UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY 
 
 ,4.
 
 A TREATISE 
 
 ON THE 
 
 LAW OF PARTNERSHIP. 
 
 From the Fifth English Edition. 
 
 BY 
 
 THE RIGHT HONOURABLE 
 
 SIR NATHANIEL LINDLEY, Knt. 
 
 ONE OF THE LORDS JUSTICES OF HER MAJESTY'S COURT OF APPEAL. 
 ASSISTED BY 
 
 WILLIAM C. GULL, M.A., 
 
 OF LINCOLN'S INN, ESQ., BARRISTER-AT-LAW, 
 VINERIAN SCHOLAR IN THE UNIVERSITY OF OXFORD, 1883. 
 
 WALTER B. LINDLEY, M.A., 
 
 OF LINCOLN'S INN, ESQ., BARKISTER-AT-LAW. 
 
 WITH AMERICAN NOTES 
 BY 
 
 CHAS. Y. AUDENRIED. 
 VOL. II. 
 
 NEW YORK AND ALBANY 
 
 BANKS & BROTHERS, LAW PUBLISHERS 
 
 1891
 
 J 
 r 
 
 Entered according to the Acts of Congress, in the year 1888, by the Black- 
 stone Publishing Company, in the office of the Librarian of 
 Congress, at Washington, D. C. 
 
 6^ 5 

 
 *BOOK III. [* 301 1 
 
 OF THE RIGHTS AND OBLIGATIONS OF MEM- 
 BERS OF PARTNERSHIPS BETWEEN THEM- 
 SELVES. 
 
 CHAPTER I. 
 
 OF THE RIGHT TO TAKE PAET IN THE MANAGEMENT 
 OF THE AFFAIRS OF THE FIRM. 
 
 In partnerships, the good faith of the partners is j>j- jjj 
 pledged mutually to each other that the business shall Chap. 1. 
 be conducted with their actual personal interposition, Each member 
 so that each may see that the other is carrying it on for of partner- 
 their mutual advantage (a). Sakfpa^ 
 
 In the absence of an express agreement to the con- j n its 
 trary, the powers of the members of a partnership are manage- 
 equal, even although their shares may be unequal; and meut - 
 there is no right on the part of one or more to exclude 
 another from an equal management in the concern (b). 
 Moreover, if two persons are in partnership, and one 
 of them mortgages all his share and interest therein to 
 the other, the latter will not be permitted, during the 
 continuance of the partnership, to avail himself of his 
 rights as a mortgagee and to exclude his co-partner 
 from interference in the partnership (c). Indeed, 
 speaking generally, it may be said that nothing is con- 
 sidered as so loudly calling for the interference of the 
 Court between partners, as the improper exclusion of 
 one of them by the others from taking part in the man- 
 agement of the partnership business (d). 
 
 (a) Per Lord Eldon in Peacock v. Peacock, 16 Ves. 51. 
 
 (b) Rowe v. Wood, 2 Jac. & W. 558; see, too, Lloyd v. Loarino;, 
 6 Ves. 777. 
 
 (c) Rowe v. Wood, 2 Jac. & W. 558. 
 
 (d) See, in addition to the cases last cited, Goodman v. Whit- 
 comb, 1 Jac. & W. 589; Marshall v. Colman, 2 ib. 266. 
 
 (373)
 
 374 RIGHTS OF PARTNERS INTER SE. 
 
 [ *302] * It need, however, hardly be observed that it is per- 
 
 Bk. III. fectly competent for partners to agree that the inanage- 
 
 Chap. 1. ^ inent of the partnership affairs shall be confided to one 
 Unless other- or more of their number exclusively of the others; and 
 wise agreed, that where snch an agreement is entered into, it is not 
 competent for those who have agreed to take no part in 
 the management, to transact the partnership business 
 without the consent of all the other partners. But, as 
 was seen in an earlier part of the treatise, every mem- 
 ber of an ordinary firm is prima facie its agent for car- 
 rying on its business in the usual way (e); and persons 
 dealing with a partner within the limits of his apparent 
 authority, are entitled to hold the firm answerable for 
 his conduct, unless such persons had distinct notice that 
 his real authority was less extensive than they had a 
 right to assume it to be. 
 
 (e) Ante, book ii. ch. I.
 
 DUTY TO OBSERVE GOOD FAITH. 375 
 
 * CHAPTER II. [*303] 
 
 OF THE GENERAL DUTY OF PARTNERS TO OBSERVE 
 GOOD FAITH. 
 
 Section I. — Preliminary Remarks. 
 
 In societatis contractibus fides exuberet (a). The nt- Ek. III. 
 most good faith is due from every member of a part- Chap. 2 Sect. 
 
 nership towards every other member; and if any dis- 
 
 pute arise between partners touching any transaction High stand- 
 by which one seeks to benefit himself at the expense of ard of 
 the firm, he will be required to show, not only that he nouo . ur re ~ 
 has law on his side, but that his conduct will bear to be amon(r 
 tried by the highest standard of honour (6). Thus, if partners, 
 one partner knows more about the state of the partner- 
 ship accounts than another, and concealing what he 
 knows, enters into an agreement with that other, rela- 
 tive to some matter as to which a knowledge of the state 
 of the accounts is material, such agreement will not be 
 allowed to stand (c). 1 
 
 This obligation to perfect fairness and good faith, is, and among 
 moreover, not confined to persons who actually are those about 
 partners. It extends to persons negotiating for a part- to become 
 nership, but between whom no partnership as yet ex- r ners ' 
 ists (d); 2 and also to persons who have dissolved part- and among 
 
 (a) Cod. iv. tit. 37, 1. 3. 
 
 (6) See Blisset v. Daniel, 10 Ha. 522, 536. Compare Cassels v. 
 Stewart, 6 App. Ca. 64, noticed infra, which shows how difficult 
 it is to apply this general principle. 
 
 (c) See Maddeford v. Austwick, 1 Sim. 89. 
 
 (d) See Hichensu. Congreve, 1 R. & M. 150; Fawcett v. White- 
 house, ib. 132. 
 
 1 See Brigham v. Dana, 29 Vt. 1 (1856); Sexton v. Sexton, 9 
 Gratt, 204 (1852); Nicholson v. Janeway, 16 N. J. Eq. 285 
 (1863). 
 
 2 If A. and B. negotiate with each other for the formation of 
 a business firm, they are at liberty each to drive as advantage- 
 ous a bargain for himself as he can. Uhler v. Semple, 20 N. J. 
 Eq. 288 (1869); but neither, when he negotiates with strangers 
 on behalf of the proposed firm, can enter into any collateral agree- 
 ment for his own private benefit. Densmore Oil Co. v. Deusmore, 
 64 Pa. St. 43 (1870.)
 
 37G 
 
 DUTY TO OBSERVE GOOD FAITH. 
 
 Bk. III. 
 Chap. 2. Sect, 
 1. 
 
 [*304] 
 
 those who 
 have ceased 
 to be part- 
 ners. 
 
 Each must 
 do his duty. 
 
 Principle of 
 good faith 
 the basis of 
 the internal 
 law of part- 
 nership. 
 
 nership but who have not completely wound up and 
 settled the partnership affairs (e); 1 and most especially 
 is good faith required to be observed when one *partner 
 is endeavouring to get rid of another, or to buy him 
 out (/). 
 
 Notwithstanding the universal application to partners 
 of the rule requiring perfect good faith, if one partner 
 repudiates the contract of partnership and will not per- 
 form his duty towards his co-partners, he cannot justly 
 complain if they in return decline to treat him on a 
 footing of equality with themselves (g). As observed 
 by Lord Eldon in Const v. Harris: "A partner who 
 complains that the other partners do not do their duty 
 towards him, must be ready at all times and offer him- 
 self to do his duty towards them" (h). 2 But if a part- 
 ner has been set at defiance by his co-partners; if they 
 have denied that he is a partner, and that he has any 
 right to interfere in the partnership, they can derive 
 no advantage from the circumstance that he has not 
 performed his duty to them (i). 
 
 A partner whose rights are denied should be prompt 
 in asserting them, or he may be seriously prejudiced. 
 This subject will be further adverted to in that part of 
 the work which relates to the defences to actions be- 
 tween partners (k). 
 
 The foregoing general principles may be regarded as 
 the basis of the law of partnership, so far as it relates 
 to the rights and obligations of partners as between 
 themselves, and they will be found to be more or less 
 illustrated throughout the whole of the present book. 
 Those cases, however, which more especially relate to 
 the obligation of partners not to benefit themselves at 
 the expense of their co-partners, and to the rights of 
 majorities, require to be especially noticed. 
 
 (e) See Lees v. Laforest, 14 Beav. 250; Clegg v. Fishwiek, 1 
 Mac. & G. 294; Perens v. Johnson, 3 Srn. & G. 419; Clements v. 
 Hall, 2 De G. & J. 173. 
 
 (/) Blisset v. Daniel, 10 Ha. 493; Maddeford v. Austwick, 1 
 Sim. 89; Perens v. Johnson, 3 Sm. & G. 419; Chandler v. Dorsett, 
 Finch, 431. As to withholding information, see McLure v. Rip- 
 ley, 2 Mac. & G. 274. 
 
 (g) See McLure v. Ripley, 2 Mae. & G. 274; Reilly v. Walsh, 
 11 Ir. Eq. 22. 
 
 (h) Turn. & R. 524. 
 
 (t) See Dale v. Hamilton, 2 Ph. 276. 
 
 (fc) Infra, ch. 10, \ 3. 
 
 1 See Betts v. June, 51 N. Y. 274 (1872); Warren v. Schain- 
 wald. 62 Cal. 56 (1882); Beam v. Macomber, 33 Mich. 127(1878); 
 Jones v. Dexter, 130 Mass. 380 (1881). 
 
 2 Rhea v. Tathem, 1 Jones (N. C.) Eq. 290 ( ).
 
 BENEFIT OBTAINED BELONGS TO THE FIRM. 3 i * 
 
 * Section IT. — Of the Obligation of Partners not to [*305] 
 Benefit Themselves at the Expense of their Co- 
 Partners. 
 
 Good faith requires that a partner shall not obtain a Bk. III. 
 private advantage at the expense of the firm. He is Chap. 2. Sect. 
 
 bound in all transactions affecting the partnership, to J 
 
 do his best for the common body, and to share with his No partner 
 co-partners any benefit which he may have been able to allowed to 
 obtain from other people, and in which the firm is in se i" a tthe 
 honour and conscience entitled to participate; Semper expense of 
 enim non id quod privatim interest unius ex sociis ser- firm. 
 vari solet, sed quod societati expedit (I). 
 
 There are two modes in which, more especially, part- 
 ners attempt unfairly to acquire gain at the expense of 
 their co-partners, viz., 1, by directly making a profit out 
 of them; and 2, by appropriating to themselves benefits 
 which they ought to have acquired, if at all, for the 
 common advantage of the firm. It will be convenient 
 to advert to each of these modes in turn. 
 
 In the first place, then, it may be laid down as a j Deriving 
 general rule, that one partner is not allowed to derive profit from 
 profit at the expense of the firm from any dealings be- dealings with 
 tween him and the partnership, unless it is clearly m " 
 
 agreed that he is to have such profit. For example, if Sale to firm. 
 a partner is buying or selling for a firm, he cannot sell 
 to it or buy from it at a profit to himself. 
 
 In Bentley v. Craven (m), one of the several part- Bentley v. 
 ners was employed to purchase goods for the firm. He, Craven, 
 unknown to his co-partners, supplied them, at the 
 market price, with goods previously bought by him- 
 self when the price was lower, and he so made a con- 
 siderable profit. But it was held that the transaction 
 could not be sustained, and that he was accountable to 
 the firm for the profit thus made. The Master of the 
 Rolls in delivering judgment, observed: "The case is 
 this, — Four partners established a partnership for re- 
 fining sugar; one of them is a wholesale grocer, and 
 from his business is peculiarly cognizant with the vari- 
 ations in the sugar-market, and has great skill in buy- 
 ing sugar at a right and proper time for the business. 
 Accordingly the business of selecting and ^purchasing r * 3061 
 the sugar for the sugar refinery is entrusted to him. 
 He being the person to buy, it is his duty and business 
 to employ his skill in buying for the sugar refinery at 
 the time he thinks most beneficial. Having according 
 
 (/) Dig. xvii. tit. 2 pro socio, I. 65, \ 5. 
 (}«) 18 Beav. 75.
 
 378 
 
 DUTY TO OBSERVE GOOD FAITH. 
 
 Bk. III. 
 Chap. 2. Sect. 
 
 Purchase 
 from firm. 
 Dunne v. 
 English. 
 
 Full dis- 
 closure 
 necessary. 
 
 Authority to 
 sell at a 
 given price 
 no waiver of 
 share ot 
 higher price. 
 
 to his skill and knowledge bought sugar at a time when 
 he thought it likely to rise, and it having risen, arjd the 
 firm being in want of some, he sells his own sugars to 
 the firm without letting the partners know that it was 
 his sugar that was sold." Being the agent for the firm 
 for buying sugars, he sold his own sugars to the firm 
 and made a profit, and the firm was held entitled to 
 that profit accordingly. 1 
 
 In Dunne v. English (n), the plaintiff and the de- 
 fendant had agreed to buy a mine for 50,000/., with a 
 view to re- sell it at a profit. It was ultimately arranged 
 that the defendant should sell it to certain persons for 
 60,000/., and that the profit of 10,000/. should be 
 equally divided between the plaintiff and the defend- 
 ant. The defendant, however, in fact sold the mine for 
 much more than 60,000/. to a company in which he him- 
 self had a large interest. The plaintiff was held entitled 
 to one-half of the whole profit made by the re-sale. 
 
 There was in this case some evidence that the plain- 
 tiff knew that the defendant had some interest in the 
 purchase beyond his share of the known profit of 10,- 
 000/.; but the plaintiff did not know what that interest 
 was, and the real truth was concealed from him. It 
 was held that the defendant being the plaintiff's part- 
 ner, and expressly entrusted with the conduct of the 
 sale, was bound fully to disclose the real facts to the 
 plaintiff, and not having done so, could not exclude him 
 from his share of the profits which the defendant real- 
 ised by the sale (o). 
 
 This case also shows, what indeed is obvious enough 
 without authority, that one partner who authorises an- 
 other to sell partnership property at a given price, does 
 not thereby deprive himself of his right to share a 
 higher price if a higher price should be realised (p). 
 
 (n) 18 Eq. 524. 
 
 (o) See, also, Imp. Merc. Credit Assoc, v. Coleman, L. R. 6 H. 
 L. 189. 
 
 {p) See, also, Parker w. McKenna, 10 Ch. 96, and De Bussche 
 
 1 If A., a member of the firm of A. & B., secure an option to 
 purchase a property and afterwards sell it to his firm at an ad- 
 vance, he must account to his partner for his profits; so if he re- 
 ceive from the vendee a commission for negotiating the sale. 
 Emery v. Parrott, 107 Mass. 95 (1871); Grant v. Hardy, 33 Wis. 
 668(1873); Densmore Oil Co. v. Densmore, 64 Pa. St. 43 (1870); 
 and if A. divide his commissions with C, he must nevertheless 
 account for the whole ot them. Graut v. Hardy, 33 Wis. 668 
 (1873). If A. enter into a partnership with D. to carry out 
 the transaction. D. knowing of A.'s wrong-doing, they are 
 both jointly and severally liable to account to B. for their profits. 
 Emery v. Parrott, 107 Mass. 95 (1871).
 
 BENEFIT OBTAINED BELONGS TO THE FIRM. 379 
 
 * The same principles apply to attempts made by [ * 307] 
 partners to secure for themselves benefits which it was Bk. III. 
 their duty to obtain, if at all, for the firm to which Chap. 2. Sect, 
 they belong (q). J 
 
 Thus in Carter v. Horne(r), the plaintiff and the de- 2. Obtaining 
 fendant agreed for the purchase of an estate in moities orients 
 between them. The estate was subject to several in- |! 0nour 
 cumbrances, which were to be discharged out of the belong to the 
 purchase money. The defendant had abatements made firm, 
 to him by some of the incumbrancers of several sums Carter v. 
 due for interest and otherwise, which they in consider- Home, 
 ation of services and friendship agreed should be to his 
 own use. However, on a bill brought against him by 
 his co- purchaser for an account of the rents and profits, 
 the Court would not allow the defendant the exclusive 
 benefit of these abatements, but held that he must ac- 
 count' for them ; the purchase being made for the equal 
 benefit of both parties, and on a mutual trust between 
 them. 1 
 
 It has been decided more than once, that if one part- Renewing 
 ner obtains in his own name, either during the part- leases, 
 nership or before its assets have been sold, a renewal 
 of a lease of the partnership property, he will not be 
 allowed to treat this renewed lease as his own and as 
 one in which his co-partners have no interest. 2 This Clandestine 
 was laid down and acted on by Sir Wm. Grant in the renewal, 
 celebrated case of Featherstonhaugh v. Femcick (s), Featherston- 
 where two partners having obtained in their own names £, aug • .£ 
 
 v. Alt, 8 Ch. D. 286; and see ib. p. 317, as to a custom authoris- 
 ing such a practice. 
 
 (q) Parker v. Hills, 5 Jur. N. S. 809, is not opposed to these 
 cases, for there the money was paid for a lease which was held 
 to belong to one partner only. 
 
 (r) 1 Eq. Ab. 7. See, also, De Bussche v. Alt, 8 Ch. D. 286 ; 
 Morison v. Thompson, L. R. 9 Q. B. 480, as to the right of a 
 principal to profits made by his a<;ent or sub-agent. Compare 
 Great Western Insur. Co. v. CunlifTe, 9 Ch. 525, and Baring v. 
 Stanton, 3 Ch. D. 502, where the agent's profits were part of his 
 remuneration. 
 
 (s) Featherstonaugh v. Fenwick, 17 Ves. 298. In such cases 
 the other partners cannot restrain the landlord from granting 
 the lease to the one partner only. Their remedy is to treat the 
 lessee as a trustee for the firm, Alder v. Fouracre, 3 Swanst. 489. 
 
 1 One partner cannot acquire for himself alone an adverse title 
 to the firm property. Forrer v. Forrer 29 Gratt. 134 (1877"l ; 
 Kinsman v. Park hurst 18 How. 289 (1855); Washburn v. Wash- 
 burn 23 Vt. 576 (1851); nor any interest in its property whicli 
 
 would be beneficial to the firm, unless with his co-partner's con- 
 sent thereto. 
 
 2 Leach v. Leach, 18 Pick. 68 (1836); Mitchell v. Read, 61 N. Y. 
 123 (1874); Struthers v. Pearce, 51 N. Y. 357 (1873).
 
 JSO 
 
 DUTY TO OBSERVE GOOD FAITH. 
 
 Bk. III. 
 Chap. 2. Sect. 
 2. 
 
 Clegg v. 
 Fishwick. 
 
 [*308] 
 
 Open re- 
 newal. 
 
 Clegg v. 
 Edmondson. 
 
 a renewal of the lease of the partnership premises, im- 
 mediately dissolved the partnership, and sought to ex- 
 clude the plaintiff, their co-partner, from all interest 
 in the new lease : but in taking the accounts of the 
 partnership, the new lease was held to be part of the 
 assets of the firm. 
 
 Clegg v. Fishwick (t) is another case to the same ef- 
 fect. * There the plaintiff was the administratrix of one 
 of several partners in a coal mine, and she filed a bill, 
 some years after the death of the deceased, against the 
 surviving partners, for an account and a dissolution, 
 and for a declaration that a renewed lease, which had 
 been obtained by the defendants, might be declared 
 subject in equity to a trust for the benefit of the part- 
 nership. A twofold defence was set up, viz., first, that 
 the old partnership ended with the old lease, and that 
 the plaintiff could not therefore claim any interest in 
 the new lease ; and secondly, that she had some time 
 before the filing of the bill, assigned all the share of 
 the deceased to his children ; and that she, therefore, 
 at any rate, had no right to institute proceedings re- 
 specting such share. It was, however, decided first, 
 that the old lease was the foundation for the new one, 
 and that parties interested jointly with others in a lease, 
 could not take the benefit of a renewal to the exclusion 
 of those others ; and secondly, that what had been as- 
 signed by the plaintiff, was the share of the deceased 
 in the partnership, which share had never been ascer- 
 tained ; and that the effect of the assignment was 
 merely to constitute her a trustee of the share for the 
 assignees after she had got it in, and not to deprive her 
 of her power to call for a realisation of the partner- 
 ship property. 
 
 In both of these cases the renewal of the lease was 
 clandestine. But that is not an essential feature. 1 In 
 the more recent and very important case of Clegg v. 
 Edmondson (u), the partnership was at will ; the man- 
 aging partners gave notice of dissolution and of their 
 intention to renew the old lease for their own benefit. 
 They afterwards did so, the other partners protesting, 
 
 (i) 1 Mac. & G. 294. See, too, Clements v. Hall, 2 De G. & J. 
 173, and 24 Beav. 333. 
 
 («) 8 De G. Mc. & G. 787. 
 
 1 See Chittenden v. Witbeek, 50 Mich. 401 (1883), where A., a 
 partner in a iirin of hotel keepers, dies- and by his death the 
 partnership is dissolved, and the surviving partner, B.. renews 
 the lease of the hotel for his own use. Here it was held that 
 B. could not be expected to account to A.'s executors for his 
 profits, since he ran all the risks in the venture.
 
 BENEFIT OBTAINED BELONGS TO THE FIRM. 381 
 
 and there was evidence to show that the landlord ob- Bk. III. 
 jected to renew to any persons except the managing ^' na P- 2 - Sect, 
 
 partners (x). It was held, however, that it was not J 
 
 competent for the managing partners thus to acquire 
 for themselves alone the benefit of the renewed leasefy). 1 
 
 A partner by renewing a lease against the will of his co- Right to re- 
 *partners, cannot force it on them and compel them to [ * 309] 
 treat the property comprised in it as acquired for the J ect renewed 
 firm, unless there is some agreement binding them so to 
 do O). 
 
 The principle which precludes a partner from retain- Benefits 
 ing for himself benefits which he ought to share with derive /l from 
 his co-partners, is applied to cases in which unfairness Jjgfghh? 
 and misconduct are by no means so apparent as in those property, 
 just cited. A high standard of honour requires that 
 no partner shall derive any exclusive advantage by the 
 employment of the partnership property, or by engag- 
 ing in transactions in rivalry with the firm. 
 
 Thus, in Burton v. Wookey (a), the plaintiff and the Burton v. 
 defendant were partners as dealers in lapis calamin- Wookey. 
 aris. The defendant who was a shopkeeper, lived Profit of 
 near the mines in which the ore was got, and he pur- a y s op " 
 chased it of the miners. Instead, however, of paying 
 them with money, he paid them with shop goods, and in 
 his account with the plaintiff charged him as for cash 
 paid to the amount of the selling price of the goods. 
 The plaintiff contended that the price of the ore ought, 
 as between himself and the defendant, to be considered 
 as being the cost price of the goods given in exchange 
 for it, and that the profit made by the exchange ought 
 to be accounted for to the partnership. The Court 
 adopted this view ; holding that it was the duty of the 
 defendant to buy the ore at the lowest possible price, 
 and to charge the partnership with no more than he 
 actually gave for the goods bartered for the ore. An 
 
 (x) See as to this, Fitzgibbon v. Scanlan, 1 Dow. 269. 
 
 (y) At the same time relief against them was refused on the 
 ground of laches and delay on the part of the plaintiffs. On 
 this point the case will be noticed hereafter. See book iii. c. 
 10, § 3. 
 
 (z) Clements v. Norris, 8 Ch. D. 129, where an attempt of 
 this sort was defeated. 
 
 (a) 6 Madd. 367. 
 
 1 The principles laid down in the text in regard to the renewal 
 of leases, of course, do not apply where the original leasehold is 
 not the property of the firm as, for example, where A. is lessee 
 of a mine or quarry and he subsequently takes B. in with him as 
 partner, for the purpose of working it. Phillips v. Reeder,18 N. 
 J. Eq. 95 (1867).
 
 3S2 
 
 DUTY TO OBSERVE GOOD FAITH. 
 
 Bk. III. 
 Chap. 2. Sect. 
 2. 
 
 Gardner v. 
 McCutcheori. 
 Part-owners 
 of ships. 
 
 [ * 310] 
 
 Benefits 
 resulting 
 from connec- 
 tion with 
 the firm. 
 
 account of the profit made by the defendant in hi3 
 barter of the goods was decreed accordingly. 
 
 Again, in Gardner v. McCutcheon (b), a ship, of 
 which the plaintiffs and the defendant were part-own- 
 ers and the defendant was master, was employed for the 
 common benefit of all in * trading and carrying under 
 charter. The defendant, during the time the ship was 
 thus employed, traded on his own account and made 
 considerable profit. It was held that he was bound to 
 account for the profits thus obtained. He was bound 
 to trade to the best of his ability for the joint interest 
 of himself and co-owners ; he had no right to employ 
 the partnership property in a private speculation for 
 his own benefit ; and although he alleged that the pro- 
 fits were made solely by the employment of his own 
 private capital, and that by custom, masters of ships 
 were allowed to trade for their own benefit, the Court 
 declined to recognize aDy such custom, and considered 
 that the profits had been made by the employment of 
 what was not the defendant's exclusively, and that the 
 plaintiffs had therefore a right to share them. 
 
 A partner, moreover, is not allowed in transacting 
 the partnership affairs, to carry on for his own sole benefit 
 any separate trade or business which, were it not for 
 his connection with the partnership, he would not have 
 been in a position to carry on. Bound to do his best 
 for the firm, he is not at liberty to labour for himself 
 to their detriment ; and if his connection with the firm 
 enables him to acquire gain, he cannot appropriate that 
 gain to himself on the pretence that it arose from a 
 separate transaction with which the firm had nothing 
 to do. This is well exemplified by the cases as to re- 
 newed leases which have been already referred to (c), 1 
 
 (b) 4 Beav. 534. See. too, Benson v. Heathorn, 1 Y. & C. C. 
 C. 326, and 2 Coll. 309 ; Miller v. Mackay, 31 Beav. 77 ; Shall- 
 cross v. Oldham, 2 J. & H. 609 ; and as to commissions, Holden 
 v. Webber, 29 Beav. 117. Compare Miller v. Mackay, 34 Beav. 
 295, where the profits were held to belong to him who made 
 them. In Moffat v. Farquharson, 2 Bro. C. C. 338, a part-owner 
 of a ship was held to be exclusively entitled to money paid him 
 for his vote in the appointment of a master. But see on that 
 «ase the note to it in Mr. Belt's edition. See infra, c. 4, \ 1. 
 
 (c) Ante, p. 307. 
 
 1 Where A. who was employed by his firm to collect a mort- 
 gage debt, foreclosed the mortgage and bought in the land for 
 himself at the foreclosure sale, at a price which more than met 
 the firm's claim, it was held that he was under no obligation to 
 account to his partners for his profits on the purchase, there be- 
 ing a very inequitable agreement among the partners to bluff off 
 other creditors. Wheeler v. Sage, 1 Wall. 518 (1863).
 
 PARTNER CANNOT RETAIN SEPARATE BENEFIT. 383 
 
 and by Russell v. Aushvick, which also shows that the Bk. III. 
 same principles apply wherever there is an agreement Cha P- 2 - Sect - 
 
 to share profits 7; 
 
 In Russell v. Aushvick (d) several persons agreed to Carriers not 
 carry on business as carriers between London and Fal- partners in- 
 mouth ; but they expressly stipulated that no partner- ter se " 
 ship should subsist betiueen them, and that each should a" 8 ?* 1 - £ 
 have a certain portion of the road over which he was to 
 carry. Business was commenced and carried on by the 
 parties to this agreement under the name of Messrs. 
 Russell & Co., and they were employed to carry bullion 
 from Falmouth and Plymouth to London. On the 
 * issue of a new silver coinage by the Bank of England, [ *311] 
 Austwick, who appears to have been the London agent 
 of the carriers, entered into a contract with the Master 
 of the Mint for the carriage of the new coin to towns on 
 the road between London and Falmouth. Shortly after* 
 wards he entered into another contract with the Master 
 of the Mint for the conveyance of more new coin to 
 towns in Middlesex, and the adjoining counties. None 
 of these last towns lay on the road leading from Lon- 
 don to Falmouth, and many of them were only accessi- 
 ble by cross country roads, and in consequence of the 
 increased risk of carriage along these roads, the Mint 
 authorities agreed to pay 7s. 6c/. per cent, for all the 
 coin sent from the Mint, instead of 5s. per cent., which 
 was the remuneration agreed on in the first contract. 
 Austwick contended that he was entitled to the whole 
 benefit of this second contract, because (except as to 
 the extra 2s. 6d.) it had nothing to do with the carrying 
 business between London and Falmouth ; and because, 
 as to the 2s. Qd., that sum, although calculated on all the 
 coin carried, whether under the first or the second agree- 
 ment, was in fact paid by the Mint in consideration only 
 of the extra risk attending the carriage to the towns speci- 
 fied in the second contract. On the other hand it was con- 
 tended and held, that the second agreement ought to be 
 considered as made on account of all the persons inter- 
 ested in the first agreement ; because, although the 
 common concern had no connection with the provincial 
 roads which were the occasion of the second agree- 
 ment, yet this agreement was entered into by the officers 
 of the Mint as connected with, and a continuation of, 
 the first agreement, and in confidence of the responsi- 
 bility of the parties to it. 
 
 {d) 1 Sim. 52. See, also, as to benefits derived by one co- 
 owner of a mine from the use of a shaft situate in his own land, 
 but used fur the mine, Clegg v. Clegg, :} Girl. 322.
 
 384 
 
 DUTY TO OBSERVE GOOD FAITH. 
 
 Bk. III. 
 
 Chap. 2. Sect. 
 
 Distinct 
 businesses. 
 Lock v. 
 Lynam. 
 
 [*312] 
 
 One partner 
 competing 
 •with firm. 
 
 This case of Russell v. Austwick shows how difficult 
 it is for a partner to benefit himself exclusively, by 
 dealings which in honour he ought not to have engaged 
 in except for the common benefit of the firm. 
 
 Lock v. Lynam, which came before the Court of 
 Chancery in Ireland, affords another instructive exam- 
 ple of the application of the same wholesome doctrine. 
 In this case (e) the plaintiff * and the defendant had 
 agreed to share the profit and loss arising from con- 
 tracts taken by the defendant for the supply of meat 
 and bread to Her Majesty's forces in Ireland. Whilst 
 this agreement was in force the defendant entered into 
 secret agreements with other persons to share with 
 them the profit and loss accruing in respect of similar 
 contracts entered into and taken by them. The plain- 
 tiff claimed a share in the profits made by the defend- 
 ant under these secret agreements; whilst the defend- 
 ant contended that he was entitled to retain them for 
 his own exclusive benefit. The Lord Chancellor ob- 
 served, that in all cases of this kind the real question 
 was, whether, from the nature of the transaction be- 
 tween the partners, there was any express or implied 
 contract against other dealings of a lrke character; and 
 that although there was no engagement not to enter into 
 any other partnership of the same kind, still it never could 
 have been in the contemplation of either of the parties 
 that one partner should, in his own name or in that of any 
 other person, adopt contracts to the prejudice of the 
 other's interest. A decree was accordingly made directing 
 an enquiry whether, during the period for which any 
 partnership between the plaintiff and the defendant ex- 
 isted, the defendant, either alone or jointly with any other 
 person or persons, separately from the plaintiff, entered 
 into, or was beneficially interested in, any other contract 
 or dealing of the like nature with those in which the 
 plantiff and the defendant were engaged as partners. 
 
 After the decisions to which attention has now been 
 drawn, there can be little doubt that a partner cannot, 
 either openly or secretly, lawfully carry on for his own 
 benefit any business in rivalry with the firm to which 
 he belongs (/).' But where a partner carries on a 
 
 (e) Lock r. Lynam, 4 Ir. Ch. 188. Compare this and the last 
 case with Miller v. Mackay, 34 Beav. 295; and see Somerville v. 
 Mackay, 18 Ves. 382. 
 
 (/) See Glassington v. Thwaites, 1 Sim. & Stu. 124; England 
 v. Curling, 8 Beav. 129, in which, however, there was something 
 more than mere rivalry. 
 
 1 Marshall!'. Johnston, 33 Ga. 500 (1863) ; Bast's Appeal, 70 Pa.
 
 POWER OF MAJORITY. 385 
 
 business not connected with or competing with that of Bk. Ill: 
 the firm, his partners have no right to the profits he Chap. 2. Sect. 
 
 thereby makes, even if he has agreed not to carry on J 
 
 any separate business (g). 
 
 * Again, it has been held competent for one partner [ * 313] 
 to acquire for himself the share of a co-partner in the Buying 
 partnership business, without informing the other part- snare - 
 ners of the purchase, and without giving them an op- tassels v. 
 portunity of acquiring it (h). 1 The articles of part- 
 nership did not forbid such a purchase ; nor was it any 
 part of the business of the firm to buy the shares of 
 its members. 
 
 The same obligation to act with good faith exists be- Partnership 
 tween persons who have agreed to become partners : not J" et 
 and if one of them in negotiating for the acquisition of 
 property for the intended firm, receives a bonus or com- -\yhitehouse 
 mission, he must account for it to the firm when 
 formed (t). He cannot retain it for himself on the 
 ground that it was paid him for personal services ren- 
 dered to the vendor before any partnership existed. 
 Having obtained the benefit, whilst negotiating for 
 himself and his future partners, he must share such 
 benefit with them (k). 2 
 
 Section III. — Of the Powers of a Majority of Part- 
 
 In the event of a difference arising between part- Disputes be- 
 ners, it becomes necessary to consider whether there is tween 
 any method of determining which of them is to give partners, 
 way to the other. It is not uncommonly supposed that 
 the minority of the partners, if they are unequally divid- 
 ed, must submit to the majority. But this is by no 
 means the casp ; for, as will be seen presently, the ma- 
 
 (g) Dean v. Macdowell, 8 Ch. D. 345. An injunction might 
 have been obtained, and perhaps damages for a breach of cove- 
 nant. 
 
 (h) Cassels v. Stewart, 6 App. Ca. 64. 
 (t) Fawcett v. Whitehouse, 1 R. & M. 132. 
 (k) Ibid. See, also, Hichens v. Congreve, 1 R. & M. 150. and 
 other cases of that class, relating to promoters of companies. 
 
 St. 301 (1872) ; Fletcher v. Ingram. 46 Wis. 191 (1879) ;Todd r.Raf- 
 ferty, 30 N. J. Eq. 254 (1878). It was held in Pierce v. Daniels, 
 25 Vt. 624 (1853) that, whore there is no deception about the 
 matter, a dormant partner may have a rival interest in the same 
 kind of business as that in which his firm is engaged. 
 
 1 Bissell v. Foss 114 U. S., 252 (1884). 
 
 2 See note 2 on page 303. 
 
 * 2 LAW OF PARTNERSHIP.
 
 386 
 
 POWER OF MAJORITY. 
 
 Bk. III. 
 Chap. 2. Sect. 
 
 o. 
 
 How to be 
 
 settled. 
 
 [*314] 
 
 1. Disputes 
 on matt lis 
 arising in 
 ordinary 
 course of 
 business. 
 
 Power of 
 majority in 
 such cases. 
 
 jority cannot oblige the minority except within certain 
 limits. 
 
 Tbe first point to determine is, whether the partner- 
 ship articles, do or do not contain any express provi- 
 sion applicable to the matter in question ; for if they 
 do, such provision ought to be obeyed (I). If they do 
 not, then the nature of the * question at issue must be 
 examined ; for there is an important distinction be- 
 tween differences which relate to matters incidental to 
 carrying on the legitimate business of a partnership, 
 and differences which relate to matters with which it 
 was never intended that the partnership should con- 
 cern itself. 
 
 With respect to the first class of differences, regard 
 must be had to the state of things actually existing ; 
 for, as a rule, if the partners are equally divided, those 
 who forbid a change must have their way: in re communi 
 potior est conditio prohibentis (ra). "Upon this princi- 
 ple it is that one partner cannot either engage a new or 
 dismiss an old servant against the will of his co-part- 
 ner (n); nor, if the lease of the partnership place of 
 business expires, insist on renewing the lease and con- 
 tinuing the business at the old place (o). 
 
 If, however, in a case of this description, unprovided 
 for by previous agreement, the partners are unequally 
 divided, the minority must, the author apprehends, give 
 way to the majority (p). 1 This is the rule applicable to 
 companies whether incorporated or unincorporated (q); 
 it is the rule adopted in the Indian contract act (r); 
 and it is practically reasonable and convenient. The 
 only alternative is to hold that if partners disagree, 
 even as to trifling matters of detail, the minority can 
 
 (/) As to the construction of partnership articles, see infnt.c.9. 
 
 (m) But see as to the employment of a ship, Abbott on Ship- 
 ping, p. 82. ed. 9, and p. 58, ed. 12 ; and as to completing con- 
 tracts already entered into, Butchart v. Dresser, 4 De G. M. & 
 G. 545. 
 
 (n) See Donaldson v. Williamson, 1 Cr. & M. 345. 
 
 (o) Clements v. Norris, 8 Ch. D. 129. N. B. — The partnership 
 had not expired. 
 
 (p) See Gregory v. Patchett. 33 Beav. 595 ; Const v. Harris, T. 
 & R. 518 : Robinson v. Thompson, 1 Vein. 465 ; as to opening ac- 
 counts. Morgan's case, 1 M. & G. 235. 
 
 (?) See Stevens v. South Devon Rail. Co., 9 Ha. 326; Simpson 
 r. Westminster Palace Hotel Co., 2 De G. F. & J. 141 ; Kent r. 
 Jackson. 2 De G. M. & G. 49, aud 14 Beav. 367. 
 
 (r) § 253, cl. 5. 
 
 Peacock v. Cum mings. 46 Pa. St. 434 (1863); Zabriskie v. 
 Hackensack & New York R. R. Co., 18 N. J. Eq. 178 (1867); 
 Johnston v. Dutton, 27 Ala. 245 (1855); Kirk v. Hodgson, 3 
 Johns. Ch. 400 { ); Staples v. Sprague, 75 Me. 458 (1S83).
 
 MATTERS WITHIN SCOPE OF BUSINESS. 387 
 
 forbid all change, and perhaps bring the business of the Bk. III. 
 firm to a dead-lock, for which the only remedy is a dis- Chap. 2. Sect. 
 
 solution. At the same time the author is not aware of J 
 
 any clear and distinct authority in support of the 
 proposition that even in such matters a dissentient 
 partner must give way to his co-partners (s). 
 
 However, a majority cannot against the will of the 
 minority * delegate to a manager the right to sign the [ * 315] 
 partnership name (t); and it is doubtful whether a 
 majority can decide where the partnership business shall 
 be carried on when the lease of its place of business 
 expires (u). 
 
 A very important rule respecting the powers and All partners 
 votes of majorities is, that a majority, to have any entitled to be 
 weight, must act and be constituted with perfect good heard, 
 faith ; for every partner has a right to be consulted, 
 to express his own views, and to have those views con- 
 sidered by his co-partners. In the language of Lord 
 Eldon, " that is the act of all which is the act of the 
 majority, provided all are consulted, and the majority 
 are acting bond fide, meeting not for the purpose of 
 negativing what any one may have to offer, but for the 
 purpose of negativing what, when they are met to- 
 gether, they may after due consideration think proper 
 to negative. For a majority of partners to say, We 
 do not care what one partner may sav ; we, being the 
 majority, will do what we please, is, I apprehend, what 
 a court of equity will not allow " (x). 
 
 Moreover, where powers are conferred on a majority Majorities at 
 present at a meeting of not less than a certain number meetings, 
 of persons, unless such meeting be duly convened and 
 the requisite number be present at the meeting the 
 powers in question cannot be exercised ; and although 
 it may be true that the required number of persons 
 was summoned, and that the absentees could not have 
 turned the scale, this will not render valid the acts of 
 the majority of those actually present, for that is not 
 such a majority as was originally contemplated (y). 
 
 00 Pollock's Dig. \ 36, adopts the author's view, but appar- 
 ently on his authority. 
 
 (I) See Beveridge v. Beveridge, L. R. 2 Sc. App. 183. 
 
 (m) See Clements v. Norris, 8 Ch. D. 129, but note there the 
 firm consisted of two members only. 
 
 (x) Const v. Harris, Turn. & R. 525, and see ib. 518, and 
 Blisset v. Daniel, 10 Ha. 493; Great Western Rail. Co. v. Rush- 
 out, 5 De G. & Sm. 310. 
 
 (y) See Re London and Southern Counties Freehold Land Co., 
 31 Ch. D. 223 ; Howbeach Coal Co. v. Teague, 5 H. & N. 151 • 
 Ex parte Morrison, De G. 539.
 
 388 
 
 POWER OF MAJORITY. 
 
 Bk. III. 
 Chap. 2. Sect. 
 
 2. Disputes 
 on matters 
 involving a 
 change in 
 
 [*316] 
 
 the nature of 
 the business. 
 One dissen- 
 tient can for- 
 bid a change. 
 
 In companies 
 as well as in 
 partnership. 
 
 Fire and life 
 Insurance 
 Company 
 turning into 
 a Maritime 
 Insurance 
 Company. 
 Natusch v. 
 Irving. 
 
 Passing now to the second class of differences, viz., 
 those which relate to matters with which the partner- 
 ship was never intended to concern itself, it has been 
 over and over again decided that no majority, however 
 large, can lawfully engage the partnership in such 
 matters against the will of even one dissentient partner. 
 Each partner is entitled to say to the ^others, " I be- 
 came a partner in a concern formed for a definite pur- 
 pose, and upon terms which were agreed upon by all 
 of us, and you have no right, without my consent, to 
 engage me in any other concern, nor to hold me to any 
 other terms, nor to get rid of me, if I decline to assent 
 to a variation in the agreement by which you are bound 
 to me and I to you." Nor is it at all material that the 
 new business is extremely profitable (z). This prin- 
 ciple is applicable to all partnerships and companies, 
 whether great or small, and is evidently one which re- 
 quires only to be stated to be at once assented to as 
 being just. No cases upon this subject can be referred 
 to with greater advantage than Natusch v. Irving and 
 Const v. Harris, both of which were decided by Lord 
 Eldon (a). 1 
 
 In Natusch v. Irving (b), a company was formed in 
 the early part of the year 1824 for granting, fire and 
 life assurances. The capital was 5,000,000/, divided 
 into fifty thousand 100/. shares. The plaintiff was one 
 of the original subscribers, and held fifteen sharps, in 
 respect of which he had paid the required deposit, but 
 he had not executed the company's deed of settlement. 
 In conformity with the rules of the company he had 
 effected a policy with it on his life for 1500/. In the 
 summer of 1824, the act of 6 Geo. 1, prohibiting com- 
 panies from carrying on the business of marine in- 
 surance, was repealed, and shortly afterwards adver- 
 tisements appeared in the newspapers, stating that the 
 company would commence the business of marine 
 insurance. The plaintiff, in answer to an inquiry 
 whether this announcement was authorized by the 
 directors, was informed that it was, and that if he ob- 
 jected to the course about to be pursued he mi^lit 
 receive back his deposit with interest, and have his 
 
 (z) A.-G. r. Great Northern Rail. Co.. 1 Dr. & Sm. 154. 
 
 {a) See. too, Davis v. Hawkins. 3 M. & S. 488; Fennin-ps r. 
 Grenville, 1 Taunt. 241 : Glassington v. Thwaites, 1 Sim. & Stu. 
 131. 
 
 (b) Gow on Partnership. App. 398; ed. 3. See, also. The 
 Phcenix Life Insur. Co., 2 J. & H, 441. 
 
 1 Zabriskie v. H. & N. Y. R. R. Co., 18 N. J. Eq. i78 (1867).
 
 MATTERS BEYOND SCOPE OF BUSINESS. 3S9 
 
 policy cancelled and the premium returned. In reply Bk. III. 
 
 to this, the plaintiff stated that he was ready to execute ^ ha P- 2 - Sect> 
 
 any deed which was in conformity with the prospectus ; J 
 
 that he conceived it competent for him to insist that 
 the business in which he was a partner should be carried 
 *on according to the agreement which united the partners [ * 317] 
 together : that he could not think his doing so would Natusch ». 
 entitle the managers of that partnership to pay him Irving, 
 out his capital, and deprive him of a share in a con- 
 cern of which he had the highest opinion ; that he 
 therefore required the directors to abstain from any 
 contracts or engagements relating to marine insurance, 
 as not being contemplated by himself and those who 
 joined the company upon the terms of the prospectus, 
 and that he required an undivided attention on the part 
 of the directors to the objects defined therein. The 
 plaintiff afterwards attended at the office of the com- 
 pany, to execute its deed of settlement, but finding that 
 it contained provisions enabling the company to carry 
 on the business of marine insurance, he refused to 
 execute it, as not being conformable to the terms on 
 which the company was formed. In pursuance of the 
 advertisements, the company had commenced, and it 
 was carrying on, the business of marine insurance ; but 
 there was no evidence to show acquiescence on the part 
 of the plaintiff, and there was evidence to show con- 
 tinued opposition by him to the carrying on of such 
 business. The plaintiff applied for an injunction to 
 restrain the directors from effecting marine insurances, 
 and an injunction was granted (c). The judgment of 
 Lord Eldon, as far as it relates to the power of a 
 majority, is particularly valuable, and the following 
 extracts from it are constantly referred to. 
 
 With respect to the liberty given to the plaintiff to retire, his Answer to 
 lordship said: "An offer is made to the plaintiff that he may ohjection 
 receive back his deposit, with interest from the date of the pay- tnat . fUs ~ 
 ment, and he is desired to consider himself as having received xe ^ xe 
 notice thereof. But it is not, I apprehend, competent to any 
 number of persons in a partnership (unless they show a contract 
 rendering it competent to them) formed for specified purposes, if 
 they propose to form a partnership for very different purposes, to 
 effect that formation by calling upon some of their partners to 
 
 (c) The bill was filed by the plaintiff on behalf of himself and 
 all others the shareholders of the company against the directors, 
 and prayed a dissolution, and, if necessary, a receiver, and an 
 injunction to restrain the defendants from effecting marine in- 
 surances in the name and on account of the company, and from 
 using the name, and from applying the capital of the company 
 for such purposes.
 
 390 
 
 POWER OF MAJORITY. 
 
 Bk. III. 
 Chap. 2. Sect. 
 3. 
 
 [ * 318] 
 
 Natusch v. 
 Irving. 
 
 Dissentient 
 need not 
 accept an 
 offer of in- 
 demnity. 
 
 Answer to 
 argument 
 that the 
 change was 
 warranted by 
 statute. 
 
 Observations 
 on powers oi 
 majorities. 
 
 receive their subscribed capital and interest and quit the con- 
 cern- and in effect, merely by compelling them to retire upon 
 such terms, so to form a new company. This would, as to part- 
 nerships, be a most dangerous doctrine. * Where a partnership is 
 dissolved (even where it can be in a sense dissolved the instant 
 after notice to dissolve is given, if there be no contract to the 
 contrary), it must still continue for the purpose of winding up 
 its affairs, of taking and settling all its accounts, and converting 
 all the property, means, and assets of the partnership, existing 
 at the time of the dissolution, as beneficially as may be, for the 
 benefit of all who were partners, according to their respective 
 shares and interests; and the other partners cannot say to him to 
 whom they have given an offer of his deposit and interest, Take 
 that, and we are a new company, keeping the effects, means, as- 
 sets, and property of the old, as the property of the new partner- 
 ship. The company will indemnify the plaintiff against loss by 
 its transactions already had, or hereafter to be had, not for the 
 specified purposes of the institution. But the right of a partner 
 is to hold to the specified purposes his partners whilst the part- 
 nership continues, and not to rest upon indemnities with respect 
 to what he has not contracted to engage in. A dissatisfied part- 
 ner may sell his shares for double what he originally gave for 
 them. But he cannot be compelled to part with them lor that 
 reason; it may be his principal reason for keeping them, having 
 the partnership concern carried on according to the contract. 
 The original contract and the loss which his partners would suffer 
 by a dissolution, is his security that it shall be so carried on for 
 him and them beneficially, and with augmented improvement in 
 the value of his shares and their shares." 
 
 With respect to the alteration of the law enabling companies 
 to carry on the business proposed, his lordship observed: "The 
 repeal of the act 6 Geo. 1, which merely made it lawful for socie- 
 ties or partnerships, however numerous their members might be 
 to insure against marine risks, could not make it lawful for com- 
 panies or societies, which were formed for specified purposes of 
 insurance upon lives and against fire, to insure against marine 
 risks, unless the contracts by which such companies were formed, 
 either expressly or impliedly (where individual partners did not 
 consent to embarking in new projects, either originally, or sub- 
 sequently to the formation of the companies), created an author- 
 ity in some part of the body to bind all the body to the adoption 
 of such new undertakings." 
 
 With respect to the power of a majority, his lordship laid it 
 down that, "If six persons joined in a partnership of life assur- 
 ance, it seems clear that neither the majority nor any select part 
 of them, nor five out of the six, could engage that partnership 
 in marine insurances, unless the contract of partnership expressly 
 or impliedly gave that power: because if this was otherwise,
 
 POWER OF MAJORITY. 391 
 
 an individual or individuals, by engaging in one specified con- Bk. III. 
 cern, might be implicated in any other concern whatever^ how- Chap. 2. Sect. 
 
 ever different in its nature, against his consent. But if a part ^ 
 
 of the six openly and publicly professed their intention to engage 
 the partnership in another concern, and clearly and distinctly 
 brought this to the knowledge of one or more of the other part- 
 ners, and such one or more of the other partners could be clearly 
 shown to have acquiesced in such intention, and to have per- 
 mitted the other partners to have entered upon, and to have en- 
 gaged themselves and the body in such new projects, and there- 
 by to have placed their partners so engaged in difficulties and 
 embarrassments unless they were permitted to proceed in the 
 farther execution of such projects, if a court of equity would 
 not go the length of holding that such conduct was ^consent, it r * 319] 
 would scarcely think parties so conducting themselves entitled to 
 the festinum remedium of injunction." * * * * "Courts must 
 struggle to prevent particular members of those bodies from engag- 
 ing other members in projects in which they have not consented 
 to be engaged, or the engaging in which they have not encouraged, 
 assented to, or empowered, or acquiesced in, expressly or tacitly, 
 so as to make it not equitable that they should seek to restrain 
 them. The principles which a Court would act upon in a case of 
 a partnership of six, must, as far as the nature of things will 
 admit, be applied to a partnership of 600." * * * "They 
 who seek to embark a partner in a business not originally part of 
 the partnership concern, must make out clearly that he did ex- 
 pressly or tacitly acquiesce. ' ' 
 
 la Const v. Harris (d), the proprietors of Covent Const 
 Garden Theatre agreed that the profits should be ex- Harris, 
 clusively appropriated to certain definite purposes. Altering 
 Afterwards, the proprietors of seven oat of eight principle on 
 shares, entered into an agreement to apply the profits whic fi profits 
 in a different manner, but they had not consulted the ^lt with 
 owner of the other eighth share, and he disapproved of 
 the alteration. It was held by Lord Eldon, that the 
 majority had no power to depart from the terms of the 
 original agreement ; and upoa a bill filed by the one 
 dissentient partner for a specific performance of that 
 agreemeot, a receiver of the profits was appointed. In 
 a long and elaborate judgment, Lord Eldon distinctly 
 recognised the principle, that articles which had been 
 agreed on to regulate a partnership, cannot be altered 
 without the consent of all the partners (e). 
 
 {d) Turn. & R, 496. 
 
 (e) See Turn. & R. 517, 523. The whole judgment is well 
 worthy of attentive perusal ; but being much to the same effect 
 as that in Natusch v. Irving, the writer has not felt itneccessary 
 to make extracts from it.
 
 392 POWER OF MAJORITY. 
 
 Bk. III. In modern times the same principle has been con- 
 
 Chap. 2. Sect, stantly recognized and followed. Indeed it is never 
 
 J now disputed, although its application frequently gives 
 
 rise to contrcrversy. The decisions bearing on this sub- 
 ject relate, however, to companies, and are not, there- 
 fore, further noticed in the present treatise (f). 1 
 
 (/) Auld v. Glasgow Working Men's Building Soc, 12 App. 
 Ca. 197, is one of the most recent cases. 
 
 Livingston v. Lynch, 4 Johns. Ch. 573 (1820) ; Cooke?). Alli- 
 son, 30 La. Ann. Pt. II. 963 (1878) ; Abbott v. Johnson, 32 N. 
 H. 9 (1835) ; Packet Co. v. Magrath, McNull (S. Ca.), 93 (1841), 
 are examples of the application of the doctrine to partnership. 
 A settlement of accounts between two partners will not bind the 
 remaining member of the firm. Chadsey v. Harrison, 11 111. 151 
 (1849) ; Lamalere v. Caze, 1 Wash. C. C. 435 (1806). Where 
 the articles provide that a majority shall govern it is doubtful 
 whether even here anything but the unanimous consent of all 
 the partners can warrant a deviation from the fundamental pur- 
 poses of the partnership. Livingston v. Lynch, 4 Johns. Ch. 
 573 (1820).
 
 CAPITAL OF PARTNERSHIPS. 393 
 
 *CHAPTER III. [* 32 °] 
 
 OF THE CAPITAL OF PARTNERSHIPS. 
 
 By the capital of a partnership is meant the aggre- gj. tjt. 
 gate of the sums contributed by its members for the Chap. 3. 
 purpose of commencing or carrying on the partnership ~ ~ ~ 
 business, and intended to be risked by them in that partnerships 
 business. The capital of a partnership is not therefore 
 the same as its property ; the capital is a sum fixed by 
 the agreement of the partners ; whilst the actual assets 
 of the firm vary from day to day, and include every- 
 thing belonging to the firm and having any money 
 value. Moreover, the capital of each partner is not 
 necessarily the amount due to him from the firm ; for 
 not only may he owe the firm money, so that less than 
 his capital is due to him ; but the firm may owe him 
 money in addition to his capital, e. g., for money ad- 
 vanced by him to the firm by the way of loan, and not 
 intended to be wholly risked in the business. The 
 distinction between a partner's capital and what is due 
 to him for advances by way of loan to the firm, is fre- 
 quently very material : e. g., with reference to interest, 
 with reference to clauses in partnership articles fixing 
 the amount of capital to be advanced and risked, and 
 prohibiting the withdrawal of capital ; and above all 
 with reference to priority of payment in the event of 
 dissolution and a deficiency of assets (a). The amount 
 of each partner's capital ought, therefore, always to be 
 accurately stated, in order to avoid disputes on a final ad- 
 justment of account; and this is more important where 
 the capitals of the partners are unequal, for if there is 
 no evidence as to the amounts contributed by them, the 
 shares of the whole assets will be treated as equal (b). 
 
 *\Vhen the agreed amount of capital of a partnership r * 321] 
 has been exhausted, and the business cannot be carried increase and 
 on to a profit, the partnership may be dissolved, as will diminution 
 be pointed out hereafter (c). A partner cannot be 0l ca P ltal - 
 compelled to furnish more capital than he has agreed 
 
 («) See on this suhject, infra, book iii. ch. 8, \ 1, on partner- 
 ship accounts. 
 
 (b) See as to the equality of shares, infra, buok iii. ch. 5, \ 2 
 
 (c) Infra, book iv. ch. 1, \ 2. '
 
 {04 
 
 CAPITAL OF PARTNERSHIPS. 
 
 Bk. III. 
 Chap. 3. 
 
 Borrowing 
 money and 
 increasing 
 
 capital. 
 
 to bring in and risk ; although he cannot, by limiting 
 the amount of his capital, limit his liability for debts 
 incurred by the firm (d). On the other hand, a partner 
 who has agreed to furnish a certain amount of capital, 
 is bound not only to bring it into the firm, but also to 
 leave it in the business until the firm is dissolved. 
 
 It follows from these considerations that the agreed 
 capital of a partnership cannot be either added to or 
 withdrawn except with the consent of all the members 
 of the partnership (e); and this rule is perfectly con- 
 sistent with the obvious fact, that the assets and liabil- 
 ities of a partnership are necessarily liable to fluctua- 
 tion, and that the value of each partner's share of such 
 assets constantly fluctuates also. 
 
 The difference between borrowing money on the 
 credit of a firm and increasing its capital, has been 
 already adverted to (/) ; and it has been seen that 
 although each member of an ordinary trading partner- 
 ship can pledge its credit for money borrowed in order 
 to carry on its business, he cannot render it liable to 
 repay money borrowed by him to enable him to furnish 
 the amount of capital which he has agreed to bring 
 
 ^ (flO- 
 
 (d) Ante, p. 200. 
 
 (e) See Heslin v. Hay, 15 L. R. Ir. 431, where an attempt was 
 made to violate this rule ; and see the obs. of Lord Bramwell in 
 Bouch v. Sproule. 12 App. Ca. 4U5. 
 
 (/) Ante, pp. 132, 133. 
 (9) lb-
 
 PARTNERSHIP PROPERTY. 395 
 
 *CHAPTER IY. [* 322 ] 
 
 OF JOINT AND SEPARATE PROPERTY. 
 
 The expressions partnership property, partnership Bk. III. 
 stock, partnership assets, joint stock, and joint estate, Chap. 4. 
 are used indiscriminately to denote everything to which p artnersrj i p 
 the firm, or in other words all the partners composing property. 
 it, can be considered to be entitled as snch (a). The 
 qualification as such is important ; for persons may be 
 entitled jointly or in common to property, and the same 
 persons may be partners, and yet that property may not 
 be partnership property ; e. g., if several persons are 
 partners in trade, and land is devised or a legacy is 
 bequeathed to them jointly or in common, it will not 
 necessarily become partnership property and form part 
 of the common stock in which they are interested as 
 partners (b). Whether it does so or does not. depends 
 upon circum stances which will be examined hereafter. 
 
 It is often a difficult matter to determine what is to Importance 
 be regarded as partnership property, and what is to be ofdistm^ish- 
 regarded as the separate property of each partner, ghipproperty 
 The question, however, is of importance not only to the from the 
 partners themselves, but also to their creditors ; for, as separate 
 will be seen hereafter, if a firm becomes bankrupt, the Pv° per ^ °^ 
 property of the firm and the separate property of each 
 partner have to be distinguished from each other, it 
 being a rule to apply the property of the firm in the 
 first place in payment of the creditors of the firm, and 
 to apply the separate properties of the partners in the 
 first place to the payment of their respective separate 
 creditors. 
 
 * It is proposed, therefore, to examine the rules by [ * 323 ] 
 which to determine what is the property of the firm, 
 and what the separate property of its members. 
 
 It is for the partners to determine by agreement Question 
 
 [a) The expression joint estate sometimes has a wider signifi- 
 cation, including all property which, on the bankruptcy of the 
 firm, is distributable amongst its creditors. See post, book iv. 
 ch. 4. see. :;. Reputed Ownership. 
 
 (6) Morris /■. Barrett, :! Y. & J. 384, and see the judgment in 
 Ex parte The File Banking Co.. « Jr. E(i. 197, S. C. on appeal 
 under the name of Re Littles, 1U ib. :27.">.
 
 m 
 
 PARTNERSHIP PROPERTY. 
 
 Bk. III. 
 
 Chap. 4. Sect. 
 1. 
 
 determined 
 by agree- 
 ment. 
 
 1. Property 
 ot the firm. 
 
 Property 
 paid for by 
 the firm. 
 
 [ * 324] 
 
 amongst themselves what shall be the property of them 
 all, and what shall be the separate property of some 
 one or more of them. Moreover, it is competent for 
 them by agreement amongst themselves to convert what 
 is the joint property of all into the separate property 
 of some one or more of them, and vice versa. The de- 
 termination, therefore, of the question, What is, and 
 what is not the property of the firm ? involves an in- 
 quiry into the three following subjects, viz : — 
 
 Joint estate. 
 
 Separate estate. 
 
 Conversion of one into the other. 
 Each of these will be examined in order. 
 
 Section I. — Of Joint Estate. 
 
 Whatever at the commencement of a partnership is 
 thrown into the common stock, and whatever has from 
 time to time during the continuance of tne partner- 
 ship been added thereto or obtained by means thereof, 
 whether directly by purchase or circuitously by em- 
 ployment in trade, belongs to the firm, unless the con- 
 trary can be shown (c). 1 
 
 The mere fact that the property in question was pur- 
 chased by one partner in his own name is immaterial, 
 if it was paid for out of the partnership monies ; for 
 in such a case he will be deemed to hold the property 
 in trust for the firm, unless he can show that he holds it 
 for himself alone (cl). Upon this * principle it is held 
 that land purchased in the name of one partner, but 
 paid for by the firm, is the pi*operty of the firm, al- 
 though there may be no declaration or memorandum in 
 
 (c) See Crawshay v. Collins. 2 Russ. 339, as to the patents ; 
 Nerot v Bnrnand. 4 Rnss. 247, and 2 Bli. N. S. 415; Bone v. 
 Pollard, 24 Beav. 283. See, also, as to co-owners of mines 
 not being co-partners, Clegg v. Clegg, 3 Giff. 322. As to outlays 
 of partnership money on the separate property of one partner, 
 see infra, \ 2. 
 
 (d) See per Lord Eldon in Smith v. Smith. 5 Yes. 193 ; Eoblev 
 v. Brooke, 7 Bli. 90 ; .Morris v. Barrett, 3 Y. & J. 384. See, 
 also, Helmore v. Smith, 35 Ch. D. 436. 
 
 1 Clementsr. Jessup, 36 X. J. Eq. 569 (1883); Taftr. Schwamb. 
 80 111. 289 (1875). The fact that one of the partners contributes 
 all the capital does not make that capital any the less the capi- 
 tal of the firm, Nutting v. Ashcraft, 101 Mass. 300 (1869); Mal- 
 ley 17. Atlantic Ins. Co., 51 Conn. 222 (1883). In the case last 
 suppose it has been held that the separate creditor of the part- 
 ner who contributes the capital can levy on the capital of the 
 firm, Bowker v. Gleason (X. J.), 7 Atl. Rep. 885 (1886); but 
 such a levy by the creditors of the non-contributing partner is a 
 trespass. See Stumph v. Bauer, 76 Ind. 157 (1881).
 
 JOINT PROPERTY. • 3f>7 
 
 writing disclosing the trust, and signed by the partner Bk. III. 
 
 to whom the land has been conveyed "(e). 1 So, if Chap. 4. Sect. 
 
 shares in a company are bought with partnership J 
 
 money, they will be partnership property, although 
 they may be standing in the books of the company in 
 the name of one partner only, and although it may be 
 contrary to the company's deed of settlement for more 
 than one person to hold shares in it (/). 2 
 
 As regards ships there was often a difficulty arising Ships, 
 from the ship registration acts. For as it was clearly 
 settled that a ship belonged, both at law and in equity, 
 to the person or persons who were registered as her 
 owners, and to no one else, it followed that if a ship 
 had been bought with partnership money, had been 
 used as partnership property, and had always been 
 treated as such by all the partners, yet if she was reg- 
 istered in the name of one partner only, there was no 
 method by which that one could be prevented from ef- 
 fectually asserting an exclusive right to the ship, and 
 depriving his co-partners of all their interest in her (g). 
 The provisions of the present Merchant shipping acts 
 differ, however, in several material respects from the en- 
 actments previously in force ; and now, in the case 
 above supposed, the registered partner would be 
 deemed a trustee for the firm (h). 
 
 (e) Forster v. Hale. 5 Yes. 308, and 3 ib. 696. 
 
 (f) Ex parte Connell, 3 Deac. 201; Ex parte Hinds, 3 De G. & 
 S. 613. 
 
 {g) See Slater r. Willis. 1 Bear. 345 ; Battersby v. Smvtb, 3 
 Madd. 110; Camden v. Anderson, 5 T. R. 709 ; Curtis »>. Perry, 
 6 Yes. 739 ; Ex parte Yallop, 15 Yes. 60 ; Ex parte Houghton, i? 
 Yes. 251 ; and as to the old law relating; to equitable interests 
 in ships, see an article by the author in the Law Magazine for 
 May, 1862 (vol. xiv. p. 70, X. S.). If a ship was registered in 
 the name of two partners, the shares in which they were inter- 
 ested might have been shown. See Ex parte Jones. 4 M. & S. 
 450. As to the right of one partner to sell or mortgage a ship 
 belonging to the firm, see Ex parte Howden, 2 M. D. & D. 574. 
 
 (h) 17 & 18 Vict. c. 104, \\ 37 and 43, and 25 & 26 Vict. c. 63, 
 | 3. Upon the construction of the former act. see Hughes c. 
 Sutherland, 7 Q. B. D. 160 ; Liverpool Borough Bank v. Turner, 
 1 J. & H. 159, and 2 De G. F. & J. 502. A ship may be regis- 
 
 1 Campbell v. Campbell, 3d X. J. Eq. 415 (1878); Spalding v. 
 Wilson, 80 Ky. 589 (1883); Bank *•. Sawyer, 38 Oh. St. 339 
 
 ( ); Hardy v. Norfolk Mfg. Co., 80 Va. 404 (1885); Shanks v. 
 
 Klein. 101 C. S. 18 (1881): Messcr r. Messer, 59 X. H. 375 
 (1879); Willet v. Brown, 65 Mo. 138 (1877); Buffum r. Buffum, 
 49 Me. 108 (186L: McCauley v. Fulton, 44 Cal. 355(1872); Mar- 
 tin v. Morris. 62 Wis. 418 (1885); Espy v. Comer, 76 Ala. 501 
 (is-'-] i. 
 
 - Kenton Furnace Mfg. Co. v. McAlpin, 5 Fed. Rep. 737 (1880): 
 Wilde v. Jenkins, 4 Paige 481 (1834).
 
 398 PARTNERSHIP PROPERTY. 
 
 [ * 3251 * Strong as is the presumption that what is bought 
 
 ±>k. III. with partnership money is partnership property, the 
 
 Chap. 4. beet, presumption may be rebutted; e. g., by showing that 
 
 J the money was lent by the firm to one partner, and so 
 
 Cases where was not in fact partnership money when invested (i). 1 
 property paid Moreover, it is to be observed that property which has 
 firm does not keen us ©d and treated as partnership property cannot 
 belong to it. be presumed to belong to one partner only, simply be- 
 cause he paid for it: for the presumption in such a 
 case is rather that the property in question was his 
 contribution to the common stock (j).~ This subject 
 will be adverted to more at length in the next section. 
 Secret bene- It has been already seen that one partner will not be 
 fits obtained allowed to retain for his own exclusive beneht any 
 by one property which he mav have acquired in breach of that 
 
 "partner i » • 
 
 v good faith which ought to regulate the conduct of part- 
 
 ners inter se. "Whatever property has been so acquir- 
 ed, will be treated as obtained for the benefit of all the 
 partners, and as being part of the assets of the firm; 
 and this rule applies to property obtained by a continu- 
 ing or surviving partner in breach of the good faith 
 which he is bound to exercise towards a retired part- 
 ner, and the representatives of a deceased partner, so 
 long as their interest in the partnership assets contin- 
 ues (k). 
 Money paid At the same time, if an advantage which has been 
 to one obtained by a partner is wholly unconnected with the 
 
 partner ior partnership affairs, or, being connected with them, has 
 liis exclusive . * 
 
 benefit. been conferred upon him with a view to his own per- 
 
 sonal benefit, he cannot be called upon to account for 
 it to the partnership. For example, where a ship, be- 
 longing to a Frenchman and two Americans as part- 
 
 tered in the name of a company, though some of its members are 
 foreigners. See IT & 18 Vict. v. 104. \ 18 ; and R. v. Ainaud, 9 
 Q. B. 806. 
 
 (i) As in Smith ?-. Smith, 5 Yes. 193. See, also, Walton v. 
 Butler, 29 Beav. 428: Ex parte Emly. 1 Rose. 64. 
 
 (,;') See Ex parte Hare, 1 Deac. 25, per Sir J. Cross. 
 
 (k) See ante, p. 305 et si >/. 
 
 1 McWilliams Mfg. Co. v. Blundell, 11 Fed. Rep. 419 (1— -2 : 
 Keller v. Stolzenbach, 20 Fed. Rep. 47 (1884). These cases in- 
 volved the title to patents obtained by a partner in his own 
 name at the expense of his firm on his own inventions. It has 
 been decided that even where a partner has agreed to give his 
 whole time to the business of his firm he has the exclusive title 
 to inventions devised by him in the way of improving machin- 
 ery in furtherance of the business of the firm. Burr v. De La 
 Yergne. 102 X. Y. 415 (1886); Belcher v. Whittemore, 134 Mass. 
 330 (1883). 
 
 2 Person v. Wilson, 25 Minn. 189 (1878).
 
 JOINT PROPERTY. 309 
 
 ners, was captured by a British cruiser, and compensa- Bk. III. 
 tion was made to the Americans, but to them only, the Cbap.4. >ect. 
 
 Frenchman being expressly excluded, it was held that J 
 
 the sum awarded to the Americans belonged to them 
 
 alone, and that the Frenchman had no interest in it (I). 
 
 So, if one partner is * the lessee of property to which [ * 326] 
 
 the firm is only entitled so long as the partnership 
 
 continues, and on the dissolution of the partnership 
 
 the lease is sold or renewed, the price of the sold lease, 
 
 or the renewed lease, as the case may be, will belong, 
 
 not to the firm, but to that partner in whom the lease is 
 
 by hypothesis exclusively vested (m). 
 
 As regards property acquired after a dissolution, but Property 
 before the affairs of a dissolved partnership have been acquired 
 wound up, such property is not necessarily to be con- ^ ( 
 sidered as partnership property, even though the part- 
 ner acquiring it has continued to carry on the business 
 of the dissolved firm without the consent of his late 
 partners. This was decided in Nerot v. Burnand (n). Nerot v. 
 In that case, in effect, an hotel-keeper bequeathed his Buruanc • 
 business to his son and daughter. After the death of 
 the testator, the daughter continued to carry on the 
 business. She afterwards transferred it to a new house 
 in Clifford Street, and this house was conveyed to her 
 in fee. She continued to carry on the business there 
 for some time, and ultimately she married. During 
 the greater part of the time which had elapsed since 
 the death of the testator, his son had been abroad, and 
 on his return he insisted that he ought to be consider- 
 ed as a partner with his sister, and that as such he was 
 entitled to have the new house taken by her, and all 
 the stock in trade and effects purchased by her in or- 
 der to carry on the business, treated as partnership 
 property. The Vice- Chancellor decided that the testa- 
 tor's son and daughter had become partners, but that 
 the partnership between them had been dissolved on 
 her marriage. He also held, that the new house, and 
 all the goods, furniture, plate, linen, china, wines, 
 stock-in-trade, implements and other effects, being in 
 and about the premises, formed a part of the partner- 
 ship property. Upon appeal this decision was affirm- 
 
 (?) Campbell v. Mullett, 2 Swanst. 551. See, also, Burnand 
 v. Rodocanaehi, 7 App. Ca. 333; Thompson v. Ryan, 2 Swanst. 
 565, n.; Moffatt v. Farquharson, 2 Bro. C. C. 338. See the note 
 on this case in Belt's edition of Brown's Reports. 
 
 (to) See Burdon v. Barkus, 3 Giff. 412, aft*, on appeal, 4 De G. 
 F. & J. 42. 
 
 (n) 4 Russ. 247, and 2 Bli. N. S. 215. See, too, Payne v. 
 Hornby, 25 Beav. 2ti(J.
 
 400 
 
 PARTNERSHIP PROPERTY, 
 
 [ * 327] 
 
 Nerot v. 
 Burnand 
 
 Bk. III. ^ ed, so far as it related to the existence and subsequent 
 Chap. 4. Sect, dissolution of partnership; but was varied so far as it 
 related to what ought to be considered as partnership 
 property. *Upon this head the Lord Chancellor's 
 judgment was as follows: — 
 
 "It appears to me satifactorily made out from all the circum- 
 stances, that the house in Clifford Street was bought with the 
 partnership property; bought in the first instanee, partly with 
 the partnership property, partly with money borrowed by Miss 
 Nerot and afterwards repaid out of the partnership effects, and 
 partly upon the credit of the house that belonged to the partner- 
 ship, and I think that part of the Vice-Chancellor's decree by 
 which he directs the house to be sold, must be affirmed. 
 
 " There is a part of the decree, however, in which I cannot 
 concur. The dissolution of the partnership took place in Sep- 
 tember, 1819. The Vice-Chancellor has directed all the property 
 to be sold which was in the house in Clifford Street at the time 
 when the decree was pronounced, several years after the dissolu- 
 tion of the partnership, as if all the property which at the time 
 of the decree existed in the house was, without enquiry, to be 
 considered as partnership property. Lord Eldon doubted greatly 
 whether that part of the decree could be sustained; and in my 
 opinion it must be varied by directing the Master to take an ac- 
 count of the particulars of the partnership property which were 
 in the house in Clifford Street at the time of the dissolution, and 
 of the value of the property at that time; and to enquire whether 
 any part of that property still remains in the house (o). 
 
 The goodwill of a partnership, in so far as it has a 
 pecuniary value, is partnership property, unless the 
 contrary can be shown. This subject, however, will be 
 more conveniently discussed hereafter, when treating 
 of partnership articles (p). 
 
 Goodwill. 
 
 2. Property 
 of the in- 
 dividual 
 partners. 
 
 Section II. — Separate Estate. 
 
 The preceding enquiry into what constitutes the 
 property of the firm, has rendered it unnecessary to 
 enquire at length into what constitutes the separate 
 property of its members. A few additional observa- 
 tions, pointing out the danger of relying too much on 
 circumstances which are often regarded as decisive, may, 
 however, be usefully added. 
 
 (o) See, also, Ex parte Morley, 8 Ch. 1026, where a surviving 
 partner continued the business, sold the old stock in trade, and 
 it was held that the new stock in trade formed part of his separate 
 estate. 
 
 (p) See infra, book iii. ch. 9 § 2.
 
 SEPARATE ESTATE. 401 
 
 *It by no means follows that persons who are part- [ * 328] 
 ners by virtue of their participation in profits, are enti- Bk. III. 
 tied as such to that which produces those profits. For Cha P- 4- Sect. 
 
 example, coach -proprietors who horse a coach and J 
 
 divide the profits, may each make use of horses which That which 
 belong to himself alone and not to the firm of proprie- produces 
 tors (q). So, where a merchant employs a broker to j^m^may 
 buy goods for him and to sell them again on his account, belong to' 
 although it may be agreed that the profits are to be one partner 
 divided, the goods themselves, and the money arising ouly - 
 from their sale, are the property of the merchant, and 
 not the joint property of himself and the broker (r); 
 and it not unfrequently happens that dormant partners 
 have no interest in anything except the profits accruing 
 to the firm to which they belong (s). 
 
 Again, it by no means follows that property used by Property- 
 all the partners for partnership purposes, is partner- used lor 
 ship property. For example, the house and land in P U r tn s rSh n P t 
 and upon which the partnership business is carried on, necessarily 
 often belongs to one of the partners only, either subject partnership 
 to a lease to the firm, or without any lease at all (t). property. 
 So it sometimes happens, though less frequently, that 
 office furniture (u), and even utensils in trade (a?), are 
 the separate property of one of the partners, subject to 
 the right of the others to use them as long as the part- 
 nership continues. If, however, a partner brings such 
 property into the common stock as part of his capital it 
 becomes * partnership property, and any increase in its [ * 329] 
 value will belong to the firm (y). 
 
 It does not even necessarily follow that property Property 
 
 (q) As in Fromontr. Coupland. 2 Bing. 170; Barton ?•. Hanson, 
 2 Taunt. 49. and see Wilson v. Whitehead, 10 M. & W. 503, as 
 to an author's interest in paper supplied for this work to the pub- 
 lisher. 
 
 (>■) Smith r. Watson, 2 B. & C. 401; Meyer v. Sharp, 5 Taunt. 
 74; Burnell v. Hunt, 5 Jur. 6.50, Q. B. 
 
 (s) See Ex park Hamper, 17 Yes. 404, 405; Ex parte Chuck, 
 Mont. 373. 
 
 t s,-e Burdon v. Barkus, 3 Giff. 412, aff. on appeal, 4 DeG. F. 
 & J. 42, as to a lease of a coal mine: Ex parte Murton, 1 M. D. 
 & D. 25-2; Balmain v. Shore, 9 Yes. 500; Rowley v. Adams, 7 
 Beav. 548; Doe v. Miles. 1 Stark. 181, and 4 Camp. 373. If there 
 is no lease and the firm is dissolved, the owner can eject his late 
 partners without notice to quit. Doe v. Bluck, 8 C. & P. 464; 
 Benham v. Cray, 5 C. B. 138 'an action of trespass). As to an 
 injunction in such cases, see Elliot v. Brown, 3 Swanst. 489, a.; 
 Haw kins v. Hawkins, 4 Jur. X. S. 1044, Y.-C. Stuart. 
 
 u i Ex parte Owen, i De G. & Sm. 351. See Ex parte Hare, 1 
 Deac. 16; Ex parte Mutton, 1 M. D. & D. 252. 
 
 (x) Exparte Smith, 3 Madd. 63. 
 
 (■y) Robinson v. Ashton, 20 Eq. 25. 
 
 * 3 LAW OF PARTNERSHIP.
 
 and furni 
 ture 
 
 402 PARTNERSHIP PROPERTY. 
 
 Bk. III. bought with the money of the firm is the property of 
 
 Chap. 4. Sect. ^e g rm p or ft sometimes happens that property, 
 
 J although paid for by the firm, has been, in fact, bought 
 
 bought with for one partner exclusively, and that he has become 
 the money of debtor to the firm for the purchase money (z). 
 
 It is obvious, therefore, that the only true method of 
 Agreement determining as between the partners themselves what 
 partners the belongs to the firm, and what not, is to ascertain what 
 true test. agreement has been come to upon the subject. If there 
 is no express agreement, attention must be paid to the 
 source whence the property was obtained, the purpose 
 for which it was acquired, and the mode in which it 
 has been dealt with. The following cases, in which 
 there was very little evidence to show what agreement 
 had been made, may be usefully referred to on this 
 subject. 
 Ex parte I n Ex parte Owen (a) one Bowers, who was a grocer, 
 
 Owen. provision dealer, and wine merchant, and who possessed 
 
 Stock in trade stock in trade and household furniture at his place of 
 business, took two partners, without any agreement 
 except that they were to participate in the profits of the 
 concern. They brought in no capital and paid no 
 premium, and no deed or agreement was executed. 
 Bowers bought with his own money, but in the name 
 of the firm, new stock required for the business. Upon 
 the bankruptcy of the firm, the question arose to whom 
 the stock in trade and furniture belonged. The Court, 
 coming to the best conclusion it could from such ma- 
 terials as were before it, held that there was an agree- 
 ment between the three, expressed or implied, that all 
 the stock in trade should become the property of the 
 [ * 330] three, subject to an account, in *which the partnership 
 would be debited in favour of Bowers for the value of 
 the articles which belonged to him or for which he paid. 
 But the Court thought there was not the same ground 
 for such an inference as to the household furniture, 
 and that therefore was held to have continued and to 
 remain the separate estate of Bowers. 
 Outlays on Sometimes a firm lays out money on property which 
 
 property. belongs exclusively to one partner ; or some of the 
 partners lay out their own monies on the property of 
 the firm ; and in such cases the question arises whether 
 
 ~ (zfSee Smith v. Smith, 5 Ves. 193 : Walton r. Butler, 29 
 Beav. 428; Ex parte Emly, 1 Rose, 64. Compare the case of the 
 Bank of England, 3 De G. F. & J. 645. noticed infra, p. 330. 
 
 (n) 4 De G. & Sm. 351. See, also. Pilling v. Pilling, 3 De G. 
 J. & S. 162. As to a lease of saltworks belonging originally to 
 one partner, but which became the property of the linn, Parker 
 v. Hills-, 5 Jur. N. S. bU9, and on appeal, 7 ib. 833.
 
 SEPARATE ESTATE. 403 
 
 the money laid out can be considered as a charge on Bk. III. 
 the property on which it has been expended, or whether Cnap. 4. Sect. 
 
 the owners of the property obtain the benefit of the J 
 
 outlay. The agreement of the partners, if it can be 
 ascertained, determines their rights in such cases. 
 But where, as often happens, it is extremely difficult, 
 if not impossible, to ascertain what was agreed, the 
 only guide is that afforded by the burden of proof. It 
 is for those claiming an allowance in respect of the out- 
 lay to establish their claim. On the other hand an in- 
 tention to make a present of a permanent improvement 
 is not to be presumed. 1 
 
 In Re Streatfield, Laurence, & Company (&), two streatfield, 
 partners bought an estate with partnership money. Lawrence, & 
 The land was conveyed to them in uudivided moieties Co - 
 to uses to bar dower, and each partner built a house on H <> use s built 
 the land with money of the firm, but charged to him in ^^ 
 his private account. An account was opened in the property, 
 partnership books, and in this account the purchased 
 estate was debited with all monies of the partnership 
 expended in the purchase. At the time of the purchase 
 the land was in lease, but the tenant surrendered to the 
 partners those portions which they wanted, they reduc- 
 ing his rent. The rents, viz., both that paid by the 
 tenant for what he held, and that paid to him for what 
 he gave up, were treated in the books of the firm as paid 
 to and by it. There was evidence to show that the 
 partners intended to come to some arrangement re- 
 specting the division of the estate, but *they became [ * 331] 
 bankrupt before doing so. It was held that both the 
 land and the houses on it were the joint property of the 
 firm, and not the separate properties of the partners. 
 
 (b) Bank of England case, 3 De G. F. & J. 645. In Pawsey v. 
 Armstrong, 18 Ch. D. 698, an inquiry was directed as to build- 
 ings paid for out of partnership moneys, but erected on the 
 separate propertv of one of the partners. See, also, Burdon v. 
 Barkus, 3 Girl". 412, and 4 De G. F. & J. 42, where a pit was 
 sunk by the firm in a partner's property. 
 
 1 A. contributed certain real estate to the firm of A. and B. at 
 a valuation and was credited with its value on the books of the 
 partnership ; but he reserved the right to withdraw the property 
 on dissolution at the valuation at which he had contributed it. 
 The buildings on the premises were destroyed by fire during the 
 continuance of the firm and the firm"s money was used to re- 
 build them. The property rose in value and on dissolution 
 A. attempted to exercise the right he had reserved, paying the 
 additional cost of building, but it was held that he could not do 
 so, as by permitting the destroyed buildings to be erected at the 
 firm's expense lie had waived his right, and that the accretions 
 in value belonged to the firm. Clark's Appeal, 72 Fa. St. 142 
 (1872).
 
 404 PARTNERSHIP PROPERTY. 
 
 Bk. III. In Collins v. Jackson (c), two persons were in part- 
 
 Chap. 4. Sect, nership as solicitors, and one of them held several ap- 
 ^ pointments ; he was clerk to poor law guardians, super- 
 Collins v. intendent registrar of births, marriages and deaths, 
 Jackson. treasurer of a turnpike trust, steward of a manor, 
 Appoint- treasurer of a charity, and receiver of tithes. The 
 ments " question arose whether the profits of these offices be- 
 
 longed to tbe partnership or not. There was no writ- 
 ten agreement specifically applying to these offices, but 
 there was a memorandum relating to some others re- 
 served by the father of one of the partners when he 
 retired from business, and the Master of the Rolls held 
 that all the offices in question were to be treated as 
 held on behalf of both partners, and not for the exclu- 
 sive benefit of the partner who actually filled the 
 offices (d). 1 
 Cases where The cases, however, which present most difficulty, 
 co-owners are those in which the co-owners are partners in the 
 share profits, profits derived from their common property (e). Sup- 
 pose, for example, that two or more joint tenants, or 
 tenants in common, of a farm or a mine, work their 
 common property together as partners, contributing to 
 the expenses and sharing all profits and losses equally, 
 there will certainly be a partnership ; and yet, unless 
 there is something more in the case, it seems that the 
 land will not be partnership property, but will belong 
 to the partners as co-owners, just as if they were not 
 partners at all (/) : and the result may even be the 
 same if they purchase out of their profits other lands 
 for the purpose of more conveniently developing their 
 business (g). 
 
 (c) 31 Beav. 645. 
 
 (rf) See, also, Smith v. Mules, 9 Ha. 556 ; and Ambler v. Bol- 
 ton, 14 Eq. 427, as to the mode of dealing with such offices on a 
 dissolution. 
 
 (e) As to the distinction between co-ownership and partner- 
 ship, see ante, p. 51, et seq. 
 
 (/) See Crawshay v. Maule, 1 Swanst. 523 ; and Roberts r. 
 Eberhardt, Kay, 159. See, also, Williams v. Williams, 2 Ch. 
 294, where the partnership had expired, but an agreement to 
 divide the property was held to have been come to. 
 
 (g) Steward v. Blakeway, 4 Ch. 603, and 6 Eq. 479, a case of 
 a farm and quarry. But compare Morris v. Barrett, Phillips v. 
 Phillips, and Waterer v. Waterer, cited below. 
 
 1 A similar question arose in Caldwell v. Leiber, 7 Paige, 483 
 (1839), where A., a partner in A. and B.. Avas appointed deputy 
 postmaster, the post-office being in the store of the firm and the 
 deputy's duties being performed by the firm's clerks. It was 
 there held that the emoluments of the office were not A. 'sseparate 
 property, but belonged to the firm.
 
 SEPARATE ESTATE. 
 
 405 
 
 In jrnrris v. Barrett (h) lands were devised to two Bk. III. 
 persons * as joint tenants. They farmed those lands ^ ha P- 4 - t>ect - 
 
 together for twenty years, and kept their money in one 7 
 
 common stock to which each had access, but they never L r* Z J 
 came to any account with each other. Out of their ^J.^ 
 common stock they bought other lands, which were by (levise 
 conveyed to one of them only, but were farmed by both, farmed in 
 like the first lands. It was held that the devised farms common. 
 were not partnership property, but that the purchased "J™** - 
 farms were. 
 
 In Broicn v. Oakshot (i) a brewer devised his real Joint tenants 
 estates to trustees for a term of 500 years, upon trust, by devise 
 to pay certain annuities, and to divide the surplus J^J.^ rs m 
 rents between his sons, and he devised the same estates g rownv 
 subject to this term to his sons as joint tenants. The 0aksnot ; 
 sons carried on their father's business in partnership 
 together, and used the real estates devised to them for 
 the purpose of the- business ; but it was nevertheless 
 held that the reversion in fee continued to be vested in 
 them jointly, and not in common, as would have been 
 the case had it become partnership property. 
 
 In Phillips v. Phillips (k) public-houses were devised Public- 
 to two persons who carried on a brewery in partner- J? 11 ^* 6- 
 ship, and it was held that such houses did not become ^ tneTS in a 
 partnership property, though used for the purposes of oreW ery. 
 the partnership. In the same case some mortgage Phillips »• 
 debts secured on public- houses were bequeathed to the Phillips, 
 two partners, and they afterwards purchased the equi- 
 ties of redemption, and paid for them out of the funds 
 of the partnership, but it was held that the property 
 thus acquired did not form part of the partnership 
 property, the equities of redemption following the 
 mortgage debts. But in this very case it was held that 
 oiher public houses purchased by the partners out of 
 the partnership funds, and used for the purposes of its 
 trade, did form partnership property to all intents and 
 purposes (I). 
 
 On the other hand, in Jackson v. Jackson (m), a tes- Devisees of a 
 
 (/,) 3 Y. & J. 384. Compare Waterer v. Waterer, infra, p. 333 
 (i) 24 Beav. 254. 
 
 (k) As stated in Bisset on partnership, p. 50. The report in 
 1 M. & K. 049, is silent as to the property devised. Mr. Bisset 
 considers the decision as an authority on the point of conver- 
 sion. But if, as he represents, the Court came to the conclusion 
 that the devised property was not in fact partnership property. 
 the question of conversion would not arise. Compare Waterer 
 v. Waterer, 15 Eq. 402, infra. 
 
 (1) 1 M. & K, 649. 
 
 (m) 9 Ves. 591, and 7 ib. 535. Compare this with Brown v. 
 Oakshot, 24 Beav. 254, noticed supra.
 
 406 
 
 PARTNERSHIP PROPERTY. 
 
 [*333] 
 
 Bk. III. 
 Chap. 4. Sect. 
 2. 
 
 trade and of 
 laud for the 
 purpose of 
 carrying it 
 on. 
 
 Jackson v. 
 Jackson. 
 
 Devisees of 
 mines. 
 Crawshay v. 
 Maule. 
 
 Devise of 
 nursery 
 grounds. 
 Waterer v. 
 Waterer. 
 
 Land acquir- 
 ed for the 
 purposes of 
 trade. 
 
 [ * 334] 
 
 tator had * devised to his two sons jointly, his trading 
 business and lands used by him for the purpose of car- 
 rying it on. The sons took the business and carried it 
 on in partnership ; and it was held that the lands form- 
 ed part of the partnership property, and did not belong 
 to the sons as mere joint tenants. In this case, not 
 only was there some evidence to show that the sons 
 considered the land as part of their property as part- 
 ners, but there was also this peculiarity, that a trading 
 business was left to them, and that the land was acces- 
 sory to that trade ; so that it was very difficult, as ob- 
 served by the Lord Chancellor, to sever the profits from 
 the land and to hold the devisees to be partners as to 
 the former, but not as to the latter. 
 
 Upon this last ground it was held in Craiushay v. 
 Maule (n), that mines devised to several persons for 
 the express purpose of being worked by them in part- 
 nership, and which were worked accordingly, were 
 partnership property. 
 
 In Waterer v. Waterer (o), a nurseryman who car- 
 ried on business with his sons, although not in part- 
 nership, left his residuary estate, including the good- 
 will of his business, to his sons in common; they, 
 after his death, carried on the business in partnership, 
 and bought more land for the purposes of the busi- 
 ness, and paid for it out of his estate; then one son 
 died, and the others bought his share and paid for it 
 out of money raised by mortgage of the nursery ground, 
 and out of their father's estate. On the death of one 
 of the surviving sons intestate, it was held that all the 
 land thus acquired had become partnership property, 
 and that the share of such son was to be treated as 
 personal and not as real estate. 
 
 By a slight extension of the same principle, if sev- 
 eral persons take a lease of a colliery, in order to work 
 the colliery as partners, and they do so work it, the 
 lease will be partnership property (p). So, if co-own- 
 ers of land form a partnership, and the land is merely 
 accessory to their trade, and is treated as part of the 
 common stock of the firm, the land will be partnership 
 property (q). 
 
 * Upon the whole, therefore, it seems that land ac- 
 
 (n) 1 Swanst. 495. 
 
 (o) Waterer v. Waterer, 15 Eq. 402. See, also, Davies v. 
 Gaiues, 12 Ch. D. 813, a similar case. 
 
 (p) Faraday v. Wightwiek, Taml. 250, and 1 R. & M. 45. 
 See Beutley v. Bates, 4 Y. & C. Ex. 182. 
 
 (q) Essex v. Essex, 20 Beav. 442. Compare Steward v. Blake- 
 way, 4 Ch. 603, and 6 Eq. 479.
 
 CONVERSION OF JOINT ISTO SEPARATE PROPERTY. 407 
 
 quired, whether gratuitously or not, for the purpose of Bk. III. 
 carrying on a partnership business, and used for that Chap. 4. Sect. 
 
 purpose, is to be considered as property of the partner- _! 
 
 ship; but that land which is not so acquired, but which Result of 
 belonging to several persons jointly or in common, is i° re g° in g 
 employed by them for their common profit, does not be- 
 come partnership property unless there is some evi- 
 dence to show that it has been treated by them as an- 
 cillary to the partnership business, and as part of the 
 common stock of the firm (r). 1 
 
 Section III. — Conversion of Joint Estate into Sepa- 
 rate Estate, and Vice Versa. 
 
 It is competent for partners by agreement amongst 3. Agreement 
 themselves to convert that which- was partnership pro- sufficient to 
 perty into the separate property of an individual part- * owners hip f 
 ner, or vice versQ, (s). 2 And the nature of the property property, 
 may be thus altered by any agreement to that effect; 
 for neither a deed nor even a writing is absolutely nec- 
 
 (>•) See Steward v. Blakeway, 4 Ch. 603, and 6 Eq. 479, and 
 cases ante, p. 332. 
 
 (.s) Ex parte Ruffin, 6 Ves. 119; Ex ■parte Williams, 11 ib. 3; 
 Ex parte Fell, 10 ib. 348; Ex parte Rowlandson, 1 Rose, 416. 
 
 1 Tbe whole question is one of intention; save that in Penn- 
 sylvania in order that this intention shall be binding on others 
 beside the partners themselves it must be in writing and those 
 ■writings properly recorded. Hale v. Henrie, 2 Watts, 143 
 (1834); DuBree v. Albert, 100 Pa. St. 483 (1882); Kepler v. Erie 
 Dime Sav. & Loan Co., 101 Pa. St. 602 (1882); Shafer's Appeal, 
 106 Pa. St. 49 (18-84). The mere fact that A. and B. who are 
 partners hold land together does not stamp the land as partner- 
 ship property. It must be shown it was acquired for partner- 
 ship purposes. Thompson v. Bowman, 6 Wall. 316 (1867). Kor 
 does it prove the land partnership property if in such a case the 
 joint owners use it in the transaction of the firm's business, as 
 where, for example, A. and B. bought land together, built upon 
 it and subsequently carried on a boarding house upon the prem- 
 ises; Sikes r. Work, 6 Gray, 433 (1856): and in Coles v. Coles. 15 
 Johns. 159 (1817), the fact that the owners of a distillery were the 
 partners in the business carried on in the property did not, it 
 was held, establish tbe claim that the premises were the prop- 
 erty of the firm. In Louisiana where partners in a commercial 
 firm own land, it is always regarded as separate property of 
 which they are tenants in common, and it is not regarded as 
 part of the firm's assets. Guilbian v. Melancon, 28 La. Ann. 
 627 (1876). 
 
 2 Whitworth v. Benbow. 56 Ind. 194 (1877); Bullitt v. Church, 
 26 Pa. St. 108 (1856); Dimon r. Bazzard, 32 N. Y. 65 (1865); 
 Evans v. Hawley, 35 Iowa, 83 (1872); Bank v. West, 46 Me. 15 
 (1858); (.illisso v. Gibson, La. Ann. 125 (1851).
 
 408 PARTNERSHIP PROPERTY. 
 
 Bk. III. essary (f) 1 ; but so long as the agreement is depend- 
 
 Chap. 4. Sect. en ^. on an unperformed condition, so long will the own- 
 
 J ership of the property remain unchanged (u). 2 
 
 Creditors not Moreover, as the ordinary creditors of an individual 
 entitled to be ^ ave no \[ en OI1 h.j s property, and cannot prevent him 
 consu e . f rom disposing of it as he pleases, so the ordinary 
 creditors of a firm have no lien on the property of the 
 firm so as to be able to prevent it from parting with 
 [ * 335] that property to whomsoever it * chooses. 8 Accord- 
 ingly it has frequently been held, that agreements 
 come to between partners converting the property of 
 the firm into the separate estate of one or more of its 
 members, and vice versa, are, unless fraudulent, bind- 
 ing not only as between the partners themselves, but 
 also on their joint and on their respective several cred- 
 itors; and that, in the event of bankruptcy, the trus- 
 tees must give effect to such agreements (x). 
 
 (t) See Pilling v. Pilling, 3 De G. J. & Sm. 162; Ex parte 
 "Williams, 11 Vas. 3; Ex parte Clarkson. 4 D. & C. 56, per Sir G. 
 Rose; Ex parte Owen, 4 De G. & Sm. 351. None of these eases. 
 however, turned on the effect of an unwritten agreement relat- 
 ing to land. See, as to a transfer by a partner of his shares in 
 the partnership property when it consists wholly or in part of 
 land, post, ch. 5, \ 5. 
 
 (u) Ex parte Wheeler, Buck. 25; Ex parte Cooper, 1 M. D. & 
 D. 358; Hawkins r. Hawkins, 4 Jur. N. S. 1044. 
 
 (x) See E.c parte Ruffin, and the other cases cited in the last 
 
 1 In Jones v. Neale, 2 Patt. & H. (Va.) 339(1856), it was held 
 that a mere agreement, unsealed and unrecorded, that real es- 
 tate shall be the separate property of one partner is inoperative. 
 
 2 Fitzgerald v. Cross, 20 N. J. Eq. 90(1869). 
 
 3 See Locke v. Lewis. 124 Mass. 1 (1878); Case v. Beauregard, 
 99 U. S 119(1878); State v. Thomas, ? Mo. App. 205 (1879); 
 Allen r. Center Valley Co., 21 Conn. 130 (1851); Shackleford v. 
 Shackleford, 32 Graft' 481 (1879); Miller v. Price, 20 Wis. 117 
 (1865); Fitzpatrick v. Flannagan, 106 U. S. 648 (1882); Foster 
 v. Barnes, 81 Pa. St. 377 (1876); Strauss r. Frederick. 91 N. Ca. 
 121 (1884). In New Hampshire it has been held that, creditors 
 have rights over the assets of the firm independent of the equi- 
 ties of the partners. Ferson r. Monroe, 21 N. H. 462 (1850); 
 Benson v. Ela, 35 N. H. 402 (1857); Tenney v. Johnson, 43 N. 
 H. 144 (1861). And in Conroy v. Woods, 13 Cal. 626 (1859), it 
 was held that where one partner buys out his associates upon 
 the agreement to pay the firm debts, the partnership creditors 
 have a priority over his separate creditors to the extent of the 
 firm assets; but this doctrine is denied in City of Maquoketa v. 
 Willey, 35 Iowa, 3-23 (1872); see Baker's Appeal, 21 Pa. St. 77 
 (1853). Transfers of firm property to an individual partner have 
 been held void as against partnership creditors without notice 
 for the want of a change in possession. Moline Wagon Co. v. 
 Rummell, 2 McCrarv. 307, 12 Fed. Rep. 658 (1880); 14 Id. 155 
 (1882); Newell r. Desmond, 63 Cal. 242 (1863,; Criley v. Vasel, 
 52 Mo. 455 (1873).
 
 CONVERSION' OF JOINT INTO SEPARATE PROPERTY. 409 
 
 A conversion of joint into separate property, or vice Bk- HI. 
 versd, most frequently takes place when a firm aDd one ^ ha P- 4 Sect - 
 
 of its partners carry on distinct trades ; or when a J 
 
 change occurs in a firm by the retirement of some or 
 one of its members, or by the introduction of a new 
 partner. 
 
 When a firm and one of its members carry on dis Dealings be- 
 tinct trades, property passing in the ordinary way of tween one 
 business from the partner to the firm, ceases to be his 5j* rt ]? er aud 
 and becomes the property of the partnership, and vice 
 versa, just as if he were a stranger to the firm. This 
 was settled in the great case of Bolton v. Puller(y), in Bolton v. 
 which there were two banking firms, one carrying on Puller - 
 business at Livei-pool aud one in London. All the part- 
 ners in the latter firm were partners in the former. 
 Some bills of exchange came in the ordinary course of 
 business into the hands of the Liverpool firm, to be 
 placed to the general account of its customers. These 
 bills were remitted by the Liverpool firm to the Lon- 
 don firm, to be placed to the credit of the former in 
 the general account between the two houses. Both 
 houses afterwards becoming bankrupt, it was held that 
 the bills were the property of the London firm and not 
 of the Liverpool firm, or of its customers. Lord C. J. 
 Eyre, in delivering judgment, adverted to the question 
 now under consideration in the following terms : — 
 
 "There can be no doubt that as between themselves a part- 
 nership may have transactions with an individual partner or 
 with two or more of the partners having their separate estate en- 
 gaged in some joint concern in which the general partnership is 
 not interested ; and that they may by * their acts convert the [ * 336] 
 joint property of the general partnership into the separate prop- 
 erty of an individual partner, or into the joint property of two 
 or more partners, or c converso. And their transactions in this 
 respect will, generally speaking, bind third persons, and third 
 persons may take advantage of them in the same manner as if 
 the partnership were transacting business with strangers: for 
 instance, suppose the general partnership to have sold a bale of 
 goods to the particular partnership, a creditor of the particular 
 partnership might take those goods in execution for the sep- 
 arate debt of that particular partnership." 
 
 Where a change occurs in a firm by the retirement of Change of 
 one or more of its members, nothing is more common property on 
 than for the partners to agree that those who continue g^" e ln 
 
 two notes, and Campbell v. Mullett, 2 Swanst. ".75; Ex parte 
 Clarkson, I I). & Ch. 56; Ex parte Pcake, 1 Madd. 358. 
 (y) 1 Bos. & P. 539.
 
 410 PARTNERSHIP PROPERTY. 
 
 Bk. III. the business shall take the property of the old firm and 
 
 Chap. 4. Sect. p a y ^ ts a eD ts, or that part of the property of the old 
 
 firm shall become the property of those by whom its 
 
 business is to be continued, whilst the rest of the prop- 
 erty shall be otherwise dealt with. So, again, when a 
 partnership is first formed, or when a new partner is 
 taken into an existing firm, or when two firms amalga- 
 mate into one, some agreement is generally come to by 
 which what was before the property of some one or 
 more only of the members of the firm, becomes the 
 joint property of all such members. All such agree- 
 ments, if bond fide, and not fraudulent against credit- 
 ors, are valid, and have the effect of altering the equi- 
 table ownership in the property affected by them (z). 1 
 Ex parte In Ex parte Ruffin (a), which is the leading case on 
 
 Euffiu. thjg subject, Thomas Cooper, a brewer, took James 
 
 Cooper into partnership. That partnership was after- 
 wards dissolved by articles, by which the buildings, 
 
 (z) Such an agreement is not a breach of a covenant not to as- 
 sign without the consent of the lessor. See Corporation of Bris- 
 tol ». Westcott, 12 Ch. D. 461 ; Varley v. Coppard, L. R. 7 C. 
 P. 505. 
 
 (a) 6 Ves. 119. See, too. Ex parte Walker. 4 De G. F. & J. 
 509 ; Ex parte Sprague, 4 De G. M. & G. 866; Ex parte Clark- 
 on, 4 D. & Ch. 56 ; Ex parte Gurney, 2 M. D. & D. 541 ; Ex 
 parte Peake, 1 Madd. 346 : Ex parte Fell, 10 Ves. 348. 
 
 1 The retiring partner who assigns his interest in the firm as- 
 sets to his associates who continue the business in consideration 
 of their agreement to pay the old firm's debts has no lien upon 
 the property of the old firm and loses his right over it as a part- 
 ner. Those assets become the separate property of the contin- 
 uing partners. This is true also where a stranger buys the re- 
 tiring partner's interest and forms a new partnership with the 
 continuing partner and the- new firm assumes the payment of 
 the old firm' debts in consideration of the transfer of the assets. 
 Baker's Appeal. 21 Pa. St. 76 (1853); Clarke's Appeal. 107 Pa. 
 St. 426 (1884); Vosper v. Kramer, 31 N. J. Eq. 420 (1879); 
 Maqnoketaw. Willev, 35 Iowa, 323 (1872); Howe v. Lawrence. !) 
 Cush. 553 (1852); Goembell v. Arnett, 1C0 111. 34 (1881); Emer- 
 son v. Parsons. 46 N. Y. 560 (1871): Trentman v. Swartzell, 85 
 Ind. 443 (1882); Allen r. Grissom. 90 N. Ca. 90 (1*84): Utley v. 
 Smith, 24 Conn. 290 (1855); Ackley v. Winkelmeyer, 56 Mo. 
 562 (1874). It is said, however, that the partner's lien in the 
 cases above referred to may be preserved by express agreement 
 Savage r . Carter. 9 Dana 408 (1840): Rogers v. Nichols, 20 Texas. 
 719 (1858). Where the purchaser agrees to pay the debts of the 
 old firm out of the assets he received, the partner may insist on 
 the application of the proceeds of those assets to the extinguish- 
 ment of his firm's indebtedness, Shackleford v. Shackleford, 32 
 Graft, 481 (1879); Kelsey v. Hobby, 16 Pet. 269 (1842); Harmon 
 v. Clark, 13 Gray.114 (1859). Where such a right is reserved by 
 a partner, it extends to the whole of the assets of his firm and 
 not merely' to his proportion thereof. Northrup v. McGill, 27 
 Mich. 234(1873).
 
 CONVERSION OF JOINT INTO SEPARATE PROPERTY. 411 
 
 premises, stock in trade, debts, and effects were as- Bk. III. 
 signed to James by Thomas, who retired. James after- Chap. 4. Sect. 
 
 wards became bankrupt, and some of the partnership J 
 
 debts being unpaid, an attempt was made to have what 
 had been the property of the partnership applied in 
 liquidation of those debts. But it was held that such 
 property was no * longer the joint property of the two [ * 337] 
 partners, but had been converted into the separate 
 property of James. 
 
 Ex parte Williams (b) was a similar case, only that Ex parte 
 on the dissolution no assignment was made. There Williams, 
 was not even any written agreement showing the terms 
 on which the dissolution took place. But it was sworn 
 that the partner who continued the business was to 
 take all the stock and effects of the old firm ; and it 
 was held that they had become his separate property, 
 and could not be considered as the joint property of 
 the dissolved partnership. 
 
 These decisions have always been regarded as settling 
 the law upon the subject of conversion of partnership 
 property, and have been constantly followed. They 
 were not, it will be observed, decided with reference to 
 the doctrine of reputed ownership, but with reference 
 only to the real agreement come to between the part- 
 ners. They apply as much to cases of a change of 
 interest on death as on retirement (c). 
 
 The case of Ex parte Owen (d), which has been Ex parte 
 already referred to (e), shows that similar principles <Jwen - 
 must be applied in order to determine what, on the 
 formation of a partnership, has been converted from 
 separate into joint estate (f). 
 
 In order, however, that an agreement may have the Agreement 
 effect of converting joint into separate estate, or vice must be 
 versa, the agreement must be executed, and not be executed - 
 executory merely, In Ex parte Wheeler (g), a retiring Ex parte 
 Wheeler. 
 
 (b) 11 Ves. 3. Compare Ex parte Cooper, 1 M. D & D. 358. 
 
 (c) See Be Simpson, 9 Ch. 572 ; and compare Ex parte Morley, 
 8 Ch. 10-26, and Ex parte The Manchester Bank, 12 Ch. D. 917, 
 and 13 ib. 46."). These three cases turned on the construction of 
 the partnership articles, combined in the last two with the wills 
 of the deceased partners. The wills and the articles together 
 prevented a conversion. 
 
 (d) 4 De. G. &Sm 351. 
 le) Ante, p. 329. 
 
 (/) See, too, Ex parte Barrow, 2 Rose, 252: and Belcher v. 
 Sikes, 8 B. & C. 1*5. for a case where separate estate was made 
 joint by a deed of dissolution not clearly expressed. 
 
 {g) Buck. 25. See, too. Ex parte Wood, 10 Ch. I). 554; Ex 
 parte Cooper, 1 M. D. & D. 358 ; and the case of the Bank of 
 England, 3 De G. F. & J. 645, noticed ante, p. :530 ; and com-
 
 412 PARTNERSHIP PROPERTY. 
 
 Ek. III. partner and a continuing partner entered into an agree- 
 
 onap. 4. sect. men fc in writing, by which the retiring *partner assigned 
 
 J the stock, goodwill, lease, furniture, fixtures, books, 
 
 [ * 338] and debts of the firm, to the continuing partner, and 
 the latter agreed to pay certain debts of the partner- 
 ship for which his father, he said, would be security. 
 The father, however, refused to give any security, and 
 this further act was necessary to be done in order to 
 complete the transfer of the property. The continuing 
 partner having become bankrupt, the court held that 
 the property of the old firm had not been converted 
 into the separate estate of the continuing partner, the 
 agreement being still executory when the bankruptcy 
 occurred. 
 Effect of Moreover, an agreement which can be successfully 
 
 fraud. impeached for fraud, will not affect the property to 
 
 which it may relate (h); 1 and it must not be forgotten, 
 that in the event of bankruptcy, the trustee, as repre- 
 senting the creditors, may be able to impeach as 
 fraudulent against them, agreements by which the 
 bankrupt himself would have been bound (*). In a 
 case where both the partnership and the individual 
 partners were insolvent, an agreement by one of them 
 transferring his interest to the others,' and thereby 
 converting what was joint estate into the separate estate 
 of the transferee, was held invalid ; for, although no 
 fraud may have been intended, the necessary effect of 
 the arrangement was to delay and defeat the joint 
 creditors (k). The firm became bankrupt shortly after 
 the assignment was made. 
 
 pare Ex parte Gibson, 2 Mont. & Ayr. 4 : Ex parte Sprague, 4 De 
 G. M. & G. 866 ; Hawkins v. Hawkins. 4 Jur. N. S. 1044. 
 
 (/<) Ex parte Rowlandson, 1 Rose, 416. 
 
 (i) See Be Kemptner, 8 Eq. 286 ; Anderson v. Maltby, 2 Ves. 
 J. 244 ; Billiter v. Young, 6 E. & B. 40. 
 
 (k) Ex parte Mayou, 4 D. G. J. & S. 664 ; Ex parte Walker. 4 
 De G. F. & J. 509." See. also, Luff v. Horner, 3 Fos. & Fin. 480, 
 which seems to have been a clear case of fraud upon a creditor. 
 
 1 Second Nat. Bank v. Farr (N. J.), 7 Atl. Rep. 892(1886); 
 Bank v. Smith, 26 W. Va. 541 (1886); Phelps v. McNeely, 66 
 Mo. 554 (1877).
 
 GENERAL NATURE OF SHARES. 413 
 
 * CHAPTER V. [*339] 
 
 OF SHARES IN PARTNERSHIPS. 
 
 In the present chapter it is proposed to examine the Bk. III. 
 following subjects : — Chap. 5. 
 
 § 1. The nature of a share in a partnership, and the Subject of 
 rules which govern its devolution in case of death. present 
 
 § 2. The amount of each partner's share. chapter. 
 
 § 3. The lien which each partner has on the joint 
 property, and on the shares of his co-partners. 
 
 § 4. The mode in which a share is taken in execution 
 for the separate debts of its owner. 
 
 § 5. The transfer of shares. 
 
 Section I. — Of the Nature of a Shake, and the .Rules 
 Which Govern its Devolution in Case of Death. 
 
 In the absence of a special agreement to that effect, Nature of a 
 all the members of an ordinary partnership are inter- share in a 
 ested in the whole of the partnership property ; but it nrm - 
 is not quite clear whether they are interested therein as 
 tenants in common, or as joint tenants without benefit 
 of survivorship, if indeed there is any difference between 
 the two. It follows from this community of interest, 
 that no partner has a right to take any portion of the 
 partnership property, and to say that it is his exclu- 
 sively (a). No partner has any such right, either 
 during the existence of the partnership or after it has 
 been dissolved. 1 
 
 What is meant by the share of a partner is his pro- gh are a 
 portion of the partnership assets after they have been right to 
 
 (a) Lingen v. Simpson, 1 Sim. & Stu. 600 ; CockTe v. Whitiug, mone y- 
 Taml. 55 ; and see the cases cited in the next note. 
 
 1 A partner has no special interest in any particular piece of 
 property belonging to his firm. His interest is to receive his 
 proper proportion of the whole amount of assets remaining after 
 the payment of all the firm's debts. Trowbridge v. Cross, 117 
 111. 109 (1886); Tobey v. McFarlin, 115 Mass. 98 (1874); Filley 
 r. Phelps, 18 Conn. 294 (1847); Staats v. Bristow, 73 N. Y. 264 
 (1878).
 
 414 SHARES. 
 
 Bk ' IJI " „, a ^ realised and converted into money, and all the debts 
 Chap. o. beet. an( j liabilities have been paid and discharged (b). This 
 
 J it is, and this only, which * on the death of a partner 
 
 [ * 340] passes to his representatives, or to a legatee of his 
 share (c); which under the old law was considered as 
 bonanotabilia (d); which on his bankruptcy passes to 
 his trustee (e); and which the sheriff can dispose of 
 under a ft. fa. issued at the suit of a separate cred- 
 itor ( / ), or under an extent at the suit of the Crown (g). 
 it is however to be observed that the Crown never holds 
 jointly or in common with its subjects (h). Conse- 
 quently, if a partner is outlawed, whereby his interest 
 in the partnership is forfeited, the other partners lose 
 their interests also; the Crown jrst taking the share of 
 the delinquent partner, and then by its prerogative ex- 
 cluding the other partners with whom it would other- 
 wise be a tenant in common. It need hardly be said 
 that this prerogative is not enforced in modern times (i). 1 
 
 Of the doctrine of non- survivorship between -partners. 
 
 Jus accres- -^ * s an °^ anc * well-established maxim, that Jus ac- 
 
 cendi, &c. crescendi inter mercatores locum non habet (k). This 
 
 (b) See Doddington r. Hallet, 1 Ves. S. 498-9 ; Croft v. Pike, 3 
 P. W. ISO ; West v. Skip, 1 Ves. S. 242 ; Taylor v. Fields, 4 Ves. 
 396 ; Crawshay v. Collins, 15 Ves. 229 ; Featherstonhaugh v. Fen- 
 wick, 17 Ves. 298 ; Darby v. Darby, 3 Drew. 503. 
 
 (c) Farquhar v. Hadden, 7 Ch. 1. See infra, bookiv. ch. 3, §3. 
 
 (d) Ekins v. Brown. 1 Spinks, Ecc. & Adm. Rep. 400 ; A.-G. v. 
 Higgins, 2 H. & N. 339. See, as to the locality of a share, Be 
 Ewing, L. R. 6 P. D. 19. 
 
 (e) See the last note but two, and Smith v. Stokes. 1 East, 363. 
 (/) Skip v. Harwood, 2 Swanst. 586 ; Re Wait. 1 Jac. & W. 
 
 605 ; Johnson v. Evans, 7 Man. & Gr. 240. 
 
 (g) R. v. Sanderson. Wight w. 50; R. r. Rock. 2 Price, 198 ; R. 
 v. Hodge, 12 ib. 537 ; Spears v. The Lord Advocate. 6 CI. & Fin. 
 180. 
 
 (/;) 2 El. Com. 409 ; Hales v. Petit, Plow. 257. 
 
 (i) See Collyer on Partn. 72. Forfeiture for felony and treason 
 was abolished by 33 & 34 Vict. c. 23, % 1. See ante, p. 74. 
 
 (fc) Co. Lit. 182 a. 
 
 1 If a partner mortgage or sell his interest in the firm property, 
 his mortgagee or assignee takes no greater right than he had him- 
 self and is entitled only to the surplus of assets over the firm 
 debts. Matlack v. James, 13 N. J. Eq. 126 (1861): Beecher v. 
 Stevens, 43 Conn. 587 (1876); Bank v. Sawyer, 38 Oh. St. 339 
 (1882): Hiscock v. Phelps. I!) X. Y. 97 (1872V The surpluseov- 
 ered by a mortgage of a partner's interest is that remaining at the 
 time of the foreclosure proceedings and not that of the date of the 
 mortgage. That is, such a mortgage is subject to the subse- 
 quently arising equities and indebtedness of the firm as well as 
 those existing at the time of its execution. Churchill i>. Proctor. 
 31 Minn. 1:29 (1883) ; Burbank v. Wiley, 79 N. Ca. 501 (1878) ; 
 Bank v. Godwin, 5 N. J. Eq. 334 (1846).'
 
 NON-SURVIVORSHIP BETWEEN PARTNERS. 415 
 
 is a common law, and not only an equitable maxim; but Bk. III. 
 whilst its application in equity was subject to few, if ^" a l'- •-'• Sect. 
 
 any, exceptions (I), it was not at law so universally ap- _! 
 
 plicable as the generality of its terms might lead one to 
 suppose. 
 
 *As regards real property and chattels real, the legal [ * 841] 
 estate in them is governed by the ordinary doctrines of Devolution 
 real property law ; and, therefore, if several partners ot ^gal 
 are jointly seised or possessed of land for an estate in lam j 
 fee, or for years, on the death of any one; the legal es- 
 tate therein will devolve on the surviving partners (m) ; Rule as to 
 and they can mortgage it for partnership debts (n) and tne equitable 
 sell it for the purpose of winding up the affairs of the 
 partnership (o). But the surviving partners are, as 
 regards the interest of the deceased j^artner, deemed 
 to be trustees thereof for the persons entitled to his es- 
 tate, and are compellable to account with them accord- 
 ingly (p). This, however, is only the case on the as- 
 sumption that the property in question is partnership 
 property, and forms part of the common stock in which 
 the deceased had an interest as a partner (q)} 
 
 (!) In Nelson v. Bealby, 4 De G. F. & J. 321, affirming S. C, 
 30 Beav. 472, articles of partnership provided that on the death 
 of A. his executors should receive one-half of the assets from B. ; 
 hut they were silent as to what was to be done on the death of B. 
 It was, however, held that his executors were entitled to half the 
 assets from A. 
 
 (m) Jefferys v. Small, 1 Vern. 217 ; Elliott v. Brown, 3 
 Swanst, 489. 1 n. 
 
 (n) Re Clough, 31 Ch. D. 324, and anie, p. 218. 
 
 (o) Shanks v. Klein, 15 Otto, 18 (Amer.). See, also, West of 
 England, &c, Bank v. Murch, 23 Ch. D. 138. 
 
 ( p) Jefferys v Small, 1 Vern. 217 ; Lake v. Craddock. 3 P. W. 
 158 ; Lake v. Gibson, 1 Eq. Ca. Ah. 290 ; Elliott v. Brown, 3 
 Swanst. 489, n. ; Lyster v. Dolland, 1 Ves. J. 435 ; Jackson v. 
 Jackson, 9 Ves. 596, 597. See, also, Re Ryan. L. R. Ir. 3 Eq. 
 222, where title of persons claiming under a deceased partner 
 prevailed against a mortgagee of the surviving partner ; the 
 mortgage being for hid separate debt, and the mortgagee having 
 notice of the equitable interest. As to part of the property there 
 was no such notice, and as to that the mortgagee's title pre- 
 vailed. 
 
 (q) Morris v. Barrett, 3 Y. & J. 384 ; Reilley v. Walsh, 11 Ir. 
 Eq. 22. A case of a lease acquired for the purpose of a partner- 
 ship which was never formed. See ante, p. 331. 
 
 1 Joint tenancy has generally in America been deprived by 
 statute of the incident of survivorship. Therefore, the legal 
 title to the interest of a partner in the lands held by himself 
 and his associates for the purposes of a partnership, descends upon 
 his death to his heirs at law subject to the claims of his partners 
 and the creditors of the firm. King r. Weeks, 70 N. Ca. 372 
 (1874) ; Whitman r. R. R. Co., 3 Allen 133 (1861) ; Bufi'um v. 
 Buffum, 49 Me. 108 (1801); Abernathy v. Moses, 73 Ala. 381
 
 410 
 
 SHARES. 
 
 Bk. III. 
 Chap. 5. Sect. 
 1. 
 
 Devolution 
 
 [*342] 
 
 of choses in 
 action. 
 
 As regards choses in action, the right to sue for a 
 debt owing to the firm, as well as the liability to bo 
 sued for a debt owing by it, also, at law, devolved, in 
 the event of the death of one partner, upon the surviv- 
 ing partners exclusively (r). In equity, * however, the 
 leo-al personal representatives of a deceased partner 
 were entitled to have a debt due to the partnership 
 brought into account by the surviving partners (s), and 
 were liable to be proceeded against by a creditor of the 
 firm (t). The Judicature Acts have not materially 
 altered the law in this respect (u). 1 
 
 (r) Kemp v. Andrews, Carth. 170 ; Dixon v. Hammond, 2 B. 
 & A. 310 ; Martin v. Crompe, 1 Lord Raymond, 340, and 2 Salk. 
 344 ; and see Slipper v. Stidstone, 5 T. R. 493 ; French r. And- 
 rade, 6 T. R. 582. There is indeed an old casein which an ac- 
 tion of assumpsit for a partnership deht was held to be properly 
 brought by the executors of a deceased partner, and the surviv- 
 ing partners jointly ; Hall v. Huffam, alias Hall v. Rougham, 2 
 Lev. 188 and 228, and 3 Keble, 798 ; but this case is in direct 
 opposition to the last cited, and is contrary to what was clearly 
 settled before the Judicature Acts. 
 
 (s) The receipt of the suvivors for a debt due to the firm is a 
 good discharge to the debtor, Brasier v. Hudson, 9 Sim. 1 ; Phil- 
 ips v. Philips, 3 Ha. 281 ; and the surviving partner can, with- 
 out making the executors of the deceased parties, sustain an 
 action for an account against a debtor to the firm. Haig v. Gray, 
 3 De G. & Sm. 741. 
 
 (i) Ante, book ii. ch. 2, ?. 1. 
 
 («) See ante, book ii. ch. 2 and 3. 
 
 (1882) ; Cobble v. Tomlinson, 50 Ind. 550 (1875) ; Buchan v. 
 Sumner, 2 Barb. Ch. 165<1847). Real estate acquired for part- 
 nership use is indeed regarded as converted to personalty ; but 
 the conversion in America is only for. the purposes of the part- 
 nership and not so far as concerns the devolution of the land 
 upon the death of one of the partners. The share of a deceased 
 partner in the surplus of real estate remaining after the dis- 
 charge of all the demands against the firm, and the complete 
 adjustment of its affairs goes to his heirs subject to his widow's 
 dower and not to his executor or administrator. Foster's Ap- 
 peal, 74 Pa. St. 391 (1873); Leaf's Appeal, 105 Pa. St. 505 
 (1884) ; Shearer r. Shearer, 98 Mass. 107 (1867) ; Strong v. Lord, 
 107 111. 25 (1883) ; (.rissoni v. Moore, lOGInd. 290 (1885) ; Good- 
 burn r. Stevens, 5 Gil. 1 (1847) ; Fairchild v. Fairchild. 64 X. Y. 
 471 (1876); Campbell v. Campbell, 30 N. J. Eq. 415 (1878) ; 
 Buffum v. Buffum, 49 Me. 108 (1861). Of course, since the right 
 to settle the firm's business belongs to the surviving partner, he 
 is entitled to the control of the real estate of the firm in order 
 to effect a settlement. Merritt v. Dickey, 38 Mich. 41 (1878) ; 
 Shanks v. Klein, 104 U. S. 18 (1881) ; Easton v. Courtw right. 84 
 Mo. 27 (1884) : Keith v. Keith, 143 Mass. 262 (1887). 
 
 1 On the death of a partner the title to the firm's choses in 
 action vests in the surviving partner and he must bring the action 
 for their recovery in his own name without joining as co-plain- 
 tiffs with himself the personal representatives of the decedent. 
 Davis v. Church, 1 W. & S. 240 (1841) ; Wallace v. Fitzsimmons,
 
 NON-SURVIVORSHIP BETWEEN PARTNERS. 417 
 
 As regards ordinary chattels, it was held in Buckley Bk. III. 
 v. Barber (v), that the interest of a deceased partner Chap. o. Sect 
 
 in chattels belonging to the firm did not devolve upon 1 ___ 
 
 the surviving partners, so as to enable them to give a Devolution 
 good legal title to the chattels as against the executors ot ordinary 
 of the deceased ; and that consequently such chattels a e 
 might be seized under a fi. fa. issued on a judgment b^J^ ' 
 obtained against the executors by a separate creditor 
 of the deceased partner (x). 1 
 
 The extent to which goodwill survives will be noticed Goodwill, 
 hereafter (y). 
 
 Before quitting the present subject, it may be ob- 
 served that the doctrine of non-suvivorship amongst 
 partners is not confined to merchants nor even to 
 traders, but extends to partners generally (z). But it 
 does not apply to societies not having gain for their 
 object, and the members of which are merely joint 
 tenants of the property they hold (a). 
 
 (v) Buckley v. Barber, 6 Ex. 164 ; and see per Dampier, J., 
 in R. v. The Collectors of Customs, 2 M. & S. 223. 
 
 (,i-) This case was certainly perplexing. It made a useless 
 distinction between land, debts and ordinary chattels ; it logic- 
 ally involved the consequence that a surviving partner could 
 only properly sell his share of a partnership cuattel ; and it 
 was inconsistent with the principles which induced courts of 
 equity to decline (except under special circumstances) to grant 
 a receiver at the intance of the executors of a deceased against 
 a surviving partner. In Taylor v. Taylor, 7 Mar. 1873, Lord 
 Justice James, sitting for V.-C. Wickens, expressed bis disap- 
 proval of Buckley v. Barber. All this is, however, of little 
 consequence now. 
 
 (y) See book iii. ch. 9, \ 2. 
 
 (z) See Buckley v. Barber. 6 Ex. 164 ; Aunand v. Honiwood, 
 2 Ch. Ca. 129 ; Jefferys v. Small, 1 Vern. 217 ; Lake v. Gibson, 
 1 Eq. Ca. Ab. 290 ; Lake v. Craddock. 3 P. W. 158. 
 
 (a) As an instance, see Brown v. Dale, 9 Ch. D. 78. 
 
 1 Dall. 248 (1788) ; Manning v. Brickell, 2 Havw. (N. Ca.) 133 
 (1800) ; Stevens r. Rollins, 34 Me. 226 (1852) ; Davidson v. 
 Weems, 58 Ala. 187 (1877); Bassett v. Miller, 39 Mich. 133 
 (1878) ; Ambs v. Caspari, 13 Mo. App. 586 (1882) ; Daby v. 
 Ericsson, 49 N. Y. 786 (1872). 
 
 1 The same doctrine is enunciated i:i Tremper v. Conklin, 44 
 N. Y. 58, 61-2 by Earl, Com. A number of authorities declare 
 that of the firms chattels in possession of the surviving partner 
 and the executors of the deceased partner are tenants in com- 
 mon. Wilson v. Soper, 13 B. Mon. 411 (1853) ; Adams ?;. Ward, 
 26 Ark. 135 (1870) ; Skipwifh v. Lea, 16 La. Ann. 247 (1861). 
 But the doctrine is repudiated by the weight ot authority ; see 
 Oram?;. Rothermel, 98 Pa. St. 300 (1881) :' Betta v. June, 51 N. 
 Y. 274 (1873) ; Adams v. Hackett, 27 N. II. 289 (1883) : Filley 
 v. Phelps, 18 Conn. 291 (1847) ; Bassett v. Miller. 39 Mich. 133 
 (1878) ; Robertshaw v. Hanwav, 52 Miss. 713 (1876) : Smith r. 
 Wood, 31 Md. 293 fl869) ; Mendenhall v. Benbow, 84 N. Ca. 646 
 (1881) ; Bohler v. Tappan, 1 Fed. Rep. 469 (1880). 
 
 * 4 LAW OF PARTNERSHIP.
 
 418 
 
 SHARES. 
 
 [ * 343] 
 
 * Of the doctrine that shares are personal estate. 
 
 Shave 
 
 personal 
 
 estate. 
 
 Bk. III. From the principle that a share of a partner is noth- 
 
 Chap. 5. Sect, ing more than his proportion of the partnership assets 
 
 !■ after they have been turned into money and applied in 
 
 liquidation cf the partnership debts, it necessarily fol- 
 lows that, in equity, a share in a partnership, whether 
 its property consists of land or not, must, as between 
 the real and personal representatives of a deceased 
 partner, be deemed to be personal and not real estate, 
 unless indeed such conversion is inconsistent with the 
 agreement between the parties (b). 1 And although the 
 decisions upon this point are conflicting, the authorities 
 which are in favour of the above conclusion certainly 
 preponderate over the others. 
 
 In Thornton v. Dixon (c), the Court recognised the 
 rule that partnership property must be considered as 
 personal estate; but held that the lands which were 
 there in question, could not be so considered, as they had 
 been conveyed to all the partners in common, and there 
 was no agreement for a sale. 
 
 In Bell v. Phyn (d), partners in trade purchased 
 with the funds of the firm a share in a plantation, and 
 kept the accounts relating to the estate in the partner- 
 ship books; and it was held upon the authority of the 
 last case, that assuming the land to have become part- 
 
 Thornton v. 
 Dixon. 
 
 Bell r. Phyn. 
 
 (6) See, as to this, Steward v. Blakeway, 4 Ch. 603, and 6 
 Eq. 479. 
 
 (c) 3 Bro. C. C. 199. 
 
 (d) 7 Ves. 453. 
 
 1 In the absence of express agreement to the contrary, the 
 courts in America regard land acquired for partnership purposes 
 as converted into personal property only for the purposes of the 
 partnership and the interest of a partner in such lands as may 
 remain after settlement of the firm's business devolves upon his 
 heirs; see note 1, p. 341. By agreement, however, the partners 
 may convert the firm real estate into personalty for all purposes, 
 and in such a case the interest of the deceased in the surplus re- 
 maining after the winding up of the business goes to his per- 
 sonal representatives. Davis r. Christian. 15 Gratt, 11 (1859); 
 and cases cited below. It has been held that such an agreement 
 has been made where the partnership articles authorize the sur- 
 viving partner to take the entire assets. Leaf's App. 105 Pa. St. 
 505 (1884); Haddock v. Astbury. 32 N. J. Eq. 181 (1880); or 
 where the firm has for its object the dealing in land as a com- 
 modity. Ludlow v. Cooper, 4 Oh. St. 1 ( ). This is denied. 
 
 Rowner. in Strong?'. Lord, 107 111. 25 (1883). And it lias even 
 been said that an agreement requiring the land to be held solely 
 for the purposes of the partnership amounts to a conversion out 
 and out. Kammelsberg v. Mitchell, 29 Oh. St. 22 (1875) ; Columb. 
 v. Reed, 24 N. Y. 505 (1862).
 
 SHARES ARE PERSONAL ESTATE. 419 
 
 nership property, it ought not to be regarded as per- Bfe. III. 
 sonal estate. Chap. 5. Beet. 
 
 In Randall v. Randall (e), the partners were farmers, J 
 
 maltsters, and biscuit makers. They bought land for Randall v. 
 the farming business, and it was held that as it was not Randa11 - 
 acquired for the purpose of any partnership in trade, 
 the land could not be treated as personalty. 
 
 In Cookson v. Cookson (/) a father who was seised c °okson v. 
 in fee of land on which he carried on business as a bot- Cookson - 
 tie- manufacturer, took his son into partnership, and 
 conveyed a share in the iand to him. The land was de- 
 clared b) the articles of partnership to be partnership 
 property. But on the death of the ^father, it was held [ * 344] 
 that his share in the Iand was to be treated as real es- 
 tate, no sale being required for the payment of the 
 partnership debts for any other purpose. 
 
 These are the cases which militate against the rule 
 under discussion. The following are those which sup- 
 port it : — 
 
 In Ripley v. Waterivorth (g), partnership land was Ripley v. 
 conveyed to trustees upon trust, upon a dissolution of Waterworth. 
 the partnership to sell and pay the partnership debts, 
 and divide the residue of the money arising from the 
 sale amongst the partners; and it was held, upon the 
 death of one of them, that his share in the land was 
 personal estate, although the land was not in fact sold, 
 and the deceased's share in it was purchased by the 
 surviving partners under a clause enabling them so 
 to do, and contained in the conveyance to the trustees. 
 
 In Toivnshend v. Devaynes (h), two persons in part- rp owngll nd 
 nership as paper-makers, purchased paper mills for the v . Devavnes. 
 use of the firm, and paid for them out of its funds. It 
 was agreed that on the death of either, the survivor 
 should have the option of purchasing his share. One 
 of the partners died, and his share was purchased by 
 the survivor. It was held that the whole of the pur- 
 chase-money formed part of the personal estate of the 
 deceased, although most of the money was paid in re- 
 spect of the interest of the deceased in the mills. 
 
 In Phillips v. Phillips (i), two persons in partnership Phillips ». 
 as brewers purchased public-houses for the purposes of Phillips. 
 
 (p) 7 Sim 271. 
 
 (/) 8 Siin. 529. 
 
 (g) 7 Ves. 425. 
 
 (//) 1 Mont. Part, note 2 A. Appx. p. 96; see, too, 11 Sim. 
 498, ii. 
 
 (/) 1 M. & K. 649. See ante, p. 332, note (ft), as to the estates 
 which were devised, and which were held not converted into 
 personalty.
 
 420 
 
 SHAKES. 
 
 Bk. III. 
 Chap. 5. Sect. 
 1. 
 
 Broom v. 
 Broom. 
 Morris v. 
 
 Kearsley. 
 
 [ * 345] 
 
 Houghton t. 
 Houghton. 
 
 Darby v. 
 Darby. 
 
 Essex v. 
 Essex. 
 
 their trade, and had them conveyed to both in fee. On 
 the death of one of them, it was held that his share in 
 the houses was to be treated as personal estates. 
 
 Broom v. Broom (k) is a decision to the same effect 
 as the last, and decided on its authority. 
 
 In Morris v. Kearsley (Z), a partnership of brewers 
 was possessed of real estate conveyed partly to the 
 partners as tenants in common, and partly to one or 
 more of the partners in trust * for the firm ; and it was 
 decided that the several lands, hereditaments, and 
 premises belonging to the partnership, ought to be con- 
 sidered as personal estate. 
 
 In Houghton v. Houghton (in), two brothers, A. & B., 
 were partners as soap-boilers. They purchased land 
 for the purposes of their trade, took a conveyance to 
 themselves as tenants in common, and mortgaged the 
 land for the purchase money. They then built on the 
 land, insured the buildings, and paid the expenses and 
 the interest on the mortgage debt out of the partner- 
 ship funds. A. died intestate, and B. took another 
 brother, C, into partnership. B. and C. paid off the 
 mortgage, and took a reconveyance to themselves as 
 joint tenants in fee, and expended money in building 
 and insurance, defraying the expense, as well as pro- 
 viding the mortgage money, out of the funds of the 
 partnership. On B.'s death it was held that the land 
 and buildings had clearly become partnership property, 
 and that it ought, therefore, to be treated as personal 
 estate. 
 
 In Darby v. Darby (n), two brothers embarked in 
 joint speculations in land. Their scheme was to buy 
 land, convert it into building sites', and then sell it at a 
 profit. This was done on several occasions, the land 
 being generally conveyed to one of them only. On tho 
 death of that one it was held that his interest in all tho 
 land bought by both, and still unsold, was personal 
 and not real estate. 
 
 In Essex v. Essex (o), two brothers were, under the 
 will of their father, seized of freehold lands. They 
 agreed to become partners as curriers and tanners for 
 fourteen years, and to carry on their business on those 
 lands. It was stipulated that if either died during the 
 
 (k) 3 M. & K. 443. 
 
 (I) 2 Y. & C. Ex. 139. The report does not state how, when, 
 or for what purpose, the property was originally acquired. 
 (»i) 11 Sim. 491. 
 in) 3 Drew. 495. 
 (o) 20 Beav. 442.
 
 SHARES ARE PERSONAL ESTATE. 421 
 
 co-partnership term, the other should take bis share in Bk. III. 
 the freenolds, and that the entirety thereof, including Chap. D - Sect - 
 
 the plant and tan-pits, should be valued at 5,000 Z. The J 
 
 fourteen years expired, but the partnership was con- 
 tinued as before. On the death of one of the partners, 
 it was held that his share in the freeholds was to be 
 regarded as personal estate ; they having been con- 
 verted by the agreement for sale. 
 
 * In Waterer v. Waterer (p), the property of a nur- [ * 346] 
 seryman, devised by him, with the goodwill of his Waterer v. 
 business, to his sons as tenants in common, was on the " aterer, 
 death of one of them treated as personal and not as 
 real estate. 
 
 There are also various dicta of Lord Eldon in favour Result of the 
 of the broad principle that partnership property is to cases- 
 be regarded as personal and not as real estate (q). 
 
 Upon the whole, therefore, it is submitted, 
 
 1. That notwithstanding Thornton v. Dixon, Bell v. 
 Phyn, and Randall v. Randall, the true rule is, as 
 stated by the Vice-Chancellor Kindersley, in Darby v. 
 Darby (r), "that whenever a partnership purchases real 
 estate for the partnership purposes, and with the 
 partnership funds, it is, as between the real and 
 personal representatives of the partners, personal 
 estate" (s). 
 
 2. That, notwithstanding Cookson v. Cookson, no 
 satisfactory distinction, with reference to the question 
 of conversion, can be drawn between land purchased 
 with partnership monies, and land acquired in any 
 other way, provided such land is in the proper sense of 
 the expression an asset of the partnership (t). 
 
 3. That the general rule may, nevertheless, be ex- 
 cluded by an agreement express or implied to the effect 
 than the land shall not be sold. The reason of the rule 
 excludes its application in such a case (it). 1 
 
 Upon this ground it was held in a recent and difficult Stewart*. 
 
 1 Slake way. 
 
 (p) 15 Eq. 4C2, noticed ante, p. 333. See, also, Murtagh v. 
 Costello, 7 L. R. Ir. 428. 
 
 (7) See the judgment of V. C. Kindersley, in Darby v. Darby, 
 3 Drew. 499, &c. 
 
 (r) 3 Drew, 506. 
 
 (s) See, in addition to the cases referred to above, Holroyd v. 
 Holroyd, 7 W. K. 426 
 
 U\ See per Lord Eldon in Jackson v. Jackson, 9 Ves. 593. "It 
 is very difficult to make a distinction between a joint tenancy 
 by will, by a gratuitous deed, or a purchase. The law of 
 merchants, if it applies to one, must apply to all." 
 
 (m) Steward v. Blakeway, 1 Ch. 603. and (i Eq. 479. 
 
 1 See note 1, page 343; also note 1, page 341.
 
 422 
 
 SHARES. 
 
 Bk. III. . 
 Chap. 5. Sect. 
 1. 
 
 [*347] 
 
 The rule 
 only applies 
 to partner- 
 ship pro- 
 perty. 
 
 Doctrine of 
 conversion 
 has only a 
 restricted ap 
 plication. 
 
 [ * 348] 
 
 case, that a farm and quarry worked by co-owners in 
 partnership, and additional lands bought by them out 
 of their profits for the purposes of their business, were 
 not to be treated as converted into money. The Court 
 held that no partner could *have enforced a sale, either 
 of the original farm and quarry or of the subsequent 
 additions to it (x). 
 
 It is well settled that the doctrine of conversion does 
 not apply to co-owners as distinguished from co-part- 
 ners ; nor to property owned by persons, who, although 
 they may be partners in profits, are only co-owners of 
 the land which yields them. Thus, where two out of 
 three partners were owners of land occupied by the 
 firm, and for which the firm paid a rent, and the land 
 was in fact kept distinct from the joint property of the 
 three partners, it was properly held, on the death of 
 one of the two partners to whom the rent was paid, 
 that his interest in the land was not to be considered as 
 personal, but as real estate (y). So, if land belongs 
 to all the partners as tenants in common, but not as 
 partners, and that land is used by them for partnership 
 purposes, but is nevertheless intended to remain vested 
 in them as tenants in common, and not to form part of 
 the assets of the firm, the share of each partner will be 
 real and not personal estate (z). In the case now sup- 
 posed, co-owners of land are. partners, but the co own- 
 ership continues unaffected by the partnership. But 
 it is not possible on his ground to uphold Thornton v. 
 Dixon, Bell v. Phyn, Randall v. Randall, or Cookson v. 
 Cookson. In each of these four cases the land had be- 
 come part of the assets of the firm, or it had not ; if 
 it had, these four cases are in direct conflict with 
 those which have been alluded to above ; whilst, if it 
 had not, they are in no less direct conflict with other 
 cases which are authorities on the question what is and 
 what is not property of the firm. 
 
 The doctrine of conversion which has just been con- 
 sidered, merely amounts to this, that on the death of a 
 partner his share in the partnership property is to be 
 treated as money and not as land. It follows, however, 
 from this doctrine that probate duty and legacy duty 
 are payable in respect of the share of a deceased part- 
 ner in partnership real estate (a); and a * partner's 
 
 x) [bid. 
 
 (y) Rowley v. Adams, 7 Beav. 548 ; Balmain v. Shore, i> Ves. 
 500. See, too, Phillips?'. Phillips, antep. 3 52. 
 
 (-. Stewart v. Blakeway, 4 Ch. 603, and 6 Eq. 479. 
 
 (a) See, as to probate duty, A.-G. v. Hubbuck, 13 Q. B. D.
 
 AMOUNT OF EACH PARTNERS SHARES. 423 
 
 share in such estate is clearly within the Charitable Bk. III. 
 Uses Act, 9 Geo. 2, c. 36 (b). * Jhap. 5 - Sect - 
 
 "Whether a partner's share in partnership real estate J . 
 
 can give him a qualification for voting on elections of Qualification 
 members of Parliament has been much discussed of ior vote- 
 late. It is settled that if a partner has no interest in 
 partnership realty as distinguished from the money 
 arising from its sale, his interest in it does not confer 
 a qualification (c); but unless this is the case the equi- 
 table doctrine of conversion, which has no practical 
 operation until his death, does not deprive him of the 
 qualification which he would otherwise have as a joint 
 tenant or tenant in common (d). 
 
 A share in a cost-book mining company is not an in- 
 terest in land within the 4th section of the Statute of 
 Frauds (e); nor is it goods or chattels within the 17th 
 section (/). 
 
 Section II. — Of the Amount of Each Partner's 
 Share. 
 
 The proportions in which the members of a firm are 
 entitled to the property of the firm, or in other words, 
 the amount of each partner's share in a partnership, 
 depends upon the agreement into which the partners 
 have entered. 
 
 In the event of a dispute between the partners as to Shares are 
 the amount of their shares, such dispute, if it does not prima lacie 
 turn on the construction of written documents, must be equal. 
 
 275, and 10 ib. 488 ; A.-G. v. Marquis of Ailesbury, W. N. 1887, 
 p. 172, reversing S. C. 16 Q. B. D. 408 ; A.-G. v. Brunning, 8 
 Ho. Lo. Ca. 243; as to legacy duty, Forbes v. Steven, 10 Eq.178. 
 distance v. Bradshaw, 4 Ha. 315, is to the contrary, but it can- 
 not now be relied upon. The decision of the Court of Appeals 
 in A.-G. v. Marquis of Ailesbury, 16 Q. B. D. 408, was reversed 
 by the House of Lords, 12 App. Ca. 672, which restored the 
 judgment of the Divisional Court in 14 Q. B. D. 895. Matson r. 
 Swift, 8 Beav. 368 must be taken as now overruled: see Lord 
 Macnaghten's judgment, 12 App. Ca. 696. 
 
 (6) Ash worth v. Munn, 15 Ch. D. 363. 
 
 i>) Watson v. Black, 16 Q. B. D. 270; Bennett?'. Blain. 15 C. 
 
 B. N. S. 518: Freeman v. Gainsford, 18 ib, 185. Bee, also, 
 Spencer v. Harrison, 5 C. P. D. 97 ; Wadmore v. Pear, L. K. 7 C. 
 P. 212. 
 
 ('/) Bax.er v. Brown, 7 Man. & Gr. 198; Rogers v. Harvey, 5 
 
 C. B. N. S. 3. 
 
 (e) Watson v. Spratlev. 10 Ex. 222. Compare Vice v. Anson 
 7B.&C. 409; Boyce v. Green, Batty, 608. 
 {/) Watson v. Spratley, 10 Ex. 222.
 
 424 SHARES. 
 
 Bk. III. decided like any other pure question of fact (g); and 
 
 Chap. 5. Sect. j£ there is no evidence * from which any satisfactory 
 
 ~J conclusion as to what was agreed can be drawn (h), the 
 
 [ * 349] shares of all the partners will be adjudged equal (i). 
 Observations This rule no doubt occasionally leads to apparent in- 
 on this rule. j us tice; but it is not easy to lay down any other rule 
 which, under the circumstances supposed, could be fairly 
 applied. It is sometimes suggested that the shares of 
 partners ought to be proportionate to their contribu- 
 tions; but without in any way denying this, it may be 
 asked, how is the value of each partner's contribution 
 to be measured ? Certainly not merely by the capital he 
 may have brought into the firm. His skill, his connec- 
 tion, his command of the confidence and respect of 
 others, must all be taken into account; and if it is im- 
 possible to set a money value on each partner's contri- 
 bution in this respect, it is obviously impossible to de- 
 termine in the manner suggested, the shares of the part- 
 ners in the partnership. Nor can it be said to be un- 
 reasonable to infer, in the absence of all evidence to the 
 contrary, that the partners themselves have agreed to 
 consider their contributions as of equal value, although 
 they may have brought in unequal sums of money, or 
 be themselves unequal as regards skill, connection, or 
 character. Whether, therefore, partners have contri- 
 buted money equally or unequally, whether they are or 
 are not on a par as regards skill, connection, or char- 
 acter, whether they have or have not laboured equally 
 for the benefit of the firm, their shares will be consid- 
 ered as equal, unless some agreement to the contrary can 
 be shown to have been entered into (A;). 1 
 Meaning of When it is said that the shares of partners are prima 
 equity. . 
 
 (g) See Peacock v. Peacock, 16 Ves. 49 ; McGregor v. Bain- 
 bridge, 7 Ha. 164 ; Binibrd d. Dommett, 4 Yes, 756. 
 
 (h) Stewart v. Forbes, 1 Mac. & G. 137 ; Webster v. Bray, 7 
 Ha. 159 ; Copland v. Toulmin, 7 CI. & Fin. 349. 
 
 (i) Robinson v. Anderson, 20 Beav. 98, and 7 Do G. M. & G. 
 239 ; Peacock v. Peacock, 16 Ves. 49 ; Webster v. Bray, 7 Ha. 
 159 ; Farrar v. Beswick, 1 M. Rob. 527. 
 
 (ft) See the last three notes. Peacock v. Peacock, 2 Camp, 44, 
 and Sharpe v. Cummings, 2 Dowl. & L. 504, which was appar- 
 ently decided on its authority, cannot be supported. See, as to 
 Scotch law. Thompson v. Williamson, 7 Bli. N. S. 4:12 ; 3 Ross, 
 L. C. on Com. Law 381. 
 
 1 Ratzer v. Ratzer, 28 N. J. Eq. 136 (1877); Northrup v. Mc- 
 Gill, 27 Mich. 234 (1873); Worthy v. Browev, 93 X. Ca. 344 
 (1885); Ligarer. Peacock, 109 111. 94 (1884); Brewer v. Browne, 
 68 Ala. 210 (1880); Henry v. Bassett, 75 Mo. 89 (1881); Ryder v. 
 Gilbert, 16 Hun. 163 (1878); Wolfe v. Gilmer, 7 La, Ann, 583 
 (1852); Honore v. Colmesnil, 1 J. J. Marsh 506 (1829).
 
 AMOUNT OF EACH PARTNER'S SHARES. 425 
 
 facie equal, although their capitals are unequal, what Bk. III. 
 
 is meant is that losses of capital like other losses must C ;na P- 5 - Sect. 
 
 be shared equally ; but it is not meant that on a final J 
 
 settlement of accounts, * capitals contributed unequally [ * 350] 
 are to be treated as one aggregate fund which ought to 
 be divided between the partners in equal shares (I). 
 
 An agreement for inequality may be conclusively in- Evidence 
 ferred from the mode in which the partners have dealt showing in- 
 with each other, and from the contents of the partner- equality. 
 ship books (m). Moreover, if an agreement for ine- 
 quality clearly at one time existed, no presumption of 
 any alteration in this respect will arise from the mere 
 fact, that some of the original members have retired. 
 In the absence of evidence to the contrary, the inference 
 is that the shares of the retiring members have been 
 taken by the continuing parties in the proportions in 
 which these last were originally interested in the con- 
 cern (n). 
 
 The rule that the shares of partners are equal, unless Rule as to 
 tbey have otherwise agreed, applies not only to persons presumptive 
 who are partners in business generally, but also to those appHes'to 
 who are partners as regards one single matter only. partnerships 
 
 Thus in Robinson v. Anderson (o), where two solici in single 
 tors, not in partnership, were jointly retained to defend transactions, 
 certain actions, and there was no satisfactory evidence to Robinson v. 
 show in what proportions they were to divide their re- 
 muneration, it was held that they were entitled to share 
 it equally, although they had been paid separately and 
 had done unequal amounts of work. The Master of the 
 Rolls, after observing on the importance in such cases 
 of attending to the onus probandi, said : 
 
 "Now I should entertain no doubt, even if I had not been con- 
 firmed by the two cases of Webster v. Bray, and McGregor v. Bain- 
 bridge, that where two solicitors undertake a matter of business 
 on behalf of a client, the same rule would follow in that, as in 
 any other undertaking where two persons carry on a business 
 jointly on behalf of themselves, or as agents of other persons. It 
 is, in point of fact, a limited partnership for a particular sort of 
 business. Assuming nothing to have been said as to the manner 
 in which the profits were to be divided, it appears to me to fol- . 
 low as a necessary consequence of law, that they are to he divided 
 
 (I) See infra, ch. 8, U, on partnership accounts. 
 
 (m) As in Stewart v. Forbes, 1 Mac & G. 137. 
 
 («) Robley v. Brooke, 7 Bli. N. S. 'JO ; and see Copland V. Toul- 
 min, 7 CI. & Fin. 349. 
 
 (o) 20 Beav. 98, and 7 De G. M. & G. 239. See, too, Webster 
 v. Bray, 7 Ha. 159, and McGregor v. Bainbridge, ib. KM, note ; 
 Kanslipt'. Kitton, 8 Jur. X. S. 835, V.-C. S.
 
 ihtt^ i i> 
 
 426 SHARES. 
 
 Bk. III. equally between them. And, although one may do more busi- 
 
 Chap.5. Sect. ness ;uu i ] iave exerted himself more * than the other, yet if noth- 
 
 ing is said upon the subject of profits, the presumption is that 
 
 I" * 351] they are to be equally divided between them. It appears to me 
 
 that if the clients had gone to Mr. Robinson and Mr. Andeison, 
 and said — We wish you to undertake the business for us, and 
 thereupon Mr. Robinson and Mr. Anderson had both said, We 
 agree to do so, and nothing had taken place between them as to 
 the manner in which they were to be paid, the necessary conse- 
 quence would have been that after payment of the costs out of 
 pocket, the net profits made by the business would have been 
 divisible equally between them, and that neither of them could 
 say to the other — I have done more business than you have, and 
 am therefore entitled to a larger share of profits. It was the duty 
 of the party who intended that this should not be a partnership 
 transaction, and that he should be paid for the amount of busi- 
 ness which he did without participating in that of the other, so 
 to express himself." 
 
 Applications A question of some difficulty arises when a firm, say 
 of rule where of two partners, engages in a partnership speculation 
 one firm w j t j a a third person not a member of that firm. Is the 
 
 anothe^ 6 * interest of such person in the speculation to be treated 
 as one-half, the other two persons being treated as one? 
 or is the interest of each of the three to be treated as 
 equal, each taking one-third? The answer to these 
 questions must depend upon whether the two partners 
 entered into the speculation as a firm or as two indi- 
 viduals. If the former, there will in substance be only 
 two parties interested in the speculation, and the pro- 
 fits thereof must be divided into two equal parts; 
 whilst if the latter is the case, there will be three par- 
 ties interested, and the profits must be divided into 
 three equal parts (p). 1 
 
 Section III. — Of the Lien which Each Partner has on 
 the Property of the Firm, and on the Shares of 
 His Co-Partners. 
 
 In order to discharge himself from the liabilities to 
 which a person may be subject as partner, every part- 
 ner has a right to have the property of the partnership 
 applied in payment of the debts and liabilities of the 
 
 (p) See Warner v. Smith. 1 De G. J. & S. 337. where the pr< - 
 fits were held to be divisible into two and not three parts. 
 
 1 Turnipseed v. Goodwin. 9 Ala. 372 (1846); Honore v. Cole- 
 mesnill, J. J., Mar. 506 (1S29); Conwell v. Sandidge, 5 Dana, 
 210 (1837).
 
 partner's liex. 427 
 
 firm. And in order to secure a * proper division of the [ * 352] 
 surplus assets, he has a right to have whatever may be Bk. III. 
 due to the firm from his co-partners, as members there- Chap, a. Sect. 
 
 of, deducted from what would otherwise be payable to J 
 
 them in respect of their shares in the partnership. 
 
 In other words, each partner may be said to have an Foundation 
 equitable lien on the partnership property for the pur- of partners 
 pose of having it applied in discharge of the debts of Une • 
 the firm; and to have a similar lien on the surplus as- 
 sets for the purpose of having them applied in pay- 
 ment of what may be due to the partners respectively, 
 after deducting what may be due from them, as part- 
 ners, to the firm (q). 1 
 
 This right, lien, quasi- lien, or whatever else it may Conse- 
 be called, does not exist for any practical purpose un- quencesof 
 til the affairs of the partnership have to be wound up, tlie nen - 
 or the share of a partner has to be ascertained; nor has 
 any partner a right to insist as against a judgment 
 creditor of the firm, that he shall have recourse to the " 
 assets of the firm before seeking to obtain payment 
 from the partners individually (r). But when part- 
 nership accounts have to be taken, and the shares of 
 the partners have to be ascertained, the lien of the 
 partners on the assets of the partnership, and on each 
 other's shares, becomes of the greatest importance. 
 "Whilst the partnership lasts, the lien attaches to every- To what 
 
 thing- that can be considered partnership propertv. and property it 
 
 • - i attaches 
 
 is not therefore lost by the substitution of new stock 
 
 in trade for old (s). Further, on the death or bank- 
 ruptcy of a partner, his lien continues in favour of his 
 
 {q) West v. Skip, 1 Ves. S. 239; Skipp v. Harwood, 2 Swanst. 
 586; Doddington v. Hallet. 1 Yes. S. 498 and 499; Ex parte Ruf- 
 fin. 6 Ves. 119; Ex parte Williams, 11 ib. 3; Holderness v. 
 Shackels, 8 B. & C. 012. Smith v. De Silva, Cowp. 469, can 
 hardly he reconciled with the other cases, but see upon it the 
 observations of Lord Tenterden, in 8 B. & C. 618. As to the 
 right of a minority of partners to insist on the payment of a 
 partnership debt out of the partnership assets, see the observa- 
 tions of Turner, V.-C, in Stevens /.The South Devon Rail. Co., 
 9 Ha. 326. Any member of an ordinary firm is at liberty to pay 
 any debt of the firm, and to charge the firm with the amount 
 paid. 
 
 (r) See ante, p. 299. 
 
 > See West u. Skip, 1 Ves. S. 239; Skipp v. Harwood, 2 
 Swanst. 586; Stocken v. Dawson, 9 Beav. 239, and 17 L.J. (Ch.) 
 2.^:2. Compare the cases in the next note but one. 
 
 1 Hobbs i'. McLean, 117 U. S. 567 (1885): Priest v. Choteau, 
 85 Mo. 398 (1885); Burleigh v. White, 70 Me. 130 (1879); War- 
 ren v. Taylor, 60 Ala. 218 "(1877); Uhler v. Semple, 20 X. J. Eq. 
 288 (1869): Buchan v. Sumner, 2 Barb. Ch. 165(1817); Edwards 
 v. Remington, 60 Wis. 33 (1884).
 
 428 
 
 SHARES. 
 
 P.k. III. 
 Chap. 5. Sect. 
 3. 
 
 [ * 353] 
 
 Lien exists 
 only on 
 partnership 
 assets. 
 
 Lien exists 
 as against all 
 
 persons 
 claiming a 
 share in the 
 
 assets. 
 
 representatives or trustees, and does not terminate un- 
 til his share *has been ascertained and provided for 
 by the other partners (t). 1 But after a partnership 
 has been dissolved, the lien is confined to wbat was 
 partnership property at the time of the dissolution, and 
 does not extend to what may have been subsequently 
 acquired by the persons who continue to carry on the 
 business. In this respect the lien in question differs 
 from the lien of a mortgagee on a varying stock-in -trade 
 assigned to him as a security for his loan (u). 
 
 It follows from the pi'inciple on which the lien of a 
 partner is founded, that it only extends to the property 
 of the firm, and to the separate interest of each partner 
 in such property. 2 In those cases, therefore, where 
 there is a partnership in profits only, but that which 
 produces those profits belongs exclusively to one of the 
 partners, the lien of the others is confined to the profits, 
 and does not extend to that which produces them (.r). 
 Moreover, if two persons engage in a joint adventure, 
 each consigning goods for sale upon the terms that 
 each is to have the produce of his own goods, neither 
 of them will have a lien on the goods of the other, nor 
 on the produce of such goods, although each may have 
 raised the money to pay for his own goods by a bill 
 drawn on himself by the other, and ultimately dis- 
 honoured (y). 
 
 The lien of each partner exists not only as against 
 the other partners, but also against all persons claim- 
 ing through them or any of them ; and it is therefore 
 available against their executors, execution creditors, 
 and trustees in bankruptcy (z). To hold, however, 
 that this lien could be enforced against persons pur- 
 chasing partnership property, would be in effect to 
 prevent any sale of that property without the consent 
 of the whole firm, and would practically stop all part- 
 nership trade. Whilst, therefore, a person who pur- 
 chases a share of a partner takes that share subject to 
 
 {t) See Stocken r. Dawson. 9 Beav. 239. affirmed 17 L. J. (Ch.) 
 282, and the cases cited in note (s). 
 
 (u) Pavne v. Hornby, 25 Beav. 280. See. too. Nerat r. Bnrn- 
 and, 4 Russ. 247, and 2 Bli. N. S. 215, ante, p. 326; Ex parte 
 Morley, 8 Ch. 1026. Compare the cases in the last note but one. 
 
 (x) See infra, as to the lien of co-owners. 
 
 (y) Ex parte Gemmel, 3 M. D. & D. 198. 
 
 (z) West v. Skip, and other cases cited, ante, note (s). 
 
 1 Hoyt r. Sprague, 103 U. S. 013 (1880); Watkins v. Fakes, 5 
 Heisk,'l85 (1871); Edberts v. Wood, 3 Paige, 517 (18321. 
 
 2 Mostellar v. Bost, 7 Ired. Eq. 39 (1850); Mann v. Higgins, 7 
 Gill, 265 (1848).
 
 partner's lien. 429 
 
 the liens of the other partners («),' a * person who [*354] 
 bond fide purchases from one partner specific chattels Bk. III. 
 belonging to the firm, acquires a good title to such Chap. 5. Sect. 
 
 chattels, whatever liens the other partners might have J 
 
 had on them prior to their sale (t»). 2 
 
 In Be Lang mead's tmsts a partnership between A. Re Lang- 
 and B. was dissolved. A. retired, and by deed agreed mead's 
 to execute an assignment to B. of the partnership lrusts - 
 assets (part of which consisted of a policy of which the 
 partners were assignees), and B. agreed to covenant to 
 pay the partnership debts, and idemnify A. against 
 them. No further instrument was executed. A. died, 
 and B. afterwards assigned the policy by way of 
 mortgage to a person wbo had notice of the deed. A.'s 
 executors were afterwards compelled to pay partner- 
 ship debts, which ought to have been discharged by B., 
 and B. became bankrupt. The policy being adversely 
 claimed by the mortgagee, by A.'s executor, and by a 
 purchaser from B.'s assignees, it was held that, even if 
 A. and his executors bad been entitled to pursue any 
 portion of the partnership property in the hands of B., 
 and to have it applied in payment of the partnership 
 debts, yet that they had no such right as against the 
 purchaser from B., though with notice, for he was not 
 bound to see to the application of the purchase 
 money (c). 
 
 The lien of partners on the partnership property No lien on a 
 extends, as has been stated, to whatever is due to or Partner s 
 from the firm, by or to the members thereof, as such, orclinarv 
 It does not, however, extend to debts incurred between debts due 
 the firm and its members, otherwise than in their from him to 
 character of members. It has therefore been held that firm " 
 where a partner borrowed money from the firm for 
 some private purpose of his own, and then became 
 bankrupt, his assignees were entitled to his share in 
 the partnership, ascertained without taking into account 
 the sum due from him to the firm in respect of this 
 loan ; and that the solvent partners were driven to 
 
 (a) Cavander v. Bulteel 9 Ch. 79. 
 
 {!>) See Be Langmead's Trusts, 20 Bear. 20, and 7 De G. M. & 
 G. :]5:;. 
 (c) Ibid. 
 
 1 Tarbell v. West, 86 N. Y. 280 (1881) ; Burbank v. Wiley, 79 
 N. Ca. 501 (1878); Beecher v. Stevens, 43 Conn. 587 (1876). 
 
 2 Clark v. Rives. 33 Mo. 579 (1863). The following cases in- 
 volve t lie sale of the firm's chosesin action. Kull v. Thompson, 
 38 Mich. 685 (1878), Caulfield v. Sanders, 17 Cal. 569 (1861); 
 McClelland v. Remsen, 30 Barb. 622 (1862).
 
 430 SHARES. 
 
 Bk. III. prove against his estate in order to obtain payment of 
 
 Chap. 5. Sect. the moEey i ent (rf).' 
 
 * Further, a partner's lien on partnership property is 
 
 [ * 355] lost by the conversion of such property into the sepa- 
 Lossoflien. rate property of another partner. Therefore, if ou a 
 dissolution it is agreed between the partners that the 
 property of the firm shall be divided in specie among 
 them, and that the debts shall be paid in some speci- 
 fied manner ; and if the property is accordingly di- 
 vided, but the debts remain unpaid, the lien which 
 each partner had on the property before its division is 
 gone : and consequently no partner has aright to have 
 the specific things, allotted to any other partner, brought 
 bask into the common stock, and applied in liquidation 
 of the partnership liabilities (e). 2 Upon the same prin- 
 ciple, if two partners consign goods for sale, and direct 
 the consignee to carry the proceeds of the sale equally 
 to their separate accounts without any reserve, and this 
 is done, neither partner has any lien on the share of the 
 other in those proceeds ; although it would have been 
 otherwise if they had remained part of the common 
 property of the two (/ ). 
 
 (d) See Ryall v. Rowles, 1 Ves. S. 348, and 1 Atk. 165 ; and 
 Meliorucchi v. The Royal Exchange Assur. Co., 1 Eq. Ca. Ab. 
 8 ; and Croft v. Pike. 3 P. W. 180. Perhaps Smith v. De Silva, 
 Cowp. 469, was decided on this principle, as suggested by Lord 
 Tenterden, in 8 B. & C. 618 
 
 (e) Lingen v. Simpson, 1 Sim. & Stu. 600 ; and see Er Lang- 
 mead's Trusts. 7 De G. M. & G. 353, the judgment of L. J. Turner. 
 
 (f ) See Holroyd v. Griffiths, 3 Drew. 428. In Holderness v. 
 
 1 The fact that a creditor happens to be his debtor's partner, 
 the debt not arising out of any partnership transaction, does not 
 give the former a lien as partner over the latter's share in the 
 firm's assets. Such a creditor stands in no better position than 
 any ordinary separate creditor. Uhler i\ Simple, 20 X. J. Eq. 
 288 (I860); Lewis v. Harrison, 81 Ind. 278 (1881); Warren v. 
 Taylor, 60 Ala. 218 (1877); Evans v. Bryan. 95 N. Ca. 174 1886). 
 In' Pierce v. Tiernan, 10 Gill & J. 253 (1838), it was held that 
 one partner had a lien on his co-partner's interest in the firm for 
 an advance made the latter when insolvent for the purpose of 
 enabling him to buy the goods which he had agreed to bring 
 into the joint venture. It is a matter of doubt whether an 
 agreement between the partners at the time the loan is made 
 that the lender shall have a lien on the interest of the borrower 
 in the firm will confer any priority on the former as to his 
 claim on this account over the separate creditors of the hitter. 
 Lewis v. Harrison, 81 Ind. 278 (18811; and Cox r. Russell. 44 
 Iowa, 556 (1876), support the lien. Hill v. Beach. 12 N. J. Eq. 
 31 (1858), denies it. 
 
 2 Clarke's App. 107 Pa. St. 436 (1884); Giddings v. Palmer. 
 107 Mass. 269 (1871); Allen v. Grissom, 90 N. Ca..90 1884 ; 
 Vosper v. Kramer, 31 N. J. Eq. 420 (1879); Emerson v. Parsons, 
 46 N. Y. 560 (1871). See note l,p. 336.
 
 SALE OF SHARES IX PARTNERSHIPS. 431 
 
 If the partnership is illegal its members have no Bk. III. 
 lien upon their common property, or upon each other's Chap. o. Sect. 
 
 shares therein (g) ; unless it be by virtue of some agree- J 
 
 ment not affected by the illegality. No lien if 
 
 Mere co-owners have no such lien as is enjoyed by co- partnership 
 partners (h). But a part owner of a ship has a right g 
 
 to have the gross freight applied in the first place in owners 
 payment of the expenses incurred in earning it (£). 
 
 * Section IV. — Of the Mode in Which a Share is [ * 356] 
 Taken in Execution for the Separate Debts of its 
 Owner. 
 
 The nature of a partner's share in partnership Execution 
 property, and the effect of the lien noticed in the pre- against a 
 ceding sections, are well seen when a separate judg- P art ner tor a 
 ment creditor of a partner seeks to levy execution upon j^^t™ 
 that partners share in the partnership. Such a credit- 
 or has always been at liberty to execute his judgment, 
 not only against his debtor's separate property, but also 
 against the property of any firm in which the debtor 
 may be a partner. This at first sight seems extremely 
 unjust ; inasmuch as it looks like taking one man's 
 property for another man's debt ; but in truth the 
 creditor gets only what belongs to his debtor, although 
 it must be confessed that executions of the nature in 
 question put the debtor's partners to no small incon- 
 venience. 
 
 In order to explain the consequences of an execution 
 against the partnership property for a separate debt of 
 one of the partners, it will be convenient to examine 
 the law as it stood before the Judicature acts with 
 reference to 
 
 1. The duty of the sheriff. 
 
 2. The position of the purchaser from him. 
 
 3. The position of the execution debtor. 
 
 The position of the execution creditor and of his 
 
 Shackels, 8 B. & C. 612, the transfer to each partner was subject 
 to the lien, which was not therefore lost. 
 
 (ff) See Ewing v. Osbaldison, 2 M. & Cr. 88. 
 
 (h) Re Leslie. 23 Ch. D. 552 ; Kay v. Johnston, 21 Beav. 536 ; 
 ante, book i. ch. 1. § 6. 
 
 (i) See Green v. Briggs, 6 Ha. 395; Alexander r. Simms, 18 
 Beav. 80, and 5 De G. M. & G. 57 ; Lindsay v. Gibbs, 22 Beav. 
 522, and 3 De G. & J. 690. See. as to the lien of the master on 
 freight, Bristow v. Whitmore, 4 De G. & J. 325, reversing S. C. 
 Johns. 96 ; Smith v. Plummer, 1 B. & A. 582.
 
 432 
 
 SALE OF SHAKES IN PARTNERSHIPS. 
 
 Bk. III. debtor's co- partner will appear in the course of this 
 
 Chap. 5. Sect, examination. 1 
 
 The effect of the Judicature acts will then be noticed. 
 
 1. 
 
 1. Of the 
 
 duty of the 
 sheriff. 
 
 Sheriff seizes 
 the partner- 
 ship 
 
 property. 
 
 [ * 357] 
 
 Heydon v. 
 Heydon. 
 
 1. Of the duty of the Sheriff. 
 
 There has been considerable doubt as to the proper 
 mode of levying execution against the property of a 
 firm upon a judgment recovered against one of its 
 members only (k). 
 
 Before the time of Lord Mansfield it seems that the 
 sheriff was in the habit of acting upon the supposition 
 that each partner was entitled to an undivided share 
 of every article belonging to the firm, without reference 
 to the state of the partnership accounts : and in 'exe- 
 cuting a ft. fa. against a partner for his * separate 
 debt, the sheriff seized the whole of the partnership ef- 
 fects (or of so many of them as were requisite), and 
 sold the undivided share of the judgment debtor there- 
 in (I). 
 
 The sheriff seized the whole of every chattel which 
 he sold, because he could not otherwise seize the share 
 of the execution debtor. But he did not sell the whole 
 of what he seized, because his authority was limited by 
 the writ to the goods and chattels of the debtor, and 
 an undivided share can be sold though it cannot alone 
 be seized. As stated by Lord Holt in Heydon v. Hey- 
 don (m) (where there were two partners, against one 
 of whom a judgment had been obtained), "the sheriff 
 must seize all because the moieties are undivided; for 
 if he seize but a moiety and sell that, the other will 
 have a right to a moiety of that moiety: but he must 
 
 (k) Burton v. Green, 3 Car. & P. 306. 
 
 (l) See Hevdon v. Heydon, 1 Salk. 392 ; Jackey v. Butler, 2 
 Ld. Raymond, 871 ; Backhurstr. Clinkard, 1 Show. (K. B.)169; 
 Pope v. Hainan, Comb. 217 ; Marriott v. Shaw, Comyn, 277 ; 
 Dutton v. Morrison, 17 Ves. 205 ; Re Wait, 1 Jac. & W. 608. 
 
 (to) 1 Salk. 392. 
 
 1 On the subject of the effect and operation of an execution 
 issued against the partnership property for the separate debt of 
 one of the partners, the laws of the several states differ widely 
 The practice is to a very great extent regulated by statute, and 
 seems to agree in no two states. The tendency of legislation 
 and judicial decision seems, however, to be in the direction of 
 permitting only the interest of the debtor to be seized by the 
 sheriff, leaving the other partners in possession of the firm's 
 assets, subject, of course, to the claims of partnership creditors 
 and to the right of the purchaser of the interest sold by the 
 sheriff to insist upon a winding up and an accounting and a dis- 
 tribution of the surplus assets remaining after payment of all 
 the firm's indebtedness.
 
 UNDER FIERI FACIAS. 433 
 
 seize the whole and sell a moiety thereof undivided, Bk. III. 
 and the vendee will be tenant in common with the other *- na P- 5 - Sect, 
 partner" (n). J , 
 
 Lord Mansfield endeavoured to introduce what at Lord Mans- 
 first sight appears to be a more equitable practice. In fold's in- 
 his time the sheriff seems to have seized and sold the 
 whole of a sufficient portion of the partnership goods 
 (instead of selling only an undivided share thereof ), 
 and then an account was directed to be taken of the 
 judgment debtor's share of the proceeds of the sale, 
 and that share, or a sufficient part of it, was handed 
 over to the execution creditor (o). This, however, was 
 a very imperfect mode of proceeding; for it was im- 
 possible to ascertain the share of the debtor partner in 
 the goods seized, without taking all the partnership ac- 
 counts, and this a court of law had no power to do. 
 Lord Mansfield's innovation was therefore discon- 
 tinued (p); and it was finally settled, in conformity Modern rule, 
 with the older cases, that the sheriff's duty was, and it 
 still is, * to seize the whole of the partnership effects [ * 358] 
 (seizable under a fi. fa.), or of so much of them as may 
 be requisite, and to sell the undivided share of the debtor 
 partner therein, without reference to the state of the 
 accounts as between him and his co-partners (q). 
 
 The sheriff, having seized the property of the firm, Sale of 
 proceeds to sell the interest of the judgment debtor in execution 
 the chattels seized, and to assign the same to the pur- S 63 , 0I s 
 chaser (r). Formerly the sale had to be by auction, but 
 now it may be made by private contract (s). 
 
 It is to be observed that the sheriff seizes, sells, and Rights of 
 assigns; but he has no business to take the goods of tne other 
 the firm out of the possession of the solvent part- P 3 ™ 618, 
 ners (t) ; and if the sheriff sells not the share of the 
 execution debtor, but the goods themselves, he is ac- 
 
 (n) See, too, per Tindal, C. J., in Johnson v. Evans, 7 Man. & 
 Gr. 249, 250. 
 
 (0) See Eddie?'. Davidson, 2 Dougl. 650. 
 
 (p) See Parker v Pistor, 3 Bos. & P. 288; Chapman v. Koops, 
 ib. 289; Morley v. Strombom, 3 Bos. & P. 254. Lord Eldon 
 greatly disapproved of it, see Waters v. Taylor, 2 V. & B. 301. 
 
 {q) See Helmore v. Smith, 35 Ch. D. 436; Holmes v. Mentze, 4 
 A. & E. 127; S. C. 5 New & Man. 563, and 4 Dowl. Pr. Ca. 300; 
 Johnson v. Evans, 7 Man. & Gr. 240. In Holmes v. Mentze, it 
 was held that a sheriff, who for the debt of one partner executed 
 a fi. fa. against the property of the firm, was not entitled to 
 make the execution creditor and the co-partner of the debtor 
 interplead; but that if the execution creditor denied the part- 
 nership he was hound to indemnify the sheriff. 
 
 (>•) See Hahershon v. Blurton, l'De G. & Sin. 121. 
 
 («) See Ex parte Villars, 9 Ch. 432. 
 
 (1) See per Patteson, J., in Burnell v. Hunt, 5 Jur. 650 Q. B. 
 
 * 5 LAW OF I'AirrXKKSHIP.
 
 434 
 
 SALE OF SHARES IN PARTNERSHIPS. 
 
 Bk. III. countable to the solvent partners for so much of the 
 
 Chap. o. Sect. p rocee( j s f the sale as is proportional to their share in 
 J the partnership (u). 
 
 2. Of the 
 purchaser 
 from the 
 sheriff". 
 
 [*359] 
 
 Injunction. 
 
 2. Of the position of the purchaser from the sheriff. 
 
 If the purchaser is a stranger unconnected with the 
 firm, he acquires for his own benefit all the judgment 
 debtor's interest in the property comprised in the bill 
 of sale, and becomes, as regards such property, tenant 
 in common with the judgment debtor's co-partners (x). 
 The next step, therefore, is to adjust the conflicting 
 rights of the purchaser, and these partners. Now it is 
 clear from the nature of the lien which each partner 
 has on the partnership property, that a partner holds a 
 partnership chattel with his co- partner, subject to all 
 *the equities which that co partner has upon it (y), and 
 subject therefore to his right to have all the creditor's 
 of the firm paid out of the assets of the firm, and con- 
 sequently, pro tanto, out of the chattels seized by the 
 sheriff (z). It is equally clea? that in this respect the 
 purchaser from the sheriff is in no better position than 
 the partner whose undivided share has been sold (a). 
 Before the Judicature acts, therefore, a suit in equity 
 became necessary, in order that the partnership accounts 
 might be taken, and the partnership property duly ap- 
 plied (6). 
 
 The right of the partners of the judgment debtor 
 being of the nature described, and it being incompatible 
 with that right that the partnership property seized by 
 the sheriff should be removed or sold by him, the Court 
 of Chancery would, before the Judicature Acts, on a 
 bill filed by the judgment debtor's co-partners against 
 the judgment debtor and his creditor and the sheriff, 
 direct the partnership accounts to be taken, and re- 
 strain the sheriff from selling the property and appoint 
 a receiver (c). 
 
 (n) Mayhew v. Herrick, 7 C. B. 229. 
 
 ix) See Helmore v. Smith, 35 Ch. D. 436. 
 
 (y) Barker v. Goodair, 11 Ves. 85. 
 
 (z) See the next note. 
 
 (a) Skipp v. Harwood, 2 Swanst. 586: Taylor v. Fields, 4 Ves. 
 396; Young r. Keighly, 15 Ves. 557; Dutton v. Morrison. 17 Ves. 
 205-6; Ex parte Hamper, ib. 404-5; iZe-Wait, 1 J. & W. 608. 
 
 (6) See Parker v. Pistor, 3 Bos. & Pal. 288: 
 
 (c) See Bevan v. Lewis, 1 Sim. 376. As to an injunction 
 against the sheriff" compare Newell v. Townsend, 6 Si7n. 419, 
 with Garstin v. Asplin, 1 Madd. 150, and Jackson r. Stanhope, 
 10 Jur. 676 ; and see Story on Partn. \ 264 : and as to making 
 the sheriff' a party, see Lord Eldon's obs. in Franklin v. Thomas, 
 3 Mer. 235, and Hawksbaw v. Parkins, 2 Swanst. 549.
 
 UNDER FIERI FACIAS. 435 
 
 3. Of the position of the execution debtor. Bk. III. 
 
 Chap. 5. Sect. 
 
 With respect to the execution debtor, it is to be ob- 4. 
 served that, in the first place, the execution generally (d) 3. of the ex- 
 operates as a dissolution of the partnership (e). In the ecution 
 next place, the assignment by the sheriff to the purchaser debtor, 
 transfers to the purchaser * whatever the sheriff had [ *3'">0J 
 power to assign, and did assign, but no more ; and as, 
 under a fi. fa., the sheriff may not have power to sell 
 everything which, as between the partners, is to be con- 
 sidered partnership property, it by no means follows 
 that the assignment has transferred to the creditor all 
 the judgment debtor's share and interest in the part- 
 nership (/). In a case, therefore, where a stranger 
 purchased, from the sheriff the execution debtor's inter- 
 est, and then assigned it to the other partners, it was 
 held that the execution debtor was still entitled to an 
 account from them ; the sale by the sheriff not having 
 divested him of all his interest in the concern (g). 
 
 Upon a sale by the sheriff of the interest of one part- Purchase of 
 ner in the property seized, there is nothing to prevent his interest 
 a purchase of that interest by his co-partners. But the by " 1S co ~ 
 
 nurt lie rs 
 
 co-partners purchasing of the sheriff must act with 
 
 perfect fairness. If they do anything to conceal the 
 
 true value of the share, so as to enable themselves to 
 
 buy it for less than it would otherwise have fetched, 
 
 the sale will not be allowed to stand. In Perens v. p erens r 
 
 Johnson (h), the share of a partner in a leasehold Johnson. 
 
 colliery was sold by the sheriff under a fi. fa. The sale 
 
 was by auction. The other partners bought the share ; 
 
 the execution creditor was paid off ; and a balance was 
 
 handed over by the sheriff to the execution debtor. It 
 
 appeared, however, that before the sale took place, it 
 
 was expected that a valuable seam of coal would be 
 
 reached. ; that the solvent partners had removed the 
 
 gear so as to prevent any one going down the mine ; 
 
 that they had also removed some ironstone recently 
 
 raised, so as to lead persons visiting the mine to believe 
 
 that coal was not so nearly within reach as it was ; and 
 
 (d) Not necessarily in all cases ; see Helmore v. Smith, 35 Ch. 
 D. 436, where the solvent partner (in effect) paid out the sheriff 
 with partnership monies. 
 
 (e) Aspinwall v. The London & N. W. Rail. Co., 11 Ha. 325 ; 
 Habershon v. Blurton, 1 De G. & Sm. 121 ; Skipp v. Harwood, 2 
 Swanst. 587. 
 
 (/) See Helmore v. Smith, 35 Ch. D. 430. 
 
 ((/) Habershon v. Blurton, 1 De G. & Sm. 121. 
 
 (h) Perens v. Johnson, and Johnson v. Perens, :! Sm. &G. 419. 
 See, also, Smith v. Harrison, 26 L. J. Ch. 412, V.-C. W., where 
 a sale by the sheriff was also set aside.
 
 creditor. 
 
 436 SALE OF SHARES IN PARTNERSHIPS. 
 
 Bk. III. that a few days after the sale, and after only one day's 
 
 Chap. ;>. Sect, -workings a ricn seam of coal was actually discovered. 
 
 J The execution debtor thereupon filed a bill against his 
 
 late co -partners, praying that the sale might be set aside, 
 on the ground that the purchase from the sheriff was 
 contrary to that good faith which should be observed by 
 one partner towards another; and a decree was made in 
 [*361] his * favour setting the sale aside upon repayment of 
 
 the purchase-money, with interest at 5Z. per cent. 
 Purchase Again, if the solvent partners buy the execution 
 
 with partner- debtor's share in the goods seized and pay for it out of 
 the partnership monies, they cannot hold the share for 
 their own benefit and treat the execution debtor as no 
 longer a partner or interested in the share pur- 
 chased (*'). 
 Ripht of the The execution creditor has no title to goods seized 
 execution under a fi. fa. issued by him, unless he purchases them 
 from the sheriff. Consequently where, under a fi. fa. 
 issued against one partner for a private debt, the sher- 
 iff seized the goods of the firm, which afterwards be- 
 came bankrupt, and the assignees sold the goods seized, 
 it was held that an action by the execution creditor 
 against the assignees for money had and received to 
 his use, would not lie; first, because he had no title to 
 the goods; and secondly, because if he had, his inter- 
 est in them could not be ascertained without taking 
 the accounts of the partnership (k). 
 
 4. Jlodijicatioits introduced by the Judicature acts. 
 
 The Judicature acts and rules promulgated under 
 them do not unfortunately contain any directions ap- 
 plicable to the subject now under consideration. Nor 
 has the new practice under them yet been reduced to 
 shape. The writer can only, therefore, offer the fol- 
 lowing suggestions with reference to their combined 
 effect: — 
 
 1. The practice must be the same in all divisions of 
 the High Court. 
 
 2. The old practice must be adhered to so far as it 
 is consistent with the modern procedure. 
 
 3. Some form of procedure must be adopted which 
 shall have the effect of a suit for an account, and an 
 injunction, and a receiver. 
 
 4. There appears to be no reason why the sheriff 
 should not proceed to seize the partnership goods, and 
 
 (i) Helmore v. Smith, 35 Ch. D. 436, where the assignment by 
 the sheriff was set aside. 
 
 (Jfc) Garbett v. Veale, 5 Q. B. 408.
 
 TRANSFER OF SHARES IN PARTNERSHIPS. 437 
 
 sell the execution debtor's share as before; and there Bk. III. 
 
 is in strictness no more * necessity for him to inter- 9 P" ° ,x '' rt- 
 
 plead now than before (7); and yet as no order for his _L_ 
 
 withdrawal can be made in his absence, a proceeding [* 362] 
 by him in the nature of an interpleader summons, 
 bringing all parties interested before the Court, would 
 probably be the most convenient course to adopt. 
 
 5. Upon a seizure by the sheriff the partners of the 
 execution debtor should obtain an order dissolving the 
 partnership, directing the sheriff to withdraw, and di- 
 recting the accounts of the partnership to be taken, and 
 the value of the execution debtor's interest in the pro- 
 perty seized by the sheriff to be ascertained, and ap- 
 pointing a receiver. 
 
 '6. After the accounts have been taken, and the above 
 value ascertained, the receiver should be directed to 
 pay the amount of such value to the purchaser from 
 the sheriff, if any, and the rest of the share of the 
 execution debtor in the assets of the partnership to 
 him. If the share has not been sold the execution 
 creditor must be paid out of, or to the extent of the 
 above value. The receiver can then be discharged. 
 
 7. Whether all this can be done without a transfer 
 to the Chancery Division is not clear; but probably it 
 very often may be done; and practically a sale by the 
 sheriff will probably be frequently dispensed with. A 
 sale usually produces great hardship, as the value of 
 the share sold is unknown; and its sale seldom an- 
 swers any useful purpose except that of getting rid of 
 the sheriff (m). 
 
 The truth, however, is that the whole of this branch Suggested 
 of the laws is in a most unsatisfactory condition, and re- alteration of 
 quires to be put on an entirely new footing. The sta- tne law - 
 tutory enactments relating to charging orders should 
 be extended to all cases in which the share of a part- 
 ner is sought to be taken in execution for a separate 
 debt of his own. 
 
 * Section V. — Of the Transfer of Shares. [ *303] 
 
 When persons enter into a contract of partnership, Transfer of 
 their intention ordinarily is, that a partnership shall shares, 
 exist between themselves and themselves alone. The 
 mutual confidence reposed by each in the other is one 
 
 (I) See ace. W. N. 1875, p. 204. 
 
 (m) See a suggested form of order in Seton on Decrees, 1214 
 n. (Ed. 4) referred to in Whetham v. Davey, 30 Ch. D. 579.
 
 438 TRANSFER OF SHARES 
 
 i'.k. III. of the main elements in the contract, and it is obvious 
 
 Chap. 5. Sect. ^ a t p ersons ma y De willing enough to trust each other, 
 
 ^ and yet be unwilling to place the same trust in any one 
 
 else. Hence it is one of the fundamental principles of 
 partnership law that no person can be introduced as a 
 partner without the consent of all those who for the 
 time being are members of the firm. If, therefore, a 
 partner dies, his executors or devisees have no right to 
 insist on being admitted into partnership with the sur- 
 viving partners, unless some agreement to that effect has 
 been entered into by them (m). 
 Effect of Still less can a partner by assigning his share entitle 
 
 transfer. his assignee to take his place in the partnership against 
 
 Effect of the will of the other members (n). 1 The assignment, 
 assignment, however, is by no means inoperative: on the contrary, 
 it involves several important consequences, more espe- 
 cially as regards the dissolution of the firm and the right 
 of the assignee to an account (o). 
 
 1. As regards As regards dissolution, it is remarkable that there 
 dissolution, should be so little authority to be found. It is gen- 
 erally stated, that if a member of an ordinary partner- 
 ship transfers his share, he thereby dissolves the part- 
 nership; but this proposition requires qualification. 
 The true doctrine, it is submitted, is that if the partner- 
 ship is at will, the assignment dissolves it (p); and if 
 the partnership is not at will, the other members are 
 entitled to treat the assignment as a cause of dissolu- 
 tion. It can hardly be that a partner, who has himself 
 no right to dissolve or to introduce a new partner, can, 
 by assigning his share, confer on the assignee a right 
 
 [ * 364] to have the accounts of the firm * taken, and the affairs 
 thereof wound up, in order that he may obtain the ben- 
 efit of his assignment. 
 
 2. x\.s regards Although a partner cannot, by transferring his share, 
 account. force a new. partner on the other members of the firm 
 
 without their consent, there is nothing to prevent a 
 partner from assigning or mortgaging his share without 
 consulting his co-partners; and if a partner does assign 
 
 (m) Pearce v. Chamberlain. 2 Ves. S. 33 ; Crawford v. Hamil- 
 ton. 3 Madd. 254 ; Bray v. Fromont, 6 ib. 5 ; Crawshay v. Maule, 
 1 Swanst. 495 ; Tatam v. Williams. 3 Ha. 347. 
 
 (n) See Jefferys v. Smith, 3 Russ. 158. 
 
 (o) In Marshall v. McClure, 10 App. Ca. 325, a surrender of a 
 partner's share in property mortgaged was held, under special 
 circumstances, to include the firm's share. 
 
 (p) See Heath v. Sansom, 4 B. & Ad. 172. 
 
 1 Mason v. Connell, 1 Whart. 381 (183G): Miller v. Bringham, 
 50 Cal. 615 (1875); Bank v. R. R. Co., 11 Wall. 624(1870); Mer- 
 rick v. Braiuard, 38 Barb. 574 (1860).
 
 IN PARTNERSHIPS. 439 
 
 or mortgage his share, he thereby confers upon the as- Bk. III. 
 signee or mortgagee a right to payment of what, upon ^ na P- 5. Sect. 
 
 taking the accounts of the partnership, may be due to !_! 
 
 the assignor or mortgagor (g). 1 But the assignee or 
 mortgagee acquires no other right than this (r) ; and 
 he takes subject to the rights of the other partners; and 
 will be affected by equities arising between the assignor 
 and his co- partners subsequently to the assignment (s). 2 
 Even if the assignee gives notice of the assignment, he 
 cannot (if the partnership is for a term) acquire a right 
 to the assignor's share as it stands at the time of the 
 assignment or notice, discharged from subsequently 
 arising claims of the other partners (t). The assign- 
 ment cannot deprive them of their right to continue the 
 partnership, and consequently to bring subsequent deal- 
 ings and transactions into account. It seems, however, 
 that an assignee of a share in a partnership can compel 
 the other partners to come to an account with him (u)f 
 but the analogy furnished by sub-partnerships leads to 
 the inference that the assignee must, to use Lord Eldon's 
 language, be satisfied with the share of the profits aris- 
 ing and given to the assignor (x). 
 
 If partners choose to agree that any of them shall be Transfer 
 at * liberty to introduce any other person into the part- [ * 365] 
 nership, there is no reason why they should not; nor allowed by 
 why, having so agreed, they should not be bound by 
 
 (q) Whetham v. Davey, 30 Ch. D. 574 ; Glyn r. Hood, 1 Gift". 
 328, and 1 De G. F. & J. 334. See, also, Cassels v. Stewart, 6 
 App. Ca. 73. 
 
 (»•) Smith v. Parkes, 16 Beav. 115. 
 
 (.s) See Cavander v. Bulteel, 9 Ch. 78 ; Lindsay v. Gibbs, 3 De 
 G. & J. 690 ; Guion v. Trask, 1 De G. F. & J. 379, per Turner, L. 
 J. See, also, Re Knapman, 18 Ch. D. 300 ; Bergmann v. Mc- 
 Millan, 17 ib. 423 ; Morris v. Livie, 1 Y. & C. C. 380. 
 
 (t) See Bergmann r. McMillan, 17 Ch. D. 423 ; Cavander v. 
 Bulteel, 9 Ch. 78 ; Kelly v. Hutton, 3 Ch. 703 ; Kedmayne v. 
 Forster, 2 Eq. 467. 
 
 (ft) See Whetham v. Davey, 30 Ch. D. 574 ; Glyn v. Hood and 
 Kelly v. Hutton, tibi supra. But Kelly v. Hutton appears to have 
 been a case of co-ownership in a newspaper and a partnership in 
 its profits. 
 
 (x) See ante, p. 48 ; and Brown v. De Tastet, Jac. 284, where 
 the bill was dismissed against the other partners. 
 
 1 See page 340 ; note 1. 
 
 2 Hiscock ?). Phelps, 49 N. Y. 97 (1872); Bank v. Sawver. 38 
 Oh. St..339 (1882); Receivers v. Godwin. 5 X. J. Eq. 334 (1846); 
 Burbank v. Wiley, 79 X. Ca. 501 (1878); Churchill v. Prostor, 31 
 Minn. 129 (1883). 
 
 3 Gyger's Appeal, 62 Pa. St. 73 (1869); Bank v. Railroad Co., 
 11 Wall. 624 (1870); Mathewson v. Clarke, 6 How. 1:2-2 |1S48); 
 Fellows r. Greenleaf; 43 N. H. 421 (1802); Miller v. Brigham, 50 
 Cal. 615 (1875). 
 
 agreement.
 
 440 
 
 TRANSFER OF SHARES 
 
 Lovegrove v. 
 Nelson. 
 
 Bk. III. the agreement (?/). Persons who enter inlo such an 
 
 Chap. 5. Sect, agreement consent prospectively and once for all to ad- 
 
 J mit into partnership any person who is willing to take 
 
 advantage of their agreement, and to observe those stip- 
 ulations, if any, which may be made conditions of his 
 admission. Such an agreement as this is the basis of 
 every partnership the shares in which are transferable 
 from one person to the other. Those who form such 
 partnerships, and those who join them after they are 
 formed, assent to become partners with any one who is 
 willing to comply with certain conditions (z). 
 
 As observed in Lovegrove v. Nelson (a), " To make a 
 person a partner with two others their consent must 
 clearly be had, but there is no particular mode or time 
 required for giving that consent ; and if three enter 
 into partnership by a contract which provides that on 
 one retiring, one of the remaining two, or even a fourth 
 person who is no partner at all, shall name the successor 
 to take the share of the one retiring, it is clear that 
 this would be a valid contract which the Court must 
 perform, and that the new partner would come in as 
 entirely by the consent of the other two as if they had 
 adopted him by name." 
 
 Where a partner has an unconditional right to trans- 
 fer his share, he may transfer it to a pauper, and thus 
 get rid of all liability as between himself and his co- 
 partners in respect of transactions subsequent to the 
 transfer and notice thereof given to them (6). But 
 even in this case the transfer alone does not render the 
 transferee a member of the partnership, and liable as 
 between himself and the other members to any of the 
 debts of the firm (c). In order to render him a partner 
 with the other members, they must acknowledge him 
 to be a partner, or permit him to act as such (d). 
 As an ordinary partnership is not distinguishable 
 the persons composing it, and as every change 
 
 Effect of 
 transfer 
 where 
 there is a 
 right to 
 assign. 
 
 Effect on 
 continuity of from 
 
 firm. 
 [ * 366] 
 
 amongst those * persons creates a new partnership, 1 it 
 follows that every time a partner transfers his share to 
 a non-partner the continuity of the firm is broken. In 
 this respect such companies as are not mere partner - 
 
 (y) Lovegrove ?>. Nelson, 3 M, & K. 20, 
 (z) See Fox v. Clifton, <J Bing. 119. 
 
 (a) 3 M. & K. 1. 
 
 (b) Jefferys v. Smith, 2 Euss. 158. 
 
 (c) Ibid. (rf) Ibid. 
 
 1 Clark v. Wilson, 1!) Pa. St. 414 (1852); Peters?-. McWilliams, 
 78 Va. 567 (1884); Morse v. Gleason, 04 N. Y. 204 (1876); Ross 
 v. Cornell, 45 Cal. 133 (1872); Mudd v. Bast, 34 Mo. 465 (1864).
 
 IN PARTNERSHIPS. 441 
 
 ships on a large scale differ from ordinary firms, their Bk. III. 
 continuance not being interrupted by changes amongst p na P- 5. Sect, 
 their members e). _J 
 
 An apparent exception to the rule that a share in a Mining part- 
 partnership cannot be transferred without the consent nerships. 
 of all the partners exists in the case of mining partner- 
 ships. Mines are a peculiar species of property, and 
 are in some respects governed by the doctrines of real 
 property law, and in others by the doctrines which 
 regulate trading concerns. Regarding them as real 
 property, and their owners as joint tenants or tenants 
 in common, each partner is held to be at liberty to 
 dispose of his interest in the land without consulting 
 his co-owners ; and a transfer of this interest confers 
 upon the transferee all the rights of a part-owner, in- 
 cluding a right to an account against the other 
 owners (/). But even here, if the persons originally 
 interested in the mine are not only part-owners but 
 also partners, a transferee of the share of one of them, 
 although he would become a part- owner with the others, 
 would not become a partner with them in the proper 
 sense of the word, unless by agreement express or 
 tacit (g). 1 
 
 Similar observations apply to transfers of shares in Ships. 
 ships. 
 
 (e) See Mayhew's case, 5 De G. M. & G. 837. 
 
 (/) See Bentley v. Bates, 4 Y. & C. Ex. 182; Redmayne v. 
 Forster, 2 Eq. 467. 
 
 {g) As in JefTerys v. Smith, 3 Russ. 158 ; Crawshay v. Maule, 1 
 Swanst. 518. 
 
 1 It is said that death does not cause the dissolution of such a 
 firm and that the assignment of his share therein by one of its 
 members will not dissolve it. Lemar v. Hale, 79 Va. 147 (1884), 
 Kahn v. Central Smelting Co., 102 U. S. 641 (1881); Nisbet v. 
 Nash, 52 Cal. 540 (1878); Campbell v. Colorado Coal & Iron Co., 
 9 Col. 60 (1885).
 
 442 CONTRIBUTION AND INDEMNITY. 
 
 [ * 367] * CHAPTER VI. 
 
 OF CONTRIBUTION AND INDEMNITY WITH REFERENCE 
 TO PARTNERSHIPS. 
 
 Bk. III. In this chapter it is proposed to consider the nature 
 
 Chap. 6. of those expenses and losses which, as between the 
 
 S b'ectof members of a firm, are chargeable to the firm, and also 
 present the nature of those which are properly chargeable 
 
 chapter. against some one or more of the members exclusively 
 
 of the others. In other words, it is proposed to inves- 
 tigate the principles upon which, in taking the accounts 
 of a firm, a given expense or loss is to be placed to the 
 debit of the firm, or to the debit of one or more of its 
 members separately. 
 
 In connection with this subject it must always be 
 borne in mind that every member of an ordinary firm 
 is, to a certain extent, both a principal and an agent. 
 He is liable as a principle to the debts and engagements 
 of the firm, and in respect of them he is entitled to con- 
 tribution from his co partners ; for they have no right 
 to throw on him alone the burden of obligations which, 
 ex hypothesi, are theirs as much as his (a). 1 Again, 
 each member as an agent of the firm is entitled to be 
 indemnified by the firm against losses and ex- 
 penses bond fide incurred by him for the benefit of the 
 firm, whilst pursuing the authority conferred upon him 
 by the agreement entered into between himself and his 
 co-partners. On the other hand, a partner has no right 
 to charge the firm with losses or expenses incurred by 
 his own negligence or want of skill, or in disregard of 
 the authority reposed in him (b). 
 
 The above general principles are the basis of the 
 whole of this branch of partnership law ; but in order 
 [ * 3681 to apply them * correctly to the infinite variety of cir- 
 cumstances which occur in the ordinary course of life, 
 it will be convenient to notice the leading doctrines on 
 
 («) See Robinson's case, 6 De G. M. & G. 572 ; Spottiswoode's 
 case, ib. 345 ; Lefroy v. Gore, 1 Jo. & Lat. 571. 
 
 (b) Thomas v. Atherton, 10 Ch. D. 185 ; Burry v. Allen, 1 
 Coll. 604. 
 
 1 Downs v. Jackson, 33 111. 464 (1864) ; Forbes v. Webster, 3 
 Vt. 58 (1829).
 
 CONTRIBUTION AND INDEMNITY. 443 
 
 the subject of contribution and indemnity generally, and Bk. III. 
 then to allude more particularly to the rights of part- Chap. 6. Sect. 
 
 ners with respect to compensation for trouble ; outlays J . 
 
 and advances; debts, liabilities, and losses and interest. 
 
 Section I. — General Observations. 
 Foundation of the right to contribution. 
 
 Whether a person who has suffered loss is entitled to The right of 
 be indemnified wholly or partly by others, is a question contnbu- 
 which cannot be decided in the negative merely upon 
 the ground that no agreement for contribution or in- 
 demnity has been entered into. An agreement may 
 undoubtedly give rise to a right to indemnity or con- 
 tribution ; but the absence of an agreement giving rise 
 to such a right, is by no means fatal to its existence. 
 The general principle which prescribes equality of bur- 
 den and of benefit, is amply sufficient to create a right 
 of contribution in many cases in which it is impossible 
 to found it upon any genuine contract, express or tacit. 
 The common feature of such cases is, that one person 
 has sustained some loss which would have fallen upon 
 others as well as upon himself, but which has been 
 averted from them at his expense ; for example, where 
 one tenant in common repairs the common property, 
 and so saves it from destruction (c) ; where one of sev- 
 eral sureties pays a debt for which all are liable (d) ; 
 where one person has his goods thrown overboard in 
 order to save the ship and the rest of its cargo(e). In 
 all these cases a right of contribution arises ; not by 
 virtue of any contract, but because the safety of some 
 cannot justly be purchased at the expense of others ; 
 and all must therefore contribute to the loss sus- 
 tained ( /). 
 
 * Again, where one man's goods have been lawfully r * 369] 
 seized for the debt of another, the owner of the goods 
 has a right to redeem them and to be indemnified by 
 the debtor (g). 
 
 (c) Ante, p. 60. 
 
 (rf) Bering r. Winehelsea, 1 Cox, 31 8. 
 
 (e) Abbott on Shipping, part. iv. ch. 10 ; and part vi. ch. 1, 
 ed. 12. 
 
 (/) Lefroy v. Gore, 1 Jo. & Lat. 571 ; Spottiswoode's case. 6 
 De G. M. &'G. 345 ; Ashurst v. Mason. 20 Eq. 225, a case of co- 
 directors. See, too, the cases in 1 Eq. Ca. Ab. Contribution 
 and Average, and in the note to Averall v. Wade, LI. & Gould 
 (temp. Sug. ). '.'o'4. 
 
 (g) Edmunds v. Wallingford, 14 Q. B. D. 811.
 
 444 
 
 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. 
 Chap. 6. Sect. 
 1. 
 
 Exclusion of 
 right by 
 agreement. 
 
 Exclusion of 
 right by 
 fraud. 
 
 But although a right to contribution may exist where 
 there is no contract upon which it can be founded, it 
 cannot exist if excluded by agreement; and it is so ex- 
 cluded whenever those who would otherwise be contribu- 
 tories have entered into any contract, express or tacit, 
 amongst themselves, which is inconsistent with a right 
 on the part of one to demand contribution from the 
 others (h). This is too obvious to require comment, 
 but it must be borne in mind as qualifying the common 
 saying, that the right to contribution is independent of 
 agreement. 
 
 Again, a right to contribution may be excluded by 
 fraud, as is the case where a person induces another by 
 false and fraudulent representations to join him in part- 
 nership. In such a case the person defrauded has a 
 right to rescind the contract of partnership, and, as be- 
 tween himself and co partner, to throw all the partner- 
 ship losses upon the latter alone (i). 
 
 Agent's 
 eight to in- 
 demnity. 
 
 [*370] 
 
 1. When he 
 obeys his in- 
 structions. 
 
 Of the right of agents and trustees to indemnity from 
 their principals and cestuis que trustent. 
 
 In order to clear the way for the discussion of the 
 right of a partner to be indemnified by his firm, it is 
 necessary to advert shortly to the right of agents and 
 truslees to be indemnified by their principals and cestuis 
 que trustent. 
 
 "With respect to agents the following cases have to be 
 considered. 
 
 1. When the agent having instructions executes them ; 
 
 * 2. When the agent having instructions does not fol- 
 low them; 
 
 3. When the agent having no instructions acts never- 
 theless for his principal. 
 
 1. With respect to the first of these three classes of 
 cases, nothing is clearer than that an agent who has in- 
 structions to act in a certain manner, is entitled be re- 
 imbursed by his principal for all outlays made in pur- 
 suance of these instructions, and to be indemnified for 
 any loss sustained by executing them (k). Even if 
 
 (/<) As in Gillan r. Morrison, 1 De G. & S. 421 ; Re The Wor- 
 cester Corn Exchange Co., 3 De G. M. & G. 180. 
 
 (i) See Newbiggiiig v. Adam. 34 Ch. D. 582; Pillars v. Hark- 
 ness, Colles, 442; Rawlins v. Wickham, 1 Giff. 355, and 3 De G. 
 & .1. 304, noticed hereafter under the head Rescission of Contract. 
 See, too, Carew's case, 7 De G. M. & G. 4 2. 
 
 (k) Story on Agency, ? 335 et seq. ; Paley on Agency, ch. 2 ; 
 Smith, Merc. Law, pp. 119, 120, ed. 9; Curtis r. Barclay, 5 B. & 
 C. 141. See, also, Ireland v. Liviugstone, L. R. 5 Ho. Lo. 416.
 
 CONTRIBUTION AND INDEMNITY. 445 
 
 what the agent does is unlawful he is entitled to in- Bk. III. 
 deinnity (?); unless, indeed, the act be one -which the Chap. 6. Sect. 
 
 agent must have known his principal could under no J 
 
 circumstances justify; for then the maxim in pari de- 
 licto melior est positio defendentis applies, and the agent 
 can obtain no indemnity from a court of justice (in). 
 
 2. It is equally clear that, speaking generally, an 2. When he 
 agent who acts contrary to his instructions is not enti- disobeys his 
 tied to any indemnity or reimbursement for losses or ms ruc lons ' 
 expenses incurred whilst so acting (n). Even although 
 the instructions may have been given by the principal 
 under a misapprehension of facts, and the agent, being 
 aware that such was the case, may have acted bond fide 
 for the benefit of his principal (o), still the agent will 
 not be entitled to indemnity; for it is the duty of an 
 agent to obey and not to disregard his orders. But if 
 the principal chooses to ratify the agent's conduct, the 
 latter acquires a right to be considered as having acted 
 in pursuance of instructions, and to be entitled to 
 reimbursement and indemnity * accordingly; for the [* 371] 
 principal cannot, whilst ratifying the agent's conduct 
 so far as it is beneficial, repudiate it so far as it is oner- 
 ous (p). 
 
 The position of an agent who has already acted on Effect of 
 his instructions, and has thereby incurred a legal obli- revocation of 
 gation to third parties, is different. The better opin- authority. 
 ion is that in this case he is not bound on the command 
 of his principal to stop short and refuse to perform 
 the obligation incurred. There is no doubt that, as 
 between himself and his principal, an agent is entitled 
 to obey the counter order, and to obtain a full indem- 
 nity from the consequences of so doing. But it is ap- 
 prehended that he is at liberty so far to carry out the 
 instructions on which he has begun to act, as may be 
 necessary to relieve himself from all the legal liabili- 
 ties incurred before notice of the countermand, and 
 
 as to ambiguous instructions. As to costs of actions unsuccess- 
 fully defended, see Broom v. Hall, 7 C. B. N. S. 503. 
 
 (/) Adamson v. Jarvis, 4 Bing. 66: Betts v. Gibbins, 2 A. & E. 
 57; per Tindal. C. J., in Collins v. Evans, 5 Q. B., 830. See. as 
 to conforming to an illegal custom unknown to the principal, 
 Perry v. Barnett, 15 Q. B. D. 388. 
 
 (m) See Merryweatner v. Nixan, 2 Sm. L. C. ; Collins v. Blan- 
 tern, 1 ib. ; Joseph v. Pebrer, 3 B. & C. 639; Shackell v. Rosier, 2 
 Bing. N. C. 634. 
 
 (n) See Stokes v. Lewis, 1 T. R. 20; Galwav V. Mathew. 10 
 East, 264; Child v. Morley, 8 T. R. 610; Warwick v. Slade, 3 
 Camp. 1-27. 
 
 (o) Howard v. Tucker, 1 B. & Ad. 712. 
 
 (;>) Story on Agency, \ 250.
 
 446 
 
 DISTRIBUTION AND INDEMNITY. 
 
 Bk. III. 
 
 Chap. 6. Sect, 
 1. 
 
 3. When he 
 acts without 
 instructions. 
 
 [*372] 
 
 Rights of a 
 
 having done so, to insist upon indemnity and reim- 
 bursement as if the principal had not changed his in- 
 structions. Nemo potest mutare consilium suum in al- 
 terius injuriam is the maxim of the civil law, and ex- 
 presses the correct principle for the decision of these 
 cases (q). * 
 
 3. There remains the third class of cases, viz., where 
 the agent, having no instructions to guide him, acts 
 for his principal, and then seeks to be indemnified by 
 him. Now, here, as in the last class of cases, ratifica- 
 tion by the principal removes all difficulty, and may 
 be excluded from consideration. Again, an agent hav- 
 ing no specific instructions may yet have an implied 
 authority to act in a given way for his principal; and 
 in the absence of orders to the contrary, an agent al- 
 ways has implied authority to act in the manner in 
 which he has been accustomed to act with the approval 
 of his principal; and to act with respect to any matter 
 as other persons situate like himself usually act with 
 respect to similar matters; and to take all those steps 
 which are usual and necessary to enable * him duly to 
 execute his instructions (?'). It may therefore well 
 happen that an agent who has no positive instructions, 
 ■ may nevertheless act within the limits of his real au- 
 thority; and so long as he keeps within those limits he 
 is entitled to reimbursement and indemnity (s). The 
 principle applicable to the first class of cases applies 
 here; but if the agent claims an indemnity against loss 
 sustained by the commission by him of an illegal act, 
 he must be prepared with very strong evidence to show 
 that such acts fell within the limits of his authority (t). 
 In a case of doubt no authority to commit an unlawful 
 act can be inferred. 
 
 The greatest difficulty arises when an agent acts 
 
 (q) See Read v. Anderson, 13 Q. B. D. 779 ; Seymour?'. Bridge, 
 14 ib. 460 ; Loring v. Davis, 32 Ch. D. 625. The position in the 
 text is supported by Pothier, Mandat. No. 121, and Story, 
 Agency, k 465, &c, and by Balsh r. Hyham, 2 P. W. 453 ; Sut- 
 ton v. Tatham, 10 A. & E. 27 ; and the cases already cited. On 
 the other hand, see 2 Kent, Com. 644. In Child v. Morley, 8 T. 
 R. 610. and Warwick v. Slade, 3 Camp. 127, the agent was only 
 bound in honour. 
 
 (r) Story on Agency, ch. 6. 
 
 Is) Curtis v. Barclay, 5 B. & C. 141 ; Sutton r. Tatham. 10 A. 
 & E. 27 ; see. too, 1 Wms. Saund. 264 b ; Pettman v. Keble, 15 
 Jur. 38; Wolfe v. Horncastle, 1 Bos. & P. 323, per Buller, J. 
 This was also the principle applied in R. v. Essex, 4 T. R. 591, 
 and referred to by Lord Cottenham in A.-G. v. The Mayor of 
 Norwich, 2 M. & Cr. 424. 
 
 (0 See, as to unreasonable or illegal customs not known to the 
 principal, Perry v. Barnett, 15 Q. B. D. 388.
 
 CONTRIBUTION AND INDEMNITY. 447 
 
 without any authority, express or tacit, but bond fide Bk. III. 
 for the benefit of his principal. There is a leaning in clia P- 6. Sect. 
 
 many minds in favour of the agent in such cases, and _ 
 
 it cannot be denied that circumstances may occur which person who 
 render officious conduct justifiable, and even benevo- ""asked 
 lent. On the other hand, culpa est immiscere se, rei ad acts fur 
 se non pertinenti (u) ; and by the law of England a per- 
 son who chooses, unasked, to incur expense for another, 
 must, speaking generally, trust rather to gratitude than 
 to judicial aid for reimbursement (x). The only es- 
 tablished exceptions to this rule seem to be — 1, where 
 one person alone sustains a loss or incurs expense for 
 the relief of himself and others from some risk or obli- 
 gation common to all; and, 2, where one person does 
 for another that which the latter is legally bound to 
 do, but either cannot or will not do himself. The first 
 class of exceptions has been already alluded to. The 
 second may be illustrated by those cases in which ex- 
 ecutors and husbands are held liable for the expenses 
 of funerals, although they gave * no orders for them, [*373] 
 and took no part in them (y); and by cases in which 
 one man's goods have been lawfully seized for another 
 man's debt (z). 
 
 The general rule, certainly, is that the officious con- General rule, 
 duct of one person imposes no obligation on another to 
 compensate him for, or indemnify him from, the con- 
 sequences of his own spontaneous act; and even al- 
 though the other may be benefited, he cannot on that 
 ground alone be compelled to pay for what he never 
 sought to obtain (a). A very strong illustration of 
 this is afforded by the case of Edmiston v. Wright (b). Edmiston v. 
 There the defendant was the owner of some estates in Wright- 
 Georgia, and of some negroes in Jamaica. The plain- 
 tiff's partner was the defendant's agent, and the gen- 
 eral manager of his West Indian estates. The negroes 
 in Jamaica were shipped for Georgia, and seized by 
 Custom-house officers in consequence of the captain of 
 the ship having neglected to procure some necessary 
 
 (u) Dig. L. tit. 17, De Reg. Jur. L. 36. 
 
 (x) See Falcke v. Scottish Imp. Ins. Co., 34 Ch. D. 248 ; Re 
 Leslie, 23 Ch. D 552. See as to the negotiorum gestor of the Ro- 
 man law, Dig. III. tit. 5, DeNegot. Gest, Thibaut's System des 
 Pand. Recht, \ 558, ed. 9. 
 
 (?/) See Amhrose v. Kerrison, 10 C. B. 776; Rogers v. Price, 3 
 Y. & J. 28 ; Jenkins v. Tucker, 1 H. Bl. 91. 
 
 (z) Edmunds v. Wallingford, 14 Q. K. D. 811. 
 
 (a) 1 Wins. Saund. 264 a; 6 B. & C. 444, per Bayley, J.- 
 Stokes v. Lewis, 1 T. R. 20; Child v. Morley, 8 T. R. 610. 
 
 {b) 1 Camp. 88.
 
 448 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. documents. The plaintiff, for the purpose of redeern- 
 
 Chap. 6. Sect. ^ „ ^ e ne g roe8 f r0 m the authorities who had seized 
 
 J . them, paid the sum of 1200/., and the negroes were 
 
 then allowed to proceed to the defendant's estate in 
 
 Georgia. The plaintiff sued the defendant for the sum 
 
 of 1200Z. as money paid to his use, but Lord Ellenbor- 
 
 ough held that it was a voluntary payment made by 
 
 the plaintiff, and one which he could not recover from 
 
 the defendant. 
 
 Rio-ht of The right of a trustee to indemnity from his cestui 
 
 trustees to que trust very closely resembles the right of an agent 
 
 indemnity. ^ indemnity from his principal — 
 
 1. A trustee is clearly entitled to be indemnified out 
 of the trust property against all costs, charges, and ex- 
 penses properly incurred, and against all losses sus- 
 tained by him, in the execution of his trust (c) ; and if 
 the trust property is not sufficient for the purpose of 
 
 [ * 374] indemnifying him in respect of such matter.-, *his ces- 
 tui que trust, if under no disability, is personally lia- 
 ble to indemnify him (d), unless such liability is ex- 
 cluded by some special circumstance (e). 
 
 2. On the other hand, a trustee who commits a 
 breach of trust is entitled to no indemnity in respect 
 thereof, except from those cestuis que trustent, if any, 
 at whose request he wrongfully acted, or who have 
 sanctioned and benefited by his improper conduct (/). 
 
 • 3. Every act of a trustee respecting the trust prop- 
 erty must necessarily either be warranted by the trust 
 reposed in him, or amount to a breach of trust, and 
 must therefore be governed by one or other of the two 
 foregoing principles. But as with agents, so with 
 trustees; their acts may be proper, although not ex- 
 pressly authorised; and whatever is necessary in order 
 duly to execute an express trust, is warranted by that 
 trust, and entitles the trustee to indemnity accordingly. 
 But even this principle will not entitle a trustee to in- 
 
 (c) Re Bleckley, 35 Beav. 449, where this rule was applied in 
 favour of a trustee for a company against its debenture-holders. 
 See, as to losses which may never arise. Hughes-Hallett v. In- 
 dian Mammoth Gold Mines Co., 22 Ch. D. 561; Hohbs v. Wayet, 
 36 Ch. D. 256; and as to the right of indemnity where trustees 
 hold two funds for different sets of people, hut under the same 
 instrument, Fraser r. Murdoch, 6 App. Ca, 855. 
 
 (d) See Oriental and Commercial Bank, 3Ch. 791; Balsh v. 
 Hyham, 2 P. W. 453; Phene v. Gillan, 5 Ha. 1; and Ex parte 
 Chippendale, 4 De G. M. & G. 52. 
 
 (e) If there is an express covenant to indemnify, the obliga- 
 tion will be limited by the covenant. See Selwyn v. Harrison, 
 2 J. & H. 334; Gillan v. Morrison. 1 De G. & Sm. 421. 
 
 (/) See Lewin on Trusts, pp. 642 and 910, ed. 8.
 
 CONTRIBUTION AXD INDEMNITY. 449 
 
 demnity in respect of everything lie may do bond fide Bk. III. 
 for the benefit of his cestui que trust; regard must be Chap. 6. Sect. 
 had to the nature of the trusts to be executed. J 
 
 Of some differences between contribution at laic and in 
 equity. 
 
 Before the passing of the Judicature acts, a right to 1. As to in- 
 contribution or indemnity, arising otherwise than by demnity he- 
 special agreement, was only enforceable at law by a ] 0re °' SS , t '^ S 
 person who could prove that he had already sustained e d. 
 a loss (g). But in equity it was very reasonably held, 
 that even in the absence of any * special agreement, a [ * 375] 
 person who was entitled to contribution or indemnity 
 from another could enforce his right before he had sus- 
 tained actual loss (h) provided loss was imminent (i); 
 and this principle will now prevail in all divisions of 
 the High Court (k). Therefore a person who is enti- 
 tled to be thus indemnified against loss is not obliged to 
 wait until he has suffered, and perhaps been ruined, be- 
 fore having recourse to judicial aid. Thus, in the ordi- 
 nary case of principal and surety, as soon as the creditor 
 has acquired a right to immediate payment from the sur- 
 ■ety,the latter is entitled to call upon the principal debtor 
 to pay the amount of the debt guaranteed, so as to re- 
 lieve the surety from his obligation (Z); and where one 
 person has covenanted to indemnify another, an action 
 for specific performance may be sustained before the 
 plaintiff has actually been damnified (m) ; and the limit 
 of the defendant's liability to the plaintiff is the full 
 amount for which he is liable; or if he is dead or in- 
 solvent the full amount provable against his estate, and 
 
 (g) See Maxwell v. Jameson, 2 B. & A. 51. Compare Spark 
 v. Heslop, 1 E. & E. 563, and the judgment of Crompton, J., in 
 Randall v. Raper, E. B. & E. 84. 
 
 (h) See Hobos r. Wayet, 36 Ch. D. 256; Laeey v. Hill, 18 Eq. 
 182. 
 
 (i) ib. : Hughes-Hallet v. Indian Mammoth Gold Mines Co., 
 22 Ch. D. 561. 
 
 (k) See Jud. Act, 1873, \\ 24 and 25. 
 
 (I) Wooldridge v. Norris, 6 Eq. 410: Nesbit v. Smith, 2 Bro. 
 C. C. 582. As to the right of one surety to contribution from 
 another, see Ex parte Snowdon, 17 Ch. D 44. 
 
 (m) See Ranelagh v. Haves, 1 Vera. 190. See Lloyd /■. Dim- 
 mack, 7 Ch. 1). 398, where Ranelagh v. Hayes was disapproved, 
 and the Court declined to decree specific performance of a cove- 
 nant to indemnify with liberty to apply in the event of future 
 breaches which might or mighl not occur. Lloyd v. Dimmack, 
 is, however, not opposed to the statements in the texl nor to the 
 eases cited in p. 375, notes (ft), (/) and (/). See the last direc- 
 tion in the order 7 Ch. D. 402. 
 
 * 6 LAW OF PABTNEKSHIP.
 
 450 
 
 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. 
 
 Chap. 6. Sect. 
 1. 
 
 [ * 376] 
 
 2. As to the 
 amount pay- 
 able by each 
 contributory. 
 Rule at law. 
 
 Rule in 
 equity. 
 
 not only the amount of dividend which such estate can 
 pay (n). In strict conformity with these principles, 
 partners and directors who are individually liable to be 
 sued on bonds and notes, which as between them and 
 their co-partners are to be regarded as the bonds and 
 notes of the firm or company, are entitled to call for 
 contribution before these bonds or notes have been ac- 
 tually paid (o). So a trustee of shares liable to calls 
 is entitled to be indemnified by his cestui que trust 
 against them before they are paid (p). 
 
 * Another difference between law and equity which 
 formerly prevailed, and to which it is necessary to ad- 
 vert, affects the mode in which the amount to be paid 
 by each of several contributories was ascertained. 
 
 At law, before the Judicature acts, if several persons 
 had to contribute a certain sum, the share which each 
 had to pay, was the total amount divided by the num- 
 ber of contributors ; and no allowance was made in the 
 event of the inability of some of them to pay their 
 shares (q). But in equity, in the absence of agree- 
 ment to the contrary (r), those who could pay were 
 compellable not only to contribute their own shares, as- 
 certained as above, but also to to make good the shares 
 of those who were unable to furnish their contribu- 
 tions. 1 This rule also now prevails in all divisions of 
 
 (n) Cruse v. Paine, 6 Eq. 641, and 4 Ch. 441. 
 
 (o) See, for example, The Norwich Yarn Co. 's case, 22 Beav. 
 143; the money borrowed by the directors in that case was se- 
 cured by their own notes, but these notes had not been actually 
 paid when the call on the shareholders was made. This does 
 not appear very clearly from the report referred to, but the 
 writer has been informed by persons conversant with the case 
 that the above statement is correct. 
 
 (p\ Oriental Commercial Bank, 3 Ch. 791: Cruse v.. Paine, 6 
 Eq. (ill, and 4 Ch. 441. See also Hobbs v. Wayet, 36 Ch. D. 
 256, wheie the calls were not yet made. 
 
 (q) See Co well v. Edwards, 2 Bos. & P. 268 ; Batard w.Hawes, 
 2 E. & B. 287. 
 
 (r) McKewan's case, 6 Ch. D. 447. The agreement, if any, 
 determines the extent of the right. 
 
 • l If of A. 's partners D. is outside the jurisdiction of the court, 
 contribution will be decreed to A. toward a payment made by 
 him on behalf of the firm, the whole amount thereof being ap- 
 portioned among the partners within the jurisdiction of the court. 
 Whitman v. Porter, 107 Mass. 522 (1871). If A. retire from his 
 firm and his partners agree to indemnify him against all the 
 linn's liabilities and judgment is obtained against the firm after 
 his retirement and he pays the judgment (although not liable 
 therefor as between the members of the old firm), he is entitled 
 as against their separate creditors to subrogation to the rights of 
 the judgment creditor against the continuing partners. Scott's 
 Appeal, 88 Pa. St. 173 (1878).
 
 CONTRIBUTION AND INDEMNITY. 451 
 
 the High Cout (s). For example, if A., B., C, and D. Bk. III. 
 are liable to a debt, A. can compel B. and C. to con- Chap. 6. beet. 
 
 tribute one-third each, if D. can contribute nothing ; J 
 
 and this, as between A., B., and C, is evidently only 
 fair and just (t). 
 
 In Wadeson v. Richardson (u), one of four partners Wadeson v. 
 assigned property to trustees upon trust, inter alia, to Richardson, 
 pay his proportion or share of all such debts as were or 
 should be owing by him and his three co-partners. He 
 and they afterwards became bankrupt ; and it was 
 held that the share and proportion of debts which the 
 trustees were to pay was, not the share and proportion 
 which, as between the assignor and his co-partners, he 
 ought to contribute to the funds of the firm, but the 
 share and proportion which, as between him and the 
 creditors of the firm, it was necessary for him to pay, 
 in order that they might receive twenty shillings in the 
 pound. The creditors were therefore held entitled to 
 come in under the deed for so much as they were not 
 paid out of the partnership funds, and as they could 
 not recover from the estates of the other partners. 
 
 So, where a loss has been incurred under circum- Rule applies 
 stances * which render it wholly chargeable to the ac- [ * 3 <7j 
 count of the partner who caused it, yet, so far as he is where or.e 
 unable to make it good, it must be borne rateably by o Ugh ^ e to in _ 
 the other partners (x). Upon the same principle, when demnify the 
 a company is being wound up. the solvent shareholders rest; 
 must, if their liability to creditors is not limited, con- and to the 
 tribute whatever may be necessary to pay all the credit- ^f^mpanies. 
 ors in full ; and must make up rateably amongst them- 
 selves what ought to have been contributed by those 
 shareholders who are insolvent (y)\ and this holds 
 even where the creditors are themselves shareholders, 
 and where the liability of the shareholders is as between 
 themselves proportionate to their shares (z). 
 
 Of contribution between wrong- doers. 
 
 There is a saying that there is no contribution amongst of contribu- 
 wrong-doers (a) ; but this doctrine is certainly inap- tion amongst 
 
 (s) .Tnd. Act, 1873, \\ 24 and 25. 
 
 (/) Bering v. Winchelsea, 1 Cox, 318 ; Hole v. Harrison, 1 Ch. 
 Ca. 246; Peter v. Rich, Rep. in Ch. 19. 
 
 (u) 1 V. & B. 103. 
 
 (a-) See Oldaker ». Lavender, 6 Sim. 239 ; Cruikshank v. Mc- 
 Vicar, 8 Beav. 117, 118. 
 
 (y) Robinson's Ex. case, 6 De G. M. & G. 572. 
 
 (z) Professional Life Ass. Co., 3 Eq. 668, and 3 Ch. 167. 
 
 (a) Merry weal her v. Nixan, 8 T. R. 186; and 2 Sm. L. C; Col- 
 burn v. Patmore, 1 Cr. M. & R. 73; A.-G. v. Wilson, Cr. & Ph. 1. 
 
 wrongdoer
 
 452 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. plicable to partners in the general form in which it is 
 
 Chap. 6. Sect. enunc j a{ed It is true, that if a partnership is itself 
 J illegal, no member of it can, in respect of any trans- 
 action tainted with the illegality which infects the firm, 
 obtain relief against any other member ; but there is 
 no authority for saying that if one of the members of 
 a firm sustains a loss owing to some illegal act not at- 
 tributable to him, but nevertheless imputable to the 
 firm, such loss must be borne entirely by him, and that 
 he is not entitled to contribution in respect thereof 
 from the other partners (b). 
 Application The claim of a partner to contribution from his co- 
 ot doctrine to partners in respect of a partnership transaction can- 
 partners. no f. jjg defeats on the ground of illegality, unless the 
 partnership is itself an illegal partnership (c); or un- 
 [ * 378] less the act relied on as the basis of the * claim is not 
 only illegal, but has been committed by the partner 
 seeking contribution, when he knew or ought to have 
 known of its illegality (d). 1 In any of these cases he 
 can obtain no assistance against his co-partners, and 
 must abide the consequences of his own wilful breach 
 of the law. Upon this ground it was often held (before 
 it became lawful for partners to carry on the business 
 of marine insurance) that if one of a firm of marine 
 insurers paid money in respect of a loss insured against 
 by the firm, he could not recover any part of the pay- 
 ment from his co-partners (e). 
 
 But if the partnership is not itself illegal, and if the 
 partner claiming contribution has not himself been 
 personally guilty of a breach of the law, his claim will 
 prevail, although the loss in respect of which it is 
 made may have arisen from an unlawful act. This 
 Campbell?;, appears from Campbell v. Campbell (/), whei'e a firm 
 amp e of distillers had incurred a penalty in consequence of 
 
 a purchase of illicit whiskey. The purchase was made 
 
 (b) See, at law, Betts v. Gibbins, 2 A. & E. 57; A damson v. 
 Jarvis, 4 Bing. G6, and see in equity, Ramskill v. Edwards, 31 
 Ch. D. 100; Lingard v Bromley, 1* V. & B. 114; Baynard v. 
 Woodley, 20 Beav. 583; Ashurst v. Mason, 20 Eq. 225. 
 
 (c) As to which, see ante, p 91. 
 
 (d) See Thomas v. Atherton, 10 Ch. D. 185; Adamson v. 
 Jarvis, 4 Bing. 66 ; Betts v. Gibbins, 2 A. & E. 57. 
 
 (e) Aubert v. Maze, 2 Bos. & P. 371. 
 
 (/) 7 CI. & Fin. 166. See, too, Thomas v. Atherton, 10 Ch. 
 D. 185; Woolley v. Batte, 2 Car. & P. 417 ; Pearson v. Skelton, 
 1M.&W, 504. 
 
 1 It has has been held that a partner in a firm of gamblers who 
 has paid the firm's debt and taken his associate's note for his 
 share of the losses can enforce its payment. Boggess v. Lilly, 
 18 Tex. 200 (1856).
 
 CONTRIBUTION AND INDEMNITY. 453 
 
 by the ..janaging partners ; and one of the members of Bk. III. 
 the firm, who took no part in its business ; was entirely Chap. 6. Sect. 
 
 ignorant and innocent of what had been going on. The J 
 
 firm was convicted for the full amount of the penalties 
 claimed ; but the Crown, on being memoralised by the 
 innocent partner and the principal of the acting part- 
 ners, remitted the penalties except to the amount of 
 3,000/. This sum was levied partly on the property of 
 the firm and partly on that of the innocent partner 
 only. He then claimed to have the whole of what he 
 had been compelled to pay made good to him by his 
 co-partners, on the ground that they alone had been 
 guilty of the illegal purchases. The innocent partner 
 obtained a verdict for the whole amount claimed, with 
 interest ; and his co-partners were adjudged liable, 
 jointly and severally, to indemnify him. A motion for 
 a new trial was refused. An appeal to the Lords was 
 dismissed with costs, for technical reasons, to which it 
 is not necessary to allude ; but the Lord Chancellor, 
 in giving the judgment of * the House, expressed a strong [ * 379] 
 opinion that the defence of illegality which was set up 
 could not be supported. His Lordship said, "If this 
 objection could prevail, that because these parties were 
 all guilty of a common offence, therefore out of such a 
 transaction no contribution could arise, it would be an 
 answer to him (i. e., the innocent partner) if he had 
 paid the whole, and demanded contribution only against 
 the other parties." 
 
 Again, where a company had illegally commenced Ex parte 
 business before the amount of capital required by Longworth's 
 statute to be paid up has been paid up, it was held executors - 
 that the shareholders were nevertheless liable amongst 
 themselves to contribute to the discharge of the debts 
 of the company (g). 
 
 The case which presents most difficulty is one in Where all 
 which an unlawful act has been knowingly performed ji r ?.™ pan 
 by all the partners, so that all are in pari delicto. 
 There is a dictum of Lord Cottenham to the effect 
 that in such a case each partner must bear all the loss 
 he may happen to sustain, and that he cannot require 
 his co-partners to share that loss (h) ; but, on the other 
 hand, there is a decision which goes far to show that 
 the loss ought to be apportioned between all the part- 
 
 (g) Ex parte Longworth's Executors, Johns. 465, and on ap- 
 peal, 1 De G. F. & J. 17. 
 
 (A) See A.-G. v. Wilson, Cr. & Ph. 1.
 
 454 COMPENSATION FOR TROUBLE. 
 
 Bk. III. ners, unless the illegal act in question is a pure tort(t'), 
 
 Chap. 6. Sect. or a direct violation of some statute, or unless the 
 
 — contract of partnership is itself void on the ground of 
 
 illegality. It is apprehended that if all the members 
 of a firm were equally guilty of a breach of trust, and 
 one of the firm alone had made it good out of his own 
 moneys, he would be allowed, in taking the partnership 
 accounts, to charge his co-partners, rateably with him- 
 self, with the amount paid by him (k). 
 
 services. 
 
 [ *380] * Section II. — Of Compensation for Trouble. 
 
 Partner not Under ordinary circumstances the contract of part- 
 entitled to nership excludes any implied contract for payment for 
 charge firm services rendered for the firm by any of its members ( I). 
 Consequently, under ordinary circumstances, and in 
 the absence of an agreement to that effect, one partner 
 cannot charge his co-partners with any sum for com- 
 pensation, whether in the shape of salary, commission, 
 or otherwise, on account of his own trouble in con- 
 ducting the partnership business (m); 1 and in this re- 
 spect a managing partner is in no different position 
 from any other partner (n). 2 Upon the same princi- 
 ple it has been held, that in taking the accounts of 
 three partnerships, viz., of the firm A. and B., of its 
 successors, A., B., and C, and of its successors B. and 
 C, this last firm could not charge a commission for col- 
 lecting the debts due to the two preceding firms (o). 
 So, a partner employed to buy or sell goods for the 
 
 (i) See Baynard v. Wooley, 20 Beav. 583. But see as to tres- 
 passes by mining, Thomas v. Atherton, 10 Ch. D. 185. 
 
 (k) See Ashurst v. Mason, 20 Eq. 225. See, further, as to con- 
 tribution between wrongdoers, Pollock. Law oi Torts, 170. 
 
 (I) Thompson v. Williamson, 7 Bli. N. S. 432, per Lord Wyn- 
 ford ; Holmes v. Higgius, IB. & C. 74. 
 
 (m) As to a charge of commission by a ship's husband, see 
 Miller v. Mackay, 31 Beav. 77, and 34 Beav. 295 ; as to the man- 
 aging owner of a ship, see The Meredith, 10 P. D. 69. 
 
 (n) Hutcheson v. Smith, 5 Ir. Eq. 117. There a managing 
 partner was disallowed all salary, commission, and compensa- 
 tion for treating customers. 
 
 (o) Whittle v. McFarlane, 1 Knapp, 311. 
 
 1 Brown's Appeal. 80 Pa. St, 139 (1879); Marsh's Appeal. (59 
 Pa. St. 30 (1871); Coddington v. Well, 29 N. J. Eq. 50 1 (ls?s i; 
 Loomisr. Armstrong, 49 Mich. 521 (1883); Scudder v. Anus 
 89 Mo. 496 (,1886); Berry v. Folkes, 60 Miss. 576 (1882 : Cam- 
 eron v. Francisco, 26 Qh. St. 190 (1875); Frazier v. Frazier, 77 
 Ya. 775 (1883); Duff v. Maguire, 107 Mass. 87 (1871). 
 
 2 Handle r. Richardson, 53 Miss. 176 (1876); Pierce v. Scott 
 37 Ark. 308 (1881).
 
 COMPENSATION FOR TROUBLE. 455 
 
 firm, cannot charge it with anv commission for so Bk. III. 
 i • ■ \ * Chap. 6. Sect, 
 
 doing (jj). 2. 
 
 Even where the amount of services rendered by the J 
 
 partners is exceedingly unequal, still, if there is no Rule applies 
 agreement that their services shall be remunerated, no JJjJJJJ^JjL-, 
 charge in respect of them can be allowed in taking the have wor k' e( i 
 partnership accounts. In such a case the remunera- unequally. 
 tion to be paid to either for personal labour exceeding 
 that contributed by the other, is considered as left to 
 the honour of the other ; and where that principle is 
 wanting, a court of justice cannot supply it (q). 1 
 
 * But where, as is usually the case, it is the duty of [ * 381] 
 each partner to attend to the partnership business, and Wilful in- 
 one partner in breach of his duty wilfully leaves the jJJj^J) to 
 others to carry on the partnership business unaided, 
 they are, it would seem, entitled to compensation for 
 their services. In Airey v. Borham (r)," two partners Airey v. 
 had agreed to devote their whole time to the partner- Borham. 
 ship business ; they quarrelled, and one of them only 
 afterwards attended to it : the partnership was ulti- 
 mately dissolved, and an inquiry was directed for the 
 purpose of ascertaining what allowance ought to be 
 made to him for having carried on the business alone. 
 
 The rule, moreover, which precludes a partner from Rule as to 
 charging his co-partners with payment for his services, services 
 does not apply to services rendered in carrying on the r j"^] e ^ e ^ is _ 
 business of the firm after its dissolution ; and it has ^olutiou. 
 been held that a surviving partner who carries on the 
 business of the firm for the benefit thereof is entitled 
 to remuneration for his trouble in so doing (s) ; unless 
 
 (p) See Bentley v. Craven, 18 Bear. 75. 
 
 (q) See per Wi'gram, V.-C, in Webster v. Bray, 7 Ha. 179. In 
 that case an allowance for trouble was made to the defendant, 
 but it was offered by the plaintiff. In Robinson v. Anderson, 20 
 Beav. 93, which was a similar case, no allowance was oflered, 
 nor was anv given by the Court. 
 
 (r) Airey v. Borham, 29 Beav. 620. 
 
 (.s) Featherstonhaugh v. Turner, 25 Beav. 382 ; Brown v. De 
 Tastet, Jac. 284 ; Crawshay r. Collins. 2 Russ. 347. See, also, 
 Mellersh v. Keen. 27 Beav. 242. where one partner became a 
 lunatic, and the business was continued by the others. 
 
 1 In Stratton v. Tabb, 8 111. App. 225 (1881). A. transacted all 
 the business of the firm ; his two associates attended totheirown 
 
 outside occupations: but no compensation was allowed him. 
 Nor was compensation allowed a partner who for twenty years 
 had carefully looked after the business of his firm, while his 
 partner -rave but little attention to it. Forrer v. Forrer, 29Gratt 
 134 I L877). 
 
 -See also the following similar eases. Newell v. Humphrey, 
 37 Vt. 265 11864 ; Gyger's Appeal, 62 Pa. St. 7:; (1869).
 
 •±56 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. there is some special reasc n to the contrary, as where 
 
 Chap. 6. beet. j^ j g ^ e eS ecutor of bis deceased partner (t). 1 
 
 l! In India an executor is allowed a per-centage on the 
 
 Indian assets collected by him ; and a surviving partner who is 
 
 allowances. th e executor of his deceased co- partner, has been 
 allowed tbis per-centage even on tbe amount due from 
 the partnership to the estate of the deceased (u). 
 
 Section III. — Of Outlays and Advances. 
 
 Outlays and I n taking a partnership account, each partner is en- 
 advances titled to be allowed against the other everything he has 
 made by one advanced or brought in as a partnership transaction, 
 and to charge the other in the account with what that 
 [ * 382] other has not brought in, * or has taken out more than 
 he ought ; and nothing is to be considered as his share 
 but his proportion of the residue on the balance of the 
 account (x). Although, therefore, a partner is not en- 
 titled to compensation for trouble, he is entitled to 
 charge the partnership with sums bond fide expended 
 by him in conducting the business thereof (y).~ Thus, 
 where the managing director of a cost-book mining 
 company advanced money for the purpose of enabling 
 the business of the company to be carried on, he was 
 held entitled to be reimbursed by the company, there 
 being no question as to his authority to carry on the 
 business on credit (z). So, where the directors of a 
 mining company advanced money to keep the mine at 
 
 (t) Burden v. Burden, 1 V. & B. 172 ; Stoeken v. Dawson, 6 
 Beav. 371. 
 
 (u) Cockerell v. Barber, 2 Russ. 585, and 1 Sim. 23. 
 
 (x) Per Lord Hardwicke in West v. Skip. 1 Yes. S. 242. 
 
 (y) Burden v. Burden. 1 V. & B. 172, where a surviving part- 
 ner, who was also executor, was allowed to charge expenses actu- 
 ally incurred, but not time and trouble. Compare Hutcheson v. 
 Smith, 5 Ir. Eq. 117, ante, p. 380, note (»). 
 
 (z) Ex parte Sedgwick, 2 Jur. N. S. 949. 
 
 1 Where the business of the firm is simply wound up, and not 
 continued for the benefit of all, no compensation is allowed the 
 partner who attends to its settlement. Dunlap v. Watson. 1:24 
 Mass. 305 1878); Bennett v. Russell, 34 Mo. 524 (.1864); 
 Brown's Appeal, 89 Pa. St. 139 (1879). 
 
 z Coddington v. Idell. 29 X. J. Eq. 504 (1878) : King v. Hamil- 
 ton. 16 111. 190 (181) ; Stegman v. Berryhill, 72 Mo. 307 ( ) ; 
 
 Newell v. Humphrey. 37 Vt. 265 (1865). A partner can make 
 no advance or commission on his expenditures for the firm's ac- 
 count ; i. e., he cannot hire a clerk for $2 per day and charge for 
 his services at $4 per day, although really worth the latter sum. 
 Porter v. Wheeler, 37 Vt. 281 (1865).
 
 OUTLAYS AND ADVANCES. 457 
 
 work, and it would otherwise have been drowned, they Bk. III. 
 were held entitled to be reimbursed, although they had p na P-6. Sect. 
 
 no power to borrow money on the credit of the com- J 
 
 pany (a). 
 
 So a partner is clearly entitled to charge the firm Payments on 
 with whatever he may have been compelled to pay in account of 
 respect of its debts (6) ; or in respect of obligations rteDts - 
 incurred by him alone at the request of the firm, as 
 where he is compelled to pay a bond given by himself 
 alone, but for the benefit of the firm and as a trustee 
 for it (c), or where he sacrifices a debt due to himself in 
 order to enable the firm to obtain a debt due to it (cl). 
 
 It need hardly be observed, that an outlay made by Useless out- 
 one partner with the approbation of his co-partners and lays. 
 for the benefit of the firm,_must be made good by the 
 firm, however, * ualessT,he~ outlay may have been. For [ * 383] 
 example, if a firm purchases a patent which is paid for 
 by one member individually, he is entitled to charge 
 the purchase money to the firm, however worthless the 
 patent may ultimately prove to be (e). 1 On the other 
 hand, if a partner makes an improper outlay or ad- 
 vance on behalf of the firm, he cannot charge it to the 
 firm, unless his conduct is ratified by it ; 2 or unless the 
 firm's assets have been increased or preserved by such 
 outlay or advance. The last qualification is rendered Useful but 
 necessary by The German Mining Company's case (/). unauthorised 
 
 An outlay which may have been very proper and even out l a y s - 
 
 necessary for the conduct of the partnership business, 
 
 cannot be charged to the partnership account, if so to 
 
 do would be inconsistent with the agreement into which 
 
 the partners have entered. In Thornton v. Procter (g), Thornton v. 
 - Procter 
 
 (a) Ex parte Chippendale, 4 De G. M. & G. 19. See ante, book 
 ii. ch. 1, £ 6. This case, and others of the same class, will be 
 noticed more at length in the vol. on Companies. 
 
 (b) Prole v. Masterman, 21 Beav. 61 A partner who negli- 
 gently pays a debt claimed, but not due, cannot charge the pay- 
 ment to trie linn. Re Webb, 2 B. Moore, 500 ; Mellreath v. Ma'r- 
 getson. 4 Doug. 278; noticed in the next section. 
 
 (c) Croxton's case, 5 De G. & S. 432 : Sedgwick's case, 2 Jur. 
 N. S. 949; V.-C. W. ; Gleadow v. The Hull Glass Co., 13 Jur. 
 1020, V.-C. E. 
 
 (d) Lefroy v. Gore, 1 Jo. & Lat. 571, where one partner re- 
 leased a witness whose evidence was essential to the firm. 
 
 (e) Gleadow v. The Hull Glass Co., 13 Jur. 1020. 
 
 (/) 4 De G. M. & G. 19. See ante, book ii. ch. 1. ? 6. 
 (g) 1 Anstr. 94. See, too, Hutcheson v. Smith, 5 Ir. Eq. 117 ; 
 East India Co. v. Blake, Finch, 117. 
 
 1 See Onderdonck v. Hutchinson, (> X. J. Eq. 632 | 1849) ; Til- 
 lotson i). Tillotson, 31 Conn. 335 (1867) : Godfrey v. White, 43 
 Mich. 171 1 1880). 
 
 Zimmerman v. Hubcr, 29 Ala. 379 (1856). 
 
 2 v
 
 45S CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. the plaintiff and the defendant had become partners as 
 
 Chap. 6. Sect. w ^ ne raer chants, and the plaintiff, who for some time 
 
 : ^ had principally conducted the business, had expended 
 
 considerable sums of money in treating customers, and 
 this was found to be necessary in that trade. The plain- 
 tiff had for several years kept the accounts of the part- 
 nership, and in such accounts he never made any charge 
 for entertaining customers, or demanded any allowance 
 on that account. He, nevertheless, afterwards con- 
 tended that he ought to be allowed, in taking the ac- 
 counts of the partnership, to debit the firm with 50Z. a 
 year for entertainments, and this was proved to be a 
 reasonable sum. Bat it was shown to be usual, in cases 
 of this sort, to insert some special clause in the articles 
 if an allowance was intended to be made, and the arti- 
 cles into which the partners had entered contained noth- 
 ing more than a general stipulation, that all losses and 
 expenses should be borne equally. It was accordingly 
 held that the plaintiff was not entitled to any allowance, 
 for he could only claim it as being a gross article of 
 expenditure, and he was precluded from charging it in 
 that way by not having included it in the yearly ac- 
 counts. 
 [ * 384] * A partner is not entitled to charge the hrrn with 
 
 No allowance any moneys alleged by him to have been laid out for the 
 for expenses benefit of "the firm if he declines to give the particulars 
 to hwetoea of his onlays; he cannot charge for secret service 
 incurred. money (h), nor for general expenses (i). Nor can a 
 partner charge the firm with travelling expenses unless 
 they have been bona fide and properly incurred by him 
 when travelling for the purpose of transacting its busi- 
 ness (A;). 
 Charges for Again, a partner expending money for valuations to 
 valuation. carry out a transaction between himself and co-partners, 
 which they afterwards succeed in setting aside, cannot 
 charge them with any part of what he may have so ex- 
 pended (I). 
 
 Not only may one partner make outlays or advances 
 for the benefit of the firm, but the firm may make ad- 
 vances and outlays to or for the benefit of one partner. 
 Under ordinary circumstances such advances and out- 
 lays will be equivalent to a loan by the firm to him, and 
 must be treated accordingly in taking the partnership 
 
 (A.) See the York and North Midland Rail Co. v. Hudson, 16 
 Beav. 485. 
 
 (t) The East India Co. v. Blake. Finch. 117. 
 (k) Stainton v. The Carron Co., 24 Beav. 356. 
 (/) Stocken v. Dawson, 6 Beav. 375.
 
 LIABILITIES AND LOSSES. 459 
 
 accounts. But occasionally considerable difficulty arises, Bk. III. 
 e.g., where there has been an outlay by the firm on ^hap. 6. Sect. 
 
 property belonging exclusively to one of the partners, J 
 
 but used by the firm for {partnership purposes. In the Outlays on 
 absence of all evidence of any agreement upon the sub se P arate pro- 
 ject, justice seems to require that in taking the partner- i^i-tiier 
 ship accounts the owner of the property in question 
 should not be allowed exclusively to gain the benefit of 
 the outlay, but that the improved value of his property 
 should be treated as a partnership asset, and be shared 
 between him and his co-partners accordingly {in). 
 
 In Burdon v. Barkus, a managing partner had, with Burdon v. 
 the knowledge of his co-partner, expended partnership Barkus. 
 monies in sinking a pit for partnership purposes on land 
 which belonged exclusively to the latter partner ; the 
 managing partner had erroneously supposed that the 
 partnership was for a term of years; but the partner- qo-t 
 ship was suddenly and unexpectedly * dissolved, and L "°oj 
 the pit thereby became the sole property of the partner 
 in whose land it had been sunk; but an inquiry was 
 directed whether an allowance should be made in respect 
 of the outlay in sinking the pit (?t). So in Paicsey v. Pawsey v. 
 Armstrong (o) an inquiry was directed as to buildings * rms lon » - 
 erected by a firm on the property of one of the partners. 
 
 Section IV. — Of Debts, Liabilities, and Losses. 
 
 In the absence of any agreement to the contrary, Mutuality 
 partners are liable to share losses in the same propor- 0I profit and 
 tion as they are entitled to share profits {p)- 1 As a ^j P J e " 
 general rule, therefore, if one partner has been com- 
 pelled to pay more than his share of a partnership debt, 2 
 or if, in properly conducting the affairs of the firm, he 
 has personally incurred a liability, he is entitled to be 
 indemnified by his co partners so far as may be neces- 
 sary to place all on a footing of equality {q). 
 
 (m) See ante, p. 330. 
 
 (») Burdon v. Barkus. 3 Giff. 412, aff. on appeal. 4 De G. F. & 
 J. 42. 
 
 (o) 18 Ch. D. 707. Compare the converse case, Bank of Eng- 
 land case, 3 De. G. F. & J. <ii5. ante, p. 330. 
 
 p) See Re Albion Life Ass. Soc, 16 Ch. D. 83, where this rule 
 was recognised, but was held not to apply to policy holders par- 
 ticipating in profits. 
 
 ('/) Wright v. Hunter, 5 Ves. 792; and see Robinson's Execu- 
 
 1 Whitcomb v. Converse, 119 Mass. 38 (1875); Flagg v. Stowe, 
 85 111. 164 (1877). 
 
 2 Evans v. Clapp, 123 Mass. 165 (1877).
 
 460 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. But it by no means follows, that a person liable to be 
 
 C hap. 6. Sect, STle( j as if }± e were a partner, is, as between himself and 
 
 .* his co-partners, bound to share the losses of the firm ; for 
 
 Presumption his co-partners may have agreed to indemnify him al- 
 
 rebutted by together from losses, and if such is the case, they can- 
 evidence . * 
 
 not require him to contribute thereto with them (r). 1 
 
 So, where the promoters of a company agree with the 
 shareholders that certain preliminary expenses to be in- 
 curred in obtaining surveys, reports, &c, shall not ex- 
 ceed a certain sum, and the promoters spend more than 
 that sum, they cannot require the shareholders to make 
 good the difference; although the extra expenditure 
 may have been caused by circumstances which were un- 
 foreseen, and over which the promoters had no con- 
 trol (s). 
 [ 3-S6J * rp^Q g enera j principle, however, that partners must 
 
 General ob- contribute rateably to their shares towards the losses 
 ligation of anc j (Jebts of the firm, is not open to question. Their 
 contribute to obligation to contribute is not necessarily founded 
 losses. upon, although it may be modified and even excluded 
 
 altogether by, agreement (t). For example, where 
 there is no agreement to the contrary, it is clear that if 
 execution for a partnership debt contracted by all the 
 partners, or by some of them when acting within the 
 limits of their authority, is levied on any one partner, 
 who is compelled to pay the whole debt, he is entitled 
 to contribution from his co-partners («). So, if one 
 partner enters into a contract on behalf of the firm, but 
 in such a manner as to render himself alone liable to 
 be sued, he is entitled to be indemnified by the firm, 
 provided he has not, as between himself and his co- 
 partners, exceeded his authority in entering into the 
 contract (x); and if, in such a case, he with their 
 knowledge and consent defend an action brought against 
 him, he is entitled to be indemnified by the firm against 
 
 tors' case, 6 De G. M. & G. 57-2; Lefroy v. Gore. 1 Jo. &Lat. 571, 
 and Hamilton v. Smith, 7 W. R. 173, as to promoters of com- 
 panies. 
 
 (/) See Geddes v. Wallace, 2 Bli. 270. 
 
 (s) Gillan v. Morrison, 1 De G. & S. 421; Be The Worcester 
 Corn Ex. Co., 3 DeG. M. & G. 180. See, too, Mowatt and Elliott's 
 case, 3 De G. M. & G. 254, and Carew's case, 7 ib. 43. 
 
 i0 Ante, p. 368. 
 
 («) McOwen r. Hunter, 1 Dr. & Walsh. 3-17; Evans p. Yeatherd, 
 2 Bing. 132; Robinson's Executors' case, 6 De G. M. & G. 572. 
 See, too Lefroy v. Gore, 1 Jo. & Lat. 571, as to provisional di- 
 rect ins. 
 
 i ,) (ileadow v. The Hull Glass Co., 13 Jur. 1020; Sedgwick's 
 case, 2 Jur. N. S. 949. 
 
 1 See Scott's Appeal, 88 Pa. St. 173 (1878).
 
 LIABILITIES AND LOSSES. 461 
 
 the damages, costs, and expenses which he mav be com- Bk. III. 
 pelled to pay (y). Chap.6.Sect. 
 
 Even if a loss sustained by a firm is imputable to the 
 
 conduct of one partner more than to that of another, Losses attri- 
 still if the former acted bond fide with a view to the ^'^J^. 
 benefit of the firm, and without culpable negligence, morethan to 
 the loss must be borne equally by all. 1 Thus, where another. 
 A. represented to his co-partner B. that shares in a cer- Ex parte 
 tain company rendered the holders only liable to the en- Letts, 
 gagements of the company to a limited extent, and B. 
 thereupon, and at A.'s request, authorised him to take 
 shares on the partnership account, and it ultimately 
 turned out that the liability of the shareholders was not 
 limited, and A. and B. were made contributories, it 
 was held that, as between * themselves, B. could not [ * 387] 
 throw the loss on A. alone {z). Again, in Cragg v. Cragg v. 
 Ford (a), the plaintiff and the defendant were part- Ford - 
 ners, and the defendant was the managing partner. 
 The partnership was dissolved, and the winding up of 
 its affairs devolved on the defendant. Part of the as- 
 sets consisted of bales of cotton, and the plaintiff re- 
 quested that these might be immediately sold. The 
 defendant, however, delayed to sell them, and they were 
 ultimately sold at a much lower price than they would 
 have fetched if they had been sold when the plaintiff 
 desired. The plaintiff contended that the loss sustained 
 by the postponement of the sale ought to be borne by 
 the defendant alone. But the Court held that the plain- 
 tiff, if he had chosen, might himself have sold the cotton; 
 and that, as the defendant, in delaying the sale, had acted 
 bond fide and in the exercise of his discretion, the loss 
 ought not to be thrown on him alone, but ought to be 
 shared by the plaintiff. 
 
 But if a partner is guilty of a breach of his duty to Losses attri- 
 the firm, and loss results therefrom, such loss must fall butable to 
 on him alone. As was said by the Court in Bury v. ^ondS S 
 Allen (h), "Suppose the case of an act of fraud, or or negli . 
 
 (y) Browne v. Gibbins, 5 Bro. P. C. 491; Croxton's case, 5 De 
 G. & S. 432. 
 
 (z) Ex parte Letts and Steer. 26 L. J. Ch. 455. See, too, Lin- 
 gard v. Bromley, 1 V. & B. 114. 
 
 (a) 1 Y. &C. C. C. 280. 
 
 (b) 1 Coll. 604. 
 
 1 Want of extraordinary caution is not sufficient to throw the 
 loss on the partner through whom it was incurred, if it resulted 
 through an honest mistake of judgment or from some trilling de- 
 parture from the partnership agreement. Tillotson v. Tillotson, 
 34 Conn. 335 (1867); Morrison v. Smith, 81 111. 221 (1876): Lyles 
 v. Styles, 2 Wash. C. C. 224 (1808). 
 
 gence.
 
 462 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. culpable negligence, or wilful default by a partner 
 
 Chap. 6. Sect. ^ ur i n g the partnership to the damage of its property 
 
 or interests, in breach of his duty to the partnership : 
 
 whether at law compellable or not compellable, he is 
 certainly in equity compellable to compensate or indem- 
 nify the partnership in this respect" (c). 1 In con- 
 formity with this rule, the justice of which cannot be 
 disputed, it has been decided that if a claim is made 
 against a firm for payment of a debt alleged to be due 
 from it, but which is not so in point of fact, and one 
 partner chooses to pay it, he cannot charge such pay- 
 ment to the account of the firm (d). So, if one part- 
 [ * 388] ner does that * which, though imputable to the firm on 
 the principles of agency, is in truth bis act alone, and 
 a fraud upon his co- partners, they are entitled, as 
 between themselves and him, to throw the whole of the 
 consequences upon him (e). 2 So, if one partner, with- 
 out the authority of his co- partners, wilfully does that 
 which is illegal, he must indemnify them from the con- 
 sequences (/). 
 Adoption by When it is said that losses incurred by the unauth- 
 firm of losses orised. culpably neglect, or fraudulent conduct of one 
 not charge- p ar t ner mU8 t be borne by him alone, it is assumed that 
 able to it. ^ conduct k as no t been ratified by the firm, and that 
 the loss has not been treated by the partners them- 
 selves as a partnership loss. A loss which is properly 
 chargeable to the account of one partner only, becomes 
 chargeable to the firm if the partners have knowingly 
 allowed it to be so charged in their accounts, and have 
 thus taken it upon themselves. 3 A strong instance of 
 
 (c) See ace. Thomas r. Atherton, 10 Ch. D. 185, a case of gross 
 negligence on the part of the managing partner of a mine work- 
 ing beyond the boundary. 
 
 {d) lie Webb, 2 B. Moore, 500 ; Mcllreath v. Margetson, 4 
 Doug. 278. where a payment was made bond fide and on the faith 
 ot false and fraudulent representations. Queere if the same rule 
 would apply if the debt being due was barred by the Statute of 
 Limitations. See Stahlschmidt v. Lett, 1 Sm. G. 415. 
 
 (e) See Robertson v. Southgate, 6 Ha. 540. 
 
 (/) See Campbell v. Campbell, 7 CI. & Fin. 166, ante p. 378. 
 
 1 Maher v. Bull, 44 111. 97 (1867). 
 
 2 If a partner mix firm money with his own, deposit it to the 
 credit of his private bank account and uses the money so de- 
 posited for his own purposes, he must bear the loss should the 
 bank fail. Lefever v. Underwood, 41 Pa. St. 505 (1862). But 
 he is not liable if the money of the firm is deposited with his 
 private, funds by the consent of his partner. Campbell v. Stewart, 
 34 111. 151 (1864). 
 
 3 See Murphv v. Crafts. 13 La. Ann. 519 (1858); Cameron v. 
 Watson, 10 Rich. (S. Ca.) Eq. 64 (1858).
 
 INTEREST. 463 
 
 this is afforded by the case of Cragg v. Ford (g), Bk. III. 
 already referred to on another point. There the plain- Chap. 6. Sect. 
 
 tiff and the defendant were partners ; the defendant J 
 
 had engaged in adventures not authorised by the part- Cragg v. 
 nership articles. The plaintiff protested against this, Ford, 
 but although the adventures ended in loss, and that 
 loss was charged against the firm in the partnership 
 books, the plaintiff did not at the time object, or insist 
 that the loss should be borne by the defendant. "When, 
 however, the partnership was dissolved, and its accounts 
 were made up, the plaintiff refused to allow the losses 
 in question to be charged against the firm. But the 
 Court held that, under all the circumstances of the 
 case, the Master who had charged the losses against 
 the partnership had not done wrong ; and exceptions 
 which had been taken to his report by the plaintiff 
 were overruled. 
 
 * Section V. — Of Interest. [ * 389] 
 
 The principles upon which, in taking partnership ac- i nterest j n 
 counts, interest is allowed or disallowed, do not appear accounts be- 
 to be well settled. The state of the authorities is, in tween part- 
 fact, not such as to justify the deduction from them of ners - 
 any general principle upon this important subject. 
 
 By the common law, in the absence of a special cus- General rule 
 torn or agreement, a loan does not bear interest (h) ; as to interest, 
 and, notwithstanding many dicta to the contrary, the 
 same rule appears to have prevailed in equity (i). 
 This rule is, no doubt, attributable to the old notions 
 on the subject of usury ; but although the usury laws 
 are abolished the rule remains, and the consequence is 
 that interest is frequently not payable by law when in 
 justice it ought to be. 
 
 At the same time, by the custom of merchants inter- 
 est has long been payable in cases where by the general 
 law it was not ; and mercantile usage and the course 
 of trade dealings are held to authorise a demand for 
 interest in cases where it would not otherwise be pay- 
 
 (g) 1 Y. & C. C. C. 285 ; but see as to losses arising from illegal 
 acts, the observations of Lord Eldon on Watts v. Brook, in Aubert 
 r. Maze, 2 Bos. & P. 371. 
 
 [h) See Calton v. Bra«:g, 15 East, 223; Higgins v. Sargent, 2 
 B. & C. 349 ; Shaw v. Picton, 4 ib. 723 ; Page v. Newman, 9 B. 
 & C. 378 ; Gwyn V. God by, 4 Taunt. 346. 
 
 (i) See Tew v. The Earl of Winterton. 1 Ves. J. 4.',1 ; Creuzer. 
 Hunter, 2 ib. 157 ; Booth v. Leycester, 1 Keen, 217, and 3 M. & 
 Cr. 459.
 
 464 
 
 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. 
 Chap. 6. Sect. 
 5. 
 
 Interest on 
 capital. 
 
 [ * 390] 
 
 Interest on 
 advances to^ 
 the firni. 
 
 able (k). In applying therefore the general rule 
 against the allowance of interest to partnership ac- 
 counts, attention must be paid not only to any express 
 agreement which may have been entered into on the 
 subject, but also to the practice of each particular firm, 
 and to the custom of the trade it carries on. 
 
 As a general rule partners are not entitled to interest 
 on their respective capitals unless there is some agree- 
 ment to that effect, or unless they have themselves been 
 in the habit of charging such interest in their ac- 
 counts (Z); 1 and even where one partner has brought in 
 his stipulated capital and the other * has not, the 
 former will not be entitled to interest on the winding up 
 of the partnership if it has not been previously charged 
 and allowed in the accounts of the firm (in,)] 2 and 
 where a person is paid for his services by a share of 
 profits, interest on capital cannot be charged against 
 him, unless there is some agreement to that effect (n). 
 Moreover, where interest on capital is payable, the in- 
 terest stops at the date of dissolution unless otherwise 
 agreed (o); 3 and undrawn profits are not necessarily 
 to be treated as bearing interest like the capital (p). 
 
 An advance by a partner to a firm is not not treated 
 as an increase of his capital, but rather as a loan on 
 which interest ought to be paid ; and by usage, interest 
 is payable on money bond fide advanced by one part- 
 
 (k) See Ex parte Chippendale, 4 De G. M. &. G. 36. 
 
 {!) See Cooke v. Benbow, 3 De G. J. & Sm. 1 ; Miller v. Craig, 
 6 Beav. 433, where interest was allowed, that having at one 
 time been in accordance with the usage of those who carried on 
 the business ; and Pirn v. Harris, Ir. Rep. 10 Eq. 442, where the 
 decision was based on the terms of the contract. 
 
 (m) Hill v. King, 3 DeG. J. & Sm. 418. 
 
 (n) Rishton v. Grissell, 5 Eq. 326, where the capital was bor- 
 rowed at interest. 
 
 (o) Barfield v. Loughborough, 8 Ch. 1 ; Watney®. Wells. 2Cb. 
 250 ; Pilling v. Pilling, 3 De G. J. & Sm. 162. contra, on this 
 point is practically overruled. As to the calculation of interest 
 where the capital is payable by instalments with interest, see 
 Ewing v. Ewing, 8 App. Ca. 822. 
 
 (])) Dinham v. Bradford. 5Ch. 519. See, also, Rishton v. Gris- 
 sell, 10 Eq. 393, as to interest on arrears of a share of profits. 
 
 1 If A. contribute all the capital of the firm and B. merely his 
 time and labor, A. cannot claim interest on his contribution. Tutt 
 v. Land, 50 Ga. 339 (1873); Day v. Lockwood. 24 Conn.185 1 1 B55 |. 
 
 2 It is disputed in America whether interest shall be allowed 
 in this case or not. Stokes v. Hodges. 11 Rich. Eq. 135 (1859 . 
 Clark v. Warden, 10 Neb. 87 (1880) disallow it : it is allowed in 
 Hartman v. Woehr, 18 N. J. Eq. 383 (1867); Ligare v. Peacock, 
 109 111. 94 (1884); Montague v. Hayes, 10 Gray, 609 (1858). 
 
 3 Johnson v. Hartshorne, 52 X. Y. 173 (1873); Bradley v. Brig- 
 ham, 137 Mass. 545 (1884).
 
 INTEREST. 465 
 
 ner for partnership purposes ; at least when the ad- Bk. III. 
 vance is made with the knowledge of the other part- Chap. 6. Sect. 
 
 ners (q). 1 The rate of interest given in such cases is J 
 
 simple interest at 5 per cent, (r), unless a different 
 rate is payable by the custom of the particular trade (s), 
 or has been charged and allowed in the books of 
 the particular partnership (t). 2 
 
 Inasmuch as what is fair for one partner is so for an- Interest on 
 other, and the firm when debtor is charged with inter- overd rowings 
 est, it seems to follow that if one partner is indebted ^ na ^ d 
 to the firm either in respect of money borrowed; or in 
 respect of balances in his hands, he ought to be charged 
 with interest on the amount so owing, even though on 
 the balance of the whole account, a * sum might be due [ * 391] 
 him (u). Except, however, where there has been a 
 fraudulent retention (x), or an improper application (y) 
 of money of the firm, it is not the practice of the 
 Court to charge a partner with interest on money of 
 the firm in his hands (z)\ for example, under ordinary 
 circumstances a partner is not charged with interest on 
 sums drawn out by him or advanced to him (a). In a 
 case (b), A. and B. were partners ; A. died, and his Rhodes v. 
 son and executor C. succeeded him in partnership with Rhodes. 
 B. B. afterwards retired in favour of his own son D. 
 At the time of B.'s retirement, a considerable sum was 
 
 (q) See Ex parte C'hippeudale, 4 De G. M. & G. 36. See, also, 
 Omychund v. Barker, Coll. on Partn. 231, note; Denton v. Rodie, 
 3 Camp. 496. But see contra, Stevens v. Cook, 5 Jur. N. S. 1415. 
 
 (r) Ex parte Bignold, 22 Beav. 167 ; Troup's case, 29 ib. 353. 
 See, also, Hart v. Clarke, 6 De G. M. & G. 254. 
 
 (s) As to compound interest in the case of hankers, see Bate v. 
 Robins, 32 Beav. 73 ; Fergusson v. Fyffe, 8 CI. & Fin. 121. 
 
 (t) As in Be Magdalena Steam Nav. Co., Johns. 690, where 6 
 per cent, was allowed. 
 
 (it) See Beecher r. Guilburn, Moseley, 3. 
 
 (x) As in Hutcheson v. Smith, 5 Ir. Eq. 117, where, however, 
 the partner retaining the money was also a receiver appointed by 
 the Court. 
 
 (y) As in Evans v. Coventry, 8 De G. M. & G. 835. 
 
 (z) See Webster i'. Bray, 7 Ha. 159, where interest on balances in 
 the hands of the defendants was asked for but not given. See, too, 
 Stevens v. Cook, 5. Jur. N. S. 1415; Turner r. Burkinshaw, 2 Ch. 488. 
 
 (a) Cooke v. Benbow, 3 De G. J. & Sm. 1 ; Meymott v. Mey- 
 mott, 31 Beav. 445. See tbe case in the next note. 
 
 (b) Rhodes v. Rhodes, Johns. 653, but better reported in 6 Jur. 
 N. S. 600. 
 
 1 Morris v. Allen. 11 N. J. Eq. 44 (1861); Emerson r. Durand, 
 64 Wis. Ill (1885); Baker r. Mayo. 129 Mass. 517 (1880). 
 
 2 An agreement that on such advances a greater rate of interest 
 shall be allowed than that fixed by statute is not usurious. 
 Cunningham v. Green. 23 Oh. St. 296 (1872); Campbell v. Co- 
 quard, 16 Mo. App. 552 (1885). 
 
 * 7 LAW OF PARTNERSHIP.
 
 4GG 
 
 CONTRIBUTION AND INDEMNITY. 
 
 Bk. III. 
 Chap. 6. Sect. 
 5. 
 
 Interest 
 where firm 
 claims what 
 has been ob- 
 tained by 
 one partner. 
 
 [*392] 
 
 Confused 
 accounts. 
 
 due to him from A.'s estate in respect of monies drawn 
 out by A. This sum was treated as a debt of the new 
 - firm of C. and D., and had not been paid off. B. having 
 died, his executors claimed interest from the time of 
 his retirement ; but the claim was disallowed on the 
 ground that no agreement to pay interest had been en- 
 tered into, and the claim was opposed to the course of 
 dealing between the partners themselves. 1 
 
 Where one partner claims a benefit obtained by his 
 co-partner and succeeds in establishing his claim, the 
 claimant is charged, as the price of the relief afforded, 
 not only with the amount actually expended by his co- 
 partner in obtaining the benefit, but with interest on 
 that amount at the rate of 5Z. per cent. (c). On the 
 other hand, if one partner has, in breach of the good 
 faith due to his co-partners, obtained money which he 
 is afterwards compelled to account for to the firm, he 
 will be charged with interest upon the amount at the 
 rate of 4/. per cent, (d). 2 
 
 * Where a partnership has been dissolved by the death 
 of one partner, and the surviving partner keeps the ac- 
 counts in such a way as to render it impossible, until 
 after the lapse of a considerable time, to ascertain the 
 balances due to himself and his deceased partner, 
 neither the surviving partner nor his representatives 
 can claim interest on the sum ultimately found due to 
 him or his estate (e). 3 
 
 (e) See Hart v. Clarke, 6 De G. M. & G. 254. See, too, Per- 
 ens v. Johnson, 3 Sm. & G. 419. 
 
 (d) See Fawcett v. Whitehouse, 1 E. & M. 132. 
 
 (e) Boddam v. Kylev, 1 Bro. C. C. 239 ; 2 ib. 2 : and 4 Bro. P. 
 C. 561. 
 
 1 It depends entirely on the circumstances of each case whether 
 or not interest will be allowed on over drafts. Buchingham v. 
 Ludlum, 29 N. J. Eq. 345 (1878); Gyger's Appeal, 62 Pa. St. 
 73 (1869). 
 
 2 For instances of disallowance of interest to a partner who 
 wrongfully collects and withholds money, see Sanders v. Scott, 
 68 Ind. 130 (1879) ; Turner v. Otis, 30 Kans. 1 (1883). Cases of 
 bad faith are sometimes published by a charge of interest com- 
 pounded with annual rests. Johnson v. Hartshorne, 52 N. Y. 
 173 (1873) ; Heath v. Waters, 40 Mich. 457 (1899). 
 
 3 Just as soon as the balances are struck on the dissolution 
 of a firm they begin to bear interest as against those partners 
 who hold the firm assets or have received the most. Holden v. 
 Peace, 4 Ired. Eq. 223 (1846) ; Clark v. Dunnam, 46 Cal. 204 
 (1873) ; Sanderson v. Sanderson, 20 Fla. 292 (1883). If the sur- 
 viving partner on whom has devolved the settlement of the busi- 
 ness of the firm unnecessarily delays the sett lenient, he will not 
 be allowed interest on his own balance. Forward v. Forward, 6 
 Allen, 494 (1863). So where a partner has fraudulently denied the 
 amount due his associate. Dunlap v. Watson, 124 Mass. 305 (1878).
 
 DIVISION OF PROFITS. 467 
 
 * CHAPTER VII. [*393] 
 
 OF THE DIVISION OF PROFITS. 
 
 The realisation and division of profit is the ultimate Bk. III. 
 object of every partnership; and the right of every Chap. 7. 
 partner to a share of the profits made by the firm to Division f 
 which he belongs, is too obvious to require comment, profits. 
 Where there is no right to share profits, there can be 
 no partnership, and almost all the other rights pos- 
 sessed by partners may be said to be incidental to the 
 right in question. 
 
 The times at which the profits are to be divided, the Times, &c, 
 quantum to be divided at any one time, the sums, if of division, 
 any, which are to be placed to the debit of the firm in 
 favour of any particular partner for salary, interest on 
 capital, &c, before any profits are to be divided, these 
 and all similar matters are usually made the subject of 
 express agreement; but where no such agreement has 
 been made, and no tacit agreement relative to them 
 can be inferred, the principles laid down in the preced- 
 ing chapter must be applied (a). With respect to the 
 times of division and quantum to be divided at any 
 given time, it is conceived that the majority must gov- 
 ern the minority where no agreement upon the subject 
 has been come to (6); ' for these are matters of purely 
 internal regulation, and with respect to such matters a 
 dissentient minority have only one alternative, viz., 
 either to give way to the majority, or, if in a position 
 so to do, to dissolve the partnership. 
 
 [a) As to the mode of ascertaining profits where a person not 
 a partner is entitled to a share of them, see Rishton v. Grissell, 
 5 Eq. 326, and 10 Eq. 393 ; Geddes v. Wallace, 2 Bli. 270. 
 
 (b) See Stevens v. South Devon Rail. Co., 9 Ha. 32(>, and Corry 
 v. Londonderry, &c., Co., 29 Beav. 2G3, as to declaring dividends 
 before paying debts ; Browne v. Monmouthshire, &c., Co., 13 
 Beav. 32, as to paying dividends before works are finished. 
 
 See Kennedy v. Kennedy, 3 Dana. 239 (1835).
 
 468 
 
 DIVISION OF PROFITS. 
 
 [ * 394] 
 
 Bk. III. 
 Chap. 7. 
 
 "What is 
 divisible as 
 profit. 
 
 Cases where 
 dividends 
 have been 
 held not 
 improper. 
 
 * Profit is the excess of receipts over expenses (c) ; ' 
 and in winding up a partnership, nothing is properly- 
 divisible as profit which does not answer this descrip- 
 tion. But for the purposes of business, and of facili- 
 tating annual divisions of profits, a distinction is made 
 between ordinary and extraordinary receipts and ex- 
 penses; and whilst all extraordinary expenses are fre- 
 quently defrayed out of capital, and out of money 
 raised by borrowing, the ordinary expenses are defrayed 
 out of the returns of the business; and the profits divisi- 
 ble in any year are ascertained by comparing the ordi- 
 nary receipts with the ordinary expenses of that year. 
 It is obvious that, unless some such principle as this 
 were had recourse to, there could be no division of 
 profits, even of the most flourishing business, whilst 
 any of its debts were unpaid, and any of its capital 
 sunk. What losses and expenses ought to be treated 
 as ordinary, and therefore payable out of current re- 
 ceipts, and what ought to be treated as extraordinary, 
 and payable legitimately out of capital or money bor- 
 rowed, is a question on which opinions may often hon- 
 estlv differ; and one which, when open to honest di- 
 versity of opinion, a majority of members can lawfully 
 determine (d). But if the current receipts exceed the 
 current expenses, the writer apprehends that the differ- 
 ence can be divided as profit, although the capital may 
 be spent and not be represented by saleable assets (e). 
 
 Under ordinary circumstances, and in the absence 
 of any agreement to the contrary, monies earned ought 
 to be treated as profits of the year in which they are 
 received and not as profits of the year in which they 
 are earned (/). 2 
 
 (c) As to the payment of income-tax, see Last v. London Ass. 
 Corp., 10 App. Ca. 438 ; Lawless v. Sullivan, 6 App. Ca. 373 ; 
 and where business is carried on abroad, see Colquhoun v. Brooks, 
 19 Q B. D. 400 ; Erichsen v. Last, 8 Q. B. D. 414 ; Cesena Sul- 
 phur Co. v. Nicholson, 1 Ex. D. 428; Sully v. A.-G., 5 H. & N. 711. 
 
 (d) See Gregory v. Patchett, 33 Beav. 595. 
 
 (e) As to the construction of clauses relating to payment of 
 dividends out of profits, see Davison v. Gillies, 16 Ch. D. 347, 
 n. ; Dent v. London Tramways Co., ib. 344. As to payingdivi- 
 dends out of capital, Bloxam v. Metropolitan Kail. Co., 3 Ch. 
 337 ; Flitcroft's case. 21 Ch. D. 519. This subject will be more 
 fully discussed in the vol. on Companies. 
 
 (/) See per Turner, L. J., in Maclaren v. Stainton, 3 De G. 
 F. & J. 214. Compare Browne v. Collins, 12 Eq. 586. 
 
 1 To ascertain the "net profits" of a business it is not right 
 to deduct interest on capital employed. Tutt v. Land, 50 Ga. 
 339 (1873). 
 
 2 See Greene v. Ferrie, 1 Desaus, 164 (1790).
 
 DIVISION OF PROFITS. 469 
 
 * As will be seen hereafter, in the absence of an express [ * 395] 
 agreement to that effect, partners have no right to expel Bk. III. 
 one of their number nor to forfeit his share (g). Chap. 7. 
 Neither can they exclude him from the enjoyment of Exclusion 
 his share of profits (h). A partner so excluded can from share of 
 compel his co-partners to restore him to his rights and P ronts - 
 account to Lira accordingly (»'). 
 
 (g) Infra, bk. iv. ch. 1, § 1. 
 
 (A) Griffith v. Paget, 5 Ch. D. 894 ; Adley v. The Whitstable 
 Co., 17 Ves. 315, 19 ib. 304, and 1 Mer. 107. 
 
 ( i) Ib. ; and see infra, ch. 10, under the heads Account and In- 
 junction.
 
 470 PARTNERSHIP ACCOUNTS. 
 
 [ * 396] *CHAPTER VIII. 
 
 OF THE ACCOUNTS OF PARTNERSHIPS. 
 
 Bk. III. I N the present Chapter it is proposed to consider, (1), 
 Chap. 8. the mode in which partnership accounts are kept; (2), 
 the duty of keeping and the right of inspecting the ac- 
 counts of partnerships. The subject of opening settled 
 accounts will be referred to in a subsequent Chapter. 
 
 Section I. — Of the Mode of Keeping Partnership Ac- 
 counts. 
 
 Partnership ^ * 8 usua l among mercantile men to treat all the ac- 
 accounts. counts of a partnership as accounts of the firm, and to 
 deal with the accounts of individual partners as if they 
 were simply debtors or creditors of the firm. The prop- 
 erty brought into the concern is credited to the stock 
 account of the firm, and is then distributed through the 
 ledger accounts; and in these ledger accounts the sev- 
 eral articles and persons are made debtors to stock for 
 the several items passed into these accounts. Each 
 partner has his own separate account opened with the 
 firm (usually in a private ledger), and is credited with 
 everything he brings into it, and is debited with every- 
 thing he draws out of it. Upon a rest, the net profits 
 are determined, and are divided between the partners 
 in the proper proportions, and the share of each partner 
 is carried to the credit of his own separate account. 
 The partners are creditors of the firm for all its stock, 
 and they are debtors to it for all its deficiencies. When 
 they first bring in their capital, the firm is in the pri- 
 vate ledger made debtor to each of them for his propor- 
 tion of capital. Whenever stock is taken, and a surplus 
 appears, that surplus is divided according to the shares, 
 r * 3Q7 -j and is carried to the * accounts of the respective part- 
 ners. If, instead of a surplus, a deficiency appears, the 
 loss is apportioned in the same way (a). 
 
 (a) See Cory on Accounts, ed. 2, p. 71 ct seq.
 
 PARTNERSHIP ACCOUNTS. 471 
 
 Each partner being thus treated like an ordinary Bk. ni. 
 creditor and debtor, in respect of what he brings in and ^ ha P- 8 - Sect. 
 
 what he draws out, the balance standing to his credit J 
 
 or to his debit, as the case maybe, in the private ledger, Mode of 
 shows how his account with the firm stands. Upon ascertaining 
 payment of that balance by the firm to him, if the share "i * 
 balance is in his favour, or by him to the firm, if the proiit or 
 balance is against him, his account with the firm is loss, 
 closed and settled. 
 
 Each partner's share of a profit to be divided, or of 
 a loss to be made good, is ascertained by a simple rule 
 of three calculation. If the partners have agreed to 
 share profits and losses equally, the share of each, of 
 any particular profit or any particular loss is ascertained 
 by dividing the whole profit or whole loss, as the case 
 may be, by the number of partners. If, however, the 
 partners share profits and losses in proportion to their 
 respective capitals, then as the united capitals are to 
 the whole profit or whole loss, so will each partner's 
 share of capital be to his share of such profit or loss. 
 
 In order to illustrate the principle upon which part- Examples, 
 nership accounts are kept let it be supposed that A., 
 B. and C are partners, with a capital of 3,O00Z. sub- 
 scribed by them equally ; that they share profits and 
 losses in proportion to their respective capitals, and 
 that A, has drawn out 500Z. and B. has advanced 100Z. 
 There are, then, three cases to be considered. 
 
 Case 1. — Where there are no profits or losses. 
 
 The accounts will then stand thus (b) : — 
 
 1. Partnership Account. 
 
 Dr. to stock 3000 Cr. by A. 's sum with- 
 
 to B. for advance . 100 drawn 500 
 
 by balance .... 2600 
 
 £3100 £3100 
 
 *2. A.' •s Account. [ * 398] 
 
 Dr. to sum withdrawn 500 Cr. by capital .... 1000 
 to balance .... 500 
 
 £1000 £1000 
 
 (b) In this ca.se no notice is taken of interest. In eases two 
 and 3 interest is supposed to be calculated.
 
 472 
 
 PARTNERSHIP ACCOUNTS. 
 
 Bk. III. 
 
 Chap. 8. Sect. ~ 
 
 Examples. 
 
 to balance . 
 
 3. B.'s Account. 
 
 Or. by capital . 
 . 1100 by advance 
 
 £1100 
 
 . 1000 
 . 100 
 
 £1100 
 
 Dr. 
 
 to balance 
 
 4. C/s Account. 
 
 Or. by capital 
 . 1000 
 
 £1000 
 
 1000 
 
 £1000 
 
 5. Balance Sheet. 
 
 Dr. to balance as above Or. by balance due as 
 
 (from 1) 2600 above to A. ... 500 
 
 " B. . . . 1100 
 
 " C. . . . 1000 
 
 £2600 
 
 £2600 
 
 Case 2. — Where there is a profit to be divided. 
 
 The accounts will then stand as under, if the profit 
 is supposed to be 1000?., and interest at 5 per cent, is 
 charged on all sums brought in and taken out by each 
 partner, and on his capital. 
 
 1. Partnership Account. 
 
 Dr. to stock 3000 O.by A.'s sum with- 
 
 to interest on ditto for drawn with inter- 
 
 one year .... 150 est for one year . . 525 
 to B. for advance with 
 
 interest for 1 year 105 
 to profit 1000 by balance .... 3730 
 
 £4255 
 
 £4255 
 
 [ * 399] 
 
 * 2. A.h Account. 
 
 Dr. to sum withdrawn Or. by capital .... 1000 
 
 with interest for by interest on ditto 50 
 
 one year .... 525 by i share of profit 333 6 8 
 
 to balance 858 6 8 
 
 £1383 6 8 
 
 £1383 6 8 
 
 3. B.'s Account. 
 
 Dr. 
 
 to balance 
 
 1488 6 8 
 
 Or. by capital . . . . 1000 
 by interest on ditto 50 
 by advance and in- 
 terest thereon . . 105 
 by J share of profits 333 6 8 
 
 £1488 6 8 
 
 £1488 6 8
 
 PARTNERSHIP ACCOUNTS. -173 
 
 4. C.'s Account. Bk. III. 
 
 Chap. 8. Sect. 
 Dr. Cr. by capital .... 1000 00], 
 
 by interest on ditto 50 — 
 
 to balance 1383 6 8 by J share of profits 333 6 8 Examples. 
 
 £1383 6 8 £1383 6 8 
 
 5. Balance Sheet. 
 
 Dr. to balance as Cr. by balance due as 
 
 above (from 1) . 3730 above to A 858 6 8 
 
 " to B 1488 6 8 
 
 " to C 1383 6 8 
 
 £3730 £3730 
 
 Case 3. — Where there is a loss to be made good. 
 
 Then if the loss is supposed to be 5000?., and inter- 
 est is calculated as in the last example, the accounts 
 will stand thus : — 
 
 1. Partnership Account. 
 
 Dr. to stock 3000 Cr. by loss 5000 
 
 to interest on ditto by A. 's sum with- 
 
 for one year . . 150 drawn with interest 
 
 to B. for advance for one year . . . 525 
 
 with interest 
 
 for one year . . 105 
 to balance 2270 
 
 £5525 £5525 
 
 * 2. A.'s Account [*400] 
 
 Dr. to sum withdrawn Cr. by capital .... 1000 
 
 with interest for by interest on ditto . 50 
 
 one year .... 525 
 
 to £ share of loss . 1G66 13 4 by balance .... 1141 13 4 
 
 £2191 13 4 £2191 13 4 
 
 3. B.'s Account. 
 
 Dr. to i share of loss 1666 13 4 Or. by capital . . . .1000 
 
 by interest on ditto 50 
 bv advance with in- 
 terest 105 
 
 by balance . . . . 511 13 4 
 
 £1666 13 4 £1666 13 4
 
 474 
 
 PARTNERSHIP ACCOUNTS. 
 
 Bk. III. 
 
 Chap. 8. Sect. 
 1. 
 
 Examples. 
 
 4. C.'-s Account. 
 
 Dr. to J share of loss 1666 13 4 Or. by capital .... 1000 
 
 by interest on ditto 50 
 by balance 616 13 4 
 
 £1666 13 4 
 
 £1666 13 4 
 
 5. Balance Sheet. 
 
 Dr. to balance due as 
 
 above from A. . . 1141 13 4 
 " B. . . 511 13 4 
 
 " C. . . 616 13 4 
 
 Effect of 
 each partner 
 being his 
 own creditor 
 or debtor. 
 
 In what 
 sense a 
 partner is 
 
 [ * 401] 
 debtor to or 
 creditor of 
 the firm. 
 
 Or. by bal an ce as above 
 
 (from 1) . . . . 2270 
 
 £2270 
 
 £2270 
 
 The balances ultimately arrived at in the foregoing 
 accounts are the sums payable— in the first two cases 
 by the firm, to the individual partners, and in the last 
 case to the firm by them — in order to wind up the 
 affairs of the firm. But it must not be imagined that 
 the balances in question are debts owing to each part- 
 ner by his co-partners. The balances are owing by and 
 to the firm, and each partner being included in the firm 
 is, to the extent of his share, his own debtor and his 
 own creditor. 
 
 Accountants are quite right in debiting each partner 
 in his account with the firm with the whole of what- 
 ever he draws out, and in crediting him with the whole 
 of whatever he brings in. * "But," as observed by 
 Lord Cottenham, "though these terms 'debtor' and 
 'creditor' are so used, and sufficiently explain what is 
 meant by the use of them, nothing can be more incon- 
 sistent with the known law of Partnership, than to 
 consider the situation of either party as in any degree 
 resembling the situation of those whose appellation has 
 been so borrowed. The supposed creditor has no 
 means of obtaining payment of his debt ; and the sup- 
 posed debtor is liable to no proceedings either at law 
 or in equity — assuming always that no separate securi- 
 ty has been taken or given (c). The supposed cred- 
 itor's debt is due from the firm of which he is a partner ; 
 and the supposed debtor owes the money to himself in 
 common with his partners" (d). 1 
 
 (e) The remedies available by one partner against another will 
 be examined hereafter. See, also. ante. p. 110. 
 
 (d) Richardson v. The Bank of England, 4 M. & # Cr. 171-2. 
 
 1 Advances by a partner to a firm do not really constitute debts 
 of the firm, although properly taken into account at the final 
 settlement between the partners. Wilson v. Soper, 13 B. Mon 
 411 (1853).
 
 PARTNERSHIP ACCOUNTS. 475 
 
 The final adjustment of a partnership account fre- Bk. III. 
 quently gives rise to questions of some difficulty. One ^ na P- 8 - Sect. 
 
 is, whether the principles on which profits and losses J 
 
 have been previously ascertained are to be adhered to, Ultimate 
 or whether they are to be more or less departed from ; adjustment 
 another is, whether on a tiDal adjustment of accounts ° accoun s> 
 anything can be regarded as profit or loss until the 
 capitals of the partners have been repaid or exhausted 
 as the case may be. In order to solve these and 
 similar questions regard must always be had to the 
 terms of the partnership articles ; but an express 
 agreement with * reference to the taking of accounts [ * 402] 
 may be, and frequently is, only applicable to the case 
 of a continuing partnership, and may not be intended 
 to be observed on a final dissolution of the firm, or even 
 on the retirement of one of its members (e). A similar 
 observation applies to the mode in which the partners 
 themselves have been in the habit of keeping their 
 accounts : that which has been done for the purpose of 
 sharing annual profits or losses is by no means neces- 
 sarily a precedent to be followed when a partnership 
 account has to be finally closed (/). Bearing these 
 observations in mind, the following rules are submitted 
 as those which ought to be followed upon a final settle- 
 Suppose that a firm consists of three partners, A., B., and C. ; 
 that their respective capitals are a, b, c, and that they share 
 profits and losses in proportion to those capitals. Then a-\-b-\-o 
 will be the joint capital of the three partners ; and if M. repre- 
 sents the amount of loss or gain to be shared, A.'s share of such 
 
 loss or gain will be ..^ Xa ; B.'s share will be , . , X b; 
 
 M 
 
 and C. 's share will he , . ■ Xc. Upon precisely the same prin- 
 ciple, if the firm is indebted to A. in a sum a', A. will owe him- 
 self in respect of this debt — r-r-j — X «: B. will owe' A. — r-, — t— 
 r «■+£>+ c a-f-6 -fc 
 
 a' 
 X &; and C. will owe A. — m — X c - So lf B. is indebted to 
 
 the firm in a sum b'; B. will owe himself in request of this debt 
 
 b' b' 
 
 „ , , ■ , ■ X b ; he will owe A. — j-n — X a ; and will owe C. 
 a-\-b-\-c a-\-b-\-c 
 
 4-Xc. 
 a -f- b -\- c 
 
 (e) See, for examples, Lawes r. Lawes, 9 Ch. D. 98 ; London 
 India Rubber Co., 5 Eq. 519 ; Blisset v. Daniel, 10 Ha. 493 ; 
 Wade v. Jenkins, 2 Giff. 509 ; Wood r. Scoles, 1 Ch. 369 ; and as 
 to interest, ante, p. 390. note (<>). Compare Be Barber, 5Ch. G87. 
 
 (/) For example, the value of goodwill seldom, if ever, ap- 
 pears in annual accounts, s<c Steuart v. Gladstone, 10 Ch. D. 626, 
 659 ; Wade v. Jenkins. 2 Griff. 509.
 
 476 PARTNERSHIP ACCOUNTS. 
 
 Bk. III. ment of partnership accounts, where there is nothing 
 
 Chap. 8. Sect. e j se ^ 8erve as a guide. 
 
 -1 In adjusting the accounts of partners, losses ought 
 
 Rules to be to be paid, first out of assets excluding capital, next out 
 observed. Q f ca pital, and lastly by having recourse to the partners 
 
 individually (g)\ and the assets of the partnership 
 
 should be applied as follows : 
 
 1. In paying the debts and liabilities of the firm to 
 non-partners ; 
 
 2. In paying to each partner rateably what is due 
 from the firm to him for advances as distinguished from 
 capital (h) ; 
 
 3. In paying to each partner rateably what is due 
 from the firm to him in respect of capital ; 
 
 4. The ultimate residue, if any, will then be divisible 
 as profit between the partners in equal shares, unless 
 the contrary can be shown. 
 
 If the assets are not sufficient to pay the debts and 
 liabilities to non-partners, the partners must treat the 
 difference as a loss and make it up by contributions 
 inter se. If the assets are more than sufficient to pay 
 [ * 403] the debts and liabilities of the * partnership to non- 
 partners, but are not sufficient to repay the partners 
 their respective advances, the amount of unpaid ad- 
 vances ought, it is conceived, to be treated as a loss, to 
 be met like other losses. In such a case the advances 
 ought to be treated as a debt of the firm, but payable 
 to one of the partners instead of to a stranger (i). If 
 after paying all the debts and liabilities of the firm and 
 the advances of the partners, there is still a surplus, 
 but not sufficient to pay each partner his capital, the 
 balances of capitals remaining unpaid must be treated 
 as so many losses to be met like other losses (A;). 1 
 Equality of The only case which practically gives rise to diffi- 
 loss and culty, is when partners have advanced, or agreed to ad- 
 
 inequality of vanC6) U nequal capitals and to share profits and losses 
 equally. If nothing more than this is agreed, a defi- 
 ciency of capital must be treated like any other loss; 
 
 (g) See Binney v. Mutrie, 12 App. Ca. 160 ; Crawshay v. Col- 
 lins, 2 Russ. 347, and Richardson r. Bank of England, 4 M. & 
 Cr. 173. 
 
 (h) These come before costs of winding-up, see Potter v. Jack- 
 son, Ch. D. 845 ; Austin v. Jackson, 11 ib. 942, note. 
 
 (0 See Wood v. Scoles, 1 Ch. 369. 
 
 {k) See the next two notes. 
 
 1 Rowland v. Miller, 7 Phila. 362 (1870); Livingston r. 
 Blanchard, 130 Mass. 341 (1881); Jackson v. Crapp, 32 Ind. 422 
 (1869); Keaton v. Mavo, 71 Ga. 649 (1883); Frigerio v. Crottes, 
 20 La. Ann. 351 (1868).
 
 PAKTNERSHIP ACCOUNTS. 477 
 
 and the assets remaining after payment of all debts Bk. III. 
 and advances must be distributed amongst the part- Chap. 8. Sect. 
 
 ners so as to make each partner's loss of capital equal; J 
 
 and if the assets are not sufficient, there must be such 
 a contribution amongst the partners, or some of them, 
 as to put all on an equality (Z). 1 But, if the true 
 meaning of the partners is that all debts shall be paid 
 out of the assets, and that any surplus assets remain- 
 ing after payment of debts shall be divided between 
 the partners in proportion to their interests therein or 
 to their capitals, effect must be given to such an agree- 
 ment, and those partners who agree to bring in most 
 capital will lose most (m). 2 
 
 * Section II. — Of the Duty to Keep and the Eight to [ * 404] 
 Inspect Partnership Accounts. 
 
 It is one of the clearest rights of every partner to Duty to 
 have accurate accounts kept of all money transactions keep proper 
 relating to the business of the partnership, and to have accounts, 
 free access to all its books and accounts (n). 3 So im- 
 portant is it to every partnership that proper accounts 
 shall be kept and be accessible to all the partners, that 
 whenever any written articles of partnership are enter- 
 ed into, clauses are inserted for the purpose of remov- 
 ing whatever doubts there might otherwise be upon the 
 
 (1) Binney v. Mutrie, 12 App. Ca. 160. See the form of order 
 there; see, also, Nowell v. No well, 7 Eq. 538; Anglesea Colliery 
 Co., 2 Eq. 379, and 1 Ch. 555; Ex parte Maude, 6 Ch. 51. Com- 
 pare Holyford Mining Co., Ir. Rep. 3 Eq. 208. 
 
 (m) Wood v. Scoles, 1 Ch. 369, is an instance of such a case. 
 
 (n) Seeder Lord Eldon in Rowe v. Wood, 2 Jac. & W. 558-9, 
 and in Goodman v. Whitcomb, 1 ib. 593. 
 
 1 A. contributed a larger amount of cash to the firm than B. 
 The latter gave all his time to the business, the former no time 
 at all. They were to share profits and losses equally, but had 
 made no arrangement providing for the distribution of the capi- 
 tal. On dissolution after loss of part of the firm's capital it was 
 held that the remaining property must be divided in proportion 
 to the cash contributions of the partners and that B. should pay 
 A. one-half of the difference between what he had invested in 
 the business and what his share of the remaining capital came 
 to. Jackson v. Crapp, 32 Ind. 422 (1869). 
 
 2 Whitcmnb v. Converse, 119 Mass. 38 (1875); Maley v. Brine, 
 120 Mass. 324 (1876). 
 
 3 Hall v. Clagett, 48 Md. 223 (1877); Godfrey v. White, 43 
 Mich. 171 (1880).
 
 478 
 
 PARTNERSHIP ACCOUNTS. 
 
 Bk. III. 
 Chap. 8. Sect. 
 
 and to allow 
 them to be 
 examined. 
 
 [*405] 
 
 Effect of 
 keeping no 
 books or of 
 destroying 
 them. 
 
 subject. The usual nature and the general effect of 
 such clauses will be adverted to in the next chapter, 
 and the right to discovery in an action, will also be 
 discussed hereafter. In the present place it will be 
 sufficient to observe, that it is the duty of every part- 
 ner to keep precise accounts and to have them always 
 ready for inspection (o). One partner has no right to 
 keep the partnership books in his own exclusive cus- 
 tody, or to remove them from the place of business of 
 the partnership (p). In the absence of an express 
 agreement to the contrary, every partner has a right, 
 without the permission of his co-partners, to inspect, 
 examine, and make extracts from all the books of the 
 firm (q) ; and no partner can deprive his co-partners 
 of this right by keeping the partnership accounts in a 
 private book of his own, containing other matters with 
 which they have no concern (?*). At the same time., if 
 a person entitled to a share of the profits of a business 
 expressly agrees that he will accept the balance sheets 
 prepared by others as correct, and will not investigate 
 the books or accounts himself, he will be bound by 
 that agreement (s). 1 
 
 * If no books of account at all are kept, or if they are 
 so kept as to be unintelligible, or if they are destroyed 
 or wrongfully withheld, and an account is directed by 
 a court, every presumption will be made against those 
 to whose negligence or misconduct the non- production 
 of proper accounts is due (t). 2 If all the persons inter- 
 ested in the account are in pari delicto, this rule cannot 
 
 (o) Eowe v. Wood, 2 Jac. & W. 558. See, too, Goodman v. 
 Whitcomb, 1 ib. 593, and 3 V. & B. 36. 
 
 (p) See Taylor v. Davis, 3 Beav. 388, note; Greatrex v. Great- 
 rex, 1 De G. & S. 692; Charlton v. Poulter, ]9 Ves. 148, note. 
 
 {q) See Stuart v. Lord Bute,12Sim. 460; Taylor v. Rundell,l Ph. 
 222, and 1 Y. & C. C. C. 128. This right was not enforceable at 
 law even in an action by one partner against another, Ward v. 
 Apprice. 6 Mod. 264. 
 
 (r) See Freeman v. Fairlie, 3 Mer. 43; Toulmin v. Copland, 3 
 Y. & C. Ex. 655. 
 
 (s) See Turney v. Bayley, 4 De. G. J. & S. 332. 
 
 (t) See Walmsley v. Walmsley, 3 Jo. & Lat. 556 ; Grav v. 
 Haigh, 20 Beav. 219. 
 
 1 If A., a partner, keep the firm accounts and on final settle- 
 ment claim that he has omitted to credit himself with certain 
 amounts to which he is entitled, he must furnish most conclu- 
 sive proof of the existence of the mistake he wants corrected. 
 Van Ness v. Van Ness, 32 N. J. Eq. 669 (1880). 
 
 2 Such a presumption does not relieve the other side from prov- 
 ing their case. Secondary evidence may, of course, be admitted 
 in such a case ; aud if there be any conflict of evidence the pre- 
 sumption has weight. Gage v. Parmelee, 87 111. 329 (1877).
 
 PARTNERSHIP ACCOUNTS. 479 
 
 be applied ; ' but it is the duty of continuing or surviv- Bk. III. 
 ing partners so to keep the accounts of the firm, as at Chap. 8. Sect. 
 
 any time to show the position of the firm when a change J 
 
 among its members occurred (u). 
 
 (u) See Ex parte Toulmin, 1 Mer. 598, note ; Toulmin v. Cop- 
 land, 3 Y. & C. Ex. 655 ; and as to losing all right to interest by 
 keeping the accounts improperly, see Boddani v. Ryley, 1 Bro. C. 
 C. 239, and 2 ib. 2 ; and 4 Bro. P. C. 561, noticed ante, p. 392. 
 
 1 In such a case the court may refuse to interfere. In Vermil- 
 lion v. Bailey, 27 111. 230 (1862) the bill was dismissed and the 
 costs divided. See Hall v. Clagett, 48 Md. 223 (1877).
 
 4S0 PARTNERSHIP ARTICLES. 
 
 [*406] ^CHAPTER IX. 
 
 OF PARTNERSHIP ARTICLES. 
 
 Section I. — General Observations. 
 
 The rights and obligations of partners inter se, are 
 generally, to a certain extent, regulated by special 
 agreement, the true meaning of which is to be ascer- 
 tained by the ordinary rules of construction (a). 
 
 In considering the effect, however, of partnership 
 articles, the following principles are to be borne in 
 mind: — 
 Bk jjj 1. In the first place, partnership articles are not in- 
 
 Chap. 9. Sect, tended to define, and are not construed as defining all 
 1- the rights and obligations of the partners inter se. A 
 
 Partnership great deal is left to be understood. The maxim expres- 
 articles are sum facit cessare taciturn naturally applies to partner- 
 not intended ship articles as to other agreements; but the rights and 
 to define all obligations of partners, so far as they are not expressly 
 and duties of declared, are determined by general principles, which 
 partners. are always applicable where not clearly excluded. In 
 the language of Lord Langdale, in Smith v. Jeyes (b). 
 
 Smith v. 
 
 "The transactions of partners with each other cannot be con- 
 jeyes sidered merely with reference to the express contract between 
 
 them. The duties and obligations arising from the relation be- 
 tween the parties are regulated by the express contract between 
 them, so far as the express contract extends and continues in 
 force ; but if the express contract, or so much of it as continues 
 in force, does not reach to all those duties and obligations, they 
 are implied and enforced by the law ; and it is often matter to 
 be collected and inferred from the conduct and practice of the 
 parties, whether they have held themselves, or ought or ought 
 T * 4071 not to ^ e held, bound by the particular * provisions contained in 
 
 their express agreement. When it is insisted that the conduct 
 
 (a) See Chapter X. of Story on Part. ; Collyer on Part. 137, &c. 
 See, also, the head Partnership in Jarman and Bythewood's 
 Convevancing and Davidson's Conveyancing. 
 
 [b) 4 Beav. 505. See, too, Nelson v. Bealby, 30 Beav. 472, and 
 Browning v. Browning, 31 Beav. 316, as to the non-application 
 of the maxim expressio unius est exclusio altcrius.
 
 GENERAL RULES OF CONSTRUCTION. 481 
 
 of one partner entitles the other to a dissolution, we must con- Bk. III. 
 sider not merely the specific terms of the express contract, but Chap. 9. Sect. 
 
 also the duties and obligations which are implied in every part- _J 
 
 nership contract " (c). 1 
 
 2. The attainment of the objects which the partners Articles to 
 have declared they had in view is always regarded as of be construed 
 the first importance. All the provisions of the articles Wltn relel - 
 are to be construed so as to advance and not to defeat biectsof & 
 those objects ; and however general the language of the partners, 
 partnership articles may be, they will be construed with 
 reference to the end designed, and, if necessary, re- 
 ceive a restrictive interpretation accordingly (d). This 
 
 rule is of especial importance in considering the limits 
 of general powers conferred on committees, directors, 
 and others. For example, in Chappie v. Cadell (e) the Chappie v. 
 proprietors of a newspaper entrusted the management Cadell. 
 of the paper to a committee of five, and gave them 
 power to call general meetings, and agreed that the 
 resolutions of the majority present at such meetings 
 should be binding on all the proprietors. A meeting 
 was convened, and the majority present resolved that 
 the paper and the shares of all the proprietors in it 
 should be sold by auction. But it was held that the 
 majority had no power to sell the shares of a dissent- 
 ient and protesting minority. 
 
 Other illustrations of the same principle will be 
 found in Bk. III., c. 2, § 3, which treats of the powers 
 of majorities. 
 
 Conformably with the same rule, 
 
 3. Any provision, however worded, will, if possible, Articles to be 
 be construed so as to defeat any attempt by one part- construed so 
 ner to avail himself of it for the purpose of defrauding ^ s to defeat 
 his co-partner. Thus it is very common for partners ' 
 
 to agree that half-yearly accounts shall be made out 
 and signed, and not be afterwards disputed ; but, not- 
 withstanding such a clause, if one partner knowingly 
 makes out a false account, and his co-partners sign it 
 upon the faith that it is correct, they will not be bound 
 
 (e) See, too, Blisset v. Daniel, 10 Ha. 522. 
 i d I See Coll. on Part. 137. 
 (e) Jac. 537. 
 
 1 The agreement in the written articles of partnership that A. 
 shall pay his contribution as soon as needed cannot he shown by 
 parol to mean that the money shall not be paid till B. pays his 
 share. Reiter v. Morton. 96 Pa. St. 229 (1880). The rules as to 
 the variance or contradiction of partnership articles are the same 
 as those applicable to other written instruments. 
 * 8 LAW OF PARTNERSHIP.
 
 482 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 1. 
 
 [ * 408] 
 
 and the tak- 
 ing of unfair 
 advantages. 
 
 Provisions 
 may be 
 waived by 
 tacit agree- 
 ment. 
 
 by it (/). Again, it is by no means unusual for part- 
 ners to agree that yearly accounts shall be taken, and 
 that, in the case of the death of a partner, his repre- 
 sentatives shall be paid his share * as appearing in the 
 last account, with interest instead of subsequent profits ; 
 but if the partners do not for several years make out 
 any accounts, and then one of them dies, the survivors 
 are not entitled to act on the letter of the agreement, 
 and pay only the amount which in the last account 
 was carried to the credit of the deceased, with interest 
 on such amount (g). 
 
 4. Every power conferred by the articles on any in- 
 dividual partner, or on any number of partners, is 
 deemed to be conferred with a view to the benefit of 
 the whole concern ; and an abuse of such power, by an 
 exercise of it, warranted perhaps by the words confer- 
 ring it, but not by the truth and honour of the articles, 
 will not be countenanced. Thus, in a case which has 
 been already frequently referred to (h), a power to 
 expel any partner was vested in the holders of two- 
 thirds of the shares in the firm ; but it was held that, 
 although this power was so framed that it might be 
 exercised without any reason being assigned, it could 
 not be put in force for the unfair purpose of obtaining 
 the share of the expelled partner at less than its value. 
 
 5. Any article, however express, is capable of being 
 abandoned by the consent of all the partners ; and this 
 consent may be evidenced, not only by express words, 
 but by conduct (i). 1 
 
 The maxim modus et conventio vincunt legem is espe- 
 cially applicable to cases of this description. In the 
 language of Lord Eldon, 
 
 "In ordinary partnerships nothing is more clear than this, 
 that, although partners enter into a written agreement, stating 
 the terms upon which the joint concern is to be carried on, yet 
 if there be a long course of dealing, or a course of dealing not 
 long, but still so long as to demonstrate that they have all agreed 
 to change the terms of the original written agreement, they may 
 be held to have changed those terms by conduct. For instance, 
 if in a common partnership the parties agree that no one of 
 
 (/) See Oldaker v. Lavender, 6 Sim. 239. 
 
 (g) Pettyt v. Janeson, 6 Madd. 146. 
 
 (h) Blisset v. Daniel, 10 Ha. 493. See, also, Wood v. Wood, Y. 
 E. 9 Ex. 190. 
 
 (?) This rule appears to be of comparatively modern date ; it 
 was not acted on in Smith v. The Duke of Chandos, Barn. 419. 
 
 1 Thomas v. Lines. 83 N. Ca. 191 (1880); Henry v. Jackson, 37 
 Vt. 431 (1865); Bobbins v. Laswell, 27 111. 365 (1862).
 
 GENERAL RULES OF CONSTRUCTION. 483 
 
 them shall draw or accept bills of exchange in his own name, Bk. III. 
 without the concurrence of all the others, yet, if they afterwards Chap. 9. Sect. 
 
 slide into a habit of permitting one of them to draw or accept 
 
 bills without the concurrence of the others, this* Court will hold [ * 4() ( Jl 
 that they have varied the terms of the original agreement in that 
 respect " (k). 
 
 This principle was acted on by Lord Eldon in a case Examples. ] 
 where the partners had agreed that annual accounts 
 should be taken, and that in case of the death of a 
 partner, his representatives should be paid an allowance 
 instead of profits ; for it appeared that for some years 
 no accounts had been taken, and that the partners had 
 engaged in transactions of such a nature, that it would 
 have been unfair to have applied the original agree- 
 ment (I). So a practice treating losses as bad when 
 discovered so to be, was held to apply as between the 
 executors of a deceased partner and the surviving part- 
 ners, although the effect was to give the executors much 
 more than they would otherwise have been entitled 
 to (m). S j, where articles contained a stipulation that 
 the partners should contribute to losses and share 
 profits in a certain proportion, and it appeared that a 
 person who managed the affairs of the firm had al- 
 ways received a share of the profits, but had never 
 been called upon to contribute to losses, it was held, 
 that assuming him to be a partner in the proper sense 
 of the term, and to have been originally bound by the 
 articles to contribute to losses, the articles, so far as 
 they obliged him so to contribute, had been varied by 
 the conduct of the parties, and were no longer binding 
 on him (n). J 
 
 (k) Const v. Harris, T. & E. 523. See, also, Coventry v. 
 Barclay, 33 Beav. 1, and on app. 3 De G. J. & Sm. 320 ; Pilling 
 v. Pilling, 3 De G. J. & Sm. 162 ; England v. Curling, 8 Beav. 
 133 and 137 ; Somes v. Currie, 1 K. & J. 605, and the cases in 
 the next three notes. 
 
 (1) See Jackson v. Sedgwick, 1 Swanst. 460; Petty t v Janeson. 
 6 Madd. 146; Simmons v. Leonard, 3 Ha. 58*1. Compare 
 Lawes v. Lawes, 9 Ch. D. 98, where the day for making up ac- 
 counts had been altered. 
 
 (m) Ex parte Barber, 5 Ch. 687. 
 
 (») Geddes v. Wallace, 2 Bli. 270. 
 
 1 In Gage v. Parmelee, 87 111. 329 (1877), A., the active partner, 
 was to receive a yearly salary of $1000. The firm's business 
 enormously increased and the membership of the firm was 
 changed. Salary was credited A. on the books at $5000 per 
 annum. The court refused to interfere with a settlement made 
 on that basis. See also Thrall v. Seward, 37 Vt. 573 (1865) : and 
 Dow v. Moore, 47 N. H. 419 (1867).
 
 484 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 J. 
 
 Varying 
 articles. 
 
 [ * 410] 
 
 Reverting to 
 
 original 
 
 rules. 
 
 Original 
 articles 
 apply to 
 partnership 
 continued 
 under them. 
 
 King v. 
 
 Chuck. 
 
 Provisions 
 applicable 
 during the 
 
 It is proposed to make an alteration in the articles 
 by an agreement which shall be binding on all parties, 
 notice of the proposed change and of the time and 
 place at which it is to be taken into consideration, 
 ought to be given to all partners (o). 1 For, even if 
 the change is one which it is competent for a majority 
 to make against the assent of the minority, all are 
 * entitled to be heard upon the subject ; and unless all 
 have an opportunity of opposing the change, those 
 who object to it will not be bound by the others (p). 
 
 It seems that a person who comes into a firm through 
 another who has acquiesced in a variation of the terms 
 of the partnership articles, is bound by that acquies- 
 cence, and cannot revert to the original articles (q) ; 
 and this principle has been applied to companies (r). 
 
 6. The last general rule which it is necessary to 
 notice is this : if a partnership, originally entered into 
 for a definite time, is continued after the expiration of 
 that time, without any new agreement, the articles 
 under which the partnership was first carried on con- 
 tinue, so far as tuey are applicable to a partnership at 
 will to regulate the rights and obligations of the part- 
 ners inter se (s). Thus, in King v. Chuck (t), three 
 partners, A., B., C, agreed that if either of them should 
 die, his capital, as appearing by the last account, should 
 be paid to his representatives by the surviving partners, 
 on whom the trade was then to devolve. A. died, and 
 this agreement was acted on, and B. and C. continued 
 in partnership without coming to any fresh agreement. 
 Then B. died, and it was held that B. and C. had in 
 fact continued in partnership on the old terms, and that 
 B.'s executors were therefore to be paid the amount ap- 
 pearing to be his capital in the last account come to be- 
 tween him and C. 2 
 
 Even where a partnership is entered into for a term 
 of years, and the articles provide for events happening 
 
 (o) See Const v. Harris, T. & R. 524. 
 
 (p) lb. 525; see, also, ib. 518. 
 
 (j) See Const v. Harris, T. & R. 524. 
 
 (r) Ffooks v. South-Western Rail. Co., 1 Sm. & G. 142; Peek 
 v. Gurney. 13 Eq. 79. 
 
 (s) See Neilson v. Mossend Iron Co., 11 App. Ca. 298, where a 
 new agreement was contemplated, but not concluded: Crawshay 
 v. Collins, 15 Ves. 228; Featherstonhaugh v. Fenwick, 17 Yes. 
 307; Booth v. Parkes, 1 Molloy, 465. 
 
 (0 17 Beav. 325. 
 
 1 Thomas v. Lines, 83 N. Ca. 191 (1880). 
 
 2 See Sangston v. Hack, 52 Ind. 173 (1875); U. S. Bank v. Bin- 
 ney, 5 Mason, 176 (1828); Mifflin v. Smith. 17 S. & R. 165 (1828).
 
 ARTICLES APPLYING TO FRESH PARTNERSHIP. 485 
 
 during the term or during the partnership, the above Bk. III. 
 rule has been still applied. Thus, where two persons Chap. !). Sect 
 
 agreed to become partners for fourteen years, and stip- J 
 
 ulated that if either died during this co-partnership term of part- 
 term, his share should be taken by the other at a cer- nersm P- 
 tain sum, and the fourteen years expired, and the two 
 persons continued in partnership together without com- 
 ing to * any fresh agreement, and then one of them [*411] 
 died : it was held that the above stipulation was bind- 
 ing, and that the share of the decased belonged to the 
 survivor upon payment of the sum mentioned (u). The 
 expression, "the partnership term," was held equiva- 
 lent to the time during which the partners continue in 
 partnership without coming to any fresh agreement. 
 
 But the authorities on this head are not uniform (x). 
 In their present state it is doubtful whether a clause 
 giving a right of pre-emption is one of those which is 
 operative after the termination of the partnership 
 originally contemplated, unless the articles are clear 
 upon the subject (y). A right of expulsion has been 
 held not to apply to a partnership continued after the 
 expiration of the time for which it was originally en- 
 tered into (z). But an arbitration clause has been held 
 to apply (a). 1 
 
 Section II. — Ox the Usual Clauses in Aeticles of 
 Partnership. 
 
 Having now alluded to the more important general Usual clauses 
 rules which require to be borne in mind in considering in partner- 
 the effect of special agreements between partners, it is sm P articles, 
 proposed to notice shortly the provisions usually met 
 with in partnership articles, and the interpretation 
 which has been put upon them by the courts. 
 
 (m) Essex v. Essex, 20 Beav. 442; Cox v. "VVilloughbv, 13 Ch. 
 D. 863. 
 
 (x) Compare the two last cases with Yates v. Firm, 13 Ch. D. 
 839, and Cookson r. Cookson, 8 Sim. 529. 
 
 (,»/> See the two last notes. Yates v. Finn was not referred to 
 in WUloughby ». Cox, but the former case is very shortly reported 
 on this point. 
 
 (z) Clark ». Leach, 32 Beav. 14, and 1 De G. J. & Sm. 409. 
 See Neilson v. Mossend Ir^on Co.. 11 App. Ca. 298. 
 
 (a) Gillett v. Thornton, 19 Eq. 599. 
 
 1 If articles provide that in case one partner wishes to retire 
 he must give notice of his intention a certain time ahead after 
 the expiration of the term of the partnership it has been held 
 that this provision is no longer binding. Duffield v. Brainerd, 
 45 Conn. 424 (1878); Wilson dl Simpson, 89 N. Y. 619 (1882).
 
 4SG 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 
 Chap. 9. Sect. 
 
 [*412] 
 
 1. Nature 
 and place ot 
 business. 
 
 Place of 
 business. 
 
 2. Com- 
 mencement 
 of the part- 
 nership. 
 
 Retrospec- 
 tive and pro- 
 spective 
 partnership. 
 
 In framing articles of partnership, it should always 
 be remembered, that they are intended for the guidance 
 of persons who are not lawyers; and that it is therefore 
 unwise to insert only such provisions as are necessary 
 to exclude the application of rules which apply where 
 nothing to the contrary is said. The articles should be 
 so drawn as to be a code of directions, * to which the 
 partners may refer as a guide in all their transactions, 
 and upon which they may settle among themselves dif- 
 ferences which may arise, without having recourse in 
 Courts of Justice. 
 
 1. The nature of the business, should always be stated. 
 Upon it depends the extent to which each partner is to 
 be regarded as the implied agent of the firm in his 
 dealings with strangers; and upon it also in a great 
 measure depends the power of a majority of partners 
 to act in opposition to the wishes of the minority (b). 
 
 The place of business, should also be stated; and 
 if the place is held on lease which will expire during 
 the partnership, provision should be made for the re- 
 newal of the lease, or for the acquisition of another 
 place of business. Otherwise the business may come 
 to a premature end (c). 
 
 2. The time of the commencement of a partnership. — 
 Prima facie, articles of partnership, like other instru- 
 ments, take effect from their date; and if they are ex- 
 ecuted on the day of their date, and contain no expres- 
 sion indicating when the partnership is to begin, it must 
 be taken to commence on the day of the date of the 
 articles, and parol evidence to show that this was not 
 intended is not admissible (d). 
 
 It occasionally happens that it is expressly declared 
 by the partnership articles that the partnership is to 
 date from a specified time, either prior or subsequent 
 to the day on which the articles are executed. The 
 effects of such a declaration, as between the parties to 
 the articles, and as between them on the one hand, and 
 third persons on the other, are by no means the same. 
 As between the parties themselves the time specified is 
 that from which the accounts of profits and losses are 
 to date; but as between those parties and third persons 
 
 (b) See ante, p. 313, ct scq. « 
 
 (c) See Clements v. Norris. 8 Ch. D. 129, where the business 
 was to be carried on at a particular place, or such other place as 
 the partners might agree upon, and they disagreed. 
 
 (d) Williams v. Jones, 5 B. & C. 108. If the articles arc not 
 dated, parol evidence is admissible to show that they were not to 
 take effect from the time of their execution. Sec Davis c. Jones, 
 17 C. B. 625.
 
 USUAL CLAUSES. 487 
 
 the time in question is of little if any importance; for Bk. III. 
 
 an agreement that a partnership shall date from a time Chap. 9. Sect. 
 
 past does not * enure to the benefit of creditors (e); J 
 
 and an agreement that it shall date from a time future [ *41o] 
 does not prejudice them, if, in fact, the parties act as 
 partners before such time arrives ( / ) 
 
 It occasionally happens that an agreement for a part- Formal con- 
 nership is drawn up and signed, but a more formal in- tract to be 
 strument is intended to be executed. If in a case of drawn U P- 
 this sort the execution of the formal instrument is de- 
 layed, the commencement of the partnership is not nec- 
 essarily delayed also. "Whether it is or is not must de- 
 pend on the terms of the preliminary agreement; for by 
 that agreement the parties are bound, and its terms will 
 regulate their rights and obligations 'inter se, so long 
 as the more formal instrument is unexecuted (g). 
 
 3. The name or style of the firm, should be express- 3 The style 
 ed; and it should be declared that no partner shall en- of the firm. 
 ter into an engagement on behalf of the firm except in 
 
 its name. Such an agreement is capable of being en- 
 forced (h) ; and it may be of use in determining, as be- 
 tween the partners, whether a given transaction is to 
 be regarded as a partnership transaction or not. 
 
 4. The duration of the partnership. — If the time 4. The dura- 
 for which the partnership is to endure is not limited to ti° n oi tn e 
 
 a definite period, either expressly or by necessary im- P artnersni P- 
 plication, the partnership may be dissolved at the will 
 of any partner (*). But it must not be forgotten that 
 a partnership entered into for a definite time is dis- 
 solved by the death or bankruptcy of any one of its 
 members before that time has expired (A:), and that it 
 is therefore necessary to provide for these events in or- 
 der to give effect to the agreement as to time. 1 
 
 A partnership entered into for a certain time, and 
 continued after that time has expired, is a partnership 
 at will (I). 
 
 5. The premium. — The points to be attended to with 5. The 
 
 . premium. 
 
 (e) Vere v. Ashbv, 10 B. & C. 288. 
 (/) Battley v. Lewis. 1 Man. & Gr. 155. 
 (g) See England v. Curling, 8 Bear. 133. 
 (h) See Marshall v. Column, 2 J. & W. 268. 
 (i) Infra, book iv. ch 1, \ 1. 
 (k) Ibid. 
 
 (/1 Featherstonhaugh v. Fenwiek, 17 Ves. 307; Neilson v. 
 Mossend Iron Co., 11 App. Ca. 298, and infra, book iv. ch. 1, § 1. 
 
 1 The courts will enforce a provision that in the event of the 
 death of one partner, the partnership shall nevertheless continue, 
 but it must be clearly proved and carried out. Alexander v. 
 Lewis, 47 Texas, 481 (1877).
 
 488 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 
 Chap. 9. Sect. 
 2. 
 
 [ * 414] 
 
 6. The 
 capital and 
 property of 
 the firm. 
 
 reference to this, are, 1, when, to whom, and how it is 
 to be paid; and, 2, whether the whole or any part of it 
 is to be returned in * any and what events. The law 
 relating to this subject has been already noticed (m). 
 
 6. The capital and property of the firm.— The ar- 
 ticles should always carefully specify what is and what 
 is not to be considered partnership property; particu- 
 larly where one partner is, or is to be, solely entitled 
 to what is to be used for the common purposes of all. 
 If one partner is entitled to land which is to become 
 partnership property, it is usual (in order to prevent a 
 Bale to a person for value without notice), to have that 
 land conveyed or assigned to trustees for the firm; but, 
 as between the partners themselves, all that is requi- 
 site is to declare in the articles that the land shall 
 form part of the assets of the firm. It is also prudent 
 to declare that, as between the real and personal rep- 
 resentatives of any deceased partner, his share shall be 
 deemed personal estate. It should be declared that 
 apprentice fees and other casual payments belong to 
 the firm, and form part of its profits. 
 
 If the firm is to spend money on the separate prop- 
 erty of one of the partners, the right of the firm to a 
 lien for its outlay should be expressly stipulated for 
 or expressly excluded (n). 
 
 A kind of property which is difficult to deal with, 
 and which should always be made the subject of an ex- 
 press agreement, is the benefit accruing from an office 
 or appointment obtained by one of the partners. For 
 example, in the case of a firm of solicitors, one of them 
 may be a clerk to some turnpike trust, or to a poor law 
 board, or he may hold some other appointment yield- 
 ing a salary. Care should always be taken to specify 
 whether the salary is to belong solely to the partner 
 holding the appointment, or whether it is to form part 
 of the partnership assets (o); and if the latter, provi- 
 sion should be made for the payment of a sum by the 
 partner holding the appointment in the event of the 
 dissolution of the firm, whilst the appointment contin- 
 [ *415] nes. If the profits of the office are * partnership as- 
 sets, and the firm is dissolved whilst the office is held 
 by one of its members, the Court, in winding up the 
 partnership, will leave him in the enjoyment of the 
 
 Official ap- 
 pointments. 
 
 (m) Ante, p. 64, et seq. 
 
 (n) Ante, pp. 330 and 384. 
 
 (o) See Collins v. Jackson, 31 Beav. (545, noticed ante, p. 331. 
 where profits arising from appointments of this sort were held to 
 belong to the partnership, although primd facie they do not.
 
 USUAL CLAUSES. 489 
 
 office, but charge him with its value in his account with Bk. III. 
 the firm (p). Chap. 9. Sect. 
 
 When a partnership is formed for working some se- J 
 
 cret and unpatented invention, the articles should spec- Trade 
 ify to whom exclusively the right of working such in- secrets > 
 vention shall belong in the event of dissolution. For pa eu s ' ' 
 if there be no agreement on the subject, all the parties 
 will have a right to work it, in opposition to each other, 
 there being no ground upon which any of them can be 
 prevented from so doing. If, however, it can be proved 
 by the inventor that his secret was to be kept from his 
 co-partners, or that they, if they discovered it, were not 
 to make use of their discovery, they will not be allowed 
 to violate the agreement into which they have entered, 
 or the trust reposed in them; and the circumstance that 
 the invention has not been patented will not be mate- 
 rial (q). 
 
 Good-tvill is a kind of property which ought also to Good-will, 
 be expressly provided for; but this is most conveniently 
 done in connection with the dissolution clauses (r). 
 
 The proportions in which the capital is to be contrib- Contribu- 
 uted by the partners, and the proportions in which they tions of 
 are to be entitled to it when contributed, ought also to capital, 
 be carefully expressed. It by no means follows that 
 the partners are to be entitled to the assets in the pro- 
 portions in which they contribute to the capital. In- 
 deed, if no express declaration upon the subject is made, 
 the prima facie inference is, that all the partners are 
 entitled to share the assets (minus the capital) equally, 
 although they may have contributed to the capital un- 
 equally (s). 
 
 The capital should be expressed to be so much money ; Capital 
 and if one of the partners is to contribute lands or should be 
 goods instead of money, such lands or goods should have money, 
 a value set upon them, and their value in money should 
 be considered as his contribution. If this be not done, 
 the articles and accounts *and the proportions in which [ * 416] 
 profits and losses are to be shared will be less perspic- 
 uous and free from doubt than will otherwise be the 
 case; and the partner who contributes land will gener- 
 ally be inclined, to look upon such land as his, and not 
 as part of the common stock. 
 
 When the articles provide that each partner shall Rules as to 
 
 bring in so much capital, or do some other specified conditions 
 . . . precedent. 
 
 ( p) See Smith v. Mules, 9 Ha. 556: Ambler v. Bolton, 14 Eq. 427. 
 
 (q) See Morison v. Moat, !) I la. 241. 
 
 (r) See as to this, infra. 
 
 (s) Ante, pp. 348, el seq., and 402-3.
 
 490 PARTNERSHIP ARTICLES. 
 
 Bk. III. thing, the question sometimes arises how far the fulfil- 
 
 Chap. 9. Sect. men t D y each of his obligations is a condition precedent 
 
 to his right to call for fulfilment by the others of their 
 
 obligations. The rules laid down in the well-known 
 note to Pordage v. Cole (t), must be applied to all such 
 cases. These rules are as follows: — 
 
 "1. If a day be appointed for payment of money, or part of it, 
 or for doing any other act, and the day is to happen, or may hap- 
 pen, before the thing which is the consideration of the money or 
 other act is to he performed, an action may be brought for the 
 money or for not doing such other act before performance ; for it 
 appears that the party relied upon his remedy, and did not intend 
 to make the performance a condition precedent ; and so it is where 
 ■no time is fixed for performance of that which is the consideration 
 of the money or other act. 
 
 "2. When a day is appointed for the payment of money, &c, 
 and the day is to happen after the thing which is the considera- 
 tion of the money. &c, is to be performed, no action can be main- 
 tained for the money, <&c, before performance. 
 
 '' 3. Where a covenant goes only to part of the consideration 
 on both sides, and a breach of such covenant may be paid for in 
 damages, it is an independent covenant, and an action may be 
 maintained for a breach of the covenant on the part of the defend- 
 ant, without averring performance in the declaration. 
 
 " 4. But where the mutual covenants go to the whole considera- 
 tion on both sides, they are mutual conditions, and the perform- 
 ance must be averred. 
 
 " 5. Where two acts are to be done at the same time, as where 
 A. covenants to convey an estate to B. on such a day, and in con- 
 sideration thereof B. covenants to pay a sum of money on the 
 mme day, neither can maintain an action without showing per- 
 formance of, or an offer to perform, his part, though it is not cer- 
 tain which of them is obliged to do the first act ; and this par- 
 ticularly applies to all cases of sale." 
 
 Stayers v ^ n conformity with these rules, it was held, in Sta- 
 
 Curling. ' vers v. Curling (u), that the plaintiff who had cove- 
 nanted to proceed on a whaling voyage, and to obey the 
 
 [ * 4171 instructions of the *defendants, but who had not obeyed 
 them, could nevertheless maintain an action against 
 them for the share of the profits which they had cove- 
 nanted to pay him, although they had only covenanted 
 to pay him on the performance by him of his covenants. 
 
 Kemble v. So in Kemble v. Mills (x), where two persons had 
 
 (t) 1 Wms. Saund. 320 a. 
 (?<) 3 Bing. N. C. 355. 
 
 (.r) Kemble v. Mills. 9Dowl. 446. Compare Marsden v. Moore, 
 4 H. & N. 500. 
 
 Mills.
 
 USUAL CLAUSES. 491 
 
 agreed to become partners, and one of them was to Bk. III. 
 bring in 2000?., and do certain things, and the other Chap. 9. Sect. 
 
 was to bring in 5000/., it was held that an action lay J 
 
 for non-payment of the 5000/., although the plaintiff 
 did not state that he had brought in bis 2000/., or had 
 done any other of the acts which he had agreed to do. 
 
 Capital is sometimes agreed to be brought in in the Bringing in 
 shape of good debts. Where, on the formation of a so much in 
 partnership, it was agreed that one of the partners §° 0( * delj ts. 
 should bring iu 40,000/. of good debts, and that sum 
 was owing to him by persons who continued customers 
 of the firm after its formation, and became indebted 
 to it, and who in time paid it 40,000/. and more, it was 
 held that this sum had been brought in as agreed. For 
 nothing having been said as to the accounts on which 
 the payments were made, and each customer's account 
 having been kept in such a way as to form one single 
 continuous account, the 40,000/. was treated as having 
 been paid iu discharge of the earliest items in their re- 
 spective accounts; or, in other words, in discharge of 
 the debts owing to the partner who undertook to bring 
 him that amount of good debts, and not in discharge 
 of the subsequent debts contracted with the firm (y). 
 
 In Cooke v. Benbow, a father, who was in business, Cooke v. 
 took his sons into partnership, and agreed to bring Benbow. 
 into the business all the capital, plant, and stock in 
 trade then and usually employed by him in the busi- 
 ness. In estimating the capital, the book debts due to 
 the father were valued at twenty per cent, below their 
 nominal amount, but they, in fact, realized more; and 
 it was held that the surplus constituted part of * the [ *418] 
 father's capital, and not part of the profits of the part- 
 nership (z). 
 
 When a person is about to enter a firm, he some Guarantee 
 times requires a guarantee that its debts do not exceed against 
 a certain sum. If such a guarantee is given, and it debts, 
 turns out that the debts of the firm exceeded the sum 
 mentioned at the time in question, the guarantor is lia- 
 ble to an action; and the amount of damages which the 
 plaintiff is entitled to recover is the loss he has sus- 
 tained in consequence of the excess of debts above the 
 sum mentioned; but not the loss he may have suffered 
 by having joined the firm (a). 
 
 7. Interest, allowances, &c. — The allowance of inter - 
 
 (y) Toulmin v. Copland, 2 CI. & Fin. 681 ; S. C, 3 Y. & C. 
 Ex. 636. 
 
 (z) Cooke v. Benbow, 3 De G. J. & Sm. 1. 
 (a) Walker v. Broadhurst, 8 Ex. 889.
 
 492 
 
 PARTNERSHIP ARTICLES. 
 
 Ek. III. 
 Chap. 9. Sect. 
 2. 
 
 7. Interest, 
 
 allowances, 
 
 &c. 
 
 Monies to be 
 
 drawn out. 
 
 Expenses to 
 be charged to 
 the firm. 
 
 8. Conduct 
 and powers 
 of partners. 
 
 [*419] 
 
 est on capital and on advances should be made the sub- 
 ject of special agreement. The interest should be made 
 payable before the profits to be divided are ascertained, 
 and the interest on advances should be made payable 
 before interest on capital (b). 
 
 Most articles of partnership contain a clause author- 
 izing each partner to draw out of the partnership funds 
 a certaim sum per month for his own private purposes. 1 
 Such a clause should provide for the repayment with 
 interest of whatever may be drawn out in excess of the 
 sum mentioned. 
 
 The articles should also specify what expenses are to 
 be borne by the firm; and particular notice should be 
 taken of allowances of an unusual kind, but which the 
 partners may intend shall be made, e. g., an allowance 
 for treating customers, for management, for rent, main- 
 tenance of servants, &c, &c. (c). 
 
 8. Conduct and powers of the partners. — It is the 
 practice to insert in partnership articles an express 
 covenant by each partner to be true and just in all his 
 dealings with the others. This, however, is always im- 
 plied; and the clause in question is of little use in a 
 legal point of view, although it may serve to remind 
 the partners of their mutual obligations to good faith. 
 
 The effect of the clause in creating a specialty debt 
 is very * limited. In Poicdrell v. Jones (d) two part- 
 ners covenanted that they respectively would be true 
 and just to each other in all their contracts, reckonings, 
 receipts, payments, and dealings; and each bound him- 
 self to the other in the penal sum of 5000Z. for the due 
 performance of the covenants in the articles. One of 
 the partners became greatly indebted to the firm in re- 
 spect of receipts by him on its account. It was con- 
 tended that the debt was a specialty debt by reason of 
 the covenant above referred to; but it was held that 
 the debt was only a specialty debt to the extent of 
 5000Z., the amount of the penalty in which each part- 
 ner was bound to the other, and that the residue of the 
 debt was a simple contract debt only. 
 
 (b) See, as to interest, when there is no agreement to allow it, 
 ante, p. 389. 
 
 (c) Ante, p. 383. 
 
 (d) Powdrell v. Jones, 2 Sm. & G. 305. 
 
 1 A provision that a partner shall be at liberty to withdraw 
 only so much as may be necessary for his private expenses has 
 been held not to cover furniture, carriages, plate. &c. . but only 
 fainilv expenses and the cost of educating children. Stoughton 
 v. Lynch, 1 Johns. Ch. 467 (1815).
 
 attention to 
 be given to 
 affairs of the 
 
 USUAL CLAUSES. 493 
 
 It is useful to state "who is to have the power of hir- Bk. III. 
 ing and dismissing servants (e). Chap. 9. Sect. 
 
 The time and attention which the partners are to give Zl 
 
 to the affairs of the firm should be expressly mentioned ; Amount of 
 
 especially if one of them is to be at liberty to give less 
 
 of his time and attention than the others. 1 Inattention 
 
 to business by reason of illness is. however, no breach m - m . 
 
 of an agreement to attend to it (/). 
 
 It is usual to insert in partnership articles a clause stipulations 
 prohibiting any partner from doing certain things with- that one 
 out previously obtaining the consent of the others ; e. partner shall 
 g., becoming surety, releasing debts, speculating in the certa j n 
 funds, drawing, accepting, or indorsing bills, otherwise things with- 
 than in the usual course of busines, &c, &c. out the con- 
 
 An agreement not to carry on any other business is sent oi tue 
 binding and can be enforced ; but a breach of it does ° eib ' 
 not necessarily involve a liability to account to the firm ^t^cairv 
 for the profits derived from the business carried on in on any tber 
 violation of the agreement (g). business. 
 
 If the number of partners exceeds two, the major- Majority, 
 ity should be expressly entrusted with the power of de- 
 ciding what shall be done as regards any matter in dis- 
 pute between the partners, and relating to the business 
 of the partnership, as * defined by the articles (h). L 4_UJ 
 It is difficult to lay down a general rule for the deter- 
 mination of what is to be done if the partners are 
 equally divided. Articles of partnership, as usually 
 drawn, are silent upon this question ; but if it were de- 
 clared that in such a case matters should be left in 
 statu quo, probably some little assistance would be 
 given to the preservation of peace and good will. 
 
 9. Partnership books. — In order to prevent any dis- 9. Custody to 
 putes as to the custody of the partnership books, it is the part- 
 advisable to declare that they shall be kept at the office slli l 3 books ' 
 of the partnership, and that each partner shall have 
 free access to them. A Court will restrain the removal 
 
 (e) See ante p. 313. 
 
 (/) Boast v. Firth, L. R. 4 C. P. 1 ; Robinson v. Davidson. L. 
 R. 6. Ex. 269. 
 
 (g) Dean v. Maedowell, 8 Ch. D. 345, and see ante, book iii. 
 ch. 2, I 2. 
 
 (h) See as to the powers of a majority, ante, p. 313, et seq., and 
 Falkland v. Cheney, 5 Bro. P. C. 476, which turned on the word- 
 ing of the articles. 
 
 1 In McFerran v. Filbert, 102 Pa. St. 73 (1883), it was held 
 that where a partner in a professional firm reserves the right to 
 carry on any other business and to absent himself as he sees fit, 
 he can cease business altogether and move away without aban- 
 doning the firm.
 
 494 PARTNERSHIP ARTICLES. 
 
 Bk. III. or detention of the partnership books contrary to an 
 
 Lnap. J. oect. ex p ress agreement entered into by the partners (i) ; aDd 
 
 J even in the absence of any special agreement, the Court 
 
 will probably interfere, for it is an implied obligation 
 on the part of every partner not to exclude his co-part- 
 ners from access to the books of the firm (k). 
 10. Accounts 10- Accounts. — The object of taking partnership ac- 
 to be kept counts is two-fold, viz., 1. To show how the firm stands 
 and taken. as re gards strangers ; and 2. To show how each part- 
 ner stands towards the firm. The accounts, therefore, 
 which the articles should require to be taken, should 
 be such as will accomplish this two-fold object. The 
 articles should consequently provide, not only for the 
 keeping of proper books of account, and for the due 
 entry therein of all receipts and payments, but also for 
 the making up yearly of a general account, showing the 
 then assets and liabilities of the firm, and what is due 
 to each partner in respect of his capital and share of 
 profits, or what is due from him to the firm, as the case 
 may be. 
 Accounts I n order, moreover, to prevent accounts which have 
 
 agreed to not been once fairly taken and settled from being after- 
 to be re- wards disputed, tbe articles usually declare that an ac- 
 openea. count when signed shall be treated as conclusive ; or 
 
 [ * 421] not be opened except for some * manifest error discov- 
 ered within a given time. A provision to this effect is 
 extremely useful, and should never be omitted (/); but 
 however stringently it may be drawn, no account will 
 be binding on any partner who may have been induced 
 to sign it by false and fraudulent representations, or in 
 ignorance of material circumstances, dishonorably con- 
 cealed from him by his co-partners (m). Where, how- 
 ever, all parlies act bona fide such clauses are opera- 
 tive; but the usual provision as to manifest errors ap- 
 plies only to errors in figures and obvious blunders, not 
 to errors in judgment, e. g., in treating as good, debts 
 which ultimately turn out to be bad, or in omitting 
 losses not known to have occurred (n). All errors are 
 
 (i) See Taylor v. Davis, 3 Beav,388, note ; Greatrex v. Great- 
 rex, 1 De. G. &..Sm. 692. 
 
 (k) In Greatrex v. Greatrex, 1 De G. & Sm. 692, it does not 
 appear whether any express agreement as to the custody of the 
 books had been entered into or not. 
 
 (?) See the obs. of V.-C. Bacon in London Financial Ass. v. 
 Kelk, 26 Ch. D. 151. 
 
 (wi) See Oldaker v. Lavender, 6 Sim. 239; Blisset v. Daniel, 
 10 Ha. 493. 
 
 (n) See Ex parte Barber, 5 Ch. 687 ; Laing v. Campbell, 36 
 Beav. 3, where, however, there were no articles.
 
 USUAL CLAUSES. 495 
 
 manifest when discovered ; but such clauses as those Bk. HL 
 here alluded to are intended to be confined to over- ^ ha P- y - Sect - 
 
 sights and blunders, so obvious as to admit of no dif- J 
 
 ference of opinion. 
 
 Moreover, an account may be conclusive for one pur- Accounts 
 pose, although not for another, e.g., for the purpose of conclusive 
 calculating the profits to be divided so long as the firm for 01 ? e P ur " 
 is unchanged, but not for calculating the total amount for another, 
 to be paid to a partner on his expulsion from the 
 firm (o). 
 
 So, from the fact that nothing is reckoned for good- 
 will in taking annual accounts with a view to a divi- 
 sion of profits, it does not follow that the good- will is 
 not to be reckoned on a dissolution of the partnership 
 by the death or retirement of a partner (p). Nor does it 
 follow that because profits and losses are annually di- 
 vided equally, the losses on a final winding up are to 
 be divided equally, without reference to the capitals of 
 the partners (q). 
 
 A most important and instructive case on this sub Covently v. 
 ject is Coventry v. Barclay (r). There it was provided Barclay, 
 that accounts * should be taken and signed yearly, and [ * 422] 
 not be afterwards disputed, and that on the death of a 
 partner the survivors should be at liberty to take his 
 share at its value, according to the last annual account 
 preceding his death. The partners were accustomed 
 in their annual accounts to put a nominal value on 
 their plant and stock in trade, and to carry over a por- 
 tion of their profits to a separate account, in order to 
 form a reserve fund to answer unforeseen losses. 
 Shortly before the death of one of the partners, the 
 others bond fide made up an annual account in the 
 usual way, and sent him a copy of it, which he never 
 signed, but never in any way disapproved. It was 
 held (both by Lord Romilly and Lord Westbury) that 
 the executors of the deceased partner were bound by 
 the nominal valuation of the stock, &c, but (by Lord 
 "Westbury, reversing the decision belo#) that they were 
 entitled to a share of the surplus of the reserve fund 
 after paying the losses, &c, to meet which it was cre- 
 ated. 
 
 (o) Ante, pp. 401, 402; Blisset v. Daniel, 10 Ha. 493. Com- 
 pare Coventry v. Barclay, infra. 
 
 (p) Wader. Jenkins, 2 Giff. 509. Compare Steuart v. Glad- 
 stone, 10 Ch. D. 626. 
 
 (q) Binucy v. Mutrie, 12 App. Ca. 160; Wood v. Scoles, 1 Ch. 
 369. 
 
 (r) 33 Beav. 1, and on appeal, 3 De G. J. & Sm. 320. See 
 also, Ex parte Barber, 5 Ch. 687.
 
 496 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 2. 
 
 Accounts not 
 signed. 
 
 11. Retiring 
 i'rom the 
 firm. 
 
 Power to 
 sell share. 
 
 [ * 423] 
 
 Co-partners 
 to have re- 
 fusal of 
 share. 
 Cassels v. 
 Stewart. 
 
 The accourjts having, in this case, been taken bond 
 fide and in the usual way, and no errors being suggest- 
 ed, the absence of the deceased partner's signature was 
 treated as of no importance, for he could not properly 
 have refused to sign them (s). 
 
 11. Retiring. — In the absence of a special provision 
 enabling a partner to retire, there is no method by 
 which he can do so without a general dissolution and 
 winding up of the firm; unless, of course, some agree- 
 ment can be made between all the partners at the time 
 of retirement. Moreover, as will be seen hereafter (t), 
 a partnership which has been entered into for a defi- 
 nite time, cannot be dissolved at the will of any mem- 
 ber. It is obviously, therefore, in many cases neces- 
 sary to insert in the articles a special clause enabling 
 a partner to retire, and defining the terms on which, as 
 between himself and co -partners, he is to be at liberty 
 so to do (u). 
 
 If it is provided that a partner may sell his share, 
 and no restrictions are mentioned, he may sell to any 
 one he likes, even to a pauper; and on giving his co- 
 partners notice of his withdrawal from the firm, he will 
 cease to be a member thereof as between himself and 
 them; even although the purchaser * from bim does 
 not come forward and take his place as a partner in 
 the firm (x). 1 
 
 It is sometimes declared that a partner who is de- 
 sirous of retiring shall offer his share to his co-partners 
 before selling it to any else. 2 
 
 In a recent Scotch case a clause of this kind was held 
 not to preclude one of the continuing partners from 
 buying for himself the share of the outgoing part- 
 ner (y). 
 
 (s) The same thing occurred in Ex parte Barber, 5 Ch. 687. 
 
 (t) Book iv. ch. 1, \\. 
 
 (u) As to the interest in the goodwill where nothing is said 
 about it, see infra. 
 
 {x) Jeffervs v. Smith, 3 Russ. 158, ante, p. 365. 
 
 (y) Cassels v. Stewart, 6 App. Ca. 64. The clauses were not so 
 worded as to prevent such a sale. 
 
 1 After dissolution, a proviso in the partnership articles that 
 no partner shall sell his interest in the firm without consent of 
 his associates is inoperative. Noonanr. McNab, 30 Wis. 277(1872). 
 
 ' l The fact that in such a case the continuing partners refuse to 
 purchase does not give the retiring partner a right to drag a 
 stranger into the firm. McGlensey v. Cox, 1 Phila. 3>7. 
 
 A provision that on the death of one partner his co-partner 
 shall succeed to all his interest in the firm, becoming debtor for 
 its value to the estate of the deceased, has been held valid. Gaut 
 v. Reed, 24 Texas, 46 (1859).
 
 USUAL CLAUSES. 497 
 
 In Homfray v. Fotkergill (z), the articles provided Bk. III. 
 that the offer should be made first to the other partners ^ ha P- J - bect - 
 
 collectively ; and if they should decline, then to those Z 
 
 desirous of collectively purchasing ; and if none such, Homfray v- 
 then to the-partners individually. It was held that an *othergiii. 
 offer by one partner to all the others was equivalent to 
 an offer to all of them, and also to such of them as 
 might be desirous of buying, and that one of them hav- 
 ing declined to buy, the others were at liberty to do so, 
 although no fresh offer to sell to them had been made, 
 and the retiring partner refused to make such offer. 
 
 In Glassington v. Thicaites (a), the articles provided How notice 
 that no share should be disposed of by any partner ™'^ n be 
 until one month after notice in writing under his hand ^ lasg - n<Tton 
 had been given to the other proprietors at a monthly r Thwaites. 
 meeting. A partner desirous of selling his share, wrote 
 a notice to that effect in a book which was produced at 
 monthly meetings, and which all the partners had at 
 all times power to inspect. It was held that the notice 
 so given was sufficient, even although the book was not 
 seen by all the partners. As a general rule, however, 
 notice should be given to each partner individually (6). 
 
 Where two persons became partners, and agreed that Sa i e if offer 
 in the case of the death of either, the other should buy is declined, 
 his share, or if he declined so to do, then that the share Featherston- 
 of the deceased should be sold to any person who Jj, au g^«- 
 might choose to buy it, one of the partners died, and 
 the survivor declined to buy his share, or to enter into 
 partnership with any purchaser of it. Under these 
 circumstances, theCourt, at the suit of the * executor of [ * 424] 
 the deceased partner, decreed a sale of his share, and 
 directed that, if no bond, fide sale could be effected, an 
 account should be taken in order to ascertain the value 
 of such share. No sale being effected, and the accounts 
 having been taken, the surviving partner was decreed 
 to pay the amount of the share of the deceased and the 
 costs of the suit (c). 
 
 Articles of partnership frequently contain a clause Declaring 
 to the effect, that in case a partner is desirous of re- option to 
 tiring, he shall give so many months' notice to his co purchase. 
 partner, who shall have the option of purchasing the 
 share of the retiring partner. If such a clause is acted 
 on, and a partner notifies his desire to retire to his co- 
 partner, and the latter declares his option to purchase 
 
 (z) 1 Eq. 567. 
 
 (a) Coop. temp. Brougham, 115. 
 
 (6) lb. 
 
 (o) Featberstonhaugh v. Turner, 25 Beav. 382. 
 
 * 9 LAW OF PARTNERSHIP.
 
 498 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 
 Enlarging 
 time for 
 purchasing. 
 
 [*425] 
 
 12. Dissolv- 
 ing the 
 firm. 
 
 the share of the retiring partner, a contract is thereby 
 concluded between them, from which neither can de- 
 part without the consent of the other (d) Conse- 
 quently, the retiring partner cannot withdraw his notice 
 and dissolve the partnership under some other clause 
 in the deed (d.) Even if the co-partner who is to 
 purchase the other's share infringes partnership ar- 
 ticles, the Court will not willingly interfere and dissolve 
 the partnership ; although, if the partner who is to 
 retire conducts himself so as to prejudice the business 
 and exclude the other, the Court will interpose for the 
 protection of the latter ; for otherwise the business to 
 which he is shor*l) to be solely entitled may be en- 
 tirely ruined (e). 
 
 "With respect to the exercise of a right of pre-emption, 
 it must be borne iu mind that if the right is to be 
 exercised within a given time it cannot be exercised 
 afterwards, unless the time has been enlarged by the 
 parties themselves. "* Courts will not extend the time on 
 the ground that it was accidentally allowed to slip 
 
 by (/)• 
 
 \\ here an offer to sell was made to a person who 
 became lunatic after it was made, but before the time 
 for accepting it had expired, it was held that his com- 
 mittee was not * entitled to an extension of such time, 
 nor to a renewal of the offer (g). 
 
 12. Dissolving the firm. — TVhere the articles expressly 
 stipulate that it shall be lawful for either partner to 
 dissolve the partnership upon the commission by the 
 other of certain specifically forbidden acts, the partner- 
 ship may of course be determined if either partner 
 does these acts. But this clause, like any other, may 
 be waived by mutual consent ; and even if not waived, 
 advantage cannot be taken of it to dissolve the part- 
 nership on the ground of the commission of any for- 
 bidden act after the lapse of any considerable time 
 since such act came to the knowledge of the partner 
 seeking to avail himself of it (h). 
 
 (d) See Warder v. Stihvell, 3 Jur. X. S. 9, V. C, Stuart; 
 Homfray v. Fothergill, anfc p. 423. 
 
 (e) Sec Warder v. StilweB\ 3 Jur. X. S. 9. 
 
 (/) See, on this subject. Brooke v. Garrorl, 2 De G. &. J. 62 ; 
 Lord Ranelaugh r. Melton, 2 Dr. &Sm. 278. 
 
 (g) Rowlands v. Evans, and Williams v. Rowlands, 30 Bear. 302. 
 
 (// See Anderson v. Anderson, 25 Beav. 1!!<>. which must not be 
 considered as an authority for the doctrine that the Court will 
 not hold partners to their articles. The notice to dissolve in 
 that case was given six months after the commission of the act 
 complained of, and not on account of such act, but in conse- 
 quence of other disputes.
 
 USUAL CLAUSES. 499 
 
 It is not unusual to provide for a dissolution or re- Bk. III. 
 tirement in case a partner shall become insolvent. The Chap. i) - Sect - 
 
 word insolvent, unless controlled by the context, means _! 
 
 unable to pay debts, in the ordinary acceptation of that In case of 
 phrase. A person may therefore be insolvent, although insolvency, 
 his assets, if all turned into money, might enable him 
 to pay his debts in full (i) ; and although he has not 
 been adjudicated bankrupt or compounded with his 
 creditors (k). But a person is not deemed insolvent 
 merely because he keeps renewing a bill which he can- 
 not conveniently meet (I). 
 
 A clause enabling any partner to determine the part- Giving 
 nership by giving notice to the others, may be acted on, notice where 
 although one of the firm has become insane ; for the ? n ? P artner 
 partner serving the notice is not bound to find under- 
 standing for him who is served (in). 
 
 * A notice once given cannot be withdrawn except by [ * 42«] 
 consent (n). Withdrawal 
 
 A notice to dissolve on a given day of the week, and 11(,I;< '' 
 
 a given day of the month, is bad if there is any mis- I n f° rmal 
 
 . . . * notice 
 
 take in either date ; e.g., a notice to dissolve on Mon- 
 day the 9th is bad, if the 9th falls on a Friday (o). 
 
 In a case where it was provided that the dissolution Dissolution 
 should be by deed, it was held that a submission by to °c 1j y 
 deed of all matters in dispute between the partners, deed, 
 and an award under seal made upon that submission 
 dissolving the partnership, had the effect of dissolving 
 it, although nothing was said about dissolution in the 
 submission (p). 
 
 When power is given to retire or dissolve the firm, Signing 
 or to expel a partner from it, power should also be given notices of 
 to any partner to sign, in the name of himself and co- dissolution. 
 partners, a notice of dissolution for insertion in the 
 "Gazette" (q). 
 
 13. Expelling. — In order that an objectionable part- 13. Towers of 
 ner may be summarily got rid of, clauses are sometimes ex P n l slon - 
 
 ft) Seeder Le Blanc, J., in Baylay v. Schofield, 1 M. & S. 338. 
 
 (k) See Parker r. Gossage, 2 C. M. & R. 617, and Biddlecombe 
 v. Bond, 4 A. «*t E. 332, in which it was held that '"insolvent" 
 had not the technical meaning of having taken the beneht of 
 the act for the relief of insolvent debtors. 
 
 (/) Cutten v. Sanger, 2 Y. & J. 459; and see Anon., 1 Camp. 492. 
 
 (m) Roberson v. Lockie, 15 Sim. 285. 
 
 («) Jones r. Lloyd, 18 Eq. 265. 
 
 (o) Watson v. Eales. 23 Beav. 294. 
 
 (p) Hutchinson v. Whitfield, Haves (Ir. Ex.), 78. 
 
 (q) See Troughton v. Hunter, 18 Beav. 470. The Court, will, 
 however, compel a partner to do this on a dissolution, Hendry v. 
 Turner, 32 Ch. D. 355.
 
 500 PARTNERSHIP ARTICLES. 
 
 Bk. III. inserted providing for expulsion in certain events. 1 The 
 Chap. 9. Sect. (3 our t cannot control the exercise of a power to expel 
 if it is exercised bond fide (r). But all clauses con- 
 ferring such a power are construed strictly, on account 
 of the abuse which may be made of them, and of the 
 hardship of expulsion ; and the Court will never allow 
 a partner to be expelled if he can show that his co- 
 partners, though justified by the wording of the expul- 
 sion clause, have, in fact, taken advantage of it for base 
 and unworthy purposes of their own, and contrary to 
 that truth and honour which every partner has a right 
 to demand on the part of his co- partners. In Blissetx. 
 Blisset v. Daniel (s), the expulsion clause was as follows : — 
 Daniel. 
 
 "That it shall be lawful for the holders of two-thirds or more 
 of the shares for the time being, from time to time to expel any 
 [ * 4271 partner, by giving * to, or leaving for him, at his then or last 
 place of abode in England or Wales, a notice in writing under 
 their hands of such expulsion, which, in such event shall operate 
 from and at the time of the giving or leaving such notice, and 
 shall be in the following form, namely, ' We do hereby give you 
 notice that you are hereby expelled from the partnership carried 
 on under the firm of John Freeman and Copper Company. Wit- 
 ness our hand this day of .' " 
 
 The power, therefore, was in the most general terms ; 
 no reasons for its exercise were required to be given, no 
 meetings or deliberations were declared to be necessary, 
 before serving the notice. The holders of two-thirds 
 of the shares signed a notice in the form prescribed, 
 and served it on the partner wbom they desired to ex- 
 pel. They gave no reasons, and relied upon the clause 
 set out above. But it appeared that they desired to get 
 rid of their co-partner, not because so to do was in any 
 sense for the benefit of the firm in a mercantile point 
 of view, but because he objected to the appointment of 
 one of his co-partner's sons as co-manager with his 
 father. It further appeared tbat the offended father 
 had complained to the other partners behind the back 
 of the expelled partner, and had prevailed upon them 
 to sign the notice, intimating that either the expelled 
 
 (r) Russell v. Russell. 14 Ch. D. 471; Steuart v. Gladstone, 10 
 ib. 626. 
 
 (s) Blisset v. Daniel, 10 Ha. 493. See, also, Wood v. Wood, 
 L. R. 9 Ex. 190. 
 
 '■The right of expulsion does not exist unless especially pro- 
 vided for by the partnership articles. Patterson v. Silliman, 28 
 Pa. St. 304 (1857); Pratt v. Willard, 3 McLean, 27 (1842); Gor- 
 man v. Russell, 14 Cal. 531 (1860).
 
 USUAL CLAUSES. 501 
 
 partner or himself must leave the firm. The expelling Bk. III. 
 partners having resolved to exercise the power, induced Chap. 9. Sect. 
 
 the expelled partner to sign certain accounts, in order J 
 
 that he might be bound by them when expelled. Their 
 intention to expel him was, however, concealed until 
 after the accounts were signed; and the notice of ex- 
 pulsion, which gave him the first intimation of any de- 
 sign to get rid of him, was not served until he had 
 signed the accounts. Under these circumstances, the 
 Court declared that the notice of expulsion was void, 
 and restored the expelled partner to his rights as a 
 member of the firm. 
 
 Having regard to the principles acted upon in cases Opportunitv 
 of this description, it is conceived that a power to expel for explana- 
 for misconduct cannot be safely acted upon until the tiori - 
 delinquent partner has had an opportunity of explain- 
 ing his conduct (t). 
 
 A power of expulsion cannot be exercised without All must 
 the Concurrence of all those whose concurrence may be [ * 428] 
 required by the articles (u). concur. 
 
 A notice of expulsion under one clause, cannot, if in- Notice of 
 valid, operate as a notice of dissolution under some expulsion. 
 other clause (x). 
 
 In Smith v. Mules it was provided, in effect, that if a Smith v. 
 partner should do or omit to do certain things, the others Mules, 
 should be at liberty to dissolve the partnership, by giv- 
 ing notice to the partner who should offend ; and that 
 upon giving such notice the partnership should cease 
 and be dissolved in the same manner, and with the 
 same consequences, as if it had been determined by the 
 voluntary retirement of the offending partner. The 
 firm consisted of three partners, A, B., and C, who 
 was B.'s son. B. was guilty of conduct for which he 
 might have been compelled to retire. A. gave B. and 
 C. notice that he dissolved the partnership under the 
 clause above referred to. C, however, had done noth- 
 ing rendering it competent for A. to expel him. It was 
 therefore decided: 1, that A. had no right to expel B. 
 without C.'s concurrence; 2, that A had no right to 
 dissolve the firm, so far as C. was concerned; 3, that C 
 having adopted the notice after it was given, A. could 
 not treat the partnership as continuing; and 4, that the 
 
 (t) See the judgment in Blisset v. Daniel, and Cooper v. 
 Wandsworth Board of Works, 14 C. B. N. S. 180. 
 
 («) See Steuart v. Gladstone, 10 Ch. D. 626: Smith v. Mules, 9 
 Ha. 556. 
 
 (x) See Smith v. Mules. 9 Ha. 556; Hart v. Clarke, 6 De G. M. 
 & G. 232, and Clarke v. Hart, 6 H. L. C. 633.
 
 502 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 
 Power to 
 expel in 
 case to 
 < mitting to 
 do tilings. 
 
 [*429] 
 
 14. Valua- 
 tion of 
 shares. 
 
 General rule 
 -where the 
 articles ean- 
 not be acted 
 
 Agreements 
 for fair 
 
 division. 
 
 Methods of 
 
 avoiding 
 
 sale. 
 
 dissolution actually brought about was not a dissolution 
 provided for by the articles, and did not, therefore, en- 
 tail the consequences of a dissolution under them (y). 
 
 When a power of expulsion is given in the event of 
 a partner omitting to do certain things, e.g., entering in 
 the partnership book all monies he may receive on ac- 
 count of the partnership, the power will not, as a rule, 
 be exerciseable, unless the omission was a studied 
 omission (z). 
 
 As to power to expel, in case a partner becomes in- 
 solvent, see ante, p. 425. 
 
 A power to expel contained in articles for a partner- 
 ship for a term of years is not exerciseable after the 
 term has expired, * although the partnership may have 
 been continued on the old footing (a). 
 
 14. Valuation of shares. — Having provided for the 
 events upon which a partnership is to cease, the next 
 point is to specify the method in which its affairs are 
 to be wholly or partially wound up. 
 
 Where the articles have prescribed no method of 
 winding up, or where the method prescribed cannot be 
 carried into effect, then, unless the partners can come 
 to some agreement as to what is to be done, there must, 
 as a general rule, be a conversion of all the partnership 
 property into money; and this money, after payment of 
 the partnership debts, must be divided amongst the 
 partners in the shares in which they may be entitled to 
 it (6). 
 
 An agreement that on a dissolution the partnership 
 property shall be fairly and equally divided, after pay- 
 ment of its debts, has been held to mean that the prop- 
 erty shall be sold, and that the money produced by the 
 sale shall be divided after the debts had been paid (c). 
 
 In order to prevent the ruin consequent on a sale 
 when a partnership happens to be dissolved, several 
 devices are had recourse to. The simplest is to specify 
 in the articles a sum at which the share of an outgoing 
 or deceased partner may be taken by his co-part- 
 
 {y) Smith v. Mules. 9 Ha. 556. 
 
 (z) See Smith v. Mules, 9 Ha. 556. 
 
 (a) Clark v. Leach. 32 Beav. 14, and 1 De G. J. & Sm. 409. 
 See Neilson v. Mossend Iron Co., 11 App. Ca. 298. 
 
 (61 See Cook v. Collingridge, Jac. 607 ; Kershaw v. Matthews, 
 2 Russ. 62; Wilson v. Greenwood, 1 Swanst. 482. That this 
 rule is not to be rigorously applied, see Pettyt v. .Taneson, 6 
 Madd. 146, and Simmons v. Leonard, 3 Ha. 581, r.oticed infra, 
 p. 431. 
 
 fe) Rigden v. Pierce, 6 Madd. 353 ; Cook v. Collingridge, Jac. 
 607.
 
 USUAL CLAUSES. 503 
 
 ners (d). But it is seldom possible to fix a sum be- Bk. III. 
 forehand, and consequently such a provision is not Chap. 9 - Sect. 
 
 common. It is more usual to stipulate that the share J 
 
 shall be taken to be of the value appearing in the last- 
 signed account, and be paid with the addition of sub 
 sequent profits, or with interest at a certain rate, in 
 lieu of such profits. If a stipulation to this effect is 
 made, and the accounts have been regularly taken and 
 signed, or regularly taken but not signed (e), * so that [ * 430] 
 the shares of the partners appear from the accounts as 
 intended, all parties must abide by the stipulation (/), 
 although difficulties may arise as to the true construc- 
 tion of the articles (g). But if, as frequently happens, Effect of not 
 the accounts intended to be taken and signed have not keeping 
 been taken, or have been taken irregularly, so that the accoun ts as 
 last-signed account is not so late a one as is contem- a » ree ■ 
 plated by the articles, in such a case the account must 
 be made up to the latest date at which it ought to have 
 been made up, regard being had to the articles and the 
 practice of the partners; and the share of the out-going 
 or deceased partner must be taken at its value, as the 
 same appears by the account so taken. 
 
 Thus in Petty t v. Janeson (h), the articles provided Pettyt p. 
 that the partnership accounts should be taken every Janeson. 
 25th of March, and that if either partner died during 
 the continuance of the partnership, his interest should 
 be regulated by the last yearly settlement, and what 
 should then appear to be due to him should be paid to 
 his executors, with five per cent, interest, instead of 
 subsequent profits. For some time the partnership 
 accounts were regularly settled every 25th of March; 
 but afterwards they were made up very irregularly, and 
 often not for sixteen or eighteen months. A partner 
 died in February, 1813. The last account prior to his 
 
 (d) Effect was given to such a provision in Essex v. Essex, 20 
 Beav. 142. 
 
 (e) As in Ex parte Barber, 5 Ch. 687; Coventry u. Barclay. 3 
 DeG. J. & Sm. 320. 
 
 (/) King v. Chuck, 17 Beav. 325; Gainsborough v. .Stork, 
 Barn. 312 ; and the cases in the last note. 
 
 '/i A provision that a share shall he paid for as the same stood 
 at the time of the last account, means as it stood in the partner- 
 ship hooks. See Blisset v. Daniel, 10 Ha. 493, p. 511. See, as 
 to clauses of this description, Coventry v. Barclay, ante, p. 421 ; 
 Ex parte Barber, ubi supra ; and Browning r. Browning, 31 Beav. 
 316, as to interest and subsequent drawings out. As to the 
 calculation of interest where the share is to be paid out, with 
 interest, by instalments, see Ewing v. Ewing, 8 App. Ca. 822. 
 As to goodwill, Stewartfl. Gladstone, 10 Ch. D. 620, and infra, 
 
 (h) 6 Madd. 140.
 
 504 PARTNERSHIP ARTICLES. 
 
 Bk. III. death was settled on the 5th of November. 1811. The 
 
 Chap. 9. Sect. execu tors insisted that as there had been no annual 
 
 J settlement, as contemplated by the articles, they were 
 
 entitled to a share of the profits calculated to the time 
 of their testator's death. The surviving partner, on 
 the other hand, contended that all they were entitled 
 to was the amount of their testator's share, as appear- 
 ing by the account settled in November, 1811, with in- 
 terest thereon. But the Vice-Chancellor observed : — 
 
 [ * 431] *" That the articles had two plain intentions — that there should 
 be an annual settlement, and that the estate of a deceased part- 
 ner should receive no profits for the fraction of the year since the 
 last annual settlement. That the settlement of the 5th Novem- 
 ber, 1811, was to be considered as a settlement substituted by the 
 agreement of the parties in the place of the settlement stipulated 
 for in the articles. That if the testator had died on the 1st Oc- 
 tober, 1812, it could not have been contended that his estate was 
 to take profits subsequent to the 5th November, 1811, being the 
 last settlement within a year of the death ; and if this were to be 
 treated in that case as a settlement, within the spirit of the arti- 
 cles, against the testator's estate, it must be equally considered 
 as a settlement for the testator's estate as a settlement on the 5th 
 November, 1811, which bound each party to come to the next 
 annual settlement on the 5th November, 1812. That the Court 
 must act upon that which ought to have been done as if it had 
 been done, and must declare the testator's estate entitled to a 
 share in the profits up to the 5th November, 1812, being the day 
 which ought to have been the last annual settlement before the 
 testator's death. " 
 
 Simmons v. The same principle was acted upon by V.-C. "Wigrain, 
 Leonard. i n Simmons v. Leonard (i), although no account hav- 
 ing ever been taken between the parties, and the day 
 mentioned in the articles for taking the account not being 
 apparently considered of much importance, the account 
 directed to be taken did not stop at the day at which the 
 last account would have been taken if the articles had been 
 acted on. In Simmons v. Leonard, the articles provided 
 that a general account and rest should be taken every 31st 
 of December, or on such other day as the partners should 
 agree upon; and that if a partner died during the term 
 his executors should receive payment of his share as as- 
 certained at the last annual rest, with interest thereon, 
 in lieu of subsequent profits; and that his executors 
 should have no right to look into the partnership books. 
 The provision relative to the annual settlement of an 
 (<) 3 Ha. 581.
 
 USUAL CLAUSES. 505 
 
 account was never acted upon at all. One of the part- Bk. III. 
 ners died, and the Vice Chancellor held that the prim- Chap. 9. Sect. 
 
 ary object of all parties was, that the death of one of J 
 
 them should not cause a general dissolution and wind- 
 ing up; that this object might be obtained, although 
 no such account as was contemplated had been taken; 
 that it was absolutely necessary to take an account of 
 some sort, and to let the executors, therefore, look into 
 the partnership books; and that, having regard to the 
 omission of *the partners to settle any account at all, [ * 432] 
 the only account which could be taken was a general 
 account of what was due to the testator at the time of 
 his death for his share of capital and profits. 
 
 In Lawes v. Lawes (k) the articles provided for tak- Lawes v. 
 ing half-yearly accounts, and that on the death of a Lawes. 
 partner his share should be taken at the amount settled 
 by the last half-yearly account. The accounts were in 
 fact settled once a year only; but on the death of a 
 partner it was held that his share was not to be taken 
 at the amount shown by the last annual account actually 
 taken, but at the amount shown by an account to be 
 taken at the end of the half-year next before his death 
 as stipulated by the articles. 
 
 These cases not only afford good illustrations of the 
 rule that in construing partnership articles regard must 
 be had to the conduct of the partners, even where a cir- 
 cumstance has arisen of which the partners had no pre- 
 vious experience (I), but they also show that this rule 
 will not be applied unfairly, and further that the rule 
 that there must be a sale of the partnership property 
 whenever there is a dissolution, unless the articles provide 
 for some other method of dealing with it, and the pro- 
 visions in the articles are capable of being rigorously car- 
 ried out, must be taken with considerable qualification (m). 
 
 It is not unusual to stipulate that the share of an out- Taking share 
 going or deceased partner shall be taken by the contin- at a valua- 
 uing or surviving partners at a valuation; and although n- 
 as a rule specific performance of an agreement for sale 
 at a valuation will not be decreed unless the valuation 
 has been made (n); yet where persons enter into part- 
 nership upou certain terms, one of which is, that on a 
 
 (*) 9 Ch. D. 98. 
 
 (l) See, too, Jackson v. Sedgwick. 1 Swanst. 460 ; Coventry v. 
 Barclay, and Ex parte Barber, ante, note (e). 
 
 (m) See, as to the rule referred to, ante, \>. 429. 
 
 (n) See Vickers v. Vickers, 4 Eq. ">:29. a case between partners 
 and the authorities there cited. The rule docs not apply to a 
 valuation of things which arc. accessories to the main purchase. 
 See Jackson v. Jackson, 1 Sin. & G. 184.
 
 506 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 o 
 
 [ * 433] 
 
 15. Introduc 
 tion of new 
 partner in 
 lieu of a 
 dead or re- 
 tired part- 
 ner. 
 
 dissolution one partner shall take the share of another 
 at a valuation, the Court will, on a dissolution under 
 the articles, enforce such a stipulation, and if necessary 
 * itself ascertain the value of the share (o). It has, 
 however, been held, that an agreement for a sale at a 
 price to be fixed by valuers, one to be appointed by the 
 seller and the other by the purchaser, or in case the 
 valuers differ, by an umpire, does not enable the Court 
 to appoint an umpire if the valuers will not do so, and 
 are yet themselves unable to fix a price (p). Moreover, 
 Wilson v. Greenwood (q), throws considerable doubt on 
 the validity, in the event of a bankruptcy, of an agree- 
 ment that the share of a bankrupt partner shall be taken 
 at a valuation by his co-partners. 
 
 15. Transmission of shares and introduction of new 
 partners. — It is a common provision iu partnership 
 articles that on the death of a partner his executors, 
 or his son, or some other person, shall be entitled to 
 take his place. The effect of any such provision 
 must of course depend on its words ; but speaking 
 generally it may be said, — 
 
 1. That clauses of this kind, although they bind the 
 surviving partners to let in the person nominated (r), 
 do not bind him to come in, but give him an option 
 whether he will do so or not (s) ; 
 
 2. That before making up his mind he is entitled to 
 make himself acquainted with the state of the partner- 
 ship affairs, although he is not entitled to have its ac- 
 counts formally taken (t) ; 
 
 3. That if he is desirous of coming in, he must com- 
 ply strictly with the terms upon which alone he is en- 
 titled to do so (u); 1 
 
 (o) Dinham v. Bradford, 5 Ch. 519. See, as to contracts to sell 
 at a fair valuation, as distinguished from a valuation to he made 
 by particular individuals. Fry on Spec. Perf. 154, 2nd ed. 
 
 (p) Collins v. Collins, 26 Beav. 306; and see Vickers v. Vickers. 
 4 Eq. 529. 
 
 (q) 1 Swanst. 471 . See, also, Whitmore v. Mason, 2 J. & IT. 204. 
 
 (r) In Wainwright v. Waterman. 1 Ves. J. 311, a person was 
 declared entitled to he admitted, although those with whom that 
 question rested were divided in opinion. But in Milliken v. 
 Milliken, 8 Ir. Eq. 16. it was held that a person who is to he let 
 in, provided he conducts himself to the satisfaction of the sur- 
 vivors, is without remedy if they will not admit him. 
 
 (s) Pigott v. Bagley, McCl. & Y. 569; Madgwick v. Wimble, 
 6 Beav. 495; Downs v. Collins, 6 Ha. 418 ; Page v. Cox, 10 Ha. 
 163. See, too, Pearce v. Chamberlain. 2 Ves. S. 33. 
 
 (f) Pigott v. Bagley, McCl. & Y. 569. 
 
 («) Holland v. King, 6 C. B. 727 ; Brooke v. Garrod, 3 K. & J. 
 
 1 Alexander v. Lewis, 47 Texas. 481 (1877).
 
 USUAL CLAUSES. 507 
 
 * 4. That if he declines to come in, and there is no [ * 434] 
 provision as to what is then to be done, the partnership Ek. III. 
 must be dissolved and wound up in the usual Chap. 9 - Sect. 
 way (v). 
 
 As a general rule, and excluding cases of agency, an Persons en- 
 agreement between two persons cannot be enforced titled to 
 against either of them by a third person, even although * ilim ' ( ! Wl11 . 
 such third person was intended to derive a benefit from et u | t „ 
 the agreement (x). In Page v. Cox it was attempted p ao . e q ox 
 to apply this rule to an agreement between two part- 
 ners, that on the death of one his widow should suc- 
 ceed him. One of the partners was dead ; it was con- 
 tended that his widow had no right to succeed. But it 
 was held that the rule in question had no application 
 to such a case ; that the articles had created a valid 
 trust in favour of the widow ; and that she was entitled 
 to come to the Court for a decree for the execution of 
 such trust (y). 
 
 In a case where articles provided that in the event of Cases of 
 the death of a partner during the term for which the settled share, 
 partnership was intended to last, his share should go to Balmain v. 
 his widow for life, and after her death to his children, and 01e " 
 in default of children to his widow's executors, admin- 
 istrators, or assigns ; it was held that the children of a 
 partner who had died leaving a widow, did not take any 
 vested interest in the partnership assets during her 
 life (z). 
 
 In another case partnership articles provided that on Appointment 
 the death of a partner the survivor should carry on the °f successor, 
 business for the benefit of himself and such person as Ponton v. 
 the other should by will appoint, and, in default of ap- ■ Uunu - 
 pointment, for the benefit of his widow, or (if she 
 should be dead) for the benefit of his children, and in 
 default of children for the benefit of his executors or 
 administrators ; and that such a person, or the said 
 widow, children, executors, or administrators, should 
 stand in the place of the deceased, and be entitled to 
 the same share in, and have the same control over, the 
 partnership trade and assets, as the deceased would him- 
 self have been entitled to if * living. It was held that [ * 435] 
 
 608, and 2 De G. & J. 62; Milliken v. Milliken, supra, note (r). 
 See Ex parte Marks, 1 D. & Ch. 499. 
 
 (v) Kershaw?;. Matthews, 2 Russ. 62; Downs v. Collins, 6 Ha. 
 418 ; Madgwick?;. Wimble, 6 Beav. 495. 
 
 (x) See Colyear v. The Countess of Mulgrave, 2 Keen. 81 ; Re 
 Empress Engineering Co., 16 Ch. D. 125. 
 
 (y) Page v. Cox, 10 Ha. 163. See, also, Murray v. Flavcll, 25 
 Ch.' D. 89 ; Dale v. Hamilton, 2 Ph. 266. 
 
 (s) Balmaiu v. Shore, 'J Ves. 500.
 
 50S PARTNERSHIP ARTICLES. 
 
 Bk. III. this was not, technically speaking, a power of appoint- 
 
 Chap. 9. Sect. me nt, and that consequently a partner could bequeath 
 
 J his share by a will which did not allude either to the 
 
 power or to the partnership (a). 
 Position of When a person has been admitted into an existing 
 
 incoming firm, and no express agreement has been made as to 
 partner. kj s rights and liabilities, the inference is that as be- 
 
 tween themselves his position is the same as that of the 
 other partners. If they are bound by existing articles 
 he will be bound by the same articles, if his conduct 
 justifies the conclusion that he has assented to them ;' 
 and if any special agreement is made with him, it will 
 be regarded as incorporated with any previous agree- 
 ment between the older partners, although so far as the 
 two agreements may be inconsistent, the latest will pre- 
 vail (6). If, indeed, the incoming partner has no 
 knowledge of any prior agreement between the otbers, 
 he cannot be bound thereby (c); for nothing that he 
 can have done can be regarded, under these circum- 
 stances, as evidence of any assent thereto on his part ; 
 and it is upon such presumed assent that the rule in 
 question is founded. 
 16 Annuities 16. Annuities to widows. — Sometimes it is agreed 
 to widows, that if a partner dies the survivor shall pay an annu- 
 &c. ity, or a share of the profits, to his widow. There is 
 
 now no difficulty in framing a clause of this sort with- 
 out making the widow a partner or a quasi-partner by 
 virtue of her participation in profits (cl); and after 
 her husband's death she can enforce payment of the 
 provision intended for her (e). 
 Annuity If the annuity is made payable out of the profits, 
 
 payable out anc \ the business is carried on and no profits are made, 
 of profits and nQ anuu jty will be payable. So, if the surviving partner 
 none made. . \. , •,, •< ■> <? 
 
 has an option to pay either an annuity or a share or 
 
 Harper & the P r °fits,. and there should be no profits, he will not 
 
 (a) Ponton v. Dunn, I R. & M. 402. See, also, Beamish v. 
 Beamish. Ir.. Rep. 4 Eq. 120, where a bequest of a share of resi- 
 due was held not to amount to a nomination of a successor. 
 
 {!>) See Austen" v. Bovs, 24 Beav. 598, and 2 De. G. & J. 626. 
 
 (c) Ibid. 
 
 (d) See, as to this, ante p. 35. 
 
 (e) See Murray ».. Flavell, 25 Ch. D. S9 ; Page r. Cox, 10 Ha. 
 163, ante, p. 434. 
 
 1 Mealier v. Cox, 37 Ala. 201 (1861). Where such a provision 
 exists and the children of a deceased partner, being sui juris, 
 drew monthly the amount to which their father was entitled, it 
 was held that they had accepted his successorship and were 
 liable to creditors as members of the firm. Nave v. Sturges, 5 
 Mo. App. 557 (1S78).
 
 USUAL CLAUSES. 509 
 
 be bound to pay anything ; for, exhypothesi, it is com- Bk. III. 
 petent for him to elect to pay out of the * profits, and p ha P- 9 - Sect. 
 
 his right to make this election in no way depends on J 
 
 their amount (/). Moreover, in construing a provi- r*436] 
 sion giving a widow of a deceased partner a share of 
 the profits, the partnership which, strictly speaking, 
 determined when her husband died, is regarded as con- 
 tinuing, and the profits which she is to share must be 
 ascertained on that principle. They ought not to be 
 calculated as if the returns yielded by the new business 
 had not to be applied in liquidating the demands on 
 the old firm (g). 
 
 In Holyland v. De Mendez (/i) a continuing partner Annuity pay- 
 gave a bond conditioned to be void on payment of an able until 
 annuity, or on being without his own default dispos- eviction, 
 sessed of the partnership property assigned to him. Holyland v. 
 It was held that the annuity did not cease on the bank- De Mendez - 
 ruptcy of the continuing partner ; dispossession by 
 his assignees not being such a dispossession as was con- 
 templated in the bond. 
 
 An agreement to pay an annuity out of profits in Effect of dis- 
 volves an obligation not wilfully to prevent the earning continuing 
 of profits ; and if, therefore, the person who has to pay business, 
 the annuity wilfully ceases to carry on business he be- 
 comes liable to an action for damages (i). In order, 
 however, to provide as far as possible against any at- 
 tempt to defeat the annuity by discontinuing the busi- 
 ness, it is desirable that the partner continuing the 
 business should covenant not only that he will carry on 
 the business and pay the annuity, but that he will not 
 transfer the business, or take in any fresh partner, with- 
 out procuring from the transferee or new partner a sim- 
 ilar covenant on his part (k). 
 
 17. Prohibitions against carrying on business. — A 17. Prohibi- 
 subject upon which it is always desirable to make some tions against 
 express agreement is the extent to which a retiring continuingin 
 
 *■ OUSllltSS 
 
 partner shall be restrained from commencing business 
 on his own account, and in opposition to the continuing 
 partner. In the absence of any * agreement upon the r * 437] 
 subject, a retiring partner is as much at liberty to set 
 
 (/) Ex parte Harper, 1 De G. & J. 180. 
 
 (ff) Ibid. 
 
 (h) 3 Mer. 184. 
 
 (0 Mclutyre v. Belcher, 14 C. B. N. S. 654. Telegraph Dis- 
 patch Co. «.* McLean, 8 Ch. 658. Compare Rhodes v. Forwood, 
 1 App. Ca. 256. 
 
 (k) A purchaser of the business with notice of such a covenant 
 would take subject to it, see Werdennan v. Socict6 Geueralc d' 
 Electricity 19 Ch. D. 246.
 
 J10 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 
 Chap. 9. Sect. 
 2. 
 
 Rule where 
 there is no 
 prohibition. 
 
 After sale of 
 good-will. 
 
 Agreement 
 not to carry 
 
 on business 
 enforced. 
 
 Williams v. 
 "Williams. 
 
 up for himself, in opposition to the firm he has quitted, 
 as he would be if he had never belonged to it ; and on 
 a general dissolution of partnership, all the partners 
 are at liberty to commence business in opposition to 
 each other, as freely as if they had never been part- 
 ners, unless they have entered into some agreement not 
 to do so. A dissolution per se obliges no partner to re- 
 tire from business, or to refrain from seeking a liveli- 
 hood in the manner in which he has been accustomed 
 so to do, and in the neighborhood where he is known (Z). 1 
 
 As will be seen presently, even a sale by an outgo- 
 ing partner of all his interest in the partnership busi- 
 ness, including the good- will thereof, does not preclude 
 him from setting up a new business in opposition to 
 the continuing partners ; but it does preclude him from 
 so doing in the name of the old firm and from repre- 
 senting himself as continuing the business sold (m). 2 
 But an agreement by an outgoing partner not to carry 
 on business in rivalry with his late co-partners may 
 be implied even where not distinctly expressed (n). 
 
 An agreement by a retiring partner not to commence 
 business in opposition to his late partners, will be en- 
 forced, if the restriction imposed upon him is not un- 
 limited, both as regards time and distance, and is not 
 unreasonable, having regard to the nature of the part- 
 nership business (o). 3 Thus, in Williams v. Williams (p), 
 
 (I) See Dawson v. Beeson, 22 Ch. D. 504 ; Farr v. Pearce, 3 
 Madd. 78 ; Davies v. Hodgson, 25 Beav. 177 ; and the next head, 
 No. 18. Goodwill. 
 
 (in) Churton v. Douglas, Johns. 174, noticed infra, p 441. 
 
 in | Sec infra, p 442. 
 
 (o) See, generally, as to covenants not to carry on business, 
 Mitchell v. Reynolds, 1 Smith's L. C. ; also the useful table ap- 
 pended to Avery v. Langford, Kay, 663. As to whether such 
 covenants can be reasonable, if unlimited both as to time and 
 space, see Davies v. Davies, 36 Ch. D. 359, where the covenant 
 was unlimited "so far as the law allows.'' and was held to be 
 too uncertain to be enforced, and also to be personal to the cove- 
 nantees. In Palmer v. Mallet, 36 Ch. D. 411, the covenant was 
 joint in form, but was held to be joint and several as regards the 
 covenantees. Distances are measured as the crow flies. Duignan 
 v. Walker, Johns. 446; Mourlat v. Cole, L. R. 7 Ex. 70, and 8 
 Ex. 32. (p) 2 Swanst, 253. 
 
 1 See Dayton v. Wilkes, 17 H.»av. Pr. 510 (1859). 
 
 2 MeCord v. Williams. 96 Pa. St. 78 (1880); Hoxie v. Chancy. 
 143 Mass. 592 (1887); White v. Jones, 1 Abb. Pr. (N. S.) 328 
 (1863); Whiley v. Baumgartner, 97 Ind. 66 (1884). 
 
 3 Such an agreement must be reasonable as to the extent of 
 territory covered by its prohibition. There must be some limit- 
 ation in this respect. Wiley v. Baumgardner. 97 Ind. 66 (1884); 
 what amounts to a reasonable territorial restriction depends on 
 the nature and circumstances of the business. Oregon Steam
 
 USUAL CLAUSES. 511 
 
 the defendant, who had been in partnership * with the [ * 438] 
 plaintiffs, in running coaches between Reading and Bk. III. 
 London, sold his share in the business to them, and Chap. 9. Sect. 
 
 covenanted not to run any coach between Heading and J 
 
 London, or so as to injure the business of the plaintiffs ; 
 and this covenant was enforced in equity. So, in 
 Tallis v. Tallis (q), the Court of Queen's Bench upheld Tallis v. 
 a covenant entered by a retiring member of a firm of Tams - 
 booksellers not to carry on the canvassing trade in 
 London, nor within 150 miles of the General Post- 
 Offiae, nor in, nor within fifty miles of Dublin or Edin- 
 burgh, nor in any town in Great Britain or Ireland in 
 which the continuing partner or his successors might at 
 the time have an establishment. 
 
 An agreement entered into when a partnership is Considera- 
 formed, to the effect that a retiring partner shall not tion - 
 carry on the business carried on by the firm, cannot be 
 invalid for want of consideration (r). 
 
 An agreement with a bankrupt to take his son into 
 partnership, and to employ the bankrupt, is a sufficient 
 consideration for an agreement by him not to carry on 
 business in competition with the firm (s). 
 
 In framing articles of partnership between solicitors, Solicitors' 
 provision should always be made respecting the deeds papers, &c„ 
 and documents in their possession, but belonging to 
 their clients. 
 
 It need hardly be observed that no agreement which 
 the solicitors may make between themselves, will pre- 
 judice their clients. Subject to any question of lien; 
 the clients are entitled to have their deeds and docu- 
 ments, and all drafts and copies thereof, paid for by 
 them, delivered up on request (/). They have, more- 
 over, a right to the joint assistance of all the members 
 of the firm employed by them ; and although, if the 
 firm is dissolved, a client cannot insist that the part- 
 ners shall continue to act as his solicitors, it is clear 
 that they cannot without his consent, turn him over to 
 
 {q) 1 E & B. 391. See, too, Atkyns v. Kinnier, 4 Ex. 770 ; 
 Keynolds v. Bridge. 6 E. & B. 528. 
 
 (/•) Per Lord Cranworth. in Austen v. Boys, 2 De G. & J. 626. 
 (s) Clarkson v. Edge, 33 Beav. 227. 
 (t) Expartc Horsfall, 7 B. & C. 528. 
 
 Nav. Co. v. Winsor, 20 Wall. 04 (1873); Warfield v. Booth, 33 
 Md. 63 (1870). .Mr. Bates thinks that a restriction as to time is 
 unnecessary and cites anion*; others the following cases in which 
 none occurred. : Dean v. Emerson, 102 Mass. 480 (1869): Ropes 
 v. Upton, 125 id. 25-< (1878); Stewart v. Bedell, 7!) Pa. St. :;:;<; 
 (1875); Thayer v. Younge, 86 Ind. 259 1 1882 ; Arnold v. Kreutzer, 
 67 Iowa, 214 (18tioj. Bates on Partnerships, £ 070.
 
 512 PARTNERSHIP ARTICLES. 
 
 [ * 439] one of themselves (w); * nor act against bim as if he 
 Ek. III. had never been a client (x). The dissolution operates 
 
 Chap, 9. Sect. as a discharge of the client by the solicitors ; and the 
 
 1 client is thereupon entitled, subject to any question of 
 
 lien, to have his deeds and oapers delivered up to 
 him (y). 
 
 But as between the solicitors themselves, it is compe- 
 tent for them to agree that, if they dissolve partnership, 
 the clients of the old tirm, and all their deeds and 
 papers, shall be divided amongst the partners, or be- 
 long solely to the partner who continues to carry on 
 the business of the firm ; and such an agreement will 
 be enforced (z). If no such agreement is come to, each 
 partner may, after a dissolution, 3o his best tc induce 
 the old clients to continue him as their sole solicitor. 
 18. Good- 18. Good-will. — In connection with the subject con- 
 
 will, sidered under the last head, it is necessary to allude to 
 
 the good-will of a trade or business. 
 Nature of The term good- will can hardly be said to have any 
 
 good-will. precise signification. It is generally used to denote the 
 benefit arising from connection and reputation ; and 
 its value is what can be got for the chance of being 
 able to keep that connection and improve it. Upon the 
 sale of an established business its good-will has a 
 marketable value, whether the business is that of a 
 professional man or of any other person (a). 1 But it is 
 plain that good-will has no meaning except in connec- 
 tion with a continuing business (6) ; it may have no 
 value except in connection with a particular house, and 
 may be so inseparably connected with it as to pass with 
 it under a will or deed without being specially men- 
 [ * 440] tioned (c). 2 In such a case the * good-will increases 
 
 (u) Cook v. Rhodes, 19 Ves. 272. note. 
 
 (x) Cholniondely v. Clinton. 19 Yes. 261. 
 
 (y) Griffiths v. Griffiths, 2 Ha, 587 ; Colegrave v. Manley, T. 
 & E. 400 ; and see Vaughau v. Yanderstegen, 2 Drew. 409 ; and 
 ante, p. 120. 
 
 (z) Whittaker v. Howe, 3 Eeav. 383. See, however, Davidson 
 v. Napier, 1 Sim. 297. 
 
 (a) Good-will is property within the meaning of the stamp 
 acts, Potter v. The Commissioner of the Inland Revenue, 10 
 Ex. 147. 
 
 (6) See. as to legacy of good-will, apart from any share in a 
 business, Robertson v. Quiddington, 28 Beav. 529. 
 
 (c) As to Blake v. Shaw, Johns. 732; Chissum v. Dewes, 5 
 
 1 The transfer of the good-will of a business is consideration 
 sufficient to support a note given for the price of it. although the 
 business may afterwards amount to nothing. Smock v. Pierson, 
 68 Ind. 405 (1879). 
 
 2 Thackray's Appeal, 75 Pa. St. 132 (1874).
 
 USUAL CLAUSES. 513 
 
 the value of the house ; but the value of the good-will Bk. III. 
 
 of any business to a purchaser depends, in some cases Chap- 9. Sect. 
 
 entirely, and in all very much, on the absence of com- J ' 
 
 petition on the part of those by whom the business has 
 been previously carried on. 
 
 Now it has just been seen that there is no obligation 
 on the part of any of the partners to retire from busi- 
 ness merely because the partnership between them is 
 dissolved. 
 
 Further, it is held, although it is certainly an extra- Carrying on 
 ordinary doctrine, that if a person sells the good-will business 
 of his trade or business, that does not disentitle him P ,fter seiUn g 
 from recommencing a similar trade or business in the ' ' 
 immediate vicinity of the place where the old one was 
 carried on (d) ;' and, therefore, if it is simply agreed 
 that a partnership shall be dissolved, and that one part- 
 ner shall buy the other out, and this agreement is car- 
 ried into effect, the retiring partner will nevertheless be 
 at liberty to recommence business in the old line in 
 the old neighbourhood (e) ; and he may not only ad- 
 vertise the fact (/), but he may also solicit business 
 from, and carry on business with, the old customers 
 and correspondents of the firm (g). But he must not 
 hold himself out as continuing the business which he 
 has sold, and must not therefore carry it on in the name 
 in which it was carried on before he sold it (h). At 
 
 Russ. 29; Ex parte Punnett, 16 Ch. D. 226; Pile«». Pile. 3 Ch. D. 
 36; and see per Cotton. L. J., in Cooper v. Met. Board of Works, 
 25 Ch, D. 479. 
 
 (d) Cruttwell v. Lye, 17 Ves. 335; Harrison v. Gardner, 2 Madd. 
 198; Kennedyu LeeJ 3 Mer. 455; Shackle v. Baker, 14 Ves. 468. 
 See, too, Davies v. Hodgson, 25 Beav. 177, and Churton v. Doug- 
 las, Johns. 174, In Johnson v. Hellely, 34 Beav. 63, notice of 
 this right was directed by the Court to be given in the particu- 
 lars of the sale of the good-will. 
 
 (c) See Kennedy v. Lee, 3 Mer. 452; Mellersh v. Keen, 27 
 Beav. 236; Bradbury v. Dickens, ib. 53; Smith v. Everett, ib. 
 446, and the next note. 
 
 (/) Hookhani v. Pottage, 8 Ch. 91; Labouchere v. Dawson. 13 
 Eq. 322, and see Cruttwell v. Lye, 17 Ves. 335. 
 
 (g) Pearson v. Pearson, 27 Ch. D. 145; Vernon v. Hallam, 34 
 ib. 748, overruling, as to this, Labouchere v. Dawson, 13 Eq. 322; 
 Ginesi v. Cooper & Co., 14 Ch. D. 596; and Leggott v. Barrett, 
 15 Ch. D. 306. N.B.— The order against soliciting the old cus- 
 tomers was not appealed against in this last case. See, also, 
 Walker v. Mottram, 19 Ch. D. 355; Dawson v. Beeson, 22 ib. 504. 
 
 (h) Churton v. Douglas, Johns. 174; Hookhani v. Pottage, 8 
 Ch. 91, where the defendant described himself as P. from H. & 
 P., tlie old firm, but in a way calculated to deceive. 
 
 1 McCord v. Williams, 96 Pa. St. 78 (1880); Hoxie v. Chaney, 143 
 Mass. 592 (1887); Porter v. Gorman, 65 Ga. 11 (1880). 
 
 * 10 LAW OF PARTNERSHIP.
 
 514 PARTNERSHIP .ARTICLES. 
 
 Bk. III. the same time, if that name happens to be his own, it 
 
 Chap. 9. Sect. - g ^ no * means dear that he could be restrained from 
 
 .1 . carrying on business in that name (i). 
 
 [ * 441 J The last propositions aie well illustrated by the im- 
 
 ^ r t ] on v - portant case of Churton v. Douglas (k). There two of 
 the plaintiffs, and the defendant, whose name was John 
 Douglas, carried on business in partnership under the 
 firm of John Douglas & Co., as stuff merchants at 
 Bradford. The defendant retired from the firm; a new 
 partner was taken in; and the defendant assigned to 
 his old partners and their new partner (being the plain- 
 tiffs) all his, the defendant's, share and interest in the 
 old firm, and in the good-will thereof. The plaintiffs 
 continued to carry on the old business under a new 
 name, with the addition late John Douglas & Co. The 
 defendant formed a new partnership with three persons 
 who had been in the employ of the old firm, and whom 
 he had enticed to leave the service of its successors and 
 to join him; and he and his new partners commenced 
 business as stuff merchants at Bradford, in a house ad- 
 joining the place of business of the old firm; and they 
 did so in the name of John Douglas & Co. They further 
 affixed that name to the house they had taken, and sent 
 circulars to the old customers of the old firm, so as to 
 lead them to suppose that the business of that firm was 
 being continued by the defendant and his new partners. 
 On a bill filed by the plaintiffs against the defendant it 
 was held, (1), that he was entitled to carry on, by him- 
 self or in partnership with others, the kind of business 
 previously carried on by him with his late partners; 
 and, (2), that he was entitled so to do in the immediate 
 neighbourhood of the place where he and his late part- 
 ners previously carried on their business. But it was 
 also held, (3), that the plaintiffs alone had the right to 
 carry on the business previously carried on by John 
 Douglas & Co. ; (4), that the plaintiffs had the right 
 to represent themselves as the successors of that firm; 
 (5), that the defendant had no right to represent him- 
 self as its successor; (6), that he could not acquire such 
 a right by taking other persons into partnership with 
 him; and, (7), that although his name was John Doug- 
 las, he had not, either alone or in partnership with 
 I" * 442] others, the * right to carry on the old kind of business, 
 in the old place, under the old name of John Douglas 
 & Co. An injunction was granted accordingly to re- 
 strain the defendant from carrying on the business of a 
 
 (?) See ib. and ante, book i. ch. 6, \ 2. 
 (k) Johus. 174.
 
 USUAL CLAUSES. 515 
 
 stuff merchant, at or in the immediate neighbourhood Bk. Til. 
 
 of Bradford, either alone or in partnership under the Cha l'- 9 - Sect 
 
 style John Douglas & Co., or in any other manner hold- Z. 
 
 ing out that he was carrying on the business of a stuff 
 merchant in continuation of, or in succession to, the 
 business carried on by the late firm of John Douglas 
 &Co. 
 
 An agreement by a partner that he will not carry on implied 
 business in opposition to his late co-partners may how- agreement 
 ever be implied from some other agreement into which u . ot to . con - 
 he and they have entered. Thus where two persons Jj n - e in 
 became partners as brewers for eleven years, and it was c ( ' 
 provided in the articles that either of the parties, on Watson? 
 giving six months' notice to the other, should be at 
 liberty to quit the trade and mystery of the brewer, and 
 that the other should be at liberty to continue the trade 
 on his own account; it was held that one of the part- 
 ners who had retired from the firm after giving notice 
 to the other was not at liberty to continue in the trade 
 at all (I). 
 
 Again, where on the retirement of a partner, it was Award dis- 
 left to an arbitrator to determine what the continuing posing of 
 partner should pay for the good-will, and the arbitrator business - 
 fixed a sum upon the understanding that the retiring ? ar V s ' )n "' 
 partner would not commence a new business in the 
 same street in which the old one was carried on; an in- 
 junction was granted restraining the retiring partner 
 from carrying on business in that street, although the 
 award itself was silent upon the point (m). 
 
 It follows from the foregoing observations that the 
 good- will of a valuable partnership business may be 
 practically unsaleable and worthless, at least to any one 
 except a former partner desiring to continue the busi- 
 ness of the firm (»). It is only so far as good-will has 
 a saleable value that it can be regarded as an asset of 
 any partnership; and the good- will of *a business is [*443] 
 frequently of no value at all, except in connection with 
 the place of business (o). This, however, is by no 
 means always the case. The value of the good- will of 
 a newspaper, for example, attaches to its name, and is 
 scarcely, if at all, deperjdent on the place of publica- 
 tion. 
 
 (?) Cooper v. Watson, 3 Dougl. 413; S. C. sub nomine Cooper 
 v. Watlington. 2 Chitty, 451. Compare Davies v. Davies. 36' Ch. 
 D. 359, ante, p. 437, note (o). 
 
 (m) Harrison v. Gardner, 2 Madd. 198. 
 
 («) See Davies v. Hodgson, 25 Beav. 177, where the good-will 
 was treated as valueless on this very ground. 
 
 (o) .As in Blake v. Shaw, Johns. 732. See ante, p. 439, note (c).
 
 516 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 2. 
 
 Good-will 
 assets of the 
 firm. 
 
 Good-will in 
 cases of 
 death. 
 
 [*444] 
 
 The saleable value of the good-will of a pai'tnership 
 business, whatever that value may be, must be consid- 
 ered as belonging to the firm, unless there is some 
 agreement to the contrary; and it follows from this — 
 
 1. That if a firm is dissolved, and there is no agree- 
 ment to the contrary, the good- will must be sold for 
 the benefit of all the partners, if any of them insist on 
 such sale (p) ; 
 
 2. That, so far as is possible, having regard to the 
 right of every partner to carry on business himself, the 
 Court will, on a dissolution, interfere to protect and 
 preserve the good-will until it can be sold (q); 
 
 3. That if a partner has himself obtained the bene- 
 fit of the good-will, he can be compelled to account for 
 its value, i.e., for what it would have sold for, he be- 
 ing himself at liberty to compete in business with the 
 purchaser (r). 
 
 In the event of dissolution by death, it has been said 
 that the good- will survives, and there is a clear deci- 
 sion to this effect (s). But this is not in accordance 
 with modern authorities; they are wholly opposed to 
 the notion that the value of the good- will, as such, be- 
 longs to the survivor (t). 1 It undoubtedly may hap- 
 pen that the survivor may obtain the benefit of the 
 good- will without paying for it; for he is at liberty 
 * (unless restrained by agreement) to carry on busi- 
 ness on his own account (u), and possibly in the old 
 place of business and in the name of the late firm (x).' 2 
 Under these circumstances, if, on the death of a part- 
 ner, the good-will is put up for sale, it will produce 
 
 (p) Pawsey v. Armstrong, 18 Ch. D. 698; Bradbury v. Dick- 
 ens, 27 Beav. 53, and the cases cited infra. 
 
 (q) See Turner v. Major, 3 Giff. 442, where, however, there 
 was an express agreement for the sale of the good-will. In 
 Lewis v. Langdon, 7 Sim. 425, the V.-C. Shadwell seemed to 
 think that a surviving partner was under no obligation to pre- 
 serve the good-will. But his opinion was probably influenced 
 by Hammond v. Douglas, 5 Ves. 539. which was not then over- 
 ruled. 
 
 (»•) Smith v. Everett, 27 Beav. 446; Mellersh v. Keen, ib. 236, 
 and 28 Beav. 453. 
 
 (.s) Hammond v. Douglas, 5 Ves. 539. 
 
 (0 Wedderburn v. AVedderburn. 22 Beav. 104; Smith v. Ever- 
 ett, 27 Beav. 446, and Mellersh v. Keen, ib. 236, and 28 Beav. 
 453. See. also, Gibblett v. Read, 9 Mod. 459, a case of a news- 
 paper. 
 
 (m) Farr v. Pearce, 3 Madd. 74; Da vies v. Hodgson, 25 Beav 
 177. 
 
 (x) See, as to this, infra, note (e). 
 
 1 Holden v. McMakin, 1 Pars. Sel. Cas. (Pa.) 270 (1847). 
 
 2 Kammelsberg v. Mitchell, 29 Oh. St. 22 (1875).
 
 USUAL CLAUSES. 517 
 
 nothing if it is known that the surviving partner will Bk. III. 
 exercise his rights. He will therefore acquire all the Chap. 'J. Sect. 
 
 benefit of the good-will; but he does not acquire it by J 
 
 survivorship, as something belonging to him exclu- 
 sively, and with which the executors of the deceased 
 partner have no concern; for if he did, he might sell 
 the good-will for his own benefit, and this he cannot 
 do (y). When, therefore, it is said that on the death 
 of one partner the good-will of the firm survives to the 
 other, what is meant is, that the survivor is entitled to 
 all the advantages incidental to his former connection 
 with the firm, and that he is under no obligation, in 
 order to render those advantages saleable, to retire 
 from business himself (z). 
 
 Again, when a partner retires not only from the firm, Good-will in 
 but from the business carried on by it, the continuing case of re- 
 partners will acquire the benefit arising out of the tireroent of 
 good-will for nothing, unless it has been agreed that one l jartner - 
 they shall pay for it; for they retain possession of the 
 old place of business, and they continue to carry on 
 that business under the old name. This, in fact, se- 
 cures the good-will to them, and they cannot be com- 
 pelled to pay separately for it, unless some agreement 
 to that effect has been entered into (a). 
 
 The right to continue the use of a partnership name Good-will in 
 is frequently the most important element in the good- connection 
 will, and is governed by principles similar to those ap- wit h use of 
 plicable to it. The * purchaser of the good- will of a 03 ^'-. 
 business acquires the right not only to represent him- L -• 
 
 self as the successor of those who formerly carried it 
 on (6), but also to use the old name (c) and to pre- 
 vent other persons from doing the like (d). If then 
 the good-will of a partnership business has any saleable 
 value at all, it seems impossible to hold that on a dis- 
 solution of a partnership, whether by death or other- 
 
 (y) See Smith r. Everett, 27 Beav. 446; Mellersh v. Keen, ib. 
 236, and 28 ib. 453; Wedderburn v. Wedderburn, 22 Beav. 104. 
 See, however, Farr v. Pearce, 3 Madd. 74, and Hammond v. 
 Douglas, 5 Ves. 539, contra. The last case cannot be regarded 
 as now law. 
 
 (z) See Farr v. Pearce, 3 Madd. 74; Davies v. Hodgson, 25 
 Beav. 177; Mellersh v. Keen, 27 Beav. 236, and 28 ib. 45:;. 
 
 (a) See infra. An agreement to pay out a retiring partner 
 the value of his share, as shown by the last annual account, does 
 not entitle him to have the goodwill valued, Stewart v. Glad- 
 stone, 10 Ch. D. 626. Compare Wade v. Jenkins, 2 Giff. 509, 
 infra, p. 448. 
 
 (b) Churton v. Douglas, Johns. 174, ante, p. 441. 
 
 (c) Levy v. Walker, 10 Ch. D. 436. 
 
 (d) See the last two notes.
 
 518 PARTNERSHIP ARTICLES. 
 
 Bk. III. wise, any partner can continue the old business in the 
 
 Chap. 9. Sect. ]^ name for his own benefit, unless there is some 
 
 J agreement to that effect, or at least to the effect that 
 
 the assets are not to be sold. Such a right on his part 
 is inconsistent with the right of the other partners to 
 have the good -will sold for the common benefit of all. 
 There are, however, authorities tending to show that, 
 • in the case of death, the surviving partners are enti- 
 tled to continue to carry on business in the old 
 name (e), and to restrain the executors of the deceased 
 partner from doing the like (/). But if these cases 
 are carefully examined, they will be found scarcely to 
 Webster v. warrant so general a proposition. In Webster v. Web- 
 Webster. s f er (g^ ^he executors of a deceased partner sought to 
 restrain the surviving partners from carrying on busi- 
 ness in the name of the old firm; but the application 
 was based upon the untenable ground that by so doing 
 the surviving partners exposed the estate of the de- 
 ceased partner to continued liability. No question of 
 Lewis v. good-will appears to have been in dispute. In Lewis v. 
 
 Langdon. Langdon (h), the V. -C. Shadwell certainly intimated 
 his opinion to be, that surviving partners had a right to 
 continue to carry on business in the old name (i); but 
 the real question there was, whether the executors of a 
 deceased partner were entitled to continue the use of that 
 name; and it was held that they were not, which is 
 quite consistent with the absence of the same right on 
 the part of the surviving partner. There seems, more- 
 [ *4461 over, to have been some agreement * not set out in the 
 report (A;), which influenced the judge's decision; and 
 at the time it was pronounced the doctrine that good- 
 will is, if saleable, a partnership asset, was not so well 
 established as it is at present. 1 
 
 (e) Webster v. Webster, 3 Swanst. 490; Lewis v. Langdou, 7 
 Sim. 421 ; Robertson v. Qniddington, 28 Beav. 536; Banks v. 
 Gibson, 34 Beav. 566. 
 
 (/) Lewis v. Langdon, 7 Sim. 421. 
 
 (g) 3 Swanst. 490. 
 
 (*) 7 Sim. 421. 
 
 {i) See, too, per Lord Romilly, in 28 Beav. 536. 
 
 (k) See the last line in 7 Sim. 425. 
 
 1 In Iowa Seed Co. v. Dorr (Iowa), 30 N. W. Rep. 866 (1886), the 
 business had been carried on under a firm name identical with 
 that of one of the partners, and the seeds sold in packages 
 marked with that name had acquired considerable reputation. 
 This firm failed and the assignee for the benefit of its creditors 
 sold its good-will. The partner, whose name had become identi- 
 fied with the old business, started in the same line of business 
 again, using his own name. The court refused to prevent this . 
 at the instance of the purchaser of the good-will.
 
 USUAL CLAUSES. 519 
 
 In considering this question, the right of a late part- Bk. III. 
 ner not to be exposed to risk by having his name con • Chap. 9. Sect. 
 
 tinued in a business must not be forgotten (I) ; and 11 . 
 
 where his name is part of the name of the firm e. g., if Continued 
 his name is A. B., and the name of the firm is A. B. & Co., use ot name 
 so long as he lives he would, it is apprehended, in the on one"oftwo 
 absence of an agreement to the contrary, be entitled to grounds. 
 restrain his late co-partners and their representatives 
 from carrying on business under the old name, and so 
 continually exposing him to risk. 1 But a sale by him 
 of his interest in the good will includes the right to use 
 the old name even if it is his own (m). The right of a 
 late partner to prevent the continued use of his own 
 name on the ground of exposing him to risk is a purely 
 personal right, and does not devolve either on his ex- 
 ecutors or on his trustee in bankruptcy, for they would 
 not be exposed to risk. 2 Their right, and indeed the 
 right of any partner whose name does not appear in the 
 name of the firm, to prevent the continuance of the use 
 of the name of the firm, can only be maintained upon 
 the ground that such right is involved in th« more gen- 
 eral right of having the partnership assets, including 
 the good-will, sold for the common benefit. And if 
 upon a dissolution this right is waived, or if the terms 
 of dissolution are such as to preclude its exercise, 
 then each partner can not only carry on business in 
 competition with the others, but each can represent 
 himself as late of, or as successor to, the old firm : and 
 each may use the old name without qualification (n); 
 at all events if he does * not hold out the other partners [ * 447] 
 as still in partnership with himself (o), 
 
 The use of a partnership trade mark is another very Good-will in 
 
 important element in the good-will of its business. A connectlon 
 . "\vitii trucic 
 
 partnership trade mark is an asset of the firm, salea- marks. 
 
 (?) See Routh v. Webster, 10 Beav. 561 ; Bullock v. Chapman, 
 2 De G. & Sin. 211 ; Troughton v. Hunter, 18 Beav. 470. See, 
 also, Hodges v. London Trams Omnibus Co., 12 Q. B. D. 105. 
 
 (m) Levy v. Walker, 10 Ch. D. 436 ; Banks v. Gibson, 34 Beav. 
 566. Note in the first of these, Miss Charbonnel having married 
 and changed her name, was not in fact held out as a partner. 
 
 (n) See Banks?-. Gibson, 34 Beav. 566, and the cases cited in 
 the last four notes. See, as to describing oneself as late with 
 or from another, Glenny i\ Smith, 2 Dr. & Sin. 476. 
 
 (o) Even this qualification is doubtful. See Levy v. Walker, 
 10 Ch. D. 436. 
 
 1 Morgan v. Schuyler, 79 N. Y. 490 (1880); McGowan Bros. 
 Pump & Mach. Co. k. McGowan, 22 Oh. St. 370 (1872). 
 ''Staats v. Howlett, 4 Den. 559 (1847).
 
 520 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 
 Chap. 9. Sect. 
 2. 
 
 Valuation of 
 good- will. 
 Agreements 
 as to paying 
 for good-will 
 on retire- 
 ment, &c. 
 
 Austen v. 
 Boys. 
 
 [*448] 
 
 ble on a dissolution like any other asset (p). 1 The 
 partnership name may be a trade mark (q) 2 
 
 Good-will is generally valued at so many years' pur- 
 chase on the amount of profits. 
 
 In framing articles of partnership, too great care 
 cannot be taken to express as clearly as possible what 
 is intended to be done with respect to good- will; and 
 in order to avoid all ambiguity, the word itself should 
 be made use of. There are cases which show that an 
 agreement to take a retiring partner's share in the 
 property and effects of the partnership (r), or in the 
 partnership premises (s), do not entitle him to any- 
 thing in respect of good-will. But in another case a 
 clause authorizing a surviving partner to take the stock 
 of the partnership at a valuation was held to entitle 
 the executors of a deceased partner to a share of the 
 value of the good-will of the partnership, and of a 
 trade-mark belonging to it (t). 
 
 When an agreement is entered into, to the effect that 
 a retiring partner shall be entitled to be paid for his 
 interest in the good will of the firm, it is material to 
 determine whether the firm is to be regarded as of defi- 
 nite or of indefinite duration. For upon this will de- 
 pend the amount to be paid to the retiring partner. 
 
 In Austen v. Boys (u), a partnership was entered 
 into for seven years, with power for any partner to re- 
 tire. In case of * retirement the retiring partner was 
 to be paid by the continuing partners the fair market 
 value of his interest and share in the partnership busi- 
 ness, and in the good-will thereof. Two days before 
 the expiration of the seven years, one of the partners 
 retired, and the question'arose, whether in ascertaining 
 the value of his interest in the good-will of the busi- 
 ness, the partnership business was to be considered as 
 
 (p) See Bury v. Bedford, 4 De G. J. & Sm. 352 ; Hall v. Bar- 
 rows, 4 De G. J. & Sm. 150. Trade marks registered under 46 
 & 47 Viet. c. 57, # 70, are only assignable with the good-will of 
 the business, see Welleome's Trade mark. 32 Ch. D. 213. 
 
 (g) 46 & 47 Vict. c. 57. \ 64. See ante, book i. ch. 6, £ 2. 
 
 (r) See Hall v. Hall, 20 Beav. 139 ; Kennedy v. Lee, 3 Mer. 
 452. 
 
 (s) Burfiekl v. Rouch, 31 Beav. 241. Compare Blake v. Shaw, 
 Johns. 732. 
 
 (t) Hall v. Barrows, 4 De G. J. & Sm. 150. 
 
 (m) 24 Beav. 598, affirmed 2 De G. & J. 626. 
 
 1 If undisposed of at dissolution, each partner may continue to 
 use it. Hazard v. Caswell, 93 N. Y. 259 (1883) ; Smith v. Walker, 
 57 Mich. 456 (1885). 
 
 2 It will be protected from infringement by strangers. Bell v. 
 Locke, 3 Paige, 75 (1832).
 
 USUAL CLAUSES. 521 
 
 continuing, or as ending at the expiration of the seven Bk. III. 
 years. It was held that the good- will to be valued, was ^hap. 9. Sect. 
 
 the good-will of a business ending with the seven years, 11 
 
 and that therefore the retiring partner's interest in it 
 was nominal merely. 
 
 In Wade v. Jenkins (x), partnership articles stipu- Wade v. 
 lated that the good-will should be deemed to be of the Jenkins, 
 value of 6000Z. and should belong to the partners in 
 the proportions in which they were entitled to the capi- 
 tal, but that the value of the good-will should not be 
 taken into account ia any of the accounts between the 
 partners. On the death of one of the partners it was 
 held that he was entitled to a share of the good-will; 
 and that the last-mentioned stipulation only applied to 
 the accounts taken during the continuance of the part- 
 nership. 
 
 In Turner v. Major (y), partners agreed to dissolve Turner v. 
 and to have the assets and good-will sold by two per- Major, 
 sons selected by them; an injunction was granted to 
 restrain one of the partners from violating this agree- 
 ment, by carrying on business on his own account be- 
 fore the good-will of the partnership had been dis- 
 posed of. 
 
 19. Getting in debts. — When a firm is dissolved, it 19. Getting in 
 is usual to appoint one of the partners, or some third debts on dis- 
 person, to collect and get in the debts of the firm. But solution, 
 notwithstanding any such arrangement and notice 
 thereof, a debtor to the firm will be discharged if he 
 pays to any one of the partners (z). Effect, however, 
 will be given by the Court to an agreement of the na- 
 ture in question, by appointing a receiver, and, if neces- 
 sary, granting an injunction (a). If the agreement is 
 under seal and is broken, an action for damages may 
 be * brought upon it (6). But it has been held that [ *-14:9] 
 an agreement not under seal entered into between two 
 members of a dissolved partnership, to the effect that 
 one of them shall get in the debts of the firm, and pay 
 what he shall receive in respect thereof to his co- part- 
 ner, is not an agreement on which the latter can main- 
 tain any action for damages in case the debts are got 
 in, and the money received on account of them is not 
 paid over; for it is said there is no consideration for 
 
 (x) 2 Giff. 509. Compare Steuart v. Gladstone. 10 Ch. I). 626, 
 where there was no clause specially applicable to good-will. 
 (y) 3 Giff. 442. 
 (2) Ante, p. 134. 
 (a) Davis v. Amer, 3 Drew. (il. 
 (i) As in Belcher v. Bikes, SU.&C, 185.
 
 522 
 
 PARTNERSHIP ARTICLES. 
 
 Bk. III. 
 Chap. 9. Sect. 
 3. 
 
 Getting in 
 debts when 
 one firm 
 succeeds 
 another. 
 
 20. Assign- 
 ment of 
 share, &c, 
 by retiring 
 partner. 
 
 [ * 450] 
 Assignment 
 of debts. 
 
 Stamp on 
 assignment 
 
 such an agreement (c). But it seems to have been ad- 
 mitted, in the case in which this was decided, that if 
 the partner to whom the money when received is to be 
 paid agrees that he will take no steps to collect the 
 debts himself, that will be a sufficient consideration to 
 support the promise to pay. 
 
 When a partner retires, on the terms that the con- 
 tinuing partners are to get in the old debts, and that 
 such debts, when got in, are to be taken into account in 
 ascertaining the share of the retiring partner, the latter 
 will have a right to charge the continuing partners with 
 whatever debts they may choose to take to themselves 
 and not get in. As observed by Lord Romilly : "If 
 continuing partners who are bound to get in debts be- 
 longing to an old firm, think fit to enter into a new 
 agreement with the debtors of the old firm, by which 
 those debtors become the debtors of the new firm, and 
 the debts of the old firm become merged in that of the 
 new firm by a security taken for the aggregate debt, 
 such contimiing partners are liable to the retiring part- 
 ners for the amount of the old debt as one of the assets 
 received by them" (d). 
 
 20. Assignment of share, &c. — When a partner re- 
 tires or dies, and he or his executors are paid what is 
 due in respect of his share, it is customary for him or 
 them formally to assign and release his interest in the 
 partnership, and for the continuing or surviving part- 
 ners to take upon themselves the payment of the out- 
 standing debts of the firm, and to indemnify their late 
 partner or his estate, from all such debts. 
 
 * An assignment of all the partnership stock, debts, 
 sums 'of money, and all other the personal estate and 
 effects of the assignors as partners, did not before the 
 Judicature acts give the assignees a right to sue one of 
 the assignors for a debt due from him to the partner- 
 ship (e). But if one of the assignors after the execu- 
 tion of the deed releases a debt which has been as- 
 signed, or negotiates a bill held by the firm, he becomes 
 liable to an action, for he has no right to derogate from 
 his own grant (/). 
 
 An assignment by a partner of his share and inter- 
 est in the firm to his co-partners, in consideration of 
 
 (c) See Lewis v. Edwards, 7 M. & W. 300, where such an 
 agreement was come to between a solvent partner and the as- 
 signees of a bankrupt partner. 
 • {d) Lees v. Laforest, 14 Beav. 262. 
 
 (e) See Aulton v. Atkins, 18 C. B. 249. 
 
 (f ) Aulton v. Atkins, 18 C. B. 249.
 
 USUAL CLAUSES. 523 
 
 the payment by them of what is due to hirn from the Bk. III. 
 firm, is regarded as a sale of property within the mean- Chap. 9. Sect. 
 
 ing of the Stamp acts ; and consequently the deed of J . 
 
 assignment requires an ad valorem stamp (g). But if by outgoing 
 the retiring partner, instead of assigning his interest, P artQ er. 
 takes the amount due to him from the firm, gives a re- 
 ceipt for the money, and acknowledges that he has no 
 more claims on his co-partners, they will practically ob- 
 tain all they want ; but such a transaction, even if car- 
 ried out by deed, could hardly be held to amount to a 
 sale ; and no ad valorem stamp it is apprehended 
 would be payable (h). 
 
 21. Indemnity to outgoing partner. — An indemnity 21. Usual in- 
 is ordinarily given by a bond or covenant entered into dernnity. 
 by the continuing or surviving partners, in considera- 
 tion of the assignment to them of all the share and in- 
 terest of the retiring or deceased partner. The bond 
 or covenant should be joint and several {%). The ef- 
 fect of such a bond or covenant is to render a retiring 
 partner, as between himself and his late co-partners, 
 a surety only for the payment of the partnership debts(fc) ; 
 * and to render him their specialty creditor if, notwith- [ * 451] 
 standing their indemnity, he is compelled to pay those 
 debts (I). 1 
 
 (g) Christie v. Commissioners of Inland Revenue, L. R. 2 Ex. 
 46 ; Phillips v. Same, ih. 399 ; Potter *. The Commissioners of 
 Inland Revenue. 10 Ex. 147. These cases overrule Belcher v. 
 Bikes, 6 B. & C. 234. 
 
 (h) In Steer v. Crowley, 14 C. B. N. S. 337, a release by the 
 executors of a deceased partner did not state the consideration, 
 and bore only a common deed stamp ; and it was held that the 
 deed was a good document of title, although some penalty 
 might be payable by the parties to it, or by their solicitors for 
 not stating the consideration. 
 
 (i) See, as to this, ante p. 196. 
 
 (k) Rodgers v. Maw, 4 Dowl. & L. 66 ; Oakley v. Pasheller, 4 
 Gl. &Fin. 207, ante p. 251. 
 
 (?) Musson v. May, 3 V. & B. 194. 
 
 1 A covenant to apply the assets received to the payment of 
 the firm's debts does not bind the covenantor to pay the out- 
 standing debts to any extent further than the assets suffice, Top- 
 liff v. Jackson, 12 Gray 565 (1859); such a covenant makes the 
 continuing partner a trustee. Marsh v. Bennett, 5 McLean 117 
 (1850). A covenant to release a retiring partner from all liabil- 
 ities amounts to a covenant to pay the debts, Griffith v. Buck, 
 13 Md. 102 (1858). The covenantee can bring his action on a 
 covenant to pay the firm's debts immediately on non-payment, 
 although he may not have been vol obliged t<> pavany debts him- 
 self, Ham v. Hill, 29 Mo. 275 (1860); Lathrop v. Atw 1,21 
 
 Conn. 117(1851); Farnsworthv. Boardman, 131 Mass. L15(1881). 
 If the covenant be to indemnify or bold harmless the retiring 
 partner against the firm's liabilities, it is necessary before he
 
 524 
 
 PARTNERSHIP ARTICLES. 
 
 Effect of 
 express in- 
 demnity on 
 lien. 
 
 Ke Lang- 
 mead's 
 trusts. 
 
 Bk. III. It is to be observed, that in the absence of any agree- 
 
 Chap. 9. Sect. ment to ^at effect, a retiring partner or the executor 
 
 ~ of a deceased partner has no right to an indemnity 
 
 Right to in- from the other partners, except so far as he may be en- 
 deninity. titled to have the assets of the firm applied in payment 
 of its debts, and to enforce contribution in case he has 
 to pay more than his share of those debts. But if all 
 the assets of the firm are assigned to the continuing or 
 the surviving partners, it is only fair that they should 
 undertake to pay its debts: and if it appears that it 
 was the intention of all parties that they should do so, 
 effect will be given to such intention, although the un- 
 dertaking on their part is not explicit in its terms (m). 
 When a retiring partner assigns his interest in the 
 partnership assets, and obtains from the continuing 
 partners a covenant of indemnity, his lien on the part- 
 nership assets seems to be at an end. In Re Lang- 
 mead's trusts (n) the assignment was made expressly 
 subject to the payment of the retiring partner's share 
 of the partnership debts. The continuing partner be- 
 came bankrupt; and the retiring partner's executors 
 ■were compelled to pay the unsatisfied partnership debts. 
 It was nevertheless held that they had no lien on the 
 specific assets of the old firm, but were confined to their 
 remedy on the covenant for indemnity. 
 
 22. Arbitration clauses. — With respect to these, it is 
 to be observed: — 
 
 1. That an agreement to refer to arbitration is one 
 which a court will not decree to be specifically per- 
 formed (o); ' and 
 
 2. That it is one which (independently of the Com- 
 mon law procedure act of 1854) cannot be effectually 
 set up as a defence to any action relative to a matter 
 
 [ *452] agreed to be * referred (p); 2 unless, indeed, the refer- 
 ence has been expressly made a condition precedent to 
 
 (m) See Saltoun v. Honstoun, 1 Bing. 433. 
 
 (n) 7 De G. M. & G. 333. See, too, Lingen v. Simpson, 1 Sim. 
 & Stu. 600. See, ante, pp. 354, 355. 
 
 (o) Agar v. Macklew, 2 Sim. &Stu. 418; Street v. Rigby, 6 Yes. 
 818. An action will lie for not referring in pursuance of an 
 agreement so to do, Livingston v. Ralli, 5 E. & B. 132. See, 
 generally. Fry, Spec. Perf. eh. 8 (ed. 2). 
 
 {p) Dawson v. Fitzgerald, 1 Ex. D. 257; Edwards r. Aberay- 
 ron, &c., Soc, 1 Q. B. D. 5G3; Cooke V. Cooke, 4 Eq. 77; and the 
 older cases referred to theie. 
 
 can bring his action on the covenant, that he be actually dam- 
 aged by having to pay the debts, Gilbert r. Wiman, 1 N. Y. 
 550 (1848); Carter r. Adamson, 21 Ark. 287 (1860). 
 
 1 Page v. Vankirk, 6 Phila. 264 (1867). 
 
 2 Meaner v. Cox, 3? Ala. 201 (1861). 
 
 22. Arbitra- 
 tion clauses.
 
 USUAL CLAUSES. 525 
 
 the right to sue (q). At the same time a Court -will some- Bk. III. 
 times decline to interfere between partners who have Chap. 9. Sect. 
 
 agreed that their disputes should be referred to arbitra- 
 
 tion, and who have not attempted so to settle them (r). 
 
 By 17 & 18 Vict. c. 125, which contains several im- 17 & is Vict, 
 portant provisions respecting agreements to refer to c. 125, § 11. 
 arbitration, it is amongst other things (by § 11) en- 
 acted that, — 
 
 "Whenever the parties to any deed or instrument in writing 
 to be hereafter made or executed, or any of them, shall agree (s) 
 that any then existing or future differences between them or any 
 of them shall be referred to arbitration, and any one or more of 
 the parties so agreeing, or any person or persons claiming through 
 or under him or them, shall nevertheless commence any action 
 at law or suit in equit} r against the other party or parties, or any 
 of them, or against any person or persons claiming through or 
 under him or them, in respect of the matters so agreed to be referred, 
 or any of them, it shall be lawful for the court in which action 
 or suit is brought, or a judge thereof, on application by the de- 
 fendant or defendants, or any of them, after appearance, and be- 
 fore plea or answer, upon being satisfied that no sufficient reason 
 exists why such matters cannot be or ought not to be referred to 
 arbitration according to such agreement as aforesaid, and that 
 the defendant was at the time of the bringing of such action or 
 suit and still is ready and willing to join and concur in all acts 
 necessary and proper for causing such matters so to be decided 
 by arbitration, to make a rule or order staying all proceedings 
 in such action or suit, on such terms, as to costs and otherwise, 
 as to such court or judge may seem fit: Provided always that 
 any such rule or order may at any time afterwards be discharged 
 or varied as justice may require." 
 
 The section does not apply where a submission to re- 
 fer has been revoked before action (t). 
 
 (q) See Scott v. Avery, 5 H. L. C. 811; Halfhide r. Fenning. 2 
 Bro. C. C. 336. The last case is generally regarded as overruled, 
 but quaere whether it is not capable of being supported on the 
 principle recognised in Scott v. Avery. See the observations of 
 Lord St. Leonards in Dimsdale v. Robertson, 2 Jo. & Lat. 91, 
 and of V.-C. Wood in Cooke v. Cooke, 4 Eq. 77. 
 
 (r) Waters v. Tavlor, 15 Ves. 10. 
 
 (») In Blyth r. 'Lafone, 1 E. & E. 4:;."). it was held that the 
 agreement to refer must be contained in the instrument on which 
 the dispute arises. But this has been overruled. See Randell, 
 Saunders, and Co. v. Thompson, 1 Q. B. D. 748, and Mason v. 
 Haddan, 6 C. B. N. S. 525. 
 
 (t) Randell, Saunders, and Co. v. Thompson. 1 Q. B. D. 748. 
 See. also, Deutsche Springstofi Actien Gesellschaft v. Briscoe, 20 
 Q. B. D. 177.
 
 526 PARTNERSHIP ARTICLES. 
 
 [*453] *The Court will decide whether the matters in dis- 
 
 Bk. III. pute are or are not within the arbitration clause (u). 
 
 Chap. 9. Sect. g u ^ even jf they are, the section is not imperative ; and 
 
 ~ . the Court in the exercise of its discretion has declined 
 
 to interfere where there were several matters in dispute, 
 some only of which were within the agreement to re- 
 fer (v); where one of the parties had become bank- 
 rupt (x) where there was a bond fide suggestion of 
 fraud (y); where there was really no question in dis- 
 pute, and the defendant's only object was delay (z); 
 where the object was to stop a suit, and not really to 
 settle a dispute, which the defendant desired to refer 
 before the suit was commenced (a). 
 
 Where, however, there is a bond fide dispute within 
 the meaning of an agreement to refer, and there is no 
 satisfactory reason why such dispute should not be 
 settled by arbitration, legal proceedings will be 
 stayed (6); even although the agreement to refer is 
 contained in articles of partnership for a term of years 
 which has expired (c). 
 
 In one case the Court refused to interfere where the 
 plaintiff sought to have a partnership dissolved, and to 
 have a receiver appointed, on the ground of the de- 
 fendant's misconduct (d); but this case has not been 
 followed (e); nor is there any reason why the Court 
 should not appoint a receiver, if necessary, pending the 
 arbitration (f). 1 
 \ * 454] * Under a general submission by partners of all 
 
 Power of matters in difference between them, an arbitrator may 
 
 arbitrator. . 
 
 (u) See Piercy v. Young, 14 Ch. D. 200. 
 
 (v) Wheatley v. Westminster. &c., Coal Co., 2 Dr. & Sm. 347. 
 (») Pennell v. Walker, 18 C. B. 651. 
 
 (y) Wallis v. Hirsch, 1 C. B. N. S. 316. Compare Russell v. 
 Russell, 14 Ch. D. 471, where the party complaining of fraud 
 resisted arbitration. 
 
 (z) Lury ?j. Pearson, 1 C. B. N. S. 639. The true grounds of 
 this decision appear to have been those stated above, but the 
 report is obscure. 
 
 (a) Corcoran v. Witt, 8 Ch. 476 n., explained in 16 Eq. 571. 
 
 (b) As in Russell v. Russell, 14 Ch. D. 471, where notice to dis- 
 solve had been given; Law v. Garrett, 8 Ch. I). 26, where th« 
 agreement was to refer to a foreign tribunal ; Plews r. Baker, 16 
 Eq. 564 ; Willesford v. Watson, 8 Ch. 473, and 14 Eq. 572 ; Ran- 
 degger v. Holmes, L. R. 1 C. P. 679 ; Seligmann v. Le Boutillier, 
 ib. 681 ; Russell v. Pellegrini, 6 E. & B. 1020: Hirsch v. Im 
 Thurn, 4 C. B. N. S. 569. 
 
 (c) Gillett v. Thornton, 19 Eq. 599. 
 
 \d) Cook v. Catchpole, 10 Jur. N. S. 1068. 
 
 (e) Plews v. Baker, 16 Eq. 564 ; Gillett v. Thornton, 19 Eq. 599. 
 
 ( f) See as to this, infra, note (o). 
 
 1 Page v. Vankirk, 6 Phila. 264 (1867).
 
 USUAL CLAUSES. 527 
 
 dissolve the partnership {g); and may order one part- Bk. ITT. 
 ner to pay or give security for the payment of a certain Chap. 9. sect. 
 
 sum to the other (h) ; and apportion the assets between 11 
 
 them (i); 1 and order conveyances to be made (k)\ and 
 direct one partner to sue in the name of himself and 
 others, and give them a bond of indemnity (I): and 
 restrain one partner from carrying on business within 
 certain limits (m); and direct mutual releases to be 
 executed (n). It seems, however, that the arbitrator 
 cannot appoint a receiver to collect and get in the 
 partnership assets and credits (o); nor direct one of 
 the partners to pay money to him (the arbitrator) in 
 order that he may apply it in payment of certain speci- 
 fied debts (p). It has also been held that an arbitrator 
 cannot enter into the question whether any part of a 
 premium paid on entering into the partnership shall 
 be refunded, unless the submission pointedly raises 
 that question for determination (q). 
 
 23. Penalties and liquidated damages. — The last 23. Penalties, 
 clause in a partnerseip deed is often one by which each &c > 
 partner binds himself to pay, either by way of penalty or 
 by way of liquidated damages, a certain sum in case of the 
 infringement by him of any agreement contained in the 
 previous clauses. A stipulation that on the breach of any 
 agreement in the articles, a sum * shall be paid by way [ * 455] 
 of penalty is of little real use, and is sometimes worse 
 than useless, for the sum mentioned will not be pay- 
 able unless damage to its amount can be proved (r); 
 and on the other hand the penalty generally limits the 
 
 (g) Green v. Waring, 1 W. Blacks. 475 ; Hutchinson v. Whit, 
 field, Hayes, Ir. Ex. 78. Simmonds r. Swayne, 1 Taunt. 549- 
 shows that a dissolution need not be awarded. 
 
 (h) Simmonds v. Swaine, 1 Taunt. 549. 
 
 (i) Lingood v. Eade, 2 Atk. 505 ; Wood i Wilson 2 Cr. M. & 
 R. 241 ; Wilkinson v. Page, 1 Ha. 276. 
 
 (fc) Wood v. Wilson, 2 Cr. M. & R. 241. 
 
 (I) Burton v. Wigley, 1 Binsj. N. C. 665 ; and see Goddard v. 
 
 Mansfield, 19 L. J. Q. B. 305 f Philips v. Knightley, 2 Str. 903. 
 
 in \ Morley v. Newman, 5 D. & R. 317. In Burton v. Wigley, 
 
 1. Bing. N. C. 665, the award permitted a partner to carry on 
 
 business, although the articles provided for his not doing so. 
 
 (n) Lingood v. Eade, 2 Atk. 505, where the arbitrator directed 
 such releases to be settled bv a Master in Chancer, v. 
 
 (o) Lingood v. Eade, 2 Atk. 505 ; Re Mackay, 2 A. & E. 356. 
 But a receiver was appointed in Routh v. Peach, 2 Anstr. 519, 
 and 3 ib. 637. 
 
 (p) Be Mackay, 2 A. & E. 356. 
 
 (q) See Tattersall v. Groote, 2 Bos. & P. 131. 
 
 (r) See the note to Gainsford v. Griffith, 1 Wins. Saund. 57. 
 
 1 Lamphire v. Cowan, 39 Vt. 420 (1867).
 
 528 PARTNERSHIP ARTICLES. 
 
 B £" II1- <a compensation which can be obtained, even although 
 Chap. 9. Sect. d arna g e ^ a g rea ter extent has been sustained (s). 
 
 - Moreover, if there are several covenants, and if for any 
 
 breach, however trival, of any of them involving the 
 payment of a small sum of money, it is stipulated that 
 a large sum shall be paid byway of liquidated damages, 
 the stipulation is always construed as a stipulation for 
 payment of the larger sum by way of penalty (t ). An 
 agreement to pay a definite sum as liquidated damages 
 in certain specified events, e. g., on carrying on business 
 within prescribed limits, may no doubt prove useful (u) ; 
 but even in these cases care must be taken not to make 
 the contract alternative ; for if it is and the stipulated 
 sum is paid, a court will not interfere by injunction (x). 
 The mere existence of an agreement for liquidated 
 damages does not, however, necessarily make a con- 
 tract alternative, and preclude such interference (y). 
 
 (s) See Clarke v. Ld. Abingdon, 17 Ves. 106. 
 
 (t) See Wallis v. Smith, 21 Ch. D. 243, where all the older 
 cases are reviewed. See, also, Elphinstone v. Monkland Iron 
 and Coal Co., 11 App. Ca. 332. 
 
 (m) Atkyns v. Kinnier, 4 Ex. 776 ; Beynolds v. Bridge, 6 E. & 
 B. 528, may he referred to as examples. See, too, The East India 
 Co. v. Blake, Finch. 117, where it was held that though a court 
 of equity would relieve against a penalty, it would not relieve 
 against payment of liquated damages. 
 
 (x) Sainter v. Ferguson, 1 Mac. & G. 286 ; Woodward r. Gvles ; 
 2 Vern. 119. 
 
 (y) French v. Macale, 2 Dr. & War. 269 ; Coles v. Sims, 5 De 
 G. M. & G. 1 ; and see Avery v. Langford, Kav, 663 ; Clarkson 
 v. Edge, 33 Beav. 227.
 
 ACTIONS BETWEEN PARTNERS. 529 
 
 * CHAPTER X. [* 456 1 
 
 OF ACTIONS BETWEEN PARTNERS. 
 
 Section I. — General Observations. 
 
 1. Law before the Judicature acts. 
 
 The mutual rights and obligations of partners hav- Bk. III. 
 ing been examined, it is proposed in the next place to Chap. 10. 
 consider the means by which those rights and obliga- Sect - 1 - 
 tions can be enforced. 
 
 It has been already seen (Bk. ii., c. 3) that before the Legal pro- 
 Judicature acts there was no method by which an or- ceedings 
 dinary firm could sue or be sued by any of its members, between 
 either at law or in equity ; for the firm, as distinguish- par ners ' 
 ed from the persons composing it, had no judicial exis- 
 tence. All proceedings, therefore, which had for their 
 object the enforcement of the mutual rights and obli- 
 gations of partners, had to be taken by some or one of 
 the members of a firm individually against some others 
 or other of them also individually. The conse- 
 quences of this rule were important, for it followed 
 from it — 
 
 1. That no action at law could be brought by one 
 partner against another for the recovery of money or 
 property payable to the firm as distinguished from the 
 partner suing ; 
 
 2. That no suit in equity was maintainable by one 
 partner against another with respect to a matter in- 
 which the firm was interested, without bringing all the 
 members thereof before the court. This rule was sub- 
 ject to exceptions, as will be seen hereafter ; but it was 
 established as a rule, and flowed from the non-recogni- 
 tion of the firm. 
 
 Moreover, until the law was altered by 31 & 32 Vict, 
 c. 116, no criminal prosecution was sustainable by one 
 partner against * another for stealing the property of[*457] 
 
 * 11 LAW OF PARTNERSHIP.
 
 530 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. the firm (a). 1 But this inconvenience has been remov- 
 
 Chap. 10. e( j ^y ^ e a bove mentioned statute (b). 
 
 L The inability of a firm to sue one of its members, 
 
 and vice versa, arose from the circumstance, that in an 
 action by a firm against one of its members, or vice 
 versa, the member in question must be both a plaintiff 
 and a defendant. Practically it is often extremely incon- 
 venient to have recourse to the intervention of a trustee, 
 and to procure agreements to be made with him so as 
 to enable him to sue and be sued thereon. But, in- 
 convenient as this was, it was only through the inter- 
 vention of a trustee that agreements between partners 
 and the firms to which they belonged, could be so en- 
 tered into as to be enforceable by action at law (c). An 
 agreement by each partner with his co-partners might 
 indeed be framed so ( as to enable one to be sued by the 
 others, if care was taken to exclude the partner sued 
 from all share in what was sought to be recovered from 
 him, and to exclude the partner suing from all obliga- 
 tion to contribute to his own payment (d); but an 
 [ * 458] agreement drawn * so as to accomplish both these ob- 
 jects; was not generally convenient. 
 
 (a) In R. v. Warburton, L. R. 1 Cr. Ca. Res. 274, it was held 
 that a partner might be convicted of conspiring with others 
 to defraud his co- partner by falsifying the accounts of the tirm, 
 and thereby, in effect, robbing his co-partner. But in R. v. 
 Evans, 9 Jur. N. S. 184, a partner who misrepresented the part- 
 nership accounts, and thereby obtained more than his share of 
 money, was held not liable to conviction for obtaining money 
 Trader false pretences ; and in R. v. Loose, 29 L. J. M. C. 132, 
 R. v. Marsh, 3 Fos. & Fin. 523, R. v. Bren, 3N. R. 176. members 
 of friendly societies indicted for stealing the monies of the so- 
 cieties were held not liable to conviction. However, in R. v. 
 McDonald, 7 Jur. N. S. 1127, a servant who was paid a salary 
 and a percentage of profits was convicted of embezzlement ; and 
 in R. v. Burgess, 2 N. R. 85, and in R. v. Webster, 7 Jur. N. S. 
 1208, a member of a friendly society was convicted of larceny, 
 and in R. v. Proud, 10 W. R. 62. of embezzlement. In the last 
 three cases, however, there were special cirsumstances as regards 
 the possession of the money and the trust reposed in the prisoner. 
 A shareholder in a banking company governed by 7 Geo. 4, 
 c. 46, was convicted of embezzling money of the company in R. 
 v. Atkinson, Car. & Marsh. 525. 
 
 (6) See on it, R. v. Smith, L. R. 1 Cr. Ca. R. 266 ; R. v. Rob- 
 son, 16 Q. B. D. 137 ; Roope v. D'Avigdor, 10 ib. 412. 
 
 (c) See Bedford v. Brutton, 1 Bing. N. C. 399 ; as to an action 
 by a partner against the trustees of himself and co-partner. 
 
 (d) Radenhurst v. Bates, 3 Bing. 463. 
 
 'See Napoleon v. State, 3 Texas App. 522 (1878). In Jones?-. 
 State, 76 Ala. 8 (1884) one partnershot another while the latter 
 was attempting to remove the firm's money from a certain draw- 
 er, but this circumstance was held not to reduce the defendant's 
 crime from murder to manslaughter.
 
 GENERAL OBSERVATIONS. 531 
 
 It was not, however, competent for partners to estab- Bk. III. 
 lish, even as amongst themselves, a rule that some Chap. 10 - 
 officer, e. g., the treasurer or secretary of the firm for ' 
 
 the time being, should, as it were, represent the firm Stipulation 
 and sue and be sued on its behalf accordingly. Consis- tnat 
 tently with the established law, effect could not be given ^c^iorVime 
 to such a rule, and it was simply nugatory (e). The being shall 
 consequences of this doctrine when applied to compa- sue. 
 nies were extremely serious. 
 
 2. Effect of Judicature acts. 
 
 The general effect of the Judicature acts, so far as Effect of the 
 they relate to legal proceedings by partnerships, has Judicature 
 been already investigated (Bk. ii., c. 3); and it was then acts ' 
 seen that a firm can now sue and be sued in its mercan- 
 tile name ; that where parties are numerous and have a 
 common interest, some of them may sue and be sued 
 on behalf of all in respect thereof. Further, there is 
 now the same facility in arranging parties to actions 
 in all divisions of the High Court as there was formerly 
 in arranging parties to suits in equity ; and the fact 
 that an account has to be taken in order to ascertain 
 what is due from one party to another is no longer any 
 reason why an action by one against the other should 
 fail ; at most, such a circumstance may render it ex- 
 pedient to transfer the action from one division of the 
 High Court to the other at some stage of the action. Nor 
 is there any danger now of an action for an account 
 being held unsustainable on the ground that an action 
 for damages is the proper remedy (/). 
 
 With respect to actions by the firm, it has been Actions by 
 already * pointed out that the name of the tirmisonly [ * 459] 
 a compendious expression, for denoting the individuals and against 
 composing the firm when the name of the firm is used. tne firm ' 
 It has not yet been decided whether an action in the name 
 of the firm can be maintained by or against one of its own 
 members ; but the writer sees no difficulty in principle 
 
 (e) Hybart v. Parker, 4 C. B. N. S. 209 ; Evans v. Hooper. 1 Q. 
 B. D. 45; Gray v. Pearson, L. R. 5 C. P. 568. As to Bills of 
 Exchange, sec ante, p. 180, note (a). 
 
 (/) See that the jurisdiction of the Court of Chancery to en- 
 tertain a suit for an account where there was no partnership, 
 trust, or fraud, Smith r. Leveaux, 2 De G. J. & Sin. 1 ; Moxon 
 ». Bright, 4 Ch. 292; Hearings v. Pugh, 4 Giff. 456; Barry v. 
 Stevens, 31 Beav. 258. Sec, also, as t<> claims for mere damages, 
 Great "Western Ins. Co. v. Cunliffe. !» Ch. 525; Duncan v. Lunt- 
 ley, 2 McC. & G. 30 ; Clifford v. Brooke, 13 Ves. 132.
 
 532 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. in supporting such an action ; the firm being regarded 
 
 Chap. 10. for t ke purposes of the action as one collective whole(gr). 
 Sect - 2 - This, however, is comparatively an unimportant mat- 
 
 ter ; for if an action in that form cannot be maintained, 
 it is plain that one partner can sue an other whenever 
 he has legal or equitable rights to be enforced or ad- 
 justed (h). 
 Actions by or With respect to actions by or against some partners 
 against some on behalf of themselves and others, it must be borne 
 on behalf of in m [ n( { that suits in this form have long been familiar 
 in courts of equity, and certain rules respecting them 
 have been settled which are not interfered with by the 
 Judicature acts. These rules will be fully investigated 
 presently. 
 
 others. 
 
 Section II. — Parties to Action Between Parties. 
 1. General rule as to partnership actions. 
 
 General rales In actions between partners not involving any part- 
 as t<» actions nership account or any interference with persons 
 between against whom no relief is sought, the general principles 
 
 partners. applicable to actions generally must be observed (i). 
 
 But partnership disputes usually involve the taking of 
 some account in which all the partners are interested, 
 or the granting of an injunction or the appointment of 
 a receiver, which materially affects them all. Hence, 
 f * 4601 ^ na8 long been a rule in Chancery that where * the 
 number of partners is not great they must all be par- 
 ties to a suit for an account if within the jurisdiction 
 of the court (k), 1 and subject to the question how far 
 the firm can be treated as representing them all, this 
 rule is still in force. 
 
 Upon a similar principle, where a creditor of a firm 
 against estate sought payment of his debt out of the estate of a de- 
 
 of deceased 
 
 partner. {g) Such actions are common in Scotland. 
 
 (h) There may, however, still be difficulties in framing an ac- 
 tion properly as in Robertson r. Southgate, 6 Ha. 536. In that 
 case there was a partnership of three persons, A., B. and C. ; A. 
 retired, B. filed a bill against A. and C. to set aside a fraudulent 
 transaction in which the two defendants had concurred ; then 
 A. and B. became bankrupt ; it was held that the joint assignees 
 of A. and B. could not proceed with the suit against C. 
 (i) Anle, book ii. ch. 3. 
 (k) See Hills v. Nash, 1 Ph. 594. 
 
 1 McKaigf. Hebb, 42 Md. 227 (1874); Arnold v. Arnold, 90 
 N. Y. 580 (1882); Stevenson v. Mathers, 67 111. 123 (1873).
 
 PARTIES. 533 
 
 ceased partner, the surviving partners had to be made Bk. III. 
 
 co-defendants with the executors of the deceased (I). 1 Chap. 10. 
 
 Sect " 
 It follows from the same principle that to an action for 
 
 a dissolution and winding up of an ordinary partner- Actions for 
 ship, all the partners within the jurisdiction must be dissolution. 
 parties (in), 2 and that the representatives of deceased 
 partners must be parties also if they have any interest 
 in the partnership accounts (n). z 
 
 But although in an action for obtaining payment of Action for 
 a proportion of an unascertained sum, all the persons snaie °f 
 interested in that sum must, as a general rule, be par- snm 
 ties, yet where the sum to be divided is ascertained and 
 the shares into which it is divided are also ascertained, 
 an action for the payment of one of those shares may be 
 maintained without making the persons interested in 
 the other shares parties (o). 
 
 So, where the account which is sought is one in Sub-partner- 
 which the partnership is not concerned, it is not neces- sm P- 
 sary or proper to make all the partners parties. If, 
 therefore, a partner has agreed to share his profits with 
 
 (I) Be Hodgson 31 Ch. D. 192; Wilkinson v. Henderson. 1 M. 
 & K. 582. This subject will be examined hereafter. 
 
 (in) Evans v. Stokes, 1 Keen. 24; Richardson v. Hastings, 7 
 Beav. 301; Harvey v. Bignold, 8 ib. 343; Deeks v. Stanhope. 14 
 Sim. 57; Wheeler v. Van Wart, 9 ib. 193; Long v. Yonge. 2 ib. 
 369; Moflat v. Farquharson, 2 Bro. C. C. 338; Ireton v. Lewis, 
 Finch. 96. 
 
 (ft) See Cox v. Stephens. 9 Jur. N. S. 1144, and 2 N. R. 506; 
 Baboo Janokey Doss v. Bindabun Doss. 3 Moo. In. App. 175, 
 and Cawthorn v. Chalie, 2 Sim. & Stu. 127, where it appears that 
 a surviving partner will, if necessary, be constituted the legal 
 personal representative of the deceased. 
 
 (o) See Weymouth v. Boyer, 1 Ves. J. 416; Smith v. Snow. 3 
 Madd. 10. Compare Hills V Nash. 1 Ph. 594. 
 
 1 In America the practice on this point is unsettled. It has 
 been held that since the claim of a creditor against the members 
 of a firm is both joint and several, he may proceed against the 
 estate of a deceased partner without exhausting his remedy 
 against the survivors of the firm. Blair v. Wood, 108 Pa. St. 
 278(1885); Sampson v. Shaw 101 Mass. 145 (1869); Silverman 
 v. Chase, 90 111. 37 (1878); Ralston v. Moore. 105 Ind. 243 (1885). 
 In other cases it has been held that the remedy against the sur- 
 viving partners must be exhausted before any proceedings can 
 be had against the estate of a deceased partner. Pope v. Cole, 
 55 X. Y. 124 (1873); Sherman v. Kreul. 42 Wis. 33 (1877); Fil- 
 ley.w. Phelps, 18 Conn. 294 (1847); Pullen v. Whitefield, 55 Ga 
 174 (1875). 
 
 - Arnold v. Arnold. 90 X. Y. 580 (1882); Fuller r. Benjamin, 
 2:: Me. 255 (1843 ; Wickhara /'. Davis. 2 1 .Minn. 167(187': I; Hank 
 v. Railroad Co., 11 Wall. 624 (1870); McKaig v. Eebb, 12 Md. 
 227 (18741; Jenness r. Smith. 58 Mich. 280 (1885). 
 
 3 Jenness r. Smith. 58 Mich. 280 (1885); Fuller v. Benjamin, 
 23 Me. 255 (1843); Burchard v. Boyce, 21 Ga. 6 (1857).
 
 531 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 2. 
 
 (7*4617 
 
 Action 
 
 against exe- 
 cutors for 
 account of 
 profits. 
 
 Effect of 
 praying in- 
 junction. 
 
 a stranger, and the latter seeks an account of those 
 profits, he should bring his action against that one 
 partner alone, and not make the other parties (p). 1 
 * This rule, however, does not apply to an action for an 
 account brought by an assignee of a partner's share (q): 2 
 and where an equitable mortgagee of a share in a mine 
 brings an action for foreclosure, all the partners ought 
 to be parties (r). 
 
 "Whether in an action against the executor of a part- 
 ner for an account of profits made by wrongfully em- 
 ploying the assets of the deceased in the business of a 
 firm of which the executor is a member, it is necessary 
 to make the other members of the firm parties, is not 
 always easy to decide. The rule appears to be that they 
 are necessary parties if the account sought is an ac- 
 count of all the profits made by the use of the capital 
 of the deceased; but not if the account is confined to so 
 much of those profits as the executors have themselves 
 received (s). 
 
 Although a person may have no interest in the ac- 
 count to be taken, and would therefore be an improper 
 party to an action confined to such account, yet, if an 
 injunction is sought to be obtained against him specially, 
 he must be made a party. For this reason, the Bank 
 of England and Sheriffs are often made parties to ac- 
 tions in which they have no real interest (t). 
 
 Where some partners may sue or be sued on behalf 
 of themselves and others. 
 
 Some on 
 behalf of 
 themselves 
 and others. 
 
 It has been held in many cases, that a bill praying 
 for a dissolution of a partnership, all the partners, how- 
 ever numerous, are necessary parties, and that conse- 
 
 (p) Brown v. De Tastet, Jac. 284; Raymond's case, cited by 
 Lord Eldon in Ex parte Barrow, 2 Rose. 255; Bray v. Fromont, 6 
 Madd. 5; and see Killock v. Greg, 4 Euss. 285. 
 
 (q) See Bergmannn v. Macmillan, 17 Ch. D. 423; Wethain v. 
 Davey, 30 ib. 574. 
 
 (r) Eedmayne v. Forster. 2 Eq. 467. 
 
 (s) See A'yse v. Foster, 8 Ch. 309, andL. E. 7 H. L. 318 ; Simp- 
 son v. Chapman, 4 De G. M. & G. 154. Compare McDonald v. 
 Richardson, 1 Gift'. 81. 
 
 If) See, for example, Yulliamy v. Noble, 3 Mer. 593 ; Bevah v. 
 Lewis, 1 Sim. 376. 
 
 1 Settembre v. Pntman, 30 Cal. 490 (1866V 
 
 2 Wallace's Appeal, 104 Pa. St. 559 (1883). As to a similar 
 exception in the case of the mortgagee ol the interest of one of 
 partners, see Eeceivers v. Godwin, 5 N. J. Eq. 334 (1846); Hus- 
 ton v. Neil, 41 Ind. 504 (1873).
 
 PARTIES. 535 
 
 quently, a bill filed by some on behalf of themselves and Bk. III. 
 others, and praying for a dissolution, is bad on demur- ^ hi *p. 10. 
 rur (u). This rule is supposed to admit of no excep- 
 
 tion, and it has, though with expressions of * regret, [*462] 
 been held to apply to unincorporated companies as well 
 as to ordinary partnerships (x). The reason given for 
 the rule is, that the affairs of a partnership cannot be 
 finally wound up and settled without deciding all ques- 
 tions arising between all the partners, which cannot be 
 done in the absence of any one of them (y). 
 
 Even if a partnership is empowered to sue and be Presence of 
 sued by a public officer, his presence is not, in an ac- public officer 
 tion for a dissolution, equivalent to the presence of all c j eut 
 the partners (z). 
 
 But notwithstanding these numerous authorities, it No instance 
 may be permitted to doubt whether it can be considered °^ decree for 
 as a rule admitting of no exception whatsoever, that to wnere a yj tne 
 every action for a dissolution, all the partners must in- partners were 
 dividually be parties. All that can on principle be not before 
 requisite, is that every conflicting interest shall be tne court - 
 substantially represented by some person before the 
 court. If, which is possible, the interest of each part- 
 ner conflicts with that of all the others, then all must 
 undoubtedly be parties. But if the partners are numer- 
 ous, and it can be shown that they are divisible into 
 classes, and that all the individuals in each class have a 
 common interest, then although the interest in each 
 class conflicts with that of every other class, there seems 
 to be no reason why, if each class is represented by one 
 or two of the individuals composing it, a decree for a 
 dissolution should not be made (a). There is not, how- 
 
 (m) Evans v. Stokes, 1 Keen. 24 ; Richardson v. Hastings, 7 
 Beav. 301; Harvey v. Bignold, Sib. 343; Deeks v. Stanhope, 14 
 Sim. 57; Wheeler v. Van Wart, 9 Sim. 193; Long v. Yonge, 2 Sim. 
 369; Ireton v. Lewis, Finch. 96; Moffat v. Farquharson, 2 Bro. 
 C. C. 338. 
 
 (x) See cases in last note and Van Sandua v. Moore, 1 Russ. 
 441; and Davis v. Fisk, in Farran on Life Assurances, and cited 
 by counsel in Younge's reports, p. 425. 
 
 (y) See Richardson v. Hastings, 7 Beav. 307. 
 
 (z) See Van Sandau v. Moore, 1 Russ. 441 ; Davis r. Fisk, cited 
 in You. 425 ; Abraham v. Hannay, 13 Sim. 581 ; Seddon v. Con- 
 nell, 10 Sim. 58. 
 
 (a) See Richardson v. Larpent, 2 Y. & C. C. C. 514, and the ob- 
 servations di' Lord Cottenham in Wallworth v. Holt, I M. & Cr, 
 635. As to Cockburn v. Thompson, 16 Ves. 321, see the obs. of 
 V.-C. Shadwell; 2 Sim. 380, and observe that the real object was 
 to make the defendants account for the money they had received, 
 and that the question as to want of parties was not raised with 
 reference to thai part of the prayer of the bill which sought a dis- 
 solution. See also, Urd. xvi. r. 9, and Old. lv. it. 3 to 9.
 
 53o 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 2. 
 
 [ * 463] 
 Actions not 
 in terms 
 seeking a 
 dissolution. 
 
 Wallworth v. 
 Holt. 
 
 Actions not 
 seeking 
 division of 
 assets. 
 
 [ * 464] 
 
 ever, so far as the writer is aware, any case in which a 
 decree for a dissolution has actually been made in the 
 absence of any of the partners. 
 
 * In an action not claiming a dissolution, the question 
 of parties turns entirely on the nature of the right 
 sought to be enforced. If an account is required, and 
 it is one in which the interest of each partner is dis- 
 tinct from and in conflict with that of all the others, 
 then all the partners, however numerous, must be parties, 
 and their representation by others, or by a public offi- 
 cer or secretary, will not be sufficient (b). On the 
 other hand, if there are no such conflicting interests as 
 above supposed, it will be sufficient if each distinct in- 
 terest is represented by a party to the record (c). 
 
 It was held in Wallworth v. Holt (d), that where part- 
 ners are too numerous to be brought before the Court, 
 and they are divisible into classes, and all the individ- 
 uals in one class have a common interest, a suit insti- 
 tuted by a few individuals of that class on behalf of 
 themselves and all the other individuals of the same 
 class against the other members of the company, is sus- 
 tainable. Since this decision, there have been many 
 suits by some shareholders on behalf of themselves and 
 others, praying for very general accounts (but studi- 
 ously avoiding a prayer for a dissolution), and such 
 suits have been successful whenever the interest of the 
 absent partners has been the same as that of the plain- 
 tiffs on the record (e). 
 
 When no dissolution is claimed, and no winding up 
 of the partnership is sought, an action may be properly 
 instituted by some of a number of numerous part- 
 ners, on behalf of themselves and all others whose in- 
 terest is identical with their own : and this form of 
 action is constantly adopted where numerous * part- 
 ners seek to make their managers account for secret 
 
 (b) See Van Sandau v. Moore, 1 Russ. 441 ; Seddon v. Con- 
 nell, 10 Sirn. 58 ; Abraham v. Hannay, 13 ib. 581 ; McMahon v. 
 Upton. 2 ib. 473 ; Sibley v. Minton, 27 L. J. Ch. 53. 
 
 (c) Comp. Harrison v. Brown, 5 De G. & Sm. 728. 
 
 (\/) 4 M. & Cr. 619. Cockburn v. Thompson, 16 Ves. 321, is an 
 earlier decision on this point. See, too, Good v. Blewitt, 13 Ves. 
 397. See, as to sura on behalf, &c, in cases of voluntary socie- 
 ties assuming to be corporations, Lloyd v. Loaring, 6 Ves. 773. 
 
 (e) See Apperly v. Page, 1 Ph. 779. See, for other instances, 
 Cramer v. Bird, 6 Eq. 143; Wilson v. Stanhope. 2 Coll. 629; 
 Harvey r. Collett, 15 Sim. 332 ; Cooper v. Webb, ib. 454 ; Clem- 
 ents i\ Bowes. 17 Sim. 167, and 1 Drew. 684; Richardson v. 
 Hasting, 7 Beav. 323 ; Butt v. Monteaux, 1 K. & J. 98 ; Shep- 
 pard v. Oxeuford. ib. 491 ; Sibsou v. Edgeworth, 2 De G. & S. 
 73. Compare Williams v. Salmond, 2 K. & J. 463.
 
 DISSOLUTION OF PARTNERSHIP. 537 
 
 benefits and advantages obtained by them in breach of Bk. III. 
 the good faith owing to those whose affairs they con- g ha t p '., 10 " 
 
 duct (/ ) ; or to rescind contracts into which the part- ! ! 
 
 nership has been induced to enter by false and fraudu- 
 lent representations (g). So in the case of mutual in- 
 surance societies and friendly societies one member may 
 sue the trustees or committee and one of each class of 
 members as representing all the other members, where 
 the object of the action is to obtain payment of what 
 is due to the plaintiff (h). 
 
 Section III. —Cases in which Courts will not In- 
 terfere Between Partners. 
 
 There are three general rules by which courts of General 
 equity were influenced when their interference was rules as to 
 sought by one partner against another, and to which it ^^^ nce 
 will be convenient at once to refer ; for the same rules par t n ers. 
 are observed by all divisions of the High Court in all 
 actions which before the Judicature acts would have 
 been suits in equity ; in other words, in all actions for 
 specific performance, for an account, for a receiver, for 
 an injunction, and in those actions for fraud in which 
 equitable relief as distinguished from the simple recov- 
 ery of damages is sought. The rules in question, how- 
 ever, have no application to cases in which prior to the 
 Judicature acts one partner could have sued another at 
 law. The rules alluded to are, 1, not to interfere ex- 
 cept with a view to dissolve the partnership ; 2, not to 
 interfere in matters of internal regulation ; 3, not to 
 interfere at the instance of persons who have been 
 guilty of laches. 
 
 1. Of the rule not to interfere except with a view to 
 a dissolution. 
 
 Formerly courts of equity were adverse to interfering Necessity of 
 at all * between one partner and another, unless it was [ * 465 | 
 for the purpose of dissolving the partnership ; or, if it praying for a 
 was dissolved already, of finally winding up its affairs. Solution. 
 Hence it will be found on reference to the older re- 
 
 (f) Chancey r. May, Free, in Ch, 59:2 ; Hicliens r. Con^reve, I 
 Buss. 562 ; Taylor /•.' Salmon, 1 M. & Cr. 134 ; Beck v. Kantoro- 
 wicz, 3 K. & J. 237. ,,. _ 
 
 (n) Sec Small r. Attwood. Vuu. 407 ; and G CI. A: I'm. 2.5:>. 
 
 (!) See Pare v. Clegg, 29 Beav. 589; Bromley v. Williams, 32 
 ib. 177 ; Harvey v. Beckwith, 2 Hem. & M. 429.
 
 538 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. ported decisions, that if a dissolution was not sought, 
 
 Chap. 10. t h e c our t would not decree a partnership account, nor 
 Sect " 3> restrain a partner from infringing the partnership arti- 
 cles, nor protect the partnership assets from destruc- 
 tion or waste. This rule, at no time perhaps very in- 
 flexible, has gradually been relaxed ; it having been 
 discovered to be more conducive to justice to interfere 
 to prevent some definite wrong, or to redress some par- 
 ticular grievance, than to decline to interfere at all un- 
 less complete justice can be done by winding up the 
 partnership, and in that manner settling all disputes. 
 At the same time so difficult is it to shake off old asso- 
 ciations, and to run counter to established rules, that 
 traces of the aversion alluded to may yet be found in 
 the decisions of the courts, and especially in those 
 which relate to the specific performance of agreements 
 to form partnerships, and in those which relate to the 
 appointment of receivers and managers. Indeed, not- 
 withstanding the extent to which the rule has been re- 
 laxed in actions for an account, or for an injunction, 
 one of the first points for consideration, even now, 
 when one partner sues another for equitable relief, is, 
 can relief be had without dissolving the partnership ? 
 Undoubtedly it may, much more certainly than former- 
 Modern rule, ly, but not always when perhaps it ought (i). With- 
 out stopping to inquire how the question is to be an- 
 swered in any particular case (for that will be discussed 
 hereafter), it may be stated as a general proposition, 
 that courts will not, if they can avoid it, allow a part- 
 ner to derive advantage from his own misconduct by 
 compelling his co-partner to submit either to con- 
 tinued wrong, or to a dissolution (j); and that rather 
 than permit an improper advantage to be taken of a 
 rule designed to operate for the benefit of all parties, 
 courts will interfere in modern times where formerly 
 they would have declined to do so. At the same time 
 courts will not take the management of a going con- 
 cern into their own hands, and, if they cannot usefully 
 [ * 466] interfere in any other manner, they will * not interfere 
 at all unless for the purpose of winding up the part- 
 nership. 
 
 2. Of the rule not to interfere in matters of internal 
 regulation. 
 
 A court of justice will not interfere between part- 
 
 (?') See infra, \ 6. 
 
 ( j ) See Fairthorne v. Weston, 3 Ha. 392.
 
 EFFECT OF LACHES. 539 
 
 ners merely because they do not agree. It is no part Bk. III. 
 of the duty of the Court to settle all partnership squab- thap. 10. 
 bles: it expects from every partner a certain amount of 
 
 forbearance and good feeling towards his co-partner; Disinclina- 
 and it does not regard mere passing improprieties, * lon to mter_ 
 arising from infirmities of temper, as sufficient to war- ma \ tersot 
 rant a decree for dissolution, 1 or an order for an in- internal 
 junction, or a receiver (A;). And when partners have regulation, 
 themselves agreed that the management of their affairs 
 shall be entrusted to one or more of them exclusively, 
 the Court will not remove the managers, or interfere 
 with them, unless they are clearly acting illegally or in 
 breach of the trust reposed in them (Z). 
 
 The rule not to interfere in matters of merely inter- Clubs, 
 nal regulation or discipline is strongly exemplified in 
 cases of clubs (m). 
 
 It is, however, in dealing with disputes between the 
 members of companies that the rule in question is 
 practically of greatest importance. The application of 
 it to them is, however, beyond the scope of the present 
 volume (n). 
 
 3. Of the rule not to interfere at the instance of per- 
 sons ivho have been guilty of laches. 
 
 Independently of the Statutes of Limitation, a plain- Laches a bar 
 tiff may be precluded by his own laches from obtain- to relief in 
 ing equitable relief. Laches presupposes not only equity ; 
 lapse of time, but also * the existence of circumstances [ * 467] 
 which render negligence imputable; and unless rea- 
 sonable vigilance is shown in the prosecution of a claim 
 to equitable relief, the Court, acting on the maxim, 
 vigilantibus non dormientibus subveniunt leges, will 
 decline to interfere (o). 2 
 
 (k) See Marshall v. Colman, 2 J. & W. 266; Smith v. Jeyes, 4 
 Beav. 503; Lawson v. Morgan, 1 Price, 303; Cofton v. Horner, 5 
 Price, 537; Warder v. Stilwell, 3 Jur. N. S. 9; Anderson v. An- 
 derson, 25 Beav. 190. 
 
 (?) See Lawson v. Morgan, 1 Price, 307; "Waters v. Taylor. 15 
 Ves. 10. 
 
 (m) See Fisher v. Keane, 11 Ch. D. 353; Labouchere v. Wharn- 
 cliffe, 13 ib. 346; Dawkins v. Antrohus, 17 ib. 615. 
 
 (n) See Foss v. Harbottle, 2 Ha, 461, and other cases of that 
 class, in the vol. on Companies. 
 
 (o) Laches may preclude relief, although actual assent or in- 
 telligent acquiescence on the part of the plaintiff may not be 
 proved, see Evans v. Smallcombe, L. R. 3 II. L. 256. See, as t<> 
 acquiescence, De Bussche '■. Alt, 8 Ch. D. 314. 
 
 1 Sloan v. Moore, 37 Pa. St. 217 (1860); Lafond v. Deems, 81 
 N. Y. 507 (1880). 
 
 2 It is said that laches which will bar equitable relict' will be
 
 540 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 3. 
 
 to a suit for 
 an account. 
 Sherman v. 
 Sherman. 
 
 Acquiescence 
 in account. 
 
 Caches in en- 
 forcing agree- 
 ments for 
 partnership. 
 
 [*468] 
 
 Cowell v. 
 Watts. 
 
 In the early case of Sherman v. Sherman (p), two 
 persons had dealings as merchants; one of them died; 
 his widow filed a bill for an account, but, although the 
 Statute of Limitations did not apply, the bill was dis- 
 missed, on the ground that many years had elapsed 
 since the dealings in question had taken place, and the 
 deceased had allowed any claims he might have had to 
 slumber (q). Again, where an account has been ren- 
 dered, and has been long acquiesced in, unless fraud 
 be proved, a court will not re-open it, although the ac- 
 count may be shown to be erroneous, and although no 
 final settlement was ever come to (V). The same prin- 
 ciple is acted on in taking accounts; for charges long 
 improperly made and acquiesced in, or long omitted to. 
 be made, and known so to be, are regarded, in the ab- 
 sence of fraud, as having been made or omitted by 
 agreement, and the question of mistake will not be 
 gone into (s). 
 
 The doctrine of laches is of great importance where 
 persons have agreed to become partners, and one of 
 them has unfairly left the other to do all the work, and 
 then, there being a profit, comes forward and claims a 
 share of it. In such cases as these, the plaintiff's con- 
 duct lays him open to the remark that nothing would 
 have been heard of him had the joint adventure ended 
 in loss instead of gain; and a court will not aid those 
 who can be shown to have remained quiet in the hope 
 of being able to evade responsibility in case of loss, 
 but of being able to claim a share of gain in case of 
 ultimate success. 
 
 * Thus, in Coivell v. Watts (t) the plaintiff and the 
 defendant had agreed to take land for the purpose of 
 improving it, and letting it upon building leases. A 
 long lease was accordingly obtained, and was taken in 
 the name of the defendant. The plaintiff then applied 
 
 (p) 2 Vera. 276. 
 
 (q) See, too, Stnrt v. Hellish. 2 Atk. 610. 
 
 (/•) Scott v. Milne, 5 Beav. 215, and on appeal. 7 Jur. 709. 
 See, too. Williams v. Page, 24 Beav. 654; Stupart /'. Arrowsmith. 
 3 Sm. & G. 176. 
 
 (s) Thornton v. Procter, 1 Anst. 94, and see ante, p. 383. 
 
 (t) 2 H. & Tw. 224. 
 
 measured by the time prescribed by the Statute of Limitations 
 in analogous cases at law. McKelvj's Appeal, 72 Pa. St. 4.59 
 (1872); Arnettw. Finney, 41 N. J. Eq. 147 (1886); Blackwell v. 
 Claywell, 75 N. Ca. 213 (1876). Time begins to run from the 
 date of the dissolution and not before against the equitable right 
 of a partner to an account. Askew v. Springer, 111 111. 662 
 (1885); Chandler v. Chandler, 4 Pick. 78 (1826).
 
 EFFECT OF LACHES. 541 
 
 to the defendant to enter into a written agreement upon Bk. III. 
 the subject of their joint adventure, but this the de- Chap. 10 - 
 fendant declined. The defendant also assumed to act kject 3 " 
 as sole owner of the land obtained; he removed the 
 plaintiff's cattle from it, and borrowed money on a 
 mortgage of the land, and expended such money in 
 building upon it. The plaintiff all this time did noth- 
 ing, although he was aware of what was going on. 
 After a lapse of eighteen months the plaintiff, by his 
 solicitor, called upon the defendant to perform the or- 
 iginal agreement; and the defendant declining, a suit 
 for specific performance was instituted. The bill how- 
 ever, was dismissed with costs, on the ground that the 
 plaintiff had by his conduct induced the defendant to 
 suppose that the plaintiff had abandoned the specula- 
 tion, and that the defendant had the sole right to the 
 land. 
 
 The doctrine now under discussion is especially ap- Laches where 
 plicable to mining and other partnerships of a highly partnership 
 speculative character. Mining operations are so ex- is a mining 
 tremely doubtful as to their ultimate success, that it is P artnersui P- 
 of the highest importance that those engaged in them 
 should know on whom they can confidently rely for 
 aid; if, therefore, a person engages in a mining adven- 
 ture in partnership with others, and disputes arise be- 
 tween them, and he is denied a partner's rights, he 
 should be careful to assert his claims whilst the dis- 
 pute is fresh; for if he lies by until the mine has been 
 rendered prosperous by his co- partners, and he then 
 comes forward insisting on his rights as a partner, and 
 seeks equitable as distinguished from legal relief, he 
 will be refused it; on the ground that he has applied 
 for it too late (u). On this principle, in Senhouse v. Sen house v. 
 Christian (x), where several persons were lessees of a Christian, 
 colliery, and the lease being about to expire, one *of [ * 469] 
 them obtained a renewal of it in his own name, Lord 
 Ko3slyn dismissed with costs a bill filed by the others 
 claiming the benefit of the renewed lease. The plain- 
 tiffs had allowed the defendant to work the colliery 
 single-handed at a great expense; and although they 
 were aware of all the facts when the original lease ex- 
 pired, they did not take any proceedings to enforce 
 their rights until four years afterwards. This case was 
 referred to with approbation by Lord Eldon, in the case 
 
 (m) See, in addition to the cases cited below, AJIoway v. 
 Braine, 26 Beav. 575, and Walker v. Jeffreys, 1 Ha. 341. 
 
 (x) Cited 1*J Ves. 157, and reported in a note to ID Beav. 356.
 
 i42 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 3. 
 
 Norway v. 
 Eowe. 
 
 Prendergast 
 v. Turton. 
 
 Clegg v. 
 Edmonson. 
 
 [*470] 
 Rule v. 
 Jewell. 
 
 of Norway v. Roive (y), in which he refused a motion 
 for a receiver made on behalf of a person claiming to 
 be a partner, but whose rights had been long denied. 
 
 Again, in Prendergast v. Turton (z), where the capi- 
 tal subscribed for working a mine was spent, and the 
 plaintiffs refused to contribute more, but the other 
 partners did contribute more, and ultimately, after a 
 lapse of some years, succeeded in making the mine 
 profitable, and then the plaintiffs came forward claim- 
 ing their shares in the concern, their bill was dismissed 
 by the Vice-Chancellor Knight Bruce, and his decision 
 was affirmed on appeal. The same doctrine was ap- 
 plied in Clegg v. Edmonson (a), the facts of which 
 were similar to those of Senhouse v. Christian, already 
 referred to. In two respects Clegg v. Edmonson goes 
 further than the other cases ; for first, the defendants 
 had brought in no fresh capital, the mine having paid 
 its own expenses; and secondly, although the plaintiffs 
 had not asserted their claims by legal proceedings, they 
 had constantly insisted on their right to participate in 
 the profits obtained by the defendants under the re- 
 newed lease. Upon this point, however, it was ob- 
 served by the Lord Justice Turner, that he could not 
 agree to a doctrine so dangerous as that a mere asser- 
 tion of a claim, unaccompanied by any act to give ef- 
 fect to it, can avail to keep alive a right which would 
 otherwise be precluded (b). 
 
 * In Rule v. Jewell (c) a member of a cost book min- 
 ing company, which was seriously in debt, had his shares 
 forfeited for non-payment of calls. After five years he 
 disputed the validity of the forfeiture and claimed to 
 be reinstated as a partner. But it was held that he 
 was precluded by his own laches from obtaining relief. 
 
 (y) 19 Ves. 144. There were more grounds than one for this 
 decision, but the case is always regarded as an authority in sup- 
 port of the doctrine acted on by Lord Rosslyn in Senhouse v. 
 Christian. 
 
 (z) 1 Y. & C. C. C. 98, and on appeal, 13 L. J. Ch. 238. 
 
 (a) 8 De G. M. & G. 787. The suit in so far as it sought for 
 an account up to the time of dissolution was sustained. 
 
 (b) This general proposition must of course be taken with 
 reference to the case before the Court. It cannot be laid down 
 as universally true that protests are useless. They exclude in- 
 ferences which, in their absence, might fairly be drawn from the 
 conduct of the party protesting, and are conclusive to show that 
 no abandonment of right was intended. See in Hart v. Clarke, 
 infra, p. 472. 
 
 (c) 18 Ch. D. 660. The Statute of Limitations was pleaded, 
 but was held not to be a defence, though the action was not 
 commenced until after six years from the alleged forfeiture. 
 Sed qu.
 
 EFFECT OF LACHES. 543 
 
 In the eases already referred to it will be observed Bk. III. 
 that there was no positive evidence that the plaintiff t'hap.^lo. 
 had ever abandoned his rights (d): and in Clegg v. Ed- 
 
 monson there was evidence to show that no abandon- Effect of evi- 
 ment had ever been contemplated. It need, however, dence ot * 
 scarcely be observed that positive evidence of aban- ^? t on ~ 
 donment, in addition to the negative evidence derived 
 from mere lapse of time, during which nothing has 
 been done by the plaintiff, greatly improves the posi- 
 tion of his opponent. 
 
 There are several cases illustrating this. In Jekyl Jekyl ». 
 v. Gilbert (e), two artificers agreed to do work for their Gilbert, 
 joint benefit; after the work was done, the person for 
 whom it was done refused to pay; the defendant re- 
 quested the plaintiff to join in legal proceedings to 
 compel payment, but the plaintiff declined. Thereupon 
 the defendant brought an action for payment of the 
 work done by him, and obtained a verdict. The plain- 
 tiff then claimed half the amount recovered, but the 
 Court held that he was not entitled to any share of it. 
 
 So if a part-owner of a ship disapproves of a pro- Drm S v. 
 posed voyage, and arrests the ship until the other part- Johnston. 
 owners give him security for his share, he is not enti- 
 tled to any portion of the profits arising from such 
 voyage (/). 
 
 * Again, where two persons agreed to take land on [ *471] 
 lease for a building speculation, and one of them after- Keilly v. 
 wards opposed the prosecution of the speculation and 
 died without ever having done anything to further it, 
 it was held that the equitable estate and the legal estate 
 were in the same person, viz., the survivor, and that he 
 was not a trustee as to any portion of the land for the 
 executors of the deceased (g). 
 
 A fortiori, if a partner formally withdraws from an 
 adventure when its prospects are bad will he be unable 
 to claim a share of the profits resulting from it- if it ul- • 
 timately proves to be profitable (h); such cases, how- 
 ever, are not so much cases of laches as of estoppel or 
 agreements to release. 
 
 It is now necessary to advert to one or two cases ap- Cases in 
 
 (d) In Prendergast v. Turton perhaps there was, and it is on 
 the ground that 'there, was, that Lord Chelmsford distinguished 
 that case from Hart r. Clarke, which will be noticed hereafter. 
 See 6 H. L. C. 657-9. See, also, Garden Gully, &c, Co. v. Mc- 
 Lister, 1 A pp. Ca. p. 57. 
 
 (e) McNaghten's Select Cases in Chancery, 29. 
 (/) Davis v. Johnston, 1 Sim. 539. 
 
 (g) Reilly v. Walsh, 11 Ir. Eq. 22. 
 
 (A) Maclure v. Ripley, 2 Mac. ct G. 275.
 
 544 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 3. 
 
 which laches 
 has not been 
 a bar to 
 relief. 
 Lake v. 
 Craddock. 
 
 [*472] 
 
 Hart v. 
 Clarke. 
 
 parently at variance with the foregoing, and in which 
 persons claiming the rights of partners have succeeded 
 in obtaining the assistance of a court of equity, although 
 their demands have been stale, and although the suc- 
 cess of the joint adventure has been due to the exertions 
 of those against whom those demands were made. 
 
 The case of Lake v. Craddock (i) is sometimes re- 
 ferred to as one of the class now in question. But this 
 case, in truth, only decided that if one of several part- 
 ners chooses to claim the benefit of partnership deal- 
 ings, after having for some time ceased to take any part 
 in the affairs of the partnership, he must contribute his 
 share of the outlays made by the other partners, with 
 interest. It was not decided in Lake v. Craddock that 
 a partner could, on the above terms, claim the benefit 
 of what had been done by the others; and although the 
 decree gave a partner who had long abandoned the con- 
 cern the option of either claiming a share on proper 
 terms, or of being excluded altogether, the other part- 
 ners do not appear to have raised any objection to this 
 option being given. 
 
 The cases which are most at variance with those re- 
 ferred to * in the preceding pages, are the recent cases 
 of Hart v. Clarke and Clements v. Hall. 
 
 In Hart v. Clarke (k) the facts were shortly as fol- 
 lows: — a mining company was formed on the cost-book 
 principle, and there was no express agreement author- 
 ising the forfeiture of shares on the non-payment of 
 calls. The plaintiff and the defendants were lessees of the 
 mine, and the only shareholders therein. Money being 
 required for carrying on the mine, and the plaintiff not 
 furnishing his proportion of the sum required, was, on 
 more than one occasion, informed that on continued 
 non-payment his shares would be forfeited, and ulti- 
 mately they were declared forfeited. The plaintiff, who 
 had all along denied the power of his co- adventurers to 
 forfeit his shares, and had suggested modes of obtain- 
 ing money which they had not approved, gave them no- 
 
 (?') 3 P. W. 158. The bill in effect was filed by the plaintiff 
 against four persons, his co-partners for an account. One of the 
 defendants had long ceased to take any part in the partnership 
 affairs. An account was decreed, and liberty was given to this 
 defendant to come in on terms, or to be excluded. He appealed, 
 beinsi discontented with the terms imposed. 
 
 /. Clarke v. Hart, 6 H. L. C. 633, affirming Hart v. Clarke, 6 
 De G. M. and G. 232, and reversing S. C. 19 Beav. 349. See, also, 
 Garden Gully, &c, Co. v. McLister, 1 App. Ca. 39. also a case of 
 forfeiture. Compare Rule v. Jewell, 18 Ch. D. 660. Shares in 
 cost-book companies may now be forfeited, see 32 & 33 Vict. c. 
 19, I 16, &c.
 
 EFFECT OF LACHES. 545 
 
 tice that, in the event of the mine proving successful, Bk. III. 
 he should expect his share of the profits, and should, if ^ h ^ p - 10 - 
 
 necessary, take legal proceedings to enforce his claim. : ! L_ 
 
 A year and a half then elapsed, and at the end of that 
 time he asserted his claim; and the defendants refusing 
 to recognize it, a bill was filed for an account. The 
 Master of the Kolls held it to be clear that no number 
 of partners could exclude another partner and forfeit 
 his share, but that the plaintiff was not entitled to be 
 considered as still a partner; (1), because the notice to 
 forfeit his share might be regarded as a notice to dis- 
 solve the partnership; and (2), because for nearly two 
 years he bad taken no step whatever to assert his rights, 
 but had allowed other people to work the mine, and had 
 only come forward when he found it had proved a pro- 
 fitable speculation. On appeal it was also held, that 
 the supposed right to forfeit had no existence: but it 
 was further held, (1), that the notice of forfeiture could 
 not operate as a dissolution, inasmuch as that was not 
 the object with which the notice had been given; and, 
 (2), that, under the peculiar circumstances * of the case, [*473] 
 the plaintiff could not be held to have shown any inten- 
 tion to abandon the undertaking, and that the nature 
 of mining speculations was such as to render it inequit- 
 able to lay down as a general rule that no adventurer 
 should be entitled to relief in equity when the adven- 
 ture becomes productive, unless he had paid up his calls 
 whilst it remained unproductive. 
 
 The ground of the decision in the above case, and Ground of 
 that which distinguishes it from Senhouse v. Christian pe decision 
 and other cases alluded to above, is this, viz., that the case 
 plaintiff in Hart v. Clarke had, as one of the lessees of 
 the mine, a legal interest therein, which nothing had 
 displaced. The Court, therefore, was in this position : 
 it was compelled either to make a decree in favour of 
 the plaintiff, or to declare him a trustee of his share in 
 the mine for the defendants ; and there not being suf- 
 ficient grounds for justifying the latter alternative, the 
 former was necessarily adopted (I). Upon no other 
 ground can the case, it is submitted, be distinguished 
 from Clegg v. Edmonson and the other cases alluded to 
 above ; for although reliance was placed, in the judg- 
 ment in Hart v. Clarke, on the distinct notice given by 
 the plaintiff that he did not acquiesce in the defend- 
 ant's conduct, and should insist on his rights, it was de- 
 cided in Clegg v. Edmondson that a protest did not 
 
 (?) See ace. Rule v. Jewell, 18 Ch. D. 660. 
 * 12 LAW OF PARTNERSHIP.
 
 546 ACTIONS BETWEEN PARTNERS. 
 
 Ek. III. enlarge the the time within which redress must be 
 
 Chap. 10. sought in a court of equity (m). 
 
 J Clements v. Hall (n) is another case in which, not- 
 
 Clements v. withstanding the lapse of a considerable time, it was 
 
 Hall. held that relief ought to be given to a person claiming 
 
 an interest in a mine ; but the facts in that case were 
 very peculiar, and four judges were equally divided, 
 Lord Cranworth and Lord Justice Turner holding that 
 the plaintiff was entitled to relief, whilst Lord Justice 
 Knight Bruce and Lord Romilly were of a contrary 
 opinion. The facts were in substance as follows. A. 
 and B. were lessees of a mine which they worked as 
 partners. The lease expired, but the lessees continued 
 
 [ * 474] in * possession as tenants from year to year, and worked 
 the mine as before. In* 1847 A. died, leaving C. his 
 executor, and bequeathing an interest in the mine to 
 D. B., after the death of A., worked the mine alone, 
 claiming it as his own entirely, and refusing to give 
 any account to C, who, however, constantly pressed for 
 one. In 1850 B. negotiated for and obtained from the 
 landlord a new lease, but on more onerous terms than 
 before. Of this C. had no notice. After the new lease, 
 B., who since the death of A. had only kept the mine 
 going, began to work it in earnest and at a profit ; and 
 in 1851 D. filed a bill against B. and C. to establish his 
 interest in the mine. C. admitted D.'s title, but B. 
 put in no answer, and the suit was not prosecuted. In 
 
 1853 B. died and C. became his representative. In 
 
 1854 the plaintiff, who was the assignee of D.'s interest, 
 filed a bill in the nature of a supplemental bill to D.'s 
 former bill, and sought to have D.'s interest in the 
 mine secured for his, the plaintiff's benefit. C, who 
 as the representative of A. had admitted D.'s right in 
 his suit, now, as representative of B., opposed the plain- 
 tiff's claim, and insisted on lapse of time as a defence 
 to the suit. But it was held, (1), that on A.'s death, 
 his interest in the mine did not determine; (2), that 
 his estate was entitled to share the benefit of the re- 
 newed lease : (3), that A. s representative was not pre- 
 cluded in 1853 from asserting this right against B., 
 inasmuch as B. had kept A.'s representative in ignorance 
 of the real state of the concern ; and, (4), that there 
 had been no laches on the part of the plaintiff or of 
 D., through whom he claimed, inasmuch as. since 1851, 
 there had been a bill on the file to secure their interest. 
 
 Lastly, on the subject of laches it may be observed 
 
 (m) Ante, p. 469. 
 
 (») 2 De G. & J. 173, and 24 Beav. 333.
 
 SPECIFIC PERFORMANCE. £47 
 
 that, as positive evidence of abandonment materially Bk. III. 
 strengthens the case of those resisting a stale demand, Chap. 10. 
 so, on the other hand, positive evidence of recognition 
 
 affords an answer to a defence grounded on laches and Effect of 
 lapse of time. Thus, where a shareholder in a com- recognition 
 pany became bankrupt, but his shares were carried in ot title 
 the books of the company to a separate account, and he 
 was regularly credited with the dividends which became 
 payable in respect of those shares, his assignees were 
 held entitled to the shares and accumulated dividends, 
 although * twenty years had elapsed since any claim [ * 475] 
 had been made to them (o). 
 
 Notwithstanding Hart v. Clarke and Clements v. Result of the 
 Hall, it is submitted that the doctrine laid down and cases, 
 acted upon in Norway v. Rou% Senhouse v. Christian, 
 Prenclergast v. Turton, Clegg v. Edmonson, and Rule v. 
 Jewell may still be safely relied on in all cases except 
 those in which the court can be driven, as it was in Hart 
 v. Clarke, to the alternative of holding either that the 
 plaintiff is entitled to relief, or that he has abandoned 
 and lost his former legal status (p). 
 
 Laches if relied on as a defence to an action ought Demurrer on 
 to be expressly pleaded ; it cannot be taken advantage the ground 
 of by demurrer, or its modern equivalent, if it can only of laches 
 be made out inferentially from the statements in the 
 claim (q). 
 
 Section IV. — Actions for Specific Performance. 
 
 If two persons have agreed to enter into partner- General rule 
 ship, and one of them refuses to abide by the agree- against 
 ment, the remedy for the other is an action for damages, specific P er " 
 and not, excepting in the cases to be presently noticed, a^^ents 
 for specific performance. To compel an unwilling per- for partner- 
 son to become a partner with another would not be shi P 
 conducive to the welfare of the latter, any more than 
 to compel a man to marry a woman he did not like 
 would be for the benefit of the lady. Moreover, to de- 
 cree specific performance of an agreement for a part- 
 Co) Penny r. Pickwick, 16 Beav. 246. See, too, the recogni- 
 tion of title in Clements v. Hall, ante, p. 473. 
 
 {p) See, also. Garden Gully, &c, Co. v. McLister, 1 App. Ca. 
 39, which shows that in such a case as Hart v. Clarke, something 
 more than mere laches is necessary to deprive a plaintiff of re- 
 lief. In Beningfield v. Baxter, 12 App. Ca. 167, there was a fi- 
 duciary relation. 
 
 (q) See Deloraine v. Browne, 3 Bro. C. C. 633; Mitf. PI. 212; 
 Turner v. Borlase, 11 Sim. 17.
 
 548 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. nersbip at will would be nugatory, inasmuch as it 
 
 Chap. 10. m jght be dissolved tbe moment after the decree was 
 Sect " 4 ' made ; and to decree specific performance of an agree- 
 
 ment for a partnership for a term of years would in- 
 volve the court in the superintendence of the partner- 
 ship throughout the whole continuance of the term. 
 [*476] As a rule, * therefore, courts will not decree specific 
 performance of an agreement for a partnership (r). 1 
 Nor will specific performance be decreed of an agree- 
 ment to become a partner and bring in a certain amount 
 of capital, or in default to lend a sum of money to the 
 plaintiff (s). 
 Cases in However, if the parties have agreed to execute some 
 
 which a formal instrument which would have the effect of con- 
 
 decree will f err j n g r igbts which do riot exist so long as the agree- 
 ment ts not carried out, in such a case, and for the pur- 
 pose of putting the parties into the position agreed 
 upon, the execution of that formal instrument may be 
 decreed, although the partnership thereby formed might 
 be immediately dissolved (t). The principle upon 
 which the Court proceeds in a case of this description, 
 is the same as that which induces it to decree execu- 
 tion of a lease under seal, notwithstanding the term 
 for which the lease was to continue has already ex- 
 pired (it). 
 England v. In England v. Curling (a?), the plaintiff and two of 
 
 Curling. the defendants agreed to become partners as ship 
 
 agents, for seven, fourteen, or twenty-one years, and 
 they signed with their initials an agreement to that 
 effect. A deed was prepared to carry out the agree- 
 ment ; the deed, however, was never executed, and it 
 differed somewhat from the agreement. The parties 
 carried on business as partners under the agreement for 
 eleven years, and then they began to quarrel. The defend- 
 ant Curling, who appears to have been in the wrong 
 
 (r) Scott v. Raynient, 7 Eq. 112; Hercy v. Birch. 9 Ves. 357; 
 Sheffield Gas, &c, Co. v. Harrison, 17 Beav. 294; Downs v. Col- 
 lins, 6 Ha. 418. See, also, Maxwell v. The Port Tenant Co., 24 
 Beav. 495, and Vivers v. Tuck, 1 Moore, P. C. N. S. 516, where, 
 however, there was fraud. See, generally, Fry on Spec. Perf. pt. 
 vi. ch. 3, ed. 2. 
 
 (s) Sichil v. Mosenthal, 30 Beav. 371. 
 
 (t) Buxton v. Lister, 3 Atk. 385, and see 1 Swanst. 513, note, 
 and Stocker v. Wedderburn, 3 K. & J. 403. 
 
 (u) See Wilkinson v. Torkington, 2 Y. & C. Ex. 72(5, and the 
 cases there cited. 
 
 (x) 8 Beav. 129. See the observations of Lord Rornilly on this 
 case, in 30 Beav. 376. 
 
 1 Meason v. Kane, 63 Pa. St. 335 (1869); Reid v. Vidal., 5 Rich. 
 
 Eq. 289 (1852); Morris v. Peckham, 51 Conn. 128 (1883).
 
 SPECIFIC PERFORMANCE. 549 
 
 from the beginning, gave notice to dissolve in three Bk. III. 
 months ; he retired from the partnership, and entered Chap. 10. 
 
 into partnership with other persons, and carried on ! ! 
 
 business with them on the premises and in the name of 
 the old firm. The new firm opened the * letters ad- [*477j 
 dressed to the old one, and gave notice of its dissolu- 
 tion to its correspondents. The plaintiff then filed a 
 bill for specific performance and an injunction, and he 
 obtained a decree (y). 
 
 The only other class of cases in which anything like Specific per- 
 specific performance of an agreement for a partnership where an 
 will be decreed, is where a person who has agreed with account only 
 another to share the profits of some joint adventure, is wanted, 
 seeks to obtain that share after the adventure has come 
 to an end. Although the decree giving him the relief 
 he asks may be prefaced by declaration that the agree- 
 ment relied upon ought to be specifically performed, 
 this has not the effect of creating a partnership to be 
 carried on by the litigants, but merely serves as a 
 foundation for the decree for an account, which is the 
 substantial part of what is sought and given. An in- 
 stance of this class of cases is afforded by Dale v. Ham- Dale r. 
 ilton(z). There, in substance, three persons had agi'eed ami on- 
 to purchase land; to build on it and improve it; and 
 then to sell it for their common benefit. Land was ac- 
 cordingly obtained, built upon and improved, and sub- 
 sequently the right of one of the three persons to any 
 share in the adventure was denied by the other two. 
 He thereupon filed a bill for a sale of the land, for an 
 account of the joint speculation, and for a proper dis- 
 tribution of the monies arising from the sale; and the 
 Court held him entitled to this relief. 
 
 Another instance of the same kind is afforded by Webster v 
 Webster v. Bray a). In that case the plaintiff and the Bray. 
 defendant had been jointly retained as solicitors to a 
 
 (#) The following was the minute of the decree : — "The Court 
 doth declare that the agreement for a co-partnership, dated. &c, 
 is a binding agreement between the parties thereto, and ought 
 to be specifically performed and carried into execution, and doth 
 order and decree the same accordingly. Refer it to the Master 
 to inquire whether any and what variations have been made in 
 the said agreement by and with the assent of the several parties 
 thereto since the date thereof. Let the Master settle and ap- 
 prove of a proper deed of co-partnership between the said par- 
 ties in pursuance of the said agreement, having regard to any 
 variations which he may find to have been made in the said 
 agreement as hereinbefore directed, and let the parties execute it. 
 Continue the injunction against the defendant Curling." 
 
 (z) 5 Ha. 369, and 2 Ph. 266. 
 
 (a) 7 Ha. 159.
 
 Sect. 4. 
 
 550 ACTIONS BETWEEN PARTNEKS. 
 
 | * 478] company. They were *not in partnership as solicitors 
 ilk. III. generally, but the plaintiff insisted that they were part- 
 
 Chap. 10. ners as regarded the business done for the company, and 
 
 <ur.+ O Til 11 
 
 . tbat the payments made by the company to eacb ought to 
 be shared by both. The defendant insisted that there was 
 no partnership, and that each was to be paid for the work 
 done by himself, and to retain for his own benefit all pay- 
 ments in respect of such work. The plaintiff having re- 
 signed, filed a bill for an account, and the Court made a 
 decree in his favour, declaring that the plaintiff and 
 the defendant were jointly and equally interested in 
 the profits and loss of the business transacted by them, 
 or either of them, as solicitors to the company (b). 1 
 Other cases Relief in the shape of specific performance may be 
 of specific required for other purposes besides carrying into exe- 
 perforniance C ution agreements to form partnerships. The assist- 
 nartners ance of a Court is often requisite to compel those en- 
 
 gaged in a going concern, to act conformably to the 
 articles of partnership; and also to compel those who 
 have dissolved partnership, to observe the stipulations 
 into which they have entered; The principles on which 
 the Courts act in granting or withholding assistance 
 when sought for the former purpose, will be considered 
 hereafter; and with respect to the specific performance, 
 after a dissolution of partnership, of agreements en- 
 tered into by the partners previously to, or at the time 
 of dissolution, it need only be observed that relief will 
 be granted or refused upon the principles by which the 
 Court is ordinarily guided in question of specific per- 
 formance, and that nothing turns on the circumstance 
 of the IMigants having been partners. It would, there- 
 fore, be foreign to the objects of the present treatise to 
 prosecute this subject further; but for purposes of refer- 
 ence, it may be useful to mention that the Court has 
 enforced the following agreements entered into upon or 
 with a view to a dissolution; namely — 
 
 Agreements not to carry on business within a certain 
 distance or for a certain space of time (c); 2 
 
 (6) Robinson v. Anderson, 20 Beav. 98, and 7 De G. M. & G. 
 239 is a similar case. 
 
 (c) Whittakeru Howe, 3 Beav. 383; Turner v. Major, 3 Giff. 
 442: and see Coates v. Coates, 6 Madd. 287, and Williams v. Wil- 
 liams. 1 Wils. Ch. 473, note. 
 
 1 An agreement between two partners that one shall convey 
 land so that on it partnership buildings may be erected either 
 at their joint expense or at tne cost of the complainant, will be 
 enforced specifically; Birchett v. Boiling. 5 Mnnf. (Va.) 442 
 (1817); Whiteworth v. Harris. 40 Miss. 483 (1806'. 
 
 2 Ropes v. Upton, 125 Mass. 258 (1878).
 
 ACTIONS FOR MISREPRESENTATION AND FRAUD. 551 
 
 * Agreements as to the custody of partnership books [ * 479] 
 and the furnishing of copies thereof (d); Bk. III. 
 
 Agreements that a third party, and he only, shall get Chap. 10. 
 in debts (e); 
 
 Agreements that the value of the share of an out- 
 going or a deceased partner, shall be ascertained in a 
 specified way and taken accordingly (/ );' 
 
 Agreements that an outgoing partner shall offer his 
 share to his co-partners, before selling it to other per- 
 sons (g); 
 
 Agreements to grant an annuity to a retiring part- 
 ner and his widow (h) ; 
 
 Agreements not to divulge or make use of a trade 
 secret (i). 
 
 Section V. — Actions for Misrepresentation and Fraud. 
 
 1. General observations. 
 
 The proper remedy for a person who has been in- 
 duced by fraud to become a partner with another, de- 
 pends in the hrst place on who the person is who com- 
 mitted the fraud. Speaking generally and subject to 
 certain qualifications which will be noticed hereafter, 
 if the fraud complained of has been committed by the 
 other partner, the person defrauded has the * option of [ * 480] 
 affirming or of rescinding the contract into which he 
 has been induced to enter; and whether he affirms it 
 
 (d) Lingen v. Simpson, 1 Sim. & Stu. 600, and see Whittaker 
 v. Howe, 3 Beav. 383. 
 
 (e) Davis v. Amer, 3 Drew. 64 ; Turner r. Major, 3 Giff. 442. 
 (/) Morris?;. Kearsley, 2 Y. & C. Ex. 139; Essex v. Essex," 
 
 20 Beav. 442 ; King v. Chuck, 17- Beav. 325 ; and see Feather- 
 stonhaugh v. Turner, 25 Beav. 382, and Gibson v. Goldsmid, 5 
 De G. M. & G. 757, reversing S. C. 18 Beav. 584. Compare 
 Downs v. Collins, 6 Ha. 418, where to have enforced the agree- 
 ment would have been to decree specific performance of a con- 
 tract for a partnership ; and Cooper v. Hood, 7 W. R. 83, where 
 a decree was refused on the ground that the agreement sought 
 to be enforced was too vague in its terms. See, as to agreements 
 for a valuation, ante, p. 432. 
 
 (g) Homfray v. Fothergill, 1 Eq. 567. 
 
 (h) Aubin v. Holt, 2 K. & J. 66 ; Page v. Cox, 10 Ha. 163. 
 See, also, Murray V. Flavell. 25 Ch. D. 89, and Bonville v. Bon- 
 ville, 6 Jur. N. S. 414, M. R., where the agreement sued upon 
 was decided not to bear the construction contended for by the 
 plaintiff. 
 
 (i) Morrisson v. Moat, 9 Ha. 241. 
 
 1 Maddock v. Astbury, 32 N. J. Eq. 181 (1880).
 
 552 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. or disaffirms it he is entitled to damages fcr any loss 
 
 Chap. 10. which he may have sustained by reason of the fraud (A;). 1 
 
 ^__^1_ But if the fraud has been committed by some third 
 
 person and is not in point of law imputable to the 
 other partner, then the person defrauded has no such 
 option; he cannot rescind the contract: he can only 
 sue those who defrauded him for damages. 2 But it 
 will be observed from this general statement that in 
 cases of this class there is always a preliminary ques- 
 tion to be considered, and which, if negatived, leaves 
 the complainant without any redress at all: that ques- 
 tion is, Has he in fact been induced by fraud to enter 
 into the contract of which he complains ? On this pre- 
 liminary question a few observations may be useful. 
 1. Untruth No attempt is ever made to give any precise defini- 
 
 necessary. tion of fraud, or to restrict by words the circumstances 
 which may be regarded as amounting to it in point of 
 law. New cases of fraud must always be met by new 
 decisions. But by the law of this country a sharp line 
 is drawn between a breach of a promise or the disap- 
 pointment of hopes raised by the expression of inten- 
 tions or expectations, on the one hand, and an untrue 
 statement on the other (I) ; and speaking generally there 
 is no fraud sufficient to support an action for damages 
 or to set aside a contract in the absence of some untrue 
 statement of fact or of some concealment of fact which 
 makes what is stated substantially untrue (in). 
 
 (k) Small v. Attwood, You. 507, and 6 CI. & Fin. 232 ; Puls- 
 ford v. Richards, 17 Bear. 87 ; Cruikshank v. Mc Vicar, 8 Beav. 
 106. And see Beck v. Kantorowiez, 3 K. & J. 230, and cases of 
 that class. 
 
 (7) See Jordan v. Money, 5 H. L. C. 185 : Harris v. Xukerson, 
 L. R. 8 Q. B. 286 ; Smith r. Chadwick, 9 App. Ca. 187. Houlds- 
 worth v. City of Glasgow Bank, 5 App. Ca. 317. is not opposed to 
 "this; it turned on the statutory enactments relating to the wind- 
 ing up of companies. 
 
 (m) See as to concealment, New Sombrero Phosphate Co. v, 
 Erlansier. 3 App. Ca. 1218, and 5 Ch. D. 73 ; Peek v. Gurnev. L. 
 R. 6 H. L. 377, and 13 Eq. 79; Central Rail, of Venezuela v. 
 Kisch, L. R. 2 H. L. 99; Oakes r. Turquand, ih. 325: New 
 Brunswick, &c, Rail. Co. v. Muggeridge, 1-Dr. & Sm. 381. See, 
 also, Gover's case, 1 Ch. D. 182, and the judgment of Fry, J., in 
 Davies v. Lon. & Prow Marine Ins. Co., 8 Ch. D. 474. 
 
 1 Rice v. Culver. 32 X. J. Eq. 601 (1880) : Morse ?-. Hutchins, 
 102 Mass. 439 (1869) : Greenewald v. Rathfon, 81Ind. 547(1873). 
 In St. John v. Hendrickson, 81 Ind. 350 (1873), it was held that 
 if A. is lured into a partnership by fraud, but is subsequently 
 informed of the facts and he ratines the contract, he can there- 
 after neither rescind it nor recover damages for the fraud. 
 
 2 See Kimmins v. Wilson, 8 W. Va. 584 (1875). See also Perry 
 v. Hale, 143 Mass. 540 (1887), where, in an action at law in tort, 
 it was held that only the guilty partnerscould be made defendants.
 
 ACTIONS FOR MISREPRESENTATION AND FRAUD. 553 
 
 * In the next place the untrue statement must relate [ * 481] 
 to some material ma*tter, and have been made to the Bk. III. 
 complainant directly, or indirectly as one of the pub- g ec a t p 5 10 ' 
 lie (n), and have been in fact relied upon by 
 
 him (o). 2 - Untruth 
 
 Whether the untrue statement must have been untrue must be ma- 
 
 , , , „ ., i ■ • , i • tenal and 
 
 to the knowledge of the person making it has given have |>een 
 
 rise to much controversy. If, indeed, he had no honest relied upon, 
 belief in its truth his ignorance of its untruth is im- 3. Whether 
 material. But if he honestly believed it to be true, the untruth 
 courts of law and courts of equity have taken different must have 
 views. It seems, however, now to be settled that, ex- at the time 
 cept under special circumstances, an action for damages 
 will not lie in such a case, although an action to rescind 
 a contract founded on the statement can be main- 
 tained (p). These two classes of actions require 
 further notice. 
 
 2. Actions for damages. 
 
 Where a person has been induced by the false and Actions for 
 fraudulent representations of another to enter into nrisrepresen- 
 partnership with him, an action will clearly lie at the a luu ' 
 suit of the first person against the second for the re- 
 covery of damages in respect of such fraud (q). 1 And 
 if false representations are made by means of adver- 
 tisements issued for the purpose of inducing persons 
 to take shares, &c, any persons who is ensnared by 
 those advertisements, and acts on the faith of them, 
 may maintain an action against those persons who 
 caused them to be published, knowing them to be 
 
 (n) That this is sufficient, see Clarke v. Dickson, 6 C. B. N. S. 
 453. 
 
 (0) See Smith v. Chadwick, 9 App. Ca. 187 ; Bellairs v. Tuck- 
 er, 13 Q. B. D. 562 ; Pulsford v. Richards, 17 Beav. 87, and 
 others of that class. In the remarkable case of the Panama 
 and South Pacific Telegraph Co. v. India Rubber Co., 10 Ch. 
 515, it was held that a contract might be rescinded for fraud 
 subsequent to itsdate, but rendering its performance impossible. 
 
 (p) Ante, pp. 103 et scq. Slim v. Croucher, 1 De G. F. & J. 
 518, has not been followed. The Court apparently thought that 
 an action for damages might have been maintained at law. In 
 support of the statement in the text, see Arkwright v. Newbold, 
 17 Ch. D. 301 ; Redgrave v. Hurd, 20 Ch. D. 1 ; Newbigging v. 
 Adam, 34 Ch. D. 582. As to misrepresentations of authority, see 
 Firbank's Ex. v. Humphreys, 18 Q. B. D. 54, and the cases there 
 cited. 
 
 (g) See the cases in the next two notes, and Dobell v. Stevens, 
 3 B. & C. 623. 
 
 •Morse v. Hutchins, 102 Mass. 439 (186J); Greenewald v. 
 Rathfon, 81 Iud. 547 (1882).
 
 554 
 
 ACTIONS BETWEEN PARTNERS. 
 
 [*482] 
 Bk. III. 
 Chap. 10. 
 Sect. 5. 
 
 Rescission of 
 contracts of 
 partnership. 
 
 Pillans v. 
 Harkness. 
 
 false (r). In order to maintain an action * for mis- 
 representation, it is not neccessary that there should 
 have been any direct communication between the de- 
 fendant and the plaintiff (s). 
 
 3. Actions for rescission of contract. 
 
 "Where a person is induced by the false representa- 
 tions of others to become a partner with them, the 
 Court will rescind the contract of partnership at his 
 instance ; and will compel them to repay him whatever 
 he may have paid them, with interest, and to indemnify 
 him against, all the debts and liabilities of the partner- 
 ship, and if the defendants have been guilty of fraud 
 against all claims and demands to which he may have 
 become subject by reason of his having entered into 
 partnership with them, he on the other hand accounting 
 to them for what he may have received since his entry 
 into the concern (t). 1 
 
 The case of Pillans v. Harkness (u) affords a good 
 example of this. In that case the plaintiff was induced 
 by the fraud of the defendants to enter into partner- 
 ship with them in a fishing business. They got money 
 
 (r) Eddington v. Fitzmaurice, 29 Ch. D. 459. Compare Smith 
 v. Chad wick, 9 App. Ca. 187 ; Bellairs v. Tucker, 13 Q. B. D. 
 562. Older cases are Davidson v. Tulloch, 3 McQu. 783 ; Cullen 
 v. Thompson's Trustees & Kerr, 4 ib. 424 ; Bale v. Cleland, 4 
 Fos. & Fin. 117: Gerhard v. Bates, 2 E. & B. 476; and see 
 Denton v. The Great North. Rail. Co., 5 E. & B. 860 ; Wat- 
 son v. Charlemont, 12 Q. B. 856. 
 
 (s) See Clarke v. Dickson, 6 C. B. N. S. 453 ; and see Bedford 
 v. Bagshaw, 4 H. & N. 538. 
 
 (t) See, in addition to the cases noticed in the text, Ex parte 
 Broome, 1 Rose, 71, and 1 Coll. 598, note ; Hamil v. Stokes, Dan. 
 20 and 4 Price, 161 ; Stainbank v. Fernley, 9 Sim. 556 ; Jauncey 
 v. Knowles, 8 W. R. 69. Clifford v. Brooke, 13 Ves. 131, was not 
 a case of this class ; the plaintiff there sought to recover money 
 which he had paid, not for the admission of himself, but for the 
 admission of his brother into partnership with the defendants. 
 The plaintiff's remedy under these circumstances was held to 
 be by an action at law. 
 
 (m) Colles, 442 (called Harkness v. Steward, and Steward v. 
 Harkness, in the table of cases to the Dublin edit, of 1789). 
 
 1 Richards v. Todd. 127 Mass. 1 67 (1879). In Howell v. Harvey, 5 
 Ark. 270 (1843)and HynestJ. Stewart,10 B. Mon. 429(1850) thedoc- 
 trine is applied that where one has been induced to enter a part- 
 nership through false representations fraudulently made, the 
 articles of agreement will be cancelled and declared void. In order 
 to warrant a rescission of the partnership agreement, the fraud 
 complained of, must relate to the formation of the firm and not 
 arise in any other matter. Ingraham v. Foster, 31 Ala. 123 
 (1857).
 
 RESCISSION FOR FRAUD. 555 
 
 from him but contributed nothing themselves ; they Bk. III. 
 nevertheless induced him to sign a deed, statins: that Cna P- 10 - 
 
 they had brought in their shares of capital. They de- ' ' 
 
 ceived him for two years and referred him, when 
 pressed, to books which, when examined, were found 
 without any entry in them. The plaintiff then filed a 
 bill against his partners for a * discovery of their [ * 483] 
 transactions and for the recovery of his money (x). 
 The Chancellor decreed them to account for all monies 
 paid by the plaintiff to them or either of them, 
 and to pay what should appear due to him with inter- 
 est, the plaintiff to be absolutely discharged from the ar- 
 ticles, agreements, and partnerships, the defendants to 
 indemnify him from all costs and damages whatsoever 
 touching the articles, or any partnership in respect 
 thereof, and to pay the costs of the suit. This decree 
 was affirmed on appeal to the House of Lords. 
 
 Another case of the same description is Raivlins v. Although the 
 Wickham (y). There the plaintiff was induced by the plaintiff 
 misrepresentations of two persons, A. and B., to enter n ". gh * * iaV | 
 into partnership with them as bankers, and he and the truth, 
 they, after carrying on their business for four years, Rawlins v. 
 transferred it to other parties. Shortly after this Wickham. 
 transfer, the plaintiff for the first time became aware 
 of the falsity of the statements by which he had been 
 induced to become a partner. He brought an action 
 against A. and B. for their misrepresentations; pend- 
 ing the proceedings at law, A. died, but the action was 
 continued against B., and a verdict agrJnst him for 
 damages was obtained. After the verdict B. became 
 insolvent, and thereupon the plaintiff filed a bill against 
 B. and the executors of A., praying that the partner- 
 ship into which he had entered might be declared void, 
 that the partnership articles might be cancelled, that 
 the defendants might be decreed to repay him the sum 
 paid by him on entering into the partnership, with in- 
 terest, and to execute a sufficient indemnity against the 
 outstanding debts and liabilities, which the plaintiff 
 had or might become subject to, in respect of the deal- 
 fa) The defendants relied on the lapse of time and laches 
 and acquiescence on the part of the plaintiff; and particularly 
 on the fact that he had entered into another agreement with 
 them to the effect that the defendants should become partners in 
 another fishing concern and share their profits in that with the 
 plaintiff, and that such partnership had been entered into. The 
 evidence, however, failed to show that the plaintiff had any 
 knowledge of this alleged other partnership, or that he was aware 
 of what had been going on, until shortly before he filed his bill. 
 (y) 1 Griff. 355, aud 3 De G. & J. 304.
 
 550 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 5. 
 
 [*484] 
 
 Newbigging 
 r. Adam. 
 
 Extent of 
 indemnity. 
 
 Mycock v. 
 Beatson. 
 
 Lien for 
 purchase 
 
 money, &c. 
 
 Rescission of 
 
 contracts 
 made on a 
 dissolution 
 of partner- 
 ship. 
 
 ings and transactions of the partnership, and for an 
 account of such debts and liabilities, and of the mon- 
 ies already paid * by the plaintiff on account of the 
 partnership debts, and for repayment of such monies 
 with interest. A decree was made in the plaintiff's 
 favour, and an appeal by A.'s executors was dismissed. 
 In this case the deceased partner had clearly been a 
 party to the misrepresentation; and although it was 
 proved that he was ignorant of the real truth, and had 
 not stated that to be true which he knew to be false, 
 still it was held that he ought not to have stated what 
 he did not know to be true, and* that he was answera- 
 ble for the falsity of his own assertions. It was also 
 held that the plaintiff was entitled to assume that the 
 statements made to him were true until he had reason 
 to suppose that they were not; and that it was no 
 answer to him that if he had examined the partnership 
 books he would have discovered the true state of af- 
 fairs (z). 
 
 Neivbigging v. Adam (a) and Mycock v. Beatson (b) 
 are more recent illustrations of the same doctrine. In 
 the first of these cases it was held that where there is a 
 right to rescind for misrepresentation, but not fraudu- 
 lent, the right of the plaintiff to indemnity is less ex- 
 tensive than it is where he is in a position to claim 
 damages for a fraudulent misrepresentation. In the 
 second of the above cases the plaintiff was held enti- 
 tled to a lien on the partnership assets (after satisfy- 
 ing the debts and liabilities) for the money he had paid 
 on entering into the partnership; and also to stand in 
 the place of any creditor of the partnership whom he 
 paid off. 
 
 Besides being called upon to rescind agreements for 
 the formation of a partnership, Courts are frequently 
 applied to by partners, or those claiming under them, 
 to rescind agreements of other descriptions, and espe- 
 cially agreements come to on or after a dissolution. 
 
 (z) See. also, Jauncey v. Knowles, 8 W. R. 69, where there 
 was also means of knowledge. Compare Jennings v. Broughton, 
 17 Beav. 234, and 5 De G. M. & G. 126. where the plaintiff did 
 not rely on the defendant's statements. 
 
 (a) 84 Ch. D. 582. The defendants were declared "jointly 
 and severally bound to indemnify the plaintiff against all out- 
 standing debts, claims, demands, and liabilities, which the 
 plaintiff had become or might become subject to, or be liable to 
 pay for or on account or in respect of the dealings and transac- 
 tions of the partnership:" not necessarily equivalent to an in- 
 demnity against the consequences of having entered into the 
 partnership. See the judgment of Bowen, L. J. 
 
 {b) 13 Ch. D. 384.
 
 RESCISSION FOR FRAUD. 557 
 
 * Supposing every member of a firm to be sui juris, [ * 485] 
 any one may retire upon any terms to which he and Bk. III. 
 his co-partners may choose to assent ; and if there is ^ c a t p ' 5 10 ' 
 no fraud or concealment on either side, all will be bound k 
 
 by any agreement into which he and they may enter, Bad bargain 
 although it may ultimately turn out that a bad bargain ™^* a ^ lde 
 has been made. 1 b eea uo 
 
 For example, in Knight v. Marjoribanks (e) certain fraud, 
 persons were partners in a speculation in Australia. Knight v. 
 The speculation was not at first successful, and it was Marjori- 
 necessary for the partners frequently to contribute banks - 
 large sums of money for the purpose of carrying it on. 
 The plaintiff, who was one of the partners, was greatly 
 pressed for money, and was unable to contribute his 
 proportion of the required capital. A sum of upwards 
 of 5000Z. was alleged to be due from him to the concern ; 
 he never questioned the accuracy of this statement, but 
 assented to its correctness, and he never examined or 
 sought to examine any books or accounts ; and in con- 
 sideration of the sum so alleged to be due, and of 250?. 
 cash, he assigned all his interest in the concern to his 
 co-partners, and released them from all demands. The 
 speculation afterwards proving profitable, he sought to 
 set aside this transaction on the ground of fraud and 
 inadequacy of consideration. But as no fraud was 
 proved, as the plaintiff knew very well what he was 
 about, as he was content that no accounts should be 
 taken, and that no person should act as his adviser, 
 and as, although he was undoubtedly in distress, and 
 his co-partners knew it, yet they had taken no unfair ad- 
 vantage of that circumstance, it was held by both Lord 
 Langdale and by Lord Cottenham on appeal, that the 
 transaction was binding and could not be impeached(d). 
 
 Any arrangement which, on the principle here ad- 
 verted to, is binding on the partners themselves, will 
 also, as a general rule, be binding as between the trus- 
 tee in bankruptcy or executors of the retiring pai'tners 
 on the one hand, and the continuing partners and their 
 trustees or executors on the * other (e) But as regards [ * 486] 
 trustees in bankruptcy, it must not not be forgotten 
 
 {c) 11 Beav. 322, and 2 Mac. &. G. 10. 
 
 \d) See, also. Ex parte Peake, 1 Madd. 346 ; Ramsbottoni v. 
 Parker, 6 Madd. 5 ; M'Lure v. Ripley, 2 Mac. & G. 274 ; Cockle 
 V. Whiting, Taml. 55. 
 
 (e) Ex parte Peake, 1 Madd. 346 ; Ramsbottom v. Parker, 6 
 Madd. 5 ; Luckie v. Forsyth, 3 Jo. & Lat. 3d8. 
 
 1 See Hunt v. Hardwick, 68 Ga. 100 (1881); Gage v. Parnielee, 
 87 111. 329 (1877).
 
 55S 
 
 ACTIONS BETWEEN PARTNERS. 
 
 F.k. III. 
 Chap. 10. 
 Sect. 5. 
 
 Agreements 
 made on a 
 dissolution 
 
 and based 
 on false 
 accounts. 
 
 Chandler r. 
 Dorsett. 
 
 Spittal v. 
 Smith. 
 
 Arrange- 
 
 [*487] 
 ments with 
 
 that they can set aside arrangements . entered into in 
 fraud of creditors, although such arrangements may 
 be binding as between the parties to them and their 
 respective executors (/). 
 
 Notwithstanding the inability of a retiring partner, 
 and of those claiming under him, to avoid an agree- 
 ment fairly come to between him and his co-partners, 
 the good faith and open dealing which one partner has 
 a right to expect from another never require to be more 
 scrupulously observed than when one of them is re- 
 tiring upon terms agreed to upon the strength of 
 representations as to the state of the partnership ac- 
 counts ; and an agreement entered into on a dissolu- 
 tion will be set aside if it can be shown to have been 
 based upon error or to have been tainted by fraud, 
 whether in the shape of positive misrepresentation or 
 of concealment of the truth. 1 Thus, in Chandler v. 
 Dorsett (g), the plaintiff and the defendant dissolved 
 partnership ; an account was drawn up by the defend- 
 ant, who made it appear that there was a balance 
 against the plaintiff. The plaintiff gave his note for 
 the amount of this balance, and afterwards having dis- 
 covered mistakes in the account, filed a bill for a new 
 account. The defendant pleaded an account stated ; 
 but the Court decreed that the defendant should come 
 to a new account, and that what should appear to be 
 due on taking it should be paid with interest. So, in 
 Spittal v. Smith (h) where the plaintiff was entitled 
 to a share of the produce of a whaling voyage, and the 
 defendant paid him a sum of money as his share, for 
 which the plaintifi gave a receipt ; it was held that as 
 there had been concealment on the part of the defend- 
 ant, the plaintiff was entitled to an inquiry as to whether 
 certain deductions which had been made were proper. 
 
 As has been more than once observed in the course 
 of the * present treatise, the principles illustrated by 
 the foregoing decisions apply most strongly to the case 
 
 (/) See Anderson v. Maltbv, 2 Yes. J. 255 : Biliter v. Young, 
 6 E. & B. 40 ; Warden v. Jones, 2:} Beav. 497 ; Heilbut v. Ne- 
 vill. L. R. 4 C. P. 354, affirmed 5 C. P. 478. 
 
 {(/) Finch, 431. See, too, Maddeford v. Austwick, 1 Sim. 89. 
 
 (/() Taml. 45. 
 
 1 As to the correction of errors arising from misrepresentations 
 innocently made, see Stephens v. Oman. 10 Fla. 9 (1862). For 
 instances where relief has been granted in settlements based 
 upon fraudulent misrepresentations, see Case v. Cushman. 3 
 Watts & S. 544 (1842); Levin r. Vannevar. 137 Mass. 532 (1884); 
 Holmes v. Hubbard, 60 N. Y. 183 (1875): McGunu v. Hanlin, 29 
 Mich. 476 (1874).
 
 RESCISSION FOR FRAUD. 559 
 
 of a partner who is expelled by the others. Powers of Bk. III. 
 expulsion are always construed strictly, and unless they ^ a , p '_ 
 are exercised with perfect good faith, the expulsion will 
 
 be declared void, and the partner wrongfully expelled an expelled 
 will be restored to his position, and will not be held P artner - 
 bound by accounts which may have been signed by him 
 in ignorance of material facts (i). 1 
 
 Hitherto the arrangement entered into, and after- Agreements 
 wards called in question, has been supposed to have J? w 
 been made between the partners themselves. But Natives of a 
 more difficulty arises where an arrangement is entered deceased 
 into between the representatives of a deceased partner partner. 
 on the one hand, and the continuing partners on the 
 other. Two cases have here to be considered, accord- 
 ing as the representative of the deceased is or is not 
 himself a partner in the firm. 
 
 If an executor of a deceased partner is not a member 1. Where the 
 of the firm, it is competent for him and the surviving representa- 
 partners to agree that the share of the deceased shall * lve 1S not 
 be ascertained in a particular way, or to be taken at a partner- 
 certain value. 2 And although it has been said that the 
 creditors, or other persons interested in the estate of 
 the deceased, may impeach such an agreement by in- 
 stituting proceedings against the surviving partners 
 and the executors of the deceased (k), still agreements 
 of the kind in question cannot be successfully im- 
 peached, unless there has been some fraud or collusion 
 between them and the executors. In Davies v. Davies (I) 
 Lord Langdale observed : — 
 
 "It has been said in the course of the argument, that in a suit Davies v. 
 constituted as this is against the execntor and surviving partner Davies. 
 
 (i) See Blisset v. Daniel, 10 Ha. 538 ; as to damages see Wood 
 v. Woad, L. R. 9 Ex. 190. See, also, Russel v. Russell, 14 Ch. 
 D. 471. 
 
 (fc) See Bowsher v. Watkins, 1 R. & M. 277 ; Gedge v. Traill, 
 ib. 281. 
 
 (0 2 Keen, 539. 
 
 1 If reinstatement is an inadequate relief under the circum- 
 stances, the court will decree the dissolution of the firm and an 
 accounting. Patterson v. Silliman, 28 Pa. St. 304 (1857). 
 
 2 Where the articles of partnership give the survivor the right 
 to take at a valuation or that the assets shall vest in him, a set- 
 tlement made in good faith by the executor of the estate of a 
 deceased partner will bind the distributees, Holmes' Appeal, 79 
 Pa. St. 279 (1875). And even in the absence of this provision 
 such a step by the executor will be approved by the court and 
 will bind all interested in the estate. Grim's Appeal. 105 Pa. 
 St. 375 (1884); Ludlum v. Buckingham, 35 N. J. Eq. 71 (1882); 
 Heath v. Waters, 40 Mich. 457 (1879); Kimball v. Lincoln, 99 
 111. 578 (1881); Sage u. Woodin 6G N. Y. 578 (1876).
 
 5G0 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 5. 
 
 [ * 488] 
 
 Effect of 
 fraud and 
 collusion. 
 
 of the testator, for an account of the partnership transactions, it 
 was not necessary to prove the fraud and collusion which are 
 charged in the bill, and the case of Bowsher v. Watkins was cited 
 in support of that proposition. I well recollect that there were 
 special circumstances which induced Sir John Leach to come to 
 the conclusion he did in that case, and that the decision was far 
 from establishing the general proposition that in every case a bill 
 might be * filed against an executorand surviving partner of the 
 testator without charging 'and proving fraud or collusion. In 
 this case there are no special circumstances. It is a bill filed by 
 persons beneficially interested in the testator's estate against the 
 executor and the surviving partner, and it seeks to have the 
 partnership accounts now. The defendant, the surviving part- 
 ner, by his plea avers that an account was settled with the ex- 
 ecutor on the 31st of December, 1832, and that, if unimpeached, 
 is a sufficient defence to the bill. ' ' 
 
 Later cases are in conformity with this decision (m). 
 If there has been fraud or collusion between the sur- 
 viving partners and the executors of the deceased part- 
 ner, the case naturally assumes a different aspect, and 
 any arrangement between them will be liable to be set 
 aside at the instance of the persons interested in the 
 estate of the deceased (n). And, even although there 
 be no fraud or collusion, still, if the executor has ob- 
 tained less than the true value of the deceased's share 
 in the partnership estate, the executor may be liable as 
 for a devastavit, although the surviving partner may be 
 protected against all demands. But if, in a case of 
 difficulty, the executor has acted with a bond fide view 
 to do his best for the estate he represents, the Court 
 will not be willing to make him account for what, with- 
 out his wilful default, he might have received from the 
 surviving partners (o). 
 •2 Where the -^ a partner dies and leaves his co-partner his execu- 
 representa- tor, much greater difficulty is met with than in the 
 case last supposed. By the present hypothesis the 
 executor is invested with two characters, and his interest 
 as surviving partner is often in conflict with his duty 
 
 (m) Chambers v. Howell, 11 Beav. 6 ; Stainton v. The Carron 
 Co., 18 Beav. 146 ; and as to accounts settled by one of several 
 executors, Smith v. Everett, 27 Beav. 446. 
 
 (n) As in Cook v. Collingridge, Jac. 607 ; Rice v. Gordon, 11 
 Beav. 265. See also Beningfield v. Baxter, 12 App. Ca. 167. 
 Less than fraud or collusion will justify an action against an 
 executor of a deceased partner and the surviving partners, Travis 
 v. Milne, 9 Ha. 141, but will not, it is apprehended, invalidate 
 arrangements into which they may have entered for payment of 
 the share of the deceased. 
 
 (o) See Kowley v. Adams, 7 Beav. 395, and 2 H. L. C. 725. 
 
 tives is him 
 self a part- 
 ner.
 
 RESCISSION FOR FRAUD. 561 
 
 as representative of the deceased. This conflict of duty Bk. III. 
 and of interest renders it almost impossible for the ex- SJSP'k 
 
 ecutor to enter into any arrangement with respect to '. ! 
 
 the share of the deceased in the partnership estate which 
 
 * those interested in that share may not afterwards sue- [ * 489] 
 
 ceed in setting aside (p). 1 
 
 In Wedderbum v. Wedderbum (q),a leading case on "Wedderburn 
 this subject, an account of a deceased partner's estate *■ "Wedder- 
 was directed after a lapse of thirty years, and repeated 
 changes in the firm, and after several deeds and a re- 
 lease had been executed by the parties beneficially in- 
 terested. The surviving partners were the executors of 
 the deceased, and were guardians of the persons bene- 
 ficially entitled to his share, and the settlements and 
 releases were executed in ignorance of the true state of 
 the partnership accounts. So in Millar v. Craig (r), Millars, 
 where one partner died, leaving four executors, of whom raig- 
 two were members of the firm; an account was settled 
 between the executors and the residuary legatees, and 
 releases were executed; but errors having been proved 
 in the accounts, the releases were set aside, and the ac- 
 counts were re-opened. Again, in Stocken v. Darvson (s), Stocken v. 
 a partner by his will authorised a sale of his share to Dawson - 
 his co-partner, whom he appointed one of his executors. 
 The surviving partner purchased the share of the de- 
 ceased at a valuation, but the purchase was set aside at 
 the suit of the son of the deceased, after a lapse of seven 
 years. So in Rice v. Gordon (t), where a partner died, ? ie V'' 
 some of his co-partners obtained administration to his 
 estate and sold part of the assets of the deceased to an- 
 other of the partners, but at an undervalue; the sale was 
 set aside at the suit of a creditor. 
 
 In all these cases there was some ground for setting Difficult 
 aside the arrangement made by the executors, in addi- position of 
 representa- 
 
 (p) See Cook v. Collingridge, Jac. 607. tive. 
 
 \q) 2 Keen, 722, and 4 M. & Cr. 41. 
 
 (r) 6 Bear. 433; in This ease no question was raised as against 
 the partners who were not executors. 
 
 (s) 9 Beav. 239. 
 
 (0 11 Beav. 265. 
 
 1 Such a transaction has been said to lie fraudulent per se and 
 not to be sustained when objected to bv any party in interest. 
 Colgate (-Colgate, 23 N. J. Eq. 372 (1872). See dictum in Gil- 
 bert's Appeal, 78 Pa. St. 266 (1875). In Filler v. Phelps, 18 
 Conn. 294 I 1847), it was held that where an administrator who 
 was a co-partner with the decedent bought out the latter's in- 
 terest in the firm, he could be compelled to carry out his contract, 
 although illegal. And in .Moses/. Muses. 50 Ga. 9 (1873), it was 
 decided that an executor can buy from the surviving partner an 
 interest for himself in the firm. 
 
 * 13 LAW OF PARTNERSHIP.
 
 562 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. tion to the mere fact that they were also surviving part- 
 
 Chap. JO. ners. But, as observed by Lord Eldon in Cook v. Col- 
 __L_I__ lingridge (u), "one of the most firmly est ablished rules 
 is, that persons dealing as trustees and executors must 
 put their own interest entirely out of the question, and 
 this is so difficult to do in a transaction in which they 
 are dealing with themselves that the Court will not 
 [ *490] * inquire whether it has been done or not, but at once 
 
 says such a transaction cannot stand" (x). 
 Eight of re- However, a surviving partner who is the executor of 
 tainer out of bis deceased co-partner, may retain out of his assets 
 what is due from the deceased to himself on taking the 
 partnership accounts (y). 
 Loss of right Assuming that, on the principles above explained, a 
 to rescind. person has a right to rescind a contract on the ground 
 of misrepresentation, he may lose that right in one of 
 two ways, viz., 1, by his own laches; and 2, by disa- 
 bling himself from restoring what he may himself have 
 received. 
 
 A person entitled to rescind a contract for fraud loses 
 his right if he does not repudiate the contract within a 
 reasonable time after the discovery of the fraud (z), 1 
 and, a fortiori, if after such discovery he does any- 
 thing to affirm the contract, 2 or anything which is in- 
 consistent with his right to rescind it; e. g , if, in the 
 case of shares fraudulently sold to him, he attempts 
 to resell them (a), or continues to act as a share- 
 holder (6). 
 Rescission in Further, a person induced by fraud to enter into a 
 toio - contract cannot rescind it unless he is himself able to 
 
 rescind it in toto, and to restore the other party to his 
 former position, or unless his inability so to do is at- 
 tributable to that party (c). But if the contract is 
 
 (u) Jac. 621. 
 
 (x) The position of the executors of the deceased partner will 
 be examined at length hereafter, and the subject above noticed 
 will he again adverted to on that occasion. 
 
 (y) Morris v. Morris, 10 Ch. 68, where the accounts were still 
 unsettled. 
 
 (z) See, on this suhject generally. Clough r. L. &N.W. Rail. Co., 
 L. R. 7 Ex. 35, and as instances of repudiation heing too late see 
 Denton r. Macneil, 2 Eq. 352; Ashley's case, 9 Eq. 263; Scholey 
 v. Central Rail. Co. of Venezuela, ib. 266, note. Compare 
 Macniel's case, 10 Eq. 503; Campbell v. Flemings, 1 A. & E. 40. 
 
 (a) ISi'iggs' case, 1 Eq. 483. 
 
 (i) Sharpley v. Louth and East Coast Rail. Co., 2 Ch. D. 663. 
 
 ('I See Urquhart v. McPherson, 3 App. Ca. 831, a deed of dis- 
 
 1 Richards v. Todd. 127 Mass. 167 (1879); Evans v. Montgom- 
 ery. 50 Iowa, 325 (1879). 
 
 - St. John c. Heudrickson, 81 Ind. 350 (1882).
 
 ACCOUNT. 563 
 
 severable, inability to rescind it as to part is not fatal to Bk. III. 
 the right to rescind it as to another part (d). Sect 6 
 
 It must be remembered that a contract induced bv 
 
 fraud is voidable only and not void. Consequently a Liability to 
 person induced by fraud to become a partner is liable cre<llte,rs - 
 to all creditors of the * firm in respect of its dealings [491] 
 with them whilst he is a partner (e). 1 
 
 Section VI. — Actions for Dissolution, Account, Etc 
 
 The remedy for a partner who insists on a dissolution 
 which is opposed by his co-partners was formerly by a 
 suit in equity, and is now by an action which should be 
 brought in the Chancery Division of the High Court (/). 
 Actions involving the taking of partnership accounts 
 should also be brought in the same division. 
 
 In an action for dissolution the statement of claim 
 should claim a dissolution and an account, and also an 
 injunction and a receiver to restrain the defendants from 
 dealing with the partnership assets and from issuing bills 
 or notes in the name of the firm. Such an action lies, 
 although the partuership be a partnership at will and 
 can therefore be dissolved by the plaintiff himself (g); 
 but if the partnership has been dissolved before action, 
 the plaintiff should claim a declaration to that effect (h). 
 If the partnership is admitted and the right to dissolve 
 is not contested, the Court will decree a dissolution on 
 motion before the hearing or trial (i). An action may 
 be brought for rescission of the contract of partnership 
 or in the alternative for dissolution of the partner- 
 ship (j). 
 
 solution and release. See, also, Phosphate Sewage Co. v. Hart- 
 mont, 5 Ch. D. 394; Laing v. Campbell, 36 Beav. 3; Clarke v. 
 Dickson, E. B. &E. 148; Maturing Tredinnick, 2 N. R. 514, and 
 4 ib. 15. 
 
 (d) See last note. 
 
 (e) See Ex parte Broome, 1 Rose, 69; Jeffreys v. Smith, 3 Russ. 
 158; Macbride v. Lindsay, 9 Ha. 574; and as to shareholders in 
 companies, Reese River Mining Co. v. Smith, L. R. 4 Ho. Lo. 70; 
 Henderson v. The Roval British Bank, 7 E. & B. 356; Daniell v. 
 The Royal British Bank, 1 H. & N. 681 ; Powis v. Harding. 1 C. 
 B. N. S. 533; Howard v. Shaw, 9 Ir. Law Rep. 335. 
 
 (/) Jud. Act, 1873, I 34. 
 
 \g\ Master r. Kirton, 3 Ves. 74. 
 
 (h) The date of the dissolution depends on circumstances. See 
 infra, book iv. ch. 1. 
 
 (i) Thorp v. Holdsworth, 3 Ch. D. 637, where the terms of the 
 partnership were in dispute. 
 
 (j) Bagot v. Eastern, 7 Ch. D. 1. 
 
 1 Haynes v. Stewart, 10 B. Mon. 429 (1850).
 
 161 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. An action for the dissolution of an ordinary partner- 
 
 Chap. 10. s kjp ma y ]j e maintained, although the partnership is 
 beet " 6 " one which may be wound up under the statutory juris- 
 
 diction conferred by the Companies act, 1SG2 (k); but 
 practically it is more convenient/to have recourse to that 
 act where it applies. 
 [ * 492] The grounds on which the Court will dissolve a * part- 
 
 nership (/); and the mode of winding up the affairs of 
 a partnership in the event of death or bankruptcy will 
 be examined in Book IV. : in the present place it is pro- 
 posed to deal with the subjects of Account and Discov- 
 ery, Injunctions, Receivers, Sale of Partnership Prop- 
 erty. 
 
 1. Of account and discovery. 
 
 Under this head it is proposed to consider, with ref- 
 erence to partners and persons claiming under them — 
 
 1. The right to an account and discovery generally. 
 
 2. The defences to an action for an account and dis- 
 covery. 
 
 3. The judgment for a partnership account. 
 
 (a) Of the right to an account and discovery generally, as between 
 partners and those claiming under them. 
 
 1. Action for 1- As to Account. — The right of every partner to have 
 an account, an account from his co-partners of their dealings and 
 transactions, is too obvious to require comment. An 
 action for an account may be maintained by partners 
 although the partnership accounts are not compli- 
 cated (ra); and although an action for damages may be 
 sustainable (w); 1 and although the defendant may have 
 stolen or embezzled the money of the firm (o). More- 
 over, although formerly the Court of Chancery would 
 
 (k) Jones v. Charlemont. 16 Sim. 271; Clements v. Bowes, 17 
 ib. 167. 
 
 (/) As to fraud, see ante, p. 479 et seq, 
 
 (m) Cruikshank v. M'Vicar, 8 Beav. 106. See Frietas t?. Dos 
 Santos, 1 Y. & J. 574. 
 
 (n) Wright v. Hunter, 5 Ves. 792, where the bill was for con- 
 tribution; Blain v. Agar, 1 Sim. 37, and 2 ib. 289, where the bill 
 was for the recovery back of deposits. See, too, Townsend v. 
 Ash, 3 Atk. 336, as to the profits of partnership real estate. 
 
 (o) Eoope v. D'Avigdor, 10 Q. B. D. 412. 
 
 1 Where a surviving partner admits that the account stated by 
 the administrator of the deceased partner is correct, although this 
 gives the latter a remedy at law, it has been held not to oust the 
 jurisdiction of a court of equity. Personette v. Pryme. 34 N. J. 
 Eq. 26 (1881).
 
 account. 565 
 
 not entertain a suit for damages merely, although the Bk. III. 
 suit was in form a suit for an account (p); yet in a g^ p ' 6 
 
 partnership suit involving a general account claims were . — '. 
 
 adjusted which in ordinary cases would have formed 
 the subject of an action at law (q); 1 and it is appre- 
 hended that* now the Court will in taking such an ac- 
 count deal with every claim which it may be * necessary [ * 493 ] 
 to investigate in order to adjust and finally settle the 
 account. But disputes not affecting the account will 
 naturally be excluded from it. 
 
 An account may be had by one partner " or his exe- Persons en- 
 cutors or administrators (r) 3 against his co- partner or titled to an 
 his executors or administrators (s). 4 So by the trus- account, 
 tees of a bankrupt partner against the solvent part- 
 ner (t) or his executors (u). So a solvent partner may 
 maintain an action for an account against the trustees 
 of his bankrupt co-partner ; 5 and, notwithstanding the 
 rule against making mere witnesses parties, the bank- 
 rupt himself may, it is said, be made a defendant for 
 the purposes of discovery (v). 6 Again, if a partner's 
 
 (p) Duncan v. Luntley, 2 Mac. & G. 30, -where shares had been 
 wrongfully sold by the secretary of a company. See, also, Clif- 
 ford v. Brooke, 13 Ves. 132. 
 
 (q) See Bury v. Allen, 1 Coll. 589; MacKennar. Parkes,fmte, p. 67, 
 note (o). Compare Great Western Ins. Co. v. Cunliffe. 9 Ch. 525. 
 
 (r) Heyne v. Middlemore, 1 Rep. in Ch. 138 ; Hackwell v. 
 Eustman, Cro. Jac. 410. 
 
 (s) Beaumont v. Grover, 1 Eq. Ab. 8. pi. 7. 
 
 (t) As in Wilson v. Greenwood, 1 Swanst. 471. 
 
 («) As in Addis v. Knight, 2 Mer. 119. 
 
 (<) Whitworth v. Davis, 1 V. & B. 545. SeeMitford PI. 187 ed. 5. 
 
 1 Richards v. Todd, 127 Mass. 167 (1879); Morrison v. Kramer, 
 58 Iud. 38 (1877); Singer v. Heller, 40 Wis. 544 (1876); Xichol 
 v. Stewart, 36 Ark. 612 (1880). 
 
 2 Sharp v. Hibbins, 42 N. J. Eq. 543 (1887), accords the right 
 to an account to a partner indebted to his firm and to whom no 
 balance could come, on the ground that he has a right to have 
 the firm's assets applied to the payment of its debts and to know 
 what his own ultimate indebtedness will amount to. A dor- 
 mant partner can claim an accounting, Harvey v. Yarney, 98 
 Mass. 118 (1867). But if a retiring partner parts in any manner 
 with his equitable lien on the firm's assets, his right to an ac- 
 count is gone. Wilson v. Soper, 13 B. Mon. 411 (1853). 
 
 3 Grim's Appeal, 105 Pa. St. 375 (1884); Freeman a. Freeman, 
 136 Mass. 260 (1884); Tillinghast r. Champlin, 4 R. I. 173. 
 
 4 The representatives of a deceased partner must be made 
 parties to a bill pravingan account. Jenness r. Smith, 58 Mich. 
 280 (1885); Burchard v. Bovce, 21 Ga. 6 (1857). 
 
 5 Fuller v. Benjamin, 23 Me. 255 (1843). 
 
 Although a partner assign his share, he is a necessary party 
 to a bill for an account. Raiguel's Appeal. 80 Pa. St. 234 1878); 
 Bank v. Railroad Co. 11 Wall. 624 (1870). Settembre v. Put- 
 man, 30Cal. 490 (1866).
 
 506 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 (hup. 10. 
 Sect. 6. 
 
 Servants, &c. 
 
 Sub-part- 
 ners, &c. 
 
 [ * 494] 
 
 Creditors, 
 &c., of 
 deceased 
 partner. 
 
 share is taken in execution, the purchaser from the 
 sheriff is entitled to an account from the solvent part- 
 ners, as is, also, the execution debtor himself (x). 1 
 
 An agreement to pay out of profits confers a right to 
 an account ; and servants entitled to a share of profits 
 can maintain an action for an account of them (y). 2 
 
 A sub partner has no right to an account from the 
 principal firm, or any of the members of it, except the 
 one with whom he is a sub- partner ; for there is no 
 contract or privity save between those two (z). 3 It has 
 even been said that if a partner charges or mortgages 
 his share in favour of a creditor, the latter has no right 
 to an account from the other partners of the profits to 
 which their co- partner may be entitled. This, how- 
 ever, is not correct (a) 4 and as regards partners in 
 mines, it has been decided that a mortgagee of one 
 partner is entitled to an account against the other 
 partners (b). If a partner, with * the consent of his 
 co- partners, assigns bis share in the partnership, the 
 assignees will, by virtue of this assent, acquire the right 
 of the assignor, and be, therefore, entitled to an account 
 from the other partners (c). 5 
 
 If a partner dies, a question arises as to the right of 
 his creditors and legatees to sue the other partners for 
 an account of the share of the deceased. The credit- 
 ors of the late firm can maintain an action against the 
 executors of the deceased and the surviving partners, in 
 order to obtain payment of their debt out of the assets 
 
 (.r) See Habershan v. Blurton, 1 De G. & Sm. 121 ; Perens v. 
 Johnson, 3 Sm. & G. 419. 
 
 (y) See Harrington v. Churchward, 6 Jur. N. S. 576 ; Rishton 
 v. Grissell, 5 Eq. 326 ; Turney v. Bay ley, 4 De G. J. & Sm. 332. 
 
 (z) Brown v. De Tastet, Jac. 284 ; Raymond's case, cited in 
 Ex parte Barrow, 2 Rose, 252 ; Bray v. Fromont, 6 Madd. 5, and 
 see Killock v. Greg, 4 Russ. 285, as to agents. 
 
 («) See Wbetbam v. Davev. 30 Ch. D. 574, and ante, p. 364. 
 
 (b) Bentley v. Bates, 4 Y. & C. Ex. 182. 
 
 (c) See Fawcett v. Whitebouse, 1 R. & M. 132 ; Redmayne v. 
 Forster, 2 Eq. 467. 
 
 1 Knerr v. Hoffman. 65 Pa. St. 126 (1870); Clement v. Foster, 
 3Ired. Eq. 213 (1844); Nixon v. Nash, 12 Oh. St. 647 1861). 
 
 2 Hargrave v. Conrov, 19 N. J. Eq. 281 (1868); Channon v. 
 Stewart," 103 111. 541 "(1882); Osbrey v. Reimer, 51 N. Y. 630 
 (1872); Hallett r. Cumston, 110 Mass. 29 (1868). 
 
 3 Reilly v. Reilly, 14 Mo. App. 62 (1883). 
 
 4 Wallace's Appeal, 104 Pa. St. 559 (1883); Receivers v. God- 
 win, 5N. J. Eq. 334 (1846); Huston v. Neil, 41 Ind. 504 (1873). 
 
 5 SeeGyger's Appeal, 62 Pa. St. 73 (1869); Bank v. Railroad 
 Co., 11 Wall. 624 (1870); Farley v. Moog, 79 Ala. 148 (1885).
 
 ACCOUNT. 567 
 
 of the deceased (d). But the separate creditors, or the Bk. III. 
 legatees, or next of kin of a deceased partner, stand ^ j?" ft 
 
 in a very different position. In the absence of special ' „ 
 
 circumstances, they have no locus standi against the 
 surviving partners, but only against the legal personal 
 representative of the deceased partner (e), 1 and it is 
 only when there is collusion between these persons, or 
 when circumstances have occurred which preclude the 
 representative from himself obtaining an account of the 
 share of the deceased, that his separate creditors, lega- 
 tees, or next of kin, may themselves bring an action for 
 that purpose against the surviving partners (f). 2 
 
 The account which a partner may seek to have taken, General or 
 may be either a general account of the dealings and limited 
 transactions of the firm, with a view to a winding up accour >k 
 of the partnership ; or a more limited account, direct- 
 ed to some particular transaction as to which a dispute 
 has risen. 
 
 It was formerly considered that no account between Account 
 partners could be taken in equity, save with a view to without a 
 a dissolution (g), and a bill praying an account but dissolution, 
 not a dissohxtion has been held bad on demurrer (h). 
 But this rule has been gradually relaxed ; for it has 
 been felt that more injustice frequently arose from the 
 refusal of the Court to do less than complete * justice, [ * 495] 
 than could have arisen from interfering to no greater 
 extent than was desired by the suitor aggrieved (i). 3 
 Accordingly, in Prole v. Master man (k), where the Prole v. Mas- 
 promoter of a company sought to make his co-promot- terinau. 
 ers contribute to a debt paid by him, but for which 
 
 (d) Wilkinson v. Henderson, 1 M. & K. 582, and see book iv. 
 ch. 3. I 3. 
 
 (e) Davies v. Davies, 2 Keen, 534 ; Travis v. Milne, 9 Ha. 141; 
 Langley v. The Earl of Oxford, 2 Amb. 798, Blunt's ed. ; Seeley 
 v. Boehrn, 2 Madd. 180. 
 
 (f) See the caseslast cited. This subject will be again alluded to. 
 
 (g) Fornian v. Homfray, 2 V. & B. 329 ; Knebell v. White, 2 
 Y. & C. Ex. 15 ; ante, p. 464 ct scq. 
 
 (h) Loscorabe v. Russell, 4 Sim. 8. 
 
 (i) See ante, #3 (1) of this chap. 
 
 (k) 21 Beav. 61. Compare Munningsw. Bury, Tam. 147. The 
 circumstance that an action for contribution would lie, did not 
 oust the jurisdiction of a court of equity, Wright v. Hunter, 5 
 Ves. 792. 
 
 1 Rosenzweig v. Thompson, G6 Md. 593 (1881); Harrison v. 
 Righter, 11 N. J. Eq. 389 (1855). 
 
 2 Boyle v. Boyle, 4 B. Mon. 570 (1844), Stewart v. Burkhalter, 
 28 Miss. 37(! (1855). So if the executor happens also to be the 
 surviving partner and he mismanage or misappropriates assets, 
 Harrisou v. Righter, 11 N. J. Eq. 389 (1855). 
 
 3 Pirtle v. Peun, 3 Dana, 247 (1835).
 
 >68 
 
 ACTIONS BETWEEN PARTNERS. 
 
 P.k. III. ' 
 Chap. 10. 
 Sect. 6. 
 
 Cases in 
 which an 
 account will 
 be decreed, 
 although no 
 dissolution is 
 prayed. 
 
 1. Account 
 
 [ * 496] 
 
 where one 
 partner 
 withhold 
 what the 
 firm is en- 
 titled to. 
 
 they were liable as well as he, it. was held that a decree 
 might be made without directing a general account of 
 what was due from the plaintiff in respect of other 
 matters. Again, in the case of a mutual insurance so- 
 ciety, where the funds of the society are answerable 
 for the payment of the monies due upon their policies, 
 an assured member is entitled to an account of what is 
 due to him upon his policy, and to a decree for the pay- 
 ment of what is so due, without involving himself in 
 any general account of the dealings and transactions of 
 the society, or seeking for a dissolution thereof (Z). 
 
 The old rule, therefore, that a decree for an account 
 between partners will not be made save with a view to 
 the final determination of all questions and cross claims 
 between them, and to a dissolution of the partnership, 
 must be regarded as considerably relaxed, although it 
 is still applicable where there is no sufficient reason for 
 departing from it. 
 
 There are three classes of cases in which actions for 
 an account, without a dissolution, are more particularly 
 common, and to which it is necessary specially to refer. 
 These are — 
 
 1. Where one partner has sought to withhold from 
 his co-partner the profit arising from some secret trans- 
 action. 
 
 2. Where the partnership is for a term of years still 
 unexpired, and one partner has sought to exclude or 
 expel his co-partner or to drive him to a dissolution. 
 
 3. Where the partnership has proved a failure, and 
 the partners are too numerous to be made parties to 
 the action, and a limited account will result in justice 
 to them all. 
 
 1. Where one partner has obtained a secret benefit, 
 from * which he seeks to exclude his co-partners, but 
 to which they are entitled, they can obtain their share 
 of such benefit by an action for an account, and such 
 action is sustainable, although no dissolution is sought. 
 The cases illustrating this doctrine have been already 
 noticed at length (m), and it will therefore be sufficient 
 here to state that an account was directed, although 
 the plaintiff did not seek to have the partnership dis- 
 solved, or its affairs wound up, in 
 
 Hichens v. Congreve, 1 E. & M. 150. 
 
 Fawcettw. Whitehonse, 1 R. & M. 132, ante, p. 313. 
 
 (1) See Bromley v. Williams, 32 Beav. 177 ; Hutchinson v. 
 Wright, 25 Beav. 444 ; Taylor v. Dean, 22 Beav. 429. See, too, 
 Bobson v. McCreight, 25 Beav. 272. 
 
 (m) Ante, p. 305 ct seg.
 
 account. 569 
 
 Beck v. Kantorowicz. 3 K. & J. 230. Bk. III. 
 
 The Society of Practical Knowledge ». Abbott, 2 Bear. 559. Chap. 10. 
 
 Sect. 6. 
 
 In all the other cases of this class, except Clegg v. 
 
 Fishwick (n), in which a dissolution was prayed, the 
 report is silent as to whether a general winding up was 
 sought or not. 
 
 With reference to cases of this description, it may The equity 
 be observed that where the benefit which the plaintiffs of the firm is 
 assert their right to share has not yet been obtained, against the 
 but only agreed for by their co-partners, the plaintiffs p^ner only. 
 have no locus standi against the person with whom the 
 agreement has been entered into by those partners, and 
 cannot therefore restrain such person from performing 
 that agreement. The proper course for the aggrieved 
 partners to take is to proceed against their co-partners, 
 and claim from them the benefit of the agreement into 
 which they have entered (o). 
 
 2. "Where the partnership is for a term of years still 2. Account 
 unexpired,and one partner has sought to exclude or ex- m cas es of 
 pel his co-partner, or to drive him to a dissolution. In ^ c usl0n ' 
 cases of this description an account has beeu directed, 
 although no dissolution has been asked. 
 
 The general proposition that courts of equity would 
 interfere under the circumstances now supposed, was 
 laid down by Sir John Leach in Harrison v. Armit- 
 age (p), where, however, no * account was directed, in- [ * 497] 
 asmuch as the evidence did not establish a partnership. 
 But in Chappie v. Cadell (q) an account was directed Chappie v. 
 at the suit of a minority where the majority had sold a Cadell. 
 partnership newspaper to a stranger, and some of the 
 more active of the majority had then entered into a 
 fresh agreement with the purchaser to carry on the pa- 
 per in partnership with him. Richards v. Davies (r) Richards v. 
 went a step further. There a partnership had been en Davis, 
 tered into for a term of years which was still unexpir- Defendant 
 ed. The defendants would come to no account with UMIlg to 
 the plaintiff respecting the partnership dealings and 
 transactions, but on the application of the plaintiff a 
 decree for an account of all past transactions was made. 
 Sir John Leach, in pronouncing judgment, observed 
 that the plaintiff had no relief at law for money due to 
 
 (n) 1 Mac. & G. 294. 
 
 (o) See Alder v. Fouracre, 3 Swanst. 489, where an injunction 
 was granted restraining the executors of a deceased partner who 
 had agreed for a renewal of a lease from disposing, of the lease 
 when granted, except for the benefit of the partnership. 
 
 ( p) 4 Madd. 143. 
 
 (q) Jac. 537. 
 
 (r) 2E.& >L 347.
 
 570 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 6. 
 
 Fairthorne v. 
 
 Weston. 
 
 Defendant 
 
 seeking to 
 
 drive plain- 
 tiff to dis- 
 solve. 
 
 [ * 498] 
 
 Other cases. 
 
 him on a partnership account; that if a court of equity- 
 refused him relief, he would be wholly without remedy; 
 and in answer to the objection that if such a suit were 
 entertained the defendant might be vexed by a new 
 bill whenever new profits accrued (s), his Honour ask- 
 ed what right would the defendant have to complain 
 of such new bill if he repeated the injustice of with- 
 holding what was due to the plaintiff? 
 
 Fairthom v. Weston (t) is another authority in point. 
 In that case two solicitors entered into partnership for 
 a term of years, and before the term expired the de- 
 fendant conducted himself in such a way as to prevent 
 the possibility of the partnership business being car- 
 ried on. The defendant's object was to compel the 
 plaintiff to dissolve. The plaintiff, however, instead of 
 dissolving, tiled a bill for an account of the partner- 
 ship dealings and transactions since the last settle- 
 ment, and for a receiver. The defendant insisted that 
 the plaintiff was entitled to no relief except with a view 
 to a dissolution ; but the Court held otherwise, and 
 observed that there was no universal rule to the effect 
 that a bill, asking for a particular account but not for a 
 dissolution, was demurrable ; and that if * there were 
 any such rule, a person fraudulently inclined, might, 
 of his mere will and pleasure, compel his co-partner to 
 submit to the alternative of dissolving a partnership, 
 or ruin him by a continued violation of the partnership 
 contract. 
 
 Again, where a person seeks to establish a partner- 
 ship with another who denies the plaintiff's title to be 
 considered a partner, if the former is successful upon 
 the main point in dispute, an account of the past deal- 
 ings and transactions will be decreed, although the 
 plaintiff does not seek for a dissolution of the partner- 
 ship which he has proved to exist (u). Upon the same 
 principle it is apprehended, that if a partner is wrong- 
 fully expelled, and he is restored to his status as partner 
 by the judgment of the Court, an account will be di- 
 
 (s) This objection -was made bv Lord Elrlon in Forman v. 
 Homfray, 2 V. & B. 330; by V.-C. Shadwell in Loscombe v. Rus- 
 sell. 4 Sim. 8; and by Baron Alderson in Knebell v. White, 2 Y. 
 & C. Ex. 15. 
 
 (t) 3 Ha. 387. 
 
 (w) Knowles v. Houghton, 11 Ves. 108, as reported in Collyer 
 on Partn. 198, note. The defendant, however, did not resist the 
 account after the question of partnership was decided against 
 him.
 
 ACCOUNT. 571 
 
 rected, but the partnership will not necessarily be dis- Bk. III. 
 
 i j / \ i Chap. 10. 
 
 solved (X). _ _ Sect * 6 
 
 As regards mines it has also been decided, that if 
 
 one co-owner excludes another from his share of the Mines, 
 profits, an account will be directed, although no disso- 
 lution is prayed (y). But, as each co-owner of amine 
 can sell his share without the consent of the other 
 owners, there is no occasion for him to ask for a disso- 
 lution, and the case of a mine is therefore, perhaps, not 
 an apt illustration of the doctrine in question. 
 
 3. Where the partnership has proved a failure, and 3. Account 
 the partners are too numerous to be made parties to the ^l^^g u " 
 action, and a limited account will result in justice to f a ji et i 
 them all, such an account will be directed, although a 
 dissolution is not asked for. 2 The leading case in sup- 
 port of this proposition is Wallworth v. Holt (z), in Walrworth 
 which Lord Cottenham, in an elaborate and justly cele- v - Holt- 
 brated judgment, overruled a demurrer to a bill by 
 some of the shareholders of an insolvent joint- stock 
 bank, on behalf of themselves and others, against the 
 directors, trustees, and public officer of the company, 
 and certain * shareholders who had not paid up their [ * 499] 
 calls, praying that an account might be taken of all the 
 partnership assets, and that the outstanding assets 
 might be got in by a receiver, and that the whole might 
 be converted into money, and applied towards the satis- 
 faction of the partnership debts. In delivering judg- 
 ment the Lord Chancellor observed, — 
 
 '"When it is said that the Court cannot give relief of this lim- 
 ited kind, it is, I presume, meant that the bill ought to have 
 prayed a dissolution, aud a final winding up of the affairs of the 
 company. How far this Court will interfere between partners, 
 except in cases of dissolution, has been the subject or much dif- 
 ference of opinion, upon which it is not my purpose to say any- 
 thing beyond what is necessary for the decision of this case; but 
 
 (x) See Blisset v. Daniel. 10 Ha. 493. where the bill prayed for 
 a dissolution, but no dissolution was decreed. In the case of an 
 incorporated company this point cannot arise, Garden Gully Co. 
 r. McLister, 1 App. Ca. 39, is an instance. 
 
 (y) Bentley v. Bates, 4 Y. & C. Ex. 182. See, also, Eedmayne 
 v. Forster, 2 Eq. 467. 
 
 (a) 4 M. & Cr. 619. 
 
 1 If the firm A. & B. buy land and A. gets the title into his 
 own name, a bill can be maintained by B. praying a conveyance 
 of an undivided half of the tract, without resorting to dissolution 
 and an account. Davis v. Davis, 00 Miss. 015 (1B82); Tniphagen 
 v. Burt, 07 X. Y. 30 (1870). 
 
 2 Coville v. Gilman, 13 W. Va. 314 (1878).
 
 572 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. there are strong authorities for holding that, to a bill praying a 
 
 Chap. 10. dissolution, all the partners must be parties (a) ; and this bill 
 
 , alleges that they are so numerous as to make that impossible. 
 
 The result, therefore, of these two rules would be — the one bind- 
 ing the Court to withhold its jurisdiction, except upon bills pray- 
 ing a dissolution, and the other requiring that all the partners 
 should be parties to a bill praying it — that the door of this Court 
 would be shut iu all cases in which the partners or shareholders 
 are too numerous to be made parties, which, in the present state 
 of the transactions of mankind, would be an absolute denial of 
 justice to a large portion of the subjects of the realm, in some of 
 the most important of their affairs. This result is quite sufficient 
 to show that such cannot be the law.'' 
 
 In Walhvorth v. Holt, the bill was filed for the sole 
 purpose of having the assets of the company applied in 
 payment of its joint debts; it did not pray an account 
 of the partnership dealings and transactions, for the 
 purpose of obtaining a division of the profits (if any) 
 amongst the persons entitled thereto. If it had, prob- 
 ably a decree would have been refused, either because 
 a dissolution ought to have been asked, or because all 
 the shareholders were not parties to the bill (6). But 
 
 Later cases, since Wallworth v. Holt other cases have been decided, 
 in which bills praying for a division of the surplus as- 
 sets amongst the shareholders, but not expressly pray- 
 ing for a dissolution, have been held good on de- 
 murrer (c). The case which has gone furthest in this 
 * 500] direction is Sheppard v. Oxenford (d); for * there every 
 
 sheppard v. kind f relief which would have been required in the 
 event of a dissolution was prayed for, although a dis- 
 solution in terms was not asked for. In Sheppard v. 
 Oxenford, a number of persons formed an association 
 for working mines in Brazil. The defendant was the 
 sole trustee of the property, and the sole director. Dis- 
 putes having arisen, a bill was filed by a shareholder on 
 behalf of himself and all the other shareholders against 
 the defendant for an account of the monies received and 
 paid by him on behalf of the association, and for an ac 
 count of its debts, and for their payment out of the 
 available assets, and for a sale, if necessary for that 
 
 (a) See as to this, ante, p. 461. 
 
 (b) See Kichardsou v. Hastings, 7 Beav. 323, and 11 ib. 17; 
 Deeks v. Stanhope. 14 Sim. 57, which were similar cases to Wall- 
 worth v. Holt. 
 
 (c) See Apperly v. Page, 1 Ph. 779; Wilson v. Stanhope, 2 Coll. 
 629; Cooper v. Webb, 15 Sim. 454, and Clements v. Bowes, 17 ib. 
 167. 
 
 {d) 1 K. & J. 491.
 
 DISCOVERY. 5T3 
 
 purpose, of part of the property, and for a division of Bk. III. 
 profits. The bill also prayed an injunction to restrain ^P' 10, 
 
 the defendant from selling or disposing of the property, ! 
 
 and for a receiver to get in the debts due to the associa- 
 tion, and to manage the affairs thereof, until the ac- 
 counts were taken, but no dissolution was asked. A 
 demurrer to this bill was put in and overruled (e), and 
 an injunction was granted restraining the defendant 
 from selling or disposing of the property otherwise than 
 in the ordinary course of business; and a receiver and 
 manager of the property in this country was appointed. 
 It is to be observed that, although this was a case of a 
 mine, the mine was in a foreign country, and was, 
 strictly speaking, partnership property, and not merely 
 so much land belonging jointly or in common to several 
 co-owners. 
 
 Having regard to the decisions in Shepparcl v. Oxen- Result of 
 ford, and other modern cases of a similar kind, espe- l atest cases, 
 cially Apperly v. Page (/) and Clements v. Bowes (g), 
 it is conceived that the doctrine established in Wall- 
 worth v. Holt may be considered as extending not only 
 to cases where an account is sought for the purpose of 
 having joint assets applied in discharge of the joint lia- 
 bilities, but also to cases where an account is sought for 
 the additional purpose of obtaining a division of the 
 surplus assets and profits amongst the persons entitled 
 thereto. If this be so, the last remnant of the doctrine 
 that, in partnership cases, there can be no account with- 
 out a dissolution, must be considered as swept away, at 
 least as regards partnerships * the members of which [ * 501 ] 
 are too numerous to be made parties to the action. 
 
 A claim for an account need not contain an offer by Offer by 
 
 the plaintiff to pay what, if anything, maybe found due p aintltl to 
 „ r . , i • i , / ,[ P a y what is 
 
 from him on taking such account (h). due from 
 
 An action for an account of partnership dealings is him. 
 not objectionable, simply because it relates to the deal- Action for 
 ings of»several partnerships, if they, in point of fact, account of 
 are nothing more than continuations of one firm (i). 1 sexera 
 But an action which involves the taking of an account 
 of the dealings and transactions of two co-existing 
 firms, may be open to objection on the ground of prac- 
 tical inconvenience (k). 
 
 Before the Judicature acts a bill in equity against 
 
 (<?) See 1 K7& J. 50L (/) 1 Ph. 779^ {g) 17 Sim. 167. 
 
 (h) The Columbian Government v. Rothschild, 1 Sim. 103. 
 (i) See Jefferys v. Smith, 3 Russ. 158. 
 (k) See Rheam v. Smith, 2 Ph. 726. 
 
 1 See Burchard v. Boyce, 21 Ga. 6 (1857).
 
 574 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. two persons praying for relief against one, and in the 
 
 Chap. 10. event of the plaintiff not being entitled to relief against 
 
 Sect ' 6 ' him, then for relief against the other, was demurra- 
 
 Alternative ble (Z). But now if the several defendants are so con - 
 cases. nected together as to render their respective liabilities 
 
 doubtful, they can be all sued in one action, unless it 
 is so embarassing as to be incapable of being fairly and 
 properly tried (m). 
 Motion before In an action for a partnership account, if the partner- 
 hearing, ship is admitted, and there is in fact nothing in dis- 
 pute between the parties except the accounts, an order 
 directing them may be obtained before the trial of the 
 action (n). 1 
 2. Discovery. 2. As to discovery and production of documents. — 
 The right of every partner to a discovery from his co- 
 partner of all matters relating to the partnership deal- 
 ings and transactions is as incontestable as his right 
 to an account; and such right, like the right to an ac- 
 count, devolves upon and is enforceable against a part- 
 ner's legal personal representatives and trustees in 
 bankruptcy. 
 
 If a partner chooses to mix up partnership accounts 
 [ * 502] with * his own private accounts he must produce the 
 whole, unless he can satisfactorily sever them (o). 
 
 How far discovery can be required from an alleged 
 partner who denies the partnership alleged, will be ex- 
 amined hereafter; in the present place it will be suffi- 
 cient to allude to a few points of practical importance 
 arising where the right to discovery is not denied. 
 Oppressive ^ P ar ty to an action for an account is often required 
 
 interroga- to set forth in answer to interrogatories, details which 
 tories. it is impossible for him to remember, and to ascertain 
 
 which inquiry and study are necessary; but all that he 
 is bound to do is to furnish the interrogator with every 
 means of information possessed or obtainable by him- 
 self, leaving the interrogator to make what he can of 
 the materials thus furnished to him. The party inter- 
 rogated is not bound to digest accounts, nor to set cut 
 
 (/) Seddon v. Connell, 10 Sim. 79. 
 
 (m) See Orel. xvi. rr. 4 and 7; xviii. r. 1; xix. r. 27: and com- 
 pare Honduras, &c, Co. v. Lefievre, 2 Ex. D. 301. with Evans v. 
 Buck, 4 Ch. D. 432; Child v. Stenning, 5 ib. 695; Bagot r. Eas- 
 ton, 7 ib. 1. See the obs. of Lord Selborne in Burstall v. Bev- 
 fus, 26 Ch. D. 39. 
 
 (n) Turquand v. Wilson. 1 Ch. D. 85. 
 
 (o) See Pickering v. Pickering, 25 Ch. D. 247. 
 
 1 If the partnership alleged in the bill be admitted in the an- 
 swer, uuless the complaint has been guilty of laches, an order 
 to account is of course. Glenn v. Hebb, 12 Gill. & J. 271 (1841).
 
 DISCOVERY AND PRODUCTION OF DOCUMENTS. 575 
 
 voluminous accounts existing already in another shape, Bk. III. 
 and which he offers to produce. Thus, in Christian Chap. 10. 
 v. Taylor ( p), in which the executor of one deceased 
 
 partner filed a bill for an account against the execu- Christian v. 
 tors of another deceased partner, and required them Ta y lor - 
 to set out in detail many complicated and voluminous 
 accounts, it was held that they were not bound to do so; 
 that they were under no obligation of going through 
 the books for the purpose of giving the plaintiff the in- 
 formation which he asked; and that the defendants 
 could not be compelled to do more than to refer to 
 the books and documents in their possession in such a 
 way as to entitle the plaintiff to have them produced 
 for his inspection (q). 
 
 Where, however, there are specific questions, it is not Drake v. 
 sufficient to refer generally to books and say that, save Synies. 
 as therein appears, no answer can be given. The per- 
 son answering must go a step further, and point out 
 where in particular the information required by each 
 interrogatory is to be found (r). 
 
 *A person interrogated as to what he has done by [ * 503] 
 himself or his agents (s), is bound to state what he Person 
 knows, to make inquiries of his agents and servants, to ^^nfake* 1 
 obtain documents to the possession of which he has a 
 right, and to afford his opponent either the information 
 sought, or all the means of obtaining information which 
 the answerer himself possesses (t). A person who has 
 it in his power to obtain information cannot escape from 
 discovery simply by saying be does not know: he must 
 make reasonable efforts to inform himself (u). 
 
 inquiries. 
 
 (p) 11 Sim. 401. 
 
 (?) See, too, Lockett v. Lockett, 4Ch. 336; White v. Barker, 
 5 De G. & Sm. 746; Seeley v. Boehm, 2 Madd. 176. A defend- 
 ant is not entitled to set out the accounts sought for in a book, 
 and to refer to the book instead of scheduling the accounts to 
 the answer. See Telford v. Ruskin, 1 Dr. & Sm. 148. 
 
 (r) Drake v. Symes, Johns. 647. See, as to taking oppressive 
 interrogatories off the file, S. C. 2 De G. F. & J. 81, and gener- 
 ally on this subject Wigram on Discovery, 165 — 169; Bray on 
 Disc, book i. ch. 4, § 6. 
 
 (s) Rasbotham v. Shropshire Union Rail. &c, Co., 24 Ch. D. 
 110. 
 
 (t) As to what accountant's reports, &c., are privileged, see 
 Walsham v. Stainton, 2 Hem. & M. 1 ; Wilson r. Northampton & 
 Banbury, &c, Rail. Co., 14 Eq. 477. As to setting out a list of 
 the debtors to the firm, see Telford v. Ruskin, 1 D. R & Sm. 148, 
 where it was held that such a list must be given. Compare the 
 observation of V.-C. Wood in Drake r. Symes,, Johns. 651. 
 
 (w) See Bolckow v. Fisher. 10 Q. B. D. 161 ; Taylor v. Rnndell, 
 (No. 1), 11 Sim. 391, and Cr, & Ph. 104; Taylor v. Rundell (No. 
 2), 1 & Y. C. C. 128, and 1 Ph. 222; Stuart v. Lord Bute, 11 Sim.
 
 76 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Beet. 6. 
 
 Production 
 ot docu- 
 ments. 
 
 [ * 504] 
 
 Murray v. 
 Walter. 
 
 Agreement 
 precluding 
 inspection. 
 
 In case it becomes necessary for a person interrogated 
 to remove obstacles thrown in his way, he should apply 
 for further time to answer, and not put in answer, which 
 is insufficient (x). 
 
 In connection with this subject it may be useful to 
 remind the reader of the rule, that a person cannot be 
 compelled to produce books which belong to himself and 
 others who are not before the Court. Thus in Murray 
 v. Walter (y), the defendant in his answer stated, that 
 certain books relating to a concern in which the plain- 
 tiff claimed to be a partner with the defendant, were in 
 the possession of the treasurer of the concern on be- 
 half of the several shareholders in it, many of whom 
 were not parties to the suit; and it was held that the 
 defendant could not be compelled to produce the *books 
 in question, although it was insisted, on the authority 
 of Walburn v. Ingilby (z), that the plaintiff had aright 
 to have whatever access to the books the defendant him- 
 self was entitled to. There are several other decisions 
 to the same effect as Murray v. Walter (a); but the 
 doctrine there laid down does not apply to cases in 
 which the absent parties interested in the books are in 
 fact represented by the defendants on the record, and 
 have no interest in conflict with theirs (b); nor it is 
 said to an action by a cestui que trust against a trustee 
 who is charged with trading with trust monies in part- 
 nership with other persons not before the Court (c). 
 
 If the plaintiff has agreed to accept the defendant's 
 statements of profits, and not to investigate his books 
 and accounts, the defendant will not be compelled to 
 produce them before the hearing of the action (d). 
 
 A person who obtains an order for the production of 
 
 442, and 12 ib. 460; A.-G. v. Rees, 12 Beav. 50; Earl of Glengall 
 v. Fraser, 2 Ha. 99. and compare Martineau v. Cox, 2 Y. & C. Ex. 
 638, where it was held that a partner here in a firm carrying on 
 business in a foreign country, was not bound to set out a list of 
 documents in the possession of the partners abroad. 
 
 (x) Tavlorv. Rundell (No. 2), 1 Ph. 222; Pickering v. Rigbv, 
 18 Ves. 484. 
 
 (y) Cr. & Ph. 114. The interest of the absent parties must be 
 stated, Bovil v. Cowan, 5 Ch. 495. 
 
 (z) 1 M. & K. 79. 
 
 (a) Hadley v. M'Dougall. 7 Ch. 312; Reid v. Langlois, 1 Mac. 
 & G-. 627; Burbidge v. Robinson, 2 Mac. & G. 244; Penney v. 
 Goode, 1 Drew. 474; Stuart v. Lord Bute, 11 Sim. 453. Compare 
 Vyse v. Foster, 13 Eq. 602. 
 
 (6) Glyn v. Caulfeild, 3 Mac. & G. 463. 
 
 (c) See Vyse v. 'Foster, 13 Eq. 602, which, however, turned on 
 the sufficiency of an affidavit of documents. See Freeman v. 
 Fairlie, 3 Mer. 43. 
 
 (d) Turney v. Bayley, 4 De G. J. & S. 332.
 
 AS TO PAYMENT INTO COURT. 577 
 
 documents is entitled not only to inspect them himself, Bk. III. 
 but to have them inspected by his solicitors and g~^" fl ' 
 agents (e); but not by an agent to whom his opponents " 
 
 reasonably object (/). But neither he nor they are en- Inspecting 
 titled to make public the information they obtain by documents, 
 means of such inspection. The order is made with a 
 view to the administration of justice between the liti- 
 gant parties; and an injunction will, if necessary, be 
 granted to restrain the communication to strangers of 
 what may be ascertained in the course of an examina- 
 tion of the books and documents produced under the 
 order (e). 
 
 The common order does not entitle the person in Inspection by 
 whose favour it is made to inspect by a professed ac- * C ™™J* nts ' 
 countant specially * appointed for the purpose; but if L 5Uo J 
 there is any necessity for so doing, a special order for 
 inspection by such a person will be made (h). 
 
 Books in use for daily business are ordered to be pro- Books in 
 duced at the place where they are usually kept ; and constant use. 
 they will not be ordered to be deposited in court unless 
 there is some special reason for so doing (i). 
 
 3. As to payment into court. — If, in an action by one 3. Payment 
 partner against another for an account, the defendant of partner- 
 admits that he has in his hands money belonging _ to gjjP ™°™ es 
 the firm, or that he had such money, and if he admits, 
 or if it otherwise plainly appears \k) that he ought to 
 have it still, he can be compelled to pay such money 
 into court before the hearing of the action (Z). As a 
 general rule, however, a partner having partnership 
 monies in his hands, cannot be made to pay those monies 
 into court before trial, if he insists that on taking the ac- 
 counts a balance will be found due to him (m). Nor will 
 he be compelled so to do unless the other partners will 
 pay in what they may have in their hands (n). Nor 
 
 (e) Williams v. Prince of Wales' Life, &c, Co., 23 Beav. 338. 
 
 (/) Dadswell v. Jacobs, 34 Ch. D. 278. See, also, Diaper v. 
 Manchester & Sheffield Kail. Co., 7 Jur. N. S. 86. 
 
 (h) Bonnardet v. Taylor, 1 J. & H. 383. 
 
 (1) Mertens v. Haigh, Johns. 735. 
 
 (k) An admission of liability to pny is not necessary. See 
 Wanklyn v. Wilson, 35 Ch. D. 180 ; Dunn v. Campbell, 27 Ch. 
 D. 254, note. 
 
 (/) In White v. Barton, 18 Beav. 192, an admission by one 
 partner that he and his co-partner who was not a party had 
 money in their hands was held sufficient. 
 
 (to) Richardson v. The Bank of England. 4 M. & Cr. loo. But 
 inBirleyu Kennedy, C> N. R. 395. a partner who had admitted 
 that he had drawn out more than he ought was ordered to pay 
 the excess into court. 
 
 (n) Foster v. Donald, 1 J. & W. 252. 
 * 14 LAW OF PARTNERSHIP.
 
 ► 7S ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. will a partner be ordered before trial to pay into court 
 
 Chap. 10. ^ e am ount of a debt due from him to the firm, if the 
 
 ec ' amount to which he is indebted is not admitted, and 
 
 cannot be readily ascertained (o). But if a partner 
 admits that he has partnership monies in his hands, 
 and it appears from his own statements that they came 
 there improperly (p), or in the violation of good faith, 
 [ * 506] he will be * compelled to pay them into court (q); so if 
 he admits facts from which it appears that he is indebted 
 to the firm in a certain sum, and he does not insist that 
 on the whole the firm is indebted to him, the money ad- 
 mitted by him to be due will be ordered into court (r). 
 After trial the court will order a partner to pay into 
 court a sum which is plainly due from him, although 
 no certificate to that effect may have been made (s). 
 
 If the partnership debts are unpaid, and the defend- 
 ant is liable to be sued for them, the order directing 
 payment into court should reserve to him liberty to 
 apply for payment out of court, of the amount of the 
 debts he may be compelled or pressed to pay (t). 1 
 
 (b) Of the defences to an action for an account and discovery be- 
 tween partners and persons claiming under them. 
 
 The defence on the ground of illegality, of fraud, of 
 laches on the part of the plaintiff, and of want of 
 
 (o) See Mills v. Hanson, 8 Ves. 68 ; Wanklyn v. Wilson, ante, 
 note (/.'). 
 
 ( p) See Costeker v. Horrox. 3 Y. & C. Ex. 530, where a sur- 
 viving partner, being also the executor of his deceased co-partner, 
 was ordered to pay into court 7000/., the amount of assets of the 
 deceased improperly applied to partnership purposes. See the 
 next note. 
 
 (q) Jervis v. White, 6 Ves. 738 ; Foster v. Donald. 1 J. & W. 
 252 ; in the first of these cases the motion was made before 
 answer. In Hichens v. Congreve, 1 R. & M. 150. note, and 
 Gaskell v. Chambers, 26 Beav. 360, directors obtaining secret 
 benefits for themselves were ordered to pay the monies received 
 by them into court. Compare Hagell v. Carrie. 2 Ch. 449, where 
 the liability of the defendants did not sufficiently appear. 
 
 (r) Toulmin v. Copland. 3Y. &C. Ex. 643 : Costekeru. Horrox, 
 3 Y. & C. Ex. 530. In Domville v. Solly. 2 Russ. 372. an order 
 was made though the defendants insisted that the plaintiff was 
 entitled to nothing. 
 
 (s) London Syndicate v. Lord, 8 Ch. D. 84 ; Creak v. Capell, 
 6 Madd. 114. 
 
 (t) Toulmin e. Copland, 3 Y. & C. Ex. 643. In S. C. 6 Price, 
 405, it was held that a surviving partner was not entitled to have 
 partnership funds, on which the plaintiffs had put a distringas, 
 transferred to him to enable him to pay outstanding debts. 
 
 1 If firm debts are still to be paid, payment into court by the 
 debtor partner of the amount found due ought to be ordered. 
 Carper i: Hawkins, a W. Va. 291 (1875).
 
 DEFENCES TO ACTIONS FOR AN ACCOUNT, ETC. 57t> 
 
 proper parties to the action, have already been exam- Bk. III. 
 ined (u). 1 In addition, however, to these grounds of g * p "g 
 
 defence, there are others which require notice, and . L — ! 
 
 which cannot be more conveniently alluded to than in 
 the present place, and under the following heads. 
 
 * 1. Denial of partnership. I oK)i\ 
 
 2. Statute of Limitations. 
 
 3. Account stated. 
 
 4. Award. 
 
 5. Payment, and accord and satisfaction. 
 
 6. Release. 
 
 1. Denial of Partnership. — An action by one partner 1. Denial by 
 against another for an account of the dealings and defendant of 
 transactions of an alleged partnership may be met by pa ^nei?hiT» 
 a denial of the existence of any such partnership (x). 
 This defence if relied upon as a reason for not answer- 
 ing interrogatories or making a discovery of documents 
 must be accompanied by statements on oath denying 
 those allegations which, if true, would establish the part- 
 nership, and denying the possession of documents rele- 
 vant to the question of partnership or no partnership, (y).~ 
 In Mansell v. Feeney (z) it was held that the plaintiff Mansell t-. 
 was entitled to an inspection of all documents admitted eene ^ • 
 by the defendant to be in his possession and to be re- 
 levant to the matters in question in the suit, although 
 the defendant denied the partnership alleged by the 
 bill, and also denied that the documents in question 
 tended to prove its existence. The defendant, however, 
 was allowed to seal up those parts of the books which 
 he swore had no relation to the matters in question. 
 
 Before the Judicature acts it was a rule in equity 
 that except in one or two cases a defendant could not 
 by answer (as distinguished from a plea), protect him- 
 self from giving discovery ; if he answered at all he had 
 
 (m) See, as to illegality, ante, p. 102 et seq. ; as to fraud, ante, 
 p. 479 et seq.; as to laches, ante, p. 466 et seq.; as to parties, ante, 
 p. 459 et seq. 
 
 (x) Drew v. Drew, 2 V. & B. 159 ; Hare v. London and North- 
 Western Kail. Co., John. 722, is an instance in which a bill was 
 successfully met by a plea denying that the plaintiff was a share- 
 holder in the company. 
 
 (y) Mansell v. Feeney, 2 J. & H. 31:5 ; Harris v. Harris, 3 Ha. 
 450 ; Sanders r. King, 6 Madd. 61. 
 
 (z) 2 J. & H. 320. See, also, Saull v. Browne, 9 Ch. 364. 
 
 1 To enable the defendants to obtain an account or a decree for 
 payment of a balance against the complainant it is not necessary 
 for them to tile a cross bill. Atkinson v. Cash, 79 111. 53 (1875); 
 Johnson v. Buttler, 31 N. J. Eq. 35 (1879). 
 
 2 Everitt v. Watts, 10 Paige, 82 [1843).
 
 580 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. to answer fully (a). This rule, which no longer ex- 
 
 Chap. 10. iats (5^ was ften productive of great hardship ; but 
 SfcCt - 6 - in conformity with it, a person sued for a partnership 
 
 account was not allowed by answer to deny the alleged 
 partnership, and excuse himself on that ground from 
 setting forth accounts, or producing documents which 
 [ *50S] the * plaintiff required to see (c). However, notwith- 
 standing this rule, the Court in more than one instance 
 declined to enforce it ; and ordered applications for 
 discovery in such cases to be postponed until after the 
 necessity for making them appeared (d); and as now a 
 court, or judge at chambers, can order any question in 
 dispute to be tried before any other (e), a person deny- 
 ing an alleged partnership can easily be protected 
 against a vexatious or oppressive exercise of a right to 
 discovery. Whilst on the one hand he must give all 
 such discovery as bears upon the question of partnership 
 or no partnership, he will not be compelled to set out 
 accounts or produce documents which he swears throw 
 no light on that question and can only be material after 
 it has been decided in favour of the plaintiff (/). 
 2. Statute of 2. The Statute of Limitations.— The Statute of Limi- 
 Limitations. tations, 21 Jac. 1, c. 16, § 3, enacts that all actions of 
 account (other than for such accounts as concern the 
 trade of merchandise between merchant and merchant, 
 their factors and servants (g) shall be commenced and 
 sued within six years next after the cause of such 
 action or suit. Before the Judicature acts a court of 
 equity was as much bound by this statute as a court of 
 law (h) ; and advantage could betaken of it by plea (i), 
 
 (a) See Elmer v. Creasy, 9 Ch. 69. 
 (6) Ord. xxxi. r. 6. 
 
 (c) Hall v. Noyes, 3Bro. C. C. 4- ) 3 ; v. Harrison. 4 Madd. 
 
 252 ; Shaw v. Clung, 11 Ves. 303 ; Somervillei^Mackay, 16 Yes. 
 382; The Great Luxembourg Rail. Co. r. Magnay, 23 Beav. 646 ; 
 Eeade v. Woodrooffe, 24 ib. 421 ; Bleckley v. Kymer. 4 Drew. 
 248 ; Mansell v. Feeney, 2 J. & H. 313 ; Thompson r. Dunu, 5 
 Ch. 573 ; Saull v. Browne, 9 Ch. 364. 
 
 (d) Clegg D. Edmondson, 8 De G. M. & G. 787 ; De La Rue v. 
 Dickinson, 3 K. & J. 388 ; Lockett v. Lockett, 4 Ch. 336 ; Great 
 Western Coll. Co. v. Tucker, 9 Ch. 376 ; Carver v. Pinto Liete, 
 7 Ch. 90 ; Wier v. Tucker, 14 Eq. 25. 
 
 (e) Ord. xxxvi. r. 8. 
 
 (/) See Be Leigh's estate. 6 Ch. D. 256 ; Parker r. Wells, 18 
 ib. 477 ; Whyte v. Ahrens, 26 ib. 717. 
 
 (g) See. as'to this exception, Robinson v. Alexander. 8 Bli. N. 
 S. 352. and 2 CI. & Fin. 717, and the cases there referred to. 
 
 (7t) Knox v. Gye, L. R. 5 H. L. 656 : Foley v. Hill, 1 Ph. 399 ; 
 Hovenden v. Annesley, 2 S. Ch. & Lef. 607 ; and see Whitley v. 
 Lowe, 25 Beav. 421, and 2 D. G. & J. 704. 
 
 ({] See Bridges v. Mitchell, Bunb. 217 ; Whitley v. Lowe, 25
 
 DEFENCES TO ACTIONS FOR AN ACCOUNT, ETC. 5S1 
 
 or * by answer (k), or by demurrer if the facts suf- [ * ti09] 
 ficiently appeared on the face of the bill (I). 1 Bk. III. 
 
 The exception as to merchants' accounts was repealed ^ t 11 ' ' 
 
 by 19 & 20 Vict. c. 97, § 9. Whilst that exception was ___ 
 
 in force the statute of James was held not to apply to 
 suits for an account between partners (m); although Tatam ,. 
 even then where a partner died, and seventeen years Williams* 
 afterwards a bill for an account was filed against his 
 executors by the surviving partners, the bill was dis- 
 missed with costs (n). 
 
 The authorities which have been already referred to Merchants' 
 also show that before the act 19 & 20 Vict. c. 97, § 9, accounts, 
 the statute of limitations did not apply to open unset- 
 tled accounts, extending from a time more than six years 
 before a bill was filed, down to a time within such six 
 years. Notwithstanding the words of the statute of 
 James, " All actions of account shall be com- 
 menced and sued," &c, it was held that, even as be- 
 tween persons who were not within the exception as to 
 merchants' accounts, the statute did not begin to run so 
 long as the account was continued (o); and that the 
 statute did not, in any case, apply to an unsettled, open, 
 mutual account, with items on both sides representing 
 
 Beav. 421, and 2 De G. & J. 704 ; Welford v. Liddel, 2 Ves. S. 
 400 ; Beanies' Pleas in Eq. 161. In Robinson v. Field, 5 Sim. 
 14, and Jones v. Pengree, 6 Ves. 580, the plea was overruled as 
 covering too much. 
 
 (A) As in Martin v. Heathcote, 2 Eden, 169 ; Barber v. Barber, 
 18 Ves. 286 ; Tatam v. Williams, 3 Ha. 347. 
 
 (/) Foster v. Hodgson, 19 Ves. 180 ; Hoare r. Peck, 6 Sim. 51 ; 
 Pro nee v. Svmpson, Kay, 678. See also, since, Noyes v. Crawley, 
 
 10 Ch. D. 31. 
 
 (m) Martin v. Heathcote, 2 Eden, 169; Barber v. Barber, 18 
 Ves. 286, and some other older cases to the contrary were over- 
 ruled by Robinson r. Alexander. 2 CI. & Fin. 717. 
 
 (w) Tatam v. Williams, 3 Ha. 347. 
 
 (o) See per Lord Eldon in Foster v. Hodgson, 19 Ves. 185; 
 Scudemore v. White, 1 Vern. 456. 
 
 1 In Equity the Statute of Limitatians is inoperative directly, 
 but chancellors have by its provisions always measured laches 
 against which they will refuse relief, in cases analogous to these 
 governed by it at law. In many of the States, the code provi- 
 sions upon the subject of limitations govern all actions of what- 
 ever nature. In the absence, therefore, of an exception in favor 
 of merchants' accounts, it may be said generally that the right 
 to demand an accounting must be exercised within the time 
 prescribed by the Statute of Limitations. See McKelvy's Ap- 
 peal, 72 Pa." St. 409 (1872); Arnett v. Finney, 41 N. J. Eq. 147 
 (1886); Quagle v. Guild. 91 111. 378 (1878); Godden v. Kimmell, 
 99 U. S. 201(1878); Blackwell v. Claywell, 75 N. C. 213 (1876); 
 McKaig v. Hebb, 42 Md. 227 (1674); Allen v. Woonsocket Co. 
 
 11 R. I. 288 (1875); Coudrey v. Gilliam, 60 Mo. 86 (1875).
 
 582 
 
 ACTIONS BETWEEN PARTNEKS. 
 
 Bk. III. 
 Chap. ID. 
 Sect. G. 
 
 Application 
 of statute to 
 current 
 accounts. 
 
 [*510] 
 
 cross demands (p). The law in this respect was modi- 
 fied by Lord Tenterden's act (q), the effect of which is, 
 . that, although there may be a mutual open running ac- 
 count, the mere existence of items not barred, is not 
 sufficient, in actions of debt or assumpsit, to take earlier 
 items out of the statute of limitations (r). Lord Ten- 
 terden's act, however, did not apply to merchants' ac- 
 counts as to which there was no statutory bar; nor did 
 Lord Tenterden's act apply to the mode of taking * such 
 accounts in a suit in chancery. But now by 19 & 20 
 Vict. c. 97, § 9, merchants' accounts are placed on the 
 same footing as other accounts; and partnership ac- 
 counts, whether they are or are not merchants' accounts, 
 are within the statute of limitations; and those statutes 
 are a bar to an action for an account extending to a 
 period more remote than six years before the com- 
 mencement of the action, unless there has been a breach 
 of an express trust, or fraud, or payment, or an ac- 
 knowledgment, such as required by Lord Tenterden's act, 
 or unless the partnership articles are under seal. So 
 long, indeed, as a partnership is subsisting, and each 
 partner is exercising his rights and enjoying his own 
 property, the statute of limitations has, it is conceived, 
 no application at all; but as soon as a partnership is 
 dissolved, or there is any exclusion of one partner by 
 the others, the case is very different, and the statute 
 begins to run (s). 1 This has been decided by the House 
 
 {p) See the notes to Webber v. Tivill, 2 Wnis. Sauud. 124 et 
 seq., and Catling ?•. Skoulding, 6 T. K. 189. 
 
 {q) 9 Geo. 4, c. 14. 
 
 (r) Williams v. Griffiths, 2 Cr. M. & R. 45; Cottam r. Part- 
 ridge, 4 Man. & Gr. 271; Ashby v. James, 11 M. & W. 542; Clark 
 v. Alexander, 8 Scott, N. R. 147; Inglis v. Haigh, 8M.&W. 780. 
 See, too, Jackson v. Ogg. Johns. 397. 
 
 (s) Noyes v. Crawley, 10 Ch. D. 31. See some remarks as to 
 the effects of the statute between partners in Winter v. Innes, 4 
 M. & Cr. Ill, and Way v. Bassett 5 Ha. 68. 
 
 1 The statute in Pennsylvania contains an exception in favor 
 of merchants' accounts; but in McKelvy's Appeal, 72 Pa. St. 409 
 (1872), it was held that, as between partners the statute begins 
 to run from the time of the dissolution of their firm. See. also, 
 Pierce v. McClellan, 93 111. 245 (1879); Allen v. Woonsocket Co., 
 11 R. I. 288 (1875); McKaig v. Hebb, 42 Md. 227 (1874). It 
 docs not begin to run till dissolution; Askew v. Springer, 111 
 111.662(1885). 
 
 In Todd v. Rafferty, 30 N. J. Eq. 254 (1878); Jordan ?•. Miller. 
 75 Ya. 442 (1881); Prentice v. Prentice, 72 Ga. 154 (1884); Pat- 
 terson v. Lilly, 90 N. Ca. 82 (1884), and other cases, it has been 
 held that the statute does not begin to run until the business of 
 the partnership has been settled or so long a time has elapsed 
 since the dissolution that a settlement has been presumed, no 
 assets being meantime collected.
 
 DEFENCES TO ACTIONS FOR AN ACCOUNT, ETC. 583 
 
 of Lords in Knox v. Gye (t), in which a surviving part- Bk. III. 
 ner relied on the statute as a defence to a suit for an Chap. 10. 
 account instituted by the executor of a deceased part- 
 
 ner. The deceased partner had died more than six years Knox v. Gye. 
 before the filing of the bill, and the right of his execu- 
 tor had never been recognized; the surviving partner, 
 however, had continued the partnership business, and 
 had got in outstanding assets within six years. The 
 V.-C. Wood held that the statute was not a bar to the 
 suit; but the decision was reversed by Lord Chelmsford 
 on appeal, and the House of Lords affirmed Lord 
 Chelmsford's decision. 
 
 In a still more recent case it has been held that the Noyes v. 
 statute of limitations affords a good defence to an ac- Crawley, 
 tion for an account of the dealings and transactions of 
 a partnership * which has been dissolved more than six [ * 511] 
 years before the commencement of the action (u). 
 
 With reference to acknowledgments, it has been held Effect of 
 in a partnership case, where no account had been come ackuow l ea 
 to for six years, that a signed acknowledgment of a lia- 
 bility to account in respect of matters more than six 
 years old, was sufficient to justify a decree for an ac- 
 count in respect of them, although the acknowledgment 
 did not contain an admission that anything was due, 
 nor any express promise to pay what might be found 
 due on taking the account (x). 1 
 
 Where a partnership account is agreed to be taken, Payment by 
 and a receiver is appointed, a payment made by the re- receiver in a 
 ceiver to one of the partners on account of a debt owing sult - 
 to him by another partner, is not sufficient to prevent 
 the statute from being a bar to such debt (y). 
 
 It must be remembered that the statute of limitations cases where 
 does not apply to cases of express trust or of concealed the statute 
 fraud. 2 Therefore, if a partner has died, having by affords no 
 will disposed of his property on trust for payment of 
 his debts, this is sufficient to justify a decree for an ac- 
 
 (0 L. R. 5 H. L. 656. See 19 & 20 Vict. c. 97, g 9. Miller v. 
 Miller, 8 Eq. 499, is hardly consistent with this, unless it he upon 
 the ground that there was no dissolution, or that there was a 
 trust deed excluding the statute. See the obs. of Malins, V.-C, 
 in 10 Ch. D. 37. 
 
 U) Noyes v. Crawley, 10 Ch. D. 31. 
 
 (x) See Prance v. Synipson, Kay, 678. The expression was, 
 "you and I must go into it and settle the account." See, also, 
 Banner v. Berrid<z;e, 18 Ch. D. 254 ; Skeet v. Lindsay, 2 Ex. D. 
 314. Compare Mitchell's claim, 6 Ch. 822. 
 
 [y) Whitley v. Lowe, 25 Beav. 421, and 2 De G. & J. 704. 
 
 1 Shelmire's Appeal. 70 Pa. St. 281 (1871). 
 
 2 Todd v. Rafferty, 30 N. J. Eq. 254 (1878). 
 
 defence.
 
 5Si 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 6. 
 
 Stainton v. 
 Carrou Com- 
 pany. 
 
 r*512] 
 
 3. Account 
 stated. 
 
 count of partnership transactions in respect of which 
 claims existed when he died, although more than six 
 . years have elapsed since that time, and before the com- 
 mencement of the action (z). Again, in cases of breach 
 of trust and of fraud, there seems to be no limit to the 
 time at which a court will interfere and afford redress 
 to the parties aggrieved. The mere lapse of thirty or 
 forty years since the right first accrued, is insufficient 
 to bar the remedy in such cases. 
 
 In Stainton v. The Carron Company (a), the man- 
 agement of the affairs of a company was entrusted to 
 a person who was entitled to one-sixth of the shares in 
 it. He was the manager of the company from 1808 
 until 1851, when he died. For twenty-five years he 
 rendered ac30unts regularly, * and these accounts were 
 never questioned during his life. But after his death, 
 it was discovered that upwards of 2000Z. a year for 
 many years had not been properly accounted for by 
 him, and the company claimed from his estate nearly 
 70,000Z. in respect of this annual deficiency, and as- 
 serted a lien for this sum on his shares and assets in 
 the hands of the company. Notwithstanding the lapse 
 of time, and the reception without dispute of the ac- 
 counts sent in by the manager from year to year, a de- 
 cree was made, opening the whole account from the 
 year 1825 down to his death (6). 
 
 3. Account stated. — To an action for an account of 
 partnership dealings and transactions, an account there- 
 of already stated and settled between the parties (c) 
 affords a good defence (d). 1 No precise form is neces- 
 sary to constitute a stated and settled account; but an 
 account stated, unless it be in writing, is no defence to 
 an action for a further account. It is not, however, 
 
 (z) Ault v. Goodrich, 4 Russ. 434. 
 
 (a) 24 Beav. 346. 
 
 {b) See. too, Allfrey v. Allfrev, 1 Mac. & G. 87 ; Wedderburn 
 v. Wedderburn, 2 Keen, 722, and 4 M. & Cr. 41. 
 
 (c) Of course the maxim. Res inter alios, &c, applies to settled 
 accounts. Carmichael v. Carmichael, 2 Ph. 101. 
 
 {(1) Taylor v. Shaw, 2 Sim. & Stu. 12 ; Endo ?■. Caleham, You. 
 306. An account settled by a majority was held binding on the 
 minority in Robinson v. Thompson, 1 Vera. 465. See, too, Stu- 
 part i". Arrowsrnith, 3 Sm. & G. 176, and Kent v. Jackson, 2 De 
 G. M. & G. 49. 
 
 1 Wood v. Gault, 2 Md. Ch. 433 (1850) ; Jessup v. Cook, 6 N. 
 J. L. 434 (1798) : Kidder v. Mcllhenney, 81 N. Ca. 123 (1879) ; 
 Gage v. Parmelee, 87 111. 329 (1877). The representatives of a 
 deceased partner are bound by the statement of accounts made 
 between decedent and his associates. Groenendyke v. Coffeeu, 
 109 111. 325 (1884).
 
 DEFENCES TO ACTIONS FOR AN ACCOUNT, ETC. 585 
 
 necessary that the account should be signed by the Bk. III. 
 parties, if it can be shown to have been acquiesced in gjjfg ' 
 
 by them (e); and an account may be stated and set- ' 
 
 tied, although a few doubtful items are omitted (/). 
 It is to be observed, that tbe fact that an account has 
 already been rendered by the defendant to the plaintiff 
 does not deprive the latter of his right to have the same 
 account taken under the direction of a court (g). x to 
 have that effect an account must not only have been 
 sent in to the plaintiff, but also have been acquiesced 
 in by him (h). It is further to be observed, that al- 
 though the * principle on which accounts have been kept L ^ l6 \ 
 may have been acquiesced in, the items may not (i). 
 
 A settled account may be impeached either wholly or impeaching 
 in part on the ground of fraud or mistake. If there be a settled 
 fraud, or if any mistake affects the whole account, the ^zJj^JJ 
 whole will be opened, and a new account will be di- f fraud and 
 rected to be taken, without reference to that which has mistake, 
 been stated (k)f but if there be no fraud, and if no 
 mistake affecting the whole account can be shown, but 
 the correctness of some of the items in it is, neverthe- 
 less, disputed, the account already stated will not be 
 treated as non-existing, but will be acted upon as cor- 
 rect, save so far as the party dissatisfied with any item 
 can show it to be erroneous (I). In a case of fraud, an 
 account will be opened in toto, even after the lapse of a 
 considerable time (m); 3 but if no fraud be proved, an 
 
 (e) See Hunter r iT*Belcher, 2 De G. J. & Sin. 194 ; Morris v. 
 Harrison, Colles, 157 ; Willis v. Jemegan, 2 Atk. 252. See on 
 this defence in general, Beanies' Pleas in Equity, 222. and Mit- 
 ford. 302, edit. 5. A verbal account and a receipt in full is not 
 equivalent to a stated account. Walker v. Consett, Forrest, 157. 
 
 (f) Sim v. Sim, 11 Ir. Ch. 310. 
 
 (g) See Clements v. Bowes, 1 Drew. 692. 
 ('/() Irvine v. Young, 1 Sim. & Stu. 333. 
 
 (0 See Mosse v. Salt, 32 Beav. 269 ; Clancarty v. Latouche, 1 
 Ball & Beatty, 420. Compare Hunter v. Belcher, 2 De G. J. & 
 
 (k) Williamsons. Barbour, 9Ch. D. 529 ; Gething v. KeigWey, 
 ib. 547; Clarke v. Tipping, 9 Beav. 2*4 : Wharton v. May, 5 
 Ves. 68 ; Beaumont v. Boultbee, ib. 485, and 7 Ves. 599 ; All- 
 frey v Allfrey, 1 Mac. & G. 87 ; Coleman r. Mellersh, 2 ib. 309. 
 
 (/) Holgatew. Shutt, 27 Ch. D. Ill, and 28 ib. Ill ; Gething 
 v. Keighley, 9 ib. 547 ; Pitt v. Cholmondeley, 2 Ves. S. 565 ; 
 Vernon v. Vawdry. 2 Atk. 119. 
 
 (m) Williamson 'v. Barbour, 9 Ch. D. 529; Allfrey v. Allfrey, 
 
 1 Rehill v. McTagns (Pa.), 7 All. Rep. 224 (1886) ; Schmidt v. 
 Lebhv, 11 Rich. Eq. 3:29 (1860). 
 
 - Rehill v. McTague (Pa.), 7 Atl. Rep. 224 (1886); Steadwell 
 v. Morris, 61 Ga. 97 (1887); McLucas v. Durham, 20 S. Ca. 302 
 (1883). 
 
 3 Berkey v. Judd, 22 Minn. 287 (1875).
 
 586 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 [*514] 
 
 Mistakes of 
 law. 
 
 Accounts 
 stated on the 
 death of a 
 partner. 
 
 account which has been long settled will not be re- 
 opened in toto ; the utmost which the Court will then 
 do will be to give leave to surcharge and falsify (n); 
 and there are cases in which, in consequence of lapse 
 of time, the Court will do no more than itself rectify 
 particular items, instead of giving leave to surcharge or 
 falsify generally (o). Moreover, the mere fact that 
 items are treated in an improper way, or are improperly 
 omitted, is not of itself sufficient to induce the Court 
 to open a settled account ; for if the items in question 
 were known to the parties, and there be no fraud or un- 
 due influence proved, the Court will infer that the 
 partners agreed to treat the items as they in fact did 
 treat them (p). But an item omitted by mutual mis- 
 take will be set right (q). 
 
 * If a settled account is impeached for errors, particu- 
 lar errors must be stated and proved (r) -, 1 and the same 
 rule holds where the account is settled, "errors ex- 
 cepted" (s). 
 
 In surcharging and falsifying, errors of law, as well 
 as errors of fact, may be set right (t); and where leave 
 is given to one party to surcharge and falsify, similar 
 leave is also accorded to his opponent (w). 2 
 
 On the retirement or death of a partner, it is usual 
 for an account to be stated between him or his repre- 
 sentatives on the hand, and the continuing partners on 
 the other, and for mutual releases to be given. After - 
 
 1 Mac. & G. 87 ; Stainton v. The Carron Co., 24 Beav. 346. See 
 Vernon v. Vawdry, 2 Atk. 119 ; Beaumont v. Boultbee, 5 Ves. 
 485. 
 
 (n) See Gething ts. Keischley, 9 Ch. D. 547 ; Millar v. Craig. 6 
 Beav. 433 ; Brownell v. Brownell, 2 Bro. C. C. 61, and 1 Mac. & 
 G. 94. 
 
 (o) See Twogood v. Swanston, 6 Ves. 485 ; Mound v. Allies, 5 
 Jur. 860. 
 
 {p) See Maund v. Allies, 5 Jur. 860, L. C. ; Laingw. Campbell, 
 36 Beav. 3, where bad debts were treated as good. 
 
 (q) Pritt v. Clay, 6 Beav. 503. 
 
 (r) Parkinson r. Hanburv, L. R. 2 H. L. 1 ; Dawson v. Daw- 
 son, 1 Atk. 1 ; Taylor v. Haylin, 2 Bro. C. C. 310 ; Kinsman v. 
 Barker, 14 Ves. 579. See Whyte v. Ahrens, 26 Ch. D. 717. 
 
 (s) Johnston v. Curtis, 2 Bro. C. C. 311, note. 
 
 (t) Roberts v. Kuffiu, 2 Atk. 112; and see Daniel v. Sinclair, 
 6 App. Ca. 181. 
 
 (it) 1 Madd Ch. 144, where it is said to have been so held by 
 V.-C. Leach in Anon., 6 March, 1821. 
 
 Harrison v. Dewey, 46 Mich. 173 (1881); Augsburyfl. Flower, 
 68 N. Y. 619 (1877); Loesser v. Loesser, 81 Ky. 139 (1879); 
 Burkett v. Hird, 55 Wis. 650(1882). 
 
 2 If an account is opened for one partner it is opened for all 
 if justice require it. Bailey v. Moore, 25 111. 347 (1861); Leon- 
 ard v. Leonard, 1 W. & S. 342 (1841).
 
 DEFENCES TO ACTIONS FOR AX ACCOUNT, ETC. 587 
 
 wards attempts are occasionally made to open accounts Bk. III. 
 thus stated, and to set aside the releases, and to have £ lia t p ' fi 10 ' 
 
 a new account taken, and a fresh settlement of the part- " ! 
 
 nership affairs. In such cases as these, before the settled 
 accounts can be opened, the release must be set 
 aside (as). Whether this can be done or not, depends 
 upon circumstances which will be found discussed un- 
 der the title rescission of contract (y). 
 
 In taking accounts under an ordinary judgment, set- 
 tled accounts are never disturbed unless specially 
 directed so to be (z). 
 
 4. Award. — Another defence to an action for an ac- 4. Award, 
 count is, that the matters in difference between the 
 partners have been settled by arbitration. 
 
 A mere agreement that the matters in question should Agreements 
 be referred, has frequently been held to be no defence to r . eter . to 
 to an action in respect of them (a). 1 But if those 
 matters have actually been disposed of by the award of 
 an arbitrator, they cannot afterwards be made the 
 foundation of any action between * the parties on [ * 515] 
 whom the award is binding (b). But an award will Award. 
 not avail as a defence to the action if the account sought 
 by it is different from that to which the award ap- 
 plies (c). So an award on a reference of all matters 
 in difference is no defence to an action for an account 
 of monies received after the making of the award, and 
 not dealt with by it, owing to a mistake on the part of 
 the arbitrator. Thus, in Spencer v. Spencer (d), the Spencer v. 
 partners on a dissolution referred all matters in differ- b P encer - 
 ence to arbitration. The arbitrator awarded that one 
 of the partners should get in the outstanding debts, 
 which were estimated by the arbitrator at a certain 
 amount. The award was acted on, but it appeared 
 that the debts ultimately got in amounted to more than 
 the sum at which they had been estimated. One of the 
 partners claimed a share of the difference between the 
 
 {x) See Millar v. Craig, 6 Beav. 433 ; Fowler v. Wyatt, 24 
 Beav. 232 ; and see Parker v. Bloxharn, 20 Beav. 295. 
 
 (y) Ante, p. 482, et seq. 
 
 (z) See Holgate 0. Shutt, 27 Ch. D. Ill,and28ib. Ill ; Xewen 
 r. Wetten, 31 Beav. 315. But see Millord v. Milford, McCl. & 
 Y. 150. 
 
 (a) Thompson v. Charnock, 8 T. R. 139 ; Michell v. Harris, 4 
 Bro. C. C. 312. Sec ante, p. 451 et seq. 
 
 (b) Tittenson r. Peat, 3 Atk. 529; Kouth" v. Peach, 2 Anst. 
 519, and 3 ib. 637. 
 
 (c) As in Farrington v. Chute, 1 Vern. 72. 
 
 (d) 2 Y. & J. 249. 
 
 . > Page v. Marshall, G Phila. 264 (1867).
 
 588 
 
 ACTIONS BETWEEN PAKTNERS. 
 
 Bk. III. 
 Chap. 10. 
 'Sect. 6. 
 
 5. Payment. 
 
 Accord and 
 satisfaction. 
 
 [ * 516] 
 
 Brown v. 
 Perkins. 
 
 Waiver. 
 
 6. Release. 
 
 estimated and the actual amount of these debts, and as 
 it was plain that the award had proceeded on a mis- 
 take, an account was directed, notwithstanding all mat- 
 ters in difference had been referred. 
 
 "With respect to agreements to refer, an important 
 enactment is contained in the Common law procedure 
 act, 1854, § 11, as has been already pointed out (e). 
 
 5. Payment, and accord and satisfaction. — Payment, 
 per se, is not a defence to an action for an account ; for 
 the subject of such an action is to ascertain how much 
 is or was payable. But payment of a sum of money 
 and acceptance of it iu lieu of all demands, is equiva- 
 lent to accord and satisfaction, which is as much a de- 
 fence to an action for an account as is a release (/ ). 
 
 With respect to accord and satisfaction, it is to be 
 observed that there must be no uncertainty in the agree- 
 ment relied on as an answer to the action for an ac- 
 count, and that it must be shown that such agreement 
 has been performed ; for in the performance lies the 
 satisfaction (g). On these grounds the * late Yice- 
 Chancellor Wigram, in a suit for an account by the ex- 
 ecutors of a deceased partner against the surviving 
 partner, overruled the plea that it was agreed between 
 the defendant and the deceased that all accounts be- 
 tween them, and all claims of the deceased in respect 
 of the partnership, should be waived ; and that in con- 
 sideration thereof the deceased should be permitted to 
 carry on business alone, without any further question 
 or dispute by the defendant, which the deceased ac- 
 cordingly did (h). However, if an agreement to waive 
 all accounts is entered into, and is founded on a suffi- 
 cient consideration, and is free from all taint or fraud 
 and undue influence, the parties to it will be precluded 
 from suing each other in respect of the accounts so 
 agreed to be waived (i). 
 
 6. Release. — A release is a good defence to an action 
 for an account (k). But where the release has been 
 executed on the faith of the correctness of certain ac- 
 counts, which are afterwards ascertained to be incor- 
 rect, the release will be set aside, and a fresh account 
 
 [e) Ante. p. 452. 
 
 (/) See Bac. Ab. Accompt. E; Vin. Ab. Account X.; Brown v. 
 Perkins, 1 Ha. 564. But see Com. Dig. Accompt. E. 6, pi. 8. 
 
 ((/) Com. Dig. Accord (B. 3) and (B. 4). 
 
 (h) Brown v. Perkins, 1 Ha. 564. 
 
 (/) See Sewell v. Bridge. 1 Ves. Sen. 297. Compare the last 
 case. 
 
 (jfc) See Mitford, PI. 304. ed. 5. As to form of plea, see Brooks 
 v. Sutton, 5 Eq. 361.
 
 JUDGMENT FOE ACCOUNT. 589 
 
 will be ordered (I), unless the parties clearly intended Bk. III. 
 to abide by the accounts, whether correct or not. A Chap. 10. 
 release, moreover, can, of course, be set aside for fraud. ec ' ' 
 A release, to be effectual as such, must be under seal. 
 A release not under seal is regarded as a stated ac- 
 count (m). 1 
 
 (c) Of judgments for a partnership accouut. 
 
 A judgment for a partnership account in its simplest Judgments 
 form is to this effect : "Let an account be taken of the for account* 
 partnership dealings and transactions between the plain- 
 tiff and the defendant from . And let what upon 
 
 taking the said account shall be certified to be due from 
 either of the said parties to the other of them, be paid 
 by the party from whom to the* party to whom the [ * 517] 
 same shall be certified to be due. Liberty to ap- 
 ply" (n). 2 
 
 (l) See, for example, Pritt v. Clay, 6 Beav. 503 ; Wedderburn 
 r. Wedderburn, 2 Keen, 722, and 4 M. & Cr. 41 ; Millar v. Craig, 
 6 Beav. 433, and see Phelps v. Sproule, 1 M. & K. 231, and see 
 ante, account stated, p. 512. 
 
 (m) Mitf. PI. 307, ed. 5. See, as to agreements to waive ac- 
 counts, ante, notes (A) and (i). 
 
 (n) Seton on Decrees, 1197, ed. 4, where several other useful 
 forms will be found given and referred to. The reports of the 
 following cases also contain useful precedents: — Binney v. Mutrie, 
 12 App. Ca. 165 ; Benningfield v. Baxter, ib. 181, as to tbe ap- 
 plication of surplus assets ; Travis v. Milne, 9 Ha. 157. decree 
 against executors of a deceased partner who had traded with his 
 assets ; Whetham v. Davey, 30 Ch. D. 580, account at instance 
 of a mortgagee of a partner's share ; Devaynes v. Noble. 1 Mer. 
 •">:;n. account where one firm succeeded another ; Wedderburn r. 
 Wedderburn, 2 Keen, 752, account where one firm succeeded an- 
 other, and the capital of a deceased partner was continued in 
 trade ; Cook v. Collingridge, Jac. 623, and more fully in 27 
 Beav. 456, note, sale of a testator's share set aside and account 
 of subsequent profits and good-will ; Crawshay v. Collins, 15 
 Ves. 230, and 2 Russ. 347, account of subsequent profits ; Millar 
 v. Craig. 6 Beav. 442, setting aside a release and opening ac- 
 counts ; Fereday v. Wightwick, Taml. 262, declaration that prop- 
 erty acquired by one partner was partnership property, and 
 an account accordingly ; Wilson v. Greenwood, 1 Swanst. 483, 
 sale, receiver, and account ; Blisset v. Daniel, 10 Ha. 538, de- 
 cree restoring a partner wrongfully expelled ; England v. Cur- 
 ling, 8 Beav. 140, specific performance of agreement for a part- 
 nership ; Pillans v. Harkness, Colles, 442, decree relieving a 
 person who had been induced to become a partner by fraudulent 
 representations ; Evans v. Coventry, 8 De G. M. & G. 835, wind- 
 ing up insurance society, accouut against directors for breaches 
 of trust. 
 
 1 The fact that an action is pending which has as its object an 
 accounting, is a bar to another action brought for the same pur- 
 pose. Clarke's Appeal, 107 Pa. St. 436 (1884). 
 
 '-' Before decreeing an account it is the duty of the Court to de-
 
 590 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. IH. 
 Chap. 10. 
 Sect, 6. 
 
 Costs. 
 
 [*518] 
 
 Mode of 
 taking 
 the 
 accounts. 
 
 la actions for an account of partnership dealings 
 and transactions, the ordinary rule formerly was to 
 give no costs up to the decree directing the account ; 
 nor was this rule departed from except in cases of gross 
 misconduct on the part of the defendants (o). 1 But 
 lately the rule has been to pay the costs of an action 
 for dissolution from the commencement out of the part- 
 nership assets unless there is some good reason to the 
 contrary (p). But where the action is really instituted 
 to try some disputed right, the unsuccessful litigant 
 will be ordered to pay the costs up to the trial of the 
 action (q). The costs of taking the accounts, &c, 
 directed at the hearing are, although disputed, usually 
 defrayed out of the partnership assets, and, * if necessary 
 by a contribution between the partners (r). 2 But the 
 partnership debts and liabilities including sums du3 from 
 the firm to the partners in respect of advances or the like 
 must be paid out of the assets in priority to the costs (s). 
 
 The method of taking a partnership account under a 
 judgment in the usual form is as follows : — 3 
 
 (o) See Hawkins v. Parsons, 8 Jur. N. S. 452 ; Parsons v. Hay- 
 ward, 4 De G. F. & J. 474. 
 
 (p) Hauler v. Giles, 11 Ch. D. 942, and see note (.<-), infra. 
 
 (q) Hamer v. Giles, 11 Ch. D. 942; Warner v. Smith, 9 Jur. 
 N. S. 169. See, also, Norton v. Eussel, 19 Eq. 343, where a 
 surviving partner refused an account to the executor of his de- 
 ceased co-partner. See,' as to mutual companies, Harvey v. 
 Beckwith, 10 Jur. N. S. 577. 
 
 (r) See the next note, and Butcher v. Pooler, 24 Ch. D. 273. 
 This rule was followed as to the whole costs where the action 
 was referred under \ 11 of the Com. Law Proc. Act, 1854 ; 
 Newton v. Taylor, 19 Eq. 14. 
 
 (s) Austin v. Jackson, 11 Ch. D. 942. note ; Hamer v. Giles, 
 ib. 942 ; Potter v. Jackson, 13 ib. 845. 
 
 termine all preliminary questions, such as arise where the Stat- 
 ute of Limitati >ns is pleaded or a release or the former statement 
 of an account. Dampf.'s App., 106 Pa. St. 72 (1884). Auld v. 
 Butcher, 2 Kans. 135 (1863). And the Court may direct the 
 framing of an issue in order to try before a jury the question of 
 whether or not the alleged partnership existed and, if so. what 
 exactly were its terms. Carl in v. Donegan, 15 Kans. 495 (1875); 
 Setzer?\ Beale, 19 W. Va. 274 (1882;; French v. Wall, 2 Texas 
 288 (1847). 
 
 1 In Stevens v. Yeatman, 19 Md. 480 (1862), it was said that 
 the question of whose conduct caused the discord that led to 
 the taking of the account has nothing to do with the adjustment 
 of the costs. Costs are within the discretion of the court and 
 are to be apportioned according to the equities of each case. 
 Gyger's Appeal, 62 Pa. St. 73 (1869): Gilman v. Vaughan 44 
 Wis. 646 (1878). 
 
 2 Pratt v. McHatton, 11 La. Ann. 260 (1856); Campbell v. 
 Coquard. 16 Mo. App. 552 (1885). 
 
 3 In order to enable him properly to state the account, the
 
 JUDGMENT FOR ACCOUNT. 591 
 
 1. Ascertain how the firm stands as regards non- Bk. III. 
 partners. Chap. 10. 
 
 2. Ascertain what each partner is entitled to charge ' ~ ec ' ' 
 in account with his co-partners ; remembering, in the 
 words of Lord Hardwicke, that "each is entitled to be 
 allowed as against the other, everything he has ad- 
 vanced or brought in as a partnership -transaction, and 
 
 to charge the other in the account with what that other 
 has not brought in, or has taken out more than he 
 ought (t). 
 
 3. Apportion between the partners all profits to be 
 divided or losses to be made good ; and ascertain what, 
 if anything, each partner must pay to the others, in 
 order that all cross claims may be settled. 
 
 In order, therefore, to take a partnership account, it Matters 
 is necessary to distinguish joint estate from separate involved in 
 estate ; joint debts from separate debts ; and to de- tak en the 
 termine what gains and what losses are to be placed to account - 
 the joint account of all the partners, or to the separate 
 accounts of some one of them exclusively. The prin- 
 ciples upon which this is to be done have been ex- 
 plained in previous chapters. Referring the reader, 
 therefore, to them, and reminding him that, in taking 
 accounts between partners, attention must be paid, not 
 only to the terms of the partnership articles, but also 
 to the manner in which they have been acted on by 
 the partners (u), there * remains but little to add on [ * 519] 
 the present subject, except as regards just allowances, 
 the period over which the account is to extend, and the 
 evidence upon which it is to be taken. 
 
 With respect to just allowances. 
 
 Just allowances are made, although the judgment is Just allow- 
 silent as to them (x); and when a partnership account ances. 
 is ordered, it is not usual for the Court to determine be- 
 
 (0 West v. Skip, 1 Ves. S. 242. The rule in Clayton's case, 
 respecting the appropriation of payments applies to partners 
 inter se as well as to other persons. See Toulrnin v. Copland. 3 
 Y. & C. Ex. 625, and 7 CI. & Fin. 350. 
 
 (u) See ante, pp. 408, 432, and Watney v. Wells. 2 Ch. 250. It 
 is said a partner is not to be charged as such with what he might 
 have received, without his wilful default, Rowe v. Wood, 2 J." & 
 W. 556, but quaere whether a surviving partner could not be 
 made so to account, as he alone can get in the assets of the hrni. 
 See, also, Bnry v. Allen, 1 Coll. 604. 
 
 (x) See Ord. xxxiii. r. 8. 
 
 master to whom the matter is referred ought to examine into the 
 terms of the partnership. Jones v. Jones. 1 Ired. Eq. 332 (1841); 
 and the extent and duration of the firm business, Lannan v. 
 Clavin, 3 Kans. 17 (1864).
 
 592 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 1. Time from 
 which the 
 account is to 
 be taken. 
 
 [ * 520] 
 
 Dealings 
 anterior to 
 commence- 
 ment of 
 partnershiq. 
 
 forehand what are, and what are not, just allowances. 
 That is determined on taking the account; and, if 
 necessary, the order will direct the chief clerk to state 
 the facts and reasons upon which he shall adjudge any 
 allowances to be just allowances (y). What ought to 
 be so allowed must be determined by the articles of 
 partnership, and by the principles discussed in a pre- 
 ceding chapter (z). 
 
 With respect to the period over which an account is to extend. 
 
 This can only be determined by ascertaining (1) the 
 time from which it is to begin, and (2) the time at 
 which it is to cease. 
 
 The time from which the account is to begin, will, in 
 a general account of partnership dealings and transac- 
 tions, be the commencement of the partnership, unless 
 some account has since that time been settled by the 
 partners, in which case the last settled account will be 
 the point of departure (a). If there has b^ en an ac- 
 count settled so as to be binding on the parties, such 
 account will not be re-opened (6). This used to be 
 provided for in the decree by the insertion of the clause, 
 "And if, in taking the said account, it shall appear that 
 any * account has been settled and agreed upon between 
 the parties up to any given time, the same is not to be 
 disturbed (c). It is not, however, now usual to insert 
 these words, it not being the practice to disturb settled 
 accounts, unless there is some special direction to that 
 effect (d). 
 
 "Where partners have had dealings together prepara- 
 tory to the commencement of their partnership, these 
 dealings cannot be excluded from consideration in tak- 
 ing the partnership accounts. As observed by Lord 
 Langdale in Cruikshank v. Mc Vicar (e): 
 
 (y) See Crawshay r. Collins, 2 Russ. 347; Brown w. De Tastet, 
 Jac. 294, 298, and 299; Cook v. Collingridge, Jac. 623, 625; AVed- 
 derburn v. Wedderburn, 2 Keen, 753. 
 
 (z) Ante, p. 380 et scq. 
 
 (a) See Cook v. Collingridge, Jac. 624; Beak r. Beak, Rep. 
 Temp. Finch. 190. An incoming partner has no right to profits 
 made before he became a partner, unless there is an agreement to 
 that effect. Gordon v. Rutherford, T. & R. 373. See, as to the 
 Statute of Limitations, ante, p. 508 et seq. 
 
 (b) See ante, p. 512. 
 
 (c) Seton, 276, ed. 2. 
 
 (d) See Holgate v. Shutt. 27 Ch. D. Ill, and 28 ib. 111,-Newen 
 v. Wetten, 31 Beav. 315. Compare Milford v. Milford, MacCl. & 
 Y. 150. 
 
 (e) 8 Beav. 116.
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 593 
 
 ' ' Some things must be clone by way of preparation for or intro- Bk. III. 
 ductionto the real transactions of the partnership business. Again, Chap. 10. 
 when the partnership business is, in one sense, at an end, still ' 
 
 you have not therefore put an end to the joint transactions; they 
 must necessarily be carried on for the purpose of winding up the 
 concern and everything belonging to it. So that when you speak 
 of partnership dealings and transactions you are not to exclude 
 from your consideration those transactions and matters which are 
 necessary by way of introduction or preparation for a partner- 
 ship dealing, nor are you to exclude those which afterwards fol- 
 low for the purpose of winding up the concerns of the partner- 
 ship." 
 
 The time at which an account of partnership dealings 2. Time up to 
 and transactions is to stop will, naturally, be the date which the 
 of the dissolution of the firm (/). Not that no ac- account is to 
 count is to be taken of what occurs after that date; for 
 some time or other must elapse between the dissolution 
 and the final winding up of the affairs of the concern, 
 and such time cannot in fairness to any one be excluded 
 from consideration (g). Notwithstanding dissolution, a 
 partnership is deemed to continue so far as may be 
 necessary for the winding up of its affairs (h); and an 
 account of partnership dealings and transactions, al- 
 though in one sense it stops at the date at which the 
 partnership is dissolved, must still be kept open for the 
 purpose of debiting and crediting the proper * parties [ *521] 
 with the monies payable by or to them in respect of 
 fresh transactions incidental to the winding up, as well 
 as in respect of old transactions engaged in prior to the 
 dissolution (i). 
 
 Moreover, upon the retirement, bankruptcy or death Subsequent 
 of a partner, it often happens that the continuing or profits when 
 surviving partner carries on the partnership business a c ,. ea , or 
 without coming to any settlement of the partnership ner > s capital 
 accounts, and without paying oat the share of the late has been 
 partner. When this is done, questions of great diffi- left iu T he 
 culty arise which it is now proposed to investigate. concern. 
 
 (/) See, accordingly, Beak v. Beak, Finch, 191, a case of dis- 
 solution by death; Jones v. Noy, 2 M. & K. 125, a case of disso- 
 lution by decree on the ground of lunacy. 
 
 ('/) See per Lord Eldon in Crawshay v. Collins, 2 Russ, 345; 
 Haie v. Hale, 4 Beav. 375. 
 
 (//) See, as to this, ante, p. 217 ct acq. 
 
 </) See Willet v. Blanford, 1 Ha. 270; and as to the difference 
 between the accounts before and after the date of dissolution, see 
 Watney v. Wells, 2 Ch. 250. See, also, Booth v. Parks, 1 Moll. 
 465, and ante, pp. 402, 420. 
 
 * 15 LAW OF PARTNERSHIP.
 
 594 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 6. 
 
 General 
 principles. 
 
 1. Where 
 capital is 
 lent at 
 interest. 
 
 [ * 522] 
 
 2. Where 
 
 capital is 
 "wrongfully 
 employed in 
 trade by 
 persons who 
 are not trus- 
 tees. 
 
 Account of profits subsequent to dissolution. 
 
 Before adverting to the decisions which define and 
 illustrate the right of a late partner, or of his represen- 
 tatives, to an account of the profits made by his contin- 
 uing or surviving partners by the use of his capital in 
 their business, it will be useful to consider the princi- 
 ples applicable to a more abstract question, which may 
 be put thus — If a person trades with property which 
 does not belong to him, what are the rights of the 
 owner against him in respect of the profit he has made? 
 
 First, let us suppose that the property is used in 
 trade by agreement with the owner: then the agree- 
 ment will regulate the rights of the owner. Conse- 
 quently, if a partner agrees that when he dies or re- 
 tires his capital shall remain in the business at inter- 
 est, those who carry on that business will be accounta- 
 ble for the capital and interest, and nothing more (k). 
 Further, if executors or trustees lend trust money to a 
 stranger at interest, the obligation of the borrower is 
 limited to repayment of the money lent with interest; 
 and it is immaterial whether he has employed the 
 money in trade or not, and whether the money was lent 
 to him properly or improperly (I). * But a loan by A. 
 to B. must, not be confounded with capital brought by 
 A. into a firm of A. and B. (m). 
 
 Next, let us suppose that the property is wrongfully 
 used in trade, without any agreement express or tacit with 
 the owner; and let us suppose that there is no trust be- 
 tween the trader and the owner. The trader's liability 
 in this case will be to restore the property, and to make 
 to the owner proper compensation for its detention. 
 But what is proper compensation ? Is it interest, or 
 the profits made by the trader by the use of the prop- 
 erty in question ? or the profits which the owner would 
 (probably) have made if he had had the property it- 
 self? The profits which the owner might have made 
 can only be guessed at, and this is a sufficient reason 
 for rejecting these profits as a measure of compensa- 
 tion. On the other hand, to limit the compensation to 
 interest (at the accustomed rate) would frequently en- 
 able the wrongdoer to profit by his own wrong, and be 
 an inadequate compensation to the owner. It may, 
 
 (k) Vyse v. Foster, L. R. 7 H. L. 318, and 8 Ch. 309, where 
 one of the surviving partners was an executor of the deceased. 
 
 (/) See Stroud v. Gwyer, 28 Beav. 130, approved in Vyse v. 
 Foster, 8 Ch. 309, infra, p. 534. 
 
 (m) See Travis v. Milne, 9 Ha. 141, and Flockton v. Bunning, 
 8 Ch. 323, note, infra, p. 530.
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 595 
 
 therefore, be necessary to give the owner the profits Bk. Ill 
 made by the trader by the use of the property in ques- g^ 1 ^ " 
 
 tion, after making the trader all just allowances in- _J 
 
 eluding a fair remuneration for his trouble. To do so 
 may moreover be justified upon the ground that the 
 profits are accretions to the property which has yielded 
 them, and ought to belong to the owner of such prop- 
 erty, in accordance with the maxim, accessoriwn sequi- 
 tur suum principale (n). At the same time it may not 
 be always right to restrict the owner's compensation to 
 the profits made by the use of his property; for it may 
 happen that it has made no profit, or less profit than 
 interest at the current rate (o). Compensation to the 
 owner being the object in view, it would be only fair to 
 give him the option to take interest or the profits made 
 by the use of his property (p). 
 
 Now let us suppose that the trader is a trustee of the 3. "Where 
 property, * and that he employs it in trade contrary to [ * 523 | 
 his trust. The reasons for charging him with interest, "^^JJ, 
 or the profits made by the property, at the option of its employed' iu 
 owner, are as applicable to this case as to that last in- trade by a 
 vestigated; but there is in this case an additional rea- trustee. 
 son for so charging him, for it is a well-established 
 rule that no trustee shall himself derive profit from the 
 use of the trust property (q). 
 
 There remains for consideration the mixed and diffi- 4. Mixed 
 cult case in which a trustee has improperly employed c ^ ses ~^° n " 
 the trust property in a trade carried on by himself in ^^g™ 
 partnership with others who are not trustees. The lia- a Liability 
 bility of the trustee in this case to be charged (at the f the trustee 
 option of the cestui que trust) with interest or with the sharing 
 profits which he (the trustee) has derived from the use profits. 
 of the trust property is well established (r) ;' but it 
 has sometimes been considered that he ought to be 
 charged with all the profits made by the firm by means 
 
 (n) See Yates v. Finn, 13 Ch. D. 839; Sir Sam. Eomilly's ar- 
 gument in 15 Ves. 224; Sir T. Plumer in 1 Jae. & W. 132 and 
 133. See, also, per Boniilly, M. R., in 15 Beav. 392, and 22 
 Beav. 100. 
 
 (o) As in Booth v. Parkes, Beatty, 444. 
 
 {})) See ace. infra, p. 528; hut he cannot have both, see Heath- 
 cote v. Hulme, 1 Jac. & W. 122. 
 
 (q) See, as to the liability of the trustee, Docker v. Somes, 2 
 M. & K. 655. 
 
 (r) See Jones v. Foxall, 15 Beav. 388, where the trustee was 
 charged with compound interest at 5 per cent. See Lord^Sel- 
 borne's observations on this case in Vyse v. Foster, L. E. 7 H. 
 L. 346. ^__ 
 
 1 Sequin's Appeal, 103 Pa. St. 139 (1883).
 
 596 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 [ * 524] 
 
 h. Liability 
 of trustee 
 not sharing 
 profits. 
 
 c. Liability 
 of, partners 
 -who are not 
 trustees. 
 
 of the trust property. This view is apparently based 
 upon the ground that the pr jfits are accretions to the 
 trust property ; and that the trustee is as much liable 
 for them as for the property itself ; and that he is not 
 discharged from this liability by the circumstance that 
 he has divided the profits with his co-partners. But, 
 plausible as this view is, it must be remembered that 
 in the case now supposed the profits have not all been 
 earned or received by the trustee, but by himself and 
 others, and that he is not in a position to make them 
 refund their shares of the profits yielded by the trust 
 property. It would therefore be highly unjust to make 
 the trustee accountable for more than his own share of 
 such profits ; and this view has been adopted by the 
 courts of appeal both in England and Scotland (s). 1 
 
 * The same considerations lead to the conclusion that 
 a co-trustee who is not himself a member of the firm 
 deriving profit from the use of the trust money, and 
 who consequently does not himself derive any profit 
 from that use, is not accountable for any of the profits 
 yielded by the trust property (t). 
 
 Lastly, we have to consider the position of the part- 
 ners who are not trustees, but who have shared the 
 profits derived from the use of the trust property. With 
 respect to them, the first thing to ascertain is whether 
 they are personally implicated in any breach of trust ; 
 for if not, they are under no liability in respect of the 
 profits in question — indeed, they may not even be liable 
 to make good the trust money (u). But if they have 
 traded with the trust money knowing that its employ- 
 ment in trade was a breach of trust, they incur the 
 same liabilities in respect of it as if they were them- 
 selves trustees. Consequently they become jointly and 
 severally liable as well for the trust property itself as 
 for the profits which they have made by it (x). But 
 this liability cannot be enforced except in an action to 
 
 (s) See Vyse v. Foster, L. R. 7 -H. L. 318, andSCh. 309; Laird 
 r. Chisholm, 30 Scottish Jur. 582. In both of these cases the 
 trustees only were sued. See, also, Jones v. Foxall, 15 Beav. 
 388, p. 395 ;* Palmer v. Mitchell, 2 M. & K. 672. Whether the 
 case would be different if all the other partners were parties is 
 doubtful. See Vyse v. Foster, ubi supra. See a thoughtful article 
 on this subject in The Law Quarterly Review, 1887, p. 211. 
 
 (/) See Vyse v. Foster, infra, p. 534. 
 
 (u) Ante, p. 160. 
 
 (*) See, accordingly, Flocton v. Bunning, 8Ch. 323, note, infra, 
 p. 530. 
 
 1 Sequin's Appeal, supra ; Long v. Magestre, 1 Johns. Ch, 
 305 (1814).
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 597 
 
 which they are all parties (y). It has, indeed, been Bk. III. 
 doubted whether there is any joint and several liability gjJJjP'g ' 
 
 as regards profits, and whether the non-trustee part- — _ 
 
 ners are liable for more than the trust property and in- 
 terest (z). 
 
 Assuming that a person is entitled to an account of Practical 
 profits made by the use of his property in trade, it is difficulty in 
 
 obviously often extremely difficult to ascertain these car rvin ? °. ut 
 »_.,,, ,. k ■ • the foregoing 
 
 profits. To take the ordinary case of surviving part- principles. 
 
 ners continuing to trade with the capital of a deceased 
 partner, great difficulty will be found in arriving at 
 the share of profits to which the executors of the de- 
 ceased are entitled. 
 
 It is very easy to say they can be calculated by the 
 rule of three — as the whole capital is to the whole 
 profits, so is the * late partner's share in the capital [* 525] 
 to his share of the profits — but this assumes that the 
 profits in question have been made by capital only. 
 Profits, and very large profits, may be made by skill, 
 and an extensive connection, with little or no capital ; 
 and even if there be capital, the profits may be at- 
 tributable less to it than to other matters, and it may 
 be impossible to determine with any precision the ex- 
 tent to which the capital has contributed to the realisa- 
 tion of the profits obtained (a). Special inquiries on 
 this subject, therefore, are almost always necessary, 
 and if it can be shown that, having regard to the nature 
 of the business or other circumstances, the profits which 
 have been made cannot be justly attributed to the use 
 of the capital or assets of the late partner, his prima 
 facie right to share such profits will be effectually re- 
 butted. 
 
 The extent of the liability to account for subsequent Willett v. 
 profits was elaborately discussed by the late V.-C. Wig- Blanford. 
 ram in Willett v. Blanford (&), and the conclusion ar- 
 rived at by him was, that no general rule could be laid 
 down upon the subject, and that every case must de- 
 pend on its own circumstances. " The nature of the 
 
 (y) See Vyse V. Foster, and Laird r. Chisholra. ubi supra ; Simp- 
 son v. Chapman, 4 De G. M. & Y. 174, per Turner, L. J. Com- 
 pare Brown v. De Tastet, Jac. 284 ; Macdonald v. Richardson, 1 
 Gift'. 81 ; Bowes v. City of Toronto, 11 Moore, P. C. 463. 
 
 (z) See Vyse r. Foster, infra, p. 534 ; Stroud v. Gwyer, 28 
 Beav. 130 ; 'Macdonald o. Richardson, 1 Giff. 88. But in Flock- 
 ton v. Bunning, 8 Ch. 323. note, infra, p. 530, the liability was 
 treated as perfectly clear. 
 
 (a) This difficulty was felt very strongly in Featherstonhaugh 
 v. Turner, 25 Beav. 382, noticed infra, p. 536. 
 
 (6) 1 Ha. 253.
 
 598 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. trade, the manner of carrying it on, the capital ein- 
 
 Chap. 10. ployed, the state of the account between the late part- 
 ec ' • ' nership and the deceased partner at the time of his 
 
 death, and the conduct of the parties after his death, 
 may materially affect the rights of the parties." This 
 conclusion of the Vice-Chancellor was entirely in ac- 
 cordance with previous decisions (c), and has been ap- 
 proved by subsequent judges; and in conformity there- 
 with several cases have since been decided, in which 
 profits acquired after the death of a partner were held 
 to belong wholly to those by whose labour they had 
 been made. An element of uncertainty is thus intro- 
 duced into an already difficult and complicated branch 
 of law, and renders it extremely embarrassing; but it 
 is hoped that the foregoing attempt to explain its prin- 
 ciples may tend to introduce more certainty in their 
 future application. 
 [ '* 526] * Passing now to the decisions, to which the fore- 
 
 going observations are intended to serve as an intro- 
 duction, the right to an account of profits subsequent 
 to a dissolution will be found distinctly laid down in 
 the following cases. 
 Bankruptcy. The first case of importance on the subject is Craiv- 
 Crawshay v. shay v. Collins (d). There one partner had become 
 Collins. bankrupt, and the solvent partners had carried on the 
 
 business without paying out the bankrupt's share of 
 the assets, and an inquiry was directed with a view to 
 ascertain whether profits made subsequently to the 
 bankruptcy were made by the application of the funds 
 which then constituted the capital of the concern (e), 
 or by the application of any other, and what funds; 
 and the master was directed to distinguish between 
 capital and stock in trade (/). The object of this in- 
 quiry was to ascertain whether the profits made after 
 the dissolution were actually made by the application 
 of the funds that belonged to the bankrupt as a mem- 
 ber of the partnership (g). And it appearing that 
 such profits were made, it was held by Lord Eldon, 
 
 (c) See in particular Lord Eldon's observations on Crawshay 
 r. Collins, in Jac. pp. 622 and 297. and 2 Russ. 330. 
 
 (rf) 15 Ves. 218 ; 1 J. & W. 267 : and 2 Russ. 325. The de- 
 cision in 15 Ves. 218, was afterwards said by Lord Eldon not to 
 have none to the extent ordinarily supposed. See Jac. 296 and 
 622, and 2 Russ. 330. Brown v. Vidler, cited in 15 Yes. 223, 
 and 2 Russ. 340, is an earlier case in point. See, too. Brown v. 
 Litton. 1 P. W. 141, and 10 Mod. 20 ; Hammond v. Douglas, 5 
 Ves. 539. 
 
 (e) 15 Ves. 218. 
 
 (/) 1J. &W. 267. 
 
 (g) 2 Russ. 337.
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 599 
 
 and afterwards by Lord Lyndhurst (on a re-hearing), Bk. III. 
 that the assignees had a right to a share of these pro- Chap. 10 - 
 fits, and that the account could not stop until the claims ec ' ' 
 of the assignees were satisfied. The bankrupt was 
 originally entitled to three-eighths of the partnership 
 assets, and although he was indebted to the firm, so 
 that the sum actually payable to him was less than 
 three-eights of the net assets of the firm, and although 
 the continuing partners had brought in a large addi- 
 tional capital since the bankruptcy, still the assignees 
 were held entitled to be credited throughout with three- 
 eighths of the profits, being debited with what the 
 bankrupt owed. The decree in this important case de 
 clared that the three-eighth parts or shares of the bank- 
 rupt in the partnership ought to be considered as con- 
 tinuing notwithstanding, and after, his bankruptcy; 
 and * that the assignees were entitled to three-eighth [ * 527] 
 parts of the profits which had been already reported to 
 have been made; and three-eighth parts of such further 
 profits as (on taking the further accounts thereby di- 
 rected) should appear to have been made (h). 
 
 So, in Brown v. De Tastet (i), where one partner died Death, 
 and the survivor carried on the partnership business, Brown v. 
 without accounting for the share of the deceased to his De Tastet. 
 administratrix, an account was directed at the suit of 
 the administratrix, not only of the dealings and trans- 
 actions of the partners up to the death of the deceased 
 partner, but also of the property of the deceased in the 
 hands of the surviving partner, and of all profits and 
 gains made by him by means of such property. 
 
 Yates v. Finn (k) is another case of the same sort; Yates v. 
 and there the surviving partner was decreed to account Finn, 
 for the profits made by means of the capital of the de- 
 ceased partner, but was allowed a proper sum for man- 
 aging the business. 
 
 The rule established in these cases has been applied other 
 in a variety of instances; e. g., where a managing part- instances. 
 ner had continued the business after the period fixed 
 for the dissolution and winding up of the partnership (I) ; 
 
 {h) 2 Buss. 347. 
 
 {i) Jac. 284. It is said in 2 M. & K. 658, that this ease was 
 affirmed by the House of Lords, and after all to have been aband- 
 oned by the plaintiff, who found it impossible to work out the 
 decree. See, too, Featherstonhaugh v. Turner, 25 Beav. 382; 
 Smith v. Everitt, 27 ib. 44G; Booth v. Parks, 1 Moll. 465, and 
 Beatty, 444. 
 
 Ik) 13 Ch. D. 839. 
 
 (1) Parsons v. Hayward, 31 Beav. 199, affirmed on appeal, 4 
 De. G. F. & J. 474.
 
 600 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 [*528] 
 
 Option to 
 take interest 
 or profits. 
 
 Account of 
 
 subsequent 
 
 profits 
 
 against 
 
 executors 
 
 ■who are 
 
 surviving 
 
 partners. 
 
 where a partner had become lunatic and the firm had 
 been dissolved, but the business had been continued by 
 the other partners, and they had not paid out the capi- 
 tal of the lunatic partner (m); where partners had 
 agreed to dissolve and to have the partnership business 
 wound up, and its assets got in and converted by a 
 third person, and one of the partners nevertheless car- 
 ried on the business in the meantime for his own bene- 
 fit (n); where a mining partnership had been dissolved, 
 but one of the partners had obtained a renewed lease of 
 the mine, and had coDtinued to work it for his own ben- 
 efit (o). 1 
 
 * In the foregoing cases it will be observed there was 
 no relation of trustee and cestui que trust (as distin- 
 guished from that of late partnership) subsisting be- 
 tween the persons who made the profits and those who 
 were held entitled to share them. But even where there 
 is no true relation of trustee and cestui que tnist, part- 
 ners continuing to carry on business without coming to 
 an account w 7 ith their late partner, or those who repre- 
 sent him, are liable to be charged either with the profits 
 made by the use of his capital, or with interest on it at 
 bl. per cent., at the option of those to whom such capi- 
 tal belongs (p) ; but in taking an account of subsequent 
 profits, the partner by whose exertions they have been 
 made is usually allowed compensation for his trouble (q), 
 unless he is, in the proper sense of the word, a trustee, 
 and guilty of a breach of trust, when no such compen- 
 sation is allowed (r). 
 
 The rights of the legatees and next of kin of a de- 
 ceased partner against his executors where they are 
 themselves surviving partners or have themselves be- 
 
 (m) Mellersh v. Keen, 27 Beav. 236. 
 
 In) Turner v. Major, 3Giff. 442. 
 
 (o) Featherstonhaugh r. Fenwick, 17 Ves. 298. See, too, Clem- 
 ents v. Hall, 2 De G. & J. 173. 
 
 (;;) Booth v. Parks, 1 Moll. 465, and Beatty, 444. See, also, 
 Clements v. Hall, 2 De G. & J. 186; Toulmin v. Copland. 2 Ph. 
 711, reversing S. C. 4 Ha. 41. 
 
 [q) Yates v. Finn, 13 Ch. D. 839; Brown v. DeTastet, Jac. 284. 
 See, also, ib. 623; Featherstonhaugh v. Turner, 25 Beav. 382; 
 Mellersh r. Keen, 27 ib. 242. 
 
 (r) Stocken v. Dawson, 6 Beav. 371, and 9 ib. 247; Burden r. 
 Burden, 1 V. & B. 170. See, however, Cookf. Collingridge, Jac. 
 622, 623. 
 
 1 For instances of the application of this rule see Brown's Ap- 
 peal, 89 Pa. St. 139 (1879); Hay's Appeal, 91 Pa. St. 265 (1879); 
 Freeman v. Freeman. 136 Mass" 260 (1884); Potter v. Moses, 1 R. 
 I. 430 (1850); Goodburn v. Stevens, 5 Gill. 1 (1847); Chittenden 
 v. AVitbeck, 50 Mich. 401 (1883); Fitzpatrick v. Flamiagan, 106 
 U. S. 648 (1882).
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 601 
 
 come partners since his death, are illustrated by the fol- Bk. III. 
 lowing decisions. Sect P 6 
 
 In Cook v. Collingridge (s), the executors of a de- 
 
 ceased partner sold their testator's share to the surviv- Cook y. Col- 
 ing partners, who resold it to one of the executors. The Un o ritI g e - 
 sale was set aside at the instance of a legatee, and an 
 account of profits made subsequently to the death of 
 the deceased partner was decreed, although the money 
 paid for the testator's share was not continued in the 
 business. 
 
 In Townend v. Toivnend (t), three brothers, A., B., Townend c. 
 C, were in partnership, under articles by which it was Townend. 
 provided that the capital of the partners should not be 
 withdrawn until the * expiration of seven years from [ * 529] 
 that date; that in case of the death of one of the part- 
 ners within that term, a valuation of his share should 
 be made, and that the surviving partners should pay to 
 his representatives the amount of such valuation within 
 three years from the said term of seven years, and in 
 the meantime give sufficient security for the same by a 
 mortgage of a competent part of the partnership prop- 
 erty. It was also provided that it should not be law- 
 ful for the representatives to commence any action for 
 recovering payment of the share of the deceased, until 
 the end of three years after the expiration of the term 
 of ten years, nor to claim any participation in the pro- 
 fits made after the day up to which the valuation was 
 made; the expressed intention being that the repre- 
 sentatives of the partner dying should take bl. per 
 cent, on the value of the share in lieu of profits. It 
 was further provided that nothing should prejudice the 
 right of the representatives within the term of seven 
 years, to take any proceedings in order to obtain a fair 
 valuation, or to obtain and enforce the mortgage secur- 
 ity. In April, 1844, A. died, having by will devised 
 his real and personal estate to B., C. and D. upon ti-ust, 
 to raise the sum of 12,000Z. and invest the same in 
 government or real security, and apply the proceeds 
 towards the maintenance and education of the plaintiff, 
 his then infant daughter, and accumulate the surplus 
 at compound interest; and upon his daughter attain- 
 ing twenty-one, to pay the accumulations to her, and 
 to stand possessed of the capital on trust to pay her 
 the proceeds during her life. The testator's estate con- 
 
 (s) Jac. 607. See the decree in 27 Beav. 456. Stocken r. Daw- 
 son, 9 Beav. 239, and on appeal 17 L. J. Ch. 282, was a somewhat 
 similar ease. 
 
 {I) 1 Gift'. 201.
 
 602 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. sisted almost entirely of his share in the partnership. 
 
 Chap. 10. j n D ecemD er, 1844, a valuation was made, by which 
 
 _£!!__!_ the testator's share was ascertained to be 20,000Z. and 
 
 upwards. In June, 1853, being more than ten years 
 from the date of the articles, certain hereditaments, 
 consisting of freeholds, leaseholds, and machinery (part 
 of the partnership assets) were mortgaged by B. to C. 
 and D., as a security for the 12,000Z. (u). The plain- 
 tiff came of age in 1857, and in 1858, B. and C. ren- 
 dered to her an account of the trust funds, in which 
 they debited her with various items for maintenance 
 [ * 530] and education, with 5Z. per * cent, interest thereon, and 
 credited her with the sum of 12,000Z. and interest at 
 5Z. per cent, with yearly rests, up to the 1st May, 1853, 
 and thenceforth with interest at 4Z. per cent, with 
 yearly rests. The plaintiff, however, insisted that the 
 12,000Z. had been continued in the partnership busi- 
 ness, and she filed a bill against B., C, and D., for an 
 account of the profits made in the partnership business 
 on the sum of 12,000Z. from the testator's death, and 
 for payment of what should be found due to the plain- 
 tiff, alleging that the mortgage was an improper secur- 
 ity. The Court held, 1, That the plaintiff was entitled 
 to an account of the legacy of 12,000Z., with interest at 
 5Z. per cent, from one year after the testator's death up 
 to the 1st January, 1849 (ten years from the date of 
 the articles), and with compound interest on the sur- 
 plus, after allowing for sums expended for her mainte- 
 nance and education ; 2, that the plaintiff was entitled 
 to an account of the profits made by the partners from 
 the 1st January, 1849, on the balance found due for 
 the principal at that date, with interest at 5Z. per cent, 
 and annual rests; 3, that she was entitled to a decree for 
 payment of what should be so found due; and, 4, that 
 the entry of the sum of 12,000Z. in the account furnish- 
 ed by B. and C. must be taken as conclusive against 
 them that they had such a sum in their hands. It was 
 considered that the mortgage had not the effect of with- 
 drawing the 12,000Z. from the business: it was part of 
 a plan for keeping the money in the business; and the 
 12,000Z. ought not to have been left on the security of 
 property from which the trustees ought to have re- 
 covered it. 
 Maedonald v. In Macdonald v. Richardson (x), a partner died, 
 Richardson, leaving his co-partner and another person his execu- 
 
 (u) The property, so far as it could be regarded as an author- 
 ised security, was not an adequate security for 12,000/. 
 (.r) 1 Giff. 81. See, also, Docker v. Somes, 2 M. & K. 655
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 603 
 
 tors, and the copartner executor afterwards took other Bk. III. 
 persons into partnership with him. The testator's as- Chap. 10. 
 sets having been kept in the business, the legatees filed ec ' 
 a bill against the executors, and them only, claiming 
 an account of profits since their testator's death; and a 
 decree was made in their favour (y). 
 
 In Flockton v. Bunning (s), a partner died, leaving Flockton v. 
 his wife * his executrix, and having directed her to get Running. 
 in his estate and invest it for the benefit of herself and L W£,C *1J 
 children. She wound up the partnership in which her 
 husband was engaged, but continued to carry on the 
 business with his capital, in partnership with other 
 persons, who knew that in so doing she and they were 
 committing a breach of trust (a). A bill was filed by 
 some of the children against her and her co- partners, 
 seeking to make them jointly and severally liable for 
 the trust estate employed in the business, and for the 
 profits made by its use ; and a decree to that effect was 
 made and was affirmed on an appeal by the wife's part- 
 ners. This case was decided on the principle that the 
 wife's partner's were clearly implicated in the breach 
 of trust committed by her, and were jointly and sev- 
 erally responsible with her for the trust estate and all 
 the profits made thereby. The widow's capital was 
 trust property ; there was no loan as in Stroud v. 
 Givyer (b), but the widow's capital became part of the 
 capital of the firm ; and she and her co-partners wrong- 
 fully traded with it (c). Both L. J. "Wood and the L. 
 J. Selwyn agreed that a mere loan, although in breach 
 of trust, would not involve liability to account for 
 profits, but that trust property which was traded with 
 by a trustee in partnership with others, could not be 
 regarded as a loan (d). 
 
 The right of the cestui que trust against his trustee option in 
 in these cases is to an account of profits made by him these cases. 
 by the use of the trust property, or at the option of the 
 
 (y) It is not quite clear whether the executor, who was a part- 
 ner, was ordered to account for more profits than he received or 
 not. 
 
 (z) 8 Ch. 323. note. The writer was counsel for the appellants, 
 and this statement of the case was written from the short-hand 
 writer's notes of the judgment. 
 
 (a) In fact, she agreed to indemnify them against the conse- 
 quences. 
 
 (b) 28 Beav. 130, ante, p. 521. 
 
 (c) Compare this case with Vyse v. Foster, L. R. 7 H. L. 318, 
 and 8 Ch. 309, noticed in infra, p. 534. 
 
 (d) See, also, as to this, Travis v. Milne, 9 Ha. 141, where, 
 however, interest only was ordered to be paid.
 
 604 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. cestui que tt-ust to simple interest at hi. per cent (e) ; 
 
 Chap. 10. or j n S p e cial cases to compound interest (/). 
 
 Sect - 6 - * The next class of cases which it is necessary to 
 
 [ * 532] notice, is that in which surviving or continuing part- 
 ners were held not liable to account for profits made 
 after dissolution. 
 
 Simpson*. Tne first of tnese was sim P son v - Chapman (g). 
 
 Chapman. There three persons were partners as bankers. The 
 bank was in such good credit as to render no capital 
 necessary for the purpose of carrying it on. One of 
 the partners died, leaving his son, one of the surviving 
 partners, and a third person, his executors. At the 
 time of his death the assets of the bank exceeded its 
 liabilities. The estate of the deceased was a creditor 
 of the bank to the extent of his share, viz., one-third 
 of its net assets, but there was a much larger sum 
 owing from his estate to the bank on his overdrawn 
 private account. The son, being also an executor of 
 the deceased, was admitted as a partner in the bank, 
 and the business was carried on by the son and surviv- 
 ing partners, but the amount of the deceased's share in 
 the business was never paid out, or separated from the 
 monies of the bank. Considerable profits were made 
 by the new partnership, and of these the son, as part- 
 ner, received his share. A suit was instituted for the 
 administration of the estate of the deceased, but to 
 such suit the executors alone were defendants, and a 
 decree was made charging the son, and the surviving 
 partner, who was an executor, in respect of the profits 
 of the bank from the death of the deceased, paid to the 
 son, so far as such profits had accrued from the assets 
 of the deceased employed in the partnership. This part 
 of the decree was appealed from and reversed, and one 
 of the grounds for the reversal was, that the profits 
 acquired after the death of the deceased could not be 
 attributed to the use made of his capital. If the debt 
 due from him to the bank were omitted from its assets, 
 the bank was at his death insolvent. The deceased had 
 no capital in it in the ordinary sense of the word, and 
 all the profits which had accrued were attributable to 
 
 (e) Heathcote v. Hulme, 1 Sac. & W. 122. 
 
 (/) If the trustee's duty is to call in the money and accumu- 
 late the income, he will he charged with compound interest ; 
 there may possibly be other grounds for so charging him. See 
 Jones v. Foxall, 15 Beav. 388; Williams v. Powell, ib. 461, and 
 Lord Selborne's observations in Vyse v. Foster, L. B. 7 H.L. 316. 
 
 (g) 4 De G. M. & G. 154. This case is the more important as 
 the non-liability to account for subsequent profits was decided 
 on the hearing of the cause.
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 605 
 
 the connection and reputation of the bank. It was Bk. III. 
 urged that the son, who had received one-third of the ^c£'e, ' 
 
 profits, and who could not distinguish how much of ^ ' r ' 
 
 them was attributable to his character * of executor, L o66 \ 
 and how much belonged to him in his individual char- 
 acter as partner, ought to be charged with the whole. 
 But it was held that this principle did not apply, inas- 
 much as he did not carry on the business as an execu- 
 tor, but in his own separate and individual right, con- 
 ceiving that he was entitled so to carry it on. 
 
 Another case of the same class was Wedclerburn v. Wedderbum 
 Wedderbum (h). There three persons were partners v. Wedder- 
 as merchants; one died, leaving the other two and his burn - 
 widow his executors. The surviving partners alone 
 proved the will, and they drew up an account of the 
 partnership assets and credited the estate of the de- 
 ceased with a certain sum as his share in the concern, 
 but this share was never separated from the assets of 
 the continuing firm. Several changes afterwards took 
 place in the new firm, and then a suit was instituted by 
 persons interested in the estate of the deceased partner, 
 against the executors and surviving partners of the de- 
 ceased, praying for an account of his estate, and for an 
 account of the gains and profits made by carrying on 
 the partnership after his death. A decree was made 
 directing an account of the personal estate of the de- 
 ceased partner; and of the dealings and transactions of 
 the firm up to his death; and of what at that time was 
 the value of his interest in the concern; and of the 
 profits of the trade carried on by the succeeded firms; 
 and of the monies which were from time to time taken 
 out of the concern, and applied on account of the 
 estate of the deceased; and of the amount of capital 
 from time to time employed in the said firms respec- 
 tively (i). It appeared that at the death of the de- 
 ceased the assets of the firm consisted almost entirely 
 of debts due to it; that it was impossible, except at a 
 great sacrifice, to get in these debts in a short time; 
 that if an attempt had been made to wind up the affairs 
 of the concern at the death of the deceased, the assets 
 of the firm would not have sufficed to discharge its lia- 
 bilities; and that the ultimate solvency of the firm was 
 attributable to the cautious and prudent conduct of the 
 surviving partners, and to their having, from time to 
 time, provided large sums of money to meet * pressing [ * 534] 
 liabilities (k). It thus, in fact , appeared that the pro - 
 
 (h) 2 Keen, 722; .4 M. & Cr. 41; and 22 Beav. 84. 
 (0 2 Keen, 752. (A) See 22 Beav. 84.
 
 606 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. fits made since the death of the deceased were made by 
 
 Chap. 10. ^ e cre( jit and connection of the house, and by the 
 
 ' reputation, skill, and ability of the surviving and later 
 
 partners, and were not attributable to the surplus as- 
 sets of the firm in which the deceased had a share. It 
 further appeared that the share of the deceased had 
 been preserved entirely by the prudent management of 
 the executors, and would have been certainly reduced 
 to nothing if they had wound up the affairs of the 
 house in the ordinary way, or had thrown the estate of 
 the deceased into Chancery. Under all the circumstances 
 of the case it was therefore held that as by the part- 
 nership articles the plaintiffs had no interest in the 
 good-will of the concern, they were not entitled to par- 
 ticipate in the profits made by the successive firms, so 
 far as those profits were attributable to the good-will 
 and connection in trade of the old firm; and that their 
 share in any profits attributable to any other source was 
 covered by interest on the amount at which the share of 
 the deceased had been valued. 
 Vyse r. Lastly, in Vyse v. Foster (I), the partnership articles 
 
 Foster. provided that on the death of a partner the amount of 
 
 his share should be ascertained and be paid out with 
 interest, by instalments, running over two years. A 
 partner died leaving throe executors, one of whom was 
 a surviving partner. The share of the deceased was 
 ascertained; it was not, however, paid out at the end of 
 two years, but was kept in the business, which was car- 
 ried on for many years, first by one and then by two of 
 the executors, with other persons. The continuing 
 firms paid interest on the capital of the deceased partner, 
 and all the persons beneficially interested in his estate, 
 except the plaintiff, acquiesced in this arrangement. 
 The plaintiff, soon after coming of age, demanded her 
 share of the estate of the deceased, and also the profits 
 made by its employment in the business. The firm 
 paid her the principal sum due to her, with compound 
 [ * 535] interest, at 61. per cent., but declined to account * to her 
 for any profits. She thereupon filed a bill against the 
 executors, and them alone, for an account of the profits. 
 A decree was made in her favour, and the defendants 
 were declared liable for all the profits made by the suc- 
 cessive firms, by the use of her share of the deceased 
 partner's estate. The court of appeal, however, reversed 
 
 (1) 8 Ch. 309, and L. R. 7 H. L. Ca. 318. The case came again 
 before the court as to the mode of ascertaining the amount due 
 to the deceased, see 10 Ch. 236. See the Law Quarterly Review 
 for 1887, p. 211.
 
 ACCOUNT — PROFITS SINCE DISSOLUTION. 607 
 
 this decision, and held that although there had been Bk. III. 
 technically a breach of trust in not paying out the £ hap ' 10 " 
 
 capital of the deceased partner as provided by the ' 
 
 partnership articles, still the plaintiff could not possi- 
 bly be entitled to charge the defendants in the suit, as 
 constituted, with more profits than they had themselves 
 received; and as the evidence showed that they had 
 acted throughout with perfect fairness, the court of 
 appeal refused even an account of these profits, and held 
 that under all the circumstances of the case the plain- 
 tiff was only entitled to her share of the testator's 
 estate, with the compound interest at 5Z. per cent, 
 which had been offered to her. The decision in this 
 case is extremely important, as it decided, 1, that the 
 clause in the partnership articles was binding both on 
 the executors of the deceased partner and on the sur- 
 viving partners, although one of them was also an execu- 
 tor; 2, that the amount due to the estate of the deceased 
 was in effect a loan to the survivors, and its non-pay- 
 ment at the time and in manner prescribed by the arti- 
 cles of partnership did not entitle the plaintiff to any 
 profits, but only to interest; 3, that even if the plain- 
 tiff's claim to profits could have been sustained, the 
 executor who was not a partner, would not have been 
 liable for such profits; and 4, that the executors who 
 were partners would not have been liable for more pro- 
 fits than they respectively themselves received {in). 
 
 The law upon the subject under consideration is still observations 
 in an unsettled state. Undoubtedly a person ought not on the fore- 
 to be permitted to retain for his own use, gains ac- going cases. 
 quired by the unlawful employment of another's prop- 
 erty; and it would certainly not be conducive to justice 
 if there were no power to compel a discovery of the r * 5361 
 amount of the gains so made, and payment * of that 
 amount by the wrong- doer (n). At the same time, 
 owing to the extreme difficulty of taking an account of 
 subsequent profits, so far as they are attributable only 
 to one particular source, the tendency of the courts in 
 modern times appears to be rather in favour of not ex- 
 ercising than of exercising the power alluded to, except 
 in cases of gross fraud or breach of trust (o). In such 
 
 (m) See, as to this, Flockton v. Bunning, 8 Ch. 323. note, ante, 
 p. 530, and the observations of Lord Cairns in L. R. 7 H. L. 333, 4. 
 
 (n) See the admirable judgment of Lord Brougham in Docker 
 r. Somes, 2 M. & K. 672. 
 
 (o) Judgments for an account of profits after dissolution are 
 fearfully oppressive ; and the writer is not aware of any instance 
 in which such a judgment has been worked out and has resulted 
 beneficially to the person in whose favour it was made.
 
 608 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 Featherston- 
 haugh v. 
 Turner. 
 
 Evidence on 
 which 
 
 accounts are 
 taken. 
 
 [*537] 
 
 cases, however, the Court will exert itself to the utmost, 
 and the efforts which it will make in. order to prevent 
 persons from deriving advantage from their own wrong, 
 cannot be better illustrated than by the case of Feather- 
 stonhangh v. Turner (p). The profits of the partner- 
 ship business there arose entirely from the skill and 
 reputation of the partners, who were medical gentle- 
 men. In order to ascertain the share of the deceased 
 in the profits made after his death by the surviving 
 partner, an inquiry was directed whether any and what 
 profits made since the death of the deceased were at- 
 tributable to or derived from persons who had become 
 customers by reason of the deceased having been a 
 partner, and it was considered that the surviving part- 
 ner was liable to pay what might be found due on tak- 
 ing that account, after deducting a liberal allowance to 
 him for his time, knowledge, and expenses in realizing 
 the profits in question. 
 
 With respect to the evidence upon which the accounts are to he taken. 
 
 As regards^ the partnership books. These being ac- 
 cessible to all the partners, and being kept more or 
 less under the surveillance of them all, are primd facie 
 evidence against each of them, and, therefore, also for 
 any of them against the others (q)- 1 But entries made 
 by one partner without the knowledge of the other do 
 not prejudice the latter as between * himself and his 
 co- partner (r); 2 and where a surviving partner drew 
 up an account which he furnished to the executors of 
 
 {p) 25 Beav. 382. 
 
 (q) See Lodge v. Prichard, 3 De G. M. & G. 906, and Smith v. 
 The Duke of Chandos, 2 Atk. 158, and Barn. 412. But see the 
 observations of L. J. Turner, in Stewart's case, 1 Ch. 587. 
 
 (r) Hutcheson v. Smith, 5 Ir. Eq. 117. See, also, Reeve v. 
 Whitmore, 2 Dr. & Sin. 446, where it was held that although 
 books kept by a person may be used against him as showing 
 what he has received, he is not entitled to use them in his own 
 favour to show what he has paid. 
 
 1 Dunnell r. Henderson, 23 N. J. Eq. 174 (1872) ; Lambert v. 
 Griffith, 44 Mich. 65 (1880); Withers v. Withers, 8 Pet. 355 
 (1834) ; Kitner v. Whitlock, 88 111. 513 (1877) ; Tucker w. Peaslee, 
 36 N. H. 167 (1853) ; Wheatley v. Wheeler, 34 Md. 62 (1870) ; 
 Fairchild v. Fairchild, 64 N. Y. 471 (1876) ; Topliff v. Jackson, 
 12 Gray, 565 (1859). In Saunders v. Duval. 19 Tex. 476 (1857), 
 it was held that, to make the books evidence against a partner, 
 it must be shown that he actually inspected them. 
 
 2 Banks v. Binney. 5 Mason, 176 (1828); Wheatley v. Wheeler, 
 34 Md. 62 (1870). The books are evidence themselves. It is 
 not necessary to prove their entries by vouchers. Powers v. 
 Dickie, 49 Ala. 81 (1873); Brickhouse v. Hunter, 4 Hen. & M. 
 (Va.) 363 (1809).
 
 ACCOUNT — EVIDENCE. 609 
 
 his late partner, it was held that such account was ad- Bk. III. 
 missible against the partner who furnished it, and that £ * p ' 
 the executors were not bound, by using it against him, ' 
 to admit its correctness throughout (s). 1 
 
 Where, in consequence of the loss of books and doc- Special direc- 
 uments, an account cannot be taken in the usual way, tlon . s on tms 
 special directions will be given as to the mode in which 
 the accounts shall be taken and vouched. The power 
 to give such a direction is expressly conferred by Ord. 
 XXXIII. , r. 3 (t). 
 
 The judgment for an account usually directs that all Production 
 parties shall produce on oath all books and papers in of books, &c. 
 their custody relating to the taking of the accounts. If 
 any partner has kept accounts relating to the partner- 
 ship in private books of his own, ho must produce such 
 books; for he should have kept his private accounts 
 elsewhere, if he did not want them to be seen (u). 
 After a dissolution new books are generally opened; 
 but if they relate to the accounts which have to be 
 taken, they must be produced (x) ; and even if a part- 
 ner not before the Court, objects to their production, 
 it is by no means clear that his objection will pre- 
 vail (y). As between partners * and their representa- [* 538] 
 tives, material documents must be produced, though f hoy 
 may be privileged as between them and other persons (z). 
 
 If a partner has books or accounts in his possession, Consequence 
 and he will not produce them, an account may, never- of non-pro- 
 
 duction. 
 
 (s) Morehouse v. Newton, 3 Be G. & Sm. 307. 
 
 (t) This rule was framed on 15 & 16 Vict. c. 86, ? 54, repealed 
 by 46 & 47 Vict. c. 49, \ 3. See, as to the old practice, Rowley 
 v. Adams, 7 Beav. 395; Millar v. Craig, 6 ib. 444; Turner v. 
 Corney, 5 ib. 515; Adley v. The Whitstable Co., 17 Ves. 327. 
 See the decree in Stainton v. The, Carron Co., 24 Beav. 363. Spe- 
 cial directions were only given when necessary. See Lodge v. 
 Prichard, 3 De G. Mac. & G. 906; Ewart v. Williams, 7 ib. 68. 
 The Bankers' Books Evidence Act, 42 & 43 Vict. c. 11, facili- 
 tates the procuring of evidence. See on it, Harding v. Williams, 
 14 Ch. D. 197 (which query); Be Marshfield, 32 Ch. D. 499, which 
 was varied on appeal; Arnott v. Hayes. 36 Ch. D. 731. 
 
 (u) Pickering v. Pickering, 25 Ch. D. 247; Toulmin v. Cop- 
 land, 3 Y. & C. Ex. 655; Freeman v. Fairlie, 3 Mer. 43. Lib- 
 erty will be given to seal up those parts which are sworn not to 
 relate to the matters in question in the suit, ante, p. 507. 
 
 l'.r) Hue v. Richards. 2 Beav. 305. See the last note. 
 
 (y) See Freeman v. Fairlie. 3 Mer. 43. But see ante, p. 503. 
 z) See Brown v. Perkins, 2 Ha. 540, where the excuse of pro- 
 fessional confidence was set up. 
 
 1 An account stated by a partner on the dissolution of the 
 partnership, admitting his indebtedness to the firm is evidence 
 against him, although unsigned. Jessup v. Cook, 6 N. J. L. 434 
 (1798). 
 
 * 16 LAW OF PARTNERSHIP.
 
 610 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 6. 
 
 Accountants. 
 
 Injunctions 
 and re- 
 
 [ * 539] 
 
 theless, be arrived at by presuming everything against 
 him. Thus, in a case where an account was directed 
 at the suit of the representatives of a deceased partner 
 against the surviving partner, and the latter would not 
 produce the books necessary to enable the Master to 
 take the accounts, the Master estimated the net profits 
 at 10Z. per cent, on the capital employed, and the Court, 
 on exceptions to his report, confirmed it, adding that if 
 he had set the net profits down at 202. per cent, his re- 
 port would have been equally confirmed (a). 1 
 
 The Court has power to employ professional account- 
 ants to assist it in taking accounts, and the Court may 
 act on their report (6). 
 
 2. Of injunctions. 
 
 In order to prevent a partner from acting contrary to 
 the agreement into which he may have entered with his 
 co-partners, or contrary to the good faith which, inde- 
 pendently of any agreement, is to be observed by one 
 partner towards his co-partner, it is sometimes neces- 
 sary for a Court to interfere either by granting an in- 
 junction against the partner complained of, or by tak- 
 ing the affairs of the partnership oat of the hands of 
 all the partners, and entrusting them to a receiver or 
 receiver and manager of its own appointment. 
 
 These two modes of interference require to be con- 
 sidered separately; for they are not had recourse to 
 indiscriminately. * The appointment of a receiver, it is 
 true, always operates as an injunction, for the Court- 
 will not suffer its officer to be interfered * with by any 
 one(c); but it by no means follows that because the 
 Court will not take the affairs of a partnership into its 
 
 (a) Walmsley v. Walnrsley, 3 Jo. & Lat. 556; and see Gray v. 
 Haig, 20 Beav. 219. 
 
 (b) See Jud. Act, 1873, § 56. 57, and Ord. xxxiii. r. 2: xl. r. 
 10; lv. r. 19; and see Hill r. King, 1 N. R. 341, L. C; Ford v. 
 Tynte, 2 De G. J. & Sm. 127; Be London. Birmingham, and 
 Bucks. Rail. Co., 6 W. R. 141. As to production to account- 
 ants, &c, see ante, p. 504. 
 
 (c) See Helmore v. Smith (No. 2), 35 Ch. D. 449. However, 
 the Court will often grant an injunction as well as a receiver, to 
 mark its sense of the impropriety of the conduct of those it spe- 
 cially restrains, see per V. -C. Kindersley, in Evans v. Coventry, 
 3 Drew. 82. 
 
 1 If the partner whose duty it is to keep the hooks of the firm 
 does it so carelessly that he is unable to give an account of pro- 
 fits, he can be charged with interest at least iu their stead. 
 Pearce v. Pearce, 77 111. 281 (1875).
 
 INJUNCTION AGAINST PARTNERS. 611 
 
 own hands, it will not restrain some one or more of the Bk. III. 
 partners from doing what may be complained of (d). ^\. ' 
 Whatever donbt there may formerly have been upon 
 
 the subject, it is clear that an injunction will not be Injunction 
 
 refused simply because no dissolution of partnership gjjjjjj no 
 
 is sought (e). 1 Where a partner who had been suffer- c iiss<)lutioii 
 
 ing from temporary insanity had recovered, but was i s sought. 
 
 excluded by his co partners, from the management of Restoring 
 
 the affairs of the partnership, the Court restored him excluded 
 
 to his position in the firm by granting an injunction partner. 
 
 restraining the other partners from preventing him 
 
 from transacting the business of the partnership (/). 
 
 Again, in England v. Curling (g), a partnership had Restraining 
 
 been entered into, for a term of years which had not ^g roper 
 
 expired. One of the partners insisted on a dissolution ' 
 
 .F x - -, . , rmgianu (. 
 
 and retired from the partnership, and entered into Cu ri ing . 
 
 another partnership, which assumed the name of the 
 old firm, opened the letters addressed to it, and circu- 
 lated notice of its dissolution. But on a bill filed by 
 the continuing partners of the old firm against their 
 co-partner and the other members of the new firm, the 
 Court granted an injunction restraining the retired co- 
 partner from carrying on business with his new part- 
 ners or any other persons except his old co-partners, 
 until the expiration of the term ; and restraining his 
 new partners from carrying on business with him, or 
 otherwise, in the name of the old firm, and from re- 
 ceiving or opening letters addressed to it, and from 
 interfering with its property ; and restraining the 
 retired partner from publishing or circulating any 
 notice of the dissolution of the old firm, before the 
 expiration of the term for which it had been entered 
 into. 
 
 * So in Hall v. Hall (h), a partnership for twenty-one (" * 540] 
 — Hall v. Hall. 
 
 (rf) See Hall v. Hall, 3 Mac. & G. 85. 
 
 (e) See Jud. Act, 1873, § 2.3, cl. 8, in addition to the cases 
 below. 
 
 (f) Anon., Z. v. X., 2 K. & J. 441. 
 
 (g) 8 Beav, 129. See, too, Warder v. Stilwell, 3 Jur. N. S. 9. 
 (A) 12 Beav. 414, 20 ib. 139, and 3 Mac. & G. 79. See. also, 
 
 Blisset v. Daniel, 10 Ha. 493. 
 
 1 Thus a partner will be restrained from appropriating the 
 firm's property to the payment of separate debts. Stockdale v. 
 Ullery, 37 Pa.' St. 486 (1860); Converse v. McKee, 14 Texas. 20 
 (1855); or from misusing it, in violation of the articles. New v. 
 Wright, 44 Miss. 202 (1870); or from breaches of the partnership 
 articles. Howell v. Harvey, 5 Ark. 270 (1843). If one partner 
 threaten or attempt to sell the assets of the firm in fraud pi his 
 associates, he will be restrained bv injunction. Sloan v. Moore, 
 37 Pa. St. 217 (1860); Halstead v. Shepard, 23 Ala. 558 (1853).
 
 612 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 Clements v. 
 Norris. 
 
 "Where one 
 partner seeks 
 to drive the 
 others to a 
 dissolution. 
 
 Injunction 
 
 where the 
 partnership 
 is determin- 
 able at 
 will. 
 
 Glassington 
 v. Thwaites. 
 [*541j 
 
 years, determinable on twelve months' notice by either 
 party (i), was entered into by the plaintiff and the 
 defendant ; disputes arose, and the defendant wholly 
 excluded the plaintiff from the partnership business. 
 TLe plaintiff hied a bill praying that the articles might 
 be performed, and, amongst other things, for an injunc- 
 tion, but not for a dissolution. An injunction was 
 granted, restraining the defendant from applying any 
 of the monies and effects of the co-partnership, other- 
 wise than in the ordinary course of business, and from 
 obstructing or interfering with the plaintiff in the exer- 
 cise or enjoyment of his rights under the partnership 
 articles. 1 
 
 Again in Clements Norris (k), a partner who insisted 
 on carrying on a branch of the partnership business 
 against the will of his co-partner was restrained from 
 so doing. The lease of the place of business had ex- 
 pired and the plaintiff declined to renew it or to concur 
 in taking any other place. 
 
 These authorities show that where a partnership is 
 not determinable at will, those partners who are de- 
 sirous of carrying on the business in the proper way 
 will be protected by the Court from the unwarranted 
 acts of a co-partner, whose only object may be to force 
 the others to submit to him or to agree to a disso- 
 lution (I). 
 
 Where the partnership is determinable at will, there 
 is, it is said, more difficulty in interfering if a dissolu- 
 tion is not sought ; for, supposing the Court to in- 
 terfere, the defendant may immediately dissolve the 
 partnership (m). But supposing him to do so, an in- 
 junction will not necessarily be futile, inasmuch as so 
 long as it continues in force, the defendant is rendered 
 powerless for evil, and a notice by him to dissolve the 
 partnership cannot, per se, operate as a dissolution of 
 the injunction. In Glassington v. Thwaites (n), the 
 plaintiff', who was one of the proprietors of the Morn- 
 ing Herald, obtained an * injunction restraining his 
 co-partners who were also proprietors of the English 
 
 (i) See 20 Beav. 139. 
 (k) 8 Ch. D. 129. 
 
 (1) See, too, Fairthorne v. Weston, 3 Hare, 387. 
 (m) See Peacock v. Peacock, 16 Yes. 49; Miles v. Thomas 
 606. 
 
 (n) 1 Sim. & Stu. 124. 
 
 9 Sim. 
 
 1 For instance, of injunctions in the case of an excluded part- 
 ner see Van Keuren v. Trenton Locomotive Mfg. Co. 13 N. J. Eq. 
 302(1861); Rutland Marble Co. v. Ripley, 10 Wall. 339(1870); 
 Pirtle v. Penn, 3 Dana, 247 (1835).
 
 INJUNCTION AGAINST PARTNERS. 013 
 
 Chronicle (in which, however, the plaintiff had no in- Bk. Ill, 
 terest), from publishing in the latter paper any infor- j^ p * 6 10 ; 
 mation obtained at the expense of the former until it * — '. 
 
 should have been first published in the Morning Herald. 
 So in Morris v. Caiman (o), one of the proprietors of Morris i 
 the Haymarket Theatre was restrained froro acting Column, 
 contrary to the articles of partnership, by writing plays 
 for other theatres. Again, where a partner had agreed not Homfray r. 
 to sell his share without first offering it to the other part- Fothergill. 
 ners, an injunction to restrain a sale was granted (p). 
 It does not appear from the reports of these cases 
 whether the partnerships were partnerships at will or 
 not ; but supposing them to have been merely partner- 
 ships at will, it is clear that the injunctions were far 
 from valueless. 
 
 In an action instituted for the purpose of having a injunction 
 partnership dissolved, or of having an account taken in actions 
 after a partnership has been dissolved, it has never been *° r dissohi- 
 doubted that an injunction will be granted to restrain 
 one of the partners from doing any act which will im- 
 pede the winding up of the concern (q). For example, 
 one partner will be restrained from carrying on the con 
 cern for any other purpose than winding up (r) ; from 
 damaging the value of the good-will if it ought to be 
 sold for the benefit of all (s) ; from getting in the assets 
 if he is likely to misapply them (t) ; a surviving part- 
 ner will be restrained from improperly ejecting the rep- 
 resentatives of his deceased co-partner (u) : and they, 
 on the other hand, will be restrained from making any 
 improper use of partnership property, the legal estate 
 of which may happen to be in them (x). 1 * So a sur- [ * 542] 
 viving partner will be restrained from disposing of or get- 
 
 (o) 18 Ves. 437. 
 
 (p) Homfrey v. Fothergill, 1 Eq. 567. 
 
 (q) A person who only shares profits is by no means necessarily 
 in the same position as a partner in these respects, see Walker 
 v. Hirsch, 27 Ch. D. 460. 
 
 (r) See De Tastet v. Bordenave, Jac. 516. 
 
 (s) Turner v. Major, 3 Gift. 442; Bradbury v. Dickens, 27Beav. 
 53. In the last case the defendant was advertising the discon- 
 tinuance of a partnership perodical of which he was the editor. 
 
 (0 O'Brien v. Cooke, Ir. Rep. 5 Eq. 51; there the plaintiff was 
 allowed to get them in, indemnifying the defendant against 
 costs, &c. 
 
 (u) Elliot v. Brown, 3 Swanst. 489, n.; Hawkins v. Hawkins, 
 4 Jur. N. S. 1045. 
 
 (a,-) Alder v. Fouracre, 3 Swanst. 489. 
 
 1 A partner will be restrained from publishing letters received 
 from his co-partner in regard to the firm's business. Roberts v. 
 McKee, 29 Ga. 161 (1859.)
 
 614 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 6. 
 
 Injunction 
 to protect 
 partners 
 from the 
 representa- 
 tives of a 
 co-partner. 
 Injunction 
 to enforce 
 [ * 543] 
 special agree- 
 ments. 
 
 ting in the partnership assets, if he has already been 
 guilty of breaches of trust with reference to them (y). 
 But a surviving partner will not be restrained from con- 
 tinuing to carry on business in the name of himself and 
 his deceased co-partner unless so to do is contrary to 
 his own agreement, or the good-will is a saleable asset 
 of the iirin (z). Again, in an action for a dissolution, 
 a partner will be restrained from improperly interfer- 
 ing with or obstructing the partnership business (a) ; 
 from drawing, accepting, or endorsing bills of exchange 
 in the partnership name for other than partnership pur- 
 poses (b) : from getting in debts owing to the firm (c); 
 from withholding the partnership books (d) ; and gen- 
 erally on a dissolution one partner will be restrained 
 from injuring the property of the firm (e). 
 
 So the Court will interfere by injunction to protect 
 partners from interference of persons claiming the 
 share of a late co-partner, by reason of his death, or 
 bankruptcy, or under an execution (/). 
 
 So after a dissolution the Court constantly interferes 
 by injunction to restrain breaches of special agreements 
 entered into between the partners ; such for example 
 as agreements *not to carry on business (g), not to get 
 in debts of the firm (h), not to divulge a trade secret (i). 
 So, if a partner retires, and assigns his interest in the 
 partnership, and in the good-will thereof, to the con- 
 
 (y) Hartz v. Schrader, 8 Ves. 317. 
 
 (z) See on this subject, ante, pp. 4:17, 448. 
 
 (a) Smith v. Jeves, 4 Beav. 503; Charlton v. Poulter, 19 Yes. 
 148. n. 
 
 (b) Williams v. Bingley, 2 Vera. 278, note, and Coll. Part. 233; 
 Jervis v. White, 7 Ves. 412; Hood v. Aston, 1 Russ. 412. In the 
 two last cases, the injunction restrained maid fide indorsees for 
 value from parting with or negotiating the securities. 
 
 (c) Head v. Bowers, 4 Bro. C. C. 441. 
 
 (d) Taylor v. Davis, 3 Beav. 388, note; Greatrex v. Greatrex, 
 1 De G. & Sm. 692; Charlton v. Poulter, 19 Ves. 148, n. 
 
 (e) See Marshall v. Watson, 25 Beav. 501, where an injunction 
 to restrain a partner from publishing the accounts of the firm, 
 was under special circumstances refused. See, also, as to mak- 
 ing slanderous statements and diverting letters, Hermann Loog 
 v. Bean, 26 Ch. D. 306, a case of agency, but applicable to part- 
 nerships. 
 
 (/) See as to assignees in bankruptcy. Allen v. Kilbee. 4 Madd. 
 464; Fraser v. Kershaw, 2 K. & J. 496: Davidson v. Napier, 1 
 Sim. 297; Freeland v. Stansfield, 2 Sm. <x G. 479. As to sheriffs, 
 Be van v. Lews, 1 Sim. 376; Newell v. Townsend, 6 ib. 419. and 
 ante, p. 356 et seq. As to executors, Phillips v. Atkinson, 2 Bro. 
 C. C. 272. 
 
 (g) Whittaker ». Howe. 3 Beav. 383. 
 
 (h) Davis v. Amer, 3 Drew. 64. 
 
 (i) Morrison v. Moat, 9 Ha. 241.
 
 INJUNCTION AGAINST PARTNERS. 615 
 
 tinning partners, he will be restrained from recom- Bk. III. 
 mencing or carrying on business in such a way as to ^ l p ' 6 
 
 lead people to suppose that he is the successor of or ! — ! 
 
 still connected with the old firm (k). 
 
 Although injunctions to restrain actions are now injunction to 
 abolished, it may be useful to observe that where sur- restrain 
 viving partners gave the executors of their late part- f, ctl ° us on _, 
 ner a bond for the amount of his share, the amount of ol - U n Se ttled 
 which had not been ascertained, an action on the bond accounts, 
 was stayed on its being shown that if the partnership 
 accounts were taken it would appear that the surviving 
 partners had already paid too much (I). But an action 
 for the balance of a settled account would not be re- 
 strained merely because there were other unsettled ac- 
 counts between the parties (ra); nor would a court of 
 equity interfere to prevent a shareholder of a company 
 who was a creditor of that company from executing a 
 judgment obtained against it by him as a creditor (n). 
 
 Before leaving this subject, it is necessary to make a injunction in 
 few observations on the kind of misconduct which will case of 
 induce the Court to grant an injunction against one misconduct, 
 partner at the suit of another. Mere squabbles and im- 
 proprieties arising from infirmaties of temper, are not 
 considered sufficient ground for an injunction (o) ; but if 
 one partner excludes his co-partner from him his right- 
 ful interference in the management of the partnership 
 affairs, or if he presists in acting in violation of the 
 * partnership articles on any point of importance, or so [ * 544] 
 grossly misconducts himself as to render it impossible 
 for the business to be carried on in a proper manner, 
 the Court will interfere for the protection of the other 
 partners (p). Where, however, the partner complain- 
 ed of has by agreement been constituted the active 
 managing partner, the Court will not interfere with him 
 
 (A) Churton v. Douglas, Johns. 174, ante, p. 441. See, also, 
 Hookham v. Pottage, 8 Ch. 91, and Hermann Loog v. Bean, 26 
 Ch. D. 306, as to making injurious statements. 
 
 (/) Jackson v. Sedgwick, 1 Swanat. 460. See, also, Gold v. 
 Canham, 1 Ch. Ca, 311, and 2 Swanst. 325, note. 
 
 (m) See Preston v. Strutton, 1 Ans. 50, and Rawson v. Samuel, 
 Cr. & Ph. 172. 
 
 (ra) Rheam u. Smith, 2 Ph. 726; Hardinge v. Webster, 1 Dr. 
 & Sm. 101 ; and see Hammond v. Ward, 3 Drew. 103. 
 
 (») See Marshall v. Colman, 2 J. & W. 260 ; Smith v. Jeyes, 4 
 Beav. 503 ; Lawson v. Morgan, 1 Price, 307 ; Cotton r. Horner, 
 5 Price, 537; Warder v. Stillwell, 3 Jur. N. S. 9. 
 
 (p) Seejjo.sf, book iv. ch. 1, §2. In Anderson v. Wallace, 2 
 Moll. 510, one of several partners who horsed a mail coach was 
 restrained from horsing it on the ground that he did it so badly 
 as to imperil the business of the concern.
 
 616 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 Partner 
 applying for 
 
 injunction 
 must come 
 with clean 
 hands. 
 
 Injunction 
 to restrain 
 holding out. 
 
 unless a strong case be made out against him (q); nor 
 will the Court restrain a partner from acting as such, 
 merely because if he is known so to do, the confidence 
 placed in the firm by the public will be shaken (r), 
 
 It need scarcely be observed that a partner who seeks 
 an injunction against his co- partner must himself be 
 able and willing to perform his own part of any agree- 
 ment which he seeks to restrain his co-partner from 
 breaking (s); and the plaintiff's own misconduct may 
 be a complete bar to his application, however wrong 
 the defendant's conduct may have been (t). As stated 
 by Lord Eldon in Const v. Harris, a partner who com- 
 plains that his co partners do not do their duty to 
 him, must be ready at all times, and offer to do his duty 
 to them (u). 
 
 In consequence of the liability which attaches to a 
 person who holds himself out as a partner with others, 
 and of the danger run by a person who is held out as a 
 partner with others, even although it may not be with 
 his consent, a Court will, it seems, interfere andrestrain 
 a person from holding out another as partner with 
 him, without the authority of that other (x). 
 
 [*545] 
 
 Object of 
 having a 
 receiver, 
 
 and manager. 
 
 *3. Of receivers. 
 
 The object of having a receiver appointed by the 
 Court is to place the partnership assets under the pro- 
 tection of the Court, and to prevent everybody, except 
 the officer of the Court, from in any way intermeddling 
 with them. 1 The object of having a manager is to have 
 the partnership business carried on under the direction 
 
 (q) See Lawson v. Morgan, 1 Price, 303 ; Waters v. Taylor, 15 
 Ves. 10. See, also, Walker v. Hirsch, 27 Ch. D. 460. 
 
 (r) Anon.. 2 K. & J. 441. 
 
 (s) Smith v. Fromont, 2 Swanst. 330. 
 
 (t) Littlewood v. Caldwell, 11 Price, 97, where an injunction 
 was refused, because the plaintiff had taken away the partner- 
 ship books. 
 
 (■») Const v. Harris, T. & R. 524. 
 
 (x) See Routh v. Webster, 10 Beav. 561 ; Bullock v. Chapman, 
 2 De G. & Sm. 211 ; Troughton v. Hunter, 18 Beav. 470. Com- 
 pare Banks v. Gibson, 34 Beav. 566. In Dixon v. Holden, 7 Eq. 
 488. an injunction was granted to restrain the publication of a 
 statement that the plaintiff was a member of a bankrupt firm. 
 
 1 Upon giving satisfactory security that he will pay his co-part- 
 ner his share in the firm assets, a partner who has possession of 
 them has been left in charge, where lie had contributed the greater 
 part of the capital and the appointment of a receiver would in- 
 jure the busiuess. Delo r. Banks. 101 Pa. St. 458 (1882); Pop- 
 per v. Scheider, 38 How. Pr. 34 (1869).
 
 RECEIVER. 617 
 
 of the Court, a receiver, unless he is also appointed Bk. III. 
 manager, has no power to carry on the business. SecT 6 
 
 Courts of Justice are by no means anxious to take k 
 
 upon themselves the management of a partnership busi- Receivers in 
 ness, and they will, it is said, never do so, save with a l^£™ * ot 
 view to a dissolution or final winding up of the affairs dissolution. 
 of the concern. In the well-known case of Const v. Q onst y< 
 Harris (y), Lord Eldon intimated that a receiver might Harris, 
 be appointed in a suit where a decree could be made for 
 carrying on the concern according to some specific 
 agreement between the parties, as well as in a suit for 
 a dissolution and winding up; and in that very case a 
 receiver was appointed, although no dissolution was 
 prayed by the bill. The receiver there appointed was, Receiver and 
 however, in no sense a manager, but merely a person manager, 
 nominated to receive money coming in from certain 
 quarters, and to apply it in the manner agreed upon in 
 the partnership articles. If the appointment of a re- 
 ceiver does not involve the appointment of a manager, 
 Const v. Harris is a clear authority to show that a re- 
 ceiver may be obtained in an action not seeking a dis- 
 solution of the partnership; the later cases are not op- 
 posed to this. But the writer is not aware of any in- 
 stance in which an action or suit has been instituted for 
 the purpose of continuing a partnership, and in which the 
 Court has appointed a receiver and manager; and in 
 Hall v. Hall (z) Lord Cottenham decided that in such 
 a suit no such appointment could be made. Roberts v. ™ o1>e ^ ts ^: 
 Eberharolt (a) is to the same effect. There the ^plaintiff , # k^ci 
 and the defendants were partners in a colliery, the plain- "- 
 tifP being the managing partner. Disputes arose be- 
 tween the plaintiff and the defendant, and the former 
 filed a bill for an account and a receiver, but did not 
 ask for a dissolution. The Vice-Chancellor, on a mo- 
 tion by the plaintiff for a receiver, refused the motion 
 on the ground that the object of the suit was to insure 
 a continuance of the partnership, and not to bring it to 
 a close. As was said by Lord Eldon, the Court will 
 not, by appointing receivers, take upon itself the man- 
 agement of every trade in the kingdom; nor will it take 
 upon itself the management of any partnership busi- 
 ness, save with a view to its final winding up (b). 1 
 
 (y) Turn. & R. 517. See, further, as to managers as distin- 
 guished from receivers, Gardner v. Lond. Chat, and Dover Rail. 
 Co., 2 Ch. 201 ; Be Manchester and Milford Rail. Co., 14 Ch. D. 653. 
 
 (z) ?, Mac. & G. 79. (a) Kay, 148. 
 
 (b) See Goodman v. Whitcomb, 1 Jac. & W. 589; Harrison v. 
 
 1 It must appear that there is a right to a dissolution and wind
 
 618 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect 6. 
 
 Receiver not 
 
 refused 
 because no 
 dissolution is 
 prayed. 
 
 Sheppard v. 
 Oxeniord. 
 
 Evans v. 
 Coventry. 
 [ * 547] 
 
 The Judicature Act, 1873, s. 25, cl. 8, may perhaps 
 render it easier than formerly to obtain a receiver in 
 partnership actions; but this has not yet been decided. 
 
 It is not, however, necessary, in order to induce the 
 Court to interfere, that the plaintiff should in his ac- 
 tion expressly ask for a dissolution: for the Court will 
 entertain an application for a receiver if the object of the 
 action is to wind up the partnership affairs, and the ap- 
 pointment of a receiver and manager is sought with that 
 view. Thus, in Shf2^pard v. Oxenford (c), which has 
 been already referred to, the Court granted an injunc- 
 tion and appointed a receiver and manager (d). No 
 dissolution was expressly asked for, but the whole ob- 
 ject of the suit evidently was to wind up the company, 
 and have its assets applied in liquidation of its liabilities. 
 
 Again, in Evans v. Coventry (e), the members of two 
 societies, or rather it would seem of one society, hav- 
 ing two branches of * business, viz., a loan branch, and 
 an insurance branch, filed a bill for the purpose of hav- 
 ing the funds of the societies made good by the default- 
 ing directors, and of having the accounts investigated, 
 the affairs of the societies wound up if necessary, and 
 their assets in the meantime protected by the appoint- 
 ment of a manager and receiver. It was proved that 
 some of the funds had already been made away with by 
 the secretary; and a manager and receiver was appointed 
 to protect what remained until the hearing of the cause, 
 upon the ground that the plaintiffs had an interest in 
 the funds in question, and that those funds were in 
 danger of being lost. 
 
 Arinitage, 4 Madd. 14:3; Hall v. Hall, 3 Mac. & G. 79; Smith v. 
 Jeyes, 4 Beav. 503; Waters v. Taylor. 15 Ves. 10; Oliver?;. Hamil- 
 ton, 2 Anstr. 453. In Morris r. Colman, 18 Ves. 438, there was 
 a reference for the appointment of a manager. 
 
 (c) 1 K. & J. 491, ante, pp. 499, 500. 
 
 (d) A receiver and manager was appointed in this country, and 
 the defendant, who had gone to the Brazils after the bill had been 
 filed, was appointed receiver and manager out there. 1 
 
 (e) 5 De G. M. & G. 911, reversing S. C, 3 Drew. 75. It does 
 not appear very distinctly what the manager, as distinguished 
 from the receiver, was expected to do. The Vice-Chancellor re- 
 fused the motion mainly upon the ground that he could not take 
 upon himself the management of such societies, even until the 
 hearing of the cause. The Court of Appeal did not allude to 
 this. 
 
 ing up before a receiver will be appointed. Serghorntner v. 
 Weissenborn, 20 N. J. Eq. 172 (1869); Garretson v. Weaver, 3 
 Edw. Ch. 385 (1840). 
 
 1 In Harvey v. Varney, 104 Mass. 436 1,1870), the court refused 
 to appoint a receiver to take possession of assets lying in a for- 
 eign j urisdiction.
 
 RECEIVER. 
 
 619 
 
 It has been already remarked, that in granting or re- Bk. III. 
 fusing an order for a receiver the Court does not act on g ec a t p ' 6 - 
 the same principles as when it grants or refuses an or- 
 
 der for an injunction; it being one thing to manage Difference 
 the affairs of a partnership oneself, and another to pre- ™[f n n g an 
 vent a person who has already misconducted himself f n j unct i n 
 from interfering further with the partnership con- and appoint- 
 cerns (/). Another reason for drawing a distinction ing a 
 between an injunction and a receiver is, that whilst an reviver, 
 injunction excludes only the person against Avhom it is 
 granted, the appointment of a receiver excludes all the 
 partners from taking part in the management of the 
 concern. It, therefore, does not follow that because 
 the Court will grant an injunction, it will also appoint 
 a receiver; nor that because it refuses to appoint a re- 
 ceiver, it will also decline to interfere by injunction (g). 
 
 In considering the right to the appointment of a re- Right to a 
 ceiver in actions for a dissolution or winding up, it is receiver, 
 necessary to distinguish cases in which there is a con- 
 test between partners, or late partners, from those in 
 which the contest is between partners or late partners 
 on the one side, and non-partners on the other. 
 
 "Where one partner seeks to have a receiver ap- 1. As between 
 pointed against his co-partners, the first thing to ascer- partners, 
 tain is, whether the partnership between them is still 
 subsisting, or has been already dissolved; for if it is 
 still subsisting no receiver will be appointed unless 
 some special grounds for the appointment ** can be[*548j 
 shown (h), or unless it is plain that an order for a dis- 
 solution will be made (i); 1 whilst if the partnership 
 is already dissolved, the Court usually appoints a re- After a disso- 
 ceiver, almost as a matter of course (A;). 2 Id the case ration, 
 supposed, the common property has to be applied in 
 
 (/) See Hall v. Hall, 3 Mac. & G. 85 ; and ante, p. 539. 
 
 \g) Although an injunction was granted, a receiver was re- 
 fused, in Read v. Bowers, 4 Bro. C. C. 441 ; Hartz v. Schrader, 8 
 Ves. 317 ; Hall v. Hall, 12 Beav. 414, and 3 Mac. & G. 79. 
 
 (A) See infra, p. 550. 
 
 (i) Goodman v. Whitcornb, 1 Jac. & W. 592. 
 
 (k) See the last note, and Thomson v. Anderson, 9 Eq. 5o3 ; 
 Sargent v. Read, 1 Ch. D. 600, where both plaintiff and defend- 
 ant applied for a receiver. But see per Lord Eldon in Harding 
 v. Glover, 18 Ves. 281, in which he disavowed the principle that 
 a dissolution was a sufficient ground for a receiver. 
 
 1 See Serghorntner v. Weissenborn, 20 N. J. Eq. 172 (18G9) ; 
 Garretson v. Weaver, 3 Edw. Ch. 385 (1840). 
 
 2 There must be some imperative reason, like breach ot duty 
 or contract. Bufkin v. Boyce, W4 1ml. 53 (1885); Morey v. 
 Grant, 48 Mich. 326 (1882) ; Fitchter v. Fitchter, 11 N. J. Eq. 
 71 (1855) ; Heflebower v. Buck, 04 Md. 15 (1880).
 
 620 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. paying the partnership debts, and has to be divided 
 
 Chap. 10. amongst the partners; and each partner has as much 
 t- right as the others to wind up the partnership affairs. 
 
 Their position is, therefore, essentially different from 
 that of mere co-owners, between whom courts decline 
 to interfere by appointing a receiver, except under 
 special circumstances (I). 
 2. As between When the contest as to a receiver arises 'between a 
 partners and p ar tner on the one hand, and the executors, adminis- 
 non-partners. Gators, or assigns of a late co-partner on the other, the 
 first thing to be considered is, whether the person 
 sought to be excluded from interference is a partner or 
 not. For whilst the Court is reluctant to exclude a 
 partner from the management of the partnership af- 
 fairs, it will readily interfere to prevent other persons 
 from intermeddling therewith. The reason given for 
 this is, that each partner is at the outset trusted by his 
 co-partners, and has confidence reposed by them in 
 him; and until it can be shown that he ought not to be 
 allowed to take part any longer in the management of 
 the partnership affairs, the Court will not interfere with 
 him. But this reasoning has no application to persons 
 who acquire an interest in the partnership assets by 
 events over which the partners have no control, e.g., 
 the death or bankruptcy of one of the members of the 
 firm. Whilst, therefore, even in an action for a disso- 
 lution, or winding up, a receiver will not be granted 
 against a* member of the firm at the instance of the 
 executors, administrators, or assigns of a late partner, 
 unless some special grounds for the interference of the 
 [*549] Court can be established (to); 1 it is a matter * of 
 course to appoint a receiver where all the partners are 
 dead, and an action is pending between their represen- 
 tatives (n); or where such appointment is sought by a 
 partner against the representatives of his late co-part- 
 Fraser v. ner (o). Fraser v. Kershaw (p) is a good illustration 
 Kershaw. f ^[ B <} oc trine. There one partner had become bank- 
 
 (l) See ante, p. 56 ct seq. 
 
 (m) Collins r. Young, 1 Macqueen. 385, and see Harding v. 
 Glover, 18 Ves. 281 ; Kershaw v. Matthews, 2 Russ. 62 ; Ken- 
 nedy v. Lee, 3 Mer. 448 ; Lawson v. Morgan, 1 Price, 303. For 
 similar reasons the Court of Probate will not appoint a receiver 
 pendente lite against a surviving partner unless under very spe- 
 cial circumstances. Horrell v. Witts, L. R. 1 Pr. & Div. 103. 
 
 (n) Philips v. Atkinson. 2 Bro. C. C. 272. 
 
 (o) Freehold v. Stansfeld, 2 Sin. & G. 479. 
 
 (p) 2 K. & J. 496. 
 
 1 Higsjinson r. Air, 1 Desaus, 427 (1795) ; Barry v. Briggs, 22 
 Mich. 201 (1871) ; Heflebower v. Buck, 64 Md. 15 (1880).
 
 RECEIVER. 621 
 
 rupt ; the share of the other partner had been taken in Bk. III. 
 execution under a fi. fa. for a separate debt, and had £~ a J ) ' fi 
 
 been assigned to his creditor by the sheriff. The credit- \ ! 
 
 or, as the assignee from the sheriff of all the share and 
 interest of the non-bankrupt partner, claimed the right 
 of winding up the affairs of the partnership, and to ex- 
 clude the assignees of the bankrupt partner from inter- 
 fering. But on a bill tiled by them against the judg- 
 ment creditor, the Court granted an injunction, and ap- 
 pointed a receiver, holding that the right of the non- 
 bankrupt partner to wind up the affairs of the partner- 
 ship was personal to himself, and was incapable of 
 transfer, and did not, therefore, pass with his share and 
 interest in the partnership assets (q). 
 
 In those cases in which special grounds for the ap- influence of 
 pointment of a receiver must be shown, it follows that the number 
 in a firm of several members there is more difficulty in ot partners 
 obtaining a receiver than in a firm of two. For the ap- appointment 
 pointment of a receiver, operating in fact as an injunc- f a receiver, 
 tion against all the members, there must be some 
 ground for excluding all who oppose the application. 
 If the object is to exclude some or one only from inter- 
 meddling, the appropriate remedy is rather by an in- 
 junction than by a receiver (r). 
 
 Before the Judicature acts it was not the practice to Defendant 
 appoint a receiver at the instance of a defendant before now entitled 
 decree (s). If * he desired to apply for a receiver be- *°* ~Q e j ver ' 
 fore decree, he had to file a cross bill. But this is now L 
 unnecessary (t). 
 
 The grounds on which the Court is usually asked to Grounds for 
 appoint a receiver before dissolution, are either because, the appoint- 
 
 bv agreement, the partners have divested themselves men . ° a 
 
 j o ' x m receiver 
 
 more or less of their right to wind up the affairs of the ao -amst a 
 concern ; or because, by misconduct, the right of per partner, 
 sonal intervention has been forfeited, and the partner- 
 ship funds are in danger of being lost. 
 
 As an illustration of an appointment of a receiver, Agreement, 
 grounded on an express agreement, reference may be p av j s r _ 
 made to Dtiris v. Amer (u). There the plaintiff and Amer. 
 the defendant, on dissolving partnership, appointed a 
 
 (q) See, too, Candler v. Candler, Jac. 225, where a receiver was 
 granted against the assignee of partnership debts. 
 
 (r) See Hall v. Hall, 3 Mac. & G. 79. 
 
 (n) Robinson r. Hadley, 11 Beav. 614. 
 
 (/) See Ord. xix. r. 3, and Ord. 1. r. 6. Sargantr. Read, 1 Ch. 
 D. 600. 
 
 (m) 3 Drew. 64. See, too, Turner v. Major, 3 Giff. 442, a 
 somewhat similar case. No receiver, however, appears to have 
 been appointed. An injunction was sufficient.
 
 622 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Ek. III. 
 Chap. 10. 
 Sect. 6 . 
 
 Misconduct. 
 
 [*551] 
 
 Keceiver 
 appointed. 
 
 stranger to get in the assets of the firm, and agreed 
 not to interfere with him. After this agreement had 
 been partially acted on, one of the partners died, and 
 disputes arising between the executors of the deceased 
 partner and the surviving partner, the latter proceeded 
 to get in the debts of the firm, in violation of the 
 agreement. On a bill filed by the executors of the de- 
 ceased partner for an account, and for an injunction 
 and a receiver, the Court, on motion, appointed a re- 
 ceiver, but declined to grant an express injunction, on 
 the ground that there was no sufficient impropriety of 
 conduct on the part of the defendant to render such an 
 order necessary (x). 
 
 With respect to misconduct, the observations which 
 have been already made on this head, when speaking of 
 injunctions might be here repeated (y). If the part- 
 nership is not yet dissolved (z), there must be some- 
 thing more than a partnership squabble ; l the due 
 winding up of the affairs of the concern must be en- 
 dangered to induce the Court to appoint a receiver of 
 its assets ; and non-co-operation of one partner, where- 
 by the whole responsibility of management is thrown 
 on his co-partner, is not sufficient (a). 2 
 
 * Where, however, a partner has so misconducted him- 
 self as to show that he is no longer to be trusted, as, 
 for example, if one partner colludes with the debtors 
 of the firm, and allows them to delay paying their 
 debts (6); or carries on trade on his own account with 
 the partnership property (c); or, the partnership prop- 
 erty being abroad, runs off in order to do what he likes 
 with it there (d); or, if a surviving partner insists on 
 carrying on the business, and employing therein the 
 assets of his deceased partner (e); or if there is such 
 
 (x) See ante, p. 539, note (e). 
 
 (y) Ante, p. 543. 
 
 \z) See<rn/e, p. 548, as to dissolved partnerships. 
 
 («) See Roberts v. Eberhardt, Kay. 148, and Kowe v. "Wood, 2 
 J. & W. 556, where one partner declined to advance, more money 
 to work a mine. 
 
 (b Estwick v. Conningsby, 1 Vern. 118. 
 
 (c) Harding v. Glover; 18 Ves. 281. 
 
 (d) Sheppard v. Oxenford, 1 K. & J. 491. 
 
 (e) Madgwick v. Wimble, 6 Beay. 495. 
 
 1 Sloan r. Moore, 37 Pa. St. 217 (1860); McElvey v. Lewis, 76 
 N. Y. 373 (1879); Loomis p. MeKenzie, 31 Iowa 425 (1871). 
 
 2 A receiver will be appointed on the ground of disagreement 
 where it appears from the personal relations of the parties that a 
 dissolution of the firm is inevitable. Marten v. Van Schaick, 4 
 Paige, 479 (1834).
 
 KECEIVER. 623 
 
 mis-management as endangers the whole concern (/) ;' Bk. III. 
 or if tbe persons having the control of the partnership Chap. 10. 
 
 assets have already made way with some of them (g)', ec ' ' 
 
 in all these cases the Court will interfere by appoint- 
 ing a receiver (h). 
 
 Again, the reluctance of the Court in appointing a Effect of 
 receiver against a partner, being based on the confidence fraud by a 
 originally reposed in him, that reluctance disappears if P aituer - 
 it can be shown that such confidence was originally 
 misplaced. Therefore, where a defendant, by false and 
 fraudulent representations, induced the plaintiff to 
 enter into partnership with him, and the plaintiff soon 
 afterwards filed a bill, praying that the partnership 
 might be declared void, and for a receiver, the Court on 
 motion ordered that a receiver should be appointed (i). 
 
 Moreover, even although there be no misconduct Effect of ex- 
 joepardising the partnership assets, the Court will ap- chiding a 
 point a receiver if the defendant wrongfully excludes P artner - 
 his co-partner from the management of the partner- 
 ship affairs (A;). 2 This doctrine is acted on where the 
 defendant unsuccessfully contends that the plaintiff is 
 not a partner (Z), or that he has no interests in the 
 partnership assets (m). 
 
 * Where a partnership is alleged on the one side and [ * 552] 
 denied on the other, and a motion is made for a receiver, Disputed 
 the Court usually declines to appoint a receiver until P artnersni P- 
 that question is determined (n). 3 
 
 (/) See De Tastet v. Bordieu, cited in a note in 2 Bro. C. C. 
 272 ; but see Const v. Harris, T. & R. 5:24. 
 
 (g) Evans v. Coventry, 5 De G. M. & G. 911. 
 
 (/<) See Smith v. Jeyes, 4 Beav. 503. 
 
 (i) See Ex parte Broome, 1 Rose, 69. 
 
 (k) See Wilson <;. Greenwood, 1 Swanst. 481 ; and Goodman v. 
 Whitcomb, 1 J. & W. 589. 
 
 (1) Peacock v. Peacock, 16 Ves. 49 ; Blakeney v. Dufaur, 15 
 Beav. 40. 
 
 (m) Wilson v. Greenwood, 1 Swanst. 471, where the plaintiffs 
 ■were the assignees of a bankrupt partner. See, too, Clegg v. 
 Fishwick, 1 Mac. & G. 294, where the plaintiff was the admin- 
 istratrix of a deceased partner. 
 
 (n) Peacock v. Peacock, 16 Ves. 49 ; Chapman v. Beach, 1 J. 
 & W. 594 ; Fairburn v. Pearson, 2 Mac. & G. 144. See Rock v. 
 Matthews, 2 De G. & Sm. 227, as to the conclusiveness, upon a 
 
 1 So where one partner wastes the firm's property and threatens 
 to apply it improperly, Evans v. Evans. 9 Paige, 178 (1841); 
 Shannon v. Wright, 60 Md. 524 (1878); Phillips v. Trezevant, 67 
 N. Ca. 370 (1872); in the last two cases the partner who com- 
 mits the waste being insolvent. 
 
 2 Hottenstein v. Conrad, 9 Kans. 435 (1872). 
 
 3 Hobart v. Ballard,- 31 Iowa, 521 (1871 j; Baxter v. Buchanan, 
 3 Brewst. (Pa.) 435 (1869).
 
 624 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 Illegality of 
 partnership. 
 
 Hale v. Hale. 
 
 Receivers of 
 mines. 
 
 [ * 553] 
 
 Rove v. 
 Wood. 
 
 Some difficulty occurs where the defendant relies on 
 illegality as a defence to the action aginst him. If the 
 illegality is established, the Court cannot, it is con- 
 ceived, interfere. But if a receiver is applied for before 
 the trial of the action, and the Court is not satisfied that 
 no relief can ultimately be given, it will appoint a receiver 
 to protect the property pendante lite, and the character 
 of the defence will go far to remove any scruples the 
 Court might otherwise have in interfering. Thus, in 
 Hale v. Hale (o), the plaintiff and the defendant had 
 carried on the business of brewers for many years in 
 partnership together. The plaintiff filed a bill for a 
 dissolution, and the defendant then denied the plain- 
 tiff 's right to any account or relief whatever, on the 
 ground that the partnership was illegal. Having 
 thus set the plaintiff at defiance, and claimed the whole 
 property himself, Lord Langdale, on that ground alone 
 appointed a receiver and manager, although the plain- 
 tiff was only a dormant partner, and the defendant's 
 management of the business was in no way complain- 
 ed of. 
 
 In mining partnerships a receiver will be appointed 
 or refused upon the same principles as in other part- 
 nership. Accordingly, if no dissolution or winding up 
 is sought, a receiver and manager will not be appoint- 
 ed ( p ) ; but with a view to a dissolution or winding 
 up, a receiver and manager will be appointed, if there 
 are any such grounds for the appointment as are suf- 
 ficients other cases (g); or if the partners * cannot 
 agree as to the proper mode of working the mines until 
 they are sold (r). In Roive v. Wood (s), indeed, a 
 receiver was refused, although one of the partners ex- 
 cluded the other from interfering with the mine ; but 
 this was a peculiar case, for the partner complained of 
 was not only a partner, but also a mortgagee in posses- 
 sion, and his mortgage debt was still unsatisfied. 
 
 motion for a receiver, of an answer denying the partnership 
 alleged by the bill. 
 
 (o) 4 Beav. 369. See, too, Sheppard r. Oxenford, 1 K. & J. 
 491, where a receiver was appointed although the legality of the 
 partnership was denied. 
 
 (p) Roberts v. Eberhardt, Kay, 148 ; and see Rowlands v. 
 Evans, and Williams v. Rowlands, 30 Beav. 302, noticed below. 
 
 (q) Sheppard v. Oxenford, 1 Kay & J. 491, where there was 
 no prayer for a dissolution. 
 
 (r) Jefferys v. Smith, 1 J. & W. 298 ; Lees v. Jones, 3 Jur. N. 
 S. 954. In "this last case will be found a discussion as to what 
 ought to be done if the mine is held on a lease, and cannot be 
 sold without the lessor's consent, which is refused. 
 
 (s) 2 J. & W. 553.
 
 RECEIVER. 625 
 
 Again, in Norway v. Roive (t), although the plaintiff Bk. III. 
 was excluded, a receiver was refused on the ground of Cha P- l0 - 
 
 his laches, he having been excluded for some time, and Sect " 6 ' 
 
 having taken no steps to assert his rights until the Norway v. 
 mine proved profitable (u). Rowe. 
 
 In Rowlands v. Evans and Williams v. Ron-lands (x), Lunacy, 
 it was held that a manager could not be appointed to Rowlands v. 
 carry on a mine for the benefit of a lunatic partner. Evaiis. 
 The Court ordered a sale, and appointed an interim 
 manager only. 
 
 If the Court, on being applied to for the appoint- Appointment 
 nient of a receiver, thinks that a proper case for such of partner to 
 appointment is made, and the partner actually carrying De receiver, 
 on the business has not been guilty of such miscon- 
 duct as to have rendered it unsafe to trust him, the 
 Court generally appoints him receiver and manager 
 without salary (y). 1 It is usual, however, to require 
 him to give security duly to manage the partnership 
 affairs, and to account for money received by him (z). 
 In other cases the appointment of a receiver is referred 
 by the judge to his chief clerk, and leave is frequently 
 gi vendor each partner to propose himself. A partner 
 who is appointed receiver becomes the officer of the 
 Court, and must act and be respected accordingly. 
 
 The order appointing a receiver usually directs the 0rder a _ 
 partners * to deliver up to him all the effects of the f * 554] 
 partnership, and all securities in their hands, for the pointing re- 
 outstanding personal estate, together with all books and ceiver. 
 papers relating thereto. 2 The receiver is directed to 
 get in the debts of the firm, and he is, if necessaiy, 
 empowered to bring actions with the approbation of the 
 judge ; he is directed to pay the partnership debts, 
 and to pass his accounts, and to pay balances in his 
 hands into court (a). 
 
 (0 19 Ves. 159. 
 
 (u) See further on this matter, ante, p. 466 etseq. 
 
 (x) 30 Beav. 302. 
 
 (y) This was done in Wilson v. Greenwood, 1 Swanst. 471 ; 
 Blakeney v. Dufaur, 15 Beav. 40. See Sargant v. Read, 1 Ch. 
 D. 600, where one of the plaintiffs, heing senior partner, had lib- 
 erty to propose himself, although it was urged that he would 
 thereby obtain an unfair advantage as regarded the good-will. 
 
 (2) See the previous note. 
 
 (a) See forms of order inSeton on Decrees, 414, ed. 4 ; Wilson 
 
 1 A partner maybe appointed receiver, Honore v. Colmesnil, 1 
 J. J. Mar. 506 (18:29); Reynolds v. Austin, 4 Del. Ch. 24 I 1837). 
 If a partner is appointed he is entitled to no salary, Berry v. 
 Jones, 11 Heisk. 206 (1873); but in Honore v. Colmesnil, 1 J. J. 
 Mar. 506 (1829), compensation was allowed. 
 
 2 SeeMorey v, Grant, 48 Mich. 326 (1882). 
 
 * 17 LAW OF PARTNERSHIP.
 
 626 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 6. 
 
 Dacie v. 
 John. 
 
 Interfering 
 with re- 
 
 With respect to the partnership books and papers, 
 an order for their delivery will not be made if there is 
 no necessity for it, or if it would occasion inconveni- 
 ence. For example, in Dacie v. John (b), the Court 
 declined to order a solicitor, who was the mac aging 
 partner of a firm, to deliver up its books and documents 
 to the receiver : for the receiver had free access to them 
 all, and nothing more was considered necessary. 
 
 A receiver is an officer of the Court, and any inter- 
 ference with him, or with property under his protection, 
 amounts to a contempt of Court, and is punishable ac- 
 cordingly (c). If a judgment creditor desires to levy 
 execution on property in the custody of the receiver, 
 special application should be made to the Court in the 
 action in which the receiver was appointed, and the 
 Court will direct the receiver to pay the judgment debt 
 or make such other order as may be just (d). 1 
 
 [ * 555] * 4. Of the sale of partnership property under the order 
 
 of the Court. 
 
 Conversion 
 of partner- 
 ship pro- 
 perty. 
 
 It has been already seen, that in the absence of a 
 special agreement to the contrary, the right of each part- 
 ner (e) on a dissolution, is to have the partnership prop- 
 
 v. Greenwood, 1 Swanst. 484 ; Whitley v. Lowe, 4 Jur. N. S. 
 815. The receiver here was appointed without opposition ; see 
 4 Jur. N. S. 197, S. C. 
 
 lb) McClel. 206. 
 
 (e) Sec Lane v. Sterne, 3 Giff. 629, where a sheriff seized part- 
 nership property in the custody of a receiver ; Helmore v. Smith 
 (No. 2), 35 Ch. D. 449, where the interference was by advertise- 
 ment. When an order for a receiver is made, a person is some- 
 times immediately put into possession ; but until he is actually 
 approved as receiver by the Court, strangers to the action in 
 which he is appointed are not guilty of contempt of court if they 
 interfere with him. See Defries v. Creed, 6 N. R. 17. 
 
 (d) Kewney r. Attrill, 34 Ch. D. 345. See, as to interpleader 
 at the instance of the sheriff, ante, pp. 358, note (q), and 362. 
 
 (e) A person paid by a share of profits has no right to have 
 them ascertained by a sale. See Rishton v. Grissell, 5 Eq. 326 ; 
 Walker y. Hirsch, 27 Ch. D. 460. Pawsey v. Armstrong, 18 Ch. 
 D. 698, went too far. See the last case. 
 
 1 After the appointment of a receiver, the assets of the firm 
 are regarded as in the custody of the court and the remedy of 
 the creditors against those assets lies in equity. Nobody can ob- 
 tain a preference in regard to them by any judgment against the 
 partner and execution or attachment against the receiver. Buck- 
 ingham v. Ludlum, 37 N. J. Eq. 137 (1883); Holmes v. McDow- 
 ell, 15 Hun. 585(1878); Knode v. Baldridge, 73 Iud. 54 (1880); 
 Jackson v. Lahee, 114 111. 287 (1885). Contra Adams v. Wood, 9 
 Cal. 24 (1858); Marye v. Jones, id. 335 (1858); see, also, Ross v. 
 Tittsworth, 37 N. J. Eq. 333 (1883).
 
 SALE OP PARTNERSHIP PROPERTY. 627 
 
 erty converted into money by a sale (/) : even although a Bk. III. 
 sale may not be necessary for the payment of debts (g). 1 ~ na P- 10 - 
 This mode of ascertaining the value of the partnership • 
 effects is adopted by Courts unless some other course 
 can be followed consistently with the agreement be- 
 tween the partners. And even where the partners have 
 provided that their shares shall be ascertained in some 
 other way, still, if owing to any circumstance their Agreements 
 agreement in this respect cannot be carried out, or if w hj cn can _ 
 their agreement does not extend to the event which has not be 
 in fact arisen, realization of the property by a sale is carried out. 
 the only alternative which a Court can adopt (h). 
 
 Thus in Cook v. Collingridge (i), where the partners Agreement 
 had agreed that on the expiration of the partnership for equal 
 the stock in trade should be divided between the part- division, 
 ners, it was held that as this could not be literally ^ ook .'*- Col ~ 
 carried into effect, there must be a sale and a division in S m & e - 
 of the proceeds. 
 
 So, if on the death of a partner an option is given to Agreement 
 
 a third party, e. g., his son or executor, to take his to tai< e at 
 
 share at a valuation, and this is not done, a sale will ^ a lu I0IK 
 
 be ordered (k). Again in a case where the articles t , 1 ' son '" , 
 • -i-ii t i- ia-n i iff Green wood. 
 
 had provided that on a dissolution by * the death of a r* 550 1 
 
 partner his share should be taken by the survivors at a 
 valuation, and they had afterwards agreed that in the 
 event of a dissolution by bankruptcy, the same course 
 should be followed as in the event of a dissolution by 
 death, it was held that this last agreement not being 
 under the circumstances binding on the assignees, the 
 partnership property and effects ought to be sold (I). 
 On the other hand, if the articles of partnership can 
 be carried out in their spirit, and if a sale is inconsis- 
 tent wjth them, then the rule in question will not apply, 
 
 (/) Burdon v. Barkus, 3 Giff. 412, and on appeal, 4 De G. F. 
 & J. 42, where a purchase by one partner at a valuation was in- 
 sisted on ; Rowlands v. Evans, and Williams v. Rowlands, 30 
 Beav. 302, a case of lunacy. See, also, Crawshay v. Collins, 15 
 Ves. 227 ; Crawshay v. Maule. 1 Swanst. 495; Featherston- 
 haugh v. Fen wick, 17 Ves. 298 ; Hale v. Hale; 4 Beav. 375. See 
 infra, p. 558, as to unsaleable assets and pending contracts. 
 
 '(</) See Wild r. Milne, 26 Beav. 504. 
 
 (h) But see Syers v. Syers, 1 App. Ca. 174, infra, p. 556. 
 
 (/) Jac. 607, and see Rigden v. Pierce, 6 Madd. 353. 
 
 (k) See Downs v. Collins, 6 Ha. 418 ; Kershaw v. Matthews, 
 2 Russ. 62 ; and Madgwick v. Wimble, 6 Beav. 495. 
 
 (I) Wilson v. Greenwood, 1 Swanst. 471. 
 
 1 Freeman v. Freeman, 130 Mass. 260 (1884); Malbec de Mont- 
 joc v. Sperry. 95 II. S. 401 (1877); Godfrey v. White, 43 Mich. 
 171 (1880); Taylor v. Hutchinson, 25 Graft, 536 (1874); Dick- 
 inson v. Dickinson, 29 Conn. 600 (1861).
 
 628 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect, 6. 
 
 Syers v. 
 Syers. 
 
 No sale 
 where there 
 is an agree- 
 ment to the 
 contrary 
 which can 
 be acted on. 
 
 Sale not 
 decreed 
 although 
 one partner 
 was lunatic. 
 
 Leaf r. Coles. 
 
 [*557] 
 
 as for example in those cases already noticed (m), in 
 which it has been agreed that a deceased partner's 
 share shall be ascertained by valuation, or from the last 
 signed account. Moreover, in Syers v. Syers (n), it 
 was held by the House of Lords that in the case then 
 before it, the Court could, in its discretion, either order 
 the sale of the undertaking as a going concern or ap- 
 prove of the purchase by one partner of the share of 
 his co-partner (n). 
 
 The rule as to selling partnership property is merely 
 adopted in order that justice may be done to all parties, 
 when no other course has been or can be agreed upon. 
 It is not an arbitrary rule, inflexibly applied in all 
 cases whether it is necessary or not ; and although, if 
 one partner or his representatives insist on a sale, the 
 Court may not be able to refuse to enforce that right (o), 
 still the Court is always inclined to accede to any other 
 mode of settlement which may be fair and just between 
 the partners. In a case where one partner had become 
 lunatic, and a decree for a dissolution had been ob- 
 tained on that ground, and an offer was made by the 
 other partners to pay a sum of money as the lunatic's 
 share, the Court referred it to the Master to inquire 
 whether it would be for the benefit of the lunatic that 
 such offer should be accepted ; and on the Master re- 
 porting in the affirmative, the Court ordered that the 
 offer * should be accepted, thereby dispensing with a 
 sale and winding up in the ordinary way (p). So, if 
 one partner is an infant, and it appears that it will be 
 for his benefit that the whole property shall be sold to 
 one or more of the partners who are desirous of buying 
 it, and the other partners consent, the Court will sanc- 
 tion a sale accordingly (q). But although it may be for 
 the benefit of an infant or lunatic partner that his share 
 should be sold, yet if the other partners insist on the sale 
 of the whole property they are entitled to such a sale (r). 1 
 
 (m | See ante. p. 420, et seq. 
 
 (») 1 App. Ca. 174. The agreement between the partners was 
 probably not intended to create a partnership but a loan (see ante, 
 book i. ch. 1, § 2); and qu. whether the discretion alluded 
 to exists in all cases ? But why should it not ? its exercise would 
 often be most beneficial. 
 
 (o) Wild v. Milne, 26 Bear. 504, and Rowlands v. Evans, 30 
 Beav. 302. 
 
 (p) Leaf v. Coles, 1 De G. & M. G. 171. See, too, Prentice v. 
 Prentice, 10 Ha. App. 22. 
 
 (q) Crawshay v. Maule, 1 Swanst. 530. 
 
 (r) Rowlands «'. Evans, and Williams v. Rowlands. 30 Beav. 302. 
 
 1 Instead of ordering the sale of the assets and a division of
 
 SALE OF PARTNERSHIP PROPERTY. 
 
 629 
 
 Co-owners of land, whether mineral or not, are enti- jj^ ™- Q 
 tied to a partition and not a sale, except in the cases Sect p 6 
 specified in the Partition Acts, 1868 and 18 <6: and even 
 
 although they may be partners in the profits arising Mining part- 
 from the land, still if the land itself is not partnership ners "P- 
 property, one co-owner is not entitled to have it sold 
 against" the wishes of the others, except under those 
 statutes (s). But if land or a mine is partnership 
 property, the right of each partner is to have it sold; 
 and a partition can only be decreed by consent J*). 1 
 
 The sale to which each partner has a right is a sale Mode of 
 to the highest bidder (u). But with a view to do as selling, 
 little injustice as possible, when the Court orders a sale 
 it will, if necessary, direct an inquiry as to the proper 
 mode of selling (x); and whether it will be for the 
 benefit of all parties that there should be an immediate 
 sale, or that the concern should be carried on for the 
 purpose only of winding up of its affairs: and if the 
 latter is the'case, the Court will give any of the parties , 
 
 * liberty to propose himself as manager until a sale (y). [ »***] 
 In Rowlands v. Evans (z), partnership property wasgjjjj™ 8 * 
 ordered to be sold, as a going concern, by a disinter- 
 ested person, with liberty to all parties to bid; and an 
 interim receiver and manager was appointed. 
 
 Is) See ante, p. 56. 
 
 {t) Wild v. Milne. 26 Beav. 504; and see Burdon r. Barkus. 4 
 De G. F. & J. 42. and Rowlands v. Evans, 30 Beav. 302. As to 
 mines not saleable without the consent of the landlord, see Lees 
 v. Jones, 3 Jar. N. S. 954; and as to unsaleable but valuable as- 
 sets, infra, note (d). . 
 
 i it ) No partner has a right to buy or to compel his co-partners 
 to buy at a valuation unless there is some agreement to that 
 effect,' Burdon c. Barkus, 4 De G. F. & J. 42, and other cases 
 cited ante, p. V35, note (/). 
 
 (x) As in Wilson v. Greenwood, 1 Swanst. 484; Cook v. Colhng- 
 ridge, Jac. 624. See, also, Syers v. Syers, 1 App. Ca. 174, where 
 an inquiry was directed as to the value ot the plaintiff's interest. 
 
 (y) Crawshay v. Maule, 1 Swanst. 529; Waters v. Taylor, 2 V. & 
 B. 306. See. too, Wild r. Milne, 26 Beav. 504. 
 
 {z) Rowlands v. Evans, and Williams v. Rowlands, 30 Beav. 
 302. So in Pawsey v. Armstrong, 18 Ch. D. 698. 
 
 the proceeds, the court will, where such a course is beneficial to 
 the interested parties and nobody objects, order a specific divi- 
 sion of the firm property, provided there are no debts outstand 
 in<* Askew v. Springer, 111 111., 662 (1885); Lang v. Waring, 
 25 Ala, 625 (1854); Pierce v. Covert, 39 AVis. 252 (1875). And 
 this can be done even in the face of outstanding firm liabilities, 
 provided each partner will give security to his associates for the 
 payment of debts to the amount he gets. Colehour v. Coolbaugh, 
 81 111. 29 (1875). 
 
 1 See Godfrey r. White, 43 Mich. 171 (1880); and Carter v. 
 Bradley, 58 111. 101 (1871).
 
 630 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. The Court is extremely reluctant to give parties who 
 
 Chap. 10. nave the conduct of a sale liberty to bid at it; and the 
 
 Sfec1 l_ (i : conduct of a sale in an action usually belongs to the 
 
 Conduct of plaintiff; if, therefore, he desires to bid, some arrange- 
 sale and ment has generally to be made respecting the conduct 
 
 leave to bid. of ^ sa ! e> other parties interested have seldom any 
 difficulty in obtaining liberty to bid (a). Where the 
 Court has given the conduct of the sale to any person, 
 the Court will not allow him to be interfered with (b). 
 Sale of <*ood- I n selling the good-will of a going concern, the book 
 will. debts and business ought to be sold in one lot, and the 
 
 purchaser ought to be informed, if the facts be so, that 
 the sellers are entitled to carry on business in competi- 
 with him (c). 
 Unsaleable If one of tne partners holds an appointment which 
 
 bul Valuable is not saleable, but the profits of which are by agree- 
 assets. ment to be accounted for by him to the partnership, the 
 
 partner holding the appointment will be debited with 
 its value; for that is the only mode in which, upon a 
 dissolution, such a source of gain can be dealt with d). 
 The same principle applies to other unsaleable but 
 valuable assets, to which one partner has no exclusive 
 right (e). 
 Pending eon- But if the object of the partnership is to carry out a 
 tract-,. certain contract which is unfinished when the partner- 
 
 ship is dissolved, the Court will not necessarily order 
 the benefit of it to be sold; nor order the share of a 
 partner in it at the time of dissolution to be ascertained 
 by valuation; but will leave the partners to * complete 
 [*559] the contract, and will postpone the ultimate account 
 
 until its completion (/). 
 Sab- before Although it is not usual for the Court to direct a sale 
 
 trial. before the trial of the action, still, if circumstances re- 
 
 quire it, an order for a sale will be made on motion, 
 even although the partnership has not been previously 
 dissolved (g). 
 
 (a) See. on this subject, Seton on Decrees. 1396, ed. 4. 
 
 (b) Dean v. Wilson, 10 Ch. D. 136. 
 
 (c) See Johnson v. Helleley, 34 Beav. 63. and 2 De G. J. & 
 Sm. 446. 
 
 (d) See Smith v. Mules, 9 Ha. 572; Ambler v. Bolton, 14 Eq. 
 427. 
 
 (e) Ibid. See ante, note (t). 
 
 (/) See McClean v. Kennard, 9 Ch. 336, where the surviving 
 partners urged that this would not be fair, as they might have 
 to find all the capital to complete the contract. 
 
 {g) Bailey c. Ford. 13 Sim. 495; Crawshay v. Maule, 1 Swanst. 
 506, 523, 524, and 529; Wilson v. Greenwood, 1 Swanst. 483. 
 See, also, Hargreaves v. Hall, 11 Eq. 415, the order of July 22, 
 1869.
 
 BETWEEN PERSONS WHO HAVE AGREED TO BECOME PARTNERS. 631 
 
 Section VII. — Other Miscellaneous Actions 
 
 1. Between persons who have agreed to become partners. 
 
 If a person agrees to become a partner, and he breaks Bk. III. 
 his agreement, an action for damages will lie against ^ p ' 
 him; and any premium he may have agreed to pay may k 
 
 be recovered (h) •/ and it is no defence that the defend- Action ou 
 ant has discovered that the plaintiff is a person vvitn agreements 
 whom a partnership is undesirable (i). So, if a mem- g^jig 
 ber of a firm agrees to introduce a stranger, an action 
 lies at the suit of the latter against the former for a 
 breach of this agreement, although it may have been 
 made without the knowledge of the other members of 
 the firm, and they may decline to recognize it (j). 
 
 * 2. Actions between partners. [ * 560] 
 
 The Judicature acts and rules have materially altered 
 the law relating to actions between partners. Formerly 
 no action at law could be maintained by one partner 
 against another if it in any way involved taking a part- 
 nership account; for although the right to an account 
 was a legal right, the old action of account, at least be- 
 tween partners, had long become obsolete, and courts of 
 law had no machinery enabling them to do justice in 
 matters of account (fc). 2 Hence it became settled that 
 actions involving accounts between partners could not 
 
 {h) Walker v. Harris, 1 Anst. 245; Gale v. Leckie, 2 Stark, 107. 
 In Figes v. Cutler, 3 Stark. N. P. C. 139. it was held that an ac- 
 tion for breach of an agreement to become a partner, could not be 
 supported without proof of the terms of the intended partnership. 
 See, also, Morrow v. Saunders, 1 Brod. & Bing. 318. But see 
 McNeill v. Eeid, 9 Bing. 68. 
 
 (0 Andrewes v. Garstin, 10 C. B. N. S. 444, where the defend- 
 ant pleaded that since the agreement was entered into he had 
 discovered that the plaintiff had been guilty of fraud and dis- 
 honesty towards a former partner. 
 
 (j) McNeill v. Reid, 9 Bing. 68. 
 
 (ft) No instance of an old common law action of account brought 
 by one partner against another, is known to the writer. The old 
 action of account is obsolete, although there have been a few in- 
 stances of it in modern times between tenants in common of real 
 property. See Baxter v. Hozier, 5 Bing. N. C. 288; Sturton v. 
 Richardson, 13 M. & W. 17; Beer v. Beer, 12 C. B. 60; Hender- 
 son v. Eason, 17 Q. B. 701; reversing Eason v. Henderson, 12 ib. 
 986. 
 
 1 Vance v. Blair, 18 Oh. 532 (1849); Hill v. Palmer, 56 Wis. 
 123 (1875); Goldsmith v. Sachs, 17 Fed. Rep. 726 (1882); Powell 
 r. Maguire, 43 Cal. 11 (1872). 
 
 2 For instances of the employment of this action, see Knerr v. 
 Hoffman, 65 Pa. St. 126 (1870); Appleby v. Brown, 24 N. Y. 143 
 ,1861); Wilhelm v. Taylor, 32 Md. 151 (1869).
 
 632 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 7. 
 
 Actions re- 
 lating to real 
 property. 
 
 Actions re- 
 lating to 
 goods. 
 
 [ * 561] 
 
 Actions for 
 damages, &c, 
 
 be sustained. The Judicature acts and rules have, how- 
 ever, abolished this rule; and the present state of the 
 law on this subject appears to be as follows: — 
 
 First as regards real property. — The equitable as well 
 as the legal ownership must be regarded; and no part- 
 ner can eject or expel his co-partners from land in which 
 he may have the legal estate, bat of which he is a trus- 
 tee for the firm, nor can he maintain an action against 
 his co-partners for coming on such land. On the other 
 hand, they can restrain him from excluding them there- 
 from (I). Whether the relation of trustee and cestuis 
 que trustent exists, depends upon whether the property 
 is partnership property or not, upon whether the part- 
 nership is dissolved or not, and upon whether, if dis- 
 solved, the property is a partnership asset in which all 
 the partners are still interested. 
 
 Secondly as regards personal property. — Partners are 
 tenants in common or joint tenants of the goods and 
 chattels belonging to the firm; but one partner has no 
 right to take possession of * them and to exclude his 
 co-partners from them; and he can, it is apprehended, 
 be restrained from doing so (m). 
 
 Thirdly, as regards actions for money demands or 
 damages. The three following rules may be taken as 
 guides: — 
 
 1. An action for damages may be maintained by one 
 partner against another in all those cases in which such 
 an action might have been maintained before the Judi- 
 cature acts; provided the action would not have been 
 restrained by a court of equity. 
 
 2. Any action which would have been so restrained 
 cannot be supported. 
 
 3. An action may be maintained by one partner 
 against another for any money demand which before 
 the Judicature acts could have been made the subjeet 
 of a suit for an account (n). 
 
 Practically, the important questions which will arise 
 under the new procedure are red viced to the following: — 
 
 1. When can an action be maintained between part- 
 ners without taking a general account of all the part- 
 nership dealings and transactions? 
 
 2. When will such an account be ordered without a 
 dissolution of the firm? 
 
 (I) As to the old law, see infra, the note at the end of this sec- 
 tion, and as to injunctions in such cases, ante, p. 541. 
 
 (m) As to the old law, see the note at the end of this section. 
 
 (n) A transfer to the Chancery Division may become necessary 
 in some of these cases. See ante, p. 458.
 
 ACTIONS BETWEEN PARTNERS. 633 
 
 The second of these questions has been already con- Bk. III. 
 sidered (o). The first, which has also been alluded ^ ha P„ 10 - 
 to (p), can only be answered generally by saying that ' 
 each case must depend upon its own circumstances, and 
 upon whether justice can really be done without taking 
 such an account (q). But there appears to be no rea- 
 son why an action should not be brought to have some 
 disputed item in an account settled, and why a decla- 
 ratory judgment should not be pronounced settling 
 that dispute without going further, unless it should be- 
 come necessary to do so. 
 
 * NOTE ON THE LAW AS IT STOOD BEFORE THE JUDI- [ * 562] 
 CATURE ACTS. 
 
 Although the law relating to actions at law between partners 
 has been completely altered, a summary of it may still be use- 
 ful for reference, and is accordingly here appended. 1 
 
 When an action would lie. 
 
 First. — As regards real property. In an action of ejectment a \ Eject- 
 plea on equitable grounds was not allowed (r). Hence, if a firm ment and 
 was in the occupation of land, the legal estate in which was in trespass by 
 one of the partners only, he could at law eject his co-partners (s); J^ amst 
 and if the firm had been dissolved no notice to quit was neces- another, 
 sary before ejectment (t), or trespass (w), was brought against 
 them. The equitable doctrine that a partnership, although dis- 
 solved, subsists for the purpose of winding up its affairs, afford- 
 ed no defence at law to such an action (a;). If the legal estate 
 was in all the partners, and one partner actually excluded the 
 others, from the land legally belonging to all, ejectment would 
 lie (y); and if one utterly destroyed the common property, an 
 
 (o) Ante, p. 494 et seq. (})) Ibid. 
 
 (q) On this head the old cases referred to infra, p. 564, as il- 
 lustrating the 6th rule, will still be useful. See, also, ante, p. 
 494. 
 
 (r) Neave v. Avery, 16 C. B. 328. 
 
 (s) Francis v. Doe, 4 M. & W. 331; Smith v. Howth, 10 Ir. 
 Com. Law Rep. 125. 
 
 (t) Doe v. Bluck, 8 C. & P. 464. 
 
 (m) Benham v. Gray, 5 C. B. 138. 
 
 (x) See the last. case. 
 
 (y) See Peaceable r. Read, 1 East, 568; Doe v. Horn, 3 M. & 
 W. 333, and 5 ib. 564. 
 
 1 As the law on this subject lias been greatly modified by sta- 
 tute in each State and as every State lias modified it in a man- 
 ner peculiar to itself, it has been deemed useless to insert more 
 than a very few American citations in this section illustrative of 
 some of the principles laid down in the text.
 
 634 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 7. 
 
 2. Trover by 
 one partner 
 against 
 another. 
 
 [ * 563] 
 
 Trover after 
 division of 
 property. 
 
 3. Action for 
 breach of ex- 
 press con- 
 tract by one 
 partner 
 against 
 another. 
 
 action for damages might be sustained (z); but for injuries not 
 amounting to the utter exclusion by one partner of the others, 
 an action it seems did not lie («). 
 
 Secondly. — As regards personal property. If one of several 
 joint tenants, or tenants in common, was in exclusive possession 
 of the common property, he had a right so to continue if he could, 
 and no action against him would lie at the suit of his co-ten- 
 ant (6). But if one tenant in common or joint tenant destroy- 
 ed (c), or as it seems sold (d), the common property, he might be 
 sued at law by his co-tenant. In the case of a sale, however, 
 the purchaser could not be made to restore the property, for he 
 at all events acquired the interest of the vendor, and became 
 therefore tenant in common with the other owners, and could 
 not be sued by them at law (e). 
 
 * If, on a dissolution of partnership, the partnership property 
 had been divided in specie amongst the partners, each might re- 
 cover what had been allotted to him, for as to that he had be- 
 come sole owner (f); 1 and if the dissolution and the division of 
 the property were made by deed, each partner was precluded 
 from denying that any division had in fact been made, or that 
 the previously existing tenancy in common had not been deter- 
 termined, and each therefore was entitled to recover what the 
 deed declared to be his (g). 2 
 
 Thirdly. — An action for damages for the breach of an express 
 agreement entered into by one partner with another would lie, if 
 the damages when recovered would have belonged to the plaintiff 
 alone. Tinas where a partner retired, and he covenanted with 
 his co-partners not to carry on business within certain limits, or 
 they covenanted to indemnify him against the debts of the firm, 
 actions for damages occasioned by breaches of these covenants 
 
 (z) See Cubitt v. Porter, 8 B. & C. 257; Stedman v. Smith, 8 
 E. &B. 1. 
 
 (a) But see Martyn v. Knowllys, 8 T. R. 146; Stedman v. 
 Smith, 8 E. & B. 1, 
 
 (6) See 2 Wms. Saund. 47, o.; Foster?-. Crabb, 12 C. B. 136; 
 Hollidav v. Camsell, 1 T. R. 658; Fennings v. Grenville, 1 
 Taunt. 241. 
 
 (c) Barnardiston v. Chapman, cited in 4 East, 121, and Bull. 
 N. P. 34-5; 2 Wms. Saund. 47, o. 
 
 (d) Mayhew v. Herrick, 7 C. B. 217; Barton v. Williams, 5 B. 
 & A. 395;' Williams v. Barton, 3 Bing. 139. 
 
 (e) Fox v. Hanbury, Cowp. 445, and other cases of that class. 
 (/) See Jackson v. Stopherd, 2 Cr. & M. 361 ; and Wiles v. 
 
 "Woodward, 5 Ex. 557. 
 {ff) Ibid. 
 
 1 See Ivev v. Hammock, 68 Ga. 428 (1881); Belcher v. Van 
 Dusen, 37 111. 281 (1869). 
 
 2 Bartley v. Williams. 66 Pa. St. 329 (1870); Harkev r. Till- 
 man, 40 Ark. 551 (1883) ; Hunt v. Morris, 44 Miss. 31*4 (1870).
 
 WHEN MAINTAINABLE BEFORE THE JUDICATURE ACTS. 635 
 
 ■would clearly lie (h). 1 So, if a partnership was entered into for Bk. III. 
 a definite time, and one partner was turned out by his co-part- Chap. 10. 
 
 ners before that time had expired, he could sue them for this k 
 
 breach by them of their agreement, and recover damages for the 
 injury he had sustained (i); 2 so an action might be maintained 
 for not rendering accounts and dividing profits (A-); for a penalty 
 stipulated to be paid in case of a breach of agreement (I); for 
 rent covenanted to be paid (m); 3 for not indemnifying the plain- 
 tiff against a debt (»); for not putting the plaintiff in funds to 
 enable him to defray expenses as agreed (o). 
 
 Fourthly. — If a person agreed to become a partner with others 4. Action for 
 and to furnish a certain amount of capital, and he made default, n °t furnish- 
 they could sue him at law for damages, although he as well as m ° P 1 a ' 
 they were to have had an interest in what he undertook to fur- 
 nish (}>).* 
 
 *It followed from the above that if A. and B. agreed to become I" * 564] 
 
 partners, and each agreed to furnish a certain amount of capital, Loan by one 
 
 and A. lent B. the amount B. was to contribute, this loan con- partner of 
 
 stituted a debt for which an action by A. against B. would lie. ? um ° ? 
 
 J brought in 
 
 ■ by the other. 
 
 i ft) Leighton v. Wales, 3 M. & W T . 545; White i: Ansdell, Tyr. 
 & Gr. 785. Barker v. Allan, 5 H. & N. 61, is an instance of a 
 successful action by a shareholder against directors who had 
 agreed to indemnify him against calls. See, too, Haddon v. 
 Ayres, 1 E. & E. 118" 
 
 (i) See Greenham v. Gray, 4 Ir. Com. Law Rep. 501. 
 
 (/.i < iwston v. Ogle, 13 East, 538; and see Stavers v. Curling, 3 
 Bing. N. C. 355. 
 
 (I) Radenhurst v. Bates, 3 Bing. 463. 
 
 i m ' Bedford v. Brutton. 1 Bing. N. C. 399. 
 
 in) Want v. Keece, 1 Bing. 18. 
 
 (o) Brown v. Tapscott, 6 M. & W. 119. 
 
 (p) Hesketh v. Blanchard, 4 East, 144; Venning v. Leckie. 13 
 East. 7; Gale v. Leckie, 2 Stark. 107. Hesketh v. Blanchard gave 
 rise to much controversy (see in Stocker v. Brocklebank, 3 Mac. 
 & G. 265; Rawlinson v. Clarke, 15 M. & W. 298; Collyeron Part, 
 p. 60), not indeed, with reference to the question decided, but 
 with reference to an opinion expressed by Lord Ellenborough, 
 that no partnership existed between Robertson and the plaintiff, 
 except as regards third parties. Having regard to the decisions 
 relating to partnerships in profits, it is difficult to assent to this 
 opinion; but the case was unimpeachable as regards the point 
 befoie the court, viz., the right of the plaintiff, whether partner 
 or not with Robertson, to recover the price of the meat for which 
 the plaintiff had been compelled to pay. 
 
 1 Lathrop v. At wood, 21 Conn. 117 (1851); Gilbert r. Wiman, 
 1 N. Y. 550 (1848); Carter v. Adamson, 21 Ark. 287 (1861). 
 
 - Hill v. Palmer, 56 Wis. 123 (1882). 
 
 :; If A. own a property and rent it to the firm of A. & B., he 
 cannot sue B. for the hitter's share of the rent. Pico v. Cuvas, 
 47 Cal. 174 (1873); Estes v. Whipple, 12 Vt. 373 (1840). 
 
 4 Pillsbury i>. Pillsbury, 20 N. H. 90 (1840); Williams v. Hen- 
 shaw, 11 Pick. 79 (1831).
 
 636 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 
 Sect. 7. 
 
 Action for 
 not contri- 
 buting to 
 expenses. 
 5. Action by 
 one partner 
 against 
 another for 
 matters 
 unconnected 
 with the 
 partnership 
 accounts ; 
 
 6. and for 
 matters not 
 involving 
 them. 
 
 Action for 
 amount of 
 valuation ; 
 
 for balance 
 struck ; 
 
 although they may actually have become partners (q). And it 
 also followed that, if partners agreed to contribute capital from 
 time to time to meet expenses, as occasion might require, and 
 one of them was compelled to pay the whole of the expenses for 
 which all were liable, he could sue his co-partners for what they 
 ought to have contributed, according to their agreement (r). 
 
 Fifthly. — One partner might maintain an action for damages in 
 respect of a demand which had either nothing to do with the 
 partnership business, or, if entangled in it, was only so entangled 
 by reason of the wrongful conduct of the defendant. 1 Thus one 
 partner who had received money to the use of another might be 
 sued for it, although he had paid it to the credit of the firm; for 
 his business was to hand it over to fiis co-partner (s). So a part- 
 ner who, in fraud of his co-partners, had given a note in the 
 name of the firm for a private debt of his own, Avhereby his co- 
 partners had been compelled to pay such note, was liable to 
 them at law for the whole of what they had been compelled 
 to pay {t). 
 
 Sixthly. — One partner might sue another at law in respect of a 
 matter which, though relating to the partnership business, was sep- 
 arate and distinct from all other matters in question between the 
 partners, and could and ought to be determined without going 
 into the partnership accounts {it). Thus where a partnership 
 had been dissolved, and it had been agreed that one partner 
 should take all the partnership property at a valuation, and it 
 had been valued, and he had taken it at that valuation, and the 
 values of the shares of the other partners had been ascertained, 
 they might separately sue him at law lor the amount payable to 
 them respectively (v). So, if partners went through the accounts 
 of the partnership, and a final balance was struck, and the amounts 
 of their shares were ascertained, and the person by whom those 
 amounts were to be paid was also ascertained, an action would 
 lie against him in respect of each share to be paid by him (a - ). 2 
 
 (q) Elgie?:. Webster, 5 M. & W. 518; Ex parte Notley, 1 Mon. 
 & Ayr. 46, and 3 D. & Ch. 367. See Jestons v. Brooke, Cowp. 
 793. 
 
 (r) Brown v. Tapscott, 6 M. & W. 119. See, also, French r. 
 Stvring, 2 C. B. N. S. 357. 
 
 (s) Smith v. Barrow, 2 T. R. 476. 
 
 (<) Cross v. Cheshire, 7 Ex. 43; Osborne r. Harper, 5 East. 225. 
 
 (w) The Court of Chancery would not restrain such actions. 
 See ante, p. 543. 
 
 (t>) See Jackson v. Stopherd, 2 Cr. & M. 361. 
 
 (x) Morley v. Baker, 3 Fos. & Fin. 146; Moravia v. Levy, 2 T. 
 E. 483, note; Foster v. Allanson, 2 T. R. 479: Wrav v. Milestone, 
 5 M. & W. 21; Brierly v. Cripps, 7 C. & P. 709; Preston v. Strut- 
 
 1 Seaman v. Johnson, 46 Mo. Ill (1870); Haller r. Williamo- 
 wicz. 23 Ark. 566 (1861); Hale v. Wilson, 112 Mass. 444 (1873). 
 
 2 Knerr v. Hoffman. 65 Pa. St. 126 (1870); Jacques v. Hulit, 
 16 N. J. L. 38 (1837); Wright v. Jacobs, 61 Mo. 19 (1875).
 
 WHEN MAINTAINABLE BEFORE THE JUDICATURE ACTS. 637 
 
 *The balance, however, must hare been a final balance to be [ * 565] 
 paid, and not a balance to be carried over to a fresh account in Bk. III. 
 continuation of that just closed. Therefore, where one partner Chap. 10. 
 sued another for a debt unconnected with the partnership, the ' 
 defendant was not allowed to set off a balance found due to him 
 on the partnership account; for it did not appear that the ac- 
 count which had been stated was a final account, nor that the 
 plaintiff had ever promised to pay the balance which, on taking 
 the account, was found due to the defendant (y). In this last 
 case the partnership continued after the balance sued for was 
 struck; but if a balance was struck, and was to be paid by one 
 partner to the other, it might probably have been sued for, not- 
 withstanding the continuance of the partnership: for ex hypotTiesi, 
 it was isolated and separated from the general account (z). 
 
 Again, if one partner gave to his co-partner a bill or note which on bill or 
 was in such a form as to bind, not the firm, but the partner who note, 
 gave it, he might be sued by his co-partner thereon, whatever the 
 state of the accounts between the two might be, and although the 
 bill or note in question had reference to some partnership trans- 
 action ; for by giving the bill or note, the demand in respect of 
 which it was given was isolated from the general partnership ac- 
 count (a). 1 An I. O. U. being evidence of an account stated, 
 might be sued upon by one partner against another accordin gly(6). 
 
 Upon precisely the same principle, if a partner leased property Action for 
 to trustees for the firm, and those trustees covenanted to pay the rent ; 
 rent, he might sue them on that covenant, although he might, 
 as one of the firm, be bound to indemnify the trustees against all 
 losses sustained by them in that character, and the trustees might 
 themselves be members of the firm ; for the covenant to pay the 
 rent constituted a demand distinct from all others (cl. 
 
 ton, 1 Anst. 50; Henley v. Soper. 8 B. & C. 16; Rackstraw v. 
 Imber, Holt, 368; Wells v. Wells, 1 Ventr. 40. 
 
 (y) Fromont v. Coupland, 2 Bing. 170. See, too, Lyon v. 
 Haynes. 5 Man. & Gr. 504, where the sum ascertained to be 
 payable was subject to contingent claims. 
 
 (z) This point was raised, but not decided, in Carr v. Smith, 5 
 Q. B. 128, where the action failed, because the account sued on 
 had been made out by a non-partner, and had not been assented 
 to by the partners, and was not stamped as an award. 
 
 (a) See Beecham v. Smith, E. B. & E. 442 ; Neale v. Turton, 
 4 Bing. 151 ; Preston v. Strutton, 1 Anst. 50 ; Fox v. Frith, 10 
 M. & W. 131, and Hey wood v. Watson, 4 Bing. 496. Conipt re 
 Tibaldi v. Ellerman, 6 Dowl. & L. 71. And as to one partner 
 suing another on a bill which he has indorsed, but not with the 
 intention of paying it, see Denton v. Peters, L. R. 5 Q. B. 475. 
 
 (b) Graves v. Cook, 2 Jur. N. S. 475, Ex. 
 
 (c) Bedford v. Brutton, 1 Bing. N. C. 399. In such a case, 
 however, a counter-claim would now be set up and have to be 
 adjusted. 
 
 1 Burnes v. Scott, 117 U. S. 582 (1886); Merrill v. Green, 55 N. 
 Y. 270 (1873).
 
 638 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 
 Chap. 10. 
 Sect. 7. 
 
 for money 
 received to 
 plaintiff's 
 use ; 
 
 [ * 566] 
 
 for money 
 placed in de- 
 fendant's 
 hands for a 
 particular 
 purpose. 
 Actions for 
 money paid 
 under mis- 
 take as to 
 accounts ; 
 on agreement 
 to indem- 
 nify: 
 
 tor contribu- 
 tion in re- 
 spect ot a 
 particular 
 loss ; 
 
 Sedgwick v. 
 Daniell. 
 
 for contribu- 
 tion when 
 one has paid 
 
 Again, if one partner received money for the use of the firm 
 in respect of some transaction separate and distinct from its other 
 business, and the money thus received ought to have been divid- 
 ed without reference to other matters, his co-partners might sue 
 him at law for their shares of the money in question (d). 
 
 * So, if one partner paid money of his own to his co-partner, 
 in order that it might be applied by him for some specified part- 
 nership purpose, and it was received for that purpose and no 
 other, and was misapplied, an action lay for the recovery of such 
 money ; for, ex hypothesis it never was the money of the firm, 
 and the duty of the partner who received that money was either 
 to apply it as agreed, or to return it intact (e). 
 
 So a purchaser of a partner's share at a price calculated on the 
 profits, could recover the amount which he had overpaid in ig- 
 norance of the real state or the accounts (J). 1 
 
 Again, if, in respect of some particular transaction, one partner 
 had expressly agreed to indemnify another, and had not done so, 
 an action might be brought by the latter against the former, in- 
 asmuch as the right to be indemnified had, by agreement, been 
 made independent of all other questions between the partners (g). 
 Therefore, where one partner in his own name accepted a bill for 
 a partnership debt, on the faith of a promise by one of the other 
 partners that he would provide funds to pay the the bill, and 
 the acceptor was nevertheless compelled to pay it, he was held 
 entitled to recover the whole amount from the other partner (h). 
 
 Further, if some of a number of partners gave their promissory 
 note for better securing payment of a debt owing by them and 
 their co-partners, and one of the makers of the note w-as com- 
 pelled to pay the whole amount of it, he was entitled to sue 
 each of the other makers of the note for his proportion of the 
 sum so paid. For, in the case supposed, the right to contribu- 
 tion arose in respect of a matter not involved in the general ac- 
 count, and did not depend upon the circumstances that the 
 makers of the note were partners. This was decided by the 
 Court of Exchequer in Sedgwick v. Daniell (i). 
 
 However, the decisions did not go the length of allowing 
 one partner who had been compelled to pay the whole of a 
 
 (d) See Graham v. Robertson, 2 T. R. 282. In Ex parte Dodg- 
 son, Mon. & McAr. 445, it was held that one of two sub-partners 
 might prove against the other's estate for half of the profits re- 
 ceived by him in respect of his share in the principal firm. Com- 
 pare Bovill ?>. Hammond, 6 B. & C. 149. 
 
 (e) See Wright v. Hunter, 1 East, 20. 
 
 (/) Townsend v. Crowldy, 8 C. B. N. S. 477. 
 (ff) Coffee v. Brian, 3 Bing. 54 ; see, too. Wilson v. Cutting, 
 10 Bing. 430 ; Brown v. Tapscott, 6 M. & W. 119. 
 (h) Coffee v. Brian, 3 Bing. 54. 
 (i) Sedgwick v. Daniell, 2 H. & N. 319. 
 
 1 Bond v. Hays, 12 Mass. 34 (1815).
 
 WHEN MAINTAINABLE BEFORE THE JUDICATURE ACTS. 639 
 
 partnership debt to sue his co-partners at law for contribution, Bk. III. 
 'in the absence of special circumstances (fc). 1 Chap. 10. 
 
 But if one of several projectors of a company was compelled to 
 
 pay a debt owing by them all, he could obtain contribution from more than 
 them by an action at law. although there were unsettled ac- hi* share of a 
 counts between him and them (I), debt of the 
 
 v ; firm. 
 
 * When an action would not lie. r * 567] 
 
 It is clear from the cases referred to in the last few pages, that General rule 
 there was no such rule as that one partner could not sue another that one 
 at law, in respect of a debt arising out of a partnership transac- P artner can_ 
 tion, and that this circumstance alone afforded no reason why an ano ther at 
 action should not be brought by one partner against another (m). law 
 Except, however, in an action of account, it was a general rule in respect of 
 that between partners, whether they were so in general or for arjv matter 
 a particular transaction only, no account could be taken at uivolvingthe 
 law (n) ; nor (except in an action of account) could one partner sue account S ^ 
 another at law, unless the cause of action was so distinct from 
 the partnership accounts as not to involve their consideration (o); 
 nor unless the plaintiff if he recovered would be justified in keep- 
 ing what he might get without afterwards having to account to 
 his co-partners for any part of it (p). Hence one partner could 
 not sue another at law for work and labour done for the firm, 
 and therefore on account as well of the plaintiff as of the defend- 
 ant (q); nor for money had and received for the firm, for it must 
 be properly shared between the parties to the action (r); nor for 
 
 (k) Sadler v. Nixon, 5 B. & Ad. 936. See, too, Batard v. 
 Hawes, 2 E. & B. 287 ; Helme v. Smith, 7 Biug. 713 ; and Pear- 
 son v. Skelton, 1 M. & W. 504 ; and compare Wooley v. Batte, 2 
 C. & P. 417 ; Osborne v. Harpur, 1 Smith. 411. 
 
 (Z) Batard v. Hawes, 2 E. & B. 287 ; Boulter v. Peplow, 9 C. 
 B. 493. 
 
 (m) See Worrall r. Grayson, 1M.&W. 166. 
 
 (n) Bovill v. Hammond, 6 B. & C. 151 ; and see Scott v. Mcin- 
 tosh, 2 Camp. 238. 
 
 (o) Ibid. ; and see the cases in the six following notes. This 
 rule was held to prevent the cestui que trust of a partner from 
 suing the other partners. See Goddard v. Hodges, 1 Cr. & M. 
 33. Sed quxre. The same rule would probably have prevented 
 a person entitled to a share of profits from suing at law for them 
 where they had not been ascertained. 
 
 {p) Mil'burn v. Codd, 7 B. & C. 421 ; Bedford v. Brutton, 1 
 Bing. N. C. 405 ; Caldicott v. Griffiths, 8 Ex. 898. 
 
 (q) Goddard v. Hodges, 1 Cr. & M. 33 ; Holmes v. Higgins, 1 
 B. & C. 74; Milburn v. Codd, 7 B. & C. 419 ; Lucas v. Beach, 1 
 Man. & Gr. 417. 
 
 (r) Bovill v. Hammond, 6 B. & C. 149 ; Smith v. Barrow. 2 T. 
 R. 476; Fromont r. Coupland, 2 Bing. 170. See, too, Lewis v. 
 Edwards, 7 M. & W. 300 ; Thomas v. Thomas, 5 Ex. 28. 
 
 1 Westerlo v. Evprtson, 1 Wend. 532 (1828): Harris v. Harris. 
 39 N. H. 45 (1859).
 
 640 
 
 ACTIONS BETWEEN PAKTNERS. 
 
 Bk. III. 
 Chap. 10. 
 Sect. 7. 
 
 [ * 568] 
 
 Actions for 
 recovery of 
 partnership 
 goods, &c. 
 
 Actions for 
 
 improper 
 
 sale. 
 
 Mayhew v. 
 Herrick. 
 
 money paid to the use of the defendant, if the question whether 
 he ought to repay it or not turned on the state of the partnership 
 accounts (s) ; nor for money lent to the firm of which the plaintiff 
 was himself a member, for the advance only formed an item in 
 the partnership account (t); nor on a bill or note drawn, accepted, 
 or endorsed in such a manner as to bind the firm jointly and not 
 its members severally also, for in such a case not only must the 
 plaintiff as one of the firm have contributed to payment of the 
 instrument, but he ought also to have been a defendant to the 
 action (?<)• For similar reasons, * if partners became indebted to 
 a third person who died, and appointed one of them his execu- 
 tor, this one could not even as executor sue his co-partners for 
 the debt due to the deceased (a?); and if there were two firms 
 with a partner common to both, one firm could not sue the other 
 at law [y) ; neither was there any mode by which at law one 
 partner could sue the firm or be sued by it (2). But upon a joint 
 and several promissory note, a partner might be sued by his co- 
 partners or by a firm of which they were members (a). 
 
 Again, as one tenant in common of personalty could not sue 
 his co-tenant for the recovery of that property, it follows that 
 one partner could not, by action at law, obtain from his co-part- 
 ner property of the firm wrongfully detained by him (b). 
 
 It was not, however, so clear that if one partner wrongfully 
 sold property of the firm, his co-partner could not sue him at law, 
 either for the wrongful conversion or for a share of the produce 
 of the sale. For although the older decisions were opposed to 
 any such right (c), it was held in Mayhew v. Herrick (d), that a 
 sheriff who, under &fi. fa. against one partner, sold goods of the 
 firm, was answerable at law to the assignees of the other partner 
 for one-half of the proceeds of the sale ; and it w as previously 
 (s) Robson r. Curtis, 1 Stark. 78. But see Townsend v. Crowdy, 
 8 C. B. N. S. 477, noticed ante, p. 566. 
 
 (O'Perring v. Hone, 4 Bing. 28; Colley v. Smith, 2 Moo. & 
 Bob. 96. 
 
 (id) See Neale v. Turton. 4 Bing. 149 ; Mainwaring v. Newman, 
 2 Bos. & P. 120 ; Teague v. Hubbard, 8 B. & C. 345, and 2 Man. 
 & Ry. 369 : Tibaldi v. Ellerman, 6 Dowl. & L. 71. 
 (x) Moffat t v. Van Millingen, cited, 2 Bos. & P. 124. 
 {ij) Perring r. Hone, 2 Car. & P. 401, and 4 Bing. 28 ; Main- 
 waring v. Newman, 2 Bos. & P. 120 ; Bosanquet v. Wray, 6 
 Taunt. 597 ; Jacaud v. French, 12 East, 317. 
 
 (z) See, in addition to the cases cited in the last note, De Tastet 
 v. Shaw, 1 B. <x A. 664, and Richardson r. The Bank of England, 
 4 M. & Cr. 171, 172, per Lord Cottenham. 
 
 (a) See Beecham v. Smith, E. B. & E. 442, and ante. p. 565. 
 (6) See Fox v. Hanbury, Cowp. 445. In Sharp r. Warren, 6 
 Price, 131, it was, however, held that the steward of a friendly 
 society was entitled to recover, at law, a box of money belonging 
 to the society, but run off with by one of its members. 
 
 (c) Graves v. Sawcer, Sir T. Raym. 15. 
 
 (d) 7 C. B. 229. See, too, Buckley v. Barber. 6 Ex. 164 ; and 
 compare Morgan 0. Marquis, 9 Ex. 145.
 
 WHEN MAINTAINABLE BEFORE THE JUDICATURE ACTS. 641 
 
 held, in Barton v. WUlimna (c), that a sale by one tenant in Bk. III. 
 common of the common property gave the other a right to sue Chap. 10. 
 him at law for a wrongful conversion (/). The question, there- '_J_ 
 
 fore, whether if one partner wrongfully sold the goods of the Barton v. 
 firm, he could or could not be sued at law by his co-partners, Williams, 
 seems to have turned on whether their demand in respect of this 
 wrongful sale could or could not be regarded as independent of 
 any question of account, so as to bring the case within the ex- 
 ception already noticed. 
 
 Moreover, a partner could not maintain an action on a bill of 
 exchange * drawn by himself on a firm of which he was a mem- [ * 569] 
 ber (g), and this rule applied to all unincorporated companies. 
 
 Nor could an action be brought by one firm against another Actions be- 
 firm where one or more persons were partners in both tween two 
 firms (h). 1 Even where the common partner was dead, nrms with a 
 the one firm could not sue the other in respect of contracts en- ^j.^,. 
 tered into between the two firms when he was a partner in each 
 of them; for no legal contract could subsist between a person 
 and those connected with him on the one side, and himself and 
 others connected with him on the other side (i). 
 
 Fox v. Hanbury (k) was the leading authority for the rule that p ox v 
 one partner could not sue another at law on the ground that the Hanbury. 
 other detained, and used for his own exclusive purposes, per- Trover. 
 sonal property belonging to the firm; and for the further rule 
 that if one partner sold such property, neither the other partners 
 nor their assignees in bankruptcy could maintain an action 
 against the purchaser in respect of his detention of the goods 
 purchased {!). 
 
 (e) 5 B. & A. 395, affirmed on appeal, Williams v. Barton, 3 
 Bing. 139. See, too, Farrar v. Beswick, 1 M. & W. 682. 
 
 (/) Agreed to by Maule, J., in Mayhew v. Herrick. 7 C. B. 
 247 ; and by Wood, V.-C, in Fraser ^.'Kershaw, 2 K. & JT. 500 ; 
 but see per Coltman, J., 7 C. B. 246 and Jacobs v. Seward, L. R. 
 5 H. L. 464. 
 
 (g) Neale v. Turton. 4 Bing. 149. See, too, Teague v. Hubbard, 
 8 B. & C. 345, and 2 Man. & Ry. 369. 
 
 (h) See Moffat v. Van Millingen, 2 Bos. & P. 124, note; Main- 
 waring v. Newman, ib. 120; Perring v. Hone, 2 C. & P. 401, and 
 4 Bing. 28; Jacaud v. French, 12 East, 317; De Tastet v. Shaw, 
 1 B. & A. 664. 
 
 (i) Bosanquet v. Wray, 6 Taunt. 597. 
 
 (k) Cowp. 445. This case was always followed with approba- 
 tion. See Smith v. Stokes, 1 East. 363; Smith v. Oriell, ib. 368; 
 Harvey v. Crickett, 5 M. & S. 336; Buckley v. Barber, 6 Ex. 164; 
 Harper v. Godsell, L. R. 5 Q. B. 422. 
 
 (I) It seems from Morgan v. Marquis, 9 Ex. 145, that if a sol- 
 vent partner sells goods of the firm, the purchaser, if he after- 
 wards sells the goods, cannot be compelled to hand over any part 
 of the proceeds to the trustee of the insolvent partners. Com- 
 
 1 Calhoun v. Albin, 48 Mo. 304 (1871) ; Tassey v. Church, 6 
 Watts & S. 465 (1843); Denny v. Metcalf, 68 Me. 269 (1878). 
 
 * 18 LAW OF PARTNERSHIP.
 
 642 
 
 ACTIONS BETWEEN PARTNERS. 
 
 Bk. III. 
 Chap. 10. 
 
 Sect. 7. 
 
 Action for 
 share of 
 surplus on 
 dissolution. 
 
 Where a partnership had been dissolved, aud the winding np 
 of its affairs had been entrusted to one or two individuals, and 
 they had taken upon themselves the duty of getting in the as- 
 sets and paying the debts, and dividing the surplus, they could 
 not, under ordinary circumstances, be compelled by proceed- 
 ings at law to pay over that surplus to those entitled to it (m). 
 If, indeed, the accounts had all been taken, and the net balance 
 payable to any particular partner had been ascertained, and if 
 such balance clearly ought to be paid over at once, then an ac- 
 tion for it might be brought (n); but in other cases recourse 
 must have been had to a court of equity. 
 
 pare this with Mayhew v. Herrick, 7 C. B. 229, and Buckley v. 
 Barber, 6 Ex. 164. 
 
 (m) Lyon v. Haynes, 5 Man. & Gr. 504, and see Lewis v. Ed- 
 wards, 7 M. & W. 300, as to a receiver suing for money withheld 
 from him by those who agreed that he should receive and dis- 
 tribute it. 
 
 (w) See ante, p. 564.
 
 DISSOLUTION OF PARTNERSHIP. G43 
 
 BOOK IY. [* 5 ™] 
 
 OF THE DISSOLUTION AND WINDINQ-UP OF 
 PARTNERSHIPS. 
 
 CHAPTER I. 
 
 CAUSES OF DISSOLUTION. 
 
 The right to rescind a partnership for fraud has been Bk. IV. 
 already considered (a). A partnership, however, which Chap. 1. 
 is incapable of being repudiated by any of its mem- 
 bers, may be terminated by a variety of events. Dis- 
 regarding (as not requiring special notice) mutual con- 
 sent on the part of all the partners, and such events, if 
 any, as by the partnership articles may be specially 
 made grounds of dissolution, the causes of a disso- 
 lution of an ordinary partnership may be reduced to 
 the following, viz. : — 
 
 1. The will of any partner. 
 
 2. The impossibility of going on; in conse- 
 
 quence of 
 
 (a.) The hopeless state of the partner- 
 ship business. 
 (6.) Insanity. 
 (c. ) Misconduct. 
 
 3. The transfer of a partner's interest. 
 
 4. The occurrence of some event which ren- 
 
 ders the partnership illegal. 
 
 5. Death. 
 
 6. Bankruptcy. 
 
 The consequences of death and bankruptcy will be 
 considered in subsequent chapters; in the present chap- 
 ter the other four events will be dealt with. 
 
 (a) Ante, p. 482.
 
 614 DISSOLUTION OF PARTNERSHIP. 
 
 [*571] *Section I. — Will of Any Partner. 
 
 1. Right to dissolve. 
 
 Bk. IV. Any member of an ordinary partnership, the dura- 
 
 Chap. 1. Sect. ^ on of -^hich i s indefinite, may dissolve it at any moment 
 
 J he pleases, and the partnership will then be deemed to 
 
 continue only so far as may be necessary for the pur- 
 poses of winding up its then pending affairs (6). 1 This 
 rule applies to ordinary mining partnerships (c); and 
 as well where there are many as where there are only a 
 few partners (d), It also applies although one of the 
 partners to whom the notice is given may be a lunatic (e). 
 But it is apprehended that the Court will restrain an 
 immediate dissolution anc< sale of the partnership prop- 
 erty, if it appears that irreparable mischief will ensue 
 from such a proceeding (/). 
 
 But although a partnership at will may be dissolved 
 by any partner, it by no means follows that he can re- 
 tain a premium which his co-partner may have paid 
 him, or secure for his own benefit other advantages 
 which he may desire (g). 
 Form of A notice that the partnership shall be dissolved must, 
 
 notice, to be effectual, be explicit, and be communicated to all 
 
 the partners (h). ~ The notice may be prospective (i). 
 
 (b) Peacock v. Peacock, 16 Ves. 50 ; Featherstonhaugh v. Fen- 
 wick, 17 Ves. 298 ; Crawshay v. Maule, 1 Swanst. 508 ; Ex parte 
 Nokes, cited 1 Mont. Part. 108 n. The Scottish law is the same : 
 see Marshall v. Marshall, 3 Ross, L. C. on Com. Law, 611. 
 
 (c) Lees v. Jones, 3 Jur. N. S. 954, but not, it is conceived, 
 if carried on on the cost-book principle. 
 
 (d) Miles v. Thomas, 9 Sim. 606. 
 
 (e) But in such a case the dissolution cannot be carried out 
 without having recourse to an action. See Mellersh v. Keen, 27 
 Beav. 236. 
 
 (/) See Chavany v. Van Sommer, 3 Woodd. Lect. 416, note, 
 and 1 Swanst. 512, note, and Blisset v. Daniel, 10 Ha. 493. See 
 also Neilson v. Mossend Iron Co., 11 A pp. Ca. 298, a Scotch case. 
 By the civil law a dissolution made maid fide, and at an unsea- 
 sonable time, is not allowed. See Pothier, Partn. § 150. 
 
 (g) As to the premium, see ante, p. 64, and as to retaining the 
 benefit of a renewed lease, Clegg v. Edmondson, 8 De G. Mc. & 
 G. 787. 
 
 {h) Van Sandau v. Moore, 1 Russ. 463 ; Wheeler v. Van Wart, 
 9 Sim. 193, and 2 Jur. 252, where the notice was left at the office; 
 Parsons v. Hay ward, 31 Beav. 199, and 4 De G. F. & J. 474. 
 
 (i) Mellersh v. Keen, 27 Beav. 236. 
 
 Fletcher v. Reed. 131 Mass. 312 (1881); McElvev v. Lewis. 76 
 N. Y. 373 (1879); Whiting r. Leakin, 66 Md. 255 (1881); Howell 
 v. Harvey, 5 Ark. 279 (1843). It makes no difference that one 
 of the partners has paid a bonus to secure his admission into the 
 firm. Carlton v. Cummings. 51 Ind. 47S (1873). 
 
 -'Eagle v. Bucher, 6 Oh. St. 295 (1856).
 
 AT WILL OF ANY PARTNER. 645 
 
 A proposal to * dissolve on terms which are not ac- [ * 572] 
 
 cepted, does not amount to a dissolution (k). Nor does Bk. IV. 
 
 a notice that a partner's share has been forfeited ; for Chap. l.Seei. 
 
 by such notice it is not intended that the partnership _J 
 
 shall be considered as dissolved as to all the partners, 
 but only that the one partner shall have no farther in- 
 terest in it (I). An answer to a bill in chancery has 
 been held sufficient notice (m). 
 
 It has never been determined that a partnership con- Where part- 
 stituted by deed can only be dissolved either by deed ners ' u P is 
 or by operation of law : and it is apprehended that no |° u *j ' ,j e( 
 deed is requisite. 1 In Doe v. Miles (n) the question Doe ^jjles 
 was raised ; but as the partners had all signed a notice 
 advertising a dissolution, Lord Ellenborough presumed 
 that it had been effected with all due solemnity. It is 
 clear from the report that there was, in fact, no deed 
 of dissolution, but there may have been in the articles 
 some clause providing for a dissolution otherwise than 
 by deed. 
 
 A dissolution of a partnership at will may be in- Dissolution 
 ferred from circumstances, e. g., a quarrel, although no inferred. 
 notice to dissolve may have been given (o). 2 
 
 A notice once given cannot be withdrawn without Withdrawal 
 consent (p). of notice. 
 
 If a partnership is a partnership at will, and a mem- Time from 
 ber brings an action for dissolution without an previous which dis- 
 notice, the writ is treated as notice to dissolve and the 
 dissolution will date from its service. In other cases 
 of dissolution by notice the dissolution will date from 
 the day the notice was given, or from the time mention- 
 ed in it for dissolution, as the case may be (q). 3 
 
 (fc) Hall v. Hall, 12 Beav. 414. 
 
 (?) See Hart v. Clarke, 6 De G. M. & G. 232. 
 
 (m) Svers v. Svers, 1 App. Ca. 174. 
 
 (n) 4 Camp. 373, and 1 Stark. 181. In Hutchinson v. Whit- 
 field, Haves (Ir. Ex.), 78, it was agreed that the partnership 
 should be dissolved by deed only ; but it was held that an award 
 dissolving tbe partnership was valid, the submission being under 
 seal. 
 
 (o) Pearce v. Lindsay, 3 De G. J. & Sm. 139. 
 
 (/)) Jones v. Lloyd, 18 Eq. 265. 
 
 (q) See Robertson v. Lockie, 15 Sim. 285; Bagshaw v. Parker, 
 10 Beav. 532 ; Mellersh v. Keen, 27 Beav. 236. 
 
 1 It has been decided that the dissolution of such a partner- 
 nershipcan be proved bv parol, Dickinson v. Bold, 3 Desaus, 501 
 (1811); Wood r. Gault, 2 Md. Ch. 433 (1850). 
 
 2 Abbott v. Johnson, 32 N. H. 9 (1855). 
 
 3 It is a disputed question whether one partner can dissolve a 
 partnership entered into fur a certain period before the expira- 
 tion of its term. In Slemmer's Appeal, 58 Pa. St. 168, Solomon 
 v. Kirkwood, 55 Mich. 256 (1884) and Skinner v. Dayton, 19 
 
 solution 
 dates.
 
 646 
 
 DISSOLUTION OF PARTNERSHIP. 
 
 [ * 573] 
 
 Bk. IV. 
 
 Chap. 1. Sect. 
 1. 
 
 Right of 
 partner to 
 retire from 
 firm. 
 
 Right to 
 retire from 
 insolvent 
 firm. 
 
 * 2. Of the right to retire. 
 
 Subject to a qualification which will be presently 
 mentioned, a member of an ordinary firm can surren- 
 der his share and interest in the firm to his co-part- 
 ners, or any of them, upon any terms to which he and 
 they may all agree. But there is only one method by 
 which a partner can retire from a firm without the con- 
 sent of his co-partners, and that is, by dissolving the 
 firm. In order to avoid the necessity of a general dis- 
 solution when a partner may wish to retire, special pro- 
 visions are frequently introduced into partnership ar- 
 ticles; but it is not unfrequently found that, owing to 
 unforeseen circumstances, these provisions cannot be 
 carried into effect; and when that is the case, a disso- 
 lution, with its usual consequences, must take place if 
 a partner is to retire otherwise than by the consent of 
 his co -partners (r). 1 
 
 The qualification above alluded to has relation to a 
 partner's retirement from an insolvent firm. A part- 
 ner desirous of retiring from an insolvent firm, is at 
 perfect liberty to sell his interest in it for any sum the 
 continuing partners think proper to give him; and a 
 sale by him to them cannot be set aside or impeached 
 as a fraud upon the creditors of the firm unless there 
 be clear evidence aliunde of such fraud (s). At the 
 same time, the present share of a partner in an insolv- 
 ent firm (t) is obviously less than nothing, whatever 
 may be the amount of the capital brought in by him. 
 Consequently a partner who retires from an insolvent 
 firm and withdraws from it a sum of money which he 
 
 (r) See Cook v. Collin gridge, Jac. 607; Kershaw v. Matthews, 
 
 2 Russ. 62; Madgwick v. Wimble, 6 Beav. 495; Downs v. Col- 
 lins, 6 Ha. 418. Compare Simmons v. Leonard, 3 Ha. 581 ; Pet- 
 tvt r. Janeson, 6 Madd. 146. 
 
 (s) See Ex parte Peake, 1 Madd. 346; Parker v. Ramsbottom, 
 
 3 B. & C. 257; Ex parte Birch, 2 Ves. J. 260, note; Ex parte Car- 
 penter, Mont. & McAr. 1. 
 
 (/) An insolvent firm is one in which the joint assets are less 
 than the joint liabilities. Such a firm is insolvent whatever the 
 wealth of the individual partners composing it may be, see 
 Mont. & McAr. p. 5. 
 
 Johns. 513, 538 (1822); it was said that he can do so, subject to 
 a liability to answer in damages for his breach of contract. In 
 Berry v. Folkes, 60 Miss. 507 (1866): Johnston v. Dutton, 27 Ala, 
 245 (1855); Hartman v. Woehr, 18 N. J. Eq. 383 (1867); Cole v. 
 
 Moxley, 12 W. Va. 730 ( ); and Kinloch v. Hamlin, 2 Hill, 
 
 (S. Ca.) Ch. 19 ( ); it was held that he cannot dissolve such 
 
 a partnership before the appointed term is ended. 
 
 1 That the withdrawal of a partner dissolves the firm, see 
 White v. White, 5 Gill. 359 (1847).
 
 RIGHT TO RETIRE. 647 
 
 is pleased to call his share, is defrauding the creditors Bk. IV. 
 
 of the firm; and such a transaction cannot stand, and Chap. 1. Sect. 
 
 may be impeached by the trustee in bankruptcy of the J 
 
 * continuing firm (u). 1 To proceedings instituted by [ * 574] 
 the trustee to impeach such a transaction, it is no an- 
 swer to say, that the bankrupts themselves were bound, 
 by it; for the trustee represents the creditors, and can 
 impeach any transaction which is a fraud as against 
 them, although the bankrupts themselves might not be 
 in a position to do so (x). Upon similar grounds, if a 
 partner relinquishes his share in a partnership to his 
 co partners, upon such terms and under such circum- 
 stances as to render that relinquishment a fraud upon 
 his creditors, and he then becomes bankrupt, his trus- 
 tee will be entitled to rescind the transaction. 
 
 Laying aside, however, ail such considerations as General rules 
 these, it may be said — as to retir- 
 
 1. That it is competent for a partner to retire with i Q g- 
 the consent of his co- partners at any time and upon 
 any terms; 
 
 2. That it is competent for him to retire without 
 their consent by dissolving the firm, if he is in a posi- 
 tion to dissolve it; 
 
 3. That it is not competent for a partner to retire 
 from a partnership which he cannot dissolve, and from 
 which his co-partners are not willing that he should 
 retire. 
 
 3. Of the right to expel. 
 
 In the absence of an express agreement to that effect, Right to 
 there is no right on the part of any of the members of expel a 
 an ordinary partnership to expel any other member, partner. 
 Nor, in the absence of express agreement, can any of 
 the members of an ordinary partnership forfeit the 
 share of any other member, or compel him to quit the 
 firm on taking what is due to him. As there is no 
 method, except a dissolution, by which a partner can 
 retire against the will of his co-partners, so there is no 
 method except a dissolution by which one partner can 
 be got rid of against his own will (y). 
 
 (u) See Sanderson v. Maltby, 4 Bro. C. C. 423, and 2 Ve.s. J. 
 244; Re Kemptner, 8 Eq. 286; and ante, p. 338. 
 
 {x) lb., and see Billiter v. Young, 6 E. & B. 40; Tyrrell v. 
 Hope, 2 Atk. 562. 
 
 (y) See Hart v. Clarke, 6 De G. M. & G. 232, and on appeal, 
 
 1 See Anderson v. Albrecht, 11 Md. 563 (1857); Ransom v. 
 Van Derventer, 41 Barb. 307(1863); Johnson v. Strauss, 26 Fed. 
 Rep. 57(1882); Phelps v. McNeely, 66 Mo. 554(1877).
 
 648 DISSOLUTION OF PARTNERSHIP. 
 
 [ * 575] * The consequence of this is, that when partners dis- 
 
 Bk. IV. agree and cannot dissolve except with the concurrence 
 
 Chap. l.Sect. f a ii^ jj. j g no ^ urmsua l f or some of them so to conduct 
 
 J themselves towards another as, if possible, to drive him 
 
 Driving a to agree to a dissolution. But it need hardly be said 
 partner to a ^at a scheme of this kind will, if possible, be frus- 
 trated ; and redress may be obtained in such a case 
 without dissolving the partnership (z). 
 Exercise of With a view to facilitate the removal of a partner who 
 powers of misconducts himself, it is not unfrequently agreed that 
 expu sion. a p Qwer j. Q ex p e j s hall be exerciseable in certain events 
 and under certain restrictions. These expulsion clauses, 
 as they are termed, have been already alluded to in the 
 chapter on the construction of partnership agreements; 
 but it may be observed in passing, that such clauses are 
 always construed stiictly, and that no expulsion under 
 them will be effectual unless the expelling partners 
 have acted with perfect good faith (a). 1 
 
 Section II. — Impossibility of Going on. 
 
 IniDossibilitv Even if the duration of the partnership is denned, 
 of going on. circumstances may arise giving a partner a right to 
 have the partnership dissolved before the expiration of 
 the time for which it was originally agreed to last. 
 But there must be some special circumstance to justify 
 a dissolution of a partnership before the term for which 
 it was entered into has expired (6). Any circumstance, 
 however, which renders the continuance of the partner- 
 ship, or the attainment of the common end with a view 
 to which it was entered into, practically impossible, 
 would seem upon principle to warrant a dissolution (c). 
 The particular circumstances which have given rise to 
 litigation, and upon which partnerships have been 
 judicially dissolved, are : — 
 T * 5761 * 1- The hopeless state of the partnership business ; 
 
 2. The confirmed lunacy of one of the partners ; and 
 
 Cfarke v. Hart, 6 H. L. C. 633; Crawshay v. Collins, 15 Ves. 226; 
 Featherstonhaugh v. Fen wick. 17 ib. 309. 
 
 (z) See Fairthorne v. Weston, 3 Ha. 387 ; and ante, p. 497. 
 
 (a) See Blisset v. Daniel, 10 Ha. 493; Wood v. Woad, L. R. 9 
 Ex. 190 : Stewart v. Gladstone, 10 Ch. D. 626 ; Russell v. Rus- 
 sell, 14 ib. 471 ; ante, p. 426, &c. 
 
 (b) See Warner v. Cunningham, 3 Dow. 76. 
 
 (c) See Harrison v. Tennant, 21 Beav. 482 ; Electric Telegraph 
 Co. of Ireland, 22 Beav. 471. 
 
 1 The burden of proving the right to expel lies on the partner 
 who has exercised it. Patterson v. Silliman, 28 Pa. St. 304 (1857).
 
 CAUSES OF DISSOLUTION. 649 
 
 3. Misconduct on the part of one or more of the Bk. IY. 
 members of the firm, and the destruction of mutual Chap. 1. Sect. 
 confidence. J 
 
 Each of these grounds of dissolution require to be 
 more fully noticed. 
 
 1. As to the hopeless state of the partnership business. 
 
 In Baring v. Dix (d) a partnership was formed be- i. insol- 
 tween three persons for the purpose of spinning cotton vency. 
 under a certain patent. The patented invention proved Baring v. 
 a failure, and two of the partners thereupon desired to Dix - 
 wind up the affairs of the partnership and to sell its 
 mills, but this was opposed by the other partner. How- 
 ever, on a bill filed against him the Court referred it to 
 the master to inquire and state whether the partnership 
 business could be carried on according to the true in- 
 tent and meaning of the articles of co-partnership, and 
 declared that, on a report in the negative, a decree 
 would be made for a dissolution of the partnership 
 and a sale of its property. It does not appear in this 
 case whether the partnership had been entered into for 
 a definite time or not, nor whether the capital of the 
 firm had been expended or not. 
 
 In a more recent and more important case, however, Loss of 
 the Court recognised the fact that expectation of profit capital, 
 is implied in every partnership, and held that, if a Jennings v. 
 partnership is entered into for a term of years, and the Baddeley - 
 capital originally agreed to be furnished has been all 
 spent, and some of the partners are unable or unwill- 
 ing to advance more money, and at the same time the 
 concern cannot go on except at a loss unless they do, 
 the partnership will be dissolved (e). Under such cir- 
 cumstances as these it is unimportant whether the con- 
 cern is already embarrassed or not. After everything 
 has been done which was agreed to be done, and cer- 
 tain loss is the only result of going * on, any partner [ * 577] 
 is entitled to have the concern dissolved, although he 
 may have agreed that tbe partnership should continue 
 for some definite time and that time has not yet ex- 
 pired (/). 
 
 If, in a case of this description, the firm is already 
 insolvent and becomes more and more so every day, 
 the Court will interfere on motion, and appoint a per- 
 
 (d) 1 Cox, 213. 
 
 (e) Jennings r. Baddeley, 3 K. & J. 78, a case of a mine. See, 
 also, Wilson v. Church, 13 Ch. D. 1, and S. C, under the name 
 of National Bolivian Navigation Co. v. Wilsou, 5 App, Ca. 170. 
 
 (/) Ibid.
 
 650 
 
 CAUSES OF DISSOLUTION. 
 
 Bk. IV. ^ son to sell the business and wind up the affairs of the 
 Chap. l.Sect. partnership, although it is not usual to grant such re- 
 
 ~J_ . lief until the hearing of the cause (g). 1 
 
 Bankruptcy. If a firm of partners, or even any one member of the 
 firm, is adjudged bankrupt, the firm is dissolved ; 2 not 
 only because it is impossible for the business of the 
 firm to be carried on, but because there is a transfer of 
 each bankrupt's interest to his trustee (h). 
 
 2. As to the Insanity of one of the Partners. 
 
 2. Lunacy. The lunacy of a partner does not itself dissolve the 
 
 firm ; 3 but the confirmed lunacy of an active partner is 
 sufficient to induce the Court to order a dissolution, not 
 only for the purpose of protecting the lunatic (i), but 
 also for the purpose of relieving his co-partners from 
 the difficult position in which the lunacy places them (k). 
 
 Jones v. Noy. In a leading case on this subject, two persons agreed 
 to become partners as solicitors for twelve years ; one 
 of them became lunatic before the twelve years were 
 out, and subsequently died. His co-partner continued 
 to carry on the business for some time ; but he eventu- 
 ally sold it ; and it was held, that the legal personal 
 representative of the lunatic was entitled to a share of 
 the profits up to the time of the sale (I). In deliver- 
 ing judgment the Court observed : 
 
 "It is clear upon principle that the complete incapacity of a 
 party to an agreement to perform that which was a condition of 
 
 (g) Bailey v. Ford. 13 Sim. 495. 
 
 (h) See post, p. 583, under the head Transfer of Interest. 
 
 (0 Jones v. Lloyd, 18 Eq. 265. 
 
 (k) See Saver v. Bennett. 1 Cox. 107 ; Wrexham v. Hudleston, 
 1 Sw. 514, note ; Jones v. Noy, 2 M. & K. 125 ; Sadler v. Lee, 6 
 Beav. 324 ; Leaf v. Coles, 1 De G. M. & G. 171 ; Anon, 2 K. & 
 J. 441 ;'and Lord Eldon's observations in Waters v. Taylor, 2 V. 
 & B. 303. 
 
 (1) Jones v. Noy, 2 M. & K. 125. 
 
 1 Hopelessness of the firm's success has been frequently recog- 
 nized by the American courts as a ground for dissolution of the 
 partnership. For examples, see Jackson v. Deese, 35 Ga. 84 
 (1866); Moies v. O'Neill, 23 N. J. Eq. 207 (1872); Brown v. 
 Hicks, 8 Fed. Rep. 155 (1881). 
 
 2 Blackwellu Claywell, 75 N. Ca. 213 (1876); Marquand v. 
 N. Y. Mfg. Co., 17 Johns. 525 (1820); Wilkins r. Davis, 15 Bank. 
 Eeg. 60(1876). 
 
 3 That the insanity of a partner does ipso facto dissolve his firm 
 is held in Isler v. Baker, 6 Humph. (Tenn.)85 (1845). This doc- 
 trine is supported by dicta in The Cape Sable Co.'s case, 3 Bland 
 (Md.) (Ch.), 606 (1823). and Griswold v. Waddington, 15 Johns. 
 57(1817). But Raymond v. Vaughn, 17 111. App. 144 (1885), is 
 in accordance with the view taken in the text.
 
 LUNACY. 651 
 
 the agreement is a * ground for determining the contract. The [ * 578] 
 insanity of a partner is a ground for the dissolution of the part- Bk. IV. 
 nership, because it is immediate incapacity ; but it may not in Chap. 1. Sect. 
 
 the result prove to be a ground of dissolution, for the partner J 
 
 may recover from his malady. When a partner therefore is af- 
 fected with insanity, the continuing partner may, if he think 
 fit, make it aground of dissolution, but in that case I consider 
 with Lord Kenyon, that in order to make it a ground of disso- 
 lution he must obtain a decree of the Court. If he does not ap- 
 ply to the Court for a decree of dissolution, it is to be considered 
 that he is willing to wait to see whether the incapacity of his 
 partner may not prove merely temporary. If he carry on the 
 partnership business in the expectation that his partner may re- 
 cover from his insanity, so long as he continues the business with 
 that expectation or hope, there can be no dissolution." 
 
 In Roiclands v. Evans and Williams v. Rowlands (m), Rowlands v. 
 one of three partners in a mine had become lunatic and ^'. an . s ' an< * 
 committees of his estate had been appointed. A bill Rowlands.*" 
 was filed by one of the sane partners for a dissolution; 
 and a cross bill was filed by the committees of the luna- 
 tic, for he appointment of a manager, on the ground 
 that the affairs of the partnership could be carried on 
 advantageously to all parties, notwithstanding the 
 lunacy. There was evidence to show that this was 
 true ;' but the Master of the Eolls held that the partner- 
 ship must be dissolved, and that the Court could not 
 appoint a manager to carry on the concern for the bene- 
 fit of the lunatic's estate. The partnership property 
 was ordered to be sold as a going concern, with liberty 
 to all parties to bid, and a receiver and manager was 
 appointed until the sale. t 
 
 In order to induce the Court to order a dissolution on Evidence of 
 the ground of the insanity of one of the partners, the lunacy. 
 Court must be satisfied by clear evidence that the in- 
 sanity exists and is incurable (n); a temporary illness 
 is not sufficient (o); and notwithstanding strong evi- 
 dence as to the past, the Court requires to be convinced 
 that the insanity exists at the time its interference is 
 called for, and it will therefore, if necessary, * before [ * 579] 
 
 (m) 30 Beav. 302. In the same case, it was held that the com- 
 mittees could not exercise an option which the lunatic had of 
 buying the share of one of his co-partners. The right of pre- 
 emption had accrued to the lunatic before his lunacy, and that 
 event occurred before the time for exercising the option had ex- 
 pired. 
 
 (n) See Kirby v. Carr, 3 Y. & C. Ex. 184 ; Anon, 2K. & J. 111. 
 
 (o) Seethe last note, and Whitwell v. Arthur, 35 Beav. 140; 
 Huddleston's case, cited 2 Ves. sen. 34 and Sayer v. Beuuet, 1 
 Cox, 107.
 
 652 
 
 CAUSES OF DISSOLUTION. 
 
 Bk. IV. 
 Chap. 1. Sect. 
 2. 
 
 Date of dis- 
 solution. 
 
 Kirby v. 
 Carr. 
 
 Costs. 
 Lunacy 
 
 [ * 580] 
 
 making an order, direct an inquiry whether the alleged 
 lunatic is in such a state of mind as to be able to con- 
 duct the business of the firm in partnership with the 
 other members, according to the articles of partner- 
 ship (p). But no such inquiry is necessary where the 
 partner is a lunatic and so found by inquisition (q). 1 
 
 A lunatic partner not so found by inquisition is en- 
 titled to bring an action (by a next friend) for a disso- 
 lution, but it is doubtful whether the partnership can 
 be completely wound up in the absence of a com- 
 mittee (r). 
 
 In ordering a dissolution of a partnership, not at will, 
 on the ground of insanity, the Court declares the part- 
 nership dissolved as from the date of the judgment, and 
 not from a prior day (s). But if the articles of partner- 
 ship authorise a dissolution and the partnership has 
 been dissolved under the articles, — which may be done 
 notwithstanding the insanity of one of the partners (t), — 
 the dissolution must date from the time at which the 
 partnership was so dissolved, and not from the date of 
 the judgment (u). "Where a partnership is at will, and 
 notice to dissolve has been given, the dissolution will 
 be ordered as from the time fixed by the notice (x). 
 It was probably on the ground that a partnership at 
 will is determinable on notice, that in Kirby v. Carr (y) 
 the dissolution was decreed as from the filing of the 
 bill, no previous notice having been given. 
 
 AVhen the Court dissolves a partnership on the 
 ground of insanity, it directs the costs to be paid out 
 of the partnership assets (z). 
 
 By the Lunacy regulation act, 16 & 17 Yict. c. 70, 
 § 123, * it is enacted that, " where a person, being a 
 
 (p) See Anon., 2 K. & J. 441 ; Kirby v. Carr. 3 Y. & C. Ex. 
 184, and Sayer v. Bennet, 1 Cox, 107, in -which two last cases the 
 partnership was a partnership at will. 
 
 (q) Milne v. Bartlet. 3 Jur. 358. 
 
 (r) Jones r. Llovd, 18 Eq. 265. 
 
 (s) Besch v. Frolich, 1 Ph. 172. In Sander v. Sander. 2 Coll. 
 276, and Jones v. Welch, 1 K. & J. 765, the dissolution was also 
 from the date of the decree, but the reports do not show whether 
 the partnerships were at will or not. 
 
 (t) Robertson v. Lockie, 15 Sm. 285; and see Mellersh r. Keen, 
 27 Beav. 236. 
 
 (u) See Robertson v. Lockie, 15 Sim. 285; Bagshaw v. Paiker, 
 10 Beav. 532. 
 
 (.el Mellersh v. Keen. 27 Beav. 236. 
 
 (y) 3 Y. & C. Ex. 184. See, also, Shepherd v. Allen, 33 Beav. 
 577. 
 
 (z) Jones v. Welch, 1 K. & J. 765. 
 
 1 Griswold v. Waddington, 15 Johns. 57 (1817).
 
 misconduct. 653 
 
 member of a co-partnership firm, becomes lunatic, the Bk. IV. 
 Lord Chancellor may, by order made on the application Ch a P- *• Sect - 
 
 of the partner or partners of the lunatic, or of such "1 
 
 other person or persons as the Lord Chancellor shall regulation 
 think entitled to require the same, dissolve the partner- act - 
 ship ; and thereupon, or upon a dissolution of the 
 partnership by decree of the Court of Chancery, or 
 otherwise by due course of law, the committee of the 
 estate, in the name and on behalf of the lunatic, may 
 join and concur with such other person or persons in 
 disposing of the partnership property, as well real as 
 personal, to such persons, upon such terms, and in such 
 manner, and may and shall execute and do such con- 
 veyances and things for effectuating this present pro- 
 vision, and apply the monies payable to the lunatic in 
 respect of his share and interest in the co-partnership, 
 in such manner as the Lord Chancellor shall order." 
 
 3. As to misconduct and destruction of mutual con- 
 fidence. 
 
 The Court will dissolve a partnership on the ground 3. Miscon- 
 tbat a partner so seriously misconducts himself as to duct - 
 render it impossible for his co-partners to continue to 
 act with him (a). But it is not considered to be the 
 duty of the Court to enter into partnership squabbles, 
 and it will not dissolve a partnership on the ground of 
 the ill-temper or misconduct of one or more of the 
 partners, unless the others are in effect excluded from 
 the concern (b); or unless the misconduct is of such a 
 nature as utterly to destroy the nmtual confidence 
 which must subsist between partners if they are to con- 
 tinue to carry on their business together (c). 'Where a 
 dissolution is sought on this latter ground, it would 
 seem that the misconduct must be * such as to affect [ * 581] 
 the business not merely by shaking its credit in the 
 eyes of the world, but by rendering it impossible for 
 the partners to conduct their business together accord- 
 ing to the agreement into which they have entered (d). 
 
 («) See Smith v. Jeves. 4 Beav. 502 ; Waters v. Taylor, 2 V. & 
 B. 299 ; Charlton v. Poulter, 19 Ves. 148, note. 
 
 i //i See Goodman v. Whitcomb, 1 Jac. & W. 589; Marshall v. 
 Colinan, 2 ib. 266 ; Wray v. Hutchinson. 2 M. & K. 235; Roberts 
 v. Eberhart, Kay, 148. 
 
 (c) See Smith v. Jeyes, 4 Beav. 502 Harrison v. Tennant, 21 
 Beav. 482; Liardet v. Adams, 1 Mont. Part. 112, note, where 
 Lord Thurlow is reported to have said he did not see what degree 
 of misconduct was to be held sufficient ground for dissolving a 
 partnership. 
 
 (d) See Anon, 2 K. & J. 441, where a partner had attempted 
 suicide.
 
 G54 
 
 CAUSES OF DISSOLUTION. 
 
 Bk. IV. 
 Chap. 1. Sect. 
 2. 
 
 Degree of 
 misconduct. 
 
 Harrison v. 
 Tennant. 
 
 [ * 582] 
 
 Most of the cases on this subject have become before 
 the Court on a motion for an injunction to restrain a 
 partner from acting improperly, and have been alluded 
 to when the remedy by injunction was considered (e). 
 It may, however, be usefully observed here that keep- 
 ing erroneous accounts and not entering receipts (f), 1 
 refusal to meet* on matters of business (g), continued 
 quarrelling, and such a state of animosity as precludes 
 all reasonable hope of reconciliation and friendly co- 
 operation (h), have been held sufficient to justify a dis- 
 solution. It is not necessary, in order to induce the 
 Court to interfere, to show personal rudeness on the 
 part of one partner to the other, or even any gross mis- 
 conduct as a partner. All that is necessary is to satisfy 
 the Court that it is impossible for the partners to place 
 that confidence in each other which each has a right to 
 expect, and that such impossibility has not been caused 
 by the person seeking to take advantage of it. A strong 
 illustration of this is afforded by Harrison v. Ten- 
 nant (i). In that case three persons, A., B., and C, 
 entered into partnership as solicitors for twenty-one 
 years. A. and B. had been in practice as partners be- 
 fore the partnership of A., B., and C. commenced, and 
 were sued in Chancery in respect of matters which had 
 arisen in the course of such practice. In this suit A. 
 was charged, after the formation of the firm A., B., and 
 C, with gross misconduct and with fraud. B. and C. 
 wished to have A.'s answer settled in consultation, but 
 A. declined, made himself the sole solicitor on the rec- 
 ord instead of the firm, and put in his answer without 
 further consulting his co-partners. B. and C. filed a 
 bill against A. for a dissol ution, and sent * circulars to 
 their clients stating that they had taken steps to dis- 
 solve the partnership existing between themselves and 
 A., in consequence of the grave charges made against 
 him in the suit above referred to. A. resisted the ap- 
 plication for a dissolution on the ground that he had 
 not been guilty of any misconduct towards his co-part- 
 ners in the business of the firm, nor of any breach of 
 the articles of partnership. But a dissolution was de- 
 
 (e) Ante, p. 538 et seq. 
 
 if) Cheesenian v. Price, 35 Beav. 142. 
 
 (g) De Berenger v. Hamel, 7 Jar. Bvth. 25. ed. 2. 
 
 (h) Baxter ». West, 1 Dr. & Sin. 173; Watney v. Wells, 30 
 Beav. 56; Pease v. Hewitt, 31 Beav. 22: Learyr. Shout. 33 Beav. 
 582. 
 
 (*) 21 Beav. 482. 
 
 1 Cottle v. Leitch, 35 Cal. 434 (1868).
 
 MISCONDUCT. 655 
 
 creed upon the broad principle that the mutual conn- Bk. IV. 
 dence reposed by all three partners in each other when Chap. 1- Sect. 
 
 the partnership was formed, had not unreasonably J. 
 
 ceased; that it was impossible that the business could 
 be conducted as originally contemplated; and that al- 
 though, being gentlemen, no outbreak had occurred be- 
 tween them, yet an attempt to compel them to act as 
 partners for the future would, as against them .all, be 
 to compel them to inflict irreparable injury upon each 
 other. Again in Essell v. Hayicard (k), it was held, ^ssell v. 
 that where one partner had become liable to a criminal 
 prosecution by reason of his having been guilty of a 
 fraudulent breach of trust, his co-partner had a right 
 to have the partnership dissolved; and a notice to dis- 
 solve having been given by him the partnership was 
 ordered to stand dissolved as from the date of the no- 
 tice, although the partnership was not at will. 1 
 
 It must be borne in mind that the Court will never Misconduct 
 permit a partner, by misconducting himself and ren- on part of 
 
 dering it impossible for his partners to act in harmonv P arTner 
 .-i- . .. -i seeKinsr 
 
 with nim, to obtain a dissolution on the ground of the dissolution. 
 
 impossibility so created by himself (Z). 
 
 In order to facilitate a dissolution in the event of 
 misconduct, a special clause is usually inserted in part- 
 nership articles. The effect of clauses of this descrip- 
 tion has been already adverted to (m). 
 
 When the Court dissolves a partnership on the 
 ground of * misconduct the dissolution dates from the [ 583 J 
 judgment, unless there are special grounds for order- 
 ing a dissolution as from some other date (n). 
 
 (k) 30 Beav. 158. 
 
 (/) See Harrison v. Tennant, 21 Beav. 493, 494; Fairthorne v. 
 Weston, 3 Ha. 387. 
 
 (m) Ante, p. 425; Anderson v. Anderson, 25 Beav. 190, would 
 seem at first sight to throw some doubt on the efficacy of such 
 clauses, where the misconduct complained of is not really of any 
 importance. But the observations there made must be taken 
 with reference to the facts before the Court. 
 
 (w) Lyon v. Tweddle, 17 Ch. D. 529; Besch v. Frolich, 1 
 Ph. 172. 
 
 1 Where a partner signs checks without authority and applies 
 the proceeds to his own use and turns over firm property to 
 strangers at a price far below the market value, his associate is 
 justified in dissolving the firm. Reiter v. Morton. 90 Pa. St. 229 
 (1880). A refusal by a partner to give his co-partner any share 
 in the rents, issues and profits of the firm's property is a good 
 cause for dissolution. Warner v. Leisen, 31 Wis. 109 (1872).
 
 G5G 
 
 CAUSES OF DISSOLUTION. 
 
 Transfer of 
 interest. 
 
 Section III. — Transfer of Interest 
 
 Bk. IV. In addition to the causes of dissolution already 
 
 Chap. 1. Sect, mentioned, there are certain other events which, where 
 the contrary is not expressly provided by agreement 
 between the partners, immediately put an end to the 
 partnership, or at all events confer a right to have it 
 dissolved. Whether the partnership is of definite or 
 indefinite duration is unimportant (o); for the princi- 
 ple upon which a dissolution results from the events 
 in question, is, that if no dissolution were to follow, 
 new partners would be introduced without the consent 
 of all the existing members of the firm (p). Any 
 event which would produce this effect causes a disso- 
 lution of the whole firm (q). Upon this principle it is 
 that, in the absence of an express agreement to the 
 contrary, a partnership is dissolved by taking a part- 
 ner's share in execution under a fi. fa. (r), 1 by the 
 transfer of his share by bankruptcy (s), 2 or out- 
 lawry (t), and formerly in the case of a female part- 
 ner, by her marriage (u). 3 
 
 The question whether an assignment by a member of 
 an ordinary firm, of his share in it, dissolves it, or gives 
 the other members a right to have it dissolved, has not 
 been much considered in this country (x). Where the 
 partnership is at will, * an assignment and notice 
 thereof must, it is conceived, operate as a dissolution. 
 But where the partnership is for a definite period, 
 which is not expired, there is more difficulty in arriving 
 
 (o) Crawford v. Hamilton, 3 Marl. 251. 
 
 (p) See Crawshay v. Maule, 1 Swanst. 509. 
 
 (q) Collyer on Part. 72. 
 
 (V) Ante, Bk. III., c. 5, ?4- 
 
 (s) Fox v. Hanbury, 2 Cowp. 448 ; Ex parte Williams, 11 Ves. 
 5 ; Ex parte Smith, 5 Ves. 297. 
 
 (t) As to attainder and outlawry, see ante, p. 73. If a part- 
 ner's share vests in the Crown it is said that the Crown by its 
 prerogative becomes entitled to all the partnership property ; 
 Coll. on Part. 72, sed qusere. 
 
 {u) Nerot v. Burnand, 4 Russ. 247, affd. 2 Bli. N. S. 215. See 
 now the Married Women's Property Act, 1882. 
 
 (x) In Heath v. Sansom, 4 B. & Ad. 175, the assignment was 
 by one partner to his co-partner : and in Jefferys v. Smith, 3 
 Russ. 158, the shares were transferable by the articles of part- 
 nership. 
 
 'Sanders v. Young, 31 Miss. Ill, (1856). A sale under an ex- 
 ecution levied on a partner's interest in his firm dissolves the 
 partnership. Renton v. Chaplain, 9 N. J. Eq. 62 (1852); Carter 
 v. Rowland. 53 Texas 540, (1880). 
 
 2 Wilkins v. Davis, 15 Bankr. Reg. 60 (1876); Blackwell v. 
 Clavwell, 75 N. Ca. 213 (1876). 
 
 3 Brown v. Chanceller, 61 Texas, 437 (1884). 
 
 Assignment 
 of share. 
 
 [ * 584]
 
 TRANSFER OF INTEREST. 657 
 
 at a correct conclusion. To hold that the assignment Bk. IV. 
 operates as a dissolution, renders it competent for a ^ ba P- L Sect> 
 
 partner to do indirectly what he cannot do directly, J 
 
 viz., dissolve before the expiration of the time for 
 which the partnership was entered into. On the othe 
 hand, to hold that the partnership continues, is not just 
 to the assignor's co-partners. The assignment does 
 not of itself create a partnership between them and the 
 assignee (y); but it does deprive the assignor of all 
 his interest in the concern, and his co-partners may 
 fairly urge that they never contemplated a partnership 
 with a person having no interest in it. It seems im- 
 possible therefore to deny their right to make the 
 assignment a ground for dissolution. The right of the 
 assignee, alone or with the assignor, to insist on a dis- 
 solution, against the will of the assignor's co-partners 
 is much more doubtful, and has not been decided. In 
 America such right is held to exist (z); but in that 
 country it seems that contracts of partnership for a 
 definite period are almost as easily dissolved as part- 
 nerships at will, which is certainly not the case here(a). 1 
 
 Whether an agreement by an ordinary partner to Creation of 
 hold his share in the partnership in trust for other per- trust of 
 sons entitles his co-partner to dissolve the partner- share, 
 ship has never been determined. Considering, how- 
 ever, the effect of notice to them of the existence of 
 the trust, they would probably be held entitled to have 
 the partnership dissolved in order to be relieved from 
 their embarrassment. The cestui que trust clearly does 
 not become a partner with the partners of his trus- 
 tee (b). 
 
 (y) See Jefferys r. Smith. Russ. 158. 
 
 (z) Story on Part, g 308 ; 3 Kent. Com. 59 ; Marquand v. New 
 York Manufac. Co., 17 Johns. 525. 
 
 (a) In Glvn v. Hood, 1 Giff. 328, and 1 De G. F. & J. 334 ; 
 Pinkett v. Wright, 2 Ha. 120 ; Murray v. Pinkett, 12 CI. & Fin. 
 764 ; and Jefferys v. Smith, 3 Russ. 156, some observations on 
 the rights of an assignee of a share will be found, but they do 
 not touch the question alluded to in the text. 
 
 (b) See Jefferys v. Smith, 3 Russ. 158; Newry Rail. Co., v. 
 
 2 The great majority of the American authorities seem to hold 
 that the voluntary assignment by a partner of his interest in a 
 firm formed to run for a certain period not yet expired has the 
 effect of making the partnership dissoluble at the option either 
 of the remaining original partner or of the purchaser of the share. 
 Cochran v. Perry, 8 W. & S. 262 (-1844); Hoi ton's Appeal, 13 Pa. 
 St. 67 (1850); Monroe?). Hamilton, 60 Ala. 226 (1877); Receivers 
 v. Godwin, 5 X. J. Eq. 334 (1846); A a few cases hold it to 
 amount ipso facto to a dissolution. Barkley v. Tapp, 87 Ind. 25 
 (1882): Ayer r. Aver. 41 Vt. 346 (1868); Carroll v. Evans, 27 
 Texas, 622 (186::.. ' 
 
 * 19 LAW OF PARTNERSHIP.
 
 658 CAUSES OF DISSOLUTION. 
 
 [ * 585] * Section IV. — The Occurrence of some Event which 
 Renders the Continuance of the Partnership II- 
 
 Bk. IV. Upon principle, it is apprehended that if, by any 
 
 Chap. I. Sect, change in the law, it becomes illegal to carry on a bi.si- 
 
 ^ ness, every partnership formed before the making the 
 
 Illegality. law for the purpose of carrying on that business, must 
 be taken to have been dissolved by the law in question. 
 So if, the law remaining unchanged, some event hap- 
 pens which renders it illegal for the members of a firm to 
 continue to carry on in business their partnership, such 
 "War. event dissolves the firm. For example,if a partnership ex- 
 
 its between two persons residing and carrying on trade 
 in different countries, and war between those countries 
 is proclaimed, a stop is thereby put to further inter- 
 course between the partners, and the partnership sub- 
 sisting between them is consequently dissolved (c). 
 
 Moss, 14 Beav. 64 ; Bugg's case, 2 Dr. & Sm. 452. Goddard v. 
 Hodges, 1 Cr. & M. 33, is the other way ; but as to this, see 
 ante, p. 28, note (p). 
 
 (c) Story on Part. $ 315 et seq. and Grim-wold v. "Waddington, 
 16 Johns. 438 (Amer.) there cited. See also, ante, pp. 72, 92.
 
 CONSEQUENCES OF DISSOLUTION. 659 
 
 * CHAPTER II. [ * 586] 
 
 CONSEQUENCES OF DISSOLUTION. 
 
 In order to wind up the affairs of a dissolved part- gt T y 
 nership, it is necessary first to pay its debts; secondly, Chap. 2. 
 
 to settle all questions of account between the partner's; ~ — : 
 
 and, thirdly, to divide the unexhausted assets (if any) J'"] 1 ^^ 
 between the partners in proper proportions; or, if the ships, 
 assets are insufficient for these purposes, then to make 
 up the deficiency by a proper contribution between 
 the partners. This can be done by the partners them- 
 selves, or their representatives (d); but if disputes 
 arise then recourse must almost always be had to the 
 Chancery Division of the High Court, for it is under 
 its superintendence only that the assets of a partner- 
 ship can be properly sold and applied, that the part- 
 nership accounts can be satisfactorily taken, and that 
 contribution can be enforced (e). 
 
 The consequences of a dissolution of partnership, Cor.se- 
 both as regards creditors and as regards the partners quences of 
 themselves, have been pointed out in earlier parts of dissolution, 
 the treatise, and only require to be shortly recapitu- 
 lated. 
 
 I. As regards the creditors of the firm, it has been i. As regards 
 seen creditors. 
 
 1. That a dissolution of partnership, whether general 
 or partial, does no* discharge any of the partners from 
 liabilities incurred by them previously to the time of 
 dissolution (/). 
 
 2. That in order that a member of a firm, wholly or 
 partially dissolved, may be freed from his liability to a 
 person who was a creditor of the firm at the time of 
 its dissolution, such creditor must either have been 
 paid, or satisfied, or must have accepted some fresh ob- 
 ligation in lieu of that which existed when the firm was 
 dissolved (g). 
 
 id) See Lyon v. Haynes, 5 Man. & Gr. 505, where a banking 
 company governed by 7 Geo. 4, c. 46. had been voluntarily dis- 
 solved. 
 
 (e) See Bk. III., c. 10, \ 6. 
 
 (/) Ante, p. 223 et sea. 
 
 (g) Ibid.
 
 6.60 CONSEQUENCES OF DISSOLUTION. 
 
 j *5S7] * 3. That (except in a few special cases) (h) notice of 
 
 Bk. IV. dissolution or retirement is requisite to determine the 
 
 Chap. 2. responsibility of each partner in respect of such future 
 
 acts of his late co-partners, as would be imputable to 
 
 the firm if no change in it had taken place (i). 
 
 4. That notice of dissolution generally, as by adver- 
 tisement, is not sufficient to affect an old customer, un- 
 less it can be brought to his knowledge (k). 
 
 5. That notice of dissolution, is notice that the former 
 partners are no longer each other's agents as before (I). 
 
 6. That after dissolution and notice, partners cease 
 to be responsible for the future acts of each other (m), 
 unless they continue to hold themselves out as partners, 
 in which case the notice is of no avail (n). 
 
 2. As regards II. As regards the partners themselves. Upon the 
 the partners, dissolution of a partnership, and in the absence of any 
 agreement to the contrary, it has been seen — 
 
 1. That each partner has a right to have the partner- 
 ship assets 8pplied in liquidation of the partnership 
 debts, and to have the surplus assets divided (o). 
 
 2. That the right of each partner is to insist on a 
 sale of 'the partnership assets; there being in the ab- 
 sence of special circumstances, no right in any partner 
 to have the value of his own or of any co-partner's share 
 determined by valuation, or to have the partnership 
 property, or any portion of it, divided in specie' (p). 
 
 3. That each partner has a right to insist that noth- 
 ing further shall be done, save with a view to wind up 
 the concern (q). 
 
 4. That, for the purposes of winding up, the partner- 
 ship is deemed to continue (r); the good faith and 
 honorable conduct due from every partner to his co- 
 partners during the continuance of the partnership, 
 
 [ * 588] being equally due so long as its affairs * remain un- 
 settled (s); and that which was partnership property 
 before, continuing to be so for the purpose of dissolu- 
 tion, as the rights of the partners require (t). . 
 
 (/<) Ante, p. 210 et seq. 
 (i) Ibid. 
 (A) Ante, p. 221. 
 (/) Ante, pp. 210, 213. 
 («i) Ibid, 
 (n) Ante, p. 216. 
 (o) Ex parte Ruffin, 6 Ves. 127. 
 (p) Ante, p. 555. 
 
 (q) Wilson v. Greenwood, 1 Swanst. 481 ; Crawshav v. Maule, 
 ib. 507 ; Ex parte Williams, 11 Ves. 3. 
 (»•) See ante, p. 217. 
 (a) Ante, p. 303. 
 (t) See Ex parte Williams, 11 Ves. Sand 6 ; Crawshay v. Collins,
 
 WINDING-UP OF PARTNERSHIPS. 661 
 
 5. That the right on a dissolution to wind np the Bk. IT. 
 partnership affairs, i. e., to get in its credits, convert ^ na P- ~- 
 its assets into money, pay its debts, and divide the 
 residue, belongs as much to one of the late partners as 
 
 to another ; and if they cannot agree amongst them- 
 selves, recourse must be had to the Court, which will, 
 if necessary, appoint a receiver, direct a sale of the 
 assets and payment of the partnership debts, and re- 
 strain a partner from interfering with the proper wind- 
 ing up of the partnership (u). 
 
 6. That the right to wind up the affairs of a dissolved 
 partnership is, however, personal to the members of the 
 late firm ; and that, therefore, on the death or bank- 
 ruptcy of one of them, his executors or trustees will not 
 be permitted to take the management of the affairs of the 
 partnership out of the hands of the other partners (x). 
 
 7. That if the partnership assets are insufficient to 
 pay the partnership debts, the deficiency must be made 
 good by the partners in proportion to their respective 
 shares (y). 
 
 8. That after a partnership has been dissolved, any 
 one of the late partners has a right to have that disso- 
 lution duly notified, so that a stop may be put to the 
 power of his co-partners to bind him (z). It seems 
 that he has also a right to restrain them from carrying 
 on business under the old name, if such name is or in- 
 cludes his own, and if he has not assigned his interest 
 in the good will to them ; for although their continued 
 use of the old name, even with his knowledge, is not of 
 itself sufficient to render him liable, by virtue of the 
 doctrine of holding out (a), such use undoubtedly ex- 
 poses him to the * risk of having actions brought [ * 589] 
 against him as if he still belonged to the firm, and in 
 
 the case supposed his co-partners have no right to ex- 
 pose him to that risk (b). 
 
 9. That each partner has a right to commence a new 
 business in the old line, and in the old neighbourhood; 
 either alone, or in partnership with other people (c). 
 
 2 Russ. 34-2, 343 ; Nerot v. Burnand, 4 Russ. 247 ; Payne v. 
 Hornby, 25 Beav. 280. See, too, Ex parte Trueman. 1 D. & Ch. 
 464, as to partnership books. 
 
 (u) See ante, Bk. III. ch. 10, \ 6. 
 
 (x) Allen v. Kilbre, 4 Madd. 464 ; Ex parte Finch, 1 D. & Ch. 
 274 ; Fraser v. Kershaw. 2 K. & J. 496. 
 
 (y) See ante, p. 401. 
 
 (z) Hendry v. Turner, 32 Ch. D. 355 ; Troughton v. Hunter, 
 18 Beav. 470. 
 
 (a) Newsome v. Coles, 2 Camp. 617. 
 
 (b) See ante, p. 544. 
 
 (c) See, as to this, ante, pp. 436, 437.
 
 662 CONSEQUENCES OF DISSOLUTION. 
 
 Bk. IV. Such, in general terms, are the consequences of dis- 
 
 Chap. 2. solution. In order, however, to obtain a complete view- 
 
 Matters in- of these consequences, it is necessary to attend to the 
 volved in the principles upon which premiums are apportioned, and 
 winding up p ar t n ership accounts are taken ; to the distinction be- 
 <rta partner- tween tlie j oint e8 t a te of the firm, and the separate es- 
 tates of the partners composing it; to the doctrines of 
 contribution and indemnity; to the rules which relate 
 to appointing a receiver and granting an injunction; 
 and lastly, to the special agreements, if any, into which 
 the partners may have entered. All these matters were 
 discussed in the third book, and it is not necessary fur- 
 ther to allude to them. But the complicated questions 
 which arise in the event of a dissolution by death or 
 bankruptcy, have necessarily been reserved for sepa- 
 rate examination, and they will form the subject of the 
 next two chapters of the present book.
 
 DEATH AND ITS CONSEQUENCES. 663 
 
 * CHAPTER III. [ * 590] 
 
 OF DEATH AND ITS CONSEQUENCES. 
 
 The consequences of the death of a member of a Bk. IV. 
 partnership will be most conveniently pointed out in Cha P- 3 - Sect - 
 
 the course of an examination of the position of the sur- J 
 
 viving members, and of the executors of the deceased 
 member — 
 
 1. As between themselves; 
 
 2. As regards the creditors of the firm; and 
 
 3. As regards the separate creditors and legatees of 
 the deceased. 
 
 Section I. — Consequences as Regards the Surviving 
 Partners and the Executors of the Deceased. 
 
 The death of any one member of a firm operates as D eat h of a 
 a dissolution thereof as between all the members, un- partner dis- 
 less there is some agreement to the contrary (a). 1 This solves the 
 is obviously reasonable, for by the death of one of the firm- 
 members it is no longer possible to adhere to the origi- 
 nal contract, the essence of which is (in the case sup- 
 posed), that all the parties to it shall be alive. The 
 mere fact that the partnership was entered into for a 
 definite term of years, which was unexpired when the 
 death occurred, is not sufficient to prevent a dissolution 
 by such death (6). 
 
 Unless all the partners have agreed to the contrary, Executors of 
 when one of them dies, his executors have no right to deceased do 
 become * partners with the surviving partners (c); 2 [*591] 
 nor to interfere with the partnership business; but the °f^^ me 
 
 (a) See Pearce v. Chamberlain, 2 Ves. sen. 33; Crawford v. 
 Hamilton, 4 Madd. 251; Crawshay v. Maule. 1 Swanst. 509; 
 Vulliamy v. Noble. 3 Mer. 614; Crosbie v. Guion, 23 Beav. 518. 
 
 (b) Crawford v. Hamilton, 3 Madd. 251. 
 
 (c) Pearce v. Chamberlain, 2 Ves. S. 33. 
 
 1 Smith's Estate, 11 Phila. 131 (1876); Vilas v. Far well, 9 
 Wis. 460 (1859); Burwell v. Cawopd, 2 How. 560 (1844); Good- 
 burn v. Stevens, 5 Gill. 1 (1847); Roberts v. Kelsey, 38 Mich. 
 ■602 (1878). 
 
 2 See p. 590, note 1. 
 
 partners.
 
 6Q± 
 
 DEATH AND ITS CONSEQUENCES AS BETWEEN 
 
 Bk. IV. 
 Chap. 3. Sect. 
 1. 
 
 Jus accres- 
 cendi, &c. 
 
 Position of 
 
 surviving 
 
 partners. 
 
 Actions by- 
 partners 
 against the 
 executors of 
 a deceased 
 partner. 
 
 executors of the deceased represent him for all pur- 
 poses of account, and, unless restrained by special 
 agreement, they have the power, by bringing an action, 
 to have the affairs of the partnership wound up in a 
 manner which is generally ruinous to the other part- 
 ners. 1 
 
 The maxim jus accrescendi inter mercatores locum non 
 habet, has been already examined, and need not be again 
 noticed (d). 
 
 On the death of a partner the surviving members of 
 the firin are the proper persons to get in and pay its 
 debts (e). 2 Bat the debts they get in must be placed 
 to the debit of the late firm, and the debts they pay must 
 be placed to its credit. Whilst, therefore, the executors of 
 the deceased partner are entitled to treat payments made 
 to the survivors by a debtor to the old firm, as made in 
 respect of his debt to it (/), the survivors have aright, 
 if they pay more than their share of the debts of the 
 old firm, to be reimbursed out of the estate of their de- 
 ceased co-partner (g). They are creditors against that 
 estate for what may be due to them, from their deceased 
 partner, on taking the partnership accounts, and they 
 may as creditors bring an action for the administration 
 of his estate (h). If he has no legal personal repre- 
 sentative, the Probate Division of the High Court will 
 grant a limited administration to a nominee of the sur- 
 viving partners, so as to enable them to institute pro- 
 ceedings to have the partnership accounts properly 
 taken (i). 
 
 A surviving partner, if a creditor of the deceased, 
 may sue either in that character for a common admin- 
 istration judgment, or, in the character of a partner, 
 for a judgment for a partnership account, and for pay- 
 
 00 Ante, p. 340. 
 
 (e) Ante, p. 288. 
 
 (f ) Lees v. Laforest, 14 Beav. 250. 
 
 (g) Musson v. May, 3 V. & B. 194. 
 
 (h) See l\obinson v. Alexander, 2 CI. & Fin. 717; Addis v. 
 Knight, 2 Mer. 119. If the deceased has pledged his real estate 
 to his co-partners for a debt due from him to them, they cannot 
 enforce their security in the absence of his legal personal repre- 
 sentative, Scholefield v. Heafield, 7 Sim. 667. 
 
 (i) Cawthorn v. Chalie, 2 Sim. & Stu. 127. The Court of 
 Chancery would not in such a case appoint a person to represent 
 the estate of the deceased. Rowlands v. Evans. 33 Beav. 202. 
 
 1 McKean r. Vick, 108 111. 373 (1884); Hoyt v, Sprague, 103 
 U. S. 613 (1880). 
 
 2 Teigley v. Whitaker, 22 Oh. St. 606 (1872); Tillotson r. Til- 
 lotson, "34 Conn. 335 (1867); Merritt v. Dickey, 38 Mich. 41 
 
 (1878).
 
 THE DECEASED AND THE SURVIVING PARTNERS. 665 
 
 ment of what is due on that account; * and if assets [ * 592] 
 are not admitted, then for a judgment for the adminis- Bk. IV. 
 tration of the estate of the deceased. An action in the clia P- 3 - Sect- 
 alternative may, it is conceived, now be sustained (j ). J 
 
 The legal personal representative of the deceased must 
 be a party if an account of his estate is sought. If 
 there is no such representative, but the assets of the 
 deceased or of the partnership are in danger, and the 
 object of the plaintiff is to have them protected, he 
 should confine his claim for relief accordingly, and not 
 seek for an account (k). 
 
 In the absence of an express agreement to that effect, Xo right to 
 the surviving partners have no right to take the share take the 
 of the deceased partner at a valuation; nor to have it sliare of 
 ascertained in any other manner than by a conversion f ^f^fti Ht 
 of the partnership assets into money by a sale (Z); nor 
 have they any right of preemption (m). Even the 
 good- will of the business, if saleable, must be sold for 
 the benefit of the estate of the deceased; although the 
 surviving partners are under no obligation to retire 
 from business themselves, and cannot, it seems, be pre- 
 vented from recommencing business together in the 
 name of the old firm unless the good-will has been 
 sold (n). 
 
 In ascertaining the share of the deceased, the sur- Accounting 
 viving partners must not only bring into account the for subse- ° 
 assets of the firm which actually existed at the time of quent pro- 
 his death, but also, whatever has been obtained by the fats ' 
 employment of those assets up to the time of the clos- 
 ing of the account ; for so long as profits are made by 
 the employment of the capital of the deceased partner, 
 so long must such profits be accounted for by the sur- 
 viving partners (o). The executors of the deceased 
 have, however, the option of taking interest at 5Z. per 
 cent. (p). 
 
 On the other hand, the surviving partners are enti- Allowance 
 tied, if they cany on the business for the benefit of the for carrying 
 estate of the * deceased partner, to an allowance for so ?\k"?*F es& 
 
 [ * 593 J 
 
 (j) Orel. xvi. r. 7. 
 
 (k) Rawlins i: Lambert, 1 J. & H. 458. Under the new prac- 
 tice a claim for an account would probably be harmless. 
 
 (I) Crawshay v. Collins, 15 Ves. 226, 229; Featherstonhaugh 
 v. Fenwick, 17 Ves. 308. See, as to unsaleable assets and pend- 
 ing contracts, ante, p. 558. And as to the discretion of the Court, 
 ante, p. 556. 
 
 (m) Brown v. Gellatly, 31 Beav. 243. 
 
 (n) See ante, p. 436 et seq. 
 
 (o) See aide, p. 521 et seq. 
 
 (p) Ante, p. 528.
 
 me 
 
 DEATH AND ITS CONSEQUENCES AS BETWEEN 
 
 Bk. IV. 
 Chap. 3. 
 Sect. 1. 
 
 doing; unless they are also his executors, in which case 
 they can make no charge for their trouble (q). 
 
 The right of the executors as against the surviving 
 Position of partners is, simply, to have the share of the deceased 
 the executors ascertained and paid ; but this frequently cannot be done 
 *d th& - d without a general sale and winding up of the partner- 
 ship. 
 
 A bond fide sale, however, by the executors to the 
 surviving partners, can generally be made with safety 
 if no surviving partner is an executor (r). 1 Where, 
 however, a sale of the share of the deceased cannot be 
 effected by private arrangement, the executors must en- 
 force a general sale and winding up for their own safety, 
 unless the persons interested in the estate of the de- 
 ceased assent to the adoption of some other course. 
 And even if they do, it must not be forgotten that the 
 executors may not be able, without risk to themselves, 
 to continue the share of the deceased in the business, 
 and take the profits accruing in respect of it ; for by 
 sharing profits made after the death of the deceased, 
 the executors, although they are only trustees for 
 others, may become liable as partners with the surviv- 
 ing partners ; and may therefore become liable to be 
 adjudicated bankrupt and to be compelled personally 
 to pay debts contracted in carrying on the business (s). 2 
 The position of the executors of a deceased partner is, 
 in fact, often one of considerable hardship and diffi- 
 culty ; if they insist on an immediate winding up of 
 the firm, they may ruin those whom the deceased may 
 have been most anxious to benefit ; whilst if for their 
 advantage the partnership is allowed to go on, the ex- 
 ecutors may run the risk of being ruined themselves. 
 Effect of With a view to obviate this, it is not unusual for one 
 
 { (q) Ibid. 
 
 (r) See infra, \ 3. Coburn v. Collins, 35 Ch. D. 373, shows 
 that the Bills of Sale Acts must not he overlooked in transactions 
 of this kind. 
 
 (s) Formerly they always did incur this liability. See Ex parte 
 Holdsworth, i M, D. & D. 475 ; Wightman v. Town roe, 1 M. & 
 S. 412 ; Ex parte Garland, 10 Ves. 119. But see now Holme v. 
 Hammond, L. R. 7 Ex. 218, noticed ante, p. 32. 
 
 1 Grim's Appeal, 105 Pa. St. 375 (1884); Ludlum v. Bucking- 
 ham, 35 N. J. Eq. 71 (1882); Sage v. Woodin, 66 N. Y. 578 (1876). 
 
 2 Wild v. Davenport, 48 N. J. L. 129 (1886); but if he merely 
 leaves the assets of the estate in the business without engaging 
 personally and actively in the management of the enterprise, he 
 is not responsible to creditors by reason of his connection with 
 the firm. Phillips v. Blatchford, 137 Mass. 510 (1884); Owens 
 v. Mackall, 33 Md. 382 (1870): Wild v. Davenport, 48 N. J. L. 
 129 (1886).
 
 THE DECEASED AND THE SURVIVING PARTNERS. 667 
 
 partner to make bis co-partner his executor ; but tbe Bk. IV. 
 difficulty of tbe executor's position is tbus ratber in- Cna P- 3 - Sect. 
 
 creased tban diminished ; for bis own personal interest J 
 
 as a surviving partner is brought * into direct conflict [ * 594] 
 with his duty as an executor. Everything therefore making a co- 
 whicb be does is liable to question and misconstruction partner an 
 on the part of the persons beneficially entitled to the executor - 
 estate of the deceased ; and he is practically much 
 more fettered in the discharge of his duties, and in the 
 exercise of his rights, than if he had not to act in the 
 double character imposed upon him (t). This will ap- 
 pear in tbe section in which it is proposed to examine 
 the rights of the separate creditors and legatees of the 
 deceased against his executors and his surviving part- 
 ners. 
 
 Where a deceased partners estate is administered Actions for 
 under the order of the Court, his executors, if they act mdeninify- 
 properly, are personally protected from all consequen- ! ng , execu " 
 ces, and no action can be sustained against them in re- 
 spect of what they so do (a). If there are liabilities 
 which will have to be met, the Court will order part of 
 tbe assets to be set aside to meet them when they 
 arise (x). But if the liabilities are remote and contin- 
 gent, and may possibly never arise at all, tbe utmost 
 that the executors can obtain in the shape of indem- 
 nity, in addition to that afforded by the orders of the 
 Court itself, is a covenant from the testator's legatees 
 or next of kin (y). 
 
 No succession duty is payable by surviving partners Succession 
 on the death of a member of tbe firm, even although duty, 
 they may benefit thereby (z). 
 
 Section II. — Consequences as Regakds Joint Creditors. 
 1. With reference to what occurred before death. 
 
 The position of tbe executors of a deceased partner, Position of 
 
 with reference to the creditors of the firm, has, to a executors of 
 ' ' deceased 
 
 {t) See some general remarks on this subject in Huttonu. Eos- partner as 
 siter, 7 De. G. M. & G. 12. regards 
 
 (u) Waller v. Barrett, 24 Beav. 413. creditors of 
 
 (x) Fletcher v. Stevenson, 3 Ha. 360 ; Brewer v. Pocock, 23 the firm. 
 Beav. 310. 
 
 (y) See Dean v. Allen, 20 Beav. 1 ; Waller v. Barrett, 24 ib. 
 413 ; Addams v. Ferick, 26 Beav. 384 ; Bennet v. Lytton, 2 J. & 
 H. 155. 
 
 (z) Oldfield v. Preston, 3 De G. F. & J. 398. Compare Cross- 
 man v. Tbe Queen, 18 Q. B. D. 256.
 
 668 
 
 DEATH AND ITS CONSEQUENCES 
 
 [*595] 
 
 Bk. IV. considerable extent, been already ascertained. For it 
 
 Chap. 3. Sect. ^ a9 i-, een se en : — 
 
 * 1. That, notwithstanding the death of a partner, his 
 estate is liable to the creditors of the firm. ; and not 
 only in respect of debts contracted in his lifetime, in 
 the ordinary way of business, but also in respect of 
 debts arising from breaches of trust committed in his 
 lifetime by himself, or his co-partners, and imputable 
 to the firm (a); 
 
 2. That this liability cannot be got rid of by any ar- 
 rangement between the executors of the deceased and 
 the surviving partners ; and that notwithstanding sub- 
 sequent dealings between the creditors and the surviv- 
 ing partners, the liability of the executors continues, 
 until it can be shown that the creditors have abandoned 
 their right to obtain payment from the estate of the 
 deceased, or that their demands have, in fact, been paid 
 or discharged (6). 
 
 3. That this liability does not extend to ordinary 
 torts, for as to them actio pey^sonalis moritur cum per- 
 sona (c), 
 
 These propositions have been already so fully illus- 
 trated in various portions of the present treatise, that 
 it is unnecessary here to do more than collect the cases 
 establishing them. 
 
 Summary ot 
 
 cases. 
 
 Estate of 1. Cases in which by death alone a partner's liability 
 
 deceased )i as been extinguished : — 
 
 discharged. 
 
 Sumner v. Powell, 2 Mer. 30, and Turn. & R. 423 {ante, p. 
 196). 
 
 Clarke v. Bickers, 14 Sim. 639 {ante, p. 196). 
 
 Wilmer v. Currey, 2 De G. & Sm. 347 (ante, p. 197). 
 
 Hill's case, 20 Ey. 585. Joint holders of shares. 
 
 Estate of 2. Cases in which the estate of a deceased partner 
 
 deceased not has been held liable (d) ; — 
 
 discharged. 
 
 id) Ante, p. 194 ct seq, 
 
 (b) Ante, p. 239 ct seq. 
 
 (c) Ante, p. 198 el seq. The Act 3 & 4 Wm. 4, c. 42, \ 2, gives 
 a remedy against the executors of a person who commits a tort 
 within six months of his death, provided such tort effects the 
 real or personal property of the person injured. See Phillips v. 
 Homfray, 11 App. Ca. 466, and 24 Ch. D. 439. As to frauds, see 
 New Sombrero Phosphate Co. v. Erlanger, 3 App. Ca, 1218, and 
 5 Ch. D. 73 ; Peek v. Gurney, L. R. 6 Ho. Lo. 377, and 13 Eq. 
 79 ; Davidson v. Tulloch, 3 McQu. 783 ; Twycross v. Grant, 4 C. 
 P. D. 40 ; and as to slander ol title to trade marks, Hatchard v. 
 Mege, 18 Q. B. D. 771. 
 
 (d) See the celebrated judgment in Devaynes v. Noble, 1 Mer. 
 539, and 2 R. & M. 495. '
 
 AS REGARDS JOINT CREDITORS. 669 
 
 * Liability in respect of contracts. [ * 596] 
 
 Beresford v. Browning, 20 Eq. 564 {ante, p. 194). Bk. IV. 
 
 Lane v. Williams, 2 Vern. 292. Chap. 3. Sect. 
 
 o 
 Simpson v. Vaughan, 2 Atk. 31. _^ 
 
 Darivent v. PFaZfore, ib. 510. 
 
 Clavering v. Wcstley, 3 P. W. 402. 
 
 £/s/<op v. Church, 2 Ves. S. 100 and 371 (arete, p. 194). 
 
 Jacomb v. Harwood, ib. 265. 
 
 i?Mrre v. i?«r», 3 Ves. 573 (arete, p. 195). 
 
 Thomas v. Frazer, 3 Ves. 399. . 
 
 Or/- v. CTase, 1 Mer. 729. 
 
 flarris v. Farwell, 13 Beav. 403. 
 
 Devaynes v. Voo/e, 1 Mer. 539, and 2 E. & M. 495. 
 
 Wilkinson v. Henderson, 1 M. & K. 583. 
 
 Two/ye v. Jackson, 2 Y. & C. Ex. 553. 
 
 fltBs v. J/eifae, 9 Ha. 297. 
 
 £Ve« v. Beckwith, 3 Jur. N. S. 31 M. R. (pas<, p. 600). 
 
 Cheetham v. CVooA:. McCl. & Y. 307. 
 
 Liability in respect to frauds and breaches of trust. 
 
 New Sombrero Phosphate v. Erlanger, 5 Ch. D. 73, and 3 App. 
 
 Ca. 1218. 
 Blair v. Bromley, 2 Ph. 354 (ante, p. 153). 
 Server v. Zee, 6 Beav. 324 (arete, p. 153). 
 Vulliamy v. iVoWe, 3 Mer. 619. 
 Devayney v. Noble. 
 
 Clayton's case, 1 Mer. 576 (arete, pp. 152, 236). 
 
 Baring's case, ib. 612 (arete, p. 152). 
 
 JF«rtfVs case, ib. 624. 
 
 3. Cases in which the estate of a deceased partner Estate of 
 has been held liable, notwithstanding dealings between deceased not 
 the creditors of the firm and the surviving partners : — discharged 
 
 a * by what has 
 
 Devaynes v. Noble. occurred 
 
 Sleech's case, 1 Mer. 539. s " lc ;t Ms 
 
 ' death. 
 
 Clayton's case, ib. 579 {ante, pp. 152, 236). 
 
 Palmer's case, ib. 623. 
 Braithwaitc v. Britain, 1 Keen, 206. 
 
 Wmter v. Trerees, 4 M. & Cr. 101 (a very important case). 
 Harris v. Farwell, 15 Beav. 31 (ante, p. 251). 
 Daniel v. Cross, 3 Ves. 277. 
 
 Jacomb v. Harwood, 2 Ves. S. 265. Estate of 
 
 ite Hodgson, 31 Ch. D. 177. deceased 
 
 discharged 
 
 4. Cases m which the estate of a deceased partner l,v wll;,t nas 
 has been held discharged by what has taken place be ^L 1 ^ 
 ftoeen the creditor and the surviving partners : — death.
 
 670 
 
 DEATH AND ITS CONSEQUENCES 
 
 \ * 597] 
 Bk. IV. 
 Chap. 3. Sect. 
 o 
 
 Statute of 
 Limitations. 
 
 Right of 
 
 creditor of 
 firm to be 
 paid ont of 
 the estate of 
 a deceased 
 partner. 
 
 * By general dealings. 
 Oakley v. Pasheller, 10 Bli. 548, and 4 CI. and Fin. 207 (ante, 
 
 p251). 
 
 Brown v. Gordon, 16 Beav. 302 (ante, p. 252). 
 Wilson v. Lloyd, 16 Eq. 60, which cannot, however, be re- 
 lied on (see ante, pp. 239, 251). 
 
 By payment. 
 
 Deraynes v. Noble. 
 
 Clayton's case, 1 Mer. 572 (ante, p. 228). 
 
 Merrimanv. Ward, 1 J. & H. 371. This case is important 
 as showing that where a debt of a deceased partner has 
 been discharged by the application of the rule in Clayton 's 
 case, it is not competent for his executors to revive such 
 a debt against his estate. 
 
 The estate of a deceased partner may be discharged 
 by the statute of limitations ; and now, by the Mercan- 
 tile law amendment act payments by the surviving 
 partners will not keep alive the creditor's claim against 
 the executors of the deceased (e). The effect in equity 
 of such payments before the passing of the act in ques- 
 tion was by no means clearly settled (/) ;' but whatever 
 doubt there may formerly have been upon the subject, 
 it has been long settled that a creditor of the firm can 
 proceed against the estate of a deceased partner, with- 
 out first having recourse to the surviving partners, and 
 without reference to the state of the accounts between 
 them and the deceased (g)- 2 But it is necessary to 
 make the surviving partners parties to the action, for 
 they are interested in the issues raised between him 
 and the executors (h). 3 
 
 (e) 19 & 20 Vict. c. 97, \ 14. See Thompson v. Waithman, 3 
 Drew. 628, which, although wrong as regards the retrospective 
 operation of the act (Jackson v. Wooley, 8 E. & B. 778), is in 
 other respects correct, ante, p. 263. 
 
 (/) Compare Winter v. Innes. 4 M. & Cr. 101, and Braithwaite 
 v. Britain, 1 Keen, 206, with Way v. Bassett, 5 Ha. 55, and 
 Brown v. Gordon, 16 Beav. 302. See, also, ante, pp. 261, 262. 
 
 (g) Ee Hodson, 31 Ch. D. 177 ; Be McEae, 25 ib. 16 ; Wilkin- 
 son v. Henderson, 1 M. & K. 582 ; Devaynes v. Noble, 2 R. & M. 
 495 ; Thorpe r. Jackson, 2 Y. & C. Ex. 553. See ante, p. 195. 
 
 (h) See, in addition to the cases in the last note, Hills r. McRae, 
 
 1 An acknowledgement by the surviving partner of a firm debt 
 whereon action is barred by the Statute of Limitations, will 
 not revive it as to the estate of the deceased partner. Espy v. 
 Comer, 76 Ala. 501 (1884) ; Bloodgood v. Bruen, 8 N. Y. 362 (1853). 
 
 2 Blair v. Wood, 108 Pa. St. 278 (1885); Simpson v. Schulte, 21 
 Mo. App. 639 (1886); Sampson v. Shaw, 101 Mass. 145 (1869); 
 Silverman v. Chase, 90 111. 37 (1878). 
 
 3 Hamersley v. Lambert, 2 Johns. Ch. 508 (1817) ; Dowell v.
 
 AS REGARDS JOINT CREDITORS. 671 
 
 * But, as pointed out in an earlier chapter (Bk. II. [ *598] 
 c. 2, § 1), a creditor of a firm is not in the same posi- Bk. IV. 
 tion as a separate creditor as regards the estate of a £ ha P- 3 - Sect - 
 
 deceased partner. A creditor of the firm, unless he is J 
 
 also a separate creditor of the deceased partner, is not Creditor's 
 entitled to the ordinary judgment for the administration ^mmistra- 
 of the estate of the deceased, and cannot compete with tion of 
 an ordinary separate creditor in the administration of deceased 
 such estate (*). The right of the creditor of the firm partner's 
 is to have the separate estate of the deceased ascer- estate - 
 tained and applied in payment of his separate debts and 
 liabilities, and to have the surplus applied in payment 
 of his joint liabilities (k). If an action has already 
 been brought for the administration of the estate of the 
 deceased, a creditor of the firm can obtain an order to 
 the above effect without being compelled to bring a 
 separate action himself (I). If necessary he can bring 
 an action himself (ra); but it is doubtful whether he 
 can proceed by an originating summons in cham- 
 bers (n). 
 
 Since the Judicature acts a creditor can, it is appre- 
 hended, sue both the surviving partners and the execu- 
 tors of the deceased partner, and obtain judgment 
 against them all ; the judgment against the executors 
 being, however, of course limited to administration in 
 due course unless assets are admitted. But to work out 
 the judgment for administration, the action, if not 
 brought in the Chancery Division, would have to be 
 transferred to it. 
 
 As will be seen hereafter, it is a rule in bankruptcy EigW of 
 
 . — creditors of 
 
 9 Ha. 297 : Devaynes r. Noble, Sleech's case, 1 Mer. 539 ; Steph- 
 enson v. Chiswell, 3 Ves. 566. In Rice v. Gordon, 11 Beav. 265, 
 one of the cases ol this class, the debt due to the plaintiff arose 
 out of a transaction in which he had engaged as surety. 
 
 (i) Be McRae, 25 Ch. D. 16 ; Re, Hodson, 31, ib. 177 ; Re Bar- 
 nard, 32 ib. 447 ; Kendall v. Hamilton, 4 App. Ca. 504, and 3 C. 
 P. D. 403. Compare Burn v. Burn, 3 Ves. 573, where a bond 
 creditor of the firm obtained a payment as if he had been a sepa- 
 rate specialty creditor of the deceased, the bond being treated 
 as joint and several. 
 
 (ft) Ibid., see the decree in Hills v. McRae, 9 Ha. 297, and 
 infra. 
 
 (1) Cowell V. Sikes, 2 Russ. 191 ; Gray v. Chiswell, 9 Ves. 118. 
 In the former there was a petition, but this is now unnecessary. 
 
 (mi) Hills v. McRae, 9 Ha. 297, is an instance of a claim ; but 
 claims are now abolished. 
 
 (hi .Re Barnard, 32 Ch. D. 447 ; as to the conduct of proceed- 
 ings where there are two actions, one by a joint, and another by 
 a separate, creditor, see Re McRae, 25 Ch. D. 16. 
 
 Mitchell, 105 U. S. 430 (1881); Garrard v. Dawson, 49 Ga. 434 
 
 (1873).
 
 672 
 
 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. 
 Chap. '3. Sect. 
 •> 
 
 [*599] 
 firm com- 
 pared with 
 the rights of 
 the separate 
 creditors of 
 the deceased. 
 
 that the debts of a firm shall be paid out of the assets 
 of the firm, and the separate debt of each partner out 
 of his separate estate : and in administering the in- 
 solvent estate of a deceased partner * the same rules 
 have now to be adopted (o). 1 Accordingly the separate 
 
 (o) Jud. Act, 1875. \ 10. Even before, they were adopted to 
 some extent. See Lodge v. Prichard, 1 De G. J. & Sm. 610. 
 See below, p. 628, note (/). 
 
 1 There is no longer any general bankrupt law in force 
 throughout the United States, but whenever a fund is brought 
 into a court of equity for distribution, whether that court be a 
 Probate Court or a court clothed by statute with such equitable 
 powers as to enable it to administer the estate of an insolvent, 
 certain principles are applied which had their origin in the prac- 
 tice of the English courts under the bankrupt laws. 
 
 The general rule governing the distribution of the estate of a 
 firm or that of the individual partner is that the joint estate 
 shall be applied primarily to the payment of the claims of joint 
 creditors and the separate estate shall be first applied to the 
 satisfaction of claims upon the individual partner. This is al- 
 most everywhere adopted. Harris v. Peabody, 73 Me. 262 (1881); 
 Weaver v. Weaver, 46 N. H. 188 (1865); Bush v. Clark, 127 
 Mass. Ill (1879); Meech v. Allen, 17 N. Y. 300 (1853); Davis v. 
 Howell, 33 N. J. Eq. 72 (1880); Hartman's Appeal, 107 Pa. St. 
 327(1884); Bailey v. Kennedy, 2 Del. Ch. 12 (1835); McCulloh 
 v. Dashiel, 1 Hart & G. 96 (1827); Gordon v. Cannon, 18 Gratt. 
 387 (1868); Woddrop v. Price, 3 Desaus, 203 (1811); Keese v. 
 Coleman, 72 Ga. 658 (1884); Evans v. Winston, 74 Ala. 349 
 (1883); Schmidlapp r. Currie, 55 Miss. 597 (1878); Forbes v. 
 Scannell, 13Cal. 242 (1859); Doggett v. Dill, 108111. 560 (1884); 
 Fullam i>. Abrams, 29 Kan. 725(1883). In Kentucky it has been 
 held that where the firm is insolvent and there are joint and 
 separate creditors and a joint and separate estate, the separate 
 creditors are entitled to receive from the separate estate as large 
 a percentage of their claim as has been received out of the firm's 
 assets by the joint creditors, and that the balance of the separate 
 estate shall be distributed among both classes of creditors pro- 
 portionately to the balance due each claimant. Bank v. Keney, 
 79 Ky. 133 (1880). This rule at one time prevailed in Pennsyl- 
 vania. Bell v. Newman, 5 S. & R. 78 (1819). In Camp v. Grant, 
 21 Conn. 41 (1851), no difference was made between joint and 
 separate creditors in the distribution of a decedent's estate. The 
 joint debtors of two partners whose claim did not arise in any 
 partnership transaction have no right to share in the firm's assets. 
 Hulse's Estate, 11 W. N. C. 499 (1882). Generally speaking, 
 the separate creditors lose their priority over joint creditors in 
 the distribution of the separate estate if there is no joint estate 
 and no living solvent partner. Strauss v. Kerngood, 21 Gratt. 
 584 (1871); Vanwagner v. Chapman, 29 Ala., 172 (1856); Harris 
 v. Peabody, 73 Me. 262 (1881); McCulloh v. Dashiel. 1 Har. & 
 G. 96 (1827); Brock v. Bateman, 25 Oh. St. 508 (1874); Pahlman 
 ft>. Graves, 25 111. 405 (1861); D'Invillier's Est., 13 Phila. 362 
 (1880). A partner or his representatives, to whom his firm owes 
 money, cannot claim against the firm estate with the joint cred- 
 itors. Bennett's Est., 13 Phila., 331 (1880); Houseal's Appeal, 
 45 Pa. St. 484 (1863); Amsinck v. Bear, 22 Wall. 395(1874); un- 
 less the claim of the partner's estate arises out of some fraudu-
 
 AS REGARDS JOINT CREDITORS. 673 
 
 estate of a deceased partner must be applied in pay- Bk. IV. 
 ment of all principle and interest due to his separate Chap. 3. Sect. 
 
 creditors before any part of such, estate can be touched J 
 
 by the creditors of the firm (p); and this rule applies 
 even although the surviving partners may be bank- 
 rupt (q). If, indeed, there is not and never was, since 
 the death of the deceased, any joint estate whatever, 
 and no solvent partner, it seems that the joint creditors 
 may rank pari passu with the separate creditors of the 
 deceased, against his separate estate (r). 
 
 Again, the rule which in bankruptcy precludes one 
 partner from proving against the separate estate of his 
 
 (p) See Lodge v. Prichard, 1 De G. J. & Sm. 610, and 4 Giff. 
 294 ; Whittingstall v. Grover, 10 W. E. 53; Gray v Chiswell, 
 9 Ves. 118; Addis v. Knight, 2 Mer. 117; Croft v. Pyke, 3 P. 
 W. 182. As to interest after the administration order, see Ex 
 parte Findlay, 17 Ch. D. 334, and § 10 of the Jud. Act, 1875. 
 
 (q) Lodge v. Prichard, and Whittingstall v. Grover, ubi sup. 
 See, as to winding up the estate of a deceased partner in bank- 
 ruptcy, where the surviving partners are bankrupt, Ex parte 
 Gordon, 8 Ch. 555 ; Morley v. White, ib. 214. 
 
 (r) See Cowell v. Sikes, 2 Puss. 191 ; and Lodge v. Prichard, 
 ubi sup. Qu. if the Jud. Act, § 10, has introduced the other ex- 
 ceptions recognized in bankruptcy in cases of fraud and distinct 
 trades, see infra, Bk. IV. c. 4, § 4. See below, p. 628, note (/). 
 
 lent conversion of a portion thereof to the partnership's use. See 
 Rodgers v. Meranda, 7 Oh. St. 179 (1857); or unless the claim is 
 one due another firm of which the partner is a member or is for 
 a debt contracted to him when separately carrying on a distinct 
 business from that in which the insolvent firm was engaged. 
 
 Houseal's Appeal, 45 Pa. St. 484 ( ); Buckner v. Caleote, 28 
 
 Miss. 432 (1855). 
 
 Neither can the firm claim against the separate estate of an 
 individual partner for a debt owing it until his separate credit- 
 ors have been paid in full. Amsinck v. Bean, 22 Wall, 395 
 (1874); Somerset Potters' Works v. Mindt, 10 Cush. 592 (1852); 
 but if the debt was incurred to the firm fraudulently, it can 
 claim ; sec In re Hamilton, 1 Fed. Rep. 800 (1880). 
 
 A solvent partner cannot claim against his co-partner's sepa- 
 rate estate along with the )oint creditors of the firm. Hill v. 
 Beach, 12 X. J. Eq. 31 (1855); Amsinck v. Bean, 22 Wall. 395 
 (1874). If he has paid the firm debts, however, he can prove 
 against it in competition with the separate creditors of his part- 
 ner. Scott's Appeal, 88 Pa. St. 173 (1878); Hill v. Beach. 12 N. 
 J. Eq. 31 (1855). 
 
 If a joint creditor has secured a lien upon the separate estate 
 of a partner, he can enforce it despite the rule of distribution. 
 Straus v. Kerngood, 21 Gratt. 584 (1871); Preston v. Colby, 117 
 111. 477 (1886); Cummings' Appeal, 25 Pa. St. 268 (1855). And if a 
 joint creditor has acquired a security charged on the separate 
 estate, or a separate creditor a similar hold upon the partnership 
 property, he is at liberty in either case to realize on his security 
 or prove his debt. Wilder v. Keeler, :'» Paige, 167 (1832); Bank 
 v. Jefferson, 138 Mass. Ill (1884); Roberts v. Oldham, 63 N. Ca. 
 297 (1869). 
 
 * 20 LAW OF PARTNERSHIP.
 
 (>74 
 
 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. 
 
 Chap. 3. Sect. 
 2. 
 
 Share in 
 firin not 
 available for 
 separate 
 creditors till 
 joint credi- 
 tors are 
 paid. 
 
 Action bv 
 
 [ * 600] 
 
 joint credi- 
 tors. 
 Brett v. 
 Beckwith. 
 
 Judgment in 
 action by 
 creditors of 
 firm against 
 the executor 
 of a deceased 
 partner. 
 
 co-partner, whilst the joint debts are unpaid, also ap- 
 pliqs in administering the estate of a deceased part- 
 ner (s). 
 
 The separate estate thus primarily liable to the sep- 
 arate creditors of the deceased, does not include his 
 share in the partnership assets ; for he has no share in 
 those assets, except subject to the payment of the debts 
 of the firm. Whilst, therefore, the separate creditors 
 of the deceased are entitled to be first paid out of his 
 separate estate, the creditors of the firm are entitled to 
 be first paid out of its assets, and, consequently, to be 
 paid in full before the share of the deceased in those 
 assets becomes available for the payment of his separate 
 creditors (t). 
 
 Actions by creditors of the firm to obtain payment 
 out of the * assets of a deceased partner, are well illus- 
 trated by Brett v. Beckwith (u). In that case there had 
 been two partners, Young and Beckwith. Beckwith 
 was dead, and Young was bankrupt. A bill was filed 
 by the creditor of the late firm against the executors of 
 Beckwith and the assignees of Young, praying for a 
 declaration that Beckwith's real and personal estate 
 was liable in equity, after satisfying his separate debts, 
 to the joint debts of the firm ; for an account of such 
 debts at Beckwith's death ; for an account of the joint 
 assets received by his executors and Young's assignee's; 
 for an account of Beckwith's separate debts ; that his 
 real and personal estate might be applied, first in pay- 
 ment of his separate debts, and then in payment of the 
 joint debts ; and that a receiver might be appointed to 
 get in the outstanding joint, assets. The Court held 
 that the plaintiff was clearly entitled, as a creditor of 
 Beckwith, to have his estate fully administered ; and 
 for that purpose to have an account taken of his sepa- 
 rate estate ; and to have the accounts between Beck- 
 with's executors and Young's assignees also taken, in 
 order to ascertain of what the joint estate consisted ; 
 and a decree was accordingly made for taking such ac- 
 counts. 
 
 When a creditor of the firm proceeds against the as- 
 sets of a deceased partner, the form of the judgment 
 which is given is in substance as follows (x): — 
 
 (s) Lacey v. Hill, 8 Ch. 441. Compare Ex parte Topping, 4 
 De G. J. & Sm. 551. 
 
 (t) See Ridgway v. Clare, 19 Beav. Ill ; Hills v. McRae, 9 Ha. 
 297. 
 ~ («) 3 Jur. N. S. 31. 
 
 (x) See Hills v. McRae, 9 Ha. 297 ; Harris v. Farwell. 13 Beav. 
 407 ; Rice v. Gordon, 11 Beav. 271.
 
 AS REGARDS JOINT CREDITORS. 675 
 
 1. It is declared that all persons who are creditors of Bk. IV. 
 
 the deceased, are entitled to the benefit of the'judg- C" a P- 3- Sect. 
 
 ment. 1 r 
 
 2. It is declared that the surplus of the estate of the 
 deceased, after satisfying his funeral and testamentary 
 expenses and separate debts, was liable at the time of 
 his death to the joint debts of the firm, but without 
 prejudice to the liability of the surviving partner, as 
 between himself and the estate of the deceased. 
 
 3. Ad account is directed to be taken of the funeral 
 and testamentary expenses and separate debts of the 
 deceased, and of the debts of the firm. If the surviving 
 partner is not a party to the action, liberty is given him 
 to attend in the prosecution of this last inquiry. 
 
 * 4. An account is directed to be taken of the personal 
 estate of the deceased. [ * 601 ] 
 
 5. It is ordered that his personal estate be applied, 
 in the first instance, in the payment of his separate 
 debts and funeral expenses, in a due course of admini- 
 stration, and then in payment of the debts of the firm. 
 
 6. And if the personal estate of the deceased is in- 
 sufficient for the purposes of the action, inquiries are 
 ordered to be made for the purpose of ascertaining the 
 real estate to which the deceased was entitled. 
 
 The judgment will, if necessary, direct inquiries 
 whether the creditors of the firm continued to deal with 
 the surviving partners, and what sums have been paid 
 by them to such creditors, .and whether the creditors 
 have, by their dealings with the surviving part- 
 ners, released the estate of the deceased from the pay- 
 ment of their respective debts (y). 
 
 Additional inquiries will be directed if necessary, 
 and as the necessity for them appears (z). 
 
 No directions are usually given for the purpose of 
 keeping distinct the joint and the separate estates; but, 
 if necessary, it is conceived that such directions would 
 be given in order that the principles upon which the 
 judgment is framed might be properly carried out (a). 
 
 In Ridgivay v. Clare (b) two partners, A. and B., had Ridg^ay v. 
 died. A suit was instituted by a separate creditor of Clare. 
 
 (y) See the decree in Devaynes v. Noble, 1 Mer. 530, and in 
 Fisher v. Farrington, Seton on Decrees, ed. 4, p. 1210. 
 
 (z) Barber v. Mackrell, 12 Ch. D. 534, as to money fraudu- 
 lently withdrawn by one partner from the assets of the firm. 
 
 (a) See Rice r. Gordon, 11 Beav. 271; Ridgway v. Clare, 19 
 Beav. Ill; "Woolley v. Gordon, Tarul. 11; Paynter v. Houston. 3 
 Mer. 297. 
 
 (6) Ridgway v. Clare, l'J Beav. 111.
 
 676 
 
 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. 
 
 Chap. 3. Sect. 
 2. 
 
 [*602] 
 
 Secured 
 creditors. 
 
 Creditors' 
 right to 
 proceed both 
 against the 
 survivors 
 and against 
 the estate of 
 the deceased, 
 Before the 
 Judicature 
 Acts. 
 
 A. for the administration of his estate; a suit was also 
 instituted by a separate creditor of B. for the adminis- 
 tration of his estate; a third suit was instituted by a 
 joint creditor of A. and B. for payment of a debt due 
 from both out of both their estates; and a fourth suit 
 was instituted by the representatives of A. against the 
 representatives of B. for taking the accounts of the 
 partnership. The plaintiff in the third suit was found 
 to be a creditor * of both A. and B., but he was held 
 by the Master not to be entitled to rank as a separate 
 creditor of A. On an appeal from the decision of the 
 Master, the Court thought it desirable that the sepa- 
 rate creditors should be ascertained, but reserved the 
 question whether the joint creditor was or was not en- 
 titled to rank as one of A.'s separate creditors. The 
 judgment, however, is instructive, as it states the man- 
 ner in which the Court administers the assets of a de- 
 ceased partner, and pays each class of creditors. It 
 appears that when there are assets sufficient to pay all 
 the creditors, the estate of the deceased forms one fund, 
 out of which the joint and separate creditors are paid 
 pari passu; but that they, and the funds for their pay- 
 ment, are distinguished when the assets are in any way 
 deficient. 
 
 A creditor who holds a security, cannot retain his 
 security and proves for his whole debt, nor realise his 
 security and prove for more than the balance then re- 
 maining due to him; if he proves for his whole debt 
 he must give up his security as in bankruptcy. The 
 rule in chancery was formerly otherwise (c). This, 
 however, was altered by the Judicature Act, 1875 (d). 
 
 The creditors of a partnership having, on the death 
 of one of the partners, a right to obtain payment from 
 the surviving partners, and out of the assets of the de- 
 ceased partner, the question arises whether the cred- 
 itors can enforce both these rights, or whether they can 
 only avail themselves of one of them. 
 
 Before the Judicature Acts, if the creditors proceed- 
 ed at law against the surviving partners, but did not 
 obtain satisfaction, they could afterwards proceed in 
 equity against the estate of the deceased partner (e). 
 So if the surviving partners became bankrupt, and the 
 creditors of the firm proved against their estate and re- 
 
 (c) Bonser v. Cox, 6 Beav. 84; Mason ?>. Bogg, 2 M. & Cr. 443; 
 Kellock's case, 3 Ch. 769. 
 
 (d) § 10; the act only applies to the estates of persons dying 
 after its commencement. 
 
 (e) Jacomb v. Harwood, 2 Ves. S. 265.
 
 AS REGARDS JOINT CREDITORS. GT7 
 
 ceived i dividend, they migbt nevertheless afterwards Bk. IV. 
 proceed against the estate of the deceased (/). Again, C Qa P- •'• SfcCt - 
 
 *as the creditors of the firm conld not in equity obtain _1 
 
 any decree for payment by the surviving partners, but [ *G03] 
 only a decree for payment out of the assets of the de- 
 ceased partner, there was no reason wby, even after a 
 decree for the administration of the estate of the de- 
 ceased, the creditors in question should not also pro- 
 ceed at law against the surviving partners. If, how- 
 ever, it could be shown that injustice would be pro- 
 duced by allowing the creditor to pursue both his rem- 
 edies at once, the Court would perhaps have compelled 
 him to elect between them, or have restrained him from 
 proceeding at law (g). 
 
 The Judicature Acts h ave so far altered the practice since the 
 as to allow one action to be brought against the sur- Judicature 
 viving partners and the legal personal representatives Acts - 
 of the deceased; and the creditor will practically obtain 
 payment from the survivors or the estate as may be 
 most convenieat; but if the estate of the deceased is 
 not sufficient to pay his separate creditors, the creditors 
 of the firm will not be able to compete with them, but 
 will have to look to the surviving partners (h). A judg- 
 ment, however, against the surviving partners is no bar 
 to an action against the executors of a deceased part- 
 ner; nor is a judgment against the latter a bar to an 
 action against the former (i), unless the personal lia- 
 bility of the surviving partners was sought to be en- 
 forced in the action against the executors. 
 
 If more than one partner is dead, a creditor of the One action 
 firm may, in one action obtain a judgment against the against the 
 estates of all of the deceased partners. several 
 
 In a case before the late Vice-Chancellor Shadwell deceased 
 there was a partnership of seven persons, A., B., C, partners. 
 &c, and another partnership, A. & B., composed of two Brown v. 
 of the members of the first. A. and C were dead. The Douglas, 
 surviving partners were bankrupt. The plaintiff, who 
 was a creditor of both firms, * filed a bill on behalf of [ * 604] 
 
 (/) Heath v. Percival, 1 P. W. 682; Devaynes v. Noble 
 (Sleech's case), 1 Mer. 539. 
 
 {g) See, as to the considerations -which guided the Court, Ex 
 parte Kendall, 17 Ves. 525 and 526. If one partner becomes 
 bankrupt, and a creditor of the firm proves against his estate, he 
 cannot afterwards sue the bankrupt and his co-partners jointly. 
 See Bradley v. Millar, 1 Rose, 273. The subject of election in 
 bankruptcy will be examined hereafter. 
 
 (It) See ante, p. 598, and Jud. Act, 1875, I 10. 
 
 (i) Re Hodgson, 31 Ch. D. 177; Jacomb v. Harwood, 2 Yes S. 
 265; Liverpool Borough Bank v. Walker, 4 De G. & J. 24. See 
 ante, Bk. II. c. 2 § 1.
 
 678 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. ^ himself and all other the creditors of A., and on behalf 
 Chap. 3. Sect. Q £ h.j mse if anc \ a \i other the creditors of C, against the real 
 and personal representatives of A., tht> personal repre- 
 sentatives of C, and the assignees of the bankrupts. 
 The bill prayed that an account might be taken of what 
 was due from A. and C. respectively to the plaintiff, 
 and their other joint and separate creditors, and of the 
 personal estates of A. and C., and of the real estate of 
 A., and that the personal estates of A. and C. and the 
 real estate of A. might be applied in payment of their 
 respective debts, as well joint as separate. This bill 
 was demurred to on the ground of multifariousness, 
 but the Vice- Chancellor overruled the demurrer, and 
 held the frame of the suit to be proper in point of 
 form (k). 
 
 2. With reference to what has occurred since death. 
 
 Having now examined the position of the executors 
 of a deceased partner, with reference to the creditors of 
 the firm, and in respect of debts existing at the time of 
 the death of the deceased, it is proposed to consider 
 the liability of the assets of the deceased, and of his 
 executors, in respect of what may have taken place since 
 his death. 
 Personal With respect to the executors themselves, it is clear 
 
 liability of that if the executor of a deceased partner carries on the 
 executors. partnership business, the executor becomes personally 
 liable to third parties as if he were a partner in his 
 own right Z); 1 and if the executor accepts or indorses 
 bills of exchange or promissory notes either in his own 
 name as executor {in), or in the name in which the de- 
 ceased carried on business (n), the executor will be 
 personally liable to be sued on such bills or notes. 
 [ *605] Whether *in such cases the executor is entitled to be 
 
 (k) See Brown v. Douglas, 11 Sim. 283; Brown v. Weatherby, 
 12 Sim. 6. Since the Judicature acts it is a mere question of 
 convenience whether there shall be one action or more. See Ord. 
 XVI. rr. 4, 16, and Ord. XVIII. rr. 1 and 6. 
 
 (I) See Wightman v. Townroe, 1 M. & S. 412; Labouchere v. 
 Tupper, 11 Moo. P. C. 198; Ex parte Garland, 10 Ves. 119; Ex 
 parte Holdsworth, 1 M. D. & D. 475. As to his liability to cred- 
 itors by merely sharing profits with the surviving partners, see 
 Holme v. Hammond, L. R. 7 Ex. 218, ante, p. 32. See as to the 
 executors of sole traders. Be Evans, 34 Ch. D. 597. 
 
 (in) Liverpool Borough Bank v. Walker, 4 De G. & J. 24. 
 
 (n) Lucas v. Williams, 3 Giff. 150. 
 
 1 Wild v. Davenport, 48 N. J. L. 129 (1886); Phillips v. Blatch- 
 ford, 137 Mass. 510 (1884); Richter v. Poppenhausen, 42 N. Y. 
 373 (1870).
 
 AS REGARDS JOINT CREDITORS. 679 
 
 indemnified out of the assets of the deceased is alto- Bk. IV. 
 gether another question ; and depends upon whether Cha P- 3. Sect. 
 
 the executor has carried on the business pursuant to the J 
 
 will of the deceased, or the directions of those benefi- 
 cially interested in his estate. 
 
 With respect to the direct liability of the assets of Liability of 
 the deceased to creditors, it may be taken as a general estate ' °* de- 
 proposition, that the estate of a deceased partner is not partner tor 
 liable to third parties for what may be done after his what occurs 
 decease by the surviving partners ;' and on that ground after his 
 it has been held that tbey cannot be restrained at the death, 
 suit of the executors of the deceased from continuing 
 to carry on the business of the late firm in the old 
 name (o). 
 
 In the great case of Devaynes v. Noble (p), some bills Devaynes v. 
 deposited with a firm of bankers were, after the death Noble. 
 of one of the partners, misapplied by the surviving 
 partners, and an attempt was made to obtain out of the 
 estate of the deceased the value of the bills so misap- 
 plied. But the attempt was not successful ; Sir Wm. 
 Grant observing — 
 
 "If there be no remedy at law against the executors of Mr. 
 Devaynes, I am at a loss to understand the equity on which this 
 Court is to interpose to make good the loss against Mr. Devaynes' 
 estate. It has not been incurred by anything that he did or ne- 
 glected to do. The bills were safely kept as long as he had any- 
 thing to do with them. From the act of placing them in the 
 custody of a partnership, it followed that upon the death of one 
 of the partners they would fall into the possession of the surviv- 
 ing partners. Mr. Houlton himself, therefore, has virtually 
 placed them there. Mr. Devaynes' executors could not take them 
 away ; Mr. Devaynes could not direct his executors to take them 
 away ; and though Mr. Devaynes has neither been personally in- 
 strumental in the loss, nor personally benefited by it, nor could 
 have prevented it, yet it is contended that it is upon his estate 
 the loss ought to be thrown, and that by a court of equity. I 
 apprehend, however, that it would be the reverse of equity to 
 throw the loss on his estate in such a case as the present. It 
 might be as well contended that if they had thrown the bills 
 into the fire, or lost them by negligence, Mr. Devaynes would bo 
 
 (o) Webster v. Webster, 3 Swanst. 490, note. But see as to 
 selling good-will, auk', p. 443. 
 
 (p) Houlton's case, Johne'S case, and Brice's case, 1 Mer. GIG, 
 &c. See, too, Vulliamy v. Noble, 3 Mer. 614. 
 
 1 Caldwell v. Stileman, 1 Rawle, 212 (1829); Dickinson v. 
 Dickinson, 25 Gratt. 321 (1874); Lyon v. Johnson, 28 Conn. 1 
 
 (18.3'J).
 
 680 
 
 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. responsible for such act or negligence. He had r.r> more to do 
 
 Chap. 3. Sect. w ith the sale of the bills than he would have had to do with a 
 J loss occasioned by such means as these." 
 
 [ * 606] 
 
 Liability of 
 the assets 
 for the acts 
 of the 
 executor. 
 
 Effect of 
 employment 
 of assets in 
 the business 
 of the firm. 
 
 [ * 607] 
 
 * Moreover, although an executor has power to dis- 
 pose of the assets of the deceased, and to keep alive 
 demands against them which would otherwise become 
 barred by the statute of limitations, still the acts of an 
 executor, to whatever extent they may render him per- 
 sonally liable, do not impose liability on the assets of 
 the deceased, unless those acts have been properly per- 
 formed by the executor in the execution of his duty as 
 executor. At the same time, there are certain acts 
 which, if done by an executor, impose liability on the 
 assets of the deceased (g); and, therefore, if a partner 
 appoints a co-partner his executor, and dies, and the ex- 
 ecutor continues to carry on the business, it is possible 
 that some of his acts, attributed to him, not as part- 
 ner, but as executor, may render the assets of the de- 
 ceased liable for what may have occurred since his 
 death (?•). But this is quite an exceptional case (s). 
 
 If an executor of a deceased partner carries on the 
 partnership business pursuant to directions contained 
 in the will of his testator, the executor will, as already 
 pointed out, render himself personally liable for debts 
 contracted in so doing, but he will be entitled to in- 
 demnity in respect thereof out of iliD estate of the de- 
 ceased (t) ; and consequently if a deceased partner has 
 himself directed his assets or any part thereof to be em- 
 ployed in carrying on the partnership bxisiness, so much 
 of them as are directed to be employed, are liable to 
 make good the debts contracted during their employ- 
 ment. For these reasons, and to this extent, there- 
 fore, his estate will be applicable to the liquidation of 
 the demands of those who have become creditors of the 
 partnership after his decease. But it must not be sup- 
 posed that a creditor of an executor or trustee can al- 
 ways stand in his place to the extent to which he is en- 
 titled to be indemnified out of the trust estate. Prima 
 facie a creditor must look for payment to his legal 
 debtor, and the fact that the latter is entitled to be in- 
 demnified by some one * else, or out of some estate, 
 
 (q) See Williams on Executors, vol. ii. 1798, ed. 8. 
 
 (r) See Vulliamv ». Noble, 3 Mer. 614. 
 
 (s) See Re Evans, 34 Ch. D. 597 ; Strickland v. Svmons. 26 ib. 
 245 ; Be Johnson. 15 ib. 548 ; Farhall c. Farhall. 7 Ch. 123 ; Owen 
 v. Delamere,15Eq. 134. 
 
 (t) Labouchere r. Tapper, 11 Moore, P. C. 198, and the cases 
 in the following notes.
 
 AS REGARDS JOINT CREDITORS, 681 
 
 does not confer any additional right on the creditor. Bk. IV. 
 
 To avail the creditor something more is necessary, viz., ^ ha P- 3 - Sett - 
 
 the existence of a trust fund expressly devoted to carry- J 
 
 ing on the business in respect of which the debt to the 
 creditor has been contracted (u). 1 
 
 In Strickland v. Symons (x), a lunatic asylum was Strickland v. 
 vested in the defendant on trust for sale. He carried Syinons. 
 it on for a time and then sold it for a large sum of 
 money. The plaintiff had supplied the defendant with 
 goods for the use of the asylum, and not being able to 
 obtain payment fi-om the defendant the plaintiff brought 
 an action for payment out of the trust estate. But he 
 was held not entitled to such payment, there being no 
 particular trust estate appropriated for the purpose of 
 carrying on the asylum. 
 
 In Re Evans (y), the widow and administratrix of a R e Evans. 
 deceased builder carried on his business, and in so do- 
 ing contracted debts to the plaintiff. The plaintiff ob- 
 tained judgment against her and sought to obtain pay- 
 ment out of the proceeds of the sale of the goods which 
 she had bought, but which proceeds, as between her 
 and the estate, were assets of the deceased. It was 
 held that the plaintiff was not entitled to any such re- 
 lief. The plaintiff was declared entitled to a lien on 
 the beneficial interest of the widow in the estate of the 
 deceased. This was the utmost he could be entitled to; 
 and the Court of Appeal carefully refrained from de- 
 ciding whether he was entitled to so much. 
 
 If, however, there is a trust fund specially appro- Trust to 
 priated to carrying on a particular business, and the carry on 
 trustee in carrying it on contracts debts, the creditors business, 
 are entitled, not indeed to payment out of the fund as 
 cestuis que trustent, but to stand in the place of the 
 trustee, and to obtain out of the fund what, if any- 
 thing, may be payable to him by way of indemnity. 
 But if he is a defaulting trustee the creditors can ob- 
 tain nothing out of the trust fund until he has made 
 good what he owes it. The most recent case on this 
 subject is Re Johnson (z), in which * the previous au- [ * 608] 
 
 I a See, in addition to the cases cited below, the American au- 
 thorities, Jones v. Walker, 13 Otto, 441 ; Smith v. Ayres, 101 U. 
 S. 3:20. 
 
 (.c) 26 Ch. D. 245, and 22 ib. 666. 
 
 iy) Re Evans, 34 Ch. D. 556. Observe that the plaintiff" had 
 not seized the goods under afl. fa. 
 
 (z) Re Johnson, 15 Ch. D. 548. 
 
 1 See, also. Pitkin r. Pitkin, 7 Conn., 307 (1828); Burwell v. 
 Mandeville, 2 How. 560 (1844).
 
 6S2 DEATH AND ITS CONSEQUENCES 
 
 Bk. IV. thorities were reviewed by Jesse], M. R, and in which 
 
 Chap. 3. Sect. ^ e r ight f the creditors to the extent above stated but 
 
 _ no further is clearly enunciated. 
 
 Proof by the Most of the other cases which have occurred upon 
 executor in t his subject, have arisen where an executor, having con- 
 b^kr^tev ^i 11116 ^ m business with a surviving partner, and hav- 
 ing become bankrupt with him, has endeavoured to 
 withdraw from the joint estate the assets of the deceas- 
 ed employed in the trade. In such cases, the execu- 
 tor has been held entitled to prove for the value of the 
 assets which he embarked in the business without au- 
 thority, such assets being in substance an unauthorised 
 loan of trust money; but he has been held not entitled 
 to prove as against joint creditors for the value of those 
 assets which his testator authorised to be so continued 
 in the business. 
 Ex parte I n Ex parte Garland (a), a miller and farmer made 
 
 Garland. a will whereby he directed his wife to carry on his 
 
 business, and that for the purpose of enabling her to 
 cai'ry it on, any sum not exceeding 600 ?. should be ad- 
 vanced to her by his trustees. He also directed his 
 wife to give her notes of hand for what might be ad- 
 vanced, and for the value of the stock, crops, and 
 effects, in his business. He appointed his wife and the 
 trustees before alluded to his executors. After his 
 death, his widow carried on the business, the stock, 
 crops, and effects in which were valued at 1351 1. 5s. Od. 
 She also received 600 ?. from the trustees for the pur- 
 pose of enabling her to carry on the business, and for 
 these two sums she gave them her promissory notes. 
 She also became indebted to the estate of the testator 
 in a further sum of 768?. 12s. 4d. She then became 
 bankrupt, and an attempt was made to prove as debts 
 due from her to the estate of tne deceased, the three 
 sums of 1351?. 5s. 0d., 600?., and 768?. 12s. Ad. But it 
 was held by Lord Eldon, that although the last sum 
 might, the two first could not be proved against her 
 estate; for they represented property which the de- 
 ceased had authorised to be embarked in trade, and 
 which was therefore answerable to the creditors of the 
 trade (b). 
 
 (a) lOVes. 110. See, also, Ex parte Butterfield, De G. 570, 
 and other cases of that class, noticed hereafter under the head 
 Bankruptcy. See, also, the Irish case, Hall v. Fennell, Ir. Eep. 
 9 Eq. 40G, and on appeal, ib. 615. 
 
 {b) See for other illustrations of the. same doctrine, Ex parte 
 Richardson. Buck. 202 & 3 Mad. 138; Thompson p. Andrews. 1 
 M. & K. 116; Cutbush v. Cutbush, 1 Bear. 184; Scott v. Izon. 34 
 Beav. 434. In this last case it was attempted to make an execu-
 
 AS REGARDS JOINT CREDITORS. 6S3 
 
 * It follows from the cases cited above that where a [ * 609] 
 trust fund is appropriated to carrying on a business, Bk. IV. 
 the creditors of those who carry it on are better off £ ha P- 3 - Sect - 
 
 than the creditors of ordinary partners, inasmuch as Zl 
 
 these last have nothing to look to except the property 
 of the partners ; whereas, in the case supposed, the 
 creditors have not only the personal security of the 
 executors and trustees who carry on the business, but 
 also a right to stand in their place to the extent to which 
 they are entitled to indemnity (c) out of the assets of 
 the deceased. 
 
 The liability of the estate of a deceased partner to Creditors 
 persons who become creditors after his decease, is sub- before death 
 ject to its liability to those who were his creditors at his P r ^" erred to 
 disease. These last must first be paid ; and although, creditors, 
 as in such a case as Ex parte Garland, they might not 
 be able to follow the assets of the deceased into the 
 hands of a trustee in bankruptcy, yet, in administering 
 the estate of a person whose assets have been employed 
 in trade in pursuance of directions contained in his 
 will, the creditors who have become such since his 
 decease cannot compete with his other creditors (d). 
 
 It has at various times been contended that when a Amount of 
 testator directs a trade or business to be carried on after estate liable 
 his decease, he thereby subjects all his assets to the where assets 
 payment of debts incurred in the course of carrying it ^be^on- 
 on ; and a decision by Lord Kenyon (e) has been sup- tinned in the 
 posed to warrant such contention. It is now, however, business, 
 clearly settled, that the extent of the liability of the 
 testator's estate does not exceed the amount authorized 
 by him to be employed in the trade or business directed 
 by him to be carried on (/) ; J and it was generally ad- 
 tor responsible for not having proved, but the attempt failed, 
 owing mainly to lapse of time and the impossibility of taking 
 the necessary accounts. 
 
 (c) Be Johnson, 15 Ch. D. 548. 
 
 (d) See Cutbush v. Cutbush, 1 Beav. 184. 
 
 (e) Hankey v. Hammock, Buck. 210, and 3 Madd. 148. 
 
 (/) See the cases in the last three notes, and Strickland r. 
 Sviirons, 20 Ch. D. 245 ; Be Johnson, ib. 548 ; Owen v. Delamere, 
 15 Eq. 139 ; McNeillie r. Acton, 4 De G. M. & G. 714 
 
 Aitkin v. Pitkin, 7 Conn. 307 (1828); Burwell v. Mandeville, 
 2 How. 560 (1844); Jones v. Walker, 103 U. S. 444 (1880). In 
 Burwell v. Mandeville, 2 How. 560 (1844), supra, Story J., says: 
 "Nothing but the most clear and unambiguous language, demon- 
 strating in the most positive manner that the testator intends to 
 make his general assets liable for all debts contracted in thecon- 
 tinued trade after his death, and not merely to limit it to the 
 funds embarked in the trade, would justify the court in arriving 
 at such a conclusion."
 
 684 
 
 DEATH AND ITS CONSEQUENCES. 
 
 Bk. IV. 
 Chap. 3. Sect. 
 3. 
 
 [ * 610] 
 
 Effect of 
 general 
 direction to 
 carry on 
 trade. 
 
 mitted that the decision of Lord Kenyon is not incon- 
 sistent with this doctrine (g). 
 
 * It becomes therefore a matter of considerable im- 
 portance, not only to executors but to creditors, to as- 
 certain what a testator who directs his trade or business 
 to be carried on has authorised to be employed in car- 
 rying it on. This must, of course, depend on the terms 
 of his will ; but it has been held that a general direc- 
 tion to carry on a business in which the testator was 
 engaged at the time of his death, does not authorise 
 the employment, for the purposes of that business, of 
 more of his assets than are embarked therein when he 
 dies (/*). It has also been held, that a bequest by a 
 person of money upon trust to allow it to remain in the 
 concern of which he is a partner, does not necessarily 
 empower the trustees to trade with that money ; for 
 the context may show that all the testator meant was 
 that the sum in question should not be called in, but be 
 allowed to remain outstanding as a loan to the surviv- 
 ing partners (i). It has also been held that a trust to 
 sell a business is not for this purpose equivalent to a 
 trust to carry it on until sale (k). 
 
 Legatees, 
 &c, of 
 deceased 
 
 [*611] 
 
 Section III. — Consequences as Regards the Separate 
 Creditors, Legatees, and Next of Kin of the De- 
 ceased. 
 
 In considering the consequences of the death of a 
 partner as regards his separate creditors, and his lega- 
 tees or next of kin, it will be convenient, first of all, to 
 examine their rights under ordinary circumstances, and 
 then to advert to the complicated questions which arise 
 when the assets of the deceased, instead of being real- 
 ised, are allowed by his executors to be employed in the 
 business carried on by the firm to which he belonged, 
 and when shares are specifically bequeathed. 
 
 1. Rights of separate creditors and legatees generally. 
 
 Under ordinary circumstances, the separate creditors, 
 legatees, and next of kin of a deceased partner must 
 look for * payment of what is due to them out of his 
 
 (g) See the ohservations of Turner, L. J., in 4 De G. M. & 
 G. 744. 
 
 (,/t) See McNeillie r. Acton, 4 De G. M. &. G. 744, where fur- 
 ther capital was required. See, also, Re Cameron, 26 Ch. D. 18 
 
 (i) See Travis*!. Milne, 9 Ha. 141. 
 
 (k) Strickland v. Symons, 26 Ch. D. 245, ante, p. 607.
 
 RIGHTS OF LEGATEES, ETC., OF THE DECEASED. 685 
 
 assets, to his legal personal representative, and to him Bk. IV. 
 alone (I). The executors are, under ordinary circum- Cna P- 3. Sect. 
 
 stances, the only persons who have a right to call upon _! __ 
 
 the surviving partners for an account ; and of this right partner most 
 they do not divest themselves by a sale and assign- look t0 nis 
 ment of the share of the deceased ; for the effect of executor - 
 such sale and assignment is only to make the executors 
 trustees for the purchaser (?n). 
 
 A leading case illustrating the doctrine that the ex- 
 ecutors of a deceased partner are, under ordinary cir- 
 cumstances, the only persons entitled to require an ac- 
 count from the surviving partners, is Stainton v. The stainton v. 
 Carron Company (n). 1 There a bill was filed by the The Carron 
 residuary legatees of a person who had been the agent Company. 
 of and a shareholder in a company, against his execu- 
 tors and other persons interested in the will of the de- 
 ceased, and against the company. The bill charged 
 that the executors, as agents, managers and shareholders, 
 had interests conflicting with their duties as executors 
 and trustees; and the bill prayed (amongst other things) 
 that the company mighl transfer the testator's shares 
 to his executors, and that an account might be taken of 
 what was due from the company to his estate, and for 
 payment to the executors of the amount to be found 
 due. The company and one of the executors demurred, 
 and their demurrers were allowed. In delivering judg- 
 ment the Master of the Kolls thus summed up the 
 effect of the cases on this subject: — 
 
 "The persons interested in the estate of the testator, not be- 
 ing the legal personal representatives, will not be allowed to sue 
 persons possessed of assets belonging to the testator, unless it is 
 satisfactorily made out that there exist assets which might be re- 
 covered, and which, but for such suit, would probably be lost to 
 the estate." And again: il To support such a bill as this it is 
 not sufficient to prove, that it may be an unpleasant duty to the 
 executors and trustees to take the necessary steps for protecting 
 the property entrusted to them. It is not sufficient to show that 
 it will be for their interest not to take such steps; it is necessary 
 to show, that they prefer their * interest to their duty, and that I" * 6 12] 
 
 (/) Alsager v. Rowley, 6 Ves. 748 ; Saunders v. Druce. 3 Drew. 
 140. If there is no person who in this country represents the de- 
 ceased, a representative will be appointed. See Maclean v. Daw- 
 son, 5 Jur. N. S. 1091. 
 
 (m) Clegg v. Fishwick, 1 Mac. & G. 294. 
 
 (re) 18 Beav. 140. 
 
 1 Harrison v. Righter, 11 N. J. Eq. 389 (1855); Rosenzweig v. 
 Thompson, 06 Md. 593 (1881).
 
 686 
 
 DEATH AND ITS CONSEQUENCES. 
 
 Bk. IV. they intend to neglect the performance of the obligation inci- 
 
 Chap. 3. Sect, clental to the office imposed upon them by the testator, and which 
 J they have undertaken to perform." 
 
 Wilrul 
 
 default. 
 
 Taking 
 
 partnership 
 
 account in 
 
 action 
 
 against 
 
 executor 
 
 alone. 
 
 [*613] 
 
 Cases in 
 which the 
 legatees, &c, 
 of a deceased 
 
 The executors, it may be observed, have, in ordinary 
 cases, a personal interest in getting in the assets of the 
 deceased; for, if they wilfully neglect so to do, they 
 will be made to account for the assets, although they 
 may not actually have received them (o). 
 
 It must not, however, be supposed that in an action 
 against the executor of a deceased partner by a sepa- 
 rate creditor, legatee, or next of kin, no account of the 
 deceased partner's share in the partnership can be or- 
 dered or taken; for it is the common course in such an 
 action to direct an inquiry as to what is due to the estate 
 of the deceased in respect of such share (p). Bat in 
 such an action no judgment can be given against the 
 surviving partners for payment of what is due on the 
 account; the executors must, if necessary, take pro- 
 ceedings against them to obtain such payment (q). 
 
 It seems that, under an ordinary judgment for the 
 administration of the estate of a deceased partner, the 
 partnership accounts will not be gone into, unless the 
 Court specially directs some inquiry to be made with 
 reference to the share of the deceased (?*). But it is 
 difficult to see how any account of his personal estate 
 can be taken without such an inquiry; and it has been 
 decided more than once, that if the surviving partners 
 seek to obtain payment of a balance from the estate of 
 the deceased on the partnership accounts, these ac- 
 counts must be taken, although no special direction as 
 to them may be contained in the judgment (s). The 
 costs of an * administration action brought by a sepa- 
 rate creditor are paid in priority to joint creditors (t). 
 
 Notwithstanding, however, the general rale that the 
 separate creditors, legatees, or next of kin of a deceased 
 partner have no locus standi against the surviving part- 
 
 (o) See, as to charging the executor of a partner with wilful 
 default, Grayburn v. Clarkson, 3 Ch. 605; Sculthorpe v. Tipper, 
 13 Eq. 232; Ward v. Ward, 2 H. L. C. 777, and Rowley v. Adams, 
 ib. 726, and 7 Beav. 395; Kirkman v. Booth, 11 Beav. 273. 
 
 (p) As in MacDonald v. Richardson, 1 Giff. 81. See. also, 
 Pointon v. Pointon, 12 Eq. 547, where the only surviving part- 
 ner was an executor arid trustee. 
 
 (q) Ord. xvi. r. 48, &c, and Ord. xviii. do not apparently ap- 
 ply to such a case. 
 
 (/■) See the next note. 
 
 (s) See Paynter r. Houston, 3 Mer. 297; Baker v. Martin, 5 
 Sim. 380: Woolley v. Gordon, Taml. 11. 
 
 (t) Re McRea, 32 Ch. D. 613.
 
 RIGHTS OF LEGATEES, ETC., OF THE DECEASED. 6S7 
 
 ners, this rule is by no means without its exceptions. Bk. TV 
 
 3 
 
 Indeed there are cases to be met with, which appa- £h a P- 3 
 
 rently warrant the inference, that surviving partners 
 
 may alwavs be sued along with the executor or admin- partner have 
 
 istrator of the deceased (u). But the authority f a right to an 
 
 i *\ ('count 
 
 these cases has recently been called in question, and } rom t i le 
 
 the better opinion now is that some special circum- surviving 
 stances are necessary to justify such a course (x). The partners, 
 special circumstances which have been held sufficient 
 are, collusion between the executors and the surviving 
 partners (y); refusal by the former to compel the lat- 
 ter to come to an account (2); dealings which may 
 have precluded the executors from themselves obtain- 
 ing any account (a); the fact that the executors are 
 themselves partners and liable therefore to account as 
 partners to themselves as executors (6); and generally, 
 where the relation between the executors and the sur- 
 viving partners is such as to present a substantial im- 
 pediment to the prosecution, by the executors, of the 
 rights of the persons interested in the estate of the de- 
 ceased, against the surviving partners, there it has been 
 said, an action may be instituted by those persons 
 against the executors and the surviving partners (c). 
 
 If the surviving partners and the executors are dif- Accounts 
 ferent * persons, and they have bond fide come to an [ * 614] 
 account respecting the partnership affairs, and have settled 
 
 settled such account as a final account, the account thus * " een s " r " 
 .,,.,.,. , . , ' . . vivmg part- 
 
 settled is binding, as between the surviving partners ners am j t j ie 
 
 and the persons interested in the estate of the deceased executors of 
 
 partner, and cannot be impeached, save on the ground a deceased 
 
 of fraud (d). partner - 
 
 (m) See Newland v. Champion, 1 Ves. S. 106, and 2 Coll. 46 ; 
 Bowsher v. Watkins, 1 R. & M. 277. 
 
 (a;) See Yeatrnan v. Yeatman, 7 Ch. D. 210 ; Davies ». Davies, 
 2 Kenn, 534 ; Law r. Law, 2 Coll. 41 ; Travis v. Milne, 9 Ha. 
 141 ; Stainton v. The Carron Co., 18 Beav. 146. 
 
 (y) Doran v. Simpson, 4 Ves. 651 ; Gedge v. Traill, 1 R. & M. 
 281, note ; Alsager v. Rowley. 6 Ves. 74H. 
 
 (z) Burroughs v. Elton, 11 Ves. 29; the prayer of the bill in 
 this case may be usefully referred to, but see Yeatman v. Yeat- 
 man, 7 Ch. D. 210, where refusal was held not to be a sufficient 
 ground. 
 
 («) Law v. Law, 2 Coll. 41, and on appeal, 11 Jur. 463 ; Braith- 
 waite v. Britain, 1 Keen, 206. 
 
 (b) Beningfield v. Baxter, 12 App. Ca. 167 ; Cropper v. Knap- 
 man, 2 Y. & C. Ex. 338 ; Travis 0. Milne, 9 Ha. 141 ; and see as 
 to continuing the deceased's assets in the business, pout, p. 614. 
 
 (c) Travis r. Milne, 9 Ha. 150. As to discovery by the sur- 
 viving partners, see Leigh v. Birch. 32 Beav. 399, andOrd. xxxi. r. 7. 
 
 (d) Davies v. Davies. 2 Keen, 534 ; Smith v. Everett, 27 Beav. 
 446. See the Conveyancing Act, 1881, \ 37.
 
 688 
 
 DEATH AND ITS CONSEQUENCES. 
 
 Bk. IV. 
 Chap. 3. Sect. 
 3. 
 
 Where 
 executors 
 are person- 
 ally inter- 
 ested. 
 
 Wedderburn 
 v. Wedder- 
 burn. 
 
 But arrangements made between executors and sur- 
 viving partners for the benefit of the executors indi- 
 vidually are always liable to suspicion; and if the ex- 
 ecutors are themselves the surviving partners, or some 
 of them, it becomes exceedingly difficult to make any 
 arrangement which will be binding on the persons in- 
 terested in the estate of the deceased; for even if any 
 arrangement is assented to by such persons, it will be 
 liable to be successfully disputed, on any of those nu- 
 merous grounds which are held to invalidate arrange- 
 ments between trustees and their ceshtis que trustent, 
 and by which trustees do, or may, obtain a benefit at 
 the expense of the trust estate. A remarkable instance 
 of this is afforded by the case of Wedderburn v. Wed- 
 derburn (e), where an account of a deceased partner's 
 estate was directed, at the suit of the persons benefi- 
 cially interested therein, although thirty years had 
 elapsed since his death, and several changes had taken 
 place in the firm, and releases had been given to the 
 executors by their cestuis que trustent (/). 
 
 2. Rights of separate creditors and legatees when the 
 share of the deceased is not got in 
 
 Rights of Executors, unless authorized by their testator so to 
 
 legatees, &c, do, ought not to leave his assets outstanding in the 
 when the trade or business in which he was engaged when he 
 deceased died. It has been laid down as a rule without excep- 
 partner are tion, that to authorise executors to carry on a trade, 
 continued in or to permit it to be carried on with the property of a 
 r 11 * ai k^ 688 ' t^tator held by them in trust, there * ought to be the 
 L uioj m ost distinct and positive authority and direction given 
 by the testator for that purpose (g) 1 . A bequest of his 
 share and interest in tbe partnership to one person for 
 life, and then to another, does not, without more, war- 
 rant the trustees of his will in keeping such share and 
 interest unconverted into money ; and it is therefore 
 
 {e) 2 Keen, 722, and 4 M. & Cr. 41, noticed ante, p. 533. 
 
 (/) See Beningtield v. Baxter, 12 App. Ca. 167, and the other 
 cases as to profits accruing since death, ante, p. 528. 
 
 (g) Kirkman v. Booth, 11 Beav. 273. A power to executors 
 named in a will to carry on a business does not justify an ad- 
 ministrator in so doing if all the executors renounce. Lambert 
 v. Rendle, 3 New R. 247. 
 
 1 Watkinson v. Fakes, 5 Heisk. 185 (1871); McKean v. Vick, 
 108, 111. 373 (1884).
 
 RIGHTS OF LEGATEES, ETC., OF THE DECEASED. 6S9 
 
 their duty to realise it, and invest what they receive for Bk. IV. 
 the benefit of the legatees (h). 1 Chap. 3. 
 
 • • • Sect "3 
 
 If a testator's capital is left in the business as a loan 
 
 to the surviving partners, they are only liable to pay Option be- 
 interest on it, even although they do not pay it off tweea in " 
 when they ought (i) ; but where an executor improperly p^^g 
 employs the assets of the testator in a business carried 
 on by himself, he is chargeable, at the option of the 
 persons beneficially interested in the estate of the de- 
 ceased, either with the sum employed and interest there- 
 on at 5Z. per cent., or with the sum employed and the 
 profits made by its employment (k). And such per- 
 sons are not deprived of this option by the circum- 
 stance that it will be difficult and expensive to ascer- 
 tain what part of the profits has arisen from the em- 
 ployment of the assets of the deceased ; for whatever 
 difficulty may exist is attributable to the conduct of the 
 executor himself, and cannot therefore be effectually 
 urged by him as a reason why no account of profits 
 should be taken (I). The cestuis que trustent are 
 moreover entitled to compound interest if the duty of 
 the executors is to call in their testator's capital, and 
 invest it and accumulate the income (m)-, but they are 
 not entitled to profits for part of the time and to inter- 
 est for *the rest, unless there has been some intervening [ * 616] 
 settlement of account (»■), or other special circum- 
 stance (o). 
 
 It follows from the doctrine above stated, and from p ro fit s made 
 the principles which were explained when treating of since death, 
 judgments for an account (p), that if one of two part- 
 ners makes the other his executor, and dies, the surviv- 
 ing partner must, under ordinary circumstances, not 
 only account to the estate of the deceased for what 
 
 (li) Re Chancellor, 26 Ch. D. 42 ; Kirkman r. Booth, 11 Beav. 
 273. See Skirving v. Williams, 24 ib. 275, and as to specific 
 legacies of shares, infra, p. 619. 
 
 (t) See Vyse v. Foster, L. R. 7 H. L. 318, and 8 Ch. 300, no- 
 ticed ante, p. 534, and see infra. 
 
 {k) See Docker v. Somes, 2 M. & K. 655 ; Palmer v. Mitchell, 
 ib. 672, note ; Heathcote v. Hulme, I J. & W. 122. 
 
 (I) Docker «. Somes, 2 M. & K. 655 ; Townend v. Townend, 1 
 Giff. 201 ; Flockton v. Bunning. 8 Ch. 323. note, ante, p. 530, 
 
 (m) See Jones v. Foxall, 15 Beav. 388 ; Williams v. Powell, ib. 
 461. Possibly, also, in some other cases. See the observations 
 in Vyes v. Foster, L. R. 7 H. L. 346. 
 
 (n) Heathcote v. Hulme, 1 J. & W. 122. 
 
 (o) As in Townend v. Townend, 1 Giff. 201, noticed ante, p. 528. 
 
 (jj) Ante, p. 516 et seq. 
 
 1 Wood's Estate, 1 Ashm. (Pa.) 319 (1827); Lucht v. Behrens, 
 28 Oh. St. 231 (1876). 
 
 * 21 LAW OF PARTNERSHIP.
 
 690 DEATH AND ITS CONSEQUENCES. 
 
 Ek. IV. may be due, in respect of the testator's shai'e in the 
 
 Chap. 3. partnership at his death (q), but also for the profits 
 
 ' made by him since his death, by the employment of his 
 
 capital in the business carried on by the late firm (r). 
 Moreover it is immaterial whether such business has 
 be§n continued by the surviving partner alone, or by 
 him and others in partnership with him ; for the obli- 
 gation of the executor thus to account, is founded on a 
 breach of trust committed by him, for which he is liable 
 at all events to the extent to which he has benefited by 
 it, whether other persons are also liable or not ; and 
 being founded on a breach of trust, an action in respect 
 of it may be sustained against the executor alone, 
 though he may only be one of several, by whom the 
 profits have been made (s). 
 
 The cases illustrating the right of legatees to an ac- 
 count of profits made since their testator's death where 
 the executors have continued his assets in the business 
 in which he was a partner have been already adverted 
 to at considerable length (t). The following classified 
 list of them is inserted here for reference. 
 
 1. Account of subsequent profits decreed. 
 
 A. Executors against surviving partners. 
 
 Yates v. Finn, 13 Ch. D. 839 {ante, p. 527.) 
 Brown v. De Tastet, Jac. 284 {ante p. 527.) 
 Sooth v. Parks, 1 Moll. 465, and Beatty, 444. 
 Featherstorihaugh v. Turner, 25 Beav. 382. 
 Smith v. Everett, 27 Bea\\ 446. 
 
 f * 617] * B. Legatees against executors who were not part- 
 ners, but who continued his assets in business. 
 
 Heaihcote v. Huhne, 1 J. & W. 122. 
 Docker v. Somes, 2 M. & K. 654. 
 Palmer v. Mitchell, 2 M. & K. 672, note. 
 
 C. Legatees against executors who were surviving 
 partners or who became partners. 
 
 Cook v. Collingridge, Jac. 607 {ante, p. 528). 
 
 Stocken v. Dawson, 9 Beav. 239, and on appeal, 27 L. J. 
 
 Ch. 282. 
 Wedderbum v. Wedderburn, 2 Keen, 722, and 4 M. & 
 
 Cr. 41 {ante, p. 533). 
 
 {q) See the cases cited, infra, pp. 616, 617. 
 (r) Phillips v. Phillips, Finch, 410. 
 (s) See ante, p. 523. 
 (t) Ante, p. 521 ct seq.
 
 RIGHTS OF LEGATEES, ETC., OF THE DECEASED. 601 
 
 Toicnend v. Tovmend., 1 Giff. 201 (ante, p. 528). Bk. TV. 
 
 Macdonald v. Richardson, 1 Giff. 81 (ante, p. 530). Chap. 3. Sect. 
 
 WiUett v. Blanford, 1 Ha. 253 (ante, p. 525). In this ^ 
 
 case accounts of subsequent profits were directed with- 
 out prejudice to any question. 
 
 Flocton v. Bunning, 8 Ch. 324, note (ante, p. 530). 
 
 2. Accoimf o/ subsequent profits refused. 
 
 A. Executor against surviving partner. 
 
 Knox v. G#e, L. R. 5 H. L. 656, the statute of limita- 
 tations being a baf. 
 
 B. Legatee against executors, one of whom was a 
 surviving partner, and the other of whom had become 
 a partner. 
 
 Simpson v. Chapman, 4 De G. M. & G. 154 (ante, p. 532). 
 Vyse v. Foster, L. R. 7 H. L. 318, and 8 Ch. 300 (ante, 
 
 p. 534). 
 See, also, Wedderburn v. Wedderburn, 22 Beav. 84, and 
 
 WiUett v. Blanford, 1 Ha. 253 (ante, pp. 533 and 525). 
 
 Upon the principle that every one concerned in a Liability of 
 breach of trust with notice of the trust is answerable for surviving 
 such breach, it follows that if a partner dies, and his P art ? e . rs for 
 surviving partners allow his assets to remain in their properly con- 
 business, with the knowledge that to suffer them so to tinned in 
 remain is a breach of trust on the part of the executors, tne lu,si ~ 
 the surviving partners will be themselves responsible to ness ' 
 the separate creditors, legatees, or next of kin of the 
 deceased, for any loss which may be thereby sus- 
 tained (u). * And further, inasmuch as it is, primd [*618] • 
 facie, a breach of trust for executors to allow the assets 
 of the deceased to remain in the business carried on by 
 him at his death, surviving partners who knowingly 
 carry on the business with assets of the deceased thus 
 left in their hands will be answerable for such assets, 
 unless they can show that no breach of trust was in fact 
 committed (x). Their liability to account for profits 
 has already been considered (y). 
 
 Where, however, the surviving partners and the ex- Loans by 
 ecutors are different persons, and the executors dis- executors. 
 
 («) See Wilson v. Moore, 1 M. & K. 127 and 337 ; Booth v. 
 Booth, 1 Beav. 125, and compare Ex parte Barnewell, 6 De G. 
 M. & G. 801. 
 
 (x) Travis v. Milne, 9 Ha. 141. 
 
 [y) Flocton v. Bunning, ante, p. 530.
 
 GS2 DEATH AND ITS CONSEQUENCES. 
 
 Bk. IV. tinctly lend part of their testator's assets to his surviv- 
 
 Chap. 3. Sect. j Q g p ar tners, tb e latter are only liable to pay interest 
 
 1 for it, at the rate agreed upon with the executors. In 
 
 such a case the legatees are not entitled to a share of 
 the profits made by means of the money lent, although 
 in lending it the executors may have been guilty of a 
 breach of trust, and the borrowers may have known 
 that the money belonged to the deceased (z). A fortoiri, 
 if the executors are authorised to lend part of the assets 
 of the deceased to his surviving partners, they will not 
 be accountable for the profits they may make by the 
 employment in their trade of money lent to them by 
 the executors in pursuance of their authority (a) : nor, 
 in such a case as is now supposed, will the executors 
 be responsible for the money if lost, if they took such 
 security for its repayment as, having regard to the will 
 of the testator, it was their duty to take (6). 
 Executor be- It sometimes happens that the executor of a deceased 
 coming a partner is taken into partnership by the surviving part- 
 partner. ners, and a question then arises whether the profits re- 
 
 ceived by the executor as partner belong to him per- 
 sonally, or to the estate which he represents. This 
 must depend on the circumstances under which the ex- 
 [ * 619] ecutor became a partner. If he became a partner * in 
 his representative character, or as in Cook v. Colling- 
 ridge (c), under circumstances entitling the legatees to 
 treat him still as their trustee, he must account for any 
 profits which he may have obtained as a partner. On 
 the other hand, if, as in Simpson v. Chapman (d), he 
 became a partner not in his representative character, 
 nor under such circumstances as those above mentioned, 
 the profits accruing to him as a partner will be his own, 
 and not form part of the assets for which he must ac- 
 count as executor. 
 
 3. Specific bequests of shares. 
 
 Legacy of a A specific bequest by a partner of his share in the 
 
 share in a partnership clearly does not entitle the legatee to be- 
 
 partnersnip. come a partner himself unless there is some agreement 
 
 to that effect binding upon the surviving partners. 
 
 (z) See Stroud v. Gwver, 28 Beav. 130 ; Flocton v. Bunning, 8 
 Ch. 323, note, and ante, p. 530 ; 44 & 45 Vict. c. 41, £ 37. 
 
 (a) Parker v. Bloxhani, 20 Beav. 295 ; Vyse v. Foster, L. R. 7 
 H. L. 318, and 8 Ch. 300, ante, p. 534, where the testator's capi- 
 tal was not got in at the time appointed, and one oi* the execu- 
 tors was a surviving partner. 
 
 (b) Paddou v. Richardson, 7 De G. M. & G. 563. 
 
 (c) Jac. 607, ante, p. 528. 
 
 (d) 4 De G. M. & G. 154, ante, p, 532.
 
 RIGHTS OF LEGATEES, ETC., OF THE DECEASED. CDS 
 
 The right of the legatee is simply to be paid the amount Bk. IV. 
 due to the testator at the time of his death in respect Chap. 3. 
 of his share (e); and also, under the circumstances and ' ec " " " 
 
 subject to the qualifications already noticed (/), to re- 
 ceive a proportion of the profits made since the testa- 
 tor's death. As between the legatee, however, and the 
 executor, the legatee is entitled to have the share kept 
 in the business, subject only to the superior right of 
 the executor to sell the testator's personal estate for 
 the payment of debts (g). 
 
 A bequest of a partner's capital has been held to in- 
 clude what was due to him in respect of advances (h). 
 
 It has been held that the legatee of a deceased part- Legatee of 
 ner's share in the good will of the partnership business good-will, 
 could not sue the surviving partners for a sale of the 
 good-will and payment of his share, although the be- 
 quest had been assented to by the executors (i). This 
 case was somewhat peculiar, as in * truth the surviving [" * 620] 
 partner was entitled to everything which gave a sale- 
 able value to the good- will (k). 
 
 A specific bequest of a share in a partnership will be Ademption 
 adeemed if the testator, after he has made his will, of legacies of 
 leaves the firm and receives his share; but so long as shares. 
 he remains a partner, there will be no ademption, al- 
 though by some agreement subsequent to the date of 
 the will, the amount of his share may have been 
 varied (I). Even where he has, since he made his will, 
 acquired the whole business, his will may include the 
 whole (m). 
 
 A legatee is not entitled to receive, out of the estate Legacv to 
 of his testator, any part of the bounty intended for him partner in- 
 by the testator, until the legatee has paid all his own debted to 
 obligations in the shape of debts owing to the testa- testator - 
 tor's estate. This principle is strongly illustrated by 
 Smith v. Smith (n). There a father who had advanced Smith v. 
 money to a firm in which his sod was a partner, died, Smith, 
 having bequeathed part of his residuary estate to the 
 son. The father's executors were held entitled to re- 
 
 (c) Farquhar v. Haddon, 7 Ch. 1. 
 
 (/) Ante, p. 616. 
 
 (g) See Fryer v. Ward, 31 Beav. 602, where the legatee had 
 an option. 
 
 (/<) Bevan v. A.-G., 4 Giff. 361. A bequest of the use of capi- 
 tal employed in trade gives an absolute interest in it, see Terry 
 v. Terry, 33 Beav. 232. 
 
 (t) Robertson v. Quiddington, 28 Beav. 529. 
 
 (k) See on this subject, ante, p. 439. 
 
 (/) Backwell v. Child, Amb. 260; Ellis©. Walker, ib. 309. 
 
 (m) Be Russell, 19 Ch. D. 432. 
 
 (n) 3 Giff. 263.
 
 694 
 
 DEATH AND ITS CONSEQUENCES. 
 
 Bk. IV. 
 Chap. 3. Sect, 
 3. 
 
 Rights of 
 tenant tor 
 life. 
 
 Rights to 
 profits, &c. 
 
 [*621] 
 
 Apportion- 
 ment of 
 profits. 
 
 tain the whole amount of the partnership debt out of 
 the son's share of the residue, althongh the debt was 
 barred by the statute of limitations when the father died. 
 
 When a share in a partnership is bequeathed or set- 
 tled in trust for one person for life and afterwards to 
 another, the first question which arises is, whether the 
 tenant for life is entitled to have the share kept uncon- 
 verted, or whether it ought to be converted into money, 
 and invested pursuant to the well-known doctrine laid 
 down in Hoive v. Lord Dartmouth (o). This, of course, 
 depends on the terms of the will; but its language 
 must be clear to entitle the tenant for life to have the 
 share kept unconverted (p). 
 
 A specific legatee of a share in a partnership is enti- 
 tled to all ordinary profits declared after the testator's 
 death (q); * unless although declared after his death 
 they were earned and ought to have been declared be- 
 fore (r). But profits declared before a testator's 
 death (s), or declared afterwards when they were earn- 
 ed and ought to have been declared before (t), prima 
 facie form part of his general estate, and do not pass 
 to the specific legatee of the share: and the same rule 
 applies to dividends declared before his death, but the 
 actual payment of which is postponed until after- 
 wards (u). Losses must not be thrown on capital so 
 as to benefit a tenant for life at the expense of the re- 
 mainderman (x). 
 
 The profits of an ordinary partnership are not with- 
 in the Apportionment act, 1870, 33 & 34 Yict. c. 35 (y), 
 although dividends of companies are within it (z). 
 
 . (o) 7 Ves. 137, and 2 Wh. & Tud. L. C; Dimes v. Scott, 4 
 Russ. 195. 
 
 (p) See Be Chancellor, 26 Ch. D. 42, and ante, p. 615, note 
 (h). See. also, Be Cameron, ib. 19. 
 
 (q) Jacques v. Chambers. 2 Coll. 435; Wright v. Warren, 4 De 
 G. & S. 367; Browne v. Collins, 12 Eq. 586; Ibbotson v. Elam, 1 
 Eq . 188. 
 
 (r) Browne v. Collins, 12 Eq. 586. But see Ibbotson v. Elam, 
 1 Eq. 188. 
 
 (s) See the next two notes. 
 
 (t) Browne v. Collins. 12 Eq. 586. 
 
 («) De Gendre v. Kent, 4 Eq. 283; Lock v. Venables. 27 Beav. 
 598: Wright v. Tuckett, 1 J. & H. 266. Compare Clive v. Clive, 
 Kay, 600, which turned on the special wording of the company's 
 deed of settlement. See as to bonuses, Bouch v. Sproule, 12 
 App. Ca. 385, reversing 29 Ch. D. 635. 
 
 (x) See Upton v. Brown, 26 Ch. D. 588; Gow v. Forster, ib. 
 672. 
 
 (?/) Be Cox's Trusts, 9 Ch. D. 159; Jones v. Ogle, 8 Ch. 192. 
 See before the Act, Ibbotson v. Elam, 1 Eq. 188; Browne v. Col- 
 lins, 12 Eq. 586; Johnston v. Moore, 27 L. J. Ch. D. 453. 
 
 (z) Be Griffith, 12 Ch. D. 655.
 
 ■*& 
 
 BANKRUPTCY. 695 
 
 * CHAPTER IT. [*622] 
 
 OF BANKRUPTCY. 
 
 Preliminary Observations. 
 
 Partners may become bankrupt, either individually Bk. IV. 
 or collectively, and in some respects a division of the Chap. 4. 
 present branch of the law into two parts, relating, the Bankruptcy 
 one to the bankruptcy of an individual partner, and the of partners 
 other to the bankruptcy of a firm, would be as conveni- atui partner- 
 ent as it would be simple. But the causes and consequen- sni P s - 
 ces of the bankruptcy of an individual partner, and the 
 causes and consequences of the bankruptcy of a firm of 
 partners, are in so many respects the same, that to con- 
 sider them twice over would lead to useless repetition. 
 With a view to avoid this, it is proposed in the present 
 chapter to treat of the bankruptcy of partners and part- 
 nerships under heads applicable to both, and to point 
 out under each head those differences between the two 
 which are of practical importance. 
 
 The present law of bankruptcy is based on the Bank- Present 
 ruptcy act, 1883 (46 & 47 Yict. c. 52), and the rules bankruptcy 
 and orders of Oct. 1886, promulgated under its au- law 
 thority. The act does not extend to Scotland or Ire- 
 land except where expressly provided (a) All the 
 older bankruptcy acts are repealed (b), and a new sys- 
 tem of law has been substituted for them, based on the 
 pre-existing law. and to a great extent preserving its 
 principles and the practice under it (c); but at the 
 same time modifying it in many important respects, and 
 rendering it * necessary in all cases to examine the new [ *623] 
 enactments before relying on earlier decisions (d). 
 
 The statute does not apply to incorporated compa- 
 nies (§ 123) ; but it does to unincorporated companies 
 empowered to sue and be sued by public officers (e). 
 
 (a) 46 & 47 Vict. c. 52, \ 2. 
 
 (b) Ibid. \ 169. 
 
 (c) Bank. Rules, 1886, r. 353. 
 
 (d) See Ex parte Griffith. 23 Ch. D. 69. 
 (Y. See Bank. Rules, 1886, r. 258.
 
 696 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 
 Proceedings 
 in partner- 
 ship name. 
 
 Attestation 
 of firm 
 signature. 
 
 Service on 
 firm. 
 
 Debtors' 
 petition by 
 firm. 
 
 Receiving 
 order against 
 firm. 
 
 Statement 
 of affairs. 
 
 Adjudica- 
 tion against 
 partners. 
 
 Firms may proceed and be proceeded agr.inst in their 
 mercantile names ; but this rule does not apply to ad- 
 judications of bankruptcy ( f ). 
 
 The statute enacts : — 
 
 \ 115. Any two or more persons, being partners, or any person 
 carrying on business under a partnership name, may take pro- 
 ceedings or be proceeded against under this Act in the name of 
 the firm, but in such case the Court may, on application by any 
 person interested, order the names of the persons who are part- 
 ners in such firm or the name of such person to be disclosed in 
 such manner, and verified on oath, or otherwise as the Court may 
 direct (g). 
 
 And the Bankruptcy Eules 1886, contain the follow- 
 ing further provisions on this subject : 
 
 259. Where any notice, declaration, petition, or other document 
 requiring attestation is signed by a firm of creditors or debtors in 
 the firm name, the partner signing for the firm shall add also his 
 own signature, e. g. " Brown & Co. by James Green, a partner in 
 the said firm." 
 
 260. Any notice or petition for which personal service is neces- 
 sary shall be deemed to be duly served on all the members of a 
 firm if it is served, at the principal place of business of the firm 
 in England, on any one of the partners, or upon any person hav- 
 ing at the time of service the control or management of the part- 
 nership business there. 
 
 261. Where a firm of debtors file a declaration of inability to 
 pay their debts or bankruptcy petition the same shall contain the 
 names in full of the individual partners, and if such declaration 
 or petition is signed in the firm name the declaration or petition 
 shall be accompanied by an affidavit made by the partner who 
 signs the declaration or petition, showing that all the partners 
 concur in the filing of the same. 
 
 262. A receiving order made against a firm shall operate as if 
 it were a receiving order made against each of the persons who 
 at the date of the order is a partner in that firm. 
 
 263. In cases of partnership the debtors shall submit a state- 
 ment of their partnership aftairs, and each debtor shall submit a 
 statement of his separate affairs. 
 
 264. No order of adjudication shall be made against a firm in 
 the firm name, but it shall be made against the partners individ- 
 ually. 
 
 (/) See Bank. Rules, 1886, r. 264, infra. 
 
 \g) This section does not apply to firms dissolved before the 
 proceedings are taken, see Exparte Young, 19 Ch. D. 124.
 
 BANKRUPTCY. 697 
 
 * The power of one partner to act for the firm ex- [ * 624] 
 tends to proceedings in bankruptcy (h). Bk. IV. 
 
 One partner only need sign a petition by the firm for Cha P- 4 - 
 adjudication of bankruptcy against a debtor to it (i). Power of 
 So, one partner may prove a debt owing to the firm, and one partner 
 vote on behalf of the firm at meetings of creditors (k) ; *? act lor 
 and, notwithstanding the general rule prohibiting one 
 partner from binding the firm by deed, it has been de- 
 cided that one partner may, by a power of attorney ex- 
 ecuted by him alone, authorise a third person to repre- 
 sent the firm in the above matters, and to prove and vote 
 on its behalf accordingly (I). One partner could un- 
 der the old law bind the firm by signing the certificate 
 of its bankrupt debtor (m). 
 
 On the other hand the Bankruptcy act, 1883, pro- Disabilities, 
 hibits the partner of a trustee from voting on questions 
 relating to his remuneration (§88) ; nor can the part- 
 ner of the registrar, official receiver or other officer, do 
 for him what he is prohibited by the act from doing 
 himself (§116 (2) ) ; nor can any one vote for any re- 
 muneration to his partner any more than to himself 
 (sched. 1, r. 26) ; nor can an affidavit be sworn before 
 the partner of a solicitor before whom it could not be 
 sworn (Bankruptcy Rules, 1886, r. 56 (2) ). 
 
 Under the present law all persons capable of con- Distinctions 
 tracting debts, whether traders or non traders, can be between 
 adjudicated bankrupt (n). The differences formerly ex- Joy -traders, 
 isting between these two classes of debtors are no longer 
 important; except that the * doctrines of reputed owner- [ * 625] 
 ship are confined to traders and persons in business (o). 
 
 {h) 46 & 47 Vict. c. 52, \ 148. 
 
 (/) Bank. Rules, 1886, r. 259. &c., and form 10, note. See 
 Brickland v. Newsome, 1 Camp. 474, S. C, sub nomine Buckland 
 v. Newsame, 1 Taunt. 477. 
 
 (k) Ex parte Mitchell, 14 Ves. 597. 
 
 (/) Ex parte Mitchell, 14 Ves. 597, and Ex parte Hodgkinson, 
 19 Ves. 291-298. 
 
 (m) Ex parte Hall, 17 Ves. 62 ; Ex parte Fife, 2 M. & A. 577. 
 
 (n) 46 & 47 Vict. c. 52, g 4. Persons having privilege of Par- 
 liament are not exempt, g 32. As to aliens, see g 6 (1) (d), Ex 
 parte Crispin. 8 Ch. 374, and as to foreign members of English 
 linns Ex parte Blain, 12 Ch. D. 523. As to married women. \ 
 152. and 45 & 46 Vict. c. 75, g 1, cl. 5 ; Ex parte Coulson, 20 Q. 
 B. D. 249 ; Re Grissell, 12 Ch. D. 484. As to infants, see Ex 
 parte Jones, 18 Ch. D. 109, As to lunatics, g 148 : Bank. Rules, 
 1886, r. 271 ; Be Lee, 23 Ch. D. 216 ; Be James, 12 Q. B. D. 332; 
 Ex parte Cahen, 10 Ch. D. 183, which, however, was on the Act 
 of 1*69. 
 
 (o) 46 & 47 Vict. c. 52, § 44 (3b As to persons who have 
 ceased to trade, see Dawe v. Vergafa, 11 Q. B. D. 241, but note 
 this was not a decision ou this enactment.
 
 098 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 1. 
 
 Petition for 
 
 receiving 
 
 order. 
 
 In order that a debtor may be adjudicated bankrupt, 
 he must have committed an act of bankruptcy, and he 
 himself or some creditor must petition for a receiving 
 order against him (p). 
 
 It is not the object of the present treatise to expound 
 the law of bankruptcy, except so far as it is a branch 
 of the law of partnership; and having made the fore- 
 going general observations, it is proposed to advert only 
 to those matters which relate more particularly to part- 
 ners; the reader being referred to works on bankruptcy 
 for further information on this subject. 
 
 Section I. — Adjudications of Bankruptcy Against 
 Partners. 
 
 1. As to acts of bankruptcy. 
 
 Acts of Nothing is an act of bankruptcy which is not declared 
 
 bankruptcy, to be so by statute (q). Moreover an act of bankruptcy 
 is a personal act or default, and is not to be imputed to 
 any one on the ground of agency (r). Consequently 
 an act of bankruptcy committed by one partner cannot 
 be regarded as an act of bankruptcy committed by the 
 firm (s). 
 
 The acts or defaults which are acts of bankruptcy are 
 stated in the Bankruptcy Act, 1883, § 4, which is as 
 follows:— 
 
 g 4. — (1.) A debtor commits an act of bankruptcy in each of 
 the following cases: — 
 
 (a. ) If in England or elsewhere he makes a conveyance or 
 assignment of his property to a trustee or trustees for 
 for the benefit of his creditors generally. 
 (6.) If in England or elsewhere he makes a fraudulent con- 
 veyance, gift, delivery, or transfer of his property, or 
 of any part thereof : 
 [ * 6261 * ( c -) If in England or elsewhere he makes any convej r ance 
 
 or transfer of his property or any part thereof, or 
 creates any charge thereon which would under this 
 or any other Act be void as a fraudulent preference if 
 he were adjudged bankrupt: 
 (d.) If with intent to defeat or delay his creditors he does 
 
 5, aud forms 4 and 10 to rules of 
 
 (p) 46 & 47 Vict. c. 52, 
 1886. 
 
 {q) See 15-Ves. 462, and 17 ib. 198. 
 
 (r) Ex parte Blain, 12 Ch. D. 522, and see infra. 
 
 (s) Ibid.
 
 ACTS OF BANKRUPTCY. 699 
 
 any of the following things, namely, departs out of Bk. IV. 
 England, or heing out of England remains out of Chap. 4. 
 England, or departs from his dwelling-house, or other- ' 
 
 wise absents himself, or begins to keep house: 
 
 (e.) If execution issued against him has been levied by 
 seizure and sale of his goods under process in an action 
 in any court, or in any civil proceeding in the High 
 Court (0 : 
 
 (/.) If he files in the Court a declaration of his inability to 
 pay his debts or presents a bankruptcy petition against 
 himself: 
 
 (g.) If a creditor has obtained a final judgment against him 
 for any amount, and execution thereon not having 
 been stayed (»), has served on him in England, or, by 
 leave of the Court, elsewhere, a bankruptcy notice un- 
 der this Act, requiring him to pay the judgment debt 
 iu accordance with the terms of the judgment, or to 
 secure or compound for it to the satisfaction of the 
 creditor or the Court, and he does not, within seven 
 days after service of the notice, in case the service is 
 effected in England, and in case the service is effected 
 elsewhere, then within the time limited in that be- 
 half by the order giving leave to effect the service, 
 either comply with the requirements of the notice, or 
 satisfy the Court that he has a counterclaim set off or 
 cross demand which equals or exceeds the amount of 
 the judgment debt, and which he could not set up in 
 the action in which the judgment was obtained (x): 
 
 (h) If the debtor gives notice to any of his creditors that he 
 has suspended, or that he is about Jo suspend, pay- 
 ment of his debts. 
 2. A bankruptcy notice under this Act shall be in the pre- 
 scribed form, and shall state the consequences of non-compli- 
 ance therewith, and shall be served in the prescribed manner {y). 
 
 Almost all the foregoing acts of bankrupcy have been. 
 
 (t) Purchasers from the sheriff are protected by £ 46 (3). 
 
 («) See Be Ide, 17 Q. B. D. 755, judgment against the firm is 
 not a judgment against a member until execution against him 
 can be issued; see Jud. Rules, 1883, Ord. XLII. r. 10. An inter- 
 pleader order that the sheriff withdrew is a stay, Ex parte Ford, 
 18 Q. B. D. 369. A judgment against a married woman's sepa- 
 rate estate is not within \ 4 (g). See Ex parte Coulson, 20 Q. B. 
 D. 249. 
 
 (a) In Ex parte Owen, 13 Q. B. D. 113, a notice given by a 
 solvent partner and his co-partner, against whom a receiving or- 
 der had been made was held good. A valid notice may be given 
 by the liquidator of a company being wound up, Ex parte Win- 
 terbottom, 18 Q. B. D. 446. 
 
 (y) See Bank. Rules, 1886, Appx. form 6.
 
 700 BANKRUPTCY. 
 
 Bk. IV. made the subject of discussion and judicial decision. 
 
 Chap. 4. j n ^j s place, * however, it is only proposed to notice 
 
 " ec ' ' those which relate to fraudulent transfers of property. 
 
 [ * 627] A transfer of property is not an act of bankruptcy, 
 
 Fraudulent unless it is intended to pass the ownership in the thing 
 conveyances, transferred ; a mere removal of property is not an act 
 of bankruptcy (z). 
 
 Notwithstanding the omission from clause (6) of § 
 4 of the words " with intent to defeat or delay his cred- 
 itors," the fraud referred to is a fraud upon creditors, 
 and not upon other persons (a); and such fraud must 
 be proved as a matter of fact. But it seems to be set- 
 tled that where a person without any actual fraud con- 
 veys all his property to secure a past debt, he commits 
 an act of bankruptcy (b). As the necessary conse- 
 quence of such a conveyance is to defeat or delay cred- 
 itors, it is said that an intent to defeat or delay them 
 must be inferred ; and that such a conveyance must be 
 fraudulent, or must at all events be treated as if it were 
 fraudulent. This reasoning is not altogether satisfac- 
 tory (c). It is, however, probably safe to say that 
 under the present law, as under the previous statutes, a 
 conveyance or assignment by a debtor of all, or substan- 
 tially all (cl), his property, either in satisfaction of (e), or 
 as a security for (/) a debt previously contracted, is an act 
 of bankruptcy, unless made pursuant to an agreement en- 
 tered into when the debt was contracted(g) ; although the 
 
 (z) Isitt v. Beeston, L. R. 4 Ex. 159. 
 
 (a) Re Wood, 7 Ch. 302 ; Ex parte Cohen, ib. 20. 
 
 (6) Ibid. • 
 
 (c) See Ex parte Mercer, 17 Q. B. D. 290, where Freeman v. 
 Pope, 5 Ch. 538, is observed upon. 
 
 (d) Re Wood, 7 Ch. 302 ; Ex parte Hawker, ib. 214 ; Ex parte 
 Cohen, ib. 20 ; Ex parte Foxley, 3 Ch. 515 ; Ex parte Bailey. 3 
 De G. M. & G. 534 . Ex parte Bland, 6 ib. 757 ; Stanger v. Wilk- 
 ins, 19 Beav. 626. Compare Smith v. Timms. 1 H. & C. 849, 
 where it was held that a bond fide assignment by a trader of all 
 his property, with a small but not a colourable exception, was 
 not an act of bankruptcy. See, also. Young c. Waud, 8 Ex. 221, 
 where the assignment was upheld, though, if enforced, it would 
 have stopped the assignor's trade. 
 
 (e) Siebert v. Spooner, 1 M. & W. 714. 
 
 (/) Ex parte Payne, 11 Ch. D. 539, where there was forebear- 
 ance ; Re Wood, 7 Ch. 302 ; Ex parte Cohen, ib. 20 ; Ex parte 
 Hawker, ib. 214 ; Lindon v. Sharp, 6 Man. & Gr. 895; Oriental 
 Banking Co. v. Coleman, 3 Gift". 11 ; Turner v. Hardcastle, 11 C. 
 B. N. S. 683. 
 
 (g) Ex parte Izard, 9 Ch. 271. If the agreement is not to take 
 effect until the debtor gets into difficulties, the agreement will 
 not protect the transaction, see Ex parte Fisher, 7 Ch. 636 ; Ex 
 parte Burton, 13 Ch. D. 102; Ex parte Kilner, ib. 245 ; Ex parte 
 Bolland, 8 ib. 230.
 
 cases. 
 
 ACTS OF BANKRUPTCY. 701 
 
 conveyance or assignment * is made bond fide and un- [ * 62S J 
 der pressure from the creditor (h); and although the Bk. IV. 
 creditor does not know that he is taking all his debt- ^ nap - 4 - 
 
 or's property (*'). A conveyance or assignment of part ' 
 
 only of a debtor's property is also an act of bankruptcy 
 if it is void under § -48 as amounting to a fraudulent 
 preference (k). That section is as follows : — 
 
 § 48. — (1.) Every conveyance or transfer of property,, or charge Avoidance of 
 thereon made, every payment made, every obligation incurred, preferences 
 aud every judieial proceeding taken or suffered by any person * n certain 
 unable to pay his debts as they become due from his own money car 
 in favour of any creditor, or any person in trust for any creditor, 
 with a view of giving such creditor a preference over the other 
 creditors shall, if the person making, taking, paying, or suffer- 
 ing the same is adjudged bankrupt on a bankruptcy petition 
 presented within three months after the date of making, taking, 
 paying, or suffering the same, be deemed fraudulent and void as 
 against the trustee in the bankruptcy (/). 
 
 (2.) This section shall not affect the rights of any person mak- 
 ing title in good faith and for valuable consideration through or 
 under a creditor of the bankrupt. 
 
 This section does not avoid as a fraudulent preference 
 a conveyance or transfer of property unless three things 
 concur, viz. :— 1. The conveyance, &c, must be made 
 by a person unable to pay his debts as they become due ; 
 2nd. It must be made with a view of giving a creditor 
 a preference over others ; 3rdly. It must be made 
 within three months of the bankruptcy petition. As 
 regards the second requisite, a conveyance, &c, made 
 spontaneously by the debtor and without any demand 
 or pressure from the creditor, or even in willing com- 
 
 (/() .Re Wood, 7 Ch. 302; Jones v. Harber, L. R. 6 Q. B. 77; Wood- 
 house v. Murray. L. R. 4 Q. B. 27 ; Newton v. Chantler, 7 East, 
 138 ; Smith v. Cannan, 2 E. & B. 35 ; Leake v. Young, 5 ib. 955 ; 
 Stanger v. Wilkins, 19 Beav. 620. 
 
 (i) Smith v. Cannon, 2 E. & B. 35. 
 
 {k) See \ 4 [c\ which settles the point raised in Ex parte Holli- 
 day, 8 Ch. 283, and Ex parte Norton, 16 Eq. 397. 
 
 (I) N.B. — The section does not enable other persons to invali- 
 date such transactions, Willmottv. London Celluloid Co., 31 Ch. 
 D. 425, and 34 ib. 147 ; Ex parte Cooper, 10 Ch. 510 Section 47 
 of the Bankruptcy Act, 1883, does not apply to the administra- 
 tion by the court in bankruptcy of the estate of a deceased in- 
 solvent under \ 125 of that act. Ex parte Official Receiver, Re 
 Gould, 19 Q. B. D. 92. Still less does # 47 apply to ordinary ad- 
 ministration actions in the High Court. The Judicature Act, 
 1875, \ 10, does not render it so applicable. Similar observa- 
 tions apply to the group of sections 43-48 of the Bankruptcy 
 Act, 1883. See the judgments in the same case.
 
 (02 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 1. 
 
 [ * 6291 
 
 Sales, &c, 
 for present 
 considera- 
 tion. 
 
 pliance with such a demand, is deemed to be made with 
 a view of giving a ^preference (wi), unless the evidence 
 shows that it was made with some other view (n). And 
 even if there is pressure a conveyance or payment to a 
 class of creditors, or to a trustee for them, is within the 
 section (o). 
 
 On the other hand a sale or mortgage by a debtor of 
 all his property for a present advance, made bond fide 
 to enable him to carry on his business, is not an act of 
 baakruptcy (p); although the purchaser may be a 
 creditor and may only pay the difference between the 
 purchase-money and what is owing to him (q). So the 
 bond fide giving security for present or future advances 
 agreed to be made (?*), or for any other advantage, e.g., 
 an agreement to give time (s), is not an act of bank- 
 ruptcy, although the security may comprise all the bor- 
 rower's property (t), and cover an antecedent debt (u). 
 
 (m) See on this section Ex parte Griffiths. 23 Ch. D. 69 ; Ex 
 parte Hill, ib. 695 ; Ex parte Pearson, 8 Ch. 667; Exparte Topham, 
 ib. 614 ; Exparte Bolland, 7 Ch. 24 ; Exparte Tempest, 6 Ch. 70, 
 affirming Ex parte Craven, 10 Eq. 648, as to the distinction be- 
 tween acts which are voidable on the ground of fraudulent prefer- 
 erence, and acts which are avoided by reason of the relation back 
 of the trustee's title. Marks v. Feldman, L. R. 5 Q. B. 275, 
 
 (n) See Exparte Taylor, 18 Q. B. D. 295, where the object was 
 to avoid a criminal prosecution. See, also, Exparte Mercer, 17 
 ib. 290. 
 
 (o) Exparte Saffery, 4 Ch. D. 555, affirmed 3 App. Ca. 213, sub 
 nom. Tompkins v. Saffery. 
 
 {p) Exparte Reed and Steel, 14 Eq. 586; Baxter r. Pritchard, 
 1 A. & E. 456; Lee r. Hart, 11 Ex. 880, and 10 Ex. 555. In 
 each of these cases the seller contemplated bankruptcy, but the 
 purchaser acted bond fide. See, as to mortgages, Be Colemere, 1 
 Ch. 128. 
 
 (q) Exparte Norton, 16 Eq. 397; Bell v. Simpson, 2 H. & N. 
 410; Pennell r. Dawson, 18 C. B. 355; Pennell v. Reynolds. 11 
 ib. N. S. 709. Compare Graham v. Chapman, 12 C. B. 85, where 
 the advance was itself included in the assignments. This case, 
 however, cannot now be relied upon. See the above cases, and 
 Lomax v. Buxton, L. R. 6 C. P. 107. 
 
 (r) Exparte Dann, 17 Ch. D. 26; Ex parte Wilkinson, 22 ib 
 788. 
 
 (s) As in Philps v. Hornstedt, 1 Ex. D. 62, affirming S. C. L. 
 R. 8 Ex. 26. Compare Ex parte Wood, 10 Ch. D. 313; Wood- 
 house v. Murray, L. R. 4 Q. B. 27. 
 
 (t) Hutton v. Crutwell, 1 E. & B. 15; Bittlestone v. Cooke, 6 
 E. & B. 296; Harris r. Rickett, 4 H. & N. 1. But see Ex parte 
 Sparrow, 2 De G. M. & G. 907. A bund fide mortgage of part of 
 a trader's property is clearly not an act of bankruptcy, see 
 Mather v. Fraser, 2 K. & J. 536. 
 
 (u) Ex parte Izard, 9 Ch. 271; Exparte Hodgkin, 20 Eq. 746; 
 Allen v. Bonuett, 5 Ch. 577; Pennell v. Reynolds. 11 C. B. N. S. 
 709; Shrubsole v. Sussams, 16 ib. 452. Compare Ex parte Fisher, 
 7 Ch. 636, where the present advance was made to obtain secur- 
 ity for a past debt.
 
 ACTS OF BANKRUPTCY. 703 
 
 Still less does *a person commit an act of bankruptcy [ * 630] 
 by bond fide conveying or assigning part of his prop- Bk. IV. 
 erty in payment of, or as a security for, a debt in re- J™ 1 *" 4 * 
 
 spect of which he is being pressed (x); and notwith- ! ! 
 
 standing § 4, cl. 1 (a) it is apprehended that a bond 
 fide assignment of part of his property upon trust for 
 sale and payment of all his debts is not an act of bank- 
 ruptcy (y). 
 
 In connection with this subject it is important to ob- Protected 
 serve the clause at the end of § 48, protecting persons transactions, 
 making title in good faith and for valuable considera- 
 tion throiagh a creditor of the bankrupt (z), and also § 
 49, which relates to dealings with the bankrupt himself 
 without notice of any act of bankruptcy. This section 
 will be referred to more at length hereafter (infra, s. 
 2). This protecting clause applies to the unsolicited 
 payment of a debt if the creditor accepts payment bond 
 fide in the ordinary course of business, and in ignor- 
 ance of any available act of bankruptcy of his debtor (a). 
 A fortiori the clause applies to a return under pressure 
 of goods not paid for (6). 
 
 Moreover, a debtor who is a trustee and who gives Fraudulent 
 to his cestui que trust, or sets apart for him that preference by 
 which in equity is his, does not commit an act of trustees, 
 bankruptcy, and although the gift or setting apart may 
 have been made in immediate contemplation of bank- 
 ruptcy, it cannot be deemed a fraudulent preference (c). 
 
 In order that a conveyance or assignment may be an Effect of 
 act of bankruptcy, it must be made within three months lapse of three 
 before *the presentation of the petition (d). But al- [*631] 
 though more than three months may have elapsed since months alter 
 
 (x) Ex parte Craven, 10 Eq. 648, and under the name Ex parte 
 Tempest, 6 Ch. 70; Ex parte Bolland, 7 Ch. 24; Crosby v. Crouch, 
 11 East, 256; Young v. Waud, 8 Ex. 221; Hale v. Allnutt, 18 C. 
 B. 505; Strachan v. Barton, 11 Ex. 647, where the debt had not 
 been payable. See, too, Belcher /•. Prittie, 10 Bing. 408; Ban- 
 natyne v. Leader, 10 Sim. 350; Johnson v. Fesenmeyer, 25 Beav. 
 88, and 3 De G. & J. 13. 
 
 \y) Bannatyne v. Leader, 10 Sim. 350; Berney v. Davison, 1 
 Brod. & B. 408; Berney v. Vyner, ib. 482. But an attempt to 
 prefer some creditors to others is clearly void, Ex parte Saffrey, 4 
 Ch. D. 555, and 3 App. Ca. 213. 
 
 (z) Ante, p. 628. 
 
 (a) See under the old law. Butcher v. Stead, L. R. 7 H. L. 
 839; Ex parte Hodgkin, 20 Eq. 746. 
 
 (b) Ex parte Topham, 8 Ch. 614; Ex parte Blackburn, 12 Eq. 
 358. 
 
 (c) See Ec parte Taylor, 18 Q. B. D. 295; Ex parte Kelly &Co., 
 11 Ch. D. 306; Edwards v. Glyn, 2 E. & E. 29; Sinclair v. Wil- 
 son, 20 Beav. 324; Gardner v. Rowe, 2 Sim. & Stu. 346. 
 
 (d) I 6 (c). 
 
 the convey- 
 ance.
 
 704 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 1. 
 
 an assignment was made, it may be impeached for 
 fraud under the statute of 13 Eliz. c. 5 (e); or be in- 
 validated by the relation back of the title of the trus- 
 
 Conveyances, tees (/). 
 
 &c, by part- The foregoing doctrines are of considerable import- 
 ance to partners ; for even if an assignment is intended 
 to be executed by all the partners, and it is in fact exe- 
 cuted by one of them only, still its execution by that 
 one may be an act of bankruptcy on his part (g). 
 Moreover, if all the partners execute the deed, and one 
 of them only becomes bankrupt, the deed is avoided as 
 to all of them (h). Again, if partners assign all their 
 property to a person who undertakes to pay their debts, 
 they thereby commit an act of bankruptcy (i). So, if 
 partners, have resolved to stop payment, and they give 
 cheques to particular creditors with a view to prefer 
 them, that amounts to a fraudulent preference and an 
 act of bankruptcy on the part of the firm (k) ; unless 
 the payments are protected under § 49 already noticed. 
 
 Convevance But a conveyance by one partner of all his separate 
 
 by one part- property to a trustee, upon trust for sale and payment 
 of the debts of the firm, is not an act of bankruptcy if 
 made bond fide for the purpose of relieving the firm from 
 its difficulties, and of enabling it to carry on its busi- 
 ness, and if it is not made for the purpose of, and has 
 not in fact the effect of, defrauding the separate cred- 
 itors of the assignor (I). And it is apprehended* that 
 a conveyance by a firm of all its joint estate would not 
 be an act of bankruptcy if the separate creditors of the 
 -partners were not prejudiced (m). But a mortgage of 
 
 Jf joint estate in favour of separate creditors will be a 
 fraud on the joint creditors, and therefore an act of bank- 
 
 (e) See, as to this, Ex parte Chaplin, 26 Ch. D. 319; Ex parte 
 Games. 12 Ch. D. 314; Allen v. Bonnett, 5 Ch. 577; Marks v. 
 Feldman, L. R. 5 Q. B. 275; Jones v. Harber, L. R. 6 Q. B. 77; 
 Hassel v. Simpson, 1 Bro. C. C. 99, better reported in 1 Dougl. 
 89, note, under the name of Hassells v. Simpson; Pulling v. 
 Tucker, 4 B. & A. 382; Ex parte Sparrow, 2 De G. M. & G. 907; 
 Exparte Taylor, Sib. 392; Oswald v. Thompson, 2 Ex. 215; Ex 
 parte Thomas, De G. 012; Ex parte Jackson, ib. 609. 
 
 (/) Under \ 43 of the act. See infra, I 2. 
 
 (g) See Bowker v. Burdekin, 11 M. & W. 128. 
 
 (h) See Ex parte Addison, 3 Mon. & A. 434. 
 
 (i) Ex parte Zwilchenbart, 3 M. D. & D. 671. See, too, Tur- 
 quand v. Vanderplank, 10 M. & W. 180. 
 
 (k) Exparte Simpson, De Gex, 9; Bevan v. Nunn, 9 Bing. 107. 
 
 (?) Abbott v. Burbage, 2 Bing. X. C 444; and see Beniey r. 
 Davison, 1 Brod. & B. 408, and Berney v. Viuer, ib. 482, and the 
 next note. 
 
 (m) See as to this, \ 4, cl. 1 (a), and Ex parte Saffery, 4 Ch. D. 
 555. 
 
 ner m 
 trust for 
 creditors of 
 trm. 
 
 [*632]
 
 ACTS OF BANKRUPTCY. 705 
 
 ruptcy if the joint estate is insolvent (n) ; and a mort- Bk. IV. 
 gage by a partner of his separate estate in favour of Chap. 4. 
 
 joint creditors would, it is apprehended, be equally in- t- 
 
 valid if it prejudiced his separate creditors. 
 
 An ordinary conveyance or assignment by one partner Conveyances 
 to another is not (with reference to the present sub- from one 
 ject) distinguishable from any other conveyance or as- P artner to 
 signment. But as each partner has a lien on the part- another - 
 nership property for what is due from the firm to him 
 as a partner, it has been held that a bond fide assign- 
 ment by one partner of all his share and interest in the 
 partnership assets to his co partner, upon trust, first, 
 to pay the partnership debts, secondly, to retain what 
 is due to himself from the firm, and thirdly, to divide 
 the surplus between the partners, does not constitute an 
 act of bankruptcy on the part of the assignor, although 
 he may have had little other property than that com- 
 prised in the assignment (o). Such an assignment does 
 not, in fact, do more than enable the assignee to work 
 out the lien which he had previously to, and inde- 
 pendently of, the assignment, and is not within the 
 words of § 4, cl. 1 (a). 
 
 In order to sustain a joint adjudication against two Rules as to 
 or more persons, it is necessary that some act of bank- J oin * adjud- 
 ruptcy shall have been committed by each of them ( p). lcatlons - 
 But it is not requisite that they should all have com- 
 mitted an act of bankruptcy of the same kind. Thus, 
 it will be sufficient if one has departed the realm with 
 intent to defraud his creditors, and another has kept 
 his house to avoid them, and a third has lain in gaol 
 for debt, and so on (q). But if a joint act of bank- 
 ruptcy is relied * upon, all the partners must be proved [ * 633] 
 to have concurred in it (r). 
 
 An act of bankruptcy committed by one partner will Act of bank- 
 not amount to an act of bankruptcy on the part of his ruptcy coni- 
 co-partners, unless it can be shown to have been, in mvtted J>y 
 point of fact, their act as well as his. The case of onlyf*" ^ 
 Mills v. Bennett (s) is a strong instance of this ; there Mills v. 
 ■ Bennett. 
 
 (n) Exparte Snowball, 7 Ch. 534. 
 
 (o) See Payne v. Hornby, 25 Beav. 280, where the assignor was 
 a surviving partner, and the assignee the executor of his deceased 
 partner. 
 
 (p) Beasley v. Beasley, 1 Atk. 97 ; Mills v. Bennett, 2 M. & S. 
 556 ; Allen v. Hartley, 4 Doug. 20 ; Dutton v. Morrison, 17 Ves. 
 193 ; Hogg v. Bridges, 8 Taunt. 200. 
 
 (q) Watson on Part. 248. 
 
 (r) See the cases in the next note. 
 
 (s) 2 M. & S. 550, See, too, Ex parte Blaine, 12 Ch. D. 522 ; 
 Exparte Mavor, 19 Ves. 543 ; Ex parte Addison, 3 DeG. &S. 580. 
 
 * 22 LAW OF PARTNERSHIP.
 
 706 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 1. 
 
 Time of 
 commission 
 of the act of 
 bankruptcy. 
 
 Dormant 
 pgrtners. 
 
 one of three bankers resided at the bank, and alone con- 
 ducted the business of the firm, his co-partners residing 
 at a distance. The resident and acting partner absented 
 himself from the bank, shut it up, and stopped pay- 
 ment, and it was held that this was not sufficient to 
 support a joint adjudication against the three partners. 
 
 In order to support a joint adjudication against all 
 the members of a firm, each must have committed an 
 act of bankruptcy during the continuance of a joint 
 debt (t). 
 
 A dormant partner may be either included in an ad- 
 judication against the firm (u), or be adjudged bank- 
 rupt on a petition against him separately (x). The 
 same, it is apprehended, is true of nominal partners (y). 
 
 2. The petitioning creditor's debt. 
 
 Who may 
 petition. 
 
 634] 
 
 The petitioning creditor may be an ordinary individ- 
 ual, or a company empowered to sue and be sued by a 
 public officer (z), or a corporation (a), e. g., a registered 
 company (b). 
 
 An unincorporated company may petition against 
 one of its shareholders (c). So the trustee of a friendly 
 society may * petition against a member, in respect of a 
 debt owing by the member to the society (d). 
 
 If a single individual petitions, the debt in respect of 
 which he petitions must be owing to him solely, and 
 not to him and others jointly (e). "When, however, a 
 firm petitions, the petition need only be signed by one 
 of the partners (/). If one member of a firm is bank- 
 
 (f.) See Ex -parte Bamford, 15 Ves. 449 ; Ex parte Dewdney, ib. 
 495. 
 
 (u) As in Exparfe Lodge and Feudal. 1 Ves. J. 166. 
 
 (x) As in Ex parte Hamper, 17 Ves. 403. 
 
 (?/) Ex parte Murton, 1 M. I). & D. 252, is an example of an 
 adjudication against a firm of two, one of whom was only liable 
 to third persons, in consequence of his having held himself out 
 as a partner. 
 
 (s) Bank. Kules, 1886, rule 258. As to the old law, see Guthrie 
 v. Fisk, 3 B. & C. 178. As to the mode of describing him, see 
 Ex parte Torkington, 9 Ch. 298. 
 
 (a) 46 & 47 Vict. c. 52, § 168, "Person." Ex parte Collins, 
 De Gex, 381 ; Ex parte Sneyds, 1 Moll. 261. 
 
 (6) Re Calthrop, 3 Ch. 252. 
 
 (e) See Ex parte Hall, Mon. & Ch. 365. 
 
 (d) Hope v. Meek. 10 Ex. 829. 
 
 (e) Buckland v. Newsame, 1 Taunt. 477. 
 
 (/) 46 & 47 Vict. c. 52, \ 115, and form 10 in Sched. to the 
 Bank. Rules, 1886, and as to the affidavit in support, see rules 
 149 to 151, and form 12.
 
 PETITIONING CREDITOR S DEBT. 70" 
 
 rupt his trustee should be a co-petitioner with the Bk. IV. 
 solvent partners (g). ^ ha P- 4 - 
 
 The amount of the aebt due to the petitioning cred- 
 
 itor or creditors must be 50Z. at least (h); and if the Amount of 
 debt is secured, the security must be given up or its petitioning 
 value must be estimated and deducted, and the petitioner ^"L 1 m 
 must give it up, if required, at its estimated value (/). 
 A debt, however, of 50Z. bought up for less than that 
 sum is sufficient in amount (k). 
 
 By the Bankruptcy Act, 1883, § 6, cl. 1 (b), the peti- Nature of 
 tioning creditor's debt must be a liquidated sum pay- tlebt - 
 able either immediately or at some certain future time. 
 
 A debt proved under a former bankruptcy will sup- 
 port a second adjudication, the object of which is to 
 impeach transactions not impeachable under the first (I). 
 
 Even where a person is a creditor to a sufficient Circum- 
 amoant, where his debt has accrued at the proper time, stances 
 and where the debtor has committed an act of bank- y*icn pre- 
 ruptcy, there may be circumstances which preclude the cre ciitor 
 creditor from obtaining adjudication against his debtor, from peti- 
 For example, the creditor may be an alien enemy, as tioning. 
 where, though a British subject, he is residing and trad- 
 ing in an enemy's country without license (in); or, the 
 creditor may rely on an act of bankruptcy, to which he 
 has himself been privy, as where the debtor has assigned 
 all his property in trust for his creditors, and the pe- 
 titioner is a creditor who is bound by such * assign- [ *635] 
 ment (n); in such cases as these, an adjudication at his 
 instance cannot be supported. 
 
 A partner who is a creditor of his co-partner, may Petition by 
 petition for, and obtain a receiving order against his one partner 
 co-partner (o). This is clear, from many cases, of a S anist 
 which Ex parte Notley (p) may be taken as a type. 
 There the petitioning creditor had lent the bankrupt a Noth'v 
 sum of money upon the terms of receiving interest at 
 hi. per cent., and a share in the net profits of the bank- 
 rupt's business, so long as the principal remained un- 
 paid ; repayment of the principal and interest was se- 
 
 {g\ Ex parte Owen, 13 Q. B. D. 113. 
 
 (h) 46 & 47 Vict. c. 52, \ 6 (1, a). 
 
 (i) lb. \ 6 (2). 
 
 (k) Doe v. Ingelby, 14 M. & W. 91. 
 
 (1) kx parte Wieland, 5 Ch. 486. 
 
 (m) McConnell v. Hector, 3 Bos. & P. 113. 
 
 (n) Ex parte Payne, De Gex, 534. 
 
 (o) See, in addition to the cases noticed in the text, Windham 
 v. Paterson, 2 Rose, 466 ; Ex parte Nokes. and Ex parte Maberley, 
 1 Mont, on Part., note N., p. 62. 
 
 (p) 1 Mon. & Ayr. 46.
 
 708 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 1. 
 
 Ex parte 
 Richardson. 
 
 Ex parte 
 Gray. 
 
 [*636] 
 
 Improper 
 petitions by 
 one partner 
 against his 
 co-partner. 
 
 cured by a bond and a judgment. The principal so lent, 
 together with some arrears of interest thereon, consti- 
 tuted the petitioning creditor's debt, and it was held 
 sufficient; for although the borrower and the lender were 
 liable to strangers as if they were partners, the debt in 
 question had nothing to do with the partnership ac- 
 counts, and might have been recovered by action at 
 law. Again, in Ex parte Richardson ( q ), two brothers, 
 Henry and William, had been partners, and had dis- 
 solved partnership. On the dissolution, the accounts 
 were taken, and the firm was found debtor to William 
 in 1000Z. and upwards. Henry continued the business, 
 without paying off what was due to his brother, and 
 borrowed from him from time to time other monies, 
 which were placed to William's credit in his account 
 with the late firm. William petitioned for an adjudi- 
 cation against Henry, and was held to have a sufficient 
 debt (r). 
 
 But, in order that a debt may be sufficient to support 
 a petition for a receiving order, the debt must be one 
 to which there is no equitable defence. This was so 
 under the previous statutes, as is shown by Ex parte 
 Gray (s), where the petitioner was not the creditor 
 partner himself, but his trustee. Hodges * and Gray 
 were partners. Hodges had brought in 1000Z. as his 
 share of the partnership capital, and had lent Gray 
 1000Z., which he brought in as his share. Gray had cov- 
 enanted with Hodges to repay him this sum with inter- 
 est ; and, as a further security Gray had executed a 
 mortgage to a trustee for Hodges, and had covenanted 
 with the trustee. to pay him the same sum with interest. 
 Hodges had filed a bill for a dissolution of partnership, 
 and for an account. His trustee then petitioned for, 
 and obtained an adjudication of bankruptcy against 
 Gray ; but the adjudication was annulled, on the ground 
 that Hodges, having filed a bill for an account, would 
 not have been allowed to sue for the 1000Z. at law, and 
 that his trustee was in no better position than himself. 
 
 In connection with this subject, it may be observed 
 that under the older statutes, although one partner 
 might have obtained an adjudication of bankruptcy 
 against his co-partner, still, if it appeared that the real 
 
 (q) 3D. &Ch. 244. 
 
 (r) In this case there was a sufficient debt irrespectively of the 
 balance found due to William on the dissolution, but the brothers 
 treated the loans made subsequently as if made to the late firm. 
 
 (s) 2 Mon. & A. 283. See, also, Ex parte Page, 1 Gl. & Jam. 
 100 ; Hope v. Meek, 10 Ex. 842.
 
 THE ADJUDICATION. 709 
 
 object of the petitioner was to dissolve the partnership, Bk. IV. 
 and that an adjudication of bankruptcy was not re- £ na P' 4 ' 
 
 quired for any other purpose, the adjudication would k ' 
 
 be annulled (t). So it would if it had been obtained 
 on the petition of a creditor acting at the instigation of 
 one of the partners ; and whether the adjudication was 
 against the whole firm, or one only of its members, was 
 immaterial (u). It is apprehended that under the 
 Bankruptcy Act, 1883, the Court will also dismiss a 
 petition or annul a receiving order on similar grounds (x). 
 
 *3. Of joint and separate adjudications. [*637] 
 
 A debt owing by one partner only will not support a Joint debt 
 
 joint adjudication against him and his co-partners (y); wil1 support 
 
 but, a debt owing bv all the partners of a firm is suf- a , s . e;,: ' 1;lte 
 ,. . , , Y " t t j- • i adiudication. 
 
 ficient to support an adjudication against any one or 
 
 more of them (z) ; and probably, a debt owing by several 
 persons jointly will support an adjudication against 
 any one or more of them, although they may not be all 
 the members of a firm, or indeed partners at all (a). 
 
 Where a receiving order is made against a firm, the 
 joint and separate creditors are collectively convened 
 to the first meeting of creditors (6). The trustee ap- 
 pointed by the joint creditors is the trustee of the 
 separate estate (c). If two or more members of a firm 
 constitute a separate and independent firm, the creditors 
 of such firm are deemed to be a separate set of cred- 
 
 (t) Ex parte Christie, Mont. & Bl. 314 ; Ex parte Browne. 1 
 Rose, 151 ; Ex parte Johnson, 2 M. D. & D. 678 ; Ex parte Phipps, 
 3ib. 505. But see Ex parte Upfill, 1 Ch. 439. 
 
 (u) See, in addition to the cases just cited, Ex parte Hall, 3 
 Deac. 405 ; Ex parte Bourne, 2 Gl. & J. 137 ; Ex parte Harcourt, 
 2 Rose, 214, 215 ; Ex parte Galliniore, ib. 434. In Ex parte Nash, 
 12 Jur. 494, Ex parte Parkes, 3 Deac. 31, and Ex parte Wilbran, 
 alias Wilbeam, 5 Madd. 1, and Buck, 459, the Court refused to 
 supersede the commission, not being satisfied that it had been 
 obtained with an improper object. See. also, Ex parte Upfill, 1 
 Ch. 439. 
 
 (x) See Ex parte Grifiin, 12 Ch. D. 480 ; Ex parte Harper, 20 ib. 
 685. As to annulling on equitable grounds, see Ex parte Clax- 
 ton, 7 Ch. 532 ; and as to injunctions to restrain proceedings in 
 bankruptcy, see Attwood v. Banks, 2 Beav. 192 ; Perry v. Walker, 
 1 Y. & C. C. 672 ; Pirn v. Wilson, 2 Ph. 653. 
 
 (y) See Ex parte Clarke, 1 D. & C. 544. 
 
 (z) 46 & 47 Vict. c. 52, ? 110. See, as to members of com- 
 panies empowered to sue and be sued by public officers, Davison 
 v. Farmer, 6 Ex. 242, overruling Ex parte Wood, 1 M. D. &D. 92. 
 
 (a) See Ex parte Chambers, 2 M. & A. 440. 
 
 (6) Bank. Rules, 1886, r 265. 
 
 (c) Ib. r. 268.
 
 710 BANKRUPTCY. 
 
 Bk. IV. itors, and are on the same footing as the separate cred- 
 
 Chap. 4. itors of any individual member of the hrm (d). 
 
 ' Partners who are dormant or who are nominal merely, 
 
 Partners who may be adjudicated bankrupt (e). But there seems to 
 may be adju- ^ e a difficulty in supporting a joint adjudication against 
 raot " severa ^ partners, one of whom is dormant and is only 
 
 entitled to a share of the profits ; for in such a case 
 there is no joint property to administer (/). "Where 
 all the partners save one are dead, the survivor can be 
 made bankrupt ; and although all the joint property 
 may in one sense be vested in him by survivorship, a 
 petition filed against him alone before his co-partners 
 died, will not be superseded in favour of a petition filed 
 against him alone since their death (g). 
 | * 038] * "Where a debtor by or against whom a bankruptcy 
 
 Effect of petition has been presented dies, the proceedings are 
 death o a continued as if he were alive, unless the Court other- 
 wise orders (h) ; and if, after the filing of a petition 
 against several persons, one of them dies, an adjudi- 
 cation may be made against the survivors ; or if an 
 adjudication has already been made against them and 
 the deceased, it will be amended (7). 
 Cases of two Where there are two distinct firms, a major and a 
 liruis with minor firm, a creditor of the latter only may obtain a 
 
 common -joint adjudication against all the persons who compose 
 iKirt Lit* i*** j j <-? j. -t 
 
 it ; although their co partners in the major firm can- 
 not be included in the same adjudication (j). If, 
 however, the major firm is adjudicated bankrupt, this 
 involves the bankruptcy of the minor firm ; and its 
 creditors can, therefore, obtain payment of their debts 
 under the adjudication against the major firm, although 
 they could not have procured such adjudication (k). 
 Concurrent Formerly it was the practice for the creditor of a 
 
 adjudica- firm of several partners to take out separate commis- 
 sions against each partner, as well as a joint commission 
 against the whole firm ; the object being to distribute 
 
 {d) lb. r. 269. 
 
 (e) See Ex parte Matthews, 3 V. & B. 125 : Ex parte Hamper, 
 17 Ves. 403. Dormant partners may be omitted, see Ex parte 
 Benfleld, 5 Ves. 424. 
 
 ( f ) See Ex parte Hamper 17 Ves. 403. 
 
 (g) Ex parte Smitb, 5 Ves. 295. 
 
 (A) 46 & 47 Vict. c. 5:2, \ 108. This does not apply to debtors 
 who die before they are served, Ex parte Hill and Hymans, 19 
 Q. B. D. 538. 
 
 (i) See Ex parte Hall, De Gex. 332. 
 
 (,/) Ex parte Chambers, 2 Mont. & A. 440. and Bernaseoni v. 
 Fairbrotlier. ib. 441 . see ib. 472. 
 
 (A-) Ex parte Worthington, 3 Madd. 26. See Bauk. Bules, 
 1886, r. 269. 
 
 tions.
 
 tions against 
 same person. 
 
 THE ADJUDICATION. 711 
 
 the assets of the firm under the joint commission, and Bk. IV. 
 the separate assets of each partner under the separate Chap. 4. 
 
 commission issued against him (I). The modern prac- ec ' ' „ 
 
 tice, however, is different ; for now, under a joint ad- 
 judication against a firm, not only are the assets of the 
 firm distributed amongst its joint creditors, but the 
 separate assets of each partner are also distributed 
 amongst his own separate creditors (m). Under a joint 
 adjudication, therefore, everything can be done as fully 
 and effectually as under separate adjudications against 
 all the members ; and more can be done * than under [ * 639] 
 separate adjudications against some only of them. For 
 these, amongst other reasons, a joint creditor seldom or 
 never now thinks of petitioning for separate adjudi- 
 cations against all the partners. If he is desirious of 
 making them all bankrupt, he petitions for a joint ad- 
 judication against the firm (n). 
 
 It used to be considered that a person who had been Several 
 once made bankrupt was incapable of being made bank- adjudica- 
 rupt again unless he had obtained a certificate ; and 
 that a second adjudication against him was utterly 
 void (o). But the correctness of this view has been 
 since denied ; and it has been decided that the trus- 
 tees under a second adjudication against an uncertificated 
 bankrupt are entitled to recover property acquired by 
 him since the first adjudication (p). It is, however, 
 obvious that inasmuch as all the property of a bank- 
 rupt, until he has obtained his order of discharge, may 
 
 (?) See Cooke's Bank. Law. 13 and 14. 8th ed. Qu., how this 
 could he done consistently with the doctrine that a person once 
 made bankrupt cannot, until he has obtained his certificate, be 
 made bankrupt again ? See, on this subject, 1 Mont. Part, notes 
 K. & 2 B. pp. 44 and 100, of the appendix. 
 
 (to) The bankruptcy of a firm is in fact the bankruptcy of the 
 individuals composing it ; see Graham v. Mulcaster, 4 Bingllo ; 
 Stonehouse v. De Silva, 3 Camp. 399. 
 
 (w) In Ex parte Gardner, 1 V. & B. 77. a creditor of a firm ob- 
 tained separate adjudications against all the partners, but Lord 
 Eklon evidently disapproved of that course. But see Ex parte 
 Duncan, 1 Mon. D. & D. 149, and E.v parte Burdikin. 2 ib. 187. 
 
 (o) Ex parte Crew, 16 Ves. 2:57; Nelson r. Cherrell, 7 Bing. 
 663; Phillips v. Hopwood, 1 B. & Ad. 019; Martin r. O'Hara, 
 Cowp. 823 ; Ex parte Proudfoot, 1 Atk. 251 ; Ex parte Brown, 
 and Ex parte Munton, 1 V. & B. 60 ; Till v. Wilson, 7 B. & C. 
 090 ; Fowler v. Coster, 10 ib. 427 ; and see Ex parte Chambers, 
 3 M. & A. 294, and a note to Ex parte Welsh, Mont. 280, where 
 all the eases on the subject will be found collected. See, too, 1 
 Mont. Part, note K. p. 44, and 2 B. p. 100. If there are two 
 commissions, and the first has never been acted on. the second is 
 valid : see Warner v. Barber, 8 Taunt. 176. 
 
 (p) Ex parte Watson, 12 Ch. I). 380; Morgan v. Knight, 15 C. 
 B. N. S. 009. See, also, Ex parte Dewhurst, 7 Ch. 185.
 
 712 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Beet. 1. 
 
 Joint adjudi- 
 eation after a 
 separate one. 
 
 [ * 640] 
 
 Annulling 
 
 be acquired by his trustee for the benefit oT his credit- 
 ors, a second adjudication against him is generally of 
 little, if any, use if the trustee in the first bankruptcy 
 interferes (q). But this observation does not apply to 
 the case of a partner ; for in general it is much more 
 expeditious, cheap, and otherwise advantageous to wind 
 up the affairs of partners under a joint adjudication 
 against the firm, than under one or more separate ad- 
 judications against the members thereof individually. 
 Consequently joint are regarded * with more favour 
 than separate adjudications ; and if a separate adjudi- 
 adjudication. ca tion has been obtained against a partner, and a joint 
 adjudication is afterwards obtained against the firm to 
 which he belongs, the Courts will give effect to the latter 
 adjudication, and annul the former, unless in justice will 
 result from so doing, This course was first adopted by 
 Lord Thurlow in Ex parte Hardcastle (?*), and the ad- 
 vantages of a more extensive adjudication over a less 
 extensive one were so great, that it became quite a 
 matter of course to annul separate adjudications against 
 individual partners where a valid joint adjudication 
 against the firm had been also obtained (s). But if the 
 joint adjudication was invalid, e. g., owing to the insuf- 
 ficiency of the petitioning creditor's debt, or of the 
 evidence showing acts of bankruptcy by all the persons 
 included in it, or if there was no joint estate worth 
 mentioning, a prior separate adjudication would not be 
 annulled (t). Moreover, although as a rule, a sepa- 
 rate adjudication would be annulled in order that a 
 subsequent joint adjudication might be proceeded with, 
 this was only because, as a rule, it was most to the ad- 
 vantage of creditors that this course should be taken. 
 The Courts would, in their discretion, support which- 
 ever of several adjudications allowed most complete 
 
 (q) As to the relative rights of the first and second sets of trus- 
 tees, see Ex parte Ford, 1 Ch. D. 521 ; Ex parte Caughey, 4 Ch. 
 D. 533 ; Ex parte Watson, 12 ib. 380. 
 
 (r) 1 Cox. 397. 
 
 (s) Ex parte Pemherton, 1 M. D. & D. 190. The eases in which 
 joint commissions have been upheld, and separate ones super- 
 seded, are very numerous. The following are those most usually 
 referred to : — Ex parte Brown, 1 V. & B. 60 ; Ex parte Rawson, 
 1 V. & B. 100 ; S. C, Ex parte Masson, 1 Kose. 159; Ex j,nrte 
 Smith. 1 Gl. & J. 256 : Ex parte Patchelor, 2 Rose. 20 ; Ex parte 
 Burdikin, 2 M. D. & D. 187 ; Ex parte Digby, 1 Deac. 347. As 
 to consolidating the proceedings under petitions for joint and 
 separate adjudications respectively, see Ex parte Mackenzie, 20 
 Eq. 758. 
 
 (0 Ex parte Roberts, 1 Madd. 72; Re Beale, 2 Dm. & War. 
 566 ; Ex parte Rennick, 12 Jur. 996.
 
 THE ADJUDICATION. 713 
 
 justice to be done, and annul all the others (u) ; and Bk. IV. 
 instances are not wanting in which joint adjudications Chap. 4 . Sect. 
 
 have been annulled, and separate ajdudications allowed J 
 
 to proceed (x). In Re O'Reardon one of two partners Re O' Rear- 
 was adjudicated bankrupt in England and the other ( * on - 
 was adjudicated bankrupt in Ireland ; both were then 
 jointly adjudicated * bankrupt in Ireland : most of the [ * 641] 
 joint creditors, and a considerable part of the joint 
 estate were in England. The Court in England de- 
 clined to order the joint assets to be remitted to Ireland 
 for distribution there (y). 
 
 Again, where two firms having a common partner were Bankrupt 
 both adjudged bankrupt, in which case the common m-ms with 
 partner was adjudged bankrupt twice over, the latest of common 
 the adjudications was superseded as to him (z) It was 
 at one time doubted whether this could be done (a); 
 but that doubt was long ago removed, and there is a 
 case in which an uQwilling purchaser was compelled to 
 take an estate, the title to which depended on this very 
 point (aa). 
 
 Where a separate adjudication had been made, and a Supporting 
 joint adjudication was afterwards petitioned for, but one . adjndi- 
 there was no sufficient evidence to support it without c:ltiou °7 
 having recourse to what had been proved in the matter i^TriotherP 
 of the separate adjudication, use was made of what had 
 been so proved, and the evidence given in support of 
 the separate adjudication was ordered to be produced 
 in order that a joint adjudication might be made (b). 
 When a separate adjudication against one partner was 
 annulled in favour of a joint adjudication against him 
 and his co-partners, it was usually expressly declared 
 in the annulling order (c) that all sales under the first 
 bankruptcy should be confirmed and carried into execu- 
 tion by the assignees under the second; that the proofs 
 
 («) Ex parte Crew, 16 Ves. 237 ; Ex parte Rawson, 1 V. & B. 
 163 ; Ex parte Cridland, 2 Rose, 164. 
 
 (x) Ex parte Rowlandson, 1 Rose, 89 ; and see Ex parte Cutten; 
 Buck, 68 ; Ex parte Hamper, 17 Ves. 403. See, too, the last note 
 but one. 
 
 (y) Be O'Reardon, 9 Ch. 74. 
 
 (2) Ex parte Coleman, Mon. & McAr. 15; Ex parte By grave, 2 
 Gl. &. Jam. 391. 
 
 (a) Ex parte Burlton, 2 Gl. & Jam. 344. 
 
 {aa) Burlton v. Wall, Tarn. 113. 
 
 (h) Ex parte Sharp, 2 Mon. D. & D. 350; Ex parte Harrison, 2 
 Gl. & J. 135. Ex parte Burdekin, 1 Deac. 57, is, however, op- 
 posed to these. 
 
 (c) See 1 lie precedents in Ex parte Mason or Rawson, 1 Rose, 
 428; Re Colbeck, Buck, 54; Ex parte Digby, 1 Hcac. 347; Ex 
 parte Ravenscroft, 4 ib. 172.
 
 714 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 1. 
 
 [ * 642] 
 
 Costs of 
 annulling. 
 
 Annulling 
 after cer- 
 tificate. 
 
 Staying 
 proceedings 
 instead of 
 annulling. 
 
 Legality of 
 annulling 
 one adjudi- 
 cation to 
 give effect to 
 another. 
 
 Modern 
 practice. 
 
 of debts under the first should be considered as if they 
 had been made under the second (d); that all creditors 
 should be admitted to prove under the second bank- 
 ruptcy; that distinct accounts of the joint and separate 
 estates should be kept; that the assignees in the first 
 bankruptcy should account to those in the second for 
 assets possessed under the first, and should allow ac- 
 tions to *be brought in their names by the assignees 
 under the second bankruptcy. 
 
 The costs of annulling a separate, in order to give 
 effect to a joint, adjudication, were usually borne by the 
 joint estate (e). 
 
 The fact that the bankrupt had obtained his order of 
 discharge under an adjudication did not prevent such 
 adjudication from being annulled (/). 
 
 Where, in consequence of what had been done under 
 an adjudication, it was inexpedient to annul it, the prac- 
 tice was not to annul, but to impound it, and to stay all 
 further proceedings under it (g). 
 
 The power to annul a prior adjudication, and to give 
 effect to a subsequent one, was not so clearly established 
 at law as it was in bankruptcy and in equity (h). 
 Hence, an injunction to restrain the production at law 
 of evidence to show the existence of the annulled bank- 
 ruptcy, would, if necessary, be granted (i). However, 
 in one case where an action was brought by assignees, 
 and a verdict was obtained by them, but a petition for 
 superseding their commission was pending, the Court 
 of King's Bench, on the application of the defendant, 
 stayed execution, and ordered that the amount recov- 
 ered shotdd be paid into Court (k). 
 
 It has been considered desirable thus to refer to the 
 
 (d) See Ex parte Bateson, 1 M. D. & D. 500. 
 
 (e) Ex parte Duncan, 1 M. D. & I). 149; Ex parte Burdikin,ib. 
 531; Ex parte Sharp, 2 ib. 531; Ex parte Peat, ib. 788. See. too, 
 Ex parte Morris, 10 Jur. 1018, where an invalid adjudication 
 against three persons was annulled to give effect to a subsequent 
 adjudication against two of them. 
 
 {/) Ex parte Cutten, Buck, 68; Ex parte Eowlandson, 1 Kose, 
 89: Ex parte Gillam. 2 Cox, 193; Ex parte Poole, ib. ±27. 
 
 (//) See Ex parte Tobin, 1 V. & B. 308: Ex parte Rowlandson, 
 1 Rose, 416; Re Col beck. Buck, 54; Ex parte Digby, 1 Deac. 347; 
 Ex parte Ravenscroft, 4 Deac. 172; Ex parte Lister, 3 ib. 516. 
 
 {h) Butt v. Bilke, 4 Price, 241; and 2 Rose, 171 note, and see 
 Lord Eldon's observations in Ex parte Lees, 16 Ves. 472, and in 
 Ex parte Cridland, 2 Rose, 167; and see 1 Mont. Part. 51 and 52, 
 notes. 
 
 (i) Ex parte Thompson, 1 Rose, 285. The fact that an adjudi- 
 cation has been annulled, can now, it is apprehended, be set nf 
 as defence without difficulty. 
 
 [k) Hodgiuson v. Travers, 1 B. & C. 257.
 
 THE ADJUDICATION. 715 
 
 _ier practice, because, although the Bankruptcy act, Bk. IV. 
 jSS, does not contain any express provision for annul! - ^ ap " 
 
 mg or superseding * a separate in favour of a joint k ' 
 
 adjudication, circumstances may arise which render [* 643] 
 suet a proceeding desirable; and as the old practice is 
 preserved, the previously established rules on this sub- 
 ject will probably not be disregarded (I). 
 
 Under the Bankruptcy act, 1883, an adjudication may Grounds for 
 be annulled if the Court is of opinion that the debtor annulling an 
 ought not to have been adjudged bankrupt, or if his adjudication, 
 debts have been paid in full (vi); but no other ground 
 for annulling an adjudication is expressly mentioned. 
 But the general power to stay and consolidate proceed- 
 ings is probably sufficient for most, if not all practical 
 purposes (n ). 
 
 The consequences of annulling an adjudication are 
 stated in § 35 (2) to be as follows: — 
 
 \ 35. — (2. ) Where an adjudication is annulled under this sec- Conse- 
 
 tion all sales and dispositions of property and payments duly quences ot 
 
 made, and all acts theretofore done, by the official receiver, trus- iuinu 1U 8 ot 
 
 ' J . adjudica- 
 
 tee, or other person acting under their authority, or by the ^ 011 . 
 
 Court, shall be valid, but the property of the debtor who was ad- 
 judged bankrupt shall vest in such person as the Court may ap- 
 point, or in default of any such appointment revert to the debtor 
 for all his estate or interest therein on such terms and subject to 
 such conditions, if any, as the Court may declare by order (o). 
 
 By the Bankruptcy act, 1883, § 106, it is enacted 
 that 
 
 Where two or more bankruptcy petitions are presented against Consolida- 
 the same debtor or against joint debtors, the Court may consoli- tion of pro- 
 date the proceedings, or airy of them, on such terms as the Court cee °-mgs. 
 thinks fit. 
 
 It is therefore to be inferred that, under the present 
 
 (/) See Bank Rules, 1886, r. 353; Ex parte Claxton, 7 Ch. 532; 
 and infra, p. 6G6. 
 
 (m) 46 & 47 Vict. c. 52, \ 35. 
 
 (n) See \\ 106, 109; and as to annulling and adjudication ob- 
 tained viuhi fide to dissolve a partnership, see ante, p. 636. 
 
 (o) See, on the corresponding section of the Act of 1869, West 
 v. Baker, 1 Ex. D. 44; Bailey v. Johnson, L. R. 7 Ex. 2<>::. and 
 6 ib. 269. Under the old law the effect of annulling an adjudi- 
 cation depended upon the cause for which it was annulled. !l' 
 annulled upon the ground that it ought never to have been made, 
 then, speaking generally, everything done under it was invalid; 
 but if annulled upon some other ground, then the annulment 
 had no retrospective effect. Sec Smallcombe v. Olivier, 13 M. & 
 W. 77: and Buck, 260, in the note. Compare Ex parti Milner, 
 i:i Ves. 204;. Gould v. Shoyer, 6 Bing. 738.
 
 716 BANKRUPTCY. 
 
 Bk. IV. as under the old law, if separate adjudications are ob- 
 
 Chap. 4. tained * against all the members of a tirm, the sepa- 
 
 Sect - L rate adjudications may be consolidated and prosecuted 
 
 [ *644] as if there were a joint adjudication (p); and if there 
 is also a joint adjudication, an order may be obtained 
 consolidating them all, and staying further proceedings 
 under the separate adjudications (q). So, if two firms 
 are separately adjudged bankrupt, the two adjudica- 
 tions will be consolidated and prosecuted as one, if so 
 to do will be for the benefit of the creditors of both 
 firms (r). 
 
 By the Bankruptcy act, 1883, it is also enacted by § 
 112 'that 
 
 ^ r 3 112. Where a receiving order has been made on a bankruptcy 
 
 Propertv of * ° , „ . . ,, 
 
 partners to petition against or by one member of a partnership, any other 
 
 be vested in bankruptcy petition against or by a member of the same part- 
 same trustee. ners hip shall be filed in or transferred to the Court in which the 
 first-mentioned petition is in course of prosecution, and, unless 
 the Court otherwise directs, the same trustee or receiver shall be 
 appointed as may have been appointed in respect of the property 
 of the first-mentioned member of the partnership, and the Court 
 may give such directions for consolidating the proceedings un- 
 der the petitions as it thinks just. 
 
 Under this section it would probably be held, as it 
 was under the older law, that if there is a separate ad- 
 judication against one partner, and a joint adjudica- 
 tion against his co- partners, either with him or with- 
 out him, the joint adjudication will be ordered to be 
 prosecuted with the separate adjudication (s). 
 
 4. Choice of trustee. 
 
 Separate creditors cannot vote in the choice of a 
 trustee under a joint adjudication (t); but joint cred- 
 it) Be Gowar, 1 M. D. & D. 1. 
 
 {q) Ex parte Lister, Mon. & Ch. 2G0; Ex parte Mackenzie, 20 
 Eq. 758. 
 
 (r) See in Harris v. Fanvell, 13 Beav. 403; Ex parte Grylls, 12 
 Jur. 171, a firm trading in one district was adjudicated bank- 
 rupt in another where one of the partners resided. The proceed- 
 ings were removed from the latter to the former district. 
 
 (s) See Ex parte Mackenzie. 20 Eq. 758; Ex parte Green, 3 De 
 G. & J. 50; Ex parte Haines, ib 58; Be Simmons, 2 M. D. & D. 
 603. See, also, the last note. 
 
 (t) Ex parte Parr, 1* Yes. 65; Ex parte Jepson, 19 Yes. 224; 
 Ex parte Hamer, 1 Rose. 321. These cases were all decided long 
 before the passing of the present Bankrupt act, but they are gen- 
 erally understood to be in accordance with the present state of 
 the law.
 
 CHOICE OF TRUSTEES. 717 
 
 itors are entitled * to vote in the choice of a trustee un- [ * 645] 
 der a separate adjudication (u). **k. IV. 
 
 If a separate is annulled in favour of a joint adjudi- U»ap-4.bect 
 cation, the separate creditors lose their right to vote in J 
 the choice of a trustee ; but this has been decided not Effect of 
 to be a sufficient reason for preserving the first adjudi- ^j^|™!on. 
 cation (x). 
 
 Upon a joint adjudication against a firm the trustee 
 appointed by the joint creditors is the trustee of the 
 separate estates. But each set of separate creditors 
 may appoint its own committee of inspection ; in default 
 of such appointment the committee (if any) appointed 
 by the joint creditors is deemed to be appointed by the 
 separate creditors also. See Bank. Rules, 1886, r. 
 268. 
 
 "Under the old practice, where there was a joint ad- Appointment 
 judication, and assignees had been chosen by the joint jj 1 "^^ 1-8 
 creditors (y), and the separate creditors of one of the the separate 
 bankrupts could show that their interests required it, creditors, 
 they were allowed to appoint an inspector of the sepa- 
 rate estate of the bankrupt in question ; and the in- 
 spector appointed was empowered to collect, and get in, 
 such separate estate, and to use the names of the as- 
 signees for that purpose, indemnifying them against 
 the costs of proceedings taken in their names ; he was 
 also directed to pay what he received into such bank as 
 the separate creditors might select , and was authorised 
 to inspect, and take copies of, all books and documpnts 
 in the possession of the assignees, and relating to the 
 separate estate (z). The costs of obtaining an * order [ * 646] 
 for liberty to choose an inspector, and also the costs, 
 charges, and expenses, properly incurred by him in the 
 execution of his duties, were borne by the estate to pro- 
 
 («) 46 & 47 Viet. c. 52, Sched. 1, § 13. A firm may vote by 
 any of its members, 46 & 47 Viet. c. 52, § 148. A corporation 
 votes by an officer appointed under its common seal, ib. Com- 
 panies empowered to sue by public officers vote by them or by 
 attorneys appointed by them, *ee Bank. Rules, 1886, r. 245, and 
 forms, and r. 258; Ex parte Ackroyd, 1 M. D. & D. 555: and the 
 appointment of the attorney need not be under seal, Naylor v. 
 Mortimore, 17 C. B. N. S. 207. 
 
 (ar) See Ex parte Pachelor, 2 Rose, 26. 
 
 \y) Be Daintry, 2 M. D. & D. 257, shows that leave to appoint 
 an inspector would not be granted before the assignees were 
 chosen ; and Ex parte Holford, ib. 485, shows that liberty to ap- 
 point an inspector would not be refused simply because there 
 was no imputation against the assignees. 
 
 \z) Bee Exparte Wright, 2 M. D. & D. 434 ; Ex parte Wilson. 1 
 ib. 310 ; Ex parte Dawson, 3 D. & C. 12 ; Ex parte Batson. 1 Gl. 
 & J. 269 ;' Exparte Miles, 2 Rose, 68 ; .E^wWeBasarro, 1 ib. 266.
 
 718 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 2. 
 
 tect which he was appointed (a). A similar course was 
 pursued where there was no joint adjudication, but where 
 the joint creditors had appointed the assignees, and the 
 interests of the separate creditors required protection (6). 
 The present rule 268 will, however, probably render 
 it unnecessary to have recourse to this practice except 
 under very special circumstances. 
 
 Property 
 
 vesting in 
 trustee. 
 
 Property 
 vesting in 
 the trustee 
 of a bank- 
 rupt firm. 
 
 [*647] 
 
 Section II. — The Property Which Vests in the 
 Trustee, and the Consequences of Such Vesting. 
 
 1. Generally. 
 
 Speaking generally, it may be said, that when a per- 
 son is adjudicated bankrupt, all property, both real and 
 personal, to which he is then beneficially entitled, or to 
 which he becomes beneficially entitled before he obtains 
 his order of discharge, vests in his trustee, for the bene- 
 fit of his creditors (c). 
 
 When a firm of partners is adjudicated bankrupt, or 
 when a joint adjudication is made against two or more 
 partners, all the joint property of the bankrupts, as 
 well as all the separate property of each of them, vests 
 in the trustee (cl). Moreover, their joint property vests 
 in the trustee, as juint property, and without reference 
 to the equality or inequality of the bankrupt's shares 
 therein (e). 
 
 Before the Judicature acts, when each of the mem- 
 bers of a firm was separately adjudged bankrupt, the 
 trustees of them all, could not recover, in one action, 
 debts due to the firm, and * also debts due to the part- 
 ners separately. The trustee of each partner must 
 have sued alone for the recovery of debts due to him 
 only (/). But probably it would be held otherwise 
 now if expedient (g). 
 
 (a) Ex parte Holford, 2 M. D. & D. 485, and see the cases in 
 the last note. 
 
 (b) Ex parte Melbourne, 6 Ch. 835. 
 
 (c) 46 & 47 Vict. c. 52, \\ 20 (1), 44, 54. 
 
 {(I) Bank. Pules, 1886, r. 268 ; Exparte Cook. 2 P. W. 500 ; 
 Hague v. Pollston, 4 Burr. 2176; Bolton v. Puller. 1 Bos. & P. 
 539 ; Graham v. Mulcaster, 4 Bing. 115. So under the Indian 
 Insolvency act, 11 & 12 Vict. c. 21, Brown v. Carbery, 16 C. B. 
 N. S. 2. 
 
 (e) Exparte Hunter, 2 Rose. 382. 
 
 (/) See Hancock v. Haywood, 3 T. R. 433 ; and as to the dec- 
 laration in an action by several sets of assignees for the recovery 
 of a joint debt, see Ray v. Davies, 8 Taunt. 134. 
 
 (g) See Jud. Rules, 1883, Ord. xvi. rr. 1, 4. 6 ; and Ord. xviii. 
 rr. 1, 3, 6.
 
 PROPERTY VESTING IN TRUSTEES. 719 
 
 "When one of several partners is adjudicated bank- Bk. IV. 
 rupt his trustee becomes entitled to all his separate ^nap. 4. Sec+. 
 
 property, and to all his interest in the joint property (h); 1 
 
 but subject to the qualification alluded to below ( p. 653), Property 
 the trustee can claim no more than the bankrupt him- vestni S "J 
 self would have been entitled to, had he not become bankrupt 
 bankrupt ; and every lien available for his co-partners partner, 
 against him is equally available for them against his 
 trustee (i). Consequently the trustee can claim noth- 
 ing as the bankrupt's share until all the joint creditors 
 have been paid (&), and the partnership accounts have 
 been duly taken and adjusted (I). On the other hand, 
 the solvent partners have no right to insist on taking 
 the partnership assets to themselves, and to pay the 
 trustee the estimated value of the bankrupt's share ; for 
 the right of the trustee against them, as well as their 
 right against the trustee, is to have an account, and a 
 sale and distribution (m). In one case it was even de- 
 cided, that a stipulation in the articles of partnership 
 to the effect that, on the bankruptcy of one of the part- 
 ners, his share should be taken by the others at a valu- 
 ation, was not binding on the assigeees (n); but the 
 circumstances of the case were somewhat peculiar ; and 
 there seems no reason why such a stipulation should 
 necessarily be ineffectual. 
 
 * In Whitmore v. Mason (o), partnership articles con- [ * 648] 
 tained a provision that, on the bankruptcy of a partner, Whitniore v, 
 an account should be taken and a valuation made of Mason, 
 his share and interest in the partnership property, with 
 the exception of a particular lease. It was held that 
 this exception was void, as against the assignees of a 
 partner who had become bankrupt, and that they were 
 entitled to his share in the lease. The provision as to 
 valuing the bankrupt's share was not sought to be 
 avoided by the assignees. 
 
 Upon principles which have already been discussed, Profits 
 
 (h) The trustee can, with the leave of the Court, sue for a joint 
 debt in the names of the trustee and of the bankrupt's partner, 
 46 & 47 Vict. c. 52, g 113. 
 
 ((") See Anon., 3 Salk. 61, and 12 Mod. 446; Fox v. Hanbury, 
 Cowp. 445 ; West v. Skip, 1 Ves. S. 239 ; Bolton v. Puller, 1 Bos. 
 & P. 548 ; 1 Mont. Part., note P., p. 66. 
 
 (k) Taylor v. Fields, 4 Ves. 396; Holderness v. Shackels, 8 B. 
 & C. 612 ; Richardson v. Gooding, 2 Vern. 293 ; Ex parte Terrell, 
 Buck, 345 ; Gross v. Dusfresnay, 2 Eq. Ab. 110, pi. 5. 
 
 (I) See West v. Skip, 1 Ves. S. 239, 456. 
 
 (m) Crawshay v. Collins, 15 Ves. 229 ; Wilson v. Greenwood, 1 
 Swanst. 471. 
 
 (n) Wilson v. Greenwood, 1 Swanst. 471. 
 
 (o) 2 J. & H. 201.
 
 720 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. Sect. 
 Sect. 2. 
 
 accruing 
 subsequently 
 to bank- 
 ruptcy. 
 Right of 
 trustee to 
 account from 
 the executors 
 of a deceased 
 partner. 
 
 Trustee does 
 not become 
 partner. 
 
 [ * 649] 
 
 Bankruptcy 
 a cause of 
 dissolution. 
 
 the trustee of a bankrupt partner is entitled to an ac- 
 count, not only of the assets as they stood at the time 
 of the dissolution of the firm, but also of the profits 
 subsequently made by the employment of the bank- 
 rupt's capital in the partnership business (p). 
 
 Where there is a fiim of two partners, and one part- 
 ner dies, and the other becomes bankrupt, the trustee 
 of the latter is entitled to maintain an action on behalf 
 of himself and all the other creditors of the deceased 
 against his executors, for the administration of his es- 
 tate, and for payment of what may be due therefrom to 
 his surviving partner (q). 
 
 The trustee, it will be observed, does not become a 
 co-partner with the solvent partners. Like purchasers 
 from the sheriff under an execution against one part- 
 ner, the trustee and the solvent partners become ten- 
 ants in common of the real and personal p operty be- 
 longing to the firm (r). Moreover, as the sheriff, in the 
 case of an execution against one partner, is entitled to 
 seize the whole of the partnership property so the 
 * messenger of the Court in Bankruptcy, in the case of 
 an adjudication against one partner, is in strictness en- 
 titled to put a person in possession of the whole of the 
 property of the firm. This, however, is seldom done, 
 as the solvent partners, either by consent, or through 
 the intervention of the Court, make arrangements for 
 securing to the trustee payment of the bankrupt's share 
 in the assets of the firm (s). 
 
 When one partner only is adjudged bankrupt, the 
 firm is thereby nevertheless dissolved (t). If it were 
 not, the solvent partners would have forced upon them 
 as co-partners, persons with whom they had never 
 agreed to be in partnership ; a result which would be 
 contrary to the fundamental principle that partnership 
 
 (p) See ante, p. 526, Crawshay r. Collins, 15 Ves. 218, 1 J. & 
 W. 267, and 2 Euss. 325 ; Smith v. De Silva, Cowp. 469. This 
 last case seems at first sight to be opposed to the existence of 
 that lien which is above stated to be available against the trus- 
 tee. But the question before the Court was simply whether the 
 assignees had a right to share profits accruing since the bank- 
 ruptcy, and Lord Mansfield very properly held that they had. 
 His judgment certainly shows that he considered the assignees 
 were entitled to those profits without paying what wasdue from 
 the bankrupt to his co-partners ; but on this point the case can- 
 not, it is conceived, be supported. See 8 B. & C. 618. 
 
 (q) See Addis v. Knight, 2 Mer. 119. 
 
 (/) See Fox v. Hanbury, Cowp. 445. 
 
 (s) A sale of the share to them need not be by auction, Be 
 Motion, 9 Ch. 192. 
 
 (t) Fox v. Hanbury, Cowp. 448 ; Ex parte £mith, 5 Ves. 297, 1 
 Mont. Part,, note E., p. 22.
 
 PROPERTY DIVISIBLE AMONGST CREDITORS. 721 
 
 cannot subsist between any persons save by the mutual Bk. IV. 
 consent of them all. The bankruptcy of one partner, Chap. 4. Sect. 
 
 moreover, dissolves the firm, not only as to him, but as J 
 
 to all the other co-partners, inter se (u); for, in the first 
 place, a partnership, being a mere assemblage of per- 
 sons bound together by contract, loses its identity, as 
 much by the bankruptcy, as by the death, of one of 
 those persons ; and in the next place, such is the law 
 of this country, that the share of a bankrupt partner 
 cannot be ascertained, save by taking the accounts of 
 the whole firm, and distributing its clear assets amongst 
 the solvent partners and the trustee of the bankrupt 
 partner. 
 
 As on the bankruptcy of one only of several part- Jurisdiction 
 ners the joint assets do not vest in his trustee, an ofCourtof 
 action in the Chancery Division to ascertain the share ^ n 7*- cy 
 of the bankrupt was formerly necessary (x), but now share, 
 the Court in Bankruptcy can itself ascertain such 
 share (y). 
 
 The doctrine that on the bankruptcy of one member R U i e as to 
 of a firm the whole firm is dissolved, is not, it seems, companies, 
 applicable to * mining partnerships (z); and although [ * 650] 
 the bankruptcy of a shareholder in an unincorporated 
 company with transferable shares may dissolve the 
 company as to him (a), it is conceived that such bank- 
 ruptcy does not dissolve it as to the other shareholders 
 inter se. 
 
 2. Property divisible amongst the creditors. 
 
 It is not proposed in the present treatise to enter 
 minutely into the details of the law respecting the 
 property which, in the event of bankruptcy, vests in 
 the trustee, or may be made available by him for the 
 benefit of the creditors ; it will be sufficient to call 
 attention to the short effect of the Bankruptcy act, 
 1883, on this subject and then to allude to the compli- 
 cated questions which arise from the doctrines of set- 
 off and mutual credit, the relation back of the title of 
 the trustee and of reputed ownership. 
 
 (m) See Hague v. Rolleston, 4 Burr. 2174 ; Fox v. Hanbury, 
 Cowp. 418 ; Crawshay v. Collins, 15 Ves. 228. 
 
 (») See Be Motion, 9 Ch. 192 ; Morley v. White, 8 Ch. 211 ; 
 Ex parte Gordon, ib. 555 ; Ex parte Rumboll, G Ch. 842 ;Ex parte 
 Anderson, 5 Ch. 473; Ex parte Sheriff of Middlesex, 12 Eq. 207. 
 
 (y) See 4G & 47 Vict. c. 52, \\ 93 and 102, but as to County 
 Courts, see the \ 102. 
 
 (z) Ex parte Broadbent, 1 Mont, & A. 638 ; BentleyV Bates, 4 
 Y. & C. Ex. 190. $ed qusere if the mine is a partnership assets. 
 
 (a) Greenshield's case, 5 De G. & S. 599. 
 
 * 23 LAW OF PARTNERSHIP.
 
 722 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 Property 
 vesting in 
 trustee. 
 
 [ * 651] 
 
 Lands. 
 
 Chattels. 
 
 On adjudication the property of a bankrupt vests in 
 the trustee (6), i. e., the official receiver, until a trustee 
 is appointed, and in the trustee when appointed (c). 
 The title of the trustee relates back to the act of bank- 
 ruptcy on which the receiving order is made ; or to the 
 earliest act of bankruptcy committed within three 
 months before the presentation of the petition (d). 
 Until adjudication the property of a bankrupt con- 
 tinues vested in him, subject to be divested retrospec- 
 tively upon adjudication. But the moment a receiving 
 order is made the official receiver's powers and duties 
 as a receiver commence (e), so that the debtor cannot 
 properly deal with his property, although it is not yet 
 divested from him. 
 
 The property which on adjudication vests in the 
 trustee is enumerated in §§ 44 and 168 of the act. 
 It includes : — 
 
 1. All the bankrupt's property, both real and per- 
 sonal, except his tools, clothes and bedding to the value 
 of 20Z.; 
 
 *2. The right to exercise all powers which he could 
 (but for his bankruptcy) exercise for his own benefit, 
 except the right to nominate to a vacant living; 
 
 3. All goods in his possession, order or disposition 
 in his trade or business as reputed owner and by the 
 consent and permission of the true owner. Trade debts 
 are goods within the meaning of this rule, but no other 
 chose s in action are so. 
 
 Onerous property vests in the trustee (ee); but may 
 be disclaimed by him in writing within three months 
 after the first appointment of a trustee (/). 
 
 Ofdinary freehold estates, to which the bankrupt is 
 entitled for life, or in fee, vest in his trustee, subject to 
 such mortgages or charges as may affect them (g). 
 Lands of which a bankrupt is seised in tail, do not, 
 strictly speaking, vest in his trustee; but such lands 
 may be disposed of for the benefit of his creditors (h); 
 and a similar observation applies to the bankrupt's 
 copyhold property (i). 
 
 The personal property of a bankrupt, including all 
 
 (b) 40 & 47 Vict. c. 52, U 54 and 20 (1). (c) \ 54 (1, 2, 3). 
 
 (d) 8 43. (e) I 9. (ee) j|44. ( /) 155. 
 
 \g) Where land is devised to a trader charged with a sum of 
 money which is allowed to remain on the security of the land, 
 his trustee can only claim the land subject to the charge. See 
 Ex pa ric Forster, 1 M. D. & D. 418. and 2 ib. 177, under the 
 name Hudson v. Forster. See, too, Ex parte Barflf, De Gex, 613. 
 
 (h) 40 & 47 Vict. c. 52, \ 56, cl. 5. 
 
 (i) \ 50, cl. 4.
 
 PROPERTY DIVISIBLE AMONGST CREDITORS. 723 
 
 trade debts owing to him, also vests in his trustee (k), Bk. IV. 
 subject to such charges and incumbrances (7) as exist ^ ^P"„ 4 ' 
 thereon. But this is qualified by the doctrine that, if '" 
 the bankrupt is in trade or business, his goods and 
 chattels, if allowed by the person to whom they are 
 pledged to remain in the bankrupt's possession, will, 
 by virtue of the doctrines of reputed ownership, be dis- 
 tributable as part of the bankrupt's estate, as if they 
 were his absolutely (m). 
 
 * The trustee is also entitled to the benefit of con- [ *652] 
 tracts made with the bankrupt for valuable considera- 
 tion (n). 
 
 Where chattels purchased by the bankrupt have ac- 
 tually come to his possession, they pass to his trustee, 
 although he may not have paid for them; but if they 
 have not come to his possession, the seller can retain 
 them, or stop the delivery of them until their price is 
 paid (o). 
 
 No person is entitled as against the trustee to with- Books of 
 hold possession of the books of account of the bank- account, 
 rupt, or to claim any lien thereon (p). 
 
 The trustee may sell the good-will of the business of Debts, g o<l- 
 the bankrupt, and the book debts due or growing due will, &c. 
 to him, and may transfer the same to any person or 
 company (q). 
 
 Shares belonging to the bankrupt vest in his trus- shares, 
 tee (r); but he may sell them (s), or disclaim them (t) 
 without becoming a shareholder himself. But he has 
 
 (k) \\ 44, 54, and 168. Debts owing to the bankrupt by a 
 person to whom he is indebted, are subject to set-off, as will be 
 seen hereafter. As to how far the trustee is bound by contracts 
 entitling others to use the bankrupt's goods, see Ex parte Barter, 
 26 Ch. D. 510. • 
 
 (1) The Bills of Sale act must be borne in mind, but it has no 
 special bearing on partners. A bill of sale given by two part- 
 ners, one of whom only became bankrupt, was held void as to his 
 interest only, in Ex parte Brown. 9 Ch. D. 389. 
 
 (m) See Jones v. Gibbons, 9 Ves. 407, and see infra. 
 
 (») See Beckham v. Drake. 2 H. L. C. 579; Valpv r. Oakeley, 
 16 Q. B. 941; Whitmore v. Gilmour, 12 M. & W. 80*8. 
 
 (o) See, as to stonpage in transitu, Lickbarrow v. Mason, 1- 
 Sm. L. C. 
 
 O) Bank. Rules, 1886, r. 349. The trustee of one bankrupt 
 partner cannot take the books from the solvent co-partners, Ex 
 parte Finch, 1 D. & Ch. 274. 
 
 (q) 46 & 47 Vict. c. 52, \ 56 (1); Kitson v. Hardwick. L. R. 7 
 C. P. 473; as to a sale of the share of a bankrupt partner, see lie 
 Motion, 9 Ch. 192. As to sale of good-will, Walker v. Mottram, 
 19 Ch. D. 355. 
 
 (r) lb. % 44, 54, and 168. 
 
 (s) lb. \ 50, cl. 3. 
 
 \t) lb. \ 55.
 
 724 BANKRUPTCY. 
 
 Bk. IV. a right to have them registered in his own name (u), 
 
 Chap.^4. unless the company's regulatiofts contain some clause 
 
 __LZ1 inconsistent with such right (x). 
 
 Trust Property held by the bankrupt in trust for any other 
 
 property. person does not vest in the bankrupt's trustee (y). 
 Consequently, if a debtor assigns a debt before he be- 
 comes bankrupt, an action for the recovery of that debt 
 must be brought in his name, or in the name of the 
 person to whom it has been assigned, as the case may 
 be (z). The trustee has no interest in such a debt, 
 [ *653] * and cannot sue for it (a). It has been already ob- 
 served, that a debtor who, in contemplation of bank- 
 ruptcy, restores to, or sets apart for his cestui que trust 
 that which is vested in himself merely as a trustee, 
 does not commit an act of fraudulent preference (£>); 
 and if a bankrupt has had property entrusted to him 
 for a particular purpose, his trustee must apply it to 
 that purpose (c); and if, being unable to accomplish 
 it, the bankrupt has returned the property, his trustee 
 cannot recover it (d). 
 Trustee It is not unusually said that the trustee represents 
 
 stands in the the bankrupt, and has no more extensive rights against 
 place of the third persons than the bankrupt himself would have 
 L> ' had if he had continued solvent: but this proposition 
 is much too general. It cannot be relied upon as re- 
 gards property affected by the doctrines of reputed 
 ownership, nor as regards acts done by the bankrupt 
 since the commission by him of an act of bankruptcy, 
 nor, as regards acts which, though binding on him, are 
 
 (u) Ee Bentham Mills Spinning Co., 11 Ch. D. 900, where the 
 bankrupt was indebted to the company. 
 
 (x) Ex parte Harrison, 28 Ch. D. 363. 
 
 (y) 46 & 47 Vict, c. 52. \ 44, cl. 1. Joy v. Campbell. 1 Soli. & 
 Let: 328; Pinkett v. Wright, 2 Ha. 120. 'See, as to reputed own- 
 ership, infra, and as to the effect of an equitable assignment, 
 Burn v. Carvalho, 4 M. & Cr. 690. 
 
 (z) Winch v. Keeley, 1 T. R. 019; Boddington v. Castelli, 1 E. 
 & B. B. 879, affirming Castelli v. Boddington, ib. 66. Whether 
 the assignee of the debt can sue depends on the application of 
 the Jud. Act, 1873, I 25, cl. 6. 
 
 (a) Carpenter v. Marnell, 3 Bos. & P. 40. 
 
 \b) Ante, p. 630. 
 
 (c) See the authorities referred to infra ? 4 in connection with 
 the subject of secured bills, and Ex parte Waring. See also Ex 
 parte Carrick, 2 De G. & J. 208; Ex parte Gledstanes, 3 M. D. & 
 I). 109; Ex parte Mackey, 2 ib. 136; Ex parte Glyn. 1 ib. 25; Ex 
 parte Brown, '., M. & A. 471. And see, as to a creditor's right oi 
 appropriating securities to one debt rather than to another, Ex 
 parte Johnson, 3 De G. M. & G. 218. and the cases above cited. 
 
 (*) Edwards v. Glyn, 2 E. & E. 29; Toove.y v. Milne, 2 B. & 
 A. 683; Moore v. Barthrop, 1 B. & C. 5. See ante, p. 630.
 
 SET-OFF AND MUTUAL CREDIT. 725 
 
 fraudulent or void as against, his creditors (e). Except, Bk. IV. 
 
 however, as regards such matters, the rule holds good; Chap. 4. 
 
 . Sect 2 
 and its consequences are important, especially with re- ' 
 
 spect to bankrupt trustees and bankrupt partners. 
 
 The Bankruptcy act, 1883, avoids as against the Transactions 
 trustee: — void as 
 
 1. All fraudulent preferences (/); but there is an a " aiI1 - st 
 exception in favour of purchasers for value without 
 notice (g). 
 
 * 2. All voluntary settlements or dispositions of prop- [ * (554] 
 erty made within two years before the bankruptcy; or 
 even if made within ten years before, unless the parties 
 claiming the property can prove that the settlor, &c, 
 had other assets sufficient to enable him to pay his 
 debts (/t),and that his interest in the property in ques- 
 tion passed to the trustee or grantee thereof (i). 
 
 3. Covenants to settle after- required property in 
 which the debtor h°.d no vested or contingent interest 
 and which does not come to him through his wife (k). 
 
 The statute further enables the trustee in certain Executions, 
 cases to obtain the benefit of executions against debtors 
 who are adjudicated bankrupt (I). 
 
 On the other hand the statute contains an important Protected 
 provision (m) for the protection of persons bond fide transactions, 
 dealing with a person liable to be adjudicated bankrupt, 
 and having no notice of any act of bankruptcy com- 
 mitted by him. This provision, however, does not pro- 
 tect any transaction avoided by §§ 45, 47 or 48. 
 
 3. Of set-off and mutual credit. 
 
 "With respect to debts owing to a bankrupt by per- Mutual 
 sons to whom he is indebted, the balance only is re- credits. 
 garded as payable to or by his estate. This equitable 
 doctrine rests upon a statutory enactment (n), which 
 
 (<?) See, as to this. Anderson v. Maltby. 2 Ves. J. 255; Billiteru 
 Young, 6 E. & B. 40. See, also, Ex parte Barter, 26 Ch. D. 510, 
 as to the trustee not being bound by a contract enabling a third 
 person to use the bankrupt's goods to complete a contract en- 
 tered into by hi in. 
 
 (/) I 48, ante, p. 628. (g) Ibid. 
 
 (h) See Ex parte Mercer, 17 Q. B. D. 290; Ex pari c Russell, 19 
 Ch. D. 588; Re Ridler, 22 ib. 74. 
 
 (i) \ 47 (1) and (3), much abridged, Ex parte Todd, 19 Q. B. D. 
 186; and see \ 29. See note (?) p. 628. 
 
 (k) \ 47 (2), and see \ 29. See note (7) p. 628. 
 
 (I) \ 46. set out infra, p. 675. 
 
 (m) \ 49, set out infra, p. 664. 
 
 (n) It was, however, recognised before the mutual credit clause 
 found its way into the Bankruptcy acts. See Anon., 1 Mod. 215; 
 Chapman v. Derby, 2 Vera. 117.
 
 726 BANKRUPTCY. 
 
 Bk. IV. allows debts to be set off against each other in many 
 
 Chap. 4. cases in which they could not be set off had no bank- 
 
 Sect 2 " ruptcy intervened (o). The enactment which now 
 
 regulates this subject is as follows (p): — 
 
 r * 6551 *# 3S - Where there have been mutual credits, mutual debts, or 
 
 Mutual other mutual dealings between a debtor against whom a receiv- 
 
 credit and j U g order shall be made under this Act, and any other person 
 set-off. proving or claiming to prove a debt under such receiving order, 
 
 an account shall be taken of what is due from the one party to 
 the other in respect ot such mutual dealings, and the sum due 
 from the one party shall be set off against any sum due from the 
 other party, and the balance of the account, and no more, shall 
 be claimed or paid on either side respectively ; but a person shall 
 not be entitled under this section to claim the benefit of any set- 
 off against the property of a debtor in any case where he had at 
 the time of giving credit to the debtor, notice of an act of bank- 
 ruptcy committed by the debtor, and available against him. 
 
 Tendency to The above clause is evidently framed with a view to 
 allow rather prevent the great injustice which would arise if a per- 
 thaii disallow gon w j 10 wa8 the creditor of a bankrupt on one account 
 set-off. an( ^ ^ debtor on the other, were compelled to pay 
 
 twenty shillings in the pound on what he owed to the 
 bankrupt, and to receive less than twenty shillings in 
 the pound on what the bankrupt owed him. There is, 
 therefore, a strong tendency to construe the clause in 
 question extensively rather than restrictively, or, in other 
 words, to favour the setting off of cross demands by and 
 against bankrupts (q) ; at the same time the courts can- 
 not carry the doctrines of set-off further than the lan- 
 guage and spirit of the enactment warrant, and some 
 of the earlier cases on the subject have been considered 
 as having gone too far (r). 
 French v. The general doctrine is well illustrated by French v. 
 
 Fenn. Fenn, and Easum v. Cato. In French v. Fenn (s), the 
 
 defendant purchased a row of pearls, and agreed with 
 one Cox to give him one-third of the profits to arise 
 from a sale of them. Cox became bankrupt, and after- 
 wards the defendant sold the pearls, and Cox's assignees 
 
 (o) See Ex parte Stephens, 11 Ves. 
 
 lp) 46 & 47 Vict. c. 52, ? 38. The section does not apply to 
 debts due to or from a firm if one member only is bankrupt, Lon., 
 Bombay, and Med. Bank v. Narraway, 15 Eq. 93, nor to actions 
 brought by bankrupts as trustees for other persons. De Mattos 
 V. Saunders. L. 1\. 7 C. P. 570. 
 
 (q) See Ryall v. Rowles, 1 Ves. S. 375. 
 
 (r) This is particularly the case with Ex parte Deeze, 1 Atk. 
 228, and Ex parte Quintin, 3 Ves. 248. 
 
 (s) 3 Doug. 257. and Cooke's Bank. Law, 565 (ed. 8).
 
 SET-OFF AND MUTUAL CREDIT. 727 
 
 demanded one-third of the profits of the sale, declining Bk. IV. 
 to allow the defendant to set off a debt due from Cox o h ^' 9 4, 
 
 to him at the time of the bankruptcy ; but it was de- ' 
 
 cided that such set-off ought to be allowed. The Court 
 held that there was a great distinction between mutual 
 debts and mutual credits, and that, although the defend- 
 ant was not indebted to Cox at the time of his bank- 
 ruptcy, inasmuch as the pearls had * not then been [ 656] 
 sold, there was a clear case of mutual credit justifying 
 the set-off. 
 
 Easum v. Cato (t) goes even further than the last Easum v. 
 case. There tbe bankrupts shipped goods for sale in a °* 
 the name of Cato, to whom they were indebted ; Cato 
 assented to the use of his name, and he received the 
 proceeds of the sale ; he was sued for these proceeds 
 by the assignees, and was held entitled to set off against 
 them what was owing to him by the bankrupts, although 
 the goods were in no sense his. 
 
 The authority of these cases has been sometimes Young v. 
 thought to be shaken by Young v. The Bank of Ben- Bank of 
 gal (u). There the Privy Council held that bankers Ben S al - 
 with whom notes of the East India Company had been 
 deposited as a security for a loan, and who were em- 
 powered to sell the notes if the loan was not paid, were 
 not entitled, after their debtor had become bankrupt, to 
 set off the proceeds of the sale of the notes against a 
 debt owing by the bankrupt to them unconnected with 
 the loan in question, and arising from the discount by 
 the bankers of the bankrupt's paper before such loan 
 was made. In this case, however, not only had the 
 notes deposited with the bankers not been sold by them 
 before the bankruptcy, but the bankers were, in truth, 
 precluded by their own agreement from holding the de- 
 posited paper for any other purpose than as a security 
 for the loan to which it was specially appropriated. 
 Young v. The Bank of Bengal, therefore, merely shows 
 that even if the deposited notes could be treated as cash, 
 yet the right to set off cross money demands under the 
 mutual credit clause only exists where there is no agree- 
 ment inconsistent with the exercise of such right (x). 
 
 (0 5 B. & A. mi. 
 
 (u) 1 Deac. 622. See, on this case, Alsager v. Currie, 12 M. & 
 W. 751 . 
 
 (x) Ex parte Flint, 1 Swanst. 30; Key v. Flint, 8 Taunt. 21 ; 
 Thomas v. Da Costa, 8 Taunt. 345, and Buchanan v. Findlay, 9 
 B. & C. 738, also illustrate this doctrine. See. too, Hill v. Smith, 
 12 M. & W. 618. Sec, further, as to general liens and to their 
 not attaching to particular securities, B< Bowes, 33 Ch. I). 586 ; 
 Brandaou Barnett,! Man. &Gr. 908; ib.630;and 12Cl.&Fin. 787;
 
 728 
 
 BANKRUPTCY. 
 
 [ * 657] 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect, 2. 
 
 Set-off 
 allowed in- 
 dependently 
 of intention. 
 
 Cases of 
 hills re- 
 turned dis- 
 honoured. 
 
 Bolland v. 
 Nash. 
 
 Debts not 
 yet due. 
 
 [ * 658] 
 
 * It has, however, long been established (hat mutual 
 credit within the meaning of the Bankruptcy acts may 
 exist independently of any intention to create a right 
 of set-off. For example, if A. sells goods to B., and 
 B. obtains from third parties an acceptance cf A.'s 
 without his knowledge, A.'s claim against B. for the 
 goods sold, and B.'s claim against A. on the bill, may 
 be set off on A.'s bankruptcy, although the acceptance 
 has not fallen due (y). 
 
 Moreover, the mutual credit clause applies, although 
 the demand of the bankrupt may not have been con- 
 tinuous from the time when it accrued to the time of 
 the bankruptcy. This is often the case when the bank- 
 rupt's claim rests on a bill of exchange which he has 
 indorsed away, but which after his bankruptcy is re- 
 turned dishonoured. Thus in Bolland v. Nash (z), A. 
 accepted a bill for advances made to him by his bank- 
 ers, and they indorsed the bill to a third person for 
 value and became bankrupts. The indorsee was him- 
 self indebted to the bankers ; and he having required 
 A. to pay the bill, which A. refused to do, and having 
 then set the debts due to himself from the bankers and 
 to them from himself against each other, returned the 
 bill to the assignees. They then sued A upon it, but 
 it was held that he was entitled to set off the balance 
 due from the bankers to him on his account with them 
 at the time of their bankruptcy, although at that time 
 they did not hold his bill. 
 
 It is also established that demands by and against a 
 bankrupt may be set off, although they may not have 
 become enforceable previously to his bankruptcy ; e. g., 
 where bills have been accepted but have not become 
 due (a); where calls have become due since the bank- 
 ruptcy (b). 
 
 It may also be observed that simple contract debts 
 may be * set off against specialty debts, and vice 
 
 Bock v. Gorrissen, 2 De G. F. & J. 434 ; Joues v. Peppercorne, 
 Johns. 430 ; Olive v. Smith, 5 Taunt, 56 ; and as to liens on funds 
 appropriated to the payment of particular bills, see Inman v. 
 Clare, Johns. 769 ; Jeffryes v. Agra and Masterman's Bank, 2Eq. 
 674. 
 
 (y) Hankey v. Smith, 3 T. R. 507. See, also, Bailey v. John- 
 son, L. R. 6 Ex. 279, and 7 Ex. 263, for another but different 
 example turning on \\ 39 and 81 of the Bank, act, 1869. 
 
 (z) 8 B. & C. 105. See, too. Ex parte Staddon, 3 M. D. & D. 
 256, noticed infra, p. 662: and Ex parte Huckey, 1 Madd. 577. 
 
 (a) Ex parte Wagstaff, 13 Ves. 65 ; Ex parte Boyle, Cooke's 
 Bank. L. 571 (ed. 8); Sheldon r. Rothschild. 8 Taunt, 156. 
 
 (b) Carralli and Haggard's claim. 4 Ch, 174 ; Re Duckworth, 2 
 Ch. 578 ; Ex parte Strang. 5 Ch. 492.
 
 SET-OFF AXD MUTUAL CREDIT. 729 
 
 versa (c); that where damages are proveable they may Bk. IV. 
 be set off against debts (d); and that a secured creditor ( lia l 1 - 1 - 
 who owes money to the bankrupt has a right to set off *" 
 what he owes from the amount due to him on his security 
 and to treat the security as a security for the balance (e). 
 
 In order, however, that cross demands may be set off Rules as to 
 against each other under the mutual credit clause, it is set off in 
 necessary— cases of bank- 
 
 1. That both demands shall be money demands, and 1U * J cy " 
 that the sum sought to be set off against the trustees 
 shall be proveable against the bankrupt's estate ; 
 
 2. That the demands shall be mutual ; 
 
 3. That the demands against the bankrupt shall have 
 arisen before the demandant had notice of the com 
 mission of an act of bankruptcy. 
 
 First, as to the nature of the demands. — It was held l. The cross- 
 in the well-known case of Rose v. Hart (/) that a demands 
 fuller, who was sued by the assignees of a bankrupt for must ,)e 
 the recovery of cloths sent to be dressed, could not ™ me ?. f e " 
 retain the goods until he was paid all moneys owing by p jt .+ 
 
 the bankrupt for services previously rendered him. The 
 assignees' demand was not in substance a money de- 
 mand at all ; they claimed the goods ; and against such 
 a claim it was decided that the fuller could only oppose 
 his lien for what was due in respect of his work on 
 those goods (g). 
 
 The doctrine thus established in Rose v. Hart, viz., 
 that by mutual credits are meant credits which from 
 their nature must, or at all events probably will, termi- 
 nate in debts (i. e., money demands), has ever since 
 been recognized as correct ; and applies to the expres- 
 sion mutual dealings (h) in the Bankruptcy act, 1883. 
 
 * Secondly, as to the mutuality of the demands. — [*659] 
 Cross demands cannot be set off against each other. % The cr0 ss- 
 unless they exist in favour of and against the same per- demands 
 
 (c) Lanesborough v. Jones, 1 P. W. 325. 
 
 ((/) Mercey Steel and Iron Co. v. Naylor & Co., 9 App. Ca. 438, 
 and 9 Q. B. D. 648 ; Peat v. Jones, 8 Q. B. I). 147. See as to 
 value of tillages and rent. Alloway v. Steere, 10 Q. B. D. 22. 
 
 (e) Ex parte Barnett, 9 Ch. 293. 
 
 (/) 8 Taunt. 499, and 2 Sm. L. C, following Ex parte Ocken- 
 den, 1 Atk. 235, and correcting Ex parte Deeze, 1 Atk. 228, and 
 Ex parte Present, ib. 230. 
 
 {(/) If the defendant had sold the goods, and the assignees had 
 sued for the money produced by their sale, the result would, it 
 is conceived, have been the same. See Ex parte Boas, Buck. 125. 
 
 (h) See Eberle's Hotels Co. v. Jonas, 18 Q. B. I). 459 ; Ex parte 
 Bolland, 8 Ch. D. 225 ; Ex parte Price, 10 Ch. 648, where a liqui- 
 dator ofa company proved for a debt due to it, and the trustee 
 was held not entitled to deduct the estimated value of a current 
 policy issued by the company, ,
 
 730 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 2. 
 
 must be 
 mutual. 
 Forster v. 
 Smith. 
 
 Case where 
 one partner 
 
 only is 
 bankrupt. 
 
 [ * 660] 
 
 Joint debts 
 cannot be set 
 off against 
 
 separate 
 
 debts. 
 
 sons in the same rights. In Forster v. Smith (i), Wil- 
 son & Co. were on the one hand indebted to their bank- 
 ers, and were on the other hand their creditors in re- 
 spect of three parcels of bank notes. One of these par- 
 cels belonged to Wilson & Co. ; another parcel also be- 
 longed to them, but only as a security for debts owing 
 to them by third persons; the third parcel was held by 
 Wilson & Co. merely as trustees. On the bankruptcy 
 of the bankers it was held that "Wilson & Co. were en- 
 titled to set off against their debt to the bankers the 
 amount of the two first parcels of notes, but not the 
 amount of the third. 
 
 Other cases may be referred to as authorities for the 
 proposition that a debt owing by a person in his indi- 
 vidual capacity cannot, in bankruptcy, be set off against 
 a debt owing to him as trustee (k). 
 
 It was at one time thought that in an action by the 
 assignees of a bankrupt the defendant could not set off 
 a debt due to him from the bankrupt; as although the 
 assignees might sue him he could not sue them (I). 
 But this notion has long been deservedly exploded (ra). 
 But before the Judicature acts if some only of the 
 members of a firm were bankrupt, and the trustees of 
 the bankrupt partners, together with the solvent part- 
 ners, joined in an action for the recovery of a debt due 
 to the firm, the defendant could not set off a debt due 
 from the firm to him (n). But now it is apprehended 
 this could be done (o). 
 
 *The doctrine of mutuality is of especial import- 
 ance to partners, for from it, it follows that a demand 
 against a firm cannot be set off against a cross demand 
 of some or one only of its members, and that a demand 
 by one or more partners cannot be met by setting off a 
 cross demand against a firm consisting of him or them 
 and others. This rule is as clearly established in bank- 
 ruptcy as it was at law and in equity, when the rights 
 of solvent persons only were under consideration (p). 
 
 (i) 12 M. &W. 191. 
 
 (k) See Ex parte Morier, 12 Ch. D. 491; Ex parte Kingston, 6 
 Ch. 632; Bailey v. Finch. L. K. 7 Q. 1'.. 34, where the executor 
 was himself residuarv legatee, and a set-off was allowed; Fair v. 
 Melver, 16 East, 130; Boyd v. .Mangles, 16 M. & W. 337; Watts 
 r. Christie. 11 Bear. 546. 
 
 (/) Ryall v. Larkin, 1 Wils. 155, and Bull, N. P. 181. 
 
 (m) See Rid out v. Brough, Cowp, 133. 
 
 (n) Stanifortb v. Fellowes, 1 Marsh. 184; Thomason v. Frere, 
 10 East, 418. (o) See ante, book ii. ch. 3, \ 2. 
 
 {jj) Ex part, Morier, 12 Ch. D. 491; Ex parte Soames, 3 D. & 
 C. 320; Ex parte Twogood. 11 Yes. 517; Lanesborough v. Jones, 
 1 P. W. 325.
 
 SET-OFF AND MUTUAL CREDIT. 731 
 
 In Watts v. Christie (q), bankers were indebted to Bk. IV. 
 A. on his separate account, but were creditors of A. & ~ 'hap. 4. 
 Co. on their joint account. Whilst the bankers were 
 
 in difficulties, but before they committed any act of Watts y. 
 bankruptcy, A. assigned what was due to him on his ^ lllistie - 
 separate account to A. & Co., and directed the bankers 
 to transfer what was standing to his credit, to the credit 
 of A. & Co. This, however, was not done. On the 
 bankruptcy of the bankers it was held that A. & Co. 
 could not set off what was due from them to the bank- 
 ers against what was due from the bankers to A. 
 
 Again, if A. and B. are partners, and C. is indebted Other illusta- 
 to them, and A. and B. dissolve partnership, and its tions of same 
 business is continued by B. and he becomes indebted ^ n * 
 to C. who is afterwards adjudged bankrupt; B. cannot 
 set off his separate debt to C. against the debt due from 
 C. to the late firm of A. and B. (r). 
 
 These principles apply where one partner only is 
 bankrupt, and his separate estate is more than sufficient 
 to pay his separate debts. Even in such a case a debt 
 due to him and the solvent partners jointly cannot be 
 set off against a debt due by him alone (s). 
 
 Moreover, where A, B. and C. are jointly indebted 
 to D., who is himself indebted to A., B. and C. sepa- 
 rately and on several accounts, D.'s separate demands 
 against A, B. and C. * respectively cannot be met by [ * 661] 
 setting off their respective proportions of the debt ow- 
 ing by them jointly to D. (/). 
 
 In connection with this subject it is necessary to ad- James ?•. 
 vert to James v. Kynnier (u). There A. and B. were Kynnier. 
 jointly indebted to C, who required payment, or to be 
 accommodated with a loan to the amount due to him. 
 A. thereupon lent C. the amount due to him, and re- 
 ceived his promissory note for it. C. became bankrupt, 
 and it was held that the debt due from A. and B. had 
 in fact been paid by A., and that both the promissory 
 note given by C. and the security given to C. by A. 
 and B., ought to be given up to be cancelled. The case 
 is one rather of payment than of set off, and cannot be 
 considered as opposed in principle to the rule that a 
 
 (q) 11 Beav. 54(5. 
 
 (>•) Ex parte Boss, Buck, 125. The marginal note in this case 
 is apt to mislead. 
 
 (s) Ex parte Twogood, 11 Ves. 517. Ex parte Quintin, 3 Ves. 
 248, is opposed to this, hut cannot now he considered law. 
 Neither can Ex parte Edwards, 1 Atk. 100, be relied upon. 
 
 (t) Ex part, Christie, 10 Ves. 105. 
 
 («) 5 Ves. 108.
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 2. 
 
 Agreements 
 to set off 
 joint against 
 separate 
 debts. 
 
 Application 
 of doctrines of 
 set off to 
 sureties. 
 
 Ex parte 
 Stephens. 
 
 [*662] 
 
 Ex parte 
 Staddon. 
 
 joint debt cannot be set off against a separate debt, and 
 vice versa. 
 
 It is hardly necessary to observe that an agreement 
 to the effect that a joint shall be set off against a sepa- 
 rate debt, or vice versa, is perfectly valid, and if duly 
 entered into will be binding, notwithstanding the sub- 
 sequent bankruptcy of tbe parties (x). So, if parties 
 choose to agree that demands which they would other- 
 wise be entitled to set off shall be kept separate and 
 distinct, and then bankruptcy ensues, the agreement 
 will nevertheless be binding upon them, as has already 
 been seen (y). 
 
 It remains to notice the application of the doctrine 
 of mutuality of credit to the case of sureties. Where 
 there are cross claims between a creditor and his prin- 
 cipal debtor, capable of being set off against each other, 
 the surety of the debtor can in bankruptcy insist that 
 these claims shall be set against each other, so that he 
 may be exonerated if possible (z). 
 
 A very remarkable extension of this principle was 
 made in Ex parte Stephens (a). In that case a lady 
 was a creditor of her * bankers, although she did not 
 know it, and she as surety for her brother joined him 
 in a joint and several note to secure repayment of 
 1000Z. lent him by the bankers. The bankers became 
 bankrupt, and the assignees sued the brother alone 
 upon the note; but Lord Eldon, upon the petition of the 
 brother and the sister, stayed the action, and ordered 
 that the money due on the note by the brother and his 
 sister as his surety should be set off against the money 
 owing by the bankrupts to the sister alone (6). 
 
 Again, in Ex parte Staddon (c), bankers advanced 
 to a customer, A., 500?. on the security of his promis- 
 
 (x) In Kinnerley v. Hossack, 2 Taunt. 170, there was such an 
 agreement. See, too, Vulliamy v. Noble, 3 Mer. 618, where the 
 agreement was inferred from past dealings. 
 
 {y) See ace. Ex parte Flint, 1 Swanst. 30, and Young r. Bank 
 of Bengal, 1 Deac. 622, noticed ante, p. 656. 
 
 (z) Ex parte Hanson, 12 Yes. 346, and 18 ib. 232. The equit- 
 able doctrines of marshalling apply in bankruptcy, see infra, \ 
 4: Ex parte Salting, 25 Ch. I). 148; Ex parte Alston, 4 Ch. 168. 
 
 (o) 11 Ves. 24. The circumstances of this case were peculiar. 
 A gross fraud had been committed by the bankers on the sister, 
 by inducing her to believe that they had bought stock for her as 
 requested, when in point of fact they had done no such thing, 
 but had applied her money to their own use. 
 
 (l>) See, too, Vulliamy v. Noble, 3 Mer. 621. See the observa- 
 tions of the M. R. on this case, and on Ex parte Stephens in Mid- 
 dleton v. Pollock, 20 Eq. 515. 
 
 (c) 3 M. D. & D. 256. Compare Bolland v. Nash, 8 B. & C. 
 105.
 
 SET-OFF AND MUTUAL CREDIT. 733 
 
 sory note, and deposited this note and others with B. Bk. IV. 
 & Co., as a security for advances made by them. The ~ ?'<?' 
 
 bankers became bankrupt. At the time of their bank- k I L_"*J 
 
 ruptcy, A. was the holder of their notes to the amount 
 of 520Z., and B. & Co. had in their hands securities of 
 the bankrupts more than sufficient to cover what was 
 due from them for advances made to them by B. & 
 Co. B. & Co. compelled A. to pay his promissory note, 
 he being ignorant of the dealings between them and 
 the bankers. 
 
 Subsequently, B. & Co., having been paid all that 
 was due to them from the bankrupts, delivered up to 
 the assignees the securities in their hands. It was held, 
 that as between A. and the bankers, A. was entitled, 
 first, to be repaid what he had paid to B. & Co. as their 
 surety, and secondly, to set off* against what was due 
 from him to the assignees on his promissory note, the 
 amount due to him from the bankrupts in respect of 
 their notes in his hands. 
 
 Thirdly, as to the notice of the act of bankruptcy. — 3. Demands 
 The language of the mutual credit clause precludes set- arising after 
 ting off a demand accruing against a bankrupt by rea- notice of an 
 son of anything clone after notice of an act of bank ' tcy ^ au ." 
 ruptcy committed by him *and available against him r *(363] 
 for adjudication (d). Therefore, although where not be set 
 bankers first stop payment and then commit an act of off. 
 bankruptcy, a holder of their notes can set off such of 
 them as came to his hands before the act of bank- 
 ruptcy (e), he cannot set off those which came to his 
 hands after that event, if he had notice of it (/). So, 
 if a person commits an act of bankruptcy which is 
 known to his bankers, and they nevertheless afterwards 
 honour his drafts, they cannot set off the payments in 
 respect of them, against the demand of the trustees 
 for the balance standing to the credit of the bankrupt 
 at the time the act of bankruptcy was committed (g). 
 
 With a view to avoid paying debts to trustees in Buying up 
 bankruptcy, recourse is frequently had by the debtors bills of bank- 
 of a failing person to the expedient of buying up his ru ^ i - 
 
 {d) Ante, p. Co."), Elliott v. Turquand, 7 App. Ca. 79 ; and see 
 Hawkins r. Tenfold. 2 Ves. S. 550 ; Vernon v. Hankey, 2 T. R. 
 113. 
 
 (e) Hawkins v. Whitten, 10 B. & C. 217: Dickson v. Cass, 1 B. 
 & Ad. 343; Forster v. Wilson, 12 M. & W. 191. 
 
 if) Dickson r. Cass, 1 B. & Ad. 343, where some only of the 
 firm had committed acts of bankruptcy. 
 
 (g) Vernon v. Hankey, 2 T. R. 113, and 3 Bro. C. C. 313. See 
 too, Kynaston v. Crouch, 14 M. & W. 266; Tamplin v. Diggins, 2 
 Camp. 312.
 
 734 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 Eelation 
 hack of 
 
 [ * 664] 
 
 trustee's 
 title. 
 
 Relation 
 back of 
 trustee's 
 title. 
 
 acceptances in order to set them ufl against the sums 
 which the purchasers owe him. If a debtor obtains the 
 acceptances of his creditors in this way for himself, 
 and without notice of any act of bankruptcy, the 
 debtor will be able to set off the full amount of the 
 acceptances, however little he may have paid for their 
 purchase (h); but it will be otherwise if he had notice 
 of the act of bankruptcy (*); or if he has obtained 
 the acceptances not bond fide to protect himself, but 
 as a trustee for others, and in order to enable them 
 to avail themselves of his right of set-off (k). 
 
 4. Of the time from tcliich the title of the trustee dates. 
 
 Under the old law the title of the assignee of a per- 
 son adjudicated bankrupt on a creditor's petition dated 
 not from * the time of adjudication, but from a time 
 anterior thereto, viz., from the time of the commission 
 of the earliest act of bankruptcy subsequent to the 
 accrual of the petitioning creditor's debt (I). As regards 
 the bankrupt's personal property, whatever he was en- 
 titled to at that time or acquired subsequently (and 
 before he obtained his certificate), became legally vested 
 in his assignees ; and as regards his real property, 
 although the legal estate in it only vested in the. 
 assignees from the time of their appointment, still they 
 could recover whatever might have been conveyed away 
 by the bankrupt after the commission of any act of 
 bankruptcy subsequent to the accrual of the petitioning 
 creditor's debt (m). To this rule, however, certain im- 
 portant exceptions (known as protected transactions) 
 were introduced by statute in favour of persons deal- 
 ing with bankrupts bond fide, and without notice of 
 any act of bankruptcy. The law upon this subject is 
 now contained in the following enactments of the Bank- 
 ruptcy act, 1883. 
 
 I 43. The bankruptcy of a debtor, whether the same takes 
 place on the debtor's own petition or upon that of a creditor or 
 creditors, shall be deemed to have relation back to, and to com- 
 mence at, the time of the act of bankruptcy being committed 
 on which a receiving order is made against him, or. if the bank- 
 rupt is proved to have committed more acts of bankruptcy than 
 
 (h) Hawkins v. Whitten, 10 B. & C. 217 ; Dickson v. Cass, 1 
 B. & Ad. 343. 
 
 (0 Dickson v. Cass, 1 B. & Ad. 343. 
 
 (k) Lackington v. Combes, 6 Bing. N. C. 71 ; Fair r. Mclver, 
 16 East 130. 
 
 (/) Cooper v. Chitty, 1 Burr. 20, and note thereto in 1 Sm.L.C. 
 
 (m) See 1 Griffith '& Holmes' Bank. Law, 257, et scq.
 
 PROTECTED TRANSACTIONS. 735 
 
 one, to have relation back to, and to commence at, the time of the Bk. IV. 
 first ot the acts of bankruptcy proved to have been committed Chap. 4. 
 by the bankrupt within three months next preceding the date of >ec ' ~" 
 
 the presentation of the bankruptcy petition ; but no bankruptcy 
 petition, receiving order, or adjudication shall be rendered in- 
 valid by reason of any act of bankruptcy anterior to the debt 
 of the petitioning creditor (n). 
 
 \ 49 Subject to the foregoing provisions of this Act with Protected 
 respect to the effect of bankruptcy on an execution or attach- transactions, 
 ment (o), and with respect to the avoidance of certain settle- 
 ments (p), and preferences (q), nothing in this Act shall invali- 
 date, in the case of a bankruptcy — 
 
 (a) Any payment by the bankrupt to any of his creditors, 
 
 (b) Any payment or delivery to the bankrupt, 
 
 *(c) Any conveyance or assignment by the bankrupt for valu- [" * 665] 
 able consideration, 
 
 (d.) Any contract, dealing, or transaction by or with the bank- 
 rupt for valuable consideration, 
 
 Provided that both the following conditions are complied with, 
 namely — 
 
 (1.) The payment, delivery, conveyance, assignment, contract, 
 dealing, or transaction, as the case may be, takes place 
 before the date of the receiving order ; and 
 
 (2. ) The person (other than the debtor) to, by, or with whom 
 the payment, delivery, conveyance, assignment, con- 
 tract, dealing, or transaction was made, executed, or 
 entered into, has not at the time of the payment, de- 
 livery, conveyance, assignment, contract, dealing or 
 transaction, notice of any available act of bankruptcy 
 committed by the bankrupt before that time (r). 
 
 These provisions are practically sufficient to protect 
 all honest dealings and transactions with bankrupts 
 without notice of any act of bankruptcy. 
 
 Notice of an act of bankruptcy within the meaning Notice. 
 of these clauses is not confined to formal or even di- 
 rect notice ; a knowledge of facts from which an act of 
 bankruptcy ought to be inferred is sufficient (s). 
 
 (n) See Allen v. Bonnett, L. R. 5 Ch. 577. The title of the 
 trustee may relate back to an act of bankruptcy committed be- 
 fore the passing of the Bankruptcy act, Ex parte Snowball, 7 
 Ch. 534. 
 
 (o) \ 45, infra, p. 674. 
 
 (p) \ 47, ante, p. 654. 
 
 (q) \ 48, ante, p. 628. 
 
 (r) A bond fide payment by an agent to his principal is not pro- 
 tected if the principal has committed an act of bankruptcy, and 
 the acent knows it when he pays the money. Ex parte Edwards, 
 13 Q. B. D. 747. Compare Be Sinclair, 15 ib. 616. 
 
 (s) See Ex parte Snowball, 7 Ch. 534.
 
 736 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 General rule 
 applies, save 
 in the above 
 excepted 
 cases. 
 
 ^cts of bank- 
 ruptcy not 
 excepted. 
 
 [*666] 
 
 Consequences 
 to partners 
 of doctrine of 
 relation 
 back. 
 
 Bankruptcy 
 of partners 
 determines 
 their power 
 to deal with 
 the property 
 of the hrm. 
 
 Notwithstanding the protection afforded by the above 
 enactments to persons dealing with or suing out execu- 
 tion against debtors, bond fide, and without notice of! 
 acts of bankruptcy committed by them, the old doctrine 
 of relation applies as rigorously as ever, save in the ex- 
 cepted cases (t). 
 
 As a rule that which is in itself an act of bankrupfcy 
 cannot be upheld as a bond fide payment, dealing, or 
 transaction, within the meaning of the enactment above 
 referred to (u). But an execution levied by seizure 
 and sale is not invalid by reason only of its being an 
 act of bankruptcy (x). 
 
 * What is notice to a firm has been already alluded 
 to (y). 
 
 The doctrine of relation back, with its exceptions, 
 having been noticed in a general manner, it is proposed 
 to examine its consequences as regards, first , bankrupt 
 partners and persons dealing with them ; secondly, sol- 
 vent partners and persons dealing with them ; and 
 thirdly, creditors who have issued execution against 
 the partnership assets. 
 
 (a) Transactions with bankrupt partners. 
 
 When a firm is adjudged bankrupt, it is necessarily 
 dissolved, and the power of its members to carry on its 
 business is thereby determined. Moreover, if there 
 has been a joint act of bankruptcy committed by all the 
 partners (e. g., by a conveyauce of all their property), 
 the title of the trustee will relate back as against all 
 the partners to that time. But if there has been no 
 joint act of bankruptcy, but each of the partners has 
 committed an act of bankruptcy at a different time from 
 the others, then peculiar difficulties arise ; for a cer- 
 tain time having elapsed between the first act of bank- 
 ruptcy and the next, the firm cannot, during this time, 
 be treated as if it had been bankrupt, but only as if one 
 of its members had been so. The consequences, there- 
 in See Turquand v. Vanderplank, 10 M. & W. 180 ; Kvnaston 
 v. Crouch, 14 M. & W. 266 ; Cannan v. South Eastern Rail. Co., 
 7 Ex. 851. It applied under 7 & 8 Vict. c. Ill, on the bank- 
 ruptcy of companies, Aitchison v. Lee, 3 Drew. 637 ; Affd. 3 Jur. 
 N. S. 95. 
 
 (w) See Bevan v. Nunn. 9 Bing. 107. 
 
 {x) 46 & 47 Vict. c. 52, \ 46 (3). \ 4 (e) makes the execution 
 an act of bankruptcy. 
 
 (y) Ante, pp. 141, etseq. If execution issues at the suit of sev- 
 eral persons jointly, and one of them has notice of an act of bank- 
 ruptcy committed by the execution debtor, such notice avoids 
 the execution as against the trustee, Edwards v. Cooper, 11 Q. 
 B. 33.
 
 TRANSACTIONS WITH BANKRUPT PARTNERS. 737 
 
 fore, of an adjudication against a firm, where each mem- Bk. IV. 
 ber has committed a separate act of bankruptcy at a a™p" 9 
 
 different time from the others, are, so far as regards I 1 
 
 transactions with strangers, the same as if there had 
 been a succession of adjudications against each mem- 
 ber separately (z). What these consequences are, it is 
 now proposed to examine. 
 
 It has been already pointed out that the bankruptcy Bankruptcy 
 of one partner dissolves the firm (a). Moreover, where of one part- 
 one partner commits an act of bankruptcy, and is ad- ne . r clete . r " 
 
 • * ... H11I16S lllS 
 
 judged bankrupt, his power of trading and of acting in power to 
 his own right in the * disposition of the property of the r * (567] 
 partnership, is determined as from the date of the act deal with 
 of bankruptcy. Indeed, so far as he is concerned, he assets. 
 may be regarded as a sole trader whose power of deal- 
 ing with property in his own right ceases on an act of 
 bankruptcy (b). On this ground, amongst others, the 
 assignees in Hague v. Rolleston (c) , recovered from a pff 16 /' - 
 creditor of a firm goods of the firm transferred to him 
 by the bankrupt after he had committed an act of bank- 
 ruptcy, for the purpose, apparently, of preferring him 
 to other creditors. On the same ground, it was deter- 
 mined in Thomason v. Frere .(d), that the indorsement Thomason v. 
 
 Frcrp 
 of a partnership bill by two out of three partners, con- 
 ferred no title on the indorsee, the indorsement having 
 been made after the two indorsers had committed acts 
 of bankruptcy (e). This case is very important, and is 
 a clear authority for the proposition that when a part- 
 ner becomes bankrupt, all his authorities to bind the 
 firm by dealings in the ordinary course of business, are 
 to be deemed as having been determined by the act of 
 bankruptcy ( f ). 
 
 This doctrine, however, must not be carried too far. 
 
 (z) See, accordingly, Fox v. Hanbury, Cowp. 445 ; Edwards v. 
 Hooper, 11 M. & W. *363. 
 (a) Ante, p. (J49. 
 (6) Seeder Bayley, J., in Harvey v. Crickett, 5 M. & S. 341. 
 
 (c) 4 Burr. 2174. See, also, Burt v. Moult, 1 Cr. & M. 525, a 
 similar case. 
 
 (d) 10 East, 418. 
 
 (e) See, accordingly, Burt?;. Moult, 1 Cr. & M. 525. [t is said 
 that partnership bills ought in the case of the bankruptcy of one 
 partner, to be endorsed by his trustee and the solvent partners, 
 see Abel v. Sutton, 3 Esp. 108, and Kamsbottom v. Lewis. 1 Camp. 
 279. But it is clear that this is not necessary to enable a bond 
 fide holder for value without notice to sue on the bill. See Lacy 
 v. Woolcott, 2 D. & R. 458 : Ex parte Robinson, 3 D. & Ch. 370', 
 and C. P. CoopAr, Ca. in Ch. temp. Brougham, 1(>\>. 
 
 (/) A for/ion is a bill given by him in the name of the firm 
 for his separate debt invalid as against the payee, Heilbut v. 
 Nevill, L. R. 4 C. P. 354, and 5 ib. 478. 
 
 * 24 LAW OF PARTNERSHIP.
 
 738 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 2. 
 
 Lacy v. 
 
 Woolcott. 
 
 [ * 668] 
 
 Craven v. 
 Edinondson. 
 
 Payments 
 made to 
 bankrupt 
 partner. 
 
 It has already been seen that persons who hold them- 
 selves out as partners, are liable for the acts of each 
 other done in the ordinary course of business, although 
 they may have been done without authority. On this 
 principle, it was held in Lacy v. Woolcott (g), that a 
 solvent partner was liable to abond fide holder of a bill 
 fraudulently accepted in the name of the firm by a co- 
 partner who had previously committed an act of bank- 
 ruptcy. The case was distinguished from Thomctson v. 
 Frere * on the ground that there the question was 
 whether the property in the bill was in the assignees 
 and the solvent partners, or in the person who had re- 
 ceived it from the bankrupt, and that nothing was there 
 decided, or meant to be decided, as to the liability of 
 the firm to an innocent indorsee for value (h) 
 
 In conformity with the principle acted upon in Hague 
 v. Rolleston and Thomason v. Frere, it was held in 
 Craven v. Edinondson (i), that where a partner after 
 he had committed an act of bankruptcy, paid to a cred- 
 itor, who was aware of that fact, a debt owing to him 
 by the firm, and afterwards the other partners com- 
 mitted acts of bankruptcy, whereupon the firm was 
 adjudged bankrupt, the .assignees were entitled to re- 
 cover back the money so paid. The decision on this 
 case was rested entirely on the ground that the agency 
 of the partner who paid the money was determined by 
 the act of bankruptcy committed by him ; whilst the 
 creditor having had notice of that act, could not avail 
 himself of the statutory enactments relating to bond 
 fide dealings and payments, and which have been already 
 adverted to. 
 
 Under the old law, if a debtor to a trader who had 
 committed an act of bankruptcy paid the debt to him, 
 his assignees could compel the debtor to pay them 
 again (j); and this is still the case if the debtor makes 
 the payment after a receiving order has been made, or 
 after he has notice that an available act of bankruptcy 
 has been committed (k). 'Nevertheless a trader, who 
 has committed an act of bankruptcy, can compel his 
 
 ((,) 2 D. & R. 458. 
 
 (h) In Ex parte Robinson, 3 D. & Ch. 376. the firm was held 
 liable on the indorsement of the solvent partner after an act of 
 bankruptcy committed by his co-partner. See the judgment in 
 C. P. Coop. Ca. in Ch. Temp. Brougham, 162, and infra, p. 673. 
 
 (i) 6 Bing. 734 ; Dickinson ?'. Cass, 1 B. & Ad. 3A?>, was a very 
 similar case, except that the creditor had not notice of the actof 
 bankruptcy, and he was accordingly protected by statute. 
 
 ( j\ See Vernon v. Hankey, 2 T. R. 113. 
 
 (k) 46 & 47 Vict. c. 52, \ 49, and ante, pp. 664, 665.
 
 TRANSACTIONS WITH SOLVENT PARTNERS. 739 
 
 debtors to pay him, so long as no receiving order has Bk. IV. 
 been made against him (I). This state of the law is Chap. 4. 
 most distressing : for if a debtor knows that an act of _JJL! 
 
 bankruptcy has been * committed by his creditor within [ * 669] 
 three months, and is pressed for payment, if he pays, 
 he runs the risk of being compelled by the trustee to 
 pay again; and if he refuses, he renders himself liable 
 to pay the costs of an action brought against him by 
 his creditor. A debtor to a firm, one of the members 
 of which is known to have committed an act of bank- 
 ruptcy, should therefore pay the solvent partners (m). 
 
 (b) Transactions with solvent partners. 
 
 The bankruptcy of any one partner, his co- partners Effect of 
 remaining solvent, affects them in no other way than bankruptcy 
 this, viz., that the trustee in bankruptcy becomes tenant °*" one P art_ 
 in common with them of the partnership property, and gop/.'j,'* 
 is entitled to have the accounts of the partnership partners. 
 taken, and to receive the bankrupt's share, whatever 
 that may be (n). 
 
 * The trustee, as has been already observed, does not Solvent 
 become partner in the firm. The solvent partners are partners 
 entitled to get in the joint assets (o) ; and unless there entitled to 
 be some misconduct on the part of the solvent partners, ^'"j "^ f e 
 or unless the solvent partners are dead or abroad, the the firm, 
 trustee has no right to interfere in the winding up or 
 management of the partnership business. If he does, 
 he will be restrained by injunction, at the instance of 
 the solvent partners ( p). The trustee, moreover, can- Trustee has 
 not compel the solvent partner to deliver up the books no right to 
 of the partnership (q). However, in a case where two *£e partner- 
 persons were in partnership as solicitors, and one of *L lp . )0 ° 
 them became bankrupt, and his assignees excluded the x^;^ " '' 
 solvent partner from all interference in the partnership 
 affairs, and got possession of the * deeds and docu- [ * 670 J 
 ments belonging to the clients of the firm, a motion by 
 
 (7) Prickett v. Down, 3 Camp. 131; Foster v. Allanson, 2 T. E. 
 479. 
 
 (m) See below. Money ordered to be paid to a firm by the 
 Court of Admiralty, is payable to the solvent partners after the 
 bankruptcy of one of the firm ; The Jefferson, 1 Rob. 325. 
 
 (») See ante, pp. 340, 649. 
 
 (o) Ex parte Owen, 13 Q. B. D. 113. 
 
 (p) See Allen v. Kilbre, 4 Madd. 464. The Court in Bank- 
 ruptcy can now do this, and it is not necessarv to proceed in the 
 Chancery Division of the High Court, 46 & 47 Vict. c. 52, \\ 93- 
 102. 
 
 (q) Ex parte Finch, 1 D. & Ch. 274. See, also, Ex parte Good, 
 21 Ch. D. 868.
 
 740 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 But they 
 have a right 
 to see tliein : 
 
 and to hring 
 actions to re- 
 cover part- 
 nership 
 
 debts. 
 
 Solvent 
 partner •will 
 he appointed 
 
 receiver. 
 
 Right to 
 
 [*67J] 
 
 wind up the 
 
 affairs 
 
 of the firm, 
 
 personal to 
 
 the solvent 
 
 partners. 
 
 the solvent partner for delivery to him of such deeds 
 and documents was refused, upon the ground that, with- 
 out the consent of the clients, the Court had no right to 
 order their papers to be delivered to one partner 
 only (r). 
 
 But although the trustee of one partner has no right 
 to the custody of the partnership books, the solvent 
 partners can be summoned before the Court, and be 
 compelled to produce them, and to answer questions 
 relative to the dealings of the bankrupt (s), although it 
 may not even be alleged that there is anything due to 
 him from the firm (t). 
 
 The trustee has power, with the leave of the Court, to 
 bring actions in the names of himself and of the sol- 
 vent partners ; indemnifying the latter, however, against 
 costs, if their names are used only for the sake of form, 
 and they claim no benefit from the action (u). So the 
 solvent partners may use the name of the trustee, upon 
 indemnifying him if he declines to take any active part 
 in the proceedings (v) ; but they may sue on contracts 
 without joining the bankrupt (w). 
 
 If disputes as to the management of the partnership 
 affairs arise between the trustee and the solvent part- 
 ners, and there is no reason for distrusting the latter, 
 the Court will appoint one of them receiver of the part- 
 nership property, directing him to give security, to pass 
 his accounts, and to furnish the trustee with proper ac- 
 counts, and to allow him at all reasonable times to in- 
 spect the partnership books (x). 
 
 The power of the solvent partners to wind up the 
 affairs of * the partnership is, however, personal to 
 themselves, and arises from the confidence originally 
 placed in them by the bankrupt, and which is con- 
 tinued to be placed in them by the Court so long as 
 there is no reason to the contrary. The right cannot 
 be transferred ; and therefore, where partnership goods 
 were seized by the sheriff under an execution against 
 
 (r) Davidson v. Napier, 1 Sim. 297. Surely the solvent part- 
 ner had more right to them than the assignees. 
 
 (s) See 46 & 47 Vict. c. 52, g 27 ; Bank. Rules, 1886, rr. 69 and 
 70 ; Ex parte Trueman, 1 D. & C. 464. 
 
 (*) Ex parte Levett, 1 Gl. & J. 185. 
 
 (w) See 46 & 47 Vict. c. 52, \ 1 13. See Ex parte Wilson, 2 Deac. 
 387, and 3 M. & A. 219, as to general orders authorising as- 
 signees to sue. 
 
 (v) Ex parte Owen, 13 Q. B. D. 113 ; Whitehead v. Hughes, 2 
 Cr. & M. 318, and 2 Dowl. Pr. Ca. 258, and 4 Tyr. 9:2. 
 
 O) 46&47 Vict, c. 52, §114. 
 
 (&•) See Ex parte Stoveld, 1 Gl. & J. 303; Freeland p. Stansfeld, 
 2 Sm. & G. 479.
 
 POWERS OF SOLVENT PARTNERS. 741 
 
 a solvent partner, and the execution creditor purchased Bk. IV. 
 from the sheriff all the execution debtor's share and in- Chap. 4. 
 terest in the partnership, and then proceeded to sell ' 
 
 the partnership effects, an injunction restraining such 
 sale was granted by the Court of Chancery, at the suit 
 of the assignees of the other partner, who was bank- 
 rupt (y). 
 
 If there is only one partner living in this country, 
 his co-partners being either dead or abroad, and he be- 
 comes bankrupt the trustee in that case winds, up the 
 affairs of the partnership as well as the private affairs 
 of the bankrupt (z). 
 
 Notwithstanding the doctrine that by an adjudica- Sales. &c, 
 tion of bankruptcy against one partner the firm is bv solvent 
 dissolved, and the trustee of the bankrupt partner par ueis ' 
 becomes tenant in common of the partnership effects 
 with the solvent partners, they can sell the partnership 
 goods and chattels, and the trustee of the bankrupt 
 partner has no locus standi against a bond fide pur- 
 chaser from them (b). In Fox v. Hanbury(c), the lead- Fox v. 
 ing case on the subject, one of several partners became Haubury. 
 bankrupt ; afterwards, partnership goods were bond 
 fide sold to the defendant by the solvent partners, and 
 after the sale the firm was adjudged bankrupt ; the 
 assignees of the firm sought to recover the goods from 
 the purchaser, upon the ground that by the bankruptcy 
 of one of the partners the firm was dissolved, and the 
 solvent partners had no power afterwards to dispose of 
 the partnership effects. Lord Mansfield, in a most 
 carefully considered judgment, held that the action 
 would not lie ; and for two reasons, viz., first, upon 
 the broad ground that, after a * partnership had been [ *G72] 
 dissolved by the bankruptcy of one partner, persons who 
 had dealt with the other partners without notice of the 
 dissolution, acquired a right against the solvent part- 
 ners and the assignees of the bankrupt partner ; and 
 secondly, upon the technical ground that the assignees 
 could not claim to be more than tenants in common 
 with the purchaser, and that trover would not lie at the 
 suit of one tenant in common against his co-tenant, un- 
 less under very special circumstances. 
 
 (y) Fraser v. Kershaw 2 K. & J. 406. 
 
 \z) See Hankey v. Garratt, 1 Ves. J. 236 ; Everett v. Back- 
 house, 10 Ves. 98; Barker v. Goodair, 11 Ves. 86 ; Dutton v. 
 Morrison, 17 Ves. 210. 
 
 (b) Sed qiapre if they are oulypartners in the profits, see Meyer 
 v. Sharpe, 5 Taunt. 74. 
 
 (<■) Cowp. 445. See, also, Smith v. Stokes, 1 East, 363 ; Smith 
 V. Oriell, 1 East, 368.
 
 W2 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 Harvey v. 
 
 Crickett. 
 
 Morgan v. 
 Marouis. 
 
 Principle 
 and effect of 
 foregoing 
 cases. 
 
 [ * 673] 
 
 Ex parte 
 Robinson. 
 
 In Harvey v. Crickett (d), which was not an action of 
 trover, but assumpsit for money had and received, the 
 plaintiffs, as assignees of a bankrupt partner, sought 
 to recover from the defendant, creditors of the firm, 
 money paid to them by the solvent partner after the 
 act of bankruptcy ; but it was held that the action 
 would not lie ; not, however, because the plaintiffs and 
 the defendant were tenants in common, but because, 
 notwithstanding the bankruptcy of one of the partners, 
 the other was entitled to apply the partnership assets 
 in payment of the partnership debts. 
 
 Again, in Morgan v. Marquis (e), the assignees of a 
 bankrupt partner sought to recover from the agent of 
 the firm monies received by him from the sale of goods 
 effected by him after the bankruptcy, by the desire of 
 the solvent partner ; but it was held that the action 
 would not lie, because it was competent for the solvent 
 partner to deal with the property as he had done. 
 
 These cases have been referred to thus in detail, in 
 order to show that they rest on something more satis- 
 factory than the technical doctrine that trover will not 
 lie by one tenant in common against the other. Al- 
 though this doctrine was, no doubt, sufficient for the 
 decision of Fox v. Hanbury, Smith v. Stokes, and Smith 
 v. Oriell, and was apparently thought by the Court of 
 Exchequer, in Buckley v. Barber (/), to afford the 
 * only reason by which those decisions could be justified, 
 yet it is submitted that those cases, together with the 
 others just referred to, are, in fact, authorities for the 
 proposition that, notwithstanding the bankruptcy of 
 one partner, the solvent partners can deal with the 
 partnership property as if no bankruptcy had inter- 
 vened, and can consequently confer a title, not only to 
 an undivided share in, but to the whole of, any of the 
 property which they assume to dispose of in the ordi- 
 nary way of business, and to persons dealing with them 
 bond fide (g). 
 
 The case of Ex parte .Robinson (h) goes the whole 
 
 (<?)5M. &S. 336\ Woodbridge u.Swann, 4 B. & Ad. 633, and 
 Smith v. Groddart, 3 Bos. & P. 465, are nearly similar cases, and 
 in them there was notice of the bankruptcy. 
 
 (c) 9 Ex. 145. See, also, Lewis v. White, 2 N. R. 81, Ex., 
 where the assignees sued an auctioneer in trover for partnership 
 property sold bv the orders of the solvent partners. 
 
 (/) 6 Ex. 182. 
 
 (g) See, accordingly, Fraser v. Kershaw, 2 K. & J. 496. See, 
 also, Tupper v. Haythorne, before Sir Wm. Grant, and reported 
 in a note in Gow, N. P. Rep. 135. See further on this subject 
 generally, note 2 M. at p. 133 of the Appendix to 1 Mont, Part. 
 
 (h) 3 D. & Ch. 376, aud 1 Mon. & A. 18, reversing Ex parte
 
 POWERS OF SOLVENT PARTNERS. 7-43 
 
 length of the doctrine here contended for. There A. Bk. IV. 
 and B. were partners. A. committed an act of bank- Cna P- 4 - 
 ruptcy, and afterwards B. accepted bills in the name of __1_L__ 
 the firm, as a security for a previously contracted obli- 
 gation. On the subsequent bankruptcy of B. it was 
 held that the holders of these bills were entitled to 
 prove against the joint estate of A. and B. ; for, as be- 
 tween the firm and bond fide holders of the bills for 
 value, B.'s authority to accept them for himself and 
 co-partner, and for a partnership debt, could not be dis- 
 puted. 
 
 But although a bill accepted by one partner in the Bill accepted 
 name of the firm, and after the bankruptcy one of its in name f 
 members, is the bill of the firm, it is obviously a very nrm atte '' lts 
 different thing from the bill of a firm in which all the not bills of 
 partners are solvent ; and an agreement to exchange the firm for 
 bills of a firm for something else, is not performed by aU purposes, 
 the delivery of bills of the firm, after some or one of 
 its members are bankrupt. This was the ground of 
 decision in Ex parte McGae (i). There A., B. and C. Ex parte 
 were bankers ; D., a customer of the bank, was in the McGae. 
 habit of receiving bills from various people ; and it 
 was agreed between * him and the bank, that he should [ * 674] 
 indorse and pay the bills into the bank, and receive in 
 exchange its notes. This agreement was acted on. A. 
 and B. became bankrupt ; but D., without knowledge 
 of that fact, continued to pay in bills, and to receive 
 the notes of the bank. Afterwards C. became bankrupt; 
 a joint adjudication was made against A., B. and C. It 
 was held that their assignees were bound to return to 
 D. the bills paid by him since the bankruptcy of A. and 
 B. ; for although he had received notes for such bills, 
 those notes were not such notes as he had stipulated 
 for, and was entitled to: they were notes, not of A., B. 
 and C, but, in substance, of C. and the assignees of 
 A. and B. 
 
 It will have been observed, that the validity of bond Validity of 
 fide dealings of solvent partners after the bankruptcy acts ot 
 of their co-partners, does not depend on the clause in the solvent part- 
 Bankruptcy act relating to bond fide dealings and trans- liers "°* 
 actions with bankrupts, without notice of any act of absence of 
 bankruptcy committed by them. That clause increases notice of 
 . bankruptcy. 
 
 Ellis, Mon. & Bl. 249. Ramsbottom v. Duck, 1 Mont. Part. 
 App. note 2 M. ; Ramsbotham v. Cator, 1 Stark. 228; Rainsbot- 
 tom v. Lewis, 1 Camp. 279 ; and Abel is. Sutton, 3 Esp. 108, must. 
 be considered as overruled so far as they are inconsistent with 
 the case in the text. 
 
 (;') 19 Ves. 606. See, too, Jornbartf. Woollett, 2 M. & Cr. 389.
 
 744 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 2. 
 
 but is not essential to the safety of persor." bond fide 
 dealing with partners who have committed no act of 
 bankruptcy. Harvey v. Crickett (k) and Woodbridge v. 
 Swann (I) are conclusive on this head. 
 
 Conflicting 
 right of 
 trustee and 
 execution 
 creditors. 
 
 (c) Execution creditors. 
 
 Subject to the qualifications introduced by statute, 
 the title of an execution creditor was always liable to 
 be overridden by the commission of an act of bank- 
 ruptcy on the part of the debtor, before the goods taken 
 in execution were actually sold (m). 
 
 The Statutory enactment now in force is 46 & 47 
 Vict. c. 52, §§ 45 and 46, which are as follows. It will 
 be observed that there is no distinction between traders 
 and non- traders. 
 
 Restriction 
 of rights of 
 creditor 
 under execu- 
 tion or 
 attachment. 
 
 [*675] 
 
 Duties of 
 sheriff as to 
 goods taken 
 in execution. 
 
 \ 45. (I.) 1 Where a creditor has issued execution against the 
 goods or lands of a debtor, or has attached any debt due to him, 
 he shall not be entitled to retain the benefit of the execution or 
 attachment against the trustee in bankruptcy of the debtor, un- 
 less he has completed the execution or attachment before the 
 date of the receiving order, and before notice of the * pre- 
 sentation of any bankruptcy petition by or against the debtor 
 or of the commission of any available act of bankruptcy by the 
 debtor. 
 
 (2.) For the purposes of this Act, an execution against goods is 
 completed by seizure and sale; an attachment of a debt is com- 
 pleted by receipt of the debt; and an execution against land is 
 completed by seizure, or, in the case of an equitable interest, by 
 the appointment of a receiver (n). 
 
 \ 46. (I.) 1 Where the goods of a debtor are taken in execu- 
 tion, and before the sale thereof notice is served on the sheriff 
 that a receiving order has been made against the debtor, the sher- 
 iff shall, on request, deliver the goods to the official receiver or 
 trustee under the order, but the costs of the execution shall be 
 a charge on the goods so delivered, and the official receiver or 
 
 (k) 5 M. & S. 336 ; and ante, p. 672. 
 
 (I) 4 B. & Ad. 633. 
 
 (m) See Cooper v. Chittv, 1 Sm. L. C, and note there. 
 
 {n) Heathcote v. Livesley, 19 Q. B. D. 285. See Re Hobson, 
 33 Ch. D. 493. as to elegit. See as to protected seizures not be- 
 ing executions. Ex parte Dickin. 4 Ch. D. 521. and Krehl v. 
 Great Central Gas Co.. L. R. 5 Ex. 289. A winding-up order 
 followed by the appointment of an interim manager, was not an 
 execution or attachment within the meaning of \ 133 of the act 
 of 1849, Aitchison v. Lee, 3 Drew. 637, 654, &c. ; Aff. 3 Jur. N. 
 S. 95. 
 
 See note (J), page 628.
 
 CONSEQUENCES AS REGARDS EXECUTION CREDITORS. 745 
 
 trustee may sell the goods or an adequate part thereof for the Bk. IV. 
 purpose of satisfying the charge. Chap. 4. 
 
 (2.) Where the goods of a debtor are sold under an execution c ' ~" 
 in respect of a judgment for a sum exceeding twenty pounds, the 
 sheriff shall deduct the costs of the execution from the proceeds 
 of sale, and retain the balance for fourteen days, and if within 
 that time notice is served on him of a bankruptcy petition hav- 
 ing been presented against or by the debtor, and the debtor is ad- 
 judged bankrupt thereon or on any other petition of which the 
 sheriff has notice, the sheriff shall pay the balance to the trustee 
 in the bankruptcy, who shall be entitled to retain the same as 
 against the execution creditor, but otherwise he shall deal with 
 it as if no notice of the presentation of a bankruptcy petition 
 had been served on him. 
 
 (3.) An execution levied by seizure and sale on the goods of a 
 debtor is not invalid by reason only of its being an act of bank- 
 ruptcy, and a person who purchases the goods in good faith un- 
 der a sale by the sheriff shall in all cases acquire a good title to 
 them against the trustee in bankruptcy. 
 
 The above clauses apply as well to cases where one 
 partner is bankrupt, and the same partner is the exe- 
 cution debtor, as to those where all the partners are 
 bankrupt, and all are execution debtors: it will also be 
 probably held to apply where one partner only is bank- 
 rupt, and the execution is against the firm for a part- 
 nership debt (o); provided the Court is in a position 
 to ensure a proper distribution of the assets of the firm 
 amongst the creditors thereof. But if a firm carries on Cases where 
 business, and has property abroad, and some of the some part- 
 partners are resident * there, and a creditor has, by [ * 676] 
 proceedings instituted abroad against the foreign house, n £ rs a *' e 
 taken its effects there in execution, be will not be in- 
 terfered with by the courts here, at the instance of the 
 trustee of a bankrupt member of the firm residing in 
 this country (p). As the Court in such a case cannot 
 ensure a proper distribution of the partnership assets 
 amongst all the creditors of the firm, it will not de- 
 prive any of those creditors of the advantages which 
 they may have obtained, and to which they are enti- 
 tled by the laws of another country. If, however, the 
 creditor has received more than the amount of his debt, 
 
 (o) Following the analogy of the old law, sec Barker v. Good- 
 air, 11 Ves. 78, and Dutton v. Morrison, 17 Ves. 210. See, too, 
 Be Wait, 1 J. & W. 610; Anon. 12 Mod. 446. 
 
 (p) See Brickwood v. Miller, 3 Mer. 279. Sec. too. the excel- 
 lent judgmenl of C. J. Eyre, in Phillips v. Hunter. 2 H. Bl. 410. 
 and the case of Waring v. Knight, referred to by him.
 
 746 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 3. 
 
 Right of 
 trustee to 
 part of 
 proceeds of 
 ■sale under 
 execution. 
 
 he will be made to account to the trustee for the differ- 
 ence (q). 
 
 Before the Judicature acts it was held that where A. 
 and B. were partners, and A. committed an act of 
 bankruptcy, and a separate creditor of B. took the part- 
 nership property in execution, and sold it, A.'s trustee, 
 although not entitled to recover the property sold, or 
 its value, was entitled to part of the proceeds of its 
 sale; and in the absence of evidence to the contrary, to 
 one-half of such proceeds (r). If, however, the trus- 
 tee of a bankrupt firm sold its property, a creditor who 
 had previously issued execution against that property 
 for a separate debt of one of the partners, could not sue 
 the trustees for that partner's share of the proceeds of 
 the sale (s). The effect of the Judicature act on such 
 cases as these has been already considered (t). 
 
 [Section III. — Of the Doctrine of Reputed Ownership. 
 
 Reputed 
 ownership. 
 
 [*677] 
 
 Object of 
 
 above 
 
 enactments. 
 
 1. Generally. 
 
 From the time of James the First, and since, it has 
 been thought proper by the Legislature to declare that 
 upon the * bankruptcy of any trader his creditors shall 
 have the benefit not only of his own property, but also 
 of all such goods of other people as at the time of his 
 bankruptcy are in his possession, order, or disposition, 
 with their permission. Under the old acts such prop- 
 erty did not, like the bankrupt's own property, vest in 
 the assignees; but an order for sale was made, and 
 when made, was retrospective, and enabled them or the 
 purchaser from them, as the case might be, to sue for 
 the goods (it). Under the Bankruptcy act, 1883, how- 
 ever, this distinction does not appear to exist (x). 
 
 The object of these enactments is to prevent a trader 
 from obtaining undue credit by being allowed to parade 
 as his own, property which in fact belongs to other 
 
 (q) Brickwood ?•. Miller, :'» Mer. 284. 
 
 , Mayhew v. Herrick, 7 C. B. 229. Compare Morgan v. 
 Marquis. 9 Ex. 145. 
 
 (s) Garbett v. Veale, 5 Q. B. 408. 
 
 (t) Ante, book iii. c. 5. \ 4. 
 
 i u ) The order might be made retrospectively, as in Me Heslop, 
 1 De G. M. & G. 477. See. as to the order for sale, Quarter- 
 maine v. Bittleston, 13 C. B. 133: Freshuey v. Carrick, 1 H. & 
 N. 653; and as to its conclusiveness. Graham v. Furber, 14 C. B. 
 134: Ex parte Wood. 4 De G. M. & G. 861 ; and as to restraining 
 a sale under it. Mather v. Lav, 2 J. & H. 374. 
 
 (x) 46 & 47 Viet. c. 52, § 44 (iii.) and I 54.
 
 REPUTED OWNERSHIP. 747 
 
 people ; and notwithstanding the very general language Bk. IV. 
 of the enactments, their application has always been g£* 3 
 
 controlled by a reference to the mischief which they 1_! 
 
 were designed to prevent ; and as the habits of a trad- 
 ing community vary, it may well happen that circum- 
 stances which are at one time calculated to deceive are 
 not so at another. Whether, therefore, property in the 
 possession of a bankrupt, but not belonging to him, will 
 pass to his trustee by virtue of the doctrine of reputed 
 ownership, will depend upon the circumstances under 
 which, and the purposes for which, they are in his pos- 
 session (y). 
 
 By the Bankruptcy act, 1883 the reputed ownership 
 clause is as follows : — § 44 ' enacts that the property of 
 a bankrupt divisible amongst his creditors, shall in- 
 clude, — 
 
 (iii.) All goods being, at the commencement of the bankruptcy, 
 in the possession, order or disposition of the bankrupt, 
 in his trade or business, by the consent and permission 
 of the true owner, under *such circumstances that he is [ *678] 
 the reputed owner thereof : provided that things in ac- 
 tion other than debts due or growing due to the bank- 
 rupt in the course of his trade or business, shall not be 
 deemed goods within the meaning of this section (z). 
 
 Upon this enactment the following observations re- 
 quire attention : — 
 
 First, as to the property. — The reputed-ownership i. Property 
 clause does not extend to land or any interest therein ; must be 
 and not therefore to leaseholds (a), equities of redemp- personal, 
 tion or the like (b)\ nor to fixtures, even though re- 
 movable as between landlord and tenant (c). But with 
 the exception of choses in action other than debts due 
 
 (y) See as to customs of trade, &c, E.c parte Brooks, 23 Ch. 
 D. 261 ; Ex parte Turquand, 14 Q. B. D. 636: Ex parte Wing- 
 field, 10 Ch. D. 591 : Ex parte Vaux, 9 Ch. 602; Ex parte Wat- 
 kins. 8 ib. 520 : Priestley v. Pratt. L. R. 2 Ex. 101 : Ryall v. 
 Rowles. 1 Yes. S. 348 ; Joy v. Campbell, 1 Sch. & Lef. 328 : Ham- 
 ilton v. Bell, 10 Ex. 545 ; Horn v. Baker, 9 East, 215, and 2 Sm. 
 L. C. 
 
 (z) 46 & 47 Vict. c. 52. '', 44 (iii), and see \ 168 lor the defini- 
 tion of goods and property. 
 
 (a) Roe r. Galliers, ■> T. P. 133. 
 
 (b) Jones v. Gibsons. !) Yes. 407. But as to money directed 
 to be raised by sale or mortgage, see Re Hughes,2 Hem. & M. 89. 
 
 (c) Horn v. Baker, Easl 215, and 2 Sm. L. C; Whitmore v. 
 Empson. 23 Beav. 313 : Mather v. Fraser, 2 K. & J. 536 : Ex parte 
 Scarth, 1 M. D. & D. 240; E.r parte Cotton. 2 ib. 725; Boydell 
 v. McMichael, 1 Cr. M. & R. 177 ; Ex parte Wilson, 4D.&C. 143. 
 
 1 See note (I) p. 628.
 
 748 BANKRUPTCY. 
 
 Bk. IV. to the bankrupt in respect of his trade or business, all 
 
 Chap. 4. pure personal estate is included in the clause (d). It 
 
 ' includes, for example, ships, notwithstanding the regis- 
 try acts (e). 
 Choses in Debts due to the bankrupt in respect of his trade or 
 
 action. business (/) are within the operation of the clause. 
 
 But all other choses in action are excepted, e. g., de- 
 bentures (g), policies of insurance (h), shares in part- 
 nerships (i), shares in companies (k) and equitable in- 
 terests therein (/). 
 [ * 679] * Secondly, as to the order and disposition. — The act 
 
 2. Property requires that the goods and chattels shall be in the 
 theTorder or bankrupt's possession, order, or disposition as reputed 
 disposition of owner. Goods therefore which are in the bankrupt's 
 the bank- possession, but not as reputed owner, are not within 
 rupt. ^he c i a use (m). On the other hand, actual possession 
 
 on the part of the bankrupt is not necessary. If the 
 goods are in the hands of a servant of a bankrupt or in 
 the possession cf a third party, to whom the bankrupt 
 has lent them, and who is bound to return them when 
 required, they are in the bankrupt's order and disposi- 
 tion (n). But if goods are in the possession of a third 
 party who is entitled to a lien upon them, the trustee is 
 not entitled to the goods as being in the bankrupt's 
 possession (o). 
 Bills ot Nor does the registration of a bill of sale necessarily 
 
 sale ' (d)~See R7yallV~Rowles, 1 Ves. S. 348, as to debts ; Horn- 
 
 blower v. Proud. 2 B. & Ad. 329, as to negotiable instruments ; 
 Edwards i\ Martin, 1 Eq. 121. 
 
 (e) Monkhouse v. Hay, 2 Brod. & Bing. 114, affirming Hay v. 
 Fairbairn, 2 B. & A. 193: Robinson v. MacDonnell, 5 M. & S. 
 228 ; Ex parte Burn, 1 Jac. & W. 378 ; Ex parte Batsou. Cooke's 
 Bank. L. 355, ed. 8. 
 
 (/) I. c, debts connected with his trade, not all debts con- 
 tracted whilst he is a trader. See Ex parte Rensburg, 4 Ch. D. 
 685 ; Ex parte Kemp. 9 Ch. 383. 
 
 (q) Ex parte Rensburg, 4 Ch. D. (185. 
 
 (h) Ex parte, Ibbetson, 8 Ch. D. 519. 
 
 (i) Ex parte Fletcher, 8 Ch. D. 218. See, also. Longman v. 
 Tripp, 2 Bos. & P., N. S. 67 : Ex parte Foss, 2De G. & J. 230. 
 
 (k) Whinney v. Colonial Bank, 11 App. Ca. 426, reversing S. 
 C. 30 Ch. D. 261, and overruling Ex parte Union Bank ot Man- 
 chester, 12 Eq, 354. Older decisions may now be disregarded. 
 
 (/) Exparte Barry, 17 Eq. 113. 
 
 (m) See Priestley v. Pratt, L. R. 2 Ex. 101, where the goods 
 were left with the bankrupt for the owner's convenience. See, 
 also, Shrubsole v. Sussams, 16 C. B. N. S. 452, where the bank- 
 rupt's name had been painted out from over his own shop. 
 
 (») Hornsby v. Miller. 1 E. & E. 192. 
 
 (o) See Greening v. Clarke, 4 B. & C. 316; Ex parte Arbouin, 
 De G. 359; Ex parte Taylor, Mont. 240; and compare Hoggardr. 
 Mackenzie, 25 Beav. 493, where the person setting up the lien 
 was only a servant of the bankrupts.
 
 REPUTED OWNERSHIP. 749 
 
 prevent the goods comprised in it from remaining Bk. IV. 
 in the order and disposition of the vendor or niort- £ h£ i p \> 4 " 
 gagor (p). 
 
 Debts are deemed to be in the possession, order, or As to debts, 
 disposition of him who has the power of giving a valid 
 discharge for the money payable in respect of them, 
 and of transferring them in the market without excit- 
 ing suspicion. Consequently a mere assignment of 
 debts, although it may be valid enough between the 
 assignor and the assignee, will not have the effect of 
 takino- them out of the order and disposition of the 
 former. To effect this, notice of the assignment must 
 be given to the debtor (q). 
 
 What amounts to a sufficient notice of an assignment As to the 
 is often not easy to decide. It seems, however, that it sufficiency of 
 . . .i,i ,i ,• • • / \ ,i , the notice, 
 
 is immaterial by whom the notice is given (r ); that a 
 
 verbal communication, *if given in the course of busi- [ * 680] . 
 ness, is as effectual as a written notice (s); that notice 
 by advertisement, if seen by the person to whom notice 
 ought to be given., is sufficient (t): and that notice to 
 one partner is notice to the firm (u); and notice to one 
 director or officer of a company, whose duty it is to re- 
 ceive it and act upon it or communicate it to the com- 
 pany, is notice to the company (as); provided that such 
 director or officer is not the person whose interest in 
 the company is the subject-matter of the transaction to 
 be notified (y). 
 
 (p) Badger v. Shaw, 2 E. & E. 472: Stansfeld v. Cubitt, 2 De 
 G. & J. 222. Compare Ex parte Hooman, 10 Eq. 63; Ashton v. 
 Blackshaw, 9 Eq. 510. 
 
 {q) Ryall v. Rowles, 1 Ves. S. 348; Ex parte Monro, Buck, 300. 
 
 (r) See Ex parte Agra Bank, 3 Ch. 555: Re Rawbone, 3 K. & J. 
 300; Re Langmead, 20 Beav. 20. 
 
 (s) Alletsou v. Chichester, L. R. 10 C. P. 319; Ex parte Agra 
 Bank, 3 Ch. 555; North British Insur. Co. v. Hallett, 7 Jur. N. 
 S. 1263; Re Shelley, 4 De G. J. & S. 543; Ex parte Richardson, 
 M. & Ch 43; # Gale v. Lewis, 9 Q. B. 730. Mere casual knowledge 
 by a secretary is, however, not enough. Societe Generale de 
 Paris v. Tramways Union Co., 14 Q B. D. 424. and 11 App. Ca. 
 20; Re Barr's Trust. 4 K. & J. 219; Ex parte Watkins,2 M. & A. 
 348; Ex parte Burbridge, 1 Deac. 131; Edwards t<. Martin, 1 Eq. 
 121. 
 
 {t) Lloyd v. Banks, 3 Ch. 488. 
 
 (u) Ante, p. 141. 
 
 (x) Alletson v. Chichester, L. R. 10 C. P. 319; Browne v. Sav- 
 age, 4 Drew. 635; Ex parte Richardson, M. & Ch. 43; Gale v. 
 Lewis, 9 Q. B. 730; Pinkett v. Wright, 2 Ha. 120. Notice tothe 
 liquidator, if the company is being wound up, is sufficient. 
 Wragge's case, 5 Eq. 284; and see ante, p. 143. 
 
 (y) Browne v. Savage, 4 Drew. 635; Ex parte Nutting, 2 M. D. 
 & D. 302; Ex parte Boulton, 1 De G. & J. 163. Compare Re 
 Shelley, 4 De G. J. & S. 543; Duucau v. Chamberlayne, 11 Sim.
 
 7:0 BANKRUPTCY. 
 
 Bk. IV. Notice of a dissolution of partnership, and that one of 
 
 Chap. 4. ^ e partners will receive and pay all debts, is not notice 
 
 Sect - 3 " that he alone is entitled to receive payment of the debts 
 
 Notice of due to the firm, and is therefore insufficient to take such 
 
 dissolution debts out of the reputed ownership of the firm (z). 
 
 °f partner- Thirdly. — The act requires that the goods shall be in 
 
 3 ?n his the P osses8ioD > &c -> of tbe bankrupt in his trade or 
 
 trade or business. This is important. What is in a person's 
 
 business. trade or business depends on what he trades in or 
 
 what his business is, and on where the particular goods 
 
 are (a). 
 
 4. Property Fourthly, as to the time, of possession. — The reputed- 
 
 [*681] ownership * clause only extends to goods and chattels 
 
 must be in in the bankrupt's order and disposition at the time of 
 
 possession of t h e commission of the act of bankruptcy to which the 
 
 tTtimfof adjudication relates (6). Therefore, although such 
 
 Ms bank- property may have been left in the bankrupt's order 
 
 ruptcy. and disposition for a long time, and although he may 
 
 thereby have acquired a false credit, still, if before he 
 
 has committed an act of bankruptcy, they have been 
 
 taken out of his order and disposition, his trustee will 
 
 have no claim to them (c). 
 
 In a case where the goods of one partner were in 
 
 the order and disposition of the firm, but were insured 
 
 in the name of their owner, and the goods were burnt, 
 
 and afterwards the firm became bankrupt, the proceeds 
 
 of the policy were held not to form part of the joint 
 
 estate of the firm, although the goods themselves would 
 
 have done so had they continued undestroyed (d). 
 
 Bona fide The effect of removing goods from the order and 
 
 dealings disposition of a bankrupt after he has committed an 
 
 without act of baukruptcy, turns on the bona fides of their 
 
 bankruptcy, owner, and on his kn owledge or ignorance of the act of 
 
 123; Thompson v. Speirs, 13 Sim. 469; Ex parte Wilkinson, ib. 
 475; Ex parte Rose, 2 M. D. & D. 131, must be considered over- 
 ruled. 
 
 (z) Ex parte Burton, 1 01. & J. 207; Ex parte Usborne, ib. 358; 
 Ex parte Sprague, 4 De O. M. & O 866. Compare Ex parte 
 Woodgate, 2 M. D. & D. 304 
 
 (a) See Ex parte Lovenng, 24 Ch. D. 31; Ex parte Sully. 14 Q. 
 B. D. 930. See, also. Colonial Bank v. Whinney, 30 Ch. D. 261; 
 Ex parte Nottingham Bank, 15 Q. B. D 441. 
 
 (b) See 46 & 47 Vict. c. 52, U 43 and 44 liiiV 
 
 re) See Ex parte Phillips, 4 Ch. D 496; Stansfeld v. Cubitt, 2 
 De O. & J. 222; Jones v. Dwyer, 15 East, 21: Smith v. Topping, 
 5 B. & Ad. 674; Price v. Groom. 2 Ex 542; Ex parte Foss, 2 De 
 G & J. 230; Sinclair v. Wilson. 20 Beav. 324. See, also, Ex parte 
 Littledale. 6 De G. M. & G. 714; Ex parte Masterman, 4 D. & 
 Ch. 751, which related to shares. 
 
 [d) Ex parte Smith, Buck 149, and 3 Madd. 63; and see Ex 
 parte Browne, 6 Ves. 136; Ex parte Parry, 5 ib. 575.
 
 REPUTED OWNERSHIP. 751 
 
 bankruptcy ; for it is held that a removal of goods is a Bk. IV. 
 dealing or transaction within the meaning of the pro- ^ ap. 4. 
 
 tecting clauses (e), Consequently, although a person's ' e 
 
 goods and chattels may be with his consent in the order 
 and disposition of a trader who commits an act of bank- 
 ruptcy, yet, if such person afterwards, bond fide and 
 without notice of such act of bankruptcy, takes those 
 goods out of the trader's order and disposition, they 
 will be protected from the claims of his trustee (/). 
 
 * Fifthly, as to the consent of the true owner. — Goods [ * 682] 
 and chattels which, at the time of the commission of an 5. Property 
 act of bankruptcy by a trader, are in his order and dis- mus * 1)e in 
 position, in fraud of, or against, or without the will of n o^ession 8 
 the true owner, are not within either the words or the w jth the 
 spirit of the reputed-ownership clause (g). After a consent of 
 bona, fide demand by the owner to have the goods re- tne true 
 stored to him, they cannot be said to remain with his owner - 
 consent, or by his permission, in the possession of the 
 bankrupt ; and although, therefore, they .do continue 
 in his possession until he becomes bankrupt,. his trustee 
 must restore them (h). 
 
 The expression true owner includes creditors having ^y^o a re con- 
 an equitable or legal charge or lien upon goods and sidered true 
 chattels left by their consent in the order and disposi- owners, 
 tion of the bankrupt (i). Consequently, the liens of 
 such persons on goods so left are lost in the event of 
 the bankruptcy of their debtor (k). 
 
 Having now alluded to the circumstances required to Cases to 
 bring a case within the reputed-ownership clause, it is which the 
 proposed to advert shortly to the non-application of doctr / nes of 
 that clause to property which, although apparently owner ship 
 within its words, is not within its spirit. do not 
 
 (e) As to which, see ante, p. 60'4, and Isitt v. Beeston, L. R. 4 
 Ex. 15!). 
 
 (/) /ZeStyan, 1 Ph. 105; Graham v. Father, 14 C. B. 134; 
 Brewm v. Short, 5 E. & B. 227. See, too, Ex parte Dobson, 2 
 M. D. & D. 685, and Burn v. Carvalho, 4 M. & Cr. 690. 
 
 (g) Ex parte Ward, 8 Ch. 144 ; West v. Skipp, 1 Ves. S. 239; 
 Ex parte Richardson, Buck, 480. See, also, Acraman v. Bates, 2 
 E.' & E. 456, as to goods at sea. 
 
 (h) Ex parte Ward, 8 Ch. 144; Smith v. Topping, 5 B. & Ad. 
 674 ; Brewin v. Short, 5 E. & B. 227 ; Re Slee. 15 Eq. 69. As to 
 the eftect of giving instructions to demand, see Ex parte Phillips, 
 4 Ch. D. 496. 
 
 (i) Ryall v. Rowles, 1 Ves. S. 348 ; Hornsby v. Miller, 1 E. & 
 E. 192 ; Be Slee, 15 Eq. 69. 
 
 (k) See last note, and Hoggard v. Mackenzie, 25 Beav. 493; 
 and see as to morgages by deed when- the mortgagor retains pos- 
 session, Freshney v. Carrick, 1 H. & X. 653; Spackman o. Miller, 
 12 C. B. N. S. 659, and Ex parte Harding, 15 Eq. 223, where the 
 hill of sale was registered. 
 
 apply.
 
 752 BANKRUPTCY. 
 
 Bk. IV. The doctrine of reputed ownership is confined to 
 
 Chap. 4. those cases in which possession of the goods by the 
 
 t- ' bankrupt is not justified by any known custom of 
 
 Property in trade (I), nor by any bond fide purpose requiring him 
 possession of ^ h. ave them under his control (m). If, therefore, 
 r* pqqi 01 * goods are entrusted to factors or brokers or known 
 legitimate agents to be disposed of by them in the ordinary course 
 purposes. of trade, and they become bankrupt, such goods do not 
 pass to their trustees ; for the possession of the goods 
 were not calculated to deceive any one conversant with 
 mercantile operations (n). 
 Trust pro- So, again, property vested in one person in trust for 
 
 perty. another does not on the bankruptcy of the trustee be- 
 
 come divisible amongst his creditors, either under the 
 reputed ownership clause or otherwise (o). But the 
 trust must be a bond fide trust, and not fraudulent, i. 
 e., not created for the purpose of giving the trustee the 
 apparent ownership in order to conceal the true state 
 state of things (p). 
 Goods held In conformity, however, with the general rule relat- 
 
 for specific ing to trust property, where goods and chattels are in 
 purpose. the hands of a bankrupt, in order that he may apply 
 
 them for a specific purpose, e. g., in payment of debts 
 owing to him by the owner of the goods, the trustee in 
 bankruptcy must so apply them, notwithstanding the 
 reputed ownership clause (q). 
 
 2. Particularly as regards partners. 
 
 Application The preceding general notice of the doctrine of re- 
 
 of doctrine of puted ownership will, it is hoped, suffice to render its 
 
 reputed application to partners readily intelligible. So far as 
 
 ownership to p ar t, ners are concerned, the doctrine in question de- 
 partners. r ; * 
 
 (/) Ante, p. 677, note (y). 
 
 (m) .See Priestley v. Piatt, L. R. 2 Ex. 101 ; Hamilton v. Bell, 
 10 Ex. 545; Joy v. Campbell, 1 Sell. & Lef. 328; Holderuess v. 
 Eankin, 2 De G. F. & J. 258. 
 
 (») See Ex parte Bright, 10 Ch. D. 506 ; Ex parte Wingfield, ih. 
 591 ; Ex parte Flyn, 1 Atk. 185 ; Collins v. Forbes, 3 T. R. 316, 
 and the cases in the last note. Compare Ex parte Buck. 3 Ch. 
 D. 795, where the bankrupt was not known to be a factor. 
 
 (o) 46 & 47 Vict. c. 52, \ 44, cl. 1 ; Joy v. Campbell, 1 Sch. & 
 Lef. 328; Exparte Greaves, 8 De G. M. & G. 291 ; Bankhead's 
 Trusts, 2 K. & J, 560 ; Ex parte Gillett, 3 Madd. 28; Ex parte 
 Martin, 19 Ves. 491 ; Exparte Smith, 4 D. & Ch. 579. 
 
 (p) Ex parte Watkins, 2 M.& A. 348, S. C. Ex parte Burbridge, 
 1 Deac. 131, reversing Ex parte Watkins, 4 Peac. & Ch. 87. See, 
 also, Ex parte Old. 2 M. & A. 724 ; Exparte The Lancaster Canal 
 Co., Mon. & Bl. 94, and further, as to secret trusts, per Law- 
 rence, J., in Horn v. Baker, 9 East, 215, and 2 Sm. L. C. 
 
 (q) Exparte Brown, 3 M. & A. 471. See other cases, ante, p. 653.
 
 REPUTED OWNERSHIP. 753 
 
 rives its chief importance from the effect it produces Bk. IV. 
 on the distribution of their assets ; for it * results from Chap. 4. 
 the reputed ownership clause, that in the event of the 
 
 bankruptcy of a firm, whatever is in ihe reputed own- [ * 684] 
 ership of the firm is distributable as its joint estate, 
 whilst whatever is in the reputed ownership of some 
 individual partner is distributable as his separate estate. 
 And this rule prevails over all others ; for when a case Effect ol 
 of reputed ownership is once established, it is not of the doctrine on 
 least consequence to whom the property in question ^*° r ^ t ° 
 really belongs. As an instance of this, reference may estate. 
 be made to Ex parte Hare (r), in which furniture be Ex parte 
 longing to one partner only, but kept in the office of Hare, 
 the firm, and used there as part of the partnership 
 effects, was, on the bankruptcy of the firm, distributed 
 as joint estate. The same principle, probably, led to 
 the decision in Ex parte Hunter (s), in which there Ex parte 
 were three partners, but one of them had no interest Hunter, 
 whatever in anything except the profits ; it was con- 
 tended that under these circumstances there was no joint 
 property of the three, but it was held that the property 
 of the two must be distributed as if it were the prop- 
 erty of the three. 
 
 Again, if goods and chattels are in the reputed own- Liens 
 ership of one or more partners, the liens of the other destroyed by 
 partners upon such goods and chattels will be overridden doctrine of 
 in favour of the creditors of those in whose order and reputed • 
 disposition the goods and chattels were at the time of 
 the bankruptcy (t). Thus, in the case of Hoggard v. Hoggard v. 
 Mackenzie (u), where a Scotch firm had an establish- Mackenzie, 
 ment in London, which was conducted in its name by a 
 manager, who had a lien on the goods consigned to him 
 by his principals for advances made by him, it was held, 
 on the bankruptcy of the firm, that goods in the pos- 
 session of the manager were in the reputed ownership 
 of the firm, and that his lien could not prevail against 
 the assignees. 
 
 As a general rule, however, property of the firm in the possession of 
 possession of one partner for the purposes of the part one partner 
 nership is not in his order and disposition so as to form generally 
 part of his * separate estate ; he is himself a true owner L o°oj 
 and his possession is that of the firm (x). thefinQ m ° f 
 
 (r) 1 Deac. 16 ; 2 Mont. & A. 478, per Erskine, C. J. Sir J. 
 Cross thought the furniture was in point of fad partnership 
 property. Compare Ex parte Murton, 1 M. D. & D. 252. 
 
 (s) 2 Rose, 382. 
 
 {t\ See Kvall v. Howies, 1 Atk. 184. 
 
 («) 25 Beav. 493. 
 
 (.i) See infra, for cases showing this to be so. 
 * 25 LAW OF PARTNERSHIP.
 
 754 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. Sect. 
 3. 
 
 No joint 
 estate created 
 where one 
 partner only 
 is bankrupt. 
 
 1. Reputed 
 ownership 
 where there 
 has been a 
 change in 
 the firm. 
 Property of 
 old firm con- 
 tinuing in 
 its reputed 
 ownership. 
 
 Ex parte 
 Burton. 
 
 [ * 686] 
 
 But the doctrines of reputed ownership only apply 
 to that which is in the order and disposition of a bank- 
 rupt; whilst, therefore, if one partner only is bank- 
 rupt the joint estate of the firm may possibly be treat- 
 ed as his separate estate by being in his order and dis- 
 position (?/), his separate estate cannot be treated as 
 joint estate by reason of its being in the order and dis- 
 position of himself and his co-partners (z). 
 
 The application of the doctrine of reputed ownership 
 to partners, seldom presents peculiar difliciilties, except 
 when there has been a change in the firm, or where 
 there is a dormant partner; but its application in these 
 cases requires special notice. 
 
 First, where there has been a change in the firm. — It 
 follows from the principles examined in the preceding 
 pages, that a mere change in the firm, whether by the 
 introduction of a new or the retirement of an old part- 
 ner, does not necessarily cause a change in the reputed 
 ownership of the property of the old firm. This is par- 
 ticularly true of debts owing to the old firm, and of 
 merchandise belonging to it, but in the hands of third 
 persons; and there is abundant authority to show that 
 debts and goods left in the reputed ownership of the 
 old firm, although in fact belonging to the new firm, 
 must, in the event of bankruptcy, be treated as the 
 joint estate of the old firm. 
 
 In Ex parte Burton (a) a firm of three partners, A., 
 B., and C, was dissolved. A. continued the partner- 
 ship business, and the debts due to the firm were as- 
 signed to him by B. and C. The dissolution was ad- 
 vertised, and the advertisement stated that all debts by 
 or to the firm would be paid or received by A. No 
 other notice of A.'s exclusive title to the debts was 
 given. A. became bankrupt, and shortly afterwards A., 
 B., and C. became bankrupt. It was held that the 
 debts assigned to A. * were in the reputed ownership 
 of A., B., and C. ; for although A., as a partner, was 
 entitled to receive the debts without reference to the 
 assignment, still, until notice of that assignment was 
 given to the debtors, they were as much at liberty to 
 pay their debts to B. or C. as to A. 
 
 (y) It cannot be so treated if the joint estate is in the joint 
 possession of all the partners, Ex parte Dorman, 8 Ch. 51. See, 
 also, Ex parte Fletcher. H Ch. D. 218. 
 
 (z) See Ex parte Taylor, 2 M. D. & D. 753. 
 
 (a) 1 Gl. & J. 207. See, too, Ex parte Usborne, ib. 358; Ex 
 parte Hawtrey, 7 Jnr. 71 ; Ex parte Leaf. 1 Deac. 176, where one 
 member of the old firm had died.
 
 REPUTED OWNERSHIP. 755 
 
 So, in Ex parte Sprague (b), a firm of A. and B. dis- Bk. IV. 
 solved partnership; the dissolution was advertised in Chap. 4. Sect. 
 
 the Gazette; and the debtors of the firm were, by a _! , 
 
 circular, requested to pay their debts to A. The debts Ex parte 
 due to the firm were, in fact, awarded to A. by an ar- Sprague. 
 bitrator appointed by him and B. to determine the 
 terms of dissolution. On the subsequent bankruptcy 
 of A., and of A. and B., it was held that the debts due 
 to A. and B. were in the order and disposition of the 
 firm; for its debtors had had no notice that A. had be- 
 come solely entitled to those debts, the circulars 
 amounting to no more than a request that the debtors 
 would pay their debts to A. on behalf of the firm. 
 
 So with goods. If one of two partners retii'es and Ex parte 
 assigns his share and interest in the partnership prop- Harris, 
 erty to the other, and part of that property consists of 
 goods in the docks or at a wharfingers, and notice of 
 the assignment is not given to the custodian of the 
 goods, they will, on the bankruptcy of the two part- 
 ners, be treated as forming part of the joint estate, and 
 not as part of the separate estate of the partner to whom 
 they were assigned (c). 
 
 On the other hand, if proper notice of a change of Reputed 
 ownership is given, that which was the property of the ownership of 
 old firm will become part of the estate of the new firm. °. ; hrn ? 
 Further, if A. is the owner of goods in the custody of a w DO tice. 
 third person, and A. takes B. into partnership with 
 him, and gives notice to such person to hold the goods 
 for A. and B., instead of for A. as formerly, and then 
 
 A. and B. become bankrupt, those goods will be treat- 
 ed as in the reputed ownership of A. and B., although 
 
 B. may have been a merely nominal partner, having no 
 share in the assets of the partnership (d); nor will a 
 
 lien on * the goods in favour of the person in whose [ * 687] 
 possession they are, affect the result, as between the 
 estates of A., and of A. and B. (e). 
 
 It has already been seen that the doctrine of reputed Property of 
 ownership only applies where a bankrupt's possession °hl firm not 
 of goods is not justified by any bond fide purpose re- in , e , 
 quiring him to have them in his custody (f). This o^ership'tff 
 principle is peculiarly applicable to partners; for the continuing 
 possession by one partner of the goods of the firm may partners : 
 
 (6) 4 De G. M. & G. 866; compare Ex parte Woodgate. 2 M. & 
 D. 394, as to the sufficiency of the notice in this case. 
 
 (c) Ex parte Harris, 1 Madrl. 583. 
 
 (d) Ex parte Arbouin, De Gex, 359. 
 
 (e) Ibid. 
 
 (/) Ante, p. 682.
 
 756 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 3. 
 
 Ex parte 
 Cooper ; 
 
 [ * 688] 
 
 nor in that 
 of surviving 
 partner. 
 
 be, and often is, perfectly justifiable; and if one part- 
 ner only is in possession of partnership goods, and the 
 circumstances are not such as to show that he is in ex- 
 clusive possession for purposes unconnected with the 
 partnership, those goods will not be treated as in his 
 order and disposition (g). In conformity with this 
 principle, if a firm is dissolved and all its property is 
 vested in one partner upon trust to pay the debts of the 
 firm, and he becomes bankrupt, the property of the 
 firm is not distributable as his separate estate, but re- 
 tains its character of joint estate \h). It is not even 
 necessary that there should be any actual assignment 
 to him upon an express trust; for if a firm is simply 
 dissolved and one partner continues in possession of its 
 property, he is held to be in such possession on behalf 
 of the firm, and for the purpose of winding up its 
 affairs, until the contrary is proved (i). 
 
 Thus, in the case of Ex parte Cooper (k), A. and B. 
 dissolved partnership; a notice of the dissolution was 
 inserted in the Gazette, and such notice stated that A. 
 would receive and pay all debts. A. continued to carry 
 on the partnership * business in the name of the old 
 firm, and he bad its property in his possession. On 
 the subsequent bankruptcy of A. and B., four months 
 after the dissolution, it was held that the property of 
 the firm in A.'s possession was not to be considered as 
 in his order and disposition. 
 
 "Where partnership property comes into the hands of 
 one partner by survivorship, and that partner becomes 
 bankrupt, very strong circumstances are required to 
 show that such property is distributable as his separate, 
 and not as joint estate (I). If he continues to carry 
 
 (g) Ex parte Flyn, 1 Atk. 185; Ex parte Taylor, Mont. 240, 
 item 2nd. Compare Ex parte Brown. 9 Ch. D. 389, where part- 
 nership goods were mortgaged by two partners, and one retired, 
 and the mortgagee allowed the goods to remain with the continu- 
 ing partner. 
 
 (h) Copeman v. Gallant. 1 P. W. :;14; and see Ex parte Martin, 
 19 Ves. 491; Ex parte Fell, 10 ib. 348; Ex parte Pembertou, 1 
 Deac. 421. 
 
 (i) Ex parte Williams, 11 Ves. 3; Ex parte Taylor. Mont. 240; 
 Ex parte Copeland, 2 Mont. & A. 177. See, too, Ex parte Vardon, 
 2 M. D. & D. 694. 
 
 (k) 1 M. D. & D. 35-'. Compare Graham ». McCulloch, 20 Eq. 
 397, noticed infra, p. 689, whore the bankrupt was in possession 
 as purchaser. 
 
 (/) See Ex parte Manchester Bank, 12 Ch. D. !U7. and 13 ib. 
 465. sub nom. Ex parte Butcher; Brett v. Beckwith, 3 Jur. X. S. 
 31, noticed ante, p. 600; Ex parte Leaf, Mon. & Ch. 662; Ex parte 
 Heath, 4 Jur. 28. Compare Ex parte Taylor, Mont. 240. noticed 
 infra, p. 689.
 
 REPUTED OWNERSHIP. 757 
 
 on the business, contrary to the trust reposed in him, Bk. IV. 
 and against the consent of the persons interested in the !?|f p " Q 4 " 
 estate of the deceased partners, it is clear that the re- ec ' °' 
 puted ownership clause will not apply (m). 
 
 Where, however, a partnership is dissolved, and one Difference 
 of the partners continues to carry on the business on ^ nere eoQ - 
 his own account, and not for the purpose of winding up ner n «a^Z^ 
 the affairs of the concern, and where, from lapse of n business 
 time or otherwise, there is evidence to show accjuies- for himself 
 cence in such a course of proceeding on the part of the on b'- 
 retired partners, then the nature of the partnership 
 property will be held to have been changed, either by 
 virtue of a tacit agreement between the partners them- 
 selves, or by virtue of the doctrine of reputed owner- 
 ship; and in either case, that which was the joint es- 
 tate of all will be distributable as the separate estate 
 of the continuing partner (n). Thus, in Horn v. Horn v. 
 Baker (o), A., B., and C. dissolved partnership, and it Baker, 
 was agreed that C. and a third person, D., should con- 
 tinue the business on their own account, and that they 
 should pay an annuity to A., and after his death to his 
 widow. The partnership property was not assigned to 
 C. and D., but was allowed to remain in their posses- 
 sion for the purposes of their business; and on their 
 bankruptcy, such of the property as consisted of *goods [ * 689] 
 and chattels was held to be in their order and disposi- 
 tion, with the consent of their true owner. 
 
 Again, in Graham v. McCulloch (p), the plaintiff and Graham r. 
 the defendant were partners, and in a suit for dissolu- McCulloch. 
 tion, and under an order of the Court, the plaintiff 
 agreed to buy the business, and was let into possession 
 as purchaser. Before the money was paid he became 
 bankrupt, and it was held that the business assets be- 
 longed to his trustee as part of his estate, and that the 
 partnership could only prove for the purchase-money. 
 The property purchased had, in fact, passed in equity 
 to the bankrupt, who was a mere debtor for the price. 
 The property was not in the order and disposition of 
 
 (in) Ex parte Butcher. 13 Ch. D. 465: Stocken v. Dawson, 9 
 Beav. 239, and on appeal, 17 L. J. Ch. 282. 
 
 (»') See West v. Skip, 1 Ves. S. 242; Ex parte Barrow. 2 Rose, 
 252; Ex parte Fell, 10 Ves. 347. See, also, Ex parte Havinan, 8 
 Ch. D. 11. 
 
 (o) 9 East, 215. 
 
 (p) 20 Eq. ?>[)". The doctrine of reputed ownership seems 
 hardly applicable to such a case. The property was in equity 
 the bankrupt's ; he was in possession, and was debtor for the 
 purchase-money. So in Ex parte Assignees of Brewster and West, 
 22 L. J. Bank. 62, there cited.
 
 75S 
 
 •BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 3. 
 
 Case of 
 surviving 
 partner. 
 Ex parte 
 Taylor. 
 
 2. Effect of 
 
 reputed 
 
 ownership on 
 
 dormant 
 
 partners. 
 
 Col dwell v. 
 
 Gregory. 
 
 [ * 690] 
 
 Keynolds v. 
 Bowlev. 
 
 the firm, but in his own order and disposition with the 
 consent of his co-partner. 
 
 Where the continuing partner is a surviving partner, 
 the doctrines of reputed ownership may apply, although, 
 as before observed, under ordinary circumstances they 
 do not. In Ex parte Taylor (q), a debt due to a firm 
 had, on the death of one of the partners, been com- 
 promised by the survivors, who, in lieu of payment, 
 had accepted from the debtor two promissory notes, and 
 a policy of insurance, which, on their bankruptcy, were 
 in their possession. The Vice-Chancellor (Shadwell) 
 held, that the debt, having been compromised by the 
 surviving partners, was within the statute. 
 
 Secondly, ivhere there is a dormant partner. —The ex- 
 tent to which a dormant partner is affected by the 
 doctrine of reputed ownership is by no means well 
 settled. It was held in Goldwell v. Gregory (r), that 
 if there was a partnership of two persons, one of whom 
 was dormant, and the other of whom became bankrupt, 
 the share of the former did not pass to the assignees of 
 the latter ; it being monstrous to deprive the dormant part- 
 ner of his share in the partnership property, and yet leave 
 him liable to all the partnership creditors. This case, 
 however, * was generally considered as overruled by 
 later authorities which were taken as having settled 
 that, under the circumstances supposed, the whole part- 
 nership property was in the order and disposition of 
 the bankrupt, within the meaning of the reputed owner- 
 ship clause, and was, therefore, distributable as if it 
 belonged to him alone (s). It naturally followed from 
 this, that if a dormant partner retired, and the other 
 partners continued to carry on the business of the firm, 
 and became bankrupt, the partnership property was in 
 their order and disposition, although it was agreed 
 that they should apply it in payment of the debts of 
 the old firm (t). 
 
 However, in Reynolds v. Bowley (w) the Court of 
 Exchequer Chamber held that where two partners car- 
 ried on business in the name of one of them, the goods 
 of the firm could not be treated, on the bankruptcy of 
 
 (q) Mont. 240, item No. 1. 
 
 (r) 1 Price, 119, 130, and 2 Rose, 149. 
 
 (s) Ex parte Dyster, 2 hose, 256 ; Ex parte Enderby, 2 B. &C. 
 389 Exparte Chuck, Mont. 364, and 8 Bing. 4(59 ; Re Curry, 12 
 Ir. Eq. 382. 
 
 (t) Exparte Enderby, 2 B. & C. 389 ; Ex parte Chunk, 8 Bing. 
 469 ; Ex parte Jennings, Mont. 45. 
 
 (it) L. R. 2 Q. B. 474, reversing ib. 41. See ante, p. 685, 
 notes (y) and (z).
 
 REPUTED OWNERSHIP. 759 
 
 that one, as in his order and disposition with the con- Bk. IV. 
 sent of the other partner. This decision, if based upon Chap. 4. 
 the ground that the so-called dormant partner was in ec 
 joint possession with the bankrupt, offers no real diffi- 
 culty ; and the decision was based on this ground both 
 by Willes, J., and Bramwell, B. But the majority of 
 the Court (x) based their judgment on the much 
 broader ground that the reputed ownership clause only 
 applies where there is a true owner, and another person 
 in possession with his consent ; and that the clause has 
 no application to cases where the person in possession 
 is himself a joint owner, and is in possession by virtue 
 of his ownership, and has as much right to possession 
 as his co-owner. 
 
 In Ex parte Hay man (y), however, property of a Ex parte 
 father was held to be in the reputed ownership of him- Hayinan. 
 self and his son who was not a partner, but was liable 
 to some creditors as if he were a partner. The father, 
 who was the true owner, had * allowed his property to [ * 691] 
 be in the reputed ownership of himself and son. The 
 possession in this case was not in accordance with the 
 title, whilst in Reynolds v. Bowley it was, and this 
 seems to be the test in cases of this description. 
 
 In Ex parte Wood (z), A. and B. were partners, car- Ex parte 
 rying on business in the name of A. They dissolved Wo ' 
 partnership, and it was agreed that A. should receive 
 and pay all debts, and should retain the stock-in-trade, 
 and pay B. for his interest. A. continued to carry on 
 business on his own account, and became bankrupt, and 
 afterwards B. became bankrupt. It was held that all 
 the partnership debts and stock-in-trade were in A.'s 
 order and disposition, as reputed owner at the time of 
 his bankruptcy, and were consequently distributable as 
 his separate estate, although the dissolution of partner- 
 ship had not been publicly made known. 
 
 Where, however, a dormant partner is dead, that In the event 
 which the ostensible partner is entitled to receive or of death of 
 have in his possession as survivor, cannot be said to be dorniant 
 in his order and disposition with the consent of the Der " 
 true owner (a), unless perhaps the executors of the 
 deceased allow him to continue to carry on business 
 with their testator's assets. 
 
 (ar) Kelly, C. B., and Byles, Keating and Smith, JJ. See the 
 next ease in which their reasoning was not altogether approved. 
 
 (y) ft Ch. D. 11. See, also, Ee Rowland and Crankshaw, 1 Ch. 
 421 ; Ex parte. Sheen, (5 Ch. I). 235. 
 
 [z] De Gex, 134. 
 
 (a) See Brett v. Beckwith, 3 Jur. N. S. 31, and other cases 
 cited ante, p. 688, note (/).
 
 760 BANKRUPTCY. 
 
 Section IV. — The Administration of Bankrupt Part- 
 ners' Estates. 
 
 1. General principles. 
 
 Bk. IV. The principles according to which the property of 
 
 Chap. 4. bankrupt partners is distributed amongst the various 
 
 LJ persons having claims upon it, have next to be con- 
 
 Administra- sidered. These principles are the same, whether the 
 
 tion ot estate to be administered is that of a single bankrupt 
 
 r S * a Aqo"i partner, or that of a bankrupt firm (b). * Conse- 
 
 bankrurjt quently, the present subject may be conveniently dis- 
 
 partners. posed of by examining the principles which apply to a 
 
 joint adjudication against the firm, and by noticing, as 
 
 may be required, such peculiarities as are met with 
 
 when the bankruptcy is confined to one partner only. 
 
 Joint estate In administei'ing the estate of a bankrupt firm or of 
 
 to be distin- some or one only of its members, it is necessary to dis- 
 
 guished tinguish accurately, first, joint from separate estate ; 
 
 estate^nd and ' secondly, joint from separate debts : for the lead- 
 
 joiut debts ing principle of administration is, if possible to pay 
 
 from separate the debts of the firm (joint debts) out of the assets of 
 
 debts. the firm (joint estate), and the private debts of each 
 
 partner (separate debts) out of his own private property 
 
 (separate estate): in other words, to make each estate 
 
 pay its own creditors (c). 
 
 Ex parte This rule, which has long been established, was clearly 
 
 Cook. laid down by Lord King in Ex parte Cook (d), in the 
 
 following words: "It is settled, and is a resolution of 
 
 convenience, that the joint creditors shall be first paid 
 
 out of the partnership or joint estate, and the separate 
 
 creditors out of the separate estate of each partner ; 
 
 and if there be a surplus of the joint estate, besides what 
 
 will pay the joint creditors ; the same shall be applied 
 
 to pay the separate creditors ; and if there be, on the 
 
 other hand, a surplus of the separate estate beyond 
 
 what will satisfy the separate creditors, it shall go to 
 
 supply any deficiency that may remain as to the joint 
 
 creditors" (e). 
 
 (J) The same principles apply where a husband and his wife 
 carry on one business in partnership (she having separate estate), 
 and he carries on another business alone, Re Childs, 9 Ch. 508. 
 
 (c) Ex parte Elton, 3Ves. 239, and see 1 .Mont. Part. 110, note 
 2 D., Bank. Rules, 1886, r. 293. 
 
 ((/) 2 P. W. 500. See, too, Twiss v. Massey, 1 Atk. 67 ; Ex 
 parte Crowder, 2 Vera, 706. 
 
 (e) The principle enunciated above was departed from by Lord 
 Thurlow, who allowed joint and separate creditors to be paid 
 pari passu. Lord Rosslyn restored the old rule, but allowed the 
 joint creditors to be paid pari passu with the separate creditors
 
 ADMINISTRATION OF ESTATES. 761 
 
 The rule thus laid down by Lord King still prevails. Bk. IY. 
 * The Bankruptcy Act, 3883, enacts as follows :— gg£ p " 4 4 " 
 
 \ 10. (3.) In the case of partners the joint estate shall be ap- r # pqqi _ 
 plicable in the first instance in payment of their joint debts, and L 
 the separate estate of each partner shall be applicable in the first 
 instance in payment of his separate debts. If there is a surplus 
 of the separate estatesit shall be dealt with as apart of the joint 
 estate. If there is a surplus of the joint estate it shall be dealt 
 with as part of the respective separate estates in proportion to 
 the right and interest of each partner in the joint estate. 
 
 I 59. (1.) Where one partner of a firm is adjudged bankrupt, Joint and 
 a creditor to whom the bankrupt is indebted jointly with the separate 
 other partners of the firm, or any of them, shall not receive any 
 dividend out of the separate property of the bankrupt until all 
 the separate creditors have received the full amount of their re- 
 spective debts. 
 
 (2.) Where joint and separate properties are being adminis- 
 tered, dividends of the joint and separate properties shall, sub- 
 ject to any order to the contrary that may be made by the Court 
 on the application of any person interested, be declared together; 
 and the expenses of and incident to such dividends shall be fairly 
 apportioned by the trustee between the joint and separate prop- 
 erties, regard being had to the work done for and the benefit re- 
 ceived by each property. 
 
 And the Bankruptcy rules, 1886 (like the older rules) 
 require distinct accounts to be kept of the joint and 
 separate estates (/ ). The rule is as follows : 
 
 293. Where a receiving order has been made against debtors in Joint and 
 
 partnership, distinct accounts shall be kept of the joint estate separate 
 
 and of the separate estate or estates, and no transfer of a surplus estaTes 
 
 accounts, 
 from a separate estate to the joint estate on the ground that there 
 
 are no creditors under such separate estate shall be made until 
 
 notice of the intention to make such transfer has been gazetted. 
 
 Further the Bankruptcy rules, 1886, provide : — 
 269. If any two or more of the members of a partnership con- 
 out of the separate estate in case of there being no joint estate. 
 The rule thus modified by Lord Rossi yn was adhered to by Lord 
 Eldon, and has not since been departed from. See Ex parte Taitt, 
 16 Yes. 193: 1 Mont. Part. 110, note 2D., and 67, note Q.; 
 Cooke's Bank. Law. 250 cf *cq., ed. 8. See, for some reasons 
 justifying the rule. Lodge v. Prichard. 1 De G. J. & S. 613, 614, 
 per Turner, L. J. The rule is adhered to without reference to 
 the actual advantage or disadvantage to the creditors in any par- 
 ticular case. See Nansou v. Gordon, 1 App. Ca. 195 ; Ex parte 
 Collinge, 4 De G. J. A Sin. 533. 
 
 (/) Bank. Rules. 1886, r. 203. A petition that separate ac- 
 counts may be kept is improper where the general order applies; 
 Ex parte Green 1 D. & C. 382.
 
 762 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 
 Sect. 4. 
 
 Separate 
 
 linns. 
 
 [*694] 
 
 Apportion- 
 ment of 
 costs between 
 joint and 
 separate 
 estates. 
 Costs out of 
 joint or 
 separate 
 estates. 
 
 Apportion- 
 ment of 
 trustee's 
 remunera- 
 tion. 
 
 stitute a separate and independent firm, the creditors of such last 
 mentioned firm shall be deemed to be a separate set of creditors, 
 and to be on the same footing as the separate creditors of any in- 
 dividual member ot the firm. And where any surplus shall 
 arise upon the administration of the assets of such separate or in- 
 dependent firm, the same shall be carried over to the separate 
 estates of the partners in such separate and independent firm ac- 
 cording to their respective rights therein. 
 
 * And as regards costs and remuneration of the trus- 
 tee they also provide : — 
 
 127. In the case of a bankruptcy petition against a partner- 
 ship, the costs payable out of the estates incurred up to and in- 
 clusive of the receiving order shall be apportioned between the 
 joint and separate estates in such proportions as the Official Re- 
 ceiver may in his discretion determine. 
 
 128. (1.) Where the joint estate of any co-debtors is insufficient 
 to defray any costs or charges properly incurred prior to the ap- 
 pointment of the trustee, the Official Receiver may pay or direct 
 the trustee to pay such costs or charges out of the -separate estates 
 of such co-debtors, or one or more of them, in such proportions as 
 in his discretion the Official Receiver may think fit. The Offi- 
 cial Receiver may also, as in his discretion he may think fit, pay 
 or direct the trustee to pay any costs or charges properly incurred, 
 prior to the appointment of the trustee, for any separate estate 
 out of the joint estate or out of any other separate estate, and 
 any part of the costs or charges of the joint estate incurred prior 
 to the appointment of the trustee which affects any separate es- 
 tate out of that separate estate. 
 
 (2.) Where the joint estate of any co-debtors is insufficient to 
 defray any costs or charges properly incurred after the appoint- 
 ment of the trustee, the trustee, with such consent as is herein- 
 after mentioned, may pay such costs or charges out of the sepa- 
 rate estates of such co-debtors, or one or more of them. The trus- 
 tee, with the said consent, may also pay any costs or charges 
 properly incurred for any separate estate, after his appointment, 
 out of the joint estate, and any part of the costs or charges of the 
 joint estate incurred after his appointment which affects any 
 separate estate out of that separate estate. No payment under 
 this rule shall be made out of a separate estate or joint estate by 
 a trustee without the consent of the committee of inspection, ot 
 the estate out of which the payment is intended to be made, or, 
 if such committee withhold or refuse their consent, without an 
 order of the Court. 
 
 270. Where joint and separate estates are being administered, 
 the remuneration of the trustee in respectof the administration of 
 the joint estate may be fixed by the creditors, or (if duly author- 
 ised) by the committee of inspection of such joint estate, and the
 
 ADMINISTRATION OF ESTATES. 763 
 
 remuneration of the trustee in respect of the administration of any Bk. IV. 
 separate estate may be fixed by the creditors, or (if duly author- Chap. 4. 
 ised) by the committee of inspection of such separate estate. ' 
 
 "Where, under a separate adjudication, the trustee Keeping 
 possesses himself of the assets of the firm, he must distinct 
 keep similar distinct accounts, so as not to pay the sepa- accounts - 
 rate creditors of the bankrupt out of the assets of the 
 firm, nor the creditors of the firm out of the separate 
 property of the bankrupt (g). 
 
 * If a creditor proves his demand against the -wrong [ * 695] 
 estate he will, on discovering his mistake, be allowed to Correcting 
 transfer his proof to the other estate (h). mistakes, 
 
 "Where one estate has paid debts or expenses which c 
 ought to have been borne by the other, the amount so 
 paid will be ordered to be refunded by the latter to the 
 former estate (i). 
 
 If the joint and separate creditors both agree that the Consolida- 
 joint and separate estates shall be consolidated and ad- tion of 
 ministered as one fund, there is no reason why such estates, 
 consolidation should not take place. And where the 
 two estates are so blended that they cannot be kept 
 separate, they must be consolidated, whether all the 
 creditors desire it or not ; but if it is practicable to 
 keep them separate, they will not be consolidated, ex- 
 cept by consent (A;). If a majority of a meeting of 
 both classes of creditors are in favour of a consolida- 
 tion, it will, nevertheless, not be made until after it has 
 been ascertained by the Court to be for the general ben- 
 efit (I). It is, however, to be observed that a consoli- 
 
 (g) See Ex parte Voguel, 1 Atk. 132, as to the old practice. 
 See, too, Cooke's Bank. Law, 267, ed. 8, and the casespf Ex parte 
 Tate. Ex pari 'c Hay ward, Ex parte Burnaby there cited. See, too, 
 Watson on Part. 324, and 1 Mont. Part, note 2 D. p. 110, in nott :s; 
 Dutton v. Morrison, 17 Ves. 209; Be Wait, 1 J. & W. 610. 
 Again, when persons are connected in various partnerships, and a 
 joint adjudication is obtained against them all, an order may be 
 obtained for keeping separate accounts of the different firms, as 
 well as the separate estates of each partner ; Ex parte Marlin, 2 
 Bro. C. C. 15. But if there are several connected firms, one of 
 which alone is made bankrupt, there can only be the common 
 order for'keeping separate accounts of the joint and separate es- 
 tates of the partners composing it : Ex parte Parker, Cooke's 
 Bank. Law, -27-2. ed. 8. 
 
 (h) Ex parte Yining, 1 Deac. 555. 
 
 (i) Ex parte Rutherford, 1 Rose, 201 ; Exparte Reid, 2 ib. 84 ; 
 and see Rogers v. Mackenzie, 4 Ves. 752, as to contribution be- 
 tween estates. 
 
 (k) Ex parte Sheppard, Mon. & Bl. 415. 
 
 (I) See Ex parte Strutt, 1 Gl. & J. 29 ; Ex parte Part, 2 Deac. 
 & C. 1. where an inquiry was directed. In Ex parti Smith, 2 
 M. & A. 60, it was held unnecessary to serve the assignees before
 
 764 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. Sect. 
 4. 
 
 Comparison 
 of the modes 
 [ * 696] 
 in which 
 lawyers and 
 accountants 
 proceed in 
 cases of 
 bankruptcy. 
 
 dation of estates does not affect debts proved before 
 the consolidation takes place ; and if a debt has been 
 properly proved against each of several estates, the 
 creditor will not be prejudiced by their subsequent con- 
 solidation (m). 
 
 The principle adopted in bankruptcy of making each 
 estate pay its own creditors, often produces results 
 strangely at * variance with the doctrine of equality, 
 and with an accountant's notions of right and wrong. 
 This cannot be better shown than by the following ex- 
 tract from a work already referred to on the subject of 
 partnership accounts : 
 
 •• We will suppose A., a man worth 40,000?. clear, well known 
 in London, and of extensive credit, to embark with an inventor, 
 B., to carry into effect some invention which requires apparently 
 more credit than actual capital ; there being what may fairly be 
 considered a most excellent prospect of success, and of turning 
 the concern, as the phrase is, within a short space of time, i.e., 
 receiving from the anticipated profits of the concern, within the 
 number of months in which the bills given by this partnership 
 become due, sufficient money to meet them or take them up. 
 Some accident intervenes, by which it becomes necessary for A., 
 who undertakes to find money, to raise a sum to meet the numer- 
 ous bills which the firm has ventured to put afloat, in expecta- 
 tion of their being taken up by the success of the project. A. 
 raises upon his credit from several persons, perhaps at a distance 
 in the country and altogether ignorant of his trading, what he 
 himself considers only temporary loans, to the amount of 39,- 
 000?., and brings this money into the firm, not as a loan but as 
 capital. We will further suppose that this is insufficient, and 
 that the firm, after a few more struggles, stops payment for 50,- 
 000?. owing to different individuals. A general meeting of all 
 the creditors is called, at which there is a desire to settle the 
 matter, and realise the effects as fast as possible, and for that pur- 
 pose they put the matter into the hands of an accountant. If 
 the accountant knew anything of the law of bankruptcy, he 
 would see the difficulties ; but if he simply followed out the mer- 
 cantile principles, he would first take the accounts of the firm, 
 and there find 50,000?. debt, and we will say 4000?. assets ; and 
 consequently a balance due to the firm from A. and B. to the 
 amount of 46,000?.; of which A. would be indebted 23,000?. and 
 B. 23.000?., or in some other proportions as the case may be ; but 
 as B. is worth nothing at all, A. would be answerable for the 
 whole. The accountant would then take A.'s accounts where he 
 
 making a consolidating order : the consolidation having been 
 found to be beneficial. 
 
 (m) Ex parte Fuller, 1 M. & A. 222.
 
 JOIXT AND SEPARATE ESTATES. 765 
 
 finds A.'s estate worth 40,000?., and that he is liable to the firm Bk. IV. 
 for 46,0007., and to other people for 39,000/., making the whole |^* P- 4- 
 amount of his liabilities 85,000?., upon which he would declare _ 
 
 a dividend of 9s. 4V7. He would, therefore, carry over to the Comparison 
 firm, as a creditor for 46,000?., the sum of 21,647/. Is. 3d., and to of the modes 
 the private creditors 18,352/. 18*. 9d., which distributed among ]^^ v "rs and 
 the 39,000/.. would give them a dividend of 9s. 4]d. He would accountants 
 then proceed to distribute the effects of the firm, amounting to proceed in 
 21.647/.. Is. 3d., recovered from A., and the assets in hand, viz., cases of 
 4000/., and this, being altogether 25,6477. Is. 3d., distributed bankruptcy. 
 among 50,000/.. would give a dividend of 10*. 3d. Such would 
 be the result of the accountant's operation. But some of the sep- 
 arate creditors would probably be dissatisfied with this result. 
 and strike a docket, and have the accounts taken in bankruptcy. 
 The Court of Bankruptcy would immediately overthrow the ac- 
 countant' s labour's, and take the accounts upon an entirely dif- 
 ferent plan. It would direct that the separate estate should be 
 distributed amongst the separate creditors, and if there were any 
 surplus, that it should be paid over to the * joint estate. There- [ * 697] 
 fore, as 40,000/. would be distributed among 39,000/.. they would 
 be all paid in full, and 1000/. passed over to the joint estate, 
 making the assets of the joint estate 5000/., which, being distrib- 
 uted among the 50,000/., would be exactly 2s. in the pound. 
 Thus the Court of Bankruptcy would give the separate creditor 
 20s. in the pound, and the joint creditors 2s. ; while, according 
 to the mercantile principle, the separate creditors ought to have 
 had but 9s. 4hd., and the joint creditors 10s. 3d. Such is the 
 difference between the practice of the two classes. But if the 
 firm had had no property at all, or the partners, in a fit of de- 
 spair, had pledged all the assets for more than they were worth, 
 the Court of Bankruptcy would have adopted the accountant's 
 principle, and suffered the joint creditors to go in for their divi- 
 dends upon the separate estate" (»). 
 
 2. Of joint estates and separate estates. 1 
 
 What property is distributable as partnership prop- Joint and 
 
 ertv, and what is not, depends mainly upon two ques- separate 
 , . •" estate, 
 
 tions, viz. : — 
 
 1. Whether, as between the partners themselves, the 
 property in question belonged to them jointly, or to 
 some or one of them to the exclusion of the others ; and 
 
 2. Whether the property in question, no matter to 
 whom it belonged, was, at the time of the bankruptcy, 
 in the reputed ownership of the firm, or in that of some 
 or one only of its members. 
 
 (w) Cory on Merc. Accounts, p. 124 et seq., ed. 2. 
 1 See page 599, note 1.
 
 m 
 
 BANKRUPTCY. 
 
 Bk. VI. 
 
 Chap. 4. 
 Sect. 4. 
 
 Ex parte 
 Ruffin. 
 
 [ * 698] 
 
 Observations 
 on agree- 
 ments con- 
 verting 
 joint into 
 separate 
 estate, and 
 vice versa. 
 
 The principles applicable to these questions having 
 been already fully examined (o), it is only necessary, 
 in the present place, to notice those peculiar difficul- 
 ties which are met with when it becomes necessary to 
 distinguish joint from separate estate for the purposes 
 of administration in bankruptcy. 
 
 It was decided in the celebrated case of Ex parte 
 Ruffin (p), that agreements between partners altering 
 the character of partnership property are binding on 
 the trustee in bankruptcy, if made bond fide, and before 
 the commission of any act of bankruptcy. This case 
 has been followed by many others, and it is therefore 
 now beyond dispute that if a partnership is dissolved, 
 and a bond fide agreement is come to between the part- 
 ners, to the effect that what was the partnership prop- 
 erty shall become the property of him who continues the 
 business, * and afterwards the firm or the continuing 
 partner becomes bankrupt, that which was the partner- 
 ship property cannot be distributed as the joint estate 
 of the firm, "but must be treated as the separate estate 
 of the continuing partner (q). The creditors of the 
 firm have no lien on its property which can prevent the 
 partners from bond fide changing its character, and con- 
 verting it into the separate estate of one of them (?*). 
 
 Even if the liabilities of the partnership exceed its 
 assets at the time when the agreement is made, still, if 
 the partners act bond fide, and not with a view to de- 
 fraud their creditors, the ownership in that which before 
 the agreement was partnership property will have 
 changed, and the joint creditors of the firm cannot in- 
 sist on its distribution as joint estate (s) 
 
 In order, however, that property of the firm may 
 have lost its character of joint estate by agreement 
 between its partners, the agreement must not be tainted 
 with fraud, nor be still executory, nor leave the prop- 
 erty subject to the liens of the partners for their own 
 
 (o) Ante, Bk. III. c. 4, and Bk. IV. c. 2, \ 3, and ante, \ 3. 
 
 (p) 6 Ves. 119. 
 
 (q) Be Simpson, 9 Ch. 572 . Ex parte Walker, 4 De G. F. & J. 509; 
 Ex parte Titner, 1 Atk. 136 ; Ex parte Fell, 10 Ves. 347 ; Ex parte 
 Williams, 11 ib. 6 ; Ex parte Clarkson, 4 D. & Ch. 56 : Ex parte 
 Gurnev, 2 M. D. & D. 541 ; Bolton r. Puller, 1 Bos. & P. 539. 
 
 (r) Ex parte Ruffin, 6 Ves. 119 ; Ex parte Williams, 11 ib. 6 ; 
 Stuart v. Ferguson, Hayes (Ir. Ex.) 472. Compare the cases 
 cited infra, note (it). 
 
 (s) Ex parte Walker, 4 De G. F. & J. 509 ; Ex parte Peake, 1 
 Madd. 346 ; Ex parte Clarkson, 4 D. & C. 66, per Sir G. Rose, 
 and see Ex parte Carpenter, Mont, & MacAr. 1. Compare Re 
 Kemptner, 8 Eq. 287, where the state of tkenrmwas held to dis- 
 prove bond fides.
 
 JOINT AND SEPARATE ESTATES. 767 
 
 indemnity. If there be fraud, whether as between the Bk. VI. 
 partners themselves or solely as against creditors, the £ lm . p \ 4- 
 agreement will not be binding on the trustee in bank- 
 
 ruptcy (t); and where both partners were insolvent, Fraud, 
 an assignment by one of them of his share to the other 
 in consideration of a covenant by him to pay the part- 
 nership debts was held fraudulent and void as against 
 the joint creditors (u). 
 
 Moreover, if the agreement to transfer or assign is Executory 
 still executory, the character of the property will not, in agreements, 
 fact, have been changed at the time of the bankruptcy, 
 and it must, therefore, * be distributed as if the agree- [ * 699] 
 ment had not been entered into (x). Whether an 
 agreement is executory or not, must depend upon its 
 terms ; the test, however, is to see whether there was 
 at the time of the bankruptcy, any act still to be "done 
 before the ownership could be considered by the part- 
 ners as changed ; if in any case there was such an act 
 to be done, the trustee will not be bound by the agree- 
 ment, whilst if there was not he will. In Ex parte Ex parte 
 Wheeler (y), a partner retired ; the continuing partner Wheeler, 
 was to take the partnership property, and to pay the 
 retiring partner an annuity, and the father of the con- 
 tinuing partner was to become surety for payment of 
 this annuity. The father, however, who was not a party 
 to the agreement, declined to become surety, and on the 
 bankruptcy of the continuing partner it was held that 
 the agreement was not an executed agreement, and that 
 the property of the firm had not therefore, by the agree- 
 ment, become the property of the bankrupt. On the 
 other hand, in Ex parte Clarkson (z), where a partner Ex parte 
 retired upon the terms of receiving a certain sum of clarkson - 
 money, partly in cash and partly in bills, and the cash 
 was paid and the bills were given, it was held that the 
 ownership in the partnership property had passed, 
 although the bills were subsequently dishonoured (a). 
 
 (0 See Ex parte Rowlandson, 2 V. & B. 172, and 1 Eose, 416 
 and Anderson v. Maltby, 2 Ves. J. 244. 
 
 (u) Ex parte Mayou, 4 De G. J. & Sm. 664 ; Re Kemptner, 8 
 Eq. 287. Compare the cases in the last note but one. 
 
 (x) Ex parte Wheeler, Buck. 25 ; Ex parte Cooper, 1 M. D. & 
 D. 358 ; and see Ex parte Clarkson, 4 D. & Ch. 64, 67 ; and Re 
 Kemptner, 8 Eq. 286. 
 
 (y) Buck. 25. See, also, Ex parte Wood, 10 Ch. D. 554. 
 
 (z) 4 D. & Ch. 56 ; S. C, nomine Ex parte Gibson, 2 M. & Ayr. 
 4. See Ex parte Wood, 10 Ch. D. 554, which was a similar case ; 
 but as no cash was paid, and the security was not given, the 
 property continued joint. 
 
 (a) Compare also Ex parte Cooper. 1 M. D. & D. 358, and Ex 
 parte Gurney, 2 ib. 541 ; Re Kemptner, 8 Eq. 286.
 
 768 BANKRUPTCY. 
 
 ownership. 
 
 Bk. IV. Again, even if it has been agreed between partners 
 
 Chap. 4. ^at on a dissolution the continuing or surviving part- 
 
 ec ' ' ner shall be entitled to the assets of the firm, still so 
 
 Property long as these assets continue subject to the right of the 
 must not be H_ier partners to have them applied in discharge of 
 totheTliens tae J°* nt debts, tne assets will continue joint for the 
 of the other purpose of distribution in the event of bankruptcy. 
 partners. To convert them into separate estate the agreement be- 
 tween the partners must be inconsistent with the con- 
 tinuance of this lien (6). 
 [ * 700] * The mere fact that a partnership has been dissolv- 
 
 Evidence of ed, or that a partner has retired, will not be sufficient 
 such agree- evidence of an agreement for the conversion of the joint 
 estate of the firm into the separate estate of the con- 
 tinuing partner. It may be that the property has been 
 entrusted to him simply for the purpose of winding up 
 the affairs of the concern; and unless there be some 
 agreement by virtue of which it has become his exclu- 
 sively, it will in case of bankruptcy be distributable as 
 joint estate (c). 
 Effect of doc- But, as before observed, whether property is as be- 
 trine of tween the partners themselves the joint pioperty of 
 
 own^rshir. them all, or the separate property of some of them only, 
 the nature of that property may for the purposes of dis- 
 tribution be altogether changed by reason of the doc- 
 trine of reputed ownership. To avoid this some change 
 in the possession of the property should, if necessary, 
 be made consistently with the agreement between the 
 partners (d). Under ordinary circumstances if one 
 partner owns all the property used for partnership pur- 
 poses, and his co-partners have nothing more than an 
 interest in the partnership business, still that property, 
 if personal, will on the bankruptcy of the firm be dis- 
 tributable as the joint estate of all, and not as the sep- 
 arate estate of its true owner (e). 
 
 (b) See Ex parte Dear, 1 Ch. D. 514; Ex parte Morley, 8 Ch. 
 1026; Ex parte Manchester Dank. 12 Ch. D. 917, and 13 ib. 465, 
 sub nom. Ex parte Butcher, where the joint assets were not con- 
 verted. Compare Re Simpson, 9 Ch. 572, where they were. See, 
 also, the cases in note O), infra. 
 
 (c) Ex parte Leaf, 4 Deac. 287; Ex parte Cooper, 1 M. D. & D. 
 358; Ex parte Williams, 11 Ves. 3. The agreement need not be 
 in writing, ibid., and see 4 D. & Ch. 67, per Sir G. Rose. 
 
 (d) See, as to the goods in the possession of third parties, Ex 
 parte Harris, 1 Madd. 583; as to debts, Ex parte Sprague, 4 De 
 G. M. & G. 866; as to goods in the possession of the bankrupt 
 himself, Graham v. McCnlloch, 20 Eq. 397. These and other 
 cases have been already adverted to. See \ 3 of this chapter. 
 
 (<?) See Ex parte Hay man, 8 Ch. D. 11; Ex parte Hunter, 2 
 Rose, 382; Ex parte Owen, 4 De G. & S. 351. Compare Ex parte 
 Murton, 1 M. D. & D. 252.
 
 JOINT AND SEPARATE DEBTS. 769 
 
 Moreover, if A. allows B. to carry on business with Bk. IV. 
 his, A.'s, goods and on his, A.'s, behalf, although not in |^j?' 4 4, 
 his name, but credit is given to them both on the sup- 
 
 position that they are partners, the property with which Effect of 
 the business is carried on will be treated as the joint holdin g out - 
 estate of the two, and not as the separate estate of 
 
 * Where property is distributable as joint estate, the [ *701J 
 joint creditors take it as the promiscious joint prop- 
 erty of all the partners, withput reference to the respec- 
 tive interests of the partnei-s therein (g). 
 
 3. Of joint, separate, and joint and separate debts. 
 
 For the purpose of administering the estates of bank- Of joint, 
 
 rupt partners, their creditors must be divided into three separate. 
 ■, ■ and jo i,v * 
 
 classes, viz. : an( j separate 
 
 1. The joint creditora of the firm (h), to whom all deb**, 
 the partners are jointly liable (i). 
 
 2. The separate creditors of each partner, to whom 
 the partners are only liable severally and respectively. 
 
 3. Joint and separate creditors, to whom the partners 
 are not only liable jointly, but also separately for the 
 same debt (k). 
 
 "What is a debt of the firm and what is not, must be 
 determined by the principles discussed in the first two 
 chapters of the second book (I). Without repeating 
 
 ( f) See Re Rowland and Crankshaw, 1 Ch. 421; Ex parteHaj- 
 nian, 8 Ch. D. 11. 
 
 (g) Ex parte Hunter, 2 Rose, 382. 
 
 (h) A curious misnomer. Joint creditors, properly speaking, 
 are persons jointly entitled, and not, as here, persons who have 
 nothing to do with each other, but happen to have the same joint 
 debtors. 
 
 (0 The word separate is relative. Creditors may be separate 
 relatively to one person, and joint relatively to another, e. g., 
 suppose a partnership of five ; creditors of any four are separate 
 relatively to the creditors of the live, but are joint relatively to 
 the respective creditors of each of the four. See Bank. Rules, 
 1886, r. 269, ante, p. 693. 
 
 (k) A creditor who has obtained a judgment against several 
 persons jointly, can levy execution against any one or more of 
 them ; and therefore, in one sense judgment debtors may be 
 said to be jointly and severally liable. This, however, does 
 not render their creditor a joint and separate creditor. He is a 
 joint creditor ; for his judgment is joint, and the remedies open 
 to him do not alter the character of the right to enforce which 
 they are given. See Ex parte Christie, Mont. & Bli. 352. N» 
 distinction is made between persons to whom all the partners are 
 jointly indebted in connection with their partnership business, 
 and other persons to whom they are also all jointly indebted. 
 SeeHoaret'. Oriental Bank. Corp., 2 App. Ca. 589. 
 
 (/) The wife of a partner who has lent money to the firm, is a 
 
 * 26 LAW OF PARTNERSHIP.
 
 770 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 [ * 702] 
 1. What 
 debts are 
 orignally 
 joint and 
 what 
 separate. 
 Frauds and 
 breaches of 
 trust. 
 
 Debts. 
 
 Bills. 
 
 [*703] 
 
 those principles it may be useful to recapitulate shortly 
 the leading rules * deducible from them, and bearing 
 upon the proof of debts in bankruptcy. 
 
 First, as to the original nature of a debt. — As a gen- 
 eral rule, that which is the debt of the firm is not the 
 separate debt of any of its members who have not 
 made themselves severally liable for it (m); but 
 
 Breaches of trust, and frauds imputable to a firm, 
 place the cestuis que trustent and defrauded creditors 
 in the position of joint and several creditors (n); and 
 
 A debt of a firm of two partners, of whom one is dor- 
 mant, may, at the option of the creditor, be treated as 
 the joint debt of the firm, or as the separate debt of the 
 ostensible partner (o) ; and a debt of a firm of two part- 
 ners, one of whom is merely nominal, may likewise, at 
 the option of the creditor, be treated as the joint debt 
 of the two, or as the separate debt of him who is in 
 substance the whole firm (p). 
 
 Bills accepted in the name of a trading firm give a 
 right of proof against the joint estate to a bona fide 
 holder for value without notice of the fact that they 
 have been accepted or endorsed without authority (q); 
 but not to a drawer affected with such notice (r) ; and 
 if a separate creditor of one partner takes in payment 
 a bill of the firm, he must, in order to entitle * himself 
 to prove against its joint estate, show that the bill was 
 given with the sanction of the other partners (s). 
 
 joint creditor of the firm, and ranks as such. Ex parte Notting- 
 ham, 10 Q. B. D. 88. 
 
 (m) See ante, p. 192 el srq. ; Ex parte Dobinson, 2 Deac. 341 ; Ex 
 parte Carlisle Canal Co., ib. 349 ; Ex parte Appleby, ib. 482 ; Ex 
 parte Benson, 2 M. D. & D. 750, and as to bills and notes, Ex 
 parte Flintoff, 3 M. D. &. D. 726 ; Ex parte Wilson, ib. 57 ; Be 
 Clarke. De Gex, 153 ; Exparte Buckley, 14 M. & W. 469, and 1 
 Ph. 562, reversing Ex parte Christie, 3 M. D. & D. 736, 
 
 (ft) See ante, p. 198 et srq. As to breaches of trust, see Ex parte 
 Poulson, De Gex, 79 ; Ex parte Barnewall, 6 De G. M. & G.801. 
 Compare Ex parte White, 6 Ch. 397, where the moneys were held 
 not to be trust moneys ; and Ex parte Geaves, 8 De G. M. & G. 
 29r, where, although there was a clear breach of trust by one 
 partner, the others were not liable for it. See, as to the trustee. 
 Ex parte Burton, 3 M. D. & D. 364. As to frauds, see Ex parte 
 Adamson, 8Ch. D. *07 ; Ex parte Unity, &c., Banking Associa- 
 tion, 3 De G. & J. 63. 
 
 (o) Exparte Hodgkinson, 19 Ves. 294; Ex parte Norfolk, ib. 
 458 ; Ex parte Law, 3 Deac. 541 . 
 
 (p) See Ex parte Arbouin, De Gex, 359. See, also, Scarf v. 
 Jardine, 7 App. Ca. 345, ante, pp. 197, 198. 
 
 [q) Exparte Bushell, 3 M. D. & D. 615, and ante, p. 180 et seq. 
 
 (r) Exparte Holdsworth, 1 M. D. & D. 475. As to indorsees 
 with notice availing themselves of the ignorance of their in- 
 dorser, see Rooth v. Quinn, 7 Price, 193. 
 
 (s) Ex parte Thorpe, 3 M. & A. 716 ; Ex parte Austen, 1 M. D.
 
 PROOF OF DEBTS AGAINST BANKRUPT PARTNERS. 771 
 
 Bills accepted in the name of one partner only do Bk. IV. 
 not give their holder a right to prove against the joint Chap. 4. 
 estate of the firm (t). 
 
 A separate creditor does not acquire a right to prove Money of 
 against the joint estate, simply because that estate has ^"Vj 1 ?™ 
 had the benefit of the money he seeks to recover ; nor benefit 
 does the joint creditor acquire a right to prove against 
 the separate estate of one partner because he alone has 
 had such benefit (u). 
 
 Secondly, as to the conversion of a joint into a separate 2. Conversion 
 
 debt and vice versa. — A joint creditor who releases one of joint into 
 
 of his debtors, cannot prove against the estates of any se P :uate 
 
 of the others (x); and the doctrine of merger, by tak- J ' J , - ■ 
 v/ . .. o ' j net versa. 
 
 ing a higher security, or obtaining a judgment ( before 
 bankruptcy) (y), applies in bankruptcy as well as at 
 law, and has a most important influence on a creditor's 
 right to prove against the joint estate of a firm, or the 
 separate estates of its members (z). 
 
 A separate bond given to secure a joint debt creates Merger. 
 a separate debt (a) and destroys the joint debt (aa). 
 A judgment has the same effect (6); and a joint judg- 
 ment against several *for a debt owing by them jointly L ' -^J 
 and severally makes the debt joint only (c); but a sep- 
 
 & D. 247 : Ex parte Agace, 2 Cox, 312 ; Ex parte Bonbonus, 8 
 Ves. 540 ; Ex parte Goulding and Davies, 2 Gl. & J. 118. 
 
 (t) Ex parte Bolitho, Buck, 100 ; but where the name of the 
 firm and of the acceptor are the same, see Ex parte Law, 3 Deac. 
 541. 
 
 (m) Ex parte "vVheatley, Cooke's Bank. Law, 534. ed. 8 ; Ex 
 parte Peele. 6 Ves. 602 : Ex parte Hartop, 12 ib. 349 ; Ex parte 
 Hunter, 1 Atk. 223 ; Ex parte Emly, 1 Rose, 65 ; Be Ferrar, 9 Ir. 
 Ch. 11. 
 
 (x) Ex parte Slater, 6 Ves. 146. So a creditor may, by dealing 
 with his debtor, discharge that debtor's surety, and on the bank- 
 ruptcy of the surety be precluded from proving against his estate. 
 See Ex parU Webster, De Gex, 414, where the surety was a firm 
 which had accepted bills sought to be proved against its joint 
 estate. 
 
 {y) Ex parte Christie, Mon. & B. 352. 
 
 (2) See ante, Bk. II. c. 2, \ 3. 
 
 (a) Ex parte Flintoff, 3 M. D. & D. 726. 
 
 (aa) Ex parte Hernaman, 12 Jur. 643. 
 
 (6) Kendall v. Hamilton, 4 App. Ca. 504. See ante, p. 193, 
 and the Addenda ; Ex parte Higgins, 3 De G. & J. 33. As to 
 •when the Court can go behind the judgment, and look to its con- 
 sideration, see the cases in Be Tollemache, viz., Ex parte Revell, 
 13 Q. B. D. 720; Ex parte Edwards, 14 ib. 415; Ex parte Ander- 
 son, ib. 606. See, also, Ex parte Lennox, 16 ib. 315 ; Ex parte 
 Banner, 17 Ch. D. 480 ; Ex parte Kibble; 10 Ch. 373. 
 
 (c) Ex parte Christie, Mon. & Bl. 352. But this does not ap- 
 ply to breaches of trust in respect of which there is a joint and 
 several liability, see Re Davison, 13 Q. B. D. 50.
 
 772 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 Ex parte 
 Waterfall. 
 
 Falling back 
 on original 
 debt after 
 taking a 
 security for 
 it. 
 
 Ex parte 
 Whitmore. 
 
 [*705] 
 
 arate judgment of a joint and. separate debt, does not 
 make it separate only (d). 
 
 Notwithstanding the effect of a judgment in merg- 
 ing the debt in respect of which it has been recovered, 
 it was held in Ex parte Waterfall (e) that where a 
 firm consisted of one partner in this country, and of 
 other partners abroad, and a creditor of the firm sued 
 the partner here and recovered judgment against him, 
 the debt of the firm was not so extinguished as to pre- 
 clude the creditor from proving against its joint estate 
 on the subsequent bankruptcy of the judgment debtor. 
 
 "Where a creditor obtains an additional security for a 
 pre-existing debt, and that security is not of such a 
 nature as to merge the debt, he may, if the security be- 
 comes unavailable, fall back on the original debt. This 
 is constantly done by the creditors of bankrupt partners; 
 and the cases show that a creditor who takes a joint bill 
 for a separate debt (f), or a separate bill for a joint 
 debt (g), becomes, as he intended, a joint and several 
 creditor, and does not lose his right of having recourse, 
 in case of need, to his original debt, unless he has taken 
 the fresh security in substitution for his original de- 
 mand (h). If, however, he has done this, he cannot 
 fall back on his first debt. 
 
 Thus in Ex part Whitmore (i), upon the formation 
 of a * partnership between two persons, one of them 
 wrote to his bankers, to whom he was indebted, and 
 directed them to transfer any balance due from him to 
 
 (d) Drake v. Mitchell, 3 East. 251 ; Ee Clarkes, 2 Jo. & Lat. 
 212 ; Ex parte Bate, 3 Deac. 358. See above, the note on Ken- 
 dall v. Hamilton, on p. 193. 
 
 (e) 4 De G. & S. 199, and 15 Jur. 214, sub nom. Ex parte Jones. 
 See, too, Ex parte Dunlop, Buck, 253, and Ex parte Stanborough, 
 5 Madd. 89, as to actions against several partners, some of whom 
 were outlawed. See above, the note on Kendall v. Hamilton, on 
 p. 193. 
 
 (/) Ex parte Seddon, 2 Cox, 49 ; Ex parte Lobb, 7 Ves. 592; 
 Exparte Meinertzhagen, 3 Deac. 101 ; Ex parte Hay, 15 Ves. 4 ; 
 Ex parte Kedie, 2D. & Ch. 321. See above, the note on Kendall 
 v. Hamilton, on p. 193. 
 
 (g) Keay v. Fenwick, 1 C. P. D. 745 ; Bottomley r. Nuttall, 5 
 C. B. N. S. 122 ; Ex parte Hodgkinson, 19 Ves. 291. See, too, 
 Exparte Raleigh, 3 M. & A. 670 ; Exparte Fairlie, Mont. 17. See 
 above, the note on Kendall v. Hamilton, on p. 193. 
 
 (h) In Byleson Bills, ed. 10, p. 381, it is said, "The takingof 
 his separate bill from one of several partners for a joint debt will, 
 as we have see (i. e., on p. 48), discharge the others." But this 
 is going too far. See the last note, and ante, p. 247, where the 
 cases referred to by Mr. Justice Byles are noticed. See above, 
 the note on Kendall v. Hamilton, on p. 193. 
 
 (t) 3 Deac. 365. See, too, Ex parte Kirby, Buck, 511, and Ex 
 parte Jackson, 2 M. D. & D. 146.
 
 JOIXT AND SEPARATE DEBTS. I io 
 
 the debit of the new firm ; this was done, and the bank- Bk. IV. 
 ers drew on the firm for the amount of the balance ; the £ ha P- 4 - Sect 
 
 bills were accepted by the new firm, but were not paid. J 
 
 The firm afterwards became bankrupt, and it was held 
 that the bankers, having exchanged debtors, could not 
 be considered as the separate creditors of their old 
 customer, and could only rank as joint creditors of the 
 firm. 
 
 Unless, however, there has been a substitution of 
 debtors, or unless a creditor has by reason of the doc- 
 trine of merger become deprived of his right to revert 
 to his original debt, the acquisition of a fresh security 
 will not destroy the rights which he may have inde- 
 pendently of that security. 
 
 With respect to the right of a joint creditor to prove Substitution 
 against a separate estate or of a separate creditor to of debtors 
 prove against a joint estate, on the ground that there can , onl ^J^ e 
 has been a substitution of debtors, or that a new right the cre( jitor'8 
 has been acquired, it is to be remembered that, there consent, 
 can be no such substitution or acquisition saved by the 
 creditor's consent. Consequently, if a partnership is 
 dissolved, and by agreement between the partners one 
 of them is to continue the business and pay all the 
 debts, the creditors of the firm do not become the sepa- 
 rate creditors of the continuing partner unless they ac- 
 cede to the arrangement so entered into between him 
 and his co-partners (k). Upon precisely similar 
 grounds, a creditor of one person does not become the 
 joint creditor of him and another who enters into part- 
 nership with him, merely because the two partners have 
 agreed between themselves that the debts of each shall 
 be the debts of both. Unless the creditor accedes to 
 that arrangement, he is not bound by it, nor can he 
 avail himself of it; his position in fact is unaltered, he 
 does not lose his old right, nor does he gain any new 
 one (Z). 
 
 (k) Ante, p. 239 et seq.; Ex parte Freeman, Buck, 471; Ex parte 
 Fry, 1 Gl. & J. 96; Ex parte Gurney, 2 M. D. & D. 541; Ex 
 parte Appleby, 2 Deac. 482. 
 
 (t) Ante, p. 20~> etseq.; Ex parte Jackson, 1 Ves. J. 130; Ex 
 parte Peele, 6 ib. 601; Ex parte Williams, Buck, 13; Be Littles, 
 10 Ir. Eq. 275; Ex parte Parker, 2 M. D. & D. 511; Ex parte Gra- 
 ham, ib. 781 ; Ex parte Hitchcock, 3 Deac. 507. As to what is a 
 sufficient accession, see Rolfe v. Flower, L. R. 1 P. C. 27; Bil- 
 borough v. Holmes, 5 Ch. D. 255; Scarf v. Jardine, 7 App. Ca. 
 345, noticed ante, pp. 197, 198. Mr. Cooke, indeed, lays it down 
 that if new partners come into a firm, and it is agreed that the 
 stock and debts of the old firm shall become those of the new 
 firm, and the latter becomes bankrupt, the creditors of the old
 
 774 BANKRUPTCY. 
 
 [ * 706] *It is easier for a separate creditor to establish a 
 
 Bk. IV. right to prove against the joint estate, than for a joint 
 
 Chap. 4. creditor to establish a right to prove against a separate 
 
 Sect. 4. estate; for, whilst all that is necessary in the first case 
 
 Easier for is to show that those who were not originally debtors, 
 separate have become so (m), it is necessary in the last case to 
 
 become a° show that a person already a debtor with others, has 
 joint creditor take a his and their debt upon himself alone. The dif 
 than vice ficulty here adverted to does not arise from any legal 
 versa. doctrine, but from the circumstance that what such a 
 
 debtor may do is prima facie referable to his charac- 
 ter of joint debtor, and does not therefore establish 
 what is wanted, viz., his separate liability. For this 
 reason it has been frequently held that a joint creditor 
 of two or more persons does not become the separate 
 creditor of one of them by entering into arrangements 
 with him for the payment of the debt by him (n); and 
 that in the case of a dissolution of partnership a cred- 
 itor of the firm who merely treats the continuing part- 
 ner as his debtor, does not acquire a right to prove 
 against his separate estate (o). To entitle himself so 
 to prove, the creditor must show either that the con- 
 tinuing partner has become separately liable for the 
 [ * 707] * debt for which he was already liable jointly with his 
 former partners (p), or that there is no joint estate (q). 
 
 firm may prove against the joint estate of the new firm ; and he 
 cites Ex parte Bingham and Ex parte Clowes, 2 Bro. C. C. 595 
 (Cooke's Bank. Law, 534, ed. 8). The facts of the first of these 
 two cases are not stated. Ex parte Clowes was a very peculiar 
 "case, and if it was ever an authority for the doctrine that a sep- 
 arate debt can, as between the partners and the creditor, become 
 a joint debt, or rice versa, without the privity of the creditor, the 
 case must be considered as no longer law. See 1 Mont. Part., 
 note 2 F., p. 117, in notes. Perhaps Mr. Cooke rested the right 
 of proof on the absence of joint estate, as in Ex parte Taylor, 2 
 M. D. & D. 753. 
 
 (in) A written agreement is not necessary to establish this Ex 
 parte Lane, De Gex, 300. 
 
 (») Ex parte Raleigh, 3 M. & A. 670; Ex parte Fairlie, Mont. 
 17; Ex parte Smith, 1 M. D. & D. 165. 
 
 (o) Ex parte Appleby, 2 Deac. 482; Ex parte Gurney, 2 M. D. 
 & D. 541; Ex parte Fry, 1 Gl. & J. 96; Ex parte Freeman, Buck, 
 471. 
 
 (p) See Bilborough v. Holmes, 5 Ch. D. 255, and the cases in 
 the last two notes, and compare Ex parte Bradbury Mon. & Ch. 
 625, where a joint creditor 'had acquired a right to prove against 
 a separate estate. 
 
 (q) See Ex parte Taylor, 2 M. D. & D. 753. This matter will 
 be alluded to hereafter.
 
 PROOF OF DEBTS AGAINST BANKRUPT PARTNERS. 775 
 
 4. Of the proof and payment of partners' 1 debts gen 
 erally. 
 
 There is nothing peculiar in the mode of proving Bk. IV. 
 debts by or against partners, nor is there any difference Chap. 4. Sect. 
 
 between the claims which are provable by or against _ 
 
 them and claims which are provable by and against 
 other persons. For information on these subjects the 
 reader is therefore referred to treatises on the law of 
 bankruptcy. 
 
 Companies which are incorporated can prove their 
 debts by a duly authorized officer, and a firm can prove 
 by any of its members (r). 
 
 If a bankrupt is a trustee, and is himself indebted Bankrupt 
 to the estate vested in him, he ought himself to prove J™Jj; v ° ught 
 against himself on behalf of those whose trustee he ao .._ nst his 
 is (s). It is important to bear this in mind in those own estate, 
 cases in which an executor has carried on his testator's 
 trade with assets which ought not to have been employed 
 therein, and has subsequently become bankrupt. 
 
 With respect to debts provable against bankrupts. Debts prov- 
 several important alterations in the law have been made able, 
 with a view to include all possible claims arising out of 
 contract, so as to discharge the bankrupt therefrom. 
 The present law is contained in the following enact- 
 ment of the Bankruptcy act, 1883 : — 
 
 \ 37. (1.) Demands in the nature of unliquidated damages Description 
 arising otherwise than by reason of a contract, promise, or breach of debts 
 of trust («), shall not be provable in bankruptcy. bankruptcy. 
 
 * (2.) A person having notice of any act of bankruptcy avail*- r * 7Qg l 
 ble against the debtor shall not prove under the order for any 
 debt or liability contracted by the debtor subsequently to the 
 date of his so having notice. 
 
 (3.) Save as aforesaid, all debts and liabilities, present or 
 future, certain or contingent, to which the debtor is subject at 
 the date of the receiving order, or to which he may become subject 
 before his discharge by reason of any obligation incurred before 
 the date of the receiving order, shall be deemed to be debts 
 provable in bankruptcy (u). 
 
 (r) 46 & 47 Vict, c 52 ? 148. 
 
 (s) See Ex parte Richardson, Buck. 202, and 3 Madd. 138 ; Ex 
 parte Shaw, 1 Gl. & Jam. 127. 
 
 (t) Before the act, demands arising from breaches of trust were 
 provable, and were treated as arising out of contract rather than 
 out of tort, Emma Silver Mining Co. v. Grant, 17 Ch. D. 122 ; 
 Ramskill V. Edwards, 31 Ch. D. 100. 
 
 (m) As to future calls, see Re Mercantile Mutual Marine Ins. 
 Ass., 25 Ch. J>. 415. As to covenants to assign aiter-acquired 
 property, Collyer v. Isaacs, 19 Ch. D. 342.
 
 776 BANKRUPTCY. 
 
 Bk. IV. (4.) ,An estimate shall be made by the trustee of the value of 
 
 Chap. 4. Sect. an y t i e bt or liability provable as aforesaid, which by reason of 
 
 its being subject to any contingency or contingencies, or for any 
 
 other reason, does not bear a certain value. 
 
 (5.) Any person aggrieved by any estimate made by the trustee 
 as aforesaid may appeal to the Court. 
 
 (6.) If, in the opinion of the Court, the value of the debt or 
 liability is incapable of being fairly estimated, the Court may 
 make an order to that effect, and thereupon the debt or liability 
 shall, for the purposes of this Act, be deemed to be a debt not 
 provable in bankruptcy (x). 
 
 (7.) If, in the opinion of the Court, the value of the debt or lia- 
 bility is capable of being fairly estimated, the Court may direct 
 the value to be assessed, before the Court itself without the in- 
 tervention of a jury, and may give all necessary directions for 
 this purpose, and the amount of the value when assessed shall 
 be deemed to be a debt provable in bankruptcy. 
 
 (8.) "Liability" shall for the purposes of this Act include any 
 compensation for work or labour done, any obligation or possi- 
 bility of an obligation to pay money or money's worth on the 
 breach of any express or implied covenant, contract, agreement, 
 or undertaking, whether the breach does or does not occur, or 
 is not likely to occur or capable of occurring before the dis- 
 charge of the debtor, and generally it shall include any express 
 or implied engagement, agreement, or undertaking, to pay, 
 or capable of resulting in the payment of money, or money's 
 worth, whether the payment is, as respects amount, fixed or un- 
 liquidated ; as respects time, present or future, certain or de- 
 pendent on any one contingency or on two or more contingencies ; 
 as to mode of valuation capable of being ascertained by fixed 
 rules, or as matter of opinion (y). 
 
 Moreover, by Sched 2, it is declared that as to future 
 debts : 
 
 Future debts. 
 
 21. A creditor may prove for a debt not payable when the 
 debtor committed an act of bankruptcy as if it were payable 
 presently, and may receive dividends equally with the other 
 T * 7091 creditors, deducting only thereout * a rebate of interest at the 
 
 rate of five pounds per centum per annum computed from the 
 declaration of a dividend to the time when the debt would have 
 become payable, according to the terms on which it was con- 
 tracted. 
 
 (.r) Where no order is made, the debt is treated as provable, 
 Morgan v. Hardy, 18 Q. B. D. 646. 
 
 {y) See, as to actions for torts. Ex parte Brooke, 3 Ch. D. 494, 
 where a verdict was obtained before adjudication : and as to 
 claims to indemnity, Kellock v, Enthoven, L. R. 9 Q. B, 241, and 
 8 ib. 458.
 
 PROOF OF DEBTS — SECURED CREDITORS. 777 
 
 Further it is enacted by § 10 as follows: — Bk. IV. 
 
 Chap. 4. 
 
 \ 10. (2.) The Court may at any time after the presentation of ' 
 
 a bankruptcy petition stay any action, execution, or other legal Power of 
 process against the property or person of the debtor, and any Court to 
 Court in which proceedings are pending against a debtor may, b j- ~ 
 on proof that a bankruptcy petition has been presented by or 
 against the debtor, either stay the proceedings or allow them to 
 continue on such terms as it may think just. 
 
 With certain exceptions (z), the assets in the hands Assets dis- 
 of the trustee are distributable pari passu amongst all tributable 
 the unsecured creditors for value of the bankrupt, with- pari passu. 
 out regard to the question whether they are creditors 
 by specialty or by simple contract (a). 
 
 The position of secured creditors is peculiar and re- Secured 
 quires special notice. creditors. 
 
 What creditors have securities for the debts due to 
 them and what have not, and the nature of the securi- 
 ties, if any, to which they are entitled are matters be- 
 yond the scope of the present work (6). But the rights 
 of the drawers, acceptors, and indorsees of bills of ex- 
 change, which are secured by legal or equitable charges 
 upon goods or other property, have so often to be con- 
 sidered in the event of the bankruptcy of commercial 
 firms, that a few observations on such rights may not 
 be out of place. 
 
 Nothing is more common than for the owner of goods Secured bills 
 to pledge them in some form or other to some persons, 
 who, having them as his security, will accept a bill of 
 exchange drawn upon him by their owner. The drawer 
 then discounts the bill, and thus obtains cash. 
 
 As between the drawer and the acceptor the question 
 * constantly arises as to the extent of the security; e. g., [ *710] 
 whether the goods have been pledged for particular 
 bills only, or to cover all the bills of the drawer,or to cover 
 whatever may be due froni the drawer to the acceptor, 
 so that the proceeds are to be dealt with generally on 
 account, the goods not being specifically appropriated 
 to anything in particular. The rights of the drawer 
 and acceptor obviously depend on the answers to be 
 
 (z) The exceptions are enumerated in 4(i & 47 Vict. c. ~r2, §| 40, 
 41. and 42; they relate to rates, taxes, wages apprenticship fees 
 and rent. Bee, as to Savings Hanks, Re Williams, :'><i Ch. !»• 573, 
 
 (a) As to voluntary bonds, see Ex parte Berry, 19 Ves. 218; 
 /■> parte Hookins, :: De G. & S. 549. 
 
 (b) Execution creditors are secured by the seizure of the sher- 
 iff, E.r parte Jones, 10 Ch. <;<>:'>: Ex parte Jameson. 3 Ch. D. 488; 
 Edwards v. Scarsbrook, 3 B, & Sin, 280, See as to them, ante, p. 
 674 et seq
 
 78 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 4. 
 
 Eight of 
 drawer. 
 
 Right of 
 acceptor. 
 
 Effect of 
 [*711] 
 bankruptcy, 
 of drawer ; 
 
 given to these questions, which are questions of fact, 
 very often turning on correspondence and the course of 
 dealing between the parties, and sometimes very diffi- 
 cult to determine (c). 
 
 But withoat solving these questions, it is to be ob- 
 served, that the right of the drawer is to redeem the 
 goods on paying the amount due upon them; or, if 
 they have been sold, to have an account of their pro- 
 ceeds, and to have them applied in paying such amount, 
 and to have the surplus paid back to him, subject to 
 such lien or set-off, if any, as the acceptor may have 
 against them on some other account. 
 
 The acceptor, on the other hand, is entitled to hold the 
 goods as a security and indemnity against his liability 
 on the bill. If he pays the bill out of his own moneys, 
 he becomes the creditor of the drawer for the amount, 
 and can sue him for it, unless it is part of the agree- 
 ment between them that before having recourse to the 
 drawer personally the acceptor shall realize the goods 
 and so reduce the liability of the drawer. In the ab- 
 sence, however, of some agreement to this effect, it 
 seems that the drawer has no more right than any other 
 mortgagor to have the security given by him realised 
 before he is himself called upon for payment (rf). The 
 object of giving the security is to keep the acceptor out 
 of cash advances, but not to prevent him from making 
 advances on the credit of the drawer if the acceptor 
 thinks proper to do so. 
 
 In the event of the bankruptcy of the drawer, his 
 trustee is * entitled to no greater rights than the drawer 
 would be if solvent, unless indeed the goods can be 
 claimed by the trustee under the reputed ownership 
 clause. On the other hand, the acceptor has the same 
 rights as before (e), with this qualification, that his 
 right of action against the drawer is converted into a 
 right of proving against his estate, and that if the 
 right of proof is exercised the security must be given 
 
 np(/)- 
 
 (c) See, for example. Ex parte Dever, 13 Q. B. D. 766, and 14 
 ib. 611; Re Broad 13 Q. B. D. 740, and Re Gothenburg Commer- 
 cial Co., 29 W. E. 358, there referred to. 
 
 (d) So long as the acceptor is solvent, the drawer does not 
 seem to be entitled to have the goods realised, and applied in 
 taking up the bills. His right seems to be to redeem the goods. 
 See Ex parte Dever (No. 2), 14 Q. B. D. 611. 
 
 (e) See Ex parte Flower, 2 Mod. & A. 224, where tht drawer's 
 assignees received proceeds of the goods, and the acceptor was 
 held entitled to have the money applied in taking up the bills. 
 See, also, Ex parte Imbert, 1 De G. & J. 152. 
 
 (/) See infra, as to this.
 
 PROOF OF DEBTS — SECURED BILLS. 779 
 
 In the event of the bankruptcy of the acceptor, his Bk. IV. 
 trustee can hold the goods subject to the right of the ^ P- 4 4- 
 drawer to redeem them, or to have them applied in talc- 
 
 ing up the bills drawn against them (g). If the goods of acceptor, 
 are sold by the trustee and they realise less than the 
 amount of the bills, the trustee is entitled to the differ- 
 ence from the drawer ; whilst if they realise more, the 
 trustee must hand the difference to him, subject to any 
 lien or set-off to which the proceeds may be subject on 
 some other account. If the goods are sold before the 
 bankruptcy, the proceeds, unless specifically appropri- 
 ated to the bills, become a mere debt due to the drawer, 
 for which he can only prove against the acceptor's es- 
 tate (h). 
 
 If the bill has been negotiated by the drawer, further Right of 
 complications arise. It is now clearly settled (i) that holder, 
 the indorsement of the bill by the drawer without more, 
 does not confer upon the holder the benefit of the 
 security given by the drawer to the acceptor (k), even 
 although the bill refers to the goods and to a letter of ^ 
 advice accompanying it (I). But the benefit * of the [ *712] 
 security, i.e., the right to have the goods sold and ap- 
 plied in taking up the billj may transferred to the in- 
 dorsee of the bill, and when such is the case he will be 
 entitled to have the goods so applied (to). Unless, how- 
 ever, the holder is the transferee of the security as dis- 
 tinguished from the bill, his remedy is on the bill itself, 
 viz., first against the acceptor, and secondly against the 
 drawer. This, moreover, is the case not only when both 
 drawer and acceptor are solvent, but also in the case of 
 the bankruptcy of either of them (n). 
 
 (g) See Ex parte Dever, 13 Q. B. D. 766, and Ex parte Dever 
 (No. 2), 14 ib. 611. 
 
 (A) Ex parte Dever, 13 Q. B. D. 766, and S. C. (No. 2), 14 ib. 
 611. 
 
 (0 Notwithstanding Frith v. Forbes, 4 De G. F. & J. 409, see 
 the cases in the next notes, and especially Phelps, Stokes & Co. 
 v. Comber, 29 Ch. D. 813; Brown, Shipley & Co. v. Kough, ib. 
 848. 
 
 (Jfc) Banner v. Johnston, L. R. 5 Ho. Lo. 157, and the cases in 
 the next two notes. 
 
 (/) Robey and Co.'s Perseverance Iron Works©. Oilier, 7 Ch. 
 695; Ex parte Dever. 13 Ch. D. 766; Phelps, Stokes& Co. v. Com- 
 ber, 29 ib. 813, and Brown, Shipley & Co. v. Kough, ib. 848. 
 These cases cannot be reconciled with Frith v. Forbes, unless 
 it be on the grounds suggested in 29 Ch. D. 870-872. 
 
 (m) As in Inman ». Clare, Johns. 769; Be Agra and Master- 
 man's Bank, 2 Ch. 391. 
 
 [n) See the cases in the last four notes, and Ex parte General 
 South American Co., 10 Ch. 635 ; Vaughan v. Halliday, 9 Ch. 
 561.
 
 780 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 Rule in Ex- 
 
 parte 
 
 Waring. 
 
 [*713] 
 
 Application 
 of rule. 
 
 But if both are bankrupt, the case is different ; for 
 the Court having then to administer both the estate of 
 the drawer and the estate of the acceptor, will apply 
 the goods pledged in taking up the bills which were 
 drawn against them. This is the celebrated rule in 
 Ex parte Waring (o), which is of such great import- 
 ance in administering the estates of commercial firms. 
 
 The rule in Ex parte Waring is that if both the 
 drawer and the acceptor of a bill of exchange become 
 bankrupt, the holder of the bill is entitled to have any 
 securities held by the acceptor for it applied in taking 
 it up. The rule is based upon the following consider- 
 ations : the property held by the acceptor for the bill 
 cannot be applied in payment of his general creditors, 
 because it is held by him for a particular purpose, and 
 on trust to relieve the drawer from his obligation to pay 
 the bill on which the acceptor is primarily liable, but 
 which being bankrupt be cannot pay. On the other 
 hand, the property cannot be applied in payment of the 
 general creditors of the drawer because it is pledged to 
 the acceptor, and the drawer is not entitled to have the 
 property back except on redeeming it, or in other words 
 himself paying the bill. The Court, therefore, applies 
 the property in such a way as to give effect as far as 
 possible to the respective rights of both drawer and ac- 
 ceptor under the circumstances of their being both 
 * bankrupt, or, as the phrase is, according to the equi- 
 ties between the two estates. The result is that the 
 securities are applied as both parties intended that they 
 should be, viz., in taking up the bill in respect of which 
 they were given (p). Moreover this rule has been ex- 
 tended to cases where the estates of the drawer and the 
 acceptor are both insolvent, and are under judicial ad- 
 ministration although not in bankruptcy (q). 
 
 Such being the principle of the rule, it is obvious 
 that whether the security is given to cover one bill or 
 several is immaterial, except that if given for several 
 the rule will benefit the holders of all of them (?•); 
 
 (o) 19 Ves. 345. The principle of the rule was much discussed 
 in Royal Bank of Scotland v. Commercial B;mk of Scotland. 7 
 App. Ca. olid, and is clearly explained in City Bank v. Luckie, 5 
 Ch. 773. See. generally, Eddis on Ex parte Waring. 
 
 (p) See the judgment of Cotton, L. J., in Ex parte Dever (No. 
 2), 14 Q. B. D. 623. 
 
 (q) Powles v. Hargreaves, 3 De G. M. & G. 430; Ex parte Alli- 
 ance Bank. 4 Ch. 423; Bank of Ireland v. Perry. L. R. 7 Ex. 14; 
 Hickie & Co.'s case, 4 Eq. 226. 
 
 (r) Ex parte Dever (No. 2), 14 Q. B. D. 611, where the security 
 was given for some bills only, and the holders of them got paid 
 in full.
 
 RULE IN EX PARTE WARING. 7S1 
 
 further the rule applies whether the value of the secu- Bk. IV. 
 rities is less than the amount of the bills drawn against gg C a t p ' 4 4 ' 
 
 them or not (s); and whether the holders of the bills U 
 
 knew that they were secured or not (*). Nor is it nec- 
 essary that the remitter of the bill should have endorsed 
 it (u). But the right is subject to the prior rights of 
 the joint creditors, if any, of the drawer and acceptor to 
 have the securities treated as joint assets (x). The 
 principle of these decisions applies where the drawer 
 and acceptor are companies in liquidation, at all events, 
 if they are also insolvent ; but, it has been said, not 
 otherwise (y). But the rule is based on the equities 
 between the drawer and the acceptor, and has been held 
 not to apply if the acceptor has a general lien on all 
 securities of the drawer in his hands for the general 
 balance of his account (2); nor where the bill holder 
 has already received by way of dividend more than the 
 value of the securities (a); nor where circumstances 
 have occurred which have rendered the securities no 
 longer applicable to take up the bill (b). The * cir- [ * 714] 
 cumstance, however, that the security was given to cover 
 other liabilities besides the bill in question, is not ma- 
 terial if in the events which have happened there is no 
 other liability to be covered by it (c). 
 
 Passing now to the position of secured creditors in Proof of 
 the event of the bankruptcy of their debtor, the rule is * e ™ t r g ed 
 that a creditor whose debt is secured is not allowed to 
 retain his security and also to prove in competition with 
 the other creditors. Such a creditor cannot prove his 
 debt or any part of it withoat giving the other creditors 
 the benefit of his security (d). This, however, he can 
 do in one of two ways, viz., either realize his security, 
 or give credit for its value, and prove for the balance 
 then remaining due to him ; or give up his security 
 altogether and prove for his whole debt (e). The trus- 
 ts) lb. ; Powles r. Hargraves, 3 De G. M. & G. 430. 
 
 \t) Ex parte Perfect, Mont. 25. 
 
 (u) Ex parte Smart, 8 Ch. 220. 
 
 (a;) Ex parte Dewhurst, 8 Ch. 965. 
 
 (y) Hickie & Co.'s case, 4 Eq. 226. Sed qu. See the cases in 
 note (q). 
 
 (2) lb. Sed qu. See Ex parte Dever (No. 2), 14 Q. B. D. 611. 
 
 (a) Loder's case, 6 Eq. 491. 
 
 (6) As in Ex parte Alliance Bank, 4 Ch. 423. 
 
 ui City Bank r. Luckie, 5 Ch. 773; but see, contra, Levi & 
 Co.'s case, 7 Eq. 449. 
 
 (d) 46 & 47 Vict, c. 52. ? 39, and Sched. 2, rr. 9 to 17. If he 
 proves lor the whole debt he loses the benefit of his security; 
 Couldery v. Bartrum, 19 Ch. D. 394 : Ex parte Solomon, 1 Gl. & 
 Jam. 25; Grngeon v. Gerrard, 4 Y. & C. Ex. 119. 
 
 (c) 46 & 47 Vict. c. 51, \ 39, and Sched. 2, rr. 9 to 17. See
 
 782 BANKRUPTCY. 
 
 Bk. IV. tee may redeem the security at its assessed value : or 
 
 Chap. 4. k e ma y h HVe the security sold (/). The valuation and 
 
 • ' proof by the creditor may be amended by leave of the 
 
 Court (g) ; and, if the scurity is sold after being valued, 
 the amount realized is to be treated as its value, and 
 dividends are to be calculated on the balance and to be 
 rectified accordingly if necessary (h). 
 Secured If the creditor's security is sufficient to pay what is 
 
 creditor not <j ue t hi m? there is no necessitv for him to apply to 
 
 to'^ve 1 ? 16 tbe Court at a11 ' but if {t is insufficient > be commonly 
 his security, applies to the Court to have his security realised under 
 it's direction, to have the proceeds applied in discharge 
 of his debt, and to have liberty to prove for the differ - 
 [ * 715] ence (i). The * trustee, however, has no power to com- 
 pel a secured creditor to take this course ; nor can the 
 trustee deprive him of his security without paying in 
 Observations ^ un what may be due to him upon it (k). Moreover, it 
 on equitable must be borne in mind that an equitable mortgage may 
 securities. De created by deposit of deeds (I) without any written 
 memorandum : and, if originally made for a particular 
 debt, may be extended by parol to some other debt (m); 
 and that a creditor who has a security not exclusively 
 appropriated to a particular debt may, on the bank- 
 ruptcy of his debtor, appropriate that security to any 
 debt which may be owing to him by the bankrupt (n). 
 Moreover, a security may be more extensive as against 
 one person than as against another, e. g., more exten- 
 sive as against a principal debtor than as against his 
 surety (o). 
 
 Ex parte Prescott, 4D. & Ch. 23, in which the rule was applied 
 to joint debts and joint securities. 
 
 {}) 46 & 47 Vict. c. 52, Sched. 2, r. 12. 
 
 \g) lb. rr. 13 and 14. 
 
 (h) lb. r. 15. See under the former act. Soeiete G£n. de Paris 
 v. Green, 8 App. Ca. (i(>6, and Couldery r. Bartrum, 19 Ch. D. 
 394. 
 
 (i) Bonds, bills of exchange, and other personal securities in 
 the hands of a creditor are treated like real securities. Ex parte 
 Hellier, Cooke's Bank. 146, ed. 8. But not bills discounted by 
 a banker and held pending discount. Ex parte Schofield, 12 Ch. 
 D. 337. 
 
 (k) Ex parte Jackson, 5 Ves. 357 ; Ex parte Topham, 1 Madd. 
 38. And see Davis's case, 12 Eq. 516. 
 
 (1) As to the necessity for which, see Ex parte Broderick, 18 Q. 
 B. D. 766. 
 
 (wj) See Ex parte Barnett, De Gex, 194 ; Ex parte Ford, 3 M. 
 D. & D. 457 ; Ex parte Moss, 13 Jur. 866. 
 
 (h) See Ex parte Johnson, 3 De G. M. & G. 218 ; Ex parte 
 Hunter, 6 Ves. 94. Compare Ex parte McKenna, 7 Jur. N. S. 
 588, which turned on the terms of the deposit, gee further, on 
 this subject, the cases referred to, ante, p. 651 et seq, 
 
 (o) Ex parte Walker, 3 Deac. 672.
 
 PROOF OF DEBTS — SECURED CREDITORS. 783 
 
 The rule which precludes a secured creditor from re- Bk. IV. 
 taining his security and also proving for his debt, ap- y e ™ t 4 ' 
 plies only where the debt is payable out of the estate 
 
 to which the security belongs; or in other words, only Cases in 
 where the same estate is debtor to the amount due on wnicn a 
 the security, and creditor by the value of the same se crec iitor can 
 curity (p). Consequently a creditor of a bankrupt prove and 
 .arm of two partners, holding a security given by a also retain 
 larger firm of which the bankrupts are members, is not ms security, 
 affected by the rule in question; he may prove for the 
 whole amount of the debt against the estate of the 
 bankrupt firm, and yet retain the security given by the 
 larger and solvent firm (q). So, if one partner mort- 
 gages his own property for *the debt of the firm, the [ * 716] 
 creditor is allowed on the bankruptcy of the firm to 
 prove for his whole debt against the joint estate, and 
 yet retain the mortgage security given by the one part- 
 ner (r). 
 
 If a partner gives as a security for a debt of the firm 
 shares standing in his own name, the right of the cred- 
 itor to prove for his whole debt and retain his security 
 depends upon whether as between the partners them- 
 selves the shares are assets of the firm, or the separate 
 property of the partners in whose name they stand: if 
 they are assets of the firm, they must be so treated, even 
 although the creditor was not aware of the fact when 
 he took them as security (s). 
 
 Again, if A. and B. are partners, and A. gives a sep- 
 arate security for a partnership debt and dies, and B. 
 becomes bankrupt, the creditor can prove against B.'s 
 estate without giving up his security (t). So, where a 
 
 (p) Ex parte West Riding Union Banking Co., 19 Ch. D. 105, 
 where half the security belonged to the bankrupt aud half to 
 his late partners. The question whether this is the case or not 
 is sometimes one of considerable difficulty, as in the case just 
 cited and in Ex parte Brett, 6 Ch. 838, but the principle is clear. 
 
 {q) Ex parte Parr, 1 Rose, 76; Ex parte Bloxham, 6 Ves. 449; 
 Ex parte Goodman, 3 Madd. 373; Ex parte Sarumou, 1 D. & C. 
 564. See, too, Ex parte English and American Bank, 4 Ch. 49; 
 and Ex parte Wilson, 2 Jur. 67, where a creditor of two firms 
 engaged in a joint transaction, proved against one and retained 
 his security against the other. 
 
 (r) Ex parte Caldicott, 25 Ch. D. 716; Ex parte Peacock, 2 Gl. 
 & J. 27; Ex parte Adams, 3 M. & Ayr. 157; Ex parte Groom, 2 
 Deac. 265. See, also, the next note, and Ex parte Manchester 
 and Liverpool District Banking Co., 18 Eq. 249, a case of a com- 
 position. 
 
 (s) Ex parte Manchester and County Bank, 3 Ch. D. 481; Ex 
 parte Connell, 3 Deac. 201. 
 
 (t) Ex parte Bowden, 1 D. & C. 135; Ex parte Smyth, 3 Deac. 
 597.
 
 t&': 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 
 Sect. 4. 
 
 [ * 717] 
 
 Position of 
 cestuis que 
 trustent. 
 
 Ex parte 
 Turney. 
 
 creditor of a firm has a security belonging to the firm 
 and also a separate covenant for payment by each part- 
 ner, such creditor may, on the bankruptcy of the firm, 
 retain his security and prove against the separate es- 
 tates of the covenantors (u). Again, where a firm has 
 assigned its property in trust for its creditors, whose 
 rights against the separate estates of the partners are 
 expressly reserved, a creditor who is both a joint and a 
 separate creditor may claim the benefit of the assign- 
 ment, and yet prove as a separate creditor against one 
 of the firm if he becomes bankrupt (x). Where, how- 
 ever, one partner only is bankrupt, and a joint creditor 
 is secured by a mortgage of the bankrupt's separate 
 estate, that creditor cannot prove as a separate * cred- 
 itor without giving up his security (y); and if the 
 mortgage is a mere equitable mortgage, giving the cred- 
 itor no locus standi as a separate creditor and nothing 
 more than a lien, he will not be a separate creditor of 
 the bankrupt, or be allowed to prove against his sepa- 
 rate estate at all (z). 
 
 The rule which enables a joint creditor, having a 
 separate security, to prove as a creditor, and yet retain 
 his security, applies to persons who claim, not as credit- 
 ors merely, but also as cestuis que trustent. Conse- 
 quently, if A., B., and C. are bankers, having trust- 
 monies in their hands, and A. afterwards improperly 
 invests some of it on a mortgage, the cestuis que trus- 
 tent may, on the bankruptcy of the firm, claim the bene- 
 fit of the mortgage, and prove against the joint estate 
 of the firm for the whole amount due from it in respect 
 of the trust monies (a). 
 
 A curious and instructive case on the right of a cred- 
 itor to to prove without giving up his security, arose in 
 Ex parte Turney (b). There A. and B., father and son, 
 were partners ; A. equitably mortgaged an estate of his 
 own to secure a debt due from B. A. afterwards died, 
 and the estate descended to B., subject to the mortgage 
 
 (u) Be Plurnmer, 1 Ph. 56, settling the doubts raised in Ex 
 parte Shepherd, 1 M. D. & D. 101, and Ex parte Davenport, ib. 
 313. 
 
 (x) Ex parte Thornton, 5 Jur. N. S. 212. See, too, Ex parte 
 Geaves, 8 De G. M. & G. 291. 
 
 (y) Ex parte "West Riding Union Banking Co., 19 Ch. D. in.",. 
 
 (z) Ex parte Leicestershire Banking Co., De Gex, 292; Ex 
 parte Lloyd, 3 M. & A. 601. The Courts will, however, order 
 the security to he sold to enable the creditor to vote in the 
 choice of a trustee, &c, ibid. 
 
 (a) See Ex parte Biddulph, 3 DeG. & S. 587, and Ex parte Bur- 
 ton. 3 M. D. & D. 364. 
 
 (6) 3 M. D. & D. 576. See, also, Ex parte Brett, 6 Ch. 839.
 
 PROOF OF DEBTS — SECURED CREDITORS. 785 
 
 in question. At A.'s death, however, the joint debts of Bk. IV. 
 A. and B. were more than sufficient to exhaust A.'s as- ^ ^. p '. 
 
 sets. B. having become bankrupt shortly after his ' 
 
 father's death, it was held that, notwithstanding the 
 descent of the mortgaged estate to B., the mortgage 
 creditor was at liberty to prove against B., without giv- 
 ing up the security, although it was admitted that this 
 could not have been allowed if the descended estate 
 had been of any value to B. 
 
 This right of the secured creditor may avail not only Marshallino-. 
 himself but the owner of the security he holds ; and 
 by the equitable doctrine of marshalling a joint creditor 
 of a firm * may be entitled to prove against the sepa- [ *718] 
 rate estate of one of its members or vice versa, contrary 
 to the general rule. 
 
 For example, in Ex parte Salting (c), a firm wrong- jr x parte 
 fully pledged the goods of a customer to their bankers Salting. 
 for an advance to the firm. One of the partners gave 
 to the bankers a separate guarantee for the advance. 
 On the bankruptcy of the firm the bankers sold the 
 goods and applied the proceeds in reducing their debt. 
 They then proved for the residue against the separate 
 estate of the partner who had given the guarantee. 
 His separate estate was more than sufficient to pay the 
 whole debt ; and it was held that the owner of the goods 
 was entitled to have the banker's securities marshalled, 
 and to have the benefit of the guarantee to the extent 
 of the value of the goods which had been sold, and to 
 prove for that value against the separate estate of the 
 partner who had given the guarantee. 
 
 The same principle of eqtiality amongst creditors Eule that a 
 which prevents one creditor from holding a security, creditor must 
 and proving for what is due on it, is also the founda- P™ ve and 
 tion of the rule that no creditor is allowed to sue a debtor 
 bankrupt in respect of any demand which may be proved 
 as a debt under the bankruptcy (d). But where the 
 creditor is the creditor not only of the bankrupt, but 
 also of another person, the creditor may prove against 
 the estate of the former, and yet sue the latter, and 
 get from him what he can (e). Consequently, if a 
 creditor of a firm, one of the members of which is alone 
 bankrupt, is in a position to prove against his estate, 
 
 (c) 25 Ch. D. 148. See, also, Ex parte Alston, 4 Ch. 168. 
 
 (d) 46 & 47 Vict. c. 52, §' 9 and % 10, (2) ante, p. 709. Under 
 the old law the creditor could sue or prove at his election. 
 
 (e) See Ex parte Schofield, 12 Ch. D. 337 ; Ex parte Isaac, 6 Ch. 
 58. See, as to cases of suretyship, Ex parte Coplestone, Mon. & 
 Ch. 262. 
 
 * 27 LAW OF PARTNERSHIP.
 
 786 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 [*719] 
 
 Two proofs 
 for same 
 debt not 
 allowed. 
 
 Interest. 
 
 such creditor may prove against it, and, at the same 
 time, sue the solvent partners (/), and it is not now 
 necessary to join the bankrupt as a co-defendant (g). 
 
 * Another fundamental principal relating to the proof 
 of debts, and one which requires notice here, is that 
 there can be only one proof against the same estate in 
 respect of the same debt. Thus, in the common case 
 of principle and surety, if the principle is bankrupt, 
 and the creditor proves against his estate, and receives 
 a dividend, and has recourse to the surety for the dif 
 ference, the surety cannot prove against the bankrupt's 
 estate without giving credit for the dividend already 
 paid to the principal creditor : in other words the divi- 
 dend paid in respect of both proofs will be no greater 
 than that payable in respect of one proof for the whole 
 amount of the debt due by the bankrupt (h). This 
 rule is of considerable importance in mercantile trans- 
 actions, and is closely allied to the rule which, as will 
 be seen hereafter, precludes a creditor from proving the 
 same debt against both the joint and the separate estates 
 of a bankrupt firm. The rule forbidding two proofs in 
 respect of the same debt applies in the winding up of 
 companies (i). 
 
 Again, if a person is adjudicated bankrupt here and 
 abroad, a creditor who has proved abroad cannot prove 
 here without giving credit for what he has received 
 under his proof abroad (k). 
 
 As regards interest, the Bankruptcy act, 1883, sched. 
 2, r. 20, enacts as follows : — 
 
 20. On any debt or sum certain, payable at a certain time or 
 otherwise, whereon interest is not reserved or agreed for, and 
 which is overdue at the date of the receiving order and provable 
 in bankruptcy, the creditor may prove for interest at a rate not 
 exceeding four per centum per annum to the date of the order 
 from the time when the debt or sum was payable, if the debt or 
 sum is payable by virtue of a written instrument at a certain 
 
 ( / ) Ex parte Isaac, 6 Ch. 58 : Keay r. Fenwick, 1 C. P. D. 
 745 ; Bottomley v. Nuttall, 5 C. B. N. S. 122 ; Heath v. Hall, 4 
 Taunt. 326 ; Bovill r. Wood, 2 M. & S. 22 ; Harley v. Green- 
 wood, 5 B. & A. 95 ; Ex parte Read, 1 Eose, 460. Compare Blan- 
 nin v. Taylor, Gow, N. P. 199. 
 
 (g) 46 & 47 Vict. c. 52, \ 114. See, previously, Ex parte Isaac, 
 
 6 Ch. 58 ; Ex parte Stanton, 1 M. D. & D. 2715. 
 
 (A) See Ex parte Came, 3 Ch. 463 ; Ex parte European Bank, 
 
 7 Ch. 99 ; Robson, Bank. 261 et seq., ed. 3. 
 
 (i) Ex parte European Bank. 7 Ch. 99, reversing S. C, 12 Eq. 
 501. 
 
 (k) Ex parte Wilson, 7Ch. 490 ; Banco de Portugal v. Waddell, 
 5 App. Ca. 161 ; Selkrig v. Davies, 2 Dow, 230.
 
 PROOF OF DEBTS SECURED CREDITORS. 787 
 
 time, and if parable otherwise, then from the time when a de- Bk. IY. 
 mand in writing has been made giving the debtor notice that Chap. 4. 
 
 interest will be claimed from the date of the demand until the > T ec ' 
 
 time of payment (I). 
 
 A jury may allow interest where it is payable by 
 agreement, or by mercantile usage ; also (by 3 &4 "VVm. 
 4, c. 42), where a * sum certain is payable under a [ * 720] 
 written instrument at a certain time and where payment 
 of a sum certain, not so payable, has been demanded by 
 notice in writing stating that interest will be claimed (m). 
 
 Interest at 4 per cent, is payable on all proved debts 
 from the date of the receiving order if the estate is 
 more than sufficient to pay all proved demands upon 
 it (n). 
 
 Having adverted to the proof and payment of debts 
 generally, it is proposed to pass to the subject of the 
 proof and payment of the debts of partners, first, out of 
 their joint, and next, out of their respective separate 
 assets. 
 
 A. Proof against the joint estate. 
 
 The administration of the joint estate will be best Admin istra- 
 explained by examining : — tion of 
 
 1. The rights of the joint creditors, partner's 
 
 2. The rights of the partners, Jomt estate ' 
 
 3. The rights of their separate creditors, 
 as against that estate. 
 
 First, with respect to the joint creditors. 
 
 The joint creditors have the first claim for payment i. Position 
 out of the joint estate (o): and until they have been of the joint 
 paid all the principal monies due to them, with interest creditors, 
 thereon (p) up to the date of the receiving order (q) 
 (if their debts carry interest), no other person is enti- 
 tled to receive a farthing out of the assets of the firm (r). 
 
 (1) See Ex parte Bath, 27 Ch. D. 509 ; Ex parte Bishop, 15 Ch. 
 D. 421. 
 
 (m) See 3 Chitty's Statutes, 584, ed. 4. 
 
 (n) See 46 & 47 Vict. c. 52. § 40 (5). See, as to appropriating 
 securities to interest, Be Savin, 7 Ch. 760. 
 
 (o) Ante, p. 692. As to marshalling, see ante, p. 717. 
 
 (p) Ex parte Ogle, Mont. 350 ; Pearce v. Slocombe, 3 Y. & C. 
 Ex. 84 ; Ex parte Reeve, 9 Ves. 590, and see Ex parte Woodford. 
 3 De G. & S. 666. 
 
 (q) Interest after that date is not payable in priority to the 
 separate creditors, Ex parte Findlay, 17 Ch. D. 334. 
 
 (r) The expenses of getting in joint estate must of course be 
 paid out of it; Ex parte Rutherford, 1 Rose, 201.
 
 788 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 [ * 721] 
 
 2. Position 
 of the 
 partners. 
 
 Ex parte 
 Sillitoe. 
 
 [*722] 
 
 If a person is truly a creditor of the firm, he is not de- 
 prived of his right to rank as a joint creditor, merely 
 * because he may have some separate security for his 
 debt (s); for he is treated, in such a case, as a joint 
 creditor having the advantage of a collateral security (t). 
 But it must not be forgotten, that a person who ad- 
 vances money to one partner, on his separate security, 
 and makes him alone the debtor, has no locus standi 
 against the firm merely because the money is after- 
 wards applied to its use (u). 
 
 Secondly, with respect to the partners. 
 
 Subject to the exceptions which will be hereafter 
 stated, it is an established rule that a partner in a bank- 
 rupt firm shall not prove in competition with the cred- 
 itors of the firm. They are, in fact, his own creditors, 
 and he cannot be permitted to diminish the partnership 
 assets to the prejudice of those who are not only cred- 
 itors of the firm, but also of himself (a?). If,- there- 
 fore, a partner is a creditor of the firm, neither he nor 
 his separate creditors (for they are in no better posi- 
 tion than himself) can compete with the joint creditors 
 as against the joint estate. Lord Hardwicke, it is true, 
 in Ex parte Hunter (y), allowed this to be done; but 
 that case has not, in this respect, been followed, and has 
 long been considered as overruled (z). 
 
 In Ex parte Sillitoe (a), a leading case on this sub- 
 ject, two partners in a banking firm carried on a sepa- 
 rate business as ironmongers, and became creditors of 
 the bank to a large amount, in consequence of having, 
 with a view to enable the bank the better to obtain 
 money, discounted their securities. * The banking 
 firm was adjudged bankrupt, and an attempt was made 
 
 (s) See Ex parte Brown, cited 1 Atk. 225 ; Ex parte Clowes, 2 
 Bro. C. C. 595; Ex parte Harman, 2 Gl. & J. 25. 
 
 (t) See Ex parte Hunter, 1 Atk. 227 ; Ex parte Harman, 2 Gl. 
 & J. 25, and ante, p. 715. 
 
 (u) Ex parte Hunter, 1 Atk. 223; Ex parte Emly, 1 Rose, 65; 
 Lloyd v. Freshfield, 9 D. & Ry. 19; and see ante, pp. 189 et seq. 
 and 703. 
 
 (x) See Ex parte Sillitoe, 1 Gl. & J. 382. Ex parte HaTgreaves, 
 1 Cox, 441; Ex parte Reeve, 9 Ves. 590; Ex parte Rawson. Jac. 
 279. See Ex parte Gliddon, 13 Q. B. D. 43, noticed hereafter, 
 where two firms were curiously intermixed. 
 
 (//) Cooke's Bank. Law, 52o\ ed. 8, and 1 Atk. 223. 
 
 (z) Ex parte Burrell ; Ex parte Parker; Ex parte Pine, all cited 
 in Cooke's Bank. Law, 528, ed. 8, and see per Ld. Eldon, Ex 
 parte Harris, 1 Rose, 438. 
 
 (a) 1 Gl. & J. 382. Ex parte Williams, 3 M. D. & D. 433, was 
 a similar case. See, also, Ex parte Maude, 2 Ch. 550; and infra, 
 p. 727.
 
 PROOF AGAINST JOINT ESTATE. 7S9 
 
 on behalf of the ironmongery firm, to prove, as joint Bk. IV. 
 creditors, against the joint estate of the bank. Lord £*hap. 4. 
 
 Eldon, overruling the decision of the Vice- Chancellor, ^ ect ' J 
 
 rejected the proof upon the ground which is stated 
 above. 
 
 So in the previous case of Ex parte Hargreaves (6), £ x parte 
 alias Shakesliaft, Stirrup, and Salisbury, three persons Hargreaves. 
 were partners as cotton manufacturers, and two of them 
 were also partners as linen drapers; goods, manufac- 
 tured by the three, were consigned to the two for sale, 
 for the benefit of the larger firm, and bills were drawn 
 on the two, on behalf of the three; both firms became 
 bankrupt, and the larger firm was indebted to the 
 smaller in respect to the above transactions. It was 
 held, that the members of the smaller firm being liable 
 to the debts of the larger firm, the assignees of the 
 former could not compete with the joint creditors of the 
 latter. 
 
 Again, as the estate of a deceased partner is liable to Executors of 
 the debts of the firm (c), it follows that, so long as such a deceased 
 liability exists, his executors cannot prove agaiDst the P artuel - 
 joint estate of the surviving partners for the amount 
 due from them to his estate (d). But if those debts are 
 paid, or the estate of the deceased is relieved from 
 them (e), such proof is admissible (/); except in respect 
 of assets, properly brought into or left in the business 
 by the executors as part of the capital of the deceased. 
 No proof, however, in respect of such assets is admissi- 
 ble against the joint estate of the surviving partners, 
 unless all their joint debts contracted as well before as 
 after the death of the deceased are paid. The leading 
 case on this subject is Ex parte Butterfield (g). In Ex parte 
 that case a sole trader * directed by his will that it Butterfield. 
 * [*723J 
 
 (b) 1 Cox, 440, and 1 Gl. & J. 382, and 11 Ves. 414, infra, p. 
 726. 
 
 (c) Ante, pp. 194. 595. 
 
 (d) Ex parte Blythe, 16 Ch. D. 620; Nanson v. Gordon, 1 App. 
 Ca. 195. affirming Ex parte Gordon, 10 Ch. 160. 
 
 (e) Exparte Andrews, 25 Cb: D. 505, shows that the outstand- 
 ing joint liabilities need not be paid. It is enough if there is 
 no proof in respect of any of them. But note, there was in that 
 case no reason to suppose they ever would be proved. See. also, 
 p. 738, note (g). 
 
 (/) Ex parte Edmonds, 4 De G. F. & j. 488, noticed infra, p. 
 723. 
 
 iff) De Gex, 570; Ex parte Corbridge, 4 Ch. D. 246. was decided 
 on the same principle. See, too, Ex parte Garland, 10 Yes. 110, 
 where proof in respect of assets improperly employed was ad- 
 mitted, and proof in respect of assets properly employed was re- 
 jected. See, also, Scott v. Izon, 34 Beav. 434; Ex parte Thomp- 
 son, 2 M. D. & D. 761, and compare the cases in the next note.
 
 790 BANKRUPTCY. 
 
 Bk. IV. should be lawful for his widow to employ 60001. in con- 
 
 Chap. 4. Sect, tinuing his business, and he appointed her and his son 
 
 * executors. After the testator's death, his widow and 
 
 son continued his business with his assets, and became 
 bankrupt. The persons beneficially interested in the 
 assets which had been employed by the bankrupts, sought 
 to prove, in respect thereof, against their joint estate; 
 but it was held that, to the extent of 6000Z., no such 
 proof could be allowed, for the employment of 6000?. 
 being authorised by the will, the proof could not be ad- 
 mitted, without, in substance, infringing the rule which 
 precludes a partner from competing with his own 
 creditors. 
 Ex parte This case may be usefully compared with Ex parte 
 
 Edmonds. Edmonds (h). There, partnership articles provided in 
 effect that if one of the partners died, so much of his 
 share in the capital, as should not exceed 100,000?., 
 should be continued in and be considered as part of 
 the partnership effects; that the survivors should pay 
 off the amount of the deceased's share by instalments, 
 with interest, but that his estate should not share in 
 the profits accruing after his death. The partner in 
 question having died, more than 150,000?. was found 
 due to him froin the partnership. His executors took 
 a bond for this amount from the surviving partners, 
 who afterwards became bankrupt, having, however, 
 previously paid all the debts for which they and the 
 deceased were jointly liable (i). It was held that the 
 executors were entitled to prove against the joint es- 
 tate of the surviving partners for the whole amount of 
 the bond, and not only for the excess over 100,000Z., as 
 the other joint creditors contended. The provisions of 
 the deed taken together showed plainly that the 100,- 
 000/., was intended to be continued in the concern in 
 the sense of a loan bearing interest; and that although 
 r * 724] the money was to be employed in * the business of the 
 partnership, it was to be so employed, not as the money 
 of the deceased, but as the money of the surviving 
 partners, borrowed by them from his estate. 
 Assets im- Assets of a deceased partner brought into the busi- 
 
 properly ness by his executor in breach of trust, do not form 
 brought into „ ar ^ f ^ ue i i n t estate of the surviving partners, and 
 the business. r J & r 
 
 (h) 4 De G. F. & J. 488. See, also, Ex parte Hill. 3 M. & A. 
 17"), and Ex parte Crofts, 2 Deac. 102, where trust money lent to 
 partners was held to be provable as a joint debt. 
 
 (0 The payment of the debts to which the estate of the de- 
 ceased was liable distinguishes this from Ex parte Gordon, 10 
 Ch. 160.
 
 PROOF AGAINST JOINT ESTATE. 791 
 
 may be the subject of proof against that estate, not only in Bk. IV. 
 competition with those creditors who have become such Cna P- 4 - Sect - 
 
 since the death of the deceased, but also in competi- . 
 
 tion with those whose debts accrued in his lifetime (A;); 
 as regards the last, the proof is exceptional, but is al- 
 lowed for the same reason as similar proof is allow- 
 ed where separate estate of a partner has been fraud- 
 ulently dealt with as property of the firm (I). 
 
 Another instructive case, illustrating the rule now Two firms 
 under consideration is afforded by Ex parte Broivn (m). with common 
 There, in substance there were two firms, with a com- partner, 
 mon partner, viz., A. and B., and A. and OL: C. had ^x parte 
 made himself separately liable for a debt owing by Brown - 
 A. and B. ; both firms became bankrupt. The princi- 
 pal creditor proved against C.'s separate estate, and 
 received a dividend. A claim was then made on be- 
 half of C.'s separate estate, to prove for the amount 
 thus paid out of it against the joint estate of A. and B. 
 But it was held that this proof could not be allowed, 
 for the principal creditor not having been paid in full, 
 he had a right of pi*oof against the joint estate of A. 
 and B., and that, consequently, C. could not diminish 
 that estate to his prejudice. 
 
 There are, however, three exceptions to the rule Exceptions 
 above stated, viz. : to rule that 
 
 1 . Where the separate property of one partner has partner can- 
 been fraudulently dealt with as the property of the n °t compete 
 « r . . with his own 
 
 ' creditors. 
 
 2. V\ here there are two distinct trades, carried on 
 by the firm, and by one or more of the members of it, 
 with distinct capitals; 
 
 *3. Where a partner has obtained his order of dis- [ *725] 
 charge, or has been otherwise discharged from the 
 joint debts, and has afterwards become a creditor of 
 the firm (n). 
 
 This last exception rests on the principle that the 
 discharged partner is no longer a debtor to the credit- 
 ors of the firm, and does not, therefore fall within the 
 
 (k) Ex parte Garland, 10 Ves. 110; Ex parte Westcott, 9 Ch. 
 626. See ante, c. 3, \ 2. 
 
 (/) See infra; assets of the testator in the business when he 
 died, and improperly left in it, cannot, it is conceived, be the 
 subject of proof, unless the debts of the firm contracted in his 
 life are paid. 
 
 (m) 2 M. D. & D. 718. See, too, Ex parte Rawson, Jac. 274. 
 
 (») Ex parte Smith. 14 Q. P,. D. 394, where the estate of the 
 deceased partner was discharged by the Statute of Limitations ; 
 Ex parte Atkins, Duck, 479, where a partner who had obtained 
 his certificate took up bills of the firm.
 
 792 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 Exception in 
 the case of 
 fraud. 
 
 Exception in 
 the case of 
 distinct 
 trades. 
 
 [ * 726] 
 
 Case where 
 one firm 
 contains the 
 other. 
 
 rule which precludes a person from compoting with 
 his owd creditors. The two first exceptions are not so 
 easily explained. 
 
 Exception in the case of fraud. — If separate property 
 of one partner has been fraudulently converted by his 
 co-partners to the use of the firm, such property must 
 be treated as the separate estate of the defrauded part- 
 ner ; and proof on his behalf (or rather on behalf of 
 his separate estate) is therefore allowed in respect of 
 such property, against the joint estate, and in compe- 
 tition with the joint creditors (o). Upon precisely the 
 same principle, if a partner has fraudulently converted 
 property of the firm to his own use, proof on behalf of 
 the joint estate is allowed, in respect of such property, 
 against his separate estate, and in competition with his 
 separate creditors (p). This, however, is a subject 
 which will have to be considered hereafter. 
 
 Exception in the case of distinct trades. — If one of 
 two firms, carrying on distinct trades, becomes creditor 
 of the other in the ordinary way of their trade, the 
 creditor firm may prove against the joint estate of the 
 debtor firm, in competition with its other joint credit- 
 ors, although one or more persons may be partners in 
 both firms (q). 
 
 If neither firm contains the other, e. g., if one firm is 
 A. and B., and the other firm is A. and C, either may 
 rank as a joint * creditor of the other, because the cred- 
 itors of the one are not creditors of the other(r). 
 
 If one of the firms contains the other, e. g., if one 
 firm is A., B., and C, and the other is A. and B., or A. 
 only, two cases have to be considered, according as the 
 larger or the smaller firm is the debtor to the other ; 
 for whilst all persons who are creditors of the larger 
 firm are creditors of the smaller, the converse is evi- 
 dently not true. Consequently, although the larger 
 firm does not compete with its own creditors if it proves 
 against the joint estate of the smaller firm, the smaller 
 firm must necessarily compete with its own creditors if 
 it is allowed to rank as a joint creditor against the es- 
 tate of the larger firm. Hence, although it was long 
 ago decided that proof might be made by the larger firm 
 
 (o) Seo per Lord Eldon in Ex parte Sillitoe, 1 Gl. & J. 383, 
 and in Ex parte Harris, 1 Rose, 437. 
 
 {pj Ex parte Lodge and Fendal, 1 Ves, J. 166, infra, p. 735. 
 
 ( q) See" in addition to the cases cited below, Ex parte Ring, 
 Ex parte Freeman, Ex parte Johns, cited in Cooke's Bank. Law, 
 534, ed. 8. Compare Ex parte Gliddou, 13 Q. B. P, 43, where 
 no debt was contracted. 
 
 (r) Ex parte Thompson, 3 Deac & Ch. 613
 
 PROOF AGAINST JOINT ESTATE. 793 
 
 against the smaller (s), it was also decided that proof Bk. IV. 
 could not be made by the smaller against the larger (t). q *?*■,*" 
 However, it seems now settled that if the two trades ' 
 
 are distinct, and if the larger firm has become indebted 
 to the smaller in the regular way of their trades (u), 
 the smaller firm may prove, like any other joint creditor, 
 against the j^int estate of the larger. This was decid- 
 ed in Ex parte Cook (x), where one partner, who carried Ex parte 
 on a separate business, was allowed to rank as a joint Cook, 
 creditor against the joint estate of the firm of which he 
 was a member, and which had become indebted to him 
 in the ordinary way of their and his respective trades. 
 
 The exception now under discussion is, however, only The trades 
 allowed provided two things concur, viz. : first, there must be 
 
 must be two distinct trades ; and secondly, the debt iv sti i >< J' ancl 
 
 . the debts 
 
 sought to be proved must have arisen from dealings lia been 
 
 between trade and trade in the ordinary way of busi- contracted 
 ness. It was because the two firms were, in fact, one, in the 
 the smaller one being only a branch of the larger, and orfhnai T 
 carrying on its business, that proof was disallowed in t j lelll 
 Ex parte Hargreaves (y), and it was because, although 
 the two * firms and their trades were distinct, the debt [ t2i\ 
 sought to be proved had not arisen in the ordinary way 
 of trade that proof was disallowed in Ex parte Silli- 
 toe (z) and in Ex parte Williams (a). In this last Ex parte 
 case there was a firm of iron-masters ; two of the firm ^ illiams. 
 were also bankers : the iron firm was indebted to the 
 banking firm for advances, but proof in respect of them 
 on behalf of the banking firm against the joint estate 
 of the iron firm was disallowed, inasmuch as the cir- 
 cumstances under which the debt was contracted pre- 
 cluded the idea that the bankers had made the advances 
 in the ordinary way of their business as bankers. 
 
 Even in these excepted cases, however, proof by one 
 partner is not allowed unless on taking the partnership 
 accounts a balance still remains due to him (6). 
 
 The rule which precludes one partner from proving Come where 
 
 against the estates of his co-partners does not apply to partnership 
 
 persons who have not become partners, and who have has no * 
 
 * commenced. 
 
 {.<*) Ex parte St. Barbe, 11 Ves. 413; Ex parte Castell, 2 Gl. & 
 J. 124 ; Exparte Hesham, 1 Rose, 146. 
 
 (i) Ex parte Hargreaves, 1 Cox. 440 : Ex parte Adams, 1 Kose, 
 305; Ex parte Sillitoe, 1 Gl. & Jam. 382. 
 
 (u) This is essential, see infra. 
 
 (x) Mont. 228. 
 
 (y) 1 Cox. 440. See ante, p. 722. 
 
 (z) 1 Gl. & J. 382. See ante, p. 721. 
 
 {a) 3 M. D. & D. 433. See, also, Ex parte Maude, 2 Ch. 550. 
 
 (b)Ex parte Maude, 2 Ch. 550,
 
 794 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 Ex parte 
 Turquand. 
 
 [ * 728] 
 
 3. Position 
 of separate 
 creditors. 
 
 not rendered themselves liable to third parties as if 
 they were partners. This is well illustrated by Ex parte 
 . Turquand (c). There, in substance, A. agreed to be- 
 come a partner with B. and C, who were already in 
 partnership together, and who carried on business in 
 the names of B. and C. It was agreed that A. should 
 bring in 2000Z., and that the name of the firm should be 
 altered to B., C. & Co, A. advanced 2000Z. to B. and 
 C. ; the name of the firm was altered as arranged, but 
 no articles of partnership were ever signed, and A. re- 
 fused to sign any or to do anything more before he was 
 satisfied as to B. and C.'s solvency. There was no 
 evidence to show that A. had made himself liable to 
 third parties as if he were a partner ; and B. and C. 
 having become bankrupt, A. was allowed to prove against 
 their estate for the advances he had made them. 
 
 * Thirdly, with respect to the separate creditors. 
 
 The principle which prohibits a partner from com- 
 peting with the joint creditors of the firm evidently has 
 no application as between one partner and the separate 
 creditors of his co-partners. Moreover, the lien which 
 each partner has upon the assets of the firm must be 
 satisfied before any part of the joint estate can be 
 divided amongst the members of the firm, or, which 
 comes to the same thing, be carried to the account of 
 their respective separate estates. Therefore, after the 
 joint debts of the tirm have been paid, with interest to 
 the date of the receiving order (d), the surplus of the 
 joint estate must be next applied in satisfaction of the 
 liens of the individual partners upon it (e); and it is 
 the ultimate surplus only which is to be divided amongst 
 the partners, or their respective separate estates, in 
 proportion to their respective shares in the assets of the 
 firm. It is hardly necessary to observe that a lien exist- 
 ing in favour of one partner increases his separate 
 estate, and confers upon his separate creditors a right 
 to prove against the joint estate in preference to the 
 separate creditors of the other partners, who have no 
 such lien (/). If the joint estate is not sufficient to 
 
 (c) 2 M. D. & IX 339. See, also, Ex parte Davis, 4 De G. J. & 
 S. 523, ante, p. 21. Ex parte Hickin, 3 De G. & S. 662, shows 
 that a person intending to become a partner, may prove as a 
 creditor for arrears of salarv. 
 
 (d) Ex parte Findlay, 17 Ch. D. 334. 
 
 (e) Ex parte King, 17 Ves. 115, and 1 Rose, 212 ; Ex parte 
 Reid, 2 Rose, 84 ; Ex parte Reeve, 9 Ves. 588 ; Ex parte Terrell, 
 Buck, 345 ; Fereday v. Wightwick, Taml. 250 ; Holderness v. 
 Shackels, 8 B. & C. 612. 
 
 (/) Ex parte King, 17 Ves. 115 ; Ex parte Reid, 2 Rose, 84.
 
 PROOF AGAINST JOINT ESTATE. 795 
 
 satisfy the lien, the deficiency becomes provable against Bk. IV. 
 the separate estates of the indebted partners (g). Chap. 4. Sect. 
 
 The joint debts being paid, and the liens of the in- . ' . 
 
 dividual partners on the partnership assets being satis- Surplus of 
 tied, the surplus of the joint estate becomes divisible J oint estate, 
 amongst the respective separate estates of the partners 
 in proportion to their respective shares in the partner- 
 ship property. The surplus of the joint estate, having 
 been distributed, loses its character of joint estate, and 
 becomes, to all intents and purposes, separate estate of the 
 partners to whose credit it is carried. If any joint 
 * estate is carried to a separate estate before the joint [ 729] 
 debts are paid and the partners' liens are satisfied, such 
 joint estate will be ordered to be restored (h). 
 
 B. — Proof against the separate estates. 
 
 The principles according to which the separate es- Administra- 
 tate of one partner is administered, in the event of an tlon ot 
 adjudication against him alone, are the same as those estate of 
 which govern the administration of the separate estates partners. 
 of the members of a bankrupt firm (i). The leading 
 principle in administering a separate estate is to pre- 
 fer separate to joint creditors, just as in administering 
 joint estate the leading principle is to prefer joint to 
 separate creditors. But there is this important differ- 
 ence to be borne in mind; the separate creditors of one 
 partner are not creditors of the firm, whilst the joint 
 creditors of the firm are creditors of each of the part- 
 ners composing it. For this reason it was formerly 
 the rule to distribute the separate estate of each part- 
 ner, jwi passu, amongst his creditors, whether joint or 
 separate (k)\ and although this rule has been depart- 
 ed from (I), the distinction in question naturally leads 
 to important consequences, as will be seen hereafter. 
 
 (g) Ex parte Terrell. Buck, 345 ; Ex parte King, 17 Ves. 115; 
 Ex parte Watson, Buck, 449, and 4 Madd. 477 ; and see, as to 
 the last case, 2 Gl. & J. 172. 
 
 (//) See Ex parte Lanfear, 1 Rose, 442. 
 
 (i) 46 & 47 Vict. c. 52, \ 40 (3), and \ 59. and Bank. Rules, 
 1886, r. 269. Ex parte Taitt, 16 Ves. 197; Everett v. Backhouse, 
 10 Ves. 98. 
 
 {k) Ex parte Blake, Cooke's Bank. Law, 528, ed. H- Ex parte 
 Cobham ; Ex parte Haydon ; Ex parte Caruthers ; Ex parte Up- 
 ton ; Stephens v. Brown, and Mathews v. Aland, all cited in 
 Cooke's Bank. Law. 260-264, ed. 8; and see Lord Craven r. 
 Widdows, Ca. in Ch. 139; Ex parte Copland, 1 Cox, 420; Ex parte 
 Hodgson, 2 Bro. C. C. 5; Ex parte Page, ib. 119; Ex parte Plin- 
 tum, ib. 120. 
 
 (1) See next note, and Ex parte Baudier, 1 Atk. 98; Ex parte 
 Olknow, Cooke's Bank. Law, 259, ed. 8.
 
 796 BANKRUPTCY. 
 
 Bk. IV. The administration of the separate estates of bank- 
 Chap. 4. beet. rU pt partners, and the administration of the separate 
 estate of one bankrupt partner, if one alone is bank- 
 rupt, will be best explained by examining 
 
 1. The rights of the separate creditors, 
 
 2. The rights of the joint creditors, 
 
 3. The rights of the partners, 
 as against such estates or estate. 
 
 [ * 730] * First, with respect to the separate creditors. 
 
 1. Position Except in those cases which will be specially noticed 
 
 of separate hereafter, the separate estate of each partner is to be 
 creditors. £ rg ^. a pp]j e ^ j n payment of his separate creditors (wi), 
 to the extent of 20s. in the pound on their provable 
 debts with interest up to the date of the receiving or- 
 der; but not with interest after that date until the joint 
 creditors have also received 20s. in the pound on tbeir 
 provable debts (n). 
 
 A bankrupt's wife who had lent him money for the 
 purpose of his business cannot compete with his other 
 creditors (45 & 46 Vict. c. 75, § 3). But this enact- 
 ment does not preclude the wife of a partner from 
 proving against tbe joint estate of the firm in respect 
 of a loan to her husband and his co-partners jointly (oo). 
 After payment of the separate creditors of each part- 
 ner, the surplus of his separate estate is carried to the 
 credit of the joint estate (o); and if- the partner is a 
 member of several bankrupt firms, the surplus of his 
 separate estate must be divided amongst their respec- 
 tive joint estates, in proportion to the amount of the 
 debts proved against them respectively (p). 
 
 (m) 46 & 47 Viet. c. 52. \\ 40 (3) and 59, and Bank. Rules, 
 1886, r. 269; Ex parte Elton, 3 Ves. 238: Ex parte Abell, 4 Ves. 
 837; Ex parte Clay, 6 Ves. 813; Ex parte Taitt, 16 Ves. 193. As 
 to marshalling, see ante, p. 717. 
 
 (n) 46 & 47 Vict. c. 52, \ 40, cl. 5, and Sehed. 2, r. 20, and Ex 
 parte Findlay, 17 Ch. D. 334. Under the old law the separate 
 creditors were not entitled to interest until the joint creditors 
 had received 20*. in the pound on their principal debts, see inter 
 alia, Ex parte Wood, 2 Mont. D. & D. 283; Ex parte Clarke, 4 
 Ves. 677; Ex parte Boardman, 1 Cox, 275; Ex parte Minchin, 2 
 Gl. & Jam. 287. 
 
 (oo) Exparte Nottingham, 19 Q. B. D. 88. 
 
 (o) Exparte Wood, 2 M. D. & D. 2*3, where the surplus of the 
 separate estate of a bankrupt shareholder in a company being 
 •wound up in equity was held applicable to the payment of the 
 creditors of the company, and not payable into court in the suit. 
 
 (/>) Ex parte Frauklyn, Buck, 332, where the order is given at 
 length.
 
 PROOF AGAINST SEPARATE ESTATES. 797 
 
 Secondly, villi respect to the joint creditors. 
 
 Except in the cases hereafter mentioned, the joint Bk. IV. 
 creditors * of partners (q) are not entitled to payment Chap. 4. Sect. 
 
 out of their separate estates, in competition with their _ 
 
 separate creditors (r). This is in accordance with the [ * 731] 
 old law (s). The Bankruptcy Act, 1883, mentions no 2. Position of 
 exceptions, and it has not yet been decided that there J oi ^ 
 are any; and owing to the language of § 59 (1) it is ^ re l ors " 
 doubtful whether they exist in cases where one partner w hi c i 1 thev 
 only is bankrupt. But it would be strange if the ex- ma y compete 
 ceptions existed (and it is apprehended that the first with the 
 three do exist) where a separate estate is administered se P» rate 
 under a joint adjudication against a firm, and not where Clet 1 ° 1= " 
 the separate property of one partner is administered 
 under an adjudication against himself alone (/). 
 
 The exceptions are four in number. The first exists 
 where there is no joint estate; the 2nd where the prop- 
 erty of the firm has been fraudulently converted; the 
 3rd where there has been a distinct separate trade, in 
 respect of which a separate debt has been contracted; 
 the 4th is in favour of the petitioning creditor him- 
 self (u). 
 
 Exception where there is no joint estate. — If in the 1. Exception 
 case of a bankrupt firm there is no joint estate the joint where there 
 creditors are entitled to rank as separate creditors ^ s t "°J omt 
 against the separate estates of the individual part- 
 ners (x). So if one partner only is bankrupt, the 
 creditors of the firm are entitled to rank as separate 
 creditors against the separate estate of the bankrupt, if 
 there is no joint estate (y), and if there is no *solvent [ * 732] 
 
 (q) As to co-debtors not partners, see Ex parte Field, 3 M. I). 
 & D. 95; Ex parte Buckingham, 1 M. D. & D. 235; Ex parte Cros- 
 field, 1 Deac. 405. 
 
 (r) 46 & 47 Vict. c. 52, \ 40 (3) and § 59 (1). ante, p. 693. 
 
 (s) See 6 Geo. 4, c. 16, 2 62: Yate Lee and Wace's Law of 
 Bankruptcy, 243, ed. 3; Kobson on Bankruptcy, 735, 736, ed. 6. 
 
 (t) See Yate Lee and Wace, ubi sup. Mr. Kobson (Law of Bank. 
 736, ed. 6), doubts whether the exceptions exist any longer. 
 
 (m) Qu. as to this; see Robson Bank. 736, note (/), ed. 6. The 
 older cases establishing the exception are Ex parte Hall, 9 Ves. 
 349; Ex parte Ackerman, 14 Ves. 604; Ex parte De Tastet, 17 
 Ves. 247; Ex parte Burnett, 2 M. D. & D. 357, reversing S. C, 1 
 ib. 608, where the petitioning creditor Mas a joint creditor in 
 respect of one demand, and a separate creditor in respect of an- 
 other. 
 
 (x) See the next note. 
 
 (y) See Ex parte Hayden, 1 Bro. C. C. 453; Ex parte Sadler, 15 
 Ves. 52; Ex parte Bradshaw, 1 Gl. & Jam. 99; Ex parte Bauer- 
 man. 3 Deac. 476; and the next three notes.
 
 798 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 4. 
 
 One partner 
 dead solvent. 
 
 Joint estate 
 
 small. 
 
 [ * 733] 
 
 Ex parte 
 Geller. 
 
 ostensible partner (z), or at all events none in this 
 country (a). 
 
 The fact that the estate of a deceased partner is sol- 
 vent does not deprive the joint creditor of his right 
 against the separate estate of the bankrupt (6). This 
 was so before the Judicature Acts, because, the legal 
 remedy surviving against the latter, the creditor had 
 no locus standi at law against the representatives of 
 the deceased; and the Judicature Acts leave the old 
 rule untouched, as the joint creditors of the tirm are 
 not separate creditors of a deceased partner, as has been 
 pointed out in an earlier portion of the work (c). 
 
 Again, if several firms enter into a joint adventure 
 and one of them becomes bankrupt, the joint creditors 
 of all the firms may prove against the joint estate of the 
 bankrupt firm, if the partners in the solvent firms are 
 abroad and there are no assets belonging to all the firms 
 jointly (d). 
 
 If there is any joint estate, however small, the joint 
 creditors will not be permitted to rank pari passu with 
 separate creditors against the separate estate (e). But 
 where one partner only is bankrupt nothing can be 
 treated as joint estate by reason only of the doctrines 
 of reputed ownership (/); and joint property which 
 is pledged for more than its value, or which for any 
 other reason cannot to any extent be made available Eor 
 the benefit of the creditors of the firm, is treated, with 
 reference to the rule in question, as having no exist- 
 ence (g). In Ex parte * Geller (h), it was accordingly 
 
 (z) See Ex parte Kensington, 14 Ves. 447; Ex- parte Janson, 3 
 Madd. 229. This last case shows that for this purpose a person 
 who is not bankrupt is solvent. The existence of a dormant 
 partner is immaterial, see Ex parte Chuck, 8 Bing. 469; Ex parte 
 Hodgkinson, 19 Ves. 294; Ex parte Norfolk, ib. 458. 
 
 (a) Ex parte Pinkerton, 6 Ves. 814, n. 
 
 (b) Ex parte Bauerman, 3 Deac. 476. The creditors of the sur- 
 vivor could not insist on the creditors of the firm going against 
 the estate of the deceased; because there is no marshalling ex- 
 cept as between creditors of one and the same debtor. See ace. 
 Ex parte Kendall, 17 Ves. 514 
 
 (c) See Kendall v. Hamilton, 4 App. Ca. 504. and ante, pp. 
 193. 598. 
 
 (d) Ex parte Nolte, 2 Gl. & J. 295 (overruling Ex parte Wylie, 
 2 Rose. 393), Ex parte Machel, 1 Rose, 447, 
 
 (e) Ex parte Kennedy, 2 De G. M. & G. 228; Ex parte Peake, 
 2 Rose, 54; Ex parte Harris, 1 Madd. 583. Compare Ex parte 
 Burdekin. 2 M. D. & D. 704; Ex parte Birlev. ib. 354. 
 
 (/) Ex parte Taylor, 2 M. D. & D. 753. See ante, p. 685. 
 
 (g) See Ex parte Peake, 2 Rose, 54; Ex parte Hill, 2 Bos. & P. 
 N. R. 191, note; but see Ex parte Clay, 1 Mont, Part. 223. note; 
 Ex parte Kennedy, De G. M. & G. 228. 
 
 (A) Ex parte Geller, 2 Madd. 262.
 
 PROOF AGAINST SEPARATE ESTATES. 799 
 
 held that a joint creditor who had sold property of the Bk. IV. 
 firm, which had been pledged to him for more than its Clmp- 4. 
 
 value, might, there being no other joint property, prove ' 
 
 so much of his debt as remained unpaid against the 
 separate estates of the partners. A joint creditor hold- 
 ing a pledge belonging to the firm must sell it or have 
 it valued before he can claim to rank as a separate cred- 
 itor, for until he has done that he is not in a position to 
 say that there is no joint estate (i). 
 
 If it is doubtful whether there is any joint estate or 
 not, an inquiry will be directed (k). 
 
 If joint creditors prove against the separate estate of Reimbursing 
 any partner, and obtain a dividend thereout upon the separate 
 assumption that there is no joint estate, and joint estate ^seauent 
 is afterwards realised, the separate estate is entitled to realisation 
 be repaid the amount paid to the joint creditors (I), of joint 
 
 Joint creditors can acquire a right to prove against estate. 
 the separate estate of any partner by paying his sepa- Join t 
 rate creditors 20s. in the pound on the amount of their ™'^ 
 provable debts (m). separate 
 
 Exception in the case of fraud. — It has been already creditors, 
 seen that if a partner's separate property has been 2. Exception 
 fraudulently converted by his co-partners to the use of m cases ol 
 the firm which becomes bankrupt, the property so con- Irau ' 
 verted cannot be treated as part of the joint estate, but 
 must be placed to the separate account of the defrauded 
 partner (n). Upon the same principle, if a partner 
 has fraudulently converted to his own use property, 
 which in truth belongs to the firm, such property cannot 
 be treated as part of his separate estate ; but forms part 
 of the joint estate of the firm. Hence, as in the former 
 case proof on behalf of the separate estate is admitted 
 against the joint * estate (o), so in the latter case, if [ * 734] 
 the firm is bankrupt, proof on behalf of the joint 
 estate is admitted against the separate estate (p); al- 
 though that estate may not in the result be greater by 
 
 (i) This follows from Ex parte Smith, 2 Rose, 64; Ex parte 
 Barclay. 1 Gl. & J. 272; and cases of that class. In Ex parte 
 Hill, 2 B. & P. N. R. 191, note, the pledge had been sold, and 
 the creditor proved for the difference. 
 
 (k) Ex parte Birlev, 1 M. D. & D. 387 ; and see S. C, 2ib. 354. 
 
 (0 See Ex parte Willock, 2 Rose, 392. 
 
 (m) See Ex parte Chandler, 9 Ves. 35, and Ex parte Taitt, 16 
 Ves. 193. See as to interest, ante, pp. 719, 721. 
 
 (n) Ante, p. 725. 
 
 (o) Ex parte Harris, 2 V. & B. 210 ; S. C, 1 Rose, 437 ; Ex 
 parte Sillitoe, 1 Gl. & J. 382. 
 
 (p) Ex parte Lodge and Feudal, 1 Ves. J. 1(56 ; Ex parte Smith, 
 1 Gl. & Jam. 74 ; Ex parte Watkins, Mont. & McA. 57; Ex parte 
 Cust, Cooke's Bank. Law, 531. ed. 8.
 
 800 
 
 BANKRUPTCY. 
 
 No sufficient 
 fraud. 
 
 Bk. IV. reason of fraud (g). Moreover, if the firm is not bank- 
 
 Chap. 4. Sect. rn pt 5 proof on behalf of the solvent partners is admit- 
 
 J ted against the estate of their bankrupt co-partner : 
 
 and in this case the solvent partners rank as separate 
 creditors, although the property fraudulently appro- 
 priated by the bankrupt belonged not to them exclu- 
 sively, but to them jointly with himself (r). 
 
 Whether in any particular instance there has been a 
 fraudulent misappropriation of the partnership prop- 
 erty or not must of course be determined by the facts 
 of each case. It may, however, be observed that the 
 mere circumstance that one partner is indebted to the 
 firm is no proof of fraud ; and even if he has acted in 
 violation of the articles of partnership, it may be found 
 that those articles have by common consent been habitu- 
 ally ignored. To bring a case within the exception 
 now under consideration, the individual partner must 
 in effect have stolen the property of the firm, and his 
 breach of good faith must not have been acquiesced 
 in or condoned by his co- partners (s). Any arrange- 
 ment by which a debt arising from fraud is made a 
 matter of mere partnership account, precludes the firm 
 from ranking, in respect of that debt, as a separate cred- 
 itor against the separate estate of the individual part- 
 ner (t). 
 
 The leading cases on this subject are Fordyce's case 
 and Ex parte Lodge and Feudal. 
 
 In Fordyce's case (u), A., B., C, and D. were part- 
 ners as bankers, and had in the course of their busi- 
 ness discounted a number of bills and notes, which had 
 thus become the property * of the firm. A. fraudu- 
 lently applied to his own use some of these bills and 
 notes. He was subsequently adjudged bankrupt, and 
 shortly afterwards the firm itself was adjudged bank- 
 rupt. The assignees of the firm claimed to prove as 
 separate creditors of A., in competition with his other 
 separate creditors and against his separate estate, for 
 the value of the bills and notes thus abstracted, and 
 they were allowed so to do. But in this same case the 
 
 (q) Lacey v. Hill, 4 Ch. D. 537, affirmed on appeal under the 
 name Read v. Bailey, 3 App. Ca. 94. 
 
 (r) Ex parte Yonge, 3 V. & B. 31, and 2 Rose, 40. The judg- 
 ment in this case is very masterly. 
 
 (s) See Ex parte Yonge, 3 V. & B. 31 ; Ex parte Smith, 1 Gl. & 
 J. 74, and 6 Madd. 2 ; Ex parte Turner, 4 D. & Ch. 169 ; Ex parte 
 Crofts, 2Deac. 102; Ex parte Hinds, 3 De G. & Sm. 613. 
 
 {t) See Ex parte Turner, 4 D. & C. 169. 
 
 (u) Also known as Ex parte Cust, Cooke's Bank. Law, 531 
 ed.8. 
 
 Fordyce's 
 case. 
 
 [ * 735]
 
 PROOF AGAINST SEPARATE ESTATES. 801 
 
 assignees were not allowed to prove against A.'s sepa- Bk TS^ 
 rate "estate for what the joint estate had been compelled Se( ; t p- 4 ' 
 
 to pay in respect of bills issued by him in the partner- '. 
 
 ship name for private uses of his own. 
 
 In Ex parte Lodge and Feudal (x), the facts were Ex parte 
 in substance as follows. John Lodge and his two sons, Lod^and 
 James and John, were partners. John Lodge, the 
 father, died, having bequeathed his residuary personal 
 estate to his two sons, and appointde them and their 
 mother his executors. After the death of the father, 
 his two sons continued to carry on the old business to- 
 gether for two years, when they dissolved partnership. 
 No accounts were taken, but it was arranged that James 
 should pay the debts of the firm. James immediately 
 entered into a new partnership with Fendal. Fendal 
 brought in 12,000Z. as his share of the capital, and 
 James Lodge brought in the same amount in stock and 
 goods. After this, James Lodge, without Fendal's 
 knowledge or consent, applied the assets of the new 
 firm in paying the debts of the old firm, and the private 
 debts of himself, James Lodge. Ultimately James 
 Lodge and his partner Fendal became bankrupt. The 
 joint creditors of the two partners Lodge and Fendal 
 petitioned for liberty to prove against James Lodge's 
 separate estate, and in competition with his separate 
 creditors, for the amount of the assets of Lodge and 
 Fendal thus improperly applied. Lord Thurlow, rely- 
 ing on Fordyce's case, expressed a strong opinion in 
 favour of the proof, and allowed it de bene esse. But, 
 after taking time to consider, his Lordship "thought 
 he could not permit the assignees under the joint com- 
 mission to prove against the separate estate of Lodge, 
 without deciding upon a principle that must apply to 
 all cases, and constantly occasion the taking an account 
 between the partners and the partnership * in every [ 7dbJ 
 joint bankruptcy. He said that if the affidavits had 
 gone the length of connecting the bankruptcy with the 
 institution of the partnership trade, and that Lodge, 
 with a view of swindling Fendal out of his property, 
 had got him into the trade, and then taken the effects 
 of the partnership into his own hands, with a view to 
 his separate creditors, it might have been different. 
 The petition on the part of the joint creditors, to prove 
 against the separate estate, was dismissed" (y). 
 
 (x) 1 Ves. J. 165, and Cooke's Bank. Law, 530, ed. 8. ^ 
 
 (?/) The passage in inverted commas is taken from Cooke s 
 
 Bank. Law. 530, ed. 8. See, further, as to the necessity of fraud, 
 
 Ex parte Grill ih. 
 
 * 28 LAW OF PAETNEESHIP.
 
 802 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 4. 
 
 3. Exception 
 in cases of 
 distinct 
 trades. 
 
 [ * 737] 
 
 Ex parte 
 Gliddon, in 
 
 re Wakekarn 
 
 Exception in the case of distinct trades. — The same 
 principle which, in the event of the bankruptcy of a 
 firm, allows proof to be made on behalf of one of its 
 members against its joint estate, in respect of a debt 
 contracted by the firm to him as a distinct trader (z), 
 also allows proof to be made on behalf of the joint 
 estate of a firm against the separate estate of one of its 
 partners, who has carried on a trade distinct from that 
 of the firm, and has become indebted to it in the ordi- 
 nary course of his distinct trading. If, therefore, a 
 person who is a partner in a trading firm carries on a 
 distinct trade of his own, and becomes indebted to the 
 firm for goods sold to him in the way of their trades 
 and then becomes bankrupt, the firm is treated as a 
 separate creditor for the debt so contracted, and is 
 allowed to prove accordingly (a). So, in the case of a 
 bankrupt firm, proof for debts thus contracted by an 
 individual partner is allowed as between the joint estate 
 of the firm and the separate estate of that partner, in 
 competition with his separate creditors (b). As Lord 
 Eldon put it it Ex parte St. Barbe, " a joint trade may 
 prove against a separate trade, but not a partner against 
 a partner. " But although there may have been distinct 
 trades, still if the debt in question has not been contract- 
 ed in the ordinary course of carrying them on, such 
 proof will not be allowed (c). 
 
 * In Ex parte Gliddon (d) an ingenious attempt was 
 made to obtain the benefit of the above rule in a case 
 where, although there were two firms in appearance, 
 there was really only one and an agent, and no such 
 separate trading as the exception requires. In appear- 
 ance there were two firms, A. and B. and C. and D. ; 
 but D. was only C.'s agent ; and C. himself was only 
 A.'s agent ; but neither B. nor D. knew this to be so. 
 Both firms became bankrupt, and C. and D. were in- 
 debted to A. and B. An attempt was made by the 
 trustee of A. and B. to prove against the separate es- 
 tate of D. for the debt due from C. and D. to A. andB. 
 But it was held that there was no such trading between 
 A. and B., on the one side and D. on the other as was 
 necessary to create a provable debt. The circumstances 
 
 (z) Ante, p. 725. 
 
 (a) Ex parte Hesham, 1 Rose, 146 ; Ex parte Castell. 2 Gl. & 
 J. 124 ; Ex parte Johns, Cooke, B. L. 538, and Wats. Part., 286. 
 
 (b) Ex parte Ht. Barbe. 11 Ves. 413. 
 
 (c) See, as to this, ante, p. 726. and Ex parte Hargreaves, 1 
 Cox, 440: Ex parte Sillitoe. 1 Gl. & J. 382; Ex parte Williams, 
 3 M. D. & D. 433, there cited. 
 
 (d) Re Wakeharn or Ex parte Gliddon, 13 Q. B. D. 43.
 
 PROOF AGAINST SEPARATE ESTATES. 803 
 
 were such as to negative the existence of any debt from Bk. TV. 
 
 D. to A. and B. The real debt was owing by A. to A. J ha P- 4 - Sect - 
 
 and B. J 
 
 Thirdly, icith respect to the partners. 
 
 The principle that a debtor shall not be allowed to 2. Position 
 compete with his own creditors, is as strictly carried out °* ~" e 
 in administering the separate estates of individual part- 
 ners, as in administering the joint estate of a firm. The 
 separate estate of each partner is liable to the debts of 
 the firm, subject only to the prior claims of his sepa- 
 rate creditors ; whence it is obvious that one partner 
 cannot compete with the separate creditors of his co- 
 partner, without diminishing the fund which, subject 
 to their claims, is applicable to the payment of the joint 
 debts, and therefore of his own creditors. In other 
 words, the rights of the joint creditors preclude one 
 partner from ranking as a separate creditor of his co- 
 partner, until the joint creditors are paid in full (e). 
 Moreover, it is now settled, in opposition to some older 
 cases (/), that a solvent partner is not entitled to rank 
 as a creditor against the estate of his bankrupt co- 
 partner upon indemnifying that estate against the claims 
 of the joint * creditors ; he must show that those claims [ * 738] 
 are discharged or otherwise barred (g). 
 
 Although a partner cannot prove against his co- Assignee of 
 partner so long as the joint debts are unpaid, yet, if a solvent 
 debt owing by the bankrupt partner to his co partner partner, 
 has been cancelled, and in consideration thereof the 
 bankrupt has taken upon himself a debt due from his 
 co-partner to a third party, this debt, so substituted for 
 the first, may be proved by such third party, in com- 
 petition with the other separate creditors of the bank- 
 rupt, whether the joint creditors are paid or not (h). 
 
 The disability of a partner to prove in competition p r0 of bv 
 
 with his own creditors, prevents proof by a firm to firm against 
 
 which he belongs against his own separate estate ; for estate ol 
 . ° 5 £ bankrupt 
 
 (e) See, accordingly, Ex parte Collinge, 4 De G. J. & S. 533, partner, 
 wbere the result of such proof would have benefited the joint 
 creditors ; Ex parte Carter, 2 Gl. & J. 233, where an executor of 
 a deceased partner sought to prove; Ex parte Ellis; ib. 312; Ex 
 parte Rawson, Jac. 274 ; Ex parte Robinson, 4 D. & Ch. 499 ; Ex 
 parte Mav, 3 Deac. 382. 
 
 (/) Viz., Ex parte Taylor, 2 Rose, 175 ; Ex parte Ogilvy . 177. 
 
 (g) Ex parte Moore, 2 Gl. & J. 166. Compare Ex parte An- 
 drews, 25 Ch. D. 505, where the possibility of a claim being 
 made was held not enough to prevent the executors of one part- 
 ner from proving against the surviving partner. The joint lia- 
 bility in that case was really visionary only. 
 
 (A) Ex parte Todd, De Gex. 87.
 
 801 BANKRUPTCY. 
 
 Bk. IV. proof by such a firm is obviously nothing more than 
 
 Chap. 4. Sect, p roo f by himself and co-partners (i). 
 
 ^ The principle which allows joint estate to prove 
 
 against separate estate, and separate estate to prove 
 against joint estate, in cases where there has been a 
 fraudulent conversion of property, or where there have 
 been distinct trades, and a debt contracted in the course 
 of those trades, is also applicable to proofs by one part- 
 ner against another, in similar cases (j ). Moreover, 
 if A., intending to become a partner with B., advances 
 him money as his, A.'s share of the common stock, and 
 before the partnership is entered into, B. becomes bank- 
 rupt, A. may prove against B.'s separate estate, as a 
 separate creditor for the amount of the advance, unless 
 A, 'without being a partner, has made himself liable to 
 creditors as if he were one (k). 
 [ * 739] * At one time it was supposed that when a person had 
 
 Partnership been induced by the fraud of another to join him in 
 induced by partnership, the former could not, on the bankruptcy of 
 fraud. t j ae i a tter, prove against his separate estate, for the 
 
 amount paid to the bankrupt as a consideration for the 
 partnership. This opinion was founded on the case of 
 Ex parte Ex parte Broome (I). There A. was induced, by the 
 Broome. f a i se and fraudulent representations of B., to enter into 
 
 partnership with him, and to pay him a considerable 
 premium. Shortly afterwards, B. became bankrupt, 
 and A. sought to recover out of B.'s estate the amount of 
 the premium paid as above mentioned. According to 
 the report this was refused, upon the ground that, al- 
 though A might be entitled to recover the money as 
 between himself and B., yet he was liable with B. to third 
 persons, viz., the creditors of the firm. 
 
 The report of this case, however, is not warranted by 
 the order which was actually made in it (m). Indeed, 
 the order expressly directed that A. should be at liberty 
 to prove against B.'s estate, and that A. should be paid 
 a dividend in respect of his proof, rateably with B.'s 
 other creditors. This order is in conformity with the 
 opinion expressed by Lord Thurlow, in Ex parte Lodge 
 
 (i) See ace. Ex parte Smith, 1 Gl. & J. 74, and 6 Madd. 2; Ex 
 parte Turner, 4 D. & Ch. 169. 
 
 (j) See Ex parte Westcott, 9 Ch. 626, as to proving for a 
 devastavit by an executor; Ex parte Maude, 2 Ch. 550. where 
 two solvent co-partners sought to prove against the separate es- 
 tate of their bankrupt partner. See ante, p. 726, 
 
 (k) Ex parte Turquand, 2 M. D. & D. 339, ante, p. 72? ; and 
 as to money payable to a person in lieu of his being taken into 
 partnership, see Ex parte Megarey, De Gex, 167. 
 
 (/) 1 Rose, 69. 
 
 (m) See the order in 1 Coll. 598.
 
 PROOF AGAINST SEPARATE ESTATES. SOU 
 
 and Feudal, and with the cases oiHamil v. Stokes (n) Bk. IV. 
 and Bury v. Allen (o). ScT'/' 
 
 The application of the foregoing doctrines to cases 
 
 where a shareholder in an unincorporated company has Prom by 
 become bankrupt, and the company seeks to prove as a company 
 creditor against his separate estate, and in competition estate of 
 with his other separate creditors, has given rise to some shareholder, 
 difficulty. But in Export Davidson (p), it was held Ex parte 
 that the public officer of a banking company, governed Davidson, 
 by 7 Geo. 4, c. 46, might prove against the separate 
 estate of one of its members for what was due from him 
 as a customer of the company, in respect of his over- 
 drawn account, although the company (including there- 
 fore the bankrupt) was itself indebted to other persons ; 
 and in Ex parte * Ball (q) it was held that a liquidator [ * 740] 
 of an unregistered and unincorporated company being ^ x parte 
 wound up under the Companies act, 1862, was entitled 
 to prove against the estate of a bankrupt shareholder, in 
 respect of a call made in the winding up. The same rule 
 applies a fortiori to the case of an incorporated com- 
 pany. Excepting, therefore, those companies which are 
 merely large partnerships, not empowered to sue and be 
 sued by a public officer, and not being wound up, it is 
 now settled that where a member of a company becomes 
 bankrupt, the company, whether its debts are paid or 
 not, may prove as a separate creditor of such member 
 for what is due from bim to it, either in respect of 
 calls (?') or other matters (s). But the company, if it 
 holds a security of the bankrupt for what is so due, 
 must realise the security and prove for the difference, as 
 inordinary cases (t). 
 
 Hitherto the right of one partner to rank as a separate one partner 
 creditor of his co-partner, has been considered solely may rank as 
 
 with reference to ioint creditors ; it is necessary, how- a separate 
 . • I •! creditor ot 
 
 (n) Dan. '20, and 4 Price, 166. See, on this case, 1 Mont. Part, 
 210. 
 
 (o) 1 Coll. 589. 
 
 ( p) 1 M. D. & D. 648, and on appeal, sub nomine Re Caldecott, 
 2 ib. 368 ; settling the doubts raised in Ex parte Marston, Mon. 
 & Ch. 576 ; Ex parte Prescott, ib. 611 ; Ex parte "Law, ib. 590 ; 
 and Ex. parte Snape, ib. 607. 
 
 u/i 10 Ch. 48. 
 
 (;•) Ex parte Brown, 3 De G. & S. 590 ; Ex parte Nicholas, 2 De 
 C. M. & G. 271. See 19 & 20 Vict. c. 47, I 90. 
 
 (s) Ex parte Davidson. 1 M. D. & D. 648, and 2 ib. 368 ; Ex 
 parte Cooper. 2 M. D. & D. 1; Ex parte Wallis, ib. 201. Ex parte 
 Woodrofte, Fonbl. Bank. Ca. 14, cannot be supported. 
 
 (t) Ex parte Manchester and County Bank. 3 Ch. D. 481 ; Ex 
 parte Cooper, 2 M. D. & D. 1 ; Ex parte Wallis, ib. 201. See, also, 
 Ex parte Council, 3 Deac. 201, where the security consisted of 
 shares in the company itself.
 
 SOb' 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 (Jimp. 4. 
 Sect. 4. 
 
 his co-part- 
 ner, provided 
 the joint 
 creditors are 
 not preju- 
 diced. 
 
 [ * 741] 
 Ex parte 
 Grazebrook. 
 
 Effect of 
 paying joint 
 debts. 
 
 ever, also to notice it with reference to separate credit- 
 ors. They are obviously benefited by the rule which 
 prevents one partner from proving against the separate 
 estate of his co-partner ; but it is not for their sake that 
 such rule has been established ; and where the reason 
 for the rule ceases to exist, the rule itself ceases to be 
 applicable. Hence, if there never were any joint debts, 
 or if all those which once existed have ceased to 
 exist (u), either because they have been paid, barred, 
 satisfied, or converted into separate debts, then one 
 partner who is a creditor of another may, on the bank- 
 ruptcy of the latter, prove against his separate estate in 
 competition with his other separate creditors. 
 
 * A leading case on the subject is Ex parte Graze- 
 brook (v) ; there a dormant partner had retired, and the 
 continuing partner continued the business and was 
 adopted as the sole person liable to pay the debts form- 
 erly due from the firm. On the retirement of the dor- 
 mant partner, the accounts of the firm were taken and 
 settled, and a balance was found due to him. On the 
 bankruptcy of the continuing partner, the dormant part- 
 ner was allowed to prove as a separate creditor, for the 
 amount of the balance so found due, although there were 
 partnership debts still unpaid, because these debts had 
 been converted into the separate debts of the continuing 
 partner, and by the statement of the account, the latter 
 had become debtor for the balance in question to his late 
 co partner. 
 
 Again, if one partner has paid the joint debts, he is 
 entitled to prove as a separate creditor of his co- partner 
 for the amount of the share which ought to have been 
 paid by him (w); and it is immaterial whether the debts 
 have been paid before or since the bankruptcy (x). 
 
 In cases of this sort, moreover, the amount provable 
 against each bankrupt is ascertained, not by dividing 
 the whole amount of the debts paid by the number of 
 partners, or by the number of shares held by them, witti- 
 
 («•) Ex parte Andrews, 25 Ch. D. 505, seems to show that it is 
 enough if they have not been proved, and are not likely to be so. 
 
 (v) 2 D. & Ch. 186. See, too, Ex parte Gill, 9 Jur. N. S. 1303; 
 Ex parte Hall, 3 Deac. 125. In Ex parte Dodgson, Mont. cSc Mac- 
 Ar. 445, there were no joint debts. So in Ex parte Davis, 4 De 
 G. J. & S. 523, noticed ante, p. 21. 
 
 (w) See Ex parte Watson, 4 Madd. 477; Ex parte Carpenter, 
 Mont, ct MacAr. 1; Wood v. Dodgson, 2 M. & S. 195. In the 
 two last cases the partner who had paid the debts had retired 
 and been indemnified against them by the bankrupt. 
 
 (x) See, in addition to the cases in the last note. Moody v. King, 
 2 B. & C. 558; Parker v. Kamsbottom, 3 B. & C 257; Ex parte 
 Young, 2 Rose, 40.
 
 PROOF AGAINST SEPARATE ESTATES. 807 
 
 out reference to their ability to pay ; but by treating Bk. IV. 
 each partner as liable to contribute his own share, calcu- £ * p \ 4 " 
 
 lated as above, and also to contribute, as surety for the ! ! 
 
 rest, to the payment of what is due from them, but 
 which they are themselves unable to pay. Those, in 
 fact, who can pay, must make up for those who can- 
 not (y). 
 
 Again, although where one partner is indebted to Proof for 
 the firm, * and the lien upon his share is insufficient to [ * 742] 
 satisfy such debt, the deficiency cannot be proved against what is not 
 his separate estate in competition with the joint credit- satisfied by 
 ors of the firm, or until they are paid (z); yet such de- 
 ficiency is provable against his separate estate in compe- 
 tition with his separate creditors, where the rights of 
 the joint creditors do not intervene (a). 
 
 Further, if the separate estate of a partner is clearly Separate 
 insufficient to pay his separate debts excluding that estate in- 
 which he owes to his co-partner, the latter is entitled to solvent, 
 prove; for, ex hypothesi, there is no possibility of any 
 surplus out of which the joint creditors can be paid any- 
 thing whatever. They therefore are in no way preju- 
 diced by the proof (b). 
 
 But even in cases in which the right to prove exists, 
 the proof cannot be admitted without taking the part- 
 nership accounts ; for if they are taken the debt sought 
 to be proved may be found to be balanced, and not really 
 to exist (c). 
 
 Before leaving this subject, it may be remarked, that Surplus of 
 where one partner only is bankrupt, and his trustee ad- J°^ nt estate 
 ministers the joint estate of the firm, as well as the sep- ^j^tered 
 arate estate of the bankrupt, and there is an ultimate under a sepa- 
 surplus, that surplus ought to be divided between the rate adjudi- 
 bankrupt and the solvent partners, according to their cation, 
 respective interests therein. 
 
 In Ex parte Lanfear (d) one of two partners became Ex parte 
 . . Lanfear. 
 
 (y) See Ex parte Hunter, Buck, 552 ; Ex parte Moore, 2 Gl. & 
 J. 172; Ex parte Plowden, 2 Deac. 456, and 3 M. & A. 402, over- 
 ruling Ex parte Watson, Buck, 449, and Ex parte Smith, lb. 492. 
 
 {z) Ex parte Carter, 2 Gl. & J. 233 ; Ex parte Ellis, ib. 312 ; 
 Ex parte Reeve, 9 Ves. 588, which shows that the joint creditors 
 are entitled to be paid interest before the co-partners receive 
 anything. 
 
 [a) Ex parte Terrell, Buck, 345 ; Ex parte King, 17 Ves. 115 ; 
 Ex parte Watson, Buck, 449, and 4 Madd. 477; and see, as to this 
 last case, 2 Gl. & J. 172. 
 
 (6) Be Levey, 4 De G. J. & S. 551. See, also, Ex parte Sheen, 
 6 Cb. 1). 235, where the proof was by a person who had held him- 
 self out as a partner. 
 
 (r-) Sec Ex parte Maude, 2 Ch. 550. 
 
 \d) 1 Rose, 442.
 
 SOS BANKRUPTCY. 
 
 Bk. IV. bankrupt, and the other died, The bankrupt partner 
 
 o h ^p*4*" having paid all his creditors 20s. in the pound, the sur- 
 
 . ' plus of the joint and of his separate estate was ordered 
 
 to be paid over to him, and it was paid over accordingly. 
 The executor of the deceased partner, however, applied 
 for an order that the bankrupt might account for what 
 was due to the deceased in respect of his interest in the 
 [ * 743] surplus of the joint estate, and that the money * which 
 had been restored might be paid into court, and an order 
 to that effect was made. 
 
 C. Proof against both the joint and the separate estates. 
 
 First, general rule as to election. 
 
 Rights of With a view to avoid as much as possible any inter- 
 
 joint and ruption in the statement of the principles according to 
 separate which the conflicting rights of the creditors of the firm, 
 
 creditors. an( j ^ e separate creditors of the individual partners, 
 are adjusted, the consideration of the position of those 
 creditors who are both joint and separate (i. e., of 
 those, who, in respect of the same debt, have the option 
 of suing either all the partners jointly, or some or one 
 of them separately from the others) has been hitherto 
 postponed. 
 
 In order that a creditor may rank as a joint and sep- 
 arate creditor, it is necessary that there should be two 
 distinct rights vested in him at the same time, by vir- 
 tue of which he is enabled to pursue either of the two 
 remedies above alluded to. The modes in which these 
 rights are acquired and lost have been already investi- 
 gated (Bk. II. c. 2), and consequently it is unneces- 
 sary to refer to that subject in the present place. 
 Rule against Subject to the exception which will be noticed pres- 
 double proof, ently, a person to whom the members of a firm are 
 bound jointly and severally is not allowed in bank- 
 ruptcy to rank as a creditor both against the joint es- 
 tate and also against the separate estates, or any of 
 them ; he is compelled to elect whether he will rank as 
 a joint creditor or as a separate creditor (e). If he 
 elects to rank as a joint creditor he must, like other 
 joint creditors, go in the first place against the joint 
 estate,-and he has no greater rights than they against 
 the separate estates, or any of them; whilst, on the 
 other hand, if he elects to rank as a separate creditor 
 he must, like other separate creditors, confine himself 
 
 (e) See Ex parte Bond, 1 Atk. 98; Ex parte Banks, ib. 106; Ex 
 parte Rowlaudson, 3 P. W. 405; Ex parte Bevau, 10 Ves. 106; Ex 
 parte Hay, 15 Ves. 4.
 
 RULE AGAINST DOUBLE PROOF. 809 
 
 la the first place to the separate estates, and he has no Bk. IV. 
 greater rights than they to the joint estate (/). Cha P- 4 - 
 
 * The reasoning upon which this rule is founded is Sect 4 ' 
 as follows: If the members of a firm are bound jointly [ * 744] 
 and severally, the creditor may sue them all jointly, or Eeason of 
 he may sue all or any of them separately, but he can- the rule * 
 not do both ; and as he cannot do both before bank- 
 ruptcy, neither ought he to do what is tantamount 
 to the same thing, after bankruptcy. It is very true 
 that if he sues them all jointly, he can levy execution 
 against the property of the partnership, or against the 
 private property of each member, or against both at 
 once; but so can any joint creditor. So far as analogy 
 goes, therefore, there is no reason why a joint and sep- 
 arate creditor should be allowed to go against both 
 estates at once, whilst a creditor who is merely joint is 
 compelled to go against the joint estate before he can 
 go against the separate estate (g), Nor is this all. 
 The grand principle in bankruptcy is, as far as possi- 
 ble, to distribute the bankrupt's estate equally amongst 
 all his creditors, and not to prefer one creditor to an- 
 other. Now if a joint and separate creditor were to be 
 allowed to prove against both estates at once, he would 
 diminish the separate estate to the prejudice of the 
 joint creditors, and diminish the joint estate to the pre- 
 judice of the separate creditors, and gain an advantage 
 over them both (h). Such are the reasons which in- 
 duced the Courts to hold that a joint and separate cred- 
 itor ought not, as a rule, to be allowed to go against 
 both estates at once, but that he should be compelled, 
 like other creditors, to go in the first instance against 
 one estate only. In giving the option to him, the 
 Courts act in analogy to the rule, by which a joint and 
 separate creditor can, as he pleases, sue his debtors 
 jointly or separately. 
 
 In conformity with the rule thus established, and ex- Examples of 
 cepting always the statutory exceptions to be noticed the rule, 
 presently, a creditor who is a joint creditor by one in- 
 strument, and a separate creditor by a distinct instru- 
 ment, is as much compelled to elect as if his joint and 
 separate rights were conferred by one * and the same [ * 745] 
 instrument (i); and if a firm has been implicated in a 
 
 (/) Ex parte Bevan, 10 Ves. 106; Bradley v. Millar. 1 Rose. 273. 
 
 {g) See Ex parte Rowlanson, 3 P. W. 405; Ex parte Banks, 1 
 Atk. 108; Ex parte Bond. ib. 98; Lord Eldon followed the rule, 
 but disapproved it; see Ex parte Bevan, 9 Ves. --l:l'\ and 10 ib. 109. 
 
 (A) See per Lord Hard wick in Ex parte Bond. 1 Atk. 100. 
 
 (i) Ex partelhU, 2 Deac. 249. Ex parte Vaughan, 3 P. W. 
 407, is not law. Query, if double proof will not be uow allowed
 
 810 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 
 Chap. 4. 
 Sect. 4. 
 
 Eulepre-sup- 
 poses a 
 creditor to 
 be a joint as 
 well as a 
 separate 
 creditor. 
 
 Electing 
 against 
 estate to 
 prove. 
 
 Election 
 when con- 
 clusive. 
 
 [ * 746] 
 
 breach of trust, the cestui que trust (who thereby ac- 
 quires a right available against all the partners jointly, 
 as well as against each of them separately) cannot 
 prove against the joint and separate estates at the same 
 time, but must elect against which he will prove as if 
 he were an ordinary joint and separate creditor (j). 
 The same rule applies in cases of fraud (k). 
 
 The doctrine of election, however, only applies where 
 a creditor is, properly speaking, a creditor as well of 
 the firm jointly as of some or one only of its members 
 separately. "Where, therefore, a firm has been dissolved, 
 and the continuing partner is to pay all the debts of 
 the firm, then, inasmuch as a creditor of the firm is in 
 no way affected by this arrangement unless he accedes 
 to it, he has not, without having acceded to it, any 
 right, in the event of bankruptcy, to stand as the sepa- 
 rate creditor of the continuing partner in respect of the 
 old debt. Under such circumstances he has no right of 
 election, but must rank as a joint creditor (I). 
 
 The rule as to election would, obviously, be wholly 
 useless unless an election, once deliberately made, were 
 held to be final (m). On the other hand, it would 
 operate with great harshness if a creditor were held to 
 have finally elected, when, in point of fact, he was not 
 in a position to judge which course it would be best for 
 him to adopt. It becomes, therefore, necessary, before 
 leaving this subject, to examine the circumstances 
 which have, and those which have not, been held to 
 bind the creditor in this respect. 
 
 In those cases in which a creditor has been held to 
 have made his election beyond recall, it will be found 
 that he acted *not only with a full knowledge of his 
 position, and of the material facts of the case, but also 
 in some manner quite inconsistent with the character 
 which he has subsequently sought to assume (n) 
 
 in all such cases as these; see Ex parte Honey, 7 Ch. 178, infra, 
 p. 748. 
 
 (j) Ex parte Barnewall, De G. M. & G. 795; Ex parte Chand- 
 ler. Re Davison, 13 Q. B. D. 50. Compare Ex parte Sheppard, 
 19 Q. B. D. 84, infra, p. 749. where the act applied. 
 
 (k) Ex parte Adainson, 8 Ch. iJ. 807. 
 
 {I) Ex parte Freeman, Buck, 471; Ex parte Fry, 1 Gl. & J. 96, 
 and see ante, p. 705. 
 
 (m) A surety is apparently bound by the election of the princi- 
 pal creditor. See Ex parte Carne, 3 Ch. 463. 
 
 (n) As in Ex parte Liddel. 2 Rose, 34, and see Ex parte Adam, 
 1 Ves. & B. 494; Bradley r. Miller, 1 Rose, 273; Ex parte Borro- 
 dailes, 1 Mont. Part. 129, Appx. was a somewhat similar case. 
 See, too, Ex parte Solomon, 1 Gl. & J. 25; Couldery v. Bartrum, 
 19 Ch. D. 394.
 
 RULE AGAINST DOUBLE PROOF. 811 
 
 That which is principally calculated to influence the Bk. IV. 
 creditor's choice is the comparative solvency of the joint Chap. 4. 
 and of the separate estates ; and in order to make his elec- 
 
 tion he must have a reasonable time to inquire into the Creditor 
 state of the different funds. He is entitled to defer his <- ntitle d to 
 election until a dividend is declared, or at least until ^ 8 m 
 the trustee is possessed of a fund to make a divi- stand before 
 dend (o); and in a case where a large number of cred- he elects. 
 itors had a right of election, and the estates were not 
 so ascertained as to enable the creditors to elect, a tem- 
 porary order was made that no larger dividend should 
 be declared of the one than of the other estate (p). 
 
 A joint and separate creditor ought, it seems, to Election 
 prove against both estates, but elect which he will be wllen not 
 paid out of before he takes a dividend (q) ; and a cred- J^J? 61 ™ 1 ** 
 itor who, having a right of election, proves against one 
 estate rather than another, will not be permitted to 
 transfer his proof without showing the grounds which 
 have induced him to change his mind (r). But the 
 mere fact of his having proved against one estate will 
 not, if he has received no dividend from it, preclude 
 him from proving against the other estate, provided he 
 does not seek to disturb any distribution of it which 
 may already have been made (s). And even if the 
 creditor has not only proved, but received a dividend, 
 still if he can show that he did so in ignorance of ma- 
 terial facts, he will be allowed to vary his proof on re- 
 funding the dividend he has received, with interest (t). 
 
 * A joint and separate creditor who petitions for ad- [ * 747] 
 judication of bankruptcy against a firm, thereby prima Position of 
 facie elects to be treated as a joint creditor (u) ; but if, creditor 1DS 
 instead of petitioning against the firm, he petitions for 
 a separate adjudication against one of the partners, he 
 may afterwards declare whether he will be treated as a 
 joint or as a separate creditor (v ). And if the separate 
 adjudication is afterwards superseded in consequence 
 
 (o) See Cooke's Bank. Law, 275, ed. 8, Ex parte Butlin, there 
 cited; Ex parte Bond, 1 Atk. 98; Ex parte Bentley, 2«Cox, 218. 
 
 {p) Ex parte Arbouin, De Gex, 359. 
 
 (q) Ex parte Bentley, 2 Cox, 218. 
 
 (?) Ex parte Dixon, 2 M. D. & D. 312. 
 
 (s) Ex parte Bielby , 13Ves. 70; Ex parte Masson, 1 Rose, 159. 
 
 (/) Ex parte Adamson, 8 Ch. D. 807; Ex parte Rowlandson, 3 
 P. W. 405; Ex parte Bolton, 2 Rose, 389; S. C, Buck, 7; Ex parte 
 Husbands, 2 Gl. & J. 4, reversing S. C, 5 Madd. 419; Ex parte 
 Law, 3 Deac. 541, and Mon. & Ch. 111. See, also, the nextnote. 
 
 (m) That be may be allowed to withdraw his joint proof and 
 prove against the separate estates, or one of them, see Ex parte 
 Chandler. Re Davison, 13 Q. B. D. 50. 
 
 (v) See per Lord Eldon in Ex parte Bolton, 2 Rose, 390, 1.
 
 S12 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 4. 
 
 Exception to 
 the rule 
 against 
 double 
 proof. 
 
 Reason of 
 the excep- 
 tion. 
 
 [ * 748] 
 
 of an adjudication against the firm, the creditor is re- 
 stored to his right of election under the bankruptcy of 
 the firm, and is not prejudiced by anything he may have 
 done in the former bankruptcy (tv). 
 
 Secondly, cases in which double proof is allowed. 
 
 The rule which excludes a joint and separate creditor 
 from receiving dividends from two estates at once, was 
 subject to an exception where each estate represented a 
 different trade carried on by a different firm. For ex- 
 ample, if a firm A., B., and C., carrying on one business, 
 drew a bill on a firm, A., B., and D., carrying on a dis- 
 tinct business, and the bill was accepted and circulated, 
 a holder of the bill was permitted to rank as a creditor of 
 both firms at the same time, and to obtain dividends 
 from their respective estates accordingly. 
 
 The principle upon which this exception was found- 
 ed was that there were distinct trades carried on with 
 distinct capitals, and that the debts of each trade were 
 properly payable out of the assets of the persons who 
 carried it on, whether those debts were collaterally 
 secured or not (x). If this principle had been logi- 
 cally carried ont, double proof would have been allowed 
 in all cases where a debt had been contracted by two 
 parties carrying on distinct trades with distinct capitals, 
 and both of * whom had become bankrupt. It would 
 have been immaterial whether the bankrupt parties 
 were a firm and one of its members ; or two firms, one 
 of which included the other ; or two firms having only 
 one partner common to them both. It would also have 
 been immaterial whether the creditor was or was not 
 aware that one of the trades was in fact carried on by 
 one or more of the persons who, with others, carried 
 on the other trade. Unfortunately, however, the prin- 
 ciple in question had been occasionally lost sight of, 
 and the consequence was that the cases bearing upon 
 the subject were in an unsatisfactory state, and ex- 
 tremely difficult to reconcile (y). 
 
 In order, however, to remove the doubts and difficul- 
 ties which had thus arisen, the following clause has 
 been inserted in the Bankruptcy act, 1883, sched. 2: — 
 
 18. If a debtor was at the date of the receiving order liable in 
 
 (w) Ex parte Brown, 1 Rose, 433, and 1. V & B. 60 ; Ex parte 
 Smith. 1 Gl. & S. 256. 
 
 (x) See Ex parte Adam, 1 V. & B. 496 ; Ex parte Bigg, 2 Rose, 
 37. 
 
 (?/) See the 1st ed. of this Treatise, vol. ii. p. 1019 el seq., and 
 Goidsmid v. Cazenove, 7 H. L. C. 785.
 
 RULE AGAINST DOUBLE PROOF. S13 
 
 respect of distinct contracts as a member of two or more dis- Bk. IV. 
 tinct firms, or as a sole contractor, and also as member of a firm, Chap. 4. 
 the circumstance that the firms are in whole or in part com- " 
 
 posed of the same individuals, or that the sole contractor is also Proof in 
 one of the joint contractors, shall not prevent proof in respect of respect of 
 the contracts, against the properties respectively liable on the coutr ^ ctSi 
 contracts. 
 
 This section, it will be observed, extends to all lia- 
 bilities on distinct contracts which a bankrupt may have 
 entered into, either as a member of two or more distinct 
 firms, or as a sole contractor and also as a member of a 
 firm (z). The section applies, although there may not 
 be any distinct trades at all ; and so long as there are 
 distinct contracts between such persons as are mention- 
 ed in the section, double proof is now admissible. If, 
 for example, the members of a firm give a joint and 
 several promissory note, the holder will be entitled to 
 prove as well against the joint estate as against the 
 separate estates of the partners (a). The old rule 
 against double proof still remains ; but it is now sub- 
 ject to so large a class of * exceptions as to render the [ * 749] 
 rule itself practically of little consequence. Joint and 
 several liabilities arising otherwise than by distinct 
 contracts are, comparatively speaking, few in number. 
 All frauds and breaches of trust are not within the act; 
 but if a partner who is a trustee improperly lends trust 
 money to the firm the cestui que trust can prove both 
 against his separate estate and against the joint estate 
 of the firm, for such a case is within the act (6). 
 
 The act, however, only applies where there are two 
 estates, it does not give a right of double proof against 
 the same estate, although it may be the estate of a firm 
 carrying on two businesses in different places (bb). 
 
 Thirdly, cases where a secured creditor may split his demand . 
 
 The rule as to election throws a joint and separate Position of 
 creditor wholly upon one estate or wholly upon the j« int and 
 other ; whilst the exceptional rule as to double proof ^editors who 
 
 (z) The fact that the contract is entered into by one of the have 
 parties as a partner need not appear from the contract itself, Ex securities. 
 parte. Stone, 8 Ch. 914. 
 
 (a) Simpson v. Helming, L. R. 10 Q. B. 406 ; Ex parte Honey, 
 7 Ch. 178. As to the Act of 1861, see Ex parte Wilson, 7 Ch. 
 490. As to joint and several covenants to pay rent, see Re Cor- 
 bet t, 14 Ch. D. 122. 
 
 (b) Ex parte Sheppard, 19 Q. B. D. 84. Compare ante p. 7l">. 
 (bb) Banco de Portugal v. Waddell, 5 App. Ca. 161, affirming 
 
 11 Ch. D. 317.
 
 814 BANKRUPTCY. 
 
 Bk. IV. allows him to prove his whole debt against both estates 
 
 Chap. 4. a £ ^ e same time (c). There is, however, a middle 
 
 ' course, and one which is open to a joint and separate 
 
 creditor who has a security for his debt. 
 
 It has already" been seen that under ordinary circum- 
 stances a creditor whose debt is secured is not allowed 
 to prove for his debt without giving up his security(d) ; 
 but that this rule does not extend to a creditor who has 
 the security, not only of his bankrupt debtor, but also of 
 somebody else ; nor to a creditor of a firm having a 
 separate security from one of the partners, nor to a 
 creditor of one partner having a security from the 
 firm (e). This doctrine, coupled with that of election, 
 puts a person who is a joint and separate creditor of 
 one or more bankrupt partners, and who has a security 
 for his debt, in this position : — 
 [*750] * 1. He may prove for his whole debt against the 
 
 estate to which the security does not belong, and retain 
 and make what he can of his security (/) ; or, 
 
 2. He may give up his security ; prove for the whole 
 debt due on it (i. e., the whole secured debt) against 
 the estate to which the security belongs, and then 
 prove for the residue of his debt against the other 
 estate ; thus in fact splitting his demand and proving 
 for part against the joint estate, and for the residue 
 against the separate estates of the partners, or vice versa. 
 Ex parte The first case in which this splitting of debts was 
 
 Ladbroke. allowed was in Ex parte Ladbroke (g). There the 
 bankrupt firm was indebted to their bankers to the ex- 
 tent of 27,000Z. The sum of 18,000Z., part of this, was 
 secured by the joint notes of the firm and by a mort- 
 gage of the separate property of one of the firm. This 
 mortgage, moreover, extended not only to the 18,000?., 
 but to further advances, and contained a joint and 
 several covenant by the bankrupt partners to pay the 
 18,000Z. and further advances. The bankers were al- 
 lowed to prove against the joint estate for the 18,000Z., 
 and against the separate estate of the mortgagor for the 
 
 (c) Of course he cannot obtain more than the whole amount 
 due to him. 
 
 (d) Ante, p. 714. He may now have it valued, and prove for 
 the difference ; but this does not affect the principle adverted to 
 in the text. 
 
 (e) Ante p. 715, and see Ex parte Thornton, 5 Jur. N. S. 212. 
 (/)As in Ex parte Bate, 3 Deac. 358 ; Ex parte Smyth, ib. 597; 
 
 Ex pa tie Groom, 2 ib. 265. He can now, it is apprehended prove 
 against the other estate for the difference between his debt and 
 the value of the security. 
 {g) 2 Gl. & J. 81.
 
 ORDER OF DISCHARGE. S15 
 
 residue of their debt, after deducting therefrom the sum Bk. IV. 
 obtained by a sale of the mortgaged property (h). g^ P g 
 
 The report of the judgment is to the effect that the U 
 
 Lord Chancellor thought that the bankers were entitled 
 to pursue the joint liability of the bankrupts on the 
 promissory notes to the extent of those notes, and at the 
 same time to proceed on the several covenants for the 
 residue of the debt. 
 
 Again, in Ex parte Hill (i) a partner covenanted to Ex parte 
 pay 4000Z, and assigned as a security 3000Z., portion Hill, 
 of his capital in the firm. A sum of 3000Z. was 
 then placed in the books of * the partnership to the [ * 751] 
 credit of the assignee, and the firm acknowledged them- 
 selves debtor to him for the amount. The firm became 
 bankrupt, and although the creditor was not allowed 
 double proof, viz., for 3000Z. against the joint estate of 
 the firm, and for 4000Z. against the separate estate of 
 the covenantor, yet he was allowed to prove for the 
 3000Z. against the joint estate, and for the remaining 
 1000Z. against the separate estate of the covenantor (k). 
 
 Section V. — The Bankrupt's Order of Discharge. 
 
 The law relating to the discharge of a bankrupt was Order of 
 recast by the Bankruptcy Act, 1883 (see §§ 28 — 31, and discharge, 
 the Bankruptcy Rules of 1886, rr. 235—238). An or- 
 der of the Court must be obtained before a bankrupt is 
 discharged from his debts and liabilities. Moreover 
 the Court has a wide discretion conferred upon it, and 
 may either grant or refuse the order, or suspend it for 
 a time, or grant it subject to conditions as to future 
 earnings or property. Further, if the bankrupt has 
 been guilty of certain misdemeanors (I), the Court is 
 forbidden to grant the order at all ; and if he has con- 
 ducted himself improperly in any of the ways specified 
 in § 28 (3) or § 29 the Court is bound either to refuse 
 
 (h) The mortgage security had been sold and a sum of mouey 
 had been received by the bankers out of the proceeds of the sale, 
 and this sum was deducted from the sum they sought to prove 
 against the separate estate. 
 
 (i) 3 M. & Ayr. 175. and 2 Deac. 249. 
 
 (k) Some deductions were made, but the above statement is 
 substantially correct with reference to the point for which the 
 case is cited in the text. 
 
 (/) See \ 28 (2) and \ 31.
 
 S1G 
 
 BANKRUPTCY. 
 
 Bk. IV. 
 Chap. 4. 
 Sect. 5. 
 
 Effect of 
 order ol 
 discharge. 
 
 [*752] 
 
 Effect of 
 bankrupt's 
 order of 
 discharge. 
 
 Wood v. 
 Dodgson. 
 
 it, or to suspend it, or to grant it subject to conditions 
 as to future earnings or property (I). 
 
 The effect of an order of discharge is to discharge 
 the bankrupt from all provable debts and liabilities, 
 with some exceptions (m), viz., crown debts, debts pay- 
 able under Revenue Acts, or to sheriffs or other public 
 officers, debts or liabilities incurred by any fraud or 
 fraudulent breach of trust to which * the bankrupt was 
 a party (n), debts or liabilities whereof he has obtained 
 forbearance by any fraud to which he was a party. 
 
 Whether an adjudication is joint or separate, all the 
 creditors, as well joint as separate, are entitled to be 
 heard against the granting of an order of discharge to 
 the bankrupt (o). 
 
 An absolute order of discharge entitles the bankrupt 
 to all property subsequently acquired by him although 
 the bankruptcy may not be closed (p). 
 
 An order of discharge operates as a discharge of the 
 bankrupt from all debts provable under the bankruptcy, 
 whether owing by him alone or by him jointly with 
 others (q). 
 
 But the discharge of one of several joint debtors does 
 not discharge his co-debtors (r). On the bankruptcy 
 of one partner, his order of discharge discharges him 
 from all demands which his co-partners may have had 
 against him, and which were provable by them. A 
 leading case on this head is Wood v. Dodgson ($): there 
 the defendant had covenanted with the plaintiffs, his 
 co-partners, on their retirement from the firm, to in- 
 demnify them against the partnership debts ; the de- 
 fendant became bankrupt, and afterwards the plaintiffs 
 were compelled to pay debts of the firm. The de- 
 fendant obtained his certificate, and this was held to be 
 a bar to an action brought on the covenant by the plan- 
 
 (7) As to not keeping proper books see Be Mutton, 19 Q. B. 
 D. 102. 
 
 (m) ? 30 (1), as to debts incapable of valuation, see Morgan v. 
 Hardy, 18 Q. B. D. 646. 
 
 (n) Not necessarily personally, by his agent or partner is 
 enough, see Cooper v. Pritchard, 11 Q. B. D. 351 ; Emma Silver 
 Mining Co. v. Grant, 17 Ch. D 122. 
 
 (o) 46 & 47 Vict. c. 52. § 28 (5), and Rules of 1886, r. 235. 
 
 (p) Ebbs v. Boulnois, 10 Ch. 479. 
 
 (q) See 46 & 47 Vict c. 52, I 30 ; Thompson v. Cohen, L. R. 
 7Q. B. 527 ; Ex parte Hammond, 16 Eq. 614. 
 
 (r) I 30 (4); Sleech's case, 1 Mer. 570, 571. 
 
 (s) 2 M. & S. 195, and see. eontra, Dally v. Wolferston, 3 
 Dowl. & Ry. 269, in which, however, Wood v. Dodgson was not 
 cited. See as to staying a partner's certificate until the partner- 
 ship accounts have been taken, Ex parte Hadley, 1 Gl. & J. 193.
 
 ORDER OF DISCHARGE. S17 
 
 tiffs ; for although their demand accrued subsequently Bk. IV. 
 to the bankruptcy, it was provable therein by virtue of Chap. 4. 
 the enactment in the bankruptcy laws relating to proofs __!!l___ 
 by sureties. The same point has been decided in other 
 cases (t). 
 
 * An order of discharge granted to two or more per- [ * 753] 
 sons protects each and all, so that the death of one does Joint orders 
 not affect the others ( u ) . of discharge. 
 
 Where there is a joint adjudication against several 
 partners, and some of them appeal from it, the Court 
 will not on that account delay granting orders of dis- 
 charge to the others (x). 
 
 For further information relating to the granting and Refusal of 
 refusal of orders of discharge, the reader is referred orders of 
 to treatises on bankruptcy. Such matters illustrate no discharge. 
 principle of the law of partnership, and are foreign, 
 therefore, to the objects of this work (y). 
 
 The same observation applies to the law and practice Allowance to 
 relating to the allowance made to a bankrupt out of his bankrupt 
 estate for the support of himself and family (z). Upon par ners " 
 this subject, however, the following rules, established 
 under the old practice, may still be usefully noticed : 
 
 1. Unless a sufficient dividend is paid both to the 
 joint and to the separate creditors of a bankrupt part- 
 ner, he will not be entitled to any allowance (a). 
 
 2. If both classes of creditors are paid a sufficient 
 dividend, each partner will be entitled to an allowance, 
 although he may have contributed little or nothing to 
 the payment of the joint creditors (6). 
 
 3. When one partner only is bankrupt, and he has 
 paid his separate creditors in full, he is not entitled to 
 an allowance out of the joint estate to the prejudice of 
 the joint creditors (c). 
 
 4. A bankrupt partner is not entitled to a double 
 allowance, one in respect of the joint and the other in 
 respect of his separate estate. He is entitled to only 
 
 (/) Ex parte Carpenter, Mont. & McAr. 1 ; Aflalo v. Fourdri- 
 nier, 6 Bing. 306 ; Wright v. Hunter, 1 East, 20. 
 
 (h) See, as to advertising a joint certificate as a separate one, 
 Ex parte Carter, 1 M. & A. 115 ; Ex parte Cossart, 1 Gl. & J. 248 ; 
 Ex parte Currie, 10 Ves. 51. 
 
 (x) Ex parte Braggiotti, 2 De G. M. & G. 964. 
 
 (y) An order of discharge may apparently be void, see Wagner 
 v. Imbrie, 6 Ex. 882 ; Allcard v. Weeson, 7 ib. 753 ; Courtivron v. 
 Meunier, 6 ib. 74. 
 
 (z) See I 64. 
 
 (a) Ex parte Goodall, 2 Gl. & J. 281 ; Ex parte Farlow, 1 Rose, 
 421 ; Ex parte Powell, 1 Madd. 68. 
 
 (b) Ex parte Morris, Mon. 505 ; Ex parte Gibbs, 105. 
 
 (c) Ex parte Holmes, 3 V. & B. 137. 
 
 * 29 LAW OF PARTNERSHIP.
 
 818 
 
 BANKRUPTCY. 
 
 [ * 754] 
 Bk. VI. 
 Chap. 4. Sect. 
 6. 
 
 one allowance, * calculated on the amount of his sepa- 
 rate estate, and of his share of the joint estate (d). 
 
 5. Where a separate adjudication is annulled in 
 favour of a joint adjudication, the bankrupt's right to 
 an allowance is not prejudiced (e). 
 
 An undischarged bankrupt is liable to be sued and 
 
 bank- 
 
 Position of 
 
 undischarged otherwise proceeded against as if he were not a 
 
 bankrupt. 
 
 50 & 51 Vict, 
 c. 66. 
 
 rupt ( /) ; but proceedings against him may be stayed 
 either by the Court in Bankruptcy or by the Court in 
 which they are taken (g). 
 
 The discharge of persons adjudicated bankrupt under 
 the Bankruptcy act, 1869, or any previous Bankruptcy 
 act, and the closure of Bankruptcy proceedings com- 
 menced before the Bankruptcy act of 1883 came into 
 operation, are governed by the Bankruptcy discharge 
 and closure act, 1887. But there is nothing in it which 
 specially relates to partners. 
 
 Section VI. — Arrangements "With Creditors. 
 
 Arrange- 
 ments with 
 creditors. 
 
 [*755] 
 
 By the Bankruptcy act, 1883, debtors, whether part- 
 ners or not, are enabled, either before or after adjudi- 
 cation, to compound or make arrangements with their 
 creditors respecting their debts and liabilities, and 
 their release therefrom, and for the distribution, inspec- 
 tion, management, and winding up of their estates ; 
 and the arrangements so made are binding not only 
 on assenting but also on all other creditors, provided 
 certain conditions which are specified in the act are 
 duly observed and the Court approves of the scheme (h). 
 If the scheme is approved, the receiving order is re- 
 scinded, and the * bankrupt (if there is no trustee) 
 is restored to his property (£). It is not, however, 
 necessary further to advert to the law on this subject ; 
 for there is nothing in it peculiar to partners except as 
 mentioned below. 
 
 (d) Ex parte Lonias, 1 Mon. & A. 525. See, too, Ex parte 
 Bate, 1 Bro. C. C. 453 ; Ex parte Minchin, Mont. & MacAr. 135. 
 
 (e) Ex parte Llewellen, 3 M. D. & D. 573. 
 
 (/) This seems to follow from the fact that the Bank. Act, 
 1883, contains no provision to the contrary. 
 
 {g) 46 & 47 Vict. c. 53, § 10 (2) and \ 102 (2 and 4). 
 
 (A) 46 & 47 Vict. c. 52, \\ 18 and 23, and Bank. Rules, 1886, 
 rr. 195 to 216. See, as to the approval of the Court, Ex parte 
 Eeed and Bowen, 17Q. B. D. 244 ; Ex parte Bischoffsheiin, 19 Q. 
 B. D. 33, and ib. 20 Q. B. D. 258. 
 
 (t) Bank. Eules, 1886, r. 208.
 
 ARRANGEMENTS WITH CREDITORS. SI 9 
 
 The Bankruptcy rules, 1886, rr. 266 and 267. are Bk. VI. 
 however important. They authorise in the case of part- Chap. 4. 
 ners several schemes, viz., a scheme for the joint liabil- ' 
 
 ities of the tirm, and separate schemes for the separate Several 
 liabilities of its several members. schemes. 
 
 266. At the first meeting, or any adjournment thereof, the 
 joint creditors and each set of separate creditors may severally 
 entertain proposals for compositions or schemes of arrangement 
 under sect. 18 of the act (ft). So far as circumstances will allow, 
 a proposal entertained by joint creditors may be confirmed and 
 approved in the prescribed manner, notwithstanding that the 
 proposals or proposal of some or one of the debtors made to their 
 or his separate creditors may not be entertained, confirmed and 
 approved. 
 
 267. Where proposals for compositions or schemes are made by 
 a firm, and by the partners therein individually, the proposal 
 made to the joint creditors shall be considered and voted upon by 
 them apart from every set of separate creditors; and the proposal 
 made to each separate set of creditors shall be considered and 
 voted upon by such separate set of creditors apart from all other 
 creditors. Such proposals may vary in character and amount. 
 Where a composition or scheme is approved, the receiving order 
 shall be rescinded only so far as it relates to the estate, the cred- 
 itors of which have confirmed the composition or scheme. 
 
 If default is made in any payment under a composi- Default in 
 tion or scheme the remedy is to apply to the Court (I), payment. 
 
 The Court has power to annul the composition or 
 scheme if default is made in payment of any instalment 
 due under it, or if it cannot proceed without injustice 
 or undue delay, or if the approval of the Court was ob- 
 tained by fraud (m). 
 
 Whether the debtor is adjudged bankrupt or not, if Effect of 
 a trustee is appointed, the property of the debtor vests scheme, 
 in him and his title to it relates back as if he were a 
 trustee in a bankruptcy (n). 
 
 * The debts provable are the same as in bank- [ * 756] 
 ruptcy (o); and, unless otherwise agreed and approved, 
 the rules respecting the payment of joint debts out of 
 joint estate and of separate debts out of separate estate 
 are also the same as in bankruptcy (o). 
 
 (ft) Or under ? 23, see r. 216. 
 
 (/) Bank. Rules, 1886, r. 211, and see Ex parte Godfrey, 18 Q. 
 B. D. 670. 
 
 (m) 46 & 47 Vict. c. 52, \ 18 (11) and \ 23 (3), and see Bank. 
 Rules. 1886, rr. 211 to 213; Ex parte Moon, 19 Q. B. D. 669. 
 
 (n) lb. | 18 (12 and 13) and % 23. 
 
 (o) 46 & 47 Vict. c. 52, and Bank. Rules, 1886, r. 215.
 
 820 BANKRUPTCY. 
 
 Bk. VI. A composition or scheme duly accepted and approved 
 
 Chap. 4. Sect. bj n cl 8 all the creditors so far as relates to their provable 
 
 ; debts (p) : but it does not release any person who would 
 
 not be released by an order of discharge (q). 
 
 A discharge by joint creditors does not affect the sep- 
 arate creditors nor vice versa (r). 
 
 After a complete discharge the debtor's after- ac- 
 quired property belongs to him (s). 
 50 & 51 Vict. By the Deeds of arrangement act, 1887, all instru- 
 c. 57. ments of arrangement with creditors (otherwise than in 
 
 pursuance of the bankruptcy law), must be registered, 
 and are declared void if not registered (see § 5). But 
 the act has no provisions specially affecting partners : 
 nor have the rules of 1888 which have beeD issued in 
 order to carry it into effect. 
 
 (p) lb. I 18 (8) and g 23. 
 (g) lb. I 18 (15) and \ 23. 
 
 (/■) See Meggy v. Imperial Discount Co., 3 Q. B. D. 711. 
 (s) Ex parte Wainwright, 19 Ch. D. 140; Ebbs v. Boulnois, 10 
 Ch. 479.
 
 INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 ABANDONMENT 
 
 of right, an answer to an action to enforce it, 470 
 of insurance, notice of by one partner good, 139 
 
 ABATEMENT, 
 
 plea in, abolished, 264. And see Addenda 
 
 ACCEPTANCE, 
 
 of bills. See Bills of Exchange 
 
 in blank, power of partner to make, 130 
 
 ACCORD AND SATISFACTION, 
 
 when a defence to an action for an account, 515 
 
 ACCOUNT, 
 
 persons entitled to an, 492 
 co-owners, 56 — 62 
 partners, 492 
 
 persons interested in the estate of a deceased partner, 493 
 trustee of bankrupt partner, 493, 648 
 sub-partners, 493 
 
 servants sharing profits, 12, 13, 35, note (s), 493 
 transferee of share of partner, 364 
 old action of, 560, note (k) 
 
 between co-owners, 59, 560, note (k) 
 between merchants, 259 
 action, before the Judicature Acts, by one partner against another 
 for not rendering an, 563 
 for balance of an. 564 
 
 for matters involving the taking of an, 567 
 for matters not involving any, 564 
 ACCOUNT, ACTION FOR. See Action 
 who may bring, 492 et seq. 
 partners, 492 
 
 persons entitled to share of partner, 493 
 servants. 493 
 subpartners when, 493 
 creditors of deceased partner, 494 
 against whom, 493, 496 
 costs of, 517 
 
 not dismissed because plaintiff entitled to damages, 458 
 where no dissolution is sought, 494 et seq. 
 
 where a limited as distinguished from a general account is desired, 494 
 in respect of illegal transactions, 103 
 in case of mines, 498 
 where partner refuses to, 497 
 
 (821)
 
 822 INDEX. 
 
 [The paging refers to the [*] pages.] 
 ACCOUNT, ACTION FOR— continued. 
 
 where partner attempts to compel a dissolution, 497 
 
 where business has failed, 498 
 
 discovery in, 501 
 
 in cases of exclusion, 496 
 
 of benefits obtained bv one partner at the expense of the firm, 305 etseq., 
 
 496 
 of profits derived from use of partnership property, 309 
 of profits derived by one partner by reason of his connection with the 
 
 firm, 305 
 of profits made by the use of the capital of a partner since a dissolution, 
 
 521 et seq. See Profits, Account of 
 where profit not yet realised, 496 
 of several partnerships, 501 
 defences to action for, 506. See Defence 
 
 denial of partnership, 507 
 
 illegality of partnership, 105 
 
 Statute of Limitations, 257 et seq., 508 et seq. 
 
 accounts stated, 512 
 
 award, 514 
 
 payment, 515 
 
 release, 516 
 parties to action for 
 
 between partners generally, 459 et seq. 
 
 by sub-partner, 460 
 
 against executors of deceased partner, 461 
 
 surviving partners not necessary parties to action by legatees, 611 
 
 some on behalf. &c, when sufficient, 461 
 
 motion tor, before hearing, 501 
 period over which an account is to extend, 519 
 
 time from which the account is to be taken, 519 
 
 time up to which the account is to be taken, 520 
 of dealings prior to commencement of partnership, 520 
 of subsequent profits when a dead or retired partner's capital has been 
 
 left in the concern, 521 — 536. See Profits 
 judgment for a partnership, 516 
 
 before trial, 501 
 
 forms of, 516, 517, note (w) 
 
 just allowances in, 519 
 
 evidence on taking, 536 
 judgment for, on the administration of the estate of a deceased partner, 
 
 600 
 See Accounts 
 
 ACCOUNT STATED, 
 
 when binding on incoming partner, 209 
 
 a defence to an action for an account, 512 
 
 by a majority binding minority, 512, note (d) 
 
 impeachment of, for fraud, &c, 513 
 
 re-opening, 420, 421 
 
 surcharging ami falsifying, 513 
 
 between the executors of a deceased partner and his surviving partners; 
 
 effect of, 613 
 action for balance of, not restrained because there are others unsettled, 
 
 543 
 
 ACCOUNTS, 
 
 of partnership generally, 396 
 authority of partner to deliver, 128 
 authority of partner to settle, 128, 136
 
 INDEX. 823 
 
 [The paging refers to the [*] pages. ] 
 ACCOUNTS— continued. 
 
 imputation of payments in cases of, 228 
 
 not to be taken backwards, 230 
 
 right to keep accounts of successive firms separate, 233 
 
 transfer of debt from one to another, 234 
 
 effect on incoming partner, 230 
 
 between merchant and merchant, time within which actions concerning 
 
 must be brought, 257—263, 508 et seq. 
 false rendered by one partner, liability of firm for, 165 
 approved of by majority, when binding on minority, 512, note (d) 
 conclusive for one purpose but not for another, 421 
 effect of keeping erroneous on right to dissolve, 581 
 effect of confusion of, on right to interest, 392 
 penalties for falsifying, destroying, &c, 404 
 agreements as to keeping, 420 
 
 effect of non-observance of agreement to take periodical, 421, 422, 430 
 reopening settled, 420, 421 
 effect of acquiescence in, 467 
 
 misrepresentations as to state of, aground for rescinding contracts, 486 
 surcharging and falsifying, 513 
 
 evidence on which partnership accounts are taken, 536 et seq. 
 special directions as to taking of, 537 
 injunction to restrain publication of, 542, note (e) 
 ultimate adjustment of, 401 
 
 where equality of loss and inequality of capital, 403 
 settled by one executor. 488, note (m) 
 mode of keeping partnership accounts, 396 et, seq. 
 duty to keep and the right to inspect partnership accounts, 404 etseq. 
 of joint and separate estates to be kept distinct in bankruptcy, 693 
 how taken in bankruptcy, 695 — 697 
 See Account, Action foe 
 
 ACCOUNTANT, 
 
 inspection of documents by, 504 
 
 employment of, by court, 538 
 
 modes of taking accounts by, different from legal mode, 396, 695 — ^697 
 
 ACKNOWLEDGMENT, 
 
 effect of, as regards the statute of limitations, 260, 511 
 when made by one partner, 263 
 See Ratification, 143 ; Laches, 466 
 
 ACQUIESCENCE, 
 
 of plaintiff in what is complained of, when a bar to relief, 318, 467 
 
 ACT OF PARLIAMENT, 
 
 persons procuring, not partners, 22 
 See Statute 
 
 ACTIONS 
 1. Generally 
 
 general remarks on, 264, 265, 456 
 general principle as to parties, 265 
 effect of non-recognition of firm on, 115, 116 
 effect of Judicature acts, 264 
 
 no distinction between legal and equitable rules, 264 
 
 no action defeated by nonjoinder or misjoinder, 264 
 
 pleas in abatement abolished, 264. And see ADDENA 
 
 as topersons jointly or jointly and severally entitled orliable, 
 
 265, 282 
 joint and several claims may be joined, 265
 
 824 INDEX. 
 
 [The paging refers to the[*] pages. 7 
 ACTIONS— continued. 
 
 1 . Generally — continued. 
 
 parties required by defendants may bejoined, 265 
 some or one may sue on behalf of all, 265 
 partners may sue or be sued in name of firm, 115, 265, 274, 
 456, 458 * 
 
 discovery of partners, 265 
 
 as to the use of where partners have changed, 266 
 as to service of writ where name of firm is used, 272 
 as to making defendants persons who ought to be co-plaintiffs, 
 
 267 
 by firm against a partner, 459 
 by partner against his firm, 267 
 firms with common partner may sue each other, 267 
 as to defences founded on conduct of one partner, 267 — 270 
 
 of deceased partner, 268 
 for account. Bee Account 
 
 an injunction. See Injunction' 
 a receiver. See Receiver 
 
 rescission of contract. See Rescission of Contract 
 specific performance. See Specific Performance 
 defences to. See Account, Action for ; Defence 
 laches, 406*/ *<q. See Laches 
 illegality, 102 et acq. See Illegality 
 against bankrupt not allowed, 718 
 in respect of legal rights, 271! etseq. 
 
 equitable rights. 283 et seq. 
 in case of fraud, parties to, 284 
 where one partner exceeds his authority, 282 
 ex delicto, 278, 283 
 
 by trustee of bankrupt partners and the solvent partners, 670 
 by several trustees in bankruptcy, 646, 647 
 may be brought by unknown principals, 275 
 on contracts with A. & Co., 274 
 formerly election between, and proof in bankruptcy, 718, note (d) 
 
 2. by partners against non-partners, 273 et scq. 
 
 illegality of partnership a defence to, 103 
 implied powers of partner as to, 271 
 on contracts under seal, 273 
 on bills and notes, 274 
 
 in name of firm, 274 
 
 accepted for honour, 274 
 on ordinary contracts, 275 
 
 for torts,' 278—280 
 for libel, 278 
 ejectment, 279 
 
 by incoming partner, 284 etseq* 
 by retired and continuing partners, 286, 287 
 by surviving partners, 2(i7 — 269, 288 
 by trustees of bankrupt partners, 288, 289, 670 
 by solvent partner, 289. 670 
 by dormant partners, 276 
 by nominal partners, 276 
 when to he brought by one partneronly, 277 
 may be brought in name of those not named, 275 
 nonjoinder not pleadable in abatement, 264 
 when one partner colludes with defendant, 279 
 where contract not made with firm, 277 
 by one firm against another whereone partner is common to botb.,267,569
 
 INDEX. S25 
 
 [The paging refers to the [*] pages. ] 
 ACTION— continued 
 
 2. by partners against non-partners — continued 
 
 when a defence against one partner is a defence against all, 116, 117, 
 267, 268 
 
 3. by non-partners against partners, 280 et seq. 
 
 when one only may be sued. 281 
 illegality of partnership no defence to, 103 
 on contracts, 280 
 
 not binding firm, 282 
 for torts. 283 
 against incoming partners, 285, 286 
 
 retired and continuing partners, 286 
 surviving partners, 288 
 
 where the executors of the deceased are also being sued, 598 
 et seq. 
 effect of change in firm, 284, 285 
 against solvent and bankrupt partners. 289 
 infant partners, 280, 281 
 dormant partners, 281 
 
 for administration of estate of deceased partner by creditors of the firm, 
 598 
 by separate creditors of deceased partner, 614, et seq. 
 legatees, 614 et seq 
 next of kin, 614 ctseq. 
 
 4. between partners 
 
 when court will not interfere, 464 et seq. 
 for an account, 491, 492 et seq. See Account 
 for discovery, 501 et seq. See Discover v 
 for dissolution, 461, 491, 570. See Dissolution. 
 should be in the Chancery Division, 491 
 parties to, 459, 461 et seq. 
 next friend of lunatic may bring, 579 
 statement of claim in, 491 
 judgment for, given before the hearing, 491 
 
 may be brought, although the partnership could be wound up 
 under the Companies act, 491 
 for injunction, 538. See Injunction 
 for a receiver, 545. See Receiver 
 for specific performance. See Specific Performance 
 for fraud and misrepresentation, 479 et seq., 481 
 for rescission of contract, 482 
 for recovery of real property, 560 
 goods, 560 
 damages, 561 
 general rule that one partner could not sue another at law, 567 
 when an action at law would lie, 562 
 on agreements for partnership, 559 
 account, 560 and note (k) 
 for money paid by mistake in accounts, 566 
 on agreement to indemnify, 566 
 ejectment, 279, 562 
 trespass, 562 
 trover, 562 
 covenant, 563 
 assumpsit or debt 
 
 for breach of express agreement, 280, 559, 563 
 for not furnishing capital, &c, 563 
 for not contributing to expenses, 564 
 for not indemnifying co-partner, 566
 
 826 INDEX. 
 
 [The paging refers to the [*] pages.] 
 ACTIONS— continued. 
 
 4. between partners — continued. 
 
 for not accounting to co- partner for money received to his use, 
 566 
 
 on an award, 564 
 
 for balance of account, 564 
 
 on bills and notes, 565. See Bills 
 
 for penalty on breach of agreement, 563 
 
 for rent, 565 
 
 for contribution, 566. See Contribution 
 
 for amount of valuation, 564 
 
 for money had and received for the use of the firm, 567 
 
 for the recovery of deposit agreed to be paid, 559 
 back of deposit, 559 
 
 for share of the produce of sale, 568 
 
 for share of surplus on dissolution. 569 
 
 for matters unconnected with partnership business, 564 
 between two firms with a common partner, 267, 569 
 between a partner and his own firm, 115, 267, 471 et seg. 
 between persons who have agreed to become partners, 559 
 by and agaiust trustee of bankrupt partner, 288, 289 
 for administration of estate of deceased partner. See ADMINISTRA- 
 TION 
 by surviving partners, 591 
 
 5. miscellaneous 
 
 against sheriff for share of produce of sale of partnership firm, 568 
 for misrepresentation and fraud, 479 et seq. 
 
 ACTORS, 
 
 illegal partnerships- between, 101 
 
 ACTS OF BANKRUPTCY, 
 what are, 625, 626 
 relation back to, 650, 663 
 
 not valid as bond fide dealings, &c, with bankrupt 665. See Bank- 
 ruptcy 
 
 ADEMPTION, 
 
 of legacies of shares, 620 
 
 ADJUDICATION, 637 et seq. See BANKRUPTCY 
 concurrent, 638 
 joint after separate, 639 
 
 ADMINISTRATION 
 
 of estate of deceased partner. See Deceased Partner : Death 
 
 partner cannot prove in competition with the creditors of the firm, 
 
 599 
 action for, by surviving partners, 591 
 creditors of the firm, 598 
 
 separate creditors, legatees, or next of kin of deceased, 
 610 
 effect of, on rights of creditors, 594 et seq. 
 under order of the court, 594 
 of estates of bankrupt partners. See Bankruptcy 
 
 ADMINISTRATOR. See Executor 
 
 ADMISSIONS 
 
 may be shown to have been mistaken, Newton v. Belcher, 12 Q. B. 921 
 
 and Newton v. Liddiard, ib., 925 
 of person that he is a partner, not conclusive, 87, 88
 
 INDEX. S27 
 
 [The paging refers to the [»] pages.] 
 
 ADMISSIONS— continued 
 
 of one partner ; when evidence against co-partner, 128 
 
 when binding on firm, 128 
 of one co-owner, effect of, 128, note (?) 
 
 effect of, as regards payment into Court being directed, 505 
 by one partner, effect on Statute of Limitations, 261 
 
 ADOPTION 
 
 by firm of losses not chargeable to it, 388 
 See, also, Ratification 
 
 ADVANCES 
 
 to a firm by trustees after the partners are changed, 113 
 how distinguished from capital, 320 
 securities for, effect of change in firm on, 119 
 by partner, 381 
 
 right to reimbursement, 381 etseq. 
 interest on, 390 
 
 effect of declining to make further, 550, note (a) 
 See, also. Loans 
 
 ADVENTURE. See Partnership 
 
 ADVERTISEMENTS 
 
 evidence of partnership, 89 
 of dissolution of partnership, 222 
 effect of, 222, 223 
 partner ordered to sign, 214 
 when to be stamped, 223 
 false representations by, action for, 481 
 
 interfering with receiver by, contempt of Court, 554, note (c) 
 See, also. Notice 
 
 AFFIDAVITS 
 
 of one partner cannot be sworn before his co-partner, 117, note (h), 624 
 
 AFTER-ACQUIRED PROPERTY 
 
 covenant to assign, proof in respect of, in bankruptcy, 708, note (») 
 vests in trustee in bankruptcy, 646 
 
 AGENCY, 
 
 general doctrines of 
 
 as regards partnerships, 124 ct seq. 
 
 eftect of change of firm, 113 
 when a partner's agency commences, 201 
 when it ends, 210 
 as regards dormant partners, 125 
 termination of, by notice, 210 
 continuing for purposes of winding up, 217 
 liability of persons sharing profits, depends on, 31 
 See, also, Agent ; Authority ; Implied Powers ; Liability 
 
 AGENT, 
 
 each partner agent for firm, 124 
 
 power of partner to appoint, 129, 147. 
 
 revocation of authority of, effect of, 371. 
 
 ratification of acts of by principal, 148, note {a), 371 
 
 payment by to principal when a protected transaction, 665, note (r) 
 
 contracts of, under seal, 177 
 
 parol, 177 
 duty of, to account for profits, 305 et seq., 307, note (r). 
 exceeding his authority, liability of, 192, 370 
 acting without authority, 371, 372
 
 828 INDEX. 
 
 [The paging refers to the [*] pages.] 
 AGENT— continued. 
 
 of firm, to whom to account, 288, note (y) 
 
 right of, to idemnity from his principal, 369. See Indemnity. 
 liability of, for acts done for non-existent principal, 163, 168 
 liability of principal for torts and frauds of, 149 
 for foreign principals usually contracts as principal, 288, note (y) 
 sharing profits, not necessarily a partner, 35 
 See. also, Agency ; Authority ; Implied Powers : Liability 
 
 AGREEMENT 
 
 whether a partnership or not depends on intention of parties, 10 
 for partnership, see Contents, Book I., chap. 1 
 
 unconcluded, 19 
 
 proof of, 80 et seq 
 
 action on, 559 
 
 part performance of, 83 
 
 specific performance of, 475 
 
 laches a defence to an action to enforce, 467 
 
 rescission of, for fraud, 479 et seq 
 
 proof by one party to, against another in the event of bankruptcy, 
 727, 738 
 between partners 
 
 determines what is partnership property, 329 
 
 may be evidence of a partnership, 89 
 
 how far it affects third parties, 168 et seq. 
 
 construction of, see Articles of Partnership 
 
 not to carry on trade or business, enforced when, 437 
 
 articles of partnership may be waived by tacit, 408, 409 
 for appointment of a receiver, 550 
 See, also, Contracts ; Rescission of Contract ; Specific Per- 
 formance ; Consideration 
 
 ALIEN 
 
 partners, 72 
 enemies, 72 
 
 who are, 72, 73 
 liability of, to bankruptcy law, 624, note (re) 
 
 ALLOWANCE, 
 
 bankrupt's, 753 
 
 ALLOWANCES, 
 
 in respect of 
 
 trouble, extra work, &c, 380 
 
 to executors and surviving partners, 592 
 treating customers, 380, note (re), 384 
 outlays generally, 381 et seq. 
 money paid in discharge of debts, 382 
 useless expenses, 382 
 Indian, 381 
 
 services performed after dissolution, 381 
 unauthorized outlays, 383 
 charges for valuation, 384 
 outlays on the property of one partner, 384 
 
 expenses incurred for firm, but not charged to it in previous ac- 
 count, 383 
 unexplained expenses, 384 
 secret service money, 384 
 
 advances generally, 381 et seq. See ADVANCES 
 liabilities and losses, 385 
 losses attributable to one partner only, 387
 
 INDEX. 829 
 
 [The paging refers to the [*] pages. ] 
 ALLOWANCES— contin tied. 
 
 in respect of — continued. 
 
 losses attributable to misconduct or negligence, 387 
 
 illegal acts, 377, 378 
 interest, 389 
 
 agreements as to, 418 
 just, 380 etseg., 519 
 See Contribution ; Indemnity 
 
 AMALGAMATION 
 
 effect of, on sureties, 118 
 on securities, 119 
 See Change in Firm 
 
 AMBASSADOR 
 
 cannot be sued in respect of commercial transactions, 72 
 
 ANNUAL 
 
 accounts, effect of not taking, 430 et seq. 
 
 ANNUITY 
 
 in lieu of profits, or out of profits, 28, 36 
 to widow, agreements as to, 435 
 
 ANNULLING 
 
 adjudications of bankruptcy, 642. See BANKRUPTCY 
 on equitable grounds, 636, note (a;) 
 effect of, 645 
 
 ANSWER IN CHANCERY, 
 
 evidence of partnership by, 89 
 denying partnership, 507 
 
 discovery when partnership was denied in, 507 
 See Payment into Court 
 
 APOTHECARIES, 
 
 partnership between unqualified, 98, 99, note (p) 
 
 APPEARANCE, 
 
 how entered, 266 
 
 one partner can authorise entry of, on behalf of firm, 271, note (y) 
 
 APPLICATION OF MONEY, 
 
 firm not liable for money because it has had the benefit of it, 189 
 exceptions, 191 
 
 APPOINTMENT, 
 
 held by firm, effect of change of partners on, 114 
 held by one partner 
 
 official, 414 
 
 agreements as to, 414 
 
 valuation of, on dissolution, 558 
 
 when assets, 331 
 of successor in firm, 434 
 when partnership property, 331 
 
 APPORTIONMENT 
 
 of premiums, 64 — 69 
 of dividends, 621 
 of profits, 621 
 
 APPRENTICES, 
 
 discharge of, on change in firm to which they are bound, 117, note (k)
 
 830 INDEX. 
 
 [The paging refers to the [*] pages.] 
 APPROPRIATION OF PAYMENTS, 
 generally, 229—236 
 discharge of retired partner by, 229 
 
 estate of deceased partner by, 229 
 
 dormant partner by, 229 
 
 surety by, 230 
 ■where one partner pays his own debt with monies of firm, 225 
 where there is a single current account, 230 
 where there are several distinct accounts, 231 
 where dividend is paid on several debts, how applied, 228, 235 
 cases in which rule applicable to single accounts does not apply, 231 
 against debtors as well as creditor, 230 
 effect on incoming partners, 230 
 where debts owing to firm and member of it, 236 
 in cases of fraud, 235, 236 
 
 APPROPRIATION OF SECURITIES, 
 
 in case of bankruptcy, 714, 720, note (n) 
 
 ARBITRATION, 
 
 staying actions, &c, after agreement to refer, 453 
 power of partner to bind firm by submission to, 129, 272 
 ratification of submission to by co-partners, 129 
 effect of agreement for, on action for account, 514 
 ' dissolution of partnership by, 454, 572, note (n) 
 usual clauses relating to, 451 
 
 clause in articles as to, applies to partnership continued alter expiration 
 of term, 411 
 See Award 
 
 ARBITRATOR, 
 
 power of, on general submission, 454 
 cannot appoint receiver, 454 
 
 ARRANGEMENT 
 
 by firm with its creditors under Bankruptcy act, 1883, 754 et seq. 
 void if not registered, 756 
 
 ARREST 
 
 for debt, effect of, 238 
 
 ARTICLES OF PARTNERSHIP, 
 
 illegal clauses in, do not necessarily make the partnership illegal, 91 
 
 proof of, not essential to establish a partnership, 87 
 
 to be drawn up, 22, 412 
 
 effect of retrospective, 88, 412 
 
 effect of deferring execution of, as regards creditors, 202 
 
 not dating, 412 
 
 actions for breaches of, 559 
 
 specific performance of clauses in, 475 et seq. See Specific PerfoRv 
 
 MANCE. 
 
 general rules for construing, 406 et seq. 
 
 not intended to define all the rights and duties of partners, 406 
 
 to be construed with reference to object of partners, 407 
 
 and so as to defeat fraud, 407 
 
 and the taking of unfair advantages, 408 
 
 provisions in, may be tacitly waived, 408 
 
 extend to partnership continued after the time fixed for determina- 
 tion, 410, 411 
 variation of, 409 
 remarks on clauses in, 406 
 
 usual clauses, 411 el seq.
 
 INDEX 831 
 
 [The paging refers to the [*] pages. ] 
 ARTICLES OF PARTNERSHIP— continued. 
 remarks on clauses in — continued. 
 nature of the business, 412 
 place of business, 412 
 commencement of the partnership, 412 
 future formal articles, 413 
 name or style of firm. 413 
 duration of the partnership, 413 
 premiums, 413 
 property of the firm, 414 
 capital of firm. 320, 414 et seq. 
 appointments held by partners, 414 
 prohibitions against carrying on business, 436 
 
 after sale of the business, 437 
 deeds and papers in the custody of firm of solicitors, 438 
 good-will, 415, 439 et seq. 
 bringing in debts as capital, 417 
 getting in debts on dissolution, 44b 
 
 assignment ot share of outgoing or deceased partner, &c, 449 
 indemnity to be given by continuing to outgoing partner, &c, 450 
 effect on lien, 451 
 
 reference of disputes to arbitration, 451 et seq. 
 penalties and liquidated damages, 454 
 trade secrets, &c, 415 
 patents, 415 
 inventions, 415 
 amount of debts, 417 
 guarantee against debts, 418 
 allowances, 418 
 interest, 418 
 
 monies to be drawn out, 418 
 expenses to be charged to the firm, 418 
 conduct of partners, 418 
 
 effect of covenant to be true and just, &c, 418 
 servants, 419, 
 
 attention to be given to business, 419 
 powers of majority, 419 
 
 powers of one partner by agreement, 418, 419 
 partnership books, 420 
 solicitor's papers, 438 
 mode of taking accounts, 420 
 effect of not keeping accounts as agreed, 430 
 conclusiveness of settled accounts, 420, 421 
 retiring from firm, 422 
 sale of share, 422, 423 
 
 offer of share to co-partner, and purchase by him, 423 et seq 
 dissolution, 425 
 premiums, return of, 66, 413 
 insolvency of member, 425 
 insanity of member, 425 
 notices of dissolution, 425, 426 
 expulsion, 426 et seq. 
 valuation of share, 429 ex seq. 
 methods of avoiding sale, 429 
 introduction of new partners, 433 ex seq. 
 settled share, 434 
 
 transmission of share to non-partners, 433 
 annuities to widows, &c, 435
 
 832 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 ASSETS 
 
 of firm, what are, 320, 322. See Property 
 good-will included in, 443 
 distributable pari passu, 709 
 
 except in cases mentioned, 709, note (z) 
 ot deceased partner, effect of continuing them in the partnership busi- 
 ness, 606, 614 ex seq. 
 liability of to creditors of firm, 594 &c. 
 for acts of executor, 606. 609 
 proof by bankrupt executor for, when allowed, 608 
 where improperly left in business, 608, 724 
 properly left in business, 608, 722 
 See, also, Administration ; Bankruptcy ; Deceased Part- 
 ner; Death 
 ASSIGNEES IN BANKRUPTCY. See Trustee in Bankruptcy 
 
 ASSIGNMENT 
 of debt, 
 
 effect of, as regards set-off, 296 
 
 notice of, necessary to take it out of the reputed ownership of the 
 
 assignor, 679 
 how to be made since the Judicature act, 285 
 of share in partnership, 363 
 stamp on, 450 
 
 difference between and release, 450 
 effect of, as regards dissolution, 583 
 position of assignee, 363 et seq. 
 right of assignee to an account, 364, 493 
 
 to a dissolution, 584 
 by outgoing to continuing partner, 449 
 of property, when an act of bankruptcy, 627 
 right of solvent partners to make, 671 
 
 See Shares; Transfer of Shares 
 
 ASSUMED NAME, 
 
 trading under, not illegal, 92 
 
 ASSUMING 
 
 to act as corporation, 93 
 
 ATTACHMENT 
 
 of debts, 299 
 
 ATTORNEY. See Solicitors. 
 
 powers of, to draw bills, effect of, 130 
 
 warrant of, given by one partner, 272 
 AUCTION, 
 
 share of bankrupt partner need not be by, 649, note (s) 
 debtor under fi. fa. 358 
 
 AUTHOR AND PUBLISHER, 
 
 partners in profits only, 14 
 partnerships between, duration of, 122 
 liability of, creditors, 179, 203 
 powers of, to make purchases, 144 
 
 AUTHORITY 
 
 to hold out as partner, 42, 43 
 
 of one partner to act for firm, 124 et seq. 
 
 where change in the firm, 113 
 of dormant partner, 125 
 in cases of extraordinary necessity, 126
 
 INDEX. 833 
 
 [The paging refers to the [*] pages. ] 
 AUTHORITY— continued. 
 
 revocation of, effect of, 371 
 
 misrepresentation of, 481 note (p) 
 
 oi one partner, liability of firm for untrue statements as to, 165, 166 
 
 excess of, effect of notice of, 167, 168, 176 
 
 liability of agent in cases of, 163, 167, 192 
 See Agency; Agents; Implied Powers 
 AWARD, 
 
 money awarded to one partner, when it does not belong to firm, 325 
 dissolving partnership, authorised by general admission to arbitration, 
 
 426, 454 
 disposing of business, effect of, 442 
 a defence to an action for account, 514, 515 
 mistakes in, when set right, 514 
 See Arbitration 
 
 BAILIFF, 
 
 to distrain, appointment of, by one partner, 137 
 
 BALANCE, 
 
 of account, action by one partner against another for, 564 
 in hands of partner, interest on, 390 
 
 BANK NOTES, 
 
 issue of, 96 note (2) 
 
 BANK OF ENGLAND, 
 
 privileges of, 96 note (z) 
 
 BANKERS, 
 
 illegal partnerships between, 95 et seq. 
 
 returns to be made by, 95 
 
 issue of notes by, 96 note (z) 
 
 number of persons who may be in partnership as, 96 
 
 books, production of, on action for account, 537 note (t) 
 
 liability of, for misapplication of money, 152, 158 
 
 account with, assent to transfer of, 135 
 
 compound interest, when payable by, 390 note (s) 
 
 direction to, not to pay cheque of firm, 133 
 
 BANKING ACCOUNT, 
 
 power of partner to open, 129 
 overdrawing, is borrowing money, 132 
 
 BANKING COMPANIES 
 
 issue of notes by, 96, note (2) 
 
 BANKRUPT, 
 
 who may be made, 623, 624 
 who may make a person, 633 
 partners 
 
 dormant partners may be, 633, 637 
 
 nominal partners may be, 633, 637 
 
 allowance to, 75.'! 
 
 need not join in suing on joint contract, 289 
 
 court in bankruptcy may restrain action against, 289, 718 
 companies, 633 
 
 See Bankruptcy; Trustees in Bankruptcy 
 
 BANKRUPTCY. See the Analysis of Contents, Bk. IV. c. 4. 
 1. Generally, 622 
 
 who may be made bankrupts, 623, 624 
 proceedings against firms, 623 
 * 30 LAW OF PARTNERSHIP.
 
 834 INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 BANKRUPTCY— continued. 
 
 1. Generally — continued. 
 
 in firm's name, 623 
 disabilities of partners of officials in, 117, 624 
 difference between traders and non-traders as to, 624 
 as to companies, 623 
 •what are acts of, 625-633 
 
 time of commission of act of, 633 
 fraudulent conveyances, 627, 659 
 
 preferences, 628, 659 
 sales for present consideration, 629 
 protected transactions, 630, 654, 665 
 petition for adjudication of, 633 et seq. 
 
 trustee in, appointment and choice of, 644 et seq. See Trustee in 
 Bankruptcy 
 what property he takes 646, et seq. 
 land, 651 
 chattels, 651 
 onerous property, 651 
 books of account. 652 
 shares, debts, goodwill, &c, 652 
 not trust property, 652 
 benefit of contracts, 652 
 liability in respect of contracts, 651 note (k) 
 share of profits made since, when, 526 
 property in reputed ownership of bankrupt, 676 
 relation back of title of trustee, 663 
 appointment of inspectors in, to protect one class of creditors against 
 
 another, 645 
 consequences of 
 
 dissolves firm, 577, 649 
 
 trustee does not become partner, 648 
 
 as regards the bankrupts, and their power of dealing with the assets 
 
 of the firm, 212, 666 ct seq. 
 as regards the solvent partners, and their power of dealing with the 
 
 assets of the firm, 212, 669 et seq. 
 as regards execution creditors, 674 
 where some partners are abroad, 675 
 
 as regards agreements between partners affecting their property, 335 
 as regards avoidance of voluntary settlements, 654 
 share of bankrupt how ascertained, 649 
 power of one partner to act for firm in proceedings in, 624 
 actions by and against partners in cases of, 283, 289 
 return of premiums in event of, 65, 67 
 
 holding out after bankruptcy of one partner, effect of, 212, 700 
 2. Adjudication of bankruptcy 
 persons liable to, 624 
 
 what acts are necessary to sustain, 625 et seq. 
 time within which it must be obtained, 628 
 petition for, 625, 633 et seq. 
 
 who may petition for, 633 
 
 amount of petitioning creditor's debt, 634 
 
 nature of petitioning creditor's debt, 634 
 
 circumstances precluding petition, 634 
 
 effect of death of partner, 638 
 
 common partners, 837, 641 
 
 by one partner against another, 635 
 
 where improper, 636
 
 INDEX. 835 
 
 [The paging refers to the [* 1 pages.] 
 BANKRUPTCY— continued. 
 
 2. Adjudication of bankruptcy — continued. 
 
 creditor of firm may obtain a separate adjudication against one part- 
 ner, 637 
 
 by creditor whose debt is merged, 257 
 joint, what will sustain, 632, 637 
 
 choice of trustee under, 644 
 
 appointment ot inspector? under, 645 
 
 dormant or nominal partner may be included in, 633, 637 
 
 made against partners individually, 623 
 annulling and superseding 
 
 causes for, 637 — 641 
 
 consequences of, 643 
 
 costs of, 642 
 
 staying proceedings instead of, 642 
 
 after certificate, 642 
 
 legality of, 642 
 consolidation of separate adjudications 643 
 prosecution of joint and separate in same court, 644, note (r) 
 concurrent adjudications, 638 
 
 in England and Ireland, 640 
 several adjudications against same person, 639 
 
 3. Administration of partners' estates in, 691 et seq. 
 
 general principle that each estate shall pay its own creditors, 692 
 
 distinct accounts of joint and of separate estates to be kept, 693 
 
 joint and separate dividends to be declared together, 693 
 
 where connected firms, 693 
 
 costs of, how payable, 694 
 
 remuneration of trustee in, 694 
 
 correcting mistakes as to, 695, 746 
 
 agreement converting joint into separate estate, et vice versd, 698 
 
 effect of doctrine of reputed ownership, 700 
 
 of holding out as partner, 700 
 joint and separate debts, what are, 701 
 bill accepted after bankruptcy, 673 
 consolidation of the joint and of the separate estates, 695 
 
 4. Administration of the joint estate, 697, 720 et seq. 
 
 joint creditors to be first paid out of the joint estate, 692, 720 
 rights of executors of deceased partner, as regards, 722 
 two firms with common partner, 724 
 proof by separate creditors against joint estate, allowed 
 
 in cases of fraud, 725 
 
 where there are distinct trades. 725 
 
 where partner has obtained order of discharge and become cred- 
 itor, 725 
 surplus of joint estate, how to be dealt with, 728, 742 
 
 5. Administration of the separate estates, 692, 729 
 
 separate creditors of each partner to be first paid out of his separate 
 
 estate, 692, 729 
 proof by joint creditors against a separate estate, allowed 
 
 where there is no joint estate, 731 
 
 where no solvent ostensible partner, 731 
 
 although one partner dead, solvent, 732 
 
 joint estate very small, 732 
 
 in cases of fraud, 733 
 
 where there are distinct trades, 736 
 
 in favour of petitioning creditor himself, 731, note (w) 
 surplus of separate estates, bow to be dealt with, 730 
 proof by partners against each other's separate estates, 737
 
 836 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 BANKRUPTCY— continued. 
 
 not allowed to the prejudice of joint creditors, 737, 740 
 where partner has paid joint debts, 741 
 
 by person who has held himself out as a partner, 742, note (b) 
 in eases of fraud, 739 
 where there are no joint creditors, 740 
 proof for what is not satisfied by lien, 741 
 proof by company against estate of bankrupt shareholder, 739 
 election by joint and separate creditors, 743 
 double proof, 719, 743, 747 
 
 position of petitioning creditor, 747 
 statutory enactment as to, 748 
 splitting demands, 749 
 6. Proof of debts in 
 
 general rules as to, 707 
 what debts may be proved, 707, 708 
 equitable securities, 715 
 in respect of torts when, 708, note (y) 
 indemnity, 708, note (y) 
 breaches of trust, 707, and note (t) 
 by cestui que trust, 717 
 
 by bankrupt in respect of trust property, 707 
 by secured creditors, 709, 714 
 
 where secured bills, 709, 710 
 where drawer bankrupt, 710, 711 
 
 acceptor bankrupt, 711 
 where both drawer and acceptor bankrupt, 712 ■ 
 effect of rule in Wearing 1 s case on, 712 
 application of rule, 713 
 
 position of holder of bills, 711 
 by executors of deceased partner against survivors, 722 
 by solvent partners against estate of co-partner, 721, 737, 740 
 by public officer, 740 
 
 by company against estate of bankrupt shareholder, 739 
 against joint estates. 720 
 against separate estates, 729 
 against both estates, 743 
 rule as to election, 743 
 where double proof is allowed, 747 
 splitting demands, 749 
 where there is no joint estate, 731 
 mutual credits. See Set-off 
 rule that creditor cannot sue and prove, 718 
 
 creditor may proveagainst bankrupt partner and sue solvent partners, 257 
 marshalling, effect of on, 717, 718 
 interest on, 719. 720 
 
 where foreign adjudication, 719 , 
 
 composition in, effect of as regards joint debt, 238 
 discharge of bankrupt, effect of on, 752 
 Bankruptcy of shareholders 
 
 company how far dissolved by, 649, 650 
 shares of, vest in trustee on, 652 
 Bankrupt's order of discharge, 751 et seq. 
 
 allowance, 753 
 Arrangements with creditors, 754 et seq. 
 BANKRUPT PARTNERS 
 
 cannot deal with property of firm, 666 
 payments made to, 668 
 See Bankruptcy
 
 INDEX. S37 
 
 [The paging refers to the [«] pages.] 
 BENEFIT 
 
 of money, effect of having had, 189 et seq. 
 of contract, 189 
 
 liability of firm for, in equity, 191 
 proof against joint estate in respect of, when, 703 
 resulting to one partner from connection with firm, 309, 310 
 
 BEQUEST. See Legacy 
 
 BILLS- OF ACCOUNT, 
 
 evidencing partnership, 89 
 BILLS OF EXCHANGE, 
 
 proof of partnership by means of, 89 
 issue of, by bankers, 96 note 
 
 do not merge debt to secure which they are given, 254, 704 
 power of one partner to bind firm by, 129, 130 
 when given for his own private debt, 171 
 when given after dissolution, 210 — 214 
 authority to transfer, 131 
 to indorse in name in which it is drawn, 131 
 to accept in blank, 131 
 
 one partner taking, in satisfaction of debt, 136 
 drawn by one partner on firm, effect of, 116 
 
 firm on another where common partners, 115 
 for old debt, a fraud on new partner, 209 
 in name of firm after bankruptcy, 673 
 payable to officer for time being, 180, note (a) 
 accepted for honor, 274 
 acceptance of, need not be signed, 186 
 
 of firm, undertaking of one partner to provide for, when due, 139 
 negotiation of, by partners who have committed acts of bankruptcy, 667, 
 673 
 by solvent partners where their co-partner is bankrupt 
 674 
 one partner has no power to guarantee payment of, on account of firm. 1 38 
 injunction to restrain negotiation of, 542 
 who liable on, 180 et seq. 
 effect of form of, 180 
 
 when name of firm is on them, 171, 173. 180 
 when name of firm is not on them, 184 
 where two firms with same name, 181 et seq. 
 where name of firm same as individual, 189 
 mistake in name, effect of, 185 
 liability of incoming partner for bills accepted by co-partners for old debt 
 
 209 
 proof against joint estate in respect of what, 702 
 secured by charge on goods, 709 et seq. 
 rights of drawer and acceptor, 710 
 right of holder, 711 
 effect of bankruptcy of drawer on, 710, 711 
 
 of acceptor, 711 
 rule in Ex parte Waring, 712 
 effect of, 713 
 given by continuing partner for old debt, effect of, 242 et seq. 
 actions by partners on, 274 
 
 action by one partner against another for not taking up, 566 
 action by one partner against another on, 565, 567 
 set-off in bankruptcy in respect of. 656, 657 
 buying up, to avoid set-off in bankruptcy, 663 
 See, also, Promissory Notes
 
 838 INDEX. 
 
 [The paging refers to the [*] pages.] 
 BILLS OF EXCHANGE ACT, 131, 180, 181 
 
 BILLS OF SALE ACTS, 
 
 effect of, on transactions between executors of deceased partner and sur- 
 viving partners, 593, note (r) 
 as regards property vesting in trustee in bankruptcy, 651, note (I), 
 
 679 
 on doctrine of reputed ownership, 679 
 BLOCKADE, 
 
 partnership for running, not illegal, 92 
 
 BONA NOTABILIA. 
 
 shares in partnerships are; 340 
 BOND, 
 
 implied power of partner as to, 131, 137 
 
 merges simple contract debt, 256, 703 
 BONUSES, 
 
 right of legatee of shares to, 621, note (u) 
 BOOK DEBTS, 
 
 of bankrupt partner may be sold by trustee, 652 
 BOOKS. 
 
 duty of partners to keep proper, 404 
 to allow them to be inspected, 404 
 
 agreements as to custody of partnership, 420 
 specific performance of, 479 
 
 delivery of, to receiver, 554 
 
 entries in, are evidence against all the partners, 536 
 
 production of, in actions for account, 501 et seq., 537 
 
 production of bankers, 537, note (t) 
 
 effect of withholding, on taking accounts, 405, 538 
 
 right of trustee of bankrupt partner to, 652 
 See further, Accounts ; Inspection 
 
 BORROWING MONEY, 
 
 power of one partner to bind firm by, 131 
 
 in case of urgent necessity, 126, 131 
 
 from trustees, 162 
 distinction between and getting things on credit, 133 
 distinction between and increasing capital, 132, 133, 321 
 effect of having had benefit of, 189, et seq. 
 
 BOVILLS ACT, 35 et seq. 
 
 BREACH OF TRUST, 
 
 liability for, joint and several, 161, 162, 198, 199, 200, 702 
 by one partner, liability of firm for, 199 
 liability of estate of deceased partner for, 596 
 following money. 162, 521 et seq. 
 notice of, effect of, 143 
 
 notice of, by one partner, when not notice to firm, 142 
 by not getting in share of deceased partner, 614 
 effect of lapse of time on, 260 
 
 remedy for, when barred by Statute of Limitations, 260, 511 
 proof in bankruptcy, in respect of, 702, 707, and note (t), 717 
 double proof for, 745, 749 
 assets brought in in, not joint estate, 724 
 See Trustee ; Trusts 
 
 BROKERS, 
 
 partnership between unqualified, 97 
 discovery by, 97
 
 INDEX. 839 
 
 [The paging refers to the [*] pages.] 
 BUBBLE ACT, THE, 101 
 
 BUILDING SOCIETIES, 
 
 members of, sharing profits not prima facie partners, 12, note (m) 
 
 BUILDINGS 
 
 on partnership property, 330, 331 
 
 BUSINESS, 
 
 of partnership, limits the authority of a partner to act for firm, 124 el seq. 
 right to transact, 301 
 
 unless otherwise agreed, 10, 302 
 agreement not to carry on, 436 
 
 when implied, 442 
 
 specific performance of, 437, and note (o) 
 vendor and purchaser of, when partners, 28 
 power of partner to extend, 137 
 
 to alter, 315, 316 
 untrue statements as to nature of, liability for, 166 
 effect of selling on right to carry on, 440, 441 
 effect of award disposing of, 442 
 of partnership, agreements as to, 412 
 profits of distinct, how far to be accounted for, 310-313 
 place of, power of majority to decide upon, 315 
 carried on abroad, income tax when payable for, 394, note (c) 
 refusal to meet on matters of, ground for dissolution, 581 
 hopeless state of, ground for dissolution, 576 
 
 See Goodwill 
 
 CALLS, 
 
 proof for future, in bankruptcy, 708, note (w) 
 
 CANCELLATION 
 
 See Rescission of Contract 
 
 CAPACITY OF PARTNERS, 71 
 infants, 74 
 lunatics, 76 
 married women, 77 
 corporations, 78 
 companies, 78 
 aliens, 72 
 felons, 73 
 outlaws, 73 
 
 CAPIAS. See Execution. 
 
 CAPITAL 
 
 generally, 320 
 
 how distinguished from advances, 320 
 
 action by one partner against another for not contributing, 563 
 
 of the firm, agreements as to, 414 
 
 interest on, 389 
 
 when payable out by instalments, 390, note (o) 
 bequest of partners, what it passes, 619 
 increasing capital, 132, 321 
 loss of, ground for dissolution. 576 
 continued employment of, 521 et seq 
 losses of, how shared, 349 
 paying profits out of, 394, note (e) 
 withdrawing, 321 
 should be money, 415
 
 840 INDEX. 
 
 [The paging refers to the [*] pages.] 
 CARRIERS, 
 
 actions against, 281, 282 
 co-partners need not be joined, 282 
 notice to one of a firm of, effect of, 143 
 
 CARTS, 
 
 names on, evidence of partnership, 89 
 CERTIFICATE, 
 
 staying bankrupt's, until partnership accounts are taken, 752, note (s) 
 
 annulling adjudication after grant of. 642 
 See Bankruptcy ; Order of Discharge 
 
 CESTUI QUE TRUST, 
 
 liability of, to indemnify trustee, 373 et seq. 
 proof by, in bankruptcy of trustee, 717 
 how far right of double proof, 745, 749 
 of partner's share not a partner, 584 
 rights of against executors of deceased partners, 614 
 See. too, Breach of Trust 
 
 CHAMBERS. See Originating Summons 
 
 CHANCERY DIVISION. 
 
 transfer of proceedings to, when necessary, 598 
 actions between partners should be brought in, 491 
 
 CHANGE IN CONSTITUTION. See Majority 
 one dissentient can forbid, 315 
 
 CHANGE IN FIRM, 
 effect of, 113 
 
 on sureties, 117 
 
 on securities, 117 
 
 on equitable mortgages, 119 
 
 on lien of solicitors, 120 
 
 on actions by and against it, 284 
 
 as regards set-off, 291, 296 
 
 on property of firm, 336 
 
 CHARGE OF DEBTS 
 
 on estate of deceased partner, effect of, 260 
 
 CHARITABLE USES ACT, 
 
 share of partner in partnership assets within, 348 
 
 CHATTELS REAL, 
 
 not within the doctrines of reputed ownership, 678 
 
 CHEMISTS AND DRUGGISTS, 
 
 partnership between unqualified, 98, note (I) 
 
 CHEQUES, 
 
 firm bound by, though drawn by one partner, 133 
 
 if not post-dated, 133 
 
 direction by partner to bankers not to pay, effect of, 133 
 
 of directors, 133, note (d) 
 
 CHOSES IN ACTION, 
 
 application of doctrine of reputed ownership to, 678 
 
 shares are, 678, note (k) 
 
 debentures are, 678 
 
 devolve on surviving partners, 341 
 
 CIRCULARS, 
 
 evidence of partnership, 89 
 notice of dissolution by, 222, 223
 
 INDEX. 841 
 
 [The paging refers to the [»] pages.] 
 CLERGY, 
 
 may be partners, 71 
 
 CLERKS, 
 
 notice to, effect on firm, 143 
 sharing profits, when partners, 13 
 
 CLUBS, 
 
 not partnerships, 50 
 
 can be wound up under the Companies act, 1862, 50, note (?') 
 
 need not be registered under, 50 
 
 liability of managers of, 45 
 
 interference in internal regulations of by Court, 466 
 
 COACH OWNERS, 
 
 partners in profits only, 13 
 liability of, for each other's negligence, 149 
 for fodder, &c. , 179 
 
 CODE CIVIL, 
 
 definition of partnership in, 2 
 
 COGNOVIT, 
 
 given by one partner, 272 
 
 COLLIERY. See Mines 
 
 COLLUSION, 
 
 by one partner, effect of as regards co-partner, 267, 279 
 effect of, as regards rescission of agreements between executors of de- 
 ceased and surviving partners, 488 
 releases given by, 145, 146 
 
 COLONIAL JUDGMENT, 
 
 does not merge debt for which it is obtained, 255, note (s) 
 
 COMMENCEMENT, 
 
 of partnership, 20 et seq. 
 
 presumptive date of, 201 et seq., 412 
 
 agreements as to, 412 
 of liability of partners for each other's acts, 201 et seq. 
 
 COMMISSION, 
 
 effect of dividing, between partners, 28 
 
 of bankruptcy. See Bankruptcy 
 
 duty of partner to account to firm for, 307, note (r), 309, note (6) 
 
 partners cannot charge, 380 
 
 COMMITTEE, 
 
 of lunatic partner, 578 
 
 exercising right of pre-emption, 578, note (wt) 
 
 COMMON LAW, 
 
 legality of companies at, 101 
 
 extent of liability of partners at, 200 
 
 actions by one partner against co-partner, 562, &c. See Action 
 
 COMMON PARTNER. See Connected Firms 
 actions between firms with, 267, 569 
 adjudications of bankruptcy incases where, 638, 641 
 creditors of firms with, how treated on bankruptcy, 696 
 proof of debts against firms with, 724 
 
 COMMON STOCK, 
 
 not essential to partnership, 12, 13
 
 842 INDEX. 
 
 [The paging refers to tlie [*] pages. ] 
 COMMUNITY 
 of loss, 10 
 of profit, 12. See Partnership ; Profits ; Losses 
 
 COMPANIES. 
 
 distinguished from partnerships and corporations, 4, 5 
 
 incorporated, 5 
 
 unincorporated, 5 
 
 illegal. See Illegal Partnerships 
 
 promoters of, not partners, 23, 24 
 
 subscribers to inchoate, not partners, 24 
 
 banking, 95, 96, and note (z) 
 
 may be partners, 78 
 
 may be petitioning creditors, 633 
 
 when subject to bankruptcy law, 623 
 
 whether dissolved by bankruptcy of members, 649 
 
 proof of debts by, 707 
 
 proof by against estate of shareholder, 739 
 
 COMPANIES ACT, 1862, 
 
 club need not be registered under, 50 
 
 may be wound up under, 50, note (i) 
 
 COMPETITION, 
 
 by one partner with firm not allowed, 312 
 remedy of partners in case of, 312 
 
 COMPENSATION 
 
 for trouble, 380. See Contribution 
 
 COMPOSITIONS IN BANKRUPTCY, 
 generally, 754 
 joint, effect of, on separate liability, 238 
 relation back of trustee's title in, 755 
 registration of, 756 
 
 COMPOUND INTEREST 
 
 in case of bankers when payable, 390, note (s) 
 liability to account for, 531. See Interest 
 
 COMPROMISE, 
 
 power of one partner to bind firm by, 136 
 
 CONCEALING NAME 
 
 and yet holding out, 42 
 
 CONCEALMENT. 
 
 when a fraud, 480, and note (m) 
 
 of firm name, effect of, on doctrine of holding out, 45 
 
 CONDITIONAL 
 
 offer to take shares, 24 
 
 CONDITIONS, 
 
 what are precedent and whatnot, 416 
 
 contracts of partnership on, 20 et seq. 
 
 in partnership articles. See Articles of Partnership 
 
 CONDUCT 
 
 of partners, agreements as to, 418 
 
 effect of as regards rights of co-partners, 116, 117, 267 — 270 
 See also Holding Out 
 misconduct when a ground for dissolution, 466, 580. See Injunction; 
 
 Dissolution 
 of proceedings, where joint and separate creditors actions, 598, note (n)
 
 INDEX. 843 
 
 [The paging refers to the [*] pages. ] 
 CONFIDENCE, 
 
 destruction of, a ground for dissolution, 580 
 
 CONNECTED FIRMS. See Common Partner 
 actions between, 267, 569 
 notice to one when notice to both, 141 
 adjudication of bankruptcy against, 637 
 creditors of, regarded as separate creditors, 693 
 proof by one against the other in bankruptcy, 724 
 double proof against, in the event of bankruptcy, 748 
 action against, not necessarily multifarious, 603, 604 
 liability of, on each others' bills, where name is the same, 181 et seq. 
 
 CONSENT 
 
 to retirement of partner from firm, 573 
 to transfer of share, 363 
 
 necessity of, 363 
 
 how given, 364, 365 
 
 CONSIDERATION 
 
 of a contract of partnership, 63. Book I., cap. II. 
 of the recovery back of premiums, 64 
 
 in cases of fraud, 64 
 
 where the consideration has failed, 65 
 
 where no time was fixed for the continuance of the partnership, 66. 
 for discharge of old partner, 242 
 
 CONSOLIDATION. See Amalgamation 
 
 of joint and separate estates in bankruptcy, 695 
 of proceedings in bankruptcy, 638, 643 
 
 CONSTRUCTION 
 
 of partnership articles, 406, et seq. See Articles of Partnership 
 
 CONTEMPLATED 
 
 partnerships, 20 et seq. 
 
 CONTINUATION OF PARTNERSHIP, 121 et seq. 
 
 effect of, on application of partnership articles, 410, 411 
 as regards the duration of sub-partnership, 122 
 
 CONTINUING PARTNERS. See Surviving Partners 
 
 promise to look to, effect of on discharge of retired partner, 242 
 treating as sole debtors, 243 
 
 CONTRACTS 
 
 of loan, how distinguished from partnerships, 15 and Add. 
 of partnership, 10 el seq. See Partnership 
 evidence of, 80 et seq. 
 
 how created and how dissolved, Book I., and Book IV. 
 unconcluded, 19 
 conditional, 20 
 
 formal, to be drawn up, effect of on commencement, 413 
 consideration of, 63 
 disabilities created by, 116, 624 
 proof of, 80 et seq. 
 duration of, 121 et seq., 413 
 rescission of, 479, 482 
 specific performance of, 475 
 dissolution of, 570 et seq. See Dissolution 
 part performance of, 83 
 construction of. See Articles of Partnership
 
 844 INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 CONTRACTS— continued. 
 
 by and with partners 
 liability on, 176 
 
 when under seal, 177, 273 
 
 when not under seal, 177. See, too, Bills of Exchange and 
 
 Promissory Notes 
 when firm is not named, 178 
 not joint and several, 192 et seq. 
 
 remedy on against assets of deceased partner, 192, 193 
 when confined to the funds of the firm, 201 
 conduct of one partner a defence, 116, 267, 268 
 effect of change of firm on, 284 
 form of, 176, 179 
 who to sue on, 274, 275 
 when firm cannot sue on, 282 
 effect of having had benefit of, 180 et seq. 
 
 through an agent, who to sue on, where there has been a change 
 amongst the partners, 286 
 power of partner to enter into, 134 
 power of partner to vary, 134 
 actions by or against partners on. See Actions 
 action for breach of express, between partners, 563 
 when required to be signed, only binds partners who sign, 179 
 and torts, distinction between, 198, 199 
 pending by partnership, how dealt with on dissolution, 558 
 distinct, double proof in bankruptcy in respect of, 748 
 ratification of, 371, 388 
 
 CONTRIBUTION, 
 
 foundation of right to, 367 el seq. 
 right to, excluded by 
 agreement, 369 
 fraud, 369 
 disobeying instructions, 370 
 
 application of this doctrine to directors, 368, note (/ 
 gross negligence, 378, 387 
 illegality of transaction, 104, 372, 377 
 agent's right to from his principal, 369 
 self-constituted agent's right to, 372, 373 
 trustees' right to, 373, 374 
 co-owners, no right to, 60 
 partners' right to 
 generally, 369 
 in respect of 
 
 services performed for firm, 380 
 
 after dissolution, 381 
 in India, 381 
 outlays and advances, 381. See Allowances 
 debts, liabilities, and losses, 385 
 
 when attributable to one partner rather than to another, 
 
 386 
 when attributable to one partner's misconduct or negli- 
 gence, 387 
 when attributable to acts done bond fide, but without au- 
 thority, 386 
 when firm has adopted them, 388 
 illegal transactions, 377, 388, note (g) 
 actions at law between partners for, 564, 566 
 difference formerly between law and equity, as to, 374 et seq.
 
 INDEX. 845 
 
 ("The paging refers to the [*] pages.] 
 CONTRIBUTION— contin tied. 
 
 as to indemnity before loss has been sustained, 375. And Add. 
 amount payable by each contributory, 376 
 
 as to contribution, when some of the contributories are insolvent, 
 376, 741 
 liability of estate of deceased partner to, 211, 262 
 between wrongdoers, 377 
 See Indemnity 
 
 CONVERSION 
 
 of bhare of deceased partner, when it is bequeathed for life, 615, 620 
 of joint estate into separate, by partnerships, and vice versa, 334 et seq., 
 697 
 agreements for, when not binding, 698 et seq. 
 if fraud, 698 
 if executory, 698 
 
 if lien of parties is to continue. 699 
 evidence of, 700 
 
 effect of reputed ownership on, 700 
 holding out on, 700 
 of joint debts into separate and vice versa, 703 
 
 of partnership property, effect of fraudulent, on right of proof in bank- 
 ruptcy, 724 
 of realty into personalty, 343 et seq. 
 
 in cases of partnership for fiscal purposes, 347, and note (a) 
 doctrine as to, does not apply to co-owners, 347 
 may be prevented by agreement, 346 
 
 CONVEYANCE 
 
 when act of bankruptcy, 631 
 See Deed; Fraudulent Conveyance 
 
 CONVICTS 
 
 cannot be members of a partnership, 71 
 administrator of property of, 74 
 to what extent disabled, 74 
 
 CO-OWNERS 
 
 not co-partners. 51 
 joint purchasers of goods, 53 
 
 part owners sharing the produce of their property, 17, 18, 53, 347 
 profits, 18, 331 
 gross returns, 18 
 when common property to be considered partnership property, 18, 331 
 
 et seq. 
 co-ownership and co-partnership compared, 52 
 doctrine of conversion does not apply to, 347 
 of land, 58, 331-333 
 of mines, 54 
 of patents, 62 
 of copyrights, 62 
 of race-horses, 18, 51 
 of ships, 60. See Ships 
 of newspaper, 364, note (w) 
 admissions of, 128, note (I) 
 lien of, 57, 60, 355 
 remedies of, inter se, 57-62 
 receivers appointed for, when, 548 
 
 CO-OWNERSHIP 
 
 and co-partnership compared, 52
 
 846 INDEX. 
 
 [The paging refers to the [*] pages.] 
 CO-PARTNERS AND CO-PARTNERSHIP, 
 See Partners: Partnership 
 
 COPYRIGIHT, 
 
 registering in name of partners, 112, 115 
 rights of co-owners of, 62 
 indivisibility of, 62, note (k) 
 
 CORPORATIONS, 
 
 distinguished from partnerships and companies, 4 
 
 persons when, 6, note (d) 
 may be in partnership with individuals, 78 
 may petition under Bankruptcy act, 633 
 presuming to act as, 93 
 name of, may be a trade mark, 114, 115 
 
 COST BOOK MINING COMPANY, 
 
 shares in, how far real estate, 348 
 
 liability of shareholders in, for goods supplied to the mine, 133 
 for money borrowed, 133 
 See, also, Mines 
 
 COSTS, 
 
 costs of trustees in bankruptcy, how paid as between joint estate, 694 
 
 separate estates, 694 
 of action for dissolution, 517; on ground of lunacy, 579 
 
 account, 517 
 of administration action by separate creditor paid in priority to joint 
 
 creditors, 612, 613 
 one partner bound to idemnify firm against, if he sues in its name, 271 
 indemnifying trustee against, when solvent partners sue, 289 
 firm liable for, in cases of breach of trust, 161 
 
 CO-SURETIES. See Sureties 
 
 COUNTER-CLAIM, 
 
 what may be set off in, 290 
 
 COURT, 
 
 administration of deceased partner's estate by, protects executors, 594 
 
 COURT IN BANKRUPTCY, 
 
 jurisdiction of, to ascertain share of deceased partner, 649 
 
 COVENANTS, 
 
 liability of partners on, 177 
 
 in the case of retired partners, 243 
 what are joint, and what are several, 280 
 with one partner on behalf of firm, 277 
 
 liability several as well as joint, when, 193, 437, note (o), and Addenda 
 actions by partners on. 273 
 
 one partner against another on, 563 
 when firm cannot sue on, 277 
 set-off in actions on, 290 et seq. 
 not to carry on business, 436, 437, note (o) 
 not to sue, 
 
 partner may join in suing notwithstanding, 270 
 
 when not equivalent to a release, 237 
 to pay out of funds of partnership only, effect of, 201 
 
 CREDIT, 
 
 of firm, destruction of, not per se a ground for dissolution, 581 
 See Borrowing Money.
 
 INDEX. 847 
 
 [The paging refers to the [*] pages. ] 
 CREDITOR, 
 
 meaning of the phrase a partner is a creditor of, or a debtor to, his own 
 
 firm, 110 
 of firm not a separate creditor of members, 198, &c. See Debts 
 joint and separate, who is, 701 et seq. 
 
 secured, position of, in the case of the bankruptcy of the debtor, 714, 749 
 of firm has no lien on its property, 334 
 
 petition by, for adjudication of bankruptcy against partners, 633 et seq. 
 rights of 
 
 against partners, 
 
 dormant partners, 125, 192, note (d), 212. See Dormant 
 
 Partners 
 the estate of a deceased partner, 594 et seq. 
 
 See, also, Deceased Partner; Executors; 
 Liability 
 of a bankrupt partner, 729. See Bankruptcy 
 of bankrupt firm, 720, 743 
 incoming partners, 205 et seq. 
 
 quasi partners. See Quasi Partnership; Holding Out 
 retired partners, 223 et seq. 
 
 See Retired Partner; Liability 
 surviving partners, 602. See Surviving Partners 
 effect of dissolution of partnership on, 134. 586 
 not affected by agreements between partners, 239. See Notice 
 of deceased partner, to an account, 494 
 conflict of different classes of creditors, 598 
 loss of rights of, 
 
 by payment, 225 et seq. See Appropriation of Payments 
 
 by dealings with the continuing partners, 242, 253 
 
 by dealings with the surviving partners, 229 
 
 by merger of debt, 254 et seq., 703 
 
 by lapse of time, 257 et seq., 597. See Limitations, 
 
 Statute of 
 by release, 237 
 
 by substitution of debtors and securities, 239 et seq 
 CREDITORS' DEED, 756 
 
 trustees of, not partners, 30 
 assent of one partner to, 135 
 by partners, 631 
 
 by one partner for creditors of firm, 631 
 CRIME, 
 
 partnership for sharing profits of, 93, and note (n) 
 CRIMINAL LAW, 
 
 remedy of one partner against another, 456, 457 
 
 CRIMINAL PROSECUTION 
 
 of partner, ground for dissolution, 582 
 
 CROWN, 
 
 prerogative of, as regards shares, in partnership, 340, 583, note (t) 
 CUSTODY 
 
 of books of firm, agreements as to, 420. See Books 
 CUSTODY OF FIRM, 
 
 misapplication of money in, consequence of, 150 — 162 
 CUSTOMERS, 
 
 allowance for treating, 383 
 
 right to solicit old, 440, and note (g) 
 See Dissolution and Notice
 
 848 INDEX. 
 
 [The paging refers to the [*] pages.] 
 CUSTOMS 
 
 of merchants as to payment of interest, 389 
 
 of trade, effect of on reputed ownership, 677, note (y) 
 
 rendering agent personally liable, 177, note (?/t) 
 
 illegal, unknown to principal, effect of, 370, note (I), 372, note (t) 
 
 DAMAGE, 
 
 to firm, when necessary to support action by it, 278 
 
 DAMAGES, 
 
 as to actions between partners for, 561 
 
 may be set off against debts, 658 
 
 what fraud sufficient to support an action for, 479, 481 
 
 unliquidated when not provable in bankruptcy, 707 
 
 action for account not dismissed because plaintiff entitled to, 458 
 
 co-owners no right of action for by way of contribution, 60 
 
 DATE, 
 
 of dissolution in cases of lunacy, 579 
 
 misconduct, 579 
 other cases, 572 
 See Commencement 
 
 DEALINGS, 
 
 with one partner only, 179 
 
 bona fide with bankrupt partner, 681 
 
 with solvent partners, 671 
 
 by creditors with continuing partners, effect of, on rights against retired 
 
 partners, 242 et seq. 
 by one partner with his co-partners, 305 
 
 DEATH OF PARTNER, 
 
 dissolution of partnership by, 590 ex seq. See the Analysis of Con- 
 tents, Bk. IV. c. 3, and infra, Deceased Paetnee, Executors, 
 Surviving Partners, Dissolution 
 effect of, on ad j udication of bankruptcy, 637, 638 
 on right to sue, 288 
 
 1. As between partners, 590 
 
 works dissolution, 590 
 
 return of premium in case of, 67 
 
 accounts on, 514 
 
 position of executors of deceased partner, 590, 593 
 
 surviving partners, 591 
 account of subsequent profits, 521 et seq., 592 
 making co-partner executor, 593 
 succession duty on, 594 
 effect of as regards goodwill, 443 
 
 2. As regards joint creditors, 211 
 
 position of executors of deceased as regards creditors of firm, 211, 594 
 tabular view of cases showing where estate of deceased partner discharge 
 
 ed, and where not, 595 — 597 
 administration of deceased partner's estate by creditor, 598 
 rights of joint and separate creditors contrasted, 598 
 form of order for administration by creditor, 600 
 personal liability of executors, 593, 604 
 liability of assets by acts of testator, 605 
 direction by will to carry on trade, 606 
 trust to carry on business, 607 
 amount of assets liable, 609 
 right of creditors to stand in place of executors, 606, 607
 
 INDEX. 849 
 
 [The paging refers to the [*] pages.] 
 DEATH OF PARTNER— continued. 
 
 3. As regards separate creditors, legatees, &c. 
 
 separate creditors, legatees, &c, must look to executors, 610 
 
 surviving partners not proper parties, 611, 612 
 
 account between executor and surviving partner, 613, 614 
 
 arrangements between executor and surviving partner, 614 
 
 rigbts when share of deceased not got in, 614 
 
 interest and profits, 615 
 
 profits made since death, 527, 616 
 
 accounts of when ordered, 616, 617 
 when refused, 617 
 executors continuing business, 614 
 specific bequests of shares, 619 
 
 tenant for life under, 620, 621 
 duty of executors to sell shares, 620 
 loans by executors, 618 
 executors becoming partners, 618 
 
 DEBENTURES, 
 
 not within doctrine of reputed ownership, 678 
 DEBTOR, 
 
 partner in what sense debtor to firm, 110, 401 
 substitution of, effect of on liability of firm, 239 et seq. 
 DEBTS, 
 
 of partnership, effect of, on its duration, 121 
 payment of, out of assets of deceased partner, 194, 195, 196 
 to one partner, 134 
 after dissolution, 134 
 to bankrupt partner, 668 
 ot debt not due to firm, 134 
 by taking bill in payment, 136 
 release of, by one partner, 135, 137 
 receipt for, by one partner, 135 
 
 by surviving partner, 284 
 transfer of, assent of one partner to, 135 
 one partner taking shares as security for, 141 
 one partner settling, 136 
 promise by one partner to pay, 136 
 tender of, to one partner, 136 
 
 liability of partners for. See Creditor ; Liability 
 extinction of by doctrine of merger, 254 el seq. , 703 
 
 by payment, 225 et seq. See Appropriation of Pay- 
 ments 
 by release, 237 et seq. See Release 
 by substitution of debtors, 239 et seq. 
 by lapse of time, 257 etseq., 508, 597. See Limitation, 
 
 Statutes of 
 by discharge of bankrupt, 752 
 by arrest, 238 
 of partnership when joint and several, 193, 199 
 claim for against assets of deceased partner, 192, 193 
 set-off of, 290. See Set-off 
 buying up, at less than their nominal value, effect of 
 
 in bankruptcy, 663 
 assignment of, effect of, as regards set-off, 291 
 to continuing partners, 450 
 may now be made, 285 
 assignee of, may sue, when, 285, 652 
 
 right of partner to insist on payment of, 351, 352, and note (q) 
 * 31 LAW OF PARTNERSHIP.
 
 850 INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 DEBTS— continued. 
 
 agreement by partner to bring in good, 417 
 
 guarantee against, giving to incoming partner, 418 
 
 agreements as to getting in, 448 
 
 right of solvent partners to get in, 670, 671 
 
 in what cases new partner may join in action for, 285 
 
 application of doctrines of reputed ownership to, 678, 679 
 
 order in which joint and separate are paid, 598, 709, and note (z) 
 
 what are joint and what are separate, 701. See Joint Debts 
 
 separate. See Separate Debts 
 
 proofs ot bankruptcy, 707. See Bankruptcy 
 
 when sufficient to support bankruptcy petition, 634 
 
 vest in trustee in bankruptcy, 652 
 
 DECEASED PARTNER, 
 
 actions against estate of, parties to, 460 
 assignment of share of by executors, 450 
 administration of estate of 
 
 by the surviving partners, 591 
 by creditors of the firm, 598 
 
 by the separate creditors, legatees, or next-of-kin, 610 
 adjustment of the conflicting rights of creditors in action for, 598 
 
 joint and separate creditors, 598 
 secured creditors, 602 
 form of order for, 600 
 effect of judgment for, on right to sue surviving partner, 195, 603, 
 
 612 
 set-off in, 291 et seq. 
 account ot assets of 
 
 where they have been improperly employed in trade, 606, 724 
 right to, by separate creditors and legatees, 494 
 where share of deceased not got in, 614 
 appointment of a representative of. 591 
 liability of survivors for assets of. 614 
 liability of estate of 
 
 to creditors of the firm, 194, 594 
 in respect of what occurred before death, 594 
 in respect of what occurred after death, 604 
 table of cases, 595—597 
 where assets have been continued in the partnership business, 
 by direction of deceased, 606 et seq., 722 
 where no direction, 617, 724 
 in case of bankruptcy, 722, note (g) 
 after judgment against the surviving partners, 194, 257 
 notwithstanding the Statute of Limitations, 262 
 for torts, 595 
 discharge of estate of, from debts of firm 
 
 by appropriation of payments, 229, See Appropriation of Pay- 
 ments 
 by Statute of Limitations, 597 
 by dealings with the surviving partners, 249, 596 
 none where dealings induced by fraud, 252 
 specific performance of agreements relative to share of, 432 
 executors of, may be joined as defendants with survivors, when, 288, 460, 
 
 598, 603 
 rescission of contracts relating to his share, 487, 488, and note (n) 
 where executors partners, 488 
 where they are not, 487 
 
 See Death ; Executors ; Surviving Partners
 
 INDEX. 851 
 
 [The paging refers to the [»] pages.] 
 DECEIT, 
 
 action for damages for, 162 
 
 distinguished from other actions based on fraud, 163 
 See Fraud 
 
 DECREE, 
 
 for dissolution of partnership, 516 
 
 in case of lunacy, 577 
 for the administration of the estate of a deceased partner, 600 
 for partnership account, 516 
 
 'See Account ; Dissolution ; Judgment ; Order 
 
 DEED, 
 
 one partner has no authority to bind firm by, 136, 137 
 necessity of, to dissolve a partnership created by deed, 572 
 not necessary to prove partnership, 87 
 who can sue on, 177 
 effect of removing seal from, 238 
 
 of partnership, general rules for construction of, 406, et seq. 
 power to vary, 409 
 
 DEFENCE, 
 
 to actions by partners, founded on conduct of one partner, 116, 117 
 
 alteration in the law as to, by the Judicature acts, 267 et seq. 
 to actions for an account and discovery, 506 
 
 accord and satisfaction, 515 
 
 account stated, 512 
 
 award, 514 
 
 denial of partnership, 507 
 
 payment, 515 
 
 release, 516 
 
 Statute of Limitations, 508 
 
 laches, 466 et seq. 
 
 illegality, 105 
 
 waiver, 516 
 
 DEFINITIONS 
 
 of partnership, 2 et seq. 
 
 DELAY 
 
 of plaintiff, when a bar to relief, 467. See Laches; Limitation, 
 Statute of 
 
 DEMURRER, 
 
 laches could not be taken advantage of by, 475 
 
 DENIAL OF PARTNERSHIP, 
 
 effect of, in action for account and discovery, 506 
 
 as regards the appointment of receiver, 552 
 
 DEPOSIT OF DOCUMENTS, 
 
 effect of as regards the doctrines of reputed ownership, 678. See Equit- 
 able Mortgages 
 
 DESTRUCTION OF ACCOUNTS, 
 
 consequence of, in taking accounts, 405 
 
 DEVASTAVIT, 
 
 by executor, proof for, 738, note (j) 
 
 DEVISEES, 
 
 of land and trade carried on on it, how far partners, 332, 333
 
 852 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 DEVOLUTION, 
 
 of partnership property, 341 
 legal estate in land, 341 
 choses in action, 341 
 chattels, 342 
 goodwill, 342 
 
 DIRECTION, 
 
 by deceased partner to carry on trade, effect of, 610 
 
 DIRECTORS, 
 
 liability of, for work, &c, done by their authority, 45 
 cheques drawn by, 133, note (d) 
 right of, to contribution, 375 
 
 DISABILITIES, 
 
 of partners, 116. 117, 268 
 under Bankruptcy law, 624 
 
 DISCHARGE. 
 
 by one partner, effect of, 135 
 
 from liability. See Liability. 
 
 of bankrupt. See Certificate and Order of Discharge 
 
 DISCLAIMER, 
 
 by trustee of bankrupt's onerous property, 651 
 
 DISCLOSURE, 
 
 duty of partner to make, to co-partners, 305 et seq., 306 
 
 DISCOVERY. See Inspection 
 
 of partners where name of firm is used, 265 
 
 right of partner to, 501 
 
 in actions for account, 404, 501 
 
 defences to actions for, 506 
 
 accord and satisfaction, 515 
 
 account stated, 512 
 
 award, 514 
 
 waiver, 516 
 
 denial of partnership, 507 
 
 release, 516 
 
 Statute of Limitations, 508 
 
 laches, 466 
 
 illegality, 102 
 where right to depends upon a preliminary question, 507, 508 
 by unlicensed brokers, 97 
 DISCRETION, 
 
 power of partner to act on his own, 127 
 as to joining firm, 20, 433, 555. See Option 
 of court 
 
 as to interfering between partners, 464 el seq. 
 See, also, Injunction ; Specific Performance 
 
 DISPUTES 
 
 between partners, &c, mode of settling, 313. See MAJORITY 
 where they relate to ordinary business, 314 
 where they relate to a change in the nature of the business, 315 
 all partners entitled to be heard, 315 
 as to internal matters, courts do not interfere, 466 
 
 DISSENTIENTS, 
 
 powers of, 315. See MAJORITY 
 
 retirement of, 317 
 
 offer of indemnity to, 318
 
 INDEX. S53 
 
 [The paging refers to the [*] pages.] 
 DISSOLUTION, 
 
 actions for, 461, 491 etseq. 
 parties to, 459 et seq. 
 next friend of lunatic may bring, 579 
 should be brought in Chancery Divison, 491 
 how statement of claims should be framed, 491 
 where partnership is at will, 491 
 
 where partnership may be wound up under the Companies act 
 491 
 not seeking, rule as to granting relief in, 464 et seq. 
 
 parties to, 462, 463 
 for share of assets after a, 569 
 causes of 570 et seq. 
 
 will of any partner, 571 
 
 unless no right of, under agreement, 10, note (e) 
 impossibility of going on, owing to 
 
 the hopeless state of the partnership business, 576 
 the lunacy of one of the partners, 577 
 misconduct, &c, 580 
 death, 586 et seq. See Deceased Partner 
 retirement, 573 
 expulsion, 574 
 transfer of interest, 583, viz. 
 
 by the assignment by one partner of his share in the partner- 
 ship, 363, 583 
 by the taking of a share in execution under a fi. fa., 359. and 
 
 note (rf), 583 
 by bankruptcy, 577, 583. See Bankruptcy 
 
 of one partner, 649, 666 
 formerly by marriage of female partner, 583 
 the occurrence of some event which renders the continuance of the 
 partnership illegal, 585 
 war, 585 
 notice of 
 
 importance of giving, 213, 214 
 each partner has a right to give, 214 
 how to be given, 222 
 what amounts to, 221 et seq., 571 
 
 insufficient notice of, 426 
 effect of, 215 
 
 as regards the doctrines of reputed ownership, 680 
 as regards future acts, 210 et seq. 
 injunction against circulating, 539 
 time from which dates, 572 
 in case of lunacy, 579 
 in case of misconduct, 582, 583 
 consequence of, 586 
 
 as regards past acts, 240 
 
 future acts, 210 
 return of premium, 65. See Premium 
 apportionment of premium, 64 et seq. 
 lien of solicitors, 120 
 actions by and against the firm, 284 
 getting in debts, 448, 669 
 
 conversion of joint into separate property, 336 
 creditors, 586 
 
 when they agree to look for payment to continuing 
 partners only, 241 . 
 partners, 587
 
 S5-A INDEX. 
 
 [The paging refers to the [*] pages. ] 
 DISSOLUTION— continued. 
 
 right to carry on business, 437 • 
 
 bills endorsed after, 213, 214, 673 
 
 torts, 214 
 
 property acquired after, 326 
 
 articles, 410 
 
 pending contracts, 558 
 
 payment for services rendered after, 381 
 how far a partnership continues after, 217 
 deed not necessary on, 572 
 
 award on submission of all matters in difference, 426 
 agreements as to, 425, See Articles of Partnership 
 driving a partner to, 497, 575 
 provision for, in case of insolvency, 425 
 injunctions in actions for, 491, 541. See Injunctions 
 rescission of agreements made on, 448 
 
 receivers, appointment of in actions for, 547 et seq. See Receiver 
 accounts on, 421, 518 et seq. 
 account without, 494 et seq. See ACCOUNT 
 
 of profits since, 326, 521 
 sale of partnership property on, 555 
 valuation of share on, 429 
 
 stamp on assignment by outgoing partner, 450 
 clauses in deeds as to, 425 
 
 part payment by continuing partner after, effect of, 263 
 of company by bankruptcy of shareholder, 649 
 
 DISTANCES, 
 
 measurement of 437, note (o) 
 
 DISTINCT CONTRACTS, 
 
 double proof in respect of, 748 
 
 DISTINCT TRADES, 
 
 effect of carrying on as regards proof in bankruptcy 
 by a separate estate against a joint estate, 725 
 by a joint estate against a separate estate, 736 
 by a creditor in both trades, 747, 748 
 
 DISTRESS 
 
 in name ol firm, 137 
 
 on partnership goods for rent due from partners separately ; see ex parte 
 Parke, 18 Eq. 381 
 
 DIVIDENDS, 
 
 payment of, out of capital, 394, note (e) 
 lipportionment of, 621 
 declaration of, in bankruptcy, 693 
 See Profts 
 
 DIXON, 
 
 his definition of partnership, 2 
 
 DOCUMENTS, 
 
 proof of partnership by informal, 85 
 
 production and inspection of, in actions, 501. See Production of 
 Documents 
 DOMAT, 
 
 his definition of partnership, 2 
 
 DOMICIL, 
 
 of partners, 72 
 
 effect of, on partnership in case of war, 72, 73
 
 INDEX. 855 
 
 [The paging refers to the [*] pages. ] 
 
 DOORS, 
 
 names on, evidence of partnership, 89 
 
 DORMANT PARTNER, 
 
 liabilities of, 10, 125, 192, note (d) 
 on written contract, 178 
 
 on contracts in which he is not named, 45, 212, 275, note (s) 
 authority of, 125 
 
 position of, and that of mere lender compared, 16 
 who is not, 212, note (h) 
 effect of retirement of, 212 
 
 where continues to hold himself out, 216 
 notice of retirement of, when necessary, 213 
 
 discharge of, by doctrine of appropriation of payments, 229. See Lia- 
 bility 
 by substitution of debtors, difficulties of, 245 
 when to sue with others, 276 
 actions against, 281 
 set-ott' in actions by and against, 294 
 may be made bankrupt, 633 
 ■ may be included in joint adjudication, 631 
 how affected by doctrines of reputed ownership, 689 
 
 when dead, 691 
 how affected by judgment against co-partners, 255, note (s). And Ad- 
 denda 
 
 DOUBLE PROOF, 
 
 by principal and surety, effect of, 719 
 
 rule against, 719, 743 
 
 when allowed, 747 
 
 election in case of, 743 
 
 when creditor holds security, 749 
 
 DRAFT 
 
 of agreement evidence of partnership, 89 
 
 DRAWINGS, 
 
 monthly, agreements as to, 418 
 
 DURATION 
 
 of partnership, 121 et seq. See Dissolution 
 agreements as to, 413 
 after dissolution, 217 
 
 effect of, on partnership articles, 410 
 effect of taking lease, 121 
 
 outstanding debts, 121 
 after term has expired, 122 
 implied terms of, 122 
 of liability, 201 et seq. See Liability 
 commencemeat of liability, 201 
 
 of firm for acts of incoming partner, 202, 203 
 of incoming partner for acts of firm, 205 — 207 
 of promoters of companies, 45, 206 
 termination of liability, 210 
 as to future acts, 210 
 by death, 211 
 
 by bankruptcy, 212. See BANKRUPTCY 
 by retirement of dormant partner, 212 
 by dissolution of partnership, 213 
 as to pa.»t acts, 223 
 by payment, 225
 
 856 INDEX. 
 
 [The paging refers to the [*] pages,] 
 DURATION— continued. 
 
 release, 237 
 
 substitution of debtors and securities, 239 
 merger, 254 
 lapse of time, 257 
 DUTIES 
 
 of partners generally. See Analysis of Contents, Bk. Ill, 
 inter «>, 303, 304 
 
 not all to be found in partnership articles, 406 
 See also Partners 
 
 EJECTMENT, 
 
 by partners, 279 
 
 by one partner against another, 328, note (t), 562 
 
 by one co-owner against another, 58 
 
 ELECTION, 
 
 formerly between action and proof in bankruptcy, 718 
 
 between proof against joint or separate estates, 743 
 
 when made conclusive, 745 
 
 when not deemed to have been made, 746 
 
 by petitioning creditor, 747 
 
 ELECTION, PARLIAMENTARY, 
 
 right of partner to vote at, in respect of partnership property, 348 
 
 EMBEZZLEMENT 
 
 by servants sharing profits, 13, note (r), 457, note (a) 
 by partner, 457 
 
 ENEMY, 
 
 partpership for trading with, illegal, 73, 92 
 
 ENGRAVINGS, 
 
 registration of, under name of firm, 113 
 
 EQUALITY 
 
 of shares in partnership, 348, 349 
 
 of profit and loss but not of capital, 403 
 
 EQUITABLE MORTGAGES 
 
 for advances, effect of change of firm on, 119, 120 
 given by one partner on behalf of firm, 140 
 may be created or extended by parol, 119, 120, 715 
 how they affect right to prove in bankruptcy, 714 
 
 observations on, 715 
 how affected by doctrine of reputed ownership, 678 
 
 EQUITY, 
 
 differences between rules of law and, as regards contribution and indem- 
 nity, 374 
 
 difference between rules of, and bankruptcy as regards secured creditors, 
 602 
 
 remedy in, in respect of money of which the benefit has been had, 191 
 
 EQUITIES OF REDEMPTION 
 
 not within doctrine of reputed ownership, 678 
 
 • ESTATE 
 
 of deceased partner. See Death ; Deceased Partner ; EXECUTORS 
 of bankrupts. See Bankruptcy. 
 
 ESTOPPEL 
 
 by holding oneself out as partner, 40 
 discharge of retired partner by, 249
 
 INDEX. 857 
 
 [The paging refers to the [*] pages. ] 
 EVICTION, 
 
 annuity payable until, 436 
 See Ejectment 
 
 EVIDENCE 
 
 that a person is a partner or quasi partner, 80 et seq. Bk. I., cap. 4. 
 what has to be proved, 83 
 usual means of proof, 84. 89, 90 
 effect of the Statute of frauds, 80 
 where there is no writing, 80, 84 
 acts of alleged co-partner, 85 
 admissions, 87 
 
 articles of partnership need not be proved, 87 
 of future partnership, 80 
 retrospective articles, 88 
 of lunaay, 578 
 
 upon which partnership accounts are taken, 536 
 partnership books, 536 
 banker's books, 537, note {i) 
 
 See, also, Liability ; Proof of Debts ; Notice 
 
 EXCISE LAWS, 
 
 illegality of partnerships infringing, 95, 99, note (s) 
 effect of breach of, by one partner, 149 
 contribution in case of breach of, 378 
 
 EXCLUSION 
 
 from management of partnership business, 301 
 
 agreements as to, 10, 302 
 
 injunction in case of, 543 
 
 receiver in case of, 551 
 
 account in case of, 496 
 from share of profits, 395 
 
 EXECUTION 
 
 against a partner for a separate debt, 356 
 
 duty of the sheriff, 356 
 
 sheriff seizes the partnership property, 356. 357 
 
 sale of execution debtor's share, 358 
 may be by private contract, 358 
 
 rights of the other partners, 358 
 
 interpleader by sheriff, 358, note (q), 362 
 
 since the Judicature acts, 361 ; form of order, see Seton on Decrees, 
 1214, edition 4 
 
 action against sheriff by solvent partner, 568 
 
 position of the purchaser from the sheriff, 358 
 
 position of the execution debtor, 359 
 creditor, 361 
 
 purchase of interest by his co-partners, 360 
 
 dissolution of partnership by, 359, note (d), 583 
 
 injunction in cases of, 359 
 
 receiver in cases of, 359 
 against partners for their joint debts, 298 et seq. 
 
 against whom it may issue when judgment against firm, 299, 300 
 
 against what property. 300 
 
 where there is a receiver, 300, 554 
 
 where alleged debtor abroad, 300, note (/) 
 benefit of belonging to trustee in bankruptcy, 654. 675 
 when levied by seizure and sale not invalid as act of bankruptcy, 665, 675 
 seizure by sheri ft' protects creditor, 709, note (b)
 
 858 INDEX. 
 
 [The paging refers to the [*] pages.] 
 EXECUTION CREDITOR, 
 
 conflicting rights of, and trustee in bankruptcy, 674 
 See Execution 
 
 EXECUTORS, 
 
 of a deceased partner 
 
 do not become partners, 590 
 
 unless express agreement to that effect, 590 
 liabilities of, 591 
 
 to surviving partners, 591 
 
 to creditors of the firm, 594 et seq., 604 
 
 as regards what occurred in the lifetime of the testator, 594, 
 
 595, 603 
 as regards what has occurred since the testator's death, 604 
 by sharing profits with surviving partners, 604, note (I) 
 by carrying on business with the assets of their testator, 604 
 et seq. 
 where direction to carry on trade, 606 
 trust to carry on business, 607 
 liability to be made bankrupt, 593 
 to the separate creditors, legatees, and next of kin of the deceased, 610 
 where partnership was illegal, 108 
 
 the assets of the deceased are not got in, 614 
 they are the surviving partners, 528 et seq., 614 
 they enter the firm, 618 
 wilful default, 612 
 duty of, to convert share into money, 593, 620 
 
 rescission of contracts between executors and surviving partners. 487 et seq. 
 effect of part-payment by, as regards the Statute of Limitations, 262 
 injunction against, 542 
 account, stated with. 613 
 actions by and against, 288, 461, 612 
 
 parties to, 288, 461, 612 
 allowances to, in India, 381 
 illegality set up by, 108 
 loans by, to surviving partners, 615, 618 
 receiver appointed against, 548 
 
 cannot prove in bankruptcy against surviving partners, when, 722 
 rights of 
 
 as regards surviving partners, 591 
 
 where they are surviving partners. 593, 614 
 
 to interfere with surviving partners, 594 
 
 to account, 493, 591 
 
 to compel proper appropriation of payments, 591 
 
 to have the assets sold, 592, 593, 620* 
 
 as regards good-will, 443, 592 
 
 to account of profits made since their testator's death, 521 et seq., 
 
 592, 616 et seq. 
 to compensation for trouble, 592 
 to indemnity, 594, 607 
 extent of indemnity, 609 
 
 to retain balance due on the partnership account, 490 
 agreement with, is with those who prove, 19, note (z) 
 See Death; Deceased Partner 
 
 EXECUTORY AGREEMENT 
 
 not sufficient to convert joint into separate estate, 337, 698 
 
 EXPELLED PARTNER. See Expulsion
 
 INDEX 859 
 
 [The paging refers to the [*] pages.] 
 EXPENSES 
 
 of forming company, liability of promoters for, 385 
 
 of trustee in bankruptcy when paid out of joint estate, 694, 720, note (r) 
 
 separate estates, 694 
 of managing partner, 380, and note (n) 
 right of partner to charge for, 381, 382, note (ij) 
 no allowance in respect of, unless actually incurred, 384 
 to be charged to the firm, agreements as to, 418 
 action between partners for not contributing to, 564 
 See, also, Contribution 
 
 EXPULSION 
 
 of partner, 574 
 
 exercise of powers of, 411, 426, 427, 575 
 provisions in articles as to, 426, 427 
 agreements made on, when void, 486, 487 
 
 EXTENSION OF BUSINESS, 
 
 power of partners as to, 137, 315 et seq. 
 
 EXTENT, 
 
 sale of share under, 340 
 
 EXTRAORDINARY NECESSITY, 
 
 power of one partner to bind firm in cases of, 126 
 See Implied Powees 
 
 FACTORS' ACTS. 140, 141 
 
 FALSE ACCOUNTS 
 
 rendered by one partner, 165. See Accounts 
 
 FALSE STATEMENTS, 
 
 rescission of contract; for, &c, 479, 482. See Fraud 
 by one partner, liability of firm for, 162 et seq. 
 actions for, 481 
 
 FARMERS, 
 
 accounts between, 59 
 
 sharing profits when partners, 332, 333 
 
 one of a firm of, has no power to bind others by bills, 131 
 
 FELONS, 
 
 partners who are, 73, 74 
 partnership between, 93, note (n) 
 
 FI. FA. 
 
 sale of partner's share under, 340, 356 et seq. 
 dissolves the partnership, 583 
 See Execution 
 
 FIRM, 
 
 mercantile and legal view of, 110 et seq. 
 
 consequence of difference, 112 
 in what sense a debtor to or creditor of its own members, 110, 401 
 name of, 112. See Name 
 
 should be expressed in the articles, 413 
 
 partners may be registered as shareholders in, 112 
 
 as owners of copyright, 112, 113 
 a trade mark, 114 
 mistakes in, 115 
 how described in legal instruments, 112 
 each partner the agent of, 124. See Implied Powers
 
 860 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 FIRM — continued. 
 
 actions by and against 
 
 general remarks on, 115, 273 
 
 may be brought in name of, 112, 265. See Action 
 
 formerly could not sue or be sued by one of its own members, 115 
 
 at law, by another firm, if one partner was 
 common to both, 115, 116 
 conduct of one partner when a defence to an action by him and his 
 co-partners, 116, 117 
 legacy to, 113 
 
 advances to, by trustees, 113 
 
 may act in bankruptcy by one of its members, 624 
 proof of debts due to, 707 
 changes in, effect of, 113, 117. See Changes 
 as regards set-off, 297 
 
 sureties and securities, 117, 118 
 equitable mortgages, 119 
 solicitors' lien, 120 
 actions, 284 
 two firms 
 
 with common partners. See Connected Firm; Common Partner 
 actions between, 115, 116 
 
 proof in bankruptcy when one contains another, 726 
 with same name, liabilities of on each other's bills, 181 
 See Partnership; Dissolution 
 
 FIXTURES 
 
 not within the reputed ownership clause in the Bankrupt acts, 678 
 
 FOLLOWING 
 
 trust money, 162, 521 et. seq. 
 
 FOREIGN BANKRUPTCY 
 
 effect of, on proof of debts in England, 719 
 
 FOREIGN CONTRACTS 
 
 remedy on, barred by the Statute of Limitations, 259 
 
 FOREIGN DEBTOR. 
 
 execution on judgment, in case of, 300, note (/) 
 
 FOREIGN FIRM, 
 
 service of writ on, 266, note (o) 
 
 income tax, when payable by, 394, note (c) 
 
 liability of, to Bankruptcy law, 624, note (n) 
 See Alien 
 FOREIGN PRINCIPALS, 
 
 agents for, contract as principals, 275, note (s) 
 
 FORGERY 
 
 by one partner, liability of firm in case of, 155. And ADDENDA 
 
 FORM OF CONTRACT. 
 
 effect of on liability of partners, 176 et seq. 
 
 FORMS 
 
 of judgments for account, 517, and note (n) 
 
 of order when sheriff seizes, 362. See Seton on Decrees, 1214, edition 4 
 
 FRAUDS, STATUTE OF, 
 
 effect of, on contracts of partnership, 80 
 
 as regards guarantees, 138 
 
 excluded by part performance, 81, 83 
 share in partnership not within, 348
 
 INDEX. 861 
 
 [The paging refers to the [*] pages. ] 
 FRAUD, 
 
 liability for joint and several, 198, 702 
 actions to rescind contracts on the ground of, 482 et seq. 
 where a third party intervenes, 480, 490 
 where fraud did not induce the contract, 481 
 how lost, 490 
 actions for deceit, and other actions based on, 163, 479 et seq. 
 parties to actions relating to, 284, 461 
 
 principal not bound by contract which is known to be a fraud, 148, 14f 
 concealment when a, 480, and note (m) 
 bad bargains upheld, there being no fraud, 485 
 reopening accounts for, 513 
 release set aside for, 145. 146 
 bargains between outgoing and continuing partners set aside for, 486 
 
 with the executors of a deceased partner set aside for, 487 et seq. 
 on faith of fraudulent accounts set aside, 486 
 effect of, on right to contribution, 369 
 on person holding himself out as partner, effect of, on his liability to 
 
 creditors, 41 
 right of proof in respect of, 702 
 whether double proof allowed, 745, 749 
 
 by one partner on another, effect of, on right to prove in bankruptcy 
 against joint estate, 724 
 
 separate estates, 733-739 
 on creditors, by retiring from insolvent firm, 573 
 
 by converting joint into separate property, 338, 698 
 appointment of receiver in cases of, 551 
 recovery of premiums in cases of, 64 
 Statute of Limitations in cases of, 259, 260 
 
 concealed, 259, 511 
 of creditor, effect of, as regards his rights against retired partner, 249 
 of one partner, liability of firm for, 149, 160 
 
 effect of, on actions by firm 269 
 of firm, liability of firm in case of, 150 et seq. 
 of agent, liability of principal for, 147 
 of infant, 75 
 
 liability of estate of deceased partner for, 596 
 estate of deceased partner not released by dealings with survivors where 
 
 there has been, 252, 253 
 effect of, on agreements between partners changing joint into separate 
 
 estate and vice versa, 338, 698 
 inducing person to join a firm, 167, 482 
 on incoming partners, 173 
 effect of, on doctrine of appropriation of payments, 235, 236 
 
 discharge of the estate of a deceased partner, 250 
 partnership formed by, no defence to creditors, 103 
 ground of dissolution, 580 
 partnership articles construed so as to avoid, 406 
 
 FRAUDULENT ACCOUNTS, 
 
 reopening, 487 
 
 bargains on the faith of, set aside, 486 
 FRAUDULENT CONVEYANCES, 
 
 are acts of bankruptcy, 627, 628 
 
 for present consideration, 629 
 
 may be set aside after lapse of three months, 631 
 FRAUDULENT PREFERENCE, 628, 630, 653 
 
 trustee in bankruptcy may disaffirm, 269, 653 
 
 by trustees, 630
 
 862 INDEX. 
 
 [The paging refers to the [*] pages.] 
 FRAUDULENT STATEMENTS 
 
 of one partner, liability of firm for, 162 et seq. 
 actions for, 481 
 
 as to solvency of another do not bind partner unless written, 138, 165 
 as to authority, 481, note (p) 
 See Fraud. 
 
 FREIGHT, lien on, 355 
 
 FRIENDLY SOCIETIES 
 
 not partnerships, 50, note (j) 
 
 action against member of, for money belonging to, 568, note (6) 
 
 criminal prosecution of members, 457, note (a) 
 
 trustee of, may petition against member for debt, 634 
 
 FURNITURE, 
 
 of partners, to whom it belongs in the event of bankruptcy, 684, note (r) 
 office, may belong to one partner only, 329 
 
 FUTURE ADVANCES, 
 
 securities for, effect of doctrines of merger on, 256 
 See Capital 
 
 FUTURE PARTNERSHIPS, 20 etseq. 412 
 Statute of Frauds, effect of, on, 80 
 
 GAIN, 
 
 partnerships not having gain for their object, 2, 4, note (t), 50 
 
 GAZETTE, 
 
 partner ordered to sign advertisement of dissolution for insertion in, 214 
 notice of dissolution in, effect of, 222 
 See Advertisements 
 
 GENERAL 
 
 and particular partnerships, 50 
 powers restricted by object, 407 
 
 GOODS, 
 
 actions between partners relating to, 560, 568 
 
 liability of partners for goods supplied before commencement of part- 
 nership, 204 
 pledge of, by one partner when binding on firm, 140 
 purchases of, by one partner on credit of firm, 144 
 return of, by one partner when binding on firm, 144 
 sale of, by one partner when binding on firm, 146 
 
 by solvent partner when binding on trustee of bankrupt partner, 
 568, 671 
 held for special purpose, not within reputed ownership clause, 683 
 
 GOODS AND CHATTELS, 
 
 what are, within the meaning of the rule as to reputed ownership, 678 
 
 GOOD DEBTS, 
 
 agreement as to bringing in, 417 
 
 GOOD FAITH 
 
 required from partners, 303 et seq. 
 agreement to observe, 418 
 
 See Fraud ; Honour 
 
 GOOD-WILL 
 
 nature of, 439 
 
 is partnership property, 327, 443 
 
 sale of, for share in profits of business, 36, 37
 
 INDEX. 863 
 
 [The paging refers to the [*] pages.] 
 GOOD-WILL— continued. 
 
 sale of, as a going concern, 558 
 
 by trustees of bankrupt partner, 652 
 
 effect of on right of vender to carry on the business sold, 444, 558 
 carries right to use old firm name, 446 
 valuation of, 447 
 in case of death, 443 
 
 retirement of one partner, 444 
 in connection with use of name, 444 
 
 trade-mark, 114, 447 
 agreements as to paying for, 415, 447 
 property within meaning of Stamp Acts, 439, note (a) 
 legatee of, 619 
 
 duty to preserve, 443, note (q) 
 how far it survives, 342 
 
 GROSS PROFITS 
 
 and net profits, distinction between sharing, 7 
 
 GROSS RETURNS, 
 
 distinction between sharing profits and gross returns, 8, 17 
 sharing does not constitute partnership, 8, 17 
 persons who share, not gwasj-partners, 29 
 co-owners sharing, not partners, 18 
 
 GUARANTEE 
 
 against debts given to incoming partner, 418 
 power of one partner to bind firm by, 138 
 ratification of, by firm, 138 
 as to solvency when required to be written, 138, 165 
 
 only binds parties who sign, 138 
 joint and several, 179, note (v) 
 
 HIGHER NATURE 
 
 extinction of debts by taking securities of, 255, 703 
 
 HIGHWAYMEN, 
 
 partnerships between, 93, note (n) 
 
 HOLDING OUT 
 
 as partner, 40 el seq. See Quasi-Paktnership 
 
 meaning of phrase, 42 
 
 what constitutes. 42 
 
 instances of, 44 
 
 but not to plaintiff, 43 
 
 sufficient proof of quasi-partnership, 83 
 
 by not preventing use of name, 43 
 
 by signing prospectus, 44 
 
 where firm name does not disclose who partners are, 45. 46 
 
 injunction to restrain, 544 
 
 after retirement or dissolution, 217, note (/<) 
 by one partner as being solely concerned in a contract, effect of, 179. 277 
 effect of on proof in competition with separate creditors, 742, note (b) 
 doctrine of, does not render the estate of deceased partner liable to third 
 
 parties, 605 
 effect of, as regards doctrine of reputed ownership, 700 
 effect of doctrine of, as regards torts, 47 
 by infant, 74 
 
 after coming of age, 73 
 by retiring partner, 45, 216 
 
 by continuing partners of bankrupt co-partner, 212, 667 
 by surviving partner, 46
 
 864 INDEX. 
 
 [The paging refers to the [*] pages.] 
 HOLDING OUT— continued 
 
 by promoters of company, 45 
 by married woman, 77 
 limit of doctrine of, 47 
 joint liability in case of, 197 
 
 HONOUR, 
 
 higb standard of, requisite among partners, 303 
 
 those about to become partners, 303 
 those who have ceased to be partners, 
 303 
 
 See Feaud ; Good faith 
 
 HOUSES 
 
 built by one partner on partnership property, when joint estate, 330, 331 
 
 HUSBAND 
 
 of partner, liability of, 78 
 
 and wife partners liability of in bankruptcy, 78, 691, note (6), 730 
 See Maeried Woman 
 
 IDIOCY, 
 
 dissolution on, 577. See Lunacy 
 
 IDIOTS, 
 
 partners who are, 76. See Lunatics 
 
 IGNORANCE 
 
 of one partner, effect of, on rights of firm, 142. See Notice 
 of firm, effect of, 
 
 in case of misapplication of money by one partner, 151 et seq. 
 
 in other cases, 172 
 
 ILLEGAL ACTS, 
 
 injunction to restrain. See Injunction 
 contribution in respect of, 377 
 
 ILLEGAL PARTNERSHIPS, Book I., cap. 5 
 what partnerships are illegal, 91 et seq. 
 on geueral grounds, 92 — 94 
 by particular statutes, 95 et seq. 
 attorniesand solicitors, 95, 100 
 bankers, 95, 97 
 brokers, 97 
 insurers, 97 
 
 medical practitioners, 98 
 newspaper proprietors, 99 
 patentees, 99 
 pawnbrokers, 99 
 theatre managers, 101 
 
 unincorporated companies with transferable shares, 101 
 unregistered partnerships, 101 
 consequences of illegality, 102. 585 
 
 as regards the right to recover back subscriptions, 106 
 actions for account, 105 
 actions by and against, 103 et seq. 
 contribution, 104, 377, 378 
 waiver of illegality, 104 
 illegality a defence, 105, 106 
 
 when not a defence, 106 
 set up by executors, 106 
 never presumed, 91 
 concealed illegality, 106
 
 INDEX. 865 
 
 [The paging refers to the [*] pages. ] 
 ILLEGAL PARTNERSHIPS— continued. 
 
 members of, have no lien, 355 
 
 illegality of partnership business, a cause of dissolution of partnership, 
 585 
 
 appointment of receiver in case of, 552 
 
 members of, liable to indictment, 109 
 ILLEGAL TRUSTS, 108 
 
 actions for execution of, 108 
 ILLNESS 
 
 of partner, when a ground for dissolution, 578 
 
 IMPLIED POWERS, Book II., cap. 1, sees. 1 and 2 
 of partners, 124 — 128 
 as regards 
 
 accounts, 128 
 
 actions, 271, 272 
 
 admissions, 128 
 
 agents, 129 
 
 arbitration, 129, 272 
 
 banking account, 129 
 
 bills and notes, 129 et seq. 
 
 bonds, 131, 136, 137 
 
 borrowing money, 131, 321 
 
 capital, increasing, 132, 321 
 
 cheques, 133 
 
 post-dated, 133 
 
 compromise, 136 
 
 contracts, 134 
 
 creditors' deeds, 135, 631 
 
 debts, 134 
 
 deeds, 136 
 
 distress, 137 
 
 extension of business, 137, 315 et seq. 
 
 Factors' acts, 140 
 
 guarantees, &c, 138 
 
 insurances, 139 
 
 interest, 139 
 
 judicial proceedings, 139, 271, 272 
 
 leases, 139 
 
 mortgages, 139 
 
 payment, 134 
 
 pledges of chattels, 140 
 
 notices, 141, 214, 571 
 
 penalties, 143 
 t purchases, 144 
 
 receipts, 145 
 
 releases and covenants not to sue, 145 
 
 representations and admissions, 146 
 
 sales, 146 
 
 taking security, 141 
 
 servants, 147 
 
 set-off, 136 
 
 ships, 147 
 
 tenders, 136 
 
 transfer of debts, 135 
 
 varying contracts, 134 
 
 winding up, 217, 218 
 termination of 
 
 by notice, 210, 571 
 * 32 LAW OF PARTNERSHIP.
 
 866 INDEX. 
 
 [The paging refers to the [*] pages.] 
 IMPLIED POWERS— continued. 
 termination of — continued. 
 by death, 211 
 by bankruptcy. 212. 666 
 effect of holding out on. See HOLDING Out 
 See Bankruptcy ; Dissolution 
 IMPLIED TERM 
 
 for duration of partnership, 122 
 
 IMPOSSIBILITY 
 
 of continuing partnership business cause of dissolution, 575, 581 
 
 IMPUTATION OF PAYMENTS, 225 et seq. See Appropriation of Pay- 
 ments 
 
 INCAPACITATED PARTNER, 71 
 
 INCHOATE COMPANIES, 
 
 subscribers to, not partners, 23 
 See Promoters 
 
 INCOME-TAX, 
 
 on what profits payable, 394, note (c) 
 
 payment of, by firm, where some of its members are abroad, 394, note (c) 
 
 INCOMING PARTNER, 
 
 actions by and against, 239 et seq., 285 et seq. 
 agreements for benefit of, 433 
 liability of, 205 
 
 under old articles, 435 
 
 for bills accepted for precontracted debt, 209 
 
 for acts done before they join firm, 208 
 
 how established, 208 
 frauds on, 173, 209, 479 et seq. 
 effect of appropriation of payments on, 230 
 
 notice of previous transactions, on, 143 
 
 INCORPORATION. 
 
 effect of, as regards sureties, 118 
 
 INCREASING CAPITAL, 
 
 difference between, and borrowing, 132, 133, 321 
 See Capital 
 
 INDEMNITY. 
 
 against losses, 15, 63 
 agent's right to. 369 et seq. 
 
 when he obeys his instructions, 370 
 
 when he disobeys his instructions, 370 
 
 when he acts after his authority is revoked, 371 
 
 when he acts without instructions, 371 
 right of partners to, 369 et st q. 
 right of trustees to, 373 
 right to, where a person has been induced to become a partner by fraud, 
 
 484 
 extent of, 484 
 
 before loss has been sustained, 374, and Add. 
 right of out-going partner to, from continuing partners, 451 
 usually given by continuing partners, 450 
 should be joint and several, 450 
 at law and in equity, former difference between, 374 
 action for, by one partner against another, 566 
 given by one partner, how far firm is bound by, 138
 
 INDEX. 867 
 
 [The paging refers to the [*] pages. ] 
 INDEMNIT Y— continued. 
 
 dissentient need not accept, 318 
 effect of taking joint covenant for, 199 
 
 persons entitled to may prove in bankruptcy, when, 708, note (y) 
 effect of, on lien, 451 
 
 of executors of deceased partners when acting under the order of the 
 
 court. 594 
 when trading with assets of testator 
 under directions in the will, 606 
 See, also, Contribution 
 INDIA, 
 
 allowances to partners in, 381 
 
 INDIAN CONTRACT ACT, 
 
 definition of partnership in, 3 
 
 division of partnerships in, into ordinary and extraordinary, 4 
 
 INDICTMENT 
 
 by one partner against another, 457, note (a) 
 
 by surviving partners and the executors of a deceased partner, 288, 
 
 note (z) 
 for illegal partnership, 109 
 INFANT 
 
 partners, 74 
 
 liability of for holding himself out as partner, 74, 76 
 after coming of age, 76 
 to be made bankrupt, 75, 6*24, note (re) 
 sued with other partners, 280, 281 
 for acts of others, 74, 75 
 for fraud, 75 
 
 should not be joined in action against the firm, 74, note (c) 
 avoidance of contracts by, 75 
 ratification of contract by, 76 
 sale of share of, in partnership, 557 
 Infants Relief act, 1874, 76 
 
 INFORMATION. See Action 
 
 duty of partners to give, 303 
 effect of withholding, 304, note (/) 
 INJUNCTION 
 
 generally, 538 et seq. 
 
 necessity of, 538 
 
 granted where a receiver would be refused, 539 
 
 between co-owners, 59, 62 
 
 against partners where no dissolution is sought, 539 
 
 where partnership is at will, 540 
 
 in actions for dissolution, 541 
 against persons claiming under a late partner, 542 
 to restrain 
 
 actions. 543 
 
 for balance of settled account because others are unsettled. 543 
 ejectment, 541 
 
 executions against firm for separate debt of one partner, 359 
 
 advertising dissolution, 539 
 
 alteration in principle on which profits dealt with, 319 
 
 change in character of business, 316 
 
 majority, 317 
 
 holding out, 544 
 
 opening letters, 539, 542, note (e) 
 
 using names, 114, 539
 
 868 INDEX. 
 
 [The paging refers to the [*] pages.] 
 INJUNCTION— continued. 
 to restrain — continued. 
 using names by continuing partners, 114, 217, note (h), 605 
 
 by successors in business, 445 
 misapplying monies of firm, 540 
 obstructing plaintiff in the exercise of his rights, 540 
 carrying on a particular branch of the business, 540 
 driving plaintiff to a dissolution by misconduct, 540 
 publishing news in a rival paper, 540, 541 
 writing plays for rival theatre, 541 
 getting in partnership assets, 542 
 negotiating bills, &c, 542 
 misconduct, 543 
 
 withholding partnership books, 542, 544, note (t) 
 breaches of express agreements, 542, 543 
 carrying on business, 543 
 
 save for winding up. 541 
 
 after a dissolution, 541 
 
 after sale of business, 542 
 
 by surviving partners in old name, 217, note (h), 445, 605 
 interfering with proper Avinding up of partnership, 588 
 against dissolution of partnership when granted, 571 
 divulging trade secrets, 543 
 publishing accounts, 542, note (e) 
 
 making slanderous statements, 542, note (e), 544, note (x) 
 excluding co-partner, 395, 540, 543 
 
 though lately insane, 539 
 proceedings in bankruptcy, 636, note (x) 
 managing partners, 466, 544 
 illegal acts, 539 
 renewal of lease, 307, note (s) 
 parties to actions for, 461 
 
 must come with clean hands, 544 
 
 INQUIRIES 
 
 directed in j udgment for administration of estate of deceased partner, 600 
 additional, when added, 69, 607 
 
 INSANITY, 
 
 a ground for dissolution, 577 et seq. See Lunacy and Lunatic 
 
 INSOLVENCY 
 
 of partner, power to dissolve in case of, 425, 576 
 
 test of, 425 
 of firm, meaning of, 425, note (k) 
 
 See Bankruptcy 
 
 INSPECTION. See Books ; Discovery 
 of accounts, &c, of firm, 404 
 
 agreement precluding, 504 
 
 by agent, 504 
 
 by accountants, &c, 504 
 of books in use, 505 
 in actions for account, 504 
 
 INSPECTORS, 
 
 appointment of, in bankruptcy, 645 
 
 INSPECTORSHIP DEED, 754 
 
 trustees of, not partners, 21 
 
 INSTRUCTIONS, 
 
 agent disobeying, effect of on idemnity, 370
 
 INDEX. 869 
 
 [The paging refers to the ["] pages.] , 
 INSURANCE, 
 
 power of one partner to bind firm by, 139 
 marine, 97. See Marine Insurance 
 
 INSURANCE COMPANIES 
 
 maritime, formerly illegal, 97 
 
 INTEREST 
 
 admission by one partner that interest is payable, 139 
 
 in accounts between partners, 389 
 
 on capital, 389 
 
 where capital payable out by instalments, 390, note (o) 
 
 on undrawn profits, 390 
 
 on advances, 390 
 
 on overdrawings, 390 
 
 where accounts confused, 392 
 
 charged against partner who will not produce books, 538 
 
 on arrears of a share of profits, 390, note (jj),*395 
 
 where firm claims what has been obtained by one partner, 391 
 
 agreements as to payment of, 418 
 
 on money wrongfully employed in partnership business, 521 et seq. 
 
 when compound interest allowed, 390, note (s), 531 
 
 charging executors with, for not converting testator's share into money, 
 615 
 
 separate creditors entitled to, up to date of receiving order, against joint 
 creditors, 730, and note (n) 
 
 joint creditors entitled to, up to date of receiving order, as against sepa- 
 rate creditors, 720 
 
 on debts in bankruptcy, 719, 720, 730, note (n) 
 
 paid by continuing partners after dissolution does not discharge retired 
 partner, 243, 246, 250, 251 
 
 as to appropriation of securities to, 720, note (n) 
 
 INTERNAL REGULATION, 
 
 interference of Court with respect to matters of, 464 et seq. 
 See Majority 
 
 INTERPLEADER, 
 
 sheriff's right to, 358, note (q), 362 
 
 order that sheriff withdraw, is a stay, 625, note (u) 
 
 INTERPRETATION 
 
 of partnership articles, 406 et seq. 
 See Articles of Partnership 
 
 INTERROGATORIES, 
 oppressive, 502 
 as to acts of agents, 502 
 
 duty to make inquiries as to subject-matter of, 502 
 See Discovery 
 
 INTRODUCTION 
 
 of new partner, provision as to, 433 
 
 INVOICE 
 
 evidencing partnership, 89 
 
 I O U, 
 
 action by one partner against another on, 565 
 
 ISSUE 
 
 to try partnership, 83, note (n) 
 
 JOINDER OF PARTIES. See Abatement ; Actions ; Parties.
 
 870 
 
 INDEX. 
 
 [The paging refers to the [»] pages.] ] 
 JOINT ADJUDICATIONS 
 
 of bankruptcy, 637. See Bankruptcy 
 
 rules as to, 632 
 JOINT BOND, 
 
 held joint and several, when, 194 et seq., 437, note (o), and Addenda 
 
 held separate only, when, 137 
 
 JOINT COVENANTS, 
 
 when not held joiut and several, 193 
 
 when held joint and several, 437, note (o), and see Addenda 
 
 JOINT CREDITORS, 
 
 who are, 701 et seq. 
 
 proof by, in bankruptcy against the joint estate, 692, 720 
 
 separate estate, 729 
 against both estates, 747 
 when secured, 709, 714, 749 
 when treated as joint and several, 194 et seq. 
 
 in bankruptcy, 743 
 paying off separate creditors, 733 
 rights of, against estate of deceased partner, 598 
 position of executors of deceased partners as regards, 594 
 See Bankruptcy ; Deceased Partner ; Joint Debts 
 JOINT DAMAGE, 
 
 when necessary to support joint action, 278 
 
 JOINT DEBTS. See Bankruptcy 
 what are, 702 
 
 when treated as joint and several, 194 et seq., 743 
 bills. 180. 702 
 frauds, 199, 702 
 breaches of trust, 702 
 
 money of which firm has had benefit, 189, 703, 721 
 conversion into separate, 703 
 cannot be set off against separate, 291 etseq., 660 
 
 unless there is an agreement to that effect, 661 
 effect of order of discharge of one bankrupt debtor on, 752 
 will support separate adjudication, 637 
 
 composition for, does not release separate liability when, 238 
 how paid, 598 
 
 See Joint Creditors 
 
 JOINT DIVIDENDS, 
 
 declaration of in bankruptcy, 693 
 JOINT ESTATE, 
 
 what is, 323. See Property 
 
 in cases of holding out, 197, 700 
 
 conversion ot, into separate, 334, 698 
 
 effect of doctrine of reputed ownership on, 684, 732 
 
 importance of distinguishing from separate, 322 
 
 distinct account of, to be kept in bankruptcy, 693 
 
 consolidation of, with separate estates, 695 
 
 proof against, 720 
 
 by joint and separate creditors, 701 
 
 proof against, by married woman, lending money to husband partner, 730 
 
 is distributed without reference to the partners' interest in it, 701 
 
 distribution of surplus of, 728, 742 
 
 absence of, confers a right of proof against separate estates, 731 
 
 rule as to, in bankruptcy, 692, 693, 697 
 
 mortgage of for separate debt, when an act of bankruptcy, 631
 
 INDEX. S71 
 
 [The paging refers to the ["1 pages.] 
 JOINT ESTATE— continued. 
 
 may be treated as separate, when, 684 
 assets brought in in breach of trust not part of, 724 
 costs of trustee when paid out of, 694 
 remuneration of trustee when paid out of, 694 
 See, also, Bankruptcy 
 
 JOINT OBLIGATION, 
 
 performance of 224 
 extinction of, 224 
 
 by merger in security of higher nature, 255, 703. And see the 
 
 Addenda 
 effect of release on, 237 
 effect of covenant not to sue on, 237 
 See Joint and Several 
 
 JOINT PURCHASES 
 
 of goods for sale, 53 
 
 of goods not for sale, 53 
 
 JOINT AND SEPARATE CREDITOR. See Joint Creditor 
 holding security, 749 
 proof in bankruptcy by, 701 
 
 JOINT AND SEVERAL, 
 
 when partnership debts are, 192. 193, 702 
 
 rule applies between creditors, 195 
 contracts, who to be sued on, 280, 288 
 
 persons liable on, may be sued jointly, severally, or in the alterna- 
 tive, 265, 282 
 
 executors of deceased partners may be joined, 288 
 debts, merger of, in higher securities, 255, 703 
 liability 
 
 on contracts, 193 
 
 for torts and frauds, 198, 702 
 
 for breaches of trust, 199, 200, 702 
 
 on promissory notes, 187 
 
 on bills, 180, 702 
 
 power of one partner to bind firm by, 130 
 receipt of composition on joint debt, effect of on separate liability, 238 
 
 JOINT STOCK 
 
 not essential to partnership, 12, 13 
 
 JOINT TENANCY, 
 
 or tenancy in common, what creates, 51, note (n) 
 
 JOINT TENANTS 
 
 partners in profits only, 53 
 remedies between, 57 — 62 
 
 JUDGMENT 
 
 when the Court can go behind, 703, note (b) 
 
 extinguishes debt for which it is obtained, 255, 703, 704. And Addenda 
 
 not if it is a colonial judgment, 255, note (s) 
 against some partners, effect oi, as regards the others, 193, 255, 256 
 
 as regards a dormant partner, 255, note (s) 
 against firm when judgment against a member, 625, note (w) 
 
 power of one partner to consent to, 272 
 against surviving partners, effect of as regards estate of deceased partner, 
 
 195, 603 
 against estate of deceased partner, effect of as regards surviving partners, 
 195, 603
 
 872 INDEX. 
 
 [The paging refers to the [*] pages.] 
 JUDGMENT— continued. 
 
 effect of on proof in bankruptcy, 703 
 dissolution dates from when, 572 
 
 where lunacy, 579 
 where misconduct, 582 
 form of, for partnership account, 516, 517, note (n) 
 form of, in action by joint creditors against executor of deceased partner, 
 
 600 
 on sale of partner's share by sheriff. Seton on Decrees, 1214, n., ed. 4 
 additional inquiries when added to, 69, 601 
 may be entered up against partners in name of firm, 266, 298 
 
 how execution issues where, 299, 300 
 action founded on, 300 
 debtor summons ou, when, 300 
 execution of. See Execution 
 as to mode of entering up, 266 
 
 JUDICIAL PROCEEDINGS, 
 
 power of one partner to act for firm in, 139, 271 
 See Action ; Bankruptcy 
 
 JUDICATURE ACTS, 
 
 effect of, as regards parties to actions, 264 et seq., 458 
 appointment of receivers, 546 
 administrations. Addenda 
 
 JURISDICTION, 
 
 of Court in bankruptcy, 645, and note (y) 
 
 JURY, 
 
 to try partnership, 83 
 
 JUST ALLOWANCES, 519 
 
 KENT, 
 
 his definition of partnership, 3 
 
 KNOWLEDGE . 
 
 effect of, where breach of trust, 161 
 
 as regards actions for misrepresentation and fraud, 163, 481 
 See, also, Notice 
 LACHES 
 
 of plaintiff, when a bar to relief, 466 
 
 barring right to account, 467 
 
 in setting aside agreements, 467 
 
 in cases of mining partnerships, 468 
 
 when not a bar, 471 et seq. 
 
 demurrer on ground of, 475 
 
 effect of recognition of title on, 474 
 
 of one partner in asserting his rights, effect of, 304 
 
 LAND, 
 
 proof of a partnership in, 81 
 
 belonging to firm treated as personal estate, 343 et seq. 
 
 when partnership property, 331 — 333 
 
 when not, 334, 343 
 
 vests in trustee in bankruptcy, 651 
 
 LAPSE OF TIME. See Delay ; Limitations, Statute of ; Time 
 LARCENY 
 
 of property of firm by partner, 456, 457, note (a) 
 
 LAW, 
 
 mistakes of, when corrected in accounts, 514
 
 INDEX. 873 
 
 [The paging refers to the [*] pages.] 
 
 LAW AND EQUITY. See Equity 
 difference between 
 
 as regards contribution and indemnity, 374. See Contribution 
 as regards joint and several liabilities, 193 
 
 LEASE, 
 
 specific performance of agreement for, after term is expired, 476 
 injunction against grant of renewed, to one partner, 496, note (o) 
 power of one partner to take a lease for a firm, 139, 315 
 
 to distrain, 137 
 liability of retired partners on covenants in, 240, note {a) 
 of partnership property, effect of, on duration of partnership, 121 
 of business permises when partnership property, 326, 328 
 of mines, 328, note [t) 
 of salt works, 329, note (a) 
 
 renewal of, by one partner enures to benefit of firm, 307 
 notice to quit by partners, 279, 562 
 forfeiture of, by assignment by one partner to another without license, 
 
 336, note (z) 
 right of partner to reject renewal of, 308, 309 
 right to retain benefit of renewed, on dissolution, 571, note (g) 
 not within doctrine of reputed ownership, 678 
 
 LEGACY 
 
 of share in partnership, 
 
 rights of legatee, 619. See Legatee 
 ademption of, 620 
 what passes under, 340, 619 
 duty of executors to realize, 615, 620 
 
 income of, as between tenant for life, and remainderman, 620 
 right of specific legatee to profits, 620, 621 
 if declared after death, 621 
 . not to other profits, 621 
 
 as to dividends and bonuses, 621 
 of goodwill, 439, note (6), 619 
 to partner indebted to testator, 620 
 to a firm, 113 
 
 LEGACY DUTY, 
 
 payable on partner's share of assets, 347, and note (a) 
 
 LEGALITY. 
 
 See Illegality 
 
 LEGAL PROCEEDINGS, 
 
 firm how described in, 115, 116, 265, 274 
 by and against firm, 115, 116, 264 elseq. 
 power of one partner to act for firm in, 271, 272 
 See Actions ; Bankruptcy 
 
 LEGATEE 
 
 of a deceased partner 
 
 what passes to, 340, 619, 620 
 rights of, against his executors, 612, 616, 619 
 the surviving partners, 610 
 to an account, 494 
 
 when there is collusion, 494 
 where the assets of the deceased are not got in, 614 etscq. 
 where the surviving partners are the executors of the deceased, 528, 614 
 of goodwill, 439. note (6), 619 
 where tenant for life and remainderman, 620 
 See Legacy
 
 874 INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 LENDER, 
 
 distinction between and partner, 16, 37. And see the ADDENDA 
 
 LETTERS, 
 
 injunction to restrain opening, 539, 542, note (e) 
 evidence of partnership, 89 
 
 LIABILITY 
 
 oi' partners 
 inter se. See Account; Action ; Contribution 
 for the acts of each other, 128 ef. seq. See Implied Powers 
 of individval partners on contract in excess of their powers, 192 
 
 when acting and dealt with on their own account, 
 179 
 by holding out, 40 et seq. See Holding out 
 by sharing profits, 2.5 — 46. See Profits 
 
 statute as to, 35 
 in respect of 
 
 dealings of co-partner before execution of partnership articles, 202 
 
 before joining the firm, 202 
 unauthorised transactions, 126, 167 
 
 with notice, 167 
 torts and frauds 147 et seq., 702 
 breaches of trust, 160— 162. 199, 200 
 misapplication of money, 150 — 162 
 misrepresentations, 162, 479 
 
 bills of exchange in various forms, 180 etseq., 702, 709 et seq. 
 See Bills of Exchange 
 promissory notes, 187 
 
 See Promissory Notes 
 contracts under seal, 177 
 
 not under seal, 177 
 
 not binding on them, but of which they have had the 
 
 benefit, 189 et seq. 
 in which all the partners are not named, 213, 275 
 when joint and when several, 
 as regards contracts, 192 
 torts, 198. 702 
 
 breaches of trust, 161, 199 200 
 in cases of holding out, 197 
 commencement of, 201 et seq. 
 extent of, 200 
 
 limited. See Limited Liability 
 termination of, 210, 223 
 as to future acts, 210 
 
 by notice of dissolution, 214. See Dissolution 
 by dissolution without notice, 213 
 effect of notice, 210 et seq. 
 
 what amounts to notice, 221 et seq., 428, 571, 679 
 by death, 211 
 by bankruptcy, 212 
 effect of lunacy as regards, 213 
 holding out, 216 
 as to past acts, 223 
 by payment, 225 
 
 See Appropriation of Payments 
 by release, 237 
 
 by dealings with continuing partners, 243 et seq. 
 by the merger of securities, 254, 703 
 by lapse of time, 257. See Limitations, Statute of
 
 INDEX. 875 
 
 [The paging refers to the [*] pages. ] 
 LI ABILITY— continued 
 
 as to past acts — continued. 
 
 by death, 223, 594 et seq. And see Death 
 by bankruptcy, 223. And see Bankruptcy 
 by judgment against co-partner, 193, 255, 703. And Addenda 
 attempts to limit, 201 
 
 effect of notice of agreement limiting, 176, 201 
 creditors not affected b}' agreements between the partners, 239 et seq. 
 
 unless they have notice, 176. And see Notice 
 of dormant partner, 125, 178. See Dormant Partner 
 of incoming partner, 205. See Incoming Partner 
 of nominal partner. See Holding out ; Nominal Partner ; Quasi- 
 
 Partnership 
 of retired partner, 
 
 dormant, 212, 214, 229 
 not dormant, 213 
 of estate of deceased partner, 594 et seq. See Deceased Partner ; 
 
 Executors 
 of executors of deceased partner, 604. See Executors 
 
 for breach of trust in employing assets in the business 
 of a partnership, 604 et seq . 
 of promoters. See Promoters 
 
 of agent who exceeds his authority, 192, 370. And see Agent 
 of principal for torts and frauds of his agent, 147 
 of shipowners in respect of each other's acts, 147, note (y) 
 meaning of, in bankruptcy, 708 
 proof in respect of what, in bankruptcy, 708 
 
 LIBEL, 
 
 actions by partners for, 278 
 
 LICENSES, 
 
 form of when no evidence of partnership, 85 
 not taking out. See Excise Laws 
 
 LIEN, 
 
 of partners, 
 
 nature of, 351 et seq 
 
 consequences of, 352 
 
 to what property it attaches, 352 
 
 exists only on partnership assets, 353 
 
 exists as against all persons claiming a share in the assets, 353, 354 
 
 prevail as against assignee or mortgagee, 353 
 
 no lien on a partner's share for ordinary debts due from him to firm, 354 
 
 loss of, 355 
 
 no lien of partnership is illegal, 355 
 
 available against trustee of bankrupt partners, 647 
 
 of partner must be satisfied before a partner proves against his co- 
 partner, 741 
 
 proof for what is not satisfied by, 741 
 
 of a firm, effect on, where a change occurs in the firm, 120 
 
 effect of express indemnity on. 151 
 on funds appropriated for payment of particular bills, 656, note {x) 
 effect of doctrine of reputed ownership on, 679, 684 
 creditors of a firm have no lien on its property, 334, 354, 698 
 on partnership assets in cases of rescission of contract for fraud, 484 
 of co-owners, 60, 355 
 
 LIMITATIONS, STATUTE OF, 
 
 between partners, 508; non-partners, 257 
 when not a defence, 470, note (c)
 
 876 INDEX. 
 
 [T«he paging refers to the [*] pages.] 
 
 LIMITATIONS, STATUTE OF,— continued. 
 
 estate of deceased partner, when discharged by, 597 
 when a bar to an action for account between partners, &c, 508 
 time within which actions must be brought, 257, 258 
 summary of rules relating to, 259 
 
 provisions of Mercantile law amendment act as to, 262, 509 
 merchants' accounts, 509 
 current accounts, 509 
 acknowledgment, 260, and note (a), 511 
 payment by receiver in an action, 511 
 cases of fraud, 260, 511 
 trust, 260, 511 
 act of one partner, effect of, 261, and note (g) 
 
 LIMITED LIABILITY 
 
 in partnership does not exist, 200 
 attempts to introduce, 201 
 
 by stipulating that funds only shall be liable, 201 
 
 by notice of terms of partnership, 176 
 under Bovill's act, 35 et seq., 201 
 
 LIQUIDATED DAMAGES, 
 
 agreements for payment of, 454 
 
 LIQUIDATOR, 
 
 notice to, notice to company, 680, note (x) 
 
 LIS PENDENS, 
 
 plea of, 256, note (y) 
 
 LOANS 
 
 to a firm by trustees after the partners are changed, 113 
 to one partner, of which firm has had the benefit, 189 et seq. 
 
 firm is bound, when, 131, 132, 191 
 by partner to firm, 384 
 contracts of loan compared with contracts of partnership, 15, 16,37 et seq., 
 
 and Add. 
 at interest varying with profits, 30. 35 
 for share of profits, if fraudulent, may constitute a partnership, 37 
 
 or if lender is not merely a creditor, 37 
 by executors of deceased partner to firm, gives the estate no right to pro- 
 fits, 615 
 distinguished from capital, 320 
 action to recover, between partners, 564 
 
 And see Advances 
 
 LOOKING ON, 
 
 effect of, as a bar to relief 466 et seq. See Laches 
 
 LOSS OF CAPITAL, 
 
 effect of, 321, 403 
 
 when a cause of dissolution, 576 
 
 how shared, 350, 403 
 
 LOSSES, 
 
 stipulation against, 15 
 
 effect of notice of, by creditors, 201, 385 
 indemnity against, 63 
 as to payment of, 25 — 48, 385 
 attributable to one partner, 386, 387 
 adopted bv firm, 388 . 
 
 how to be' borne, 385, 402, 403 
 as between tenant for life and remainderman, 621 
 See Contribution; Partnership; Profits
 
 INDEX. 877 
 
 [The paging refers to the [*] pages.] 
 
 LUNACY 
 
 of partner, effect of, as regards liability of himself and co-partners, 213 
 
 a ground for dissolution, 577 
 
 date of dissolution in case of, 579 
 
 costs of payable out of partnership assets, 579 
 
 sale of share in partnership, in case of, 553, 556 
 
 receiver and manager in case of, 553 
 
 does not prevent a dissolution by notice, 425, 426, 579 
 
 evidence of, 578 
 partner recovering from, entitled to take part in business of the firm,539 
 apportionment of premium, whether ground for, 67 
 
 LUNACY REGULATION ACT, 579 
 
 LUNATIC 
 
 may be a partner, 76 
 
 service of notice of dissolution on, 424, 579 
 service of writ on, 266, note (o) 
 partner becoming a cause for dissolution, 577 
 entitled to sue for dissolution, 579 
 
 when entitled to share of profits made since dissolution, 527 
 effect of Bankruptcy act, 1883, on, 624, note (») 
 MAJORITY, 
 
 powers of, 313 et seq. 
 
 in matters of ordinary business. 314 
 instances of what it cannot lawfully do, 314 
 cannot alter principle on which profits are to be divided, 319 
 change nature of business, 315 
 sell shares of minority, 407 
 agreements as to, 313, 419 
 to bind minority, 318 
 
 duty of, to hear minority, 315 
 after a dissolution, 218 
 account settled by, binding on minority, 512, note (d) 
 See Injunction 
 
 MALA PROHIBITA 
 
 and mala in se, 94 
 
 MALICIOUS INJURY, 
 
 liability of firm for, 149 
 
 MANAGEMENT, 
 
 interference by court in matters of internal, 466 et seq. 
 of affairs of partnership, right to take part in, 301 
 
 if no agreement to the contrary, 10, 301 
 expenses of, how paid, 380 et seq., 418 
 
 See, also, Ix junction; Majority 
 
 MANAGER 
 
 and receiver, appointment of, 545. See RECEIVER 
 at instance of co-owner, 59, 62, 548 
 
 difference between receiver and, 545, 547 
 
 sharing profits, when a partner, 10, 13 
 
 partner appointed when, 553 
 MANAGING COMMITTEE, 
 
 liability of members of, for each other's acts, 45 
 See Promoters 
 MANAGING PARTNER, 
 
 interference with, by the court, 466, 544 
 
 right of, to salary or commission, 380, and note (n)
 
 878 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 
 MANIFEST ERRORS, 
 
 clause as to, 420, 421 
 
 See Accounts; Mistake 
 
 MARINE INSURANCE, 
 
 partnerships for, formerly illegal, 97, 98 
 agreements for, must be in writing, 80, 98, note (i) 
 
 may be stamped after execution, 98, note (i) 
 
 MARRIAGE 
 
 of female partner, dissolution of partnership by, 583 
 
 MARRIED WOMAN, 
 
 capacity of, to be a partner, 77 
 
 where no separate estate, 78 
 where she has separate estate, 79 
 liable to Bankruptcy law when, 78, 624, note (n). And Addenda 
 Married woman's property act, 78 
 
 rights of, in partnership with her husband upon his bankruptcy, 78, 691, 
 note (b) 
 See, also, Husband 
 loan by, to husband, for purposes of trade, 78 
 proof for, as joint creditor, 701, note (I), 730 
 
 MARSHALLING, 
 
 assets of bankrupt partners, 717, 718 
 
 equitable doctrine of, applies in bankruptcy, 661, note (x) 
 
 MAXIMS, 
 
 Accessorium sequitur stium principale, 522 
 
 Actio personalis moritur cum persona. 595 
 
 Culpa est immiscere se, rei ad se non pertinenti, 372 
 
 Ex turpi causd non oritur actio, 103, 108 
 
 Expressio unius est exclusio alterious, 406 note (6) 
 
 Expression facit ccssare taciturn, 406 
 
 In pari delicto mclior est positio defendentis, 370 
 
 In re communi potior est conditio prohibentis, 314 
 
 In societalis contractions, fides exuberet, 303 
 
 Jus accrescendi inter mercatores locum non habet, 340, 591 
 
 Nemo debet bis vexari pro eadem causd. 256 
 
 Nemo potest mulare consilium suum in alterius injuriam, 371 
 
 3Iodus et conventio vincunt legem, 408 
 
 Prot cstatio facto contraria non valet, 41 
 
 Ees inter alios acta, 239, 512, note (d) 
 
 Respondeat superior, 148 
 
 Semper enim non id quod privatim interest unius ex sociis servari solet, sed 
 
 quod societati expedit, 305 
 Si quid societati debetur singulis debetur et quod debet societas singuli 
 
 debent, 5 
 Si quid universitati debetur singulis non debetur, nee quod debet universitas 
 
 singuli debent, 5 
 Socius mei socii, socms mens non est, 48 
 Vigilantibus non dormientibus subveniunt leges, 467. 
 
 MEDICAL PRACTITIONERS, 
 
 partnership between unqualified, 98 
 
 MEETINGS, 
 
 attending, evidence of partnership, 90 
 
 MEMBERS, 
 
 of partnerships, see Firm; Partners
 
 INDEX. 879 
 
 [The paging refers to the [*] pages. ] 
 MEMORANDA, 
 
 evidence of partnership, 89 
 
 when unsigned, 81, note (c) 
 
 MERCANTILE LAW AMENDMENT ACT, 
 as to sureties, 119 
 as regards Statutes of Limitation, 262, 263, 509 
 
 MERCHANTS, 
 
 custom of, as to payment of interest, 389 
 
 MERCHANTS' ACCOUNTS, 
 
 provisions of Statutes of Limitation as to, 259, 509 
 See, also, Accounts 
 MERGER 
 
 of debts and securities, 254, 703 
 
 by judgment recovered, 255, 703. And Addenda 
 
 by taking security of a higher nature, 225. And Addenda 
 
 unless security only collateral, 255 
 by taking bills, 254, 702 
 of securities in bankruptcy, 703 
 of joint and several obligations, 256 
 effect of, on securities for further advances, 256 
 as to joint bonds given for joint and several debts, 256 
 effect of, on creditor petitioning for an adjudication of bankruptcy, 257 
 not an extinction of the debt, 257 
 MINES, 
 
 verbal agreements as to, 82 
 devisees of, how far partners, 333 
 co-owners of, 54 
 
 when partners, 55, 328, note (t) 
 partner in coal mines may not be an inspector of, 117 
 appointment of receiver and manager of, 55, 552 
 
 as against mortgagee, 553 
 account of profits of, 498 
 
 by assignee or mortgagee of share, 493 
 without dissolution, 498 
 laches a bar to relief concerning, 468 
 transfer of shares in, 56, 366 
 shares in, within Mortmain acts, 348 
 
 not within Statute of Frauds, 348 
 sale of, on dissolution, 555, 557 
 See Cost-Book Mining Company 
 
 MINE OWNERS, 
 
 power of, to draw bills in name of firm, 130 
 
 MINING COMPANY, 
 
 directors of, advancing money to work mine, 382 
 whether dissolved by bankruptcy of one member, 649 
 
 MINORITY, 
 
 always entitled to be heard, 315 
 when bound by majority, 313 
 when not, 313 
 
 bound by account stated by majority, 512, note (d) 
 See, also, Majority 
 
 MISAPPLICATION OF MONEY, 
 
 injunction to restrain, 540, 541. See Injunction 
 by one partner, liability of firm for, 150 et scq. 
 See Breach of Trust
 
 880 INDEX. 
 
 [The paging refer9 to the [*] pages. ] 
 MISCONDUCT, 
 
 losses incurred by, how borne, 386, 387 
 loss of right to contribution by, 370, 386, 387 
 a bar to injunction at the instance of the guilty party, 544 
 of partner, a ground for dissolution, 580 
 not at his instance, 582 
 time from which dissolution dates, 582 
 degree of, 581 
 
 with a view to compel co-partners to dissolve, 497,^575, 579 
 injunction in cases of, 543 
 receiver in cases of, 550 
 apportionment of premium in cases of, 68 
 See, also, Injunction ; Receiver 
 
 MISJOINDER OF PARTIES. See Action ; Parties 
 
 MISNOMER. See MISTAKE ; NAME 
 MISREPRESENTATIONS, 
 
 actions for, 163, 479 etseq., 481 
 
 what will support, 163, 480, 481 
 must be material, 481 
 have been relied on, 481 
 known to party making it, 481 
 liability of partners for, 162 et seq. 
 rescission of contract for, 479, 482 
 as to nature of business, 166 
 
 of authority, 481, note {p) 
 See, also, Fraud ; Liability ; Rescission of Contract 
 
 MISTAKE, 
 
 reopening accounts for, 513 
 in proof in bankruptcy corrected, 694 
 
 in name of firm, consequences of, as regards bill of exchange, &c, 185 
 
 in other respects, 115 
 MONEY, 
 
 had and received, action for, by one co-owner, against another, 59, 
 
 note (e) 
 agreements as to drawing, 418 
 
 lent, action by one partner against another for, 565, 567. See Action 
 power to borrow, 131 
 
 effect of having had the benefit of, 189 et seq., 703 
 misapplication of, 
 
 by one partner, liability of firm for, 150 et seq. 
 injunction to restrain, 542. See Injunction 
 trust, following, 162 
 
 employment of, in partnership business, 162, 523, 606. See BREACH 
 of Trust ; Liability 
 
 MONSTER, 
 
 partnership for exhibiting, 92 
 
 MORTGAGE, 
 
 equitable, may be created or extended by parol, 119, 715 
 
 by one partner on behalf of the firm, 139, 140 
 
 effect of change of firm on, 119 
 
 judgement on covenant in effect of, as regards right to foreclose, 255 
 
 note (p) 
 bond fide, not an act of bankruptcy, 629 
 
 of joint estate to separate creditors when an act of bankruptcy, 632 
 of separate estate to joint creditors, 632 
 collateral, to secure share of profits, 36, note {t) 
 
 effect of. as regards merger, 255. See Merger
 
 INDEX. SSI 
 
 LThe paging refers to the [*] pages. ] 
 MORTGAGEE, 
 
 of partner, right of to account, 493 
 
 position of, in the event of bankruptcy, 709 et seq. 
 partner's lien prevails against, 364 
 of mine, appointment of receiver against partner who is, 553 
 equitable, parties to action by, 461 
 
 MORTMAIN ACTS, 
 
 share of partner in partnership real estate within, 348 
 
 MULTIFARIOUS, 
 
 one action for the administration of the estates of several partners, nol 
 necessarily, 603, 604 
 
 MUTUAL CREDIT, 290, 654 et seq. 
 See Bankruptcy ; Set-off 
 
 MUTUAL INSURANCE COMPANIES 
 when not partnerships, 51 
 
 policies must be in writing, 80, note (a), 97, 98 
 may be stamped after execution, 98, note (i) 
 
 NAME 
 
 on doors, bills, &c, evidence of partnership, 89 
 
 carrying on business under a name not one's own not illegal, 92 
 
 effect of not preventing use of, 217 
 
 of firm, 112 
 
 not disclosing partners, effect of on doctrine of holding out, 45, 46 
 may be used in actions, 111, 265, 458. See Actions 
 right of majority to authorise manager to sign, 314, 315 
 judgment may be entered up in, 266, 299 
 
 how execution issues, where, 300 
 a trade mark, 114, 447 
 part of good-will, 444. See Goodwill 
 can be assigned with good-will, 114, 447 
 registration of, 114, 447 
 right to use after sale of business, 440 
 right to use after dissolution, 444 
 continued use of when wrong, 446 
 agreements as to, 413 
 
 contracts in, who should sue on, 279 et seq. 
 several firms with same, 181 
 bills of exchange in, 
 
 liability of firm on, 180 et seq. 
 effect of mistakes in, 185 
 when unimportant, 186 
 of changing, 185 
 effect of use of wrong name, 185 
 liability of person using wrong name, 185 
 same as that of individual, consequence of, 182, 446 
 partner has no authority to bind the firm by a name not its own. 
 
 184 
 injunction to restrain use of, granted, when, 114, 217, note (7*), 446, 
 539, 542 
 NAMES 
 
 Copyright acts do not apply to, 114, note (y) 
 NAVIGATION LAWS, 
 
 breach of, when no defence to action for account, 107 
 NECESSITY, 
 
 extraordinary, power of partner in case of, 126 
 tested by nature of partnership business, 127 
 * 33 LAW OF PARTNERSHIP.
 
 882 INDEX. 
 
 [The paging refers to the [*] pages.] 
 NEGLIGENCE, 
 
 loss of right to contribution by, 378, 387 
 of servants, liability for, 148 
 of partners, liability for, 149 
 
 NEGOTIABLE INSTRUMENTS. 
 
 See Bills of Exchange ; Promissory Notes 
 
 NEGOTIORUM GESTOR, 372, note (x) 
 
 NET PROFITS 
 
 and gross profits, distinction between, 7 
 See Profits 
 
 NEW PARTNER, 
 
 agreements as to introduction of, 433 
 
 effect of introduction of, on retired partner's liability, 245 et seq., 248 
 on creditors rights, 239 et seq. 
 See Incoming Partner 
 
 NEW SECURITY, 
 
 effect of taking, 244, 246, 253. See Merger 
 
 NEWSPAPERS. See Advertisement 
 
 assignment of share by co-owner of, 364, note (it) 
 sale of, account in, 497 
 
 injunction against publishing news in, 540, 541 
 effect of advertisements of dissolution in, 222, 223 
 
 NEWSPAPER PROPRIETORS, 
 
 penalties upon, in default of registration, 99 
 
 NEW YORK, 
 
 civil code of, definition of partnership in, 2 
 
 NEXT OF KIN. See Death ; Deceased Partner ; Executors ; Lega- 
 tee 
 NOMINAL PARTNER 
 
 not liable to creditors to whom he has not held himself out, 43 
 
 when to sue with others, 276 
 
 may be made bankrupt, 633 
 
 may be included in joint adjudication, 637 
 
 See, also, Holding out ; Ostensible Partner : Quasi-Partner- 
 ship 
 NOMINATION 
 
 of successor in firm, right of, 433, 434, 435 
 See Option 
 
 NON-SURVIVORSHIP, 
 
 effect of doctrine of, between partners, 340 el seq. 
 
 NON-JOINDER, 
 
 of parties. See Action ; Parties 
 
 NON-TRADER 
 
 and trader distinction between in bankruptcy, 624 
 
 implied power of, to draw bills, 130 
 
 to make purchases, 144 
 NOTES, 
 
 issue of, by bankers, 96, note (z) 
 
 promissory. See Promissory Notes 
 
 NOTICE, 
 
 of act of bankruptcy, effect of, on right to set-off, 562 
 
 on dealings with bankrupts, 665
 
 INDEX. 883 
 
 TThe paging refers to the [*] pages.] 
 
 NOTICE— continued. 
 
 of assignment of debts, shares, &c, necessary to take them out of the 
 order and disposition of their assignor, 679 
 what amounts to, 221 et seq. , 428, 679 
 how to be given, 221 
 
 casual knowledge not, 680, note (s) 
 
 given by solvent partner and his co-partner against whom a 
 receiving order made good, 625, note (x) 
 by liquidator, 625, note (a;) 
 to one partner, when notice to the firm, 141, 142, 680 
 to a retired partner, 143 
 to an incoming partner, 143 
 to director when notice to company, 680 
 
 when not, 680 
 to clerks of fraud of partner, not notice to the firm, 143 
 of partnership, effect of as regards double proof, 748 
 that a person who holds himself out as a partner is not a partner, effect 
 
 of, 40 
 to quit, may be given by one partner on behalf of firm, 279, 562 
 of breach of trust, e fleet of, 143 
 of want of authority, effect of, 168, 175, 176 
 of fraud on firm, effect of, 169 
 that one partner will not be bound by acts of co-partner, effect of, 168,' 
 
 175, 176' 
 of private stipulations of partners, effect of having, 173, 201 
 
 of stipulations of partners limiting their ability, 176, 201 
 determining partner's agency by. 210 
 to dissolve partnership, 425, 571 
 form of, 571 
 partnership at will. 571 
 under articles, 423—426 
 when one partner is lunatic, 425 
 withdrawal of, 426, 572 
 of dissolution or retirement 
 necessity of, 211, 213 
 
 when partner lunatic, 213 
 when not necessary, 215 
 in case of death, 211 
 in case of bankruptcy, 212 
 
 in case of the retirement of a dormant partner, 212 ] 
 stipulations as to, 426 t 
 
 right to give, 214 
 effect of, 215, 680 
 
 where there is a continual holding out, 216 
 as regards acts necessary to wind up the partnership, 217 et i 
 as regards the doctrines of reputed ownership, 679 
 of expulsion, 428 
 
 NOVATION, 239. See Substitution of Debtors 
 
 NUDUM PACTUM, 
 
 sharing profits, not losses, not, 64 
 
 abandoning right to look to outgoing partner for payment of a de 
 the firm not, 242 
 
 NUMBER 
 
 of persons who may be in partnership, 70, 101 
 
 effect of, on appointment of a receiver, 549 
 NURSERY GROUNDS, 
 
 conversion of, by being used as partnership property, 333, 346
 
 884 INDEX. 
 
 [The paging refers to the [«] pages.] 
 
 OFFICER, 
 
 bill of exchange payable to, 180, note (a) 
 
 public, presence of, in action for dissolution, not sufficient, 462. See 
 Public Officer 
 
 OFFICIAL APPOINTMENTS 
 held, by a firm, 114 
 
 held by one partner, when partnership assets, 331 
 agreements as to, 414 
 See Appointment 
 
 OLD CUSTOMERS, 
 
 notice of dissolution, how to be given to, 221, 222 
 
 OPTION 
 
 to become a partner, 20 
 
 position of person who has, 433 
 as regards creditors, 20, 21 
 to purchase share of partner, 423 
 sale ordered when, 555 
 when to be declared, 424 
 in case of lunacy. 578, note (»») 
 provision in articles as to, 424 
 
 ORDER. See Judgment. 
 
 forms of, in partnership actions, 517, note (n) 
 
 when sheriff seizes for separate debt, 362. And ADDENDA 
 and disposition, 679. See Reputed Ownership 
 
 ORDER OF DISCHARGE, 751 
 effect of, 752 et seq. 
 
 joint orders, 753 
 refusal of, 753 
 status of undischarged bankrupt, 754 
 
 ORIGINATING SUMMONS, 
 
 right of creditor of firm to proceed against estate of deceased partner by, 
 598 
 OSTENSIBLE PARTNER, 
 
 notice of retirement of, how to be given, 221 
 
 liability of, to person who knows he has no interest in firm, 173, 175 
 See Holding Out ; Nominal Partner ; Quasi-Partnership 
 
 OUTGOING PARTNER, 
 
 agreements as to purchase of share of, &c, 422 et seq. 
 assignment of share by, 450 
 indemnity to, 450 
 right of to retire from firm, 573 
 See, also, Retired Partner 
 
 OUTLAWRY 
 
 of partner, effect of, 73 
 dissolves the partnership, 583 
 OUTLAYS AND ADVANCES, 
 
 allowances for, 381. See, also, Advances ; Allowances ; Contribu- 
 tion 
 
 useless, 382 
 
 useful but unauthorised, 383 
 
 by partner on account of debts not due, 382, note (6) 
 
 on separate property of one partner and vice verm, 330 et seq. 
 
 no allowance for expenses unless proved to have been incurred, 384 
 lien for. See Lien 
 
 of part owners for, 57, 60, 355
 
 INDEX. 885 
 
 [The paging refers to the [*] pages.] 
 
 OVERDRAWING^, 
 
 interest on, when payable, 390 
 effect of, same as borrowing money, 132 
 See Accounts 
 
 OWNERS, 
 
 consent of true, as regards reputed ownership, 682 
 
 PARLIAMENT. 
 
 persons procuring act of, not partners, 23 
 share of partner, when qualification for vote for, 348 
 persons having privilege ot, not exempt from Bankruptcy law, 624, 
 note (») 
 
 PAROL 
 
 evidence, admissibility of, where partnership in land, 51, note (n), 81 
 contract, by partner, who may sue on, 177 
 See Evidence 
 
 PARTICULAR PARTNERSHIPS 
 
 distinguished from general, 49 
 shares in, presumptively equal, 350 
 See Partnership 
 
 PARSONS, 
 
 his definition of partnership, 3 
 
 PARTIES 
 
 to actions. See Abatement ; Actions 
 
 by and against partners, 264 et seq. And see Addenda 
 on contracts, 273 et seq., 280 et seq. 
 for torts, 278 et seq., 283 
 in respect of equitable rights, 283 
 where a change in the firm, 284 
 between partners, 456 et seq. 
 
 for an account, 460, See Account 
 by and against the executors of a deceased partner. 460, 461 
 
 necessity of making surviving partners parties, 460, 597, 612 
 by sub-partner, 460 
 by mortgagee of share in mine, 461 
 by assignee of partner's share, 461 
 for a dissolution, 460 
 
 actions by some on behalf, &c, 265 et seq., 461 
 representation by public officer, 461 
 actions not seeking dissolution, 462 
 
 nor division of assets, 463 
 for an injunction, 461 
 
 to rescind contracts tainted with fraud, 482 
 by some on behalf of themselves and others 
 when allowable, 265, 459, 461 
 identity of interest requisite in, 462 
 when trustee in bankruptcy of one partner a necessary party, 289 
 no action defeated for mis-joinder or non-joinder, 264 
 
 PARTITION, 
 
 not ordered instead of sale, 555 
 
 except in cases within the Partition acts, 557 
 agreement for on dissolution, meaning of, 429 
 
 PARTNERS, 
 
 who may be. See Capacity of Partners 
 
 by holding out, 40 et seq. See Holding out 
 
 who are and who are not. See Analysis of Contents, Bk. I., and 
 
 infra, PARTNERSHIP
 
 886 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 PARTNERS— continued. 
 
 liabilities of, to creditors. See Analysis of Contents, Bk. II., and 
 
 Bk. IV., c. 2 and 3, and Liabilities 
 mutual rights and duties of. See Analysis of Contents, Bk. III. and 
 
 Bk. IV., c. 2 and 3 
 rights and liabilities of, in the event of a dissolution. See Analysis of 
 
 Contents, Bk. IV., c. 1,2, and 3 
 bankruptcy of. See Bk. IV., c. 4. See Bankrupt Partner ; Bank- 
 ruptcy 
 deceased. See Deceased Partners 
 dormant. See Dormant Partners 
 incoming. See Incoming Partners 
 infant. See Infant 
 lunatic. See Lunatic and Lunacy 
 nominal. See Nominal Partners 
 ostensible. See Ostensible Partners 
 outgoing. See Outgoing and Retired Partner 
 retired. See Retired Partner 
 promoters of companies not, 23, 24 
 servants, when, 13 
 
 rights of, depend on agreement and on conduct, 10, 12, 408 
 members of mutual insurance societies not, 51 
 co-owners, difference between and, 52 
 not sureties of firm. 111 
 both principals and agents, 111 
 disabilities of, 116, 117, 624 
 liability of, for acts of co-partner before execution of articles, 202 
 
 before joining firm, 202 
 special agreements between. See Articles of Partnership; Implied 
 
 Powers 
 dutiesof, towards each other, not to be all found in partnership articles, 406 
 extent of liability at common law, 202 
 high standard of honour to be observed by, 303. See Fraud ; Good 
 
 Faith ; Honour 
 actions by and against. See Actions 
 petition in bankruptcy by, 635. See Bankruptcy 
 proof between, in bankruptcy 
 
 against joint estate, 721 
 
 against separate estate, 737 
 execution against 
 
 for debt of firm, 298 
 
 for separate debts, 356 
 See Execution 
 property of, 322 et seq. See Bk. III. c. 4, and Assets ; Property 
 
 application of doctrines of reputed ownership to, 683. See Reputed 
 Ownership 
 right of, to dissolve partnership. See Bk. IV. c. 1 ; and Dissolution 
 lien of, 351. See Lien 
 shares of. See Bk. III. c. 5, and Shares 
 option to become, 20. See Option 
 power to nominate, 21 
 number of limits to, 70, 101 
 
 may be registered as shareholders in the name of, 112 
 legal proceedings between. See Bk. III. c. 10 ; Actions 
 
 See also, Partnership 
 
 PARTNERSHIP, 
 
 meaning of the term, 1 
 definitions of, 2
 
 INDEX. 887 
 
 [The paging refers to the [*] pages. ] 
 PARTNERSHIP— continued. 
 
 ordinary and extraordinary ,4 
 
 distinguished from corporations and companies, 4 
 
 distinguished from contracts of loan, 15, 16, 37 et seq. And Addenda . 
 
 not having gain for their object, 2, 4, note (_t), 50 
 
 where agreement unconcluded, 19 
 
 prospective, 19 et seq. 
 
 clause negativing a, effect of, 11 
 
 as regards third persons, 25 et seq. See Bk. I. c. 1, § 2, and Quasi- 
 Partnership 
 
 in profits not necessarily a partnership in the assets by which they are 
 made, 14, note (.r), 323 
 
 what constitutes a, 10 et seq. See Bk. I. c. 1. 
 in profits and losses, 10 
 in profits only, 10 — 17 
 evidence of. See Bk. I. c. 4, 80 et seq. See Evidence 
 
 who may enter into. 71. See Capacity 
 
 consideration for, 63. See Consideration 
 
 general nature of, 110 et seq. See Bk. I. c. 6 
 
 principals of agencies as applied to, 124. See Implied Powers, 
 
 capitals of, 320. See Capital 
 
 commencement of, 22 
 
 duration of, 121 et seq. See Bk. I. c. 7. See Duration of Partnership 
 
 dissolution of. See Bk. IV. c. 1, and Dissolution 
 
 transfer of share in, 363, 583. See Transfer of Shares 
 
 retirement of partners from, 573 
 
 expulsion of partner from, 574 
 
 at will and for a term, 121, 413 
 
 articles of, 406 et seq. See Articles of Partnership 
 
 articles to be drawn up, 22 
 
 property of, 322 et seq. See Bk. III. c. 4, and Assets ; Property ap- 
 plication of doctrines of reputed ownership to, 683. See Reputed 
 
 Ownership 
 nature of partners' interest in, 339. See Share 
 
 general and particular, 49 
 
 extent of, depends on agreement, 49 
 
 in particular transactions, presumption of equality of shares in, 350 
 
 management or affairs of, 301 et seq. 
 
 accounts, 396 et seq. See Accounts 
 
 contracts ot. See Contracts 
 
 rescission of, 432 et seq. See Rescission 
 
 specific performance of, 475. See Specific Performance 
 
 actions on. See Actions 
 
 agreements for deed of, 411. See Agreement 
 
 illegal, 91. See Bk. I. c. 5 
 
 partnerships with common partners. See Connected Firms 
 
 sub-partnership, 48 
 
 compared with co-ownership, 52 et seq. 
 
 premiums paid for, 64. See Premiums 
 
 books of. See Books 
 
 induced by fraud, 482. See Fraud 
 proof in respect of, 739 
 
 PART OWNERS, 
 
 not partners, 52 et seq. 
 lien of, 56, 60, 355 
 not each other's agents, 124, note (a) 
 admissions of, 128, note (/) 
 See Co-owners
 
 bb» INDEX. 
 
 [The paging refers to the [*] pages.] 
 
 PART PAYMENT. See Payment 
 
 effect of, as regards Statute of Limitations, 260 
 
 by continuing partner, effect of on retired partner, 263 
 
 PART PERFORMANCE, 
 
 excludes operation of the Statute of Frauds, 81, 83 
 
 PATENT, 
 
 agreements as to, 415 
 illegal partnerships in, 99 
 co-owners of, 62 
 partnership in working, 49 
 
 PAUPER, 
 
 transfer of share to, when valid, 365 
 
 PAWNBROKERS, 
 
 illegal partnerships between, 99 
 
 PAYMENT, 
 
 into Court, when ordered, 505 
 
 before trial, 505 
 
 after trial, 506 
 
 effect of admissions as regards, 505 
 into Court, evidence of partnership, 90 
 when a defence to an action for an account, 515 
 by one partner, 224, note (n) 
 
 when not allowed as against the firm, 386, 387 
 
 effect of, as regards the Statute of Limitations, 260 — 262, 597 
 by Paymaster-General to one partner, 135, note {n) 272, note (e) 
 by receiver, 511 
 to one partuer, 134 
 
 of debt not due to firm, 134 
 to surviving partner discharges payer, 342, note (s) 
 to bankrupt partners, validity of, 668 
 to agent by bill drawn in his name, 136 
 to one of several trustees no discharge, 218, note (m) 
 bond fide, when protected, 665, and note (r) 
 receipt for. not conclusive evidence of, 135 
 termination of liability by, 225 
 imputation of, 225 et seq. See Appropriation of Payments 
 
 PEACE 
 
 declaration of, whether operates retrospectively, 72, note (k) 
 
 PENAL STATUTES 
 
 construction of, 95 
 
 PENALTIES, 
 
 reservation of, in partnership articles, 454 
 action between partners for recovery of, 563 
 power of one partuer to bind firm in, 143, 144 
 prohibitions under, 95 
 
 PERSONAL ESTATE, 
 
 partnership realty when treated as, 343 
 
 when not, 347 
 shares in partnerships are, 343 — 346 
 actions between partners in respect of, 560 
 doctrine of reputed ownership, as regards. 678 
 of bankrupt vests in trustee, 652 
 
 PERSONAL SERVICES, 
 
 partner cannot charge for, 380
 
 INDEX. 889 
 
 [The paging refers to the [*] pages.] 
 PERSONS 
 
 corporation when, 6, note (d) 
 capable of being partners, 71. See Capacity 
 their number, 70, 101 
 their capacity, 71 et seq. 
 meaning of, in Bovill's Act, 36 
 
 PETITION 
 
 for adjudication in bankruptcy, 625, 633 
 
 by one partner against another, 635, 636 
 when improper, 636 
 
 PETITIONING CREDITOR 
 in bankruptcy, 633 
 
 though joint, when entitled to rank as a separate creditor, 731, and 
 
 note (it) 
 election by, to stand as a joint or separate creditor, 747 
 where public officer, 633, note («) 
 company, 633 
 
 PHYSICIANS, 
 
 partnership between unqualified, 98 
 
 PLACE, 
 
 of business should be stated in the articles, 412 
 right of majority to choose, 315 
 
 PLEDGE 
 
 of partnership goods for private debt, 172 
 power of one partner to bind firm by, 139 
 
 after dissolution, 140, note (c), 218. 219 
 
 redemption of, 140 
 
 POLICIES OF INSURANCE, 
 
 not within doctrines of reputed ownership, 678 
 See. also, Marine Insurance 
 
 POLLOCK, 
 
 his definition of partnership, 3 
 
 POSSESSION, See Reputed Ownership 
 
 POTHIER, 
 
 his definitions of partnership, 3 
 
 POWERS 
 
 conferred by articles of partnership, must be construed with reference to 
 
 object of firm, 406, 407 
 of majorities, 313. See Majorities 
 of partners, 124. See Implied Powers 
 of expulsion, 574 
 
 exercise of, 408, 426 et seq. 
 of management, 301 
 to nominate partner, 21, 434 
 agreements as to, 418 
 of attorney 
 
 construction of, 130, and see Harper v. Godsell, L. R. 5 Q. B. 422 
 
 PRACTICE. See Actions ; Judicial Proceedings 
 of partners, importance of, 408, 409 
 
 PRECEDENTS 
 
 of orders for account, 516, 517, note (n)
 
 890 INDEX. 
 
 [The paging refers to the [*] pages.] 
 PRE-EMPTION, 
 
 clauses giving rights of, 423 
 
 when the partnership is continued after expiration of the term, 
 410, 411 
 
 PREMIUMS, 
 
 action for, where agreement to become partners broken, 559 
 agreements as to, in partnership articles, 413 
 apportionment of, 64 — 69 
 recovery back of, 64 et seq. 
 in cases of fraud, 64 
 in cases of illegality, 102 
 where consideration has tailed, 65 
 
 where partnership ceases sooner than was expected, 65 
 in event of bankruptcy, 67 
 lunacy, 67 
 death, 67 
 disagreements, 68 
 misconduct, 68 
 
 what sufficient. 68 
 where neither party is to blame, 65 
 
 where no time for continuance of partnership was fixed, 66 
 where for a term, 66 
 
 where a partnership was only contemplated, 727 
 where agreement made on dissolution, 66 
 where no agreement, 67 
 right to retain, on dissolution, 571, note (g) 
 amount to be returned, 68 
 time when question should be raised, 69 
 
 PREROGATIVE 
 
 of crown as regards forfeited shares, 340, 583, note (t) 
 
 PRESUMPTION 
 
 of equality of shares, 385 
 of equality of loss, 12, 403 
 
 PRICE 
 
 to be charged by one partner in account with firm, 306, 309 
 
 PRINCIPAL, 
 
 one. partner holding himself out as, 179, 277, 281 
 not bound by a contract known to be fraudulent, 148 
 right of, to profits made by agent or sub-agent, 307, note (r) 
 bond fide payment to, by agent when protected, 665, note (r) 
 See Agency and Agent 
 
 PRINCIPAL AND AGENT, 
 partner both, 111 
 
 PRIORITY, 
 
 debts entitled to, 709, and note (z). See Debts 
 
 PRIVATE STIPULATIONS 
 
 of partners, effect of having notice of, 173, 174, 176 
 
 PROBATE DUTY, 
 
 payable in respect of shares of partners, 347, note (a) 
 
 PROCEEDINGS, 
 
 conduct of, where two actions of administration, 598, note (n) 
 stay of, on bankruptcy, 709
 
 INDEX. 891 
 
 [The paging refers to the [*] pages. ] 
 
 PRODUCTION OF DOCUMENTS, 501. See Books; Discovery; Inspection 
 rules as to, 503 
 agreement precluding, 504 
 belonging to persons not before the court, 503 
 of books of account, 404, 537 
 in constant use, 505 
 to professional accountants, 504 
 to agents, 505 
 
 PROFITS, 
 
 what are, 7, 394 
 
 agreement to share, see Book I., c. 1 
 a test of partnership, 7, 12 et seq. 
 without sharing losses, 15 et seq. 
 in lieu of salary, 13, 390 
 specific performance of, 477 
 annuities payable out of, 435 
 
 when no profits are made, 435 
 annuities in lieu of, 28 
 salary varying with, 13, 22, 28, 390 
 liability incurred by sharing, 25 et seq., 604, note (I) 
 
 origin of rule that those who share profits are liable to losses, 26 
 modern alterations in the above rule, 
 
 by the judgment in Cox v. Hickman, 30 
 
 more recent decisions, 31 et seq. And ADDENDA 
 act of 28 & 29 Vict. c. 86, 35 
 distinction between sharing, 
 net and gross profits, 7 
 profits and gross returns, 8, 17, 18, 28, 29 
 profits and payments varying with them, 29 
 partnerships in profits, 12 et seq. 
 
 not necessarily a partnership in the assets by which they are 
 made, 14, note \x), 328 
 presumption of equality of shares of, and losses, 12, 348, 385 
 how ascertained, 397 
 division of, 393 
 
 payment of, out of capital. 394, note (e) 
 what divisible as, 394 
 altering principles of division of, 319 
 exclusion of partner from share of, 395 
 share of, collaterally secured, 36, note (t) 
 income tax payable in respect of what, 394, note (c) 
 legatee of share in partnership entitled to, 620 
 no apportionment of, 621 
 account of, 401. See ACCOUNT 
 
 agent must account for, 305, 307, note (r) 
 partners must, 305 et seq. 
 
 when derived from use of partnership property, 309 
 from dealings with the firm, 305 
 from connection with the firm. 310 
 from competition with the firm, 312, 419 
 since dissolution, 435, 521, 614 et seq. 
 where the capital is lent at interest, 521 
 where the traders are not trustees, 522 
 where they are trustees, 523 
 
 where some of the traders are trustees, 523 et seq. 
 rights of legatee against executors who are surviving partners, 528, 
 530, 534 
 may take interest at 5 per cent, or profits, 531
 
 892 INDEX. 
 
 [The paging refers to the [*] pages.] 
 PROFITS— continued. 
 
 account of subsequent to bankruptcy, 648 
 
 when share of deceased partner is not got in, 521 
 co-owners sharing, 18, 53 
 managers sharing, 10, 13 
 trustees sharing, 523 et seq. 
 
 executors of deceased partner sharing, 604 et seq. See EXECUTOBS 
 servants sharing, 13, 18, 390 
 if not drawn do not necessarily bear interest, 390 
 See, also, Losses 
 
 PROFITS AND LOSSES, 
 
 agreement to share, 10 
 
 type of partnership, 7, 10 
 
 restricted rights under such agreements, 10 
 
 clauses negativing partnerships in, effect of, 11 
 shared alike unless agreement to the contrary, 348, 385 
 partners' share of, how ascertained, 397 
 
 See Profits ; Losses 
 
 PROHIBITORY CLAUSES 
 
 in articles of partnership, 419 
 against carrying on trade, 436 et seq. 
 
 PROHIBITORY STATUTES, 
 construction of, 95 
 
 PROMISE 
 
 by one partner to pay debt, 136, 261 
 
 effect of, as regards the Statute of Limitations, 261, 262, 511 
 to one partner to pay debt, 136, note (d) 
 by creditor to discharge retired partner, 242 
 to pay out of certain funds only, effect of, 201 
 by one partner to provide for bill of exchange, 139 
 
 PROMISSORY NOTES, 
 
 liability of partners on, 180, 187 
 
 effect of form of, 176 et seq. 
 
 power of one partner to bind firm by, 129. See Implied Powers 
 
 authority to transfer, 131 
 
 joint and several, liability on, 187 
 
 action on 
 
 by one partner against another, 565 
 
 by partners, 274 
 injunction to restrain negotiation of, 542, note (6) 
 issue of, by bankers, 96, note 
 instruments held to be, 187 et seq. 
 
 given by continuing partner, when binding on retired partner, 213 ft *<</. 
 do not merge debt, 254 
 See Bills of Exchange 
 
 PROMOTERS OF COMPANY 
 
 not partners, 23, 24 
 
 not impliedly liable to each other for services, 24, note (q) 
 
 observations on liabilities of, 45 
 
 extent of such liabilities, 206, 207, 385 
 liability of, for acts done before they become promoters, 206 
 effect of admission by one as against the others, 88, note (o) 
 
 PROOF 
 
 of partnership, 80 et seq. See EVIDENCE
 
 INDEX. 893 
 
 [The paging refers to the [«] pages.] 
 PROOF OF DEBTS, 707 et seq. 
 
 in bankruptcy, 701 et seq., 707 et seq. 
 liquidated, 707 
 unliquidated, when, 707 
 against executor for devastavit, 738 note (j) 
 against bankrupt partner, does not preclude creditor from having 
 
 recourse to the estate of deceased partner, 250, 602 
 by secured creditor, 602, 709 et seq., 749 
 by bankrupt trustee, 707 
 by surety, 719 
 by joint creditors, 720, 730 
 by separate creditors, 728, 730 
 by partners, 721, 737 
 by firm, 707 
 by company, 707 
 if brought up for less than their nominal amount, 663 
 on administration of estate of deceased partner, 597, 598 
 See Bankruptcy 
 
 PROPERTY 
 
 of partners, 322 
 
 joint estate, what is, 323 
 
 agreement of partners the true test, 323, 329, 414 
 property paid for by the firm, belongs to firm, 323 
 
 where not, 325 
 secret benefits obtained by one partner, 307, 325 
 ships, 324 
 
 good will, 327, 415, 439 
 
 money paid to one partner for his exclusive benefit, 325 
 property acquired after dissolution, 326 
 nature of partners' interest in, 339. See Shares 
 devolution of, in case of death of partner, 341. See Death 
 to what extent personal estate, 343 et seq. 
 sale of on dissolution, 429. See SALE 
 separate estate, 327 
 
 property used for partnership purposes not necessarily partner- 
 ship property, 14, note (x), 328 
 property bought with the money of the firm, 329 
 appointments, 331, 414 
 stock in trade, 331 
 furniture, 329 
 lease, 330 
 
 trade secrets, patents, &c, 415 
 houses built on partnership property, 330 
 lauds farmed in common, 332 
 
 joint-tenants partners in profits, 332 
 devisees of a trade and of land for the purpose of carrying it on, 
 
 333 
 devisees of mines, 333 
 
 land acquired for the purposes of trade, 333 
 conversion of joint estate into separate estate, and vice versd, 334 
 et seq., 697 
 agreement of partners sufficient for, 334, 697 
 
 if executed, 337, 697 
 evidence of such agreement, 700 
 dealings between one partner and the firm, 335 
 change of property on change in firm, 336 
 effect of fraud on, 338, 697 
 of holding out on, 700
 
 894 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 PROPERTY— continued. 
 
 effect of doctrine of reputed ownership on, 700 
 continuance of lien on, 699 
 effect of in administrating estates in bankruptcy, 697 etseq. 
 binds creditors, 335 
 trustee in bankruptcy, 335, 697 
 belonging to firm, profits derived by use of, must be accounted for 
 
 to the firm, 309 
 sharing produce of, 17, 28, 29, 53, 347 
 vesting in trustee of bankrupt partners, 644, 646 et seq. See Trustee 
 
 in Bankruptcy 
 actions between partners relative to. See Actions 
 of the firm, agreements as to, 414 
 lien on. See Lien 
 use of, evidence of partnership, 90 
 
 wrongful employment of, by trustee, liability for, 523 et seq. 
 See Assets ; Capital 
 
 PROSPECTIVE 
 
 partnerships, 20, 80, 412 
 
 PROSPECTUS 
 
 application of doctrine of holding out to persons signing, 44 
 evidence of partnership, 89 
 
 PROTECTED TRANSACTIONS 
 
 under the Bankruptcy act, what are, 630 
 
 PROTEST, 
 
 effect of, as regards laches, 469 
 
 PRUSSIAN CODE, 
 
 definition of partnership in, 3 
 
 PUBLIC, 
 
 holding out as partner to, 40 et seq. See Holding OUT 
 mode of giving notice of dissolution to, 214, 222, 223 
 See Notice 
 
 PUBLIC OFFICES, 
 
 partnership for sale of, illegal, 92 
 
 PUBLIC OFFICER, 
 
 bill of exchange payable to, 180, note (a) 
 presence of, in action for dissolution insufficient, 462 
 company entitled to sue by, may petition under Bankruptcy act, 633 
 proof in bankruptcy by, 739 
 See Action 
 
 PUBLIC POLICY, 
 
 partnerships opposed to, 92 
 
 PUBLISHER AND AUTHOR, 14 See Author and Publisher 
 
 PUFFENDORF, 
 
 his definition of partnership, 3 
 
 PURCHASE, 
 
 partner may, his co-partners' share, 313 
 option of, of co-partners' share, 423 
 how declared, 424 
 enlarging time for, 424 
 
 of share of partner sold under nfi. fa., 340, 356 et seq. See ESECUTION 
 See, also, Sale of Shares
 
 INDEX. 895 
 
 [The paging refers to the [*] pages.] 
 PURCHASE— continued. 
 of goods 
 
 by one partner for firm, 144 
 
 from firm, duty to disclose in case of, 306 
 for re-sale and division of produce, 53 
 See Sale 
 
 PURCHASER 
 
 protected in case of bankruptcy wben, 625, note (t) 
 See Purchase 
 
 QUARRELS 
 
 dissolution in case of, 581 
 
 inferred from, 572 
 injunction in cases of, 543 
 
 QUARRIES. See Mines 
 
 who are partners in, 54 
 
 partner in, has no power to bind co-partners by bills, 130 
 
 QUASI-PARTNERSHIP, 25 
 meaning of, 9 
 evidence of, 83 et seq. 
 by sharing profits, 25 
 
 distinction between sharing profits and gross returns, 28, 29 
 
 and payments varying with 
 them, 29 
 alteration in law as to, by Cox v. Hickman, 30 et seq. 
 by holding oneself out as a partner, 40 et seq. 
 effect of doctrine on deceased partners, 605 
 
 effect of knowledge that a person who hold himself out as a part- 
 ner is not a partner, 40, 41 
 effect of fraud, 41, 42 
 what constitutes a holding out, 42 
 where name is concealed, 42, 45 
 holding-out must be to the plaintiff, 42, 43 
 authority to hold out, 42, 43 
 holding out by retiring partner, 45 
 by surviving partner, 46 
 by bankrupt partner, 212, 667, 700 
 application of doctrine to inchoate partnerships, 44 
 holding-out, a question of fact, 44 
 not in cases of tort, 47 
 
 bills of exchange of, 181. See Bills of Exchange 
 See, also, Holding-out 
 RACE-HORSE. 
 
 co-owners of, not partners, 14, 18, 51 
 RATIFICATION, 
 
 knowledge essential to, 143 
 when possible, 148, note [a) 
 in case of torts, 148 
 by firm, of guarantee, 138 
 
 of submission to arbitration, 129 
 by partners, effect of in settling accounts, 387, 388 
 by infant, 76 
 
 of deed executed by one person for another, 137, note (i) 
 REAL ESTATE, 
 
 actions between partners relating to, 560 
 of firm, devolution of, in case of death of partner, 341 
 treated as personalty, 343
 
 896 INDEX. 
 
 [The paging refers to the [*] pages.] 
 RECEIPTS 
 
 of one partner, when binding on firm, 135, 152, 270 
 
 not conclusive evidence of payment, 135 
 
 by surviving partner discharges debtor to firm, 342, note (s) 
 
 given to one partner does not discharge co-partners, when, 239 
 
 not entering a ground for dissolution, 581 
 
 RECEIVER, 
 
 object of having a, 545 
 
 cannot carry on business unless appointed manager, 545. See Manager 
 
 when appointed, 545 
 
 in actions not seeking a dissolution, 545 
 defendant entitled to, before judgment, 549 
 not refused because no dissolution is prayed, 546 
 
 difference between granting an injunction and appointing a receiver,547 
 appointment of, operates as an injunction, 538 
 effect of payment by, on Statute of Limitations, 511 
 delivery of partnership books to, 554 
 refused, though an injunction is granted, 547, note (g), 549 
 
 on ground of laches, 469 
 against creditor of solvent partner at suit of trustee in bankruptcy, 549 
 executors, 548 
 partners, 547 
 non-partners, 548 
 
 surviving partners, 548, note (»»), 550 
 a mortgagee, 553 
 co-owners, 59, 62 
 influence of the number of partners on the appointment of, 549 
 grounds for the appointment of, against a partner, 550 
 agreement, 550 
 misconduct, 550 
 fraud, 551 
 exclusion of co-partner, 551 
 
 where partner excluded is also a mortgagee, 553 
 denial of partnership, 552 
 illegality of partnership, 552 
 effect of Judicature acts on appointment of, 546 
 of mines, 53, 552 
 in case of lunacy, 553 
 appointment of partner to be receiver, 553 
 
 of solvent partner on bankruptcy, 670 
 order appointing receiver, 553 
 security to be given by, 553 
 
 interfering with, a contempt of Court, 538, 539, 554 
 right of arbitrator to appoint, 454 
 
 appointment of, on breach of agreement as to getting in debts, 448 
 action by, for recovery of money to be distributed by him, 569, note (wi) 
 execution on judgment where a, 300, note (e), 359 
 
 RECEIVING ORDER, 
 petition for, 625 
 against the firm, effect of, 637 
 See Bankruptcy 
 
 RECITALS 
 
 in releases, 238 
 
 evidence of partnership, 90 
 
 REDEMPTION, 
 
 implied power of partner to redeem, 140
 
 INDEX. 89T 
 
 [The paging refers to the [»] pages.] 
 
 REDUCTION OF CAPITAL, 
 
 partner cannot make, without consent, 321 
 See Capital 
 
 REFERENCE 
 
 to arbitration, agreements for, 451. See Arbitration 
 action on, 451, note (o) 
 power of partner to make, 129 
 ratification of by co-partners, 129 
 REGISTERS, 
 
 evidence of partnership, 85, 90 
 
 REGISTRATION, 
 
 asssociations not requiring, 50, note (/), 101, note (t) 
 of firm name equivalent to use, 114 
 
 as shareholders, 112 
 
 as owners of copyright, 112 
 of deeds of arrangement, 756 
 
 REIMBURSEMENT, 
 
 right of, for expenses, 371, 381 
 See Contribution; Outlays 
 
 RELATION BACK 
 
 of the title of trustee in bankruptcy, 663. See Trustee in Bank- 
 ruptcy 
 general doctrine of, 663 et seq. 
 
 as regards bond fide dealings without noticeof act of bankruptcy, 665 
 consequences of doctrine of, as regards 
 dealings with bankrupt partners, 666 
 dealings with solvent partners, 669 
 execution creditors, 674 
 in case of compositions in bankruptcy, 755 
 of partnership articles, 88, 412 
 
 RELEASE, 
 
 setting aside, 45 
 
 must be set aside before account stated is re-opened, 514 
 a defence to action for account, 516 
 by one partner, 135, 145 
 of one partner, effect of, 237, 241 
 effect of recitals in, 238 
 by removing seal, 238 
 by arrest, 238 
 
 by merger of securities, 254, 703 
 by substitution of debtors, 239 
 
 of drawer of bill, does not discharge the acceptor, 238 
 in form, held to be only a covenant not to sue, 237 
 evidence of partnership by a, 90 
 
 difference between, and assignment as regards stamp duty, 450 
 Sea Liability 
 
 REMAINDERMAN. See Tenant for Life 
 
 REMOVAL 
 
 of seal, release by, 238 
 
 of goods, within protecting clauses, 681 
 
 REMUNERATION 
 
 by share of profits, 35 et seq. See Profits 
 for services, 380 
 
 after dissolution, 381 
 of trustee in bankruptcy, 694 
 * 34 LAW OF PARTNERSHIP.
 
 898 INDEX. 
 
 [The paging refers to the [*] pages. } 
 RENEWAL OF LEASE. See Lease 
 
 by one partner, enures to benefit of firm, 307 
 
 KENT, 
 
 action for, by one partner against another, 565 
 power of one partner to distrain for, 137 
 
 REPAIRS, 
 
 liability of co-owners for, 60. And see Addenda 
 
 REPRESENTATIONS 
 
 of one partner, when binding on firm, 146, 162 et seq. 
 
 by partner that debt is due, effect of on liability of firm, 260, 261 
 
 by one partner that he is acting for himself alone, effect of, 281 
 
 by one partner as to the extent of his authority, 165, 168, 481, note, ( j») 
 
 as to nature of business, 166 
 
 See Fraud ; Misrepresentation 
 
 REPUDIATION 
 
 of partnership induced by fraud, 479 et seq. 
 by infant, 75 
 
 See Fraud ; Rescission of Contract 
 
 REPUTED OWNERSHIP, 
 
 general doctrines of, 676 et seq. 
 
 effect of customs of trade on, 677, note (y) 
 
 property subject to, 678 — must be 
 
 in order and disposition, 679 
 in trade or business, 680 
 at time of bankruptcy, 681 
 with consent of true owner, 681 
 doctrine of, does not apply to bond fide dealings, &c, without notice of 
 an act of bankruptcy, 681, 682 
 as to notice, 679 
 application of doctrine of, to 
 ships, 678 
 
 choses in action, 678 
 
 shares in companies, debts, policies, &c, assigned without notice, 
 . 678, 679 
 
 property in possession for lawful purpose, 682 
 or by virtue of custom of trade, 682 
 trust property, 683 
 
 property held for specific purpose, 683 
 partnership property, 684 
 
 when a change in the firm, 685 
 debts assigned to continuing partners, 685 
 property in the possession of a surviving partner, 687 
 dormant partners, 689 
 effect of, on lien, 684 
 
 on separate estate of bankrupt partner, 684, 732 
 on joint estate of firm, 684 
 
 RESCISSION OF CONTRACT 
 
 on the ground of fraud, generally, 163, 479 et seq. 
 in toto or not at all, when, 490 
 where a third party intervenes, 490 
 not for every fraud, 479 — 481 
 
 fraud must be on some material point, 481 
 and have been relied on by the plaintiff, 4sl 
 though plaintiff might have ascertained the truth. 483 
 loss of right to rescind, 467, 490 
 bad bargains not set aside except for fraud, 485
 
 INDEX. 899 
 
 [The paging refers to the [*] pages.] 
 RESCISSION OF CONTRACT— continued. 
 
 of contracts of partnership on the ground of fraud 
 general right to. 482 
 for false representations, 482 
 
 plaintiff may sue for dissolution in the alternative, 491 
 instances of, in the case of partners, 482, 483 
 of bargains between outgoing and continuing partners, 484, 485 
 of bargains between surviving partners and the executor of a deceased 
 
 partner, 487 
 of bargains made on dissolution, 484 
 of failure of consideration. See Consideration 
 by infant, 75 
 indemnity in case of, 484 
 extent of indemnity, 484 
 
 liens on assets for purchase-money in case of, 485 
 And see Fraud ; Contract 
 RESIDENCE 
 
 of partners, effect of on partnership in the time of war, 72, 73 
 
 RESTRAINT 
 
 of trade, 436, 437, and note (o) 
 
 RETAINER 
 
 of solicitors, as evidence of partnership, 84, note (r) 
 by surviving partner executor of deceased, of balance due on the part- 
 nership account, 490 
 
 RETIRED PARTNER, 
 
 actions by and against, 286 
 
 liability of, to creditors, 201 et seq., 242 et seq. See Liability 
 for future acts of firm, 210 et seq. 
 for past acts, 223 
 discharge of, 
 
 by agreement with creditors, 239 
 by notice, 210. See Notice 
 death, 211. See Death 
 bankruptcy, 212. And see Bankruptcy 
 payment, 225 
 release, 237 
 lapse of time. 257 
 dealings of creditor with remaining partners, 242 et seq. 
 
 and incoming partners, 211, note (a), 245, 248 
 fraud of creditor, 249 
 when not affected by notice given to others, 143 
 how affected by doctrines of reputed ownership, 685 et seq. 
 by doctrine of holding out, 45, 216 
 rescission of agreements made by and with, 484 et seq. 
 right of, to indemnity from the continuing partners, 450 
 
 RETIREMENT 
 
 of partner, agreements as to, 422 
 effect of, on liability, 212 
 accounts on, 514 
 
 account of profits made after where capital continued in the firm, 521 
 et seq. 
 See Retired Partner 
 dissentient partner not bound to retire, 317 
 right of, 
 
 from partnership. 573 
 See Articles of Partnership ; Rescission of Contract ; Spe- 
 cific Performance
 
 900 INDEX. 
 
 [The paging refers to the [*] pages.] 
 RETROSPECTIVE 
 
 articles, effect of, 88 
 partnership, 412 
 
 See Relation Back 
 
 RETURN 
 
 of premium, 64 ei seq. See Premium 
 of goods sold to firm on credit, 144 
 
 REVENUE LAWS, 
 
 breach of, by one partner, effect of, 149 
 
 illesality of partnership infringing, 95, 99, note (s) 
 
 contribution in cases of breach of, 378 
 
 REVOCATION 
 
 of agent's authority, effect of, on his right to indemnity, 371 
 of partner's authority, 170, 210 
 of submission to refer, effect of, 452 
 
 RIFLE CORPS, 
 
 liability of officers of, for clothing of, &c. , 50, note (k) 
 
 RIVALRY 
 
 between partner and firm, 309 ei seq. 
 
 RUTHERFORD, 
 
 his definition of partnership, 3 
 
 SAILORS 
 
 sharing produce of voyage not partners, 19 
 
 SALARY 
 
 varying with profits, 13, 18, 35. See Wages ; Profits 
 share of profits in lieu of, 13, 18, 22 
 partner's right to, for extra work. 381 
 
 SALE 
 
 by one partner, when binding on firm, 146, 569 
 
 when actionable by co-partner, 568 
 
 when made after dissolution, 217, 218 
 bankruptcy, 671 
 by partner to firm, 305 e1 seq. 
 
 action between partners for share of produce of, 568 
 of business, effect of, on vendor's right to carry on the business sold, 
 
 440, 558. See Goodwill 
 on dissolution 
 
 partner's right to, 555 
 
 order for, 555 
 
 when dispensed with, 556 
 
 agreements as to, 556 
 
 partition instead of, when, 555, 557 
 
 mode of selling, 557 
 
 conduct of, 558 
 
 leave to bid at, 558 
 
 of good will, 558 
 
 of pending contracts, 558 
 
 valuation of unsaleable appointments, 558 
 
 directed before trial, 559 
 of shares of partners 
 
 rights of purchaser, 358, 363 
 causes a dissolution, 359, 363, 583 
 under fi fa., 356 
 
 may be by private contract, 358 
 since the Judicature acts, 361 et seq.
 
 INDEX. 901 
 
 [The paging refers to the [*] pages.] 
 SALE — continued. 
 
 under/, fa., duty of sheriff, 356 
 right of purchaser. 358 
 position of execution debtor, 359 
 co-owners, right of to, 62, 557 
 agreements as to, 422. 423 
 notice of, how given. 423 
 
 by executors of deceased partner to surviving partners 593 
 when an act of bankruptcy, 627 et seq. 
 See, also, Purchaser ; Transfer of Shares 
 
 SAVINGS BANKS, 
 
 debts owing to, no priority, 709, note (z) 
 
 SCHEMES 
 
 of arrangement, 754 el scq. 
 effect of, 755 
 registration of, 756 
 
 SCRIVENER, 
 
 solicitor not, 156 
 SEAL, 
 
 removal of, from bond, effect of, 238 
 
 SECRETS, 
 
 trade, provisions in articles as to, 415 
 SECRET BENEFITS 
 
 obtained by one partner must be accounted for to firm, 305 et seq., 325 
 
 actions for account of, 495 
 
 SECRET PARTNER 
 
 what constitutes, 27 et seq. 
 liability of, 178 
 
 See Dormant Partner 
 SECRET SERVICE MONEY, 
 
 no allowance to partners for, 383, 384 
 SECRETARY, 
 
 notice to, when sufficient, 680, note (s). See Notice 
 for time being, actions by, 458 
 See Public Officer 
 SECURED CREDITORS, 
 proof of debts by, 
 
 in bankruptcy, 709 et seq. 
 
 in respect of bills secured by equitable charge on goods, 709 
 
 See. also, Bills of Exchange 
 splitting demands by, 749 
 
 cases in which, can prove and retain security, 715 
 in administration by the High Court, 602 
 SECURITIES 
 
 of firm, effect of change of partners on, 119 
 merger of debt by taking, 254, 703, 704 
 
 effect of possessing, as regards the right to prove against bankrupt part- 
 ners, 714 
 as regards right to split demands, 749 
 discharge of retiring partner by taking, from continuing, 244, 253 
 position of secured creditors in bankruptcy, 709 et scq. 
 
 in administration in the High Court, 602 
 as to appropriation of, to interest, 720, note (n) 
 28 & 29 Vict. c. 86, does not deprive a lender of his. 37, 38 
 substitution of, effect of on liability of firm, 239
 
 902 INDEX. 
 
 [The paging refers to the [*] pages.] 
 SECURITY, 
 
 power of partner to take, 141 
 
 to give, 138, 139 
 SEPARATE ADJUDICATION. See Bankruptcy 
 
 SEPARATE BUSINESS, 
 
 profits derived from, 305 et seq., 310 et seq., 419 
 
 SEPARATE CREDITORS, 
 
 proof by, in bankruptcy, 692, 728 
 
 against the joint estate, 721 et seq. 
 
 separate estates, 692, 729 
 becoming joint, 704 et seq. 
 rights of, against estate of deceased partner, 610 et seq. 
 
 SEPARATE DEBTS, 
 what are, 702 
 
 bills given for, 171. See Bills of Exchange 
 execution against partners for. 356. See Execution 
 proof and payment of. See Bankruptcy, Deceased Partner 
 effect of partner paying with money of the firm, 171 
 mortgage of joint estate to secure, when an act of bankruptcy, 631 
 cannot be set off against joint debts, 291 et seq. 
 See Joint and Several 
 
 SEPARATE DIVIDENDS, 
 
 declaration of, in bankruptcy, 693 
 
 SEPARATE ESTATE, 
 
 what is, 322, 327, 697. See Property 
 
 property used for partnership purposes may be, 328 
 
 property bought with money of firm, 329 
 
 stock in trade, 329 
 
 houses built on partnership property, 330 
 
 trade secrets, patents, &c., 415 
 
 appointments, 331, 414 
 
 land, 331, 332, 333 
 
 conversion of, into joint, 334, 697 
 
 effect of doctrine of, reputed ownership on, 684 
 
 distinct account of, to be kept in bankruptcy, 693 
 
 consolidation of, with joint estate, 695 
 
 proof against, 729 
 
 where firms, with common partners, 693 
 
 by joint and separate creditors, 729, 730 
 
 by partner in administration action, 599 
 distribution of surplus of, 730 
 caunot be treated as joint estate because in the order and disposition of 
 
 the firm, 686, 732 
 mortgage of, to joint creditors invalid, when, 632 
 costs and remuneration of trustee, when paid out of, 694 
 
 See, also, Bankruptcy; Property 
 of married women, 
 
 liability of, 78. 624, note (71), 691, note (6) 
 
 rights of, who have lent money to husbands for their business, 730 
 
 SERVANTS, 
 
 power of one partner to hire and dismiss, 147, 419 
 
 liability of firm for negligence of, 149 
 
 right of, to account, 493 
 
 payment of, by share of profits, 13. 390 
 
 when partners, 13, 28 
 
 possession of, effect of, as regards reputed ownership, 679
 
 INDEX. 903 
 
 [The paging refers to the [*] pages. ] 
 SERVICE OF WRITS, &c. 
 on firm, 266 
 
 on one partner, when sufficient, 272 
 on foreign firms, 266, note (o) 
 on lunatic partner, 266, note (o) 
 
 SERVICES, 
 
 right of partners to compensation for, 380. See Allowances 
 
 SET-OFF 
 
 hy and against partnerships, 290 
 
 combined effect of rules at law and in equity, 291 
 
 effect of changes in firm and assignment of debt on right of set-off, 
 292 
 agreed to be allowed by one partner, 296 
 where there is a dormant partner, 294 
 cases where one partner only has been dealt with, 295 
 attempt to avoid, by suing one partner, 296 
 against assignee of debt after notice, 296, note (b) 
 by way of counterclaim, what may be, 290 
 where there has been an assignment, 295 
 
 legacy to partner indebted to testator, 620 
 in bankruptcy, 654 et seq. 
 
 tendency to allow, 655 
 
 not allowed where excluded by agreement, 656 
 right of, exists independently of intention, 657 
 only debts or claims capable of proof can be, 658 
 where bills are returned dishonoured, 657 
 where the debts are not yet due, 657 
 simple contract debts with specialty, 657, 658 
 damages against debt. 658 
 where debt secured, 658 
 
 the cross demands must be money demands, 658 
 and mutual, 659 
 
 and contracted before notice of an act of bankruptcy, 662 
 buying up bills of bankrupt for purposes of, 663 
 See Bankruptcy 
 joint demands cannot be set off against separate demands or vice versa, 
 
 269, 291-294, 660 
 agreement to set off joint debt against separate, 269, 294, 661 
 
 where one partner only is bankrupt, 659 
 as regards sureties, 661 
 by and against surviving partners, 290 
 
 SETTING ASIDE 
 
 releases given by one partner, 145 
 
 See, also, Fraud ; Rescission of Contract 
 
 SETTLED ACCOUNT. See Account Stated 
 
 SETTLEMENT 
 
 of shares in partnership, 434 
 
 SHARE IN PARTNERSHIPS, 
 nature of a share, 339 
 
 share a right to money, 339 
 
 whether qualifies for vote, 348 
 
 transfer of, consent of all partners requisite to, 363 
 
 legacies of, 610, 619 
 
 mortgage of, 48, 341, 493 
 
 assignment of, 583 
 
 jus accrescendi inter mercatores locum non habet, 340
 
 904 INDEX. 
 
 [The paging refers to the [*] pages.] 
 SHARES IN PARTNERSHIP— continued. 
 
 nature of shares are personal estate, 343 
 not interests in land, 343 et seq. 
 
 within the Statute of Frauds, 348 
 are within the Mortmain acts, 348 
 how far goods and chattels, 348 
 forfeiture of to crown, 340 
 agreements as to. See Articles of Partnership 
 amount of each partner's share, 348 et seq. 
 presumption in favour of equality, 348 
 evidence contra, 350 
 application of rule to shares in particular transactions, 350 
 where one firm comprises another, 351 
 not within doctrine of reputed ownership, 678 
 action by partner for. See Actions between Partners 
 lien on shares. See Lien 
 
 mode of taking shares in execution. See Execution 
 sale of. See Sale 
 
 transfer of does not get rid of liability, 240. See TRANSFER OF SHARES 
 forfeiture of, 574. See Expulsion 
 surrender of, 573. See Retirement 
 settled, 434 
 
 right of one partner to purchase his co-partner's, 313 
 locality of, 340, note (d) 
 
 SHARES IN COMPANIES 
 
 registration of in name of firm, 112 
 
 power of partner to take, for security for debt to firm, 141 
 
 trustee of, right to indemnity against calls, 375 
 
 vest in trustee of bankrupt partner, 652 
 
 not within doctrine of reputed ownership, 678 
 
 SHAREHOLDERS, 
 
 liability of to contribute to losses of company, 377 
 proof against estate of by company, 739 
 bankruptcy of, how far dissolves company, 649, 650 
 
 SHARING PROFITS. 
 
 quasi-partnership by, 25 — 30. See Partnership ; Profits ; Quasi- 
 Partnership 
 
 SHERIFF, 
 
 how to execute fi. fa. or separate debt of one partner, 356 
 
 action against, for share of monej received by, on sale of partnership 
 
 property, 568 
 right of purchaser from to an account, 493 
 injunction against, at the suit of partners, 359 
 effect of seizure and sale by, if followed by bankruptcy, 674, 675, 709, 
 
 note (b) 
 what can be seized by, as share of partner, 340 
 form of order on sale by, 362. See Seton on Decrees, 1214, ed. 4 
 
 See, also, Execution 
 
 SHIP 
 
 ownership of, 324 
 
 registration of, 324 
 
 part owners of, 60 
 
 liability of, for acts of each other, 147, note (y) 
 when not entitled to share profits made by, 470 
 lien of. 355 
 
 profits derived from use of partners', belong to firm, 309, 310 
 
 powers of one partner as to, 324
 
 INDEX 905 
 
 [The paging refers to the [*] pages. ] 
 SHIP — continued. 
 
 application of doctrines of reputed ownership to, 678 
 transfers of shares in, 366 
 
 managing owner of, right of to commission, 380, note (m) 
 injunction to restrain sailing of, Miles v. Thomas, 9 Sim. 606 
 
 SHIP'S HUSBAND, 
 
 partner acting as, for firm, 380, note (m) 
 
 SLANDER, 
 
 injunction to restrain, 542, note (e) 
 
 SLANDER OF TITLE 
 
 to trade marks, 595, note (e) 
 
 SMUGGLERS, 
 
 partnership between, 93 
 
 cannot maintain action for smuggled goods sold, 103 
 
 SOCIETIES, 
 
 friendly, not partnerships, 50 
 not having gain for their object, 50 
 in which each member acts for himself, 51 
 See Partnership 
 
 SOLICITING 
 
 old customers, right of retiring partner to, 440, and note (g\ SeeGooD^ 
 
 WILL 
 
 SOLICITORS, 
 
 are not scriveners, 156 
 
 not part of their ordinary business to receive money for investment 151. 
 
 note (u), 156 
 clerk may be articled to two partners, Be Holland, L. R., 7 Q. B. 297 
 evidence of, against their clients, 84, note (p) 
 summary jurisdiction over partners who are, 152, note (y) 
 partnership between 
 
 when jointly retained, 49 
 
 when illegal, 100 
 
 proof of, 84 
 
 in particular transactions only, 478 
 
 lien of, effect of change in firm on, 120 
 
 dissolution of 
 
 agreements as to clients' papers on, 438 
 effect of on client's papers, 120, 438 
 
 in the case of dissolution by bankruptcy, 669 
 liability of, for each others' acts, 163. And Addenda 
 with respect to bills, 130 
 
 misapplication of money, 151 et seq. 
 partner in firm of, no authority to borrow, 132 
 
 SOLVENCY 
 
 guarantees as to, when required to be written, 138, 165 
 SOLVENT PARTNERS, 
 
 proof by, against bankrupt co-partners, 721, 738, 740 
 
 actions by, 288, 289 
 
 trustee of bankrupt partner must be joined with, when, 289 670 
 
 entitled to wind up business of the firm, 669 
 
 may sue on contracts without joining bankrupt, 289, 670 
 
 may sell partnership goods, 671 
 
 validity of acts of, not dependent on absence of notice of bankruptcy 694 
 See Bankruptcy
 
 906 INDEX. 
 
 [The paging refers to the [*] pages.] 
 SOME ON BEHALF 
 
 of themselves and others, 461. See Pakties 
 
 SPECIAL AND GENERAL 
 partnerships, 49 
 
 SPECIALTY DEBTS, 
 
 whether created by covenant to he true and just, 418, 419 
 may be set off against simple contract debts, 658 
 not entitled to priority, 709 
 
 SPECIFIC PERFORMANCE OF AGREEMENTS, 475 et seq. 
 lor partnerships, 475 
 for an account, 477 
 in partnership articles, &c, 478 
 to take share at valuation, 432, 479 
 not to carry on business, 478 
 as to granting an annuity, 479 
 not to divulge secret, 479 
 as to sale of share, 479 
 as to custody of partnership books, 479 
 as to collecting debts, 448, 479 
 to refer to arbitration, 451 
 for a lease after term has expired, 476 
 to share profits, 477 
 laches of plaintiff, a bar to, 467 
 
 SPIRITUAL PERSONS, 
 
 disabilities of, 71, note (e) 
 may be partners, 71 
 
 SPLITTING DEMAND 
 
 by creditor of bankrupt partners, 749, 750. See Proof of Debts 
 
 STAKEHOLDER, 
 
 illegality set up by, 106, 107 
 
 STAMP 
 
 on advertisements of dissolution, when necessary, 223 
 
 on assignment by out-going partner to continuing partner, 450t 
 
 on assignment of good-will, 439, note («) 
 
 on release, 450 
 
 STATED ACCOUNT. See Account Stated 
 
 STATEMENTS. See Representations ; Misrepresentations ; Fraud 
 
 STATUTE OF FRAUDS, 
 
 effect of, on guarantee by one partner, 138 
 
 on contracts of partnership, 80 
 share in cost-book mining company not within, 348 
 
 STATUTES 
 
 limiting number of partners. 70, K»l 
 regulating trades. 95, note (a;) 
 penal and prohibitory, 95 
 
 STATUTES OF LIMITATION. See Limitations, Statutes of 
 
 STAYING PROCEEDINGS 
 
 at instance of one partner, 271 
 power of Court of, under Bankruptcy act, 709 
 See Injunction 
 
 STEALING, 
 
 indictment for, by surviving partners, 288, note (z) 
 property of firm by partner, 456, 457, note (a)
 
 INDEX. 907 
 
 [The paging refers to the [*] pages. ] 
 STIPULATIONS 
 
 as regards powers and conduct of partners, 418, 419 
 of partners with each other, effect of on third persons, 168 etseq., 176 
 against loss, in partnership agreements, 15 
 See Authority ; Notice 
 
 STOCK 
 
 wrongly sold by one partner, liability of firm for, 152, 1'53 
 
 STOCK-BROKERS. See Brokers 
 
 liability of firm of, for money misapplied by one partner, 153, 154 
 
 STOPPAGE IN TRANSITU, 
 
 right of, against trustee in bankruptcy, 652, note (o) 
 
 STORY, 
 
 his definition of partnership, 3 
 
 STYLE 
 
 of firm, 413. See Name 
 
 SUBMISSION TO ARBITRATION. See ARBITRATION 
 
 SUB-PARTNERS, 
 who are, 48 
 
 liability of, to creditors of principal firm, 48 
 right of, to account, 493 
 duration of partnership between, 122 
 parties to action by, 460, 461 
 
 SUB-PARTNERSHIPS, 48 
 duration of, 122 
 right to account in, 493 
 parties to actions relating to, 460, 461 
 bankruptcy proceedings, where major firm bankrupt, 637 
 
 SUBSCRIBERS 
 
 to inchoate companies not partners, 24 
 
 right of, to have back their money where company is illegal, 106 
 
 actions by, for the recovery of their subscriptions, 498, 499 
 
 SUBSCRIPTION, 
 
 recovery of. See Consideration ; Premium 
 where partnership illegal, 106 
 
 SUBSEQUENT PROFITS. 
 
 account of, when directed, 521, 614 el seq. 
 
 right of trustee in bankruptcy to account of. 648 
 
 right of executors of deceased to share of, 592 
 
 SUBSTITUTION 
 
 of debtors, discharge of partner by, 239 et scq. 
 effect of, in bankruptcy, 704. 705 
 can only be made with creditor's consent, 239, 705 
 
 SUCCESSION DUTY 
 
 on death of partner, 594 
 
 SUCCESSOR 
 
 to business, 440 et scq. 
 appointment of, 434 
 
 SUICIDE, 
 
 attempted, no ground for dissolution, 581, note (d) 
 
 SUITS IN EQUITY. See Action
 
 908 INDEX. 
 
 [The paging refers to the [*] pages. ] 
 
 SUPERSEDING 
 
 adjudications of bankruptcy, 642, 643. See Bankruptcy 
 
 SURCHARGING 
 
 and falsifying accounts, 513. See Accounts 
 
 SURETIES, 
 
 partners not, of firm, 111 
 
 to or for firm, position of, on change in firm, 117 rt seq., 287 
 to or for company, position of, on incorporation or amalgamation of com- 
 pany. 118 
 discharge of, by doctrine of appropriation of payments, 230 
 
 by judgment against principal debtor, 255, 256 
 application of doctrines of set-ofi' to, in cases of bankruptcy, 661 
 proof by, in case of bankruptcy, 719, 745, note (?/i), 752 
 provisions of Mercantile law amendment act, 119 
 right of, to contribution from co-sureties, 375, note (I) 
 
 SURGEONS, 
 
 partnership between, unqualified, 98 
 
 SURPLUS ASSETS, 
 
 action for share of, 569 
 
 distribution of, 402. See Assets; Bankruptcy 
 
 SURRENDER 
 
 of partner's share in property mortgaged held to include firm's share, 
 362, note (o) 
 See Retirement 
 
 SURVIVING PARTNERS, 
 
 rights of, as against the executors of a deceased partner, 443, 444, 591 
 to partnership property, 341 
 to good- will, &c, 443, 447 
 to get in debts, 341, 342, note (s), 591 
 to mortgage partnership property, 341 
 to sell, 341 
 
 as regards account, 613 
 liabilities of 
 
 to creditors of the firm, 341, 591, 595 
 
 where the creditors are proceeding against the estate of the de- 
 ceased, 288, 460, 598 
 to the executors of a deceased partner, 341, 592, 593 
 to the separate creditors, legatees, and next of kin of a deceased 
 partner, 612 
 when the assets of the deceased are not got in, 614 et seq. 
 when they are lent to the firm, 618 
 position of, when also executors, 528, 593 
 
 account of subsequent profits against, 528 
 right of retainer, 490 
 actions by and against, 288. See Actions; Parties 
 proper parties to actions, by joint creditor to administer the estate of a 
 
 deceased partner, 460, 598 
 not proper parties to actions by separate creditor against executors of 
 
 deceased partner for an account, 612 
 may be joined with executors of deceased partners as defendants, when, 
 
 603 
 cannot render the estate of their deceased co-partner liable for what oc- 
 curs after his death, 46, 605 
 injunction against, 541, 542 
 
 to restrain use of old name, 605
 
 INDEX. 909 
 
 [The paging refers to the [*] pages.] 
 
 SURVIVING PA RTNERS— continued. 
 
 rescission of contracts between, and executors of deceased partner. 487, 
 483. note (n) 
 
 application of doctrines of reputed ownership to property in the posses- 
 sion of, 687, 689 
 
 payment of debt to, discharges payer, 342, note (s) 
 
 agent of firm must account to, 288, note (y) 
 
 creditor looking for payment from, does not lose his right against estate 
 of deceased, 250 
 
 part payment of debt by, effect of as against estate of deceased partner, 
 263 
 
 right of to charge for expenses and services, 381, 382, note {y) 
 See Death; Deceased Partner 
 
 SURVIVORSHIP, 
 
 of the doctrine of, between partners, 340 
 
 how far doctrine applies, 342 
 
 not to societies not having gain for their object, 342 
 
 devolution of legal estate in land, 341 
 
 equitable estate, 341 
 
 choses in action, 341 
 
 ordinary chattels, 342 
 
 shares, 343 
 
 good-will, 342, 443, 444 
 SUSPENSION 
 
 of bankrupt's certificate, 752, note (s) 
 
 of proceedings. See Staying Proceedings 
 
 TEMPER, 
 
 interference of the Court between partners on the ground of bad tem- 
 per, 466, 550, 580 
 
 TENANT FOR LIFE, 
 
 of share in partnership. 620 
 
 losses, how shared, as between remainderman and, 621 
 
 TENANT IN COMMON, 
 
 purchases by persons as, 51 et seq. 
 
 who are, and who are joint tenants. 51, note {n) 
 
 trustee of bankrupt partner and solvent partners are, 648, 669 
 
 remedies between, 57 et seq. 
 
 action by one against the other for sale of common property, 568 
 
 are not partners, 51 
 
 may be partners in -profits only, 331 
 
 of trade-mark, 62, note (g) 
 See Co-Own eks 
 TENDER 
 
 to one partner, 136 
 
 TERM, 
 
 partnerships for a, 121 
 TERMINATION OF LIABILITY, 210—263 
 as to future acts, 210 
 as to past acts, 223 
 by payment, 225 
 by release, 237 
 
 by substitution of debtors and securities, 239 
 by lapse of time, 257 
 by agreement, :.!:!! I 
 by death, 211. See Death 
 by bankruptcy, 212. See Bankruptcy 
 See, also," LIABILITY
 
 910 INDEX. 
 
 [The paging refers to the [*] pages. ] \ 
 THEATRES, 
 
 illegal partnerships in, 101 
 
 not enforced, 102 
 
 lessee and manager of, sharing gross receipts of, not partners, 18 
 
 THIBAUT, 
 
 his definition of partnership, 3 
 
 THIRD PARTIES, 
 
 partnership as to. See Holding Out ; Quasi-Partnerships 
 possession of, effect of, as regards doctrine of reputed ownership, 679 
 
 TIME, 
 
 lapse of, when an answer to an action, 466 
 when a bar to an action for account, 508 
 discharging partners from liability, 257 et seq. 
 right of partner to charge for, 380, 382, note (y) 
 See Laches ; Limitation, Statute of 
 
 TITLE, 
 
 recognition of, effect of, on defence of laches, 474 
 slander of, action for, 595, note (c) 
 
 TORTS 
 
 actions by partners for, 278 
 
 against partners for, 283 
 of agent, liability of principal for, 147 
 of partner, liability of firms for, 149 et seq. 
 
 of estate of deceased partner for, 595, and note (c) 
 
 of retired partner for, 47, 214 
 impose joint and several liabilities, 198 
 when provable in bankruptcy, 70S, note (y) 
 doctrine of holding out, not applicable to, 47 
 contribution in respect ot, 377 el seq. 
 and breaches of contract, distinction between, 198, 199 
 
 TOWN CLERKS, 
 
 partnerships between, 100, note (t) 
 
 TRADE, 
 
 covenants in restraint of, 437, note (o) 
 
 direction by testator to carry on, effect of, 610 
 
 customs of, effect of, on doctrine of reputed ownership, 677, note (y) 
 
 on rights and liabilities of principal, 370, note (/). 
 372, note (t) 
 
 TRADERS, 
 
 distinction between, and non-traders, how far important, 624 
 
 reputed ownership clause applicable to, only, 625 
 
 as to executions against, if followed by bankruptcy, 674 
 
 TRADE MARK, 
 
 name of a firm, 114 
 may be assigned with goodwill, 114 
 registration of, 114 
 tenants in common of, 62, note (g) 
 part of goodwill, 447 
 
 action for slander of, title to, 595, note (c) 
 See Name 
 
 TRADE NAME. See Name 
 
 TRADE SECRETS, 
 
 agreements as to, 415
 
 INDEX. 911 
 
 [The paging refers to the [*] pages.] 
 TRANSFER OF DEBT 
 
 from account of old firm to account of new firm, effect of. ou creditor 239 
 
 et seq., 241, 242, 250, 253 
 from one account to another, assent by one partner, 135 
 
 TRANSFER OF INTEREST 
 
 a ground for dissolution, 583 
 See Transfer ok Share 
 
 TRANSFER OF LIABILITY 
 
 by substituting debtors, 239. See Liability 
 
 TRANSFER OF SHARE 
 by co-owners, 52 
 by partners, 363. 583 
 
 necessity of consent of partners to, 363 
 
 to representatives of deceased partners, 363 
 
 effect of, 363 
 
 on continuity of firm, 365, 366 
 
 on liability, '240 
 
 as regards dissolution, 583 
 
 account, 364 
 where right to assign, 365 
 rights of transferee, 365 
 in mining partnerships, 55, 366 
 
 TREASURER 
 
 for time being, action by, 458 
 See Public Officer 
 
 TREATING CUSTOMERS, 
 
 allowance to partner for, 380, note (w) 
 
 TRESPASS 
 
 by one partner against another, 562 
 
 TROUBLE, 
 
 right of partners to compensation for, 380 
 
 executors and surviving partners, 592 
 
 TROVER 
 
 by assignees of bankrupt partner against purchaser from solvent part- 
 ners, 671 
 by one partner against another, 562, 568 
 
 TRUE OWNER, 
 
 who is, within the meaning of the reputed ownership clause, 682 
 See Reputed Ownership 
 
 TRUSTEE 
 
 surviving partner, how far, 521 etseq., 528 
 
 sharing profits, liabilities of, 28, 523 
 
 when bankrupt, should prove against his own estate, 707 
 
 authorised to lend money to firm, 113 
 
 unauthorised lending by, liability for. 523 et seq. 
 
 of creditors' deeds how far partners, 21 
 
 right of, to indemnity, 373, 374 
 
 where two funds in the hands <»(' the trustees. 
 373, note (e) 
 application of doctrine of reputed ownership to, 683 
 liability of for profits made by trust fund. 523 
 payment of one of several, no discharge, 21ft, note (m) 
 See Profits, Account of ; Breach of Trust
 
 912 INDEX. 
 
 [The paging refers to the ["1 pages. } 
 TRUSTEE IN BANKRUPTCY. 
 1. Generally 
 choice of, 644 
 
 right of joint and separate creditors, 645 
 of joint estate is also trustee of separate estate, when, 637,644 
 appointment of inspectors to protect creditors, 645 
 property vesting in, 646. See BANKRUPTCY 
 may disclaim onerous property, 651 
 when not bound by the acts of the bankrupt, 659 
 relation back of title of 
 generally, 663 et seq. 
 
 as regards bond fide dealings without notice of act of banktuptcy, 664 
 what transactions excepted, 664, 665 
 consequences of, as regards 
 
 dealings with bankrupt partners, 666 
 dealings with solvent partners, 669 
 execution creditors, 667 
 set off against, 660. See Set-off 
 lien of partners good against, 647 
 bound by agreement of partners as to their property, 335 
 
 and other like agreements, 485 
 rescission of agreements by, 4s6 
 
 has no right to property of which the bankrupt is trustee, 652 
 cannot sue for debts owing to the bankrupt as trustee, 652, 653 
 joinder of, when necessary, 289 
 injunction against, 542 
 
 receiver appointed against, or on application of, 548 
 remuneration of, 694 
 costs of expenses of, 694 
 2. of a bankrupt partner 
 
 does not become a partner, 648, 649, 669 
 
 becomes tenant in common with solvent partner, 648, 669 
 
 takes his share only, 647 
 
 how far bound by agreement that share shall be taken at a valuation, 647 
 
 right of 
 
 to interfere with the solvent partners, 669 
 
 to the partnership books, 669 
 
 to bring actions in the names of the solvent partners, 670 
 
 to join solvent partners in suing, 289, 670 
 
 to wind up the affairs of the firm, 670 
 
 to an account, 493, 648 
 
 to institute a creditor's action against the executors of a deceased 
 
 partner, 648 
 to avoid fraudulent preference by the bankrupt, 269 
 to recover property sold by the solvent partners, 671 
 profits after bankruptcy, 648 
 
 TRUSTEE OF DEED OF ARRANGEMENT, 
 appointment of, 755 
 
 separate estates as well as joint vest in him, when, 755. «See Arrange- 
 ment 
 relation back of title of, 755 
 
 TRUST PROPERTY 
 
 does not pass to trustee in bankruptcy, 652, 683 
 
 not affected by doctrine of reputed ownership, 683 
 
 following, 162 
 
 liability of partners for, 160 et seq. See Breach of Trust 
 
 wrongful employment of by trustee, liability of for, 523 et seq.
 
 INDEX. 913 
 
 [The paging refers to the [*] pages.] 
 
 TRUSTS 
 
 to pay debts, effect of, on Statute of Limitations, 260 
 
 when an act of bankruptcy, 631 
 breach of, effect of Statute of Limitations on, 260, 511 
 illegal, actions for execution of, 108 
 
 to carry on business, effect of as regards executors and trustees, 606 
 
 creditors, 606, 607 
 See Breach of Trust ; Trustee 
 
 UNAUTHORISED ACTS, 
 
 adoption of, by firm, 388 
 indemnity in respect of, 371 et seq., 382 
 liability of firm for, 167 et seq. 
 effect of notice of want of authority, 168 
 See Ratification 
 
 UNCERTIFICATED BANKRUPT, 
 
 as to whether he can be made bankrupt, 639 
 
 UNCONCLUDED AGREEMENT, 
 
 partnership not the result of, 19 
 
 UNDERWRITERS, 
 
 illegal partnerships between, 97, 98 
 
 UNDISCLOSED PRINCIPAL, 
 action by, 177 
 
 against, 275, note (s) 
 
 UNINCORPORATED COMPANIES, 
 
 with transferable shares when illegal, 101 
 subject to Bankruptcy Act, 623, 633 
 effect of bankruptcy of one member of. 650 
 proof by against estate of shareholder, 739 
 
 UNIVERSAL PARTNERSHIP, 49 
 
 UNLIMITED LIABILITY, 
 
 common law doctrines as to, 200 et seq. See Liability ; Limited Lia- 
 bility 
 
 UNQUALIFIED AND QUALIFIED PERSONS 
 
 partnerships between. See Illegal Partnership 
 
 attornies, 100 
 
 brokers, 97 
 
 medical practitioners, 98 
 
 UNREGISTERED PARTNERSHIPS, 
 
 number of persons who may be partners in, 70, 101 
 
 UNSALEABLE ASSETS, 
 valuation of, 558 
 
 USAGE, 
 
 of partners, importance of attending to, 408 et seq. 
 See Customs. 
 
 USUAL COURSE OF BUSINESS, 
 
 limits partner's implied authority to act for firm, 124 et seq. 
 
 USURY, 
 
 usurious loan held to constitute a partnership, 15, 16 
 
 VENDOR AND PURCHASER OF BUSINESS, 
 partners when, 28 
 
 * 35 LAW OF PARTNERSHIP.
 
 914 INDEX. 
 
 [The paging refers to the [*] page?.] 
 VALUATION, 
 
 agreements to take share at a, 429 
 no sale where there is, 555 
 
 unless agreement cannot be carried out, 555 
 how far biuding on trustee in bankruptcy, 647 
 when Court will enforce, 432 
 no right to have share of a deceased partner at, 592 
 action by one partner against another for amount of, 564 
 ot unsaleable propery, 558 
 of shares, 426 
 charges in respect of, 384 
 debts incapable of, in bankruptcy, 708, 751, note (m) 
 
 VARIANCE 
 
 between name of firm and name used on its behalf, consequence of, J85, 
 186 
 VARYING, 
 
 articles of partnership, 409 
 
 VERDICTS 
 
 evidence of partnership, 90 
 
 VINNIUS, 
 
 his definition of partnership, 4 
 
 VOET, 
 
 his definition of partnership, 4 
 
 VOLUNTARY SETTLEMENTS, 
 
 avoidance of by trustee of bankrupt, 654 
 
 VOLUNTEERS, 
 
 commander of, liable for goods ordered by him for regiment, 50 
 
 VOTE, 
 
 share in partnership, when a qualification for parliamentary, 348 
 
 WAGES, 
 
 effect of paying, by a proportion ot gross returns, 18 
 See Profits ; Salary 
 WAIVER 
 
 of clauses in partnership articles, &c, 408 et seq. 
 
 of illegality, 104 
 
 of right to rescind for fraud, &c, 490 
 
 defence to an action for account, 516 
 WAR, 
 
 effects of on the rights of partners, 72, 92 
 
 a cause of dissolution of partnership, 585 
 WARING EX PARTE, 712 
 
 application of rule in, 713 
 
 effect of rule in, 713 
 
 extent of application, 713 
 WARRANT OF ATTORNEY, 
 
 given by one partner, 272 
 WATSON, 
 
 his definition of partnership, 4 
 WHALING VOYAGES, 
 
 contracts between persons engaged in, 19 note (x) 
 WIDOWS, 
 
 agreements as to annuities to, 435 
 
 of deceased partner sharing profits, 36
 
 INDEX. 915 
 
 [The pacing refers to the [*] pages. J 
 
 "WIFE. See Married Woman ; Hi'sband 
 
 WILFUL DEFAULT 
 
 gainst executors of partners. 612 
 against partners, 518. note («) 
 
 WILFUL TORTS. 
 
 liability of partners Cur, 149, 150 
 
 WILL, 
 
 partnerships at, 
 what are, 121 
 
 by continuance after expiration of articles, 413 
 actions for dissolution of, 586 et seq. 
 injunction in cases of, 540 
 right to determine at any time by notice, 571 
 directing assets to be employed in business, effect of, 606 et seq. 
 in the event of bankruptcy, 722 
 
 WINDING UP. See BIc. IV., DlSSOLUTlox 
 
 ageney of partners continued for purposes of, 217 — 221 
 
 final settlement of accounts on 402 
 
 where capital unequal and losses shared equally, 403 
 
 appointment of receivers in actions for, 546 et seq. 
 
 matters involved in, 5*9 
 
 right of, personal to solvent partners, 670 
 
 WITNESS, 
 
 proof of partnership by, 90 
 
 by solicitors ol the partners, 84, note (r) 
 
 WORK AND LABOUR, 
 
 action by one partner against another for, 567 
 
 WRITS, 
 
 service of, 266, 272. See Service 
 
 WRITTEN CONTRACTS. See Contract 
 
 when binding on partners not named in, 178 
 
 not necessary to form a partnership, 80 
 
 not necessary to convert joint property into seperate, or wee versa, 324. 334 
 
 WRONG DOERS, 
 
 contribution amongst, 377 
 
 THE END.

 
 
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