(rentlemen Lorrowir^ this book will please not deface it with pen or pencil riccrks. UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY Gift of Howard Surr TREATISE LAW OF PARTNERSHIP. BY TIIEOPHILUS PARSONS, LL.D. DAKE PROFESSOR OF LAW IN HARVARD UNIVERSITY, AT CAMBRIDGE. THIRD EDITION. REVISED AND ENLARGED. BOSTON: LITTLE, BROWN, AND COMPANY. 1878. T 1578 Entered according to Act of Congress, in the year 1866, by Theophilus PaRSOJ7S, in the Clerk's Office of the District Court of the District of Massachusetts. Entered according to Act of Congress, in the year 1870, by Theophilus Parsons, in the Clerk's Office of the District Court of the District of Massachusetts. Entered according to Act of Congress, in the year 1878, by Theophilus Parsons, in the Office of the Librarian of Congress, at Washington. CAMBRIDGE: PRESS OF JOHN WILSON AND SON. s S PREFACE TO THE LAW OF PARTNERSHIP. I HAVE followed the same plan in this as in my former works ; judging, from the favor they meet with and all I can learn about them, that it is satisfactory to the profession. It may be briefly described thus : In the text, I state the law as clearly and succinctly as I can ; enlarging upon the reasons and principles involved, when I treat of questions more than usually important, difficult, or uncertain. In the notes, I give all that the complete library of this Law School could supply me with, of authorities needed to verify the law as stated, or exhibit the qualifications or modifications to which it is subject, and enable an inquirer, with a library at command, to make a thorough investigation of any question. The great and still growing increase in the number of reports makes it very difficult for any individual to have a full collection of them ; and leads me to believe, that a work intended, on the one hand, to supply on its spe- cific subjects the want of a library so far as any single work can hope to do this, and, on the other, to facili- 306203 IV PREFACE. tate the use of a complete library for those who have access to one, will be found useful to students and practitioners. This work has been long in hand ; and would have been published some years ago, had I not thought, with my publishers, that it was better to wait for peace. I shall not regret this delay, if it has enabled me, by additional labor and the use of recent authorities, to offer it in a less defective condition to the profession, whose kind reception of my other works gives me so much cause for gratitude. Cambridge, 1867. T. P. PREFACE TO THE THIRD EDITION. In this edition, the Law of Partnership is brought down to the present time, — it is hoped, accurately and fully. About four hundred cases have been se- lected from those decided since the last edition ; which either present new points, or illustrate or modify earlier decisions. ' T. P. CONTENTS. THE PAGES REFERRED TO ARE THE STAB PAGES. CHAPTER I. FAOK Of the Origin and Purpose of Partnership 1 CHAPTER IL "What Partnership is and how it is made 6 Sec. I. What partnership is 6 Sec. II. How partnership may be made 6 CHAPTER III. Of Partners 16 Sec. I. Who may be partners 16 1. Infants 17 2. Married women 23 3. Of aliens 27 4. Of the insane and persons under guardianship, 28 5. Of corporations 29 Sec. II. Of the kinds of partners 30 1. Ostensible or public partners 30 2. Secret or unknown partners 30 3. Nominal partner 31 4. Silent partner 32 5. Dormant partner 33 6. Retiring partner 34 7. Incoming partner 34 8. General partner 34 9. Special partner 35 CHAPTER IV. Of the Purposes and Kinds of Partnership .... 36 VI CONTENTS. CHAPTER V. Who are Partners as to each Other 40 CHAPTER VI. Who are Partners as to Third Parties 61 Sec. I. General grounds of liability 61 Sec. II. lYlien a person is liable as actual partner ... 66 Sec. III. How far stipulations between the partners affect third parties 93 Sec. IV. When credit is given to one partner only . . . 103 Sec. V. When a person is liable because he is held out as a partner 115 Sec. VI. Of liabilities arising from annuities, loans, leases, or trusts 136 Sec. VII. How far partners are liable in solido for the torts of other partners 150 CHAPTER VII. Op the Rights and Duties of Partners between Them- selves 150 Sec. I. Of the right of choice as to partner 159 Sec. IL Of the right of assigning or transferring prop- erty 162 Sec. hi. Of the foundation and general extent of the power of a partner 170 1. Of the foundation of this power .... 170 2. Of the general extent of this power . . . 171 3. Of the power to submit to arbitration . . 176 4. Of the power to affix a seal 178 5. Of the representations or admissions of a partner 184 6. Of the power to vary the business of a partnership 197 Sec. IV. Of negotiable paper 199 Sec. V. Of the power of a majority of the partners . . 218 Sec. VI. Of the conduct which partners may require of each other 222 1. Of good faith 222 2. How for a partner may transact independent business 227 CONTENTS. Vil 3. How tlie accounts of the firm shall be kept, 228 4. Oi a partner's right to extra compensation . 229 5. How far partners are tiustees 231 Sec. VII. Of the articles of copartnership 231 1. General principles of the construction and effect of articles 231 2. Bill in equity tor specific performance of articles 234 3. Of waiver of provisions in the articles . . 238 4. Of renewal of a partnership 239 5. Of provisions for advances by a partner . . 240 6. Of provision as to tlie accounts .... 242 7. Provisions for giving care and skill and time to the partnership 243 8. Of provisions for a dissolution 244 9. Of provisions for the determination of differ- ences by arbitration ; for the powers of a majority ; or for division of profits . . . 247 10. Of provision for damages for misconduct of a partner 250 11. Of provisions for appropriation of property to a partner 252 12. Of provisions respecting the name of the firm 254 Sec. VIII. Of the rights of property of the partners inter se, 256 1. What constitutes partnership property . . 256 2. Of the good-will, and of trade-marks, copy- rights, and patent-rights 261 3. Of the trade name 265 CHAPTER VIII. On the Remedies of Partners inter se 267 Sec. I. General considerations 267 Sec. II. Of questions between partners of which the courts of law take cognizance 270 1. Of demands distinct from the affairs of the partnership 270 2. Of a demand founded upon a balance of account stated 278 3. Of a demand for contribution 285 Sec. III. Of questions between partners cognizant only by courts of equity 288 VIU CONTENTS. 1. Demands between firms having a common member 288 2. Of the demand of a firm grounded on the tort of a member thereof 293 Sec. IV. On the methods and processes of equity applicable in cases of partnership 297 1 . Of a decree for specific performance . . . 297 2. Of a decree for a dissolution and for an account 299 3. Of a decree for an injunction 302 4. Of a decree for a receiver 312 Sec. V. Of torts between partners 321 CHAPTER IX. Of Remedies by Partners against Third Parties . . 325 Sec. I. Of remedies for breach of contract 335 Sec. II. Of the remedies of partners against third parties for torts 337 CHAPTER X. Of the Remedies of Third Persons against the Part- nership AND against Partners 342 Sec. I. Of the appropriation of the property to the debts, 342 Skc. IL Of the suit, attachment, and levy of a private cred- itor against a partner personally indebted to him 350 CHAPTER XI. Of the Real Estate of a Partnership 362 Sec. I. General considerations 362 Sec. II. When and by what means real estate becomes partnership pi-operty 363 Sec. III. How courts of law treat the real estate of a part- nership 366 Sec. IV. How the real estate of a partnership is treated in equity 369 1. How far it is regarded as personal estate . 369 2. Of dower in such real estate 372 3. Of the inheritance of such real estate . . . 373 4. Of the right of creditors of the firm to its real estate 375 CONTENTS. IX 5. Of the riglit and power of the partners as to the real estate of the partnership . . . 376 Sec. V. Of conveyances to strangers of the real estate of the partnership 377 CHAPTER XII. Of Dissolution 379 Sec. I. Of the extent and duration of a partnership . . 379 Sec. II. Of dissolution by a provision in the articles . . 380 Sec. III. Of dissolution by the will of all the partners . . 384 Sec. IV. Of the general effects of a dissolution .... 386 1. Of its effects on the interest or rights of part- ners 386 2. Of winding up the concern 388 3. Of the effect of a dissolution upon third parties 394 4. Of actions and remedies after a dissolution . 398 Sec. V. Of dissolution by the act of a part of the firm only, 399 1. AVhat acts dissolve a partnership .... 399 2. At what time and in what manner a partner may terminate a partnership 401 CHAPTER Xni. Of a Change in the Partnership 406 Sec. I. Of the effect of any change in the partnership . 406 Sec. II. Of a retiring partner 408 1. How retirement, of itself, affects the liability of the partner 408 2. Of notice 410 3. When the retiring partner is discharged by the creditors 421 4. When the retiring partner is discharged by appropriation of payment 427 Sec. III. Of an incoming partner 433 Sec. IV. Of the death of a partner 438 1. Dissolution by death 438 2. Of the powers and interest of the surviving partners 440 3. Of the settlement of the estate of a deceased partner 447 4. When the deceased has made his partner his executor 450 5. When a power of appointment is given by the articles 451 X CONTENTS. CHAPTER XIV. Of Dissolution by Dkcuee 457 1. Of a decree for misconduct of a partoer . . 457 2. Of a decree where miriconduct is not charged, 4G0 CHAPTER XV. Of Bankruptcy 469 Sec. I. Wheu and how a bankruptcy dissolves a partner- ship 469 Sec. II. Of the effect of the bankruptcy of a partner upon solvent partners 471 Sec. III. How the funds are appropriated to the debts . . 480 Sec. IV. Whatdebtsor funds are joint, and what are several, 484 Sec. V. Of a sale of the effects in bankruptcy .... 506 CHAPTER XVI. Of an Account 508 Sec. I. When an account will be ordered 508 Sec. II. Of opening an account for error 513 Sec. III. How an account should be taken 519 CHAPTER XVII. Of Limited Partnership 526 CHAPTER XVIII. Of Joint-stock Companies 541 CHAPTER XIX. Of Part-owners of Ships 548 Sec. I. Of the peculiar nature of part-ownership of ships, 548 Sec. II. Of the rights and obligations of part-owners of ships in relation to each other .... 553 1. Of repairs, sale, insurance, and the like . . 553 2. Of the employment of the ship 558 3. Of the lien of part-owners of ships . . . . 563 CONTENTS. XI Sec. til Of the rights and obligations of part-owners of shii)s as to thii-d parties 564 1. Of the power of a part-owner to represent the owners 564 2. Of the ship's husband 569 3. Of mortgagees, mortgagoi's, and cliarterers • 570 4. How far part-owners are bound for the torts of each other or of tlieir servants . . . 571 INDEX TO CASES CITED, THE PAGES REPEURKD TO ARK THE STAR PAGES. A. PAGE Abat V. Penny 407 Abbot V. Bay ley 24 V. Johnson 222 Abbott V. Smith 273, 285, 286, 295, 350 Abbott's Appeal 372 Abel V.Sutton 891,411,413 Abell, Ex parte 482, 493 i: Forgue 173 Aberfoyle, Tiie 572 Abpt V. Miller 203 Achley v. Stachlin 112 Ackernian, Ex parte 483 Adam, Ex parte 22, 491, 499 Adams, Ex parte 480, 500, 501, 502 V. Bankart 176, 177, 182 V. Carter 44 Adams Bank v. Rice 7 Addams r. Tutton 885 Adderley v. Dixon 235 Addis V. Knicrlit 849, 448 Addison v. Overend 337 Aflalo V. Fourdrinier 502 Agace, Ex parte 111, 112, 113, 175 Agawam Bank v. Morris 489 Agnew V. Johnson 323 V. Piatt 474 Akhurst v. Jackson 241, 296, 503 Ala. Coal Mining Co. v. Brainard 201 Albers v. Wilkinson 179 Albretcht v. Sussman 28, 327 Alcock V. Taylor 382, 401 Alder v. Fouracre 307 Alderson v. Pope 95, 120, 196 Aldrich v. Grimes 19 Alexander, Ex parte 292 V. Barker 172, 291, 334, 501 V. Dowie 552 V. Heriot 19 V. Hutcheson 19 r. Kiml)ro 365 ?'. Stern 175 Alexandria v. Patten 427, 428 Alfele V. Wriglit 168 Alger V. Thaclier 410 AUcott V. Strong 12, 194, 429, 432 Allegre v. Insurance Co. 248 PAGB Allen V. Blancbard 36 V. Centre Vale Co. 345, 353 V. Coit 213, 522 V. Davis 36, 44, 144 V. Dunn 69, 300 V. Farrington 173 V. Hill 440 V. Kilbre 506 V. Owens 196 V. Rostain 7 j;. Wells 348, 349, 352, 421, 449, 482 V. White 135, 292, 329 Allfrey v. Allfrey 515 Alliance Bank v. Keasley 175 Al.sop V. Mather 455 Alter V. Brook 353 Alvord V. Smith 12, 162 Ambler v. Bradley 42, 89 V. Whipple 458 V. AVilson 458 American Bank v. Doolittle 173 American Bank Note Co. v. Ed- son 243 American Linen Thread Co. v. Wortendyke 411 Ames V. Downing 442, 443, 528, 536 Amiable Nancy, The 572 Amidown v. Osgood 413, 414, 415 Aniory v. Francis 489 Amoskeag Manufacturing Co. v. Spear 265 Amphlett v. Hubbard 494 Anders v. Meredith 556 Anderson v. Anderson 458 V. Clay 7 V. Ilenshaw 110 V. Lemon 226 V. Levan 65, 108, 133, 194 V. Maltby 142, 492 V. Moncrieff 287 V. Taylor 229, 304 V. Tompkins 163, 1G4, 166, 183, 510 V. Wallace 304 V. Wanzer 196 V. Weston 413 Andrew v. Boughey 487 XIV INDEX TO CASES CITED. Andrews v. Brown V. Pillison V. Essex F V. G.arstin V. Keith 364, 368, 373, 376 276, '297 &M. Ins. Co. 11 7 343 V. Planters' Bank 216 V. Schott 100, 535, 538 Anger v. Price 25 Anna Miiria, The 572 Annett r. Carstairs 553 Anonymous (2 Ca. Ch.) 175, 309, 559 (2 Eq. Abr. 12) 517 (2 Havw.) 178 (1 Mackl. Ch.) 236 (12 Mod. 446) 172,173,472 (Sitinner, 230) 562 (Styles, 370) 1, 199 (Taydor, 113) 178 (1 Ves. 476) 810 (2 Ves. 629) 13, 236 (2 Ves. Sen. 630)235,286 (16 Vin. Abr.) 163 (W.Jones, 253) 337 V. Lavfield 1, 172, 217 Ansell V. Waterliouse 158, 273, 286, 287 Anten v. Pvllingwood 44 Anthon v. Fisher 28 Anthony v. Butler 180 Apollo, The 558, 559. 561 Appeal of Second Nat. Bank 371 Appeal of the York Co. Bank 345, 346 Apperly v. Page 512 Appleby, Ex parte 426, 487 Apsey, Ex /xiiie 155 Arbonin, Ex parte 491, 496, 497 Archibald v. Mercantile Ins. Co. 11 Arden v. Sharpe 199, 201, 212 V. Tucker 334 Argall V. Smith 539 Arkwright, E.r parte 497 Arlington v. Merrick 332, 333 Armsby v. Farnam 330, 423 Armstrong v. Armstrong 9 V. Fahnestock 168 V. Hussey 63, 415 V. Lewis 9, 10 V. Robinson 178 Arnold v. Brown 163, 210, 400, 461, 470 V. Camp 111, 424 V. Del Col 572 Artisans' Bank v. Treadwell 533, 535, 538 Arton V. Booth, 174, 175, 325 V. Lond. & N. W. R. R. Co. 330, 358, 385, 4no Ashton V. Robinson 365 Aspinwall v. WiUiams 13, 118, 125 Astley ;;. Weldon 252 Atherton v. Tilton 86 Atkins V. Atkins 476 V. Hunt 6 V. Tredgold 185, 186, 187, 188, 451 Atkinson V. Farmers' Bank 476 V. Foster 551 V. Laing 292, 330, 331, 398 V. Mackreath 152 267 V. Maling 550, 571 Atkyns V . Rinnier 252 Attorney-General v. Brooksbank 520 V. Burgess 156, 157 V, Heelis 644 V. Mackreth 47 V. Parnther 28 V. Siddon 156 V. Stranyforth 1.56 V. Wilson 287 A tt water V. Fowler 278, 520 Attwood V. Banks 110 V. Rattenbury 334 At wood I . Gillett 193 Aubert v Maze 10 287 Auld V. Butcher 511 Ault V. G oodrich 187, 223 395 451 Austin V. Bostwick 189, 192 V. Holland 413 V. Vandermark 216 V. Walsh 331 V Williams 13, 118 Averill v Lyman 173 423 Avery v. Lauve 14, 15 Axe V. C arke 309 Ayer v. Tilden 230 Ayrault i ;. Cliamberlin 416, 435 Babb V. Read 544 Babcock v. Brashear 447 V. Stewart 435 V. Stone 212, 289, 326 Babonneau v. Farrell 838 Bachurst v. Clinkard 342, 353 Backus V. Murphy 481 V. Richardson 838 Badlam v. Tucker 571 Bagley v. Peddle 251, 252 Bagshaw v. Parker 465 Bailey v. Clark 60, 96, 142 V. Ford 459 V. Lymaa 328 V. Moore 509 V. Starke 271, 275 285 Bailiffs, &c. v. Trinity House 572 Bainbridge v. Wilcocks 516 Baird c. Baird 299 512 V. Cochran 112 208 Baker, Ex parte 489 V. Biddle 514 516 V. Charlton 120, 122 214 223 V. Jewell 331 V. Plaskitt 542 i;. Rappier 122, 124 V. Ruchtrieb 39 V. Stackpoole 193 INDEX TO CASES CITED. XV Baker v. Wlieaton 474 Barker v. Blake 111 423, 429 Baker's Appeal 345 V. Burgess 112 Baldiiey v. Ritchie 290 554, 566 V. Buttress 451 Baldwin v. Jotinson 377 V. Goodair 309, 461, 469, 471, V. Useful Knowledge So- 472, 474 476 481, 606 ciety 298 V. Parker 332 4.55, 505 Ballon t\ Spencer 45 V. Richardson 174, 175 Ballum V. Price 173 Barklie v. Scott 18 145, 147 Baimain v. Shore 159, 439 Barlow v. Reno 179 Balmer, Ex parte 9 V. Wiley 23 Baltzell V. Trump 230 Barnadiston v. Chapman 556 Bamford v. Barron 496 Barnes v. Bartlett 556 Banchor v. Cilley 148 Barnett, Ex parte 497 Bandier, Ex parte 483 V. Lynch 158 Bangor v. Warren 486, 567 V. Smith 60, 132 Bank, Ex parte 174 Barney i-. Currier 196 V. Carrolton 353 V. Smith 447 V. Horn 471 Barnley v. Bice 199 Bank, Canadian v. Wilson 201 Barnstead v. Empire Mining Co. 457, First Nat. v. Breese 201 510 Bankhead v. AUoway 201 Barratt v. Collins 838 Bank of Chenango v. Osgood 173 Barrett v. McKenzie 353 V. Root 197 V. Swann 55, 202 Commonwealth v. Mudgett Barringerf. Sneed 198 418 Barrow, Ex parte 11 ,53, 160, 169 England, Ex parte 491, 499 V. Rhinelander 518 Kentucky v. Brooking 200, Barry v. Nesham 58,78 212 21G, 233 Barson v. Kiiicaid 173 V. Keizer 482 Barstow i\ Adams 471 Louisville v. Hale 365 V. Gray 292 Mobile V. Andrews 439 Bartle v. Coleman 10 New York v. Vandcrhorst 438 Bartlett v. Jones 50,85 Port Gibson v. Baug h 391 v. Walter 548 Rochester v. Bowcn 216 Barton v. Hanson 104, 118 V. Monteath 126, V. Williams 45, 163, 323, 355, 128, 129. 130, 556 200, 233 Bar wis, Ex parte 22 St. Marys v. St. Joh n 33, 292 Bascom r. Young 172, 175 Scotland v. Christie 422 Bass V. Estill 349 South Carolina v. H jm- V. Taylor 339 phreys 391,419 Batard i\ Hawes 273 Tennessee v. Saffarans 205, Bate, Ex parte 491 216 Batson, Ex parte 484 500, 502 the United States v. Davis Battaile v. Battaille 535 420 Battersby i\ Smyth 556 Vergennes v. Cameron 1!)3, Battley v. Bailey 14 212, 216 Batty V'. M'Cundie 95 Banks, Ex parte 491 Bawden v. Howell 334 V. Gould 320 Baxter v. Clark 63, 96 V. xMitchell 289, 325 V. Connoly 262 Bannatyne v. Leader 496 V. Plunkett 201 Barber v. Backhouse 112, 207 V. landman 59, 82 V. Hartford Bank 449 V. West 457 Barclay, Ex parte 487 Baylis v. Dineley 18 V. Gooch 287 Beach v. Hay ward 292, 447 V. Lucas 332 V. Hotchkiss 270, 278, 282, 331 V. Phelps 489 V. State Bank 200, 216 Bard well v. Perry 348, 349, 352, 376 Beaeham v. Eckford 228. 509, 524 Barfoot v. Goodnll 419 Beak v. Beak 390, 392, 394, 522 Bargate v. Sliortridge 162 Beale i'. Caddick 163, 432 Baring v. Crafts 128, 423 V. Hayes 252 V. Dix 381, 458, 459, 467 i\ Mouls 434, 436 V. Lyman 2B9 Beall V. Lowndes 121 XYl INDEX TO CASES CITED. Beanian v. TVliitney 13 Benton v. Chaniberlin 415, 416 Bean r. Morgan 24 Berkeley v. Hardy 179 Beard v. Webb 23 Berkshire v. Evans 10 Beardsley v. Hall 194 Berley v. Kampacher 24 Beatty i'. Bates 36 Bernard i'. Torrance 411, 413, 416 V. Wray 230, 231, 444 V. Wilcox 292 Beaumont v. Bramley 513 Berry v. Cross 459 V. Meredith 37, 458, 467, Bertiiold v. Goldsmith 86 545 Besch V. Frolick 465, 467 Beauregard i\ Case 44 Best V. Givens 10 Beaver v. Lewis 381 Beste V. His Creditors 224 Beck V. Martin 172, 175 Bethel v. Franklin 274 Beckford v. Wade 515 Betts V. Bagley 474 I'. Wildman 521 Bevan, Ex parte 490, 491 Beckham v. Drake 106 V. Lewis 104 105, 213, 309 V. Knight 106, 565 Bevans i'. Sullivan 195, 228, 229 r. Poay 193, 210 Bewley v. Tarns 183 Beckwith v. Talbot 44 Biddlecombe v. Bond 247 Bedford v. Brutton 275 276, 297 Bidwell V. Madison 71 V. Deakin 397, 422, 424, 425, Biernan v. Braches 271 485, 488 Bigelow V. Grannis 19 Beebe v. Kogers 105 Bigg, Ex parte 491, 499 Beecli V. ILyre 434 Biggs V. Fellows 477 Beechara v. Dodd 7, 42, 49, 89 V. Lawrence 341 Beeclier v. Guilburn 225 Bignold, Ex parte 174 Beers v. Reynolds 532 536, 538 V. Waterhouse 102, 175, 196, Beitz V. Fuller 188 420 Beldon v. Campbell 568 Bill V. Porter 486 Belknap v. Gibbens 288 Billings ('. Meigs 210 Bell, Ex parte 10, 287 Binford v. Dommett 822 473, 501 V. Ansley 336 Binney v. Le Gal 179 V. Banks 107, 108 Birch V. Stephenson 251 V. Humphries 570 Birchett v. BoUing 13 235, 236 V. Lay mans 323 Bird V. Caritat 475 V. ]\Iorrison 186 189 190, 193 V. Hamilton 6,14 V. Newman 345 ,449 , 482, 503 V. Lanius 104 1-. Pbyn 370 V. McCoy 290 Bell airs v. Ebs worth 333 Birdsall v. Colie 812, 316 Belote V. Wynne 190 Bisel V. Hobbs 63 Belton V. Hodges 22 Bishop V. Breckles 404, 458 Benedic^t v. Davis 120, 132 V. Sheplierd 82 Benfield n. Solomons 367 Bispham i'. Patterson 190 194, 195 Benham v. Bishop 19 Bitzer v. Sliunk 179 V. Gray 387 Bixby V. Whitney 550 Benjamin v. Porteus 77, 145 Black V. Black 363, 368 V. Stremple 324 V. Bush 845, 350 Bennet, Ex parte 473, 489 Black's Appeal 482 Bennett v. Ames, In re 469 Blackburn, Ex parte 499 V. Marshall 179 V. McCallister 178 V. Kussell 223, 229 Blackett v. Weir 278, 285 V. Stickney 174 Blades v. Free 397 Bennett's Case 394 Blain »'. Agar 296 Benninger v. Clarke 263 Blair v. Bromley 150, 172 Bensley v. Bignold 10 V. Snover 331 Benson, Ex parte 499 Blake, Ex parte 499 V. Hadfie 426 V. Dorgan 381 V. Heathorn 394, 596 V. Nutter 363, 364 V. M'Bee 39, 52, 57, 100 V. Wheadon 326 V. Tiiompson 554, 565 V. Williams 474 Bentle}' v. Bates 301, 317 Blakeley v. Graham 277 V. Craven 226 Blakeney v. Dufaur 313 ,314 , 317, 459 V. Harris 63 Blanchard, In re 552 V. White 89, 52, 99, 100 V. Coohdge 50, 84, 145 INDEX TO CASES CITED. XVII Bliiiichanl v. Pasteur 109 Bland, Kx parte 553, 565, 566, 567, 569 V. Haselrig 185 Blaiikonliajfen, Ex parte 491 Blansliuni, In re 558, 559 Blew V. Wyatt 897, 426 Bligh V. Hreiit 546 Blight V. Tobin 151 Blin V. I'ierce 291 Blinn v. Evans 205 Blisset V. Daniel 223, 234, 245, 400, 402, 407 Blodgett, In re 494 V. Weed 103, 201 Blood V. Goodrich 179 Bloodgood V. Zeily 513, 514 Blount V. Ilipkins 546 Bloxam v. Hubbard 337 Bloxham, Ex parte 489 V. Pell 137, 140, 141, 14-2 Blue v. Leathers 44, 144, 280 Biundell v. Winsor 395, 542, 543, 544, 645, 547 Boardman v. Gore 96, 152 V. Keeler 292, 501 V. Mosman 155 Bobo V. Hansel! 19 Bockleu 1'. Hardenberg 44 Bodenham v. Purchas 432, 523 Bodle ('. Chenango, &c. Ins. Co. 336 Bogget V. Frier 24 Bosjgs V. Curtin 334 Bolitho, Ex parte 64, 105, 128, 129,213 BoUand, Ex parte 153, 154 Boiling ly. Boiling 514 Bolton, Ex parte 476 V. Puller 52, 328, 494 Bonbonus, Ex parte 101, 112, 113, 205, 206, 208, 499 Bond, Ex parte 491, 499 V. xVitkins 105, 107, 181 V. (iibson 163, 164 V. Hays 184 V. Pittard 41, 46, 57, 132, 235 Bonfield ;•. Smith 591 Bonnaffe r. Fenner 7, 274 Bonner v. Campbell 370 Bonney v. Ridgard 615 Bonsall v. Conly 494 Bonsteel v. Vanderbilt 65 Booth V. Clark 315 V. Hodgson 10, 287 V. Meyer 469 V. Parks 239, 240, 401, 441, 443, 523 V. Smith 486 Bosanquet v. Wray 52, 244, 288, 290, 325, 326 Boson V. Sandford 158 Bostwick 0. Champion 156 Bosvil V. Brander 483 Bosvvell ''. Dunning 334 V. Green 163, 166 Botifeur v. Weyman Boucher v. Lawson Bouldin v. Page Bouller V. Peplow Hound ('. Latiirop Bourne r. Freeth 513, 514, 515 11, 572 196, 420 273 188, 196 132 V. Wooldridge 209 Boussmaker, Ex parte 27 Bovill V. Hammond 36, 51, 56, 269, 282, 283 Bowas V. Pioneer Tow Line 44 Bowden i'. Sciiatzell 349, 448 Bowen v. Argall 632, 538, 539 V. Mead 203 V. Rutherford 12 Bower v. Swadlin 173 Bowker v. Burdekiii 180 V. Smith 349 Bowman v. Bailey 42, 89 Bowyer v. Anderson 36, 85, 144 Boyce <-•. Burchard 314 V. Owens 24 V. Watson 195 Boyd V. Cann 419 V. Emerson 176, 177 V. Mynatt 238, 463 Boyden v. Boyden 19 Boyers v. Elliott 372 Boynton v. Page 228 Boys V. Ancell 251, 252 Boyson v. Gibson 550 Bozon I'. Farlow 263, 264 Brace v. Taylor 619 V. Washburn 556 Braches v. Anderson 63, 163 Bracken v. Kennedy 287, 289, 510 Bracket v. Winslow 394 Bradbury, Ex parte 487 V. Barnes 367 V. Smith 47, 637, 538 Braden v. Gardner 552, 563, 564 Bradford v. Kimberly 229, 394, 503 Bradley v. Chamberlin 239, 394, 401, 446 V. Harkness 160 V. Holdsworth 546 V. White 84 Bradstreet v. Baer 25 Brady v. Calhoun 37, 45, 363 V. Hill 193 Braithwaite v. Britain 448, 485 Braley v. Goddard 86 Brand v. Boulcott 272 Brandon v. Hubbard 37 V. Nesbitt 28 V. Robinson 473 Brandram v. Wharton 186, 188 Brandred v. Muzzy 57 Brannon v. Hursell 230 Brasier v. Hudson 173 Brassington v. Ault 292, 501 Bray u. Fromont 12, 160, 168, 546 Brazier v. Bryant 427 XVlll INDEX TO CASES CITED. Breekenbridge v. Ornisby 18 Brcekcnridgo r. iShrieve 100 Breiiiner i\ Cliamberlayne 484 Breimn v. Preston 817, 558 Bieiiolilej', Ex parte 502 Brent v. bavis 96 V. liny 564 Bretlierton v. Wood 158 Brett v. Beckwitli 348 Brettell v. Williams 217 Brewer v. Wortliington 421 Brewster v. Hanimet 310, 343 V. Hardeman I'JO, 192 V. Mott 112, 113. 203, 209, 211, 293 V. Wakefield 234 Brickhonse v. Hunter 522 Brick wood v. Miller 474 Bridge v. Gray 192, 194, 196 V. McCullongh 349 Brierly v. Cripps 278, 282, 283 Briggs, Ex parte 142 IK Vanderbilt 55 V. Wilkinson 552, 553, 569 Brigliam, Ex parte 435 V. Clarke 44 V. Dana 42, 48, 230 V. Eveleth 273, 281 Bright V. Hiitton 43 V. Rowland 252 V. Sampson 174 Brimley v. Kupfer 279, 284, 523 Brisban v. Boyd 193 Briscoe v. Anketel 190 Bristow V. James 475 V. Taylor 325 V. Towers 27 Broad v. Jollyfe 410 Broadbent, AV parte 511 Broadus v. Evans 210 Brock V. Bateman 348 Brockenbrough i\ Hackley 189 Brockway v. Burnap 85 Brodie v. Howard 553, 554, 566 Brooke v. Knderby 432 V. Evans 118 V. Washington 63, 364 Brooks V. Martin 223 Broom v. Broom 364, 374 Broome, Ex parte 13, 296, 457, 479, 502 Bropliy V. Holmes 142 Brothroyd, In re 494 Brown, Ex parte 105, 108 V. Agnew 280, 285, 287 V. Clark 391 V. Cook 80 V. l)e Tastet 12, 53, 160, 443, 447, 472, 474, 503, 524 I'. Duncan 9 V. Duncanson 203 V. Fifield 25 V. Gordon 426 Brown v. Heathcote 168 V. lligginbotham 85 V. Jewett 26, 400 V. Lawrence 172 V. Leonard 95, 120, 411, 414 V. Litton 224, 443, 447, 503 V. McFarland's Ex. 444 V. Marsh 173 V. Tapscott 55, 276, 282, 287, 510, 569 V. Turner 10 V. Vidler 447, 503 V. Wilkinson 572 Browne v. Carr 476 V. Gibbins 113, 295 Brownel v. Brownel 517 Brownlee v. Allen 144, 366 Brownrigg v. Rae 164 Brozee v. Poyntz 66 Brubaker v. Robinson 283 Bruen v. Marquand 182, 325 Bruiidred v. Muzzy 146 Brutton v. Burton 179, 181, 183 Bry u. Cook 517 Bryant v. Wardell 48 Brj'den v. Taylor 147 Brydges v. Branfill 150, 151 Bryson v. Whitehead 410 Buchan v. Sumner 364, 371, 372, 377, 378 Buchanan v. Curry 176, 177, 178 Buchoz V. Grandjean 176 Buck V. Mosley 209, 298 V. Winn 372 Buckingliaui v. Burgess 120 V. Hanna 159 Buckland i\ Newsame 175 Buckley, Ex parte 128, 214 V. Bramhall 638 V. Buckley 864, 366, 371, 372 Bucknal v. Roiston 168 Bucknam v. Barnum 42, 85, 194 Buckner v. Lee 42, 81, 129, 130 Buddington v. Stewart 548, 559 Buell V. Cole 270 Buffalo City Bank v. Howard 411 Buffuin V. Butfura 7, 864 Buford V. Neely 400 Bulfincii V. Winchenbach 56, 860 Bulkley v. Barber 548 V. Dayton 182 r. Marks 682, 637, 538 Bull V. Schuberth 59 BuUen v. Sharp 67, 74, 160 Bullock V. Bovd 516 Bullpin V. ClaVke 25 Biunage v. Frosser 388 Bumpass v. Webb 271 Bunn V. Guy 410 Burch V. Breckinridge 25 Burckle v. Echart 42, 85 Burden v. Burden 230, 231, 894, 442, 443, 451 INDEX TO CASES CITED. XIX Burdick v. Green Bunion v. Dean Burfield v. Lougliborough Biiririin V. Lyell Burgess v. Atkins V. Lane V. Merrill Burgne v. Firmin Burk V. McClain Burke v. Winkle Burleigii v. Parton V. Stott Burley r. Harris 288. Burniester v. Norris Burn, E.r ptnte V. Burn V. Morris Burnell v. Hunt V. Minott 273, 283, Burnes v. I'ennell Burnliani v. Whittier Burnliisel v. Firman Burns v. Harris I'. Nollingliam V. Kowlands Burnside v. Merrick 3G4, Burrell, Ex parte Burton, Ex parte V. Goodspeed t'. Issitt V. Wookey 226, 227, Burtus V. Tisdall 346, Burwell v. Mandeville 438, Busby V. Clienault Bush V. Crawford V. Stowell Busliell, Ex parte Butcliart v. Dresser 314, 315, 388, 392, Butcher v. Forman 272, Butler V. Burleson V. Stocking Butlin, Ex })arle Butterfield v. Ilartsliorn V. Hensley Button r. Hampsou Butts V. Dean Buxton c. Lister IS, V. Snee Byers v. Dobie V. Van Deusen Byrd v. Fox 133, Cabell V. Vaughan Cadwallader v. Blair V Kroesen Cady V. Shepherd 178, Calder v. Rutherford Calder & Hebble Nav. Co. v. Pilling 54c 486 Caldicott V. Griffiths 43, 297 483 Caldwell v. Gregory 474, 497 230 V. Lawrence 190 413 V. Leiber 38, 227. 229, 230, 352 243 244 , 394, 522 195 V. Sigourney 188 23 V. Sithens 126 194 V. Siileman 390 475 Calkins i'. Smith 201, 210 24 Callumb V. Bead 364, 371 204, 210 Calvert v. Mario w 278 186 Calvin v. Markliara 288 , 290, 326 Calvit V. Markhani 516 09 Caniblat v. Tupery 299, 512 493, 406 Cambridge v. Hobart 188 180 Cammack v. Johnson 310, 349. 360. 331, 334 448, 501 7, 48 Camp V. Grant 349 , 286, 287 Campanari v. Woodburn 397 546 Campbell i-. Bowen 218 200, 320 V. Dent 67 2:J0 V. Hastings 12, 469 494 V. Mathews 173 279 V. Mullett 257, 325, 345, 346, 66 351, 442, 474, 493, 503, 368. 372, 504 374, 441 V. Stein 570 500, 502 V. Stewart 102 412, 407 V. Thompson 550 67 Candler v. Candler 17, 56, 264 174, 302 Canfield v. Hard 37 438, 450 , 305, 306 Cann v. Cann 513 347, 353 Cannan v. Bryce 10 450, 454 V. Meaburn 572 440 Cannon v. Alsbury 21 201 Capen v. Alden 433 195 V. Barrows 275 276, 279 122 Cape Sable Co.'s Case 381 385, 464 386, 387, Card V. Hope 559 393, 440 Garden v. General Cemetery Co. 545 477, 562 Carey v. Carver 112, 113 445 Cargill V. Corby 06, 100 216 Carlen v. Drury 286, 459, 541, 545 491 Carlisle v. Mulhern 374, 376 485 Carlton v. Ludlow Woollen Mill 190 05 Carmichael v. Greer 469 179 Carpenter, Ex jiurte 492 486, 567 V. Lockhart 252 235, 236 Carr v. Smith 282 564, 569 Carrick v. Yickery 526 475 Carrington v. Cantillon 174 468 Carroll v. Blencow 23 237, 283 Caner, Ex parte 479, 502 V. Home 225 V. Southall 106 V. Whalley 120, 131, 411,416 Carver i-. Dows 112 333, 337 V. Miller 554 434 Carvick v. Vickery 39, 148, 109 176,210 Gary v. Williams 322 189, 102 Casco, The Brig 572 447 Case V. Abeel 441, 442 lling 543 V. Maxey 274 XX INDEX TO CASES CITED. Casey V. Brush 280, 612 Casli V. Tozer 179 Castell, Z;.!- parte 480, 502 Castelli v. Cook 558 Castle, Ex parte 496 Caswell V. Cooper 272, 273 V. Cross 572 Catskill Bank v. Gray 29, 80 V. Messenger 173 V. Stall 212. 216 Catt r. Howard 196, 435 Caiulell V. Shaw 23 Causteii V. Burke 273 Cavitt V. James 391 Cavton V. Hardv 16 Chadsev v. Harrison 280, 282 Chadwiek v. Clarke 289, 545 Chalmers v. Bradley 515 Chamberlain v. Dow 897 V Madden 65 V. Walker 271 Chambers v. Clearwater 152 V. Goldwin 516, 517 V. Howell 442 V. Walker 272 Champion v. Bostwick 55, 80, 92 V. Mumford 200 V. Bigby 515 Champlin v. Butler 571 V. Tilley 195 Chandler, Ex parte 482, 483 V. Brainard 148 V. Herrick 173 V. Parkes 22 Channel v. Fassit 11, 160 Chaniiell v. Ditchburn 186 Chapin v. Coleman 195 Chapline v. Conant 67 Chapman v. Beach 458, 459, 512 V. Durant 554, 565, 566, 567 V. Koops 270, 309, 343, 352, 480 V. Thomas 386 V. Wilson 7, 132 Chappedelaine v. Dechenaux 613, 516 Chappel ". Brockway 410 Chappie y. Cadell 249,512 Chardon v. Oliphant 193 Charlton v. Boulter 804, 305, 311 Charmaii v. Henshaw 130 Charrington v. Laing 252 Chase v. Barrett 48, 60, 144 V. Garvin 283, 284 V. Stevens 148 Chavany v. Van Sommer 237, 304, 311, 381, 400, 402 Chazournes v. Edwards 112, 113, 202, 203, 204 Cheap V. Cramond 36, 51, 56, 76, 89, 145, 172, 196 Cheddick v. Marsh 252 Cheeny v. Clark 43, 100, 271 Cheeseman v. Sturges 163 Cheever v. Smith 566, 667 Chenowith r. CiiambeMin 216 (yheshire v. Barrett 19 Chesley v. Thompson 556 Ghesson v. Chesson 514 Chester v. Dickenson 7, 152, 349 Chevalier, Ex parte 491, 499 Chidsey v. Porter 132 Ciiild V. Hudson's Bay Co. 543 Chilton r. London & Croydon K. Co. 543 Chippendale v. Thurston 187 V. Tomlinson 445 Chissam v. Dewes 263 Chitty V. Naish 427 Christian v. Ellis 510 V. Senhouse 317 Christie, Ex parte 214 V. Bishop 195 V. Craig 658 Chuck, Ex parte 31, 66, 139, 142, 496 Church V. Knox 167, 310, 313, 350, 360, 449. 481 V. Sparrow 63, 105, 172 Churchman v. Smith 42, 81 Churton v. Douglass 409 Citizens Ins. Co. v. Wallise 483 City Bank of Brooklyn v. Dearborn 415 V. McChes- ney 415, 418 City of Maynoketa v. Willey 346 Clagett V. Hall 517 Clagget V. Kilbourne 37 Clairborne r. Creditors 458, 467 Claiicarty v. Latouche 520 Clapp V. Rogers 412, 413, 415 Clark, In re 17 V. Clement 173 V. Dibble 278, 283 V. Flint 235 V. Hooper 187 V. Houghton 97 V. House 447 V. Howe 330 V. Huffaker 194 V. Leach 234 V. Miller 292 V. Reid 148 V. Sigourney 188 V. Van lleimsdyk 195 V. Wilson 167 Clarke, Ex parte 491 V. Imjierial Gas Co. 546 V. Richards 87, 258 V. Tipping 516 Clarkson, Ex parte 497 V. Carter 292, 501 Clay, Ex parte 848, 482, 493 V. Cotrell 104, 112, 203 V. Langslow 195 V. Rufford 340 Clayton's Case 155, 428, 432, 433, 523. 524 INDEX TO CASES CITED. XXI Clegg V. Fishwick 319, 393 V. Houston 494 Clegliorn v. Ins. Bank of Columbus 345 Clement v. Brush 107, 108, 178, 180 V. Foster ul2 V. Hadlock 85 Clements v. Hall 393 Clementson v. Blessing 27 V. Williams 190 Clerk V. Blackstock 139 Cleveland v. Woodward 291 Clifford V. Brooke 296 Clowes, P2x parte 148, 435 V. Hawley 324 Coates V. Coates 244, 30(3 !'. Williams 57, 146 Coats V. Ilolbruok 265 Cobb r. Abbott 55, 156 V. III. Con. R. R. 198 V. New England Mut. M. Ins. Co. 177 Cobliam, Ex parte 499 Cochran v. Perry 12, 1G2, 400, 462 Coekburn v. Thompson 545 Cocke V. Bank of Tennessee 197 V. Branch Bank 100 Cockerell v. Aucompte 43 V. Cholmeley 515 Cocks V. Nash 173 Coddington v. Hunt 412 Coder v. Huling 378 Codman c. Rodgers 520 Coflee V. Brian 273, 275, 2b2 Coffin V. Jenkins 81 Cofton V. Horner 311 Cohen v. Gibbs 471 V. Haiinara 3;;6 V. N. Y. Life Ins. Co. 27 Coit V. Tracy 188, 189 Colbeck, In re 76, 136, 138 Colburn v. Phillips 334, 335 Colby V. Lamson 24 Cole V. Albers 493 V. Pennel 23 V. Pennoyer 18 V. Reynolds 325 V. Sackett 110, 486 V. Terry 323 Coleman v. Coleman 273 Coles V. Coles 163, 363 V. Gurney 174 Collamer v. Foster 271, 273 Collier v. Leech 107, 108 Collins V. Prosser 173 V. Warren 372, 373 I'. Young 319 Collyer v. Collyer 508 Colnaghie v. Block 887, 399 Colt V. WoUaston 296, 4-58 Colwell V. Lawrence 475 Commercial Bank u. Warren 203 Commercial Bank v. Wilkins 167, 338, 343, 345, 353, 360, 503 Commercial Bank of Manchester V. Lewis 199, 212 Com. V. Bennett 67 Compton V. Greer 516 Comstock V. Smith 486, 567 Conant v. Frary 375 Condry v. Gilliam 307 Conery v. Hayes 194 Conklin v. Barton 86, 92 Conkling v, Washington Univer- sity 142 Connecticut River Bank v. French 201 Connelly v. Cheevers 447 Conro V. Port Henry Iron Co. 412, 414 Consequa i'. Planning 516 Const 17. Harris 219, 222, 238, 313, 314, 315,519 Contee v. Dawson 248, 517 Converse v. Sliambaugh 12 Conwell V. Sundidge 167, 261, 345, 400, 446, 503, 525, 552 Cook, Ex parte 473, 480, 483, 493, 502 V. Batchellor 337, 338 V. Beech 330, 337 V. Carpenter 7 V. Castner 196 V. Collingridge 443, 446, 473, 507, 511, 515, 524, 525 V. Fowler 230 V. Jenkins 389 Cooke, Ex parte 347 V. Seeley 106, 329, 334 Cookingham v. Lasher 290, 350 Cookson V. Cookson 370, 473, 511 Coombs V. Boswell 396 Coomer v. Broomley 150 Coons V. Renick 175 Coope V. Bowles 164 V. Eyre 36, 41, 45, 47, 62, 105, 526 Cooper, Ex parte 497 V. Henderson 471 V. McClarkan 212 V. Watlington 244 V. Watson 410 Cope's Appeal 481 Copeland, Ex parte 165 C'oppard v. Page 77 Corbett V. Poelnitz 23 Corbin v. McChesney 112 Cork & Bandon R. R. Co. v. Caze- nove 21 Cornwall i-. Hoyt 24 Corpe I'. Overton 18 Corps V. Robinson 194, 196 Corwin v. Suydam 103 Cosio V. Del5ernales 23, 26, 328 Coslake v. Till 263, 445 Cosleker v. Horrox 518 Coster V. Clarke 363, 364, 372, 373 Cothay v. FenueU 291, 334, 335, 501 xxu INDEX TO CASES CITED. Cotter V. Bettner Cottle V. Leitch Cotton ('. Evans Cottrill V. Vamluzen Coiicli v. IMills Cough V. Riidcliffe County V. Gates Courcey v. Baker Course v. Prince Coursen v. Hamlin Court V. Cross Cowan V. Burgess Cowell r. Edwards V. Sikes Cowles V. Garrett Cox, Ex parte V. Bodfish V. Delano V. Hickman V. McBurney V. Keid Crabtree v. May Cadiifck I'. Simpson Cragin v. Carletou Craig V. Alverson V. Hulschezer Cramer v. Noonan Crane v. Ford V. French Crapster i>. Griffith Crater v. Binninger Craven v. Knight V. Widdows Crawford v. Austin V. Baum V. Collins V. Hamilton V. Stirling Crawshay v. Collins 223, 224, 232, 234, 239, 241, 263, 388, 401, 406, 440, 443, 444, 445, 469, 472, 474, 503, 505, 5U9, 511, 524, 525 V. Maiile 36, 159, 236, 237, 314, 317, 319, 381, 382, 388, 393, 399, 401, 404, 407, 438, 440, 446, 452, 464, 469, 507, 524, 525 55, 156 458 112, 113, 203 66, 132 173 458, 467 179 200, 217 280, 282 229 186 323 569 348, 485 159, 160, 323 174 545 82 144 74,86 146 864 553, 566 18, 21 7 195 193 293 339 315 179 359 558 271 502 232 67 481 125 254 407 217 Creath v. Sims Creel v. Bell Cremer v. Higginson Crisdee v. Bolton Crisp, Ex parte Crispe i'. Perritt Crocker v. Colwell V. Higgins Crockett v. Grain Croft V. Pyke Croinpton v. Conkling Cromwell v. County of Sac Cronise v. Clark Cronker v. Crooker Crosbie v. Guion 424 334, 335 427 251 483 470 201 4G1, 349 168, 849, 481 475 230 18 481, 485 438 Cross V. Cheshire 273, 275, 277, 281, 282, 510 V. Jackson 276 V. Langley 12 C'rosthwait v. Ross 100 Crottes V. Frigerio 268 Crouch V. Bowman 126, 215 Croughton v. P^n-rest 164 Crowdor, Ex parte 347 Crowe V. Clay 486 Croxton, Ex parte 234 Crozier v. Kirker 127, 199 Ciumless v. Sturgess 194 Crusader, The 81 Crutwell V. Brown 182 V. Lye 262, 444 Cullen V. Duke of Queensbury 545 Cullum V. Bloodgood 166 Gumming v. Forester 835 V. Hackley 287 V. Parish 95 V. Powell 18 Cummins v. Cassily 178, 179, 183 V. Cummins 395 Cumpston V. McNair 89, 51, 55 Cunlitfe v. Dyerville 230 Cunningham v. Bragg 390 V. Littlefield 173, 510 V. Munroe 437 Curling v. Robertson 554 Currier v. Cameron 103, 202 V. Silloway 31 V. Webster 271 Curry v. Larer 252 Curtis V. Belknap 292, 334, 335 V. Hubbard 567 V. Perry 497, 499, 556 Gushing v. Marston 329, 330 V. Smith 116 Cushman v. Bailey 81 Gust, Ex parte 492, 500 Cutbush V. Cutbush 454 Cutler V. Thomas 7 V. Winsor 82, 85, 144 Cutts V. Gordon 28 Cuxon V. Chadley 485 D. Dabney v. Stidger Dacie v. John Dailey v. Hall Dain v. Cowing Dakin v. Demming V. Graves V. Williams Dale V. Hamilton Dalton V. Dalton V. Hawes, V. Murphy Dana v. Lull V. Stearns 197 821, 522 44 823 514 284 251 8, 37, 363 44 44 25 168, 165, 166 21 INDEX TO CASES CITED. xxm Dance ;;. Girdler Diinfortli V. Carter Daniel v. Cross 149, V. Daniel 176, 209, 293, V. Townsend Dann v. Si)urrier Darby v. Baincs V. Darby Darling v. Marcli 303, 368, 370 112, 192, 197, 21C, 387, l')arracott v. Pennington Darst V. Eotli 180, Dart V. Walker Dartiiery v. Lee Davenport v. Gear 280, V. llackstrow 135, ?;. IJunlett 112,113 Davlrl V. EUice 110, 307, 422, 485, Davidson v. Bridgeport V. llobertson Davies v. Edwar:. Hulme 107 Dotrgett V. Jordan 7 Dolman v. Ordiard GC, 119, 132, 411, 414 Dommet r. Bedford 478 Domville v. Solly 518 Donaldson v. Kendall 510 V. Williams 228 Donelson r. Posev 261 Doner v. Stauffer"l67, 343, 345, 449, 503 Doniphan r. Gill 108 Donnally v. Kyan 105 Dore i". Wilkinson 156 Doremus v. McCormick 150, 173, 325 V. Selden 272, 334 Doty V. Bates 127, 202, 214 Dougall V. Cowles 163, 200 Dougherty v. Van Nostrand 226, 229, 262, 263, 264, 394, 444, 446, 525 Douglas V. Horsfall 340 V. Russell 555 V. Winslow 343, 352 Dounce v. Parsons 155 Dow V. Phillips 201 V. Savward 96, 102, 310, 352 Dowley I'.'Hall 44^ Downham v. IMattliews 237 Downing r. Linville 210 Downs V. Collins 159, 4.50, 454 V. Gazebrooke 515 V. Jackson 287, 386 Dowzelot V. Rawlings 195 Dovle V. Bailey 510 Drake v. Klwyn 7, 125, 200 V. Kanney 60, 142 V. Rogers 167 Dran ;-. Newliall 173 Drennen v. House 116 Drew V. Ferson 228 V. Power 516 Drewry v. Montgomery 365 Driver v. Burton 330 Druid, The 572 l^rumrigbt i'. Pliilpot 181 Drury i-. Roberts 314 Drv V. Boswell 48, 76, 88, 89, 91 V. Davy 332 Dublin & Wicklow R. R. Co. v. Black 21 Dubois r. Ludcrt 290 V. Roosevelt 526 Dubois's Appeal 163, 184 Duckworth v. Allison 251 V. Stratford 316 Dudley v. Littlefield 87, 863 Duff V. East India Co. 173, 306 r. McGuire 44 Duggins I'. AVatson 572 Duhring v. Duhring 364,371, 373, 374, 376 Dulles V. De Forest 432 Dumas v. Jones 336 Dumont v. Ruepprecht 437 Dunbar v. Lane 516 Duncan v. Clark 212 V. Lewis 103 t'. Lowndes 217 V. Lyon 271, 275, 285, 510 V. Worrall 308 Dundass v. Gallagher 216 Dundee, The 572 Dunham v. Dodge 190 V. Gillis 275 V. Hanna 481 I'. Jarvis 317 I'. Rogers 117 Dunlop V. Gregory 410 Dunn r. Slee 287 Dunning's Appeal 535 Dupuy V. Johnson 287 V. Leavenworth 864 Durbin r. Barber 459 Durj'ea v. Jiurt 67 Duryee v. Elkins 81 Dusar v. Murgatroyd 512 Dulton V. Morrison 3, 180, 309, 461, 469,471,474, 476, 481, 506 V. Woodman 124, 194 Duvergier i\ Fellows 542, 545, 547 Dwight ('. Brewster 156, 172 Dwinel v. Stone 7, 49, 56 Dyer v. Clark 167, 363, 864, 365, 366, 368, 371, 372, 373, 374, 378, 438, 440, 441, 497, 523 Dyke v. Brewer 14, 62, 163, 4.34 Dyster, Ex parte 496 E. Eagle V. Bucher 401 Earl of Chesterfield v. Janssen 516 Earl Pomfret v. Lord Windsor 517 Early v. Reed 216 Eason v. Cherry 224 Eastburn v. Kirk 811 East India Co. v. Blake 251 V. Vincent 494 INDEX TO CASES CITED. XXV Eastman v. Cooper !'. Foster V. Wright Eastwood V. Brown Eaton V. Boissoncault Ebbert's Appeal Eccleston v. Clipsham 175 48y 175, 288, 325, 329 496 230 7,371 233, 243, 275, 276 167, 449, 480 378 273 Eddie v. Davidson Edgar v. Donally r. Fowler r. Knapp Edjreriy v. Shaw Ediiiistoii V. Writjht Edmonson r. Davis Edmund v. Caldwell Edmumlson ;•. Thompson Edwards v. MeFall r. Mcyrick V. Tracy Egberts v. Wood Egyptienne, The Ehle V. Pnrdy Einer v. Deynoodt Elder v. Hood Elderkin v. Winne Eldredge v. Frost Electric Telegrapli Co. of Ireland, In re 381 Elgie V. Webster 7, 142, 271, 510 166, 167, 345, 287 287 19 175 157 335 116 416 515 44 442, 470, 474 560 333 1G6 273 52 44 307, 387, 112, Elizabeth & Jane, The Eilicott ('. Nichols Elliot V. Brown V. Davis Elliott V. Dudley V. Sleeper V. Stevens Ellis, Ex parte V. Bronson V. Jameson V. Watson Ellison V. Chapman V. Dezell V. Moffat Ellston V. Deacon Ellsworth V. 'J'artt Elton, Ex parte Emanuel v. Bird V. Draughn Emerson v. Harmon V. Knower Emly V. Lye Emmet v. Butler Enderby, Ex }tarte England v. Curling 223, 235, 236, 238, 459 Englis V. Furniss 288, 290, 325 Ennis v. Williams 411 Ensign i'. Wands 39, 99, 526 Ensniinger v. ]\Iarvin 202 Essex c. Essex 370, 371 560 190 441 180 203 486 354 479, 502 411,416 195 195 275 182 514 112 55 348, 481, 482, 493 349, 449 42, 55 172, 175, 212 182, 325 105, 213 414 496, 497 Estabrook v. Messersmith 462 Estabrook v. Smith Estes V. Whip])le Estwick V. Conningsby Etheridge v. Binney 63, Etnyre v. McDaniel Eubanks v. Peak Evans v. Bennett V. Bicknell V. Biddleman V. Corriell V. Drummond 62 415 V. Evans 319, V. Gibson V. Silverlock V. Wells r. Yeatherd Everard v. Heme Everett v. Coe V. Stone Everit v. Strong V. Watts Everitt v. Chapman Evernghin v. Ensworth Ewing V. French V. Osbaldistone Exeter Bank v. Sullivan Experiment, The Fagely v. Bellas Faikney v. Heynous Fail V. McTiee Fairburn v. Pearson Fairchild v. Fairchild V. Holley Fairlie, Ex parte Fairthorne v. Weston Faith V. Kichmond Falilo V. Griffin Falkland v. Cheney Fall River Whaling Co. 328, 329 276, 289 314, 319, 321, 442 129, 130, 172, 201, 202 230 19 333 296, 513 104 195 111, 19.5,397, , 423, 485, 488 440, 442, 446, 507, 525 366, 374 294, 330 212 273, 286 173 81, 89 476 166, 183 25 7, 44, 63, 118, 256 112, 210 334 10 185, 190 559 184 9 46 813 364 428, 430, 432 148, 149 313, 4.59, 512 126, 127 414 218 , Borden 8, 37 363, 364, 365, 369 Fanning v. Cliadwick 278, 279, 281, 285 Fanshawe v. Lane 535 Farina v. Silverlock 265 Farlow, Ex parte 474 Farmer v. Bissell 287 V. Davies 553 Farmer's Bank of Mo. v. Bajdess 213 V. Clark 188 V. Green 418 Farmer's Ins. Co. v. Ross 44 Farnham i\ Brooks 515 Farnum i\ Boutelle 432 Farr f. Johnson 258 XXVI INDEX TO CASES CITED. Farr v. Pearce 204, 265, 409, 444, 445 V. Smith 323, 555, 556 Farraiit v. Olrnius 251 Farrar v. Beswick 261, 323, 552, 555, 556 V. Deflinne 416 V. Iltiti'liinson 112,175,210,211 Farrer v. Grananl 24 Fawcett v. Osborne 86 V. Whiteliouse 225 Fay V. Davidson 44 V. Nol)le 43 Fearns v. Young 447, 503 Featiierstone v. Hunt 397, 425 Featlierstoniiaugh v. Fenwick 226, 240, 263, 382, 383, 394, 399, 401, 446, 473, 507, 511, 524, 526 Feiglej'^ r. Sponeberger 97 Felichv V. Hamilton 42, 46 Fell, Ex parte 345, 34G, 351, 493, 496, 497 Fellows V. Wyman 388, 391, 392 Fenn v. Craig 340 V. Harrison 217 V. Simpson 195 Fennings r. Grenville 323, 556 Fenton v. Holloway 29 Fereday v. Hordern 42, 139, 142 V. Wightwick 36, 374, 446, 505, 506, 507, 525 Fereira v. Sayres 392 Ferguson u. Bell 18 Ferry v. Henry 521 Fichthorn v. Beyer 180 Fickett V. Swift 196 Fidgeon v. Sharp 476, 493 Field V. Carr 432 V. Clark 449 V. Crawford and Trs. 360 V. Holland 195 V. Sowle 25 Fielden v. Laliens 201, 204 Fife, Ex parte 175 Figes, Ex parte 506 V. Cutler 13, 237 Figgins V. Ward 196 Figiitmaster v. Beasly 323 Fiiley v. Phelps 126, 215 Finekle i'. Stacy 47 Finlay v. Stewart 274, 284 Finney i'. Bedford Com. Ins. Co. 335 f. Warren Ins. Co. 336 First Nat. Bank v. Almy 42 Fisher v. Bowles 66 IK Mowbray 18 V. Murray 166 V. Tayler 176 V. Tucker 178, 188, 189, 190, 192, 510 V. Willing 571 Fisk V. Copeland 196 V. Herrick 167, 353, 359, 360, 449 Fiske V. Foster 474 Fitch V. Hall 85 V. Harrington 480 V. Stamps 196 V. Sutton 567 Flagg V. Upham 203 Flanagin v. Champion 193, 194 Fleming v. Dunbar 178, 180, 181 V. M'Nair 122 Flemyng r. Hector 37, 42 Fletcher v. Dyche 251 V. Pollard 522 Flood V. Yandes 180 Flower v. O'Conner 447 Floyd V. Wallace 155 Fogg V. Greene 195 t'. Johnston 13, 296, 458, 459 Foil V. McArthur 196 Fole^' V. Robards 104 Folk V. Wilson 105, 210 Fonda v. Van Home 18 Foot V. Sabin 112, 216 Forbes v. Marshall 128 V. Webster 287 Ford V. Haft 179 V. Phillips 19 Forde v. Herron 364, 377, 378 Forkner v. Stuart 163 Forman v. Homfray 299, 511, 512 Forrester v. Bell 643 Forster v. Hale 322 Forsyth v. Hastings 19 Fortitude, Tlie Ship 568 Fortune v. Brazier 271, 276, 334 Foster v. AUanson 280, 285, 510, 520 V. Andrews 200, 203 V. Barnes 372 V. Donald 241, 518 1-. Hall 104, 105 V. Jackson 173 V. Lawson 337, 338, 339 V. U. S. Ins. Co. 175, 570 Foster's Appeal 371 Foute V. Bacon 190 Fowke V. Bowie 427 Fowie V. Harrington 391 Fowler v. Bailey 364 V. Ludwig 111, 486, 567 Fox V. Clifton 7, 12, 14, 31, 131, 1.33, 161, 170, 271, 546, 547 V. Hanbury 2, 160, 163, 165, 167, 324, 343,461, 4()9, 470,472, 473, 476, 480, 525 V. Norton 180 V. Tlie Lodemia 659 Frances, The 556 P>ancis v. Smith 434 Francis, W. W. In re 67 Fiaii Cisco V. Fitch 269 Frank v. Branch 365 Frankland v. M'Gusty 112, 113, 205, 207 Franklin, The 27 INDEX TO CASES CITED. XXVll Franklin v. Tlrownlow V. Hosier V. T{f)l)inson )•. Tlionias Franklin Bank v. Hooper Franks, Ex pnrfe V. De Pienne Frazer v. Marsh Frederic!, Tlie Freeland v. Cocke V. Heron V. Stansfield Freeman, Ex parte 149, V. Bloomfield V. Carliart V. Carpenter V. Fairlie V. Orzer V. Boss V. Smitli V. Stewart Freeman's Bank i\ Bollins Freli^h v. Miller Frencli v. Backhouse V. Chase 360, V. Fenn V. Price 60, 144, V. Bowe V. Styrinj; Frentress ;•. Marble Fridge v. Tlie State Friese ;•. Iileson Frigerio ?•. Crottes Frink i'. Byan Frisbie v. Larned Fromme v. Fromme Fromont ". Coupland Frost V. Moulton V. Oliver Fry, Ex parte V. Bennett Fullagar ?•. Clark Fulton V. Williams Furber v. Carter Furlong V. Bartlett Furnival v. Weston 248 55 149, 174, 474 569 229, 394 309 427 23 24 552, 569 77 516 520 318, 472 435, 493, 502 58 180 208 155 24 212 13 603 424 53 570 449, 501 503 548, 551, 567 193 55, 271 110 18 44 524 280, 284 111, 486 163 280, 520 383 652, 569 435, 493 339 515 289 66 324 175, 325 G. Gabriel v. Fvill 7 Gage V. Rollins 329 Gainsborough i-. Stork 233, 242 513 Galbraith v. Gedge 372, 873 V. Moore 273 Gale V. Leckie 237 271 V. Miller 103, 194 V. Reed 410 Gallatin r. The Pilot 554 Galsworthy i'. Strutt 251, 252 Gait V. Cailand 110, 510 Galway v. Matthew 97, 126, 149, 397, V. Smith V. Smithson Gamble v. Grimes Gano V. Samuel Gansevoort v. Williams 112, 216, 113, 204, 214, 14 553 455, 176, 381, 334. Ganson v. Lathrop Gardiner v. Childs V. Smith Gardner v. Cleveland 550, 551 V. M'Mahon Gardom, Ex jiarte Garden ;;. Slowden Garland, Ex parte 147, 454, V. Agee V. Davidson V. Jacomb t'. Noble Garrard v. Harding Garretson v. Weaver 312, 314, Garrett v. Handley 175, 329, V. Miss. & Ala. R. Co. V. Taylor Garvin v. Paul Gass V. Stinson Gates V. Graham V. Pollock Gay V. Bowen V. Johnson Gavlord v. ImhofF Geddes v. Wallace 59, 132, 234, Geery v. Cockroft Cellar, Ex parte 52, 62, General Smith, The 568, George v. Clagett Geortner i-. Trustees, &c. 314, Gerard v. Basse 178, Gering, Ex parte German Mining Co., In re 229, Gcrvais v. Edwards Getchell v. Foster Gibbons v. Wilcox 77, 145, 148, Gibbs V. Brj-ant V. Merrill r. The Two Friends Gibson v. Lupton 46, 60, 104, V. Minet V. Moore 273, V. Stevens 146, 337, 343, i\ Stone V. Warden Giddings v. Palmer Giffin V. Ashby Gilbank v. Stephenson Gilbert v. Dickerson 323, Gilderslceve v. Mahony Gilfillan v. Henderson Gill V. Gever V. Kuhn 58, 132, V. M. & L. R. R. 214, 411 128 98 207 233 203, 216 349 113 11 563 190 172 9 505 192 178 99 338 542 459 335 308 331 853 432 180 325 192 23 494 287, 519 210 165 569 291 391 179 506 230 298 44 194 (55 23 572 147 485 283 359 86 178 346 187 44 556 212 17 249 282 44 XXVlll INDEX TO CASES CITED. Gillespie v. Hamilton 438 Gillett V. Hull 510 V. Thornton 234 Gillj^ V. Singleton 196 Gilmore v. iWnvk 45, 159, 168, 546 r. Biissey 567 Gilpin I'. Enderbey 42, 58, 142 V. Temple 195 Gitcliell V. Ileald 188 Given V. Albert 63, 148, 447 Glascock V. Smith 391 Glassington v. Thwaites 63, 224, 227, 228, 244, 249, 253, 804, 305, 313, 512 Glassop V. Colman 18, 135, 292 Gleason v. Clark 193 V. White 460 Glover v. Austin 337, 348, 552 V. Tuck 237, 275 Giyn V. Caulfield 521 Goble V. Howard 278 Goddard v. Bulow 443 V. Hodges 12, 160, 271, 545 V. Ingram 187, 188, 192 V. Lyman 328 V. Pratt 6, 30, 55, 385, 412, 416, 419 Godfrey v. Browning 438 I'. RIacanlev 419 V. Turnbuli 411, 419 Goesele v. Bimeler 38 Gold V. Canbarn 306, 517 Goniersall v. Gomersall 268 Good, Ex /Kirte 44 V. Blewitt 558 Goodburn r. Stevens 361, 372, 373 Goode V. Harrison 18, 20, 123, 134 V. Linecum 175 V. McCartney 59, 209, 210, 293 Goodenow i\ Tyler 567 Gooding v. Morgan 486 Goodman, E.r jmrle 483 V. Whitcomb 228, 297, 302, 304, 312, 314, 315, 451, 459, 586 V. White 100, 173 Goodnow V. Smith 179 Goodsell V. Myers 19 Goodtitle '-'. Woodward 197 Gordon v. Buchanan 175 V.Ellis 211,291,293 V. Freeman 396, 400 V. Gordon 513 V. Kennedy 345 Gorham v. Tliompson 413, 418 Gorman v. Russell 541 Goss V. Dufresnov 502 V. N. Y. & P. R. R. Co. 64 Gough V. Davies 397, 425 Gould V. Gould 261, 552 V. Horner 401 V. Stanton 559, 563, 669 Goulding, Ex parte 111, 205 V. Bain 313, 316 Goule V. Hayward 55 Gouthwaite v. Duckworth 62, 117, 118, 256 Govett V. Radnidge 157 Gcwan v. Foster 553 V. Jackson 196 V. Jeffries 314, 815, 316, 317, 320, 381, 459, 461, 469 Gowdy V. Gillam 190 Gower v. Saltmarsh 252 Grace v. Shurter 447 V. Smith 41, 67, 69, 73, 78, 136, 137, 138, 140, 141, 142 Graeff v. Ilitchman 63, 105, 213 Grafton v. United States 65 Grafton Bank v. Moore 194 Graham v. Harris 288 V. Holt 280, 283 i;. Hope 413,419 V. Robertson 272, 273, 284, 287, 475 V. Wichels 395 Gram v. Cad well 96, 112, 210 V. Seton 181, 182 Grant, In re 489 i;. Hawkes 200,211,233 V. Jackson 194, 195 V. Watts 13 Grasselli v. Lowden 410 Gratz V. Bayard 159, 224, 304, 319, 439, 458 Graves v. Boston Marine Ins. Co. 175, 336 V. Kellenberger 201 V. \\Qy 495 V. Merry 411, 412 V. Sawcer 323, 548, 556, 557, 562 Gray, Ex parte 491 V. Brown 173 V. Chriswell 848 V. Cropper 151 V. Crosby 251 V. Gibson 536, 640 V. Hodgson 194 V. Palmer 363, 368, 372 V. Portland Bank 250 V. Ward 100 V. Washington 513 V. Wilson 248 Grazebrook, Ex parte 479 V. M'Creedie 179 Greatrix v. Greatrix 305 Greeley v. Wyeth 112, 170, 210, 211, 293, 330 Green v. Barrett 13, 296, 457 V. Beals 178, 179 V. Beesley 41, 55 V. Bostwick 321 V. Bradfield 493 V. Briggs 548, 551, 563, 564 V. Chapman 288, 325 V. Deakin 111, 205 INDEX TO CASES CITED. XXIX Green v. Greenbank 158 V. Tanner 105, '218 V. Waring 408 Greene v. Greene 167, 343, 366, 372, 573 Greenleaf I'. Quincey 189, 192 Greensliide v. Dower yO, 176 Gregg V. IJrower '270 V. James 173 Gre^g Township v. Half-Moon Townsiiip 56 Gregory v. Paul 24 V. Bailey 202 V. Gregory 515 V. Pierce 24 Gregory's Ex'rs v. Forrester 514 Grellier v. Neale 2'.)1 Gribble, Ex paite 663 Gridley v. Dole 274,286, 510 Grieff v. Boudousquie 61 Grier v. Hood 17'J Griffin v. Doe 7 Griffith V. Buck 346, 351 V. Butluin 55, 63, 118 V. Chew 2»8, 325 V. Wilhing 510 Grigsliy v. Ranee 274 Grill. Ex pnrie 500 Grinau v. Baton Rouge Mills Co. 415, 418 Griswold v. Haven lUO V. Waddinuton 12, 27, '28, 160, 3-27, 438, 461, 463, 464, 4Gy, 504, 546 Grosvenor, Ex parte 506 V. Lloyd 63, 416 Grove v. Dubois 336 Grover v. Hall 516 r. Hugell 308 Grozier v. Atwood 81 Grund v. Van Vlack 150 Guidon v. Robson 66, 132, 134, 135, 2y3, 334, 4y5 Guild V. Welch 103 Guillen V. Peterson 155, 198 Gulick V. Gulick 278, 280 Gunter v. Williams 109 Gurney, Ex parte 496 Guyther v. Pettijolin 323 Gwinn v. Rooker 181 Gyger's Ajjpeal 230 H. Habershon v. Blurton 358, 385, 400, 462 475 193 194 156 203 291 189, Hacker v. Shepherd Hackle}' v. Patrick Haddock v. Crocheron Hadfield v. Jameson 63, 151, Hagar v. Mounts 112, V. ytone Hagedorn v. Oliverson 335, 557, 570 Haguart v. Morgan 248 Haggerty i-. Taylor 536, 537 Hague V. RoUeston 160, 461, 469, 471, 483 Haldeman r. Bank of Middletown '202 Halderman v. Halderman 283 Hale V. Gerrisli 19 V. Hale 313, 314, 459 V. Hurrie 368, 378 Halhed v. Marke 513 Halket, Ex parte 550 Hall, Ex parte 174, 482, 483 V. Baiirbridge 178 i;. Digby 54 V. Franklin 16 V. Hall 314, 345, 403, 448, 459, 460 V. Lanning 175, 178, 194 t'. Leigh 46 V. Smith 128, 149, 214 V. Stewart 275, 510 I'. Wood 349 Hallack v. Marcli 176 Hallett V. Cumston 67 V. Dowdall 543 V. Hallett 522 Halliday v. Do^gett 329, 334, 335 V. Ward 186 Hallifax, Ex parte 44, 496 Halls V. Coe 175, 210 Halpenny v. Pennock 178 Halsehara v. Young 217 Halsey v. Fairbanks 325 V. Norton 469 V. Whitney 180, 182 Halstead v. Shepard 163, 164, 209, 295 Halsted v. Shmelzel 55, 280 Haly V. Goodson 558, 559 Hambidge v. De La Croue'e 176, 179 Hamblin v. Dinneford 298 W?L\nev, Ex parte 484 Hamilton v. Benbury 427 V. Cummings 295, 308 V. Hamilton 280, 510 V. Seaman 389, 391 V. Summers 193, '201 Ilammatt i". Wyraan 394 Hammil v. Hammil 314, 420 Hamraill v. Parvis 217 V. Stokes 296, 457 Hamraon v. Roll 173 Hammond v. Douglas 263, 443, 445, 447, 503 V. Hammond 269 , Hamper, Ex parte 49, 60, 67, 74, 92, 142, -291, 501, 508 Hand v. Armstrong 230 Hantfr. Howard 8, 37'2, 377, 378 Hankey v. Garrett 155, 492 Hanning t'. Ferrers 494 Hanson v. E. & N. A. R. R. Co. 572 XXX INDEX TO CASES CITED. Harding v. Foxcroft 46 , 148, 548, 551 Haslet V. Street 174 V. Glover 313, 314 Hasiett V. Witherspoon 385 Hardy v. Sproule 551, 554, 565 Hasseis v. Sim|)son 476 V. Walters 18 Hastings v. Hopkinson 538 Hare, Ex parte 493 Hatch V. Crawford 181 V. Waring 54() Hatcher v. Seaton 275 Hargrave v. Conroy 66, 71 Hathaway v. Haskell! 188 Hargreaves, Ex parte 480, 502 llaughley r. Strickler 195 Hargroves v. Cooke 427 Haven v. White 288 Harman v. Johnson 100 Havens i». Hussey 166 Harper v. Fox 176, 179 Haviiand v. Chace 532 V. Lamping 155, 427, 437 Hawes r. Diinton 200 V. Kaj'inond 546, 547 V. Tillinghast 60 V. Wrigley 201 Hawken v. Bourne 99 ,170 172, 233 Harrington v. Higham 176, 177 Hawkins i'. Appleby 150 Harris, Ex parte 96, 97, 104, 393, 492, V. Hawkins 387 494, 500, 503 Hawkshaw v. Parkins 180 182, 309 V. Farwell 111, 348, 397, 422, llawley v. Cramer 292, 475 424, 425, 485 V. Keeler 44 V. Lindsay 110, 421, 423, 425, Hawtayne v. Bourne 99 487 Hay, Ex parte 148 149 488, 491 V. Murray 535 V. P'airbairn 496, 571 V. Nortii Devon R. Co. 31)4 V. Mair 416 V. Pollard 367 Hay den, Ex parte 348 V. Wall 19 Hayes v. Bement 533 534, 535 V. Wilson 194 V. Flowers 275 Harrison, Ex parte 548, 552, 554, 563, V. Heyer 166 312 314, 534 504 V. Reese 511 V. Armitage 299, 300, 312, Haythorn v. Lawson 338, 339 459,511, 612 Haj'ward v. P'rench 103, 210 V. Close 173 Haywood v. Harmon 196, 420 V. Devington 339 Hazard v. Hazard 59,67 V. Fitzlienry 135, 292 Heald v. Warren 111 V. Gardner 262, 306, 445 Heane v. Rogers 495 V. Heatliorn 452, 515, 547 Heap V. Dobson 201 V. Jackson 174, 178, 180, Heard v. Bowers 251 182, 199 Heart v. Rankin 365 V. S terry 163, 165, 166, 183, Heartt v. Corning 242, 513, 520, 522 475, 481, 483 Heath, Ex parte 496 V. Ten nan t 381, 458,467 V. Hall 476 Hart V. Alexander 110, 397, 413, 423, V. Hubbard 323, 556 424, 426 , 485, 487, 488 V. Percival 397 V. Clarke 317, 403 V. Samson 111, 195, 211, 385, V. Fitzgerald 337 400, 416, 468 V. Palmer 196 Heathcote v. Hulme 155, 443 V. Tomlinson 434 Heaton, Ex parte 155 V. Withers 110 178, 179, 180 Heckert v. Fegely 85, 144 Hartley v. Kirlin 434 Heckman v. Messinger 482 V. Wharton 19 Hedderle}', Ex parte 489 Hartley's Case 77 Hedge's Appeal 44 Hartman v. Woehr 384 Hediey v. Bainbridge 100 Hartness v. 'J'hompson 23 Hefferman v. Brenham 36 Hartridge v. Rockwell 310 Heimstreet v. Howland 89,92 Hartung v. Siccardi 210 Helme v. Smith 271, 273, 548, 551, Hartz V. Schrader 807, 311, 312, 319, 552, 569 442 Helsby v. Mcars 172, 434 Harvey v. Child 67 Helton V. Granville 311 V. Crickett 269, 461, 469, 471, Henderson, Ex parte 22 476 V. Harbee 180 V. Varney 242 295, 315, 50!) V. Hudson 8 Harwood v. Edwards 174 V. JVIayhew 566 Haskell v. Adams 279, 287 V. McDuffie 569 Haskins v. Warren 67 V. Wild 173, 175, 210, 211 INDEX TO CASES CITED. XXXI Ileiulrick v. Gunn 63 Henecy, Ex parte 473 Henley v. Soper 247, 278, 281, 288 Ileiin V. Walcli 303, 304, 312, 314, 458 Heniiessy v. Western Bank 183 Henniker v. Wigg 431, 433 Henry v. Birch 459 V. Jackson 543 Hepburn r. Curts 289 Heran v. Hall 51 Herbert v. llanriftfk 181 Herberton r. Jepliersnn 393 Hcrcy v. Birch 236 Herfrnian c. Dettlebach 310 Herkimer, The 55 Herrick v. Ames 513 Herries v. Jamieson 273, 286, 350, 421 Herrin v. Katon 323, 556 Heshani, Ji.r parte 479, 480, 501 Hesketii >\ Blanchard 60, 74, 273 Hess V. Werts 541, 543, 544 Hester v. Lumpkin 209 Hewes v. Bay ley 329 Hewett V. Buck 5V0 Hewitt V. Sturdevant 548, 550, 551, 563, 564 Heyden, Ex parte 499 V. Heyden 342, 353 Heylioe v. Burge 6, 79 Hey wood v. Watson 211 V. Wingate 326 Hiard v. Bigg 104 Hibbert v. Hibbert 13, 235 V. Martin 336 Hichens v. Congreve 325 Hickes v. Cook 515 Hickman v. Cox 57, 77, 80, 87, 90, 146 V. Runkle 202 I'. Reineking 112, 203 Hicks V. Cram 31, 32, 120, 132 Hickson v. Ayhvard 516, 517 Higginbotham v. Holme 473 Higgins V. Packard 567 V. Thomas 323 Higginson v. Air 319 V. Fabre 517 RiW, Ex parte 473,491 V. Burnliam 508 V. Holli8ter 248 V. Manchester & Salford Water- Works Co. 546 V. Marsh 325 V. McPherson 289, 326 V. Southerland 428 V. Voorhies 63, 111, 171 V. Wiggin 210, 343, 352, 359 Hilliker v. Loup 292 Hills (;. Bailey 277 V. McRae 348 V. Nash 301 V. Ross 174 Hilton V. Eckersley 410 Hinds V. Terry 323 Hindy v. Margarity 19 Hine v. Lart 265 nine. The, v. Trevor 568 Hinkie o. Reid 284 Rinlon, Ex parte 473,491 V. Law 550, 551 Hiseock v. Philips 365 Ilitclicock V. St. John 166 Ilitchings v. Ellis 61 llite u. llite 394 Hoag V. McGinnis 251 Hoare v. Allen 28 V. Clement 569 V. Dawes 33, 41, 44, 62, 105, 132, 145, 291 Hobart v. Andrews 516 V. Howard 421 Hobbs V. Memphis Ins. Co. 336 V. Wilson 409 Hoby V. Roebuck 395, 437 Hodenpyl v. Vinnerhold 196 Hodges V. Dawes 85 V. Harris 166 V. Holenian 167, 503 Hodgkinson, Ex parte 48, 76, 11 1, 148, 149, 174, 290, 488, 501 Hodgnian v. Smith 81 Hodgson, Ex parte 348, 473, 522 V. Butts 571 V. Murray 308 V. Temple 9 Hodsden v. Staple 496 Hoe V. Richards 515 Hoffman f. Duncan 315, 318 V. Pitt 496 Hogaboom v. Herrick 424 Hogan V. Reynolds 172, 176 Hogg V. Ellis 535, 536 Hogle V. Low 305 Hoi brook v. Wight 156 Holcroft V. Hoggins 104 Holden v. M'Makin 265, 316, 444 V. Peace 224 Holderness v. Shackles 167, 351, 503, 506, 551, 563 Holdredge v. Gwynne 113 Holdswortb, Ex parte 147 Holland v. Drake 166 V. Fuller 364, 372 V. Holland 516 V. Leed 332 V. Weld 331 Hollidav v. Cumsell 323 Hollifield V. White 44 Holloway v. Brinkley - 44 Hohnan v. Johnson 11 Holm V. Hammond 93 Holme V. (ireen 186 Holmes v. Blogg 18, 20 V. Burton 100, 104 V. Hawes 346, 351 V. lliggins 39, 52, 229, 268, 271, 526, 541, 545 XXXll INDEX TO CASES CITED. Holmes v. Mentze V. Old Colony R. R. Co. V. Porter V. United Ins. Co. V. Williamson 273, 285, Holt V. Kernodle V. Ward Holyoke v. Mayo Homer r. Wood 202, 211, 289, Homfray v. Fotliergill 234 Ilonore c. Colmesnil 224, 229, 448 524 Hood I'. Acton 212 305, 307, Hook V. Stone Ilookliam v. Pottage Hoop, The Hooper V. Lusby 175 Hope V. Cust 111, 205, 207, Hopkins v. Banks 189 V. Cliittenden V. Porsyth V. Smith 40 V. Watt Hopkinson v. Smith Horbach v. Huey 329 Horn V. Baker 493 V. Gilijin 557 562 Home V. Clarkson Horsley v. Rush Horton i\ Chid V. Soyer Horton's Appeal 160 168 Ilosack V. liogers 173 Hoskins v. Johnson r. SI ay ton Hotchkiss V. English Houghton, Ex jiarte 493 V. Houghton 864 872 Hourguebic v. Girard Houseal & Smith's Appeal How V. Kane 65, Howard, /*( re V. Cobb V. Priest 864 372 373 Howe V. Thayer 380, 406, 414, Howell v. Adams V. Brodie V. Harvey 12, 13 13, 296, 381, 457, 458 V. Howell V. Reynolds Howland, In re Hoxie V. Carr 345, 364, 365, 366, 371 Hubbard, Er parte V. Callahan V. Curtis V. Guild Hubbell V. Woolf 330 343, 346 318, 319 352 17, 2, 85 132 45 286, 287 81 21 278 293, 294 , 521 261, , 552 , 340 166 263 27 , 557 ,217 , 193 230 548 , 148 225 17 , 331 , 496 , 568 336 180 108 177 ,400 , 517 340 653 201 ,496 , 374 280 481 , 109 67 195 ,374 418, 419 413 ,271 401, ,459 366 337 494 367, ,503 482 230 , 349 472 213 Hubert v. Nelson Hudson V. Barrett 301, Huey V. Horbach Huggett i\ Montgomery Huglies, Ex jKirta V. Ellison 166; V. Morris V. Wheeler Hull V. Garner Human v. Cuniffe Hume V. Bolland 154 Humphries v. Chastain V. McCraw Hunsden v. Cheyney Hunt V. Benson 864, V. Bridgham 188, V. Chapin V. Clark V. Gookin V. Hall , V. Morris V. Royal Ex. Ass. Co. V. Waterman 846 Hunter, Ex parte 104, 213, 478, 499; V. Galliers V. Rice Huntington v. Potter Hurd V. Darling 323, V. Haggerty Hnshand, Ex parte 491,498, Hussey l\ Allen i\ Christie V. Dole V. Jewett Hutchins r. Bank of Tenn. 412, V. Hope V. Hudson V. Sims V. Turner Hutchinson v. Smith V. Whitfield Hutton V. Eyre Hyat V. Hare Hyde v. Brashear V. Stone 323, 324, 339, 555 Hynes v. Stewart 13, 172 413 173, 272 200 512 330 157 506 180 550 486 179 184 , 155 391 439 494 365 424 99 463 610 172 284 196 351 493, 502 473 497 393 656 202 499 566 663 475 21 415, 419 514 415 415 157 155 385 287 163 447 ,556 296 Ibbotson V. Elam Iddings V. Bruen Ide V. Ingraham Ilsley V. Jewett Inhusch f. Farwell Indian Chief, The Ingliss V. Grant Ingraham v. Foster Innes v. Lansing V. Stephenson Irby V. Graham 234, 521 321 192, 390 188, 486, 567 35 224 474 13, 296 442, 533 172 449 Irl)y V. Vining 414 Irvine v. Forbes 43, 219, 545 Irving V. Excelsior Fire Ins. Co. 51, 175, 336 V. Young 5"iO Irwin V. Conlilin 66 Isler V. Bilker 423, 424, 466 Ives V. Miller 271, 272, 274 Jacaud v. French Jackson, ^.r parte 148,149,435, In re V. Alexander V. Anderson V. Cator V. Clynier V. Faiibank 17. Jackson 53, 54, V. Mayo V. Porter V. Kobinson 46, 148, V. Sedgwick 234, 238, 302, 503, V. Sheldon V. Stanford 180, V. Stopherd 274, 281,282. V. Todd Jacky V. Butler 342, Jacobs V. Fatlierstone V. McBee Jacobsen v. Hennekenius 31, Jacobson v. Williams Jacquin r. Buisson 319, 442, 531, Jrtffray v. Frebain Jaggers i'. Binnings 196, James v. Bixby 554, 565. I'. Bostwick 109^ V. Woodruff Janes v. Whitbread 57, Jaques v. Hulit V. Marquand 104, 105, 155, Jarvis v. Brooks 349, 364, 378, V. Hyer V. Feck Jefferson, Tiie Jefi'erson Ins. Co. v. Cotheal Jeffreys v. Small 1 362, 441 V. Smith 36, 317, 382, 400, 546 Jell V. Douglass Jenkins v. JSlizard 414 Jennings v. Estes 133 V. Griffiths 552, 553, 566 V. Randall Jennison v. Hapgooc Jepson, Ex }>ni-te Jerusalem, The Jervis v. White 307, 340 173 43(), 486 17 292 323 491 481 186 441 21 181 548, 551 242, 519 533 367 510 152 353 24 107 322 483 536 22 552 566 510 546 146 280 213 482 352 410 504 335 548 385, 547 329 419 195 569 158 505 484 568 518 SES CITED. XXXlll Jessup V. Cook 224, 520 Jestons V. Brooke 141, 142 Jevvett, In re 60, 116, 469, 475 Jewson V. Moulson 483 Johan and Sigmuud, The 562 John, The 559 Johns, Ex parte 501 V. Battins 181 Johnson v. Bcardslee 188 V. Boone 430 V. Byerly 152 V. Curtis 516 V. Evans 352, 353, 385, 400 V. Hudson 9 V. McDonald 539 V. Miller 85 V. Peck 174, 211 V. Shrewsbury, Sbc.E . Co. 298 V. Totten 413, 420 Johnson's Executors v. Ketch um 513 Johnston v. Dutton 97, 219, 220 I'. Freer 324 V. Warden 104, 195 Jonau V. Blanchard 533 Jones, Ex parte 484, 493, 496 V. Bailey 176, 178 V. Blum 566 V. Booth 112, 203 V. Brown 323 V. Caperton 36 V. Clayton 350 V. Dwyer 496 V. Gates 329 V. Harraden 273 V. Herbert 174, 175 V. How land 493 V. Jackson 1.57 V. Jones 261, 480 V. Latimer 516 V. Lees 410 V. ^Nlars 214 V. Maund 427 r. McMichael 8, 438 V. Morgan 295 V. Neale 364, 372 V. Noy 464, 465 V. Parsons 168 V. Perry 308 V. Phoenix Bank 21 V. Turk 345 34G, 351, 3.53 V. United States 432 V. Yates 205, 209, 211, 288, 293, 294, 295, 458 Jonge Pieter, The 27 Jonge Tobias, The 552, 554 Jons V. Perchard 37 Jordan v. Lewis 251 V. Wilkins 96 Josephs V. Pebrer 542 546, 547 Josiyn V. Smith 188, 189 Joy V. Campbell 497 Joyce I'. Williams 203 Judd V. Gibbs 483 XXXIV INDEX TO CASES CITED. Jndfl ?■. Harris Judge V. Braswall Judson V. Adams V. Gibbons Julia, Tlie Julio V. Injialls Justin V. Ballam 270 99 84 28 27, 28, 327 8 569 K. Kaiser v. Wilhelm 73 Kane v. Scofield 199 Karason, Tlie 572 Kartliaus v. Ferrer 17G Kaskaskia Bridge Co. v. Shannon 106 Katsch V. Slienck 314, 508 Kawshaw v. Kawshaw 25 Kay V. DePlenne 24 Keane v. Boycott 18 V. Fisher 292 r. Jolinsoa 198 Keasley v. Codd 545 Keating v. Marsh 154, 155 Ke(iie,^Er parte 486,487 Keene v. Harris 265 Keene's Executors, In re 26, 162 Keesley v. Cadd 541 Keith V. Fink 493 Kelby v. Steel 272 Kell r. Nainby 23. 134, 135, 292 Kelley v. Greenleaf 209, 224, 229, 231, 295, 394 V. Hurlburt 33, 63, 415 V. Sanborn 190 Kellogg V. Fancher 210 V. Griswold 59 Kelly V. Eckford 312 r. Kanffman 285, 287 Kelshaw v. Jukes 44 Kenible v. Farren 251, 252 I'. Kean 298, 299 Kemeys v. Richards 203 Kemp" 17. Camley 166 V. Coffin 391 Kendall, Ex parte 345, 348, 485, 488, 506 V. Rider 364 Kendrick v. CampbeU 189, 192 V. Tarbell 126, 215 Kennebec Co. v. Augusta Ins. & Banking Co. 175 Kennedy v. Bohannon 416 V. Kennedy 381, 459, 512 V. Lee 262, 263, 409, 445 V. M'Fadon 284, 286 Kenney v. Atwater 413 Kensington, Ex parte 332, 348 Kerr v. Hawthorne 450 V. Potter 58 Kerridge v. Hesse 434 Kershaw v. Matthews 314, 439, 452 V. Kelsey 27 Ketcham v. Clark 159, 168,411,412, 414 Ketchum v. Durkee 104, 433, 442 Kibbler v. De Forrest 216 Kidckr r. Page 210 Kiddwelly Canal Co. v. Raby 545 Kieran v. Saunders 135 Kiffin V. Willis 157 Kilby V. Wilson 153 Kilgore v. Powers 230 Kiigour V. Finlyson 411, 413 Killam v. Preston 280, 282, 283, 520 Kimball i". Hamilton Fire Ins. Co. 166 V. Walker 103 V. Whitney 448 Kimberly v. Jenning 298 Kimbro v. Bullitt 99 King, Ex parte 477, 500, 501, 502 V. Accumulative Assurance Co. V. Dodd V. Faber V. Hamilton V. Hoare V. Lowry V. Rock V. Sanderson V. Smith i". Weeks Kingman v. S^jurr 541, 112, Kinkead, In re Kinloch v. Hamlin Kinnersley v. Mussen Kiiisler i'. Pope Kinsman v. Barker V. Dullam Kirby, Ex parte V. Cannon V. Carr V. Cogswell V. Hewitt V. IngersoU Kirk V. Blurton V. Hiatt V. Hodgson Kirkley v. Hodgson Kirkman v. Booth V. Newstead V. Snodgrass Kirkpatrick v. TurnbuU Kirwan v. Kirwan 110, 111, 383 544 203 229 108 551, 553, 554, 567 481 481 173, 39-3, 196 365 11, 12, 159, 160, 162, 168, 546 25 Kitchen v. Bank V. Bartsch Kleine v. Shanks Kline v. Beebe Knapp V. McBride Knebell v. White Knerr v. Hoffman Knight V. Earl of Plymouth V. Marjoribanks 510 179 111 516 127 112, 206 23 464, 465 200, 329 195 166 128 190, 193 219 496 456 331 413 164 597, 421, 426, 435, 485, 487 230 471 372 21 202, 438 299, 300, 512 353 456 225 Knott V. Morgan 265. 340 Knowles v. Haughton 10, 301, 511, 512 Knowlton v. Reed 439 Knox V. Campbell 548, 551 INDEX TO CASES CITED. XXXV Knox I'. Simmons 481 Koliler V. Smith 234 Kramer v. Artiiurs 37, 378 Krebs v. O'Grady 24 Krueger, In re 134, 397, 409 Kyle ('. Kyle 522 !,'. Roberts 510 Lacey, Ex parte Lacliaise i'. Marks 532, 535, 537 Laciiomette v. Tliomas 189, 532, Lacy V. Le Bruce V. McXeile V. Walcott V. Waring Ladbroke, Ex parte Ladd V. Griswold Lafon I'. Chitm Laforest, Ex parte Lagow V. Patterson Lake v. Gibson Lallande v. McRae Lamalere v. Caze Lamb v. Durant 325 172, 192 212, 258, 278, 280, 282, 163, 548, 549, 551, 552 V. Grover Lambden v. Sharp Lambert's Case Lambeth v. Vawter Lancaster Bank v. Negley Lancaster Canal Co., Ex parte Lanckton v. Wolcott Lane, Ex parte V. Felt V. Tyler V. Williams Lang V. Keppell V. Waring Langan v. Hewett Langdale, Ex parte 487, 199, 216, 3G8, 372, 375, 96 42, 75, 132, Lange v. Kennedy Langer v. Kennedy Langham v. Bewett Lanier v. McCabe Lansdale v. Brashear Lansing v. Gaine 100, 113, 202, 411,413 V. M'Killup V. Ten Eyck Lapham v. Green Larazzabel v. Gorbea Larch, The Lascaridi v. Gurney Lash V. Lambert Latham v. Kenniston Laugher v. Pointer Laughlin v. Loring's Adm 100, 112 174, 196, 99, 292, 552, 563, 195, 515 538 536, 537 326 196 474 364 491 345 104 491 179 441 103 520 550, 556 51 181 163 193 372 546 489 491 360 278 201 447 373, 376 ,216 322, 495 194 411 23 203 36 391, 526 420 112 334 504 570 7 230 273 156 439 Laverty v. Burr 112, 202, 204, 216 Law V. Cross 227 V. Ford 163, 316, 317, 319 Lawes, Ex parte 234 Lawless v. Mansfield 517 Lawrence, Ex parte 496 V. Clark 286 r. Dale 175 V. Sebor 336 V. Taylor 163, 183 V. Trustees of Orphan House Lawson v. Lovejoy V. Morgan Laycock, Ex parte Layfield's Case Lay ton. Ex parte V. Hastings Lea r. Guice Leach v. Church V. Leach Leaf, Ex parte V. Coles Leake v. Craddock Lean v. Schutz Leane v. Bray Leavitt v. Peck Lea}' craft v. Dempsey Lechmere v. Fletcher Leddo V. Hughes Lee, In re V. Bennett V. Gibbons V. Lashbrooke V. Onstott Lee's Admr. v. Reed Leeds & Thirsk R. R. Co ley Lees, Ex parte V. Laforest Le Faun v. Macolmson Lafavour v. Yandes Lefever v. Underwood Lefevre v. Boyle Lefevre's Appeal Legge V. Harlock Leggett V. Hyde Leigh V. Everhart Leighton v. Wales Leonard v. Huntington 349 18, 19 305, 310, 311, 312- 484 97 291 179, 180 63, 99, 196 440 226, 394, 446, 525 412 464 1 23 157 96, 97, 98, 134 516 108, 41,0 568 ^ 483 25 3^4 229, 261, 394 180 513 Fearn- 21 22 893 338, 339 190, 193 223 333 7 251 67, 75, 92 308 251 550, 565, 566 Le Roy v. Johnson 104, 125, 126, 200, 212, 255, 411 Leslie v. Wiley Lessig V. Langton Levally v. Ellis Leveck v. Shaftoe Lever v. Fletcher Leverson v. Lane Levett, Ex parte Levy V. Cadet Levy V. Pjne Lewis V. Ciiapman V. Conrad 152 312 480 292 11 112, 204 521 190, 193 100 338, 339 480 XXXVl INDEX TO CASES CITED. Lewis V. Greicler 44, 51 V. Laiigdon 2G3, 265, 308, 444, 445 V. Lee 24 V. MofFett 230 V. Pead 513 V. Reilly 887 V. Westner 103 Liddiard, Ex parte 110, 487 Liddle, Ex parte 201, 491, 49D Lightfoot V. Heron 20 Lightoller, In re 480 Lillard i\ Turner 25 Lilly V. Kroesen 516 Lime Rock Bank v. Phetteplace 365 Linie Rock Ins. Co. v. Treat 201 Linipus V. London Omnibus Co. 572 Lindsey i'. PMminston 31 Linford v. Linford 481 Liiigard v. Bromley 287 Lingen v. Simpson 167, 297, 351, 492, 507 Lintner v. Milliken 44 Linton r. Hurley 152 LTn vincible 572 Litchfield, In re 478 Littell V. Fitch 202 Little V. Snedecor 865 Littlewood v. Caldwell 312, 458, 521 Livermm-e v. Rand 432 Livingston v. Cox 36 V. Hastie 112, 202, 203, 526 V. Lynch 222, 545 V. RadcUff 110 V. Ralli 177, 247, 248 V. Roosevelt 39, 100, 101, 112, 163, 175, 199, 200, 201, 202, 212, 526 Lloyd, Ex parte 164 V. Archbowle 33, 292, 501 V. Ashby 64, 201 V. Bellis 156 V. Loaring 219, 545 V. Passingham 513 V. Tliomas 194 Lobb, Ex parte 148, 149, 486, 488 Locke ('. Stearns 150, 152, 156 Lockvvood V. Comstock 388, 391 Lockyer v. Savage 473 Lodge, Ex parte 492, 494, 500 V. Dicas 110, 397, 421, 422, 475, 485, 487, 488 Loeschield v. Hatfield 440 Loescliigk v. Addison 440 Logan V. Bond 104 V. Mason 432 Lomas v. Bradshaw 274 London Ass. Co. v. Bold 333 Long V. Carter 216, 217 V. Majestre 227, 306 V. Story 388, 391 Longman v. Pole 151, 211, 294, 340 Loorais V. Marshall 44, 83, 85, 87, 90, 91 V. McKennie 459 V. Pierson 174 Lord V. Baldwin 292, 360, 449, 501 V. Proctor 73 Loring v. Brackett 174 Loscombe v. Russell 299, 300, 304, 458, 460, 512 Lothrop V. Wightman 483 Lottimer v. Lord 820 Love V. Moynehan 24 Lovejoy i'. Bowers 167, 350 V. Spofford 397, 413 Lovelace's Case 180 Lovell 0. Hicks 151, 265 Lowe V. Farlie 515 V. Miller 823 V. Peers 251 Lowery v. Drew 181 Lowndes v. Taylor 309 Lowry v. Brooke 42, 49, 59 Lowther v. Chappell 190 Loyd V. Freshfield 103, 104, 172, 175, 213 Lucas V. Bank of Darien 175, 183, 413, 419,420 V. Beach 271, 545 V. De la Cour 196 V. Laws 343, 353 V. Sanders 179, 181 Ludlow V. Cooper 87, 363, 372 V. Simond 180 Ludwick V. Huntsenger 230 Luke V. Gibson 548 Lumberman's Bank v. Pratt 390 Lumley v. Wagner 298 Lunt V. Stevens 173 Lupton V. Janney 514 Lusk V. Smith 391 Lyles V. Styles 163, 224 Lyman v. Lyman 39, 231 Lynch v. Bitling 242, 514 Lyndon v. Gorham 343, 353, 359, 860' Lyon V. Haines 38^ Lysagt V. Walker 431 Lyster v. Dolland 441 Lythe v. Ault 422, 485, 487 M. McAlister v. Montgomery 373 M'Arthur v. Bloom 24 V. Ladd 59, 180, 275 McBride v. Hagan 178, 179, 182, 325 V. Protection Ins. Co. 133 McCalmont v. Rankin 550 McCart v. Lewis 181 V. Nixon 447 McCauley v. Cleveland 60 M'Cauley v. M'Farlane 492, 500 McClelland v. Remsen 165 Mackay v. Bloodgood 180 INDEX TO CASES CITED. XXXVll Mackellar v. Wallace 513 Mackenzie v. Pooley 566 Mackintosh v. Mitcheson 568 Machie v. Sutherland 128, 214 McCliin. Locke Nunnely v. Doherty Nutting, Ex parte V. Colt Oakeley v. Pasheller Oakley v. Aspinwall 271, 275 197, 413 516 25 195 45 475 269, 457, 510 178 497 59 110, 424, 488 63, 142 INDEX TO CASES CITED. xli O'Brien v. Ciirrie 22 Page r . Cox 159 O'Coiiner v. Stark 512 V Fry 336 Odionie v. Lylord 323 V McCrea 304 V. Maxcy 196 V Wolcott 437 Ogden V. Astor 49, 59 442, 443, 447, Pahlman v. Graves 481 514, 516 Paine ;. Thatcher 230, 276, 394 V. Kip 310 Palmer v. Dodge 388, 391 V. Saunders 474 V. Elliot 63 Ogilby, J'Jx parte 477 V. Justice Assurance Soc. 180 Ogilvy, J'Jx parte 477, 502 V. Myers 164 Ogle, Ex parte 500, 502 V. Piiikham 124 V. Barnes 157 V. Stephens 126, 128 V. Eagle Ins. Co. 549 V. Tyler 511 V. Wraugliam 570 Park V Ballentine 47& OliI V. Eagle Ins. Co. 550, 552 V Wooten's Ex. 411 Olcott V. AVing 37 Parker Ex parte 500 Oldaker v. Lavender 243, 296, 457, V. Barker 21, 123, 495 513, 521 V. Brewer 194 Olipliant V. IMattliews 129, 130 V. Canfield 44 Oliver v. Burton 334 V. Cousins 111, 388, 391 V. Gray 87 V. Fergus 44, 67, 72 V. Greene 549 V. Gossage 247 V. Hamilton 312 , 316 317, 459 V. Gregg 329 V. Palmer 475 V. Jones 11 Olmsted v. Hill 60 V. Jonte 516 O'Mealey v. Wilson 28, 327 V. Macomber 289, 826, 388, Onondaga Co. Bank v. De Puy 172 389, 391 Ontario Bank v. Muniford 329 V. Merrill 192 Ord V. Parbal 334 V. Morrell 192 Ordinary r. Wherry 19 V. Muggridge 476, 483, 503 Orphan Board v. Van Eeenen 51B V. Phillips 390, 392 Orr V. Churchill 251 I'. Pistor 270 , 300, 343, 480 Orvis V. Kinihall 19 r. Eamsbottora 141, 479, 492 Osborn v. McBride 353 Parkhurst v. Kinsman 55, 265, 400 V. U. S. Bank 195 V. Muir 314 Osborne v. Brennan 46 Parkin V. Carruthers 104,411,413, V. Harper 272 414 Osgood V. Spenser 447 V. Fry 545 Osmond i'. Fitzroy 513 Parnell V. Robinson 226 Ostrom V. Jacobs 105, 195 Parr, Ex parte 484, 489 Ottley V. Browne 10 Parry, Ex parte 493, 552, 554, 563, Ouston V. Hebden 561 564 Overholt's Appeal 364 Parsons t'. Crosby 31, 66, 135, 292, Overton v. Tozer 179, IgO 495 Oviatt V. Sage 555, 557 V. Haywood 234 Owen V. Body 57 146, 455 Patch V. Wheatland 557 V. Bo wen 485 Paterson lu Gandasequi 565 V. Van Aster 214 Patten V. Garney 150, 337, 338 Owens V. Collins 364, 365 v. Whitehead 128 V. Davis 548 Patterson ;•. Blake 364 V. Mackall 147 r. Brewster 37, 107, 349 wings V. Low 189,193 V. Chalmers 548, 550, 551, Owston r. Ogle 233, 285, 548, 553, 558 552, 553, 554, 565, 567, 570 Oxley, Exports 473 V. Choate 189 Oxnard v. Swanton 24 V. Grace 303, 368 Ozeas V. Johnson 278 280, 521 V. !Maughan V. Silliman V. Ware 178 247 241 P. Pattison v. Blanchard 55, 89, 208 Pat ton V. Schooner Randolph 563, Page V. Brant 291, 420 564 V. Carpenter 352, 359 Payne V. Hornby 888 xlii INDEX TO CASES CITED. Payne v. Ive8 V. Matthews 349, 448, Peacock r. Cummings V. Peacock 135,228,258, 260, 311, 314, 322, 388, 3'.)9, 401, 404, Teake, Ex parte 346,351,474, 483, 492, Pearce v. Cliamberlain 12, 160, V. Covert V. Hennessy V. Kearney t'. Piper I'. Wilkins V. Williams Pearpoint v. Graliam 163, 166, 381 Pearsall v. McCartney Pearson v. Keedy 345, i;. Lord V. Parker 329, V. Skelton 297, V. Williams Pease v. Hirst 187, 331, Pechell V. Watson Peck V. Fislier 364, 365, V. Thomas Pecker v. Hall Pecks V. Ellis Peele, Ex parte PeirsoU v. Elliott Pellecat v. Angell Pemberton v. Oakes Penn v. Stone V. Whitehead Pennell v. Defell Penniman v. Munson 55, Penn. Ins. Co. v. Murphy Penn. & Heading R. K. Co. v. Derby Penny v. Black V. Martin 65, Pennypacker v. Umberger People V. Norton Peoria M. & F. Ins. Co. v. Hall 149, 174, 175 432, 452, 326, Perens v. Johnson Perham v. Raynal Perkins v. Hart Perminter v. Kelly Perrin v. Keene Perrine v. Hankinson Perring v. Hare V. Hone Perrott v. Bryant Perry ?>. Butt V. Jackson V. Randolph Person v. Carter Peter v. Beverley Peters v. Anderson V. Davis V. Sandford Petrie v. Bury 385, 393, 185, 480, 126, 215, 81, 66, 178, 440, 65, 217 ,503 218 259, 381, 400 480, 493 438, 464 395 230 108 545 97 490 ,404 493 346 336 344 563 251 334 338 372 14 897 287 205 308 11 523 354 25 432 265 543 572 261 109 426 316 557 400 186 517 323 391 144 545 541 76 210 182 132 181 486 427 447 108 833 Petrikin v. Collier Pettee v. Appleton V. Hannay V. Lamotit Pettes V. Atkins Pettit V. Shepherd Pettyt V. Jameson Peyroux v. Howard Pfetfer r. Steiner Phebe, The Phelps V. Brewer Philips V. Atkinson V. Belden V. Ledley ■" V. Turner 229 Phillips V. Clagett V. Cook V. Pennywit V. Phillips 364, V. Purington Philson V. Bamplield Phinsen v. Negley Phoenix v. Ingraham Piatt V. Williams Pickard v. Sears Pickering v. Holt V. Pickering V. Rugby Pierce v. Barnham I'. Bryant V. Cameron V. Covert V. Daniels V. Fuller V. Jackson 152, V. Kearney V. Pass V. Stockwell V. Tiernan V. Tobey V. Trigg 364 V. Whitley Pierson v. Hooker Pigott V. Bagley Pike V. Bacon V. Warren Pillans V. Harkness Pilling V. Pilling Pim /;. Harris Pinckney v. Hall V. Keyler V. Wallace Pine, Ex parte Pinkerton, Ex parte Pinkett v. Wright Pipe V. Bateman Piper ?j. Smith Pirtle ('. Penn Pit V. Cholmondeley Pitcher v. Barrows 12, 39, 384 44, 78 9 152 44 308 242, 302, 519 569 447 572 174 319, 442 516 568 , 230, 394, 522 182, 325 310, 853, 359 335 366, 374. 375 194, 548, 551 65 202 493 163 494 179 337 312 24 532, 538 110 372 223, 224 410 167, 202, 352, 353, 449, 481 65 112, 113, 210 175 167, 503 19 , 372, 373, 446 12 163, 173, 182, 325 452, 453, 512 180, 183 188 13, 2li6 2 SO 280 1, 199 104 441 500 348 645, 547 544 373 301 517 826, 412, 418, 419 INDEX TO CASES CITED. xliii Pitkin v. ritkin 454 Pitt V. Pet way 323 I'. Smith 29 Pitts V. Mower 335 V. Waugh 65, 362, 363, 368, 369 Place V. Sweetzer 310, 3-13 Planclie v. Fletcher 11 Piatt V. Ilalen 334 Plowden, Ex jiarle 478 Poimlexter v. Waddy 203, 434 Pollard V. Stanton 42 Pollock V. Williams 99 Pomeroy v. Benton 513 Pond V. Clark 230 V. Kimball 494 Pontet V. Basingstoke Canal Co. 546 Ponton V. Dunn 452 Pool V. Delancy 271, 272, 274 V. Pratt 18 Poor V. Carleton 311 Pope V. Cole 448 V. Randolph 281, 283 V. Pisley 193, 412, 419 V. Salsman 511 Popper V. Sclieider 459 Porter v. Cumings 200, 214 V. M'Clure 45, 47, 551 V. Taylor 173, 325, 396 V. Wheeler 394 Porthouse v. Parker"" 196 Portland Bank v. Hyde 288, 290, 325 V. Stubbs 571 Posey V. Bullitt 178 Post V. Kimberly 39, 45, 99, 117, 256 Postmaster-General v. Furbur 432 Potomac, The Ship 227 Pott, Ex parte 497 V. Eyton 42, 77, 89, 120 Potter V. Gray 381, 383 V. McCoy 111, 180 V. Moses 56, 59 Potts V. Bell 27 V. Waugh 37 Powell V. Lay ton 157, 158 V. Messer 202, 203 V. North 455 V. Waters 196, 420 Pozzi V. Shipton 168 Pratt V. Hutchinson 546, 547 V. Langdon 63, 67 V. Oliver 241 V. Peed 569 V. Tunno 568 Prentiss v. Savage 474 V. Sinclair 411, 412, 413 Prescott, Ex jxtrie 489 President, The Brig 568 Preston u. Strutton 274, 278, 282, 283 Price V. Alexander 59, 181, 183 V. Green 251 V. Groom 57, 146 V. Hicks 365 Prince v. Crawford 99 Princeton & K. Turnpike Co. v. Gulick 411, Pritchard v. Draper 173, 187, 188, 195, Pritt V. Clay Proctor V. Moore V. Sargent Protheroe v. Form an Pruyn v. Milwaukie Pugh V. Currie 364, 365, 368, 373, Pullen V. Ready Purcell V. Cole Purdy V. Powers 211, 293, Pursley v. Ramsey 128, Purviance v. M'Clintee V. Sutherland 181 Putnam i;. Wise 42, 45, 144, 160, 413 192, 396 516 474 410 309 230 376 513 515 295 411 80 , 183 546, 557 Q. Queen v. Whitmarsh 43 Quinbran i'. English 409 Quine v. Quine 36, 55 Quiner v. Marblehead Social Ins. Co. 163 R. Raba v. Ryland 165 Rackstraw v. Imber 280, 281, 520 Radcliffe, Executors of, v. Wight- man 514 Radenhurst v. Bates 276, 330 Raine}^ v. Nunse 481 Rains v. McNairy 323 Raleigh, Ex parte 62 Ramey v. McBride 210 Ramsbottora v. Duck 477 V. Parker 237 Randall v. Randall 370 Randel v. Chesapeake, &c. Canal Co. 248 Randleson, Ex parte 10, 433 Randolph v. Randolph 514 Ransom v. Van Deventer 477 Rapid, The 27, 327 Rapp V. Latham 152 Raw V. Pole 494 V. Potts 494 Rawlinson v. Clarke 58 linw sou, Ex parte 502 Rawstone v. Gandell 825, 329 ]\ay V. Bogart 514 Rayburn v. Day 567 Raymond v. Cause 297 V. Putnam 250 Raymond's Case 53, 159, 168 Rayner v. Pearsall 514 Read a. Bowers 311 V. White 485, 488 xliv INDEX TO CASES CITED. TJeade v. Bcntley 381, 383, 384 Relier v. Coliunbus Macli. Man. Co. 116 Redman r. Green 516 Reece v. Iloyt 402 Reed v. Boardman 427 V. lliissey 81 V. Murpliy 85 V. Norris 50.5 V. Upton 486, 567 V. White 111, 397, 423, 485, 488, 566, 567 Reese v. Bradford 345, 346, 351 Reeve, Ex parte 492, 500, 502 V. Davis 552, 553, 509 Reeves v. Ay res 480 Regden v. Pierce 505, 506, 525 Regina ». Mallinson 322 V. Registrar of Joint-stock Companies 542 V. Wiiitmarsh 512 Held, Ex parte 478,500,501 V. HoUinsliead 47, 50, 56, 169 Reilly v. Smith 412 Reimsdyk v. Kane 192, 194, 196, 200 Remick v. Emig 440 Remington v. Allen 67 V. Cummings 179 Renfrew v. Pearce 113 Renton v. Chaplain 312, 319, 400, 462 Reppert v. Colvin 190 Reuben v. Cohen 201 Revens v. Davis 548, 553 Rew I'. Pettet 187 Rex V. Ahnon 156 V. Cole 22 V. Collector of the Customs 548 V. Inhabitants of Hardwick 196 V. Marsh 156 V. Pearce 156 V. Philip 548 V. Topham 156 V. Webb 546, 547 Reybold v. Dodd 229, 394 Reynard v. Chase 17 Reynolds v. Cleveland 39, 68, 99, 106 V. Hicks 86, 159 V. Mardis 230 V. Toppan 82, 84, 85, 91, 144, 572 V. Ward 424 Rhea v. Rhenner 24 Rice V. Austin 81, 84, 144, 145, 343, 353 V. Barnard 372 V. Barrett 116 i\ Shuman 7 V. Shute 475 Rich V. Coe 553 V. Davis 212 V. Pikinton 157 Richards v. Beauman 459 V. Daveis 299, 300, 312, 459, 512 Richards v. Dutch 475 V. Heather 447 Richardson, Ex parte 454, 455, 505 In re 494, 501 V. Bank of England 241, 269, 518 V. Boright 19, 21 V. Farmer 62 V. French 155 V. Hastings 459, 512 V. Hogg 532, 533 V. Larpent 394 V. Maine Ins. Co. 11 V. Moies 391 V. Tohey 472 I'. Wyatt 376 V. Wyman 488 Richmond v. Pleapy 174, 211 Richmond Turnpike Co. v. Van- derbilt 572 Richter v. Poppenhuscn 147 Ricketts r. Bennett 99 Rider v. Wilcox 67 Ridgeley v. Crandall 18 V. Carey 168, 503 Ridgway v. Clare 34.3, 349, 448 V. Grant 275, 276 V. Philip 12.3, 132, 195, 196 Ridgvvay's Appeal 366, 378 Ridley v. Plymouth, &c. Grinding and Baking Co. 543 V. Taylor 111, 112, 199, 203, 204, 206, 208 Rigden y. Pierce 446,473,507,511, 525 Ripley V. Colby 39, 52, 125 V. Waterworth 370 Roach V. Perry 36, 229, 261 Roache v. Pendergrast 272 Robb V. Mudge 411, 487, 488 Robbins v. Butler 541 V. Cutler 18 V. Eaton 19 V. Fuller 386 V. La swell 86 V. Willard 194 Robert v. Garnie 427 Roberts (;. Anderson 311 r. Everhardt 36,312,313, 315, 317 V. Fitler 271, 287 V. Hardy 28, 327 V. Johnson 152, 156 V. Kuffin 517 V. McCarty 366, 372 V. Spencer 413 V. Totten 156, 224, 242 Robertson v. Lockie 465 V. Mills 203, 212 V. Smith 23, 65 Robey v. Howard 39, 526 Robinson, Ex parte 502 In re ^11 INDEX TO CASES CITED. xlv Robinson v. Anderson V. Crowder V. Gleadow V. Ilofnian V. Mansfield V. Marcliaiit V. McDonnell V. Mcintosh V. Reynolds V. Rudkins V. Ta\l()r V. Thompson V. Wilkinson V. Williams Robson V. Curtis V. Drummond Rockwell V. Wilder 249 166, 183 557, 502, 570 175 337 339 496 1G6, 236, 271, 533, 538 24 106 391 218 64, 291, 397 282 273, 283 291, 333, 334, 335 271, 272, 274, 279, 284 395 849 265 517 Rodgers v. INIaw V. Meranda V. >.'o\viil Rodney v. Hare Rodriguez v. Heffernan 160, 164, 167, 169, 343, 547 Rod well V. Redge 291, 334 Rogers v. Batchelor 112, 113, 163, 164,168,175,203,205,209 126,213 18 157 346, 351, 462 380 269, 288, 325 251 298 V. Coit V. Hurd V. Inibleton V. Nichols V. Keed V. Rogers Rolfe V. Peterson V. Rolfe Rolleston v. Hibbert 550 Rollins V. Stevens 216 Rolston V. Click 216 Romp, The 171 Roosevelt v. Mark 188 Rootes V. Waltbrd 193, 387 Rooth V. Quia 97, 195, 397, 411 Rose V. Daniel 21 V. Marchie 292 V. Poulton 290 Roes v. Decy 64, 291 V. Drinker 59 V. Henderson 343 V. Howell 175, 180 V. La whom 108 i\ Parkyns 67 Rothwell V. Dewees 471 V. Humphreys 105, 172 Routh V. Thompson 557, 570 Rowe V. Wood 223, 228, 509 Rowland, In re 469 V. Booser 363 V. Long 78 Rowlandson, Ex parte 50, 68, 74, 345, 474, 490, 493, 496, 499 Rowley v. Adams 258 Rowley v. Stoddard 173 Rowth V. Howell 455 Roxby, Ex parte 148 149, 488 Roys V. Vilas 440, 441 Ruddock's Case 182 Ruffin, Ex parte 167, 168, 344, 345, 346, 350, 351, 442, 469, 474, 481, 493, 497, 502 Ruffner v. McConnel 183 Ruff'ord, Ex parte. 489 Russell V. Annable 178, 183 r. Austwick 225 V. Grimes 284 V. Leland 53 V. Loscombe 511" V. Miller 365 V. Pellegrini 177, 247 V. Perkins 333 V. Swan 828 , 329, 330 Rntledge v. Squires 112 Rutter V. Tallis 814 Ryan v. Mackmath 308 St. Barbe, Ex parte 480, St. Jago de Cuba, The St. James Club, In re St. John V. Holmes V. Standring St. Johns, Ex parte Sadler, Ex parte V. Lee 155, 172, Sainter v. Ferguson Sale V. Dishman Salmon v. Davis Salomons v. Nissen 182, 39, 51, 164, 59, Salter v. Ham Saltmarsh v. Bower Saltoun V. Houston Sampson i". Shaw Sanborn v. Merrill Sander v. Sander Sanderson v. Brooksbank V. Stoctkdale Sandham, Ex parte Sandilands v. Marsh Sanford v. Mickles Sangster v. Mazarredo San Jose Indiano, The San Juan Baptista, The Saunders v. Johnson SauthofF, In re Savage, In re V. Carter V. Marsh V. Putnam V. Rockwell Saville v. Robertson 62, 104, 105, 117, 118, 148, 215,256 Saving and Loan Society i'. Gibb 172, 217. 193, 27; 243 501 569 43 179 823 480 482 464 251 110 325 324, 473 508 172 437 341 323 465 212 481 435 232 391 195 261 572 275 494 469 864 474 439 409 114, 436 443 xlvi INDEX TO CASES CITED. Sawyer v. Freem.an V. Proctor Sayer v. Rennett Sayre v. Frick Scaife V. Jackson Scak'S V. Jacob Scliack V. Alitor 553, 554, 570 283 455, 463, 464 40 486 186, 190 333 Schemerliorn v. Loines 554, 565, 566, 567 Schmertz v. Shreever 178, 183 Schoeffling v. Scliwarting 46 Scliolefield v. Eiclielberger 27, 159, 407, 438 V. Ileafield 447 Scholey v. Walton 451 SchoUenberger v. Seldonbridge 213, 526 Schulten v. Lord 535, 537 Schunbacker i\ Riddle 152 Scotlin V. Stanley 565 Scott V. Avery 177, 248 V. Beale 434 0. Berkeley 515 V. Buchanan 18, 21 V. Campbell 85, 87, 271, 272 V. Colmesnil 65, 80, 415 V. Dansley 128 V. Fisiier 427 V. Godwin 333 V. Milne 447, 516 V. Rayment 237 Scottin V. Stanley 554, 566 Scruggs V. Blair 365 V. Russell 7 Seabrook v. Rose 548, 552, 563 Sea, Fire, and Life Ass. Co., In re 543 Searight v. Craighead 190 Searle v. Adams 230 Secor V. Killer 292 Sedam v. Williams 65, 109 Seddon, Ex parte 148, 149, 486, 488 V. Connel 287 Sedgwick v. Daniell 273, 287 See Renter, The 562 Seighortner v. Weissenborn 459 Seldon v. Hickock 323, 556 Sellers v. Strcator 180 Sells V. Hubbell 295 Sergeant, Ex parte 287 Servant v. Rusk 494 Servante v. James 233 Sessions v. Jones 808 V. Richmond 251 Settembre v. Putnam 547 Sewall V. Catlin 337, 3-38 Sewel V. Bridge 517 Sexton V. Sexton 225 Shackle v. Baker 262, 263 Shaffer v. Snyder 418 Shakeshaft, Stirrup, & Salisbury, Case of • 480, 499, 501 Shaler v. Trowbridge 210 Shamburg v. Ruggles 435 Sharon Canal Co. v. Fulton Bank 17, 29 Sharp V. Taylor 10, 11, 287 V. Warren 277 Sharpe v. Cummins 258 Shaw, Ex parte 174 V. Holland 542 V. Pic ton 427, 428 V. Pratt 173 V. Rhodes 319 V. Robbins 475 Shearer v. Paine 376 V. Shearer 365,' 872 Shed V. Pierce 173 Sheehy v. Mandeville 65, 110, 423, 424, 486, 487 Sheldon v. Sheldon 194, 346 Shelton v. Cocke 188, 189 V. Pollock 178 Shenkl v. Dana 230 Shepard v. Hawley 40, 197 V. Pratt 67 Shepherd, Ex parte 489 V. Morris 516 V. OxenfordJ 317 V. Tow good 505 Shepley v. Waterhouse 188 Sheridan v. Medara 142 Sherman v. Kreul 448 Sherwood v. Barton 211 V. Hall 572 V. Marwick 152 V. St. Paul, &c. 7, 364 Shields v. Oncy 291 Shirley v. Long 471 Shirretf y. Wilkes 111, 205, 207, 434 Shoemaker v. Benedict 190 Shott 0. Strealfield 119, 131 Shotwell V. Miller 173 Shropshire v. Shepherd 33, 85 Shumway v. Reed 486, 567 Shurlds V. Tilson 412, 413 Shute V. Taylor 252 Sibley r. Lambert 190 Siegel V. Cliidsey 104, 469, 470 Siffkin V. Walker 105, 213, 334 Sigourney v. Drury 188, 190 V. Munn 364, 441, 446, 525 Sikes V. Work 279, 284 Silk V. Osborn 445 V. Prime 449 Sillitoe, Ex parte 480, 499, 500, 501 Simmons v. Curtis 166 V. Leonard 446, 525 V. Swaine 468 Simms v. Kirtley 522 Simonds v. Strong 413 Simpson, Ex parte 484, 496 I'. Bloss 10 V. Feltz 42, 56, 443, 524 V. Geddes 189, 192 V. How den 308 V. Leach 373 INDEX TO CASES CITED. xlvii Simrall i'. O'Bannons Sims V. Bond V. Brittain V. Brutton V. Smith j;. Willing Simson v. Cooke V. Ingham 427, Singer v. Kelly Sisters, The Sitler V. Walker Skaife v. Jackson Skilling V. Coolidge Skinner v, Dayton 178, V. Stocks V. Tinker Skipp V. Harwood 404, 2yi, 292, 334, 334, 569, 100, 333 428, 430, 533 650 180, 181, 510, 543 334, 335 168, 309, 321, 559, 173, 187, 448, 476, Skipworth v. Lea Skirving v. Williams Skrine v. Sloop Hope Slater, Ex parte V. Lawson V. Willis Slee V. Bloom Sleech's Case Slemmer's Appeal Sloan V. Moore Slocum V. Hooker Sloo V. State Bank of Illinois 178, Small V. At wood V. Fitzwilliams Smith, Ex parte 254, 343, 359, 469, 478, 489, 491, 492, 494, 497, Matter of V. Allen V. Argall V. Bailey V. Barrow V. Black V. Burnham V. Cliandos V. Clay V. Coleman V. CoUins V. Craven V. Curamings V. Danvers V. Darker V. De Silva V. Edwards V. Emerson V. Fromont V. Goldsworthy V. Hill V. Hull Glass Co. 543, V. Jackson 343, V. Jameson 155, 232, 395, V. Jarves u. Jeyes 234,312,314,381, V. Johnson 310, 532, 538, 172, 199, 269, 275, 65, 7, 37, 65, 100, 105, 167, 469, 503, 147, 346, 326 563 570 151 103 40 432 432 535 559 310 211 176 381, 544 501 401 400, 461 440 456 561 488 451 556 513 485 459 313 23 179 340 251 470, 496, 500 480 268 539 214 277 109 368 238 575 205 35 118 311 320 343 570 351 350 303 543 36 544 373 427 199 459 345 Smith IK Jones 37, 65, 363 V. Kane 483 V. Kerr 181 V. Knight 44 V. Lowe 315 V. Ludlow 188, 189 V. Lusher 98, 199, 212, 233, 289 V. Mallory's Ex'r 449 V. Mayo 18, 19 V. Moynahan 44 V. Oriell 324, 461, 471, 472, 473, 474 ads. Perry 86 V. Rogers 111, 425, 485 V. Sheldon 392 V. Sherwood 134 V. Sloane 99 17. Smith 63,132,254,270,365, 475, 486 V. Stokes 324, 461, 469, 471, 472, 473, 480 V. Stone 182, 325 V. Sumner 44 V. Tarlton 7,8 V. Tupper 179 V. Tustin 326 V. Vanderberg 67, 99 V. Watson 50, 145, 495 V. Wigley 430, 432 V. Winter 180, 386, 392 V. Wright 44, 56 Smitha v. Cureton 196 Smout V. Ilbery 397 Smyth V. Harrie 395 V. Hawthorn 447 V. Strader 212 Smythe v. Smytlie 311 V. Tankersley 323 Snaith v. Burridge 111, 153, 165, 209 Snead v. Barringer 106 Sneed v. Coyle 212 V. Wiester 427,430 Snell V. Deland 72 Sniffer v. Sass ' 480 Snodgrass v. Broadwell 329 Snow V. Howard 214 Snyder v. May 179 V. Webb 25 Solly V. Forbes 173, 333 Solomon v. Solomon 39, 224, 238 Somerbv v. Buntin 44 Somerville v. Mackay 244, 299 Sophie, The 568 Soules V. Burton 227 Southard v. Steele 178 South Carolina Bank v. Case 128, 129, 200, 213, 233 Southwick V. McGowan 12 Spalding v. Hedges 117 Sparhawk v. Bussell 449 Sparrow v. Chisman 174, 211 Spaulding v. Ludlow Woollen Mill 190, 411 xlviii INDEX TO CASES CITED. Speake v. Brewitton 292, 329 Spear v. Gillet 108, 109 V. Newell 270, 281, 282 Spcer V. Bisliop 397 Speights y. Peters 314, 316 Speiiceley v. Grreeiiwood 397 Speiieer u. Billing 121, 495 V. Darant 243, 275 Sperry, Ex parte 349 Spicer v. James 264 Spiers v. Houston 382 Sprague, Jlx parte 497 V. Ainsworth 218 Springer v. Foster 475 Spiiry, In re 345 Staats V. Howlett 214, 263 Stables v. Eley 414 Stackpole v. Davoren 515 Stacy V. Davy 385 Stall V. Catskill Bank 216 Stannard v. Whittlesey 510 Stansfield v. Levy 291 Stanton Iron Works, In re 189 Stanwood u. Owen 397 Slapilton v. Stapilton 618 Stark V. Taylor 24 Starnes v. Quin 323 State V. Bierman 151 r. Catskill Bank 205 V. Neal 151 State Bights, The 572 Stead V. Salt 176, 177, 182 Steamboat Oi-Ieans v. Phoebus 555, 559, 561 Stearns v. Barrett 410 V. Burnham 203, 204 V. Haven 59, 66, 132 V. Houghton 20 L Stebbins, Ex parte 345 Stegall V Coney 210 Steel f. Jennings 172,175,190 V. Western 292 Steele v. Stuart 52 Steers v. Lashley * 10 Steiglitz V. Egginton 179, 180 Stem V. Robertson 241, 261, 296 V. La Dow 166 Stephens v. Reynolds 201 V. Orman 224, 514 V. Thompson 423, 424 Sterling v. Hanson 552, 564 V. Jaudon 103 Sternberg v. Callaman 112, 484 Sterndale v. Hankinson 482 Sterry v. Clifton 17, 88 Stevens (;. Denning 333 V. Faucet 86 V. Lunt 330, 334 V. Morse 394 V. Yeatman 394 V. Perry 319 Stevenson v. Mathers 511 Steward v. Blakeway 865, 371 Stewart^. Brown V. P^orbes V. Hall V. Levy V. Rogers Stileman v. Ashdown Stinison v. Lewis Stinson v. Wyman Stoallings v. Baker Stockdale v. Ullery Stocken v. Dawson Stocker v. Brockelbank Stockton V. Prey Stockwell V. Dillingham Stokes V. Brown Stone V. Chaniberlin V. Dennis V. Fouse V. Ketland V. Marsh V. Seymour Storer v. Flack V. Hinkley V. Hunter Storrs V. Barker Story V. Livingstone V. Lord Winsor V. Moon Stouffer V. Coleman Stoughton V. Lynch 513, 516, Stout V. Fortune Stoveld, Ex parte V. Eade Strain v. Wright Strange v. Lee Strangtbrd i'. Green Street v. Rigby Strelly u. Wiiison Strong u. Fish V. Foster Stroud, Ex parte Struthers v. Pearce Stuart V. Corning V. Kirkwall Studdy V. Sanders Styles V. Cowper Succession of Andrew Sullivan v. Greaves Sumner v. Hampson V. Powell Sutcliffe V. Dohoman Sutton V. Back V. Clarke V. Gregory r. Irvvine Suydam v. Barber V. Owen Swallow, Steamboat Swan t'. Stedman V. Steele 52, 62, 172, 175, 404 259, 260 565, 566 150 485 516 645 572 44 201 231, 443, 451 59,68 156, 157 103 21 110, 391 248, 249 457, 510 572 153, 154 724 8 200 496 494, 495 475 36 459 471 224, 242, 447, 517, 522, 523 315, 346, 351 317 431 18 382, 333 178 248, 249, 468 557, 559, 562 210 424 480, 502 225 267 25 195 494 470 10, 287 107, 372, 374, 376, 503 348 343 650 157 199, 212 217 108 440 65 181 121, 131, 163, 182, 199, 201 INDEX TO CASES CITED. xlix Swasey v. Antrim 25 V. Vaiulerheyden 18 Sweet u. Bradley 217 V. Jacocks 505 Sweetser v. French 216, 217 Sweetzer v. Mead 164, 183 Sylvester v. Smith 104, 21)0 Symonds v. Canter 339 T. Taher v. Cannon SfiO Taft V. Buffum 400 V. Seriieant 18, 19 Tagrgard v. Loring 82, 144, 54U, 550 Taitt, Jix parte 483,484 Talbot V. Commanders of Three Brigs 572 Tallmadge i'. Penoyer 208 Tarns V. Hitner 126 Tanner y. Hall 209,216 Tapley v. Butterfield 163, 164, 166, 172, 1«3 Tappan v. Bailey 545 V. Blaisdell 343, 352, 449 V. Kimball 190 V. Poor 474 Tassey v. Cliurch 289 Tatam v. Williams 547 Tate V. Mut. Fire Ins. Co. 329 Tatiock V. Harris 396 Tattersall v. Groote 13, 248, 296, 457 Tay V. Ladd 437 Tayloe i'. Sandiford 427 Taylor, Case of 178 Ex parte 477, 484, 496, 502 V. Bemis 265 V. Carpenter 265 V. Castle 438 V. Church 337, 338, 339 V. Coryell 174, 178 V. Davies 459 V. Fields 3, 167, 309, 442, 480, 481, 506 V. Glassbrook 17 V. Hamlin 516 I'. Hayling 516 V. Henderson 133, 194 V. Herring 52 V. Higgins 287 V. Hilly er 203, 204 V. Jones 151, 516 V. Kymer 431, 433 V. Perkins 60, 147 V. Taylor 261 V. Terme 80 V. Young 413 Teague v. Hubbard 274, 289, 545 Teed v. Baring 566, 567 V. El worthy 23, 135, 292 Telford v. Pamsey 103, 128 Teller v. Muir 194 Temple v. Seaver 32. 390 Tench v. Roberts 56, 59, 76 Tennat v. Elliott 287 Tenney v. Johnson 481 V. N. E. Protective Union 541 Terrell v. Goddard 316, 394 V. Richards 7, 275 Terry v. Butler 481 Texiere v. Da Costa 314 Thacher v. Dinsmore 567 Thames, The 672 Thayer v. Buffum 289, 326 V. Lane 372, 374 V. Smith 202 Thicknesse v. Bromilow 99, 172, 175, 200 Thimblethorp v. Hardesty 243, 275 Thom V. Thorn 369 Thomas, Ex parte 496 V. Elmaker 545 V. Fredericks 248 V. Harding 175 V. Lichfield 295 V. Penrick 103 V. Pyke 275 V. Shillibeer 110, 897, 422 Thomason v. Frere 178, 469, 474, 476 Thomasson v. Boyd 19 Thompson v. Andrews 454 V. Bowman 316 V. Brown 430, 455, 456, 505 V. Charnock 288 V. Cook 555, 556 V. Davenport 565, 566 V. Finden 266, 554, 566 V. Graham 308 V. Howard 36, 100 V. Ketchum 328 V. Lay 19 V. Leake 556 V. Percival 110, 897, 422 423, 426, 485, 487, 488 V. Ryan 258, 504 V. Snow 82, 144 V. Steamboat J. D. Mor- ton 290 V. Wesleyan Newspaper Association 644 V. AVilliamson 258, 260 Thomson v. Cook 323 w. Thomson 287 Thorn v. Hicks 550 r. Smith 105 Thonidike v. De ^Yolf 46, 145, 548, 551, 554, 563, 564 Thornton v. Dixon 438 V. Illingworth 18, 23 V. Kerr 133 V. Proctor 229, 230, 394 Thorpe, Ex parte 111, 112, 113, 205 V. Jackson 348, 447, 448 Thrall V. Seward 338, 434 Thrupp V. Fielder 19 INDEX TO CASES CITED. Thurber v. Corbin 421 Tliurlow V. Gilniore I'J Tliursby v. Lidgerwood 388 Thurston v. Blancliard 667 V. Lloyd 202 Thwaites v. Richardson 196 Tliweatt V. Jones 287 Tibbatts v. Tibbatts 56, 144 Tiekel v. Short 5-20 Till's Case 494 Tilley v. Phelps 343 Tillier v. Wliitehead 175, 233 Tillinghast v. Champlin 347, 364, 372, 378 V. Nourse 190 Tillotson V. Tilh)tson 365, 441 Tilson V. Warwick Gas Light Co. 545 Tindal v. Bright 289, 325 Tinkler v. VValpole 194 Tipton V. Nance 328 Tirrell v. Jones 230 Tobias v. Blin 85 Todd V. Clapp 25 Tom V. Goodrich 107, 179 Toinbeckbee Bank v. Dumell 391,411 Tonikins v. Woodford Tonilin v. Lawrence Tooker's Case Toplift V. Jackson Torrell, Ex parte Torrey v. Buck Toulniin v. Copland 201 173, 174 182 273, 386 502 808 432, 518, 521, 523 329 146 151 271, 280 37 Towle V. Harrington Town V. Hendee Townsend v. Bogart V. Goewey V. Neale V. Riddle 424 V. Townsend 515 Toyrnahend, JEx parte 517 V. Devaynes 204 Tracy v. Pearl 111 Traders' Bank of Rochester v. Bradner 208 Tradesman's Bank v. Astor 233 Trafton v. United States 108 Trait v. Baird 276 Travis v. Milne 260 Treadwell v. Williams 164, 377 V. Brown 359 Tredwen v. Bourne 99 Tribune, The 572 Trimble v. Coons 178, 179, 180 Troughton v. Hunter 417, 459 Troup V. Haight 616 Troy Factory i;. Corning 407 Troy Ins. Co. v. Winslow 448 Trueman, Ex parte 621 V. Loder 129 Tubbs V. Richardson 323 Tucker i;. Bradley 146 V. Butiington 571 Tucker v. Moreland V. Oxly V. Peaslee Tuckerman v. Newhall Tudor V. White Tunilin v. Goldsmith Tunno v. The Betsina Tupper V. Haythorne Turbeville v. Ryan Turner, Ex parte V. Bissell V. Burrows 335, V. Ross V. Smart Turnipseed v. Goodwin Tult V. Adams V. Lund Tuttie V. Cooper 23, 133, V. Eskridge Twiss V. Massey Twopenny v. Young Twyford v. Trail Tyler v. Taylor V. Scott Tyng V. Thayer Tyrrell v. Washburn Tyson v. Pollock u. Uhler V. Browning V. Semple Ulling V. Gimrick Ulmer v. Cunningham Union Bank v. Eaton V. Hall V. Knapp United Ins. Co. v. Scott United States v. Astley 18 449 105 173 413 12 661 165 181 492 84, 89, 91 336, 569, 570 188 186 241, 261, 463 202, 203 230 158,194,475 178, 181 493 833 155 323 44 509, 523 544 172 202 372 99 334 201 887 516 568 179, 182 18 432 108 343 432 107 156 173 432 105, 46,57 107, 178, 65, 428, V. Bainbridge V. Bradbury V. Cushman V. Hack V. Kirkpatrick V. Lyman V. Thomason V. Thompson V. Ward well United States Bank v. Binney 30, 38, 129, 130, 239, 401, 446, 522 United States Express Co. v. Bed- bury 267 Univ. of Cambridge v. Baldwin 333 Universities of Oxford and Cam- bridge V. Richardson 243 Updyke v. Doyle 484 Upham V. Hewett 44 V. Naylor 360 Usborne, Ex parte 497 Usher v. Dauncey 212 INDEX TO CASES CITED. li V. Valentine v. Ford Valiant, The Vallett V. Parker Van Alstyne v. Cook Van Aninnge v. Ellmaker Vance v. Blair V. Canipbe-ll Vanderburgli v. Hull Van Deuscn v. Blum Van Epps v. Van Ueusen Van Eps v. Dillage Vanlieatli v. Turner Van Keuren v. I'arraelee Vann v. Barnett Van Ness i-. Forrest Van Ostranrl v. Reed Van Reiinsdyk v. Kane Van Sandau v. Moore Van Scoter v. Lefferts Van Valcn v. Russell Van Valkenburgh v. Bradley Van Winkle v. Ketchum Varnor v. Nobleborougli Vassar v. Camp Venning v. Leckie Vent V. Osgood Venus, Tiie Vere, Ex parte V. Aslibj' Vermillion v. Bailey Vernon v. Jf fferj's 24 5(il 200, 202, 212 635 278, 280, 28^, 510 2:^7 100 42, 85, 91 178, 180 483 110 1 170, 190, 192 518 G5, 274, 283 480 195 236, 401, 403, 405, 512 167 65 391 18 486, 507 14, 57 275, 276 18 327 473 14, 64, 201, 436 511 333, 475 V. Manhattan Co V. Vawdry Vesey v. Mantell Vez V. Emery Vihbard i\ Roderick Vioary's Case Vice V. Anson V. Fleming Vigers v. Sainet Vililia, The Villa V. Joute Vinall 0. Burrill Vincennes, The Viner v. Cadell Volant, The Voorhees v. Jones V. Wait Vose V. Grant 212, 412, 415, 419 513, 515, 516 275 456 87 196 7 97,893, 397,411 541 568 7 189, 192, 550 559 505 572 86 21 287 VuUiamy v. Noble 407, 438, 449, 450, 474, 485 W. Waddell i'. Cook Wade V. Jenkins 359 446 Wadley v. Jones 284 Wadsworth v. Manning 55 Wagner v. Wagner 511 Wagnon v. Clay 175, 216 Wainwright v. Crawford 568 V. Waterman 452 Wait, In re 474, 476, 477 Waite V. Dodges 33 V. Foster 392 V. Thayer 103 Waithman, Ex parte 196, 420 V. Miles 884, 385, 387, 399 Waland v. Elkins 55, 156 Walburn v. Ingilby 301, 541, 543, 544 Walcott V. Canfield 157, 175 V. Willcut 572 Walden v. Sherburne 80, 163, 164, 170, 179, 193, 195, 200, 233 , Waldo, The 572 Waldo Bank v. Greely 202 V. Lamber 212, 216 Walford v. De Pienne 24 Walker, Ex parte 491, 499 V. Crain 542 V. Duberry 189, 193 r. Eyth 349 V. Eyton 349 V. Harris 237 r. House 312,316,319,320 V. Long 278 V. McCulloch 173 V. Svmonds 515, 516 V. Trott 307, 314 Wall's Adm's v. Fife 105 AVallace v. Agry 486 V. Fairman 107 V. Fitzsimmons 396, 447 «. Kelsall 211,293 V. Patterson 475, 481 Wallis V. Hirzch 247 V. Wallace 325 Wallworth v. Holt 300, 459, 512 Walmsley v. Cooper 174 V. Walmsley 521 Walney v. Wells 437 Walsh V. Adams 339, 843, 359 V. Kelly 477 Walton V. Dodson 175 V. Robinson 189 V. Treston 178 Warasley v. Lindenberger 23 Want V. Reece 275, 285 AVarbritton v. Cameron 272 Ward V. Brampston 337 V. Dalton 489 V. Gaunt 47 V. Howell 189 I'. Johnson 65, 107 V. Lewiston 292, 334, 335 V. Morris 475 V. Motter 65, 107, 108, 110 V. Newell 532, 535 lii INDEX TO CASES CITED. Ward V. Society of Attorneys 543 V. Tlioni'pson 14, 48, 117 Wnrtlell v. IIu<;lies 202 Warder r. Newdigate 210 Wardwell v. Haiglit 415, 418 Ware v. Clowny 338 Waring v. Cram 443, 447 V. KoLinson 17y, 320 Warner v. Cunningham 159, 439 V. Griswold 3(3, 334 V. Sraitli 34 Warren, In re 8, 37, 63, 126, 215, 363 V. Ball 416 V. Batchelder 485 V. Dickson 112 V. French 103 V. Taylor 297 V. Tyler 386 V. AVills 351 V. Wheelock 282. Warwick i\ Brnce 21 Washburn v. Bank of Bellows Falls, 343,345,346,348,351, 352 V. Goodman 390, 392, 394. 407, 438, 442, 443, 447, 449 Watchman, The 475 Waterer v. Waterer 365. Waters v. Taylor 299, 312, 314, 315, 316, 317, 358, 881, 458, 459, 462, 464, 511, 512 V. Tompkins 187, 428 Watkins, E.r parte 493, 494, 500 r. Hill 486, 567 Watkinson u. Bank of Penn. 411, 412, 419 V. Bernadiston 56'J Watney v. Wells 230 Watson, Ex parte 22, 32, 33, 66, 76, 135, 155, 290, 477, 501, 502 V. Bourne 474 V. Fletcher 287 V. Owens 65 V. Siieath 477 V. Taylor 481 r. Wells 196, 420 V. Woodman 194 Watt V. Kir])y 104 Watts V. Brook 9 Waugh V. Austen 475 V. Carriger 1C7 V. Carver 31, 36, 41, 65, 72, 78, 85, 88, 90, 136, 145, 287, 495 Way V. Bassett 187, 451 Wavdell v. Luer 110, 111, 486 Weal r. King 157 Weald of Kent Canal Co. v. KoLin- son 546 Weaver v. Upton 230, 276 V. Weaver 48> Webb, In re 224, 287 V. Brooke 10 Webster v. Bray 249 259, 261 V. Seekamp 508 V. Stearns 106, 190 V. Webster 265, 308, 397, Weaver v. Jones V. Tapscott 18 110 445, 449 Wedderburn u. Wedderburn 445,447, 450, 503, 515, 524, 552 Weed V. Panama 11. II. Co. 572 V. Richardson 112, 203 V. Small 516 Weeks v. Weeks 323 Weisman v. Smith' 307 Weld V. Oliver 323, 555, 556 Weller v. Baker 338 Wells V. Carpenter 284 V. Evans 182 V. March 164 V. Masterman 212 V. Simons 284 V. Turner 100 V. Wells 278 Welsh V. Speakman 195 Wendell v. Van Rensselaer 494 Wendover v. Hagebroom 550 Werner v. Leisen 459 Wesson v. Washburn Iron Co. 372 West, Ex parte 22 V. Randall 475 V. Skip 2, 3. 167, 168, 344, 442, 472, 474, 481. 502, 524 West Branch Bank v. Moorehead 427 Westcott V. Price 289 V. Tyson 477 Westerdell v. Dale 553, 554 Westerlo v. Evertson 36, 280, 283, 286 Western Bank of Scotland v. Need- ell 416 Western Stage Co. v. Walker 170, 219,220 Weston V. Barton 332, 333 V. Penniman 550 West Point Foundry Asso. v. Brown 6 Wetherell v. Spencer 566 Wetmore i'. Baker 55, 278 Wetter v. Schlieper 106, 314, 317 Weyer v. Thorn burgh 481 Weyland v. Elkins 55, 156 Whaley v. Moody 216 Wharton v. P'isher 483 V. Walker 485 V. Woodburn 109 Whately v. Manlieim 195 Wheatcroft v. Hickman 86, 146 Wheatley v. Calhoun 365, 368 Wheeler, Ex parte 139, 497 V. Jennings 25 V. Rice 203 V. Sage 223 INDEX TO CASES CITED. liii Wheeler v. Van Wort .' 381, 388, 384, 401,403,404 Wheelock v. Doolittle 188, 189, 190 Wheleii V. Watmoutli 510 Whipple V. Parker 42, 541 v. Stevens 190 Whitakcr v. Brown 104, 105, 112, 155, 172, 200, 203, 238 Whitcomb v. Converse 230 V. Whiting 185, 186, 187, laa, iby, 191 V. Williams 567 White V. Fitzoerald 372 V. Gibson 196 V. Ilaekett 634, 535 V. Hall 186, 189 ?;. Harlow 286,287 V. Jones 330, 353 . V. Murphy 419 V. Osborn 323, 339, 555, 556 V. Phelps 328 V. Smith 157 V. Toles 210 V. Tudor 391 V. Union Ins. Co. 407, 503 V. Woodward 310 Whitehead v. Barron 433 V. Chadwcll 492 Whiteright v. Stimpson 442 Whitesides v. Cannon 25 V. Lafferty 318, 319 Whitewright v. Stimpson 533 Whiting V. Furanet 480 Whitman v. Boston & Maine R. R. 367 V. Leonard 420, 463, 470 V I'orter 44 V. Bobinson 234 Whitmore, Ex parte 149, 435, 485, 488 V. Adams 204 Whitney v. Dean 283 V. Dutch 19 V. Ferris 133, 194 V. Ludington 46, 86 V. McKechnie 334 V. Sterling 194 V. Beese 190 Whittaker v. Howe 264 Whittingham i-. Hill 18 Whittle r. iM'Farlane 229 AVhitton v. Hulbert 163 V. Smith 381 Whit well V. Warner 385 Whitworth v. Harris 13 Why wall v. Champion 18 Wickham v. Wick ham 431 Widdifield v. Widdifield 7 Wide V. Jenkins 516 Wiggin V. Cummings 269 V. Goodwin 511 V. Tudor 173 Wiggins V. Hammond 104 V. Cunnnings 275 Wightman v. Townroe 146, 454, 505 Wllby V. Phinnev 279, 281, 285, 394, 449 Wilcox V. Boath 19 I'. Singletary 178 Wild V. Dean 487, 488 Wilde V. Jenkins 514, 520 Wilder v. Keeler 349, 448 Wildes V. Fessenden 110, 422, 487 Wildman, Ex parte 489 Wiles V. Maddox 351, 358 Wilkins v. Davis 469, 472, 475 V. Pearce 97, 98 V. Beed 565, 567 Wilkinson, Ex parte 497 V. Candlish 100 V. Frazier 59, 76 V. Henderson 348, 448, 485 V. Jett 59 V. Stafford 456 V. Torkington 237 Wilks V. Back 149, 214 Willard v. Stone 21 AVillett V. Blanford 230, 444, 524 V. Brown 372 V.Chambers 39,150,526 Williams, Ex parte 149, 160, 167, 333, 344, 345, 346, 351, 388, 393, 435,440,461, 471,480,481, 484, 486, 493,496, 497, 503 V. Attenborough 36 V. Bank of Michigan 541 V. Barrett 210 V. Beaumont 338 V. Bingley 305 V. Bowers 411 V. Brimliale 12 V. Butler 7 V. Gage 345 V.Gilchrist 112,202 V. Gridley 190 V. Henshaw 271, 273, 275, 279, 280, 281, 284, 523 V. Hodgson 107, 108, 109, 180, 196, 510 IK Jones 14 V. Keats 132, 411, 414 V. Moor 18 1-. Bawlinson 432 V. Savage Manuf. Co. 516 V. Thomas 100, 200, 552 V. Thorp 497 V. Walbridge 203, 216 V. Walsby 180 V. Williams 306 V. Wilson 2G2, 264, 315, 316, 444 Williamson v. Fox 412 V. Johnson 126, 128, 213, 255 V. Haycock 297 V. McGinnis 157 V. Naylor 454 V.Wilson 316,318,320, 438, 459, 461, 469 liv INDEX TO CASES CITED. Willings I'. Blight 559, 5G1 !'. Coiisequa 65, 109, 173 Willis V. Dyson 97, 98, 397, 411 V. Freeman 364, 474, 481 V. Green 40 V. Hill 104, 189, 218 V. Jernegan 513, 519, 520 Willison V. Patteson 27, 28 Willock, Ex parte 502 Wills V. Sinimonds 44 Wilsford V. Wood 14, 331 Wilson, Et parte 407, 484 V. Bowden 1G8 V. Campbell 12 V. Conine 338, 481 V. Curzon 545 V. Cutting 273 V. Dickson 552, 572 V. Forder 194 V. Gibbs 480 V. Greenwood 160, 313, 314, 316, 317, 319, 388, 393, 446,459,461.469, 471, 472,503, 511 V. Hirst 433 V. Hunter 181, 366 V. Lasson 457, 510 V. Lewis 112, 207 V. Mower 174 V. Reed 323, 324, 339, 555, 556 V. Robertson 493 V. Soper 167, 345, 346, 351 V. Stihvell 300 V. Tovbet 190 V. Turn man 150 V. Wallace 128, 291, 292, 329, 501 V. Whitehead 55, 118 V. Williams 112, 203, 205 Wiltram v. Van Worraer 201 Windliam Co. Bank v. Kendall 201 Windsor Castle, The 561 Winget V. Heatlicote 317 Winsliip V. Bank of U. S. 33, 56, 62, 63, 105, 163, 170, 172, 175, 200, 201, 233 Winsor v. Cutts 114 Winsten v. Ewing 343 Winter v. Innes 111, 485 V. White 278, 283 Wintle V. Crowther 64, 111, 112, 175, 201, 207 Wise V. Copley 112, 210 Wish V. Small 48, 58 Wisham v. Kay 349 Withers v. Withers 522 Withington v. Herring 76 Witter V. McNiel 181 V. Richards 310, 343, 345, 501 Woddrop V. Wards 345, 503 Wolbert v. Harris 314, 315, 320 Wolf V. Mills 152 Wood, Ex parte 26, 162, 491, 496, 497 Wood r. Beath 44 V. Bod well 486, 5G7 V. Braddick 188, 189, 191, 192, 193, 194, 387, 395 V. Connell 175 V. Copper Miner's Co. 248 V. Creditors of Weir 569 V. Dodgson 477, 479, 502 V. l^ummer 442 V. O'Kelley 292, 334 r. Pennell 66,119 V. Rutland Ins. Co. 330, 336 V. Scoles 231, 521 V. Shepherd 164, 176, 178 V. Vallette 42, 56, 81, 89 Woodbridge v. Swann 477 V. Wilkins 363 Woodford v. Downer 387 Wo(jdgate, Ex jiarte 497 Woodman r. Cowing 2 Woods V. Wilder 27 Woodward, Ex parte 451 In re 17 V. Cowing 2, 43 V. Gyles 251 V. Newhall 23 V. Schatzell 307 V. Winship 176 Woodworth v. Downer 192 V. Fuller 325 Wooley V. Batte 286 Woolley V. Kelly 350, 421 Worcester Corn Exc. Co., In re 43, 96, 100, 543 Wormley v. Worraley 515 Worrall v. Mume 181, 183 Worsley v. De Mattos 496 Worts V. Pern 302 Wray v. Hutchinson 303, 458, 464 V. Milestone 278, 281, 283 Wren v. Kirton 36 Wrexham v. Huddleston 159, 464 Wright V. Cumpsty 272, 278 V. Davidson 72 V. Hunter 272, 273, 285, 286, 295, 548, 551, 554, 556, 565, 567 V. Michie 271, 275 V. Pratt 494 V. Pulham 411, 413, 419 V. Russell 331, 332 V. Williamson 329, 334 V. Wrislit 24 Wrightson v. Pullan 391, 411, 413, 419 Wyatt V. Marquis of Hertford 566, 567 V. Hudson 186, 187 Yale V. Fames V. Yale 193, 392, 447 210 INDEX TO CASES CITED. Iv YrWqi), Ex parte 493,496 Yandes v. Lefavour 173, 180 Yarnell v. Anderson 111,424,425, 485 Yeager i;. Wallace 95, 210, 321 Yeatman v. Worde 373 Yonge, Ex parte 228, 477, 492, 500 York V. Clemens 7, 364 V. Eaton 441 York & North Midland R. R. Co. V. Hudson 394 Young, Ex parte 344,473,477,479, 548, 550, 551, 552, 554, 563, 564, 570 V. Axtell 65, 119, 120, 132, 136, 138, 142 V. Brander 552, 553, 569 V. Brick 278 Young V. Goodson V. Hunter 174 64, 104, 114, 118, 433 V. Keighly 163, 165, 442, 481, 545, 547 V. Smith 194 V. Tibbetts V. Timming8 Zenobia, The Zent V. Heart Zettee v. Soper Zoller V. Janvrin Zuel V. Bo wen 413 410 572 188, 190 99 411, 413 201 THE LAW OF PARTNERSHIP. CHAPTER I. OF THE ORIGIN AND PURPOSE OP PARTNERSHIP. The Law of Partnership, as it exists in England and in this country, constitutes a system by itself. Its origin cannot be found, excepting in the Law-Merchant, which is itself only the custom of merchants, adopted, systematized, and enforced by the courts, (a) Commercial partnerships were known to the Romans ; and their law recognized and regulated them. So far as commerce was then conducted in a similar manner and upon similar principles as at present, the rules of the Roman law are appli- cable now ; for that law, quite as much as our own, applied to the transactions of merchants a law founded upon their usages ; and to this extent we may regard the Roman civil law of part- nership as similar to our own. As a very large part of com- mercial business consists in forming and executing contracts which must be governed by the law of contracts generally, («) Thus the peculiar doctrines of dock, 3 P. Wms. 158 ; Vanheath v. the law of partnership, which most Turner, Winch. 24 ; Molloy, b. 2, ch. distinguish it from the common law, 10, § 19. The case of Pinckney v. as that there is no survivorship of prop- Hall is thus reported in 1 Salk. 126 : erty or rights between partners (except " By the custom of England, where there for the settlement of the business), that are two joint traders, and one accepts the act of one partner, in reference to a bill drawn on both for liim and part- a partnership matter, is the act of all, ner, it binds both if it concerns the are declared by the earliest authorities trade ; otherwise, if it concerns the to be "per legem mercatoriam," and "pro acceptor only in a distinct interest and beneficio commercii." Jenkins, 160; Co. respect." y. Layfield, 1 Salk. 292. Litt. 182 a ; 2 Brown, 99 ; Jeffreys v. See also 2 Rol. Abr. 702, 370 ; Anon., Small, 1 Vernon, 217 ; Leake v. Crad- Styles, 370 A. 1 2 THE LAW OF PARTNERSHIP. [CH. I. * 2 and this is a part of the common law, * many of the principles applicable to partnership are the same as those which regulate the common transactions of men ; and so far the law of partnership may be said to be founded upon the common law. We doubt, however, whether any thing is gained by references of this kind. The supposed analogies between the law of partnership and other branches of the law, if they sometimes afford ample illustration, lead to confusion and error when we attempt to carry them far ; or, by their help, deduce from other departments of the law a rule which may control and determine a question of partnership. Thus partnership has been compared to tenancy in common, and also to joint tenancy ; and has been said to be one or other of these, modified in certain ways. This was the view taken in all the early books. (J) But this is no more true than that tenancy in common or joint tenancy is a modified partnership. The three things are essentially distinct. Tbey all have the element of joint ownership of property ; but in all other re- spects are different and independent ; and the law of each must be sought for in itself. Only when a partnership has termi- nated, may the former partners be considered as tenants in common of the property not yet divided among them ; but even then certain peculiar rights and principles attach to the property, or to the interests of the parties, growing out of the former partnership. And as to joint tenancy, not only may all of the four unities, — title, interest, time, and possession, — every one of which is essential to joint tenancy, be absent from part- nership, but, beside this technical difference, the substantial characteristic of joint tenancy, which is the right of survivor- ship, is wholly wanting in fact in partnership, for it exists there only in form and as a mere trust for the purpose of settle- ment, (c) And it may be added that partnership differs from {b) See ante, p. 1, note (a). See also ticular stock in being at the time of en- 38 Edw. III. 7 ; tit. " Accompt ; " Bac. tering into the partnership, but to con- Abr., tit. "Joint Tenants," &c. (C); tinue so throughout, whatever changes Com. Dig. tit. "Merchant" (D). In might be made in tlie course of the West V. Skip, 1 Ves. Sen. 239, Lord trade." Of modern law-writers, Story Chancellor Hardwicke uses the follow- is perhaps the only one who denies the ing language : " The partners them- accuracy of this view. Story on Part, selves are clearly joint tenants in the § 90, et seq. stock and all effects ; not only that par- (c) Co. Litt. 186 a ; 2 Bl. Com. 183 ; CH. I.] OF THE ORIGIN AND PURPOSE OP PARTNERSHIP. 3 both * of these species of joint ownership, in this, — * 3 that neither joint tenant nor tenant in common can alien- ate more than his own interest in the joint property, whereas each partner has usually a power of disposition over all the partnership effects. Our conclusi?)n is, that the law of partner- ship is an entirely distinct and independent branch of the law ; and we have made these remarks because it has not always been so considered. When these species of joint interest and ownership came under the cognizance of the courts of England it was new to them, and new to the law of England ; and it was perhaps unavoidable that they who administered the law should have sought to bring this new topic within the rules and principles of those kinds of joint ownership which were well known. For this not only seemed to preserve the unity and symmetry of the law, but relieved the courts just so far from the labor and the hazard of framing new rules for these new relations. Perhaps this was not only inevitable, but wise, at the beginning. We think, however, that it has been carried too far and continued too long in England. And even in this country, at the present time, perhaps something would be gained, if, when new questions in partnership arise, the courts looked for assistance, in giving an answer, to the existing sys- tem of the law of partnership ; which, if it does not provide in advance for all possible questions, contains within itself prin- ciples that, generally at least, will suggest the proper answers. And if they fail, and an absolutely new question demands an absolutely new answer, it will be safer to look to the reason and justice of the case, and the usage of merchants if there be one, than to remote and disconnected branches of law, resem- bling partnership in some respects, but dififering from it in still more. The law of partnership is at once more important and more difficult in this country than in any other. The general pur- Com Dig. "Estate," K. 6, K. 8 ; Fox v. specie, while a partner can claim only Hanbury, Cowp. 445 ; Woodman v. his proportion of the residue found to Cowing, 11 Me. 1. Partnership is also belong to him upon a balance of ac- unlike tenancy in common in that count. West v. Skip, 1 Ves. 392 ; each co-tenant is entitled, as against Taylor v. Fields, 4 id. 396 ; Button v. his co-tenants, to a specific share as Morrison, 17 id. 193. interest in the common property in 4 THE LAW OP PARTNERSHIP. [CH. I. pose of mercantile partnership is twofold : either to aggregate capital, or combine the capital of one with the labor and skill of another ; or to apply the principle of association and divi- sion of labor and all the advantage of common interest and common action to mercantile transactions. * 4 * As to the first of these objects, it is obvious that a country in which commercial enterprise is perfectly free, and well rewarded, and finds an almost boundless field for action, while at the same time there is a want of capital in com- parison with that of older and wealthier nations, is precisely the place in which it would be most common to supply this want of capital by bringing small portions of it into a common stock. And, as to the second, there is among us a strong and uni- versal tendency to association, to a joinder of interest and a joinder of action, which pervades us as a people. Every thing that is done, from the bond which makes our whole country a state composed of states, to the habit which fills all our cities and villages with partnerships, illustrates this tendency. If we look upon the signs over the doors of shops or stores, from the main streets of business of our wealthiest marts to the smallest settlements of the interior, we shall find more names than one upon a majority of them. And it is perhaps a curious recognition of the universality of the principle of association, and of the advantage which it is believed to give, that it is not uncommon for traders who have no partner, to put to their names the addition of " and Co.," to give themselves the appearance and respectability of partnership ; a practice which it has been thought necessary to prohibit by statute in New York, (d) Thus we explain the fact that partnership is far more com- mon here than it is anywhere else ; and of course the law of partnership is more important, if only because it is more often appealed to. But this law is, as we have said, not only more important in this country, but more difficult. All business action is with us entirely free and untrammelled ; and, as a consequence of this, business enterprise — which encounters all risks, and explores all paths which seem to open, and perpetu- (c?) See pos^, p.* 255. CH. I.] OF THE ORIGIN AND PURPOSE OF PARTNERSHIP. 5 ally seeks for profitable novelties — is far greater here than else- where. And beside this, as any man may be, or try to be, a merchant of any kind in this country, many who are inexperi- enced, and ignorant, and unqualified, engage in business; and as they do not go in the established ways, because they do not know them, they are often getting into difficulties not known elsewhere, and exhibiting new complications, which raise new questions. Nor is this all. If partnership offers important advantages, it also exposes those who enter into it to peculiar liabilities. The safety of society requires this. If every partner were not held * absolutely for the whole amount of all the debts * 5 of the firm, by which soever of the partners they were con- tracted, a wide door would be opened for fraud and public loss. It is, however, a very common thing for persons to try, in a vast variety of ways, to gain all the advantages and profits of part- nership, without encountering these liabilities ; or to escape from these liabilities when loss has accrued. This the law forbids, and, as far as it can, prevents ; and it must therefore be always ready to meet the contrivances, evasions, and dis- guises resorted to by ingenious men. A very large proportion of the many questions under the law of partnership, which are constantly coming before our courts, is of this kind. There seems to be a necessity, therefore, that the law of partnership should have a greater development and precision in this country than elsewhere ; and this seems also to be the fact. The jurisprudence of England appears to have borrowed some- thing from us. And lately parliament has endeavored to intro- duce to some extent our system of Limited Partnership, bor- rowed by us from Continental Europe, and improved. By this we endeavor to facilitate the aggregation of capital, and its em- ployment in business transactions, by affording many of the ad- vantages of partnership, with less than the general liability ; and to guard this privilege by well-devised provisions for the safety of the community. But England, or at least its government, does not seem able as yet fully to adopt this system, although the experience of this country proves its utility and safety. THE LAW OP PARTNERSHIP. [CH. II. CHAPTER 11. WHAT PARTNERSHIP IS, AND HOW IT IS MADE. SECTION I. WHAT PARTNERSHIP IS. We define partnership as the combination by two or more persons of capital, or labor, or skill, for the purpose of business for their common benefit. Considering this as the definition of a partnership, the topics it suggests are : First, the way in which it may be made. Sec- ond, who may be partners. Third, what the partners may bring into the common stock. Fourth, for what purposes a partnership may be formed. SECTION II. HOW PARTNERSHIP MAY BE MADE. There must be a lawful and valid agreement to enter into partnership ; and this contract must be executed. And there- fore courts do not declare persons to be partners under an agreement of partnership, withouf proof that some joint trans- actions have been undertaken in accordance with it, or some joint benefit received, (ft) But a partnership may be made by (a) Metcalf v. Eoyal Exch. Ass. filment of which no partnership will Co., Barnard. 343 ; Heyhoe v. Barge, exist, unless it be waived by the con- 9 C. B. 431 ; West Point Foundry sent of both parties. McGraw v. Pull- Association V. Brown, 3 Edw! Ch. 284 ; ing, 1 Freem. Ch. 357 ; Bird v. Hamil- Atkins V. Hunt, 14 N. H. 205; God- ton. Walker Ch. 361. Where E. dard v. Pratt, 16 Pick. 412. If two or advanced money to W., to enable hina more persons, who agree to enter into to perfect and realize a certain inven- partnership, stipulate each to furnish tion, and W., beside expressly promis- a certain amount of capital, compli- ing to repay the advance, agreed that, ance with this stipulation may be a if the invention should be one of pub- condition precedent, without the ful- lie or private use, W. should have CH. II.] WHAT PARTNERSHIP IS, AND HOW MADE. an agent ; and, if by one not then an agent, a subsequent ratifi- cation makes the partnership effectual, (aa) Not un- frequently in England, and more rarely here, *the con- *7 tract is sealed ; but this can seldom be useful, and is never necessary to its validity. Usually the contract is in writing ; and should always be so, as a matter of reasonable precaution. But writing is not essential to render the general agreement, or any of its details, valid. (6) And though ar- ticles exist, the partnership may be proved by parol, if the ques- • tion is between those who form the firm, and a stranger. (65) Whether a partnership exists is a question of fact ; what a partnership is, is a question of law. (c) Sometimes, although rarely, the question occurs, whether the provisions of a partner- ship come within the requirement of the Statute of Frauds, and must therefore according to some authorities be in writing ; but this may be doubted, (c?) one-tliird of the profits thereof; held, that E. might sue W. for the sum so advanced. Elgie v. Webster, 5 M. & \y. 518. So in Burnell v. Hunt, 5 Jur. 650, where B. was to receive from A., for superintending the latter's manu- factory, half the profits as soon as any accrued, and, till that time, 21. per week. No profits liaving ever arisen, the court held that there could be no partnership before that time. If a man make an agreement for a partner- ship, but expressly reserve for himself for twelve months the option of deter- mining finally whether or not he will be a partner, he is not one until he exercises that option and declares him- self such. Gabriel v. Evill, 9 M. & W. 297. See Chapman v. Wilson, 1 Rob. (Va.) 267; President, Directors, & Co. of the Adams Bank v. Rice, 2 Allen, 480 ; Andrews i". Garstin, 10 C. B. N. s. (100 Eng. Com. L. R.) 444; Lascaridi v. Gurney, 11 C. B. n. s. (103 Eng. Com. L. R.) 890; Moody v. Rathburn, 7 iVlinn. 89 ; Cook v. Car- penter, 34 Vt. 121. Where one per- mits another to buy stock on their joint account, in anticipation of form- ing a partnersiiip, and immediately afterwards repudiates the agreement to become a partner, he is not entitled to any of the property bought, nor are his individual creditors. Rice v. Shu- man, 43 Penn. 87. See, as to what connection in business constitutes a partnership, and the admission of new members, Meaher v. Cox, 37 Ala. 201. {cm) Williams v. Butler, 85 111. 544. (6) The true meaning and applica- tion of this rule is clearly stated by Tindal, C. J., in Fox v. Clifton, 9 Bing. 117. See also Smith v. Tarlton, 2 Barb. Ch. 336. (bb) Anderson v. Clay, 1 Stark. 405 ; Grifiin v. Doe, 12 Ala. 783 ; Widdifield V. Widdifield, 2 Binn. 245; Bonnafie V. Fenner, 6 Smedes & M. 212 ; Allen v. Rostain, 11 S. & R. 362. Otherwise, perhaps, where the question of partner- ship or no partnership arises between the partners themselves. Cutler v. Thomas, 25 Vt. 73. See BuflEum v. Buffum, 49 Me. 108, and Villa v. Jonte, 17 La. Ann. 9. (,■) Gabriel v. Evill, Car. & M. 358 ; Drake v. Elwyn, 1 Caines, 184 ; Beech- am V. Dodd, 3 Marring. (Del.) 485; Doggett V. Jordan, 2 Fla. 541 ; Ever- ett V. Chapman, 6 Conn. 347 ; Terrell V. Richards, 1 Nott & McC. 20. See Dwinell v. Stone, 30 Me. 384. ((/) Vice V. Anson, 7 B. & C. 409; Smith V. Burnham, 3 Sumn. 435. In THE LAW OP PARTNERSHIP. [CH. II. * It becomes more important, and indeed necessary, that the contract should be reduced to writing, in propor- this last case, the plaintiff brought his bill in equity, alleging an agreement of copartnership between himself and the defendant for general business pur- poses, and, among others, for the pur- chase and sale of lands, and praying for a general account of the affairs of the partnership. The existence of the partnership was attempted to be proved only by parol. Held, per Story, J., that a verbal agreement to become interested as partners in the purchase and sale of lands was a parol contract respecting an interest in lands within the Statute of Frauds, and therefore void. So in Henderson v. Hudson, 1 Munf. 510. [And this appears to be the law of Pennsylvania. Lefevre's Ap- peal, 69 Penn. St. 123 ; Ebbart's Appeal, 70 Penn. St. 79.] But in Dale v. Hamil- ton, 5 Hare, 309, a different view would seem to have prevailed. In that case, the bill of the plaintiff, a land agent and surveyor, alleged a parol agree- ment of copartnership with the defend- ants, who were capitalists, for the sole purpose of speculation in lands ; and that, by the terms of their agreement, each of the parties was to be interested one-third in profits and losses. Real estate had confessedly been acquired under some arrangement of this sort, which had since greatly risen in value. The prayer of the plaintiff was, that the affairs of the joint concern might be wound up, the lands sold for the most they would fetch, and the pro- ceeds distributed by the court in ac- cordance with the terms of the said contract. The Vice- Chancellor (after a statement of the question raised) said : " When the proposition was first advanced by the plaintiff, I confess, it appeared to me, that to admit the ar- gument to the extent contended for would be virtually to repeal the Stat- ute of Frauds, or nearly so." But, upon examination of the authorities, he felt himself bound to hold that the plaintiff might first prove by parol the existence of the partnership, as an in- dependent fact, and, tliat being estab- lished, might then show by the same evidence his interest in the lands, con- sidered as the substratum or stock of the partnersiiip. An issue was accord- ingly directed to determine whether such an agreement of copartnership as that alleged in the bill had been made. [See Caddeck v. Simpson, 2 De G. & J. 52.J In Fall River Wlialing Co. v. Bor- den, 10 Cush. 458, where both the above cases are examined, the exist- ence of the copartnership was evi- denced by the books and other written transactions of the parties, and was therefore held to be proved by a memo- randum in writing in compliance with the statute. See Haupf v. Howard, 3 Jones Eq. 440, 445. In Smith v. Tarl- ton, 2 Barb. Ch. 336, an agreement of copartnership to last three years was entered into by parol. Held, that this was not an agreement not to be per- formed within one year within the Statute of Frauds. Tiie object of the partnership was to carry on a certain kind of manufiicture, and with that end to purchase a water privilege and site, and to erect suitable buildings. Held, that the contract of partnership was valid, though made by parol with the design of purchasing real estate for the purposes of the firm, and that such real estate was partnersiiip prop- erty subject to partnership equities. It is held by Ware, J., in the case of In re Warren, Daveis, 320, that a part- nership for buying and selling lands may be proved by the same evidence as a partnership for ordinary mercan- tile business, so far as third persons are involved. The result of the cases, as well as of true reasoning upon the question, would seem to be tliat of the Vice-Chancellor in Dale v. Hamilton, supra. See Julio v. Ingalls, 1 Allen, 41; Storer v. Flack, 41 Barb. 162; Jones V. McMichael, 12 Rich Law (S. C), 176. [Chester v. Dickerson, 54 N. Y. 1 ; Sherwood v. St. Paul R. R. Co., 21 Minn. 127 ; Scruggs v. Russell, CH. II.] WHAT PARTNERSHIP IS, AND HOW MADE. 9 tion as it is composed of many articles, and provides in detail for the transaction of the business of the firm, or for the riglits and duties of the partners. Of the effect and construction of written articles we shall speak particularly hereafter, (e) Partnership may be formed not only by express agreement, but may grow out of transactions or relations in which the word " partnership " is not uttered. If there is such a joinder of interests and action as the law considers as the equivalent of partnership, or * rather, such as it re- *9 gards as constituting partnership, it will give to the persons engaged in it all the rights, and lay upon them all the responsibilities, and give to third parties dealing with them all the remedies, which belong to partnership. Of this we shall treat somewhat in the chapter on the rights and obligations of partners between themselves, but more in that upon their obli- gations to third parties. (/) That the contract may be legal, it must be formed for a legal purpose. (^) It is obvious that the law — through the courts — cannot protect or enforce what the law forbids. (A) McCahon (Kan.), 39; York f. Clemens, Geo. 3, ch. 99, regulating tlie pawn- 41 Iowa, 95] brokers' trade. See Armstrong v. (e) Ch. 7, § 7. Lewis, 2 C. & M. 274 ; Armstrong, (/) Ciis. 5,6. V. Armstrong, 2 Mylne & K, 45; (g) Tlie English law has at different Garden v. Slowden, 12 Clark & F. 237. periods laid various restrictions upon There have also been certain restric- the formation of partnerships, some tive statutes, which have been passed designed to secure monopolies to one rather to protect the revenue of the or several large incorporated corapa- realm than to afford security to the nies, and which have since been re- public. Hence it is held, in several pealed or greatly modified, while others cases, that, though a partnership be have aimed at the more laudable ob- formed in disregard of the provisions ject of protecting the public from the of these statutes, yet such infringe- combinations and the delusive schemes ment will not deprive the partnership of speculators. Thus tlie statute of of the right to recover upon their con- 6 Anne, ch. 22, § 9, made it unlawful tracts with third persons. Hodgson for a partnership of more than six v. Temple, 5 Taunt. 181 ; Johnson v. persons, other than the Bank of Eng- Hudson, 11 East, 180; Brown v. Dun- land, to carr}' on banking business, can, 5 B. & C. 93. By 6 Geo. 1, ch. 18, § 12, partnerships (h) A distinction was formerly made were forbidden to engage in the busi- between contracts of partnersiiip for ness of marine insurance, or to make objects which are mala in se, and those loans upon bottomrj\ In like manner, for objects which are only mula prohib- by 28 Geo. 3, ch. 53, § 2, partnersliips ita. It was held that contracts arising of more than five persons for trading out of the transactions of a partner- in lands are made illegal. See further ship, formed for purposes which were 6 Geo. 1, ch. 18, § 18; also, 39 & 40 inhibited by positive statute merely, 10 THE LAW OP PARTNERSHIP. [CH. II. * 10 Hence a partnership * would be deemed void because illegal, not only if it contemplated a business which the might be recognized and enforced by the courts, if they were one step re- moved from the illegal contract itself. Ex parte Balmer, 13 Ves. 313. Thus, in Faikney i\ Reynous, 4 Burr. 2069, the action was debt upon a bond. The defendant pleaded an act of par- liament " to prevent the infamous practice of stock-jobbing ; " that the plaintiff and one Richardson were partners ; that in the partnership busi- ness the plaintiff had paid out large sums, contrary to the provisions of the said statute ; and that the bond in suit was given to secure to the plaintiff the repayment from Richardson of a moiety of such illegal expenditure. Demurrer joined. Ld. Mansfield : " The offence relied upon as furnish- ing a ground of defence ... is not malum in se ; 'tis only prohibited by this act of parliament." The other judges observed, " that paying money to compound these differences was not a malum in se, but only stood prohibited by this act ; which neither says nor means to invalidate all securities relat- ing to it : it only prohibits paying or receiving money for compounding dif- ferences." Per Cur., unanimously, judgment for plaintiff. Upon the au- thority of this case, a similar decision was made in Petrie v. Hannay, 3 T. R. 418; and in Watts v. Brook, 3 Ves. 612. The Lord Chancellor, upon the same ground, sustained a bill for an account between partners engaged, contrary to act of parliament, in the business of marine insurance. See also Berkshire v. Evans, 4 Leigh, 223. But these cases were in conflict with previous aj3judication, and cannot be regarded as decided upon sound prin- ciples. Sullivan v. Greaves, Park on Ins. 8. In Bensley v. Bignold, 5 B. & Aid. 335, Best, J., says : " The distinc- tion between jnala prohihita and 7nala in se has been long since exploded. It was not founded upon any sound prin- ciple ; for it is equallj^ unfit that a man should be allowed to take advantage of what the law says he ought not to do, whether the thing be proliibited because it is against good morals, or wliether it be prohibited because it is against the interests of the state." Mitchell V. Cockburne, 2 H. Bl. 379 ; Aubert v. Maze, 2 Bos. & Pul. 371 ;. Ewing I'. Osbaldistone, 2 My. & Cr. 53. See also Cannan v. Bryce, 3 B. & Aid. 179 ; Steers v. Lashley, 6 T. R. 61 ; Brown v. Turner, 7 id. 630; Webb v. Brooke, 3 Taunt. 6 ; Simpson v. Bloss, 1 Taunt. 246 ; Ottley r. Browne, 1 Ball & B. 360; Ex parte Randleson, 1 Mont. & M'A. 36, and cases cited. Compare with these cases Sharp v. Taylor, 2 PhiUips, 801. Nor will the courts any more sustain an action brought in revocation and disaffirmance of an il- legal contract of partnership. Booth V. Hodgson, 6 T. R. 405 ; Ex parte Bell, 1 M. & S. 751. But though equity will not sustain a bill for an account of illegal partnership transac- tions, yet, if a part of the business of the partnership be legal and a part illegal, an account of that which is legal may be directed ; as where the business of a firm was that of brokers and underwriters, the court dismissed so much of the bill as sought for an account of the profits of the under- writing business, but decreed an ac- count of the other business. Knowles V. Haughton, 11 Ves. 168. Where the business of pawnbrokers was car- ried on by two persons under a deed of partnership, but under the apparent conduct and in the name of one, and he only was licensed, semhle, tiiat al- though the parties might have made themselves liable to the penalties im- posed by 39 & 40 Geo. 3, ch. 99, yet that, it being no part of the contract to carry on the partnership in such a manner as to contravene the law, the contract was not void ; but that, had a collateral agreement to carry on the partnership, in violation of the act of parliament, been proved, no rights could have been acquired under it by eitiier party. Armstrong v. Lewis, 2 Cromp. & M. 274. CH. II,] WHAT PARTNERSHIP IS, AND HOW MADE. 11 law expressly prohibits, as smuggling, gambling, making coun- terfeit bills or false coin to be used at home, or stealing, but also if it were formed for a purpose distinctly opposed to the principles or policy of the law ; as, to procure the election of persons to office, or the success of a political party, or for mar- riage brokerage, (f) Whether our courts would take notice, in this way, of a breach of a foreign law, has not been, so far as we know, determined by adjudication. If, for example, a * partnership were formed in New York to make coun- * 11 terfeit Bank of England notes, to be used only in Eng- land, or false coin to be exported to the "West Indies, it may be a question whether our courts would sanction such a partner- ship. We are of opinion they should not ; and, perhaps, that they would not. This may well be doubted, however ; for it seems to be well established, both in England and in this coun- try, that the courts will take notice of no violation of law at home, excepting of the law of the country to which the tribunal belongs. This rule grew, in many of its applications at least, out of the unwillingness of the English courts to interfere with the very profitable trade which Englishmen have sometimes carried on with foreign nations, in violation of the municipal law of those nations. The law of Shipping and the law of Insurance have many instances in which this rule is in force ; and it seems now to be adopted in this country, (/) ((') M., an agent and officer of the Lever r. Fletcher, cited in Park on government, contracted with B. for Ins. 507 ; Boucher v. Lawson, Cas. the rebuilding of Fort Washington, temp. Hardw. 183; Holman v. John- and stipulated for a share in the profits son, Cowp. 341 ; Pellecat v. Angell, of the undertaking. The frauds upon 2 Cromp., M. & R. 311 ; Sharp v. Tay- the government, by which the ex- lor, 2 Phillips, 801 ; Gardiner v. Smith, pected profits, in part at least, were to 1 Johns. Cas. 141 ; Richardson v. be gained, were detected and pre- Marine Ins. Co., G Mass. 102; Parker vented. B. filed a bill in equity to v. Jones, 13 id. 173; Andrews v. Es- compel an alleged partner in the trans- sex F. & M. Ins. Co., 3 Mason, 6 ; action to account for his share of the Archibald v. Mercantile Ins. Co., 3 loss sustained in the execution of the Pick. 70. The rule, as now understood contract. Baldwin, J. : " To state and applied, was first definitely settled such a case is to decide it. Public by Lord Mansfield. It has ever since morals, public justice, and the well- been invariably followed by the Eng- established principles of all judicial lish judges, and, as we have seen, is tribunals, alike forbid the interposition firmly established in this country, of courts of justice to lend their aid to But its morality has been often and purposes Hke this." Bartle v. Cole- gravely questioned. Of the Conti- man, 4 Pet. 184. nental writers, Valin, Emerigon, and {j) Planche v. Fletcher, Doug. 251 ; Pardessus, admitting the existence of 12 THE LAW OF PARTNERSHIP. [CH. II. The contract of partnership must be voluntary ; that is, all the partners must consent and agree to it. This is so essential, that no person can be introduced into a firm without the con- sent of all who are members of it. (^) This consent * 12 may be * implied ; (/) and even if one or more members were reluctant, and made objections, and never expressly gave their assent, still it might be inferred from their acts, if the rule, justify it only on the ground of tl'.e concurrent usage of nations, while Pothier, on strictly moral grounds, pointedly condemns it. 2 Valin, 128, note; 1 Emerigon, 210- 215; Pardessus, Cours de Droit Com., torn. Ill, art. 792; Pothier, Traite' d'Assurance, No. 58. The English law-writers are divided on the ques- tion. Miller, Park, and Arnould openly or tacitly sustain the morality of the English doctrine. On the other hand, Marshall and Chitty adopt and sup- port the views of Pothier. Miller on Ins. 23 ; Park on Ins. 236 ; Arnould on Ins. TOG, 707; 1 Marshall on Ins. 50, 61 ; 1 Chitty on Com. Law, 82, 84. Chancellor Kent speaks of the rule as one " which does no credit to the com- mercial jurisprudence of the age ; " and Mr. Justice Story says, " An en- lightened policy, founded upon nation- al justice as well as national interest, would seem to favor the opinion of Pothier in all cases, where practical legislation has not adopted the princi- ple as a retaliation upon the narrow and exclusive revenue system of another nation." 3 Kent. Com. 265 ; Story, Confl. of Laws, § 257. (k) Ex parte Barrow, 2 Rose, 255 ; Kingman v. Spurr, 7 Pick. 235 ; Mur- ray V. Bogert, 14 Johns. 318 ; Channel V. Fassit, 16 Ohio, 166; Moddewell V. Keever, 8 Watts & S. 63 ; NicoU v. Mumford, 4 Johns. Ch. 522. [Partner- ships inter sese can only be formed by the contract of the parties. Freeman V. Bloomfield, 43 Mo. 391 ; Metcalf v. Redmon, 43 III. 264.] See Brown v. De Tastet, Jacob, 284 ; Bray v. Fro- mont, 6 Madd. 5 ; Mathewson v. Clark, 6 How. 122; Goddard v. Hodges, 1 Cromp. & M. 33. Upon this principle of dilectus persona, neither the repre- sentatives of a deceased partner, nor the assignees of one bankrupt, become partners with the surviving or solvent partners, but are simply entitled to an account. Pearce v. Chamberlin, 2 Ves. 33 ; Marquand v. N. Y. Man. Co., 17 Johns. 525 ; Griswold v. Waddirtg- ton, 15 id. 82. In the civil law, the doctrine was even carried to the length of making null and void stipulations in the articles of association that heirs or representatives should themselves be partners. Otherwise in the English and American law. See post [p. * 159]. (/) Mason v. Connell, 1 Whart. 381, The question in this case was, whether the firm of A. & B. was partner with C. The evidence offered on this point was a written agreement of copartner- ship to which was signed the name of C, and also the name of the firm of A. & B., in the handwriting of A. Held, that engaging the firm in such a part- nership was out of the ordinary com- mercial transactions, and was therefore presumed to be without the scope of one partner's authority. But, though the consent of each partner was absolutely necessary to constitute a partnership, yet that such consent might be testified in exjiress terms, or the assent might be tacit, or to be implied solely from the acts and conduct of the parties. [Gen- eral reputation is not evidence of part- nership, Campbell v. Hastings, 29 Ark. 512; Bowen v. Rutherford, 60 111.41; or of its dissolution. Pitcher v. Bar- rows, 17 Pick. (Mass.) 361 ; nor are the admissions of an alleged partner, till shown uliimde to be a partner. Cross V. Langley, 50 Ala. 8 ; Converse v. Shan- baugh, 4 Neb. 376 ; Allcott v. Strong, 9 Cush. (Mass.) 31 ; Tumlin v. Gold- smith, 40 Ga. 221 ; Southwick v. McGov- ern, 28 III. 533. See also post, p. * 195.] CH. II.] WHAT PARTNERSHIP IS, AND HOW MADE. 13 the alleged partner or partners were treated by the other partners and in their transactions as only a partner could be or should be treated. (^/) Still there must be this consent; and we shall presently see that if a partner sells out all his interest in a firm to a third person, and expressly agrees with him that he shall take the seller's place in the partnership, this will not make him a partner, unless the other partners receive him as such, (m) If the articles of the copartnership provided, somewhat in the way those of joint-stock companies do, that a copartner might, in a certain way, and upon certain terms, transfer all his inter- est and rights in the company to a third person, who should, by force of the transfer, become a copartner in the transferrer's stead, a court of equity generally would, and a court of law might, so far recognize the force of this provision as to hold such transferee partner at once, (n) It is certain, however, that a mere agreement to admit a new member into a partner- ship, like an agreement to form a partnership, (o) however expressed, and on whatever consideration, would not of itself invest any person or persons with the * character * 13 of partners, although the breach of it might give an action for damages. ( jo) For sufficient reason equity will decree specific performance of articles agreed on ; but only where the partnership is for a definite period, or such decree is necessary to invest one of the partners with legal rights which he could not otherwise pos- sess. ( pp') Whatever be the evidence offered to prove a partnership, it is said that parties denying it cannot give evidence of private conversation or correspondence to rebut that evidence. ( ppjo) (//) Pierce r. Whitley, 39 Ala. 172. Scott, 89; Byrd v. Fox, 8 Mo. 574. (m) Seech. 7, § 1. See ch. 8, §2. (n) Fox f. CHfton, 9Blng. 115. See {pp) Whitworth ('.Harris, 40 Miss. Kingman v. Spurr, 7 Pick. 236; Al- 483 ; Freeman v. Smith, 2 Wallace, 160; vord V. Smith, 5 id. 232 ; Cochran v. Buxton v. Lister, 3 Atk. .383 ; Anony- Perry, 8 Watts & S. 262. See also post, mous, 2 Ves. 629, 630 ; Birchctt v. Bol- ch. 7, § 1. ling, 5 Munf. 442 ; Hibbert v. llibbert ; (o) Wilson V. Campbell, 5 Oilman, CoUyer on Part. § 203. See jiost, ch. 383 ; Howell v. Brodie, 6 Bing. N.C. 44. 7, § 7. {p) Figes V. Cutler, 3 Stark. 139; (ppp) Freeman i;. Smith, 2 Wallace, M'Neill V. Reid, 9 Bing. 68, 2 Moore & 160. 14 THE LAW OF PARTNERSHIP. [CH. II. We shall hereafter see that, in reference to transfer and to incoming partners, the courts pay great respect to that " dilec- tus personarum,'^ by which partners, who are so much in the power of each other, may protect themselves from the danger of having that power pass into hands to whom they would not willingly intrust it. (g) Every contract that is vitiated by fraud, or by coercion, is thereby avoided and annulled. This is certainly true of the contract of partnership ; and, from the peculiar character of the relation of partners, and of their almost unrestricted capac- ity to do each other an injury, it may be thought that courts would be peculiarly watchful to require that this contract was formed deliberately and freely, and without deception or undue or wrongful influence, (r) So, too, that the contract of partnership may be lawful, it must be made by competent parties ; that is, by those who have a legal right to enter into it. And we shall hereafter see that competency to enter into partnership is almost or quite coex- tensive with a competency to transact business generally. (&•) It is sometimes important to determine when a partnership begins. Usually, this is determined by the contract of partner- ship. If not, it would probably be held as presumption of law that it began when the written articles were executed. (^) But even if in the contract of partnership it were expressly stipu- lated that it should have a retrospective effect, and that the partnership should begin a certain time before the date, it might bind the parties to it, for some purposes at least ; * 14 but could not make them * partners at the time stipu- lated, in reference to third parties, except from the date, (w) (q) See ch. 7, § 1. 38; Austin v. Williams, id. 282 ; Grant (r) TattersalU'. Groote, 2Bos. &Pul. v. Watts, 10 Paige, 82; Ingraliam v. 131 ; Ex parte Broome, 1 Rose, 69 ; Foster, 31 Ala. 123 ; Beaman v. Whit- Green V. Barrett, 1 Sim. 45 ; Pillans v. ney, 20 Me. 413. Harkness, CoUes P. C. 442; Ilynes (m) Thus, where A. & B., who were V. Stewart, 10 B. Mon. 429 ; Howell v. already in partnership, agreed on the Harvey, 5 Ark. 270 ; Fogg v. Johnston, 24th of June to become partners with 27 Ala. 432. See post, ch. 14, sub- C, and it was farther agreed that the section 1. new partnership should be considered (s) See ch. 3. as commencing from the 18th of May (t) Howell V. Brodie, 6 Bing. N. C. preceding ; held, that C. was not liable 108 ; Aspinwall v. Williams, 1 Ohio, as a partner upon a bill of exchange CH. II.] WHAT PARTNERSHIP IS, AND HOW MADE. 15 If the agreement of copartnership is executory and condi- tional, no partnership is created by it until all the conditions are fulfilled, (v) In one case, in which the partnership was unlawful if entered upon on the day of the date of the articles, and lawful if it be- gan three months afterward, the court held it to be an absolute presumption of law that it began on the day of the date, although nothing in the articles specially indicated it. And the court refused evidence that the bargain and intention of the parties was not to enter upon the partnership until it should be legal. This case we do not think law ; altliough it would be proper to exclude evidence which contradicted an express provi- sion. (^^) Where the partnership was not formed by any express agree- ment, written or oral, but implied by law from certain joint transactions, it would be held to begin when these transactions took place, or perhaps when the agreement to enter into them was formed. (:f) Thus, if there were such a joint buying indorsed by the firm of A. & B. upon the 19th of May. Vera v. Asliby, 10 B. & C. 288 ; Wilsford v. Wood, 1 Esp. 182. See Dyke v. Brewer, 2 Car. & K. 828. On the other hand, if A., B., and C. agree to enter into partnership on the 1st of January, and from that time regard themselves as partners, the partnership will be held to have commenced on that day, though the deed of partnership be not executed till the 18th of January. Battley v. Bailey, 1 Scott N. R. 143. (v) Fox V. Clifton, 6 Bing. 776; Dickinson v. Valpy, 10 B. & C. 128 ; Murray r. Richards, 1 Wend. 58. See further Ward v. Thompson, 1 Newb. Adni. 95; Bisset on Part., part 2d, ch. 6 ; Story on Part. § 150 ; Avery v. Louve, 1 La. Ann. 457 ; ]>ost, ch. 18. See Peck v. Thomas, 29 Eng. L. & Eq. 276. {w) Williams v. Jones, 5 B. & C. 108. See Dix v. Otis, 5 Pick. 88 ; Vassar v. Camp, 14 Barb. 35G ; Bird v. Hamilton, Walker Ch. 361. In this last case the contract of partnership was exe- cuted the IGth of May. The language imputed a partnership in prcesenti. But, inasmuch as the business of the part- nership could not be entered upon until the 1st of July, the court, regard- ing the situation of the parties, con- strued the partnership not to commence until that time. (.r) Gardiner v. Childs, 8 Car. & P. 345. The firm, C. & D., defendants, were printers. The present action was brought to recover of them the price of a certain amount, of paper delivered to them by the plaintiffs, but at the order and upon the credit of the firm of A. & B., publishers. The plaintiffs, to prove the existence of a partnership between the defendants and A. & B. in certain pubhcations for which the paper was furnished and used, put in evidence accounts be- tween the two firms, determining their respective shares of the profits accru- ing from such publications. These accounts bore dates from January, 1836, to February, 1837. Tlie impcr was supplied in April and May, 1836. Upon this state of tacts, Ed. Denman, C. J., left it to the jury to say whether, at the time the goods in question were furnished, the defendants were partners 16 THE LAW OP PARTNERSHIP. [CH. II. * 15 of property * with the intention of joint selling, as would make the parties partners in law as to their prop- erty or business, they would be partners, not only when the thing was bought, but they might become partners as to this purchase by their agreement to join and act, although no re- sponsibilities as partners would rest upon them until something was done to carry the agreement into effect. It may be well to remark, in this connection, that courts of common law cannot take cognizance of a large proportion of the cases which arise under the law of partnership. Nearly all of those which relate to the rights and obligations of partners inter se go into a court of equity. We shall hereafter see that one partner can sue another at law only in a few exceptional cases. And when the settlement of the affairs of a partnership is required, or the taking of an account, or the prevention or discontinuance of some wrongful act, or the protection or en- forcement of a right by other means than damages for a breach of it, the parties necessarily resort to equity. Hence there is certainly no branch of commercial law (to which partnership emphatically belongs) that so often finds the common-law ju- risdiction inadequate to its wants, and is therefore obliged to resort to equity for relief. As we go on, we shall endeavor to point out specifically, in reference to the various questions and conflicting claims which are frequently springing up under the law of partnership, the methods and measures of relief which equity administers. in the concern upon whose credit they the plaintiffs. See Avery v. Louve, 1 were supplied. The jury finding that La. Ann. 457. they were, judgment was rendered for CH. III.] PARTNERS. 17 CHAPTER III. OF PARTNERS. SECTION I. WHO MAY BE PARTNERS. There is nothing in this country to prevent any number of persons from entering into partnership. Nothing but their own convenience and pleasure determine this, (a) As to personal competency, it may be said that any persons competent in law and in fact to transact ordinary business on their own account may enter into partnership for that purpose. For there is nothing in the status of partnership, which, on the one hand, confers a power to transact business on one who otherwise would have no power, or, on the other, restrains or diminishes the power in him who possesses it before or without partnership. We have said competent in law and in fact, because there are incompetencies created by the law, or absolutely presumed, without any reference to the actual fact. (6) As in the (a) But now, in England, by " The 3, ch. 99, § 3, rendered all spiritual Companies Act " of 25 & 26 Vict, persons incompetent in law to carry 1862, consolidating and amending on, by themselves or their agents, former acts upon the subject, no part- " any trade or dealing for gain or nership consisting of more than twenty profit," and of course thereby inter- persons, which has for its object the dieted such persons from being partners acquisition of gain, is allowed to carry for that purpose. Hall v. Franklin, 3 on business, without forming a company M. & W. 259. See 102 Vict. ch. 10. by registration ; and under the pro- So also the law sometimes renders all visions of this act any seven or more persons who have not been qualified in persons may so associate, with or a prescribed legal way, incompetent without limited liability, as they may to exercise particular trades or pro- elect and declare. This is the nearest fessions. Thus, by 5 Eliz. ch. 4, per- approach to our system of limited sons were prohibited from following partnership that has yet been made by any manual art or occupation, who the legislation of that country. had not previously served an appren- (6) In England, the statute 57 Geo. ticeship to the same. But one who, 18 THE LAW OF PARTNERSHIP. [CH. III. * 17 case of an * infant, who cannot lawfully do, the day be- fore he is twenty-one, what he may do on that day. So a married woman is disabled at common law, althougli in fact she may have far greater business capacity than her husband. The recent changes in the law of married women, which in some of our States seem to give her all, or very nearly all, the rights and powers of a single woman, may extend to the right of becoming a partner in a trading firm ; but we know no case in which this question is decided. An insane person is disabled by the fact of his insanity. And whether insanity exists, and in a sufficient degree to have this effect, must be a question of fact only. And some difficulty, to say no more, would attend the entering into a copartnership of a corporation as a member of the firm, (c) We will, however, look at some of these ques- tions more specifically. 1. Infants. Infants are persons under twenty-one years of age ; and, for their own benefit and safety, the law considers them disqualified for the transaction of business. Their contracts or promises though he had not been apprenticed, was a partner witli a brewer, was held not within the statute, since lie had not acted in nor personally exercised the trade. Keynard v. Chase, 2 Wils. 40. See 22 Geo 2, ch. 46, § 11, an act to prevent unqualified persons from acting as attorneys or solicitors. In re Jackson, 1 B. & C. 270 ; In re Clark, 3 D. & R. 260 ; Hopkinson v. Smith, 1 Bing. 13 ; Candler v. Candler, Jac. 225; Sterry v. Clifton, 9 C. B. 110; Taylor v. Glassbrook, 3 Stark. 76. In GilfiUan v. Henderson, 2 Clark & F. 1, two solicitors had entered into partner- ship, one of whom could practise only in a superior court, the other only in an inferior court. By their agreement the profits of their general business were to be divided; each was to recom- mend clients to the other, and the ex- istence of the partnership was to be kept secret. Held, that the agreement was illegal and void. See In re Wood- ward, 4 Johns. 289. (c) As the whole power of a corpo- ration is derived from its charter, it may well be questioned whether it could enter into a partnership for the transaction of a business different from the object for which it was char- tered. And it seems that two or more corporations cannot consolidate their funds, or form a partnership, unless authorized by express grant, or neces- sary imj)lication. Sharon Coal Co. v. Fulton Bank, 7 Wend. 412. It is a different question, whether a corpora- tion may not render itself liable to third parties as a quasi partner, by its acts ; and we know of no reason why this might not be the case. The sub- ject was before the court in Holmes v. Old Colony R. II. Co., 5 Gray, 58 ; but, as the acts of the corporation were held not sufficient to constitute a part- nership liability as to third parties, there was no direct decision upon the question whether a corporation could be held as partner. CH. III.] PARTNERS. 19 for necessaries — such as slielter, food, raiment, and such other means of support and education as are proper for them — are valid and obligatory, because it is for their interest that they should be able to l)ind themselves for the things they must have, or suffer from the want of them. But the promise of an infant in * any business transaction is voidable by * 18 him ; because it is not necessary that he should earn money by buying and selling, (dl) The promise is voidable only (if made by an infant mentally and physically able to make it), and not, we think, in any case absolutely void, as it used to be called, (e) For any such (d) 1 Rol. Abr. 729; Whittingham V. Hill, Cro. Jac. 494; Whywall v. Champion, 2 Stra. 1083 ; Dilk v. Keigh- ley, 2 Esp. 480; Goode v. Harrison, 5 B. & Aid. 147 ; Van Winkle v. Ketcli- um, 3 Caines, 823 ; Smith i'. Mayo, 9 Mass. 62 ; Mason v. Wright, 13 Mete. 306 ; Crabtree v. May, 1 B. Mon. 289. The contract of partnership is like all other mercantile cq^itracts, and may be made by an intant for his own benefit, subject to his right to avoid it when he comes of age. Ibid. ; Glossop V. Colman, 1 Stark. 25. Hence, an infant may be a partner in a mercan- tile house, his father supplying the capital ; and if the transaction be a bond Jide one, and the son be the real party in interest, and the father retain no power of withdrawing from the firm either the capital or the profits, an agreement tliat the firm shall ac- count to the father as trustee for his son, for one-third profit of his son's capital, or any loss that may accrue, and be governed by his advice in all business matters, will not make the father a partner. Barklie v. Scott, 1 Hud. & Bro. 83. But, though an infant coming of age may avoid his contract, he cannot recover, of persons who have dealt with the partnership, money expended by him in its afiairs, for which he has received and enjoyed a valuable consideration. Holmes v. Blogg, 8 Taunt. 508. But where A., an infant, made an agreement of co- partnership with B., and paid to him a hundred pounds, to be forfeited if, when he came of age, the partnership deed was not duly executed by him, the jury finding that A. had paid the monej- on a fraudulent representation in B.'s balance sheet. A., attaining his majority and disaffirming the contract, was allowed to recover back the de- posit. Corpe v. Overton, 10 Bing. 2-52. This last case differs from Holmes v. Blogg in many important features. The court, however, distinguish it from that case only upon the ground, that in the one the infant had, and in the other he had not, enjoyed a valu- able consideration for the money he sought to recover back. (e) The doctrine of the common law, that there are some contracts of an infant, namely, those which the courts can pronounce to be to his prejudice, which are absolutely void, is recognized and asserted in a very great number of cases. Keane v. Boy- cott, 2 H. Bl. 511; Bayley, J., in Thornton v. lUingworth, 2 B. & C. 826; Fisher v. Mowbray, 8 East, 330; Baylis v. Dineley, 3 M. & S. 477; Tucker v. Moreland, 10 Pet. 58 ; Vent V. Osgood, 19 Pick. 572; Lawson v. Lovejoy, 8 Greenl. 405 ; Rogers v. Hurd, 4 Day, 57 ; Fool v. Pratt, 1 D. Chip. 252; McGaw v. Marshall, 7 Humph. 121 ; M'Minn v. Kichmonds, 6 Yerg. 9 ; M'Crillis v. How, 3 N. H. 348 ; Swasey v. Vanderheyden, 10 Johns. 33 ; United States v. Bain- bridge, 1 Mason, 71 ; Fridge v. The 20 THE LAW OF PARTNERSHIP. [CH. III. promise of an infant may be ratified by him after he is of full age. And this ratification may be direct and express, * 19 or it may be implied by * his acts, or even his silence, or inferred by law from circnmstances. In England, no ratification, after full age, binds an infant, unless made in writing and signed by him. (/) A similar statute exists in Maine. (//) It is not quite certain how this requirement would affect a ratification by a continuance of the partnership and business. If, for example, a young man of the age of twenty entered into a partnership, and at twenty-one took no notice of his having been an infant, but continued in the partnership and in the same business for a year or two more, and tlie firm was tlien called on to settle an account running through all these years, we doubt whether, under this statute, the infant would be permitted to draw a line between the items, and hold him- self responsible only for those which were subsequent to his majority. In this country generally, one who was an infant may not only ratify after coming of age any promise to which there is no other objection than the fact of the previous infancy, but may ratify this by any conduct of an unequivocal character, which must be understood either as a ratification, or else as fraud or as gross negligence on his part. (Ji) But a mere State, 3 Gill & J. 103; Ridgeley v. Crandall, 4 Md. 435 ; Cronise v. Clark, 4 M(l. Ch. 403. But the doctrine of the text seems more sound in principle and more practical of application, and is supported by the later authorities. Williams v. Moor, 11 M. & W. 256; Fonda v. Van Home, 15 Wend. 631 ; Brockenbridge v. Ormsby, 1 J. J. Marsh. 236 ; Scott v. Buchanan, 11 Humph. 468 ; Cunimings v. Powell, 8 Texas, 80 ; Cole v. Pennoyer, 14 111. 158; Rob- bins V. Cutler, 6 Foster, 173 ; Weaver i;. Jones, 24 Ala. 420 ; Hardy v. Wa- ters, 38 Me. 450 ; Ferguson v. Bell, 17 Mo. 347 ; Strain v. Wright, 7 Ga. 568; 1 Am. Lead. Cas. 103; Taft V. Sergeant, 18 Barb. .320. (/) y Geo. 4, ch. 14, § 5. In the construction of this statute, it has been held that " any written instru- ment signed by the party, which, in the case of adults, would have amounted to the adoption of the act of a party acting as agent, will, in the case of an infant who has attained his m.ajority, amount to a ratification." Harris v. Wall, I Exch. 122. See Mawson v. Blane, 10 Exch. 206. In Hartley v. Wharton, II A. & E. 934, the writing by which the ratification was alleged to be made was a letter, without date or address, containing a promise to remit within a short time, but mentioning no sum nor any particular debt. Held, nevertheless, that this was a ratification which satis- fied the statute, and that the date, ad- dress, and debt might be proved by parol. (fj) Acts of Maine, 1845, ch. 166. See Thurlow v. Gilmore, 40 Me. 378. (h) Martin v. Mayo, 10 Mass. 137; Whitney v. Dutch, 14 id. 457 ; Pierce V. Tobey, 5 Mete. 168 ; Orvis v. Kimball, 3 N. H.314; Aldrich v. Grimes, 10 N. H. 194 ; Bobbins v. Eaton, id. 561 ; Edgerly v. Shaw, 5 Foster, 514 ; Boy- CH. III.] PARTNERS. 21 acknowledgment that the de))t exists is not of itself a ratifica- tion of a promise to pay tlie debt. (^') * If we suppose that an infant enters into a partner- * 20 ship, liolding liimself out by his declarations, or by the plain indication of circumstances, as an adult, and, after he comes of age, does not expressly withdraw or give any equiva- lent notice, persons dealing with the firm in the belief that the former infant was still a partner would hold him liable ; be- cause, whether he was a partner or not, he permitted the firm to use his credit, and he, and not an innocent third party, must suffer the consequences, (y) In general, an infant partner who comes of age, should, with no unnecessary delay, leave the firm, and declare himself not responsible for its debts, if he intends to take that course ; for any considerable delay would bind him like a ratification, be- cause it could be accounted for only by criminal neglect or fraud. (A;) den V. Boyden, 9 id. 519 ; Delano r. Blake, 11 Wend. 85 ; Bigelow v. Gran- nis, 2 Hill (N. Y.), 120; Taft v. Ser- geant, 18 Barb. 320; Lavvson v. Love- joy, 8 Greenl. 405 ; Richardson v. Bright, 9 Vt. 368 ; Best v. Givens, 3 B. Mon. 72; Cheshire v. Barrett, 4 McCord, 241 ; Bobo v. Hansell, 2 Bai- ley, 114 ; Eubanks v. Peak, id. 497 ; Alexander v. Heriot, Bailey Eq. 223 ; Thomasson v. Boyd, 13 Ala. 419; Forsyth v. Hastings, 27 Vt. 646. {i) Thrupp V. Wilder, 2 Esp. 628; Goodsell V. Myers, 3 Wend. 479 ; Mil- lard V. Hewlett, 19 id. 301; Smith v. Mayo, 9 Mass. 62 ; Ford v. Phillips, 1 Pick. 202 ; Thompson r. Lay, 4 Esp. 48 ; Benham v. Bishop, 9 Conn. 330 ; Wilcox V. Eoath, 12 id. 550; Hale v. Gerish, 8 N. H. 374; Robbins v. Eaton, 10 id. 561 ; Ordinary v. Wherry, 1 Bailey, 28 ; Alexander v. Hutcheson, 2 Hawkes, 535; Hindy v. Margarity, 8 Barr, 428. (j) Goode V. Harrison, 5 B. & Aid. 147. Goode & Bennion, defendants below, had held themselves out as general partners in trade, especially by a joint purchase of goods of the plaintiff in April, 1818. At that time Bennion was an infant, though that fact was unknown to the plaintiff. There was evidence showing tliat Ben- nion did not intend to be a partner with Goode, except for the single transaction of April, 1818, and that he did not afterwards interfere with Goode's general business. In May following, he became of age ; but no notice of his having ceased to be a partner was ever given by him. Sub- sequently to his coming of age, Goode bought more goods of Harrison in the name of the firm, and accepted a bill for them in the name of himself and Bennion. Held, that Bennion was liable on this bill ; for, having shortly before he came of age represented himself as a partner, it was his duty to notify the plaintiff that he was not so, when he came of age, as otherwise he facilitated the commission of a fraud upon the plaintiff. (k) See Holmes v. Blogg, 8 Taunt. 35; 1 J. B. Moore, 466. In March, 1816, the firm of A. & B. leased cer- tain premises, for the purposes of their trade. A., an infant, in the presence of B., advanced one-half of the amount of the rent. For the other half, three 22 THE LAW OF PARTNERSHIP. [CH. III. * 21 * It may be well to remark that the right of an infant to avoid his contract gives no right of avoidance what- bills were drawn upon the firm, and aecei)ted bj' A., in tlie names of }nm- self and partner, the first bill payable in four months. In June, A. reached his majority, and immediately dis- solved the partnership ; but, though his name was taken from the door shortly afterwards, no notice was given of his avoidance of the lease till nearly four months afterwards. Dallas, J., said : " I agree that in every instance of a contract, voidable only by an infant on coming of age, the infant is bound to give notice of disaf- firmance of such contract in reasonable time ; and, if the case before the court were that simple case, I should be disposed to hold, that, as the infant liad not given express notice of dis- affirmance within four months, he had not given notice of disaffirmance in reasonable time." But it seems that notice of disafl[irmance of an infant's contract may be dispensed with by the acts of the party to whom it would otherwise be due. The lessor, in this case, having, after the dissolution of the partnership, made a new arrange- ment with B., A.'s copartner, by which a part of the rent was remitted, and having, when the first bill became due, sued B. alone upon it, and having afterwards compromised the action and accepted from B. alone a sur- render of the lease, and cancelled the other bills, all this without the privity of A., it was held, that there should be a new trial, in order that the jury might determine whether, upon these facts, notice of disaffirmance had not been waived. The case, however, was ultimately decided upon other grounds. 8 Taunt. 508. The dictum of Dallas, J., above quoted, that an infant must disaflirm his contract within a reason- able time after coming of age, or his silence will bind him like a ratifica- tion, is established law in the English courts, and has been approved by emi- nent judges in this country. Cork & Bandon R. K. Co. r. Cazenove, 11 Q. B. 935; Leeds & Thirsk R. R. Co. v. Fearnley, 4 Exch. 26 ; Northwestern R. R. Co. V. M'Michael, 5 id. 114; Dublin & Wicklow R. R. Co. v. Black, 8 Exch. 181 ; Richardson v. Boright, 9 Vt. 368; Kline i-. Bebee, 6 Conn. 494; Scott v. Buchanan, 11 Humph. 468. But the weiglit of American authority cannot be said to be in favor of the proposition that mere neglect to disaffirm will of itself amount to a ratification. There must, beside, be positive action on the part of him who lias come of age clearly indicating his intention to abide by the contract which he has made during his infancy. Thus, in Dana v. Stearns, 3 Cush. 842, B., an infant, and S. had been in part- nership, which was, however, dissolved by mutual consent before B. came of age. B. sold out his share to S., took therefor the note of S. with security, but never expressed any purpose of repudiating the partnership. In an action brought against B. & S. as partners, upon notes given by them while in business together, and in consideration of merchandise sold and delivered to them, it was contended that B. had ratified the partnership after coming of age, and therefore the notes in suit, by retaining and attempt- ing to enforce the note of S. above mentioned, which was given by S. not only for the amount of capital originally contributed by B., but also in addition for B.'s siiare of the profits realized by the firm during their con- tinuance in business. But the court held, that no sufficient ratification was proved from these facts, and that B. was not liable for the partnership debts. See, to the same point, the note to the case of Dublin & Wicklow R R. Co. r. Black, 8 Exch. 181, where the American authorities are reviewed. See also Jones v. Phoenix Bank, 4 Seld. 228; N. H. Mut. F. Ins. Co. v. Noyes, 32 N. H. 345 ; Stokes r. Brown, 4 Chand. 39. A plea of infancy to a note executed by an infant partner in CH. III.] PARTNERS. 23 ever to the other contracting party, who is bound if the infant does not choose to avoid tlie contract. (/) The infant's privi- lege of avoiding his contracts extends to his legal representa- tives, (w) * A fiat or decree of bankruptcy against an infant is * 22 not voidable only, but wholly void at law. (w) Equity, liowever, will not declare it void if he has induced persons to give him credit as an adult member of the firm, but will leave him to his remedy at law. (o) But the fact that his name is the name of the firm is not avoided by a replication that defendant had con- tinued to be a partner for a year and more after he became of age, and had not during tliat time, nor for some years after, disaffirmed any note exe- cuted during his infancy, in tlie name of the firm. There should also be an averment that he had knowledge of the particular contract declared on, and that he was looked to as a party to it. Crabtree v. May, 1 B. Mon. 289. In Miller v. Sims, 2 Hill (S. C), 479, an action was brought on a note signed by Sims in the name of Sims & Ash- ford. Ashford was, at the time of signing, a minor. After he came of age, there was evidence that he re- ceived moneys due the firm, and signed the firm name, but refused to have any thing to do with the note in ques- tion, and never ratified or confirmed it. The court held, that if Ashford, after coming of age, did in any manner con- cur in carrying on the partnership business, or received profits from it, it would amount to a ratification ; and that, by affirming the partnership, Ashford recognized and affirmed the agency of Sims. (/) Holt V. Ward, 2 Str. 9.37 ; War- wick V. Bruce, 2 M. & S. 205; Willard V. Stone, How. 22 ; Parker v. Barker, 1 Clarke Ch. 136 ; Rose v. Daniel, 3 Brev. 438 ; Voorhees v. Wait, 3 Green, 343; M'Ginn v. ShaefCer, 1 Watts, 412; Cannon v. Alsbury, 1 A. K. Marsh. 76. (m) Hussey v. Jewett, 9 Mass. 100; Martin v. Mayo, 10 id. 137 ; Jackson V. Mayo, 11 id. 147. (n) O'Brien v. Currie, 3 C. & P. 28.3; Belton v. Hodges, 9 Bing. 365. The fiat is void, because a minor's contracts of trade being voidable, he cannot be a bankrupt for debts which he is not obliged to pay. Ibid. ; Rex V. Cole, 1 Ld. Raym. 443 ; Lord El- don in Ex parte Adam, 1 Ves. & B. 494; Ex parte. Moule, 14 Ves. 602. Hence also a joint commission of bank- ruptcy against a firm, one of the mem- bers of which is an infant, will be superseded. Ex parte Henderson, 4 Ves. 163 ; Ex parte Barwis, 6 Ves. 601. But where a statute provides that an adjudicated bankrupt, to test the val- idity of the commission, must show cause before the commissioner within seven days after the adjudication ; or, to dispute or annul the fiat, must com- mence proceedings within twenty-one days after the advertisement of the bankruptcy, — a partner, adjudged a bankrupt while an infant, cannot after the lapse of the prescribed pe- riod maintain a petition praying, on the ground of his infancy, to have the adjudication and fiat annulled ; there being in this respect no exception made of infants in the statute. Ex parte West, 2 De Gex, Mac. & Gor. 198. (o) Ex parte Watson, 16 Ves. 265. The Lord Chancellor delivered his opinion as follows : " As it appears in this case that the petitioner held him- self forth to the world as an adult, and sui juris, and traded in tliat character, and contracted debts to a considerable amount for two years jirevious to the commission, and as this petition is op posed on belialf of tlie creditors, I will make no order; but leave the bank- 2-i THE LAW OF PARTNERSHIP. [CH. III. used in the firm is not of itself sufficient to prevent equity from annulling the same. ( p) If a contract be made with a firm, one of the members being an infant, and repudiating his own liability, it seems to be doubted whether the contract can afterwards be treated as a contract made with the other partners, ipp') We should say, however, that it may. The technical rules of pleading in Eng- land require that if an action be brought against an infant (or one who was an infant at the time of the promise) and others, and infancy is pleaded, the plaintiff cannot proceed against the others, but he may bring a new action against them * 23 alone. (5) And if he brings an action * originally against them alone, and the non-joinder of the infant is pleaded in abatement, the infancy is a sufficient replication, (r) although a ratification by him who has been an infant would be a good rejoinder. (5) In Massachusetts, New York, New Hampshire, Indiana, and Maine, it has been held that an action brought against all may be continued against the other parties when one of them pleads infancy, (t^ We know of no dis- rupt to his action at law, if he shall ()) Burgess v. Merrill, 4 Taunt, think proper so to do. I consider him 469 ; 2 Vin. Ab. 08. no more entitled to any favor or assist- (s) Gibbs v. Merrill, 3 Taunt. 307. anee than a feme coveH is who hves But such rejoinder must be supported apart from lier husband, and holds by proof of a ratification made before herself out as a, feme sole, and contracts suit brought. Tliornton v. Illingworth, debts, is entitled to any summary re- 2 B. & E. 824. In an action for a lief from the judges at common law ; partnership debt, an infant partner Avho always leave a woman of that must be made co-plaintiff. Teed v. description to make the best she can Elworthy, 12 East, 210; Kelly. Nainby, of her plea of coverture in any action 10 B. & C. 20. brought against her, and constantly (t) Woodward v. Newhall, 1 Pick, refuse to interfere so as to afford her 500 ; Tuttle v. Cooper, 10 id. 281 ; anj- summary relief." Hartness v. Thompson, 5 Johns. 160 ; ip) As where A. takes B., liis minor Robertson v. Smith, 18 id. 478; Mor- son, sixteen years old, into partnership, ton v. Croglian, 20 Johns. 123 ; Judson Thougli the names of A. & B. are put i\ Gibbons, 5 Wend. 224 ; Ex parte over the door of their place of busi- Nelson, 1 Cow. 424 ; Cutts v. Gordon, ness, B. is not by that circumstance so 13 Me. 474. The same is the rule in held out to customers as an adult part- Indiana. Kirby v. Cannon, 9 Ind. 371. ner as to lose the right of having an- So, too, in New Hampshire. Gay v. nulled a joint fiat of bankruptcy Johnson, 32 N. H. 167. See also issued against the firm of A. & B. Wamsley v. Lindenberger, 2 Rand. Ex pane Lees, 1 Deason, 70.5. 478 ; Cole v. Pennell, id. 174 ; Barlow (pp) See Story Part. § 25-5. v. Wiley, 3 A. K. Marsh. 457 ; Slocum iq) Chandler v. Parkes, 3 Esp. 76 ; v. Hooker, 13 Barb. 536. JafEray v. Frebain, 5 id. 47. CH. III.] PARTNERS. 25 tinctly opposite ruling, and should expect that this would be recognized as the American rule. 2. Married Women. A married woman is, by common law, incapable of trade, and therefore of entering into partnership. But, by the " cus- tom of London," married women may sometimes be sole traders, (ii') and the courts of this country are quite indulgent in permitting women whose husbands have deserted them — voluntarily, or by compulsion of law — to enter into business for their support. And we know no reason whatever why any married woman who is capable of being a sole trader may not also enter into a commercial partnership, (f ) (u) Langham r. Bewett, Cro. Car. 68. In this case, the custom of Lon- don was read, to wit: "That a feme sole merchant is wliere the feme trades by herself in one trade, with which her husband doth not meddle, and buys and sells in that trade." But the city courts only, not the superior courts at Westminster, take notice of this custom, so that a feme covert can- not, by virtue of it, sue or be sued in the latter without her husband. Cau- dell i". Shaw, 4 T. R. 861; Beard v. Webb, 2 B. & P. 93 ; Cosio v. De Ber- nales, 1 C. & P. 266, note. (v) By the law of England a wife may act as a feme sole, if her husband has been banished, or has abjured the realm, or been transported, or if he has professed the Catholic religion. Co. Litt. 132 b, 133 a ; Lean r. Sciiutz, 2 W. Bl. 1195; Corbett v. Poelnitz, 1 T. R. 5 ; Marshall v. Button, 8 id. 545 ; Carroll v. Blencow, 4 Esp. 27 ; Marsh r. Hutchinson, 2 B. & P. 231 ; Ex parte Franks, 1 Moore & S. 1. So, also, if her husband is an alien, who has never resided in England. Deerly v. Maza- rine, 1 Salk. 116 ; De Gallon v. L'Aigle, 1 B. & P. 357 ; Marsh ?•. Hutchinson, 2 id. 226 ; Farber t-. Granard, 4 id. 80 ; Walford i'. De Pienne, 2 Esp. 554; Franks v. De Pienne, id. 587 ; Kay v. Pienne, 3 Camp. 123. The principle upon which the English courts have proceeded in these cases is. that, in the view of the law, the husband has no civil existence, and that the wife is therefore in a state of civil widowhood. In this country, the same exceptions to the disability of married women to make and to be bound by contracts have been recognized by the courts. Gregory v. Paul, 15 I\Iass. 31 ; Robin- son V. Reynolds, 1 Aik. 174 ; Cornwall V. Hoyt,"^ 7 Conn. 420; Wright v. Wright, 2 Desau. 244 ; Boyce v. Owens, 1 Hill (S. C), 8; M'Arthurr. Bloom, 2 Duer, 151. And, if a man has never lived in that State of the Union in which his wife resides, he is, so far as that State is concerned, an alien, and his wife is treated as a feme sole. Ab- bot V. Bayley, 6 Pick. 89. But Ameri- can courts have also gone farther, and have held a separation from and aban- donment of the wife, coupled with an intent to renounce de facto the marital relation, to operate like an abjuration of the realm, and to invest the wife with the rights of a feme sole. And in some cases slight circumstances have been considered sufficient to constitute such desertion and renunciation. Bog- get i'. Frier, 11 East, 301 ; Gregory y. Pierce, 4 Mete. 478 ; Rliea v. Rhenner, 1 Pet. 105 ; Valentine v. Ford, 2 P. A. Browne, 193 ; Bean v. Morgan, 4 McCord, 148 ; Love v. Moynehan, 16 111. 277; Krebs v. O'Grady, 28 Ala. 26 THE LAW OF PARTN'ERSHIP. [CH. III. * 24 * Tlie whole law of married women is, in this country, or in many of our States at least, in a transition condi- tion ; and it is not easy to ascertain or to define it. There is everywhere a stron<^ disposition to escape from the old feudal doctrine which almost merged the existence of the wife * 25 in that of the husband, (w) * We do not always 726. In Massachusetts, a wife di- vorced a mensa et thoro may sue and be sued as a feme sole. Dean v. Richmond, 6 Pick. 461 ; Pierce v. Barnham, 4 Mete. 303. Otherwise in England. Lewis V. Lee, 3 B. & C. 291. (iv) Legislation in this country has made tlie most important and exten- sive additions to the powers of married women. So early as 1718, in Penn- sylvania, and 1744, in South Carolina, the privileges of feme sole traders by the custom of London were extended to married women in those States, which were then colonies. See Burke V. Winkle, 2 S. & R. 189 ; Jacobs v. Fatherstone, 6 W. & S. 346 ; Newbig- gin V. Pillans, 2 Bay, 462 ; McDowall V. Wood, 2 Nott & McCord, 242 ; Stark V. Taylor, 4 McCord, 413. Within the last few years, however, the legis- latures of very many States have made much greater innovations upon the law of husband and wife. The various statutes differ of course in their details, and are changing every year. Their exact nature and effect remain to be determined by time and adjudication. But, in general, their object and scope are the same, and may be said to be to give to a married woman the rights of a feme sole, when there has been a de facto, though not legal, dissolution of the marriage tie, as by the desertion of the husband, or his imprisonment, or by a divorce o mensa et thoro; and, secondly, to give her those rights with respect to all the property which she may possess in her own right at the time of her marriage, or may afterwards acquire by her own exertions, or otherwise independently of her husband. See Rev. Stat, of Maine, 1857, ch. 61 ; Colby v. Lamson, 89 Me. 119; Oxnard v. Swanton, id. 12.5 ; Rev. Stat, of New York (4th ed.), 1852, p. 331 ; Berley r. Rampacher, 5 Duer, 183 ; Freeman v. Orzer, id. 476 ; Rev. Code of North Carolina, ch. 39, § 13 ch. 56 ; Acts of Pennsylvania of 1848, 1850, and 1851 ; Laws of New Jersey, 1852, ch. 41; Gen. Stat, of Mass. ch. 108 ; Rev. Stat, of Louisi- ana, 1856, p. 560 ; Rev. Stat, of Rhode Island, 1857, chs. 135, 136; Acts of Vermont, 1847 ; Rev. Stat, of Connec- ticut, ch. 1, § 7, 1849; Act of 1849, ch. 20 ; Acts of Alabama, 1850 ; Laws of Texas, ch. 79, 1848 ; Acts of Mary- land, 1853, ch. 245 ; Anger v. Price, 9 Md. 552 ; Practice Act of California, 1851 ; Snyder v. Webb, 3 Cal. 3 ; Caw- shaw V. Cawshaw, id. 312 ; Wheeler V. Jennings, 17 B. Mon. 476 ; Rev. Stat, of Michigan, 1846, ch. 85, §§ 25, 26 ; Session Laws, 1855, p. 420 ; Mark- ham t». Markham, 4 Gibbs, 305; Brown V. Fifield, id. .322 ; Dalton v. Murphy, 30 Mo. 59 ; Lee v. Bennett, 32 id. 119; Laws of Wisconsin, 1850, ch. 44 ; Rev. Stat of Indiana, p. 320 ; Acts of 1853, p. 57, § 5 ; McCarty v. Mewhinney, 8 Ind. 513. In equity, also, it is the English doctrine, that, where property is set- tled upon a married woman to her separate use, she has complete jus dis- ponendi, and, as far as that property is concerned, is competent to act in all respects as a feme sole, unless express restrictions are prescribed by the deed of settlement. The courts of chan- cery will enforce all her engagements against such property, real or personal. Thus, a feme covert, with property set- tled to her separate use, renders it liable, by accepting a bill of exchange, Stuart V. Kirkwall, 3 Madd. 387 ; or by making a promissory note, Bulpin V. Clark, 17 Ves. 365 ; Field i;. Sowle, CH. III.] PARTNERS. 27 remember, however, that tlie opposite extreme of wrong is not necessarily right. It is undoubtedly well to give a wife a more secure possession of and a better control over her prop- erty than she enjoys at common law. But if some of the changes are made which are from time to time pressed upon legislatures, or indeed if some of the laws now existing are carried out to the full extent of their language, we do not know why a wife might not enter into a commercial partnership with her husband, and he and she constitute a firm, as seems to be the case in * some parts of Continental * 26 Europe, (a;) But we do not know that any law has been enacted of which it can be presumed that this was its purpose. And if a single woman was a member of a firm, — which she certainly may be, — we have no doubt that what we consider the established principle, by which her marriage dissolved the part- nership, would prevail, generally at least, in this country. (?/) 4 Russ. 112. In New York, the rule in equity was substantially the same, till changed by the Revised Statutes of that State, regulating trusts. Noyes V. Blakeman, 8 Sandf. 531. But the courts of this country generally appear to have adopted an opposite rule, and to incline to the position that a mar- ried woman has no power over her separate estate that is not plainly given her by the instrument creating such estate. See 1 Lead. Cas. Eq. 324, 34o, where the whole subject is discussed and the principal authorities collected. Also, 2 Kent Com. (9th ed.) pp. 152-164; Dobbin y. Hubbard, 17 Ark. 189 ; Whitesides v. Cannon, 23 Mo. 457 ; Lillard v. Turner, 1(3 B. Mon. 374 ; Burch v. Breckinbridge, id. 482. In these instances, at law and in equity, married women may bind themselves by their contracts, and of course by those made in the way of trade. Wherever they have tiiis gen- eral power, it would seem to follow, as suggested in the text, that they also have the power to enter into a com- mercial partnership. Where a feme covert entered into agreement of part- uersliip, providing for its duration be- yond tlie death of her husband, and this agreement was executed, and the partnership continued beyond her hus- band's death until her own, it was held, that the copartnership related back to the execution of the articles, so as to give all parties the same rights and advantages as they would have been entitled to if the feme covert had been a feme sole at the date of their execution. Everit v. Watts, 10 Paige, 82. [Married women may be partners in Ohio, Swasey v. Antram, 21 Ohio St. 87 ; in Illinois (with her husband), lie Kinkead, 3 Biss. (U. S. C. Ct.) 405, and note ; in Virginia, Penn v. Whitehead, 17 Graft. (Va.) 503. But not in Maryland, Bradstreet v. Baer, 41 Md. 19 ; nor in Massachusetts, Todd V. Clapp, 118 Mass. 495.] But the vesting in the husband of his wife's shares in a joint stock company, so as to impose upon him the liabilities of a partner, must always be subject to the provisions of the original deed con- stituting tlie company, those provisions being in fact the terms upon which the members of the partnershij) consent to the admission of a new member. (x) As in Spain, Cosio v. De Ber- nalles, Ryan & M. 102, 1 Car. &P. 266. (y) Watson on Part. 384; Gow on 28 THE LAW OF PARTNERSHIP. [CH. III. There are kinds of partnership, as joint-stock companies and the like, in which a partner may only own stock or shares, and take no part whatever in the active management of the concern. We know nothing to prevent a wife from holding such stock or shares; but we think her ownership — or partnership, if it should be so called — would be that of her husband, and that upon him would rest generally all the liabilities and obligations of a partner, (z) So, if a man's wife inherited an interest in a partnership, and he, instead of having the accounts settled, and the interest withdrawn, as he might do, permitted it to continue in the business, this would make him a partner, even without his actually withdrawing and appropriating funds. It certainly would have this effect wherever the common law so far pre- vailed that all her share of the profits were at once his. If, however, the property or interest were given to trustees for the sole benefit of the wife, free from any right or control of * 27 the husband, then the mere fact of its * continuance in the business would not render him liable as partner, al- though it would probably cast this responsibility on the trustees ; as otherwise it would be a kind of limited pai'tnership, without Part. 225. See post, ch. 12, § 5. And under Stat. Geo. 4, cli. 46, § 13, could see Brown v. Jewett, 18 N. H. 230. issue. The same was held In Ness v. (z) Gow on Part. 2. In Dodgson v. Angas, 3 Exch. 806, where tlie defend- Bell, 5 Exch. 57, the question was, ant's wife had bought shares after her wliether the defendant was a partner marriage, witli the consent of licr hus- in a joint-stock banking company in band, but out of tlie proceeds of lier which, before and at the time of his own estate ; and this although her marriage, his wife was a legally regis- husband had received some of thedivi- tercd owner. After their marriage, dends, signed receipts therefor as her the shares had contiinied to stand in agent, and attended company meetings, the maiden name of defendant's wife, at which only shareholders were en- and she had received dividends and titled to be present. It is to be observed, paid calls in respect of them, though that, in this last case, upon the author- without tlie knowledge of her husband, ity of which Dodgson v. Bell was ■who never in any way meddled with decided, great stress is laid by the them. The company's deed of settle- judges upon the fact that the remedy ment provided, that the husband of a attempted to be enforced against the female shareholder should not, merely defendant, as a partner by virtue of in respect of his wife's shares, become his wife's interest, was an extraor- a member of the company, but that dinary statutable remedy. In both he must first comply with certain con- these cases the question was as to who ditions. The defendant not having were partners inter se, and not as to fulfilled tliese conditions, it was held, who were partners with respect to that he was not a member against third persons. In re Keene's Execu- whom a sci. fa. to levy execution tors, 8 De Gex, Mac. & Gor. 272. CH. III.] PARTNERS. 29 the precautions and safeguards of the law on that subject. And if the law of the State where the case occurred gave to the wife, so far as her property was concerned, the status of a single woman, she might then be a partner. 3. Of Aliens. An alien friend can be a partner in a commercial house ; for there is nothing to prevent his holding any personal property, or in bringing and maintaining or defending any suits, (a) If the property of the firm were in part or in whole real estate, a question might arise. If the estate was in a country in which aliens could not hold land, the legal title certainly could not be in him ; but we think that courts of equity would, in that case, hold the partners possessing the legal title as trustees for the partnership. They would certainly do this where one of many partners alone holds the title, and there were no aliens ; and we see no sufficient reason why they should not, if one or more of the cestui que trusts were aliens. (&) The rule is quite otherwise as to alien enemies. Here partner- ship is impossible, (c) And if there be a partnership with an alien friend, and war breaks out between the countries, it en- tirely suspends the partnership. From the language sometimes used, it might be inferred that a war would terminate and annul such partnership altogether ; (d) and it might have this effect in many cases. But where the terms and business and state of affairs of the partnership were such that an entire suspen- (a) Co. Litt. 129 b. subject a learned note to the case of (b) See post, ch. 11. Clemontson v. Blessing, 11 Exch. 135. (c) The reason is, that the existence {d} See Griswold v. Waddington, 15 of a state of hostility between two coun- Johns. 57; 16 id. 438. [A commercial tries renders illegal all commercial partnership between citizens of the re- intercourse between their citizens, spective belligerents was dissolved by Bristow V. Towers, 6 T. R. 35 ; Potts the late rebellion. Woods v. Wilder, 43 V. Bell, 8 id. 548 ; Willison v. Patteson, N. Y. 164. Bat the general doctrine of 7 Taunt. 439 ; The Hoop, 1 Rob. Adm. the text seems to be upheld by the 196; The Indian Chief, 3 id. 22; weight of modern authority. Kershaw The Jonge Pieter, 4 id. 79 ; The v. Kelsey, 100 Mass. 561 ; Cohen v. N. Y. Franklin, 6 id. 127 ; Ex parte Bouss- Life Ins. Co., 50 N. Y. 610. See also maker, 13 Ves. 71 ; Griswold v. Wad- Mutual Benefit Life Ins. Co. v. Hild- dington, 15 Johns. 57, 16 id. 4-38; The yard, 37 N. J. Law, 444, where the Rapid, 8 Cranch, 155 ; The Julia, 1 cases upon the efiect of war upon the Rob. Adm. 181; Scholefield v. Eichel- abrogation of contracts are fully col- berger, 7 Pet. 585 ; The San Jose lected ; N. Y. Life Ins. Co. v. Statham, Indiano, 2 Gall. 268. See upon this 93 U. S. 24.] 30 THE LAW OP PARTNERSHIP. [CH. III. sion of all rights and intercourse during the war would still leave the partnership in a condition to go on as before when the war ended, we should say that the partnership revived by peace, and did not need to be created anew. * 28 * No alien enemy can bring any action in any court of the hostile country, (e) And this rule has been applied to a citizen then resident in a foreign country, on the ground that if he prevailed, and funds in satisfaction of his judgment were remitted to the foreign country, it would be a strengthen- ing of the enemy. (/) There is nothing to prevent a firm consisting wholly of aliens from having an agency in this country, and bringing any per- sonal actions. Even if husband and wife form a commercial partnership in a foreign country in which such a partnership could legally exist, it would be difficult to say that they could not maintain an action together, in this country even as joint plaintiffs, however unusual such a thing might be. (^) 4. Of the Insane and Persons v.nder Cruardianship. A fatuous or insane person could neither transact business on his own account nor as a partner. The degree of mental inca- pacity which should have this effect is hardly capable of defini- tion ; and the question whether it existed might be a difficult question of mixed law and fact. So, if one were generally sane, with attacks of insanity, or generally insane, with lucid inter- vals, it might be difficult to apply the rule ; (Ji) but the rule itself certainly must be that no one is incapacitated from be- coming a partner who is able to transact business of his own. (e) Co. Litt. 129 b ; Anthon v. Fislier, disabled from suing in her own name on Dougl. 649, note ; Brandon y. Nesbitt, a contract made either before or during 6 T. R. 23 ; Willison v. Patteson, 7 coverture. De Wahl v. Braune, 1 Hurl. Taunt. 439 ; Griswold v. VVaddington, & Nor. 178. 15 Johns. 57, 16 id. 438; Hoare v. (/) M'Connell v. Hector, 3 B. & P. Allen, 2 Dallas, 102. And the disa- 113; O'Mealey i;. Wilson, 1 Camp. 482; bility to sue attaches to an alien carry- Roberts v. Hardy, 3 M. & S. 533 ; The ing on trade in an enemy's country, Julia, 8 Cranch, 181 ; Griswold y. Wad- though lie resides there also as consul dington, 16 Johns. 438. of a neutral country. His individual (9) See ch. 9, § 1. character for purposes of trade is not [h) See the impressive remarks of merged in his national character. Al- Lord Chancellor Thurlow, in Attorney bretcht v. Sussman, 2 Ves. & B. 323. General v. Panither, 3 Bro. Ch. Rep. The wife of an alien enemy is also 441. CH. III.] PARTNERS. 31 Indeed, it might perhaps be said that one with a less measure of intellect might become a partner, because he would have the assistance and protection of others, and so be guarded against liis own imbecility. * To those under guardianship as spendthrifts or * 29 otherwise, or whom habitual intoxication has enfeebled and stultified, a similar rule must apply, (i) They are incom- petent to transact business on their own account, and therefore incapable of entering into a commercial partnership, (y) 5. Of Corporations. The question has arisen in one or two cases whether a cor- poration, considered as a person, may become a partner, either with another corporation or with individuals. We have alluded to this already. Perhaps no other general rule on this subject can be stated than that a corporation may incur the liability of a partner as to third persons, although, on general principles, it would be inconvenient, if not impossible, for a corporation, which is only a legal person, to enter into a full copartnership, either with another legal person or with natural persons. (Jc) [i) Menkins v. Lightner, 18 111. 282 ; and such as are necessarily incident to Mansfield f. Watson, 2 Clarke, 111. So, the grant made to them. Corporations an agreement to form a partnership at common law have certain powers, would clearly be avoided, by proof but not such as would authorize the that at the time it was made one of the forming of a partnership, or the consoli- parties " had not an agreeing mind," dation of two corporations into one." through temporary intoxication. Pitt In Catskill Bank v. Gray, 14 Barb. V. Smith, 3 Camp. 33 ; Fenton v. Hollo- 479, one of the questions presented was way, 1 Stark. 126. See Lightfoot v. whether a corporation could be a part- Heron, 3 Younge Exch. 586. ner with an individual even as to lia- {j) See further, on the subject of per- bility. The language of the court is : sons of insufficient mind to contract, 1 " Strictly, perhaps, corporations should Eonbl. Eq. b. 1, ch. 2, § 3 ; 1 Story Eq. be and are restricted from contracting ch. 6, § 229, et seq. ; 1 Pars. Cont. (5th partnerships with individuals or cor- ed.) b. 1, ch. 20 ; 2 Pothier on Obhga- porations, and as between the parties to tions, App. No. 3, p. 23. the contract, acting upon equal knowl- (^-) In Sharon Canal Co. v. Fulton edge, a question of validity might be Bank, 7 Wend. 412, the court say : " It raised ; but a corporation may contract cannot be necessary to decide whether with an individual in furtherance of the it is in the power of the two cori)ora- object of its creation, the effect of which tions, who are the plaintiffs, to consoli- contract may be to impose upon the date their stock or to form a partnership, company, as respects the community, General principles are against the power the liabilities of a partner. I cannot of corporations to do such acts. They think that a corporation may so shape have no powers but such as are granted, its contracts, relating to the business 32 THE LAW OF PARTNERSHIP. [CH. III. SECTION II. OF THE KINDS OF PARTNERS. Different names are given to partners, describing tlieir re- spective relations to the partnership. The principal names are : 1. Ostensible, or Public. 2. Secret, or Unknown. 3. Nominal. 4. Silent. 5. Dormant. 6. Retiring. 7. Incoming. 8. Gen- eral. 9. Special. 1. Ostensible or Public Partners. This name indicates that the partner is " shown forth " to the world as one. If this is done with his own consent, all the lial)ility of a partner attaches to him. There is no special way of hold- ing such partner forth. It may be done by having his name in the firm or style of the partnership, or on the signs at the door, or by advertisement, or by circular letters. (V) Indeed, we ap- prehend that if a partner generally unknown is made known as such in any way to any one man, with his own consent, he is, so far as that man is concerned, an ostensible partner in every legal aspect and liability, as much as if advertised to the world. In this sense, therefore, there would be a difference between the words " ostensible " and " public," — the latter meaning shown as a partner to all the world, — although these two words are commonly used as synonymous. 2. Secret or Unknown Partners. He is a secret partner who keeps himself concealed from the public, and from all the customers of the partner- for which it was incorporated, as to reason why a corporation, more than a share jointly with an individual in the natural person, who participates in the profits of such business ; subtract its profits as such of a particular business interest in the profits from the fund on in which it may lawfully engage, should which the creditors of the concern had not be holden to the public for losses." a riglit to rely for the payment of the See Marine Bank v. Ogden, 29 111. debts due to them ; and, when called 248. upon by such creditors, be permitted (/) Partners whose names are not ex- to escape liability altogether, on the pressed in the firm, but who are simply ground that the profits were realized indicated by the word " Co.," are not as the partner of an individual, which dormant, but ostensible, partners. God- relation the corporation could not le- dard v. Pratt, 10 Pick. 428. gaily occupy. I know of no sound CH. III.] PARTNERS. 33 ship, (m) We * shall hereafter see that neither the * 31 word *' Co.," nor any other public designation of a co- partnership is necessary to bind all the partners. But this important distinction is to be taken : A partner is liable either because he is one in fact, or because he holds himself out or suffers himself to be held out as one. In the latter case, he is liable whether actually a partner or not, as we shall presently see. But, in the former case, he is not liable, unless it can be shown that he is actually a partner. If he is, he has gained nothing by being secret. Of course, so long as he is undis- covered he is safe : but as soon as he is found to be a partner, even if this be not until after an action has been brought against the other partners, he becomes liable ; because, although he added no credit to the firm, and permitted no debt to be in- curred on his credit, he is equally liable as if he had done this, from the mere fact that he shared the advantages of the part, nership. If a secret partner is announced as a partner to a customer, without his own consent or connivance or ratification, his rights are wholly unaffected by the customer's knowledge, and depend entirely upon the fact of his partnership. Not so, as we have seen in the preceding subsection, if he permits himself to be made known as a partner to a customer. 3. Nomiyial Partner. Every ostensible partner is a nominal or known partner ; but by this designation is usually meant, that the partner is only nominally one. (n) That is, he is so held forth as a part- ner, with his own consent, by any of the means usually em- ployed for that purpose, as to make him liable as a partner on the ground that he has given his credit to the firm, and authorized engagements on his account, (o) It follows, there- (m) United States Bank v. Binney, 5 a nominal partner with another man Mason, 185. may be called by him as witness. He (n) /?.r /jarte Chuck, 8 Bing. 469. See is not incompetent on the score of Currier v. Silloway, 1 Allen, 19 ; Lind- interest. Parsons v. Crosby, 5 Esp. sey V. Edminston, 25 111. o59 ; Jacobsen 199 ; Mawman v. Gillett, 2 Taunt. 327. V. Hennekenius, 1 Bro. P. C. 432; Fox (o) Tiie ground of the liability of a V. Clifton, 6 Bing. 795 ; Hicks v. Cram, nominal partner is thus stated in a lead- 17 Vt. 449. Hence one who is merely ing case, Waugh v. Carver, 2 H. Bl. 34 THE LAW OF PARTNERSHIP. [CH. III. * 32 fore, that if a person * suffers himself to be regarded as a partner by any customer of the firm, to him he is liable as if he were one, although he is in fact no partner, and not generally supposed to be one. The nominal partner is the converse of the secret partner. 4. Silent Partner. Tliis name is properly and generally applied to those who take no active part whatever in the business of the firm, and exercise none of the rights of a partner, except that of receiv- ing their share of the profits from time to time. He is a silent partner, whether his name be made known in any way as a partner or not. There is, however, a very common use of the word " silent," which differs somewhat from that above stated. It seems to be thought tliat he only is a silent partner who is silent to the world in respect to his interest in the firm, as well as silent within the firm in its transaction of business. In this sense, a silent partner is one who is both inactive and unknown. And there are those who go so far as to think the silence to 235 : " 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 profits. But, if he will lend his name as a part- ner, he becomes as against all the rest of the world a partner, not upon the ground of the real transaction between them, but upon principles of general policy, to prevent the frauds to which creditors would be liable, if tliey were to suppose that they lent their rasney upon the apparent credit of three or four persons, wlien in fact they lent it only to two of them, to whom, with- out the others, they would have lent notliing." So in Ex parte Watson, 19 Ves. 461, Lord Eldon says : " There is a wide difference between a dormant and nominal partner. The former is liable in respect of the profits ; . . . but if one, retiring or coming into the trade, suffers his name to be used, it is of no consequence, whether he has a salary, or simi of money, to be paid by others, or to be got out of the profits. It is the use of the name that makes him liable, as one of the persons by and to whom every thing is bought and sold." So, in Hicks v. Cram, 17 Vt. 449, the court say : " It is the representing one's self, or suffering one's self to be represented, as a part- ner, that creates a liability to third persons ; and tliis is sufficient to create a liability, notwithstanding the truth should prove to be, tliat the person so suffering himself to be held out as part- ner, in fact was not so. This is in order to preserve good faith and pre- vent fraud, and is almost the only ground of an estoppel in pais. If one man has made a representation whicli he expects another may or will act upon, and the other does in fact act upon it, he is estopped to deny tlie truth of the representation. So, too, equally, when one remains silent, and suffers another to make the representation." CH. III.] PARTNERS. 35 the world to be the main thing, understanding by the phrase " silent partner " one who is not known as such, whether active or otherwise ; thus making the word " silent " synony- mous with the word " secret.'' We prefer * the defi- * 33 nition we have first above given, as the most reasonable, and as that which is best sustained. 5. Dormant Partner. This phrase also is used in somewhat different senses. Indeed, there is much confusion and inaccuracy in the common use of the three words, — " secret," " silent," and " dormant." Many use this word as if it meant only unknown and secret ; and apply the designation of dormant or sleeping to partners whose names are concealed, however awake and active they may be in the business of the firm. Others consider the word as properly applied to those only who are wholly inactive in the business, whether known to have an interest or not. We think, however, the word implies both the qualities of secrecy and inactivity, (p) It seems to be most common and most con- (/') These two qualities are attributed Winship v. Bank of the United States, to the dormant partner in tlie following 5 Pet. 573. In Mitchell v. Dall, 2 expression of the difference between a Harris & G. 159, however, and Bank dormant and an open partnership. " It of St. Mary's v. St. John, 25 Ala. 566, seems to me to be this : when the persons seem to have been held dor- names of the partners do or do not mantpartners.wlio, though their names appear in their accounts, their adver- were concealed, took an active part in tisements, or their paper ; when the the business of the firm. See Lloyd business is carried on in the name of v. Archbowle, 2 Taunt. 32J: ; Kelly v. all, it is open ; but, i/ani/ are kept hack, Hurlburt, 5 Cowen, 534 ; Hoare v. it is dormant ; that the knowledge which Dawes, 1 Doug. 371 ; Ex parte Watson, the public may have is not the test, 19 Ves. 461 ; Shropshire v. Shepherd, when it is acquired from the declara- 3 Ala. 733. The definition and il- tions of the acting, avowed partners ; lustration of dormant partnership in it may enable them to reach the dor- Watson on Partnership, p. 46, seems mant one, if the transaction is one in accurate : " Sometimes all the partners which he had an interest, but does not in trade do not appear ostensibly to the alter its nature. The partnership re- world, though they share in tlie profits mains dormant as to all whose names and loss ; and it is not unusual for do not appear on its transactions. The gentlemen of large and independent dormant, sleeping, inarJive partner may fortunes to embark very considerable be known by reputation, or the decla- sums of money in trade, they being ration of his copartner ; but these do not oftentimes ignorant of the science of make him an avowed or active one, commerce, and meaning to depend en- without the avowal and pledge of his tirely upon the skill of merchants or name or paper." Per Baldwin, J., in traders with whom they engage in a 36 THE LAW OP PARTNERSHIP. [CH. III. * 34 venient to use the word as indicating * a partner who both keeps himself concealed, and who also refrains from any active interference with the business or management of the firm. But the word is so often used as merely synony- mous with " unknown," that we shall frequently be obliged to employ it or refer to it in this sense. 6. Retiring Partner. He is one who leaves an existing firm. In law, as we shall see, the going out of a partner, by his own act, or decree of court, or by death, terminates that partnership. But in prac- tice it is otherwise. Some old firms have continued to use the same style, and to transact their business as one and the same copartnership, with all the continuity of a corporation, although not only all the original members, but all who immediately succeeded them, have passed away. In some of the commercial cities of Europe, there are said to be active firms established under their present names by the great grandfathers of those who are now members. In this country it is, however, more common to announce these changes by a corresponding change in the style of the firm. 7. hicoming Partner. This phrase designates a person who enters into an existing copartnership, and becomes a member of it. Here it may be said, as before, that any such change as the addition of a new member terminates the former copartnership in law and creates a new one. (^pp) But in practice it is not so ; the old firm being " kept up," as the common phrase is, by former members going out from time to time, and new members coming in. general partnership of all their stock v. Bloss, 30 N. Y. 374 ; Waite v. Dodges, and effects, yet not suffering their names 34 Vt. 181. to appear in the copartnership firm, but (pp) Mudd v. Bast, 34 Mo. 465. at the same time receiving a propor- [When two partners enter into another tionate share of the profits arising out partnership with a third person, they of their joint trade, bearing equally are in the new partnership as individ- their risk of loss ; and such are usually uals, and the profits are to be divided styled dormant partners." See North equally amongst the three. Warner v. Smith, 9 Jur. n. s. 168.] CH. III.] PARTNERS. 37 8. General Partner. This is a new phrase with us, and is, at least in our sense of it, unknown in the English law. It means one who is that member of a Limited Partnership, under our statutes, who transacts the business, whose name is used in the firm, and who is liable for all the debts and obligations of the firm, to their full amount. 9. Special Partner. * He is one who supplies a certain amount of capital, * 35 and who, if he complies with all the requirements of the statutes, is not liable for the debts of the firm beyond the amount which he contributes to the capital. We have been somewhat precise in defining these different classes or kinds of partners, because it will be seen in our sub- sequent chapters that especial rights, obligations, liabilities, and remedies belong to them severally. 38 THE LAW OF PARTNERSHIP. [CH. IV. CHAPTER IV. OF THE PURPOSES AND KINDS OF PARTNERSHIP. Although partnerships are usually formed for commercial purposes, they are not always so, and there is scarcely any occupation which an individual can legally pursue that may not be the subject of partnership. In this country we have a far wider extent in the variety of purposes for which partner- ships are established, than anywhere else. Thus, we have partnerships not only for every known branch of commercial business, but for all kinds of farming, (a) or manufacturing, mining, (6) stage-driving, fishing, hunting, lumbering, and the like, as well as the business of lawyers, (c) physicians, (c?) mechanics, artists, laborers, and, indeed, of almost all other employments. («) (a) See opinion of Gould, J., in Coope V. Eyre, 1 H. Bl. 37 ; Allen v. Davis, 13 Ark. 28 ; Lansdale v. Brash- ear, 3 T. B. Men. 330 ; Quine v. Quine, 9 Smedes & M. 155 ; Roach v. Perry, 16 111. 37. [Jointly buying and selling cattle may constitute a trading part- nership. Smith V. CoUins, 115 Miss. 388 ; and see post, p. * 54.] (b) In England, mines have never been regarded in equity as real estate, but uniformly as the regular subject and substratum of a trade. In Wil- liams V. Attenborough, Turn. & Russ. 70, the language of the Lord Chancel- lor is : " Collieries and landed estates are quite different in the contempla- tion of this court ; a colliery being always considered as a trade, the profits accruing from day to day as in all trading concerns." Storj' v. Ld. Winsor, 2 Atk. 630 ; Wren v. Kir- ton, 8 Ves. 502 ; Crawshay v. Maule, 1 Swanst. 495, 518; Fereday v. Wight- wick, Tamlyn, 250 ; Jeffreys v. Smith, 1 Jac. & Wal. 298. See Beatty v. Bates, 4 Younge & C. Exch. 182; Roberts v. Everhardt, 1 Kay, 148. The whole subject of partnership in mines, as treated in the English courts, is considered in a separate chapter in CoUyer on Part. b. 5, ch. 2. (c) Marsh v. .Gold, 2 Pick. 286; Westerlo v. Evertson, 1 Wend. 532; Warner v. Griswold, 8 id. 665 ; Liv- ingston V. Cox, 6 Barr, 360 ; Smith v. Hill, 13 Ark. 173. See Jones v. Cap- erton, 15 La. Ann. 475. (d) Allen v. Blanchard, 9 Cow. 631; Thompson v. Howard, 2 Cart. (Ind.) 245. (e) Thus, there may be a partner- siiip in a ferry. Bowyer v. Anderson, 2 Leigh, 550. An association for carrying personal property for hire in vessels is a commercial partnership by the laws of Louisiana. Hefferman V. Brenham, 1 La. Ann. 146. Ship CH. IV.] OP THE PURPOSES AND KINDS OF PARTNERSHIP. 39 * After some question, it seems to be settled, that * 37 there may be a partnership for the buying and selling of land. (/) It is to be remembered, however, that the Statute of Frauds, and our Statutes of Conveyance, which require that all interests in land should be transferred by a writing signed and sealed by the grantor, and acknowledged and recorded, thus determine the legal title by different evidence and on different principles from those which apply to per- sonalty. This has sometimes an important effect upon the rights and ol)ligations of partners in land speculations, and of those who deal with them. We have already alluded to this subject, and shall consider it more fully hereafter. (^) It is obvious that there can be no partnership in a mere per- sonal office, or in the discharge of its duties ; as in the office of guardian, trustee, executor, or the like. (A) These offices agents and ship brokers may be in partnership as to the profits of tiieir respective commissions. Waugli v. Carver, 2 H. Bl. 235. See Bovill v. Hammond, 9 D. & R. 186; Cheap V. Cramond, 4 B. & A. 663. Private associations and clubs for benevolent and other purposes, have been re- garded so far as partnerships, that their members are subject to liabilities similar to those of partners. Beau- mont V. Meredith, 3 Ves. & B. 180. See Delauney v. Strickland, 2 Stark. 416. But their liability seems to rest on the authority given to the agents, rather than on partnership. The points of difference between such as- sociations and trading partnerships are stated and illustrated in Flemyng V. Hector, 2 M. & W. 172. See ch. 5, § 1- ( /) Lands being now so far subject to commercial conditions, by the aid of equity, as to be capable of being held as incident to commercial partner- sliips, there would seem to be no suffi- cient reason why they may not, on the same principles, and by the same equitable conversion, be the substra- tum itself of a copartnersliip. The later cases, both in England and in this country, leave little or rather no room for doubt upon this point. Dale V. Hamilton, 5 Hare, 369; Potts ?,'. Waugh, 4 Mass. 424 ; Fall River Wh. Co. V. Borden, 10 Cush. 458; Smith V. Burnhara, 3 Sumn. 435 ; Kramer V. Arthurs, 7 Barr, 165 ; Brady v. Cal- houn, 1 Penn. 140 ; Olcott v. Wing, 4 McLean, 15 ; Smith v. Jones, 12 Me. 332; Dudley v. Littlefield, 21 Me. 418; hi re Warren, Daveis, 320; Ludlow v. Cooper, 4 Ohio St. 1 ; [Chester v. Dickenson, 54 N. Y. 1]. See Patter- son V. Brewster, 4 Edw. Ch. 352 ; Claggett V. Kilbourne, 1 Black U. S. S. C. 346. (q) See ante, ch. 2, § 2, and post, ch. 12. {h) Thus, the office of sheriff's bail- iff is personal, and cannot be held by two in partnership. .Jons i'. Perchard, 2 Esp. 507. See Canfield v. Hard, 6 Conn. 180. Upon tlie same principle, a mercantile partnership, though it may act as executor, cannot be ap- pointed guardian. De Mazar c. Pybus, 4 Ves. 644. Where, by the usage of the herald's office, a herald and pur- suivant were always in attendance, who sliared tlie profits of any business which was begun while they were jointly on duty, it was held that they were in the situation of copartners, and might maintain a joint action (for making out a pedigree) against tiie 40 THE LAW OF PARTNERSHIP. [CH. IV. * 38 arc often * held by two or more persons together ; but tlieir powers and duties, and relations generally, arc governed by rules entirely distinct from those of partner- ship. Tliere are additional and decisive reasons against the exer- cise of the powers or the discharge of the duties of any public office by a partnership. It might seem as if there were some offices, as that of postmasters, or of examiners of steaniljoats, or the like, which might be given to a firm ; but the principle of personal selection and personal responsibility make it diffi- cult, if not impossible, that a firm should hold such an appoint- ment, although persons holding it sometimes become partners, and share in the profits of the appointment, (i) Partnerships may be general or special. In theory, it is said they may be universal ; but an instance can seldom occur in which the partners own every thing in common, without the reservation of any private and exclusive property of either of them, (y) We have, however, in this country, some associa- tions which might perhaps be regarded as universal partner- ships, (k) Special partnerships relate only to an ownership or defendant, thougli he had contracted as being an agreement for the sale of only with the herald. Townsend v. an office, either within the 5 & 6 Edw. Neall, 2 Camp. 190. On the other 6, ch. 16, or within the 49 Geo. 3, ch. hand, the appointment of one of a firm 126. Sterry v. Clifton, 9 C. B. 110. to the office of sheriff's replevin clerk (/) See Caldwell v. Lieber, 7 Paige, will not enable the firm to bring a 483. joint action for the e.xpenses of prepar- (j) United States Bank v. Binney, ing a replevin bond, although it was 5 Mason, 183. Story, J., said : " Tliere executed, and the stamp for it pro- is probably no such thing as a uni- vided, in their office. Brandon v. versal partnership, if by the terms we Hubbard, 4 J. B. Moore, 367. See are to understand that every thing Clarke i'. Richards, 1 Younge & C. done, bought, or sold is to be deemed Exch. 351. A., an attorney holding on partnership account. Most men numerous lucrative clerkships, stew- own some real or personal estate ardships, and other offices, entered which they manage exclusively for into copartnership with B. By the themselves." articles of agreement it was stipulated (k) A recent case, Goesele v. Bi- that B. should be a partner with A. in meler, 14 How. 589, would seem to his business, and " that the emoluments establish, not only that such a partner- arising from the said offices, clerkships, ship may exist, but that, under able and stewardsliips as should be held administration and conduct, it is not by either of them, the said A. and B., inconsistent with a high degree of in- during the partnership, should be con- dividual social prosperity. The de- sidered as partnership property, and fendants in the case were members of be distributable accordingly." Held, a society called Separatists, which emi- that the above contract was not void grated from Germany to the United CH. IV.] OP THE PURPOSES AND KINDS OF PARTNERSHIP. 41 use or employment by partners of one thing, or one cargo, or one mercantile * adventure. (/) It has been * 39 said that if a note or bill of exchange be signed or indorsed by two or more persons jointly, this is a case of special partnership between those persons as to that note or bill, (m) The name, however, or the distinction, is of little mechanic arts, in manufacturing by machinery. The value of the property is now estimated by complainants' counsel to be more than a million of dollars." Further : " The people . . . are proved to be moral and religious. It is said, that, although the society has lived at Zoar for more than thirty years, no criminal prosecution has been instituted against any one of its members." There is no legal objec- tion, it seems, to such an association. See an example of a similar associa- tion called " The Harmony Society." Baker v. Nachtrieb, 19 How. 126. See Lyman v. Lyman, 2 Paine C. C. 11. (/) The authority which is usually referred to for the distinction between general and special partnerships is a diciitm of Lord Mansfield in Willett v. Chambers, Cowp. 814. "Let us see, then," said he, " what was the nature of the partnership afterwards entered into between Dodley and the present defendant : whether it was a general partnership in all Dodley's business, or confined to one particular branch of it only ; for, to be sure, there may be such a confined partnership." Very many cases have since recognized and illustrated the distinction. Salmons V. Nissens, 2 T. R. 674 ; Robey v. How- ard, 2 Stark. 557 ; Holmes v. Higgins, 1 B. & C. 74 ; De Berkom v. Smith, 1 Esp. 29; Livingston v. Roosevelt, 4 Johns. 265, 270 ; Post v. Kimberly, 9 id. 470; Mumford v. NicoU, 20 id. 611 Ensign v. Wands, 1 Johns. Cas. 171 Reynolds v. Cleveland, 4 Cow. 282 Cumpston v. McNair, 1 Wend. 457 Mifflin V. Smith, 17 S. & R. 105 ; Bent- ley V. White, 3 B. Mon. 263 ; Benson V. McBee, 2 ^McMull 01 ; Solomon v. Solomon, 2 Kelly, 18 ; Ripley v. Colby, 3 Fost. 438; Petripin v. Collier, 1 Barr, 247. (m) Gow on Part. 6 ; 3 Kent (8th States in 1817, and settled in Ohio. In 1819, articles of association were drawn up and signed by the members of the society, consisting of fifty-three males and one hundred and four fe- males. By these articles, the signers surrendered all their individual prop- erty, real or personal, present or fut- ure, into the hands of three directors, elected annuallj- by themselves. These oflScers were to conduct the business of the society, to manage all its prop- erty, and to account to the society for all their transactions. In 1824, the original articles were amended. An entire union of property, and an abso- lute renunciation of private owner- ship, were declared. Provisions were made for the admission of new mem- bers. The directors were to conduct the affairs of the society ; to apply themselves for its benefit ; to provide for the boarding, lodging, and clothing of its members ; to provide for the children ; to determine disputes, &c. Other of the new provisions related to the general welfare of the society. In 1832, a charter of incorporation was granted them, in accordance with which they adopted a constitution, embodying, with others, substantially the same provisions as those contained in the articles of association above re- ferred to. The extent of the prosper- ity, which, under this modified species of communism, the association had attained in the space of about thirty 5-ears, may be seen in the following extracts from the opinion of Mr. Jus- tice McLean: "It appears, by great industry, economy, good management, and energy, the settlement at Zoar has prospered more than any part of the surrounding county. It surpasses probably all other neighborhoods in the State in the neatness and produc- tiveness of its agriculture, in the 42 THE LAW OF PARTNERSHIP. [CH. IV. * 40 * use, for all the laws of partnership apply as far, and only as far, as the partnership extends ; and there is no distinct dividing line between general partnerships and those which have Ijeen called special. And the designation, by statute, of the partner in a limited partnership, who is liable only to the extent of the capital he supplies, as " special part- ner," is an additional reason for the disuse of the phrase " spe- cial partnership," in the sense above stated. Joint-stock companies will be treated by themselves. They are much used in England, and are there regulated by statute. Here they were quite common formerly. But incorporation may here be obtained with great facility for any legitimate purpose ; and wise and practical laws, in many of our States, give to corporations all the freedom and all the facilities they can desire, and limit the responsibility of members as narrowly as a due regard for public safety, and, indeed, the safety of the members, permits ; and joint-stock companies are now com- paratively rare. Limited partnerships, to which we have already alluded, we shall speak of more fully in a subsequent chapter, (w) ecl.),p. 28. The only authority for con- ties to whom the bill was payable, sidering such joint promise or indorse- This verdict does not appear to have ment as constituting a partnership is been disturbed. So that, the result of the case of Carvick v. Vickery, 3 the case being considered, it can hardly Doug. 653, note. There the action be said to be authority for the position was by the indorsee of a bill of ex- that joint promisors or joint indorsers change drawn upon defendants, the of a bill or note are quoad hoc partners ; Maydwells, by father and son, and since the second verdict could only payable " to us or our order," but in- have been upheld on the ground that dorsed only by the son. The father the defendants were not partners, and son were admitted not to be part- The case does not seem to rest on ners. At tlie first trial Ld. Mansfield sound principles, and is unsupported nonsuited the plaintiff, because the by any other English authorities. In bill had not been indorsed by both this country, it has been distinctly the parties to whose order it was pay- repudiated. In Willis v. Guen, 5 Hill, able. But a rule being obtained to 23'2, Nelson, C. J., says : " It was once show why there should not be a new supposed, in a like case, that the in- trial, the court were unanimously of dorsers were partners quoad the par- opinion that the Maydwells, by niak- ticular transaction ; but that doctrine ing the bill payable " to our order," had was repudiated when the case after- made themselves partners as to this wards came on for trial before Lord transaction, and the rule was made Mansfield." Sayre v. Herick, 7 Watts absolute. Upon the second trial, be- & S. 883 ; Hopkins v. Smith, 11 Johns, fore Ld. Mansfield, a verdict was 161 ; Shepard v. Hawley, 1 Conn. 367. again found for the defendants on the See Mifflin v. Smith, 17 S. & R. 165. same ground, that the indorsement (n) See /Jost, ch. 17. should have been made by both par- CH. V.J WHO ARE PARTNERS AS TO EACH OTHER. 43 CHAPTER Y. WHO ARE PARTNERS AS TO EACH OTHER. The power of partners over each other, and the responsibility of partners for each other, and their mutual rights and obliga- tions, often make it extremely important to determine who stand in this relation to each other. The basis of this relation is community of interest. But the question has often arisen, and been much discussed, how far this community must extend ; whether, for example, it must cover all losses as well as all profits. And although it is undoubtedly true, that in much the greater number of partner- ships there is a community of loss as well as of profit, the weight of authority as well as of reason seems to be decidedly in favor of the rule that there may be a legal and valid part- nership, although one or more of the partners are guaranteed by the others against loss, (a) And even if one of the parties (a) The doctrine, that persons can- not be partners as to each other unless the}' participate in the losses of a trade, is founded on the language of the judges in several of the leading cases upon partnership. It is also asserted in many other cases which have followed them, and in some is made the apparent ground of decision. Thus in Grace v. Smith, 2 W. Bl. 998, De Grey, C. J., says : " Every man who has a share of the profits of a trade ought also to bear his share in the loss." And in Hoare v. Dawes, 1 Doug. 371, and Coope v. Eyre, 1 H. Bl. 37, the criterion of partnership laid down by all the judges is a par- ticipation in " profit and loss." In Waugh V. Carver, 2 H. Bl. 235, Lord Chief Justice Eyre gives as his reason for holding that the parties were clearly not actual partners, that they were not to be liable in common for losses. Day v. Boswell, 1 Camp. 329. So in Green v. Beesley, 2 Bing. N. C. 108, the court lay great stress upon the fact that the parties sought to be charged as partners were to participate in losses as well as in profits ; Tindal, C. J., saying, " I have always under- stood the definition of partnership to be a mutual participation in profit and loss." In Bond i'. Pittard, 3 M. & W. 357, A. & B., attorneys and solicitors, carried on business together under an agreement by which B. was to have out of the profits 300/. annually, but was not to be liable for any losses, and was to have a lien on the profits for any losses he might sustain by reason of his liability as partner to third persons. A. & B. joined in an action of debt against the defendant, for work and labor done as his attorneys, and 44 THE LAW OF PARTNERSHIP. [CH. agrees to be liable for losses, although he is not to participate in the profits, it is possible that there may be a partnership here, (^aa') the question was, whether the joint action could be maintained. Tiie judge, at the assizes, told the jury that to constitute a partnership there ought to be a community of loss as well as profit ; that a third party was not concluded by having dealt with them as partners, if it turned out that they were not at the time partners in law, for want of a community of profit and loss, and might therefore object to their having been joined as plaintiffs in the action. And he left two ques- tions to the jury : first. Was there a community of profit ? and, secondly. Was there a community of loss? The jury found the first question in the affirmative, and the second in the negative, and, under the direction of the judge, the verdict was entered for the defendant. A rule being obtained, the precise question, whether there must be a sharing of loss as well as of profit, to constitute a partnership inter se, was not considered by the court. Lord Abinger, C. B., however, in his opinion, intimates that B. was in some degree a sharer in the losses. The case, however, was disposed of on other grounds. See Pott v. Eyton, 3 C. B. 32. To the same effect as these English cases, are apparently many American authorities. See the language of the courts in Fehchy v. Hamilton, 1 Wash. C. C. 491 ; Putnam v. Wise, 1 Hill, 239 ; Burckle v. Eckhart, 1 Denio, 341, 842; Ambler v. Bradley, 6 Vt. 119; Bowman v. Bailey, 10 id. 170 ; Buck- nam v. Barnum, 15 Conn. 72 ; Church- man V. Smith, 6 Whart. 148, 149 ; Lowry v. Brooks, 2 McCord, 422 ; Simpson v. Feltz, 1 McCord Ch. 218, 219; Beecham v. Dodd, 3 Harr. 485; Pollard V. Stanton, 7 Ala. 761 ; Eman- uel V. Droughn, 14 Ala. 306 ; Buckner V. Lee, 8 Ga. 288 ; Wood v. Vallette, 7 Ohio St. 172. But of these cases it is to be observed, first, that the remarks of judges, to the effect that partners inter se must participate in losses as well as profits, are frequently general ones, not strictly applicable to the facts before them ; and, secondly, that the real meaning of such observations is often nothing more than that a party's ex- emption from the losses of a trade is a fact, which, though not conclusive, tends to show that he is not an actual partner, and, taken in conjunction with other circumstances, may clearly estab- lish that fact. In Vanderburgh v. Hall, 20 Wend. 71, the court, deeming one of the parties before them to be merely an agent, paid out of profits, and not a partner, add : " He was not to be answerable for losses, wliich con- Jirms the vieiv that the arrangement was made simply in reference to the measure of compensation." The true principle seems to be laid down by Lord Eldon in Ex parte Langdale, 18 Ves. 301 : " A man, who is to have no profit, may be a partner, if holding himself out as such ; as by lending his name. He may also be a partner when the contract is that he shall suffer no loss ; and, I agree, it is not the less a partnership because part of the contract is, that they are not to suffer by bad debts, the personal negli- gence of him who has the custody of the articles, by fire, &c." See Brig- ham V. Dana, 29 Vt. 1. So in Gilpin V. Enderby, 5 B. & Aid. 954, where, though one of the parties was guaran- teed against all debts and losses, there being no usury in the case, the court held that there was a partnership, tliough of a peculiar kind ; and the cir- cumstance that one of the parties was not to bear any losses was not adverted to. See Fereday v. Hordern, Jacob, 144. The distinction between partici- pation in gross and in net proceeds arises more frequently with respect to partnership as to third persons. (aa) For such a case, see Mandeville V. Mandeville, 35 Ga. 243. CH. v.] WHO ARE PARTNERS AS TO EACH OTHER. 45 It would * seem that there must be a community of * 42 interest for business purposes, (b} It cannot be said that partnership exists only for * buying and selling ; * 43 for, as we have seen, physicians and lawyers, who neither buy nor sell professionally, may yet form a professional (b) Hence, voluntary associations or clubs, for social and charitable pur- poses, and the like, are not proper part- nerships ; nor have their members the powers and responsibilities of partners. In Flemjng v. Hector, 2 M. & W. 172, the defendant, a member of the " West- minster Reform Club," was sought to be charged as partner for goods sup- plied and work done for the club at the order of its committee. Lord Abinger, C. B. : "I had thought, but without much consideration, at the Assizes, that these sort of institutions were of such a nature as to come under the game view as a partnership, and that the same incidents might be ex- tended to them ; that where there was 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. . . . Trading associa- tions stand on a very different footing. Where persons engage in a community of profit and loss as partners, one partner has the right of property for the whole: so any of the partners has a right in any ordinary transaction, un- less 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 the 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 ; . . ." Gurney, B. : " The discussion which has taken place in this case has convinced me that this is not the case of a partnership, but of principal and agent ; . . ." So, " clubs " are neither " partnerships " nor " associations " within the meaning of the Winding-up Acts. In re The St. James Club, 2 Ue G., M. & G. 383, 13 Eng. L. & Eq. 589. See ajite, p. * 36, note (e). Nor is a com- pany, the purpose of which is the pur- chase of lands with fund.s raised by subscription, and the division of such lands amongst the subscribers, a com- pany entitled to registration under 7 & 8 Vict. ch. 110, which (§ 2) applies only to associations formed "for any com- mercial or trading purposes." Queen i;. Whitmarsh, 15 Q. B. 600. See Delauney v. Strickland, 2 Stark. 416; Caldicott u. Griffiths, 8 Exch. 898, 22 Eng. L. & Eq. 527 ; Cockered v. Au- compte, 2 C. B. n. s. 4'10; Bright v. Hultou, 3 H. L. Cas. 341, 12 Eng. L. & Eq. 1. In re Worcester Corn Exchange Company, 3 DeG., M. & G. 180, 19 Eng. L. & Eq. 627 ; Cheney v. Clark, 3 Vt. 431. Persons who subscribe in writing certain sums, for the purpose of building a meeting-house, which, when completed, is to be the property of the subscribers in the projiortion of their subscriptions, are not partners. Woodward v. Cowing, 41 Me. 1. And the members of a telegraph company are not partners, but only tenants in common. Irvine v. Forbes, 11 Barb. 587. Nor are the subscribers and holders of stock in a manufacturing corporation which has been defect- ively organized, and transacted busi- ness under such defective organization, thereby made partners, general or spe- cial, in such business. Eay v. Noble, 7 Cush. 188. [Nor if they obtain a certificate of incorporation are they liable as partners, by reason of having transacted business before the capital stock was paid in, contrary to the statute. First Nat. Bk., &c. v. Almy, 117 Mass. 476. But see post, p.* 542, note ; Whipple v. i'arker, 29 Mich. 370, contra.] 46 THE LAW OF PARTNERSHIP. [CH. V. partnership, which is entirely legal and to which all the rules and privileges of the law of partnership apply. Usually, the purpose of the partnership is to buy goods and sell them again. It seems, however, that if the intention of acting in common is limited to buying and making, or if a valu- able product arises from a contribution to common stock of one thing by one and another thing by another, and a working on and with those things by both, this may constitute a partner- ship as to the ownership of that product, and in all the trans- actions which led to it, although the product itself was * 44 not to be sold on common * account, but divided between the parties to it. This would be a manufacturing part- nership ; and the fact that the parties engage in common labors for the purpose of producing a new product out of a common stock, which is to belong to them when made, is, according to some authorities, enough to make it a partnership, (c) This is (c) Musier v. Trumpour, 5 Wend. 274. Tlie plaintiff was the owner of a lime-kiln, and agreed with the de- fendant that the latter should fill the kiln with stone, furnish the necessary wood, and burn the kiln, the lime to be equally divided between them. Held, that a technical partnership existed as to the lime. In Everitt v. Chapman, 6 Conn. 347, A., B., and C. carried on jointly the business of tanning hides, under an agreement by which A. fur- nished hides for one-half of the stock, and received and made market for one- half of the leather ; and B. and C. fur- nished the other half of the stock, and received and made market for the other half of the leather. One of the ques- tions in the case being whether a part- nership existed between the parties, it was objected that the leather when manufactured was to be divided be- tween the copartners, that is, that B. and C. were to receive and sell one- half, A. the other. Daggett, J. : " Be it so. The leather was to be divided into moieties in quantity and quality. Such is the clear meaning of the article. Is it not the same, then, as if the whole leather was, by agreement, to be sold by either of the partners, or by an agent, and the avails divided ? " Upon this case it is remarked, however, by the court, in Loomis v. Marshall, 12 Conn. 86, that " it is not entirely clear that when the leather Avas manufac- tured, it was to be equally divided, and a moiety to be taken by each, as his separate property. It would seem rather to have been the intention of the parties, that both should bear equally the burden of disposing of the leather in market for the equal benefit of both, subject to accountability." See 15 Conn. 73. In Stoallings v. Baker, 15 Mo. 481, the plaintiff and defendant had entered into an agree- ment for getting out lumber, by the terms of which one of the parties was to furnisii a saw-mill and workmen, the other the logs to be sawed ; and the lumber to be equally divided be- tween them. Held, that those facts did not constitute a partnership i)iter se, since it appeared that tlie lumber was to be sold, not on joint account, but by each party separately on his own. So also in Blue v. Leathers, 15 111. 31, where the object of the joint enteri)rise was the tillage of land, and the crops were to be equally divided by the parties. See, however, contra, Allen v. Davis, 13 Ark. 28. And see Meaher V. Cox, 1 Select Cas. Ala. 15G ; Martin CH. v.] WHO ARE PARTNERS AS TO EACH OTHER. 47 open to some question, it is true ; that the thing thus made, after being divided among them, is to be sold by each. This V. Tidwell, 36 Geo. 332. [An agree- ment between two persons that one shall furnish land and stock, and the other the labor, each to pay one-half the cost of feeding the stock and la- borers, and other plantation expenses, and divide the crop equally, is a part- nership as between the parties. HoUi- field V. White, 62 Ga. 567. Otherwise, if there be no community of expense. Holloway v. Brinkley, 42 Ga. 226; Smith V. Sumner, 48 Ga. 425. So where the owner of a tug and the owner of a barge went into the freighting business, w'ith their respective vessels, wages and expenses (except for repairs) to be paid out of the earnings, and the balance of the profits to be divided in proportion to the agreed values of the respective vessels, tliis was held to be a partnership. Bowas v. Pioneer Tow Line, 2 Sawyer, 21. But see Fay v. Davidson, 13 Minn. 523. So an agree- ment that A. shall furnish a stock of goods, shop fixtures, &c., and that B. shall pay the rent of the shop, manage the business, and pay A. interest on one- half of the fixtures, the profits to be divided equally, renders A. and B. partners as to third parties, although it be orally imderstood, at the time of executing the agreement, that the share of profits to B. shall be in lieu of sal- ary. Brigham i'. Clark, 100 Mass. 430. So where three partners agree " to enter upon an operation embracing the pur- chasing and selling of shingles," — one to purchase, and the other two to re- ceive and sell, the shingles, to be the property of these two, who were to furnish the capital, — all to share equally the profits and losses, they are partners as to third parties. Getchell V. Foster, 106 Mass. 42. An agree- ment by which one party contributes his inchoate interest in an invention, and another contributes the money necessary to procure a patent, and both are to render their services in making it remunerative, is an agree- ment for a partnership. Somerby v. Buntin, 118 Mass. 279. Where one contributes the use of real estate, and the other furnishes capital and labor, whereby the former is utilized, the profits to be divided, a partnership is constituted. Wood v. Beath, 23 Wis. 254; Dalton v. Dalton, 33 Ga. 343. A. and B. opened a joint account with a bank ; B. guaranteeing payment of any business which might be done from A. & B., as " A. & Co." A. carried on the business as " A'. & Co.," in which B. took no part. Held partners. Ex parte Good, 5 Ch. D. 46 ; reversing Ex parte Halifax, &c., 25 W. R. 83. As to what particular facts constitute a partnership in special cases, see fur- ther Duff V. McGuire, 99 Mass. 300; Decker v. Howell, 42 Cal. 636 ; mining enterprises, Pettee v. Appleton, 114 Mass. 114 ; Adams v. Carter, 53 Ga. 160 ; brickmaking, Farmer's Ins. Co. v. Ross, 29 Ohio St. 429; farming, Beauregard V. Case, 91 U. S. 134 ; leasing a rail- road. Wills V. Simmonds, 51 How. (N. Y.) 48; agreement amongst cred- itors to continue and carry on the busi- ness of a debtor, Pettes i-. Atkins, 60 111. 454 ; agreement between tinner and plumber to work together, Tyler v. Scott, 45 Vt. 261 ; jobbing, Gillbank V. Stephenson, 31 Wis. 592 ; agree- ment to purchase and man a ferry- boat. Whitman v. Porter, 107 Mass. 522; joint-stock association, unincor- porated, for purchase of land and bor- ing for oil, Hedge's Appeal, 63 Penn. St. 273 ; agreement between two railroad corporations, Gill «. M. & L. R. R., L. R. Q. B. 186; lumbering enterprise, Up- ham V. Hewett, 42 Wis. 85; McComb V. Credit Mobilier, 34 Leg. Int., 29 U. S. C. Ct. Dist. Penn. ; building a railroad ; lease of mill, half profits as rent, Dalton & Co. v. Hawes, 37 Ga. 115; (but see Parker i-. Fergus, 43 111. 437 ;) where one advances capital, and the other supplies services, the profits be- ing shared, Wright v. Davidson, 13 Minn. 449; Parker v. Canfield, 37 Conn. 250 ; series of adventures, El- 48 THE LAW OF PARTNERSHIP. [CH. V. may constitute it a business transaction ; but if the parties thus combined stock and work for a product to be divided between them, and not for sale, but for each party to keep and use the share that fell to him, we should say it was certg,inly not a partnership. It is not perhaps certain, whether the law of partnership requires a community of interest in the profits resulting from the business or work done. We think, however, that * 45 this is requisite, ((i) * Thus, if persons purchase goods dredge v. Frost, 1 Rob. (N. Y.) 518. As to special facts' which do not con- stitute a partnership, see further Mor- rison V. Cole, 30 Midi. 102, contract of one to deliver to the other hay, which the latter is to take to market and sell; Beckwith v. Talbot, 2 Col. T. 639, contract to keep and sell cattle; Anten v. Ellingwood, 51 How. (N. Y.) 359, editing and conducting a newspaper ; Marsh v. N. W. Ins. Co., 3 Biss. U. S. C. Ct. 351; Lewis v. Greider, 51 N. Y. 231, single mercan- tile adventure, — series of adventures; but see Smith v. Wright, 4 Abb. (N. Y.) App. Dec. 274 ; common interests in a patent-right, Bocklen v. Hardenburgh, 37 N. Y. Supr. Ct. 110; cultivation of land on shares, Holloway v. Brinkley, 42 Ga. 226 ; cheese-factory association, Hawley v. Keeler, 62 Barb. (N. Y.) 231 ; purchase of land and erecting buildings thereon, Kelshaw v. Jukes, 8 L. T. N. s. 387 ; joint contract to per- form labor and furnish materials, each a specific part. Smith v. Moynahan, 44 Cal. 53; advance of money for pros- ecution of business to be reimbursed out of sales, with share of profits in lieu of interest, Lintner v. Millikin, 47 111. 178. See also Edwards v. Tracy, 62Penn. St. 374; Dailey o. Hall, 5 Bush (Ky.), 549; Freese v. Ideson, 49 111. 191 ; Parker v. Canfield, 37 Conn. 317, A debt of A. is transferred to and assumed by B., who is to pay it out of the profits of a partnership. This does not make A. a member of the firm. Delaney v. Timberlake, Sup. Ct. Minn., 15 Abb. L. J. 513. If A. agrees to advance B. a certain sum, to enable the latter to carry on business, who is to pay interest on the average balance, A. receiving his share of the profits after expenses are paid, but not to be liable for losses, is not a partner- ship as to third persons. Smith v. Knight, 71 111. 148.] {d) Such certainly would seem to be the principle of many adjudications, which, coupled with the numerous opin- ions of judges to the same efiect, are apparently decisive of the point. Thus, in Hoare v. Dawes, 1 Doug. 371, several persons had employed a broker to purchase a lot of tea, of which they were to have a separate share. The question being whether the employers of the broker were partners, so as to make any one of them liable for the price of all the tea so purchased, it was held, that they were not ; since there was no communion of profit and loss, but merely an undertaking with the broker, by each, for a particular quan- tity. So in Coope v. Eyre, 1 H. Bl. 37, where Lord Loughborough says : " If the parties be jointly concerned iu the purchase, they must also be jointly concerned in the future sale ; otherwise, they are not partners." On the same principle, joint purchases of land, or even of merchandise, by two or more, cannot have the effect of making them part- ners, nor of raising a presumption that they are so. Porter v. M'Clure, 15 Wend. 187 ; Ballon v. Spencer, 4 Cow. 163; Brady v. Calhoun, 1 Penn. 140; Gilmore v. Black, 2 Fairf. 485; Put- nam V. Wise, 1 Hill, 234 ; Barton v. Williams, 5 B. & Aid. 395; Noyes v. Cushman, 25 Vt. 390. In this last case, C. and N. bought a grist-mill and privilege, and agreed to share the ex- CH. v.] WHO ARE PARTNERS AS TO EACH OTHER. 49 to be sent on a mercantile adventure, the proceeds to be reinvested in a return cargo, the question may arise. When and how hjng are they partners ? Here it would seem that, if there be a partnership in the buying of the goods, and in the sending of them abroad and there selling them, there may still be no partnersliip in the purchase or the ownership of the return cargo, unless that cargo was to l)e sold for the common benefit. For if it is to be divided in specie, each of the company taking in severalty his share, it may be doubted whether it could be said that there was any partnership in the return cargo, (e) pense of refitting and repairing the same. They afterward sold one-sixth of the mill and privilege to M., who agreed to bear the cost of repairing and refitting in like proportion. Held, that by tliese mutual contracts to repair and rebuild, C, N., and M. were not made partners ; but that, when they thus purchased and contracted, with a view to a joint enterprise and under an agreement to share in the profit and loss thereof, a partnership was tlien constituted between tlieni. (e) See preceding note. Holmes v. United Insurance Company, 2 Johns. Cas. 329. The plaintiff effected a policy of insurance upon a return cargo for $2.5,000, from Calcutta to Baltimore, " intei'est as it may appear." His actual interest in the cargo, which was owned by himself and four other per- sons, proved to be about $13,000. He claimed to recover in the present action the overplus premium, and was clearly entitled so to do, unless the other co- owners of the cargo were partners with him, and might therefore, in case of loss, have covered some ^jart of their interest under his policy. The only facts tending to establish a partnership were that the cargo belonged to the plaintiff and the four other persons, and had been purchased with the proceeds of an outward cargo, which belonged to the same persons. The plaintiff was not cimnected in trade with the other co-owners of the cargo, an) But if two or more creditors take an assignment of their debtor's stock in trade, and agree together and with him to carry on the business and apply the profits to the payment of their debts due them, this does not of itself make them part- ners as between themselves, (pp) There is nothing to prevent the same person from being a partner in several distinct firms, {q') This may involve difficult questions of fact, or perhaps of law, arising from the compli- cation of interests, especially in case of bankruptcy. (^^) A («) Salomons tJ. Nissen, 2 T. R. 674. tion. Cumpston v. McNair, 1 Wend. So, if two mercantile houses recom- 457. In like manner, if the proprietors mend consignments to each other, and of separate lines of stage-coaches hire divide the gross commissions on all and keep a stable in common for their sales of goods so recommended, quoad coach horses, and employ and pay a hoc they are partners. Cheap v. Cra- hostler at their joint expense, a part- mond, 4 B. & Aid. 663. So, also, where nership exists between them for these two jointly undertake to procure a purposes. Ripley v. Colby, 3 Fost. cargo for a vessel, the commission 438. See Bentley v. White, 3 B. Mon. therefor to be divided between them. 268 ; Benson v. M'Bee, 2 McMull. 91. Bovill V. Hammond, 6 B. & C. 149. (o) Holmes v. Higgins, 1 B. & C. 74. And where D. & W. were owners of a (;>) Ex parte Cellar, 1 Rose, 297. quantity of salt, taken to secure them- (pp) Taylor v. Herring, 10 Bosw. selves against their joint liability as 447. indorsers of a note, and by agreement (q) Swan v. Steele, 7 East, 210 ; between them D. took tlie salt to mar- Bosanquet v. Wray, 1 B. & C. 597 ; ket to sell on joint account, and did Elderkin v. Winne, 1 Chand. 27. sell it, and the proceeds were applied (qq) See post, ch. 8, § 3 ; and Steele for the joint benefit, it was held, that v. Stuart, Law Rep. 2 Eq. Cas. 84. D. & W. were partners in this transac- CH. v.] AVHO ARE PARTNERS AS TO EACH OTHER. 67 firm cannot sue a firm, if one person is a partner in both. But one member of a firm may sue another firm of which his co- partners were members, on a covenant executed to him by that firm, {qqq) Some of these questions we shall hereafter con- sider, when we treat of bankruptcy and the settlement of a partnership estate. It seems, however, not only that a member of one partnership may become a member of another, but a member of one firm may enter into such a bargain with a third party, in respect to the interest of tlie first in the stock, busi- ness, or profits of his partnership, as shall constitute this third person and himself partners as to the interest of the first, although the partnerships are entirely distinct, the new from the old, and the third person acquires no rights and in- curs no obligations in reference to the first partnership, (r) (1777) MuUany v. Kernan, 10 Iowa, 224. (r) To this effect is the language of Eyre, C. J., in Bolton r. Puller, 1 B. & P. 546 : " There can be no doubt, that, as between themselves, a partnership may have transactions with an indi- vidual partner, or with two or more of the partners having their separate es- tate engaged in some joint concern in whicli the general partnership is not interested ; and that they may by tlieir acts convert the joint property- of the general partnership into the separate property of an individual partner, or into the joint property of two or more partners, or e conrerso. And their transactions in this respect will, gener- ally speaking, bind third persons, and third persons may take advantage of them in tlie same manner as if the partnership were transacting business with strangers ; for instance, suppose the general partnersliip to have sold a bale of goods to the particular partner- ship, a creditor of the particular part- nersliip might take those goods in execution for the separate debt of that particular partnership. In some re- spects, therefore, an individual partner, or a particular partnershii) consisting of two or more of those persons, who are partners in some larger partner- ship, may be considered as third per- sons in transactions in which the general partnership may happen to be engaged with their correspondent." The court proceeded upon the same principle in Brown v. De Tastet, Jac. 284. There A., B., and C. being in partnership, A. agreed with D. to give him a moiety of his share in the firm. It was liihl, that an account might be decreed between A. and D. without making B. and C. parties. See Glass- ington V. Thwaites, 1 Sim. & S. 124. In Ex parte Barrow, 2 Rose, 255, the two Slyths, father and son, were in partnership. They agreed to dissolve ; that the affairs of the partnership should be settled by arbitration ; and that Slyth the younger should have one-third out of the profits of the busi- ness, until some situation should be foimd for him. The affairs of the part- nership were never adjusted ; but, shortly after, Slyth the elder, who re- mained in possession of the effects of the firm, formed a new partnership with Gyles. A commission of bank- ruptcy having issued against the two Slyths, their assignees took possession of the effects of Slyth and Gyles, to an amount more than sufficient to pay the creditors of that firm. The ques- tion in the present case was to whom tlie surplus belonged, whether to the joint creditors of Slyth the elder and 58 THE LAW OP PARTNERSHIP. [CH. V. * 53 *If the new partnership becomes insolvent, it would affect the old partnership only as the insolvency of any member thereof would, (s) If a person belongs to two firms, he may transfer to the credit of one of them liis interest in the other, against the wishes of his partners in the second firm; nor would tliis necessarily operate a dissolution of the second firm, (ss) But it is so obvious that such complicated arrange- ments may bring upon the parties great inconvenience and embarrassment, that they will continue to be very rare, even if they take place at all. Where property is left to two or more persons by a will, in such a way that they would take it as joint tenants, or as ten- ants in common, and they take it as partners, and continue to hold and use it as partnership stock, their rights to and in the property, and against each other in relation to the property, are governed by the law of partnership. Qf) To this it may Slyth the younger, or to the separate creditors of Slyth the elder. The court hfld, that it was the separate property of Slyth the elder. Lord Chancellor Eldon, in the course of his opinion, said: "Now Slyth the son was no partner in this (the new) partnership; for althougli Slyth the father might be obliged to give one-third of his profits to Slyth the son under this arrange- ment, yet I take it to liave been long since clearly established, that a man maj' become a partner with A., where A. and B. are partners, and yet not be a member of that partnership which existed between A. and B. In the case of Sir Charles Raymond, a banker in the city, a Mr. Fletcher, agreed with Sir Charles Raymond that he should be interested so far as to receive a share of his profits of the business, and which share he had a right to draw out of the firm of Raymond & Co. But it was held that he was no partner in that partnership, had no de- mand against it, had no account in it, and that he must be satisfied with a share of the profits arising and given to Sir Charles Raymond." See Fre- ligh V. Miller, 16 La. Ann. 418. (s) See preceding note. {ss) Russell I'. Leland, 12 Allen, 349. (t) Jackson v. Jackson, 7 Ves. 535. Same case on Appeal, 9 "Ves. 591. In this case, personal property, including leaseholds, property in trade, &c., was left to A. & B., as residuary legatees. By both the Master of the Rolls, and the Lord Chancellor on appeal, it was held, that they took it originally as joint-tenants. But the Master thought the bequest positive, and that there were no circumstances by which he could be guided in giving to the words of the will any other than their literal import. Therefore he decreed that, on the death of A., all the property thus bequeathed, excepting a portion of the accrued profits, belonged to B., the survivor. The Lord Chancellor, on the other hand, held, that the will had, neither from the obvious inten- tion, the purposes to which the testator had devoted his property, nor from any other consideration, gone the length of providing that the residuary legatees should not have any power of destroying the original joint-tenancy by their acts and agreements. A. & B. then possessing the power of severing the joint-tenancy, he held, that they had exercised it, both as to the capital CH. v.] WHO ARE PARTNERS AS TO EACH OTHER. 59 be said, by way of * exception, that if the will con- * 54 tained distinct expressions which would give to the property the quality of joint-tenancy, even when it should be held in partnership, these words, in reference to the legatees, would take effect, (w) Questions of partnership are far more frequent, and generally more important, when they arise from relations between the firm, or an alleged member of it, and third persons. These questions will be considered in the next chapter. Here we will sum up what seem to us the true principles of partnership as between the partners, as follows: — Persons are partners in regard to each other, if each of them contributes either capital (money, merchandise, chattels, or choses in action), or credit, or skill and care, or labor, or two or more or all of these, and all the contributions are put together into common stock, to be used for the purpose of carrying on business, or for one or more business transactions, for the com- mon benefit, (y) and the profits, by acting for twelve years as partners in trade tiierein ; and that, therefore, they were to be con- sidered as tenants in common of the property embarked in trade, from tlie time tliey were let into possession. See 2 Hov. Supp. 66. («) As where a testator, after mak- ing considerable pecuniary and otlier legacies, witliont making any express disposition of the residue of his per- sonal estate, constituted his two eldest sons his executors. Though tlie exec- utors had carried on trade together with a portion of the residue, it was, nevertheless, held, that, upon the death of one of them, the whole of the re- siduum survived to the other. Hall v. Digby, 4 Bro. P. C. 224. In 9 Ves. 59G, the Lord Chancellor thus states tlie principle upon which the case was decided : " In that case Mr. Fazaker- ley, Sir John Strange, and the otlier considerable persons who signed the reasons upon the appeal, all agreed that actual dealing in partnership with effects left to two jointly, with intent that it should be a dealing in partner- ship, though they had taken under the will as joint-tenants, yet having once begun to act with the property as mer- chants, would sever the joint-tenancy, unless the will contains something that would clothe the property, though en- gaged in trade, with the quaHty of joint-tenancy." (f) The proposition of the text is illustrated by a great variety of cases. The most unmistakable, and perhaps the most common, form of partnership, is where two or more per- sons agree to contribute both capital and labor, and to share in both profit and loss, equally or in certain specified proportions. Such an agreement being executed, there can be no question as to the existence of a complete partner- ship inter se. See Metcalf v. Royal Exchange Assurance Co., Barnard. 343; Goddard v. Pratt, 16 Pick. 412 Green v. Beesley, 2 Bing. N. C. 108 Wilson V. Whitehead, 10 M. & W. 503 Doak V. Swann, 8 Greenl. 170; Griffith V. Buffam, 22 Vt. 181 ; Cumston v. MeXair, 1 Wend. 457; Halsted v. Shnielzel, 17 Johns. 80; Brown v. Tapscott, 6 M. & W. 119; Quine V. Quine, 9 Sined. & M. 155; Goule 60 THE LAW OF PARTNERSHIP. [CH. V. 55 * It is certainly not necessary that each partner should bring into the common stock both labor and property. V. Hayward, 1 Cal. 345; Wadswortli V. Manning, 4 Md. 59; Emanuel v. Drauglin, 14 Ala. 303. Where parties agree to enter into an association for the purpose of buying and selling, and carrying on a joint business, indefi- nitely, no stipulation for dividing profit and loss is necessary, as that is an in- cident to the prosecution of their joint business. Barrett v. Swann, 17 Me. 180. As to where there is a partner- ship in a patent, see Parkhurst v. Kins- man, 1 Blatch. C. C. 488 ; Penniman V. Munson, 26 Vt. 164. The partners need not all contribute money, nor in equal proportions. An}^ thing of value for the use of the partnership, as for example a license to trade, is a suffi- cient contribution to the joint funds. The Herkimer, Stewart Adm. 23, 24. Nor need the property itself be put into the common stock. On the other hand, the capital of a firm may consist of the mere use of property owned by the individual partners separately. Chancellor Walworth, in Champion v. Bostwick, 18 Wend. 183. Thus, car- riers of passengers and goods some- times divide among themselves a line of road, each of them, at separate ex- pense, furnishing the means of trans- portation for a particular portion of it. If, then, they share proportionably in the profits and losses accruing from the running of the whole line, they are part- ners inter se, and the capital contributed by each is tlie use of the vehicles, and other property wliich each provides for his separate part of the route. Cham- pion V. Bostwick, supra; Fromont v. Coupland, 2 Bing. 170 ; Cobb v. Abbot, 14 Pick. 289 ; The Steamboat Swallow, Olcott Adm. 334. See Waland v. El- kins, 1 Stark. 307 ; Wetmore v. Baker, 9 Johns. 307, and the comments of the court thereon in Champion v. Bost- wick. See Cotter v. Bettner, 1 Bosw. 490. But if in such cases the carriers do not own the profits resulting from the whole road, as a common^fund out of which each is entitled to draw a cer- tain share, but each one of tliem re- ceives only those profits and bears only those losses which accrue from his own particular piece of road, tliere is now no such community of interest between them as to make them part- ners. Mohawk & Hudson R. R. Co. v. Niles, 8 Hill, 162; Briggs v. Vander- bilt, 19 Barb. 222; Bonsteel v. Vander- bilt, 21 id. 26 ; Pattison v. Blanchard, 1 Seld. 186; Ellsworth v. Tartt, 26 Ala. 733. [Where several common carriers on a continuous route divide the proceeds of the joint transporta- tion in an agreed proportion, this does not constitute them partners as to the carriage of the goods, there being no general agreement to share the proceeds of the whole business on all their lines. Goss v. N. Y. & P. R. R. Co., 99 Mass. 220.] In French V. Styring, 2 C. B. n. s. 357, two joint owners of a race-horse had entered into an arrangement by which one of them liad the entire management of the horse, and paid in advance all the expenses of keeping, training, &c. The other co-owner was to pay a moiety of these expenses, and to share equally in the earnings. One of the questions raised in the case was, wliether that agreement constituted a pnrtnership. Cockburn, C. J. : "I think the fair re- sult of the evidence is, that there was no partnership in the horse ; but that the plaintiff" and defendant were owners in common, each being entitled to an un- divided moiety, — part-owners, but not partners. But, although they were not partners in the horse, I concur in the argument of the defendant's counsel that they were partners in the manage- ment and working of the horse." Crowder, J. : " There was certainly no partnership in tlie horse; but it is con- tended that there was a partnership so far as regarded tlie running and the managing of the horse. If tiiat be so, then what was the capital 1 It con- sisted of the money necessary to train, feed, convey the horse to races, and CH. v.] WHO ARE PARTNERS AS TO EACH OTHER. 61 It is a familiar * principle, quite frequently put in prac- * 56 tice, tliat one or more of the partners may contribute money alone, while one or two others may contribute labor and money, or labor alone, (if) And indeed all may contribute labor, and none money, (a:) The principles, or rules above stated, as defining or describ- ing a partnership, may be further illustrated by cases in which joint business transactions have been conducted, but were held not to constitute a partnership, for the want of some essential ingredient, as where the contributions of all the parties were not mingled into common stock. (?/) So where the capital other matters ; that is, of the money necessary to be expended to i)Ut the horse in a condition to win liis stakes." See aufe, page *48, note (j), for furtiier illustrations of partuersliips in whicli tlie use of property alone constitutes the capital. See also Bulfinch v. Winclienpack, 3 Allen, 161. {w) Keid V. HoUinshead, 4 B. & C. 867; Ex parte Chuck, 8 Bing. 46'J; Candler v. Candler, 6 Madd. 141 ; Bovill V. Hammond, 6 B. & C. 149 ; Dob v. Halsey, 16 Johns. 34; Gregg Town- sliip 1-. Half-Moon Township, 2 Watts, 342; Simpson i-. Fetz, 1 McCord Ch. 218; Potter v. Moses, 1 R. I. 430; Winship v. Bank of the United States, 5 Pet. 529; Tibbatts v. Tibbatts, 6 McLean, 80; Brace v. Washburn, 43 Me. 564 ; Wood r. Vallette, 7 Ohio St. 122. See Dwinel i-. Stone, 30 Me. 384. (.r) Not only may one partner con- tribute labor alone to the joint under- taking, but the contributions of all the partners, and the whole capital of the firm, may consist substantially of personal services, as is generally the case in professional partnerships be- tween solicitors, physicians, &c. See Tench v. Roberts, 6 Madd, 145, note (a). So where two commission houses, one in London, the other in Rio Janeiro, in accordance with mutual stipulations, recommend customers to each other, and divide equally the commissions on the sale of all goods thus recommended by the one house to the other, quoad hue they are partners, the capital of the partnership being the partners' mutual exertion of influence in each other's favor. Cheap v. Cramond, 4 B. iSL Aid. 663. See Dix v. Otis, 5 Pick. 38. (y) In Smith v. Wright, 5 Sandf. 113, two mercantile houses had carried on a joint business under the following arrangement : Each firm agreed, in its own name and with its own funds, to make puixhases and sales of flour and other produce. But all such contracts were to be made for the joint account and benefit of the two firms, who were to share equally in the profits and losses resulting from the separate deal- ings of each firm in this particular line of business. Upon the question whether this agreement constituted the parties to it partners, Sandford, J., said: "There was no union of funds contemplated by the agreement. Each firm was to make and fulfil its own contracts. There was no union of services, because it might so happen that one of the firms would be unable, or deem it unwise, to make any con- tracts at all ; and yet, in the absence of bad faith, it would participate in the profits, and would certainly be liable to share the losses of the con- tracts made by the other firm. The whole effect of the agreement was to bind two distinct mercantile houses, acting in tlieir own names, separately and independently of each other, to share the profits and losses, when they should be ascertained, arising from one particular department of their 62 THE LAW OF PARTNERSHIP. [CH. V. * 67 and labor employed * were not combined together for business purposes and a common profit, {z") And it seems that there is a difference between an enterprise undertaken by a number of persons jointly, with the intent thereby to diminish a loss, and one for the sake of profit, properly speaking, (a) Tlie capital may be, and remain throughout the partnership, the property of only a part of the partners ; (6) but all must own in community the profits resulting from the business, (c) trade. We think that this did not constitute tiie two firms copartners in tlie contracts, wliicli the respective separate firms made in the transaction of that portion of tlieir business." Benson v. M'Bee, 2 McMullen, 91. (z) Thus a deed of assignment by a debtor of all his property to trustees for the benefit of creditors, containing a clause by which the trustees are authorized to carry on the trade of the debtor, will not make the creditors who sign the deed partners, if the carrying on of the business is merely auxiliary to winding up the debtor's affairs, and has in view merely the realization of his property. Other- wise, if the object of the deed is to carry on the trade in a spirited and extensive manner, for the purpose of making a profit for the parties to it. Owen 0. Body, 5 Ad. & El. 28 ; Janes V. Whitbread, 11 C. B. 406, 5 Eng. L. & Eq. 431; Coate v. Williams, 9 id. 481; Hickman v. Cox, 18 C. B. 617, 36 id. 400, 3 C. B. n. s. 523. (a) As where underwriters, having separately insured, and separately ac- cepted an abandonment of a vessel, then unite in prosecuting the original voyage, "it is carrying the general principle too far to consider them in the light of common partners," since they take the vessel only for the pur- pose of diminishing a loss, and with no other view than to sell her at its termination. Livingston, J., in United Ins. Co. V. Scott, 1 Johns. 112. So, where a debtor, in consideration of his indebtedness, transfers the control of his business to his creditors, the latter to receive a large share of the profits until the indebtedness of the former shall be reduced to a specified amount, the debtor and his creditors are not partners. Brandred v. Muzzy, 1 Dutch. 208. See Price v. Groom, 2 Exch. 542. {b) See last note ; also ante, p. * 44 and note (c). Where partners in a mercantile house enter into an ar- rangement by which they admit other parties to share in their present profits and losses, and further agree, at the end of a certain period and upon cer- tain considerations, to transfer to those parties certain shares in the capital, such present participation in the prof- its, with a right to the use of the capital, and an inchoate title to it, constitutes a full partnership. Vassar V. Camp, 14 Barb. 341. (c) The courts have not perhaps precisely defined a partner's interest in accruing profits, as an ownership of them. But it is evident that in all cases of actual partnership, such is the fact. Further, an ownership of a part of the capital of a firm will not alone make a man a partner, nor the n)ere reception of a share of the profits of a trade. But if there be an owner- ship of the profits, while they are profits, that one circumstance alone will constitute a complete partnership. See p. * 44 and note. Hence, a joint ownership of profits seems to be the real test of partnership, since it is that thing which by itself is sufficient to constitute an actual partnership, and without which none ever exists. And in some cases this criterion of partner- ship appears to be recognized by the courts. Thus, in Bond v. Pittard, 3 CH, v.] WHO ARE PARTNERS AS TO EACH OTHER. 63 * It should be added, that whether two or more persons * 58 are partners as to each other must generally, and per- haps always, be determined by the intention of the parties, as the same is expressed in the words of their contract, or may be gathered from the acts and from all the circumstances which are available for the interpretation or construction of the contract. (cZ) M. & W. 357, G. F. Watts & P. H. Watts carried on business as attorneys and solicitors, under an agreement by wliicli v. H. Watts was to receive in tiie first place, out of the profits of the business, the sum of 300/. annually. But lie was not to be liable for any losses, and was to have a lien on profits to indemnify him for any losses he might sustain, by reason of his liability as partner, to third persons. G. F. Watts being bankrupt, the ques- tion was whether his assignees and P. H. Watts could join in an action against the defendant for the price of work and labor done. Parke, B. " To whom would this money belong if recovered ? — It would belong to botli till the end of the year, when the amount of profits would be ascer- tained ; and then in one event 300/. would be due to P. H. Watts, and the other would be entitled to the bal- ance." Again : " I have no doubt that the contract could have been entered into by both the Messrs. Watts, whether they were partners or not ; and, if it were, both would be entitled to sue. If it were entered into by one only, then the question would be, whether the other was jointly inter- ested in the contract. According to the agreement between them, it ap- pears that Pliilip Henry Watts was to receive 300/. a j'ear out of the profits, that is, out of the net profits, which could not be ascertained imtil a view was taken of the real state of the accounts at the end of the year. But in the mean time, doubtless the money recovered in this action would be the joint property of both, and would go into the general fund for the benefit of both, until that state of things should arise when a division would take place, and for this reason I am of opinion that in this case the contract is with both." See Wish v. bmall, 1 Camp. 331 ; Barry v. Nesham, 3 M., G. & Sc. 657, opinion of Maule, J. In subsequent notes the subject is dis- cussed at greater length. {d) Hence, if persons who unite in a joint undertaking expressly declare that they do not mean to become part- ners, the law will not hold them part- ners as to each other, unless the actual relations into which they enter neutralize and negative their declara- tions. Gill V. Kuhn, 6 S. & R. 337 ; Kerr v. Potter, 6 Gill, 404 ; Gilpin v. Enderby, 5 B. & Aid. 954 ; [Freeman V. Bloomfield, 43 Mo. 391.] But the controlling infiuence which the courts give to the intention of the parties, in questions of this kind, is best illus- trated by a large class of cases in Avhich the inquiry is, whether as be- tween thetnselces a person who receives a share of the profits is a partner with another person, or only his agent and servant. Thus, if A. & B. are engaged in a particular trade, of which A., who finds capital, receives a part of the profits, and B., who manages the busi- ness, receives another part, the real relation between A. & B. may be that of partners, or that of principal and agent, and can be determined only by discovering from the whole character of their connection the intention with which they formed it. Thus, in Muzzy V. Whitney, 10 Johns. 2^:0, A. & B. had agreed with a turnpike corporation to build and complete a certain road. They afterwards contracted with C. " to let him have a share of the profits, if any, in making the second ten miles 64 THE LAW OF PARTNERSHIP. [CH. V. of the road, in proportion to the lu'lp he affortleil in completing the same, tiie one-lialf of it to be taken from A.'s part, and the other from B.'s part." It was hekl that this agreement consti- tiited no partnershij) between the par- tics, but only apjiearcd to be a mode of paj'ing C. for his lielp and labor. In Rawlinson v. Clarke, 15 M. & W. 292, A., a surgeon and apothecary, sold out his business to B., and further agreed to employ himself for a year in transferring his business to B., — in consideration whereof B. agreed to give A. during the year a moiety of the clear profits of the trade. Held, that by this agreement A. & B. were not made partners ; and that, upon a view of the whole deed, it would bear no other construction than that A. was to receive nothing more than a salary for the services he was to afford to B., in helping him to continue the busi- ness. See Salter v. Ham, .31 N. Y. 321. In Stocker v. Brockelbank, o Mac. & G. 250 ; 5 Eng. L. & Eq. 67 ; the main question was whether the plain- tiff and the defendants were partners. The defendants were licensees of a patent, and, with the view of exercis- ing and making a profit out of their patent privilege, entered into a con- tract with the plaintiff for the manage- ment of their business. By the deed executed by the parties, the defendants were to furnish all the capital, and the plaintiff was to manage and generally superintend the business ; receiving therefor by way of compensation and as "salary "a "sum of money equal to 40 per cent upon the net profits." The deed everywhere and in a care- ful and studied maimer excluded the plaintiff from any interest in the prof- its. His remuneration was always spoken of as his " salary," and it was further declared that the contract should not inure as a contract of partnership, and that the word " part- ners," when used in the deed, should be held to apply solely to the defend- ants. There were also other provi- sions as to what should be done on the happening of certain contingencies. The Lord Chancellor, in deciding the question of partnersliip, considered it material to take into consideration the whole character of the agreement be- tween the parties ; to examine the general state of the business, the na- ture of the plaintiff's interest given him by the deed, the nature of his remuneration, and the nature of his service. In conclusion of this part of the case, he said : " I have stated the nature of the parties' interests ; I have stated the nature of the services, and the express declaration that no part- nership should arise out of the con- tract. Does, then, the interest which the party had in the amount of the profits (because his remuneration was to be measured by that amount) con- stitute him a partner } I think it does not, and I tliink the authorities are decisive. ... I tiierefore am clearly of opinion that in this case there was no partnersliip ; that it was simply a contract of hiring and of service, the remuneration to be measured witli ref- erence to the amount of the profits of the business." So, in Hazard v. Haz- ard, 1 Story, 371, where A. allowed to B., for his services, one-third of the profits of his business for one year, and one-fourth for another; the court hekl, that the parties, not liaving in- tended by this agreement to become partners, did not become so, and that B.'s share of tlie profits was merely a mode of paying him for his services as agent. See, to the same point, Wilkinson v. Erazier, 4 Esp. 182 ; Mair V. Glennil, 4 M. & S. 240 ; Geddes v. Wallace, 2 Bligli, 270 ; Baxter v. Rod- man, 8 Pick. 435 ; Ross v. Drinker, 2 Hall, 415 ; Allen v. Dunn, 15 Me. 292; M'Arthur v. Ladd, 5 Ohio, 431; Motley V. Jones, 3 Ired. 144 ; Kellogg V. Griswold, 12 Vt. 291 ; Stearns v. Haven, 16 id. 87 ; Mason v. Potter, 26 id. 722; Norment v. Hull, 1 Humph. 320 ; Lowry v. Brooks, 2 McCord, 421 ; Bull V. Schuberth, 2 Md. 38 ; Wilkin- son V. Jett, 7 Leigh, 115; Potter v. Moses, 1 R. I. 430 ; Nutting v. Colt, 3 Halst, Ch. 539; Ogden v. Astor, 4 Sandf. 311 ; Price v. Alexander, 2 Greene, 427; Goode v. McCartney, 10 Texas, 193. The case of Tench v. cii. v.] WHO ARE PARTNERS AS TO EACH OTHER. 65 Roberts, 6 Madd. 145, note, at first eiglit seems to hold tliat persons may be made partners inter se, contrary to tlieir avowed and real intentions. There the contract of tlie parties was in this form : " Mr. Gregory Koberts and Mr. James Tench agree as fol- lows : Mr. James Tench to become an assistant to Mr. Roberts, and to take one-third part of the profits of the business, by way and in lieu of a salary ; not to be considered as a part- nership. Mr. Roberts agrees to allow Mr. Tench the above for his sliare as an assistant." The Vice-Chancellor held, that this agreement constituted a partnership which was contrary to statute (22 Geo. 2, ch. 46, § 11), as being between an attorney and an un- qualified person ; and that the neces- sary and legal effect of the agreement, and the policy of the statute, could not be escaped by the declaration of the party that a partnersliip should not be constituted. But the case is not nec- essarily to be regarded as deciding that there was a partnership between the parties to the above contract, though they were also the only par- ties to the present suit. According to the common understanding of Ex parte Hamper, 17 Ves. 404, to which case the court referred as its authority, an agreement of the above nature would undoubtedly have made the parties partners as to third persons. Conse- quently the decision in this case may be regarded as only declaring that a contract between an attorney and an unqualified person, which, being exe- cuted, made them partners as to third persons, was as much forbidden by the statute of Geo. 2, ch. 40, § 11, as one wliich made such persons partners as to each other. See further, in illus- tration of the general principle, Hes- keth V. Blanchard, 4 East, 144 ; Gibson V. Lupton, 9 Bing. 297; Bailey v. Clark, 6 Pick. 372 ; Drake v. Ramey, 3 Rich. 37; McCauley v. Cleveland, 21 Miss. 438; Taylor v. Perkins, 26 Wend. 124; Hawes v. Tillinghast, 1 Gray, 289 ; Chase v. Barrett, 4 Paige, 148; French v. Price, 24 Pick. 19; Moore v. Smith, 19 Ala. 774; 01m- stead I'. Hill, 2 Ark. 346 ; Newman v. Bean, 1 Post. 93 ; Barnett v. Smith, 17 111. 565. 66 THE LAW OF PARTNERSHIP. [CH. VI. CHAPTER VI. WHO ARE PARTNERS AS TO THIRD PARTIES. SECTION I. GENERAL GROUNDS OF LIABILITY. As we have seen that it is one of the essential qualities of partnersliip that upon each partner rests an absolute liability for the whole amount of every debt due from the partnership, it is of the utmost consequence, both to the creditors of a part- nership and to actual or alleged members of it, to determine with certainty who they are upon whom this liability rests ; or, in other words, who are partners in respect to third parties dealing with the firm. And this question is sometimes as dif- ficult as it is important. It will be seen, as we go farther in this chapter, that the authorities are quite irreconcilable, and that it is extremely difficult to draw from them distinct and certain principles or rules. It is certain that persons may be held as partners as to third parties, who would not be deemed partners as between themselves, (aa) The first thing to be remembered is, that persons may be charged as partners of a firm on either one of two perfectly distinct grounds, to both of which we have already referred. One of these is, that the person actually is a partner. The other is, that he has, with his own knowledge and consent, been held forth as a partner, to the person having a claim, or to the public generally. In the great majority of cases these two causes unite ; that is, he is held forth as a partner who (aa) Grieff v. Boudousquie, 18 La. held as partner, even though there be Ann. 631. [A person may be so neg- no community of interest or participa- ligent as to be estopped to deny that a tion in profits. In re Jevvett, 15 N. B. person wlio is managing his property R. 12(}.] is acting by his authority, and may be CH. Vr.] WHO ARE PARTNERS AS TO THIRD PARTIES. 67 actually is one. The secret partner, on the one hand, or the merely nominal partner, on the other, are exceptions to the prevailing custom ; but such exceptions do occur, and not very unfrcquently : and then the question is, What are the rules of law in regard to them ? The first which we state is, that the liability of a partner is fastened upon any person just as absolutely, and to all intents and purposes, by either one of these causes alone, as by both of them * together. And the reason is obvious. * 62 If a man is in fact a partner in a mercantile or other partnership, the mere circumstance that he has been able to conceal this partnership from the world affords no reason whatever why he should not share in the liabilities of the known partners, (a) We hold that a secret partner is (a) Tliat one who is a partner in fact, though not known to be so, is Hable upon all the partnership engagements to tlie same extent as tliougli his name had never been concealed, is one of the oldest and best-established doc- trines of partnership law. In Hoare v. Dawes, 2 Doug. 371, Lord Mansfield said : " I considered them at first as a sort of dormant partners. The law with respect to them is not disputed, namely, that they are liable when dis- covered, because they would otherwise receive usurious interest without risk." And in Saville v. Robertson, 4 T. R. 725, Lord Kenyon, C. J., said, " It is clear that if all these parties had been partners at the time when these goods were furnished, though that circum- stance were not known to the plaintiff, they would all have been liable for the value of the goods. It is equally clear that such an action might be main- tained against the dormant partners alone, unless they pleaded in abate- ment." Coope i\ Eyre, 1 H. Bl. 48; Gonthwaite v. Duckworth, 12 East, 421 ; Swan v. Steele, 7 id. 210 ; Ex parte Raleigh, 3 Mont. & Ayr. 670; Evans v. Drunimond, 4 Esp. 89 ; Ex parte Gellar, 1 Rose, 297 ; Dyke v. Brewer, 2 C. & Kir. 828. The whole doctrine on the subject is thus stated by Marshall, C. J., in Winship v. Bank of the United States, 5 Pet. 561 ; " 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 gen- eral principles, which are known to the public, which subserve the purpose of justice, and which society is concerned in sustaining. One of them is, that a man who shares in the profits, 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, cer- tainly the acting partner, has power to transact the whole business of the firm, whatever thatmay be, and, consequently, to bind his partners in such transac- tions as entirely as himself. This is a general power, essential to the well conducting of business, which is im- plied in the existence of a partnership. Wlien, 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 busi- ness, has a right to consider him as the company, whoever may compose it. It 68 THE LAW OF PARTNERSHIP. [CH. VI. * 63 * liable upon all the acting partner's contracts made within the usual scope of the partnership business, whether such contracts are really on partnership account or not. It might perhaps be said, that as no credit is given to the secret partner, and as his liability is wholly founded upon his interest, if it were shown that in fact he had no interest in is usual to buy and sell on credit ; and, if it do so, the partner who pur- chases on credit in the name of tlie firm must bind the firm. This is a general authority held out to tiie world, to which the world has a right to trust. Tlie articles of copartnership are per- haps 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 themselves. The trading world, with whom the company is in perpetual in- tercourse, cannot individually examine these articles, but must trust to the general power contained in all partner- ships. The acting partners are iden- tified with the company, and have a right to conduct its usual business in the usual way. This power is conferred by entering into the partnership, and is perhaps never to be found in the articles. If it is to be restrained, fair dealing requires that the restriction should be made known. These stipu- lations may bind the partners, but ought not to atTect those to whom they are unknown, and who trust to the general and well-established commer- cial law. See Richardson v. Farmer, 36 Mo. 35. " The counsel for the plaintiff in error supposes, that, though these principles 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 re- sponsibility of a dormant partner, and one whose name was to the articles. But their responsibility, in all partner- ship transactions, is admitted to be the same. Tliose 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 mistake; if their belief be verified by the fact, their claims on the partners, who were not ostensible, are as valid as on those whose names are in the firm. This distinction seems to be founded on the idea, that, if part- ners are not qpenly named, tlie 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 cer- tainly is not correct. The responsibil- ity of unavowed partners depends on the general principles of commercial law, not on the particular stipulation of the articles." s. c. 5 Mason, 176; Armstrong v. Hussy, 12 S. «& R. 315 ; Mifflin V. Smith, 17 id. 165; Graeff ;;. Hitchman, 5 Watts, 454 ; Given v. Albert, 5 W. & S. 333 ; Bisel v. Hobbs, 6 Blackf. 479 ; Braches v. Anderson, 14 Mo. 441 ; Church v. Sparrow, 5 Wend. 223; Baxter v. Clark, 4 Ired. 127 ; Everitt v. Chapman, 6 Conn. 347 ; Reynolds v. Cleaveland, 4 Cow. 282; Kelley v. Hurlburt, 5 id. 534 ; In re Warren, Daveis, 324 ; Hadfield v. Jame- son, 2 Munf. 66 ; Grosvenor v. Lloyd, 1 Mete. 19 ; McDonald v. Millandon, 5 Louis. 406, 408 ; Lea v. Gnice, 13 S. & M. 656 ; Smith v. Smith, 7 Fost. 244 ; Brooke v. Washington, 8 Gratt. 248; Hill V. Voorhies, 22 Penn. 680; Griffith V. Buffum, 22 Vt. 181 ; Pratt v. Lang- don, 12 Allen, 544. A secret partner cannot avoid his liability to creditors, by showing, that, according to the law of the place where it was made, the contract of partnership as between the parties was void. Oakley v. Aspin- wall, 2 Sandf. 7. CH. VI. J WHO ARE PARTNERS AS TO THIRD PARTIES. 69 a particular transaction, he ought not to be bound with refer- ence to it, even though it were apparently within the regular course of the business carried on by the partnership. And there are cases in which the court seems to adopt this view. But we think the rule we have above stated rests upon the better reason and the stronger authority. (^) It * has * 64 (i) In Etheridge v. Binney, 9 Pick. 272, where llie two Binneys and John Winship carried on the manufacture of soap and candles in partnersliip, but in the name of John Winship alone, the princij)al question in tlie case being whether tiie Binneys were liable for moneys borrowed by Winship, the court instructed the jury that "the name of the firm here being only the name of the individual, a note offered in that name, unaccompanied by any represen- tation, would of course import only a promise of 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 borrowing partner states that he is one of a company, and that he borrows money for the com- pany, 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 knowing whether he is acting hon- estly towards his associates or other- wise, and he lends the money or sells the goods on the faith of such represen- tation, the company will be bound, unless they prove that the contract was for his private benefit, and known to be so by the creditor." [When two persons, under a private agreement, be- come partners as to third parties, the contract specifying no firm name, but allowing each partner to purchase goods on his own individual credit, — one to transact the business, and the other to be unknown, — the dormant partner is not liable on a note for goods put into the concern by the other, and by him signed in his own name ; tlie signature not being intended as the firm signa- ture, and the payee not having reason to suppose it to be such. Palmer v. Elliot, 1 Clif. C. Ct. 63. See also Mercantile Bk. v. Cox, 38 Me. 500. But see Hendrick v. Gunn, 35 Ga. 234.] In Lloyd v. Ashby, 2 C. & P. 138, assumpsit was brought on a bill of exchange, accepted by " Ashby & Rowland." The question was whether Shaw, a dormant partner with Ashby & Rowland, was liable on the above acceptance. Shaw was not known as a partner, nor did his name appear in the partnership transactions. The bill in question was accepted in a matter having no relation to the partnership business. Abbott, C. J. : " If Shaw had been known to be a partner, I should have held that it was taken on liis credit ; and that, unless there was fraud in the plaintiff, he would be entitled to recover on it against Shaw ; but as the plaintiff did not know that Shaw was a partner, and as he could not have taken the bill on Shaw's credit, I am of the opinion that the plaintitt' cannot recover. I ground myself on these circumstances, that Mr. Shaw was an unknown partner, and that the bill was not accepted for a debt from him, but for the raising of money from which he had no benefit." See also Young V. Hunter, 4 Taunt. 5»3, opinion of Gibbs, J. ; Ex parte Bolitho, Buck, 100. See Miller v. Maince, b Hill, lU. But the doctrine of these decisions is cer- tainly controverted by better consid- ered and more weighty adjudications. Lloyd V. Ashby, sujua, was afterwards reconsidered in the King's Bench ; and the court were of opinion that the plaintiff was entitled to recover, and a new trial was granted. 2 B. & Aid. 23. The principle of the decision in Vere v. Ashby, 10 B. & C. 288, is the same with that in 2 B. & Aid. 23 ; and in Wintle v. Crowther, 1 C. & G. 316, 70 THE LAW OF PARTNERSHIP. [CH. VI. been held that a judgment obtained against an ostensible partner, upon a note given by him in his own name in * 65 the course * of the partnership business, his copartner being unknown to the creditor, was no bar to a joint action upon the same note against both the ostensible and the secret partner, (c) But we think this doctrine opposed to the weight of American authority ; and upon the ground that a partnership debt is, in this respect, joint only, and not joint and several, a judgment against the ostensible partner or partners, though unsatisfied, may be pleaded in bar to a subsequent suit upon the same cause of action, where both the ostensible and the secret partners are joined as defendants, (c?) It has, how- Bayley, B., referring to the above cases, said : " Notwithstanding tliese cases, we are of opinion, that when a partner- sliip name is pledged, the partnership, of wliomsoever it may consist, and whether tlie partners are named or not, and whether they are known or secret partners, will be bound, unless the title of the person who seeks to charge them can be impeached." See Nichols v. Cheairs, 4 Sneed, 229. In Ross v. Decy, 2 Esp. 469, the action was for goods sold and delivered ; plea set oflP. The plaintiffs entered into partnership as grocers, Ross to keep the shop in his own name only. He solci to the de- fendant the goods for the price of which the present action was brought. The defendant had done business for Ross on his separate account to a greater amount than the demand now made against him by the partnership; and this he offered to set off. Lord Ken- yon was of opinion that the set-off was good. His lordship said, the plaintiffs had subjected themselves to it, by hold- ing out false colors to tlie world, by permitting Ross to appear as the sole owner ; that it was possible the defend- ant would not have trusted Ross only, if he had not considered the debt due to himself as a security against the counter demand. Furthermore, not only is a secret partner bound by all transactions within the scope of the partnership business, whether on part- nership account i?i fact or not, but in Robinson v. Wilkinson, 3 Price, 538, it is said to be " clear law that a dor- mant partner cannot discharge himself from liability to pay the debts of a creditor through the medium of his ostensible partner by any acts of his during the concealment of the unknown partner." There, Wilkinson was a secret partner with Cay in a vessel. Tiie plaintiif supplied the vessel with stores on the credit of Cay ; took Cay's sole bills for tiie amount of his debt ; allowed him to renew them when due, and afterwards, Cay proving insolvent, compounded with him for the unpaid portion of the debt, and received as security the acceptance of a third per- son. But the fact of Wilkinson's inter- est in the ship being unknown to the plaintiff during the time of these sev- eral transactions, it was held that he was not discharged by any thing that had taken place. A similar decision was made in Chamberlain v. Madden, 7 Rich. 395. (c) Sheehy v. Mandeville, 6 Cranch, 253 [overruled in Mason y. Eldred, 6 Wall. (U. S.) 231]. See Van Ness v. Forrest, 8 id. 30; Watson v. Owens, 1 Rich. HI ; Brozel v. Poyntz, 3 B. Mon. 178; Scott V. Colmesuil, 7 J. J. Marsh. 416 ; Dennett v. Chick, 2 Greenl. 191 ; Nichols V. Cheairs, 4 Sneed, 229. ((/) Robertson v. Smith, 18 Johns. 459; Ward r. Johnson, 13 Mass. 148; Smith V. Black, 9 S. & R. 142; Moale V. Hollins, 11 Gill & Johns. 11 ; Will- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 71 ever, been said, that the law as to dormant partners is confined to commercial partnerships, and does not extend to specula- tions in land, (e) If such be the law in regard to one who is an actual but a secret partner, on the other liand, if he be not a partner in fact, but has, for or without a reason, suffered those who dealt with the firm, or any one of them, to believe that the firm had the guaranty of his liability as partner, and thus gave to the firm his credit, there are no grounds whatever for permitting, him to refuse to satisfy that guaranty, merely because the actual relation between him and the partnership would not of itself have created it. (/) To give to such a circumstance ings V. Consequa, 1 Pet. C. C. 301 ; Anderson v. Levan, 1 W. & S. 334. Hee further Pierce v. Kearney, 5 Hill (N. Y.), \)i; Moss v. McCuUough, id. 135, 136 ; Ward v. Motter, 2 Rob. (Va.) 559, 560; Nichols v. Anguera, 2 Mills, 290 ; Grafton v. The United States, 3 Story, 649 ; United States v. Cushman, 2 Sumn, 438 ; Gibbs v. Bryant, 1 Pick. 121 ; Peters v. Sandford, 1 Uenio, 224 ; Van Valen v. Russell, 13 Barb. 593 ; Ledam v. Hodges, 4 McLean, 51 ; How V. Kane, 2 Chand. 222 ; Philson v. Bampfield, 1 Brevard, 202. Whether, if a creditor has lost his right of action against all the partners, by obtaining judgment against the ostensible partner alone, equity will relieve him as against the dormant partners when discovered, see Penny v. Morton, 4 Johns. Ch. 566 ; Willings v. Consequa, 1 Peters C. C. 301 ; Smith r. Black, 9 S. & R. 142 ; Ledam v. Hodges, 4 McLean, 51 ; How V. Kane, 2 Chand. 222. (e) Pitts V. Waugh, 4 Mass. 424 ; Smith V. Jones, 3 Fairf. 332 ; Smith v. Burnham, 3 Sumn. 470. See post, ch. 11, § 3. {/) Young V. Axtell, cited in Waugh V. Carver, 2 H. Bl. 235. There the question was, whether Mrs. Axtell was liable as partner with the defendant, for coals sold and delivered by the plaintiff. An agreement was in evi- dence, from which a partnership intei- se was attempted to be proved ; but, it being shown that bills were made out for goods sold to her customers in their joint names, Lord Mansfield said : " However, as she suffered her name to be used in the business, and held herself out as a partner, she was cer- tainly liable, though the plaintiff did not, at the time of deahng, know that she was a partner, or that her name was used." The ground upon which persons held out as partners are made liable, as such, to third persons, is thus stated by Lord Chief Justice Eyre in Waugh V. Carver, supra : " Kow, 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 further, not to receive any profits. But, if he 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 transaction 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 per- sons, when, in fact, they lent it only to two of them, to whom, without the others, they would have lent nothing." See further, in illustration of the gen- eral principle, De Berkom v. Smith, 1 Esp. 29 ; Guidon v. Robson, 2 Camp. 302; Parsons v. Crosby, 5 Esp. 199; Ex parte Watson, 19 Ves. 461; Ex parte Matthews, 3 Ves. & B. 125; Dol- man V. Orcliard, 2 C. & P. 104 ; Stearns V. Haven, 14 Vt. 540 ; Cottrill v. Van- duzen, 22 id. 511 ; Eurber v. Carter, 11 Humph. 271 ; Perry v. Randolph, 6 S. 72 THE LAW OF PARTNERSHIP. [CH. VI. this effect would be to sanction an obvious and easy fraud. It may, however, be said that he is liable as a partner only to those who have been led with his consent to believe him a partner, and who have trusted the tirm on his credit, {ff) * 66 * But when we go further, and seek to determine the exact facts and rules which decide whether a person is liable, either as actual partner or as ostensible partner, we find a considerable difficulty. These questions we now proceed to consider. SECTION II. WHEN A PERSON IS LIABLE AS ACTUAL PARTNER. The cases on this subject are not easily reconciled, nor is the language used in relation to it always admissible, or indeed intelligible. All that we have said in the preceding chapter has some bearing upon the subject of this ; for, if one certainly is a partner in relation to others who are copartners, he is so in relation to third persons dealing with the firm. It is true, as we have already intimated and shall hereafter state more fully, that partners may, by an agreement made among them- selves, which is also made known to their customers, * 67 importantly qualify the obligations of one * partner or another in reference to these customers. Still it is also true that the tests already exhibited, as those by which we may determine who is, as to the partnership itself, a member of it, will be useful when the question comes. Is he a member of it as to others ? Thus, we have already seen that a community of interest in the profits is essential to a partnership, and, generally at least, that such community will suffice to constitute a partnership, (^fff} But it is certain that every interest in the profits is not suf- ficient to make a person a partner, or liable as a partner. In many recent cases it has been held that participation in the profits is not a decisive proof of partnership, unless the participation is such as to constitute the relation of principal and agent be- & M. 335. See 'also post, eh. 6, § 5 ; (ff) Wood v. Pennell, 15 Me. 52. Fisher v. Bowles, 20 111. 396 ; Irwin ;•. {X/f) Duryea v. Burt, 28 Cal. 569 ; Conklin, 36 Barb. 64 ; Burns v. Row- [In re W. W. Francis, 7 N. B. R. 359.] lands, 40 id. 368; Moss v. Jerome, 10 See Pratt v. Langdon, 12 Allen, 544, Bosw. 220 ; Moffat v. Moffat, id. 468. and 97 Mass. 97. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 73 tween the person taking tlie profits and those actually carrying on the business. Cffff} The very customers and creditors of a firm may be said to have some interest in the profits. They depend upon them as the fund for payment of their debts, and they are said to have, as we shall see, a kind of lien upon them for this purpose. To go nearer to the partnership, however, it is more obvious that the employes of the firm have an indirect interest in the profits, althougli no property in them ; for to these tliey look for their salaries and wages. Out of this fund . these are paid ; and every payment of his annual salary to a clerk diminishes by just so much the funds which would go to the payment of the debts. Now, it is \ery frequently said, that the taking of the profits takes from the fund to wliich the creditors look for payment, and that this is the reason why the taker is held liable to the creditors. (^) But as every payment ijff^) BuUen v. Sharp, Law Rep. 1 the foots showed participation in both C. P. 86; [In re Howard, 25 W. R. profits and losses. See also posi, p. * 74. Ct. of App. 854 ; s. c. 4 L. & Eq. Rep. Under the statute in Massachusetts giv- 523; Ross v. Parkyns, L. R. 20 Eq. ing jurisdiction in equity of suits upon 331. In Molwo t'. Court of Wards, L. R. account not conveniently adjustable at 4 P. C. 419. It should appear that the common law, a person, not a partner, person taking the profits took them by who has a portion of the net profits virtue of his rights as a principal in a for his compensation, may maintain a joint business, where each party had bill in equity as if he were a partner. authority to bind the other. Harvey Hallet u. Comston, 110 Mass. 32. One r. Childs, 28 Ohio, 319. The interest who is entitled to a percentage of profits must be in the profits as profits, and as compensation, though not a partner, not merely as compensation. Legett may have an account. The right to V. Hyde, 58 N. Y. 272; Shepard v. an account is not a conclusive test Pratt, 16 Kan. 209 ; Burton v. Good- of partnership. Bentley v. Harris, 10 speed, 69 111.237. A mere contingent R. 1. 434, distinguishing Hazzard r.Haz- interest in property, without right in zard, 1 Story U. S. C. Ct. 371. For the property of the firm, and without cases of partnership resting on special responsibility for losses, constitutes no contracts and near the line of agency partnership. Cora. v. Bennett, 118 paid by a sliare of the profits, see Rider Mass. 443 ; Haskins v. Warren, 115 id. v. Wilcox, 109 Mass. 24 ; Remington v. 514; Campbell v. Dent, 54 Mo. 325; Allen, 109 Mass. 47. See also, upon the Eastman v. Clarke, 53 N. H. 276; general subject, ;oos^ p. * 71, note (/).] Bendell r. Hettrick, 45 How. (N. Y.) (g) De Grey, C. J., seems first to Pr. 198; Crawford v. Austin, 34 Md. have stated this proposition in Grace 49 ; Morgan v. Stearns, 41 Vt. 397 ; v. Smith, 2 W. Bl. 998. The language Chapline v. Conant, 3 W. Va. 507 ; he there makes use of, and which has Parker v. Fergus, 43 111. 437 ; Smith since been quoted with approbation in V. Vanderberg, 46 111. 34 ; Mason v. innumerable cases, is : " Every man Hackett, 4 Nev. 420 ; Hargrave v. Con- who has a share of the profits of a roy, 4 Green (N. J.), 281. In Man- trade ought also to bear his share in hattan, &c. v. Sears, 45 N. Y. 797, it is the loss. And, if any one takes part of said that participation in the profits the profits, he takes part of that fund makes one a partner as to third parties, on which the creditor of the trader But the point was not in the case as relies for his payment." 74 THE LAW OF PAETNERSHIP. [CH. VI. from the funds has precisely this effect, and every payee cer- tainly does not become liable for the debts of the firm, it is obvious that this reason is not of itself, and expressed in these general terms, a sufficient one. Lord Eldon said (A) : " The cases have gone 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 themselves, as profits, he is a partner." After- * 68 wards, in * the same case, as if in explanation, and certainly in confirmation, of this, he says: " 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." In another case, (i) he says, more briefly, but evidently intending to ex- press the same rule : " The ground is 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." The inference from this, and perhaps a justifiable inference, has been, that if a clerk, for example, agrees to take one-twentieth part of the profits of a firm, he becomes liable as a partner ; but, if he agrees to take a sum of money equal to one-twentieth part of the profits, he is not a partner : but we cannot admit that this is a strictly necessary inference from Lord Eldon's state- ments, or a reasonable or a useful rule. It cannot be denied that this declaration, so understood, has had great influence upon the courts and the profession. Collyer says, " It must be admitted that his lordship's dicta upon this subject have received the sanction of the most eminent prac- titioners at the bar." (y) In this country they have been at {h) iEa: parte Hamper, 17 Ves. 404. terms of the agreement before the (i) £a:/3arte Rowlandson, 1 Rose, 91. court in Stocker v. Brockelbank, 3 (j) Collyer on Partnership (Per- Mac. & G. 250, 5 Eng. L. & Eq. 67. king's ed.), § 40. See the form and CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 75 least as generally adopted. We have reason to believe that, for many years, in various parts of this country, numerous contracts of this kind have been drawn, carefully using the language wliich Eldon is supposed to have made sq/e, by the distinction he asserted. Nor is it difficult to account for this. For, to say nothing of the immense authority of so eminent a judge, his words so understood supply a clear, simple, and easily applicable rule for the avoidance of a great danger. They tell the lawyer who would draw a contract of this kind, how, by a mere formula, he can guard his clients from a great uncertainty ; the inconvenience of which might other- wise suffice to prevent the proposed arrangement. As * a * 69 convenient rule, much may be said of it ; but, as an accurate one, it must be spoken of very differently. It is indeed very remarkable, that a rule, or a distinction, to which Lord Eldon strongly objects, not merely " doubting," but positively affirming his dislike, and which he lays down, as he says, under the constraint of irresistible authority, should since have been generally adopted, not so much on his author- ity, as on his assertion of preceding authority, when in point of fact no such authority can be found, or, so far as any acces- sible evidence goes, can now be believed to have existed. The only case in the books, to which he can be supposed to refer, (^) on the one hand, would not justify a specific rule of this kind, and, on the other, does not seem to contain any thing calling for animadversion or regret. We cannot but think that Lord Eldon has been misunder- stood, and perhaps misreported. If the first of the three paragraphs above quoted stood alone, it would not conflict with the current of authority existing at that time, nor with the general and best-established principles of the law of part- nership ; but neither would it express or justify the rule drawn from it. If one promises to pay another a sum of money equal to one-twentieth of the profits, " that will not," says Lord Eldon, " make him a partner." Certainly it will not : it will raise a presumption that he is not a partner, which can be re- butted only by showing, from other parts of the contract or by other means, that he is a partner. " But if he has a specific interest in the profits themselves, as profits, he is a (k) Grace v. Smith, 2 Wm. Bl. 998. 76 THE LAW OF PARTNERSHIP. [CH. VI. partner." Undoubtedly he is: every principle of the law of partnership leads to this conclusion. But, if the trader agrees to pay to him one-tiventieth part of the profits, this does not necessarily give him a specific interest in the profits themselves, as profits. And in the supposition that it has this effect, lies, we think, the mistake. So, in the third of the passages above quoted, it is said : " If a man chooses to stipulate for an interest in the profits of a business, he is as to third persons a partner." Undoubtedly, again ; but a stipulation that he shall have a definite aliquot part of the profits, for his services, is not a stipulation " for an interest in the profits of a business." If the word " interest " be used here in the broad sense * 70 necessary to make it true that such a * bargain gives an interest in the profits, then such an interest is not suf- ficient to make a man a partner ; and, if it be used in the restricted and technical sense in which one who has an interest in the profits is accurately said to be made thereby a partner, then it is not true that a bargain for a definite part of the profits gives the receiver " an interest in the profits, as such." We doubt whether either of these two passages, or the two together, would have given rise to this construction, or to this rule. The trouble lies with the other passage which we have quoted. Here, Lord Eldon uses a different phrase from that which he employs in the other two. He says, " But if he agrees for a part of the profits, he is a partner." He certainly seems to use this phrase as the exact equivalent of the other; that is, he appears to think that a bargain for a definite part of the profits for services or any other consideration, and a bargain to become interested in the profits, are one and the same thing. Here, we say, is the mistake ; nor should we have much doubt that it was a mistake made for Lord Eldon, and not hy him, were it not for the regret he expresses. Such a view leads to a conclusion, to a distinction, to a rule, which might well be regretted, because they have no truth and no foundation. But if he only meant to say, what we should otherwise incline to suppose that he meant (even at the neces- sity of believing him misreported as to a few words), then we do not see any thing to cause either his surprise or regret. What we mean is this : The principles of the law of partner- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 77 ship lead decidedly to the conclusion, that if a trader makes an arran<^ement in regard to a commercial business or transaction with another person, by reason whereof that other person be- comes interested as the first is interested (no matter in what proportions) in the resulting profits, while they are undivided and remain as profits, these two are certainly partners. And the same principles lead us directly to this other conclusion, that a mere payment, or promise to pay out of the profits, a sum of money, as a specific proportion of the profits, does not necessarily constitute the payee a partner, and gives him no interest in the profits, and no right to the profits, but only a personal claim against the promisor for such money, or for such a share of profits after they are ascertained and may be divided. Undoubtedly there may be connected with the promise other terms, promises, or conditions, which * clothe the * 71 promises with the interest and character of a partner ; but the promise does not. If two men were bargaining for a house, and the seller says, Your business is so prosperous, you can afford to pay me all I ask ; and the buyer replies, You mis- take : the profits of my business are not so large as you think ; and the seller rejoins. Well, I will, at all events, take one-fourth part of your next year's profits for the house ; and a written contract is executed on these terms, — it would be simply absurd to contend that this sale of a house made the seller liable for all the business debts of the buyer. Our conclusion is, that the question of interest in the profits, as such (by which we mean the profits before they are ascertained and divided), is always to be inquired into. The words which the parties use, and all of them, and all the parts and provisions of their agreement, as well as its general character and their relation to each other, are to be looked at ; and if the whole evidence leads to the con- clusion that the receiver of money took it in good faith only as wages or specific compensation or payment, and did not intend to acquire any interest in or any control over the business, or in the profits as they accrue and before they are ascertained and divided, but only after they were ascertained to find in them the fund and in their amount the measure of his payment, he is no partner, nor liable as such. (M) And the true test is, {kk} Bidweli v. Madison, 10 Minn. 13; Hargrave v. Conroy, 4 Green, 281. 78 THE LAW OF PARTNERSHIP. [CH. VI. Did the supposed partner acquire, by his bargain, any property in or any control over the profits, while they remained undi- vided? If so, he is liable to third persons; and otherwise, not. This subject is certainly one of the most interesting, and per- haps one of the most difficult, in the whole law of partnership. And we have given to it, in our notes, the space necessary for a full analysis and comparison of the leading cases. (/) (/) The rule laid down in the text for determining who are partners as to each other, because actual partners, is not perhaps fully stated and applied in any one case. But we consider it the only clear and intelligible result de- ducible from all the authorities. The cases on this difficult point are natu- rally divisible into three classes : those in which a party puts into a business his labor, those in which he puts in his property, and those in which he puts in both property and labor. But, as the same principle governs in all, this arrangement is of no particular ser- vice. The instances in wliich money is loaned for a share in the profits, involve the question of usury, and will be separately considered hereafter. We shall examine the leading author- ities with reference to two points : first, to see whether they really estab- lish and sanction the principle that a taking of a share in the profits of a trade does of itself make one a partner as to third persons ; and, if it does not, second, to see whether the true test of partnership, as to third persons as well as inter se, is not an ownership of the profits before they are divided. In Waugh V. Carver, 2 H. Bl. 235, the question was, whether the defendants, the two Carvers and Giesler, were lia- ble as partners upon the true construc- tion of certain articles of agreement. The material portions of their contract were these : The two Carvers, mer- chants and ship agents, residing in Gosport, agreed with Giesler, also a merchant and ship agent, that, for their mutual benefit, he sliould estab- lisli himself at Cowes, and there carry on a house in the agency line. The two Carvers were to recommend ships to Giesler, and were to receive a share in his commissions on such ships, and in the discount of the bills of the tradesmen employed on them. Giesler was to act by the advice of the Carvers, to recommend ships to them, and to receive a share in their commissions on them, and in their discounts on tradesmen's bills, and also certain pro- portions of warehouse rent and agency. Liberty was given to the Carvers to occupy warehouses at Cowes, without Giesler's interference, and the parties were to form no conflicting business connections. It was tlien covenanted that one-fifth part of the agency or commission on each ship should be re- tained by the party under whose care such ship should be, as compensation for all incidental expenses, the remain- ing balance of the commissions to be divided in the above-mentioned pro- portions ; and that such commissions or agency should be ascertained by each party's producing to the other annual authenticated accounts. Lastly, it was stipulated that each party should sepa- rately run the risk of and sustain all such losses as might happen on the ad- vances of money by either in respect of any ships or vessels ; and that neither party should be affected by any losses, or be answerable for any acts, deeds, or receipts of the other of them, but that each should be answerable for his own. The parties having acted upon this agreement, we may observe that there was a clear case of actual part- nership : 1. There was a common stock or joint capital, contributed by each of the parties, and consisting of the use of the money and otiier prop- erty furnished by each of the parties to carry on the business at Gosport CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 79 Before leaving the question of the effect of sharing the profits, it should be stated that there are many ways in which persons and Cowes respectively. 2. Tliere was a participation in and ownersliip of the profits while they remained profits. One-fifth was to be deducted from the gross commissions as they accrued, to defray current expenses, and become at once the separate prop- erty of the parties. The balance re- mained in their hands as a common fund, to be divided among them, and become their individual property upon a settlement of accounts. As to the stipulation tliat each party should bear his own losses, &c., we have already seen that it is not inconsistent with a partnership for one partner to cove- nant that he shall not be liable either to any loss, or, as in this case, to par- ticular items of loss ; for here the gross proceeds alone of the business were not to be divided, but those pro- ceeds diminished by an allowance to each party for his expenses in carry- ing it on. 3. Other provisions in the articles give the wliole agreement the tone and character of a contract of partnersliip ; as the provision giving the Carvers leave to engage ware- houses at Cowes, and those by which the parties mutually agree to account, and not to form other business connec- tions. All these provisions seem to be consistent only with an actual partner- ship ; and therefore the decision of the court, that the parties were liable as partners, seems unobjectionable. But of the grounds upon which that deci- sion is professedly put, the same can- not be said. The court (by Eyre, C. J.) first declare the question as to whether the parties are partners as to each other not to be before them ; but then say that they are not partners intei- se, principally on the ground that the}' were not to share in losses, — an expression of opinion, inthe view of the case taken by the court, clearly obiter, and, as we have just seen, not sup- ported by the reason given for it. The Lord Chief Justice tlien proceeds to say that the parties evidently entitled themselves to share indefinitely in the profits of the business as they should arise ; and that, upon the authority of Grace v. Smith, he who shares in the profits indefinitely, shall, by operation of law, be made liable to losses, upon the principle 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 ; and that, therefore, the Carvers and Giesler, though not part- ners inter se, had yet made themselves such with respect to third persons. The case is thus professedly decided upon the authority of a rule said by Lord Chief Justice Eyre to be the foundation of the decision in Grace v. Smith, and to stand upon tlie fair ground of reason. To estimate, then, the weight to be given to the principle of tlie decision of the court in Waugh V. Carver, we must see how far that principle is sanctioned by the case of Grace v. Smith, 2 W. Bl. 998. There Smith & Robinson dissolved partner- ship. But, Robinson continuing the business, Smith left behind in the trade 4,000/., for which he was to receive five per cent, interest, and an annuity of 300/. a year. The question being whether Smith & Robinson were gen- eral partners, De Grey, C. J., said : " 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 part of that fund on which the creditor of the trader relies for his payment. . . . I think the true criterion is to inquire whether Smith agreed to share the profits of the trade with Robinson, or whether he only relied on those profits as a fund of payment. . . ." Now (whatever may be the effect of Mr. Justice Blackstone's opinion, which we shall consider when we come to loans), there is nothing in the extracts above quoted which makes any distini.'tion between sharing definitely and sharing indejinitely in profits. On the other 80 THE LAW OF PARTNERSHIP. [CH. VI. may join in an enterprise or transaction, and share the profits, without becoming partners ; as where an owner of land fur- hand, the distinction is between shar- ing the protits of a trade and relying on tliem for payment, in both of which cases tlie indefiniteness may be the same. In tlie second place, the ground of this distinction cannot be that every man who participates in profits should be liable to losses because he takes from that fund on which creditors rely ; since, whetlier he shares in prof- its, or relies on them for payment, he equally takes from that fund. Indeed, the remarks of this nature with which Cliief Justice De Grey commences his opinion seem to be merely general ones, founded on supposed equitable considerations, but neither universally true, nor serving nor intended to serve as the grounds of the rule he after- wards lays down. Hence we think that neither the rule asserted in Waugh V. Carver as deducible from Grace i'. Smith, that he who takes a share of the profits indefinitely shall be liable as partner for losses, nor the reason given for it upon the same au- thority, because by so doing he takes from the fund on which creditors rely for payment, is established in that case. The criterion laid down by Chief Jus- tice De Grey is, it is true, vague and indefinite. But there is a view of it which is not only obvious and natural, but whicli also makes it entirely con- sistent with what we consider true principles. The distinction drawn is between Smith's sharing the profits with Robinson and his merely relying on them as a fund of payment. Now, if by sharing the profits with Robinson is meant being interested in them as Robinson was, and in the same right, then the sort of interest which it is said Smith would have, if he were a partner, is that of joint owner of the profits with Robinson. And the sort of interest the criterion of De Grey gives Smith, if he were not a partner, is not expressed by the words sharing in the profits in any way. Eut in that case he is said to simply rely on them as a fund out of which, indeed, he has a right to be paid, but in which he does not share. But whatever may be the true meaning of Cliief Justice De Grey's criterion, in any interpretation we think it opposed to the broad rule which is derived from it by the court in Waugh v. Carver. Tlie next case we propose consider- ing is tliat of Hesketh v. Blanchard, 4 East, 144. There, Robertson, the defendant's testator, having neither money nor credit, requested the plain- tiff to order goods with him to be taken on a voyage, and promised, that, if any profit should arise from them, the plaintiff should have one-half for his trouble. The plaintiff did as re- quested, and, having subsequently paid the whole price of the goods, brought the present suit against Robertson's executor to recover the amount so paid. It was held, that the action would lie. Lord Ellenborough said : " The distinction taken in Waugh v. Carver et al. 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 Robertson his credit." Now, the only question before the court being whether the parties were partners as to each other, the decision that they were not was called for, and seems consonant with the facts of the case and with true princi- ples. They clearly did not intend to form a partnership ; and the whole proceeds of the adventure before divi- sion clearly belonged to Robertson. But the additional remark that quoad third persons they were partners is purely obiter, and may be classed with the dicta of Waugh v. Carver, but can have no more weight. We may now examine the cases in whicli the rule referred to in the text is laid down by Lord Eldon. The facts upon which the question of partner- CH. VI.] WHO ARE PARTNERS AS TO THIRD PERSONS. 81 nishes seeds and implements to one who is to work the land and divide the profits with him ; or where one lets a farm or ship turned were the same in Ex parte Rovvlandson, 1 Rose, 91, and in Ex parte Hamper, 17 Ves. 403. Thomas & Rogers had been partners in a mer- cantile adventure to Cadiz, Rogers furnishing goods, and Thomas going out with and seUing them. Before the goods were all sold, Rogers entered into a new arrangement with Thomas, as follows : " I do agree to give Thomas one-half the profits he makes on my goods, instead of a commission, after shipping, freight, and every ex- pense paid ; I pay Thomas his passage out." This agreement was acted upon by the parties, and letters were in evidence from Thomas to Rogers, in which Thomas styled himself a part- ner, and other expressions indicating the existence of a partnersliip between Rogers and himself. In 1 Rose, 91, Lord Eldon said : " The ground was settled that if a man as the reward for his labor chooses to stipulate for an interest in the profits of a business, instead of a sum proportioned to those profits, he is as to third persons a part- ner." In 17 Ves. 403, he said: " 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 tliemselves, as profits, he is a partner." And again : " It is clearly settled that if a man stipulates that, as the reward of his labor, he shall have, not a spe- cific interest in the business, but a given sum of money, even in propor- tion to a given quantum of the profits, that will not make him a partner ; 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 cap- ital, he is as to third persons a partner. Upon the memorandum, therefore, and the letters in this case, there is no doubt that Thomas would be hable." These three propositions of Lord Eldon, ap- plied to the same state of facts and in the same way, are clearly only differ- ent expressions of the same rule, and are to be explained by reference to one another, and to be understood as meaning the same thing. The first thing to be observed is that the criterion of Lord Eldon gives no support to the rule asserted in Waugh V. Carver, that he who partici- pates in the profits of a trade indefi- nitely is liable as a partner, because he takes from the fund on which cred- itors rely ; since, whether a man has one-half of the profits of a trade, or a sum equal to one-half, in both cases he is alike affected by the accidents of trade, and in both cases takes from the fund to which creditors look for payment. But, as in Grace v. Smith, the distinction taken is between diflfer- ent kinds of interests in or claims upon profits. Thus, if a man agree as the reward of his labor for a sum equal to half the profits of a trade, that kind of interest in profits, it is said, will not make him a partner. Yet his remu- neration depends upon the accidents of trade ; he diminishes the fund on which creditors rely, and he is entitled to an account ; for though Lord Eldon, in one passage we have quoted, speaks of the right to an account as belong- ing to that species of interest which will make a man a partner, yet he can- not be understood to mean that it is exclusively characteristic of that in- terest. But this sort of interest in profits will not make a man a partner. On the other hand, " a specific interest in the profits themselves, as profits," " an agreement for a part of the profits as such," is declared to be that sort of interest which will make a man a partner. Now, by the terms " profits themselves, as profits," and " profits as such," used in relation to a partner- ship and to partners, must, we think, be meant profits before division. For, when the profits made by a firm have been divided among its individual members, there remains no fund which 6 82 THE LAW OF PARTNERSHIP. [CH. VI. inn for a portion of the profits ; or where seamen sail a ship on shares. All such cases are governed by the general principle, represents the profits of the partner- sliip business. The aliquot portions of the profits which the several part- ners have received represent the re- turns of their several investments of capital or labor. But tlie only fund which can represent the ])rofits of the business of the partnership is those profits while they remain undivided and part of the stock in trade. And this is what we understand by the expressions of Lord Eldon, "profits themselves as profits," and " profits as such." And the interest in profits so understood, which will make a man a partner, must be a " specific interest." It must be greater and more immedi- ate than that of one whose return for his property or labor depends wholly upon the amount of profits. It must be greater than that of a person who is sirapl}' entitled to an account. We think it can be interpreted to be no other than a proprietary interest, an ownership in the undivided profits. And, if this be the meaning of the terra, then Lord Eldon's criterion is entirely consistent with that of Chief Justice De Grey, of which it professes to be only a differently worded state- ment. Moreover, so understood, it is perfectly intelligible, and recognizes what we believe to be the true test of partnership. It seems open only to the objection mentioned in the text ; that it appears to hold that, if a man stipulates for a half or a fourth of the profits of a business, he thereby neces- sarily acquires that specific interest in the profits, as profits, whicli we think to mean an ownership of the undivided profits. But in this very case of Ex parte Hamper, Lord Eldon decides that Thomas is a partner, not merely upon the ground that by the memorandum he was to have half the net profits ; but, as if that circumstance alone were not sufficient, he says : " Upon the memorandum and the letters in this case, Thomas would undoubtedly be liable." These letters contained, as we have seen, admissions by Thomas that he was a partner, and were there- fore important as showing in what riglit Thomas was to have one-half the profits. We think these views are sustained by another case decided by the same judge. Ex parte Langdale, 18 Ves. 300. Here, the bankrupt kept a canteen. The question was whether the brewers who supplied him with beer were lia- ble as his partners in respect of their participation in profits under their agreement. This agreement, accord- ing to the brewers' account, was that the brewers were to pay half his rent, and supply him with beer at 4/. 5s. per barrel, the usual price being 3/. 8s. The bankrupt's account was that the • brewers were to have out of the profits 17s. per barrel for the half of the rent ; the bankrupt taking the rest. Now, by either account, the brewers were directly interested in the profits of the bankrupt's business. But, if the brewers' account were the true one, then there was no undivided fund of profits in which both the bankrupt and the brewers were interested. On the contrary, when profits accrued, they were always already divided, and they could accrue in no other shape. If, however, the bankrupt's account was the true one, there was an undi- vided fund of profits in which both the brewers and himself were inter- ested. These being the facts of the case. Lord Eldon said : " Tlie true criterion is whether they are to par- ticipate in profit. That has been the question ever since the case of Grace V. Smith.'" Now, if the phrase "par- ticipation in profit " is interpreted in a general sense, then the brewers were partners, whichever was the true ac- count of their contract. But Lord Eldon proceeds : " I cannot refuse to let tliis case go to a jury. The agree- ment to sell their beer to him at a higher price than to others would not make them partners ; but the bank- CH. VI.] WHO ARE PARTNERS AS TO THIRD PERSONS. 83 that they only are partners who are jointly interested in the profits, as profits, and not by way of payment for labor or services performed. (/Z) rupt's representation is so different, that it is impossible to determine, without tlie decision of the jury upon the question, whether this was an agreement for a division of the profits, or the brewers stood only in the rela- tion of vendors of the beer to this retailer at 41. 5s. per barrel, in consid- eration of paying half his rent, selling to others at 3/. 8s. If the actual con- tract gave a claim upon the profits, or the application of them, that is part- nership. If there was no claim upon the profits, or the application of the profits, then it is not partnership." The whole case, taken in connection with the authority cited, and the cases decided by the same judge which we have just examined, is not in conflict with the doctrine of the text. The same may be said of the case of Ex parte Watson, 19 Ves. 459. There Lord Eldon said : " There is a wide difference betwixt a dormant and a nominal partner. The former is liable in respect of the profits ; but one who receives a salary not charged upon profits, according to a known but nice distinction, is not by that a partner." We consider this as simply a looser expression of the rule laid down in Ex parte Hamper, and Ex parte Rovv- landson, and as one to be explained by reference to those cases, especially since in the case before the court its application was not called for. See Ex parte Hodgkinson, 19 Ves. 291 ; In re Colbeck, Buck, 48. See also, in this connection, Ex parte Digby, 1 Deac. 341, a case in which the only thing justifying tlie decision of the court seems to be the declarations of the party sought to be charged as partner. Tench v. Roberts, 6 Madd. 145; Withington v. Herring, 3 Moo. & Payne, 30. The case of Cheap V. Cramond, 4 B. & Aid. 663, contains a dictum approving of the doctrine of Waugh V. Carver. But we have al- ready treated of that case in an earlier note, when considering another princi- ple to which it is clearly referable. In Dry i;. Boswell, 1 Camp. 329, the deci- sion of the court seems to have been founded on the same principle. But we shall consider that case, when we examine the distinction between gross and net profits at the close of this sec- tion. So it is generally held that sail- ors, who receive in lieu of wages a certain share of tlie profits of a voyage, are not thereby made partners with the other participators in the profits. Wilkinson v. Frazier, 4 Esp. 182 ; Per- rot V. Brj'ant, 2 Y. & Coll. 61, explain- ing Coppard v. Page, Forrest, 1. In Mair v. Glennie, 4 M. & S. 240, it was contended that the captain of a vessel, who was to share, in lieu of wages, one-fifth in the profit or loss of the voyage on ship and cargo, was a part- ner with the owners. Lord Ellen- borough said: "According to that mode of argument, every seaman in a Greenland voyage would become a partner in the fishing concern. There is no pretence, therefore, for saying that the captain was a partner be- cause his wages were to be regulated and paid by reference to a calculation on the profits of the adventure." The principle upon which the courts have proceeded in these cases is manifest. Mariners, under such agreements, share indefinitely in profits. They take from the fund on which creditors rely. They do not stipulate for a sum equal to a certain proportion of the profits. Yet, from the relative posi- tion of the parties, from the custom of (//) See an instructive case on this land, ibid. 323, and Wright v. David- subject, Parker v. Fergus, 43 111. 438. son, 13 Minn. 449. See post, p. * 144, Compare this case with Snell v. De- note (k). 84 THE LAW OP PARTNERSHIP. [CH. VI. * 72 * As to the intentions of the parties, Story, in his work on Partnership, intimates an opinion, that the rule would the trade, in tine from the whole char- acter of the transaction, it clearly ap- pears that the sailors are not owners of the profits, as such, but merely inter- ested in them as supplying the fund, or measuring the amount of their wages. This is well illustrated by the case of The Frederic, 5 Rob. Adm. 8. There the master claimed specific shares of the cargo, as the prop- erty of himself, and the officers and crew of his vessel. Sir Wm. Scott said : " I have no hesitation in pro- nouncing that these persons cannot be admitted to claim. They are to be considered as mariners ; and their proportion of the proceeds of the voyage, as their wages." See opinion of Martin, B., in Hickman v. Cox, supra. So in Hartley's case, Rus. & R. 139. The same view may be taken of the instances in which a factor or broker has been declared not to be a partner. One who is a factor or broker is well known to be merely a peculiar kind of agent ; and though he be paid by a proportion of the profits, still, if he act only as factor or broker, his holding that character shows his interest in the profits to be simply that of one who relies on them for payment, and not that of one who is interested in them, like his princi- pal, as an owner. Thus, in Benjamin V. Porteous, 2 H. Bl. 590, the action was for goods bargained and sold, to recover the price of a quantity of indigo. The broker, who had sold the goods, being called to prove the con- tract, testified that by his agreement with the plaintiff he was to have for his own profit whatever he could get for the indigo above half a crown for the pound, but not an allowance of so much per cent by way of commission, in the usual manner. Eyre, C. J., thought the witness was not a broker nor factor, and that he was not com- petent on the score of interest. But the other judges said that they could not distinguisli him from a common broker, except that he was paid for his trouble in a particular manner, namely, by a share in the profits, which could make no difference. They therefore held him admissible. So in Dixon v. Cooper, 3 Wils. 40, where a special action on the case was brought for the non-performance of a contract to receive and pay for three hundred quarters of wheat. The only witness ofl'ered to prove the con- tract was Morley, the plaintifi^s factor, who made the contract with the de- fendant, and was to receive one shil- ling on the pound for selling the wheat. Objection being made to his compe- tency, it was held, that he was a mere factor, a go-between, and was a good witness for either the vendor or ven- dee. Gibbons v. Wilcox, 2 Stark. 43. There are several other recent Eng- hsh cases, which may be properly con- sidered in this place. In Pott v. Eyton, 3 C. B. 32, Eyton, being concerned in a colliery, entered into an agreement with Jones for opening a store at Mos- tyn Quay, principally with the view of supplying his workmen with goods. Eyton built the shop. His name was put over the door, and appeared in the excise licenses, and in the invoices for goods bought for the store. Jones managed the shop, and paid over to Eyton the money taken there ; of which Eyton received 7/. per cent on all sales to his workmen, and Jones all the rest of the profits. In 1834, Eyton & Jones entered into a new arrangement. Jones was thenceforth to buy goods in his own name, and to receive all pay- ments. Eyton was to have 5/. per cent on the amount of sales to his work- men, and his name remained over the door. Jones had several other shops, and when lie began to buy goods in his own name, opened an account with a bank at Halywell. In 1839, this bank failed, a large balance being due to it on that account ; to recover which the present suit was brought against Eyton & Jones as partners. There CH. VI.] WHO ARE PARTNERS AS TO THIRD PERSONS. 85 have been more * convenient, and more conformable to true principles as well as to public policy, if it had held 73 was no evidence that credit had been given to Eyton, or that the bankers supposed liim to be a partner, or that they knew iiis name had ever appeared over tlie shopdoor, or in the licenses, &c. Upon these facts, it was left to the jury to say whether there had been a sharing of profit and loss between Eyton & Jones after the account was opened with the bank, so as to con- stitute an actual partnership between them. The jury found in the nega- tive. A rule nisi being obtained on the ground that the verdict was against evidence, Tindal, C. J., said : " Traders become partners between themselves by a mutual participation in profit and loss : but, as to third persons, they are partners if they share the profits of a concern ; for he who receives a share of the profits receives a part of that fund on which the creditors of the con- cern have a right to rely for payment, and is therefore to be made liable to losses, although he may have expressly stipulated for exemption from them. Grace v. Smith ; Waugh v. Carver. But in the former of these cases, Lord Chief Justice De Grey, after laying down the rule of law in the terms which I have mentioned, proceeds : " If any one advances money to a trader, it is lent on his general personal security. It is no specific lien upon the profits of the trade ; and yet the lender is gen- erally interested in those profits : he relies on them for payment." After- wards, he says : "I think the true criterion is to inquire whether Smith agreed to share the profits of the trade with Robinson, or whether he only relied on those profits as a fund of pay- ment, — a distinction not more nice than usually occurs in questions of trade and usury. The jury liave said that this is not payable out of the prof- its." " So, in tlie present case, the jurj' have said tliere was no agreement to share tlie profits." "And it appears to us that in the present case the pay- ment to Eyton was in the nature of commission on certain sales supposed to be effected tlirough his influence over his workmen, and was not suffi- cient to render him, as a matter of legal inference, liable as a partner ; and, in so far as it was a question of fact, it was disposed of by the jury." The grounds of the decision of the court, as appearing in the above extracts, are not perhaps entirely manifest. If the verdict of the jury, that there was no participation in profit, was supported by the evidence, as appears to be as- sumed in the first of the above quota- tions, then there was no occasion to affirm the doctrine of Waugh v. Carver. But we think the true reason why the case was so decided is found in tlie last quotation, namel3', that it appeared from the whole character of the relations be- tween the parties that Eyton's interest was simply of the nature of a commis- sion on certain sales. Indeed, we think the facts in the case clearly indicate that, under the second agreement, Ey- ton was no longer an owner of the profits ; as, for instance, the fact that Jones was to take the avails of the sales of the shop, whereas, under the first agreement, Eyton was to receive them. In Barry v. Nesham, 3 C. B. 641, Ne- sham, the proprietor of a newspaper, sold out the concern to Lowthin for 1,500/. ; payable, with interest, by in- stalments running through a period of several years. Nesham also guaran- teed to Lowthin a clear annual profit of 150/. over and above the payment of the annual instalments and the in- terest thereon ; in consideration where- of, Lowthin agreed to pay to Nesham all the profits over 150/. per annum, until such surplus profits should amount to 500/. ; and, if they should amount to so much during the seven years, then Lowthin agreed to pay, in ad- dition to the purchase-money, inter- est, and the 500/., the existing liabilities of the newspaper not exceeding 250/. It was also agreed that Nesham should 86 THE LAW OF PARTNERSHIP. [CH. VI. 74 that no partnership should be deemed * to exist at all, even as to third persons, unless such were the intention receive sucli surplus profits only till the same amounted to 500/. ; tliat Lowthin might pay off the purchase- money, and assume all the liabilities, and become entitled to all the profits of the newspaper at any time ; and that Nesham might, upon giving six months' notice, withdraw the above-mentioned guaranty. The question was, whether Nesham was liable as partner for goods supplied to the newspaper at Lowthin's order. The court reiterate the general doctrine of Waugh v. Carver. But we do not think they really apply it. The counsel for the defendant con- tended that the court must look at the wiiole purview of the agreement, in order to ascertain the intention of the parties. Wilde, C. J., said : " Adopt- ing the principle of that case, and looking at the intention of the parties to their agreement, I am unable to come to any other conclusion than that it created an interest in the profits of the concern in Nesham, which constituted him a partner rjuoad third persons. The view presented by my brother Maule, in the course of the argument, seems to me to be the correct one " Maule, J., said in the course of the argument : " The proper way of taking the account between the parties under the agreement, as it strikes me, should be, to treat Nesham as a person entitled to the whole profits of the newspaper, subject to the payments guaranteed to Lowthin;" and in his judgment " I quite agree, that we are to look at the substance, and not at the mere form, of the transaction. The question is, whether it gave Nesham an interest in the profits of the newspaper." And he determines what the interest of Nesham is in the following manner : " Before the date of the agreement, the whole profits belonged to him. What does he, in substance, part with ? Lowthin is to manage the concern, and to receive 150/. a year, at all events, for seven years. That is all that Lowthin is certain of receiving. Deduct that sum from the whole interest in the newspaper, and Nesham is interested in the excess, except in the improbable event of the profits realizing more than suflficient to pay the annual instal- ments of the 1,500/., the 150/. a year to Lowthin, and tlie further sum of 500/. in the seven years. Upon that simple statement, it might very well be ques- tioned whether Lowthin was a partner, or whether he was not a sort of salaried agent, remotely interested in surplus profits. It is however, unnecessary to discuss that ; for no one disputes that he is a partner. I think Nesham is a much more unquestionable partner than Lowthin." Now, it is evident that the interest in the profits which Maule, J., here gives to Nesham is none other than that of owner. He considers him as never having wholly parted with his proprietary interest. See further Heyhoe v. Burge, 9 C. B. 431. The head-note is as follows : A. & B., by a memorandum in writing, agreed, " for services performed," to allow C. a fourth share of the clear profits arising from a contract for the construction of a line of railway ; and there was evi- dence to show that C. had acted upon the agreement (though not formally a party to it), and that he had to some extent interfered in the work. Held, sufficient to show that C. was a partner in the transaction, quoad third persons. See also the recent and very interest- ing case of Plickman v. Cox, 3 C. B. N. s. 523, and 36 Eng. L. & Eq. 400. [Grace f. Smith, and Waugh v. Carver may be said not to be now law in Eng- land. Cox V. Hickman, 8 H. of L. Cas. 268 ; Buller v. Sharp, L. R. 1 C. P. 86 ; Stat. 28 ; 29 Vict. ch. 86 ; post, p. * 93, note (0; ante, p. * 67, note. See fur- ther, as to criteria of partnership. Am. Law Reg. n.s. 10, p. 209 ; Molwo v. Court of Wards, L. R. 4 P. C.429. See also Lord V. Proctor, 7 Phila. (Penn.) 630; Kaiser v. Wilhelm, post, p. * 524, n. (k)J] The American authorities on tliis subject are in no inconsiderable cou- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 87 of the parties, or unless they had so held themselves out *to the public. He admits, however, that the common 75 flict. Mr. Justice Story believes that the true principle, and the one deduci- l)le from all the authorities, is, that a participation in profits raises a pre- sumption of partnership, which, how- ever, is not conclusive, but may be overcome by other circumstances. Story on Part. § 38, et seq. Chancellor Kent affirms the general doctrine of Waugh V. Carver, and also adopts the principle that the interest in profits which will constitute a man a partner must be such as to entitle him to an account. 3 Kent Com. (8th ed.) pp. 22, 23, 26, 32. And the same distinction is approved by Chancellor Walworth in Champion v. Bostwick, 18 Wend. 184, 185 [reaffirmed by the Court of Ap- peal in Manhattan Brass Co. v. Sears, 45 N. Y. 797; Leggett v. Hyde, 58 N. Y. 272, which last especially ex- pressly affirms the doctrine of Grace V. Smith, and Waugli v. Carver]. Still the tendency of the cases, especially of the later and better-considered ones, we believe to be on the whole in favor of the doctrine of the text. We shall examine particularly only those which are important, either from the elabo- rate consideration they have received, or because they maj^ be regarded as representing a class. There are quite a number of early cases in which the courts have applied without a question the rule asserted in Waugh ik Carver, and supposed to be confirmed by Lord Eldon. Thus, in Purviance i\ Mc- Clintee, 6 S. & R. 259, Purviance was sued as a partner with S. Dryden, Jr. His defence was that he was not a partner, but merely a clerk, receiving as compensation for his services one- half the profits of a store kept at Lan- caster. Tilghman, C. J., delivered the opinion of the court, and after citing Grace v. Smith, Waugh v. Carver, and Hesketh v. Blanchard, said: "In the present state of the world, we cannot afford to part with any of the safe- guards against fraud. Every man who trusts tlie partnership, increases the fund to which creditors look for payment, upon the faith of its being applied in the first instance to pay the partnership debts ; and, therefore, no man shall be suffered to diminish it, under the pretence of taking any part of the profits as a compensation for his services, without being himself re- sponsible in case of loss. This is all fair in principle and good in practice. I argue, therefore, that if S. Dryden, Jr., was to take half the profits, he was, by operation of law, the partner of Purviance" So the case of Walden V. Sherburne, 15 Johns. 422 (which is not very unlike Waugh v. Carver in its facts), is sometimes cited as sup- porting the same principle. And to tliat effect is a remark of tlie court. But the decision is that the parties were general partners, and no distinc- tion is drawn between partnership inter se and partnership as to third persons. And the facts certainly seem to make out a clear case of actual partnership. See also Miller v. Bartlet, 15 id. 137 ; Brown v. Cook, 8 N. H. 64 ; Miller v. Hughes, 1 A. K. Marsh. 181 ; Taylor V. Ferme, 3 Harr. & Jolms. 505; Scott V. Colmesnil, 7 J. J. Marsh. 416 ; M'Donald v. Millaudon, 5 Miller, La. 403. There are also later cases, which must be regarded as decided upon the same grounds, or, at least, as giving a controlling, and, we think, undue in- fluence to the fact of participation in indefinite profits. Thus, in Catskill Bank v. Gray, 14 Barb. 471, the facts were these : The Ulster Iron Company leased to Gray, for the term of five years, their manufacturing premises at S. As rent of the premises, G. agreed to pay the company one-fourth of the net profits arising therefrom ; all expenses being deducted, except commissions on sales, G.'s personal services, and the general superintendence of the busi- ness. G. was to furnish all the finances necessary to carry on the manufacture, and to be allowed interest on his ad- vances, and was at liberty to make re- THE LAW OF PARTNERSHIP. [CH. VI. 76 law has settled it otherwise. And then he remarks upon the difference which * he supposes to exist on this point, pairs at a cost of not over $5,000, for wliich the company were to allow him interest until the accruing rent should be equal to the expenditure. One-half the profits agreed upon as rent was to be paid annually ; the balance at the end of the five years, with interest ; such interest to be yearly added to the principal. Any loss that accrued was to be charged to the profit and loss account ; but the company were not to repay any amount already received by them as rent, nor to be liable for any deficiency, at the end of the demised term. G. was to allow interest on all moneys in his hands arising from the manufacture. A certain kind of iron was allowed to be used, to be charged at its fair market price, the price and all other questions arising under the agreement to be settled by one J. T., of New York. Burt, the superintend- ent of the works, and who drew the bills on G. & Co., upon which the present action was brought, testified that the accounts of the concern were kept at the works with G. as lessee, that he acted as agent of such lessee, and received no directions from the Ulster Iron Company. This last evi- dence does not appear to have been regarded ; but, upon a construction of the above agreement, the court held, that the Ulster Iron Company thereby stipulated for a specific interest in the profits, as profits, and were therefore liable as partners to third persons. The court took the whole agreement into consideration, but apparently only for the purpose of ascertaining whether the company were to be paid, indfji- nitely, out of the profits. The language is : " What was to be received by the company was only payable out of the profits actually made in the manu- facture of iron. They had then a di- rect interest in such profits. As was said in Dob v. Halsey (16 Johns. 40), ' he who takes a part of the profits indefinitely, shall, by operation of law, be made liable for losses ; upon the principle, that by taking a part of the profits, he takes from the creditors a part of that fund which is the security for the payment of their debts.' We think the error here lies, not in declar- ing that 'a specific interest in profits, as profits,' makes a man a partner as to third persons, but in assuming that a stipulation for a certain share of the profits necessarily gives such specific interest; that is, an ownership in the profits. There are certainly portions of the agreement which are not incon- sistent with a contract of partnership ; as the provisions respecting the kind of iron to be used, and the sharing of profits. On the other hand, the whole character of the transaction seems more consonant with the idea that it was a mere contract of lease, and that the company were interested in profits, not as owners, but merely as relying on them for payment." See further Cushman v. Bailey, 1 Hill, 526 ; Wood V. Valette, 7 Ohio St. 172; Church- man V. Smith, 6 Whart. 146; Holt v. Kernodle, 1 Ired. 199 ; Everett v. Coe, 5 Denio, 180; Buckner v. Lee, 8 Ga. 285. The decisions in Hodgman v. Smith, 13 Barb. 302, and Perry v. Butt, 14 Ga. 699, notwithstanding the dicta of the courts, do not seem at variance with true principles, all the circumstances considered. But, in contradistinction to these cases, we may now examine those which, we think, must be regarded as proceeding upon, if not definitely establishing, a different and sounder principle. Thus, in the first place, it has been uniformly held, as in the Eng- lish law, that mariners, who receive for their wages a share in the profits of a voyage, are not thereby made partners, either as to rights or as to liabilities. Rice v. Austin, 17 Mass. 197 ; Grozier v. Atwood, 4 Pick. 234 ; Coffin V. Jenkins, 3 Story, 108; The Crusader, Ware, 437; Reed v. Hussey, 1 Blatch. & Howl. Adm. 525 ; Duryee V. Elkins, 1 Abbott Adm. 529. And CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 89 between the English and American law, on the one hand, and Roman law and the modern * foreign law, on the 77 the principle whicli has governed the courts, in these agreements with sailors, is, tliat, all the circumstances being considered, it is apparent that the par- ties never intended to give, nor did give, to the mariners the interest of owners in the undivided profits. In Baxter v. Rodman, 3 Pick. 435, the master and crew of a whaling-ship re- ceived, in lieu of wages, a proportion of the net proceeds of the oil obtained in the adventure. The court said : " That every seaman should be tenant in common with all the other seamen, the master, and the owners of the ves- sel, in all the oil which may be taken on a whaling voyage, so that no action could be brought respecting it without joining all, and none could be sued without the whole, giving every sea- man 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 proprietors 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 agree- ment as to the mode of compensation, and gives them no property in the oil, but only regulates the amount of com- pensation." So, in Bishop v. Shep- herd, 23 Pick. 494, where the court say : " It has often been held that upon these whaling voyages, carried on under a shipping-paper and form of contract like that exhibited in the present case, although the officers and seamen re- spectively are to receive a share of the proceeds of the oil and other acquisi- tions of the ship, as their only compen- sation, yet they are not partners or part-owners of tJie oil with the owners of the ship; but, on the contrary, the oil, before division, is the property of the owners. The oil, in the first in- stance, being the property of the own- ers, it remains theirs until some settle- ment or adjustment." For similar reasons, we think the courts have uni- formly held, that a ship-owner who lets his vessel to another, in consideration of receiving a certain share of the gross or net proceeds of the adventure, is not liable to third persons as a part- ner with the hirer. Reynolds v. Top- pan, 15 Mass. 370 ; Taggard v. Loring, 16 id. 336 ; Thompson v. Snow, 4 Greenl. 264; Cutler v. Winsor, 6 Pick. 335. See Holmes v. Old Colony R. R. Co., 5 Gray, 58, 60. In Cox V. Delano, 3 Dev. 89, the question was whether Delano & Whel- den were liable as partners under the following agreement : " The said De- lano agrees to let a schooner," &c. " to the said Whelden, upon condition as follows : said Whelden to pay all charges of victualling and manning, together with all and other charges which may arise on said schooner, as long as he shall have possession of her, excepting such as are hereafter enu- merated, which are to be paid by the said Delano ; namely, one-half the expenses of port charges, one half the expense of lights used on board, and the wages of one seaman. . . . The said Whelden is hereby empowered to invest the pro- ceeds of freight in such merchandise as he may think for mutual interest. All profit, over and above the expenses above mentioned, to be equally di- vided." It was held, that Delano & Whelden were general partners. The opinion of the court is well worthy of attention : " He who shares in the prof- its, which are nothing but the net earnings, should also share in the losses, if there be any. The inor *96 *97 G., M. & G. 180, 19 Eng. L. & Eq. 627 ; Bailey v. Clark, 6 Pick. 372. See also Boardman v. Gore, 15 Mass. 339; Bax- ter V. Clark, 4 Ired. 127 ; Denny v. Cabot, 6 Mete. 98 ; Jordan v. Wilkins, 3 Wash. C. C. 115; Dow v. Say ward, 12 N. H. 271 ; Cargill v. Corby, 15 Mo. 425; Langan v. Hewett, 13 S. & M. 122; Brent v. Davis, 9 Md. 217. In Leavitt v. Peck, 3 Conn. 124, Ilosmer, C. J., says : " It is a well-established principle, that the contract of a partner is obligatory for his copartner, by vir- tue of an implied authority, which may be rebutted by a refusal to be bound by his acts. B}' legal consequence, the part- ners whose authority is thus declined cannot bind the copartnership in favor of those who have knowledge of the fact. . . . The principle under consid- eration is not founded at all on any supposed waiver of the creditor, but solely and exclusively on the declara- tion of the person declining to be bound. The implied authority of his partner he has annihilated ; and the contract in the name of the firm is of no validity beyond the personal obligation it im- poses on the individual making it." So if, upon the dissolution of a copartner- ship, the outgoing partner assigns to the continuing partner all his interest in the outstanding partnership debts and accounts, the subsequent release of a debt by the outgoing partner to a debtor having notice of the agreement is void. Gram v. Cadwill, 5 Cowen, 489. See Ex parte Harris, 1 Madd. 588. Partners sometimes give notice to particular persons, or to the public generally, that they are not responsible for the acts of one or more of the other partners. Such repudiation of the ordinary liabilities of a partner, espe- cialh^ if it be with reference to a single transaction, is not, perhaps, necessarily inconsistent with the continuance of the partnership. But it more com- monly happens when one or more of the partners wishes to dissolve the partnersliip and retire, while the rest choose to continue in the business. Such warnings by partners of limita- tions they mean to put to their own liability, and to the authority of the other partners, have the same effect, so far as third persons are concerned, as the communication of stipulations between partners restricting their lia- bility, and upon similar principles. For, a partnership being once proved to exist, and the implied power of each partner to act for the others in every thing within the scope of the partner- ship business being once given, the fair presumption upon which third par- ties are justified in acting is, that the partnership and the consequent implied authority of each partner still con- tinue. But this presumption is of course wholly rebutted by notice to the contrary, and can then no longer be a reason for holding the party giv- ing the notice to liability as a partner. In Galway v. Matthew & Smithson, 10 East, 264, the defendants, partners in trade, were sued upon a promissory note. Matthew let judgment go by default ; but Smithson defended the action on the ground that the plaintiff, before he took the note in question, had notice of an advertisement, then recently published in a newspaper by Smithson, wherein he warned all per- sons not to give credit to the defendant Matthew on his (Smithson's) account, and that he would no longer be liable for drafts drawn by the other partners on the partnership account. The de- fendants having a verdict on this ground (Galway v. Matthew, 1 Camp. 403), upon motion to set aside the non- suit, Lord Ellenborough, C. J., 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, wlio is now sought to be charged, which reached the plain- tiff, warning him that Matthew had 106 THE LAW OF PARTNERSHIP. [CH. VI. tion of authority on the part of his partner, to bind, seems to be a question of fact, (w) no such authority. It is not essential to a partnersliip that one partner should have power to draw bills and notes in the partnership firm to charge the others : they may stipulate be- tween 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 sliall 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." Layfield's Case, 1 Salk. 292; Minnit V. Whinnery, 2 Bro. P. C. 323 ; 16 Vin. Abr. 244 ; Ex parte Harris, 1 Madd 583 ; Vice v. Fleming, 1 Y. & J. 227; Rooth v. Quinn, 7 Price, 193; Feigley v. Sponeberger, 5 Watts & S. 564 ; Johnston v. Button, 27 Ala. 245. It has, however, been questioned, whether, if a firm consist of more than two members, the expressed and known dissent of one partner to a contract about to be entered into in good faith by a majority of the part- ners in the name of the firm will oper- ate to free the dissenting partner from liability thereon. Story on Part. § 12-3, and notes ; 3 Kent Com. 45. This question will be considered when we come to treat of the power of a ma- jority of the partners to bind the part- nership, post, ch. 7, § 5. In one case, indeed, it was said : " By the act of entering into a copartnership, each of its members becomes clothed with full power to make any and every contract within the scojie and limits of the co- partnership business. All such con- tracts will therefore be absolutely binding upon the several members. This power is incident to the copart- nership relation, and must exist, in defiance of expostulations and objec- tions, while the relation endures." Wilkins v. Pearce, 5 Denio, 541, 544. But, though the judgment in this case was affirmed in the Court of Appeals, the dictum just quoted does not appear to have been approved. On the other hand, the acts of the protesting part- ner subsequent to his expression of dissent were held to amount to a waiver of it, and to a ratification of the transactions to which he had origi- nally objected, s. c. 2 Comst. 469, 472. See opinion of Colden, Senator, in Smith v. Lasher, 5 Cow. 689, 710. In Willis V. Dyson, 1 Stark. 164, Lord Ellenborough held, " that after notice by one partner not to supply any more goods on the partnership account, it would be necessary for the party send- ing goods after such notice to prove some act of adoption by the partner who gave the notice, or that he had derived some benefit from the goods." This qualification of the rule, that a partner may limit his liability by giv- ing notice to that effect, though reiter- ated upon the authority of this case by some of the writers on partnership (see 3 Kent Com. 8th ed. 49; Gow on Part. 52), seems open to considerable question, as matter of principle. Nor does it appear to have the support of any other judicial decision. On the contrary, in Galway v. Smithson, su- pra, Matthew, for whose acts Smith- son, his partner, had given the plaintiff notice he would not be responsible, had, after the notice, borrowed money of (w) Leavitt v. Peck, 3 Conn. 124 ; Willis V. Dyson, 1 Stark. 164 ; Vice v. Fleming, 1 Y. & J. 227. See authori- ties cited above. And if a partner, in the presence of a party dealing with another partner who acts in the name of the firm, refuses to be bound by the transaction, yet his subsequent acts and declarations may amount to a waiver of his dissent, and to a ratifi- cation of the transaction from which he thus at first dissented. Pearce v, Wilkins, 2 Comst. 469. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 107 * On the whole, we say that the law-merchant, as it is * 98 incorporated into the common law of England and of this country, does not permit one to secure to himself all the advantages and gains of partnership, and guard himself against all its liabilities and losses ; and that his attempt to do so would be defeated by casting upon him those liabilities. But stipulations are often entered into which must be understood as giving up, on the part of all the partners, or of a part, some of the powers and advantages of partnership, and providing against a proportionate measure of liability ; and any stipula- tions of this character would undoubtedly take effect as far as they were known. Thus, it is quite common, in continental Europe, for mercan- tile firms, in their circulars or other advertisements, to desig- nate one or more of the partners as alone having authority to put the name of the firm to negotiable paper. If a firm should so advertise in this country, it would undoubtedly prevent any person who knew of it from holding the firm on the signature of any other member. But it should not affect one who did not know it ; because he might fairly imply the authority of each partner from the partnership. * Formerly, the * 99 phrases special and limited partnerships, which now have a statute meaning, were applied quite loosely to those which were less general than usual ; {x) and it was always the plaintiff, and had applied it mostly party thus notified still persists in his to the payment of partnership debts, purpose, and completes the contract, Nevertlieless, Smithson was held not he must be presumed to have made liable on a note given in tlie partner- it solely on the credit of the non- ship name for the sum so borrowed, dissenting partners. But we shall see, So in Leavitt v. Peck, 3 Conn. 124. in the next section, that where credit In Monroe v. Conner, 15 Me. 178, is given to one or more of the individ- Shepley, J., after an examination of ual partners, the other partners are not the point, comes to the conclusion, that liable on such contracts, even though " it is more in accordance with the they inure to the benefit of the part- general principles of law, and with nership. good faith and fair dealing, to hold {x) See Lansing v. Ten Eyck, 2 that a partner is not bound by a con- Johns. 304 ; Mumford v. Nicoll, 20 id. tract after he has given notice, to the 624, 629 ; Bentley v. White, 3 B. Mon. party proposing to make it, that he 263 ; Reynolds v. Cleaveland, 4 Cow. would not be bound by it." When 282; Ensign v. Wands, 1 Johns. Cas. notice is given to a party proposing to 171. In these last two cases, the word make a certain contract, that one mem- " limited " is used only in the head- ber of a firm will not be bound by the note. Ensign v. Wands, 1 .Johns. Cas. action of tlie other members, if the 171 ; De Berkom v. Smith, 1 Esp. 108 THE LAW OF PARTNERSHIP. [CH. VI. held that, where these limitations were known to a customer, he was affected by them ; and further, that this specialty or limitation may be inferred from facts. Limitations upon the authority of one partner to represent his copartners may also be imposed by the nature and usages of particular trades. The fact that a partnership is engaged in a particular trade being known, is sufficient notice to third persons of the limitations which the nature and customs of that trade place upon the power of each partner ; and third parties dealing with a partner in matters outside the scope of its usual business, to charge his firm therein, must show him to have possessed special authority so to act. Thus, it has been held^ that persons who are en- gaged in working a mine or a farm, in partnership, give no implied authority to one another to borrow money or to draw bills of exchange on joint account and credit, even in promotion of the joint business. Hence, if money be borrowed, or a bill be drawn, by one of several persons jointly interested in a farm or a mine, the lender or holder cannot hold the other partners upon it, without showing that they had in some way authorized the acting partner so to bind them. (?/) 29; Post V. Kimberly, 9 Johns. 489. v. Ginrick, 57 111.531;] Greenslade v. [When, by the terms of a partnership, Dower, 7 id. 635 ; Ricketts v. Bennett, the liability of each partner is limited, 4 C. B. 686. See Shieknesse v. Bromi- and this limitation is known to a tiiird low, 2 Cromp. & J. 425 ; Hawtayne v. person who contracts with a partner Bourne, 7 M. & W. 595; Tredwen v. in a matter for which he alone is re- Bourne, 6 id. 461 ; Howken i'. Bourned, sponsible, the other partners are not Sid. 703; Burmesteri?. Norris, 6 Exch. liable. Thus, A. and B. are partners, 796 ; 8 Eng. L. & Eq. 487. But where A. agreeing to furnish capital, and B. it was sliown that it was the custom labor ; and C. knowing these facts con- of planters generally to borrow money tracts with B. to perform in part the when necessary for tlie purposes of labor which B. was to furnish. C. their business, it was held, that one of must look to B. for his compensation, a firm engaged in the business of plant- Pollock V. Williams, 42 Miss. 88 ; New- ing might bind his copartners by bor- man v. Baker, 9 Johns. 207 ; Zettee v. rowing money for their business, and Soper, Sup. Ct. Kan., 4 Cen. L. J. 288. giving a note therefor. Lea v. Gnice, The rights of third persons against a 13 S. & M. 656. And in McGregor v. partnership will be limited by the spe- Cleaveland, 5 Wend. 475, a promissory cial provisions of the articles of copart- note given for the firm by one of two nership known to such third persons, partners in the business of farming and Smith V. Vanderburg, 46 111. 34.] coopering was held good, and binding (y) Dickinson v. Valpy, 10 B. & C. upon both. "An attorney, gud at- 128; [Judge v. Braswell, Ct. of App. torney, is not a scrivener: it is part of Ky. 3 L. & Eq. Reptr. 602 ; Kimbro his business to prepare conveyances V. Bullitt, 22 How. (U. S.) 256; Ulery and negotiate mortgages, and see that CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 109 * A limitation or exception may grow out of the * 100 nature of the particular transaction. Thus, if a partner tlie deeds are executed and the trans- action completed. A scrivener is a person who receives money to lay out upon security, and to hold the money in his hands until an opportunity offers for laying it out." Hence, where two are in partnership merely as attorneys, one member of the firm is not rendered liable as partner by his copartner's re- ceiving money indefinitely for the pur- pose of being laid out on mortgage security. Harman v. Johnson, 2 Ellis & B. 188, 18 Eng. L. & Eq. 400, 2 Ellis & B. 01. See Sims v. Brutton, 1 id. 440 ; Wilkinson v. Candlish, 19 Law J. Kep. Exch. 100. So, if persons are in partnership as attorneys, there is no implied authority in one of them to bind the rest by pledging the name of the firm for a loan of money, Brecken- ridge v. Shrieve, 4 Dana, o75; Hedley V. Bainbridge, 3 Q. B. 316; or by put- ting the name of the firm in any shape to negotiable paper, Levy v. Pyne, 1 C. & Marslim. 453. See Smithy. Cole- man, 7 Jur. 1053 ; Wells v. Turner, 10 Ind. 133. [Garland i\ Jacomb, L. K. 8 Ex. 218. In Wisconsin, after a care- ful review of the authorities, it was held that one member of a non-trading part- nership — law firm, for instance — can- not bind his copartner by a bill or note, drawn, accepted, or indorsed by him, even for a debt of the firm, unless spe- cially authorized by his copartner, or it be necessary to carry on the partner- ship, or it be shown to be usual in similar partnerships ; and the burden of proof of authorit}-, necessity, and usage is upon the party claiming under the note. Smith v. Sloan, 37 Wis. 285; Hunt V. Chapin, Lansing (N. Y.), 139 ; McCord i: Field, 27 U. C. C. P. 3j)l ; Prince v. Crawford, 50 Miss. 344.] In like manner, a partner in tlie practice of physic is not bound by a note drawn by his cojiartner in the name of the firm, for the purpose of raising money, Crosthwait v. Ross, 1 Humph. 23 ; nor by any other of his copartner's con- tracts which are not connected with their business as physicians, Thomp- son V. Howard, 2 Cart. (Ind.) 245. So if four are interested as partners in two shares of the stock of a company formed for digging tunnels, the peculiar and limited character of the partnership business precludes any legal implica- tion that one of the partners can bind the others by issuing commercial paper in the partnership name. Gray v. Ward, 18 111. 32. See Cocke v. Branch Bank, 3 Ala. 175, respecting the limi- tations to the authority of one of a firm of tavern-keepers. In re Worcester Corn Exchange Company, 3 De G., M. & G. 180, 19 Eng. L. & Eq. 032 ; and Cheeny v. Clark, 3 Vt. 431, as to the liability of members of a building asso- ciation. See also Williams v. Thomas, Esp. 18 ; Bentley v. White, 3 B. Mon. 203 ; Vance v. Campbell, 8 Humph. 524 ; Lanier v. McCabe, 2 Fla. 32 ; Miller v. Hines, 15 Ga. 197 ; Benson v. M'Bee, 2 McMullan, 91 ; Goodman v. White, 25 Miss. 103 ; Cargill v. Corby, 15 Miss. 425 ; Lansing v. Gaine, 2 Johns. 300. In Andrews v. Lehott, 10 Barr, 47, Andrews & Harris had agreed to form a statutory limited partnership, Harris being the special partner. With that view, they had placed upon record, and otherwise published to the woi'ld, in accordance with the provisions of the statute, the terms of their connec- tion. A subsequent breach of the stat- ute made Harris a general partner, in an action against both the partners upon contracts made in the name of the copartnership. Harris alleged in defence that the plaintifl, at the time the contracts were made, knew he was a special partner, and gave credit to the firm and the general partners, and did not rely on liim. But it was held, that this knowledge by the creditor of the special partnership could not discharge the special partner from the general liability fixed on him by statute. The court said: "If the plaintifi's knew they held themselves out as a limited partnership, they also knew that, if 110 THE LAW OP PARTNERSHIP. [CH. VI. of a firm which deals only in merchandise gives the note of the firm for a horse, it would be a fair presumption that the party- receiving it — if he knew the general business of the firm — should have supposed that the partner had no authority * 101 to give such a note. (2) The rule itself, which gives *to a partner his authority, limits it, in perhaps all the au- thorities which assert the rule, to contracts or acts within or belonging to the business of the firm. The reason of this is perfectly obvious ; and it would follow that as partners may cer- tainly limit their business as they please, by so doing they place an analogous limitation to the authority of the partners, in reference to any one knowing the limitation of their business. The general reason why all the partners are bound by the acts of one, is, that great and inevitable frauds would spring from the want of this rule. Thus, it would always be easy for a firm doing the largest business to have one partner the defendants failed to comply with the requisition of the act, they became general partners, and were liable as such. The presumption is, that the contract was made in reference to the legal rights of the parties ; and this pre- sumption can alone be rebutted by clear proof of an express contract, waiv- ing all the plaintiffs' rights under the statute." (z) Holmes v. Burton, 9 Vt. 252; Livingston v. Roosevelt, 4 id. 25L In this last case, A. & B. formed a copart- nership, under the style of A. & Co., in the business of sugar-refining, and so advertised the public. B. afterwards, without the knowledge of A., bought a quantity of brandy, for which he gave his note, payable to the firm, and in- dorsed by him with the name of the firm. nie plaintiff, the indorsee of said note, took both the newspapers in which the character of the business of A. & Co. was advertised. The question in the case being whether the copart- nership was liable on the above note, Kent, C. J., said : " All partnerships are more or less limited. There is no one 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, that he deals with him on his private account, notwithstanding the partner may give the partnership name, unless there be some circumstances in the case to destroy that presumption. ' If,' says Lord Eldon (8 Vesey, p. 544), ' under the circumstances, the person taking the paper can be considered as being ad- vertised, that it was not intended to be a partnership proceeding, the partner- ship is not bound.' Public notice of the object of a copartnership, the de- clared and habitual business carried on, the store, the counting-house, the sign, &c., are the usual and regular indicia by which the nature and extent of a partnership are to be ascertained. When the business of a partnership is thus defined and publicly declared, and the company do not depart from that particular business, nor appear to the world in any other light than the one thus exhibited, one of the partners can- not make a valid partnership engage- ment on any other tiian a partnership account. There must be some author- ity, beyond the mere circumstance of partnership, to make such a contract binding." CII. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. Ill (entitled to a very small share) without means, and therefore without risk, who should sign all their paper and execute all their contracts ; the other partners taking all the profits and casting all the losses on him. But it would as certainly be a fraud, if a customer, who knew that a partner with whom he dealt had no authority to act for his partners in a certain way or on certain terms, should nevertheless make that very bar- gain with him, relying on the responsibility of the other part- ners, (a) A firm may undoubtedly permit one of the partners to act in his own name, but for the interest and benefit of the firm, and then any loss in such transaction is a loss of the firm. As where one partner deposited the funds of the firm in a bank in his own name, with the consent and for the convenience of the firm, and the funds were charged to him in the books of the firm, but only to indicate in whose hands they were, and the bank became insolvent, — it was held to be the loss of the firm, and not of the partner, (aa) * While there are many cases in which this general * 102 question is raised, there are few in which it is fully con- sidered. In nearly all, it is dismissed with the simple remark, that any stipulations which partners choose to agree upon between themselves are operative and obligatory upon any third parties to whom they are made known. But, for the reasons we have already given, we think this statement of the rule too broad. It needs to be qualified by the other rule, that the limitations and qualifications shall produce or leave (a) To a similar effect is the language upon the purchase of groceries or fur- of Kent, C. J., in Livingston v. lioose- niture for his family, — it could not be velt, 4 Johns. 278, 279. He says that supposed by any one that the company where the particular business of a firm would be holden. These would be is made known in a usual and reason- plain cases of a fraud, practised upon able way to the public, " the creditor is the firm, of which the creditor would advertised that he is not dealing on a be chargeable with notice. When the partnership account ; and for him to public have the usual means of knowl- take a partnership engagement, with- edge given them, and no means have out the consent of the firm, is, in judg- been suffered by the partnership to ment of law, a fraud upon the firm, mislead them, every man is to be pre- S appose, in the case of a general com- sumed to know the extent of the part- mercial partnership, a debt was to be nership with whose member he deals." contracted by one partner upon the Dow v. Sayward, 12 N. H. 275. See purchase of new lands ; or suppose, in Bignold v. Waterhouse, 1 Moore & S. the case of a partnership between two 259 ; Maltby v. N. W. & li. Co., 10 Md. attorneys, in law business, a partnership 422. note was to be given by one of them [aa) Campbell v. Stewart, 34 III. 151. 112 THE LAW OF PARTNERSHIP. [CH. VI. something of equality between the general advantages wliich are to be gained by the partnership on the one hand, and the power and authority of the partner or partners on the other ; or in other eases, similar to those we have already used, the law will not permit parties to enter into an actual and unlim- ited partnersliip, so far as regards all the advantageous results to be derived from a partnership, and then by an agreement among themselves, communicated to others, to protect them- selves from any important portion of the liabilities which necessarily belong to partnership by the law, the usage of merchants, and reason and justice. We have already seen that any stipulations between partners bind them, and there is nothing to prevent them from agreeing that one shall share all the profits, but that the others shall bear all the losses. This, however, will not prevent a creditor of the firm from suing all, nor from levying an execution on the property of the partner thus exempted, unless the creditor had knowledge of the agreement, and made his bargain with the firm so far in acceptance of and accordance with that agree- ment, that he must be taken not to have given any credit to the exempted partner. If that partner is made to pay any share of loss, by the general law of partnership, he can turn round upon his partners, under their agreement, and recover it from them. * 103 * It is well established that if a partner, in direct violation of his stipulations as partner, or in fraud of the partnership, enters into any contract on their part with a third person, the partners are not discharged by his breach of contract, or by his fraud, unless the third person was partici- pant or conusant of it. (6) (h) See post, ch. 7, " Of the Rights A partner cannot, for a private con- and Duties of Partners between Tliem- sideration, discharge a debtor of tlie selves." And see Salland v. McRae, firm, by an agreement to pay the 16 La Ann. 193 ; Stockwell v. Dilhng- debtor's note to tlie firm. Lewis v, ham, 50 Me. 442. Mechanics' Bank Westner, 29 Mich. 14. If a partner V. Foster, 44 Barb. 87 ; Gale v. Miller, pays his private debts by receipting a id. 420 ; Tilford v. Ramsey, 37 Mo. bill due from his creditor to the firm, 563 ; Hay ward v. French, 12 Gray, the firm, or its assignee, may neverthe- 453; Sterling ?;. Jandon, 48 Barb. 459; less recover the amount of their bill. [Blodgett y. Weed, 119 Miss. 215. See Thomas v. Penrich, Sup. Ct. Gin. also Guild v. Welch, 119 Mass. 257. Ohio, 3 L. & Eq. Reptr. 399. If the CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 113 We add, that the person so dealing with a fraudulent part- ner, in actual ignorance of the fraud, but in an ignorance which implies gross negligence on his part, should not be permitted to hold the firm. This would be an inference from the prin- ciples of agency. This rule has been applied to the holder of negotiable paper, and should be applied to every one dealing with such partner, (c) SECTION IV. WHEN CREDIT IS GIVEN TO ONE PARTNER ONLY. He who gives credit to one partner alone, cannot call on the rest. This is true, however the credit be given. As, if the * creditor sold him goods; (cZ) or sold to another * 104 appropriation by one partner of part- nership property to pay his private debt, be made and received in good faith and under such circumstances that the other partners and tlie cred- itors are not defrauded, the money so appropriated cannot be recovered back. Corwin v. Suydara, 24 Ohio St. 210.] (c) Loyd V. Freshfield, 2 C. & P. 325 ; New York Fire Insurance Co. v. Bennett, 5 Conn. 574. In this last case, Hosmer, C. J., says : " It is now insisted, that the payee of a promis- sory note, although he has knowledge that the maker or indorser in the name of the firm is making payment by this act of his own debt, or is becoming the surety of another person, without the concurrence of his partners, and that neither the partnership covenant nor the interest of the partnership sanc- tions the act, yet that he has a riglit to subject the partnership. The prin- ciple, in direct hostility with justice and convenience, is endeavored to be sustained by the unwarranted supposi- tion, that the payee, not having knowl- edge that special authority was not given the partner, may fold his arms, and reap a benefit from his supine- ness. Common sense and common integrity require that he should make inquiry, in such cases, and actually know that authority was given. He is bound, on legal and fair principles, to sustain the affirmative. He knows that the partnership is for mercantile operations. He knows that the part- ner, signing or indorsing a note in the name of the firm, from the partnersiiip contract, had no implied authority. He knows that the act can alone be authorized by the delegation of ex- press power. And he knows tliat on the most common and best-established principles, in promotion of justice and prevention of fraud, the person claim- ing the obligation of contract against a partnership is bound to prove it." See Warren v. French, 6 Allen, 317 ; Kimball v. Walker, 30 III. 482 ; Dun- can i\ Lewis, 1 Duvall (Ky.), 183; Sims u. Smith. 12 Rich. Law (S. C), 685. [Whether the plaintiff suing on such a note had such notice as ought to put him on inquiry, is a question for the jury. Waite v. Thayer, 118 Mass. 473. The burden of proof that a note given in the firm name by one of the partners is not on partnership account, is on the partnership. Cur- rier V. Cameron, 31 Mich. 373.] (d) As where goods for the use of a stage-coach are supplied to one of several partners in a stage-coach line by one knowing that the agreement between them is that each shall run and stock a particular portion of the road at his own expense. Iliard v. Bigg, Mann. N. P. Index, Partners, A. (a), 5; Barton v. Hanson, 2 Camp. 97 ; 2 Taunt. 49. So where L. & C, 8 114 THE LAW OF PARTNERSHIP, [CH. VI. goods on his guaranty ; or received him as surety in any way, or loaned him money, (e) If there is no evidence to show to whom credit was given, the fact that money borrowed by a partner comes to the use of a firm raises a presumption that the * 105 hjan was made by him * as partner, and, if not rebutted, will malce the firm liable for the repayment. (/) by articles, entered into partnership for the manufacture of hemp ; L. to find the stock, and C. to furnish the ma- chinery and operatives. The plain- tiff's slave was employed, by C. alone, in the business of the firm, and the present action was assumpsit against the partners for the value of his ser- vices. The plaintiff, as the only evi- dence of the liability of the firm, exhibited the articles of copartnership, providing for the arrangement above stated. Held, that, in the absence of evidence to the contrary, the plaintiff must be presumed cognizant of the duty of C. to furnish hands, and to have contracted solely upon the credit of C. ; to whom alone, therefore, he could look for payment. Lafon v. Cliinn, 6 B. Mon. 305. See Pinckney t;. Keyler, 4 E. D. Smith, 469. In Young V. Hunter, 4 Taunt. 583, Gibbs, J., said : " I am by no means of opin- ion 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 them- selves 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 not recover against him, although such other per- son would have the benefit of the goods. See further Saville v. Rob- ertson, 4 T. R. 725 ; Gibson v. Lupton, 9 Bing. 297 ; Ex parte Harris, 1 Madd. 583 ; Holcroft i-. Hoggins, 2 M., G. & Sc. 488; Sylvester v. Smith, 9 Mass. 121 ; Holmes v. Burton, 9 Vt. 252 ; Ketchum v. Durkee, 1 Hoff. Ch. 528 ; Watt V. Kirby, 15 III. 200 ; Meyer v. Larkin, 3 Cal. 403. In Johnston v. Warden, 3 Watts, 101, the court in- structed the jury : " That if A. con- tract with B. to deliver articles at a specified period, and if in the inter- mediate time B. & C. enter into a partnership, as upon such a contract, it is to be i)resun)ed that payment is to accompany delivery ; if credit is given at the time of delivery, it must be pre- sumed to be done upon the credit of the partners, and this whether the ex- istence of the partnership was known to the plaintiff who gave the credit or not. If the existence of the partner- ship was known at the time, no doubt could be raised ; but if a credit be given where there is a secret partner, as the credit is supposed to be given as well to him as to those associated with him, upon the ground that he is en- titled to the profits, so he in equity should be responsible for the loss in the present case." (e) Ex parte Hunter, 1 Atk. 223; Parkin v. Carruthers, 3 Esp. 248, per Le Blanc, J. ; Loyd v. Ereshfield, 2 C. & P. 325 ; Bevan v. Lewis, 1 Sims, 376 ; Murray v. Somerville, 2 Camp. 99 ; Le Roy V. Johnson, 2 Peters, 186; Mifflin V. Smith, 17 S. & R. 169; Willis v. Hill, 2 Dev. & Bat. 231 ; Foley v. Robards, 3 Ired. 177 ; Bird v. Lanius, 4 Wis. 615 ; Clay V. Cottrell, 18 Pe'^nn. 408 ; Wiggins V. Hammond, 1 Mo. 121 ; Siegel v. Chidsey, 28 id. 279; Miller v. Morrice, 6 Hill, 114; Holmes v. Burton, 9 Vt. 252; Evans v. Biddleman, 3 Cal. 435; Logan V. Bond, 13 Ga. 192; Foster v. Hall, 4 Humph. 346 ; Jaques v. Mar- quand, 6 Cow. 497 ; VVhitaker v. Brown, 16 Wend. 505. (/) Jaques v. Marquand, 6 Cow. 497 Rothwell V. Humphreys, 1 Esp. 406 Church V. Sparrow, 5 Wend. 223 Whitaker v. Brown, 16 id. 505. If for money borrowed a partner gives his CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 115 If the creditor sold goods or loaned money to every one of the partners severally, on their several credit, he could not recover of them jointly, nor hold them mutually responsible, although the money or the goods were immediately used by the bor- rowers or buyers to make up the stock of the firm, or provide for its debts or business. () ber wlio was not a party in giving such higher security, yet tliat a court of equit}' will look at the original char- acter of the debt, and will not withhold relief against the member not uniting in the higher security, merelj' because of the merger and destruction of the legal remedy against him ; but will treat that simple contract as a debt still subsisting inforo conscienticE, unless it is shown that the creditor intended, by accepting such higher securit}', to abandon all recourse upon his original demand. In other words, that in a court of law the higher security oper- ates per se a destruction of the simple contract ; but that, in a court of equity, whether such is to be the effect of the transaction, is a question to be decided by proof of the intention of the parties. If by taking such higher security it was not the design of the parties that the social debt should be wholly extin- guished, equity will still hold all the partners bound. If, on the other hand, the higher security is given and ac- cepted as a substitute for the original simple contract of the firm, and with the intention to absolve the firm, all remedy upon the latter is gone, in equity as well as at law." See Sale v. Dishman, 3 Leigh, 548 ; Gait v. Cal- land, 7 id. 594 ; Weaver v. Tapscott, 9 id. 424 ; Ward v. Motter, 2 Kob. (Va.) 552 ; Moser v. Libenguth, 1 Rawle, 255 ; Hart v. Withers, 1 Penn. St. 285, 290. (o) Attwood V. Banks, 2 Beav. 192 ; Lodge V. Dicas, 3 B. & Aid. 611 ; Liv- ingston V. RadcliflT, 6 Barb. 201 ; David V. EUice, 5 B. & C. 196 ; Cole v. Sack- ett, 1 Hill, 516 ; Waydell v. Luer, 5 id. 448 ; Wildes v. Fessenden, 4 Mete. 12 ; Frentress v. Marble, 2 Greene (la.), 553. See Pierce v. Cameron, 7 Rich. 114; Stone V. Chamberlin, 20 Ga. 259. [If a creditor of the firm, after dissolution, knowing that one or more of the part- ners have agreed to assume and pay the firm debts, accepts the note of those agreeing to pay, in payment of his debt, it is a discharge of the other partners. Millerd v. Thorn, 56 N. Y. 402. So where each partner gives his note for his share of a debt, it is a discharge of the partnership debt. Maxwell v. Day, 45 Ind. 509.] (/)) Thus it was said by Denman, C. J., in Thompson v. Percival, 5 B. & Aid. 925 : " Many cases may be con- ceived in which the sole liability of one or 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 rem- edy, as in cases of bankruptcy, or survivorship, or in various other ways ; and whether it was actually more bene- ficial in each particular case cannot be made the subject of inquiry." Kirwan V. Kirwan, 2 Cromp. & M. 617, 623; Hart V. Alexander, 2 M. & W. 484 ; Waydell v. Luer, 3 Denio, 410; Liv- ingston V. Radcliff, 6 Barb. 301 ; Van CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 121 From the language used in some cases, it might be inferred that the taking of a new security of the same class from one partner for a partnership debt is of itself sufficient to extinguish tlie partnership debt, and to discharge the firm. But the principle now applied, l)otli in England and generally in this country, is, that the acceptance by a creditor of the firm of one partner's separate security of the same class with the joint security discharges the other partners only when an ex- press or implied * agreement that such shall be the effect * 111 of the transaction is clearly made out. (^q) Instances of partners using the name or credit of the firm for their personal advantage, and without authority, are con- stantly occurring ; and, as we have seen, when this is known to the person dealing with them, the firm are not held. Some Eps V. Dillage, id. 244 ; also, Harris v. Lindsay, 4 Wash. C. C. 271 ; Marshall, C. J., in Shelby v. Mandeville, 6 Cranch, 264 ; Ex ]>arte Liddiard, 4 Deacon & Ch. 603 ; Oakeley v. Paslieller, 10 Bligh, 548 ; Anderson v. Henshaw, 2 Day, 272 ; Thomas v. Shillibeer, 1 M. & W. 124. The principle of these latter cases seems also to have been asserted in Evans v. Drumraond, 4 Esp. 92, and in Reed v. White, 5 id. 122. In the former, Lord Kenj'on said : " Is it to be endured, that, when partners have given their acceptance, and when per- haps one of two partners has made provision for the bill, the holder shall take the sole bill of the other partner, and yet hold both liable ? I am of opinion, that, when the holder chooses to do so, he discharges the other part- ner." [Acceptance by a firm creditor of a note made by the surviving part- ner, who had been authorized to take this in liquidation, does not discharge the estate of the deceased partners. Titus V. Todd, 25 N. J. Eq. 458.] (7) Ex parte Hodgkinson, 19 Ves. 295 ; Newmarch v. Clay, 14 East, 239 ; Kirwan r. Kirwan, 4 Tyrw. 491 ; 2 C. & M. 617 ; Harris v. Farwell, 15 Eng. L. & Eq. 70, 15 Beav. 31 ; Winter v. Innes, 4 Myl. & Cr. 108, 109; Estate of Davis V. Desauque, 5 Whart. 530 ; Arnold v. Camp, 12 Johns. 409 ; Smith V. Rogers, 17 id. 340 ; Muldon r. Whit- lock, 1 Cow. 290 ; Frisbie v. Earned, 21 Wend. 450; Waydell v. Luer, 3 Denio, 410 ; Parker v. Cousins, 2 Gratt. 372 ; Mason v. Wickersham, 4 Watts & S. 100; Kinslerr. Pope, 5 Strobh. 126; Yarnell v. Anderson, 14 Mo. 019 ; Pot- ter V. McCoy, 26 Penn. St. 458; Hill V. Voorhies, 22 id. 68 ; Nichols v. Cheairs, 4 Sneed, 229. And even in those States, where, as in Maine, Massachusetts, and Vermont, the tak- ing of a negotiable note or bill is re- garded as prima facie evidence of pay- ment of the debt, it may be believed that the acceptance by a partner- ship creditor of such separate secu- rity would not discharge the firm, un- less it were clearly sliown that such was the intention of the parties. Bar- ken-. Blake, 11 Mass. 20, 21. See also Melledge v. B. Iron Co., 5 Cush. 170; Fowler v. Ludwig, 34 Me. 455; Tracy V. Pearl, 20 Vt. 162 ; Heald v. Warren, 22 id. 410. The security of one or more of the partners for a firm debt is more frequently taken by a creditor where the partnership is dissolved by the retirement of one or more of its members. See ch. 31, § 2, for a more detailed examination of the cases. 122 THE LAW OF PARTNERSHIP. [CH. VI. difficulty often arises as to the proof of such knowledge on the part of the creditor. Tliere is a rule, however, which rests on strong authority, and is in itself reasonable, just, and convenient, which would settle most of these cases, or at least reduce them to mere questions of fact. It is, that whenever a party re- ceives from any partner, in payment for a debt due from that partner only, whether the debt be created at the time or before existing, or by way of settlement of or seciirity for a debt or indebtedness or obligation of the firm in any form, the pre- sumption of the law is, that the partner gives this and the creditor receives it in fraud of the partnership, and has con- sequently no demand upon them, (r) And upon the * 112 * same principle, if one partner releases a debt due to his firm, in consideration of a release to him of a debt due by him solely, the presumption will be that the transaction was fraudulent, (s) The presumption of fraud in these cases is never absolute. It may be rebutted by proof of the authority given by the other partners, or of their knowledge and consent, or their ratification ; and these, or either of them, may be express, or {)•) Hope V. Cust, cited in Shirreff v. Blackf. 57, 261 ; Hickman v. Reine- Wilks, 1 East, 48; Ridley l-. Taylor, 13 king, 6 id. 388; Lanier v. M'Cabe, 2 id. 175 ; Green v. Drakin, 2 Stark. 347 ; Fla. 32 ; Clay v. Cottrell, 18 Penn. St. Ex parte Goulding, 2 Glyn & J. 118; 408; King v. Faber, 22 id. 21 ; Darling Heath 1-. Sansom, 2 B. & Ad. 291 ; Ex v. March, 22 Me. 184 ; Elliott v. Dud- parte Thorpe, 3 Mont. & Ayr. 716; ley, 19 Barb. 326; Miller v. Hines, 15 Wintle V. Crowtlier, 1 Cromp. & J. 316 ; Ga. 197. See Leveson v. Lane, 13 C. B. Snaith v. Burridge, 4 Taunt. 684 ; Ex n. s. 278 ; Williams v. Brimhall, 13 parte Aagace, 2 Cox, 312; Davenport Gray, 462 ; Casey i;. Carver, 41 111.228; V. Runlett, 3 N. H. 386 ; Greeley v. Rutledge v. Squires, 23 Iowa. 53. Wyeth, 10 id. 15; Williams v. Gil- (s) Evernghim u. Ensworth, 7 Wend. Christ, 11 id. 535; Livingston r. Hastie, 326; Gram v. Cadvvell, 5 Cow. 489; 2 Caines, 246 ; Lansing v. Ten Eyck, 2 Farrar v. Hutchinson, 9 A. & E. 641 ; Johns. 300; Livingston v. Roosevelt, 4 Greeley v. Wyeth, 10 N. H. 15. If a id. 251; Dob v. Halsey, 16 id. 34; firm is sued upon a note given in the Foot V. Sabin, 19 id. 154 ; Laverty v. partnership name, partly for a partner- Burr, 1 Wend. 529 ; Whitakery. Brown, ship debt and partly for the separate 11 id. 75 ; Gansevoort v. Williams, 14 debt of one or more of the partners, it id. 133 ; Wilson v. Williams, id. 146 ; seems that the firm is liable so far as Chazournes v. Edwards, 3 Pick. 5 ; the note is founded upon a partnership Rogers v. Batchelor, 12 Pet. 221 ; Baird consideration. Wilson v. Lewis, 2 V. Cochran, 4 S. & R. 397; Cotton v. Man. & G. 197; Barker v. Burgess, 3 Evans, 1 Dev. & B. Eq. 284; Wead v. Mete. 273. See Barber v. Backhouse, Richardson, 2 Dev. & B. 535 ; Piercer. 1 Peake, 61; Wintle v. Crowther, 1 Pass, 1 Porter, 232 ; Mauldin v. Branch Cromp. & J. 316 ; Ex parte Kirby, Buck, Bank, 2 Ala. 511 ; Hagar v. Mounts, 3 511. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 123 be inferred from their acts, or usage, or any circumstances whicli reasonably imply them. (^) The presumption seems to be held much more strongly in this country than in England. There, indeed, the conrts would seem to hold, that, if the name of the partnership be used by a partner even for his private debt, the partners will be held, unless they can show covin or fraud on the part of the holder ; and the mere fact that it was the private debt of one partner to him will not amount to primd facie proof of this, (w) In a recent English case, in a (t) Frankland v. M'Gusty, 1 Knapp, Pr. C. 274; Ex jiarte Bonbonus, 8 Ves. 540; Ex parte Thorpe, 3 Mont. & A. 710 ; Gansevoortw. Williams, 14 Wend. 133 ; Wilson v. Williams, id. 146; Cot- ton V. Evans, 1 Dev. & B. Eq. 295; Noble V. M'Clintock, 2 W. & S. 152; Pierce v. Pass, 1 Porter, 232 ; Brewster i". Mott, 4 Scam. 378 ; Jones i'. Booth, 10 Vt. 268; Miller v. Hines, 15 Ga. 197; Darling v. March, 22 Me. 184. See Corbin v. McChesncy, 26 111. 231 ; Warren c. Dickson, 30 111. 363 ; Stern- burg V. Callaman, 14 Iowa, 251, adopted and confirmed in Cadwal- lader v. Blair, 18 Iowa, 420; Carver V. Dows, 40 111. 374 ; Wise v. Copley, 36 Ga. 508. But proof of knowledge that the indebtedness or obligation of the partnership had been applied by one partner to pay his own debt is not proof of consent to or satisfaction of such misapplication by the other part- ners, so as to rebut the presumption of fraud in the creditor. Ex parte Aagace, 2 Cox, 312 ; Elliott v. Dudley, 19 Barb. 326. (i() Compare Ridley i'. Taylor, 13 East, 175; Frankland i'. M'Gusty, 1 Knapp, Pr. C. 274 ; Ex parte Aagace, 2 Cox, 312 ; Ex parte Bonbonus, 8 Ves 540; Ex parte Thorpe, 3 Mont. & A 716; Musgrave v. Drake, 5 Q. B. 185 with Davenport v. Runlett, 3 N. H 386 ; Lansing v. Gaine, 2 Johns. 305 Dob V. Halsey, 16 Johns. 34 ; Ganse voort V. Williams, 14 Wend. 133 Chazournes v. Edwards, 3 Pick. 5 Rogers v. Batchelor, 12 Pet. 221 ; Cot ton V. Evans, 1 Dev. & B. Eq. 284 Pierce v. Pass, 1 Port. 232. In Dob v Halsey, supra, Spencer J., said : " The only diflference between the decision of this court and that of the King's Bench consists in this : We require the sepa- rate 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 burden 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 pri- vate debt the paper of the firm was given, by showing that it was done without the knowledge, and against the consent, of tlie other partners, and that the fact was known to the separate creditor when he took the paper of the firm." In Rogers v. Batchelor, 12 Pet. 221, the question was raised whether it made any differ- ence that at the time of the transaction the separate creditor had no knowledge that there was a misappropriation of the partnership funds ? Judge Story said : " 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 the separate debt. But we think that the true principle to be extracted from the authorities is, that one partner cannot ai)ply the partner- ship funds or securities to the discharge of his own private debt without their consent ; and that without their consent their title to the property is not di- vested in favor of such separate creJ- 124 THE LAW OF PARTNERSHIP. [CH. VI. suit on a bill of exchange accepted by a partner in the name of the firm, Avhich bill includ,ed with the debt of the firm a private debt of the partner, the court directed a verdict for only * 113 the amount that was due from the firm, (wv) We * shall, in a future chapter, speak of this question more fully in regard to negotiable paper. Property purchased by one partner with the funds of the partnership, in his own name or that of his wife, will be con- sidered in equity as belonging to the partnership, and held in trust for it. («u). If a partner makes a fraudulent use of the name or property of his firm, it should be clearly and immediately repudiated by them as soon as it comes to their knowledge ; and any long delay may work a ratification, (uuu) It is sometimes important, in reference to liability for debt, as in other respects, to determine when a partnership begins. For example, if a man orders goods sent to another, and they are so sent and charged to the first party, and the seller dis- covers that the orderer and receiver were partners in the transaction, both are liable. But if the goods were to be sup- plied to the receiver by the orderer, and manufactured on certain terms by the party receiving them, and the new prod- ucts when manufactured (and not before) were to be the joint property of the two as partners, then the receiver of the goods would not be liable, (w) The general principle which answers the question when a partnership begins, for the purpose and with the effect of casting upon the members of the firm the liability of partners, * 114 must of course * be that the liability of persons on itor, whether he knew it to be partner- [nv] Ellston v. Deacon, Law Rep. ship property or not. In short, his 26, B. 20. riglit depends, not upon his knowledge (uu) Holdredge v. Gwynne, 3 that it was partnership property, but Greene (N. J.), 26; [Renfrew v. upon the fact wliether the otlier part- Pearce, 68 111. 125.] ners had assented to such disposition {uuu) Marine Co. of Chicago v. Car- of it or not." Brewster v. Mott, 4 ver, 41 111. 66 ; Casey v. Carver, id. Scam. 378. See the language of Spen- 225. cer, J., in Dob v. Halsey, 16 .Johns. 39. (v) Gardiner v. Cliilds, 8 Car. & P. [It was distinctly adjudged in Acliley 345; Broune ly. Gibbins, 5 Bro. & C. V. Stachlin, 56 Mo. 558, that the fact 491 (Dublin ed.), 3 id. 127. that a creditor had no knowledge was immaterial. en. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 125 contracts not made by themselves, and as partners, begins at the moment when they begin to have a joint interest in the contracts as partners. For if a person purchases goods or bor- rows money upon his own credit, and it is afterwards discov- ered tiiat the goods or the money have been applied to the use of a partnership of which he is a member, the firm will be liable for the price of the goods or the amount of the loan, if, from the nature and circumstances of the transaction, the firm may be regarded as the real purchaser or borrower, which has acted through its authorized agent ; otherwise, only the party to whom credit was actually given can be held. Suppose there is no partnership in contemplation at the time goods are sold or money is loaned. In such case, though the money or the goods subsequently go to the use of a copartnership, of which the visible contracting party is a member, there can be no pretence for holding the firm liable, since, at the time of tiie formation of the contract, it had no existence even in intention. Qw} (iv) Such was the case of Young v. Hunter, 4 Taunt. 582. Hunter & Kay- ney had purchased goods of the plain- tiffs and other persons, which they intended to ship for the Baltic ; and the defendants, HofFham & Co., who were not otherwise partners of Hunter & Co., were afterwards allowed to join in the adventure, and to have a fifth share upon the goods being put on board. The plaintiffs knew nothing of Hoffham & Co., but sold the goods to Hunter & Co. only. The question was, whether Hoffham & Co., having had the benefit of the goods, were lia- ble to pay for them. Heath, J. : " The proposition of the plaintiffs, that, if it be shown that at any one period of the transaction thei-e was a partnership subsisting, it was therefore to be in- ferred that there had been a partner- ship in the original purchase, is wholly unfounded." Chambre, J., was of the same opinion ; and Gibbs, J., said : " The only possible ground for a new trial would be, if the plaintitt's could show that at the time of the purchase of the goods from the plaintiffs, Hoff- ham & Co. and Hunter and liayney were concerned in that purchase on their joint account. Now, the only evidence given of it was, that at the time of the shipment they were so in- terested. How long before the ship- ment the purchase was made, does not appear ; but it is not to be inferred, from Hoffham & Co. being interested at the time of the shipment, that they were interested at the time of the pur- chase. It is for the plaintiffs, who seek to implicate them, to make it out by evidence. On the other hand, if parties have agreed to be partners for the prosecu- tion of a joint adventure, and one of them with the view pledges his credit for his allotted contribution to the joint capital, he only can be made liable upon the contract, unless, at the time of making it, the partnership was in existence and capable of being a contracting party. And hence, if by the parties' agreement the begin- ning of the partnership appear clearly dependent upon some act or event subsequent to the making of the con- tract in question, the possibility of the firm's being liable thereon is at once 126 THE LAW OF PARTNERSHIP. [CH. VI, SECTION V. WHEN A PERSON IS LIABLE BECAUSE HE IS HELD OUT AS A PARTNER. We have already seen that one may be liable as a partner who is not so in fact, if he suffers himself to be held out excluded. This proposition is illus- trated by the case of Saville v. Rob- ertson, 4 T. 11. 720. There the action was for goods sold and delivered. The defendants, J. Robertson and J. Hutchinson, had entered into the fol- lowing (amongst others) articles of agreement, with S. Pearce and Wil- liam Robertson : " Articles of agree- ment nuide tlie 19th of April, 1787, between J. Robertson and J. Hutcliin- son of London, merchants and co- partners, as well on the part of them- selves as of others who have or shall subscribe their names on the back of these presents, of the one part, and S. Pearce & Co., merchants, of the other part, namely, Whereas the said S. Pearce is the sole owner and proprie- tor of the ship Triumph, &c., and whereas the said J. Robertson, J. Hutchinson, S. Pearce, and others who have subscribed their names on the back of these presents, have mutually agreed upon a joint undertaking, and risk as to profit and loss in a certain voyage or maritime adventure about to be performed under the direction of the said parties, who have or shall have a majority of interest therein, or by a committee appointed by them ; now these presents witness that they, the said J. R. & J. H., on behalf of themselves and all others who have or shall subscribe, &c. ; and the said S. P. for himself, in consideration of the trust which they severally repose in each other, and also in pursuance of the said agreement, have and do, each for himself, his heirs, executors, &c., mutually covenant and agree with each other, &.c. : 1. That the said ship ' Triumph,' whereof the said S. Pearce is sole owner, shall, from the day of this date and until her re- turn from her intended voyage, be at the disposal, direction, and risk of all the said parties hereto jointly, at the valuation of 3,750/., &c. 2. That the said J. R. & J. H., by themselves and others who have or shall subscribe, &c., shall and will on or before the 24th August next procure and provide a cargo of goods for the said intended voyage, to the value of between 22,000/. and 25,000/., and which goods shall, in the judgment and opinion of the majority of the parties to these presents, be deemed eligible and proper for the voyage and markets ; and that the said goods shall be furnished or purchased at the lowest cash prices, although not payable till the usual period of credit is expired ; the differ- ence between the said cash terms and the given credit to be made good by giving bonds bearing interest from the date of the contract of such goods ; and that they, the said J. R. & J. H., and other the persons who subscribe, &c., shall and will prepare and ship the said cargo at such time and in such manner as the majority of the said concerned or their committee shall direct. 3. That all additional outfits of the ship ' Triumph,' in cables, &c., which she may require, &c., after the date hereof, until her voyage be con- cluded, shall be on the joint account, &c. 4. That, in case the said S. Pearce shall be desirous to increase his interest in the said joint concern, he shall be permitted so to do, by shipping on the joint account as many goods over and above the goods to be shipped by the said J. R. & J. H., and others who shall subscribe, &c., as he may think proper ; but the said goods CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 127 to the world * as a partner, (cc) The reason is obvious. Any person may lend his credit to another, as he may 116 so to be sliipped by tbe said S. Pearce, are to be such articles as tlie majority of the concerned or their committee sliall approve of as proper for tlie voyage and market. 5. Tiiat the said 3,750/., together with tiie amount of the additional outfits to be advanced by the said S. Pearce, the amount of half of the premiums of insurance to be made the said S. P. on the said ship, freight, and cargo, and such amount of goods as the said S. P. may ship on the joint account as above mentioned, shall be considered as the said S. P.'s share or capital in the said joint undertaking ; and lie the said S. P. shall be entitled to receive the profit or bear the loss thereon in the exact proportion as the amount of all such sums shall be to the remainder or otlicr part of the said joint concern ; and that the said J. K. & J. H., and the subscribers, &c., shall receive the profit and bear the loss in the like proportion as to the sums set opposite to their several names. 11. That in case the said S. P. shall want the assist- ance of the said J. R. & J. H., or the subscribers, &c., to procure him the loan of any money to enable him to complete the outfits, they engage to procure him 500/., to be rejjaid by him in a manner as therein stipulated." On the 28th July, 1787, the following memorandum was indorsed on the said article bj* the same persons : " Notwith- standing what may be understood to be tiie meaning of the foregoing arti- cles, it is hereby declared by all the parties, that the minute made on the 26th June last and signed by us, re- specting each of us holding the pro- portions of one quarter each, that is to say, Robertson & Hutchinson one-half, and S. Pearce and W. Robertson one- quarter each, it is now fully to be con- sidered and understood that that min- ute is now declared null and void, and that each party whose name is here- unto subscribed is to hold no other share or proportion in the said concern than the amount of what each sepa- rately orders and ships ; and which interest will be hereafter declared agreeably to the true intent and meaning of this agreement. And it is further declared that the orders given for the cargo and outfit of the ship are to be each separately paid, and that one is not bound for any goods or stores ordered or shipped by the other. And that the said S. Pearce has full liberty to ship what goods are suitable for the voyage, over and above the ship and outfit, leaving room clearly for those ordered by Robertson & Hutchinson, and W. R. ; and it is to be understood that the ship is made over in trust for the general concern." In May, 1787, the plaintiff, by the order of Pearce, supplied copper to sheathe and repair the ship ' Triumph,' to the amount of 48/. In August, 1787, tlie plaintiff, by the order of Pearce, delivered copper on board the said ship to the amount of 938/. 3s. 'id., which formed part of the cargo thereof. In October, 1787, the said ship sailed from London for Ostend, and proceeded from thence to the East Indies with the goods so fur- nished by the plaintiff, and other goods on board. In January, 1788, Pearce became a bankrupt, and Saville proved his debt under the commission against him; and in I'ebruary, 1788, William Robertson also became a bankrupt. On the ship's return in 1789, Robertson, without advising Pearce's assignees, went on board and took her to Ostend, (x) See Edmundson v. Thompson, rod v. Langdon, 21 Iowa, 518 ; [Rice 2 Post. & Pin. 564; Reber v. Col. y. Barrett, 116 Mass. 312. i« re Jew- Machine Manuf. Co., 12 Ohio, 175; ett, 15 N. B. R. 126; Cushing i>. Smith, Drennan v. House, 41 Penn. 30; Sher- 43 Texas, 261.] 128 THE LAW OF PARTNERSHIP. [CH. VI. * 117 lend his money or property ; and * if lie chooses to lend his credit or responsibility, he must of course abide by and sold her for his own and Hut- chinson's benefit, because, as he ad- mitted, " he and liis partner were liable to pay the whole debt, for ship and cargo." In January, 1790, the defendants became bankrupts. It be- ing admitted that the plaintiff was en- titled to recover for the copper for sheathing, the question in the case was, whether, upon a construction of the above articles, taken in connection with the defendants' admission and their acceptance of bills drawn for the price of these very goods, the plaintiff could recover for the residue of the copper. It was held that he could not ; and, further, that the contract of sale not having originally been with the partnership, no act which passed subsequent to the delivery of the goods could have any retrospect so as to alter the nature of the contract. Lord Kenyon said : " The facts of the case are shortly these : several persons who had no general partnership, nor any connection with each other in trade, formed an adventure to the East Indies. The outfit of the vessel was a joint concern of all the partners ; and that delivers the case from one con- sideration, namely, the parcel of copper for sheathing the ship, which is admitted to be a partnership concern. But be- yond that I see no partnership between the parties till all the parcels of the cargo were delivered on board; and that made it a combined adventure between all the parties. I cannot, therefore, see how it can be said that these goods, which were sold to Pearce only, and on his sole credit and ac- count, were sold and delivered on the partnership account. Afterwards, in- deed, these defendants were to gain or lose by the joint cargo : when the other goods were brought in, the part- nership arose ; but each was to bring in his own particular stock. But in this case I think that the question stops short of affecting the defendants, and I can- not see how the plaintiff can have a right to call on the defendants, as partners, for the value of these goods, on a supposed contract, when the real contract between the buyer and seller was consummated before the joint risk began." The case of Post i\ Kim- berly, 9 .Johns. 470, is somewhat analo- gous in its facts, and exemplifies the same principle. See Ward i'. Thomp- son, 1 Newb. Adm. 95, where, how- ever, the question arose between the partners : Spalding v. Hedges, 2 Barr, 240, 243 ; Dunham v. Rogers, 1 Barr, 255. On the other hand, Gouthwaite V. Duckworth, 12 East, 421, is a case in which, from the character of the agreement between the parties, the partnership was deemed to be in no Avay dependent for its beginning upon any commingling of the several part- ners' contributions, nor upon any other appropriation thereof to the joint fund ; but to have been in existence at the time of and for the purpose of the purchase of such contributions. Lord Ellenborough, C. J., there said : " It comes to the question, whether, contemporary 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 examination, for the adventure ; that was the agree- ment. Then what was this adventure ? Did it not commence with the pur- chase of these goods for the purpose agreed upon, in the loss and profits of which the defendants were to share 1 The case of Saville v. Robertson 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 partnersliip in the goods did not arise. But here the goods in question were purchased, in pursuance of the agreement for the adventure, of which it had been before settled that Duckworth was to have a CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 129 tlie consequencesof any contracts made on the faith of * it. * 118 Most cases of this kind occur where a partner retires moiety. There seems, also, to have been some contrivance in this case to keep out of general view the interest whicii 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 purcliase on the joint ac- count of the tlireo ; 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 tiie same, for this pur- pose, as if all the names had been announced to the seller, and therefore all are liable for the value of them." Bayley, J., said : " In Saville v. Rob- ertson, after the purchase of the goods made by the several adventurers, tliere was still a further act to be done, which was the putting them on board tlie ship in which they had a common concern for the joint adven- ture ; 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." So in Everitt v. Chap- man, 6 Conn. 347. There A., B., & C. were in partnership in the business of tanning hides, under an agreement by whicli A. was to furnish hides for one-half of the stock, and was to re- ceive and make market for one-half of the leather, and B. & C. were to furnish the other half of the stock, and to make market for the other half of the leather ; each of the part- ners to purchase on his own separate credit. B. bought hides of the plain- tiff, which were charged to him indi- vidually. But, afterwards discovering the partnership, the plaintiff brought his action against A., B., & C. It was held, that tlie firm were liable for the value of the hides. The court cited Gouthwaite v. Duckworth, supra, and, commenting on Saville v. Robert- son, referred to by the defendants, said : " This authority, then, is so far from justifying the defence, that it vindicates the claim of the plaintiff ; for these defendants were in partnership when the hides were purchased — they were bought for the concern — they were delivered into their tannery — they went to their joint benefit, having been purchased by H. R. Mott, with- out disclosing the names of his co- partners." See also, to the same effect, a dictum of Gibbs, J., in Young V. Hunter, 4 Taunt. 583 ; Brooke v. Evans, 5 Watts, 196; Grifiith v. Buf- fum, 22 Yt. 181. In Wilson v. White- head, Ackerman & Carleton, 10 M. & W. 503, the action was assumpsit for goods sold and delivered to the defend- ant. Whitehead, to be used in printing the " Sporting Review." To establish the joint liability with him of Acker- man & Carleton, a verbal agreement between the three was proved that they should bring out and be jointly interested in the " Sporting Review ; " Ackerman was to be tlie publisher, and to make and receive general payments, Carleton to be the editor, and White- head the printer ; and, after payment of all expenses, the three were to share the profits of the publication equally. Whitehead was to furnish tlie paper for the work, and to charge it to the account at cost price, and was also to charge the printing at " master's prices." On this evidence, the court directed a nonsuit, on the ground that the other defendants were not jointly liable with Whitehead in this action, giving the plaintiffs leave to move to enter a verdict for the admitted value of the paper. On the hearing of the motion, Parke, B., said : " The ques- tion is, Did the other defendants au- thorize Whitehead to purchase the paper on their account, or on his own 1 It appears to me, on the true construc- tion of the contract, that the latter was the case. When the paper was in his 9 130 THE LAW OF PARTNERSHIP. [CH. VI. from a firm, and his retirement is unknown, either through his wish or his negligence. These we propose to consider together in reference to the duties and liabilities of a retiring partner. It has been said, holding out one's self as partner to * 119 the world " is * not a wise expression ; " and the question should be, " whether he so held himself to the plaintiff, or under such circumstances of publicity as to satisfy a jury that the plaintiff knew of it and believed him to be a part- ner."(?/) But to hold one's self out " to the world" means, precisely, so to hold one's self out as to justify anybody and everybody in believing him a partner ; and it seems to be a very good expression for this purpose. It is a different case, when the plaintiff relies upon the fact that the party sought to be charged so held himself out specifically to the individual charging him. Where a creditor sues a firm, and seeks to put the liability of a partner upon one who is only a nominal partner, it is a somewhat difficult question, whether the plaintiff can recover without proof that he himself believed the person whom he seeks to charge to be a partner. The authorities on this ques- tion are far from unanimous : some holding that one put forth to the world as a partner is liable as such to every creditor of the firm ; while others hold that he is thus liable, only because he was a partner in fact and in interest, or because the plaintiff regarded him as one, and dealt with the firm, in some degree at least, on his credit, (t/y) We think a reasonable rule may be stated thus : Where one is held forth to the world as a possession, he was at liberty to have pinwall v. Williams, 1 Hamm. 38 ; appropriated it to any other purpose Austin v. Williams, id. 282. Of than to the ' Sporting Review.' " That course, the same considerations are is, from the nature of the agreement applicable, where, in pursuance of an between the parties, it was apparent agreement to prosecute an adventure that, contemporary with the purchase in company, one or more of the part- of the goods in question, there was no ners, on Ins own credit, borrows money, joint interest in them on the part of and puts it into the firm as his con- the defendants ; but their joint inter- tribution to the joint fund. Smith v. est therein arose subsequent to the Craven, 1 Cromp. & J. 500. contract of sale, and only after some (y) So said, by Parke, J., in Dick- act had been performed by Whitehead inson v. Valpy, 10 B. & C. 140. by whicli the paper was appropriated (yy) Wood v. Pennell, 61 Me. 52; to the use of the partnership." See Fitch v. Harrington, 13 Gray, 468. Barton v. Hansom, 2 Taunt. 49 ; As- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 131 partner, the first question is, Was he so held out by his own authority and assent, or connivance, or negligence ? If by his authority, assent, or connivance, the presumption is absolute, that he was so held out to every creditor or customer. If so held out by his own negligence only, he should be held only to a creditor who had been actually misled thereby, (^z) (z) In Young v. Axtell, cited in 2 H. Bl. 242, Lord Mansfield said that the defendant, Mrs. Axtell, " as she suffered her name to be used, and held herself out as a partner, was certainly liable, though the plaintiff" did not, at the time of dealing, know that she was a partner, or that her name was used." See Dolman v. Orchard, 2 C. & P. 104. And there can be no doubt that, in a great majority of the cases on this point, a party has been allowed to charge a person as a partner, by prov- ing that he has publicly held himself forth as one ; without being further required to prove a knowledge of such holding out, on his part, contempora- neous with the making of the contract sued upon. But there are authorities which seem to be in favor of the dictum of Parke, J., as quoted in the text. In Shott V. Streatfield, 1 Moody & R. 8, the question was, whether Green was liable as a partner with Streatfield. A witness testified that he had been told, in Green's presence, that Green liad become a partner with Streatfield. The witness then being asked whether he had afterwards reported tliat Streat- field and Green were partners, it was objected that this was not evidence, unless it was shown that the defend- ants, or one of them, were present when it was reported. Lord Tenter- den, C. J. : "I think it is ; because otherwise it will be said presently that what was said was confined to the witness, and the plaintiffs could not have acted on it." In Alderson v. Pope, 1 Camp. 404, note (o), where C. was held out to the world as a partner with A. & B., but was not one in real- ity, this fact being known to tlie plain- tiff" was held to preclude him from holding C. liable as partner. See, however. Brown v. Leonard, 2 Chitty, 120. In Carter v. Whalley, 1 B. & Ad. 11, the action was assumpsit by the indorsee against the acceptors of a bill of exchange. The facts were these : S. and others, the defendants, had car- ried on business under the name of the " Plas Madoc Colliery Company." But, some time before the acceptance of the bill in question by the company, S. had retired from the firm, though no notice of his withdrawal had ever been given, either to the plaintiff or to the public. The question was as to the liability of S. upon the bill thus accepted by the company after his retirement ; and it being proved that the plaintiff had not dealt with the company while S. was a member, and that the partnership during that time had not been so known when tiie plaintiff did business, that he must be supposed to have looked upon Saun- ders as a partner, in default of notice to the contrary. Lord Tenterden or- dered a nonsuit. On motion for a rule to show cause, Parke, J., said : " Saun- ders had given no direct authority : he was not a partner at the time. But he may by his conduct have repre- sented himself 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 pub- licly appeared as a partner as to satisfy a jury that the plaintiflt" must have believed him to be such; and if he had suffered the plaintiff to con- tinue 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 132 THE LAW OF PARTNERSHIP. [CH. VI. * 120 * Persons may come under a general liability, by merely liaving the same firm name, provided they do * 121 business in such a way as * to lead to the inference representation, uncontradicted by a subsequent notice. But, in order to render him liable on these grounds, it is necessary that lie should have been known as a member of the firm to the plaintiff, 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 comjiosing it ; and the plaintiff did not show that Saunders had dealt with him in thecliaracter of a partner, or had held liimself out so publicly to be one as that the plain- tiff must liave known it. Carter, the plaintitf, lived at Birmingham ; it should have ajipeared that there had been such a dealing at that place by Saunders, or that his connection with the com- pany 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." — Rule refused. So in Pott V. Eyton, 3 C. B. 39, the same view seems to be taken by the court. The American cases, Benedict v. Da- vis, 2 McLean, 347, Markham v. Jones, 7 B. Men. 456, are to a similar effect. See also Buckingham v. Burgess, 3 McLean, 364, 549 ; Hicks v. Cram, 17 Vt. 449. Regarding the question with refer- ence to the principle which underlies it, Mr. CoUyer, referring to the lan- guage of Lord Mansfield, in Young v. Axtell, above quoted, says : " It ap- pears from this case, that it is not necessary for a person charging a nominal partner to have been aware of the partnership at the time of the contract. And this doctrine seems satisfactory when we consider, that the object of the rule is to prevent the extension of unsound credit." Colly er on Part. (Perkins' ed.) § 86. On the other hand, in 1 Smith Lead. Cas. 507, it is remarked, that " this position appears very questionable ; for the rule which imposes on a nominal partner the re- sponsibilities of a real one is framed in order to prevent those persons from being defrauded or deceived, who may deal with the firm of which he holds himself out as a member, on the faith of his personal responsibility." Now, it is clear that in these two extracts the liability of a nominal partner rests upon two different i^rinciples, leading to two diflferent rules of law. If a nominal partner is to be made liable, " to prevent the extension of unsound credit," then that liability is to be im- posed upon him whenever he has held himself forth to the world as a partner, whether he has in fact deceived the particular creditor or not. For, if it be proved that a man has exhibited himself to the world as a partner, then unsound credit has been extended ; and the reason for preventing it, by mak- ing him liable, is in no way weakened by the fact that a particular creditor has not been deceived. The fact that mischief has not been done in the par- ticular case is no proof that the general and public injury against which the rule was designed to guard has not been caused, and is not therefore any reason for the non-application of the rule to that case. On the other hand, if a nominal partner is to be made liable as a real one, simply to compel him to make good the assurances he has given, and to fulfil the engage- ments he has led others to suppose he has made, then the doctrine is one of private justice, rather than of public policy. Hence, though a man has held himself out as a partner to the world, yet, if he has not appeared as a contracting party to a particular cred- itor, there is, in the absence of consid- erations of public policy, no ground for holding him liable to that creditor, since to him he has given no assur- ances of his personal responsibility, and with him he has made no engagements. See Wood v. Pennell, 51 Me. 62. en. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 133 suggested by the name, of an identity of interest, (a) So, too, if one is a partner in a house for some business, and the other partners carry on another business in which he has no interest, if nothing is done or said and no circumstances exist to indicate his want of community in this last busi- ness, so that those dealing with the other partners are justified in believing that they are dealing with him also, he is then liable as a partner. (Z>) (a) James Spencer carried on busi- ness in Mancliester under the firm of James Spencer & Co. ; and William Spencer, in London, under the style of Spencer & Co. It was held, that Wil- liam Spencer, having been in the habit, personally, or by his clerk, of ac- cepting bills drawn upon James Spen- cer & Co., and addressed to William Spencer's place of business in London, had thereby held himself out as a partner of James, and became liable accordingly. Spencer v. Billing, 3 Camp. 310. [And two firms will be held to be one, if they assume to con- stitute one. Beall v. Lowndes, 4 S. C. 258.] (6) Wood & Paj'ne were in partner- ship as wholesale grocers. Wood, Payne, & Steele were partners in buy- ing and selling cotton ; this last busi- ness being carried on at Wood & Payne's counting-house, and in the name of Wood & Payne. Steele, however, had no concern in the gro- cery business, nor did he take an ac- tive part in the cotton business ; nor was he known as a partner therein, either to the plaintiffs or to the world. Wood & Payne bought groceries of the plaintiffs; for which they gave a bill of exchange received by Wood & Payne, as cotton dealers, for cotton sold to the drawer, and in which Steele was interested. This bill was payable to the defendants or order, and was in- dorsed by either Wood or Payne, by the name of the firm of Wood & Payne. Held, that Steele was liable as partner on such indorsement. Swan V. Steele, 7 East, 210. See Miner v. Downer, 19 Vt. 14. Assumpsit on a biU of exchange by the indorsees against the defendant as one of the drawers, the other drawer having be- come bankrupt. The bill was drawn in the name of " James King & Co.," under which firm the defendant and his partners had traded. It also ap- peared that tliere were other partner- ships carried on under the firm of " James King & Co.," in which the other drawers were concerned, but in which the defendant had no share. The defendant offered to show that this bill was not drawn on account of the partnership in which he was con- cerned, but on account of one of the others, and that he knew nothing of it. Lord Kenyon was of opinion that the defendant was nevertheless liable ; he had traded with the other partners under that firm, and persons taking bills under it, though without his knowledge, had a right to look to him for payment. Baker v. Charlton, Peake, 80. See Fleming v. McNair, cited in 1 Montagu on Part. 37, note (c) ; and in 3 Dow, 229. In Baker v. Nappier, 19 Ga. 520, it ajipeared that Kilgrow & Price were in partnership in the hotel business, and Kilgrow & Patillo in the grocery business. From the evidence, also, it was doubtful whether each firm did not sometimes use or recognize the name of E. W. Kilgrow & Co as its own. For goods bought of Kilgrow, in the name E. W. Kilgrow & Co., the plaintiffs sought to hold the firm of Kilgrow & Price. The court held, that the jury should be instructed, " that, if Baker & Plart (the plaintiffs), after taking reasonable care to find out which firm Kilgrow was dealing for, really thought lie was dealing for that in which Mrs. Price 134 THE LAW OF PARTNERSHIP. [CH. VI. * 122 * 111 general, conversations, assertions, or admissions, and acts tending to show that parties are partners, and have that joint interest in the business which makes them lia- ble as partners, will often have that effect, (c) although * 123 it might be quite insufficient * to prove a partnership as between the partners, if no third parties were interested in the question. (^) was a member, and so sold him the goods, intending tliem for that firm, and if tlie goods were adapted to tlie business of that firm, — then that firm was liable to pay for the goods, al- though Kilgrow, in truth, intended them for the other firm, and although they went into the other firm." (c) An admission by a person that he is a partner will not estop him from contradicting it by evidence, if the ad- mission was made after the contract upon which it is sought to charge him was entered into. Thus, Ridgway, the plaintiff, applied to Brown to build him a gas vacuum engine. Brown after- wards showed him the draft of an agreement therefor, purporting to be between the plaintiff and Brown & Co. The plaintiff desiring to know who composed that firm. Brown indorsed on the back of the draft the names of " John Broadhurst, Esq., and Dr. Wil- son Philip." The agreement was not fulfilled, and the plaintiff resolved to proceed for the breach. But, before suit brought, his son called on the defendant Broadhurst, and mentioning his father's intention, and the indorse- ment made by Brown upon the agree- ment, begged to know if Brown had been correct in so doing. Broadhurst replied that Brown was right in so do- ing, and stated that he bought his orig- inal interest of the other defendant, Philip. It was also in evidence, that, while the engine was building, Broad- hurst attended very frequently at the manufactory, to inquire as to its prog- ress, to give advice, &c. In answer to this, an agreement or license to Broadhurst, from Brown and the other parties interested in the patent, was put in on the part of Broadhurst, au- thorizing him to use the patent for the erecting of engines in certain parts of Cornwall onli/ ; and it was contended that the admissions of Broadhurst were to be taken with reference to the inter- est which he thus possessed in the invention, and not to any participation either in the patent generally, or in the particular transaction in question. Gaselee, J., left it to the jury to say whether Broadhurst, at the time he made the admission, was under a mis- take, and whether the acts he was proved to have done did or did not af- ford a sufficient ground for supposing it to be a mistake ; and, with regard to those acts, he left it to the jury to say whether they were referable to a part- nership in the patent in general, or in this particular transaction, or whether they were done by Broadhurst to sat- isfy himself as to the license he had obtained for erecting the same engines in Cornwall, being likely to be produc- tive to him or not. The jury having found a verdict for the defendants on the ground that Broadhurst was not a partner, a rule for a new trial was re- fused. Ridgway v. Philip, 1 C, M. & R. 415. {d) Action for money had and re- ceived, to determine whether the plain- tiff had been a trader within the mean- ing of the bankrupt laws. The plaintiff resided under the roof of Greenwood, his brother-in-law, who had long been a trader. Greenwood persuaded the plaintiff to enter into partnership with him. There was a long negotiation between them ; and numerous conver- sations were proved, in which the plain- tiff said, sometimes that he had become a partner, sometimes that he was about to become one. There was no evi- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 135 The rule must be, that every one who authorizes another to believe him a partner, is, as to the person so authorized, a dence of any express agreement, nor of any interference in the business by tlie plaintiff, except that he had once gone in company with Greenwood to a dyer's, and, having inquired about some goods that were left with him to be dj-ed, spoke of them as the joint prop- erty of himself and Greenwood. The partnership, if any existed, only lasted from tiie 22d of March till the 9th of May, during which time no act of buy- ing and selling was proved. The jury, upon this evidence, having found for the defendant, and having thereby established that the plaintiff was a partner with Greenwood, and therefore liable to the bankrupt laws, the Court of Common Pleas refused to disturb the verdict. Parker u. Barker, 1 Brod. & B. 9. In Goode v. Harrison, 5 B. & Aid. 147, the facts were these : In April, 1818, Goode & Bennion called upon Fair, a broker at Manchester, when Goode introduced Bennion as a friend of his from Liverpool, and said, " We want goods." Fair introduced them to Harrison and other houses in Manchester, as the firm of Goode & Bennion. They bought goods of Har- rison and other persons to a consider- able amount, the invoices of which were made out, some to the firm of Goode & Bennion, others to John Goode & T. Bennion, and were seen by them. The goods were forwarded to the ad- dress of Goode & Bennion. At this time, also, Goode said, in the hearing of Bennion, that if the goods they then bought would answer the purpose, in a very short time they would have five hundred pieces of one sort, and five hundred of another sort. After this. Fair corresponded with the firm of Goode & Bennion. In April, 1818, Goode & Bennion had a counting-house in Liverpool, and the name of Goode (who had been some time in the count- ing-house before this transaction of Goode & Bennion, but had not shipped goods before) appeared on the private door, and remained there till August, 1819. But the name of Bennion never appeared on the door at all. In Jan- uary, 1819, Fair received a letter order- ing more goods, in the handwriting of Goode, in which the pronoun we was used throughout, and which concluded, " I am, for G. & B., very respectfully yours, John Goode." Fair consequently bought goods of Harrison, and for- • warded the same, as also a bill of parcels, to the direction of Goode & Bennion. He also drew a bill of ex- change, for the amount of these goods, upon Goode & Bennion, which bill was accepted by Goode in the name of the firm. Fair did not see Bennion from the time of his being in Manchester, in April, 1818, till February, 1819; at which time Bennion asked Fair for the account current of Goode & Bennion for goods bought when he and Goode came to Manchester in April, 1818, and said that the transaction of April, 1818, was the only one that he was engaged in with Goode, and that all that account should be paid. But Bennion did not say in 1818, that he was going to enter into only one adventure with Goode, and there was further put in a letter from him to Fair in the following terms : " Liverpool, 20th April, 1819. Dear sir, we shall be obliged by your purchasing for our account one hundred pieces of the fancied bordered gingham, &c. I remain, dear sir, for Goode and self, yours, T. Bennion." On the other hand, it was testified by Riley, who was in the employ of Goode, and kept the books till the end of April, 1818, but who then went to Barbadoes with the goods first purchased of Harrison, that he never knew Bennion's name to be used in the purchase of goods after April, 1818. A principal question in the case, being how far Bennion was liable as a partner with Goode, for the goods purchased as above, it was held, by the Court of King's Bench that from the above facts it appeared that he had been so held out as partner as to be liable for the goods bought after 136 THE LAW OF PARTNERSHIP. [CH. VI. * 12-4 partner: * hut it must also be true that this authoriza- tion must be such as would be so regarded by a reason- able and fair man ; and a mere conjecture that a man is a partner, even from circumstances tending that way, is not sufficient to hold him as such, (g) as well as in April, 1818. Palmer v. Pinkham, 33 Me. 32, illustrates the same rule. Tliere the question was whether Say ward had been held out as a partner with Pinkliani upon the fol- lowing facts : In October, 1848, Pink- ham applied to the plaintiffs to purchase goods, representing himself as in com- pany with Sayward, under the firm of Horace A. Pinkham & Co. The plain- tiffs thereupon sold him goods on credit, and cliarged them to Horace A. Pinkham & Co. Tliey afterwards directed their attorney to ascertain whether Pinkham and Sayward were really in partnership. The attorney testified that he called upon Pinkham, and received assurances from him that they were so. Of Sayward he asked the question, "Are j'ou in com- pany in the store with Pinkham 1 " and received the answer, " Yes " But it appeared that Sayward was the owner of the store in which the business in question was done, subject only to a right of redemption in Pinkham ; and that he might therefore have supposed that the question of tlie plaintiffs' attor- ney referred to the store only, and not to the business there transacted, and might have framed his answer accord- ingly. Upon this ground, the verdict of the jury at nisi pi-ius, in favor of the defendant, was attempted to be sup- ported. But the court Iield, that the word " company," when applied to per- sons engaged in trade, denoted those united for the same purpose in a joint concern ; that it was so commonly used in this sense, as indicating a partner- ship, that few persons accustomed to purchase goods at shops where they are sold by retail would misappreliend that such was its meaning ; that the defendant Sayward must be supposed to have understood its meaning as used in common parlance ; that he must be responsible for the ideas which the language of his answer was suited to convey to other minds ; and, that if there was any thing equivocal in it, and other persons were fairly entitled to receive it as making known to them that he was a partner of Pinkham in the business transacted in that store, he could not be relieved from the con- sequences resulting from his own lan- guage, fairly interpreted. See further Dutton V. Woodman, 9 Cush. 255. {e} This is well illustrated by the lan- g)iage of the court in Baker r. Nappier, 19 Ga. 520. Tliere were two firms : the one composed of Kilgrow & Price, hotel- keepers; the other, of Kilgrow &Patillo, grocers. From the evidence, it was doubtful whether either partnership had a well-settled firm-name, or whether each did not sometimes use or rec- ognize the name of E. W. Kilgrow & Co. as its own. For goods sold to Kilgrow, it was sought to liold the firm of Kilgrow and Price. By the court : " A merchant, in dealing witli a person known to him to be a member of two different firms, and in respect to goods suitable to either firm, would in gen- eral be in the exercise of no more than ordinary care, if he called on tliat per- son to know which was the firm lie was dealing for. And if, without mak- ing any such inquiry, the merchant should sell the person the goods, think- ing him to be acting for one firm when he was acting for the other, the mer- chant could, in general, hold only the firm for wliich the person was really acting, liable." And it was held, that the jury should have been instructed as follows: "If Baker & Hart (the plaintifls), after taking reasonable care to find out which firm Kilgrow was dealing for, really thought he was deal- ing for that in which Mrs. Price was a member, and so sold him tlie goods, CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 137 * Every partnership should have its proper name *125 or style. It may be whatever name the partnership chooses ; (ee) and this name need not be prescribed in the arti- cles, or determined upon by express agreement. It may grow out of the custom of the firm, and the manner in which it carries on its transactions. (/) If it have no name, and even if it avoid having one, * the responsibilities of those who * 126 can be shown to be actually partners will not be prevented intending them for tliat firm, and if tlie goods were adapted to tlie business of tliat firm, — then that firm was liable to pay for the goods, altliough Kilgrow, in truth, intended them for the other firm, and although they went into the other firm." {ee) Crawford v. Collins, 45 Barb. 269. (/) In Le Roy v. Johnson, 2 Pet. 186, Hoffman & Johnson had entered into articles of copartnership, and one of the questions in the case was, what the firm-name was. Washington, J., said : " It is quite clear that the name of this firm is nowhere designated in the arti- cles of copartnership which have been referred to. The mode in which a particular branch of their business was to be conducted cannot reason- ably be construed to give a name to the firm. It manifestly had no allu- sion to that subject. The stipulation that the funds necessarj' for the pur- poses of the concern should be raised upon the paper of Johnson, to be in- dorsed by Hoffman, or in such other shape as might be found most suitable to the object of the parties, no more designated Jacob Hoffman than it did George Johnson as the name of the copartnership. It is unnecessary to decide whether the omission to agree upon a partnership name in the body of the instrument was or was not sup- plied by the signatures of the contract- ing parties to it ; because it was in full and uncontradicted proof, that, after the concern went into operation under tlie articles, their books were kept, and the bills and accounts relating to their business were made out at their ware- house, in the joint names of Hofiman & Johnson, by which name the firm was generally known in Alexandria, and in which they acted in relation to the business of the concern, and ad- vertised in the newspapers. Now, it cannot be questioned Init that a name thus assumed, recognized, and publicly used, became the legitimate name and style of the firm, not less so than if it had been adopted by the articles of co- partnership." W. G. & C. agreed to enter into partnership ; but the articles were silent as to the name of the firm. C. bought merchandise on joint account, and executed a note therefor, signed in the name of himself & Co. It was held, that, in the silence of the articles on the subject, the fair presumption was that the style adopted by C. was that agreed upon by the parties as the name of the firm. Aspinwall v. Wil- liams, 1 Hamm. 38 ; Drake v. Elwyn, 1 Caines, 184. In Ripley v. Colby, 3 Foster, 443, the court said : " Was the evidence competent to show that the plaintiffs constituted the firm of S. F. Ripley & Co. The evidence was direct that the plaintiffs agreed to hire a stable for their common use ; that they after- wards occupied this stable according to this agreement ; that they furnished money in the stipulated proportions to pay their hostler, and to pay the rent. They made these repairs on the building while they so occupied it. They entered and held under a lease made by the defendants to S. F. Ripley & Co. This must be licld competent and quite satisfactory evidence that the plaintiffs were i)artners under the firm of S. F. Ripley & Co., and, as such, made the repairs in question." 138 THE LAW OF PARTNERSHIP. [CH. VI. or lessened, (g') But, when there is an adopted and recognized style, nothing else, as such, binds the partnership, (gg') But tliough a partnership style has been agreed on in the articles or otherwise, and has been used accordingly, proof that another name is also customarily emjtloyed in the dealings of the firm, with the concurrence of all the partners, or even of the managing partner alone, will suffice to make that name one by which the partnership will be bound. (A) If the style be A., B., & Co., the Co. being C, a note signed A., B., & C, in which they jointly and severally promise to pay, is not a * 127 partnership note. (^) * Neither would a note signed {g) See Bank of Rochester v. Mon- teath, 1 Dcnio, 402. (,'/7) See o'l^e, p. *95. (h) Williamson v. Johnson, 1 B. & C. 146. Abbott, C. J. : " It appears from the evidence that Hopgood, Dixon, and a person named L^'e, car- rying on business in partnership to- gether, were known by the description of Hopgood & Co. All their transac- tions of buying and selling were carried on in that name ; but Dixon, who was proved to be the manager of the wliole business, was also in the habit of in- dorsing bills in the name of Hopgood & Fowler, by procuration, for the pur- pose of getting them discounted. The question then is, whether that suffi- ciently proves the existence of per- sons using, for the purposes of business, the style and firm of Hopgood & Fowl- er 1 At the trial I was at first inclined to yield to the objection, but afterwards altered my opinion. I still think that, as between third persons, there was sufficient evidence of an indorsement, by persons using the style and firm of Hopgood & Fowler ; inasmuch as Dixon, the managing partner in the firm of Hop- good & Co., was in the habit of issuing bills into the world, indorsed under the former designation." See Faith v. Rich- mond, 11 A. & E. 339 ; Rogers v. Coit, 6 Hill, 322; Mifflin v. Smitli, 17 S. & R. 165 ; Palmer v. Stephens, 1 Denio, 471 ; Tams v. Hetner, 9 Penn. St. 441 ; Le Roy v. Johnson, 2 Pet. 186. (i) Perring v. Hone, 4 Bing. 32 ; Crouch V. Bowman, 3 Humph. 209. See Marshall v. Colman, 2 Jac. & W. 266 ; Kendrick v. Tarbell, 1 Williams, 512; In re Warren, Daveis, 320; Filley V. Phelps, 18 Conn. 294. In Lord Gal- way V. Matthew & Smithson, 1 Camp. 403, wliere the action was against the defendants as surviving partners, Lord Ellenborough held, that a note made in the following manner was sufficient on the face of it to bind the wliole firm : "' Sixty days after date, I pay Lord Viscount Galway, or order, 200/. value received. For J. Matthew, T. Whit- smith, and T. Smithson, J. Matthew." But this must of course proceed on the presumption that the names of all the partners, as subscribed by the partner acting for the firm, were to be con- sidered the style of the firm until the contrary was proved. Caldwell v. Sithens, 5 Blackf. 99. In Norton v. Seymour, 3 M , G. & Sc. 792, the action was upon a note drawn in the following form : " Two months after date, we promise to pay," &c., and signed, " Thomas Seymour, Sarah Ayres," in the handwriting of Se^'mour. The defendant Ayres had formerly carried on business at the place at wliich the goods, in respect of wliich the above note had been given, had been supplied, and had admitted that she was in part- nership with Seymour. A circular and invoice issued by Seymour were also in evidence; the circular stating that the business would in future be carried on in the names of Seymour & Ayres, CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 139 " A. & B." be the note of the firm. In either case, or al- most any other, upon proof tliat the partnership was really the party in interest and under obligation, and that another style than that of the partnership was used through inadver- tence or fraud, the partnership would be held liable ; (/) but no signature other than their own would hold them as their signa- ture. (A;) and the invoice being lieadcd Seymour & Ayres. It was objected, on the part of the defendant Ayres, that, assuming the existence of a partnership between herself and Seymour, the latter had no authority to bind her by a bill or note signed otherwise than with the name of the firm. On motion for a new trial of the case, Maule, J., said : " As to the form of the note, it is to be observed that it is signed by Seymour in the name of himself and the other member of the firm. Suppose there was no authority so to sign it, other than the general authority conferred by the part- nership, I should hesitate to say that one of two partners could not bind the other by signing the true names of both, instead of the fictitious name. That, however, is not the question here. The circular states that the business will in future be carried on in the names of Seymour & Ayres ; that is, in the names of the two persons mentioned, whatever those names may be. Thomas Seymour is the name of the one, and Sarah Ayres that of the other. There is, therefore, sufficient evidence of a special authority to sign the note in those names, if such special authority were necessary." ij) Kinsman v. Dallam, 5 Monr. 382; Crozier v. Kirker, 4 Tex. 252. In Faith v. Richmond, 11 Ad. & Ell. 339, Richmond, Barbour, & Hannay were in partnership, under the style of " The Newcastle & Sunderland Wall's End Coal Company." A prom- issory note was made by Richmond, signed as follows : " For the Newcastle Coal Company, William Richmond, manager. At the London and West- minster Bank." It was objected that, admitting Richmond to be entitled, as a partner, to make promissory notes on behalf of The Newcastle & Sunder- " land Wall's End Coal Company, yet this was not a note drawn in their behalf, and could not bind them ; " The Newcastle Coal Company " not being their firm, nor the London & Westminster Bank one with which they dealt. The Lord Chief Justice, in summing up, observed, that the three defendants were partners, and Richmond might draw bills or notes as their agent ; and that if he had done so in the name of The Newcastle & Sunderland Wall's End Coal Com- pany, or if the plaintiff had been used to deal with them as the New- castle Coal Company, the defendants would have been bound : but he left it to the jury to say, whether, on the evidence, the note in question was one which Richmond, as a partner in the first-mentioned firm, had authority to draw. A verdict being found for the defendants, the Court of Queen's Bench refused a rule for a new trial, on the ground of misdirection. {k) "If, in the body of a promis- sory note, made by one partner, the language be, ' I promise to pay,' &c., but the note be signed with the co- partnership name, such note is bind- ing on the firm, and not alone on the partner who executed it." Doty v. Bates, 11 Johns. 544. But if an obliga- tion on its face purports to be the act of one partner, and to be made to se- cure a debt due from him individually, the mere fact that the partnership name is signed to this instrument is not sufficient to bind the firm thereby. Scott V. Dansley, 12 Ala. 714. If a note be made as follows : " I promise to pay," &c., and be signed " For A., 140 THE LAW OF PARTNERSHIP. [CH. VI. * 128 * Questions of this kind sometimes arise where part- ners in business do not advertise or in any public way make known the fact of partnership, but transact their business under the name of one of their partners only. (Z) When par- ties agree to transact business jointly, or under an agreement to share in the profits, the name or firm which they use is arbi- trary and conventional. They may use the name of both, or of one of them alone, or any distinct designation, by which all will be included and bound, as if their names were used, (wi) But though the business of a copartnership may be transacted in the name of one partner, that partner alone cannot bring an action for the price of goods sold by the house. The other acting and ostensible partners must be co-plaintiffs, (w) And in assumpsit by a copartnership, the plaintiffs must prove who compose the firm, (uti) These questions are much complicated when this partner does business on his own account also, for then the signature may do nothing toward determining whether a purchase was made, or a bill accepted, or a note given by that individual alone, or by a partnership of which he was a meml)er. All questions of this kind are questions of fact rather than of law. Nothing better can be said, perhaps, than that they must be answered accordingly as the evidence brings them under this or that general principle of the law of partner- ship. If, for example, the character of the goods purchased, the circumstances of the purchase, the use made of them, or B., C, & D., A." or " By A.," it seems name of one partner is the style of tlie that tlie wliole firm is liable thereon, firm, that partner's name, with the Galway v. Smith, 1 Camp. 403; Hall addition of "& Co.," will not operate V. Smitli, 1 B. & C. 407 ; Ex parte as the signature of the partnership. Buckley, 14 M. & W. 469. Whether As where J. B. & C. H., carrying on upon such a note there is a separate business as partners under the name rigiit of action against the executing of J. B. & C. H., made and indorsed a partner, see post, p. * 199, et seq. bill of exchange in the name of " J. B. (/) The style of a copartnership & Co.," held, that J. B. was not bound may be the name of one of its mem- thereby. Kirk v. Blurton, 9 M. & W. bers. Ex jmrte, Bolitho, 1 Buck, 100 ; 284. See Maclae v. Sutherland, 3 El. South Carolina Bank v. Case, 8 B. & & Bl. 34, 35, 25 Eng. L. & Eq. 92, 110; C. 427 ; Palmer v. Stephens, 1 Uenio, Forbes v. Marshall, 11 Exch. 176, 180. 471 ; or of one who is not a partner, (n) Wilson v. Wallace, 8 S. & R. Bank of Rochester v. Monteath, 1 53. Denio, 402; Williamson v. Johnson, 1 (nn) Patten v. Wliitehead, 13 Rich- B. & C. 146. ardson, L. 150. See Pursley v. Ramsey, (/«) Per Shaw, C. J., in Baring v. 31 Ga. 403; Tilford v. Ramsey, 37 Crafts, 9 Mete. 392. And where the Mo. 563. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 141 the circumstances attending the giving of tlie paper, or any or all of these, sufficiently indicate that* the trans- * 129 action was in fact on account of the partnership, it will be held as the transaction of the partnership, (o) (o) Ex parte Bolitho, 1 Buck, 100. See Truman v. Loder, 11 Ad. & El. 693. In United States Bank v. Binney, 5 Mason, 170, the two Binneys and John Winship carried on business as partners, under the name and firm of " John Winsliip." By the present suit, it was attempted to recover of all the partners, as indorsers, upon certain promissory notes indorsed with tlie name of John Winship, and which had been protested for non-payment. Story, J., said: "In respect to the 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, prima facie bind tlie firm, unless it is ultra the business of the firm. Where the firm imports, on its face, a company, as A., B., & Co., or A., B., & C, then the contracts made by the partners in that name bind the firm, unless they are known to be beyond the scope and business of tlie 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, then, in order to bind the firm, it is necessary to prove not only the signature, but that it was used as the signature of the firm by a party authorized to use it on that occa- sion and for that purpose. In other words, it must be shown to be used for partnership olyects and as a part- nership act. The proof of the signa- ture is not enough. The plaintifTs must go farther, and show that it is a partnership signature. In the present case, tlie signature of " John Winsliip " may be on his individual account, or his personiil contract, or it may be on account of tlie 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 con- tract of the firm, and ought to bind them." s. c. 5 Pet. 529; Manuf. & Mech. Bank v. Winship, 5 Pick. 11; P>theridge v. Binney, 9 id. 272 ; Buck- ner v. Lee, 8 Ga. 285 ; Mercantile Bank V. Cox, 38 Me. 500. But if the person whose name is adopted as the style of the partnership does not carry on a separate business, then that name, attached to a note or other obligation, will be presumed to be the signature of the firm. Bank of Rochester v. Monteath, 1 Denio, 402 ; Oliphant v. Matthews, 16 Barb. 608. See Mifilin V. Smith, 16 S. & R. 165. By the court, Johnson, J. : " It seems to be well settled, that where a partnership is carried on in the name of an individ- ual, and a suit is brought against the partners upon a note or other obliga- tion signed by such individual, the legal presumption is that it is the note of the individual, and not of the part- ners. And the plaintiff, in order to recover against the partners, must not only prove the execution of the note, but go farther, and prove, either that the money for which the note was given was borrowed on the credit of the partnership, or that, when obtained, it was used in the business of the part- nership. If the individual whose name is used declares at the time of the transaction that it is on account of the partnership, that is sufficient to bind the partners. And it would seem, from an examination of the reported cases, that the legal presumption that the debt is the debt of the individual in whose name the obligation is made, and not of the firm, may be repelled and overcome by proof as to the busi- ness in which such person was engaged. Thus, in Mifflin o. Smith, 17 S. & R. 165, where it appeared that the usual and regular business of the borrower was on account of the partnership, and 142 THE LAW OF PARTNERSHIP. [CH. VI. * 130 * In all such cases, it must be remembered that the individual partner whose name is used, has, by law, full authority to represent and act for the rest, and use his own name as the name of the firm ; and his representations in a matter of business which might be theirs bind them all, how- ever fraudulent on his part. If, therefore, when he purchases goods, or gives a note, or offers a note for discount with his indorsement, he represents that he acts for the partnership, and the person with whom he deals believes honestly and rationally that he does so act, the partnership, and of course all the part- ners, arc bound, although no name but that of the individual was used in the transaction. The use of such a name as usually indicates partnership, tliat no business was done by him on his own account, except an occasional speculation, it was held, tliat tlie trans- action must be presumed to be on part- nership account. So, in the case of South Carolina Bank v. Case, 8 B. & C. 427, wliere it appeared that the part- ners were Crowder, Clough, & Prefect, and the name of the firm in England was Crowder, Clough, & Co., but in their business in the United States the name of Clough alone was used, and tliat Clough, while he resided here, never traded, or drew or indorsed bills on his own account, but did on account of the firm, — it was held, "un- der the circumstances, that a bill indorsed here by Clough must be regarded as a bill indorsed by the firm." Manuf. & Mech. Bank v. Winship, 5 Pick. 11 ; Etheridge v. Binney, 9 id. 272 ; Bank of Rochester v. Monteath, 1 Denio, 402 ; Buckner v. Lee, 8 Ga. 285. In United States Bank v. Binney, 5 Ma- son, 189, wliere the two Binneys and John Winship were in partnership, under the firm and style of " John AVinship," and the action was against all the partners, as indorsers upon promissory notes indorsed in the name of John Winship, Story, J., said : " 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 ex- pressly or by implication, that these notes were offered by Winship as notes binding the firm, and not merely him- self personally, as that the discounts were made for the benefit and in the course of the business of the firm. It is not sufficient for the plaintiffs to prove that the bank, in discounting these notes, acted upon the belief that they bound the firm, and were for the benefit and business of the firm. They must go farther, and prove tliat that belief was known to and sanctioned by Winship himself in offering the notes, and that he intentionally held out to them that the discounts were for the credit and on the account of the firm, and that his indorsement was the in- dorsement 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 evi- dence, 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, sufficient to prove that the discounts were procured on account of the firm. It is a strong circumstance, entitled to weight, but not decisive." See, to the same effect, the language of the court in Etheridge v. Binney, 9 Pick. 275. See also Oliphant v. Matthews, 16 Barb. 608. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 143 while it may be primd facie evidence of partnership, is slight and easily rebuttable, (oo) Under the topic of the liability of a person as partner because he is so held out, a question arises which may be attended with some difficulty. If a person, who is not generally or publicly declared to be a partner, is declared with his consent to be a partner to one customer, and that customer communicates the fact to another, is the person thus disclosed to be held as a partner by this other * customer, if he be not a * 131 partner in fact ? If he is a partner in fact, he is liable as such whenever he is discovered to be one, without any reference to the means or manner of the discovery, or the time, whether before or after the contract. But if, not being a partner, he is chargeable, if at all, because he is held out as one, can he be thus charged by one to whom he was not so held out by himself, or with his direct consent ? The cases and principles which we have already considered in treating of a closely related question touch upon this also, (p) It seems, however, to be a distinct question. But though there are cases which touch on . this, there are none that we are aware of which determine the question. We suppose the answer must depend in each case upon the circumstances and manner of the first or original disclosure, and the intention of the parties therein. If the alleged partner, who is to be held only because he has loaned his credit, in- tended to lend it only to the very person and in the very trans- action in which he made or permitted the disclosure, then he should not be held any further, unless through his own fault or negligence. Whatever was his original intention, and however limited it might have been, if he did not limit this giving of his credit in fact, he must be bound to all to whom the fact to which he gives circulation is afterwards communicated. If, on the other hand, he says to the customer, I am a partner as to you, but I tell you so in confidence, and you must not mention this to any person ; and the customer mentions it, and with it the (oo) Cliarman v. Henshaw, 15 Gray, 210 ; Berkom v. Smith, 1 Esp. 29 ; Fox 293. V. Clifton, 6 Bing. 79-4 ; Carter v. {}>) Shott V. Strcatfield & Green, 1 Whalley, 1 B. & Ad. 11. M. & Hob. 9; Swan v. Steele, 7 East, 144 THE LAW OF PARTNERSHIP. [CH. VT. injunction of secrecy to another customer, the first one does what he had no right to do, and the second knows that the first had no right to do it, and therefore can acquire no right by receiv- ing wliat he knew tlie giver had no right to give. If the second customer did not know that the first broke his promise in telling him, or, what is the same thing, did not know that the alleged partner gave no authority for being called a partner to him, it may be a more difficult question, whetlier he can hold this person as partner. But we think he can; because the innocent customer should be protected, rather than the guilty party, who migiit have effectually limited his credit by * 132 * guaranty or the like, instead of putting it into a form by which others might be deceived. Usually, the question whether one is liable as a partner because so held out by himself, or with his consent, turns upon the force and meaning of his acts. If his name is adver- tised, (5-) or is on the painted signs over the door, (r) on the shop-bills or cards, (s) and he knows this and makes no (9) In Ex parte Matthews, 3 Ves. & Bea. 125, the petitioner prayed that the joint commission against himself and John Matthews as partners might be superseded : and stated, that he, the petitioner, never was a partner, nor interested with John Matthews nominally or really in the property or profits of his trade, or any other trade; that he was merely the sliop- riian to John Matthews, and not a trader; and that there was no pre- tence for supposing him a partner with John Matthews, except an adver- tisement in the Gazette, declaring the partnership between them dissolved; which advertisement was inserted for the purpose of counteracting a report that they were partners. The Lord Chancellor held, that upon the affida- vits he could not possibly decide that there was no partnership ; and, accord- ingly, that an issue must be directed to try that question. (r) Wilhams v. Keats, 2 Stark. 290; Dolman v. Prichard, 2 C. & P. 104. (s) Young V. Axtell, 2 H. Bl. 242; Gill V. Kuhn, 6 S. & R. 338 ; Benedict V. Davis, 2 McLean, 348. See f urtlier, for illustrations of the methods by which persons may exhibit themselves as partners, Ex parte Langdale, 18 Ves. 300, s. c. 2 Kose, 444 ; Bond v. Pittard, 3 M. & W. 357; Guidon v. Robson, 2 Camp. 302; Geddes v. Wal- lace, 2 Bligh, 296 ; Stearns v. Haven, 14 Vt. 540 ; Hicks v. Cram, 17 id. 449 ; Cottrill V. Vanduzen, 22 id. 511; Matthews f. Felch, 25 id. 536; Perry V. Randolph, 6 Sinedes & M. 335 ; Chapman v. Wilson, 1 Rob. ( Va.) 267 ; Mershon v. Hobensack, 2 N. J. 372; Smith V. Smith, 7 Post. 244 ; Holmes V. Porter, 39 Me. 157; Barnett v. Smith, 17 111. 5G5 ; McMulhm v. Mac- kenzie, 2 Greene (la.), 368 ; Chidney v. Porter, 21 Penn. St. 390. If A., wishing to get bills discounted, intro- duces B., as his partner, to C, but the only connection between A. and B. is in discounting bills, B. is not hereby so held out as a general partner with A. as to be liable for goods afterwards bought by A. of a person who liad been informed by C. that A. and B. were partners. Berkom v. Smith, 1 CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 145 objection, he is bound. But a person cannot be made liable as partner because so held out, unless the holding out is proved to have been with his concurrence. Hence the declaration or acts of A., implicating B. as his partner, while they bind the former, cannot atfect the latter, without * some con- * 133 firmation by him. (i) As to public acts of this kind, Esp. 29. See Ridgway v. Philip, 5 Tyrw. 131. A person is not liable as partner because so held out, who has signed his name to an instrument im- porting that the subscribers intend, upon the fulfilment of certain condi- tions, to carrj' on business in part- nership. He has not thereby held himself out to the world as a partner in a company already formed. Bourne V. Freeth, 9 B. & C. 632. Nor is one who has retired from a firm, and given due notice thereof, liable as a partner to third persons for goods sup- plied to a ship, because, having before retirement defectively conveyed his interest as a partner therein, his name appears on the ship's register down to a period subsequent to the delivery of the goods, when he joins with the assignees of the other partners in mak- ing a good title thereto to their ven- dee. M'lver V. Humble, 16 East, 169. See Hoare v. Dawes, 1 Doug. 371. (<) Whitney v. Ferris, 10 Johns. 66; McPherson i\ Eathbone, 7 Wend. 216 ; Jennings v. Estes, 16 Me. 323 ; Thorn- ton V. Kerr, 6 Ala. 823 ; Tuttle v. Cooper, 5 Pick. 414 ; Anderson v. Le- van, 1 Watts & S. 334; Taylor v. Henderson, 17 S. & R. 458. See Mat- thews V. Felch, 25 Vt. 536; McBride V. Protection Ins. Co., 22 Conn. 248, 259. In Fox v. Clifton, 6 Bing. 776, 4 Moore & P. 713, the action was brought by the plaintiff for goods sold and de- livered and for work and labor done, upon a contract made, not with the defendants personally, but with the chairman and directors of the " Impe- rial Distillery Company." It was con- tended, that the defendants had allowed themselves to be held out as partners in this company, upon the following evidence, as stated in the opinion of the court : " The secretary of the com- pany had prepared a book containing a list of the names of all those persons to whom shares had been allotted in the concern, in which list the names of the seven defendants had been included. This list had been left with the bankers of the company, to enable them to re- ceive the deposits from the contrib- utors, upon which list the payments had been made, and receipts given at the banking house ; and a copy of it was lying upon the table of the count- ing-house belonging to the company, where it was seen by the plaintiff when he called upon the subject of the con- tract ; and on one occasion, when the plaintiff was expressing a doubt about trusting such a numerous company, the secretary opened the book, and the plaintiff looked over some of the names. The book itself, when referred to, con- tained lists, on the different pages, of the names of the several persons to whom shares had been allotted, ar- ranged alphabetically, one leaf being assigned to each letter of the alphabet, and the whole number of names con- sisted of upwards of two hundred ; so that merely opening the book in the counting-house, and seeing some of the names, could not, in the ordinary course of things, give any intimation to the plaintiff that the names of the seven defendants were included in the lists. Indeed, it is not argued on the ground that the plaintiff saw the names of the defendants in this list, but that the bare circumstance that their names were included in such list used for the purpose above specified, by their own permission, was a sufficient holding themselves out to the world as part- ners in the company. But, in the first place, there was no evidence that the defendants knew of the existence of any copy of the list at the counting- 10 146 THE LAW OF PARTNERSHIP. [CH. VI. * 134 there is some presumption that he knows and * permits tiiem ; and he can escape the liabiHty only by proving his want of knowledge and consent, (it) If he knew, and neither consented nor refused, nor took any steps in relation to it, then he would be held as consenting ; for he is in fault, and he should suffer rather tlian tlie wholly inno- cent persons whom he permits to be deceived. And if he does something in the way of objecting, the question then is. What, and how much ? (w) and we take the only rule to be, that if he is held out as partner, and knows it, he is chargeable as one, unless he does all that a reasonable and honest man should do, under similar circumstances, to assert and manifest his refusal, house ; still less, any evidence that such list was made up, or shown to any one, with their permission or knowledge. The liolding one's self out to the world as a partner, as con- tradistinguislied from the actual rela- tion of partnership, imports at least the voluntary act of the party so hold- ing himself out. It implies the lending of his name to the partnership ; and is altogether incompatible witii the want of knowledge that his name has been so used. Thus, in the ordinary in- stances of its occurrence, when a person allows his name to remain in a firm, either exposed to the public over a shop door, or to be used in printed invoices or bills of parcels, or to be published in advertisements, the knowl- edge of the party that his name is used, and his consent thereto, is the very ground upon which he is estopped from disputing his liability as partner. That there must have been a list of the sub- scribers to so numerous a company, the defendants may, indeed, be taken to have known : it would have been impossible to make calls for deposits, to give notices, or to do any of the acts necessary for carrying on the concern, without a written list of the names of the subscribers. So far, therefore, the authority of the defendants to the ex- istence of a list may be assumed. But that implies no authority whatever that a copy should be made out and lie in the counting-house, for the purpose of being shown to strangers who might demand to look at it. And still less could the list left with the bankers be considered as making any communica- tion to the world, with the assent of the defendants. That list was a matter in strict confidence and privity between the banker who received the money, and the party who called with the letter in his hand and paid the deposit. It held out no information to the pub- lic, because not communicated to any other third person whatsoever. Even upon the face of the book itself, it con- tained no information of the relation in which the parties stood to each other ; . But, without reference to the information wliicli the plaintiff actually received from the book, we think the communication of this book was no act done by the defendants themselves, or by their authority or permission, so as to make them nom- inal and ostensible partners, in contra- distinction to real partners or sharers in the profits of the concern." (u) See cases cited in four preceding notes. (v) As in the case of a retiring part- ner, who, it seems to be settled, must notify the dissolution to the public by proper advertisements, and, perhaps, to customers by a particular notice. Newsome v. Coles, 2 Camp. 617. See Leavitty. Peck, 3 Conn. 124. See also post, ch. 13, § 2. CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 147 and thereby prevent innocent parties from being misled. If he docs any thing which might fairly produce the impression that he is a partner, or, when another does this, fails to do what he should to remove or prevent this impression, then he is as much liable as if he calls himself a partner. If one is chargeable as partner because so held out, he may be treated as one, not only by being made responsible, but by being joined with the partners in a suit against them, or in a suit by them, {iv') So, if a contract be made with per- sons as partners, * they may sue or be sued as part- * 135 ners, whether they are so in fact or not. (x) Where there is a partnership as to third parties, the law presumes a partnership as between themselves, (y) But, if one sues a firm, he is not compellable to join a person who is not a partner, merely because he is held out by a partner to be one. (z) (uj) That a nominal partner may be joined in a suit against the other part- ners, is sliown by almost every case in which this liability of a nominal part- ner is tested. See Goode v. Harrison, 5 B. & Aid. 150. That one held out as partner may be a coplaintiff in a suit with the other partners, see Guidon V. Robinson, 2 Camp. 302 ; Kell r. Nainby, 10 B. & C. 20. In Smith v. Sherwood, 10 Jur. 214, A. filed a bill for an account against B. & C, alleging himself a partner witii them. B. & C, in their answer, denied the existence of the partnership, and stated that the plaintiff was their foreman, whom they had contemplated taking into partner- ship, and whom, therefore, they had allowed to hold himself out as their partner in many ways. They ad- mitted that the accounts had been made out in the name of B., C., & A. ; that, in a certain specification of build- ings required by them, the buildings had been described as the property of B., C, &. A. ; and also, that they had served A. with a notice to dissolve partnership. The Vice-Chancellor /ieW, that there was sufficient proof of the existence of a partnership between B., C, & A. [Such a partner may also be made a bankrupt as a member of the firm. Re Krueger, 2 Lowell's Deci- sions, (Dist. Ct. U. S.), 66.] [x) Bond V. Pittard, 3 M. & W. 357. {y) Lord Ellenborough in Peacock v. Peacock, 2 Camp. 45. (z) In Guidon v. Robson, 2 Camp. 302, Lord Ellenborough apparently held, that a merely nominal partner, not only might join with the other partners in a suit, but in some cases was even a necessary party. There, the action was by Guidon alone against Robson, upon a bill of exchange, drawn in the name of Guidon & Hughes upon Robson, and by him accepted. Hughes was simply a clerk of Guidon. Lord Ellenborough : " 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. Persons 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 agreement there may be between him and those who share the profit and loss. They are equally respon- sible, and the contract of one is the contract of all. In this case, the declaration states that the defendant promised to pay the money specified in the bill, to the plaintifi" only, whereas 148 THE LAW OF PARTNERSHIP. [CH. VI. Much the greater number of cases relating to the liability of one licld out as a partner turn upon the rights and duties of a retiring partner, and will be considered when treating of that subject. SECTION VI. OF LIABILITIES ARISING FROM ANNUITIES, LOANS, LEASES, OR TRUSTS. A person may be in receipt of a sum from the profits of a partnership, without being chargeable as a partner, when one is entitled to an annuity from the firm. This happens most fre- quently in the case of a retiring partner, who as a part of his several property, or instead of some portion of his share in the partnership property which he leaves behind, is to receive an annuity for life, or for a certain number of years. This may occur also by the bequest of a deceased partner, who leaves his funds or a part of them in the firm, and gives an annuity to his widow or some other person out of the profits. It is agreed that if this annuity be certain, and in no way dependent on the amount of the profits, although payable out of them, then the annuitant is not a partner, (a) And, if Lord Eldon's rule was she promised to pay it to the plain- not entitled himself to recover alone in tiff jointly with another person. The this case." And in Parsons r. Crosby, variance is fatal." But in Teed v. 5 Esp. 199, the same judge lield, at nisi Elwortliy, 14 East, 210, where the bank- prius, that, in an action b}' the real ing business was carried on in the name party in interest, the nominal partner of John Teed (the lather of the present might be called as witness for the plaintiff), Thomas Teed & Co. being plaintiff. See also Davenport v. Rack- the firm in whose joint names the straw, 1 C. & P. 89 ; Harrison v. Fitz- banking accounts were kept, a suit henry, 3 Esp. 238; Glossop i-. Colman, being brought by John Teed alone 1 Stark. 25; Kell v. Namby, 10 B. & against a customer, for the balance of C. 20 ; Ex parte Watson, 19 Ves. 461; an overdrawn account. Lord Ellen- Kieron v. Sanders, 6 Ad. & El. 515 ; borough said : " Supposing the plaintiff Allen w. White, Minor, 365. See Story could sue alone in this case, bij showinfj that on Part. § 242, notes and cases cited, he alone was the proprietor of the funds (a) See Young v. Axtell, 2 H. Bl. of the bank, and that the son had no 243. In Waugh v. Carver, 2 H. Bl. interest as a partner in this account 235, Lord Chief Justice says : " This with the defendant, although the ac- case has been extremely well argued, count was kept with the defendant in and the discussion of it has enabled the joint names of the father and son ; me to make up my mind, and removed yet these facts ought to have been dis- the only diflSculty I felt, which was, tinctly proved at the trial, which they Whether, by construing this to be a were not, and therefore the plaintiff has partnership, we should not determine CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 149 relied on, it would probably be held that, if the annuity were to be a sum of money equal to a certain proportion of the profits, this would not cast upon the receiver the liabilities of a partner, while it would have this effect if it were described as the same profjortion of the profits. But we think the rule of as little value in this case as in those to which it has been usually ap- plied. The question must still be, Has the annuitant, by the terms of the agreement or the bequest, an interest or ownership in the property or the profits of the firm while they are un- divided, or only a right to require that the profits should be determined and divided * in a proper way and at a * 137 proper time, and a certain part of them delivered to him ; and may he have his action against the partnership, if this be not done ? In this case, he is not a partner in any respect whatever. (6) that if there was an annuity granted out of a banking-house to tlie widow, for instance, of a deceased partner, it would make her Uable for the debts of tlie house, and involve her in a bank- ruptcy ? But I think this case will not lead to that conclusion." So in Grace V. Smith, 2 W. Bl. 1001, Blackstone, J., said : " I think the true criterion (when money is advanced to a trader) is to consider whether the profit or premium is certain and defined, or casual, in- definite, and depending on the accidents of trade. In the former case, it is a loan (whether usurious or not, is not material to the present question) ; in the latter, a partnership." See also Ex parte Colbeck, Buck, 48. (6) The cases on this point are not very numerous ; nor do they, we think, give any strong support to Lord El- don's rule. In Bloxham v. Fell, 2 W. Bl. 999, Pell, for leaving money in a firm, was to receive not only an annuity, with a right to inspect the partnership books, but also tlie usual rate of interest. It was, therefore, considered by Lord Mansfield that he must be a partner ; as otherwise he would be a usurious lender, which it could not lie in his own mouth to say. Nor is Grace v. Smith, 2 W. Bl. 998, to be regarded as conclusively settling the rule, that the perception of an in- definite proportion of the profits of a trade, in return for money invested or left therein, necessarily makes one a partner. There Smith & Robinson dissolved partnership. The tenns of the dissolution were, that all the stock in trade, debts, &.C., of the partnership, should be carried to the account of Robinson only ; that Smith was to have back 4,200/. which he brought into the trade, and 1,000/. for the profits then accrued ; that Smith was to lend Robinson 4,000/., part of this 5,200/., or let it remain in his hands for seven years, at five per cent inter- est, and an annuity of 300/. per an- num, for the same seven years. For all which Robinson gave bond to Smith. De Grey, Chief Justice: " The only question is, "What consti- tutes a secret partner ? Every man who has a share of the profits of a trade ought also to bear liis share of the loss. And, if any one takes part of the profit, he takes part of that fund on which the creditor of the trader relies for his payment. If any one advances or lends money to a trader, it is only lent on his general personal security. It is no specific lien upon the profits of the trade, and yet, the lender is generally interested in 150 THE LAW OF PARTNERSHIP. [CH. VI. * 138 * It has been thought, in some cases, that the question whether an annuitant or lender of money was or was tliese pnifits : lie relies on tliem for payment. And there is no difference wlietlior tiiiit money be lent de novo, or left beliind in trade by one of the partners who retires. And whether the terms of that loan be kind or harsh, makes, also, no manner of difference. I think the true criterion is, to inquire whether Smith agreed to share the profits of the trade with Robinson, or whether he only relied on those profits as a fund for pay- ment, — a distinction not more nice than usually occurs in questions of trade or usury. The jury have said this is not payable out of the profits ; and I think there is no foundation for granting a new trial." Now, as we have already seen [see p. *71, note (/)], the language of De Grey above quoted is by no means authority for tlie rule in question. The distinction there taken is, not between sharing definiiehj and sharing indcjinitel i/ in the profits of a trade, but between sharing them at all, and only relying on them as a fund of paj'ment. And as ap- plied to the case of money put into a firm, by which example the Lord Cliief Justice illustrates his criterion, the distinction is between lending money on the general personal secu- rity of the trader, and lending it in such a way as to acquire a specific lien upon the profits. By which lien, as we have endeavored to show in an- other place, is meant nothing more than a proprietary interest in the profits of a trade while they remain profits ; that is, before division. Black- stone, Justice, however (of the same opinion), said: " I think the true crite- rion (when money is advanced to a trader) is to consider whether the profit or premium is certain and de- fined, or casual, indefinite, and de- pending upon the accidents of trade. In the former case it is a loan (whether usurious or not, is not material to the present question) ; in the latter, a partnership. The hazard of loss and profit is not equal and reciprocal, if the lender can receive only a limited sum for the profits of his loan, and yet is made liable to all the losses, all the debts contracted in the trade, to any amount." Now, Mr. Justice Black- stone agrees with the Chief Justice. By this it may be meant that he con- curs both in the result and in the grounds of his opinion. It is certain, however, that the two opinions have always been regarded as entirely har- monious ; and we may, therefore, so consider them. If so, then Mr. Jus- tice Blackstone's criterion signifies the same thing as Cliief Justice De Grey's. Accordingly, Cliief Justice De Grey's criterion must be regarded as the expression of the general principle of which Mr. Justice Blackstone's is merely the specific application. That is, while Chief Justice De Grey as- serts as the universal principle, that to be a partner one must have a specific interest in profits, as profits. Justice Blackstone brings down that principle to the case in hand, by adding that where money is loaned to a trader, whether or not the lender has this specific interest in profits, as profits, will be determined by inquiring whether the return he is to receive for his money is definite and certain, or casual and depending on the acci- dents of trade. The opinions of the two judges, then, uniting on the gen- eral doctrine, the precise difference between them seems to be in the in- fluence which they give to the fact of an indefinite participation in profits ; Mr. Justice Blackstone considering that, if a loan is made, and the return therefor is to depend upon the profit and loss of the borrower, that one circumstance alone is sufficient to make him a partner. If this be his view, we think he stands alone. At least, there is no evidence that the other judges agreed with him, while some of the language used by Chief Justice De Grey would certainly seem to lead to CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 151 not a partner, might * depend upon the prior question, * 139 whether the annuity or payment were to be made " in lieu of profits." If they were expressly so made, the party could have no interest in profits who had expressly agreed to receive something instead of them ; and therefore he could not be a a different conclusion. And if we suppose Justice Blackstone to have agreed with Cliief Justice De Grey as to tlie rule of law, that a partner must have a specific interest in profits, as profits, then, sharing indefinitely in profits is simply a fact from which with all the other facts of the case it is to be determined whether such par- ticipator has that specific interest. But it is not identical with nor the same as that specific interest. The circumstance of sharing casually in profits, as we have already seen, may be a strong symptom of partnership ; but it is not necessarily conclusive. Nor is there any reason for consider- ing that circumstance more conclu- sive in case of a loan (to which Blackstone, J., applies it), than in any other. The fact that the consideration of a loan is a certain proportion of the profits of a trade is only one among other circumstances, from all which put together it must be decided whether there is established that spe- cific interest in profits, as profits, which is necessary to make the lender a partner. Perhaps, if the latter part of Mr. Justice Blackstone's opinion, in which he appears to suggest a reason (evidently an equitable one) for the rule he lays down, be considered in connection with and as the basis of his criterion, the conclusion may not, after all, be inconsistent with this view. We do not consider, therefore, the case of Grace v. Smith to be one which gives any strong support to tlie rule, that the lender of money, wlio is paid by a certain proportion of the prof- its of a business, is necessarily a partner with the trader to whom he lends. Nor is much more force added to the doctrine by the inclination of Lord Mansfield's opinion, in Young v. Ax- tell, 2 H. Bl. 242; that Mrs. Axtell, who, beside an annuitj', received 2s. per chaldron on all the coal sold, by the other defendant, to customers of her recommendation, was therefore a part- ner with the other defendant, because that payment would be increased in proportion as she increased the busi- ness. In the matter of Colbeck & Co., 1 Buck, 48, John Holdsworth assigned all his share of the partnership trade and premises to Colbeck & Ellis, his partners, upon trust, to pay an annuity of 50/. a year to himself for life, and after his death to his wife for life, &c. And it was also stipulated, that if the proceeds of John Holds- worth's share should not be sufficient to pay the annuity of 50/. a year, tlien that it should abate proportionably ; or, on the other hand, if his share so assigned should amount in value to 5,000/., that then the annuity should be increased to 100/. After the exe- cution of the deed, John Holdsworth retired from the concern, but the style of the firm was not altered. The opinion of the Lord Chancellor was to this effect : " As to John Holdsworth, he certainly must be taken to have re- tired from the business, reserving an interest in the projits of the trade; for the annuity he reserved was not merely an annuity the amount of which was calculated with reference to the then present profits, but it was to be paid out of the profits, and to be subject to abatement and enlargement as the profits might fluctuate. His partner- ship, therefore, was never determined." See Ex parte Wheeler, Buck, 25 ; Ex parte Chuck, 8 Bing. 469. See opin- ion of Master of Rolls, In re Stanton Iron Works, 21 Beav. 1G4, cited ante, p. *41, note. 152 THE LAW OF PARTNERSHIP. [CH. VI. partner. We apprehend, however, that these words, or any- equivalent words, would not suffice to shield from liability as partner one who was so by the whole intent and meaning of the bargain. If one stands in such a relation to a firm that he has a definite interest in the profits as they accrue, he is a partner, although he may agree to receive his share of the prof- its in a certain way ; and this may be the only meaning and effect of the phrase, " in lieu of profits." (c) A similar view may be taken of the circumstances of a longer or shorter dura- tion of the annuity, (c^) (c) See in Fereday v. Hordem, Ja- cobs, 144, an instance of an actual partnership, in whicli one of tlie part- ners receives for his contribution to tlie common stock an assured sum in lieu of profits. (d) If, at the inception of a joint enterprise by A., B., & C., in which A. finds capital, it is agreed that A., for his contribution tliereto, is to receive an annuity, the term of that annuity, whatever it may be, would seem to agree equally well with A.'s being either a partner or simply a lender of money. If, into a partnership already formed, A. puts money, or, apparently retiring therefrom, leaves money be- hind, for which he is to receive an annuity, to endure as long as the other partners, B. & C, shall continue in trade, — this identity in the duration of the business in which B. & C. are engaged, and of the annuity A. is to be paid, is undoubtedly consonant, for many obvious reasons, with A.'s being a partner with B. & C. But it seems no less consistent with the supposition that A. is merely a lender of money to B. & C, the loan to continue for a time commensurate with the occasion for it ; that is, so long as B. & C. carry on a joint business. But suppose that, in a similar case, A. is to receive from B. & C. an annuity in duration en- tirely independent of the continuance of the joint business ; it ma}^ perhaps, be safely allowed that the circum- stance that A.'s annuity is not de- pendent upon the existence of the partnership between B. & C. raises a presumption that his contribution to the funds of the firm has not made him their partner. But inasmuch as the question is, whether there is not a partnership between A., B., & C, the fact that B. & C. have agreed that they will be partners for a certain length of time can at most be only prima, facie evidence, open to rebuttal, that they have not since formed a new partnership with A. for a different lengtii of time. That is to say, B. & C. being in partnership for a certain lengtii of time, if A. puts money into the firm, in consideration of an an- nuity, or a different length of time, this difference ma}^ in the absence of other facts, give the contract the ap- pearance of a simple loan. But there may be other circumstances in the case, putting a different face on the agreement, and showing A. to have, in intent and in act, really become a partner. Then, notwithstanding the difference between the term of A.'s annuity and of the original partnership between B. & C, there can be no doubt that a jury might and should find the three to be partners. If, then, the effect of these two facts, — an annuity expressed to be in lieu of profits, and an annuity to continue for a period not at all affected by the duration of the partnership, — when they occur singly in a case, is not conclusive against the supposition of the annuitant's being a partner, M'hat effect is to be given to them occurring conjointly ? That is, A. investing money with B. &, C, who are partners, for no matter what length CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 153 * If money be lent to a firm for more than legal inter- * 140 est, this * would be a usurious loan, (e) but would not * 141 of time, is to receive, for tlie use thereof, during a shorter or longer period, an annuity in lieu of a share of the profits of the business. Upon these facts is A necessarihj a lender of money merely, and not a partner ? Undoubtedly, without strongly oppos- ing evidence, he might and should be found merely a lender of money to the firm of B. & C. But, notwithstanding A.'s annuity is said to be in lieu of a share of the profits, and is independent, in point of duration, of the partnership of B. & C, still, we think, the arrange- ment between B. & C. may be shown to be superseded by one by which, for the term of A.'s annuity, A. is to have (e) Gestons v. Brooke, Cowp. 793 ; Parker v. Ramsbottom, 3 B. & C. 257. When the principle is at hazard, there can be no usury. Accordingly, in Morse v. Wilson, 4 T. R. 353, where the lender of money was to receive a share of the profits of a trade in addi- tion to legal interest, and to be liable to no losses, it was contended in his behalf that tlie contract was not usuri- ous, inasmuch as, by sharing in the profits, he was liable to creditors for all the partnership debts, and thus his principal was in hazard. But Lord Kenyon, C. J., said : " Nothing can be clearer than this case. Tlie plaintiff, without having any partnership in contemplation, lent 2,000/. to H. Wil- son, for which he was to receive not only 5/. per cent interest, but also such surplus profits as should arise from these two shares in the business, he himself not being bound, on the other hand, to make good to the partners any part of the losses which the trade miglit sustain. The simple question is. Why, then, this is not an agreement to receive more than the 5/. per cent allowed by law for the forbearance of a loan ? Most unquestionably it is ; and it is therefore void. It has been argued, however, that this was not an a specific interest in profits, as profits, with B. & C. That is, notwithstanding the bearing of these facts to the con- trary, since they are neither of them absolutely inconsistent with the exist- ence of an actual partnership, other circumstances may justifj' the jury in finding that A. has, in reality, though perhaps unintentionally, acquired the rights, and therefore become subject to the liabilities, of a partner. We think the decision in the case which approaches nearest the one we have above supposed is to be sup- ported on this ground, if at all. We refer to Bloxham v. Pell, cited in Grace V. Smith, 2 W. Bl. 999. In this case usurious contract, because the princi- pal was put in hazard, as it was liable to the partnership creditors : but it was no farther hazarded than in the case of every other loan, namely, by the risk of the borrower's insolvency ; for, as between the plaintiff and the part- ners in the business, he was not liable to contribute to the losses in the trade." BuUer, J. : " In this agreement provi- sion is made to receive the profits, but none to engage for the losses, of the trade. And, therefore, it is not true that the plaintiff's principal was at stake ; since, by the terms of the con- tract, the trade is to be carried on by the other partners, and the plaintiff is only liable to make good the losses of the trade in the event of the insolvency of the other partners. But, as between these parties, if there be any losses, they must be borne by the defendant and the other partner ; and, if there be any profit, the plaintiff is to receive his proportion of it." On the other hand, in Morisset v. King, 2 Burr. 891, a stipulation between the parties, by which the person advancing money to a trader was to be liable for a moiety of the losses by the trade, seems to have determined the court in holding the transaction not to be usurious. 154 THE LAW OF PARTNERSHIP. [CH. vr. make the lender a partner. If it be lent to the firm, and the lender is to receive a certain share of the profits, this might be regarded as a contribution to the funds of the firm, and a join- ing of it in tlie character of a silent partner, and the lender might then incur the liability of a partner. In the case of a loan of money to a firm, the lender to have a certain proportion of the profits, the party must, as in every other case, have a specific interest in the profits, as profits, or he cannot be held as a partner. (/) So it would be if he were to receive a there was a partnership, for seven years, between Brooke & Pell, but, at the end of one year, agreed to be dis- solved, though no express dissolution was had. The agreement recited, that Brooke, being desirous to have the profits of the trade to himself, and Pell being desirous to relinquish his right to the trade and profits, it was agreed that Brooke should give Pell a bond for 2,485^., which Pell had brought into the trade, with interest at five per cent, which was accordingly done. And it was further agreed, that Brooke should pay to Pell 200/. per annum for six years, if Brooke so long lived, as in lieu of the profits of the trade ; and Brooke covenanted that Pell should have free liberty to inspect his books. Hereupon, Lord Mansfield held, that Pell was a secret partner ; that, if there was not a partnership, there was crime ; and that it should not lie in Pell's mouth to say, " It is usury, and not a partnership." But, laying aside the question of usurj^ there are facts in the case from which, perhaps, notwith- standing the annuity received in lieu of profits, and to last independently of the continuance of tlie business, it might well have been inferred that Pell was a partner. In the first place. Pell had the right, generally, at least, ap- pertaining only to a partner, of inspect- ing the concern's books. Moreover, the clause of the agreement by which Pell becomes entitled to an annuity of 200/. a year, " as in lieu of the profits of the trade," seems to admit and to imply Pell's claim to interest in those profits, and, in one view of it at least, to be only a stipulation by which the amount of Pell's ultimate share therein is fixed, and not one by which his interest is changed or diverted. The remarks of counsel upon this case, in Grace v. Smith, are not inapt in this connection. " Grose & Adair, for the defendant, argued that the present case is very distinguishable from that of Bloxham v. Pell. Pell was to be paid out of the profits of the trade, as appears from the covenant to inspect the books, which else would be useless. His annuity was expressly given as in lieu of those profits. It was contingent in another view, as it depended on the life of Brooke, by whom those profits were to be made. (/) It is entirely possible that a loan may be made for a proportion of the profits under circumstances which will not give the lender this specific interest, and will not therefore make him liable as a partner. But we consider the pre- ceding proposition of the text a correct expression of the general rule, as that may be implied from the authorities as they now stand. See Morisset v. King, 2 Burr. S'Jl ; Gestons v. Brooke, Cowp. 793 ; Elgie v. Webster, 5 M. & W. 518; Bailey v. Clark, 6 Pick. 372; Oakley v. Aspinwall, 2 Sandf. 7; Conk- ling V. Washington University, 2 Md. Ch. 497 ; Drake v. Rhodes, 3 Rich. 37. It has been said that an agreement by which parties covenant to become part- ners, one of them to put in a certain amount of capital, and to receive for his share of the profits a certain fixed sum (with the payment of which all the property of the concern is charged), but not to be liable for any of the part- nership debts, is not void on the ground CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 155 certain amount * of interest, legal or otherwise, and in * 142 addition thereto a share of the profits. (artners. Here, however, it may be remarked, that the debt may be changed without any change in the partnership. If, for instance, a partner buys something on his own account, and is alone responsible, the partnership may afterwards join in the promise or guarantee it ; so, if the debt be originally a partnersliip debt, it may afterwards be as- sumed by one partner alone, the others being discharged. An adoption by a partnership of a debt due from a single partner may be made impliedly, by acts as well as by express agree- ment ; and it seems that, in some cases, slight circumstances will be sufficient to prove such adoption, (a;) The defendants, who were never gen- eral partners, ordered wheat of the plaintiffs, by an order containing tlie following words : " Payment for the same to be drawn upon each of us, in the usual manner." The plaintiffs, in a letter addressed to each of the de- fendants, answered : " We have made a purchase for your joi/it account." At the same time, they drew upon the defendants for one-third of the price, upon each by a separate bill for one moiety of the third. They afterwards despatched the wheat, and drew other similar bills, in the same manner, for the remainder of the price ; having, however, previously written them : " We hold j/ou both harmless for the advance up to the period of lading and invoice." The bill of lading, on its reaching the defendants, was indorsed by each of them ; the freight and charges were paid by the money of each; and the wheat was equally di- vided between them when it was ware- housed. Upon these facts, it was held, that the defendants were not jointly liable as partners for the whole price of the goods. See also Jackson v. Robinson, 3 Mason, 138; Harding v. Foxcroft, 6 Greenl. 76. (iv) Thus the fact that two persons sign a note jointly is no evidence of copartnership between them. Hop- kins V. Smith, 11 Johns. IGl. But it has been held otherwise where two persons draw a bill of exchange. Car- vick V. Vickery, Doug. 053, note. See also Given ;•. Albert, 5 Watts & S. 339 ; MTver v. Humble, 16 East, IG9 ; Gibbons v. Wilcox, 2 Stark. 43; Chandler v. Brainard, 14 Pick. 285; Clark y. Reid, 11 id. 446; Banchor v. Cilley, 38 Me. 553 ; Chase v. Stevens, 19 N. H. 465. (.t) See Ex parte Clowes, 2 Bro. C. C. 595 ; Ex parte Seddon, 2 Cox, 49 ; Ex parte Jackson, 1 Ves. 131 ; Ex parte 11 162 THE LAW OF PARTNERSHIP. [CH. VI. But there is no presumption of law which favors any such change. It must be shown to be done by all the parties, with a full knowledge of the circumstances, and by the consent or authority of all, and for good consideration, if any party comes under a new obligation, or if any other party surrenders * 149 any * right. (?/) The obligation of the partnership, and the several obligations of a partner, may be cumulative ; if A. signs a note beginning, " I promise," &c., " A. for A., B., & Co.," it is said that there is the note of A., and also the note of a partnership. (2) And, generally, if to the obligation of the Lobb, 7 ill. 592 ; Ex parte Hay, 15 id. 4; Ex parte Roxby, 1 Mont. Part. 198 ; Ex parte Fairlie, Mont. 17 ; Ex parte HoJgliinson, Coop. 101 ; Saville v. Robertson, 4 T. R. 720. (y) In Ex parte Jackson, 1 Ves. 131, a widow in trade, and who was indebted by bond, took lier son into partnersliip. A commission liaving issued against the tirm, a petition was put in to prove tlie bond debt against tlie joint estate. The Lord Chancellor said : " If I can come at it in any manner, I will. For that reason I asked, if any interest had been paid upon that bond by both ? for, if so, I sliould have considered it as adopting the debt, and making the partnership liable. Then I could do it consistently with the principle. If tliey have, in any way, considered the debt as a joint debt, I will understand it so, as it ought to be ; for if one man, having debts, takes another into partnersliip with him, a very little matter respecting those debts will make both liable. Let it stand over, to see if you can fasten it in any way upon botli, which I should be glad to do." See Daniel v. Cross, 3 Ves. 279. See also Ex parte Seddon, 2 Cox, 49; Ex parte Lobb, 7 Ves. 592 ; Ex parte Peele, id. 602; Ex parte Hay, 15 id. 4; Ex parte Roxby, 1 Mont. Part. 198; Ex parte Fairlie, Mont. 17 ; Ex parte Hodgkinson, Cooper, 101 ; Ex parte Whitmore, 3 Mont. & A. 627. So held in Ex parte Williams, Buck, 18. But the Lord Chancellor said : " But I agree to the proposition, that a very little will do to make out an assent to the agreement. If any of the creditors named in the schedule think they can make out such a case, they may apply on that ground to prove their debts against the joint estate." See Ex parte Freeman, id. 471 ; Ex parte Fry, 1 Glyn & J. 96 ; Ex parte AVhitmore, supra. See also Montagu on Bankruptcy, 2d part, p. 71 ; 3d part, p. 126. It will be seen, from the above cases, that where, for the sep- arate debt of one partner, a creditor receives the joint security of all, if tlie contract to substitute the one for the otlier is clearly proved, tli£re can be no question as to tlie consideration ; the obtaining tlie responsibility of all the partners, in lieu of that of only one, being deemed sufficient. {z) Galway v. Matthew, 1 Camp. 403; Hall v. Smith, 1 B. & C. 407; 2 Dowl. & R. 584. Upon such a note, however, perhaps only A. could be separately sued, since, upon the face of the note, A.'s is the only separate contract. See Clerk v. Blackstock, 1 Hodg. 474 ; Marsh v. Ward, Peake, 130; Wilks v. Back, 2 East, 142. Of the decision in Hall v. Smith, supra (where it was held, that upon a note commencing, " 1 promise," &c., and signed, "For A., B., & C. A.," both the firm and A. separately were liable), it is remarked by Mr. Justice Storj', that " this construction of the instrument certainly goes to the very verge of the law, and, perhaps, may be thought to deserve further con- sideration." CH. YI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 163 partner that of the firm purports to be superadded, or the ob- ligation of a partner to that of the firm, it is no proof, and does not even give rise to a presumption that the prior obligation is discharged or lessened, (a) SECTION VII. HOW FAR PARTNERS ARE LIABLE IX SOLIDO FOR THE TORTS OF OTHER PARTNERS. Partners are liable in solido for the tort of one, if that tort were committed by him as a partner, and in the course of the business of the partnership. This principle is frequently illus- trated by cases in which a partnership is held liable for injury caused to third persons by their having acted upon the false and deceitful representations made to them by one partner. (6) (a) Ex parte Seddon, 2 Cox, 49. There the petitioners had sold goods to one of the bankrupts, which were paid for by a joint note, and a receipt was given by the petitioners as for money paid, not expressing the pay- ment to be made in tlie manner it really was. The question was, whether the petitioners had not ac- cepted the security of the joint note, in full satisfaction of the debt, so as to preclude their coming on the separate estate. The Lord Chancellor : " To be sure, on the face of the note, it is a joint debt ; but the question is, whether the creditor may not maintain his debt for goods sold and delivered; that is, Does the note ex- tinguish the debt ? If it had been a bond given, instead of the note, it would clearly have done so ; but the note was no payment : and then as to the receipt, if it had remained un- explained, it would have been evidence of the debt being paid ; but, when it appears how it was given, it is not conclusive. I think this may be proved as a separate debt. Hence, also, where several partners had given their separate bonds for money bor- rowed, which money, though lent on the individual securities of the re- spective parties, had come to the use of the partnership ; and where, there being several other debts of the part- ners under the same circumstances, the partners came to an agreement to consolidate them, and to consider them the debts of the firm, the Lord Chancellor thought that, as the money was admitted by all the partners to have come to the use of the joint fund, it would entitle the creditors to con- sider themselves as joint or several creditors, and therefore to prove against the joint or separate estates ; it being a joint debt in respect to its having come to the joint use, and separate from the nature of the se- curity." (6) As where the plaintiffs were in- duced to take the note of a third party in payment for goods sold upon the representation of one of the defend- ants, who were partners, that it was good, when, in fact, the defendants knew the makers were insolvent, and the note worthless; it was held, that the defendants were liable, either in an action of assumpsit to recover the value of the goods sold, or in an action on the case to recover damages for the deceit practised. Hawkins v. Appleby, 2 Sandf. 421. See Patten v. Carney, 164 THE LAW OF PARTNERSHIP. [CH. VI. * 151 * It is not always easy to draw tlie line between such cases and those in which the partners are not liable. 17 Mass. 182; Doremus v. McCormick, 7 Gill, 49 ; Locke v. Stearnes, 1 Mete. 5(50 ; National Exchange Co. v. Drew, 2 Macq. (Sc. Ap. Cas.) 103, 32 Eng. L. & Eq. 1 ; Blair v. Bromley, 5 Hare, 542, 2 Phillips, 354. See Brydges v. Branfill, 12 Sim. 369 ; Coonier v. Brom- ley, 5 DeG. & S. 532, 12 Eng. L. & Eq. 307 ; Chester v. Dickerson, 51 Barb. 349. In one case (Willett v. Chambers, Cowp. 814), particular cir- cumstances were held to make a part- ner liable for a fraud committed by his copartner before the beginning of their partnership. The facts were these : Prior to any partnership be- tween the defendant and Dudley, an attorney and conveyancer, the latter, in the year 1771, received of a Mr. Bindley the sum of 350/., to be laid out on real security. Dudley accord- ingly furnislied him with a mortgage from a Mr. Hughes to that amount, which, as it afterward appeared, Dud- ley had forged. In 1776, Dudley and Chambers entered into partnership, shortly after which Bindley wanted to call in his money. Tlie pretended mortgagor was represented at the same time to want a further sum of 150/., which, added to the original mortgage- money, made together the sum of 500/. The plaintiff, Willett, was ready to ad- vance this sum. And, in consideration of his doing so, an assignment was made to him of the false mortgage, before made to Bindley. As to 180/. part of this sum of 500/., Willett paid it into Dudley's office to Chambers; who gave for it liis separate receipt, Dudley not being at home. He sub- sequently called at the office, and paid the residue to Dudley, who gave tliere- for his separate receipt. It was ad- mitted that Chambers was in no respect privy to the forgery. Upon these facts, the jury having found for the plaintiff, the Court of King's Bench held, that the verdict should stand ; Lord Mans- field saying : " The defendant sutlers by the rascality of a man who had a very good character. I am very sorry for the defendant ; but, upon this evi- dence, I cannot say but that it is a partnership transaction." See, in illus- tration of the general principle of the text, Brydges v. Branfill, 6 Jur. 310, s. c. 12 Sim. 369 ; M'Farland v. Crary, 8 Cow. 258 ; Lowell v. Hicks, 2 Younge & C. 481 ; Blight v. Tobin, 7 Monroe, 617 ; Hadfield v. Jameson, 2 Munf. 53 ; Simms ;;. Brutton, 5 fcixch. 802, 1 Kng. L. & Eq. 446 ; State v. Neal, 7 Fost. 131. In this last case it was held, that if one of two persons unlawfully sell spirituous liquors in pursuance of an agreement between them, and for their joint account and benefit, the other party may be liable in an indictment for the sale. State r. Bierman, 1 Strobh. 256. See Townsend v. Bog- art, 11 Abb. Prac. R 355; [doubted in Stewart v. Levy, 36 Cal. 159 ;] Gray V. Cropper, 1 Allen, 337 ; Taylor v. Jones, 42 N. H. 25 ; McKnight v. Ratcliffe, 44 Penn. 156. [So each mem- ber of a firm is civilly liable for a violation of the revenue laws by a copartner, whether with or without the knowledge of the others. United States r. Thomason, 4 Biss. 99. But, when one partner has obtained credit for goods sold the firm by false repre- sentations, the innocent partner cannot be arrested on civil process, under a statute authorizing arrest in case of fraud only, McNeely v. Haynes, 76 N. C. 122 ; nor adjudged guilty of actual fraud, Stewart i-. Levy, 36 Cal. 159 ] " If one partner of a firm col- ludes with one of another firm, in a transaction connected with the part- nership, the partners of the person so colluding are liable for damages to the injured firm, by reason of that part- ner's misconduct." Per Lord Tenter- den in Longman v. Pole, I Dawson & Lloyd, 126, 1 Mood. & ilalk. 223. In that case, the facts were as follows : The plaintiffs, Longman & Co., bankers with the defendants, Pole & Co., and Hunt, a partner in the house of Long- CH. VI.] WHO ARE PARTNERS AS TO THIRD PERSONS. 165 The fact that money * procured by a fraud becomes part- *152 nership stock does not render them lialde witliout their participation in or consent to the fraud. At tlie same time, if money be raised in the course of partnership business, by the fraud of one of the partners, the otlier partners will not be relieved from their liability for the fraud, merely l)y the want of evidence that the money so raised was applied to the use or benefit of the firm, (c) man & Co., sent the cashier to the de- fendants witli cash to take up bills ac- cepted by him in the name of the firm and coming due the next day. He accordingly took up the bills, but by Hunt's order did not enter them in the plaintiff's books. About the same time, Downes, a partner in Pole & Co., told one of the defendants' clerks that a bill of Longman's would come in on such a day, which he was to pay and give to him (Downes), debiting Hunt with it in the note-book, so that it might not go into the ledger. Downes afterwards gave similar directions re- specting another bill. Both these bills, which were acceptances by Hunt in the name of the firm, were paid and entered in the note-book to the debit of Hunt individually ; and the cash payments made by Hunt to provide for these bills were also entered in the same book to his credit, so that no trace of these proceedings appeared in the pass-book of the defendants or the check-book of the plaintiffs. The cash- ier who gave the above statement also admitted that there were bills on Hunt's private account to a large amount, wiiich appeared in the pass-book (which the plaintiffs were not in the habit of examining), but not in their check- book. It also appeared, that, at the time of these transactions, Hunt had a large private account with the defend- ant. Upon this state of facts. Lord Tenterden held, the action as brought clearly maintainable. But the jury found a verdict for the defendants, the collusion of Downes not lieing estab- lished with sufficient certainty Tiie rule respecting the liability of I)artners for each other's torts is, as we have seen, confined to such torts as a partner commits in that character, and in the course of the partnership busi- ness. Hence, where three partners were sued in an action of trespass, on account of the wrongful ejectment by one partner of the tenant of a canteen, it was ruled that one partner could not involve his copartners in such a wrong ; though there might be exceptions to the rule, as where the trespass was in the nature of a taking which was avail- able to the partnership, and they after- wards concurred in it and received tlie benefit of it ; or where, before the tres- pass, they all joined in ordering it. Petrie v. Lament, 1 Car. & M. 93. [Mere subsequent approval of a part- ner's tort, not done in the interests of the partnership, will not render the partnership liable. Wilson v. Turnman, 6 M. & G. 236 ; Grund v. Van Vlack, 69 111. 478.] In Pierce v. Jackson, 6 Mass. 245, Parsons, C. J., says: "A fraud committed by one of the part- ners shall not charge the partnership." And in Sherwood v. Marwick, 5 Greenl. 295, it seem to have been held, that one partner cannot be made liable for the fraud of another, without proof of actual participation. But in Locke v. Stearns, 1 Mete. 564, where all the partners were held liable for the deceit of one, Shaw, C. J., cites and explains both the above cases. He considers them to have been decided on their special facts, and to be not inconsist- ent with the general i)rinciple of law under discussion. See Atkinson v. Mackreth, Law Hep. 2 Eq. 570, and Linton v. Hurley, 14 Gray, 191. (r) Compare Manuf. & Mecli. Bank V. Gore & Grafton, 15 Mass. 75, with 166 THE LAW OF PARTNERSHIP. [CH. VI. If a partner steals money, and deposits it to partnership ac- count, innocent partners would not be liable for the tort, although assumpsit for money had and received might lie. (c?) Boanlman i'. Gore, id. 331. [The firm is liable for frauds or torts practised by one of the partners in the part- nership business, though the act was unknown to the other partners. Ches- ter V. Dickerson, 52 Barb. (N. Y.) 349; Stewart v. Levy, 30 Cal. 159; Wolf r. Mills, 56 111. 360; Chambers V. Clearwater, 1 Abb. (N. Y.) App. Dec. 341 ; Jackson v. Todd, Sup. Ct. Ind., 5 Cent. L. J. 316. But, in an action to recover damages for the deceit, the injured party, not knowing the other parties, need not join them. Leslie v. Wiley, 47 N. Y. 649. See also Dart v. Walker, 3 Daly (N. Y. C. P.), 136. The firm is not liable for a tort by one partner, when the act is known, by the party injured, to be in violation of law. Leslie v. Wiley, 47 N. Y. 649. See also Dart v. Walker, 3 Daly (N. Y. C. P.), 136 ; nor for a deceit practised by one of the partners upon a third person, by the sale to him of such partner's interest in the firm, Schunbacker v. Kiddle, Sup. Ct. 111., 5 Cent. L. J. 271.] {(I) Rapp V. Latham, 2 B. & Aid. 795. Latham & Parry were in part- nership as wine merchants. Parry, being the managing partner, in Janu- ary, 1812, wrote to the plaintiff that he had an opportunity of purchasing sixty-one pipes of port, at 05/. per pipe, and he desired the plaintiff to remit the money to pay the price of such wine and the duties thereon. The plaintiff accordingly remitted the money, and Parry represented that he made the purchase, and afterward, in the name of the firm, transmitted an account to the plaintiff, stating that thirty of these sixty-one pipes had been resold at the price of 84/. per pipe, and paid the proceeds of such pretended sale to the plaintiff. Other similar transactions took ])lace, run- ning through a period of about one vear. Each transaction formed the subject of a separate account, ansi prius (Ryan & M. 368) : First, that no debt could be founded on and arise out of a felony ; and that it was against the policy of the criminal law that the party whose name had been forged should be al- lowed to adopt tlie felony, or in any way to sanction it, or turn it to his advantage. Second, that, inasmuch as the transfer under a forged power worked no alteration of property, the plaintiflTa had not lost their prop- erty, but still remained owners of the stock, and might call upon the Bank of England to account for both the principal and dividends. Tiiird, that even if the defendants were fixed by the payment of the money to their agents, Martin & Co., still they were discharged by the repayment of it to Fauntlcroy, one of the parties, whose property it was, and into whose hands and use it appeared by the evidence to have come. In answer to the first ob- jection, it was held, in the Court of King's Bench (6 B. & C. 564), and by Lord Lvndhurst (Mont. & Mac. 397), that it was undoubtedly a principle of law that a man should not be allowed to make a felony the foundation of a civil action. But that this rule of law was one founded on public policy, which requires that offenders against the law shall be brought to justice, and ceases to operate when the reason for it fails ; and that no such policy or rule was applicable to the present case, the offender having already suffered the extreme penalty of the law for a similar offence. Further, that the assertion that the plaintiffs were seeking to ratify a felonious act, and were making that act the ground of their demand, was incorrect. That the ground of their demand was the actual receipt of the money produced by the sale and transfer of their an- nuities. That the sale was not a felonious act, nor the transfer, nor the receipt of the money. That the felo- nious act was antecedent to all these, and complete without them. (See a similar opinion of the court in Board- man V. Gore, 15 Mass. 331, cited in note ('(). supi-a.) In reply to the sec- ond objection, it was held, in the same courts, that whether or not the plain- tiffs had a remedy against the Bank of England, it was unnecessary to decide, since their remedy against the defend- ants was clear, and, generally speaking, when an injured party has different remedies against different persons, he may elect which he will pursue. Upon the third objection. Lord Tenterden said, in Ryan & M. 369: "But they say, also, that Fauntleroy was one of the persons entitled, and that he has drawn the money out, and, therefore, they are not answerable. Now, if two persons give a power of attorney to bankers to sell out their joint stock, the bankers ought to place the pro- ceeds to their joint account, and both ought to draw. If it is meant that the money should be paid to one, an au- thority to that effect ought to be given to the bankers; that, in my experi- CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 169 knowledge of tlie other partners,* the firm will be * 155 chargeable with the amount, and held as debtors to the trust therefor, (y) It is said in some cases that the firm will not be liable in such case, unless the other partners have knowledge of the trust and of this ajjplication of the trust funds, {z) But it has also been held, that if a member of a firm ence, has been tlie ordinarj'^ practice. If you are of opinion that tliis is tlie visual mode of dealing, the^), as against the otiier two, it is no defence that the payment has been made to one only of several who are jointly entitled to re- ceive it." See, to the same point, Ex parte Bolland, 1 Mont. & A. 570; Keating r. Jlarsh, id. 582; Marsh v. Keating, id. 592, s. c. 2 CI. & Fin. 250. In Hume v. Bolland, 1 C. & M. 130, s. c. 2 Tyr. 575, a case arising out of the same bankruptcy, Marsh & Co., the banking firm of which Faunt- leroy was a member, had been em- ploj'ed by the trustees of stock, stand- ing in their names on the books of the Bank of England, to receive the divi» dends thereon. In the books of Marsh & Co., accordingly, tlie amount of the dividends was regularly carried to the creilit of their employers, and was by them drawn for and received. But it af- terwards appeared that none of the above dividends had in point of fact been received by Marsh & Co. ; Fauntleroy having transferred and sold the stock by means of forged powers of attorney, and having caused the above entries to be made in the books of the firm in fraud of his copartners, the money never having been received by them. Upon the issuing of commissions against Marsh & Co., a case being sent to the Exchequer to try the question whether the bankrupts were indebted to the trustees, and if so in how much, it was held, that, at the date of the commissions, the bankrupts were not indebted to the trustees for tlie balance of the dividends appearing by the books to have been received. But see Hume v. Bolland, Ryan & M. 371 ; also, Keating v. Marsh, supra, subsequently decided in the House of Lords, in Sadler v. Lee, 6 Beav. 324. (y) Ex parte Watson, 2 Ves. & B. 414 ; Smith v. Jameson, 6 T. R. 601 ; Boardnian v. Mosman, 1 Bro. C. C. . 68 ; Jaques (;. Marquand, 6 Cow. 497 ; Hutchinson v. Smith, 7 Paige, 26; Richardson v. French, 4 Mete. 577. (s) Ex parte Heaton, Buck, 386 ; Ex parte Apsey, 3 Bro. C. C. 265 ; [Guillou V. Peterson, 9 Phila. 225 ; Bounce v. Parsons, 45 N. Y. 180.] But see Rich- ardson i\ French, 4 Mete. 577 ; Wliit- aker i\ Brown, 16 Wend. 509 ; Freeman I'. Fairlie, 3 Meri. 44. In this last case, it seems to be held, that, if the other partners merely permit one partner to mix his accounts as executor with those of the firm, the partners may, without proof of further knowledge on their part, be compelled to produce those accounts to the cestui que trust. And, in the following case, the fact, that, during the continuation in a firm of trust funds by a breach of trust on the part of some of the partners, other partners entered and retired from the firm, seems to have exempted the lat- ter from liability for the breach of trust of their copartners to which they were privy. A., a partner in a house of agency in India, died, having by his will directed his estate to be called in, and invested on certain trusts, and appointed two of his copartners his executors. They, however, suffered his share in the partnership to remain in the house. After A."s death, B. and C. were admitted as partners, and they knew that A.'s share was remain- ing in the house, and that it was sub- ject to the trusts of his will. They afterwards retired, and other partners were admitted. The house ultimately failed. Held, that B. and C. were not responsible for the breach of trust committed by their copartners, the executors. Twyford v. Trail, 7 Sim. 170 THE LAW OF PARTNERSHIP. [CH. VI. holding funds as an agent of a third party, puts that money into the business of the firm, the firm is liable whether the other partners knew that the money was so held or not. (zz) How far the knowledge and consent of the other partners is necessary to make them liable is not distinctly settled on the authorities. A partnership to whom goods were consigned for sale * 156 was held * liable for the pledge thereof by a fraudulent partner ; («) so was a firm of common carriers, one of whom lost property intrusted to them ; (6) and partners in a publishing house, one of whom published a libel ; (c) and part- ners in the stage-coach business, one of whom caused an injury by negligent driving. (cZ) So all the partners are liable for the tort of an agent, although that agent were appointed by one partner only, provided he had authority to make the appointment, (e) So it would be in case of a breach of the revenue laws. (/) And a demand upon and 92. Where trust money is put into trade without authorit}^ the cestui que trust may generally elect to take from the trustees either a share of the profits, for the period of the breach, or interest for that time. There may, however, be circumstances in which the cestui que trust will have a right to divide the period, and to claim interest for one part and a share of the profits for an- other. Heatlicote v. Hulme, 1 Jac. & W. 722 ; Docker v. Somes. 2 Mylne & K. 656. See Clayton's Case, 1 Meri. 572; Hankey v. Garrett, 1 Ves. 2-36. {zz) Floyd r. Wallace, 31 Ga. 688. And see Harper v. Lamping, 33 Cal. 641. (rt) Nicoll r. Gleniiie, 1 M. & S. 588. (b) Mitchell V. Tarbutt, 5 T. R. 649. (c) Rex V. Almon, 5 Burr. 268G ; Rex V. Pearce, Peake, 75; Rex v. Topham, 4 T. R. 126 ; Rex ;;. Marsh, 2 B. & C. 723, per Littledale, J. ((/) Moreton v. Hardern. 4 B. & C. 223. (e) As where several persons are proprietors of, and partners in, a line of stage coaches, but each stocks, and employs drivers for his own particular portion of the road ; all the partners are liable for injuries caused by the misconduct and negligence of a person employed on any portion of the line, tliough such wrong-doer is hired and paid by only one partner. Weylan V. Elkins, Holt, N. P. 227 ; 1 Stark. 272; Bostwick t'. Champion. 11 Wend. 571, 18 id. 175 ; Bayley, J., in Laugher v. Pointer, 5 B. & C. 570. See also Dwight v. Brewster, 1 Pick. 50 ; Cobb v. Abbott, 14 id. 289 ; Stock- ton V. Prey, 4 Gill, 406; Hadfield i\ Jameson, 2 Munf . 53 ; Locke v. Stearns, 1 Mete. 560 ; Roberts v. Tot- ten, 8 Ark. 609; National Exch. Co. r. Drew, 2 Macq. (Sc. Ap. Cas.) 103, 32 Eng. L. & Eq. 1 ; Cotton v. Bettner, 1 Bosw. 430. [And the action may be brought against one or more or all the partners. Roberts v. Joluison, 58 N. Y. 613.] {/) Attorney-General !'. Strongforth, Bunb. 97 ; Attorney-General v. Burges, id. 223 ; Attorney-General v. Siddon, 1 Cromp. & J. 220; [United States v. Thomason, 4 Biss. C. Ct. U. S. 99; a7tte, p. * 151, note.] CH. VI.] WHO ARE PARTNERS AS TO THIRD PARTIES. 171 a refusal by one partner is a conversion by the firm, which will sustain trover, (g') But even if the tort were committed by a partner in the per- formance of the partnership business, it might, from its nature or attendant circumstances, be shown to be only a several act. As if two physicians were in partnership, and one intentionally maltreated a patient. So if two were partners as bankers and bill-brokers, and one of them discounted a note usuriously, this would be his own act only, or the act of the partnership, ac- cording to his authority, or the usage of the firm, or other circumstances. (Ji) * It is to be observed that, although all the partners * 157 may be liable for a tort, and all may be sued jointly, they may also be sued severally ; for, in law, all torts, however joint, and whether constructive or actual, are several. It is, therefore, no answer for a defendant sued in tort to say that others were guilty with him. (/) (g) Nisbet v. Patton, 4 Kawle, 120; Hoibrook v. Wight, 24 Wend. 169; Mitcliell V. Williams, 4 Hill, 18. The managing partner, who conducted the business of a mine, refused to deliver up ore belonging to the former tenants of the mine, on the ground that it was partnership property, and there was subsequently a notice, by the attorney for tlie defendants, offering to deliver up tools that were in the same building with the ore ; but the notice was silent as to the ore. Held, evidence of con- version by all the partners. Lloyd v. Bellis, 37 Eng. L. & Eq. 545. See Com. Dig. tit. Trespass, ch. 1 ; NicoU V. Glennie, 1 M. & S. 588; Uore v. Wil- kinson, 2 Stark. 287. (/i) When one partner, without the knowledge of the other, borrows money at usurious interest, and executes a note in the name of the firm ; and after- wards pays the usurious interest, and the other partner, ignorant of the pay- ment of the usury, executes his own note in lieu of the other, — he cannot, when sued upon it, set up as a defence the payment of usury by his partner. Jones V. Jackson, 14 Ala. 186. See Hutchins v. Turner, 8 Humph. 415. ((') If an attorney is in partnership with another, and they carr}- on their business together, and their joint names are put on their papers in causes in their office, either of them is liable to the penalties of the act -37 Geo. .3 for practising as an attorney without entering his certificate, though it does not appear that one of them had any profit or advantage from the suit for suing in wliich the action in qui tarn is brought. 1 Wms. Saund. 291, d; Eich V. Pilkinton, Carth. 171 ; Sutton v. Clark, 6 Taunt. 29 ; Edmondson v. Davis, 4 Esp. 14 ; Attorney-General V. Surges, Bunb. 223 ; ]\Iitchell r. Tar- butt, 5 T. R. 649 ; Stockton v. Frey, 4 Gill, 406. As all the partners may be affected by tiie tort of one, so a release to one of all liability in respect of the tort will operate as a release and dis- charge of ail. Co. Litt. 232, a; Bac. Abridg. Release (G) ; Com. Dig. Re- lease, B. 4 ; id. Pleader, 3 M. 12 ; Kiffin V. Willis, 4 Mod. 379 ; William- son V. McGinnis, 11 B. ^Mon. 74. Case is the proper action against partners for injuries caused bj' the negligence of their servant ; and, if the damage be effected by laches simply, it will lie 172 THE LAW OF PARTNERSHIP. [CH. VI. Partners arc not only liable in actions ex contractu and ex delicto, bnt also in actions quasi ex contractu, which, though in form founded in tort, are in fact actions of contract. (^') * 158 To * the general rule, however, that actions quasi ex contractu are to be regarded as actions of contract, and that the form of the action will not vary the right of defence, an exception has been made in the case of common carriers. Actions against them seem now, though not formei'ly, to be regarded as resting in tort, unless a special contract is ex- plicitly stated in the declaration, (/c) against them, even though one partner were present, personally, and acted in tliat which occasioned the damage. So, where one partner is a wilful wrong-doer, if under the circumstances any action is sustainable against his copartners, case is still the proper rem- edy. But, as against the malicious partners solely, trespass is tiie proper form of action. Mitchell v. Tarbutt, 5 T. R. 649 ; Morley v. Gaisford, '2 H. Bl. 442 ; Huggett v. Montgomery, 5 B. & P. 440 ; Leame v. Bray, 3 East, 593 ; Ogle V. Barnes, 8 T. R. 188 ; Rogers v. Imbleton, 5 B. & P. 117; Moreton v. Hardern, 4 B. & C. 223 ; Whiteman V. Smith, 12 Rich. Law (S. C), 595. (j ) In Govett v. Radinge, 3 East, 62, where the action was brought against three for negligently loading a hogshead, to two of whom a certain reward was to be paid, and to the third a certain other reward, the action was held to be founded in tort, and not in contract, and to be attended with the consequences of tort ; so tliat one of the codefendants could be found guilty, and the rest acquitted. But this case appears to be no longer law. See Powell v. Layton, 5 B. & P. 364 ; Max V. Roberts, id. 454 ; Weal v. King, 12 East, 452; Walcott v. Canfield, 3 Conn. 198. The general conclusion to be deduced from the authorities is thus expressed by Mr. Collyer : " It might perhaps be a question, whether, if an action on the case were brought against several defendants, in a matter where there is no action by the custom of the realm, and no express or particular contract were stated on tlie declara- tion ; such action would be considered as laid in tort or in contract ; but, upon the whole, it is conceived that the court would look to the real nature of the case, without reference to the form of the declaration ; and would liold tlie action to be attended with the conse- quences of tort or contract, according as tort or contract was the essence of the actual transaction between the parties." Collyer on Part. (Am. ed.) § 738. See Jennings v. Randall, 8 T. R. 335; Green v. Greenbank, 2 Marsh. 485; Marzetti v. Williams, 1 B. & Ad. 415 ; Barnett v. Lynch, 5 B. & C. 589; Newberry v. Colvin, 7 Bing. 190. (k) Boson V. Sandford, 1 Show. 101, 2 Show. 478 ; Powell v. Layton, 5 B. & P. 370 ; Max v. Roberts, id. 454, s. c. 12 East, 89; Tuttle v. Cooper, 10 Pick. 283-287, 6 M. & S. 385 ; Bretherton V. Wood, 6 Moore, 141, 3 Brod. & B. 52 ; Pozzi v. Sliipton, 8 A. & E. 963. The reason for this exception with reference to a common carrier seems to be, that he is regarded as a public servant, against whom an ancient ac- tion lies, founded on the custom of the realm, for the breach of his public duty. See Gould PI. 205. CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 173 CHAPTER YII. OF THE RIGHTS AND DUTIES OF PARTNERS BETWEEN THEMSELVES. SECTION I. OF THE RIGHT OF CHOICE AS TO A PARTNER. No one among the rights of partners is more certain, or leads to more important consequences, than that to which we have already referred as implied l)y the phrase dilectus personarum. Every partnership must be, in its beginning, voluntary, and the result of the choice and wish of those who become partners. Precisely so as to admission of new partners, it must continue to be. (a) Hence, whatever rights a partner may have of assigning or otherwise disposing of his share of the stock or profits (a subject to be presently considered), his character or relation of partner cannot be assigned. (6) And if he (a) The civilians pushed the princi- ple of dilectus personarum to a great, and, as Pothier thinks, to an unreason- able extent; for with them, even a stipulation between partners, that lieirs or executors should succeed to the re- lation of partner, was deemed to be void. Domat, lib. i. tit. 8, § 2 ; Pothier, Trait€ du conlrat de socie'te, ch. 8, § 3 ; Crawshay v. Maule, 1 Swanst. 509, note. The doctrine of the English and American Law is otherwise, and stipu- lations for the admission of such per- sons into a firm upon the decease of a partner are frequent, and are always, as far as possible, enforced by the courts. See Wrexham v. Hudleston, 1 Swanst. 514, &c. ; Balmain v. Shore, 9 Ves. 50O ; Warner v. Cunningham, 3 Dow, 76; Gratz v. Bayard, 11 S. & 11. 41 ; Scholefield v. Eichelberger, 7 Pet. 680; Downs v. Collins, 6 Hare, 418; Page V. Co.x, 10 Hare, 163, 17 Eng. L. & Eq. 672. See Reynolds v. Hicks, 19 Ind. 113; Buckingham v. Hanna, 20 Ind. 110. (b) Raymond's Case, 2 Rose, 255 ; Kingman v. Spurr, 7 Pick. 235 ; Gil- more V. Black, 2 Fairf. 488 ; Modde- well V. Keever, 8 W. & S. 63; Cowles V. Garrett, 30 Ala. 341 ; Ketcham v. Clark, 6 Johns. 144 ; Murrajf v. Bogert, 14 id. 318. In Marquand v. New York Manuf. Co., 17 Johns. 625, Fitch as- signed his interest in a partnership, by the articles of which it was provided that it should continue until two of the partners should demand a dissolu- tion. The other partners desired the partnership to go on notwithstanding the assignment. But, per Woodworth, J. : " It is well settled in England, that an act of bankruptcy is a dissolution of partnership ; this is by reason of the 174 THE LAW OP PARTNERSHIP. [CH. VII. * 160 does assign it, and the * other partners receive the as- signee among them and into the partnership, the new partner becomes one, altogetlier by tlieir reception and his agreement with them, and in no degree by the assignment or transfer by him who has ceased to be a partner, (f) In an Englisii case, a person entering into bnsiness was guaran- teed to the firm up to a certain amount by his father, and in consideration thereof contracted to pay to his father a certain assignment, which severs tlie interest of the banltrupt, by operation of law. An assignment made by tlie i)arty liim- self, under circumstances like the pres- ent, produces the same result : in both cases, they give rise to a state of things altogether incompatible with the prose- cution of a partnership concern, com- menced and previously conducted by the bankrupt and his former copart- ners. It is perfectly clear that a new partner cannot be admitted without consent. This, ex vi termini, implies that even consent would be nugatory, unless the assignee elected to become a partner; when he does not so elect, but (as in the present case) insists on a division of the property, the demand, according to acknowledged general principles, cannot be denied." Ma- thewson v. Clark, 6 How. S. C. 122 ; Putnam v. Wise, 1 Hill, 238; Channel V. Fassitt, 1(5 Ohio, 166 ; Mason v. Con- nell, 1 Whart. 381 ; Horton's Appeal, 13 Penn. St. 67 ; Bray jv. Fromont, 6 Madd. 5. In Goddard c. Hodges, 1 C. & M. 33, the plaintiti' was the solicitor of a bridge company, and on that ac- count not desiring to appear as the owner of ^shares in a company, had procured one Fall to be the nominal stockholder of a certain number of shares, the plaintiff, however, being the real owner, making the deposits, and paying all other expense on the shares. In an action to recover com- pensation for professional services, the plaintiff cited Bray v. Fromont, supra; and contended that, as between him- self and the bridge company, he was not a partner, since there was no con- sent nor agreement of the company to receive him as such. But the court held otherwise, and a nonsuit was entered. See Bradley v. Harkness, 26 Cal. 76. {<;) The effect of an assignment l)y a partner of his interest in a copartner- ship is to give the assignee a right to insist upon an account of the joint concern, and to claim whatever his assignor would be entitled to upon a settlement of accounts, upon satis- faction of the claims of the otlier partners. NicoU v. Mumford, 4 Johns. Ch. 622 ; Rodriguez v. Heffernan, 6 id. 417 ; Marquand v. New York Manuf. Co., 17 Johns. 525; Kingman V. Spurr, 7 Pick. 235 ; Bray v. Fromont, 6 Madd. 5 ; Mathewson v. Clark, 6 How. S. C. 122; Moddewell v. Keever, 8 Watts & S. 63. In this last case it was held, that an acquittance of a part- nership debt, given by the assignee of one partner's share, could not have the effect of relieving the debtor from lia- bility to the firm for the same debt. Ex parte Barrow, 2 Rose, 252 ; Brown V. De Tastet, Jac. 284 ; 2 Bell Comm. 636. See Newland v. Tale, 3 Ired. Eq. 226; Cowles v. Garrett, 30 Ala. 341. The transferee of a portion of a co- partner's interest has a debt which lie may prove against the transferrer's estate. Ex parte Dodgson, Mont. & M'A. 445. But the assignee of a part- ner's interest cannot witlidraw his share of the joint effects. They must remain in the possession of the con- tinuing partner, for the purpose of wind- ing up the affairs of the partnership, which has been dissolved by the as- signment. Horton's Appeal, 13 Penn. St. 67 ; Mealier v. Cox, 1 Sel. Cases Ala. 150. CH. VII.] RIGHTS OP PARTNERS BETWEEN THEMSELVES. 175 sum out of the profits. Afterwards marrying, he made a mar- riage settlement, by which lie transferred all the profits and earnings of the business to his father and another, in trust, first to secure the father's annuity, and then on other trusts. It was held by the Court of Common Pleas that the father became a partner in the business and liable for the debts. (ra. See Kimball v. Hamilton Fire Ins. Co., 8 Bosworth, 495. 182 THE LAW OF PARTNERSHIP. [CH. vir. actual insolvency, in effect, thoiigli not technically. The almost universal establisliment of insolvency systems in our States lessens the importance of this question. If a partner die, the surviving partners may undoubtedly apply the effects of the partnership to the payment of its debts, without consulting at all the representatives of the deceased. (^) The power of each partner over his own share or interest in the partnership property stands upon an entirely different foot- ing from his power over the partnership property generally. It is certain that no partner has any exclusive rigiit to any one or more things of the partnership. (5-) If, in the case sup- (/)) Egberts v. Wood, 3 Paige, 517 ; Wilson V. Soper, 13 B. Mon. 411 ; though, Avhere there is more than one survivor, one of them cannot assign the whole interest in the partnership effects to trustees, for the benefit of preferred creditors, without the con- currence of the other. Egberts v. Wood, supra. The remaining partners have the same rights as against an assignee of all one partner's interest. Clark V. Wilson, 19 Penn. St. 414. As to whether, when one of the part- ners is dormant, a deed of assignment of all the i^artnership propert}', by the other jjartner or partners, for the bene- fit of creditors, is valid without being executed by him, see Egberts v. Wood, supra; Drake v. Eogers, 6 Mo. 317. Whether the general partners in a limited partnership may make a gen- eral assignment of the joint funds, without the consent of the special partner, was doubted in Mills v. Ar- gall, 6 Paige, 577. (q) Hence no general principle of the law of partnership is better set- tled than that nothing is to be con- sidered the share of any one partner but his proportion of the residue on the balancing of the partnership ac- counts. Accordingly, where a member of a copartnership sold and assigned to another " all his interest in and to the property, goods, wares, and mer- chandise, and debts belonging to the firm," heldj that a debt owing by him- self to the firm did not pass by the assignment ; the interest of the as- signor being only what remained over and above the amount of his indebted- ness to the firm. Van Scoter v. Lef- ferts, 11 Barb. 140. See further Fox V. Hanbury, Cowp. 445 ; Smith i". De Silva, id. 469; West v. Skip, 1 Ves. 239; Ex parte Ruffin, 6 id. 119; Ex ;M)- Dow, 229; 18 Conn. 294; DeJarnette r. McQueen, Miller v. Consolidation Bank, 48 Penn. 31 Ala. 230 ; ante, p. * 126, note (/)• 514. (0 Saville v. Kobertson, 4 T. K. 720; (s) Perring v. Hone, 4 Bing. 28 ; see, for statement of the case, ante, Crouch V. Bowman, 3 Humph. 209. See p. * 105, note {(j) ; p. * 114, note (w). Norton i*. Seymour, 3 C. B. 792 ; Ken- 236 THE LAW OF PARTNERSHIP. [CH. vir. was not authorized. One of these is the indorsing of paper which does not belong to the firm. This is, in fact, lending or giving the credit of the firm. There can be no doubt that tliis is frequently done by mercantile firms. Sometimes they lend their credit, and are paid for it by a compensation for the guar- anty. Sometimes they reciprocate accommodation paper with another firm, each indorsing for the benefit of the other ; and the notes are of the same amount, or equalized in some way, and perhaps made for some broken amount, to give them the appearance of business paper. Of course, a partnership is liable where it authorizes any such use of its name. But this is no part of general and regular mercantile business, and therefore the presumption of the law is rather against the author- * 216 ity of the partner who so signs the * name, (m) But this presumption may be overcome not only by direct evidence of authority, but from usage or frequent recognition of such signature, or such other similar facts as would satisfy a jury that the signature was for the partnership and by its authority, (v) (h) Tlie principle is clearly stated by Walworth, Chancellor, in Stall v. Cats- kill Bank, 18 Wend. 466, 477. See also Bank of Tennessee v. Saffarrans, 3 Humph. 597. New York F. Ins. Co. V. Bennett, 5 Conn. 574 ; Mauldin v. Branch Bank at Mobile, 2 Ala. 502; Lang 17. Waring, 17 Ala. 145 ; Ganse- voort V. Williams, 14 Wend. 133, 139 ; Williams v. Walbridge, 3 id. 415; Aus- tin v. Vandermark, 4 Hill, 2G1 ; Bank of Vergennes v. Cameron, 7 Barb. 143, 150. But this presumption does not arise where accommodation paper, exe- Wend. 133, 139 ; Chenowith v. Cham- berlin, 6 B. Mon. 60; Sweetser v. French, 2 Cush. 309; Bank of Ken- tucky V. Brooking, 2 Litt. 41, 45 ; Dar- ling V. March, 22 Me. 184, 188; Tanner V. Hall, 1 Barr, 417; Dundass v. Gal- lagher, 4 id. 205. But, though it appear that each of two partners have repeat- edly, with' the knowledge and assent of the other, indorsed accommodation notes in the firm name, this is not sufficient evidence that either of them is author- ized to sign the firm name to such paper as maker and surety. Early v. cuted by one partner in the name of Reed, 6 Hill, 12. Paper, however, to the firm, is in reality for the benefit of which tlie partnership name has been the partnership, rather than for that afli.xed by one partner by way of accom- of him to whom it is given. As where a bill, drawn b}' one partner upon the firm, and accepted by him in the firm's name, for the accommodation of the payee, is given in exchange for the paper of the latter to be used in raising modation, is alwa^'s binding upon tlie firm, in the hands of a bnndjide holder for value, taking it without notice of the circumstances, express or implied. Id. ; Catskill Bank v. Stall, 15 Wend. 304; Austin V. Vandermark, 4 Hill, 259; money for the purposes of the partner- Gano v. Samuel, 14 Ohio, 502; Waldo ship. Gano v. Samuel, 14 Ohio, 592. Bank v. Lumbert, 16 Me. 41(3 ; Mauldin (v) Bankof Tennessee y. Saffarrans, v. Branch Bank at Mobile, 2 Ala. 503, 3 Humph. 597 ; Wlialey v. Moody, 2 513 ; Beach v. Stale Bank, 2 Cart. id. 495; Gansevoort v. Williams, 14 (Ind.) 488. CH. VII,] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 237 It is also a general rule, that no partner has any authority implied from the mere fact of partnership to become surety for any debt in any way, and bind the partnership thereto, (w) The reason from which this rule originated, is, that the proper business of a partnership is most usually buying and selling ; and therefore there is seldom a presumption that any thing but this is within their business. And the same rule applies, for the same reason, to guaranties given by one partner in the name of the * firm. But the question is always open * 217 to evidence ; and the holder of the guaranty may show not only the peculiar usage of that firm, or their frequent rec- ognition of such guaranties, (a;) but also that the nature of their business is such as to make this giving of guaranties a part of it. So Lord Mansfield said in relation to bankers ; (?/) (w) Foot V. Sabin,.19 Johns. 154; Laverty v. Burr, 1 Wend. 531 ; N. Y. i\ Ins. Co. V. Bennett, 5 Conn. 674, 680; Andrews v. Planters' Bank, 7 Smedes & M. 192 ; Langan v. Hewett, 13 id. 122; Wagnon v. Clay, 1 A. K. Marsh. 257 ; IloUins v. Stevens, 31 Me. 454 ; New York F. Ins. Co. v. Bennett, 6 Conn. 583 ; Butler v. Stocking, 4 Selden, 408. See farther, for the gen- eral principle, Sweetser v. French, 2 Cush. 309, 314; Rolston v. Click, 1 Stewart, 526 ; Kibbler v. De Forest, 6 Ala. 92 ; Bank of Rochester v. Bowen, 7 Wend. 158; Long y. Carter, 3 Ired. 238. [The ratification by a firm of the unauthorized act of one partner, in signing the firm name to a contract of suretyship, is ineffect- ual as against existing partnersliip creditors, being in substance an adop- tion by the firm of a private debt of one partner. Kidder v. Page & tr., 48 N. H. 380.] (jr) And a recognition and adoption, express or implied, subsequent to the giving of the guaranty, may be given in evidence as well as a prior author- ity ; and either the one or the other may be shown by parol as well as by a written document. Duncan v. Lowndes, 3 Camp. 478 ; J^x parte Nolte, 2 Giyn & J. 305, 300; Craw- ford V. Sterling, 4 Esp. 207; llalseham V. Young, 5 Q. B. 833 ; Long v. Car- ter, 3 Ired. 241 ; Mayberry v. Bainton, 2 Harris, 24. See Coursey v. Baker, 7 Harris & J. 28. In Sweetser v. French, 2 Cush. 309, 314, Metcalf, J., states very clearly the law respecting guaranties as established both in Eng- land and this country. See also Hamill v. Purvis, 2 Penn. 177 ; Sutton V. Irwine, 12 S. & R. 18. Partners may give in evidence a disclaimer of a guaranty, and a refusal to be concerned in it. V. Layfield, 1 Salk. 292. And whether a guaranty has been given by one partner with the privity and consent of all, is a question for the jury. Payne v. Ives, 3 Dow. & R. 664. (y) Hope V. Cust, 1 East, 53. If a guaranty given by one partner can be considered as an assurance or represen- tation made in the usual course of, and with reference to, the business of tlie firm, it will be binding on tiie partner- ship, as being an act entirely within the scope of one partner's authority. See Crawford v. Sterling, 4 Esp. 209 ; Sutton V. Irwine, 12 S. & R. 13. But one partner will not be deemed to have tlie power of giving a guaranty in the name of the firm, merely in conse- quence of its being a Teusonahle mode of carrying into efifect an acknowl- edged partnership contract. Brettel V. Williams, 4 Exch. 623. 238 THE LAW OF PARTNERSHIP. [CH. VII. and it has been held, that in horse-dealing it is so customary to sell with warranty, or rather so rare to sell without it, that a buyer may presume that a partner (or any agent) having authority to sell has thereby authority to warrant, (z) The power or authority to sell generally does not carry with it the power to warrant ; but we should be disposed to hold that a warranty by any partner, of the property of the firm lawfully sold by liim, would hold the firm, if made and received in good faith, (fl) SECTION V. OF THE POWER OF A MAJORITY OF THE PARTNERS. Whether a majority in numbers of the partners can lawfully control the rest, and conduct the affairs of the partnership at their own pleasure, has been much discussed. At one time there was certainly a strong tendency to sustain this power, and to extend it over all the affairs of the partnership, provided only that it was exercised honestly and deliberately, and with every reasonable opportunity to the minority to make their wishes and the reasons for their wishes known and duly con- sidered. It has, as certainly, been the tendency of the courts in later years to limit this power narrowly, and almost confine it within what may be called the domestic acts of the firm ; as, for example, the appointment or salary of a clerk, the arrange- ments of the counting-room, method of conducting sales, or (z) "A case may be put, where two firm, received the proceeds, and ap- persons in partnership, for the sale of plied them to the use of the firm. At horses, should agree between them- the sale, he assured the purchaser of selves never to warrant any horse ; the paper that he would warrant that yet, though this be their course of the notes were given in the regular business, there is no doubt that if, course of business, and would be paid ; upon the sale of a horse, the property that the makers and indorsers were of the partnership, one of them should responsible and men of abundant give a warranty, the other would be means. The notes having been bought thereby bound." Per Abbott, C. J., upon the strength of these and other in Sandilands v. Marsh, 2 B. & Aid. similar representations, which proved 679. See Penn v. Harrison, 3 T. R. to be false, it was hdd that the firm 760. was bound by the representations of (a) In Sweet v. Bradley, 24 Barb, the partner who sold the notes ; and 549; the defendant, a member of the that an action would lie against all firm of B. Bradley & Co., sold some the members of the firm, upon the promissory notes belonging to the warranty. CH. VII.] RIGHTS OP PARTNERS BETWEEN THEMSELVES. 239 keeping accounts, and the like. And, even as to these, it is put upon the apparent necessity of deciding as to how that shall be done which must be done in some way. Whereas, if the partnersliip cannot agree about a purchase, or a sale, it may be omitted, and the business nevertheless go on. Recent American decisions appear to enlarge this power somewhat. Thus, it has been held that a majority of a firm established to publish a newspaper has authority to appoint or remove a pub- lisher, (aa) It will be apparent, however, from the authorities presented in our note, that the law as to the power and author- ity of a majority of copartners cannot be considered as defin- itively established. (6) {aa) Peacock v. Cunimings, 46 Penn. St. 434. [But see Yeager v. Wal- lace, 57 Penn. St. 365.] (6) Cliitty says (3 Laws of Com- merce, 286) that, in the absence of express stipulations between the part- ners, " a majority must decide as to the disposal of the partnersliip prop- erty ; or, if no majority can be ob- tained to decide as to such disposal, or there are but two partners in the firm, one or more partners may manage the concern as they think fit ; provided it be within the rules of good faith, and warranted by the circumstances of the case." To this Collyer adds (Collyer on Part. § 197) : " It will be observed that this opinion is given with considerable caution, and perhaps it may be laid down that, in a partner- ship without articles, the power of the majority to bind the minority is con- fined to the ordinary transactions of tlie partnership." The English au- thorities on the point are few, and by no means conclusive. In Robinson v. Thompson, 1 Vern. 465, it was held, that an account of the profits of a voyage settled by the major part of the part-owners should conclude the rest. And in Falkland v. Cheney, 5 Bro. P. C. 476, 1 Bro. P. C. (Dublin ed.) 90, it seems to have been laid down as a general principle that, in all sea adventures, tiie act of a major- ity binds the whole. But in that case such power was given to the majority by the articles of association. See Lloyd V. Loaring, 6 Ves. 777. Per- haps the weightiest authority to be found in the English books is the dictum of Lord Eldon in Const v. Harris, Turner & R. 516, 5-25. After declaring that the act of the majority of the partners is to be considered the act of all, he adds : " I call that the act of all, which is the act of the ma- jority, provided all are consulted, and the majority are acting bond Jide ; meet- ing, not for the purpose of negativing what any one may have to offer, but for the purpose of negativing what, when they are met together, they may, after due consideration, think proper to negative. For a majority of part- ners to say, ' We do not care what one partner may say : we, being the ma- jority, will do what we please,' is, I apprehend, what this court will not allow. 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 upon 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 American authorities are not much more numerous nor satisfactory. The opinion of the court in Kirk v. Hodgson, 3 Johns. Cli. 400, contains expressions wliich, considered by them- selves, would ai)pear to give unquali- fied support to the above dicta of Lord 240 THE LAW OF PARTNERSHIP. [CH. VII. * 219 * We may consider this question in reference to third persons, and also in reference to the partners themselves. If the majority propose to deal with a customer, either in the way of purchase or sale, in a manner to which the minority do not assent, it is certain that the minority, whether they with- hold authority or not, will be bound, if they do not communi- cate their dissent to the customer, provided the transaction be within the scope of the partnership business ; for so * 220 would the majority be bound if the minority so * did it, and so would all the partners be bound if any one of them so did it. On the other hand, if it be not within the business of the firm, neither a majority nor a minority would be bound to third persons, unless these persons could show themselves to have believed and to have been authorized to be- lieve that it was within the business of the firm, or that the firm had made it theirs by adoption or ratification. All that we have said results necessarily from principles which have been fully considered in former chapters. Let us here suppose that the question refers to some single act. The majority of a house dealing in cotton wish to sell one hundred bales at a certain price, and the minority refuse to consent ; Eldon. But Cliancellor Kent, who trade, employed H. as their clerk, at a rendered the decision in that case, fixed annual salary, but with the un- says of it, in liis Commentaries, that it derstanding that the salary should be " related only to tlie case of the man- increased with the increase of the agement of the interior concerns of the firm business and of H.'s duties. In partners among themselves ; and to the tliird year, it was discovered that that it is to be confined." 3 Kent II. had overdrawn money of the firm Comm. [45]. We have, however, two and applied it to his own use; and this recent cases in which the doctrine is breach of trust was confessed by him. asserted, that where a firm, without Nevertheless, a majority of the firm, articles, consists of more than two E. & D., continued H. afterwards in members, any contract within the his employment. It was held, that this sphere of the joint business, made in fact was decisive in favor of the con- good faith by the majority, will be tinuance of the rights of H. and of his binding on tiie whole, notwithstanding claim to tlie stipulated increase of sal- at the time of, or previous to, the ary ; that it was evidence that he had making of the agreement, the minority not forfeited tlie confidence of the firm, expressly dissent, and communicate and that tlie overdrawings, charged their dissent to the third party with and confessed, were not understood whom it is made. See Johnston v. by them to be acts of intentional fraud ; Dutton,, 27 Ala. 245 ; [Campbell v. and that they could not, therefore, be Bowen, 49 Ga. 417.] See also Western set up by the firm against his claim, Stage Co. V. Walker, 2 Iowa, 504 ; Irvine founded on tlieir promises and acknowl- V. Forbes, 11 Barb. 587 ; Kirk v. Hodgs- edgments, and his services. [But see don, 3 Johns. Ch. 400. E., K., «& D., in ante, p. *95 and notes.] CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 241 the majority make the sale, deliver the cotton, and take notes or money for it ; can the buyer hold this cotton by good title ? Certainly, if the minority express no dissent ; but, if they do express dissent and positive prohibition, is the transaction then valid ? It might not be easy to reach the question at law. The minority alone, that is, without the majority, would find it diffi- cult to maintain replevin or trover, or any other action, for the cotton or its value. And it would not seen), commonly at least, to be a case in which a court would permit a minority to use the names of the majority as coplaintiffs against their will. If the minority sold the same cotton to another customer, and let the two purchasers contest the title of each other, the pur- chaser from the minority alone would certainly have no better title than the purchaser from the majority alone. If the ques- tion were considered in equity, all the circumstances of the case would be duly regarded, and, among others, the right or absence of right of the minority to dissolve the partnership at will, (c) For, if they have this right, it would seem that * they could exercise it, in case of irreconcilable and * 221 material diHerence of view or purpose. And, if they did not exercise it, they might be considered as yielding to the majority, for the sake of preserving the partnership, and so adopting the transaction. If they could not dissolve it, because it was established for a time certain, and if the conduct of the majority was unreasonable and oppressive, this would be a good ground for the other partners asking of the court a dissolution of the partnership ; and generally, if they did not, it would, (c) In both the cases, Johnston v. for a specified term, as having any Button, 27 Ala. 245, and Western bearing on the case under considera- Stage Co. V. Walker, 2 Iowa, 504, tion. Conceding they are law, which cited in preceding note, the partnership is doubtful, the decisions rest solely was, by articles, to continue for a time upon the ground, that the limitation of certain, and in both the actions were the right of dissolution is incompatible at law. In Johnston v. Button, the with the nature of the partnership cou- attention of the court seems to have tract; and this principle does not been called to views similar to those militate against the positions we have represented in the text. See argu- asserted. The dissent, in the present ment of counsel, p. 250, 251. The case, cannot be regarded as a disso- court, however, said, p. 253 : " We do lution ; for, if effectual, it would not, not consider the cases to which we necessarily, produce that result, al- have been referred, holding that one though it might operate to change the partner has the right, at pleasure, to mode of conducting the business. In dissolve a partnership, althougli the other words, it might be carried on articles provide that it is to continue without contracting debts." 16 242 THE LAW OF PARTNERSHIP. [CH. VII. we think, be taken as before, that by not dissolving tlie part- nersliip they acceded to the wishes of the majority. But there certainly might be cases in which the act of the majority would be injurious to the minority, and an immediate dissolution even more so, and the majority would be deemed to have no right to inflict upon a minority either of these mischiefs. Then the court would decree such annulling of the act, or compensation, or other remedy, as justice between all the parties and the power of the court should authorize and require. But these consid- erations touch rather the rights and interests of the partners. So far as the customer, the third party, is concerned, — always supposing the transaction honest as to him, — we should say that the question of the power of a majority would be put aside both in law and in equity by the general rule, that, if the transaction were within the business of the firm, it bound all the partners who gave no notice to the third party ; and, on the other hand, that it did not bind recusant and protesting partners who gave sufficient notice of their dissent ; (c?) and that, if it was without the business of the partnership, it bound nobody but those who authorized the act or ratified it. If the question of a majority related only to those things to which no person out of the partnership was privy, it would as- sume a somewhat different aspect. Suppose, for example, a majority chose to enlarge or vary the business importantly, or enter upon a new business, which things no partner can do by his implied authority, can the majority compel the mi- * 222 nority to acquiesce in * this ? We should say that they certainly could not. (e) And yet it must generally be the case, that if the majority persisted, and the minority did (d) See oH^e, p. *218, note {b). wards altered by the company so as (e) Natusch v. Irving, Gow on to allow a trade in ardent spirits to be Part. App. p. 398 ; ante, p. * 198, note carried on. The court said : " We can (x). See Const v. Harris, Turn. & have no hesitation in holdlm], that this R. 524 ; Livingston v. Lynch, 4 Johns, was such a substantial alteration as Ch. 573. In Abbott v. Johnson, 32 discharged the plaintiffs from their N. II. 9, it appeared that a number of obligation to proceed with the part- persons, among them the plaintiffs, nership, unless they agreed to the formed a written agreement of copart- change, and that it gave them the nership, for the purpose of carrying on right to retire from the firm, ... if a retail trade in domestic and foreign they did it under circumstances which goods. By one of the articles it was were such as to do no injury to the provided that there should be " neither partners who chose to go on under the purchase nor sale of ardent spirits by new arrangement." the concern." The articles were after- CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 243 not dissolve the partnership or seek relief from a court of equity, but did go on with the business in the manner proposed by the majority, this would be deemed evidence of their consent. Still, the universal principle would apply, that waiver or consent are implied by acquiescence only when that acquiescence is free and voluntary ; and therefore this evidence, or presumption, might be rebutted by showing that circumstances had placed the mi- nority so far in the power of the majority that they must go on and submit for a time, reserving all their rights of dissent, or- suffer important injury, and then their so going on would not be held as necessarily implying a waiver or loss of any right. These views are, to some extent, only theoretic ; and it is perhaps a little remarkable that cases of conflict of interest or wishes between partners have not been before the courts of England or this country often enough to settle the question by adjudi- cation as to the power of a majority. SECTION VI. OF THE CONDUCT WHICH PARTNERS MAY REQUIRE OF EACH OTHER. 1. Of G-ood Faith. The first and highest duty which partners owe to each other, is that of perfect good faith, (eg) In the Roman civil law, the " societas " * of merchants for trade, and of * 223 husband and wife, were considered closely analogous, and in many respects governed by the same principles. (/) Indeed, what we have already said indicates sufficiently how- much partners are in the power or at the mercy of each other, and there certainly seems to be no relation in life, calling, either by its own exigencies or by the rules of law, for a more abso- lute good faith than the relation of partnership, (g) After this comes the duty of having and using the skill and (ee) See Nicholson v. Janeway, 1 25 Eng. L. & Eq. 105 ; Ault v. Good- Green (N. J.), 285. rich, 4 Russ. 430. In some cases, (/) Vin. Comm. lib. 3, tit. 26, § 2 ; however, the same strict good faith Potliier, Contr. de Soc. ch. 3. does not seem to be required between (g) Baker v. Charlton, 1 Peake, 80. partners as is imperative upon those See England v. Carting, 8 Beav. 129, who occupy the position of fiduciary for an example of bad faith between relations. Wheeler v. Sage, 1 Wal- partners, and of the displeasure with lace, U. S. S. C. 518. In some cases, whicli it is viewed by the court. See partnership is fiduciary. Brooks v. also Blissett v. Daniel, 11 Hare, 493, Martin, 2 id. 70. 244 THE LAW OP PARTNERSHIP. [CH. VII. knowledge which the partnership requires; of applying to all its affairs due care ; of devoting to them a reasonable measure of time and labor ; and of conducting all its concerns, private or public, with due economy. For the breach of any one of these duties, the party is held responsible. (7i) A court of equity, in particular, will always decree such compensation, in form or kind and amount, as shall be needed to make good any losses arising from any violation or disregard of these duties, (i) The rule would extend, by the reason of it, to the manner of doing any thing. Hence, as no partner should do that which he has no lawful power to do, so he should do every thing he has power to do either by the general law of partnership or by special stipulation in the articles, — as, for example, the assign- ing of his share, or the giving of partnership security, — in such a way as a due regard for the interests of the partnership would require, (y) As every partner is under an obligation to do what he can to promote the prosperity of the partnership, no partner can charge the firm or his copartner for the extra value of his services over those of his partner, without a specific agreement. (_;)') In every bargain which he makes, he must remember a prin- ciple laid down emphatically by Lord Eldon, — that it is his duty to use the property for their benefit whose prop- * 224 erty it is ; (^) that is, for *the benefit of the whole as {h) See post, p. *236, as to how far (jj) Bennett i'. Russell, 34 3Io. 524. a partner may engage in other busi- (k) Crawshay v. Collins, 15 Ves. ness, beside that of the firm ; post, note 22G ; Honore v. Colmesnil, 1 J. J. ()■). See tlie remarks of Redfield, Marsh. 507, 541. Hence, when all the C. J., in Pierce v. Daniels, 24 Vt. 624. proprietors of a morning paper, save {«') See post, ch. 8, §§ 3, 4, respect- one, were also the owners of an even- ing the remedies between partners ing paper, published in the same place, which courts of equity administer, an injunction was granted to restrain See Lefever r. Underwood, 41 Penn. the proprietors of the evening paper 505. [If a partner neglects to render from publishing therein any informa- the personal services which he ought tion obtained at the expense of the to render, he will be charged with morning paper, until it should first • their value in settlement of the part- have been published in the morning nership account. Marsh's Appeal, 69 paper. Glassington v. Thwaites, 1 Sim. Penn. St. 30.] & S. 124, 133. And if a copartnership (j) The rule that each partner own a dwelling-house which is occu- must do all he can for the benefit of pied exclusively by the family of one his firm has, of course, its limitation in of the partners, this partner is liable the reason of the thing and the cir- for rent to the firm, though there be cumstances of each particular case, no special agreement to that effect. See Rowe v. Wood, 2 Jac. & W. 556. Holden v. Peace, 4 Ired. Eq. 223. The CH. VII.] RIGHTS OP PARTNERS BETWEEN THEMSELVES. 245 one concern, or one body, for so it is owned. So if a partner by any means gets possession of a fund properly belonging to the firm, lie must share any profit or advantage arising from it, with his copartners, (kk') If losses occur by reason of a breach of duty by a partner, in any way whatever, whether through fraud, negligence, ig- norance, or extravagance, and w^hether by design or not, they must rest on the partner whose faulty conduct has caused them ; and he cannot require the partnership to contribute in any way towards them. (/) But a partner is not liable to his copartners for a loss caused by an honest mistake of judgment, unless it amounts to gross negligence or igno- rance. (Jl) The question may occur whether a negligence and conse- quent loss, in one respect, would be made up, or excused, by great successes and profit in another. It would perhaps be impossible to frame a definite rule which would govern all cases of this kind. The general principle would be something like this: If it were one transaction, quite indivisible, and the partner conducted it in some respects with a want of attention, whicli caused some loss, and in others with unusual care and case of Beecher v. Guilbane, Mosley, derit probable that the solvency of the 3, is thus reported : " If one copartner firm and the rights of the creditors borrows money of the other on his depend upon the interference of chan- note, he sliall pay interest for it, though eery, equity may interpose by injunc- he had more money in the stock than tion, even though a dissolution of the what he borrowed; for the stock is firm be not prayed for. Miles r. only to be employed in augmentation Thomas, 9 Sim. 607; Gratz v. Bayard, of the trade, for their mutual benefit ; 11 S. & R. 41, 48. The same princi- but neither of them can make use of pies as to the use of the joint property it for their own private advantage." apply to partners who wind up the af- See Kelley v. Greenleaf, 3 Story, 93 ; fairs of the partnership after dissolu- Roberts y. Totten, 8 Eng. 609; Pierce tion. See post, ch. 12, 13, upon the V. Daniels, 25 Vt. 624. dissolution of a partnership and its If one partner employ partnership effects, funds in a private trade or adventure, (kk) Eason v. Cherry, 6 Jones, Eq. he must account not only for the inter- 261. est on the funds thus withdrawn from (/) Devall v. Burbridge, 6 Watts & the partnership, but also for the profits S. 529 ; Jessup v. Cook, 1 Halst. 434. of such separate trade. Brown v. See M'llreath v. Margetson, 4 Doug. Litton, 1 P. Wnis. 140; Crawshay v. 278; /« ?e Webb, 2 J. B. Moore, 500; Collins, 15 Ves. 218; Stoughton v. Lyles v. Styles, 2 Wasli. C. C. 224. Lynch, 1 Jolms. Ch. 467; Solomon See Beste v. His Creditors, 15 La. Ann. V. Solomon, 2 Kelly, 18. And if such 55. acts of one partner threaten tlie de- (//) Morris v. Allen, 1 McCarter, 44 ; Btruction of the joint property, or ren- and see Stephens v. Orman, 10 Ela. 9. 246 THE LAW OF PARTNERSHIP. [CH. VII. skill and energy, which increased the profits, it could * 225 not be deemed on the whole a case of * wrong de- manding compensation. If, however, he had conducted throughout as he should have done, excepting in one or two particulars, and his default in these caused material injury, he should not be held excused for thus lessening the profits of the firm by the fact that they were still, on the whole transac- tion, very considerable. For the partnership is entitled to all its profits, and may ask compensation of any one whose wrong- ful act takes them or a part of them away, whether he be a partner or not, and whether much or little be left. And if there be many transactions, or one business divisible into many transactions, that he did his duty for the most part would certainly be neither excuse nor compensation for not doing it at all times. And we should doubt whether equity would find it easy to regard him as protected against all claims for default or violation of duty, because in certain things he did more than his duty, (m) From the requirement of perfectly good faith, it follows that no partner must deceive his copartners, for his benefit and their injury, either by false representations or by concealments. Thus, if he persuades them into any course of business, or to any single transaction, by these means, and losses occur, he must sustain them or compensate for them. So, if he proposes to buy of them the whole or any part of their share of their business, and by any false statement or intimation on his part, or any conceal- ment or prevarication, influences them to enter into an arrange- ment to effect his wishes, it will not be obligatory on them, (n) If he makes any private bargain with third parties for his own benefit, which either inflicts a loss upon the partnership, or turns to himself advantages which belong to all in common, he will be held to make compensation for this, or to restore these advantages to the partnership in some way. (o) Thus, (m) See rothier, Contr. de Soc, n. Knight v. Marjoribanks, 11 Beav. 322, 125. 2 Macn. & G. 10. (?i) Maddeford v. Austvviek, 1 Sim. (o) Fawcett v. Whitehouse, 1 Russ. 89, is a leading case. Tlie same prin- & M. 132, 135, 141, 148; Hicliens v. ciples are asserted and maintained in Congreve, 1 Russ. & M. 132, 150, note the cases of Sexton v. Sexton, 9 Gratt. {b), 4 Russ. 562; also, Carter v. Home, 204, and Hopkins v. Watt, 13 III. 298 ; 1 Eq. Ca. Abr. "Account," A., pi. 13 ; Russell V. Austwick, 1 Sim. 52. CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 247 if the partnership have a valuable leasehold property, and, when it is about to expire, a partner privately gets a renewal of it to himself, he cannot take * advantage of * 226 this to impose hard terms on his partners, but will be held to have obtained it for them as well as for him- self, (p) So, if he obtains goods for the partnership by barter of his own goods, he cannot charge an extra price for his goods. If he is properly carrying on a separate business, he may charge a fair living price ; so perhaps he may if he has them on hand in any way. But if he purchased them for this bargain with the partnership funds or credit, or if he for the partnership might have bought in the same way, he will be allowed to put upon them only the price he paid, (g) So if he acts in buying for his firm a particular kind of goods which he also buys and sells on his own account, the firm are entitled to any profit he may make on his own goods sold to the firm, (r) And if, on (p) Featherstonaugh v. Fenvvick, 17 Ves. 298, 310 ; Dougherty v. Van Nos- trand, 1 HofF. Ch. 68, 09; Leach v. Leacli, 18 Pick. 08, 76 ; Anderson v. Lemon, 4 Seld. 230, 4 Sandf. 552. In Featlierstonaugli v. Fenwick, supra, the Master of the Rolls said : " It is clear that one partner cannot treat pri- vately, and behind the backs of his co- partners, 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." [The renewal, during a copartnership, of a lease held by a firm, and rendered more valuable by the business of the firm, tliough made by one partner to himself, and though it would not have been made to the firm, inures to the benefit of the firm. Mitchell v. Reed, 61 N. Y. 123 ; Struthers v. Pearce, 51 N. Y. 357.] (7) Burton v. Wookey, 6 Madd. 867. The plaintiff and defendant entered into partnership together to deal in lapis culuininaris. The defendant, who was a shopkeeper, was to take the active part in the concern, and to pur- chase the article from the miners in whose neighborhood he lived. After some time, the defendant adopted a course of dealing, by which, in place of paying the miners for the article with money, he paid them with shop- goods ; and in his account with the plaintiff he charged him as for cash paid, to the amount of the price of the goods. The question was, whether he could justify this charge, or whether he must not divide the profit made by him on the sale of the goods with the plaintiff. The Vice-Chancellor said: "I must 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 defendant." (r) Bentley v. Craven, 18 Beav. 75. In this case the firm carried on the business of sugar-refiners. One of the members was a wholesale grocer, who had great knowledge of the proper time for buying sugars, and who, therefore, was selected as the buying agent of the firm. lie bought sugars on his own account, in anticipation that the firm would need them ; and, when they were required, sold them to the firm at the then market price. 248 THE LAW OP PARTNERSHIP. [CH. VII. the other hand, a partner gives the goods of the partnersliip in barter for something he buys, or otherwise uses them for his own benefit, lie must allow the partnership the full market-price for them, or what any customer would have paid, unless the usage of the firm or their stipulations permit him to make his personal profit out of them. 2. Hoiu far a Partner may transact Independent Business. * 227 * It is quite well settled that a partner has no right to carry away his knowledge, his skill, his capital or credit, his care or labor, into another business, whether only his own or that of another firm, to the injury of his first copartners. That is, he may not do this in such a way as to deprive them of business, of profits or advantages, which they had a right to expect from their connection with him. (s) As there is in practice no such thing as a universal partnership, so no part- ner is obliged, by the mere fact of partnership, to do nothing else than the business of the partnership. It is probably not Held, tliat tlie firm was entitled to any profit lie might have made. [But when a partnership is entered into for the purpose of transacting a commission business, — one to furnish buildings and fixtures, and the other to keep the books and give his personal attention to the management of the business, — the latter may, after the houses furnished by the former are full, and the former refuses to furnish further warehouse- room, put up other warehouses, and extend the business, to his own exclu- sive profit, provided he does not neg- lect the business of the firm. Parnell V. Robinson, Sup. Ct. Ga. 1877, 4 L. & Eq. Reptr. 13.] (s) See Boulay Paty, Cours de Droit, Com. tom. ii. 9i. Sir John Leach said, in Glassington v. Thwaites, 1 Sim. & S. 131, 133, "The princi- ples of courts of equity would not permit that parties bound to each other by express or implied contract, to pro- mote 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." In Long v. Majes- tre, 1 Johns. Ch. 305, A. & B. carried on trade as partners, the capital being supplied by A. B. without the consent of A., and without rendering any ac- count or dissolving the partnership, formed a new partnership with C, and carried into that house all the funds of the original firm, and used them therein till his death. The plaintiff filed his bill against the administratrix of B., and against C, his surviving partner, claiming to be entitled to the whole share of the deceased in the last partnership, alleging that a great part of the personal estate of the deceased had come into the hands of C. ; and praying that C. might be compelled to set forth a full and true account of the joint transactions between him and the deceased, and of the personal estate of the latter in his hands. C. demurring to so much of the bill as called for the discovery and account above stated, the demurrer was overruled. And see Law V. Cross, 1 Black (U. S.), 583; Soules V. Burton, 36 Vt. 652. CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 249 true in fact that the majority of partners confine themselves absolutely and exclusively to partnership business, or that it is expected or necessary that they should. (^) And it may be very difficult for a court to distinguish between the case of an honest several business, taking only its due share of time, cap- ital, care, &c., and an instance of unlawful withdrawing from a partnership of what belongs to the firm. But the line must be drawn somewhere ; and courts have sometimes applied the rule with so much severity as to avoid transactions or compel compensation where the partner could not be charged with any thing more than exposing himself to a bias in his own favor and prejudicial to the partnership, (m) 3. How the Accounts of the Firm should be kept. * As all partners have these rights as against each * 228 other, so they have the right which these rights imply, — that of enforcing and protecting these rights ; and especially of knowing whether they are invaded or not. Therefore, each partner has a perfect right to know all that is done, and exam- ine all the accounts at his own pleasure, (v) So every partner is bound to enter upon the proper books and in the proper way, or enable the clerk or other person employed to make due entry of, every charge and every credit, all money paid or (t) See remarks of Willard, Vice- The considerations applicable to the Chancellor, in Caldwell v. Lieber, 7 case of surviving partners, who are Paige, 483, 494, 495; Ship "Potomac," appointed executors of deceased co- 2 Black (U. S.), 481. partners, will be suggested hereafter. (n) Burton ?'. Wookey, 6 Madd. Posf, ch. 13, § 4, subsection 4. 367 ; ante, p. *226, note {q). Sir John {v) Rowe v. Wood, 2 Jac. & W. 558. Leach there said : " It is a maxim of It is the duty of each partner to keep courts of equity that a person who precise accounts, and to have them stands in a relation of trust or confi- always ready for inspection. The dence to another, shall not be per- good faith of the partners is pledged mitted, in pursuit of his private advan- mutualh^ to each other, that the busi- tage, to place himself in a situation ness shall be conducted under their which gives him a bias against the due actual, personal inspection, enabling discliarge of that trust or confidence." each to see that the other is carrying But the mere fact tliat partners are so it on for their mutual advantage, and situated as to be under a temptation to not destroying it. Peacock r. Pea- improperly use tlie partnersliip prop- cock, 16 Ves. 49, 51 ; Donaldson v. erty is not sufficient to induce equity Williams, 1 Cromp. & M. 345 ; Rowe to interfere by injunction. See Glass- r. Wood, 2 Jac. & W. 553, 556. See ington V. Thwaites, 1 Sim. & S. 124. Boynton v. Page, 13 Wend. 425. 250 THE LAW OF PARTNERSHIP. [CH. VII. money received, and all notes payable or receivable, and every other transaction which is usually put upon the books of ac- count ; and all this he must do without unnecessary delay, (w) So, if any partner contemplates any important transaction, we should regard it as his duty to communicate what he * 229 * does, and what he intends to do, before he takes any preliminary steps which might embarrass the firm if the transaction should not be carried into effect, in order that the firm may do what they think proper. If, by articles or arrange- ments, any one partner is intrusted with the accounts, it would be a peculiar breach of duty on his part to keep them in such way as to mislead his partners, whether by misentry or by non- entry, (a;) 4. Of a Partner^ s Right to extra Compensation. Another point seems to be well settled, both at law and in equity. It is that no partner shall receive any special com- pensation for what he does, unless by agreement of the * 230 partnership. (?/) * If the articles, or an arrangement {lo) Ex parte Yonge, 3 Ves. & B. 36; Goodman v. Whitcomb, 1 Jac. & W. 589, 593. Every reasonable presump- tion will be made against partners wliose fault it is tliat the partnership books are imperfect ; and if they claim to be entitled to other credits than those to which the books, at the close of the partnership, entitle them, it is usual to require of them very strict proof. Bevans v. Sullivan, 4 Gill, 383, 391. In Beacham v. Eckford, 2 Sandf. Ch. 116, it was held, that, on the disso- lution of a partnership between persons residing at different places, it is the duty of each partner to furnish to the other all their accounts, and to en- deavor to adjust them to ascertain the balance ; that this is especially the duty of the partner at the place where the principal business has been transacted ; and that, upon the death of a copartner, this duty becomes imperative upon the survivor ; and, if he neglect it, he will lose interest on the balance which may subse- quently appear to have been due to him. (x) See Maddeford v. Austwick, 1 Sim. 89 ; Kelley v. Greenleaf, 3 Story, 93, 103. It is, of course, improper to blend the accounts of the partners with the firm with the individual accounts of the partners between themselves. Honore v. Colmesnil, 1 J. J. Marsh. 506, 517. (y) Thornton v. Proctor, 1 Anst. 94 Whittle V. M'Farlane, 1 Knapp, 312 315; Holmes v. Higgins, 1 B. & C. 74 Franklin v. Robinson, 1 Johns. Ch 156, 165; Bradford v. Kimberly, 3 id 431 ; Caldwell v. Lieber, 7 Paige, 483 Phihps V. Turner, 2 Dev. & B. Eq. 123 Anderson v. Taylor, 2 Ired. Eq. 420 Reybold v. Dodd, 1 Harr. 401, 415 Dougherty v. Nostrand, 1 Hoff. Ch. 68 Bevans v. Sullivan, 4 Gill, 383 ; Cour- sen V. Hamlin, 2 Duer, 513 ; Roach v Perry, 16 111. 37 ; King v. Hamilton, id 190 ; Bennett v. Russell, 34 Mo. 524 [Drew V. Ferson, 22 Wis. 651.] Upon the same principle, no partner is en- CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 251 subsequent to them, provide that one or another shall receive any special compensation for special service, this arrangement titled to interest on moneys advanced to, or deposited witli, the firm, for its use, unless there be a special agree- ment to that effect. Lee v. Lash- brooke, 8 Dana, 214 ; Day v. Lock- wood, 24 Conn. 185; Desha v. Sliep- ard, 20 Ala. 747. But In re German Mining Company, 19 Eng. L. & Eq. 591, 4 De Gex, M. & G. 19, Knight Bruce, L. J., said : " I think that mer- cantile usage and the general course of trade dealings do, wliere a partner in trade has duly and properly ad- vanced money of his own for the pur- poses of the partnership business, so as to become justly a creditor in ac- count with the partnersiiip for the amount, raise an implied contract for interest, so as to entitle the partner advancing to have his account with the firm credited with interest ac- cordingly, although his partners may not have authorized, and may not have known of the transaction ; at least, in the absence of any express contract to the contrary." See In re German Mining Company, 27 Eng. L. & Eq. 158. [There is no established rule as to the allowance of interest between partners. The circumstances of each particular case must determine. Gyger's Appeal, 62 Penn. St. 73; Moss V. McCall, 75 III. 190. Interest will not generall}' be allowed, imless on special agreement, Tirrell v. Jones, 30 Cal. 655; Whitconib v. Converse, 119 Mass. 38 ; then with annual rests before dissolution, but without rests after, Burfield v. Loughborough, L. R. 8 Ch. 1, disapproving Pilling v. Pilling, 3 DeG., J. & S. 162. But it is elsewhere held that, in taking account after dis- solution, the articles allowing interest on capital, interest from that time and during the process of settlement is not to be allowed on each part- ner's capital contributed, Watney v. Wells, L. R. 2 Ch. App. 250; but other- wise, if there is no agreement for inter- est, Tutt V. Land, 50 Ga. 338. When profits are left in business, the partner leaving them does not draw interest, unless by express agreement. Dinham V. Bradford, L. R. 5 Ch. App. 519. Nor is a partner chargeable with inter- est on overdrawn profits. Maymott v. Maymott, 9 Jur. n. s. 496. Where by the contract partners agreed to keep one another in funds to a specified extent, and, on dissolution, one was found not to have contributed to the extent agreed, interest was allowed on the difference, to the partner whose advances were in excess of the others. Pim V. Harris, Irish Repts., 10 Eq. 442. Interest payable by the terms of the contract at a greater rate than the law permits, except by special contract, is to be reckoned, after the maturity of the contract, at the rate fixed by the law, in the absence of express agree- ment. Thus, where the rate is six per cent, unless otherwise agreed, a note payable in one year at ten per cent interest draws but six per cent after the expiration of the year. Brewster V. Wakefield, 22 How. (U. S.) 118; Eaton V. Boissoncault, Sup. Jud. Ct. Me., 5 Reptr. 270 ; Burnhisel i-. Firman, 22 Wall. (U. S.) 170; Ludwick v. Huntsenger, 5 W. & S. (Penn.) 51; Cook V. Fowler, L. R. 7 H. L. 27; Pearce v. Hennessy, 10 R. L 223; Kitclien v. Bank, 14 Ala. 233; Lash V. Lambert, 15 Minn. 416 ; Hubbard v. Callahan, 42 Conn. 524 ; Searle v. Adams, 3 Kan. 315. In Cromwell V. County of Sac, in the United States Supreme Court, February, 1878 (5 Reptr. 419), Brewster v. Wakefield, supra, is explained, if not overruled, and the contrary doctrine asserted to be established by the preponderance of authority. See also contra, Brannon V. Hursell, 112 Mass. 63; Hand v. Armstrong, 18 la. 324 ; Marietta Iron Works V. Lattimer, 25 Ohio St. 621; Hopkins v. Chittenden, 10 Tex. 189 ; McLane v. Abrams, 2 Nev. 199; Koh- ler V. Smith, 2 Cal. 597; Pruyn v. Milwaukie, 18 Wis. 367; Etnyre v. McDaniel, 28 111. 201; Kilgore v. 252 THE LAW OF PARTNERSHIP. [CH, VII. will be respected. (2) But if there be no such provision, the law will not make any, nor infer one from the greater industry- Powers, 5 Blackf. (Ind.) 22. But see Aj-er v. Tiklen, 15 Gray (Mass.), 178.] But, if a partner be appointed by the firm agent for a special pur- pose, he is entitled as against the firm to the usual compensation in rela- tion to tlie subject of such agency. Bradford v. Kimberly, 3 Johns. Ch. 431; Philips v. Turner, 2 Dev. & B. Eq. 123. [If, in winding up their affairs, the surviving partner renders services, not strictly in settlement, but in the prosecution and execution, of contracts already existing, or new ones entered into with tlie consent of the adminis- trators of the deceased partner, for the general benefit of the partnership fund, he is entitled to compensation for such service as is not in strict set- tlement. Schenkl v. Dana, 118 Mass. 236; Willett v. Blandford, 1 Hare, 253.] And if a partner sell half his share to another person, who becomes the general manager of the partner- ship business, such third party, not being a partner as respects the partner retaining his original interest in the firm, is responsible to the latter only as agent, and as against him may claim a reasonable compensation for his ser- vices. Newland r. Tate, 3 Ired. Eq. 226. A partner is, of course, entitled to be indemnified for outlays made by him, and obligations incurred, in the service of the partnership, and for the successful conduct of its business, though he cannot claim any thing for his management, time, and labor. Bur- den V. Burden, 1 Ves. & B. 170 ; Brig- ham i;. Dana, 29 Vt. 1. And, it seems, there may be actual expenditures of money for the firm, by one partner, which partake so much of the nature of personal service that the court will not allow the firm to be charged with them, especially if the partner himself do not appear to have regarded them as items of expense incurred on part- nership account. Thornton r. Proctor, 1 Anst. 94 ; In re The German Mining Company, 27 Eng. L. & Eq. 158. And if shareholders, or partners in such a company, at the request of the direc- tors, the managing partners, make ad- vances of money for partnership pur- poses, which are so applied, and are the means of saving the concern from ruin, and of preventing the total loss of the joint property, such shareholders are creditors of the company to the amount of their advances and interest thereon. In re The German Mining Company, 19 Eng. L. & Eq. 591, 4 De Gex, M. & G. 19. [See also post, p. *230, note (cc).] (z) Paine v. Thacher, 25 Wend. 450 ; Desha v. Sheppard, 20 Ala. 747; Pond V. Clark, 24 Conn. 370. See Baltyde V. Trump, 1 Md. Ch. 517. And where by the articles of copartnership one partner is exempted from the duty of rendering his personal services to the joint business, if he afterwards does render such services, at the instance and request of his copartners, he will be entitled to a reasonable compensa- tion therefor. The general rule, that one partner cannot charge the firm for his services, is founded on the principle that each partner is bound to devote his skill and labor to the promotion of the common benefit of the concern, and is inapplicable when the reason for it fails. Lewis v. Moffett, 11 111. 392. Upon the same ground, if part- ners agree to invest equal amounts of capital in the joint enterprise, and one partner advance more than his share, the partnership must allow him inter- est on the excess. Reynolds v. Mardis, 17 Ala. 32. If A. & B. enter into part- nership under articles by which "A. bargains and agrees to give B. four hundred and fifty dollars to manage the business," B.'s salary is to be paid not by A. alone, but by the partner- ship, and out of the partnership funds. Weaver v. Upton, 7 Ired. 468. See Reynolds v. Mardis, supra. CH. Vir.] RIGHTS OP PARTNERS BETWEEN THEMSELVES. 253 or greater ability of any one partner, (a) The principle seems to be, that partners are considered as meeting on a common ground, each engaging to do all he can do for the common good. (6) And, whatever any one does, he has no claim for any thing beyond his equal share of the common benefit, with- out the consent of his copartners, (c) It has, however, been lield that a partner is entitled to interest on advances made to the firm, although there was no express agreement to that effect, if it may be inferred from circumstances or their usage, that , an allowance of interest was intended, (cc) 5. How far Partners are Trustees. * As a general principle, which will sometimes be of * 231 much use in determining the rights and obligations of copartners, it may be said that all partners are regarded some- what as trustees for the firm. We have already remarked that the law of partnership is a thing by itself; but, like every other branch of the law-merchant, and indeed of the law in general, it is connected, by many relations and analogies, and many common principles, with collateral branches ; and these it is often useful to consider. Thus the law is well settled in regard to trustees. A wisely adjusted system of right and obligation guides the trustee, preserves the property or interests in his hands, and protects both him and the cestui que trust; (a) Philips V. Turner, 2 Dev. & B. Eq. [But if a partner refuses to discliarge 123. In this case, the partnership busi- the duties he is bound to by the arti- ness was under tlie ahnost exclusive cles, he may be charged with their superintendence of the partner making value in the account. Marsh's Appeal, a claim for extra compensation. See 69 Penn. St. 30.] Caldwell I'. Lieber, 7 Paige, 483; ante, (c) Beatty v. Wray, 19 Penn. 516, p. * 227, and Cunliffe v. Dyerville, 7 519. The rule is the same after the R. I. 325. dissolution of the firm, by death or (h) The principle was very fully otherwise. Partners who wind up the considered by Willard, V. C, in Cald- concern are not entitled to any extra well V. Lieber, 7 Paige, 483, 495. He compensation for their time and labor, said: " Where there is no special agree- Burden v. Burden, 1 Ves. & B. 170; ment to that eSect, partners are not Stocken u. Dawson, 6 Beav. 371,376; entitled to charge each other for their Beatty v. Wray, 19 Penn. St. 516 ; Ly- services in the management of the man v. Lyman, 2 Paine, C. C. 11, 52. concern; and the law never under- (cr) Morris r. Allen, 1 iMcCarter, 44; takes to settle between them their Wood v. Scoles, Law licp. 1 Ch. App. various and unequal services in the 369. [See also anfe, p. * 230, note (^).] transaction of their private affairs." 254 THE LAW OF PARTNERSHIP. [CH. VII. him from all undue interference and molestation while faith- fully discharging his duty, and the cestui que trust from all injurious breach of duty. Now, a copartner has powers, oppor- tunities, and duties, in relation to the partnership, very similar to those which a trustee has in relation to his cesttd que trust. And, so far as they are similar, it has been repeatedly held that the same rules and principles are applicable to them, both in law and in equity, (c?) SECTION VII. OF THE ARTICLES OF COPARTNERSHIP. 1. Greneral Principles of the Construction and Effect of Articles. It would be very possible for persons to enter into partner- ship with no articles, and no agreements whatever, excepting the bare agreement to become partners. Then the law would provide for them a set of rules and arrangements which * 232 would cover nearly * the whole ground, and would prob- ably be much the same with those agreed upon by parties in most cases. But generally, if not always, the parties them- selves enter into some definite and special bargains or terms, which are to be taken as the foundation of their partnersliip. Sometimes these are agreed upon only orally, and sometimes they are expressed in writing. It does not seem that there is any difference in their effect and operation, whether spoken or written, if only they are ascertained ; (e) but there is much difference in respect to the evidence of the agreement ; for the only way to be reasonably certain of the terms of a bargain is to reduce it to writing at the time, and, as a matter of precau- tion, have it verified by the signatures of all who are interested init.(/) {d) See the remarks of Story, J., in action of covenant can be maintained Kelley v. Greenleaf, 3 Story, 93, 101. for a breach of the stipulations in it, Surviving partners are trustees for cer- wiiich would be binding on the repre- tain purposes. See ante, p. * 227, sentatives of the contracting parties in note (u). the same manner and to tlie same ex- (e) It miglit be one advantage of tent as other specialty obligations. having a deed of partnership, that an (/) The importance of written arti CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 255 In regard to the articles of copartnersliip, the two most gen- eral principles liave already been stated. They are, first, that the law permits partners to enter into any arrangements or engagements between themselves which are not void as against statutory provisions or the general principles of law. These may conflict with any or all of the especial rules of the law of partnership, but will be none the less binding upon the parties themselves. Thus, if A., B., & C. choose to enter into partnership, and agree that A. shall keep all the accounts, and that neither B. nor C. shall ever see them without his permission ; or that A. alone shall sign the name of the firm ; or that he shall share the profits, but not share any loss : (^) any or all of these agreements would be binding on the parties. The second general rule is, as already stated, that these special arrangements or bargains are not binding or operative upon any third parties who are not especially informed of them, and subsequently enter into transactions in acknowledg- ment of them. (A) * The general rules of law, and the * 233 special rules of the law of partnership, every person is presumed to know, and cannot ground a right or a defence upon his ignorance of them. But no one is presumed to know those private arrangements, and no one is therefore affected by them until they are brought home to his knowledge. cles, by which the courts may be some one or more of the partners shall guided in determining all questions in not have the power of putting the firm which the partnership or the several name to negotiable paper. If, notwith- partners are interested, and especially standing such stipulation, the prohib- as to the method of winding up the ited partners do exercise this power, affairs of the joint concern upon a the partnership is bound, unless knowl- dissolution, is strongly enforced by edge of such prohibition, actual or con- Lord Eldon in Crawshay v. Collins, 2 structive, can be fixed upon the party Russ. 3il-o43. taking the paper ; and it makes no {(/) See North British Bank v. Col- difference that the stipulation be made lins, 28 Eng. L. & Eq. 7. in favor of a dormant partner. Win- (/i) Sandilands v. Marsh, 2 B. & Aid. ship v. Bank of United States, 5 Mason, 697; Smith v. Jameson, 5 T. R. 601, 176,5 Pet. 529; Grant v. Hawkes, Chit- 603; Craven v. Widdows, 2 Ch. Ca. ty on Bills, 42; South Carolina Bank r. 139; Hawken v. Bourne, 8 M. & W. Case, 8 B. & C. 427 ; Smith v. Lusher, 703,710; Tradesmen's Bank f. Astor, 5 Cow. 689, 710 ; Walden ?•. Slierburne, 11 Wend. 87, 90 ; Tilher v. Whitehead, 15 Johns. 409 ; Whitaker v. Brown, 16 1 iJallas, 269; Devin v. Harris, 3 G. Wend. 605, 508; Bank of liochester v. Greene, 186 ; Nichols v. Cheairs, 4 Monteath, 1 Denio, 402, 406 ; Gano v. Sneed, 229. The proposition of the Samuel, 14 Ohio, 592 ; Bank of Ken- text is frequently illustrated by cases tucky v. Brooking, 2 Litt. 41; ante, ch. in which it has been stipulated that 6, § 3. 256 THE LAW OF PARTNERSHIP. [CH. VII. There remain to be considered the rules and princij)Ies which courts ajiply to the construction of partnership articles. In the first place, so far as the articles contain provisions which the law would create between the partners if the articles did not, they might be regarded as surplusage. But if any question arose as to the bearing, application, or exact effect of these rules, great regard would be paid to the intention of the parties as it was expressed in their articles, (i) (i) Gainsborough v. Stork, Barnard Ch. 312. General language used in one place will sometimes be construed to run tlirough and pervade the whole body of the articles. Thus, the words of covenant, generally occurring at the commencement of a partnership deed, usually declare the covenant to be joint and several ; and words of cove- nant subsequently occurring in the instrument are on that account usu- ally construed to be intended to be also joint and several. But it is to be borne in mind that, whatever may be the form of a covenant, if the interest and cause of action be joint, the action must be by all the covenantees ; and, on the other hand, if the interest and cause of action be several, the action may be by one. Hence, notwithstand- ing the rule of construction we have just stated, where the covenant, in- troductory to a partnership deed, is declared to be joint and several, some of the covenants in the instrument may be such that the partner com- mitting a breach can be sued only by all the rest jointly, while for the breacii of others a several action by one of the partners may be maintainable. Ec- cleston V. Clipsham, 1 Saun. 153. See Owston v. Ogle, 13 East, 538 ; Servante v. James, 10 B. & C. 410. There may be single and particular provisions in partnership articles, which,'from change of circumstances, lapse of time, or in other ways, have come to be entirely inconsistent with and contradictory to the whole scheme and tenor of the agreement. In such case, a court of equity regarding the general object and purpose of the parties as superior to and controlling any lesser and subordinate intent, will refuse to carry into effect the minor and inconsistent stipulation. See this illustrated vvitii respect to the clause giving to two-thirds of the partners the power to expel a member of the firm. Blisset v. Daniel, 11 Hare, 493, •25 Eng. L. & Eq. 105. See also Ex parte Croxton, 11 Eng. L. & Eq. 227, 1 De Gex, M. & G. 600, as to the construction of apparently inconsistent stipulations respecting the liabilities of a retiring partner. When a partnership consists of very many partners, as in a joint-stock company, the partners are to be held, as strictly as may be, to the terms of association. Ex parte Lawes, De G., M. & G. 421, 10 Eng. L. &, Eq. 162. In the construction of partnership articles, Lord Eldon said, in Greddes V. Wallace, 2 Bligh, 295 : " You are to take the whole instrument together, and you are not only to look at the whole of the instrument together, but you are to look at the transactions of the parties ; for, whatever may be the language of a partnership deed, the dealings and transactions among the partners may be such as to amount to distinct evidence that some of the arti- cles in that partnership deed were waived by all parties, and that some of the articles in that deed were not to be considered as rules which should regulate the rights and duties of the partners." And partnership articles are read in a court of equity as not containing the clauses on which the parties have not acted. Lord Eldon in Jackson v. Sedgwick, 1 Swanst. 469. But the topic of the waiver of partner- CH. VII,] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 257 * If any of the rules of partnership law are not inter- * 234 fered with by the articles, — that is, if the articles are silent on any points established by the law, — it will be presumed that the parties intended that tlie right given and the duties imposed by the law in these respects, suited them perfectly, and all such rules of law will be enforced in the same manner as if they entered into the articles, (j?') 2. Bill in Equity for Specific Performance of Articles. Most of the questions litigated under articles of partnership come before courts of equity ; nor is there any doubt as to the full jurisdiction of equity over these articles, or any general difference between the principles which equity applies to ques- tions of partnership and those applicable to other questions of an analogous character, {kk) A very frequent prayer of a complainant in equity is for a * decree for a specific performance. This prayer * 235 the court will hear in some form, whether the act re- quired is demanded by the articles, or is a legal obligation created by the law ; and will grant, as in ordinary cases, pro- vided the contract or duty be clearly made out, and there is no waiver on the complainant's side, or no breach on his part justifying that of which he complains ; and provided the per- formance prayed for is practicable, remedial, and just as between ship articles will be separatelj' con- when the partnership is contin- sidered hereafter. Post, subsection 3, ued beyond the term limited by the p. * 245. articles. Gillett v. Thornton, L. li. (j) In Crawshay v. Collins, 15 Ves. 19 Eq. 599 ; Parsons v. Haywood, 31 218,226, Lord Eldon said: "Partner- Beav. 199. But special and unusual ships are regulated either by the e.x- provisions of a penal nature will not press contract, or by the contract be considered as in force after the implied by law from the relation of expiration of the term. Clark v. the parties. The duties and obligations Leach, 8 L. T. n. s. 40. A stipulation, arising from that relation are regulated, in partnership articles, that neither as far as they are touched by the e.v- shall sell his interest without the con- press contract; if it does not reach all sent of the others, has no api)lication those duties and obligations, they are after a dissolution, and the appointment implied and enforced by the law. of a receiver. Noonan v. McNab, 30 Smith V. Jeges, 4 Beav. 508, 505. See Wis. 277.] Jackson v. Sedgwick, 1 Swanst. 469. (kk) Whitman v. Robinson, 21 Md. [The written articles of partnership, 30; Homfray v. Fothergill, Law Hep. including the arbitration clause, con- 1 Eq. Cas. 5G7; Ibbotson v. Elam, id. tinue in force, so far as applicable, 188. 17 258 THE LAW OP PARTNERSHIP. [CH. VII. the parties, and not injurious to third parties. But one prin- ciple, which often prevents this decree in ordinary cases, is frequently applicable in partnerships. It is this : A partner may bind himself by articles, to be honest, diligent, skilful, . Dennis, 3 & S. 124, 131. Fort. 23y. See following subsection CH. VII.] RIGHTS OP PARTNERS BETWEEN THEMSELVES. 273 Very frequently the articles provide for the division of profits, and determine the proportion in which each partner takes his share. There is nothing to prevent their making any bargain on tliis subject that they see fit to make. Where they make none, it is certainly the general rule, both in law and equity, that the profits shall be shared equally among the partners, (w) But we should say that where, from inequality of shares in the concern, * or of contribution to it, coupled with ^250 other circumstances of a similar indication, it must be obvious that a different distribution was expected and intended, a court of equity might be expected to so order, (a;) 10. Of Provision for Dama) For if A., B., & C. combine their prop- evidence, I will look at the circum- stances, ami I will infer as strongly from the circumstances the intentions ot the parties as from tlie written evi- dence." And Lord Brougham : " If I was trying at nisi prius the question what proportion the partners in a con- cern were severally entitled to, I should be disposed to advise the jury, leaving tlie matter to them, that an equal division would be a convenient doctrine of fact, and form the ground for a convenient inference to be drawn, in the absence of other evidence : but that would only be supposing that there was no other evidence in the cause ; if tliere was any other evidence that could be found to alter the pro- portions, that evidence must furnish the rule, and that would be an addi- tional ground for saying, that it must be a presumption of fact and not of law." And even where there was no evidence. Lord Brougham stated, as the opinion of Lord Wynford, of one of the Chief Justices, and of himself, that a jury should in all cases be di- rected to take into consideration " the fairness of an equal division ; but not discountenancing evidence, rather courting evidence, rather regretting that there was no evidence, and only having recourse to that presumption in the last resort, for want of evidence." See also the opinion of the Master of the Rolls, in Lake v. Gibson, 1 Eq. Cas. Abr. 291 ; Sliarpe v. Cummins, 2 Dow. & L. 504. These are the prin- cipal, if not the only, common-law authorities, which are clearly at vari- ance with the doctrine of the text. ]\Ir. Justice Story, indeed, says [Story on Part. § 24, n. (3)] : " It is true, that, in the case of Thompson v. Williamson, a doubt was thrown upon this doctrine [the presumed equality of the shares of partners], as a doctrine of the com- mon law, by Lord Wynford and Lord Brougham ; but I cannot think that it is successfully maintained by the rea- soning contained in their opinions. Each of these learned judges admitted on that occasion, that, if there is noth- ing 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 diiferent conclusion, the presumption of law is, tliat the partners are to take in equal shares ? " We conceive, however, that a consideration of the entire opinions of the two Lords in that case shows that, in their view, the question what proportions the partners in a concern are severally entitled to, is never, in the absence of special agreement, any thing but a question of fact to be passed upon by the jury. They both admit that there may be instances in which the inference may be made that the partners in a concern have equal shares. But, if we understand their views, this inference is not to be made by the court, but can only be drawn by the jury. That is, the presumption of equality of shares among partners is not a presumption of law, but a pre- sumption of fact. And the question must always be submitted to the jury. And it is obvious, from the whole tendency and scope of the opinions of the two Lords, that, unless the question of the distribution of interest were presented in this simple form, " Given that A. & B. are partners ; what are their shares 1 " they did not contem- plate that the presumption of equal shares among partners, which they allowed to exist, could have any opera- tion. " It is scarcely possible," says Lord Wynford, " for a case to occur in which there will not be circum- stances which it is fit to submit to the consideration of a jury, and which would induce a jury to give in unequal shares." ip) The presumption of equality of interest may be rebutted, not only by CH. VII.] RIGHTS OF PARTNERS BETWEEN THEMSELVES. 283 erty * in very different proportions, it is still very possi- * 260 ble, and indeed very frequent, in fact, that he who brings less capital brings more skill or more labor, and that the profits are therefore equalized. But while the profits resulting from this mingling of money and labor and skill are equal, so far as refers to the stock alone, Ave should say that the law would listen favor- ably to all evidence and all circumstances which tended to preserve the same proportions of interest in the capital stock which originally existed. Practically, this question cannot often- arise. If the firm be insolvent, its stock is all gone, and all questions of ownership disappear when there is nothing to own. Such questions, in practice, come only at dissolution, by death or otherwise ; or when some withdrawal or diminution of stock is proposed. Then they will generally be determined by the articles ; for they are seldom omitted when there is great ine- quality in the contributions to be made by the different part- ners. If not so determined, it might be that law or equity would presume that the same proportions of ownership and proof of an express agreement between the parties to share unequally, but by evidence of any modes of dealing, or of any transactions, from wliich such a contract can be implied. See Stew- art V. Forbes, 1 Mac. & G. 137, 146, the Lord Chancellor said : " The plain- tiff's bill rests upon the supposition that, from 1830 to 1840, Sir Charles Forbes and the plaintiff were equal partners ; and Peacock i". Peacock, 2 Camp. 45, 16 Ves. 55, 56, was relied on as a foundation for that assumption. 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 assumed that the parties had car- ried on their business on terms of an equal partnership. That case has no application to the present, because there is, in this case, conclusive evi- dence, not from any form of contract, but from the books of the business and the dealings between the parties, that such were not the terms on which the parties carried on their business. An equal partnership implies not only an equal participation de facto in profits and loss, but a right in each partner to claim and insist on sucli participation. This is what tlie law has implied in the absence of all evidence of a con- trary intention of the parties. But what would have been the decision in Peacock v. Peacock, if the books and accounts, instead of absolute silence as to the shares of the partners in each year, had described the shares to which the partners were entitled in the busi- ness, and had attributed to the plain- tiff four-sixteenths only of the shares of the business ? These entries are as conclusive of the rights of the parties as if they had been found prescribed in a regular contract." See Webster V. Bray, 7 Hare, 159. It is not to be as- sumed, however, that the annual stock taken by a partnership necessarily represents the interests of the several partners in the firm ; but it may or may not do so, according to the pur- pose for which, and the mode in which, it is made up. Travis v. Milne, 9 Hare, 153. 284 THE LAW OF PARTNERSHIP. [CH. VII. interest continue which originally existed ; and, certainly, comparatively slight evidence would suffice to establish this. Whether, in the absence of special agreement upon the point, any presumption exists, and what it is, and whether of law or of fact, and what are its grounds, and what its strength, must depend, not oii the law of partnership alone, but on that law in connection with the principles of evidence. But notwithstand- ing some conflict, as indicated in the cases cited in the previous note, we are of opinion that the prevailing rule of law that partners are interested in stock and profits in equal propor- tions, in the absence of any evidence to the contrary, may be considered as pretty well settled both in England and this country. (, 3 Story, 26 Vt. 164; Lovell v. Hicks, 2 Younge 458 ; Amoskeag Manufacturing Co .v. & C. 481. 19 290 THE LAW OF PARTNERSHIP. [CH. VII. * 2G6 first, to * secure the payment of the common debts, for wliich each partner is liable m solido, and then to secure to him his own share in the partnership property, after the debts are all paid. And it is also said that this lien may be followed out, and made to attach, in some cases, to the pro- ceeds of partnership property, which has been wrongfully sold. We should consider this topic here, but it is closely connected with another principle generally stated with it ; namely, that it is through this lien that the right of creditors of the partner- ship to the property of the partnership, as pledged to the pay- ment of their debts, is to be worked out. This is much the most important aspect of this topic of lien, in a practical point of view ; and, regarding the doctrine of lien as of more moment to the creditors than to the partners themselves, we defer the consideration of it until we treat of the rights and remedies of third persons against the firm. And then we shall state our dissent from some of the views fre- quently expressed of this lien, and endeavor to show how it needs to be qualified or modified before it can harmonize with the law of partnership, or the general law-merchant. CH. VIII.J OF THE REMEDIES OF PARTNERS INTER SE. 291 CHAPTER VIII. OF THE REMEDIES OF PARTNERS INTER SE. SECTION I. GENERAL CONSIDERATIONS. The relation of partners, and the legal status of a partner- ship, are peculiar ; and the remedies which each partner has against another are equally so, and it is sometimes difficult to define them. A partnership is not a corporation, nor a legal person ; and yet the common law yields so far to the reasons and necessities of the law-merchant as to consider the partner- ship as a quasi corporation, or, at least, to recognize it as having some kind and measure of personality. Perhaps it might be better if our law, like the Scotch law (founded on the civil law), carried this personality so much farther as to permit actions by or against the firm, without reference to the individual part- ners, (a) In Illinois, it has been held that, under the attach- ment act of that State, a copartnership may be sued by their firm name, and a garnishee proceeded against in the same way. Qaa') The same power is given by statute in some other States, (^aaa') In some instances, it might be useful and safe to permit (as the Scotch law permits) (^) a partner to proceed against a partnership, or the firm against a partner, much as may be done in the case of a corporation. Nothing of that kind is known to the common law ; and it may be that equity has now established principles and methods which practically answer as well. But in equity an action to recover for money misappropriated by a partner should make the defaulting partner a party, (bb) In this country, where equity and (a) 2 Bell Coram. Bk. 7, V. p. 510. (b) Ibid. (art) U. S. Express Co. v. Bedbury, (bb) Atkinson v. Mackreth, Law 84 111. 459. Rep. 2 Eq. 570. (aaa) Stuart v. Corning, 32 Conn. 105. 292 THE LAW OF PARTNERSHIP. [CH. VIII. law have, in many States, approached closely together, and seem to be tending towards unity, there may be still less need of any remedies in addition to those now made use of. But many questions in the use of these remedies certainly demand better and more certain answers than can now be made. They, however, can be given authoritatively only by adjudication, or by legislation. * 268 * As a general rule, the law will not take cognizance of questions which relate to the partnership between living partners, (c) The reasons for this are substantial and of much weight. One is, that if a partner calls on another to acknowledge or satisfy any claim in which the partnership is interested, the plaintiff will either prevail and recover damages to which he must himself eventually contribute, or be defeated, and perhaps be obliged to pay to the defendant something which gives the plaintiff a right to call at once on the defendant to refund a part of what he pays. (cZ) The second reason is little more than a development or consequence of the first. It is, that no partner has a several and personal claim on any other partner for any matter in which the partnership is in- terested, because neither can the partners be separated, — all being interested, both as plaintiffs and as defendants, — nor can any claim or item of claim be separated from the other inter- (c) Or as the rule is laid down by no action against the partnership for Abbott, C. J. : " One partner cannot the amount of his expenditures, be- maintain an action against his copart- cause he cannot be both plaintiff and ner for work and labor performed, or defendant of record ; nor against his money expende. Reece, 1 Bing. 18; Owston ?;. ready referred to; and they are, we Ogle, 13 East, 538; Duncan w. Lyon, 3 think, better explained upon other Johns. Ch. 3(52; Bailey v. Starke, 1 grounds. See Wright v. Hunter, 5 Eng. 191. See Niven v. Spickerman, Ves. 792; ante, p. *271 and note; 12 Johns. 401. Holmes v. Williamson, 6 Maule & S. 312 THE LAW OF PARTNERSHIP. [CH. VIII. * 286 remarkable, because the whole * doctrine of contribu- tion is originally only equitable. Every reason against other actions at law, between copartners, would seem to apply to those for contribution. One partner pays money to-day, and another to-morrow ; and the only way of determining the questions which might arise from such payments would seem to be, to credit the paying partner with the amount he pays, and give this item its due place and weight in the general ac- count of the partnership. We find but little, or rather nothing, in American jurisprudence, (r) and nothing in the reason of 159 ; Blackett v. Weir, 5 B. & C. 385, 388; Evans v. Yeatherd, 2 Bing. 133; Wooley V. Batte, 2 C. & P. 417, is, per- haps, the most direct adjudication in favor of contrihution at law between partners. See Milburn v. Codd, 7 B. & C. 419, per Bailey, J. Mr. Gow, in the first and second edi- tions of his work on Partnership, laid down the rule that, " in an action of assumpsit, for money paid to his use, one partner may enforce from his co- partner contribution towards a debt, which the single partner may have discharged, but for which the firm were jointly liable." Gow on Part. (2d ed.) 90. In the subsequent editions, how- ever, the rule is greatly qualified, and its operation restricted to the case of partners in a single transaction. For the rule in its changed and limited shape, he cites numerous cases. Ab- bott V. Smith, 2 \V. Bl. 947 ; Merry- weather V. Nixon, 8 T. li. 186 ; Evans V. Yeatherd, 2 Bing. 133; Herries v. Jamieson, 5 T. R. 556, per Lord Ken- yon ; Ansell v. Waterhouse, 6 Maule & S. 390, per Bayley, J. ; Holmes v. Wil- liamson, id. 158 ; Carlen v. Drury, 1 Ves. & B. 157 ; Wright v. Hunter, 5 Ves. 792 ; Burnell v. Minot, 4 ,L B. Moore, 340. But these cases seem to be very far from establishing the prop- osition for which they are cited. In some of them are to be found dicla of judges asserting the general right of contribution between joint defendants ; in some contribution is actually en- forced, but between persons who are not partners, but simply joint contrac- tors, or otherwise jointly connected ; while in others the question before the court is the competency of a witness, his competency depending upon his liability to contribute, eitlter in luiv or in eqnitji, to a demand which his testimony establishes. The distinction, if any, which these cases suggest, is one be- tween persons who are simply joint contractors, and between those who hold to each otiier the closer relation of partners ; that is, it is between parties who are partners, and those who are not, and not between different kinds of partners. And the difference as to the right of contribution, between those who are partners and those wlio are merely co-debtors or co-contractors, as well as the reason for it, is obvious. They are thus stated by the court in White V. Harlow, 5 Gray, 463, 468: " Where two independent parties owe a joint debt, and one pays the whole, which he may be compelled to do by the creditor, the law, in the absence of any express agreement of such debt- ors, implies a promise of the co-debtor, to him who has thus paid the whole, to pay him one-half of the common debt thus discharged. But, when one part- ner tlius pays the whole debt, the law implies no such promise : it merely authorizes him to charge the whole to the firm in partnership account, of which he will have the benefit, as a credit on settlement of that account, voluntarily, or by a suit in equity." (i) The American authorities, indeed, seem to be against the right of contri- bution as between partners. And in CH. VIII.] OF THE REMEDIES OF PARTNERS INTER SE. 313 the case, to * sustain an action at law by a partner against * 287 his partner for contribution, unless the facts of the case and the whole character of the transaction insulate it from the general accounts of the partnership, and bring it within those reasons which, as we have said, seem to us sufficient to sustain any action at law between partners. («) this respect no distinction is made be- tween trading and professional partner- sliips. "Wcsterlo i-. Evertson, 1 Wend. 532; Gridley r. Dole, 4 Mill's Const. 486 ; Lawrence v. Clark, 9 Dana, 2-57 ; Kennedy v. McFadon, 3 Harris & J. 194 ; Bracken v. Kennedy, 3 Scam. 564 ; Brown v. Agnew, 6 Watts & S. 238 ; Roberts v. Fitter, 1.3 Penn. St. 265 ; Haskell v. Adams, 7 Pick. 59 ; White V. Harlow, 5 Gray, 463 ; Morin i'. Mar- tin, 25 Mo. 360; De Jarnette v. Mc- Queen, 31 Ala. 230. (s) As where one partner claims contribution of another in respect of some transaction which has been sep- arated from the partnership accounts ; or has arisen after dissolution and settlement ; or is a consequence, not of the relations of the partners inter se, but of their relations to third persons. Graham v. Robertson, 2 T. R. 232; Brown r. Agnew, 6 Watts & S. 2.35 ; Kelly V. Kauffman, 18 Penn. St. 351 ; ante, p. * 285 and notes. Or where the parties to the suit for contribution are to be regarded as joint contractors, or in any other light than as partners. Ansell I'. Waterhouse, 6 Maule & S. 390; Holmes v. Williamson, id. 158; Burnell v. Minot, 4 J. B. Moore, 340 ; Edger r. Knapp, 6 Scott N. R. 707, 712; Sedgwick v. Daniell, 2 H. & N. 319; Forbes v. Webster, 2 Vt. 58; Dupuy V. Johnson, 1 Bibb, 562. Or where there is a special agreement be- tween partners authorizing one of them to lay out money on partnerslup ac- count, with a stipulation that tliey will each contribute, in due proportion, such sums as may be necessary to reimburse him. Brown v. Tapscott, 6 M & W. 119; Geddes v. Wallace, 2 Bligh, 270; Waugh V. Carver, 2 H. Bl. 235 ; Hut- ton V. Eyre, 6 Taunt. 289 ; In re Webb, 2 J. B. Moore, 500 ; Murray v. Bogert, 14 Johns. 318. There must be actual payment of a joint debt, before one part- ner can recover contribution. Maxwell V. Jameson, 1 B. & Aid. 51 ; Taylor v. Higgins, SEast, 169; Gumming i-. Hack- ley, 8 Johns. 202. See Dunn v. Lee, 1 J. B. Moore, 2 ; Barclay v. Gooch, 2 Esp. 571 ; Ex parte Sergeant, 1 Glyn 6 J. 183. Neither will a suit for con- tribution be maintained, either at law or in equity, in consequence of a recov- ery against one partner under a judg- ment in an action on a tort. Merry- weather V. Ni.xon, 8 T. R. 186 ; Ansell i: Waterhouse, 6 Maule & S. 390; Vose r. Grant, 15 Mass. 521 ; Thweatt V. Jones, 1 Rand. 328 ; Dupuy v. John- son, 1 Bibb, 565; Pecks v. Ellis, 2 Johns. Ch. 131 ; Lingard v. Bromley, 1 Ves. & B. 114, 117. See also Seddon V. Connell, 10 Sim. 79, 86; Attorney- General v. Wilson, Craig & P. 1, 28; Miller r. Fenton, 11 Paige, 18. As to rights arising from payments of money under illegal contracts, see Aubert v. Maze, 2 B. & P. 371 ; Ex parte Bell, 1 Maule & S. 752 ; Watson t'. Fletcher, 7 Graft. 1 ; Sullivan v. Greaves, Park on Ins. 8. See Booth v Hodgson, 6 T. R. 405 ; Tenant v Elliott, 1 B. & P. 3 ; Farmer v. Russell, 1 B. & P. 296 ; Sharp V. Taylor, 2 Phillips Ch. 801, 818 ; Thompson v. Thompson, 7 Ves. 473 ; Anderson v. Moncrieff, 3 Dess. Ch. 124. See Edgar v. Fowler, 3 East, 222. A partner who redeemed lands of tlie firm from execution was held entitled to contribution, in Downs v. Jackson, 33 111. 464. 3U THE LAW OF PARTNERSHIP. [CH. VIII. SECTION III. OF QUESTIONS BETWEEN PARTNERS COGNIZANT ONLY BY COURTS OF EQUITY. 1. Demands between Firms having a Common Member. * 288 * The reasons which liave already been given for the refusal of courts of law to sustain generally actions between partners, indicate, with sufficient clearness, the classes of cases in which courts of equity give relief. It may be said that they will give relief wherever law will not, and that it is the general rule that law will not sustain suits between partners. The preceding section may be considered as stating the excep- tions to this rule ; and all cases which do not come under one or other of these exceptions come under the rule. One important class of actions, in which suits at law are not maintainable, needs more particular attention. It consists of cases in which one firm has a cause of action against another firm, and there is some one person who is a member of both firms. There can be no action at law between those firms, (f) {t) Bosanquet v. Wray, 6 Taunt. 598 ; Mainwarlncr v. Newman, 2 B. & P. 120 ; Moffatt v. Van Milligen, id. 124, note ; Jones v. Yates, 9 B. & C. 532 ; Griffith V. Ciiew, 8 S. & R. 30 ; Portland Bank v. Hyde, 2 Fairf. 19G ; Eastman V. Wright, 6 Pick. 320, 321 ; Graham v. Harris, 5 Gill & J. 489 ; Burley v. Harris, 8 N. H. 235 ; Rogers v. Rogers, 5 Ired. Eq. 31 ; Calvin i'. Markham, 3 How. (Miss.) 343; Green v. Chapman, 27 Vt. 2o6 ; Englis v. Furniss, 4 E. D. Smith, 587; Haven v. White, 39 111. 509. Upon the same principle, a plain- tiff cannot summon himself, nor can several plaintiffs summon one of their own number, as a trustee, in the pro- cess of foreign attachment. Belknap V. Gibbens, 13 Mete. 471. See Port- land Bank v. Hyde, 2 Fairf. 196. And where there are two firms, with a partner common to each, in an action against one of them the other cannot be summoned as trustee ; for the rea- son that the trustee process is a mode of enforcing bij a suit at law the contract between the trustee and the principal debtor, for the benefit of the creditor of the latter. Denny v. Metcalf, 28 Me. 389. In Pennsylvania, by act of April 14th, 1838, it was enacted that no action by partners or several persons against partners or several persons should abate, nor the action be de- feated by reason of one or more indi- viduals being or having been members of both firms, or being or having been of the parties plaintiffs, and also of the parties defendants, in the same suit ; the acts and declarations of the partner or persons so being of both the parties, plaintiffs and defendants, to affect each party respectively to the same extent as the acts and declarations of the other partners or persons, plaintiffs or defendants, would affect the respective firms or parties ; provided, that no act or declaration of the party shall be given in evidence in his own favor to the prejudice of others. For cases CH. VIII.] OF THE EEMEDIES OF PARTNERS INTER SE. 315 There is a * rule which, though technical, or rather * 289 formal, would suffice to prevent it. It is the rule which prevents the same party from being both plaintiff and defend- ant of record ; for then a man would sue himself. We have ali'eady remarked that a partnership possesses a kind of per- sonality, and that it is, for many purposes, a kind of corpora- tion. The law of partnership, as it is incorporated into the common law, acknowledges this sul)stantially as the foundation of its whole system ; but it never acknowledges it formally. Tlie names of all the partners — as a general rule — must be set forth, both as to the plaintiffs and the defendants. They should be described as " copartners, under the name and style of A., B., & Co." But these words, however usual and proper, and, for some purposes necessary, are, in law, words of de- scription ; and A., B., ). (/•) Somerville r. Mackay, 10 Ves. 382; Moritz v. Peebles, 4 E.'l). Smith, 135. 326 THE LAW OF PARTNERSHIP. [CH. VIII. 2.. Of a Decree for a Dissolution, and for an Account. We connect these topics, in this section, because a court of equity frequently decrees an account between partners ; almost always, however, where there has been or is to be a dissolution of the partnership. Indeed, courts of equity have intimated, with much distinctness, that they would not decree any account, unless there either was a dissolution, or the bill prayed for a dissolution, (s) As we have said, this is generally the case in point of fact ; and there are reasons as well as high authority for the rule ; reasons which, however, may perhaps be summed up in this : that a partner, who is driven to a court of equity as the only means by which he can get an account from his part- ner, may be supposed to be in a position which will be benefited by a dissolution ; in other words, such a partnership as that ought to be dissolved. (0 (s) Forraan v. Homfray, 2 Ves. & B. defendant to complain of such new bill, 329; Waters v. Taylor, 15 Ves. 10; if he repeats the injustice of witlihold- Loscombe i-. Russell, 4 Sim. 8; Kne- ing what is due to the plaintiff ? Would bell V. White, 2 Younge «& C, Exch. not the same objection lie in a suit for 15. These last two cases have been tithes, which accrue de anno in annum ? " supposed to overrule the doctrine of In Knebell v. Wliite, 2 Younge & C, Sir John Leach in Harrison v. Armi- Exch. 21, Alderson, B., remarking tage, 4 i\Iadd. 143, and Richards v. upon this point, said : " Then what is Davies, 2 Russ. & M. 347 ; Camblat v. the principle f It seems this, that Tuperv, 2 La. Ann. 10. One partner where there is an open account, in cannot demand an account in respect which the antecedent items, respecting of particular items, and a division of which the account in equity is sought particular parts of the property ; but to be taken, are necessarily connected the account must necessarily embrace with, and not capable of being severed every thing. Baird v. Baird, 1 Dev. from, tlie other items of the account & B. 524 ; McRae v. McKenzie, 2 id. wliich are to arise in future, the court 232. will not interpose ; for, if it did, it (f) In Forman v. Homfray, 2 Ves. & would tolerate the bringing of a suit B. 330, Lord Eldon placed the reason which could never come to an end till of the rule upon the ground of conven- ience, saying : " If a partner can come here for an account merely, pending the partnership, there seems to be noth- ing to prevent his coming annually." This objection was met bj' Sir John Leach, Master of the Rolls, in Richards V. Davies, 2 Russ. &, M. 347, as follows : " It is objected that, if such a suit be entertained, the defendant may be vexed by a new bill whenever new profits accrue; but what right lias the the account itself was closed, for the state of the account would be continu- ally changing whilst it was under dis- cussion and settlement. The party who seeks redress must put it in the power of the court to close finally, by its decree, the dispute between the parties. As soon as he does this, he is entitled to its assistance. In the case of a partnership, tiierefore, he must pray a dissolution." CH. VIII.] OF THE REMEDIES OF PARTNERS INTER SE. 327 * We apprehend, however, that the question is one * 300 which is perfectly open to the discretion of the court, and the rule, if there be a rule, goes no farther than the reason of it. If a partner prays for an account, and his case shows that he has need of one, that it is his only effectual remedy, and that he cannot get it without the aid of the court, but shows also that, as soon as an account is rendered, no sufficient cause of dissolution will remain, and circumstances from which the court could infer that a continuance of the partnership de- sired by both would be neither injurious nor useless, — in such a case, we know not why a decree for an account should not be rendered ; and we have no doubt that it would be by most of our courts, if not by all. (w) (it) Perhaps it may now be said that there is no general, or, at least, no uni- versal, rule, to the effect that equitj' will not decree an account between partners, unless there be dissolution, or a pra3'er for it. The cases before Lord Eldon, supra, p. * 299, note ('), in which he affirmed the existence of such a rule, may perhaps, be deemed to have turned, in a great measure, upon their own particular circumstances. In Harrison v. Armitage, 4 Madd. 143, and Richards v. Davies, 2 Russ. & M. 847, Sir Jolin Leach expressly rules, that though the court could not carry on a partnership, except with a view to dissolution, yet it might and would, if justice so required and the petition- ing partner had no other remedy, de- cree an account of the past partnership transactions, though there was no dis- solution, actual or prayed for. A dif- ferent principle governed the decision of the court in Losconibe v. Russell, 4 Sim. 8, and was approved in Knebell r. Wliite, 2 Younge & C, Exch. 15, in both of which cases the opinion attrib- uted to Lord I'^ldon was followed, as being the sounder and the better estab- lished. But the later English cases strongly incline in favor of the opinion of Sir John Leach, and this may now be considered as the received doctrine. In Wallworth v. Holt, 4 Mylne & C. 619, 635, 039, Lord Chancellor Cotten- ham, speaking of the two supposed rules, — " 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," — says : " The result of these two rules would be that the door of this court would be shut in all cases in which the partners or sliareholders are too numer- ous to be made parties ; which, in the present state of the transactions of man- kind, would be an absolute denial of justice to a large portion of the subjects of the realm, in some of the most im- portant of their affairs. 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 fraud- ulently inclined might, of his mere will and pleasure, compel his copartner to submit to the alternative of dissolv- ing a partnership, or ruin him by a continued violation of the partnership contract." See farther Bentley v. Bates, 4 Jur. 552 ; Hills v. Nash, 10 id. 148 ; Walburn v. Ingilby, 2 Mylne & K. 61, 76. In Pennsylvania, it has been decided that a court of equity will entertain a bill for an account by one partner against the other, although the bill 328 THE LAW OP PARTNERSHIP. [CH. VIII. * 301 * 111 England, an account has been decreed upon a bill praying for the establishment of the partnership, (y) A prayer for dissolution is often made, and the power of equity to grant it for good cause is doubted by no one. Tliis subject, however, has not only a special importance, but some peculiar difficulties ; and -we propose to treat of Dissolution by Decree, — its causes, methods, and consequences, — by itself. So, too, equity is often called upon to decree a sale of the partnership property ; but, as this would itself amount to a dissolution, or at least arrest the business of the partnership for the time being, and would be an exertion of the power of equity which could never be called for unless where there was or should be a dissolution, Ave shall consider this subject in connection with that of the dissolution of partnership ; not, however, altogether in the chapter on dissolution by process of law ; for a sale may also be decreed where the dissolution is by expiration of a limited period by agreement of the partners, or by the death of one or more of them. Perhaps the aid of equity is not invoked in any cases in which it is more indispensable, or more useful, than when it is asked to settle the accounts between the partners. And it may be well to say something of the principles by which it will be guided in making such settlement. In the first place, it is perfectly competent for the partners to agree, at their own pleasure, how the accounts shall be set- tled ; and if such agreements are entered into in good faith by all the parties, and are not in themselves oppressive and * 302 injurious, they * will be carefully respected. (2) And not only will equity thus regard express agreements how to settle, but will draw from the words, or from the acts of the does not contemplate a dissolution of tered into for a partnership, and, two of the partnership. Hudson r. Barrett, 1 the partners being esquire beadles of Pars. Sel. Cas. 4U. See Firtle v. the University of Cambridge, it was Penn, 3 Dana, 240, 248. agreed to conceal the partnership from iy) Knowles v. Houghton, 11 Ves. the University, and therefore that the 168. articles should not be executed. Lord (z) Jackson v. Sedgwick, 1 Swanst. Cowper decreed an account of the part- 469. And this remains true, though nership according to the terms of the the articles containing the provision draft of the articles, so far as the same respecting the mode of taking the ac- were reduced to a certainty. Worts v. counts be not actually executed by the Pern, 3 Bro. P. C. 548. parties. As where articles were en- CH. VIII.] OF THE REMEDIES OF PARTNERS INTER SE. 329 parties, considered in connection with all the circumstances, ■whatever inference or information it can as to their original or subsequent intention and understanding, and will, on the same condition that this method be honest and not injurious, carry it into effect. Thus, if there have been many settlements, or even one, previously made between the partners, if this be not now objected to by either of them for good cause, and be not itself obviously and considerably objectionable, the court will be disposed to adopt this as an example and precedent, and direct the future accounts to be made up on the same principle, (a) If it be necessary, equity will, on sufficient proof, compel the production of concealed articles, or agreements as to the method or principles of accounting ; or, if they are ascertained, but cannot be produced, will order an account to be taken in conformity with them. The topic of " account " has, liowever, so much extent and importance in the law of partnership, that we propose to consider it in a chapter by itself. S. Of a Decree for an Injunction. There is nothing in the practice or principles of equity as to the enforcement of specific rights strictly peculiar to cases of partnership. The essentials to give equity jurisdiction are three : There must be a contract, which may be express or implied, but must be valid at law ; there must be an infringe- ment of this contract which is not technical merely, but material and substantial ; and the remedy at law must be inad- equate. In such cases, a * court of equity will frame its * 303 remedy so as to make it in the greatest degree complete and effectual ; and this may be in a positive form, by decree of specific performance, or in a negative form, by injunction. The former having been somewhat considered, we will now treat of the latter. Injunction is one of the most stringent measures, as well as one of the most efficacious remedies, within the practice or power of equity. It is never made use of on slight or merely (a) Jackson v., Sedgwick, 1 Swanst. 460, 409; Pettyt v. Janeson, 6 Madd. 146 ; ante, pp. * 238, * 242, and notes. 330 THE LAW OF PARTNERSHIP. [CH. VIII. temporary grounds. (J) The reasons against interfering be- tween married parties are regarded — not only in the civil law, to which we have already referred, but at common law — as liaving some application to partnerships, (c) Mere failure or infirmity of temper, disputes, which, however vexatious, are not positively injurious, or other similar troublesome but tol- erable grievances, will not induce equity to apply this remedy. Nor will injunction issue where there is reason to believe that it will not be efficacious and entirely remedial ; nor in case it will prol)ably inflict an extreme inconvenience, or other mis- chief, beyond what the character or exigency of the case calls for or justifies, (t?) It is said that equity will not interfere, by injunction, where there is only a single breach of a covenant, actual or threat- ened, or but one or two ; and not unless there are many or a series of similar wrong-doings, such as would amount to a course of bad and injurious conduct, (e) This may be a rule which would operate as far as the reason of it goes ; which is, that for such single breaches the injured party may be left to his remedy at law, while the proper course, in a case of con- tinued bad conduct, is to put a stop to it. But there can be no arbitrary rule that equity will not interfere, by injunction, in a case of a single breach, if, in other respects, the conduct of the defendant calls for, and is suited to, equitable relief. A ques- tion has arisen, somewhat analogous to one we had occasion to consider in reference to a prayer for account, which is, whether injunction will be decreed where dissolution is not de- * 304 creed, or is not asked for. Our general * answer would be the same. But it seems to be much more clearly determined, that neither dissolution nor a prayer for it are a necessary foundation for injunction, than that they are not necessary for an account. (/) (b) Goodman v. Wliitcomb, 1 Jac. (e) Marshall v. Colman, 2 Jac. & & W. 592; Marshall v. Colman, 2 id. W. 266. 266; Wray v. Hutchinson, 2 Mylne & (/') In Marshall v. Colman, 2 Jac. K. 235; Henn v. Walsh, 2 Edw. Ch. & W. 266, S!. sertion is repeated by the text writers, Wlieadon, 2 Hayw. 109 ; Babcock Collyer on Part. § 642, Story on Part. V. Stone, 3 McLean, 172 ; Hey wood v. § 234, Gow on Part. 119, 120, and in Wingate, 14 N. H. 73. So in Penn v. many cases. See De Tastet v. Shaw, Stone, 10 Ala. 209, though the in- 1 B. & Aid. 664; Burly v. Harris, 8 dorsee was also assignee of the part- N. H. 233, 235. See also Addison on ner's share both of assets and Ha- Cont. 732 ; but it does not seem to bilities, and so ultimately liable to have been expressly decided until Mil- contribute ; because this did not ren- ler v. Thorn, R. M. Charlt. 180. It is der him a partner. But, if the note is not, however, clear from authority or not negotiable, it 's subject to the on principle that this rule is uni- same defences in the hands of the in- versal. dorsee as in those of the payee, being CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 355 partner removes this technical bar, we should say the survivors might sue. (ee) As a general rule, it must be true, that no action can be sustained by a copartnership, properly setting forth the names of the partners, if either of tliem is disabled from bringing that suit. *And the cases must * 327 be few, if any exist, in which the law indulges the firm with suppressing the name of the disabled partner, and so bringing the action. In the case of an alien enemy, the rule- seems to be established ; and, as a consequence of it, no part- nership, of which one member is an alien, can bring, in either of the countries to which the partners belong, any action during a war between those countries. (/) How it would be if one partner — all being citizens of one of the belligerents — resided in the country of the other, is a question of some difficulty. The true principle must be, that the rights of the partnership were unaffected by their residence alone, if there were nothing of adherence to the enemy. (_(/) But it might be very difficult to make this distinction applicable, where the foreign residence of the partner was permanent, or even long. (^Ji) A different (ee) This is expressly held in Lacy V. Le Brun, Ala. 904. (/) McConnel v. Hector, 3 B. & P. 113; Albretcht y. Sussnian, 2 Ves. & B. 323; and see O'Mealey v. Wilson, 1 Camp. 482. All causes of action which accrued prior to the war are suspended during the war. But, if the cause of action arises during the war, it seems that the firm are precluded from suit at any time, if their partner be affected with a hostile character when the contract was made. Thus in Griswold v. Waddington, 16 Johns. 438, the plea of alien enemy was held a bar to an action brought by a firm after return of peace on a balance ac- crued during war, one partner — though a native of the country wliere the suit was brought — being resident in the belligerent country when the balance accrued. And, by the doctrine of the courts both of England and America, it would seem that the right to contract is destroyed eo insUtnti war is declared. See The Venus, 8 Cranch, 253. [g) Collyer on Part. § 647, citing Roberts v. Hardy, 3 Maule & S. 533 ; but see next note. {h) Roberts v. Hardy, 3 Maule & S. 533 ; O'Mealey v. Wilson, 1 Canip. 482 ; The Julia, 8 Cranch, 195 ; The Rapid, 8 Cranch, 160, 161. In Gris- wold V. Waddington, 16 Johns. 479, Kent, C. J., says of the prohibition of intercourse : " It reaches to all inter- change or transfer or removal of prop- erty, to all negotiation and contracts, to all communication and all locomotive intercourse ; to a state of utter occlu- sion to any intercourse but one of open hostility, to any meeting but in actual combat." This utter and rigid veto on all intercourse arises eo instanli war is declared. See The Venus, 8 Cranch, 253. In 2 Wildman's International Law, 45, it is said that " domicile by residence in the enemy's country is considered as adherence to the enemy, inasmuch as it increases his strength through contribution of taxes and other means, and consequently imposes a hostile character on the person domi- 856 THE LAW OF PARTNERSHIP. [CH. IX. question, previously adverted to, arises, where, by the law of a foreign land, husband and wife may form a mercantile part- nership, or both be members of one. At home, they could, of course, bring any action. But, in England and in this * 328 country, a wife cannot join * with her husband in any such action ; and it is said that an action by such a firm cannot be maintained, (z) It is, however, possible that the recent legislation of some of our States, giving to the married woman, so far as her property is concerned, almost the status of a single woman, might be construed to permit such an action. The rule that, whenever the lex loci comes into ques- tion, the lex loci fori shall determine all questions of remedy, might oppose such an action. But this rule has only been ap- plied to such questions as arise under the statute of limitations, and, perhaps, those of infancy ; (^j) and, on the other hand, the question of disability to make the contract is determined by the law of the place of the contract. On the whole, we should expect that an American court would say, either that the wife might sue with the husband, because of her unquestionable right, at home, or that she could neither sue nor be regarded in this country as a partner, and that her name might be omitted. But the simpler, and certainly the safer, way would be, to indorse the paper over, if it were negotiable, to some third person who could be made plaintiff. As there is no doubt that a firm can indorse their paper to any third party, who may then sue it, so we suppose it clear that they may indorse it over to one of their number, who may then bring the suit in his own name, (/c) Nor do we see why ciled." It should seem, therefore, that sell v. Swan, 16 Mass. 314. In Esta- mere residence, if it clearly appear, brook v. Smith, 6 Gray, 670, it was ^Yill, if not shown to be compulsory, held, that a partner might transfer amount to adherence to the enemy a partnership note by indorsement in and support the plea of alien enemy. the partnership name to his copartner, (/) Collyer on Part. § 646, citing but could not by an indorsement in his Cosio V. De Bernales, Ryan & M. 102. own ; though it was argued that to There is, however, no case which de- require the name of the copartner as cides this question. See the next and indorser on the note was to compel following notes. him to indorse to himself. But it has {J) Thompson v. Ketcham, 8 Johns, been held, that where the indorsement 189. by the firm was merely colorable, to (k) Bailey v. Lyman, 1 Story, 396 ; avoid the objection that the maker Bolton V. Puller, 1 B. & P. 546; God- was a partner, it was held still to be dard v. Lyman, 14 Pick. 268 ; Rus- the note of the firm, and that no action CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES 357 this indorsement may not be made by the partner who is in- dorsee. It is every day's practice to make a note payable to the maker's own order. There is no such practice of indorsing to the order of the indorser, because he must then indorse again, in order to designate and authorize a third person to bring suit, and this he can do as well at first. But, wliere there is any reason for a payee's indorsing to his own order, we see no objection to it; and we should *say * 329 there could be none to a partner's writing as indorser the name of the firm, and as indorsee his own. (Z) This power, however, is confined to negotiable paper. In many of our States, the common law as to choses in action has been materi- ally modified ; but, where it remains in force, no partner can transfer and assign his interest in a chose in action to the other partner or partners, so that the transferee may bring his action at law in his own name, (w) In equity it would be otherwise ; (w) but such a transfer, for consideration, would authorize the transferee to use the name of the transferring partner, at law, nor could he interfere with the suit in any way. (o) could be maintained upon it by the indorsee. Tipton v. Nance, 4 Ala. 194. If the indorsement be in the name of one partner only, it passes no interest. Mclntire v. McLaurin, 2 Humph. 71. (/) Burnham v. Whittier, 5 N. H. 334 ; Kirby v. Coggswell, 1 Caines, 505; and see Estabrook v. Smith, 6 Gray, 570. In Towle v. Harrington, 1 Gush. 146, a note was made by one firm to another, there being a common partner in both. After the death of the common partner, the survivor in- dorsed the note to liimself. The in- dorsement was held void, but only because the note survived to him as partner, and his indorsement to him- self was null. But a partner's right to indorse with tlie partnership name the partnersliip paper to himself seems impliedly admitted. (m) Tiie common law (witiiout statutory provision) has nowliere been so modified that tlie mere assignee of a chose in action can sue in his own name. A mere assignment, therefore, by one partner to liis copartner of a partnership demand, gives no right to tlie assignee to sue in his own name. Tate V. Mut. Fire Ins. Go., 13 Gray, 79; Russell v. Swan, 16 Mass. 314, and cases cited in note (p), infra. (n) An assignee has not, however, a resort to equity, merely because he cannot sue in his own name ; for, as courts of law admit him to sue in the name of his assignor, his remedy at law is complete, and equity will not entertain his claim unless inequitable defences are set up in his assignor's name. See 1 Pars, on Gont. (5tli ed.) 224, note {d), and cases there cited and examined ; especially Ontario Bank v. Mumford, 2 Barb. Gh. 596. (o) Eastman v. Wright, 6 Pick. 316, 322. By the assignment, all property is divested from the assignor, who becomes thereby a merely nominal party, with no interest for a release to act upon, and the release is there- fore merely null. Rawstorne u. Gan- 358 THE LAW OF PARTNERSHIP. [CH. IX. It must be the general rule, that all those who were partners at the time a debt was contracted, are those to whom it is due, and they should join in any action to recover the debt, (p) And * 330 it is, * moreover, an unquestioned rule, that no agreement between partners can alter the liability or mode of lia- bility of their debtor, without his assent. Thus, by no assign- ment of a debt due to the partnership by one of the partners, can he acquire the right to sue it in his own name, (ij-) If, however, the assent of the debtor sufficiently appear, and be on a good consideration, an action may be maintained by the part- ner who is assignee, in his own name, (r) When such valid as- sent is given, the action by the assignee in his own name, is upon a new contract substituted for the old one on principles similar to those of novation ; (s) the discharge of the debtor from his dell, 15 M. & W. 304. But notice must also be given the debtor, as with- out tliis, which is practically a revo- cation of the partner's authority to receive or discharge the debt, the debtor has a right to presume each partner still possessed of that authority which the mere fact of partnership confers. ip) Jell V. Douglass, 4 B. & Aid. 374; Dob v. Halsey, 16 Johns. 34; Hewes v. Bayley, '20 Pick. 96 ; Gushing V. Marston, 12 Gush. 431 ; Gage v. Eollins, 10 Mete. 348; Halliday v. Doggett, 6 Pick. 359 ; Pearson v. Parker, 3 N. H. 366; Parker v. Gregg, 3 Foster, 416 ; Horbach v. Huey, 4 Watts, 455 ; Allen v. White, Minor, 365 ; Snodgrass ?'. Broadwell, 2 Litt. 353 ; Wright v. Williamson, 2 Penning. 978 ; Wilson v. Wallace, 8 S. & R. 53 ; Tate V. Mut. Fire Ins. Go., 13 Gray, 79 ; Speake v. Prewilton, 6 Tex. 352 ; Jones V. Gates, 9 B. & G. 532; Garrett t'. Handley, 3 B. & G. 462; Gooke v. Seely, 2 Exch. 746 ; Driver v. Burton, 17 Q. B. 989; Greeley v. Wyetli, 10 N. H. 15. (q) Huey V. Horbach, 4 Watts, 455; Clark V. Howe, 23 Me. 560 ; Degroot V. Darby, 7 llich. 117 ; Gushing v. Marston, 12 Gush. 431 ; Russell v. Swan, 16 Mass. 314 ; dictum in Raden- hurst V. Bates, 3 Bing. 470 ; Wood v. Rutland Ins. Co., 31 Vt. 552. But it seems to have been thought that on dissolution a sole right of action might vest in remaining partners, without any assent or new promise by the debtor. Gollyer on Part. § 658, citing Evans v. Silverlock, Peake, 21 ; At- kinson V. Laing, Dowl. & R. N. P. 16. 1 Lindley, Partn. 403, remarks that this case " is more than questionable." We should say that Mr. Collyer's proposition is without authority, and that there is no such exception as " severance by dissolution," to the necessity of joinder of all the partners on a partnership demand. In Louisi- ana, however, it seems that the liqui- dating partner on a dissolution of the firm may maintain an action in his own name, only setting forth the fact that the transaction arises out of the business of the firm. White v. Jones, 14 La. Ann. G81. ()•) Degroot v. Darby, 7 Rich. 117 ; Cook V. Beech, 10 Humph. 412 ; Howell V. Rej-nolds, 12 Ala. 128; McLanahan V. Ellery, 3 Mass. 269; Moore v. Hill, 2 Peake, 10; Stevens v. Lunt, 19 Me. 70, 72; Wood v. Rutland Ins. Co., 31 Vt. 552; Aspinwall v. Lond. & N. W. R. R. Co., 11 Hare, 325 ; Armsby v. Farnam, 16 Pick. 318. (s) See Pars, on Gont., vol. i. pp. 217-222, 5th ed. CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 359 liability to the firm forming the consideration of the new prom- ise, (i) Where, however, the assignment is by an old firm to a new one which includes the old, there would seem to be but two parties in question ; for the old firm and the new one are one quoad this contract, and the promises of discharge of the old liability, and of payment of the new one by the firm and the debtor respectively, are mutually considerations one for the other, (u) In like manner a new contract may arise by the implied assent of the debtor, who has paid one or more of several joint creditors * their respective shares, to pay * 331 the other his separate share, and the latter may main- tain his separate action therefor, (v) Persons who leave the firm and cease to be partners may transfer the debt so as to retain no interest in it ; but still their names should be used, (w) On the other hand, those who come into the firm after the debt is created may acquire an interest in it, and the debt will be collected for their benefit ; but still their names cannot be used, (x) This is true even where the debt was originally contracted with the understanding that it should be a continuing contract, contemplating successive changes in the house, and intended to go through them all and be always a debt to the house, whoever may be its copart- (t) This new promise may be ex- press, as in Howell v. Reynolds, 12 Ala. 128, and Wood v. Rutland Ins. Co., 31 Vt. 582 ; or implied, as it was in Cook V. Beech, 10 Humph. 412, from the debtor's drawing a bill for the amount of the debt in favor of the assignee ; or from his admissions, as in Degroot v. Darby, 7 Rich. 117. (m) See Armsby v. Farnam, 16 Pick. 318. (v) Garrett v. Taylor, 1 Esp. N. P. 117 ; Kirkman v. Newstead, id. ; Baker V. Jewell, 6 Mass. 4G0 ; recognized in Medbury v. Watson, 6 Mete. 257 ; Blair V. Snover, 1 Halst. 153 ; Holland v. Weld, 4 Greenl. 255 ; Horbaeh v. Huey, 4 Watts, 455; Beach v. Hotchkiss, 2 Conn. 697. In Austin v. Walsh, 2 Mass. 401, A. & B. jointly consigned a cargo, directing the master to keep the proceeds till called on. Before the vessel returned, A. & B. agreed to divide, and the master subsequently paid A. his share. B. demanded his of the master, who refused, but offered to " pay the true owner." It was held that this would be construed as a di- rect promise to i)ay B., and that he might sue accordingly. So also Burn V. Morris, 3 Caines, 54. (w) Pease v. Hirst, 10 B. & C. 122 ; Dobbin v. Foster, 1 Car. & K. 823. In Atkinson v. Laing, 1 Dowl. & R. N. P. 10, a contrary doctrine was held by Lord Tenterden ; but see this case ex- amined, supra, p. * 330, n. (q). (r) Pease v. Hirst, 10 B. & C. 122; Wilsford V. Wood, 1 Esp. 182 ; where an incoming partner, whose entry had been antedated on the partnership deed, was not allowed to join in an action on a contract made prior to his entry, but subsequent to the date of the deed. 360 THE LAW OF PARTNERSHIP. [CH.IX. ners. (y) Intimately connected with this topic is the question, how far a guaranty, bond of indemnity, and the like, is construed as covering matters subsequent to a change of the firm by the retirement or accession of a partner or partners ; and when it ceases to have any operation after such change. We give the authorities on this subject in the note. (2) It will be seen that iy) Pease v. Hirst, 10 B. & C. 122. In this case, a note was made to A., B., C, I)., & E., partners in a banking- house, as security for advances to be made by them. A. and B. left the firm, and new members entered it ; and advances were also made by the new firm. The note was handed by the old firm to the new, but not in- dorsed. An action thereon by the old firm for the new advances was held rightly brought by them, and by tliem only ; the security covering the new advances being evidently intended to be a continuing one. (z) The earliest case is that of Wright V. Russell, 3 Wils. 532. Here a bond, conditioned for the faithful service of W. Baird as clerk, was made to the plaintiff, Wright. Wright subsequently took a partner. Baird then left his service, but re-entered that of the new firm ; and, while in their service, committed a breach of trust by embezzling the money of the firm. In an action of debt on the bond, judgment was given for the de- fendant ; De Grey, C. J., saying : " The law is, that a surety shall not be bound beyond the terms of his engagement, as understood at the time he entered into it. Here Wright, by his own act, takes in a partner. From that mo- ment the suretyship is at an end. If there is one, there may be twenty partners taken in. Is the surety liable if Baird disobeys the orders of any one of these partners'? Or can the surety be called upon to insure the money of all of the partners 1 Certainly rot." In Barclay v. Lucas, 1 T. R. 291, however. Lord Mansfield held, that bonds of this nature were given to the house, and not to the individual ; and that, therefore, they extended the application of the bond to a new firm, if the old name was preserved. In this case, considerable reliance was placed on the recital by which the partners were to take the clerk into their employ, "in their shop and counting-house." And, in another case, it was admitted to be the common understanding among merchants, that the firm, and not the individual part- ners, were meant to be guaranteed from loss : per Mansfield, C. J., in Weston V. Barton, 4 Taunt. 673. But the case of Barclay v. Lucas seems clearly not law. In Barker v. Parker, 1 T. R. 287, where the bond guaran- teed faithful service to " A. B., and his executors," Lord Mansfield held, that this did not cover breaches com- mitted by the clerk while in the ser- vice of the executors of A. B., who kept on in the same business after the death of their testator. He attempted to sustain Barclay v. Lucas, by the distinction that the change in that case was only by the accession of a new partner, the old firm still contin- uing. But this distinction is expressly against the case of Wright v. Russell, supra, and must fall with the case of Barclay v. Lucas, which rests solely upon it, if the case of Wright v. Rus- sell be law. Of this there is now little doubt. In Myers v. Edge, 7 T. R. 254, Lord Kenyon said : " I very much approve of the case from Wil- son ; " and decided the case before him on its authority. Story, Part. § 250, note 3, says : " Barclay v. Lucas was a case which was supposed to contain language importing a pro- vision of this [a continuing] character; but great doubts may well be enter- tained whether the case can be main- tained upon any such interpretation." CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 361 the general rule, as now established, * is that such * 332 change discharges a bond of indemnity. And the prin- ciple is applied with equal force to simple guaranties, (a) * And on the same ground any change in a firm * 333 materially altering its character discharges the surety, although the members of the firm remain unchanged. (J) So where there is an alteration, by removal or accession, in the par- ties whose conduct is guaranteed, the bond is discharged of farther operation, (c) And a contract with an ostensible part- ner, which has particular reference to his individual skill, has been held not to survive to the dormant partner. (tZ) From the cases cited in the notes to the last paragraph and from the nature of partnership, we should draw the general So in Weston v. Barton, 4 Taunt. G73, it was said by Mansfield, C. J. : " The propriety of Barclay v. Lucas has been very much questioned." In this last case, the condition was for re- payment to five bankers of any money advanced by these five, or any or either of them ; and it was held, that even this did not cover advances made by the survivors after one had died, Mansfield, C. J., saying : " There may be many very good reasons for such a construction. It is very proba- ble that sureties may be induced to enter into sucli a security by a con- fidence which they repose in the integrity, diligence, caution, and ac- curacy of one or two of the partners. In tlie nature of things, there cannot be a partnership, 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 is the very person on whom the sureties relied." Tlie same was lield in Arlington v. Merrick, 2 Saund. 412 ; Strange v. Lee, 3 East, 484. [a) Myers v. Edge, 7 T. R. 254; Spiers v. Houston, 4 Bligh, n. s. 515 ; Ex parte Kensington, 2 Ves. & B. 79 ; Holland v. Teed, 7 Hare, 50. So in Ex parte McGee, 9 Ves. 6!)7, an agree- ment to pay bills into a banking-house was held discharged by the bankruptc}' of the partners, and an action was held, to lie against the assignees in bank- ruptcy for bills paid subsequently to that event. In the case of Dry v. Davy, 10 Adol. & E. 30, it was even held, that the retirement of a dormant partner put an end to a guaranty. If the dormant partner was not known to the guarantor, she could only claim that the guaranty was at an end be- cause she had contracted with the partners in interest, and not in name merely. This position, however, does not bring the case within the reason of personal confidence reposed actu- ally, or by legal intendment, in the known members of the firm, as as- signed by Lord Mansfield in Weston V. Barton, supra, and followed in Ar- lington V. Merrick, and Strange v. Lee, supra; and the authority of this case, therefore, finds no support in those. (6) Thus, in Dance v. Girdler, 1 Bos. & P. N. s. 34, the incorporation of the obligees had this effect. (c) Simson v. Cook, 1 Bing. 452; Univ. of Cambridge v. Baldwin, 5 M. & W. 580; Bellairs v. Elsworth, 3 Camp. 53; Russell v. Perkins, 1 Mass. 368 ; London Ass. Co. v. Bold, 6 Q. B. 514. (d) Robson v. Drummond, 2 B. & Ad. 303. And see Stevens v. Ben- ning, 1 Kay & J. 168, G De Gex, M. & G. 223. 362 THE LAW OF PARTNERSHIP. [CH. IX. conclusion, tliat a bargain with a firm expires with the dissolu- tion of the firm, or with any change in it, and is not assignable or transferable by the firm to one of the partners, or to a stranger. For this the obvious reason may be given, that any contract with a firm may be supposed to be made with the per- sons composing it ; because they are partners. It may be impossible to say that the bargain was made on the credit, pecuniary or moral, of this one or that one. The party has a right to say that he made it with all, because they were all there, and each contributed what he did, whether of money, skill, or character. Only those who are named as parties in contracts under seal can sue upon such contracts, (e) But it has been held, that where a deed was made to a partnership by the name of the firm, the then existing partners might sue upon it, and parol evidence was admitted to show who those were. (/) And in another case a bond to the trustees of a trading company, to secure the faithful services of a clerk, was held to remain in full force so long as the clerk acted in that capacity, notwith- standing the fluctuations of the company. (^) Where the partners have substituted a deed for a simple contract, the lat- ter is merged in the former, and those only who are parties to the deed can sue upon it. (^) The same limitation of the parties to the action to those whose names appear on the instrument prevails in the case of negotiable paper, and all those parties must sue. (7i) If (e) Cabell r. Vaughan, 1 Saund. (ff) Metcalf v. Bruin, 12 East, 400 ; 291, /; Metcalfe v. Eycroft, 6 Maule 2 Camp. 422. & S. 75; Vernon v. Jefferys, 2 Str. (.9) Evans i\ Bennett, 1 Camp. 303, 1146; Lefevre v. Boyle, 3 B. & Ad. note. "There has been no case 877 ; Ehle v. Purdy, 6 Wend. 629 ; where, the hitcrest being the same Petrie v. Bury, 3 B. & C. 354 ; Ex parte as that secured by deed, it has been Williams, Buck, 13, 15, note; Scott holden that assumpsit would lie," V. Godwin, 1 B. & P. 74. Thus it is Lord Ellenborough, Schack v. Autorg, said, in Montague v. Smith, 13 Mass. 1 Maule & S. 574; but the interest 405: "When covenants are made by intended to be secured by the two or between two or more parties, al- must be identical. See Twopenny v. though the covenant be for the benefit Young, 3 B. & C. 208, and Dean v. of a third person, mentioned in the Newliall, 8 T. R. 168; Solly r. Eorbes, instrument, the action must, neverthe- 2 Brod. & Bing. 38. less, be brought by the parties." (h) In actions on bills and notes, (/) Moller V. Lambert, 2 Camp, only the parties thereto can, but all 548 ; 1 Lindley on Part. 386. these must, sue. Guidon v. Robson, Cir. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 363 the note be indorsed *in blank, then, of course, all or * 334 any of the partners may sue thereon, (f) If a simple contract be made with one partner for the benefit of the firm, it may be sued by all, (/) and cannot be sued excepting by all the partners, unless there be some express language or circumstances which make it a bargain with one only ; (/c) whereas such contracts, in cases where the parties to be benefited and the one making the contract do not stand in the relation of partners, may generally be sued either by the party whose name is used, (^) or by the parties actually interested, though their names be not used. (??i) But this 2 Camp. 302; Bawden v. Howell, 3 Man. & G. 638; Pease v. Hirst, 10 B. & C. 122; Siffkin v. Walker, 2 Camp. 307 ; Whitney v. McKechnie, 1 Bosw. 427. In Boswell v. Dunning, 5 Ilarring. 231, because the note was indorsed in full to a firm, bj' the firm name, proof was required of the part- nership. (0 Ord V. Portal, 3 Camp. 239; Attwood V. Rattenbury, 6 J. B Moore, 579 ; Machell v. Kinnear, 1 Stark. 499. But if it appear affirmatively, by the defendant, that the note was delivered to third persons, in the first place the plaintiflTs must show a delivery to themselves b}' such holders. Id. (j) Garrett v. Handley, 4 B. & C. 664; Alexander v. Barker, 2 Cromp. 6 J. 133; Skinner v. Stocks, 4 B. & Ad. 437 ; Cook v. Seely, 2 Exch. 746 ; Halliday v. Daggett, 6 Pick. 359; Creel v. Bell, 2 J. J. Marsh. 309 ; For- tune V. Brazier, 10 Ala. 793 ; Stevens V. Lunt, 19 Me. 70; Wright i: Wil- liamson, 2 Penn. 978 ; Pearson v. Par- ker, 3 N. H. 366. This is, indeed, the case in all implied contracts, that arise in the course of the partnership business ; for, as the implied promise must follow the consideration, it is raised to the firm from whom the consideration moves. Boggs v. Curtin, 10 Serg. & R. 211 ; Lee v. Gibbons, 14 id. Ill ; Ulmer v. Cunningham, 2 Greenl. 118, 119; Addison on Cont. 743; 1 Pars, on Cont. (5th ed.) 26. (k) Sims V. Bond, 5 B. & Ad. 389 ; Garrett v. Handley, 3 B. & C. 462 ; Oliver v. Burton, 17 Q. B. 989 ; War- ner V. Griswold, 8 Wend. 665; Piatt V. Halen, 23 id. 456; Ewing v. French, 1 Blackf. 353 ; Ward v. Leviston, 7 id. 466 ; Doremus i\ Seldon, 19 Johns. 213; Burn v. Morris, 3 Caines, 54; Munroe i'. Ezzel, 11 Ala. 603. Thus, in Wood V. O'Kelly, 8 Cush. 406, where the question whether a mes- meric doctor should join as coplaintiff", in an action for medical services, his partner, the woman who slept in the clairvoyant state, and with whom he divided the net profits after paying expenses, the court below ruled, that, if the woman was a silent partner, she need not be joined. In the court above, it was not necessary to consider the question. The court, however, said : " It is not necessary that a dormant partner should be joined with the ostensible partners of a firm, in an action against a person who dealt only with the ostensible partners." (/) Ward V. Leviston, 7 Blackf. 466; Rodwell v. Ridge, 1 Car. & P. 220 ; Skinner v. Stocks, 4 B. & Aid. 437 ; Desher v. Holland, 12 Ala. 513 ; Warner v. Griswold, 2 Wend. 665 ; Lapham v. Green, 9 Vt. 407 ; Curtis V. Belknap, 21 id. 433; Sims v. Bond, 5 B. & Ad. 393; Colburn v. Phillips, 13 Gray, 64, 06; Sims v. Brittain, 4 B. & Ad. 375. (vi) Arden v. Tucker, 4 B. & Ad. 815; Rodwell v. Ridge, 1 Car. & P. 220; Lapham v. Green, 9 Vt. 407; Cothay v. Fennel, 10 B. & C. 671 ; Alexander v. Barker, 2 Cromp. & J. 364 THE LAW OF PARTNERSHIP. [CH. IX. * 335 differs from the case supposed in the last * paragraph, thus : A promise to a present firm, with the understand- ing that others may come in and profit by it, is still no bargain with those others. They are not known, and are indeed un- certain as yet. But a bargain witli one of a firm for the interest and benefit of all the firm is a present bargain with all the firm. And thus the rule remains good that those, and only those, with whom the bargain is made can sue upon it. The exception where a bargain is made under seal with one for the interest and benefit of others, in which case only those named as parties can sue, arises from the peculiar law of specialties, which prevents any persons not named from coming in as parties. But where a written but not sealed contract is entered into with one partner, it not appearing on the face of the contract that he was acting on behalf of the firm, he may sue alone, on that contract. In such a case, the action may be maintained either in the name of the person with whom alone the contract was ostensibly made, or in that of the parties who can be shown to be really interested, (n) Partnership contracts for insurance are governed by the same rule, that those and only those by whom the bargain is made can sue upon it, excepting so far as the rule is modified by the law of insurance, which, under certain circumstances, permits persons by whose authority and for whose benefit a policy is made, to sue, although their names are not men- tioned, (o) By that law, the persons named in the policy may sue, and they alone can sue, unless the policy is made " for all whom it may concern," or contains other general words 133, 138 ; Kobson v. Drummond, 2 can maintain no action, Mellen v. B. & Ad. 303, 307, 308, per Parke and Whipple, 1 Gray, 317, 321, 322 ; Col- Littledale, JJ. ; Stacy v. Decey, 2 Esp. burn v. Phillips, 13 id. 61, 66 ; with 169, n. ; Skinner v. Stocks, 4 B. & one or two well-defined exceptions. Id. Aid. 437 ; Garrett v. Ilandley, 4 B. (h) Curtis v. Belknap, 21 Vt. 433. & C. 664 ; Curtis i'. Belknap, 21 Vt. And see Skinner v. Stocks, 4 B. & Aid. 433 ; Creel v. Bell, 2 J. J. Marsh. 309 ; 437 ; Cothay v. Fennell, 10 B. & C. Pitts V. Mower, 18 Me. 361; Story on 671; per Littledale, J., in Robson v. Agency, § 160, and cases cited ; Halli- Drummond, 2 B. & Ad. 303 ; Phillips day V. Doggett, 6 Pick. 359; Ward v. v. Pennywit, 1 Pike (Ark.), 59. Leviston, 7 Blackf. 466; Edmund v. (o) Grove v. Dubois, 1 T. R. 112; Caldwell, 15 j\Ie. 340. But the party Gumming v. Forrester, 1 Maule & S. for whose benefit the contract was 497 ; Hagedorn i'. Oliverson, 2 id, made must also be the one from 426 ; 2 Pars, on Maritime Law, 29, whom the consideration moves, or he and note 3. CH. IX.] EEMEDIES BY PARTNERS AGAINST THIRD PARTIES. 365 of equivalent import, (p) The * reason of this is, that * 336 the insurers are entitled to know whom they insure, or else to know that they insure unknown persons, that they may make their terms accordingly, {cj) An insurance by one part- ner in his own name and without general words, although on property belonging to the firm, covers only his interest, and the firm cannot maintain an action on such a policy, (r) Whether the partner insured, in an action for the whole loss, averring in his declaration an entire interest, can upon proof of the firm ownership recover any thing, and, if any thing, whether his pro rata share only, or the whole, has been vari- ously decided. Some of the cases, including a decision of the United States Supreme Court, given by Marshall, C. J., which is entitled to the highest respect, holding that he cannot recover at all ; (s) others, that he may to the extent of his interest as a partner; {t) and others still, that he may recover the whole loss, (ii) (p) Finney v. Bedford Com. Ins. Co., 8 Mete. 348 ; Turner v. Burrows, 5 Wend. 541 ; Jefferson Ins. Co. v. Cotheal, 7 id. 72; Finney v. Warren Ins. Co., 1 Mete. 16; 1 Phillips on Ins. §§ 391, 392; 2 Duer on Ins. § 20; Graves v. Boston M. Ins. Co., 2 Cranch, 419. {q) Dumas v. Jones, 4 Mass. 647. (r) Graves v. Boston M. Ins. Co., 2 Cranch, 419 ; Pearson v. Lord, 6 Mass. 81; Turner v. Burrows, 5 Wend. 541. See also Bell v. Ansley, 16 East, 141 ; Hibbert v. Martin, 1 Camp. 538 ; Cohen v. Hannam, 5 Taunt. 101 ; Law- rence V. Sebor, 2 Caines, 203. (s) In Graves v. Boston M. Ins. Co., 2 Cranch, 419, it was held, that a part- ner insuring for an individual and entire interest can recover nothing, but must suffer a nonsuit, on its ap- pearing that he was only jointly inter- ested in the property ; the loss being a joint one, which he could neither in- sure nor recover for separately, either in whole or pro rata. The same doc- trine is hold in Cohen v. Ilannam, 5 Taunt. 101, denying the authority of Page V. Fry, 2 B. & P. 240. (t) Dumas v. Jones, 4 Mass. G47; Turner v. Burrows, 5 Wend. 541 ; Page V. Fry, 2 Bos. & P. 240 ; Irving v. Ex- celsior Fire Ins. Co., 1 Bosw. 507 ; Murray v. Col. Ins. Co., 11 Johns. 302, 311. (u) In Horn v. Clarkson, 1 Caines, 276, and Lawrence v. Sebor, 2 id. 203, the courts admit a recovery in such case for the entire value insured. [Where one partner sells and transfers his interest to his copartner, and re- tires from the firm, an action cannot be maintained by tlie joint insurers in case of loss. Dix v. Mercantile Ins. Co., 22 111. 272 ; Murdock v. Chenango Co. Mut. Ins. Co., 2 Comst. (N. Y.) 210. On the contrary, it has been held that in such cases the action must be joint, and that, if the transfer is con- sented to by the insurers, the remain- ing partners suing in the name of the firm may recover the whole loss ; if without their consent, the amount of their interest. Hobbs v. Memphis Ins. Co., 1 Sneed (Tenn.), 444. And where a surviving partner, by tlie articles, becomes sole owner, he may recover in his own name for the whole loss, though the insurers were ignorant of the agreement. Wood v. Rutland, &c. 366 THE LAW OF PARTNERSHIP. [CH. IX. There is no doubt that a contract made with a firm, and therefore with all the members of a firm, may be exchanged for any other by the act or consent of all the parties. Thus, a sale is made to a firm, who owe for it. But the merchandise is transferred by the firm to one partner, who agrees to pay for it. By this alone the obligation of all the partners is not in the slightest degree affected. But if the seller, upon being applied to, consents to the arrangement, and agrees to dis- charge the firm and take this partner alone as his debtor, we should think the arrangement would be valid in law, * 337 although some doubt might arise from the * fact that, as this partner was already bound with all the rest, his new promise is no consideration for the discharge of the rest. By the principle of novation, if the new debtor is altogether a new person, his promise is sufficient consideration ; and, as the separate promise of a partner would bind his separate property to this debt (we shall presently consider the question whether partnership debtors can claim any of the private property of partners until their private debts are discharged), we should incline to believe that this would be consideration enough, (w) Where no objection of this kind comes in, it is certain that such a transfer would be effectual ; (a;) as if a sale were made by a firm and the debts transferred to one partner, and the debtor, being discharged by the other partners, agreed to pay that one ; (y) or if a guaranty were made to a firm, and trans- ferred to one partner ; or made to one partner, and by him transferred to a firm ; and the guarantor, for any sufficient consideration, agreed to the transfer. Ins. Co., 31 Vt. 552. On the other Chenango Co. Mut. Ins. Co., 2 Comst. hand, where a sole trader takes a part- (N. Y.) 53.] ner, with the consent of the insurers, (w) See ante, p. *329, note {p) ; and tliat the policy shall be good to p. *331, note {]/). the firm, it has been held that no action (x) See ante, p. * 329, note (p). can be maintained by either partner (>/) Cook r. Beech, 10 Humph. 412 ; severally, or by both jointly, but the Degroot v. Darby, 7 Rich. 117; Howell remedy must be in equity. Bodle v, v. Reynolds, 12 Ala. 128. CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 367 SECTION II. OF THE EEMEBIES OF PARTNERS AGAINST THIRD PARTIES, FOR TORTS. It is plain that there may be torts against a firm jointly, as well as against any or all the partners. And there is no rea- son why the firm may not as such sue the wrong-doer at law. (2) But the * rule would doubtless be strictly applied, * 338 that damages could be recovered only for the joint in- jury sustained, (a) Thus an action would lie for seducing away one in their employ, (b) for turning any business from them by fraud and falsehood, or for any fraud against the whole firm, or for slander of them as merchants, (c) or for {z) Addison v. Overend, 6 T. R. 766 ; Cabell v. Vaughan, 1 Wms. Saund. 291, m. and notes; Glover v. Austin, 6 Pick. 209 ; Bloxam v. Hub- bard, 5 East, 407 ; Cooke v. Bachellor, 3 Bos. & P. 150 ; Foster v. Lawson, 3 Bing. 452; Taylor v. Church, 4 Seld. 452, 1 E. D. Smith, 479 ; Sewall v. Cat- lin, 3 Wend. 291; Patten r. Gurney, 17 Mass. 186, followed in Medbury v. Watson, 6 Mete. 246, 257, 258. A dor- mant partner may join in trover. Robinson v. Mansfield, 13 Pick. 139. The rule is often laid down tliat part- ners may join in an action ex delicto for an injury affecting their joint interest. Best, J., in Foster v. Lawson, 3 Bing. 455. It is more correct to say that they must. Patten v. Gurney, 17 Mass. 185; cases cited supra; Ward V. Branipston, 3 Lev. 362. If they do not join, it can, however, only be taken advantage of by plea in abatement. Deal V. Bogue, 20 Penn. St. 228 ; Gib- son V. Stevens, 7 N. H. 352, 358; 1 Chitty PI. 65; Gow on Part. 136 ; Pick- ering v. Pickering, 11 N. H. 141 ; Night- ingale V. Scammell, 6 Cai. 50G ; Anony- mous, W. Jones, 253. Or the court may abate tlie writ ex officio. Hart v. Fitzgerald, 2 Mass. 509. (u) Barratt v. Collins, 10 J. B. Moore, 446 ; Haythorn v. Lawson, 3 Car. &. P. 196; Pechell v. Watson, 8 M. & W. 691. Thus in Garland v. Noble, 1 J. B. Moore, 187, it was held, that on a submission to arbitration of all matters in dispute between a part- nership and an individual, only the joint claims of the firm were in issue. The same was the case in Barratt v. Collins, supra. See the cases in note (h), infra. {bj Story on Part. § 258. (c) Lewis V. Chapman, 19 Barb. 252, where a postscript to a letter say- ing "confidential; had to hold over a few days for the accommodation of L. & H.," was held libellous if false, when addressed to the creditors of L. & H. ; but held in the Court of Appeals to be for the jury to determine as a question of interest, 16 N. Y. 369; i^oster v. Lawson, 3 Bing. 452 ; Cooke v. Bach- ellor, 3 Bos. & P. 150; Sewall v. Catlin, 3 Wend. 291 ; Haythorn v. Lawson, 3 Car. & P. 196; Buraage V. Prosser, 4 B. & C. 247 ; Williams v. Beaumont, 10 Bing. 270; Taylor v. Church, 1 E. D. Smith, 279, 4 Seld. 452 ; Le Fanu v. Malcomson, 1 H. L. Cas. 637. In this last case, a charge of cruelty to employe's was held an in- jury to the firm in their trade, for which they could sue jointly. See also Davis i-. Davis, 1 Nott & McC. 290; Backus v. Richardson, 5 .lolins. 483, 485; Ware v. Clowny, 24 Ala. 707; Babonneau v. Farrell, 15 C. B. 360, 28 Eng. L. & Eq. 339. 368 THE LAW OF PARTNERSHIP. [CH. IX. conversion of the property of the firm ;(d) or, indeed, for any injury Avrongfully inflicted, whether by negligence or with wrongful intent, (e) So, too, if vn injury affected two or more members of a firm jointly, and not the rest, those who were jointly injured could sue jointly. (/) * 399 * It might not always be easy to draw the line between damages, which were recoverable in such an action, because they were joint, and those which were not recoverable, because they were not joint, (g) Thus, if a libel charged in- solvency or dishonesty upon any one partner, he, of course, could sue ; but, in strict law, he could not recover in this several suit for any damage done to the firm of which he was a member, and not even, we should say, for his share of this damage. For this the firm must sue, and, in this suit, they could recover only for the damage all sustained jointly, (^h) (d) In trover or trespass for injuries to the joint property, the partners can (and must) join. Wilson v. Comine, 2 Johns. 280; Patten v. Gurney, 17 Mass. 185, 187, per Parker, C. J. ; Glover v. Austin, 6 Pick. 209. (e) Weller v. Baker, 2 Wils. 414, 423; Patten v. Gurney, 17 Mass. 185; Medbury v. Watson, 6 Mete. 257, 258. Thus case lies by a firm against an officer if he improperly give up prop- erty attached at their suit. Commer- cial Bank v. Wilkins, 9 Greenl. 28. (/) This question seems most gen- erally to have arisen where the joint property has been seized, or sold and delivered, on execution against one partner, for his separate debt. In fact, it would seldom arise in any other way, except perhaps in the case of col- lusion, between one partner and some third party, to slander or defraud the firm; since the injury, to admit of a joint action as partners by two or more members of the firm to the exclusion of another member, must touch them in their partnership property, or inter- est in that property, and yet not affect the excluded partner, by reason of the act by whicli the injury is caused being justifiable as to him, or one for which he is responsible. In many of the States, it is held, that the sheriff may seize, and deliver to the purchaser, the specific property of the firm, and that the purchaser thereby becomes tenant in common with the other partners of that property : as in Maine, New York, Alabama, Iowa, Illinois, North Caro- lina, Texas, Michigan,01uo, New Jersey. So in England ; but see next chapter. In case, therefore, the purchaser should undertake to convert the property by a destruction of it, or, as is held in some courts, by a sale, trover would lie against him, as against any tenant in common, by the other partners exclud- ing the debtor partner. Wilson v. Reed, 3 Johns. 175 ; Mayhew v. Her- rick, 7 C. B. 229, per Maule and Cress- well, JJ. ; White v. Osborne, 21 Wend. 72 ; Hyde v. Stone, 7 id. 354. («7) In trover by one partner against a sheriff who has sold the whole prop- erty on a levy, for the separate debt of the copartner, in tiie absence of pre- cise proof of his interest the partner may recover a moiety, Walsh v. Adams, 3 Denio, 125; Deal v. Bogue, 20 Penn. St. 228 ; or the proportion of his original interest in the goods, if this appear, Deal v. Bogue, id. {h) One partner can recover for a libel on him in the way of his trade, although the libel also affects the firm. Harrison v. Bevington, 8 Car. & P. CH. IX.] REMEDIES BY PARTNERS AGAINST THIRD PARTIES. 369 Possibly the principle of exemplary damages, which, although called in question by high authority, is, we think, certainly admissible in some actions for tort, and, possibly in all, might come in aid of the plaintiff, and help to remove the diffi- culty, (i) If a third person colluded with a partner to defraud * the firm, there would be very great difficulty * 3-10 in permitting the whole firm, including the fraudulent partner, to sue this third person ; and, also, some difficulty in maintaining a suit by the other partners for the damage done to the firm. (/) This latter action, however, has been sus- tained, and we have no authority for supposing the former maintainable. But what damages could be recovered in such an action, whether all that the firm sustained, or only the proportion of the suing partners, we are not informed, (k) 708; Robinson v. Marchant, 7 Q. B. 918 ; and even though tlie %m has al- ready recovered for its injury through the same libel. Taylor v. Church, 1 E. D. Smith, 279. See Le Fanu v. Malcomson, 1 H. L. Cas. 637, where the libel referred to occurrences " in some of the Irish factories," and tlie plaintitf was allowed by innuendo to show tiuit this was applied to him- self, though his name did not appear therein. The question of damages being one for the jury, it was intimated by Coleridge, J., that where on the face of the declaration the damage is partly joint, and partly several, the course in such a case would be to limit the proof at the trial. Robinson v. Marchant, 7 Q. B. 923; Taylor i-. Church, 1 E. D. Smith, 279, affirmed on error, 4 Seld. 452 ; Foster v. Lawson, 3 Bing. 452. Perhaps the doctrine on this sub- ject may be briefly stated thus : An action on such libel, either by tlie firm, or the single partner, or by both, will lie ; both may declare without proof of special damage, and the jury will be presumed to have confined themselves to the injury of the party plaintiff. If they allege special damage, the proof ■will be limited at the trial. If the libel be such that the respective injury cannot be distinguished, the defect must be specially demurred to. Inju- ries, however, to the personal feelings, cannot of course be included in a joint suit by the firm. Haythorne v. Law- son, 3 Car. & P. 196. (/) Taylor v. Church, 1 E. D. Smith, 279, 4 Seld. 452, and cases cited ; and see Lewis v. Chapman, 19 Barb. 2.52. Also, see Symonds v. Carter, 32 N. H. 458 ; Cramer v. Noonan, 4 Wis. 231 ; Fry V. Bennett, 4 Duer, 247. (j) Longman i'. Pole, Moody & M. 223. In the Metropolitan Saloon Om- nibus Co. v. Hawkins, 4 Hurlst. & N. 87, 92, Longman v. Pole was cited and afiirmed ; and it was even said by Wat- son, B. : " But it is clear that an ordi- nary partnersliip would have a right to maintain an action against one of its members, for injury to their real or per- sonal property, and for all wrongs done to them." (k) By the analogy of cases in tro- ver against sheriffs for sales of the entire property of the firm, it would seem that the extent of the recovery might be for the shares of the innocent partners. But as the defendant is guilty of acquisition of tlie property by a fraud, though against the plaintiffs only, this would perhaps estop him from claiming any property tliere- under ; for tlie law would not permit him to divide his own fraud. 24 370 THE LAW OF PARTNERSHIP. [CH. IX. "We should have said, that an action by all the partners, includ- ing the fraudulent partner, and using his name only for the benefit of the innocent partners, and recovering, therefore, only the share of damage sustained by the innocent part- ners, (^) might have satisfied the justice of the case, and the technical rules of law, quite as well. We know nothing in the law of partnership which limits the power of equity in giving the partnership relief against third parties. We mean, that in all cases of this kind, the same reasons for giving relief would be required, and the same selection of remedy, whether by injunction, discovery, specific performance, or otherwise, as in similar cases which did not concern partnership. (?m) There is, however, one question which has arisen, where a partnership has prayed for an in- junction, to prevent a several creditor of a partner from inter- fering with the partnership property, which comes up as a question of the remedies of partnerships against third persons. It is, in fact, however, a question as to the rights and remedies of third persons against the partnership ; and this gen- * 341 eral subject we will not proceed to consider, * adding only to this section, that where the partnership is itself illegal, or where the action or the object of the action is illegal, no suit can be maintained by a partnership, any more than it could be by an individual, under the same circum- stances, (w) It has, however, been held that, when one part- ner seeks in equity a settlement of the partnership, the fact that the firm was established for a fraudulent purpose is no defence, (nw) But this is not certain. (/) See tlie preceding note. 8 Hare, 281 ; Douglas v. Horsfall, 2 (m) Hood V. Aston, 1 Russ. 416; Sim. & S. 184. Jervis v. White, 7 Ves. 413; Motley i\ {n) Biggs v. Lawrence, 3 T. R. 454, Dounman, 3 Mylne & Cr. 1 ; Knott v. where the partnership was formed for ]\Iorgan, 2 Keen, 213 ; Small v. At- smuggling. wood, Younge, 456; Fenn v. Craig, (nn) Harvey v. Varney (2 Browne), 3 Younge & C. 21G ; Clay r. Rufford, 98 Mass. 118; [but see Sampson w. Shaw, 101 Mass. 145.] CH. X.] REMEDIES OP THIRD PERSONS, ETC. 371 CHAPTER X. OP THE REMEDIES OP THIRD PERSONS AGAINST THE PARTNERSHIP- AND AGAINST PARTNERS. SECTION I. OF THE APPROPRIATIOX OF THE PROPERTY TO THE DEBTS. The remedies of third parties against the firm and its mem- bers are generally the same as those which exist in relation to individuals. Similar actions at law, and similar suits in equity, with such variation as the nature of the case suggests and requires ; similar attachment, whether direct or foreign attach- ment, or garnishee process, and similar levy and execution ; but always subject to one modification or exception, which has caused much conflict and uncertainty in practice, and of which all the etfects and all the rules are not yet determined. This exception arises from the fact that there may be creditors of the partnership, and creditors of the several partners ; and the rights and claims of these two classes of creditors are conflicting. In the days of Salkeld and Lord Raymond, one hundred and fifty years ago, the extreme inadequacy and incompleteness of the law of partnership are proved by the fact, that a creditor of a partner got at once by execution the share of the indebted partner in the partnership property. If there were two part- ners, — and at that time it would seem that there were seldom more, — a creditor of one got judgment and execution against him, and levied it upon the partnership property, of which the sheriff (altliough he seized the whole) sold one-half. If there were three, he sold one-third ; if four, one-quarter, (a) The (a) Heyden v. Hey den, 1 Salk. 392 ; Mariott v. Sliaw, Comyn, 277 ; Bac- Jacky V. Butler, 2 Ld. Raym. 871; hurst v. Clinkard, 1 Sliow. 169. 372 THE LAW OF PARTNERSHIP. [CH. X. progress of the change is not very distinctly exhibited *343 *in the reports; but it began early, (5) and it has long since been the well-established rule and practice, that no private creditor of a partner could take, by his execution, any thing more than that partner's share in whatever surplus remained after the partnership effects had paid the partner- ship debts, (c) There are two entirely distinct, and indeed opposite, ways of viewing a commercial partnership. One of them regards it as a modified tenancy in common ; the other regards it as a modi- fied corporation. It is certain that a partnership is neither a tenancy in common nor a corporation ; and it is equally cer- tain that it has some of the attributes and qualities of each of these forms of joint ownership. The question, which lies at the bottom of the difhculties presented by our present topic, seems to us to be this : Which of these two things does part- nership most nearly approach ? Exactly so far as a partnership is a tenancy in common, it has no existence as a body by itself, and has no property, and no debts or creditors. Just so far as it is a corporation, it has (6) It seems to have been received 548; Ex parte Smith, 16 Johns. 102; in the time of Lord Mansfield. In Walsh v. Adams, 3 Denio, 125 ; Lyn- Fox V. Hanbury, Cowp. 4-45, the sale don v. Gorhara, 1 Gallison, 367 ; Tap- by the sheriff was limited to the share pan v. Blaisdell, 5 N. H. 193, per of the partner after the settlement of Richardson, C. J. ; Gibson v. Stevens, all the partnership accounts ; to as- 7 N. H. 352 ; Morrison v. Blodgett, 8 certain which, an account was taken N. H. 244, 254; Newman v. Bean, 1 on a reference before a Master in Post. 93 ; Hill y. Wiggin, 11 id. 292; Chancery. But in Parker v. Pister, Church y. Knox, 2 Conn. 523; Witter 3 Bos. & P. 288 ; Chapman v. Koops, v. Richards, 10 id. 41 ; Tilley v. Phelps, id. 289, this equitable process by a 18 id. 294; Rice v. Austin, 17 Mass. court of law was emphatically refused 206 ; Brewster v. Hamraitt, 4 Conn, by Lord Alvanly. See the history of 540 ; Smith v. Barker, 1 Fairf . 458 ; the change, examined in Ex parte Commercial Bank v. Wilkins, 9 Greenl. Smith, 16 Johns. 102, note ; 3 Kent 38 ; Douglas v. Winslow, 20 Me. 89 ; Comm. 65, note (a); Am. Jur., Oct. Doner f. Stauffer, 1 Barr, 198; Deal u. 1841, art. 3. Bogue, 20 Penn. St. 228 ; Greene v. (c) Washburn v. Bank of Bellows Greene, 1 Oliio, 244 ; Place v. Sweet- Falls, 21 Vt. 278, 284; Matlock v. zer, 16 Ohio, 142; Sutcliffe v. Dohr- Matlock, 5 Ind. 403 ; Andrews v. Keith, man, 18 id. 181 ; Winsten v. Ewing, 1 34 Ala. 722 ; Rodriguez i'. Heffernan, Ala. 29 ; Lucas r. Laws, 27 Penn. St. 5 Johns. Ch. 417 ; Murray v. Murray, 211 ; Hubbard v. Curtis, 8 Iowa, 1, 14 ; id. 60 ; Delmonico c. Guillaume, 2 Ridgway v. Clare, 19 Beav. 11 ; [Ross Sandf . Ch. 366 ; Smith r. Jackson, 2 v. Henderson, Sup. Ct. N. C, 4 L. & Edw. Ch. 28; U. S. v. Hack, 8 Pet. Eq. Reptr. 211.] 275 ; Moody v. Payne, 2 Johns. Ch. CH. X.] REMEDIES OF THIRD PERSONS, ETC. 373 ail independent existence, and its own property, and its own debts. And precisely, as in recent times, it has been found necessary, in this * country, where so much busi- * 344 ness is done by corporations, to impart to corporations many of the qualities of partnership ; and just as during the dif- ficult and tedious process of adjusting this new condition of joint ownership and joint action, many mistakes were made and much mischief done, until the just medium was found, and the reconciling principle which best protects the interests of all concerned ; so, in reference to partnership, we apprehend that mischief has been caused by the difficulty of adjusting its true relation to a corporation, or, in other words, in determining the degree in which the law will acknowledge a voluntary mer- cantile partnership as a quasi independent body, and the con- sequences which it will derive from this acknowledgment. We have no doubt whatever that the rule now, as has been said, perfectly established, which shuts out the creditors of the several partners from the partnership property, until that has paid the partnership debts, is derived directly from this acknowl- edgment ; and it would seem to be an inevitable consequence of any recognition of a partnership as a body by itself, having its own creditors and its own effects ; and we are also confident that most of the difficulties which still embarrass this subject will be removed by a more distinct recognition, and more direct application, of the same principle. Not many years since, there began, — perhaps not with Lord Eldon, but confirmed by him, ((^) — a way of explaining (d) Lord Hardwicke held, that a and I approve of that decision." "The partner, or his representatives, had a grounds on which I went in Ex parte specific lien upon the partnership stock Kuffin were these : Among partners for his surplus. West v. Skip, 1 Ves. clear equities subsist, amounting to Sen. 289. See Dodington v. Hallett, 1 something like a lien. The property Ves. Sen. 498, 499 ; by Lord Eldon, in is joint; the debts and credits are Ex parte Younge, 2 Ves. & B. 242, jointly due. They have equities to because the parties were part-owners discharge each of them from liability, and not partners. Tlie theory, as up- and then to divide tlie surplus accord- held by later authorities, is undoubt- ing to their proportions ; or, if there is edly founded on the remarks of Lord a deficiency, to call upon eacli other to Eldon, in Ex parte RuflSin, 6 Ves. 119, make up that deficiency according to followed by Ex parte Williams, 11 Ves. their proportions. But while they re- 4. In the latter case, he said : " I main solvent, and the partnership is have frequently, since I decided the going on, the creditor has no equity case of £•:? parte Ruffin, considered it, against the effects of the partner- 374 THE LAW OF PARTNERSHIP. [CH. X. * 345 the rights * and determining the remedies of partners, by supposing a kind of lien on the partnership property, by the partners, and a kind of lien by the creditors on the part- ners' lien. This is not the language used ; but, it is said, that partners have a lien on the property for the payment of the debts, and that creditors have a quasi lien, and by means of this, and through the lien of the partners, they worked out their effectual remedy against the property, (e) This theory is certainly obscure, and hardly capable of being definitely stated ; nor does it appear to lead in any direct or distinct way to the result, for the sake of which it seems to have been constructed. There is no doubt that creditors of the firm have an equitable preference, or right, which courts of equity enforce. (/) But we do not see that much is gained by regarding this as a lien. (^) ship." " But still, in either of these eases [dissolution by efflux of time, the death of one partner, the bankruptcy of one, or by dry, naked agreement], the community of interest remains that is necessary, until the aflPairs are wound up ; and that requires tliat what was partnership property before shall continue, for the purposes of a distribution, — not as the rights of the creditors, but as the rights of tiie part- ners 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 deatli, it is the equity of the deceased partner that enables the creditors to bring forward the distribution." Also, Ex parte Rowlandson, 2 Ves. & B. 173; Ex parte Fell, 10 Ves. 348. See Con- well V. Sandidge, 8 Dana, 278, 279. (e) Story on Part. §§ 3G0, 361. (f) Ex parte Williams, 11 Ves. 6 ; Ex parte Ruffin, 6 Ves. 126, 127 ; Ex parte Kendall, 17 Ves. 626 ; Hoxie v. Carr, 1 Sumner, 181-2 ; Ex parte Row- landson, 2 Ves. & B. 172; Appeal of York Co. Bank, 32 Penn. St. 446; Baker's Appeal, 21 id. 76 ; Doner v. Stauffer, 1 Barr, 198 ; Wilson v. Loper, 13 B. Mon. 414 ; Jones v. Lusk, 2 Mete. (Ky. ) 356; Stout ij. Fortune, 7 Iowa, 183; Campbell v. Mullett, 2 Swanst. 575 ; Cross on Lien, 198 ; Washburn v. Bank of Bellows Falls, 19 Vt. 278. Authorities upon the point might be multiplied almost indefinitely. This is the recognized and decided law of all the New England States. Most of the otlier States have also recognized it; and no one has expressly denied its existence or obligation, so far as we know, with the exception of Penn- sylvania and Georgia. See Witter V. Richards, 10 Conn. 37 ; Egberts V. Wood, 3 Paige, 517 ; McCulloch v. Dashiell, 1 Harris & G. 96 ; Hall v. Hall, 2 McCord Ch. 302; Wooddrop V. Wards, 3 Desaus. 203 ; Smith v. Johnson, 2 Edw. 28 ; Commercial Bank V. Wilkins, 9 Greenl. 28. Further see Pearson v. Keedy, 6 B. Mon. 128 ; Black V. Bush, 7 id. 210; Ladd v. Gris- wold, 4 Gilman, 25 ; Reese v. Bradford, 13 Ala. 837; Matlock v. Matlock, 5 Ind. 403 ; Miller ;;. Estill, 5 Ohio St. 508; Allen v. Centre Vale Co., 21 Conn. 130; [Williams v. Gage, 49 Miss. 777 ; Gordon v. Kennedy, 36 Iowa, 167.] In Pennsylvania, it was denied in Bell v. Newman, 5 Serg. & R. 78; In re Sperry, 1 Ashm. 347 ; and, in Georgia, in Ex parte Stebbins, K. iff) See Mayer v. Clark, 40 Ala. 259. CH. X.] REMEDIES OF THIRD PERSONS, ETC. 375 It seems to be admitted by Mr. Justice Story, who build upon this theory ahnost all the remedy of the creditors, that partners have no lien, unless in case of insolvency or dissolution ; or, * certainly, that the creditors do not get * 346 their qiiaisi lien, unless in these cases. It is not easy to see how either insolvency or dissolution creates any lien, al- though, in these new circumstances, new rights arise, or, at least, are developed, and come into prominence, and the courts of equity recognize and enforce them. And this we suppose to be what is meant. (^) We apprehend that there is a simpler view of this subject, which is at least equally efficient, and is open to no important M. Charlt. 77 (tliough this case was decided under a statute, and was ex- ceptional in its circumstances) ; and questioned in Cleghorn r. Ins. Bank of Columbus, Ga. 319. But it is now otherwise in both States. The right has been recognized in Pennsylvania, in Appeal of York Co. Bank, 32 Penn. St. 446, and other cases cited ; and, in Georgia, in Hoskins v. Johnson, 24 Ga. 625, 630, where it is called an equity. In the case of Burtus v. Tisdall, 4 Barb. 588, Strong, J., says : " It is clearly settled that the joint creditors have, tlien, the ^rsi equitable claim upon the whole, for the satisfaction of their debts." Sometimes tlie copartnership property is called a trust fund for the benefit of creditors ; and sometimes it has been said that the copartnership creditors have a lien, or quasi lien, upon it. But, whatever may be the exact nature and extent of these rights, it is certain that the joint debts have a claim of priority of payment out of the whole of the joint funds. (9) If the private creditor levies on the joint property, and, on an account being taken to find the amount cov- ered bj' the levy — viz., the debtor's share — if it appear that there is enough to satisfy both the joint and separate creilitors, the former cannot be said to be preferred. If there is not enough to satisfy both, tlien there is an insolvency, and tlie joint cred- itors are preferred. So, in the case of marshalling of assets. This, there- fore, seems to be the sense in which the numerous cases are to be taken which admit the equitable lien only in case of insolvency. Washburn v. Bank of Bellows Falls, 19 Vt. 278; Hubbard v. Curtis, 8 Iowa, 1 ; Jones V. Lusk, 2 Mete. (Ky.) 356; Stout v. Fortune, 7 Iowa, 183 ; Burtus i-. Tis- dall, 4 Barb. 571 ; Pearson v. Keedy, 6 B. Mon. 128 ; Story Eq. Jur. § 676 ; Griffith V. Buck, 13 Md. 102 ; Campbell V. Mullett, 2 Swanst. 551. As the joint creditor has no lien or equity till dissolution and insolvency, any bona fide assignment prior thereto would seem to convert the joint into separate property, and removes it from the operation of the lien. Cross on Lien, 198; Ex parte Ruffin, 6 Ves. 119; Ex parte Williams, 11 Ves. 3 ; Hunt V. Waterman, 2 R. I. 298; Smith v. Edwards, 7 Humph. 106 ; Miller v. Estill, 5 Ohio St. 508; Campbell V. Mullett, 2 Swanst. 575; Ex parte Fell, 10 Ves. 347; Griffith v. Buck, 13 Md. 102; Rogers r. Nichols, 20 Tex. 719; Stout v. Fortune, 7 Iowa, 183 ; Jones v. Lusk, 2 Mete. (Ky.) 356 ; Holmes v. Hawes, 8 Led. Eq. 21 ; Wilson V. Soper, 13 B. Mon. 414 ; Reese v. Bradford, 13 Ala. 846 ; Ex parte Peake, 1 Madd. 358. [So where one partner sells out to another who assumes the debts. City of Maynoketa V. Willey, 35 Iowa, 323. See also Giddings v. Palmer, 107 Mass. 269. 376 THE LAW OF PARTNERSHIP. [CH. X. objection. It is that which we have already intimated. A part- nership is a legal body by itself; we do not say it is a corpo- ration, because it wants some of the most essential elements of incorporation. But we say it is a body by itself, and is so recognized by the law for some purposes, and should be — always in a proper way and to a proper degree — for all purposes. And among these purposes is the placing of * 347 its relation to its creditors on the basis of * contracting its own debts, and having its own creditors, and possess- ing its own property, which it applies to the payment of its debts. After this relation is exhausted, or after this work is done, there is a resolution of this body into its elements. Then come up the new relations between those who were the mem- bers of this body and those who were its creditors. If the joint debts have been so paid, in full, there are no joint cred- itors, and they who were partners own the remaining property, free from all encumbrance, except each other's rights, and they share this remainder between them. If the funds of the part- nership were insufficient to pay its debts, they who were its members are now the debtors of those who were before only the creditors of the partnership ; and, like other debtors, must pay their debts by whatever means they can. (Ji) The law does not now make this recognition in the plain and simple way we have stated, and drawn from it all those infer- ences to which it would seem to lead. Thus, long after it was established that the creditors of the partnership had a priority of right to the partnership effects over private creditors of the partners, it was quite as well established that the creditors of the partnership could levy upon the private effects of the part- ners, just as freely as their private creditors could ; thus giving to the creditors of the partnership a double change, — priority After dissolution, if one partner pur- delectus personanim, the necessity of a chase the interest of the other, agree- joint suit by or against tiiem, the ing to assume tlie debts, he becomes doctrines of equitable preference, ^nd the principal debtor, of wliom the re- of the joint and several liability of tiring partner is surety ; and creditors of partners, are well explained on this the firm, having knowledge of this basis, without resorting to the theory equity, are bound to regard it in their of quasi and dependent lien. In many subsequent dealings with the parties, of the cases involving the claims of Shelden v. Shelden, Sup. Ct. Mich. 25 the joint creditors on the partnership Am. L. R. 292.] fund, the word " lien " is not used, but (h) Various attributes of a part- the right of the partnership creditor is nership favor this view. Thus, the termed a trust ; and, in some cases, is CH. X.] REMEDIES OF THIRD PERSONS, ETC. 377 in one respect, and equality in the other. It seems, however, to have become a rule in the settlement of bankrupt and insol- vent concerns, to apply a more just and reasonable principle ; namely, to give to the creditors of the partnership all the effects of the partnership if necessary for their debts, leaving only the surplus, if these debts were paid to the private creditors ; and to give to the several private creditors the private assets of the several partners, applying only the surplus to the debts of the partnership, (i) There was some * fluctuation back * 348 and forth ; but this principle finally prevailed in England, and, as almost all insolvencies were settled there in chancery, this may be considered as their method of settling such estates, (j) In this country there were some, but rather held operative directly on the fund, and not through the medium of the partner's lien. Tillinghast i'. Champ- lin, 4 R. I. 173 ; Burtus v. Tisdall, 4 Barb. 571, 588. (/) This was first held in a. d. 1715, in Ex parte Crowder, 2 Vern. 706 ; followed by Ex parte Cooke, 2 P. Wms. 500. ij) The older rule in bankruptcy, giving a full satisfaction out of the separate estate to the separate cred- itors, was first broken in upon by Lord Thurlow, in Ex parte Hayden, 1 Bro. Ch. 454, which introduced the im- portant modification that the separate estate might be had recourse to, by the partnership creditors, M'henever there was neither joint estate nor a solvent partner. This somewhat anomalous rule, making the nature of the debt depend on the presence or absence of joint assets (see per Lord Eldon, in Ex parte Pinkerton, 6 Ves. 814, note), seems farther to have been extended, by Lord Thurlow in Ex parte Hodgson, 2 Bro. Ch. 5, to an absolute equality as to the sep- arate estate between the joint and separate creditors ; and, apparently, this continued to be the rule till the decision of Lord Rosslyn in Ex parte Elton, 3 Ves. 238, a. d. 1796, when the principle of the old rule of e.x- clusive satisfaction of the separate creditors from the separate estate — the partnership creditors coming in only for the surplus — was restored, and was followed for some time. Ex parte Clay, 6 Ves. 813; Ex parte Kensington, 14 Ves. 448. For the history of this fluctuation, see Allen V. Wells, 22 Pick. 453; BardweU v. Perry, 19 Vt. 292, where it is con- cisely set forth ; Murray i'. Murray, 5 Johns. Ch. 60, where it is given at greater length. The earlier rule, re- stricting the joint creditors from re- course to the separate estate, was adopted from bankruptcy into equity, receiving only the modification that if no joint estate subsisted, and there was no solvent partner, the firm creditors might come upon the sep- arate fund pari passu with the separate creditors. See accordingly Cowell v. Sikes, 2 Russ. 191 ; Gray v. Chiswell, 9 Ves. 118; Ex parte Kendall, 17 Ves. 514. In Gray v. Ciiiswell, it was de- cided expressly that separate creditors were entitled to be paid first out of the separate fund, if there was any joint fund, however small, for the joint creditors to follow ; Lord Eldon remarking that it was the first time the case had been presented in equity, thougli in bankruptcy the question was familiar. But in Devaynes v. Noble, 1 Meriv. 529, 562, 564, it was held, by Sir William Grant, that though the common law had, unlike tiie law-merchant, made all partner- ship contracts joint, equity, following the law-merchant, would hold them 378 THE LAW OP PARTNERSHIP. [CH. X. * 349 faint, * attempts to establish the same princii)le. Re- cently these have been renewed with more vigor and more success. And we believe that a principle which is so obviously just and reasonable and consistent wnth the true theory of partnership, will before long be settled and estab- lished with us. (k) several, by operating through its juris- diction to correct a mistake, to reform the contract. Hence, he held, that equity would admit a partnership creditor to come directly upon tlie separate estate, without regard to the accounts between the partner and his firm. His ruling was confirmed by Lord Brougham on appeal. 2 Russ. & M. 495. It had been already fol- lowed in Sumner v. Powell, 2 Meriv. 37 ; and since in Wilkinson v. Hender- son, 1 Mylne & K. 582 ; also, in Thorpe V. Jackson, 2 Younge & C. 553, where it was held, that the same rule applied also to joint debtors not partners in trade. And this seems to be the un- doubted law in England, Story Eq. Jur. § 676 ; Redfield, J., in Washburn V. Bank of Bellows Falls, 19 Vt. 278 ; and, to some extent, in this country. But this rule is confined solely to cases where the partnership creditors seek to come upon the separate assets of one partner, and there are no com- peting separate creditors. See the cases cited accordingly; also, Hills v. M'Rae, 9 Hare, 297 ; Harris v. Farwell, 13 Beav. 403; Brett v. Beckwith, 8 Lond. Jur. n. s. 3L But if there are separate creditors, it seems to be the present equity doctrine that, as to equitable assets, if there be no joint fund or solvent partner, whether the separate estate be solvent or not, the separate creditors must first be satis- fied out of their fund, and the joint creditors take only the surplus, if any, Ridgway v. Clare, 19 Beav. 311 ; Addis V. Knight, 2 Meriv. 117; Croft v. Fyke, 3 P. Wms. 112 ; while, if both estates are solvent, the joint creditors can come upon either ; or, if the joint fund be solvent, and the separate in- solvent, the joint creditors can follow the latter, as, by their payment, the separate estate has a credit to that amount in the joint estate, which the separate creditors can pursue. Ridg- way V. Clare, 19 Beav. 311; Ex parte Sperry, 1 Ashm. 357 ; Walker v. Eyth, 25 Penn. St. 216 ; Lawrence v. Trus- tees of Orphan House, 2 Denio, 577 ; Patterson v. Brewster, 4 Edw. Cli. 3.52. (/r) The preference of the separate creditors, as a rule of equity, is af- firmed by Chancellor Kent. Murray V. Murray, 5 Johns. Ch. 60 ; 3 Kent Comm. 65, citing Wilder v. Kceler, 3 Paige, 167, Morgan i\ His Creditors, 20 Mart. (La.) 599; McCulIoh y. Dash- iell, 1 Harris & G. 96; Payne v. Matthews, 6 Paige, 19 ; Hall v. Wood, 2 McCord Ch. 302 ; Bowden i'. Schat- zell, 1 Bailey Eq. 360; Cammack v. Johnson, 1 Green Ch. 163. [The joint estate of a partnership is first liable for the joint debts, and the separate estate of tlie respective part- ners for their separate debts ; and neitlier class has a right to go to the fund previously belonging to the other, imtil the creditors having preference are fully paid. In re jNIcLean, U. S. Dist. Ct. 15 N. B. R. 333; Murril v. Neil, 8 How. (U. S.) 421; Bass v. Estill, 50 Miss. 300.] So also see Patterson v. Brewster, 4 Edw. Ch. .352; Crockett v. Grain, 33 N. H. 452 ; North R. Bank v. Stewart, 4 Bradf. 254 ; Ganson v. Lathrop, 25 Barb. 455 ; Morrison v. Kentz, 15 111. 193; Hub- bard I'. Curtis, 8 Iowa, 1. Elsewhere the more modified doctrine is main- tained, that tlie partnersliip creditors will be admitted pari passu, only when they have no joint fund. Bridge v. McCullough, 27 Ala. 661 ; Rodgers v. Meranda, 7 Ohio St. 179; [Brock V. Bateman, 25 Ohio St. 609 ;] or there is no solvent partner, Daniel v. Town- send, 21 Ga. 155. While in the later CH. X.] REMEDIES OP THIRD PERSONS, ETC. 379 There is perhaps no great practical objection in permitting the creditors of the partnership to go at once for their payment to the partners personally, and their private property, where there is no insolvency of the partnership ; because, if a partner is obliged to pay such a debt, he may charge his payment to the firm, and so be allowed it on the general settlement, or in account. This is the present rule and practice ; each partner •being liable in solido, although the whole partnership is solvent and accessible, and the action must be brought against all. (Z) * But it would be more consistent with the * 350 true theory, and in all respects a better rule, we think, if the creditors of the partnership were in no case — fraud, of course, excepted — permitted to proceed against the private effects of a partner severally, until they had exhausted all those means of the partnership which were accessible to them, and available without too much cost or difficulty, (m') cases in New York, &c., it is held, that the lien of a firm creditor for a partnership debt, by a judgment thereon, will not be relieved against in favor of a later judgment of a separate creditor. Meech v. Allen, 17 N. Y, 300; AVisham v. Kay, 1 Stockton, 353. In Allen v. AVells, 22 Pick. 450; Bardwell v. Perry, 19 Vt. 292, the doctrine goes somewhat under the peculiar priority law of each State, which makes priority in time of at- tachment the sole test at law. In equity, however, the rule is clearly maintained that the partnership cred- itors will come in pari passu with the separate creditors, but that equity will interpose to see that those who may have recourse to two funds shall ex- haust one before going upon the other on which anotlier creditor relies solely. This same ground is followed in Camp V. Grant, 21 Conn. 41 ; Emanuel v. Bird, 19 Ala. 596. [In Massachusetts, by trustee process, a creditor of the firm may attach the private property of one of the partners, in a suit against the firm ; and a subsequent attach- ment by a separate creditor, in a suit against the partners for his individual debt, will not supersede the prior at- tachment. Stevens v. Perry, 113 Mass. 380. Contra, in New Hampshire. Bowker v. Smith, 48 N. H. Ill ; Jar- vis V. Brooks, 23 N. H. 136. In Ohio, trustee process will not lie in such a case. ]\Iyers v. Smith, Sup. Ct. Ohio, 3 L. & Eq. Reptr. 360.] (/) In cases at law, there never has been a doubt of the immediate liabil- ity of each partner to have the judg- ment against the firm fully satisfied from his assets, or of his liability In solido. WooUey v. Kelly, 1 B. & C. 68 ; Herries v. Jamieson, 5 T. R. 556; Ld. Eldon in Ex parte Ruffin, 6 Ves. 119; Abbot v. Smith, 2 W. Bl. 949, per De Grey, C. J. ; Jones v. Clay- ton, 4 JNIaule & S. 349 ; Villa v. Jonte, 17 La. Ann. 9 ; Nicholson v. Janeway, 1 Green (N. J.), 285. (m) See ante, pp. *348, *349, and notes. 380 THE LAW OF PARTNERSHIP. [CH. X. SECTION II. OF THE SUIT, ATTACHMEXT, AND LEVY OF A PKIVATE CREDITOR AGAINST A PARTNER PERSONALLY INDEBTED TO HIM. When we come to the question of the rights and remedies of a private creditor of one partner in respect to that partner's share of the partnership, we shall find much uncertainty still remaining. We apprehend, however, that a careful adherence to two principles will remove most of the difficulty. One of these is, that a creditor of any debtor can secure to himself, and for his own benefit by attachment and levy, only the prop- erty, interest, or right which his debtor has ; (?i) the other is, that this he may thus secure. The first point, therefore, is to adopt no theory and no conclusion which will offer to an attacliment, or to execution, any thing more or any thing else than the debtor has. What, then, is the right or interest or property of a partner to or in the effects of the partnership ? Certainly, not a separate and exclusive right to any part or portion of it ; or any right of any kind to any one part rather than to any other part ; or any other right or interest than that which all the other partners have, (o) It follows, therefore, that he can have no * 351 right or * interest which is such in kind or in degree as prevents all or any of his copartners from having pre- cisely the same ; and the right which he has is the same as theirs in reference to the whole and every part of the property. We cannot, therefore, define this right of any one partner better than we have already done, by calling it an ownership of all the property of the firm, subject to the ownership of the copartners, who hold it all subject to his ownership. This is at least the foundation of his property and interest ; and from this he de- rives certain rights as incident to it. Thus, if no special (n) See an^e, p. *34o, note (c), and Knox, 2 Conn. 518. And see ante, cases cited. And see Smith v. Emer- p. *343, note (c), the cases wliich ad- son, 43 Penn. 456. mit the partner's interest alone to be (o) Lovejoy v. Bowers, 11 N. H. taken. See Cookingham v. Lasher, 404 ; Black v. Bush, 7 B. Mon. 210 ; 38 Barb. 656. Daniel v. Daniel, 9 id. 195 ; Church v. CH. X.] REMEDIES OF THIRD PERSONS, ETC. 381 agreement forbids, each partner may disencumber his interest from the rights of the others, by giving up his right to all the other shares or interests. That is, each one may have his own share in severalty. But, to do this, the first step is to ascertain what this share is. For it must be remembered, not only that the ownership of each partner is subject to the ownership of all the others, but that all the partners together hold the property subject to the right and obligation of the partnership as a body per se, to apply all its funds to the payment of all its debts, (p) Or, if this way of presenting this right be objected to, then we say that all the partners own all the property, subject to the right of all the creditors to have their debts paid and satisfied out of this property. (^) The partner who desires to separate his share of the common property, and own it free from any liability to others or any * interest in others, must settle the concerns of the * 352 partnership in the first place, so as to be sure that the debts are paid or provided for; and then he may call for a division of the joint property, and take his share to himself. He may do many other things by the consent of others : he may in that way sell out his interests to a stranger, or to a third person, who is to come into the partnership ; or he may sell to his copartners. But no such arrangement liberates his (/») Washburn v. Bank of Bellows an equity of theirs, and not primarily, Falls, 19 Vt. 292 ; [Warren v. Willis, if at all, of the partnership creditors, 38 Tex. 225.] Hunt v. Waterman, 2 R. I. 298 ; Miller {q) This ownership by partners, sub- r. Estill, 5 Ohio St. 508; and maybe ject to the claims of creditors of the barred, or the property removed from firm, is made by Richardson, J., the its operation by any bond fide assign- foundation of an able dissenting opin- ment, Ex parte Ruffin, 6 Ves. 119; ion against the right of a sheriff to Ex parte Williams, 11 id. 3; Miller v. take specific articles of the partnership Estill, 5 Ohio St. 508 ; Smith v. Ed- stock for the debt of one. Wiles v. wards, 7 Humph. 106 ; Holderness v. Maddox, 26 Mo. 77, 84. So by Parker, Shackels, 8 B. & C. 612; Lingen v. C. J., in Morrison v. Blodgett, 8 N. H. Simpson, 1 Sim. & S. 600 ; Campbell 238. In 4 Strobh. Eq. 25, it is held, v. Mullett, 2 Swanst. 575; Ex parte that the share of each partner in the Fell, 10 Ves. 347 ; Griffith v. Buck, joint effects is subject to his partners' 13 Md. 102; Rogers i'. Nichols, 20 Tex. liens for joint demands, and, though 719 ; Stout v. Fortune, 7 Iowa, 183 ; aliened, was subject to their equities Jones v. Lusk, 2 Mete. (Ky.) 356; for a settlement. The rigiit or lien of Holmes v. Hawes, 8 Ired. Eq. 21 ; Wil- the partners on the joint property for son i'. Soper, 13 B. Mon. 414; Reese their own shares, and for the payment v. Bradford, 13 Ala. 840 ; Ex parte of the partnership debts, is, however, Peake, IMadd. 358. See ante, p. *o45. 382 THE LAW OF PARTNERSHIP. [CH. X. share from the debts of the firm ; and nothing will but their payment, or the agreement of the creditors, for consideration, to discharge him. What the law permits him to do, or cause to be done, without the consent of others, is to settle the con- cern, pay the debts, and then divide the surplus. This is, practically speaking, the whole of his right. And this, and only this, is therefore the right which his private creditor can acquire by attachment or execution. That is, his creditor may put himself exactly in the place of his debtor, both as to the power of the latter and as to its limitations, (r) The creditor may, therefore, attach tlie interest of the debtor partner in the partnership property. This is universally admitted, (s) But can he attach the very goods of the part- nership ? or, to state the question more accurately. Can the officer having the writ attach any definite portion of the goods of the partnership, and take them into his possession; or can he, holding an execution, take a portion of the goods, and sell them to satisfy it ? There is much diversity of opinion on this subject ; but we are unable to regard it as at all doubtful on principle ; that is, the conclusion to which the principles applicable to the case lead seems to us inevitable. If * 353 there be any doubt, it must arise from * the inability of the law of partnership to clear itself of the last remaining influence of the old notion, tliat partnership was but one form of tenancy in common. (^) The partner himself is (r) Tappan v. Blaisdell, 5 N. H. to attach the partnership effects against 193. See Inbusch v. Farwell, 1 Black all creditors whose demand is not upon (U. S.), S. C. 566. the company." See also Allen v. (s) Chapman r. Koops, 3 Bos. & P. Wells, 22 Pick. 450; Washburn v. 289; Moody v. Payne, 2 Johns. Ch. Bank of Bellows Falls, 19 Vt. 278; 548; per Parker, C. J., in Morrison v. Bardwell v. Perry, 19 id. 292; Dow v. Blodgett, 8 N. H. 252, 253 ; Jarvis v. Sayward, 12 N. H. 276, 277; Page v. Hyer, 4 Dev. 367 ; Johnson v. Evans, Carpenter, 10 id. 77 ; Hill v. Wiggin, 7 Man. & G. 240; Mayhew v. Herrick, 11 Post. 292; Newman v. Bean, 1 id. 7 C. B. 229 ; Holmes i: Mentze, 4 Adol. 93 ; .James v. Stratton, 32 III. 202. & E. 127. So the share may be taken (t) And that this is so, see the later on mesne process in those States which cases of Johnson v. Evans, 7 Man. & G. confer this right. Pierce v. Jackson, 240; Mayhew v. Herrick, 7 C. B. 229, 6 Mass. 242 ; Burgess v. Atkins, 6 in which the court found the right of Blackf. 337 ; Douglas v. Winslow, 20 the sheriff to take possession of spe- Me. 89, 92, 93. Thus, in Pierce v. cific articles, on the old law as it stood Jackson, Parsons, C. J., says: "A in Heydon v. Heydon, 1 Salk. 392, creditor of one of the firm has a right Jackey v. Butler, 2 Ld. Raym. 871, CH. X.] REMEDIES OF THIRD PERSONS, ETC. 383 wholly without the right (unless by agreement) of appropriat- ing to himself in severalty any thing whatever which belongs to the common stock. All the partners together cannot do it, if it be needed for the payment of the debts, (w) This is universally conceded. If a private creditor of a partner attaches his interest in any form, his attachment is certainly avoided by the insufficiency of the joint assets to pay the joint debts, (v) How, then, can it be held^ either that the partner, before settlement of the debts and a division of the property, may, by his own act, make some portion of it his own ; or that the partner himself has no such right, but that his private creditor may say the partner has such right, and possess him- self of it by attachment or levy or execution ? The courts which have, in recent times, permitted a sheriff to attach the property of a firm in a suit against a partner, and sell the same on execution, hold also that he must not pay this over to the plaintiff, but must hold the proceeds subject to an account with the firm, to be paid to them for their creditors if needed for debts, or for the other partners if it belongs to them on the settlement. Or else that the purchaser takes the property as Bachurst v. Clinkard, 1 Shower, 169 ; tion lies in the nature of the interest, namely, permitting the interest of one which is not a specific thing, having partner to be taken as an undivided a distinct and independent existence; moiety. See Garvin v. Paul, 47 N. H. but is a mere result flowing from a 158. comparison of accounts, and may fall (u) As to the restriction upon the on either side as the balance happens partners to assign in case of insolvency, to be. A specific debt or demand may actual but not avowed or acted upon be unliquidated, but nevertheless has by process of court, see Allen u. Centre its own independent existence, and Vale Co., 21 Conn. 130. And see may be ascertained by computation or Jones V. Lusk, 2 Mete. (Ky.) 356; Den- valuation. Not so with the interest of nis V. Green, 20 Ga. 380; Burtus v. a partner in an unsettled partnership Tisdall, 4 Barb. 571 ; Lucas v. Laws, account. It results wholly from a 27 Penn. St. 211. comparison of the debts and credits (v) And this is true even though of the partnership in the first instance, the partnership creditors have com- and then a comparison of the accounts menced no action for the recovery of between the partners themselves. If their debts. Pierce v. Jackson, G Mass. the partnership is insolvent, there is no 242; Fisk y. Herrick, 6 id. 271 ; Rice balance for division; if solvent, then V. Austin, 17 id. 206 ; Commercial the account between the partners may Bank v. Wilkins, 9 Greenl. 28; Lyn- show that the partner whose interest don V. Gorham, 1 Gallison, 308. [Tlie it is attempted to attach has no claim true reason why the resulting interest to any part of the balance. Agnew, J., of a partner in the partnership effects Alter v. Brooke, 9 I'iiila. 258; Knerr cannot be attached or taken on execu- v. Hoffman, 16 P. P. Smith, 126.] 384 THE LAW OP PARTNERSHIP. [CH. X. tenant in common with the other partners, and subject to an account between the partners, which, if it eventuate against him, will make his purchase give him nothing, {iv} This is an acknowledgment that the partner holds his interest * 354 in the joint property * on terms and conditions which make it unreasonable to subject that property itself to attachment as his property. We should say, therefore, that there is no general rule of the law of partnership which rests on stronger reason than that a private creditor cannot do this. But this rule is perhaps subject to some qualification. How, for example, is the cred- itor affected by private agreements or arrangements between the partners ? (a;) These may be of two kinds : they may be favorable to the creditor, or unfavorable. Thus, if the articles of copartnership permitted any one partner to withdraw one- third of the stock at his pleasure, or some specific articles of the joint property, it would be for the advantage of the cred- itor to acquire this right. If by the articles no partner could ask for a settlement, or withdraw any stock, for five years, it would be a hindrance to the creditor to be delayed so long. In considering the question how a private creditor of the partner would be affected by such a bargain, if it were unfavor- able, if, — for example, the articles of partnership provided that an account should be taken annually, and all the profits added to the stock for five years, and that the partnership should not be dissolved, or any of its stock withdrawn, for five years more, and eight of these ten years remained, — it might be supposed that the well-known principle, in constant applica- tion, that no bargains between the partners affect injuriously any third person dealing with tlie partnership in ignorance of these bargains, would apply to this case. The reason of this {w) Phillips V. Cook, 24 Wend. 398, v. McBride, U. S. Dist. Ct. Cal. 16 404 ; Johnson v. Evans, 7 Man. & G. N. B. II. 22. See also Menagh v. 240; Mayhew y. Herrick, 7 C. B. 222; Whitwell, 62 N. Y. 146; Bank v. Lncas v. Laws, 27 Penn. St. 211; Carrolton R. K, 11 Wall. (U. S.) 624 ; [White V. Jones, 38 111. 159. If the Garvin v. Paul, 47 N. H. 158 ; Barrett interest of both members of a partner- v. McKenzie, 1 N. W. Reptr. 123, S. C. ship consisting of two be sold on sep- Minn.] arate executions against each to the (x) Elliott v. Stevens, 38 N. H. 311, same purchaser, he gets nothing till 313. the partnership debts are paid. Osborn CH. X.] REMEDIES OF THIRD PARTIES, ETC. 385 principle is, that all jDersons have a right to believe that all partnerships stand on the common ground of the law, unless they are informed that it is otherwise. If this rule were held to apply to an attaching creditor, we should say that a private creditor of a partner, who knew of such an agreement when he gave him credit, should be bound by it as much as he would be by any other lien or encumbrance on the partner's property. But that, if he had no such knowledge or means of knowledge, he would be unaffected by the agreement. There are cases which would, indii-ectly at least, favor this conclusion. (^) But as all partners have a right to make any honest disposition of their affairs, or any arrangements between themselves, which do not injuriously affect those who deal with the * firm, we should prefer to say that an attaching cred- * 355 itor of one of the partners would be bound by such a bargain, if made in entire good faitli, and with no reference to any insolvency either of the partner or of the firm. Prac- tically, however, it would make little or no difference. Where the interest of the debtor was sold on execution, we apprehend that this would work a dissolution of the partnership. The remaining partners would not be bound to admit the purchaser as their partner during these years ; and, on the other hand (the delectus personarum being mutual and equal), the pur- chaser would not be bound to become and remain a partner with the others, against his wishes. The parties could, of course, make what arrangement they chose. But, if they could not agree, the legal effect of the sale and purchase would be a dissolution ; and the legal effect of this would be an annulling of those agreements, and a right on the part of the purchaser to call at once for an account and settlement, and to take his share in severalty. On the other supposition, that, if the partner had made an agreement adding to or enlarging his rights, the principle that the ci-editor takes just what the debtor has, and is put precisely in his place, would give to him all the benefit of tliis agreement. And the fact that he did not know it, would not prevent his profiting by it, any more than it would prevent him (ij) See Penn v. Stow, 10 Ala. 209. 26 386 THE LAW OP PARTNERSHIP. [CH. X. from profiting by property, theretofore unknown to him, of the partnership or of the partner. No theory can be adopted, in relation to the partner's right and its liability to attachment, wiiich will not give rise to diffi- cult questions, that cannot be definitely answered without the aid of adjudication. Thus, while we assert that the partner's separate interest is not, as a general rule, open to attachment or execution, the question arises, whether circumstances may not. authorize such attachment. We will suppose an English firm, of which all the partners are resident English subjects. One of them visits this country, and in his individual capacity here contracts a large debt ; and while he is here a large amount of the property of the firm arrives here. We suppose, further, that the firm is perfectly solvent, but that this partner refuses here to pay this debt, and has no effects in this country which could satisfy this debt. The question would then arise, whether his creditor might not attach his interest in this * 356 property, and sell it on * execution, if, after due notice and opportunity, the firm did not lease this property by substi- tuting for it an equivalent or security for this partner's interest in it. The principle, that no creditor of a partjier could take by attachment more than the partner himself has, would distinctly deny that such attachment or levy could be made in the case above supposed. One reason, however, occurs to us for per- mitting such attachment, which may be found in an analogy between such a case and that of a foreign bankruptcy. Our courts have decidedly refused to hold our citizens so far bound by a transfer of property by foreign bankruptcy as to lose their right of attaching the property of the bankrupt in this country, and, instead of this, trust only to receiving a dividend with the creditors abroad. (2) The cases certainly are not the same ; but the creditor of the separate partner in this country cannot here attach his individual interest in the partnership property, to any purpose, without attaching the property itself; for the goods may be sold or sent abroad, and then the officer has not within his reach the means of satisfying the judgment which he has if he attaches the interest of the partner in a home firm. (z) See 3 Parsons on Cont. (5th ed.) 449-455. CH. X.] REMEDIES OF THIRD PARTIES, ETC. 387 It may be that the courts would adhere to the principle, that the property belongs to the partnership, and not to the several partners, so far that it is not open to attachment or levy even by the creditor of a partner, when he and the property are far from their home, and in the home of the creditor. But if we suppose that the reason, above suggested, with others growing out of the case, might make this exception, it would apply probably to the different States of this Union ; which, for most purposes in the law-merchant, are foreign to each other. The question might then arise, how the firm could liberate their property from such attachment. Of course, they could charge in their account with their partner whatever they lost by a compelled payment of his debt. We think that they could not tender, instead of the property, the whole of that partner's interest in that specific property, and require the surrender thereof ; for we apprehend that he has no more an interest in any special part than he has a full property in every special part. Then, could they tender the whole of his interest in all the property of the firm, and claim the protection of the courts in liberating their property * thereupon ? We * 357 think not ; because, if they could do this as a matter of right, they might do it although the property was nearly all wanted for the debts, and the balance to each partner was trifling; and then the creditor would find the goods withdrawn to pay debts abroad, and his security lost ; which is precisely what our courts will not subject him to in the case of foreign insolvency ; and we suppose the attachment itself would be per- mitted, if at all, mainly on the ground of an analogy to the case of insolvency. Indeed, if a tender of the partner's interest, whatever that may be, would liberate the property, it should be free from attachment or levy whenever there was no interest ; or, in other words, whenever the firm was insolvent, or could only pay its joint debts. We have presented these questions for consideration, because we know that they have actually arisen, although they did not pass under adjudication ; but the reasons on the one side and the other seem to us so nearly balanced that we must wait for authority to decide them. The general conclusion to which we come, — and on this wo rely very confidently, — is, that a separate creditor of a part- 888 THE LAW OF PARTNERSHIP. [CH. X. iier, in pursuing his remedy npon property of the firm, can attach or levy upon the partner's interest in the copartnership property, and upon nothing else, (a) But even where this is held, there is much diversity and uncertainty as to the proper manner of doing it. We tliink, however, that a clear appre- hension of the principle itself would lead to a sufficient and unobjectionable method of carrying that principle into effect. We have no doubt tliat this interest of the partner may be attached as well as any other interest or property, and levied upon, and sold, to satisfy a judgment. The manner in which this is done must depend somewhat upon the local statutory provisions. In general, an officer ordered to attach this interest would do so by indorsing such attachment on his writ ; he should then certainly give immediate notice to the debtor, and it would be expedient and proper to give such notice to the other partners. This interest would remain under attachment. We think that the firm could go on, dealing as before, buying and selling, and delivering goods ; (h') because this at- * 358 tachment did not take effect * upon any specific interest in any specific goods, but on the interest of the partner in the partnership concern ; and we incline to the opinion that it would be held to affect the defendant's interest in new mer- chandise added to the stock, in the course of dealing, as much as in the old ; although this conclusion could not be reached by the court without applying equitable principles to the case. We suppose that the transactions of the firm, after being noti- fied of the attachment, are in good faith ; and, if so, it is no objection to them that the debtor himself is active in these transactions, or in part of them. But, whether he be active or not, if the transactions are fraudulent as against the creditor, — that is, intended to delay or defeat the recovery of his debt, — they might still be valid as against him, and in favor of a (n) See ante, p. *3o2, note (s) ; p. the specific goods under execution, is a * 343, note (c). dissolution. Id.; Haberslion v. Blur- (h) The property of the partner in ton, 1 De G & S. 121 ; Waters v. Tay- his share is not entirely divested, and lor, per Lord Eldon, 2 Ves. & B. 301. the firm consequently dissolved, till The same mode of attachment without sale under the levy. Morrison v. Blod- seizure was held to be the only proper gett, 8 N. H. 238; Aspinall v. Lon- form in Pennsylvania. Deal i-. Bogue, don & N. W. R. Co., 11 Hare, 325; but 20 Penn. St. 229. a sale of any part, however small, of CH. X.] REMEDIES OF THIRD PARTIES, ETC. 389 stranger dealing honestly with the firm in their way of busi- ness : but would be void in favor of the creditor, as against the fraudulent partners, and as against any third party co-operat- ing in the fraud, or dealing with the partners knowing the intention of fraud, and by thus dealing giving it efficacy ; for this would be co-operation, although tlie third party had no other object in view but his own interest. So affairs might go on until judgment was obtained, and an execution issued. For, if not, it would be in the power of any person, by mere suit and allegation of a demand against a part- ner, to arrest the whole business of a partnership more effect- ually than he could do it by the allegation of a debt against the partnership itself. When execution issued, the sheriff would sell the interest of the partner in the partnership in the same manner in which he would sell any other interest or right which he levied upon, — as a right to redeem, or the like ; and the proceeds would be applied to satisfy the execution, (c) * The purchaser would not become a partner ; but he * 359 would stand in the place of the partner whose interest he bought, and acquire all of his rights which were necessary to make this interest valuable and available. That is, he would have the right to call for an account, and a settlement of the partnership concern, and to take his share of any surplus in severalty. And a court of equity would probably render him the same assistance in obtaining or enforcing these rights that they would to the partner whose interest he has bought. This, (c) This is admitted as tlie conse- Phillips v. Cook, 24 Wend. 397; Wad- quence of such levy and sale in the dell v. Cook, 2 Hill, 47, and note; case of Wiles v. Maddox, 26 Mo. 77, Walsh v. Adams, 3 Denio, 12.5, &c. 84. The doctrine of tlie majority of Even in New Hampshire, the unfortu- the court in that case is sustained by nate effects of the ordinary method of the decisions of every law court except attachment without the power to make those of New Hampshire, Morrison v. it operative except in equity, because Blodgett, 8 N. H. 238 ; Gibson v. a mere contingent right is sold that no Steven, 7 N. H. 357 ; Page v. Carpcn- one cares to buy, have been so severely ter, 10 N. H. 77 ; Hill v. Wiggin, 11 felt, that, in Hill v. Wiggin, the result Post. 292, &c. ; and of Pennsylvania, is described by the judge as affording Deal 1-. Bogue, 20 Penn. St. 229 ; and a secure means for fraudulent debtors of some earlier cases in New York, to get their money securely out of the Crane i\ French, 1 Wend. 313 ; Ex reach of the law. Hill v. Wiggin, 11 parte Smith, 16 Johns. 102 ; which Post. 2U2. 296. were all conclusively overruled in 390 THE LAW OF PARTiNERSHIP. [CH. X. however, like almost every lliing else in equity, would be ad- dressed to the discretion of the court, and could not be claimed as a matter of strict and technical right. For if the case were one whicli admitted of easy and accurate estimate, and certainly sufficient tender, and this were made, the court would not require a settlement wliich would be injurious to the partner- ship, and was asked for by this purchaser only for oppressive or dishonest purposes. An additional step to that of attaching the separate partner's interest has been suggested on high authority, {d) It is * 360 to sue the * indebted partner by process of foreign attach, ment or garnishee process or trustee process, as it is variously called, and make the other partners trustees. They would tlien be required to answer under oath ; and the interests, rights, and property of the principal defendant in their hands might thus be more effectually held. It might be that our courts would find some difficulty in the complete application of such a system to practice, unless they were aided by legislative provisions ; (e) and perhaps no other questions of commercial law call so loudly, at this time, for such provisions. We have already remarked, that the attachment by a sepa- rate creditor of a partner, of his debtor's interest in the part- nership, or of the goods themselves, is vacated by the insolvency of the partnership, which leaves in the partner no interest, and ((/) In Morrison v. Blodgett, 8 N. H. whole partnership have been held as 238, Parker, C. J., suggested, as a means trustees in a suit of f(jreign attach- of rendering available an attachment ment, upon the private debt of one of the partnership effects for the pri- partner. The course thus suggested vate debt of a partner, the expediency and approved is entitled to the highest and necessity of summoning the other consideration, and may prove to be partners as trustees. See also Tread- practically the best that can be pur- well V. Brown, 43 N. H. 290. A simi- sued in the present condition of the lar suggestion had previously been law. But it is obvious that the law of made by Parsons, C. J., in Fisk i\ Her- partnersliip, taken in connection with rick, 6 Mass. 271, where a debtor of the law of trustee process or foreign the partnership had been ineffectually attachment, offers some difficulties ; summoned as trustee in a suit against and we do not know that this course one partner of the creditor firm ; and has been generally adopted, in Lyndon v. Gorham, 1 Gallison, 261, (e) See Field v. Crawford and Trs., Mr. Justice Story recognized that 6 Gray, 116 ; Lane v. Felt, 7 id. 401 ; course as likely to obviate some of the Treadwell v. Brown, 41 N. H. 12; difficulties in the case then before the Bulfinch i-. Winchenbach, 3 Allen, court. But we know of no case in IGl. which a portion of the members or the CH. X.] REMEDIES OF THIRD PARTIES, ETC. 391 requires all the property to pay the debts. (/) But it is also vacated by the fact of insolvency, prior to any proceedings founded thereon, whether there be a general process of insol- vency or suits by individual creditors. But a distinction seems to be taken in this respect between the case of a dormant (that is, secret) partner and a known partner. Thus, if a man in business have a dormant partner, and a creditor of the first sue him and attach his goods, this attachment shall not be postponed to a later attachment by another creditor, who discovers this unknown partner, and makes him defend- ant. (^) For, if both creditors stand on equal ground as to their claims, the fact that one happens to discover, and sues, a partner not publicly known, should give him no advantage over one who sues in fact the partnership, and uses all the names that the firm enables hira to know. It is not so, however, in its reason, and, we think, not on authority, where the creditors stand on different grounds. Thus, if the first creditor dealt with the known partner only, and did not deal with him in fact on partnership account, but did attach partnership property, then this attachment must yield to one on which part- nership property is taken in a suit * properly brought * 361 against all the partners. And we apprehend the result should be the same although the known partner was the only defendant in both writs. That is, if a man transacted business on his sole account, and also had a secret and silent partner, and with him transacted another business, which was distinctly a partnership business, and became insolvent, and creditors in his own business attached his property, and creditors in the partnership business also attached the property, either before or after the others, we suppose that a court of equity, if it could discriminate the debts and discriminate the property, would give relief, and appropriate the partnership property to the partnership debts, and the private property to the private debts. And we should suppose that courts of law would now, generally at least, follow the same rule to the same result. (/) Lyndon v. Gorliam, 1 GallUon, (//) French v. Chase, 6 Greenl. 160; 307; Commercial Bank v. Wilkins, 9 Lord v. Baldwin, 6 Pick. 348. See also Greenl. 28. And see Fisk v. Ik-rrick, Cammack v. .Johnson, 1 Green, Ch. 6 Mass. 271; Upham v. Naylor, id. 164; Allen r. Dunn, 15 Me. 202. 490; Church v. Knox, 2 Conn. 514. 892 THE LAW OF PARTNERSHIP. [CH. XI. CHAPTER XL OF THE REAL ESTATE OF A PARTNERSHIP. SECTION I. GENEltAL CONSIDERATIONS. Formerly, the title of tliis chapter could have found no place in a treatise on the law of partnership. The distinction which existed at common law between real estate and personal estate has been bridged over only of late. It used to be deemed that the purposes of partnership, and the means which it used, ex- cluded all reference to land, and that the law of partnership could not with propriety speak of land, (a) But in England this doctrine has long been greatly modified ; and now, by the assistance of equity, a tolerably convenient and consistent sys- tem is in force there. Mr. Justice Story, in his treatise on Partnership, remarks (§ 93) : " The doctrine (as to real es- tate), under these circumstances, must be considered as open to many distressing doubts." We apprehend, however, that a careful consideration of American cases will show that, in this country, most of these doubts have been dispelled. Indeed, few questions remain, in relation to this subject, as to which au- thority, illustrated by the reasons and principles which are unquestionably applicable, do not give us a sufficiently distinct and definite answer. There are two reasons why we might have expected an im- provement in the American law on this subject over that of (a) In Pitts V. Waiigh, 4 Mass. considered in England tliat the rule, 424, where it was sought to charge a jus accrescendi inter mercalores locum non person as partner in an action for the habei, applied only to personal prop- price of land sold to the ostensible erty ; and it was also thought neces- partner alone, the court said, " The sary to provide against survivorship law-merchant does not extend to spec- in the partnership articles. Jeffreys u. ulations in land ;" and it was formerly Snell, 1 Vern. 217. CH. XT.] OF THE REAL ESTATE OF PARTNERSHIP. 393 England. One is, our less rigid conservatism ; or, in other words, the weaker * influence of precedent and * 363 prescription, and the greater facility of change. This reason, however, applies to the whole body of our law. The other applies peculiarly to this topic. It is, that land is, with us, vastly more a matter of merchandise than in England. It is every day's practice for individuals and partnerships to en- gage in business, of which the principal, and sometimes the only, element is trade or speculation in land. (^) There is nothing to make this illegal, or, within proper bounds, impolitic or undesirable. At all events, the law recognizes it, and must take charge of it, as of all other social or business movements. Questions to which such business as this gives rise not only come before our courts with great frequency, and demand for their settlement well-considered and well-established principles, but they come in such a form as to compel important modifica- tions of the technical law of real estate, (c) It must be obvious that these questions connect themselves with many others. But the remaining influence of the peculiar law of real estate — an influence which must remain until our whole system of law is changed by legislative authority — im- parts to all the details of this subject a character peculiar to them and common to them all ; (rZ) and it is thought best to gather under one head all that the law and practice of our American courts have to say about the real estate of a partnership. (6) This, after some doubts, see Pitts V. Waugh, 4 Mass. 424, Blake i-'. Nutter, 19 Me. 16 ; Coles v. Coles, 15 Johns. 169, in cases occurring before courts of law, was early recognized in this countrJ^ See Dudley i'. Little- field, 21 Me". 418; Fall River Whaling Co. V. Borden, 10 Cush. 469; Black v. Black, 15 Ga. 445 ; Gray v. Palmer, 9 Cal. 616; Smith v. Jones, 12 Me. 337 ; Ludlow v. Cooper, 4 Ohio St. 1 ; Coster V. Clarke, 3 Edw. Ch. 238; Patterson v. Grace, 10 Ala. 444 ; Row- laud V. Boozer, id. 690 ; In re Warren, Daveis, 320. And in England, Dale v. Hamilton, 5 Hare, 369 ; Darby v. Darby, 3 Drewry, 495. (c) Dudley v. Littlefield, 21 Me. 418; Coster v. Clarke, 3 Edw. Ch. 238 ; Darby v. Darby, 3 Drewry, 495; Dilworth v. Mayfield, 36 Miss. 40; Brady v. Calhoun, 1 Penn. 140; Woodbridger. Wilkins, 3 How. (Miss.) 360; Markham v. Merrett, 7 How. (Miss.) 437. {(l) See post, section 3d of this chapter. 394 THE LAW OF PARTNERSHIP. [CH. XI. SECTION II. WHEN AND BY WHAT MEANS REAL ESTATE BECOMES PARTNERSHIP PROPERTY. The general rule is undoubtedly this : Real estate * 864 purchased * for partnership purposes, and appropriated to those purposes, paid for by partnership funds, and necessary for partnership purposes, always becomes part- nership property, (e) Nor does it seem to be material in what manner, or by what agency, the land is bought, or in what name it stands. (/) It may be conveyed to all the partners as tenants in common, and tliis perhaps is the usual and the best way ; (>- stone, for instance, — the land still re- mains realty. Steward v. Blakeway, L. R. 4 Ch. Ap. 60a.] (/)) In Markham v. Merritt, 7 How. (Miss.) 487, it was said o/vVe/- by Sharkey, C. J., that taking a deed as tenants in common might be lidd a partition of the joint fund ; but see, per Story, J., in Hoxie v. Carr, 1 Sumner, 1^8, that that circumstance was as evidence of intention, jier se, very slight, and never decisive. See Wilson v. Hunter, 14 Wis. 68:3; where one of the partners who had not the legal title nn^rtgaged land, and it was held good against subsequent mortgagees, with notice. And see Howell v. Howell, 15 Wis. 66. 398 THE LAW OF PARTNERSHIP. [CH. XI. the rules of equity, wliile sitting as courts of law ; and * 367 in some tliey have, * from a kind of necessity, taken to themselves this power, and applied equity principles to such questions as those we have to consider. At the same time, the distinction is obvious and certain between the prin- ciples of law and their operation, and the principles of equity and their operation. And this distinction in some form or other is usually preserved, even by courts that administer both principles. We shall speak of them as entirely distinct. In England, the legal title to real estate in respect to transfer and conveyance is entirely distinct from that of personal es- tate. In respect to inheritance, it is also different, both in form and in substance ; in respect to devises, it is different, but less so, practically, than in reference to tlie other two. In this country, the law of real estate is even more distinct from that of personal than in England, in respect to conveyance, owing to our excellent and universal system of record : but, in regard to inheritance, the difference is formal only ; the same persons, in nearly all instances, taking realty who would take personalty, though by a different title and process, (^q') We should infer, therefore, tliat here as well as there the law would pay the utmost regard to title by deed and record. And this is always so. Thus, no partner or partners can convey any interest or title in or to real estate, not held of record in their names, although it is partnership property beyond all question, (r) And in all actions at law, no person can appear and rest upon his title, as plaintiff or defendant, if the title by deed on which he rests is in some one else, (s) And this is (7) In Davis v. Christian, 15 Gratt. ham i'. Merritt, 7 How. (Miss.) 437. See 11, a bill was filed for a share accrued Bradbury v. Barnes, 19 Cal. 120, as to to tlie complainant as husband of the the right of one partner to buy an- daughter of a partner deceased, and other's interest in the real estate of the one question was, whether she took partnership. such share as real or personal prop- (/) Jackson v. Stanford, 19 Ga. 14, erty ; and so whether the complainant where one partner, holding under a acquired the property absolutely as conveyance to the partners by their personal, or only a life-interest therein, individual names, attempted to convey as tenant by curtesy : and it was held, the whole property, and the convey- that tlie conversion of real property ance was held valid, only as to his into personal was equitable only ; but moiet}'. See Whitman v. Boston & the precise question was not definitely Maine R. R., 3 Allen, 133. decided. Per Sharkey, C. J., in Mark- (s) Story, J., in Iloxie v. Carr, 1 CH. XI.] OF THE REAL ESTATE OF PARTNERSHIP. 399 true of title by inheritance also. "We apprehend that some of our courts might find a way to dispose of this * title * 368 at law, as it would be done in equity ; but it would be difficult to do this, and, wherever equity powers could be exer- cised, it would be unnecessary. We should say, therefore, that at law the real estate of a partnership would pass to the legal heir by inheritance ; that is, to the legal heir or heirs of him or them in whom was the legal title : (^) and that it would also pass by devise of the legal holder, although here courts of law might perhaps take a wider liberty than in the case of in- heritance. In like manner the peremptory provisions of the Statute of Frauds would apply ; and even equity would feel itself obliged to pay some regard to them. Hence, if a partnership were formed even to trade in lands, and for nothing else, the lands when bought must not only have an owner by legal title, and pass solely from him and solely by a legal title, but all contracts and agreements betw^een the partners themselves, as well as between them and strangers, for the sale of " lands, tenements, and hereditaments, or any interest in or concerning them," should be written and signed. Qii) But on this there are con- flicting views, which we shall consider in the next section. Hence, too, at law, the general rule, as to the rights and lia- bilities of dormant partners, is said not to apply to partnerships for the purchase and sale of land. Thus, if two are partners for such a purpose, one of whom is silent and unknown, and the other, in whose name the lands are taken and transferred, alone becomes indebted for the price, it is said that the secret partner cannot be sued for the price, on proof of his partnership, and that the purchase w^as made and the debt incurred for the part- nership, (f) Sumner, 173, 177, 178; Benfield v. Gray f. Palmer, 9 Cal. 616 ; Patterson Solomons, 9 Ves. 76; Harris v. Pol- i-. Grace, 10 Ala. 444 ; Black r. Black, lard, 3 P. Wras. 348. 15 Ga. 445. And see Darby v. Darby, {t) Pugh V. Currie, 6 Ala. 446 ; 3 Drewry, 495. Tlie case of Smith v. Lang V. Waring, 25 id. 625 ; Dyer v. Burnham, 3 Surnn. 435, seems, from Clark, 5 Mete. 562; Burnside U.Merrick, the remarks of Story, J., to support 4 Mete. 537 ; Dilworth v. Mayfield, 36 the same doctrine ; thoiifrh tlie decision Miss. 40; Andrews v. Brown, 21 Ala. was against tiie complainant, no satis- 437; Davis v. Christian, 15 Gratt. 11. factory proof of a partnership, even (u) Per Tucker, J., in Wlieatley v. by parol, being made out. See ante, Calhoun, 12 Leigh, 264 ; Sergeant, J., p. * 7. in Hale v. Henrie, 2 Watts, 145, 147; ('•) Pitts v. Waugh, 4 Mass. 424; 400 THE LAW OF PARTNERSHIP. [CH. XL But we have some doubt whether tliese decisions do not rest upon a recognition of a difference between land and personalty which would not now be made. The reasons which compel courts of law to regard the legal title to land by deed do not apply, or certainly not with the same force, to courts of * 369 equity. Nor do we * know any among the reasons which are held sufficient in such a case to bind a secret partner when discovered, in an ordinary case of partnership, which do not apply quite as well to a case where land was a part of the partnership property. (?t') From the regard which is necessarily paid to the legal title, it follows, as we have said, that no partner can convey any real estate, or any interest in it, but he in whose name it stands. Even equity cannot dispense with this rule. By the American law and practice all title to land must be traced along an unbroken chain of record. At every step, it must be legal title ; passing, by legal conveyance, from him who has it to one capable of taking it. ' SECTION IV. HOW THE KEAL ESTATE OF A PARTNERSHIP IS TREATED IX EQUITY. 1. Hoiv far it is Regarded as Personal Estate. On this point, the conflict of authorities renders it difficult to lay down a positive and certain rule. We think, however, that there is a difference between the practice of the English equity courts and our own ; and this difference can be defined and explained, and the decided tendency, if not the established rule, of the courts of each country, be ascertained. The older authorities in England are opposed to any recog- cited and followed in Gray v. Palmer, now universiilly admitted at common 9 Cal. 016. law — it must be considered overruled (ic) Though the case of Pitts v. by the current of later authority ; and Waugh is usually considered sound, the rule, that a dormant or secret as being merely at law, — see Fall partner of a land company cannot be Iliver Whaling Co. v. Borden, 10 Cush. charged, would seem now to rest upon 485, — yet, so far as it was rested by feeble reasons. In Thorn v. Thorn, the court on the ground of an im- 11 Iowa, 146, it was held that the possibility to have a partnership deal- Statute of Frauds did not apply to ing in land, — such partnerships being land held in partnership. CH. XI.] OF THE REAL ESTATE OF PARTNERSHIP. 401 nition of real property as a part of the partnership stock, and the later have yielded to the pressing necessity for this ac- knowledgment, slowly and imperfectly. It was not until quite recently that it has been full and complete ; and now it is carried further in England than it is here. We suppose the rule of those courts to be well expressed thus : " All property, whatever be its nature, * purchased with part- * 370 nership capital for the purposes of partnership trade, is and continues to be partnership capital, and has, to every intent, the quality of personal estate." {x) These last two clauses are, it will be noticed, quite distinct. It is one thing to say that such real estate shall be considered, in every respect, partnership property, and another thing to add that it has to every intent the quality of personal estate. It is the first thing only, we suppose, which the American courts say ; and the English courts say that, and then add the latter. There are two reasons for this English rule. One is, that the reluctance to admit real estate as by any possibility part of the partnership capital arose from the feeling that only personal property could be thus held ; and therefore, when it became obvious that real estate must be acknowledged as part of the partnership property, it seemed as if this was in fact calling it personal property. The other reason is more sub- stantial, and probably more operative. The law of inheritance is such, in England, that where a partner intended that his real estate should be partnership stock, and so treated in all respects, injustice would be done by treating it so until the partnership account was settled and terminated, and tiien {x) Mr. Bisset, in his treatise on which these conclusions were drawn, the Law of Partnership, after a review would seem to be overruled by Essex of all the cases up to his time (1847), v. Essex, 20 Beav. 442, and Darby v. concludes, among other things, tliat Darby, 3 Drewry, 495. See Bell v. " real estate, purchased with partner- Phyn, 7 Ves. 453, and Ripley v. Water- ship property, but not for partnership worth, id. 425. In the latter case, the purposes, is not converted into person- whole law on this point was elabo- alty ; and that, though partners pur- rately considered, and the Vice-Chan- chase with partnership funds the equity cellor /wid, after reviewing all the of redemption of mortgages devised to authorities, that all real estate which them, the equity of redemption follows was added to the partnership stock, in tlie mortgage, and does not become whatever way acquired, becomes con- partnership property." But the cases verted absolutely into personal prop- of Kandall v. Randall, 7 Sim. 271, and erty. See Bonner v. Campbell, 48 Cookson V. Cookson, 8 Sim. 520, from Penn. St. 280. 26 402 THE LAW OP PARTNERSHIP. [CH. XI. restoring to it its character of real estate. For then the heir would take it, and all the next of kin would lose it : one child would take all, and the rest none. If the father had sold the land, and put the money into trade, all would have shared it. And if he had put his land into trade, and it must be consid- ered that he in this way made it personal estate so far as his partners and the creditors of the firm were concerned, it would seem reasonable that he should be considered as having in- tended to impart to tlie real estate the character of per- * 371 sonalty in all respects, and just to carry this * intention into effect. (7/) Hence, it seems to be the English rule, and is so stated in American cases which refer to it, that the real estate of a partnership does not go to the heir of a deceased partner or partners beneficially interested in it, but to his personal representatives. (2) The following distinction might possibly be taken : Supposing three partners, one of whom has the legal title to real estate which is partnership property, and he dies. His heir would be held as trustee for two-thirds of it (one-third to each partner), but the other third he would hold as his own. Whereas, in the same case, if one of the other partners who was thus beneficially, but not Ijy legal title, in- terested in one-third, had died, the partner holding the title, or his heir, would be held as trustee, not for the heir of that deceased partner, who had only an equitable title, but for his personal representatives. We apprehend, however, that such a distinction would be regarded as theoretical only, if admitted at all ; and that the English rule, for the reasons we have stated, would give to such real estate the character and quali- ties of personal property, as to all persons and under all cir- cumstances. iy) See per Sharkey, C. J., in Mark- wliich gave rise to the doubt. See an^e, ham V. Merritt, 7 How. (Miss.) 437. p. * 370, note (.r) ; [Callumb v. Read, (z) This is the conclusion of Wal- 24 N. Y. 505.] So see the same con- worth, Ch., in Buchan v. Sumner, elusion in Diihring c. Duhring, 20 Mo. 2 Barb. Ch. 199, 200 ; of Story, J., in 174. Compare, with these English Hoxie V. Carr, 1 Sumn. 173, 184 ; and cases, the recent case of Steward v. Shaw, C. J., in Dyer v. Clark, 5 Mete. Blakeway, Law Rep. 6 Eq. Cas. 479. 562, 578; and though this was ques- [The land still remaining after the tioned in Buckley v. Buckley, 11 Barb, settlement of the partnership aflairs 73-76, yet that was before the more becomes realty. Foster's Appeal, 74 recent cases of Essex i-. Essex, and Penn. St. 341.] Darby v. Darby, overruling the cases CH. XI.] OP THE REAL ESTATE OF PARTNERSHIP. 403 111 this country, tlie rule is otlierwise. Neither of the rea- sons above stated apply to us. There is not, and we know no reason why there should be, any reluctance to recognize as partnership property any real estate which the owners wish should be so considered. And when it has fulfilled all its functions as personal property, in respect of the partnership, the partners, and the creditors, and is no longer wanted for these, it may now become, in their hands who have the legal title, real estate, and subject to all incidents as such ; because the same persons with us take the personalty and inherit the realty, and it will l)e much simpler and easier for them to take at once as realty that which is realty. The following, then, is the American rule: Real estate, purchased and held as part- nership property, is so treated in equity, and subjected to all the incidents of partnership property. If there be death, * the surviving partner, whether he hold the whole title, * 372 or hold it in part, or hold none of it, if he be a creditor of the partnership, has the same rights against the real estate, and only the same, which any other creditor has. (a) But this real estate goes to pay the debts of the partnership, and only after they are paid does it, or what is left of it, become the property of the partners, or their representatives, free from all claims ; and then it is divided between them just as so much money capital would be. But it then becomes at once real estate ; or, rather, all the incidents and qualities of real estate revive. This rule goes upon the ground of a trust im- posed upon all who hold the legal title, in l)elialf of all partner- ship objects ; and, that trust once discharged, the residue resumes its former character. (Z;) (a) Delaney ?;. Hutclieson, 2 Rand. (i) Dyer v. Clark, 5 Mete. 562; 183; Gray v. Palmer, 9 Cal. 616; Burnsiile v. Merrick, 4 Mete. 5B7 ; Eoberts v. McCarty, 9 Ind. 16. Ab- Howard v. Priest, 5 id. 582 ; Peck v. bott's Appeal, 50 Penn. St. 234. [In Fislier, 7 Cusli. 386; Rice v. Barnard, Pennsylvania, if the partners take a 20 Vt. 479 ; Goodburn ^^ Stevens, 5 deed of real estate as tenants in com- Gill, 1 ; Gal))raitli v. Gedge, 16 B. nion, this fixes the character of the Mon. 631; liuckiey v. Buckley, 11 property as to creditors ; and, in dis- Barb. 43 ; Holland v. Fuller, 13 Ind. tribution, i)rivate and partnership 195, 199 ; Mattock v. Mattock, 5 id. creditors are paid pari 7ws.su. Ap- 403; Buclian v. Sumner, 2 Barb. Cli. peal of Second Nat. Bank, 83 Penn. 165; Boyers v. Elliott, 7 Humph. 204; St. 203. See also Ebbert's Appeal, Tillinghast r. ('h!in)piin, 4 li. I. 173; 70 Penn. St. 79.] Lancaster Bank v. Myley, 12 Penn. 404 THE LAW OF PARTNERSHIP. [CH. XI. 2. Of Dower in such Real Estate. The English rule would seem to cut this off. (e) * 373 But in this * country it is quite well settled that while dower yields to the claims of partnership creditors, whether they are of the firm or strangers, and therefore can- not be granted until all the partnership debts are paid or se- cured, yet, when this is accomplished, as the land is treated in the same way as if it had never entered into partnership prop- erty, dower revives, (d) But the widow should be made a St. 544 ; Sumner v. Hampson, 8 Ohio, 358 ; Greene v. Greene, 1 Ohio, 244 ; Coster v. Clarke, 3 Edw. Ch. 428 ; Lang V. Waring, 25 Ala. 625 ; Jones v. Neale, 2 Patton & H. 339 ; HanflF v. Howard, 3 Jones Eq. 440 ; Collins V. Warren, 29 Mo. 236 ; Wesson v. Washburn Iron Co., 13 Allen, 95; Shearer v. Shearer (2 Browne), 98 Mass. 107 ; [Kleine v. Shanks, U. S. C. Ct. Miss. 1876, 3 Cen. L. J. 799 ; Foster v. Barnes, 81 Penn. St. 377 ; Pierce v. Covert, 39 Wis. 252.] But, in Pierce v. Trigg, 10 Leigh, 406, it was held, by Tucker, J., that the pur- chase of real property with partner- ship funds and for partnership purposes, converted it absolutely into personalty. The court say : " It ought to replace the fund withdrawn from the personal estate. By placing it as stock in the partnership, the deceased evinced a design to treat it as personalty, and it ought to go accordingly. The representatives of the deceased can claim it only as stock ; and as stock in trade it is, ex vi termini, personal. And, accordingly, the widow's dower was denied to her thereout, although the partnership was solvent." The court were not unanimous in this opinion. No other American decision has, it is believed, maintained this doctrine ; and the later cases in Vir- ginia, Davis V. Christian, 15 Graft. 11, and Jones v. Neale, 2 Patton & H. 339, treat the point as doubtful, a decision thereon being unnecessary. See ante, p. * 367, note (q). On the other hand, dicta occur going to sustain an abso- lute conversion in the case of a pur- chase of land, under a stipulation for resale, made either at the time, or agreed upon in the partnership articles. Ludlow V. Cooper, 4 Ohio St. 1 ; Buck V. Winn, 11 B. Mon. 320; Divine V. Mitchum, 4 id. 488; Galbraith v. Gedge, 16 id. 631, 635; Thayer v. Lane, Walk. Ch. 200 ; but in none of these cases is the point decided. See Dewey v. Dewey, 35 Vt. 655. As to what joinder of interest is necessary to make a partnership in lands, see White V. Fitzgerald, 19 Wis. 480. (c) Houghton V. Houghton, 11 Sim. 491 ; Morris v. Kearsley, 2 Younge & C. 139. (d) Dyer v. Clark, 5 Mete. 562; Howard v. Priest, 5 Mete. 582 ; Coster V. Clarke, 3 Edw. Ch'. 238 ; Galbraith V. Gedge, 16 B. Mon. 631 ; Goodburn v. Stevens, 5 Gill, 1 ; Smith v. Jackson, 2 Edw. Ch. 28. Thus, if the firm become insolvent, the widow loses dower. Greene v. Greene, 1 Ohio, 244 ; Duhring v. Duhring, 20 Mo. 174. [There is no dower in the real estate of a partnership, till the adjustment of partnership accounts ; and any sale, whether by mortgage, or on execu- tion, or by decree of court, will bar dower. Simpson v. Leach, Sup. Ct. III., June, 1878, G Cent. L.J. 135 ; Uhler V. Semple, 20 N. J. Eq. 288 ; Willett v. Brown, Sup. Ct. Mo. 3 L. & Eq. Reptr. 728.] On the otiier hand, if the prop- erty passes out of the partnership to a stranger, as he is not privy to the CH. XI.] OF THE REAL ESTATE OF PARTNERSHIP. 405 party to any bill for an account or for a sale of the real prop- erty to pay debts, (e) Otherwise, the purchaser might be liable to the widow's claim for dower. (/) 3. Of the Inheritance of such Real Estate. The heir always takes the real estate in order to support the legal title, and is then held as trustee for all those purposes to which the land must be devoted in order to make it effectually partnership property ; (^) having, however, the right to require that the real property shall not be sold to pay debts until all the personal property is exhausted. (Ji) When these are all fulfilled, he then holds * it discharged from claim, * 374 precisely as if it had never been otherwise, (i') If land be conveyed to partners, in fact as partnership property, but in form to them as tenants in common, and one dies, his heir becomes tenant in common with the other partners, (y) Here, as before, he holds as trustee for the partnership until this trust is discharged, and then for himself. And it is said in England, that, in such a case, if the heir has a beneficial as well as legal interest, dower would be allowed. (Jc) Here it certainly would be as soon as the estate were cleared from all liability for the debts of the partnership. trust, but holds the estate discharged into personalty, and the widow could thereof, the widow can claim dower take no dower. But this decision of the vendee, as the holder of the seems questioned in Davis v. Christian, legal estate ; nor can he avail himself 15 Gratt. 11. of the fact that the land was partner- (e) Pugli v. Currie, 5 Ala. 446. ship property, as the trust is wholly (/) Thus, in Collins v. Warren, 29 gone. Markham v. Merritt, 7 How. Mo. 2.36, as this was not done, the sur- (Miss.) 437. In Tennessee, it is held, vivor was not allowed to recover from that, in consequence of the act ahol- the widow, in an action of ejectment, ishing joint tenancy, Stat. 1784, ch. 22, more than an undivided moiety of the land of the partnership, bought with real estate. its funds and used for its purposes, (*/) See ante, p. *363, note (c) ; unless within the exception in favor of p. *368, note (t). "useful trade," &c., will have every (h) Lang v. Waring, 25 Ala. G25. attribute of real property, and descend So the heirs must be parties when a to the heir, and not go to tlie personal sale is sought for payment of firm representatives. McAllister v. Mont- debts. Piigh v. Currie, 5 Ala. 446 ; gomery, 3 Ilayw. i) * 375 * It has been held in England, where mortgages were devised to partners, and they bought the equities of redemption, thus completing title in themselves, the land was not partnership property, nor to be treated as personal prop- erty. The case was perhaps well decided on its facts, (o) But we believe no rule exists in England, and certainly none in this country, that real estate so acquired should not be con- sidered partnership property, if it was intended so to be, and was so treated, by the parties interested. (/) This equitable interference is Sumner v. Hampsnn, 8 Ohio, 328; more usual in England than in this Duliring v. Duhring, 20 Mo. 174 ; country, Broom v. Broom, 3 Mylne & Evans v. Gibson, 29 id. 236; Carlisle K. 443 ; Morris v. Kearsley, 2 Younge v. Mulhern, 19 id. 5(3. & C. 139; Hougliton v. Houghton, 11 (m) Phillips v. Phillips, as stated in Sim. 491 ; Fereday v. Wightwick, 1 Bisset on Part. 50. Russ. & INI. 45 ; as the statutes of most (n) Dyer v. Clark, 5 Mete. 562; of the United States have changed Burnside v. Merrick, 4 id. 537 ; Howard joint tenancies into what are practi- v. Priest, 5 id. 582. cally tenancies in common, by abolish- (o) Phillips v. Phillips, Bisset on ing the right of survivorship. See Part. 50. This case has not been 1 Washburn on Real Propert}', 408, questioned in any decision that we are where the several State statutes are aware of, and is recognized by Mr. referred to at length. The American Lindley, Law of Part. pp. 553, 554, courts generally have declared the same though, it seems, witii some hesita- equitable rule. Delaney v. Hutcheson, tion ; and it is certainly against the 2 Rand. 183 ; Thayer v. Lane, Walk, broad rules given by him as the result Ch. 200 ; Dyer v. Clark, 5 Mete. 562 ; of the English authorities. CH. XI.] OP THE REAL ESTATE OF PARTNERSHIP. 407 4. Of the Ricjht of Creditors of the firm to its Heal Estate. This right whenever it arises, as will be inferred from what has been said, is the same as it is to the personal estate of the partnership. But it must be worked out by the power of equity to hold the legal owner as trustee for those who are beneficially interested. A question of some importance, at least in this country, arises, as to when the creditors' right to real estate may be enforced. It is this : Have the creditors of a firm, in equity, under all circumstances tlie same right to the real estate that they have to the personal estate of the firm ; or have they only a right to resort to the real estate if the personal estate prove to be insufficient to pay the debts ? The difference might be a very important one in this country, so far at least as dower is concerned. It might, indeed, be for the interest of the heir to have the land of a partnership appropriated in the first place to pay the debts. If the firm were insolvent, it would make no difference. (|j) If not, the heirs would lose the land, but would save from the surplus of personal just as much as they would lose in the laiid, and would take it free from the encumbrance of dower. But, in such a case, a court of equity applied a similar rule to that which obtains in the settlement of an estate of a de- ceased person, {cf) The personal * estate is applied to * 376 the payment of debts in the first place ; if that be ex- hausted and insufficient, then so much of the real estate is so applied as may be necessary. And so it is in case of partner- ship ; and therefore the whole real estate of a partnership, if none of it were wanted for payment of debts or partners' (p) But see, in Lang v. Waring, 25 where the aid of equity is claimed to Ala. 625, that the heirs are not cut off reach a fund, hy one who has recourse from all defence, even by insolvency to two funds in the same ri>>lit; that is, of the firm. [Where a partner mort- the creditor will be comiiellcd to resort gages partnership real estate to secure to that fund which he alone has re- his individual debts, the i)artnership course to, and exhaust it, before he creditors must first be paid before the can subject the otlier to his demand, private creditors can take the property, Adams' Eq. 271, 274, and cases cited ; or any part of it, by foreclosure. Bardwell v. Perry, 19 Vt. 2U2 ; and, Conant r. Frary, 49 Ind. 5:10.] generally, cases cited ante, p. *353, (q) The doctrine of marshalling as- note («). sets will always be applied in cases 408 THE LAW OF PARTNERSHIP. [CH. XI. shares, would be as unaffected in equity as at law ; and, if part of it were so wanted, that part only would be treated as per- sonal property, leaving the residue untouched, (r) 5. Of the Right and Power of the Partners as to the Meal Estate of the Partnership. This seems to be, in equity, entire and complete, so far as the payment of debt goes ; and, after that payment, so far as the adjustment of the mutual claims or balances of the part- ners is concerned, (s) But there is a limitation as to the power of a partner over this real estate, which would, we think, be applied in this country as it is in England. It is simply this : No partner, and no proportion of the partners, can sell or trans- fer the real estate of the firm — outright for money, or by way of mortgage to secure a debt, or to assignees in trust for debts — without the consent and authority of the other partners. * 377 On the first point, — that he * who happens to have the legal title cannot sell the real estate without the consent and authority of the rest, so as to give title to a grantee having notice, — we are quite sure that must be the law. And if he make a mortgage to secure a debt, or an assignment in trust for creditors, by which the legal title would pass, it seems that equity will not sustain the transaction, even supposing it free (r) In case of dissolution by the v. Mulhern, 19 id. 56 ; Ricliardson v. death of a partner holding title to the Wyatt, 2 Desaus. 471; Dillon v. firm's real estate, neither the survivor Brown, 11 Gray, 179. In the cases nor the partnership creditors can claim where an apparent right has been the aid of a court of equity to compel given to the survivor to call upon the the widow and heirs to release their heir peremptorily to convey, it will rights, until the personal assets are always, we think, be found that the exhausted. Lang r. Waring, 25 Ala. land was needed to pay the debts of 625, correcting Andrews v. Brown, 21 the firm. Pugh v. Currie, 5 Ala. 446 ; id. 437. As to the right of partnership Sumner v. Hampson, 8 Ohio, 328. And creditors, when the real assets are the case of Andrews i". Brown, 21 Ala. requisite to a full satisfaction of their 437, which seemed to disregard this debts, to call upon the heirs and widow rule, was overruled on this point by to convey and release their rights, Lang i-. Waring, 25 id. 625. through the medium of assent to a (s) Dilworth v. Maj'field, 36 Mo. 40 ; sale by the survivor, see Sumner v. Andrews i\ Brown, 21 Ala. 437; Lang Hampson, 8 Ohio, 328 ; Lang v. War- v. Waring, 25 id. 625 ; Pugh v. Currie, ing, supra: Pugh v. Currie, 5 Ala. 446; 5 id. 446 ; Davis v. Christian, 15 Gratt. Davis V. Christian, 15 Gratt. 11 ; Duh- 11 ; Shearer v. Paine, 12 Allen, 289. ring V. Duhring, 20 Mo. 174 ; Carhsle CH. XI.] OF THE EEAL ESTATE OF PARTNERSHIP. 409 from the taint of fraud. (0 It would seem, therefore, that the power of a partner over the real estate of the firm is less than that over the personal estate. He may contract debts and make contracts which will indirectly reach the realty, because this must finally be subject to the debts of the firm. But he cannot directly convey or appropriate it, excepting so far as he has the legal title in himself; and then a purchaser with knowl- edge, or the means of knowledge, takes the land subject to all the equities of the partners, (i^) And, by the same principle, it is held^ in England, that the contracts of a partner about the land of the firm — as for its sale, for example — have no force, unless they are made with the consent and by the authority of the firm. If this were shown, however, although not in such a ■way as to give any interest or right or remedy at law, equity would undoubtedly enforce the contract, if it were itself legal. A different question arises when a partner does not under- take to dispose of the property or interest of the firm in the real estate, but sells his own interest in it to a stranger. This it has been held he may do, and that the sale is valid as against his copartners, although it would not be valid as against the creditors of the firm. (i«/) A sale of partnership real estate by order of court, to pay the debts of a deceased partner, conveys only his interest as partner, although the whole legal title was in the deceased, {uuu) SECTION V. OF CONVEYANCES TO STRANGERS OF THE REAL ESTATE OF THE PARTNERSHIP. We have repeatedly remarked that the law respects and upholds the legal title to land by deed and record. Xor will equity disregard or supersede this in relation to innocent pur- chasers. Thus, if land which certainly belongs to a partner- ship is held in the name of one partner, and he conveys it for (I) Ilanff i;. Howard, 3 Jones Eq. (uu) Treadwell r. Williams, 9 Bosw. 440 ; Baldwin v. Johnson, Saxt. Ch. 441. 649. (n) Forde v. Hcrron, 4 Munf. 81(j ; (unu) M'Cormick's Appeal, 57 Tenn. per Walworth, Chancellor, in Huciian St. 54. V. Sumner, 2 Barb. Ch. 175, I'JS. 410 THE LAW OP PARTNERSHIP. [CH. XI. value to a person who 1ms no knowledge, or reasonable means of knowledge, that it belongs to the firm, such person, we have seen, will iiold it as against the firm. Of this there can * 378 be no doubt, and as little that * if the grantee knew, or had sufficient means of knowing, that it belonged to the firm, his title will be annulled, or he will be charged as trustee for the firm, (v) It is a much more difficult question, whether such innocent purchaser holds the property as against creditors. In the absence of decisive authority, we should say, on gen- eral principles, tliat he would. If a partner sells a part of the merchandise of his firm, fraudulently against the firm or its creditors, but apparently in due course of business, so as to excite no suspicion, and give no notice to the purchaser, we should say that the purchaser would hold it both as against the firm and their creditors. On similar grounds, we should say that a regular transfer of land, for value, to an innocent stranger would give him title against the firm and the creditors of the .firm, although the firm were insolvent, and the sale fraudulent on the part of the partner selling. (r) M'Dermot v. Laurence, 7 S. & decision was sustained by the court in R. 438 ; Forde y. Herron, 4 Munf. 310; bank. In tlie later cases of Kramer Walworth, Ciianceilor, Buchan i'. Sum- i'. Arthurs, 7 Penn. St. 165, and Kidg- ner, 2 Barb. Ch. 198 ; Tillinghast v. way's Appeal, 15 id. 177, the same Champlin, 4 II. I. 173, 209 ; per Shaw, doctrine was recognized. But see C. J., in Dyer v. Clark, 5 Mete. 562, Moderwell v. MuUison, 21 id. 257, 580. In some cases in Pennsylvania, Coder v. Huling, 27 id. 84, where tliis a different doctrine prevails. In the doctrine seems somewhat qualified, earliest case, M'Dermot v. Laurence, Where, as is generally the case, the Tilghman, C. J., carefully guarded purcliaser is a creditor of one part- against the case where the purchaser ner, it seems held, that he will be post- had reasonable means of knowledge ; poned to the demands of the partner- but in Hale v. Henrie, 2 Watts, 145, ship, — both creditors' and partners' the court, Gibson, C. J., absolutely claims — notwitlistanding the recorded excluded evidence showing a clear title. Edgar v. Donnally, 2 Munf. .387 ; knowledge of the partnership equities, Jarvis v. Brooks, 7 Fost. 36; Hanft' v. holding tiuit tlie purcliaser need only Howard, 3 Jones Eq. 440 ; Tillingliast rely on the registered title ; and his v. Champlin, 4 R. I. 173. CH. XII.] OP DISSOLUTION. 411 CHAPTER XII. OF DISSOLUTION. SECTION I. OF THE EXTENT AND DUUATION OF A PARTNERSHIP. When a partnership is formed, the partners may determine at their pleasure what its extent shall be in respect to busi- ness, and what in respect to time. We shall presently consider how far and in what way their agreement as to the duration of the partnership binds them. As to the scope or character of their business, supposing they do or propose to do notliing in itself unlawful, we know no limitation to their power. They may determine this when they enter into partnership, and provide for it in their articles, or at any subsequent time. And they may change their business at their own pleasure, by enlargement, contraction, or alteration. It must be obvious, however, that any agreement of this kind, once made, is binding upon all the parties to it, and comes under the general rule of contracts, that they cannot be varied or rescinded but with the consent of those who make them. And another general rule applies ; which is, that the terms of the bargain, if reduced to writing, are not to be varied by other evidence ; and, if not reduced to writing, may be inferred from circumstances. This is sometimes important. A partner who violates an agreement of this kind — that is, who makes a material change in the extent or character of the business, without the consent of the other partners — commits a wrong against them, as wc have already seen, for which he is responsible to them in damages, and may also be restrained or otherwise dealt with in equity. Whether such wrong has been done may be easily ascertained, if there be articles which dchnc 412 THE LAW OF PARTNEESHIP. [CH, XII. the business of the partnership. If there are none, * 380 * it is more difficult. And, perliaps, it may be said that courts of law or of equity would in such case require circumstantial evidence of a certain and positive character, both as to the proper scope and character of the business, and that the cliange complained of is in violation of the agreement implied, in the absence of writing, from a long and distinct course of business. A partnership, having once begun, will be presumed to con- tinue until there is some evidence of its termination, (a) And, even after a dissolution, the partnership, or at least a kind of community of interest, of power, and of liability, continues, as we shall see, for some purposes, and for so long a time as is necessary to carry those purposes into effect. In general, how- ever, we may say that a partnership ends by its dissolution. And we will now proceed to consider the subject of dissolu- tion of partnership ; and, particularly, how many ways there are in which a partnership may be dissolved, and what are the effects of each kind of dissolution. Dissolution of partnership takes place in seven different ways : 1. By the provision of the articles. 2. By the will of all the partners. 3. By act of one or more of the partners alone. 4. By a change in the partnership. 5. By the death of a partner. 6. By decree of a court of equity. 7. By bank- ruptcy. SECTION II. OF DISSOLUTIOX BY A PROVISION IN THE ARTICLES. Perhaps there is no one thing more frequently provided for by the articles than the duration of the partnership. Where this is done in a simple form, as by the mere statement that "this partnership shall continue for the period of five years from this date," there can be no question about its meaning, and none (a) Howe i'. Thaj-er, 17 Pick. 91." the note in suit was signed, was not But in Rogers v. Keed, 18 Me. 257, evidence tliat they were so at that the court held, tliat evidence that per- time, sons were partners ten months before CH. XII.] OP DISSOLUTION. 413 about its legal obligation. When that period expires, or the time for dissolution arrives, the partnership dies, of course. It may be * continued by agreement, and often is ; but this * 381 is, in fact, a new partnership. And the old articles are of use only as evidence to assist in determining its terms ; and they will be decisive on this point, if by the agreement the terms of the new one are to be the same with those of the old. The question often occurs, however, What can a partner do, who, wishes to terminate such a partnership before the agreed period arrives ? And we have already seen that there is much diffi- culty in determining how far the parties are bound by such agreement in practice. No doubt exists that equity may decree dissolution for cause, whatever be the agreement, or may refuse such a decree, and even enjoin a continuance of the partner- ship. And we shall presently see that certain acts, which would seem to be always in the power of a partner, as a trans- fer of his interest, or his insolvency, or retirement in any way, generally dissolve the partnership. And the question has arisen, whether equity will ever compel parties to remain in this rela- tion, after it has become certain that there is no longer mutual confidence, or regard, or desire for continuing the connection. This question we have already touched upon ; (6) and it is per- haps impossible to give even a general rule on the subject, unless we venture to state this to be one : That equity will not in such case, decree a continuance of the partnership because the agreed period has not expired, unless, in the first place, a decided wrong and injury would be inflicted by the present dis- solution ; and, secondly, it is practicable for the court to insist upon such a continuance as will in fact prevent the threatened mischief, without doing other harm, (c) (6) See ante, pp. *236, 301. And Harrison v. Tennant, 21 Beav. 482; see ;jos<, p. * 404, note (c). Pearpoint v. Graliani, 4 Wash. C. C. (c) Chavany v. Van Somnior, cited 2:>4 ; Cape Sable Co.'s Case, 3 Bland, 1 Swanst. 512, note, and 3 Wooddes. 674; Monroe v. Conner, 15 Me. 180; Lect. 416, note; Barring v. Dix, 1 Cox, llowell v. Harvey, 5 Ark. 281 ; Beaver 213; Smith v. Jeyes, 4 Boav. 503; r. Lewis, 14 Ark. 138; Mann r. Con- Harrison V. Tennant, 21 id. 482 ; In re nell, 1 Whart. 388 ; Whitton r. Sniitii, Electric Telegraph Co. of Ireland, 22 1 Freem. Ch. (Miss.) 231 ; Blake v. Dor- id. 471 ; Waters v. Taylor, 2 Ves. & B. gan, 1 Greene (Iowa), 640 ; Garretson 229; Skinner v. Dayton, I'J Johns, y. Weaver, 3 Edw. Ch. 385 ; Kennedy 538; Peacock y. Peacock, 16 Ves. oO ; v. Kennedy, 3 Dana, 23'J ; Gowan v. Crawshay v. Maule, 1 Swanst. 4'J5 ; JeSries, 2 Ashm. 2y0. As to season- 414 THE LAW OP PARTNERSHIP. [CH. XII. The provision in the articles on this subject may not be so simple as above suggested. It may be that the partner- * 382 ship shall * continue until certain circumstances occur, or until one partner or the other does certain things. In such a case, there is no dissolution by the articles until tiic circumstances occur, or the act be done. Difficult questions of fact may arise under such a clause ; but, so far as a question of law can come from it, it must be governed by the ordinary principles of contracts on a condition, (c?) The articles may omit all reference to the termination of the partnership; and sometimes the agreements as to the partner- ship are only oral, (e) and sometimes the partners expressly agree simply to be partners, leaving all the rest to their mut- ual but silent understanding, or to time and the operation of law. (/) In these cases, it may be a question whether the facts and circumstances do not imply or raise a presumption of law that there was some agreement for a definite term. This question has been not unfrequently mooted, and sometimes it seems to have been decided on doubtful principles. We certainly should not deny that there may be such inferences or implications ; but they should not readily be admitted. If, for example, a partnership, needing land or a store for its business, hired one, paying the rent from partnership funds, and using it for partnership purposes, so as to leave no doubt that it is partnership property, could it be said that the lease implies an agreement that the partnership shall continue until the lease expires ? We think not ; and the best authorities lead to this conclusion. (^) Asa matter of actual probability, such a lease is very slight evidence of any such intention. They may have taken it for many years, because they could not get it otherwise, and were willing to take the risk of disposing of able time, see "Wheeler v. Van Wart, (/) Ante, p. * 231. 2 Jur. 252 ; Reade v. Bentley, 3 Kay (rj) Crawshay v. Maule, 1 Swanst. & J. 271, 4 id. 65; Potter v. Gray, 495; Featherstonhaugh i\ fenwick, 1 R. I. 430. As to the grounds on 17 Ves. 2'J8, 307; Alcock v. Taylor, which equity will decree a dissolution, Tamiyn, 500; Jefferys v. Smith, 1 Jac. see Mealier v. Cox, 37 Ala. 201. & W. 301. See Marshall r. Marshall, (d) See 2 Pars. Contr. (5th ed.) 525- cited 2 Bell Comm. 641, note 3, and 527. 033, note 1. (e) Ante, p. * 6, et seq., and notes. CH. XII.] OF DISSOLUTION. 415 it when they should dissolve ; or they may have taken it in order to he sure, at all events, of the premises as long as they might want them. Other suppositions might be made: so many, indeed, that we think the lease while standing alone would not amount, even if wholly unexplained, to prima facie evidence, either in fact or in law, of * any under- * 383 standing that the partnership should last as long as the lease run. So, too, if the partnership entered into long and continuing contracts of business, or engaged in some transaction which could not be closed for a considerable period without great loss, we should say, that nothing of this kind would be very strong evidence of a definite understanding or agreement for continuance. (/«) There may be many ways of transferring or cancelling such contracts, or bringing such transactions to a close, or even of continuing them after the partnership has closed. We should admit that all circumstances of this kind might be admissible and useful evidence in connection with the general course of the business, the usage relating to it, and all those facts which, looking to the future, imply an intention in regard to it. But, so far as a general principle can be given fur tliis class of questions, it must, we think, be this : That equity would not decide on such grounds that the partners had mutually agreed to continue as partners for a certain period ; unless no other theory so well satisfied and explained all the facts of the case, and a permission to either partner to dissolve at pleasure would work great mischief. Then, perhaps, equity might prefer to decide that the })arties had agreed to remain together, and therefore should not part, rather than to say that one of them should not exercise his right to dissolve the firm, because he would thereby inflict an injury. («) But if one of (/() Featherstonhaugh v. Fenwick, 17 (/) In "Wlieeler v. Van Wart, 2 Jur. Ves. 298, 307. But see Potter v. Gray, 252, tlie deed of settlement constituting 1 R. I. -130. The mere fact tliat a firm a company contained no clause limit- has incurred debts, and charged its ing the duration of the partnership; assets for their payment, is no evidence but it provided that certain persons of an agreement that the firm shall should be appointed directors until continue until its debts are paid. See July, 1838, or until an act of Parlia- King r. The Accumulative Assurance ment should be had. The Vice-Chan- Co., 3 C. B. X. 8. (yl Eug. Com. L. li.) cellor said: " It is my opinion that 151. they could not dissolve until July, 416 THE LAW OF PARTNERSHIP. [CH. XII. several partners agrees with a stranger for a sub-partnership, it is not to be implied, merely from the absence of any agreement to the contrary, that the duration of the sub-partnership is to be coextensive with the original jtartnership. (y) * 384 * Partnerships are sometimes formed for a single ad- venture or enterprise. Then, they terminate when that enterprise is brought to a close ; (/c) for the articles of agree- ment which limit the partnership to that adventure imply that it ceases when that ceases ; but, for the purpose of winding up those affairs, it continues until all past transactions are closed. (^) But such a partnership may continue, by express agreement, or by the partners going on to act as partners in other transactions ; and this would not be considered as a new and distinct partnership, but as a continuation of the original one, and a continuation of the original terms, unless new par- ties came in, or it could be shown, or inferred from circum- stances, that the terms were varied. So, too, if the partnership were formed for dealing with a subject-matter certain to expire at a certain time, or even to expire at any time, it must be understood as providing that the partnership shall then expire. As, if for traffic with a certain patent or copyright, which had a definite number of years to run. We apprehend, that, if such patent or copyright were renewed under the general law, the partnership would still continue. But, if it were renewed only by special statute or grant, a continuance of the partnership would require a new agreement. (>«) SECTIOX III. OF DISSOLUTIOX BY THE WILL OF ALL THE PARTXER9. It is obvious and certain that the contract of partnership is rescindable by all who are parties to it, at their own pleas- 1838 ; and, if so, then, as in an ordi- ( /) Frost v. Moulton, 21 Beav. 596. nary partnership, they could not do it (i) Pothier, Contrat de Soc. No. without notice." Tliis point is not 140-14.3. mentioned in the report of the case in (/) Petrilsin r. Collier, 1 Barr, 247. 9 Sim. 193. See Keade r. Bentley, (m) See Wheeler v. Van Wart, 9 3 Kay & J. 271, 4 id. 65; Potter v. Sim. 193, 2 Jur. 252 ; Reade f. Bentley, Gray, 1 R. I. 430. 4 Kay & J. 656, 3 id. 271. CH. XII.] OP DISSOLUTION. 417 ure. (7i) But a majority of the partners may not exclude one of the partners from the firm without sufficient cause. It has been held not a sufficient cause, that he paid into the capital a part only of what he agreed to contribute, if that part had been accepted, and used in the business of the firm, (nii) A technical distinction, still mentioned in our text-books, that, if the contract of copartnership is under seal, it cannot be revoked and cancelled excepting under seal, has never had any force in equity ; and we do not suppose that it would now have any practical effect in law. (o) * Not only would any express renunciation have this * 385 effect, but a general consent of the termination of the partnership would be inferred from conduct or circumstances not otherwise explicable ; as, by a tacit renunciation and stop- ping of business, settlement of the debts and accounts, con- verting of the property into money, or division of it among the partners, sale of the good-will, or the like. ( j!?) It has been questioned whether the incorporation of the part- ners, for a similar business, would amount to a dissolution by consent. This has not unfrequently occurred in this country, where successful manufacturers or mechanics have found their business so enlarged that it was more convenient to transact it under the forms of a corporation. We should say that this fact alone would not necessarily be the dissolution of the partner- ship. But it never would stand alone. The corporation would always have some defined relation to the former partnership. (n) See Master v. Kirton, 3 Ves. Same ease not reported so fully, 4 274. Camp. 373. In Hutchinson v. Whit- (nn) Hartman v. Woehr, 3 Green field, Hayes, 78, it was provided that (N. J.), 383. the partnership should be dissolved (o) Tills point was raised in Waith- only by deed. Held, that an award man v. Miles, 1 Stark. 181. The part- under a submission, both under seal, nership deed was under seal. To dissolving the partnership, was valid. prove a dissolution, a written notice Tlie action of covenant lies for a wrong- was put in, signed by all the parties, ful dissolution. Addams i'. Tutton, •which stated that thy hud dissolved the 39 Penn. 447. partnership. Lord Ellenborough said (p) For cases bearing on such ques- it might be very deserving of atten- tions, see Heath v. Sansom, 4 15. & Ad. tion, whether a partnership created by 175; Jefferys i'. Smith, 3 liuss. 158; deed could be dissolved by any thing Johnson v. Evans, 7 Man. & G. 240 ; short of a deed; but here, as against Ilaberslion u. Ulurton, 1 De Ge.x & S. the party who signed the notice, the 121 ; Aspinall v. The London & N. partnersliip must be taken to have W. K. Co., 11 Hare, 325; Perens v. been dissolved by competent means. Johnson, 3 Smale & G. 411). 27 418 THE LAW OF PARTNERSHIP. [CH. XII. Either it would be a substitute, taking all its business and all its proj»erty, leaving it nothing to hold, nothing to do, and noth- ing to 1)C ; in which case it would be clear that the partnership had died out ; or else some portion of the business and the stock would be left for the firm, and some use made of it ; and then it would remain for these purposes, (^q) SECTION IV. OF THE GENEKAL EFFECTS OF A DISSOLUTION. 1. Of its Effect on the lyiterests or Riglds of Partneis. * 386 * Some general results follow a dissolution of partner- ship, or some general principles apply to dissolution, which are especially pertinent to dissolution by articles or by consent, and we will present them in a general form now ; re- serving the modifications in them caused by particular methods of dissolution, until we specially consider those methods. In the first place, a mere dissolution has no effect whatever on the property of the partners, or their interest in the joint stock or joint rights, or their power over old or existing debts due to them or due from them; excepting always that they have all entirely lost the power of acting for each other, or binding each other, any further than all joint debtors or joint creditors may do. Thus, if we suppose a dissolution by articles or consent, and no special agreement as to the powers or acts of the several partners, each one has a perfect right to require, and through equity compel, a final settlement and adjustment of all questions and all property ; (r) and each one has the same power as to this, and all the details connected with it, as any other. So, too, each partner has as much right to any par- ticular thing or things as any other ; and all the others have as much right as he has. (5) '>^ ((/) See Goddard v. Pratt, 16 Pick, liabilities of the old firm, and the cred- 412; Tlie Cape Sable Company's Case, iters assent thereto, they cannot on the 3 Bland, 674. There is no doubt that failure of the corporation hold the for- after the incorporation the members of mer members of the firm. Whitwell the tirm are liable for all debts pre- v. Warner, 20 Vt. 425. viously incurred. Haslett v. Wother- (/•) ^/() Waite v. Foster, 33 Me. 424. the retiring partner in the prosecution (c) Fellows v. Wyman, 33 N. H. of all suits. In an action in which 351. judgment had been obtained by all the ((/) Morse v. Bellows, 6 N. II. 508. 426 THE LAW OF PARTNERSHIP. [CH. XII. may pay and receive payment, (t^) may sell goods con- * 393 signed to the firm before * dissolution, (/) and may compromise debts in any way which does not indicate fraud. (^) So, too, he may undoubtedly exchange goods, but always for the purpose of winding up the old concern. He has power to draw a bill upon a debtor of the firm, and, on its being accepted, to sue him in the firm name ; (A) to release a debt due to the firm ; (i) to pledge shares of stock which the firm had contracted to buy, but had not paid for, to raise the money to pay for the shares ; (y) to collect, compound, and release debts of the firm. {Jc} But, any thing done l)y him, however innocent and proper in itself, would not be within the scope of his authority, if it was done for the purpose of con- tinuing the business of the firm, or opening it anew, instead of winding it up. (/) It may be doubted, too, whether he can, without especial authorit}-, buy goods so as to bind the other pa^'tners for the purchase. It is not uncommon, in practice, for a settling part- ner to make small purchases, in order to complete an assortment of goods on hand, and promote the sale thereof. If he does this with cash, in good faith, the seller certainly holds the money, and we should have no doubt that he might credit himself with such payments in his account. But, if he buys on credit, we do not think that the other partners would be held, unless they distinctly authorize the purchase. («i) 'ifs, All the partners, and each partner, have the right of requir- ing that the settlement should be made with reasonable prompti- tude, and with entire respect for the rights and interests of each one. And, of course, no partner can have any rights in- consistent with these rights of his copartners. («) And if any (e) Butchart v. Dresser, 10 Hare, (/.) Huntington v. Potter, 32 Barb. 453, 4 De Gex, M. & G. 542. See also 300. Parker v. Pliillips, 2 Cush. 175, 178 ; (/) Wilson v. Greenwood, 1 Swanst. Washburn v. Goodman, 17 Pick. 519, 481 ; Crawsbay v. Maule, id. 507 ; 636; Fereira v. Sayres, 5 Watts &. S. Ex parte Williams, 11 Ves. 3. 210 ; Beak r. Beak, 3 Swanst. 627. (m) See Minnit v. Whinner}', 5 (/) Herberton v. Jepherson, 10 Bro. P. C. 489, 2 id. (Dublin ed.) 323, Barr, 124. 16 Vin. Abr. 244 ; Vice v. Fleming, 1 (f/) Bass V. Taylor, 34 Miss. 342. Younge & J. 227; Ex parte Harris, 1 ('/() King I'. Smith, 4 Car. & P. 108. INIadd. 583. (i) Napier v. McLeod, 9 Wend. 120. («) See Lees v. Laforest, 14 Beav. ( j) Butchart v. Dresser, 10 Hare, 250 ; Clegg v. Fishwick, 1 Macn. & G. 453, 4 De Ge.x, M. & G. 542. 294; Perens v. Johnson, 3 Smale & G. CH. XII.] OF DISSOLUTION. 427 thing is done which should not be done, or left undone which should be done, a court of equity will interfere. There is, per- haps, no class of questions or of cases in which equity so readily * or so usefully exerts its power as in those * 394 which arise under dissolution of partnership. The guiding principle in its action is, to preserve equally the rights of all parties, (o) Hence, no partner can make any use of the property for his own particular benefit ; but he will be held, chargeable for all the profits and advantages which may accrue from such use, either as trustee, or in some other adequate way. (jo) And, as a general rule, each partner has an equal right to the possession of the partnership property. If the firm is dissolved, and the partners cannot agree as to the divi- sion of it, a court of equity will appoint a receiver to collect and apply the effects, {q) Nor can any partner claim to him- self any especial commission or payment for his services in settling, unless there be an agreement to that effect ; the rea- son which forbids this after dissolution being the same which forbids such claim for services in the ordinary partnership business ; namely, the entire equality of the partners, unless they agree upon some inequality, (r) So, too, all compositions or compromises of debts, all settlements, and all the trans- actions which follow dissolution, must be for the common and equal benefit of all the partners, (s) 419 ; Clements v. Hall, 2 De Gex & J. 173. (o) Bennett's Case, 18 Beav. 339, 5 De Gex, M. & G. 284; Benson v. Heatliorn, 1 Younge & C. 326; York 6 North Midland R. Co. v. Hudson, 16 Beav. 485 ; Maxwell v. The Port Tennant Co., 24 id. 495 ; Kichardson V. Larpent, 2 Younge & C 507 ; Harris V. The North Devon R. Co., 20 Beav. 384. (/*) Kelley v. Greenleaf, 3 Story C. C. 93, 101 ; Featherstonhangh v. Fenwick, 17 Ves. 298 ; Pothier, Contr. de Soc. ch. 8, § 4, art. 1.50. See also Leach v. Leach, 18 Pick. 68; Dough- erty V. Van Nostrand, 1 Hoff. Ch. 68, 70. (r/) Terrell v. Gcxldard, 18 Ga. 664. See Stevens v. Yeatnian, 19 Md. 480. (/•) Caldwell V. Lieber, 7 Paige, 483 ; Thornton v. Proctor, 1 Anst. 94 ; Franklin v. Robinson, 1 Johns. Ch. 157, 165; Bradford v. Kimberly, 3 Johns. Ch. 431 ; Burden v. Burden, 1 Ves. & R. 170 ; Lee v. Lashbrooke, 8 Dana, 219 ; Paine v. Thatcher, 25 Wend. 450 ; Anderson v. Taylor, 3 Ired. 420; Reybold v. Dodd, 1 Ilarr. (Del.) 401; Newland v. Tate, 3 Ired. Eq. 232 ; Phillips v. Turner, 2 Dev. & B. Eq. 123 ; Dougherty v. Van Nos- trand, 1 Hoff. Ch. 68; Wasliburn v. Goodman, 17 Pick. 519; Ilite v. Hite, 1 B. Mon. 179. But see Bradley v. Ciiamberlin, 16 Vt. 013 ; VViiby v. Pliiiuiey, 15 Mass. 120. But sec ante, p. * 443. (.s) See Porter v. Wheeler, 37 Vt. 281; Beak v. Beak, 2 Swanst. 627; 428 THE LAW OF PARTNERSHIP. [CH. XII. 3. Of the Effect of a Dissolution upon Third Parties. No dissolution of any kind affects the rights of tliird * 395 parties, * who have had dealings with the partnership, without their consent. This is a universal rule, without any exception whatever, (f) Undoubtedly, the partners may agree as they please about their joint property and all the parts of it ; and so they may about their joint obligations. And all such agreements are valid, so far as they do not affect the rights of strangers; but, where they do, they are wholly void. Thus, three partners may agree to-day to dissolve, and to divide all the property in a certain way, specifying that one shall have this, another that, and the third that thing. Or they make such an agreement about some one or more things, and not about all. And these agreements determine the property in these things effectually as to the partners themselves. But they are all responsible, in solido for the debts due by the firm ; and all the joint property of the firm is just as liable for the joint debts, after such division or settlement among them- selves, as it was before, (ii) So, too, it is very common for the partners to agree not only that one of them may settle and wind up the partnership con- cern, but that one or more shall wind it up, and for that pur- pose shall have in full property all the goods or funds and business, or a certain part of them, and shall pay all the debts ; and this he undertakes to do. Such an agreement is so far binding on the partners, that, if either of the others is obliged Page V. McCrea, 1 Wend. 167; Bracket Cummins )'. Cummins, 8 Ired. Eq. 723 ; V. Winslovv, 17 Mass. 153 ; Hammatt y. Wood v. Braddick, 1 Taunt. 104; Wyman, 9 id. 139 ; Stevens v. Morse, Hoby v. Roebuck, 7 Taunt. 157 ; Gra- 7 Greenl. 36. ham v. Wicliels, 1 Cromp. & M. 188. (0 Story on Part. § 334; Ault v. In Wood v. Braddick, Heath, J., says : Goodrich, 4 Kuss. 430 ; Gow on Part. " When a partnership is dissolved, it ch. 5, § 2, p. 240, 3d edit. ; Blundell v. is not dissolved with regard to things Winsor, 8 Sim. 613. [Dissolution does past, but only with regard to things not release the partnersliip from their future. With regard to things past, liability on a continuing but still unex- the partnership continues, and always ecuted contract. Dickson v. Indiana must continue." See Smyth v. Harrie, Mfg. Co., Sup. Ct. Ind., November, 31 111. 62. And see a somewhat pecu- 1877, 6 Cent. L. J. 97.] liar case on this subject, Mayer v. (u) Smith V. Jameson, 5 T. R. Clark, 40 Ala. 259; and Myers v. 601 ; Dickenson v. Lockyer, 4 Ves. 36 ; Smith, 15 Iowa, 181. CH. XII.] OF DISSOLUTION. 429 to pay a debt thus assumed by a partner, the partner paying may have his action for the money against the partner who undertook to pay. But, so far as the creditors are concerned, all the partners remain just as responsible to all the creditors, after such an agreement, as they were before, (v) Thus, an agreement between the partners, that one of them shall settle up the affairs of the concern, collect and pay the debts, and the like, will not prevent any person from * effect- * 396, ually paying to any partner a debt due the firm ; Qiv) even though the debtor has notice of the arrangement, (a;) And a payment, after dissolution, to an insolvent partner, has been held to be good, where the partner was insolvent at the time the firm was formed, and known to be so to the other partners, (y) But, where the legal or equitable interest in a partnership has been transferred to an assignee, a debtor who should pay a debt to either of the partners, after notice of such assignment, would be liable to the assignee. (2) And a pay- ment to the executor of a deceased partner is not good, (a) Though these agreements between the partners do not affect the creditors, without their consent, yet it is certain that, if, in any case, they do consent, and for sufficient consideration, they become parties to the agreement, and are bound by it. (6) The question whether they have assented, and, if so, whether on good consideration, arises sometimes under every form of dis- solution ; but far more frequently where there is a change among the members, — one or more going out, and one or more new ones coming in. And then it is important to ascertain who are the debtors or the creditors, under an obligation which existed at the time the contract was made ; that is, whether a retiring partner is freed from this obligation, or whether an incoming partner has assumed it. We shall consider the prin- ciples applicable to these cases more fully when we treat of this particular form of dissolution ; at present, remarking only, in (v) See Kodgers v. Maw, 4 Dowl. (y) Major v. Havvkes, 12 III. 298. & Lowndes, G6 ; yniith v. Jameson, 5 (s) Gordon v. Freeman, 11 111. 14. T. R. 601. See also rritchard v. Draper, 1 Kuss. & (w) King V. Smith, 4 Car. & P. 108 ; M. 191. Duff V. East India Co., 15 Ves. 198 ; (a) Wallace v. Fitzsimmons, 1 Dall. Coombs V. Hoswell, 1 L)ana, 47?>. 248. (x) Porter v. Taylor, 6 Maule & S. (&) Duller, J., in Tatlock v. Harris, 156. 3 T. K. 180. 430 THE LAW OP PARTNERSHIP. [CH. XII. the first place, tliat the consent of the creditors to an arrange- ment which discharges some of their debtors, may be expressed or imphed from circumstances distinctly indicative of their knowledge of the transfer or change of the indel)tedness, and of their concurrence and consent ; and, in the next place, that this concurrence and consent, whether expressed or implied, will not suffice to exonerate the partners whom it is intended to discharge, unless there be a valuable consideration for it. Because, as every creditor has the liability of every * 397 partner, * he only lessens his security by taking one for the whole ; and his agreement to do this can bind him no more than any other agreement to discharge a debt, unless he gains some advantage by it, — which may be, by added security, better terms of payment, more favorable busi- ness, or any other benefit, — or unless those whom he dis- charges undergo, at his instance or request, a loss by reason of his concurrence and consent, by paying something to him who undertakes to pay the debt, or in some other way benefit- ing him at their own cost, (c) Another most important subject connected with dissolution is notice. For, on the same principles which hold a principal bound by the acts of his general agent whose authority he had revoked, unless he has given sufficient notice of his revocation, any person who deals with one professing to act for himself and others as partners in a certain firm, and believes that he so acts, and is justified in that belief, either by what those others so held out as partners have done or have failed to do, has both a legal and a moral right to hold them as partners. ((Z) (c) See, on tliese questions, Kirwan ander, 7 Car. & P. 746 ; Harris v. Far- V. Kirwan, 2 Cr. & M. 617; Thompson well, 15 Beav. 31. V. Percival, 5 B. & Ad. 925; Lodge v. {d) See Vice v. Fleming, 1 Younge Dicas, 3 B. & Aid. 611; David v. El- & J. 227; Willis v. Dyson, 1 Stark. lice, 5 B. & C. 106, 1 Car. & P. 369; 164 ; llooth v. Quin, 7 Price, 193; Gal- Thomas V. Shillibeer, 1 M. & W. 124; wey v. Mathew, 1 Camp. 402, 10 East, Evans y. Drummond, 4 Esp. 89; Reed 264; Pecker v. Hall, 14 Allen, 532. V. White, 5 id. 122; Heath r. Percival, [A new contract, after dissolntion, in 1 P. Wms. 682, 1 Str. 403 ; Bedford v. the name of the firm, will bind the Deakin, 2 B. & Aid. 110; Feather- firm to those who, having previously stone V. Hunt, 1 B. & C. 113; Spence- cjealt with the firm, have had no notice ley V. Greenwood, 1 Fos. & Fin. 297 ; of the dissolution. Dickinson v. Dick- Robinson V. Wilkinson, 3 Price, 538; inson, 25 Gratt. (Va.) 321. See also Gough V. Davies, 4 id. 200; Blew v. Lovejoy v. Spolford, 93 U. S. 430.J Wyatt, 5 Car. & P. 397 ; Hart v. Alex- CH. XII.] OF DISSOLUTION. 431 This is true of every dissolution, excepting that by the death of a partner, {e') wliich event is said to operate an universal notice, or, at least, to render a notice unnecessary. But a creditor, having knowledge of a dissolution of a copartnership when he gives credit to it, cannot recover from members who have retired, however the knowledge was communicated to him. (ee) And this is true where the dissolution is by the death of a partner, and the debt is contracted with one having knowledge of the death, (gee) The chief importance of this requirement of notice, and the principal questions arising under it, belong to cases of dissolution by change, in which the retiring partner must give notice of his retirement, or continue to be held as partner ; and we shall consider when notice and what notice is necessary, more fully, when we treat of that form of dissolu- tion. (/) 4. Of Actiojis and Remedies after a Dissolution. * As the fact of dissolution has no effect whatever on * 398 the rights of third persons, or on the rights of the firm against third persons, so it is a general rule, that actions by and against the firm must continue to be what they would have been before the dissolution. That is, all the names of the partners must be used in an action brought by the settling partner, for a debt due to the firm ; and, if a debt owed by the firm is sued, not only can all the old partners be sued, ((/) but it is not enough to make the settling partner sole defendant, even if he have undertaken to pay all the debts of the firm, unless it is intended to discharge all the other partners. In one case, (Ji) where two persons, forming a partnersliip, (e) Devaynes v. Koble, Houlton's sibility, Speer v. Bishop, 24 Ohio St. Case, 1 Meriv. 616, Johnes' Case, id. 598.] 619, Brice's Case, id. 620; Webster v. (ee) Davis v. Keyes, 38 N. Y. (Tif- AVebster, 3 Svvanst. 490; Blades v. fany) 94. Free, 9 B. & C. 167 ; Smout v. Ilbcry, {eec) Stanwood v. Owen, 14 Gray, 10 M. & W. 1 ; Campanari v. Wood- 195. burn, 15 C. B. 400. [One wlio sufYers (/) See Clianiberlain v. Dow, 10 his name to be used in a firm after his Micli. 319. retirement, is responsible to now cus- (y) Dobbin i'. Foster, 1 Car. & K. tomers as well as old, who do not have 323. actual knowledge of the change. Re [h) Atkinson v. Laing, Dowl. & R. Krueger, 2 Lowell Dec. (U. S. Dist. Ct.) N. P. 16. 66 ; and is estopped to deny liis respon- 432 THE LAW OF PARTNERSHIP. [CH. XII. had carried on trade, and, after this partnership was dissolved, one of them carried on his own business, under tlie name of the partnership, it was held that this person might bring an action for goods sold and delivered by the partnership. The case seems to leave it in doubt whether the goods were sold and delivered by the partnership, or only during the partner- ship ; but the remark of the judge Avho tried the case, that, if the defendant had any counter demand against the partner- ship, it would have been necessary to bring the action in the name of the partnership, seems to indicate that the action was for a debt due to the partnership. His remark, that the plain- tiff was really entitled as " remaining partner," is not very intelligible : the case does not indicate that he was a surviving partner, and seems to us of very doubtful authority. We shall see, in speaking of dissolution from bankruptcy, that the sol- vent partner may sometimes sue alone, without joining either the bankrupt partner or his assignees. A dissolution may put an end to a right or interest held by a partnership, if it be held on condition that the partnership exists, or if it be of such a nature that the law considers it as existing only while the partnership exists ; but not if the con- tinued existence of the right or interest is independent of the existence of the partnership. Thus, a common lease to a firm, from a stranger, is a property which survives the dissolution. All the partners continue to be bound for the rent, and all are entitled to the beneficial use of, or interest in, the lease. * 399 But if it * is stipulated that it be held during the part- nership only, the lease is terminated by the dissolu- tion, (i) So, a lease held by the partners, as partners, from one of them, is terminated by the dissolution ; and the lessor may at once re-enter, without notice. (/) (i) Waithman v. Miles, 1 Stark. 181. {;■) Colnaghi t;. Bluck, 8 Car. & P. 464. CH. XII.] OP DISSOLUTION. 433 SECTION V. OF DISSOLUTION BY THE ACT OF A PART OF THE FIRM ONLY. 1. What Acts Dissolve a Partnership. Dissolution of partnership may occur by the act and intent of some of the partners only, or as the effect of some act or condition of theirs. (^) Without now speaking of these acts or conditions, which are good cause for a decree of dissolution, we may speak of some which, of themselves, operate a disso- lution. One of these, at common law, is outlawry ; and, although we know nothing of this here, we have conviction for felony. In England, where attainder forfeits the property of the convict to the king, who cannot be a tenant in common with a subject, it not only dissolves the partnership, but trans- fers to the king all the joint property of the partnership. That effect of the rule exists now in England only in theory, if it ever was applied to a case of partnership. In this country, we know nothing of it. But still, we suppose that a conviction for felony would here operate a dissolution, of itself, and with- out waiting for a decree. But it may be open to question whether notice is necessary in this case. If a convicted part- ner used the name of the firm, apparently in its business, immediately after his conviction, we should say, that it would bind the firm to a party who had no knowledge of the felony, and no especial means of knowledge. So, on the marriage of a female partner, the other partner may dissolve the partnership ; for all the rights, interests, and property she can hold as partner, pass at once to the husband, by the common law, as * completely by mar- * 400 riage as they would by any transfer ; and she loses all power of binding herself by any contract. (Z) Whether a partner has or has not a right to terminate the partnership at his pleasure, (7?*) it is certain that an assign- {k) Peacock v. Peacock, 16 Ves. 50; (m) Equity would probably restrain Featherstonliaugh v. Fenvvick, 17 Vos. to prevent irreparable niiscliief. See 298; Crawshay v. Maule, 1 Swanst. Cliavany v. Van Soinnier, -i Woodd. 508; Miles v. Thomas, 9 Sim. GOG. Lect. 416, n., 1 Swanst. 512, n. ; Blis- (/) Kerot V. Burnand, 4 lluss. 247 ; set v. Daniel, 10 Hare, 493. and see Brown v. Jewett, 18 N. II. 230. 28 434 THE LAW OF PARTNERSHIP. [CH. XII. mciit by one partner, of all his interest in the joint property, to the other partner or partners, operates at once the withdrawal of the assignor and a dissolution of the firm. For, here the other partners assent to the transfer, by their acceptance of it ; and, therefore, no question could be raised as to the right of the assignor. («) And an assignment to a third person has the same effect, (o) So an assignment, in good faith, by a partner, of all the joint property in trust, for the payment of the debts of the firm, which, as we have seen, is, by the weight of authority, valid, would undoubtedly operate a dissolution. ( p') And so would a sale on execution and levy upon the interest of an insolvent partner in the joint property. (^ A partner may un- doubtedly make this dissolution prospective ; and this is the usual way of doing it. It is obvious that only peculiar circum- stances could justify a partner morally speaking, however it might be legally, in saying to his copartners, at once and without notice or preparation, From this moment the partner- ship ceases to exist. And such conduct would certainly in- (z) See an^i ; Wheel- (b) ilarty. Clarke, U De G., M. & G. 232. 438 THE LAW OF PARTNERSHIP. [CH. XII. cluce a court of equity to examiue closely into the motives which led to it, and into the effects resulting from it, that they might prevent injurious consequences. Still, however, it is always possible that there may be good reason for the sudden exercise of this riglit, of the existence of which there seems to be no doubt, where the partnership is not formed for a time * 404 certain. It * may be that no other course would prevent the firm from rushing into wasteful and dangerous con- tracts, or from pursuing a path which might lead to ruin. And, therefore, on the one liand, the court would not presume that such a dissolution was wrongful in intent or effect, although they would listen to evidence showing it to be so. And, on the other hand, as soon as such a declaration was made, be its pur- pose or circumstances what they might, we are not aware of any reason for supposing that the partnership would exist a moment longer, (c) The dissolution of the partnership by the act of a partner, or at his will, does not require a written declaration of his will ; nor even any especial spoken words, or, indeed, any words whatever. He must manifest his desire of withdrawing from the partnership. He may do this as he pleases ; and, however it be done, it has the same effect. But, if he only manifest his desire of leaving the partnership at a future time, this is not a present dissolution. Nor is there any way to manifest the purpose of immediate withdrawal, except by such withdrawal ; and this is a dissolution. This could hardly be by act without words. But he may manifest, by a course of action, such with- (c) Tlie question whether one part- than the mere will of one party to ner may, by his own mere will, dissolve justify a dissolution. But it seems to a partnership formed for a definite pe- me that but little more should be de- riod, has been much discussed in this manded. The principle of the civil country and in England. It appears law is the most wise. Wiiy should to have been assumed that there is no this court compel the continuance of a such power, in Peacock v. Peacock, 16 union, when dissension has marred all Ves. 57 ; Crawshay v Maule, 1 Swanst. prospect of the advantages contem- 508 ; Wheeler v. Van Wart, 9 Sim. 193, plated by its formation ] By refusing 2 Jur. 252 ; Pearpoint v. Graliam, 4 to dissolve it, the power of binding AA^ash. C. C. 232. The right is forcibly each other, and of dealing with the maintained in Skinner r. Dayton, 19 partnership property, remains, when Johns. 538 ; Mason r. Connell, 1 Whart. all confidence and all combination of 381. In Bishop tJ. Breckles, 1 Hoflf. Ch. effort is at an end. Tlie object of the 534, the court said : " The law of the contract is defeated." court then requires something more CH. XII.] OF DISSOLUTION. 439 drawal. He may engage wholly in other business, and take no part whatever in the interests or concerns of the partner- ship. This would rather make him a silent partner, or give good cause for the other partners to reject him, or perhaps ob- tain a decree for his removal, tlian amount to evidence that he had in fact withdrawn himself. It may, however, be said, hy- pothetically, that such conduct might be carried so far as to have that significance and effect. And then the * dis- * 405 solution would take place, not when the other partners acceded to his wish, but when it became certain what his wish w^as. The only rule applicable to such questions must be this : The wish of a partner to dissolve a partnership which is at will, while it remains unexpressed, can have no force nor effect ; but it operates to cause a dissolution as soon as it is distinctly expressed, whatever be the form or manner of this expression, {d} partnership dealings and transactions taken, up to that very moment) ; yet one difficulty which has often occurred to me as of great weight in cases like the present, with reference to the dis- solution of the company by notice, is this : What avails it that you give no- tice to A. B. of putting an end to the company, if you do not give notice to the three hundred other individuals of whom it is composed 1 Has not every one of these individuals the same com- mon-law right to notice, before the partnership can be so dissolved ? If, on the other hand, it is said, that it is not necessary to give notice to all the partners, it must be on the ground that the deed has made some provision declaring that notice not to be neces- sary, which, but for particular provi- sions, would be necessary ; and that case must be proved from the deed itself." {(i) In Van Sandau v. Moore, 1 Russ. 463, Lord Eldon says : " The bill pro- ceeds on two grounds : one, that Mr. Van Sandau could by mere notice put an end to the company ; the other, that if notice alone was not sufficient for that purpose, yet there has been such conduct on the part of the secretary and other members as to entitle the plaintiff to call for a dissolution ; and, in either case, he prays that an account may be taken of the partnership deal- ings and transactions. Now, though, according to the law of the country, a company or partnership formed by parties agreeing to become copartners may be dissolved at any moment by one of the partners, and tliough his copartners cannot answer his notice of dissolution by saying, 'Here is your money, get out of the concern, and leave us to ourselves ' (because he has a right to have all the accounts of the 440 THE LAW OF PARTNERSHIP. [CH. XIII. CHAPTER XIII. OF A CHANGE IN THE PARTNERSHIP. SECTION I. OF THE EFFECT OF ANY CHANGE IN THE PARTNERSHIP. The retirement of a partner may take place in many ways. He may simply withdraw, carrying with him and retaining all his interest in the property. Or he may retire, by transferring his interest to a stranger, who then holds it as tenant in com- mon with the other partners. Or he may transfer it to one who is received by the other partners, and becomes a copartner with them. However it takes place, it is plain that, if a partnership consists of but two persons, the retirement of either one puts an end to that partnership. And it may now be considered as a settled rule of the law of partnership, in England and in this country, that the retirement of any one partner from a firm consisting of any number of partners operates a dissolution of that firm. The Institute says, " Cum aliquis renunciaverit societati, solvitur societas.^^ (a) In Roman practice, mercantile copartnerships consisting of many partners, if not common, were certainly known. Only of late years has this rule been asserted ; and it was qualified by Lord Eldon, who was almost its author, and ever was its highest authority, by the phrase, " unless it was otherwise provided." (^>) We apprehend, how- ever, that the rule comes of necessity from the very nature of partnership, and admits of no qualification whatever. Thus, if we take the qualification mentioned by Lord Eldon, — that of an express provision to the contrary, — it is plain that, even if (a) Inst. L. 3, t. 26, § 5 ; Pothier on 228 ; Peacock v. Peacock, 16 id. 49 ; Part. ch. 8, § 3, p. 141. Howe v. Thayer, 17 Pick. 95. (b) Crawsliay v. Collins, 15 Ves. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 441 it is SO provided, the remaining partners can only * form * 407 a new partnership. The qualification is, therefore, equivalent to saying, that the old partnership is dissolved unless a new one is formed ; which is meaningless. "We sup- pose the truth to be, that if a partner retires, — whether by voluntary act, bankruptcy, expulsion, or death, or if a new partner comes in, by any means whatever, — in either of these cases, the old partnership ceases to exist, (c) Where a mortgage was given to a firm consisting of " A. and B." to secure advances to the mortgagor, and a third partner was taken in, and the name changed to " A., B., and Co.," and the business was continued and conducted precisely as before, it was held that this addition dissolved the first firm, and that the new firm could not avail themselves of the mortgage, (cc) But a deceased partner may have provided by will, or a retir- ing partner by assignment, that his interest shall be so retained or reserved in the partnership as to prevent the determination of the partnership as to his estate ; and then the estate of the de- ceased or retiring partner personally continues liable, (ccc) If it is provided by the articles that, if either party dies, his personal representatives, or his son, or some one else, shall take his place, and this partner dies, his death does not ipso facto introduce this other party. The assets of the deceased are responsible, of course, for the debts of his firm, but his representatives are not ; nor are they bound by the new con- tracts of the firm, nor have they power to bind the firm by their acts, unless some agreement is entered into which con- stitutes them partners. And this agreement makes a new partnership. And, in the case of an association for some spe- cial purpose, the articles might so provide as to continue the association (which, however, would be different from a common partnership) after a change of members. (ccZ) This rule is directly o{)posed to a common practice, and, per- (c) Vulliamy v. Noble, 3 Meriv. McC. 659. And see post, p. * 452- 614; Crawshay v. Maule, 1 Swanst. 454. 609; Crawford i'. Hamilton, 3 Madd. (cc) ALat v. Penny, 19 La. Ann. 251 ; Scliolefield v. Eichelbert,'er, 7 289. Pet. 586; Dyer ;;. Clark, 5 Mete. 575; {crc) Ex partc^ Wilson, Buek, 48. Washburn v. Goodman, 17 Pick. 519 ; (cd) Troy Factory v. Corning, 45 White V. Union Ins. Co., 1 Nott & Barb. 2:31. 442 THE LAW OF PARTNERSHIP. [CH. XIII. hapsi, to a common imderstanding. We have in this country many ancient firms, in which there may not be one person who was a partner from the beginning. In England, there are firms wliich have survived some generations ; (fZ) but the name lias never been changed, and the business has gone on without deviation or interruption. But we still say that the partner- ship is dissolved by every change, because every partnership consists of certain persons who are all liable for the debts, who all own a certain joint property, and who all have certain pow- ers to act for and to bind each other. Those who owe the firm owe only them, and those to whom the firm is indebted have claims only on them. If from this partnership any persons go out, or if any come into it, and the old partners and the old debtors and creditors agree, there will be the least possible break to the succession. But this agreement no more makes the old firm identical with the new, than the son's inheritance of his father's property, coupled with an accepted promise to *408 be responsible for all his debts, makes the * son the same individual with the father. That this mere agree- ment, however effectual in sustaining and continuing a busi- ness, cannot preserve the identity of the old partnership, may be seen from this supposition: If A., B., & C. have for a long time been partners, and conclude to retire, and D., E., & E. say to them. It is a pity to scatter so profitable a business and lose so good a custom, and we will buy your good-will, and take all your stock, and pay all your debts, and hold by assignment all the debts due to you, and bring to you the consent of all your debtors and creditors, — one would hardly say that the old firm continued over, or was identical with the new one. One firm succeeds the other ; and, if the later firm chooses to adopt the name of the earlier, this does not make them one and the same. And, if one member of the old firm comes into the new firm, this does not make them one. And if all remain but one, or all remain and a new one is added, here also is a new firm, which can no more have the effects and choses in action of the old, nor be liable for its debts, without a new and distinct agreement between all parties interested therein, than if the change were entire, and the name also. (d) See Blisset v. Daniel, 10 Hare, 49B, 23 Eng. L. & Eq. 105. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 443 We have dwelt the more strongly on this principle, — and shall have occasion to refer to it again, — because a disregard of it has led to some confusion in the authorities in relation to the rights and obligations of a retiring partner, and of an incoming partner, — a sul)ject which we shall now proceed to consider. SECTION 11. OF A RETIRING PARTNER. 1. How Retirement^ of itself, affects the Liahility of the Partner. The right of a partner to retire is the same thing as the right to dissolve a partnership ; because retirement is dissolution. This we have already considered ; and it has also been stated, that he may retire in either of many ways. The effect of the retirement (excepting so far as mutual agreements vary it) is nearly the same in all. * He neither loses prop- * 409 erty by it, nor relieves himself from any liability.(/) If he retires with the consent of the other partners, there is an implied promise on their part to pay the debts of the firm and save him harmless, but only to the extent of the assets of the firm. He is still liable in solido for the debts existing when he retired. But, if he pays more than his proportion, he may have contribution from his former copartners, (if) If he "sells out," — to use a common phrase, — either to the re- maining partners, (^) or to a stranger, the question may arise whether, in addition to what he actually transfers, he comes under any obligation which a court of law or of equity could recognize. Not unfrequently, the articles of copartner- ship provide that the remaining partners may take the interest of an outgoing partner at a valuation, or they prescribe other terms ; and these agreements a court of equity will enforce. Q. Merry, 6 Cow. (r) See wfra. And see Reilly v. 701; Ketcliam v. Clark, Johns. 144; Smith, IG La. Ann. 31; Williamson 448 THE LAW OP PARTNERSHIP. [CH. XIII. * 413 * as to those who have not been dealers, a retiring partner can exonerate himself from liability by publish- ing notice of the dissolution, (s) or by showing knowledge of the fact. A notice by public advertisement, in a usual way and to a usual extent, or any notice which, under the circumstances, was equal to a public advertisement, would always be sufficient to pro- tect the retiring partner against new customers ; (i) because it is obviously impossible for him to know who may thereafter deal with that firm. But he does know or may know who have dealt with it, and may make it sure that they have notice ; and therefore it is his duty to make this certain, and he takes upon himself the risk of their ignorance. Mr. Justice Story appears to go so much further as to hold that no new customers can hold the retiring partner, unless he permits his name to be used by the old firm, although he gives no notice whatever. But, in this remark, he goes somewhat beyond the prevailing authorities. And, in his note to the passage, he seems to apply his rule only to new customers who do not know who were the old partners, or who had no reason to believe the retiring part- ner to have been and still to be one. And such new customers could not, of course, hold a retiring partner. A considerable lapse of time between the retirement, and the contracting of the new debt, would, of course, go very far to show that it was V. Fox, 38 Penn. 214; Vernon v. ton Turnpike Co. v. Gulick, 1 Ilarr. Manhattan Co., 17 Wend. 526, 22 id. 161 ; Clapp v. Rogers, 2 Kern. 283 ; 183; Watkinson v. Bank of Penn., Magill v. Merrie, 5 B. Mon. 168; Si- 4 Whart. 482; Mitchum v. Bank of monds ;;. Strong, 24 Vt. 642. Ky., 9 Dana, 166; Mauldin v. Bank (t) Minnit r. Wliinnery, 5 Bro. P. C. of Mobile, 2 Ala. N.s. 502 ; Coddington 489, 2 id. (Dublin ed.) 323; Abel v. 1-. Hunt, 6 Hill (N. Y.), 595; Goddard Sutton, 3 Esp. 108; Wrightson v. V. Pratt, 16 Pick. 431, 434 ; Ex parte Pullan, 1 Stark. 375, called Wright Burton, 1 Gill & J. 207 ; Ex parte Leaf, v. Pulham, 2 Cliitty, 121 ; Kilgour v. 1 Deacon, 176; Shurlds v. Tilson, 2 Finlyson, 1 H. Bl. 155; Nott v. Down- McLean, 458; Prentiss v. Sinclair, ing, 6 La. 680; .Lansing v. Gaine, 2 5 Vt. 149; Pitcher v. Barrows, 17 Johns. 300; Shurlds v. Tilson, 2 Mc- Pick. 365. Lean, 458 ; Mowatt v. H^wland, 3 (s) Parkin v. Carruthers, 3 Esp. Day, 353 ; Taylor v. Young, 3 Watts, 248; Gorham v. Thonipson, Peake, 339. [Other circumstances may go 42 ; Anderson v. Weston, 6 Bing. to the jury as the equivalent of public N. C. 296; Graham i;. Hope, Peake, advertisement, in a newspaper, — such 154 ; Bernard i'. Torrance, 5 Gill & J. as cliange in the firm name, notoriety 383 ; Lucas v. Bank of Darien, 2 of the dissolution, remoteness of tlie Stewart, 280; Amidown v. Osgood, residence of the new customer, and 24 Vt. 278 ; Burgan v. Lyell, 2 Mich, the like. Lovejoy v. Spafford, 93 U. 102; Johnson v. Totten, 3 Cal. 343; S. 430. See also Deering f. Flanders, Davis V. Allen, 3 Comst. 168 ; Prince- 49 N. H. 225.] CH. XTII.] OF A CHANGE IN THE PARTNERSHIP. 449 not, or should not have been, contracted on the credit of tlie retiring partners, (m) Notice is intended to give knowledge ; and therefore knowl- edge, however acquired, generally renders notice unnecessary, and protects a retiring partner who has done nothing, (v) Whether a person has actual knowledge of a dissolution, is a question of fact for the jury, and not of law for the court, (w^ But a partner who * actually retires as to * 414 all his rights and interests may consent to leave his name in the firm, or to a use of it by the old partners ; and, while he thus consents, even by his silence alone, if he knows it, he does not retire as to his responsibilities, (^x) And a (u) See Merrit v. Pollys, 16 B. Mon. 355. See post, p. * 418. (v) Hart V. Alexander, 2 M. & W. 484 ; Prentiss v. Sinclair, 5 Vt. 149 ; Martin v. Walton, 1 McCord, 16. (w) Deford v. Reynolds, 36 Penn. St. 325 ; Hart v. Alexander, 2 M. & W. 484 ; Hutcliins v. Sims, 8 Humph. 423 ; Merrit v. Pollys, 16 B. Mon. 355. In Deford v. Reynolds, supra, A. & B., under the style of A. & Co., had done business for some time with C. & Co. In April, 1853, B. retired. Prior to this time, all drafts drawn by C. & Co. were upon the firm of A. & Co., and their letters were so addressed. But, from the time of the dissolution, C. & Co. drew on A. alone, and their letters were addressed to him alone. Their accounts were, however, kept with A. & Co. until December, 1853 ; and their clerk testified that he did not know of the dissolution until this time. The jury found that C. & Co. were ignorant of the dissolution; and the court refused to set aside the ver- dict, although not satisfied witii it. In Irby v. Vining, 2 McCord, 379, it is said to be sufficient evidence of knowledge, if sucli circumstances be proved as to leave no rational doubt that the party knew of the dissolution. [Actual notice is necessary to persons theretofore dealing with the firm. Den- man V. Dosson, ly La. Ann. 'J; Zoliar V. .Janvrin, 47 N. H. 324 ; Kirkman v. Snodgrass, 3 Head (Tenn.), 37b; Aus- tin V. Holland, N. Y. Ct. of App. 16 Alb. L. J. 36. Only those who have habitually dealt with a firm are en- titled to actual notice. A single trans- action does not amount to habitual dealing. Merritt v. WiUiams, 17 Kan. 287; Clapp v. Rogers, 12 N. Y. 283. Actual knowledge, however obtained, is notice. Davis v. Keyes, 38 N. Y. 94; Young v. Tibbetts, 32 AVis. 79; Deering v. Flanders, 49 N. H. 225. See also Tudor v. White, 27 Tex. 584. And the burden of proof of notice is on the partner denying liability on account of dissolution. Kenney v. Atwater, 77 Penn. St. 34. It may be inferred from circumstances ; but publication in two newspapers, neither of them published in the place where the creditor resides or taken by Jiim, is insufficient. Howell v. Adams, N. Y. Ct. of App., 4 N. Y. Weekly Dig. 164. Perhaps, if the papers were regularly sent to the creditor, the notice would be sufficient. Roberts v. Spencer, Sup. Jud. Ct. Mass., March, 1877. J (x) A person who continues to act as a partner after dissolution, is liable as a partner. iMnniet v. Butler, 7 Taunt. 599; Mulford v. Griffin, 1 Post. & F. 145; Fuldo v. Griffin, id. 147; Ketciiam i'. Clark, 6 Johns. 144. So it is generally held that a jjcrson al- lowing his name to remain is liable. Parkin v. Carruthers, 3 I'^sp. 248; Williams v. Keats, 2 .Stark. 290; Dol- man V. Orchard, 2 Car. & P. 104 ; 29 450 THE LAW OF PARTNERSHIP. [CH. XIII. customer who knows that he has retired as to his interests, but has no notice, and lias no notice of Ihe retirement, may be led to believe that notice is withheld because the partner intends to continue responsible. And, if he is justified in this belief by all the circumstances, however erroneous it might be, the mere knowledge, on his part, of the retirement, without notice, would not prevent him from holding the partner. (?/) If one of several partners retires, and notice thereof is given, but the business continues to be carried on as before, those partners, as to whom no notice is given, will be presumed to hold the same relation to the concern as before, (z) Whether there has been a previous dealing with the firm, — that is, whether a plaintiflF had a right to require one kind of notice, or only another, — is sometimes a difiicult question. That the dealing must be with the firm directly, and * 415 not merely the purchase * of their paper for a third person, is, we think, evident, (a) A mere purchase for cash would probably not be enough. (6) But selling goods to a firm and delivering them, to be paid for afterwards, although no term of credit is fixed, would make the sellers dealers, and entitle them to notice, (c) So a bank which has previously been in the habit of discounting notes and bills for a firm, (c?) or a person who has been in the habit of indorsing for a Stables v. Eley, 1 irl. 614 ; Aniidown sucli notice is given, for the acts of the V. Osgood, 24 Vt. 278. But see Jen- other partners. kins V. Blizard, 1 Stark. 418. (z) Howe v. Thayer, 17 Pick. 91. In Conro v. Port Henry Iron Co., 12 (a) Hutchins v. Bank of Tennessee, Barb. 56, the court said: "The con- 8 Humph. 418. See Grinnau r. Baton tinuance of the same sign on tiie store. Rouge Mills Co., 7 La. Ann. 638. the form of the bills against the com- (i) Dictum in Ciapp v. Kogers, 2 pany, not objected to, of notes and Kern. 283. receipts given, of notices posted in (c) Clapp v. Rogers, 2 Kern. 283. the name of the company, contracts (d) Hutchins *•. Bank of Tennessee, made in the company name by the 8 Humpli. 418. See also City Bank of president and other officers, and other Brooklyn v. McChesney, 20 N. Y. 240; acts and declarations of the officers. Id. i;. Dearborn, id. 244; National indicated a continuance of the business Bank v. Norton, 1 Hill, 572. In Ver- on the responsibility of the company." non v. Manhattan Co., 17 Wend. 524, [y] Thus, in Brown v. Leonard, 2 22 id. 183, the note was the last of a Chitty, 120, it is held, that a partner series of accommodation notes. The who gives notice that he has ceased first note was discounted by the de- to be a partner, but who has said that fendants, and renewed several times, his name is to continue for a certain Held, that the defendants were dealers, time, is liable to a person to whom CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 451 firm, (e) or of lending his note to it for its benefit, (/) is a dealer. As a general rule, previous dealing, which would en- title a person to notice, must be during the continuance of the partnership ; but in one case where goods had been delivered after dissolution, but before any publication of it, at the store formerly occupied by the old firm, in which the retiring part- ner still remained, though in the capacity of a clerk, and the old sign was up, it was held that the seller was to be consid- ered a dealer, and entitled to notice. (6 ; Marsh. 277. 464 THE LAW OF PARTNERSHIP. [CH. XIII. unqualified : no doubt exists that one who owes many debts may insist that his payment shall dis) See cases in the two following (r) See Taylor i-. Kymer, 3 B. & Ad. notes. 320 ; Stoveld v. Eade, 4 Bing. 154 ; (r/) See Taylor y. Kymer, .3 B. & Ad. Newmarch v. Clay, 14 East, 240. In 320. Thus, where an agent wiio had, Wickham v. Wickham, 2 Kay & J. 478, in a previous account, charged himself J. F. & Sons, as agents of the plaintiffs, with a balance due from him, continued supplied goods to the firm of S. & W. to receive money for his principal and upon the footing of the hitter becon)ing to pay money out, it was lield, that his debtors to the plaintiff's. They also payments were not necessarily to be supplied the same firm with other 468 THE LAW OF PARTNERSHIP. [CH. xiir. One of the most certain indications might arise from asking to whom did the money belong. It is perfectly obvions that if tlie money belongs to an old firm, it must pay the debts of that firm ; if to the new firm, it must pay their debts. Indeed, this is saying no more than " No creditor can pay the * 432 debt of one person with * the money of another." (s) If a person has an account with a banking firm which is dissolved, and his account continues as before, so that the transactions before and after the dissolution are comprised in one account, payments made by the new firm are construed to be in liquidation of the earliest items on the joint account, and not of the new account merely. (^) And if, upon the dissolu- goods on their own behalf, and made no distinction in tlieir accounts. E. F. was a partner in both firms. It was hdd, that communications made by the firm of J. F. & Sons to tlie jjiaiutiffs, admitting a large debt due from tlie firm of S. & W., and undertaking tliat E. F. would use his influence as a partner with S. & W. to secure its reduction, upon the faith of which communication the plaintiffs forebore to sue S. & W., precluded tlie firm from treating their debt to tlie plaintiffs as one wliich had been liquidated by the appropriation of the payments made by them to the firm of J. F. & Sons, in order of date. In Henniker v. Wigg, 4 Q. B. 793, where a bond was given to secure payments by A. to B. of a specified sum, and certain payments were after- wards made by A., Lord Denman, C. J., after stating the general rule, that, where there is an open account, the first item on the debit side is discharged by the first item on the credit side, said : " But it is equally certain that a particular mode of dealing, and more especiallj- any stipulation between the parties, may entirely vary the case ; and this would be the effect in the present instance, if it should appear that this bond was given to secure the plaintiffs against advances which they might from time to time make to the defendant." (s) See cases, ante, pp. *429, 4.30, and note (/). (t) Clayton's Case, Devaynes v. No- ble, 1 Meriv.572; Pembertony. Oakes, 4 Russ. 168 ; Simson v. Ingham, 2 B. & C. 65, per Bayley, J. ; Simson v. Cooke, 1 Bing. 4.52 ; Williams v. Kawl- inson, .3 id. 71 ; Field v. Carr, 5 id. 13 j Bodenham v. Purchas, 2 B. & Aid. .39; Smith V. Wigley, 3 Moore & S. 174 ; Livermore v. Hand, 6 Fost. 85 ; Allcott V. Strong, 9 Cush. 323 ; Farnam v. Boutelle, 13 Mete. 1-59. See also Pen- nell V. Deffell, 4 De Gex, M. & G. 372 ; Beale v. Caddick, 2 Hurlst. & N. 326. And this rule ajiplies as well between partners themselves as between part- ners and third persons. Toulmin v. Copland, 3 Younge & C, Exch. 625, 7 Clark & Fin. 349. In Newmarcli v. Clay, 14 East, 239, there were three partners, one of them being dormant and unknown. Goods had been fur- nished to them by the plaintiff, and bills received in payment. The part- nership was then dissolved, the dormant partner retiring. Other goods were then furnished, and the bills given be- fore the dissolution of the partnership were dishonored, and new bills given, which were more than sufficient to cover the debts of the old partnership. Held, that the delivering up the old bills, on receipt of the new, was evi- dence of a particular appropriation of the new bills in payment and discliarge of the old debt, of which the dormant partner might avail himself in an ac- tion on tlie case for goods sold and delivered, brought against him jointly with the other two partners. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 469 tion, the old account is struck, and the balance due carried to a new account, and debts arc afterwards incurred and payments made generally, the payments are first applied to liquidate the first item, — the balance of the old account, {ii) But, if a new account is opened with the new firm, the creditor may apply a general payment to the new account, (r) And, in general, the doctrine of appropriation, and the right of election, apply only where the debts or accounts are distinct in themselves, and are so regarded and treated by the parties. If the whole may be considered as one continuous account, the general rule is, that the payments are to be applied to the earliest items of the account, (w) * If debtors commit a breach of trust in respect to * 433 certain property, and afterwards make payment generally on account to their creditor, who is ignorant of the breach of trust, these payments are not considered as payment of the trust account, although it is earlier in date than the other items, (a;) And if payments are made on an open account for («) Sterndale v. Hankinson, 1 Sim. 393 ; Allcott v. Strong, 9 Cush. 323. (v) Logan v. Mason, 6 Watts & S. 9. See Simson v. Ingham, 2 B. & C 65, cited sii/ird, p. *428, note (_/). {w) Clayton's Case, Devaynes v. Noble, 1 Meriv. 609. See also Brooke V. Enderby, 2 Brod. & B. 70 ; Smith v. Wigley, 3 Moore & S. 174; United States V. Kirkpatriek, 9 Wheat. 720 ; Jones I'. United States, 7 How. 681; Postmaster-General v. Furber, 4 Ma- son, 332 ; United States v. Wardwell, 5 id. 82 ; Gass v. Stimson, 3 Sumner, 98; Fairchild v. Holly, 10 Conn. 175; McKenzie v. Nevius, 22 Me. 138 ; United States i'. Bradbur}*, Daveis, 14(3. In Bank of Scotland v. Christie, 8 Clark & F. 214, the doctrine of Claj^- ton's Case was applied to payments made to a bank by surviving partners, on a debt due from the firm to the bank. But payment will not be ap- plied to the earliest items in an ac- count, if a different intention is clearly expressed by the debtor, or by both parties, or where such intention can be Kymer, 3 B. & Ad. 320 ; Henniker v. AVigg, 4 Q. B. 792; Capen v. Alden, 5 Mete. 268 ; Dulles v. De Forest, 19 Conn. 190 ; Wilson v. Hirst, 1 Nev. & M. 742; Beall ;;. McCullough, 27 Md. 645. (x) Clayton's Case, Devaynes v. No- ble, 1 Meriv. 572. This case decided two points. First, that above stated ; and, second, the following : Clayton deposited exchequer bills with a firm of bankers, for safe-keeping ; and di- rected them to take in exchange for them, at their maturity, other bills to be held by them in the same manner, and to apply the proceeds to their own use. There was also a general bank- ing account between the parties. One of the partners died, and the firm some time afterwards became insolvent. Be- tween the death and the bankruptcy, the payments made to Clayton by the survivors exceeded the amount of the cash balance due at the death, and the amount of the bills. But their receipts on his account, during this time, exceeded the simi paid ; and the gathered from the particular circum- balance due at the bankruptcy, exclu- stauces of the case. See Taylor v. sive of the amount of the exchequer 470 THE LAW OF PARTNERSmP. [CH. XIII. advances, and some of these grew out of illegal transactions, the payjnents are to be appropriated to the reduction of the legal, and not the illegal, part of the demands, (y) SECTION III. OF AN INCOMING PARTNER. A new partner is of course liable for all the subsequent debts of the firm, in the same manner as any other partner ; and it is equally obvious that he is not liable for the old debts, unless he assumes them for consideration, (z) If, however, he as- sumes them at all, there is consideration enough in his * 434 admission into * the firm's business to bind him to those bills, exceeded the amount of the bal- ance due at the time of the death. The estate of tlie deceased partner was held liable for the amount of the ex- chequer bills. (y) Ex parte Randleson, 2 Deac. & Ch. 534. (z) Thus, in Young v. Hunter, 4 Taunt. 582, and in Ketchum v. Dur- kee, Hoff. Ch. 538, it was held, tliat the fact that the new partners derived a benefit from goods sold to the old firm did not render them liable for the price of the goods. So, if the goods are ordered before and delivered after he joins, he is not liable. Whitehead v. Barron, 2 Moody & R. 248. See also Beale v. Mouls, 10 Q. B. 976 ; Brem- ner v. Chamberlayne, 2 Car. & K. 560 ; Kerridge v. Hesse, 9 Car. & P. 200 ; Beech v. Eyre, 5 Man. & G. 415. And a member of a provisional committee is not liable for services performed for the company after he joins, if they are performed in consequence of an order given previously to his joining. New- ton V. Belcher, 12 Q. B. 921. And if goods are sold to a firm, and the old firm is dissolved, and one of the old partners unites with a new one, and forms a new firm, the new partner is not liable on a note given for the goods by the old partner in the new firm's name. Poindexter v. Waddy, 6 Munf. 118. See also Shirreff r. VVilks, 1 East, 48. In Hart v. Tonilinson, 2 Vt. 101, it is held, that a new partner is not liable for an old debt, although the firm name is unchanged, and no notice is given ; and that, if the new partner dies pending the suit, this makes no difference. In Dyke r. Brewer, 2 Car. & K. 828, a person agreed with A. to furnish him with bricks whenever he wanted them, at a certain price per thousand. Some time afterwards, B. became a partner with A., and ordered bricks from time to time, which were used for a partnership purpose. Held, that each order was a new contract ; and that B. was liable as partner for all the bricks received after he became a partner, though the court said, that, if the contract had been for a certain number of bricks at so much per thou- sand, B. would not have been liable. See also Helsby v. Mears, 5 B. & C. 504. But see Scott v. Beale, 6 Jur. N. s. 559, 98 Eng. Com. L. R. 878, for a case the soundness of which seems very questionable. See Sternburg v. Callanan, 14 Iowa, 251, confirmed and adopted in Cadwallader v. Blair, 18 Iowa, 420 ; Hartley i: Kirlin, 45 Penn. 49; Thrall r. Seward, 37 Vt. 573; Updyke v. Doyle, 7 R. I. 446 ; Francis 1-. Smith, 1 Duvall, 121. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 471 from whom the consideration comes. As to others, the question is more difficult. For instance, the new partner, by his contract with the old firm, agrees to assume all the old debts, and be liable for them like the other partners ; and tliey agree that he shall be jointly interested with them in the stock, the business, and the profits. There is no doubt of the validity of this contract as between the partners ; and, therefore, if they or any one of them are obliged to pay any of the old debts, they will have as effectual a remedy against the new partner as they would have had if he had been with them when the debts were contracted. It is, however, another question, whether the creditors of the firm can hold the new partner merely on his contract with the old partners. It is said that where a partner comes in, and agrees to take all the stock and be liable for all the debts, it is a novation of the debts, and therefore the new partner is bound. But by the law of novation (which is perhaps the latest law borrowed from the civil law) the new debt is not obligatory, unless the old one is discharged ; and the old one cannot be discharged without thetconsent and concurrence of the creditor. And on this ground the creditor could not hold the new partner merely on his contract * with the old ones. If it be * 435 said that the creditor's assent to the reception of addi- tional security may be presumed, it must be replied, that this reception of new security may also imply the loss of the old security ; for it may be and often is the case, that the new partner takes the place of an old and retiring partner. A bargain between all the parties, including the creditor, that the old partner should be released and the new one taken, would undoubtedly be valid. But the assent of the creditor to such an arrangement cannot be presumed, (a) on the ground that it is necessarily advantageous to him. On the whole, we should say that the law of contracts and the law of partnership lead to the conclusion, that the new partner is not bound to the old creditors, unless on a promise to them, for a consid- eration ; (6) both of which might of course be indirect, and implied by circumstances. (a) Catt V. Howard, 3 Stark. 5. it is said, that " where new partners (b) In Cooke's Bankrupt Laws, 538, are taken into a trade, and it is agreed 472 THE LAW OF PARTNERSHIP. [CH. XIII. Whether the new incoming partner has thus assumed the old debts, is sometimes a difficult question of mixed law and fact. It certainly may be implied by circumstances ; and what circumstances should, in any one case, imply it, is a question pai-tly for the court and partly for a jury. Paying of interest on a debt, with a knowledge, without objection, that the new firm pays the interest, would warrant a jury in finding such an assumption of the old debt, (c) And perhaps any single fact of like kind would have the same effect. All of these * 436 things are evidence for a jury, or * matter for a court to infer such adoption. For it must be obvious that a transfer of the account from the old to Ihe new, and payments made on it, through a long course of time, by the new firm, with the knowledge and without the objection of the new partner, would justify a belief that he was submitting to this actual assumption of the old debts because it was for his interest or a part of his bargain. (iwi) A distinction has been taken of this sort : It is said, that the representatives of the deceased are tenants, in common with the survivors, as to all things in possession, but not as to choses in action ; for these the survivors alone have the power and duty to hold, and collect the proceeds, and apply them to the debts of tlie firm, and are trustees for all concerned in the balance, (nnn) We apprehend, however, that this distinction is not necessary, even if it be maintainable, (o) The tenancy (mnm) Hamraill v. Hammil, 27 Md. {mm) Story on Part. § 346. 679. (o) A surviving partner has a right (nn) Tillotson v. Tillotson, 34 Conn, to collect all debts due to the firm, and S35. to sell the property. Hi« responsibil- {nm) See pos<, p. * 443. ity to the representatives of the de- CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 479 in common exists as to all the effects of the partnership, only as to the property/, and not as to the possession. The survivors have possession and keep possession of every thing. Until a settlement, the representatives of the deceased cannot claim or take any one chattel, or any portion of the merchandise, (p) The survivors are, from the death, trustees for all concerned in the partnership ; for the representatives of the deceased, for the creditors of the firm, and for themselves. (^) Their trust is to wind up the concern in the* best manner *442 for all interested, and, therefore, without unnecessary delay ; and their powers are such as enable them most effectu- ally to execute that trust. Nor do we know any difference, in this respect, as to the choses in possession and those in action. After a final settlement, questions may arise as to the disposi- ceased partner exists only after tlie partnership aflfairs are settled. Having the right to collect and dispose of the property, he has the power, for that purpose, of assigning any chose in action belonging to the estate. Pinck- ney v. Wallace, 1 Abb. Prac. 11. 82. And see Roys v. Vilas, 18 Wis. 169. (/>) Real estate, purchased by part- ners, for the partnership business and with the partnership funds, though conveyed to them by such a deed as, in case of other parties, would make them tenants in common, is considered, in equity, as part of the partnership stock ; and is to be applied, if neces- sary, towards payment of the partner- ship debts. Though such estate is considered at law as the several prop- erty of the partners, yet it is held subject to a trust arising by implica- tion of law, by which it is liable to be sold, and the proceeds brought into the partnership fund, so far as is necessary to pay tiie debts of the firm ; and neither tiie widow nor the heirs of a deceased partner can claim any bene- ficial interest in such estate, until the claims of the creditors of the firm are first satisfied. Burnside v. Merrick, 4 Mete. 537. And upon the dissolu- tion of tlie partnersiiip, by the death of one of the partners, tiie survivor has au equitable lieu on such real estate for his indemnity against the debts of the firm, and for securing the balance that may be due to liim from the deceased partner on settlement of the partnership accounts between them ; and the widow and heirs of such de- ceased partner have no beneficial inter- est in such real estate, nor in the rent received therefrom after his death, until the surviving partner is so indem- nified. Dyer v. Clark, 5 Mete. 562. See ante, ch. 11, § 4. (7) Case V. Abeel, 1 Paige, 393; Lake v. Gibson, 1 Eq. Ca. Ab. 290, affirmed in 3 P. Wms. 158 ; Jefferys v. Small, 1 Vern. 217; Elliot v. Brown, cited in Jackson v. Jackson, 9 Ves. 597 ; Lyster v. Dolland, 1 Ves. Jr. 434, 435, per Lord Thurlow ; York v. Eaton, 2 Freem. 23 ; Booth v. Parks, 1 Molloy, 465; Sigourney v. Munn, 7 Conn. 11. And see Egberts v. Wood, 3 Paige, 517 ; Ketchum v. Durkee, 1 Barb. Cii. 480 ; Whiteright v. Stimpson, 2 Barb. (S. C.) 379 ; Innes v. Lansing, 1 Paige, 583; Campbell v. Mullet, 2 Swanst. 574; West v. Skip, 1 Ves. 237, 445; Ex parte RuflSn, 6 Ves. 126, 128; Wood V. Dummer, 3 Mason, 312 ; Murry v. Murry, 5 Johns. Ch. 60; Taylor v. Fields, 4 Ves. 396 ; Young v. Keighley, 15 Ves. 557. And see Marlett v. Jackman, 3 Allen, 287. 480 THE LAW OF PARTNERSHIP. [CH. XIII. tion of the resulting property, — as whether it shall he divided or sold, or taken hy one or another, and on what terms : and these questions we shall, in another chapter, consider ; saying now, only, that we perceive no difference in principle between the two kinds of property. The surviving partners are held strictly as trustees ; and their conduct, in discharging their trust, is carefully looked after by courts of equity. (?•) Thus, like other trustees, they cannot sell the property of the firm and buy it themselves ; nor, as the converse of this, can they buy from themselves property for the firm. (&) Their trust being to wind up the concern, their powers are commensurate with the trust. Hence, they may collect, compromise, or otherwise arrange all tlie debts of the firm ; and their receipts, payments, and doings generally, in this behalf, are valid, if honest, and within the fair scope and purpose' of the trust. And if there be negligence, delay, misconduct, or gross mistake, equity will interfere, and give the proper relief. * 443 * It is said tliat the surviving partners are trustees, in part, for themselves. But while, as trustees, they have all power and possession, they stand as cestui que trusts on the same footing as the others ; or, rather, must postpone them- selves to the creditors of the firm ; and only as to wliat is left after the creditors are paid do they come in on equal terms with the representatives of the deceased, and with each other. (r) Phillips V. Ackerson, 2 Bro. Ch. (s) But equity will not interfere 272; Hartz v. Schrader, 8 Ves. 317; and deprive the surviving partner of Estwick V. Conningsby, 1 Vern. 118; the riglit of closing up the concern, Burden v. Burden, 1 Ves. & B. 170 ; b}' appointing a receiver, if he is re- Ames V. Downing, 1 Bradf. 321 ; Wash- sponsible and acts in good faith. So burn V. Goodman, 17 Pick. 519; Case held where tlie survivor resided in V. Abeel, 1 Paige, 398, per Wahvortli, England, hut was engaged in closing Chancellor: "The surviving partner up the affairs of the firm, by a corn- has the legal right to the partnership petent agent, with all reasonable dili- effects ; but in equity he is considered gence. Evans v. Evans, 9 Paige, 178; merely as a trustee to pay the part- Jacquin v. Buisson, 11 How. Prac. nership debts and dispose of tlie effects 385. Nor in closing up the affairs of of the concern for the beilefit of him- the firm, is there any such principle self and the estate of his deceased in equity, that surviving partners partner. He cannot, therefore, be per- cannot become purchasers, from tiie milled to make any gain or profit by representatives, of the share of de- the use of the partnership funds and ceased partner. Chambers v. Howell, effects for his own exclusive benefit." 11 Beav. 6, 12 Jur. 905. And see Ogden v. Astor, 4 Sandf. 311. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 481 And, if there is not enougli to pay the debts in full, then, all being equally liable, they must do nothing to disturb or pre- vent this equality, {t) The survivors are not bound to continue the business at all ; and would probably be permitted to wind it up quite abruptly, if they chose not to engage in new transactions for the firm, or even continue old ones, although the new or the old seemed to promise a much better winding up at the close. And, moreover, if the trustees choose to continue the property in trade, or to go on in lousiness under the credit and risking the effects of the firm, not only will equity restrain them doing so, if injunction be desired by the representatives of the deceased, but if, by such new business, profit is made, the survivors will be bound to account for this profit as belonging to the firm. (^^) And if no profit, or even a loss, is made, they must be charged with interest on the funds they use, and the whole loss will be theirs, (v) It seems, however, that, if the survivors carry the business on, and make a profit which is credited to the firm, they may be allowed some compensation for their services, unless the articles of agreement provide otherwise, (w) And a surviving partner may be allowed for his time and expenses, under especial circumstances justifying such a claim, (zvw) The survivors do not, however, bear more than * their * 444 (0 See cases cited in previous notes and see Cook v. Collingridge, Jac. 607 ; to this section. See Saving and Loan Burden v. Burden, 1 Ves. & B. 170; Society v. Gibb, 21 Cal. 595, limiting Stocken v. Dawson, 6 Beav. 371. But the liability of the surviving partner, see, also, contra, Ames v. Downing, 1 id. 496. Bradf. 321, in which the Surrogate (») Waring r. Cram, 1 Pars. Sel. says: "Nor can Mr. Hicks charge Eq. Cas. 522 ; Washburn v. Goodman, commissions, as surviving partner, for 17 Pick. 519 ; Ogden v. Astor, 4 Sandf. the collection of the debts. His legal 311; Booth V. Parks, 1 MoUoy, 465; duty was to collect the assets and Crawshay v. CoUins, 15 Ves. 218, 2 wind up the business of the firm ; a Russ. 325 ; Brown v. Litton, 1 P. Wms. duty the law imposes on him as an 224 ; Hammond v. Douglas, 5 Ves. incident to the contract of partnership, 539 ; Brown v. De Tastet, Jacob, 284, and for the performance of which no 292 ; Heathcote v. Hulme, 1 Jac. & W. remuneration is promised or implied. 122. Such a claim is new to me, and I am {v) Simpson v. Feltz, 1 McCord Ch. not aware that it is supported by prece- 213 ; Goddard v. Bulow, 1 Nott & dent or authority." Beatty v. Wray, McCord, 45 ; Honore v. Colmesnil, 19 Penn. St. 516 ; Brown v. McFar- 7 Dana, 201 ; Moon v. Story, 8 Dana, land's Ex., 41 id. 129. 233; and cases in previous note. {ww) Newell v. Humphrey, 37 Vt. (w) See CoUyer on Part. § 328; 265. 31 482 THE LAW OF PARTNERSHIP. [CH. XIII. share of losses resulting after the death of the deceased, from transactions entered upon before, and only carried to completion by the survivors. If the survivor or survivors carry on the business, they may sometimes realize great advantages and large profits from the fact that the business was so well established during the lifetime of the deceased. And then the question may come, whether the court will require them to make an allowance to the represen- tatives of the deceased, for their profit. The question, in fact, amounts to this : Is the good-will of the concern so far part- nership property that, if the survivors retain it, they must allow for it ? There is but little adjudication on this subject ; but that little leads to the conclusion, that the good-will goes to the survivors, without payment or allowance on their part. There are some difficulties, however, attending this view. The stock of goods, the lease, or the right or expectancy of remain- ing on the premises, all belong to the firm. If the merchan- dise, if sold in connection with the lease and right, will bring much more money than if sold otherwise, should it not be sold in this way ; and if the survivors buy it, or take it, or keep it, should they not, in some form, allow for it the price it would bring if others bought it as they buy it ? So much of the good- will — the meaning of which word is not very exactly defined — as attaches merely to the goods and the place, and the ex- isting contracts, belongs, we should say, to all alike ; but so much of it as is personal, and originates in the way of carry- ing on the business, and might go with the survivors wherever they engage in the same business, this belongs to them ex- clusively, (a;) (.r) An examination of tlie author- Hoff. Cli. 68, that, upon a dissoUition, ities will show considerable conflict on it must be sold, and that it does not these questions. Crawshay i-. Collins, survive. In Holden's Admr. v. Mc- 15 Ves. 218, 227; Crutwell v. Lye, 17 Makin, 1 Pars. Sel. Eq. Cas. 270, it Ves. 336 ; Farr v. Pearce, 3 Madd. 74; was held, that the good-will (consisting Lewis V. Langdon, 7 Swinb. 421; Wil- of the subscription list, &c.) of a news- lett V. Blanford, 1 Hare, 253, 271. paper is partnership property ; and, Held, in Williams v. Wilson, 4 Sandf. when one of the partners dies, it does Ch. 379, that the good-will of a busi- not survive to the surviving partner, ness, built up by a copartnership, is an but is to be sold, with the presses, important and valuable interest, which types, and mechanical appliances of the law recognizes and will protect ; the establishment. In tlie case of and in Dougherty v. Van Nostrand, 1 Wedderburn v. Wedderburn, 22 Beav. CH. XIII.] OP A CHANGE IN THE PARTNERSHIP. 483 * It lias sometimes been supposed that the surviving * 445 partners have a right to take all the effects and mer- 104, the Master of the KoUs, in de- livering judgment, says : " The cjood- ivill of a trade, although inseparable from the business, is an appreciable part of the assets of a concern, both in fact and in the estimation of a court of equity. Accordingly, in reported cases, Lord Eldon held, that a share of it properly and as of right belonged to the estate of the deceased partner. It does not survive to the remaining partners, unless by express agreement ; but it may by agreement, as it may be agreed that any particular portion of the partnership assets shall so survive. Good-will manifestly forms a portion of the subject-matter which produces the profits (which constitutes partner- ship property) ; and which is to be di- vided between the surviving partners and the estate of the deceased partner, according to the terms of the contract, and, when that is silent, according to their sliares in the concern. There is considerable difficulty in defining, ac- curately, what is included under this term good-will : it seems to be that species of connection in trade which induces customers to deal with a par- ticular firm. It varies almost in every case ; but it is a matter distinctly ap- preciable, which may be preserved (at least to some extent), if the busi- ness be sold as a going concern, but which is wholly lost if the concern is wound up, its liabilities discharged, and its assets^ got in and distributed. I am of opinion, then, that both on principle, on the authority of the de- cided cases, and on the ordinary rules of common sense, I must, whenever there is a reputation and connection in business, constituting good-will, treat that as part of the assets of the concern." But this opinion may be regarded, to some extent, obiter; as the case really holds that, as there was an express agreement in the arti- cles that the good-will should belong to the surviving partner, the plaintiffs were not entitled to participate in the profits, so far as those profits were attributable to the good-will and con- nection in trade of the old firm. And, indeed, the case itself was finally set- tled by a compromise. See further, on this question, Hammond v. Douglas, 5 Ves. 539 ; Farr v. Pearce, 3 Madd. 74 ; Chippendale v. Tomlinson, Cooke's Bankr. L. 431 ; Silk v. Osborn, 1 Esp. 140; Coslake v. Till, 1 Russ. 376 Kennedy v. Lee, 3 Meriv. 441, 452 Webster v. Webster, 3 Swanst. 490, n. Harrison v. Gardner, 2 Madd. 198 Butler V. Burleson, 16 Vt. 176. In Lewis V. Langdon, 7 Sim. 421, it was contended that the right to use the designation of a partnership ranges itself under the head of good-will, and that good-will survives, — the personal representatives of the deceased part- ner having nothing to do with it. The Vice-Chancellor, Sir S. Shadwell, in sustaining this position, said : " The question in this case depends on the right, in the surviving partner, to carry on the business under the name of the partnership. Lord Eldon, cer- tainly, has expressed a doubt, in the case of Crawshay v. CoUins (15 Ves. 227), upon what has been understood as the proposition laid down by Lord Rosslyn, in the 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, the 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 sup- posed connection between the place where the business was carried on and the good-will. But it occurs to me, that, if the good-will is to be con- sidered as a salable article which be- longs to the partnership, then this consequence must follow ; namely, that the surviving partner must be under an obligation to carry on the trade for some time after his partner's death, in 484 THE LAW OF PARTNERSHIP. [CH. XIII. * 446 cliandise (after the * debts are paid or secured) at a valuation. And, undoubtedly, there may be cases in which this would be a just and beneficial mode of settlement, and the court would therefore permit or order it. But 'it must be clear that they have no such right. Indeed, the right on this point is on the other side ; for it would seem, both from the reason of the case and on the authorities, that the repre- sentatives of the deceased have a right to require a sale of the eifects, as the only certain way of ascertaining their value and making a fair division. But this again, although a rule, cannot be deemed a universal rule ; for equity may find in par- ticular circumstances good reason for not decreeing a sale, although it must be admitted that it strongly inclines to that mode of settlement, as, on the whole, the fairest and the safest. (?/) That the representatives of the deceased may 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 surviving partner chose to discontinue the business, and to write to the cus- tomers, 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 power is there in a court of equity to compel a part- ner to carry on a trade after the death of his copartner, merely that, at a future time, the good-will (as it is called) may be soldi 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 property. I cannot but think, when two partners carry on a business in partnersiiip together, under a given name, that, during the partnership, it is the joint right of them both to carry on 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." It was accordingly held, that, as the plaintiff in this case had never abandoned the right which accrued to him on the death of his partner, an injunction would be granted to restrain the defendant, wlio was ex- ecutor of the deceased partner, from using the partnership name in carry- ing on his business. See Wade v. Jenkins, 2 Giffard, 509. See ante, ch. 7, sect. 8, subs. 2, where the Good- Will is treated of. {tj) Crawshay v. Maule, 1 Swanst. 495, 523 ; Featherstonhaugli v. Feu- wick, 17 Ves. 298; Cook v. Colling- ridge, Jac. 007 ; Simmons v. Leonard, 3 Hare, 58L In winding up the con- cerns of a partnership, after a dissolu- tion, one partner cannot take the partnership stock at a valuation ; but its value must be ascertained by the conversion of it into money. Sigour- ney v. Munn, 7 Conn. 11 ; Evans v. Evans, 9 Paige, 178 ; Dougherty v. Van Nostrand, 1 Hoff. Ch. 68; Con- well V. Sandidge, 8 Dana, 278. See also, on this subject, Mifflin v. Smith, 17 Serg. & R. 165 ; Bradley v. Cham- berlin, 16 Vt. 613 ; U. S. Bank v. Bin- ney, 5 Mason, 185; Dickinson v. Bold, 3 Desaus. 501 ; Wilson v. Greenwood, 1 Swanst. 471 ; Leach v. Leach, 18 Pick. 75 ; Fereday v. Wiglitwick, 1 Tamlyn, 261 ; Rigden v. Pierce, 6 Madd. 353 ; Pierce v. Trigg, 10 Leigh, 406. CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 485 have an account taken — or, rather, that their right in this respect is as complete as * the right of the de- * 447 ceased while he lived and vras a partner — seems to be certain. (2) At law, the creditors of the firm must bring their actions against the surviving partners only ; who, of course, charge what payments they are obliged to make, in account with the estate of the deceased. On the other hand, the survivors alone bring any action to collect a partnership debt, in their own names. At common law, the executor or administrator of the deceased cannot be joined ; and the executors or administra- tors of the last survivor sue alone, without joining the repre- sentatives of the first or of any later deceased, (a) (z) Waring v. Cram, 1 Pars. Sel. Eq. Cas. 522; Washburn v. Goodman, 17 Pick. 519 ; Ogden v. Astor, 4 Sandf. S. C. 311. In Scott V. Milne, 5 Beav. 215, the court refused to open accounts, though of a general and summary nature, not containing the items, and which had been indorsed by a surviv- ing partner to the representatives of a deceased partner, and had remained unquestioned for twenty-two years ; but it decreed an account limited to the subsequent receipts of the surviv- ing partner, which, it was admitted, had taken place. In Wedderbum v. Wedderburn, 22 Beav. 84, it is said, that the liability to account for profits derived from trade, carried on after the death of the testator, must depend, in the absence of contract, upon the nature of the trade, the mode of carry- ing it on, the capital employed, the state of the account between the part- nership and the deceased partner, and the conduct of the parties after his death. And see Stoughton v. Lynch, 1 Johns. Ch. 469 ; Brown v. Litton, 1 P. Wms. 140; Hammond v. Douglas, 5 Ves. 539 ; Brown v. Vidler, 15 id. 223; Brown v. De Tastet, Jac. 284; Fearns v. Young, 9 Ves. 549. (a) Barney v. Smith, 4 Harris & J. 485 ; Murray v. Mumford, 6 Cow. 441; Davis i;. Church, 1 Watts & S. 240 ; Clark v. House, 23 Me. 560 ; Peters v. Davis, 7 Mass. 257 ; Wallace V. Fitzsimmons, 1 Dall. 248 ; McCarty V. Nixon, 2 id. 65, note; Smyth v. Hawthorn, 3 Eawle, 355 ; Yale v. Fames, 1 Mete. 487 ; Beach v. Hay- ward, 10 Ohio, 455 ; [Pfeffer v. Steiner, 27 Mich. 537.] In Louisiana, the sur- viving partner does not possess the right, until he is autliorized by the Court of Probate, to sue alone for, or to receive, partnership debts. Flower V. O'Conner, 7 La. 194 ; Connelly v. Cheevers, 16 id. 130; Hyde v. Brashear, 19 id. 402; Babcock v. Brashear, id. 404. On actions against surviving partners, and actions against executors, see Richards v. Heather, 1 B. & Aid. 29 ; Given v. Albert, 1 Watts & S. 833 ; Osgood v. Spenser, 2 Harris & G. 133 ; Grace v. Shurter, 1 Wend. 148 ; Lang v. Keppell, 1 Binn. 123 ; Calder v. Rutherford, 1 Brod. & B. 302, 7 Moore, 158. In Thorpe v. Jackson, 2 Younge & C. Exch. 553, it was held, that joint contractors, whether partners or not, are in equity jointly and severally liable ; and, if one die, his assets are liable, but other contractors should be joined. See also Scholefield v. Heafield, 7 Sim. 667. 486 THE LAW OF PARTNERSHIP. [CH. XIII. 3. Of the Settlement of the JEstate of a Deceased Partner. The estate of the partnership would be settled, in a case of dissolution by death, entirely on equitable principles; * 448 and we should * have no doubt that they would require that the claims of the several creditors and those of the joint creditors should be kept entirely distinct, each having its separate fund, and passing over to the other only in case of a surplus. Indeed, as we have already intimated, we consider the decided tendency of common-law adjudication to be in that di- rection, (h) But the question seems not to be so fully settled by authority as we think it to be on principle. In the whole mat- ter of the settlement of such an estate, there are yet questions which cannot be considered as positively determined. Thus, after some conflict and uncertainty, it seems now to be settled (6) Wilder v. Keeler, 3 Paige, 167 ; Morgan v. His Creditors, 20 Martin (La.) 599 ; M'CuIloh v. Dasliiell, 1 Harris & G. 96 ; Payne v. Matthews, 6 Paige, 19 ; Hall v. Hall, 2 McCord's Ch. 302 ; Bowden v. Schatzell, 1 Bailey's Eq. 360 ; Cammack v. Johnson, 1 Green Ch. 163 ; Ex parte Moult, 1 Deacon & Chitty, 44, 73, 1 Montagu, 292. A de- ceased partner's estate, after payment of his separate debts, is applied in payment of such partnership debts as remain unsatisfied after applying the whole partnership assets in liquida- tion thereof; and, if his personal estate is insufficient, the real estate of the deceased partner is to be taken. Addis V. Knight, 2 Meriv. 117, 119. As to the power of survivors to make a new contract to keep alive a debt against the estate of a deceased partner, see Braithwaite v. Britain, 1 Keen, 221. See ante, p. *347, et seq., and notes. [By partnership articles, D. was to be a partner with A. and B. in profits, but not in the capital stock ; and he was not required to find any capital. D.'s partnership was to continue for twelve years, at the expiration of which term his interest in the concern was to cease. If D. died during such term, his repre- sentatives were to receive a proportion- ate part of his share of the profits of the current half-year, for the period up to his decease, to be ascertained accord- ing to the average of the last two pre- ceding half-yearly stock-takings. D. died ; after wliich the business was carried on by A. and B. until A.'s death, and then by B. alone. A cred- itor of the firm, in respect of a debt contracted while the firm consisted of A., B., and I)., claimed to have the whole of B.'s estate applied in pay- ment of all the creditors of A., B., and D., without regard to whether their del)ts were contracted before or after the death of D., or before or after the death of A. There were in exist- ence specific assets which had belonged to the firm while it consisted of A., B., and D. Held, that, under the part- nership articles, D.'s executors had a right to have the debts existing at D.'s death paid out of the then exist- ing assets ; that the assets then on hand, and now existing in specie, must therefore be applied in payment of the creditors of the original firm of A., B., and D. ; and that, therefore, such cred- itors could not take B.'s separate as- sets until his separate creditors had been paid in full. Ex parte Dear, In re White, 1 Ch. D. 514.] CH. XIII.] OF A CHANGE IN THE PARTNERSHIP. 487 in England, that, on the death of a partner, a creditor of the firm may proceed at once in equity against the estate of the deceased, whether the firm or the surviving partners be solvent or otherwise ; the court requiring, however, that the surviving partners should be made parties, because they are interested in the account. () (z) Butts V. Dean, 2 Mete. 76; Wat- 8 Cowen, 77 ; Booth v. Smith, 3 Wend, kins V. Hill, 8 Pick. 522; Reed v. Up- 66; Bill v. Porter, 9 Conn. 23; David- ton, 10 id. 525 ; Maneely v. McGee, son v. Bridgeport, 8 Conn. 472 ; Elliott 6 Mass. 143; Wood v. Bodwell, 12 v. Sleeper, 2 N. H. 525; Frisbie v. Pick. 268 ; Ilsley v. Jewett, 2 Mete. Larned, 21 Wend. 450 ; Cole v. Sack- 168 ; Varner v. Nobleborough, 2 ett, 1 Hill, 516 ; Waydell v. Luer, 5 id. Greenl. 121 and note (a) ; Deseadillas 448. For the English law upon this V. Harris, 8 id. 298; Newall v. Hussey, point, see Crowe v. Clay, 9 Exch. 604, 18 Me. 249 ; Bangor i;. Warren, 34 id. 25 Eng. L. & Eq. 454; Maxwell v. 324; Fowler v. Ludwig, id. 455; Shum- Deare, 8 Moore, P. C. 363, 26 Eng. L. way V. Reed, id. 560 ; Comstock v. & Eq. 56. Smith, 23 id. 302; Gooding y. Morgan, (6) Ex parte Williams, Buck, 16; 37 id. 419. Ex parte Seddon, 2 Cox, 49; Ex parte («) Peter v. Beverly, 10 Pet. 567; Lobb, 7 Ves. 592; Scaife v. Jackson, Sheehy v. Mandeville, 6 Cranch, 253 ; 5 Dow. & R. 290, 3 B. & C. 421 ; Ex Wallace v. Agry, 4 Mason, 336 ; Smith parte Kedie, 2 Deac. & Ch. 321 ; Ex V. Smith, 7 Fost. 244 ; Van Ostrand v. parte Jackson, 1 Ves. Jr. 131. And Reed, 1 Wend. 424 ; Burdick v. Green, see cases in previous notes. 15 Johns. 247 ; Hughes v. Wheeler, CH. XV.] OF BANKRUPTCY. 529 If the debt was originally joint, and had apparently become * several instead of joint, we apprehend that a *487 distinct consent of the creditor to this arrangement, — by which he gives up all, and retains only one, — and a distinct consideration for his consent, must be proved. And this, of course, may be any benefit to him, actual or prospective ; or any loss or injury to the firm, suffered at the instance of the creditor. A consideration to the several partner must, })erhaps, also be proved ; for, although he was held before, he had before, on payment, a right to charge his payment to the firm, which he has not now. (c) In general, it would seem from the cases that, while a dis- tinct intention, or consent and agreement, of all the partners must be proved, in order to give validity to an arrangement by which a new indebtedness has discharged an old one, or a joint debt been extinguished by conversion into a several debt, or ince versd, — if such consent and agreement be proved, the court apply quite liberally the principle of novation, and con- sider the discharge of the one debt a sufficient consideration to sustain the assumption of the new debt. ((^) Whether or no such consent and discharge have taken place, (c) Lyth V. Ault & Wood, 7 Exch. son v. Percival, 5 B. & Ad. 925; Hart 669. Parke, B. : "The plaintiff agrees f. Alexander, 2 M. & W. 484; Kirwan to take the security of one partner, v. Kirwan, 2 Cromp. & M. 617, 4 instead of that of both. She is at lib- Tyrw. 491. Tiie authority of David erty to enter into that arrangement ; v. EUice, 5 B. «& C. 196, 7 Dow. & R. for the court cannot inquire into the 690, and Lodge v. Dicas, 3 B. & Aid. value of the consideration. If there 611, is considered as greatly shaken be any consideration whatever, it will by the later authorities. See Hart v. support an agreement. Now, although Alexander, 2 M. & W. 493; Sheehy 10/. would be no satisfaction for a debt r. Mandeville, 6 Cranch, 264 ; Harris v. of 100/., yet an article of much less Lindsay, 4 Wash. C. C. 271. But see value than 10/. may be given and re- Wildes v. Fessenden, 4 Mete. 12, re- ceived in satisfaction of such a debt, viewing the authorities. Robb v. It may, at first, appear paradoxical ; Mudge, 14 (iray, 534 ; Wild v. Dean, but the sole responsibility of one of 3 Allen, 579 ; Ex parte Appleby, 2 many partners may be of greater value Deac. 482 ; Ex parte Liddiard, 4 Deac. than that of all, for you may tiiereby & Ch. 603 ; Ex parte Kedie, 2 id. 312 ; obtain tiie security of his real and per- Ex parte Lane, De Gex, 300; Ex parte sonal estate." Pollock, C. B. : " The Bradbury, 4 Deac. 202. exchange may be of great advantage (cl) Lyth v. Ault, 7 Exch. 069, to the creditor; for it may be much .s»pra, note (c) ; and the opinion of Al- more desirable to have the sole secu- derson, B., p. 674. And see Andrew rity of a rich old man, than the joint v. Boughey, Dyer, 75 a,- Tiiompson v. security of the old man, and of a young Percival, 5 B. & Ad. 925; Mills v. man without any property." Thomp- Boyd, 6 Jur. 943 and cases there cited. 34 630 THE LAW OF PARTxVERSHIP. [CH. XV. must depend upon considerations quite analogous to those *488 which * have been presented in the inquiry when a re- tired partner was discharged from the Hability of the firm, by change of charge, or credit, or account. The cases are rather numerous on this point ; but it is not easy to draw from them any general principles other tlian those which have been already stated, (e) If there be an old indebtedness, and a new one for tlie same cause, and it is not proved or presumed that the new has paid the old, then both co-exist ; and, generally, in such case the old is the principal delit, and the new is collateral to and security for the old. The cases show that the question whether the old debt is extinguished is sometimes one of much difficulty in practice. But, if it be not extinguished, then it is certain that the creditor may give up the new debt, and found his claim only on the old. (/) In this country, it is a universal principle, recognized in all our systems of insolvency and in the national bankrupt law, that a creditor having a debt with security may (e) Wild V. Dean, 5 Allen, 579. In this case, Bigelow, C. J., fully con- siders the conflicting authorities, and holds that a partnership debt is not provable against the private estate of one of the partners, who has received an assignment of all the partnership proi)ert3', and executed a bond to his retiring partner to assume and pay the partnership debts, witiiout evidence of an express or implied assent by him to pay the same to the creditor as his private debt ; and that notice by the creditor of his election to treat it as a private debt is not sufficient. Kobb v. Mudge, 14 Gray, 534 ; Ex parte Whit- more, 3 Mont. & A. 627; Evans v. Drummond, 4 Esp. 89; Read v. White, 5 id. 122 ; Bedford v. Deakin, 2 Stark. 178, 2 B. & Aid. 210 ; Lodge v. Dicas, 3 id. Gil ; Thompson v. Percival, 5 id. 925 ; Hart v. Alexander, 2 xM. & W. 484. (f) Ex parte Roxby, 1 Mont, on Part. 198. The petitioner, a joint cred- itor, took a draft of the solvent part- ners upon a third person. The peti- tioner applied to prove. The proof was refused, unless upon delivering up the draft. Petition to prove. Lord Chancellor : " The question is, whether the bill was given as a collateral secu- rity, or in discharge of the debt ; as to which an affidavit must be made." Ex parte Hodgkinson, 1 Coojjer, 101 ; Ex parte Kendall, 17 Ves. 527. Lord Eldon : " In many cases, the representa- tive may be entitled to say to a cred- itor, wlio chooses to make the demand, that justice requires the surviving part- ners to pay the debt : tiiey are to be considered the principals ; he is merely a surety ; and therefore a court of equity would not permit them to call upon him for payment, except upon an equitable arrangement and modifi- cation requiring them to assign the dividend." Ex pai-te Seddon, 2 Cox, 49 •■ Ex parte Lobb, 7 Ves. 592; Ex parte Hay, 15 id. 4 ; Ex parte Slater id. 146; Evans v. Drummond, 1 B. tS C. 113; Reed v. White, 5 Esp. 122 Thompson v. Percival, 5 B. & Ad. 925 Ex parte Whitmore, 3 Mont. & A. 627 Oakeley v. Pasheller, 10 Bligh, 548, 4 Clark & Fin. 207. CH. XV.] OF BANKRUPTCY. 531 give up his security, and prove his whole debt; or may obtain what he can from his security, and prove for the balance. (^) AVe do not know that this principle has been applied * to the case of a creditor of a partner, holding the lia- * 489 bility of the firm as collateral security ; and there might be some difficulty in this application of it. The simplest result would be, that the creditor should prove against the firm, and, deducting his dividend, then prove for the balance against the partner ; but a difficulty in the way of such procedure leads to a doubt whether it would be permitted. (A) We have supposed the indebtedness to be such that the lia- bility of the firm and that of the partner cannot be called concurrent. Perhaps they would be so deemed; and if they (g) Richardson v. Wytnan, 4 Gray, 553. The question was before the court in this case, where the respon- dent held a joint and several note of three persons, tenants in common, and held also a mortgage security. The petitioners claimed that the security should first be made available, and the respondent be permitted then to prove against the insolvent estate of one of the debtors. The court said: "The property of the insolvent debtor, wliich is pledged for tlie payment of the debt, should either be applied to its extin- guishment, or surrendered to the as- signees and made part of the estate to be distributed among the general cred- itors ; and whatever other property the creditor holds as security' ought also to be appropriated to the payment of ti)e debt. This is an equitable rule, which will do justice to all parties. It has the sanction, in its spirit, of the courts of chancery in England, and has been recognized and enforced in our own." Lanckton v. Wolcott, 6 Mete. 305; Amory i-. Francis, 16 Mass. 308; In re Grant, o Law Rep. 303 ; Ex parte Baker, 8 id. 461 ; Eastman v. Foster, 8 Mete. 19. For English cases, see Ex parte Goodman, 3 Madd. 373 ; Ex parte Parr, 1 Rose, 76, 18 Ves. 65 ; Ex parte Bennet, 2 Atk. 527 ; Ex parte Wildman, 1 id. 100 ; Ex parte l)e Tas- tet, 1 Rose, 323 ; Ex parte Iledderley, 2 Mont., Deac. & DeG. 487 ; Ex parte Shepherd, id. 204; Ex parte Prescott, 4 Deac. & Ch. 23 ; Ex parte Dickson, 2 Mont. & A. 99 ; Ex parte Ruiford, 1 Glyn & J. 41 ; Ward v. Dalton, 7 C. B. 643; Ex parte Bloxham, 6 Ves. 449, 600 ; Ex parte Barclay, 1 Glyn & J. 272 ; Ex parte Smith, 3^ Bro. C. C. 46. (/() Agawam Bank v. Morris, 4 Cush. 99. A partnership note having been indorsed by tiie paj'ee to a third person, and by him indorsed to and discounted at a bank of which lie was president, and one of the promisors having afterwards become insolvent, the bank proved the note as a claim against his estate. The solvent prom- isor afterwards, at the request of the second indorser, and for the purpose of securing him and the bank, but without the knowledge of the bank, gave him security applicable to the note in question, and also to another note held by the bank ; such indorser promising to account to the promisor for the surplus of the security, if any. It was held, that the security was not given to the bank, but was a personal one to the second indorsee, and to indeninifj'^ him as such ; and tiiat a subsequent order of the commissioner, on the motion of the assignee, directing the note to be struck out of the list of claims proved, and disallowing the same, on the ground that the bank held collateral security therefor which had not been surrendered or applied, was erroneous. See also Barclay v. Phelps, 4 Mete. 397. 532 THE LAW OF PARTNERSHIP. [CH. XV. were, in fact or by construction, such that the creditor need not consider tlie one as principal, and be limited in his * 490 claim in the other, as he * would be in a case of strict guaranty, — then it seems to be settled, although not without some doubt and objection of great weight, that the creditor can only elect to proceed against one, (i) and abandon his claim against the otlier party. In fewer words, if a creditor can elect, he must elect. Tbis rule would seem to have been settled only on authority in England, — for the supposed analogy to a rule of law is surely insufficient for it, — and we doubt whether it has been yet established by practice in this country ; nor are we confident that it will be. Lord Eldon appears to think that, aside from authority, if a creditor gets the security of a partner, and also the security of a firm for the same debt, by a valid contract, there is no reason why he may not prove against both, in the same way as if they were different and distinct persons. (/) {i) Ex parte Bevan, 9 Ves. 222. Lord Eldon : " It is not necessary to decide the otlier question as to the joint and several proof. If it was, I am not perfectly satisfied with the authority that has been stated. Tiie reasoning gf)es upon this : that a joint and separate action could not be brought at law. But surely the dis- tinction is this : 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 Pearce v. Williams, the only separate creditor was he who took out the con)mission ; 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 tliat 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 in the same case, 10 Ves. 107, Lord Eldon again says : " The principle seems ob- vious ; yet in bankruptcy, for some reason not very intelligible, it has been said the creditor should not have the benefit of the caution which he has used. I never could see why a cred- itor, having both a joint and a several security, should not go against both estates. But it is settled that he must elect." ij) The case alluded to by Lord Eldon, as quoted in the previous note, is £x parte Rowlandson, 3 P. Wms. 405. " The Lord Chancellor (Talbot) at first inclined to think that the peti- tioner, being a joint and a separate creditor, ought to be at liberty to come in tinder each of the commissioners, provided he received but a single satis- faction ; but the next day his lordship helil, 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, lie cannot sue them severally, but the one action may be pleaded in abate- ment of the other. (But, as to this, see Lechmere i'. Fletcher, I Cromp. & M. 636.) 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." CH. XV.] OF BANKRUPTCY. 533 * It is also important to determine what constitutes * 491 the fund appropriated to one class of creditors, and what that of the other class ; or, to ascertain what is joint property and what is several property. Questions of fact, or even of law, as to the ownership of certain goods or effects or lands, are usually to be determined by the general principles of the law of contracts, or the law of property. But those which are peculiar to the law of partnership, or arise out of its relations, are also of much importance. It seems to be held that if a partner takes property from the firm, even in good faith, and bankruptcy ensues, and the ques- tion arises, which class of creditors has the benefit of this prop- erty, it will be held to satisfy any balance due from that partner to the firm, and thus to increase the fund of the joint creditors, and the several creditors have only the surplus. As a general principle, this may rest upon sufficient reasons ; for a partner should not be permitted to withdraw his share from the capital stock, and in this way assist his several creditors at the ex- pense of the joint creditors. But the principle, or the rule, should not be extended to cases in which chattels were appro- priated long ago to one partner, or bought by him with money taken from the firm, when the goods or money were duly charged to and allowed by him. If the rule were applied to such cases, a partner could have no several property, or it And, notwitlistanding tlie doubts of parte Ladbroke, 2 G\yr\ & J. 81 ; Ex Lord Eldon and other high autliorities, parte Bate, 3 Deac. 358 ; Ex parte tlie rule is now firmly established in Smith, 1 id. 385; Ex parte Hill, 3 England, that, where there is a joint Mont. & A. 175 ; Ex parte Clarke, 1 and several creditor, he must make DeGex, 153; Ex parte \^^ooi,\A. \Zi; his election whether he will come in Ex parte Banks, 2 Jones & La T. 212. upon the joint or the separate estate ; Ex parte Lane, 1 De Gex, 300 ; Ex that is, which he will come in upon, in parte Arborim, id. 359; Ex parte Hay, preference; for, whichever he may 15 Ves. 4 ; £'x/>arte Adam, 1 Ves. & B. elect, he will be entitled to come in 493, 2 Rose, 36 ; £'.r /wrte Bigg, id. 37 ; upon the surplus of the other, if there Ex parte Gray, 4 Deac. & Ch. 778. should be any. Ex parte Blankenha- But where the contract is for double gen, Cooke's B. L. 257 ; Ex parte security against distinct firms, though Butlin, id. ; Ex parte Banks, 1 Atk. consisting of the same individuals, the lOG ; Ex parte. Bond, id. 98 ; Ex parte creditor, if ignorant of their connec- Smith, 1 P. Wms. 237 ; Ex parte JIas- tion, may prove against both. Ex son, 1 Rose, 159; Ex parte Liddel, 2 id. parte Bevan, 10 Ves. 109, note to Sum- 34; ^r /«(rte Bank of England, id. 82; ner's ed. And see Ex parte Adam, Ex parte Husband, 2 Glyn & J. 4. 5 1 Ves. & B. 493, 2 Rose, 36 ; Ex parte Madd. 419 ; /s.r/)«(te Moult, Mont. 337; Bigg, id. 37; Ex parte La Foret, Ex parte Chevalier. 1 Mont. & A. 345; Cooke's B. L. 251; Ex parte Walker, Ex parte Hinton, 1 De Gex, 550 ; Ex 1 Rose, 441. 634 THE LAW OF PAETNERSHIP. [CH. XV. would be so mixed up with that which would be restored * 492 to the joint fund that no line of separation * could be found. Indeed, it seems to be limited to those cases in which certain specific property has been taken out, which has been identified, and may be specifically restored. Even here, however, the rule must be qualified, or rather another rule substituted, which may be drawn from the true princii)les of the case, (/c) It cannot be doubted that partners may agree in their original articles as to what property shall belong to one or another in case of dissolution ; or that they may so agree subsequently to the formation of the partnership; or that they may so agree in reference to the present and immediate several ownership of articles of joint property, at any time or in any way they please ; with this limitation only, that the agreement must be made in good faith, and therefore must not be made in contemplation of bankruptcy. The same power and right exist in relation to choses in action ; any division or appropriation of these, by indorsement of negotiable paper, or assignment of debt, or other- wise, must be lawful and effectual, with only the same limita- tion. (/) And if a partner owns in this way, or in any other way, land or personalty, his right and interest cannot be affected by permitting the partnership to use or employ his property, upon any terms satisfactory to them, always within the limitation that the whole transaction was in perfect good faitli. And tbe con- verse of all this must be equally true ; that is, partners may transfer to the firm, either realty or personalty, choses in pos- session or choses in action, and the use or employment by a partner of the thing so owned by the firm cannot affect the (/.■) In Ex parte Smith, 1 Gill & J. (/) Ex parte Lodge, 1 Ves. Jr. 166 ; 74, it was held, that if one partner be Ex parte Harris, '2 Ves. & B. 213 ; Ex intrusted with the entire management /wirte Yonge, 3 id. 34 ; £J.r ;wrte Reeve, of the partnersliip concern, and lie 9 Ves. 589 ; Ex parte Smitli, 6 Madd. withdraw moneys for his separate use, 2, s. c, semhie, 1 Glyn & J. 74. See wiiich he duly and openly enters in also notes 3 and 4 to Hankay v. Gar- the partnership books, this is not a ratt, 1 Ves. Jr. 241 (Sumner's ed. ) ; fraud which will entitle tlie joint es- Anderson v. Maltby, 4 Bro. C. C. 428, tate to prove against the separate; 2 Ves. Jr. 244 ; Parker y. Ramsbottom, otherwise, if by the entries'^ in the 3 B. & C. 2-57; Ex parte Carpenter, 1 books he disguises the transaction, or Mont. & McA. 1 ; Ex parte Peake, 1 wholly omits and conceals it. Ex Madd. 346 ; Lingen ?'. Simpson, 1 Sim. /jflrte Lodge, 1 Ves. Jr. 166 ; M'Cauley & Stuart, 600; Ex parte Turner, 4 r. M'Farlane, 2 Desaus. Ch. 239 ; Deac. & Ch. 169, 177. Ex parte Gust, 1 Cooke's B. L. 548. CH. XV.] OP BANKRUPTCY. 535 interest or diminish the rights of the firm, — always, we re- peat, within the limitation of the entire honesty of this transfer * and this use, and its complete independence * 493 of all bankruptcy, or expectation of bankruptcy, (w) If, after such appropriations have taken place, bankruptcy ensues, it will raise the question of their effect. We think the true answer must be, that the question of their original validity comes first. To determine this, we must inquire whether any thing of fraud, actual or constructive, entered into the transac- tion ; was bankruptcy contemplated ; or was it so near that it ought to have been contemplated ; (w) or are there any other circumstances to indicate that the transaction was something else than an honest transfer of property, by those who had a right to transfer, to those who had a right to receive it. If the original transaction was wholly free from any taint of this kind, we cannot see any sound principle in the law of partner- ship, or in the law of bankruptcy, which should interfere with the consequences of the transfer. And therefore the property would remain within the joint fund, or in the several fund, accordingly as it had been placed by the transfer in one or in the other. We should express the general rule thus : If the firm and all the partners are bankrupt, no separate estate of a (m) Ex parte Ruffin, 6 Ves. 119; forraably to the usual phraseology of Ex parte Freeman, Buck, 471 ; Ex bankrupt and insolvent laws, tliat a parte Peake, 1 Madd. 346, 589 ; Ex conveyance, in order to constitute parte Fry, 1 Glyn & J. 96 ; Campbell preference, must be in actual contera- V. Mullett, 2 Swanst. 575; Ex parte plation of legal bankruptcy or insol- Willianis, 11 Ves. 3 ; Ex parte Row- vency. Thus, in England, it is said, landson, 1 Rose, 416 ; Ex parte Fell, that the law does not avoid a convey- 10 Ves. 347 ; Ex parte Hare, 2 Mont, ance, made under circumstances in & A. 478; Ex parte Hunter, 2 Rose, which the party may "hope that his 382; Ex parte Jackson, 1 Ves. 131 ; affairs would rally and come round Ex parte Burn, 1 Jac. & W. 378 ; Ex again." Green v. Bradfield, 1 Car. & parte Jones, 4 Maule & S. 450 ; K. 454, per Tindal, C. J. It must be Ex parte Yallop, 15 Ves. 60; Ex parte an act tiiat not only in effect contra- Houghton, 17 id. 252 ; Horn v. Baker, venes the bankrupt laws, but it must 9 East, 215 ; Ex parte Parry, 5 Ves. be done with intent to contravene 575; Ex parte Watkins, 1 Mont. & them, and in contemplation of bank- McA. 57. [But all the partners of an ruptcy. Hilliard on Baidcr. 329 ; insolvent partnership cannot assign Fidgeon i;. Sharp, 1 JIarsh. 198, per the property of the firm to pay the Gibbs, C. J.; Phanix r. Ingraham, 5 debts of one individual partner. Wil- Johns. 412. And see Pearsall v. Me- son V. Robertson, 21 N. Y. 587; Keith Cartney, 28 Ala. 110; Cole v. Albers, V. Fink, 47 111. 272. See also Nat. 1 Gill, 412 ; Jones v. Howland, 8 Mete. Bank v. Sprague, 20 N. J. Eq. 13.] 377. (n) It is the prevailing rule, con- 536 THE LAW OF PARTNERSHIP. [CH. XV. partner can claim against tlie joint estate, nor the joint estate against any separate estate, until all the creditors to whom the fund is primarily appropriated are paid in full with inter- est, (o) But if any property appears in either of these * 494 * estates, which has been fraudulently abstracted from any other, it must be restored ; and this fraud may be constructive only, and any act would be so which violated the articles or agreement of the partners, or abstracted or appro- priated property or funds by the act of one partner only, without the authority, consent, or knowledge of the others, (p) Whether partnership assets are subject to the exemption or homestead rights of a partner is not certain on authority. We should say, on general principles they are not. But it might depend somewhat on the language of the statutes cre- ating those rights. (|^/>) The English " statute of reputed ownership," as it is com- monly called, contains provisions which bear upon this ques- tion, {q') It enacts that goods which at the time of the (o) Per Lord Loughborough, Ex parte Elton, 3 Ves. 242 ; Twiss v. Massey, 1 Atk. 67 ; Ex parte Cook, 2 P. VVms. 500; Ex parte Abell, 4 Ves. 837 ; Ex parte Clay, 6 id. 833 ; Bolton V. Puller, 1 Bos. & P. 539-545. And see In re Rowland, Law Rep. 1 Ch. 421, and Rolfe v. Flower, Law Rep. 1 P. C. 27. {p) In re Lodge, 1 Ves. Jr. 165 ; Ex parte Harris, 1 Rose, 129, 437, Lord Eldon : " I take it now to be necessary, attending to the result of Lord Thurlow's decisions, /n re Lodge, and the other cases, that, in order to establish a right of proof for the joint estate against the separate estate or for the separate estate against the joint estate, it must be made out that the money was taken improperly and fraudulently. In this sense, improperly and fraudulently that it was taken against tlie contract between the par- ties, express or implied ; or as against an individual partner, to increase his private estate. I have oftener than once expressed my confirmation of that opinion, that those circumstances would, in a legal sense, constitute fraud. Cases of this kind, however, must be decided upon their particular cir- cumstances ; and the conclusion of law as to fraud must depend upon the nature of those circumstances." Ex parte Smith, 1 Glyn & J. 74; Ex parte Watkins, 1 Mont. & McA. 57. (/'/') [Whether a partner can claim homestead and exemption rights out of partnership assets, is a much debated and quite unsettled question. That he can, see Stewart v. Brown, 37 N. Y. 350 ; Servant v. Rusk, 43 Cal. 235; In re Richardson, 11 N. B. R. 114 ; Bonsall v. Comly, 44 Penn. St. 442. That he cannot, see Pond v. Kimball, 101 Mass. 105 ; Amphlett v. H bbard, 29 Mich. 298 ; Clegg v. Houston, 1 Phila. 352 ; Wright V. Pratt, 31 Wis. 99; Burns v. Harris, 67 N. C. 140 ; In re Blodgett, 10 N. B. R. 145; Till's Case, 3 Neb. 261 ; Gaylord v. Imhoff, 26 Ohio. 317 ; In re Brothroyd, 14 N. B. R. 323. A retir- ing partner from an insolvent firm can- not take any money with him; and, if he do, and place it in a homestead, equity will take it for the benefit of the firm's creditors. In re SauthofF, 16 N. B. R. 181, U. S. Dist. Ct. Wis.] (7) This statute, 6 Geo. 4, c. 16, § 3, provides that a fraudulent convey- CH. XV.] OP BANKRUPTCY. 537 bankruptcy are in the possession, order, and disposition of the bankrupt, as reputed owner thereof, by consent of the true owner, shall be distributable as the property of the bankruptcy among his creditors. This statute was first enacted in the reign of James I., and has been confirmed by 6 Geo. 4. The statute of James was never adopted in this country, as we had no bankrupt law here until after our independence. Nor is there a similar provision in our bankrupt law. It is plain, however, that the principle of this statute is, to a considerable extent, one of common law ; and its purpose is one which might in many cases be asserted by a court of equity, without any special statute, (r) * Indeed, this principle is the * 495 same with that which holds a person as a partner who has been, with his own consent, held out as one. For such a person is so held because the creditors of the firm trusted the firm on the credit of his membership, or, in other words, trusted him ; and did this by liis permission and authority, (s) If, therefore, this person, instead of permitting himself to be lield out as a partner, permits his property to be held out as the property of the firm, and as forming a part of the foundation on which its credit rests, the very same reason which held him personally in the first case, with all his property, would now hold that part of his property so permitted to appear as the property of the firm. We cannot, therefore, doubt that equity would decide such a case very much in accordance with the general purpose of this law, although we doubt whether any ance, " within this country or else- v. Cator, 5 Ves. 688 ; Dann v. Spurrier, where," should constitute an act of 7 id. 231 ; Raw v. Pole, 2 Vern. 239. bankruptcy. Tiiis language was used In the application of this principle, at to meet a decision under previous common law, see Pickard v. Sears, 6 statutes (Ingliss v. Grant, 5 T. R. 530), Adol. & E. 469-474; Heane v. Rogers, that a conveyance made in India by 9 B. & C. 586 ; Graves v. Key, 3 B. & one residing there, though trading Ad. 318, a. with England, could not constitute an (s) Spencer v. Billing, 3 Camp, act of bankruptcy. 810; Parker v. Barker, 1 Brod. & B. 9, (»•) Storrs V. Barker, 6 Johns. Ch. 3 Moore, 226; Ex />arte Langdale, 18 166; Wendell v. Van Rensselaer, 1 id. Ves. 301; Guidon v. Robson, 2 Camp. 344; East India Co. i>. Vincent, 2 Atk. 302; Parsons v. Crosby, 5 Esp. 199; 83; Hanning v. Ferrers, 1 Eq. Cas. Mclver i;. Humble, 16 East, 174; Smith Abr. 356, pi. 10; Gilbert's Eq. Cas. v. Watson, 2 B. & C. 411; Waugh v. 83 ; Raw v. Potts, Prec. in Ch. 35 ; Carver, 2 H. Bl. 235 ; De Berkom v. Hunsden v. Cheyney, 2 Vern. 150; Smith, per Lord Kenyon, 1 Esp. 29. Styles V. Cowper, 3 Atk. 692 ; Jackson 538 THE LAW OP PARTNERSHIP. [CH. XV. court would, in this country, without the direction or authori- zation of a statute, carry this principle so far as it has been applied in some cases, under the statute, in England, {t} In the cases under this statute, (?<) it has been repeatedly held that property passed in this way to the creditors of the firm, although there was no imputation of fraud upon the actual owner. He may have had excellent reasons for placing *496 his property in the * possession or at the disposal of the firm : the only inquiry was, Has he done so? for, if he has, he has placed it within reach of the creditors of the firm, (v) We do not, however, see that at common law, or in equity, there needs to be actual fraud, any more than in the analogous case of one held personally a partner because he permits himself to be so held out. If, for any reason whatever, he permits his property to enlarge the credit of the firm, either he intends that it shall be liable for the debts contracted on that credit, or he does not. If he so intends, there is no fraud of any kind ; and the law accepts his intention and will carry (t) The cases in equity collected in 21 Jac. 1, eh. 19, is repealed ; but the our notes may perhaps go no further 11th section of the statute of James is than to lioKl, tliat, wiiere the real re-enacted by the 72d section of tlie owner of tiie property stands by and repealing statute, almost in folidem virtually assents to its sale by the verbis. The adjudged cases, therefore, reputed owners, it is a fraud on the which were decided with reference to purchaser, and the real owner is es- the statute of James are equally ap- topped from subsequently setting up plicable to the statute of Geo. IV. title. This would be the rule here. {v) Horn r. Baker, 9 East, 218 ; £'x The princ'iple is well stated by Chan- parte Fell, 10 Ves. 348 ; Ex parte Row- cellor Kent, in Storrs v. Barker, 6 landson, 1 Rose, 419 ; Ex parte Wil- Johns. Ch. 168. liams, 11 Ves. 7 ; Ex parte Enderby, (it) By Stat. 6 Geo. 4, ch. 16, § 72, 2 B. & C. 389; Jones v. Dwyer, 15 it is enacted, " that if any bankrupt, at East, 21 ; Ex parte Smith, 3 Madd. 63, the time he becomes bankrupt, shall. Buck, 149 ; Storer v. Hunter, 3 B. & by consent and permission of the true C. 368; Ex parte Arbonin, 1 De Gex, owner tliereof, have in his possession, 359 ; Ex parte Lawrence, id. 269 ; Ex order, or disposition, any goods or parte Castle, 3 Mont., Deac. & De G. chattels whereof he was reputed owner, 117; Ex j)arte Burn, \ J&c. & W. 378; or whereof he had taken upon £a- par/e Jones, 4 Maule & S. 450, over- him the sale, alteration, or disposition, ruling Ex parte Yallop, 15 Ves. 60, and as owner, the commissioners sliall Ex parte Hougliton, 17 id. 252. See have power to sell and dispose of the also Robinson v. INIcDonnell, 5 Maule same, for the benefit of tlie creditors, & S. 228; Hay v. Fairbairn, 2 B. & Aid. under the commission ; provided that 193 ; Monkhouse v. Hay, 2 Brod. & nothing herein contained shall inval- B. 114; Kirkley v. Hodgson, 1 B. & idate or effect any transfer or assign- C. 580. By the statute 6 Geo. 4, ex,- ment of any ship or vessel," &c. By ception is now made iu case of ships, section 1st of this statute, the statute as will be observed. CH. XV.] OP BANKRUPTCY. 539 it into effect. If he does not so intend, then he commits a constructive fraud upon the creditors ; and the law, or, if law cannot, equity, will give to tliose creditors the benefit of that property, (w') The important consequences of the statute in England fall u[)on retiring partners, and especially upon retiring dormant pai'tners, wlio leave their property in the possession or at the disposal of the firm. And it is obvious that tliese are the parties, of all others, upon whom these consequences should fall. If a known partner retires and carries his personal credit out of the firm, but chooses to leave the credit of his property in the firm, certainly he cannot complain if they who accept this credit and act upon it are held in law to be entitled to the advantage of it. (a:) He should, * therefore, not * 497 only give such notice of his retirement as will prevent his personal liability from attaching to future contracts, but he should withdraw all his property, and thus prevent the credit of this property from so attaching. Or, if he cannot or will uot so withdraw his property at once, perhaps a sufficient notice that the property so left is his, and is not left with the firm for them to trade on the credit of it, might save his property from creditors who come in after the retirement. This may be difficult ; and the case of the dormant or unknown partner is still more difficult. He, it seems, may by his retirement alone, without notice, cut off his liability for future debts. He has never contributed to the firm any credit but that of his prop- erty ostensibly in their possession as their own. If he now leaves this property in their hands, he leaves with it all this (if) Independently of any consid- {x) Ex parte Chuck, 8 Bing. 469; eration of bankruptcy, it is a general Ex parte Wood, 1 De Gex, 134; Ex rule of law that all secret sales and parte Gurney, 3 Mont., Deac. & De transfers of jiersonal chattels, unae- G. 541 ; Ex parte Thomas, id. 40, companied by possession, are at least affirming s. c. 2 id. 294; Ex parte \lsi\- priind facie fraudulent and void as lifax, id. 544 ; Bannatyne v. Leader, against creditors; since the effect of 10 Sim. 350; Ex parte Heath, 4 Jur. them is to enable a party to gain a 28 ; Ex parte Simpson, Mont. c&, Ch. false credit from the world. 1 Deacon 662; Ex parte Taylor, Mont 240; B. L. 400 ; Hoffinan v. Pitt, 5 Esp. Ex parte Dyster, 2 Rose, 256 : but see 25; Eastwood v. Brown, 1 Ryan & Caldwell v. Gregory, id. 149; Curtis M. 312; per Buller, .1., in llodsden v. v. Perry, 6 Ves. 747 ; Ex parte Fell, 10 Stai)]e, 2 T. R. 697 ; Bamford v. Baron, id. 347. id. 594, note ; and see Worsley v. De Mattos, 1 Burr. 467. 540 THE LAW OF PARTNERSHIP. [CH. XV. credit, and it is bound to make this credit good. In such case, if he undertakes to protect his property against this risk, it would seem that he must give notice of his past relations and liabilities, and that he has terminated them by retirement, and leaves his property there for certain reasons, but not to be lia- ble as the property of the firm. It may be doubted whether even this would save his property as against the statute, although it might be enough at common law or in equity if there were no statute. (?/) It not unfrequently happens that persons who actually *498 are in * partnership, and in one firm, appear to the world as distinct traders, or as distinct firms, for the convenience and advantage of using the names separately upon negotiable paper. Thus, if there are three partners who call themselves so, they could use only the name of A., B., & Co. But, if not known as partners, A. may draw on B. in favor of C, and B. may accept and C. indorse, and the paper have apparently three distinct liabilities. The question then may arise, May the holder proceed against the several estates of all these persons, or only against the joint fund of their firm? (2) {}/) Ex parte Woodgate, 2 Mont., Deac. & De G. 394. A dissolution of partnership was advertised in the Ga- zette, and a circular sent in the name of the dissolved firm, requesting debtors of the firm to pay their debts to one partner. Held, that the notice was insufficient to take the debts out of the reputed ownership of the firm. The plant and stock in trade was taken possession of by the same part- ner, and used in his separate trade after the dissolution. Held, that it was in his separate reputed ownership. Ex parte Sprague, 4 De Gex, M. & G. 86B. And see Hunter v. Rice, 15 East, 100; Ex parte Wheeler, Buck, 25; Ex parte Clarkson, 4 Deac. & Ch. 56 ; Ex parte Enderhy, 2 B. & C. 89 ; Ex parte Arbonin, 1 De Gex, 359 ; Ex parte Riiffin, 6 Ves. 119 ; Ex parte Fell, 10 id. 347 ; Ex parte Williams, 11 id. 3 ; Joy v. Campbell, 1 Schoales & L. 328 ; Ex parte Burton, 1 Glyn & J. 207 ; Ex parte Usborne, id. 358 ; Ex parte Cooper, 1 Mont., Deac. & De G. 358. And see further, on the effect of notice or want of notice bearing on reputed ownership, Ex parte Barnett, 1 De Gex, 194; Ex parte Wood, 3 Mont., Deac. & De G. 314 ; Ex parte Arkwright, id. 129 ; Ex parte Wilkin- son, 13 Sim. 475; Ex parte Pott, 2 id. 257, recognizing the rule in Williams V. Thorp, id. 203 ; and overruling Ex parte Smith, id. 357; Ex parte Nutting, 2 Mont., Deac. & De G. 302 ; Ex parte Usborne, 1 Glyn & J. 358 ; Ex parte Burton, id. 207, (z) B. & G. carry on business at Manchester as commission agents, un- der the firm of B. & Co., G. being also a trader on his own separate account at Stockport, under the firm of J. & Co., and being likewise a partner with J. in London, trading under the firm of J. & Co., and with S. R. at Stock- port, trading under the firm of S. R. B. & Co. drew two bills upon J. & Co., payable to the order of B. & Co., which J. & Co. accept, and which are after- wards indorsed by B. & Co., G. & Co., CH. XV.] OF BANKRUPTCY. 641 The authorities on this point are conflicting ; nor do they cover the whole ground. We would state the result, however, thus: If the holder took the paper on the credit of the several names, and in ignorance of their joint interest, he certainly may prove against all the parties severally. But he may elect to proceed against the firm, or the joint fund, because what lie held was in fact partnership paper, (a) If he took the paper * knowing that these names were the names of part- * 499 ners, it is much more doubtful whether he can now and S. R. ; and of which W. & Co. be- came the hohlers for a valuable con- sideration, without any knowledge that G. was a partner in the house of B. & Co., or in that of J. & Co. B. & G. and J. severally became bankrupt. Tlie judges were equally divided on the question, whether W. & Co. could prove the amount of the bills botii against the joint estate of B. & G. and the separate estate of G., or whether tliey must elect. But hekl, by all the judges, that the amoimt of dividends, which had been previously declared, though not received by W. & Co., under the commission against J., must be deducted from such proof. Ex parte Moult, 1 Deac. & Ch. 44, Mont. 321. The question is very elaborately argued by Erskine, C. J., and Sir George Hose, that AY. & Co. must elect ; and, on a rehearing before the Lord Chancellor, it was so decided. 2 Ueac. & Ch. 41'J, Mont. & B. 28. (a) A. & B. were in partnership, B. being a secret partner ; and A., on the partnership account, drew bills in his own name on B., which were ac- cepted by him. Held, on the bank- ruptcy of A. & B., that the holder of these bills, who was ignorant of the partnership, was not entitled to prove them against the joint estate of A. & B. and the separate estate of B., but tiiat he was entitled to prove them against the sejiarate estates of A. & B., held, too, that the holder, having proved against the joint estate, might, after a declaration of the dividend of the joint estate, retire from that proof, and prove against the sei)arate estate. Ex parte Husbands, 2 Glyn & J. 4, reversing s. c. 5 Madd. 419. The Lord Ciiancellor said : " The circum- stances of this case are peculiar, and create some embarrassment in the ap- plication of well-known principles of the bankruj)t law. It is clear, that where a party takes a bill, drawn by some members of a firm, carrying on a distinct trade, on the firm, in igno- rance that the drawers constitute part of the firm of the acceptors, proof is admitted against both the drawers and acceptors ; and it is equally clear, that a person holding a joint and separate security' for the same debt is in bank- ruptcy bound to elect. In this case, however, the bills are accepted by the dormant partner of the partnership of Isaac and Peter Blackburn, carrying on business in the name of Isaac Blackburn ; and are drawn by Isaac Blackburn, in his individual name indeed, but, as I must take it on the evidence, in his name as representing the firm of the two bankrupts. It does not appear to me that this case ranges itself within that class of cases in which, contrary to the ordinary rule in bankruptcy, the holder has been allowed to pursue the contract appear- ing on the face of tlie bills, and to have double proof. But I do not think that the petitioners are con- cluded by any thing that has passed, so as to be prevented now from with- drawing the proof against the joint estate, and being admitted as creditors on the two separate estates." See the cases cited in the following notes, for a full consideration of these questions. 542 THE LAW OF PARTNERSHIP. [CH. XV. proceed against the parties severally. There are dicta of great weight (ft) in favor of his right, but little or no adjudication. We think the test would be the actual character of the paper. If this was in fact partnership paper, and the holder knew that the names were those of partners, we think he has only the right which attaches to partnership paper ; and if the holder knew also that it was partnership paper, as well as that it bore the names of partners, we should be quite certain of this. If, however, the paper was not partnership paper, but the paper of one of the persons, or of one of the firms placing their names on it, then we should say that the holder could proceed against them severally, although they were partners otherwise, and he knew that they were so. (c) If a firm be indebted to one of the partners, it has been sup- posed (fZ) that this debt formed a part of the several assets of that partner, and that his several creditors might, therefore, prove against the joint fund, for that debt, in competition with the joint creditors. But that partner, if solvent, could * 500 not himself prove * against the joint fund, to the injury of the joint creditors, because he is himself liable to those creditors ; and the several creditors of that partner take on his insolvency only his rights ; and therefore it seems now to be settled, that they cannot prove against the joint fund, in such a case, (e) If, on the other hand, a partner owes a balance (6) These are collected and com- parte Bond, 1 Atk. 98 ; E.r parte Cob- mented on in Ex parte Moult, 2 Deac. ham, 1 Bro. Cii. 576 ; Ex parte Heyden, & Ch. 419. 1 Cooke, B. L. 254 ; Ex parte Cheva- (c) Ex parte Moult, 1 Deac. & Ch. lier, 1 Mont. & A. 345. 44, Mont. 321, and s. c. 2 Deac. & Ch. (d) Ex parte Hunter, 1 Atk. 223, 419, xMont. & B. 28 ; Ex parte Sillitoe, per Lord Harkwicke ; Ex parte Blake, 1 Glyn & J. 383 ; In re Shakeshaft, Cooke B. L. 503. Stirrup, & Salisbury, cited in Curtis v. (e) Ex parte Reeve, 9 Ves. 588 ; Perry, 6 Ves. 743, 747 ; Ex parte Ex parte Lodge & Fendai, 1 id. 166 ; Adam, 2 Rose, 36, 1 Ves. & B. 498 ; Ex parte King, 1 Rose, 212. In Ex Ex parte Bigg, 2 Rose, 37 ; Ex parte parte Reeve, Lord Eldon, in holding Walker, 1 id. 441 ; Ex parte Liddel, 2 that, under a joint commission of id. 34 ; Ex parte Husbands, 5 Madd. bankruptcy, the right of Uie creditors 419, s. c. on appeal, 2 Glyn & J. 4 ; to interest subsequent to the date of Ex parte La Forest, 1 Cooke B. L. 276 ; the commission, in the case of a sur- Ex parte Benson, 1 Cooke, 278 ; Ex plus, is preferred to a debt from the parte The Bank of England, 2 Rose, separate to the joint estate ; upon the 82; Ex parte Rowlandson, 3 P. Wms. princii)le, that neither the partnership 405 ; Ex parte Boubonus, 3 Ves. 546 ; nor the individual debtor can claim Ex parte Blackburn, 10 id. 204; Ex in competition with the creditors, said: CH. XV.] OP BANKRUPTCY. 543 to the firm, the joint creditors cannot, on that account, prove against his several fund, provided the balance or debt against the partner arose from lawful transactions ; but it seems that, if this balance was caused by a fraudulent or surreptitious with- drawal by the partner of something from the joint fund, this should be restored to that fund, for the benefit of the joint creditors. So, if the joint estate is larger at the time of bank- ruptcy, by any fraudulent act against one partner, his several creditors may, it is said, proceed against the joint estate, for that amount. (/) If there be dormant partners, creditors who dealt in partner- ship business with the ostensible partners, without any knowl- edge of the dormant partners, may, upon discovery, elect whether to proceed against the ostensible partners alone, or against the joint fund of the actual partnership. (^) But " All these cases were very fully dis- cussed by Lord Tliurlow, in the case of Lodge & Feudal. Mr. Feudal was a creditor of the partnership, of him- self and Lodge, for large sums ad- vanced. Tiiey became bankrupts immediately after tiie formation of the partnership ; and those advances formed the joint estate, to be divided. There was a struggle by Feudal to be admitted a creditor for the amount of his advances as against tlie partner- ship. Lord Thurlow, after full con- sideration, was of opinion, that all the authorities establish this ; that those who, being in partnersliip, are them- selves, or some of them, debtors to the creditors of every class, cannot come in competition with the creditors. After their demands are liquidated finally, the partners may be creditors upon each other, but not before." M'Cauly i'. M'Farlane, 2 Uesaus. 239 ; Ex parte Burrell, Cooke B. L. 503 ; Ex parte Parker, id. ; Ex parte I'ine, id. ; Ex jmite Adams, 1 Kose, 305 ; Ex parte Harris, id. 438 ; Ex parte Sillitoe, 1 Glyn & J. 382; Ex parte Ogle, Mont. 350 ; Ex parte Yonge, 3 Ves. & B. 34, 2 Rose, 44 ; Ex parte Batson, Cooke B. L. 503 ; Ex parte Grill, id. (/) Ex parte Smith, 1 Glyn & J. 74, 6 Madd. 2 ; Ex parte Cust, Cooke B. L. 506 ; Ex parte Harris, 2 Ves. & B. 214, 1 Rose, 129, 437 ; Ex parte Wat- kins, 1 Mont. & McA. 67 ; Ex parte Yonge, 3 Ves. & B. 31, 2 Rose, 40; Ex parte Reid, id. 84. ((j) Ex parte Reid, 2 Rose, 84; Ex parte Norfolk, 19 Ves. 458 ; Ex parte Watson, id. 459 ; Ex parte Hamper, 17 id. 403 ; Binford v. Dormnett, 4 id. 434 ; Ex parte Matthews, 3 Ves. & B. 125 ; Ex parte Hodgkinson, Cooper, 101. As to the conflicting riglits of joint and separate creditors, in cases of partnerships having a dormant part- ner, see French r. Chase, 6 Greenl. 1(56; Lord v. Baldwin, 6 Pick. 348; Cammack v. Johnson, 1 Green Ch. 164 ; Witter v. Richards, 10 Conn. 37. It is in the option of a firm, suing as plaintiffs, either to join the dormant partner in the suit or omit him ; as, in the corresponding case of the firm being sued as defendants, it is at the option of the plaintiff' to join the dor- mant partner or not; and the joinder or nonjoinder will not constitute any objection to the maintenance of the suit. Skinner v. Stocks, 4 B. & Aid. 437 ; Lloyd v. Archbowle, 2 Taunt. 324 ; Brassington v. Ault, 2 Ring. 177 ; Wilson V. Wallace, 8 S. & R. 55; Clarkson v. Carter, 3 Cowen, 85 ; 544 THE LAW OF PARTNERSHIP. [CH. XV. * 601 it would seem that the rule in * equity, above referred to, that one who may choose between two funds shall not, by such choice, injure one who has no choice, here comes in ; and that, if such creditors elect to prove against the separate estate of the ostensible partners, several creditors of the ostensible partners, who could not proceed against the joint fund, may now proceed against it for an equivalent amount. (A) We have before considered the case of parties who are actu- ally partners, but do not appear as such. If, however, they do not seem to constitute two distinct firms, but do so actually, — as, for example, if, out of four who are partners for one kind of business, two are partners in another entirely distinct business, and these two firms deal with each other, — there may be proof by one against the other, or by the creditors of either against its own fund, in the same way as if the two firms were formed of different persons, (i) Boardman v. Keeler, 2 Vt. 65 ; Lord V. Baldwin, (3 Pick. 348 ; Alexander v. Barker, 2 Cromp. & J. 133 ; Cothay v. Fennell, 10 B. & C. 671. (k) B. & S. were in partnership to- gether ; the latter being a dormant partner. A joint commission issued against them. B.'s separate estate was very considerable ; the joint creditors, therefore, availing themselves of their right to resort either to the visible and the dormant partner, or to the visible partner only, adopted the latter alter- native, and proved tlieir debt against B-'s separate estate. The consequence of this was, that B.'s separate estate, which would have sufficed for the pay- ment of all the separate creditors in full, was, by the access of the joint creditors, apportioned iiva dividend of seven shillings in the pound ; while the joint estate of B. & S., exonerated of its proper claimants, produced a sur- plus. On application of B.'s separate creditors, it was held, that they had a lien upon that surplus to the extent which their funds had been diminished by the resort of the joint creditors. Ex parte Reid, 2 Rose, 84. {{) In re Richardson, 5 L. .J. Ch. 129; Ex parte St. Barbe, 11 Ves. 413 ; Ex parte Silhtoe, 1 Glyn & J. 374 ; Ex parte King, Cooke B. L. 534 ; Ex parte Johns, id. ; Ex parte Hesham, 1 Rose, 146; Ex parte Adams, id. 305. In re Shakcshaft, Stirrup, & Salisbury, cited in 6 Ves. 123, 747, and in 11 id. 413. In this last case, Lord Eldon said: "In the case of Shakeshaft, Stir- rup, & Salisbury, Lord Tlmrlow went upon this distinction : that where there is only one partnership arrang- ing different concerns belonging to tiiem all, in different ways, for the ben- efit of different parts of that joint con- cern, as, in that instance, the three per- sons carrying on the business of cotton manufactures in Lancashire, and two of them in London, there could not be proof by the three against tlie two ; but if the trades be perfectly distinct, then the three as cotton manufactur- ers in Lancashire n)ight be creditors upon the separate concern of the two as ironmongers in London." Ex parte Freeman, Cooke B. L. 534 ; Ex parte Castell, 2 Glyn & J. 124 ; Ex parte Brenchley, id. 127 ; Ex parte Stroud, id. ; Ex parte Cook, Mont. 228. For the limitations on this doctrine, see Ex parte Hargreaves, 1 Cox, 440. CH. XV.] OP BANKRUPTCY. 545 * Wliile solvent partners cannot prove against the * 502 joint fund to the prejudice of joint creditors, because they are liable to those creditors, (y) they may prove against the joint fund, in competition with the several creditors, to whom they are not liable. (^) Indeed, their rights are prior to those of the several creditors ; for those creditors can have the right of their debtor to the joint fund only after all claims upon it are satisfied, and, among these, the claims of the other partners. On this point, it must be the general rule, applicable to all yiartnerships, whether they be general, or confined to a particular business or a particular transaction, and, indeed, to all joint adventures and enterprises of every kind, that they must be first settled, and the mutual claims and balances of the copartners or coadventurers be adjusted, before the divisible surplus is ascertained ; and then the right of each one is only to his share of this surplus, and the creditors of each one can reach and acquire only his right. It follows, therefore, that the several creditors of each one will be postponed, so far as the joint assets go, not only to the joint creditors, but to the claims of the coadventurers for balances due from their com- panions, arising out of the adventure. (Z) ( /) Ex parte Adams, 1 Rose, 305. Hunter, 1 Atk. 225 ; Ex parte Batson, A. lends a sum of money to one part- 2 Ca. Ch. 139, 166 ; Craven v. Knight, ner, on his own security', who lends the 2 Chan. 226 ; Ex parte Taylor, 2 same to the partnership trade. A joint Rose, 175; Ex parte Ogilvy, id. 177, commission is taken out. A. shall not 3 Ves. & B. 133 ; Ex parte Watson, come in as a creditor upon the joint 4 Madd. 477, Buck, 449, 492; Ex parte estate of the bankrupts directly, with Willock, 2 Rose, 392 ; Wood v. Dodg- the rest of the partnership creditors; son, 2 Maule & S. 195; Aflalo v. Four- but, by way of circuity, he is entitled, drinier, 6 Bing. 309; Butcher f. For- as standing in the place of that partner man, 6 Hill (N. Y.), 583. who has paid the money to the use (/) West u. Skip. 1 Ves. 142 ; Ex of the partnership trade. Ex parte parte Ruffin, 6 i|^. 119 (Sumner's ed.) Hunter, 1 Atk. 223. And see Ex parte note (rf)- Upon a dissolution of the Ellis, 2 Glyn & J. 312 ; Ex parte Car- partnership, each partner lias a lien ter, id. 233 ; Ex parte Reeve, 9 Ves. upon the partnership effects, as well 589 ; Ex parte Ogle, Mont. 351 ; Ex for his indemnity as for his proportion parte Burrell, Cooke B. L. 505; Ex of the surplus. But creditors have no parte Broome, 1 Rose, 69; Ex parte lien upon tiie partnership effects for Rawson, Jac. 277 ; Ex parte Robinson, their debts. Their equity is tiie equity 4 Deac. &. Ch. 499. of the partnership assenting to the {k) Ex parte Adams, 1 Rose, 305; payment of the partnership debts. Ex parte King, 17 Ves. 115; Ex parte 3 Kent Comm. (5th ed.) 65; Campbell Torrell, Buck, 345; Goss v. Dufres- «. Mullett, 2 Swanst. 008, 010; Ex parte noy, Davies B. L. 371 ; Ex parte Harris, 1 Madd. 583 ). Murray v. Mur- 35 546 THE LAW OF PARTNERSHIP. [CH. XV. * 503 * If any such adventures, contracts, or enterprises are outstanding at the time of the bankruptcy, the assignees must wait until they are concluded and adjusted, and then take the share or interest of their bankrupt in the result, (w) The assignees are also entitled to claim unpaid instalments due from a solvent partner, for his admission into the partnership, because these form a part of the joint fund, (n) Nor is the interest of partners in a foreign enterprise lost by seizure of the goods there, provided they, or any part of them, be restored. Thus, if there be three partners, — two citizens of one country, and one of another, — and between these countries war breaks out, and property of the partnership is seized in the country of the one as property of aliens, but the share therein of that one is restored to him, the other partners are entitled, on settlement, to a share of the property re- * 504 stored, in the same way as * if it were restored to the partnership ; and, if insolvent, their assignees take that share. (o) A foreign government may, however, make a gift to ray, 5 Johns. Ch. 60; Woddrop v. Ward, 3 Desaus. 203; Bell v. New- man, 5 Serg. & R. 78 ; Doner v. Stauffer, 1 Penn. 198 ; White v. Union Ins. Co., 1 Nott & McC. 557 ; Ridgeley V. Carey, 4 Harr. & McH. 167 ; M'Cul- loch V. Dashiell, 1 Harr. & G. 96; Hoxie V. Carr, 1 Sumn. 181 ; Conwell V. Sandidge, 8 Dana, 278 ; Ex parte Williams, 11 Ves. 5; Holderness v. Shackels, 8 B. & C. 612 ; Hodges v. Holman, 1 Dana, 53; Pierce v. Tier- nan, 10 Gill & J. 253; Sumner v. Hampson, 8 Ohio, 328; Bradford v. Kimberley, 3 Johns. Ch. 431 ; Parker V. Muggridge, 2 Story, 347 ; Payne v. Matthews, 6 Paige, ^. The lien of partners upon the wlrole funds of the partnership, for the balance finally due to them respectively, seems incapable of being enforced in any other manner than by a court of equity, through the instrumentality of a sale. The cred- itors of the partnership have a prefer- ence to have their debts paid out of the partnership funds before the pri- vate creditors of either of the partners. But this preference is, at law, generally disregarded; in equity, it is worked out through the equity of the partners over the whole funds. 1 Story Eq. Jur. § 675; Commercial Bank v. Wilkins, 9 Greenl. 28 ; Freeman v. Stewart, 41 Miss. 138. (m) Prench v. Fenn, 1 Cooke B. L. 536, 3 Doug. 257 ; Jackson v. Sedg- wick, 1 Swanst. 468 ; Brown v. Litton, 1 P. Wms. 140; Smith v. De Silva, Cowp. 469. The assignees under a separate commission take only such undivided interest or share as the bankrupt himself had, and in the same manner as he held it. Holderness v. Shackels, 8 B. & C. 618. See also Wilson V. Greenwood, 1 Swanst. 471, 481, n. ; Hammond v. Douglas, 5 Ves. 539; Crawshay v. Collins, 15 id. 218; Hill V. Burnham, cited id. ; Brown v. Vider, 15 id. 223, 2 Russ. 340 ; Brown V. De Tastet, Jac. 284 ; Fearns v. Young, 9 Ves. 549; Wedderburn i;. Wedderburn, 4 Mylne & C. 53. ()() Akhurst r. Jackson, 1 Swanst. 85, 1 Wilson, 47. (o) Thompson v. Ryan, cited in Campbell v. Mullett, 2 Swanst. 565, n., and id. 577. And see, as to the effect of war upon partnership, Griswold v. Waddington, 16 Johns. 438, and au- thorities there cited. CH. XV.] OF BANKRUPTCY. 547 their own citizen ; and it has been said, that if the government choose to make, or cause to be made, a compensation in money to their citizen, instead of a restitution in solido, this will be held to be a gift, in which the copartners have no interest. And this would be especially true if there were an express exclusion of the aliens. Of course, the joint creditors could not prove against funds thus made several. (/?) The English Court of Admiralty has refused to assist the assignees of a bankrupt in obtaining his share of property restored in solido. But we think this arose from a limitation of the admiralty power in England, which does not exist here, {q) (p) Campbell v. Mullett, 2 Swanst. 651. Two American citizens residing at Baltimore, and a French subject residing at St. Domingo, being in part- nership, and owners of certain ships captured by British cruisers, and the commissioners appointed imder the sev- enth article of the treaty of commerce, concluded in 1794, between England and America, for awarding compensa- tions to American subjects who had suffered losses by capture, for which they could obtain no redress in the ordinary tribunals, having awarded, in compensation of the ships of the part- nership captured, certain sums to the two Americans, with express exclusion of the French citizen as an alien enemy, the sums so awarded are not partnership property, and the creditors of the partnership have no claim on them, as against the separate creditors of tlie Americans. In this case, the following distinction is made by Sir Thomas Plumer, Master of the Rolls, in delivering judgment : " If the very joint stock, or a part of it, as in Thompson v. Ryan, had been restored, there would have been notiiing to alter the property : the goods are returned, iti statu quo, the property of the part- ners. But here the ships are gone, and never restored, and the question concerns a new property come to the two in the way of compensation. That is far removed from a case of restitution. Restitution might have been made, if it were still joint prop- erty' ; compensation considers only the individual shares, and gives in the pro- portion of their interests individually to the two. There is no more ground for admitting the joint creditors than the French partner." During tlie ar- gument, the Master of the Rolls put the query, " If a partnership sustained an accidental loss, as by fire, and an individual made a donation to two of the partners, in compensation of their loss, would that be partnership prop- erty ? " And see Larazzabel v. Gor- bea, cited id. 572. (9) The Jefferson, 1 C. Rob. Adm. 325. Sir W. Scott, indeed, in his judgment, expressly says, after the decree for restitution had been passed : " The question is, whether the court shall proceed again to make a sever- ance between these parties ? I cannot think that I have the power to do that. All the severance that was necessary in this case to determine the national character of the parties has been al- ready made : restitution stands decreed to this house. I am functus officio, and I shall not begin again at the prayer of the assignees, who now suggest that one of the partners is likewise an Eng- lish merchant and a bankrupt. They must resort to some other authority to make the discrimination between this American partnership stock, for the purpose of subjecting a particular share to a British bankruptcy. It is 548 THE LAW OF PARTNERSHIP. [CH. XV. *505 * It has been repeatedly said, that, if a partner be- comes insolvent, the accounts of a firm should be closed, and the assignees should not continue the trade and business, nor permit a continuance of it without settlement, (r) But that may not be a positive and universal rule ; nor can the solvent partners resist a bill by the assignees for a share in the profits of a subsequent trading, on the ground that the assignees did not require an immediate settlement, because it is no more the duty of the assignees to require this than it is the duty of the solvent partners to make it. (s) Where a de- ceased partner's estate was insolvent, and the administrators had permitted the surviving partners to sell the stock in the usual course of trade for the business benefit, and a loss oc- curred, they were not held responsible therefor, (i) But, on the other hand, if administrators put assets, which they have in their own hands, into the hands and possession of the sur- viving partners to trade with, and a loss occurs, for this they will be held responsible, (m) no part of the duty of the Court of Admiralty to do this, and 1 dismiss the petition." See 2 Pars. Mar. Law, b. 3, on the law and jurisdiction of admi- ralty in America. {>•) Crawsliay v. Collins, 15 Ves. 218-227; Kegden v. Pierce, 6 Madd. 353; Fereday v. Wightwick, 1 Tani- lyn, 201 ; 3 Kent Comm. 61 ; 2 Bell Comm. 032; Story on Part. § 350; Gow on Part. 231; Collyer on Part, b. 2, ch. 2, § 2, pp. 146, 147. (s) Crawshay v. Collins, 15 Ves. 228, per Lord Eldon : " It is said a dut}' was imposed upon the assignees to call for tiie account. That is true. It is farther urged that they could not be traders in new adventures. This 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 tlie 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 prop- erly to be termed remaining or sur- viving partners ; the destruction of one being, unless it is otherwise pro- vided, a dissolution of the whole part- nership, — as if by effluxion of time, or by death, — except as it may be reasoned upon the effect 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." (t) Thompson v. Brown, 4 Jolms. Ch. 619. And see Shepherd v. Tow- good, Turner & R. 379 ; Reed v. Nor- ris, 2 Mylne & C. 361 ; Jennison v. Ilapgood, 7 Pick. 1 ; Sweet i'. Jacocks, G Paige, 355. {u) Tliompson v. Brown, 4 Johns. Ch. 019. And see Barker v. Parker, 1 T. R. 295; Ex parte Garland, 10 Ves. 119 ; Ex parte Richardson, Buck, 209 ; Wightman v. Townroe, 1 Maule & S. 412; Viner v. Cadell, 3 Esp. 90. CH. XV.] OF BANKRUPTCY. 549 SECTION V. OF A SALE OF THE EFFECTS IX BANKRUPTCY. * If there be a bankruptcy of the whole firm, it is * 506 very seldom that any other mode of settlement is re- sorted to, but a sale of the property, (v) And this is so usual, and recommended by so many obvious considerations, that as- signees must not only have an unquestionable power to take this course, but would, perhaps, find it difficult to explain and justify any other course, (w) In one case, where creditors called upon the English court of chancery to restrain the as- signees from a proposed sale of the bankrupt's effects, alleging suspicious circumstances as to the manner of the sale, Lord Eldon refused to interfere, on the ground that the assignees were acting in a matter peculiarly within their power and at their discretion, and the court must recognize them as the best judges of the propriety and expediency and manner of a sale ; and that the assignees must abide their own responsibility for what they did in this matter. (2;) The question comes up in a different form when a part only of the partners are bankrupt, and the residue solvent. There the assignees take all the interest and rights of the bankrupt, but take them subject to the solvent partner's rights, (z/) We should say, therefore, that they had no right, as a matter of course, to require a sale. (2) Usually, there is no sale ; but the solvent partners settle up the concern so far as to ascertain the value of the bankrupt's interest, and this they pay to the assignees. And sometimes they give security to the assignees that they (r) Eden B. L. 215; Ex parte (x) Ex parte Montgomery, 1 Glyn Gering, 1 Ves. Jr. 1G8 ; Ex parte & J. 341. Ordinarily, on a dissolution, Hughes, 6 Yes. 617, 622 ; Regden v. from whatever cause, there must be Pierce, 6 Madd. 353 ; Fereday v. a sale. Dickinson v. Dickinson, 29 Wightwick, 1 Tamlyn, 261. Conn. 601. (ic) But if, in the exercise of a (y) Taylor v. Fields, 4 Ves. 396, sound discretion, a court of equity is 15 id. 559, n. ; Barker v. Goodair, 11 satisfied that a postponement of a sale id. 85 ; Dutton v. Morrison, 17 id. 209 ; is for the general benefit of the cred- Holderness v. Shackels, 8 B. & C. 618. itors, it will be so ordered. Ex parte (z) Allen i-. Kilbre, 4 Madd. 464; Kendall, 17 Ves. 519; Ex parte Gros- Ex parte Figes, 1 Glyn & J. 122. But venor, 14 id. 589. see Ex parte Montgomery, id. 338. 650 THE LAW OF PARTNERSHIP. [CH. XV. will, without delay, settle the concern, and ascertain and pay over the bankrupt's share, (a) That the assignees may * 507 have an account, is certain ; * and the court would always decree a sale where the assignees requested it for good cause, and perhaps it may be said that any decided advantage to the estate of the bankrupt would be deemed good and suf- ficient cause. (6) (a) In Nerot v. Burnand, 2 Russ. 56, pending an appeal against a decree declaring a partnership dissolved and directing tlie property to be sold, and an account, the court upon motion suspended the sale upon the terms of bringing title-deeds into the master's office, and giving security for the value of the effects. (b) Crawshay v. Maule, 15 Ves. 218 ; Gow on Part. 234 ; Lingen v. Simpson, 1 Sim. & Stuart, 600; Featherston- haugh V. Fenwick, 17 Ves. 309; Fere- day V. Wightwick, 1 Tamlyn, 261 ; Regden v. Pierce, 6 Madd. 353 ; Cook V. CoUingridge, 1 Jacob, 607 ; Evans v. Evans, 9 Paige, 178. CH. XVI.] OF AN ACCOUNT. 551 CHAPTER XYI. OF AN ACCOUNT. SECTION I. WHEN AX ACCOUNT WILL BE ORDERED. We have been obliged to anticipate many remarks about the taking of an account, when treating other topics ; especially the various modes of dissolution, and its consequences. The right to demand an account is almost, but not quite, peculiar to partners and their representatives. In deciding one case, (a) Lord Eldon seemed to think that the having a right to an account was a good test of the relation of partner ; that is, if one by agreement acquires a right to an account, this will make him a partner. We should prefer saying that partnership is a good test for the right to an account ; and that the first inquiry must be, whether a man is a partner ; for though one may have a right to an ac- count who is not a partner, (^aa') if he is a partner, the con- (o) Ex parte Hamper, 17 Ves. 412. And see Katsch v. Slienck, 13 Jur. 668. By a memorandum in writing, the defendant, a general mercliant, agreed with the plaintiff, in considera- tion of tlie general services in business of the latter, to allow him, in addition to a fixed salary, one-fifth of the net profits on all new business entered into through him : semhle, a partner- ship was thereby constituted between the parties ; and held, that, at any rate, the plaintiff therebj' acquired a right, as against the defendant, to an account of profits, and the appointment of a receiver. The Vice-Chancellor : " It strikes me, that by the agreement the plaintiff has become a partner ; and there is a failure of evidence to show that, notwithstanding the words of the agreement, there was subjoined any stipulation that the plaintiff should not be taken as a partner ; without further entering into the question, as between the plaintiff and defendant, there is an interest created in the plaintiff to know what is the amount of profits, and therefore an interest to see that those things out of which the profits arise are properly disposed of, which is, in itself, very like a partnership interest. I think, on prin- ciple, a receiver ought to be ap- pointed." See Salter v. Ham, 31 N. Y. 321 ; CoUyer v. Collyer, 38 Penn. 257. {aa) [One compensated by a .share of the profits may have an account, though not a partner. The right to an account is not a conclusive test of partnership. Ante, p. * 60, note (J)f)-] 652 THE LAW OF PARTNERSHIP. [CH. XVI. elusion follows, that he has a riglit to an account. This right he may transfer ; for not only do all partners possess this right, but it is one among those rights which originates in or arises out of a partnership, and yet which a partner transfers * 509 to * his representatives, whether they be executors or administrators, assignees in bankruptcy, execution cred- itors, or transferees, although they do not thereby become part- ners. Every one of tliese, and every other party who has acquired the partner's interest in the joint fund, may call for an Account, in order to settle and determine what that interest is. (6) It is partly as a consequence of this universal and important right, that all partners, having any charge of the business of the firm, are bound to keep constantly, regular, intelligible, and accurate accounts of all the business, and to give all the part- ners at all times access to them, and to the means of verifying them. And if they, for any considerable time, disregard and (b) In Crawshay v. Collins, 2 Russ. 842, Lord Eldon says : " A partnership may expire by death, or by effluxion of time, or by notice, or by the bank- ruptcy of a partner; but, in all tliese cases, though, in a certain sense of the word expiration, a partnersliip does so expire in each and every one of them, yet, in most instances, a partnersliip does not and cannot then expire as to all purposes. In some, it may not expire for years after the period in wliicii, in one sense of the word, we say it does expire ; and it must depend upon the nature of the partnership, in Avliat way it is to be carried on during the period in which it is to be wound up. If it expires by bankruptcy, there are introduced into it, as persons in- terested in the manner of winding it up, the assignees of the bankrupt. If it expires by death, there are intro- duced, in like manner, tlie executors of the deceased partner; who may be stated, tliough certainly not in a very correct use of the term, to be a sort of assignees of the deceased partner. When it expires by notice, it may happen that in many cases the party who gave the notice may die long before the time arrives when it may be said to be quite dissolved, and his executors may become partners in the concern. In short, in every species of dissolution which may take place, in different events persons in the course of time may be introduced into the partnership, with reference to whom accounts must be settled much in the same manner as it would have been necessary to have settled them with the original partners." See Bailey v. Moore, 25 111. 347. See, as to what interest gives a right to an account, Moffat V. Moffat, 10 Bosw. 4G8. [Even a member of a firm organized for the purposeof hindering and delaying cred- itors of a prior firm may have an ac- count. Harvey v. Varney, 98 Miss. 118. Where after dissolution the re- spective partners continue in settle- ment of the affiiirs of the partnership, the statute of limitation begins to run against the right of either to an account from the others, from tiie date of the last transaction, receipt, or pay- ment by either, and no demand is necessary before suit. McClung v. Capehart. Sup. Ct. Minn., 1 N. W. Reptr. 123.] CH. XVI.] OF AN ACCOUNT. 553 refuse to perform this duty, a court of equity will coerce them to its full discharge, (c) * It is possible that for a breach of this duty, especially * 510 where tlicre was an express contract to perform it, an injured party might have redress at law ; but he can compel the performance, and, generally, find a remedy for the ill con- sequence of a non-performance, only in equity. But this court has full power in the premises, and usually acknowledges the right to an account of any partner, or representatives of a partner, unless it is obviously unnecessary, and requested for frivolous reasons, or with malicious intent. (cZ) (c) Rowe V. Wood, 2 Jac. & W. 358, per Lord Eldon : " One partner cannot exclude anotlier from an equal man- agement of the concern ; and it is the duty of each to keep precise accounts, and to have tliem always ready for inspection, and, in short, to keep good faith towards each other. I think that the plaintiff, subject to the equities which may be ultimately declared between the parties, has a clear right to insist that regular accounts shall be kept of all receipts, payments, transactions, and so on, relative to the mine, and to bave constant access for tlie purpose of inspecting the accounts ; and also, that, subject to those equities, he has a clear right to control the working of the mines, and if he is impeded in the exercise of any of these rights, let him come to the court again. The application, after the other parties have been apprised of what the court expects them to do, will be differently treated." Beacham V. Eckford, 2 Sandf. Ch. 116. See Tyng V. Thayer, 8 Allen, 301. (d) Smith's Merc. Law (5th ed.), 85 ; Marshall v. Colman, 2 Jac. & W. 266. Where plaintiff has an adequate remedy at law by action of account, it is held, in Connecticut, that chan- cery has no jurisdiction. Stannard v. Whittlesey, 9 Conn. 556. It has also been held in Connecticut, that no action at law will lie for the settlement of a partnership account, where the number of partners exceeds two ; the remedy is in equity. Beach v. Hotchkiss, 2 Conn. 425. But it is otherwise in Pennsylvania. Whelen v. Watmough, 15 Serg. & R. 153 ; Griffith v. Wilbing, 3 Binn. 317 ; Brightly Eq. Jur. §§ 121, 122, 128; Adams Eq. 225; 1 Story Eq. § 449. And see Bracken v. Ken- nedy, 3 Scam. 658; Giliett v. Hall, 13 Conn. 426 ; Cunningham v. Little- field, 1 Edwards Ch. 104. Partners cannot sue one another at law for any of the business or undertakings of the partnership. This can only be done in chancery, by asking a dissolution and an account. Stone v. Fouse, 3 Cal. 294; Nugent v. Locke, 4 id. 320; Wilson V. Lassen, 5 id. 116; Barnstead V. Empire Min. Co., id. 299. On the action of account at law, see 3 Steph, Bl. 532 ; Foster v. Allanson, 2 T. R. 479 ; Jackson i'. Stopherd, 4 Tyrw. 330; Elgie v. Webster, 5 M. & W. 518; Brown v. Tapscott, 6 id. 119. It has been held, that partners may sue each other at law for a breach of any dis- tinct engagement in the partnership agreement, and that generally ade- quate relief can in sucli case be ob- tained. Where this can be done, equity will not interfere. Kinloch v. Hamlin, 2 Hill Ch. 19; Duncan v. Lyon, 3 Johns. Ch. 360; Hunt v. Gookin, 6 Vt. 462. [But where two persons enter into a partnership as to certain proposed contracts, and, after the completion of one, one partner notifies the other that as to the other contracts he shall proceed on his sole 654 THE LAW OF PARTNERSHIP. [CH. XVI. * 511 * Whenever there is a dissolution of a partnersliip, for any cause, it would seem that there must be an account, if it be demanded by any party in interest, (e) But it is always possible for partners or their representatives to agree together upon some arrangements which render an account unnecessary. Nor is this very unfrequent in fact. The parties interested value the property, good-will, &c., and found their arrangements upon this estimate ; one paying to the other a sum of money, without any account being taken. (/) But such account, the remedy is by suit for a breach of tlie contract, and not by a bill to account for profits. Doyle v. Bailey, 75 111. 418.] See Cross v. Cheshire, 7 Exch. 43. Where there is a distinct promise to pay an ascer- tained sum, as where a balance of accounts is struck, assumpsit will lie between partners. Hall v. Stewart, 12 Penn. 213 ; Hamilton v. Hamilton, 18 id. 20. See Morrow v. Riley, 15 Ala. 710; Gridley v. Dole, 4 Comst. 486; Miller v. Andress, 13 Ga. 866. And where an acgount stated resulting in such balance is retained by a part- ner without objection, a promise will be implied, as in other cases. Van Amringe v. EUmaker, 4 Penn. 281. But in matters of difficulty or con- troversy between partners, it is now most usual to resort to a court of equity for their final adjudication and settlement. Bracken v. Kennedy, 3 Scam. 558. It will entertain jurisdic- tion, although account or other action would lie between the parties. Gillett V. Hall, 13 Conn. 426 ; Cunningham v. Littlefield, 1 Edw. Ch. 104. And al- though one partner cannot bind the firm by deed, Donaldson v. Kendall, 2 Ga. Decis. 227 ; Napier v. Catron, 2 Humph. 534; Dickinson v. Legare, 1 Desaus. 537 ; Skinner v. Dayton, 19 Johns. 518 ; Fisher v. Tucker, 1 Mc- Cord Ch. 170 ; Williams i-. Hodgson, 1 Harris & J. 474 ; yet, in some cases, a court of equity will regard a debt secured by the specialty of one partner as a simple contract debt, and hold all the partners bound by it. See Gait V. Calland, 7 Leigh, 594; Mc- Naughten v. Partridge, 11 Ohio, 123 ; Christian v. Ellis, 1 Gratt. 396; An- derson V. Tompkins, 1 Brock. 456 ; Kyle V. Roberts, 6 Leigh, 495 ; James V. Bostwick, Wright, 142. As to pleadings and practice in taking an account, see Auld v. Butcher, 2 Kan. 135. (e) Adams Eq. ch. 3, p. 239, et seq. ; Collyer on Part. (3d Am. ed.) § 298; 1 Story Eq. Jur. § 671 ; Forman v. Hanfray, 2 Ves. & B. 329; Harrison V. Armitage, 4 Madd. 143 ; Russell v. Loscombe, 4 Sim. 8; Knowles v. Haughton, 11 Ves. 168; Waters v. Taylor, 15 id. 15 ; Ex parte Broad- bent, 1 Mont. & A. 635. See Hayes V. Reese, 34 Barb. 151 ; Vermillion V. Bailey, 27 111. 230; Pope v. Sals- man, 35 Mo. 362. [A partner may have an account, although he has failed to pay in the capital he agreed to contribute. Palmer v. Tyler, 15 Minn. 106. But see Stevenson v. Ma- thers, 67 111. 123. An account will not be decreed, if it appears that the party praying for it has no real cause of com- plaint, and that no good purpose can be served by directing an account to be taken. McKacy v. Hebb, 42 Md. 227. Nor when one partner has re- ceived, by agreement with his copart- ners, all he could in any event be entitled to, so that he has no interest in the accounts. Wagner v. Wagner, 50 Cal. 76.] (/) 7 Jarman Convey. 31; Cook- son V. Cookson, 8 Sim. 529. But see Cook V. CoUingridge, Jac. 607, 620. [Where one partner sells out his in- terest to another, the presumption is that CH. XVI.] OF AN ACCOUNT. 555 an arrangement can arise only from an agreement ; for if the parties differ as to the value of the property, or of their respec- tive interests therein, an account must be taken, as the only means of determining this. (^) Indeed, the taking of an account is a frequent preliminary to any * further * 512 action by a court of equity ; because by this means alone can the court ascertain the true relation of the parties as to their rights and obligations. (A) An account and a dissolu- tion seem to be so clearly connected, that Lord Eldon, as we have seen, was unwilling to grant an account, unless the petitioner prayed also for a dissolution : (i) but this cannot be the price paid is based upon a set- tlement of accounts. Wiggin v. Good- win, 63 Me. 389 ; Noonan v. Huddles- ton, 64 111. 11.] ((/) Featherstonhaugh v. Fen wick, 17 Ves. 298, 309, per Sir William Grant : " The next consideration is, whether the terms upod which the defendants proposed to adjust the partnership concern were those to which the plaintiff was bound to ac- cede. The proposition was, that a value should be set upon the partner- ship 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 he was bound to accept, the consequence is, that, con- tinuing to trade with his stock, and at his risk, they come under a hability for whatever might be produced by that stock. In the case of Crawshay V. Collins, 15 Ves. 218, there was no circumstance, except, merely, that there had been no adjustment of accounts with the assignees of the bankrupt. Here, the defendants proposed ad- justing the accounts on certain terms, but terms which the other party was not bound to accept. Though he, thinking they had no right to dissolve the partnership, might not have gone into any detail of the principles on which the dissolution should take place, }'et I conceive it to have been their duty, in the first place, to put themselves right by offering to him those terms upon which the law gave him a right to insist ; and, not having done so, but continuing to trade with his stock under the liability to answer for the profits, the same inquiry should be directed as in Crawshay t'. Collins, to ascertain what that stock was at the period of the dissolution, what use was afterwards made of it, and wliat profits were produced by the trade." Wilson v. Greenwood, 1 Swanst. 471, 482 ; Rigden v. Pierce, 6 Madd. 353 ; Cook v. CoUingridge, Jac. 607. (h) It has often been held that there can be no division of partnership prop- erty until all the accounts of the part- nership have been taken, and the clear interest of each partner ascertained ; that the chancellor may, in a proper case, dissolve the partnership, but cannot aid in carrj'ing it on. Baird V. Baird, 1 Dev. & B. 524; McRae v. McKenzie, 2 id. 282; Camblat v. Tupery, 2 La. Ann. 10 ; Kennedy v. Kennedy, 3 Dana, 240. But see Hud- son V. Barrett, 1 Pars. Sel. Eq. Cas. 414. (i) Forman v. Hanfray, 2 Ves. & B. 829. 656 THE LAW OP PARTNERSHIP. [CH. XVI. deemed a rule of equity, (/) although in the great majority of cases, where the relations between the j)artners are such that one of them can obtain an account only through the interposi- tion of a court, a dissolution is and should be asked, (/c) SECTION 11. OF OPENING AN ACCOUNT FOR ERROR. * 513 * Mere errors alone will not always lead to the open- ing and restating of accounts. If the parties agree, as they sometimes do, that closed accounts shall not be opened for error, after the death of the parties, or after a fixed period, a ij) In Harrison v. Armitajje, 4 Madd. 14;j, it is said that the rule laid down by Lord Eldon applies only to the case of an injunction, or to a case of interim management. The following cases bear on the question; Loscombe V. Russell, 4 Sim. 8 ; Knowles v. Haughton, 11 Ves. 168; Waters v. Taylor, 15 id. 15; Walworth v. Holt, 4 Mylne & C. 619, 635. In this last case. Lord Cottenham made a very full review of the autliorities ; deciding that a relief of this limited kind could be given without a prayer for dissolu- tion, and a final winding up of the af- fairs of the company. This rule, al- though not without great conflict, seems now to be decided. Richardson V. Hastings, 7 Beav. 301 ; Fairthorne V. Weston, 3 Hare, 387; Miles v. Thomas, 9 Sim. 609 ; Goodman v. Whitcomb, 1 Jac. & W. 593 ; Richards V. Davies, 2 Russ. & M. 347 ; Rich- ardson V. Hastings, cited in 8 Hare, 391 ; Chappie i'. Cadell, Jac. 537. (k) Loscombe v. Russell, 4 Sim. 8; Waters v. Taylor, 15 Ves. 10 ; Forraan V. Hanfray, 2 Ves. & B. 329; Goodman V. Whitcomb, 1 Jac. & W. -589 ; Chap- man V. Beach, id. 594 ; Marshall v. Colraan, 2 id. 266 ; Vansandau v. Moore, 1 Russ. 441; Pigott v. Bagley, McClel. & y. 569; Krebell v. White, 2 Younge & C. 15. In an action by one partner for a dissolution of the partnership, and an account, &c., al- leging that dividends of profits were to be made at stated periods, tlie court may decree ^he payment of the sum due for such dividends, before final distribution of the assets. O'Conner V. Stark, 2 Cal. 155. The ordinary course is to pray that the partnership may be dissolved, and the surplus assets distributed; but this practice has been relaxed in favor of joint- stock companies, and of other numer- ous partnerships, and bills have been sustained -which asked more limited relief ; namely, that the assets of an abandoned or insolvent partnership might be collected and applied in dis- charge of the debts, leaving the ques- tions of dissolution and contribution as between the partners entirely open for future settlement. Adams Eq. 241 ; Goodman v. Whitcomb, 1 Jac. & W. 572 ; Marshall v. Colman, 2 id. 266; Glassington v. Thwaites, 1 Sim. & Stuart, 124 ; Loscombe v. Russell, 4 Sim. 8 ; Walworth v. Holt, 4 Mylne & C. 619 ; Richardson v. Hastings, 7 Beav. 301, 323; Apperly v. Page, 1 Phillips, 779; Fairthorne v. Weston, 3 Hare, 387. A creditor cannot file a bill to stop a partnership, and wind up its con- cerns. It is only at the instance of a partner that this can be done. Cle- ment V. Foster, 3 Iredell Eq. 213. CH. XVI.] OP AN ACCOUNT. 657 court of equity will always respect such an agreement, (Z) unless gross mistake, fraud, or great danger of fraud, be shown, (m) And the same reasons which cause * part- * 514 ners to make such an agreement would induce a court to open an account only for important error, after the death of parties or long acquiescence, (n) But it has been held, that (/) Gainsborough v. Stork, Barnard. 312. See Heath v. Corning, 3 Paige, 560 ; Stoughton v. Lynch, 2 Johns. Ch. 218. In Mackellar v. Wallace, 26 Eng. L. & Eq. 62, 8 Moore P. C. Cas. 378, the following distinction is drawn : " Parties having accounts between them may meet and agree to settle those accounts by the ascert^iinment of the exact balance ; it may be nec- essary for that case, and probably it is necessary in most cases, that vouch- ers should be produced, and that all the information possessed on one side and the otlier should be furnished in the settlement of that account ; and, if it afterwards turn out that there were errors in that account, it is a sufficient ground for opening such account, and setting it right in a court of equity. If, on the other hand, persons meet and agree, not to ascertain the exact balance, but a sum which one is willing to pay, and the other is content to receive as the result of those accounts, — in a case of that sort, it is obvious that the production of vouchers is entirely unnecessary, and errors in the account are entirely out of the question; for the very object of the parties is to avoid the necessity for producing those vouchers, upon the assumption that there are or may be errors in the account so settled. Therefore, it is either an account stated and settled, in the formal sense of the expression, or it is the case of a settlement by compromise." (m) Oldaker v. Lavender, 7 Sim. 239. In Mackellar v. Wallace, cited supra, the court, after laying down the doctrine as above, go on to say : " In either case, the transaction might be vitiated by fraud. In either case, it is good for nothing if, either from the collusion of the parties, or from the circumstances under which the settle- ment takes place, it is proved in a court of equity that tlie transaction was not so fairly and so fully under- stood between the parties, either from the confusion in which it was involved, or from misrepresentation made on the one side or the other, as it ought to have been, and that injustice has been done on either side." Slee v. Bloom, 20 Johns. 669, 5 Johns. Ch. 366 ; Lee's Admr. v. Heed, 4 Dana, 112; Botifeur t;. Weyman, 1 McCord Ch. 156 ; Bar- row V. Rliinelander, 1 Johns. Ch. 650 ; Johnson's Executors v. Ketchum, 3 Green Ch. 364 ; Bloodgood v. Zeily, 2 Cai. Cas. 124; Gray v. Washington, Cooke, 321 ; Chappedelaine i'. Dech- enaux, 4 Cranch S. C. 309 ; Stoughton V. Lynch, 2 Johns. Ch. 218, 219, 1 Madd. Ch. Pr. (2d ed.) 103, 262, 280; Herrick v. Ames, 8 Bosworth, 115 ; Cann v. Cann, 1 P. Wms. 127 ; Sta- pilton V. Stapilton, 1 Atk. 10 ; Pullen V. Ready, 2 Atk. 692 ; Lewis v. Pead, 1 Ves. Jr. 19 ; Vernon v. Vawdry, 2 Atk. 119, 2 Eq. Cas. Abr. 8; Gordon v. Gordon, 3 Swanst. 476 ; Halhed v. Marke, id. 444, note, 1 Hovenden on Frauds, 160 ; Osmond v. Fitzroy, 3 P. Wms. 130 ; Willis v. Jernegan, 2 Atk. 251 ; Milnes v. Cowley, 8 Price, 620 ; Lloyd i'. Passingham, Cooper, 156 ; Beaumont v. Bramley, 1 Turner, 61 ; Evans v. Bicknell, 6 Ves. 183, 189; [Pomeroy v. Benton, 67 Mo. 531.] (n) A suit to impeach an account ought to be brought within a reasona- ble time, or, at farthest, within the statutory period for commencing an action at law, upon matters of account. Lupton V. Janney, 13 Pet. 381. And where the bar of the statute is inap- plicable, — namely, where the demand is purely equitable, — the court is reluc- tant to interfere after a considerable 558 THE LAW OF PARTNERSHIP. [CH. XVI. where a partnership had existed for eight years, and during this time accounts had been taken, without cancellation of books, releases, or discharges in full, an account might be called for. («n) Where there is danger of fraud, or where the accounts were made up by parties having unrestricted power, and acting under strong personal interest, as in the case of accounts between an executor partner and the legatees of the deceased partner, a long acquiescence will not establish them beyond the reach of inquiry ; (o) and in one case, else- lapse of time ; particularly after the death of parties whose transactions are involved in the inquiry. Adams Eq. 227 ; Baker v. Biddle, Baldwin C. C. 418; Ellison v. Moffat, 1 Johns. Ch. 46; Ray v. Bogart, 2 Johns. Cas. 432; Rayner v. Pearsall, 3 Johns. Ch. 578, 586; Mooers v. White, 6 id. 360, 370; Boiling V. Boiling, 5 Munf. 334; Ran- dolph V. Randolph, 2 Call, 537, id. (2d ed.) 453; Dexter v. Arnold, 2 Sumner, 108; Wilde i-. Jenkins, 4 Paige, 481; Dakin v. Demming, 6 Paige, 95; Bloodgood V. Zeily, 2 Cai. Cas. 124 ; Gregory's Ex'rs v. Forrester, 1 IMc- Cord Ch. 318, 382; Ex'rs of Radcliffe V. Wightnian, id. 408; Hutchins v. Hope, 7 Gill, 119; Chesson v. Chesson, 8 Ired. Eq. 141. But, where there has been fraud, the court will open and examine accounts after any length of time, even though the person who committed the fraud be dead. Boti- feur V. Weyman, 1 McCord Ch. 166. But it must be shown that the fraud was not, and could not with reasonable diligence be, discovered, until witliin six years before the commencement of suit. Ogden v. Astor, 4 Sandf. S. C. 311. (nn) Lynch i\ Bitting, 6 Jones Eq. 238. And see Stephens i;. Orman, 10 Fla. 9. (o) A., B., & C, in 1796, became partners, as merchants, under articles for seven years, and it was provided, that, if either party died in the mean time, the partnership should be deter- mined, as to his share, from the first of May following his death ; and that thereupon an account should be taken, and, after payment of debts, " pay- ment, appropriation, and delivery " should be made, between the surviving partners and the executors of the de- ceased partner, of the residue of tlie moneys, goods, &c., of the partnership. In 1801, B. died, and appointed his wife and surviving partners, A. and C, his executors and guardians of his infant children, who were his residuary legatees. A. and C, only, proved the will, and having caused a valuation and account of the partnership assets to be made, a balance sheet was set- tled up to the first of May, 1801, showing what amount was due to the testator's estate (which included out- standing credits to a large amount), and his estate was credited accordingly in the partnership books, and tiie partnership continued by the surviv- ing partners, but no severance of the assets was made. In May, 1809, the eldest son came of age, and an account was stated, by the executors, of the testator's residuary personal estate, but which assumed, as its basis, the valuation and account made on the testator's death. Another account was stated of the debts and credits remaining unpaid and uncollected, showing what was then divisible ; and another of the moneys expended for the eldest son's maintenance. A deed, dated September, 1809, between A. and the eldest son, was executed, on which these accounts were indorsed, and A. covenanted for the payment, by instalments, of the share due to CH. XVI.] OF AN ACCOUNT. 559 where * referred to, they were opened after some thirty * 515 years of acquiescence. ( ji?) "Where fraud had been com- mitted, an account was opened after nearly as long a time, although the fraudulent partner had long been dead, (g) And if the bill praying for the opening of a settled account do not the eldest son, so far as the same had been realized ; and the eldest son de- clared he was " content and satisfied with the disclosures thus far made and accounts thus far given," &c. ; and it was provided that he should not be pre- vented from claiming any further share " not as yet received, or fallen in, or accounted for." In 1810, 1815, 1821, 1826, and 1830, changes took place in the partnership firm. There were three younger children, who attained twenty -one, respectively, in 1812, 1813, and 1820, when similar accounts, founded on the same basis, were stated in each of them by the execu- tors ; and a similar deed of settlement executed by the two former, and a release by the latter, and further divi- sions of the testator's assets made ac- cordingly. In 1816, the only other child died an infant, and then also a division of assets was made ; and, in 1822, a deed of release was executed by the trustees of the settlement of one of the daughters, in respect of a balance not included in the deed exe- cuted by her. The bill was filed in 1831, by the several children and their representatives. Held, that A. and C, being executors and guardians as well as surviving partners, and the release being partial only, and founded on insufficient knowledge by the ces- tuis que trust of the partnership affairs and accounts, the plaintiffs were not precluded, by tlieir deeds or by lapse of time, from inquiring into the mode in which the assets of the old firm had been dealt witli, and claiming a share in the profits arising from the testator's assets having been used in the business of the successive partnerships. Wed- derburn v. Wedderburn, 2 Keen, 722, 4 Mylne & C. 41. And see Cook v. CoUingridge, 1 Jac. 607 ; Walker v. Symonds, 3 Swanst. 64-69; Greg- ory I'. Gregory, Cooper, 201, Jac. 631 ; Champion v. Rigby, 1 Russ. & M. 639 ; Chalmers v. Bradley, 1 Jac. & W. 51 ; Downs V. Gazebrooke, 3 Meriv. 200; Ex parte Lacey, 6 Ves. 628; Cock- erell r. Cholmeley, 1 Russ. & M. 425, on the strictness of equity in similar cases of trust. See also Smith v. Clay, 3 Bro. C. C. 639, note ; Townsend v. Townsend, 1 Cox, 28 ; Bonney v. Rid- gard, id. 145; Beckford v. Wade, 17 Ves. 87, 97 ; Hickes v. Cook, 4 Dow, 16, on the question of the length of time that had elapsed. Dickenson v. Lord Holland, 2 Beav. 310 ; Purcell v. Cole, 1 Longf. & T. 449 ; Edwards v. Meyrick, 2 Hare, 60, 6 Jur. 924. (l)) Wedderburn v. Wedderburn, 2 Keen, 722, 4 Mylne & C. 41. And see Hoe v. Richards, 2 Beav. 305. Under particular circumstances of fraud, imposition, and delay, a court of equity will decree an account of rents and profits of an estate after an adverse possession of fifty years. Stackpole v. Davoren, 1 Bro. P. C. 9. And, in another case, where an entry in an administrator's account, which had been settled, was shown to be fraudulently made, the whole account was opened, notwithstanding the lapse of forty years since the death of the intestate, seventeen since the settle- ment of the account, and more than two since the discovery of the entry complained of. Special directions were inserted in a decree for the protection of the accounting party. AUfrey v. Allfrey, 1 Macn. & G. 87, 1 Hall & T wells, 179, 13 Jur. 269. (q) Vernon v. Vawdry, 2 Atk. 119 ; Botifeur v. Weyman, 1 McCord Ch. 161 ; Lowe v. Farlie, 2 Madd. Ch. 102; Beames' Pleas in Eq. 232. 660 THE LAW OF PARTNERSHIP. [CH. XVI. allege fraud, but, in the opinion of the court, the facts stated imply fraud, the prayer will be granted, (r) * 516 * A party seeking to open an account for error must specify the errors so particularly that each may be judged of by itself. For tlie court may be unwilling to open an account if, when it is opened, it may be examined and unravelled from end to end. (s) But they may be willing to permit the plaintiff to surcharge and falsify. (^) If an omission has (r) Farnham v. Brooks, 9 Pick. 212. And see Worniley v. Wormley, 8 Wheat. 421; Fullagar v. Clark, 18 Ves. 481. Courts of equity feel them- selves at liberty to infer, juJicially, a fraudulent purpose, from suspicious circumstances, well corroborated and in no way rebutted, though such cir- cumstances fall short of legal proof. Earl of Chesterfield v. Janssen, 2 Ves. Sen. 155 ; Walker v. Symonds, 9 Swanst. 71 ; Taylor v. Jones, 2 Atk. 602; Stileman v. Ashdown, id. 480. A party who has once admitted an account to be correct cannot after- wards file a bill to have the account taken in equity, upon the mere alle- gation that he had no means of ascer- taining that the account so delivered was correct, witliout charging specific acts of fraud against the defendant; and it is not necessarily an allegation of fraud to say that the accounting party agreed to deliver up certain cliattels demanded by the other, upon condition of having his alleged balance admitted and paid. Darthery v. Lee, 2 Younge & C. 5, 5 L. J. n. 8. Exch. Eq. 73 ; President, &c., of Orphan Board v. Van Reenen, 1 Knapp, 100. (s) Union Bank v. Knapp, 8 Pick. 113; Kinsman v. Barker, 14 Ves. 579; Shepherd v. Morris, 4 Beav. 252 ; Chambers v. Goldwin, 9 Ves. 254 ; Calvit V. Markham, 3 How. (Miss.) 343; Mebane v. Mebane, 1 Ired. Eq. 403; De Montmorency v. Devereux, 1 Drury & Walsh, 119; Leaycraft v. Dempsey, 15 Wend. 83 ; Baker v. Biddle, 1 Bald. 394, 418; Bainbridge V. Wilcocks, id. 536, 540 ; Consequa v. Fanning, 3 Johns. Ch. 587, 17 Johns. 511, 1 Madd. Ch. Pr. (4th Am. ed.) 103 ; Taylor v. Hamlin, 2 Bro. C. C. 310; Wide v. Jenkins, 4 Paige, 481; Weed V. Small, 7 id. 573; liobart v. Andrews, 21 Pick. 526 ; Chappedelaine V. Dechenaux, 4 Crancli, 306 ; Bullock V. Boyd, 2 Edw. Ch. 293; Pliilips v. Belden, id. 1 ; Stoughton v. Lyncli, 2 Johns. Ch. 209 ; Hickson v. Ayhvard, 3 Moll. 1. Where an account stated is open a long time, as sixteen years, after it has been rendered, it will not generally be opened. It will be opened as to fraud or mistakes charged in the bill, and so far proved that the court is satisfied they ought to be corrected ; and, when some such errors are j)roved, then as to other errors charged, which the court is satisfied ought to be made tlie subjects of further examination. Ogden V. Astor, 4 Sandf. S. C 311. And see Clarke v. Tipping, 9 Beav. 282 ; Holland (,-. Holland, 6 Ired. Eq. 407 ; Pritt v. Clay, 6 Beav. 503 ; Scott V. Milne, 5 id. 215, affirmed 12 L. J, y. s. Ch. 233, 7 Jur. 709; Jones v. Latimer, 1 id. 980 ; Johnson v. Curtis, 3 Bro. C. C. 226 ; Taylor v. Hayling, 1 Cox, 435; Dunbar v. Lane, 1 Bro. P. C. 3 ; Maund v. Allies, 5 Jur. 860 ; Milliken v. Gardner, 37 Penn. 456. The court will not open a settled account where it has been signed, or a security taken on the foot of it, unless tlie whole transaction appears fraudu- lent, upon errors specified in the bill, anil supported by evidence. Drew v. Power, 1 Sch. & Lef. 182. See Parker V. Jonte, 15 La. Ann. 290, as to alleged errors in books. (?) Consequa v. Fanning, 3 Johns. Ch. 587 ; Troup v. Haight, Hopk. 239 ; CH. XVI.] OF AN ACCOUNT. 561 been made of a credit due, the * plaintiff, by show- * 517 ing the same, will be permitted to add it ; and this is a surcharge. If a wrong charge is stated in the account, the plaintiff may be permitted to remove it ; and this is falsifi- cation, (if) It may be added, as a general remark, that when- ever accounts are stated by persons having great trust reposed in them, and great power, a court of equity allows a latitude in opening and examining such accounts, bearing some proportion to that trust and power, (v) In England, the practice is quite uniform of requiring a part- ner who petitions for an account, and either admits expressly or by implication that he is, or is shown to be, owing to the partnership a private debt or balance, to j)ay that debt or balance into court before a decree will issue, (w) This is not Cliappedelaine v. Dechenaux, 4 Cranch 30(5; Redman v. Green, 3 Ired. Eq 64; Bullock v. Boyd, 1 Hoff. Cli. 294 Nourse v. Prime, 7 Johns. Ch. 69 Philips V. Belden, 2 Edw. Ch. 1 Grover v. Hall, 3 Har. & J. 43 ; Free- land V. Cocke, 2 Munf. 352 ; Compton V. Greer, 2 Dev. Cii. 93 ; Miller v. Wornack's Adm'rs, Freeman's Miss. Ch. 486; Lilly v. Kroesen, 3 Md. Ch. 83; Williams v. Savage Manuf. Co., 1 id. 306 ; Kinsman v. Barker, 14 Ves. 579; Vernon v. Vawdry, 2 Atk. 119, Barn. Ch. 280, 305 ; Sewei v. Bridge, 1 Ves. Sen. 297 ; Earl Pomfret v. Lord Windsor, 2 id. 482; Pit v. Cholmon- deley, id. 565 ; Brovvnel v. Brownel, 2 Bro. Ch. 62; Chambers v. Goldwin, 9 Ves. 254; Anon., 2 Eq. Abr. 12. Plaintiff, in his bill, having assigned 150 errors in five stated accounts, an order was made on him to pick out those he would insist on, and, if the court should be of opinion they were not errors, to consent to waive the rest. If the court thought them errors. Davies v. Spurling, 1 Tamlyn, 199, 1 Buss. & M. 64 ; Millar v. Craig, 6 Beav. 433. The party complaining of errors in a settled account should make the errors appear by proof. Bry V. Cook. 15 La. Ann. 493. ((«) In reference to these terms, see 1 Story Eq. Jur. § 525; Pitt v. Chol- monileley, 2 Ves. Sen. 565, 566 ; Per- kins r. Hart, 11 Wheat. 237, 256. (;;) Matthews v. Wallyn, 4 Ves. 118 ; Newman v. Payne, 2 Ves. Jr. 199; Pit V. Cholmondeley, 2 Ves. Sen. 565; Stoughton i'. Lynch, 2 Johns. Ch. 217 ; Higginson v. Fabre, 3 Desaus. 93. Thus, in ordinary cases, the ride is, that the establishment of a material mistake is necessary to in- duce the court to give a decree en- titling the party to surcharge and falsify an account. But, wliere the relation of attorney and client subsists, the ordinary rule does not prevail ; for there, though the party only alleges generally that the accounts, as settled, are erroneous, the court will, if suffi- there would be good cause either to cient cause be shown, make a decree decree an open account, or give jilain- tiff leave to surcharge and falsify. Rodney v. Hare, Mos. 296. See fur- ther, on the question of surcharging and falsifying, Roberts v. Kuffin, 2 Atk. 112; Chambers v. Goldwin, 5 Ves. 837 ; Ex parte Townshend, 2 Moll. 242; Hickson v. Aylward, 3 id. 14; opening tliose accounts. Lawless v. Mansfield, 1 Drury & War. 557, 4 Ired. Eq. 113. {w) Vin. Abr. Partners (E), 5; Melioruchi v. Royal Ex. Ass. Co., 1 Eq. Abr. 8; Gold v. Canham, 2 Swanst. 325, 1 Ch. Ca. 311. See Mulhollan u. Eaton, 11 Curry (La.), 291. Payment 562 THE LAW OF PARTNERSHIP. [CH. XVI. true of a debt on partnership account ; for if a partner avers that he has taken money from the firm, but avers also that * 518 a balance is still due to him, he * is not required to pay into court the money thus taken, unless special reasons exist for the requirement, (.t) The rule is, therefore, applica- ble only to a private and personal debt. It would hardly be applied here, merely on the authority of the English practice ; but it rests in that country on the general principle, that he who asks equity must be ready to do equity ; and it may be expected that a similar rule will be provided for here, by the rules of practice of the courts of equity. (?/) of money into court is directed wliere the defendant admits money to be in liis bands wliicli lie does not claim as his own, and in which he admits that the applicant is interested. Adams Eq. 850. See, on this subject, Hosack V. Rogers, 9 Paige, 468 ; Clagett v. Hall, 9 Gill & J. 81 ; Contee i'. Dawson, 2 Bland, 293 ; Nokes v. Leppings, 2 Phillips, 19 ; Maddox v. Dent, 4 Md. Ch. 543. (x) Foster v. Donald, 1 Jac. & W. 252. In this case, tlie plaintiffs and the defendant carried on business together in the north of J^ngland. It had been proposed to dissolve the partnership ; and the terms of dissolu- tion had been nearly arranged, when the defendant represented that, before finally acceding to them, he thought it proper to go to London, for the purpose of consulting a friend residing there. In the course of his journey, he went round to several customers of the firm, in different parts of the country, and collected of tliem debts due to the partnership to the amount of about 2,318/. In one instance, a debt due by himself had been set off against a debt due to the firm, and he received the difference. The bill was filed for an account of the partnersiiip transac- tions. The defendant, in his answer disclosing these facts, stated that he believeil the balance of the account would be in his favor. Lord Eldon : " If a partner, as partner, receives money beh)nging to the firm, and, ad- mitting that lie has received it, insists that there is a balance in his favor, there is no pretence for making him pay it in. But if he has received it under circumstances from which you can infer that he had agreed not to receive it, and that his receiving it was contrary to good faith, then he may be ordered to bring it into court. Cases may happen where 10,000/. may be due to him, and yet he may have received 1,000/. under such circum- stances that he will not be allowed to retain it. . . . Though it is very true that a partner may receive partnership effects, and insist on not paying in the amount, unless all the other partners will pay in what thej' have in their hands, yet I think the defendant has admitted himself to have received these sums in a manner in which he ought not to have received them. He must, therefore, pay them in." See Kichardson v. The Bank of England, 4 Mylne & C. 165, in which the ques- tion is fully considered. See also Mills V. Hanson, 8 Ves. 68, 91 ; Domville v. Solly, 2 Russ. 372 ; Toulniin v. Cop- land, 3 Younge & C. 648. In Jervis v. White, 6 Ves. 738, the defendant was ordered to pay money into court be- fore answer in a case of gross fraud, appearing upon affidavit by the plain- tiff, and by a corresponding affidavit by the defendant. Daniel's Ch. Pr. (Perkins' ed.) 2024; Vann i'. Barnett, 2 Bro. C. C. 158 ; Costeker v. Horrox, 3 Younge & C. 530. (i/) Under section 244 of the New York Code of Procedure, as amended CH. XVI.] OF AN ACCOUNT. 563 SECTION III. HOW AN ACCOUNT SHOULD BE TAKEN- *As to the manner of taking an account, the first * 519 remark to be made is, that the parties themselves may regulate this, and the court will respect their agreement, (z) This may be contained in the original articles, or in subsequent agreements. Or it may be derived from their practice. Where partners have, for a considerable time, settled their accounts in a certain way and upon certain terms, it is obviously reason- able to infer that this was their agreement and understanding. Equity will draw this inference, and direct the account to be taken in a similar manner, (a) Indeed, this evidence from custom, or from conduct and acquiescence, is even stronger than tiiat of expressed agreement. For if there be certain terms agreed upon, and the accounts have been kept in disre- gard of them for a considerable time, and without objection, we have seen that the court will treat it as a waiver of the terms by the party whom they benefit, or as a subsequent agreement cancelling them. (6) And the accounts need not in July, 1851, a partner, who by his though he swears tliose sums were answer admits that lie has in liis hands discharged, yet it is still a ground for partnership funds, which on his state- directing an account. Brace y. Taylor, nient appear to belong to the adminis- 2 Atk. 253. trators of his deceased partner, will be (z) See ante, p. * 302, note (s). ordered to pay over such funds to (a) Jackson v. Sedgwick, 1 Swanst. them, although there are outstanding 460, 469, per Lord Eldon : " Partner- contested claims against the firm, and ship accounts may be taken in various it has claims to enforce which will wajs. The distinction is, tliat, in the require time and disbursements. Tiie absence of a special agreement, the order for such payment will, however, accounts must be taken in the usual require the administrators to give se- way ; but wiiere a special agreement curit^' to the surviving partner to con- has been made, it must be abided by, tribute to the outstanding claims, if provided that the parties have acted established, and to pay their share of on it ; if not, I always understood that the expenses that may be incurred in the articles are read in this court as prosecuting the demands of the firm, not containing the clauses on which The surviving partner will also be the parties have not acted." permitted to retain sufficient to cover (/') Geddes t?. Wallace, 2 Bligh, 270; such claims against the deceased part- Petty v. Janeson, 6 Madd. 146 ; Const ner as are contested in the suit in v. Harris, Turn. & lluss. 496, 523 ; which the order is made. 4 Sandf. Jackson v. Sedgwick, 1 Swanst. 460, 642. If a defendant by his answer 469. acknowledges any particular sum due, 564 THE LAW OP PARTNERSHIP. [CH. XVI, be signed by the parties, if there be other evidence of acquies- cence. The possession of the account and vouchers for a long time, without objection, will be deemed evidence of acquies- cence ; not only from its intrinsic proliability, but because the other parties have a right to know and meet, at an early period, any objections which exist, or else to go on upon the * 520 assumption that none exist, (c) Hence, in * a leading American case, it was held^ that a partner would be deemed to acquiesce in any statement of account to which he did not object within a reasonable time, (f?) (c) Willis V. Jernegan, 2 Atk. 251. The plaintiff's counsel objected to tlie defenrlant's plea of a stated account, on the ground tliat it was not signed by the parties. Lord Hardwicke : " Tiiere is no absolute necessity that it should be signed by the parties who have mutual dealings, to make it a stated account ; for even where there are transactions supposed between a mer- chant in England and a merchant be- yond sea, and an account is trans- mitted here from the person who is abroad, it is not the signing which will make it a stated account, but the person to whom it is sent, keeping it by him any length of time, without making any objection which shall bind him, and prevent his entering into an open account afterwards." Id. 252. Tickel V. Short, 2 Ves. Sen. 239 ; Morris V. Harrison, Colles P. C. 157; I Story, Eq. Jur. § 526 ; 2 Dan. Ch. Pr. 7U2 ; Jessup V. Cook, 1 Halst. 436 ; Lamalere V. Caze, 1 Wash. C. C. 430, 2 P. A. Browne, 128 ; Murray v. Toland, 3 Johns. Ch. 569; Wilde v. Jenkins, 4 Paige, 481 ; Freeland v. Heron, 7 Cranch, 147 ; Codman v. Rodgers, 10 Pick. 112. But in Clancarty v. La- touche, 1 Ball & B. 428, it was held, by Lord Chancellor Manners, that acqui- escence alone, in accounts furnished, does not amount to a settlement, al- though it must have considerable effect. This, however, was in refer- ence to an account which was usurious ; and whicii, even if expressly concurred in, would have been set aside. Where an account relied on as a stated ac- count has not been signed, it is not enough to prove the delivery of it. The acquiescence of the other ])arty in it must also be proved. Irving v. Young, 1 L. J. Ch. 108. In the Attorney-Gener.il v. Brooksbank, 2 Younge & J. 42, the chief baron of the exchequer expressed an opinion that an account stated must be actu- ally signed by the parties, to enable the defendant to plead it in bar to a suit for an account ; although he seemed to suppose an account not signed might be a good defence, if set up in the answer and proved at the hearing. Commenting on this. Chan- cellor Walworth says : " That opinion is clearly not law ; and it is directly opposed to that of Lord Hardwicke, in Willis V. Jernegan, 2 Atk. 252, where he says, in express terms, that it is not necessary that the account should be signed by the parties." Heartt v. Corning, 3 Paige, 566. (t/) Heartt v. Corning, 3 Paige, 566. And see 1 Story, Eq. Jur. § 526 ; Com. Dig. Ch. 2 A. 3 ; Lamalere v. Caze, 1 Wash. C. C. 436 ; Kiilam v. Preston, 4 Watts & S. 14. In Lamalere v. Caze, the court says : " To constitute a set- tled account, all the parties must con- sent to it; all must be bound by it, or none are. This consent must be either expressed or implied. I am inclined to think, that if, after dissolution, one partner were to state the account, and send it to the other, who should by his conduct show his acquiescence, by retaining it for a considerable time, without objections, that he might be CH. XVI.] OP AN ACCOUNT. 565 * But the terms of an account, whether proved ex- * 521 pressly or by implication, are not conclusive. Even if the articles, or subsequent agreements, or practice with acqui- escence, or all together, would lead to the conclusion that certain terms had been agreed upon, still, if fraud, oppression, or uncompensated and extreme injury, can be shown, the court will direct the account to be stated upon premises more consist- ent with justice, (e) It may be said, in general, that whenever on a dissolution questions arise among the partners as to the division of the property or profits, these questions fall within the jurisdiction and practice of equity, (^ee) If a decree for an account issues, and the case is referred to a master to take an account, his method of proceeding will be governed very much by the rules and custom of his own court. In general, the parties must produce before him all books, vouchers, and evidence, bearing upon the general account or any special items ; and he may examine not only witnesses, but all the parties, and should examine any party at the suggestion or desire of any opposite party, unless this be obviously and certainly unreasonable. (/) bound by that statement, as well . Elam, Law Rep. 1 Eq. 188; Hom- ■wise the action cannot be maintained, fray v. Fothergill, Law Rep. 1 Eq. Foster v. Allanson, 2 T. R. 479 ; Fro- 5G7. mont r. Coupland, 2 Bing. 170, 9 Eng. (/) Ferry v. Henry, 4 Pick. 75; Com. Law, 367. The only authority Glyn v. Caulfield, 6 Eng. L. & Eq. 1, to the contrary that I am aware of is 15 Jur. 807 ; Toulmin v. Copland, 3 a nisi priits decision of Gibbs, C. J., in Younge & C. 655 ; Beckford v. Wild- Rackstraw v. Imber, Holt, N. P. Cas. man, 16 Ves 438. In one case, where S68, 3 Eng. Com. Law, 132, wliere a surviving partner, who had posses- he says he considers an implied un- sion of the partnership books, wilfully 666 THE LAW OF PARTNERSHIP. [CH. XVI. * 522 * Generally, the master should begin from the last ac- count which was closed and settled, taking the balance thereof as his basis ; unless, by order of court, or for reasons shown, he goes behind this account. If there be no settled account, ho must supply the want of one, by beginning with the and fraudulently refused to produce them, to have the accounts taken under a decree for tliat purpose, the master, in the absence of other evi- dence, charged ten percent per annum on the capital stock, as the net gains made during the partnership, and debited the surviving partner with a moiety thereof. The court held that the master was justified in so doing, and made a decree accordingly. Walmsley V. Walmsley, 3 Jones & La T. 556. And in another case, where the defend- ant denied charges in the bill of fraud and misconduct, and explained others away, alleging his inabilit3' to put in a full answer, by reason that plaintiff withheld imi)roperly the partnership books, the court refused (but without prejudice to future application) the injunction prayed by the bill. Little- wood V. Caldwell, 11 Price, 97. In 1811, A. & B. entered into a partner- ship, which continued till 1818, when it was dissolved, and the affairs wound up, except as to some outstanding debts. In 1820, a deed of release was executed, from which these debts were excluded. Partnership books relating generally to these and other debts were all along suffered to remain in A.'s hands. All the outstanding debts were subsequently settled. In 1830, B. was declared bankrupt, till which time the books were never called for by B. Held, that A. & B., nevertheless, continued tenants in conmion in respect of them, and that the length of time did not affect that relationship ; and, therefore, altliough there was no charge of fraud in the settled account, yet the commissioner had jurisdiction to call A. before him, and examine him and the books rela- tive to the former dealings of the bankrupt. Ex parte Trueman, 1 Deac. & Ch. 464 ; Ex parte Levett, 1 Glyn & J. 185. So, the solicitor of the pur- chaser of an estate from a bankrupt has been ordered to attend (but with- out prejudice to privilege) for the pur- pose of being examined. Ex parte Hodgson, 2 Glyn & J. 21. But where a partnership has expired by efflux of time, and, in a suit for account, &c., a receiver has been appointed before decree, the court will not compel de- fendant (the former managing partner) to deliver up to receiver, for the pur- pose of making out bills of costs, part- nership books and accounts which have remained in his hands, and title- deeds belonging to a third person, which came into the possession of the copartners as solicitors ; such defend- ant offering the receiver free access thereto, and to assist in making out such bills. Dacie v. John, McClel. 206, 13 Price, 446. Partnership ac- counts having been directed to be taken by the masters in a case in which some of the books have been lost, the court directed the master, if it should appear in taking the account that any necessary books, &c., should be wanting, to report the same spe- cially, and whether in consequence of the want of such books he was unable to proceed satisfactorily in taking the account. Millar v. Craig, 6 Beav. 438. See further, in reference to accounts in partnership books, Heartt v. Corning, 3 Paige, 566 ; Caldwell v. Leiber, 7 id. 483; Simms I-. Kirtley, 1 T. B. Mon- roe, 80 ; Stoughton v. Lynch, 2 Johns. Ch. 217, 218; Allen v. Coit, 6 Hill (N. Y.), 318 ; Withers v. Withers, 8 Peters, 359; United States Bank v. Binney, 5 Mason, 188; Phillips v. Turner, 2 Dev. & B. Eq. 123 ; Fletcher V. Pollard, 2 Hen. & Munf. 544 ; Brick- house V. Hunter, 4 id. 363 ; K3le v. Kyle, 1 Graft. 52G ; Hallett v. Hallett, 2 Paige, 432. CH, XVI.] OP AN ACCOUNT. 567 partnersliip, and stating the account according to ordinary rules and usage, unless tliey are controlled by some agreement of the parties, or some peculiar circumstances, which he will be careful to report. (^) And he must * continue the ac- * 523 count to the day on which he makes it, unless there has been a previous dissolution. In that case, he will continue it to the dissolution, and either stop there, or from that day begin a new account; for the dissolution has terminated the partnership, and the account thereafter is not an account be- tween partners. (//) And if there be outstanding items to be (//) Beak v. Beak, Cas. temp. Finch, 190. In this very early case on the question, a bill was brought to liave an account of the estate of Elias Beak, deceased, and of a stock of money by him broujjht into trade with the defendant, Arnold Beak, his brother, in the year 1648. The bill set forth that in April, 1G62, a balance was made ; that from the year 1G48 a joint trade was carried on between the brothers, till February, 1673; that sev- eral balances were made in loose pa- pers, and " a particular balance in February, 1673," when all the particu- lars were agreed between them, except- ing only an error of a small amount. It appears, however, from the further report of the case, that Elias made his will in March, 1667, and soon after died. It was admitted on all sides, that an account ought to be had of the estate in partnership; but the question was about the time it should begin, and how long it should continue. The counsel for the plaintiffs insisted on an account stated in the year 1062, and that it ought to proceed from that time without any retrospect; and that the stock of Elias might not be carried on in a pretended partnersliip after his death, but that it might be accounted as his separate estate from that time. The counsel for the defendant argued that the account of the joint trade ought to be carried on till all the accounts relating to the partnership could be settled and made even. The court decreed an account, and that if the master should find a balance con- cerning the j(jint trade, either in 1662, or in 1673, or at any other time, then he was to take it from such time ; otherwise, it must take its rise from the year 1048, when the partnership first began, and must be carried on to the death of Elias, but not afterwards. For the plaintiff ought not to be con- cluded by any new or growing account in trade, but only is to have an account of what was then in partnership, and the j)roceeds thereof till got in. (k) Booth V. Parks, 1 Molloy, 465, per Sir A. Hart, Lord Chancellor: " There can be no partnersliip without existing partners. It is not correct to say, that the survivor, carrying on the business for the purpose of winding it up, carries on a partnership-trade : he only deals with the effects finally ex necessitate, and rather in the character of a trustee. If he continues it as a trade, it is at his own risk, liable to the option of accounting for profits, or being charged with interest upon the deceased partner's share of the surplus, as taken at his death." In Dyer v. Clark, 5 Metc.'575, Shaw, C. J., says : " The time of the dissolution fixes the time at which the account is to be taken, in order to ascertain the relative rights of the partners, and their respec- tive shares in the joint fund. The debts may be numerous, and the funds widely dispersed and difficult of collec- tion ; and, therefore, much time may elapse before the affairs can be wound up, the debts paid, and the surj)lus put in a condition to be divided. But whatever time may elapse before the 568 THE LAW OF PARTNERSHIP. [cH. xvr. settled afterwards, when they are settled they must be referred back to that period, {i) The same principles of appropriation of payment which have already been spoken of will be applied to the account ; the most general one being that the earliest payment shall be applied to the earliest debt, and the first sum paid in by a customer who deposits and draws is the first sum drawn out. (j) * 524 * In regard to the terms of the account and settlement, and the charges, credits, or allowances to be made, it has been conceded, by the highest authority, that specific rules are of little use, because the justice of every case requii-es that its peculiar facts and merits, the nature of tlie trade, the con- duct of the parties, and all the various circumstances which affect the rights of the parties, must be taken into consideration in determining what they are or should be. In our note will be found many cases in which special circumstances were considered by English and American courts. (A;) One rule, final settlement can be practically made, tliat settlement, when made, must relate back to the time when the partnership was dissolved, to deter- mine the relative interests of the part- ners in the funds." (i) Stoujjhton v. Lynch, 2 Johns. Ch. 209 ; Dyer v. Clark, 5 Mete. 575. And see Tyng v. Thayer, 8 Allen, 391 ; Brinley v. Kupfer, 6 Pick. 179; Wil- liams V. Henshaw, 11 id. 79, 12 id. 378; Dickinson v. Granger, 18 id. 315, -317. ij) Clayton's Case, in Devaynes i;. Noble, 1 Meriv. 572 ; Bodenham v. Purchas, 2 B. & Aid. 39 ; Pemberton v. Oakes, 4 Buss. 154 ; Toulmin v. Cop- land, 3 Younge & C. 625. In this last case, it was decided that where persons carry on business in the nature of a banking business, — as, for instance, that of navy agents, — and a change takes place in the house by the death or retirement of a partner, on taking the partnersliip accounts, the rule in Clay- ton's Case will be held prima facie to apply as well between the partners themselves as between tlie partners and third persons ; and there must be strong evidence to rebut the presump- tion as to that mode of taking the part- nership accounts. Therefore, where A. and B. were partners as navy agents, and A., becoming a lunatic, that partnership was dissolved, and the business was carried on upon the same terms by B. and C, and B. died, and the accounts of both partnerships were unsettled, — held, that the ac- counts of A. and B. must be taken on the foundation of the rule in Clayton's Case, although C, in order to estab- lish an agreement to the contrary, set up certain affidavits made by B., in a suit brought against him by the com- mittee of the lunatic, in which he alluded to an understanding between B. & C. (which, in some instances, had been acted upon), that the advances made to the customers of their firm should be repaid before any portion of the moneys paid in by those customers was applied in liquidation of their debts due to tlie original firm. (k) Willett f. Blanford, 1 Hare, 253, 269, per Sir James Wigram, V. C. : "I have again considered the subject, and read the cases to whicli I was referred ; and I remain of the opinion I ex- pressed at the close of the argument, that there is no rule of this court ap- CH. XVI.] OF AN ACCOUNT. 569 already stated, is of so much practical importance, that we repeat it here ; it is, that a partner settling the business, as a plicable alike to all cases ; and that there is no rule which is so estahlished or fieneral in its apj)li('ation, that it is to be taken to be the general rule, until circumstances are shown which displace it. Tlie facts of each case must be fully brought under the view of the court, before it can be in a posi- tion to state what justice to the party seeking its protection may require, with due regard to the interest of other parties. No one can attend to the elaborate judgments of Lord Eldon in Crawshay v. Collins, Brown v. De Tastet, and even in Cook v. Colling- ridge, without being satisfied that his mind saw the impossibility of subject- ing cases so various as those of trading partnerships to any universal rule. The decrees in those cases, that of Sir William Grant in Featherstonhaugh v. Fenwick, and the ju. Marks, 15 Abb. Pr. 454, 463; Lachaise v. Marks, 4 E. D. Smith, 610. [Where a certifi- cate and notice of dissolution is re- quired by statute, it must be strictly complied with, /le Terry, 5 Biss. 110.] (s) Haggerty v. Taylor, 10 Paige, 261 ; Lachaise v. Marks, 4 E. D. Smith, 610. (0 Haggerty r. Taylor, 10 Paige, 261 ; Scliulten i-. Lord, 4 E. D. Smith, 206, 210. In Bradbury v. Smith, 21 Me. 117, where a partnership was formed between A. & B., wherein it was stipulated that the partnership should be special, that B. should be the special partner, and should con- tribute a certain sum " as capital to the common stock for carrying on the business," which was to be conducted in the name of A. & Co. ; and the sum was paid in and invested in goods, and the goods were sold, and other goods purchased in their place with the pro- ceeds of the sales, — it was held, that whether tlie partnership was to be considered as a special one, under the statute, or as a general one, the goods became partnership property ; the part- nership becoming debtor to the part- ner advancing the capital, to the amount advanced. In Louisiana, the court held, that a partner in commendam is responsible to the creditors of the partnership for the amoinit of the capital he was bound to contribute ; and, where his portion of the capital has been withdrawn, the creditors may proceed against him by a direct action. La Chomette v. Thomas, 1 La. Ann. 120. Eustis, C. J., in pronounc- ing the judgment of the court, said : " We have recently recognized the rights of creditors to hold partners in commendam responsible for the amount of the capital which they were bound to put into the partnership of which they were members. Civil Code, art. 2813. We will prevent tiie creditors from obtaining any undue preference over each other, and, in all cases, carry into effect the principle of law which makes the commendam fund a common pledge for the cred- itors of the partnership ; but we will permit no obstacle of mere form to prevent the direct recourse of the cred- itor against the partner in commendam. CH. XVII.] OF LIMITED PARTNERSHIPS. 585 * Defects in the certificate, or publication or record, *538 or in any compliance with the requirements of the law, do not vitiate, if these defects are merely formal, and such as cannot injuriously mislead any party. But, if they are substan- tial, — that is, if they can be injurious, — they leave all the partners lial)le as general partners, although none of them were in fault, (i^) Thus, a publication that the partnership would begin on the 16th of November, when it actually began on the 16th of October, was held not to bind the special partners as general partners. But it was said that it would have bound them if the error had been intentional, or if the debt sued had been contracted before the 16th of November, (v) ■whenever his obligation to contribute to the partnership debts is made out. In the present case, the partner in commendam has not only withdrawn his capital on the dissolution of the partnership, but his share of the profits ; and wliy should he not pay his share of the debts 1 " See further, as to the liability of the special "part- ner, Pierce v. Bryant, 5 Allen, 91 ; Marshall v. Lambeth, 7 Rob. (La.) 471; De Lizardi /•. Gosset, 1 La. Ann. 138 ; Beers v. Reynolds, 1 Kernan, 97. For a debt owing by all the partners, general and special, in a limited part- nersliip, a suit is well brought against the general partners alone. And a judgment and execution in such suit, levied upon the property of the part- nership, will bind the entire interest of all the partners. The provision of the statute, that suits in relation to the business of a limited partnership " may be brought and conducted by and against the general partners, in the same manner as if tliere were no special partners," must be construed to mean, not only that they maj' be thus brought "in the same manner," but " with the same effect." The Artisans' Bank v. Treadwell, 34 Barb. (S. C.) 653. And see Bulkley v. Marks, 15 Abb. Pr. 454, s. c. nom. Buckley v. Bramhall, 24 How. Pr. 455; Robinson v. Mcintosh, 3 E. D. Smith, 221 ; Hastings v. Hopkinson, 28 Vt. 108, 117. [u) Andrews v. Schott, 10 Barr (Penn.), 47 ;Bowen v. Argall, 24 Wend. 496; Smith v. Argall, 6 Hill, 479, 3 Denio, 435 ; Lachaise v. Marks, 4 E. D. Smith, 610. In this last case, where the certificate of tlie formation of a limited partnership declared " that all the general partners interested therein are A. and B., both of Brook- lyn, in the State of New York, and that the special partner interested therein is C., of Jersey City, in the State of New Jersey," — it was held, that this was a compliance with the statute (2 N. Y. R. S. 4th ed. p. 174, § 4, subd. 3), requiring the certificate to contain the respective places of residence of the general and special partners, and that no more distinct averment of their being residents of those places was necessary'. See also Bulkley v. Marks, 15 Abb. Pr. 454, s. c. nom. Buckley v. Bramhall, 24 How. Pr. 455. [If the firm moves its business into another county than that where the certificate lias been re- corded, they become general partners till the certificate is newly recorded. Riper v. Poppenhausen, 43 N. Y. 68.] ()•) The Madison County Bank v. Gould, 5 Hill, .309. And see Bradbury V. Smith, 21 Me. 117. 586 THE LAW OF PARTNERSHIP. [CH. XVII. So, a publication of the certificate was held to have been made " immediately " within the terms of the statute, when it was made within three days after the recording. And it was held sutficient, if made once in each of the succeeding six weeks, (w) * 539 * Where real estate was purchased by the general partners for the firm, and paid for by the firm, the cir- cumstance that the title to the land was taken in the names of all the partners did not make the special partners liable as general partners. Stress was laid upon the fact that the special partners did not know that the land was so granted to them. But, if they did know this and consent to it, it does not seem clear, on general principles, why they should be held as general partners, provided they had complied in all things with the requirements of the law. Perhaps they should be so held, however, to the vendors, for the price of the land, (a;) But where the certificate was published in two newspapers, and in one of them the sum contributed was said to be five thousand dollars, when in fact it was but two thousand, and the mistake was made by the printer, it was held that the special partners were liable as general partners, without proof that the creditors were misled by the mistake. (?/) (w) Bowen v. Argall, 24 Wend. 496. of the capital actually paid in by the An aflSdavit to accompany a certifi- special partner would be a substantial eate of a limited partnership, under and material portion of the terms, N. Y. Rev. Sts. (4th ed.) p. 174, § 7, cannot be doubted. It is the founda- need not follow the exact words of the tion of the credit to be given. The statute. If it clearly establislies the duty of making such publication is by facts required by the statute, it is the statute devolved upon the part- sufScient. Thus, an affidavit that the ners ; and it is one tliat the}' must see special partner has " actually paid in " to at their peril. If they fail in this, the capital contributed by him, is held the consequence is declared in plain equivalent to an affidavit that he has terms : ' the partnership shall be paid it "in cash." Johnson v. Mc- deemed general.' In this the courts Donald, 2 Abb. Pr. 290. have no discretion. They have only (x) The Madison County Bank v. to declare the will of the legislature. Gould, 5 Hill, 309. The publication of different ' terms ' (y) Argall v. Smith, in the Court of in two papers, in one of which they Errors, 3 Denio, 435, per Spencer, are untruly stated, can be no better Senator : " The ' terms ' must be truly than to omit a publication altogether." published in two papers. Not to pub- See the same case in the Supreme lish at all would be clearly fatal ; and Court, 7iom. Smith v. Argall, 6 Hill, it would be equally so to publish in 479. And see Bowen v. Argall, 24 but one paper, or in papers in any Wend. 496. other senate district. That the amount CH. XVII.] OF LIMITED PARTNERSHIPS. 687 The certificate, being duly sworn to, acknowledged, and re- corded, is 2^rimd facie evidence of its own truth, and may be offered as such ; but lias no force to rebut positive testimony of its falsehood. Thus the certificate cannot contradict, as evi- dence, testimony going to show that the sum actually paid in was less than that stated. (2) * In some of the States, there seems to be no restric- * 540 tion as to the purposes for which these special partner- ships may be formed. In others, certain objects or kinds of business are enumerated, which they may carry on. In others, some are excepted ; as banking and insurance. In many of the States, in which limited partnerships are permitted, banking is prohibited, except by corporations expressly authorized. But the business of insurance is generally open ; and we see no rea- son, derivable from its nature, why a limited partnership might not engage in it. In this country, the whole business of insur- ance is now so entirely in the hands of corporations, — mutual, or stock companies, or those which unite both characters, — that there is no probability of its being done or attempted by individuals or mere partnerships, (a) (z) The Madison County Bank v. account of transactions of his firm Gould, 5 Hill, 309, 315. Held, in with the citizens of another State. Michigan, that an agreement for the King v. Sawin, 14 N. Y. S. C. 167. formation of a limited partnership, See also Barrows i'. Downs, 9 R. I. executed under the laws of New York, 446. Where one who has given credit but not recorded so as to become ef- to a partnership which he believes to fectual for the purpose designed, has be a limited partnership, and wliich no tendency to prove an actual general is known to the public as sucii, after- partnership between the parties named wards seeks to charge all the part- in it, in the absence of extrinsic evi- ners as general partners, the burden of dence to show that they had actually proof to show a general partnership is entered into business as partners, on him. Whilldin v. Bullock, 4 Weekly Gray v. Gibson, 6 Mich. 300. [A Notes of Cases, 234.] special partner of a firm in one State (a) See ante, note [d), p. * 527. is exempt from general liability on 588 THE LAW OF PARTNERSHIP. [CH. XVIII. CHAPTER XVIII. OF JOINT-STOCK COMPANIES. In England, where incorporation is difficult and costly, joint-stock companies are very common, and are regulated by statute, (a) In this country, where incorporation is in fact, though not in form, almost at the pleasure of the parties, and limited partnerships protect from indefinite loss, joint-stock companies are less frequently found. They exist, however, in many of our States, and have given rise to interesting questions. In general, they are copartnerships, and are subject to the whole law of partnership. (S) They are, however, partnerships of a very peculiar kind. (a) The Joint-Stock Companies' Acts are, 7 Wni. 4 and I Vict. cli. 73 ; 7 &8Vict. ch. 110, 111; Companies' Clauses Consolidation Act, 8 & 9 Vict, ch. 16 ; Joint Stock Banks' Acts, 7 Geo. 4, ch. 46, and 1 & 2 Vict. ch. 96 ; 5 & 6 Vict. ch. 85; 7 & 8 Vicfc. ch. 113. The later acts are, 9 & 10 Vict. ch. 28, 75 ; 10 & 11 Vict. ch. 78 ; 11 & 12 Vict. ch. 45 ; 12 & 13 Vict. ch. 108; 17 & 18 Vict, ch. 73 ; 18 & 19 Vict. ch. 133 ; 19 & 20 Vict. ch. 3, 47, 100 ; 20 & 21 Vict. ch. 14, 49, 78; 21 & 22 Vict. ch. 60, 91. (6) In Williams v. The Bank of Mich- igan, 7 Wend. 542, Walworth, Ch., says : " It is well-known, tliat tliere are and have been many joint-stock, and even banking, companies which are mere partnersliips, as to every person except their own stockliolders ; they never having been legally incorporated. Whatever name such a company may assume and use in the transaction of its business, it is a partnership, and not a corporate, designation ; and every suit, upon a contract with the company, must be brought in the names of the several persons composing the firm." See The King v. Dodd, 9 East, 516; Holmes v. Higgins, 1 B. •&, C. 74 ; Hess y. Werts, 4 Serg. & R. 356 ; Car- len V. Drury, 1 Ves. & B. 157 ; Keesley V. Cadd, cited in Perring v. Hone, 2 Car. & P. 401; Vigers v. Sainet, 13 La. 300 ; Walburn v. Ingilby, 1 Mylne & K. 61 ; Gorman v. Russell, 18 Cal. 688; Robbins v. Butler, 24 111. 387; Tenney v. The N. E. Protective LTnion, 37 Vt. 64. [Where such associations fail to become legally constituted joint-stock companies, from some in- formality or other, they constitute partnerships. Whipple o. Parker, 29 Mich. 370. They are partnerships, except as otherwise provided by statute. Moore v. Brink, 6 T. & C. (N. Y.) 227 ; Manning v. Gasharie, 27 Ind. 399. Stockholders in a busi- ness corporation, who, after expiration of their charter, continue business, and authorize contracts to be made in the name of the copartners, are partners. National Bank v. Landon, 45 N. Y. 419. As to when the partnership of the associates in a joint-stock com- pany, unincorporated, begins, see CH. XVIII.] OF JOINT-STOCK COMPANIES. 589 The question has been raised, whether they were not illegal on the ground thatthej usurp the privileges of corporations, (c) It never came to a decision ; and we can see no ground for raising such a question, or for denying to copartners the power of* regulating their own business, form, name, * 542 and rules of proceeding, at their own pleasure, (c?) Sometimes, in our joint-stock companies, all the property is in trustees, who alone have the legal title ; and the copartners, as shareholders, under an indenture which declares the trust, have the equitable or beneficial estate. In law, this might make some important differences ; but much less in equity, (g) Universally they imitate, more or less, the form and appear- ance of corporations. They have a common name, which is usually descriptive of their business, like that of a corporation ; and does not contain or consist of the names of persons, like the name of a firm. (/) They have their officers, their by- Hedge's Appeal, 63 Penn. St. 273. Members of a corporation, to whom a certificate of organization lias been duly issued, are not responsible as partners, as to liabilities contracted before tliey had complied witii the provision of the statutes. First Nat. Bank, &c. v. Almy, 119 Mass. 476. The statutes of one State, having no extra- territorial efficacy, joint stockholders in that State become partners in an- other. Taft V. Ward, 106 Mass. 518. See also Gott v. Dinsmore, 111 Mass. 45. As to what facts would authorize a jury to find a partnership in such a case, see Taft v. Ward, 111 Mass. 518.] (c) Story on Part. § 164; Collyer on Part. 615-624, 1st ed. And see cases cited in the following note. (d) In England, the Stat. (3 Geo. 1 ch. 18, enacted tiie year after the in- famous South Sea project had beg- gared many persons, made it highly penal for subscribers to public under- takings to " presume to act as if they were corporate bodies, by making their shares in stock transferable," &c., 4 Bl. Comm. 117 ; Duvergier v. Fellows, 6 Bing. 248, 10 B. & C. 826 ; Josephs V. Pebrer, 3 B. & C. 639; Blundell V. Winsor, 8 Sim. 601 ; Garrard v. Hardey, 5 Man. & G. 471 ; Harrison V. Heathorn, 6 id. 81. The Stat. 6 Geo. 1, ch. 18, was in part repealed by 1 Vict. ch. 73. The Act of 7 & 8 Vict, ch. 110, came into force on the first of November, 1844. A railway company was incorporated bj' an act before that date. Subsequently thereto, the com- pany obtained an act for an extension line : it was held that the latter under- taking was not a partnership, the formation of which was conanenced after the first of November, 1844, witliin the meaning of the act. Shaw V. Holland, 15 M. & W. 136, 4 Railw. Cas. 150. And see Baker v. Plaskitt, 5 C. B. 262, 5 Railw. Cas. 117. (e) An act under which tiie prop- erty of a manufacturing company, in- cluding its right to call assessments and the liability of stockholders for its debts, is vested in trustees for distribution among the creditors, is a bar to a suit by a creditor against a stockholder, under an act making members of manufacturing companies liable for their debts. Walker v. Grain, 17 Barb. 119. (/') In Kegina v. Registrar of Joint- stock Companies, 10 Q. B. 839, Lord Denman held, that a joint-stock com- 590 THE LAW OF PARTNERSHIP. [CH. XVITI. * 543 laws, (^) and their * rules of proceeding : and by these they regulate the election of officers, the transaction of business, the transfer of shares, and the like ; and, generally, in the mode of transfer, forms are used like those of incorporated companies, — as, for example, certificates (or "scrip") are issued, transfers are recorded, ») Tlie John, of London, 1 Ilagg. shard, 2 B. & C. 244, 248, 249 ; Strelly 342, o46; Tlie Pitt, id. 240; In re i;. Winson, 1 Vern. 297; Anonymous, Blanshard, 2 B. & C. 248 ; Tiie Apollo, 2 Cas. Ch. 36 ; Buddington v. Stewart, 1 Hagg. 306; Haly v. Goodson, 2 14 Conn. 404; Haly v. Goodson, 2 Meriv. 77 ; Willings v. Blight, 2 Pet. Meriv. 77. The majority in such case Adm. 288; Steamboat Orleans v. control the appointment and dismissal Phoebus, II Pet. S. C. 175. of the officers and crew of the ship; («) Adams's Eq. 526 ; Card I'. Hope, and the dissentient owners bear no 2 B. & C. 661. part of the expense, and are entitled (o) See last note. And see Gould to no part of the profit of the voyage V. Stanton, 16 Conn. 12 ; Willings v. to which they have disagreed. Gould Blight, 2 Pet. Adm. 288; The Ma- v. Stanton, 16 Conn. 12; Davis v. rengo, Sprague, 506 ; The Apollo, 1 Johnson, 4 Sim. 539 ; The Apollo, 1 Hagg. 306 ; Fox v. The Lodemia, Hagg. 306 ; Card v. Hope, 2 B. & C. Cralibe, 271 ; The Steamboat Orleans 661, 675. y. Phoebus, 11 Pet. 175; In re Blan- en. XIX.] OF PART-OWNEES OF SHIPS. 609 ship, either from mere folly or for some collateral advantage : here the court would not regard the wishes of a majority. Practically, the rule in our courts may be said to be, that they will direct such employment of every ship as shall seem to be most advantageous for all concerned ; being, in all cases, greatly influenced by the wishes of a majority, but not absolutely bound by them. They who prevail, and thus get control of the ship, must give security to those who are defeated ; and this security might be given either for the share of the profits of the voyage contem- plated which would have come to the defeated owners if they had entered into the voyage, or for some compensation for the use of the vessel by the prevailing owners. But a recent de- cision would seem to limit the action of the court to requiring of the majority, who take possession of the ship, security for her safe return, with no compensation to the other owners for the use of the ship, (g) She is virtually insured for the min- ority, by the security given for her safe return. We know no case in which the security required extends expressly to re- pairs ; but perhaps this also is included, to some extent, in her safe return ; and, if circumstances distinctly called for specific security on this point, the court might, perhaps, require it. (r) If there is no majority, the English admiralty would not select from the two antagonist desires that which is thought the best, (s) * And it seems now to be settled, * 561 that they would not decree a sale, (f) In this country, (q) The case of The Marengo, 1 {t) Adams's Eq. 526; Ouston v. Amer. Law Review, p. 88, decided by Hebden, 1 Wils. 101 ; The Apollo, Judge Lowell, Dist. Court U. S. for 1 Hagg. 306; The Margaret, 2 id. Massachusetts, April, 1866. 276, per Sir C. Robinson : " The law (»•) See, for the general principles of some countries has gone so far as which have regulated the action of ad- to endeavor to compromise all inter- miralty on this subject, 2 Pars, on Ship- ests, by compelling, in cases of dis- ping & Admiralty, ch. 7, sect. 1, and the agreement, a sale, either of the shares cases cited in the notes on the next page, of the minority or of the whole ship, (s) See The New Draper, 4 Rob. at the application of a majority of tlie Adm. 287 ; The Egyptienne, 1 Hagg. owners, and sometimes even of a Adm. 346 ; The Elizabeth and Jane, 1 moiety of interests. Such attempts W. Rob. 278 ; The Valiant, id. 64, 67 ; appear to have been made also in this The Windsor Castle, 1 Notes of Cases, country ; but the justice of such a 118. See Adams's Eq. 526 ; Smith's proceeding may be questionable. Dis- Merc. Law, 174; Davis v. Johnston, 4 agreements may be fomented by it, or Sim. 589. a forced sale, at particular times, may 39 610 THE LAW OF PARTNERSHIP. [CH. XIX. the decided weight of authority, and, as we think, of reason, is in favor of the power of admiralty to decree a sale, (m) We have no doubt that the court would do this, rather than have the vessel lost by disuse ; and in most cases, perhaps in all, they would do this rather than select between two proposed courses, neither of which was desired by a majority. But if the majority would make no use of the ship, and the minority a reasonable use, it seems that the minority may have the ship, giving bonds, tain agreement for 251 must be agreed upon for one distinct breach only 251 LOSSES, caused by a breach of duty by one partner, effect of ... . 224 LOSSES, SHARING OF. (See PartxNeks.) LUNATIC. (See Insanity.) M. MAJORITY OF THE PARTNERS, power of 218 in dealing with third persons 219 in reference to the partners themselves 220 as to excluding a partner 384 MANAGING OWNER, who is 569 (See Ship's Husband.) MARRIAGE, of a female partner, effect of 399, 462 (See Dissolution of Partnership.) MARRIED WOMEN, incapable of entering into partnership at common law ... 23 the custom of London as to 23 INDEX. 657 MARRIED WOMEN" — continued. where a man never lived in that State of the Union in which his wife resides 23 n. (u) where a single woman is a member of a firm, her marriage dis- solves the partnership 26 where a wife holds shares in a joint-stock company .... 26 where a man's wife inherits an interest in a partnership ... 26 where the property was given to trustees for the sole benefit of the wife 26 MASTER OF A SHIP, where he is a part-owner 561 (See rART-owNEKS OP Ships and Admiralty.) where a part-owner, and the majority wish to displace him . . 562 (See Partners of Ships and Admiralty.) MATERIAL-MEN, who are 568 lien of, against the ship for the amount due them for repairs or supplies 568 MINES. (See Partnership Property.) MISCONDUCT OF A PARTNER, provisions for, and damages for 250 MORTGAGE OF A SHIP, in case of, the party who has actual control of the ship is the owner for the time and purpose 571 if not made known, will not affect a third party 571 MORTGAGEE OF A SHIP, rights and liabilities 570 MORTGAGOR OF A SHIP, rights and liabilities 570 N. NAME OF FIRM, every partnership should have one 125 need not be prescribed in the articles, or determined by agreement, 125 may grow out of the custom of the firm ; instances of. . 125 n. (_/) where it avoids having one 125 whei-e there is an adopted and recognized style 126 where a partnership style has been agreed on, and another name is also employed ; instances of 126 where the name of one partner alone is the proper name of the firm, this name, with the addition of Co., will not operate as a signature of partnership 128 n. (m) may be the name of one of its members 128 n. (/) provisions respecting 204 where another name is used by a partner 254 42 658 INDEX. NAME OF TmU — contmued. the sanction of the firm to a change in the name may be implied, 255 a firm cannot be bound by any name but its own . ... 255 a firm may have two names , 255 fictitious names prohibited by statute in New York .... 255 where not agreed upon in the articles 255 ■where attempted to be used by an executor of a deceased part- ner 263 NEGOTIABLE PAPER 199 waiver of notice by one partner where the note is made for his own benefit 201 defences of partners to 200 ■when taken with knowledge that it was given for the debt of one partner only, presumed in this country to have been taken fraudulently 202 with the firm name, where the transaction is fraudulent, effect of 202n. ((£) given by one partner, when consent of the others may be im- plied, without a new consideration 202n. ((Z) bearing the signature of the firm given by a partner to a third party for his own debt, effect of 202 doctrine of the English courts in reference to this 204 where given by one partner in payment of his separate debt, and for a larger amount than the debt, effect of 205 where received bearing only the signature of one partner, effect of 213 credit given on, only to those whose name it bears . 213, 274 n. (.<) where usage of the firm is to sign by only one partner . . . 213 where signed in a fictitious name, if authorized or adopted by the firm, effect of 213 may be signed by one partner, so as to hold all jointly and him- self severally 213 of one of two firms connected in business and using the same name, effect of 214 indorsing of paper which does not belong to the firm, by one who is a partner ; presumption against authority so to indorse it, 215 indorsed by the firm to one partner 327 who must sue on 333 promissory note indorsed in blank 333 a person taking, on the credit of several persons, in ignorance of the fact that they are partners, may prove against the parties severally, or against the firm 498 where taken with knowledge that the names were the names of partners 499 NET PROFITS. {See Partners.) NEW HAMPSHIRE, statute of, concerning actions between copartners 285 INDEX. 659 NOMINAL PARTNER, ostensible partner a nominal one also 31 usual meaninji; of this designation 31 may be called by his [)artner as a witness 31 n. (n) how dilfennt Irom dormant 31 n. (o) converse of the secret partner 32 where oblij^ed to pay the debts of the firm, may recover from the firm 273 n, (u) NOTICE, of a stipulation to one member of a firm is notice to all, 95 n. (v) where a partner gives notice to a particular person, or the pub- lic generally, that he is not re.«;ponsible for the acts of the others 95 n. (r) where the fact that a partnership is engaged only in a particular trade is known, this is a limitation of the authority of a partner; instances of 99 of dishonor to one of the joint indorsers of a note who are not partners, not sufficient 196 n. (ji) to one of joint lessees, sufficient if they are partners ; other- wise, not 197 n. (y) to one partner is notice to the firm 196 of dissolution in case of the death of a partner not necessary . 449 of dissolution not necessary in case of bankruptcy 473 NOTICE OF RETIREMENT OR DISSOLUTION, must be given by retiring partner 410 manner of giving 411 as to former customers and new customers 412 rule as to 412 by public advertisement 413 when unnecessary 413 whether a person has, a question of fact 413 there must be dealing with the firm directly, in order to entitle a person to 414 what dealing would entitle a person to 415 as to a dormant partner 415 as to a dormant partner, when known to any customer . , . 416 governed by rules applicable to notice in other cases .... 417 in what manner it should be given 417 must be such as the usage of merchants requires 418 by the notoriety of the act 418 cases in which a jury might infer 418 when given in a newspaper 419 given to one of a partnership, binds the firm 420 to an agent, binds the principal 420 where given to a stockholder in a corporation 420 where casually given by advertisement to a director of a bank . 420 where given to a director expressly for the bank 420 660 INDEX. o. OBLIGATIONS, of the partnership and the several obligations of a partner may- be cumulative 149 where obligation of the firm purports to be superadded to that of a partner, no presumption that the firm obligation is discharged 149 OFFICES, no partnership in 37 if held by two persons, govei-ned by rules distinct from partner- ship 38 (See Partnership.) OSTENSIBLE PARTNERS, who they are 30 when held out as partner with his consent 30 no especial way of holding such partner forth 30 where a partner generally unknown is made known to any one man 30 contract with, does not survive to a dormant partner .... 333 (See Nominal Partner.) OWNERSHIP, questions as to the, of goods, effects, or lands, determined by the general principles of the law of contracts .... 491 P. PARTIES. (See Actions.) PARTNERS, any persons, competent in law and fact to transact business on their own account, may become partners 16 competency of, in law and in fact 16 kinds of 80 who are as to each other (Ch. V.) 41 community of interest the basis of the relation 41 one or more may be guaranteed by the others against loss . . 41 if one does not participate in profits, but is liable for losses, may still be a partnership 41 must be a community of interest for business purposes ... 42 clubs for social and charitable purposes not partnerships, 42 n. (b) there must be a community of interest resulting from the work done 44 may be as to the buying of goods and the sending of them abroad, and not in the return cargo 45 when physicians or lawyers are 46 effect of the bargain where it was provided that one should find all the money, and the other do all the work, and the j^rofits be divided 51 INDEX. 661 PARTNERS — contuwed. if two mercantile houses recommend consignments to each other, and divide the gross commissions on sales of goods so rec- ommended, they are quoad hoc partners .... 51 n. (n) an a n. (/) where an assignment of property has been made . . . 32'Jn. (';) 678 INDEX. REMAINING TARTNER. (See Retiring Partner.) REMEDIES BY PARTNERS AGAINST THIRD PARTIES, Ch. IX 325 for broach of contract 325 two firms Laving a common partner 325 n. (/>) ■where a party has a defence against one of the partners . . . 325 where a partner releasing a debt is a dormant partner . . . 326 REMEDIES OF THIRD PERSONS AGAINST THE PART- NERSHIP AND AGAINST PARTNERS, Ch. X. . . 342 RENEWAL OF PARTNERSHIP, by tacit continuation of business 239 when a tacit renewal, it is di.'^solvable at will of either partner . 240 (See Partnership.) renewal of limitation of time seldom presumed from acts . . . 240 REPAIRS, if made by a part-owner of a ship, he has a claim against each of the others, for his share of the expense, at law . . . 553 REPUTED OWNERSHIP, statute of 6 Geo. 4, ch. 16, § 3 494 n. (g) statute of 6 Geo. 4, ch. 16, § 72 495 n. (m) RETIRING PARTNER, one leaving an existing firm 34 in law, retirement of any partner terminates a partnership . . 34 how retirement affects the liability of 408 neither loses property nor relieves himself from liability . . . 409 if he pays more than his share of the old debts, may have con- tribution from his partners 409 where he "sells out" 409 may set up the same business in the immediate vicinity, in the absence of any agreement 409 effect of promise of, not to carry on the same business . . . 409 when obligation of, is determined by the language of the articles, 410 how he may terminate his liability for the partnership debts . . 410 notice of retirement must be given by 411 manner of giving notice of retirement 411 difference in liability of, as to old and new customers .... 412 rule as to notice of retirement ' 412 where knowledge is equivalent to notice 397 consenting to a use of his name by the old partners .... 414 where a dormant partner 415 liability of, when an existing contract contemplates future pay- ments to any extent 417 notice of retirement by notoriety 418 sufficient lapse of time may snpi)ly want of notice 418 casts in which a jury might infer knowledge of the retirement . 418 INDEX. 679 RETIRING PARTNER — continued. must show that^the notice of retirement was such as the usage of merchants requires 418 right of action against remaining partners for breach of contract to pay the debts 421 ■when discharged by creditors 421 agreement between him and those who remain, of no effect as to creditors 421 should be included in any action against the firm, for a debt contracted while he was a partner 421 execution against the firm may be satisfied from property of . 421 where held only as surety for the firm debt 424 where a creditor retains the old securities against the firm . . 424 where a creditor expressly retains his rights against .... 425 the creditors receiving interest from the new firm will not neces- sarily discharge 425 facts from which a jury might find an implied assent to dis- charge of 426 liability of, for trust money used in the partnership by one part- ner, with the knowledge of all 426 when discharged by appropriation of payment 427 when a partner puts into the firm the money of a stranger, this does not make the stranger a partner 427 liability of, for existing debts 429 not liable fcr debts created after his retirement 429 when money is paid after his retirement, right of the new firm to appropriate it 429 not bound by an appropriation of payment, fraudulent or inju- rioi:s as to him 429 where the new firm, for adequate business causes, appropriated the funds of the old firm to the payment of new debts . . 420 when permitted to pi'ove his claim against a bankrupt partner . 478 where he has a covenant with the remaining partner to pay all the debts, and, the remaining partner becoming bankrupt, he pays them, may prove them against the bankrupt's estate, 479 who leaves Lis property in the possession or at the disposal of the firm, liability of 496 must give notice o! his retirement, and of the purposes and limi- tations under which he leaves his property in the firm . . 497 leaving some of his property with the firm, and giving notice that the propertv so left is his, and not left for the firm to obtain credit on, may protect it from future creditors . . 497 RIGHTS OF TROPERTY OF PARTNERS INTER SE, Ch. VII., Sec. Vm 256 680 INDEX. s. SALE, on execution of one partner's interest 400 secret, unaccompanied by possession, is prima facie fraudulent and void as to creditors of the firm 496 n. (»/;) of the effect, in a bankruptcy 506 ■where only a part of the partners are bankrupt, the assignees have no right to sell 506 but the court -will decree a, if the assignees request it for a good cause 507 may be decreed as a preliminary proceeding, or means of mak- ing account 624 (See Assigning and Transferring Property.) SALE OF PARTNERSHIP PROPERTY. {See Dissolution.) SEAL, belongs to the common law, while partnership belongs to the law-merchant 182 when regarded by courts as surplusage 183 SECRET PARTNERS, who are 30 the word '* Co." not necessary to bind all the partners ... 31 why liable 31 where announced to a customer, without his own consent . • 31 where he permits himself to be made known 31 liable upon all the acting partner's contracts, made within the scope of the partnership business 62 SECURITY, several security of one partner, accepted by a creditor holding the joint security of the firm dees not discharge the firm, 110 where a partner disposes of security belonging to the firm, for his own debt 209 SELLER, of goods to one who orders them sent to another, who is in fact his partner 113 (See Partners.) SEPARATE CREDITOR. (See Private Creditor.) SERVICE OF PAPERS, as to partners 172 n. (w) SETTLED ACCOUNT. (See Account Stated.) SETTLEMENT BETWEEN PARTNERS. (See Account Stated.) SETTLING PARTNER, power of 392 INDEX. 681 SEVERAL CREDITORS, who are 484 SEVERAL PARTNER. may sue at law on demands against a partner or partners, when they are distinct from the affairs of the firm 270 where a partner may sue a partner, on any claim arising before the partnership, although it refers to the partnership . . 271 SEVERAL PROPERTY, what is 491 SHAREHOLDER. (-See Joint-stock Company.) SHARES. (See Part-owners of Suips, and Joint-stock Com- panies.) SHIPS, are personal chattels 549 are like real estate, in some particulars 649 must be registered, before they become entitled to the privi- leges of American ships 549 English statutes require registration to make a transfer of a ship valid 549 all transfers of ships, by way of mortgage or pledge, must be registered 550 employment of, where the owners differ 558 (See Part-owners of Ships.) SHIP'S HUSBAND, who is 569 not necessarily an owner 509 duties and powers of 5G9 if not a part-owner, all are responsible to him in solido for his charges within the scope of his authority 569 if he be a part-owner, then each owner is liable to him only for his share 569 may sue any part-owner who refuses or neglects to pay his share 569 has a lien on the proceeds of the ship, or the documents of title, for indemnification upon his lawful obligations for the ship 570 lien of, does not extend to the ship itself 570 appointment of, may be inferred 570 duty of 570 cannot insure other owners, nor give up their lien of the ship on the cargo for freight, nor borrow money, nor delegate his authority 570 cannot begin and prosecute an action at law, without express authority from the other owners 570 where any ol his acts are ratified by the part-owners . . 570 n. (e) 682 INDEX. SIGNATURE. (See Partneks, and Power of Partners.) SILENT PARTNER, is one who takes no active part in the business of the firm . . 32 whether his name be made known as a partner or not ... 32 SKILL. (See Partnership and Partnership Property.) SOLVENT PARTNERS, effect of bankruptcy of a partner upon 471 hold the effects and property in somewhat the same way that sur- viving partners do 472 cannot get the firm property out of the hands and possession of the assignees of the bankrupt, the right to possession being the same 473 continuing the business without winding up the concern, do so at their own peril 474 have possession of, and full power over, the partnership effects, 476 hold the effects of the firm as trustees for all interested . . . 476 committing actual or constructive fraud, liable in damages, or it may be avoided by those whom it injures 477 rights of, against the estate of a bankrupt partner .... 477 cannot prove against the jcint-fund in competition with joint- creditors, but may with several creditors 502 when rights of, against their insolvent partners are prior to the several creditors of the insolvent 502 cannot resist a bill by the assignees of the bankrupt for a share in the profits of a subsequent trading, on the ground that the assignees did not require an immediate settlement . . 505 SPECIAL PARTNER, definition of 35 must see that all the requirements of the statutes respecting lim- ited partnerships are complied with 532 if he withdraw any part of the capital, and the firm becomes insolvent, he is liable to the creditors for the amount so withdrawn, with interest 532 ■where the general partner withdraws some of the capital, with- out the consent or knowledge of the 533 if his name is used in any contract with his consent, or if he take an active part in the formation of any contract, he is liable as a general partner 533 ■when and in what manner he becomes liable as a general part- ner ooo n. (p) liable as general partners in all things, except those in which the statute expressly limits their liability 535 bound, after dissolution, for the future debts of the firm, unless notice is given, or it ceases by limitation of time or act of the law 536 notice should be given, in case of death or bankruptcy . . . 536 INDEX. 683 SPECIAL PARTNER — continued. if they make themselves generally liable, after dissolution, to tlie holders of notes, the holders cannot come in and claim tlie joint assets equally with the previous creditors of the firm o37 holders of such notes should join all the partners in a suit . . 537 not liable as general partners because real estate had been pur- chased by the general partners, and paid for by the firm, and the title taken in the names of all the partners . . . 539 liable as general partners, where there was a mistake made in the publication of a certificate 539 (See Limited Partnership.) SPECIAL PARTNERSHIP, relates only to a single transaction, or the use of one thing . 38 where a note or bill is signed or indorsed by two or more per- sons 39 SPECIFIC PERFORMANCE OF ARTICLES, bill in equity for 234 SPECIFIC PERFORMANCE OF CONTRACT, decree for 297 enforced in equity; instances of 297 n. (o) in what cases enforced 298 (See Equity.) STATES, are foreign to each other in respect to bankrupt laws • . . 474 STATUTE, 2Sth & 29th Vic. ch. 86, provides that lending money to a firm, the lender to receive a certain share in the profits, does not make him liable as a partner 92 n. (<) of Kentucky, promissory notes have all the legal effect of bonds under seal 183 n. (m) 9 Geo. 4, ch. 14, on limitations 184 n. (n) of New Hampshire, concerning actions between copartners . 285 of Pennsylvania, April 14, 1838, concerning abatement of ac- tions against partners 288 n. (f) STATUTE OF LIMITATIONS. (See Limitations; Limitations, Statute of; and Pay- ments BY A FllUI.) STATUTES, of the several States, in regard to limited partnership . 530, 532 STIPULATIONS, as to retrospective effect of contract of partnership .... 13 between partners, how far they alRct third parties .... 93 (See Partner.) 684 INDEX. STIPUL ATIOXS — continued. notice of, to one member of the firm 95 n. (&) between partners exempting some of the firm from liability of, no effect as to creditors 102 between partners, violations by one, effect of 103 STOCK. (See Partnership Property.) STOCKHOLDER, of a joint-stock company by a transfer, may give good title in the property to his transferee 546 (See Joint-stock Company.) STRANGER. (See Dilectus Personarum, and Partners.) STYLE OF FIRM. (See Name of Firm.) SUBMISSION. (See Arbitration.) SUB-PARTNERSHIP, duration and effect of 383 SURCHARGE, ■what it is 517 SURETY, no partner may become surety for a debt, and thereby bind the firm 216 SURVIVING PARTNERS, powers and interests of 440 at the death of a partner, have an exclusive right of posses- sion and management of the firm propert} and business for closing tlie same ... 440 if the authority of, for winding up the concern, be unduly exer- cised, the remedy is by applying to a court of equity for the appointment of a receiver 440 n. (/) where the articles provide what shall be done if a partner dies, 440 where a partner absconds 440 are tenants in common of the partnership property .... 440 have a right to collect all debts due to the firm, and to sell the property of the firm 441 •where the deceased partner, by his will, provides for the continu- ance of his interest in the partnership 441 the tenancy in common of, exists only as to the property, and not as to the possession 441 rights of, to possession of the partnership property .... 441 have a lien on the real estate of the firm for indemnity against firm debts 441 n. (o) are from the death of a partner, trustees for all concerned in the partnership 441 may not sell to nor buy the property of the firm themselves . 442 power of, to arrange and settle all the debts of the firm . . . 442 equity will interfere, in cases of negligence or gross mistake by, 442 INDEX. 685 SURVIVING PARTNERS — co»