrawn by
his principal, ia a payment which binds the creditor, but certainly not
the principal ; and the agent cannot recover the money so paid from his
principal; although he may not be entitled (unless, indeed, it is paid
under a sheer and mutual mistake) to recover it .back from the creditor.
Nor is it true, that payment by one partner, after a dissolution, of any
debt, as a supposed partnership debt, binds the other partners. On the
contrary, they have a right to say, that it never was, or was not at the
PARTN. 43
506 PARTNERSHIP. [CH. XIV.
§ 32-4 a. But, however the doctrine may be after a
dissolution, in cases where all the parties are living, it
time of the payment thereof, an existing partnership debt. Suppose it
had been already either paid, or extinguished, hojr is the partnership
liable to pay it again ? It is assuming the very matter in controversy to
assert, that a debt, once barred by the Statute of Limitations, is not extin-
guished, if voluntarily revived by the acknowledgment of one partner.
What right or power has an agent, after his authority is dissolved, to
make any acknowledgment or promise upon my account, to bind me ? He
may bind himself, if he pleases ; but it will require some other reasoning
to show that he can bind me. The reasoning against the English rule
will perhaps be found as fully stated in the case of Bell v. Morrison,
(1 Peters, R. 351, 367 to 374,) as in any other case. " It still remains (say
the Court) to consider, whether the acknowledgment of one partner, after
the dissolution of the copartnership, is sufficient to take the case out of
the statute, as to all the partners. How far it may bind the partner
making the acknowledgment to pay the debt, need not be inquired into.
To maintain the present action , it must be binding upon all. In the case
of Bland v. Haslering, (2 Vent. 151,) where the action was against four,
upon a joint promise, and the plea of the Statute of Limitations was put
in, and the jury found that one of the defendants did promise within, six
years, and that the others did not; three Judges, against Ventris, J., held,
that the plaintiff could not have judgment against the defendant who had
made the promise. This case has been explained upon the ground, that
the verdict did not conform to the pleadings, and establish a joint promise.
It is very doubtful* upon a critical examination of the report, whether the
opinion of the Court, or of any of the Judges, proceeded solely upon such
a ground. In Whitcomb v. Whiting, (2 Doug. R. 652,) decided* in 1781,
in an action on a joint and several note, brought against one of the
makers, it was held, that proof of payment, by one of the makers, of in-
terest on the note and of part of the principal, within six years, took the
case out of the statute, as against the defendant, who was sued. Lord Mans-
field' said ; ' Payment by one is payment for all, the one acting virtually
for all the rest ; and in the same manner, an admission by one is an ad-
mission by all, and the law raises the promise to pay when the debt is
admitted to be due.' This is the whole reasoning reported in the case,
and is certainly not very satisfactory. It assumes that one party, who
has the authority to discharge, has, necessarily, also, authority to charge
the other ; that a virtual agency exists in each joint debtor to pay for the
whole ; and that a virtual agency exists, Ijy analogy, to charge the whole.
Now, this very position constitutes the matter in controversy. It is true,
that a payment by one does inufe for the benefit of the whole. But this
arises, not so much from any virtual agency for the whole, as by operation
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 507
is very clear that no acknowledgment by the surviving
partners after the death of one of them will revive the
of law ; for the payment extinguishes the debt. If such payment were
made after a positive refusal, or prohibition of the other joint debtors, it
would still operate as an extinguishment of the debt, and the creditor
could no longer sue them. In truth, he, who pays a joint debt, pays to
discharge himself; and so far from binding the others conclusively by his
• act, as virtually theirs also, he cannot recover over against them in contri-
bution, without such payment has been rightfully made, and ought to
charge them. When the statute has'run against a joint debt, the reason-
able presumption is, that it is no longer a subsisting debt ; and, therefore,
thepe is no ground on which to raise a virtual agency to pay that which
is not admitted to eKist. But, if this were not so, still there is a great
difference between creating a virtual agency, which is for the benefit of all,
and one which is onerous and prejudicial to all. The one is not a natural
or a necessary consequence from the other. A person may well authorize
the payment of a debt, for which he is now liable ; and yet refuse to
authorize a charge, where there at present exists no legal liability to pay.
Yet, if the principle of Lord Mansfield be correct, the acknowledgment of
one joint debtor will bind all the rest, even though they should have
utterly denied the debt at the time when such acknowledgment'was made.
The doctrine of Whitcomb v. Whiting, has been followed in England in
subsequent cases, and was applied in a strong manner, in Jackson v. Fair-
bank, (2 H. Bl. 340,) where the admission of a creditor to prove a debt,
on a joint and several note, under a bankruptcy, and to receive a dividend,
was held sufficient to charge a solvent joint debtor, in a several action
against him, in which he pleaded the statute, as an acknowledgment of a
subsisting debt. It has not, however, been received without hesitation.
In Clark v. Bradshaw, (3 Esp. E. 155,) Lord Kenyon, at Nisi Prius, ex-
pressed some doubts upon it ; and the cause went off on another grotmd.
And in Brandram v. Wharton, (1 Barn. & Aid. 463,) the case was very
much shaken, if not overturned. Lord Ellenborough upon that occasion
used language, from which his dissatisfaction with the whole doctrine may
be clearly inferred. ' This doctrine,' said he, ' of rebutting the statute of
limitations by an acknowledgment, other than that of the party himself,
begun with the case of Whitcomb v. Whiting. By that decission, where,
however, there was an express acknowledgment, by an actual payment of
a part of the debt by one of the parties, I am bound. But that case was
full of hardship ; for this inconvenience may follow from it. Suppose a
person liable jointly with thirty or forty others, to a debt ; he may have
actually paid it, he may have had in his possession the document by which
that payment was proved, but may have lost his receipt. Then, though
this was one of the very cases which this statute was passed to protect,
508 PAETNEKSHIP. [CH. XIV.
debt against the estate of the deceased partner, and
no acknowledgment by the representative of the de-
he may still be bound, and his liability be renewed, by a random acknow-
ledgment made by some one of the thirty or forty others, who may be
careless of what mischief he is doing, and who may even not know of
the payment which has been made. Beyond that case, therefore, I am
not prepared to go, so as to deprive a party of the advantage, given him
by the statute, by means of an implied acknowledgment.' The English
cases, decided since the American Revolution, are, by an express statute
of Kentucky, declared not to be of authority in their Courts ; and conse-
quently Whitcomb o. Whiting, in Douglas, and the cases which have
followed it, leave the question in Kentucky quite open to be decided upon
principle. In the American Courts, so far as our researches have extended,
few cases have been litigated upon this question. In Smith v. D. & G.
Ludlow, (6 Johns. R. 267,) the suit was brought against both partners, and
one of them pleaded the statute. Upon the dissolution of the partnership,
public notice was given, that the other partner was authorized to adjust all
accounts ; and an account signed by him, after such advertisement, and
within six years, was introduced. It was also proved, that the plaintiff
called on the partner, who pleaded the statute, before the commencement
of the suit, and requested a settlement, and that he then admitted an
account, dated in 1797, to have been made out by him; that he thought
the account had been settled by the other defendant, in whose hands the
books of the partnership were'; and that he would see the other defendant
on the subject, and communicate the result to the plaintiff. The Court
held, that this was sufficient to take the case out of the statute ; and said,
that without any express authority, the confession of one partner, after the
dissolution, will take a debt out of the statute. The acknowledgment
will not, of itself, be evidence of an original debt ; for that would enable
ona party to bind the other in new contracts. But the original debt being
proved or admitted, the confession of one will bind the other, so as to pre-
vent him from availing himself of the statute. This is evident, from the
cases of Whitcomb v. Whiting, and Jackson v. Fairbank ; and it results
necessarily from the power given to adjust accounts. The Court also
thought the acknowledgment of the partner setting up the statute was
sufficient, of itself, to sustain the action. This case has the peculiarity of
an acknowledgment made by both partners, and the formal acknowledg-
ment by the partner who was authorized to adjust the accounts after the
dissolution of the partnership. There was not, therefore, a virtual but
an express and notorious agency devolved on him, to settle the account.
The correctness of the decision cannot, upon the general view taken by
the Court, be questioned. In Roosevelt v. Marks, (6 Johns. Ch. Rep. 266,
291,) Mr. Chancellor Kent admitted the authority of Whitcomb ti. Whit-
CH. XIV.] DISSOLtFTION — RIGHTS OF PARTNERS. 509
ceased partner will revive the debt against the survi-
vors.-^
ing, but denied that of Jackson v. Fairbank, for reasons which appear to
us solid and satisfactory. Upon some other cases in New York we shall
have occasion hereafter to comment. In Hunt v. Bridgham, (2 Pick. E.
581,) the Supreme Court of Massachusetts, upon the authority of the cases
in Douglas, H. Blackstone, and Johnson, held that a partial payment by
the principal debtor on a note took the case out of the statute of limita-
tions, as against a surety. The Court did not proceed to any reasoning to
establish the principle, considering it as the .result of the authorities.
Shelton v. Cocke, (3 Munford, R. 191,) is to the same effect; and contains
a mere enunciation of the rule, without any discussion of its principle.
Simpson v. Morrison, (2 Bay, Rep. 533,) proceeded upon a broader ground,
and assumes the doctrine of the case in 1 Taunt. Rep. 104, hereinafter
noticed, to be correct. Whatever may be the just influence of such recog-
nitions of the principles of the English cases in other States, as the doc-
trine is not so settled in Kentucky, we must resort to such recognition,
only as furnishing illustrations to assist our reasoning, and decide the
case now, as if it had never been decided before. By the general law of
partnership, the act of each partner, during the continuance of the partner-
ship, and within the scope of its objects, binds all the others. It is con-
sidered the act of each and of all, resulting from a general and mutual
delegation of authority. Each partner may, therefore, bind the partner-
ship by his contracts in the partnership business ; but he cannot bind it by
any contracts beyond those limits. A dissolution, however, puts an end
to the authority. By the force of its terms it operates as a revocation of all
power to create new contracts ; and the right of partners, as such, can
extend no farther than to settle the partnership concerns already existing,
and to distribute the remaining funds. Even this right may be qualified
and restrained, by the express delegation of the whole authority to one of
the partners. The question is not, however, as to the authority of a part-
ner, after the dissolution, to adjust an admitted and subsisting debt ; we
mean, admitted by the whole partnership, or unbarred by the statute ; but
whether he can, by his sole act, after the action is barred by lapse of time,
revive it against all the partners, without any new authority communicated
to him for this purpose. We think the proper resolution of this point
depends upon another, and that is, whether the acknowledgment or pro-
mise is to be deemed a mere continuation of the original promise, or a new
contract, springing out of and supported by the original consideration.
We think it is the latter, both upon principle and authority ; and, if so,
> Atkins V. Tredgold, 2 Barn. & Cressw. 23 ; Slater v. Lawson, 1 Barn.
& Adol. 396 ; Crallan v. Oulton, 2 Beavan, R. 7 ; Way v. Bassett, 5
Hare, R. 67.
43*
510 PARTNERSHIP. [CH. XIV.
§ 324 h. Another question has arisen ; and that is,
whether after the decease of one partner, the surviving
as after the dissolution no one partner can create a new contract, binding
upon the others, his acknowledgment is inoperative and void, as to them.
There is some confusion in the language of the books, resulting from a
want of strict attention to the distinction here indicated. It is often said,
that an acknowledgment revives the promise, when it is meant that it
revives the debt or cause of action. The revival of a debt supposes that it
has been once extinct and gone ; that there has been a period, in which it
had lost its legal use and validity. The act which revives it, is what
essentially constitutes its new being, and is inseparable from it. It stands
not by its original force, but by the new promise, which imparts vitality
to it. Proof of the latter is indispensable to raise the assumpsit, on which
an action can be maintained. It was this view of the matter, which first
created the doubt, whether it was necessary that a new consideration
should be proved to support the promise, since the old consideration was
gone. That doubt has been overcome ; and it is now held, that the origi-
nal consideration is sufficient, if recognized, to uphold the new promise,
although the statute cuts it off, as a support for the old. What, indeed,
would seem to be decisive on this subject is, that the new promise, if qual-
ified or conditional, restrains the rights of the party to its own terms ;
and if he cannot recover by those terms, he cannot recover at all. If a
person promise to pay, upon condition that the other do an act, perform-
ance must be shown before any title accrues. If the declaration lays a
promise by or to an intestate, proof of the acknowledgment of the debt by
or to his personal representative will not maintain the writ. Why not,
since it establishes the continued existence of the debt ? The plain reason
is, that the promise is a new one by or to the administrator himself, upon
the original consideration, and not a revival of the original promise. So,
if a man promises to pay a preexisting debt, barred by the statute, when
he is able, or at a future day, his ability must be shown, or the time
must be passed, before the action can be maintained. Why ? Because it
rests on the new promise, and its terms must be complied with. We do
not here speak of the form of alleging the promise in the declaration, upon
which, perhaps, there has been a diversity of opinion and judgment ; but
of the fact itself, whether the promise ought to be laid in one way or
another, as an absolute or as a conditional promise ; which may depend
upon the rules of pleading. This very point came before the twelve
Judges, in the case of Hyling v. Hastings, (1 Ld. Raym. 889, 421,) rn
the time of Lord Holt. There, one of the points was, "' whether the
acknowledgment of a debt within six years would amount to a new pro-
mise, to bring it out of the statute ; and they were all of opinion, that it
would not; but that it was evidence of a promise.' Here, then, the
CH. XIV.] DISSOLUTION — EIGHTS OP PARTNERS. 511
partner can, in a suit brought to obtain payment of a
debt due to a creditor of the firm out of the assets of
Judges manifestly contemplated the acknowledgment, not ag a continua-
tion of the old promise, but as evidence of a new promise ; and that it is
the new promise, which takes the case out of the statute. Now, what is
a new promise, but a new contract ; a contract to pay, upon a preexisting
consideration, which does not, of itself, bind the party to pay, indepen-
dently of the contract? So, in Boydell v. Drummond, (2 Camp. R. 157,)
Lord Ellenborough, with his characteristic precision, said, ' If a man
acknowledges the existence of a debt, barred by the statute, the law has
been supposed to raise a new promise to pay it ; and thus the remedy is
revived.' And it may be affirmed, that the general current of the En-
glish, as well as the American authorities, conforms to this view of the
operation of an acknowledgment. In Jones v. Moore, (5 Binney, K.
573,) Mr. Chief Justice Tilghman went into an elaborate examination of
this very point ; and came to the conclusion, from a review of all the
cases, that an acknowledgment of the debt can only be considered as
evidence of a new promise ; and he added, ' I cannot comprehend the
meaning of reviving the old debt, in any other manner than by a new
promise.' There is a class of cases, not yet adverted to, which materially,
illustrates the right arid powers of partners, after the dissolution of the
partnership, and bears directly on the point under consideration. In
Hackley v. Patrick, (3 Johns. K. 536,) it was said by the Court, that,
' After a dissolution of the partnership, the power of one party to bind the
others wholly ceases. There is no reason, why his acknowledgment of an
account should bind his copartners, any more than his giving a promissory
note, in the name of the firm, or any other act.' And it was, therefore,
held, that the plaintiflF must produce further evidence of the existence of
an antecedent debt, before he could recover ; even though the acknowledg-
ment was by a partner authorized to settle all the accounts of the firm.
This doctrine was again recognized by the same Court, in Walden v.
Sherburne, (15 Johns. R. 409, 424,) although it was admitted, that in
Wood V. Braddick, (1 Taunt. 104,) a different decision had been had in
England. If this doctrine be well founded, as we think it is, it furnishes
a strong ground to question the efficacy of an acknowledgment to bind
the partnership for any purpose. If it does not establish the existence of
a debt against the partnership, why should it be evidence against it at
all ? If evidence, aliunde, of facfc within the reach of the statute, as of
the existence of a debt, be necessary before the acknowledgment binds, is
not this letting in all the mischiefs, against which the statute intended to
guard the parties ; viz. the introduction of stale and dormant demands, of
long standing, and of uncertain proof? If the acknowledgment, per se,
does not bind the other partners, where is the propriety of admitting
512 PARTNERSHIP. [CH. XIV.
the deceased partner, in which suit the surviving part-
ner is made a party, se.t up the statute of limitations
proof of an antecedent debt, extinguished by the statute as to them, to
be revived without their consent ? It seems difficult to find a satisfactory-
reason, why an acknowledgment should raise a new promise, when the
consideration, upon which alone it rests, as a legal obligation, is not
coupled with it in such a shape as to bind the parties ; that the parties
are not bound by the admission of the debt, as a debt ; but are bound by
the acknowledgment of the debt, as a promise, upon extrinsic proof. The
doctrine in 1 Taunt. R. 104, stands upon a clear, if it be a legal ground;
that, as to the things past, the partnership continues, and always must
continue, notwithstanding the dissolution. That, however, is a matter
which we are not prepared to admit, and constitutes the very ground now
in controversy. The light in which we are disposed to consider this
question, is, that after a dissolution of a partnership, no partner can create
a cause of action against the other partners, except by a new authority
communicated to him for that purpose. It is wholly immaterial what is
the consideration, which is to raise such cause of action ; whether it be
a supposed preexisting debt of the partnership, or any auxiliary consider-
•ation which might prove beneficial to them. Unless adopted by them,
they are not bound by it. V^hfen the statute of limitations has once run
against a debt, the cause of action against the partnership is gone. The
acknowledgment, if it is to operate at all, is to create a new cause of
action ; to revive a debt which is extinct ; and thus to give an action,
which has its life from the new promise, implied by law from such an
acknowledgment, and operating and limited by its purport. It is then, in
its essence, the creation of a new right, and not the enforcement of an
old one. We think that the power to create such a right does not exist,
after a dissolution of the partnership, in any partner. There is a case in
the Kentucky Reports, not cited at the bar, which coincides, as far as it
goes, with our own views ; and if taken as a general exposition of the
law, according to its terms, is conclusive on this point. It is the case of
Walker and Evans w.Duberry, 1 Marshall's Kep. 189. It is very briefly
reported, and the opinion of the Court was as follows. 'We are of
opinion, that the Court below improperly admitted, as evidence against
Walker, the certificate of J. T. Eyans, made after the dissolution of the
partnership, between Walker and Evans, acknowledging that the partner-
ship firm was indebted to the defendant Duberry in the sum demanded, in
the action brought by him in the Court below.' It cites 3 Johns. R. 536 ;
3 Munf. R. 191. It does not appear what was the state of facts in the
Court below, nor whether this was an action in which the statute of limita-
tions was pleaded, or only non assumpsit generally. But the position is
generally asserted, that the acknowledgment of a debt by one partner
CH. XIV.] DISSOIiUTIOK — EIGHTS OF PAKXNERS. 513
as a bar to a demand against the assets of the deceased;
and it has been held that he cannot.^ And it yet
remains a matter of doubt, whether the representatives
of the deceased partner can in such a suit set up the
statute of limitations as a bar, so long as the surviving
partner continues liable to the payment of the debt, as
the deceased's estate is liable to be called upon by the
surviving partner for contribution in case the latter
pays the debt.^
after a dissolution is not evidence against the other. Whether the Court
meant to say in no case whatever, or only when the debt itself was
proved, aliunde, does not appear. The language is general, and would
seem to include all cases ; and if any qualification were intended, it would
have been natural for the Court to express that qualification, and have
confined it to the circumstances of the case. The only room for doubt
arises from the citations of 3 Johnson, and 3 Munford. The former has
been already adverted to ; and the latter, Shelton v. Cocke and others,
(3 Munf. R. 191,) recognized the distinction asserted in 3 Johns. R. 536,
as sound. These citations may, however,*have been referred to as mere
illustrations, going to establish the proposition of the Court to a certain
extent, and not as limitations of its extent. In any view, it leads us to
the most serious doubts, whether the State Courts of Kentucky would
ever adopt the doctrine of Whitcomb v. Whiting, in Douglas ; especially
so, as the early case in 2 Vent. 151, carries an almost irresistible pre-
sumption, that the Courts, at that time, held a doctrine entirely incon-
sistent with the case in Douglas." See also Ante, § 107.
1 Winter v. Innes, 4 Mylne & Craig, 101.
2 Winter v. Innes, 4 Mylne & Craig, 101, 111. — Lord Cottenham said;
" When the simple case shall occur of the representatives of a deceased
partner setting up the Statute of Limitations against a claim by a creditor
of the firm, it will be to be considered whether such a defence can prevail
whilst the surviving partner continues liable, and the estate of the deceased
partner continues liable to contribution at the suit of the surviving part-
ner. If the equity of the creditor to go against the estate of the deceased
partner is founded upon the equity of the surviving partner against that
estate, it would seem that the equity of the creditor ought not to be
barred, so long as the equity of the surviving party continues, as that
would be to create that circuity, which it is the object of the rule to pre-
vent. In Braithwaite v. Britain, the Master of the KoUs thought that the
statute did not operate, although nine years had elapsed. In this case it
is not necessary to consider that general question ; Mr. Baillie was himself
514 PARTNERSHIP. [CH. XIV.
[§ 324 c. But after a dissolution of partnership, by-
death or otherwise, the surviving or continuing part-
ners of the firm are, in a suit against theni by persons
claiming to be creditors of the partnership, entitled to
the protection of the Statute of Limitations, although
as between themselves and retired partners, or the
estates of decease^ partners, the partnership accounts
are unsettled ; and the retired partners, or the execu-
tors of a deceased partner, are in such a suit against
them entitled to the like protection;^]
§ 325. On the other hand, notwithstanding the dis-
solution of the partnership, these still remain certain
rights, duties, powers, authorities, and relations between
them, which the law recognizes and supports, because
they are, or may be, indispensable to the complete
arrangement and final settlement of the affairs of the
partnership ; and, therefore, in a qualified and limited
sense, the partnership may be said for those purposes
to continue between the parties, until such arrange-
ment and settlement take place.^ Indeed, as has been
a trustee and executor of the will of the deceased partner, and did not
renounce till 1830; and Mr. Innes, who had the property, acted through-
out on behalf of the estate of the deceased. And who now set up the
Statute of Limitations ? Not the executors of the deceased partner, who
are not bound to plead the statute, but may, if they please, pay a just
debt, though barrable by the statute ; nor any one interested in his estate,
but those who stand in the place of Mr. Innes as surviving partner. I
think, therefore, that their defence cannot prevail." But see Way v.
Bassett, 5 Hare, R. 68 ; Braithwaite v. Britain, 1 Keen, K. 206.
' Way V. Bassett, 5 Hare, K. 68 ; Brown v. G-ordon, 15 Eng. Law &
Eq. R. 340. See Ante, § 233 a.
2 Gow on Partn. ch. 5, § 2, p. 231, 3d edit.; Wilson v. Greenwood,
1 Swanst. R. 471, 480, 481 ; Crawshay v. Maule, 1 Swanst. R. 495, 506,
507 ; Peacock v. Peacock, 16 Ves. 49, 57 ; Ex parte Williams, 11 Ves. 3,
5 ; Ex parte Ruffin, 6 "Ves. 119, 126, 127 ; Post, § 328, note; Murray v.
Mumford, 6 Cowen, R. 441 ; Cruikshank v. M'Vicar, 8 Beavan, R. 106 ;
Geortner v. Trustees of Canajoharie, 2 Barbour, R. 625.
CH. XIV.] DISSOLUTION — RIGHTS OF PARTNERS. 515
well said by a learned author on this subject, from the
very nature of a partnership, engagements "may be con-
tracted, which cannot be fulfilled during its existence,
exposed as it is to sudden and arbitrary terminations ;
and the consequence, therefore, must be, that, for the
purpose of making good outstanding engagements, of
taking and settling all the accounts, and converting all
the property, means, and assets of 'the partnership,
existing at the time of the dissolution, as beneficially
as may be for the benefit of all who were partners,
according to their respective shares and proportions,
the legal interest must subsist, although, for all other
purposes, the partnership is actually determined.^
§ 326. Besides; as we have already seen,^ each
partner, upon the dissolution of the partnership, has
a perfect right, in the first place, to require that the
partnership funds shall be directly and regularly
applied to the discharge of the partnership debts and
liabilities ; and, after these are discharged, to have his
share of the residue of the partnership funds.^ This
right is a privilege or lien on those funds, fully recog-
nized and enforced by Courts of Equity ; and, through
this right of the partners themselves, is worked out
the known equity of the joint creditors, to have a pri-
ority of payment of .their debts out of the same funds.
1 Gow on Partn. ch. 5, § 2, p. 231. — Substantially the same language
was used by Lord Eldon, in Crawshay v. Collins, 15 Ves. 226. See also
Natusch V. Irving, Gow on Partn. App. p. 398, 404, 3d edit.
2 Ante, § 97, and note 1 ; 1 Story on Eq. Juris. § 675, 676 ; Ex parte
Ruffin, 6 Ves. 119, 126; Ex parte Williams, 11 Ves. 3, 5 ; Holderness v.
Shackels, 8 Barn. & Cressw. 612; Kirby v. Schoonmaker, 3 Barbour, Ch.
R. 46.
3 Gow on Partn. ch. 5, § 2, p. 235, 236, 3d edit.
616 PARTNERSHIP. [CH. XIV.
in Opposition and preference to the separate creditors
of each partner.^ It is easy to perceive, that this
right would be a mQre dead claim or inert title, if the
i Ex parte Euffin, 6 Ves. 119 ; S. C. Ante, § 97, note 1 ; Ex parte
Fell, 10 Ves. 347; Allen v. Center Valley Co. 21 Conn. 130; Ex parte
Williams, 11 Ves. 5. — In the latter case Lord Eldon said; "I have fre-
quently, since I decided the case Ex parte Euffin, considered it ; and I
approve that decision. In a subsequent case the dissolution took place
only a week before the question arose ; and the true question, I thought,
was upon the bona fides of the transaction ; whether that which had been
' joint estate, had become separate estate. The grounds upon which I
went, in Ex parte Euffin, were these. Among partners clear equities
subsist, amounting to something like lien. The property is joint; the
debts and credits are jointly due. They have equities to discharge each
of them from liability, and then to divide the surplus according to their
proportions ; or, if there is a deficiency, to call upon each other to make
up that deficiency, according to their proportions. But, while they
remain solvent, and the partnership is going on, the ereditor has no equity
against the effects of the partnership. He may bring an ^action against
the partners, and get judgment ; and may execute his judgment against
the effects of the partnership. But, when he has got them into his hands,
he has them by force of the execution, as the fruit of the judgment ;
clearly, not in respect of any interest he had in thev partnership effects,
while he was a mere creditor, not seeking to substantiate, or create, an
interest by suit. There are various ways of dissolving a partnership;
efiluxion of time ; the death of one partner ; the bankruptcy of one,
which operates like death ; or, as in this instance, a dry, naked agreement,
that the partnership shall be dissolved. In no one of these cases can it
be said, that to all intents and purposes the partnership is dissolved ; for
the connection still remains until the affairs are wound up. The repre-
sentative of a deceased partner, or the assignees of a bankrupt partner,
are not strictly partners with the survivor, or the solvent partner. But
still, in either of those cases, that community of interest remains that is
necessary, until the affairs are wound up ; and that requires, that what
was partnership property before, shall continue for the purpose of a distri-
bution, not as the rights of the creditors, but as the rights of the partners
themselves require. And it is through the operation of administering the
equities, as between the partners themselves, that the creditors have that
opportunity ; as in the case of death, it is the equity of the deceased part-
ner that enables the creditors to bring forward the distribution." See
also Gow on Partn. ch. 5, § 2, p. 235, 236, 3d edit.
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 517
mere dissolution of the partnership would of itself
prevent the partners from applying the joint funds in
an appropriate manner to those very purposes ; at least
if a Court of Equity did not interpose to enforce it.
And why should a Court he called upon to do the very
acts, which, upon principles of common sense and com-
mon justice, the partners themselves might reasonably
be left to do for themselves, without such a dilatory
and inconvenient process ?
§ 327. Moreover, it is plain, that if a total extinction
of all rights, powers, and authorities of the partners to
deal with the partnership property, funds, and effects,
immediately followed upon the dissolution of the part-
nership, it would amount to a complete suspension of
all right and authority to apply any part thereof to
the payment and discharge of the existing partnership
debts, or to collect the debts due to the partnership,
or to adjust unsettled accounts, or even to close any
outstanding adventures, or inchoate operations. The
mischiefs, therefore, would be positive and irreparable,
without the intervention of a Court of Equity to com-
pel the parties to do that, which the law has wisely
allowed without compulsion, or to appoint a receiver,
who should perform the like functions in a slow, and
expensive, and, for the most part, a less active and
skilful manner.
§ 328. Hence it is now the admitted doctrine of
the common law, that although the dissolution of the
partnership disables any one of the partners from con-
tracting new debts, or buying or selling or pledging
goods on account of the firm, in the course of the
former trade thereof; yet, nevertheless, it leaves every
partner in possession of the fuU power (unless, indeed,
upon the dissolution it has been exclusively confided
PAKTN. 44
518 PARTNERSHIP. [CH. XIV.
and delegated to some other partner or person) -"^ to
pay and collect debts due to the partnership;^ to apply
the partnership funds and eJBfects to the discmirge of
their own debts ; to adjust and settle the unliquidated
debts of the partnership ; to receive any property
belonging to the partnership ; and to make due acquit-
tances, discharges, receipts^ and acknowledgments of
their acts in the premises.^ For all these acts, if done
1 2 Bell, Comm. B. 7, ch. 2, p. 643, 644, 5th edit.; Gow on Partn. ch. 5,
§ 1, p. 227, 228, 3d edit.; Id. ch. 5, § 3, p. 305, 306.
[And the insolvency of one partner, and his misapplication of the
funds collected, will not affect the validity of a hona fide payment to him
by a debtor of the firm. Major v. Hawkes, 12 Illinois R. 298.]
3 CoUyer on Partn. B. 1, ch. 2, § 3, p. 75 ; Id. B. 2, ch. 2, § 8, p. 130 ;
Id. B. 4, ch. 1, p. 582 to p. 588, 2d edit. ; Fox v. Hanbury, Cowp. R. 445 ;
Harvey v. Crickett, 5 Manle & Selw. 336 ; Woodbridge v. Swan, 4 Barn.
& Adol. 633 ; Smith v. Oriell, 1 East, R. 363 ; 1 Montagu on Partn. App.
Note 2 M. p. 135 ; 2 Bell, Comm. B. 7, ch. 2, p. 643 ; Id. p. 637, 5th
edit. ; Combs v. Boswell, 1 Dana, R. 475 ; Murray v. Mumford, 6 Cowen,
R. 441; Gannett v. Cunningham, 34 Maine, 62; Homer v. Irvine, 3
Watts & Serg. 345; Robinson v. Taylor, 4 Barr, R. 243. — In Harvey v.
Crickett, (5 Maule & Selw. 336 to 344,) the question was much con-
sidered. On that occasion Mr. Justice Bayley expounded the doctrine in
the following manner. " If this action is maintainable, the consequence
would be, that after an act of bankruptcy committed by one partner, the
partnership-house must immediately be closed. But such a consequence
is directly contrary to the cases of Pox v. Hanbury, and Smith v. Oriell.
If several persons enter into partnership, either for a definite or an inde-
finite time, each partner is at liberty to apply the joint funds in payment
of the partnership debts ; and each has a lien on those funds for his own
indemnity, limited to their being applied to the payment of partnership
debts. When one of several partners becomes bankrupt, he puts himself
by that act out of the partnership, and ceases to have any further control
over the partnership property. The whole of his rights pass to his
assignees. But this does not prevent the remaining partners from exer-
cising the control, which rests with them over the property, to take care
that it is duly applied in liquidation of the partnership debts. If this
were not so, in what a situation would the solvent partners be placed ?
For if, in this case, a creditor had applied to M. B. Harvey for payment
of a partnership debt, and he were precluded by the bankruptcy of J. W.
Harvey from paying it, the consequence would be, that having funds of
CH. XIV.] DISSOLUTION — EIGHTS OF PAETNEES. 519
bond fide, are for the advancement and consummation
of the great objects and duties of the partners upon
the partnership in his hands, fully sufficient to satisfy the demand, he
must, nevertheless, become liable to arrest, and to be detained in prison.
And the creditor also would be in this dilemma, that, having funds to look
to for the discharge of his debt, he could not obtain payment, because he
could not properly receive what the other was unable to pay. The
solvent partner would say, that he was liable to account with the assignees
of the bankrupt partner, and thus leave the partnership creditor unpaid.
This seems to me to be a consequence, the inconvenience of which is
sufficiently obvious. It is argued, that a distinction is to be made in the
present case, because both M. B. Harvey and the defendants were aware
of the act of bankruptcy. But I ask, whether this was not a 5ona Jid&
payment to a person who is entitled to receive it ? If it were, the know-
ledge which they possessed of the act of bankruptcy does not, as it seems
to me, distinguish the case from those of Fox v. Hanbury, and Smith u.
Oriell. In Smith v. Oriell, Lord Eenyon considered that the whole, and
not a moiety only, of the partnership property, delivered by the solvent
partner in satisfaction of a partnership debt, passed by the transfer." The
other Judges concurred in his views. Mr. Bell (2 Bell, Comm. B. 7,
ch. 2, p. 643, 5th edit.) has summed up the general doctrine, both as, to
authority and principle, in the following terms. " When a partnership
expires, whether by death, or by lapse of time, or by bankruptcy, the
partnership is considered, in one sense, as determined, but in a sense also
as continued, that is, continued, till all the affairs are settled. After this
no act can be effectually done, or contract entered into, in the name of the
firm, as in partnership ; but every act of administration, which is necessary
for winding up the concern, may effectually be done. (1.) A receipt to a
debtor of the company, by the signature of the firm, seems to be valid, if
no other mode of settling the affairs has been appointed and made known.
(2.) If by the dissolution and notice the debts are to be paid to a parti-
cular person, partner, or other receiver, no other can validly discharge
the debt; especially if there be any evident marks of collusion; as paying
by an offset against the partner, who grants the receipt. (8.) After disso-
lution, no valid draft, acceptance, or indorsation, can be made by the firm;
and it is no authority to do so, if one partner is in the notice empowered
to receive and pay the debts of the company. The indorsation, draft, or
acceptance, must be done by all, the partners, or by one specially em-
powered so to act for them. (4.) If after dissolution a partner accept a
bill in the name of the company, bearing date before the dissolution, it
has been held in England, that the other partners are not bound. But a
distinction has been taken, where, before the dissolution, skeleton or blank
bills have been signed by the firm, and those are filled up subsequently to
the dissolution,«but a date inserted prior to the dissolution ; in that case
620 PARTNERSHIP. [CH. XIV.
the dissolution, to wind up the whole partnership con-
cerns, and to divide the surplus, if any, among them,
after all debts and charges are extinguished.^ In cases
the bill has been held effectual to bind the partners. Such a case
occurred in Scotland, but it has not yet been decided, in which, after the
dissolution, it appeared that certain skeleton bills, which the company had
been in use of granting, were filled up and antedated, so as to fall within
the period of partnership." [On the other hand, in Buckley v. Barber,
1 Eng. Law & Eq. R. 511, Baron Parke said — " In our law the rule of
the civil law does not exist with respect to agents of deceased principals ;
and with respect to surviving partners, though there are expressions of
text-writers, (Story on Partnership, § 344 ; 3 Kent, Comm. Lect. 43, p.
63,) and judges, (Harvey v. Crickett, 5 Mau. & S. 336 ; see Woodbridge
V. Swann, 4 B. & Ad. 636; Beck v. Beck, 3 Swanst. 627 ; Lord Notting-
ham's MS., and 1 Id. 507, note,) which have that aspect, there is no clear,
satisfactory authority that the surviving partner has a power, by virtue of
the partnership relation only, to transfer the legal title to the share belong-
ing to the executors of the deceased, to a third person, leaving the execu-
tors to pursue their remedy against the survivor, if that authority is
improperly exercised. It is clear that the legal title to the share of the
survivor passes, and the purchaser therefore is at all events tenant in
common with the executor; and as the law allows no right of action to
one tenant in common against another, so long as the Subject of the
tenancy exists, and is capable of recaption, that circumstance will explain
all the decisions on the subject, including Harvey b. Crickett, 5 Mau. &
S. 336; see W^oodbridge v. Swann, 4 B. & Ad. 633. In Harvey v.
Crickett, the dicta of the judges go much further ; probably Mr. Justice
Bayley mistook the opinion of Lord Kenyon in Smith v. Oriell, 1 East,
36/8, and we doubt whether surviving partners have a power to sell, and
give a good legal title to the share belonging to the executors of the
deceased partner, when they sell in order to pay the debts of the deceased
and of themselves ; but, be that as it may, we think it clear, that the sur-
vivors could have no power to dispose of it otherwise than to pay such
debts, certainly not to mortgage that share together with their own, (for
that is the real nature of this transaction,) as a security for a debt princi-
pally due from the surviving partners, and in part only from the deceased,
and in order to enable them to continue their trade. At all events,
therefore, this transaction was .not within the scope of any implied author-
ity which the surviving partners may have, to wind up the affairs of the
partnership ; and therefore this conveyance did not pass the share of the
deceased to the plaintiffs, by virtue of any implied authority in the
survivors."]
J Note, Ibid. ; Drury v. Roberts, 2 Md. Ch. Deo. 157. •
CH. XIV.] DISSOLUTION EIGHTS OF PABTNERS. 521
of the dissolution of a partnership by the death of one
of the partners, the same rights and duties (as we
shall presently see) attach to the surviving partners.
The survivors are entitled to close up the affairs of the
firm, to collect and adjust the debts due to it, and to
pay its debts and discharge its liabilities. They are
also bound to apply the partnership property to the
like purposes with reasonable diligence. If they are
negligent in the discharge of their duties in these
particulars. Courts of Equity will interfere, and, upon
the application of the representatives of the deceased
partner, appoint a receiver, and order a sale of the
partnership property, and wind up the affairs of the
firm.^
I 329. And, here, is seen the beneficial operation of
the jurisdiction of Courts of Equity. While they will
protect each partner in the due exercise of these rights
and authorities, notwithstanding a dissolution j they
will, on the other hand, watch over and guard the
interests of the partnership itself, and take care that
he shall not, by any misconduct, or abuse, or excess in
the exercise of his own rights and authorities, prejudice
those of the other partners. Hence, Courts of Equity
will interfere and prohibit and control, by an injunction,
any improper sale or other misapplication of the funds
of the partnership by any partner to the payment of
his own private and separate debts. So they will, in
like manner prevent him from subsequently trading
with the partnership funds ; or from interfering injuri-
ously with the settlement of the partnership affairs ; or
from excluding the other partners from their just share
' Ibid.; Evans v. Evans, 9 Paige, K. 178 ; Post, § 3i4.
44*
522
PARTNERSHIP. [CH. XIV.
of the management thereof; ^ or from doing any other
act, or making any use of the property of the partner-
ship, inconsistent with the purpose of winding up the
concerns thereof, in the manner most beneficial to all
the parties.^ If any partner has, after the dissolution,
misapplied the partnership funds, and made profits
thereby, he will be made accountable for all such
profits ; but the losses, if any, must be borne by him-
self.^ [But if the partners of a solvent partnership
1 Gow on Part. ch. 5, § 2, p. 231, 232, 3d edit. ; Harding v. Glover, 18
Ves. 281 ; Crawshay w. Maule, 1 Swanst. K. 507; Heathcote v. Hulme,
1 Jac. & Walk. 122, 128 ; Wilson v. Greenwood, 1 Swanst. E. 481 ; Dacie
V. John, 1 McClell. R. 206 ; S. C. 13 Price, R. 446 ; CoUyer on Partn.
B. 2, ch. 3, § 5, p. 235 ; Id. B. 4, ch. 1, p. 579, 587, 509, 2d edit.; De
Tastet V. Bordenave, Jacob, R. 516 ; 1 Story on Eq. Jurisp. § 671 ; Allen
V. Kilbre, 4 Madd. R. 464. — Mr. CoUyer (Collyer on Partn. B. 2, ch. 3,
§ 7, p. 245, note b) seems to think, that a Court of Equity would refuse
an injunction to restrain the use of the partnership name by one partner
after a dissolution; and he founds himself upon the doctrine of Lord
Thurlow, in Ryan v. Macktoath, (3 Bro. Ch.R. 15,) that a Court of Equity
would not decree a written instrument to be delivered up and cancelled,
upon which no action could be maintaihed at law. Lord Thurlow's
opinion upon the general doctrine seems now abandoned ; and the con-
trary rule, as to written instruments, generally established. See Mr.
Belt's note (1) to 3 Bro. Ch. R. 15; 2 Story on Eq. Jurisp. §(699, 700,
701, 702, and the cases there cited. But, as between partners, the doctrine
of Lord Thurlow would seem (even if it were admissible in common
cases) to be unsatisfactory, and inconsistent with sound principles ; for
every such use of the partnership name after the dissolution may expose
the other partners to the hazard of a suit at law, and perhaps to a recovery
against them, where actual knowledge of the dissolution could not be
brought home to the holder, if it be a negotiable instrument. But see
Webster v. Webster, 3 Swanst. R. 491, note, and Lewis v. Langdon, 7
Sim. R. 421. See also Ante, § 224 to § 227.
2 Crawshay v. Maule, 1 Swanst. R. 495, 507; Collyer on Partn. B. 2,
ch. 2, § 1, p. 130, 2d edit.
3 Ante, § 174, 233; Heathcote u. Hulme, 1 Jac. & Walk. 122, 128;
Stoughton V. Lynch, 1 Johns. Ch. R. 467, 469, 471 ; Crawshay v. Collins,
15 Yes. 218 ; Gow on Partn. ch. 5, § 4, p. 354, 3d edit; Brown v. Litton,
CH. XIV.] DISSOLUTION EIGHTS OF PAETNEES. 523
agree to dissolve and divide their joint .property, and
to own their respective parts in severalty, neither has
any remedy in equity against the other, and no lien on
the other partner, because of his liability for the debts
of the firm, or his payment of them.^]
§ 330. If it shall become expedient and proper
more effectually to attain any or all of these purposes,
Courts of Equity will appoint a manager or receiver
to coUect the partnership funds, and wind up the whole
concern in the manner most beneficial to all the par-
ties, either exclusive of all the partners, or by making
one or more of them the exclusive managers or receiv-
ers. To induce Courts of Equity, however, to interfere
in this last strong and summary manner, some fraud-
ulent breach of contract or duty must be shown, or
some urgent and pressing necessity.^
§ 331. Courts of Equity proceed still further in the
enforcement of their principles. If any partner, after
the dissolution, should make any composition of the
debts due to or from the partnership, he will not be at
liberty to avail himself of any private benefit there-
from, but it will properly belong to the partnership ;
for whatever act he does, it is his duty to perform it
1 P. Will. 140 ; Brown v. De Tastet, Jacob, E. 284 ; 1 Valin, Comm.
Lib. 2, tit. 8, art. 5, p. 578, edit. 1766 ; Willett v. Blanford, 1 Hare, E.
253, 263.
1 Holmes v. Hawes, 8 Iredell, Eq. R. 21 ; Lingen «. Simpson, 1 Sim. &
Stuart, 600; Hickman v. MTadden, 1 Swann, 258.
2 Gow on Partn. ch. 2, ^ 4, p. li4 ; Id. ch. 5, § 2, p. 231, 232, 3d edit. ;
Harding v. Glover, 18 Ves. 281 ; Crawshay v. Maule, 1 Swanst. E. 507;
Heathcote v. Hulme, 1 Jac. & Walk. 122, 128; Wilson?;. Greenwood,
1 Swanst. E. 481 ; Dacie v. John, McClell. E. 206 ; De Tastet v. Borde-
nave, Jac. E. 516 ; CoUyer on Partn. B. 2, cb. 3, § 6, p. 240 to p. 244;
Id. B. 4, ch. 1, § 2, p. 579, 587, 588, 2d edit.; 1 Story on Eq. Jnrisp.
§ 672; 2 Bell, Comm. B. 7, oh. 2, p. 645, 5th edit.; Ante, ^ 228, 229,
231.
524 PARTNERSHIP. [CH. XIV.
not for Ms own personal advantage, but for the utmost
advantage of the concern.-^ Hence, also, if, under an
agreement for a lease for the partnership, one partner,
after the dissolution of the partnership, should obtain
the lease in his own name, he will be restrained from
disposing of it otherwise than for partnership pur-
poses.^ So fixed, indeed, is this duty still to continue
to act for the benefit of the partnership, that no partner
is allowed to claim any particular reward or compen-
sation for his trouble or services, in thus assisting in
the arrangement and winding up of the concerns
thereof, unless it be specially stipulated.^
§ 332. The French law has, to a certain, but not to
the full extent, adopted these doctrines of the common
1 Collyer on Partn. B. 2, ch. 2, ^ 1, p. 130, 2d edit.; Beak v. Beak,
3 Swanst. E. 627 ; 1 Story on Eq. Jurisp. § 316 ; Gow on Partn. ch. 5,
§ 2, p. 255 ; Crawshay v. Collins, 15 Ves. 218, 229 ; Beak v. Beak, Kep.
Temp. Finch, 190; Ante, § 174 to § 186.
2 1 Collyer on Partn. B. 2, oh. 3, § 5, p. 235, 2d edit. ; Alder v. Fouracre,
3 Swanst. K. 489 ; Elliott v. Brown, 4 Swanst. 489, note ; Gow on Partn.
ch. 5, ^ 4, p. 349, 3d edit. ; Ante, § 174 to ^ 186.
3 Ante, § 182 ; Collyer on Partn. B 2, ch. 2, § 1,' p.. 130, 2d edit. ; Id. B.
2, ch. 2, § 2, p. 151 ; Heathcote v. Hulme, 1 Jac. & Walk. 122 ; Wittle
V. McParlane, 1 Enapp, K. 312. — On this last occasion (which was an
appeal from Jamaica) the Master of the Rolls (Sir John Leach) said ;
" It is impossible to maintain the charge for commission, because it is in
truth a charge by a partner for the collection of a partnership debt. How
can a partner charge commission against a partner for the collection of a
partnership debt, in which both of them are interested ? It is a misappre-
hension entirely, and there does not appear any pretence for saying that
there is any local usage in the island to sanction such a charge. If com-
mission cannot be charged, of course interest upon commission cannot be
charged. The Court will, therefore, refer it back to the Court below,
■with a declaration, that no commission could be charged, either for the
collection of the debts of first or second partnership." See also Franklin
«. Robinson, 1 Johns. Ch. R. 158 ; Bradford v. Kimberley, 3 Johns. Ch.E.
434 ; Caldwell u. Lieber, 7 Paige, 483 ; Thornton ». Proctor, 1 Anst.
94; Burden v. Burden, 1 Ves. & Beam. 170; Caldwell v. Lieber, 7
Paige, 483.
CHi XIV.] BISSOLUTION — BIGHTS OF PARTNERS. 525
law. It treats the dissolution of the partnership, in
whatever way it may happen, when hrought to the
knowledge of the partners, as a virtual determination
of their powers to act for the partnership in any future
operations ; uiiless, indeed, so far as may be necessary
to complete acts and concerns already entered into on
account of the partnership, but incomplete and in pro-
gress at the time of the dissolution. These are treated
as matters of positive and indispensable obligation;
and they, therefore, may be finished by the same part-
ner who was authorized to begin and complete them.-^
And this is but following out the precept of the Ro-
man law, which required, in such cases, where the
dissolution was occasioned by the death of one partner,
that the business begun by him should be completed
by his heir. Hoeres socii, quamvis socius non est;
tamen ea, quce per defundum inchoata sunt, per hceredem
explkari debent?
§ 333. But in other respects the French law does
not seem to' have followed out this just policy, and
these enlarged principles of the common law, as to
the rights of the partner upon the dissolution of the
partnership. On the contrary, it seems silently, if
not submissively, to have followed out the dictates of
the Roman law on the subject of mandates or agency,
and the powers of partners ; ^ so that the dissolution
of the partnership, in any manner whatsoever, is held
to amount to a revocation of the implied powers and
authorities of each partner, any farther to admin-
ister the concerns of the partnership, as the delegate
1 Potliier.de Society, n. 155, 156.
2 Dig. Lib. 17, tit. 2, 1. 40; Pothier, Pand. Lib. 17, tit. 2, n. 59.
3 Ante, § 95, 102, 109, and note 5 ; Story on Agency, § 425 to 429 ;
Pothier, de Societ6, n. 156, 157.
526 PARTNERSHIP. [CH. XIV.
or agent of the others. Accordingly, Pothier lays it
down as clear, that, immediately, after notice of the
dissolution of the partnership, the power of each part-
ner to act as the administrator thereof ceases; and
even a payment to one partner of the debts due to the
partnership will he invalid, if the debtors have notice
of the fact of the dissolution at the time of such pay-
ment.^ Nay, the doctrine is pressed farther; and if
the partnership expires by its own limitation, or by
mere efflux of time, the like payment wiU be invalid,
even without such notice ; because (it is said) those,
who have any business with a partnership, ought to
inform themselves of the tenure or duration of that
partnership.^ So that, in fact, from the time of the
dissolution, the partners become tenants in common
of the property engaged in the partnership ; and if
the whole belonged to one, he is forthwith entitled to
the whole profits and proceeds thereof.^ They can no
longer proceed to administer the same separately ; and
all that they can do is to require either an amicable
and voluntary adjustment, and settlement, and division
of the partnership concerns ; or, in default thereof, to
apply to the proper tribunal for that remedial justice
which is required to accomplish the same purpose.
Each, therefore, has in effect an action or suit, like that
of the Roman action. Pro socio, or the Roman action,
Communi dividendo.^ Indeed, as we have seen, the
Roman law did not, during the continuance of the
1 PotUer, de Society, n. 157; Id. n. 155, 156.
2 Pothier, de Societfe, n. 157. '
3 Pothier, de Societfe n. 158,160; Civil Code of France, art. 1865,
1872.
4 Pothier, de Society, n. 161 to 180-; Civil Code of France, art. 1872 ;
Ante, § 223, 230.
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 527
partnership, clothe any partner, unless the power was
specially delegated to him, with the power to adminis-
ter the entire concerns and business of the partnership,
or with any power to dispose of any part of the pro-
perty thereof, except his own particular share.*
§ 334. The foregoing considerations apply to the
effects and consequences, as between the partners
themselves, of a voluntary dissolution by their own
mere act or will, or in conformity to their original
stipulations. Let us, then, in the next place, proceed
to consider the effects and consequences of such a dis-
solution in relation to third persons. And, here, the
preceding statements, respecting the liabilities of part-
ners to third persons,^ will greatly abridge whatever
might otherwise have been appropriate in this place.
In the first place, the dissolution of a partnership,
whether it be by the voluntary act or wiU of the par-
ties, or by the retirement of a partner, or by mere
efflux of time, will not in any manner change the
rights of third persons, as to any past contracts and
transactions with, or on account of the firm ; but their
obligation and efficacy and validity will remain the
same, and be binding upon the partnership in the
same manner, as if no dissolution had taken place.*
In the next place, such a dissolution will not absolve
the partners from liabilities to third persons, for the
future transactions of any partners, acting for or on
account of the firm, unless some one or more of the
following circumstances occur. (1.) That the third
persons dealing with, or on account of the firm, have
1 Ante, § 95, 102, 109, and note 5; Story on Agency, § 425 to 429.
2 Ante, § 126 to 168.
3 CoUyer on Partn. B. 1, ch. 2, § 3, p. 75, 2d edit. ; Ault v. Goodrich,
4 Russ. R. 430 ; Gow on Partn. ch. 5, § 2, p. 240, 241, 3d edit.
528 PAETNERSHIP. [CH. XIV.
due notice of the dissolution;^ or, (2.) That they have
had no transactions whatsoever with the firm until
after the dissolution;^ or, (3.) That the partfiiership
was not general, but limited to a particular purchase,
adventure, or voyage, and terminated therewith before
the transaction took place ;^ or, (4.) That the new
transaction is not within the scope g,nd business of
the original partnership;* or, (5.) That it is illegal,
or fraudulent, or otherwise void from its defective na-
ture or character;® or, (6.) That the partner, sought
to be charged, is a dormant partner, to whom no credit
was actually given, and who retired before the trans-
action took place. ®
I 335. The same rule as to the necessity of notice
is adopted in the French law. And accordingly Po-
thier says, that if traders and artisans, who have been
accustomed to furnish supplies to a partnership, con-
tinue, in good faith, after the dissolution of the part-
nership, of which they are ignorant, to furnish the
like supplies to one of the partners on account of the
partnership, all of the partners and their heirs will be
bound therefor.'' It is observable, that Pothier puts,
* .
' Ante, § 160 to 164; CoUyer on Partn. B. 1, eh. 2, § 2, p. 74, 2d ed.;
2 Bell, Comm. B. 7, eh. 2, p. 638 to 640, 5th edit.; Gow on Partn. ch.
1, p. 20; Id. ch. 5, § 2, p. 240, 248 to 251, 3d edit.; Watson on Partn.
ch. 7, p. 384, 385, 2d edit.; National Bank v. Norton, 1 Hill, (N. Y.) R.
572 ; Conro v. Port Henry Iron Co., 12 Barbour, 27.
8 Ante, § 160, 161. But see 2 Bell, Comm. B. 7, ch. 2, p. 641, 642,
5th edit. See also Parkin «. Carruthers, 3 Esp. R. 248.
3 Ante, § 280, 321, 322, 323.
4 Ante, § 126, 127, 128, 130.
5 Ante, § 130, 131, 132; Id. §6.
6 CoUyer on Partn. B. 1, ch. 2, § 2, p. 74, 2d edit. ; Id. B. 3, ch. 3,
§ 3, p. 370, 371 ; Evans v. Drummond, 4 Esp. R. 89 ; Brooke «. Enderby,
2 Brod. & Bing. R. 71; Heath v. Sansom, 4 Barn. & Adol. 177 ; Go-w-
on Partn. ch. 4, § 2, p. 251, 3d edit.; Ante, § 159.
7 Pothier, de Society, n. 157.
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 529
by implication, the very qualification which is insisted
on in the preceding section ; for he confines the lia-
bility to the cases of persons, who had, before the dis-
solution, been accustomed to deal with the partnership.
The same result, however, would probably arise in all
cases, where, notwithstanding the dissolution, the part-
ners should still hold themselves out as partners, either ,
expressly, or by allowing their names to stand openly
as a part of the firm.-^
§ 336. In respect to the necessity of such a notice,
the cases of a voluntary dissolution of the partnership,
in any of the ways abovementioned, differ essentially
from the cases of a dissolution by the death, or the
bankruptcy (duly declared by public proceedings) of
one or more of the partners ; for^ in these latter cases,
no notice whatsoever is necessary to be given of the
dissolution to third persons, in order to exempt their
estates ' from all responsibility for the acts and con-
tracts of the other partners ; since the partnership is
thereby dissolved by mere operation of law.^ The
reason seems to be, that the parties are thereby either
1 Ante, § 160, 161 ; Williams v. Keats, 2 Starkie, R. 290; Parkin v.
Carrut'hers, 3 Esp. E. 248.
3 Collyer on Partn. B. 1, ch. 2, ^ 2, p. 74; Id. B. 3, cli. 3, § 4, p. 419,
2d edit. ; Vulliamy v. Noble, 3 Meriv. B,. 614 ; 2 Bell, Comm. B. 7, ch. 2,
p. 638, 639, 5tli edit. ; Gow on Partn. ch. 5, ^ 2, p. 248 ; Id. ch. 5, § 4,
p. 348, 3d edit. ; Ante, § 162. — Perhaps, in the case of bankruptcy, the
reason why notice is not positively required to be given after the declara-
tion of the bankruptcy, is its supposed notoriety, and that all the world
are bound to take notice of it. Certainly there is no pretence to say, that
a mere secret act of bankruptcy, upon which no public proceedings have
been or can now be had, will produce the like effect, unless notice be given.
Sec Lacy v. Wooloott, 2 Dowl. & Kyi. R. 458. See Ante, § 313 ; 2 Bell,
Comm. B. 7, ch. 2, p. 641, 5th edit. ; Gow on Partn. ch. 5, ^ 3, p. 306, 3d
edit. ; Thomason v. Frere, 10 East, R. 418 ; Franklin' v. Lord Brownlow,
14 Ves. 550, 557, 558.
PAIiTN. 45
530 PAKTNEKSHIP, [cH. XIV.
totally incapable of acting at all, or at least of binding
their estates ; and it is against public policy to allow
the acts of the other partners to bind any persons,
who are incapable either of acting at all, or of contin-
uing any authority for such a purpose, or whose estates
may otherwise be subjected to irreparable injury, or
even to ruin. The same principle would probably be
held to apply to other cases, creating by mere opera-
tion of law a positive incapacity; such as the marriage
of a female partner, or the attainder of a partner of
felony,-' or the dissolution of the partnership by a
public war.^
§ 337. With, these brief remarks, we may dismiss
the consideration of the effects and consequences of a
dissolution of the partnership by the voluntary acts or
stipulations of the partners, and may, in the next place,
proceed to the consideration thereof in cases of bank-
ruptcy.^ Bankruptcy (as we have seen) puts an end
to the partnership by operation of law, and immediately,
upon the due declaration thereof, by relation back from
the time when the act of bankruptcy was committed.*
1 Ante, § 303, 306.
2 Griswold V. Waddington, 15 Johns. K. 57 ; S. C. 16 Johns. K. 438 ;
Ante, § 303, 804, 306, 315.
3 It is not within the scope or objects of these Commentaries to treat of
the various topics, connected with the issuing of- the commission in bank-
ruptcy, the proof of debts, and other proceedings thereon. They properly
belong to a different Treatise, upon the pi-actice in bankruptcy. The
discussion of the subject of joint and several commissions in bankruptcy,
and the proceedings thereon, seem also properly to belong to such a
Treatise. Those who wish for more information thereon, can consult
Collyer on Partn. B. 4, ch. 2, ^ 1 to 11, p. 595 to 678, 2d edit., and Id.
B. 4, ch. 3, § 1 to 8, p. 686 to 718, and Gow on Partn. ch. 5, ^ 3, p. 256
to 348, 3d edit.
4 Ante, § 313, 314; Gow on Partn. ch. 5, § 1, p. 227, 228, 3d edit.;
Id. ch. 5, ^ 3, p. 305, 806, 307; Collyer on Partn. B. 4, ch. 1, p. 590,
591, 2d edit.; Barker v. Goodair, 11 Ves. 78; Button v. Morrison, 17
• CH. XIV.J DISSOLUTION — EIGHTS OF PARTNERS. 531
Prom that period, therefore, the bankrupt ceases to
have any power or dominion over his property and
effects in the partnership ; and it is transferred to the
assignees, who are appointed under the commission,
and they succeed to all his rights and. interests therein?
From the same period also the assignees are deemed
tenants in common with the other partners .in all such
property and effects, subject to the rights and claims of
the other partners.^
§ 338. Another consequence, flowing directly from
the preceding considerations, is, that all future actions
at law, to be brought on account of the partnership
property, or contracts, or rights, must be brought
jointly in the names of the solvent partners, and the
assignees of the bankrupt, who succeed equally to his
ri'ghts of action, as well as to his rights of property ;
for the assignment not , only transfers the property of
the bankrupt, but also all his rights of action, to the
assignees.^ On the other hand, all actions atlaw by
third persons against the partnership, may be, and,
indeed, ordinarily should be, brought against all the
partners, including the bankrupt j and the assignees
Ves. 193 ; In re Wait, 1 Jac. & Walk. 605 ; Thomason v. Frere, 10 East,
E. 418.
1 Ante, § 313, 314; 3 Kent, Comm. Lect. 43, p. 58, 4th edit.; Gow on
Partn. ch. 5, § 1, p. 227, 228, 3d edit. ; M. ch. 5, § 3, p. 298, 299 ; Tlioma-
son V. Frere, 10 East, K.418.
2 Ante, § 313, 314 ; 3 Kent. Comm. Lect. 43, p. 58, 59, 4th edit. ; Gow
on Partn. ch. 5, § 3, p. 266, 267, 3d edit. ; Id. ch.,5, § 3, p. 299, 305 ; Col-
lyer on Partn. B. 4, ch. 1, p. 579, 580, 2d edit.; Holderness v. Shackels,
8 Barn. & Cressw. 612.
3 Gow on Partn. eh. 5, § 3, p. 341, 342, 3d edit. ; Collyer on Partn. B. 3,
ch. 5, § 1, p. 471; Id. B. 4, ch. 1, p. 579; Id. B. 4, ch. 5, p. 696, 697, 701,
702, 2d edit. ; Thomason v. Frere, 10 East, K. 418 ; Graham v. Eobertson,
2 Turn. R. 282; Franklin v. Lord Brownlow, 14 Ves. 567 ; 1 Chitty on
Plead, p. 27, 28, 6th edit.; Com. Tiiig. Bankrupt, D. 29.
532 PARTNERSHIP. [CH. XIV.
should not in general be made parties thereto, since they
are not liable thereto, but are to account only under the
proceedings in bankruptcy.^ The case may be, and
often is, very different in suits in equity, brought by,
or against the assignees.^
§ 339. On the other hand, from the time of the act
of bankruptcy, and by relation thereto, the bankrupt
becomes incapable of acting for, or binding the part-
nership by his acts ; and in a general sense, and with
few exceptions, all his acts become from henceforth
void and inoperative. He cannot in any manner sell,
or otherwise dispose of the partnership effects ; he
cannot contract debts or other engagements, binding
on the partnership ; and he cannot compel any pay-
ments to the firm, or give any receipt or release there-
for.^ In respect ^to the other solvent partners, they
1 1 Chitty on Plead, p. 62, 63, 6th edit. ; Id. p. 104 ; Id. p. 176 ; Watson
on Partn. ch. 8, p. 434, 2d edit.
3 See Story on Eq. Plead. § 153 to § 158, 439 ; Cook's Bankrupt Law,
Vol. 1, oil. 14, § 1, 2, 3, p. 553 to 561,4th edit.; Gow on Partn. ch. 5, § 4,
p. 352, 3d edit. ; Bailey v. Vincent, 5 Madd. K. 48. — The full considera-
tion of this subject properly belongs to a Treatise on Pleading, and is
therefore omitted in this place. *'
3 Ante, § 313, 314 ; Gow on Partn. ch, 5, § 1, p. 227, 228, 3d edit. ; Id.
ch. 5, § 3, p. 299, 304, 305, 306 ; CoUyer on Partn. B. 4, ch. 1, p. 589,-
590, 2d edit. — Mr. Gow has very well stated the general doctrine, and
cited some cases to illustrate it. " We have seen (says he) in a former
part of this work, that an act of bankruptcy committed by one partner,
when followed by a commission, dissolves the partnership by relation to the
time when the act of bankruptcy was committed. The partner, therefore,
who has committed the act of bankruptcy, cannot afterwards communicate
to strangers any rights, either against the firm, or the joint property ; be-
cause the commission and assignment retrospectively deprive him of all
capacity of acting. They determine his power to bind the firm by rela-
tion to the date of his bankruptcy, and all his rights, from that time, pass-
ing to his assignees, he ceases to have any further control over the part-
nership, or the joint property. And the statutes concerning bankrupts
make an entire, not a partial avoidance of the bankrupt's acts, as well in
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 533
also are, by the bankruptcy, disabled from engaging
in any new dealings in future on account of tht part-
nership.-^ But in respect to past transactions, whicb
were consummated at the time of the bankruptcy, they
respect of his partner's moiety as his own. Therefore, where a partner,
on the eve of his bankruptcy, voluntarily deposited goods with a third
person for a creditor of the firm, and the deposit falsely purported to be
founded upon a supposed sale, the creditor, after the bankruptcy of the
partner, having received information of the deposit, declared his accept-
ance of it; and in an action of trover by the assignees under a joint com-
mission to recover the goods, it was held, that the creditor could not resist
their claim, inasmuch as the deposit was not completed until after the
bankruptcy of the party depositing, at which time the partnership was at
an end. So, where two of three partners afiecting, but without authority,
to bind the firm, by deed assigned a debt due to them from a correspond-
ent abroad, without his privity, to a creditor at home, and afterwards, by
the direction of such correspondent, drew a bill of exchange in the name
of the firm, upon his agent here, which was accepted, payable to their own
order, for the amount of the debt ; and then the two partners, having in
the mean time committed acts of bankruptcy, indorsed such bill to the
creditor of the firm in part satisfaction of his debt, and afterwards separate
commissions were sued out against the two partners, who were declared
bankrupts, and their effects assigned, the other partner being all the time
abroad. It was held, that by such an indorsement of the bill by the two,
after acts of bankruptcy committed by them, though before the commission
issued, nothing passed to the creditor ; for the bankrupt partners had, by
relation, ceased, at the time of such indorsement, to have any control over
the joint stock as partners, and therefore could not bind either the property
of their assignees, or of their solvent partner." Gow on Partn. ch. 5, § 3,
p. 304, 305, 306, 3d edit. ; Hague v. Rolleston, 4 Burr. E. 2176 ; Thoma-
son !;. Frere, 10 East, K. 418. But see Lacy w. Woolcott, 2 Dowl. &
Kyi. 458 ; CoUyer on Partn. B. 4, ch. 1, p. 582 to 588, 2d edit. The ex-
ceptions to the general doctrine stand principally upon the statutes of
baiikruptcy, saving from the operation of the general rule bond fide con-
tracts, and payments made by the bankrupt to and with persons who have
no notice of the act of bankruptcy. CoUyer on Partn. B. 4, ch. l,p. 689,
590, 2d edit.
1 Ante, § 313, 314 ; Gow on Partn. ch. 5, § 3, p. 306, 307, 8d edit. ; Fox
V. Haubury; Cowp. E. 445 ; Harvey v. Crickett, 5 Maule & Selw. 336 ;
Murray v. Murray, 5 Johns. Ch. K. 78 ; Hoxie u. Carr, 1 Sumner, K. 173 ;
CoUyer on Partn. B. 4, ch.,1, p. 587, 588, 2d edit.; Thomason v. Frere,
10 East, R. 418.
45*
534 PARTNERSHIP. [CH. XIV.
are not prevented from exercising a due control over
the paffcnership effects, and of applying tliem bond fide
to the payment and discharge of the partnership debts
and obligations.-'
§ 340. Indeed, so completely does the bankruptcy
of one partner sever the joint rights and interests of
the partnership, that even an execution, issued against
the partnership effects, subsequently to the act of bank-
ruptcy, will be invalid and inoperative upon those
effects ; for the act of bankruptcy overreaches the execu-
tion ; and it is not competent for the execution creditors
to disappoint the arrangements, made in bankruptcy,
for the equal distribution of the effects of the partner-
ship among all the creditors; since it would defeat
the just policy of the bankrupt laws.^ The subject of
the due administration of the partnership assets, and
other incidental topics, will hereafter occur in another
connection, when we come to treat of the final adjust-
ment and settlement, and winding up of the partner-
ship concerns.
§ 341. As to the solvent partners, in case of the
bankruptcy of one or more of the partners, it is clear,
that they retain all their original rights, powers,, and
authorities over the management of the concerns of
the partnership, excepting only, that they are not at
liberty any further to carry on the business of the
' Ante, § 325 to 328 ; Gow on Partn. ci. 5, § 1, p. 227, 228, 3d edit. ;
Collyer on Partn. B. 4, ch. 1, p. 679 to 588, 2d edit.— .It seems that
the assignees of the bankrupt are clothed with the like reciprocal rights
and authorities. Collyer on Partn. B. 4, ch. 1, p. 578, 579, 580, 2d edit;
See also Gow on Partn. ch. 5, § 3, p. 298, 299, 300, 3d edit. ; Id. p. 308,
309.
2 Collyer on Partn. B. 4, ch. 1, p. 590, 591, 592, 2d edit. ; Gow on Partn.
ch. 5, § 3, p. 308, 309, 3d edit.; Barker v. Goodair, 11 Ves. 78; Button
I). Morrison, 17 "Ves. 193 ; In re Wait, 1 Jac. & Walk. 605.
CH. XIV.] DISSOLUTION — EIGHTS OF PAKTNERS. 535
partnership, or to make any new contracts or other
engagements, or to incur any liabilities on account
thereof, or to employ the capital stock in trade. If
'they do, it will be a violation of duty, and at: their
own risk ; and they may, at the option of the as-
signees, be compelled to account for the profits, if any
are thereby made, or be charged with interest upon
the share of the bankrupt, and they must bear all the
losses.^ [Neither has the solvent partner an absolute
1 CoUyer on Partn. B. 2, ch. 3, § 4, p. 221 to 227, 2d edit. ; Gow on
Partn. eh. 6, § 3, p. 306 to 308, 3d edit.; Crawshay v. Collins, 15 Ves.
218; S. C. 2 Kuss. R. 325; Brown u. De Tastet, Jacob, R. 392; Ante,
§ 325 to 328. — In Brown v. TH Tastet (Jacob, R. 295,) Lord Eldon used
the following language ;" " The Master in the execution of the decree has,
I am informed, proceeded upon the case of Crawshay u. Collins. In that
case, three persons, Collins, Noble, and Boughton, carried on the business
of pump and engine manufacturers in partnership together. In 1804, a
commission of bankrupt issued against Noble, and in 1805 the bill was
filed by his assignees, claiming three eighths of the profits of the business,
which remained unaccounted for at the time of the bankruptcy, or which
had accrued since, and also of two patents, and the profits derived from
them. The question, therefore, was, whether the assignees of Noble were
entitled to the same relief, that he himself would have been entitled to, if
he had not become a bankrupt ; a bankruptcy dissolving a partnership in
the same manner as death, in this respect only, that assignees have rights
somewhat similar to those which the representatives have, ■vshere the part-
nership is dissolved by death. It was argued, that in both cases the de-
mand to be made by the representatives of a deceased partner, or the
assignees of a bankrupt, was limited to that sum of money, which, if the
account had been taken at the dissolution, would have been found due
from the surviving or solvent partner, leaving all the property in their
hands. On the other hand, it was argued that, in many cases, that could
not be the law ; for instance, if immediately after the bankruptcy, all the
stock, which in that case consisted of manufactured goods, pumps, and
such things, had been sold for a' sum of money, three eighths of which
would have been more than what was due to the bankrupt, taking the
account as matter of debt, then the assignees, being certainly tenants in
common till the stock was converted, and the identical stock being sold,
and, three eighths of it yielding more than what was due to the bankrupt
at the time of his bankruptcy, as the calculated value, what pretence
could there be for saying that the assignees should not Lave a proportion
536 PARTNERSHIP. ' fcH. XIV.
legal right to the sole administration of the assets; al-
though a Court of Equity would ordinarily appoint him
receiver, if his capacity and integrity were unques-
tioned.^] But the solvent partners have a lien upon
the partnership property and effects for the payment
of all the debts and charges due. by the partners, as
well 'as for their own distributive share of the surplus.^
They may, therefore, notwithstanding the act of the
bankruptcy of the partner is known to them, proceedj
bond fide, to make payments out of the partnership
funds in discharge of the joint debts and other obliga-
tions of the partnership ; ^ although, if they are guilty
of any excess, in this particular, injurious to the rights
of the assignees, they may be restrained by an injunc-
tion by a Court of Equity.*
§ 342. In the next place, then, as to the effects and
consequences of a dissolution by the death of one of
the partners. This subject may properly be considered
of what it sold for ? But it is asked, Will you say, that in all cases, where
there is a partnership, such is to be the consequence of carrying on the
business, that the profits shall be divisible in the same way as if the part-
ner had not died, or had not become bankrupt ? I say no ; I do not mean
to say, that it jvill be so in all cases ; but on the other hand, I will 'hot deny
that it may be the law in some cases. The general principle,! should say,
ought to be this ; that, as it is quite competent to the parties to settle the
accounts and to mark out the relation between themselves, as creditors or
debtors, so where there is a non-settlement of the account, (though a set-
tlement may sometimes introduce great hardships and difficulties,) yet
those who choose to employ the property of another for the purposes of
their trade, exposing it to all the risks of insolvency or bankruptcy, have
no right to say that the account shall not be taken, if it can be taken
without incurring difficulties which might embarrass the house to such an
extent as to make it unjust to demand it."
1 Hubbard v. Guild, 1 Duer, (N. Y.) 662.
a Ante, § 326.
3 CoUyer on Partn. B. 4, ch. 1, p. 582 to 589, 2d edit.; Harvey v.
Crickett, 5 Maule & Selw. 336 ; Ante, § 325 to 328, 339, and note.
« Ante, § 224, 225, 329, 341, and note (1,) p. 488.
CH. XIV.] DISSOLUTION — EIGHTS OF PAKTNERS. 537
under two aspects ; (1.) As to the partners themselves;
(2.) As to third persons. In the first place, as to the
t)artners themselves. And, here, the remark already
made becomes important ; that a partnership is not,
strictly speaking, either a joint-tenancy or a tenancy
in common ; and that it is an universally established
principle of the whole commercial world, that the pro-
perty and effects thereof do not belong exclusively to
the survivors; but they are to be distributed between
them and the representatives of the deceased, in the
same manner as they would have been upon a volun-
tary dissolution inier vivos} In short, the universally
acknowledged maxim on this subject is; Jus accrescendi
ivder mercatores proleneficio commercii locum non kabet?
The maxim has been since expanded, and is now con-
stantly construed, so as to embrace all sorts of partner-
ships between two or more persons for their joint
account and benefit, whether they are merchants or
not, and whatever may be the nature of the trade, or
business, or employment, in which they are engaged.^
1 Ante, § 89, 90.
9 Co. l,Ltt. 182, a.
3 Ante, § 90 ; Jeffrey v. Small, 1 Vern. R. 217. [In a late case in the
Exchequer, it was extended to manufacturers and to trade fixtures.
Baron Parke, in a learned judgment observed, — " In the earlier books
we do not find any trace of the doctrine of survivorship inter mercatores,
in chattels, but some against the now admitted doctrine of survivorship as
to remedies or choses in action. The first cited is from the Year Book,
38 Edw. 3, 7, tit. 'Accompt,' (which is the authority mentioned in Br.
Ab., 'Joint-tena,nts,' pi. 11.) There Kirton (a serjeant) arguing that in
an action of account against a bailiff of two, (not merchants,) the execu-
tors of both ought to join, says, that if two merchandise in common, the
executors of each shall have a moiety, so they ought in the case of an
action. But Knyvet, J., says, 'It is not alike of a chattel in possession
and a chattel in action, for the action cannot be severed, and his executors
cannot join in the action with the other who survived.' The language
indeed is ' I'aut ne poit my est' seve,' but I'aut seems a false print — it
may, however, mean the 'other,' or 'latter,' i. e. the chose in action. It
538 PARTNERSHIP. [CH. XIV.
§ 343. We have already seen, that a Hissolution Tby
"death puts an end to the partnership, from the time of
is afterwards said that the writ, which was by the executors of the survivor,
was adjudged good ; and a sentence is added, which must be either a mis-
print, or refer to the right oi action — it is said,''and this is the law of two
merchants who have goods in common ; if one die, the other shall have
the whole by survivor.' The next authority is Lord Coke, 1 Inst. 182 a,
who puts the joint wares and merchandise, debts and duties, of merchants
on the same footing, and so does Noy, 55 ; and it is argued, that if they
be on the same footing, as the remedy clearly survives, the title to the
chattels does also. But Lord Coke clearly means, in the case of mer-
chants, not to allow a survivorship in both wares and duties, but to disallow
it in each ; and it was afterwards made a question, notwithstanding what is
said in the Year Book, 38 Edw. 3, whether the survivor and executor of
the deceased ought not to join in an action for a chose in action in the
lifetime of the deceased. It was held by the Court, in Hall v. Huffam,
2 Lev. 188, in consideration of the authority of Lord Coke in this passage,
that they ought to join in an action for goods sold by two joint merchants ;
also, there is a precedent in Lutw. 1493, of an action by the executors of
a joint merchant joining with the survivor for taking the goods of the
partnership in the life of the deceased. Subsequently, in the case of
Martin v. Crompe, 1 Ld. Eaym. 340 ; 1 Salk. 444, it was held to be clear,
in accordance with the doctrine in the Year Book, 38 Edw. 3, that the
right of action of two merchants survived, that the survivor should take
the whole, and account to the administrator of the deceased, and that the
administrator could not join ; for Lord Holt said that it would make
strange confusion, that one should sue in his own right, and the other in
another's ; and it has been undoubted law, ever since that decision' that the
remedy survives. Lord Eldon, in Ex parte EuiEn, 6 Ves. 126, says, that
in the law of merchants, the legal title in some respects, in all the equita-
ble title, remains, notwithstanding the survivorship; and the same doctrine
was acted upon in the Court of King's Bench, in the case of Kex v. The
Collector of the Customs at Liverpool, 2 M. & S. 223, which case pro-
ceeded entirely on the ground that the legal title did not survive in the
case of a partnership in ships. On the other hand, the authority is very
slender, that the title survives at law, and that the executor of the
deceased person can only claim in equity. The most direct is a note
of Lord Tenterden's, in his Treatise on Shipping, (p. 97,) in which it is
said, the rule ' Jus aocrescendi inter raercatores locum non habet,' is only
enforceable in a Court of Equity, — but there is no prior authority quoted
for that position. Mr. Justice Story (p. 68, American edition of Abbott)
says that this note was not written by Lord Tenterden, but that seems not
to be the case, from a note of my brother Shee, (p. 9 7, c. 3, 7th ed.) This
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 539
the occurrencfe of that event, whether known or ua-
known, or whether third persons have or have not
note may have been founded on the authority of the doctrine in some
equity reports where a Court of Equity has granted relief on survivorship.
For instance, in Lake v. Gibson, 1 Ab. Ca. Eq. 291, the Master of the
Bolls, Sir Joseph Jekyll, says, in all cases of a joint undertaking, either
in trade or any other dealing, the joint owners are to be considered as
tenants in common, and the survivors as trustees for those who are dead:
but this observation follows a statement respecting a joint purchase of land,
where the difference is pointed out between purchasing in equal shares,
where there is a survivorship, and where the portions are not equal where
there is none ; in equity, however, the legal estate may survive at law.
The latter indicates that the .joint-tenants do not mean to have an equal
chanCe of survivorship, but that one shall hold in trust for the other in
proportion to his share. There is no dictum that there is a survivorship
at law, in all cases, between merchants. A similar doctrine to that in
Lake v. Gibson had been laid down before in Jeffrey v. Small, 1 Vera.
217, A. D. 1683, by Lord Keeper Guildford, who is evidently treating of
equities only, and who states the rule of equity to be, that if .two. persons
are joint-tenants, by gift or devise, there is a survivorship ; the parties are
liable to all the consequences of the law; — but as to any joint under-
taking, in the way of trade or the like, it was otherwise ; and he decreed
that the plaintiff should be relieved. The dicta of judges in some subse-
quent cases were cited, which admit of the same explanation. Lord
Eldon, indeed, in Crawshay v. Collins, 15 Vcs. 227, speaking of partner-
ship, says it determines ' by the death of one partner, in which case the
law says that the property survives to the others. It survives as to the
legal title in many cases ; but not as to the beneficial interest.' Now, if
Lord Eldon is speaking of choses in action, it is perfectly correct, and it
is by no means clear that he meant any thing more. Upon the whole,
there is no satisfactory authority for the position that the title to partner-
ship chattels survives at law, and the authorities the other way greatly
predominate. It may be added that Mr. Justice Story on Partnership,
§ 342, treats it as the universally acknowledged rule, that upon the disso-
lution of the partnership by death, the property and effects thereof do
not belong exclusively to the survivors, but they are to be distributed
betweep them and the representatives of the deceased, in the same maimer
as they would have been upon a voluntary dissolution inter vivos. We
consider, therefore, that the first point made on the part of the plaintiffs
ought to be decided against them. The next question is, whether the
same law which excepts the goods of merchants, for the benefit of com-
merce, from the general law of joint-tenancy, extends to those of manu-
facturers. At a very early period the term ' merchant ' was very liberally
540 PAETNERSHIP. [CH. XIV.
notice thereof.-^ So that it completely puts an end to
the power and authority of the surviving partners to
construed — it was held to include shopkeepers. 2 Brownl. 99. The
same principle of the encouragement of trade applies to manufacturers,
in partnership and every other description of trade. Story, § 342. It is
then said that it does not extend to fixtures. But trade fixtures, which
are removable, are part of the stock in trade, and clearly fall within the
rule as to partnership stock, and all these fixtures were of that character.
Therefore we are of opinion that one third of the fixtures seized belongs
to the executors of William', and that they would be seizable under an
execution by fi. fa. against his executor de bonis testatoris, if there were
no other circumstances in the case. But it was urged on behalf of the
plaintiffs, that though the right to the chattels does not survive, the sur-
viving partner or partners have of necessity a Jus disponendi, for the
purpose of winding up the partnership concerns, and that the conveyance
by Abraham was within the scope of that authority, and transferred the
le'gal title in all. In the civil law such a /us disponendi prevails, in the case
of both agents and partners of deceased persons. ' Si vivo Titio, negotia
ejus administrare csepi : intermittere, mortuo eo non debeo: nova tamen
inchoare necesse mihi non est : vetere explicare, ac conservare necessarium
est : ut accidit, cum alter ex sociis mortuus est ; nam qusecunque priori
negotii explicandi caus§, geruntur, nihilum refert, quo tempore consu-
mentur, sed quo tempore inchoarentur. Dig. lib. 3, tit. 5, 1. 21, § 2. In
our law, this rule does not exist with respect to agents of deceased princi-
pals; and with respect to surviving partners, though there are expressions
of text-writers, (Story on Partnership, § 344 ; 3 Kent's Comm. Lect. 43,
p. 63,) and judges, (Harvey v. Criokett, 5 Mau. & S. 336 ; see Wood-
bridge v. Swann, 4 B. & Ad. 636; Beck». Beck, 3 Swanst. 627; Lord
Nottingham's MS., and 1 Id. 507, note,) which have that aspect, there is
no clear, satisfactory authority that the surviving partner has a power, by
virtue of the partnership relation only, to transfer the legal title to the
' Ante, § 319, 336. — There seems to be an exception as to the neces-
sity of such a notice, when the surviving partners or one of them are
executors of the deceased partner ; for then, in order to exonerate his
estate from future liability, it is said, that due notice ought to be given of
his death to the creditors of the firm, because in the absence of such
notice, the executor partner, in his character of personal representative
of 'the deceased, has power to bind his estate. VuUiamy v. Noble, 8 Meriv.
K. 614. But is this doctrine maintainable, except in cases where thfe
usual articles of agreement authorized the executor to carry on the part-
nership ? What authority otherwise can he have to bind the testator's
estate ?
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 541
carry on for the future the partnership trade or busi-
ness, or to engage in new transactions, contracts, or
liabilities on account thereof.^ It is, therefore, the
duty, of the surviving partners henceforth to cease
altogether from carrying on the trade or business
thereof;^ and if they act otherwise, and continue, the
trade or business, it is at their own risk, and they will
be liable, at the .option of the representatives of the
deceased partner, to account for the profits made
thereby,^ or to be charged with interest upon the' de-
share belonging to the executors of the deceased, to a third person, leaving
the executors to pursue their remedy against the survivor, if that authority
is improperly exercised. It is clear that the legal title to the share of the
survivor passes, and the purchaser, therefore, is at all events tenant in
common -with the executor ; and as the law allows no right of action to
one tenant in common against another, so long as the subject of the
tenancy exists, and is capable of recaption, that circumstance will explain
all thedecisions on the subject, including Harvey v. Crickett, 5 Mau. & S.
336 ; see Woodbridge v. Swann, 4 B. & Ad. 633. In Harvey v. Crickett,
the dicta of the judges go much further ; probably Mr. Justice Bayley
mistook the opinion of Lord Kenyon in Smith v. Orlell, 1 East, 368, and
we doubt whether surviving partners have a power to sell, and give a
good legal title to the share belonging to the executors of the deceased
partner, when they sell in order to pay the debts of the deceased and of
themselves ; but, be that as it may, we think it clear, that the survivors
could have no power to dispose of it otherwise than to pay such debts,
certainly not to mortgage that share together with their own, (for that is
the real nature of this transaction,) as a security for a debt principally
due from the surviving partners, and in part only from the deceased, and
in order to enable them to continue their trade. At all events, therefore,
this transaction was not within the scope of any implied authority which
the surviving partners may have, to wind up the affairs of the partner-
ship ; and therefore this'conveyance did not pass the share of the deceased
to the plaintiffs, by virtue of any implied authority in the survivors."
Buckley v. Barber, 1 Eng. Law & Eq. R. 506.]
' Gow on Partn. ch. 5, § 4, p. 351, 352, 3d edit.; 2 Bell, Comm. B. 7,
ch. 2, p. 637, 638, 643, 644; 3 Kent, Comm. Lect. 43, p. 63, 4th edit.
2 See Travis v. Milne, 9 Hare, 141.
3 See Chambers v. Howell', 11 Beavan, 6, when they will not be liable
for profits.
PARTN. 46
542 PARTNERSHIP. [CH. XIV.
ceased partner's share of the surplus, besides bearing
all the losses.-'
§ 344. But here, also, the same qualifications and
limitations of the doctrine already stated, with refer-
ence to the rights, duties, powers, and authorities of
the partners, in cases of a dissolution by voluntary
consent, or by efflux of time, or by bankruptcy, apply
1 See Willett v. Blandford, 1 Hare, K. 253 ; CoUyer on Partn. B. 2,
ch. 1, § 1, p. 79, 2d edit. ; Id. B. 2, ch. 3, § 4, p. 221 to 226 ; Booth v.
Parks, 1 Molloy, R. 465 ; Crawshay v. Collins, 15 Ves. 218 ; S. C. 2
Kuss. R. 325 ;-Brown v. Litton, 1 P. Will. 224 ; Ogden v. Astor, 4 Sandf.
311 ; Goodburn v. Stevens, 1 Md. Ch. D. 420 ; Hammond v. Douglas,
5 Ves. 539 ; Brown v. De Tastet,' Jacob, R. 284, 292 ; Heathcota v.
Hulme, 1 Jac. & Walk. 122 ; 3 Kent, Comra. Lect. 43, p. 64, 4th edit. ; "
Ante, § 329. — Where an election is made to have a decree for a share of
the profits, there it would seem that the surviving partners are, or at
least may be, entitled to all just allowances and deductions, and even to
some compensation for their skill and personal services. Lord Eldon, in
Crawshay v. Collins (2 Russ. R. 345,) said ; "And I cannot bring myself
to think, that, if it be clearly made out, that a business is carried on with
the property, which belonged to a deceased partner, for instance, by the
surviving partner, and no particular circumstances occur to vary the rule,
the mere accident of one man surviving the other can authorize him to
say, 'I shall carry on the trade by the application of the funds of the
partnership, at the hazard of the funds of the partnership, and I shall
have the whole of the profits, and you shall have no share of them.'
There may, undoubtedly, be occasion for making claims in the nature of
just allowances ; but I cannot bring myself to think, that the interest,
which at law survives in a continuing partnership, survives in such a sense
as to cut down the rule of equity, and that the continuilig partners shall
have to account for nothing, but the value of what the share was at the
time of the death or bankruptcy of the othef partner. Even if you were
to lay down the rule, in that way, still you would have to ask yourself,
how is that value to be ascertained ? It cannot be done by the surviving
partner choosing to say, 'I shall take it at such a value.' There must be
some way of valuing it, so as to give the party retiring the complete value ;
and there must be some way, in which this Court will direct that valuation
to be made." See also the remarks of the same learned Judge in Craw-
shay ti. Collins, 15 Ves. R. 218, 226, 227, 228, and 2 Russ. R. 345, cited
Ante, § 322, note (1), and Ante, i) 343, note (2) ; Gow on Partn. ch. 5,
§ 2, p. 254, Sd edit. ; Id. ch. 5, ^ 4, p. 365 ; CoUyer on Partn. B. 2, ch. 3,
§ 4, p. 226, 228, 229, 2d edit.
CH. XIV.] DISSOLUTION — RIGHTS OF PARTNERS, 543
to cases of the survi-ving partners.^ Although, as to
future dealings, the partnership is terminated by the
death of one partner ; yet for some purposes it may
be said to subsist, and the rights, duties, powers, and
authorities of the survivors remain, so far as is neces-
sary to enable them to wind up and settle the affairs
of the partnership.^ And the ordinary rule is, that
upon .the dissolution of a partnership by death, the
surviving parties are entitled to close up the affairs of
the firm.^ They have, therefore, a right to receive the
debts due to the partnership, and, on the other hand, to
apply the partnership assets and effects in discharge of
the debts and other obligations due^by it.* However,
if there be any danger of abuse or positive misappli-
cation of those funds by the surviving partners, a
Court of Equity will interpose, and restrain it by
injunction, and even appoint a receiver, upon the
application of the representatives of the deceased.^
§ 345. And, here, we have an analogous rule pro-
mulgated in the Roman law in the case of agency, as
well as in the case of partnership. Si, vivo TUio
1 Ante, § 324 to 328.
2 Evans ». Evans, 9 Paige, R. 178 ; Ante, § 328 a,
3 Evans v. Evans, 9 Paige, R. 178.
« Ante, § 325 to 328, 341 ; 2 Bell, Comm. B. 7, ch. 2, p. 637, 638, 643,
644, 5th edit., and J 328, note (2), where the language of Mr. Bell is cited.
Collyer on Partn. B. 2, ch. 2, \ 2, p. 130, 2d edit.; Wood v. Braddick,
1 Taunt. R. 104; Hutchinson v. Smith, 7 Paige, R. 26 ; Evans v. Evans,
9 Paige, R. 178. See Buckley v. Barber, 1 Eng. Law & Eq. R. 511. ,
5 Gow on Partn. ch. 5, ^ 2, p. 230, 231, 3d edit. ; Id. ch. 5, ^ 4, p. 856,
357 ; Phillips v. Ackerson, 2 Br. Ch. R. 272, and Mr. Belt's note ; Collyer
on Partn. B. 2, ch. 3, ^ 4, p. 226, 2d edit. ; Id. B. 2, ch. 3, ^ 5, p. 235 ; Id.
B. 4, ch. 1, p. 588 ; Hartz i;. Schrader, 8 Ves. 817 ; Estwick v. Coningsby,
1 Vern. R. 118 ; Burden v. Burden, 1 Ves. & Beam. 170 ; 3 Kent, Comm.
Lect. 43,. p. 63, 4th edit. ; 2 Bell, Comm. B. 7, ch. 2, p. 645, 5th edit. ;
1 Story, Eq. Jurisp. § 672; Ante, § 228, 231 ; Evans v. Evans, 9 Paige,
R. 178.
544 PARTNEESHIP. [CH. XIV.
negotia ejus administrare ccepi, intermittere, mortiio eo,
non deleo. Nova tamen inchoare necesse mihi non est ;
Vetera explicare ac conservare necessarium est ; ut acci-
dii, cum atter ex sociis mortuus est. Nam qucecunque
prions negotii explicandi causa geruntur, nihilum refert,
quo tempore eonsummentur, sed quo tempore inchoaren-
tur}
§ 346. One of the consequences, then, of a dissolu-
tion of a partnership by death (under the qualification
and limitations above suggested) is, that the personal
representatives of the deceased become tenants in com-
mon with the survivors of all the partnership property
and effects in possession.^ We say, the partnership
property and effects in possession ; for there is at the
common law a material distinction between such
property an& effects in possession, and choses in action,
debts, and other rights of action, belonging to the
partnership. The latter, at law, belong to the sur-
viving partners ; and they possess the sole and exclu-
sive right and remedy to reduce them into possession ;
although, when so recovered, the survivors are regarded
as trustees thereof, for the benefit of the partnership,
and, the representatives of the deceased partner pos-
sess, in equity, the same right of sharing and partici-
pating in them, which the deceased partner would
have possessed, if he had been living.^ However, the
1 Dig. Lib. 3, tit. 5, 1. 21, § 2 ; Pothier, Pand. Lib. 3, tit. 5, n. 50.
2 Gow on Partn. ch. 5, § 4, p. 351, 3d edit. — What, properly speaking,
constitutes partnership property, has been already in part considered, and
•Svill occur again incidentally in another connection hereafter. The subject
as to the good-will of an establishment, and of the right to use the firm
name by the surviving partners, after the death of one partner, has been
already adverted to. Ante, § 98 to 100, and note 4, Ibid. ; Lewis v.
Langdon, 7 Sim. R. 421.
3 Gow on Partn. ch. 5,-§ 4, p. 348, 358, 3d. edit.; Martin v. Crompe,
CH. XIV.] DISSOLUTION RIGHTS OF PARTNEES. 545
representatives of the deceased partner cannot, strictly-
speaking, be deemed partners with the survivors. But
1 ,Ld. Raym. 340; Collyer on Partn. B. 3, ch. 5, § 2, p. 471, 2d edit. ;
Id. § 2, p. 474, 2d edit. ; 1 Story, Eq. Jurisp. § 676, 677 ; 2 Bell, Comm.
B. 7, ch. 2, p. 637, 638, 643, 644, 5th edit. — There is nothing in this
doctrine peculiar to cases of partnership; for the same rule applies to
cases of several obligees, covenantees, and other joint contractees, having ,
a joint interest in the contract ; for, in every such case, upon the death of
one, the action must be brought in the name of the survivors-. Collyer on
Partn. B. 3, ch. 5, § 1, p. 471, 472, 2d edit. And, reciprocally at law,
(for it is different in equity) an action lies solely against the survivors, at
the suit of third persons, for any debt or other obligation due by the part-
nership. Collyer on Partn. B. 3, ch. 3, § 4, p. 404 to 413, 2d edit. ; 1
Story, Eq. Jurisp. § 676, 677, 679, 680; Scholefield v. Heafield, 7 Sim.
E. 667; Gow on Partn. ch. 5, § 4, p. 351, 352, 3d edit.; Id. p. 356, 357,
358. Mr. Gow (p. 358, 359, 3d edit.) has assigned the technical reasons
for this doctrine, (which seems not known in the Roman law, or in the
modern law of continental Europe,) as follows. " The right of action
must necessarily survive ; otherwise, according to the technicalities of law,
there would be a failure of justice ; for the rights of the executor and of
the survivor being of several natures, if they joined in the same suit, there
consequently must be several judgments, which in a single action is not
allowed. Substantially, however, the right of the representative of the
deceased is not varied by this legal anomaly ; for, there being no survivor-
ship in point of interest, the instant any joint chose in action is reduced
into possession by the legal process of the survivor, the right of the repre-
sentatives to their distributive portion attaches. So, with respect to joint
contracts entered into by a firm, and from which a joint legal responsibility
results, it can at law, after the death of one partner, be enforced against
the survivor alone, and finally against the representatives of the last sur-
vivor ; for the law considers partnership contracts which are joint in
form, as px-oducing only a joint obligation, which, on the death of one,
attaches exclusively upon the survivor. Indeed, the reason, which has
been advanced, as operating to prevent personal representatives from as-
serting, jointly with the survivor, a right resulting to the partnership
firm, applies with undiminished force, if a right accruing to a stranger
from the firm should be attempted to be enforced against them and the
survivor. Executors or administrators, if legally responsible, could only
contract such a responsibility by the assumption of' their representative
characters ; and it therefore follows, that they could only be charged
de bonis testatoris, whereas the surviving partner would be liable de bonis
propriis. So that the judgments must be different, as they applied either
to the survivor, or to the representatives of the deceased partner. And
46*
546 PARTNEESHIP. [CH. XIV.
still a community of interest .subsists between them,
whicb is necessary for the winding up of the affairs
of the partnership, and requires that what was partner-
ship property before, shall continue so, for the purpose
of being applied to the discharge of all the proper
debts and obligations thereof, and for a final distribu-
tion of the surplus, according to the rights and shares
of all the partners.^
§ 347. It may be farther remarked, that, as it beT
comes the duty of all the parties in interest, upon a
dissolution by death, with all practicable diligence to
wind up and settle the partnership concerns, to pay
the partnership debts and obligations, and to distri-
bute the surplus among those who are entitled to it,
according to their respective shares therein, each party
in interest has a right, in case of any improper delay,
or danger of loss, or neglect of duty, to require the
aid of a Court of Equity to enforce the duty, and to
compel a full account and settlement of the whole
concern.^ Hence the personal representatives of the
little inconvenience arises from the present rule ; for, notwithsta,nding the
surviving partner is liable for the whole debt in the first instance, he can
call upon the executor of his copartner for a contribution. Nor is there
any hardship upon the creditor, since, in the event of the insolvency of the
surviving partner, we shall presently see that he has a remedy in equity
against the estate of the deceased."
' Gow on Partn. ch. 5, § 4, p. 351, 3d edit.; Ex parte Williams, 11
Ves. 5 ; Wilson a. Greenwood, 1 Swanst. E. 480 ; Crawshay v. Maule,
1 Swanst. E. 506 ; Beak v. Beak, 3 Swanst. E. 627, App. ; 2 Bell,
Comm. B. 7, ch. 2, p. 637, 638, 543, 644, 5th edit.; 3 Kent, Comm.
Lect. 43, p. 63, 4th edit; Ante, § 325 to 328 ; Evans v. Evans, 9 Paige,
E. 178.
2 Evans ». Evans, 9 Paige, E. 1 78. — A bill of this sort strongly re-
sembles the action, pro socio, of the Eoman law, which was designed to
effect the same and other purposes. 2 Bell, Comm. B. 7, ch. 2, p. 646,
5th edit.; Pothier, Pand. Lib. 17, tit. 2, n. 30 to 53 ; Pothier, de Soci-
ety, n. 161.
CH. XIV.] DISSOLUTION EIGHTS OF PARTNERS. 547
deceased partner have a right to insist upon the appli-
cation of the joint property, in the hands of the survi-
vors, to the payment of the joint debts, and a division
of the surplus.'' And as this can' ordinarily be done
only by a sale and conversion of the property into
money, they are entitled to have the property sold for
this purpose.^ And if within a reasonable time the
survivors do not account with them, and come to a
settlement, a Court of Equity will entertain a bill for
this purpose, and will, in aid thereof, if necessary, re-
strain the partners by injunction from disposing of
the joint property, and from collecting the outstanding
debts.^ So, the surviving partners have each against
the others a like right to insist upon a final adjust-
ment and settlement of the partnership accounts, and
a distribution of the surplus ; but in such a suit the
personal representatives of the deceased partners are
necessary parties; for they have an equal interest
therein with the survivors, and would not be con-
cluded by any decree made in the premises, unless
they were made parties.*
' Ex parte Kuffin, 6 Ves. 126 ; Gow on Partn. ch. 5, § 4, p. 352, 3d
edit.
2 Evans v. Evans, 9 Paige, K. 178.
3 Grow on Partn. ch. 5, § 4, p. 352, 3d edit. ; Hartz v. Schrader, 8 Ves.
317; Ante, § 329 f» § 344,; CoUyer on Partn. B. 2, ch. 3, § 4, p. 226,
227, 2d edit.
4 Gow on Partn. ch. 5, ^ 4, p. 352, 3d edit.; Collyer on Partn. B. 2,
ch. 3, § 4, p. 226, 227, 2d edit. — Mr. Bell (2 Bell, Comm. B. 7, ch. 2,
p. 645) has summed the general results of the dissolution of the partner-
ship, and the mode of settlement of the partnership concerns, as follows.
" Until the final settlement of the partnership affairs, and the payment of
the joint debts, and distribution of the joint property, it cannot correctly
be said, that the partnership is determined. (1.) On the dissolution of
partnership, the property is common, to be divided according to the shares
of the partners after the payment of debts. This consists of the following
particulars : — (1st.) The stock in trade, as originally contributed, with all
548 PARTNERSHIP. [CH. XIV.
§ 348. In taking the account between the partners
upon any dissolution, each, of course, becomes charge-
able with all the debts and claims, which he owes, or is
accountable for, to the partnership; with all interest
accruing upon the same debts and claims ; and with all
J»rofits, which he has made out of the partnership
effects during the partnership, or since the dissolution,
either rightfully or by misapplication thereof^ Similar
provisions existed in the Roman law, which are labori-
the additions made to it. (2d.) Real estates acquired by the company ;
leases of premises for the use of the company; ships purchased or
freighted on time. (3d.) The good-will of a mercantile or literary estab-
lishment seems to form a part of the common stock. (2.) The partners,
or either of them, may insist on a sale as the best criterion of the value
of the property ; and this the Court may order, without waiting the final
adjustment of interests, where it is manifest that there must be a dissolu-
tion. (3.) The common property thus converted, with the pecuniary
funds when collected, forms a fund, over which the creditors of the con-
cern have a primary and preferable claim ; and it must be so applied, in
the first place, before any partner, or his assignee or representative^, can
claim a share. (4.) In taking an account between the partners them-
selves, the slate of the stock is to be taken as at the dissolution, (death for
instance,) and the proceeds thereof until it is got in ; and each is to be
allowed whatever he has advanced to the partnership, and to be charged
with what he has failed to bring in, or has drawn out more than his just ■
proportion. The partners are to be allowed equal shares of the profit and
stock, if there be no other arrangement settled. But a different arrange-
ment may be established either by contract or by the books and usage of
the company. (5.) The surviving partners are to wind up the ^ffairs,
unless some fault or abuse is chargeable against them, or some danger
from their intromissions, which may require the appointment of a neutral
person, or the requisition of caution. (6.) The same confidence, which
was placed in the partner, is not necessarily reposed in his representatives;
and, therefore, where both or all the partners die, the Court will appoint
-a receiver."
' Gow on Partn. ch. 5, § 12, p. 255, 356, 3d edit. ; Id. § 3, p. 302, 303 ;
Id. § 4, p. 355 ; CoUyer on Partn. B. 2, ch. 2, § 1, p. 122, 123, 2d edit ;
Id. B. 2, ch. 3, § 4, p. 221, 222 ; Ante, § 329, 341, 343 ; Burton v.
Wookey, 6 Madd. R. 367 ; Brown v. Litton, 1 P. Will. 224 ; Crawshay v.
Collins, 15 Ves. 218, 220.
CH. XIV.j DISSOLUTION — EIGHTS OF PAETNERS, 549
ously collected by Pothier, in his edition of the Pan-
dects ;^ and from that law they have been transferred
into the modern law of France.^
§ 348 a. If any partner has made advances to the
firm, and others have received advances from it, these
do not constitute debts, strictly speaking, until the
concern is wound up, but only as items in the account
between the partners.^
1 Pothier, Pand. Lib. 17, tit. 2, n. 36 to n. 45.
2 Pothier, de Society, n. 167 ; Id. n. 109 to n. 132.
3 Richardson v. Bank of England, 4 Mylne & Craig, 165, 172.— On
this occasion Lord Cottenham said, speaking of debtor and creditor part-
ners ; " But though these terms ' creditor ' and ' debtor ' are so used, and
sufEciently explain what is meant by the use of them, nothing can be
more inconsistent with the known law of partnership than to consider the
situation of either party as in any degree resembling the situation of those
whose appellation has been so borrowed. The supposed creditor has no
means of compelling payment of his debt ; and the supposed debtor is
liable to no proceedings either at law or in equity, assuming always that
no separate security has been taken or given. The supposed creditor's
debt is due from the firm of which he is a partner ; and the supposed
debtor owes the money to himself in common with his partners ; and,
pending the partnership, equity will not interfere to set right the balance
between the partners. Indeed it could not do so with effect, inasmuch as
immediately after a decree has enforced payment of the money supposed
to be due, the party paying might, in exercise of his power of a partner,
repossess himself of the same sum. But if, pending the partnership,
neither law nor equity will treat such advances as debts, will it be so after
the partnership has determined, before any settlement of account, and
before the payment of the joint debts or the realization of the partnership
estate ? Nothing is more settled than that, under such circumstances,
what may have been advanced by one partner, or received by another,
can only constitute items in the account. There may be losses, the par-
ticular partner's share of which may be more than sufficient to. exhaust
what he has advanced, or profits more than equal to what tlie other has
received; and until the amount of such profit and loss be ascertained by
the winding up of the partnership affairs, neither partner has any remedy
against, or liability to, the other, for payment from one to the other, of
what may have been advanced or received. In Crawshay v. Collins,
Lord Eldon says, ' Where a sum is advanced as a loan to an individual
partner, his profits are first answerable for that sum ; and if his profits
550
PARTNERSHIP. [cH. XIV.
§ 349. In respect to the mode of taking the accounts
between the partners, that must depend upon circum-
stances. If the partners have by the articles of part-
nership provided a particular mode, that will be held to
furnish the true rule for the adjustment of the concern,
and the winding up of all the affairs thereof; unless
the partners, by their own acts and conduct, have
waived, or abandoned it ; for, in that event, the stipu-
lation in the articles, as to the mode, will be held
a nullity.^ In the absence, however, of any positive
stipulations, or the abandonment of them by the acts
and conduct of the parties. Courts of Equity, as
between the partners, will commence with the last
stated account between them ; and deem that conclu-
sive upon all antecedent transactions, unless, indeed,
some gross and palpable error or fraud can be shown.^
If there has not been any stated account or any
positive or implied settlement at any period, then, of
course, the accounts must be taken from the period of
the commencement of the partnership.^ If profits have
shall not be sufficient to answer it, the deficiency shall be made good out
of his capital ; and if both his profits and his capital are not sufficient to
make it good, he is considered as a debtor for the excess.' The money
drawn out by any partner ceases to be part of the joint stock, so that,
upon bankruptcy, the joint creditor cannot recall it, unless there had
been a fraudulent abstraction ; Ex parte Younge. Again, in Foster v.
Donald, Lord Eldon says, ' If a partner, as pai-tner, receives money
belonging to the firm, and, admitting that he has received it, insists that
there is a balance in his favor, there is no pretence for making him pay
it in.' " Ante, § 229.
1 Ante, § 192 ; Gow on Partn. ch. 5, § 4, p. 353, 354, 3d edit. ; Jackson
V. Sedgwick, 1 Swanst. R. 460, 469 ; Pettyt v. Janeson, 6 Madd. K. 146 ;
2 Bell, Comm. B. 7, ch. 2, p. 645, 647, 648, 5th edit.
2 Ante, ^ 206.
3 Ante, !j 206, 207, 347; Gow on Partn. ch. 6,§ 4, p. 354, 355, 3d edit.;
Beak v. Beak, Rep. Temp. Finch, 190 ; S. C. 3 Swanst. R. 627 ; CoUyer
on Partn. B. 2, ch. 2, § 2, p. 144, 145, 2d edit. ; Id. B. 2, ch. 3, § 4,
p. 212, 213, 214.
CH. XIV.] DISSOLUTION — EIGHTS OF PAETNEKS. 551
accrued since the death of the partner, by the employ-
ment of the capital or otherwise, that will he treated
as an accession to the capital, and as joint property,
subject to all just allowances and deductions.-^
I Willett V. Blanford, 1 Hare, K. 253, 265 ; Ante, § 329, 341, 343, and
note (1) ; Gow on .Partn. ch. 5, § 4, p. 354, 356, 3d edit. ; Brown v. Lit-
tonj 1 P. Will. 140; Hammond v. Douglas, 5 Ves. 539; Crawshay v.
Collins, 15 Ves. 218, and Hill v. Bumham, and Coxwell v. Bromet, cited
there, p. 220, 223 ; Brown v. Be Tastet, Jacob, K. 284 ; Burden v. Burden,
1 Ves. & Beam. 170 ; CoUyer on Partn. B. 2, ch. 3, § 1, p. 165, 2d edit. ;
Id. B. 2, ch. 3, § 4, p. 221, 222; 2 Bell, Comm. B. 7, ch. 2, p. 6y, 648,
5th edit. — Many other matters, connected with the taking of the accounts
between the partners, arise incidentally in the course of the adjustment,
tinder the direction of Courts of Equity ; such, for example, as the allow-
ance of interest for or against partners for advances made to or by them ;
[see Ante, § 182 a]; so for separate debts due from the other partners
to one partner. These and many similar questions will be found dis-
cussed in other elementary treatises ; but they are not within the scope of
the present Commentaries, which do not purport to deal with the minute
details fit for the consideration of an accountant. See on this subject,
Gow on Partn. ch. 2, § 4, p. 105, 106, 8d edit.; Id. ch. 5, § 3, p. 236 ; Id.
oh. 5, § 4, p. 356, 357, 358 ; Collyer on Partn. B. 2, eh. 3, § 4, p. 200,
212, to p. 221, 229, 230, 231, 2d edit. ; Beacham v. Eckford, 2 Sandford,
Ch. R. 116. Mr. Collyer has well remarked (p. 214) ; "In taking the
partnership accounts, it is mainly to be considered, what was the value of
the joint property, and what the amount of the joint debts at the time of
the dissolution ; what was the share of the retired, deceased, or bankrupt
partner, in the joint property ; whether, and to what extent, the joint
capital has been employed, or joint debts incurred, sinCe the dissolution ;
whether any of the joint property in specie has been sold since the disso-
lution ; if so, what the gross amount, and what the interest of the profits;
on the other hand, whether any of the joint property in specie having been
sold, the profits have been applied to the purchase of other property in
specie ; and generally, whether, and to what extent, the joint property has
been traded with since the dissolution. These, with many other considera-
tions bearing on each particular case, must be duly weighed in the arrange-
ment of complicated partnership accounts. And it may here be remarked,
that the account is founded on the same principles, in whatever manner the
dissolution may have taken place ; whether, therefore, the affairs are to be
adjusted between the remaining and retiring partner, the surviving partner
and the executors of the deceased partner, or the solvent partner and the
assignees of the bankrupt partner." The following remarks of Vice-Chan-
552 PARTNERSHIP. [CH. XIV.
§ 350. Another question, which ordinarily arises
between the partners in cases of a dissolution by
cellor Wigram, in Willett v. Blanford, (1 Hare, K. 253, 269, 270, 271,
272,) deserve to be here cited as to the mode in which profits are to be
shared which are made after the death of one partner, as showing that no
universal rule can be laid down. " The circumstances of some cases
would almost exclude the possibility of making a decree in any other form
than that which the plaintiffs claim in this case. Take, for example, the
case suggested by Lord Eldon, in Crawshay v. Collins, of the mere con-
version into money, at a large profit, long after the testator's death, of the
very property which belonged to the partnership at his death, and no other
circumstance to embarrass the question. Again, the dissolution of a part-
nership ^rjm«yacie prevents new contracts being made on the joint account
of the partners ; but it necessarily leaves the old contracts of the partner-
ship to be wound up. In the absence of circumstances to alter the case, it
would be impossible to deny the right of the estate of a deceased partner
to participate in the profits arising from winding up of the old concerns ;
and if, in such a case, the surviving partners should have so mixed up new
dealings with the old, that the two could not be separated, the right of the
estate of the deceased partner to share in the profits of the new dealings
might unavoidably attach. In another case, a partnership may be formed,
the substratum of which may consist of specific things of pecuhar value in
their use, as, for example, patents, the invention or property of one of the
partners ; and the profits made after the death of the patentee, or owner of
the patent, may be derived wholly or principally from contracts subsisting
at his death, but not wound up until long afterwards ; or contracts entered
into after his death, of which contracts his specific property (the patents)
may have been the media. In such a case, in the absence of special cir-
cumstances, it would be dilfioult to suggest a principle upon which the
estate of the deceased partner should be refused the same proportion of the
profits which he enjoyed in his lifetime. This appears to me to be the
ground of the ultimate decision in Crawshay v. Collins. Again, the whole,
or the substantial part, of a trade, may consist in good-will, leading to re-
newals of contracts with old connections. In such a case, it is the identical
source of profit which operates both before and after dissolution ; and this
appears to me to be the groundwork of Lord Eldon's reasoning, in Cook v.
CoUingridge. Circumstances may be suggested of a very different kind.
Take the case of a business, in which profit is made by the personal activity
and attention with which the use of the money capital is directed, and the
case may require a difierent determination. Brown v. De Tastet ; Feath-
erstonhaugh v. Fenwick. Or, there may be the case of two persons befng
partners together, in equal shares ; one finding capital alone, and the other
finding skill alone ; and suppose the latter, before his skill had established
CH. XIV.J DISSOLUTION — RIGHTS OF PARTNERS. 553
death (wMch is equally applicable, indeed, to other
cases of dissolution,) is, in what manner the partner-
ship effects and assets are to he divided, after all the
charges and the debts and obligaitions due to third
a connection, or good-will, for the coneq^n, should die, and the survivor, by
the assistance of other agents, should carry on the concern upon the part-
nership premises, — it could scarcely be contended, after a lapse of years,
that the estate of the deceased partner was entitled as of course to a moiety
of the profits made during that lapse of time after his death ; and if his
estate would not be so entitled where the deceased partner had left no cap-
ital, it would be difficult to establish a right to a moiety only, because he
had some small share of the capital and stock in trade engaged in the
business 'at his death, without reference to its amount, and the other cir-
cumstances of the case. If, on the other hand, the skill of an individual,
without capital, had been exercised as a partner in a concern, until it has
created a connection and good-will, and, upon his death, his surviving part-
ner, instead of giving to the estate of the deceased the benefit of that good-
will by a sale of the concern, should think proper to carry on the concern
for his own benefit until the connection and good-will were lost ; it would
not be difficult to justify a decree which, in such a case, should declare the
estate of the deceased entitled to share any profits made after his death.
If capital were to be taken as the basis upon which, in every case, the pro-
portion of profits was to be calculated, much injustice would often ensue.
In partnership cases, the agreed capital of a concern is considered in
general as remaining the same, notwithstanding one partner may make ad-
vances to, and the other abstract money from the concern. If, at the death
of an acting partner, he had abstracted or borrowed money from the part-
nership exceeding the amount of his property in the concern, it would be
any thing but justice to hold, as a rule of course, that his right to participate
in the profits after his death should continue to the same extent as if his
accounts with thepartnership were adjusted, and he had given his time and
attention to the business. The distinction also between capital and stock
in trade, which forms so material a subject of consideration in Crawshay v.
Collins, would often make it unjust to take the agreed amount of capital in
partnership as a basis upon which to found a general rule applicable to the
estate of a deceased partner. I consider myself, therefore, bound by au-
thority and reason, to hold, that the nature of the trade, the manner of
carrying it on, the capital employed, the state of the account between the
partnership and the deceased partner at the time of his death, and the con-
duct of parties after his death, may materially affect the rights of the par-
ties ; and that I must have more information than I now possess before I
can safely decide this case."
PAKTN. 47
554 PARTNERSHIP. [CH. XIV.
persons have been duly paid and discharged. In
other words, how are the effects and assets, whether
real, personal, or mixed, to be valued, so as to make
an equal distribution of them among the partners,
according to their respective shares thereof. In rela-
tion to the real estate of the partnership, it seems to
have been generally considered, that it ought to be
decreed to be sold, as the only fair and just way (in
the absence of any other agreement between the' par-
ties) to ascertain its true value.-^ The same rule would
seem equally to apply to all cases of chattels and
other personal property and effects, which are not ca-
pable in themselves of being exactly divided, without
reference to their positive and absolute value.^ As to
chattels and other personal property, capable of such
a division, the same rule, as to a sale, may not neces-
sarily and under all circumstances apply. But the
true doctrine of Courts of Equity on this subject
would seem to be, in all cases, to decree a sale of the
partnership property, rather than a division thereof in
kind, whenever a sale would be most beneficial for
the interests of all the partners.^
1 CoUyer on Partn. B. 2, ch. 3, § 4, p. 204 to 214, 2d edit. ; Id. p. 214
to 216 ; Cook V. CoUingridge, Jacob, R. 607 ; 2 Bell, Comm. B. 7, ch. 2,
p. 632, 645, 6th edit. ; 3 Kent, Comm. Leot. 43, p. 64, 4th edit. ; Craw-
shay v. Collins, 17 Ves. 218, 227 ; Crawshay v. Maule, 1 Swanst. R. 495,
606, 623 ; Gow on Partn. ch. 5, § 2, p. 234, 235, 3d edit.
2 Ibid.
3 Ibid. ; Regden v. Pierce, 6 Madd. R. 353 ; Collyer on Partn. B. 2,
ch. 2, § 2, p. 146, 147, 2d edit. ; Id. B. 2, ch. 3, § 4, p. 206 to 211, 214,
215, 216. — Mr. Gow (Gow on Partn. ch. 5, § 2, p. 235, 237, 3d edit. ;
Id. p. 252, 253) insists upon the right of any partner to insist on a sale in
all cases. He says (p. 234) : " When the common property is ascertain-
ed, either partner may insist upon a sale of the whole concern. The rights
of the partners respectively are then precisely equal ; each may require .
the whole concern to be wound up by a sale, and a division of the produce.
CH. XIV.] DISSOLUTION — EIGHTS OF PARTNERS. 555
§ 351. The doctrine has sometimes been strenu-
ously contended for, that upon the dissolution of the
partnership by the retirement, or death, or bankruptcy
of one partner, the others had a right to take the
"whole partnership property and effects at a valuation.
But this doctrine has been completely repudiated by
Courts of Equity, as equally unfounded in principle
and public policy.-' In short, it would amount to a
One partner • has no claim upon his individual pro|)ortion of a specific
article, nor can he insist upon an exclusive right in it ; but he is entitled
only to a general arrangement of the partnership concerns, and for that
purpose to an account of the produce of the aggregate joint effects. He
cannot separate his share from the bulk of the joint property, nor compel
his copartner to accept vrhat, according to a valuation, his interest may be
worth. That is not the mode in -which a Court of Equity -winds up the
concerns of a partnership. But in every case, in vfhich that Court inter-
feres in closing the transactions of a firm, it directs the value of the -whole
of the joint property, -whether real or personal, to be ascertained, in the
■way in -which it can be best ascertained, viz. by a sale and its conversion
into money.'' In Freday v. Wightwiek, (1 Tamlyn's E. 261,) Sir John
Leach, Master of the Rolls, said ; " It is a principle, that all property,
■whether real or personal, is subject to a sale on a dissolution of the
partnership." Mr. Chancellor Kent lays down the same doctrine in his
Commentaries. 3 Kent, Comm. Lect. 43, p. 64.
1 Gow on Partn. ch. 5, § 2, p. 234, 235, 3d edit. ; Ante, § 350 ; Col-
Iyer on Partn. B. 2, ch. 3, § 4, p. 206 to 211, 2d edit. ; Cra-wshay v.
Collins, 15 Ves. 218, 227,; Crawshay v. Maule, 1 Swanst. R. 495 ; Fox
V. Hanbury, Co^wp. R. 445; Featherstonhaugh v. Fenwick, 17 Ves. 298 ;
Wilson V. Greenwood, 1 Swanst. E. 471 ; Cook v. Collingridge, Jacob,
R. 607; Sigourney v. Munn, 7 Conn. R. 11. — In Featherstonhaugh v.
Fenwick, (19 Ves. 298, 309, 310,) Sir William Grant said; « The next '
consideration is, whether the terms upon which the defendants proposed
to adjust the partnership concern, were those to which the plaintiff was
bound to accede. The proposition was, that a value should be set on the
partnership stock ; and that they should take his proportion of it at that
valuation ; or, that he should take away his share of the property from
the premises. My opinion is clearly, that these are not terms to which
he was bound to accede. They had no more right to turn him out, than
he had to turn them out, upon those terms. Their rights were precisely
equal ; to have the whole concern wound up by a sale, and a division of
the produce. As, therefore, they never proposed to him any terms which
556 PARTNEESHIP. [CH. XIV.
right of preeminence or superiority in some of the
partners over the rest, upon any dissolution, to com-
pel them to submit to a particular mode of selling
their rights in the property, upon such terms as the
he was bound to accept, the consequence is, that, continuing to trade with
his stock, and at his risk, they come under a liability for whatever profits
might be produced by that stock." In Crawshay v. Collins, 15 Ves. 218,
227, Lord Eldon (after making the remarks already stated, Ante, § 322,
note 1,) added ; " As to the case now before the Court, of the bankruptcy
of one partner, supgpsing it the simple case of profit made by the mere
sale of the property, there must be an account. It is said, a duty was
imposed upon the assignees to call for the account. That is true. It is
further urged, that they could not be traders in new adventures. That
also is in a sense true. But the proposition would be rash, that there can
be no case in which they could trade with consent of the creditors, or of
the creditors and the bankrupt together. If they had the consent of all
persons interested, I do not know that other persons, with whom they
might deal, could make the objection. The duty'is not as between them
and the other persons, who are not properly to be termed remaining or
surviving partners ; the destruction of one being, unless it is otherwise
provided, a dissolution of the whole partnership ; as if by effluxion of
time, or by death, except as it may be reasoned upon the efiect in bank-
ruptcy of the substitution of assignees. It is, however, no more the duty
of the assignees to settle with the others, than it is their duty to settle
with the assignees. Is it possible, then, to say, that upon any rule of law
the other partners can take, as sole owners, all the houses, buildings, and
stock in trade ? The consequence of the destruction and dissolution of
the partnership is, that they became tenants in common in each and every
article embarked in it, under an obligation to deal with the whole of the
stock, and every article, as the equitable title of the bankrupt and them-
selves requires ; and, according to the case of Fox v. Hanbury, the right
is not to an individual proportion of a specific article, but to an account ;
the property to be made the most of and divided." Mr. Collyer has
summed up the general result of the cases in the following terms (p. 210) ;
" It appears, therefore, that in all cases of partnership at will, whether
the contract was originally of that nature, or has become so by effluxion
of time or other circumstances, a Court of Equity will, upon a dissolution,
decree a sale of the entirety of the partnership efiects at the desire of any
of the parties. And even in the case of a partnership with articles, sup-
posing it to be dissolved for the misconduct of one partner, a case might
be stated, where a Court of Equity would decree a general sale and
account, as of a partnership at will, notwithstanding express provisions
in the articles, as to the proceedings to be had upon a dissolution.
CH. XIV.] DISSOLUTION — EIGHTS OP PARTNERS. 557
others should choose to prescribe ; a right utterly iu-
consistent with the acknowledged principles of the
equality of rights and of powers and authorities of all
the partners.^
§ 352. The Roman law, in like manner, contained
provisions for the due settlement and distribution of
the partnership effects, as, indeed, every system of
jurisprudence must, which aims at any moderate ad-
ministration of public or private justice. The action.
Pro socio, seems properly to have appUed to the due
taking of the accounts of the partnership, and the
action, Communi dividundo, to the distribution of the
effects.^ And certain rules were laid down, as to
what charges and allowances were to be made for or
against each partner, and thie reciprocal rights, which
each has against the others upon the final adjustment.^
But a special enumeration thereof would rather be a
matter of liberal curiosity, than of practical utility or
illustration of our jurisprudence.
I 353. The French law also contains a minute enu-
meration of the mode of settling the accounts, and of
making a distribution of the effects upon the dissolu-
tion of partnerships.* In some material respects, it
' Ibid.
2 Dig. Lib. 10, tit. 3, 1. 1 to 31 ; Id. Lib. 17, tit. 2, 1. 52, 57, 65 ; Po-
thier, Pand. Lib. 10, tit. 3, n. 6; Id. Lib. 17, tit. 2, n. 33 to n. 54 ;
Pothier, de Societd, n. 161.
3 Pothier, Pand. Lib. 17, tit. 2, n. 35 to 49; Domat, B. 1, tit. 8, § 6,
art. 16.
*Po),liier,deSociet6,n. 167 to 174. — Pothier says (166, 168;) "Avant
que de procdder au partage, on doit proc^der au compte de ce, que cha-
cune des parties doit k la communaut6, qui est k partager, et de ce, qui
lui est du par ladite communautfe. On doit comprendre dans cet 6tat,
non-seulement cu qu'elle devoit h, la soei6t6 lors de sa dissolution, mais ce,
qu'elle a pu devoir h, la communaut6 depuis la dissolution, soit pour raison
de ce qu'elle auroit retir6 du fonds commun, soit pour raison du dommage,
47*
558 PARTNERSHIP. [CH. XIV.
agrees with our law ; in others, again, it widely differs.
It gives to every partner a right of action to enforce a
due account and settlement ; but it requires, in such a
case, that aU the partners should be parties to the suit ;
and if they are not, they may intervene, and make
themselves parties.^ If the partners have fixed a par-
ticular time after the dissolution for the account, that
stipulation is to be followed. If there be no such stipu-
lation, then an account is immediately demandable.^ '
qu'elle auroit causd par sa faute dans les effets de la communaut6. Pareil-
lement on doit comprende dans I'^tat de ce, qui est du par la communaut6
h chacune des parties, non-soulement ce qui lui 6toit du par la societ6 lors
de sa dissoIut^^n, mais ce qui a pu lui §tre du depuis par la communautfe
k cause des d6bours6s, qu'elle auroit faits inutilement pour less affaires
communes, ou pour les biens de la communautd, depuis la dissolution de
la socifetfe. On doit compenser jusqu'^ due concurrence le montant des
sommes dont chacune des parties est d^bitrice de la communautd, au
montant de celles, dont elle est cr^anciere, et arreter la somme dont elle
se trouve, apr6s cette compensation faite, d6bitrice de la communaut6 ; ou
celle, dont elle se trouve, apr^s cette compensation faite, crdanciere de la
communaut6. Observez que, dans le compte de ce, qui a 6t6 re^u ou mis
pour la socidtd, le livre de socifetfe tenu par I'un des associ^s, fait foi entre
eux ; Lauterbach. Apr^s ce compte fait, on dresse la masse, c'est-&-dire,
un dtat d6taill6 de toutes les diff6rentes choses dont la communaute est
compos6e ; et on comprend dans cette masse, au nombre des dettes actives
de la communaut6, les sommes, dont quelques-unes des parties se sojit trou-
vdes, apr&s la compensation faite, d^bitrices de la communaute ; et au
partage de la communaute, on la leur prfecompte, sur leur part. On dresse
aussi un 6tat des dettes passives de la communaute,«et on y comprend les
sommes, dont quelques-iines des parties se seroient trouve& au compte de
la communaut6, aprfes compensation faite, crfeancieres de la communaut6.
Ces sommes doivent 6tre par elles pr61evfces au partage de la communaut6.
Chacune des choses dont la communaute est composde, soit meubles, soit
heritages, est port^e dans cette masse pour une certaine estimation. Les
parties peuvent faire elles-mdmes cette estimation, lorsqu'elles sont en fetat
de la faire, qu'elles en sont d'accord, et qu'elles sont toutes majeures ; sinon
I'estimation se fait par un ou par plusleurs estimateurs dont elles con-
viennent ; et si elles n'en peuvent convenir, le Juge du partage en nomme
d'office."
1 Pothier, de Societe, n. 162, 163.
2 Pothier, de Soeiete, n. 165.
CH. XIV.] DISSOLUTION — WRIGHTS OF PAETNBKS. 559
And so, indeed, is the rule of the Roman law. Si cmi-
vmit, ne omnino divisio fiai, hujusmodi pactum nullas vires
Jmbere manifestissimum est ; sin autem, ne intra cerium
iempus, quod etiam ipsius rei qualitas jorodest, vaht} In
these and in many other respects there is an agreement
with our law.
§ 354. But the French law differs from our law in
a striking manner, as to the mode of distribution of
the partnership effects, whether they are movable, or
immovable, or credits. It allows so much thereof to
be sold, as may be necessary to discharge the debts
and other obligations of the partnership.^ But it does
not authorize a sale thereof for any other purposes,
unless it be by the express consent of aU the partners,
or it be the only mode by which practically a division
of a part thereof can be made.^ It provides, with
these exceptions, that a valuation thereof shall be
taken, either by agreement of the parties, or, if they
disagree, by the proper judicial tribunal.* It further
provides, that the movable or personal property shall
be valued, and divided among them all in kind (en
nature ; ) that for this purpose it shall be put into lots
of ec[ual value, the lots to be drawn by the partners ; ®
that the real estate shall, in like manner, be valued
and divided ; and, as it rarely will admit of being put
into lots of equal value, the value of each lot is to be
ascertained, and the partner, who draws any lot be-
yond or short of his share, is to pay or receive the
surplus to or from the other partners, who respectively
I Pothier, de Societd, n. 165 ; Dig. Lib. 10, tit. 3, 1. 14, § 2.
s Pothier, de Society, n. 169, 173.
3 Pothier, de Society, n. 169, 171.
*Pothier,de Society, n. 168. i
5 Pothier, de Society, n. 169.
560 PARTNEESHIP. [CH. XIV.
have the corresponding lots.^ As to debts due to the
partnership, they are to be valued and divided in the
like manner ; that is, each partner is to have his own
share of each of such debts.^ But, inasmuch as great
embarrassment must arise from each debtor's being
thus obliged to pay each partner his share of the
debts, a custom has prevailed of putting up into
lots such of the debts as are good, and of dividing
them by lot, in the same, way as other effects.^ As to
debts due from the partnership to third persons, so
far as they cannot be discharged by the application of
the partnership effects, they also are divisible among
all the partners, who thereby become liable inter sese
to pay the same to the creditors ; but the rights
of the creditors against all in solido are not thereby
varied.'*
§ 355. It can scarcely escape observation, even from
this brief enumeration, how much the rule of our
Courts of Equity on this subject, by directing, in uU
cases of real complexity or difficulty, a sale, instead
of a distribution or division of the effects, excels
that of the Roman and French law, in point of conve-
nience, simplicity, and practical policy. The Scotch
law has here also wisely abandoned the Roman law,
and adopted the same rule of a sale as is adopted in
our law.^
1 PotWer, de Society, n. 170.
2 Pothier, de Society, n. 172.
3 Pothier, de Sooiet6, n. 172. — In this respect^ the French law <Join-
cides with that of the Koman law. Ea, quae in nominibus sunt, non reci-
piunt dlvisionem. Cod. Lib. 3, tit. 36, 1. 6 ; Dig. Lib. 10, tit. 2, 1. 4 ;
Pothier, Pand. Lib. 10, tit. 2, and tit. 3, n. 26 ; Pothier, de Society,
n. 172.
4 Pothier, de Society, n..l73.
s 2 Bell, Comm. B. 7, ch. 2, p. 632, 633, 645, 5th edit.
CH. XIV.] DISSOLUTION — EIGHTS OF PAETNERS. 561
§ 356. We come, in the next place, to the fourth
and last consideration under this head, viz. the effects
and consecLuences of a dissolution of the partnership
by a decree of a Court of Equity. And here, as be-
tween the parties themselves, there is little room for
any additional observations, since precisely the same
effects and consequences follow, as ordinarily apply to
a voluntary dissolution by the partners, or to a disso-
lution by death. The only suggestion, which seems
important in a practical view to be made, is, that
where a bill is filed for this purpose, and it is clear to
the Court, that a dissolution ought finally to be de-
creed, the Court will generally at once put an end to
the partnership trade or business, by directing a sale
by an interlocutory order or motion, where that
measure is manifestly required by the interest of the
parties, and otherwise a serious or irreparable mischief
might ensue.-'
1 Gow on Partn. ch. 5, § 2, p. 235, 236, 3d edit.; Crawshay v. Maule,
1 Swanst. R. 506, 623 ; Nerot v. Burnard, 2 Euss. K. 56. See also Good-
man V. Whitcomb, 1 Jac. & Walk. 569, 572.
562
PARTNERSHIP. [CH. XV.
CHAPTER XV.
DISSOLUTION — EFFECTS AND CONSEQUENCES AS TO THE
RIGHTS OF CREDITORS.
_ § 357. Hitherto we have been mainly considering
the effects and consequences of a dissolution as be-
tween the partners themselves and their representa-
tives, and when and under what circumstances third •
persons, having no notice thereof, might, notwith-
standing, have a remedy against all the partners upon
subsequent transactions with some of the firm. We
now come to the consideration of the rights of the
creditors, who are such at or before the dissolution of
the firm. These creditors may be either joint creditors
of all the firm, or separate creditors of one or more of
the firm. For the most part, the same considerations
will apply to each class of creditors in all cases of dis-
tribution, whether by voluntary consent, or by mere
operation of law, or by death, or by bankruptcy, or by
the decree of a court. There are, however, some par-
ticulars belonging to the case of bankruptcy, which
will be reserved for a distinct and separate examination.
But, unless some qualification is annexed, the doctrines
hereinafter stated will generally apply to all other cases
of dissolution.
§ 358. It has been already suggested, that the
rights of antecedent creditors of the partnership are
in -no wise varied by the dissolution of the partner-
ship.-^ It may be added, that, upon the dissolution, it
1 Ante, § 334, 335 ; Ault v. Goodrich, 4 Euss. R. 430 ; Gow on Partn.
CH. XV.] DISSOLUTION — RIGHTS OF CREDITOES. 563
is competent for the partners, in cases of a voluntary
dissolution, to agree, that the joint property of the ,
partnership shall belong to one of them ; and if this
agreement be lond fide, and for a valuable considera-
tion, it will transfer the whole property to such part-
ner, wholly free from the claims of the joint creditors.^
The like result will arise from any stipulation to the
same effect, in the original articles of copartnership,
in cases of a dissolution by death, or by any other per-
sonal incapacity ; but not in cases of a dissolution
by forfeiture for felony, or by bankruptcy. The reason
of this is obvious, WhUe the partnership is solvent,
and going on, the creditors have no equity, strictly
speaking, against the effects of the partnership.^ Nei-
ther have they any lien on the partnership effects for
their debts. All that they can, or may do, is to pro-
ceed by an action at law for their debts against the
partners ; and having obtained judgment therein, they
may cause the execution, issuing upon that judgment,
to be levied upon the partnership effects, or upon the
separate effects of each partner, or upon both.^ There
being, then, no lien, and no equity in favor of the
ch. 5, § 2, p. 240, 241, 3d edit. CoUyer on Partn. B. 1, ch. 2, § 3, p. 75,
2d edit.; 2 Bell, Comm; B. 7, ch. 2, p. 638, 5th edit.
i.Gow on Partn. ch. 5, § 2, p. 237 to 241, 3d edit.; CoUyer on Partn.
B. 2, ch. 1, § 2, p. 113, 114, 2d edit. ; Ex parte Peake, 1 Madd. E. 346 ;
Ex parte Kuffin, 6 Ves. 127; Ex parte Fell, 10 Ve3.'347; Ex parte
WiUiams, 11 Ves. 3 ; Ex parte Kowlandson, 1 Rose, R. 416 ; Campbell v.
Mullett, 2 Swanst. K. 575 ; Ante, § 97, and note (1) ; Ante, § 326, note
(1) ; Ketchum v. Durkee, 1 Barbour, Ch. R. 480. ,
2 Ibid., and Ante, § 97, note, and Ante, § 326, note (1,) and especially
Ex parte Williams, 11 Vea. R. 3, 5 ; Waterman v. Hunt, 2 Rhode Island
R. 298; Cook v. Beech, 10 Humph. 412.
3 Ex parte RuflSn, 6 Ves. 119, 126, 127; Ex parte Williams, 11 Ves.
S; Ex parte Fell, 10 Ves. 347; Campbell w. Mullett, 2 Swanst. R. 552,
675.
564 PAETNERSHIP. [CH. XV.
creditors against the partnership effects, until such
execution is issued and levied thereon, it follows, that
those effects are susceptible of being legally transferred,
bond fide, for a valuable consideration, to any persons
_ whatsoever, and as well to the other partners as to mere
strangers.-'
§ 359. And this is equally true, although the whole
or a part of the consideration of the transfer is, that
the partners taking the property shall pay the whole
or a particular part of the debts of the partnership j
for that will not aid the creditors. The reason is,
that, in such a case, the retiring, partner who so
transfers his share, has no lien on the property for the
discharge of those debts ; for by his voluntary transfer
thereof he has parted with it, and trusted to the per-
sonal security and personal contract of the other part-
ners.^ Even if he had, the lien would not pass to
those creditors by operation of law, so as to become
available in their favor.^ There may be, and indeed
often is, a special agreement, subsequently entered
1 Ex parte Ruffln, 5 Ves. 119, 126, 127; Ex parte Williams, 11 Ves.
K. 3, 5 ; Ante, § 97, and note ; Ante, § 326, note (1) ; Campb^l <;. Mul-
lett, 2 Swanst. K, 552, 575; Ex parte Fell, 10 Ves. 347; Ketchum v.
Durkee, 1 Barbour, Ch. R. 480.
2 Ex parte Euffin, 6 Ves. 119, 126, 127; Ex parte Williams, 11 Ves.
3, 5 to 8.
3 Gow on Partn. ch. 5, § 2, p. 238 to 241, 3d edit.; Id. p. 245 ; Id. p.
253, 254 ; Collyer on Partn. B. 4, ch. 2, § 1, p. 603 to 605 ; Ex parte Peele,
6 Ves. 602 ; Ex parte Williams, Buck. Cas. 13 ; Ex parte Freeman, Buck.
Cas. 471 ; Ex parte Ruffin, 6 Ves. 119, 126, 127 ; Ex parte Williams, 11
Ves. 3 ; Campbell v. Mullett, 2 Swanst. 552, 575 ; Ex parte Fell, 10 Ves.
347. — In Ex parte Williams, (11 Ves. Z, 6,) Lord Eldon said; "The
creditors are not injured by the agreement of partners to dissolve the
partnership ; and that, from that time, what was joint property shall become
the separate property of one, notice of the dissolution being given; as
either a consideration is paid, or, which for this purpose is equal to a con-
sideration, a covenant is entered into to pay the debts and indemnify the
CH. Xy.] DISSOLUTION — RIGHTS OF CREDITORS. 565
into between the creditors and the partner, taking the
transfer ; but then the case stands dryly upon such an
agreement, and has no operation beyond it.-^
§ 360. Subject, however, to these exceptions, it may
be generally stated, that, where the partners them-
selves have a lien upon the partnership effects for the
discharge of all the debts and obligations thereof, (as
they have in all cases, where they have not parted
with it,^) that lien may, in many cases, be made avail-
able for the benefit of the creditors. But then the
equities of the creditors are to be worked out through
the medium of that of the partners.^ They have, in-
deed, no lien j but (as has been said) they have some-
retiring partner, so conceived as not to leave any lien upon the property.
Upon any other principle the conclusion must be, that a partner could not
retire from Child's house ; as the effects may be distributed twenty years
hence among the creditors, if they remain so. If creditors do not like the
arrangement, they must go to each of the partners, and desire payment.
Another material ground is, that, -where the possession of the property is
delivered over to the surviving partner, and he goes into the world as a
sole trader, he has all the credit belonging to him as such sole trader ;
having the possession, and dealing with mankind as such. I qualify it so ;
for I do not agree, that mere dissolution will work all this effect ; as that
does no more than declare, that the partnership is not to be carried on any
further, except for winding up the affairs, and he who has actual posses-
sion, has it clothed with a trust for the other, to apply the property to the
debts ; and that will qualify the nature of his possession, so that it cannot
be said, he has the sole possession of the specific effects, or the debts, to
bring it within the operation of the Statute of King James, which cer-
tainly affects debts." '
' See Gow on Partn. ch. 3, § 2, p. 240, 245, 3d edit. ; Id. p. 254, where
the principal cases are collected.
2 Ante, § 97, and note, and Ante, § 326; 1 Story, Eq. Jurisp. § 675,
676; Holderness v. Shackels, 8 Barn. & Cressw. 612.
3 [And if the contract of partnership is of such a nature, that the co-
partners can enforce no such right of lien as between themselves, the
partnership creditors can claim no such preference. Rice v. Barnard, 20
Verm. 480 ; "Washburn v. Bank of Bellows Falls, 19 Verm. 278, and the
able judgment of Kedfield, Chancellor.]
PARTN. 48
566
PARTNERSHIP. [CH. XV.
thing approaching to a lien, of which, with the assent
of the partners entitled to the lien, they may avail
themselves in a Court of Equity against the partner-
ship effects.^ The community of interest still remains,
notwithstanding a dissolution, so far as is necessary to
wind up the affairs of the partnership ; and this re-
quires, that what was partnership property before, shall
(unless otherwise agreed,} continue to be so for the
purpose of a distribution, not as the rights of the cre-
ditors may suggest, but as the rights of the partners
themselves require. And it is thus, through the ope-
ration of administering the equities between the parties
themselves, that the creditors have the opportunity
of enforcing this quasi lien.^ In short, in case of a
dissolution, each partner holds the joint property,
clothed with a trust to apply it to the payment of the
joint debts, and, subject thereto, to be distributed
among the partners according to their respective shares
therein.®
1 Campbell v. MuUett, 2 Swanst. K. 551, 575, 576 ; Ex parte Ruffin, 6
Ves. 119, 126, 127 ; Ex parte Pell, 10 Ves. 347 ; Ex parte Williams, 11
Ves. 3 ; Ante, § 97, note, and Ante, § 326, and note ; 3 !Kent, Comm. Lect.
43, p. 65, 4th edit.; Ex parte Kendall, 17 "Ves. 514, 526. — In^Ex parte
Kendall, (17 Ves. 526,) Lord Eldon said ; " I do not recollect an instance,
that this right to go in upon the separate fund, not given by the legal con-
tract, was extended beyond those who were creditors of the whole firm.
Supposing that all those creditors could go in, the next question is, whether
the creditors of the four can compel them to go in. W^ith regard to that,
though much artificial doctrine has been introduced in this Court, yet
creditors, as such, independent of the effect of any special contract, have
no lien or charge upon the effects of their debtor ; and in all these cases
of distribution of joint effects,^it is by force of the equities of the partners
among themselves, that the creditors are paid ; not by force of their own
claim upon the assets, for they have none."
2 Ex parte Williams, 11 Ves. S, 6 ; Ex parte Ruffin, 6 Ves. 119, 126,
127 ; Ante, § 97, note; Ante, § 167 ; Ante, § 326, note (1 ;) Ex parte
Kendall, 17 Ves. 514, 526. See Stocken v. Dawson, 9 Beav. K. 246.
3 Ibid. See Crallan v. Oulton, 3 Beavan, 1, 7.
CH; XV.] DISSOLUTION — KiaHTS OF CREDITORS. 567
§ 361. From the foregoing considerations, then, it
is plain, that the joint creditors of the partnership,
while all the partners are living and solvent, can en-
force no claim against the joint effects or the separate
effects of the partners, except by a common action at
law.-^ It is only in cases, where there is a dissolution
by the death or bainkruptcy of one partner, that the
right of the joint creditors can attach, as a quasi lien
upon the partnership effects, as a derivative subordi-
nate right, under and through the lien and equity of
the partners. In the former case, (of death,) the per-
sonal representatives of the deceased partner have a
right (whether his estate be solvent or insolvent) to
insist upon a due application of the joint effects, to
pay the joint debts and fulfil the other purposes of
the trust.^ At law, indeed, the creditors have no rem-
edy, except against the surviving partners for their
debts ; ^ but in equity, as we shall presently see, it is
far otherwise. In the latter case (of bankruptcy) the
[1 In Allen v. The Center Valley Co., 21 Conn. E. 130, it was held,
that although partnership creditors were entitled to priority of payment as
against individual creditors, out of partnership funds, so long as they con-
tinued partnership funds, yet they have no specific lien thereon ; and
while the partnership remains, and its business is going on, whether in-
solvent or not, there is no legal objection to a bonS, fide distribution of
the partnership funds among the members of the firm, or a bond, fide
change of them from joint to separate estate.]
8 Ex parte Ruffin, 6 Ves. 119, 126, 127 ; Ex parte Williams, 11 Ves. 3,
6 ; Ante, ^97, note ; Ante, § 326, 346, 347, note ; Gow on Partn. oh. 5,
§ 2, p. 235, 236, 8d edit, j 1 Story on, Eq. Jurisp. ^ 675, 676 ; CoUyer on
Partn. B. 3, ch. 3, ^ 4, p. 404, 405, 2d e,dit. ; Id. B. 3, ch. 5, § 2, p. 503 ;
3 Kent. Comm. Lect. 43, p. 65, 4th edit. ; Ex parte Kendall, 17 Ves. 313,
526 ; Wilcox v. Kellogg, 11 Ohio, (Stanton) E. 394.
3 Ibid. ; 1 Chitty on Plead, p. 39, 40, 3d edit. ; Bacon, Abridg. Obliga-
tion, D. 4 : Comyns, Dig. Abatement, F. 8 ; Godson v. Good, 6 Taunt. R.
487 ; Bovill ». Wood, 2 Maule & Selw. 23 ; Eiohards v. Hunter, 1 Barn.
& Aid. 29 ; CoUyer on Partn. B. 3, ch. 5, § 2, p. 503, 2d edit.
568 PARTNERSHIP. [CH. XV.
like equity attaches to the solvent partners, and the
assignees can stand only in the place of the bankrupt,
and take his rights, and consequently they are entitled
to nothing, except the surplus, after the disohargg of
all, the joint debts, and of the claims of the other part^
ners.^ So that, in each case, it is plain, that the joint
creditors muSt be paid, in order to the due adminis-
tration of justice between the partners themselves.
Thus, we see at once, how the qziasi lien or equity of
creditors arises, and that it is a dependent and subor-
dinate right.
§ 362. Another important consideration in cases of
a dissolution by death is, as to the rights of the joint
creditors against the estate of the deceased partner.
We have seen, that at law the sole right of action of
the joint creditors is against the survivors.^ And the
inquiry here naturally presented is, whether they
have any remedy in equity. The doctrine formerly
'held upon this subject seems to have been, that the
joint creditors had no claim whatsoever in equity
against the estate of the deceased partner, except
when the surviving partners were at the time, or sub-
sequently became, insolvent or bankrupt.^ But that
doctrine has been since overturned ; and it is now
held, that iq equity all partnership debts are to be
1 See authorities cited in note (1,) of this section.
s Ante, § 361, note (2.)
3 See Lane v. Williams, 2 Verm. R. 292 ; Jacob v. Harwood, 2 Ves.
265; Hankey v. Galrrett, 1 Ves. Jr. 236; Ex parte Ruffin, 6 Ves. 119,
126, 127 ; Ex parte Williams, 11 Ves. 3 ; Ex parte Kendall, 17 Ves. 519 ;
Campbell v. MuUett, 2 Swanst. R. 576 ; Gray v. Chiswell, 9 Ves. 118 ;
Collyer on Partn. B. 3, ch. 3, § 4, p. 404 to p. 408, 2d edit. ; Hamersley
V. Lambert, 2 Johns. Ch. R. 508 ; Gow on Partn. ch. 5, ^ 2, p. 359, 360,
3d edit. [This doctrine is still maintained in New York. See Lawrence
V. Trustees of Orphan House, 2 Denio, R. 577.]
CH. XV.] DISSOLUTION — EIGHTS OF CREDITOES. 569
deemed joint and several;^ and consequently the joint
creditors have in all cases a right to proceed at law
against the survivors, and an election also to proceed
in equity against the estate of the deceased partner,,
whether the survivors be insolvent, or bankrupt, or
not.^ The consequence is, that the joint creditors
1 By the civil law of France, tKe rule as to the obligations of partners
on their partnership contracts, does not seem to agree exactly with the rule
of the common law. They are always understood to contract jointly, but
not always severally. The general rule is, that each partner is considered
as contracting only to the extent of his interest ; and in any case, unless
there be an express agreement by all the partners to bind themselves sev-
erally, the creditor can only recover from each his own proportion of the
debt. One exception to this rule is indeed admitted in favor of commer-
cial partnerships (socifetds de commerce,) wherein the partners are liable
jointly and severally (solidairement) for the debts of the partnership ; and
this exception i^created for the purpose of extending the credit of mer-
chants. But in universal partnerships (soci6t6s universelles,) and in all
special partnerships (soci6t^s particulieres,) which are not commercial
partnerships, each partner, although he is presumed to contract in the
name of the firm, only binds each one of his copartners for his propor-
tional part of the debt. When, indeed, a partner has contracted for the
firm in his own sole name, he is: solely responsible to the creditor, but he
has a legal claim for indemnification and contribution therefor on each
partner for his proportion, unless he have transgressed the limits of his
authority, or been guilty of fraud. See Pothier, de Socidt6, ch. vi. § 1,
No. 96, § HI, No. 103 to No; 106.
2 Collyer on Partn. B. 3, ch. 3, § 4, p. 407 to p. 413, 2d edit. ; De-
'vaynes k. Noble, 1 Meriv. E. 589; 2 Russ. & Mylne, 495; Sumner v.
Powell, 2 Meriv. E. 37 ; Wilkinson v. Henderson, 1 Mylne & Keen, 582 ;
Thorpe v. Jackson, 2 Younge & Coll. 553 ; Gow on Partn. ch. 5, § 2,
p. 358, 359, 360, 3d edit. ; Id. § 3, p. 290, 291, 292 ; 1 Story on Eq.
Jurisp. § 676 ; 3 Kent, Comm. Lect. 43, p. 64, 4th edit.; Hamersley v.
Lambert, 2 Johns. Ch. E. 508 ; Belknap v. Abbott, 11 Ohio, (Stanton) R.
411. In Devaynes v. Noble, 1 Meriv. 529, 563, 564, Sir William Grant
(Master of the Rolls) said ; " It may be proper, however, to observe, that
the common law, though it professes to adopt the Lex Mercatoria, has not
adopted it throughout in what relates to partnership in trade. It holds,
indeed, that although partners are in the nature of joint tenants, there
shall be no survivorship between them in point of interest. Yet, with re-
gard to partnership contracts, it applies its own peculiar rule ; and, be-
cause they are in form joint, holds them to produce only a joint obliga-
48*
570 PAKTNERSHIP. [CH. XV.
need not now wait/ until the partnership affairs are
wound up, and a final adjustment thereof is made.
But they may at once proceed, as upon a joint and
several contract, in equity against the estate of the
deceased partner ; although in any such suit the sur-
viving partners must be made parties, as persons in-
terested in taking the account.^
tion, which consequently attaches exclusively upon the survivors ; whereas,
I apprehend, by the general mercantile law, a partnership contract is
several, as well as joint. That may probably be the reason, why Courts
of Equity have considered joint contracts of this sort, (that is, joint in
form,) as standing on a different footing from others. The cases of relief
on joint bonds may be accounted for on the ground of mistake in the man-
ner of framing the instrument ; and it may be said, that equity gives to
them no other effect, than it was the intention of the parties themselves
to have given to them. But, how is it possible to explain the eases upon
partnership notes, so as to distinguish thetn from ordipary partnership
debts ? "
1 CoUyer on Partn. B. 3, ch. 3, § 4, p. 404, 405, 2d edit. ; Ante, § 847 ;
Wilkinson u. Henderson, 1 Mylne & Keen, 582, 588. On this occasion
Sir John Leach (Master of the KoUs) said ; " All the authorities establish,
that, in the consideration of a Court of Equity, a partnership debt is sev-
eral, as well as joint. The doubts upon the present question seem to have
arisen from the general principle, that the joint estate is the first fund for
the payment of the joint debts, and that the joint estate, vesting in the
surviving partner, the joint creditor, upon equitable considerations, ought
to resort to the surviving partner, before he seeks satisfaction from the as-
sets of the deceased partner. It is admitted, that, if the surviving partner
prove to be unable to pay the whole debt, the joint creditor may then ob-
tain full satisfaction from the assets of the deceased partner. The real
question, then, is, whether the joint creditor shall be compelled to pursue
the surviving partner in the first instance, and shall not be permitted to
resort to the assets of the deceased partner, until it is established that full
satisfaction cannot be obtained from the surviving partner ; or whether
the joint creditor may, in the first instance, resort to the assets of the de-
ceased partner, leaving it to the personal representatives of the deceased
partner to take proper measures for recovering what, if any thing, shall
appear upon the partnership accounts to be due from the surviving partner
td the estate of the deceased partner. Considering that the estate of the
surviving partner is at all events liable to the full satisfaction of the credi-
tors, and must first or last be answerable for the failure of the surviving
partner ; that no additional charge is thrown upon the assets of the de-
CH. XV.J DISSOLUTION — RIGHTS OP CREDITORS. 571
§ 363. Still another inquiry may remain, in cases
where the estate of the deceased partner is not suffi-
cient to pay all his separate debts, and all the joint
debts, and that is, whether the debts are to be paid
pari passu out of the assets of the deceased, or either is
entitled to a preference. The general rule would seem
to be, (as it is in bankruptcy,) that the joint creditors
have a priority of right to payment out of the joint ^
estate, and the separate creditors a like right of pri-
ority to payment out of the separate estate ; and the
surplus, if any, is divisible among the other class of
creditors.^ In cases where there is both a joint estate
ceased partner by the resort to ttem in the first instance, and that great
inconvenience .and expense might otherwise be occasioned to the joint
creditors ; and, further, that according to the two decisions in Sleech's
Case in the cause of Devaynes v. Noble, the creditor was permitted to
charge the separate estate of the deceased partner, which in equity was
not primarily liable, as between the partners, without first having resort
to dividends, which might be obtained by proof under the commission
against the surviving partner ; I am of opinion, that the plaintiff is entitled
in this case to a decree for the benefit of himself, and all other joint cred-
itors, for the payment of his debt out of the assets of Shepherd, the de-
ceased partner." [But see Lawrence v. Trustees of Orphan House, 2
Denio, R. 577 ; Patterson v. Brewster, 4 Edw. Ch. R. 352, where the case
of Wilkinson v. Henderson is examined and set aside.]
' Gray v. Chiswell, 9 Ves. 118, 124, 125 ; Twiss v. Massey, 1 Atk. 67;
Ex parte Cook, 2 P. Will. 500 ; Ex parte Clay, 6 Ves. 633 ; CoUyer on
Partn. B. 4, ch. 2, § 1, p. 595, 2d edit.; Id. § 3, p. 623, 624 ;. 3 Kent,
Comm. Lect. 43, p. 64, 65, 4th edit. ; Murray v. Murray, 5 Johns. Ch. R.
74 to 77 ; Tucker v. Qxley, 5 Cranch, R. 34, 44, 45 ; Gow on Partn. ch.
5, § 3, p. 286, 287, 3d edit, ; Id. p. 316 to p. 323 ; S. P. Payne v. Mat-
thews, 6 Paige, R. 19 ; Comm. Bank of Lake Erie v. Western Reserve
Bank, 11 Ohio (Stanton) Rep. 444, 451. — This doctrine has not been
universally adopted in America. Mr. Chancellor Kent has collected the
principal cases in his Note (b) to 3 Kent, Comm. Lect. 43, p. 65, 4th edit.
The subject was also very fully discussed by the same learned Judge, and
all the then existing authorities were cited by him in Murray v. Murray,
(5 Johns. Ch. R. 60,) and by Mr. Chief Justice Tilghman, and Mr. Justice
Gibson, and Mr. Justice Duncan, in Bell v. Newman, 5 Serg. & R. 78,
572 PARTNERSHIP. [cH. XV.
and a separate estate, the rule may not be unreasona-
ble, as, at most, it only puts the joint creditors of the
partnership to an election, whether they will proceed
against the joint estate, or against the separate estate,
where both estates are insolvent. But, where there is
no joint estate,, the case may seem to be involved in
more nicety and difficulty ; since under such circum-
stances the creditors would seem, as their contract is
several, as well as joint, to be entitled, upon general
principles, to claim pari passu with the separate
creditors? However, it cannot be positively affirmed,
that such is the settled doctrine in equity, in cases of
deceased partners. On the contrary, tljere seems to
be some conflict of opinion upon the point.^ In bank-
85 to 107. Still more recently this doctrine has been reviewed at large by
Mr. Chief Justice Shaw, in an elaborate opinion, in Allen v. Wells, 22
Pick. R. 450 ; and the conclusion to which he has arrived seems entirely
well founded, that the doctrine is one that can be properly enforced in
equity only, and not at law. The comments of all these learned Judges
upon the general doctrine are very instrucHye, and in a great measure
exhaust the subject.
1 CoUyer on Partn. B. 3, ch. 3, § 4, p. 413, 2d edit; Emanuel v. Bird,
19 Ala. 596.
2 Cowell v. Sikes, 2 Buss. R. 191, 194, 196. — In this case Lord Gif-
ford (Master of the Rolls) seemed to be of opinion, that the joint creditors
under such circumstances could not come in, pari passu, with the separate
creditors. But Lord Eldon, under the circumstances of that particular
case, thought otherwise. Mr. Collyer on this subject says ; " We ought
not to conclude this subject without adverting to the question, whether,
when a partnership creditor has obtained a decree in equity for payment
of his debt out of the estate of the deceased partner, he is entitled to
receive payment pari passu with the separate creditors of that partner.
If this point were decided on principle alone, and without reference to
any supposed analogy between the practice in the Courts of Equity and
the practice in bankruptcy, it seems clear, that the partnership creditor,
as resting on his separate contract, would have a right to come in com-
petition with the separate creditors. On the other hand, the cases of
Gray v. Chiswell, and Cowell v. Sikes, tend to show, that, by analogy to
the rule in bankruptcy, the partnership creditor will in suoh case be
CH. XV.] DISSOLUTION 7— RIGHTS OF CREDITORS. 573
ruptcy, where there is no joint estate, and there is no
solvent partner, joint creditors are permitted to prove
against the bankrupt's estate 'pari passu with the
separate creditors.^
§ 364. Be this doctrine as it may, it seems certain,
that the joint creditors cannot be compelled, in case
of the death of one partner, and the bankruptcy of
postponed to the separate creditors, unless there be no joint estate. Mr,
Chancellor Kent, in his Commentaries, seems to have laid down the
doctrine in general terms, as equally applicable to all cases. His language
is ; " The joint creditors have the primary claim upon the joint fund, in
the distribution of the assets of bankrupt or insolvent partners, and the
partnership debts are to be settled before any division of the funds takes
place. So far as the partnership property has been acquired by means
of partnership debts, those debts have in equity, a priority of claim to be
discharged ; and the separate creditors are only entitled in equity to seek
payment from the surplus of the joint fund, after satisfaction of the joint
debts. The equity of the rule, on the other hand, equally requires that
the joint creditors should only look to the surplus of the separate estates
of the partners, after payment of the separate debts. It was a principle
of the Soman law, and it has been acknowledged in the equity jurispru-
dence of Spain, England, and the United States, that partnership debts
must be paid out of the partnership estate, and private and separate debts
out of the private and separate estate of the individual partner. If the
partnership creditors cannot obtain payment out of the partnership estate,
they cannot iii equity resort to the private and separate estate, until pri-
vate and separate creditors are satisfied ; nor have the creditors of the
individual partners any claim upon the partnership property, until all the
partnership creditors are satisfied. The basis of the general rule is, that
the funds are to be liable, on which the credit was given. In contracts
with a partnership the credit is supposed to be given to the firm ; but
those who deal with an individual member rely on his sufliciency."
3 Kent, Comm. Lect. 43, p. 64, 65, 4th edit. The modern Code of Com-
merce of France provides (art. 534), that the creditor, holding a joint
and several obligation of the insolvent and other persons, who are also
insolvent, shall participate in the dividends of all their respective estates,
until he shall be fully paid. See also Duranton, Cours de Droit FranQ.
Tom. 17, § 457, and Duvergier, Droit Civil Fran9. Tom. 5, § 406, cited
post, § 365 ; Pardessus, Droit Comm. Tom. 4, § 1089.
1 Ex parte Kensington, 14 Ves. 447 ; Ex parte Janson, 3 Madd. R.
229 ; Buck's Gas. 227; Ex parte Sadler, 15 Ves. 62 ; CoUyer on Partn.
B. 4, ch, 2, § 3, p. 624, 626, 627, 2d edit.
574 PARTNERSHIP. [CH. XV.
the survivors, to resort to the estate of the deceased
partner for payment for the benefit of the fund in
bankruptcy, in aid of creditors, who are ' creditors of
the survivors, and not of the old partnership.-' For
the rule in equity, that, where one person can resort
to two funds for payment, and another can resort to
one only, the latter may compel the former to resort
to the fund to which he may exclusively resort, in aid
of the latter, applies only where both debts are due
by precisely the same debtors.^
§ 365. This principle of Equity Jurisprudence, that
the joint creditors shall be entitled to a priority of
payment out of the joint effects, and the separate
creditors to a like priority out of the separate effects,
before the other class of creditors shall be entitled to
any portion of the surplus, is not, perhaps, under all
its aspects, so purely artificial as it has sometimes
been suggested to be ; at least, it has been often relied
upon, as the dictate of natural justice.® In the Ro-
man law, if one man carried on two separate trades^
it seems, that the creditors, who separately supplied
goods or credit for the use of either of those trades,
had a privilege or right of payment out of the pro-
perty employed therein, in preference to the creditors
in the other business. Utputa, (says Ulpian,) diias
negotiationes exercebat, [puta saga/rmm et liniianam) d
separaios habmi creditores ? Puto, separatim eos in
trihutum vocari ; unusquisque enim eorum merci magis,
quam ipsi, credidit.^ Straccha lays down the like
I Ex parte Kendall, 17 Ves. 514, 526, 527; Collyer on Partn. B. 4,
ch. 2, § 3, p. 629, 630, 2d edit,
s Ibid. ; 1 Story on Eq. Jur. § 558 to 560 ; Id. § 642 to 645.
3 Ex parte Elton, 3 Ves. 242.
4 Dig. Lib. 14, tit. 4, 1. 5, § 15 ; Pothier, Pand. Lib. 14, tit. 4, n. 8;
CH. XV.] DISSOLUTION EIGHTS OF OEEDITOES. 575
doctrine in the case of the failure or insolvency of a
merchant, engaged in two kinds of business. Si
mercator duas negoticdiones exercuisset, puta sagariam
et lirdemiam, et separatos haluerit creditores in dictis
mercibus, separatos eos in iribuium vocari ; et ilia ratio
in prcedietis redditur ; quia unusquisque creditor magis
merci, quam mercaiori, credidit ; et ne ex alterius re
merceve alii indemnes fiant, alii damnum sentiant}
§ 366. Bmerigon holds the same doctrine ; and says,
that where a person carries on two trades in different
houses, the creditors who have given credit to one of
these trades or houses, have a privilege upon the effects
there found, to the exclusion of the creditors who
have given credit to the other trade or house ; and
these last creditors have' also a like exclusive privilege
upon the effects of the trade or house to which they
have given credit.^ And he puts the very case of the
joint creditors of a partnership, as clearly settled in the
French law, saying, that the joint creditors of a part-
nership have a privilege or preference of payment out
of the partnership effects, before the separate creditors
of any one partner ; and that the respective creditors
of two different partnerships have the like exclusive
privilege and preference upon the partnership effects
of each partnership, although both firms are composed
of the very same persons.^ And he gives the very
reason assigned therefor in the Roman law ; Unusquis-
que enim eorum merci magis, quam ipsi, credidit} This
2 Emerig. Contrats a la Grosse, eh. 12, § 6, p. 582, edit. 1783 ; Inst. Lib.
4, tit. 7, § 3; Duranton, Cours de Droit rran9. Tom. 17, § 457, p. 512,
513, 514.
1 Straccha de Decootoribus, Pars Ultima, n. 21y). 469, edit. 1669.
2 Emerigon, Contrat a la Grosse, ch. 12, § 6, p. 582, edit. 1783.
3 Ibid.
4 Ibid. See also 2 Story on Eq. Jur. § 1221, to 1223, 1239, 1240.
576 PARTNERSHIP. [CH. XV.
also seems to be the recognized doctrine in the modern
jurisprudence of France ; and it has been so promul-
gated by sonle of its most approved jurists.-"-
1 Dflranton, Cours de Droit Fraii9. Tom. 17, § 457, p. 512 to p. 515;
Duvergier, Droit Civil Frang. Tom. 5, § 405, 406 ; Pardessus, Droit
Comm. Tom. 4, § 1089, 1207. — In relation to the correlative principle,
that the separate creditors ought first to be paid out of the separate efiects
of the debtor partner, there does not seem to be the same uniformity- of
opinion at present prevailing in France, although Duranton strongly
inclines to hold it. His language is ; " Mais il n'y a pas lieu de dire, en
sens inverse, que les cr6anciers partiouliers d'un associ6 doivent 6tre pay«s
sur les biens personnels de cet assocife, par preference aux creanciera, qu'il
h raison de la soci6t^, m§me en ci qui concerne la part de ses coassoci6s
dans ces memes dettes, dans le cas ou ils en seraient tenus solidairement,
soil parce que la socifete serait en nom coUectif, soit parce que les assoei^s
se seraient obliges avec clause de solidarity ; car cet associ^ est obligd, a
I'^gard des uns, comme k I'figard des autres, sur tous ses biens pr6sens et h
venir, par consequent sur ses biens particuliers comme sur ceux, qu'il avait
pour sa part dans la societfe. Et de meme que les cr6anciers particuliers
d'un h6ritier ne peuvent demander la separation de son patrimoine d'avec
celui du d^funt (art. 881 ,) pour 6tre pay& sur ses biens par preference aux
creanoiers de la succession, de m@me les creanciers particuliers d'un
associe no doivent pas pouvoir demander la separation de ses biens person-
nels de ceux, qu'il a dans la societe, pour 6tre payes sur ces m§mes biens
par preference aux cr6anciers, qu'il a relativement aux affaires de cette
societe. II y a parite parfaite ; cet assooi6, en contractant la societfe, et
des dettes relativement k cette meme societe, a fait ce qu'il avait le droit
de faire, comme un heri'tier, qui, en acceptant purement et simplement
une succession oberde, a pris sur lui les dettes du defunt. Tout ce qu'on
pourrait dire de plus juste, et telle est I'opinion de plusieurs personnes,
c'est que si les creanoiers de la societe demandent h. Stre paves par pre-
ference sur ses biens ils doivent souffrir que les creanoiers particuliers de
I'associe soient payfes par preference h, eux sur les biens personnels de cet
assooie. La loi citee au n° precedent fournirait un argument pour le deci-
der ainsi. On en trouverait un semblable dans la loi 3, ^ 2, ff'. de Separa-
tionibus, ou Papinien, contre le sentiment de Paul et d'Ulpien (dans la
5° , au m@me titre,) qui ne voulaient pas, que les effets de'la separation
pussent Stre scindes, admettait bien les creanciers du ddfunt, qui avaient
demande la separation des patrimoines, h se faire payer aussi sur les biens
particuliers de I'heritier, mais toutefois apres discussion pr6alablement
faite de ceux du d6ful|t, et, en outre, aprfes le paiement integral des cre-
anciers particuliers de I'heritier ; decision qua'avait adoptee Domat, Lebrun,
et Pothier. Comme le point en question n'est paa positivement prevu et
CH. XV.] DISSOLUTION — EIGHTS OF CBEDITOES. 577
§ 367. In relation to what properly constitute joint
debts of the partnership, and what constitute separate
debts of the particular partners, the considerations
already suggested in another place will, in a great
measure, supersede any discussions here.^ It may,
however, be generally stated, that wherever the origi-
nal credit is given to the partnership, that will consti-
tute a debt against the partnership, notwithstanding
the partner contracting the debt may also have given
his own separate security therefor, or have also made
himself personally liable therefor.^ And, on the other
hand, wherever the original credit has been exclu-
sively given to the partner contracting the debt, the
partnership will not be liable therefor, but the indi-
vidual partner only, although it has been applied to
the use and benefit of the partnership.^
§ 368. So, also, if the original debt is exclusively
contracted by one partner on his own account, but it
has been immediately assumed by the partnership}
with the consent and approbation of the creditor, as a
partnership debt, it will henceforth be treated in his
favor as a joint debt.^ So, if one partner is separately
regl^ par le Code Civil, les Juges, en virtu de I'article 4, pourraient le
decider de la sorts, en suivant les regies de I'^quit^, qui parissent en effet
vouloir une seinblable decision. " Duranton, Cours de Droit Franpais,
Tom. 17, ^ 458, p. 6l$ to 517. Mr. Duvergier holds a different opinion.
Duvergier, Droit Civil Frang. Tom. 5, § 406.
1 Ante, § 126 to 155 ; CoUjer on Partn. B. 4, ch. 2, § 1, p. 613 to 622,
2d edit.
2 Ante, § 140 ; Gow on Partn. ch. 5, ^ 3, p. 282, 283, 284, 285 ; Wat-
son on Partn. ch. 5, p. 274 to 278, 2d edit. ; Ex parte Brown, cited 1 Atk.
225 ; Ex parte Emly, 1 Rose, R. 65 ; Ex parte Hunter, 1 Atk. 223.
3 Ibid.
* Ante, § 142, 164 ; Gow on Partn. ch. 6, § 3, p. 284, 285, 286, 3d
edit. ; Ex parte Jackson, 1 Ves. Jr. 131 ; Ex parte Peele, 6 Ves. 604 ;
Ex parte Williams, Buck, R. 13 ; Ex parte Apsley, 3 Bro. Ch. R. 266 ;
PARTN. 49
578 PARTNERSHIP. [CH. XV.
intrusted with trust-money, and he, with the knowl-
edge and consent of his partners, applies it to partner-
ship purposes, it will constitute a joint debt against
the partnership, at the election of the cestui que trust,
or beneficiary.-^
§ 369. Cases also may arise in a more general form,
involving the like considerations, whether debts, origi-
nally separate, have been converted into joint debts ;
or debts, originally joint debts, have been converted
into separate debts, at any other period subsequent to
their first creation ; and also, whether, if there has
been such a conversion, the original debts have been
thereby intentionally extinguished, or not.^ It is ob-
vious, that the remedy of the creditors against the
estates of the partners, either joint or several, may be
materially affected by each of these facts, and espe-
cially by the latter. By the conversion of debts, in
the technical sense of the phrase, is meant the chang-
ing of their original character and obligation with the
consent of the creditors ; so that, if they are originally
joint debts of all the partners, they become, by con-
sent, the separate debts of one partner ; or, if they are
the separate debts of, one partner, they become, by the
like consent, the joint debts of all the partners. It is
obvious, that this conversion may be with an inten-
tion, either to extinguish the original debt, or merely
CoUyer on Partn. B. 4, ch. 2, § 1, p. 613 to 622, 2d edit. ; Ex parte
Freeman, Buck, R. 471 ; Watson on Partn. ch. 6, p. 274, 275, 2d edit.
1 Gow on Partn. ch. 5, § 3, p. 285, 3d edit. ; Ex parte Watson, 2 Ves.
& Beam. 414 ; Smith v. Jamieson, 5 Term R. 601 ; Keble v. Thompson,
3 Bro. Ch. R. 112 ; CoUyer on Partn. B. 4, ch. 2, § 1, p. 616 to 622, 2d
edit. ; Id. ch. 2, § 5, 638, 639 ; Ex parte Clowes, 2 Bro. Ch. R. 595 ;
Watson on Partn. ch. 5, p. 274 to 278, 2d edit.
2 CoUyer on Partn. B. 4, ch. 2, § 2, p. 613, 614, 2d edit. ; Ante, § 155
to 157 ; W&tson on Partn. ch. 5, p. 274, 275, 2d edit.
CH. XV.] DISSOLUTION — RIGHTS OF CREDITORS. 579
to give the creditor an additional security therefor ;
and the law wiU give effect to it according to that
intention. Where the original debts have been con-
verted with an intention to extinguish them, (which
can only be where a sufficient consideration exists or
passes between the parties,) there, the creditors must
rely solely on their debts in their new quality or form,
and are entitled to receive compensation out of the
joint estate or several estate, according to the nature
of the conversion, and in conformity to the principle
already stated.^ But, where the original debts have
been converted without any such extinguishment,
(which, also, can only be upon a sufficient considera-
tion,) the creditors can take advantage of the debts,
according either to their new or their old form and
quality.^ In other words, they may treat them as
joint, as well as separate debts, and have their remedy
against the joint or separate estate accordingly in
their election. The creditors are, therefore, ordinarily?
in this latter case, in a far more beneficial condition
than in the former ; * and this may be, especially in
cases of bankruptcy, a right of no inconsiderable
value.*
§ 370. The question, therefore, may become highly
important to ascertain, what, upon any such conver-
siouj will amount to a conversion of the original debt
1 CoUyer on Partn. B. 2, ch. 1, § 2, p. 113, 2d edit. ; Id. B. 4, ch. 2,
§ 2, p. 614 ; 1 Montagu on Partn. B. 2, ch. 7, § 2, [p. 226 to 232,
(Amer. ed.) ] ; Watson on Partn. ch. 5, p. 256, 257, 2d edit. ; Bolton v.
Puller, 1 Boa. & Pull. 539.
2 Collier on Partn. B. 4, ch. 2, § 2, p. 614, 2d edit. ; Id. B. 2, ch. 1,
§2, p. 113.
3 Ibid. •
* CoUyer on Partn. B. 4, ch. 2, § 5, p. 634 to 641, 2d edit. ; Gow on
Partn. ch. 5, § 8, p. 286 to 288, 3d edit.
580 PARTNERSHIP. [CH. XV.
with any extinguishment ; and what will amount to
a conversion thereof without such extinguishment.
And, here, again, what has been already stated may
serve, in a great measure, to explain and solve most
questions of this sort.-'^ In order to produce any con-
version at all, either with or without an extinguish'
ment, there must he a sufl&cient consideration, and also
a deliberate and mutual assent of the creditors and
debtors to such conversion. Both must concur j and
the ofPer and the acceptance must be upon the same
conditions, stipulations, and limitations.^ In short, all
the terms must be accepted and complied with.^ And
it may be laid down, as a general rule, that where a
separate creditor has taken a partnership bill, or note,
or other security, in full discharge of his original claim,
there, the separate debt is converted into a joint debt,
and the original remedy is extinguished.* The same
1 Ante, § 157 to 159 ; CoUyer on Partn. B. 3, oh. 3, § 3, p. 384 to p.
889, 2d edit. — See especially the cases already cited (Ante, § 156 to
159,) where, upon the retirement- of one partner, there have been sub-
sequent dealings by the joint creditors with the remaining partners, consti-
tuting a new firm, and new securities have been taken, and ndw credits
obtained, and new accounts opened, and new stipulations entered into
between them, with reference to the old debts, when and under what cir-
cumstances they will amount to a conversion of the old debts, and an
extinguishment. Mr. Collyer and Mr. Gow have cited the cases at large
in the passages above referred to.
2 Collyer on Partn. B. 4, oh. 2, § 2, p. 617 to 620, 2d edit.; Id. ch. 2,
§1, p. 608, 609.
3 Ibid. ; Ex parte Fairlie, 1 Montagu on Partn. 17 ; Ex parte Peele,
6 Ves. 602 ; Ex parte Williams, Buck, K. 13 ; Ex parte Freeman, Buck,
R. 471 ; Ex parte Fry, 1 Glyn. & Jam. 96 ; Gow on Partn. ch. 5, § 3,
p. 284, 285, 3d edit.
* Collyer on Partn. B. 4, oh. 2, § 2, p. 614 to 618, 2d edit; Ex parte
Seddon, 2 Cox, K. 49 ; Gow on Partn. ch. 5, § 3, p. 282 to 286, 3d edit. ;
Ex parte Lobb, 7 Ves. 592 ; Ex parte Roxby, 1 Mont, on Partn. 203 ; Ex
parte Fairlie, 1 Mont, on Partn. 1 7 ; Ex parte Clowes, 2 Bro. Ch. K.
CH. XV.] DISSOLUTION — RIGHTS OF CREDITORS. 581
rule will apply in the converse case, where a joint
creditor has taken the separate bill, or note, or other
security, in discharge of the joint debt. But, if the
evidence goes only to show, that the bill, or note, or
other security was given, not in discharge of, but as a
collateral security for the original debt, in such a case
the original debt and remedy will still remain.^
§ 371. Another question may arise, and that is, as
to what is to be deemed joint property of the partner-
ship, and what separate property of the respective
partners. This, not unfrequently, becomes a perplex-
ing and complicated inquiry in cases of bankruptcy ;
and it is sometimes not wholly free from doubt in
other cases. But, as with few exceptions, and these
chiefly arising upon reputed ownership under the
statutes of bankruptcy,^ the same general principles
apply to all classes of cases, we shall consider them
(reserving the exceptions for a future discussion) in
this place.
I 372. The joint estate of the partnership is that
which belongs to the firm, and in which the partner-
595 ; David v. EUice, 5 Barn. & Cressw. 196 ; Gow on Partni ch. 5,
§ 4, p. 359 to 367, 3d edit. ; Id. ch. 5, § 4, p. 360 to.366.
1 CoUyer on Partn. B. 4, eh. 2, § 2, p. 615, 616, 2d edit. ; Id. B. 3,
ch. 3, § 3, p. 384 to 388 ; Ex parte Seddon, 2 Cox, R. 49 ; Ex parte
Lobb, 7 Ves. 592 ; Ex parte Roxby, 1 Montagu on Partn. 203 ; Ex parte
Hodgkinson, Cooper, R. 101 ; Ex parte Hay, 15 Ves. 4; Ex parte Slater,
6 Ves. 146 ; Evans v. Drummond, 1 Barn. & Cressw. 113 ;' Reed v.
White, 5 Esp. K. 122 ; Thompson v. Percival, 5 B. & Adol. 925 ; Ex
parte Whitmore, 3 Mont. & A. 627 ; Oakley v. Pasheller, 10 Bligh, 548 ;
S. C. 4 Clark & Fin. 297 ; Watson on Partn. ch. 5, p. 274 to 277, 2d
edit.
2 See Ex parte Enderby, 2 Barn. & Cressw. 389 ; in re Todd, 1 De
Gex, R. 134 ; CoUyer on Partn. B. 4, ch. 2, § 1, p. 597 to 600, 2dedit. ;
Gow on Partn. ch. 5, § 3, p. 267, 268, 271, to 274, 3d edit. ; Id. § 2, p.
232 to 234 ; Watson on Partn. ch. 5, p. 256 to 260, 2d edit. ; Id. p. 264
to 272.
49*
582 PARTNERSHIP. [CH. XV.
ship have a joint interest, eithet at lav/ or in equity,
at the time of the dissolution.-^ The separate estate
is that in which any of the partners has a separa,te
interest, either at law or in equity, at the same period ;
and it is not the less his separate estate, although it
may be actually possessed and used by the partnership
at the time, for partnership purposes, if in truth it is
merely for the accommodation thereof, and the part-
nership have no interest whatsoever therein.^ The
partners may, by their articles of partnership, agree as
to what shall be deemed partnership property, and
what shall be deemed separate property, at the time
of the dissolution. So they may, during the partner-
ship, convert joint property into separate property, or
separate property into joint property ; and the prop-
erty will, at the dissolution, be held to possess that
character, and that only, which is imposed upon it at
the time.^ Hence, if upon a dissolution, any partner-
ship property be left in the possession of one partner,
but not for the purpose of carrying on the trade there-
with, on his own account, it will be deemed partnership
property, and retain its true character, notwithstanding
such partner shall subsequently, while it is in his pos-
session, become a bankrupt* The reason is, that the
property is in his hands, merely as a trustee of the
1 Ante, § 88 to 100.
2 CoUyer on Partn. B. 4, ch. 2, § 1, p. 595, 596, 2d edit. ; Ex parte
Hamper, 17 Ves. 404, 412, 413 ; Gow on Partn. ch. 5, § 8, p. 271 to
274.
3 CoUyer on Partn. B. 4, ch. 2, § 1, p. 596, 597, 2d edit. ; Id. p. GOO,
601, 608 to 606 ; Ex parte Euffin, 6 Ves. 119.
4 CoUyer on Partn. B. 4, ch. 2, § 1, p. 596, 597, 2d edit. ; Watson on
Partn. ch. 5, p. 314 to 320, 2d edit. See also Stocken v. Dawson, 9 Beav.
R. 239.
CH. XV.] DISSOLUTION — RIGHTS OF CREDITORS. 583
partnership ; and trust property is not deemed to be
the reputed property of the bankrupt.^
I 373. In relation to the assignment of separate
debts by a partner to the firm, or the assignment of
joint debts by the firm to a separate partner, (subject
to the exceptions arising 'under the bankrupt laws,^)
the debts will be treated as joint or several in equity,
according to the intention of the parties, whether they
are actually reduced into possession, or whether actual
notice has been given to the debtors or not. For
such an assignment will operate in equity as a com-
plete transfer of the debts, if made londfide, and for a
valid consideration. In respect to the assignment of
other property, the transfer need be made only in the
same way and manner, as it ought to be, to be valid if
made in favor of a third person. But, in all these cases,
the transfer by assignment must be complete, and all
the conditions thereof fulfilled, otherwise it will not
amount to a conversion of the property.^
§ 374. We come, in the next place, to the consider-
ation of the effects and consequences of a dissolution
by bankruptcy upon the rights of creditors. It might
at first view be supposed, that the doctrines upon this
subject, being the growth of the bankrupt system of
1 Winch V. Keely, 1 T. R. 619 ; Copeman w. Gallant, 1 P. Will. 314 ;
Six parte Flyn, 1 Atk. 185 ; Ex parte Williams, 11 Vea. 3, 5, 6 ; CoUyer
on Partn. B. 4, ch. 2, § 1, p. 597 to 599, 2d edit. «
a Gow on Partn. ch. 5, § 3, p. 275, 276, 3d edit.
3 2 Story on Eq. Jur. § 1039 to 1048 ; CoUyer on Partn. B. 4, ch. 2,
§ 1, p. 612, 613, 2d edit. ; Ex parte Kuffin, 6 Ves. 119 ; Gow on Partn.
oh. 5, § 3, p. 268 to 270, 3d edit. See and consult the cases cited by
Mr. CoUyer on Partn. B. 4, ch. 2, § 1, p. 605 to 610, 2d edit. ; Gow on
Partn. ch, 5, § 3, p. 268 to 281, 3d edit. ; which, though arising in
bankruptcy, show what the general principle is, where there is no bank-
ruptcy.
584 PARTNERSHIP. [CH. XV.
Bflgland, were not of much imporfcance to be examined
or studied elsewhere. But, when it is considered, that
the jurisdiction exercised by the Courts in cases of
bankruptcy, is founded upon the general notion of
administering the principles of equity and general
justice between the parties, (although these princi-
ples may, perhaps, in some instances be administered
upon artificial reasoning,) it will be found, that they
furnish many lights by which the corresponding sys-
tems of other nations in the analogous cases of insol-
vency, and the Oessio bonorum, may frequently be
illustrated and expounded. It is mainly upon consid-
erations of this sort, that they are here brought under
review.
§ 375. It is obvious, that many of the considera-
tions already suggested, as applicable to other cases
of dissolution, are also applicable to cases of bank-
ruptcy .-"^ Thus, for example, the assignees, in the ease
of the separate bankruptcy of one partner, can affect
the joint property no farther than the bankrupt him-
self They have no right to change the possession,
or to make any specific division of the joint effects.
They take only such an undivided share or interest
therein, as the bankrupt himself had, and in the same
manner as he held it ; that is to say, subject to all the
rights and liens of the other partners ; and they are
entitled only to the balance, which is ascertained to
be, due to the bankrupt, after all the partnership debts
and the claims of the solvent partners are paid, and a
division is made of the surplus.^ But there are some
• See Gow on Partn. ch. 5, § 3, p. 299, 300, 3d edit.
2 Gow on Partn. ck 5, § 3, p. 300, 3d edit. ; Watson on Partn. ch. 5,
p. 312, 313, 2d edit.
CH. XV.] DISSOLUTION — RIGHTS OP CREDITORS. 585
doctrines, which are peculiar to the latter cases, and
therefore require a distinct and separate examination.
It is not the design of these Commentaries to enter
into a general discussion of all the various topics he-
longing to the administration in bankruptcy of the
joint and separate effects ; or to the administration in
bankruptcy in cases under a joint commission against
aU, or a separate commission against one or more of
the partners ; or of the practice and proceedings in
matters of bankruptcy. A fuU and exact exposition
of these subjects properly belongs to a regular Trea-
tise on the principles, the proceedings, and the prac-
tice in bankruptcy, rather than to an elementary work
on the subject of partnership, which can discuss but
a single branch thereof.^ Our remarks will, there-
fore, be limited to a few prominent considerations of
a general nature, which may principally serve to illus-
trate the doctrines in bankruptcy, as contradistin-
guished from those which are commonly applicable
to other cases of dissolution, or which may qualify or
vary the latter.
§ 376. In the first place, then, it is a general rule
in bankruptcy, that the joint debts are primarily pay-
1 The learrjed reader will find very ample infflrmation upon the prac-
tice and proceedings and administration of assets in bankruptcy, in Gowon
Partn. ch. 5, § 3, p. 256 to p. 348, 3d edit. ; in Coll. on Partn. B. 4, ch.
2, § 1 to 21, p. 595 to p. 678, 3d edit. ; Id. ch. 3, p. 686 to p. 716 ; in
Watson on Partn.. ch. 5, p. 243 to p. 356, 2d edit. ; in 1 Montagu on Partn.
B. 2, ch. 7, [p. 226 to p. 233, Amer. edit.] ; and still more amply in
Cook on Bankruptcy, Chriatian on Bankruptcy, Deacon on Bankruptcy,
and Montagu & Ayrton on Bankruptcy. The doctrines stated in the text
have in some few cases been qualified or modified by the recent Bankrupt
Act in England. But it seemed unnecessary in the present work minutely
to examine them, as they involve no general principles of Equity Juris-
prudence as administered in bankruptcy.
586 PARTNERSHIP. [CH, XV.
able out of the joint effects, and are entitled to a pre-
ference over the separate debts of the bankrupt ; and
so, in the converse case, the separate debts are prima-
rily payable out of the separate effects of the bankrupt,
and possess a like preference ; and the surplus only,
after satisfying such priorities, can be reached by the'
other class of debts.^ For this purpose, the joint estate
and the separate estate of the bankrupt constitute
separate funds, to be administered separately by the
assignees under the commission, whether it be a sepa-
rate commission against one partner, or a joint com-
mission against all the partners.^
' Grow on Partn. ch. 5, § 3, p. 235, 236, 3(i edit.; Id. p. 281, 282, 299,
800 ; Collyer on Partn. B. 4, ch. 2, § 3, p. 623, 2d edit. ; Id. B. 2, ch. 1,
§ 2, p. 119 ; Twiss v. Massey, 1 Atk. 67 ; Ex parte Cooke, 2 P. Will.
500 ; Ex parte Elton, 3 Ves. 240 ; Ex parte Abell, 4 Ves. 837 ; Ex parte
Clay, 6 Ves. 833 ; In re Plummer, 1 Phill. Ch. K. 56, 60 ; Bolton v. '
Puller, 1 Bos. & Pull. 539, 545 ; Murrill v. Neill, 8 Howard, R. 414 ;
VVashburn r.Bank of Bellows Palls, 19 Verm. R. 278 ; Watson on Partn.
ch. 5, p. 262, 263, 2d edit.; Id. p. 324 to 334. — In Ex parte Field, in
Bankruptcy, Montagu, Beac. & De Gex. R.,95, the Chief Judge (in
Bankruptcy) said; "It appears to me that long known decisions have
settled the point, that a joint debt cannot be proved against the separate
estate of a bankrupt, so long as there are joint assets or a solvent partner."
The rule equally applies to cases of co-contractors as of partners. Ibid. ;
Ex parte Morris, Mont B. R. 218.
2 Gow on Partn. ch. 5, § 3, p. 280 to 282, 3d edit. ; Id. p. 299, 300, 311,
312 ; Watson on Partn. Ch. 5, p. 243 to 245, 2d edit. ; Id. p. 252 to 260 ;
Id. p. 262, 263 ; Bolton v. Puller, 1 Bos. & Pull. 539 ; Collyer on Partn.
B. 3, ch. 2, § 3, p. 624, 2d edit. — Lord Chief Justice Eyre, in delivering
the opinion of the Court, in Bolton v. Puller, (1 Bos. & Pull. 539, 547,
548,) said ; " Bankruptcy, when it intervenes, may very much chapge
the situation of these parties. Mr. Justice Heath suggested this consid-
eration at the close of the first argument. It is a very important con-
sideration. If all become bankrupts, all the joint and all the separate
property will vest in the assignees, whether the commissions are joint or
several. If a separate commission issue against one partner, his assignees
will take all his separate property, and all his interest ,in the joint pro-
perty. If a joint commission issues against all, the assignees wiU take all
CH. XV.] DISSOLUTION — EIGHTS OF OEEDITOES. 587
§ 377. This rule, although now firmly established,
has occasioned much diversity of opinion among
learned Judges at different times.-"^ It was established
at an early period ; but was afterwards departed from,
and was again reestablished ; and it now stands,' as
much, if not more, upon the general ground of au-
thority and the maxim. Stare decisis, than upon the
ground of any equitable reasoning. In truth, it is
precisely such a case, as may well justify a great deal
of argument on each side j and, although it has been
said, that the equity of this mode of distribution is
very plain, because each estate ought to bear its own
debts ; yet it is by no means clear, that this is not an
artificial suggestion, cutting down the difficulty, and
assuming the correctness of the rule, rather than
the joint property, and all the separate property of each individual part-
ner. In the distribution to creditors, a rule of convenience has been
adopted. To understand it, we should see what the rights of creditors
were as to execution for their debts before bankruptcy. A separate
creditor might take at his election the separate estate of his debtor, or his
debtor's share of the joint estate, or both, if necessary. A joint creditor
might take the whole joint estate, or the whole separate estate of any one
partner. But the rule of convenience, which has been adopted, restrains
the separate creditor from resorting, in the first instance, to his debtor's
share of the joint property ; and also restrains the joint creditor from
resorting, in the first instance, to the separate property of his debtor.
Bankruptcy has been called a statute execution ; but if it has any analogy
to an execution, it is certainly very much modified, and, as I take it, bj»
the authority of the Chancellor, who is to take order for the distribution
of the effects of a bankrupt. Under the rule the separate creditors have
a right to be satisfied for their debts out of the separate property in
preference to the joint creditors. But what shall be deemed separate
property, or what effect the claims of third persons upon that, which (as
between one partner and the partnership) would be separate property, are
questions which neither bankruptcy nor the rule of distribution seem to
touch. The assignees stand but in the place of the bankrupt, and take
the effects subject to every legal and equitable claim upon those effects."
' See Cleghorn v. The Insurance Bank, 9 Georgia, 322.
588 PAKTNEESHIP. [CH. XV.
showing, that it has its origin and foundation in the
principles of natural justice, ex cequo ei bono}
1 Ante, § 363, 364. — Mr. Gow (p. 312 to 314) has summed up the, doc-
trine of the authorities on this subject as follows. " In the time (Jf Lord
Hardwioke, the rule adopted was to permit joint creditors to prove under
a separate commission against one partner, or under separate commissions
against all the partners, for the purpose of assenting to, or dissenting
from, the certificate ; and the joint creditors were considered to have an
equitable right to any surplus of the separate estates, after payment of the
separate creditors ; but the joint property was distributed under a joint
commission taken out for that purpose, or a bill must have been filed for
an account of the joint estate. Ex parte Baudier, 1 Atk. 9S ; Ex parte
Voguel, 1 Atk. 132 ; Ex parte Oldknow, Co. B. L. 245 ; Ex p^rte Cob-
ham, lb. 246. See also Button v. Mcjrrison, 17 Ves. 207; Ex parte
Farlow, 1 Rose, 422. This rule was broken in upon by Lord Thurlow,
who expressed his decided opinion, that the contrary course was the
best as being the most legal ; and he, in several instances, (Ex parte
Haydon, Co. B. L. 246 ; S. C. 1 Bro. C. C. 453 ; Ex parte Copland, Co.
B. L. 248 ; S. C. 1 Cox, 420 ; Ex parte Hodgson, 3 Bro. C. C. 5 ; Ex
parte Page, lb. 119 ; Ex parte Flintum, lb. 120,) allowed the joint credi- _
tors to prove and take dividends under a separate commission ; his Lord-
ship holding, that a commission of bankruptcy was an execution for all
the creditors, and as the assignees under a separate commission might
possess themselves, not only of the separate estate, but of the bankrupt's
proportion of the joint estate, and as a joint creditor, having brought an
action and recovered judgment against all his debtors, might have several
executions against each, therefore the bankruptcy, preventing his action
with effect, should be considered a judgment for him as well as the others,
and consequently that no distinction ought to be made between joint or
separate debts, but that they ought all to be paid rateably out of the bank-
rupt's property, which was composed of his separate estate, and his moiety
or other proportion of the joint estate. See Button v. Morrison, 17 Ves.
^07. Lord Rosslyn acted for some time upon the practice established by
Lord Thurlow, but afterwards with some alteration ; and upon great con-
sideration he restored the principle of the rule, which had been adopted
by Lord Hardwicke. In the case of Ex parte Elton, (3 Ves. 242,) Lord
Eosslyn says ; ' The plain rule of distribution is, that each estate should
bear its own debts. The equity is so plain, that it is of course upon a
bill filed. The object of a commisson is to distribute the effects with the
least expense. Every order I make, to prove a joint debt upon the separ
rate estate, must produce a bill in equity. It is not fundamentally a just
distribution, nor a convenient distribution ; because it tends to more litiga-
tion and more expense. Every creditor of the partnership would come
CH. XV.] DISSOLUTION — EIGHTS OF CREDITORS. 589
§ 378. What renders the foundation of the rule it-
self, as one of natural justice and equity, and not of
mere assumed convenience, somewhat more open to
criticism and question, is the character of the. excep-
upon the separate estate. The consequence would be, the assignees of
the separate estate must file a bill to restrain the dividend upon all these
proofs, and make Ihe partners parties. But there is another circumstance;
it is a contrivance to throw this upon the separate estate ; for what hinders
them from recovering at law this debt against the partnership, for it is
money paid to one of the partners. ? They have nothing io do but to bring
an action against the partners. The affairs of the partnership may be
very much involved ; but if they are arrested, they would pay it. It is not
stated as a ease where there are no joint effects. Here it is only that
there are two funds. Their proper fund is the joint estate, and they must
get as much as they can from that first. I have no difficulty in ordering
them to be admitted to prove, but not to receive a dividend.' This rule
was afterwards acted upon by Lord Rosslyn, (Ex parte Abell, 4 Ves. 837,)
and was adopted and followed by Lord Eldon in many subsequent cases,
not because he was convinced of its propriety, or of its being better calcu-
lated to the due administration of justice than the doctrine introduced by
Lord Thurlow ; but he adhered to it, because it was the practice, and to
avoid the mischief arising from shaking settled rules. Ex parte Clay,
6 Ves. 813, and the cases cited lb. in note ; Ex parte Kensington, 14 Ves.
447 ; Ex parte Taitt, 16 Ves. 193. According to the rule, therefore,
which these decisions have established, if there is a joint fund, or a solvent
partner, a joint creditor is not entitled to prove his debt under a separate
commission for the purpose of receiving a dividend, without the Lord
Chancellor's order. Mont. B. L. 230. And notwithstanding the joint
property is of the most trivial amount, yet if there is such a fund of any,
even the smallest description, and it is capable of being realized, the rule
is inflexible, and there will be no departure from it. Ex parte Feake,
2 Bose, 54. See also in re Lee, lb. in note. Lord Eldon, indeed,
admitted this qualification of the rule, that ' If the property alleged to exist
be of such a nature, and in such a situation, that any attempt to bring it
within the reach of the joint creditors must be deemed a desperate, or, in
point of expense, an unwarrantable attempt, that would authorize a depart-
ure from the rule ; as in truth there would then be no joint property.'
(Ibid.) And joint estate has been said to mean such estate only, as
comes under the administration of the assignees to distribute, and not to
extend to joint estate pledged for more than its value. Ex parte Hill,
2 N. R. 191, n." See also Collyer on Partn. B. 4, ch. 2, § 3, p. 623,
624, 2d edit.; Ex parte Cobham, 1' Brown, Ch. K. 576, Mr. Belt's
note (1).
PARTN, 50
590 PARTNERSHIP. [CH. XT.
tions, to which it has giveu rise, some of which may-
be truly said to present the reasoning against it in a
strong light, and to make it more difficult to he sus-
tained. These exceptions allow a joint creditor to
share, pari passu, with the separate creditors in every
case, to which they are applicable. They are of three
sorts; (1.) Where the joint creditor is the petitioner
for ar separate commission against the bankrupt part-
ner; (2.) Where there is no joint estate, and no living
solvent partner; (3.) Where there are no separate
debts. In the first case, the petitioning creditor may
prove his debt, and share, pari passu, with the sepa-
rate creditors in the separate estate ; in the second
case, all the joint creditors enjoy the same privilege ;
and in the third case, all the joint creditors share, pari
passu, with each other.^
I 379. The first exception stands confessedly upon
a ground of reasoning, which, if not purely artificial,
applies at least with equal force in favor of the joint
creditors in all other cases. The ground is, that a
commission of bankruptcy is an action and an execu-
tion in the first instance.^ To which it has been
« Collyer on Partn. B. 4, ch. 2, § 3, p. 623 to 628, 634, 635, 2d edit. ;
Ex parte Tate, Co. Bank Laws, 253.
STwiss V. Massey, 1 Atk. 67; Ex parte Crispe, 1 Atk. K. 133;
Collyer on Partn. B. 4, ch. 5, § 3, p. 625, 626, 2d edit. ; Ex parte Elton,
3 Ves. 238. — In this latter case Lord Loughborough (after Earl of Koss-
lyn) said; "Antecedent to these authorities, I should have thought it
perfectly clear it could not be done ; and, that the utmost length they
could go was, that a joint creditor, where there is a separate commission,
is to be admitted to prove, only for the purpose of assenting to or dissent-
ing from the certificate, and receiving such surplus beyond the amount of
the separate debts, as joint creditors would be entitled to claim, where
there are two commissions. I doubt, whether it is possible to innovate
upon that, which was the law formerly; for though a commission is an
execution, and the joint creditor has such an interest as enables him to
CH. XV.] DISSOLUTION — BIGHTS OF CEEDITOES. 591
replied with as great force, tliat it is true that a com-
mission is not an execution, but an execution for all
take out a separate commission, yet the consequence does not follow.
There are cases antecedent to those cited. In Lord King's time it was
determined, that a joint creditor might be a good petitioning creditor,
though the commission is only against one partner ; that the joint creditor
does no more in taking his execution, passing over his action, than bring-,
ing the separate effects to be administered in bankruptcy. But it is not
treated any longer as an execution at law ; for the effects taken under it
are not disposed of as at law, but fall immediately by the direction of the
statute under the administration of this Court ; which is to make an equi-
table distribution among the creditors, to admit all equitable claims upon
the effects, and to divide them ratably. It has been long settled, and it
is not possible to alter that, that each estate is to pay its own creditors.
With regard to the creditor suing out the commission, the separate cred-
itors cannot object to his having the effect of the execution he has taken
out. He is precluded from suing at law ; and it would be against all
equity, having done it for their benefit, to refuse him the fruit of that for
his own debt. But any other joint creditor is in exactly the case of a per-
son having two funds ; and this Court will not allow him to attach himself
upon one fund to the prejudice of those who have no other, and to neglect
the other fund. He has the law open to him ; but if he comes to claim a
distribution, the first consideration is, What is that fund from which he
seeks it ? It is the separate estate, which is particularly attached to the
separate creditors. Upon the supposition, that there is a joint estate, the
answer is, ' Apply yourself to that ; you have a right to come upon it ; the
separate creditors have not ; therefore do not affect the fund attached to
them, till you have obtained what you can get from the joint fund.'
There would be no great inconvenience, if he could put them in his situ-
ation as to the joint fund ; but I doubt very much whether that is possible.
For suppose in the case of A. and B., partners, the former remains sol-
vent, the latter becomes a bankrupt, and there is a joint debt of £1000.
The creditor making his claim first against the separate estate, paying a
dividend of 10s. in the pound, receives £500. Can the assignees claim'
against the solvent partner, what they have paid ? His answer would be,
they could only claim the same right the bankrupt could ; and as against
the bankrupt he is entitled to retain ; he has paid his moiety of the part-
nership debt. If the case is turned the other way, and the creditor first
sues the solvent partner, he recovers all the debt against him ; and he has
a right to come in as a separate creditor of the bankrupt to the amount
only of a moiety of that debt; for a moiety only of the debt of the partner-
ship he could have recovered against him if he had been solvent. That
makes a very great difference to the separate creditors. I was led to con-
592 PARTNERSHIP. [CH. XV.
the creditors ; that if a joint creditor had brought an
action against all the partners, he might have several
executions against each, or at least a joint execution,
which could be levied upon the joint property, and
also upon the separate property of each of the part-
ners.^ What makes it still more artificial is, that if a
sider another thing, — Is it possible to admit a separate creditor to take a
dividend upon the joint estate ratable with the joint creditors ? No case
has gone to that, and it is impossible ; for the separate creditor at law
has no right to sue the other partner.* He has no right to attach the part-
nership property. He could only attach the interest his debtor had in that
property. If it stands as a rule of law, we must consider, what I have
always understood to be settled by a vast variety of cases, not only in
bankruptcy, but upon general equity, that the joint estate is applicable to
partnership debts, the separate estate to th& separate debts. Another
difficulty is, whether really it is just to put it to the assignees in behalf of
the separate creditors, to assert the right of the creditor, making the
claim, to go against the joint estate. The creditor coming in upon the
separate estate is first to answer the question, why he does not go against
the joint estate. It may be said, ' The law is open to you ; it is not open
to us. You put us to file a bill against the other partners to discover and
apply the partnership fund. You have a much quicker remedy ; sue the
partnership. Yon need not wait the account. They will settle it rather
than put you to that ; at all events, you have a legal execution against
them.' Another consideration is, that the great object of the law in estab-
lishing this sort of authority, in which I now sit, is to make a speedy dis-
tribution, and to avoid suits. The necessary consequence of admitting a
joint creditor to prove against the separate estate, is in every such case to
make a chancery suit ; and the right of the separate creditors to the
administration of their fund is frustrated." See, also. Ex parte Abell,
4 Ves. 837.
' Ex parte Hodgson, 2 Bro. Ch. R. 5; Button v. Morrison, 17 Ves.
207. — In this latter case Lord Eldon went into the reasoning of the vari-
ous opinions, and said ; " The case now before me must be regarded in
this point of view. The question being as to the effect of the quasi
execution, under a commission of bankruptcy against one partner, with
reference to the interest of himself and two others, in a fund in the hands
of the plaintiff. The jurisdiction in bankruptcy being both legal and
equitable, let us see, whether we must not, of necessity, go a great way
in this case ; or admit, that we have already gone much too far in bank-
ruptcy. The opinion of Lord Hardwicke was, that joint creditors could
CH. XV.] DISSOLUTION' — EIGHTS OF CREDITORS. 593
joint creditor sues out a joint commission against all
the partners, lie can resort only to the joint funds of
the partnership.^
prove under a separate commission only for the purpose of assenting to, or
dissenting from, the certificate, but not to receive dividends ; and that
they must file a bill for an account of the joint estate. The operation of
that bill was to draw into the joint estate the share of that bankrupt part-
ner, taken in execution, as far as bankruptcy can be so represented ; and
by the effect of the commission, the bill, and the decree, nothing could be
divided among the separate creditors under the commission, but that which
formed the separate share of the bankrupt after the account, and an appli-
catioa of the joint estate to all demands against it. Lord Hardwicke,
therefore, must either have thought, that upon such a case it was clearly
fit to say, that execution against one partner should not afiect the applica-
tion of the joint fund to the joint demands ; or, as I rather believe, he
found himself in a situation requiring him to cut the knot, and to make
some rule that would, upon the whole, be most convenient. This subject
took a different course at different periods, until the time of Lord Thurlow,
who considered it with great anxiety ; and, having consulted most of the
Judges, expressed his decided opinion, that the contrary course was the
best, as being the most legal ; and therefore held, that the joint creditors
should be admitted to prove, and take dividends, under a separate commis-
sion ; that a commission of bankruptcy was an execution for all the cred-
itors ; that, if a joint creditor had brought an action against all the debtors,
he might have several executions against each ; and therefore, the bank-
ruptcy, preventing his action with effect, should be considered as a judg-
ment for him as well as the others ; that he had a right to receive the
dividends ; and it was upon the assignees of the separate estate to bring
their bill to have the account settled. The question afterwards came to be
considered by Lord Loughborough, who got back to the old rule, and
abided by it firmly; but great difficulties occurred of this sort. Lord
Loughborough, adopting the principle of Lord Hardwicke's rule, did not
adopt his practice ; not putting the joint creditors to file a bill, bringing
before the Court the assignees and the solvent partners, and taking the
account in their presence ; but taking this course, directing the assignees
to take an account of the joint estate, and applying that to the discharge
of the joint creditors, to ascertain the share of the residue, belonging
respectively to the bankrupt and the solvent partners. From the nature
of this proceeding, unless the solvent partners thought proper to come in
and have the account taken before the commissioners, the Lord Chancellor,
1 Ex parte Bolton, 2 Rose, R. 389, 390, cited in the preceding note.
51*
594 PAKTNERSHIP. [CH. XV.
§ 380. The second exception excludes the joint
creditor, in all cases but one ; and in that case two
in bankruptcy, had no power to compel them ; neither could the joint
creditors, unless they thought proper to come in before the commissioners,
be compelled, in that proceeding, to come in ; and if the other partners
did not, or could not, as in the instance of residence abroad, make them-
selves parties, the account upon ordinary principles could not bind them.
I pressed the difficulty that would arise, if a joint creditor should bring
an action and proceed to judgment. Would this Court interfere upon
the ground, that there was an order in bankruptcy, to which he and
the other joint creditors were not parties ; and, to enforce that order,
grant an injunction against execution,in that action ? That would be a
question of great importance, if the law was as simple as it was supposed
to be in the early cases upon this subject ; that the assignees were tenants
in common of a chattel with the solvent partner ; and the creditor might
satisfy himself out of the apparent interest. But, taking the law to be,
that no more should be applied than the result of a general account, the
only efi'eot of the execution would be, that the creditor would haVb
subjected himself to the general account, that was going on in another
proceeding. The question then came before me ; and upon consideration
of all the authorities, I thought the best course for me to adopt (whether
the best in principle I have often doubted) was, that the rule should
continue to be applied, as it had been for some years in a course of
application ; and, therefore, I have not disturbed the practice, as it has
of late prevailed. The result is, that now it has been understood for
fifteen years, that, under a separate commission of bankruptcy, the other
partners remaining solvent, an account shall be directed of the joint
estate in the absence even of the other partners ; and upon the apjilication
of any one joint creditor, whether the others choose it or not, the whole
account bemg taken in the bankruptcy, the joint creditors shall be paid,
pari passu, out of the joint estate ; and the residue shall then be distrib-
uted only according to the respective interest of the partners ; and, if the
rule of law, wheA a creditor takes execution, is the same, perhaps we are
not far wrong. In the course of this period there has been no instance of
a creditor coming here, saying that he had a judgment, not executed,
against a partner, and desiring to go on ; nor has the case occurred in
bankruptcy of a joint creditor claiming to set aside the execution under the
commission by a prior act of bankruptcy ; and desiring to have execution
against all without any account. Such a case, if it occurred, must be
dealt with upon much the same principle as this." I cannot find that
Lord Thurlow's reasoning on the subject is any where given at large.
All that remains consists of these notes and comments. It is manifest
that Lord Eldon equally doubted with him, as to the solid foundation of
CH. XV.] DISSOLUTION — BIGHTS OF CREDITORS. 595
circumstances must concur and co-exist ; (1.) That
there is no joint estate; and (2.) That there is no
'living solvent partner. If there is any joint estate,
however small it may be, if it is an available joint
fund, and not purely a desperate and nominal joiiit
fund, then the joint creditor is excluded. As for ex-
ample, if the joint fund is absolutely vforthless from
the expenses of any attempt to get it in, or if it is
the rule. Ex parte Clay, 6 Ves. 813 ; Ex parte Chandler, 4 Ves. 35 ; Ex
parte Cobham, 1 Bro. Ch. R. 476, Mr. Belt's note (1 ;) Ex parte Taitt,
16 Ves. 193, 195, 196 ; Gow on Partn. ch. 5, § 3, p. 312 to 315, 3d edit.
Again, in Ex parte Bolton (2 Rose, R. 389, 390,) Lord Eldon said;
" Since the case of Ex parte Crisp, a decision now at least sanctioned by-
time, it has been clearly settled, that a joint creditor may take out a sepa-
rate commission ; and, taking out that commission, he has a privilege of
election, either to make his proof against the separate or the joint estate.
By a joint' commission, on the other hand, he binds himself to resort to
the joint property. The rule at law, as to executions, affords some anal-
ogy. If a creditor take out a joint execution, he cannot afterwards take
out a separate execution ; and a commission is in the nature of an execu-
tion ; a joint commission being as an execution against all, a separate
commission as an execution against the individual. If a creditor deliber-
ately resorts to the process of a joint commission, he is, as a joint credi-
tor, proceeding on a joint judgment and execution ; and having once
elected so to do, he cannot alter it. No determination approaches a case
like the present. Here are two separate commissions at the instance of
the same creditor. If it were the case of one separate commission, thus
awarded, the creditor might say, I will take my debt out of either the
joint or the separate estate ; but to get at the joint estate, there must be a
special order of the Chancellor. The joint property is, therefore, reached
but by circuity ; and being thus looked at, if the creditor says, I will rank
under this commission as against the joint estate, and so ranking, receives
a dividend, say to the extent of fifteen shillings in the pound, he still
remains the creditor of the solvent partner as to the five, and for that he
may bring his action, or he may take out a commission ; and taking out
a commission, until he completely knows, and which until then he only
indirectly knows, the state of the joint accounts under that commission,
he cannot be said deliberately to have elected. I think, therefore, he is
entitled to reconsider his mode of proof; and refunding the joint dividend
with the interest, let the proof stand against the separate estate." See
also Collyer on Partn. B. 4, ch. 2, § 5, p. 634, 635, 3d edit.
596 PARTNERSHIP. [CH. XV.
pledged beyond its real value, it will be deemed a mere
nullity J but not otherwise.^ On the other hand, if
there is no available joint fund, still, if there is a'
solvent partner, as the creditor has his right of action
against him for a full satisfaction, it is said, that,
therefore, he ought not to be allowed to come in com-
petition with the separate creditors of the bankrupt.^
Why he may not, it is not easy to say upon general
reasoning, especially as all partnership debts are now
treated in equity as several, as well as joint. But
here, again, there is a peculiar qualification upon this
part of the rule. The solvent partner must be liv-
ing ; for if he is dead, although his estate is solvent,
yet, the joint creditors may come in upon the sepa-
rate estate of the bankrupt, pari passu, with the
separate creditors.^ The like rule will apply to the
case of joint debtors, who are not partners, under the
like circumstances.*
§ 381. The third exception stands, if possible, in
its actual application, upon more subtle and refined
grounds. It is not necessary here to make out a case,
where there are absolutely and literally no separate
debts at all. It is sufficient, that they are few and
inconsiderable in amount, and that the joint creditors
undertake to pay them all, and do discharge them ; so
1 Collyer on Partn. B. 4, ch. 2, § 3, p. 626, 627, 2d edit.; Ex parte
Leaf, 1 Deacon, K. 176 ; In re Lee & Armstrong, 2 Rose, 64 ; Ex parte
Peake, 2 Rose, 54; Ex parte Hill, 5 Bos. & Pull. 191, a; Ex parte
Janson, 3 Madd. K. 229 ; Ex parte Kensington, 14 Ves. 447 ; In re Mar-
wick, Daveis's R. 229.
2 Collyer on Partn. B. 4, ch. 2, § 3, p. 626, 627, 2d edit. ; Ex parte
Sadler & Jackson, 15 Ves. 52, 56 ; Ex parte Kensington, 14 Ves. 447.
3 Collyer on Partn. B. 4, ch. 2, § 3, p. 627, 2d edit.
4 Ibid.
CH. XV.] DISSOLUTION EIGHTS OP CREDITORS. 597
that they no longer stand in their way as subsisting
claims, impeding their rights.^
§ 382. Such is the acknowledged state of the au-
thorities as to the general rule, and the exceptions to
it as to the respective rights of joint creditors and
separate creditors against the joint and separate es-
tates of the bankrupt. , After the repeated doubts
which have been expressed upon the subject, by the
most eminent Judges, it is not, perhaps, too much to
say, that it rests on a foundation as questionable and
as unsatisfactory as any rule in the whole system of
our jurisprudence. Such as it is, however, it is fo^
the public repose, that it should be left undisturbed,
as it may not be easy to substitute any other rule,
which would uniformly work with perfect equality
and equity in the mass of intricate transactions con-
nected with commercial operations.
§ 383. But although the joint creditors and the
separate creditors are not entitled to come in, pari
passu, upon the joint and separate estates of a bank-
rupt, for a dividend thereof; yet they are in all cases
entitled to come in and prove their debts against his
estate, for the purpose of assenting to or dissenting
from his certificate ; but not to vote in the choice of
assignees.^ And this is upon a principle of natural
justice, since the certificate, when given, will operate
as a discharge of the bankrupt equally against his
joint and his separate creditors.^
1 CoUyer on Partn. B. 4, ch. 2, § 3, p. 627, 2d edit. ; Ex parte Chand-
ler, 9 Ves. 35 ; Ex parte Taitt, 16 Ves. 193 ; Ex parte Hubbard, 13 Ves.
424. See also Rice ». Barnard, 20 Vermont R. 479.
2 Gow on Partn. B. 5, § 3, p. 280, 2d edit.; Id. p. 329 ; Ex parte
Taitt, 16 Ves. 193 ; Watson on Partn. ch. 5, p. 334, 335, 2d edit.
3 Ibid.
598
PARTNERSHIP. [CH. XV.
§ 384. The question often occurs in bankruptcy,
as to the rights of creditors;; who are at law hoth
joint and several creditors of the partners, or, in other
words, to whom the partners are in law jointly and
severally indebted upon joint and several securities
and contracts, whether they are entitled to prove both
again"st the joint estates and against the separate
estates of the bankrupt or bankrupts. And here the
general rule is now firmly established, that they shall
not in equity be allowed to prove their debts and take
dividends upon the joint estate, and also upon the
separate estate ; but they shall be restrained, and put
to their election to prove and take dividends from the
one or the other.^ When the'y have once made this
election, they are excluded from any dividend of the
other fund, unless there remains a surplus after the
discharge of all the debts having a preference there-
on.^ However, before any such creditor can be put
to his election, he is entitled to a reasonable time to
inquire into and ascertain the true state of each fund ;
and even after he has made an election, he will
sometimes be allowed to recall it upon equitable cir-
cumstances, when it will not interfere with the posi-
tive rights actually acquired and fixed in others.^
1 Gow on Partn. ch. 5, § 3, p. 286, 287, 3d edit.; Cook's Bankrupt
Laws, 259, 4th edit. ; Ex parte Bank, 1 Atk. 107 ; Ex parte Rowlandson,
3 P. Will. 405 ; Ex parte Bond, 1 Atk. 98 ; CoUyer on Partn. B. 4, ch.
2, § 8, p. 651, 2d edit. ; Id. B. 4, ch. 2, § 4, p. 630 to 632 ; Id. p. 634 to'
637; Watson on Partn. ch. 5, p. 289, 296, 2d edit.
2 Ibid.
3 Gow on Partn. ch. 5, § 3, p. 287, 288, 289, 3d edit. ; Ex parte Bond,
1 Atk. 98. — We are here to understand, that the election of the remedy
by the creditor against the joint or the several estate is strictly confined to
cases of one and the self-same debt; and does not apply, where the creditor
has two distinct debts, arising under separate and independent contracts.
CH. XV.] DISSOLUTION EIGHTS OF CREDITORS. 599
§ 385. The doctrine thus established does not, any
more than ~4;he preceding, seem to stand upon any
solid ground of equity or general reasoning. It has
been supported upon some supposed analogy to the
rule of law in cases of this sort, where the creditor
may su6 all the partners at law, and have a joint exe-
cution against all, or he may sue each partner sepa-
rately at law, and have a separate execution against
each. But he cannot do both ; that is, he cannot at
law at the same time sue them all in a joint action,
and each one separately in a separate action ; but he
wiU be put to an election of his remedy by the very
forms of pleading.-^ And it is added, that the general
CoUyer oa Partn. B. 4, ch. 2, § 4, p. 632, 2d edit.; Id. § 5, p. 634 to
638, 2d edit. ; Ex parte Edwards, 1 Mont. & Mo Arth. 116.
1 Gow on Partn. ch. 5, § 3, p. 286, 287, 3d edit.; -CoUyer on Partn.
B. 4, ch. 2, § 4, p. 630, 631, 2d edit. ; Id. p. 634, 635 ; Ex parte Row-
landson, 3 P. Will. ,405, 406.^ On this occasion Lord Talbot stated his
opinion to be ; " That as at law, when A. and B. are bound jointly and
severally to J. S., if J. S. sues A. and B. severally, he cannot sue them
jointly, and, on the contrary, if he sues them jointly, he cannot sue them
severally, but the one action may be pleaded in abatement of the other •
so, by the same reason, the petitioner in the present case ought to be put to
his election under which of the two commissions he would come ; and that
he should not be permitted to come under both ; for then he would have
received more than his share. But his Lordship said he would hear coun-
sel, if they had any thing to object against this order." And again he
added ; " In the principal case, the bond upon which the petitioner would
seek relief under the separate commission, was not only for the same debt,
but given by both the parties ; and the plea in abatement would have been
proper, had the bond been sued at the same time both as a joint and several
bond, vphich cannot be where there is only a separate bond. Then taking
this to be the rule at law, that a joint and several bond cannot be sued at one
and the same time both jointly and severally, but that the obligee must
make his election ; so it ought to be (he said) in the principal case. And
this would best answer the general end of the statutes concerning bank-
rupts, which provide that all debts shall be paid equally, as in conscience
they are all equal ; that it is upon this foundation that debts of a partner-
ship have been ordered to be first paid out of the partnership effects ; and
600 PAETNEKSHIP. [CH. XV.
end of tlie bankrupt laws is to provide for the pay-
ment of all debts equally, as in conscience all are
equal ; and equality is equity.^ ,
§ 386. Now, (to say the least of it,) this is assuming
the very ground of controversy, and not establishing
it by any satisfactory reasoning. With what justice
that afterwards the joint creditors, when the separate creditors are satisfied,
may come in upon the separate effects, but not before ; and so vice versd,
the separate creditors are to come first on the separate effects of the part-
ners, and if these are not sufficient then on the joint effects, after the part-
nership creditors are paid." And therefore, the Reporter adds, " That
there might be an equality in the principal case, his Lordship ordered that
the petitioner should make his election, whether he would come in for a
satisfaction out of the partnership, or the separate effects, but not out of
both at the same time ; however, his having received his dividend out of
the joint effects, on the' joint commission, whilst this matter was in sus-
pense, was not to bind him ; and provided he brought that back again, he
might come in for a satisfaction out of the separate effects, and he to
have a month's time to make his election." Lord Hardwicke, in Ex parte
Bond, (1 Atk. 98,) said ; « It was objected upon the last day of petitions,
that this would be contrary to proceedings at law upon a joint and several
bond, where the creditor may proceed against both obligors at the same
time, till his debt is fully satisfied. And to be sure it is so at law ; but in
bankrupt cases, this Court directs an equality of satisfaction. Consider it
on the footing of a joint estate first ; joint creditors are entitled to a satis-
faction out of the joint estate, before separate creditors ; but then they
have no right to come upon the separate estate for the remainder of their
debts, till after separate creditors are satisfied. What would be the con-
sequence, if the petitioners should be admitted to come on both estates at
the same time ? Why, then, these creditors would draw so much out of
the separate estate, as would be a prejudice to other joint creditors, who
have an equal right to come upon the separate estate with themselves ;
and by that means I should give the petitioners a preference to other
creditors, when the act of parliament and the equity of this Court incline,
that all persons should have an equal satisfaction, and not one more than
another." See also Ex parte Wildman, 1 Atk. 109.
•> Ibid. — The doctrine, compelling the creditor to elect, equally applies
to the case of a joint creditor, who takes the separate personal contract
or security of one of the debtors, as collateral security for the joint debt.
Ex parte Roxby, 1 Montagu on Partn. 124; Gow on Partn. ch. 5, § 3,
p. 287, 3d edit.; Collyer on Partn. B. 4, ch. 2, § 5, p. 685, 636, 2d edit.
But see In re Plummer, 1 Phillips, Ch. R. 56, 59; Post, § 389.
CH. XV.] DISSOLUTIOK RIGHTS OF CREDITORS. 601
can it be said, that a contract, which is merely joint
or merely several, shall stand upon an equal footing,
as to right and remedy, with one that is both joint
and several? The very object of the latter is to
provide a superior remedy to enforce itj and why
should any Court deprive the creditor of the very
benefit which the debtors had stipulated to give him,
or restrain him from using all his rights ? Courts of
Equity generally act upon an opposite principle, and
give a broader effect to joint partnership contracts in
favor of the creditor, even when his remedy is, by
the death of one of the partners, gone at law.^
1 Ante, § 384, 385, and note (2). — Lord Eldon held a pointed opinion
against the whole doctrine ; but at the same time he considered it so well
established in practice by authority, that he ought not to depart from it.
In Ex parte Bevan, (9 Ves. 223, 224,) he said ; '• It is not necessary to
decide the other question, as to the joint and several proof. If it was, I
am not perfectly satisfied with the authority that has been stated. The
reasoning goes upon this,' that a joint and separate action could not be
brought at law. But surely the distinction is then, that where a joint and
separate bond is given, and another security, several from each, there, as
two actions might be brought, the rule in bankruptcy should be different.
I think I have heard, that in the case cited in Peere Williams, the only
separate creditor was he who took out the commission ; and it appears by
the book, that the joint creditors prayed that he might deliver over to
them the effects, which was refused ; and it was said, that he should have
the effects applied to his separate bond. And if that is the case, the rule
is quite right ; for he would have a right to take the separate effects, if
not to the detriment of other separate creditors." And again, in Ex parte
Bevan, (10 Ves. 106, 109,) he said; " The principle seems obvious ; yet
in bankruptcy, for some reason not very intelligible, it has been said the
creditor shall not have the benefit of the caution he has used. I never
could see why a creditor, having both a joint and a several security,
should not go against both estates. But it is settled that he must elect.
By his election to go against the joint estate, the effect to the joint cre-
ditors is very different from what it would have been, if he had elected to
go against the separate estate ; and the question is, whether, if he elects
to go against the joint estate, and thereby participates with the joint cre-
ditors, that participation, arising from his election, has not in practice been
treated as a consideration for the rest of the joint creditors ; entitling them
PAETN. 51
602 PARTNERSHIP. [OH. XV.
However, the doctrine is now too firmly established
in practice to be shaken.
§ 387. But, although, generally, where a creditor
holds the joint contract or personal security of the
firm, and likewise the separate contract or personal
security of individuals composing the firm, he is com-
pelled, upon the bankruptcy of some of them, to
elect, whether he will consider them as his joint or as
his separate debtors, and proceed accordingly ; yet
this rule is not without exceptions. For, where a
creditor holds the joint contract or personal security
of a firm, and also the several contract or personal
security of some of its members, and the latter like-
wise form a distinct partnership iTtter sese, there are
cases, where the creditor may have a double remedy.
Thus, if A., B., C, and D. trade under the firm of A.,
B. & Co., and C. and D. are in a distinct partnership,
and the firm of A., B. & Co. draw bills upon C. and D.,
who accept them, the holder of such bills may prove
them under the bankruptcy of C. and D., and after-
wards may bring his action on the bills against A., B.
& Co.^ So, if a creditor of A. and B. should take out
a separate commission against A., and receive a
dividend under that commission out of the joint es-
tate, he may bring an action against the other partner
for the residue.^
§ 388. Cases sometimes occur upon written nego-
to go along with him upon the separate estate, when he afterwards goes
against that estate."
1 Ex parte Parr, 1 Eose, 76. See also In re Plummer, 1 Phillips, Ch.
E. 66, 89 ; Post, § 389.
2 Heath v. Hall, 4 Taunt. 326 ; Young v. Hunter, 16 East, 258 ; Col-
lyer on Partn. B. 4, ch. 2, § 7, p. 645, 2d edit. ; Gow on Partn. ch. 5, § 3,
p. 289, 3d edit,
CH. XV.] DISSOLUTION RIGHTS OF CREDITORS'. 603
tiable instruments, ,such as bills of exchange and
promissory notes, where, in reality, all the parties are
partners, and the bills or notes are drawn, or indorsed,
or accepted, upon their joint partnership account, and
yet the parties appear only to be separately bound
upon the face of the instrument, as drawers, or as
indorsers, or as acceptors. In such cases, a question
has been made, whether the creditor has a right in
bankruptcy to prove his debt against the estates of all
the respective parties, (which is called double proof,)
or he must elect to prove against one only of the es-
tates. It has been held, that if the creditor is, at the
time of taking the negotiable instrument, ignorant of
the actual connection between the parties in that in-
strument, he is entitled to the double proof.^ But, if
he is not so ignorant, it seems doubtful, in the present
state of the authorities, whether he is entitled to the
double proof, or not.^ Be this as it may, it is very
' CoUyer on Partn. B. 4, ch. 2, § 8, p. 648, 649, 656, 2d edit. ; Gow
on Partn. ch. 5, § 3, p. 289, 3d edit. ; Ex parte Benson, Cook's Bankr.
Laws, p. 263 ; Ex parte La Forest, Id. p. 261 ; Ex parte Bonbonus, 8
Ves. 546.
2 CoUyer on Partn. B. 4, ch. 2, ^ 8, p. 649 to 651, 2d edit.; Gow on
Partn. ch. 5, ^ 3, p. 288, 3d edit. — Mr. CoUyer (CoUyer on Partn. B. 4,
ch. 2, ^ 8, p. 648 to 651, 2d edit.) has stated the cases as Mows. " The
leading case on this subject is Ex parte La Forest, Cook's Bankr. Laws,
261. There, Corson and Gordon, partners and turpentine manufacturers,
entered into partnership with Whincup and Griffin, soap manufacturers.
The latter business was carried on under the firm of Whincup & Griffin.
A joint commission was issued against the four, under which they were
found bankrupts ; and the assignees possessed themselves of the joint
fund of the four, and also the joint fund of Corson and Gordon, and their
respective separate estates. Corson & Gordon, in their partnership firm,
drew biUs of exchange upon the firm of Whincup & Griffin, who ac-
cepted such biUs. The petitioners discounted many of these biUs. The
petitioners aUeged, that, at the time of such discount, they were ignorant
of any partnership existing between the four ; but that they considered
604 PARTNERSHIP. [CH. XV.
certain, that the creditor cannot prove his debt against
the joint and against the separate estates of the same
Corson & Gordon, the drawers, and VThincup & Griffin, the acceptors, as
two distinct firms, and thought that they had the security of the funds of
both those firms. The petitioners applied to the commissioners to be ad-
mitted! to prove against the respective joint estates of Corson and Gor-
don, and of Whincup and Griffin ; but the commissioners refused, con-
ceiving that the bills ought to be proved only against the joint estates of
Whmcup, Griffin, Corson, and Gordon. Lord Loughborough held, that,
admitting the allegation of ignorance on the part of the petitioners be
true, they were entitled to the proof which they required. Again, A.,
B. and C. were partners in a cotton manufactory, and B. and C. carried
on a distinct trade in partnership, as grocers. The petitioner sold goods
to B. and C. as grocers, for which they remitted to him a bill drawn by
A. in their favor, upon one Z., and indorsed by B. and C. Z. accepted
the bill ; but it was protested for non-payment. The drawer, indorsers,
and acceptor, all became bankrupts. The petitioner did not know that A.
had any connection in trade with B. and C. Lord Loughborough ordered
that the petitioner should be at liberty to prove the amount of the bill
against the joint estate i of B. and C, and also against the separate estate
of A., and be paid dividends upon both estates. Ex parte Benson, Cook's
Bankr. Laws, 263. Again, five persons, trading under the firm of C. &
Co., drew a bill of exchange on two of the members of the copartnership,
who carried on a distinct trade, as H. and G. The bill was accepted,
negotiated, and, in the course of circulation, came into the hands of the
petitioner, without any knowledge, on his part, of the connection between
the parties. Upon the bankruptcy of C. & Co. the petitioner ■claimed to
prove both against the drawers and acceptors. Lord Eldon held, that the
petitioner, as ignorant of the connection of the parties, was entitled to
such proof. Ex parte Adam, 2 Kose, 36. In all these cases, the part-
ners, who appeared as distinct parties to the bills, were also in distinct
partnerships ; and yet the holders of the bills, in order to obtain double
proof, were required to prove their ignorance, that these distinct partner-
ships also formed an aggregate partnership. Nevertheless, according to
a learned writer, Lord Eldon has determined, that, where the firms are in
fact distinct, it is not material that the ignorance of the holder, that the
same parties were also united in one firm, should be requisite to entitle
him to proof. Eden on Bankr. Law, 182. Now, although this remark
does not seem to be supported by any express authority ; yet it is justified
by several dicta of Lord Eldon, and by the case of Ex parte Walker,
(1 Rose, R. 441,) which is in point. There A., a sole trader, B. and C,
partners, and D., also a sole trader, engaged in a joint adventure ; and '
for a joint purchase of goods by them, the vendor, with a knowledge of
CH. XV.] DISSOLUTION — EIGHTS OF CREDITOES. 605
parties ; but he must elect to go against the one, or
the other.^
§^389. Another question may arise in bankruptcy,
where a creditor has a pledge or mortgage or other
security upon the estate of the bankrupt for his debt,
whether he can retain it, and proceed in bankruptcy
for <the amount, or not. And, here, a doctrine pre-
vails, which seems equally consonant to justice and
common sense ; and that is, that the creditor in such
case may, if he chooses, surrender up the pledge or
mortgage or other security, and come in under the
commission, for his whole debt ; or, he may have the
pledge or mortgage or other security sold, and if it is
insufficient to pay the whole debt, he may prove
against the estate for the deficiency.^ But as the
their joint interest, received in payment a bill drawn by A. on, and ac-
cepted by B. and C. ; Lord Eldon held, that on the bankruptcy of A.,
and of B. and C, the vendor was entitled to prove the bill against both
their estates. On other occasions, likewise. Lord Eldon appears to have
adverted to double proof, without ever referring to the ignorance of the
holder of the double security, that the distinct firms constituted one
general firm. Ex parte Bonbonus, 8 Ves. 546. On the other hand, there
is a recent case, in ■which Sir George Eose is reported to have said, that
the holder of a bill is not entitled to double proof, if he knew the different
persons whose names appear upon it to be all members of one joint firm,
2 Deac. R. 261. Upon the whole, it seems still open to contend, that
where a bill is drawn by some of the partners upon the others, or upon
the whole firm, or vice versa, and the bill purports, and the fact is, that
the drawers and acceptors likewise constitute distinct firms respectively,
in such case, the holder, whether ignorant or not of the aggregate con-
nection of the parties, is entitled to pursue the contract appearing on the
face of the bill, and to prove against both the estate of the drawer
and that of the acceptors." See Watson on Partn. ch. 5, p. 274 to 276,
2d edit.
J Collyer on Partn. B. 4, ch. 2, § 8, p. 681 to 654, 2d edit.
2 Collyer on Partn. B. 4, ch. 2, § 4, p. 633, 2d edit. ; Id. ch. 2, § 7, p. 645,
646 ; Ex parte Gellar, 2 Madd. R. 262 ; Ex parte Bennett, 2 Atk. 527 ;
Ex parte Parr, 1 Rose, R. 76 ; Ex parte Goodman, 3 Madd. R. 373 ; In
re Plummer, 1 Phillips, Ch. R. 57, 59 ; Ante, § 389.
51*
606 PARTNERSHIP. [cH. XV.
established rule in bankruptcy is, that the deduction
of a pledge or mortgage or other security is never
made, except when it is the property of the bankrupt,
it has been held, as a consequence of that rule, that
in the case of a separate pledge or mortgage or secu-
rity of property made for a joint debt, either by a
partner or by a third person, the security may be re-
tained, although the whole joint debt be proved under
the commission.'
§ 390. It was also for a long time a matter of
doubt, whether, if a firm be indebted to one of the
partners, the creditors on the separate estate of that
partner should be admitted as creditors on the part-
nership estate, in competition with the joint creditors ;
Lord Hardwicke conceived and held,^ that, where
money had been lent to the partnership by a partner,
who afterwards became bankrupt, the separate credi-
tors of the latter might prove the amount of the loan,
as a debt against the joint estate. Lord Thurlow,
however, thought differently ; and, in a subsequent
case,^ he decided, that proof could not, under such cir-
cumstances, be made. He proceeded upon the prin-
ciple, that the equities of the creditors, whethet joint
or separate, must be worked out through the medium
of the partners ; and that it was a clear and well-
established rule, that the individual partner could not
himself prove against the joint estate in competition
' Collyer on Partn. B. 4, ck 2, § 7, p. 645 to 647, 2d edit. ; Ex parte
Parr, 1 Rose, R. 76 ; Ex parte Peacock, 2 Glyn & Jam. 27 ; In re Plum-
mer, 1 Phillips, Ch. K. 57, 59; Ex parte Bowden, 1 Deacon & Chitty,
R. 125.
2 Ex parte Hunter, 1 Atk. 223.
3 Ex parte Lodge, Cook's Bankr. Laws, p. 505 ; S. C. 1 Ves. Jun.
166.
CH. XV.] DISSOLUTION — KIGHTS OP OREDITOES. 607
with the creditors of the firm, who were in fact his
own creditors, and thereby take part of the fund to
the prejudice of those, who were not only creditors of
the partnership, but of himself. Therefore, where
there was a joint commission against two partners,
and a separate commission against one of them, and
the assignees under the separate commission peti-
tioned to be admitted creditors under the joint com-
mission for a sum of money brought by the bankrupt,
whom they represented, into the partnership, beyond
his share, and as being, therefore, a creditor upon the
partnership, for that sum ; Lord Thurlow refused it,
upon the ground, that proof of a debt due to an indi-
vidual partner could not be allowed to come in con-
flict with the proofs of the joint creditors.^ The rule
introduced by Lord Thurlow, has since his time been
in many cases acted upon and confirmed.^
§ 391. The like question may arise in the converse
case, where the joint creditors seek to prove a debt,
due from a single partner to the partnership, against
the - separate estate of that partner. And here, also,
it is now the settled rule, that, where one partner has
become indebted to the firm, oi" has taken more than
his share out of the joint funds, the joint creditors are
not to be admitted to prove against the separate estate
of that partner, until his separate creditors are satis-
1 Ex parte Burrell, Cook's Bankr. Law, p. 503 ; Ex parte Parker, and
Ex parte Pine, Ibid. ; Gow on Partn. ch. 5, § 3, p. 290, 291, 3d edit.
2 Ex parte Reeve, 9 Ves. 589 ; Ex parte Adams, 1 Eose, 305 ; Ex parte
Harris, Ibid. 438; Ex parte Sillitoe, 1 Glyn & Jam. 382; Gow on Partn.
ch. 5, § 3, p. 290, 291, 3d edit. ; Watson on Partn. ch. 5, p. 278, 279, 280,
3d edit. — In this and the three succeeding sections, I have followed for
the most part Uterally the language of Mr. Gow, as at once full and accu-
rate upon the points.
608 PAKTNEKSHIP. [cH. XV.
fied, unless it can be shown, that in; drawing out the
money, the partner has acted fraudulently, with a
view to benefit his separate creditors, at the expense of
the joint creditors.^
I Gow on Partn. ch. 5, § 8, p. 316, 317, 318; Watson on Partn. ch. 5,
p. 280 to 285, 2d edit. Mr. Gow on this point says ; " The law sanctioned
by the authorities of Lord Talbot, and Lord' Hardwicke, formerly was,
that if the debt, raised by the partners against an individual-partner, arose
out of contract, as upon a loan by the partnership to him, the joint credi-
tors might be admitted to prove against the separate estate in competition
■with the separate creditors. But the opinions entertained by those learned
Judges have been receded from in more modern times ; and the settled
doctrine now is, that if the claim arise out of contract, the estates are to
be administered jointly and separately, as they are actually constituted
at the time of the bankruptcy ; the joint creditors not being permitted to
recall into the joint fund, what one partner has by contract, express or
implied, substracted from the joint, and applied in augmentation of his
separate estate. This rule was introduced by Lord Thurlow, who, having
much considered the question , finally determined, that the assignees on
behalf of the joint, could not prove against the separate estate, unless the
partner had taken the joint property, with a fraudulent intent to augment
his separate estate. Thus, where Fendall was a dormant partner with
Lodge, and Lodge took money from the partnership, to a considerable
amount, without the knowledge of Fendall, who did not intermeddle in
the partnership business, Lord Thurlow, after taking time to consider,
thought he could not permit the assignees, under a joint commission, to
prove against the separate estate of Lodge, without deciding upon a prin-
ciple, that must apply to all cases, and constantly occasion the taking an
account between the partners and the partnership in every joint bank-
ruptcy. He said, that if the afiidavits had gone the length of connecting
the bankruptcy with the institution of the partnership trade, and that
Lodge, with a view of swindling Fendall out of his property, had got him
into the trade, and then taken the effects of the partnership into his own
hands, with a view to his separate creditors, it might have been different ;
and the petition, on the part of the joint creditors, to prove against the
separate estate, was dismissed. The principle established by Lord Thur-
low's decision has been acknowledged, and followed by Lord Eldon ; and
it is now an indisputable rule in bankruptcy, that, where the debt from
one partner to the partnership was incurred with the privity of his co-
partners, proof by the joint against the separate estate will not be admit-
ted." See also Ante, § 384, 385, note (1,) § 390 ; Lord Eldon's opinion
in Ex parte Harris, 2 Ves. & Beam. 212, 213, cited.
CH. XV.] DISSOLUTION — EIGHTS OP OEEDITORS. 609
§ 392. But although in. cases of contract, in which
the joint estate is increased at the expense of the
separate estate, the funds are administered as they are
constituted at the time of the bankruptcy ; yet there
are circumstances, under which the separate creditors
will be permitted to prove, against the joint estate, a
debt due from the partnership to the individual part-
ner.^ To induce a relaxation of the rule, however, it
must be made out, that the separate effects, creating
the debt, were obtained from the separate to augment
the joint estate, either by actual fraud, or under cir-
cumstances, from which tho law will imply fraud ;
and, in a legal sense, every appropriation by the firm,
as contradistinguished from a taking either by con-
tract, or by loan, is considered fraudulent, if it be made
without the express or implied authority of the indi-
vidual partner.^
1 Ex parte Harris, 1 Eose, 438 ; S. C. 2 Ves. & Beam. 210 ; Ex parte
Tounge, 3 Ves. & Beam. 31 ; S. C. 2 Rose, 40 ; Ex parte Cust, Cook's
Bankr. Law, p. 506.
2 Ex parte Reid, 2 Rose, 84 ; Gow on Partn. ch. 5, § 3, p. 292, 3d
edit. ; Watson on Partn. eh. 5, p. 280 to 282, 2d edit. ; CoUyer on Partn.
B. 4, ch. 2, § 10, p. 666 to 672, 2d edit. ; Ex parte Harris, 2 Ves. & Beam.
R. 213. — In Ex parte Harris, (2 Ves. & Beam.R. 210, 212,) Lord Eldon
said ; " There has long been an end of the law which prevailed in the
time of Lord Hardwicke ; whose opinion appears to have been, that, if
the joint estate lent money to the separate estate of one partner, or if
one partner lent to the joint estate, proof might be made by the one or
the other in each case. That has been put an end to, among other prin-
ciples, upon this certainly; that a partner cannot come in competition
with separate creditors of his own, nor as to the joint estate with the joint
creditors. The consequence is, that if one partner lends £1,000 to the
partnership, and they become insolvent in a week, he cannot be a creditor
of the partnership, though the money was supplied to the joint estate ; so
if the partnership lends to an individual partner, there can be no proof for
the joint against the separate estate ; that is, in each case no proof to
affect the creditor, though the individual partners may certainly have the
right against each other. The opinion of Lord Talbot seems also to have
been in favor of this proof. But in and previously to the year 1790 great
610 PARTNERSHIP. [CH. XV.
§ 393. Cases also may arise, independently of any,
fraud, in which the separate creditors will be entitled
to relief, and to make proof "of their debts against the
joint estate. In cases of dormant partnerships, it is a
general rule, that the creditors who have dealt with
the ostensible partner, not knowing that there is any
dormant partner, have a right to treat their debts as
joint debts, or as separate debts, and have an election
to prove the same against the joint estate, or against
the separate estate of the ostensible partner.^ Un'der
discussion took place at this bar ; the result of which, according to Lord
Thurlow's opinion, was expressed particularly in the case of Dr. Fendall
and Lodge. The former, a physician, embarked a very large property,
his whole fortune, in a partnersliip with Lodge, whom he permitted to
have the whole management ; and, a bankruptcy ensuing. Lord Thurlow
held, that as it was with the knowledge and permission of Fendall, that
the whole management of the property was with Lodge, he was authorized
to do as he thought fit with the partnership property ; and Fendall, there-
fore, must abide the consequences of what had been done most improperly,
but, under his own authority, most imprudently given ; and there could,
therefore, be no proof. The law has been clear from that time, that, to
make out the right to , prove by the one estate, or the other, it must be
established, that the effects, joint or separate, have been acquired by the
one, or the other, improperly and fraudulently in this sense, that they have
been acquired under circumstances from which the law implies fraud ; or
in this sense, to increase the separate estate of one partner, that'he meant
fraudulently to increase his own means out of the partnership estate.
Lord Thurlow by ' fraud ' intended to express what he thought necessary
to distinguish, that from taking by contract, or loan, or without the ex-
press or implied authority of the other partner, and that such act would
amount to fraud. Upon this case, I formerly expressed my opinion ; and
1 now lay down, that, if in either the expressed, or implied terms of an
agreement for a partnership there is a prohibition of the act, and it is
done without the knowledge, consent, privity, or subsequent approbation
of the other partner, before the bankruptcy, and to the intent to apply
partnership funds to private purposes, that is prima facie a fraud upon
the partnership.''
1 CoUyer on Partn. B. 4, ch. 2, § 5, p. 639, 2d edit. ; Ex parte Reid,
2 Rose, R. 84 ; Ex parte Norfolk, 1 9 Ves. 458 ; Ex parte Watson, 19 Ves.
459 ; Gow on Partn. ch. 4, § 1, p. 178, 1 79, 3d edit. ; Id. ch. 5, § 3, p. 261,
262. See Van Valen v. Russell, 13 Barbour, 590.
CH. XV.] DISSOLUTION — EIGHTS OF OEEDITORS. 611
such circumstances, if such creditors should elect to
prove them against the separate estate of the ostensi-
ble partner, the separate creditors of the latter will be
entitled to prove their debts against the joint estate,
and to receive an equivalent out of any surplus of the
joint estate, vrhich may remain after satisfying the
joint debts ; for the same rule prevails in bankruptcy,
as is adopted by Courts of Equity generally, that the
mere election of a creditor," who has a right to resort to
two funds, shall not deprive 'other creditors, who can
resort but to one of those funds, of their just rights ;
but the latter shall be allowed, by way of substitu-
tion, to obtain the like benefit against the other fund,
as the original creditor would have, if he had not
made such an injurious election.^ Therefore, where a
joint commission issued against A. and B., A. being a
dormant partner, and the joint creditors resorted to
the separate estate of B., thereby diminishing that
separate estate, and exonerating the joint estate of A.
and B., so as to produce a surplus of it, it was held,
that the separate creditors of B. had a lien upon
that surplus to the extent to which their funds had
been diminished by this election and resort of the joint
creditors.^ ^
§ 394. Another relaxation of the rule, that a part^
ner cannot prove against a firm, is admitted where
there is a minor partnership, or house of trade, consti-
tuted of persons who are members of a larger firm,
and there are distinct dealings between the distinct
Rouses of trade, and both firms become bankrupt, the
1 Ex parte Keid, 2 Pose, E. 84 ; 1 Story on Eq. Jurisp. ^ 558 to 561 ;
Id. ^ 663 to 668; Gow on Partn. ch. 5, ^ 3, p. 292, 3d edit. ; CoUyer on
Partn. B. 4, ch. 2, ^ 5, p. 639, 2d edit.
a Ex parte Reid, 2 Rose, K. 84.
612 PAETNIESmP. [CH. XV.
one being indebted to the other in respect of such
dealings ; in such a case proof may be made of the
debt, in the same manner as if the dealings had been
among strangers.-^ But the question, what is a deal-
ing in a distinct trade, is always to be looked at with
great care, for the proof is admissible on behalf of the
separate trade against the aggregate firm, only in
respect of dealings between trade and trade. If an
individual partner, who is a separate trader, should
lend money to his partnership, the strict, rule would
immediately apply to him, and shut him out from the
benefit of proof; for it were suflicient to state, in
order to bring the case within the exception, that the.
partner would not have lent the money, but as a -sep-
arate trader, the general rule would be at an end. It
is obvious, therefore, that the right of proof must be
confined to distinct dealings in the articles of distinct
trades ; since a more extended relaxation of the rule
would, in its consequences, lead to the destruction of
the rule itself.^ Therefore, where two partners of a
large banking firm carried on a separate trade as iron-
mongers, and a debt arose from the aggregate firm to
the separate trade, in respect of moneys procured for
the benefit of the aggregate firm, on the credit of the
indprsement of the separate firm, it was held, that no
proof could be made on behalf of the firm of the two
against the aggregate firm in respect of that debt.®
If the firm consists of two persons only, and one carty
' Ex parte Hargreaves, 1 Cox, 440; S. C. cited 6 Ves. 123, 747, and
11 Ves. 414 ; Ex parte Ring, Ex parte Freeman, Ex parte Johns, Cook's
Bankr. Law, 509 ; Ex parte St. Barbe, 11 Ves. 413 ; Ex parte Hesham,
1 Rose, 146 ; Ex parte Catesby, 2 Christ. Bankr. Law, 286.
8 Ex parte Williams, 3 Montagu, Deac. & De Gex, K. 433.
3 Ex parte Sillitoe, 1 Glyn & Jam. 374.
CH. XV.] DISSOLUTION — EIGHTS OF OREDITOES. 613
on a separate trade ; as they are both liable for the
same joint debts, the solvent partner is not entitled to
prove, under the commission against his copartner, a
debt for goods sold by his distinct house to the firm,
until the' joint creditors have been satisfied. It would
be otherwise in the case of a firm of A., B., C, and D.,
proving against the firm of A., B., C, and B. ; for the
former would not be liable for the joint debts of the
latter firm.^
§ 395. The subject of set-oflf in bankruptcy, as ap-
plicable both to separate debts and to joint debts,
might be here introduced and expounded. But as it
turns mainly on the positive provisions of the Statues
of Bankruptcy, as to mutual debts and credits, or on
the doctrines, adopted by Courts of Equity, and
founded upon the equities arising in particular cases,
it seems more appropriate for Commentaries of a more
eltended character. It may, however, be stated, that
at law, and in bankruptcy, and indeed in equity gen-
erally, there can be no set-oflf of joint debts against
separate debts, unless there be some special agreement
between the parties to that effect, or some equitable
circumstances, creating it in the particular case.^
§ 396. We have already seen, that in common
cases of a dissolution, it is competent for the partners
to agree between themselves, either originally by their
1 Ex parte Adams, 1 Rose, 305 ; Gow on Partn. ch. 5, § 3, p. 292, 293,
3d edit. ; Watson on Partn. ch. 5, p. 286 to 288, 2d edit. ; CoUyer on
Partn. B. 4, ch. 2, § 9, p. 664, 665, 2d edit.; Id. B. 4, ch. 2, § 10, p. 666
to 672; Id. p. 673 to 678.
2 CoUyer on Partn. B. 4, ch. 2, § 11, p. 678 to 685, 2d edit; 2 Story,
Eq. Jur. § 1430 to 1444 ; V7atson on Partn. ch. 5, p. 339 to 350, 2d edit. ;
Gow on Partn. ch. 3, § 1, p. 137 to 139, 3d edit.; Id. ch. 5, § 3, p. 331
to 340.
PABTlir. 52
614 PARTNERSHIP. [CH. XV.
articles of partnership, or by their arrangements at its
dissolution, that one partner may or shall take the
whole partnership property at a valuation ; and the
assignment thereof, when made hond fide in either way,
will be valid and obligatory upon the creditors.-' But
in cases of bankrtiptcy, the rule is otherwise ; for the
policy of the bankrupt laws intervenes, and prevents
any effect being given to any such stipulations or ar-
rangements. The assignees are entitled to the interest
of the bankrupt in his property,,whatever it may spe-
cifically be, at the moment of the act of bankruptcy.
And no agreetaent made between him and his part-
ners, in contemplation of bankruptcy, is permitted to
interfere with their rights. For, although the owner
•of property may generally, upon his own voluntary
alienation of that property, qualify the interest of his
alienee, by a condition to take effect upon the bank-
ruptcy of the latter ; yet it would defeat the very ob-
jects of the bankrupt laws, to allow a party to qualify
his own interest therein, while it remains his absolute
property, by a like condition, determining or control-
ling it in the event of his own bankruptcy, to the dis-
appointment, delay, or injury of his credi1?ors ; for
such an event, by mere operation of law, takes away
from him entirely the jus disponendi, and transfers it
to the assignees for the equal benefit of all his credi-
tors.^
I Ante, § 208, 358, 359, 372, 373.
Si Gow on Partn. ch. 5, ^ 3, p. 300, 301, 3d edit. ; Collyer on Partn. B.
2, ch. 2, § 2, p. 146, 2d edit. ; Wilson v. Greenwood, 1 Swanst.'R. 481. — I
have stated the doctrine positively in the text, deeming it the just result
of the reasoning in the authorities, whether the stipulation be in the origi-
nal articles of partnejrship, or be made afterwards. Mr. Gow and Mr.
Collyer speak of it as a matter open to doubt, where the stipulation is in
the original articles. In the case of Wilson v. Greenwood, (1 Swanst. R.
CH. XV.], DISSOLUTION EIGHTS OP OEEDITORS. 615
§ 397. Passing from this subject, let us, in the
next place, proceed to the consideration of another
474, 481, 482,) Lord Eldon said; "In this case, the first question is,
■whether, supposing the original deed had provided for the dissolution of
the partnership by bankruptcy, as it has provided for the dissolution by
other means, that provis?ion, would be good. I will not say, that it would
not ; but I have heard nothing to convince me that it would. From the
original deed, it is clear, that the intention of the parties was not, as the
defendants insist, to apply the special provision to the event of dissolu-
tion by bankruptpy. After providing for other cases, it expressly declares
that, in case of bankruptcy, the concerns are to be wound up in the same
way as if no special provision was made. On this agreement, the parties
proceed till the execution of another deed, which, in one sense, may be
justly said to be made in contemplation of bankruptcy, because it is ap-
plicable to the event of bankruptcy alone. But I have no doubt, from the
face of it, that it was, in a strict sense, in contemplation of bankruptcy ;
for it contains a recital, which cannot be believed by any one, who looks
at the original deed, that the parties to that deed intended the same pro-
vision in cases of bankruptcy and insolvency, as in the case of dissolution
from other causes. I go farther; the ineflScaey of the terms of the agree-
ment, as applied to bankruptcy, affords another proof, that the application
was not designed. In the event of dissolution by misconduct, the parties
were to name a valuer, and the property was to be divided. If the part-
nership was dissolved by the death of a partner, what was to be done ?
His executors or administrators were to name a valuer. The deed, then,
contemplating bankruptcy and insolvency, the provision for insolvency is
sufficient, because, while not yet become a bankrupt, the insolvent retains
all capacities of acting. But if he becomes bankrupt, it is impossible to
contend, that, under this clause, he is to name the persons who are to
value the interests of his assignees ; and no such authority is ^ven to his
assignees, for the word ' assigns' is not to be found in the deed. I have
no doubt, therefore, whether, on general principle, or on the construc-
tion of the deeds, that the law of this case is, that the partnership was
dissolved by bankruptcy ; and the property must be divided, as in the
ordinary event of dissolution without special provision. The conse-
quence is, that the assignees of the bankrupt partner are become, quoad
his interest, tenants in common with the solvent partner ; and the Court
must then apply the principle on which it proceeds in all cases, where
some members of a partnership seek to exclude others from that share to
which they are entitled, either in carrying on the concern, or in winding
it up, when it becomes necessary to sell the property, with all the advan-
tages relative to good-will." See also the Reporter's note,' 481, note (a) ;
Ante, § 207, 208.
616 PAETNEESHIP. [CH. XV.
subject of inquiry, -which constantly arises in bank-
ruptcy; and that is, What property, not strictly be-
longing to the bankrupt, but yet in his possession
and reputed ownership at the time of his bankruptcy,
will pass to his assignees, in opposition to the claims
of the real owner ? This inquiry is equally as appli-
cable to cases of property owned by partners, as it is
to property belonging to particular individuals. We
have already seen,-"- in what cases partnership pro-
perty, upon a dissolution of the partnership, may pass
by transmutation or conversion thereof to one or
more of the partners, or to the survivors or remaining
members of the firm. But the point here proposed
for consideration turns altogether upon the construc-
tion of a clause which was early introduced into the
English Statutes of Bankruptcy, and has continued
substantially in force down to the present day, through-
out aU the modifications which the system has suc-
cessively undergone. It was provided by the statute
of 21 James 1, (ch. 19, | 11,) that, if any bankrupt,
at the time of his bankruptcy, shall, by the consent
and permission of the true owner or proprietary, have
in his possession, order, or disposition, any goods or
chattels, of which he shall be the reputed owner, and
take upon him the sale, alteration, or disposition there-
of, as owner, the commissioners shall have power to
sell and dispose of the same, to and for the benefit
of the creditors, as fully as any other part of the es-
tate of the bankrupt.^
1 Ante, 5 338, 359, 372, 373, 396.
2 1 Cook's Batikr. Laws, [,60,] 4th edit. ; Watson on Partn. ch. 5, p. 272
to 274, 2d edit. The statute of 6 Geo. 4, ch. 19, § 72, substantially re-
enacts the same provision.
OH. XV.] DISSOLUTION EIGHTS OF CREDITORS. , 617
§ 39'8. The proYision thus made was doubtless,
designed more fully to enforce the doctrines of the
common law, and to aid in the suppression of frauds,
by preventing persons from giving an ostensible own-
ership of property to third persons, who might thereby
acquire a false and collusive credit, to the gross injury
of their creditors. To a limited extent, this remedial
justice might have been ordinarily obtained, either
at the common law, or through the interposition of
equity.^ But the statute has erected it into a positive
rule, in order to prevent cavil, and to operate by way
of preventive and admonitory justice.
§ 399. The general question, then, arises, When, and
under what circumstances, the bankrupt can be prop-
erly said to have the possession, order, or disposition
of any goods or chattels, or the reputed ownership
thereof, with the consent of the true owner ? It has
been well observed,^ that it is the principle of discoun-
tenancing /fictitious credit, and its concomitant frauds,
which the statute enforces. Indeed there can be no
other just ground, upon which one man's debts are to
be paid out of the property of another. In further-
ance of this principle it has uniformly been held, that
such a possession as is calculated to give a delusive
credit is a reputed possession, within the meaning of
the statute. "When, therefore, the fact of reputed own-
ership is settled, the application of the statute is easy j.
for, from the reputed ownership, false credit arises j
from that false credit arises the mischief; and to that
1 See 1 Story on Eq. Jur. § 388 to 394 ; 1 FonbL Eq. B. 1, eh. 3, § 4 ;
Com. Dig. Chancery, 4, 1. 3 ; Id. 4 W. 26 ; Storrs v. Barber, 6 John. Ch.
R. 165, 169, 172; Pichard v. Sears, 6 Adol. & ElliSj K. 474.
2 Gow on Partn. ch. 5, § 3, p. 272, 3d edit.
62*
618 PAETNERSHIP. [CH. XV.
mischief the remedy of the statute applies. But to
make the statute available to the creditors of the
party in whose visible possession the property has
been, that possession must continue up to the time of
the bankruptcy ; for, if withdrawn, lona fide, by the
owner, at any time, however short, before the bank-
ruptcy, the property cannot be reclaimed by. the as-
signees.^ But a removal made in contemplation of
bankruptcy being fraudulent, will not alter the posses-
sion in the consideration of law.^ And, to constitute
a fraud on the part of the true owner, it is necessary
that the property should be left in the order and dis-
position of the bankrupt, with his consent. Where
this is not the case, it would rather be to encourage
than to check fraud, if what had been surreptitiously
detained were to be divested from the innocent owner,
and transferred to the assignees of the bankrupt.^
§ 400. In general it may be stated, that the mere
fact, that the partnership property, after the dissolu-
tion of the partnership, remains in the possession of
one partner, who afterwards becomes bankrupt, will
not be sufficient, of itself, to make him, in the sense
of the statute, the reputed owner thereof; for this is
certainly in consonance with the rights of aU the part-
ners, as all and each of them are equally entitled to
the possession and custody thereof. The case must
go farther, and establish that the other partners have,
by their own acts, or contracts, or conduct, conferred
upon him the exclusive right, and order, and disposi-
1 Jones V. Dwyer, 15 East, E. 21 ; Ex parte Smith, 3 Madd. R. 63 ; S.
C. Buck, K. 149 ; Storer v. Hunter, 3 B. & C. 368.
8 Ex parte Smith, 3 Madd. E. 63.
8 Ex parte Eichardson, Buck, E. 488 ; Gow on Partn. oh. 5, § 3, p. 272,
3d edit.
CH. XV.] DISSOLUTION — RIGHTS OF CKEDITOES. 619-
tion thereof, beyond the purposes helonging to the
partnership. This results from the doctrine akeady
stated, that all the other partners, upon the bankruptcy
of any one of them, retain all their original rights and
interests in the partnership effects.^
§ 401. In cases of partnership, where the transfer
of the joint property from the retiring partners to the
continuing partners is not made a matter of contract,
it may be difficult to establish an actual consent to
any change in the right to the property as taking
place. But, although no actual consent can be proved j
yet for this purpose the acts and conduct of the par^
ties will warrant the presumption of an assent; and
this will be inferred, if, from the time of the dissolu-
tion down to the time of the bankruptcy, the retiring
partners renounce their equity of having the partner-
ship credits applied in discharge of the partnership
debts, and allow the continuing partners to deal as
they think fit with the property, and to act with the
world respecting it so as thereby to gain for them-
selves a false and delusive credit.^ A dissolution on
the eve of the retirement of a partner will not, of itself,
convert into separate property the joint estate left in
the possession of the partners continuing the business;
for such a possession is qualified, ^nd is clothed with a
trust to apply the property in discharge of the joint
debts,^ unless, indeed, the laches of the retiring part-
ner has been such as to suffer the joint property to
remain in the exclusive possession of the continuing
» Gow on Partn. ck 5, § 3, p. 267 to 269, 3d edit. ; Id. p. 271 to 278;
Id. p. 299 to 305 ; Holdemess v. Shackford, 8 Barn. & Cressw. 612.
2 See West v. Skip, 1 Ves. Sen. 242 ; Ex parte Ruffin, 6 Ves. 129.
3 Per Lord Eldon, Ex parte Williams, 11 Ves. 6.
620 PARTNEESmP. [CH. XV.
partners for such a length of time as falsely to give
them an appearance of substance.^ A fortiori, the sta-
tute will not apply to a case where the joint property
is wrongfully withheld by one partner, against whom a
bill in equity is filed for an account, and an injunction
to restrain him from disponing of it, pending which he
becomes a bankrupt.^ But if a new firm be consti-
tuted of some of the members of an old firm, either
with or without the addition of others, and the whole
of the stock in trade of the old firm be delivered over
to the new firm, and they be allowed to appear to the
world as apparent owners of it, and afterwards become
bankrupts; in such a case all the eiFects of the old
partnership, found in specie amongst the property
seized under the commission, will vest absolutely in
the assignees ; and though there be outstanding debts
of the former firm unsatisfied, these efiects,- so found in
specie, will not be considered as the joint estate of the
former firm, either for the benefit of the joint credit-
ors, or of the partners who have withdrawn from the
firm.®
1 Gow on Partn. ch. 5, § 3, p. 272, 273, 3d edit. ; West v. Skip, 1 Ves.
Sen. 242.
2 Gow on Partn. ch. 5, § 3, p. 273, 3d edit. ; West v. Skip, 1 Ves. Sen.
242.
3 Ex parte Euffin, 6 Ves. 129, and Ex parte Williams, 11 Ves. 3, 6 ;
Ex parte Fell, 10 Ves. 347 ; Gow on Partn. ch. 5, § 3, p. 272, 273, 3d
edit. — I have in this and the two following sections generally followed
the language of Mr. Gow, and he has illusteated the doctrine here stated
by the following cases : " Therefore, where upon the dissolution of a part-
nership between a father and his son, it was agreed that, until the son was
provided for, the father should allow him a third of the profits ; and the
father afterwards formed a partnership with a third person, and carried
into it the stock belonging to the former partnership ; on a commission of
bankruptcy being awarded against the father and son it was held, that
their joint property, having been permitted by the son to become the
CH. XV.] DISSOLUTION — RIGHTS OF CREDITORS. 621
§ 402. In cases of conditional transfers of the joint
estate by some to the other .partners, if the condition
is not performed before the bankruptcy, the nature of
the property is not changed by the simple force of the
contract. But in such cases, and in cases in which the
consideration for the transfer is not paid, the property
wiU still pass, as separate estate under the statute, if
from the time of the contract down to the date of the
bankruptcy,, the partners to whom it is assigned are
permitted by the ojhers to continue in the sole posses-
sion, and to carry on trade and acquire credit as sole
owners thereof. There can, indeed, under such circum-
stances, be no solid distinction between a permitted
possession under a contract, incomplete as regards the
visible property of the new partnership, it must, in the first instance, be
applied in satisfying the creditors of that partnership ; and that if after-,
wards any surplus remained, the share of the father in it would be his own
separate property, and, therefore, subject to the claims of his separate cre-
ditors. And again, on the dissolution of a partnership between A., B.,
and C, three persons, as distillers, one of them (to whom the property in
fact belonged) leased to C. and to one J. the distil-house and premises,
and the several stills, vats, and utensils of trade specified in a schedule,
as used by the former partnership ; and C. and J. were to carry on the
business on the premises, which they accordingly did for some time, but
afterwards became bankrupts ; whereupon a question was raised, whether
such stills, vats, and utensils, so continuing in the possession of C. and J.,
and used by them in their trade, in the same manner as by the former
partners, passed under the statute to the assignees, as b^ing in the posses-
sion, order, and disposition of the bankrupts at the time of their bank-
ruptcy, as reputed owners ; and it was held that the stills, which were
fixed to the freehold, did not pass to the assignees under the word goods
and chattels in the statute ; but that the vats, &c., which were not so fixed,
did pass to the assignees, as being left by the true owner in the possession,
order, and disposition (as it appeared to the eye of the world) of the
bankrupts, as reputed owners. So if a country partnership, consisting
of three partners, sell their goods in London, in the names of two of the
firm, the property in London will, it seems, be in the order and disposition
of the two." Ibid.
622 PARTNERSHIP. [CH. XT.
persons contracting, and one which is tolerated by the
parties independently of contract. The one must be as
productive of the mischief contemplated by the statute,
as the pther ; and both ought, therefore, to be held to
be within its provisions. It has consequently been con-
sidered, that an exclusive possession, derived under a
contract, which, as between the parties themselves, has
not been performed, is sufficient to operate a conver-
sion of the property, if the meaning of the transaction
was to transmute it, and possession follows accord-
ingly.^
§ 403. With respect to the description of property
affected by the statute, it is settled that no distinction
exists between debts due to the partnership and other
property ; for, notwithstanding debts are not assignable
at law, yet they are still within the scope of the sta-
tute.^ And where, upon the dissolution of a partner-
ship, debts have been assigned by some of the partners
to the others, although by the assignment the latter be-
1 Gow on Part. ch. 5, § 3, p. 274, 275, 3d edit. ; Ex parte Fell, 10 Ves.
348; Ex parte Williams, 11 Ves. 3, 6. — In Ex parte Eowlandson (1 Rose,
416, 419,) Lord Eldon said: "If one partner puts another into the sole
possession of the partnership estate and effects, and leaves them in his
sole order and disposition, giving him title under an instrument upon the
face of it giving title, it would be difficult to insist that he would have a
lien upon that property for the consideration money, against the separate
creditors of the other; considering, that he had by title, and by his own
act, left this property in the sole order and disposition of the other. Pre-
vious to the dissolution, the joint creditors had established no lien on this
property. They could only sue and take out execution, either jointly or
separately, against the joint effects or separate effects of their debtors. Till
they had actually matured their process into an execution, they had no
means of specifically attaching the partnership effects, and could only work
out their equity through the partner himself."
2 Ex parte Kuffin, 6 Ves. 128; Ex parte Williams, 11 Ves. 6 ; Horn-
blower V. Proud, 2 Barn. & A. 329 ; Ex parte Enderby, 2 Barn. &. Cress.
389.
CH. XV.] DISSOLUTION RIGHTS OF -CREDITORS. 623
f
come the" true owners of them ; yet they will remain in
the order and disposition of the partnership, and form
part of the joint estate, unless, prior to the bankruptcy,
notice of the assignment has been given to the debtors.^
It is true, that a partner stands in a different situation
from a stranger, to whom the debts might have been
assigned ; because in his character of partner, and in-
dependently of any assignment, he is personally com-
petent to receive and discharge them. But it is also
true, that, until notice be given to the debtors, the other
partners are equally competent to receive and give
acquittances for whatever may be due.^ Besides, the
partners, who receive the assignment without informing
the debtors of the transaction, would thereby enable the
others, if they were so disposed, fraudulently to obtain
a fictitious credit with the debtors ; and, therefore, so
long as notice is withheld from them, the order and
disposition of these debts must remain in the partner-
ship. Upon this principle it has been held, that debts
due to a partnership, which, upon a dissolution, are as-
signed by a retiring partner to the continuing partners,®
or debts, which, by agreement, are, on a dissolution, to
belong to one • of the partners,* continue in the order
and disposition of the partnership, and consequently'
form part of the joint estate, unless, previously to their
bankruptcy, the debtors are apprized by the assignment
or agreement. And it is insufficient in such cases to
notify the dissolution only ; for, unless express notice
' Ryal V. Eowles, 1 Ves. iSen. 349 ; S. C. 1 Atk. 165 ; Jones v. Gibbons,
9 Ves. 407 ; Ex parte Monro, Buci, K. 300.
2' Duff I). East India Company, 15 Ves. 213.
3 Ex parte Burton, 1 Glyn & Jam. 207.
*- Ex parte Usborne, 1 Glyn & Jam. 358.
624 • PARTNERSHIP. [CH. XV.
of the assignment be also given, the order and dispo-
sition will not be altered.-^ But the operation of the
statute, and any question respecting the transmutation
of the property, may, in all cases, be avoided, upon the
retirement of a partner, by his assigning to the remain-
ing partners all the effects in trust to pay the debts ;
because, then, notwithstanding there may not be a
subsisting joint possession, the property would continue
subject to the joint demands, and would not, by the
simple fact of possession, be converted into separate
estate.^
' Ex parte Harris, 1 Madd. 587. — In Ex parte TJsborne, (1 Glyn &
Jam. 358,) a notice, stating the dissolution of the partnership by mutua:!
agreement, and that all debts due to or from the concern would be received
and paid by one of the partners, was inserted in the gazette. But Sir
John Leach held such a notice ineffectual, and that the order and disposi-
tion of the debts owing by those debtors, who had not express notice of
the agreement, remained in the partnership.
2 Ex parte Fell, 10 Ves. 347 ; and see Ex parte Williams, 11 Ves. 6 ;
Ex parte Martin, 19 Ves. 491 ; S. C. 2 Rose, 331 ; Gow on Partn. oh. 5,
§ 3, p. 275, 276, 277, 3d edit. — The Ship Registry Acts have not affected
this question of reputed ownership at all, as those statutes relate to trans-
fers by the acts of the parties, and not to transfers by operation of law.
Mr. Gow on this subject says ; " The statute of James is not repealed,
and of course those sections of the late general bankrupt act, in which the
provisions in the statute of James has been embodied, are not rendered
inoperative as to shipping, by the Ship Register Acts ; for these statutes
relate to transfers made by the act of the party only, viz. from a former
owner to a new owner, and where the transfer is capable of being effec-
tuated in the ordinary way, by the mere operation of an instrument of
assignment from the one party to the other, and do not relate to transfers
deriving their effect by peculiar provision or operation of law, as assign-
ments by commissioners of bankrupt to assignees under the bankrupt laws
do, or Ijtles passing to executors or administrators in case of death. In
these cases a title may be transmitted without any of the forms required
by the statutes ; and as a title may be transmitted without these forms in
the case of bankruptcy generally, it may be so done in a case falling within
the scope and object of the statute of James. Therefore, where A., the
owner of a ship, duly assigned his interest in it to B., and B. became the
CH. XV.] DISSOLUTION BIGHTS OF CBEDITOES. 625
§ 404. Another question, however, still remains to
be considered under this head ; and that is, how the
statute, as to reputed ownership, affects dormant part-
ners. After some fluctuation of judicial opinion, the
doctrine is now finally settled that, in cases of dormant
partners, if the ostensible partners become bankrupt,
the whole partnership property is to be deemed to be
in their reputed ownership, and the dormant partner is
excluded from any right or title thereto, as against the
assignees in bankruptcy.^
§ 405. Hitherto we have been principally examining
questions arising upon a dissolution by bankruptcy, so
far as it affects the rights of creditors, either generally
or in case of reputed ownership of property. Let us
now look to some of the rights of the partners vder
sese, consequent upon such a dissolution. And here it
may be remarked that, generally, the partners are not
entitled, in any case, to come in competition with the
joint creditors upon the partnership funds, whatever
may be the rights and equities which would otherwise
attach between them against the bankrupt partner or
partners.^ So, where all the partners become bank-
registered owner; but by hia permission, A. continued to have the same
in bis possession, order, and disposition, until he became bankrupt, it was
holden, that A.'s assignees were entitled to the ship. And under a com-
mission of bankruptcy against two partners, ships registered in the name
of one of them, but in the ordering and disposition of both, form part of
the joint estate. On the same principle, a ship registered in the name of
two partners, but which is left m the order and disposition of one of them,
will pass to the assignees of the latter on his bankruptcy." See also Gow
on Partn. oh. 5, § 3, p. 279 ; Kirkley v. Hodgson, 1 Barn. & Cressw. 568.
1 Gow on Partn. oh. 5, § 3, p. 278, 279, 280, 3d edit. ; Id. p. 300, 301 ;
Kirkley v. Hodgson, 1 Barn. & Cressw. 588 ; Ex parte Enderby, 2 Barn.
& Cressw. 389 ; In re Todd, 1 De Gex, R. 134.
3 Gow on Partn. ch. 5, § 3, p. 293, 3d edit. ; Id. p. 321 ; CoUyer on
Partn. B. 4, ch. 2, § 9, p. 655 to 658, 2d edit. ; Ante, § 390 to 393 ; Ex
PARTN. 53
626 PARTNERSHIP. [CH. XV.
rupt, the general rule is, that the separate estate of
one partner shall not claim against the joint estate of
the partnership, in competition with the joint credit-
ors ; nor the joint estate agiainst the separate estate,
in competition with the separate creditors. And the
creditors are not, in either case, considered as satisfied,
until they have received the interest due upon their
debts respectively, as well as the principal.'
§ 406. In like manner, a solvent partner cahnof
prove his own separate debt against the separate
estate of the bankrupt partner, so as to come in com-
petition with the joint creditors of the partnership ;
for he is himself liable to all the joint creditors ; and
therefore he ought not, in equity, to be permitted to
take any of the funds of the bankrupt before all the
creditors, to whom he is liable, are duly paid.^ Neither
parte Kendall, 17 Ves. 521 ; Ex parte Adams, 1 Kose, E. 305 ; Ex parte
Keeve, 9 Ves. 588. In Ex parte St. Barbe, (11 Ves. 413, 414,) Lord
Eldon said : " There have been cases of a trade carried on by three, and
distinct trades by two, and by one of them ; where this sort of proof of a
debt, distinctly due from one partnership to the other, has been permitted
as between the partners, so engaged in different concerns. The course of
the authorities has been, that a joint trade may prove against a separate
trade ; but not a partner against a partner. In the case of Shakeshaft,
Stirrup, and Salisbury, Lord Thurlow went upon this distinction ; that
where there is only one partnership arranging different concerns, belong-
ing to them all, in different ways, for the benefit of different parts of that
joint concern, as in that instance, the three partners carrying on the busi-
ness of cotton manufacturers in Lancashire, and two of them in London,
there could not be proof by the three against the two. But if the trades
are perfectly distinct, then the three, as cotton manufacturers in Lanca-
shire, might be creditors upon the separate concern of the two, as iron-
mongers in London. I am inclined to abide by that case and Ex parte
Johns."
> CoUyer on Partn. B. 4, ch. 2, § 10, p. 665 to 678, 2d edit.; Ante,
§ 390 to 393.
2 Collyer on Partn. B. 4, ch. 2, § 9, p. 655, 2d edit. ; Ex parte Reeve,
9 Ves. 588, 589. .
CH. XV.] DISSOLUTION — EIGHTS OF OREDITOES. 627
can a solvent partner prove against the separate estate
of the bankrupt partner, in competition with the sepa-
rate creditors of the bankrupt, unless and until all the
joint creditors of the partnership are paid, or at least
unless and until the joint estate is fully indemnified
therefor J for if a dividend were reserved to him on
such proof, the joint creditors might he injured by
such solvent partner stopping, in transitu, the surplus
of the separate estate, which would otherwise be car-
ried over to the joint estate ; or the separate creditors
might be injured by their funds being stopped pro-
spectively, upon the faith of such partner being after-
wards able to pay the joint debts.^
1 CoUyer on Partn. B. 4, ch. 2, § 9, p. 655 to 658, 2d edit. ; Id. p. 660,
661, 662, 665. — In Ex parte Reeve, (9 Ves. 588, 589,) Lord Eldon said:
" All these cases Tvej-e very fully discussed by Lord Thurlow, hi the case
of Lodge and Fendall. Dr. Fendall was a creditor of the partnership of
himself and Lodge, for large sums advanced. They became bankrupts
immediately after the formation of the partnership ; and those advances
formed the joint estate to be divided. There was a struggle by Fendall
to be admitted a creditor for the amount of his advances, as against the
partnership. Lord Thurlow, after full consideration, was of opinion that
all the authorities establish this : that those who, being in partnership, are
themselves, or some of them, debtors to the creditors of every class, cannot
come in competition with the creditors. After their demands are liqui-
dated finally, the partners may be creditors upon each other ; biit not
before. The course in bankruptcy has been, to stop the proof at the date
of the commission, which is founded upon this ; that the debt to be proved
is the debt due before the commission, taking the commission to follow
rapidly upon the act of bankruptcy; which, however, is frequently not
the case. It is true, now,_a great deal of debt accrued after the bank-
ruptcy is paid under it ; for instance, all interest accrued, though after the
date of the commission, if the state of the effects allows it, upon a sort of
equitable principle, the interest being considered as a kind of adjunct or
shadow of the principal debt, which was due before the bankruptcy. It
is now, therefore, clearly settled, that where there is a partnership and
separate debts also, the partnership shall not be admitted a creditor upon
any individual, or any individual upon the partnership, until the creditors
of the individual and the creditors of the partnership are satisfied to the
628 PARTNERSHIP. [CH. XV.
§ 407. Subject, however, to. these exceptions in favor
of the joint creditors and separate creditors, and also
extent of 20s. in the pound, out of the respective estates ; also, that where
the separate creditors are paid 20s. in the pound, and there is a surplus,
that surplus shall not go immediately to pay interest to the separate cre-
ditors ; but shall go to make the joint creditors equal with them as to the
principal. No decision, however, has gone this length ; that, if both the
joint and the separate creditors are paid to the extent of 20s. in the pound,
upon the payment to that amount to the creditors of each class, a partner
shall not be admitted a creditor upon the partnership, or upon the indivi-
dual. But I cannot distinguish the cases ; for if the principle is, that
neither the partnership nor the individual debtor shall claim in competi-
tion with the creditors, and if the creditors are entitled to any interest, the
interest is as much a debt as the capital ; and that principle will prevent
either the partnership or the individual debtor ranking with the other cre-
ditors, until all their demand is satisfied ; which includes both the prin-
cipal and interest of their debts.'' See also Ex parte Moore, 2 Glyn &
Jam. K. 166. Mr. CoUyer on Partn. (p. 658, 659, 3d edit.) has on this
subject added : " But the general rule in question, like all other general
rules, is qualified in cases of necessity. Therefore, when the solvent part-
ner, without his own default, is unable to procure a discharge from every
joint creditor, — as, for instance, where one of the joint creditors is a
lunatic, — in such case, it seems he will be permitted to prove against the
separate estate, upon giving security for the debt which cannot be dis-
charged, and paying the residue of the joint debts. Ex parte Young,
3 Ves. & Beam. 33. There are some cases, also, where, notwithstanding
the retiring partner has not paid all the demands of the partnership, he
has been permitted to prove against the joint estate, on the ground' of the
joint creditors having' assented to the arrangements made between the
retiring and remaining partners, or being barred by length of time from
objecting to the retiring partner's proof. Thus, where a partnership
had been dissolved upon the terms of the retiring partner taking a
security from the remaining partner for the balance due to him, and the
remaining partner was treated by the joint creditors as their sole debtor,
until he afterwards became bankrupt; it was held that the retiring part-
ner might prove his debt against the separate estate of the bankrupt,
although some of the partnership debts were unpaid. Ex parte Graze-
brook, 2 D. & C. 186. In this case it may be remarked, that the retiring
partner had been a dormant partner. So, where upon the death of one
of three partners, his executors carried on the trade with the surviving
partners for a twelvemonth, and then dissolved the partnership, upon
•which occasion the two continuing partners gave the executors a bond, to
secure the balance due to them, and more than six years afterwards the
CH. XV.] DISSOLUTION — EIGHTS OF CREDITORS. 629
to that respecting reputed ownership, which has been
previously mentioned, the solvent partners retain their
full rightj power, and authority, over the partnership
property after bankruptcy, in the same manner and to
the same extent as if no bankruptcy of a particular
partner had occurred.-' Their Hen, also, remains in full
forcOj not only to have the partnership funds applied
to the discharge of the partnership debts and liabili-.
ties ; but also to the discharge of all the debts due by
the partnership to them, or any of them, as well as for
their own distributive shares in the surplus. Hence
they have a right to priority of payment of the debts
due by the bankrupt to the partnership, in preference
to his separate creditors ; and if the joint funds should
prove insufficient to discharge the debt, they have a
right to insist upon coming upon the separate estaite
of the bankrupt therefor, pari passu, with the separate
creditors.^ In such a case the debt is deemed, in
two became bankrupt; it was held that the executors had a right to prove
the amount of the bond against the joint estate of the two continuing
partners. Ex parte Hall, 3 Dea. 125. Again, where a person on the eve
of bankruptcy induces another, by fraudulent means, to become his part-
ner, and the latter advances capital to the concern, a case might be stated
where the latter would be allowed to ptove the amount of the capital so
advanced, pari passu with the separate creditors of the bankrupt. How-
ever, such proof will not be allowed where the person defrauded has held
himself out to the world as a partner, though only for a short time."
1 Ante, § 341 ; Gow on Partn. ch. 5, § 3, p. 800 to p. 305, 3d edit. ; Id.
p. 321, 322, 323 ; Watson on Partn. ch. 5, p. 302, 2d edit. ; Id. p. 314 to
p. 324; CoUyer on Partn. B. 4, ch. 2, § 9, p. 655, 2d edit,; Id. p. 661,
662.
2 Gow on Partn. ch. 5, § 3, p. 321, 322, 323, 3*d edit. ; Ex- parte Terrell,
1 Buck, R. 345 ; Collyer on Partn. B. 4, ch. 2, § 9, p. 655, 656, 2d edit. }.
Id. p. 661, 662 ; Pereday v. Wightwick, 1 Tamlyn, K. 850 ; Ex parte
Reeve, 9 Ves. 588 ; Ex parte Drake, cited 1 Atk. 225 ; Taylor v. Fields^
4 Ves. R. 390 ; S. C. 15 Ves. 559, n. ; Holderness v, Shaokels, 8 Barn. &
Cressw. 612.
53*
630
PARTNERSHIP. CH. XV.]
equity, a separate debt of the bankrupt, secured also
by a lien on the joint fund.-^
§ 408. In cases of this sort there is no difference,
whether the partnership is general or is only for a
single adventure ; or, indeed, whether the parties are
strictly to be treated as partners or as part-owners, if
in the particular adventure there is, either by contract,
or by usage, or by custom, a lien of the co-adventurers
upon the property engaged therein, and the produce
thereof, for the proportion of the outfit and expenses
incurred by one or more of them, for the common
benefit.^ In every such case, the lien of the other
co-adventurers thereon wUl be deemed to include all
such outfits and expenses, as well as their own shares
in the adventure.^ Hence, where the part-owners of a
ship were engaged in the whale fishery, and the usual
mode of managing the- cargo in such cases was, that,
on the arrival of the vessel at the homeward port, the
whalebone was taken into the possession of the ship's
husband, and sold by him, and the proceeds were
applied towards the discharge of the expenses of the
ship ; and the blubber was deposited in a warehouse
belonging to one of the owners, but rented by all the
owners of the ship ; and the oil ■ produced from it was
put into casks, each owner's share being weighed out,
and placed separately in the warehouse, in casks,
marked with his initials; and, after the division, the
practice was for the warehouseman to deliver to the
order of each part-owner his share of the oil, unless
1 Many cases illustrative of this doctrine of the text -will be found stated
in Gow on Partn. ch. 5, § 8, p. 321 to p. 327, 3d edit.
2 Gow on Partn. ch. 5, § 3, p. 303, 304, 3d edit.
3 Ibid.
CH. XV.] DISSOLUTION — EIGHTS OF CREDITORS. 631
notice was given by the ship's husband that the ovrn-
er's share of the disbursements had not been paid ;
and, in that case, the warehouseinan was accustomed
to detain the oil until the demand had been satisfied ;
it was held that the other co-adventurers had a lien,
under such circumstances, upon all the undelivered oil
in the possession of the warehouseman, for the unpaid
disbursements ; that the assignees of the owner, who
had become bankrupt, took the same oil subject to that
lien, and that the lien was not divested by the separa-
tion of the share of the bankrupt, and placing it in the
casks marked with his name.^
' Holderness v. Shackels, 8 Barn. & Cressw. 612. Mr. Justice Bayley,
in delivering his opinion in this case, fully expounded the general doc-
trine. " Where there is (said he) a joint adventure, which produces cer-
tain goods, the proper course is, first to deduct all the expenses which have
been incurred in order to obtain those goods, and th6n to divide the resi-
due among the shareholders, in proportion to the shares to which each is
entitled respectively. In this case the joint adventurers obtained a quan-
tity of oil in bulk. No partner, or representative of a partner, had a right
to his aliquot part of that oil, until he has paid his share of the expense of
procuring it. That will be the case, whether the shareholder has become
a bankrupt or continues solvent. If he continues solvent, he may pay his
share of the outfit and of the expense. If he does not pay it in money,
the other part-owners have a right to see that an aliquot, part of what has
been gained in the adventure be retained, so as to pay that share of the
outfit which he ought to pay. In this case Foxton became bankrupt, and
having become bankrupt, if he could have paid in money his share of the
outfit there would have been twenty-nine tons of oil coming to him. He
could not pay; and, therefore, as it seems to me the justice and the law of
the case is, that his share of the expense should be paid out of the
twenty-nine tons, and that, until he has paid his share of the expense, he
cannot claim that quantity. It has been said that there has, in this case,
been a delivery, and that, in consequence of that delivery^ the rights of
Foxton and of his assignees are different from what they otherwise would
have been. But it seems to me that there, has not been a perfect delivery.
It would have been perfect if the other part-owners had been dispossessed
of the oil. That has not been done. The property still remained in the
warehouse, and was the joint property of all. A part only has been
632 PARTNERSHIP. [CH. XV.
§ 409. These seem to be the most material consider-
ations, respecting the eJBfects and consequences of the
dissolution of a partnership by bankruptcy, which are
important to be brought before the reader, in order to
explain and illustrate the general distinction between
the case of a dissolution by bankruptcy, and other cases
of dissolution. A more minute inquiry into the various
details of the system, would occupy a large space, alto-
gether disproportionate to its relative usefulness in an
elementary work of this nature, and serve to perplex
and obscure what might, otherwise, be justly applicable
to the systems of bankruptcy and insolvency in other
countries, which, differ in some particulars from that of
removed. The removal .of that part does not vary the right as to the resi-
due. It is clear that the assignees cannot recover the twenty-nine tons
before they pay Foxton's share of the expense. The other part-owners
might say, there are twenty-nine tons allotted to you ; you may take
possession of all to which you will be entitled, but you must first pay your
share of the expense ; nine tons will be sufficient for that purpose ; you
may, therefore, take away twenty tons. The right of the other part-owners
is not varied by their having allowed thfe bankrupt to take away twenty
tons. That being so, the plaintiffs are not entitled to recover. It i^s been
urged that there has, in ^his case, been a change of possession, by reason
of Locking's having debited the bankrupt in account, with a portion of
the rent. But that portion of the rent must have been paid by the bank-
rupt before he took away the oil, in specie ; or it might have been deducted
out of his share of the produce, if he compelled the other shareholders to
sell, in order to pay his share of the expense. The usage being for the
part-owners to detain the oil, until each part-owner's share of the expense
has been paid, it seems to me that the fact of debiting the party with ware-
house rent can have no effect. I think, therefore, that the plaintiffs have
not made out their right to the residue of the oil." The part-owners of
the ship would be deemed partners in this adventure, (although not in the
ship itself,) as sharing the net profits of the adventure, upon the grounds
suggested in the preceding sections as to joint adventurers, and sharing
the net profits. Ante, § 27, 34, 39,40, 58. See also Mr. Baron's Parke's
Remarks in Pearson v. Skelton, 1 Tyrwh. & Grang. R. 848 ; S. C. 1 Mees.
& Welsb. 504.
CH. XV.] DISSOLUTION — BIGHTS OF CREDITORS. 633
England. And, here, these Commentaries, so far as they
respect the subject of Partnership, might be concluded ;
for it is not within the scope thereof to examine at large
the nature and extent of the remedies by or against
partners, either at the common law, or in equity,
whether they respect the government, or mere private
individuals. Those topics properly belong to a Treatise
of a very different character, where the principles of
pleading, in its most general sense, are to be brought
under review, and expounded with all their abstruse
and intricate learning.
§ 410. The subject, however, of Partownership in
goods and chattels, as contradistinguished from Part-
nership, has come incidentally under discussion in
several parts of the present Commentaries;^ and it
has been commonly thought, from its close analogy
to partnership, that a brief exposition of the general
principles applicable thereto is peculiarly appropriate
in such a connection. Pothier has, accordingly,
thought it worthy to be separately discussed in an
Appendix to his Treatise on Partnership. He con-
sijiers every community of property, or, as we should
call it, every tenancy in common of property, not a
partnership, or affected by any repugnant convention,
to be a kind of g'Mas^contract, or g'ltas^-partnership.;
whether it be a universal community, or a community
of particular things. And he illustrates the. subject
by examples, which, although perfectly accurate in
the foreign and Roman law, where there may be a
title by descent to every species of property, real as
' Ante, § 89, 90.
634 PAETNEKSHIP. [CH. XV.
well as personal, are not so striking in our law; to
wit, by cases of a community of property (biens) under
a succession or descent to many heirs, and of legacies
bequeathed jointly to many legatees.^ He states the
distinction between such a community of interest in
property and partnership, as principally consisting
in these circumstances, that partnership is founded
necessarily in the voluntary consent of the parties,
and takes place by and under one and the same title ;
whereas, in other cases of mere community of interest,
these ingredients are not essential. Certainly, they
are not. But they may, (as Pothier admits,) never-
theless co-exist in the latter cases ;^ and, therefore,
they do not seem to constitute, philosophically or log-
ically, an appropriate distinction. Thus, for example,
two persons may agree to purchase a ship together in
equal moieties, and to hold the same as tenants in
common; and they may take the ship at the same
time by the same title deed.^ The true distinction
seems to be, that there is no community of interest in
the entirety of the property in the latter cases ;
whereas, in partnership, there always is such a com-
munity of interest, founded upon the positive consent
of the parties.*
§ 411. Following, therefore, the example of Pothier,
as well as that of some of the most distinguished ele-
mentary writers on Partnership at the common law,
who have in the like manner discussed in supplementary
1 Pothier, de Societd, u. 2, 3 ; Id. App. n. 181 to ,183 ; Ante, § 3, 4.'
8 Pothier, de Society, n. 183.
3 Ante, § 3, 4.
* Ante, 89, 90, 91 ; Gow on Partn. ch, 2, § 2, p. 32, 3d edit.
CH. XV.] DISSOLUTION, RIGHTS OF CREDITORS. 635
tracts the leading outlines of this branch of the law/
the present work will be concluded with a chapter
devoted to the same purpose.
' Collyer on Partn. B. 5, ch. 4, p. 793, 2d edit.; Watson on Partn. ch.
4, p. 227, 2d edit. ; 2 Bell, Comnl. B. 7, ch. 4, p. 655, &o., 5th edit.
636 PARTNERSHIP. [CH. XVI.
CHAPTER XVI.
PARTOWNEES — RIGHTS, POWERS, AND LIABILITIES OF.
I 412. We have already seen, that persons may
become partowners (or, as Pothier denominates them,
g-was^-partners, Quasi-Associes,)^ of movable or per-
sonal property, as well as of real estate, without being
partners.^ As to partownership in real estate, not
held as partnership property or assets, it does not
properly fall within the scope of the present Commen-
taries • but it belongs rather to a Treatise, which is to
unfold the general rights incident and appertaining to
real property, in which the rights of persons holding
real estate in joint-tenancy, in coparcenary, and in
tenancy in common, are discussed and distinguished.
A very succinct, but at the same time an accurate
account of that subject, will be found in the elegant
Commentaries of Sir William Blackstone.^ What is
proposed to be considered in the present chapter, will
simply relate to partownership in movable or personal
property.
§ 413. The general distinctions between joint tenan-
cy, tenancy in common, and partnership, have already
been sufficiently pointed out in the preceding pages ; *
and, therefore, need not again be here adverted to.
Movable or personal property may be held in joint-
1 Pothier, de Societfe, App. n. 184, 185, 186.
3 Ante, § 3 ; Id. § 89 to 94.
3 2 Black. .Comm. p. 178 to 194.
* Ante, § 89 to 91 ; Id. § 410.
CH. XVI.] RIGHTS AND INTERESTS OF PART-OWNERS. 637
tenancy, which, of course, gives the jus dccrescendi, or
right of survivorship, of the whole property to the sur-
vivor, unless the joint-tenancy is severed in the life-
time of the parties ; or it may be held in tenancy in
common, which gives to each tenant an undivided, but,
at the same time, a distinct and independent interest
therein, which do^s not pass to the survivor, but belongs
to the personal representatives of the party upon his
decease.-^ But there can, strictly speaking, be no estate
in coparcenery of movable or personal property at the
common law ; because the latter title arises only by
descent ; and, at the common law, there can be no
descent of such property.^
§ 414. In general, the rights, duties, obligations,
authorities, and liabilities of part-owners are the same,
in relation to every kind of personal property ; and,
therefore, whatever is affirmed in relation to one, will
apply to aU others, unless in cases where, from the
peculiar nature and uses of a particular species of such
property, or the peculiar customs and usages apper-
taining thereto, a different rule arises, by implication
of law, to govern or affect it. Thus, for example, if
two persons are tenants in common of a horse, or other
personal chattel, each has an equal right to the posses-
sion and use thereof; ^ and each can sell only his own
undivided share thereof.* If one tenant in common
takes exclusive possession of a personal chattel, refus-
ing to the other any possession or use thereof, the
' 2 Black. Comm. 399 ; Ante, § 89.
s 2 Black. Comm. p. 399.
3 Co. Litt. 200, a ; 3 Kent, Comm. Lect. 45, p. 153, 4th edit.
* CoUyer on Partn. B. 5, oh. 4, § 4, p.. 811, 2d edit. ; Abbott on Shipp.
B. 1, ch. 1, § 2, p. 3, 5th edit. 1829 ; 3 Kent, Comm. Lect. 45, p. 153, 154,
4th edit.
PARTN. 54
638 PARTNERSHIP. [OH. XVI.
latter has no remedy whatsoever by action; but he
may take the chattel, if he can find it, from him who
hath done him the wrong.^ In relation to expenses,
it may be stated that neither of such owners has
a right to.inc;ur any expense thereon, which shall
bind the other to contribution therefor, without some
proof of an express or implied authority therefor, even
when the expenses are absolutely indispensable for
the due preservation thereof This is unquestionably
true at the common law, in the case of inanimate or
dead chattels. But, probably, in the case of a tenancy
in common of a horse, or other animal, in the absence
of all controlling circumstances, a presumption would
be sustained, that the necessary expenses of the keep
thereof were to be borne by the mutual contribu-
tions of both, from the very nature of the chattel, and
the mutual use and benefit intended to be derived
therefrom by the tenants in common. However, if a
positive or implied prohibition were shown, the same
rule would prevail as in the ordinary cases of dead
chattels.
§ 415. But the most useful as well as the most
various illustrations of this subject, may be -derived
from a class of chattels constantly found engaged in
commerce and navigation, that is to say, ships j the
fitting out and the employment of which have given
rise to many important questions ; and, therefore, the
doctrines applicable to ships seem especially to require
a full exposition in this place. In our subsequent
inquiries, the main topics discussed will be the rights,
powers, duties, obligations, and liabilities belonging to
1 Co. Litt. § 323, p. 199 b, p. 200 a.
CH. xn.] RIGHTS AND INTEEESTS OF PAET-OWNERS. 639
part-owners of ships, as well mter sese, as in respect to
third persons.
§ 416. Ships are strictly and technically denomin-
ated chattels, or personal property, at the common law,
although they are distinguishable from most other
kinds of personal property by the peculiar solemnities
which belong to the mode in which the title thereto
is ordinarily acquired, transferred, and made suscepti-
ble of pledge, lien, or mortgage. Ordinarily, it is well
known that the title to personal goods and chattels
will pass by mere delivery and change of possession.
But it is not generally so in respect to the title to
ships. In most, if not in all, commercial countries,
the title thereto is now usually acquired, and trans-
ferred, and evidenced by written documents ; ^ and
1 Whether a delivery of a ship by parol, without any bill of sale or
other written instrument of transfer, be sufficient to pass a good title to
the ship, has been thought not quite settled in our law. It is true that a
ship is a mere personal Chattel, and personal chattels ordinarily may pass
by delivery only, without any written evidence of contract or title. But
the text shows that, from very early times, a different course has been
pursued in respect to ships ; and if the universal maritime usage has been
to evidence a transfer of ships by written documents, that usage would
a&eta, prima facie, to form apart of our municipal law, — the law mer-
chant being a part of the common law. There is a dictum in the case of
Lamb v. Durant, (12 Mass. R. 54,) in which it is declared that ships may
pass by delivery only, as well as any other chattel, so far as respects the
property of the vessel. And a like expression fell from the court in lag-
gard V. Loring, 16 Mass. B. 336. But in neither of these cases was the
point directly before the Court. On the other hand, there is no case in
the English Jurisprudence in which it has been decided that a transfer by
parol is sufficient to pass the title. The point was made in Bolleston v.
Hibbert, (3 Term R. 406,) by counsel ; and Lord Kenyon then said : " It
was first contended, that it was not necessary that the property in a ship
should pass by a written instrument. On that point I give no opinion,
because it is not necessary." This language shows that no such point was,
at that time, deemed settled in the common law ; otherwise it would at
once have been recognized. Lord Stowell, on the other hand, in the case
640 PAETNEKSHIP. [CH. XVI.
statute enactments in those countries create many
regulations,, respecting the mode of acquiring, and
transferring, and evidencing that title, as well for
municipal purposes and policy, as for the due ascer-
tainment and proof of the national character of the
ship, and its right to protection, and privileges upon
the ocean.-'
of The Sisters, (5 Eob. K. 155,) manifestly shows his own opinion to be,
that a bill of sale is necessary. His words are too remarkable to be omit-
ted. " It has been contended in argument, (says he,) that the eflfect of a
bill of sale alone would not be material, because this was a foreign ship,
in respect to which it might not be requisite that it should pass by a bill
of sale. It is said that the agreements to be found in these letters, (i. e.
in that case,) and the actual delivery under it, would be sufficient to
establish the equitable title ; and a reference has been made on this sub-
ject to some opinions at common law, which are said to have been given
in favor of such a title. The opinions of gentlemen of that bar must
undoubtedly be entitled to entire respect, on a question of municipal law.
But this is a question of a more general nature, arising out of a system
of more general law ; out of the universal maritime law, which consti-
tutes a part of the professional learning of this Court and its practisera.
According to the ideas which I have always entertained on this question,"
a bill of sale is the proper title to which the maritime Courts of all coun-
tries r would look. It is the universal insti-ument of transfers of ships in
the usage of all maritime countries ; and, in no degree, a peculiar title
deed or conveyance known only to the law of England. It is "what the
maritime law expects ; what the Court of Admiralty would, in its ordinary
practice, require ; and what the legislature of this country has now made
absolutely necessary, with regard to British subjects, by the regulations of
the statute law." In Ex parte Halket, (19 Ves. 474,) Lord Chancellor
Eldon said : " It is laid down that the ship may be bound by bill of sale,
but it cannot be by parol." Mr. Jacobsen, in his Sea-Laws, (B. 1, ch. 2,
p. 17, 21,) manifestly considers a bill of sale indispensable, by maritime
usage, to pass the title. In the case of Ohl v. The Eagle Insurance Com-
pany, (Cir. Ct. U. States at Boston, May Term, 1827, 4 Mason, R, 172 ;
S. C. Id. 890,) the question underwent considerable discussion. See also
Atkinson v. Maling, 2 Term R. 462, 466 ; Sutton v. Back, 2 Taunt. R.
301, and particularly the argument of the defendant's counsel, p. 305;
Abbott on Shipp. Ft. 1, ch. 1, § 5, p. 12 ; Zouch on Admiralty Jurisdic-
tion, V. p. 103.
1 Abbott on Shipp. Pt. 1, ch. 1, § 1, p. 1, 5th edit. ; Id. ch. 2, § 1, p. 23 ;
CH. XVI.] EIGHTS AND INTERESTS OF PART-OWNEES. 641
§ 417. Property in a ship may be acquired by two
or more persons, either by building it at their own
expense, or by the purchase of a part thereof of the
sole owner, or by a joint purchase of the whole of
another person.^ But, whether acquired by the joint
building, or by a part purchase, or by a joint purchase,
the parties, in the absence of all positive stipulations
to the contrary, become entitled thereto, as tenants in
common and not as joint-tenants.^ In this respect, it
will make no difference, whether the title is acquired at
one and the same time, by and under one and the same
instrument, or whether it is acquired at different times,
and under different instruments.^ This is a natural, if
1 Valin, Comm. Liv. 1, tit. 14, art. 1, p. 340, 341 ; Id. Liv. 2, tit. 10, art.
1, p. 601, 602. — The present British Ship Registry Act of 3 and 4 Wil-
liam 4, ch. 55, -will be found at large in the Appendix to Mr. Sergeant
Shee's very valuable edition of Lord Tenterden's Treatise on Shipping ;
and the nature and objects and construction of the various clauses of the
old Act will be found in Lord Tenterden's Text, Pt. 1, ch. 2, p. 47 to 83,
London edit. 1840. The American Ship Registry Acts will be found in
the Appendix to the American edition of Abbott on Shipping, (1829) ;
and the nature, objects, and construction of the various clauses thereof, in
the notes to chapter second of the text to that edition, from p. 23 to 68.
See also 3 Kent, Comm. Lect. 45, p. 139 to 150, 4th edit. One of the
most prominent differences between the British and the American system
is, or at least was, that, by the former, no title could be acquired or trans-
ferred except in the manner prescribed by the Registry Act ; but, in the
latter, the transfer may be good and valid in law, although the requisites
of the Registry Act are not complied with. But then, by such non-com-
pliance, the ship will lose her American character and privileges as a regis-
tered ship. It is not within the design of these Commentaries to go into
any details on this subject. They will properly find a place in a work on
the Law of Shipping and Navigation.
1 Abbott on Shipp. Pt. 1, ch. 1, p. 1, § 1 , 5th edit. ; Jacobsen's Sea Laws,
by Prick, ch. 3, p. 36, 37, edit. 1818.
a Abbott on Shipp. Pt. 1, ch. 3, § 1, p. 88, 5th edit.; Id. § 9, p. 79, 5th
Amer. edit. 1829, note (1) ; Abbott on Shipp. by Shee, Pt. 1, ch. 3, § 5,
p. 96, 6th edit. 1840; Macy v. DeWolf, 3 Wood: & Min. 193.
3 Collyer on Partn. B. 5, ch. 4, p. 793, 2d edit jWoddington v. Hallet,
54*
642 PARTNERSHIP. [CH. XVI.
not a necessary result of the doctrine, that the jus
accrescendi has no existence among merchants, or in the
business of commerce and navigation. A different
doctrine, which should introduce into the maritime law
the narrow doctrine of the common law, as to joint-
tenancy and the right of survivorship, would be fatal
to the interests of commerce, and overthrow the plain
dictates of public policy. The whole course of com-
mercial usage and opinion has settled the doctrine
the other way; and, accordingly, upon the death of
one of the partowners, his executors and administrators
become tenants in common of the ship, with the sur-
vivors.^ Of course, the general rule of law, as to the
I Ves. 497 ; 3 Kent, Comm. Lect. 45, p. 151, 4th edit. ; NicoU v. Mumford,
4 John. Ch. K. 522; Watson on Partn. eh. 1, p. 54; Id. ch. 2, p. 67;
Id. 91 ; Ex parte Young, 2 Ves. & Beam. 242, 243. Jaoobaen'a Sea Laws,
by Frick, ch. 3, p. 36, 37, edit. 1818.
1 Abbott on Shipp. Ft. 1, ch. 1, §. 1, p. 1 ; Id. ch. 3, § 1 ; NieoU v.
Mumford, 4 John. Ch. R. 522 ; S. C. 20 John. E. 611 ; Dunham v. Jarvis,
8 Barbour, 94. — In the 5th London edition of Abbott on Shipping, Ft. 1,
ch. 3, § 1, the following note (a) occurs. " This is the most usual practice.
If the interests are not severed and distinguished in this way, but the en-
tire ship is granted to a number of persons generally, it is apprehended
they become joint tenants at law, and that .the rule Jus accrescendi inter
mercatores locum non habet, which is applicable to a ship, is to be enforced
only in a Court of Equity." To which the American Editor (1829) has
subjoined the following comment. " This is not a note of the original
author, but of his English editor. The point stated in it seems new, and
is apparently contrary to what is laid down in Watson on Fartnership,
where he seems to consider the rule, as to the Jus accrescendi, not appli-
cable either to partnerships generally, or to^ownership of vessels in shares,
but as an exception created by the law merchant, and necessary for the
advancement of commerce. In chapter 1, p. 54, he says ; ' K several
either build or purchase a ship, they are partowners or partners as to this
concern.' And again, in chapter 2, p. 67 ; ' There is no diflference in the
interest of partners in goods tq.be disposed of in the course of trade, and
in a chattel, the keeping and employment of which constitute the object
of the partnership. TJhe partowners of a ship are tenants in common
CH. XVI.] EIGHTS AND INTERESTS OF PART-OWNERS. 643
rights of tenants in common, prevails in regard to ships,
that each partowner can sell only his own share there-
of; -^ whereas, in cases of partnership, (although not in
cases of joint-tenancy,) any one partner can* sell the
entirety of the.ship.^
§ 418. It is obvious, that a personal chattel, vested
in several distinct proprietors, cannot be advantage-
ously possessed or enjoyed, unless by common consent
■with each other of their respective interests.' He afterwards says, ifl
chapter 2, p. 91, that a partowner of a ship can only dispose of his own
share, and not of that of his co-owners, even if it be partnership property.
The case of The King v. Collector of the Customs, (2 M. & Selw. 223,)
proceeds on the principle, that the same rule, as to non-survivorship, exists
as to property in ships, as in common partnership property. No allusion
was there made as to the necessity of a suit in equity by the representa-
tive of the deceased in any case ; a;nd the particular shares of each party
in the ship are not stated or referred to as material facts. In America it
has not been unusual to omit any specificatipn of the shares of each part-
owner, both in the register and bill of sale ; and it has never been yet
decided, that such an omission matje the parties joint-tenants with benefit
of survivorship. Mr. CoUyer entertains the like opinion with the American
editor. CoUyer on Partn. B. 5, ch. 4, p. 793, 2d edit. It may be added
that this is now tHfe general understanding of the doctrine in America.
3 Kent, Comm. Lect. 43, p. 40, 4th edit. ; Id. Lect. 45, p. 151. In Ohl v.
Eagle Ins. Co. (Circuit Court, Oct. Term, 1826, May Term, 1827, S. C.
4 Mason, R. 172, 309,) the Court thought that if no other distinct shares
appeared in the register or bill of sale, the parties must, in the absenoe.of all
other proof, he presumed to hold in equal moieties. See also. In the matter
of Blanshard, 2 Barn. & Cresw. 244 ; Ex parte Young, 2 Ves. & Beam. R.
242; NicoU v. Mumford, 4 John. Ch. R. 522, S. C. ; 20 John. R. 611,
and 615, note."
1 Hopkins v. Forsyth, 2 Harris, 34. Case of a steamboat.
2 Abbott on Shipp. Pt. 1, ch. 1, § 2, p. 3, 5th edit. ; Ante, § 89, 90, 91 ;
2 Bell, Comm. B. 7, ch. 4, p. 665, 5th edit. ; CoUyer on Partn. B. 5, ch. 4,
§ 4, p. 811, 2d edit.; Jacobsen's Sea Laws, by Frick, ch. 3, p.-36, 37, edit.
1818. — Mr. Chancellor Kent (3 Kent, Comm. Lect. 154, p. 54, 4th edit.)
has well stated the distinction between partownership in ships and partner-
ship in ships. He says ; " The cases recognize the clear and settled dis-
tinction between partowners and partners. Partownership is but a tenancy
in common, and a person who has only a part interest in a ship, is generally
644 PARTNERSHIP. [CH. XVI.
and agreement among them all.^ For, as each has an
equal title to the possession and use thereof, no one
can oust the others of that possession or use ; and, when
once a skuggle or controversy exists among them for
the accomplishment of purposes adverse to each other,
the mischief must he immediate to the interest of
some, and perhaps ultimately ruinous to that of
all. This remark applies with peculiar force to ships,
which (as has been quaintly, but truly said) were
"originally invented for use and profit, not for
pleasure or delight ; to plough the sea, not to lie by
the walls." ^ Hence, while the possession, use, and
employment oT other personal chattels have been
generally left to the free and unrestricted discretion of
the proprietors thereof, and their own sense of the
a partowner, and not a joint tenant or partner. As partowner he has
only a disposing power over his own interest in the ship, and he can convey
no greater title. But there may be a partnership, as well as a co-tenancy,
in a vessel ; and, in that case, one partowner, in the character of partner,
may sell the whole vessel ; and he has such an implied authority over the
whole partnership effects, as we have already seen. The vendee in a case
free from fraud, will have an indefeasible title to the whole ship. When
a person is to be considered as a partowner, or as a partner, in a ship,
depends upon circumstances. The former is the general relation between
ship-owners, and the latter the exception, and requires to be especially
shown. But as the law presumes, that the common possessors of a valuable
chattel will and desire whatever is necessary to the preservation and
profitable employment of the common property, partowners, on the spot,
have an implied authority from the absent partowners, to order for the
common concern whatever is necessary for the preservation and proper
employment of the ship. They are analogous to partners, and liable as
such for necessary repairs and stores ordered by one of themselves ; and
this is the principle and limit of the liability of partowners."
1 Abbott on Shipp. Pt. 1, ch. 3, § 2, p. 68, 5th edit.
2 MoUey, B. 2, ch. 1, § 2; Godolphin, Adm. Jurisd. Introd. p. 13;
The AppoUo, 1 Hagg. Adm. B. 306, 312 ; 3 Kent, Comm. Lect. 45, p. 151,
152, 4th edit.
CH. XVI.] RIGHTS AND INTERESTS OF PART-OWNERS. 645
necessity of mutual cooperation and forbearance for
their mutual benefit, it has been the policy of
maritime nations, from a very early period, to provide
regulations respecting the joint ownership of ships in
order to prevent the obstinacy of one or more proprie-
tors from interfering with the just rights and interests
of the rest, as well as to promote the general advance-
ment of commerce and navigation, and to add to the
resources of national wealth and national power.
Hence in cases of ships, almost all maritime nations,
in modern times, have provided regulations, by which
some of the partowners of the ship shall be at liberty,
notwithstanding the dissent of others," to employ it
in trade and navigation, for their own profit, and at
their own expense and risk. Of course, if all are
agreed, and all consent, the employment and the
expenses and the profits are to be on the joint account
and for the joint benefit. In such cases, it is not un-
usual for all the owners, by common consent, or a fixed
agreement among themselves, to appoint an agent (who
may be either a partowner, or a stranger) to super-
intend the management and concerns of the ship, who,
(as has been justly said,) by a very intelligible figure
of speech, is called the ship's husband, and who directs
the repairs, appoints the oflS.cers and mariners, and
generally conducts all the affairs and arrangements for
the due employment of the ship in commerce and
navigation.-^
1 Abbott on Shipp. Ft. 1, eh. 3, § 2, p. 68, 5th edit.; Card v. Hope, 2
Barn. & Cressw. 661 ; CoUyer on Partn. B. 5, ch. 4, § 4, p 810, 2d edit. ;
3 Kent, Comm. Lect. 45, p. 151, 156, 4th edit. ; 1 Bell, Comm. B. 3, Ft. 1,
ch. 4, § 2, p. 503, 504, 5th edit. ; Jacobsen's Sea Laws, hy Frick, ch. 3, p.
38, 39, edit. 1818. — Mr. QoUyer on this subject says ; " In order to admin-
646 PARTNERSHIP. [CH. XVL
§ 419. It follows, of course, that wherever the ship
is reasonably repaired, or necessary expenses are in-
curred, by the consent of all the owners, for the com-
mon benefit, each partowner is bound to contribute
his share thereof; and, if the whole has been paid by
one partowner, he has a right at law to recover their
several contributory shares from each of the others.^
Now, in this respect, the case differs from one of a
mere partnership in a ship ; for in the latter case, (as
we have seen,^) no partner has any right of contribu-
tion against the others for any sums paid, or expenses
incurred on the joint account, until all the partner-
ship concerns are adjusted ; and, then, only in equity.^
There is, on the other hand, in some respects, a coin-
cidence between the cases ; for in each of them all
the parties are at the common law jointly liable, in
solido, for the whole debt to third persons, who have
credited them for the repairs, or other expenditures,
for the common benefit.*
ister the affairs of tlie ship with unanimity, it is usual to appoint a ship's
husband. He may be either a partowner or a stranger, and may be ap-
pointed by writing or parol. His duties are to see to the proper outfit of
the vessel ; to have a proper master, mate, and crew ; to see to the furnish-
ing of provisions and stores ; to see to the regularity of all the clearances
from the custom-house ; to settle the contracts ; to enter into proper char-
ter-parties, or engage the vessel for general freight ; to settle for freight,
and adjust averages with the merchant; to preserve proper certificates
and documents in case of future disputes with insurers or freighters, and
to keep regular books of the ship. But without special powers, he cannot
borrow money generally for the use of the ship, though he may settle ac-
counts and grant bills for them, which will form debts against the concern.
Nor can he, without special authority, insure the ship." See also 1 Bell,
Comm. B. 3, Pt. 1, ch. 4, § 2, p. 503, 504, 5th edit. ; Sims v. Britain, i
Bam. & Adol. 375 ; 3 Kent, Comm. Lect. 45, p. 157, 4th edit.
1 Abbott on Shipp. Pt. 1, eh. 3, § 13, 15, p. 82, 84, 5th edit.
2 Ante, § 219, 220, 260.
3 Ante, § 219, 220, 221, 260.
* 3 Kent, Comm. Lect. 45, p. 156, 4th edit. ,
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNERS. 647
§ 420. The French law agrees with ours, so far as
it makes all the partowners liable in the like manner
as partners, to contribute their proportion of all the
necessary debts and reasonable expenses, incurred for
the common benefit. But, if one partowner only has
contracted with the creditor, the latter can have no re-
course for the debt, except against the particular part-
ner with whom he has contracted. However, upon
payment of it, that party has his remedy over against
the others for their contributory shares.-' On the con-
trary, in cases of mere commercial partnerships, the
French law makes each partner liable, in Solido, to the
creditor for the whole debt.^ If, indeed, all the part-
owners have jointly contracted with the creditor, each
will be liable to him in severalty for his own share of
the joint debt;® and for that only, unless they have all
agreed to be bound in solido^ The law of Holland is,
in this respect, coincident with the French law, making
the several partowners in all cases chargeable for the
repairs and other expenses upon the ship, only accord-
ing to their respective interest in the ship.^ In ?ill
cases of this sort, however, we are to understand, that
the expenses are incurred with the consent of all, or
at least of a majority of the partowners ; for neither a
single partowner, nor a minority of the partowners,
have any right to make any such repairs, or incur any
such expenses, against the will of the majority ; the
' Pothkr, de Society, n, 187; Id. n. 185 ; Id. n. 86; Abbott on Shipp.
Pt. 1, ch. 3, § 18, 5th edit.
2 Pothier, de Societ6, n. 96 ; Ante, § 102, 105, 108.
3 Pothier, de Society, n. 186, 187.
* Pothier, de Society, n. 186, 187.
5 Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 84, 5th edit., who cites Vinnius
in Feckium, p. 155.
648 PARTNERSHIP. [CH. XVI.
latter having (as we shall presently see,) a complete
authority to regulate the whole concerns of the ship.-^
§ 421. Where, however, no common consent or
agreement exists among the owners, as to the posses-
sion, use, enjoyment, or preservation of the ship, it
becomes necessary to ascertain, what, at the common
law, are the ordinary rights, duties, obligations, and
liabilities of the partowners, either inter sese, or in
respect to third persons. And in the first place, as
between the partowners themselves. The inquiry,
which is here first naturally presented, is. What are
the rights, and duties, and liabilities of the partown-
ers of a ship to each other in respect to repairs and
other expenditures, made by any of them for the
proper or necessary preservation thereof? The gen-
eral understanding at the common law is, that, if there
be no express or implied agreement between the own-
ers, either by their conduct, or by their acts, sanction-
ing any such repairs or expenditures, although any
one or more of the owners have a right to incur them ;
yet they have no remedy over against the others for
contribution thereto j but they must themselves, whether
they constitute a majority or minority of the owners,
bear the whole charge.^
§ 422. The reason, usually given for this doctrine,
is, that no one partowner has a right to compel
another, against his will, to incur any burden or ex-
pense, even although necessary for the preservation of
the common property ; but it should be left to his own
free choice. For, otherwise, in case one partowner
1 Post, §426,427.
2 Abbott on Shipp. Ft. 1, ch. 3, § 2, p. 69, 70, 71, 5th edit. 1829 ; 3
Kent, Coram. Lect. 45, p. 153, 154, 4th edit. Macy v. DeWolf, 3 Wood.
& Min. 193.
CH. XVI.] EIGHTS AND IN*rEEESTS OF PARTOWNEES. 649
were poor, it might operate as a grievoi|^ evil, and
compel him to sell his share by a sort of forced sale.-^
Perhaps the doctrine may have been founded upon the
analogy to cases of joint ownership of lands and woods,
under the old common law, where no one owner was
bound to contribute to the repairs of the fences and
other meliorations made upon the common property,
although for the common benefit, unless done with the
common consent and agreement of all the owners, or
justified by a special custom.^ But there was an ex-
ception in cases of houses and mills, which being of a
higher legefcl consideration, for the habitation of man,
and for the general good of the realm, the common
law required all the owners to contribute towards the
necessary repairs thereof.^ There seems to be great
good sense in this distinction ; and certa,inly it is not
less applicable to the case of ships, which are for the
use and habitation of man, and the general good of the
country, than it is to houses and mills. ' The Roman
law positively affirms the like doctrine of contribution,
1 Ibid.
2 Lewis Bowie's Case, 11 Co. R. 82, b. ; Co. Litt. 200, b.
3 Fitzh. Nat. Brev. 127; Id. 162 ; Co. Litt. 200, b. — Lord Holt is re-
ported, in Tenant v. Goldwin, (2 Lord Eaym. 1089, 1093,) to have said;
" That the writ is grounded upon the custom of the place, and not upon
the common law ; and there is such a custom in many places, and there is
no other authority for it." It is not a little remarkable, that neither Lord
Coke, nor Fitzherbert, in affirming the doctrine, make any allusion what-
ever to any such custom ; but they put it as a doctrine of the common law ;
and put it upon the express ground, " that owners are in that case (as
Lord Coke says) bound, pro bono publico, to maintain houses and mills,
which are for the habitation and use of men.'' Mr. Chief Justice Parsons,
in delivering the opinion of the Court in Carver u. Miller, (4 Mass. B.559,
561,) states it to be a clear doctrine of the common law. The like doc-
trine was affirmed by Mr. Justice Jackson, in delivering the opinion of
the Court, in Doane v. Badger, 12 Mass. R. 65, 70. But see Converse v.
Ferre, 11 Mass. R. 325, 326.
PARTN. 55
650 PARTNERSHIP. [CH. XVI.
in respect, to reparations of houses held in common.^
And, hence, some maritime writers in modern times
have, as we shall presently see, applied it by analogy
to the case of partownership of ships.^
§ 423. Whether, indeed, this supposed doctrine of
the common law, as to ships, is founded upon satisfac-
tory principles or not, ma,y perhaps be thought to
deserve more grave consideration than it seems hith-
erto to have received. If we look to the gener?il
policy of shipping and navigation, in all commercial
nations, and the objects for which joint ownership in
ships is allowed and encouraged, that is, to create a
large and flourishing marine trade by the union of
small capitalists, and thereby augmenting private
wealth as well as national interests, we shall see at
once why the ordinary rules with regard to joint own-
ership in other personal property have been made to
yield in the case of ships, and have either been wholly
set aside, or controlled by principles of a more equita-
ble and liberal character. Now it is scarcely practi-
cable to state a single reason, why the ordinary rules
should have been relaxed in other cases, which is not
strictly applicable to the case of repairs, necessary and
proper for the due preservation of the ship. In a just
and reasonable sense, all such repairs are for the com-
mon benefit of all the owners, in order to prevent the
utter ruin and destruction of the common property ;
and they also generally enhance the value, as well as
preserve the sound state of the property.
1 Dig. Lib. 17, tit. 2, 1. 52, § 10 ; Pothier, Pand.'Lib. ] 7, tit. 2, n. 53 ;
Domat, B. 3, tit. 1, § 5, art. 6, 7, 8.
2 Abbott on Shipp. Pt. 1, ch. 3, § 2, p. 68, 69, 5th edit.; Post, § 424,
note (3.)
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNEES. 651
§ 424. It is clear, (as has been already suggested,^)
that many of the maritime jurists, as well as some of
the positive codes of modern maritime nations, assert
the doctrine that all the owners of a ship are bound to
contribute according to their shares, for all expenses
incurred in the necessary reparation thereof by any
one of the owners ; and this duty may be enforced by
suit in case of their neglect or refusal. Straccha af-
firms this in positive terms, and in this he is followed
by Roccus and other jurists.^ It has also the sanc-
tion of the highest tribunals of Genoa, one of the most
enlightened commercial states in the early progress of
coflimercial enterprise in the Mediterranean.^ Nay, in
some. States and by some jurists the doctrine has been
pressed farther; so that if the negligent owner did
not, after due notice, within a limited time, pay his
proportion of the repairs with interest, he forfeited his
title to his share in the ship ; a severe and harsh regu-
lation, which is scarcely consonant to the liberal spirit
of maritime jurisprudence.*
1 Ante, § 422.
2 Straccha, De Navibus, Pars 2, n. 8, p. 420, edit. 1669 ; Roccus, De
Nav. n. 22 ; 2Emerigon, Trait6 des Contratsa la Grosse, ch. 4, § 4, p. 427
to 429, edit. 1783.
3 Decis Eotse Genuae, Decis. 170, n. 3; Straccha, DeMerc. p. 285, edit.
1669.
* Ibid. ; Straccha de Navib. Pars 2, n. 8, p. 420, edit. 1669 ; Koecus, de
Nav. n. 22 ; 2 Emerigon, Traits a la Grosse, ch. 4, § 4, Tom. 2, p. 427,
edit. 1783. — Straccha, in the passage referred to, says; " Naves plerun-
que refectione egere, nemo est, qui nesciat ; et innuit Jurisc. in 1. fin. ff.
de exer. Nee etiam longo tempore durant, licet novis tabulis reficiantfir ;
ut scribit Ange. in 1. foramen, flf. de ser. urb. prse. Unde proxime accedit
ad propositas quaestiones ilia dubitatio. Duos fingito exercitores, sen ejus-
dem navis dominos ; alterum cessantem, et negligentem reficere ; alteram
vero navim, quae vitium fecerat, communi nomine refecisse. Putb, si intra
quatuor menses socius cessans nummos pro portione erogatos cuin centesi-
mis usuris, non restituerit oonsocio, qui refecerit, ex oratione Divi Marci
652 PARTNERSHIP. [CH. XVI.
*
§ 425. Above all, the Consolato del Mare has ex-
plicitly sanctioned the doctrine, and declared, that
when the partowner-master (Patron, Senyor de Nau)
finds that the ship needs repairs in the place of resi-
dence of the owners, if all of them, upon notice,
consent to have them made, he may repair the ship at
the expense of all, and hire money on the share of any
delinquent partowner who fails to discharge his por-
tion. If the owners deem the repairs improper, be-
cause the ship is not worth repairing, then either the
partowner-master or the other owners may compel a
public sale of the ship. But if such master repairs
the ship without the consent of the other partowners,
none of them will be liable to him for such repairs ;
but he must reimburse himself, as he may, out of the
earnings of the ship.^
reficienti jus dominii pro solido vendicare, vel obtinere deoretum esse. L.
si. fratres. § idem respondit. Vers. § idem respondit sooius, qui cessantis.
ff. pro socio. 1. si. ut proponis. C. de aedifi. privat. Quse jura singulariter
notanda inquit Areti. (Inst, de act. § sequens. n. 13.) socium cessantem
reficere rem communem. Si enim alter reficit, et cessans intra quatuor
menses non restituit partem impensarum cum usuris, perdit dominum suae
partis, et reficienti acquiritur. Probat et commendat ibidem Jason, sub
num. 48. et idem Jason, in repet. 1. quominus. ff. de flum. n. 112, et in 1.
creditor, n. 7. ff. si cert. peta. Hoc idem placuit Veron. (in tract, de
servi. urb. prsedi. in tit. de refect, rub. 59. vers, quarto quseritur,) subdens,
id valde notandum esse. Et vide MarS. sing. 859. mille." Tiie passage
in the Digest (lib. 1 7, tit. 2, 1. 62, § 10,) is as follows ; " Idem respondit :
Socius, qui cessantis cessantiumve portiones insulse restituerit, quamvis aut
sortem cum certis usuris intra quatuor menses, postquam opus refeotum
erit, recipere potest, exigendoque privilegio utetur, aut deinceps propria,m
rem habebit. Potest tamen pro socio agere ad hoc, ut consequatur, quod
sua intererat. Finge enim, malle eum magis sujim consequi, quam domin-
ium insulse : Oratio enim D. Marci idcirco quatuor mensibus finit certas
usuras, quia post quatuor diminium dedit."
1 Consolato del Mare, ch. 200 [245]; Id. ch. 194 [239]; Id. oh. 1,97,
[242]. I quote from Pardessus's edition, Tom. 2, p. 237 to 240 ; Id. p.
223 to 227; Id. p. 231 to 283.
CH. XVI.] EIOHTS AND INTERESTS OF PARTOWNERS. 653
§ 426. Pothier has affirmed the general doctrine of
the liability of every partowner to contribution for all
repairs, reasonably (utilemeni) made upon the common
property, at least if he does not abandon his part of
the property ; and he applies it to -ships.^ He takes
the appropriate distinction in such cases, that the other
partowners are not liable to the mechanfts who have
made the repairs ; but only to the partowner who has
procured them to be made.^ And he founds himself
upon the doctrine of the 'Pandects. JSi cedes communes
1 Pothier, de Society, App. n. 187 ; Id. n. 192 ; Id. n. 86. His language
is, (n. 187) : "A I'dgard des dettes contracWes pour les affaires de la
communaut6 durant la communaut^, tel que seroit un marcli6 fait avec
des ouvriers pour des reparations k faire k quelque heritage commun, il
n'y a que celui des quasi-associds, qui les a contract6es, qui en soit tenu
envers les cr6anciers, sauf k lui k s'en faire indemniser par ses quasi-
associ^s, pour la part que chacun d'eux a dans la comniunaut6, lorsqu'elles
ont it6 utilement contract^es. Lorsque ces quasi-associ^s les ont con-
tract6es ensemble, s'il n'y a pas une clause de soliditfe exprimde, chacun
d'eux n'en est tenu envers le cr6ancier que pour sa portion virile ; de
meme que nous I'avons d^cidd, suprk, k regard des soci^t^s particulieres,
qui ne sont pas socidtes de commerce ; sauf k se faire raison entre eux de
ce, que chacun d'eux en doit porter de plus ou de moins que cette portion
virile, eu 6gard k la part, qu'il a dans la communaute." Again he adds,
(n. 192,) :'" C'est encore une des obligations, que forme la communaute,
que chacun des quasi-associ6s est obligd de contribuer pour la part, qu'il
a dans la communaute, aux reparations, qui sont k faire aux choses com-
munes, k moins qu'il ne voulut abandonner la part, qu'il a dans la chose."
Emerigon thinks that the jurists who maintain the doctrine, that the
share of a delinquent owner is forfeited by omitting, after notice, within
the limited time, to pay his contributory portion, is founded upon a mistaken
application of the Law of the Emperor Adrian, (Cod. Lib. 8, tit. 10, 1. 4,)
respecting repairs on houses, which he deems to be a mere local regulation
for the improvement of Borne. 2 Emerig. des Assur. Trait6 des Contrata
a la Grosse, ch. 4, § 4, p. 427, edit. 1783. But Emerigon insists, equally
with Pothier, that the delinquent owner is liable to contribution; and
that, upon his refusal, the other owners may borrow the money on bot-
tomry on his share. 2 Emerig. Trait6 a la Grosse, ch. 4, § 4, p. 429, edit.
1783.
2 Ibid. ; Ante, 420.
55*
654 PAETNERSHIP. [CH. XVI.
sint, aut paries communis, et eum reficere, vel demolire,
vel in eum immiiere quid opus sit ; communi dividendo
judicio erit agendum, aut interdicto, vii possidetis, expe-
rimur} The same doctrine is maintained in the Insti-
tutes, as arising, 2'Mas? ex contractu, m all cases where
one proprietor incurs expenses upon the common prop-
erty, which "lire for the benefit of all. Item, si inter
aliquos communis res sit sine societate, veluti quod pariter
eis legata donatave esset, et alter eorum alteri ideo tencr
atur communi dividundo judicio, quod solus fructus ex ed
re perceperii, aut quod socius ejus solus in earn rem neces-
sarias impensas fecerit ; non intelligitur ex contractu pro-
prie ohligatus esse ; quippe nihil inter se contraxerunt ; sed,
quia ex maleficio non tenetur, quasi ex contractu teneri
videtur?
1 Dig. Lib. 10, tit. 3, 1. 1 2 ; Pothier, Pand, Lib. 14, tit. S, n. 6 7 ; Pothier,
de Societ6, n. 86, 192,
3 Inst. Lib. 3, tit. 28, § 3. See also Dig. Lib. 17, tit. 2, 1. 52, § 10. It
should be recollected that, in the Roman law, no such distinction generally
prevailed between real estate and personal estate, as is recognized in the
common law. Both might descend, and be devised in the same way, and
both were generally affected by the same incidents. Vinnius, in com-
menting on the text says : " Tertia species, qua quasi ex contractu obli-
gationem producit, est communio rerum inter aliquos citra sooietatem sus-
cepta. Rerum communio sic inter aliquos constituta, sive hsereditatis
inter cohaeredes, sive rerum singularum inter eos, quibus eadem res legata
aut donata est, quive simul eandem rem emerunt sine affectione societatis,
duarum rerum obligationem parit; nam et consortem ad rerum divisionem
obligat, et in communione manenti prasstationibus quibusdam, ad cam com-
munionem pertinentubus, implicat, (1. item, Labeo. 22, § 4, fam. ere. 1. 4,
§ 3, comm. divid.) Prima et prsecipua hie obligatio est, quod consors, si
sponte communionem omittere noHt, compellatur ad divisionem judicio
divisorio ; in quo hoc maximfe agi constat, ut sua cuique pai'te adjudicata,
h, communione quam neo suscipere, nee retinere quisquam cogitur, (1. 26,
§ 4, de cond. ind. I. ultim. C. comm. div. discedatur. 1. 1, fam. ere. 1. 1,
comm. divid. § qusedam. 20, 1 inf. ce act.) Divisio rerum qualis sit, quae
in ea adjucatio, quseve mutua condemnatio, explicatur § 4, et seqq. inf.
de offic. jud. Prsestationes personales inducuntur vel lucri, vel damni, vel
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNEES. 655
§ 427. In tlie next place, as to the employment and
equipment of the ship for any voyage or adventure.
We have already seen that, in cases of partnership at
the common law, the majority of the partners, in the
absence of all contrary stipulations, possess entire
authority to regulate, and transact all the concerns of
the partnership ; and that this majority is to be de-
cided by the majority of persons, and not by that of
interest in the partnership.-^ The French law has, on
this point, adopted the rule of the common law ; and
each, in this respect, differs entirely from the Roman
law, by which (as we have seen) a single partner
might prohibit, as far as he was concerned, any parti-
cular act .or contract of the othOr partners, so that it
should not bind him.^ But, in relation to the part-
impensarum nomine. (1. 3, comnl. dlv.) Lucri, ut, si quid ad unum e
consortibus ex re communi pervenit, id cseteris communicet. (1. 3, C. eod.
d. § 4, inf. de off. jud. et toe text.) Damni, ut, si quid damni in re com-
muni datum aut factum est culpa aut negligentia unius, id cseteris propor-
tione cujusque sarciat, (1. 16, § pen. 1. hsaredes. 25, § non tantum. 16, et §
item culpa. 18, 1. inter cohseredes. 44, quod ex fact. 5 fam. erciso.) Culpa
autem non ad exactissimam diligentiam dirigitur ; quonian, qui rem cum
alio communem habet, propter suam partem causam habet gerendi ; et ideo
non major diligentia ab eo exigitur, quam qualem suis rebus adhibere
consuevit. (d.'l. hsredes. 25, § non tantum. 16.) Impensarum, ut, si quae
ab uno in res communes factse sunt, quas propter partem suam necesse
habuit facere, ei k cseteris pro rata refundantur." Vinnius, Comm. ad Inst.
Lib. 3, tit. 28, § 3, p. 716, 717, edit. 1726. The doctrine of the text, as
stated by Pothier and upheld by the Roman law, is, probably, to be
received with the qualification, that the repairs have been made without
any actual knowledge or dissent of the other owners ; for by the French
law, as we shall immediately see, the majority of the owners in interest
have the entire control and management of all the concerns of the ship ;
and, by the Eoman law, even in cases of partnership, one partner alone
might; by his single prohibition, prevent the others from binding him by
any of their acts or contracts. Ante, § 124.
1 Ante, § 123, 124. See 3 Kent, Comm. Lect. 45, p. 153, 154, 155, 4th
edit.
2 Ante, § 124 ; 8 Kent, Comm. Lect. 45, p. 153, 154, 155, 4th edit.
656 PARTNERSHIP. [CH. XVI.
owners of ships, a different rule prevails at the com-
mon law ; for (as we have seen) no one or more of
the owners, whether a majority or a minority, can,
by incurring expenses or making repairs upon {he
ship, oblige the other owners to contribute thereto,
^unless they have expressly or impliedly consented to
the same.-'
§ 428. What, then, it may be asked, is to be done
in case of any dissent by one or more of the part-
owners, not only as to the repairs, but as to the em-
ployment of the ship upon any projected voyage or
adventure ? Is the ship to remain idle, and rot at the
wharf? Or, may the ship be equipped and employed,
so as to earn freight and subserve the general commer-
cial policy of the country, as well as the private inter-
est of the other owners ? . The common law has here
adopted and followed out the doctrines of Courts of
Admiralty, founded upon the enlarged and equitable
principles of maritime jurisprudence. It authorizes the
majority, in value or interest, to employ the ship upon
any probable design ; and yet, at the same time, it
takes care to secure the interest of the dissentient
minority from being lost, in any employment which
he or they disapprove.^ If the majority choose, there-
1 Abbott on Shipp. Part. 1, ch. 3, § 2, p. 70, 71, 5th edit ; Ante, § 123,
1 24. — The case of The Steamboat New Orleans v. Phoebus, 1 1 Peters, R.
175,) is directly in point. The English authorities above cited seem to
leave the matter in doubt. Upon principle, there does not seem any just
reason -vsfhy the minority should -not possess the same rights, as to the
employment of the ship, as the majority, if the latter refuse to employ her.
And the policy of the general rule would seem fairly to reach such a case,
since otherwise the ship must remain unemployed, and earn no freight for
any one. See 3 Kent, Comm. Lect. 45, p. 151, 152, 156, 4th edit.
2 Abbott on Shipp. Pt. 1, ch. 3, § 2, p. 70, 71, 5th edit. ; Godolphin on
Adm. Jurisd. Introd. p. 13 ; The Apollo, 1 Ha^. Adm. R. 306, 312 ;
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 657
fore, to employ the ship upon any particular voyage or
adventure, they have a right so to do, upon giving
security by stipulation to the minority, if required, to
bring back and restore the ship to them, or in case of
her loss, to pay them the value of their shares.^ When
this is done, the dissentient partowners bear no portion
of the expenses of the outfit ; and they are not entitled
to share in the profits of the undertaking ; but the
ship sails wholly at the charge and risk, and for
the profit, of the others.^ And a complete jurisdiction
exists in the Court of Admiralty, not only to compel
such a stipulation to be given by the majority at the
instance of the minority ; but, also, if the ship is in
possession of the minority, to compel the delivery
thereof upon giving such a stipulation to the majority.^
In the matter of Blanshard, 2 Barn. & Cresaw. 244, 248, 249 ; Molloy,
de Jure Marit. B. 2, eh. 1, § 2, p. 308, 10th edit. 1778 ; Id. § 3, p. 310 ;
Sir Leoline Jenkins's VTorks, by Wynne, vol. 1, p. 76, 84; Id. p. 792 ;
Jacobsen's Sea Laws, by Frick, ch. 3, p. 43, 44, 45, edit. 1818.
1 Abbott on Shipp. Pt. 1, ch. 3, § 3, p. 70, 5th edit. ; 3 Kent, Comm.
Lect. 45, p. 151, 162, 4th edit. ; CoUyer on Partn. B. 5, ch. 4, § 4, p.
806, 807, 808, 2d edit. ; Molloy, B. 2, ch. 1, § 3 ; 2 Bro. Civil and Adm.
Lavf, 131 ; The Apollo, 1 Hagg. Adm. R. 306 ; Ex parte Blanshard,
2 Barn. & Cressw. 244, 249 ; Willings v. Blight, 2 Peters, Adm. E. 288 ;
Sea Laws, 441, edit. 1705 ; Card v. Hope, 2 Barn. & Cressw. 661, 674,
675 ; The Steamboat New Orleans v. Phoebus, 11 Peters, R. 175.
2 Ibid. ; Sir Leoline Jenkins's Works, by Wynne, Vol. 1, p. 76 ; Id.
p. 792 ; Jacobsen's Sea Laws, ch. 3, p. 43, 44, 45, edit. 1818.
3 Ibid. ; The John of London, 1 Hagg. Adm. R. 342, 346 ; The Pitt,
1 Hagg. Adm. R. 240. ^- Mr. Abbott has stated the whole doctrine with
great clearness and accuracy in the passage above referred to. He says ;
" The law of this country appears to possess an important advantage over
all the ordinances that have been cited ; because, while it authorizes the
majority in value to employ the ship ' upon any probable design,' it takes
care to secure the interest of the dissentient minority from being lost in
the employment, of which they disapprove. And for this purpose it has
been the practice of the Court of Admiralty, from very remote times, to
take a stipulation from those who desire to send the ship on a voyage, in
658 PAETNERSHIP. [CH. XYl.
On the other hand, if the majority do not choose so to
employ the ship, the minority possess the same right
upon giving the like security, and are in like manner
to be entitled to all the profits of the voyage or adven-
ture, and are to bear all the expenses and outfits and
risks thereof.-'
a sum equal to the value of the shares of those who disapprove of the
adventure, either to bring back and restore to them the ship, or to pay
them the value of their shares. When this is done, the dissentient part-
owners bear no portion of the expenses of the outfit, and are not entitled
to a share in the profits of the undertaking ; but she sails wholly at the
charge and risk, and for the profit of the others. This security may be
taken upon a warrant obtained by the minority to arrest the ship. And it
is incumbent on the minority to have recourse to such proceedings, as the
best means of protecting their interest; or, if they forbear to do so, at all
events they should expressly notify their dissent to the others, and if pos-
sible, to the merchants also who freight the ship. For it has been de-
cided, that one partowner cannot recover damages against another, by an
action at law, upon a charge of fraudulently and deceitfully sending the
ship to foreign parts, where she was lost. And it has also been decided
in the Court of Chancery, that one partowner cannot have redress in
equity against another for the loss of a ship sent to sea without his assent.
These decisions are consonant to the general rule of law, that where one
tenant in common does not destroy the common property, but only takes
it out of the possession of another, and carries it away, no action lies against
him ; but if he destroys the common property, he is liable to be sued by
his companion. And in a case tried before Chief Justice King, wherein
it appeared, that one partowner had forcibly taken a ship out of the pos-
session of another, secreted it, and changed its name ; and that it after-
wards came into the possession of a third person, who sent it to Antigua,
where it was sunk and lost ; the Chief Justice left it to the jury to say,
under all the cijcumstances of the case, whether it was not a destruction
of the ship by the means of the defendant ; and they finding it to be so,
the plaintiff recovered the value of his share. The Court of Common
Fleas afterwards approved of the direction of the Chief Justice. If a part-
owner expressly notify his dissent, the Court of Chancery will not compel
him to contribute to a loss. If the minority happen to have possession of
the ship, and refuse to employ it, the majority also may by a similar war-
rant obtain possession of it, and send it to sea, upon giving such security."
Post, § 434.
1 The Steamboat New Orleans v. Phoebus, 11 Peters, K. 175 ; The
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 659
§ 429. In this respect the common law differs essen-
tially from the French law.^ The French law, in the
absence of any positive stipulation of the partowners
to the contrary, gives complete authority to a majority
in interest (not in number) to make repairs and incur
expenses on the ship for the common benefit, to which
all the other joint owners will be bound to contribute,
notwithstanding their dissent. The Ordinance of Louis
14th, of 1681, expressly declares, that in all things
which concern the common interest of the proprietors
of the ship, the opinion of the majority shall be follow-
ed ; and that shall be reputed to be the majority which
holds the largest shares of the ship.^ In this respect
the French law seems to have followed out the doc-
trine promulgated upon some other occasions in the
Roman law. Such, for example, as in the case of cred-
itors — Pari autem quaniitate deliti inventa, dispari vero
creditorum numero ; tunc amplior pars oUineat, ita, ut quod
pluribus placeat, hoc statuatur? And again, in the case
Apollo, 1 Hagg. Adm. K. p. 306, 312 ; Ex parte Blanshard, 2 Barn. &
Cressw. 244, 249. See Godolph. Adm. Jurisd. Introd. p." 13 ; MoUoy,
Jure, Marit. B. 2, ch. 1, § 2 ; Abbott on Shipp. Pt. 1, ch. 3, § 6, p. 74,
75, 5th edit. ; 2 Bro. Civ. and Adm. Law, 131 ; Sea Laws, 442, 3d edit. ;
Willing3 V. Blight, 2 Peters, Adm. R. 288 ; 3 Kent, Comm. Leot. 45,
p. 155, 156, 157, 4th edit. ; Ante, § 427, note (3.) But see The Eliza-
beth & Jane, 1 W. Bob. New Adm. R. 278.
1 See 1 Valin, Comm. Liv. 2, tit. 8, art. 4, p. 575 to 584, edit. 1766 ;
Abbott on Shipp. Pt. 1, ch. 3, § 3, p. 69, 5th edit.
s 1 Valin, Comm. Liv. 2, tit. 8, art. 6, p. 575. The present commer-
cial code of France gives the like authority. Code de Comm. art. 220 ;
Boulay Paty, Droit Comm. Tom.l, tit. 3, § 5, p. 340 ; Emerigon, Traits
a la Grosse, ch. 4, § 4, Tom. 2, p. 427, edit. 1783 ; Pardessus, Droit
Comm. "Tom. 3, art 621, p. 43, 44 ; 3 Kent, Comm. Lect. 45, p. 155,
156, 157, 4th edit.
3 Cod. Lib. 7, tit. 71, 1. 8, cited 1 Valin, Comm. Liv. 2, tit. 8, art. 4,
p. 575 ; Dig. Lib. 2, tit. 14, 1. 8 ; Kurioke ad Ordin. Hanseat. tit. 5, art. 7,
p. 758, 759.
660 PARTNERSHIP. [OH. XVI.
of the arbitrators ; Judicium enim integrum est, qaodplu-
rimorum senteniiis comprdbatur} And again ; Majorem
esse partem, pro modo debiti, non pro numero personarum,
phcuit ;^ and again; Quod major pars Curios effecit,
pro eo habetur, ac si omnes egerint? And in answer to
the question, what, in a just sense, may be deemed
repairs or expenses for the common benefit, Valin does
not scruple to declare, that they are such as are reason-
able and fit, in order to put the ship in a state to earn
freight, and to be suitably navigated during the con-
templated voyage or adventure.*
§ 430. The laws of other foreign maritime nations
seem generally to coincide with these provisions of the
French law, and abundantly show, that the doctrine is
not founded upon any peculiar policy of France.® The
Ordinances of the Hanse Towns of 1591 and 1614,
expressly affirm the doctrine, stating it, in one place,^
to be conformable to ancient usage ; and, in another
place, to be conformable to the ancient usages of the
sea.® The ordinance of Rotterdam of 1721;'^ that of
1 Cited 1 Valin, Comm. 575. See also Dig. Lib. 50, tit. 1, 1. ],9 ; Id.
Lib. 4, tit. 8, 1. 17, § 7 ; Id. 1. 27, § 3.
2 Dig. Lib. 2, tit. 14, 1. 8 ; cited 1 Valin, Comm. 576.
3 Cited 1 Valin, Comm. 577; Dig. Lib. 50, tit. 1, 1. 19. See also the
passage. Dig. Lib. 17, tit. 2, 1. 52, § 10, referred to Ante, § 424, note (3.)
* 1 Valin, Comm. Liv. 2, tit. 8, art. 5, p. 579.
5 Styppman, Jus. Marit. p. 416, n. 101 to 104 ; Script, de Jure Nautic.
Fascic. Heineecii, p. 416, edit. 1740 ; Kuricke, Jus. Hanseat. art. 5, 7,
p. 755, 758, 759 ; Boulay Paty, Droit Comm. Tom. 1, tit. 3, § 5, p. 344
to 346 ; Jacobsen's Sea Laws, by Frick, cb. 3, p. 40, 41, edit. 1818.
6 Pardessus, Collect, de Lois Marit. Tom. 2, p. 526 : Droit Marit. de
la Ligue Anseatique Eeces de 1591, art. 67 ; Id. Reces de 1614-, art. 7,
7 Ordin. of Rotterdam, 1721, art. 172 ; 2 Magenson Insur. 108 : Abbott
on Shipp. Pt. 1, cL 1, § 3, p. 70, 5th edit. ; 3 Kent, Comm. Lect. 45,
p. 153, 4th edit.
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 661
Hamburg of 1276 ;^ that of Lubec of 1299 ;^ and also
the .laws of Wisbuy, (although not printed itn the
p. 546 ; Abbott on Shipp. Pt. 1, ch. 3, § 3, p. 70 ; Cleirae, Us et Coutum.
Ord. Hans. art. 59, p. 211, edit. 1661 ; Id. p. 107, edit. 1788 ; Malyne,
Lex Merc. p. 128, edit. 1636. — I copy from Pardessus's unrivalled edi-
tion, in this and the following citations. Kuricke, in his Commentaries
on the Hanseatic Ordinance, (Kuricke, Jus Hanseat. tit. 5, art. 7, p. 758,
769, edit. 1740,) gives the general provisions of the principal ordinances
of different countries. His language is ; " Jus Wisbycen. art. 65, hoc in
casu, quando nimirum inter exercitorem et nauclerum conveniri non
potest, statuit, nauclerum nihilominus posse navim illam ducere pro naulo,
quod viri boni sequum esse judicaverint. Et art. 66, in genere sancitur,
quod omnes exercitores, quidquid in reparationem navis nauclerus impen-
dent, vel etiam pro ejusdem necessitate emerit, ad obulum usque solvere
teneantur. Jus Pruthenicum (1. 4, tit. 19, art. 4, § 3,) generaliter vult,
quod illi, qui minores partes in navi habent, sequi debeant eos, qui plus in
eis possident. Jus vero*Lubecense (1. 6, tit. 4, art. 6,) alternative idem
statuit, nimirum illos, qui minus in navi possident, reliquos, qui plus
tenent, aut sequi, aut totam navim certa pecunia aestimare debere, optione,
aliis data, utrum tantumdem dare, aut accipere velint, emptoremque reli-
quis exercitoribus pecuniam istam intra sex hebdomadas postmodum sol-
vere ^neri. Jus Danicum artic. 61, idem preecipit, et addit, quod^ si
nulla ratione inter se couvenire possint, navim tamen otiosam jacere non
oporteat, sed exercitorum potior pars illam in suum commodum, suo
periculo, exercere possit ; illis vero, qui exercere navem noluerunt, nulla
vecturse portio danda sit. Eodem etiam tendunt Statut. Hamburg. (Part.
2, tit. 13, artic. 2, et Grot. d. inir. part. 23.) Utut autem hsec expediti
sint juris eo in casu, ubi plures exercitores existunt, quseri tamen potest,
quid hoc in casu, ubi duo tantum sunt exercitores, et quidem inter se dis-
sentientes, juris sit ? Certe quum prsevalere debere, qui navim navigare,
quam otiosam domi manere mavult, inde concludi potest, quod Ulpianus
dissertis verbis in (1. 12, § 1 ff. de usufruct.) scribat : Navis usufructu
legato, navigatum mittendam navim, licet naufragii periculum immineat ;
navim enim ad hoc parari, ut naviget, dummodo tamen id apto et non
adverso navigationis tempore fiat, na^^isque idoneis hominibus committatur
(1. 16, § 1, et 1. 36, in fin. fi". de 58. V.) et gubernatore sit instructa (1. 13,
§ 2, flF. locat.)" See also Emerigon, Trait6 des Contrats a la Grosse, eh.
4, § 4, p. 427, 428, edit. 1783; Id. 454, 455, Edit, of Boulay Paty, 1826.
1 Ordin. of Hamburg, 1276, art. 24 ; Pardessus, Collect, de Lois Marit.
Tom. 3, p. 346. '
2 Ordin. of Lubec, 1299, art. 25 ; Pardessus, Collect, de Lois Marit.
Tom. 3, p. 410.
PAKTBT. 56
662 PABTNEKSHIP. [CH. XVI.
common editions/) contain provisions to the same
effect.
§ 431. It has been supposed by a learned writer
upon this subject, that the common law has in this
respect an important advantage over all these ordi-
nances; because, while it authorizes the majority in
value to employ the ship upon any probable design,
it takes care to secure the interest of the dissentient
minority.'^ Perhaps it may not be so very manifest,
that such an advantage really exists; for, although
the majority are thus entitled to employ the ship, yet
the minority cannot derive the slightest advantage
from that employment; and they may, and indeed
must, be affected somewhat in their interest from the
natural diminution of value of the 'ship, by the mere
wear and tear of the voyage or adventure,' even if no
accident occurs to prevent her safe return. It is no-
where affirmed, that the minority are entitled to any
compensation for such diminished value ; and the
general theory of the common law upon the rights of
partowners, certainly authorizes every partowner to
t
1 Laws of Wisbuy, 1841, art. 65, 66 ; Pardessus, Collect, de Lois Marit.
Tom. 1, p. 522, 523. See also Pardessus's note to Tom. 1, p. 522, 523,
notes 9, 10, and his note to Tom. 2, p. 526, n. (2). In these notes he
states, that these articles are not found in the editions of 1505, or
the MSS. of 1533 and 1537, but are in that of 1541, of Gripswald. The
Consolato del Mare gives to the master-owner (Patron, Segnor de la Nau),
who undertakes to build a ship, a right to compel other persons, who have
engaged to take particular shares in the ship, to pay their proportions of
the expenses of building the same ; or, upon their default, to hire money
on their shares for the same purpose. Consolato del Mare, ch. 3, [48,] as
given in Pardessus, Collect, de Lois Marit. Tom. 2, p. 50. I have not dis-
covered in that venerable, collection any traces of the law as to the employ-
ment and outfits of the ship, when some of the owners dissent. See also
Jacobsen's Sea Laws, by Frick, ch. 3, p. 40 to 43, edit. 1818.
2 Abbott on Shipp. Pt. 1, ch. 3, § 4, p. 70.
CH. XVI.] EIGHTS AND. INTERESTS OF PAETOWNERS. 663
use the ship for his own purposes, without any liability
to repair the natural or necessary waste or decay occa-
sioned thereby. On the other hand, although the for-
eign laws and ordinances give the majority the right
to impose the burden of sharing the expenses upon'
the minority ; ,yet the latter are to share My in
the profits, if any, in the voyage or adventure,lrccord-
ing to the well known maxim ; jSecundum naiuram est,
commoda cujusque rd, eum sequi, quern sequurdur incomr
moda}
§ 432. The common law not only thus gives to the
majority in interest of the partowners the right and
authority to employ the ship upon any proper voyage
or adventure ; but it also confers upon the majority
the right and authority in all cases to appoint the
master and officers and crew of the ships, and to dis-
place them at their pleasure, even although the master
should be a parte wner.^ But, then, this authority
must be exercised by a free and impartial judgment
in the choice of the master and officers and crew, and
especially in the choice of the master, who is intrusted
with the management of the outfit, and. with the navi-
gation of the ship. Any contract, therefore, made by
some of the partowners only, which is calculated to
have the effect of fettering their judgment, and of
binding them to appoint, or to concur in the appoint-
ment of particular persons as master and officers, is a
violation of that duty. The violation of duty becomes
' 1 Valin, Comm. Liv. 2, tit. 8, art. 5, p. 577 to 579 ; Dig. Lib. 50, tit.
17, 1. 10. — The Danish Ordinance, art. 61, according to Kuricke, is simi-
lar to the law of England. See above, ^ 430, note (3 ;) Jacobsen's Sea
Laws, by Frick, oh. 3, p. 37, 40 to 43.
2 This is also the rule of the French law. Boulay Paty, Droit Comm.
Tom. 1, tit. 3, ^ 5, p. 340.
66,4 PARTNERSHIP. [CH. XVI.
^eater and more odious, if the contract is founded
upon motives of peculiar gain and advantage to the
contractors ; for all the partowners ought to share rate-
ably in every profit that may be made of the ship.
And if such contracts could be allowed by law, they
must^erate as a discouragement to persons to become
part(^TOers of ships.-^ Indeed, the duty is not owing
singly to the other partowners, and to charterers (if
any,) but also to all whose life or property may be
embarked in her. Such a contract is, therefore, utterly
void, as against public policy, and the true interests of
commerce and navigation. Upon this ground a con-
tract, made by two partowners, who were the ship's
husbands, with a third person to sell him a part of their
shares, and he to be appointed master, (they holding
the majority of interests,) and they to be continued as
the ship's husbands, and he or they to have the appoint-
ment of his successor, as master, has been held to be
utterly void.^
§ 433. We have already seen that the French Or-
dinance declares, that the opinion of the majority of
the owners of' a ship, is to govern in every thing
which concerns the common interest of the oWners.
[En tout ce, qui concerne l' inter et eommun des proprietai-
res?) But the question, as to the extent of the power
of the majority to^ bind the minority by their acts, or,
in other words, what is to be deemed in the sense of
the Ordinance for the common interest, is a matter
still left open to construction and interpretation.
1 Card V. Hope, 2 Barn. & Cressw. 661, 674, 676. I have followed
• nearly the very words of Lord Tenterden, in his able judgment in this
case.
2 Card V. Hope, 2 Barn. & Cressw. 661, 674, 675.
3 Ante, ^ 429.
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNEES. 665
Here, Valin is very explicit ; and he declares that it
extends not only to the repairs of the ship, but to the
enterprise and voyage in which the ship is to be en-
gaged, to the choice of the master, officers, and crew,
and also to the outfits and engagements for the voyage.
But it does not extend to any right to compel the dis-
senting owners to contribute their shares to a cargo
for the ship for the same voyage.^ As to the repairs
and other legitimate expenditures and charges for the
voyage, if the dissenting owners refuse to contribute
their shares, it is competent for the majority, after such
refusal and due proceedings had, to take up the amount
on bottomry for the account and risk of the dissenting
owners.^
§ 434. But suppose a majority of the owners are
against any employment of the ship upon any adven-
ture or voyage whatsoever at a particular period, as
not being for the interest of the concern, and the mi-
nority are, at the same time, ready and willing to
employ the ship upon a particular adventure or voy-
age, the question then arises whether, in the sense of
the Ordinance, the majority have still the right to con-
trol the minority, and prevent any such employment.
The answer given by Valin, in the affirmative, seems
entirely satisfactory in its reasoning, as a just exposi-
tion of the Ordinance.^ Whether the common law has
'1 Valin, Comm. Liv. 2, tit. 9, art. 5, p. 676 to 580, edit. 1766. Par-
dessus. Droit Comm. Tom. 3, art. 621,p. 44, 45; 3 Kent, Comm. Lect.
45, p. 156, 157,' 4th edit.
2 1 Valin, Comm. Liv. 2, tit. 8, art. 5, p. 576, 577, 679; Pardessus,
Droit Comm. 'Tom. 3, art. 621, p. 44, 45, 46.
3 1 Valin, Comm. Liv. 2, tit. 3, art. 5, p. 582, 583 ; Boulay Paty, Droit
Comm. Tom. 1, tit. 8, § 5, p. 844, 245 to 348 ; Kuricke, Jus Hanseat. tit.
5, art. 7, p. 768, 759, edit. Heinecc. Scrip. Naut. Fascio. edit. 1740. Sev-
56*
666 PARTNEESfflP. [CH. XVI.
adopted the like rule seems, in tlie present state of
the authorities, doubtful, although the old writers mani-
festly lean in favor of it.^
§ 435. A question far more nice and difficult is, to
decide what is to be done where the partowners have
equal interests, and are equally divided as to the em-
ployment of the ship upon any particular voyage or
adventure. Within this predicament several cases may
arise : (1.) Where the partowners are equally divided
as to the employment of the ship upon any voyage
or adventure whatsoever, one being in favor and the
other against any such employment, upon the ground,
eral of the maritime Jurists of other countries entertaia a different opinion.
Mr. Chancellor Kent has summed up the opinions on each side Tvith his
usual ability and accuracy. " By the French law, the majority in interest
of the owners control the rest, and in that way one partowner may govern
the management of the ship, in opposition to the wishes of fifty other part-
owners, whose interests united are not equal to his. This control relates
to the equipment and employment of the ship, and the minority must con-
tribute. But they cannot be compelled to contribute against their will,
for the cargo laden on board, though they will be entitled to their portion'
of the freight. If the partowners be equally divided on the subject, the
opinion in favor of employing the ship prevails, as being most favorable
to the interests of navigation. Many of the foreign Jurists contend, that
even the opinion of the minority ought" to prevail, if it be in favor of
employing the ship on some foreign voyage. Emerigon, Kicard, Straccha,
Kuricke, and' Cleirac; are of that opinion. But Valin has given a very
elaborate consideration to the subject, and he opposes it on grounds that
are solid, and he is sustained by the provisions of the old ordinance and of
the new code. Boulay 'Paty follows the opinion of 'Valin and of the codes,
and says that the contrary doctrine would enable the minority to control
the majority, contrary to the law of every association, and the plainest prin-
ciples of justice. The majority not only thus control the destination and
equipment of the ship, but even a sale of her by them will bind the right
of privileged creditors after the performance of one voyage by the pur-
chaser, but not the other partowners."
1 Willings V. Blight, 2 Peters, Adm. R. 288 ; Abbott on Shipp. Pt. 1,
, eh. 3, § 4, 8, 6, p. 70 to 76 ; Ante, § 427, 428. See The Elizabeth & Jane,
1 W. Rob. New Adm. Rep. 278.
CH. XVI.] EIGHTS AKD INTERESTS OP PAETOWNEKS. 66t
that at the time it will be either unprofitable, or very-
hazardous, under all the circumstances j (2.) Where
each partowner is equally willing to have the ship
employed in some voyage or adventure, but they differ
as to the voyage ; or, (3.)' Where each partowner is
ready to take the whole ship for a voyage, to be
planned by himself, but he will not engage with the
other in any voyage whatsoever. ^ What is to be done
in such a case ? An opinion has been expressed by
certain learned writers that, in the first case, the part-
owner who is willing to employ the ship for a voyage
or adventure is entitled to have it delivered to him for
that purpose, upon giving the usual security ; and this,
indeed, seems to be the actual practice in the Admi-
ralty of England.-^
§ 436. Cleirac adopts the like opinion, in which he
has»also the support of other Jurists.® Straccha, in
particular, puts the case directly. Et ego fingq tibi ques-
iionem : Duos esse Dominos nam,, alierum velle congruo
tempore wd^iaviganekm ipsam navim navigafum mittere,
atterum vero malle in portu permanere ; et prcefereridurri
ilium existimo,qui rem ad usiim paratum uti velit, et iiti-
liter agere, recusainte socio? The reason seems to be^
that ships are designed for navigation ; and, thus em-
ployed, they support a great public commercial policy.*
1 Abbot on Shipp. Vt 1, ch. 3, § 6, p. 75, 5th edit; MoUoy, de Jure
Marit. B. 2, ch* 1, § 2, p. 308, lOth edit. 1778 ; 1 Mtontagu on Partn. B. 2,
ch. 1. Molloy holds this opinion. MoUoy, de Jure Marit. B. 2, oh. 1, § 2,
p. 308, 10th edit. 1778. But see The Elizabeth & Jane, 1 W. Bob. New
Adm. Ki 278.
8 Cleirac, Us et Gout, de la Mer, Ordin. Hanseat. Comm. art. 59,p. 211,
edit. 1661 ; Straccha, de Navib. Pars 2, n. 6.
■ 3 Straccha, de Navib. Pars 2, § 6j p. 420, edit. 1669.
* See Cleirac, Us et Coutum. de la Mer, Ord. Hans. Comm. art. 59, p.
211, edit. 1661 ; 1 Valin, Comm. Liv. 2, tit. 8, art. 5, p. 586, 586 ; Kuricke,
668
PARTNERSHIP. [cH. XVI.
The French Ordinance seems to justify the same course,
leaving, however, the question, as to the propriety of
the projected voyage, open for discussion.-^
§ 437. But the two last cases (there being an equal-
ity of interests) have been thought by some distin-
guished Jurists to be wholly unprovided for by the
common law ; for, under such circumstances, there
seems to be no ground for giving any preference to
either partowner.^ In cases of this sort, there is no
doutt that, under the Ordinance of France, of 1681,
a sale may be decreed to be made by the proper tri-
bunal, and the proceeds divided among the owners
according to their respective shares.® Maylne evi-
Jus Hanseat. tit. 5, art. 7. ; Script, de Jure Naut. et Marit. Fascic. p. 758,
759, edit. 1740 ; Ante, § 429, 430, note (3.)
• 1 Valin, Comm. Liv. 2, tit. 8, art. 6, p. 685, 586.
2 Abbott on Shipp. Ft. 1, ch. 3, § 5, p. 72 to 76, 5th edit. ; Id. § 7, p. 75,
76; Ouston v. Hebden, 1 Wils. E. 101. — In this ease a partowner, pos-
sessed of a small share, instituted a suit in the Court of Admiralty, against
the major partowner, who was also master, and who insisted upon making
a voyage with the ship, praying that the ship might be sold, or the party
have such other remedy as might be thought proper by the Admiralty ;
and the other applied to the Court of King's Bench to prohibit the Admi-
ralty from proceeding in the suit. But Chief Justice Lee said : " I have
no doubt but the Admiralty has a power in this case to compel a security,
and this jurisdiction has been allowed to that Court for the public good.
Indeed the Admiralty has no jurisdiction to compel a sale ; and if they
should do that, you nfight have a prohibition after sentence ; or we may
grant a prohibition against selling, or compelling the party to sell, or to
buy the shares of others." This was agreed to by the whole Court, and
the case ended by prohibiting the Court of Admiralty to direct a sale, but
leaving the Court at liberty to compel security;
3 1 Valin, Liv. 2, tit. 8, art. 6, p. 584, 585, 586 ; Boulay Paty, Droit
Comm. tit. 3, § 5, p. 359 to 366 ; Emerigon, Traite a la Grosse, ch. 4, § 4,
p. 427, 428, edit. 1783 ; Id. p. 454, 455, edit, of Boulay Paty, 1827 ; Par-
dessus. Droit Comm. Tom. 3, art. 623, p. 46, 47 ; Abbott on Shipp. Pt. 1,
ch. 3, § 7, p. 75, 76, 5th edit. — The present Commercial Code of Prance
also provides, that the vessel shall not be adjudged to be sold in order to
a distribution of the proceeds among the joint owners, except upon the
CH. XYI.] EIGHTS AND INTERESTS OP PARTOWNEF.S. 669
d&ntly supposes that the general maritime law author-
izes a sale to he made by the proper Court of Admi-
ralty, in all cases where, hy reason of the disagreement
of the partowners, the ship cannot be employed, whor
ther there be an equality in the dissenting interests or
not.^ MoUoy adopts the same opinion ; and it has
apparently the support of others of the old English
maritime writers, as a generally recognized practical
rule.^ The Consolato del Mare seems to uphold the
doctrine that, at least after the first voyage of a ship
which is owned by the master and other persons, the
partowners may compel a sale of the ship, in case of
a disagreement between them.^ The law of Scotland
gives a right, as it should seem, in all cases, to the dis-
senting partners, to offer their shares for sale to the
other owners at a j)articular price ; and, if this ofier is
not accepted, then to require a judicial sale to be
made of the ship, and the proceeds to be divided
among them.*
application of a moietjr in value of the said owners, unless there be a writ-
ten agreement to the contrary. Code de Commerce, art. 220 ; Locre,
Esprit de Code de Commerce, Tom. 2, p. 52, 53, 54 ; Boulay Paty, Droit
Comm. de France, Tom. 1, tit 3, § 5, p. 339 to 366.
1 Malyne, Lex Merc. ch. 30, p. 120, 121, edit. 1636.
2 Molloy, de Jure Marit. B. 2, ch. 1, § 3, p. 310, edit. 1778 ; 2 Brown
Civ. and Adm. Law, 131.
3 Pardessus, Collect, de Lois Marit. Tom. 2, p. 62, citing Consolato del
Mare, art. 10 [55] ; Id. p. 207, citing Consol. del Mare, art. 184 [229] ;
Id. p. 233, citing Consol. del Mare, art. 199 [244]; Id. p. 237, 238, citing
Consol del Mare, art. 200 [245.]
* Bell's (Wm.) Diet, of Law of Scotland, voce, Sett., Action of,r p.
910 ; Id. Ship. p. 915, edit 1838; 1 Bell, Comm. B. 3, Pt 1, ch. 4, § 11,
p. 504, 5th edit ; 3 Kent, Comm. Lect 45, p. 153, 4th edit., note (b.) — In
the work called " The Sea Laws," the like doctrine is affirmed. Sea
Laws, p. 441, edit 1705. In several of the foreign ordinances an alternar
tive is given to the dissenting partowners, either to buy, or to sell their
respective shares in the ship at a fixed price ; and if they refuse, the ma-
670 PARTNERSHIP. [CH. XVI.
§ 438. It has also been generally supposed, that,
according to the common law of England, in no case
jority or a minority may employ the ship in navigation. See Kuricke,
Jus Hanseat. tit. 5, art. 7 ; Script, de Jure Naut. et Merit. Fasc. p. 7587
759, edit. 1740 Heinec. See also the opinion of Mr. Justice Washington,
in Brooks & Davis v. The Seneca, 18 Arflerican Jurist, (Jan. 1838,) p.
486,490,491. Mr. Justice Washington in this case said; " Our atten-
tion is then invited to the civil law, or rather to the Roman marine code,
another legitimate source of general maritime law ; in which we find sun-
dry wise provisions for adjusting disputes between partowners' of vessels,
from which the three following rules may be deduced. (1.) That the
opinion and decision of the majority in interest of the owners, concerning
the employment of the vessel, is to govern ; and, therefore, they may, on
any probable design, freight out or send the ship to sea, though against the
will of the minority. (2.) But if the majority refuse to employ the ves-
sel, though they cannot be compelled to it by the minority, neither can
their refusal keep the vessel idle, to the injury of the minority, or to the
public detriment ; and since, in such a case, the minority can neither em-
ploy her themselves, nor force the majority to do so, the vessel may be
valued and sold. (3.) If the interests of the owners be equal, and they
differ about the employment of the vessel, one half being in favor of em-
ploying her, and the other opposed to it, in that case the willing owner
may send her out." Mr. Bell, speaking on this subject, after stating the
English rule, says ; " In Scotland the remedy has been by sale. Not only
in the 'case of equality, but even where the minority opposed the employ-
ment, the dissentient owners, minority, or equal, have, in admiralty, been
entitled to insist, either for a sale, or that, at a price put on the shqtres, the
other owners shall purchase their shares, or be obliged to part with their
own. This doctrine was grounded on the consideration, that partowners,
though not properly copartners, frequently suffer by the contracts or de-
linquencies of shipmasters, perhaps not of their own choosing ; for which
they are answerable, at least to the value of their own share. And the
same doctrine, though not supported by such considerations of hazard,
was, in modern times, applied to the case of a brewery held in common.
Which of these rules ought now to. prevail in this united country, it might
be presumptuous to say. But it may be necessary to reconcile them in
some future case, in which the property comes to be mixed, and persons
of both countries concerned in the same vessel. Perhaps the course
followed in England may be followed on the same principles of equity,
which have recommended it to adoption by the Court of Chancery in
England, as a measure of less harshness, and less attended with peril,
than the remedy which we have long used." 1 Bell, Comm. B. 8, Ft. 1,
CH. XVI.] RIGHTS AND INTERESTS OP PARTOWNERS. 671
whatsoever of a disagreement of the partowners, as to
the employment of the ship upon any particular voy-
age, does there exist any jurisdiction in the Court of
Admiralty (and, if that Court has it not, no other
Court has,) to order a sale thereof, whether the ship
be owned in equal, or in unequal shares. It is true,
that the terms of the commissions, granted to the
Judges of that Court, include jurisdiction of all mat-
ters, which concern owners and proprietors of shipSj
as such.-' But this jurisdiction of the Courts of Ad-
miralty has been exercised for the last two centuries
in England, if one may so say, in vincuMs, in conse-
quence of the severe penalties imposed upon the
Judges by statute, if they should happen unintention-
ally to exceed their true jurisdiction ; and the open
hostility and prohibitory interference of the Courts of
common law.^ The commissions have thus become
practically much narrowed in the import of their
terms, by the construction of these latter Courts.^ It
was positively, although incidentally, asserted by Lord
Chief Justice Lee, in a case in the King's Bench, in
the reign of George the Second, that the Court of Ad-
ch. 4, § 1, p. 603, 5th edit. See also Jacobsen's Sea Laws, by Frick, ch. 3,
p. 40 to 43, edit. 1818. But see the Elizabeth & Jane, 1 Wm. Rob. New
Adm. E..278.
1 Godolphin, Adm. Jurisd. 43 ; Laws of the Sea, p. 259, edit. 1705 ;
De Lovio v. Beat, 2 Gallis. R. 470, note (7) ; Houghton's Articles, Art.
1633 ; Gierke's Praxis, p. 145, edit. 1798.
2 See De Lovio v. Boit, 2 Gallis, E. 398, &c.
3 The Apollo, l.Hagg. Adm. R. 306, 309.— The late Act of Parlia-
ment (statute of 3d and 4th Victoria, ch. 65,) has in a great measure re-
stored to the Court of Admiralty its ancient jurisdiction, as well as inde-
pendence ; and it exhibits the complete triumph of principles of public
policy and convenience over mere technical doctrines, and the stern oppo-
sition of the Courts of common law.
672 PABTNERSHIP. [cH. XVI.
miralty has no authority to compel a sale in any case
of disagreement whate¥er between partowners.'^ If
this doctrine be in reality established in the common
law of England, it is a reproach both to its equity
and its justice ; for it leaves the parte wners of ships
without any remedy whatsoever, in cases where irre-
parable injuries may arise from an equality of division
in interests and opinions, without any fault or wrong
on either side. Upon what ground it has been' as-
serted, it is difl&cult to perceive. It certainly has no
support in the positive maritime law of other coun-
tries, or in the ancient principles of maritime jurispru-
dence.^ All these point the other way. The Admi-
ralty Courts of England have never of themselves
adopted any such limited doctrine ; but have always
contended for the exercise of the full jurisdiction as
rightful, although they have been practically compelled
to surrender it under the imposing authority of the
Courts of common law.
§ 439. In America a strong disposition has been
manifested to assert the right and duty of Courts of
Admiralty to decree a sale of the ship, in cases of an
equal division of voices and interests, as to undertak-
ing a particular voyage or adventure. It • has been
recognized upon several occasions, as being within the
true scope of the Constitution of the United States, a
case of admiralty and maritime jurisdiction ; and it is
sustained by reasoning which it is difficult to overturn,
unless by striking out of the commission the whole
1 Ouston V. Hebden, 1 Wilson, E. 101 ; Abbott on Shipp. Pt. 1, ch. 3,
p. 73, 74, 5th edit. ; Jocobsen's Sea Laws, by Frick, eh. 3, p. 43, 44, edit.
1818 ; 1 Montagu on Partn. B. 2, ch. 1.
8 Ante, §435,436,437.
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 673
authority of the Admiralty in cases of controversies
between partowners ; and also by disregarding .the
common usages, which have prevailed among mari-
time nations from an early period, and which constitute
the basis of the general maritime law, as well as of the
positive codes, which affirm and enforce it.^ The right
1 Ante, § 435, 436, 437, and note (2,) p. .612. — In the case of Skrine v.
The Sloop Hope, (Bee's Adm. K. p. 2,) Judge Bee declared a sale of a
ship upon a petition of one partowner against another partowner. But the
question was very elaborately discussed on both sides, by very able counsel,
in the case of Davis & Brooks v. The Brig Seneca, Gilpin, R. p. 10. The
learned Judge of the District Court (Judge Hopkinson) pronounced an
opinion against the jurisdiction of the Court to decree a sale, the case
being that of the partowners being equally divided in opinion, and each
wishing to employ the brig upon a distinct voyage. Upon appeal, Mr.
Justice Washington reversed, the decree, and directed a sale ; and the
parties submitted to his decision. Upon that occasion Mr. Justice Wash-
ington relied upon the French Ordinance, not as a mere matter of positive
regulation, but as an exposition of the general maritime law ; and after-
wards he added ; " Having ascertained the true meaning of this article of
the French Marine Ordinance, its authority, or the influence which it
should have in deciding this cause, is next to be considered. It is insisted
by the counsel for the appellee, that this article is nothing more than a
part of the local law of France, founded upon the Boman law of licitation
adopted by France, applicable to the partition of property, movable and
immovable, which is held in. common by two or more persons, which,
without a sale, could not be otherwise conveniently divided between them.
And, in support of this argument, it is remarked, that the expressions of
the article are all negative, and, must necessarily refer to some other code,
whenever the excepted case shall occur. The ingenuity and the imposing
appearance of this argument are freely acknowledged ; but it will not, I
think, bear a close examination. For, admitting the general law of licita-
tion to have formed a part of the local law of France, it does not follow,
that an ordinance restraining and qualifying that law in cases, and in rela-
tion to subjects purely maritime in their nature, should likewise form a
part of the local law of that country. It would rather seem^ tlkt, on ac-
count of their maritime character, it was deemed proper to withdraw such
subjects from the local, for the purpose of incorporating them into the
general, marine code of the nation. That the 5th article is of this description
has not been questioned. It was no doubt copied from the Roman mari-
time code, which, having also provided for cases of disputes between the
PARTN. 57
674 PARTNEKSHIP. [CH. XVI.
to order a sale of property, subjected to its jurisdiction,
is clearly a matter withia the competency of a Court
owners of unequal interests, as well as between those having equal interests
in one event only, it would seem as if the 6tli article had been introduced
for the purpose of perfecting the system, by afibrding a remedy in another
event, for which the Koman law had made no provision. It is most ob-
vious, in short, that Valin, as well as other jurists, who have treated of
these articles, have considered them, not as parts of the common, but of
the maritime law of France ; and we find provisions similar to them in
principle introduced into the commercial code of that country. That
the Ordinances of Louis XIV. are not of binding authority upon the
maritime Courts of other countries, I freely admit ; but as affording evi-
dence of the general maritime law of nations, they have been respected by
the maritime Courts of all nations, and adopl;pd by most, if not by aU of
them, on the continent of Europe. We are informed, that this code was
compiled from the prevailing maritime regulations of France, and of other
nations, as well as from the experience of the most respectable commercial
men of France. And why should not such' parts of it as are purely of a
general maritime character, which are adapted to the commercial i state
of this country, and are not inconsistent with the municipal regulations
by which our Courts are governed, be followed by the Courts of the
United States in questions of a maritime nature ? I leave this question
to be answered by those, who would restrain the admiralty jurisdiction of
the District Courts within the liinits allowed by the Common Law Courts
of England to be exercised by the High Court of Admiralty of that
country. • And why, let me again ask, shall the 6th article of xnis code be
rejected in the case now under consideration ? Neither justice nor policy
requires it ; for it is manifest that the appellants must either slirrender
their property in this vessel, or rather the fruits of it, to the appellee, or
their equal right to appoint the master, and to decide upon her destination,
or that she must remain idle in port, until the subject in dispute is totally
lost to both the owners. There is no other imaginable alternative, unless
it be the one which the appellants ask for ; for if the appellee may now
legally claim the right to take this vessel to sea, and, by giving security
for her safe return, may take to himself, in exclusion of the other part-
owners, all the earnings of the voyage, his right to employ her, on the
same terms, as long as she shall be in a condition to be navigated, will
continue equally valid, and the exercise of it can no more be denied then,
than now. Suppose, for the purpose of further illustrating this part of the
subject, these parties had filed cross petitions, setting forth the difierence
between them, respecting the appointment of a master, and each praying
to be permitted to take the vessel to sea under the usual stipulations ; since
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNEES, 675
of Admiralty, and, indeed, is familiar in practice, in
order to prevent irreparable mischiefs or impending
neither could entitle himself to a preference, what could the Court do, but
dismiss both petitions, and thus leave the vessel unemployed; unprofitable
to both parties and to the interests of commerce, and subject to all the
injury to which such a state of things would expose her ? Yet this is
substantially the present case ; and if the Court has no power to decree a
sale, it is clear that neither of the parties can take the vessel to sea, with-
out a decree of the District Court authorizing him to do so. Upon the
whole, considering the article of the French Code, which has so often
been referred to, as constituting a part of the maritime law of nations ;
that it is in itself a wise and equtiable provision ; that it is not inconsistent
with the commercial state of this country, or with any law which should
govern this Court ; I feel myself not only at liberty, but bound to adopt
and apply it to the present case ; and I shall, therefore, reverse' the sen-
tence of the District Court, and decree a sale of this vessel. My opinion,
I acknowledge, was very different, when this cause was opened, from that
which I now entertain. I had read that which was pronounced in the
District Court by the learned Judge of that Court, with an entire convic-
tion of its correctness. But the new evidence which has been introduced
in this Court, presents, in at least one most essential particular, a different
case from that which was submitted to the view of that Court." Brooks &
Davis V. The Seneca, ;18 Amer. Jurist, (Jan. 1838,) p. 486, 492 to 494.
The decisions of the Courts of Common Law upon questions of Admiralty
Jurisdiction ought, for many reasons, historically well known, to be received
with great scruple and hesitation, especially when considering the times
when these questions were principally agitated, during the hostile contro-
versies between these Courts and the Court of Admiralty. Nor, indeed,
considering the very slight means of knowledge then possessed by the Courts
of Common Law upon the doctrines of commercial and maritime jurispru-
dence, a system very little in consonance with the strict doctrines of the
common law, is it at all a matter of wonder, that the decisions of these
Courts upon this subject should have little in them to commend them for
adoption in the present age, either in point of reasoning, or of principle,
or of learning. How, indeed, it could be, that the Admiralty had un-
doubted jurisdiction in cases of disputes between partowners themselves,
and ^Iso between partowners and the master, to dispossess one party and
give possession to the other, thus acting in rem, in order to prevent irre-
parable mischief or ruin to the joint property ; and yet, that it could not,
to prevent the like mischief and ruin, direct a sale thereof, if it were the
only adequate means to attain the end, is a matter of no small difficulty to
understand. Nothing is more clear or more common in the exercise of
676 , PARTNERSHIP. -, [CH. XVI.
losses.^ Analogy, therefore, is clearly in. its favor ; and
unless some limitation or exception can be asserted to
exist, either in the origin, or constitution, or practice
of the Court itself, it will not be a very satisfactory
mode of disposing of the question, for a Court of Com-
mon Law to assert, upon its o'wn mere dictum, without
any reasoning in support of it, that the Court of Ad-
miralty has a right, in cases of disputes between part-
owners of ships, to take a stipulation, but not to order
a sale. Such language would seem more like an edict
than a judgment^ and to promulgate an arbitrary dis-
tinction, father than a rational interpretation of the
jurisdiction of another Court.
§ 440. Having thus considered the rights, duties,
obligations, and liabilities of partowners, as between
themselves, in respect to the repairs, possession, and
employment of the ship, and the authority of the ma-
jurisdiction by Courts of Admiralty, than to decree a sale of ships and of
other property in their custody, to prevent loss, at decay, or ruin. Even
Courts of Equity, although their jurisdiction rarely acts in rem, will direct
a sale of property subjected to claims within their cognizance, in order to
adjust rights, and to distribute proceeds, where otherwise irreparaj)le mis-
chief might ensue, or no other sufficient remedy exists. This is very
common in cases of a dissolution of partnership, and in cases of charges
upon land, and even sometimes in cases of pledges of personal property.
See 2 Story on Eq. Jurisp. § 1024 to 1028 ; Id. § 1033. See also Stevens
V. The Sandwich, 1 Peters, Adm. R. 233 ; De Lovio u._ Boit, 2 Gallis. R.
398, 463 ; 3 Kent, Comm. Lect. 45, p. 153, 154", arid notes, Ibid. As to
the jurisdiction of Courts of Admiralty in cases between partowners, see
the Commissions to the Vice- Admiralty Courts in America (which in this
respect are mere copies of the Commission of the High Court of Admiralty
in England), cited in De Lovio v. Boit, 2 Gallis. R. 470, note ; Curtis on
Merchant Seamen, p. 348; note (3) ; Godolphin, Admr. Jurisd. ch. 4, p. 43 i
Sir Leoline Jenkins's Works, Argument in the House of Lords on the
Admiralty Jurisdiction, Vol. 1, p. 76,-80 to 84; Id. p. 792; 2 Brown,
Civil and Adm. Law, p. 77, note (5); Id. p. 130 to 133.
' Ibid.
CH. XVI.] RIGHTS AND INTERESTS OP ^PARTOWNERS. 677
jority to direct and control the same, let us now pro*
ceed to examine some other rights, duties, obligations,
and liabilities, arising from the same relation, when
all the partowners act together, by common consent,
for their mutual interest. In the first place, it may
be convenient, here, to consider the rights and reme-
dies, where one or more or all of the partowners, by
common consent, g,re employed in the general con-
cerns of the ship, or of a part thereof, and expend
moneys, or contract debts on account thereof. There
can be no doubt, that, in such cases, aU the partown-
ers are bound to contribute and pay their respective
shares of such expenditures, and that all of them are
liable, in solido for the unpaid debts so properly in-
curred on the- joint account.^ But the question may
arise, whether this is a mere personal charge, or
whether the respective partowners have also a' lien
on the ship itself for the expenditures, or charge,
made by them, which lien is capable of being enforced
against the ship itself, in cases of the insolvency,
death, or bankruptcy of a particular partowner, or any
other failure on his part to discharge his own share
thereof.
§ 441. In cases of partnership, we have already
seen^ that the partners respectively have a specific
lien upon the partnership property, for all expenditures
made by them, and balances due to them for advances,
and other liabilities incurred on account of the part-
nership, as well as for their shares of the partnership
1 Ante,^ 419, 420 ; Abbott on Shipp. Ft. 1, ch. 3, ^ 8, p. 76, 5th edit. ;
Gollyer on Partn. B. a, ch. 4, § 4, p. 811, 812, 2d edit.; 1 Montagu on
Pai:tn. B. 2, ch. 1.
2 Ante, § 326, 346, 347, 360, 361.
57*
678 _ PABTNERSHIP. [CH. XVI.
ejBFects, upon a dissolution of the partnership.^ There
is as little doubt, that partowners of a ship, who pur-
chase a cargo, and engage in a common voyage and
adventure, upon the joint account and profit of aU
concerned, (and not merely in an employment of the
ship on freight,) have also a like lien^ for all disburse-
ments and advances, as well as for their share of the
profits, upon the property employed in such voyage or
adventure, and its proceeds ; for as to such voyage or
adventure, they are treated as partners, and not merely
as partowners.^
1 Ante, § 326, 346, 347, 360, 361 ; Collyer on Partn. B. 5, ch. 4, § 1,
p. 793, 794, 2d edit.
[2 In Green v. Briggs, 6 Hare, 400, it was said that the use of the word
" lien, " in this connection, did not properly describe the right of a part-
owner to be reimbursed out of the gross freight, the expenses incurred in
the prior repairs and outfits of the ship.]
3 Ante, § 54, 55, 56 ; Abbott on Shipp. Pt. 1, ch. 8, § 9, 10, p. 77, 78,
79, 5th edit.; Collyer on Partn. B. 5, ch. 4, § 1, p. 794, 2d edit. ; Holder-
ness :u. Shaokels, 8 Barn. & Cressw. 612; 1 Montagu on Partn. B. 2,
ch. 1. — In the case of Holderness i). Shackels (8 Barn. & Cressw. 612,
618,) the very distinction was stated by Lord Tenterden, in delivering his
opinion. " This is not the case of a claim of lien on the share of the
ship, but a claim by persons, being partowners of a ship, engaged to-
gether in an adventure ; and the subject-matter, in respect of which this
action is brought, is part of the proceeds of that adventure, viz., part of
the oil, which had been obtained on a fishing voyage. Now, it is clearly
established, as a general principle of law, that if one partner becomes a
bankrupt, his assignees can obtain no share of the partnership efiects until
they first satisfy all that is due from him to the partnership. The case of
Smith V. De Silva, (Cowp. R. 469,) is a very entangled case, and the
facts stated in the report are not very clear or perspicuous. It appears
that De Silva had originally made advances, not as partowner of the ship,
nor even as partner in the adventure, but as a person appointed by all the
partowners to manage the adventure for them, rather as their agent than
as their partner. He afterwards acquired an interest by purchasing a part
of the ship, and so became a partner in the adventure ; but he was not an
original partner. Smith v. De Silva may, therefore, have been properly •
decided, without breaking in on the general principle to which I have
adverted."
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 679
§ 442. But the question here propounded is in-
tended to apply to the case of expenditures, advances,
and debts, incurred on account of the ship, by the
partowners, merely in their character as such, as, for
example, for repairs, or for outfits for a voyage, or by
discharging existing liens thereon. Upon this ques-
tion, different judicial opinions have been expressed
by eminent Judges in England and in America.^ Lord
Hardwicke, upon the niost full and deliberate consid-
eration, held, that where any partownei; died without
paying his portion of the expenses of building and
fitting out the ship, the other paatowners had a speci-
fic lien on his share in the ship, for the moneys which
they had laid out, and the liabilities they had incurred
on this account.^ On the other hand, Lord Bldon,
1 Abbott on Shipp. Pt. 1, ch. 3, § 9, 10, p. 76 to 80, 5th edit; CoUyer
on Partn. B. 5, ch. 4, § 1, p. 793, 794, 2d edit.; 3 Kent, Comm. Lect.
43, p. 39, 4th edit.; 1 Montagu on Partn. B. 2, ch. 1, and Id. App.
note (z.)
2 Doddington v. Hallett, 1 Ves. R. 497 ; Abbott on Shipp. by Shee, Pt.
1, ch. 3, § 5, p. 94, edit. 1840. [Affirmed in the late case of Green v.
Briggs, 6 Hare, 395, where Vice-Chancellor Wigram observed: — "The
case of Doddington v. Hallett, was referred to in argument by the plain-
tiff's counsel, but only (as I understand) for the purpose of excluding the
suggestion that the plaintiff relied upon it, or upon the doctrine it con-
tains, for supporting his claim in this suit. I collect from, Story on Part-
nership, that upon principles of public policy and convenience, America
has adopted Doddington v. Hallett. But, however that may be, it is cer-
tain that Lord Eldon, in Ex parte Harrison, and in Ex parte Young, de-
liberately overruled it. And the plaintiff was hot wrong in reminding
me at the outset, thafr what he seeks by this suit is, not to affect the ship
or the proceeds of the sale of the ship, but only to have her gross earn-
ings, or a sufficient part, applied in paying the expenses incurred in mak- .
ing them, before profits are divided amongst the partowners. From this
point I shall start by making three assumptions: first, by excluding the
repairs of the huU of the ship ; secondly, by supposing the ship's earnings
to have consisted of a cargo of whale oil made upon a whaling voyage,
and not to have arisen in the shape of freight ; and, thirdly, by assuming
680 PARTNERSHIP. [CH. XVI.
•upon great consideration, overruled this decision of
Lord Hardwicke, and maintained that there was no
that the voyage was simple and entire, and not affected by considerations
■which sometimes apply where an entire voyage out and home has, for
some purposes, been considered as consisting of several voyages. After
these assumptions I need not dwell long upon the point ffrst contended for
by the plaintiff. Holderness v. Shackels is a case in point. The Court
distinguished between the ship itself, and her earnings ; and held in that
case, that although partowners were tenants in common of the ship, they
were jointly interested in the use and employment of the ship, and that
the law as to earnings must follow the law in partnership cases. And in
Ex parte Hill the Vice-Chancellor said, ' If there had been no sale the
creditors would have had no lien on the ship, because that was not joint
property ; but the earnings of the ship would have been joint property,
and liable to the joint creditors, not from any doctrine peculiar to the
earnings of a ship, but on the general principle applicable to the joint
property of every partnership.' If in this case the ' Thames ' had been
employed on a whaling voyage, and the money now at the / bank repre-
sented the cargo, no dispute could have arisen. Then is freight, qua
earnings, distinguishable from other earnings of a ship, for the purpose
under consideration ? In the absence of authority establishing such a
distinction, or a clear principle requiring me to adopt it, I will not admit
it. The authorities, in fact, as far as they go, negative the distinction in-
stead of supporting it. In Ex parte Young, in which Lord Eldon's mind
was distinctly called to the difference between the ship and her earnings,
he said, ' I have no doubt that freight is liable to the joint demand : as to
the ship, it stands upon the nice distinction of a tenancy in common.' In
Ex parte Hill, the earnings of the ship, with which the Court had, to deal,
was freight. In Ex parte Christie, Lord Eldon said, that what was com-
ing from the master was joint earnings. The language of Story on Part-
nership is not opposed to this conclusion. The learned author meant only
to state what he considered clearly decided by authority, and not to say
that freight might not be subject to the same law as other earnings of a
ship. Does principle then require me to admit the distinction contended
for, between freight and cargo, for a purpose like the present ? Suppose
a ship, by the consent of the owners, to be fitted for a voyage, and to make
profit partly by freight, and partly by merchandise. Holderness w. Shack-
els furnishes the law in the one case. Upon what principle is the mode
of adjusting the account between thepartowners to be split, with refer-
ence only to the nature of the earnings the ship has made ? Am I bound
to hold that each alteration in the employment of a ship, which accident
or convenience may, from day to day, suggest, is to affect the rights of the
partowners inter se, as to the expenses necessary to prepare the ship for
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 681
lien in such cases by the partowners upon the shares
of each other.^
her employment ? So here, in fact, (though it forms no part of the argu-
ment on which I mean to rely,) it does appear that the profits made were
nofexclusively from freight; that there was a cargo of beer, or some arti-
cle of export to a small amount, that entered into the transaction. If a
distinction like that contended for, — a distinction which leads to manifest
injustice, and in support of which nothing but what Lord Eldon in Young's
case calls a ' nice distinction,' turning upon a tenancy in common, be not
already established, I see no ground for it. The case of Helme v. Smith
was referred to. In tfiat case it was decided, that the managing owner
may sue each'shareholder for his proportion of the expenses before the
adventure ends, which it was said in an ordinary partnership he could not
do. Other cases to the same effect were cited. But there is no reason
why that right should preclude the partner, who made an advance for his
copartner for joint purposes, from insisting, where joint property comes to
be divided, that in making the division, each partner, before he receives
his proportion of profits, shall be charged with his due proportion of the
' Ex parte Young, 2 Ves. & Beam. R. 242 ; Ex parte Harsison, 2 Rose,
K. 76. — Lord Tenterden, (Abbott on Shipp. Pt. 1, ch. 3, § 10, p. 79, note
(1,) Amer. edit. 1829,) in his earlier editions, stated his own doubts upon
the doctrine of Lord Hardwicke, in language which was afterwards adopted
by Lord Eldon, in Ex Parte Young, (2 Ves. & Beam. 242,) and there-
fore it is here inserted, although omitted in the later editions. He said ;
" It seems to have been considered, that partowners might have a lien on
each other's shares of a ship, as partners in trade have on each other's
shares of their merchandise. But I do not find this point to have been
ever decided ; and there is a material difference between the two cases.
Partners are at law joint-tenants of their merchandise ; one may dispose
of the whole property. But partowners are tenants in common of a ship.
One cannot sell the share of another. And if this general lien exists, it
must prevail against a purchaser, even without notice ; which does not
seem consistent with the nature of the interest of a tenant in common.
It is true, indeed, that as long as the ship continues to be employed by the
same persons, no. one of them can be entitled tq partake of the profits,
until all that is due in respect to the part he holds in the ship, has been
discharged. But as one partowner cannot compel another to sell the ship,
there does not appear to be any mode by which he can enforce against
the other's share of the ship, in specie, the payment of his part of the ex-
penses." See also 1 Montagu on Partn. B. 2, ch. 1, and Id. App. note (z.)
Why may not a lien be fairly presumed in such cases to be contemplated
by the parties ?
682
PARTNERSHIP. [CH. XVI.
§ 443. It does not appear that any distinction was
taken by Lord Eldon, in the application of the doc-
expenses of making them. The observations of Mr. Justice Bosanquet,
in Helnie v. Smith, apply to that view of the case. Moreover, the objec-
tion would apply as strohgly to Holderness v. Shackels as to any case. A
form of expression found in numerous cases was next relied upon ; name-
ly, that 'freight follows the ownership in a ship, as an incident;' and
Case V. Davidson, and other cases to the same effect were referred to.
This law I do not doubt, but it is plain that those cases have no bearing
upon the principal csise. The question in those cases has been, who was
the rightful party to receive such freight as was payable ; and not whether
the freight to be paid was gross or net freight, which is the only question
here. Here there is no dispute that Briggs & Co. are entitled to such
freight as is coming in respect of Acraman's share, and the only question
is, whether the expenses of earning the freight are not, as between the
partowners, to be. first paid in ascertaining what freight is coming. Ex-
cluding then the expense of the repairs of the ship, I hold that the plain-
tiff has a right to have the gross freight applied in paying the expenses
of the refitting and outfit of the ship, before any division amongst the
partowners shall be made. The argument against the plaintiff's claim to
have the expenses of repairs protected in the same way, was in substance
this : that the repairs to the hull of the ship were inseparable from it ; that
they were, in effect, improvements of the chattel held in common, and
must be governed by the same law which regulates the rights of the share-
holders inter se respecting the sl^ip itself. Now I will not deny, that a
case may exist in which the question of repairs would necessarily be so
dealt with. Nor will I say that any rule of logic would be violated by
applying that reasoning to all cases of repairs. Nor, if I found authority
supporting that reasoning in its application to repairs, do I say that my in-
dividual opinion is so strong against it, that I should feel justified in op-
posing that opinion to any distinct authority. But that is not the question
here. . I am satisfied there is nothing, in point of authority, to pi-event my
holding that repairs necess^ily and properly done, with a view to a par-
ticular adventure, — repairs without which the particular adventure could
not be undertaken, should be governed by the same considerations which
apply to such parts of the refitting and outfit as are inseparable from, and
not part of the ship. And, if that be so, I cannot hesitate in preferring a
conclusion which (without possible injury to any one) excludes the techni-
cal distinction upon which Lord Eldon overruled Doddington v. Hallett,
and applies to this case the equitable rules by which the rights of partners
inter se are regulated. I say without possible injury to any one, because,
if, at the expiration of the adventure, the ship be of increased value, each
tenant in common will, in that character, have the benefit of the improve-
CH. XVI.] EIGHTS AND INTERESTS OF PAETOWNEES. 683
trine, whether the party making the advances and ex-
penditures was the ship's husband or not, or whether
the ship's husband was a partowner or not. The lien
seems equally to have been denied by him in each
case. , The ship's husband, indeed, will be entitled, if
a partowner, to a lien for his disbursements and out-
fits upon the proceeds and profits of the voyage or
adventure, undertaken upon joint account and for joint
profit, as a sort of partnership for the voyage or ad-
ment. The question, however, is whether, upon legal principles, this 'is
the right conclusion. For the purpose of trying this I will first suppose,
that the repairs are strictly necessary for the purposes of the adventure,
and such as would be exhausted in the adventure. Why are the expenses
of such repairs not to be treated as part of the capital employed by the
adventurers on joint account ? All expenditure for the purpose of, and
necessary to the joint adventure, must, prima facie; be taken to be the
capital embarked in fhe adventure. The circumstance that the ship (held
in common) is, during the adventure, improved in value, cannot by any
logical ^e alter the character of the expenditure which was made with
a view Wthe adventure ; and if that be admitted, the case is ended, for a
partner who has not paid up his share of the capital, cannot entitle him-
self to a share of the profits, without giving credit for the share of capital
which he ought to have supplied. It would not be diflScult to suggest a
case in which tenants in common of land, agreeing to be partners in farm-
ing it for experimental, as distinguished from ordinary agricultural purpo-
ses, and incurring extraordinary expenses in so doing, by which the land
ilaelf is improved during the partnership, would, as between each other,
have^a right similar to that which I hold to exist in this case. Would,
then, the circumstance, (if it existed,) that the expenditure in repairs was
not exhausted with the adventure, alter the case ? ff expenditure were
necessary or proper for a specific purpose, why should this incidental con-
sequence alter the case ? I have already said, that no injury could possi-
bly result to any party from it. The utmost consequence, however, would
be the apportionment of the expenses of the repairs; In this case, the
evidence is, that the repairs were necessary for the adventure. The ship,
at the end of the voyage, was in fact broken up, and the defendant has
made no case for apportionment. Where the reasoning upon which Lord
Eldon overruled JDoddington v. Hallett applies, it must be acted upon ;
where it does not, the principle upon which Doddington v. Hallett pro-
ceeded will, I concei^^be followed."]
684 PARTNERSHIP. [CH. XVI.
venture. And if the ship's husband be a mere stran-
ger, and he has regularly come to the possession of
the proceeds of the voyage, or of the ship itself, if sold,
or of the ship's documents and freight, he will be en-
titled to a lien thereon for his reimbursement and
indemnity. But beyond this, the ship's husband does
not seem to be recognized as having any peculiar lien,
or at least not any upon the ship or its proceeds.-^
There seems no little hardshi;^ in this strict doctrine ;
and it forms a marked contrast with that liberal
policy, with which the Court of Admiralty, following
OHt the precepts of the general maritime law, was
accustomed to act, when allowed the free exercise of
its own jurisdiction, by giving a lien on the ship for ail
supplies and expenditures thereon.^
§ 444 In America, the same question has occurred,
and the doctrine of Lord Hardwicke has been affirmed,
as best founded in principle, and public policy, and
convenience.^ In short, cases of this sort are •eated
1 1 Bell, Comm. B. 3, Pt. 1, ch. 4, § 1, p. 503 to 505, 5tli edit.; CoUyer
on Partn. B. 5, ch. 4, § 4, p. 810, 2d edit. ; Abbott on Shipp. Pt. 1, ch. 3,
§ 8, 9, 10, p. 76, 77, 78, 5th edit. ; Ex parte Young, 2 Rose, R. jg, note ;
S. C. 2 Ves. & Beam. 242.
2 See on this subject the resolutions of the Privy Council of England of
the 18th of February, 1632, assented to by all the Judges, expressly
affirming the jurisdiction of the Admiralty, in the following terms. " If'
a suit be in the Court of Admiralty, for building, mending, saving, or
necessary victualling of a ship, against the ship itself, and not against any
party by name, but such as for his interest makes himself a party ; no
prohibition is to be granted, though this be done -within the realm."
Godolphin on the Admiralty Jurisdiction, p. 159 ; Zouch on Admiralty
Jurisd. p. 122, 123 ; 2 Brown, Civil and Adm. Law, p. 78, 79 ; Sir Leoline
Jenkins's Works, Vol. 2, p. 76, 80 to 84, Argument on Admiralty Juris-
diction. See also 1 Bell, Comm. B. 3, Pt 1, ch. 4, § 5, p. 62aj 526, 527,
5th edit. . *
3 Mumford v. Nicoll, (20 John. R. 611,) overruling the decision in the
same case in the Court of Chancery, 4 John. Ch. R^22 ; Durham v. Jar- '
CH. XVI.] BIGHTS AND INTERESTS OF PAETOWNEBS. 685
as constituting a quasi partnership, with reference to
the intended voyage or adventure, upon which the
vis, 8 Barbour, 94. The reasoning of Lord Hardwioke was to this effect :
" No purchaser or assignee of any share of this ship is now before me, but
merely the representatiVe of Thomas Hall, who was partowner with others
in the trade of this ship ; and his representative is just in the same case as
he would be himself; and these general creditors are in the same case,
having no assignment or specific lien on his share in the ship ; and the
rule of determination must be exactly the same as if Thomas Hall himself
had been before the Court, and an account prayed against him. It must
be admitted, the ship may be the subject of partnership, as well as any
thing else ; the use and earnings thereof being proper subject of trade,
and the letting a ship to freight as much a trade as any other/ Then it
appears plainly to be a partnership among them, and the ship itself to be
part of the subject thereof, which was to be let to freight to the company,
it being their method of trading. The foundation of this partnership stock
is the ship itself, which must be employed, and the earnings and profits to
arise. Undoubtedly all these persons subject to this agreement, are liable
in solido to the tradesmen who fitted it out ; and this agreement for pro-
portional shares is as between themselves ; which is the case of all part-
nerships. But as to all persons furnishing goods or merchandise, or em-
ployed in work, each are liable in solido." The opinion of Lord Eldon is
very brief, and almost without reasoning. He observed, in Ex parte
Young (2 Ves. & Beam. R. 242), " The difficulty in this case arises upon
the decision qf Doddington v. Hallett, by Lord Hardwicke, which is di-
rectly in point. That case is questioned by Mr. Abbott, who doubts what
vfrould be done with it at this day ; and I adopt that doubt. . The case,
which is given by Mr. Abbott, from the Register's Book, is a clear decision
by Lord Hardwicke, that partowners of a ship, being tenants in common,
and not joint-tenants, have a right, notwithstanding, to consider that as a
chattel used in partnership, and liable, as partnership effects, to pay all
debts whatever, to which any of them, are liable on account of the ship.
His opinion went the length, that the tenant in common had a right to a
sale. There is great difficulty upon that case ; and the inclination of my
judgment is against it. But it would be a very strong act for me, by an
order in bankruptcy, from which there is no appeal, to reverse a decree
made by Lord Hardwicke in a cause. From a manuscript note, I know it
was his most solemn and deliberate opinion, after grfeat consideration, that
the contrary could not be maintained ; and there is. no decision in Equity
contradicting that.'' In the note of Lord Eldon's judgment in 2 Rose, R.
78, note, the language attributed to him is : " Doddington v, Hallett, I
know, from a MS. note, to have been Lord Hardwicke's deliberate judg-
ment. In a case of joint property, I admit there cannot be much difficulty.
PAETN. 58
686 PARTNERSHIP. [CH. XVI.
ship is to be employed ; and, therefore, the repairs,
outfits, and other expenses incurred to accomplish the
It is difierent in a tenancy in common, and in an undivisible personal
chattel. I certainly differ from Lord Hardwicke ; but I hesitate to decide
against his deliberate judgment in a cause upon a petition in bankruptcy.
The better way will be, at present, to intimate my opinion to be against
this lien, leaving the parties^ if dissatisfied, to apply for a rehearing. I
have no doubt, that freight is liable to the joint demands. As to the ship,
it stands upon the nice distinction of a tenancy in common.'' In Mumford v.
NicoU, (20 John. E. 611,) Mr. Ch. Justice Spencer considered the subject
very much at large, and his opinion was adopted by the Court of Errors.
Upon that occasion he said : " The decree appealed from considers the
appellant and Stilwell to have been owners as tenants in common, in equal
moieties, of the brig Phoenix, and that they were special partners, and had
a joint interest in the cargo and voyage ; and that that partnership was
one entire and distinct concern, unconnected with any former partnership,
in any former voyage, in any other vessel ; and it was decreed, that a mas-
ter should state an account between the respondents, as assignees of Stil- i
well, and the appellant, in respect to the brig Phoenix, and her cargo and
voyage, and that the appellant be charged with a moiety of the net pro-
ceeds of the brig sold at Havana, and with a moiety of the net proceeds of
the freight and cargo of the brig on the voyage, or so much, if any, of the
net proceeds of the moiety of the freight and cargo, as shall appear due to
the respondents, as such assignees, after deducting the balance, if any found
due to the appellant from Stilwell, on an account to be taken and stated
between them, in respect to their joint concern in the said freight, and
cargo, and adventure, after all just allowances between them, in respect
to such joint concern, are made. In other words, the decree considers the
appellant and Stilwell as joint owners and partners, in regard to the cargo
and freight, and directs the amount to be stated on that principle, confining
that, however, to the particular voyage and concern of the brig Phoenix ;
and it considers them tenants in common of the vessel itself, and renders
the appellant liable for the net proceeds of the sale of the brig, denying to
the appellant a right to reimburse himself out of those proceeds, however
the accounts between the appellant and Stilwell may stand, either as
regards that voyage, or other concerns and voyages in other vessels. I
put out of consideration, at once, the inquiry, whether the appellant knew
of the assignment to the respondents, of Stilwell's interest in the brig>
when he requested Captain Green to consign to him the proceeds of the
brig and cargo, because there is no complaint of the sale of the brig, which
was made in pursuance of instructions originally given, and which never
were revoked ; and because the appellant's right depends on legal prin-
ciples, and not upon the circumstance that he has those proceeds in his
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 687
enterprise, are deemed to be made on joint account,
and intended to be governed, as to rights and liens,
possession. The question simply is, Has he a right to hold them subject
to the inquiry into the general balance of his account, either in relation to
that particular adventure, or in relation to other and similar adventures ?
In short, under the facts and circumstances of this case, are the proceeds
of the vessel to be regarded as partnership property, either as regards the
voyage of the Phoenix, or other and similar voyages in other vessels ? I
understand the Chancellor as admitting, that the case of Doddington v.
Hallett, (Ves. Sen. 497,) is directly opposed to the decision he has made,
and that he considers that case as not only not having been acted upon,
but as overruled by the cases to which he has referred. We ivill see
what Lord Hardwicke decided in that case. The bill was founded on an
agreement between the plaintiffs and one Hall, authorizing the latter to
contract for the building of a ship, and for fitting out, managing, and vic-
tualling her, with an agreement to pay proportional shares, according to
their interests. "The partowners claimed, against Hall's representatives,
a specific lien, upon what was due to Hall for his share, on account of the
money the plaintifis had paid to the tradesmen, in fitting, &c. the ship,
and that Ihe administrators should not run away with it, as part of the
general assets for all the creditors. Lord Hardwicke, after premising,
that the case stood as though Hall himself was before the Court, no one
having a specific lien on Hall's share in the ship, went on to say that it
must be admitted, that a ship might be a subject of partnership, as well as
any thing else, the use and earnings thereof being a proper subject of
trade. He said, it was a partnership among them, and the ship itself to
be part of the subject thereof, which was to be let to freight to the com-
pany, it being their method of trading. The foundation of this partnership
stock was the ship itself, which must be employed, and the earnings and
profits Jo arise. That, undoubtedly, aU the persons subject to the agree-
ment are liable in solido to the tradesmen who fitted it out, and the agree-
ment for the proportional shares is as between themselves, which is the
case of all partnerships. He said, if it had been agreed, that a brewhouse
should be part of the partnership stock, (which sften happened,) the ease
of the brewhouse being used in the partnership trade, if workmen do work
in the brewhouse, every partner would be liable to that, and that brew-
house must be brought into the partnership account ; and if more was due
to one partner than another, all the shares of the partnership stock, con-
sisting of the lease of the brewhouse, as well as the other effects, are
liable to that account. He went on to observe, that if the share of one
partner had been assigned, if it stood on the head of general equity, he
should be of opinion, that if the purchaser had notice of the partnership,
he would be subject to it ; and he decreed for the plaintiffs. Lord Hard-
688 PARTNERSHIP. [CH. XVI.
by the rules, of strict partnerships. After all, there
would seem to be intrinsic equity in the doctrine
■wicke perfectly understood the distinction between a tenancy in common,
such as owners of diflerent shares in a ship have among themselves, and
a joint tenancy, as between partners of the goods and stock in trade.
He meant to decide, and did decide, that a subject, which ordinarily may
be held as a tenancy in common, may, by the acts of the parties, become
to be held in joint-tenancy. And the facts of the agreement to build the
ship at their joint expense, in proportion to their shares, and the agree-
ment to fit her out, manage and victual her, for the East India Company,
formed, in his judgment, such a community of interest, as to constitute
that a partnership transaction, in relation to those subjects ; and thus a
specific lien was acquired, by those who contributed more than their
shares, against the share of the one who contributed less than his propor-
tion. This case derives strong confirmation from the case of Smith v,
De Silva and others, (Cowp. K. 469,) in which it was decided, upon an
issue out of Chancery, that the interest of partowners in a ship, and in
the profits and loss of an adventure, undertaken by their mutual consent,
is not afiected by the banki-uptcy of one of them taking place after the
commencement of the voyage, although he has not paid his full share of
the outfit. Lord Mansfield, in giving the opinion of the Court, held, that
if the other partners had been obliged to discharge the amount of the
notes, which remained unpaid at the time of the bankruptcy, the assignees
must have allowed the other partners the full sum paid for the bankrupt,
and would have come against them only for the balance due to him, if
any. Mr. Abbott, in commenting upon this case, says, it seems to have
been considered- that partowners of a ship might have a lien on each
other's shares of a ship, as partners in trade have on each other's shares of
their merchandise. And in the third edition of his Treatise, (p. 94,) he
says ; ' It is true, indeed, that as long as the ship continues to be employed
by the same persons, no one of them can be entitled to partake of the
profits, until all that is due, in respect to the part he holds in the ship,
has been discharged.' And again, after citing the case of Doddington v.
Hallett, without a word ofi disapprobation, in p. 96, he says ; ' This usage,
or course of trade, I apprehend to be, to charge the assignee or purchaser
in account, for the outfit and other expenses incurred^ in respect of the
voyage, of which he is entitled, in consequence of his purchase, to share
the profits, which can only be the voyage in prosecution at the time of
the purchase ; but not to carry back the charge, as against him, to the
expense of any antecedent adventure, from which he can derive no profit.'
The cases cited by the Chancellor, and on which he has relied, to establish
a contrary doctrine, do, undoubtedly, strongly impugn the authority of
Doddington v. Hallett, though I must be allowed to say, that the case
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNERS. 6.89
maintained by Lord Hardwicke ; and, as liens may-
arise, either from express or implied agreements, it is
but a reasonable presumption, (in the absence of all
controlling circumstances,) that partowners do not in-
tend to reiy solely upon the personal responsibility of
each other, to reimburse themselves for expenses and
charges, incurred upon the commpn property, for the
common benefit; but that there is a mutual under-
standing, that they shall possess a lien in rem.
§ 445. We have already had occasion to state, that
Ex parte Parry, (5 Ves. Jun. 575,) is very distinguishable, and does not
oppose Lord Hardwicke's opinion. It is, however, to be observed, that
all the cases on which the decree is founded, are long since our revolu-
tion, and have no authoritative influence here. And I am not disposed to
overrule Lord Hardwicke, supported, as I think he is, by Lord Mansfield,
and the other Judges who sat with him, in a case in which justice and
right require him to be supported. The statement of this case shows,
that it is much stronger for the appellant, than the case before Lord
Hardwicke. The vessel here was owned in equal shares, and was fitted
out, or to be fitted out, on a circuitous trading voyage, at the joint expense
of the parties. It was, therefore, a limited and special partnership, not
only as to the cargo, freight, and the profits thereon, but as to the fitting
out of the vessel. The appellant, after paying his proportion of mechan-
ics' bills and ship-chandlery, under the assurance they had been paid by
Stilwell, is called upon and compelled to pay them over again. The
respondents are assignees for prior debts, and are chargeable with notice,
or, at all events, !t)ave received the subject, liable to all equities between
the appellant and Stilwell. Can it be just and equitable to deprive the
appellant of his right "to reimburse himself for the moneys he has been
compelled to pay, as partowner, for the default of Stilwell, in whose
shoes the respondents stand ? I answer, unhesitatingly, that it would be
inequitable and unjust to do so. I must not be supposed to overrule the
distinction between partners in goods and merchandise, and partowners of
a ship. The former are joint-tenants, and the latter are, generally speak-
ing, tenants in common ; and one cannot sell the share of the other. But
I mean to say, that partowners of a ship may, under the facts and circum-
stances of this case, become partners as regards the proceeds of the ship ;
and if they are to be so regarded, the right of one- to retain the proceeds,
until he is paid what he has advanced beyond his proportion, is unques-
tionable."
58*
690 PAETNEESHIP. [CH, XVI.
the majority in interest of the partowners have a right
to appoint the master and oflBicers of the ship.'' This
right necessarily carries with it the right to displace
and dispossess the master and other officers, when in
authority or possession of the ship ; and it will make
no difference, in this resjfect, whether the master or
other officer he a partowner or not. However, when
a Court of Admiralty is called upon to enforce this
right, although it allows the authority to displace and
dispossess, to be exercised at the sole pleasure of the
majority, if the master or other officer* is a mere stran-
ger ; yet if he is a partowner, the Court commonly
requires some reasonable ground to be stated there-
for.^
§ 446. It often becomes a matter of important in-
quiry, to what extent the implied authority of one
partowner extends to bind the^others in the concerns
of the ship, when there is no real disagreement among
them which affects their respective rights.^ As to
this, we have seen, that one partowner maiy bind the
others by his contract for repairs and materials and
expenses of outfits by implication, when there is no
known disagreement among them, and there is an
acquiescence in what is done, or is doing.* But tliere
are certain other authorities, which do 'not arise by
implication of law under ordinary circumstances ; and,
therefore, such authorities, whether exercised by a
ship's husband, or by a mere partowner, will not bind
the other owners, unless there is either direct proof,
1 Ante, § 432.
a The New Draper, 4 Kob. Adm. K. 287, 290, 291.
3 Ante, § 419.
* Ante, § 419, 421 ; Davis v. Johnson, 4 Sim. R. 539.
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 691
or a strong presumption, that they have been posi-
tively conferred upon them. Thus, for example,
neither the ship's husband, nor any partowner, as
such, has a right to insure the ship, or to borrow
money, on account of the owners, or of other partown-
ers ;7 or to pledge their shares in the ship for the
expenses of a law suit.^
§ 447. We have seen, in cases of partnership, that
the dissolution thereof is not, under all circumstances,
dependent upon the sole will of any one partner ; but
can, in some cases, be accomplished only by the decree
of a Court of Equity.® The case is far otherwise
with respect to partowners, who are not compellable
to maintain their connection with each other for any
period ; but each may terminate it at pleasure, by a
sale of his own share, without the privity or consent
of the others.* The connection may also be dissolved
1 French v. Backhouse, 5 Burr. K. 2727 ; Campbell v. Steen, 6 Dow,
R. 134 ; CoUyer on Partn. B. 5, ch. 4, § 4, p. 811, 812, 2d edit. ; Abbott
on Shipp. Pt. 1, ch. 3, § 8, p. 76, 77, 5th edit. ; Hooper v. Lusby, 4 Camp.
K. 66 ; Bell v. Humphries, 2 Stark. B. 345 ; 3 Kent, Comm. Lect. 45, p.
157, 4th edit. ; 1 Bell, Comm. B. 3, Pt. 1, ch. 4, § 1, p. 503, 504, 5th edit.
s Ibid. '
3 Ante, § 275, 282 to 303.
* Collyer on Partn. B. 6, ch. 4, § 1, p. 796, 2d edit. ; Id. § 4, p. 811 ;
MoUoy, de Jure Marit. B. 2, ch. 1, § 3 ; Abbott on Shipp. Pt. 1, ch. 1,
§ 3, p. 3 ; Id. ch. 3, § 7, p. 75, 5th edit. — Lord Tenterden, in his work on
Shipping, (Abbott on Shipp. Pt. 1, ch. 3, § 7, p. 75, 76, 5th edit.) has
remarked upon the difference between the law of England and that of
foreign maritime nations as to the right of sale. He says : " We have
seen, that the Court of Admiralty cannot, u\ any case, compel any of the
partowners to sell his interest. The French Ordinance prohibits one part-
owner of a ship from forcing his companion to a sale, (which by the French
laws one tenant in common might in general do,) except in, case of equal-
ity of opinions upon the undertaking of a voyage. But a partowner may
by our law dispose of his interest to another person at any time ; a rule
better adapted to the present state of commerce, than that which formerly
692 PARTNERSHIP. [CH. XVI.
by the death or bankruptcy of any one partowner ; for
then his share passes by operation of law to the repre-
sentative or assignee of such partowner. The absolute
destruction of the ship, also, amounts to a- complete
dissolution thereof
§ 448. Molloy has put some curious cases of the
constructive ovFnership, as well as of the constructive
destruction of a ship, which it may be well to state in
his own words. " If a ship be broken up or taken in
pieces, with an intent to convert the same to other
uses ; if afterwards, upon advice or change of mind,
she be rebuilt with the same materials ; yet this is now
another, and not the same ship ; especially if the keel
be ript up or changed,'and the whole ship be once all
taken' asunder and rebuilt, there determines the part-
nership, quoad the ship. But if a ship be ript up in
parts, and taken asunder in parts, and repaired in parts,
yet she remains still the same vessel, and not another ;
nay, though she hath been so often repaired, that there
remains not one stick of the original fabric. If a man
shall repair his ship with, plank or other materials be-
longing to another, yet the ship maintains and keeps
her first owners. But if a man take plank and materi-
als belonging to another, and prepared for the use of
shipping, and with them build a ship, the property of
prevailed among some of the nations of the continent, and which did not
permit the sale of a ship until after a possession of three or more years ;
or at least not till after the performance of one voyage at the charge and
risk of the partowners. The old rule appears to have been framed with
a view to the interest of the master, who in former times was a principal
owner, and was the person, who, with the pecuniary assistance of the
other owners, generally caused the ship to be built in the expectation of
being employed in the command ; an expectation that might be defeated,
if the others could sell their shares to strangers, who, acquiring a majority
of interest, might appoint a friend of their own."
CH. XVI.] EIGHTS AKD INTERESTS OF PABTOWNERS. 693
the vessel follows the owners of the materials, and not
the builder. But if a man cut down the trees of an-
other, or takes timber or planks prepared for the erect-
ing or repairing of a dwelling-house, nay, though some
of them are for shipping, and builds a ship, the proper-
ty follows not the owners, but the builders." ^
§ 449. Partowners being tenants in common, one or
more o*f them cannot maintain any action at the com-
mon law against the others for detaining, or even for
forcibly carrying away the ship ; ^ but they may for
the destruction of the ship ; and, by parity of reason-
ing, probably for a sale of the entirety of the ship with-
out-their consent.^ The right, also, to an account of all
the earnings and profits of the ship by all the partown-
ers, is clear and indisputable. But at law, there is no
small embarrassment in their proceeding to compel an
account of the earnings and profits, which have been
received by some of the partowners, who refuse to
render any account.* The ordinary remedy in cases of
this sort is by a bill in equity, to which, in general, all
1 MoUoy, de Jure Marit. B. 2, ch. 1, § 6, 7.
a Molloy, de Jure, Marit. B. 2, ch. 1, § 2 ; Abbott on Shipp. Pt. 1,
ch. 3, § 4, p. 70, 71, 5th edit. ; 3 Kent, Comm.Leot. 45, p. 157, 4th edit;
1 Montague on Partn. B. 2, ch. 1 ; Barnardiston v. Chapman, cited 4 East,
121, 122, 123 ; Heath v. Hubbard, 4 East, R. 110 ; Litt: § 323 ; Co. Litt.
199 b, 200 a.
3 Bloxham v. Hubbard, 5 East, K. 407, 421 ; Wilson v. Keed, 3 John.
B. 175. — There is a strong intimation, in Heath v. Hubbard, (4 East, R.
107,) that the sale of the entire ship by one partowner, is not such a
destruction of the ship, as will entitle the others to maintain an action of
trover against him. In the case of Wilson v. Beed, (3 John. R. 175,) the
Court expressly held, that trover would lie by one tenant in common
against another for a sale by the latter of the entirety of a chattel.
■4 CoUyer on Partn. B. 5, ch. 4, § 4, p. 812, 813, 2d edit. ; Abbott on
Shipp. Pt. 1, ch. 3, § 12, p. 80, 81, 5th edit. ; 1 Story on Eq. Jur. § 442
to 450.
694 PARTNERSHIP. [CH. XVI.
the owners should be made parties, either as plaintiffs
or as defendants.-' We say, the ordinary remedy, and
to which, in general, all the parties should be made
parties ; because there Inay be cases, in which one of
the partowners, or the ship's husband, or any other
agent may have entered into an agreement, by which
he may bind himself to account with each of the part-
owners severally, for his separate share of all proceeds
and profits in his hands ; and such an agreement, under
such circumstances, may entitle each partowner to
maintain an action at law for such share ; and if that
should fail, or be found inadequate, it will entitle him
to maintain a separate bill in equity for an account
thereof, "without making the other partowners parties.^
§ 450. This duty to . account for all the earnings
and profits, is so manifestly a dictate of general jus-
tice, that it must naturally find a place in the juris-
prudence of every civilized country. It is fully
recognized in the Roman law; and in the modern
jurisprudence of continental Europe.^ Thq Roman
law applies to all cases of this sort the common rule
of partnership. The Digest says; Si. Actor impensas
aliquas in rem commimem fecit, sive sodus ejus solus,
' 1 Story on Eq. Jur. § 466 ; Collyer on Partn. B. 5, ch. 4, § 4, p. 812,
813, 2d edit. ; Abbott on Shipp. Pt. 1, ch. 3, § 12, p. 81, 82, 5th edit. ;
MoSat V. Farquharsoii, 2 Bro. Ch. R. 338 ; iStory on Eq. Plead. § 166.
a Ouston v. Ogle, 13 East, R. 538 ; Abbott on Ship. Pt. 1, ch. 3, § 12,
p. 81, 82, 5th edit. ; Collyer on Partn. B. 5, ch. 4, § 4, p. 812, 2d edit.
The case of Ouston v. Ogle, 13 East, R. 538, was a case, where a suit at
law for a share of the net profits was brought, under an agreement of this
sort, by one, partowner against the ship's husband, who was also a part-
owner, and was successfully maintained. The case of Wilson v. Cutting,
(10 Bing. R. 436,) and Servants ». James, (10 Barn. & Cressw. 410,)
turned upon similar considerations.
3 1 Valin, Comm. Liv. 2, tit. 8, art. 5, p..578, edit. 1766.
CH. XVI.] BIGHTS AND INTERESTS OF PAETOWNERS. 695
aUqmd ex ea re lucratus est, velut operas servi, nierce-
desve ; hoc judido eorum. omnium ratio habetur. Sive
aviem hcando fundum communem, sive colendo, de fundo
communi, quid socius consecutus sit, communi dividundo
judido tenebitur} Again the Code says; Item eorum
etiam, quce vobis permaneni communia, fieri divisionem
providehit ; turn sumptuum, {si quis de vobis in res com-
munes fecit,) quam fructuum.^ The reason given is; Ut
in omnibus ceqtiabilitas servetur?
§ 451. The Roman law, indeed, seems to have gone
a step farther than, perhaps, has as yet been distinct-
ly recognized at the common law, and that' is, by giv-
ing a, complete remedy, in taking an account and
making an allowance for all losses occasioned by the
fraud or negligence of one partowner, to the others, in
the management of the common property. Item, doli
et culpcB, {cum in communi dividendo judido hcec omnia
venire non ambiffatur) rationem, ut in omnibus cequabilitas
serveiur, habiturus.* And again ; Venit in cmnmuni divi-
dendo judicium, etiam si quis rem communeih deteriorem
fecerit ; forte servum vulnerando, aut animum ejus corrum-
pendo, aid arbores ex fundo exddendo} Probably our
Courts of Equity would, in many cases, act upon the
same just and enlarged policy ; but it would not be
easy to point out many instances of its actual exercise
and application in practice.
§ 452. Pothier has enumerated, in a general way^
some of the duties and obligations which partowners
' Dig. Lib. 10, tit. 3, 1. 11 ; Id. 1. 6, § 2.
s Cod. Lib. 8, tit. 37, L 4.
3 Ibid.
4 Ibid.
5 Dig. Lib. 10, tit. 3, 1. 8, § 2 ; Pothier, de Societ6, n. 190.
696 PARTNERSHIP. [CH. XVI.
owe to each other. Among others, he enumerates the
duty of each partowner to pay his share of the debts
and charges contracted for the common concern ; ^ to
account with the other partowners for their shares of
the common earnings and profits in his hands ; and to
pay the debts due by him to them, as well as the
damages sustained by them by his acts or negligences.^
Some of these duties and obligations are so obvious,
and so analogous to the like duties and obligations
between partners, that it does not seem to be of any
importance to dwell upon them, or even to enumerate
them in detail. But here, again, we must not assume,
as a matter of course, that any one or more of the part-
owners is entitled, at the common law, to a compensa-
tion for losses, sustained by the negligence or miscon-
duct of the others in the management of the common
property, where no special agency has been assumed,
simply because the Roman law or the French law
would seem, in the like cases, to justify it ; ^ for the
common law authorities have not as yet recognized
any such general doctrine ; and some of them
may, perhaps, be thought to point to a different con-
clusion.*
§ 453. We may conclude this head with the con-
sideration of the question, how far partowners are
bound by the statements or admissions of each other,
where neither of them is the common agent of the
ship, or the separate agent of any one partowner of
the ship. We have already seeQ, that the statements
1 Pothier, de Society, n. 187, 188, 189, 191, 192.
2 Pothier, de Societ6, n. 189, 190.
3 Pothier, de Societfe, n. 190.
* Ante, §460, 451.
CH. XVI.] EIGHTS AND INTERESTS OF PABTOWNERS. 697
and admissions of one partner, during the continuance
of the partnership, will bind the others as evidence,
according to the' common law.^ But the sam§ doctrine
has never been applied to the case of partowners.^
The reason sometimes assigned for this distinction is,
that, in case of a partnership, every man knows who
his partner is. But when one partowner sells »his
share, the remaining partowners, not being privy to
the instrument, by which the new partowner is created,
may be entirely ignorant of the fact, who the person is,
who has thus become a partowner with them.^ But
the truer and broader ground is, that there is no com-
munity of interests, or of > rights, or of authorities
between partowners ; and they are not, as in cases of
partnership, agents of each other in the concerns of
the ship, unless some special authority is expressly or
impliedly delegated to them for the purpose. Part-
owners are not, therefore, bound by the acts of each
other, unless those acts are specially authorized ; and,
hence, it follows, a fortiori, that the mere admissions of
one, without any such authority, ought not to bind the
others. Even an act of one partowner, which will
ordinarily make the ship liable to condemnation, if
done with the privity of the other owners, will: not
produce any such effect, except as to his own share,
when it is done without such privity ; for that implies
cooperation and consent.'*
§ 464. Let us in the next place, proceed to the
.1 Ante, § 450.
2 Collyer'on Partti, B. 4, ch. 4, § 5, p. 819, 820, 2d edit. ; Jaggers v.
Binnings, 1 Stark. R. 64.
3 Mr. Justice Bailey in Wilson v. Dickson, 2 Barn. & Aid. 2, 12, 13.
* The Jonge Tobias, 1 Bob. E. 329 ; Collyer on Partn. B. 5, ch, 4, ^ S,
p. 820, 2d edit. ; 2 Wheat. E. Appendix, 37, 38r, 39, 40.
PAETN. 59
698 PARTNERSHIP. [CH. XVI.
consideration of the rights and remedies of partowners
of ships against third persons. These may arise,
either from contracts made with such persons, or from
torts committed by them upon the common property.
In respect to both, all the partowners constitute in
point of law but one owner ; ^ and, therefore, all con-
trasts made by them, either personally, or through the
instrumentality of an af ent, or ship's husband, with
third persops, are treated as entire joint contracts;
and the remedy for any breach thereof must be in the
name of all the partowners against the other contract-
ing party. If the name of any one be omitted, it is
ordinarily, upon the technical rules of pleading at the
common law, fatal to the maintenance of the suit ; for
by those rules all the contracting parties, who are
plaintiffs, are positively required to join in the suit.^
1 Abbott on Shipp. Ft. 1, ch. 3, ^ 13, p. 81, 5th edit.
s Abbott on Shipp. Ft. 1, ch. 3, § 14, p. 82, 5th edit. ; Collyer on
Partn. B. 5, ch. 4, § 6, p. 820, 821, 822, 2d edit. ; 1 Bell, Comm. B. 3,
Ft. 1, ch. 4, § 5, p. 519, 520, 5th edit. ; Skinner v. Stocks, 4 Barn. &
Aid. 436, 437 ; 1 Chitty on Plead, p. 6, 7, 8, 3d edit. ; Baker v. Jewell,
6 Mass. R. 460 ; CoUyer on Partn. B. 3, ch. 5, § 1, p. 461, 462, 2d edit. ;
1 Montague on Partn. B. 2, ch. 1. — There may, perhaps, be an exception
where one partowner has received his own share of the money due on the
contract, or has released his claim to it. At least. Lord Tenterden, in his
work on Shipping, puts the case as open for consideration at the common
law. There is, however, some reason to doubt, whether in such a case the
remedy of the other partowners is not exclusively in equity. Lord Ten-
terden has stated the whole doctrine in the following terms ; " In the case,
however, of an action for the freight of goods conveyed in a general ship,
all the partowners ought to join, or if they do not, the defendant may
avail Hmself of the objection by evidence at the trial, and without plea in
abatement, according to the general rule of law and the distinction be-
tween contracts and wrongs ; unless, i perhaps, some one should have
received his own share, or have released his claim to it. The necessity of
all the partowners joining as plaintiffs in the suit, in this case, is founded
upon the consideration, that all of them are partners with respect to the
concerns of the ship ; and upon this consideration j the present Lord Chan-
CH, XVI.] EIGHTS AND INTERESTS OP PARTOWNEKS. 699
In 'cases of tort, a more mitigated doctrine prevails ;
for while all the partowners are at the common law
required in strictness to join in every suit for any tort,
committed against the common property, nevertheless,
the omission to join any one or more of them can be
taken advantage of only in a preliminary stage of the
suit by a plea in abatement ; and if no such plea is
filed in the cause, it is a waiver of the objection, and
will not afiect the rights of the plaintiffs upon a trial of
the merits.^ It is not, perhaps, very easy to establish
cellor (Eldon,) in a case of bankruptcy, wlierein it appeared that the own-
ers of a ship, upon a settlement of accounts with the master, who had
become a bankrupt, were indebted to him, and that, on the other hand he
also was indebted to some of them severally upon separate and distinct
concerns, refused to allow the latter to set oflF their respective demands
against the claim of his assignees for their shares of the general debt."
Abbott on Shipp. Pt. 1, ch. 3, § 14, p. 82, 5th edit. ; Ex parte Christie,
10 Ves. 105 ; CoUyer on Partn. B. 5, ch. 4, § 6, p. 821, 822.
» Abbott on Shipp. Pt. 1, ch. 3, § 18, p. 81, 5th edit. ; 1 Bell, Comm. '
B. 3, Pt. 1, ch. 4, § 5, p. 519, 520, 5th edit. ; Sands v. Child, Salk. 32 ;
Addison v. Qverend, 6 Term R. 76 ; Sedgworth v. Overend, 7 Term R.
279 ; Rice v. Shute, 5 Burr. R. 2611 ; Eecleston & Wife v. Clipsham,
1 Saund. R. 153, and Serg. V7illiams's note (1), Id. p. 154 ; Baker v.
Jewell, G Mass. R. 460 ; Hart v. Fitzgerald, 2 Mass. R. 569 ; Converse
V. Sims, 10 Mass. R. 377 ; Thompson v. Hoskins, 11 Mass. R. 419 ;
MoUoy, de Jure Marit. B. 2, ch. 1, § 2 ; CoUyer on Partn. B. 5, ch. 4,
§ 6, p. 820, 821, 822, 2d edit, ; Heath v. Hubbard, 4 East, R. 122 ;
IBloxam v. Hubbard, 5 East, R. 407 ; Depeyster v. Wheelwright, 1 John.
R. 471, 486 ; Brotherson v. Hodges, 6 John. R. 108. — Upon this point
Lord Tenterden, in his work on Shipping, has given the reasoning, on
which the general rule is founded in cases of tort. " The several part-
owners of a ship make in law but one owner ; and in case of any injury
done to their ship by the wrong or negligence of a stranger, they ought
regularly to join in one action at law for the recovery of damages, which
are afterwards to be divided among themselves according to their respec-
tive interests ; for otherwise the party, who had committed the wrong,
might be unnecessarily harrassed with ' the expense of several suits to
obtain the same end, which might be as well efifeoted in one. But this
rule of law is made for the ease of the wrong-doer ; and, therefore, the
law requires, that he should avail himself of it at the very beginning of
700 PAETNERSHIP, [CH. XVI.
the soundness of this distinction upon any general
reasoning. It seems, however, to proceed upon this
grotnd, that, in cases of tort, the tort is treated as joint
and several ; whereas in cases of contract, the contract
is treated as an entirety, and as being incapable of sep-
aration as to the plaintiflfs. And yet a different rule
prevails, even in cases of contract, as to the parties
who are defendants in the suit ; for in the latter cases,
the objection of the nonjoinder of aU the proper con-
tracting parties«to the contract as defendants can be
taken advantage of, (as in the case of torts,) by a
plea in abatement only, and not upon the trial of the
merits.'^
§ 455. In the next place, as to the rights and rem-
edies by third persons against partowners of ships.
These properly are divisible into those arising from
contract, or those arising from tort. In cases of con-
tract, by the common law, all the partowners are liable
in solido to the other contracting party for the entirety
the cause,, by pleading in abatement of a suit brought by one partowner,
that there are others living, ■who ought to be parties to it. For if the
defendant does not do this, the single partowner wiU recover dam^es for
the injury proportionate to his share in the ship, whether the nature of
his interest is made to appear upon evidence at the trial, or is originally
stated by himself in the allegation of his cause of complaint. And if after-
wards another partowner sues for his own interest, the defendant can no
longer avail himself of the objection, because the party to the first suit has
no longer any matter of complaint. In the case of the death of any part-
owner after an injury received, the right of action survives in general to
the surviving partowners, who must afterwards pay to the personal repre-
sentatives of the deceased the value of his share." Abbott on Shipp. Pt.
1, ch. 3, § 13, p. 81, 82, 5th edit.
' Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 82, 83, 5th edit. ; 1 Montagu on
Partn. B. 2, ch. 1 ; Kice v. Shute, 5 Burr. R. 2611 ; Serg. Williams's
note (1) to Eccleston & Wife v. Clipsham, 1 Saund. K. 153, 154 ; Col-
lyer on Partn. B. 5, ch. 4, § 6, p. 822, 2d edit. ; Id. B. 3, ch. 5, § 2, p.
496, 407 ; Id. § 5, p. 513 ; 'VYright v. Hunter, 1 East, R. 20.
CH. XVI.] EIGHTS AND INTERESTS OP PAKTOWNERS. 701
of the debt or obligation, whether the contract be
directly made by one or more of the partowners with
the consent of all, or be made through the instrumen-
tality of the master of the ship, or of the ship's hus-
band, or of any other agent.^ There is an exception,
indeed, which stands entirely in harmony with the
general rule ; and that is, where an exclusive credit is
knowingly and intentionally given to one or more of
the partowners, or to the master, or the ship's hus-
band, or any other agent ; for in such cases, as it is
competent for the creditor to give such an exclusive
credit, he thereby exonerates all the other parties.^
What circumstances will, or will not, amount to giving
such an exclusive credit, must, of course, depend upon
the evidence in each particular case, and can admit of
no universal exposition.^ But it may be generally
stated, that merely receiving payment from one part-
owner for his share, or charging the master, or ship's
husband, or other agent, with the debt, 'Will not, of
itself, amount to giving an exclusive credit to them,
which will discharge the owners.* A fortiori, it will
1 Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 83, 84, Sth edit. ; 3 Kent
Comm. Lect. 45, p. 155, 156, 4th edit. ; 1 Bell, Comm. B. 3, Pt. 1, ch. 4,
§ 5, p. 520, 529, 537, 5th edit. ; Collyer on Partn. B. 5, ch. 4, § 6, p.
817, 818, 2d edit. ; Kich v. Coe, Cowp. K. 636 ; Bladney v, Ritchie,
1 Stark. R. 338 ; Westerdell v. Dale, 7 Term R. 306 ; 1 Montagu on
Partn. B. 2, ch. 1.
2 Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 82, 83, 84, 5th edit. ; Story
on Agency, § 288 tp 300 ; Chapman v. Durant, 10 Mass. R. 47 ; SoheV-
merhorn v. Loines, 7 John. R. 311 ; Murdon v. Whitlock, 1 Cowen, R>
290 ; Cox V. Reid, 1 Carr. & Payne, R. 602 ; Reid v. White, 5 Esp. R.
122 ; Wyattr. Marquis of Hertford, 3 East, R. 147 ; Ex parte Bland,
2 Rose, R. 91 ; Collyer on Partn. B. 5, ch. 4, § 5, p. 817, 2d edit.
3 Story on Agency, § 288 to 291 ; Id. § 293, 294, 296, 297, 298.
* Teed v. Bearing, cited Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 83, 84,
59*
702 PAETNERSHIP. [CH. X<FI.
not, where none of the owners are known, or it is not
known that there are other partowners; for, under
such circumstances, there is no pretence to say, that
any exclusive credit is intended to he given, since
there is no knowledge, or act, from which an election
to give an exclusive credit can he inferred.^ We have
already had occasion to state, that ordinarily all the
partowners should he joined in a suit brought on a
joint contract by the creditor against them ; but that
if not joined, the objection is not fatal at the trial upon
the merits ; but was pleadable only in abatement.
I 456. The French law does not agree with the
common law in making partowners liable in solido
for all the debts contracted upon account of the ship,
or other common property, even when the contract is
made by all, or in the name of all, of them. But it
restricts the liability of each partowner to the pay-
ment of his own share or proportion thereof, unless
all expressly agree to be bound in solido? In this
5th edit. ; Ex parte Bland, 2 Rose, R. 91 ; Stewart v. Hall, 2 Dow. R.
29 ; James v. Bixby, 11 Mass. R. 34 ; Leonard v. Harrington, 15 John.
R. 298 ; Marquand v. Webb, 16 John. R. 89 ; Story on Agency ».§ 288,
294 to 299 ; CoUyer on Partn. B. 5, ch. 4, § 5, p. 817, 818, 2d edit. ;
Thompson v. Finder, 4 Carr. & Payne, R. 158.
1 Story on Agency, § 290, 291, and note (2), Ibid. ; Thompson v.
Davenport, 9 Barn. & Cressw. 78 ; Paley on Agency, by Lloyd, p. 245
to 250; Paterson v. Gandesaqui, 15 East, R. 62. ,
2 Ppthier, de Society, n. 187 ; Emerigon, Trait6 des Assur. Tom. 2,
ch. 4, § 11, p. 456, edit. 1783. — The law of Louisiana is the same as the
law of France on this subject. David v. Eloi, 4 Miller, Louis. R. 106 ;
S'Kent. Comm. Lect. 45, p. 156, 4th edit.; Civil Code of Louisiana
(1825,) art. 2796. Mr. Justice Porter, in delivering the opinion of the
Court in David v. Eloi, (4 Miller, Louis. R. 106,) referring to the case
of Kimball v. Blanc, said ; " In the opinion delivered in that case, the
Court took occasion to say, that as to the law previous to the adoption of
the Louisiana Code we were not left in doubt, since the decision in the
§uit of Carrol v. Waters. It was there settled, that joint owners of steam-
CH. XVI.] BIGHTS AND INTERESTS OP PAETOWNERS. 703
respect it diifers from its own rule in cases of commer-
cial partnerships ; for there all the partners are liable
boats were only responsible for their virile share. That case was decided
on the definition given in the Code of Louisiana of a particular partner-
ship, and it is so expressly stated in the opinion., The majority of the
Court being unable then, as they are now, to distinguish between the joint
owners of a steamboat, and the joint owners of a house or of a planta-
tion. It is an association, which relates to a specified thing, and to the
use to be derived therefrdln. Civil Code, 390, art. 12. The correctness
of the construction was supposed to be,forfeited by a reference to the rules
prevailing in the greater number of commercial countries in relation to
the responsibility of joint owners. And so it appears to be. For after all
that has been said in the argument of this cause, it is quite clear they are
not responsible in solido, as they were in the Roman law. By the statutes
of the majority of the commercial nations of Europe, owners of vessels
are discharged from all responsibility by surrendering their interest in
them. This Court does not profess to understand, how the partowner of a
ship, who can free himself from responsibility for a debt, which may be
ten times as great as his share in the vessel, by abandoning that share to
the creditor, can be considered as personally responsible in solido for the
whole debt. It thinks with Emerigon, that his obligation is more real than
personal ; and that it depends on the amount of interest he has in the
vessel, not on an obligation in solido as joint owner, whether he is bound
for the whole amount of a debt contracted by the master. Emerigon,
Trait6 des Assurances, vol. 2, p. 464. It remains to consider, whether a
change has been made in the law, as it stood previous to the adoption of
the late amendments to our Code. By the 2796th article of the Louis-
iana Code, it is provided, that an association for the purpose of carrying
personal property for hire in ships and other vessels, is a commercial part-
nership. In the case of Kimball v. Blanc, we decided that the bare cir-
cumstance of persons being joint owners of a boat did not make them
responsible in solido ; and this is still the opinion of the Court, because
men may become joint owners of a boat for other purposes than carrying
personal property for hire. She may be bought on speculation with an
intention of selling her again. She may, as was said in the opinion deli-
vered in the case of Kimball v. Blanc, be chartered out, and while she
remains joint property never be used to carry goods. In these and other
oases, which may be supposed, there is no association for transporting per-
sonal property for hire. From the argument in this case, we suppose it
has been understood, that the Court, in the case alluded to, settled the
principle, that joint owners, who used the boat in carrying the goods for
hire, were not responsible in solido. The general reasoning in that opi-
nion, which went further than was necessary for a decision of the case,
•04 PARTNERSHIP. [cH. XVI.
in solido} And where the contract is entered into by
one partowner alone on account of the ship, as for
example, for supplies or outfits or repairs, that part-
owner is solely responsible to the creditors for the
whole amount of the debt ; but he has his remedy
over against the other partowners for contribution.^
In short, in such a case, the creditor is deemed to give
an exclusive credit to the contracting partowner. By
the law of Holland, the several partowners are in all
cases chargeable only according to their respective
interests in the ship.*
may have furnished some grounds for that belief; but nothing was further
from our intention ; so far from it, a contrary intimation was thrown out.
It was there said ; ' Owners would perhaps be bound in solido, if they
held themselves out to the community as partners in the carrying trade ;
but the bare circumstance of their being joint owners cannot have that
effect.'"
1 Pothier, de Society, n. 187 ; Ante, § 102, 103, 109.
2 Pothier, de Societfe, n. 187 ; Ante, § 420.
3 Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 84, 6th edit.; Vinn.. ad Peck-
ium, p. 155, note (a,) tit. De Exercit. Act. edit. 1647; Van Leeuwen,
Comm. on Koman-Dutch Law, B. 4, ch. 2, § 9. — Van Leeuwen, in his
Commentaries, says ; " A creditor, who had transactions with any one, to
whom a ship was trusted by an owner, oi- who was placed by his master
as factor or manager of any merchandise concerning the ship, 0{ such
merchandises alone, such creditor anciently had the option, whether he
would call upon the owner of the ship, or his substitute, the merchant, or
his manager, fof payment, and prosecute them at law ; and if there were
several owners or merchants, in that case each of them was bound for the
whole. But this usage has not been adopted among us, it being prejudi-
cial to trade ; and one is obliged always to call upon the owners, or the
merchants themselves, and sue them at law. Keither is it in use in Hol-
land, (where trade is at present, and has for a long time since been pros-
perous,) viz. that where there are many owners and partners, each shall
be bound for the whole. But, on the contrary, it was introduced, that
many joint owners of a ship together may not be called upon for payment
further than for the value of the ship, and the amount of the property
which she contains ; and each is bound separately, and no further than for
his respective share in the trade ; and it is sufficient if they deliver and
bring up, what they have in common, in satisfaction of the decree for the
\
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNERS. 705
§ 457. The Roman law promulgates a similar doc-
trine, where the contract is made by all the partowners
personally ; that is to say, that they are not liable in
solido; but each is liable only for his own share and
proportion of the debt, according to his interest in the
ship. On the other hand, where one partowner only
makes the contract, he alone is held responsible to the
creditor for the whole debt. But where the contract
is made by the master, appointed by them, there all
whole ; and so it was decreed in the high court of Holland." Van Leeu-
wen's Coram. B. 4, c. 2, § 9, English Translation, London, 1820, p. 320.
Vinnius, in his Commentaries on Peckius, De Exercit. Actione, (Lex. 4,)
p. 155, edit. 1647, says ; " Si pluresj sint, qui navem exerceant, placet
singulos ex contractu magistri in solidum teneri ; idque hac ratione, ne in
plures adversaries distringatur, qui cum uno contraxit. (1. 1, par. ult. et
1. 2, hoc tit. fac. 1. et ancillarum, 27, § ult. inf. de pecul.) Quippe actio
exercitoria, qua tenentur exercitores, ex solius magistri persona et facto
nascitur ; ntpote cum quo Sblo, non cum ipsis exercitoribus, contractum
est. Cum igitur in plures dividenda non sit obligatio, quse in unius per-
sona originem habet, ne in plures distringatur, qui cum uno contraxit, ex
eb satis intelligimus beneficio divisionis hoc casu locum non esse. (Bald,
in rubr. C. eod. in fin.) Idem est, si contractum sit cum plurium insti-
tore. (1. habebat. 13, par. ult. et 1. seq. inf. de instit. act.) aut cum servo
plurium voluntate dominorum navem exercente. (1. 6, par. 1, inf. hoc tit.)
Cffiterum hoc jus apud HoUandos receptum non est, apud quos singuli
exercitores, pro sua duntaxat parte exercitionis conveniri possnnt. Neque
enim ut singuli in solidum teneantur, visum est aut naturali aquitati con-
venire, quae satis habet, si pro suis singuli portionibus conveniantur ;
neque publice utile esse, propterea quod deterrentur homines ab exercen-
dis navibus, si metuant, ne ex facto magistri quasi in infinitum teneantur.
Quin et hoc constitutum, ne exercitoria etiam universi amplius teneantur,
quam ad aestimationem navis et eorum, quae in navi sunt, teste Grotio, lib.
3, introduct. ad jurisp. Bat. c. 1, et lib. 2, de jur. bell, et pac. c. 11, n. 13.
Caeterum Hevia p. 2, Cur. Phil. lib. 3, c. 4, n. 22. simpliciter sequitur
dispositionem juris communis." See also the Commentaries of Peckius
upon the same title and law of the Digest ; from which, perhaps, it may
be inferred, that principles similar to those of the Roman law pervade the
jurisprudence of many of the continental nations. The Scottish law is
certainly so. See 1 Bell, Comm. B. 3, Pt. 1, ch. 4, § 5, p. 519, 520, 537,
538, 5th edit. ; Erskine", Inst. B. 3. tit. 3, § 45.
706
PARTNERSHIP. [cH. XVI.
the partowners are liable in solido} Thus, it is said by
Ulpian in the Digest; 8i tamen plures per se navem
exerceant, pro portionibus exerciiatioms eonveniuniur. JVe-
que enim invicem sui magidri videniur. Sed, si plures
exerceant, unum autem de numero suo magistrum fecerint,
hujus nomine in solidum poteruni conveniri. Sed si servus
plurium navem exerceat vohntate eorum, idem phcuit, quod
in phribus exercitoribus. Plane si unius ex omni vohntate
exercuit, in solidum ilk tenebitur. Et ideo puto in isto, et
superiore casu, in solidum omfies teneri?
§ 458. In the next place, as to the rights and rem-
edies of third persons against partowners of ships for
torts committed by them personally, or by the im-
proper conduct or negligence of their agents in the
management of the joint property. They are, without
question, all responsible at the common law, severally,
as well as jointly, in solido, for all torts personally
committed or authorized by them, or occasioned to
third persons by the negligence of one or more, or all
of them, or by that of the master of the ship, or ship's
husband, or other agent thereof; but not for the wilful
or malicious acts of the latter.^ The reason for this
distinction between negligent and wilful or malieious
acts is, that neither the master nor ship's husband,
nor other agent, in doing such wilful or malicious acts,
can properly be deemed to be acting within the scope
1 Abbott on Shipp. Pt. 1, ch. 3, § 15, p. 84, 5th edit; 1 Bell, Comm.
B. 3, Pt. 1, ch. 4, § 5, p. 519 to 525, 5th edit.
2 Dig. Lib. 14, tit. 1, L 4, § 1, 2 ; Id. I. 1, § 24, 25 ; Pothier, Pand. Lib.
14, tit. 1, n. 4, 10, 13.
3 Story on Ageno/, § 308 to 313 ; Id. § 452 to 457 ; Ante, § 167, 168 ;
1 Montagu on Partn. B. 2, ch. 1 ; Low v. Mumford, 14 John. R. 426 ;
Patten v. Gurney, 17 Mass. R 182. — ^ Hence the suit may be commenced
against all of them, or against any one or more of Ihem. Ibid.
CH. XVI.] RIGHTS AND INTERESTS OP PARTOWNERS. 707
of the authority confided to him by the owners, in the
management of the ship or its concerns ; but cases of
negligence may, and ordinarily do arise, in the very
course of such management.^ The doctrine is clearly
illustrated in the common case of a collision or run-
ning down of ships on the high seas, or in port, whereby
damage or loss is incurred. If thatort be by the wilful
or malicious act or design of the master, or any other
officer or agent of the ship, the owners are not liable
therefor; but the party only, who commits the tort.
But if it be by the negligence of the master, or any
other officer or agent, then the owners are liable there-
for in solido, jointly and severally. On the other hand,
if a tort be committed by one partowner of the ship,
who is not employed by the others about the concerns
of the ship, or authorized to act for them, but he is
acting solely, SMo/wre, as partowner, the other partown-
ers will not ordinarily be liable therefor, whether the act
be wilful or malicious, or merely negligent, for the very
reason that he is not intrusted by them with the man-
agement or concefrns of the ship.^
§ 459. The Roman law, in like manner, in many
cases, made the principal liable for the torts and neg-
ligences of his agents and servants.^ It has been sup-
posed, that the Roman law never was in this respect
as extensive in its reach as our law ; in other words,
that it never did create a general liability of principals
for the wrongs and negligences of their agents, but
limited it to particular classes of cases; and that the
liability of principals, so far as it is recognized in that
1 Story on Agency, § 308 to 313 ; Id. § 452 to 457.
3 CoUyer on Partn. B. 5, ch. 4, § 5, p. 820, 2d edit. ; Story on Agency,
§ 452 to 474. '
3 Story on Agency, § 318.
708 PAETNERSHIP. [CH. XVI.
law, was mainly dependent upon the Praetor's edict;
and was not worked out of the original materials of
the Roman jurisprudence. Whether this supposition
be correct, or not, it is certain, that in certain classes
of cases, the Prsetor, by his edict, either introduced a
new and more rigid liability, or he gave to that, which
previously existed, ^n additional force, and, in some
respects, a more onorous obligation. Thus, masters
and employers of ships, inn-keepers, and stable-keep-
ers, were made responsible for the safety and due de-
livery of the goods committed to their charge ; and of
course, if the loss or damage were occasioned by the
negligence or wrong of their servants, and not by
themselves, their responsibility was not varied.-^ Ait
1 Story on Agency, § 318 ; Story on Bailm. § 464, 465 ; Dig. Lib. 4,
tit. 9, 1. 1, § 3 ; Heinec. Pand. Lib. 4, tit. 8, § 546, 547, 548 ; Pothier,
Pand. Lib. 4, tit. 9, n. 1, 2, 8 ; 1 Domat, B. 1, tit. 16, § 1, art. 3, 5 ; Id.
§ 2, art. 2; Id. § 3, art. 1. — Lord Stair, in his Institutes, (B. 1, tit. 13,
§ 3,) seems manifestly to have considered this edict as introducing, for the
first time, the liability of principals for the acts and defaults of their agents,
and of making that liability more rigid, in many cases, upon the ground
of public policy. His language is : " In the civil law there is a deposita-
tion of a special nature, introduced by the edict, Nautas, caupones sta-
bularii, ' quod cujusque salvum fore receperint, nisi restituent, in eos
judicium dabo.' By this edict, posltiye law for utility's sake hath appointed
that the custody of the goods of passengers in ships, or strangers in inns,
or in stables, shall be far extended beyond the nature of depositation, which
obliges only for fraud, or supinh negligence, them, who have expressly
contracted for their own fact. But this edict, for public utility's sake, ex-
tends it ; first to the restitution of the goods of passengers and voyagers,
and reparation of any loss or injury done by the mariners, or servants of
the inn or stable. Whereas, by the common law, before that edict, in
this and such other cases, there was no such obligement ; much less are
persons now obliged for their hired servant's fact or fault, except facts,
wherein they are specially intrusted by them. But, because the theft
and loss of goods is very ordinary in ships, inns, and stables, therefore this
edict was introduced for the security of travellers. Secondly, the edict
extends this obligement, even to the damage sustained by (the act of) other
CH. XVI.] EIGHTS AND INTERESTS OF PAETOWNERS. 709
Prcetor ; Navtoe, Oaupones, Stabularii, quod cvjusque
salvum fore receperint, nisi restituent, in eos judidum
daho} The reason assigned is, that the rule is well
founded in public policy and convenience, and is the
only means to prevent losses by fraud or connivance.^
A fortiori, if the act was done with the consent of the
principal, he was liable. Si ipse alicui e nautis committi
passengers or strangers in the ship, inn, or stable, for the -which, .the mas-
ter of the ship, innkeeper, or keeper of the stable, could be no ways
obliged, but by virtue of this edict. Thirdly, they were made liable for
the loss or theft of such things absolutely, from which they were free by
BO diligence, but were not liable for accident or force ; that is, sea-hazard
miist always be excepted." See, also, 1 Bell, Comm. § 398, 399, 400, 401,
402, 4th edit. See Story on Bailm. § 400, 401, 402, 458, 464, 465, 466.
There are certainly passages in the Digest, which make principals respon-
sible for the faults and negligence of their agents, and servants, beyond
those specially pointed out in the Prastor's edict. This responsibility seems,
however, to have been limited to cases, where the principal was guilty of
some negligence ill employing negligent and improper agents and serv-
ants. Thus, in the Digest, the opinion of Pomponius is approved. Vide-
amus, an et servorum culpam, et quoscunque induxerit, prsestare con-
ductor debeat ? Et quatenus prsestat ? Utrum, ut servus noxae dedat,
an vero suo nomine teneatur ? Et adversus eos, quos induxerit, utrum
prsestabit tantum actiones, an quasi ob propriam culpam tenebitur ? Mihi
ita placet, ut culpam etiam eorum, quos induxit, prajstet suo nomine, esti
nihil convenit, si tamen culpam in inducendis admittit, quod tales habue-
rit, vel suos, vel hospites. Digest, Lib. 19, tit. 2, 1. 11 ; Pothier, Pand.
Lib. 19, tit. 2, n. 30, 31. See also. Dig. Lib. 9, tit. 2, 1. 29, § 9, 11 ; Po-
thier, Pand. Lib. 19, tit. 2, n. 31. See Story on Bailm. § 401 ; 1 Domat.
B. 1, tit. 4, § 2, ari. 5, 6 ; Id. B. 2, tit. 8, § 1, art. 1 to art. 9 ; Id. § 4, art. 8.
Again ; Qui columnam transportandem conduxit, si ea dum tollitur, aut
portatur, aut reponitur, fracta sit, ita id periculum praastat,. si qua ipsius,
eorumque, quorum opera uturetur, culpa acciderit. Culpa eutem abest,
si omnia facta sunt, quas diligentissimus quisque observaturus fuisset. Dig.
Lib. 19, tit. 2, 1. 25, § 7 ; Pothier, Pand. Lib. 19, tit. 2, n. 32.
1 Dig. Lib. 4, tit. 9, 1. 1 ; Pothier, Pand. Lib. 4, tit. 9, n. 1, 2 ; 1 Do-
mat, B. 1, tit. 16, § 1, art. 2, 4, 6 ; Id. § 2, art. 2 ; Id. § 3, art. 1, 2, 3 ;
-Heinec. ad Pand. Lib. 4, tit. 8, § 346, 547, 548, 551.
3 Story on Agency, § 318, and note (2) ; 1 Domat, B. 1, tit, 16, § 1,
art. 7.
PARTN. 60
710 PARTNERSHIP. [CH. XVI.
jussit, sine duhio deheat ohligari} The liability of the
principal for the acts and negligences of his agents, as
well as for his own, is fully proclaimed in the com-
ments of the Roman law. Thus, for example, it is said,
as to the owners or employers of ships ; Sunt quidam
in navibus, qui custodies gratia navibus prcBponuniur, id est,
navium custodes et dietarii. JSi quis igitur ex his receperit,
puto in exerdtorem dandam actionem ; quia is, qui eos hu-
jusmodi officio prceponit, committi eis permittit? The same
doctrine is also applied to innkeepers. Caupo prces-
tat factum eorum, qui in ea caupona, ejus caitponce exer-
cendce causa ibi sunt. Item eorum, qui habitandi causa ibi
sunt. Viaiorem autem factum non prcestat? The same
doctrine is also applied to stable-keepers. Caupones autem
et stabularios ceque eos accipiemus, qui cauponam vel stabu-
lum exercent, Institoresve eorum.^ Eodem modo tenentur
caupones et stabularii, quo exercentes negotium suuni redpi-
unt.^ And the whole doctrine is summed" up "in another
passage, where it treats of the liability of such princi-
pals for the frauds, deceits, and thefts of their agents
or servants, without their knowledge. Item exerdtor
navis, aut cauponce, aiit stabuli, de dolo aut furio, quod in
nam, aut caupona, aut stabuh, factum erit, quasi ex rfialefi-
do teneri videtur, si modo ipsius nullum est malefidum, sed
alicujus eorum, quorum opera navem, aut cauponam, aut
1 Dig. Lib. 4, tit. 9, 1. 1, § 2 ; Pothier, Pand. Lib. 4, tit. 9, note (2)
Story on Agency, § 318, note (2) ; 1 Domat, B. 1, tit. 16, § 1, art. 5.
a Dig. Lib. 4, tit. 9, 1. 1, § 3 ; Pothier, Pand. Lib. 4, tit. 9, note (2)
1 Domat, B. 1, tit. 16, § 2, art. 1, 2, 3, 4.
3 Dig. Lib. 47, tit. 5, 1. 1, § 6 ; Pothier, Pand. Lib. 47, tit. 5, n. 3
1 Domat, B. 1, tit. 16, § 1, art. 3, 6.
4 Dig. Lib. 4, tit. 9, 1. 1, § 5 ; Pothier, Pand. Lib. 4, tit. 9, n. 2
1 Domat, B. 1, tit. 16, § 1, art. 3.
« Dig. Lib. 4, tit. 9, 1. 3, § 2 ; Pothier, Pand. Lib. 4, tit. 9, n. 3.
CH. XVI.] RIGHTS AND INTERESTS OF PARTOWNERS. 711
stabulum exercet. Cum enim ueque ex maieficio, neque ex
contractu, sU ad/verms cum constituta hcec actio, et aliquor
tenus culpce reus est, quod opera mahnm hominum utere-
tur ; tdeo, quasi ex malefim, teneri videtur} Here we
have the rule of the liability of owners and employers
of ships and stable-keepers, and the reason for it. They
are respt)nsible- for the tort and fraud of their agents
and servants, although they are not parties to it, quasi
ex maieficio, as if they themselves were wrong-doers ;
because they have made use of the services of such
bad agents and servants in their employment.
§ 460. And here, again, the like limitations to this
liability were recognized in the Roman law, as exist
in ours. The principal was not liable for the torts or
negligences of his agents or servants, except in cases
within the scope of their employment. Thus, for ex-
ample, the innkeeper was liable only for the torts, or
thefts, or damages, of his servants, done or committed
in his inn, or about the business thereof; and not for
such torts or thefts committed in other places. Eodem
modo tenentur caupones et stabularii, quo exercevies ne-
ffotium suum recipiunt. Cceterum, si extra negotium rece-
1 Inst. Lib. 4, tit. 5, § 3 ; 1 Domat, B. 1, tit. 16, § 1, art. 7 ; Id. § 2,
art. 1, 2, 3, 4. — The same rule is laid down in the Digest. In eos, qui
naves, caupones, stabula exercebunt, si quid a quoque eorum, quosve ibi
habebunt, furtum factum esse dicetur, judicium datur ; sive furtum ope,
consilio exercitoris, factum sit; sive eorum cujus, qui in ea navi navl-
ganda causa • esset. Navigandi autem causa aceipere debemus eos, qui
adhibentur, ut navis naviget, hoc est, nautas. Dig. Lib. 47, tit. 5 ; Introd.
and 1. 1 ; Pothier in Pand. Lib. 47, tit. 5, n. 1, 3. Qu^cunque de furto
diximus, eadem et de damno debent intelligi. Non enim dubitari oportet,
quin is, qui salvum fore recipit, non solum a furto, sed etiam a damno
recedere videatur. Dig. Lib. '4, tit. 9, 1. 5, § 1 ; Pothier, Pand. Lib. 4,
tit. 9, n. 8 ; Dig. Lib. 14, tit. 1, 1. 1, § 2 ; Pothier, Pand. Lib. 14, tit. 1,
n. 6 ; Heinec. Pand. Ps. 1, Lib. 4, tit. 8, § 551, 552, 553, 554 ; Story on
Bailm. § 464 to 468 ; Ersk. Instit. B. 3, tit. 1, § 28, 29 ; Id. B. 3, tit. 3,
712 PARTNERSfflP. [CH. XVI.
perird, non tenebuntur} So, the owner or employer of a
ship was not liable for the torts, or thefts, or damages,
of the mariners, unless done or committed in the ship,
or about the business thereof Debet exerdtor omnium
'mtutarum suorum, sive liberi, sive servi, factum prcBstare.
Nee immerito factum eorum prcestat, cum ipse eos mo pen-
cub adhibuerit. Sed non alias prcestat, quam si in ipsa
nave damnum daium sit. Cceterum, si extra navem, licet
a nautis, non prcedabii?
§ 461. Similar principles were applied in the. Ro-
man law to the ordinary agents employed in the
common business of trade and commerce, called Insti-
toresj^ and also to the case of domestic servants and
persons belonging to the family. Prceter ait de Ms, qui
dejecerini, vel effuderint. TJnde in eum hcum, quo vulgo
iter fiet, vel in quo eonsistetur, dejectwn vel effusum quid
erit, quantum ex ea re dumnum datum factumve erit, in eum,
qui ibi habitaverit, in duplum judicium dabo* Si servus,
insciente domino, fecisse dicetur, in judicio adjiciam, aut
noxam dedere.^ These seem to be the most important
cases, specially and positively provided for in the
Eoman law. That law does not seem to have recog-
§ 43 to 45 ; 1 Bell, Comm. B,3, ch. 4, § 5, p. 465 to 476, 5th edit. ;
1 Domat, B. 1, tit. 16, Introd. ; Story on Bailm. § 401.
1 Dig. Lib. 4, tit. 9, 1. 3, § 2 ; Pothier, Pand. Lib. 4, tit. 9, n. 3.
2 Dig. Lib. 4, tit. 9,.l. 7; Pothier, Pand. Lib. 47, tit. 5, n. 1 ; 1 Domat, B.
1, tit. 16, § 1, art. 7 ; Id. § 2, art. 1, 2, 3, 4.
3 Story on Agency, § 8; 1 Domat, B. 1, tit. 16, § 3, art. 1 ; Dig. Lib.
H, tit. 3, 1. 5, § 1 to 9 ; Pothier on Oblig. n. 121, 453, by Evans ; Id. in
French edit. n. 121, 489.
4 Dig. Lib. 9, tit. 3, 1, 1 ; Id. 1. 27, § 11 ; 1 Black. Comm. 431 ; Inst.
Lib. 4, tit. 5, § 1 ; Ersk. Instit. B. 8, tit 3, ? 46 ; Dig. Lib. 19, tit. 2, 1. 11 ;
1 Domat, B. 2, tit. 8, § 1, art. 1 to 9.
5 Dig. Lib. 9, tit. 3, 1. 1 ; Pothier, Pand. Lib. 9, tit. 3, n. 1 ; Inst. Lib. 4,
tit. 5, § 1, 2.
CH. XVI.] EIGHTS AND INTERESTS OP PARTOWNERS. 713
nized, to the full extent, the general maxim, Respondeat
.Superior, inculcated by our law.^
§ 462. The modern nations of continental Europe
have adopted the doctrine of the Roman law to its
full extent, and some of them, at least, seem to have
carried it further. Pothier lays down the rule in the _
following broad terms ; " Not only is the person, who
has committed the injury, or been guilty of the negli-
gence, obliged to repair the damage, which it has
occasioned; those who have any person under their
authority, such as fathers, mothers, tutors, preceptors,
are subject to this obligation, in respect of the acts of
those who are under them, when committed in their
presence, and generally when they could prevent such
' S6e 1 Stair's Inst. B. 1, tit. 13, § 3 ; Story on Agency, § 454, n. 1. —
Mr. Holt, in a passage cited in Story on Agency, § 454, n. 1, says, that,
" In the civil law the liability was narrowed to the person standing in the
relation of a pater-familias to the wrong-doer." It is also observable,
that Mr. Xie Blanc and Mr. Marshall, in arguing the case of Bush v.
Steinman, (1 Bos. & Pull. 405,) assert, that " the liability of the principal
to answer for his agent is founded in the superintendence and control
which he is supposed to have over them (citing 1 Black. Comm. 431).
'In the civil law, that liability was confined to the person standing in the
relation of pater-familias to the person doing the injury." For- which
they cite Inst. Lib. 4, Tit. 5, ^ 1, and Dig. Lib. 9, tit. 3. These citations
clearly prove, that the pater-familias is liable for the wrongful acts and
negligences of his domestics ; but they do not prove, negatively, that
other persons were not liable, as principals, in any other cases, for the
wrongs and faults of their agent. The text shows, that in many other
cases, besides that of a pater-familias, the principal was in the civil law
liable for such wrongs and faults. The learned counsel seem to have mis-
understood the true meaning of the text of Blackstone's Commentaries,
which by no means insists upon any such limitations. Mr. Justice Heath,
in the same case, seems to have entertained the notion, that the Boman
law was or might be as limited as the learned counsel supposed. But he
added ; " W^hatever may be the doctrine of the civil law, it is perfectly
clear, that our law carries such liability much further." S. C. 1 Bos. &
Pull. 409. See also Story on Bailm. § 464 to 469.
60*
"7^14 PARTNEESHIP. [CH. XVI.
acts, and have not done so. But if they could not
prevent it, then they are not liable 5 Nullum crimen
patitiir is, qui non prohibet, quum prohibere non potest.
(1 109,^. de reg.jur) Even when the acfis committed
in their sight, and with their knowledge ; Culpa card,
qui scii, sed prohibere non potest. {I 50, ff. d. t). Mas-
ters are also answerable for the injury occasioned by
the wrongs and negligences of their servants. They
are . even so, when they have no power to prevent
them, provided such wrongs or injuries are committed
in the exercise. of the functions, in which the servants
are employed by their masters, although in the mas-
ter's absence. This has been established, to render
masters careful in the choice of those whom they
employ. With regard to their wrongs, or neglects
not committed in these functions, the masters are not
responsible." ^ The doctrine of the Roman law seems
to be followed with more scrupulous exactness in the
laws of Spain ^ and Scotland,^ where the specific enu-
merations of the Roman law are to be found followed
out in treating of the . liability of principals for the
acts of their agents.*
§ 463. These are the most material considerations,*
whi(3h seem necessary to be presentei^ to the learned
1 Pothier on Oblig. by Evans, n. 121, 453 ; in the French ,edit. n. 121,
489.
3 2 Moreau & Carlton, Partidas, 5, tit. 8, 1. 26, p. 743 ; Story on Bailm.
§465 to 468.
3 Ersk. Inst. B. 8, tit. 3, § 43 to 46 ; 2 Bell, Comm. § 398 to 406, 4th
edit. ; 1 Stair, Inst. B. 1, tit. 13, § 3.
* These last four sections are copied literally from Story on Agency,
§ 458 to 461. The object in reinserting them here is the desire to make
each work independent of the other ; and it seems indispensable to a full
exposition of this branch of the subject, to present the Roman and foreign
law with fullness and exactness.
CH. XVI.] EIGHTS AND INTERESTS OF PARTOWNERS. 715
reader ia order to illustrate the leading distinctions
between cases of partnership, and cases of partowner-
ship. And, here, these Commentaries, according to
their original design, are brought to their appropriate
conclusion. In reviewing the whole subject of part-
nership, it cannot escape the attention of any careful
observer, how many of the doctrines of the jurispru-
dence of the common law are coincident with those
of the Roman law, and those of the modern commer-
cial nations of continental Europe. This circumstance
affords no slight proofj that they are essentially found-
ed in the principles of general justice, sound policy,
and public convenience. If it should be objected,
that the common law on this subject contains some
very subtle, artificial, and even arbitrary doctrines,
having no just foundation in an enlarged and liberal
equity, and not susceptible of any satisfactory vindica-
tion, except as mere positive or technical rules, the
same objection lies, at least to an equal extent, against
the pystem. of the Roman law upon the saine subject,
and the jurisprudence of modern Europe, built upon
it. In truth, it is impracticable to establish any uni-
versal rules, which shall equally suit the habits and
institutions, the policy, and the various employments
of aU commercial nations. Every branch of munici-
pal law must have a close affinity to all others, belong-
ing to the same common system, which attempts to
regulate and enforce the rights, the liabilities, and the
remedies by and against particular persons in their
various social relations. The positive and technical
rules, applicable to one branch,, must in a great mea-
sure pervade the whole, in order to make the. adminis-
tration of justice by the public tribunals at once safe,
easy, certain, and satisfactory. It would, therefore.
716 PARTNERSHIP. [cH. XVI.
be a matter of wonder, if in tlie diversities of pursuits^
of occupations, of interests, and even of political
arrangements, in different countries, we should not
find ingrafted upon each system some peculiarities,
which, in a philosophical sense, might seem to be
either incongruities or defects. Human wisdom never
yet has achieved anything perfect ; an^ the most,
that can be expected from the most enlightened juris-
prudence, is, that it shall contain within itself near
approximations to the soundest equity and moral jus-
tice, and in its adaptations be fitted to the wants, the
spirit, and the policy of the age. In this respect the
common law, especially in the department of commer-
cial jurisprudence, which has grown up and expanded
with the increasing intercourse between different na-
tions, and the enterprise, and .skill, and necessities of
navigation and trade, may justly challenge competition
with any other system in ancient or in modern times.
It has been nourished by the genius, and learning,
and independence of Judges, whose labors, like those
of Ulpian, and Gains, and Paul, and Papinian, are des-
tined to the same immortality as the Law itself Its
highest praise is, that its principles receive an almost
universal homage, not as the positive dictates of
authority, but as the persuasive and irresistible in-
fluence of reason. Vaknt pro ratione, non pro introdudo
jure.
INDEX.
THE PIGUEES EEFBR TO THE SECTIONS.
A.
ABATEMENT OF SUIT.
in cases of contract ..... 239
nonjoinder of all contractors defendants 160, 454
nonjoinder of all plaintiffs fatal on trial as well
as in abatement . . 235, 236, 244, 245, 454
in cases of tort ..;... 167
■ nonjoyjider of all plaintiffs . . . 167,454
nonjoinder of all defendants . . .167
(See Partners — Fraud.)
ABSENCE FROM THE COUNTKY, when a good cause of
dissolution of partnersliip or not . . , 298
ACCEPTANCE of separate security of one partner, when debt
of firm extinguished by or not . 155, 156, 157, 254, 255
ACCOUNT.
annual, under articles, effect of . . 206, 207, 208
aH profits to be accounted for in . . 175, 181, 349
how taken on dissolution .... 344 - 354
between partowners, how and when taken . 449, 451
by suit at law- ..... 449, 450
by bill in equity .... 449, 451
when running account with new firm discharges the old
or not . . . . . . 1S4-158
will be compelled of fraudulent gains by partner 175-180
each partner bound to keep proper accounts . . 181
whether account decreed between partners without a
prayer for dissolution . . . . 334
ACCOUNTS will not be taken generally in equity pending the
partnership, or the balance set right . . 229, 349
ACKNOWLEDGMENT OF PARTNERS.
when it binds the firm or not .... 107
of debt .... 107, 323, 324, 324 a, 324 6
ACKNOWLEDGMENT OF ONE PABTOWNER.
when it binds the other owners or not . . 453
313,
314,
374-
-408
454
,
455-
-462
■
23S
1, 236
,244
235
•
235
, 236,
,244
235
•)
216-
-228,
,232
,
234-
■264
181
204
204
718 INDEX.
ACT OF BANKRUPTCY.
effects and consequences' of
(See Bankruptcy.)
ACTIONS BY PAKTOWNERS.
against partowners
effect of nonjoinder as plaintiffs
effect of nonjoinder as defendants .
ACTIONS BY PARTNERS. All must join in
against partners, all should be joined
ACTIONS BY AND AGAINST PARTNERS.
{See Partners and Partnership.)
between partners
against third persons
ADMINISTRATION OF PARTNERSHIP,
who have a right to, generally
who under articles
equity will enforce and protect the right of
ADMIRALTY, COURT OF.
jurisdiction in cases of partowners . . . 428
in case of an equal division of interests and opinions 435-439
ADMISSION OF PARTNER. .
when it binds the firm or not .... 107
ofdebt 107
whether it binds after dissolution or not . . 323, 324
of partowner, when it binds others . . . 453
ADVANCES by partner, how considered . . . 219, 328
AGENT.
every partner agent of the firm . " . • 1
when agent, sharing profit as a compensation, a partner
or not .... 32, 33, 34, 35 - 52
distinction between sharing of gross and net profits 85 - 80
' partowner when agent or not, and
howfar . . 89,412-414,419-422,440,446
AGREEMENT TO FORM PARTNERSHIP.
when ibrced in equity . . . . ' 188, 189
articles of partnership, when and how enforced . 188,189
(See Articles.)
ALIENS, when they may be partners or not ... 9
friends may be . . . • ■ 9
alien enemies not ... 9, 240
dissolution of partnership by war . . 9
ALLOWANCE TO PARTNER FOR SERVICES.
when allowed or not .... 182, 185,186
ANNUITY.
when receiving an annuity makes a person a partner
or not . . . . • • .66-69
INDEX. 719
APPKOPRIATION OF PAYMENTS.
effect of upon and after change of firm . 157,253,254
how made . . .' . . . . 157
ARBITKATION. (See Partners — Partnership.)
one partner cannot bind firm by . . . 114
articles to refer to, cannot be enforced in equity . 215
when arbitrators may award a dissolution on an arbi-
tration .... 215, 299, 300, 301
ARTICLES OF PARTNERSHIP. {See Partnership.)
construction of, generally .... 187-215
construction of special articles . . . 198-202
duties under ..... 172-185
partners bound to conform to . . . 173
when courts of equity will decree specific articles to
form a partnership .... 188, 189
what articles after partnership will be specifically de-
creed to be performed .... 187, 189
how and when waived, controlled, or varied . 192, 199
ASSETS PARTNERSHIP, what are ... 92, 93
(See Partners and Partnership.)
distribution of, on dissolution . . . 350, 355
ASSIGNEES IN BANKRUPTCY.
rights, powers, and interests of . . . 375
ASSIGNMENT OF PARTNERSHIP PROPERTY.
when and what assignment good by one partner 101, 309, 310
to pay partnership debts . . . 101,309,310
whether general assignment by one partner good
■without consent of all . , . . . .101
when one partner may asgign his interest in part-
nership or not . . . . 183, 307, 308
'dissolution of partnership, when by . . 307, 308, 309
when assignment to partner good or not 358, 372, 373, 396
involuntary, effect of. (See Bankruptcy.)
involuntary, effect of by seizure in execution of 311, 312
assignment to one partner in cases of bankruptcy,
when valid or not ..... 396
ASSUMPSIT. {See Action — Remedies.)
ATTAINDER OF FELONY, OR TREASON.
dissolution of partnership by . . . 304,305
AUTHORITY AND POWERS OF PARTNERS.
to bind each other .... 101-125
AWARD. (See Arbitration.) . . . 114, 215, 299, 301
B.
BANKRUPTCY. (See Partners and Partnership.)
effects and consequences of . . . 313,374-396
720 INDEX.
BANKRUPTCY — eoniinued.
dissolution of partnership by . . . . 313
from what time . . . ... . 314
rights of joint creditors on . . . 374-409
rights of several creditors on . . . 374-409
reputed ownership in cases of, what is 397-404, 407, 408
rights of creditors in respect to dormant partners in
cases of ...... 393
rights and powers of solvent partners in cases of 338, 339, 407,
408
rights of creditors having a security . . . 389
BILLS AND NOTES. (See Pkomissory Notes.)
when partners may make or indorse in name of
firm . . ... . 102, 102 a, 126, 127
when partnership not bound by .. . .126,127
BOND TO PARTNERS.
for fidelity of clerks, &c., how and when extin-
guished . . . . . 245-251
by one partner, when binding the firm or not 117- 122 a
BOOKS OF PARTNERSHIP.
effect of entries in . . . .24, note, 191
C.
CAPITAL STOCK.
one partner may supply, aiud another labor and ser-
vices . . . . • • 15, 16, 17
community of interest of partners in . • 15,16,17,27
how and when partners contribute to . . 15,16,17
when community of interest creates a partner or ,
not in .....
of what it may consist . . .15-
construction of articles as to advance of
CHANGE OF FIRM, effect of . . .
notice of, when necessary
CLANDESTINE BUSINESS AND PROFITS.
every partner responsible to partnership for .
CLUB, when exclusive credit given to or not
COLLUSION OF ONE PARTNER.
when It binds firm or not. (See FRArn.) 108, 109, 131, 132,
133, 133 a, 162, 163, 164, 237, 238
COMMANDITE, partnership in, what is . . . .78
how formed ...... 87
COMMENCEMENT OF PARTNERSHIP,
when it takes effect . . . . . 194
.
27
-29
58 a
,88-
100
203,
,204,
205
,
153,
160
159-
•163
,
177,178
144,
145
INDEX. 721
COMMISSIONS, when participation in, makes a partnership
or not . • . . . 24,37,38,41
COMMUNITY OF INTEREST.
in profits. (iSfee Pkofits.) . . . .18-23
when it makes parties partners , . . 53-69
when not. (5^ee Partnership.) . . . 30-52
COMPENSATION OF AGENT.
when sharing profits makes agent a partner or not 33, 34
partners cannot claim unless by special agreement 182, 185, 186
allowed to partner for expenditures and losses on
account of firm .... 185, 186
COMPOUNDING and compromising debt of firm by one
partner, when valid .... 115, 116
COMPROMISE and compounding of debt by one part-
ner valid ..... 115,116
CONCEALMENT BY PARTNER INJURIOUS TO
PARTNERSHIP. .
when he is liable for .
when his contracts with firm voidable for
CONTINUANCE OF PARTNERSHIP,
construction of articles (as to)
after death of a partner by his agreement
by representatives or appointees
how far debts contracted after his death binds his
assets ...... 201 a
CONTINUING CONTRACTS.
how affected by change of firm . . . 243, 245 - 251
in cases of guaranty . 243,244,245,248,249,250,251
in cases of suretyship . . . 246, 248, 249
in cases of bonds for fidelity of clerks, &c. . .249,250
CONTRACT, partnership founded in . . . .2-6
{See Partnership.)
what are deemed partnership contracts or not 134, 137, 138,
154,243-256
by what contract one partner can bind the firm 102 - 109,
142, 143
when firm not bound . 110,113,117,118,142-146
not unless made in firm name . . . 102, 102 a, 142
nor if by deed . . . . . 117 -122 a
exceptions to rule . . . 120-122,243,244
not where exclusive credit given to one partner 134 - 145
with partners, how extinguished . 154-157, 253, 254, 255
(See Extinguishment.)
what deemed of the partnership or not . . 243,244
how sued upon when one partner retires . . 244
PAKTN. 61
172
•
•
172
195
180,
, 199-
-201a
180,
199-
■201 a
722 INDEX.
CONTRACT — continued.
continuing, how construed . . . 245 - 251
of guaranty to or by firm . . .■ . 245-248
of suretyship for clerks by or to fiim . . 245 - 251
CONTRACTS, partnership, are deemed joint and several in
equity ....... 362
CONTRIBUTIONS BETWEEN PARTNERS.
■when right exists to .... 169-173
when it may be had at law or not . . 218, 219, 220, 221
when in equity ..... 222, 223, 224
when in cases of tort or not ..... 220
COURTS OF EQUITY. (See Paetneks.;
remedial power between partners . . 176-183
in cases of fraud or clandestine business or bar-
gains . . . . • 174-183,287
injunctions, when gi'anted by 178, 179, 209- 212, 225-283
wh"fen a receives appointed by . . . 228-231
when a dissolution decreed by . 176, 232, 282, 286 - 298
when the specific performance of articles of partner-
ship will be decreed ....
when specific performance of articles of partnership
decreed or not .....
bill in equity between partners to account lies in
so between partowners to account
when equity will interfere to restrain one partner
violating the articles of partnership, the bill not
praying a dissolution .... 229
whether and how far they will interfere between
partners, unless a dissolution is prayed by the bill . 229
CONVERSION OF DEBTS.
(See Extinguishment.)
what is ...... 369,370
effect and consequences of . . 369,370,397-404
CONVEYANCE OF PARTNERSfflP PROPERTY.
by one partner, when good or not . . 106, 309, 310
(See Assignment.)
CREDIT. When exclusive credit is given to one partner,
the partnership is not bound . . 134 - 145, 154, 243
what is exclusive credit or not . . 134 - 145, 158
when credit to new firm discharges old firm 154-158, 253-255
CREDITORS. When persons are partners as to, although
not inter sese. (iSee Partnership.) .. . 53-70
when persons not partners as to . , .30-52
CREDITORS, RIGHTS AND PRIVILEGES OF.
(See Joint Creditors.)
joint ..... 861-365,390,391
188,
189
204-
-210
347-
■851
449
INDEX. 728
CEEDITORS, RIGHTS AND PRIVILEGES OF — continued.
several ...... 363, 390, 391
joint and several . . • . . 384-386
equities and quasi lien of . . . 326,357-361
rights of creditors against partners generally . 126 - 168
in cases of death of one partner . . .361,362
against survivors . . . 361, 362
against estate of deceased partner . . 361,362
what -debts are joint and several . . 367,373
of bankruptcy . . 376,377,384,^6
D.
DAMAGES. Liability of partners to contribution for 169-173,220,221
when a partner liable to firm for . . . 185
DEATH. Dissolution of partnership by . . 317, 318, 319 a
(See Paetnbks and Partnership.)
from what time * • . . . . . 319
effects and consequences of • . . 342 - 356
rights of survivors ..... 344 - 347
rights of representatives . ' . . 342-346
rights of creditors ..... 361, 362
DEATH OF PARTNER. When partnership continued by
his agent for a period after his death, how far his
assets are liable for debts contracted after his death 201 a
DEBT OP SEPARATE PARTNER.
payment of, when misapplication of partnership funds
or not . . . . . . 132, 133
when debt binds partnership, T^hich is contracted be-
fore it is formed, or not . . . 146,147-152
when incoming partner bound or not . . 152,153
DEBTS DUE BY PARTNERSHIP. {See Partnership.)
when joint and several . .... 262
conversion of, what is, and when it takes place . 369,370
effects of conversion . . . 369,370,397-403
DEBTS OF PARTNERSHIP are joint and several.
DECLARATION OF PARTNER.
when it binds the firm or not . . 107, 323, 324^ 324 a, 324 b
whether after dissolution or not . . 323 - 324 &
of one partowner, when it binds others . . . 453
DECREE IN EQUITY OF A DISSOLUTION.
effects and consequences of . . . . 356
when made .... 176,232,282,286
receiver, when appointed . . . 228 - 231, 330
724 INDEX.
DEED. One partner cannot bind the firm by deed 101, 117-122a
exceptions to the rule .... 120-122
DEFAMATION OF PARTNERSHIP.
action lies for . . . . . . 256 - 258
DELECTUS PERSONS, when essential in partnership . 5
DILIGENCE, DUE, when required of every partner in part-
nership business . . . . 182-186
DISCHARGE OF PARTNERSHIP DEBT.
(See Extinguishment.)
what is or is not . . . 155-158,253-255
DISSOLUTION OF PARTNERSHIP . . . 265-319
(See Partners and Partnership.)
when decreed in equity . . . 232, 286, 287, 288
when for fraud .... 232,285-288
when decreed for gross misconduct 232,233,285-288
when not . • ... . 286, 287, 288
how produced ..... 265-319
by act or consent of parties . . 265,268,270,274
by decree of court of equity . . 232, 265, 282-285, 295
by operation of law ..... 265
when by efflux of time .... 278,279
when at will . . . . . 269 - 277
by extinction of the thin^ .... 280
by accomplishment of the entire business . . 280
on account of the impracticability of the undertaking 290
on account of incapacity of partner . \ 294, 295, 298, 304
on account of insanity of partner . . . 295-297
by award of arbitrators .... 299,300,301
by change of condition of a partner . . . 302-306
by absence from the State .... 298
by outlawry ...... 304
by attainder ..... 804, 305
by marriage of a female partner . . . 306
by assignment of all share and interest in partnership 307-310
by involuntary assignment, (See Bankruptcy) 313, 314
by seizure of partnership property in execution 311, 312
by public war ..... 315, 316
by death of partner . . . . .317, 318
from what time .... 314, 319, 319, a
effects and consequences as to partners . . 320 - 356
' (See Partners and Partnership.)
effects and consequences as to creditors and third per-
sons . . . . . .357-411
(See Partners and Partnership.)
effects and consequences of, by voluntary act . 820 - 337
by bankruptcy . . 320, 337 - 341, 374 - 396
INDEX.
725
DISSOLUTION OF PARTNERSHIP — coMiinueci:.
by death .... 820, 842 - 855
by decree in equity .... 320, 356
when notice of, necessary or not . . . 834 - 336
in cases of voluntary dissolution . . 357-361
Ln cases of bankruptcy . . 887,374-394
in cases of death .... 362
rights against survivors . . . .862
rights against estate of deceased . .862,364
rights of joint creditors . . . 365-895
rights of several creditors . . .365-895
DISTRIBUTION of partnership effects . . . 350-356
DORMANT PARTNER. {See Paktnekship) . . 80
liability of, to third persons ... 63, 64
bound by acts and contracts of ostensible partners . 108
not bound after his retirement from the firm . . 159
when necessary party to a suit or not . . .241
liabilities of, in cases of bankruptcy . . . 393
when dormant partner should join or be joined in a suit 241
DOUBLE PROOF, what is, and when allowed . . 384 - 387
DURATION OF PARTNERSHIP, {See Partnership) . 84
at will . . . . .84, 197, 201, 277, 297
. for a fixed time . . . .84, 195, 278, 279
what is presumed as to . . . . • M
when deemed to be for life . . . .271
construction of articles as to . . 195,196,198-200
in case of death of a partner . . . .195
when deemed to be renewed . . .197,198
effect of renewal indefinitely . . .197,278,279
construction of articles, as to continuation of, on death
of a partner .... .198-200,279
DUTIES AND RIGHTS OF PARTNERS . . 169-186
{See Partners and Partnership.)
implied . . . . . .169-186
(&e Articles) . . . 187-215
E.
EFFLUX OF TIME, dissolution of partnership by . 278,279
{See Dissolution.)
ELECTION OF CREDITORS to prove debts in bankruptcy 384-388
of joint creditors . . . • 384-888,891,392
of joint and several creditors . . 384-388,393,394
of creditors having a pledge or security . . 389'
in cases of dormant partnership .... 393-
61*
726 INDEX.
ENTEIES IN BOOKS OF PARTNERSHIP, effect of 24, n., 191
EQUITY, COURTS OF. (See Courts of Equity) . 178
■whether courts of equity will interfere between part-
ners and appoint a receiver, except the bill praya
a dissolution. (See Myl. & Ckaig, 635, 639) . 229
when specific performance of articles to form a part-
nership will be decreed by . . . 188, 189
when specific performance of articles after partner-
ship will be decreed by . . . 204-210
when injunction granted by or not 178, 179, 209-213, 221 - 233
receiver, when appointed by . . . 228 - 231
when dissolution decreed by . . 176, 232, 282, 286
bill for account between partowners, when it lies in . 449
EVIDENCE. See Admission, Acknowledgment, Declaration.)
when and what acts or acknowledgments of one part-
ner bind the others, or not . . . .107
EXECUTION AGAINST PARTNERSHIP EFFECTS ON A
SEPARATE JUDGMENT AGAINST ONE PARTNER,
when good for the separate debt of one partner
how far the right of the creditor extends
what may be seized on .
whether sheriff can sell on .
when injunction lies by the other partners against
sale by sheriff ....
effects of seizure on, in dissolving partnership
EXECUTORS AND ADMINISTRATORS OF PARTNERS.
(See Partners and Partnership.)
rights and duties of .... 342-347
EXPENDITURES BY PARTNER in business of firm to
be allowed him . . . . . .185
EXPIRATION OF PARTNERSHIP.
(See Dissolution op Partnership) . . 265 -319 a
EXTINGUISHMENT OF PARTNERSHIP DEBT.
what is, or not . . . 153-158,251-255
upon change of firm .... 153-157
upon retirement of a partner . . 155,156,158,159
upon giving credit to new firm . 157, 158, 253, 264, 265
by conversion of partnership debt . .369,370,397-404
F.
FELONY, ATTAINDER OF.
is a dissolution of partnership . . . 304, 305
FEME COVERT, when she can be a partner or not . . 10, 11
in case of abjuration or exile of husband . . 10,11
261-
•264
261-
•264
261-
-264
262,
,263
264
311,
312
INDEX.
727
FEME COYISRI — continued.
in case of special custom .... 10,11,12
not without consent of her husband . . 10, 11, 12
■when and how far bound as a partner . • 10, 11
powers of, in equity, under nuptial contracts, or other
agreements . . . . . .11
when treated as a feme sole ... 11, 12
when a partner under a foreign law ' . . . 239
marriage of a feme sole, when a dissolution of prior
partnership ...... 306
FIRM, STYLE OF. Construction of articles as to . . 202
all the partners bound to conform to it . . . 202
use of, necessary to bind firm to contracts 102, 184 - 136, 142, 143
exceptions to the rule .... 142, 143
FISHERIES, when parties in, partners or not . . .42
FOREIGN LAW, when it governs the rights of a partnership 239, 240
FRAUD OF A PARTNER, when it binds the other innocent
partners . . 108, 109, 131, 163, 164, 236, 237, 238
when not ..... 128,129,131,132
of retiring partner binds him to pay debts . . 162,163
to injury of partnership, he is liable for . . 172,173
what acts of a partner are frauds on the partnership 1 72, 1 75
how remediable in equity . . . . 176
dissolution when decreed for . . . 233, 287
FRAUDS, STATUTE OF.
how it affects partnership in lands ... 83
G.
GENERAL PARTNERSHIP, what is . . . .74
(See Partnership.)
GOOD-WILL OF A TRADE, whether it is partnership
property or not . . . . .99, 100
what passes by agreement to convey it to one partner 211, 212
how equity will enforce right to . . . .212
* GUARANTY, when partnership bound by or not . Ill, 112, 127
when guaranty to partnership extinguished or not . 243
effect of change of firm on existing . . 245 - 250
HUSBAND AND WIPE. (See Fbme Covert) . 10, 11, 12
when wife may, or not, be a partner . . 10, 11, 12
when husband bound by acts of wife, as partner, or not 10-12
when they may sue as partners under foreign law . 239
728 INDEX.
I.
ILLEGAL PARTNERSHIP, void .... 6
what is illegal ■•. . . . . .6
(See Partnekship.)
IMPRACTICABILITY OF THE UNDERTAiaNG.
a ground for dissolution of partnership . . . 290
INCAPACITY OF A PARTNER. {See Dissolution of
' Partnership.)
when a ground of dissolution of partnership . 292,293
INCOMING PARTNER, rights and responsibility of . 152, 153
INFANT, partnership contract does not bind ... 7
partnership by, voidable, not void . . . .7
infancy a good cause of dissolution . . 7, 292, 293
IN^TUNCTION, when granted in equity between partners 178, 179,
192-202, 209-212, 222-233
not granted for fugitive and temporary breeches of
duty ..... 225, 286, 287, 288
when granted against third persons . . 258, 259, 260
in cases of fraud .... 258, 259, 285 - 288
ita cases of gross misconduct . . 258,269,260,285-288
in other cases ..... 258 - 260
in cases of separate execution against effects of firm 260 - 264
whether equity will restrain sale by sheriff on sepa-
rate execution . . . , . . 264
INSANITY OP A PARTNER, when a good ground of
dissolution of partnership . . . 295-297
INSOLVENCY OF A PARITNER. Construction of arti-*
cles for dissolution tof partnership on . . 214,215
INTEREST.
when allowed between partners . . . . 182 a
INTERESTS AND RIGHTS OF PARTNERS in part-
nership property. (See Partnership) . .88-100
JOINDER OP PARTNERS. (See Nonjoinder op Partners.)
all should join as plaintiffs . . 235, 236, 244, 245
objection of nonjoinder fatal at trial . 235,236,244,245
all should be joined as defendants . . . 235
but nonjoinder only pleadable in abatement 235, 236, 241, 242
JOINDER OF PARTOWNERS in cases of contract 454,455
in oases of tort ..... 454, 455
of all partowners as plaintiffs should, be in cases of
contract . . . . . . 454, 455
INDEX. 729
•
JOINDER OF TAUTOWlHEViS — continued.
omission of, fatal .... 454, 455
in tort all should be joined . . . 454
but the omission is only pleadable in abatement . 167
JOINT ADVENTDRERSi when partners or not . . 33, 34
JOINT CREDITORS, RIGHTS AND PRIVILEGES OF.
(See Partners and Partnership.)
against joint effects .... 361-365,390
against separate effects . . . . 361-365
equities and quasi lien of . . 97, 326, 357 - 361
■what property deemed joint, and what sev-
eral ..... 369,370,397-404
JOINT DEBTS, what are . . . 145-153,376-387
what are joint and several . . 387,389,391-394
how payable in cases of bankruptcy . . 376-387
in cases of dormant partnerships . . . 393
JOINT PROPERTY. * -
what deemed joint, and what several . 369, 370, 397-404
JOINT STOCK COMPANIES, liability of . . 164
liable like common partners . . . . 164
rights and powers of . . . . 213
rights of majority to govern .... 213
LAND, how statute of frauds affects partnership in . .83
partnership property in . . . .92, 93
how treated in equity . . . . . 92, 93
one partner can transfer only his own share therein,
unless authorized by deed by other partners . ' 117 - 122 a
LEASE in name of one partner, when the benefit of belongs
to the firm . . . . . . 1 74
'LETTER OF CREDIT, when partnership bound by, or not 127
LIABILITY AND EXEMPTIONS OF PARTNERS ON
CONTRACTS. (See Partnership.)
as between themselves ..." 169 - 186
as to third persons .... 126-169
on contracts .... 126-165; 168 a
on torts . . . . . 166 -168 a
LIBEL OF FIRM, action lies for • » • • 256, 257
by firm, action lies for . . . . 257
LIEN OF PARTNERS on partnership property 97, 98, 360, 361
upon dissolution ..... 360, 361
LIEN OF CREDITORS, when they have a quasi lien or
equity, and what . . '. 97,326,357-361
730 INDEX.
*
LIMITATIONS, STATUTE OP.
admission of debt by a partner before dissolution,
whether it revives debt or not . . . .107
whether it does, when made after dissolution
of partnership . . . . 323, 324'
in case of misrepresentation . . . - . 108
when a bar to an account between partners . . 233 a
when a bar, after dissolution of partnership, to creditors 324 c
admission by one partowner, when it binds the other
partowners, or not . , . . 323, 325, 453
LOSSES, when and how community in, essential to partner-
ship or not . . . 19, 20, 21, 22, 60 - 62
when share of profits makes a person a party, al-
though he bears none of the losses . . 60-62
how losses borne in absence of any special agreement 20-27
validity and effect of ^special agreement, as to . 60-63
by negligence, "when a partner responsible for 169 - 173
by one partner for the firm to be compensated for . 185
M.
MAJORITY IN CASES OF PARTNERSHIP.
rights and powers of .... 123
(See Paktjstkrs.)
when entitled to govern
when not
construction of articles as to rights and powers of
MAJORITY IN CASES OP PARTOWNERSHIP.
rights and powers of . . .
as to repairs of ship
as to employment of*ship
as to furnishing cargo
as to appointing officers
MARRIAGE OP FEME PARTNER.
a dissolution of partnership .
MINING BUSINESS, when partnership bound by acts in, or not
MINORITY IN CASES OP PARTOWNERSHIP.
rights and powers of .... 428-431
MISAPPLICATION OF PARTNERSHIP FUNDS.
when it binds partners . 108, 109, 130, 131, 133, 134
when not ..... 128, 129, 132
to pay the separate debt of one partner, when
■ binding or not . . . . 133, 134
MISCONDUCT OP PARTNER.
when a ground for an injunction . . . 226, 227
when for a dissolution' .... 233, 287, 288
123,
, 124, 125,
213
125,
213
s of
213
413,418-
-426
.
418-
■423
^
. 426*-
■434
,
433,
,434
432,
,445
306
3 in.
or not
126
INDEX. 731
MISREPRESENTATION BY PARTNER . . 107,108
when it binds the partnership, or not . . 107,108
•when he is liable for, to his partners . . 172,173
when it is ground for a dissolution . . 228 - 233
MORTGAGE. When one partner may mortgage partnership
property, or not . . . . .94-96
when and how a creditor, holding a mortgage, may
prove in bankruptcy .- . . . .389
N.
NAME OF FIRM, construction of articles as to . . 202
must be used to bind partnership 102, 134, 135, 136, 142, 143
effect of its being the sole name of one partner . . 139
NEGLIGENCE, when partner liable for . . .169-172
when partners liable for inter sese . 169, 173, 348, 349
when to third persons .... "l6G, 167, 168
when partowners liable for inter sese . . 449, 452
when to third persons ..... 445 - 460
NOMINAL PARTNERS, who are .... 80
liability of . . . . . . 64, 65
{See Paktnebship.)
whether they must join and be joined in suits . 241, 242
NONJOINDER OF PARTNERS. {See Joindek of Partnebs.)
effect of, if plaintiffs . . . 235, 236, 244, 245
effect of, if defendants . . 166, 235, 236,*240, 241
in cases of contract .... 240, 241, 242
in cases of torts ..... 167
of dormant partner, effect of . 240, 241
of nominal partner, effect of . . . 242
NONJOINDER OF PARTOWNERS.
effect of, as plaintiffs, in cases of contract . . 454
as plaintiffs, fatal at trial ..... 454
effect of, as defendants . . . . 167
pleadable only in abatement in cases of defendants . 197
in cases of tort . . . . • 167
as plaintiffs ...... 454
as defendants . . . . . . 167
NOTICE. When acts of a partner in violation of duty known
to third persons will exonerate partnership . 127-134
of retirement of partner^ when necessary or not . 159 - 163,
334, 335, 336, 343
what is sufficient . , . - 161, 162, 163
when necessary on dissolution of partnership . 159-163
when not ... . 159, 160, 162, 336
732 INDEX.
TSOTICE — continued.
not in cases of death . . . 162, 336, 343
not in cases of bankruptcy . . . 336
when notice to one partner binds the firm, or not 107, 108
O.
OSTENSIBLE PARTNEES, who are ... 80
liability of . . . . . . 64, 65
(See Paetneeship.)
when bound after retirement .... 160
when notice of retirement necessary . . . 160
what notice sufficient .... 161, 162
OUTLAWRY, a dissolution of partnership ... 334
OWNERS OF SHIPS, rights, powers, duties, and liabili-
ties of (&e Paetownbes) . . 412-460
how ships held by partowners . . . 416,417
no right of survivorship among . . . 417
OWNERSHIP, REPUTED, in cases of bankruptcy, what
is or not . . . . . 397-404,407
P.
PARTNERS.
are both principals and agents .... 1
who may be . . . . . .7-14
persons sui juris . . . . . 7, 8
alien friends . . . . . .9
feme covert in special cases . . .10, 11, 12
infant, when at his own election bound . . 7, 8
who may not be . . . . . 7-14
infants generally . . . . . 7, 8
alien enemies ..... 9
married women .... 10, 11, 12
special exceptions by custom . . .12, 13, 14
different sorts of . . . . ■ 80
ostensible partners . . . . .80
dormant partners ..... 80
secret partners ...... 80
rights of, in partnership property . . . 88 - 100
difference between partners and partowners . 89
whether they are tenants in common or joint-
tenants . . . . . .88-91
no difference of rights in equity, whether
property is personal or real . . 92, 93
INDEX. 733
PARTNERS — continued.
powers and authorities of partners over partnership
property 94_96
power to sell or pledge partnership property . 94-96
liens and rights of partners on partnership property 97-99
powers and authorities of partners generally . 101 - 125
to assign property generally or specially . 101
to assign property for benefit of creditors . . 101
to buy or sell or pledge goods . 102, 102 a, 126
to borrow money . . . .102
to draw bills and notes . . ,. 102, 102 a
to negotiate and indorse bills or notes . 102, 102 a
to draw checks .... 102, 102 a
to procure insurance .... 102
to do any acts authorized by usage of the trade
or business. . . 102, 102 a, 103, 126
the like powers exist in cases of dormant partners 103
and of trustees, who are partners . . 105,106
to do all acts appropriate to arid within the scope
of the partnership business 107,108,113, 126, 127
how powers and authorities are to be exercised
and executed by . . . . ' 102
powers should be executed in the name pf the firm 102
right of majority of, to govern . . . 123,213
representations and admissions of, when they bind
the firm ..... 107, 108, 109
when not . . . . 107, 108, 109
when notice to one partner binds the firm . . 107
■when fraud of one partner binds the firm . . .108
release of one partner binds the firm . . . 115,116
so compromise of debt ■ . . . 115, 116
so guaranty within scope of the trade or business 111, 127
what contracts are deemed partnership contracts, or
not . . . . 134, 137, 138, 154, 243
when the acts of a partner do not bind the firm 110-113, 117,
142, 145
not, when in business beyond scope of partnership 110, 111, 112
not, when in acts not incident to the business or trade 112, 113
one partner cannot bind the firm in cases of sale of
real estate ...... 101
one partner cannot bind the firm by submission to
arbitration. ...... 114
one partner cannot generally bind another by deed,
unless authorized by deed . . . 117 -122 a
exceptions to the rule . . . 120 -122 a
PARTN. 62
734
INDEX.
PARTNERS — continued.
one partner cannot bind the firm by contract with a
third person, -who knows that he is acting in fraud
of the firm, or without authority . 110- 113, 128-131
nor by a guaranty not within business of the firm 111, 127
nor, ordinarily, by an appropriation of partnership
property to his private debts . . . 132, 133
in cases of disagreement between partners, the ma-
jority governs ..... 123
exceptions to the rule .... 123,124,125
liabilities and exemptions of partners to third persons 126-168
when all are liable in solido . . . 102-109,456
partners bound only for dcts done within scope of
business of firm ' . . 106, 107, 108, 109, 126, 127
not bound, where act is fraudulent and known to the
other party . . • . 110-113,128-133
not bound, where credit is exclusively given to one
partner .... 134-139,153,154,243
what is sufficient evidence of exclusive credit, or
not . . . . . . 138-144, 243
not bound, where debt is contracted before part-
nership is formed .... 146-150
not bound by preliminary steps taken to form a
partnership ..... 150 - 151
incoming partner not bound for debts of the old firm 152
unless contract is changed by consent . . 152,153
not bound, where the credit is not given, to the
firm, but to one partner .... 154,243
how discharged from contracts by subsequent acts 155, 156,
253, 254, 255
by acceptance of the security of one partner in ex-
tinguishment of the debt of the firm 155 - 158, 254, 255
when giving credit to the firm after retirement of
one partner discharges a prior debt, or not 156 - 158, 253 - 255
how payments are to be appropriated . . 157, 253
when partner after his retirement is discharged from
future debts, or not . . . 159,160,162,163
when and to whom notice of retirement is necessary 160 - 163
notice of dissolution of partnership when necessary
to discharge partners, or not . . . 160-163
what notice is sufficient or not . . . 161
when partners liable for new debts, notwithstanding
a notice of retirement or dissolution . . . 163
when in cases of fraud . . . . . 1^63
in joint-stock companies hable as in common partnerships 164
INDEX.
V35
PARTNERS —continued.
■whether partners in joint-stock companies can limit
their liability ..... 164,165
right of, to govern in cases of joint-stock companies . . 213
■when partners liable for torts of each other to third
persons . . ' . . . 166-168
Rights, Duties, and Obligations of Partners between
themselves . . . . .169-186
' duties as to diligence and care and skill 169, 170, 171
182, 183
partners liable for gross negligence 169, 170, 171, 233
partners liable for frauds . . 171,172,182
duty to conform to stipulations of articles of
partnership ..... 173, 187
duty to abstain from clandestine and secret trade
injurious to partnership . . 174-179,209-212
duty to act for benefit of partnership . .175-177
duty to abstain from improper speculations . 177
duty not to be interested in rival partnerships . 175, 180
duty to keep precise accounts and disclose all
partnership transactions to all the partners . 181
duty not to violate rights of other partners 182, 183, 184
duty to allow and pay all proper expenditures
on partnership account . . . 185, 186
Construction of Partnership Articles . . 187-215
{See Paetneks.)
specific performance of articles, when decreed,
or not . . . 188,189,193,217-227,232
remedies between partners at law and in equity 193, 217 - 227,
232
when injunction granted or not 193 - 202, 215, 224 - 227
when receiver appointed, or not . . 228, 229, 331
remedies by partners against third persons . 234 - 264
when at law or not . . 234 - 241, 256 - 258
when in equity only . 234, 235, 244, 259, 260
all partners must join as plainti£fs in a Suit, other-
wise it is a fatal defect . . . 235, 236, 244
exceptions to the rule . ... 241, 242
all partners should be joined as defendants ; but the
objection only matter of abatement . . . 235
remedy in equity only, where one and the same per-
son is partner in two firms . . 234, 235, 336
partners cannot maintain suit at law upon a security,
where there is a good bar against one partner 237, 238
or where there is fraud or misrepresentation by
one partner ..... 237, 238
736 INDEX.
PARTNERS — continued.
all partners must be competent, or at law no action
lies by them 239
■what constitutes incompetency to sue . . 230, 240
being a feme covert . . . .239
being an alien enemy . . . 240
what contracts are deemed partnership contracts, or not 243
how contracts are to be sued, when one partner re^
tires 254, 255, 356, 357
construction of continuing contracts hy or to . . 245 - 251
contracts to, for fidelity of clerk, when binding, or
not, on change of firm . . . 245 - 250
continuing contracts of guaranty to, when binding
after change of the firm . . . 245,248-251
remedies by partners at law against third persons
for torts . ' . . . . .256
and for frauds ..... 256
and for defamation of firm . . .257
and for obstructions and injuries to their business 258
remedies by partners in equity against third per-
sons . . . . • 234, 235, 244, 259
by injunction ..... 259
in cases of execution against one partner and
seizure of partnership effects . . 260-264
whether equity will restrain sale of the eflFects
by sherifif in such a case . . . 264
Dissolution of Partnership , . . . 265-270
by act of parties . . . 265,268,269,279
by efflux of time
by tacit renunciation
by performance of business or voyage
by extinction of the partnership property
by a decree of court of equity
for what causes decreed
for causes at time of formation of partnership
for causes subsequent to formation of partnership
for fraud .....
for gross misconduct
for impracticability in the undertaking
for incapacity or inability of a partner .
for insanity . • . . .
for absence from the State
when dissoluble by arbitrators, or not
when dissoluble at pleasure, or not 268 -
when deemed to endure for life
•
267,
278
272
280
280
282-
■285
,
286-
■298
1
286,
287
ship
286
285,
286
'
288,
289
290
,
■291-
■294
295-
-297
298
215,299
,300
270,
274-
■277>
307
,308
271
INDEX. 737
PARTNERS — continued.
when deemed to be prolonged or renewed
beyond original term . . 84, 85, 271, 272, 279
by operation of law .... 302-316
by change of state or condition of party . 302 - 305
by marriage ..... .306
by voluntary assignment of all interest in partner-
ship ..... 307-310
by involuntary assignment of interest . . 311-313
by execution against all the partnership effects 311, 312
by banlsruptcy and insolvency . . 313, 314
at what time dissolved by banltruptcy or insolvency 314
by war between countries or partners . 315, 316
by death of one partner . . . 317,318
from what time dissolution by death takes place 319
notice of, when necessary or not 159 - 163, 834 - 336,
342, 343
efiects and consequences of dissolution generally 320-411
between the partners . . . 326-356
in cases of voluntary dissolution . 320 - 322
lien of partners on effects . . 360-361
what powers and authorities are extinguish-
ed by dissolution 322 - 324, 329, 344, 445, 446
what power and authorities remain 320 - 328, 331,
344-346
when receiver will be appointed 228, 229, 231, 330
accounts' between partners, hotr taken . 346-353
representatives of, entitled to an account . 343, 361
when a sale of partnership effects will be order-
ed, or not ...... 350
all profits to be accounted for ... . 349
valuation of partnership effects, when and how
made . . . . . 350 - 355, 396
valuation when not allowed . ' . 358, 359, 373
when effects may be assigned to one partner on
dissolution, or not . . . 358, 359, 396
assignment not allowed in cases of bankruptcy 396
effects and consequences of dissolution by bank-
ruptcy . . . . .337-341
rights and powers of partners on bankruptcy 337 - 343
rights of assignees in bankruptcy . . 37&
by death, effects and consequences of . 342, 357, 358
rights and powers of the survivors . . 344-347
rights and powers of representatives of . 342 - 346
lien of the survivors .... 361
by decree of a court of equity . . . 3^&
62*
738 INDEX.
PARTNERS — confe'nucd
effects and consequences of such a decree . 356
sale of effects, when ordered by court of equity 350, 356
dissolution of partnership, effects and conse-
quences as to third persons . , 334,337-411
rights of creditors on dissolution . . . 358
equity of creditors upon partnership effects,
when and what . . . 326,358-360
creditors have no lien, but a quasi lien in certain
cases ..... 326, 358 - 360
how this quasi lien is enforced . .326, 358 - 361
rights of joint creditors of . . 361 - 365, 390
debts of joint and several creditors . . . 362
equities of joint creditors as to separate ef- '
fects .... 363,365,390,392
remedies of joint creditors • 361, 362, 390 - 392
against survivors ..... 362
against representatives of deceased partners ' . 362
rights and remedies of separate creditors 363, 364, 390, 391
remedies of joint creditors in cases of death
of one, and bankruptcy of the other part-
ner . . . . 364-366,367,378
rights and remedies of a partner, who is a cred-
itor of the firm , • , 390-392,405-407
rights of creditors, who are both joint and sev-
eral creditors ..... 384, 385
what debts treated as joint and several . . 867 - 373
what is a conversion of joint or of several debts 367-373
what property is deemed joint and what sev-
eral .... 659,370,397-403
rights of joint creditors in cases of bankruptcy 376-378
exceptions to the general rule . 378 - 381, 392 - 394
where creditors are joint and several creditors,
they are bound to elect . . . 384-386
exceptions to the rule , . , . 387-394
rights of a partner, who is creditor of the firm
in bankruptcy ..... 390
set-off in bankruptcy, what debt or claim is good,
or not, by way of ... . 395
rights of pledgee and mortgagee . . . 389
dissolution by bankruptcy, valuation not allowed on 396
reputed ownership in bankruptcy, what is, or hot 397 - 403
PARTNERSHIP, what constitutes . - . . . 1, 2
founded in consent . . . . 3, 4, 5, 6
in contract . . . . . .6
what is legal or illegal ..... 6
INDEX. 739
PARTNERSHIP — continued.
community of interests in . . . 15, 16, 27
community of property in . . . . 16,17,27
community of profits in ... 16, 18, 24
profits how shared . . . . .16, 24, 26
property how shared . . . 18-24,27-29
what constitutes between the parties . . 15-29
what constitutes as to third persons . . 30, 53 - 70
by sharing profits generally . . 18 - 24, 33, 34
by sharing profits as such . . 33,34,35,53-62
by sharing net profits ,33, 34, 35, 38, 39, 40, 42, 43, 47,
53, 56-62
by sharing profits as a dormant partner . .63
by holding out to the world, that one is a partner 64, 65
by receiving a part of the profits, as profits, as
an annuitant . . . . 66-69
by taking the profits as trustee for others . . 70
when it does not exist as to third persons . . 30-52
by mere joint purchase . . . .30,31
by mere joint sale . . , . 30,31
by share of profits as agent 32 - 34, 38, 40, 41, 42, 47 - 52
by share of gross earnings . 33 - 36, 41, 42-47
by share in fisheries . . . . .42
by shipment on half profits . . . 43, 44
by portion of profits in lieu of rent . . .43
by share of gross earnings instead of wages . 44-47
by receiving an annuity out of the profits, not as
profits, but as a fund for payment ' . . 67, 68
difierent sorts of. -
universal partnership . . . -71, 72, 78
generalpartnership . . . . 71, 74
special or limited partnership . . 71, 75, 408
private partnership , . ■ . 76
public company . . . .76, 77, 79
in commandite ..... 78
when deemed at will, or not . . . 227
when deemed to be continued, or not, after expi-
ration of the original term . . 271, 279
business of partnership .... 81', 82, 83
in trade . . . . . . 81, 82
in purchase and sale of lands ... 82, 83
in collieries . . . . . 82, 83
how formed . . . . . 84, 85
for what period . . . , 84,85,277
for life .... ..84,85,271
for years ..... 84, 85, 277
740
INDEX.
PARTNERSHIP — continued.
indefinitely . . . . .84, 85, 271
when deemed to be renewed . . . 279
in what mode formed.
by express or implied agreement . . 86, 87
by. written articles . . . .86,87
by parol . . . . . 86,87
right of majority t6 govern in . . 123,213
rights and interests to partners in partnership
property . . . . . 88-100
{See Partners.)
partnership property, what is . . . 92
no diiferenee between real and personal proper-
ty, as to rights of ... . 92, 93
whether real estate of partnership is deemed dis-
tributable as personal property or not . 92, 93
whether good-will of a trade is partnership prop-
erty, or not .... 99, 100
powers and authorities of partners in partnership
property . . . . . .94
(See Paetnbes.)
liens of rights and partners on partnership property 97-99
powers and authorities of partners generally 101-125
(See Paktnees.)
liabilities and exemptions of partnerships upon
contracts ..... 123 - 168 a
{See Partners and Partnership.)
partnership not bound for acts of one partner
not within the scope of the partnership busi-
ness . . . 106, 107, 112, 113, 126, 127
not bound for fraudulent acts, known to be such »
by the other party . . 110-113,128-131,133
not bound, where credit is exclusively given to
one partner . . . . 134,137
what is proof of an exclusive credit or not 138-144
not bound for debts contracted before the part-
nership is formed . . . 146 - 151
unless specially agreed to . . 152
not bound upon preliminary contracts in contem-
plation of a future partnership . . 149 - 151
new partnership not bound for debts of the old firm 152
unless specially agreed to . . 153
when discharged from a contract by subsequent
acts or contracts ..... 155 ■
when acceptance of negotiable security of one
partner discharges the partnership . . 155-158
INDEX. 741
PARTNERSHIP — coktinued.
■when giving credit to a new firm discharges the
old firm . . . . .156-159
how payments made after dissolution of old firm,
and new firm is formed, are appropriated . 157
when a partner after retirement is discharged, or
not, from future debts of . . . 159-163
■when notice of retirement or dissolution neces-
sary, or not . . . . 160 - 162
■what notice of retirement or dissolution in suflS-
cient, or not ..... 161
■when are partners liable after retirement or dis-
solution, for new debts, notwithstanding notice 162, 163
■when liable in cases of fraud . . . 162,163
joint-stock companies, liability of partners in . 164
■whether shareholders can limit their liability to
•the funds ... . . . 164,165
liable for torts generally . . . 166-168
■when liable for torts, or not, of one partner . 166
rights, duties, and obligations of partners be-
tween themselves . . 179-186,331-333
(See Partners.)
duty to make no secret or private gains against
partnership interests . . . 174-186
rights and duties of partners under articles of 173, 187 - 215
construction of articles of partnership . 187-215
specific performance of articles, when decreed or
not .... . 188, 189
rules of construction of articles of . . 190, 191
covenants in, when construed to be several, as
well as joint .... 190,191
how and when articles are superseded, or waiv-
ed, or qualified .... 192-199
effect of entries in books of partnership . 24, note, 191
construction of articles as to the commencement
thereof . . ... . .194
debts of partners, when joint and several . 362
construction of articles as to the duration thereof 195, 196
construction of articles as to partnership, contin-
ued after the stipulated term . . . 197
construction of articles as to continuance thereof
after death of a partner, by his appointee or
representatives . . . 199 - 201 a, 275
construction of articles as to the name and signa-
ture of firm ..... 202
742
INDEX.
PARTNERSHIP — continued.
construction of articles as to carrying on other
trade . . . . 174, 179, 209, 210
construction of articles as to advance of capital stock 203
construction of articles as to management of part-
nership by one or more partners . . 204
construction of articles as to what shall be deem-
ed partnership property .... 205
construction of articles for annual accounts and
settlements . . . . . 206
construction of articles as to winding up con-
cerns upon a dissolution thereof ... . 207
construction of articles as to one partner's taking
the property at a valuation on a dissolution 206 - 208, 396
in eases of bankruptcy . . . 206 - 208, 396
construction of articles as to business being car-
ried on by one of the partners alone after dis-
solution .... 210, 211, 212
construction of articles as to right of majority or
select number to govern . . . 213
construction of articles as to right to expel a
partner ..... 214
construction of articles to settle disputes by arbi-
tration ...... 215
remedies to compel specific performance of an agree-
ment to form a partnership . . 187-189,202
remedies for violation of articles at law, or in equity 193,
216-228, 232
when by injunction . . 193, 202, 224, 225, 227
when not by injunction . . 215, 217, 224, 225
when receiver will be appointed 228, 229, 231, 330, 331
when specific performance of, decreed 187, 188, 189, 202
dissolution of . . . . .265-319
by act of parties .... 265,267
by efflux of time . . . • . 267,278'
by tacit renunciation .... 272
by performance of voyage on business . 280
by extinction of partnership property . . 280
by decree of a court of equity . . . 282-285
for what causes . . 232,233,286-299
by decree for causes at time of formation of part-
nership ..... 233, 286
for subsequent causes . • . . 286
for fraud . . . 233, 285, 286, 287
for gross misconduct . . . 233, 288
for impracticability of the undertaking . 290
INDEX. 743
P ARTNEESHIP — conimuei.
for incapacity or inability of partner . . 292-294
for insanity . . . . . 295-297
for absence from the State . . . • 298
■when dissoluble by arbitration . . . ^ 299, 300
■when dissoluble at pleasure, or not 268- 271, 274-277, 307, 308
■when deemed to endure for life . . . 271
■when deemed to be prolonged or rene^wed beyond
original term ... 85, 86, 271, 272, 304
■when dissolved by operation of la^w . . 302-306
by change of state or condition of party ' 302,303,305
by marriage ..... 306
by voluntary assignment of all interest in part-
nership . . .' . . 307-310
by involuntary assignment of partnership prop-
erty . . . . .311-313
by execution and levy on all partnership property 311, 312
by bankruptcy and insolvency ,. . . 313, .314
at ■what time dissolved by bankruptcy and insolvency 314
by ■war bet'ween countries of partners . 315,316
by death of one partner .... 317-319
at what time dissolved by death . . .319
■when notice of dissolution necessary or not 159-163,
335, 336
what notice sufEcient, or not . . . 161, 162
no notice in case of death . . . 336, 343
or of bankruptcy .... 336
or to new customers . ■ . . 160
in cases of dormant partners . . . 159
dissolution of, effects and consequences of . 320-411
between the partners themselves . . 320-356
in cases of voluntary dissolution . . 320-322
lien of partners on effects . . . 360,361
what powers and authorities remain 322, 323, 324, 324,'a
• 324, 6, 328, 344
whatnot .. . . . . 322, 323, 344
no power to trade anew . . . 322 - 324, 329
what admissions and acknowledgments of part-
ners bind or not . 107, 323, 324, 334 a, 324 h, 333
what powers over partnership property remain
after ..... 324-328,333
to pay debts of partnership . . . 324-328
to wind up the affairs . . . 324 - 328
to make compositions . . . .331
when receiver appointed . 228, 229, 231, 330
accounts, how taken . . . 346-349, 352, 353
744
INDEX.
Partnership— conft-n«e^.
representatives of partner entitled to account *'
and share of property . . . 342,343,361
when sale directed or not . 206, 207, 349, 350, 356
all property to be accounted for . . . 349
when effects may be taken at a valuation, or not 350, 351,
352, 353, 354, 355, 396
when and how effects may be assigned to one-
partnei; on dissolution, or not . 35'7, 358, 359, 396
not allowed in cases of bankruptcy . . 396
dissolufion-of, effects and consequences of, as to third
persons . . ... . 334,335,357-411
when notice of dissolution- necessary, or not, as
to third persons . 159 - 163, 334, 335, 336, 343
no notice necessary to new customers . . 160
nor in cases of bankruptcy . • . 336
nor in cases of death . ' . . 336,343
dissolution in cases of bankruptcy, effects and con-
sequences of ... ., . 337,374,375
all powers of baiikrujt gone . . 338,339,340
powers of solvent partners . 338, 339, 340, 407, 408
powers to settle, and pay debts, collect property,
&c., remain . . . . ' 339-341
to wind up affairs .... 340, 341
but not to contract new debts . . 338,339,343
whether assignment or valuation in favor of one
partner in bankruptcy good or not . . 358,373
rights and powers of assignees . . . 375
dissolution by death, effects and consequences of 343 - 356
takes effect from time of death without notice ^^
thereof . . . . . 336, 343
no new contract can be made . . 343,344
representatives, of deceased partner entitled to
account . . . . . . 343, 361
lien of, on partnership effects . . 361
right to share property as tenants in common 343, 346
powers and authorities of survivors . . . 344
survivors may collect and pay debts . 344,346,347
and wind up affairs .... 846, 347
lien of surviving partners .... 360,361
when sale of effects decreed . . . .-. • • 349
when effects taken at valuation, or not . 850-354
how accounts taken ,; . . 346-351,352,353
dissolution by decree of court of equity, effects and
consequences of .... . 356
the same as in other cases . # . . . 356/
sale of effects ordered by .... 356
INDEX. 745
PARTNERSHIP — continued.
dissolution, eflfects and consequences as to third per-
sons ..... 334, 335,_357-411
when notice of dissolution necessary or not, as to
third persons . . . 159 - 163, 335, 336, 343
rights of creditors on dissolution . . 357,358
when and what equity of creditors in partnership
effects . . . , . . 357, 358, 359
when creditors have a lien on partnership effects
ornot . . . . . . 326,358-361
when creditors may enforce a lien or claim against
partnership effects in equity . . 326, 358 - 361
joint creditors, remedy of, when all partners are living 361
when one or more partners are dead . 361, 362
against surviving partners . . 346,362
when they have a quasi lien . 326, 361, 390
remedy in equity against deceased partner's
estate ..... 361, 362
debts of partnership held to be joint and several 362
equities of, as to separate effects of partners,
when one partner is a creditor of partnership 390
joint creditors, rights of, in respect to separate credi-
tors . . . . . • . 363, 364
joint-creditors entitled to priority out of joint effects,
but not of separate effects . . .363-366
separate creditors entitled to priority out of separate
effects ..... 363, 394, 365
in cases of death of one partner and bankruptcy of
survivors, whether joint creditors compellable to
proceed against the estate of deceased partner in
aid of bankruptcy .... 864,365
partner, who is a creditor of firm, cannot come in
competition with other joint creditors against
partnership effects . . . . 405-407
what property is deemed joint,, and what several . 372
what debts treated as joint, and wh'atas several 367, 368, 369,373
conversion of joint debts into several, and e contra,
what is, and when it exists . 369, 370, 391 -394 a
joint creditors, rights of, in cases of bankruptcy . 376
joint creditors have a priority out of joint estate, and
separate creditbrs out of separate estate . 376-378
foundation of the rule . . . . 378
exceptions to the rule . . . 378-381
where joint creditor is petitioner in bankruptcy 379
where there is no joint estate and no solvent
partner . . . . . 378, 380
PARTN. 63
746 , . INDEX.
PARTNERSHIP — continued.
where there are no separate debts . . 378,381
effect of persons being at once joint and separate
creditors of partners in bankruptcy . 384-386
they can only elect to prove against the joint or
several estate, and not against both . . 384 - 387
exceptions to this rule .... 387-394
doctrine in bankruptcy as to creditors holding pledges
or mortgages ...... 389
■when and how a partner, who is a creditor of the firm,
is entitled as against the joint or separate effects of
other partners . . 390,391,405,406,407,408
whether the separate creditors of a partner, who is
creditor of firm, may prove against the joint estate 390
whether the joint creditors may prove against the
separate estate of a partner, indebted to the firm . 391
exceptions to the rule, that creditors cannot prove in
either case ..... 392, 393, 394
in cases of fraud ..... 392
in cases of dormant partners . • . 393
in cases of minor partnership constituted of perr
sons of a larger firm . . ... 394
set-off in bankruptcy, when and how allowed . .395
not generally allowed of joint debts against
several debts, or the contrary . . . 395
agreement of parties to take at a valuation in cases
of bankrupt!^ not allowed .... 396
what in cases of bankruptcy is treated as property in
the reputed ownership of bankrupt, or not . 397-404
PARTNERSHIP PROPERTY. {See Partners and Partnership.)
what is to be deemed,/ or not . . . 92,93,205
what property is deemed joint, and what several . 369, 370,
397-404
when the good-will of a trade deemed to be . 99, 100
rights and powers of partners in and over . . 94
when and how it may be assigned to one partner, or
not .... . 101, 309, 814, 396
how distributed on dissolution . . . 350 - 355
reputed ownership in, what is, or not . . 397 -404
PARTOWNERS.
rights, powers, and liabilities of, in general . 89,412-453
when they may bind each other, or not 419, 440, 441, 446
in cases of ships . . . 415,416,417,418
no right of survivorshij) among . . . 417
one partowner of ship can sell only his own share,
and not the entirety . . . . 417
INDEX. 747
•
PARTOWIsERS — continued.
rights of, as to possession, use, and employment of
ships .... 418, 427, 428, 434, 435
right of majority to govern . . 418 - 422, 427, 428
rights of minority ..... 427-432
contribution may be claimed for repairs made by com-
mon consent .... 419,420,440,441
but not against partowners, who dissent . .411-425
rights of partowners, when equally divided in opinion
and interest ...... 435
right of minority to employ ship, if majority decline 428 - 439
whether a sale can be decreed of the ship, where
partowners are equally divided . . . 435 - 439
whether partowners have a lien on the ship for ex-
penses and advances and materials furnished for
a voyage ...... 441 - 444
partowners engaged in joint adventure are entitled
to the same equities and liens as partners . 407, 408
partowners engaged in joint adventure are treated
as partners, as to such adventure . . 75, 407, 408
appointment of master and officers belongs to ma-
jority of ship owners ..... 432
remedies of partowners against each other . . 449
remedies against third persons . . . 454, 455
right and duty of, to account for ship's earnings 449 - 452
declarations and admissions of one partowner, when
they bind the others ..... 453
remedies by part owners upon contracts . . 454
remedies by partowners for torts . . ■ . 454
remedies against partowners upon contracts . i 455,456,457
remedies against partowners upon torts . . 458-460
partowners, when liable in solido upon contracts 445-457
when liable in solido for torts . . 458 - 460
when liable for torts of their agents . . 458-462
when not liable for torts of their agents . 458 - 462
PARTOWNERSHIP, how it differs from partnership 89, 90, 410-414
how it may be dissolved .... 447, 448
PAYMENT, when good, out of partnership effects, by one
partner, or not ..... 132, 133
after dissolution of partnership . . . 328
when payment of his separate debt good, or not 132, 133
how appropriated . . . . .157
PERFORMANCE, SPECIFIC, in equity, when decreed of
partnership duties or articles 187 - 193, 204-210, 216 -2^7,
232, 233
when of articles to form partnership . . 187,188,189
•
389
94
-97,101-
125
126-133
90,
412-453
. 76
22,
23, 24, 28
748 INDEX.
•
PL-EDGE, wheri partners have power to pledge partnership
property, or not .... 94-96,101
creditor, holding pledge, how and when he can prove
in bankruptcy ..."
PQWERS AND AUTHORITIES OF PARTNERS
(See Partners and Partnership.)
limitations of .
ofpartowners . . . .8
(See Partowners.)
PRIVATE PARTNERSHIP, what is
PROFITS. Community of interest of partners in
(See Partners.)
when participation in profits makes a person a part-
ner . . . . 18,19,23,30-47,52-69
when not . . . . .30-47
distinction between sharing gross and net profits 24, 25, 33, 34,
37, 38, 39, 41
, how shared in absence of sjieeial agreement 20 - 22, 24-27
partner cannot appropriate any to himself exclusive
of the partnership . . . . .174
all must be accounted for . . . 175,180,349
PROHIBITION TO ENGAGE IN OTHER TRADE.
when implied . . . 178,179,209,210,211
when expressed in articles .... 210
when courts of equity will enforce . . 210, 211, 212
PROMISSORY NOTES.
when one partner may bind the firm by signing, or
indorsing . . .-102,102 0,136-139,142,143
whennot . . 110-113,127,129,130,132,133
PROPERTY OF PARTNERS IN PARTNERSHIP PROP-
ERTY. (See Partnership.) . . . 88 - 100
PUBLIC PARTNERSHIP OR COMPANY, what is . .76
PURCHASE, BY ONE PARTNER, when it binds the firm,
or not . . . . . 102, 111, 112, 113
R.
REAL ESTATE, partnership property in . . . 92, 93
(See Partnership.)
how treated in equity . . ., . .93
RECEIVER, when a court of equity will appoint or not 228 - 23] , 330
REFERENCE TO ARBITRATORS. (See Arbitration.)
one partner cannot bind by a . . . .114
agreement for, will not be enforced in equity . 215
when award may include a dissolution of partnership . 215
INDEX. 749
KELEASE. One partner may in Lis own name release a debt
due to the firm .... 114, 115, 252
'when release not binding on the firm . . . 132
release to one partner discharges all . . . . 168
KEMEDIES BETWEEN PARTNERS . .193,316-233
, ■. (See Paetnees and Partnership.)
■when at law or not . .218, 219, 234 - 241, 256 - 258
■when in equity . . 222 - 233, 235, 236, 259 - 261
by partners against third persons . . . 234 - 264
when at law, or not ... . . 234-242,
■when in equity . . . 2^4,235,259-261
■when in cases of tort . . . . 256,257
■when taken away by fraud or misrepresentation
of one partner. .... 237,238
RENEWAL OP PARTNERSHIP. (See Partnekship.)
when and how renewed . . . . . 27^9
effect of tacit renewal ..... 279
REPAIRS, when parto^wners liable for, or not . . 419 - 426, 440
REPRESENTATION OF PARTNER, when it bindsthe
.firm, or not . . . . . 107,108,109
REPUTED OWNERSHIP, in bankruptcy, -what is, and what
. is not . . . . 397-404,407,408
RETIREMENT OF PARTNER. (See Retiring Partner.)
RETIRING PARTNER.
when discharged from old debts, or not . . 154 - 161
when discharged from new debts, or not 159, 160, 161, 162, 163
when notice of retirement of, discharges from future
debts . . . . . .159-161
what is due notice of retirement of . . 161,162,163
bound in cases of fraud . . . . 162, 163
RIGHTS AND DUTIES OF PARTNERS between them-
selves . . . - . .169-186
(See Partners.)
to third persons . • . . .126-128
RIGHTS AND INTERESTS OF PARTNERS IN PART-
NERSHIP PROPERTY. (See Partnership.) 88-100, 122,
126
S.
SALE OF PARTNERSHIP PROPERTY.
when and how directed in equity 206, 207, 349, 350, 356
SECURITY, SEPARATE, of one partner, when it discharges
the firm, or not ..... 142, 143
of new firm when it discharges the old 134 - 144, 154-158
SEPARATE CREDITORS.
rights ofi in general . . . . .376-388
rights of, in bankruptcy . . . . 370-394
750 INDEX.
SET-OFF, in partnership, what is allowable or not . . 395
in bankruptcy ...... 395
SHIPS. (See Partowners.) .... 412-460
rights, powers, duties, and liabilities of owners of 412-460
SHIP'S HUSBAND, meaning of the phrase . . .418
powers and authorities of . . . 418, 446
duties of 418, 419
lien of 441, 443
what powers and authorities he has not . . , 446, 447
SIGNATURE OF FIRM, articles respecting . . 202
necessaty in general to bind the firm in case of con-
tract .... 102,134,135,142,143
SLANDER, ACTION FOR.
, by the firm . . . . ^ . 255, 256, 257
against the firm • . . . . 256,557
SOLVENT PARTNERS.
rights and powers of, on bankruptcy . 337-341, 407, 408
SPECIAL PARTNERSHIP, what is . . . .75
{See Partnership.)
SPECIFIC PERFORMANCE, when compelled in equity,
or not, of partnership duties or articles 187, 188, 189, 204-
215, 216-228, 232
to form a partnership, when decreed, or not
SPECULATIONS, partner bound to abstain from
SURETYSHIP, how affected by change of firm
SURVIVING PARTNERS.
rights, powers, and authorities of .
SURVIVORSBUP. Does not exist in cases of partners
nor in cases of partowners
T.
TENANTS IN COMMON, rights of .
TORTS, liability of partners to third persons for
liability for, of one partner
liability of third persons to partners for
' deemed seyeral, as well as joint
when partners are not liable for .
remedies for, by partowners against third persons . 454
remedies by third persons against partowners . 455-460
partowners liable for, when and how far . 166-108 a
partners liable severally, as well ajointly, for 167, 458-462
, suit for, should, regularly, be brought by all the
partners . . . - ■ . . 167,454
suit for, should be regularly brought against all the
partners .... 167,458-462
187,
,188,
189
178
•
243-
-248
.
342-
•347
■s 88
-91,
,343
417
90
166-168 a
.
166
234, 235,
,256-
-259
167
168
INDEX. 751
TOKTS — continued.
release of torts Ib one partner discharges all . . 168
liability of third persons to partowners for . . 454
by partowners to third persons for . . 468, 462, 463
of one partowner to the others for ' . . ,449,550
TROVER, between partowners, when it lies, or not . . 449
TRUSTEES, when liable as partners. {See Paktkekship.) 70, 106
U.
USAGE OF TRADE, effect on partnership . . .127
• when partnership bound by . . 127
VALUATION OF PARTNERSfflP EFFECTS.
agreement for, when and how decreed in equity 207, 208, 246,
• 247, 248, 358, 359, 360, 373
when tot . . . . ' • . 208, 396
not in cases of bankruptey ... 208,396
■ ', I
W.
WAGES. When a person receiving part of profits in lieu of
wages is a partner, or not . . . .32-51
WAR, effect of, on partnership , . . . .9, 240
when it dissolves partnership . . . 315, 316
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