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AN EXPOSITION
OF THE
PRINCIPLES of PARTNERSHIP.
BY
JAMES PARSONS, A.M.
Member of the Philadelphia Bar, and
Professor in the Department of Law, and of Philosophy, at the
University of Pennsylvania.
BOSTON:
LITTLE, BROWN & CO.
?
Fntcn-il. ;i..i.rrtliiKtn Act of Congress, in the year 1889, by
.JAMKS I'AKSONS. A. M.,
lu till- Vttwf iif the I.lbniriau of Congress, at Washiugtou, D. C.
REFACB.
I wish to express my acknowledgement to DwiGHT
M. LowREY, Esq., for the aid he has cordially given
me in preparing for publication the materials I had
collected, and the manuscript I had draughted, dur-
ing the alternate years since 1873, for the double
purpose of my ledlures upon the subject of partner-
ship and of this present work. The suggestions
and the criticisms which he made in the course of
the final revision have contributed to clear up some
of the principles of Partnership law, and to clinch
the argument advanced for several propositions.
JAMES PARSONS,
1430 So. Penn Square,
Philadelphia.
January^ jSSg.
Table of C
ABLE OF CONTENTS.
ASSUMING THE POSITION OF A PARTNER, OR WHAl
CONSTITUTES A PARTNER.
CHAPTER I.
ORIGIN AND GROWTH OF PARTNERSHIP.
At Roman law, a bargain between the partners ; at Common law, a basis
for dealing with third persons. ^ i. A status, not a contracft-relatiou.
^ I. Property the foundation of partnership, and sufficient to charge
the proprietor. ^ 3. The contribution shows a proprietor, and meas-
ures his capacity. I4. Law Merchant gave power to buy and sell. § 5.
Commercial paper, when confined to trade transactions, made payees
partners. |6. Relation extended from trade to "business." ^7.
Land became merchandise. ? 8. Title controlled by firm. I 9. Stat-
ute of Frauds prevents oral partnership for trading in land. § 10.
Building operation. ^11. Landlord and tenant. ? 12. Parties convert
land into article of traffic, 'i 13. Non-commercial partnership. ^ 14.
Mining partnership. ^ 15.
CHAPTER H.
THE ANTECEDENTS OF PARTNERSHIP.
Objedl, gain, not merely a benefit. ? 16. Parties fix commencement of
partnership. ? 17. Postponement at option. §18. Contribution part-
ner's separate obligation. i< 19. Incoming partner makes no contribu-
tion. <i 20. Terms for jurv, effedt for court. §21. No contracT. unless
terms settled. ^22. Intention insufficient. I 23. Defa5lo corporation
a partnership. \ 24. Contribution, for duration of partnership, and
carries temporary ownership. \ 25. Special partnership, type of com-
mercial partnership. ? 26. No partnership in profits, unless in the
stock. \ 27. Increase or decrease of contribution, for or against firm.
§ 28. Title to contribution between partners. ? 29. Partnership con-
verts its subjedl-matter into merchandise. \ 30. Property rights de-
Table of Contents.
pcn.l on theory of contribution. >, 3'- l^ebt theory of contribution.
\X2 True theory. J 33- Loss, total or partial, shared accordmg to
contribution, i 34, 835- Ratio of profits, for jury. ^6. Special part-
ner's conUibution. <! 37- Contribution by non-owner. J 38. By
trustee. «39. CfSlHV que trust's right to follow fund. Uo. May
waive tort' and sue in assumpsit, Uh to recover fund and profits.
{42. 1 )iniculty of ascertaining profits uo answer to cesiuy que trust's
claim, 'i 43.
:e>j^:rt II.
/•///:• rk'IXC/PUCS WHICH REGULATE PARTNERSHIP
DURING ITS EXISTENCE. ■
CHAPTER I.
THE CONSTITUENTS OF PARTNERSHIP.
As to liability, partners only joint contradtors. >^ 44. Adl sufl&cient to
charge; intention not necessary. \\^. In joint transadlions parties
held on implied contract, 'i 46. Withholding property charges par-
ties in contract, 'i 47. Partnership as to third persons, the legal con-
ception of partnership at the present day. 'i 48. The business gives
commercial privileges. i<49. The intention of partners creates relation
between them, and charges them as to third persons. ^50. Property
the medium of partnership, and partners proprietors. ^51. Sharing
profits by proprietors, 'i 52. Title to profits depends on ownership.
J 53. Indicia of ownership establish partnership. ? 54. Title to
profits a property right. ^ 55. Roman type survives in Common law.
J 56. Property the link between profits and contribution. ? 57.
Compensation out of profits confounded with title to profits. ? 58.
'Sharing' ambiguous, and law re-established by limiting term to shar-
ing as proprietor. \ 59. Distindlion between profits and sum equal
to profits founded on twofold meaning of 'sharing.' ? 60. Parties
sharing profit and loss are not partners unless proprietors. ?,6i.
Parties sharing gross profits not partners. ?62. Commission on
sales like share of gross profits. ? 63. Lender taking profits not a
partner. \ 64. Amount of interest or profits not a test. ? 65. Usuri-
ous rate does not change the loan into a partnership. | 66. Inference
against a partnership. <; 67.
CHAPTER n.
SUB-PARTNERSHIP.
feleRus prrsoncr confined to relation between the partners. ? 68.
vi.
Table of Contents.
CHAPTER III.
HOLDING OUT.
Holding out charges the party held out. ■? 69. Nominal partner liable in
joint adlion with partner in fact, i^ 70.
CHAPTER IV.
EXECUTORS AND ADMINISTRATORS AS PARTNERS.
Executor may succeed partner, ^71, or distributees become special part-
ners. § 72. Unless executor, or administrator, renounces, charged as
partner, i 73. May limit contribution of deceased partner's estate.
? 74. Whether executor or administrator a partner, determined by
his a(fts. § 75.
CHAPTER V.
NATURE OF THE CONTRACT MADE BY THE FIRM IN TRANS-
ACTING ITS BUSINESS WITH THIRD PERSONS.
Partners may have collective name, except in legal proceedings. ^, 76.
Procedure of Law Merchant not adopted by Common law. ^ 77. Con-
tradl by partners, though joint in form, several in substance. ^ 78.
No formula prepared for partners' obligation, i/ 79. As Court did
not re-model process. Legislature recflified it. </. 80. Joint process ex-
tinguished the several liability of partners. ^81. Pennsylvania Leg-
islature corrected abuse of legal process by preventing merger in joint
adlions. '^82. Courts did not extend remedy beyond joint adtions.
^ 83. Merger, though plaintiff did not know of partner's membership,
and kept from knowing it by the partner. ^. 84. Right against each
partner frustrated by the process. § 85. Death of partner released
his estate. § 86. Death pending suit deprived plaintiff of recourse
against the estate. ^ 87. Pennsylvania AAs prevented failure of pro-
cess by partner's death pending suit, 'i 88, also severed a judgment,
so that it bound deceased partner's representative as well as surviv-
ing partner. ^ 89. The Statutes recognize several liabilities. § 90.
Creditor entitled to both joint and several remedies for satisfadlion.
§ 91. Lord M.\NSFIELD showed that joint contra(5l was an aggregate
of separate contraAs. ^ 92. Marshall carried out the severance.
§93. Modern pracflice admits the several cause of acftion. '^.g^.
There is no joint liability apart from the several liabilities of the
partners. ? 95. As the firm is nothing but a phrase, the contraAs
must be separate. ? 96.
CHAPTER VI.
THE TITLE TO FIRM PROPERTY.
Co-ownership mutual restri(5lion upon the owners. | 97. Joint tenancy
the transition] from communal to individual ownership, 'i 98. Joint
Takle of Contents.
u:i;.iu-y ad iplcd to coinmc-rcial purposes for partuership. ^ 99. The
joint cslule creates the creditors' rights. ^^ 100. Parrtnership, a status,
i 101. It iloes uol derive its distinctive features from contracl:. g 102.
rartuers" estate, a joiut tenancy. '/. 103. Tenancy in coumion incon-
sistent with relation, i. 104. Marshalling assets excludes tenancy in
common. 5. 105. I'artner's equity protects his separate estate, and
founds firm creditors' rights. ^ 106. Destination, outgrowth of joint
tenajicv i. 107. Finn creditors' preference not based on any theory
of credit, i loS.
CHAPTER VII.
THE TITLE TO PARTNERvSHIP LAND.
Conversion and lien, expedients for overcoming tenure. ^ 109. Land may
be treated as firm assets, without any fidlion. g no. Purchaser with-
out notice, but not creditors, rely on legal title. ^ in. Except under
Pennsylvania record-system, creditors show that firm has beneficial
ownership. <! 112. In Pennsylvania legal title protedls not only judg-
ment, butgeueral, creditors. <iii3.
CHAPTER VIII.
THE IMPLIED POWER OF A PARTNER.
Partner, authority to sell firm stock, ^ 114, to buy for the business, § 115.
Implied authority restricfted to simple contradls. § 116. Not by spe-
cialty. !;ii7. Seal, surplusage only if express authority. gii8.
Partner cannot appear for firm, 'i 119, or submit to arbitration, ^ 120,
but represents firm, and may bind it by admission, i 121. Partner
cannot bind co-partner by confessing judgment against firm. <; 122.
Partner may borrow amount usual in the given business. ^ 123. May
issue or use commercial paper, ^ 124, but not accommodation paper.
i. 125. Partner's authority by commercial paper defined, not by part-
nership principles, but by those peculiar to commercial paper. ^ 126.
The form of commercial paper conveys no notice of the characfter of
the transa(5lion. ? 127. Firm's receipt of consideration will not change
chara<5ler of individual transaction. ^128. Partner cannot guarantee
debt of another, i. 1 29. Set-offa medium of equity. ? 130. Partner can-
not assign for firm creditors, i 131. Assignment/'«w«/ar/'?, a dissolu-
tion. ? T32. Partners cannot restricl co-partner's authority, ? 133,
except by agreement, and as to themselves. ? 134. Partners may
ratify co-partner's ac^ in excess of his authoritv. i. 135. Infant partner
must disaffirm at majority, or be liable for past and future afts. ? 136.
Infant partner's position determined not by contraA with partners, or
third persons, but entirely by his property rights. ? 137. Married
■woman not a partner unless permitted to be by statute. ? 138.
Table of Contents.
CHAPTER IX.
THE LIABILITIES OF A PARTNER.
Partner answers for co-partner's tort, 'i 139, unless firm but the occasion
for his tort, 'i 140. Trustee-partner's use of fund in the firm charges
his co-partners. ^ 141. Special made general partner by neglecT;, lia-
ble for co-partner's tort. ? 142. Partner criminally liable for misap-
propriation of firm property. ^ 143.
CHAPTER X.
CHANGE OF PARTNERS.
Incoming partner cannot be charged, nor can he ratify previous acft of
firm, 'i 144. The theory of trust and consideration is superceding
the necessity of novation. | 145. Retiring partner remains liable un-
til released. § 146. His liability, foundation of his equity. | 147.
Continuing firm not an assignee for creditors. ? 148. Novation re-
quires a new partner. § 149. Incoming partner personally liable to
firm creditors on his agreement to assume the debts. ^ 150.
CHAPTER XI.
THE RELATION OF PARTNERS.
Requires utmost good faith. ^ 151. Equal power among partners in deal-
ing with outsiders; in domestic administration, majority controls.
^ 152. During partnership no litigation between partners, 'i 153.
Partner cannot pay firm debt and substitute himself for the creditors.
? 154. Partner cannot sue co-partner for mismanagement, i 155. No
set-off between partners, except in the account. §156. Account-stated
equivalent to decree in account. I 157. As trausadlion independent
of firm account, partners are strangers. ^ 138. Also account for isolated
transadtions lies during partnership. 1 159. Procedure prevents suits
between the partner and his firm. ? 160. Obstacle of procedure re-
moved by statute in Pennsylvania. ^ 161. Equitable remedy not
taken away, 'i 162. But difiiculty inherent. ? 163. Common partner
means different capacities, 'i 164. Partner as proprietor and creditor
has priority for his advances. ■? 165. Partners may recover amount
converted by co-partner from his separate estate. ^ t66. They may
avoid a6t which is in excess of his authority. ^ 167. Thev need not
dissent from his use of firm credit, or firm funds, for his individual
account. | 168. Apartner may re-assert the joint title, or the partners
may ratify a co-partner's misappropriation, 'i 169. But the fraud must
be committed against the firm. ^ 170. Partner may dispose of his
share as he likes. ^171. May mortgage, or alien it absolutely. ^ 172.
Table of Contents.
X^.A.I^T III-
THE PRISCIl'I.ES ACCURDINC TO WHICH THE BUSI-
.\ESS IS WOUND UP.
CHAPTER 1.
THE REA:,0NS for A DISSOLUTION.
Dissolution only for adequate cause. \ 173. Partner's remedy for prema-
ture dissolution, an action for the breach of contradl. \ 174.
CHAPTER H.
HOW DISSOLUTION IS BROUGHT ABOUT.
Notice necessary to revoke partner's implied authority. ^ 175. Different
kinds of notice. ? 176. Customers must have adlual notice. ? 177.
CHAPTER ni.
THE EFFECT OF DISSOLUTION.
Dissolution ends partner's authority, ? 178, and divides joint title into
separate titles. ^179.
CHAPTER IV.
THE APPOINTMENT OF A RECEIVER.
Appointment of receiver not always necessary. ^180. Receiver, of course
against partner's vendee. ^ 181. Partner forfeits right to receiver by
laches. \ 182.
CHAPTER V.
LIQUIDATION.
Firm continued only for liquidation. \, 183. Liquidating partner repre-
sents firm for settlement. \ 184. If no liquidating partner, any part-
ner may bind co-partners for liquidation. \ 185. Retiring partner
gives up right to liquidate. \ 186. Partner's power, coupled with
interest, and irrevocable; stranger's revocable. ^187. Liquidating
partner not entitled to compensation. \ 188. General creditors con-
trol lifjuidating partner. ^189. Liquidating partner displaced only
by necessity for receiver. <i 190.
CHAPTER VI.
MARSHALLING THE ASSETS.
Theories to explain marshalling, ijigi. Firm creditors reclaim assets
from separate creditors. ? 192 Equity interferes only when a creditor
Table of Contents-
has two funds. ^ 193. Firm creditors' equity rests ou partner's legal
liability, 'i 194. Equity could not take away firm creditors' right,
and only controls the exercise of it against the separate estate. ^ 195.
Equity does not interfere with firm creditors, except when they have
a joint fund, 'i 196. The restriction protedls nothing but the separate
estate. ^ 197. Creditor partner's independent claim against co-partner
not enforced until firm debts are paid. >/. 198. If there would be no
surplus out of debtor-partner's separate estate, recovery might be had
on independent claim. ^ 199. Firm creditors may become separate
creditors of partner who bought out co-partner. ^ 200. Partner may
compete with separate creditors of co-partner. ?;20i. Partner's debt
to firm not an. asset. ? 202. Surviving partner's indebtedness to firm
would not prevent firm creditors from colle6ling debts out of deceased
partner's estate. ^ 203. Exemption at law of deceased partner's
estate did not enable his representative to recover his share in com-
petition with firm creditors. ? 204. A common member furnishes no
basis for marshalling. ^ 205.
CHAPTER VII.
ACCOUNT.
Account, an epitome of partnership. ? 206. Basis of account, joint prop-
erty, partner's liability for firm obligations, and good faith. ^ 207.
Advances have priority. ? 208. Good-will an asset. ^ 209 Disburse-
ments on firm account, items of credit. ^ 210. No account of illegal
business. ^211. Partner must account for a breach of good faith.
^212. Account barred by Statute of Limitations, or by laches. ^ 213.
Outside transadtions not included in account ^ 214. Decree for ac-
count. ^215. Jurisdidlion of account. |2i6.
Authors Mentioned.
^mTbnrt>, iH. Tivj ^JlcticimH-uii, Ihth, p. 8-i. i; 37, n. d.
*rnM«, 5.'. r)J. I'. iJlrnC'Sbur^. i.'cbrtnidi bcr iUmbcctcn, ? 213, 13th ed.,
'i, 92, 11. V
ArSTix, John. Leclures oti Jurisprudence, or the I'hilosophy of Positive
Law. London: 1851. Intro. & n. 3.
Amk.s, Prof. J. B. The history of Assumpsit, 2 Harvard Law Review, i-
19; 53-69- Intro.
B.\TKS, Clkmknt. The Law of Limited Partnership. 1886. ? 37, n. 2.
The Law of Partnership, i 383. 1888. \ 117, n. 2, a.
BiDDi.K, Geo. W. "'The Judicial Characfter of Chief Justice Sharswood."
1883. \ 102 & n. 2, b.
BissKT, AxDRKW. Law of Partnership, 1847, p. 47-56 i< 109, n. 5.
BoxjK.XN. Dk. L. p.. Traite dcs Aclions, 2d ed. Paris: 1845. Intro.
■J^ptd'arM, Jr. Ckar. Tie f'iJettcnben .'paribelegeiefee bee Grbballe. sub
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BiMi', Orlando F. The Law and Practice of Bankruptcy, 5th ed., ^j. 53,
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Carter. James C. The Proposed Codification of Our Comman Law.
1S84. Intro.
Cassa REGIS. Joseph L. M. De. Discursus Legales de Commercio.
XXIX, no. 38. Opera Omnia, Venetiis, m dcc xl. \ 51, n. 2, a.
CoLKYER, John. A Pradical Treatise on the Law of Partnership, 1 468,
5th Am. from 2d Engl. ed. 1861. i;ii7, n. 2, a. ^30 & notes.
''< 159. >i I.
Authors Mentioned.
Cook, Francis Wii^liam. a Treatise on the Law of Partnership and
Joint Stock Companies, i vol., p. 541. 1866. § 96, u. 3.
COOLEY, Judge Thomas M. An address, entitled "The Uncertainty of
the Law," delivered to the Georgia Bar Association, and published
in 22 Am. Law Review, 347-70, 1888. Intro.
Corliss, Guy C. H. Partnership Real Estate, 32 Alb. Law Jour., p. 284,
304, 326. 1885. ? 112, n. 4, a.
Da VIES, S. D. Criteria of Partnership, 10 Am. Law Reg., n. s. 209. 1871.
? 46, n. 2.
DURANTON. 17, Cours de Droit Frangais, p. 438. ^36, n. 3.
Eddis, B. A., Arthur Clement. The Rule of ex parte Waring. 1876.
I 106, n. 8, c.
F. F. "The Legal and Equitable Rights of Individual and Partnership
Creditors." 26 American Jurist 55. 1841. ^ 108, n. i.
Felicius, Hector, Ictus. Tradtatus de Societate, c. i. No. 4, (cited) Ve-
netiis, M DC X. ^ 16, n. 6, c.
fitting, 2)r. Hermann. ®te 5tatur bcr ©orrcal Dbligationen. 'i.2. ? 92.
n. 3.
^iiffel, 2)r. 5'^^^- ?fi^'^"ff- Societates Innominatae, ch. Ill, <> 3, Lip-
siae, 1843. 'i 37. <^-
@ I ii cf . 15. Grldulerung ber ^anbecten, p. 394 eiseq. 1. 965. 'i 33, u. i ; p. 404-
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I. 988, ? 108, n. 3 ; 14 2J^eil p. 276-8, 1 164, n. 6.
©olbfc^mibt, CDr. 2. §anbbuc^ bag $anbelgrcd|tg, 1864, 3SI. 2, 61). 1, g.
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Gould, Tracy. 21 Albany Law Journal, 168. 1880. ? 159, n. i.
Gow on Partnership, p. 31 London : 1823. >; 20, n. 1.
Green, Wm. 1 Virginia Law Journal, 127. 1877. ? 119, n. i.
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Hamilton, G. F. Critique On the Dodlrine of Vyse v. Foster. 3 Law
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Hakk.J. I.Ci.AKK. LL.I). The Law of Conlraas. :887. §44,11.1. Notes
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.V li r I c III a n 11 , b a n nee. Xai, iBcrl^dltnifj ber Societdtgglaubigcr ju ben
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3iiridi, IH4»). '^ no, n. 2-3; ^ loi, n. 3; ^ 164, n. 7.
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H rt b , T r . '.y c r n b a r b . ikitrdije juni 3iec6t ber 6-rttierbe.= u. 2Sirtf)fd)aft§s
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HcUcr, Jr. A. '>! . Uober ;L'tti'>=(Sontcitatton. ?. 52, a. 1827. ^92, n. 3.
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VI. 3. 22f)-229. ^. loi, n. 2.
I'cift, Tr. 1' . 2}. 3ur ©cfc^ic^te ber romifc^cn ©ocieta§, v>ena, 1881.
? I, n. 2.
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" 529- I 130, n. 14.
Mk. Justice, i Partnership 329. ? 40, n. i.
" " 19. \ 61, n. I.
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?Jlattbiac, i^on 6. (SontrotJcrfen=i.'erifon bee romifd>en 6it)ilrec^t§. Sei^jig,
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Authors Mentioned.
Mitchell, Judge J. T. Note to Northern Bank of Kentucky v. Keizer,
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183, etseq. London. 1822. \ 103, n. 13.
Mokawetz. Private Corporations. 2ded., 1886, s. 748, adfinem. ? 24,
n. 6; s. 74S, 699. ? 24, n. 9.
MOYLE, B. C. L., J. B. Institutes of Justinian, i vol. 472-77. Oxford,
1883. I 91, n. 3.
Parsons, James. A series of Essays on Legal Topics, p. 50-5, 1876.
\ 48, n. 3, a.
Parsons, TheOPHILUS, LL.D. The Law of Partnership, 2d ed, 1870, ch.
X, ^ I. \ 100, n. 2, b ; p. 342. \ 100, n. 6, a.
Pollock, Frederick. A Digest of the Law of Partnership, 4th ed.,
Appendix, London, 1883. Intro & n. 2.
Pothier, R. J. 6 Pandedls 448, Paris, 1823. \ 63, n. 4.
^ u n t f d} a r t , '^ r o f . 2) r . ilritifcfie a>ierte(ial()r|d}nft fiir ©efe^gebunoi imb
9Jed)f)t5>Di[fenfcf)aft. 29 SBairb 5L3, 514. 1887. ^91, n. 3.
Reeves, John. History of the English Law. Finlason's ed., London,
1869.
Slcnaub, 3tc^iIIe§. 2)a§ 3ied|t ber ©ommanbitgefellfc^aften, ISiuUttung,
Set^Sig, 1881. | 3, n. i ; §. 33, ^). 233-4. I 32, n. i ; |. 13, )). 94,
^37, n.c; ?.61, ^3.437, | 130, n. 2 ; §.61, )3.436, |i30,n. 8, ^; ^,.61,
^3. 439-40, 1 130, n. 11, 12 ; ?.55, ^3. 386-7, \ 77, n. i.
Stibbentro^j, S)r.®eorg ^uliug. 3"i^ 2^'f'i^^ '^i'" ^*^" Gorreal^Dblis
galionen \. 5, 1831. I91, n. 3.
Rogers, Prof. Henry Wade. Note to Davis v. Howell, 20 Am. Law
Reg., N. S., 461. 1861. I 108, n. 8.
3fioggc, Dr. ilarl 2luguft. Ueber bae 0erid)t§lt)efen ber @ermanen,
'^■iO.Vi.z, 1820. Intro.
Rousseau. Societes Civiles et Commerciales, s. 64, Paris, 1878. \ 16, n.
6, a; s. 66. \ 16, n. 6, b ; s. 1736, ^51, n. 2, b.
©dtmibt, 5i^ifi5«ridj 6uftaD 3(bolf. Sanbelsgefellfc^aftcn in '^ix\.
beutfdien ©tabtred)t§queUen be^ 93Httelalters, 1883. ^ 2. n. 1.
Sharswood, C. J. GeoRGE. Mss. Le<flures at the University of Peuncyl-
vania. \ 102, n. 2.
Story on Partnership, s. 51. '< 63, n. 5.
XV.
Authors Mentioned
STRACCHA. ])e Assecur, ),'l. 20, No. 4, cited from i Tropmjng, p. 21.
5 16, II. 3.
Stron«;, Ji'UGK Wm. lutroductory Address to the Law Students of the
rniversity of rennsylvania, Odlober, 1879. Intro.
SwiKT. Jonathan. "Tale of a Tub," III Vol., 82, ed. 1803. J 33, n. 3.
Trohlonc. Socidt^s Civiles et Commerciales, Paris, 1843. Vol. i, p. 21,
I 16, n. 3; p. 9, "/. 16, n. 6, r; p. 61, J, 567, | 33, n. i ; ^494, ^51, n.
2, a; §499, ?.5i.n. 2, (J; ? 482-3, 1485,^488; §503-4, ? 51, n. 2,
/ ? 487. ? 57, n- 5-
Va.n Wettkr, r. Les obligations en droit Roman, 2 Vol., 292, §54,
1S82. ?9i, n. 3.
^■AVASSKUR, A. Traitd des Socidtds Civiles et Commerciales, 2d ed.,
Paris, 1878. I 28, 1 13, n. I ; s. 23, § 16, n. 5 ; s. 92, § 31, n. 3 ; s. 85-
94. ? 33, n- I ; s. 348, ? 37, n. a ; s. 315, ^ 51, n. 2, d.
iiU i b 1 , ^\ i . X' e n J 2)ie Sortcalobligationen, p. d, ei seq. § 91, n. 3.
W., K. Retainer of Attorneys, 37 Law Mag. 72, 1847. §119, n. i.
xn.
TABLE OF CASES
STATED IN THIS TREATISE.
A few cases have been cited, but not stated, as they simply confirm the
case taken as the illustration for the proposition in the text.
The cases merely cited are printed in italic.
Abbott's Appeal, 14 Wr. 234,
Abbott a. Belkuap, 11 Ohio 411, - - . <
Abergavenny's Case, 6 Rep. 79, ...
Ackland a. Trethewy, 2 Saunders 48, - . _
Abrams a. Stewart, 7 Watts, 448, ...
Adams v. Beall, 8 A. Rep'r 664, -----
Adams v. Howell, 68 N. Y. 315, . - - -
Adams a. Lothrop, 135 Mass. 469, - - - .
Adams v. May, 27 Fed. R. 907, . - . .
Adams v. McKesson, 3 Sm. 81, - . . .
Adams a. Walsh, 3 Denio.125,
Addison a. Loeschick, 3 Rob. 331, . - - -
Aigen v. B. & Me. R. R,, 132 Mass. 423, -
Ainey's Appeal, 11 W. N. C. 568, . - - -
Alberger a. Bank (Steuben Co.), loi N. Y. 202,
Alderson v. Pope, i Camp. 404, u., -
Alexander v. Gorman, 7 A. Rep'r 243, . - -
Alexander v. Morgan, 31 Ohio St. 546, - . .
Allen a. Dickey, i Gr. Ch. 40, - . . .
Allen a. Meech, 17 N. Y. 300,
Allen a. Morris, i McCart. Ch. 44, - - -
Alter a. Scull, i Harr. 147,
Altheimer a. Bank (4 Nat. of St. Louis) 3 S. W. Rep'r 858
Altvater a. Kenney, 27 Sm. 34, -
Allen a. Ellis, 2 S.' Rep'r 676,
Allen a. Richards, 44 Leg. Int. 432, - - - -
American Loan and Tr. Co. a. Ricker, 140 Mass. 346,
Ames a. Herrick, 8 Bosw. 115, -
no,
106,
194.
103,
. 109,
J 03,
94,
95.
137,
177,
140,
Amsinck v. Bean, 22 Wallace 395 . - - -
Amsink a. Dingtnan, 27 Smith 114 -
Anderson v. Levan, i W. & S. 334, - - - -
Anderson v, Maltby, 4 Br. Ch. 422 ; s. c. 2 Ves. Jr. 244,
104,
192,
62,
216,
126,
134,
105,
138,
215,
193.
165,
170,
59,
177.
114,
113.
16,
215,
rio6,
\ 106,
(107,
J 88,
I 88,
83.
106,
1S65.
1842.
1608
1669.
1838.
1887.
1877.
1882.
1886.
1866.
1846.
1865.
1882.
1882.
1886.
1811.
1886.
1877.
1838.
1858.
1861.
1837.
1887.
1874.
1887.
6,
1887.
6,
1885.
3,
1861.
2, b.
%d,
1874.
2,
3.
^1
1874.
3.
1841.
2, a.
1793-
Table of Cases.
AiuU-rson :•. rollanl. 62 Geo. 46, . - - - 86, 6, 1878.
\ii(lrfws a. I-osler. 2 P. & W. 160, - - - - 168, i, 1830.
\n.lrews :-. ruK'li. 24 I- J, Ch. 5«- - " " ' 59- g, 1855.
Andri-ws ;■. Wilcoxon. 25 Ch. Div. 505, - - - 205, 3, 1884.
AiiK'i-11 J- Arnold. 62 N. Y. 508, 65, i, 1875.
AiikIc <i- Shihley, 37 N. Y. 626, . . - . 23, 3, 1868.
Aushutz :■. iMt/siiiunoiis, 9 Barr 180, - - - - 169, 3, 1848.
Anson a. Vice, 7 B. cS: C. 409, 23, 5, 1827.
Appleby a. Hawkins, 2 Saudf. 421, - - - - 140, 3, 1849.
Applc^ate <7. Van Brunt, 44 N. Y. 544, - - - 112, 18, 1871.
Arbendrolh<z. Durant, j^^ n. y! S^ - - - 37, 3,/ J^^;
Ar^all :■. Smith. 3 Denio 435, ----- 37, 3,^,1846.
.•\nnstronj,' a. Hijigins, 10 Pac. R. 232, - - - 15, 4, i8s6.
Arnistronj,' rt Pettrecht, 5 Rob. 339, - - - - 178, 5, 1868.
Arnol.l :•. Angell, 62 N. Y'. 508, - . - . 65, i, 1875.
/Vrnold <r Cochran, 8 Sm., Pa., 399, - - - - 24, 5, 1868.
Arnold a. Patterson, 9 Wr. 410, . . - _ 24, 4, 1863.
r 8 2
Artluirs a. Kramer, 7 Barr 165, -< ' ' 1847.
Ash i: Guie, i Out. 493, - 16, i, 1881.
Ashton a. Robinson, 20 Eq. 25, - - - - 28, 2, 1873.
Aspinwall ;■. Williams, I Ohio 84, - - - ' { j\V ]^ 1823.
Astor (7. Ogden, 4 Sandf. 311, 54, i, 1850.
Assurance Co. (London) v. Drennen, { \\l U; | 5i,^^ 23, 3, 1885.
Aitornev General v. Hubbuck, \ '^ Q' ^ ^ 488, - 109, 4, 1883.
< 13 y. B. D. 275, - 109, 4, 1884.
Atwfll (7. Morrison, 9 Bosw. 503, - - - - jyo, 2, 1862.
Atwood :■. Inipson, 5 C. E. Gr. 151, - - - - 106, i, a, 1869.
Austirick a. Russell, i Sim. Ch. 52,
Austin f. Holland, 69 N. Y. 571,
Austin :'. Williams, 2 Ohio 61, -
Autin :■. Townsend, Pen. 744, •• - - -
Averill v. Loucks, 6 Barb. 19, - - - -
Avery r. Myers, 60 Miss, 368, - - -
Axtell a. Young, 2 H. Bl. 242, arg.
Aver <z. Smith, 13 Otto 320, . - - .
Azel :/. Betz, 2 E. D. Smith 188,
Racheller a. Lawrence, 131 Mass. 504. - - - 2,7, 3, a, 1881.
Badcley :•. Consolidated Bank, 38 Ch. D. 238, - - Intro. i883
Bagley z/. vSmith, 10 X. Y. 4S9, / ^74. 2, „
. . ^ . 1 212, ^. ^^-^^
. a. Cushman, i Hill 526, 58. "/", 1841.
• t'. A'/zt-ar^.v, ii6Eng. C. L. Rep. 775, n., - 90, 3,' 1866!
^y 'i- Monarty, 46Coun. 592, - - . - 167, 5, a 1879.
{197 2
202', I, 1887.
nam a. uouiainj'. 4 bandi. 716, - . . . l'^^' ^' ^' ^\^c-2
Bakera. Wetn.ore, 9johns. 307, - - - . 62, /, 1812!
151,
4,
1826.
177,
2,
1877.
1 44,
I 76,
7>
25-
I825.
76,
4-
1811.
1 93,
I,
10,
1S49.
75-
2,
1882.
58.
g
1784.
74.
5,
1879.
17,
3-
1853-
Table of Cases.
Baldwin v. Burrows, 47 N. Y. 199, - - - - 23, i,
Baldy z: Brackenridge, 2 S. Rep'r 410, . . . 140, 3,
Ballentine v. Freliughuyseu, 38 N. J. Eq. 266, - 28, 3,
Ballou z>. Spencer, 4 Cow. 163, ----- 8, i,
Banco de Portugal, ex parte, 11 Ch. Div. 317, - - 164, 2,
Banco de Portugal v. Waddell, 5 Appeal Cases 161, - 164, 2,
Bank, Agr. & Mfrs., v. Stambaugh, 13 S & R. 299, - 106, 8, d,
Bank, Am. Nat., a. Blodgett, 49 Conn. 9, - - - 74, i,
Bank, Belleville Sav., a. Wiuslow, 30 F. 488, - - 85, i.
Bank, CatskilL v. Gray, 14 Barb. 471, - - - 58, I y^
Bank (Central City Saving) ?'. Walker, 66 N. Y. 425, 24, 3,
Bank, Citizens', v. Hine, 49 Conn. 236, . . _ 23, 3,
Bank, Consolidation, a. Miller, 12 Wr. 514, - - 127, 5,
Bank v. Cushing, 53 Vt. 321, - . . . _ 197, i,
Bank z'. Dakin, 24 Wend. 411, - - - - " I 76 22'
Bank, Fayette Nat., Lexington, v. Kenney, 49 Ky. 133, 195, 4,
Bank, Gainesville Nat., a. Stevens, 62 Texas 499, - 51, i.
Bank, Lancaster, v. Myley, i Harris 544, - - tog, 7,
Bank z'. Monteath, i Denio 402, ----- 44, 8,
Bank v. Norris, 43 L. I. 56, 68, 2,
Bank of Bellows Falls a. Washburn, 19 Vt. 278, - | J"^' 2' ^'
Bank of Commonwealth v. Mudgett, 44 N. Y. 514, - 126, 4,
Bank of Middletown a. Haldeman, 4 Cas. 440, - - 127, 6,
Bank of Mt. Pleasant, a. McKee, 7 Ohio 463, - - 117, 4,
Bank of New York v. Vanerhorst, 32 N. Y. 553, - 103, 2,
Bank of U. S. o. Cramond, i Binn. 64, - - - 130, 16,
Bank, Steuben Co., v. Alberger, loi N. Y. 202, - - 126, 5,
Bank v. Sawyer, 38 O. S. 339, ----- 19, 3,
Bank a. Templar, 26 Fed. Rep'r 580, - - - - 178, i.
Bank, The Cecil, a. Bowman, 3 Gr. 33, - - - 127, 2, d,
Bank, i Nat. of Alleg., v. F's Deposit Bk., 5 C. Rep. 505, 74, 5,
Bank, ist Nat. of Greensville, a. Buzzard, 2 S. W. Rep. 54, 44, 4,
Bank (1st Nat.) z'. Bissell, 2 McCrary 73, - - - 15, 4,
Bank, 4th Nat. ofSt. Louis.,z^. Altheimer, 3S.W. Rep. 858, 59, i.
Bank's Appeal (York Co.), 8 Casey, 446, - - - | jq^' 3' •
Bai^ks, ex p., i Atk. 106, - 197, i.
Baker v. Dawbarn, 19 Grant's Ch. 113, Up. Can. - 192, 3,
Baker's Appeu., 9 Harris 76, - - - - - 107, 3,
Barber a, Suydam, 6 Duer 34, - - - - - 84i 4,
Barber a. Durbin, 14 Ohio 311, ----- 112, 4,
Bardweil v. Perry, 19 Vt. 292, - - - - i ' ^
Barge a. Osborne, 29 Fed. Rep'r 725, - - - 131, 4,
Barker v. Mayo, 129 Mass. 517, 165, 4,
Barkery. Parker, i T. R. 287, 71, i,
Barlow a. Noakes, 26 L. T. 136; 20 W. R. 388, - - 71 - i.
Barnard, in re, 32 Ch. D. 44, - - - - - 126, 2,
Barnes v. Barrow, 61 N. Y. 39, - - - - - 129, i,
Barnes a. Foster, 31 Sm. 377, ----- 113, i,y]
Barrow a. Barnes, 61 N. Y. 39, - - - - - 129, i,
Barrow a. Jenkins, 35 N. W. Rep'r 510, - - - 156, i,
Barry v. Nesham, 3 C. B. 641, ----- 58, r,
Barthan a. Kapp, i E. D. Smith 622, - - - 215, 4,
Bartle a. Cochran, 3 S. W. Rep'r 854, - - - 48, 3, b,
Taiu.k of Cases.
Barlon a. Conklin, 43 ^arb. 435. - - " " ^9-4, 1864.
Barton ;•. Hanson, 2 Camp. 97; 2 Taunt. 49- - " ^2, e, 1^09.
Bast's AptKal, 2oSm. 301, i5^, 5. if>72.
i 102, 4, Q
Batcnjan .;. Brock, 25 O. ht. 609. - - - - j j^^^ 3^ io74-
Bates ;•. James, 3 Ducr 45. ^^7, 5, *. 1854.
,.11. ' " Moore 421. _/: g
Bates./. Kadenhust, -^ 3 Riug. 463, - - - 7^. 0,
Battin .;. lonts. 6 Cas. 84, ------ 135. 5. «. 1857.
Bauir <J. Sinmph, 76 Iml- 157. 27, i, iSSi.
Haurichlcr <;. Christman, 10 riiila. 115, - - - 35, 4, 1674.
liavinl a. C.ratz, II S. cS: R. 41. - - - - 72, I, 1824.
Ik-acli r. Ilaywar.l, ioOhio455, . - - - 76, 11, 1841.
Beach a. Hill, 1 Beas. 31, ------ | ^J' l\ 1858.
Beall a. Adams, S A. Rep'r 664, ----- 137, 5, 1887.
{106, 2, d,
106, 9, a', 1874.
107, 2,
Bean a. Walker, 34 Minn. 437, - - - - - 120, d, 1886.
Beasley a. Green, 2 Biug., N. C, loS, . - - 62, ^,1835.
Beaston a. Yorkshire Bk'g Co. | ^\^- ^ C- P; D. 204 . „5_ ^^^ jgso.
Beatsou :•. Harris, I J9 Cent L^I. 275, . . . ^^^ 2, 18S4.
Beck <i. Mair, 4 K. Rep'r 855, 120, 2, 1886.
Beiker z-. Boon, 61 N. Y. 317, 120, b, 1874.
Beckett :■. Raiiisdale, 31 Ch. D. 177, - - - - 88, 8, 1855.
Beerher fl. Gates, 60 N- Y. 518, 178, 5, 1875.
Bilchera. Guild, 119 Mass. 257, - - . - 167, 5, f, 1876.
Belknap r. Abbott, II O. St. 411, - - - - / J°^' 3. 1882.
, 105,' h
Bell :■. Newman, 5 vS. & R. 78, - - - -J. 108, 7, 1819.
195, 4,
Bendell v. Heltrick, 3 I. & vSp. 405, - - - - 69, 21, 1S73.
Benjamin z: I'orteus, 2 H. Bl. 590, - - . . 63, 2, 1796.
Benners v. Harrison, 19 Barb. 53, - . . . 8, i, 1854.
Bennett :■. Buchan, 61 N. Y. 225, - . . - 129, 4, 1874.
Bennett a. Hoyt, 59 N. Y. 538, 86, 3, 1872.
Benson i'. Tilton, 58 N. H. 137, 215, 3, 1877.
Bentley v. Craven, iS Reavan 75, - - - - 151, 3, 1853.
Bentley's Estate, 16 Pliila. 263, - . - . 216, i, 1883.
Bcntlya. Reade, 4 K. &J. 657, .... 48, 3, d, 1858.
(115, 3,
Bernhcim a. Johnston, 86 X. Car. 339, ... J 134^ 4^ 1882.
1.152, I,
Berry t . Kelley, 4 Rob. 106, 194, 2, 1S66.
Bettner a. Cotter, i Bosw. 490, 15, 5' 1857.
Bettsr. June, 51 N. Y, 274, 184,' 2, 1873'
Betz a. A/.el, 2 K. D. vSmilh 1S8, .... 17, 3, 1853.
Bibb I-urnace Co. a. I-anchon, 2 S. Rep'r 268, - - 120! ' d, 1887.
Bidwella. Ir^^•in, 22 Sni., Pa., 244, .... 18, 4, 1872.
BilliuKSfl. Bowen, i3Neb. 439, 112] 6* 1882.
BdhnKS 7-. Meigs, 53 Barb. 272, - . . . 130, 7 1869.
Binney r. Mulrie, 12 Appeal Cases 1S6, ... 31, 2, i886-
Birdsallr-. Cole. 2 Stock.Ch. 63, .... | ^o^. i- 1S54.
Table of Cases.
Bishop V. Countess of Jersey, 2 Drewry 143,
Bishop^?. Dodd, 50 L,a. An. 1178,
Bishop a. Ettenborough, 11 C. E. Gr. 262,
Bishop a. Speer, 24 O. St. 598, - - - -
Bissell a. Bank, ist Nat., 2 McCrary 73,
Bissell z/. Foss, 114U. S. 252, . - - -
Bitter v. Rathman, 61 N. Y. 512,
Bitzer v. Shunk, i W. & S. 340,
Bixby a. R. R. Co., 55 Vt. 235, - - - -
Blacka. Pruyn, 21 N. Y. 300, - - - -
Black ..S«pt,{37WN. 565, ....
Black a. Smith, 9 S. R. 142, - - - -
Black's Appeal, 8 Norris 201,
Blackwell v. Rankin, 3 Hal. Ch. 152,
Blair v. Brcuiiey, 2 Phil. Ch. 354,
Blair v. Snover, 5 Hal. 153, . . . -
Blair v. Wood, 12 Out, 278, . . - -
Blaker z;. Sands, 29 Kan. 551, - - - -
Blanchard a. Hesketh, 4 East. 144,
Blanchard a. Pattison, 5 N. Y. 186, -
Blanchard a. Livingston, 130 Mass. 341, -
Blanford a. Willett, i Hare 253,
Blight V. Ewing, i Pittsburg 275,
Blodgett V. Am. Nat. Bank, 49 Conn. 9,
Blodgett V. Weed, 119 Mass. 215,
Bloss«. North, 30 N. Y. 374, . - - .
Bloxam v. Pell, 2 Wm. Bl. 999, - - - -
Boardman a. Farnsworth, 131 Mass. 115, -
Body a. Owen, 5 A. & E. 28,-
Boeklen v. Hardenburgh, 5 J. & Sp. no,
Bogue«. Deal, 8 Harris 228, - . - -
Bogert a. Murray, 14 Johns. 318,
Boggs a. Sheppard, 9 Neb. 257, - - - -
Bogue V. Steel, i Ph. Rep. 90, -
Bogue's Appeal, 2 Norris loi, -
Bohrer v. Drake, 33 Minn. 408, - - - -
Bond V. Gibson, i Camp. 185, -
Bond, ex p., i Atk. 98, . . - . -
Bond V. Pittard, 3 M. & W. 357,
Boon a. Beecher, 61 N. Y. 317, - - - -
Borden a. Fall River Whaling Co., 10 Cush, 438,
Boston & Col. Smelting Co. v. Smith, 13 R. I. 27,
Bostwick a. Campion, 18 Wend. 182,
Boswell a. Dry, i Camp. 329, - - - -
Boswell V. Green, i Dutch. 391, -
Bourne v. Freeth, 9 B. & C. 632,
Bourret a. Byers, 64 Cal. 73, . . - -
Bowen v. Billings, 13 Neb. 439, - - - -
140,
2,
1854.
69.
2,
1878.
112,
10,
1875-
70,
2,
1874.
IS-
4,
1885.
IS,
4,
1S85.
r 69,
19,
i 106,
4, a,
1875.
(138.
I,
f 95,
1 122,
e.
2,
1841.
104,
3,
1882.
94,
c,
i860.
9,
I,
1879.
84,
I,
1822.
9,
I,
■ II,
I,
1879.
112,
5-
f 106,
1 192,
2,
1848.
140.
3,
1S47.
17S,
5,
1828.
96,
I,
1885.
14,
I,
1883.
48,
3,
1803.
62,
e,
1851-
31,
7,
1881.
43,
I, d,
1842.
59,
b,
1856.
74,
I,
1881.
124,
2,
1875.
76,
12,
1864.
66,
2,
1775-
37,
i,g^
1881.
59,
0,
1836.
67,
6,
1874.
100,
4,
1853.
J 171,
1 206,
2,
2,
1817.
209,
2,
1879.
104,
10,
1850.
106,
8, e,
1876.
52,
I,
1881.
115,
I,
1808.
195,
3,
1745-
48,
3,'^-
i8-,8.
120,
b,
1874.
10,
10,
1852.
64,
2,
1883.
62,
/
1837-
/ 44,
I 62,
3,
a
1818.
133.
6,
1856.
23,
4,
1829.
76,
17,
1883.
112,
6,
1882.
Table of Cases.
Rowman : . Hank (Cecil), 3 Or. 33, . - - -
Bowman : . Kistlt-r. 9 Casey 106, . - - -
Bowman r. vSpaldiiiK. 2 S. W. Rep'r 911, -
Boy<len :. Boyden, 9 Met. 519.
lioytT a. ricblliort), 5 Watts 159,
Brackcuriilge n. Balily, 2 S. Rep'r 410.
Bra<lbury :■. Dickens, 27 Btav. 53. " " " "
Bradiur'a. Stranj^, 114 l^'- S. 555. . - - -
Braswell u. Juilge, 13 Bush. 67, - - - - -
Bnuslk-lil :•. I'rench, 59 Miss. 632, - - - -
Brcnton r. Thompson, 20 L. I. 133. " ' ' ' {
Brewer a. Dyke, 2 Car. & K. 828, . - - -
Brewer :•. Norcross, 2 C. E. Gr. 219,
Brewster a. Patterson, 4 Ed. Ch. 352,
Brewster :■. Sterrett, 8 Casey 115, " " ' " {
Brick a. Young, Pen. 663,
Briggs z. Briggs, 15 N. Y. 471,
Briggs, ex ])., 3 Dea. & Ch. 367
Briggs a. llman, 32 La. An. 657, . . - -
Briggs :•. Vanderbilt, 19 Barb. 222, . - - -
Brigham ti. Miller, 50 Cal. 615, |
Brighls a. McKinney, 4 Har. 399, . . - -
Brine a. Moley, 120 Mass. 324, - - - - -
Brink a. Greenwood, 1 Hun 227 , - - - -
Bristow a. Staats, 73 N. Y. 264,
Brock z: Bateman, 25 O. St. 609, . . . - j
Brocklebank a. Stocker, 15 Jur. 591; 3 M. & G. 250, - I
Brockway :•. Burnap, 16 Barb. 309, . - - -
Brodhead a. (jreenwood, 6 Barb. 593, . - -
Brodie a. Howell, 6 Bing. N. C. 44, -
Brokam a. Runyan, i Hal. Ch. 340, - - - -
Bromley a. Blair, 2 Phil. Ch. 354, ... -
Brooks a. Gregorj', 1 Hun. 404,
Brooks i'. Martin, 2 Wall. 70, - - - - -
Hrophy i. Holmes, 2 MoUoy, Ir. Ch. i, - - -
Brotzman a. Newcomet, 19 Sm. 185, - - - -
Brown :'. Clark, 2 Har. 469, . - . . .
Brown a. Dutton, 31 Mich. 182, -----
Brown :■. Hicks, 24 Fed. Rep'r 811, - - . .
Brown z'. Jaquette, i3Norrisii3, - . . .
Brown :-. Tapscot, 6 M. & W. 119,
Brown a. Thomas. 10 Atl. Rep'r 713, - - . -
Brown :■. Thompson, Coxe, 2, -
Browning a. Ihler, 4 Dutch, 288, . - - -
Brown's Appeal, 8 Nor. 139, - - - _ .
Brundrcd :•. Muzzey, i Dutch. 268, ... -
Brush a. Levy, 45 N. Y. 589, . - - . .
Brush a. Wood, 13 Pac. Rep'r 627, ....
Hn.an :: Tooke, 60 Geo. 437, . - - _ .
Bryant v. Wardell, 2 Exch. 479, . - . . .
127,
2, i,
1859.
79.
I,
90.
I,
1859-
Ill,
2,
145,
I,
1887.
136,
2,
1845.
135.
6.
1836.
140,
3.
1887.
209,
3,
iS59-
141,
2,
1884.
15,
4.
1887.
74,
4,
1882.
102,
106,
a
5. "
1863.
144,
5.
1849.
214,
2,
1865.
8,
1,
1844.
88,
106,
2,
7, «
1858.
153.
3,
1810.
146,
I,
1857.
48,
2,
1833-
37,
3./^
1880.
62,
I',
1855-
103,
104,
5.
8,
1875-
168,
3,
1851.
31.
6,
1876.
59.
3.
I874.
103,
3.
1878.
102,
105,
4.
3,
1874.
59.
60,
8,
I,
iS5i.
60,
I,
1853-
106,
5, '^,
1850.
18,
4,
1839-
215.
3,
1846.
140,
3.
1847.
12,
I,
1874-
211,
3.
1874.
48,
3. a,
, 1828.
177,
I,
1871.
178,
2,
1850.
136,
4,'^,
1875-
59,
e
, 1885.
12,
I,
1880
134,
2.
1840.
173,
12,
1S87.
130,
7. a
, 1790.
125,
2,
1869.
216,
I,
1879.
59,
/.A
1855.
ID,
3,
1871.
156,
2,
1887.
125,
5.
1878.
161,
4.
1848.
Table of Cases.
Bryant a. Grant, loi Mass. 567
Buchan c. Bennett, 61 N. Y. 225, . . . .
Buchan v. Sumner, 2 Barb. Ch. 165, - - - -
Buchanan v. Cheeseborough, 2 Duer. 238,
Buckham, in re., 10 Nat. Bankruptcy Rep'r 206,
Buckingham v. Ludlam, 2 Stew. 345 E. A.,
Buckley v. Buckley, 11 Barb. 43, ... -
Budd a. Wilkins, i Hal. 153,
BufiFalo City Bank v. Howard, 35 N. Y. 500
Buisson a. Jacquin, 11 How. Pr. 385, - - - -
Bulkley v. Dingman, 11 Barb. 289, . - - -
Bullen V. Sharp, L. R. i C. P. 86,
Bullitt z^. Church (M. E.), 2 Cas. 108,
Bunning, a. FlocSlon, L. R. 8 Ch. Ap. 323, n.
Burckle v. Eckhardt. 3 Comst. 132 ; s. c. i Denio 337,
Burdick v. Garrick, L. R. 5 Ch. App. 233,
Burgan v. Cahoon, i Pennyp. 320, - - - .
Burge a. Heyhoe, 9 C. B. 431, - - - - -
Burke a. Tomlinson, 5 Hal. 295, . - - -
Burkhardt v. Burkhardt, 42 Ohio 474,
Burnap a. Brockway, 16 Barb. 309, - - - -
Buruell v. Hunt, 5 Jur. 650,
Burnett v. Snyder, 81 N. Y. 550, . . . _
Burnham a. Smith, 3 Sumner, 435, - - - -
Burns v. Hall, Pen. 984, --.-..
Burns v. Rowland, 40 Barb. 368 -----
Burrell v. Maudeville, 2 How. 560, - -
Burrough's Appeal, 2 Cas. 264, - - - - -
Burrows a. Baldwin, 47 N. Y. 199, . - - -
Burt a. Duryea, 28 Cal. 569, -----
Burt a. Traphagen. 67 N. N. 30, -
Burton, a. Patterson, Pen. 717,-
Burton v. Wookey, 6 Mad. Ch. 367, - - - -
Bush V. Bush, 33 Kan. 556, ------
Bush V. Crawford, 29 Leg. Int. 363,
Bushell a. Edmunds, L. R. i Q. B.
Butler a. Johnson, 4 Stew. 35, - - - -
Butler a. Jones, 87 N. Y. 613, - . - -
Butterfield a. Harris, 33 L. J. 639,
Butterfield v. Lathrop, 21 Sm. 225,
Butterworth a. Haldane, 5 Bosw. i, -
Buzzard v. Bank of Greenville, 2 S. \V. Rep'r 54,
Byers v. Bourret, 64 Cal. 73, - - - -
Byers a. Carson, 21 Rep'r 232, - - - -
B. & M. R. R. V. Dick, 7 Neb. 242,
B. & Me. R. R. a. Aigen, 132 Mass. 423, -
Cadet a. Levy, 17 S. & R. 126,
Cady V. Smith, 12 Neb. 628,
96,
/ 35,
I 207,
2,
5,
1869
129,
4,
1874.
no.
4,
1847.
210,
2,
1856.
164,
I,
1874
J 165,
1208,
3,
4,
1878
1 109,
2,
1850.
\ 112,
17,
85,
3,
1822.
f 69.
19,
\ 106,
A.b
1866
(200,
I,
75,
3,
1855
70,
2,
185 1
64,
/,
1866
106,
9, c,
1856
42,
2,
1864
' 53,
I 59,
I,
a,
1849
43,
I, r,
1870
69,
17,
1881.
58,
g
1850
76.
2,
1829.
209,
I, b.
1885
60,
I,
1853
18,
I,
1841.
68,
2,
1880
10,
10,
1838.
76,
2,
1812
69,
18.
1863
74,
4,
1844
76,
21,
1856
23,
I,
1872.
15,
2,
1865
10,
4-
1 876
155,
I,
1810.
151,
3,
1822
40,
4,
1885
125,
3,
1872
26,
I,
1865
206,
I,
1879
32,
3.
1882
17,
2,
1876
67,
10,
1872
69,
15,
1859
44,
4,
1886.
76.
17,
1883
195,
I,
1885
76,
I,
1878.
62,
^.
1882.
178,
6,
1827
76,
I,
1882
Table of Cases.
69, 17, 1881.
. unriran 1 Pennyp- 320. " ' . 16, 2, 1853-
aSu:"S"'.s.SHxch.S98. - " ; SS, :, ,3.6-
CaUlwell a. Oram. 5 Cow. 4«9. - " ^ ^^^; ^;. ,329.
,,, n .. Stilcm.in, 1 K-awle2i2, - " j^^ i, a, 1872.
^^h^'^'-^; cS 4bN- V. 614. - - . 1,3, 5- 1^53-
CalkeU .. HJ"" 6 0. St. 190, - 1840.
Cameron . . } r.mc^c _ . t, ^
Camioc « I Jones 394. " . 134, i, 1829.
H"nV'ISer37^^,^^I ■ - - - : x^: 2: x8£:
gdti-1 Sr-A.57iv^^ - : : - 6, I. 1781
rfrvirk' Vickerv. Douglas 653, " _ . 175,
1886.
S re . 'Kk 117 U. S. R. 201, - _ . ,95. ,, 1885.
Srson :•• Bver.. 21 Rep'r 232 - " _ . . 39, 2, 1883.
Carter r. Lipsey. 70 Geo 417, " " . . . 57. 4, I793•
Car^er «. Waugb. ^ H. Bl. 235. - - fio6, 1,6 ^882.
Carv..Goodbar, 16Fed.Rep.3x6. - " " \ 107 - 4. ^^ ^g^^
Carv :■ Williams, i Duer 667, - " _ . 131, 2, 1836.
Cai </. Deckard, 5 Watts 22. - - . 172, i, 1881.
Cas^els V Stewart, 6 App. Cases, 64, - _ 5^ 2, 1884.
Sss'lv-;. Hall.97N.Y. 159. --_:.. 15, i, 1871.
Castle a. Taylor, 42 Cal. 367. - _ _ . . x2i, 9, 1877.
Catanach a. Stanbndge, 2 Nor. 3^^, . 9, 2, ^378.
Cavetta. Lauffer,6Nor. 479- - " " ' ' U^o 5, i860.
Chadxvick V. Eelt, II Ca. 305. --_:". 81', i, 1880.
Chafeea. Slutts, 48W1S.617, - ^57, 3, ^g^g
ChafTaixr. Lafitte,2oLa.Am.63i, - - ' ^ 77' ^ ^887.
Chambefort v. Chapman, 19 Q- B. D. 229, - ; _ ^g' ^' 1874.
Chamberlain !■ Forbes, 3^^ C 277, _ _ _ 4_ 1864.
rhambersr. Clearwater, i Keyes 310,
Cliamuer^, c. f 1 1 Wend. 571, . . 62, /, 183/.
Champion v. Bostwick, | jg Wend. 182. 69 17, 1838.
Champions. Flanigan, I Or. Ch. 51, - " ] ] gi] 3', x847.
Chapin V. Clemitson, i Barb. 311. " _ . jSi, 2, 1852.
Chaplain a. Renton, i S^^ck. 62 - 1887.
Chapman a. Chambefort. 19 Q- B. D- 2?9, ' ' 6 1827.
Chapman a. Everitt, 6 Conn. 247, " " " _ ^oo, 2, 186S.
Chapman I'. Thomas. 4 Reyes 210, - - _ _ 1,^,1887.
Chanev c. Hoxie. 143 Mass. .592, - - " _ §8, 3- ^878.
Chase a. Silverman. 90 111. 37. - " - - 57, 4. 1821.
Cheapf.Cramond 4B.&AI.663 ; : _ ^57 , ^g^^
Cheeseborough a. Buchanan, 2 Duer 238. ^ ^^^ ^ ^^^
Cheescmanr.Sturges,6Bosw. 520. - - " ' UoS, ^i, ^gg^
Cheney f. Newberry, 67 Cal. 126, - - - " ^^^ ^; 1873.
Chesteri'. Dickerson. 54N. \. I, - " _ 7. a, i860.
Cheveliera. Petit. 2 Beas. iSi, - - " ' _ j^^_ 9,^,1857-
Chidsey a. Siegel, 4 Cas. 279, "
Table of Cases.
Cenlrai Bauk of Pittsburg a. Fulton, ii Norris 112,
Childs a. Harvey, 28 O. St. 319, - - - -
Childs a. Hasbrouck, 3 Bosw. 105,
Childs a. Voorhis, 17 N. Y. 355, ...
Chisholm a. Laird, 30 Scot. Jur. 5S4, -
Christl a. Fitzgerald, 5 C. E. Gr. 90, -
Christman :'. Baurichter, 10 Phila. R. 115,
Chuck, ex p., 8 Bing. 469, - - - -
Church (M. E. ) a. Bullitt, 2 Cas. loS,
Church a. Tassey, 6 W. & S. 465,
City of Brooklyn v. Dearborn, 20 N. Y. 244,
City of Brooklyn v. McChesney, 20 N. Y. 240,
Clark a. Brown, 2 Har. 469, - - -
Clark V. Cullen, 9 Q. B. D. 355, -
Clark V. Cushing, 52 Cal. 617,
292,
Clark a. Eastman, 53 N. H. ■
296,
295,
341,
267,
Clark a. Jones, 42 Cal. 180,
Clark a. Woodward, 30 Kan. 76,
Clarke v. Mills, 13 P. Rep'r 569, - • ■
Clarke a. Rawlinson, 15 M. & W. 292,
Clark's Appeal, 22 Sm. Pa. 142, -
Clark's Appeal, 1 1 Out. 436,
Clay V. Cottrell, 6 Har. 408,
Clearwater a. Chambers, i Keyes, 310,
Cleather v. Twisden, 28 Ch. D. 340, -
Clement v. Clement, 35 N. W. 17,
Clements a. Wharton, 3 Del. Ch. 209,
Clemitson a. Chapin, i Barb. 311,
Cleveland a. McGregor, 5 Wend. 475,
Cleveland a. Reynolds, 4 Cow. 282, -
Cleveland a. Society Rerun, 43 O. St. 481,
Clifton a. Fox, 6 Bing. 776,
Cobb a. Wilson, 2 Stew. 361, E. & A.,
Cobeau a. Schriver, 4 Watts, 130,
Cochran v. Arnold, 8 Sm., Pa., 399, -
Cochran v. Bartle, 3 S. W. Rep'r 854,
Cochran a. Finney, i W. & S. 112,
Cockroft a. Geery, i J. & Sp. 146,
Codding, in re., 9 Fed. Rep. 849,
Coddington a. Hampton, i Stew. 557
Coddtag.on..Iddl, {3|;-;54o, - ;
Coddington v. Toppan, 11 C. E. Gr. 141, -
Coe a. Everitt, 5 Denio 180, - . -
Cohen v. N. Y. Mutual Life, 50 N. Y. 611,
Cohen a. Reuben, 48 Cal. 543,
185,
2,
1879.
64,
c
1S76.
32,
I,
1S58.
86,
I,
1858.
f 39,
I,
42,
I,
1858.
i 42,
4, a
179,
I,
1869.
35.
4,
1S74-
( 52,
I 58,
3. b
1832.
106,
9, ^■,
1S56.
161,
6,
' 1843-
69,
7,
1859-
177,
3,
1859.
178,
2,
1850.
77,
^,
1882.
104,
9,
1878.
44,
I,
54,
3,4,
55,
2,
1872.
58,
2,3,
62,
I,
15,
I,
1871.
44,
3,
1883.
158,
4,
1887.
59,
h
1846.
f 28,
\ no.
4,
6,
1872.
147.
I,
1884.
128,
2,
1852.
139,
4,
1864.
140,
I,
1884.
175,
2.
1887.
40,
4,
1868.
81,
3,
1847.
/ 44,
I 76,
6,
24,
J 830.
II.
2,
1825.
24,
3,
1885.
23,
2,
1830.
54,
I,
1878.
57,
4,
1835-
24,
5,
1868.
48,
3, ^
1887.
87,
I,
1841.
f no,
II,
1871.
1 167,
5,«,
III,
6,
1881.
133,
5,
1877.
208,
4,
1S79.
210,
4,
1878.
lOI
I,
1875-
/ 57,
I 58,
4,
1848.
16,
2,
1872.
1874.
Table of Cases.
Coil <i Maimcy, Sb N. C. 4^3.
Cole a. Birdsall, 2 Stock. Cli. 63,
Cole a. Pease. 53 Conn. 53.
Cole a. Tope, 55 N. Y. 124, -
Cole :•. RevnoUls. 18 N. V. 74, -
Coles V. Coles, 15 Johns. 159,
Coles tJ. Newsome, 2 Campb. 617, . - - -
Colbeck, in re., Buck48, ------
Coljjrove z>. 1-allmadge, 6 Bosw. 289, . - - -
Colhoun v. Snider, 6 Biun. 135, . . - -
Col lender v. Phelan, 79 N. Y. 366, . - - -
Collingwood a. Lampton, 4 Mod. 315,
Collins' Appeal, 11 Out. 590,
Collinsa. Crawshay, I 15 Vesey, 227
Collins a. Whitaker, 34 Minn. 299, - - - -
Colt a. Demmy, 3 Sandf. 284, - - - - -
Columb V. Read, 24 N. Y. 505,
Colvin a. Reppert, 12 \Vr. 248,
Col well a. Crocker, 46 N. Y. 212,
Col well a. Farrell, i Vr. 123,
Coniraercial Bank, Buffalo, v. Warren, 15 N. Y. 577,
Conimonweallh a. Hare, 11 Norris 141, - - -
Commonwealth v. Mateer, 16 S. & R. 416 -
Commonwealth v. Vanderslice, 8 S. & R. 452, -
Commonwealth a. Wetherell, 17 W. N. 104,
Conklin v. Barton, 43 Barb. 435, . . - -
Conklin a. Tremper, 44 N. Y. 61,
Conn a. Gardiner, 34 O. St. 187, . - - .
Connon V. Dunlop, 64 Geo. 680, . . - .
Conroy a. Hargrove, 4 C. E. Gr. 281, . - -
Consequa 7'. Willing, i Peters 301, - - - -
Consolidated Bank a. Badeley, 38 Ch. D. 238, -
Converse a. Whitcomb, 119 Mass 38, - . .
Cooper r'. Prichard, 75!^. T. 91, - - - - -
Cook a. Je.ssup, i Hal. 434,
Cook V. Penrhyn Slate Co., 36 O. St. 135,
Cook a. Wrenshall, 7 Watts 464, - . - .
Cookingham v. Tasker, 2 Keyes 454,
Coope V. Eyre, i H. Bl. 39, . . . . .
Cooper a. Dixon, 3 Wilson, 40,
Cofjper's Appeal, 2 Casey 262,
Coover's Appeal., 5 Casey 9,
Corning a. Heartt, 3 Paige 566,
Coryell a. Taylor, 12 vS. & R. 243, - . . .
Corwin v. Suydam, 24 O. S. 209, . . . .
52,
1882.
f lOI,
1 180,
I,
2,
1854.
i4-
I,
1885.
86,
5,
1873-
161,
7,
1858.
13.
109,
2,
5.
1818.
112,
L 158,
2,
2.
176,
2, a,
1811.
/ 57,
i 58,
4,
1817.
148,
I,
i860.
109,
7.
1813.
210,
3.
1879.
103,
8,
1695-
|i7i,
1 172,
3.
2,
1885.
43.
a,
1808.
99,
2,
139.
6,
1885.
/ 112,
I113.
5,
1850.
109,
6,
1862.
178,
I,
1864.
127,
I.
1871.
f 100,
1 104,
8,
1862.
10,
135,
I, a,
1837.
106,
8,/
1875.
/ 89,
1103,
I,
8,
1827.
103,
8,
1822.
106,
8, d
1885.
69,
4,
1864.
j IOO|
1103,
5,
2,
1870.
210,
3.
1877.
105,
4.
1880.
59.
(i,
1868.
85.
2,
1816.
Intro
1888.
31.
4,
1875-
140,
3.
1883.
215,
I,
1798.
176,
2, a
1880.
130,
6,
1838.
76.
12,
1866.
f 7.
I 49.
I,
6,
1788.
63.
2,
1768..
106,
8./
1856.
106,
8,
1857-
215.
I,
1832.
120,
a
1824.
167,
5, c
1873.
Table of Cases.
Cosgrove a. Goldsmid, 7 H. L. 7S5, -
Cothran v. Marmaduke, 60 Texas 370,
Cotter V. Bettner, i Bosw. 490, - - - -
Cottrell a. Clay, 6 Har. 408, - - . .
Coulter a. Stewart, 12 S. & R. 252,
Countess of Jersey a. Bishop, 2 Drewry 143,
Court of Wards a. Mollwo, L. R. 4 P.'C. 419,
Cowan V. Kinney, 33 O. St. 442,
Cowart V. Perriue, 3 C. E. Gr. 457,
Cox V. Hickman, 8 H. L. 268, - . - .
Coxa. Keegan, 116 Mass. 289, - - - .
Cox I'. McBurney, 2 Sandf. 561, - - - -
Cox a. Munster, 10 Ap. Cas. 680,
Cox V. Peters, 2 Beas. 39, - - - - -
Cragin a. Logan, 27 La. An. 352,
Craig a. Hulschiser, 5 Vr. 363, - . . ■
Craig V. Smith, 15 Pac. Rep'r 337,
Cramond v. Bank of U. S., i Binn. 64,
Cramond a. Cheap, 4 B. & Al. 663, -
Crandall v. Denny, Pen. 137, . . - .
Crary v. Williams, 2 Ohio 65, -
Craven a. Bentley, i8Beavan75,
Crawford a. Bush, 29 Leg. Int. 363,
Crawford a. Eager, 76 N. Y. 97, - . .
Crawford a. Tiffany, i McCart. Ch. 278, -
( 218 -
Crawshay v. Collins, 15 Ves. "^227-
Critchfield v. Porter, 3 Ohio 519,
Crites v. Wilkinson, 65 Cal. 559,
Crocker v. Colwell, 46 N. Y. 212,
Crosby a. Parsons, 5 Esp. 199, . - - ■
Cross a. Daniel, 3 Ves. 277, . . - .
Cross V. Jackson, 5 Hill 478, - - . .
Cross a. Trowbridge. 117 111. 109,
Cubbinson a. McCowin, 22 Smith, 358,
Cullen a. Clark, 9 Q. B. D. 355, - - - ■
Culley V. Edwards, 44 Ark. 423.
Cummiug's Appeal, i Casey, 268,
Cummings v. Mills, i Daly 520, - - - ■
Cummings v. Morris, 25 N. Y. 625, -
Cummings a. Peacock, 10 Wr. 434, -
Cummins a. Pond, 50 Conn. 372,
Cumpston v. McNair, i Wend. 457, -
Cunningham v. Littlefield, i Edw. Ch. 104,
Curry v. Fowler, 87, N. Y. 33, -
Curry v. White, 51 Cal. 185, 1875; 531,
Curtis V. Woodward, 58 Wis. 499,
Cushing a. Clark, 52 Cal. 617, - - - •
Cushing a. Nat. Bank, 53 Vt. 321,
Cushman v. Bailey, i Hill. 526, - - -
Cutbush V. Cutbush, i Beav. 185,
Dakin a. Bank, 24 Wend. 411, -
Dalton a. Romero, 11 Pac. R. 863,
Daly a. Randolph, i C. E. Gr. 313, -
205,
6,
1859-
59,
3,
1883.
15-
5,
1857-
128,
2,
1852.
130,
7,
1825.
140,
2,
1854.
64,
b.
1872.
69-
17,
1878.
213,
I,
1867.
59.
hP,
i860.
137,
2,
1874.
112,
8,
1849.
77,
3,
1885.
180,
I,
i860.
79,
0■^
1875.
167,
2, a.
1871,
95,
I,
1887.
130,
16,
1803.
57,
4,
1821.
76.
2,
1806.
76,
10,
1825.
151,
3,
1853-
125,
3,
1872.
66,
6,
1879-
III,
14,
1826.
43,
a
1808.
99,
2,
119,
a,
1828.
114,
3,
1884.
127.
I,
1871.
48,
2,
1805.
106,
5,/
1796.
76,
6,
1843.
103,
^,
1886.
178,
4,
1872.
1S3,
I,
77,
^,
1882.
64,
2,
1884.
III,
7,
1855.
61,
3,
1866.
156,
5,
1862,
152,
2,
1864.
59,
b.
1882.
7,
4-
1828.
54,
I,
158,
3,
1831.
64,
d.
1881.
81.
2,
1885.
193,
I,
1883.
104,
9,
1878.
197,
I.
1881.
58,
/
1841.
74,
7,
1838.
44,
76,
5,
22,
1840.
12,
I,
1 886.
105,
193,
2,
3,
1863.
Table ok Cases.
Dana a. Schcnklc, i iS Mass. 237,
Daim :•. SU-arns, 3 Cush. 372, - - - -
Daiurl .-. Cross. 3 Ves. 277, - - - -
Davenport a. Wild, 7 A. R. 295, - - -
Davi.lson r-. Cohk-n vStale Iron Works, 15 I'ac. Rep r 20,
Davi.lson r-. Holden. 10 At. Rep'r5i5,
D.ivis, ex parte, 4 DeC., J. & S. 523, - - - ■
I) ivis :■. Howell, 20 Am. Law Reg'r N. S. 461, -
Davis :•. Keves, 3S N. Y. 94, . - - - •
Davisrt. LiniUey, 13 P. Rep'r 118, - - - ■
Davis a. Marsh, 33 Rand. 326,
Davisa. Moore, n Ch. D. 261, - - - - •
Davis 7'. Morris, 36 N. Y. 569, - - - - •
Davis :: Newkirk. 5 Deuio 92, - -
Davis (/. (Juiii. 2S Sni. 15. - - ■ " " '
Davis a. Salmon, 4 Binn. 375, - - - -
Davis V. Smith. 2 S. Rep'r 897,
Dawbarn a. Baker, 19 Grant's Ch. (Up. Can.), 113,
Dawes a. Hoare, i Doug. 371, -
Dav V. Stevens, 88 N. C. 79,
Dayton v. Wilkes, 5 Bosw. 655,
Deal Z'. Bogue, 8 Harris, 228. - - - - .
Dean v. Harris, 33 L. T. | g^^| _ - - -
Dean <: McDowelL 8 Ch. Div. 345, - - - ■
Dean a. Wild, 3 Allen 579, -----
Dearborn a. City Bank of Brooklyn, 20 N. \'. 244,
Deckard z: Case, 5 Watts 22, - - - -
Decker z>. Howell, 42 Cal. 636, - - - -
Deems a. Lafond, 81 N. Y. 507, - - - -
Defora. Weber, 8 How. Pr. 502, - . -
Delaney v. Root, 99 Mass. 546, - - - -
Delliasse, ex p., 7 Ch. D. 511, - - - -
Delmonico v. Guillaume, 2 Sandf. Ch. 366,
Demmy v. Colt, 3 Sandf. 284, - - - -
Denithorne v. Hook, 2 Am. 240, . . -
Dennis Z'. Kennedy, 19 Barb. 517, ... -
Druny a. Crandall, Pen. 137, ....
Denton v. N'oyes, 6 Johns 295, - - . -
Deveau v. Fowler, 2 Paige Ch. 400, -
Devoney v. Mahoney, 8 C. E. Gr. 247,
Dexter <7. Jones. 125 Mass. 469, 1878; 130 Mass. 380,
Dick a. B. .S: M. R. R., 7 Neb. 242, -
Diikens a. Bradbury, 27 Beav. 53, - - -
Dickerson a. Chester, 54 N. Y. i,
Dickey z\ .Mien, i Gr. Ch. 40, -
Dirkinson v. Valpy, 10 B. & C. 128, -
Dillon z\ Horn. 5 How. Pr. 35, -
Dilloti a. Plunkett, 4 Houston 338,
Dinginan v. .Anisink, 27 Sm. 114. 118,
Dingman a. Bulkley, ii Barb. 289, - . .
Ditmars a. Large, 12 C. E. Gr. 283, -
188,
3,
1875-
137,
4,
1849.
106,
5,/,
1796.
73.
I,
1886.
J, 17,
4,
1887.
69-
10,
1S87.
18,
3,
iS6v
108,
8,
1861.
175,
3,
1868.
103,
c.
1887.
10,
7,
1885.
45-
1879.
77,
e.
iS8v
122,
7,
1847.
4,
2,
1875.
"7.
«,
1812.
112,
I,
1887.
192,
3,
1872.
1 ''
3,
1780.
I 49.
6,
12,
I,
1883.
147,
2,
1859.
100,
4,
1853-
17,
2,
1875-
151.
6,
1877.
170,
4,
1862.
69.
7,
1859-
131.
2,
1836.
15,
6,
1872.
16,
I,
1880.
173.
2,
1853-
12,
1,
1868.
50,
3,
1878.
no,
3,
1845.
(112,
I "3.
5,
1850.
69.
3,
1886.
24,
I,
1854.
76,
2,
1806.
"9-
I, c
1810.
f 106,
1148,
7,
2,
1831.
r 28,
3.
< no,
9,
1872.
iiii,
15,
100,
8,
i88r.
76,
I,
1878.
209,
3,
1859-
10,
7,
1873-
215.
2,
1838.
23,
4,
1829.
189,
I,
1850.
57,
4,
1875.
88,
5.6,
1874.
70
2,
185 1.
208,
8,
1876.
Table of Cases.
Dixon V. Cooper 3 Wilsou 40, -
Dob V. Halsey 16 Johns. 34, . . . .
Docker v. Somers, 2 Mylne & K. 653,
Dodd V. Bishop, 50 La. Au. 1178,
Dodd V. Tarr, 116 Mass. 287, . . . .
Douer z'. Stauffer, i Pa. 203, ... -
Donnally r. Ryan, 5 \Vr. 306, - - . -
Doughty z: Doughty, 3 HaL Ch. 227,
Downey z'. F. & M. Bank, 13 S. & R. 28S,
Drake a. Bohrer, 33 Minn. 408, - - - -
Drake a. Holland, 29 Ohio St. 441,
Drennen a. Assurance Co. (London) -| ^ ^^ ^' q ^^'^
Drennen z'. House, 5 Wr. 30, - - - -
Drexel a. Sparhawk, i W. N. 560,
Driver a. Pooley, 5 Ch. D. 458, - - - -
Dry V. Boswell, i Campb. 329, - - - -
Dubois' Appeal, 2 Wr. 231, ... -
Duckworth a. Gouthwaite, 12 East. 421, -
Duff V. Maguif e, 107 Mass. 87, - - - ' -
Duucan a. Pa R. R. Co., i Am. 352, -
Duugan v. Miller, 4 C. E. Gr. 219,
Dunham Z'. Jarvis, 8 Barb. 88, -
Dunham Z'. Presby, 120 Mass. 285,
Dunham Z'. Rappleyea, i Harr. 75, -
Dunham v. Rogers, i Barr 255 - - - -
Dunlap V. Watson, 124 Mass. 305,
Dunlop a. Connon, 64 Geo. 680,
Durant v. Arbendroth, -I ^?-vt' ^.T x,-,'
( 97 N. Y. 132,
Durbin v. Barber, 14 Ohio 311, - - - -
Durborrow a. Everly, 8 Ph. 93, -
Durborrow's Appeal, 3 Nor. 404,
Duryea v. Burt, 28 Cal. 569, . - . .
Duttou V. Brown, 31 Mich. 182,
Dwinell a. Sanborn, 135 Mass. 236, -
Dyke Z'. Brewer, 2 Car. & K. 828,
Eager z'. Crawford, 76 N. Y. 97, . . . .
Earon v. Mackey, 10 Out. 452, -----
[292, - . - -
I 296, - - - -
Eastman z>. Clark, 53 N. H. -j 295, - - . .
341, - - - -
1 297, - - - -
Eaton a. Robson, i f. R. 62,
Eaton's Appeal, 16 Smith 4^3, -----
Eberhardt a. Roberts, i Kay 148, . - - -
Ebbert's Appeal, 20 Sm. 79,
Eckhardt a. Burckle, 3 Comst. 132: s. c- i Denio 337,
xxix.
63,
3,
1768.
51,
2,
1819.
43.
I,
1834.
69.
2,
1878.
156,
3,
1874.
102,
I, 2,
1829.
38,
I,
1861.
180,
3.
1S48.
81,
4.
1825.
52,
I,
1881,
131,
3,
1876.
1885.
23,
3,
1886.
i 69,
5,
1861.
1 121,
2,
164,
3,
1875-
/ 50,
I 64,
3,
I,
1876.
j 44,
3,
1818.
\ 62,
a,
117,
I,
1861.
19,
5,
1810,
161,
5,
1871.
24,
10,
1886.
130,
7,-5,
1868.
1 152,
2,
2,
1854.
211,
2,
1876.
157,
3,
1837.
1 7.
I 60,
I,
I,
1845.
188,
I,
1878.
105,
4,
1880.
1877.
37,
3,y,
1884.
112,
4,
1846.
34,
I,
1871.
100,
c,
1877.
15,
2.
1865.
136.
4,5
1875-
205,
4,
1883.
144,
5,
1849.
66,
6,
1879-
68,
3.
1884.
44,
I,
54,
3, 4
55,
2,
' 1872.
58,
2, 3,
62,
I,
"9.
I,
207,
I,
1 870.
15,
3,
1853.
"3,
^
1871.
1 53.
\ 59,
I,
a
1849.
Tahlk of Cases.
r.lmnn^jn V. Thompson. S Jurist, N. S. 235, - - 17, 2, 1861.
kLou.Is. ex parte, 4 1). I--. & J-. 488 - - - 204 2. 862
H.luiuiuls : . Hushell. I.. R. i Q. B. 96 - - - 26, i, 1865.
bMmun.ls. exp^rte. nl). K. &J. 488, - - - 75, i, 862.
Ivlsun a. Smarte. I Lev. 30, - - - - - '3°. 7. i&^i-
/^./r.wn/v.:. /An/tT. ii6Kngl. C. L. Rep. 775, - " 90, 3, 2866.
H.Uvanls (/. CulU-y, 44 Ark. 423. - - - - 64 2, 1884-
Ivlw.mlsr Tracv. i2Sin. 374. 67,12, 1869.
I-Mwar.lsr. RcininK'ton. 51 Wis. 336, - - - 96, 2, ib»i.
KKh.rtsr. \Voo.l. 3 I'aiKeCh. 517, - - - - 106, 6, 1832.
Uhlre.! </. Masou. 6\Vall.23i, 82, 3, 1^79
Ivl.lre<l.r Roberts. 15 r. Rep'r 16, - - - - 112, 7, 1887.
Hl.lrulKC :•. Smith, 144 Mass. 35, - - - - 130, 15, 1887.
ICl.lri.lL'e z: Froost. 6 Rob. 518, 67, 5, 1866.
KlK'ie :•. Webster, 5 M. ^^^V. 518, ... - 48, 2, 1839.
i:i>,'iii Watch Co. 2: Meyer, 30 Fed. Rep'r 659, - - 131, i, 1887.
F:ii()t<;. Hoskinson, 12 Sm. 393, . - - - 86, i. 1869.
Elliott a. Prentice, 72 Geo. 154, 213, 2, 1883.
Ellis :■. Allen. 2 S. Rep'r 676, - - - - - 114, 2, 1887.
Ellis X'. Ward, 21 \V. R. 100, 22, i, 1872.
Ellis a. Wells, 68 Cal. 243, 132, 2, a, 1885.
I 8 C. E. Or. '27, 1S72; 9 C. E. Gr. 2:2, 8, g
Elslon a. Murray, -^^j^g^^^gg - - - 215, 3, '"73-
Elton :■. Perkenpine, i E. Rep'r 637, - - - 150, 2, 1855.
Elworlhy a. Teed, 14 East. 210, ----- 76, 8, 1811.
Emory a. Van Ransselaer, 9 How. Pr. 135, - - | ^g^j j' 1854.
Eaiorv v. Wilson, 79 N. Y. 78, 214, 2, 1879.
Endefby a. Gilpin, 5 B. & Aid. 955, - - - - 208, 3, 1822.
Englis f . F'umis, 4 E. D. Smith 587, - - - - 163, i, 1855.
English a. Hotchkiss, 4 Hun. 369, - - - - 17, 4, 1875.
Fjigl. & Ir. Ch. & I iiiv. Ass. Soc, in re., i Hem. & M. 85, 59, a, 1863.
F:nsign :'. Wands, i Johns Cas. 171, - - - - 7> 6, 1799.
Epping a. Flournoy, 68 Geo. 707, - - - . 69, 17, 1882.
Flpstein a. Fedor, 10 Pac. Rep'r 785, - - - - 76, i, 1886
F:rb's F:state, I Pearson, 98. ----- 113, 2, 1856
Erhard a. Zimmerman. 83 N. Y. 94, - - - - 76, 15, 1880.
Firie Dime vSav. & L. Co. a. Kepler, 5 Out. 602, - ill, 3, 1882,
Erie R. R. a. Wood. 72 N. Y. 196, . - - - 76, 16, 1878.
Erikson a. Hunt, 57 ISIich. 330, - - - . 51, i, 1885,
Erwin's Appeal, 3 Wr. 535, ----- m, g, 1861.
FIttenborough r. Bishop, 11 C. E. Gr. 262, - - 112, 10, 1875.
F:ureka Mnfg. Co. a. Flint, 55 Vt. 669, - - - 62, i. 1881.
Evans a. Johnson, 7 M. & G. 240, - - - - 100, i, 1844.
FZvans Z'. Meylert, 7 Harris 402, - - - - ng, f), 1862.
Everett z^. Coe, 5 Denio 180, - - - - ' \ ^l' '^' e ^^4^"
F^verhart's .\ppeal, 10 Out. 349, - - - - - 10, 11, 1884.
F>eritt :'. Chapman, 6 Conn. 247, - - - . 19, 6, 1827.
Everitt f. Watts, 10 Paige 82, ----- I j^^' ^°' 1843.
Ftverly x: Durborrow, 8 Phila. 93, - - - - 34^ i^ 1871.
F^ving a. Blight, i Pittsburgh, 275, - . - - 59, ^, 1856.
Eyrea. Coope, I H. Bl. 39, ^ "' 3^' 1788.
( 49, 6, '
Fvtr,:, „ T>ott ^, C. B. 32, ------ 63, I, 1846.
Table of Cases.
Fairchild a. Slocum, 7 Hill 292,
Fairchild v. Fairchild, 64 N. Y. 471, -
Fairlanb v. Percy, 3 P. & M. 217,
Fairman a. Wallace, 4 Watts 378, ....
Falconer a. Freeman, 12 J. & S. -^ ^^'
Fallmadge a. Colgrove. 6 Bosw. 289, - - - -
Fall River Whaling Co. v. Borden, 10 Cush. 458. -
Fanchon v. Bibb Furnace Co., 2 S. Rep'r 268, -
Farmers' and Mchs. Bank a. Downey, 13 S. & R. 288,
Farmers' and Mchs. Bank v. Green, i Vr. 366,
Farmers' Dep. Bk. a. ist Nat. Bk., All'y, 5 Cent. Rep. 505, 74,
Farnsworth v. Boardman, 131 Mass. 115, -
Farr v. Johnson, 25 111. 522, . - - .
Farr a. Osburn, 42 Mich. 134, - . . .
Farrand v. Gleason, 56 Vt. 633, ....
Farrell v. Col well, i Vr. 123,
Farrington a. Harrison. { \l i'_^^ep¥io5,
Fedor v. Epstein, 10 Pac. R. 785,
Feigley v. Sponeberger, 5 W. & S. 564,
Felt a. Chadwick, 11 Ca. 305, - . - .
Felton a. Smith, 43 N. Y. 418, - - - -
Fenbrook a. Carlisle, 57 Ind. 529, ...
Fendrick a. Kaiser, 2 Out. 528, - - - -
Ferguson v. Wright, 11 Sm. 258,
Ferrell a. Orr, 5 S. W. Rep'r 490,
Person v. Monroe, \ i Foster, 21 N. H. 462,
Fessler's Appeal, 3 W. N. C. 71, ...
Fettretch v. Armstrong, 5 Rob. 339, -
Ficthorn v. Boyer, 5 Watts 159,
Fielden v. Lahens, 9 Bosw. 436, ...
Filley v. Phelps, 18 Conn. 294, - - - -
Filts a. Walker, 24 Pick. 191, - - - .
Finney v. Cochran, i W. & S. 112,
Fish V. Henarie, 13 Pac. Rep'r 193, - - -
Fisher a. Kauffman, 3 Grant 302,
Fisher v. Murray, i E. D. Smith, 341,
Fisher a. Perkins, 80 Ky. 11,
Fisher v. Sweet, 67 Cal. 228, . - - .
Fitchera. Wilson, 3 Stock Ch. 71, -
Fitzgerald v. Christl, 5 C. E. Gr. 90, -
Fitzsimmons a. Anshutz, 9 Barr. 180, - - .
Flanigan v. Champion, i Gr. Ch. 51, -
Fletcher v. Reed, 125 Mass. 312,
Flint V. Eureka Mfg. Co., 55 Vt. 669,
Flockton, V. Bunning, L. R. 8 Ch. App. 323, n.
Floss a. Fireman's Ins. Co., 10 A. Rep'r 139, -
Flournoy v. Epping, 68 Geo. 707,
Fogerty v. Jordan, 2 Rob. 319, -
Foote a. Tenny, 95 111. 99, ....
Forbes a. Chamberlain, 3 S. C. 277, -
62,
/i5
i 13,
3, li
I 112,
4,
74,
II, i<
/ 95,
3, J,
1149-
2, ^"
69,
■«. ;:
148,
I, I
10,
10, I
120,
b, I
81,
4, I
177,
5, I
5. 74,
5, I
37,
3,^, I
36,
6, I
76,
8, I
13,
I, I
f loo,
I 104,
8' I
10, ^
151,
'. ;
76,
I, I
152,
I, I
10,
5, I
130,
5, <&, I
32,
2, I
129,
I, I
153,
I, I
132,
I, I
fio6.
I, c,
\ io7,
4, I
(-194,
3,
154,
I. I
178,
5, I
135,
6, I
125,
I, I
147,
3, I
12,
I, I
87,
I, I
91,
2, I
122,
6, I
131,
3, I
164,
I, I
12,
2, i<
173,
7, i>, \k
179,
I, I.
169,
3, i>
69.
17, Ic
184,
3, i^
62,
I, iJ
42,
2, Ic
144,
4, If
69.
17, li
121,
4, If
^39-
3, If
18,
2, If
Table of Cases.
Fonl :■• Munson, i South. 93, 76, 5. 1818.
l-orrestera. Oliver. 96III. 315, I73. i. 1880.
Fossa, Hissell. 114 r. S- 252, ^5. 4, i«»5-
Foster :•. Andrews. 2 r. & W. 160, - - - - 168, i, 1830.
Foster :■. Barnes, 31 Sm. 377, - - - - 113. i-/ 1876.
f L. R. 7 Ch. 334, . - - - 40, I, 1S72.
Fostera. Vvse. -^ L. R. 8 Cb. App. 309, - - - 42, 3, 1870.
I.L. R. 7 H. of L. 318, 333. - - - 42, 2, 1874.
f 109. 9-
Foster's Appeal, 24 Sm. 399, i 112, 15,0,1874.
1 113. i> ^.
Fowle V. Torrev, 125 Mass. 289, 170, 4. 1881.
Fowler a. Curry, 87 N. Y. 33, 64, d, 1881.
Fowler a. Deveau, 2 Paige Ch. 400, 1^ j^g' 2, ^^3i-
Fowler a. Schaeffer, i Am. 451, 49. i> 1886.
Fox r. Clifton, 6 Bing. 776, 23, 2, 1830.
Fox :-. Hanburv, Cowp. 445, 27, 5, 1776.
Fox a. Harper,'; W. & S. 142, 122, i, 1844.
Foxall a. Jones, 15 Beav. 388, 42, 3. 1S52.
Francisco :-. Cameron, 26 O. St. 190, - - - - 210, 4, a, 1875.
Frasier a. Wilkinson, 4 Esp. 182, . . - . 62, d, 1S05.
Frazer r. Murdock, 6 H. L. 855, . . - . 74, 8, 1881.
Freeman f. Falconer, 1 2 J. &S. 1^32, - - - g^ jg 1878.
Freer a. Payne, 91 N. Y. 43, - - - - - 165, 2, 1883.
Freeth a. Bourne, 9 B. & C. 632. .... 23, 4, 1829.
Frelinghuvsen v. Ballentine, 38 N. J. Eq. 266, - - 28, 3, 1864.
French a. Brasfield, 59 Miss. 632, - . . - 74, 4, 1882.
French :■. Styring, 2 C. B., N. S. 357, ... 67, 7, 1857.
Frick a. vSayre, 7 W. & S. 383, 6. 2, 1844.
Frick a. Steel, 6 Sm. 172, 12, i, 1867.
Frlcke a. Ganzer, 7 Sm. 316, . . - . . 69, 5, 1868.
Frier <7. Young, i Stock. 465, 106, 5, c, 1853.
Froost a. Ivldridge, 6. Rob. 518, .... 67, 5, 1866.
Frost i: Hanford, i E. D. Sm. 540, .... 134, 2, 1852.
Froude r. Williams, 56 L. T. Rep., N. S. 441, - - 50, 3, 1887.
Frow, Jacobs & Co. 's Estate, 23 Sm. 459, - - - 107, 3, 1873.
Frye a. Page, 2 B. & P. 240, 103, 11, 1800.
Fuller :'. Perceval, 126 IMass. 381, .... 125, 6, 1879.
Fuller :■. Rowe, 57 N. Y. 23, 24, i, 1874.
Fulton z'. Central Bank Pittsburg, 11 N. 112, - - 185 2, 1879.
Funk r. Haskell, 132 Mass. 580, - . . . 58, a, 18S2.
Furuis a. Euglis, 4 E. D. Smith 587, - . . . 163, i, 1855.
Gaffney z: Hoyt, 10 Pac. Rep'r 34,
Gale V. Miller, 54 N. Y. 536,
Gano fl. Moore, 12 Ohio 300,
Gano :'. Samuel, 14 Ohio 593,
Ganzer v. Fricke, j Sm. 316,
Gardiner v. Conn, 34 O. St. 1S7,
Crardiner a. Reid, 65 N. Y. 578,
Gardner v. McCutcheon, 4 Beavan 534,
Garland, ex parte, loVes. 110, -
Garnet a. Ward, 6 Duer 257,
69,
13,
1886
171,
4,
1874
158,
2,
1843
124,
4,
1846
69,
5,
1868
210,
3,
1877
214,
I,
1875
151,
4,
1842
74.
4,
1804
49.
4,
1857
Table of Cases.
Garrick a. Burdick, L. R. 5 Ch. App. 233, - - 43, i, r, 1870.
Gates V. Beecher, 60 N. Y. 518. 178, 5, 1875.
Gates a. Wells, 18 Barb. 554, - - - - - 24, i, 1854.
Gauger fl. Pautz, 45 Wis. 449, 96,' 2,' 1878.
Gavit c'. vSupplee, 2 W. N. C. 561, - - . . 121, 9, 1876.
Gay f. Seibold, 97 N. Y. 472, 76, 15, 1884.
Gay V. Waltman, 8 N. 453, - 120, b, 1879.
Gaylord v. Imhoff, 26 O. St. 317, - . . . X03, a, 1875.
Geddes'Appeal, {34L^I_-33o, ^^^^^^^ ^3^^
Geery :■. Cockroft, I J. & Sp. 146, - . - - {J^°'"' 1S71.
Gellar, ex parte, i Rose 297, - . . . . 54, :, 1812.
Gibbs a. Hogeboom, 7 Nor. 2^5 - - - - - -' 95. 4- jg-o
Gibson a. Bond, i Camp. 185, 115, i, 1808.
( 7, I.
Gibson V. Lupton, 9 Bing. 297, k 19, 2, 1832.
i 49. 5'.
Gibson V. Stone, 43 Barb. 285, 63, 2, 1865.
Gilbert a. Ryder, 16 Hun. 163, 25, 4, 1878.
Gillies a. Williams, 75 N. Y. 197, - - ... 10, i', 1878.
Gillilan v. Ins. Co., 41 N. Y. 376, - - - - 133, 3, 1869.
Gilmore (7. Moorehead, 27 Sm. 118, . . - . 127, 7, 1874.
Ginrich a. Walter, 2 Watts 204, S3, 4, 1834.
Gilpin V. Enderby, 5 B. Aid. 955, . . . . 208, 3! 1822.
Glasgow Bank a. Muir, 4 H. L. 337, - - - - 73, 2, 1879.
Gleason a. Farrand, 56 Vt. 633, '3, i, 1884.
Glennie a. Mair, 4 M. & S. 240, - - - - - 59, 2, ^, 1815.
Goepper E'. Kinsinger, 39 Ohio St. 429, - - - no, 6, 1883
Goeway a. Townsend, 19 Wend. 424, ... 1^8, i, 1838'
Goff, a. Reeves, Pen. 609, - 158, i, 1809'
Golden a. Mosgrove, 5 Out. 605, .... 76, 3, 1882'
Golden State Iron Works v. Davidson, 15 Pac. Rep'r 20, 171, 4, 1887'
Goldsmid v. Cosgrove, 7 H. L. 785, - . - . 205, 6, 1859'
Goodbar v. Gary, 16 Fed. Rep'r 316, . - . . -j J°^' ^' ^^ 1882!
Goode V. Harrison, 5 B. Aid. 147, - - - - | ^^9. 20, ^g^^
Goodwin a. Mch's Bank, i Hal. Ch. 334, - - . 112, 12, 1846.
Gordan a. Nanson, L. R. i Ap. Cas. 195, - - - 204, i, 1876.
Gordon a. Merrick, 20 N. Y. 93, - - - - - 62, e, 1859.
Gorman a. Alexander, 7 A. Rep'r 243, ... 105, 3, 1886.
c^^ ^A ^ r^ u (8 Cow. 168, ..... 1828.
^°"^^^-G°"l^- Uwend. 263, ^67, 1, ^g^^
Goulding V. Bain, 4 vSandf. 716, 173, 5, 1852
Gouthwaite v. Duckworth, 12 East. 421, - - - 19, 5, 1810.
Grace 27. Smith, 2 Wm. Bl. 997, 1 a^' ^' ^775-
Gram V. Caldwell, 5 Cow. 489, | J^^- ^' 1826.
Gram v. Seton, i Hall 262, i 135, "'' ^ 1828.
Grant v. Bryant, loi Mass. 567, ' 35. 2. ^gg
1 207, 5, ^
Graser v. Stellwagen, 25 N. Y. 315, - - - - 114, 2, 1862.
Gratz J*. Bayard, 11 S. & R. 41, 72, i, 1824.
Tarlk of Cases.
Gray <i. Catskill Hank, 14 Barb. 471, -
Green :. Hcasky, 2 Bing., N. C, 108,
Green </. Hoswel'l, i Dutch. 391, -
Green a. V. &. M. Bank, i Vr. 366, -
Greene V. Greene, i Ohio 535, -
Green it. Merrill. 55 N. Y. 270, -
Gii'rn ;: IVillis, 5 Hill 232,
Grcenham v. Grav, 4 Ir. C. L. 501. -
Greenshaw a. Logan, 25 Fed. Rep'r 299, -
Green wald. v Kastcr, 5 Nor. 45, -
Greenwood :: Brink, i Hun. 227,
Greenwood v. Brodhead, 6 Barb. 593,
Gregg a. Smith, 9 Neb. 212,
Gregory i: Brooks, i Hun. 404, -
Gregory a. Plumer, L. R. 18 Eq. 621,
Grey a. Greenham, 4 Ir. C. L. 501.
Grier r'. Hood, l Casey 430.
Griffiths a. Caldicott, 8 Exch. 898,
Grimes «. Rothell, 35 N. W. 392,
Grinnell Mfg Co. a. Haddock, 16 W. N. 549,
Grinnell (/. Richards, 63 Iowa 44,
Griswold v. Haven, 25 N. Y. 595,
Groom a. Price, 2 Flxch. 542, - - -
Grover «. Lamb, 47 Barb. 317,
Guetner a. McCuIlough, i Binn. 214, -
Guidan :■. Robsou, 2 Camp. 302,
Guie a. Ash, i Out. 493, . - - -
Guild V. Belcher, 119 Mass. 257,
Guild a. Hubbard, i Duer 662, - - -
Guillauuie a. Delmonico, 2 Sandf. Ch. 366,
„ -11 n *. MI Leg. Int. 112,
GuiUou V. Peterson, ■{ ■'<j x' ^a-
' I 8 Nor. 103,
Gulf City Paper Co. a. Rapier, 64 Ala. 330,
Gulick :•. Gulick,
I Harr. 186, -
t 2 Green 578,
Gulick a. Princeton & K. Turnpike Co., i Harr. 161,
Guthrie a. Scott, 10 Bosw. 40S, -----
Gwymne v. Holdredge, 3 C. E. Gr. 26, - - -
58,
I,
/,
185 1.
62,
g,
1835-
133,
6,
1856.
J 77,
5,
1863.
112,
13,
1823.
208,
7-
1853-
148,
3.
1873-
6,
2,
1843-
50.
2,
1855-
112,
II,
1885.
90,
3,
1878.
59-
3,
1874.
106,
5.
c,
1850.
76,
I,
1879-
12,
I,
1874.
140,
I,
1874.
50,
2,
1855-
122,
3,
1855-
16,
2,
1853-
192,'
1,
a,
1887.
37,
3.
g,
1885.
51,
I,
1884.
139,
2,
1872.
59,
2,
«,
1848.
59,
2,
b,
1866.
119,
d,
1807.
69,
21,
1809.
16,
I,
1881.
167,
5,
c,
1876.
n^,
2,
1853-
no.
3,
1809.
41,
I,
1870.
139,
5,
1874.
141,
I,
1874.
25,
I,
1877.
134,
2,
1837.
157,
2,
1835-
177,
4,
1837-
170,
3,
1863.
208,
7,
1866.
Haas a. So. White Lead Co., / ^5 N. W. 493, -
' I 33 N. W. Iowa 657,
Hackettrt. White, 20 N. Y. 178, -
Haddock :'. Grinnell Mfg. Co., 16 W. N. 549, -
Haight rt. Roseufield, 53 Wis. 260,
Haldeman v. Bank of Middletowu, 4 Cas. 440, -
Hale V. Henrie, 2 Watts 143,
Halfielda. Moses, 3 S. E. Rep'r 538, -
Hall a. limns. Pen. 984, - 1 - - .
Hall a. Cassidy, 97 N. Y. 159, - . - .
Hall V. Lanning, i Otto 160,
Hall a. McLewee, 103 N. Y. 639,
Hall a. Tanner, i Barr, 417,
123,
I,
1887.
37.
3,/
1859-
37,
3,^,
1885.
52,
1881.
127,
6,
1857-
III,
II,
113,
I, r.
1834.
117,
I,
1887.
76,
2,
1812.
64,
2,
1884.
"9,
b,
1875.
64,
2,
1886.
127.
f 2. a
1 ,\ n
1845.
Table of Cases.
/ I Buck, Cases in Bank'cv,
1 3 Madd.
Halsey a. Dob, i6 Johns. 34,
Hamill v. Purvis, 2 P. & W. 177,
Hanulton, iu re., i Fed. Rep'r 800, -
Hamilton a. Kendall, L,. R. 4 App. Cas. 504,
Hamilton a. McKce, 33 O. vSt. 7,
Hamilton a. Williams, i South 220, -
Hamilton's Appeal, 7 Out. 368,
Hammock a. Hankey,
Hammond a. Holme, L. R. 7 Exch. 218,
Hampton v. Coddington, i Stew. 557,
Hampton a. Sumner, 8 O. 328; 365, - - -
Hanbury a. Fox, Cowp. 445, - . . .
Hancock v. Hintrager, 60 Iowa, 374, -
Hanford a. Frost, i E. D, Sm, 540,
Hankey v. Hammock, { ' il"^>> <^^f « ^" Bank'cy,
■' I 3 Madd. 148,
Hankinson a. Perrine, 6 Hal. 181,
Hauna v. Wray, 27 Sm. 27, -
Hanrahan a. Tolman, 44 Wis. 133, - . .
Hanson a. Barton, 2 Camp. 97; 2 Taunt. 49,
Harbert's (Sir William's) Case, 3 Rep. 14,
Hardenburgh a. Boeklen, 5 J. & Sp. no, -
Hare z/. Commonwealth, 11 Nor. 141,
Hare a. Hyat, Comb. 383, -----
Hargrave v. Conroy, 4 C. E. Gr. 281,
Hargrove a. Mclnroy, 16 L. T. 509,
Harper v. Fox, 7 W. & S. 142, -
Harper z>. Raymond, 3 Bosw. 29,
Harris a. Beatson,
275,
f 19 Cent. h. J.
I 60 N. H. 83,
Harris v. Butterfield, 33 L. T. 639,
Harris a. Dean, 33 L,. T. 639, - . -
Harris v. Fischer, 57 Geo. 229, -
Harris v. Murray, 28 N. Y. 574, -
Harris v. Peabody, 73 Me. 262, -
Harris v. Sessler, 3 vS. W. Rep'r 316, -
Harris a. Wolbert, 3 Hal. Ch. 605,
Harrison a. Benners, 19 Barb. 53,
Harrison v. Farrington, | ^5 Stew. 353, -
° ' i 10 A. Rep'r 105,
Harrison a. Goode, 5 B. & Al. 147,
Hart V. Kelly, 2 Nor. 286, - ■ -
Hart zj. Withers, i P. & W. 285, -
Hartley a. Prosser, 29 N. W. Rep'r 156, -
Hartley v. White, 13 N. 31, - - -
Hartley's Case, Rus. & R. 139, -
Hartman v. Woehr, 3 C. E. Gr. 383, -
Harvey v. Childs, 28 O. St. 319, -
Harvey a. Stillman, 47 Conn. 26,
Hasbrouck r. Childs, 3 Bosw. 105,
Hasbroiuk a. Horner, 5 Wr. 169,
51,
2, I
129,
3, I
192,
3, «, i^
f 76,
13,
77,
3, I
I 92,
4,
124,
3, I
130,
3, li
120,
2, I
74,
6, I
75,
I, I
133,
5, I
112,
14, I
27,
5, I
69,
9, I
134,
21, I
^' 74,
6, I
12,
I, I
121,
9, I
124,
I, I
62,
^, I
103,
7, I
67,
6, I
106,
8, h, I
5,
I, I
59,
a, I
49,
2, I
122,
I, I
171,
5, 1
117,
2, li
17,
2, I
17,
2, I
104,
2, i(
/ 37,
/'I
1 104,
7,
193,
I, I
69,
2, I
206,
2, i!
8,
I, i{
151,
I, ^
' I
/ 69,
1 136,
20,
3, ''
64,
4, i^
135,
7, a, iJ
103,
c, \\
167,
7, K li
59,
k, li
1 '9,
«' M
I 207,
I, ^'
64,
e, \i
133,
4, 1^
32,
I, \'t
100,
7, i^
Tai'.i.k ok Cases.
liiLskell a. Funk, 132 Mass. 580,
llasson <r Rich, 4 vSaiidf. 115,
Haven a. Griswold, 25 N. Y. 595,
Hawkins :'. Appleby, 2 Sandl. 421,
Hawley Z'. Huril. 56 Vt. 617,
Hivcliv </. Shrpanf, 1 Conn. 367,
Hawn :-. Land ^;: Water Co., 16 P. Rep"r 196.
Hayden a. Rose, 35 Raud. 106. -
,w II '3 Sandf. 293,
Hayes f. Heycr, ^ ;; Sa,ijf. cii. 485. - -
Hayes a. Remel. S3 Mo. 200,
Havward (J. Beach, 10 Ohio 455,
Ha'vward a. Parsons, 4 DeG. F. &J. 474, -
Heartt :-. Corninj:, 3 Paige. 566,
Healhcol z'. Ravciicroft, 2 Hal. Ch. 113,
Heimstreet :■. Howland, 5 Deuio 68, -
Helion a. Webb, 3 Rob't 625,
Helhnan a. Rtis, 25 O. St. 180, -
Helmorer. ^""th, ^ ^^5 ^.j^ ^ 4o^, _
Helsby v. Mears. 5 B. & C. 504,
Heiningsway a. Rensheinier, 1 1 Casey 432, -
Henarie a. Fish, 13 Pac. Rep. 193,
Henderson :■. Lewis, 9 S. 6c R. 379, -
Henderson a. Taylor, 17 S. & R. 453,
Henn v. Walsh, 2 Edw. Ch. 129,
Henrie a. Hale, 2 Watts 143,
Hepburn a. Moore, 5 Barr 399, -
Herrick v. Ames, 8 Bosw. 115, -
Hervey v. Van Pelt, 4 Bosw. 60,
Hesketh v. Blanchard, 4 East. 144, " -
Hettrick a. Bendell, 3 J. & Sp. 405, -
Heustis a. Patton, 2 Dutch. 293,
Hever a Haves ' ^ ^^-^^AL 293, -
Hesera. Hayes, ^ ^ g^^^if Ch. 485, -
Heyhoe v. Burge, 9 C. B. 431,
Hicken. ex parte, 3 DeG. J. & S. 662,
Hickle a. Valentine, 39 Ohio St. 19, -
Hickman a. Cox, 8 H. L. 268,
Hicks a. Brown, 24 Fed. Rep'rSii,
Higgins V. Armstrong, 10 Pac. Rep'r 232, -
Higgins V. Rector, 47 Texas, 361,
Higgins V. Rockwell, 2 Duer 650,
Hill :-. Beach, i Beas. 31, -
HilU. Laecv. M Ch. Div. 237, - - .
- • ( 3 Ap. Cas. 94, -
Hill V. Sheiblev, 68 Ga. 556,
Hill V. Smalley. 8 Vr. 103, - - . .
Hill a. Smith, 45 Verm. 372,
Hill :-. Voorhees, 10 Harris. 68, -
Hills a. Tanner, 48 N. Y. 662, -
Hilton V. McDowell, 87 N. C. 364,
Hine a. Bank. Citizens, 49 Conn. 236,
Hiutragera. Hancock, 60 Iowa, 374, -
5«.
a, ii
121,
13. i{
139.
2, ii
140,
3. iJ
44.
2, li
6,
2, 1}
185,
V, \{
10,
9. i<^
I3I.
3. li
187,
3. I
69,
16, l{
76.
II, I
207,
3. I
215,
I, I
181,
I. I
62,
b, I
208,
5. I
166,
1, a, I
104,
5. I
183,
I, ^
144.
2, I
104,
6, I
91.
2, I
130,
13. I
"9.
d, I
173.
6, I
1 III,
^^' T
U13,
i,^,
83,
{:: ■
215,
3. I
146,
3. I
48,
3, I
69,
21, I
12,
I, I
131,
I
187,
3. I
58,
g' 1
59.
/I
19.
7. I
59-
/,Ai
59.
e, '
15.
4, I
193,
I, I
87.
2, I
( 165,
h ,
1 208,
2, ^
166,
4.a.[
51,
1, I
173,
8, I
69,
12, iJ
69,
17. I
12,
I. I
121,
4. I
23.
3, li
69.
9. I)
Table of Cases.
Hoare v. Dawes, i Doug. 371, ^ - - - ' \ Jd ^ 1780.
Hobeusack a. Mershou, 2 Zab. 372, - - -
Hobbs V. McLean, 117 U. S. 567, . - -
Hodgman v. Smith, 13 Barb. 302, . . -
Hoefiiuger v. Wells, 47 Wis. 628, _ - -
HofFman a. Knerr, 15 Sm. 126, -
Hoffman v. Steiubeisser, 11 W. N. (C. P. 4)383,
Hogeboom v. Gibbs, 7 Nor. 235,
Hoglan a. Young, 52 Cal. 467, - - - -
Holdane v. Butterworth, 5 Bosw. i, -
Holden a. Davidson, 10 At. Rep'r5i5,
Holdredge v. Gwynne, 5 C. E. Gr. 26,
Holland a. Austin, 69 N. Y. 571,
Holland v. Drake, 29 O. St. 441,
HoUemback v. More, 44 N. Y. vSup'r Ct. 107, -
HoUingshead a. Reed, 8 B. & C. 878,
Hollistera. Salt Lake City, 118 U. S. 256,
Holme V. Hammond, L. R. 7 Exch. 218, -
Holmes «. Brophy, 2 Molloy Ir. Ch. i,
Holmes v. Kortlander, 31 N. W. Rep'r532,
Holmes a. Low, 2 C. E. Gr. 148, . - -
Holmes v. U. Ins. Co., 2 Johns. Cas. 329, -
Holthouse a. Kountz, 4 Nor. 235, . - -
Homer v. Wood, 11 Cush. 62, -
Hone a. Perring, 4 Bing. 28, - - - -
Hood a. Grier, i Casey 430, . . - -
Hood V. Riley, 3 Gr. 127, -----
Hook a. Denithorne, 2 Am. 240, . - -
Hooker a. Wright, 10 N. Y. 51, -
Hopkins v. Thomas, 28 N. W. Rep'r 147, -
Hopkins «. Walstrom, 7 Out. 118,
Horbach z'. Huey, 4 Watts 455, -
Horn a. Dillon, 5 How. Pr. 35, -
Horner v. Hasbrouck, 5 Wr. 169,
Horner a. Jones, 10 Sm. 214. _ - .
Hoskinson v. Eliot, 12 Sm. 393,
Hotchkiss v.- English, 4 Hun 369,
House a. Drennen, 5 Wr. 30, - - -
Houseal's Appeal, 9 Wr. 484, - - -
Ilovey a. Rianhard, 13 Ohio 300,
Howard a. Buffalo City Bank, 35 N. Y. 500,
Howard v. Kyte, 28 N. W. R. 609,
Howard v. McLaughlin, 2 Out. 440, -
Howard a. Smith, 20 How. Pr. 121, -
Howell V. Adams, 68 N. Y. 315, -
Howell V. Brodie, 6 Bing. N. C. 44, -
Howell a. Davis, 20 Am. Law Reg'r, N. vS., 461,
Howell a. Decker, 42 Cal. 636,-
\ 7,
3,
I 49,
6,
69,
10,
36,
I,
59.
3,
124,
6,
157,
4,
190,
I,
) 95.
4,
1 121,
12,
1.56,
6,
69,
15,
69,
10,
208,
7,
177,
2,
131,
3,
41,
2,
52,
24,
7,
75-
I,
48.
3,
a,
135,
5,
a,
180,
4.
7,
I,
144-
7,
167.
2,
b,
J 153,
ti6o,
2,
I,
122,
3.
/130,
1131,
10,
3.
b
69,
3,
44,
8,
128,
I,
/ 95,
1149.
5,
I,
1130,
3.
I,
a
189,
I,
100,
7.
118,
a,
86,
I,
17,
4,
/ 69,
1 121,
5,
2,
202,
2,
24,
2,
f 69,
19,
\ 106,
4,
b,
(200,
I,
12,
I,
192,
2,
a,
106,
9.
b,
177,
4.
18,
4,
108,
8,
15,
6,
Table of Cases.
Howell <j. Reynolds, L. R. « Q- H. 39S,
Howell <J. Ross. 3 Nor. 129, - - - -
Howell v. Teel, 2 Stew. 490, - - - -
Howlaud a. Heimstreet, 5 Denio 68, -
Hoxie V. Chaiiey, 143 Mass. 592,
Hovl r. Reimett, 59 N. Y. 538, - - - -
Hovl *i. tialTney, 10 Pac Rep'r 34, -
Hovl Z'. Sprague, 103U. S. 613, - - - -
Hoyt's Appeal, 2 Out. 257, - - - - -
Hubbard v. Guild, I Duer 662, - - - -
Hubbard :'. Matthews, 54 N. Y. 43, -
. . ^ , ) 10 0. B. D. 488,
Hubbuck a. Attorney General, | g g ^ 275,
Huey a. Horbach, 4 Watts 455, - - - -
Hulit a. Jaques, i Harr. 38, . . . .
Hull a. Yanderburgh. 20 Wend. 70, -
Hulschizer a. Craig, 5 Vr. 363. - - - -
Hnl«,^'c FQtatP ' '2 Phila. 130,
Hulse s Estate, \ ,1 w. N. 449. -
Hunta. Burnell, 5 Jur. 650, . . - -
Hunt ?'. Eriksou, 57 Mich. 330, - - - -
Hunter rt. Young, 4 Taunt. 583, - - - -
Huntington a. Moore, 7 Hun 425,
Hurd (/. Hawley, 56 Vt. 617, . - - -
Hutchinson v. Onderdonk, 2 Hal. Ch. 277,
Hutchinson a. Onderdonk, 2 Hal. Ch. 632, E. & A.
Hutchinson a. Sharp, 100 N. Y. 533,
Hutzler v. Phillips, i S. E. Rep'r 502,
Hyat v. Hare, Comb. 283,
Hyde a. Leggett, 58 N. Y. 272, - - - -
Idell a. Coddington, I 3 Stew. 540, - - - -
'^ 1 2 Stew. 504, - - - -
Ibnisen v. Negley, i Casey, 297, . . - -
Ihnison v. Lathrop, 8 Out. 365, -----
Inihoffa. Gaylord. 26 O. St. 317, - - . -
Impson a. Atwood, 5 C. E. Gr. 151, - - - -
Inji.'illsa. Julio, i Allen, 41, . . . - .
Insurance Co., Fireman's, v. Floss, 10 A. Rep. 139. -
Insurance Co. a. Gillilan, 41 N. Y. 376,
Insurance Co., Hamilton Fire, v. Kimball, 8 Bosw. 495
Insurance Co. a. Mallery, 51 Conn. 222, - - -
Insurance Co., Northern, v. Potter, 63 Cal. 157,
Insurance Co., Sun, v. Kountz L,ine, 122 U. S. S. C. R. 583, 69, 11,
Irwin a. Bidwell, 22 Sm. Pa. 244, - . -
Irwin V. Riegle, 34 Leg. Int. 447,
Irwine a. Sutlon, 12 S. & R. 13, -
Isle-. V Turker, 5 Duer 393, ....
Jackson a. Cross, 5 Hill, 478,
Jackson v. Litchfield, 8 Q. B. D. 474,
119.
I,
1873-
95.
d
1877.
122,
4.
III,
I,
1878.
62,
b.
1847.
209,
I, f,
1887.
86,
3,
1872.
69.
13.
1886.
106,
5./
1880.
III,
8,
1881.
133.
2,
1853.
173.
3.
1873-
1883.
109,
4.
1884.
76,
130,
3-
I, a
1835-
157.
I,
1837-
59.
c,
1838.
167,
2, a,
1871.
172,
2,
1878.
1882.
18,
I,
1 841.
51,
I,
1885.
20,
2,
1812.
67,
II,
1876.
44,
2,
1884.
188,
2,
1847.
188,
2,
1849.
37,
I,
1885.
108,
5,
1887.
5,
I,
1609.
52,
1874-
208,
4.
1879.
210,
4,
1878.
126,
3,
1855.
69,
2,
1883.
103,
a
1875.
106,
I, a,
1869.
35.
3.
1861.
144.
4.
1887.
133.
3,
1869.
114,
2,
1861.
25,
2,
1883.
90,
3.
1883.
, 69,
II.
1886.
18,
4,
1872.
129,
I,
1877.
129,
I,
1824.
137,
6,
1856.
76.
5,
1843-
77,
c
1882.
Table of Cases.
Jackson v. Miller, i Dutch. 90, - - - - -
Jackson a. Skaife, 3 B. & C. 421,
Jackson a. Smith, 2 Ed. Ch. 28, -
Jacques v. Marquand, 6 Cowen, 497, - - - -
Jacquin v. Buisson, 11 How. Pr. 385, - - - .
James a. Bates, 3 Duer 45, -
James a. Mattock, 2 Beas. 126, - - - . .
James v. Pope, 19 N. Y. 324, - . . . .
James a. Rizer, 26 Kan. 221,
Janes v. Whitbread, 1 1 C. B. 406, . . . .
Jaques v. Hulit, i Harr. 38, - -
Jaquette c. Brown, 13 Nor. 113, -
Jardine a. Scarf, 7 App. Ca. 345, - -~ -
Jarvis a. Dunham, 8 Barb. 88, - - - - -
Jaycox a. Turner, 40 N. Y. 470, -----
Jenkins v. Barrow, 35 N. W. Rep'r 510, -
Jennings v. Rickard, 15 Pac. Rep'r 677, -
Jessup V. Cook, i Hal. 434, - - - - .
Johnson t'. Buttler, 4 Stew. 35, - -
Johnson a. Cammack, 1 Gr. Ch. 83, -
Johnson r-. Evans, 7 M. & G. 240, - - - .
Johnson a. Farr, 25 111. 522, - - - . .
Johnson, in re, 15 Ch. D. 548, -----
Johnson v. Kaiser, 11 Vr. 286, - - - - .
Johnson v. Miller, 16 Ohio 431,
Johnson v. Stear, 109 Engl. Com. L. Rep'r, 57 N. S. 341,
Johnson a. Tenuey, 43 N. H. 144, - -" - .
Johnson's Appeal, 5 Am. 129, - - . . .
Johnston v. Bernheim, 86 N. Car. 339,
Johnston v. Straus, 26 Fed. Rep'r - . - -
Jones' Appeal, 20 Sm. 169, ------
Jones V. Battin, 6 Casey, 84, - . - . .
Jones V. Butler, 87 N. Y. 613, - . - - .
Jones V. Clark, 42 Cal. 180, -
Jones V. Dexter, j ^^5 Mass. 469, - - - -
' i 130 Mass. 380, - - . .
Jones V. Foxall, 15 Beav. 388, -----
Jones V. Horner, 10 Sm. 214, - - - . .
Jones V Lloyd, L. R. 18 Eq. 265, . . - -
Jones a. Pettingill, 28 Kan. 749, -----
Jones a. Voorhees, 5 Dutch. 270, ....
Jones V. Walker, 103 U. S. 444, -----
Jones a. White, i Rob't 321, - - - . .
Jordan a. Fogert}', 2 Rob. 319, -
Judge V. Braswell, 13 Bush 67,
f 3 B. & S. 847, ... -
Jukes a. Kilshaw, < 32 Law J. Q. B. 217, -
i 9 Jurist, N. S. 1231,-
Julio Z'. lugalls, I Allen 41, .....
June a. Betts, 51 N. Y. 274, .....
xxxix.
138,
2,
1355.
167,
3,
1 824.
1 '^'
) 109.
I 112,
3,
3,
1833.
16, a
40,
3,
1S26.
75.
3,
1855.
167,
5,-^
1854.
1 1 10,
8,
\I12,
i860.
11,'/,
176,
I,
1859.
69-
16,
1881.
59-
n
1851.
157.
I,
1837.
12,
I,
18S0.
70,
I,
1882.
( 67.
1152,
2,
2,
1854.
( 106,
1 170,
9./'
3,
1869.
156,
1,
1887.
151,
2,
1887.
215,
I,
1798.
206,
I,
1879.
76,
23,
1839-
100,
1,
1844.
36,
6,
1861.
74,
10,
1880.
130,
5, a,
1878.
67.
II,
1S47.
n. 47,
3, b,
1869.
194,
3,
1864.
212,
6,
1886.
( "5,
3,
1 134,
4,
1S82.
1 152,
I.
) 106,
I, d,
t 107,
4,
1882.
113.
h,
1871.
135,
5, a,
1857.
32,
3,
1882.
15,
I,
1871.
100,
B,
1878.
1881.
42,
3,
1852.
118,
a,
1869.
173-
11,
1874.
158,
3,
1882.
52,
1S65.
74,
3,
1880.
209,
I, b,
1863.
121,
4,
1864.
15,
4,
18S7.
64,
1',
1863.
35,
3,
1861.
184,
2,
1873.
Table of Cases.
,. ..11 - Appi-al, II Nor. 276,
K.iiMT : . IVii.lrick, 2 Out. 52S, - - - - -
KiHscT <;. Johnson. II Vr. 286.
Kane a. Meason. 13 Sin. 335,
Kai>l> :•. Barlhan. i K. I>. Sm. 622, - - - -
Kastcr a. Oreenwald, 5 Nor. 45, -
KaulTman :•. ImsIkt, 3 Grant 302, . - - -
Kayser :: Maut;hani, 8 Col. 232, . . - -
K«.-i.;^an :■. Cox', 116 Mass. 2S9,
Ki'ini (1. Sparniau. 83 N. V. 245, . - - -
Keller (7. vSeoor, 4 Duer 414,
Kelley a. Berry. 4 Rob. 106,
Kellogj,' a. Wilcox, 1 1 Ohio 394, . - - -
Kellv a. Hart. 2 Nor. 286,
.. ,, 117 1 1 ' 27 How. I'r. 559,
Kelly a. Walsh. -^^^B^^^ljgS^ - - - -
Kemp (/. Carnley, 3 Duer I, . - - - -
Kendall :■. Hamilton, L. R. 4 App. Cas. 504, -
Keiinady a. Mecutchen, 3 Dutch 230,
Kennedy a. Dennis, 19 Barb. 517, . - - -
Kenney r. Altvater, 27 Sm. 34, -
Kenney a. Bank, Fayette Nat., of Lexig'n, 49 Ky. 133,
Kepler v. Erie Dime S. & L. Co., 5 Out. 602, -
Keves a. Davis, 38 N. Y. 94, - - - - -
( 3 B. & S. 847, - - - -
Kilshawz/. Jukes, i 32 Law J. Q. B. 217, -
l^ 9 Jurist, N. S. 1231,-
Kimball z: Hamilton Fire Insurance Co., 8 Bosw. 495,
Kiny a. Morriset, 2 Bur. 891,
KiiiK V. Sarria, 69 N. Y. 24,
K\u^ z'. Wilcomb, 7 Barb. 263, -----
Kin^ (I. Woodruff, 47 Wis. 261, -----
Kinj.;'s Appeal, 9 Barr. 124,
Kingsbury :-. Tharp, 28 N. W. R. 74, - - -
Kinney a. Cowan, 33 Ohio St. 442, - - - -
Kinsinj^er a. Goepper, 39 Ohio St. 429, . - -
Kirkwood a. Solomon, 55 Mich. 256,
Kistler a. Bowman, 9 Casey 106, - . . .
Kitchen :'. Lee, 11 Paige Ch. 107, - . . -
Klein a. Shanks, 14 Otto 18,
Knerr v. Hoffman, 15 Sm. 126,
Knickerbocker a. Woodling, 31 Minn. 268,
Knott V. Knott, 6 Oregon 142,
Knowles a. I<yon, 3 B & S. 556, . . . .
Kohn a. Sparrow, 3 E. R. 293, - - - - -
Koningsburg v. Launitz, i E. D. Sm. 215,
Kortlander a. Holmes, 31 N. W. Rep'r 532,
Kountz z'. Holthouse, 4 Nor. 235, ....
Kountz Line a. Sun Insurance Co., 122 I'. S. S. C. R. 583,
xl.
106,
8, i,
1879.
129,
I,
1881.
130,
5. a,
1878.
i 10,
I 121,
6,
I,
1869.
215-
4.
1852.
90,
3.
1878.
122,
6,
i860.
51.
2,
1885.
137,
2,
1874.
136,
4, a,
188;).
76,
13,
1855.
194,
2,
i8t)6.
ii94,
I 200,
I,
I,
1842.
64,
4,
1877.
106,
9,b,
1864.
131,
2,
1853-
f 76,
13,
77,
13,
1879.
I 91.
4,
126,
6,
1858.
24,
I,
1854.
177,
I,
1874.
195,
4,
1880.
III,
3,
1882.
175,
3,
1868.
64,
a
1863.
114,
2,
1861.
66,
I,
1759'
37.
3, «
1877.
no.
7,
1849.
184,
4,
1879.
106,
8, a
1848.
21,
2,
1886.
69-
17,
1878.
no.
6,
1883.
174,
I, a
1884.
i 79,
I 90,
I,
I,
1859-
147,
I,
1844.
f 106,
1 no,
7, a
18S1.
5.
157-
4,
1870.
140,
4,
1883.
36,
6,
1876.
62,
c.
1863.
76,
16,
1885.
( lOI,
1 179,
I,
I,
1851.
135.
5, «
, 1887.
144,
7.
1877.
53, 69,
II,
1886.
Table of Cases.
Kramer v. Arthurs, 7 Barr 165, -
Kremer a. Reed, i Am. 482,
Kyte a. Howard, 28 N. W. R. 609,
Labouchere v. Tupper, 11 Moore, P. C, 198, -
„.„ 14 Ch. D. 237,
Laceyz^.Hill,|^^p Cas.94, - - - - ■
Lafittefl. ChafFaix, 30 L,a. An. 631, - - - -
Lafond v. Deems, 81 N. Y. 507 - - - - ■
Lahens a. Fielden, 9 Bosw. 436, . - -
Laird f. Cbisbolm, 30 Scotishjur. 584,
Lamb v. Grover, 47 Barb. 317, -
Lambert's Case, Godbolt 339, - - - -
Lambeth a. Marshall, 7 Rob. L. A. 47,
Lampton v. CoUingwood, 4 Mod. 315,
Land & Water Co. a. Hawu, 16 P. Rep'r 196, -
I 13 C. B. (N. S.) 278,
Lane a. Leverson, < ^^g E C L
Lane v. Thomas, 37 Tex. 157, - - - -
Lane v. Williams, 2 Vern. 277, - - - -
Langdale, ex parte, 18 Ves. Jr. 300, -
Lanning a. Hall, i Otto 160, - - - -
Large v. Ditmars, 12 C. E. Gr. 283, -
Lasley a. Yeoman, 40 O. S. 190,
Laswell a. Robins, 27 111. 365, - - - -
Lathrop a. Butterfield, 21 Sm. 225, -
Lathrop a. Ihmson, 8 Out. 365, - - - -
Latshaw v. Steinman, 11 S. & R. 357.
LaufFer v. Cavett, 6 Nor. 479, - - - -
Laughliu v. Lorenz, 12 Wr. 275,
J 10
Launitz a. Kpningsburg, i E. D. Sm. 215, - ' ti;
Law a. Roberts, 4 Sandf. 642, . - - -
Lawrence v. Bacheller, 131 Mass. 504,
Lawrence v. Sebor, 2 Caines 505,
Lawrence a. Williams, 47 N. Y. 462, -
Leaf's Appeal, 9 Out. 505, - - - - -
Leask a. Pole, 9 Jurist, N. S., 829,
Leavitt a. Nicholson, 4 Sandf. 252, -
Leavitt v. Peck, 2 Conn. 124, - - - -
Lee a. Kitchen, 11 Paige Ch. 107,
Lee V. Orr, 11 Pacif. R. 745. " ' " "
Lefevre's Appeal, 19 Sm. 22, - - - -
Leggett V. Hyde, 58 N. Y. 272, - - - -
Lennig v. Lennig, 11 W. N. 18, -
Lennon a. Walsh, 98 111. 27, - - - -
Lesley v. Wiley, 47 N. Y. 648, - - - -
Levan a. Anderson, i W. & S. 334. -
xli.
8,
109,
2,
7,
1847.
69.
5-
iS86.-
12,
I,
1 886.
73,
I,
1857.
166,
4, a,
1876.
1877.
57,
61,
3,
4,
1878.
16,
I,
1880.
125,
I,
1862.
39,
I,
42,
I,
1858.
42,
4, a,
59,
b,
1866.
5,
2,
1614.
37,
3, a,
1844.
103,
8,
■695.
185,
I,
1887.
129,
5,
1862.
169,
2,
211,
I,
1872,
5,
3,
1692.
21,
I,
1811.
"9,
b,
1875-
208,
8,
1876.
8,
2,
1883.
25,
6,
1862.
67,
10,
1872.
69,
2,
1883.
94,
95,
a
a
1824.
9,
III,
2,
2,
1878.
71,
.154,
2,
I,
1864.
101,
L179,
I,
I,
1851.
210,
I,
1851.
37,
3, a
1881.
103,
10,
1804.
67,
4,
1872.
109,
8,
1884.
69,
9,
1863.
170,
I,
1850.
152,
I,
1819.
147,
I,
1844.
76,
I,
1886.
(III,
II,
,^ 1871
I 113.
I, '
52,
' 1874.
188,
I,
I 8m.
118,
("
1S81.
76,
12,
1S72.
83,
3,
1841.
Table of Cases.
Kcvi-rick a. I'ringlc, 97 N. V. 181,
Lcversoi. v. Lane. | ^^ ^ ^[; (^- ^- ^ ^^B, - -
Levy :/. Brush, 45 N. Y. 589. ... -
Levy V. Cadet, 1 7 S & R. 1 -'6, -
Lewis a. Henderson, 9 S. ^v R. 379, -
Ivcwis </. Locke, 124 Mass. 1,
Lewis a. I'niled States, 13 Nat. Bank'cy Regr ;i^,
Lewis.-'. Webber. 1 16 Mass. 450,
Ix?wis :•. Williams. 6 Wh. 263, - - - -
Lidiijerwood <:. Thursby, 69 N. Y. 198,
Lindley :•. Davis, 13 P. Rep. 118,
Liiil'ord :-. Linford. 4 Dutch. 113,
Linn v. Ross, i Harr. 55,
Lipincott a. Wisham, i Stock. 353, - - -
Lipsey a. Carter, 70 Geo. 417, -
Lilchtield a. Jackson, 8 Q. B. D. 474,
Litllelieltl </. Cunningham, i Edw. Ch. 104,
Livini^ston ;■. Blanchard, 130 Mass. 341, -
Livingston z'. Lynch, 4 Johns. Ch. 573,
Lloyd, in re., 22 Fed. Rep'r90, - - . -
Lloyd (7 Jones, L. R. 18 Eq. 265, - . .
Lloyd V. Thomas, 29 Sm. 68, - - - -
Lock :•. Lynam. 4 Ir. Ch. 188, - - - .
Ivocke :'. Lewis, 124 INIass. i, -
Lockwood ti. Ralph, 61 Cal. 155, ...
Loeschick z: Addison, 3 Rob. 331, ...
Logan a. Cragin, 27 La. An. 352, ...
Logan V. Greeushaw, 25 Fed. Rep'r 299, -
Long, in re, 7 N. Bank'cy Reg'r 227,
Long i'. Seavers, 7 Out. 517, ....
Long (7. Townsend. 27 Sm. 143, ....
Lorah a. Todd, 25 Sm. 155, ....
Lord .\bergavenny's Case, 6 Rep. 79,
Lord r. Proctor, 7 Phila. 630, ....
Lord (7. Schulten, 4 E. D. Smith 206,
Lorenz a. Laughlin, 12 Wr. 275, ...
Loring a. vSmith, 2 Ohio 440, . - . .
Lothrop V. Adams, 135 Mass. 469, ...
Loucks a. Averill, 6 Barb. 19, -
Loucks :•. Martin, 9 A. Rep'r 279,
Love :■. Rhyne. 86 Xo. Car. 572, ...
Low :■. Iloluies, 2 C. E. Gr. 148,
Lowrcy a. Ruth, 10 Neb. 260, - - . .
Luce V. Snively, 4 Watts 396, - . . .
Ludlam a. Buckingham, 2 Stew. 343. E. & A. -
Luer r. Waydell, 3 Denio4io, ....
Lupton a. Gibson. 9 Bing 297, ....
Lynam a. Lock, 4 Irish Ch. 188,
xlii.
146,
3,
1884.
129,
5,
1862.
169,
2,
10,
3,
1871.
178,
6,
1827.
130,
13,
1823.
37,
3,^
1878.
204,
3.
1876.
194.
5,
1875-
«3,
2,
1 841.
"7,
I,
1877.
103,
A
1887.
192,
2,
1859-
140,
2,
1837.
1 ''■
I,
4,
1853-
39.
2,
1883.
77,
c
1882.
158,
3.
1831.
31,
7.
1 881.
135.
4. a
1820.
196,
2,
1884.
173.
II,
1874.
184,
6,
1875-
151,
3,
1854.
37,
3,^
1878.
76,
17,
1882.
192,
I,
1865.
79,
a
1875.
112,
II,
1885.
j 106,
2, c,
1 107,
3,
1874.
12,
I,
1883.
148,
4,
1874.
169,
I,
1874.
103,
2,
1608.
64,
c,
1870.
76,
14.
1855-
I 154,
2,
I,
1864.
f 126,
I,
i 167,
8, a
1825.
U92,
3.
140,
4,
1882.
i 93.
I no,
I,
10,
1849.
146,
2,
1887.
156,
I,
1882.
180,
4.
1S64.
76,
I,
1880.
100,
7.
1835-
• 165,
1 208.
3.
4,
1878.
184,
5.
1846.
J 7.
I,
>9.
2,
18^,2
( 4).
5,
151,
3.
i8;4.
Table of Cases.
Lynch a. Livingston, 4 Johns. Ch. 573, - - - i35> 4,^,1820
Lynch a. Staughton, 6 Johns. Ch. 467, - - - 208, 6, i»i5
Lynch v. Thompson, 61 Miss. 354, - - - - 52, i«^3
Lyon V. Knowles, 3 B. & S. 556, - - - - 62, c, 1863
Lyon a. Yates, 61 N. Y. 344. ^37, 2, 1874
MacDowell a. Dean, 8 Ch. Div. 345, - - - - 151, 6, 1877.
Mackall a. Owens, 33 Md. 372, ----- 72, 2, 1670.
Mackey a. Earon, 10 Out. 452, ----- 6», 3- i^M-
Macmillan, Ex parte, 24 L. T. 143, - - - - 207, 2, 1871.
( 106, 5, a,
Mageea. Potter, PamphletU. S. C. C. 21, - - -^107, 1, 1878.
° 1. 108, 2,
Maguire a. Duff, 107 Mass. 87, 161, 5, 1871.
Mahagan v. Mead, 63 N. H. 130, - - - - 10, n. 1884.
( 28, 3,
Mahoney a. Devoney, 8 C. E. Gr. 247, - - - ^ no. 9. 1872.
U", 15,
Mair z/. Beck, 4 E. Rep'r 855, ----- 120, 2, 1886.
Mair v. Glennie, 4 M. & 8. 240, . . - - 59. ^- ^^^S-
Mallery v. Insurance Co., 51 Conn. 222, - - - 25, 2, I083.
Mallory z/. Russell, 32 N. W. Rep'r 102, - - - 112,14, 1887.
Maltby ..Anderson,! 4 B-^Ch^42j^;^^^. . , ,06, 2, a,
Mandeville a. Burrell, 2 How. 560, - - - - 74-4, 1844.
Mandeville a. Sheehy, 6 Cranch 253, - - - 93, i, i°iO-
Manhattan B. & Mfg. Co. v. Sears, 45 N. Y. 797, - 51, i, i^^i-
Manhattan Ins. Co. v. Webster, 9 Sm. 227, - - 103, 10, 1868.
Manufg. & Mer. Co. of Sandusky zv. Schooly, Tappan 233, 76, 7, 1818.
Manville z'. Parks, 7 Col. 128, ----- 5i, 2, 1883.
Markham a. Tellyett,57Geo. II, - - - - 32, i, 187b.
Marklea. Pardee, 17W. N. C. 211, - - - - 151, i, 1886.
Marmaduke a. Cothran, 60 Texas 370, - - - , 59, 3, 1053.
Marsh v. Davis, 33 Rand. 326, ----- 10, 7, 16^5.
Marsh z/. Russell, 66 N. Y. 288, - - - - 211, 2, 1876.
Marshall z/. Lambeth, 7 Rob., La. 47, - - - 37, 3, «- iM4.
Marquand a. Jaques, 6 Cowen 497, - - - - 4o, 3, i82b.
Martin a. Brooks, 2 Wall. 70. - - - - " 211, 3, 1874.
Martin a. Loucks, 9 Atl. Rep'r 279, - - - - 146, 2, 1887.
Marx a. Miller, 65 Texas 131, 58, ^- i-^5-
Mason z;. Eldred, 6 Wall. 231, ----- 82, 3, 1679.
Mason v. Partridge, 66 N. Y. 633, - - - - i34, 5, 1876.
( 419, - - 89, I, TQ97
Mateer a. Commonwealth, 16 S. &R. I ^jg' . . j^^^ 8, ''
Matherson v. Wilkinson, 8 Atl. Rep'r 84, - - - 130, i, b, 1887.
Matthews a. Hubbard, 54 N. Y. 43, " " " " \73, 3, i»73-
Matthewsa. McStea, 50N. Y. 166 - - - - i/, 3, ^^z/-
Matthews a. Oliphant, 16 Barb. 608, - - - - 76, 20, ibo3.
Matthews a. Wilcox, 44 Mich. 192, - - - - 57, 4, lo^o.
J 1 10, O, tRAo
Mattock z/. James, 2 Beas. 126, ----- |ii2, 9,11,
Maugham a. Kavser, 8 Col. 232, - - - - 5i, 2, 1885.
Mauneyz^ Coit,'86N. C. 463, 52, 8b2.
May a. Adams, 27 Fed. R. 907,^ - ^- " ' " 76, i, 886.
Mayberry v. Willoughby, 5 Neb. 368, - - - i7», 7. i»77-
xliii.
Taulk of Cases.
Mavod. Harker, 129 Mass. 517, - - - -
Mavou, Kx i)arle, 4 DeG. J. &; S. 664,
McAvov i: Wright, 137 Mass. 206, -
McIUiriiev n. Cox, 2 Saiulf. 561,
McChesu'ey <i. City Rank of Brooklyn, 20 N. Y. 240,
McClure a. Torter, 15 Wend. 187,
McCormick's Appeal, 5 Sm. 252,
McCormick's Appeal, 7 Sm. 54, . . -
McCowin J'. Cubbison, 22 Sm. 358, - - -
McCoy a. Potter, 2 Casey 458, - - - -
McOliiy 7'. I 'anncman, Pen. 870,
McCullough r. Guetner, i Binn. 214,
McCutcheon a. Gardner. 4 Beavau 534,
McDonald a. Smith, i South. 103,
McDowell a. Hilton, 87 N. C. 364,
McKwen, in re, 12 Nat. Bank'cy Reg'r 11,
McFall a. Williams, 2 S. & R. 281, -
McGovern a. Yoho, 42 O. St. 11,
McGregor v. Cleveland, 5 Wend. 475,
Mclnroy :'. Hargrove, 16 L. T. 509,
Mcintosh a. Robinson, 3 E. D. Sm. 221, -
McKce V. Hank of Mt. Pleasant, 7 Ohio 463,
McKee v. Hamilton, 33 Ohio St. 7, -
McKesson a. Adams, 3 Sm. 81, -
McKinnev v. Brights, 4 Har. 399, ...
McKnigh't :■. Ratcliff, 8 \Vr. 156,
McKnight a. Robbins, i Hal. Ch. 645, E. & A.
McLaughlin a. Howard, 2 Out. 440, ...
McLean a. Hobbs, 117 U. S. 567,
McLean, in re, 15 Nat. Bank'cy Reg'r 341,
McLcod a. Napier, 9 Wend 120, ...
McLewee a. Hall, 103 N. Y. 639, ...
M<-Mahon :■. O'Donnel, 5 C. E. Gr. 306, -
McManus a. Tracy, 58 N. Y. 257, ...
>L'-Naira. Cumpston, i Wend. 457, ...
McNaughten v. Partridge, 1 1 Ohio 223,
McNaughton's Appeal, [ ^^ ^^\^- 5"^°' -
^ *^' ' I 5 Out. 550,
MrStca V. Matthews, 50 N. Y. 166, -
Meail (/. ^L'^hagan, 63 N. H. 130,
Mcars a. Helsby, 5 B. & C. 504, ....
Meason :■. Kaine, 13 Sm. 335, ....
Mechanics' Bank v. Goodwin, i Hal. Ch. 334, -
Mecutchen v. Kennady, 3 Dutch 230,
Medera a. Sheridan, 2 Stock. 469, E. & A.
165
107
47
112
177
I 44
f 106
\ 163
(.202
( ID
1113
fi78
1183
135
76,
119
151
76
121
/ 105
1193
81
84
I 44
I 76,
49
207
117
124
12
168
142
I 67
192
36:
201
i87:
64:
60,
r 48
I 67
I 7
I 54
135
19
T7
10
144
I '°
( 121
112
126
/ 57
I 66
4,
5,
I,
8,
3,
2,
4,
7,b,
2,
I,
8,
I, e,
4,
I,
2,
4,
5,
4.
3-
I,
2,
2,
6,
24.
2,
I,
4,
3,
I,
9,
2, c.
I,
I,
2,
I,
3> c,
13.
4,
I,
I. <^,
4,
3,
II,
2,
6,
I,
12,
6,
4,
4,
xliv.
^93.
2,
18,58
59,
3.
1886
I30,
7.
1869
1 09,
7,
1872
131,
I,
1887
103,
4,
106,
T, ^
107.
4,
1^73
Table of Cases.
Meech v. Allen, 17 N. Y. 300, - . . . .
Meehan v. Valentine, 29 Fed. Rep'r 276, - - .
Meigs a. Billings, 53 Barb. 272, . - - - -
Meily t/. Wood, 21 Sm. 488,
Meyer a. Elgin Watch Co., 30 Fed. Rep'r 659, -
Menagh v. Whitwell, 52 N. Y. 146, - - - - J
L 167, 7- a,
Meng a. Pleasants, I Dall. 380, - - - - -- 132, 3, 1788.
Meranda a. Rogers, 7 O. St. 179, .... 197^ 3^ 1857.
Merrick v. Gordon, 20 N. Y. 93, - - - - 62, e, 1859.
Merrill v. Green, 55 N. Y. 270, ----- 148, 3, 1873.
Merritt v. Walsh, 5 Tiffany 685, . - . . 67, 3, 1865.
Mershon v. Hobensack, 2 Zab. 372, - - - - 69, 10, 1850.
Merwin v. Playford, 3 Rob. 702, - . . . 59, >&, 1865.
Metropolis Nat. Bank v. Sprague, 5 C. E. Gr. 13, - 194, 4, 1869.
Meyer v. Sharpe, 5 Taunt. 74, - - - - - 27, 4, 1813.
Meyer a. Styles, 7 Lans. 190, ----- 69, 9, 1872.
Meylert a. Evans, 7 Harris 402, ----- 119, b, 1862.
Mifflin V. Smith, 17 S. & R. 165, . . - - 76, 18, 1827.
Miles a. Strong, 45 Conn. 52, 167, 5, d. 1877.
Miles V. Wenn, 27 Minn. 56, 91, 2, 1880.
Miller v. Brigham, 50 Cal. 615, ----- | ^°3, 5, ^^^^
Miller v. Consolidation Bank, 12 Wr. 514, - - 127, 5, 1865.
Miller a. Dungau, 4 C. E. Gr. 219, - - - . 130, 7, b, 1868.
Miller a. Gale, 54 N. Y. 536, 171, 4, 1874.
Miller a- Jackson, i Dutch. 90, - - - - - 138, 2, 1855.
Miller a. Johnson, 16 Ohio 431, ----- 67, 11, 1847.
Miller z'. Marx, 65 Texas 131, 58, ^,1885.
Miller v. Reed, 3 Casey 244, - - - - - j ^3, 6, ^g^^
Miller v. Sims, 2 Hill 479, ------ 136, i, 1834.
Millers a. Wynne, 61 Geo. 345, ----- 103, 12, 1878.
Millett V. Stringer, 17 Abb. Pr. 152, - - - - 41, 2, 1858.
Mills a. Clarke, 13 P. Rep'r 569, . - - _ 158, 4, 1887.
Mills a. Cummings, i Daly 520, ----- 61, 3, 1866.
Mitchell a. Palmer, 2 Mylne & K. 655, - - - 43, i_ 1834.
Mitchell a. Rammelsberger, 29 O. St. 22, - - - 212, i, 1875.
Mittnight v. Smith, 2 C. E. Gr. 259, - - - . 106, 5, c, 1865.
Mize a. Westbrook, 10 P. Rep'r 881, - - - - 47, i, 1886.
Mohawk & H. R. R. v. Niles, 3 Hill 162, - - - 62, e, 1842.
Moies V. O'Neill, 8 C. E. Gr. 207, - - - . 180, i, 1873.
Moist's Appeal, 24 Sm. 166, ----- 88, 3, 1873.
Moley V. Brine, 120 Mass. 324, - - - - 31,6, 1876.
MoUwo V. Court of Wards, L. R. 4 P. C. 419, - 64, b, 1872.
iio6, I, c,
107, 4, 1850.
194, 3.
Monteith a. Bank, i Denio 402, ----- 44, s, 1845.
Moore v. Davis, 11 Ch. D. 261, 45, 1879.
Moore v. Gano, 12 Ohio 300, 158, 2, 1843.
Moore v. Hepburn, 5 Barr 399, ^3' 1 i' ^847.
xlv.
Table of Cases.
Moore r. Huntingdon, 7 Hun 425,
Moore <z. Sloan, i Wright 217, -
Mooreheatl r. Ciilmorc, 27801. 118, -
Moore's Appeal, 10 Cssey 41 1, -
More (/. Holleniback, 44 N. V. Sup'r Ct. 107,
Morvj.iii <i. Alexaniler, 31 O.St. 546, -
M.)r..^.iii :'. Schuyler, 79 X. Y. 490,
Mori^aiislL-rn v. Thritt, 66 Cal. 577,
.M iriartv :■■ Hailcy, 46 Conn. 592,
Morrelli/. Ran.lc'll, 2 C. E. Gr. 343, -
Morrell <:. Ryan, 21 Reporter, Ky., 273, -
Morris :•. Allen, i IMcCart. Ch. 44,
Morris a. Cuininings, 25 N. Y. 625, -
Morris a. Davis, 36 N. Y. 569, -
M irriset V. King, 2 Bur. 891, - - -
Morrison :: Atwei', 9 Bosw. 503,
M^rri-son a. Sweet, 7 E. Rtp'r389,
Morse a. Page, 1 28 Mass. 99, - - -
Morse :-. Wilson, 4 Term. 353, -
Mortimer a. Noble, 4 W. N. C. 300, -
Morton a. Pulford, 28 N. W. R. 716, -
Moses V. Halfield, 3 S. E. Rep'r 538,
Mosgrove v. (jolden, 5 Out. 605,
Muilgett a. Bank of Commonwealth, 44 N. Y.
Muir V. City of Glasgow Bank, 4 H. L. 337,
Muir a Parkhurst ■' ^ ^'''^- ^^- 3°7. "
Muir a. Farkliurst, ^^ , ^^^ ^.^ ^^^_ _
514,
Muir a. Tellers, Pen. 749, -
Mulock a. Smith, i Rob. 569,
Mumford :•. Nicholl, 20 Johns 611, -
Munro a. Whitman, 8 Hun 553,
Munson a. Eord, i South. 93,
Munster v. Cox, 10 App. Cas. 680,
Murdock a. Frazer, 6 H. L. 855,
Murphy rt. Tait, 2 S. Rep'r 317,
Murray ;■. Bogert, 14 Johns. 318,
Murrave-. Elston,{^C.E. Gr. 127, -
I 9 C. E. Gr. 310, 589,
Murray a. Fisher, i E D. Sm. 341, -
Murray a. Harris, 28 N. Y. 574, -
Murray, in re, 13 Fed. Rep'r 550,
Murray a. Watson, 8 C. E. Gr. 257, -
Murrell v. Murrell, 33 La. 1233,
Mutrie (/. Binncy, 12 .\ppeal Cases 186,
Muz/.ey <i. I'.rundred, i Dutch. 268,
Mu/./.y r'. Whitney, 10 Johns. 226,
Mvcrs a. Avery. 60 Miss. 368,
Myers i: Nell. 4 W. N. 229.
Mvers 7'. Smith, 29 Ohio St. 120,
Mvler a. Smith, in Harris 36,
Myley a. Bank of Lancaster, i Harris 544,
67,
II,
876.
f 114.
I,
131,
I," 1
860.
ii73.
4,
127,
7,
[874.
88,
3,
1859-
41,
2,
[878,
138,
3,
877.
209,
I, a,
1879.
47,
3,
885.
167,
5, a,
879.
173.
10,
86b.
40,
4. ]
885.
165,
4,
[861.
156,
5,
[862.
77,
e,
883.
66,
I,
^759-
170,
2,
1862.
206,
2,
[886.
136,
4, ^,
[880.
66,
5, 1
791.
121,
10,
[877.
10,
5,
[886.
117,
I,
[887.
76,
3, ]
8S2.
126,
4,
871.
73,
2,
1879-
180,
2,
[848.
[849-
121,
4,
[811.
178,
4,
1863.
67,
I,
1822.
/ 32,
I 57,
2,
4,
1876.
76,
5,
1818.
77,
3,
1885.
74,
8,
1 881.
100,
b,
[887.
/171,
I 206,
2,
2,
1817.
(212,
1215,
8,
1872.
3,
1873-
131,
3,
1850.
1 37,
1 104,
7-
1864.
69,
22,
[8S2.
211,
2.
[872.
112,
2,
[88r.
31.
2,
1886.
59.
/,A
1855-
59,
d,
[81-5,
75,
2,
[882.
94.
2,
[877.
216,
2,
876.
130,
I, 9,
[853-
109,
7,
[850.
xlvi.
Table of Cases.
Nanson r. Gordon, L. R. i App. Cas. 195,
Napier z/. McLeod, 9 Wend. 120,
Nash a. Nixon, 12 O. St. 647, . - - -
National Bank of Salem .'. Thomas, 47 N. Y. 15,
Neff, in re, 19 Q. B. D. 88, -
Negley a. Ihmsen, i Casey 297, - - - -
Nell a. Myers, 4 \V. N. 229, ... -
Nelson a. Tomlinson, 49 Wis. 679, ...
Nesham a. Barry, 3 C. B. 641, ....
Newberry a. Cheney, 67 Cal. 126,
Newbold v. Wright, 4 Rawle 205, ...
Newcomet v. Brotzman, 19 Sm. 185, - - .
Newkirk a. Davis, 5 Denio 92, -
Newman a. Bell, 5 S. & R. 78, -
Newman v. Richardson, 9 Fed. Rep'r 865,
Newsome v. Coles, 2 Camp. 617,
New York & H. R. R. a. Straiton, 2 E. D. Sm. \i
New York Mut. Life a. Cohen, 50 N. Y. 611,
Nicholl a. Mumford, 20 Johns. 611, ...
Nichols V. White, 15 N. Y. 531, -
Nicholson v. Leavitt, 4 Sandf. 252, . . -
Niles (7. Mohawk & H. R. R., 3 Hill 162, -
Nisbet V. Patton, 4 Rawle 120, - - . -
Nixon V. Nash, 12 O. St. 647^ . _ . .
Noakes v. Barlow, 20 W. R. 388; 26 L. T. 136,
Noakes v. Smith, i Yeates 238, - - - -
Noble V. Mortimer, 4 W. N. C. 300, -
Noland v. Oblius, 13 Petersdorf 106 ; i Stark 272,
Norcross a. Brewer, 2 C. E. Gr. 219, . - -
Norris a. Bank, 43 L. I. 56, ....
North V. Bloss, 30 N. Y. 374, . - - -
Noyes a. Denton, 6 Johns. 295, - . . -
Oblius a. Noland, 13 Petersdorf 106; i Stark 272,
O'Donnell a. McMahon, 5 C. E Gr. 306. -
Ogden V. Astor, 4 Sandf. 311, -
Oliphant v. Matthews, 16 Barb. 608, - - - .
Oliver v. Forrester, 96 111. 315, - - - . .
Onderdonk a. Hutchinson, 2 Hal. Ch. 277,
Onderdonk v. Hutchinson, 2 Hal. Ch. 632, E. & A. -
O'Neill a. Moies, 8 C. E. Gr. 207, ....
Oram v. Rothermel, 2 Out. 300, - - - - -
Orr jT. Ferrell, 5 S. W\ Rep'r 490, _ - . .
Orr a. Lee, 11 Pac. R. 745, ------
Orsee a. Smith, 42 N. Y. 132, - ... -
Orser a. Pettee, 6 Bosw. 123,
Osborne v. Barge, 29 Fed. Rep'r 725, - . - -
Osburii V. Farr, 42 Mich. 134, .
Otis V. vSill, 8 Barb, 102,
Ouachita Belle a. Wilmont, 23 La. An. 607,
Owen V. Bodv, 5 A. & E. 28,
Owens v. Mackall, 33 Md. 372, - - - - -
Oxley a. Tucker, 5 Cranch 34> - ■ " ' ^ *
xlvii.
204,
I,
1876.
187,
I,
1832.
100,
d,
i86j.
128,
3>
1871.
201,
I,
2,
1887.
126,
3.
1855-
94,
2,
1877.
156,
3,
1880.
58,
c,
184 1.
76,
17,
1885.
4,
I,
1833-
177,
I,
1871.
122,
7,
1S47.
105,
I,
108,
7,
1819.
195.
4,
125,
4,
1881
176.
2,
<i,
1811
62,
e,
1853
16,
2,
1872
67,
I,
1822
178,
3.
1881
170,
I,
1850
62,
e,
1842
139.
I,
1833
100,
d,
1861
ii>
I,
1872.
112,
15,
1793
121,
10,
1877
62,
/
1816
214,
2,
1865
68,
2,
1886
76,
12,
1864.
119,
c,
1810
60,
I,
1869.
54,
I,
1850.
76.
20,
1853-
173,
I,
1880.
188,
2,
1847
188,
2,
1849
180,
I,
187,3.
87,
3,
1881.
132,
I,
1887.
76,
I,
1886.
104,
4,
1870.
131.
I,
i860.
131,
4,
1887
76,
8,
1879.
1 12,
19,
1849.
122,
5,
1S80.
59,
1836.
72,
2,
1870.
105,
2,
1809.
Tajjlk ok Cases.
TaiMork .;. Toi)niiig, 92 HI. 92, -
I'age . . li vc, 2 IV vS: l'. 240, . - - -
I'a^t.- :■• Morse, 12S Mass. 99, - - - -
r.i-L- :•. Thomas, 43 O. >St. 38, -
Vm-a^ :■■ I'aig*--. 32 N. W. Rcp'r 360, -
ralimr :•. Mitchell, 2 Mylne & K. 655,
raliiKT .-■. Tunly, 83 N. V. 144, - - - -
Palmer r. Stephens, iDeuio47i,
I'anU-e .-. Markle, 17 W. N. C. 211, -
Parke :■. Smith, 4 W. 6t S. 290, - - - -
Parker (/. Harker, i T. R. 287, - - - -
Parker z: Canfield, 37 Conn. 251,
Parker, in re. 19 Q. H. I). 84, . - - -
,,•13 Hal. Ch. 307, -
Parkhursti'. Mmr.^^jj^l ^.j^ 555. - " "
Parkins <i. Ross, L. R. 20 Eq. 331,
Parks a. Manville, 7 Cal. 128, - - - -
Parmalee r. Wiggenhorn, 6 Neb. 322,
Parsons :•. Crosby, 5 Esp. 199, -
Parsons :•. Hayward, 4 DeG. F. & J. 474, -
Partridge a. Mason, 66 N. Y. 633,
Partridge a. McXaughten, II Ohio 223,
Partridge z'. Wells, 3 Stew. 176, -
Paschal a. vSlade, 67 Geo. 541, - - - -
Patterson v. Arnold, 9 Wr. 410, - - - -
Patterson v. Brewster, 4 Edw. Ch. 352,
Patterson v. Burton, Pen. 717, . - - -
Pattison v. Blanchard, 5 N. Y. 186, -
Patton a. Ileustis, 2 Dutch. 293,
Patton «. Nisbet, 4 Rawle 120, - - - -
Pant/, a. Ganger, 45 Wis. 449, - - - -
Payne Z'. Freer, 91 N. Y. 43i - - - -
Peabody a. Harris, 73 Me. 262, - - - -
Peacock z'. Cuinmings, 10 Wr. 434, -
Pearce a. Renfrew, 68 111. 125, - - - -
Pearcc a. Strulhers, 51 N. Y. 359, 365,
Pearce fl. Wilkins, 5 Denio 541, - - - -
Pease v. Cole, 53 Conn. 53, ....
Peck !•. Leavitt, 2 Conn. 124, -
Peck a. Sayre, i Barb. 464, ....
Pell a. Bloxam, 2 Wni. Bl. 999, - - - -
Peltier :•. Sewall, 12 Wend. 386, ....
Penn i'. Whitehead, 17 Gratt. 503, -, .
Penu'a R. R. Co. r. St. Louis, A. & T. R. R, 118U. S. 290,
Penrhyn vSlate Co. a. Cook, 36 O. St. 135, -
Pennrick a. Thomas, 28 O. St. 55, - - -
Pepple a. Roberts, 55 Mich. 367,
Perceval a. Fuller, 126 Mass. 381,
Percy a. Fairland, 3 P. & M. 217,
Perry a. Smith, 5 Dutch. 74, ... .
Perkenpine a. Elton, i E. Rep'r 637,
Perkins f. I-isher, 80 Ky. 11,
Perrine a. Cowart, 3 C. E. Gr. 457,
Perrine t'. Hankinson, 6 Hal. 181, ...
( 28
Perring v. Hone, 4 Bing. -'. ' "
xlviii.
20,
3'
1879.
103,
11,
1800.
136,
4, ^,
1880.
III,
10,
1885.
112,
14,
1887.
43.
I,
1834-
149.
3.
1880.
131.
3. «.
1845.
151,
I,
1886.
"7,
a
1842.
71.
I,
1786.
60,
2,
1870.
47.
3.
1887.
180,
2,
1848.
1849.
59.
c,
1875-
51.
2,
1883.
144,
I,
1877.
48,
2,
1805.
207,
3.
1862.
134,
5,
1876.
135,
I, a
1842.
no.
2,
1878.
69,
16,
1881.
24,
4,
1863.
8,
I,
1844.
155.
1,
1810.
62,
e,
1851.
12,
I,
1857-
139.
I,
1833-
96,
2,
1878.
165,
2,
1883.
193.
I,
1881.
152,
2,
1864.
197,
2,
1878.
212,
9.
1873-
^33,
I,
1848.
14,
I,
1885.
152,
I,
1819.
215,
3.
1847.
66,
2,
1775-
67.
9.
1834.
138,
4,
1867.
, 24,
7,
1886.
176,
2, a
1880.
167,
4,d
, 1878.
91.
2,
1884.
125,
6,
1879.
f 74,
L141,
II,
I,
1875-
27.
2,
i860.
150,
2,
1855-
164,
I,
1882.
213.
I,
1867.
12,
I,
1829.
153.
160,
2,
I,
1826.
Table of Cases.
Perry a. Bardwell, 19 Vt. 292,
Perry a. Roach, 16 111. 37, -
Peters a. Cox, 2 Beas. 39, - - - -
„ ... (8 Nor. 163,
Peterson a. Guillou, | ^^ j^^^ ^^^ ^ ^2, -
Peterson v. Roach, 32 Ohio St. 374, -
Petit V. Chevalier, 2 Beas. 181, -
Petry's Appeal, 11 W. N. 512, -
Pettee v. Orser, 6 Bosw. 123,
Pettingill v. Jones, 28 Kan. 749,
Phelan a. Collender, 79 N. Y. 366,
Phelps a. Fillev, 18 Conn. 294, -
Phillips a. Hutzler, i S. E. Rep'r 502,
Phillips V. Reeder, 3 C. E. Gr. 95,
Pilcher, Succession of, i S. Rep'r, La., 929,
Pilgrem v. Pilgrem, 18 Ch. D, 93,
Pilley V. Robinson, 20 Q. B. D. 155, -
Pittard a. Bond, 3 M. & W. 357,
Place V. Sweetzer, 10 Ohio 142, -
Playford a. Merwin, 3 Rob. 702,
Pleasants v. Meng, i Dall. 380, -
Plumer v. Gregory, L. R. 18 Eq. 621,
Plunkett V. Dillon, 4 Houston 338, -
Pole V. Leask, 9 Jurist, N. S., 829,
Pollard a. Anderson, 62 Geo. 46,
Pollion V. Secor, 61 N. Y. 456, -
Pond V. Cummins, 50 Conn. ^372,
Pooley V. Driver, 5 Ch. D. 458, -
Pope a. Aldersou, i Camp. 404, n.
Pope V. Cole, 55 N. Y. 124,
Pope a. James, 19 N. Y. 324,
Poppenhauser a. Riper, 43 N. Y. 68, -
Poppenhusen a. Richter, 39 How. Pr. 82,
Porter a. Critchfield, 3 Ohio 519,
Porter v. McClure, 15 Wend, 187,
Porter a. Whitman, 107 Mass. 522,
Porteus a. Benjamin, 2 H. Bl. 590,
Pott V. Evton, 3 C. B. 32, -
Potter V. Magee, Pamphlet U. S. C. C. 21, -
Potter V. McCoy, 2 Casey 458,
Potter a. Northern Insurance Co., 63 Cal. 157, -
Powers a. Purdy, 6 Barr. 492, -
Prentice v. ElUott, 72 Geo. 154,
Presby a. Dunham, 120 Mass. 285, - - - -
Price V. Groom, 2 Exch. 542, - - - - -
f 7 Phila. 179,
Price z/. Spencer, I ^^ j^ J .6_ - - - - -
Prichard a. Cooper, 75 L. T. 91, - - - -
Princeton & K. Turnpike Co. v. Gulick, i Harr. 161,
Pringle v. Leverick, 97 N. Y. 181, - - - -
Prodler a. Lord, 7 Phila. 630, - - - - -
xlix.
f 108,
6, c
1 195,
2 1847.
36,
6', 1854.
180,
I, i860.
41,
I, 1879.
139,
5, 1874.
128,
I, 1877-
173.
7, a, i860.
184,
I, 1882.
131,
I, i860.
158,
3, 1882.
210,
3, 1879.
147,
3, 1847.
108,
5, 1887.
212,
6, 1866.
103,
c, 1887.
74.
9, 1881.
77,
3, 1887.
48.
3, ^ 1838.
( 100,
\ 103,
/..847.
59.
k, 1865.
132,
3, 1788.
140,
I, 1874.
57,
4, 1875.
69,
9, 1863.
86,
6, 1878.
69,
I, 1875.
59,
b, 1882.
1 50,
I 64,
3' 1876.
'34,
3', 181 1.
86,
5, 1873.
.76,
I, 1859.
37,
3, g, 1870.
72,
2, 1870.
119,
a, 1828.
1 7,
^' 1836.
I 44,
4,
31,
5, 1871.
63,
2, 1796.
63-
I, 1846.
f 106,
5,d,
\ 107,
I, 1878.
(108,
2,
135,
2. 1856.
90,
3, 1883.
167,
4, <-h 1847-
213,
2, 1883.
211,
2, 1876.
59,
11, 1848.
1870.
161,
^' 1873.
140,
3, 1883
177.
4, 183/.
146,
3, 1884.
64,
c, 1870.
Tahkk of Cases.
I"^osser :: Hartley, 29 N. \V. Rep"r 156, -
rrmilv :■. vSwifl, 51 N. Y. 594, -
I'mvii :■• Black, 21 N. Y. 300,
l'U)/h u. Andrews, 24 L. J. Ch. 5S,
riillord z: Morton, 28 N. \V. R. 716, -
I'urdya. Talnier, 83 N. Y. 144, -
I'unlv :'. powers, 6 Barr. 492,
I'lirvis ii. Haniill, 2 P. cS: W. 177,
Putnam :■. Wise, I Hill 234,
gueen v. Robson, 16 y. B. 137, -
yiiin I'. Davis, 28 Sm. 15, -
(Juinn (7. vStamets, 1 1 C. E. Gr. 38^,
Radenhurst r. Bates, 11 Moore 421 ; 3 King. 463,
Rafferty tf. Todd, 3 Stew. 254, . - - -
Raigucl's Appeal, 30 Smith 234, ....
Raiguel a. Wentworth, 9 Phila, 275, -
Railroad Co. v. Bixby, 55 Vt. 235, - - -
Railroad Co., Pa., r. Duncan, i Am. 352, -
Rali)li V. Lockwood, 61 Cal. 155,
Raninielsbergcr r. Mitchell, 29 O. St. 22, -
Ranisdale a. Beckett, 31 Ch. D. 177, -
Randell v. Morrell, 2 C. E. Gr. 343, ....
Randolph r. Daly, I C. E. Gr. 313, -
Randolph a. Shafer, 3 Out. 250,
Rankin i'. Blackwell, 3 Hal. Ch. 152,
Rapier v. Gulf City Paper Co., 64 Ala. 330,
Rapplevea a. Dunham, i Harr. 75, ...
Ratcliffa. McKnight, 8 Wr. 156,
Rathman a. Bitter, 61 N. Y. 512,
Ratzer v. Ratzer, i Stew. 137, ....
Raub V. Smith, 28 N. \V. R. 676,
Ravenscroft a. Heathcot, 2 Hal. Ch. 113, -
Rawlinson :■. Clarke, 15 M. & W. 292,
Raymond a. Harper, 3 Bosw. 29, . . .
Read z: Bailey, L. R. 3 App. Cas. 94,
Read a. Collumb, 24 N. Y. 505, - - - .
Reader. Bentley, 4 Kay & J. 657, ...
Rector (I. Higgins, 47 Texas 361,
Reed a. Fletcher, 125 Mass. 312,
Reed v. Hollingshead, 8 B. &. C. 878,
Reed V. Kremer, 1 Am. 482, ....
RCed a. Miller, 3 Casey 244, . . . .
Reeder a. Phillips, 3 C. E. Gr. 95, - - - - ' 212, 6, 1866.
103,
^,
1886.
59.
i,
1873-
94,
c,
i860.
59,
g,
1855.
10,
5,
1886.
J 49.
3,
i860.
167,
4, a,
1847.
129,
3,
1830.
12,
I,
1841.
16,
I,
1885.
4,
2,
1875-
201,
3,
1876.
76,
6,
1826.
212,
7,
1878.
1876.
161,
162,
3,
I, a,
162,
I, a,
1873-
104,
3,
1882.
24,
ID,
1886.
76,
17,
1882.
212,
I,
1875-
88,
8,
1855-
173,
10,
1866.
105,
193,
2,
3.
1863.
69,
2,
1881.
106,
192,
5, <?,
2,
1848.
25,
I,
1877.
157,
3,
1837-
142,
I,
1863.
69,
19,
106,
4, a
1870.
138,
I,
3,
2,
1877.
10,
5,
1866.
181,
I,
1847.
59,
h
, 1846.
171,
5,
1858.
197,
2,
202,
I,
1877.
.205,
I, 2,
4,
109,
6,
1862.
48,
Z,b,
1858.
193,
I,
1877.
184,
3,
188 r.
52,
1825.
69,
5,
1886.
63,
91.
6,
I,
1856.
Table of Cases.
Reeves v. GofF, Pen. 609, - . . .
Reg. V. Wortley, 15 Jurist 1137, -
Reid, Ex parte, 2 Rose 84, ...
Reid V. Gardiner, 65 N. Y. 578, -
Reis V. Hellman, 25 O. St. 180, - - .
Remel v. Hayes, 83 Mo. 200, - - .
Remington a. Edwards, 51 Wis. 336, -
Renfrew v. Pearce, 68 111. 125, -
Rensheimer v. Hemingsway, 1 1 Casey 432,
Renton v. Chaplain, i Stock. 62,
Reppert v. Colvin, 12 Wr. 248, - - -
Reuben v. Cohen, 48 Cal. 545, - - .
Reynolds v. Cleveland, 4 Cowen 282,
Reynolds a. Cole, 18 N. Y. 74, -
Reynolds v. Howell, L. R. 8 Q. B. 398,
Reynolds a. Stidger, 19 Ohio 351,
Rhyne a. Love, 86 No. Car. 572,
Rianhard v. Hovey, 13 Ohio 300,
Rice V. Shute, 5 Burr. 261 1,
Rice a. Wheat, 97 N. Y. 296, - . .
Rich V. Hasson, 4 Sandf. 115,
Richards v. Allen, 44 Leg. Int. 432, -
Richards v. Grinnell, 63 Iowa 44,
Richardson v. Hughitt, 76 N. Y. 55, -
Richardson a. Newman, 9 Fed. Rep'r 865,
Richter v. Poppenhusen, 39 How. Pr. 82, -
Rickard a. Jennings, 15 Pac. Rep'r 677,
Ricker v. Am. Loan & Tr. Co., 140 Mass. 346,
Riegle v. Irwin, 34 Leg. Int. 447,
Riessner a. Rogers, 30 Fed. Rep'r 525,
Riley a. Hood, ,3 Gr. 127, -
Ringo V. Wing, 5 S. W. Rep'r 787, -
Riper v. Poppenhausen, 43 N. Y. 68,
Rizer v. James, 26 Kan. 221,
Roach V. Perry, 16 111. 37, - - -
Roach a. Peterson, 32, O. St. 374,
Robbins v. McKnight, i Hal. Ch. 645, E. & A.
Roberts Appeal, 11 N. 407, O. C. 13 Phil. 36,
Roberts v. Eberhardt, i Kay 148,
Roberts v. Eldred, 15 P. Rep'r 16,
Roberts i'. Law, 4 Sandf. 642,
Roberts v. Pepple, 55 Mich. 367,
Roberts a. Ruppell, 4 N. & M. 31,
Roberts a. Tench, 6 Madd. Ch. 145, -
Robertson a. Saville, 4 Term. 720.
Robertson v. Smith, 18 Johns. 459,
Robinett's Appeal, 12 Casey 174,
Robins v. Taswell, 27 111. 365, ...
Robinson v. Ashton, 20 Eq. 25, -
Robinson v. Mcintosh, 3 E. D. Sm. 221,
Robinson a. Pilley, 20 Q. B. D. 155, .
Robson V. Eaton, i T. R. 62, . . -
Robson a. Guidan, 2 Camp. 302, - - -
Robsou a. Queen, 16 Q. B. 137, . - -
158,
59.
198,
214,
166,
69,
96.
197,
104,
181,
178,
168,
II.
161,
"9.
207,
156,
24,
80,
144,
121,
113.
51.
66,
125-
72,
151,
16,
129,
144.
r 130,
1 131.
171,
37,
69.
36,
128,
I 51.
I 67.
■ 24,
.135.
15.
112,
210,
91.
50,
211,
19.
84,
42,
25,
28,
207,
77,
119-
69,
16,
I, a,
I,
I, a,
16,
2,
2,
6,
2,
I,
6,
13.
6,
I,
6,
4.
2,
2,
6,
I,
3.
10,
I,
16,
6,
I,
I,
9,
8,
3. a,
3.
7,
I,
*2,
3. a,
2,
I,
I,
3-
6,
21,
I,
1809.
, 1851.
, 1814.
1875.
. 1874.
1884.
1881.
1878.
i860.
1852.
1864.
1874.
1825.
1858.
1873-
1841.
1882.
1844.
1770.
1884.
1850.
1887.
1S84.
1879.
1881.
1870.
1887.
1885.
1877.
1887.
1835.
1887.
1870.
1881.
1854.
1877.
1847.
1880.
1853-
1887.
1851.
1884.
1834.
1819.
1792.
1821.
i860.
1862.
1873-
1854.
1887.
1785-
1809.
1885.
li.
Tablk of Cases.
Rockwell a. Higgins, 2 Duer. 650, -
Rogers a. Diinhuni, i Harr. 255, ,
Ro^t-rs : . MiraiKla, 7 O. St. 179,
Ko^ji-is ;■. Riessiitr, 50 Fed. Rep'r 525,
RoHtrs :. Roj;crs. 5 Ire. ICii. 3'. -
Roj^crs <;. Rooj), 5 Walls 193,
Rogers i'. Sutlle, 19 Hra<l\VLll 163.
Romero :: Dallon, 1 1 I'ac. R. .S63,
R...)p :. Rogers, 5 Watts 193,
Root V. Delaney, 99 Mass. 546, -
Rorbach ti. Vausyckle, 2 Hal. Cb. 234,
Rose Z'. Havcleii,'35 Raud. 106, -
Roseufield v. Ilaigbt, 53 Wis. 260,
Ross v. Howell, 3 Nor. 129,
Ross ii. Linn, i Harr. 55, -
Ross z: I'arkins, L. R. 20, Eq. 331, -
Ross I'. West, 2 Bosw. 390, - - - -
Rothell V Grimes, 35 N. W. 392,
Rothermel a. Oram, 2 Out. 300,
Rowe a. I'uller, 57 N. Y. 23. - - -
Rowland a. Bums, 40 Barb. 368,
Rovce a. Sanborn, 132 Mass. 594,
Ruggles (/. Sbamburg, 2 Nor. 148,
Run von r. Brokam, i Hal. Ch. 340, -
Ruppell r. Roberts, 4 N. & M. 31,
Rusher a. Wade, 4 Bosw. 537, -
Russell i: Austwick, i Sim. Ch. 52, -
Ru.ssell a. I^Iallory, 32 N. W. Rep'r 102,
Russell a. Marsh, 66 N. Y. 288,
Russell :-. Russell, 14 Ch. D. 471,
Russell a. Scruggs, McCahou 39, U. S. C. C.
Russell :-. Stroud, 12 W. N. 419,
Ruth V. Ivowrey, 10 Neb. 260,
Ryan a. Donnally, 5 Wr. 306,
Ryan v. Morrell, 21 Reporter 273, Ky.
Ryder v. Gilbert, 16 Hun 163, - - -
Sage z. Sherman, 2 N. Y. 417, - - - - •
Sager z: Tupper, 38 Mich. 258, - - - -
Salmon v. Davis, 4 Binn. 375, - - - -
Salt Lake City v. HoUister, 118 U. S. 256,
Samuel a. Ganf), 14 Ohio 593, . . . . .
.SanlMjrn z: Dwintll, 135 Mass. 236, - - - .
Sanborn v. Royce, 132 Mass. 594, - - -
Sands r7. Blaker, 29 Kan. 551, - - . -
Sar;;eant a. Tibbals, I McCart. 449, -
Sarria a. King, 69 N. Y. 24, . - . .
St. I^uis, Alton &T.H. R.R.Co.aPa. R. R., 118U. vS.
Savage, in re, T6Nat Bank'cy Rep'r 36S, -
Saville f. Robert.son, 4 Term. 720, - - -
Sawyer a. Bank. ^8 O. S. 339, - . - .
Sayre z/. Frick. 7W. &S. 383, - - - -
lii.
87.
2,
1853-
I 60!
I,
I,
1845. ,
197.
3.
1857-
144.
3.
1887.
162.
2,
1847.
106,
8, d,
1836.
69-
17.
1885.
12,
I,
1886.
106,
8, d,
1836.
12,
I,
1868.
137,
I,
1847.
10,
9.
1886.
52,
1881.
) 95.
I 122,
d,
4.
1877.
140,
2,
1837-
59-
c,
1875-
117,
3,
1858.
192,
I, a,
18B7.
87,
3.
1881.
24,
I,
1874.
69,
18,
1863.
103,
5.
1882.
70,
2,
1876.
215.
3.
1846.
50,
3. a
1834.
(140,
1.166,
3.
3. a
1859.
151,
4,
1826.
112,
14,
1887.
211,
2,
1876.
215,
2,
1880.
10,
2,
1858.
103,
I,
1882.
76,
I,
1880.
38,
I,
1861.
40,
4.
1885.
25.
4.
1878.
8,
2,
1849.
44.
2,
1878.
117,
a
, 1812.
24,
7,
1886.
124,
4,
1846.
205,
4.
1883.
103,
5.
1882.
14,
I,
1883.
182,
I,
1862.
37,
3. a, 1877
290, 24,
7,
1886.
164,
4,
1878
19,
I,
1792.
19.
3.
1882.
6,
2,
1844-
Table ok Cases.
Sayre v. Peck, i Barb. 464,
Scarf V. Jardine, 7 App. Cas. 345, - . . .
Sceva V. True, 53 N. H. 632,
Schaeffer z'. P'owler, I Am. 451, Pa., - - - -
Schenkle z^. Dana, 118 Mass. 237, . - . .
Schlieper a. Wetter, 4 E. D. Smith 707, . - .
Schmertz v. Shreeve, 12 Sm. 457, - . . .
Schncck a. Secly, Pen. 75, - - . . - .
SchooUy c. Mfg. & M. Co. of Sandusky, Tappan 233,
Schriver <'. Cobeau, 4 Watts 130, - . . .
Schulten v. Lord, 4 E, D. Smith 206,
Schuyler a. Morgan, 79 N. Y. 490, - - . .
Schwamb a. Taft, 80 111. 289, -----
Scoles a. Wood, L. R. i Ch. 369, - - - -
Scott T'. Guthrie, 10 Bosw. 408, - - - - -
Scott a. Nat. Ins. Co., i Johns. 106, - - - -
Scruggs V. Russell, McCahon 39, U. S. C. C, -
Scull V. Alter, i Harr. 147, -----
Seabrook a. Stout, 3 Stew. 187,
Sears a. Manhattan Brass & Mfg. Co., 45 N. Y. 797,
Seavers a. Long, 7 Out. 517,
Sebor a. Lawreuee, 2 Caines 505, - . - -
Secor V. Keller, 4 Duer 414, -----
Secor a. Polliou, 61 N. Y. 456, -----
Seely v. Schncck, Pen. 75, -
Seelye v. Taylor, 32 La. An. 11 15,
Seguin's Appeal, 7 Out. 139, - - - - -
Seibold ^7. Gay, 97 N. Y. 472,
Seighortner v. Weissenborn, 5 C. E. Gr. 172,
Seipt a. Black, 7 W. N. 565 ; 34 L. I. 66, -
Semple a. Uhler, 5 C. E. Gr. 288, - - - -
Sessler a. Harris, 3 S. W. Rep'r3i6, - - - -
Seton a. Gram, i Hall 262, -----
Sewall a. Peltier, 12 Wend. 386, - . . -
Shafer v. Randolph, 3 Out. 250, -----
Shafer's Appeal, 10 Out. 49; 39 L. I. 304, -
Shaler v. Trowbridge, i Stew. 595, - - - -
Shamburg v. Ruggles, 2 Nor. 148, - - - -
Shanks v. Klein, 14 Otto 18,
Shannon a. Skinner, 44 Mich. 86, - - - -
Sharp a. Bullen, L. R. i C. P. 86,
Sharp V. Hutchinson, 100 N. Y. 533, - - - -
Sharps a. Meyer, 5 Taunt. 74, - - - - -
Sheehy i'. Mandeville, 6 Cranch 253, . - .
Sheibley a. Hill, 68 Ga. 556, -----
Sheldon :-. Wood, 2 Bosw. 267,
Shepard v. Haivley, i Conn. 367, - - - .
Sheppard :'. Boggs, 9 Neb. 257, -----
Sherburne a. Walden, 15 Johns. 409, - - - -
Sheridan v. Medera, 2 Stock 469, E. &. A.
Sherman a. Sage, 2 N. Y. 417,
Shibley v. Angle, 37 N. Y. 626, - - • -
liii.
215,
3-
70,
I,
46,
I,
49,
I,
188,
3,
131,
I,
118,
b,
76,
2,
76,
7,
57.
4,
76,
14,
209,
I, a.
l^^
3,
[ 35,
I 208,
I,
I,
170,
3.
49-
6, a,
10,
2,
170,
4,
213,
3-
51,
I,
12,
I,
103,
10,
76,
13,
69,
I,
76,
2,
30,
I,
42,
3,
76,
15-
173,
9,
9,
I,
J 112,
1165,
6,
4,
69,
2,
135 {
7, a,
8,
67,
9,
69,
2,
"3,
I, b,
166,
3, ^
70,
2,
/ 106,
7, a,
l no,
5,
103,
b,
64,
/
37,
I,
27,
4,
93,
I,
51,
I,
212,
5,
6,
2,
209,
2,
57,
4.
i 57,
I 66,
4,
4,
8,
2,
23,
3-
Table of Cases.
Shrccvea. Schmertz, 12 Sm. 457.
Sbryock <;. Weaver, 6 S. & R. 262,
Shunk a. BiUer, 1 \V. & S. 340,
Sbule a. Rice, 5 Burr. 261 1, . . - -
Sic-).;cl V. Cbidscy. 4 Cas. 279, . - - -
Sill ii. Utis, 8 Barb. 102, . . - -
Silvcrinan Z'. Cbase, 90 111. 37, - - -
Simmoiuls u. Wills, 8 Hun 189; 51 How. I'r. 4^
Simpson a. Tenuey, 15 V. Rep,r 187,
Sims a. Miller, 2 Hill 479, - - - - •
Skaife :'. Jackson, 3 B. & C. 421,
Skinner :-. Sbannon, 44 Micb. 86, -
Sladc :-. Paschal, 67 Geo. 541, - - - -
Slemmer's Appeal, 8 Sm. 168, - - - ■
Sloan r Moore, i Wrigbt 217, -
Slocum i: Fairchild, 7 Hill 292,
Slutts z'. Cbafee, 48 Wis. 617, - - -
Small a. Wisb, i Camp. 329, - - -
Smalley a. Hill, 8 Vr. 103, . - - ,
Smarle v. Edsuu, i Lev. 30, . . -
Smith a. Argall, 5 Denio 435, . - - •
Smith V. Aver, 13 Otto 320, ...
Smith a. Bagley, 10 N. Y. 489, - - - .
Smith V. Black, 9 S. & R. 142, -
Smith a. Boston Smelting Co., 13 R. I. 27,
Smith :■. Burnbam, 3 Sumner 435,
Smith a. Cady, 12 Neb. 628, . . -
Smith a. Calkins, 46 N, Y. 614,
Smith a. Craig, 15 Pac. Rep'r 337,
Smith (Z. Davis, 2 S. Rep'r 897,
Smith a. Eldridge, 144 Mass. 135,
Smith z'. Felton, 43 N. Y. 418, -
Smith a. Grace, 2 Wm. Bl. 997,
Smith V. Gregg, 9 Neb. 212,
Smitha. Helmore, 35 Cb. D. 436, 449,
Smith V. Hill, 45 Vt. 372, - - . .
Smith a. Hodgman, 13 Barb. 302,
Smith V. Howard, 20 How. Pr. 121, -
Smith V. Jackson, 2 Ed. Cb. 28, -
Smith V. Loring, 2 Ohio 440,
Smith V. McDonald, i South. 103,
Smith a. Mifflin, 17 S. & R, 165,
Smith a. Mittiiight, 2 C. E. Gr. 259, -
Smith v. Mulock, i Rob. 569,
Smith a. Mvers, 29 O. St. 120, -
Smith V. Myler, 10 Harris 136, -
liv.
iiS,
b,
1869.
86,
4,
1820.
' 95-
(^,
1841.
(. 122,
2,
80,
1,
1770.
106,
9, a,
1857.
112,
19.
1849.
88,
3-
1878.
59-
m,q
1876.
112,
4.
1887.
136-
I,
1834-
167-
3,
1824.
103,
b,
1880.
69.
16,
18S1.
1 180,
5.
1868.
1209,
3.
( 114-
I,
131.
I,
i860.
ii73.
4-
62,
/,
1843.
81,
I,
1880.
27-
1,
1808.
173-
8-
1874.
103,
7,
1661,
37-
i,g,
1846.
74.
5:
1879.
) 174-
l 212,
2,
3,
1853.
84.
I,
1822.
64,
2,
1883.
10,
10,
1838.
75,
I,
1882.
167,
I, a.
1872.
95,
I
1887.
112,
I,
1887.
130,
15,
1887.
130,
5, b,
1870.
/ 55,
I 66,
I,
3,
1775-
76,
I,
1879.
I104,
I 183,
5,
I,
1885.
69,
12,
1850.
59,
3,
1852.
106,
9,b,
1859-
f '3,
3-
i 109,
3,
1833-
(.112,
16, a,
fl26.
I,
ii67.
8, a,
1825.
1 192,
3,
76,
5,
1818.
76,
18,
1827
106,
5- c,
1865.
178,
4,
1863.
216,
2,
1876.
130,
I- 9,
185.^
Table of Cases.
Smiths. Noakes, i Yeates 238, . - . . 112, 15,
Smith V. Orsee, 42 N. Y. 132, - . . . . 104, 4,
Smith a. Parke, 4 W. & S. 290, 117, a,
Smith V. Percy, 5 Dutch. 74, - - - - - 27, 2,
Smith a. Raub, 28 N. W. R. 676, . . . . 10, 5,
Smith a. Robertson, 18 Johns. 459, - - . . 84, i.
Smith V. Tarlton, 2 Barb. Ch. 336, - - - - 10, 11,
Smith a. Thayer, 116 Mass. 363, . - . - 124, 5,
Smith V. Walker, 57 Mich. 459, ----- 209, i, d,
Smith V. Watson, 2 B. & C. 401, - - - - \ ^l' ^'
Smith V. Wright, i Abb. Pr. 243, - . - - 44, 8,
Suider a. Colhoun, 6 Binney 135, . - - - 109, 7,
Snively a. Luce, 4 Watts 396, ----- 100, 7,
Snodgrass' Appeal, i Harris 471, - - - - 106, 9, a,
Snover a. Blair, 5 Hal. 153, 178, 5,
Snyder v. Burnett, 81 N. Y. 550, . - - - 68, 2,
Societe de I'lsere, 5 Rev. des Societes, - - - 50, 3,
Society Perun v. Cleveland, 43 O. St. 481, - - 24, 3,
Solomon v. Kirkwood, 55 Mich. 256, - - - 174, i, a,
Somes a. Docker, 2 Mylne & K. 653, - - . 43^ i^
So. White Lead Co. v. Haas, 25 N. W. 493; 33 N. W. 657, 123, i,
Spalding a. Bowman, 2 S. W. Rep'r 911, - - - 145, i,
Sparhawk v. Drexel, i W. N. 560, - - - - 164, 3,
Sparmau v. Keim, 83 N. Y. 245, - . - . 136, 4, a,
Sparrow v. Kohn, 3 E. R, 293, ----- 76, 16,
Speerz;. Bishop, 24 O. St. 598, ----- 70, 2,
Spencer a. Ballou, 4 Cowen 163, - - - - 8, i,
Spencer a. Price, {7 Pbila 179, - - - . - ^^ .
^ ' 1,40 L. I. 76, I
Sponeberger a. Feigley, 5 W. & S. 564, - - - 152, i,
Sprague a. Hoyt, 103 LT. S. 613, - - - - 106, 5, /,
Sprague a. Metropolis Nat. Bank, 5 C. E. Gr. 13, - 194, 4,
Sprague a. Staples, 75 Me. 458, ----- 52,
Staats V. Bristow, 73 N. Y. 264, 103, 3,
Stambaugh a. Ag. & Manuf 's Bank, 13 S. & R. 299, 106, 8, d,
Stamets v. Quinn, 11 C. E. Gr. 383, - - - - 201, 3,
Stanbridge v. Catanach, 2 Nor. 368, - - - - 121, 9,
Stanford a. Sweeney, 67 Cal. 635, - - - - 76, 17,
Stanton v. Westover, loi N. Y. 265, - - - - 178, 5,
Staples V. Sprague, 75 Me. 458, ----- 52,
Stapp a. Strong, 15 Pac. 835, . . - - - 208, 2,
Stauffer a. Doner, i Pa. 203, 102, i, 2,
Staughton v. Lynch, 6 Johns. Ch. 467, - - - 208, 6,
Stear a. Johnson, 109 Engl. Com. L. Rep. N. S., 3 41, n. 47, 3, b,
Stearns a. Dana, 3 Cush. 372, 137, 4,
Steel a. Bogue, i Ph. Rep. 90, - - - - - 104, 10,
Steel V. Frick, 6 Sm. 172, 12, 1,
Steele a. Campbell, i Jones 394, ... - 84, 3,
Steinbeisser a. Hoffman, 11 W. N. 383 (C. P. 4) - 190, i,
Steinman a. Latshaw, 11 S. & R. 357, - - - > ?!' !!'
t 95> ">
Stellwagen a. Graser, 25 N. Y. 315, - - - - 114, 2,
Stephens a. Palmer, i Denio 471, - - - - 131, 3, a,
Sterrett a. Brewster, 8 Casey 115, . . . . \ ' '
Stevens a. Day, 88 N. C. 79, 12, i,
Table of Cases.
Stocker v. Brockelbank,
b>ii:vin>- i: (.■ainesville Nat. Bank, 62 Texas 499,
Stewart :: Abrauis, 7 Watts 448,
Stfwart a. Casstls, 6 App. Cas. 64, -
Stewart :-. Coultc-r, 12 S. & R. 252, -
Stiil.Ljcr :. Reynolds, 190111035:,
Still-mill ii. Caltlwcll, i Rawle 212, -
Stiles :■. :\Iev<.r. 7 Lans. 190, . . . -
Stilltuaa v. Harvey, 47 Conn. 26, - - -
I 3 McN. & G. 250, -
( 15 Jurist 591,
Stone a. (ribson, 43 Barb. 285, - - - -
Stoner i'. Stroiiiaii, 9 W. & S. 85, - . .
Stout :'. Scabrook, 3 Stew 187, - - - -
Straiton v. N. Y. & N. H. R. R., 2 E. D. Sm. 18
Strang f. Bradner, 114 U. S. 555,
Straus a. Johnson, 26 Fed. Rep'r 57, -
Strin,.;^!- it. Millett, 17 Abb. Pr. 152
Slroinan a. Stoner, 9 W. & S. 85, -
Slron<^ z: Stapp, 15 Pac. 835,
Stron.t^ v. Miles, 45 Conn. 52, - -
.S'.roiid a. Russell, 12 W. N. 419,
Struthcrs v. Pearce, 51 N. Y. 357, 365, -
Stuinph V. Baur, 76 Ind. 157, - -
Sturges a. Cheeseman, 6 Bosw. 520,
Styring a. French, 2 C. B. N. S. 357,
Sullivan v. Campbell, 2 Hall 271, -
Sumner a. Buchan, 2 Barb. Ch, 165,
Sumner v. Hampton, 8 Ohio 328, 365, -
Supplee a. Gavit, 2 W. N. C. 561, -
Sutro -'. Wagner, 8 C. E. Gr. 388,
Suttle a. Rogers, 19 Bradwell 163,
Sutton :'. Irwine, 12 S. & R. 13, -
Suydam f. Barber 6 Duer 34, - -
Suydrim a. Cor^vin, 24 O. St. 209, -
Sweeney :■. Stanford, 67 Cal. 635, - -
Sweet (i. I-islicr, 67 Cal. 228,
Sweet Z'. Morrison, 7 E. Rep'r 389,
Sweet a. Prouty, 51 N. \'. 594,
Sweetzer a. Place, 10 Ohio 142,
Syers v. Syers, i App. Cas. 174, -
Taft V. Schwamb, 80 111. 289,
Tait :;. Murphy, 2 S. Rep'r 317,
Tanner v. Hall, i Barr 417,
Tanner v. Hills, 48 N. Y. 662, -
Tapscota. Brown, 6 M. & W.' 119,
Tarlton a. Smith, 2 Barb. Ch. 336,
T.irr a. Dodd, 116 Mass. 287,
Tasker a. Cookingham, 2 Keyes 454,
51,
I,
1884.
94,
95,
1838.
172,
I,
1881.
130-
7,
1825.
207,
4.
184 1.
175,
I,
1829.
69,
9.
1872.
133
4,
1879.
59,
60,
I,
185 1.
63,
2,
1865.
89,
2,
1845.
213,
3,
1878.
62,
e,
1853-
141,
2,
1884.
106,
I, d,
1882.
107,
4.
41,
2,
1858.
89,
2,
1845.
208,
2,
1887.
167,
5,^,
1877.
103,
I,
1882.
212,
9,
1873-
27,
I,
1881.
156,
208,
4,
I,
i860.
67,
7,
1857.
134,
I,
1829.
110,
4,
1847.
112,
14,
1838,
121,
9.
1876,
180,
3.
1873-
69.
17,
1885-
129,
I,
1824.
84,
4,
1856.
167,
5, <?.
1873-
76,
17,
1885.
12,
2,
1885.
206,
2,
1886.
59,
i.
1873-
100,
d,
1847.
103,
5,
31,
57,
I,
I,
1876.
32,
3,
1875^
100,
l>.
1887.
127,
f 2, a,
U, «.
1845-
12,
I,
1872.
134,
2,
1840.
10,
II,
1847-
156,
3,
1874-
76,
12,
1866.
Ivi.
Table of Cases.
Tassey i'. Church, 6 W. & S. 465,
Taylor, ex parte, 2 Rose 175,
Taylor v. Castle, 42 Cal. 367, - - . .
Taylor v. Coryell, 12 S. & R. 243,
Taylor v. Henderson, 17 S. & R. 453,
Taylor a. Seelye, 32 La. An. 11 15,
Taylor t/. Smith, 116 Mass. 363, - - - .
Taylor 27. Webster, 10 Vr. 102, E. & A., -
Teed za El worthy, 14 East 210, -
Teel a. Howell, 2 Stew. 490, - - . .
Tellers v. Muir, Pen. 749, - - - . .
Tellyett z'. Markham, 57 Geo. 11,
Templar v. Bank, 26 Fed. Rep'r. 580,
Tench v. Roberts, 6 Madd. Ch. 145, -
Tenney z>. Foote, 95 111, 99, . . . .
Tenney v. Johnson, 43 N. H. 144, - . .
Tenney z>. Simpson, 15 P. Rep'r. 187,
Terrell, Ex parte, Buck 345, - . . .
Tharp a. Kingsbury, 28 N. \V. R. 74,
Thaj'er a. Wait, 118 Mass. 473, - - - .
Thielens <?. White, 10 Out. 173, - - - -
Thomas z/. Brown, 10 Atl. Rep'r 713,
Thomas a. Calkett, i Phil. 463, - - - -
Thomas a. Chapman, 4 Keyes 210, - - .
Thomas a. Hopkins, 28 N. W. Rep'r 147, -
Thomas a. Lane, 37 Tex. 157, - - - .
Thomas a. Lloyd, 29 Sm. 68, - - - -
Thomas a. Nat. Bank of Salem, 47 N. Y. 15,
Thomas a. Page, 43 Ohio St. 38, - - -
Thomas v. Pennrick, 28 O. St. 55, - - .
Thompson a. Brenton, 20 L. L 133 - - -
Thompson a. Brown, Coxe 2, - - - -
Thompson a. Edmanson, 8 Jur. N. S. 235,
Thompson a. Lynch, 66 Miss. 354, - . .
Thomson Z'. Williamson, 7 Bligh. 432.
Thrift a. Morganstern, 66 Cal. 577,
Thursby v. Lidgerwood, 69 N. Y. 198,
Tibbals v. Sargeant, i McCart. 449, - - -
Tiffany v. Crawford, i McCart. Ch. 278, -
Till'sCase, 2 Neb. 261, - . . . .
Tilton a. Benson, 58 N. H. 137, - - - -
Todd z/. Lorah, 25 Smith 155, - - . .
Todd f. Rafferty, 3 Stew. 254, - - . .
Tolman z/. Hanrahan, 44 Wis. 133, - . -
Tomlinson z>. Burke, 5 Hal. 295, - . .
Tomlinsou f. Nelson, 49 Wis. 679, - - .
Tomson v. Campbell, 5 W. & S. 16, -
Tonroe a. Wightman, 4 Taunt. 412, - - -
Tooke a. Bryan, 60 Geo. 437, - . - .
Toppan a. Coddington, 1 1 C. E. Gr. 141, -
Topping, Ex parte, 4 D. J. & S. 551, -
Topping ('. Paddock, 92 111. 92, - - - -
Torrey a. Fowle, 125 Mass. 289, - >- - -
Townsend a. Auten, Pen. 744, - . - .
Town send z/. Goeway, 19 Wend. 424, -
Townsend v. Long, 27 Sm. 143,
Ivii.
161,
6,
1843.
201,
2,
1S14.
15,
I,
1871.
120,
a
, 1824.
119.
d
1828.
30,
I,
1880.
124,
5,
1874.
69,
14,
1878.
76,
8,
1811.
III,
1,5.
1878.
121,
4,
1811.
32,
I,
1876.
178,
I,
1886.
211,
2,
1819.
139.
3.
1880.
194,
3.
1864.
1 12,
4,
18S7.
201,
4,
1819.
21,
2,
1886.
127,
I,
1875-
150,
I,
1884.
173,
12,
1887.
"3,
5,
1853-
200,
2,
1868.
128,
I,
1881.
2IT,
I,
1872.
184,
6,
'875,
128,
3,
1871.
III,
10,
1885.
167,
4,^,
1878.
102,
iq6,
(I,
5, «,
1863.
130,
7, a,
1790.
17,
2,
1861.
52,
1883.
36,
5,
1831.
47,
3,
1885.
"7,
I,
1877.
182,
1,
1862.
III,
14,
1862.
106,
5,^,
1874.
215,
3,
1877.
169,
I,
1874..
212,
7,
1878.
124,
I,
1878.
76,
2,
1829.
156,
3>
1880.
36,
5,
1831.
73.
I,
1813.
125,
5-
1878.
lOI,
I,
1875.
199.
I,
1865.
20,
3,
1879.
170,
4,
1881.
76,
4,
1811.
158,
I,
1838.
148,
4,
1874-
Table of Cases.
., , 1 c ,-. - - - 67, 12, 1869.
Tracv a. P.dwards, 12 bin. 3/4, - - '' '
Tracy : . McManus, 58 N. V. 257, - - " ' (. 67, 13, ^°''*"
Traphagcn z. Burt. 67 N. V. 30, - - " " ^ ^^J ^4. 1876.
Treadwell z'. Williams, 9 B< sw. 649, - - " " \ 171, 4, ' ^"
I 100, 5, jg
Trcmper Z'. Conklin, 44 N. Y. 61, - - " " 1^103, 2, ''
Trenton Loc. & Mach. Mfg. Co. a. VanKuren, 2 Beas. 302, 45, ;86i.
Trcthewv a. Ackland, 2 Saunders 51, - - - io3. 7, ioo9-
Trouhrulger. Cross, 117 111. 109. - " " ' J^' . A 877
Trowbridge <?. Shaler, i Stew. 595, - - ' ' ^^^' ,^' ^' joH'
Trowbridge:. Wetherbee, II Allen 361, - - - 10,11, i»b5-
True ^. Sceva, 55 N. II. 632. ----- 46, i. 873.
Tuar. Carriere, 117U. S. R. 201, - - - - I75, 3, i»»b.
Tucker a. Isles, 5 Duer. 393. l^J' ""' Jgg-
Tucker v. Oxley, 5 Crancb 34, - - - - " ^°5' 2, 809.
Tupper a. Labouchere, 1 1 Moore P. C. 198, - - 73, i. i057-
Tupper.Sager,38Mich. 258. ----- 44- 2. ^1878.
Turner v. Jaycox, 40 N. Y. 470, \ 170, 3, ^ ^'
Turner Z'. Turner, 5 S. W. Rep'r 457, - " ' ^07, 2, 1887.
Tustin :•. Cameron, 5 Wharton 379, - - - - ^f' 1°- ^°f-
Twisden a. Cleather, 28 Ch. Div. 340, - - - i4o, i, i8»4-
U. Insurance Co. a. Holmes, 2 Johns. Gas. 329, - 7, i, r8oi.
Uhler :■. Browning, 4 Dutch. 79, ' " ' ' r ^^^' 5' ^
rhler :'. Semple, 5 C. E. Gr. 288. . - - - { Jg^^ ^'^ 1869.
riman :■. Briggs, 32 La. An. 657, . - - - 37, 3. -*, 1880.
United Insurance Co. V. Scott, i Johns. 106, - - 49, 6, a, 1806.
l"niiL<l States v. Lewis, 13 Nat. Bank'cy Reg'r 33, - 204, 3, 1876.
I'liruh's listate, 13 Phila. 337, 36, 6, 1880.
Valentine v. Hickle, 39 O. St. 19, - - - - 19, 7, 1883.
Valentine <7. Meehan, 29 F. Re])'r 276, - - . 59^ 3, 1886.
Valjjy a. Dickinson, 10 B. & C. 128, - - - . 23, 4, 1829.
Van 'Brunt i: Applegate, 44 N. Y. 544, - - - 112, 18, 1871.
Vanderbilt a. Briggs, 19 Barb. 222, - - - . 62, e, 1855.
Vanderburgh v. Hull, 20 Wend. 70, - - - - 59, c, 1838.
Vanderhorst a. Bank of New Y'ork, 32 N. \'. 553, - 103, 2, 1865.
Vanderslice a. Commonwealth, 8 S. & R. 452, - - 103, 8, 1822.
Van Kuren v. Trenton Loc. & M. Mfg. Co., 2 Beas. 302, 45, 1861.
I'ainifniaii a. iMcCrcdy, Pen. 870, - . . . 76, 2, 1811.
Van Pelt a. Hervey, 4 Bosw. 60, - - . . 146, 3, 1859.
Van Rensselaer v. Emer\-, 9 How. Pr. 135, - - ■[ \°\' J- 1S54.
(^ lol , I,
Van Sycle v. RorVjach, 2 Hal. Ch. 234, - - 137, i, 1847.
Vice :'. Anson, 7 B. & C. 409, 23, 5, 1827.
Vickery (7. Carsick, Douglas 653, - - - . 6, i, 17S1.
Visrhcr a. Harris, 57 Geo. 229, - - - . - 104, 2, 1876.
Voohis r. Childs, 17N. Y. 355, 86, i, 1858.
Voorheesa. Hill, 10 Harris68, ----- 69, 17, 1853.
Iviii.
Table of Cases.
Voorhees v. Jones, 5 Dutch. 270,
f L. R. 7 Ch. 334, - - -
Vyse V. Forster, -^ L. R. 8 Ch. App. 309, -
(l. R. 7H. ofL. 318. 333. -
52,
1865
40,
2,
1872.
42,
3,
1870
42,
2,
1874
Waddell a. Banco de Portugal, 5 Ap. Cases 161, - 164, 2,
Wade V. Rusher, 4 Bosw. 537, | \^^ ^' ^^
Wagner a. Sutro, 8 C. E. Gr. 388. - - - - 180', 3',
Wait z/. Thayer, 118 Mass. 473, ----- 127, i,
Wakeham, in re, 13 Ch. Div. 43, - - - - 205, 6,
Walden v. Sherburne, 15 Johns. 409, - . . 57^ 4^
Walker v. Bean, 34 Minn. 437, . . . . 120, b.
Walker a. Central City Saving Bank, 66 N. Y. 425, - 24, 3,
Walker v. Fitts, 24 Pick. 191, 12, i,
Walker a. Jones, 103 U. S. 444, 74, 3,
Walker a. Smith, 57 Mich. 459, ----- 209, i, d,
Walker's Appeal, 4 Pennypacker 452, - - - 216, i,
Wallace v. Fairman, 4 Watts 378, - - - - | ^95. 3.
Wallace a. Welker, 31 Ga. 362, - - - - 41, 4,
Wallace a. Yeager, 7 Smith 565, - - - - 152, i,
Walsh V. Adams, 3 Denio 125, - - - - - 104, 10,
Walsh a. Henn, 2 Edw. Ch. 129, - - - - 173^ 6,
Walsh V. Kelly, 42 Barb. 98 ; 27 How. Pr. 559, - 106, 9, b,
Walsh V. Lennon, 98 111. 27, - - - - - 118, c,
Walsh a. Merritt, 5 Tiffany 685, - - - - 67, 3,
Walstrom z/. Hopkins, 7 Out. 118, . - - - \ ^^' \'
Walter v. Ginrich, 2 Watts 204, - - - - - 83, 4,
Walter's Appeal, i Chester Co. R. 278, - - - | ^^5, 5. ^
Waltman a. Gay, 8 N. 453, - - - - - 120, b.
Wands a. Ensign, i Johns. Cas. 171, . . - 7, 6,
Ward a. Ellis, 21 W. R. 100, 22, i.
Ward V. Garnet, 6 Duer 257, ----- 49, 4,
Warden a. Bryant, 2 Exch. 479, . . - . 161, 4,
Warner a. Wood, 2 McCart. 81, 173, 8,
Warren a. Com. Bank of Buffalo, 15 N. Y. 577, - 135, i, a,
Washburn v. Bank of Bellows Falls, 19 Vt. 278, - | ^°g' ^' ^'
Waterer v. Waterer, L. R. 15 Eq. 402, - - - 109, 5,
Watson a. Dunlap, 124 Mass. 305, ... - 188, i,
Watson V. Murray, 8 C. E. Gr. 257, - - - - 211, 2,
Watson a. Smith, 2 B. & C. 401, - - - " { 48 2'
Watts a. Everit, 10 Paige 82, | ^^ ^°'
Waugh V. Carver, 2 H. Bl. 235, ----- 57, 4,
Waydell v. Luer, 3 Denio 410, 184, 5,
Weaver v. Shryock, 6 S. & R. 262, - - - - 86, 4,
Webb V. Helion, 3 Robt. 625, 208, 5,
(105, 2,
Webb, in re, 16 Nat. Bank'cy Rep'r 258, - - - i 195, i,
(196, I,
Webber a. Lewis, 116 Mass. 450, - - - - 194, 5,
lix.
859
873
875
884
818
886
877
837
880
885
884,
835
860
868
846
833
864
881
865
883
S34
881
879
799
872
857
848
862
857
847
873
878
872
824
843
793
846
820
864
875
875
Table of Cases.
Unit .. Defor, S How. I'r. 502.
Webster 11. KlKif. 5 ^I & W. 51S,
Webster a. Maiih. Ins. Co., 9 Sm. 227,
Webster a Taylor, 10 Vr. 102, E. & A.
Wcfii <i. Hlod'^ett, 1 19 Mass. 215,
Wcissenborn u. Sei^hortuer, 5 C. E. Gr. 172,
Welker :: Wallace, 31 Ga. 362,
Wells I'. Ellis, 68 Cal. 243, - - - -
Wells I'. Gates, 18 Harb. 554,
Wells <7. Hoeflinj,'er, 47 Wis. 628,
Wells a. l\irtri<l<.;e, 3 Stew. 176,
Wemi a. Miles, 27 Minn. 56, -
Wentworth :'. Kaiguel, 9 Ph. 275,
West </. Ross, 2 Bosw. 390, - - - -
Westover a. Stanton, loi N. Y. 765, -
Westbrook :•. Mize, loP. Rep'rSSi, -
Welherbec <7. Trowbridge, 11 Allen 361, -
Wetherill v. Coniuionwealth, 17 \V. N. 104,
Wctniore :■. Baker, 9 Johns. 307,
Wetter :■. Schlieper, 4 E. D. Smith 707, -
Wharton v. Clements, 3 Del. Ch. 209,
Wheat V. Rice, 97 N. Y. 296,
Wheeler, Ex parte, Buck 48, - - -
Whitbread a. Janes, 11 C. B. 406,
Whitcomb z'. Converse, 119 Mass. 38,
White a. Currv, 51 Cal. 185, 1875; 531,
White V. Hackett, 20 N. Y. 178,
White a. Hartley, 13 N. 31, - - .
White t. Jones, iRob't32i,
White a. Nichols, 85 N. Y. 531, - - -
White z'. Thielens, 10 Out. 173, - - -
Whitehead a. I'enn, 17 Gratt. 503,
Whitman a. ^lunro, 8 Hun 553,
Whitman v. Porter, 107 Mass. 522,
Whitney a. Muzzy, 10 Johns. 226,
Whittaker v. Collins, 34 Minn. 299, -
Whitwell a. Menagh, 52 N. Y. 146, -
Wiggenhorn a. Parmalee, 6 Neb. 322,
Wightinan z: Tonroe, 4 Taunt. 412, -
Wilcomb a. King, 7 Barb. 263, -
Wilcox I'. Kellogg, 11 Ohio 394,
Wilcox V. Matthews, 44 Mich. 192, -
Wilcoxon a. Andrews, 25 Ch. Div. 505,
Wild V. Davenport, 7 A. R, 295,
Wild V. Dean, 3 Allen 579, - - . .
Wiley a. Lesley, 47 N. Y. 648. -
Wilkes a. DaWon, 5 Bosw. 655, -
Wilkins v. Budd, i Hal. 153,
Wilkins v. Pearce, 5 Denio 541, -
Wilkinson a. Cntes, 65 Cal. 559,
Wilkinson :'. Frasier, 4 Esp. 182,
i73,
2,
1853-
48,
2,
1839-
103,
10,
1868.
69,
14,
1878.
124,
2,
1875.
173.
9,
1869.
41,
4,
i860.
132,
2, a,
1885.
24,
I,
1854.
124,
6,
1879.
no.
2,
1878.
91.
2,
i88q.
162,
I, a,
1873-
"7>
3,
1858.
178,
5,
1S86.
47,
I,
1886.
10,
II,
1865.
106,
8, d,
1885.
62,
/,
1812.
131,
1,
1858.
40,
4,
1868.
144,
6,
1884.
57,
4,
1817.
58,
d.
59,
n,
185 1.
31,
4,
1875-
81,
2,
1885.
37,
3,/
1859-
167,
7,b,
1880.
209,
I, b,
1S63.
178,
3,
1881.
150,
I,
1884.
138,
4,
1867.
32,
57,
2,
4,
1876.
31,
5,
1871.
59-
d,
1813.
139-
6,
1885.
103,
4,
106,
I, h,
107,
4,
1873-
167,
7, a,
144,
I,
1877.
73,
I,
1813.
no,
7,
1849.
194,
200,
I,
I,
1842.
57.
4,
1880.
205,
3,
1884.
73,
I,
18S6.
170,
4,
1862.
76,
12,
1872.
147,
2,
1859-
85,
3,
1822.
133,
I,
1848.
"4,
3,
1884.
62,
d,
1805.
Ix.
Table of Cases.
Wilkinson a. Matherson, 8 Atl. Rep'r 84, -
Willett V. Blanford, 1 Hare 253,
Williams a. Aspinwall, i Ohio 84, - - -
Williams rt. Austin, 2 Ohio 61, - - . -
Williams a. Cary, i Duer 667, - . . -
Williams a. Crary, 2 Ohio 65,
Williams a. Froude, 56 L. T. Rep. N. vS. 441, -
Williams i'. Gillies, 75 N. Y. 197, - - .
Williams Z'. Hamilton, i South. 220, - - -
Williams a. Lane, 2 Vern. 277, - - - -
Williams v. Lawrence, 47 N. Y. 462, -
Williams a. Lewis, 6 Wh. 263, - - . .
Williams v. McFall, 2 S. & R. 280, -
Williams a. Treadwell, 9 Bosw. 649, - - -
Williamson a. Thomson, 7 Bligh 432, - - .
Willing a. Consequa, i Peters 301, - - .
Willis V. Green, 5 Hill 232, - . - .
Willoughby a. Mayberry, 5 Neb. 368,
Wills V. Simmonds, 8 Hun 189; 51 How. Pr. 48,
Wilmont v. Ouachita Belle, 23 La. An. 607,
Wilson V. Cobb, 2 Stew. 361, E. & A.
Wilson a. Emery, 79 N. Y. 78, -
Wilson, Ex parte, L. R. 7 Ch. 490,
Wilson 11. Pitcher, 3 Stock. Ch. 71, - - -
Wilson (7. Morse, 4 Term. 353, - . - .
Wing a. Riugo, 5 S. W. Rep'r 787, - . .
Winslow a. Belleville Saving Bank, 30 F. 488, -
Wise a. Putnam, i Hill 234, . . . .
Wish V. Small, i Camp. 329, - - . .
Wisham v. Lippincott, i Stock. 353, - - .
Withers a. Hart, i P. & W. 285,
Woehr a. Hartman, 3 C. E. Gr. 3S3, - - -
Wolbert v. Harris, 3 Hal. Ch. 605,
Wood a. Blair, 12 Out. 278, - . . .
Wood V. Brush, 13 Pac. Rep'r 627, - . .
Wood a. Egberts, 3 Paige Ch. 517,
Wood V. Erie R. R., 72 N. Y. 196,
Wood a. Homer, 11 Cush. 62, - - - -
Wood V. Meily, 21 Sm. 488, - - - .
Wood V. Scoles, L. R. i Ch. 369,
Wood a. Sheldon, 2 Bosw. 267, - - - -
Wood V. Warner, 2 McCart. 81,
Wood V. Wood, I Harr. 429, . . . .
Wood a. Woodson, 37 Alb. Law Jour. 389,
Woodling V. Knickerbocker, 31 Minn. 268,
Woodruff Z'. King, 47 Wis. 261, - - • .
Woodson V. Wood, 37 Alb. Law Jour. 389,
Woodward v. Clark, 30 Kan. 76, . . .
Woodward a. Curtis, 58 Wis. 499,
Wookey a. Burton, 6 Mad. Ch. 367, - - -
Wortley a. Reg., 15 Jur. 1137, - - . .
130,
I, l\
1.SS7.
43,
I, b.
1842.
/ 17.
1115,
I,
2,
1823.
/ 44,
I 76,
7,
25,
1825.
166,
2, a.
1853.
76,
10,
1825.
50,
3,
1887.
10,
I,
1878.
130,
3,
1818.
5,
3,
1692.
67,
3.4,
1872.
83,
2,
1841.
81,
2,
1816.
f 112,
1 171,
20,
4,
1862.
36,
5,
1831.
85,
2,
1816.
6,
2,
1843-
178,
7,
1877.
59,
m,q.
1876.
122,
5,
1880.
54,
I,
1878.
214,
2,
1879.
205,
6,
1872.
173,
7,^,
1855.
66,
6,
1791,
171,
I,
1887.
85,
I,
18S7.
12,
I,
1S41.
27,
I,
1808.
1 78,
I III,
I,
4,
1853-
135,
7, a,
1830.
/ 19-
1207,
8,
I,
1867.
206,
2,
1849.
96,
I,
1885.
156,
2,
1887.
106,
6,
1832.
76,
16,
1878.
167,
2, b.
1853-
109,
7,
1872.
/ 35,
I208,
I,
I,
1 866.
212,
5,
1857.
173.
8,
1862.
6,
2,
1838.
184,
3.
1888.
140,
4,
1883.
184,
4,
1879.
184,
3>
1 888.
44,
3>
1883.
193,
I,
1883.
151,
3,
1822.
59.
k.
1851.
IxL
Table of Cases.
Wray it. Ilaiina, 27 Sni. 27,
Wrcusliall :. Cook, 7 Watts 464,
Wrif^bta. I'erguson, 11 Sm. 25S,
Wrij^lit :. Hooker, 10 N. Y. 51, -
\Vn>,'lu ./. MoAvoy, 137 ]Mass. 206,
\Vri)^hl ./. Niwbokl. 4 Rawle 205,
Wiij^hl <;. Smith, i Abb. I'r. 243,
Wyiirii- : . Millers, 61 Geo. 345, -
Yates i: Lyon, 61 N. Y. 344,
Yeajjer :■. Wallace, 7 Sm. 565, -
Yeoman r . Lasley. 40 O. S. 190,
Yoho i: McCiOvern, 42 O. St. 11,
York's Appeal, 17 N. Y. 17, 33, -
Yorkshire Banking Co. v. Beaston, | 7"
Young z: Axtell, 2 H. Bl. 242, ar^., -
Young I'. Brick, Pen. 663, -
Young, Kx parte, 19 Ch. D. 124,
Young, Ex parte, 2 Rose 40,
Young z: Frier, i Stock. 465,
Young V. Hoglan, 52 Cal. 467, -
Young V. Hunter, 4 Taunt. 582, -
4 C. P. D. 204
5 C. P. D. 109,
Zell's Appeal, i Am. 532, - . .
Zimmerman z: Erhard, 83 N. Y. 74, -
Zug & Co., In re., 34 Legal Int. 402, -
121.
9.
1S74.
130,
6,
1838.
153,
I,
1869.
44,
8,
1854.
47,
I,
1884.
4,
I,
1833.
44,
8,
1854.
J 03,
12,
1878.
137,
2,
1874.
152,
I,
1868.
8,
2,
1883.
84,
2,
1884.
H5,
2,
1886.
' 76.
19,
1880.
'58,
^
1784.
153,
3,
1810.
77,
d,
1881.
198,
2,
1814.
106,
5, c,
1853.
156,
6,
1877.
20,
2,
1812.
208,
I,
1886.
76,
15,
1880.
"3,
I, a,
1877.
Ixii.
Introduction.
I am astounded by the statement whicli both
LiNDLEY and Pollock, the leading authors who
have written upon the subjedl, concur in making,
that the law of partnership is ripe for codification.
They intend by this statement to convey the mean-
ing. That the principles of the relation, having been
fully established, can be expressed in definitions and
applied in formulas. How do they succeed in demon-
strating the feasibility of the proje6l? They stumble
and halt on the very threshold. The definition of
partnership breaks them all up. Having no guid-
ing principle to start with, how can they create a
system ? Look at the law of partnership as it stands
to-day, and try to point out the principle which
underlies the relation. The last English case
abandons the only landmark which remained to
individualize a partnership. * There is no clue left to
*A lender taking a deed for a building contrail, with all the rights
preseiit and prospective under it, including stock, plant and fixtures,
stipulating for a share of the net profits, for the destination of the fund,
Ixiii.
Introduction.
distiiij^nisli a partnership from any other agency,
The Profession is thrown back on the general dodlrine
of Principal and Agent. This is like answering the
question. W'liat is an Englishman? by saying, There
is no snch person as an Englishman, distindl from
any other European. The only way to find out what
an Englishman is would be to study the general
type of the European made up from German, French,
Italian, and other stocks, not to mention Turks, and
out of the medley extrad the Englishman.
The relation once relegated to an abstradion, the
subje(5l-niatter of partnership becomes mythical.
Property, the only thing for which the partnership
for control of the debtor, allowing him to drazu out a salary from the
working capital before profits ivere estimated, and for taking his place,
do not, one and all, reveal the traits of a a co-partner in the business, but
are consistent with the adverse relation of debtor and creditor. By niort-
j^aj^c-deed, 4 July, 1878, A advanced money to B, ^1500 at a time, payable
in 6 months, lo carry out B's contra(5l with C for the construdlion of C's
railroad. A stipulated for 20 per cent, interest and i-io of the net profits
tnade out of the building contract. B assigned in advance to A all the
moncv and securities he should receive from C, and all his stock, plant
and fixtures, and policies of insurance. B covenanted that he would at-
tend to the work, complete it with due expedition, and employ the ad-
vances exclusively in the construdlion of the road. A had power, upon
B's non-performance of any condition, or his bankruptcy, to take posses-
sion and carry on the work to completion, and B's contradls with C enured
to A. A also had a power of sale. B was entitled to draw out, for his ser-
vices, /"loco, in quarterly instalments, before profits were computed, and
.\'s share was charged as an advance. The correspondence between A & B
called the advances 'working capital,' and A waived repayment until the
completion of the contradl. Diredlors of C, in 1881, induced D to advance
money to carry on the work, and guaranteed C's bonds for ^16000. In
1882 E recovered judgment against B, and attached C's debt to B. Notice
of A's claim had not then been given to C. In 1883 other creditors at-
Ixiv.
Introduction.
exists, and in which it deals, is discarded as a
constituent of the relation. But the disputes which
arise are in reference to the property of the firm, and
they cannot be adjusted unless the title is located.
Think of formulating the propositions which embody
the doctrines of partnership without reference to the
original principle out of which the}^ are all evolved,
and which give coherence to the relation ! It takes
something more than a man, although he has been
admitted to the Bar, to make a world of partnership
out of nothing.
The instant the notion of firm property is brought
forward, the material is furnished for an explanation
tached the debt. B's claim against C was adjusted at ;^38,ooo, for which
B should take debenture stock and have C's bonds returned. C repaid D
the sum advanced B, who was bankrupt. A sued all parties, and claimed
priority. Defence : A the partner of B. — A a creditor, not a partner, of B.
The exclusive application of the advances to the business did not make A
a partner, because he had B's personal obligation for repayment, although
the evidence showed that A did not rely upon it. The destination of the
capital increased the security ! The control of the debtor's use of the
money borrowed may be peculiar,' but it does not make a loan to the
business. The power to take jDOSsession and complete the contract en-
forces the security, and makes it effecftual. The debtor nmst efface him-
self, and let the creditor manage the business, in order not to impair the
security ! The stipulation for profits after the loan should be refunded,
though unusual, is nothing but a bonus for making the loan. A could,
after he had been paid off both principal and interest, still diredl and con-
trol B in his condu(5t of the business, in order to gain the stipulated share
of profits ; but this was a part of the creditor's security ! The allowance to
B of /"looo a year for his services is not drawing out of a common fund
by the working partner, but a provision made by the creditor, in order
to enable the debtor to devote himself exclusively to the business, and
thereby perfecft the security ! Badley v. Consolidated Bank, 34 Ch. D. 536
(1886) ; 38 Ch. D. 238 (1886).
Ixv.
Intkodiction.
c)t die relation in all its bearings. As a common
propc-rlv is the distinclive charadleristic of partner-
ship, the fundamental principle of the relation can be
established. The typical trait of partnership has
been lost sight of, and no basis is left for the relation.
The Profession has groped about in search of the
principle for the last half-century. Not having
succeeded in re-discovering it, many have come to
believe that there is nothing distin6live abont the
relation, and they proclaim the absence of principle
as the ideal of partnership.
The title to the property being the first thing to
engage the attention, presents itself in two stages
Sharing the profits disclosed a property right in A. He
might negative the title, and show that he claimed under B,
who had the exclusive proprietorship. Then B would be
sole proprietor, and his powers would correspond to his title.
A could not deprive him of the right to exert his preroga-
tives of ownership. Every attribute of a proprietor taken
away from B and given to A shows that he is sharing the
projirietorship with B. The control and destination of the
funds are the characteristic of an owner, and contra-distin-
guishes him from a creditor, who abandons his control when
he parts with his title. The debtor becomes the owner,
and the creditor has no control over him. The attempt to
control the debtor shows that the relation of debtor and cred-
itor is superceded and replaced by a co-proprietorship. The
provision for a management by the creditor if the debtor does
not succeed reveals the position of the parties, and proves
that the creditor is a proprietor, and dire<5tly interested
Ixvi.
Introduction.
First, the nature of the partner's contribution has
to be determined. Inconsistent theories have been
advanced to account for the right, and define the
extent of the firm's ownership. In facl, but one State
has worked out the true theory of the contribution,
and all the others vacillate between conflidling theo-
ries, maintaining positions which are self-destru(5live.
The next thing to consider is the effe(51: of the com-
bined contributions made b}^ the different partners.
It is the joint estate thus created which forms the
basis of partnership. Until the title by which the
partners hold the property of the firm is ascertained,
no adjustment can be made of any right or liability
in the business. The survival of the relation of debtor
and creditor after the debt has been paid, and the control
or management of the business in order to secure the profits
stipulated as a bonus for the loan is a rediiflio ad absurdum.
The Hindu Rajah's case (§64, n. 4, 8) is no precedent for
this decision. That was an undoubted loan at the start.
Tlie subsequent restridlion which the creditor put upon
the debtor, in order to realize the debt or enforce its collec-
tion, was in the nature of execution or sequestration, and
did not change the original chara6ler of the transa(5tion.
Here, on the contrary, the transa(5lion, at its origin, is in
question, and can be ascertained only by the legal effe(?t of
all the provisions, without the aid derived from a relation
already established.
The abandonment of property which furnishes the stand-
ard of partnership destroys the indicia of the relation. No
clue is left for establishing a partnership, except the ac-
knowledgement of the parties.
Ixvii.
Introduction.
between the partners, nor can either joint or separate
creditors establisli ;i claim against them. The nature
of the property must be understood, or the principles
of partnership will remain unsettled. The Professi(m
does not exhibit the confidence which springs from
conviction, based upon knowledge of the underlying
principles of partnership, but trifles with first prin-
ciples. The failure to comprehend the chara6ler of
firm property has produced an interchange of confu-
sion among the different States. States which
consider the title joint upon one point treat it as
separate upon another, and although the}^ exchange
places without rhyme or reason, no State consistently
adheres to the joint title in every aspedl.
The property measures the capacit}- of a partner.
He pledges the property by each firm transa6lion,
and thus creates a right in the firm creditor. This
principle clears up the mystery of marshalling assets,
one of the grand bugbears of partnership. Every
country has had to acknowledge in pra(5tice a prefer-
ence of the firm over the separate creditor, but no
legal system has furnished a justification for the
privilege except the Common law, and that has
achieved the result by unconscious cerebration.
The failure to master the fundamental principle
of the relation has left every question of partnership
Ixviii.
Introduction.
open for revision. The trait which constitutes a
partner has been the enigma of partnership for half
a century. The nature of the contribution made by
a partner to the firm stock, though not the subje(5l of
such an endless chain of talk, has been none the less
a riddle. The nature of the joint estate, and how it
has modified partnership at the Common law, has
never been apprehended. The effedt of the estate in
creating for a partner the capacity, which the Com-
mon law refused to acknowledge, deserved attention,
but attracted none. The consequence of the estate
upon the do6lrine of marshalling the assets also
passed unobserved. Nothing but the principle will
serve to reduce these main heads of partnership to
certainty, and through them to transmit certainty to
the multitude of minor points which depend upon
them for correal adjudication.
The property alone is sufficient to make the pro-
prietor a partner, although he takes no part in the
management of the business. It is this feature which
distinguishes the Common law from the Civil law
partnership. It is the property which extends the
private bargain of the Civil law, and converts it into
the business-establishment of a Common law partner-
ship. The dormant partner is the typical Common
law partner. The failure to apprehend the charac-
Ixix.
Introduction.
teristic of the Coiniiioii law type has led to covert
attacks upon the dormaut partner. As he could not
be dislodi^cd by himself, the attempt was made to
throw tlic undisclosed principal overboard.f The at-
tempt failed, and the dormant partner, the commer-
cial type of the undisclosed principal, stands as the
liyiuij embodiment of property as partnership.
Next to the principles inherent in partnership, it
is important to understand what foreign elements
have been permitted to intrude themselves into the
relation, and to interfere with its normal functions.
In this respe(5l partnership has had to undergo radi-
cal changes. The dual position of a partner, (a sur-
vival of the socic/as honoruvt universorum^) who is
charged with unlimited liability, in spite of the fa(5l
that he contributes but a portion of his estate, creates
a collision of rights at the start. The law adheres to
tradition, and enforces the liability. Equity recog-
nizes that the liability should be limited to the con-
tribution, and, where its principles apply, controls
the firm creditors who seek to enforce the liability
against the separate estate in competirion with the
separate creditors. Both the legal right and the
equitable control of its exercise must be apprehended,
in order to appreciate the exadl limits of each. The
tEdmunds :-. Bushell, \ 26, n. i.
Ixx.
Introduction.
want of a clear understanding of the difference be-
tween the position of the firm and of the separate
creditors has introduced a combat of opinion which a
statement of the right and of the equity is sufficient
to terminate.
The Common law has a mode of procedure pecuh'ar
to itself for enforcing the unlimited liability of a part-
ner. The dogma of an indivisible contrail was taken
as the standard of the commercial contract which the
partners make in transacting the business of the firm,
and the partners were classified with joint contra6l-
ors. Had the process for the enforcement or the
breach of a joint contrail been pra6lical, the interpre-
tation of the business contrail and of the remedies to
enforce it would have been adequate to the require-
ments of the business, and no mischief would have
resulted from identifying partners with joint contract-
ors. But the crochet of an indivisible contrail and
the technical trifling of medieval procedure conflidled
with and transformed the business contrails of the
firm. The remedy was a pitfall, and seemed designed
to prevent the attainment of satisfadlion, the obje6l
of the process. Partnership has had to submit to
these restridlions, and to work at a disadvantage from
its introduction into England up to the present day.
There has been a long struggle, and it has been
Introduction.
carried on against the inveterate iDrejudice of the
Profession, to provide partnership with the legal
machinery which is adapted to its requirements. It is
only now, and in America, that the desired result has
al last been worked out. In England, the partnership
procedure has been codified upon the model of the
Civil law pra(5lice, and a discretion has been lodged
with the judges to mould the procedure, in order to
carry out the enactment. But our Profession at the
old homestead still worships the Fetish of an indivi-
sible contradl. The judges have disregarded the
legislative mandate, and ignored the Civil law process.
They have read the conceit into the Civil law, and
vitiated its process, as they did the procedure of the
Common law.
The law of commercial paper has injected itself
into partnership, and created a partial revolution.
By means of commercial paper a partner's implied
power is extended beyond the scope of the partner-
ship business. At first, where the form of the paper
indicated an individual transaction, the first taker at
least could not hold the firm ; but the use of commer-
cial paper did not correspond to its form, and no
notice is now suggested by the way in which the
paper is drawn. The partner may employ commer-
cial paper for his individual account, and charge his
Ixxii.
Introduction.
firm. There is no limit to a partner's power in deal-
ing witli commercial paper. The important thing to
remark is, that this is an exceptional power, and that
it stands isolated from ever}- other. The failure to
observe that this power conflicts with partnership
principles, and supercedes them for the nonce, has
induced a habit of arguing b}- analogy which has
no justification. The admitted power of a partner b}-
means of commercial paper to make his co-partners
share his individual debts is assumed to be derived
from partnership principles, and thence it is argued
that other exertions of power should be countenanced,
because the}' do not exceed the power of a partner b}^
commercial paper.
From this outline of principles, it is obvious that
partnership has not been anahzed and reduced to its
constituent elements, much less have the principles
been worked out in detail, and classified according to
their prominence in the relation. Without such
analysis and elaboration, an embodiment of partner-
ship would not be complete. The proposed code by
Prof. Pollock contains no hint of such requirements.
Austin, the great advocate for a code, insisted that it
should embody a system of principles. The qualifica-
tions he specified for a codifier should be recalled by
those who invoke his name. Think of his standard
Introduction.
in comparison with modern projeAs! The organizing
faculty of Aristotle should, he said, be combined
with the knowledge of the Common law possessed by
CoKK or ELDON..t Superior qualifications could
hardly be conceived, and yet they are not equal to
the requirements demanded for a codifier. The pro-
gress of the human mind is made in stages, and not
all at once. Xo man, though an Aristotle and
Eldon rolled into one, possesses all the wisdom of his
epoch, much less of all time. An attempt to put into
definite propositions all the provisions of law% would
of necessity be imperfect. Principles would be over-
looked, misunderstood, or not brought into co-ordina-
tion with the system. The reasoning from the code
would be based upon a comparison of all the parts.
The construdlion is e complexu^ and thus the tares
would grow up together with the wheat. Austin's
criticism of the French Code,'-' and Pothier'S idiosyn-
cracies incorporated in the Code Napoleon ,t illus-
trate the cffe^l. This process of interpretation vitiates
not only the corpus juris, but also the lawyers who
are trained to reason from arbitrary premises, with-
out taking thought whether they are true or false.
X 3 .^fSTiN's Jurisprudence 377-8 ; 2 lb. 362-3.
♦Austin Jurispruflence, 293, 205.
t { 34. n. I. 2 Bonjean, Traitd des Actions 102-3, cites an instance and
states the habit.
Ixxiv.
Introduction.
The statutor}^ provisions are theoretically remediable
by subsequent legislation, but the work of a code is
not performed by the legislators ; it is thrust upon the
legislature from without, and when once enabled is
not easily rectified. The change of a part involves a
readjustment of the whole, because the basis of con-
strudtion extends to all parts. But if the code were
remediable by subsequent legislation, a legislature
would be required to sit like a court without interrup-
tion. What advantage would be gained by substitut-
ing a legislature for a court? The legislature has
broken down even in its appropriate province. Mr.
Carter has marked out the sphere of legislative
a6lion with unequalled discrimination.''' The State
takes charge of the common welfare, but does not
interfere with the relations between the citizens,
unless thej^ disturb the public good. It is under this
rule of non-interference that the citizens of Rome and
of England built up, according to their needs, the only
two great systems of law which the world has seen.
Judge Strong, in a remarkable address delivered to
the law students of the University of Pennsjdvania,
showed how the system of popular legislation had
failed to perform its function, and had thrown back
*The Proposed Codification of Our Common Law.
Ixxv.
iNTRCa^UCTION.
its work upon the courts. t It is not simply the cor-
ruption of legislative bodies which accounts for the
failure, but it is the want of intelligence. The legis-
lature is not made up of experts, who know what the
law is, and how it can be improved. Austin always
regretted that he had not been bred to the law.J He
felt that the source of his legal inspiration had been
cut off, and that he did not master the materials
whicli lie would fain have worked up into the frame-
work of a code. His organizing mind craved order,
and he thought nothing would bring it about in law
but a code. It seems strange that he should have
distrusted in law the process which he made the key-
stone to his system. He demonstrated how^ the mind
appropriates a principle, and assimilates it in all its
details. Xo better explanation could be given of the
reliance upon principle for guidance.=-= Had the sug-
gestion been made to Austin that the principle of
utility should be codified, with what astonishment
would he have regarded the projeA? Judge CoOLEY
has recently illustrated the process in reference to
the principles of law.|| What is simpler than part-
tIntro<luaory .Address to Uie Law Students of the University of Penn-
lylvania, oaober, 1879.
tThc Pro\-ince of Jurisprudence.
•AiSTfN's Jurisprudence, vol. i.
347-"o.'S." ""'''''^ '"'''' Uncertainty of the Law," .. Am. Law Rev.
Ixxvi.
Introduction.
nership? A partner is nothing but a co-proprietor
in the business. The recognition of this trait, in any
aspe6l in which it may present itself, is a difficulty
only in the sense that the instance may be compli-
cated by other traits which conflict with a proprietor-
ship, and make its existence doubtful. No obscurity
arises from the principle, though its application un-
der the diversified phases of life may not always be
simple.
The impifttation cast upon judges by BenTHAM and
his school is groundless. They have never usurped
any prerogative. The fundlion which they exercise
is the normal process, and the only intelligent method
ever yet devised to meet the wants of a community.
The Roman course differed only in having free trade
in jurisconsults^ which was letting the parties choose
their judge. The judicial utterance is the original
method which has prevailed from the earliest times.
It is pre-eminently the Common law process. The
Anglo-Saxons were the embodiment of their law.
Bach member of the commune was an exponent of
the law, and testified to its terms.* The court and
jury of the present day do but represent the com-
munity and continue the legal tradition which has
endured from the days of the markmen. Whether
*2)r. Slarl 2luguft Slogge. Ueber bag (55end)t'SUicK'n bor (Ma-manen.
Ixxvii.
Introduction.
the tluory of HoLMKS,t that the court is educated by
the jury, be adopted or not, the* judges formulate the
principles for tlie common weal, and have been found
by ages of experience to be the only body which can
give adequate expression to the will of the commu-
nity. The slur of "judge-made" law has not de-
terred the judges from exerting their faculties, nor
will it make them abnegate their fundlion. They
should not be intimidated and seek to conceal the
process by a false pretext. The maxim of stare de-
cisis is a meaningless phrase, and should not be used
as a blind. Mill charges lawyers with the fault of
arguing as if a proposition were general when it has
but a restricted meaning. The charge accurately
describes the use made by lawyers of the maxim stare
decisis. It does not mean what the words stridlly
import, that a judicial blunder must be perpetuated
forever. The history of the Common law negatives
such an absolute sense. Bracton seleAed his cases
mainly from the rolls of Pateshull and RalEIGH,
disregarding the rolls of all the other judges,|| and
yet his book has been taken as a statement of the
law. It is the only original source of early Case-law,
and he wrote in order to bring the decisions to the
tHoLMRs' Common Law. 1 13-14, 123-9.
IIBracton's Note Book, by Maitland.
Ixxviii.
Introduction.
attention of judges. The vast accumulation of rolls
were evidently not consulted by any one. REEVES,
in his history of the Common law, recapitulates the
changes made in the law of England during succes-
sive reigns, and no legal writer can be consulted who
does not show how the do6lrines of his subje6l have
been modified at different times. The maxim does
not mean what it says. It must be interpreted in
connedlion with its complement, which provides that
a precedent, when superceded, never was law. This
shows that it is only sound law which obtains in the
long run, because principle is the only safe guide for
human a6lion. Why, it might be asked, take any
exception to the maxim if, when corredlly under-
stood, it coincides with principle? The answer is,
that this co-incidence is not recognized, and the
maxim is never invoked, except to exclude the opera-
tion of a principle. A precedent, it must be borne in
mind, is nothing but an experiment. If the proposi-
tion justifies itself, the principle stands, but if subse-
quent investigation shows that the proposition is
unsound, it is set aside and replaced by the true
principle.* Any attempt to stifle investigation, and
*"In stridlness the decision of a judge is not law for succeeding cases ;
" it is only evidence of the law. It is the testimony of a witness who is pre-
"sumfedto be learned and capable, explaining what the law actually is
"on the point in question. It decides the particular case, but it does not
Ixxix.
IXTROnrCTION.
bolster up an incorredl statement of the law, causes
more mischief than undoing the wrong at first. The
repeated decisions aggravate the case until, in the
end, a wliole mass of decisibns has to be overthrown,
instead of a single precedent.
It is the process of testing the cases at every recur-
rence bv the touchstone of principle which makes the
law a science. This is the method of natural science.
The opportunity is afforded for verification or revi-
sion ])y the court after the most searching investiga-
tion and discussion by the lawyers. A history, if it
existed, of legal do(ftrines at the Common law would
show how, and when, the different groups of cases
were generalized and brought into consistency with
the system. No one familiar with legal thought can
fail to recall instances where lawyers have unearthed
and framed the principle which serves to reconcile a
given line of cases, and have put the class upon its
true basis of principle. The wisdom of the Common
law arrangement consists in its providing for the
coKjperation of the Bar in making the law. The
provision liberates all the latent resources of the
Profession, and makes them available at all times for
• ' rl^"?!r'?' '^^■"'^^ ''""" °°^' ^^^* ^'^"°^- The succeeding judge may
reica the test.mony of his predecessor as erroneous ; he may find
Z.^IT..?.!:'^ ''''^\^^^ predecessor declared it to be; he
ision.'
Ixxx.
rejca the test.mony of his predecessor as erroneous; he may find that
•• hl^forr "°' ;" '^'^ "''"' ""'' predecessor declared it to be ; he may
therefore ozrrrule the prior decision.- Hadi^ev's Roman Law, p. 68-9
Introduction.
the development of the law. The ranks of the Pro-
fession may be all but filled with ordinary and com-
mon-place judges and pradlitioners. It needs but
one original mind to dete^l the latent principle which
explains a congeries of cases, and to combine princi-
ples in their related order in the system. The in-
stant the principle is announced, and its position in
the hierarchy of principles disclosed, the truth is es-
tablished. The discovery is recognized, like a truth
of natural science, without debate or argument, and
the revelation illuminates the mind with convi(5lion.
It is the free play of original thought which infuses
life into the law and keeps it from stagnation. The
perversion of the maxim stare decisis^ and the adher-
ence to precedent without reference to principle, pro-
duce the same effe6l as a code. The reasoning from
an arbitrary premiss, vitiates the faculty of reason,
cutting it off from the source of its inspiration, and
the arbitrary element introduced into the law helps
to fix the basis of construdlion for the whole corpus
juris.
The meaning of the common saying, that periods
of codification mark epochs of decay, is simply that
a code excludes the co-operation of the Profession in
making or developing the law. The creating force
is turned off. Any science would die out which pre-
Ixxxi.
Introduci^ion.
vented the closet student, the pra(5lical operator, the
experimentalist, or any other follower, from contrib-
uting to the general fund of knowledge. No one can
foretell from whom may come the inspiration which
will advance the knowledge of all, and the co-opera-
tion of every disciple is solicited. No one is driven
away.
By enacling a proposition, or adhering blindly to
a precedent, the process of sifting and purifying the
law by snbj celling it to reason is arrested, and the
law becomes a dead mass which succeeding genera-
tions of lawyers cannot utilize, as it admits of no
assimilation.
When I took possession of my chair at the Univer-
sity of Pennsylvania, in 1874, I announced, in an
introductory lelure, the plan of instruAion which I
should pursue, and I have endeavored to follow the
course which I then marked out. The present book
is the producl of my work upon one topic of the
course, and will illustrate my method of handling
the law.
The point to which I direded the attention of the
students is, that cases are the exponents of principle,
and that back of the fads lies the reason which
explains them. The occupation of watching the
Ixxxii.
Introduction.
a<5ling forces of the law as they mould its provisions,
captivates and absorbs the mind. The students
become interested in the process which, while it is
open only to the initiated, explains what they see
going on before their eyes in the courts. They
learn to appreciate a principle when they witness the
transformations which it effe6ls. One who starts
with the reason for a proposition has the inside view.
His mind, guided by the principle acfts under its
inspiration and working according to its nature,
comprehends the exadl extent and limit of its appli-
cation. It is the weakness of statutory law that
reason is excluded in interpreting its provisions.
The ipse dixit of the legislature mocks reason.
The charadler of the instru(5lion which a ledlurer
gives will depend upon the obje6l he has in view.
If he says the Common law is a case-system, the
important thing is to take up the mechanism of a
case, and teach the class how it is constru6led. He
would then dissedl cases and think no valuable time
lost which was consumed in putting the inexpe-
rienced students through the gymnastics of a case.*
The result of such a method would be to turn out a
*This is the method expounded aud advocated by Sidney G. Fishek,
Esq. , in an article entitled, ' ' The Teaching of Law by the Case-System. ' '
27 Am. Law Reg'r 416-26. He treats the class-room as a clinic for the
dissection of cases, and .seems to think this is the Harvard-System.
Ixxxiii.
Introduction.
case-lawvcr, whose aim would be to familiarize him-
self with as many cases as possible. If he could
classify them in series, the segregation would enable
him to memorize theux with greater ease, and he
would accordingly start with what are called leading
cases. The subsequent decisions would be grouped
under the first, but as the combination of fa^ls does
not recur, the process would be imperfedl, and with
the succession of cases become more and more con-
fused. Sub-divisions would keep up only the show
of classification. Cases spring up everywhere which
admit of no such grouping. They are indexed as
novel points, and soon fill a digest. In the end the
digests and text books are over^vhelmed with a mass
of unassorted cases.
It is needless to say that no Law School adopts
this course of instru6lion. It is the want of the
training given by Law Schools that accounts for this
plan of case-juggling. Even a 'mast-fed' la^vyer, as
Lincoln jocosely said he was, would not follow such
a plan, if he had the mental aptitude to reason for
himself
To try and fit one case to another without recur-
ring to the principle which conne(5ls them to a com- ,
raon system is to make a patch-work or mosaic of the
law. The course of instrudion at Harvard, if Judge
Ixxxiv.
Introduction.
Holmes' bookf and Prof. Ames' articles^ disclose the
process, is the historical method. The early cases
are studied in order to discover the origin of each
principle at the Common law, and when it is detedled
the course of its subsequent development is pointed
out.
There is, however, a method of instruc^tion which
disregards first principles, and adheres to secondary
ones. The principle immersed in the fa6ls of a case
must always be extra(5led and stated in the form of a
proposition. The analysis of a case is the prelimi-
nary step in reaching the proposition. The lawyer
represents, or assumes to represent, the logical
faculty. The case having been reduced to its con-
stituent elements and stated in the form adapted for
reasoning, becomes a starting point. No inquiry,
however, is made into the origin of the rule, or its
connedlion with any other branch of the law. The
dedudlions made from the premises may be stri(5lly
accurate and logical, but the failure to connedl them
with each other in a system destroys the inter-
dependence of the parts in the whole. By severing a
principle from its stock, the life of the limb is taken
away, and the proposition becomes an arbitrary state-
t The Common Law, by OLIVER W. Holmes, Jr., i88i.
X "The History of Assumpsit." 2 Harvard Law Rev. 54-69, 1S88.
Ixxxv.
Introduction.
niciit. The reasoniug faculty is perverted by making
it tlcal with counters instead of with principles. It is
this eccentric feature which gives to so much of legal
reasoning its anomalous character. The sweeping
language of lawyers is misleading. They affedl to
to be reasoning on general principles, when the
language is in fa6l confined to an abbreviated propo-
sition, and does not comprehend what its terms
import.
The true method of instruction involves the histori-
cal, the dogmatic, and the comparative study of law.
The origin of a principle must be investigated, its
development traced from its first appearance down to
its last manifestation, and the changes noted which it
has produced, as well as the principles which have met
and counteradled it. The principle may be latent,
and require side lights to make its presence visible.
The interdependence of the parts in a system must
be understood, in order to realize the relative force of
any given principle. The instruaion includes a
comparative study of other systems of law, which
have had the same problems to solve, in order to
ascertain how best the purposes of law can be accom-
plished.
The direction given to the course of thought when
the student's mind is first awakened to the idea of
Ixxxvi.
Introduction.
law controls him throughout his subsequent career.
The students of the University of Pennsylvania have
been led to approach the study of law in the scientific
spirit, and have carried the original impetus into
their subsequent work. The law, they see, is a
science, and its process conforms to the scientific
method both of investigation and verification. The
graduates of the University of Pennsylvania exhibit
the advantages of studying the law in the scientific
spirit, and would not, it is safe to predial, exchange
the method which they acquired at that University
for any competitive scheme of legal education.
JAMES PARSONS.
142,0 ^o. Penu Square,
PhiIvADEIvPhia., Pa.
IxxxvH.
THE
PRINCIPLES OF PARTNERSHIP.
THE PRINCIPLES OP
PARTNERSHIP.
The subjedl of partnership naturally divides itself into
three parts:
1. Assuming \\)t position of a partner, or iol)at conatitutea
a partner.
2. (3:i)e prindpks vo\]\c\) regulate partnersl]ip buring its
existence; anb
3. Qllje principles bn m[)k\) tl)e busineBS is tuonntr up.
Part I.
n'jiiuiiuna tl)c position of a partner, or m\)ai constitutes a
partner
CHAPTER I.
TIIK ORIGIN AND GROWTH OF PARTNERSHIP.
tilic relation of tl)e partueru betiueen tliemselocs mas tl)c leinal
aspcit ol" tl)c snbjcrt at tl)e Ixoman lain, n)l)ile at tl)e Conimon
law tl)c effect upon tljirir persons of one's acting as a partner is
tl)e question for iiiscussion.
Partnership existed at the Roman law, which de-
fined the relations of the partners among themselves.
Being founded upon confidence, the ideal of good faith
was enforced. The partners became mutual trustees
in the business. Fairness required that each should
share the profits in proportion to the contribution he
made to the business, and the law prescribed an ad-
justment of the interests upon this basis. ^
The Common law leaves the domestic equation to
the agreement of the parties, and sanAions any ar-
rangement they see fit to make among themselves.
It IS only in the absence of any contract that the law
supplies its place and regulates the status of the
partners. The main discussion of partnership in-
volves the rights of third persons against a firm, and
upon this point the Roman law was almost silent.
Pt. I, Ch, !. Origin and Growth. §i.
Partnership at the Roman law antedates contracl. The
origin of the relation goes far back to the worship of ances-
tors, patrem 'ct matrem vciierari oportet. D. ^y]) I5> i; 2.
The parents and children form a partnership, secla^ socie-
tas. It is a tie of blood, and binds the kin together, con-
sorfes^ by sacred rites. The family partnership executes
blood vengeance, siias siioriiniqiie injiirias perseqititur.
The joint property results from the union of persons,
herSliiin non citimi^ and accounts for the partnership of all
property rights, societas omnium bojiorum^ and explains Ul-
pian's description of partnership as a kind of brotherhood,
cii7n societas jus qiiodaminodo fraternitatis in se habcat^ D.
17, 2, 63, which exadls the utmost good faith from its mem-
bers, fratres consortes. The reciprocal obligations were
enforced by t\].e/aniiliae Jicrcisaindae aflio.
The patron and client enlarged the relation and intro-
duced the voluntary element. This, in time, became the
distin(5live trait of a partnership. A joint possession or
ownership which did not arise from a contra(5l was called a
co7)imunitas^ to denote the specification which had been
made, but the only difference between them lay in the
method of acquisition. Co-owners or co-tenants of land
might be partners in it, not because they converted the
land into merchandise for traffic, but simply because they
effefted a joint purchase, and without reference to any use
or disposition they might make of the land. Two monks,
who bought a saddle-horse for each to ride, were partners
in the animal. The a^io pro socio was confined to the
partnership by contrail.
The trade- partnership arose from farming the public
revenues, which overtaxed the administrative resources of
the Republic, and was committed to private individuals."
The purpose, which induced the partners to enter the re-
lation, ser\^ed as a basis for a classification of partnership.
Gain being the leading impulse for action, made the grand
di\nsioii a partnership for gain, societas ex quaes tu., or a
partnership not for gain.''
5
§2^ Origin and Growth. Pt. i, Ch. i.
TIk- only kind which corresponds with the trade-part-
ncrsliip of modern times is the societas ex qiiaestu.
1. l.-» (Hliicf* (Slautmuui ber ^anbectcn 304-26. ^.966.
I. A^yjx (vJcjdMcbtc bcr jHomifc^cn Societal Don ®r. 33. SB. 2eift, ^ena, 1881.
§2.
|JartncrGl)ip ciisteLi before lontract regulated its terms, anb
tlif pnmitioc relation is not reinoLielei^ bn tl)e boctriue of consid-
eration.
Partuership grew up in the middle ages, and there
assumed its modern form. The history of the various
firms wliich flourished during that period has been
investigated, and the partners seem, generally, to
have been related as members of a family. The
headquarters were at the family seat, and branches
were established, or travelling members sent out,
when occasion required, to extend the business.' It
needed the intimacy and trust of kinship to carry
on trade in a predatory period, and the necessity
added new force to the canon of the Roman law, that
partnership is a relation of the strictest confidence.
When tlie question arose in our law: May the
family relation serve as the basis of a partnership? a
collision of theories presented itself, owing to the
fad that with us the element of consideration had
become the controlling fadlor in contractual relations.
It was assumed that the contract of partnership, like
all other contracts, required a consideration to uphold
It. The family relation of the partners rebuts the
presumption of a consideration between members, and
pr-vents a contract from being implied by law. But
Pt, I, Ch. I. Origin and Growth. §3.
the argument overlooks the medieval practice of fam-
ily partnerships, and makes the modern graft of con-
sideration sap the trunk of the partnership tree.
Without reference to either history or consideration,
the question was settled in conformity with medieval
tradition.^
1. ^anbelggefellfdiaften in ben beutfdjen Stabtrcc^tSquellen be§ SJJittelalter^S
bon 5-riebri4 ©ujta» 2tbotf ©djmibt, 1883.
2. Family relatio7i don'' t rcbtit inference of partnership arising from
joint transafliofis. Joseph Ratzer, in 1865, bought carts and started
business as a carter. In 1866, his father, John, began buying brew-
ers' grain, and FeHx, his son, joined them; followed by John, a
third son, in 1867. From 1866 to 1868 they traded as J. & F. Ratzer;
then changed to Ratzer Bros. The proceeds of bvisiness went to the
mother, who supported them and supplied them with pocket-money.
John and Joseph brought bill for account. Defence : No partnership,
but plaintiffs obtained support for their services. Felix' testimony,
that original firm was John, Sr., and Felix, negatived bj- his admis-
sions, confirmed by change of name to Bros, when third brother
entered, and by father's admission that sons owned the business. —
Account. Transacftiug business together, though without an agree-
ment, implies a partnership, and entitles each member to share the
profits equally. Ratzer v. Ratzer, i Stew. 137(1877).
§3.
tDl)£n partiursljip urns intro^ucELl as a fuurtiou of trabc,
property, beinci tl)c subject-matter of trabe, mas becmcti to
cljargc tl)c proprietor iul)o contributcii to tl)e tirm roitl) i\)t im-
liiuitcLi liabiliti) of a partner, altl)outil) l)c took no part in i\]t
management of tl)c business.
Partnership entered the Common law through trade
or commerce, and the Law Merchant governs, it is
said, the relation. But this is true only of a few
principles adopted apparently at haphazard. The
earlier statutes of the various sea-port towns on the
continent of Europe have been collated, and they es-
tablish the law of the then commercial world. The
7
(53. Origin AND (iROWTH. Pt. 1, Ch. i.
result of the enadments is that in medieval times
the test of general liability as a partner was his join-
ing as a proprietor in the management of the busi-
ness. He must be both an owner and a manager.
The Coiuvioida^ or property contributed to a business
conducted by others, did not of itself personally
charge the contributing partner, who took no part in
the management, for any liability incurred in the
transa(5lion of the business. He staked his contribu-
tion in the venture, and that was all he could lose, if
the enterprise failed.' The Common law did not
adopt tlie Law Merchant upon this point, but modi-
fied it by interje6ling a feudal notion into the trade
relation of partnership. The joining in trade was
not interpreted according to its natural form and ef-
fect, simply as the co-operation of proprietors in the
management of a business, but the element of prop-
erty was made the dominant fa(5lor, and property em-
barked in trade became itself a sufficient basis for the
relation.
lender the Feudal law all the rights and duties of
tlic individual took root in the possession of property.
Land, the most usual and important form of property,
became, in effedl, though not in name, a legal person,
and the man a mere incident or locum tcnens. Per-
sonal property never had this independent legal
status, but the habit of mind acquired in dealing with
real estate led the common lawyers to personify the
contribution of a partner. Starting with the physical
fact of contribution, the rights and responsibiliries of
the contributor were the result of its commercial
movement. The joinder of property was deemed suf-
ficient to charge the owner, although he did not, as a
Pt. I, Ch. I. Origin and Growth. §4.
person, join in the business, or take part in its man-
agement or dire(5lion.
This novelty in i^aw has effected a revoi^ution in partner-
Ship, AND MADE THE COMMON LAW TYPE A DISTINCT SPECIES, UNLIKE
THE PARTNERSHIP OF THE LAW MERCHANT. ThE CHANGE RESULTED
FROM THE UNCONSCIOUS ADHERENCE TO FEUDAL TRADITIONS WHILE
PROFESSING TO ADOPT THE PRINCIPLES OF TRADE. ThE METAMOR-
PHOSIS IS SO COMPLETE THAT THE NORM.\L TYPE, NOW INTRODUCED
BY STATUTE UNDER THE NAME OF SPECIAL P.^RTNERSHIP, IS NOT
RECOGNIZED BY THE PROFESSION, BUT IS MISTAKEN FOR A MONGREL
CROSS BETWEEN A LOAN AND A PARTNERSHIP.
I. Das 5tecf)t ber ©ommanbitgejeUjdjaften Don 3t d) i lies 31 en a u b, Ginlcitung,
Sei^gij, 1881.
§4.
^\]t contribution £stablisl)c^ tl)c position of a proprietor,
inl)icl) in turn became tl)e measure of a partner's preroi^atiues
anil liabilities totoarii tl)irii persons.
The contribution identifies a partner, because it
shows that he is a proprietor of the business. The
contribution might consist of skill or service as well
as of money. If the parties chose to consider influ-
ence, experience, or address, equivalent to a money
consideration, the law accepted what the parties had
agreed upon, and gave effedl to the contrail, which
invested the contributing partner with the rights of
a proprietor.
The result is not changed if the contribution is
waived, for third persons judge only b}^ the effe<5l,
which invests the partner with the rights of a pro-
prietor. The waiver of any contribution is a private
arrangement between the partners, which does not
affe(5l outsiders.
9
^^ Origin and Growth. Pt. i, Ch. i.
It is because a share of the profits indicated a pro-
prietor's rights, that the sharing was made the test
of a partner. It is essential to make the partner a
proprietor, in order to invest him with his necessary
prerogatives, becaur,e at the Common law the posses-
sion of property does not imply any power of disposi-
tion, property being tenure, or the right to hold, not
the right to sell.
As property at the Common law partakes of the
nature of a bailment, the power to sell, which is the
highest right of dominion, does not carry with it
everything less than an absolute disposition, on the
principle that the greater includes the less.^
On the contrary, the power of bailees is restricted
to the grant, although strangers are ignorant of any
limitation of its extent." In a joint business venture,
the possession of property by a partner must be coup-
led with a proprietar}' right to it, or no one could
safely deal with the possessor.
I. There w;i.s ;i struggle between the competing principles of property
aii<l of bailment. It is asserted that the Common law did recognize the
,!..,|i,, tion, and held that the right to sell carried any right less than a
• . g.. to pledge. Mkrkdith ari^iicndo. Newboid v. \\'right, 4
■ 205-6. I'a. (1833). The inference was extended to a peculiar spe-
ll*. -.' .1 flisposition. The right to emancipate and enfeoff a villain was
ili> i^n.und adopted to sustain the lord's contracts with him ; by which
<'i]>vliolils were created. "Quia si domimis potest villanum tnanu-
i>t..:cic it jcoffare, multo potius poteril ei qtiandani conventionetn
Jditic, it quia si potest id quod plus est, potest multo fortius id quod
minus est. Bracion, De Legibus, lib. iv, cap. 28. fol, 209.
^ " ' ' rapacity to sell. If authority by a dijferent capacity, proof
llir sale was made en autre droit. .\ stored a piano with a
d dealer, who sent it to the auctioneer and had it sold.
icf|uired no title. Though the dealer's business was to
;d at au<ftion. he received the piano on storage. The stor-
■i.' A.i.-> simply a bailment, and did not authorize the bailee to sell,
atis more Uian leaving a watch to be repaired would authorize the
jeweler to sell it. Quin v. Davis, 28 Sm., 15. Pa (1875)
Pt. I, Ch. I. Origin and Growth. §5.
§5.
^\)t Cato iHcrfljant rrmttti tl)c potucr, rul^icl) a partner pos-
sesses, to buu/ sell," or make am contract in tlje course of trak.-'
The Common law recognized joint ownership and
joint possession, but neither owner nor possessor
could alien or mortgage his co-tenant's share, for
only the holding, whether of title or of possession,
was in common. A partner acquired the right to sell
or pledge his co-partner's share, because the partner-
ship was an organ of trade. If the partners were re-
quired to join in transa6ling business, the firm would
be an obstacle, not a facility, to trade. The courts, to
meet the trade necessit}^, dispensed with a joinder,
and allowed partners, or joint traders, to sell or pledge
each other's share, declaring that the Law IMerchant
w^as part of the Common law.* It follows, as the
greater includes the less, that, being a joint proprie-
tor, the partner's power to sell, which is the badge of
dominion, carries with it the right to make au}^ con-
trail ^vith reference to a sale, and that the correlative
power to buy for a co-partner involves the right to
contrail for a purchase. Any contract, therefore, with
reference to trade is within a partner's power.
1. Partner may buy merchandise and bind co-part)ier for the price.
Hoi^T : "If there be two partners iu trade, and one of them buys
goods for them both, and the other dieth, the survivor may be charged
by indebitatus assioiipsit generally, without taking notice of the
partnership, or that the other is dead and he survived. Hyat v. Hare,
Comb, 383 (1609J.
2. Partner's sale is also his co-partner's. A & B partners. A, by differ-
ent contracts, sold merchandise to C, and sued him for balance due
on the various contracts. — Suffered non-suit to avoid C's wagtr of law
iu debt. "And in this case it was agreed by the Court, that the sale
by one partner is the sale of them both ; and therefore although one
of them selleth the goods, or merchandizeth with them, yet the adlion
must be brought in both their names ; and in such case the defendant
shall not be received to wage his law, that the other partner did not
§6. Oric.ix and Growth. Pt. i, Ch. i.
sell the goods unto him, as is supposed in the declaration." Lam-
IkmI's Case, Godbolt, 339 (1614)
3. Paiincr viav borroTC, and bind co-partner for loan by contrail in
form of contincrcial paper. B & C partners. B borrowed money
of A, and gave bim a note signed B & C. A brought bill to charge
C's estate.— Liable. Note charged both. Lane v. Williams, 2 Vem.
277 (1692).
"If there be three joint trailers for the common stock and benefit
of all three, and their factor draws a bill on them, the acceptance of
one will ohlige the residue of the company." Molloy, 279.
"If it (the bill of exchange) be on joint traders, the acceptance by
one will conclude and bind the other." lb. 279, 282.
"If there be two merchants or partners, and one of them accepts a
bill of exchange, the same shall bind the other ; and an acflion on the
case on the custom may be maintained against him," lb. 284.
4. Co. Litt., II b. note (m)
3f fommcrcial paper l)ait been fonfu^e^ to trabe, tl)£ioinb£r of
paiicc5 idouIli l)ane constitiiteLi tl)eiu partners in \\]t tiocumcnt.
At first, when commercial paper wavS used only as
an instrument of trade, a joinder as payees was a joint
ad of trade, and was proof of a partnership in the
document.' This ruling was displaced by the fa6l
that commercial paper outgrew the limits of trade, on
account of its convenience, passing, as it does, a claim
from hand to hand, and making it the least of all con-
tracts open to dispute. Being used by persons not
engaged in trade on account of its availability, and
no longer confined to trade, a joinder on commercial
paper is not proof of a joint a6l in trade. A payee,
therefore, could not, for instance, endorse for his co-
pay ee.-
'■ Kilf' "'^-1'^",^^'^ bill are partners in the instrument. B & C drew a
^l?"f l''^^'''-"'''^^''' '''"^ ^ endorsed it to A, who sued D.— Judg-
^^ 1 f i ^'''■'''''^ '■• Pickery. Douglas 653. { 1 781 ). Tpon a second
w^ in f" """.^ P''°X^'^ t^^t ^>' a custom of I^ondon the endorsement
waj, inadequate, and obtained a verdicl
Pt. I, Ch. I, Origin and Growth. §7.
The verdicl established a local exception to the law . The exception
has become the rule.
2. The joint payee of a pi-ojiiissoiy note is not entitled to deal zvith it
as a partner. B & C made a promissory note for fiooo, payable to E
& F. E endorsed it in his own name, and, as attorney in fa<5l for F,
to G, who endorsed it over to A. He sued the makers. Plaintiff ar-
gued that payees were partners in the note, and that either was enti-
tled to endorse it in the names of both ; the endorsement by attorney
being surplusage ; that bill drawn by two to their order, and endorsed
after acceptance bj- one of payees would have been sustained, except
for custom of London, and endorsement by one payee of a bill was
sufficient. — Non-suit. Joint payee no more power than joint owner of
a horse. If endorsement of bill by one of payees before acceptance,
the acceptor is estopped from denying pa3-ee's right, but no implica-
tion of partnership from the commercial instrument between the co-
owners of it. Wood V. Wood, I Harr. 429. NJ. (1S38).
JVor does a Joint endorsement by the payees make thein partners.
Joint endorsers not being partners, notice to one of protest is insuffi-
cient. Promissory note to B & C's order. Each joined in endorsing
it to A. He sued notar}', D, on his bond for failure to notify C of
protest. — ^Judgment for D. Notice to B sufficient, as joint endorse-
ment made them partners. — Reversed. Sayre v. P'rick, 7 W. & S.
3S3, Pa. (1844); Shepard v. Hawley, i Conn, 367 (1S15); Willis v.
Green, 5 Plill 232. N. Y. (1843).
^7-
^\)z trausformatiou of tratie iVom its startiiu] point, in tl)e
ciTl)ange oC coinniotiitics, to its triunipl) in tl)c coimntrcial antJ
intiustrial state, l)as maiic partnersljifi co-£itcnsit)e iDitl) business.
Is partnership still an organ of the trade, and are
its fun(5lioiis defined by the nature of trade? If so,
could a partnership be formed to do any business
which did not consist of the double operation of buy-
ing and selling? Neither the a(5l of buying^ nor the
a6l of selling," apart from each other,^ constitutes
trade; both a(5ls are required to complete the transac-
tion. This is the primal type of trade.' Has there
been no departure from the primitive notion of trade ?
Has not its scope been enlarged by the modem de-
velopement of commercial and industrial enterprise?
Undoubtedly! trade has undergone a transformation.
13
§7. ()Ki(;ix AND Growth. Pt. i, Ch. i
The word 'business' indicates the extension which
tlic notion has received. The original constituents
of buying and selling need no longer co-exist in the
business. There may be a partnership in manufac-
turing, which is not a trade, but an industry. A
firm might manufa6lure in partnership, and sell the
manufactured produ6l on separate account. Each
partner would become a debtor to the firm for the
price of goods sold by him, and the ultimate profits
would be divided between them.^ In fadl, neither
buying nor selling need be an element of the partner-
ship business. A capitalist, who furnished the means
to eredl a fa(5lory and stock it with machinery, would
be a partner with the manufadlurer, who contributed
his skill and labor to manufacfture the goods, although
they should not be sold by the firm. The sales might
be made by independent faAors, and the raw produA
supplied by either partner, without affedling the rela-
tion of the partners in the manufacT;uring business.
I. So partturahip in biiyina;. A and four others, unconne<5led in
])usiiifss, made shipments abroad iu one cargo. Return cargo to be
divided among tliein in proportion to ownership of proceeds of out-
w.ird cargo. ,\ insured his quota in unvalued policy, and, on ascer-
tainment of value, sued for excess of premium. Defence : that policy
covered whole cargo as partnership property, in which A could have
no separate nisurable interest.— Association for buying merely, and
not a partnership, because no joint sale contemplated. Holmes v.
I.. Ins. Co., 2 Johns. Cas. 329. N. Y. (1801).
An agreement to share merchandise bought bv another, does not
make the sharers partners. B, C & D agreed to take aliquot shares of
grxHls winch H should buy in his name. A, the seller, sued C & D, as
partners, for the whole price.— Not liable, because no re-sale with a
stianng of the profits, but a division of the merchandise among the
Duyers. Hie division is a sub-contracl, not a joint purchase. Coope v.
tyre. I H. m. 39(1788). ' J 1^ v
Qui noliinl inter se contendere, solent per nuntium emere in com-
mune quod a societate longe remotiim est. D. 17, 2, 33.
./ purchase in common not partnership. B, a merchant, at Leeds,
^rJu'V" "^ of dealing with A, at Hamburgh, ordered a cargo
nLr. r'!-''T-""^ '?'" hini.self and C, and directed bills to be drawn
u^J li J Ills moiety. The correspondence described the adven-
T«id f^.-'i? " I. ^ ^^^^"^ ^'^^ shipped, and each took his half. B
paid Jor hih share, and A sued him for balance of price due from C,
Pt. I, Ch. I. Origin and Growth. §8.
who had become bankrupt. — Not C's partner, because no sharing of
profit and loss, but a separate purchase by each. Gibson v. Lupton,
9 Bing. 297 (1832).
2. All partners must join in aRion for goods sold and delivered.
Joint sale a constituent of partnership. A & B partners. B and C em-
ployed D to build a saw-mill, and made payments, with C's knowledge,
in the goods of A & B. B charged them on the books to D. A & B
dissolved, and B assigned firm claims to A, and promised to pay A
whatever he owed D, but denied any indebtedness to D. A sued B
& C in assumpsit. — No recovery in a6lion against both. C's promise
not absolute, and B's did not bind him as a partner, because no joint
sale of mill contemplated, and B a necessary plaintiff on a count for
goods sold and delivered. Porter v. McClure, 15 Wend. 187 N. Y. (1836).
3. Purchase by broker, though joint, for undisclosed principals, with a
right to pledge the goods and to sell each one's quota, does not make
the purchasers partners. B bought tea as a broker, at India Co. 's
sales, for himself and for undisclosed principals, who also authorized
him to sell. He pledged the warrants to A, for a loan. A sued C, a
purchaser of 2-16, as a partner with B and the other purchasers. — Not
a partner. Though the tea was sold by the Co., in a block, B bought
for separate purchasers, and sold their quotas for them as individuals.
The negotiation of the warrants was a pledge of the tea, but not of the
owners' credit. Hoare v. Dawes, 1 Douglas 371 (1780).
4. Fhiying and selling. Judgmentagainst A &B, as endorsers. Debtor
indemnified them, by giving them salt. A sold the salt on joint ac-
count, and applied proceeds in discharge of judgment. He had given
a note of A & B for freight to defendant, w'ho transferred it to plaintiff,
with giiarantee oi colletlion (not payment). Plaintiff never enforced
payment, supposing B was not a partner, and hence not liable. B had
since become insolvent. Plaintiff, to excuse laches, denied partner-
ship. — B held a partner, because a joint purchase and agreement to
share profit and loss of sale. Cumpstou v. McNair, i Wend. 457. N. Y.
(1828).
5. ,'oanbbudi be§ .fani'ffSrerfjts lUMt ^r. £' . ©olbf rfimibt, 1864. Bk. 2,
Ch. I, s. 41, p. 299.
6. /;/ uianufaHuring ivithout selling. A & B were joint owners of
paper-mill, and partners in manufacSiure of paper. No sales made on
joint account. Whatever sales were made by either partner, were on
his separate account, and he became a debtor to firm for price ; the
profits were shared between them. A sold paper to C expressly on
basis of arrangement, and sued him for price. Defence : Non-joinder
of B. — Recovery, because partnership limited to manufa<5lure and di-
vision of ultimate profits. Ensign v. Wands, i Johns. Cas. 171, N. Y.
(1799)-
§8.
£anb tttag bt mabe an article of trafi5c, anb a partnersl^ip
formeti for bealinci in it as mcrdianliisc.
15
§s.
()KU;iN AND CxROWTH. PT. I, Ch. I.
As the province of partnership is co-extensive with
the area of business, where are its confines? Unless
withdrawn from the will of man by the authority of
tradition, there are no limits to the boundless trad,
whicli is open to his energy. Land was not, at the
Common Liw, a natural subjeA of commerce, and if
parties traded in land the buying and selling remained
distinA acl:s, unconnedled in spite of the intention to
unite tlicm in a single transaction, by reason of what
Lord Cork calls the ' perdurability ' of land/ The
clod could not be moulded by man, but shattered his
will to pieces. In plain English, land was withdrawn
from trade under the Feudal regime, and the seclusion
became, in time, a privilege of distin6lion. The spirit
of trade, however, which levels all distin6lions but
money, is gradually affeding land, and bringing it
into the market as an article of commerce. Tradi-
tion has yielded to the innovation, and a partnership
may exist for dealing in land.'-
I. Huyiiiff and selling land did not constitute a partnership. Associa-
tion foniiffl to buy and sell real estate. Two members acfled as
trustees. ])uyiiij(, sellins^ and mortgacriner in their own name, and ex-
eculiuj.; declarations of triist to associates. Trustees bought of A, and
jjavc him a mortgage and their own bond for the purchase-money.
A l)rouglit bill in equity against other members as partners. — No
parlncrshii) in buying and selling laud, though there might be in
fanning or mining it. vSale on credit of trustees. If A ever had a
claim against the members, he lost it by taking trustees' bond. Pat-
terson V. Hrewster, 4 Ed. Ch. 352, N. Y. (1844).
Trading in land no partnership. Speculators in land under arti-
cles, employed a book-keeper, who sued one occupying position of
dormant partner, for salary. Defence : No partnership in land specu-
lations. — Triable, without ])artnership, for services incidental to pur-
clia.se and sale, on basis of joint ownership. Benners v. Harrison, 19
Barb. 53, N. Y. (,854).
A & B bought land of C on joint credit, to be paid for, in part, with
strangers' promissory notes, which A & B were to endorse, if required.
A endorsed A & R in partnership form. C endorsed to plaintiff, who
6ue«l A cS: B as partners.— B not liable, because not partner, but joint
owner. Ballou v. vSpencer, 4 Cowen 163, N. Y. (1825).
(^clMdjmict'o ,v»anbclerec^t, Bk. 2, Ch. i, s. 41, pp. 310-12.
16
Pt. I, Ch. I. Origin and Growth. §9.
2. Trading in land makes the traders partners. B, C, and five others
made a venture in buying and selling Western lands. C was pur-
chasing agent. Deeds to be taken to B, as trustee, and payments
made in drafts on B. Drafts not accepted. A sued the five for the
purchase-money. — All liable, as partners, for the price of lands. Sage
V. Sherman, 2 N. Y, 417 (1849).
Buying and selling land does constitute a partnership. A joint
stock company was formed, to deal in land. The land was levied
upon and sold by the separate creditor of a partner. The purchaser,
with notice that the sale was made for a separate debt, was postponed
to a subsequent purchaser, who bought the firm's interest. The
partner's title was not a tenancy in common, but a contingent own-
ership of the stock and profits after a dissolution. Kramer v. Arthurs,
7 Barr. 165, Pa. (1847).
Partnersh ip tJi buying land on joint account. Secret price to co-buyer
for effeFling sale at higher rate vitiates transa^ion. B, who owned
a farm supposed to contain coal, arranged to give C an option to buy
for the ostensible price of I85 per acre, but, at the same time, gave C
a private option for I70, C induced A et al. to buy the farm with
him. After the settlement, B returned C the difference between 1^70
and $85 per acre. A et al. sold half the tract, for an advance, to D.
Coal was not, but the scheme of B and C was discovered. A et al.
re-purchased the tracfl from D, and tendered the farm to B, in order
to rescind the sale and reclaim the purchase-money. — Recovered the
price and interest. Yeoman v. Lasley, 40 O. S. 190 (1883).
19.
(!ll]e title to lan^, if not Dtsteb in t!)c finii, is controUeii bp it,
anb tl)e titk-l)oiLi£r is its trustee.
Land does not, of course, pass, like merchandise, as
a staple of commerce, or by a bill of sale. The ob-
stacle, however, to dealing in land is merely formal.
The title must be manifested by deed, and cannot be
conveyed without the joinder of all the co-proprietors.
The deed must, where statutes require it, be recorded;
when creditors may rely upon the record-title. The
partnership deals in land subje6l to the forms which
regulate the disposition of real estate. But the pre-
scribed forms do not prevent the title from being put
in one, or all, of the partners,' or in a third person, for
17
(tio. Origin and Growth. Pt. i, Ch. i.
the benefit of the firm; which, then, has the equitable
title. The legal title is a mere instrument controlled
by the firm, which may compel the trustee to adl at its
di(5lati()ii.
Or the legal title may be vested diredlly in the firm.^
1. /'aro/ evidence competent to shoiv firtn title. In the course of a
buildinj^ operation, partners in brickmaking traded houses, which
they owne<l, for a lot, to improve. The title was taken in the name
of one, and conveyed by him to a stranger, who created the mort-
j^'ages, and he then conveyed to the other partner. The rents of the
buildings were entered in the firm books. The first partner failed,
and assigned for creditors in August, and the second in 0(5tober.
I'arol eNndence was admitted, to show that the firm owned the prop-
erty, and the joint creditors availed themselves of the partners'
equity, in order to exclude the separate creditors from the firm as-
sets. Black V. Seipt, 34 L. I. 66. If the attempt was made to prove
that the title in one partner was held as to a moiety for his co-part-
ner, as a tenant in common, the evidence could surely be rebutted
by proof that the title was held for the firm, for it is competent to
establish title in the firm, independently of any counter-offer. Black's
Appeal, 8 Nor. 20J, Pa. (1879).
2. Itced to partners trading as a firm puts the legal title in the firm.
Deed of land, made in 1870 to B, C & D, 'doing business under the
style of R, C & Co.,' their heirs and assigns. Each signed, in 1872,
judgment note to A, with the addition, 'doing business under the
style of B, C & Co.' Deed recorded in 1874. Subsequently lots sold
to R et al. A brought sci. fa. to revive judgment.— Revived. Terre-
tenants took subjedt to lien against firm property. Lauffer v. Cavett,
6 Nor. 479, Pa. (1878).
§10.
u:iic Statute of fraubg bocs not interfere mX\\ a partner sl)ip
m la^^, but bocs picncnt tl)c enforfcincnt of m oral agreement
between partners to ^eal in lan^, so long as tlje contract is
crccutorn.
The Statute prohibits dealing in land, except by a
writing; and since partnership may arise from an oral
contrad, the Statute operates as a restridion upon
the formation of a partnership for trading in land.
The obvious application of the Statute is to the con-
18
Pt. I, Ch. I. Origin and Growth. §io.
tra(ft between vendor and vendee; but in a partner-
ship to buy and sell land a further question arises:
Does the Statute also apply to the agreement between
the joint purchasers? The vendor, in a written con-
tradl, may seek by oral proof to enforce the contradl
of sale against the partner of the vendee/ or, under
like circumstances, the vendee's partner may seek by
oral proof to avail himself of the written contrail, and
to compel a conveyance from the vendor." So long as
the contrail between the vendee and his partner is
executory, both of these cases are within the purview
of the Statute. Should the partner who was not
named in the contrail of sale assert his interest in
the land, by a suit against his co-partner, the vendee^
the right to recover depends upon the payment of his
contribution.'^ If it has been paid, the vendee becomes
a trustee for the plaintiff to the extent of his interest.^
If the contribution is partially paid, the plaintiff re-
covers an interest proportionate to his payment.*^ If
the vendee sues his partner for the whole contribution,
or for an unpaid balance, the defendant is not liable
without a writing." This principle of a resulting trust
arising out of an executed contradl between the part-
ners, that is to say, out of the payment by one partner
of his contribution for the price of the land, underlies
the rule, subsequently discussed (Part II, Ch. VII) ,.that
whoever holds title to land purchased with firm funds
becomes a trustee for the firm. It follows, therefore,
that wherever the partner who was not named in the
contrail of sale, has a complete remedy against the
vendee, he may enforce the firm title in an adlion
against the vendor, although the partnership relation
is proved by oral testimony. On the other hand,
19
§io. Origin and Growth. Pt. i, Ch. i.
whenever an oral partnership in land has been fully
executed, the members of the firm incur all the lia-
bilities, and acquire all the rights, of partners.'
An oral agreement by the owner of land, to take a
partner and admit him to an interest in the land, is
within the Statute, although the purchase-money may
have been paid in part, and the firm business con-
dueled on the land. The possession of the partner
vendee is not exclusive of his vendor, and is ambigu-
ous, because he may be on the land not as owner, but
merely to take part in the firm business.**
Where an agent, appointed to purchase land, takes
the title in his own name, will he be treated as a
trustee for the principal? Upon this question the
authorities divide. It has been held, on the one hand,
that the agent does not become a trustee, unless he
bought the land with the money of his principal. On
the other hand, it has been decided that a trust arises
by operation of law from the violation of confidence,
even where the agent paid for the land with his own
funds." This question does not arise between partners.
Conceding the correctness of the view last stated, the
doctrine of agency can not be invoked to force the
vendee of land to admit another as his partner in the
purchase. The vendee is himself a principal, and his
agency for his partner does not commence until after
the formation of the partnership. The undertaking
rests entirely on contrail, and the vendee's refusal to
admit his alleged partner to share the title with him is
nothmg more than a refusal to enter into partnership
with him.'"
\\ here no effort is made to assert title to any land,
but the contention arises between the partners over
Pt. I, Ch. I. Origin and Growth. §io.
the distribution of the proceeds of land bought and
sold on joint account under an oral partnership, the
Statute of Frauds has no application/^
1. Vendor has no recourse against vendee's co-purchasers under an
oral contra^ to buy and sell land on joint account. B orally agreed
with C & D to buy and sell land, lie to contribute half the capital,
and the}' each a quarter, and to share the profits in the same propor-
tion : D to take title and give his bond and mortgage for the unpaid
purchase-money, which he did, with B and C's authority and con-
sent ; each paid his quota of the cash consideration and of interest
on the bond. Mortgagee foreclosed, and proceeds being insufficient
to pay the debt, recovered judgment against C for the deficiency. —
Judgment reversed. Williams v. Gillies, 75 N. Y. 197 (1878),
Suppose the defendant had paid his part of the pur-
chase-money to his partner, the vendee, would the de-
fendant have been liable for an unpaid balance of the
price resulting- from the failure of the vendee either to
pay up his contribution in full or to pay over to the
vendor the contribution received from the defendant,
on the ground that as the contrail of partnership had
been executed as to the defendant, he incurred the
liability of a partner, and became responsible for the
price of the land bought on behalf of the firm? The de-
fendant, it seems, would not be liable, because the part-
nership in land is always specific, that is, a partnership
in a particular transaction. And a partner's obligation
for the price of the land will not exceed the liability of
a co-purchaser. The purchase not being joint in form,
the partner is liable only for his quota, and he is not lia-
ble to the vendor for that, because he is not a party to the
written contra(5l of sale. His only obligation was to his
partner, the vendee, and that has been discharged. A
purchase of the land complete in all its parts is prelim-
inary to the establishment of an oral partnership, with
its attendant responsibilities, and the attempt to charge
the defendant by oral proof for any portion of the price
would forestall the relation.
2. A partner, having paid his contribution, may compel the vendor
of his co-partner to convey to the firm. A & B formed a partnership
to buy land, ere6l a mill, and carry on the business of sawing lumber.
B, as his contribution, bought the lot in his own name for fooo, by
written contract, paid ;^ioo on account, and gave his own notes for
the balance. They took possession, and A put up the mill, worth
111500, as his contribution. They continued the business until B died.
Then A took up B's notes, and brought a bill against the vendor and
B's representatives for a conveyance to himself and the representa-
tives of B. — Decree. The payment by B was made with funds de-
5io. Origin and Growth. Pt. i, Ch. i.
vote<l to fimi purposes, although never a^ually in the firm treasury.
Scruggs V. Russell, McCahou 39, U. S. C. C. (1858).
3 Oral cotttrail to buy land in common not binding if executory. B
agreed, orally with A, to bid at public sale for land, take title to them
in common, advance the cash payment required by terms of sale ; and
A agreed to repay V> his quota of cash advanced, and join with him
in the bond and mortgage for balance. B took title in his name. A
tendered pavment, and, upon B's refusal to convey a moiety, de-
manded specific performance. Defence : Statute of Frauds.— No
pjirtnership, but agreement for joint purchase. No trust resulted to
A, liecause contradl executor^'. Levy v. Brush, 45 N, Y. 589 (1871).
4. Trust results to partner on oral contra^ of partnership in land,
when executed. A & B agreed, orally, to buy and sell farms in
partnership. Without A's knowledge, B took title to a farm. Sub-
.se<iuentlv, A paid his share of the price and improvements, and both
treated the farm as joint property. Upon discovery that title was
not in both, A called for a conveyance of his moiety. Defence :
Agreement void by Statute of Frauds, and, if a valid partnership,
remedy, account.— Trust resulted to A on executed contradl of part-
nership. Account unnecessary. Traphagen v. Burt, 67 N. Y. 30 (1876).
5. A trust arises upon a partial payment of the consideration. B &
C bought land, each orally agreeing to pay half the purchase-money,
I500. Deed made to B. C paid I75 on account, and balance paid by
B, who conveyed to A to reimburse himself the advance. A brought
ejeAment against C's tenant. — Recovered, because C did not tender
balance of his purchase-money, or ask for conditional verdicl. Cs
part-payment raised a trust, independent of B's breach of contra(5l,
and gave him an equitable title, which corresponded to his payment.
Chadwick v. Felt, 11 Ca. 305, Pa. (i860).
Unless the State decrees, as Michigan has done, that
a trust shall not result from payment of the considera-
tion:
"When a grant for a valuable consideration shall be made to one
"person, and the consideration therefor shall be paid by another, no
" use or trust shall result in favor of the person by whom such pay-
" nient shall lie made ; but the title shall vest in the person named as
"alienee in such conveyance." Gen. Stats, of Michigan, s. 5569.
Trust does not result to vendee' s partner who pays part of the price.
A brought account against B for a share of the profits made by the
purcha.se and sale of a lot, averring an oral contra(5l, by which each
should pay half the purchase-money and share the profits equally.
The conveyance made 10 B, who furnished most of the money. A
contributed but a small portion.— Dismissed. Michigan Statute pre-
vents a trust from resultnig from part payment of the price. Pulford
V. Morton, 28 X. W. R. 716, Mich. (1886).
A sued B for breach of tnist on oral contract to buy timber-land,
an<l to manufacture aud sell lumber. A agreed to seleA land, B to
buy them, put title to 1-3 in A and to take 2-3 ; A to re-imburse B 1-3
lue purcha.se-money, by sawing a given amount of timber at a speci-
liecl rate. B bought for himself. A averred performance of his part.
iJelence : Statute of I-rauds.- Contradl void. Raub v. Smith, 28 N.
^^. R. 676, Mich. (1.S66).
*■ «l ''r^u^'^" -^f <^^'^^''f^"lion tinder oral contraR to deal in land. .^
t^ Ti, -V^ , ^ ^"^^ ^ ^o*" fiuota of price, offering oral agreement,
to the effea that A & B were to buy the land for A, B & C, and divide
Pt. I, Ch, I. Origin and Growth. §io.
the profits of a sale as partners. — B an incompetent witness. Since
C could not enforce the contra<5t against A & B, they could not make
him contribute. They could not say: "Heads we win; tails you
lose." Meason v. Kaine, 13 Sm. 335, Pa. (1869).
7. Land bought and sold tmder an oral contra^ of partnership charges
the partners, irrespeRive of title and the Statute of Frauds. B, C & D
agreed, orally, in September, to buy and sell land in B's name, on joint
account. They purchased land in Odlober, and reduced the agreement
to writing in November, In December B sold to A, as oil-producing,
land on which he had, with C's knowledge, poured petroleum, in
order to deceive A. D was ignorant of the scheme. A brought ac-
tion against B, C & D for deceit. D's defence: No partnership in
land, at least, without a writing ; hence not liable for co-speculator's
fraud. — Liable. Partnership in land differs from partnership in mer-
chandise only in mode of conveying title. The Statute of Frauds
does not exclude proof of an interest in land already bought under
an oral agreement. Chester v. Dickerson, 54 N. Y. i (1873).
Dealing in land under an oral contrail of partnership gives a part-
ner title, without reference to the Statute of Frauds. B, C and D,
trading as D & Co., owned mills, which, with adjoining land, they
used in the business. By oral agreement A, in 1875, joined the firm,
and his 1-4 interest in firm property, estimated at f 12,000, was en-
tered on the books. A acfled as a partner in transa<5ling the firm
business until 1882, when his co-partners exchided him. He brought
account against B, C and D for his share of the firm property, which
had increased to 130,000. Demurrer on account of Statute of Frauds,
— Decree. The oral contrail having been carried out, A became a
partner, and shared the real estate of the firm, no matter who held
the legal title. Marsh v. Davis, 33 Rand, 326, Kan. (1885).
8. Possession by vendee, under oral contrail of partnership with ven-
dor, insufficient to satisfy Statute of Frauds. D, the owner of land,
orally agreed to take B and C into partnership in consideration of
^^5,700 for their two-thirds, 12,000 cash, balance payable out of the
profits. Cash paid, and B and C went into possession with D. The
firm built a saw-mill, and made other improvements on the land for
the lumber business. A claimed, as separate creditor of D, a lien
paramount to firm creditors. — Judgment against D bound the title.
Statute of Frauds prevents a transfer of title to the firm, B and C's
entering into possession did not exclude D, and was not equivalent
to the feudal investiture for which the vStatvite makes writing a sub-
stitute. The possession might be for a purpose apart from the pur-
chase ; for example, to condudl business on the land, which would
explain the possession to the neighborhood. McCormick's Appeal, 7
Smith 54, Pa. (1868).
9. A trust results to principal from agent's violation of confideiice.
A employed B to purchase a lot. B entered into negotiation with the
owner and bought the lot for himself, with his own money, and
took title in his own name. A brought ejectment. Defence : Statute
of Frauds. — Recovered. Trust arises, by operation of law, from the
violation of confidence, without payment of the consideration. Rose
V. Haydeu, 35 Rand, 106 (1886).
10. An oral partnership, to deal in land without paymettt of contribu-
tion, does not constitute the vendee a trustee for his partner. A
brought a bill against B, alleging an oral partnership to buy and sell
land and lumber ; B to take title and sell on joint account, the pay-
ment by A of certain sums by way of contribution, asked for an
§io. Origin and Growth. Pt. i, Ch. i,
nrcouiil of previous sales and the conveyance to him of his share in
such lands iis remained unsold. B denied the partnership, treated
the advances as loans, and set up the Statute of Frauds. — Dismissed.
The fact of an oral partnership is not clearly established, and cer-
tainlv there was no partnership fund, but the Statute is a bar in any
eveui. An oral partnership for the purchase and sale of lands on
joint account is clearly the case of an oral contradl respecftiug an in-
terest in lands, and is invalid under the Statute as a conveyance, con-
tract or trust, unless it be i. trust arising or resulting by implication
or construction of law. It is not the case of an estate created in lands,
but rather of a declaration or creation of a trust, or confidence in
lands not arising or resulting by implication or operation of law.
This trust arises on the purchase, if at all, and it arises dire<5lly ex
cotilmilu, and not by operation of law. To this latter result it is
necessary that the plaintiff, i, shall have paid the price, or, 2, have
owned the funds, either in whole or in part, from which the purchase-
monev was taken. The first is the case of an agent, the second is the
case of a j)urchase with firm or trust funds. Or there must have been
some fraud. The lands were not purchased with firm funds, for there
were no funds ; there was no fraud, but a violation of a promise, and
the alleged partner can not be charged as an agent who has vio-
lated the trust reposed in him, because the plaintiff paid no portion
of the price. Even if an agent could be made a trustee when he has
l)ought \s-ith his own money land which he orally agreed to purchase
for his principal, it would be a case distinguishable from the present,
because the defendant made the purchase as a co-principal, and prop-
erly in his own name. The plaintiff cannot avoid the Statute by defin-
ing the alleged partnership as a contra<5l to share the profits made by
dealing in land, and not as a contra6l for an interest in the land itself.
The i)rofits are an increment to the partnership fund, and pre-suppose
an interest in the land. Smith v. Burnham, 3 Sumner 435, U. S. C. C.
(.83S).
Fall River Whaling Co. v. Borden, 10 Cush. 458, Mass. (1852).
1 1. Oral partnership and real estate as assets. A & B agreed, orally,
to buy a foundry site, erecfl buildings, and carry on the business.
Kiich ])aid in his contribution in full, and B took title to the land.
The land was sold, and the firm dissolved. A brought bill for an
account, and enjoined B from disposing of the firm assets. B moved
to dissolve iujuncftion, on the ground that as the partnership contem-
plated the purchase of real estate it was invalid, because oral. — Motion
refused. Smith v. Tarlton, 2 Barb. Ch. 336 (1847).
.-/ amlracl to divide the profits arisins: from a sale of land is not
prohthitcd by the Statute. B, in 1866, advanced C I250 to buy a traA
of land, upon his oral agreement to divide the profits of a sale between
them. C gave his note for the loan, and mortgaged the tra<ft as se-
curity. In consideration for a re-conveyance of part, B, in 1S68, relin-
quished his claim for profits. In 1872, B and C submitted their ac-
counts to an arbitrator, and he awarded B I96. A, et al., terre-
tenaiiLsof land not re-conveyed, brought bill against B. Claim: i.
Loan, including principal, interest and profits, usurious; 2, Statute
o! I-rauds ; 3, Redudion of debt enured to plaintiffs.— Judgment for
». Contract not within Statute of Frauds. Mahagan v. Mead, 6^ N.
H. 130(1884). ^ ' -^
i^ 1"*^^^ & C on oral contradl for 1-3 profits of land purchased and
sold by them. Defence : Statute of Frauds.— Recovered. Perform-
ance waives the Statute. Trowbridge v. Wetherbee, 1 1 Allen 361, Mass.
24
Pt. I, Ch, I. Origin and Growth. §ii.
Oral contraR for proceeds or prod u ft of land not affcfled by Statute.
A and B agreed, orally, to cultivate a farm and to buy and sell land
in partnership, sharing the profit and loss equally. A brought a bill
for half the profits of the farm, and of the real estate trausadtions.
Defence : Statute of Frauds. — Decree for a share of profits made by
real estate operations, because land converted and claim for proceeds,
which were personal property ; for a share of profits made in cultivat-
ing the farm, because the title to land was not involved in the issue.
Everhart's Appeal, lo Out. 349, Pa. (1884).
§11.
J)artncrsl)i|j ma« tiist for improniug, as uicll as ior buning
ani) sellinci, lauti.
The business may consist of a building operation,
undertaken for the improvement of land, and for
bringing it into the market by means of the strudl-
ures ere(5led upon it;^ or the business may be limited
to the erection of buildings, without any ulterior view
of selling the premises.^
1. A building operation on joint account is a partnership. Land was
let to B, who condu6ted a building operation. C advanced the money.
Title held by C, though in equity tenant in common with B. Funds
realized by sale of houses deposited to joint credit, upon which either
entitled to draw. After advances and outlays reimbursed, profit and
loss divided equally between B & C, A sued C for building materials.
— Liable, because transadlion was by B as C's agent on behalf of both.
Noakes v. Barlow, 26 L. T. 136, s. c. ; 20 W. R. 388 (1872).
The title belongs to the firm. B & C were partners in Isrick-making.
They traded two lots held by them in common, and two in severalty,
for a lot which was conveyed to B for a building operation. He put
title in D, who executed mortgages and conveyed to C. The mort-
gages were never negotiated. B assigned for creditors, to A, and C
subsequently assigned for creditors, to E. A sought to make E re-
convey a moiety, on the theory of a tenancy in common by B & C.
E offered to show, by parol, that land belonged to the firm, — Evidence
admitted, because contest between partners. Black's Appeal, 8 Nor.
201, Pa. (1879).
2. A partner'ship in building. A & B were associated for building,
but not for operating, a mill. A bought mill-stones for firm, on in-
dividual credit. Plaintiff sued both for price. — Recovered, because
partnership in building, and purchase incident to business. Reynolds
v. Cleveland, 4 Cowen 282 (1825).
25
5j2. Origin and Growth. Pt. i, Ch. i.
§12-
Z\)t onlti close left iv\)k\) business bocs not penetrate is farm
lanii.
The relic which survives of the traditionary epoch
is the custom of fanning on shares. The relation of
landlord and tenant gives expression to agricultural
habits, which would not, it was thought, adapt them-
selves to the transa6lions of business men.^ But the
exception is becoming rather a presumption of fa6l
than a dogma of law, and if the parties mean to farm
land in partnership, the law will not prevent them.^
Fanning on shares does not constitute an agricultural
partnership, bnt establishes the relation of landlord and
tenant, according to inveterate tradition.
I. Fannitii^ on shares no partnership. By agreement, B farmed land
of A for 1-2 the produdl, each furnishing 1-2 the stock, but B the
impleiiients, working-stock and labor, and also paying road-tax and
1-2 of other taxes. B confessed judgment to C, who levied on and
sold H's interest in the farm to D. Claim of A's devisee: Sheriff's
vendee bought only balance due B after account with A. — Judgment
for C. No partnership, and A's failure to distrain, or notify sheriff
of claim for rent, devested his right. Brown v. Taquette, i^ Norris
113, I'a. (i8,So). J H , J
.\ rented B a farm for 1-2 produce, and a tavern for 1-2 profits, and
sued for use and occupation. — A(5lion lav, as agreement created no
partnership. I'errine v. Hankinson, 6 Hal. 181 (1829).
H, who owned a farm, furnished and provided for the horses, C for
the laborers eni])loyed to raise tobacco, for half the produce. C sold
the crops to A, who sued B and C for its non-delivery.— Judgment
for A reversed. No partnership. Day v. Stevens, 88 N. C. 79 (1883).
// ork III ff farm on shares no partnership. A covenanted with B to
work his farm for 1-2 the crop. A brought covenant. Defence : A,
partner, an<l should have brought account.— A was a servant, neither
tenant, tenant m common, nor partner. Patton v. Heustis, 2 Dutch.
293(iH57).
A ^T,"''% "" -^^'^^^-^ no partnership, althomrh agreement to share
profit and loss. A & B let farm partially stocked to C, sharing speci-
hed produds and profit and loss. A & B sued C for their share.
ueicnce : Account nece.ssary. On trial, question put to defendant :
N\ Mat was general result, profit or loss ? '—Question immaterial, not-
>*unstanrling agreement. Plaintiffs entitled to a share of produce.
Gregory v. Brooks, i Hun 404 (1874).
1 he tenant is entitled to the possession during the
tenn of his lease.
f^Zm"'^' 7 ^\'^'''^^^^'^'^^ farmer possession. B let moietv of a farm
lor one jear to A, who agreed to haul and spread manure,' and keep
26
Pt. I, Ch. I. Origin and Growth. §12.
the fences in repair, to plant fields with specified seeds, and to pay
taxes. B bargained for half the com and grain, and A for all the hay
and for pasturage. A sued B for failure to give possession. — Recov-
ered. Steel V. Frick, 6 Sm. 172, Pa. (1867).
Title to the crop is incident to the possession, and is
vested in the tenant.
Owner no title to crop until set apart. B rented his farm on shares
to C et al. A attached the growing grain in their possession for B's
debt. — Valid. No levy until rent in kind set apart for B, but attach-
ment lay for it against tenants, as owners. Howard v. Kyte, 28 N. W.
R. 609 (1886).
The interest of the landlord in the growing crop is
not severed by execution and sale under a judgment
against him.
Execution against the landlord does not sever the crop. B let his
farm on shares to C from year to year. During the term, the growing
grain was sold under a judgment against B to A. Subsequently the
land was levied on, and sold to D. C, as tenant of D, delivered to
him the harvested grain. A sued D. — Recovered. Levy severed the
shares, and sale passed B's share to A. — Reversed. Long v. Seavers,
7 0ut. 517, Pa. (1883).
A cropper shares the produ(5l, but, as he is not a
tenant, he has no right to the possession, which remains
in the owner, and he acquires no title to the crop.
A cj^opper has no way-going crop. B agreed with C that he should
put out 25 or 30 acres in wheat, and have 2-3 of the crop. The farm
was sold by the sheriff to A, who, in January, sold it to D, and subse-
quently entered up judgment for the purchase-money. C paid D 1-3
of the crop, and retained 2-3 of it. D claimed to set-off the 2-3 against
A's judgment. — Disallowed. As C not a tenant, but only a cropper,
there was no way -going crop for C to claim, or D to set-off. Adams v.
McKesson, 3 Smith 81, Pa. (1866).
Cropper has only a claim for his share. B, who held land, bar-
gained to plow and sow, A to fence and irrigate it, and to harvest the
crop on shares. Upon disagreement, B cut off water, took charge of
crop, and promised to pay A |io a ton for his half; for which A sued
B. Demurrer, because remedy account. — A simply a cropper, who
had no interest in land, but a share of crop for his work. Romero v.
Dalton, II Pac. R. 863 (1886).
In Massachusetts, and in New York, the disposition
is to treat the farmer on shares neither as a tenant nor
as a cropper, but as a co-occupant, with an undivided
share of the crops and a qualified interest in the land.
Fanning on shares gives the fanner a joint title to the crop. By
agreement, B should work A's farm on shares for one year, each
furnishing half the seed. A's creditor attached and removed his
quota. A sued B for half the crop. — ^Judgment for B, Though
remedy against officer by both co-occupants, who had undivided
shares of the crop, yet the duty to a6t was upon A, because the tres-
pass was committed for his private debt. His negledl waived pursuit
of the officer for the trespass, and for recovery of the quota. Walker
V. Fitts, 24 Pick. 191 (1837).
27
Ui.
Origin and Growth. Pt. i, Ch. i.
Available af^ainsl his co-occupaul, owner of the land. Agreement
bv A iind H to farai on shares, each furnishing half the seed and
manure, A doing hand and B team work, and A harvesting the crop.
H exchuled A, and consumed the crop. A sued B for the conversion.
—Recovered.' Tenants in common of the crop, and trover lies, in
MiussachusetLs, against co-tenant for conversion of undivided half.
Delanev v. Root, 99 -Mass. 546 (1868).
(>:c>irrs, occupants and laborers, farming on shares, are tenants tn
common of produRs, and muy join in suit for price. C & D took A
& H's farm on shares. D divided his share with E & F, in considera-
tion for working the farm. D sold wheat, and all six sued for the
price. Defence: Contracfl with D alone. — Suit maintained. Though
not partners, owners tenants in common with occupants and laborers
of products. As all must join in tort to common property, they may
waive the tort and sue in assumpsit. Putnam v. Wise, i Hill 234 N. Y.
Until or unless a division is made.
The agreement may provide for a division, and exclude a joint in-
terest. .Agreement : A to work B's dairy farms, deliver 9,600 pounds,
and retain the residue of cheese manufacflured and sold by the fadtory.
.\ sued D, its treasurer, for proceeds he had paid B. — Judgment for
D. Title to first 9,600 pounds manufa<5lured in A ; balance only in B.
W'ilber v. Sisson, 54 N. Y. 121 (1873). Or the value of a share may be
bargained for, and that indicates a cropper. Tanner v. Hills, 48 N. Y.
662(1872.)
Farming on shares by owners constitutes a partnership. A & B
jointly bought lands, for the purpose of farming them, and eventually
of selling them. By subsequent agreement, Aconducted the farming
oj)cratioiis, and B attended to the sale and shipment of produce,
l>earing equally the expenses, and after an allowance to A for his ser-
vices, and for the use of his teams and implements, sharing equally
the net proceeds. A sued B for his portion.— Judgment for B. Part-
ners, and only remedy account. Fishery. Sweet, 67 Cal. 228 (1885).
§13.
^t is tl)c act of tl)c parties, ant) not of tl)e lato, ml)icl) makes
loni) K\\\ article of tratic.
The conversion of land into merchandise is a posi-
tive aa, which must be performed by the parties who
wish to effeA the transformation. The land retains
Its natural state until some ad is done which changes
the normal condition, and converts it into merchan-
dise. The law does not work the effeA of its own
28
Pt. I, Ch. I. Origin and Growth. §14.;
motion, but follows in the wake of the parties, and
ratifies their a(5l when it is an accomplished fa6l/
At first, mutual covenants by the partners were re-
quired, in order to convert the land into merchandise.^
But the intention is now sufficient.'^
1. Owners of la7id, mill and machinery are tenants in common, unless
they intended to use or sell the plant as partners. A, B and C agreed
to jointly buy and hold land, erecT; a steam saw-mill, and eqxjip it
with machinery. They agreed to share equally the profits, either of
selling or letting the plant, and to reimburse any over-advance by
either. B died, and A brought bill for account and over-advance. —
Decree. Lien enforced upon the cotitradl, but parties co-tenants, not
partners. Farrand v. Gleason, 56 Vt. 633 (1884).
This is also the Civil L/aw: "Supposons que deux personnes se
" sont reunies pour acheter un immeuble : seront-elles en etat de so-
"ciete ou de communaute? Pour resoudre la question, on doit cher-
" cher le but que se sont propose les parties. Est-ce pour revendre et
" faire un benefice qu'elles ont achete? C'est une societe qui exist
" eutre elles. Mais dans le doute sur leur intention, la presomption
" de communante doit I'emporter." Traite des Societes Civiles et
Commerciales, par A. Vavasseur, s. 28, 2d ed., Paris, 187S.
2. Partners would hold real estate as tenants in common. A & B
were partners in working a distillery, which they owned. They sold
the premises, and B recovered the price. A's representatives brought
assumpsit for his quota. Defence: Should have brought account. —
Recovered, because partners are tenants in common of real estate,
which could be devoted to the firm purposes only by means of mutual
covenants. Coles v. Coles, 15 Johns. 159 (1818).
3 Title to firm real estate. Partnership held land. No mutual cove-
nants, but intention to use it for firm purposes. A died, and B as-
signed for firm creditors. Land sold on mortgages executed by the
partners. Wife of A joined in the mortgages. The surplus was
claimed by assignee, and by A's heir, and by his widow. — Widow al-
lowed dower in a moiety, though husband had a two-thirds interest
in the firm. Each partner's title was subje6l to a co-partner's equity,
but proceeds remained realty, and hence widow took dower. Smith
V. Jackson, 2 Ed. Ch. 28 (1833).
Intention of partners sufficient to put title in firm A, B, C & D,
co-partners, bought laud, biit D took title in his name. A, B and
representatives of C claimed purparts. — Recovered. Purchase by
firm makes laud its assets. Fairchild v. Fairchild, 64 N. Y. 471 (1878).
But a modification is to be noted, which results from
an extension of the partnership area.
29
5i«^. Origin and Growth. Pt. i, Ch. i.
ijllf priiuiplfs ml]ifl) oiroui out of trabe anb regulate tta trans-
attiona uniifrao a d)ange u)l]cu partn£rsl)ip, au organ of trak,
10 fitfULiCLi to a business nil)irl) is not a trabe, anb bocs not
fonsist of buningi ant> selling mercl)anbise.
The extension of partnership to all branches of
business has led to the recognition of a new class,
styljed, by way of contrast, non-commercial partner-
ships. Their powers are defined by the special busi-
ness undertaken by the firm, and not by trade.*
I. Shefp-raisitifr is inconsistent with partner's agency to sell. A & B
were partners in sheep-raising. B, during A's absence, and without
his consent, sold out the ranch to defendants, but subsequently in-
duced them to restrici the sale to 1-3 of the flock. B died, and A
sued to recover possession of the sheep. — Recovered. Sheep-breed-
ing involved no authority by a partner to sell. The business of in-
creasing and improving the stock would be destroyed by a sale. The
only purchases incident to the business are of breeding sheep, and
the only sales of culls. Blaker v. Sands, 29 Kan. 551 (1883).
T/iratre hnsincss does not justify commercial paper. B & C, part-
ners for conducling a theatre. Without C's knowledge, B gave firm
note for a loan, to D, who endorsed it to A. A knew the business
was not for trade. The note being given shortly- after the partnership
was formed, no custom was established of the firm's giving notes.
The proceeds were not traced beyond B, and no firm necessity was
shown for the note. A sued firm.— Judgment for plaintiff set aside.
I'resumjHion against partner's authority to make commercial paper
in non-trading partnership. Each partner is not general agent for
firm, except in a commercial partnership. Semble : Firm bound if it
received proceeds. Pease v. Cole, 53 Conn. 53 (1885).
§15.
^ mining partnersl)ip forms a distinct species. In it tl]ere
is no drlcclus pcrsonae, but a sl)are inrests tlje Ijolber mitl)
mnnbcrsljip, cucu against tl)e mill of l]is fo-partners. Ncitljer
tl)f bcatl) of a partner nor tl)e assicinmcnt of l)is sl]are bissolncs
tlie firm.'
The partnership results from a co-operation in the
working of a mine, whether it is owned by the firm,
30
Pt. I, Ch. I. Origin and Growth. §15.
by the partners as tenants in common, or by tbird
persons who make leases to the firm.^ The nature
of mining property, and the requirements for its de-
velopement, led to the abandonment of contraA as the
basis for the relation. Mining operations demand
uninterrupted exertions, and would be imperilled if a
dissolution of the firm resulted from a change of part-
ners. Moreover, the amount of capital required to
undertake and condudl extended works furnished an
additional reason why the firm should not depend for
its existence upon the mutual contradl of its constitu-
ents.^
The personal confidence which, in ordinary partner-
ship, results from the choice made by the partners
of their associates does not exist in a mining partner-
ship, where the connexion with each other is only
through the common business. Each partner repre-
sents the business, but he does not represent his co-
partners, and his implied authority is defined by the
nature and necessities of the business.* His liability
springs from the same source.'^
The normal type of partnership, however, reverts,
and will exist in a mining business, if there is a de-
leSJus personae^
I. II Morrison's Mining Rep. 223-607.
Partners by purchase, right to assets. Superintendent of mining
partnership bought for its hydraulic diggings ditches upon which A
had a lien. Of original partners, some died, and all the others, except
B, were succeeded by A et al., who knew that purchase-money was
unpaid when they purchased shares. A brought account. Defence :
B survivor, aud retired partners not joined. — Decree. No dissolution
by death, or substitution of partners. Retired partners not necessary-
parties. Jones V. Clark, 42 Cal. iSo (1871J.
Share-holder a partner in mining Jinn. B bought out an original
partner, who had 1-16 interest in a mining partnership, and sold 1-2
to C. Neither was known as a partner in the business, or took part
in its management. A erecfted a rock-crushing mill under contracfl
with the firm, and sued B & C for contract price. — Recovered. Holder
of share a partner in mining firm, although he is not held out, and
31
jjc Origin and Growth. Pt. i, Ch. i.
Ukcs no part in uianaj^iug the business. Taylor v. Castle, 42 Cal. 367
(I.S71J
2 Partiur has lien for advaJiccs made in working mines. A bought
out tlu- uiterests of 5 who, with 15, worked mining property. The
linn IjoukIU with its funds other mining land and a ditch to supply
the works with water. There was no contracSl of partnership, but
tlu- profits and losses were shared according to the interests. The
firm incurred debt by construdling a tunnel. Account showed B in-
debted to -V ^^1,572.55. B, insolvent, sold his 1-5 to C and D, inform-
ing C. but not D, of A's claini. — C and D took subjedl to A's lien.
Duryea v. Burt. 28 Cal. 569 (1865).
3. Kcf filer appointed only upon interference. A & B, solicitors in
partnership, bought part of a coal mine, and worked the colliery.
\'\yo\\ a disagreement. A, while adlually condu(5ling the operations,
brought a bill for account and for the appointment of a receiver. —
Dismissed. No such interference as broke up the business. The
refusal of partners to co-operate is like the aisagreement in an ordi-
nary partnership, but there must be such an interference by a part-
ner as prevents a continuance of the business, in order to justify a
court in undertaking its management. Roberts v. Eberhardt, i Kay
'48 1 1 853)-
4. The partner is not an agent to bind the firm by commercial paper.
rnder the fa<5ls, B was appointed agent by one of the proprietors, to
erec^ a smelter and carry on smelting works for the association. A
solil coal for the business, and sued the members as partners. ^Re-
covered. A mining partnership results from the co-operation of own-
ers in working a mine. The partner has authority to do a(?ts neces-
sjiry or usual in transa(5ting such business, though not to make com-
mercial paper, or employ counsel to litigate the title to a mine.
Sluire may be assigned to stranger without consent of co-partners,
and finn not dissolved by a partner's death. Higgins v. Armstrong,
lu Pac. Rep. 232, Col. (1886).
Mining firm's pre-emption right of retiring partiier'' s interest does
not prevent him from selling his title, if the mines are owned by the
partners, and not by the firm. A, B, C & D, each owned one-fourth
of two lead mines. While A and B were negotiating for the firm to
buy out D, B and C closed with 1), and took his title for themselves.
A discovering the purchase, claimed for the firm the proceeds depos-
ited ni bank.— Judgment for B and C. B not a trustee, as he repudi-
ated^ agency, and bought for himself with his own funds. Mining
firm's riglit of ])re-eniption is confined to retiring partner's interest
in firm j.roperty, and does not extend to his individual title. The
partnership for working the mines did not include the ownership of
the i)roperty. I-irst Nat. Bank v. Bissell, 2 McCrary 73, U. S. C. C
AOirmed. s. c, Bissell v. Foss, 114 U. S. 252 (1885).
A partner's authority in a mining partnership is defined by require-
f>ir>it<; of the business. B, C, etal., partners in mining. Articles
•n/.ed purchase and sale of lauds, or leases, but prohibited any
' r from contraaing any debt without consent of his co-partners.
■ • m;, Nv on C, m favor of A for purchase-money of mineral land. C
relused to accept, and A sued.— Judgment for C. Authority to bor-
row l,y commercial paper necessary for a trading, but not for a non-
trading partnership. Judge V. Braswell, 13 Bush. 67, Ky. (1887).
^ .,!i''"''Z'''^ '" a'or/t/;/?- quany. Partner liable for tort of co-part-
worwir^ ■^'''''■'- ^'' ''^"'■'^ ^ ^"^""y- shipped and sold the stone C
worked the quarry, and his men assisted B's men in loading. B & C
32
Pt. I, Ch. 2. Antecedents. §i6.
paid for blasting powder, and divided profits in equal parts. Cs men
injured A on adjoining premises, by negligent blasting, and A sued
B. — Recovered. B & C partners. Cotter v. Bettner, i Bosw. 490, N. Y.
(1857).
6. Mining does not differ frotn trading partnership if a delectus per-
sonae. B, a pra<5lical miner, contributed his skill, and C the money,
with which they bought and worked a mine. A sued firm on its note
made by B for, and used in, the business. — Recovered. Ordinary
partnership, though for mining. DeleHus personae. Decker v. How-
ell, 42 Cal. 636(1872).
-O-
CHAPTER II.
THE ANTECEDENTS OF A PARTNERSHIP.
§16.
(l[l)£ object of trabc, antr also ofpartnersljip as an instrument
of trabt, is gain, anb unless a business is unbertaken tl)cre can
be no partncrsljip.'
Gain means a positive acquisition of property. Mu-
tual prote(5lion against loss does not add any new
produ6l, but simply provides security for retaining
what is already possessed. A mutual protection, or
mutual insurance, association does not amount to a
partnership." As Straccha puts it: "Assecuratus
" non quaeret lucrum, sed agit ne in damno sit."^ Nor
does a tontine involve a partnership as the agent of
produAion. The right to succeed upon the death of
a member to his share does not result in a gain, but
in a division among the contributors of the fund, which
they possessed at the beginning.^ But insurance may
33
$i6.
Antecedents. Pt. i, Ch. 2.
be carried on as a business, and then a partnership
would result from the undertaking, unless the insur-
ers organized as a corporation,' for any business un-
dertaken for gain is a partnership, unless transacted
under a corporate franchise."
Thf French law does not limit the partnership to the
profits made in a business, but enlarges the scope of the re-
lation, .so that it comprehends any association producing a
benefit which can be estimated in money.''' The pleasure
and advantage derived by the citizens from frequenting a
park would be sufficient, it is said, to make them partners
in buying it, the value of recreation being equivalent to
monc\-.'' The Commercial Code, however, regulates the
affairs of business, and hence arises the distindlion which
is made between Civil and Commercial partnerships.
The authors of the Code Napoleon adopted the definition
j^iven by F'elicius of a partnership :'' ^'' Societas est con-
^' tract us qui consensu^ rcbiis^ vel operibiis^ vel indiistna
^' intci-'cnimtihus^ ad coniinuneni quaestiim^ sen hia'iim^
'' pcrfuitiiry^
I. riiih for titiiliiaf benefit, tlwuffh possessed of property, is not a part-
iicrsliip. IndejieiulcMit order of ' Rechabites, ' organized as the 'Wash-
inj^on Tl-iiI,' for teiiiperauce, justice, relief in sickness, and observ-
aiu-e of obsequies. The association acquired |4,6oo. A, alleging
disagTeement and praAical exclusion of members, accompanied by-
diversion of funds, but not averring that he had first appealed, as re-
quireclby the Constitution, to the ' High Chief Ruler,' or to the ' High
Tc-nl,' moved to dissolve the association, although its Bj^-Laws for-
bade a dissolution while ten members remained, unless by tmanimous
consent. —Motion refused. Association not a partnership, because
not for gain, and property merelv an incident to the main purpose.
Lafond v. Deenis, 8i N. Y. 507 (iSSo).
An association, ivhich is not for ^ain, is no partnership, and
ptaiutiff need not join representatives of deceased's joint obligor.
Lo'lge of Ancient Masons appointed committee, B, to provide for
erection of a temple. B obtained loans on sealed certificates of the
Uxlge, A huh had never before issued them, except to attest mem-
bership or to communicate with other lodges. B reported proceed-
ings to Lodge, which approved his course. Temple was constructed.
I.of gc occupied a third floor room, and rented out the rest of the
building. A, who lent lioo, brought assumpsit against over a hun-
flred members, as partners, on a certificate. On trial A testified as to
the loan, and examined defendants.— Verdidl for A set aside. Asso-
ciation no partnership, because not for gain. No members except
34
Pt. I, Ch. 2. Antecedents. §i6,
those who authorized the constru(5liou were Uable to A. He was
competent, because AS. 25 May, 1878, P. L. 153, equitably extends
to joint debtors, and A<51 22 March, 1S61, P. L. 186, don't require
substitution of deceased member's representatives, and therefore lia-
bility only of survivors at issue. A might prove his case by defend-
ants under Act 27 March, 1865, P. L. 38, Ash v. Guie, i Out. 493,
Pa. (1S81).
Association, unless for gain, not a partnership. A, one of twenty
Christian converts associated to promote spiritual and mental de-
velopment, was convidled under 31 and 32 Vic. c. 116, s, i, for em-
bezzling the "partnership" funds. — Convidlion reversed. Association
not a partnership, because not for gain. Queen v. Robson, 16 O. B.
137 (1885).
2. Subscription to mutual proteRion fund no partnership. Society
formed, by annual subscription of its members, for proteAion of their
interests in trade, adled through a committee, which it stipulated to
indemnify out of the funds raised by subscription, or by an assess-
ment. Committee, upon A's qualif^nng himself by becoming a
member, appointed him printer and stationer for the society. He
sued the committee for materials and services. Defence : A their co-
partner, who gave credit to the fund. A obtained verdicSt. — Sus-
tained, because no finding that A looked only to fund for payment,
and exonerated committee from liability for its acfls. Subscribing to
the fund didn't make A a partner. Caldicott v. Griffiths, 8 Exch. 898
(1853)-
H/utual insurance not partnership. B, a mutual insurance Co.,
wdth members in different States, insured A, of Georgia. His widow
claimed that the war prevented him from paying the premiums, and
asked to have the policy reinstated upon payment of the arrears.
Defence : B a partnership, and dissolved by the war. — Not a partner-
ship ; but if so, A entitled to a share of the assets at the date of dis-
solution. Cohen v. N. Y. Mut. Life, 50 N. Y. 611 (1872).
3. De assecur. gl. 20, No. 4, cited, Troplong, Societes Civiles et Com-
merciales, vol. i, p. 21, Paris, 1843.
4. Bravard-Veyrieres, Traite des Societes Commerciales, pp. 15, 26,
Paris, 1S62.
5. Vavasseur, s. 23.
6. Any association for gain, not a corporation, is a partnership. Car-
trust a partnership. Association formed to buy rolling-stock, and to
sell and let it to R. R. Co., which agreed to pay in ten annual instal-
ments the price, which should lie sufficient to cover principal, interest
and expenses. Members furnished money, and received certificates
for principal and interest at 6 per cent., but payable only out of net
rentals. Trustee held title, issued certificates, and executed leases.
Association taxed as partnership. — Liable. Ricker v. Am. Loan and
Trust Co., 140 Mass. 346 (1885).
a. " Que doit-on entendre par benefice? Faut-il necessairement qu'il
" consiste en uue somme d' argent a partager? Evidemment non.
" II suffit que ce soit un avantage commun appreciable a prix d'ar
"gent." Rousseau, Societes Civiles et Commerciales, s. 64, Paris, 1878.
b. Rousseau, s. 66.
c. De Societate, c. i, No. 4, cited Troplong, p. 9.
d. " La societe est un contrat par lequel deux on plusieurs personnes
" convennent de mettre quelque chose en commun dans la vue de
"partager le benefice qui pourra en resulter. " C. C, s. 1832.
35
§17. Antecedents. Pt. i, Ch. 2.,
§17.
(I lie commcncf incut of a partnersl)ip is fiieb bri tl)c toill of tl)c
parties.
When docs the partnership begin? If not at once/
the date may be fixed at the outset/ or left open for
subsequent determination by the partners, or by a
third person; or it may depend on a contingency.
The commencement of partnership, if made to de-
pend upon a condition, which would prevent the part-
nership from coming into existence unless the condi-
tion had been performed, will not be suspended where
the partners proceed to carry on the business, and do
not wait for the performance of the condition. They
will be deemed to have waived the jDerformance by
transacting the business as if there had been no con-
dition.'
The unauthorized a(5l, however, of a party does not
commit the firm and establish the business.^
I. Partucrship dates from agreement, not from beginning business
iiNdn- //, and the purchase by a partner, though for his quota, if made
on joint credit, binds all in a name which he adopts, B agreed to
crca a .listillery on liis land and let it for 15 years from date of the
agreement. C & D to fit up the establishmeiiit, stock it, and adjust
each partner's quota by his contribution. C & D to condu(5l the busi-
ness in consultation with B. All to share the cost of distillery, and
jointly own stock and establishment. D, on strength of B's credit in
N. \ ., Ixniglit merchandise, for which he gaye a note in B, D & Co.'s
name. Nolhing was done to carry out the agreement, and the busi-
ness never began. Defence : Purcha.se by D for his contribution and
paitnersliip a projecfl not realized, because the conditions preliminary
to Us existence were not performed. -Judgment for A. The defend-
ants were jointly interested in the business, and were co-owners of
«^,l r l'\" ,''■• i?'^''' 'V'>« t'' ^^e sold for their mutual benefit. The
fhl n, frc 7- e'Tea on us execution, and empowered each to bind
n nwil V whi" "'^ of;-* ".'-^''le implied its adoption by B and D. As-
pinwall V. \\illiams, i Ohio 84 (1823).
2. If a father puts his son into business with another, as a
Clerk, on a salary graduated by the profits, for three
years, and at the expiration, as a partner, the son would
36
Pt. I, Ch. 2. Antecedents. §17,
not be liable for debts contra^led during the three )'ears,
because the provisional arrangement lasted until the end
of the term.
Ad interim clerk not a partner until the term expires. B, a manu-
fadlurer, advertised for a partner, aud C's father, in response, arranged
for C to become B's partner. The arrangement was subsequently
postponed for 3 years, and it was agreed that in the interval C should
have a salary, ascertained by the profits, but not so as to be liable as
a partner. C acfled as a partner, by opening letters and discharging
clerks, and stated that he was B's partner. A, who was in the habit
of suppl3'ing B with goods, sued C for the price of goods sold after the
arrangement. A did not know, when he sold the goods, of C's state-
ment, that he was a partner, though B then told him that C was his
partner. — Not liable, as B's declaration to A did not affedl C, and his
admission was not known to A when he gave B credit. Arrangement
made C a clerk for 3 years, and not a partner until the term expired.
Edmansou v. Thompson, 8 Jurist N. S. 235 (1861).
If a lender took interest and a percentage of the coal
mined, and, as security, an assignment of the lease and
title to the works, and stipulated for three-fourths of the
profits when repaid his loan and expenses, he would not
be a partner, because the partnership would not begin
until the loan was refunded.
Equitable mortgagee 0/ mines and prospe^ive partner, upon repay-
ment of loan, is not a partner until repaid. By articles, B advanced C
;^2,ooo, for working a coal mine, and assumed liability for that
amount. B stipulated for 10 per cent, interest and for a commission
of 3d. a ton on the coal mined. He took assignment of lease and title
to works until he should be reimbursed. After payment of advance,
royalties and expenses, he was to have 3-4 the net profits, and C 1-4
and a salary. C worked mines, and became insolvent. B died before
his advance was repaid. A sued B's executors for debt incurred in
working mines. — A lender, and not a partner until loan repaid and
subsequent arrangement took efife(5l. Dean v. Harris ; Harris v. But-
terfield, 33 Iv.T. 659(1876).
3. Carrying on business zvaives condition 0/ partnership. Not zvar,
but interdiilion of commercial intercourse, dissolz'cs partnership.
Articles of N. O. firm, in which B was a general partner, declared
that they should be void unless C became special partner. C refused,
but firm continued business, and accepted a draft in A's favor, April
23, 1861. B returned to his home in N. Y., April 27, 1861. A sued B.
Defence : War, which began April 13, by attack on Sumpter, dissolved
the partnership. — Recovered. Firm waived C's membership by con-
tinuing business. Though war begun, partnership not dissolved until
commercial intercourse interdidled by President's Proclamation in
August, 1861. McStea v. Mathews, 50 N. Y. 166 (1872).
Beginning business makes partnership. By articles, partnership
between A & B was to begin when each had contributed his quota.
B paid his share in part; A paid in full. They hired and stocked a
store, and began business. B never paid vip his contribution, and A,
being excluded from store, sought to recover, as owner, the posses-
sion of stock bought with his money. — Beginning business consti-
tuted a partnership, and was a waiver of condition as a preliminary
Stock belonged to firm. B's failure to contribute, or A's exclusioi/
37
§iS.
Antecedents. Pt. i, Ch. 2.
was a vrround ol" dissclutiou, and A's remedy was a bill for an account.
\ie\ V Ik-tz, 2 E. D. Smith i88, N. Y. (1853).
•/<7 0/ partner in excess of authoritv does not begin the business.
' B 'contributed patented articles, and sold them. The proceeds were
c(iuallv divided. C authorized to take notes in payment, and endorse
H it C's name. D paid a pauper $2, who made a note to B & C, and C
endorsed it in B & C's name, to D. He endorsed it to A, a bonajide
purchaser. A sued B & C. B's defence : No partnership and note a
forL'erv.— Judgment for B. C'^ first acl, being in excess of authority,
was a Vorgerv, and 15 not estopped, because no business begun, to cre-
ate reputation of partnership. Hotchkissv. English, 4 Hun 369, N. Y.
(1875V
§18.
(il)c postponement of a partnersl)ip, luljicl) enables an option-
l)olt)cr to eipeiinient luitl] tl)e business, iiocs not affect tl)ii"b
persons.
The right to make the partnership hang in suspense
until the issue of its success or failure is determined,
although absolute for the contra6ling parties/ is none
the less subject to the rights of third persons. The
parties cannot make the commencement conditional,
for the purpose of concealing a partnership which does
in facT: exist.' If they were permitted to speculate at
the expense of creditors, a business could be estab-
lished and controlled by a principal, who might shift
its liabilities upon a man of straw, and monopolize its
profits himself The disguise is all the more trans-
parent when the option to become a partner, if exerted,
relates back to the beginning of the business, and
entitles the holder of the option to share the profits
from the start.'' The prima fades is that the option
does not relate back, but that the membership dates
from the exertion of the right, and that proof must be
snade to establish a relation back to the inception of
38
Pt. I, Ch. 2. Antecedents. Si8.
the partnership/ During the interval, the characfter
of the option-holder is determined by his a6ls. If the
business was in reality controlled by him, and the
right was reserved for the purpose of hiding the fa6l
during the period of experiment, until he could pro-
claim his position without incurring the risks of the
business, the form will not affe6l the substance of the
transaction.
1. Partnership to begin with the tnaking of profits, does not obtain
imtil profits accrue. A rented fa(5lory, furnished capital, supplied
machinery, and bought materials for silk lace manufacfture. B was
superintendent, and was to receive £2 a week from A until profits
should be made, and then 1-2 profits. A sued C, the sheriff, for seiz-
ing and selling manufadtured goods at instance of B's separate cred-
itor. — Recovered, as B could not be a partner until there were profits
to be shared. Burnell v. Hunt, 5 Jur. 650 (1841).
2. Option to take profits makes a partner. Holding out. A owned a
saw-mill, and B managed it, under the name of B & Co., for a share
in the profits or a salary, at his election. In the spring, A contracted
to saw D's logs. During the summer, B refused to saw them, and, in
the fall, elected to take a salary. A, who subsequently bought out
B, sued D. He set up the damage caused by B's refusal. Dedu(?tion
allowed. — -Holding B out as partner made A responsible for his a(5ls.
B was a partner until he exercised his option, because of his right to
the profits. Chamberlain v. Forbes, 3 S. C. 277, N. Y. (1874).
3. Option to become a partner makes no partnership, inter se, until
exerted. A & B agreed that B should carry on business as B & Co.,
which should, from the outset, be for the benefit of himself and of A's
nominee, if A should nominate a partner within 8 years. A under-
took to make advances, and to go security for B, who, in turn, stipu-
lated to carry on the business with A's nominee for 21 years, and to
give notes for amounts advanced by B. B kept A advised of the state
of the business, and A had right to inspect the books. Cash and bills
receivable were deposited with the cashier, who applied them in pay-
ment of firm liabilities. During the first 8 years, the proceeds should
be applied to pay B, board for himself and family, and ^100 a year,
and A his advances, with interest, and then B should take 1-3 and A's
nominee 2-3 of the profits and losses. Before 8 years expired, B
became bankrupt, and A, who had not elecfted to nominate himself
as a partner, proved for his advances. — Entitled, as he had not exer-
cised his option to become a partner, and as there were no firm cred-
itors with whom he competed. Ex parte Davis, in re Harris, 4 DeG.
J. & 8.523(1863).
4. If a lender took no interest, but stipulated for one-
seventh share of a market when ere6led, and then the
loan went on account of payment, he is not a partner
with the builder, because the agreement referred to com-
pletion.
39
§19. Antecedents. Pt. i, Ch. 2.
liurdcu on plaintiff to shoiu thai partnership agreement relates back.
H iuivainc-tl money, with interest, to C, a builder, for the eredlion of
a inarkit, and, on' its completion, agreed to take 1-7 interest in it.
His advances went on account of payment, and if not equal to valua-
tion, he agreed to pay the balance ; if in excess, C agreed to pay in-
terest on surplus as "a loan. Profits had accrued before agreement
was made, l)ut no account had been taken. A sued B as a partner,
for services and materials furnished during constru(5lion of building.
Verdici for defendant. — Sustained. As a conX.ra.&. pri»ia facie s^y^ak-S
from its date, and as B had taken no share in the profits, the jury was
entitled to negative a partnership from the beginning of the opera-
tion, although B's advances made without interest, resembled a con-
tribution. Ilowell V. Brodie, 6 Bing. N. C. 44 (1839).
Lender's option does not make him a partner. B, on i September,
1S67, made advances to C, an oil refiner, and took a mortgage on his
works as security. C agreed to repay advances before I January,
1870; until then to pay B 30 cents a barrel for oil refined, to keep
accounts, and let B inspe<5l books, and to keep works insured and
unincumbered. If B elecfled, before i January, 1879, to become a
partner, the advances would become his contribution, and he would
share profits from commencement of business, returning the 30 cents
a barrel received, and paying C an annual salary of |2,ooo. B did
not elecfl. A sued B & C as partners.— Judgment for defendants.
Irwin V. Bidwell, 22 Sm. 244, Pa. (1872).
But where a man's contribution is already in the busi-
ness, the option to become a partner is pradlically the
ri^ht to take the profits, if any accrue, and this is a part-
nership.
§19.
^\]t contribution is mak bri a partner to X\)t firm, anb w \)\b
separate obliaatian.
There is no partnership in the contributions. Al-
though the partnership may begin before the contri-
butions are made, yet the firm is a subsequent associa-
tion, and the contributions are individual obligations
antecedent to the partnership. Being the quotas
which the partners contribute, they charge the indi-
viduals, but not the firm. If a partner contributes
his quota of stock to the firm, and it becomes firm
property, his co-partners do not become liable for the
Pt. I, Ch. 2. Antecedents. §19.
price. The buyer alone is liable, and he is the
partner,' If the purchasers agree to pay according
to their quotas for a common stock, they will not be-
come jointly liable.^ The firm does not assume the
debt of the individual partner for his contribution,^
and his attempt to impose it upon his co-partners is a
fraud, which would be sufficient to set aside a judg-
ment for collusion against the creditor who knew the
purchase was made for a contribution.''
The co-partners become liable when the sale is made
dire(5lly to the firm,^ or to a partner, if he buys for the
firm, although on his separate credit. The business
cannot be severed and turned into single ventures in
order to let the partner treat the separate purchases as
his contribution.*' Though if nothing is undertaken
but a series of optional ventures, the purchases would
stand as contributions.^
As it is a preliminary condition, the partners may
enforce the contribution by an adlion. But after going
on with the business without the contribution, they
could not exclude the partner who failed to pay his
contribution. The non-payment would entitle them
to dissolve the firm, but not to take the law into their
own hands and exclude him.^
1. Merchandise ordered by a partner, as his contribution, a separate
debt. B, owner of ship, and others agreed, jointly, to fit her out for a
voyage. Each furnished his portion to the cargo, and shared the
profit and loss of the adventure in proportion to his contribution. A
proved against B, who became bankrupt, for copper bought as his
contribution, and subsequently brought assumpsit against the others,
as partners, for the price. The defendants had accepted drafts for the
copper. — Though liable on drafts, not in assumpsit, because each paid
for his own contribution, which did not become joint stock until the
voyage began. Saville v. Robertson, 4 Term. 720 (1792).
2. A purchase in common not partnership. B, a merchant at Leeds,
who was in the habit of dealing with A, at Hamburgh, ordered a
cargo of wheat, on account of himself and C, and direcfled bills to be
drawn upon each for his moiety. The correspondence described the
41
§19-
Antecedents. Pt. i, Ch. 2.
ailvciiture as joiiil. The cargo was shipped, and each took his half.
H paid lor his share, and A sued him for balance of price due from C,
who had become bankrupt.— Not C"s partner, because no sharing of
profit Olid loss, but a separate purchase by each. Gibson v. Lupton, 9
BitiK. 297(1832).
3. f^rlnn-'s deed of lai:d held for firm to repay his contribution, gives
' HO title against firm cr.-ditors subsequently obtaining judgment. B, C
& I), partners, bought laud, though they took as tenants in common.
I) sold out to B & C, who agreed to contribute |5,ooo each, to carry on
the business. B conveyed to A, who endorsed his note for |5,ooo,
and who knew the facts, a moiety of land as security, B & C failed.
SulKsefjucnt judgment-creditor of firm obtained decree for proceeds.
A ap]H.'aled.— Judgment afiSrmed. Firm title paramount to A's deed,
which was, iu efiect, a mortgage for B's contribution. Bank v. Sawyer,
38 O. 8.339(1882).
4. If partner gives firm note and judgment to lender, for money to buy
his contribution, firm creditors may attack judgment collaterally for
collusion betiueen partner and lender to defraud them. B agreed to
furnish capital for firm of B & C. They bought out D, whom B paid
jtjSfj, but raised the purchase-money by giving a firm note for ^1200,
which A discounted for B. B gave a judgment note of the firm and
of himself to A, who entered up judgment and took firm property in
execution. C asked to open judgment. Refused. He then confessed
several judgnients to D et al., firm creditors, one of whom sold the
finn property on execution, for ^916. A claimed priority. Auditor
awarded fund to D et al., and excluded A as B's individual creditor.
— .\ffinned. Judgment collusive, and creditor could attack it before
auditor. McNaughton's Appeal, 5 Out. 550, Pa. (1882).
5. I) i reel purchase for the concern, and not for a contribution to it,
charges the partners. B & C agreed to repay D his advances in a
previous adventure out of the returns from a new venture, and to go
halves witli him in the surplus of profit or loss. The goods were to
be bought and paid for by B & C, and shipped on a certain vessel. D
also consigned goods to the supercargo, for sale on joint account with
H. A sued D for the price of goods bought by B & C for the ship-
ment. — Liable as a partner, because the goods immediately upon the
purcha.se became stock of the concern, without any intermediate
ownership in B & C. Gouthwaite v. Duckworth, 12 East. 421 (1810).
6. Purchase on separate credit for joitit account charges firm. B, C &
I> manufaAured leather in partnership, A buving as an individual, on
his separate credit, one-half the hides, B and C the other half, and
dmding the nianufaclured leather for sale as separate individuals.
A sold B hides and .sued the firm.— Recovered. The purchases and
sales were made for the firm. Everitt v. Chapman, 6 Conn. 247 ( 1827).
7. Partner's purcha.ses contributions for optional undertakings. B, C
& D agreed for shipment and sale of cattle on joint account. Each
might buy and jiresent cattle for shipment. If accepted by the
others, they became firm stock. A, who knew nothing of joint
arrangement sold B cattle. C rejected, but D accepted, them, and
Uiey were so d for joint account of B and D.— A's judgment against
hrm reversed. No partnership until contribution accepted. Valen-
tine V. Hickle, 39 Ohio vSt. 19 (1883).
8. Failure by partner to pay cotitribution in full don't entitle the co-
partner Uy exclude him ivithonl a dissolution. A. B & C formed
partnership to ereA buildings and carry on business. Each to con-
42
Pt. I, Ch. 2. Antecedents. §20.
tribute |;io,ooo. A owned land, valued at >6,ooo, which he put in as
part of his contribution. After business had begun, B & C excluded
A, because he had not paid up in full. A brought bill for dissolution
and account. — Decree. B & C might have brought suit for balance,
or for dissolution, but could not exclude A without a dissolution.
Hartman v. Woehr, 3 C. E. Gr. 383 (1867).
§20.
If takm into a firm alreabu formed, a fiartwr mnnot bt l)elb
for a contribution, unUss \]t a%vttii to makt onc.^
A partner not being liable for the contribution of
bis co-partner, is not cbarged for the contribution
made before he became a member of the firm. He is
not charged as a partner before he becomes a partner,
nor after he joins the firm are his liabilities carried
back, and made by relation to precede his membership.
If admitted to share in a shipment after the merchan-
dise was bought, he does not become liable for the
price." The buyers alone are liable, because the mer-
chandise alone was contributed by them. In the
absence of a stipulation that he should reimburse
them a part of the outlay, in proportion to his share
of the profits, the law will not imply such an obliga-
tion. Unless they stipulate for a contribution by
him, the capital borrowed by the firm for its business
cannot be charged as a joint expense, and a portion
corresponding to his share of the profits be dedu(51ed
from his account.'' The law does not make a partner
contribute. The contribution is the result of his
agreement. An existing partnership is presumably
equipped with its capital stock, furnished before the
firm began business.
^j Antecedents. Pt. i, Ch. 2.
I Cow aUribiiU-s this to the partnership conlradl: "A subsequently
' "aciiuiml joint interest has not the effecfl and operation of altering
"and varyiiiK Hi*-' "iiture of the original contraa. . . If such an e.r
"host fdi'lo operation were ascribable to an after-acquired right, the
"law would in fad create a supposed contra(5l, when the real con-
"tracl was consunnnated before the joint interest and consequent
"joint risk was in existence. No subsequent adl or acknowledge-
"nicnt therefore will create in a party the charader of, or render him
" liable as a jiartner upon a cjntraA, if it clearly appears that a part-
" nership did not exist at the time the coutracT; was made." Gow on
Tartnership, 31. London, 1823.
2. Adtnitliui^ party after purchase of goods to share in adventure does
not com in it him for price. B bought goods of A for shipment to the
Ilaltic, anil let C take 1-5 part in the adventure upon delivery of the
goods on l)oard. A sued C for the price. — Not liable, because the
goo<ls remained H's property until contributed to the joint enterprise,
by giving C an interestin them. Young v. Hunter, 4 Taunt. 582 (1812).
3. I 'n less a partner is lialilc to contribute capital, his co-partners can
not charge him interest on money borrowed as working capital for the
firm. B & C owed A $1, 126.36 for arrears of salary, when they took
him into tlie firm, and gave him 1-5 of the net profits for 5 years, and
1-4 for 2 years. A, in account, claimed that the net profits were
135,776.38, but B & C estimated them at ^^31, 121.69. Tbe difference
was the interest on money borrowed by B & C, as capital for the
business. — Decree for A. The inference to be drawn from the articles
and conduct of the partners was that B & C should furnish the capital.
If they borrow it, they should pay interest for the loan, and not A,
who made no agreement to contribute any capital. Topping v. Pad-
dock, 92 111. 92 (1879).
§21.
<Jhc (Tourt iJctcrmincs tl)e legal effect of tl)c contract, but Us
trnns, if oral, arc founi) bij a jurn.
Who ascertains whether a partnership exists or not
depends upon the nature of the contrad. If it is in
writing, the court interprets the meaning of the parties
and determines the legal effec^t of the articles. If the
contract is not in writing, the jury finds what the con-
trad was,' and the court decides the legal effeA of it.^
I. li'/ial the contraa between the parties is, viust be found bv a jurv.
A, a retail dealer, had an arrangement with B, the brewers, to supplv
nim with t,eer. A's version was that B should have 1 7sh. a barrel out
ot tbe profits in consideration of his paying 1-2 A's rent, and A should
44
Pt. I, Ch. 2. Antecedents. I2Z.
have the rest of the profits. B's version was, that he should pay 1-2
A's rent, and repay himself by adding lysh. a barrel to market price
of beer which he supplied to A. The question, upon petition of A's
assignees in bankruptcy, was whether this agreement constituted a
partnership. — Which version was true, was an issue of fa6l for trial
by a jury. If B shared the profits, he was a partner ; if he charged
his half of the rent in the price of the beer, he was not. Ex parte
Langdale, 18 Vesey, Jr., 300 (1811).
2. Upon undisputed /ac^s, question of partnership a conclusion 0/ law.
B & C agreed to contribute capital to buy live-stock, and to share the
profit and loss of their dealings. B, who did not complete his con-
tribution, gave a bill of sale for stock to his separate creditor. A, who
brought trover. B & C insolvent. C's defence : Question, whether B
partner only in profits or also in stock, for jury. — ^Judgment for
defendant. Court decides upon undisputed fadls. Firm title not
devested by B's sale. Kingsbury v. Tharp, 28 N. W. R. 74, Mich. (1886).
§22.
Unless tf)e terms of tl)c contract l)(n)e been trefiniteln settled,
tl)e contract is not ronclubeb.
As the partnership results from a contradl, the
terms must be finally settled by the parties, or there
will be no contrail which can be enforced. The busi-
ness, if undertaken, would not operate as a substitute
for the contradl, if the parties meant to agree upon the
terms but failed to complete the bargain.*
I. specific performance of partnership contract not eftforced until terms
definitely settled and plaintiff able to fulfil his obligations. A, B &
C were engaged in organizing a sewage company. B was to furnish
capital which was to be repaid out of profits, and was to receive a
commission on the transadlions. C divulged his process for making
yeast, and they agreed to be partners for its manufa6lure. B was to
supply the nione}-, and A and C do the work. They started three
different places of business under various names, though B took leases
and kept bank account of each in his own name. They had articles
drawn up, but did not sign them, and then quarrelled and put A out.
He brought a bill to enforce the contracft. — vSpecific performance
refused, because he had negledled to secure execution of the contracfl
and was never in a position to bear the losses imposed by its terms.
Ellis V. Ward, 21 W. R. 100 (1872).
45
§23-
Antecedents. Pt. i, Ch. 2.
§23.
^\]c intention to be ^jautncra is not fquiBalcnt to a contract of
partncrsl)ip.
The intention may be reconsidered, and until em-
lx)died in a contradl it does not charge the parties
who entertain the projeA as partners by anticijDation.'
The failure of a proje6led company to come into
existence after the applicant has qualified himself as
a member, would save him from liability as a partner.
He would have made an offer to become a partner, but
there would be no company in existence to accept it.^
A would-be-member is not liable for the a6ls of the
projectors, except so far as they were his agents.'^
On the other hand, if an applicant takes part in
organizing a company, but does not comply with the
requisites of admission, he does not become a member
in due legal form.'' He is not a partner, and cannot
be charged as a member of the company. He may
even have the right to demand the privileges of mem-
bership, and 3-et not be a partner; he may hold scrip
which entitles him to demand certificates of stock, but
he is not a partner until he exerts his right and be-
comes a member of the company,'
1 . Ititinlioii not equivalent to contraFt of partnership. B, and 4 others,
rx)UKht cotton, with intent, but without contract, to sellon joint
account. H liehl the cotton. He consigned it to A for an advance,
pretending that lie had authority. A lost on consignment, and sued
Uie others for the loss.— Xo partnership until intention to sell passed
into a contract. Baldwin v. Burrows, 47 N. Y. 199 (1872).
2. Takiuir stock in projeHed Co. no partnership until Co. established.
I rosi)ectus issued for ijrojec'led Co., to be organized by a deed, and all
ulio flid not execute it within 30 days were to forfeit their interest.
» appiierllor shares, which were allotted to him, and he paid the first
^w,^'!^ A , '^e°°^ "o part in the concern, though his name was
inserted by Secretary, in the list of subscribers on the Co.'s books.
A sucfi ji, as a partner, for services and materials furnished the Co.
46
Pt. I, Ch. 2. Antecedents. §23^: <■
— Not liable, because he had only offered to become a partner in the
Co., which never came into existence, and had not constituted the
projedlors his agents. Fox v. Clifton, 6 Bing. 776 (1830).
3. Promoters not liable beyond subscriptions. A, B et al., subscribed
and paid for stock of projected corporation for a college. A advanced
money in eredting buildings, and sued B et al. for contribution. — Not
liable. Subscription limit of defendant's undertaking. Shibley v.
Angle, 37 N. Y. 626 (1S68).
Intermediate partnership until incorpoimtion. A held notes of B
& C, partners, in Conne6licut, 24januar3', 1877, "cv'hen D, of Boston,
and E, of Providence, advanced jf2,ooo for a quarter interest in the
business and a quarter of the capital stock of a corporation to be
organized to carry on the business. A, upon hearing of agreement,
did not press for payment, but took renewal notes after 24 January,
1877. A also discounted note, 22 June, 1877, for $300. Neither D
nor E took part in business, or knew of coutracft being divulged to A.
— A obtained judgment for ^300. D and E partners from 24 January-,
1877. Counedlicut law governs question of partnership. Citizen's
Bank v. Hine, 49 Conn. 236 (1881).
A partner's status in a firm may be assumed ivitlwut liability as a
qualification for incorporation. A, B & C, partners, contemplating
incorporation, agreed with D to take him into their business upon
his paying |;5,ooo in cash and giving his note for |;5,ooo, and to divide
the shares in the proje(5led corporation in proportion to the contribu-
tions in the business. D was to share the profits from the date of his
payment. The firm was insured, and a clause avoided the policy
for any change in the title or possession of the property, or if the
interest of the assured was anything but the entire unconditional and
sole ownership of the policy. Defence : Change by D's becoming a
partner. — D not a partner. Prospecflive stockholder and intermediate
lender. London Assurance Co. v. Drennen, 113 U. S. 51 (1885); 116
U. S. 461 (i886j.
4. Scripholder, tliougJi intending to become a partner, is not sucJi in
fa^. B applied for 30 shares of a proje6led Co. 10 were allotted to
him. He paid, on account, ^15 a share, signed 'some' deed at Co. 's
counting-house, received scrip, and attended a shareholders' meeting.
A sued him, as a partner, on an acceptance of the Co. — Evidence
insufficient to charge B as a partner in fa6l, or by holding out. Dick-
inson V. Valpy, 10 B. & C. 128 (1829).
Signing prospertus, and aiding organization of a company, is not
joining it. B signed prospectus, which announced the projedl of a
company and the terms of subscription. He attended a subscribers'
meeting, and solicited others to take shares, but never paid his sub-
scription. A supplied goods to company, and sued B as a partner. —
Not liable, because a declaration of intention to be a partner is not
sufficient to make out an adlual partnership. Bourne v. Freeth, 9 B.
& C. 632 (1829).
5. Holding certificate and paying deposit do not make a stockholder.
B paid denosit on a share in Co., and received a certificate, which
described her as the holder of share No. 133 of Co. 's stock. She had
never signed any deed, though she had spoken and written of herself
as a shareholder. A, who knew nothing of her holding herself out
when he made the sale, sued her for price of merchandise sold and
delivered to Co. — Not a member, although she thought she was, as
the certificate conveyed no interest in the stock. Vice v. Anson, 7 B.
& C. 409 (1827).
47
524- Antecedents. Pt. i, Ch. 2.
§24.
«lraLimg in corporate form u)itl)out a fran£l)ise, is a partiursl]ip.
Persons acling iu corporate form without a franchise
are partners, and are liable for the adls of the admin-
istration which they have organized to carry on the
business.' Even in the case of a valid incorporation
the stockholders theoretically dire6l and control the
management of the corporation, and, as the ultimate
repositaries of the corporate power, they authorize and
sanclion its exercise. This theor}' would charge all
the corporators as partners, were it not for the exemp-
tion secured by the franchise." The immunity from
liability for joint transa(5lions can be obtained only by
a grant from the State. It is the charter which secures
the exemption. Nevertheless, trading as a coporation
has been held not to charge the stockholders as part-
ners where they, or the parties who dealt with them,
transaclcd business in the belief that they had a char-
ter. The corporate existence in law was justified by
faith. But they were none the less doing a6ls which
constitute partnership, and they are charged as part-
ners by law, which they are bound to know. It is no
answer to say that they should not be made partners
by operation of law, unless the law renounces its pre-
rogative, and refuses to pronounce the legal efifecT: of
the transaction. The reason for the decision is sim-
ply the hardship of the common law, which charges
every proprietor of the stock with unlimited liability
as a partner, although he took no part in the manage-
ment of the business (§3). Doing business in corpo-
rate form without a charter presents an extreme appli-
cation of the dogma. Where there is a corporate
48
Pt. I, Ch. 2. Antecedents. §24.
franchise, the stockholders are not, practically, prin-
cipals in the business, for they possess but a shadow
of power in the management of the corporation. This
is the justification for the exemption which the sover-
eign grants by the charter. The member of an unin-
corporated association is as remote from the manage-
ment and control of the organization as the corporator
in a chartered company. This brings out the hard-
ship of the member's position in being charged with
unlimited liability, but there is for him no relief con-
sistent with the struifture of the Common law, except
a grant of immunit}^ from the Sovereign power.
A de faclo is an illegal corporation, because the
incorporation was not efFe6led according to law. The
color of authorit}^ for the existence of such a corpora-
tion is derived from tradition. When the franchise
was a dire(5l grant made b}^ the Executive or Legisla-
tive department, the charter was deemed the a6l of a
co-ordinate branch of the Government, and, in defer-
ence to the Political Power, was treated as a judgment
which could not be impeached collaterally. The pro-
hibition by Constitution of special grants, and the
statutory regulation of incorporation has made it sub-
je(5l to judicial cognizance, and has changed the char-,
a6ler of incorporation from a Public to a private trans-
a6lion. The incorporation has become, and is now,
the a(5l of the incorporators In cases of incorporation
under general statutes, the Executive department of
the Government is powerless to prevent the incorpora-
tion. Its a6lion is purely ministerial.
Since provision has been made for incorporation by
general statutes, and compliance with the statutory
requirements is the only condition of the franchise, a
49
?!24.
Antecedents. Pt. i, Ch. 2.
corporation has the status of a special partnership.
The corporator, like the special partner, claims exemp-
tion from the full measure of the liability which, by
the Common law, attaches to his a6ls. The special
partner, however, furnishes co-partners who are liable
to the full extent for the joint a(?ts, whereas all the
corporators claim the benefit of a limited liabilit}^
In a choice between a corporation and a special part-
nership, the law, which exa6ls the security of indi-
vidual responsibility, must prefer the special partner-
ship, which involves a narrower exemption. But
neither is privileged in the first instance. In each
case immunit}^ must be proved, for it is a universal
principle that he who claims a special privilege must
make out the exception upon which he relies. The
burden of proof rests upon him, and is the condition
of his right. If the law has prescribed the requisites,
nothing short of compliance with the requisitions of
the law will be sufficient to establish the exceptional
privilege.
The question arose under general mining laws, and
the change in the chara6ler of incorporation, from a
Public to a private a6l, was recognized by the Supreme
Court of Pennsylvania.' The position was subse-
•quently reconsidered, and the decision declared not to
be law. ■' The change of the process was admitted, but
the effed of the change M'as denied. Upon what basis
of reasoning does the denial rest? The staple of the
argument is the miserable plight of the stockholders,
who are cliarged as partners. But hardship proves too
much. If unlimited liability for joint ads is unjust,
the Common law exadion should be restrided, and a
limit'-d liability allowed where the corporator, or part-
50
Pt. I, Ch. 2. Antecedents. §24.
ner, takes no part in the business. So long as the
principle stands as a part of the law, and is admitted
by the court, the hardship does not furnish a legal
reason for rejecfbing the law. This is self-evident, and
the hardship of the case must not be permitted to mask
the real position. The ratio decidendi was that self-
incorporation under statutes is, by tradition, the grant
of a charter by the State. The corporators are pro-
tected by the reminiscence of the deference shown to
a6ls of Government in the days when the franchise
was received by dire6l grant from Parliament or the
Crown.
A point is made by Morawetz, to uphold his argu-
ment, that a de faBo corporation prote(51:s its members
from liability as partners. It is this: If the corpora-
tors are charged as partners in 2Lde faFlo corporation,
the members of a de jure corporation must also be
charged upon the same principle for its ultra vires
adls.*" The answer to his position divides itself into
two parts. First ^ As to ultra vires contrails. There
are none. A contrail made by the agent of a corpora-
tion in excess of its authority delegated to him is not
the contra(5l of the corporation, and does not create a
corporate obligation.^ In order to charge the corpora-
tors as partners upon an ultra vires contrail, they
must all unite, and authorize it to be made ; otherwise
only the persons who do or authorize the aA are lia-
ble.^ Second^ As to torts. Between the tort-feasor and
his innocent associates, they are always ulti'a vires.
The partner, or corporator, who commits a tort is lia-
ble individually, like any other tort-feasor, for his a(5l,
although when he is a6ling in the course of the joint
business, his tort charges the firm, or corporation.'
51
§24- Antecedents. Pt. i, Ch. 2.
Nevertheless, the ultimate liability is that of the
wrong-doer, who must reimburse his co-partners, or
the corporation. Of course it was never intended by
the charter to authorize the corporation to commit
such torts, but in charcring the company the liability
cannot be said to be incurred in excess of the franchise.
In facl, the endeavor to trace the liability of a corpora-
tion to an authority from the State to perform the adls
by which the liability is entailed is misleading. The
real purpose of a charter is not to grant powers, but
to secure exemption. The so-called powers in the
charter are nothing but a description of the scope of
the business for which the members have obtained
the exemption. They are liable as a corporation for
every acl done in the course of that business, not be-
cause they are authorized by the State to do the adl,
but because the adl is an incident of the business
which they themselves undertake. When the tort is
not incident to the business defined by the charter,
it stands upon the same footing as an ultra vires con-
trad. No one is liable but the tort-feasor and his
accomplices, and they are charged to the full extent
of their individual capacity. No foundation, it thus
appears, exists in law, which is the embodiment of
principle, for the analogy instituted between a de fadlo
corporation, which charges the members, because they
have no right to transaci; business, except as partners,
and a de jure corporation, which has the right to trans-
ad business, and is liable for the tort of a member,
because it is committed in the course of the corporate
bu5;niess. The abuse by the agent of his authority
charges the principal, because the authority exists.
52
Pt. I, Ch. 2. Antecedents. §24.
The act of a person who has no anthority charges
him, because he is a principal.^
The effe6l iijDon a charter granted by the State of
Pennsylvania prior to the present Constitution, of an
acceptance by the corporation of subsequent legisla-
tion in its favor, might be to reduce it to the status
of corporations formed under the general statutes,
which regulate self-incorporation. This would do
away with the Dartmouth College case in Pennsylva-
nia, and bring corporations, like other persons, under
the sovereign control of the Commonwealth.^"
1. Lnincorporatcd society a partnership. Joint stock conipany ap-
pointed trustees, who, in exercise of their discretion, purchased a
printing press. — All members liable for price, as partners. Wells v.
Gates, 18 Barb., N. Y., 554 {1854).
Managers of unincorporated society appropriated property of the
body to their own use. Some members sued for conversion. De-
fence : Non-joinder of the others. — Suit maintainable by some part-
ners on behalf of all, under Code. Dennis v. Kennedy, 19 Barb., N.
v., 517(1854).
Coiitrafl for salary with alleged corporation don'' t bind a subsequent
president and stockholder as partner. A was employed, as super-
intendent, by B, president of an alleged corporation. Afterwards, C
subscribed to stock, and was eleAed president. A reported to him,
and drew upon him for salary and expenses of business. Until it
failed, C supposed the conipany had a charter. A sued C for salary.
— Judgment for C. A's contract with B. C not bound by a contradl
made before he became a partner. Fuller v. Rowe, 57 N. Y. 23 (1874).
Contract severable, according to services rendered ?
2. If partners transact business in corporation form, they are bound
by aft of directors within scope of business, although irregularly
executed, unless objeRed to at the time. A stage line was organized
to go from Cincinnati to Sandusky, and stock issued to subscribers,
who held part until it could be placed. They elected diredlors, who
bought and consolidated with a line from Cincinnati to Columbus,
abandoning the northern half of the roilte. This was done at an
irregular meeting, but with the knowledge of the stockholders, and
without any protest by them. The companv Ijecame embarrassed.
Creditors' bill for account and contribution. — Decree. Stockholders
partners, and liable for contribution. Purchase of mail route, and.
consolidation with it, within scope of business, and irregular transfer
waived by stockholders' acquiesence. Holder of stock charged as if
bona fide subscriber. Rianhard v. Hovey, 13 Ohio 300 (1S44).
3. Continuing to act as a corporation after the charter has expired,
does not charge the stockholders as partners. Neither B and C, stock-
holders, nor any one connected with the corporation, knew that the
charter had expired. A dividend was declared subsequently, and
received by B and C. D, the secretary, gave a corporation note, after
53
|524.
Antecedents. Pt. i, Ch. 2.
Ihf fxi)iralioii, to A, who sued B and C as partners.— Not liable.
Joint owners arc not ])artners. B and C not even joint owners, but
ustiiv que trust, entitled only to share in surplus after corporation
debts are paid. Partnership arises from intention, or holding out,
but not 'by operation of law.' Dividend was not received as the
profits of a ]>artnership, but of a corporation. Central City Savings
Hank v. Walker, 66 N. Y. 425 (1S77),
\lssumiui^ a franchise creates a de faflo corporation, which exists
until decree of ouster. In 1874, city, B, sold lots to C, taking his
mortgage for uui)aid purchase-money. C conveyed to association A,
which, acting as a corporation, though illegally organized under
General Statutes, divided lot, and sold parcels to co-defendants. _ B,
in 1.S79, recorded mortgage. In 1S80, Attorney General obtained
<lecrce that A never had any corporate existence. B brought suit en
his mortgage and vendor's lien, and, relying on quo warranto,
obtained judgment, A's evidence of attempted incorporation being
excluded. A appealed. — Judgment reversed. Title and conveyances
oi de failo corporation valid until decree of ouster made. Not a
question of estoppel, but of public policv. Society Perun v. Cleveland,
43O. St. 4S1 (1885).
4. Self-incorporation tinder general statutes valid only if statutory
requisitions are fulf lied. B et al., partners, who had erected mills
and carried on manufacturing business, organized under the general
mining law, and five of them certified that they had each subscribed
20<xj shares of I50 each, for the capital of 1500,000, and that 1351,525
had been acluallv paid in. In fact, the only capital was the firm
stock, and the actual pa3nient was the money previously expended
during the partnership. Shares of stock were issued to the partners
in the original firm, who then transadled business as a corporation.
495 shares of the f 500, 000 were never issued or paid for. A sold B et
al. cotton, and sued them as partners. — Recovered. Incorporation un-
lawfully efFedted, no prote(ftion against creditors. Paterson v. Arnold,
9 Wright 410, Pa. (1863).
5. Cochran v. Arnold, 8 Smith 399, Pa. (1868).
6. Private Corporations, by Victor Morawetz, 2ded., 18S6, s. 74S,
ad Jinem.
7. lltra vires contraB not binding. Railroad A, without authority by
its charter, leased railroad B for 99 years, and operated the road. A
et al., who guaranteed performance of the terms, brought bill to en-
force contract.— Dismissed. Ultra vires. Pa. R. R.'v. St. Louis,
Alton & Terre-IIaute R. R., 118 U. S. 290 (18S6).
Torts ofviunicipal officers charge city which they represent. Muni-
cipal cori>oration A sued to recover ^12,000 exa(5led by B, internal
revenue collector, as special taxes on spirits distilled by A, but not
de])osited in U. vS. bonded warehouse, as required by law, and paid
under protest. A demurred to plaint, because the distilling was done
by officers who exceeded their authority.— Judgment for B. Corpo-
ration liable for torts of officers competent to exert its powers. Salt
Lake City v. Hollister, 118 U. S. 256 (1886).
8. Ratification by a part?ier of aEls beyotid the scope of the partnership
not binding, unless all the partners ratify them. B and 22 others
organized company C, which was not incorporated, to construct, equip
and operate a railway in connection with through line, D. The
trustees of C bought of A all the stock of a line running parallel with
1) lor a short distance, making D the principal debtor, and the mem-
54
Pt. I, Ch. 2. Antecedents. §25.
bers of C sureties for the price. B, in his letter of approval, stated
that "the purchase was to be paid for by the duly 'authorized notes
of C." Thirteen out of 23 members of C ratified the purchase. A
claimed payment out of B's estate. — Disallowed. The purchase was
ultra vires, and did not bind the members of C, unless they adopted
it. B's approval was qualified, and not binding without a ratification
of all the members. Roberts' Appeal, il Norris 407, Pa. (1880).
9. MORAWETZ, ^748 and I699, who has collecfled a mass of cases, dis-
cusses the contrariety of opinion which prevails upon the subjecfl, in
consequence of the uegledl to revert for the solution of the problem
to the first principles of the Common law.
TO. A corporation's acceptance of legislation maybe made a condition
for its renunciation of chartered privileges. A, under K&. 16 May,
1857, extended its track, and thereby subje6led itself to A61 3 May,
1855. A also accepted A61 15 April, 1868, andsubje(5teditself to Con-
stitutional Amendment of 1857, Art. I, s. 26, P. L- 811. These pro-
visions made the renunciation by a corporation of its exemption from
State control the condition of its acceptance of subsequent legislation
in its favor. B, imder Art. XVI, s. 8, in Constitution of 1874, recov-
ered damages for property not taken by A, but injured by the con-
strucftion of its elevated track. A appealed. — ^Judgment affirmed. A
surrendered its corporate exemption, and legislature resumed its dis-
cretion to impose additional liability. Pa, R. R. v. Duncan, i Am.
352, Pa. (1S86).
§25.
21 contriLnttion gircs tl]£ propertn to tl)e business for tl]f
tiuratiou of tl)c |3artn£isl)ip, in otl)er tuoriis, girts tl)e use of
propertn ; but trabe, luljiii) is bulling ttn^ selling, Iteds uiitl) tl)e
oumersl)ip, anilt, necessarih), rests tl)e title in tl)e firm.
What is meant by the contribution of a partner to
the stock of a firm ? Does the partner contribute the
use and enjoyment of a fund, or of merchandise, for
the duration of the partnership, and retain the owner-
ship of the stock contributed by him, or does he con-
vey to the firm the ownership of the property?
The title would, unless some reason existed for
shifting it, remain vested in the partner, and nothing
but the use of the property would be contributed to
55
^'25. Antecedents. Pt. i, Ch. 2.
the finiL The use is sufficient to answer the purposes
Iff the business. This is apparent in real estate, which
is not an article of trade. If a partner owns the build-
ing occupied l)v a firm, and used as the stand for
transa(5ling its business, he would contribute the use
and occupation to the joint stock, but he would retain
tlie title as his separate estate. The firm could neither
sell nor encumber the premises. The title could be
aliened or charged only by the contributing partner,
as he remains the owner.* But merchandise is the
staple of trade, and is governed by its laws. Third
persons mav obje6l to a partner's retaining the title
to property contributed by him. The firm must a(?t
as owner, and will be held as owner during the part-
nership.
The answer to the question, it thus appears, depends
upon the nature and effe6l of trade. If it did not a£fe6l
the chara6ler of property, did not make it fungible or
consume it in the use, there would be no necessity for
the partner's transfer of his title to the firm. If the real
estate is a mere incident, not the substance of its trans-
actions, the use is sufficient to enable the firm to trans-
act its business, and persons dealing with the firm
could not be misled by the ads of the firm, which does
not assume to own thepropert}^, but merely to possess
it. But partnership is for trade, and the stock is bought
and sold by the firm. The joinder in trade is to buy
and sell. The business requires that the firm should
have the ownership of its stock. The use and enjoy-
ment would be of no service, because the property is
not for use, but for sale. The title, therefore, must
be vested in the firm, in order to enable it to transact
its business.' Each partner may exzrt the powers of
56
Pt. I, Ch. 2. Antecedents. ^25.
the firm, aud he has the right to sell, not only his own
contribution, but also the contribution of his co-part-
ner. This is a right inherent in a partner, and if it
is taken away from him he is reduced from the rank
of a co-principal in the business to the position of an
agent.
It was held at one period in Penns3dvania that the
capital stock might remain the property of the contri-
buting partner, and that a levy upon it by his separate
creditor would take precedence of an execution issued
by a firm creditor. But the decision was made upon
the theory of working out a firm creditor's right
through the equity of the partner, and not upon a
consideration of the necessity which exists that a
commercial firm must have the title to its stock. ^ The
facets of the case did not call for a decision in this
aspedl, and the precedent may be explained by re-
ferring it to the class of non-commercial partnerships.
The business undertaken was a livery-stable. The
lease and fixtures, as well as the equipment of horses
and vehicles, might be owned by the partner who
contributed the means to procure them. The co-
partner would have no joint ownership of the property,
because there was no necessity in the business for him
to deal with the title. He could fulfil the purposes of
the partnership by managing the business, which did
not involve a sale of the property, but merely its use.
The case, under any circumstances, could not stand
as a precedent for commercial partnerships. The
contribution of a partner remains his separate property
at the farthest only until it is converted by a sale.
The sale is a joint a6l, and the proceeds belong to
the firm. The purchase of goods to replace the mer-
57
§25. Antecedents. Pt. i, Ch. 2.
chandisc sold is made uiDoii the joint credit of the
partners, and the title vests in them. The vendor of
the original stock, bought by a partner for his contri-
bution, has no lien upon it in the hands of the firm.''
He cannot claim the proceeds of a sale or follow the
stock into a different corpus. The partner who con-
tributes property, for which he has not yet paid, to the
stock of a firm, does not commit a breach of trust, but
perforiTTS a legitimate operation of business. The
vendor has no standing as a cestiiy que trusty to treat
him as a delinquent trustee. On the contrary, thej^
stand as buyer and seller at arms length. The sale
and re-purchase of stock are the very elements of trade,
and must be assumed as a fa6l in the business, if not
proved. The stock, therefore, will, in the absence of
evidence to the contrary, be presumed to belong to the
firm.'' As a conversion of the stock is the purpose of
a commercial partnership, the law, when it requires a
contribution, vests the title in the firm, and excludes
a separate execution.
If the title is in dispute only between the partners,
and the controversy does not affe6l strangers, the arti-
cles may make the contribution separate property. A
partner may stipulate to retain title. He does not
then contribute the property to the firm, but keeps
both the title and possession himself."
I . Partner's contribution oflndlding, a usufrncl dm-ing t/ie partnership.
15 & C, partners in publishing establishment. B owned the building,
and finii used it, without lease, for its business. A issued execution
against finu. Pending final process, B sold his interest to D, who
joined C in a new firm, which assumed the debts of old firm, but
before shenfT's sale C & D assigned all firm assets to A, who brought
bill against B for use of building.— Dismissed. UsufruA of building
contributed only for duration of partnership, and ceased upon its
termination by B's retirement. Rapier v. Gulf City Paper Co., 64
Ala. 330(1877). ^ .> I' . ^
Pt. I, Ch. 2. Antecedents. §25.
2. Title to contribution passes to Jinti. A insured his stock in compauy
B. Policy avoided if A's interest in the property was any other than
the entire unconditional and sole ownershii^, or if any transfer or
change was made of his title or possession. Atook C, his clerk, into
partnership, giving him a share of the profits, and against his capital
stock of |i57,ooo stipulated that C should contribute |io,ooo the first
year, and let 1-3 of his salary remain until |,io, 000 more accumulated.
C prohibited from using commercial paper, or drawing checks, and
funds deposited in A's name. The stock was destroyed by fire before
C had contributed anjlhing. A sued B for insurance. The nature
of the contribution, as a temporary disposition over the fund diiring
the limited period of a partnership, was relied on to disprove a trans-
fer of property by the owner to the firm, which he formed with his
clerk. — Judgment for B. In form, and in external fa(5t, the title did
pass, said the Court, even if only for the occasion, and subje<5l to re-
verMng upon a dissolution : In substance between the parties, said
the dissenting Judge, without reference to outsiders, the title did not
pass. Mallery v. Atlantic & Marine Ins. Co., 51 Conn. 222 (1883).
3. Title to firm stock retained by contributing partner. B & C, part-
ners in keeping a livery stable. B furnished capital, and retained
exclusive title to the stock until C should pay a contribution, which
he never paid. A issued separate execiition against B, and, subse-
quently, D a joint execution against both. — A entitled to proceeds
■ of sale. York Co. Bank's Appeal, 8 Casey 446, Pa. (1859).
4. Partners make contribution cf one, firm stock by contraBs of sale
and re-purchase. Seizure on separate execution enures to firm execu-
tions. B bought goods of A on credit, and contributed them to firm.
C contributed labor; profit and loss were equally divided. In course
of business, the stock was sold out and replaced. A sued B for price,
and levied on the stock. Firm creditors issued executions, but sheriff
made no second levy. He sold the goods, and paid proceeds to firm
creditors. A sued sheriff and firm creditors for proceeds. — A had no
vendor's lien. B & C could not deny firm title, because they made
the contracts of sale and re-purchase. Sheriff's seizing stock on
separate execution enured to firm executions. Ryder v. Gilbert, 16
Hun 163, N. Y. (1S78).
5. Stock, though contributed 'Wholly by a partner, through the co-paH-
ner's default in paying his quota of the price, if replaced by joint pur-
chases, becomes firm property, and a joint execution takes it aivay
from a prior separate execution. B & C, holding theniselves out as
partners, bought and sold stock on firm account. C failed to contri-
bute any capital, and received, as his interest, a commission on sales.
A issued execution against B, and firm creditors followed with joint
executions. — In default of evidence that any of the original stock
remained, which was B's property, as C failed to pay his half, the
current stock v.as presumed to belong to the firm, and to have been
bought on the credit of B & C. A's separate execution was accord-
ingly postponed to the joint executions, which took the proceeds.
Walter's Appeal, i Chester Co. Reps. 278, Pa. (iSSi).
6. Partnership inter se cuithout joint stock. Advance, with guaranty
of profits, not a loan, but a partnership. By agreement, A 'advanced
money to B,' for purchase of cattle, which A was to ozun till sale.
B did tlie work. Profits divided equally, and B guaranteed A profits
equal to 20 per cent, on his advance. B attempted to hold the cat-
tle, claiming that the transa6lion was a cover for a usurious loan. A
brought account, averring a partnership, and claiming the whole
59
§26. Antecedents. Pt. i, Ch. 2.
property —Partnership without any joint stock. A entitled to 1-2
profits on sales, and to all the property on hand. Robins v. Laswell,
,- Til -.Ac CtSfi-?!
111. 36s (1862).
^26.
Special partn£rg|)ip ia not an a-ccption, but is t\)t normal tppc
of tl]c relation.
The type of partnership at the Civil law made the
co-operation of a proprietor in the management of the
business the test of his unlimited liability as a part-
ner. • The special partnership embodied this principle.
The introduction of this kind of partnership into the
Common law ran counter to the instincts of the Com-
mon lawyers, who made the property element, or the
interest of a proprietor, the sole test of partnership,
A dormant partner, the commercial type of the undis-
closed principal, represented the Common law partner,
pure and simple. Special partnership impeached the
general principle of the Common law, and released the
special partner from the unlimited liability wliicli
the Common law imposes upon every proprietor.
The docl;rine of the undisclosed principle was felt to
be the obstacle in the way of any limitation of lia-
bility at the Common law, and the attack was directed
against that principle. ^ But the dodrine was found
to be too firmly imbedded in the law to be uprooted.
Upon the failure of the assault, limited liability was
introduced by legislation." The alteration introduced
by statute was not revolutionary, but left the princi-
ple of unlimited liability in force, except wljere a full
disclosure of the limitation of liability was announced
by the record, and brought home to the customers.^
60
Pt. I, Ch. 2. Antecedents. §26.
The expediency of giving a trader the faculty to limit
his liability under the' precaution of notice brought
home to his customers, was obvious. The limitation
of liability was proclaimed as the new gospel of trade.*
The persecution of the special partner by the courts,
in spite of this prevailing tendency to introduce a
limitation of liability, can only be ex,plained by the
professional belief that the recognition of a special
partner would abrogate the Common law principle of
unlimited liability. The statute, however, did estab-
lish a special partnership, and that was the end of it.'
The refusal to recognize this variety of partnership,
except under res trillions, which render its existence
almost impossible, has led to the wholesale abrogation
of the Common law principle of unlimited liability.
As usual, the last state is worse than the first.
1. Undisclosed principal liable on agenVs contrail. B did business as
C's agent, but in his own name. B accepted bill in A's favor, con-
trary to C's commands. A sued C. Defence : C unknown to A at
time of acceptance. — ^Judgment for A. Bill given in course of busi-
ness bound C as undisclosed principal. Edmunds v. Bushell, L. R.
iQ. B. 96(1865).
2. Adl March 21, 1836, P. L. 243, Pa., and Supplements.
3. An anonymous writer in the American Law Review, takes the
ground that notice to creditors relieved a participant in the profits,
who had stipulated against liability, and that this principle would
relieve a known special partner who had not complied with the statu-
tory requirements. Article on Liability as a Partner, 2 Am. L. Rev.
7, 8 and 202 : 1877.
4. Lord Bramwei.1, has recently recounted the history, but his address
is reported only in the daily press.
5. The language of Smith, J., Eastman v. Clark, infra i< 44, n. i,
gives the true rationale of special partnerships:
" If it be argued that it is against the polic}' of the law to allow a
" man a chance to share in the receipts of a business without also
"sharing all its liabilities, the answer is that the law permits such
" agreements as the present to have full force and effect, when the
"stipulations are known to those dealing with the parties. * * * *
" The intrinsic justice of this legal principle seems to be recognized
"by the legislative enadlments relating to limited partnerships
" 'which provide for the public record of the partnership limitations
"as a method of making them known to third persons.' "
61
§2;. Antecedents. Pt. i, Ch. 2.
§27.
:\ partncriil)ip in tl)c firotits uiitl)out a fii-opi-ictovsl)ip of tl)c
stock 15 a miiMioincr in a tomincrcial partncrsljifi.
The sale by agents, or brokers, who receive a share
of the profits, would not deserve mention were they
not said to be partners m the profits, but not in the
stock of a firm. They are, in fad, nothing but agents,
and the designation of partners is stripped of all mean-
ing by limiting the partnership to the profits, which
are only the result of a business. It is the sharing
made by proprietors which indicates that they are
the principals, or partners, in the business.^ For this
reason a partner in the profits for soliciting orders
could not bind the partners who owned the stock by
the release of a firm debtor, who paid him.^ As he
was but an agent, selling was the limit of his power,
and receiving payment exceeded his capacity. Nor
could a partner in the profits, who bought for the
partners, draw upon their bank deposit.^ He was
only a broker, who had no title to the goods bought,
nor to the proceeds, but merely to the profits. A
partner in the profits abroad disposed of a cargo which
had been pledged, but replaced it by merchandise
which he bought, and remitted the bill of lading,
which the partner, in England, handed over for the
substituted cargo to the creditor. But the debtor who
failed between the sale and re-purchase, could not pass
the title, as it went, upon his bankruptcy, to the as-
signee for creditors.' Had the foreign agent been a
partner, his bona fide disposition would have been a
valid transfer of the title.'
62
I
r
Pt. j. Ch. 2. Antecedents. §?7.
1. Individuals said to be partners in the profits, though not in the stock.
A pastured bullocks on C's land, and agreed to share the price which
they brought, above ^20. with C, for fattening them. A sued B for
price, and he pleaded non-joiuder of C. — Overruled. C not a partner
in the Ijullocks, though he was in the profits. Wish v. Small, i Camp.
329 (180S).
'Partner in the profits^ not a partner, because tiot a co-owner of the
stock. A, by agreement in 1873, contributed the capital aud owned
all the stock, aud B his labor and experience, to carry on the business
as A & Co. B did not bear any loss, and his working interest was 1-3
the net profits, increased in 1877 to 1-2. C recovered judgment against
A, and put execution in hands of sheriff, D, who levied on part of firm
stock, which A replevied. — ^Judgment for D. Property retained by A,
as B was not a partner. Query : Would B's liability as a partner
justify holding assets for firm creditors? Stuniph v. Bauer, 76 Ind.
157 (1881).
2. Sharing profits of sale gives no title, or poiver over stock. A & B,
clothiers, and also jobbers, employed C, as traveling salesman, to
solicit, by sample, orders for piece goods. He received a compensa-
tion equal to 1-2 profits. A & B sued D for price of goods. Defence :
Release by C— Recovery. C a clerk. No inference admitted from
extent of his agency of power to release. Though a partner in the
profits, not a co-owner of stock with A & B, who alone were liable
for its price. Smith v. Percy, 5 Dutch. 74, N.J. (i860).
3. Share in profits gives sharer no title to proceeds of goods. By prior
agreements, B, a broker, who bought for A, took 1-4 profits and 1-8
losses of adventures, in lieu of his commission. A continued to em-
ploy B as agent, but, by a new agreement, gave him 1-3 profits and
made no provision for losses. B drew, as a partner, upon the proceeds
deposited by A with C, his bankers. A became bankrupt, and his
assignees sued C for amount of A's deposit. — Recovered, as B had no
title to the goods, or to the proceeds which represented them, but
was merely entitled to a share of the profits. Smith v. Watson, 2 B.
& C. 401 (1824).
Note. — C would be a third person, and entitled to deal with B as
a partner. This would be a defence, if B had not indemnified C,
and made the controversy inter sc.
4. A share in pi'ofits and losses of adventure gives share-taker no title
to stock. A pledged bills of lading to B for a cargo bought for him
by C, his foreign agent, who shared 1-2 the profits and losses of the
adventure. C sold part of the cargo abroad, without A or B's knowl-
edge. A became bankrupt. Then C replaced the' goods sold by
others, and sent a bill of lading to A, which he gave to B. A's
assignees in bankruptcy brought trover for the substituted goods. —
Recovered, because B could get no title to the goods from C. He
was nut a partner as to the stock, which belonged to A, but only in
the adventure. Meyer v. Sharpe, 5 Taunt. 74 (1S13).
5. Partner can pledge firm stock after co-partner' s bankruptcy, if igno-
rant of the act. B, in England, and C, in Maryland, partners. D had
advanced money on acceptances of B, who secretly left England and
exchanged residences with C. B secured D by consignments of
tobacco. Subsequently C committed an a6l of bankruptcy in England,
and failed. A joint commission issued against both, on account of
B's leaving England. Assignee brought trover against D. — Judgment
for D, because a bona fide purchaser from B. Creditors had waived B's
absconding as a(5l of bankruptcv. Fo.x v. Hauburv, Cowp. 445 (1776).
63
§28. Antecedents. Pt. i, Lh. 2.
§28.
ii:i)c cjiliaiucmcnt in luiliie of a routributiou buring i\)t part-
ncrsliip cmiics to tl)c fuin, uil)icl) is also cliargmbU u)itl) amj
bcpicciation.
'riic accessory follows the principal. The contrib-
uting partner who desires to withdraw the property
contributed by him is entitled to what he put into the
firm, but not to any increment added to the contribu-
tion during the partnership.' The accretions are
attributed to the firm, as owners."
Where the partner retains title and contributes only
the use of his property, the value of the increase wall
be estimated and credited to the firm if the property
cann(jt be severed from the original contribution.^ The
arrangement of the partners for a withdrawal of the
contributed stock at its original valuation, is equiva-
lent to a retention of title by the contributing partner,
and if it afterwards becomes inequitable, the courts
will not give it effedl, but will revert to the normal
method of adjustment.^
1. The language of the German and of the Austrian Code is identical:
,,e. 143. 2Scnn cin ©ci'dlfdrnftcr Sadicn in bie ©efellfdjaft eingebracl)t
,, bat, Juctdic Gigcntbum bcrfclbcn gctporbcn finb, fo fallen bicfelbcn bit bcr
,, Jluecinanbcrfctunu] nidU an xbn juriid, fonbcrn er erbdit ben Serif; aus
„ bent CJcjeUKbatfeuermbgen critattet, fi'ir iweldjen jic gemdi§ Ueberetnfunft
„ ubcrncmmen Unirben. '^tblt es an biejer 2Bert^beftimmung, fo gejd^iet
,, bic Critattung nad> beni 3i>ertl)e, treld^cn bie Sadicn jur ^dt ber Ginbring
„ung batten." XieGeltcnben.'oanbcI^gefe^ebeS Grbballs, t»on^r . 0§car
2} r (^ a r b t , JM* vocibus, Serlin, 1886.
2. 7'hc increase in value of contribution belongs to firm. A contributed,
in 1.S61, mill and machinery, at ^'24,000; B, ^2,500 cash; C nothing.
.At first. .\ took 1-2 and B and C each 1-4, but afterwards each took
1-3 until C's death, when A succeeded to his share. At the end of
that year .\ and B each took 1-2. Capital and accumulated profits
carried interest. The mill was enlarged, lands bought, and other
buildings erecfted during partnership, with firm funds. The entries
put mill and plant at original price, showing increase bv improve-
64
Pt. I, Ch. 2. Antecedents. §29.
nieiits and repairs, and decrease by annual depreciation. No re-
valuation during partnership. A & B sold out, in 1S72, receiving
^57,052 for mill and fixed plant, and ^48,744 12s for movable plant
and good will. A claimed ^57,052 as his capital. — Allowed only his
original .price. Like the contribution, its enhancement in value
belonged to the firm, which r:either rented the mill and plant from
A, nor repaired them for him. Robinson v. Ashton, 20 Eq. 25 (1873).
3. Improveinents on partner'' s land, made zvith firm funds, belong to
firm. A & Co. built part of its brewery establishment upon A's land.
A's executors brought bill against surviving partners. — Firm charged
with original value of land appropriated, but credited with enhanced
value, which is divisible as profits. FrelinghuNseu v. Ballantine, 38
N.J. Eq. 266(1864).
A & B were carpenters in partnership. B built a house, with firm
assets, on his own lot. Firm dissolved. B sold the house and lot to
C, and left the jurisdicftion. A paid firm debts beyond bis quota, and
claimed title to lot against C, who still owed |;iooo on account of the
purchase-money. C is a bona fide plirchaser for value, without notice
of the firm's claim to improvements upon it, except to the |iooo pur-
chase-money still due. Devoney v. Mahoney, 8 C. E. Gr. 247, N. J.
(1872).
4. Option to ivithdrazv foiDidry superceded by rebuilding ivith con-
tribiiting partner' s co-operation. By articles, A contributed a foundry
at appraisement, reserving option to M'ithdraw it on dissolution at
appraised value. The foundry was burnt down during the partner-
ship, and was rebuilt with firm funds, A co-operating. In the settle-
ment, he insisted upon a return of the land, and at its original valua-
tion ; in order to gain the rise in value. — Court refused him the land,
and gave it to the firm at the original valuation. Clark's Appeal, 22
Sm. 142, Pa. (1872).
§29.
If tl)c qttestion of title to tlje contribution arises bettiicm tl)c
partners, a\\ii nntl)out refcrenfe to tljirti fiersons, tl)e Itistinrtion
between a eonnncreial business anb utl)er kinlis of business, is
simpln a matter of form.
Fungible goods become the property of a firm, in
spite of the partners' intention, on account of the
nature and effe6f of trade. The use which is made
of the thing carries with it the ownership.' The iden-
tical thing cannot be restored, because it is lost by
transacting the business. A different thing, although
65
§30. Antecedents. Pt. i, Ch. 2.
the same in kind, must be returned in its place. But
apart from the holding out involved in the firm's deal-
ing with the title as its own, the distinction between
fungible and non-fungible property does not affeA the
partners. If they intend to contribute nothing but
the use to the firm, that is all the firm w^U get. The
transfer of title w^ill be merely an incident of the
business; it will not control the partners in dealing
with each other, or override their intention. The
partners may shuffle the title as they please.
1. The German and Austrian Codes agree in making contributions
firm property :
,,2.91. SL'cnn r^ctb obcr anbere bcrbraucfibare ober bertretbare Sadden,
„ obcr lucim nnncrbrauAbarc ober unocrtretbare ©ad^en nad) eincr ©c^at=
„5uni3, bie nidit blc§ jum ^\v(d ber (5eit)innt)ertbeitimg gcjd^tet, in bic
„ fMcfcUfduift cingebradit irerben, fo itterben btefe 6egenftanbe ©igent^um
„bcr &c\M']tl)ait." And the Austrian Code adds : „ ^i" 3l»etfet Jctrb
„ angcnommcn, bafg bic in ba§ ^nocntar bcr OJeicUid^aft ntit bcr Untcr=
„ ic^rift fammtlidier Wefcirfdiafter eingctragencn bi§ baljin ctncm 0efcU=
,, frfiaftcr gchbrigen, bet»eg[id}en orber unbmegtidien ©ad)en ©igent^um bee
^OJcicUeiaft getDorbcn finb." Sorcbarbt, sub vocibus.
^30,
fllcrcliaiibisc bcinci tl)c subiect-matta- of trabe, partnersliip,
as ttu organ of trak, fonrcits cncnjtijing in ml]icl) tl)£ firm bmls
into incrcl)antiisc.
When the title to property contributed by a partner
is not required by the firm for the transadion of its
business, the use of the property constitutes the con-
tribution, and the title remains in the contributing
partner (§25).
But the fa(5l that the firm has the use, indicates that
the property is conneded with the business, and a
66
E
Pt. I, Ch. 2. Antecedents. . §31.'
slight indication of intention is sufficient to transfer
the property to the firm. Thus an agent was sent to
Cuba to work mines, and if he effe6led a sale he was
given half the price. He undertook to work the
mines and share the profits with the principal accord-
ing to their contributions. He made no property con-
tribution, unless the agreement for a sale was looked
upon as vesting title to the mines in the firm. He
would, in this aspedl, contribute one-half the capital
stock, as he would get half the price of the mines if
they were sold. This was the interpretation put upon
the contra6l.^
I. Contrail for 1-2 the price of mines not enforced if parties subse-
quently became partners in zi'orking them, a)id shared profits accord-
ing to contributions, the right to 1-2 the price being the plaintiff's
only contribution ; but rcuicdy, account. A was employed by B to go
to Cuba, look after B's mines, and ship the asphaltum. B furnished
the money, and agreed to give A 1-2 the profits on a sale of the mines,
products and patents. They shared the profits of working the mines,
as partners, in proportion to their contributions. The business did
not succeed, and B sold the mines. A sued him for half the price.
Defence : A's remedy, account. — ^Judgment for B. By making his
share in the partnership depend upon his contribution, A must have
put into the firm the moiety which he owned in the mines by virtue
of his right to half the price of them on a sale, and could not after-
wards sue B on the contract, Seelye v, Taylor, 32 La. An. 1115 (1880).
§31.
Olontlictinc; tljearics prenail of tl)e fontributton, an^ unsettle
tl)e propertij riciljta of tl)e partners iiil)cre tl)eu Ijane not tuei) its
djaracter bii an express provision.
In the first place, the contribution may become the
property of the firm out and out, so that upon a dis-
solution the contribution will be divided, like other
assets, in proportion to the shares of the respedlive
67
§3 1. Antecedents. Pt. i, Ch. 2.
partners. This is the English theory, but the courts
have discovered no mode of working it out to a logical
conclusion.
In a partnership at will, if one partner contributes
$10,000, and the other his services, and they share
the profits and losses equall}^, the partner who made
the contribution might die the next day, and the sur-
vivor might legall}^ appropriate $5,000 of the capital
stock, although the whole amount, $10,000, was con-
tributed by the deceased partner. Thus, one partner
contributed a music-hall and tavern, the other contri-
buted no propert}', but he was entitled to 1-8 of the
profits. Upon a dissolution 1-8 of the music-hall and
tavern belonged to him.'
If this theory be true, and the $10,000 in the case
put were lost in the business, the non-contributing
partner, who has lost nothing but the expectation of
profit, could not be held to make up the loss to the
partner contributing the capital. Res peril domino.
But the law of England, on the contrary, makes
the non-contributing partner share the loss of his co-
partner, a result consistent only wath the theor}- which
makes a partner creditor of the firm for his contribu-
tion.
The recent English decisions indicate a disposition
to abandon the view that the title to the contribution
is vested in the firm, and to take up with the theory
that a contribution is an advance."
I. 2^ and 2g I'ifl. r. 86 docs not create a limited partnership. B, for
/250 paid him by A, undertook to convey him in partnership 1-8
profits of a music hall and tavern, under 28 and 29 Vict. c. 86, which
B called the Limited Partnership A(5l. No duration fixed for loan or
partnership.— Partnership at will, and defendant's denial in his an-
swer termmated relation.— A entitled to 1-8 profits during continu-
ance, and to 1-8 of hall and tavern on sale. He intended to be a
68
)
/
Pt. I, Ch. 2. Antecedents. §31,
partner, with liability limited to his loan. Syers v. Syers, i App. Cas.
174 (1876).
2. After coiitributioiis rc-iinbnrscd, assets shared as profits. A & B,
who had been partners, with shares in proportion of 3-1, took in C,
and re-adjusted the interests thus: A 40 percent., B 35, and C 25.
B contributed most of the capital, C a little, and B less. The credit
balances at expiration of partnership were: A 1214,815, 15^58,422, and
C 1160,762, which were made up by crediting the estimated profits each
year and adding interest, with an allowance to A of |;2,5oo a year for
rent. A asked for a division of assets according to the contributions.
B and C according to capitals of partners at dissolution. — Contribu-
tions reimbursed with interest, and surplus divided according to
shares of the profits. Binney v. Mutrie, 12 App. Cas. 1S6 (1S86).
The second theory which has obtained currency is
that the contribution is a loan b}^ the partner to his
firm, in other words, to himself and co-partners, and
is charged as a debt, to be repaid before any division
of firm assets can be made. This theory obtains in
Massachusetts.
It is the Civil law Titutuuni revived. The contri-
bution is merchandise, which is fungible, and can
not be returned in specie. This is the distindlive
characteristic of the viiituum. The partner's loss of
title to his contribution, which is merged in the firm
stock, although for temporary purposes, and his ina-
bility to recover it in specie, led to confounding his
position with that of a lender. The idea of a contri-
bution is lost in that of an advance.'
Two partners contributed the capital, and two their
services, each receiving 1-4 the profits. Upon a dis-
solution the firm owed to each contributing partner
the amount he had contributed.* The firm debt was,
say $100,000. Each partner was liable for one-fourth,
or $25,000. Bach contributing partner, after dedu(5l-
ing $25,000 to pay his quota of the loss, is still enti-
tled to recover $25,000, and each non-contributing
partner must pay that sum to equalize the loss. If a
partner is insolvent, the loss is distributed, as a debt,
69
§,i Antecedents, Pt. i,Ch. 2.
among the solvent partners. The quota of each part-
ner would be $33, 333-33>^', and the non-contributing
partner would be liable to pay that amount for the in-
demnity of his co-partners. A partner who is out of
the jurisdi6lion is treated as if insolvent, because the
process of the courts cannot reach him, and his quota
of the loss must be divided among the partners amena-
ble to j udicial process.^ The theory of debt would make
the contribution carry interest, but the Massachusetts
courts do not allow interest upon the contribution with-
out a stipulation to that effe6l.'' The theory of debt
halts again where they decide that upon dissolution a
partner's title to his contribution revests in him.' He
has the right to seize the assets which remain in the
firm, for his contribution, without first devesting the
joint title by judicial proceedings. This is the pre-
rogative of an owner, for no lender can touch the prop-
erty of his debtor without judgment and execution.
3- This is the French law:
"Si les choses dont la jouissance seulement a 6t6 mise dans la
" society soiit des corps certains et determines, quinese consomment
•'pas par I'usage, elles sont aux risques de I'associe proprietaire. Si
^'|les choses se consomment, si elles se deteriorent en les gardent,
''si elles sont destinies a etre vendues, ou si elles ont ete niises dans
" la soci^te sur une estimation portee par un inventaire, elles sont
"aux risques de la societe. Si la chose a ete estimee, I'associe ne
" peut repeter que le mantant de leur estimation." C. C, 1851.
^^ *: Si ce sont des choses qui se consomment par I'usage meme qui en
II est fait, comme le vin, I'huile, I'argent monnave etc; car il est de
' regie que la^ simple tradition des choses fongibles en transmet la
^1 propriete meme ; en pareil cas la societe en devient proprietaire et
^ par suite elle est debitrice envers I'associe qui a fait I'apport de
choses de meme nature et qualite, ou de leur valeur." Vav. s. 92.
4- Contrihutw7i a firm debt, and each partner liable for Us repayment.
A ami B contributed the capital, C and D their services, to the firm.
nacn partner to receive 1-4 the net profits, after deduc5ling interest on
the contributions. The firm dissolved, and A wound up the business,
winch resulted in a loss. D was insolvent. A demanded repavment
01 nis capital, as a partnership debt. D's defence : His labor became
capital ; but no intention to insure either contribution.— Recovered,
nac 1 solvent partner must contribute equally to repay the capital.
Whitcomb V. Converse, 119 Mass. 38 (1875).
70
Pt. I, Ch. 2. Antecedents. §32.
5. Loss apportioned according to interests of partners within jurisdic-
tion. A, and others, some in Massachusetts, and some who afterwards
removed from the State, formed a ferry company, as a partnership.
The proceeds, less expenses, went to the subscribers pro rata. A
paid money for the firm, and sued the members in Massachusetts for
contribution. — Recovered. Loss apportioned in proportion to inter-
ests, and members out of jurisdicftion disregarded, like insolvents.
Whitman v. Porter, 107 Mass. 522 (1871).
6. Assets go on accou7it of, and in proportion to, the contributions, and
each partner must make up the deficit in proportion to his share of the
profits. A, B & C, an infant, who agreed to share profits equally,
dissolved, and made B liquidating partner. He might retain, out of
the assets, his contribution, 14,874, without interest, and after paying
the debts, repay A's contribution, |i,8oo, without interest, and apply
the balance to C's contribution, 1882. The assets were not sufiicient
to repay the contributions. A and B claimed that the contributions
should be repaid with interest, that the assets should be shared in
proportion to the contributions, and that each partner should make
up one-third of the deficiency. C's defence: Infancy. That each
partner should have 1-3 of the assets, and make up the deficit in pro-
portion to his contribution. — Assets divided in proportion to contri-
butions, but no interest allowed on them. Each partner liable foi
1-3 of deficiency. Moley v. Brine, 120 Mass. 324 (1876).
7- Partner entitled to repayment for his contribution before profits are
computed. A agreed to furnish all the capital, and B his services, in
carrying on a drug store, and divdde the profits equally after deduct-
ing interest and expenses, including a salary to B. A contributed
13,300. The firm dissolved, and A's executrix claimed to deduA
13,300 capital, and then take half the residue as profits. — Recovered,
less 1-2 the loss, i. e., depreciation in value of the fixtures. The
contribution becomes firm property, but reverts to the contributing
partner upon dissolution. Livingston v. Blanchard, 130 Mass. 341
(1881).
§32.
<l^t tl]cors tl)at tl)e rontributiou is a bebt \\<x% bem abopkb in
seocral States, btsiks ilTassadjusctts.
It is recognized in Georgia. The contributing part-
ner, upon a dissolution, agreed to pay all the debts of
the firm. His contribution was construed to be a debt,
and, as such, was embraced in his agreement.^
In Indiana. A partner, who furnished the capital
to eredl buildings and provide the machinery for manu-
^32. Antecedents. Pt. i, Ch. 2.
faclurinj; in partnership, was entitled to colled from
his co-partner a portion of the loss caused by fire, cor-
responding to his share of the profits."
In Illinois. The destru(?tion of buildings and ma-
chinery was a loss apportioned equally among the
partners, because they shared the profits on an equal
footing.^
1. Partner's agreement, upon dissolution^ to pay firin debts includes
■u'hat the firm owes him for his contribution. A contributed skill and
lal)or. and B contributed property, which would belong to the firm
when paid for out of the net proceeds of the business. Upon dissolu-
tion, H a.yreed to pay the firm debts, and A made over his interest in
certain assets, including B's contribution. Some proceeds were left
undivided, and 1? held them as his own. A brought bill for his share
of them. Rill dismissed at the hearing, because it contained no aver-
ment that the proceeds in question exceeded the net proceeds which
were to be applied in payment for B's contribution. — Reversed. Dis-
missal admits facts set forth in the bill : That the individual assets
belonged to the partners in equal proportions : That B agreed to paj'
all debts. This included the firm debt to B for his c<mtribution.
Tcllyett v. Markham, 57 Geo. 11 (1876).
2. Share in profit arid loss measures the distribution of the loss of capi-
tal. A and B furnished the capital and C did the work. A received
10 per cent, on his capital, and B and C salaries. Then profit and
loss divided equally. A partial loss of capital. — In account, C must
bear 1-3 of the loss. Carlisle v. Fenbrook, 57 Ind. 529 (1S77).
3. Agreement to divide losses includes partial loss of capital. A con-
tributed building and machinery, at 19,600, and B and C, together,
$2,500. Profit and loss divided equally during partnership. Build-
ings destroyed bj- fire. A charged B and C, each, with a third of the
loss of capital. Defence : Only a loss in excess of capital to be equally
divided. — Loss of capital divided equally. Taft v. Schwamb, 80 111.
289(1875).
In New York the theory has been fully discussed,
and perhaps settled. A partner contributed $2,000
for 3-4 of the profits. The co-partner contributed
$2,000 for 1-4 of the profits. The court accounted for
the excess of profits as a compensation to the partner
for his services. The conjedure was but a shrewd
guess, while sharing the losses in proportion to the
contributions would efifedl the same result upon prin-
ciple.' In another case, also decided by a lower court,
the losses were distributed, in spite of Judge HoFF-
Pt. I, Ch. 2. Antecedents. §32.
:\rAN's reasoning in his dissent from the decision in
Hasbrouck v. Childs, not in proportion to the contri-
butions, but in proportion to the profits." The Court
of Appeals has recognized the debt theory without
discussion.'^
1. Majority : Profits xvil I be apportioned as a return upon contribution,
and as a compensation for services. Minority.- Losses of capita t are
borne in proportion to contributions 'ci'ithout reference to s/mres in the
profits. A contributed |;2,ooo, and did all the work ; B contributed
f 2,000, and did no work. A took 3-4 and B 1-4 the profits. No men-
tion of loss. Partial loss of capital. A claimed half the residue. B's
defence: A should bear 3-4 the loss. — Recovered. IMajority: 1-2
profits went to A, as compensation for services, the other 1-2 was
divided between them as partners. IMinority : A not a clerk; he
received extra profits as a partner. Equality a presumption of facft.
In the absence of agreement, profit and loss divided according to
contribution. In such case, if one contributes labor and the other
capital, the jury alone can decide the value of the labor contribution.
If money is contributed against labor, the two form a joint fund, and
the loss of capital is counterbalanced by a proportionate loss of labor ;
if onlv the use of money is contributed, res perit domino. The con-
tributions and the shares of profit and loss may be in different pro-
portions. Then, as profits are not divided until capital is deduAed,
so losses are not apportioned in the ratio of profits, except for a defi-
ciency beyond capital ; otherwise the partner having the larger share
of profits would guarantee his co-partner's capital pro taiito. Has-
brouck V. Childs, 3 Bosw. 105, N. Y. (1858).
2. Losses shared like profits in absence of agreement. A, B & C manu-
factured tubs. A and B furnished fa6lory, stock and funds, and C
carried on the business. Card contained the names of all three. The
profits were shared equally. Loss of nearly all the stock. A and B
brought account against C. — Decree. Presumption that losses shared
like profits, unless rebutted. Munro v. Whitman, 8 Hun 553, N. Y.
(1876).
3. Agreement must be clear to rebut the inference of debt. A con-
tributed merchandise, estimated at |;i5,ooo; B merchandise at 13,000.
Profits and losses, including depreciation of stock and expenses, were
shared equally. A charged B one-half of his capital lost in excess of
B's capital. — Recovered. The clause did not distinctly provide for a
division of the assets in proportion to the contributions and relegate
the division of loss to the excess after the contributions were restored,
Jones V. Butler, 87 N. Y. 613 (1882).
The German law pushes the debt theory to its log-
ical conclusion, and makes the contributions carry
interest. The increment goes to swell the profits of
the contributing, and the losses of the non-contribut-
ing, partner.
73
§33- Antecedents, Pt. i, Ch. 2.
Rknaud ^ves the following illustratious : First, of profits, when
hoth i)artners contribute. A contributes $i,ooo, B 1:9,000. At end of
the year there is a profit of |2,ooo. A takas l^o interest on his con-
Iribiilion, at 4 per cent, B I360 on his; in all, I400 dedudled before
the net profits of |;i,6oj is divided between them, giving A f 1,840, and
B ^fio, i6o. Second, of losses. The end of the year shows a loss of
|2,ooo. .'X.s 540 is due A, and I360 B, for interest, the aggregate, I400,
is added to |2,ooo, and A stands half the loss, or |i,2oo, which takes
all his capital, and after deducting his interest, I40, pays half B's
interest, or $S6o, to him. Third, of profits, when one partner con-
tril)utes property and the other does not. A contributes no property,
B i^io.ooo. At the end of the year there is a profit of f 2,000. B takes
moo interest and half the balance of |ii,6oo. He receives his capital,
|io,ooo, interest, $400, and profits, |8oo, in all, |i 1,200. A receives
ISoo. Fourth. A lo.ss of f 2, 000 at the end of the year. Each makes
up half the loss of principal and interest. A pays |2oo on interest, and
|i,oooon principal, account to B, who also loses |i,20o. Gominanbit=
flcfeUfc^often, g33, pp. ii3;i-4.
§33.
The only theory consistent with partnership is that
the firm acquires the title to the partners' contribu-
tions by reason of the business in which the firm is
engaged, and fiDr its purposes alone. Trade involves j
the title as an incident of its fun6lion. The owners '
are not presumed to part with the title, except for
the purpose of the joint business. The moment the
objedl of the joinder is accomplished, the title reverts A
to the original proprietor. The use carries the title I
by trade necessity, but the co-partner can not retain I
it after the trade purpose is satisfied. Upon this
theory the partners share the capital stock according
to their contributions, and share the deficit beyond the
contributions as they share the profits.
^\)t title to tlie contribution, tl)ougl) inDobet) in its use bn tl)c
firm, is bctuieen tl)e partners separate estate.
Who has the title to a partner's contribution ? pro-
voked a controversy; which began in the middle ages,
74
Pt: I, Ch. 2. Antecedents. §33.
and still continues at the present day. The argu-
ments urged by the disputants made the answer turn
upon the point whether the partner contributed the
property itself, that is, the full ownership of it, to the
firm, or only the use and enjoyment of the property,
while he retained the title in himself. The result of
the discussion was a general consensus of authors.
They united in thinking that the partner contributed
only the use. He retained the title himself* The
position established by medieval authority is no less
sound to-day than it was when first taken. The
ancient authority has, in recent times, been called in
question, but the reason for doubting the soundness
of judgment displayed by the sages of law in settling
the controversy are not tenable. The modern obscu-
rity arises from confounding the substance of the
transaction with its form. The title, when required
by the business, must be vested in the firm, in order
to enable it to deal with or dispose of the property for
the purposes of the business. For this reason the
partner makes a transfer of his title to the firm. The
effe(5l of changing the title, upon creditors who deal
with the firm, has been stated (§25). They acquire
rights by reason of the firm's dealing with the title.
They rely upon the title which the firm holds out to
them as its own. This is an incident of commercial
business, which involves buying and selling property,
or exerting the powers of proprietorship. But the
partners do not possess the stranger's right to insist
that the title shall belong to the firm. They know
the actual title, and do not infer a title from the indi-
cia of ownership. Nor is their position changed by
dealing with the firm as owners of the property. The
75
§34- Antecedents. Pt. i, Ch. 2.
partnership is not in fee or for life. The transfer of
propert}' is restricted, like the partnership, to a given
period, or is at will. They know that the title remains
in the contribnting partner, subje6l only to the firm's
right to control the title during the partnership. This
is equivalent to the firm's use of the property which
remains in the contributing partner, and at his risk,
though temporarily subjedl to the enjoyment of the
firm.
I. It is sufficient to refer to the authors -who give a summary of the
literature upon this point : lo & liicf'j (S[autcrimc( ber -^anbccten, p. 394
<■/ st-(/. <;9»i"); Troi'Long, p. 6i ctscq., ^587; Judge Hoffman, iu Has-
hrouck V. Childs, 3 Bosw. \\2ctscq. The exceptional provision of
the French Code, supra, ^(31, n. 3, which makes the contributions firm
property, is ascribed to Pothiek, who followed ArETIn against the
array of great Civilians. Troplong, supra; Vav., I85-94. The Ger-
man and .Austrian codes have followed the Frendi. supra, ^29, n. i.
§34.
5n p^nnsnltiania tl)e losses of capital are s\)axt\i in proportion
to tl)c contributions.
A partner contributed $10,000, the co-partner his
services, and they shared the profits equally. The
capital was lost, and the contributing partner sued his
co-partner for half the loss, $5,000. The court refused
to shift the loss, or any part of it, upon the defendant.'
The contribution is the property of the partner. When
the title passes to the firm, either on account of the
nature of the property or the convenience of the busi-
ness, the transfer is made only for the occasion, that is
for the partnership. Apart from the business, the
property belongs to the contributor. He does not
Pt. I, Ch. 2. Antecedents. §35.
give his property away after the partnership is ended.
The contribution is limited to the duration of the part-
nership. When the partnership is dissolved the title
reverts to the original owner. The purpose for which
the title was transferred has been served, and the pro-
• visional title of the firm is exhausted.
I. Everly v. Durborrow, 8 Phil'a R. 93 (1871).
§35.
% partial loss of capital mtist bt bistributeb accorbinQ to i\)t
t[)£orn of tl)e contribution u)l)icl) prinaiis.
The question presents itself frequently where there
has been a partial loss of the firm capital. The loss
must be distributed either according to the theory of a
debt, or of separate titles in the partners. By the debt
theory as the excess of capital contributed by any part-
ner in the case of a total loss must be made up by the
co-partners, so must any partial loss of capital be made
up by the partner who contributes less than his co-
partner in the ratio in which he shares the profits.
The effe61; of the plan is to make the partner who
contributes no capital to the firm stock insure the
capital of his co-partner in the same proportion as he
shares the profits.
A contributes $100,000, B his services, and they
share the profits in equal parts. A loss occurs of
$50,000. B owes A $25,000. That is, by the debt
theory, the firm owes A $100,000, but A, as a partner,
owes himself $50,000, and the loss is divided between
them, $25,000 each.
77
§35- Antecedents. Pt. i, Ch. 2.
The English theory vests the title to the contribu-
tions in the partners in the proportion in which they
share the profits, but this theory discloses no reason
to charge the non-contributing partner with half his
co-partner's loss of capital. Each partner would lose
his half of the joint property, and that would be the
end of it. In the case put, each partner owns $50,000
of the capital, and after sharing the loss according to
his ownership, has $25,000 left. It is inconsistent to
make the partner's ownership in his co-partner's con-
tribution a premium paid for the insurance of the con-
tribution to a corresponding amount. This would
make the contribution a debt which the partner owed,
not a title which he owned. The theory has no founda-
tion in reason, nor is it maintained with the steadness
which indicates a belief in its soundness. A slight
suggestion of a different intention by the partners is
sufficient to supercede the theor}^ and re-establish a
distribution of loss according to the contributions.^
In fad, the readiness to revert to the separate titles
of the partners, in order to measure a loss of the con-
triljutions among them, is proof of a legal instinct, if
not of a conscious apprehension of the theory which
is consistent with partnership." The theory does not
prevent the partners from dividing the assets in a pro-
portion different from the ratio of contributions, if they
see fit to make such a contrad. The theories which
have been acted on are inferences drawn by different
judges from the conception entertained by them of the
partnership relation, and are superceded by any agree-
ment made by the partners.' The inference is made
only in the absence of an agreement by the partners
upon the point.
78
Pt. I, Ch. 2. Antecedents. ^^.i^-.
The question does not affe6l third persons, and is not
affedled by their right to make the contribution firm
property for themselves. The question relates to a
dornestic arrangement between the partners, and is lim-
ited to their rights. The adjustment is made subject to
the claims of third persons, and embodies the ultimate
settlement between the partners after all claims against
the firm have been disposed of. The intention of the
partners regulates the matter; which is confined to
themselves, and controls the construction of the courts.
If the contribution belongs to the partner making
it, the title will measure the loss. He takes the risk
of his property, which he staked in the business. As
each contributing partner does the same, a partial loss
of capital is divided between partners in proportion to
the amount contributed by them.
The contributions of two partners were as three to
one, A $9,000, B $3,000, but the profits were divided
equally. The partial loss, $3,000, was divided between
them in the ratio of 3 to i. $2,250 by A, $750 by B,
the assets left being the property of each partner in
the proportion in which he contributed them, A
$6,750, B $2,250.'
I. In England, the partners agreed to divide the assets
according to their interests in them. The EngHsh con-
stru6lion makes the interest of a partner in the capital
stock correspond with his share of the profits, but the
agreement indicated, it was thought, an intention to
divide the assets according to the contributions made
by the partners, and superceded the constru(5lion of law.
Paiiners' agreement to divide surplus assets according to interests
in them overrides legal constmElion of provision to share profit and
loss equally, and divide assets according to contributions. A & B,
partners, agreed to share profits and losses equally, and, i;pon dissolu-
tion, to divide the surplus assets according to their interests iu them.
'Ine contributions by A & B were as i to 2, and carried interest. Either
partner, who might let his profits accumulate, would be paid interest
"^n the additional capital. B made advances, apart from his contribu-
79
§jO. Antecedents. Pt. i, Ch. 2.
tion an<l :uiuuiulaU'd interest. On settlement, the assets amounted
to /, vooo ; A's cajiital to /830, and R's to /4.000. B, who wound up
the business, took the assets for his excess of capital. A sued for a
share of the assets proportioned to his capital. — Recovered. The
assets are the capital, and distribution accordinj^ to interests in them
is acconlinji to contributions, and excludes equal liability for them as
debts ; which nuist Ije paid before ecjual distribution of profit and loss
couUl'be made. The advances, independent of contribution, charge
both i)artncrs e(iuallv. as a debt. Wood v. Scoles, L. R., i Ch. 369
(iS66).
2. A partner, contributing $75,000, guaranteed his co-
partner, contributing |io,ooo, profits to the extent of
$10,000 the first ) ear. The year showed a loss of $10,000.
The guaranty re\^ersed tlie Massachusetts constrtidlion of
law, and made the guarantor pay his co-partner $10,000,
instead of colledl $5,000 from him.
C.uarantv of profits consistent ivith partnership. A contributed
^^75,000, and R |io,ooo. Profit and loss to be divided equally during
continuance of firm. For first year A guaranteed B that his profits
should not be less than f 10,000; notwithstanding losses to any extent.
Dissolution at end of first year, and loss .of al^out |;io,ooo. — B took
^10,000, and remainder divided between them, "according to their
respedlive proportions." Grant v. Bryant, loi Mass. 567 (1S69J.
3. A supercargo, paying $1,000, stipulated for a salary
and a fifth interest in the ship and cargo, which cost
between $15,000 and $18,000. The agreement was suffi-
cient in Massachusetts, where a non-contributing part-
ner has no title to firm stock, to give him title to 1-5 of
the assets.
Affrecinent ivill re,^ulate a paHner's share in the firm property,
independent of the amount of his contribution. By the articles, B
furnished a vessel and cargo, at a cost of from |i5,ooo to|;i8,ooo, and
A was supercargo, at Iso a month and 1-5 interest in vessel and cargo,
for which he paid |i, 000. On dissolution, A claimed 1-5 interest in
the property. — Recovered. Partnership, with 1-5 interest to A, not-
withstanding salary and the disproportion of his cash contribution.
Julio V. Ingalls, i Allen 41 (1861).
4. Christmau v. Baurichter, lo Phil'a R. 115 (1874).
§3e.
^\\t ratio of profits, if not tkc^ bn agreement,' mill be aster-
tainc^ bij tl)c junj, in orkr to be anailable as a stanbar^ for
bistributinoi tl)c loss of capital among tl)e partners.
8'j
Ft. I, Ch. 2. Antecedents. §36.
No ratio may have been agreed upon for sharing
the profits. In this event the Code Napoleon ena6ls :
" That when the contra(ft of partnership does not de-
" termine the share of each partner in the profits or
" losses, his share is in proportion to his contribu-
"tion."" This provision embodies the general view
of Civilians in reference to a partnership for gain.''
But the German Bmpire, as well as the Austrian, has
adopted, in the absence of a different agreement, the
rule of equality for sharing the profits of a business
partnership. The Commercial Code says : "Profit or
" loss, in default of any other arrangement, is divided
*' among the partners by heads. "^ The English plan
refers the ascertainment of the parts to the j ury . That
means a reference to the men ens^asfed in such a busi-
o o
ness, who are alone competent as experts to testify what
elements enter into a determination of the question.'^
But sharing the profit and loss does not mean sharing
the contributions. They are between the partners
separate estate, and the firm looks for its profits to the
surplus which is left after the partners have re-taken
their contributions, and makes up the deficit which
remains after the contributions have been lost. It is
only when the amounts contributed by each partner
are not known, andean not be ascertained, that the ratio
of profit and loss measures the interest of the partners
in the assets which belong to the firm, because they
cannot be identified b}^ the partners. There is no pre-
sumption of law, and the presumption of fa6l arises
only on default of any clue to the intention."
I. Profits shared according to contribjitio7ts by contrafl. C, in expedta-
tion of a Government contract, agreed with A & B to furnish half the
capital, and they one-fourth each, in order to carry it out, and to share
the profits and losses according to the contributions. C furnished no
capital. A & B, who supplied the capital and did the work, claimed
81
I
§37- Antecedents. Pt. i, Ch. 2.
the sum which C recovered from the Governmenl.^udj^ment for A
& B. Hobbs V. McLean, 117 U. vS. 567 (1886).
2. " Ivorsque lacle de societe ne determine point la part de chaque
" "associe dans les benefices ou pertes, la part de chacun est en pro-
•' portion de sa misc dans Ic fonds de la societe. A I'egard de celui
"qui n'a apportc que sou industrie, sa part dans les benefices ou dans
" les pertes est reglee coinnie si sa mise eut ete egale a celle de I'as-
"socie qui a le moins apporte." C. C. 1853.
3. 17 Durantou, Cours de Droit Frau^ais, 438.
4. Sl'cr (iiODinit obcr ikrhift Jxnrb, in Grmangetung eincr anbercn isereiiu
barung, unter bte Ciiefellfd^aftcr nad; itcpfctt bertfjeilt. Com. Code, ^109.
5. /;/ default of as:reeincnt, jury settles diz'isioii of profits and presiitncs
equality, unless inconsistent circumstances appear. Court below re-
ferred to jury the fa(5t of partnership, and, in default of agreement,
the proper division of profits. — Submission sustained. In the absence
of agreement, the jury, or the judge sitting as a jury, must find the
probable intention. Equality a presumption of facl, which becomes
controlling in default of all guiding circumstances. Tomson v. Camp-
bell, 5 Wilson & vShaw 16. s. c, Thomson v. Williamson, 7 Bligh 432
6. Contributions and shares in profits presumed to be equal. A, B & C,
partners by oral agreement, each contributing personal and real estate:
A and B 350 acres each, and C 640. With the proceeds of the real
estate they purchased a ferry franchise and property, which, on dis-
solution, formed the chief asset. The evidence indicated that D was
also a partner. There was no agreement for a division of the profits,
and the amounts which each contributed were apparently not proved.
A and B, in account, claimed against C a 2-3 interest in the assets. —
Each received a 1-4, because, in the absence of proof, the shares were
presumed to be equal. Knott v. Knott, 6 Oregon 142 (1876).
Partners share stock and profits equally. A & B, partners. B died,
and A was his adminstrator. No agreement fixing share of stock or
profits. — Equal shares. In absence of agreement, shares presumed
equal. Unruh's Estate, 13 Phila. 337 (iSSo).
Presumption of equality in capital and profits. A & B, partners,
submitted to arbitration. By the award, uncolledted assets were di-
vided equally. A had a claim against the firm.— B owed 1-2 the debt.
There being no evidence of the partners' interests in profits or capital,
their shares were presumed to be equal. Farr v. Johnson, 25 111. 522
(1S61).
Partners' interests presumed equal. A, B & C owned a farm in
common, and managed it in partnership. A lent money to the firm.
His executor brought account against B & C. A entitled to credit
for his loan. There being no evidence, the interests presumed to be
equal. Roach v. Perry, 16 111. 37 (1854).
§37.
^\\t onin pccnltaritTi of a special partner's contribution is il)e
statiitcinj requirement, tl)at it must be mabe to tlje firm.
82
Pt. I, Ch. 2. Antecedents. §37.
The constru6lion put upon the statutory mandate,
enadled to enforce the special partner's contribution,
is a marvel of hermeneutics. The courts do not
recall the historical facfl that the partner who does
not join in the management of the business, but
makes a special contribution, has never been charged
with unlimited liability by the LaAV Merchant, which
England adopted. Having lost sight of his original
Status, they regard him as an exceptional freak of
legislation, and proceed to put him outside the pale
of judicial reasoning. Whenever a special partner's
rights are at stake, trifles become the staple of argu-
ment, and captiousness the ruling spirit. The finical
objections constantly taken, in order to charge the spe-
cial partner with unlimited liability, are incompre-
hensible, especially in contrast to the encouragement
given to de fafio corporations (§24), which are advo-
cated when they are admitted to be usurpations.^
The reason alleged for extirpating a special partner-
ship applies, with the added force of numbers, to dc
faflo corporations, and adds a new gloss to the biblical
aphorism, "strain at a gnat and swallow a camel,"
and exemplifies in law, the domestic economy, which
"holds in at the spigot and lets out at the bung."
Even the member of a legal corporation, who claims
exemption from any liability beyond his contribution,
can make out his immunity only through the pedigree
of the special partner.
In an admirable summary of the authorities, BATES
has stated how, though that was not his purpose, the
statutes enabled in the different States, to re-establish
the special partnership, which the courts originally
excluded, have been used by them to frustrate the
83
§27- Antecedents. Pt. i, Ch. 2.
iuleiition of the parties to this commercial contra6l.''
Out of the letters of the Statute, as SwiFT did out of
the letters of the paternal will/' they made for a com-
mercial ena(5lment an artificial construdlion, which
ignored its niison (Tetre.
Special partnership embodies a principle necessary for
the developement of modern law. It is a general principle
of the connnercial law of Europe, and of America.'' The
courts of England, however, excluded special partnership,
although the>- professed to adopt the Law Merchant. The
legislature intervened, to correcft the blunder and to re-
establish a limited liability in commercial enterprises.''
But a statutory is not equal to a judicial developement,
and no discrimination was made between the joint stock
companies which could be organized under general stat-
utes. The association exists on the continent of Europe
without legislation, either as a limited or as a special
partnership. Each kind may be formed with joint stock,
and the shares will represent the interests of the partners.
The special partnership is called Societe en commandite
par aclions^ or Gommanbitgcjeirfrfrnft auf 2ktien ; the limited part-
nership, societe anonyme^ or 2lctiengefeEfrf)aft. The vital dif-
fereuce between them was overlooked by Parliament.
The exemption from unlimited liability in a special part-
nership organized as a joint stock company extends only
to the members who take no part in the management of the
association,*^ but extends to every member of a limited
partnership so organized. Two evils resulted from the
refusal of the courts to recognize the institute as part of
the Law Merchant. First: They abnegated the judicial
fundlion, which consists in working out the principles of
law into a coherent system, and brought about what they
professed to abhor. They drove away applicants who, for
refuge, went to the legislature, which permitted partners
to organize as a company, and restrict their liability to
the amounts contributed. Second: The community lost
84
Pt. I, Ch. 2. Antecedents. ^T^y,
the intelligent direction of the courts in working out the
principles of partnership law. The security and efficiency,
which result from the unlimited liability imposed by the
commercial law upon the managing members of a special
partnership association, have been abandoned. It is the
want of this wholesome restraint, and of the caution induced
by it in transacting business, that accounts for the exhibi-
tion witnessed, unfortunately on a grand scale, of specula-
tion and corruption, by companies which have been improvi-
dently substituted for special partnership associations. A
further evil resulted from throwing upon the legislature the
work which belongs to the courts. The exemption from
liability, as it was acquired by statute, was mistaken for a
State prerogative, and a joint stock company lost, in general
estimation, its distincStive character as a private organization,
and became the delegate of a public franchise. This miscon-
ception obliterated the distin6lion between a corporation and
a company,'^ and led parties to seek incorporation, which
was the avowed grant of a franchise. The universal resort
to incorporation for private enterprises, led the State, from
weariness, to abandon the grant of charters, and to permit
self-incorporation under general statutes. The State, over-
taxed by the applications for incorporation, abnegated its
prerogative and deprived itself of an essential fundlion.
The State has lost its initiative in public enterprises, and
has granted indiscriminately to private associations the
sovereign prerogative, which, by right, can be exerted only
for a public use, or for the common benefit of all. ®
1. In his dissenting opinion, Pa. R. R. v. St. Louis, A. & T. H. R. R. Co.,
(?24, note7)Mr. Justice Bradley urged that the ursurpation of a fran-
ciiise was equal to a charter. This redu/Iio ad absurdicm is in glaring
contrast with the refusal to admit a special partner's legal status, unless
he sets it up by way of defence. The plaintiff is entitled to assume
that he is7iot a special partner, and to proceed against him asagenerat
partner. B special, C and D general, partners. A sued all three for
goods sold the firm. B's defence : A special partner. A offered to
prove B's non-compliance with statutory requirements. — Competent.
Acflion lay on general liability as partners. It is only the defence
which puts A to proof of B's failure to comply with the Statutes.
Sharp V. Hutchinson, loo N. Y. 533 (1885)
2. The Law of Limited Partnership, by ClEMENT Bates, 1886.
85
§27. Antecedents. 1't. i, Ch. 2.
3. v^wii'T jnils llie case of three sons, wlio were embarrassed by a
commaiul imposed by their father: "The paternal will was very
" precise, and the main precept in it was with the greatest penalties
"annexed, not to add to or diminish from their coats one thread,
" without a positive command in the will. Now the coats their father
"had left them were, it is true, of very good cloth, and besides so
"neatly sewn, vou would swear they were all of a piece; but at the
"same'time very plain, and with little or no ornament, and it hap-
"pened, that before they were a month in town, great shoulder knots
"came up; straight all the world wore shoulder knots; noapproach-
" ing the ladies ;7^r//« without the quota of shoulder knots. . . .
"Our three brethren soon discovered their want, by sad experience,
"meeting in their walks with forty mortifications and indignities.
". . In this unhappy ca.'-e they went immediately to consult their
"father's will, read it over and over, but not a word of the shoulder
"knot: What should they do? What temper should they find?
"Obedience was absolutely necessary and yet shoulder knots ap-
" peared extremely requisite. After much thought one of the broth-
"ers, who happened to be more book learned than the other two
"said, he had found an expedient. It is true, said he, there is noth-
" ing here in this will, tot idem verbis, making mention of shoulder
"knots; but I dare conje(5lure, we may find them, inclusive ox to'i-
"detii sytlahis. This distin6lion was immediately approved by all ;
"and so they fell again to examine ; but their evil star had so directed
" the matter that the first syllable was not to be found in the whole
"writing, upon which disappointment, he, who found the former
"evasion took heart, and said. Brothers, there are yet hopes; for
"though we cannot find them totidem verbis, nor totidem syllabis, I
" dare engage we shall make them out tertio uiodo, or totidem Uteris.
"This discovery was also highly commended, upon which they fell
" once more to the scrutiny, and soon picked outS, H, O, U, L, D, E, R;
"when the same planet enemy to their repose had wonderfully
" contrived that a K was not to be found. Here was a weighty diffi-
"culty, but the distingviishing brother for whom we will hereafter
" find a name, now his hand was in proved by a very good argument,
"thatK was a modern illegitimate letter unknown to the learned
"ages, nor anj'whereto be found in ancient manuscripts. It is true,
" said he, the word Calcndae hath in Q. V. C. been sometimes written
"with a K but erroneously ; for in the best copies it has been ever
" spelt with a C. And by consequence it was a gross mistake in our
"language to .spell knot with a k but from henceforward he would
"take care it should be written with a C. Upon this all further diffi-
" culty vanished. Shoulder knots were made out to be clearly jure
''patenio." Swift's Works, "Tale of a Tub," III Vol. 82, ed. 1S03.
The courts took the .statutory language, and spelt out the
word N, O, N, D, E, S, C, R, I, P, T, for the special partner.
They did not classify him as a partner, except to vidlimize
him for the non-observance of any trifling formality, but they
treated him as an anomaly in law. If the legislature had
not ena6led him a partner, the profession would have made
him a creditor. ^ As it is, he runs the gantlet of the Pro-
fession.^
86
Pt. I, Ch. 2. Antecedents. §37.
a. "Au foncl, obje6tera-t-on que la limitation de la responsabilite aux
" mises des associes est contraire a ce priucipe du droit civil d'apres
" lequel quiconque s'oblige tous ses biens? Mais ce principe
" n'est qu'une regie geuerale, susceptible d'etre amendee par conveu-
" tion ; caril est incoutestablenientpertnis delimiter son engagemeut
"a certain biens; cette limitation, qui devient la regie dans lessocietes
" commerciales, serait valable a titre d'exception, dans les societes
' ' civiles ordinaires, et obligatoire vis-a-vis des tiers si elle etait connue
" d'eux. Or cette connaissance leur sera donuee au moyen de la pub-
" licite exigee par la loi comnierciale." Vav., s 34S.
vSpecial partnership is not a kind of partnership, but is a modifica-
tion of general partnership. Marshall v. Lambeth, 7 Robinson La. 47
(1844).
Foreign speaal partnership recognized by comity. B, special, and
C and D general partners, in Cuba, trading as C, D & Co. B, who
had never adled or held himself out as a partner, failed to observe the
statutory requirements of contribution in cash, and of recording cer-
tificate, which were held direcftory in Cuba. A lent the firm money
in N. Y. , and sued B as a general partner. — ^Judgment for B. Cuban
special partnership recognized by comity. King v. Sarria, 69 N. Y. 24
(1877).
Foreign process against special partnership regulated by foreign
law. B, general, and C, special, partners, who traded, in Massachu-
setts, in B's name, suspended payment. D, a Massachusetts creditor,
attached debts due the firm B, in New York, Alabama and Arkansas,
and recovered the claims. A, B's assignee in insolvency, sued D for
the amount colledled. — Judgment for D. Though equity would not
let D obtain a privilege by attaching insolvent's property in another
State, the law does not take away the privilege when thus obtained.
The attachments against B bound the firm, because the Massachusetts
Statute made B's name the firm designation, and, although without
extra territorial force, is recognized as the law of the partnership.
Though attachments invalid and payment by garnishees voluntary,
A could not recover from D ; the judgments cannot be impeached
in this collateral suit. Special partner, if unknown, should no more
be joined as defendant than dormant partner. Lawrence v. Bacheller,
131 Mass. 504 (1881).
b. Law of Partnership, by NathaxieIv Lindley, i vol. 6, et seq.
c. Renaud, ^13, p. 94.
d. "Confirmatio (apud Anglos 'charter') Societatis a Principe impe-
"trata num ad valorem contradlus requiratur, fludluat sententiajuris-
"consultorum. Alii enim utique eam desiderant, alii omitti posse
"aiunt, alii pro casuum diversitate mode hoc modo illud statuunt
"verum esse. Re accuratius perpensa verius mihi hoc visum est.
" Distiuguendae sunt societates innominatae ex diversitate opens,
"quod faciendum suscipitur. Illae enim, quarum finis est, ut res
"aliqua negotiumve ad imperantis jura pertinens expediatur, valide
"iniri absque Principis assensu nequeunt. Ita ad rem metallicam
" exercendam, ad Salinas struendas non sufficit privatorum conventio,
"quoniam regalibus ista accensentur; neque ad canales fodiendos
"ferreasve vias sternendas sufficit societas privata, quia territorio
"opus est et inviti ad vendendos fundos domini expropriationis lege
" compellendi sunt. Huiusmodi igitur societates validae esse absque
"confirmatione non possunt, quia antequam haec impetrata est,
"parum constat, liceatne opus perficere nee ne. " Societates Innomi-
natae, by Dr. Fred. Fransc. FiJssEL, ch. Ill, ^3, Lipsiae, 1842. This
8 7
5r-
Antecedents. 1't. i, Ch. 2.
view IS rotisistont with thai of the I-aculty of Ivcipsif,' jurists : "Quae
•• »4K-ut;iUiii aiioiivmain statuit esseuniversitatem, additque, pa<5tum,
•'iiu.. i-.insiiiuaiiti'ir uiiivcrsitates, jure Romano non msignitum nom-
" iiic iKCiihari. non aliud esse, ac quod in constituenda republica' pac-
"tum unuinis et ordinationis' soleat dici ; ipsam universitatem ab eo
" imlf monicnto txisterc, quo membra, se earn ])ro constituta habere,
"(Ictlaraverint; confirmationeni publicam uonnisi positivo jure Ro-
'• mano et particulari rcquiri, ideoque etiam absque hac a membris
"ipsis cotnunctioncm illam pro universitate esse agnoscendam."
SiH-irtiitrs Inuomiuatac, supra, <(4, n. 23.
S^aft JlcticnUKfcn, w\\ S. 3lucrbadi, 1873, ^p. 3-i.
e. "The r.encral Assembly shall not pass any local or special law . .
" creating coq)oratious, or amending, renewing or extending the
•'charters thereof, . . . nor indiredlly enadl such special or local
" law, bv the jjartial repeal of a general law." Constitution of Penn-
sylvania, 1874, Art. Ill, 'i~.
/. Special partner's interest a chose in aflion. A, B and C, special
partners, D general partner. On E's execution against A, sheriff
sold his interest in the firm to K, without levy upon or view of the
stock. A claimed the share. — Recovered. His interest a chose in
action, and, tlierefore, not subje<5lto execution. There could be no
levy on the stock to sell special, like general, interest, because
special partner has uo right of control over firm property. Resem-
bles a debt rather than an interest in property, or even a share of
coqwrate stock. Probablv not a debt at all. Harris v. Murray, 28 N.
Y. 574(1864).
Special partner cannot claiui re-payvtcnt of loan made apart from
his contribution, unfit firm creditors are satisfied. Special partner,
A, lent money to the firm beyond his contribution, and claimed as a
creditor against th'.- fund in the hands of B, the receiver. Defence :
Statute postpones A to firm creditors. Reply : Loan made not as a
contribution, but as an independent transaction. — ^Judgment for B.
Statute makes no distindlion, but puts all loans on the footing of the
contribution. White v. Hackett, 20 N. Y. 178 (1859).
g. ExaR compliance ii'ith statutory requirements necessary to proteEl
special partner. B, general, and C, special partner. All the statutory
requirements were observed, but the advertisement contained a mis-
print of the amount contributed by C, which was announced as $5,000,
uistead of |2,oocj. A sued C, as general partner, for goods sold to the
firm.— Recovered, (ieneral lialjility the penalty for the inaccurac}-.
Argall v. Smith, 3 Denio 435 (1846).
A et al. sued 15, special partner in C & Co. Affidavit of C, for
renewal of partnershij), stated that B had contributed |.5o,ooo, and it
^'remains in the common stock of said firm."— Liable. Affidavit
insufficient, because it did not explain the state of the contribution.
Haddock v. C.rinnell IManuf'g Corp'n, 16 W. N. 549 (1S85). '
Chaui^e of place of business, zvithout recording certificate, charges
shenal a% general partner. Insolvency of surviving partner, found
but not defined, presumed to be total after juds:menCas:ainst survivifig
and executors of deceased partner. B, general, and'c, special, part-
ners in New York. I'irm moved its place of business to Kings Co.,
but did not record a certificate there. A. sold goods to the firm in
Kings Co.. and .sued B and executors of C. Referee found B insolvent.
iJefence: In.solvency ambiguous. Plaintiff must show total insolv-
ency-, or execution unsatisfied.— Recovered. C liable as general
partner. C should, at the reference, have compelled A to prove that
88
Pt. I, Ch. 2. Antecedents. §37.
he had exhausted B's resources. Afterwards, total insolvency is
presumed, iu order to uphold the judgment. Riper v Poppeuhausen,
43 N. Y. 68 (1870).
Special partner becomes general bv disposing oj Jinn assets after its
failnre. Contracl to pay jinn liabilities not merged in indemnity to
jinn and to contraFling partner. C agreed, in April, 1872, to furnish
means and merchandise to carry on firm of B & Co., and indemnify
A, the special partner, if he would continue his contribution for two
years. B & Co. failed in May, 1872, and all the partners were ad-
judged bankrupts. C assigned for creditors, to I) & Co., and all his
creditors joined in the deed in November, 1S72. Then a settlement
was made among all the parties: A gave up the agreemei;t of April,
surrendered claims against C, agreed to pay commercial paper nego-
tiated for B & Co., and paid C |;37,ooo. The bankruptcy proceedings
were dismissed by consent. B & Co. assigned their assets to C, who
agreed to pay B & Co. 's debts and indemnify B & Co. and A. D &
Co. guaranteed C's contracfl. A sued D & Co. Defence: As A did
not pay debts, he cannot claim reimbursement. — Contract to pay
independent of indemnity, and covered liabilities. A, by joining in
assignment of B & Co. and advancing money to C, became liable as
general partner, and, as such, had been adjudged bankrupt by final
decree. A obtained relief, C firm assets and A"s cash to meet his
liabilities, and D & Co. possession of C's property. Guaranty part
of settlement. C would have recourse in equity for endorsement
made for B & Co. Farnsworth v. Boardman, 131 Mass. 115 (1881).
Creditor of general partners^ ivithout knowledge of the special part-
nership, may hold firm assets received in satisfaBion of his claim
against a firm creditor's attachment. A dissolved partnership with
B and C, as carriage makers, and took their note for his balance of
account. B & C continued the business alone for a month, and then
formed the new partnership of B & Co. , with D, E and F as special
partners. B and C sold A, who did not know of the special partner-
ship, three carriages, in payment of their note, which A surrendered
to them. G, creditors of the special partnership, attached the car-
riages as its property, and A replevied it. Defence : B and C could
not appropriate firm assets to the payment of their separate debt. —
Recovered. The special entrusted the general partners with authority
to dispose of the firm property as their own, and their separate creditor
may receive from them, in payment of his debt, firm assets, which he
believes, from their apparent ownership, to be their individual prop-
erty. A and G both innocent parties. G is identified with B & Co.,
who enabled B and C to deal as owners, and must bear the loss. Locke
V. Lewis, 124 Mass. i (1878).
The whole machinery of the Statute has but one purpose,
that is, to notify strangers, who is the special partner, and
what is his contribution.'' If they already know these two
fa6ls, their knowledge dispenses with the notice for which
the Statute provides. The Statute could not be misunder-
stood, for it enadled the commercial principle, which pre-
vailed everywhere else, in order to make it a part of the
Common law. The beacon light of experience was equal
to the illuminated pathway of the Israelites: "The Lord
89
§,7. Antkcedents. Pt. I, Ch. 2.
"went »K-forc them by day in a pillar of cloud, to lead them
•'the wav; and by ni^-ht in a pillar of fire, to give them
"li>fht: to fro In- day and night.'" Men trusted to the good
faitli of the judges in applying the language to business
Iransaclions. How the commercial world was deceived is
shown in tlie business wrecks among special partners.
Look at the method of constru6liou resorted to by the
courts. The Statute requires a contribution. The special
partner is made to pa>' it, and his co-partners to swear to
tlie ixiyment on the date of the contrail of partnership, or
of its renewal, otherwise the payment counts for nothing.
The s|x-cial partner ma)- be in Europe on that day. The im-
possibility is no excuse for non-compliance. If the special
partner anticipates the difficulty, and obviates it, by giving
liis check in advance, he is denounced for seeking to defraud
the Statute, and the partners are charged with perjury,
although both check and affidavit relate to the date" of part-
nership, and are good at that time.^
A. Statiilory requirements, omitted -in forming special partnership,
tntisl he constituents of it, in order to charge special as general part-
tifr. R was special partner, and received a percentage on gross sales,
instead of a share in the profits. He once consulted wth the general
p.irtjKTs, and telegraphed the standing of the firm to N. Y. Minor
rei|iiirements of the Statute \vere not observed in forming the part-
nershij). A, et al., sued B, as general partner. — Not liable. Record
of si)ecial partnership ample protection to creditors, and irregulari-
ties, not inconsistent with special partnership, disregarded. Tele-
gram might have been sent by a stranger. Ulman v. Briggs, 32 La.
.•\n. 657 (1H80).
/ 2 Moses xiii; 21.
J. Statement and payment of special partner' s contribution must coin-
cide in date with the contrah of partnership. B special, C and D
general partners. Certificate and affidavit, 23 December, 1870, stated
amount of contribution ])aid in cash for partnership, to begin i Jan-
uary, 1.S71. B gave his check, 31 December, 1870, which was paid 2
January, 1871. the ist being vSunday. A sued B, C & D on promissorv
.f finn.— Recovered. Certificate and affidavit not read as of the
L>uran
'■> which they referred for commencement of the partnership.
JU V. /Vrbeudroth, 69 X. Y. 148 (1877); 97 N. Y. 132 (1884).
Pt. I, Ch. 3. Antecedents. §38-39.
§38.
^f t\)c contribution nia^c to tl)e tirni bu a partner consista of
fungible propertn roljici) tiocs not belong to l)ini, but tol)icl) l)as been
put into l)is l)ani!is for use, tlie owner cannot reclaim it troni tl]e
firm.
The transfer of title by the partner to the firm does
not exceed his authority, as it is a use by the partner
in conjunction with his co-partners, and the firm ac-
quires by the use a right to the property. If the owner
deposits money, or its equivalent, with the partner for
use by him, the deposit is in effe61; a loan, but not to
the firm. A debt results from the use of the deposit
by the partner in the business, and the owner must
look only to the partner as his debtor. The firm,
although it uses the deposit as capital stock, does not
owe its value as a debt to the proprietor.'
I. Firings use of gold deposited with partner for use by him, does not
charge the Jinn. A sent gold dust from California to his sister B, the
wife of C. D, the partner of C, urged both A and C to use it as stock,
but A lent it to C, and it was used in the business. C died, and A sued
D. — No acflion lay. The fund was contributed by C, and the firm was
not liable for it. Donnally v. Ryan, 5 Wr. 306, Pa. (1861).
§39.
(al)e element of trust, if complicatei^ miti] tl)e contribution, cljanges
tl)e djaracter of tl)e transaction.
Upon what theory does the law charge a trustee
for the profits which he makes by trading with trust
funds? It has been said: The law does not suggest
a breach of duty and impute it to the trustee, but
adopts the natural inference that he is ailing in the
91
^-p^ Antecedents. Pt. i, Ch. 2.
performance of his duty. The profits belong to the
iKMieficinrics, because the trustee a6led for them in
trading with the trust fund. The a(5l being done on
behalf of the beneficiaries, they are entitled to ratify
it. The right of eledlion results from the trustee's
a(5l of trading for them with the trust fund.' But the
trustee's conduct does not admit of such an explana-
tion. He is prohibited by law from doing the acft
which is alleged to be a performance of duty. With
the prohibition staring him in the face, he refuses to
invest the fund in legal securities, as he is direcfted to
do, and disobeys the iujunc^tion of the law. He pro-
ceeds a step further, and embarks in a speculation
witli the trust fund. The acfl of the trustee is a viola-
tion of law and a breach of the trust by him. The
only performance of duty which he could make would
be a legal investment of the fund. Anything else is
the non-performance of duty.
.\ partner, therefore, who holds trust money, with
no authority to contribute it to a firm, and who does
nevertheless employ it for that purpose, commits a
breach of trust.'"^ The trustee might invest the trust
fund in a partnership without an intention to defraud
the ccstuy que trusty but the contribution would not be
a lawful investment. There would be no tangible
security for a return of the fund, not even a promise
to repay it by the partners. The money would be at
the risk of the business, in other words, a speculation.
1. Lord Ardmillan's opinion, Laird v. Chisholm, ^o Scottish Tur.
584(1858). -^ -*
2. Ward may reclaim the funds ivhich guardian used as a partner in
his firm, from assignee for creditors. B, guardian of A, put ward's
money in the firm of B & C. B died insolvent, and his sureties were
also insolvent. C assigned for creditors to D. A brought bill against
V. ann jj. to recover trust funds in preference to creditors.— Recovered.
Larter v. Lipsey, 70 Geo. 417 (1883).
92
Pt. I, Ch. 2. Antecedents. §4xx
§40.
©[jE orbinarp fonseqnence u)l)tcl) follotus t\)t misuse of trust
t'uniis, enables tl)E ccstiiy que trust to redaim from tl)c ttrm X\\t
moneg coutributcLJ to it bn ti)£ trustee..
It is only a purchaser for value and without notice
who prevents a pursuit of the funds. He is protedled,
and the cestuy que trust then looks to the considera-
tion as a substitute for the property. The firm can-
not deny the cestuy que trusfs right, and claim to be
considered a purchaser for value and without notice,
from the partner, who contributes the trust funds. ^
The firm is not a person existing apart from its mem-
bers, but an aggregate of the partners. The contribu-
tion does not pass to the co-partners, and enable them
to claim it as purchasers, for then it would be their
separate estate. So far as the separate estate, from
which the consideration moved, is involved, they are
entitled to protection, and would be exonerated from
liability, were it not for the nature of the C. L. contradl
(§ 102). But the contribution remains the property of
the contributing partner, shared, during the partner-
ship, with his co-partners. The cestuy que trusty in
reclaiming it from the firm, takes it back from the
trustee, and from his co-partners, who have paid noth-
ing for it out of the joint estate, but simply added
something to it in the joint stock. The firm, there-
fore, is a volunteer, and by the doctrine of equity the
trust fund, if it is identified, may be followed into the
hands of the trustee, or of a volunteer, or even of a
purchaser for value, if he had notice of the trust.
The character of a partnership is often overlooked,
and the attributes of a person are inadvertently given
93
540. Antecedents. Pt. i, Ch. 2.
to the firm. It is said that a partner may lend trust
fiuuls to his firm, and if his co-partners are ignorant
of the breach of trust committed by him in making
the loan, they will not be affec1:ed by the breach, but
will be entitled to hold the funds as firm property, for
which they will be indebted only to the co-partner as
;i lender," who will alone be liable to the ccstiiy que
trust? But the distinction taken between a loan and
a contribution of trust funds by a partner to his firm,
has no foundation. If there were any difference,
the tort of a partner in acquiring his contribution
would affecl his co-partners the least. Inasmuch as
the contribution is an independent transadlion, ante-
rior to the partnership, it might be urged that the co-
partners should not be implicated by the partner's
fraud. But no such argument could be made when
the partner procures money after the firm has been
formed.' He cannot a(5l in an independent capacity,
for he represents the firm, which must necessarily be
affe(5led by his knowledge acquired in the very trans-
action.
I. The suggestion of Mr. Justice Lindley, i Partnership 329.
J. LoUDji'STicE James speaks of the eledlion between interest and
pruliLs ill the case of "an actual loan bv a trustee in breach of trust
to himself and others," meaning partners. Vyse v. Foster, L,. R. 7
Ch. 334(1872).
3. ^ Parinci^s use 0/ trust funds in his firm does not charge it. B, in New-
York, and C, in New Orleans, partners. B wentsurety for A. Upon
debtor. IVs. default, lie gave for A's security an order to B, though in
H & C's name, for merchandise, which B, without C's knowledge,
sold and applied for the firm. A's assignee brought assumpsit against
H. iK-feucc : Nonjoinder of C— Recovered. B's separate debt, and
L not made a co-debtor by application of trust fund for firm. Jaques
V. Miirquand, 6 Coweu 497, N. Y. (1826).
, . „ .^^owledsre. j.^^ y^^-^<,
ZZL ?nTf'^ ^"J ^\ ,''"'^ embezzled by him. A & Co. brought bill
againsi ji 6: L.— Lial)le to account. Misapplication charged fimi, and
repayment to partner no exoneration. Rvan v. Morrell, 21 Reporter
^,i, Ky. (1885). Infra <4i, notes i and 4.'
94
Pt. I, Ch. 2. Antecedents. §41.
Trust funds put by trustee paiiner in his firm creates a firm lia-
bility. B, acimiuistrator, aud also guardiau of E, lent funds of dece-
dent to firm of B, C & Co., which became insolvent, and executed a
note for the loan, and a trust-deed of lands to secure it. Firm cred-
itors attached the lands. A foreclosed. — Recovered. Firm liable for
fund, and security binding. Bush v. Bush, 33 Kan. 556 (1885).
Partner's conversion of trust funds to firm use -makes the partners
liable to the cestuy que trust. B, United States deputy collector of
internal revenue, with knowledge of C, his co-partner, converted
money received by him to the use of firm B & Co., which, becoming
insolvent, executed a judgment bond of indemnity to D et al., sureties
on B's official bond. Judgment entered up, and firm stock sold. A
et at. enjoined E, sheriff, from paying proceeds of execution to D et at.
— Bill dismissed. Wharton v. Clements, 3 Del. Ch. 209 (1868).
§41.
(^[]£ cestuy que trust man tuaice tl]c tart of tl]e partner in
misapprcipriating tl]e trust funibs, anb rrcocrr of tl)c ttrm in
assumpsit tl]e proreebs us£li in tl)e business.
The tort of a partner does not implicate his co-
partners, unless they derive a benefit from the wrong
which he has committed. If the firm received the
proceeds of the tort, the defrauded owner may waive
the tort, and recover the proceeds, or its equivalent.
The recover}'- is not founded on a contract, or a debt.
The proprietor simply follows his property into the
hands of the firm, which has no title to it, and compels
a surrender of the possession. If restoration can not
be made, an equivalent is exadled, in lieu of the prop-
erty.' The co-partners can make no defence to the
reclamation of the owner, as they gave no value for
the proceeds, and though the}' had no knowledge of
the fraud, equity requires a purchaser for value to
intervene before it will arrest the proprietor in the
pursuit of his property. -
95
5^1 Antecedents. Pt. i, Ch. 2.
Following trust fuuds into partnership seemed nat-
ural among the Romans, because no individual lia-
bility of an innocent partner was involved. The firm
ha.s received the funds, and is obliged to restore them,
with the penalty, or profits acquired by their employ-
ment. The right of the ccstny que trust to waive the
tort, and proceed direclly for the money, is a clear
equity. The collision of rights occurs when an inno-
cent party is brought into the transaction. The part-
ner who was not concerned in the breach is made to
pay the money, though this would simply make him
the victim, instead of the cestuy que trust. The loss
is shifted from one innocent man to another. The
Romans limited the recovery to partnership assets,
and this makes a simple case. If we could limit the
firm liability, when once admitted, to the joint effe6ls,
the problem would be solved. Should the innocent
partner pay for his co-partner's theft? It would seem
not. if he did not, in the language of Ulpian,^ know of
it. If ignorant of the fraud, he should be exempt from
personal liability. The rights being equal, the loss
would not be changed, but would remain where it
originally stood. The liability, /// persojimn^ of a
partner arose only when his co-partner put the con-
sideration into the firm assets. Then the firm re-
ceived the benefit, and as each received the goods in
facl, each must restore. The a6lual receipt by the
firm is the facl which fixes the partners' liability."*
' ■ C7'',"T ^ ""' ("f trust funds in the firm charges his co-partners. B
III I l)jl;i.lelplna. and C and D, in New Vork, partners as stock-brokers.
I), executor of A, without B's knowledge, except in one instance, lent
securities of A's estate to the firm, which used them in its business.
On iLs failure, A's administrator d. b. n. sued B in assumpsit.— Re-
V^^. f M ^^ '*"• ■^•''"^'^' ^vithout notice of the borrowing or con-
version of the securities. Guillou v. Peterson, 8 Norris 163, Pa. (1870).
96
Pt. I, Ch. 2. Antecedents. §42.
2. In New York the firm is regarded as a purchaser for
value
Trust J'lDtdx cannot be recovered, altlwui!;li identified. B <S: C, part-
ners for purchasing and couducfting a hotel. B contributed trust
funds of A, without C's knowledge. B sold his share to D, who had
no notice of the trust. A sued for as much in the value of the hotel
as his money had purchased. D's defence A, B"s creditor, and enti-
tled only to account of B's interest, — Defence sustained. D, a bona
fide purchaser for value. Hollemback v. More, 44 N. Y. Sup'r Court,
107 (1878).
The cestuv que trust cannot prove even against the joint estate.
Millett V. Stringer, 17 Abb. Pr. 152, N. Y. (1858).
3. D. 17, 2, 55.
4. Firm's receipt of trust fund charges the partners for its return.
Cestuy que trust sued surviving partner in assumpsit, for trust
monej-s which his deceased partner had employed in the business
without his knowledge. — Recovered. Having received the benefit
of the trust fund, the defendant should make it good to the plaintiff.
Welker v. Wallace, 31 Ga. 362 (i860).
§42.
5ll)e cestuy que trust is entitleii to recanrr not onlii tl^c trust
funli £inploi]£ii in tl)c tirm, or contributeii to it bn tl)C trustee
partner, but, in abolition to it, tl)e sliare of profits u)iyicl) tl)e firm
maiie bn tl)e use ot tl)e funb.
The authorities made a distindlion between the
trustee partner and his co-partners. In this aspe6l,
the co-partners do not commit a breach of trust, be-
cause they are not trustees. No obligation rests on
them to invest the property of the cestiiy que trust in
authorized securities, and the prohibition not to trade
with trust funds is not directed to them. The benefi-
ciaries may reclaim the fund, with interest, because it
does not belong to the partners, and the law will fol-
low it into their hands. They do not a(5l in a fiduciary
capacity by appointment, and unless they had knowl-
edge of the trust and of its appropriation by the trustee,
97
^2. Antkckdents. Pt. I, Ch. 2.
they will not be charged for diverting the fund to un-
lawful uses.' If, however, the partners had such
knowledge, they become trustees ex tna/r/ido^ by co-
operating in the breach, and are accountable for the
profits which they make by trading with the trust
fund.
The distinction results in a curious refinement.
The fund is severed, and the partners are treated as
strangers to each other with reference to it. The
trustee partner is not liable for his co-partners' share
of the profits which the firm made by the use of the
trust fund. He is, as an individual, dereli6l, and is
charged, on account of his tort, with his share of the
profits, but his co-partners are not compelled to account
to the crstuy que trust for their shares. The co-part-
ners are liable to the cestuy que trust only for the fund,
with interest.'^ The theory, if it could be maintained,
involves a pro tanto dissolution of the firm. The
trustee partner is made to occupy the double position
of a stranger and of a member of the firm. But as has
been shown (§40) he represents the firm in his breach
of trust, and charges his co-partners for the tort, which
he commits. They can no more retain the fruits of
the fraud than he can, and they must answer for them
to the defrauded cestuy que trust. The ignorance of the
co-partners would be a difference only as to his sepa-
rate estate, if the procedure distinguished between
joint and separate assets.
But the segregation of the trust fund from the joint
stock could not be sustained on partnership principles.
The profits, in theory, correspond with the contribu-
tions, and originally the law made the adjustment.
Subsequently, the correlation was left to the partners,
98
Pt. I, Ch. 2. Antecedents. §42.
but the law assumes that they adjust the profits in
proportiou to the contributions (§56). The contribu-
tion, therefore, of the trust fund is matched by an
equivalent contribution made by each of the co-part-
ners. The profits of the trust fund, if divided among
all the partners, entitle the trustee partner to share,
by virtue of his trust contribution, the profits of all
other contributions. The result is equivalent to giv-
ing him all the profits of the trust fund. This con-
clusion has also been worked out by Hamilton, on
business principles.'*
I. Tlie trustee partner answers for his share of the profits made by the
firm in trading ivith the trust funds, but not for the shares of his co-
trustees or co-partners. They ansiver only for principal and interest.
Articles provided for paytneut of partner's share iu instalments within
18 months after his death. D died, appointing his partner, C, and
others, trustees and executors. C alone adled, substituting three co-
trustees, who made him their agent. C did not withdraw D's interest,
but left it in the firm. The beneficiaries claimed the profits made in
the business from C, and from his co-trustees, and also from his co-
partners, although they were not parties to the proceedings. — Re-
covered from C, who was solvent, profits made b}- him. Co-trustees
would be liable only for debt and interest (dissent would charge them
jointly with C), as would his partners. Laird v. Chisholm, 30 Scot-
tish Jur. 582 (1858).
Co-trustces are identified zvith the trading trustee^ and
are liable for the profits zvJiich he ear tied by means ofi the
trust fiiind., although they received nothing. What is nec-
essary in order to charge a trustee for the profits made by
trading with trust funds? Must the profits be received
by him? If co-trustees did not use the fund, and were
not enriched by the profits, they could not be said to
retain the profits which belonged to another, for they did
not receive any profits. The question may be asked:
Do they not answer merely for negligence in not pre-
venting the trustee from trading with the fund ? The
liability for neg-ligence would be to make good the loss
occasioned by the trading trustee. This would be com-
pensation or indemnity, and include the principal sum
employed by him in trade, and the interest upon it.
Would the co-trustees, who made no profits, be pun-
ished, and a penalty inflidted upon them after they had
made up the loss to the cestii v que trust ? This would
99
Ma.
Antecedents. Ft. i, Ch. 2.
make the co-trustees take money out of their own pock-
ets, in order to cnricli the beneficiaries beyond the loss.
The answer is: The trustees are a unit. All are deemed
to receive the profits, because the>' have the control, and
are char<,a-d by law with its e.xertion. They do not
answer for the profits made by a different person, but ft)r
the profits received by themselves through a member
identified with them.
. LoRO Cairns. Vyse v. Foster, L. R. 7 H. L. 333-4 (.1874).
l\trtnt-rs traiiinff -with a. bartner who contributes trust fund mr
liable to ccstuy que trust for interest, or the profits of its employmail.
B, executrix of husband, C, in 1S54, took his assets for her contribu-
tion to firui, which she formed, stipulating for profits in proportion
to contribution. DifTerent firms succeeded first until 1864, when B
went out. She had declared trusts of fund 22 February, 1S62, and
ajjreed to indenniify co-partners. vShe became bankrupt. Children
of C brought account. D partner from beginning, and E from i July,
1S62. — Decree. They appealed. — Afi&rmed. Plaintiffs entitled to
eiKjuiry, in order to elecfl interest or profits of testator's assets em-
ployed in trade. An appropriation, not a loan, of trust fund, which
partners acfjuired with knowledge of the breach of trust. Flocfton v.
Bunniug, L. R. 8 Ch. App. 323 n. (1864).
,. Cestuy que trust entitled only to trustee partnei^s share of profits
made bv use of trust fund. By settlement, B and C, trustees were
(lirecled to call in debt of ^350 from banking firm, of which B was a
partner. The debt remained uucollecfled for 16 years, when the firm
wa.s dissolved. C died during the interval, and D was substituted co-
trustee. Cestuy que trust brought bill against B for profits made by
use of the trust money. — PUititled to only 1-3, or B's share of firm
profit, and, therefore, interest with annual rests allowed at eledlion.
Jones V. Foxall, 15 Beav. 3S8 (1852).
Contrail for purchase of deceased partner's share by surviving part-
ners executed, in spite of terms unperformed and price unpaid for 2j
years, if sale, apart from its formalities, intended by the parties ; de-
ceased partner's legatee could not impeach sale and claim profits
because executor a partner. Partners B & C, with capitals respedlively
/9^),f>xj and jr\v,,ooo, had received equally their father, the firm
founder's, interest. Remaining partner, D, laad ^'7,000 capital, and
new partner, E. nothing. Each received s per cent, interest on his
capiul and accumulations, and B 6-16, C 5-16, D 3-16, and E 2-16 of
profits. .At different periods profits were re-adjusted among the old
r.ng ])artners, but not according to their contributions. By
rviving partners should take deceased partner's share at
i ^^ ' ^^'i last account of stock, and pay in instalment notes,
maturmg in two years from his death. B died in 1S55, making C,
hissonC, who subsequently became partner, and H his executors.
I Jieyleft B s share in firm at 5 per cent, interest, added annually to
principal, against which cestuy que trust drew, like other members
01 the family against their deposits. Eight of the nine legatees.
testator s children, and the annuitants, his widow and father, ratified
inc sale. But A, the youngest child, who attained majority in 1S65,
a^^ ^ ", ''•'^^;"'* ^' ^" ^^70, for profits.-Dismissed. ^ Articles
ciiectea a sale of B's share to co-partners, who became debtors for
ine pnce. Though negle(5t to withdraw, a breach of trust, which
'?
Pt. I, Ch. 2. Antkcedents. §42.
benefited firm, appointment of partner executor, which extinguished
debt at law, and left it only a debt in equity released executors from
performance of terms available only for legal debts, and making son
co-executor, who could not enforce terms at law, also indicated a
dispensation of executory terms, in order to preserve ancestral busi-
ness. By ratification, others made transacliou lawful with them.
Were capital the only source of profits, the children's quotas, princi-
pal of annuities and deposits would be counted with partner's contri-
butions, and A's share would be only her share of the aggregate ; but
where capital is a facSlor at all, it is never the leading element in
profits. The main source, apart from the good-will, is the partner's
capacit}'. Their shares were not based on the amounts contributed,
but on their quotas of the good-will and their ser\dces. Interest was
the measure of capital for contributions and loans. Recovery could
be only against executor-partner, and for proportion of profits made
by him with trust funds. To charge him for co-partners' profits
would not be equit}-, but punishment. Vyse v. Foster, L. R. 8 Ch.
App. 309 (1870). — Affirmed on appeal. Testator dispensed with per-
formance, of which time was not the essence. Delay would not justify
inference of coUedliou and a re-loan. Bill incongruous ; could not
rescind against executor partner sale, which subsists for surviving
partners ; claim for interest on surviving partners' shares as a creditor
for the price and for profits out of executor partner's share as a co-
partner. Quer}' : A(5live breach of trust would charge all partners
aware of it, but not one for all. L. R. 7 H. L. 318 (1S74).
A rough estimate is sometimes made for convenience
sake, in order to avoid the trouble of ascertaining the
constituent portions of the profits. An allowance is
made out of the profits to the firm for ser\dces, and the
compensation is deducted before the cestuy que trust ' s
share is estimated. An allowance of 1-3 for manage-
ment has been made in other cases, and adopted in
partnership.
If decedent s business is carried on rcith his assets by administratrix ,
/lis creditor may conipet Iter to account for 2-j of t lie profits. B, pawn-
broker, died, leaving $3,000 assets, with which C, his widow and
administratrix, continued the business. She made |ii,7oo profits a
year. A obtained judgment against B's estate for $6,400, and claimed
pavment out of the profits. — Entitled. C allowed |;6oo for expenses,
and charged with |i, 100 as net profits, aggregating in 14 years $15,000.
Robinett's Appeal, 12 Casey 174, Pa. (i860).
Ward must elecT. in advance for fund put by guardian in Jiis firm,
eitlicr profits of business or principat and interest, zait/wut drawing
court's opin ion : ivlietlier tJie profits are of t/ie guardian or oftliefirm,
and zuitti or 7>.'itJiout atloTvances to partners for managoncnt. B put,
in 1S66, ward A's money, $9,826.84, in firm of B & C, C going surety
for B as guardian. Account in firm books gave credit, with 6 per
cent, interest, carried to guardian's account every six months, after
dedu6ling A's maintenance. B lent trust fund, $39,000, to firm, in
April, 1S66. His contribution was $30,000, and C's $95,000. On ist
06lober, 1866, B's share increased from 1-3 to 1-2. The partners'
capitals varied greatly in amount during the partnership, but no
other change was made in their shares, the capitals for the time be-
ing carrying 6 per cent, interest. In 1880, on C's suicide, A attached
B, who, eo die, paid over balance due A, $13,691.11. A claimed elec-
^2. Antecedents. Pt. i, Ch. 2.
lion of principal and interest or of profits in B & C's business ; but
rcfusc<l 10 elect until courts decided what share A had in firm profits.
On)ii»ms' Court allowed 1-3 profits to partners for management, 1-2
balance to each ns his share of profits, and refused to surcharge B for
C's share of profits. As A refused to elecl. Orphans' Court entered
decree for prnu-ii)al and interest. A's claim : vShare as quasi partner
iu proiK>rlion to his capital used in business, without allowance for
co-i)artners* services. Defence : Interest the direcT; measure iu value
of A's fund. Profits retireseiit good-will of business and capacity of
partners.— Affirmed. Scguin's Appeal, 7 Out. 139, Pa. (18S3).
/f/Jit^ testator provides for a valuation and account of
his share by the surviving partners^ the iiifcrence is a
sale of his share to than. An element is frequently in-
trodiiced which changes the nature of the relation. The
testator clire(5ls his partners to liquidate his share and
pay over the sum to his executor. The diredlion effec^ts
a sale of his share to his partners, and converts the rela-
tion of trustee and cestity que trust into that of debtor
and creditor. The change saves the partners from lia-
bility as trustees ex vialefcio^ and charges them simply
with interest upon the testator's share as a debt."
The diredlion may be to liquidate the share within a
given period, and pay it over to the executor, but a
partner may be appointed the executor. The appoint-
ment deprives the estate of the right to enforce the pay-
ment at law, and makes the claim an equity. The
courts infer from the appointment that the testator
meant to leave the withdrawal of his share to the dis-
cretion of his executor. If he does not colledl the debt,
it remains in the firm on tlie footino^ of a loan.''
o
4. He sums up his demonstration in figures: "Let the total profits
'* efjual 9, then, as each of the three partners has one equal third part
"of tlie capital, the share of profits earned by each partner's capital
II will equal 3. That is 3+3+3, the sum total of the profits so made,
II each share of capital contributing 3, amounts to 9, the total profits.
!! ^^" *^'''-""' ^''^ executor partner received simply the profits which his
||. share of capital makes, he would get 3; as it is, out of the three
'.l"!^'.'*^ '•>' ^^'^ share of capital he receives i only, the other 2 being
II divided equally between his partners. The argiiment against me
^ IS, I subniit: If he was paid the whole 3 w^hich his share produces,
" u yyy '^^ '"•'1'^^ to account for that 3; but as all he gets is i, he
^ shall only account for i. I answer, he gets indeed i only from his
^^own share, but that is because at the same time he gets i from each
^^01 the other two shares; therefore the net result is, that instead of
^ Ketling 3 and having to account for 3, begets i + i+i, which, arith-
metically, equal 3, but still only subjecl: him to the necessity of
a"-ounting for j." Critique "On the Dodlrine of Vyse v. Foster,"
Dy u. i<. M.\Mii.TON, 3 Law Quarterly Rev. 211 : 1887.
accounting forj."
y C'. P. n.\MII,TON
Laird v. Chishoba, supra. Vyse v. Foster, supra.
Pt. I, Ch. 2. Antecedents. §43.
§43.
^\)t Mfficultn of ascertaininoi t\)t sl^arc of profits attributable
to tl)e capital in a business, anii cspecialln in a partn£rsl)ip busi-
ness, boes not preuent tl)e cestiiy que trust from redainiinci,
u)itl) l)is nionen eontributei) bu tl)e trustees, tl)e profits inanieii bn
its eniplonment.
The general rule that a trustee must account for
profits made with trust funds applies to partnership.
The mystery of the elements involved in the produc-
tion seemed to form a barrier to an investigation. But
unless the right to make inquisition is acknowledged,
the trustee would take advantage of his own wrong.
He could create the complication, in order to profit by
it. Equity would abnegate its prerogative if a trustee
could defy its powers and neutralize its process. The
suggestion could not be entertained by a chancellor.
The decree for an investigation must be granted.^
What part of the profits is the product of capital must be
left open for iuvestigation in each case. It being established
that the principle of equity extends to funds used by a firm,
and entitles cestuy que trust to elect either profits or interest
in return for the employment of his property, the question
presents itself: What part of the profits is made by the
capital? The query suggests another: How man}- sources
are there of profits, and is there any fixed proportion for
the co-operation of the various facfhors? The ratio, it is
obvious, may var}' with the kind of business.
In one class, the estate of a deceased partner might be
entitled to the share of profits which the partner had while
living. The business might consist in dealing with patents
owned by the deceased partner. His property formed the
basis of the firm business, and continued for his estate the
share of the profits which he enjoyed in his life-time.* In
like manner the good- will and connedlions of the firm may
103
^^,. Antecedents. Pt. i. Cii. 2.
constitute the foundation of the business. The deceased
jKirtncr's estate shares the profits which result from the
continuing' operation of the original cause.** So a partner
nii^ht contribute the capital and his co-partner his services.
Upt.n the copartner's death before a good-will and connec-
tions were established, his share of the profits would also
cease, and go to a successor, who replaced his services.
In a (lifTcrent class the capacity and services of the part-
ners may be the chief elcinents of success in the business.
The business of the partnership might require no capital,
and trust funds deposited in the firm would earn no part of
the profits.'"
The question is not, however, an alternative of a con-
tribution earning all the partner's profits, or earning none
of them. The capital generally plays an intermediate role,
co-operating with the other fadlors in earning profits. The
capital makes a part of the profits, or it would not be con-
tributed to the firm. But the nature of the business, the
good-will and influence attached to it, the capacity and
ser\*ices of the partners, must be taken into account, as
well as the capital contributed by them. No rule can be
laid down which will work out a uniform rate in the product
when the factors combined to make it do not remain fixed,
but vary in the combination. The contribution itself may
vary in amount, and often does vary, without affedling the
ratio of profits which the contributing partner takes. ^
I. Pifficully of asccrtaiyiins; profits of trust money, no answer to en-
quiry. R and C, executors, who had authority to carry on testator's
business for 6 years, continued it for themselves, and in settlement
of various claims of the estate allowed 5 per cent, interest on the
amounts received. The sums were put into their business. Cestuy
qur trust, .\, brought bill for account of profits.— Account decreed.
Docker v. Somes, 2 Mylne & Keene 653 (1834).
B, an executor, continued testator's' business, and retained testa-
tor's fnnds, which he employed in the business. B traded at first
alone. an<l then in partnership with diff'erent persons. A asked for
accountofprofits.— Account decreed. Palmer v. Mitchell, 2 Mylne &
Keene 655 (1834).
a. Use of partner' s share after dissolution charges continuim; partners
Jar retiring partner's share of the profits. B, C & D manufadlured
pumps in pc-ulnership, under original patent issued to B. B became
Dankrupt. C & D continued the business without making a settle-
104
Pt. I, Ch. 2. Antecedents. 5^43
ment. A, assignee of B, brought bill for his share of the profits. B
was indebted to firm, and continuing partners had increased the cap-
ital. — Decree. As the co-partners did not settle with B, the original
adjustment continued unchanged. Crawshav v. Collins, 15 Ves. 218
(1808).
b. Rate of deceased partner may continue luith the business. Articles
allowed C to continue business on B's death, and take 2-3 profits,
provided he secured B's capital, and made new agreement with
estate. B made his partner, C, his widow, D, and another executors.
B had 7-10 profits in one branch and 1-2 in other branch. C disre-
garded provisions. He paid 5 per cent, on testator's money. Cestuy
que trust demanded account of profits. — Account decreed. Willett v.
Blanford, i Hare 253(1842).
c. Trust fund charges firm for profits only if a constituent affirm p7'ofits.
Solicitor, B, with power to sell and invest for A, deposited proceeds
of sale with bankers, to credit of B's firm. A demanded account. —
Profits refused, because money not employed in solicitor's business,
which required no capital. Interest allowed. Burdick v. Garrick, L,.
R. 5 Ch. App. 233 (1870).
d. Supra ^42, n. 3.
t>^
Part II.
Z\)t priiuipUs luhirh i cQulatc partiursljip buring its tnstmit.
CHAPTER I.
THE CONSTITUENTS OF PARTNERSHIP.
§44.
Partncrsl)ip liabilitn at tl)c (Eomman lou) takes tl)e form of a
ioiut obiuiation.
By the Commercial law of Europe every joint a6l
in trade was a partnership. In England, however,
tlicrc was no partnership, except in a joint undertak-
iiij; to buy and sell, but the measure of a partner's
liability was that which obtained in all cases of joint
obligation.' With reference to third persons, a part-
nership thus became a species under tlie genus of
joint obligation." In a proceeding, therefore, to cliarge
one person with a liability in conjun6lion witli another,
the issne is not necessarily upon the existence of a
partnership between them, but upon the performance
of an adl to which the law attaches a joint obligation.
When a man is sued for an adl performed in conjunc-
tion with another, he is liable for his adls as if per-
formed alone. To admit the plea of no partnership as
a defence, and as a corollary to compel the plaintiff to
pr')ve the existence of the relation, abrogates the law
by displacing the point of controversy ; which is made
I
Pt. 2, Ch. I. The Test. §44.
to turn upon the facl of partnership inter se^ instead of
upon the liability of a man for his a6ls. The change
reverses the order of proof. Every person who per-
forms an a6l is liable, whether he is a partner or not.*
To exculpg.te himself he must prove that he did not
perform the a6l at all, or, if he did, that he was merely
the agent or instrument of another, who is the princi-
, pal. The burden of proof is upon him. The plea
that no partnership exists, when made by him who
did the adl, does not meet the cause of a6lion. The
exa6lion of the law is the proof that he was under-
stood to a<ft as an agent. In accepting a denial of
partnership as a defence to the cause of a(5lion, the
claim is made equivalent to an averment of partnership
inter se^ and the fadl must be proved by the plaintiff.
The defendant might have made no contrail of part-
nership, nor had any intention to become a partner,
and the plaintiff who joins issue upon the existence
of a partnership iyiter se^ will be unable to prove it.
The defendant, although a principal in the transa6Lion,
and bound in law to disprove his liability, does, in fa6l,
prove nothing, yet defeats the plaintiff's recovery.^
As partners are merely joint obligors, a firm name
is not necessary in pleading.'' The law looks for the
principals in the transaction, and not for names or
phrases. The mention of partners "trading as" is
surplusage. The name is simply a brief designation
of the individuals who use it for their convenience.
A partner might sign the names of his co-partners in
full,^ or if they failed to sele(5t a firm name, select one
for them.^ Firms may trade in partnership, each using
its own name for the transadlions made on joint ac-
197
v^^ Till- Tkst. Pt. 2, Ch. I,
count. A coiiiinon name would be both inconvenient
and uncalled for.'
1. Thf test, rx lontraclu, is a joint interest in the con-
trud. The rule of liability for contractors who are not
partners is tluks stated b>- Hammond:
• If the bcucfil, ri},'ht or property conferred by the contradl belongs
••jus Ijclwecii thcni.selves jointly to both * both are jointly liable."
.\ PracflJoal Treatise on Parties to Adlions and Proceedings Civil
iind Criminal ; and of Rights and Liabilities with reference to that
suhjcol, l)v Anthony H.vmmond, 1822, p. 62.
The joint liability, ex contraclii^ is thus explained by
Ju(l}.(e Hare:
•.Vgreeably to the tlnglish law, persons who enter into a joint ob-
'• ligation are as nnich bound for its entire fulfilment as if the obliga-
"lion were several. The suit and judgment should regularly be
'•joint, although this is not essential in the absence of a plea in
'abalcnicnl, but the goods of each co-contradlor maybe taken in
'•execution for the whole debt." The Law of Contradls, by J. I.
Clarke Hark, LL. D., 1887.
A joint interest makes the parties interested liable,
whether they are partners or not. They are co-princi-
pals iu the transaction, and are liable because they are
principals. This is explained by C. J. DoE, who, how-
ever, must not be understood to mean that all co-prin-
cipals are partners. The object of his exposition was to
demonstrate that all partners are co-principals, and the
remark that all co-principals are partners should be
limited to trade, or business transactions, in which the
joinder of principals makes a partnership. In other
instances, where a partnership is excluded by the nature
of the transaclion, co-principals are nevertheless liable
for their Joint adis The difference is in the powers
implied from the joinder. A partnership carries the
powers originally exerted in trade. A joinder not in
trade creates no implied authority in the co-principal.
The joinder is limited to the acl itself. Thus a joint
purchase, either of real or of personal property, charges
each purchaser for the entire price, although there is no
partnership between them. The joint use and posses-
sion of property charges the possessors for the use and
enjoyment, without reference to their being partners
(§46. n. 2). Wherever a partnership is not admitted on
account of the nature of the transadion, the joinder of
pnncipals charges them, nevertheless, with a joint lia-
bility. •*
T08
Pt. 2, Ch. I. The Test. §44,
Referring to a case put, where A employs B to make
a purchase in B's name for him (A), upon a secret agree-
ment between A and B, that A is not to be responsible
to the seller for the price, C. J. DoE says:
"A difficulty arises from an ambiguity in the terms, 'A employs B
"to make a purchase in B's name for him (A).' Ifthismeans that A
" is the principal and B his agent, A is liable because he is the prin-
"cipal. Edmunds V. Bushell, L. R. i Q. B. 97. If it means that B,
"as principal, is to buy the propert}- of C, and then sell it to A, A is
" not liable to C because he is not the principal. The question of A's
"liability is the question whether, in the contrail of purchase from
" C, A is in fa6l the principal, and B his agent, or whether B is the
"principal, who, after he has bought the property of C, is to sell it
" to A ; whether the title passes direclly from C to A, or from C to B
"and from B to A; whether there are to be two successive purchases
"of the same property, or only one; whether (in the contra<ft of
"purchase from C) A or B is the purchaser. This depends (so far as
"A's liability is concerned, and aside from fraud and estoppel) upon
" the understanding between A and B. If they understand the title
"passes directly from C to A, and not through B as an intermediate
"purchaser, A is the principal, B is his agent, and A, as the pur-
" chaser, is bound to pay C for the property which he bu3S of C. A's
"denial of the fa(5l that he is the purchaser, has no more effedl than
"his denial of anj' other fa<Si; an agreement between him and B to
" deny the fa(fl, does not alter the fadl; A, being the purchaser, is
"responsible as the purchaser for the price ; he is liable upon the fa<5t,
" and is not discharged from his liability by an understanding between
"him and his agent that the fa6l should not be disclosed or should be
"denied. A purchase of goods is a sale; and a sale is something
"more than the vendor's parting with bis property. It includes pay-
"ment made, promised or in some way provided for by the other
"party to the contracft. The buyer, i. e., the principal who buys, is
" necessarily a pa3'er, unless the vendor agrees he shall not be. If
"the agreement between A and B is made known to C during the
"negotiation, and he expressly or implied!}' agrees not to look to A
" for payment, he is bound by his agreement ; but he is not bound by
"a secret agreement between A the purchaser and B the purchaser's
"agent, that A is not to pay C for property bought by A of C. When
" C discovers that A is the buj-er, he is not deprived of all the benefit
"of that fadt by the undisclosed agreement iiiter alios that A is not
" to pay for what he buys. That agreement does not make the agent
"B the purchaser in fa6l, nor relieve the purchaser A from his part
"of the contract of purchase made with C. The agent, holding hini-
" self out as the purchaser, is estopped to deny, as against the vendor
" C, that he is the purchaser. But the secret agreement l)etween the
" real purchaser and his agent, that payment is to be made by the
"latter and not by the former, is no part of the contract of purchase:
" it is merely an extraneous executory agreement inter alios to which
"the vendor is not a party. C is a party to the contra6t of purchase ;
"and if A is the purchaser, he is liable to C because he is the pur-
" chaser. The fa6t that he is the purchaser is the material thing;
"the non-disclosure of that fa(ft, so far as his liability is concerned,
"is immaterial; his intention not to pay is as immaterial as it would
"be if he had held himself out as a purchaser, and had omitted to
"disclose the fact that he intended not to pay. The question whether
" A is a principal and B his agent, that is whether A authorizes B (o
"make the eontradl in his behalf, is often a difficult question of facfl.
109
5^^ The Test. Pt. 2, Ch. 1.
••onu. iiKil till.- (liicslion whclber A is a principal is calk-da question
•■ of nriiuipal and aueiU, or aj^^ency. The legal charadler of the ques-
•• liwji \\ Uflhcr A is a principal, is not altered by the circumstance that
•' » is or is not a principal, nor by the circumstance that it is called
"in ouc case a question of partnership" (or co-principalship), "and
"in the other a question of agency. And as that question is not
"nffecled by the name given it by the tribunal called upon to decide
"it. so it does not depend upon the name given it by A and B, or
"Iwlh of Ihem." Eastman v. Clark, 53 N. H. 292 (1872).
2. The pleadinti^s disclose the classification.
.Van: u^'aiiisf c/i/i-iidau/s sufficient, zvitlwut calling them partners,
1/ cause 0/ act ion joint. A brought assumpsit against B & C, without
averring that they traded as B & Co., and, under common counts,
proved note signed B & Co. by B.— Judgment. Cause corresponded
to aclioii which was joint, and, as defendants need not be partners,
the designation would be surplusage. Hawley v. Hurd, 56 Vt. 617
(1SS4).
Joint afl sufficient to charge parties jointly. A sued B & C, mill-
owners, for equipment, which he furnished mill. — ^Joint contracft,
express or implied, sufficient for recovery without proof of partner-
ship. Sager v. Tupper, 38 Mich. 258 (1878').
3. The sharer 0/ profits is a partner, and the sharer of gross earnings,
though not a partner, is liable for his aH-s. B, owner of a lighter, let
it to C, a lighterman, who agreed to work it and, by the first evidence,
to share the profits ; by later evidence the gross earnings. A sued C
for rejiairs ordered by him. — Liable, because he ordered repairs. If
gross earnings intended, sharing them would Ije a mode of compensa-
tion for wages which might be received, although no net profits were
made; if net profits intended, B and C would be partners. Dry v.
Itoswell, I Camp. 329 (181S).
linycr liahlejor goods alone, or with undisclosed co-principal. B,
who kept a drug store at Cherokee, bought goods of A and stocked a
store at McCune. He agreed to give C all the profits above 12 1-2 p.
c. for managing the branch. A sued B for price. — Recovered, B
liable, either as sole or joint proprietor. Woodward v. Clark, 30 Kan.
76(1883).
4. Joint contract to pay. A and B engaged C to build a mill. B was
partner with D, and paid for mill with firm funds, with the knowl-
edge and assent of A. When B & D dissolved, B promised, for him-
self and A, to repay. D sued both, as partners, on this promise. — A
not liable; joint undertaking with B constituted no partnership.
Porter v. McClure, 15 Wend. 187 (1836).
Tlie court in tliis case was of opinion that, primarily, A and B were
jounly hahle, under the circumstances, for the draft upon the firm
fuiKl-i of B & D, but that B, the common party (not common partner),
prevented the enforcement of the demand at law ; that the subsequent
assignment 1j>- B of all his interest in the firm to I) did not help mat-
ters. l)ecause suit must still be brought in the name of B & D if an
attempt were made to recover on the original obligation. But this
suit wa.s brought in the name of D alone; hence the plaintifT must
rely on a subsequent ])romise. He has proved a promise by B alone,
mougb perhaps made in form as a joint promise by B and A. This
P'1.2, Ch. I. The Test. §44.;
promise cannot bind, because, though he is a co-principal, he is not
a partner, and his "liability is defined b}' his express contracSl." In
other words, the plaintiff had a right without a remedy. He could
not bring a general bill of account for a settlement of the affairs of B
& D, and of A and B, because B & D had closed up their affairs, and
there was nothing to be accounted for. The only difficulty, the
equivocal position of B, had been eliminated from the case by the adt
of the parties. If B, by borrowing these funds with the knowledge
and consent of A, had been able to charge both, were the plaintiff a
stranger, why would not his promise to repay I) bind both as soon
as it appears that D is alone interested, for it is not, in reality, the
creation of a new obligation, but the giving of precision to the old?
A was admittedly liable to D in such a way as to sustain a subsequent
promise without a new consideration. But a consideration, which,
aside from the question of waiver, will sustain a subsequent promise
must be such as will give rise to an implied promise, on which suit
may be sustained without anj-thing further. Upon the reasoning of
the Court, then, A must have been liable to D as an original debtor,
without the necessity of resorting to B's subsequent promise and the
theory of a partnership by which it was to be made effectual.
A fortiori if the benefit right, or property is in one he
is liable.
Principal escaped liability because agenl hoc a partner. B, who had
previously employed C at a salary, to buy and sell cattle, agreed to
advance |i6,5oofor C to bu}', keep and sell cattle, which, while kept,
were put in B's brand. Expenses payable out of capital advanced,
the balance, if any, belonged to B. If profits, C to share them in lieu
of salar}'. A joined B, as partner, in suit against C on note which C
gave for pasture. — Judgment reversed, because no partnership. Buz-
ardv. First Nat. Bank of Greenville, 2 S. W. Rep'r 54 (1886).
5. Partner a fling for a firm and for himself under a common designa-
tion pri}na facie charges the firm. B was managing partner for the
firm X, and did business on his own account under the name of Y.
B kept but one bank account, and habitually signed his check thus:
'B, agent.' A sued the members of X on a check so signed, calling
them Y. — Firm name surplusage. The firm prima facie liable on
check. Had the common designation been emjjloyed only in the
business of X, the form of the check would have concluded the firm,
but now X might prove Y received the proceeds. Bank v. Dakin, 24
Wend. 411, N. Y. (1840).
6. N^o firm name. Partnershipin farming and coopering. Presump-
tion of firm tra7isa£lion. B C & D C were partners without a firm
name. B C gave a note and signed it B C & D C. A & Co., the
holders, sued and proved that he had previously given two notes
signed B & D. C. Defence : The note, by its form, is an attempt to
pledge his individual credit. — Recovery. Instrument presumed a
firm note, and designation of the firm sufficient. McGregor v. Cleve-
land, 5 Wend. 475, N. Y. (1830).
7. Partner may use his name and add Co. for co-partner. B, C & D
had entered into partnership, but had not adopted a name. B exe-
cuted a note in name of B & Co. A sued the partners. — Liable. If
no name, B may bind co-partners by name of B & Co. Austin v.
Williams. 2 Ohio 61 (1825).
8. Between firms. A & Co. and B & Co. agreed to sell grain on joint
account, making contradls for delivery at a future day, and dividing
e^- Thk Test. Pt. 2, Cvv. i.
nrofiLs between them. IMaintilf sucl H & Co. on contract made by A
Tco iTtTeir oi' name, but on joint account.-Members of both
Lns'liuble: contrad bcinj,' on joint account need not be in joint
nnme Smith v. WriKht. i Abb. Pr 243, ^.\. (i»54)-
" >., luthh- on onnwnrial paper. i^ivn, on jinn account, though no
firm nam,. R. in Rochester, and three others, in Albany were part-
ners H con.hiclLd f.rm business at Albany in his individual name,
and the others traded at Rochester in name of C, an agent Articles
nr..vi<le.l that no commercial paper should be given. B drew on C
n A's favor in firm transaction, and C accepted. Partners in Roch-
ester were sued a.s acceptors.— Defendants liable, without P., whose
non-joinder was not pleaded. Prohibition not binding on strangers.
Hankv. Monteath. i Denio 402, N. Y. (1845).
Iirm liable on commercial t-iper given on firm account, though no
Jinn name H, in Troy, and C & Co., in Oswego, were partneis, each
trading for the firm in his own city, under their respedlive names.
C & Co <lrew on B in A's favor for firm account, though on separate
cre<lit B refused to accept, and A sued B and C & Co. as drawers.
—Recovered, though A took draft on C &. Co.'s credit. Wright v.
Hooker, 10 N. Y. 51 (1854)-
§45,
(J he liabilitT} bofs not bcpcntr upon tl)c xntfntion to assume
tlif obluiation.
Tlic consent of the parties makes the contradl of
partnership, and they agree, let it be supposed, that a
partner shall not be liable. Now it is asked: How can
he be bound without his consent, when consent is the
groundwork of his liability ? The question betrays a
confusion in thought of a partner's rights with the
rights of a stranger. The liability to a third person
does not grow out of the parties' consent to be liable.
They could never be liable to him on the contra61; of
partnership. What has he to do with a contrail be-
tween the partners to which he is a stranger? The
obligation to him is independent of the partnership
inter sc, and is paramount to it. It is the perform-
ance of an a6l which creates a liability for the conse-
quences, whether done by a single individual or by
Pt. 2, Ch. I. The Test. §45.-
several. Each one engaged in the transacftion is lia-
ble for the a6l, as if he were the sole principal. The
contra(5t of partnership admits that the partner is a
principal in the business, and his liability attaches as
a matter of course, because he is a principal. The
undertaking carries with it the liabilities which arise
out of the business, and they cannot be shaken off.
The intention of a principal to limit the extent of his
liability, or not to incur any liability in the business
he undertakes, is against the law, which makes a man
answer for all the consequences of his a6ls, and denies
him the power to curtail his liability. A stipulation
for limited liability in the contradl of partnership is
like the intention cherished in the breast of a principal
that he will not be liable for his agent's a6ts. How
can the partners by their contra6l give away a stran-
ger's right of redress?
A capitalist and builder joining in a building opera-
tion could not prevent the effe6l of the joinder which
made them principals in the business, by stipulating
that they were not partners. The denial of partnership
is inconsistent with the position taken by them as
principals. The adls of the parties speak louder than
words.
Legal ejfc Ft of agreeinoit prevails against inte7ition of the parties,
even inter se. A & B bou.<i;ht an estate for building improvements.
B furnished the capital, which carried interest at rate fixed by him-
self. A gave his experience and superintendence to the operation,
and contributed 1-3 of his trade discounts. The financial manage-
ment was in B's discretion, and his accounts could not be disputed
by A. They agreed that the arrangement should be limited to the
estate, improved for their mutual benefit, and should not be con-
strued a partnership, although they shared the profits and losses
equally. A brought a partner's bill for account. — B held a partner,
because he had under the agreement a partner's rights and obliga-
tions, which were not taken away by the stipulation not to be a part-
ner. Moore v. Davis, 11 Ch. D. 261 (1879).
A corporation and a patentee joined and established
a foundry for the manufadlure of materials to supply
the corporation. The parties' disavowal of a partner-
ship did not neutralize the effe(!:l: of the joinder and pre-
113
5^6. Thk Test. Pt. 2, Ch. t
vent a partnersliij). The result is a conclusion of law
fn)in the acls of the jxirties, and a partnership contrac^t
is not a jjuhlic statute to repeal or abrogate the law.
The le^al in/tiriirr of partnership is not negatived by the parties'
tHtentiou. A a>jree<l with B. a corporation, to nianufadlure castings.
\\ provided founilrv. at rental of j4,ooo, payable out of proceeds, and
supplied capital for tiie business. H aj^reed to buy all castings used
l)V the corporation from foundry at market rates, and to use A's patent
air wheels; .X agreed to devote his labor and skill to the business,
and to make over the exclusive right to manufacture and sell his
patent wheels. The net profits were to be equally divided, and the
arrangement to continue for 12 years. The net profits for the first
year were ^^4,916, and fi,5oo was reserved to pay employees. B ex-
cluded .A from the management, and A obtained an injundlion. B
moved to dis.solve, and denied A's right, by virtue of the agreement,
to share in the nmnagemeut. — Injuuciion dissolved, because answer
averred a dissolution by mutual agreement, and then A's remedy
would be the appointment of a receiver; but B's denial of partner-
shin did not negative A's equity, as partnership is an inference of law,
and H could not deny the legal conclusion, even of the relation inter
se. \'an Kuren v. Trenton Locomotive and Machine Manufadluring
Co., 2 Heas. 302, N. J. (1861).
§46.
(TIlc lain rl)arqc5 tl)c principals in a ioint transaction as if tl)CTi
l)aii (ontrattcLi uiitl) cad) otl)cr to pcrfann it.
How can the relation of partnership be e£fe(5led, it
may be asked, without intention as the original cause
and the creator of the partnership ? If it results from
a coutradl, and the parties must manifest their inten-
tion by making a contrad, how can they be charged
by a third person, except by proof that they have con-
tracted to become partners in the business? But is
the command imperative? Must there be a contrad
between co-principals, whether expressed or inferred
from the facls, contemplating holding in embryo the
obligation which a stranger is seeking to enforce, and
will nothing short of a contrail give legal expression
to the liability? The law provides a remedy for the
114
Pt. 2, Ch. I. The Test. §47.
enforcement of the obligation upon the theory of a
contract:, although none in fa6l exists.^ A joint con-
trail served as the type and furnished the means for
proceeding as if the parties had made a contrail. It
is a ^iiasi'-contrsLSi, raised by the construAion of law.
For an a6l done on behalf of several, the law charges
all concerned in the transa6lion, whether known or
not, without reference to any agreement, or absence
of agreement, upon the subje6l of their liability.'^
1. "There is a class of legal rights, with their correlative legal duties,
"analogous to Wi^ obligationcs quasi ex contraRii of the civil law,
"which seem to lie iu the region between contraAs on the one hand
" and torts ou the other, and to call for the application of a remedy
"not diredlly furnished either by adlions ex contraRu or adlions ex
'^ deliilo. The common law supplies uo a6lion of duty, as it does of
" assumpsit or trespass ; and hence the somewhat awkward contriv-
"anceofthis fidlion (an implied contradl) to apply the remedy of
" assumpsit where there is no true contradl, and no promise to sup-
"port it." Ladd, J., Sceva v. True, 53 N. H. 632 (1873).
2. "The ground of the implied contra<5l is the benefit drawn diredlly
"from the use of goods or property purchased, which property has
"been received immediately from the creditor in such a manner as
"to create a privity of relationship between the debtor and himself;
"and what is true of one, holds equally good of any number ofdebt-
"ors." Article: " Criteria of Partnership, " by S. D. Davies, 10 Am.
Law Register, N. S. 209 (1S71J.
§47.
If sercral nntl)l]oli> propcrtn, tlien are liable to tl)e oroner aa
if tl)cp Ijab coiitracteti ta pau for it.
A liability is imposed by law upon a man who with-
holds personal property which does not belong to him,
to pay an equivalent in value for it to the owner. The
obligation becomes joint, if there are two persons who
withhold the possession, and each of them is liable to
the owner for the whole value of the property.' The
adl is a tort, but may become a contrail by ele^lion.^
115
§47. 'I'HK 'I'KST. PT. 2, Ch. I.
The owner waives the Lort, and proceeds as if upon a
contract/
1. The liabilitx- f.x diliclo of wrong doers is thus stated
bv Hammond : . ,
'•'Thcv nrc liable, each by himself ; since the entire damage sus-
"laiucl'was oocasionc.l by each, each san<5tioning the a^s of the
"olluTs so that bv suing one alone he is not charged beyond his
"just t.n.nortion. 'Thcv are liable altogether, as are any number less
•'than the whole; beca'use each is answerable for his companion's ■
•• act ■ and besides, if this -s\"re not allowed, not only would useless
"litigation be incurred, the plaintiff might be reducedin his security
"to one cfTender, since after a judgment obtained against one, he
"would be i)recluded suing, or continuing his suits against the oth-
"ers." A Traclical Treatise, &c., p. iS5.
Silt is/an ion the only bar to separate or joint smt against co-tort-
feasors, b, constable^ attached C's wagon under writs isued by attor-
ney for D et al., on the theory that C's sale of it to A was fraudulent.—
A recovered judgment against H, and also judgment against D et al.
for the conversion. McAvoy v. Wright, 137 Mass. 206 (1884).
B, constable, attached, for C, hay as D's property. A claimed the
hay, and sued C for the conversion, and recovered for part. A sued
B for balance. — Cause of action, satisfied by C, released B. Westbrook
v. Mize, 10 r. Rep'r SSi, with note of cases, 1886, s. c. 35 Kan. 299.
2. The tort of a partner charges his co-partner only
through and by means of the joint business (^24). Since
a tort of this kind has been confounded with a breach
of contract,*' the damages recoverable for a tort or for a
breach of contra(5l have been assimilated,'' and an elec-
tion of either remedy follows as the result.
3. /'>oul)te proof for fyreaeh of trust against trnstec-partner and against
his firm, u-hieit used the trust fund. B, trustee for A, raised ^'15,000,
which was ])ut in the hands of B & C, solicitors, for investment in a
spccificfl mortgage. They misapplied the money to their own use,
an<l l>ecanie bankrupt. A, by substituted trustee, proved against
joint estate, and also against B's separate estate, for ^'15,000 and
interest. — .\llowed. P^reach of trust a tort arising out of contract of
firm. Implied contract of fimi on receipt of money, and of B, who
undertook trust. In re Parkers, 19 Q. B. D. 84 (1887) (Hi)-
Value of property, if converted, recoverable on implied contraB. B
sold interest in mining claim to A, who furnished machinery, tools,
and means for working the claim. The undertaking turned out un-
productive, and B relinqui.shed the claim and equipment to A. Sub-
seciuently B and C ejecled A, and took possession of the property.
A suerl them for its value.— Judgment for A reversed, because B was
n partner, and could not convert his own property. Moreanstern v
Thrift, 66 Cal. 577 (18S5).
a. .^ Series of Essays on Legal Topics, by James Parsons, pp. 50^5,
1076.
^' I o]8.\^ '" Johnson v. Stear, 109 Engl. Com. I.. Rep's., N. S., 34X
(IC69).
116
Pt. 2, Ch. I. The Test. §48.
§48.
iA partnersl)ip as to tl]irb persons is tl)e kgal aspect of t\)t
relation at tl)e present ^an.
Partnership is ordinarily classified as : i , a partner-
ship between the partners and, 2, a partnership as to
third persons. The second class has been said not to
be a true partnership, and has been termed in deroga-
tion a qimsi-'psLVtnQrsh.iip. The principles of partner-
ship were discussed primarily with reference to the
partners, and only secondarily with reference to third
persons. This method of treatment corresponds to the
historical development of partnership, but is anti-
quated at the present stage of its progress. The
method reverses the order of modern partnership law,
which does not turn ujDon the rights of the partners,
but upon the rights of third persons who deal with the
firm. In recent times, under the freedom of contract,
the partners may make any medley of partnership
they please.^ The provisions of the articles constitute
a domestic law for themselves.^ It is only when the
rights of third persons are at stake that the effeA of
the domestic arrangement must coincide with the legal
struAure of the relation.^
I. A partner may indemnify his co-partner against loss,
and give him all the profits. The agreement to indem-
nify a partner has been thought to lack consideration,
and to be inconsistent with partnership.* But the con-
trail of partnership has a consideration, and the special
provisions are sustained by the general consideration.''
The stock illustration of an impossible partnership,
stated by the civilians, would not be a valid partner-
ship, at the common law, between the partners. But
the partner who assumed all the debts, and received
none of the profits, might be a principal in the business
117
^^^ The Test. Pt. 2, Ch. i.
(^74) and if he had more than one co-partner, his motive
miirht be to establish one co-partner m business. It
would be a Rift of his credit and services to that co-
n-irtner and his share of the profits, increased by the gift,
would lie the consideration paid by the third co-partner."
2 S7;<;/r in profits Lnves sharer vo title to proceeds of snoods By prior
■ aerceuK-iits. \\ a broker, who bought for A, took 1-4 profits and i-S
losses of adventures, in lieu of bis commission. A continued l(j
employ n, as agent, but, by a new agreement, gave him 1-3 profits
aiKlmade no provision for losses. B drew, as a partner, upon tlie
proceeds deposited bv A with C, his bankers. A became bankrupt,
and his assignees .sued C for amount of A's deposit.— Recovered, as
H had no title to the goods, or to the proceeds which represented
thenj, but was merely entitled to a share of the profits. Smith v.
Watson, 2 B. & C. 401 (1824). • , j . , , -.t. -„
Kt,XK. C would be a third person, and entitled to deal with B as
a partner. This would be a defence, if B had not indemnified C, and
made the controversy inter se.
Loan, with interest, and a share in the profits does not make part-
nership inter sc. A lent B /20 to start in business, and he agreed to
pay 5 ji.c. interest, and subsequently 1-8 profitsiu addition, by monthly
instalments. A brought a petition to put B into bankruptcy. An-
swer : Loan usurious or creditor a partner, and account necessary. —
A's right as petitioning creditor sustained. Striking monthly balance
ascertains debt, and would make partner a creditor for it, although
partnership continued, but as no intention to stake money iu the
business, or renounce right to repayment in any event, A was a lender,
and not a partner with B, except as to third persons, and B "could
not, after borrowing money of A, turn round upon him, and say, you
are my partner by operation of law, and therefore I will not pay your
debt." Ex parte Briggs, 3 Dea. & Ch. 367 (1833).
Consideration for a loan may be a share in business and profits, and
yet loan recoverable as a de'^t from co-partner. A lent B ^59 for 1-3
interest in his inventions and in the profits of manufadluring and sell-
ing them. B agreed to repay the loan in any event. A sued B for the
advance. Defence : A was a partner. — Recovered. Although the
consideration for the loan was a share of inventions and profits, the
contrac-t to repay at all events prevented the loan from becoming
partnership funds. Elgie v. Webster, 5 M. & W. 518 (1839).
HoldiniT out does not make a partner in interest. A sued B for
price of merchandise. He pleaded non-joinder of C. A called C as
a witness, who, on his voir dire, testified that business was carried on
in name of A & C, and that he accepted drafts for firm, but had no
share in the business as a partner. — Competent, for not a partner in
interest, though he held himself out as a partner. Parsons v. Crosby,
5 Esp. 199(1805).
3. Sharine; profits for loan of credit and trouble, no partnership inter
sc. n, not having sufficient credit, induced A to buy goods with him
for an adventure, and agreed to give him half the profits. The sale
was made to both, and A, who had been compelled to pay the price,
sued J5's executor to recover it. — Recovered. Though a partnership
as to third persons, none inter se, because profits merely compensa-
tion to A for his trouble and credit, Hesketh v. Blanchard, 4 East.
144(1803).
118
Pt. 2, Ch. I. • The Test. §49.
a. Diilum: partner's indcDDiity of cu-parincr ituduiii paclniii. A
advanced the capital. B furnished the skill and did the work. Profits
divided equally. B indemnified A, and gave collateral. Loss beyond
collateral. A claimed reimbursement in account. Arbitrators ig-
nored guaranty. — Award conclusive; but gusLvaniy -nudinii paflum,
and A charged with 1-2 the loss. Brophy v. Holmes, 2 Mollov, Ir.,
Ch. I (1S28).
b. Partner may uidemnify co-parlncr against loss. A, author, and B,
publisher, agreed that profits of every edition should be divided
equally, after deducing 10 p. c. for commissions and as indemnity
against bad debts. B assumed the risk. A brought bill to rescind,
averring an agency. B claimed an irrevocable license. — Decree for
dissolution. A partnership, though B stood the whole loss. Reade
V. Bentley, 4 Kay & J. 657 (1858).
A partner, though salaried and indemnified by a pledge of the
profits, should be joined as co-plaintiff. A & B were in partnership
as solicitors. By the articles, B stipulated against any liability for
losses, and had a lien on the profits, to indemnify him if charged with
any losses, and bargained for ^300 a year out of the profits, a sum
equal to 1-5 the then profits. A & B sued a client for services. Plea:
B not entitled to recover as plaintiff. — B rightly joined. The fee be-
longed to both until the accounts were settled and the sum divided.
The fadl that B was indemnified did not take away his right to the
fund which was pledged for his security. Bond v. Pittard, 3 M. & W.
357(1838).
Pai'tner need not share loss. A & B, upon dissolution, submit
accounts to arbitration. Award : A to receive no compensation for
services, nor pay for any losses during the years when no profits
made. A sued to enforce award. — ^Judgment. Partners competent
to agree that one should b^ar losses, and presumption that award
based on such agreement. Cochran v. Bartle, 3S. W. Rep'r854 (1887).
c. Managing firm business but an indication of membership. B fur-
nished D & C, partners, brewery, machinery and capital to carry on
the business, stipulating for ^^700 a year for the use of his property.
He bought and sold for the firm, and paid the debts from the pro-
ceeds of the business. A sued B, as partner in the firm of D & C, for
the price of goods. Defence : No partnership, but B's agency and
loan a benevolence to D & C, his relatives B informed A of this at
the time of purchase. Court below rejected evidence of motive. —
Reversed. Evidence competent for jury. Agency but an indication
of B's membership, and-rebutted by proof of a motive consistent with
the adls. Tracy v. McManus, 58 N. Y. 257 (1874).
§49.
It is tl)e business tul)icl] iutiests tl)e partners luitl) romnier^
cial prerogatiDes, anb, unless engagelr in a business, tl)e prin-
cipals in a joint transaction, altl)ougl) liable for tl)e act, l)ax)£ no
partnersl)ip potoers.^
119
^^ Ttik Test. Pt. 2, Cn. i.
A joint purchase makes the purchasers principals,
and each liable for the whole price. The contribu-
tion charges the solvent buyers for the insolvent's
quota of the price.' Why are not the buyers partners
in the purchase? They join as principals in the trans-
action. The answer is: The Common law does not
admit a partnership in buying.' As trade consists of
bu}-ing and selling (§7); the transaction does not
come within the province of commerce, and is not
governed by the Law Merchant (§4). The joint pur-
chase is left to be interpreted by the tradition of ten-
ures, and holding property in common does not con-
vert the possessors into partners.^ The purchase is
presumed to be for division or for holding in common.
The purchase must be joint, or the point does not
present itself. The purchase by several may be joint
in form, but separate in interest. The effect is a
separate purchase by each.'^ If the purchase is by
one for several, he could not charge each principal for
more than his quota. The agency was limited to buy-
ing a specific amount without any joint purchase by
all.'
I. Twenty-three underwriters, who had insured a ship,
which was abandoned by the owner, took the vessel,
each settling for his proportion of the risk with the
owner. They sold the ship to divide the loss. A joint
sale was not the purpose the insurers had in view when
they took the vcs.sel, but that was merely an incident.
They were compelled to buy the ship, not as an article
of traffic, to make a profit by selling it, but to get rid of
it and divide the loss.''
A joint purchaser, hound to pay the whole price, could not acknowl-
edge it by accepting for his co-purchaser the seller's draft, though ac-
ceptance is less than payment. R & C boutrht land of D, who, to pay
off A's hen, drew upon them for price in A's favor. B accepted. A
sued on draft. Defence : Faihire of consideration as D no title-
Judgment for A reversed, because, at best, not being holder for value
I 20
Pt. 2, Ch. I. The Test. §49.
ou account of a debt past due, be took subjecl: to acceptor's defence
against drawer. Schaeffer v. Fowler, i Am. 451, Pa. (1886).
2. A joint purchase charges each buyer for the whole
price. The contribution among the buyers is an adjust-
ment made by equity of the consideration in proportion
to their interests.
Joint adventure a patinership, and, though quotas specific, liability
in addition for insolvent party's quota. A, and four other firms,
agreed to take 1-5 interest each in 1200 tons of sugar ordered by B.
As bills would be drawn on B, he should have power of sale, though
each party undertook to pay his quota of drafts, and assumed 1-5 of
the risk. Adventure resulted in a loss, and two firms failed. A, who
paid the bills, sued the two solvent firms for contribution. Defence:
Each liable for only 1-5 of loss. — Contribution enforced against each
for 1-3, because a joint venture of the five, which rendered solvent
parties liable for quotas of insolvent parties. Mclnroy v. Hargrove,
16 L. T. 509 (1867).
3. The books speak of a partnership in buying, and a
joint purchase would naturally make the purchasers
partners, as they are co-principals in the transadlion ;
but the feudal tradition of holding property yielded as
little as possible to the commercial principle, which
makes it an article of traffic. The transa(5lion not being
within the technical definition of trade, was excluded
from the operation of its laws.
4. Purchase of interest no partnership if division intended. A bought
1-6 interest in cotton owned by B et al., en route for N. Y., to be
divided or sold on arrival. None was ever sold, tliough part was
divided. B sent the rest to his N. J. fadlory. A sued lor conversion.
Defence : Partnership. — Recovered. Agreement alternative ; partial
division of cotton a determination against a partnership. Ward v.
Garnet, 6 Duer 257 (1857).
5. Gibson v. Lupton, 9 Bing. 297 (1832) ^7, n. i.
6. Hoare v. Dawes, i Douglas, 371 (1780) ^7, n. 3.
Coope V. Eyre, i H. Bl. 39 (1788) ^.7, n. i.
a. Joint owners. A insured cargo ; and B & C, vdth 22 others, as
separate underwriters, insured ship. Ship captured by enemy, and
abandoned by owners to underwriters, who paid as for total loss.
Captain ransomed ship with portion of cargo, and, out of proceeds
of residue, sold at port of destination, repaired ship. A, paying in-
surance on cargo, was subrogated to owners' title. He sought to
charge B & C, as partners, for amount expended in repairs. — Liable
only for quotas as co-owners. Not partners, though they designed
to sell ship, because not voluntary purchasers, but owners by neces-
sity. United Ins. Co. v. Scott, i Johns. 106. N. Y. (1806).
121
§5o. The Test. Pt. 2, Ch. i.
§50.
iilloiiiJil) tlic ciisteiifr of a partncrsl]ip inter se is bctcrmineb
bn tl)c intention of tl)c parties, itii ctTcct is to make tl)an priuci-
pals.
Where there is a contraA, what the parties intended
is ascertained by the ordinary rnles of constru6lion.
What is the real nature of the undertaking? This is
the fa6l to be established. Does the undertaking pro-
vide for a transadion, or a series of transactions, in
reality, onbehalf of all ?^ If a partnership is intended
by the parties, no disguise of the operations under any
other relation will prevent the law from attaching to
the members all the incidents of partnership, and the
chief incident is liabilit}^ as a principal. The law does
not determine who are partners inter se. The parties
create their own relations. The law simply imposes
upon the parties an adherence to the positions which
they have taken, not in semblance, but in fa6l (§44. n.
I, and §45), and charges them as principals.'
The controversies about the existence of partner-
ship arise from inattention to the prohibition by law
of piecemeal partnership, except so far as it is limited
to the partners themselves. The relation is a well-
known association with definite traits and results.
The freedom of contradl does not permit the parties
to remodel the stru(5lure of the partnership relation,
except for themselves. They are powerless to alter
its constituents as to strangers; and when they do
come iuto confli(5l with third persons, they are com-
pelled to accept or rejecT; the status of partners as an
ap-rregate. The confusion arises from the mistaken
V-iief of the parties, who think they have the right to
Pt. 2, Ch. I. The Test. §50.
coutraA for any portion of a partner's attributes, with-
out being bound to assume the rest of them, if they are
expressly excluded by the contra6l. The only diflEi-
culty for the courts is to decide whether the part con-
tra6led for is sufficient, or not, to carry the whole.^
1. The attribute which distinguishes a partner from all
who are not partners is undertaking a business and be-
ing a co-proprietor of it. The business, if not carried
on by each partner, is, at least, carried on for him. It
is his right to have the business condu6led as he planned
and started it, although he should take no part in its
control or management. The fa6l that the business is
carried on by his will, and for his benefit, shows that
he is a principal. Being a proprietor, it is immaterial
whether he participated in the management or not, as,
for example, a dormant partner."" Although, in his
case, the impulse was imparted at the outset, the origi-
nal force continues and sustains the business. When
withdrawn by the demand for an account, which involves
a settlement of the business, the partnership comes to an
end. The power which created and can terminate the
relation perpetuates it by permitting it to stand.
2. Sharing profits, 'cvith absolute control of bnsincs^, makes a partner.
B, owner of a mill, agreed witii A to manufacture cotton. B was
allowed ;^300 for rent, and 5 p. c. for the capital, which was all ad-
vanced by him. A had entire control and management of the busi-
ness, and received ^150 a year and 1-5 profits. The book-keeper
rendered account to both, and A agreed to engage in no other trade.
B expelled A, who sued to be reinstated as a partner. — Reinstated.
A's absolute control of the business, and his dire(5t sharing the profits,
showed the parties' intention, that he should be a partner. Green-
ham V. Grey, 4 Ir. C. L. 501 (1855).
3. A loan, if a cover for a contribution, charges tlie lender as a partner.
B & C agreed to raise for a business, by contributions 2-3, and by
loans 1-3, of the capital, which was divided into 60 shares, the loans
to be made under 28 & 29 Vidl. c. 86. A loan admitted the lender
to the rights of a contributor, and entitled him to share the profits in
])roportion to his share in the capital. He could compel B & C to
cpndu(5l the business according to the deed, to exhibit periodical
accounts, and permit him to inspect the books. If he became bank-
rupt, they were to pay him off, and to refund his loan at termination
of the partnership, unless on a settlement his share of losses equalled
the loan, though he was not liable beyond it. B & C failed, and A,
the holder of a draft, sued D, who took shares by way of a loan, as a
partner. — Liable, as a dormant partner. The lending a pretence to
conceal partnership. Pooley v. Driver, 5 Ch. D. 458 (1876).
123
§5<^-
Thi- Test. Pt. 2, Ch. i.
Sharini: ptofits indefinitely, and also losses until 1-2 advances lost,
and option to reclaim balance exerted, make a partner. A, by 28 &
ju Via c S6, i)ut / io,(x>o in a firm, uiulcr articles which stipulated
thai H & C should be partners for three years, a period subsequently
renewed; but that A should not be a partner. The /i 0,000, with
such advances as auv party should make, constituted the capital,
whirh carried 5 p. c. interest. A took 1-4 the profits and losses, the
JMilancewas divided between B & C. Periodical accounts were ex-
hibited to A, who had option, if his/ 10,000 was reduced 1-2 by losses,
or if either partner died, to dissolve partnership and become liquidat-
injj partner, or let surviving partner continue the business and divide
decease! i)artner's share with A, though, if he died, his executors
were not to withdraw capital until expiration of term. He had right
to sell out, and IJ *: C the right to pay him off. They failed, and A
offered to prove for /6,ooo, subsequently advanced by him, and in-
terest. — Rejected, because A was a dormant partner. He shared
profits indefinitely, though his right to withdraw capital when re-
duced to a moiety by losses, made him share them only to a limited
extent. He had control over destination of his capital. B & C were
not his debtors, and he could reclaim but a portion of his advance.
I-:x parte Delh;isse, 7 Ch. I). 511 (187^)-
Advance, coupled with partnership privileges, tnakes lender a part-
ner. H advanced C, for his contemplated business, /500, stipulating,
I, that C should repay the loan within 48 hours after demand, and, 2,
until payment, 5 p. c. interest and, 3, in addition to interest, a sum
equal to 1-2 the net profits of the business, less a salary of ^4 a week
for C's inanageinent ; 4, that C should devote his whole time to the
business until repayment; 5, that he should keep books of account
open to Bs inspection ; 6, that a half yearly account and valuation
snould be made by C, at his expense, for B, and, 7, that C should
furnish B every facility to verify the account. A sued B as a part-
ner—Liable. Act 28 '& 29 Vict. c. 86, s. I, enables lender to take
a share of profits without on that account alone being held a partner.
But the sharing is not excluded as a constituent when combined with
other .stipulations. Clauses I, 2 and 7 indicated a loan; 3 and 4 a
partnership, and 5 and 6 either a loan or a partnership. Froude v.
Williams, 56 Law Times Rep., X. S. 441 (1887). Comment, 83 Law
Times 92-3.
Nor do the Frencli permit any disguise of a partner-
ship.
,/ loan with a partner's rights makes lender a partner. A, pre-
vented by his office of sheriff from engaging in commercial business,
lent 3-.V>o francs to B, to develope a quarrv. An equal amount was
contribute<l by B, and al.so by C. If the partnership continued ten
years, A could take 13 the capital, in the internal he shared the
profits in lieu of interest equally with B & C, had the rii^^ht to inspecl
the ))ooks advise and vote on partnership questions, prevent liqui-
dation or dissolution, and, upon its happening, he had 1-3 of assets
on account of his loan. A took part in managing the business, and
dealt \^nth others as partner.— In the liquidation, A must be treated
as a partner. Like his co-partners, he must bear the losses as he
^"^r* A XJ.°^^^' '" P''oportion to his loan, which was a contribution.
i>oci€te de 1 Is6re, 5 Revue des Soci^t^s 266. 1S87.
■ . • ^°'"{'J3^'"^y ""• dormant, on contract with ostensible, partner B
timber broker, suggested to C the purchase of a cargo of timber from
A. The invoice was made out to C, and R drew on him for the
T24
Pt. 2, Ch. I. The Test. §51.
freight, which C paid. A sued B & C, as partners, for the price.
Some evidence of joint shipment. Objedlion : Contra6l by C. —
Plaintiff might show B was interested in the contradl, as a dormant
partner. Ruppell v. Roberts, 4 N. & M. 31 (1834).
§51.
Ipropertp is tl)c mcbium of partn£r8l)ip, anb partners are
:propriftors of tl)c stock.
As trade consists of buying and selling, its subjedl-
matter is merchandise. Without property there could
be no trade. Property, as the medium for partnership
adts, and the substance of its transadlions, is the trait
(T union of partners.
A principal in the business means a proprietor of
the stock; one who, by virtue of his dominion, buys
and sells the property of the firm.^ If he is invested
with the prerogative of dominion, although he has,
in fa6l, no title to the property, he is none the less
assumed to be a proprietor by those who deal with
the firm (§4, §25)." The domestic arrangement be-
tween the partners does not affe6l the position which
is created by the nature of trade.
Sharing the profits and losses of a business, if not by co-
owners, forms a distinct class of association in the Civil
law, called association en participation^ and is contrasted
with partnership, which is a sharing by co-proprietors.''
By the Common law, the sharing of profit and loss by
proprietors identifies them with the business, and, being
jointly interested in the business, they are partners. The
Civil law does not judge the party by his interest in a
transaction, but charges him only upon his avowed con-
tract.'' The undisclosed principal not beino;- liable under
§5^
Thk Test. Pt. 2, Ch. i.
that system wlu-n discovered, the cases in which he escapes
liability are j^aouped under the association en participation.''
I IfMotits shiin\l as proprietors Joint aRion lies. A & C shared profits
of purchase mid sliiinneiit of cotton. A sued both. —Charge .sustained,
that iMirtics" inlt-ntion was not controlling, but a joint interest would
)(ivc a joint cause of action. Stevens v. Gainesville Nat. Bank, 62
Texas 499 \ 18X4).
liuviiii: laud for capitalist -with tialf profits of sale, a partnership.
\\y oral ngrccnRiit, A was to furnish money, with which B was to buy
lun<l. taking title in A's name. A received for his capital 10 p. c. iu-
Icrcs't an<l half profits from sale of land. A brought account against
B.— Account lay. A & Ji partners. Richards v. Grinnell, 63 Iowa 44
liuxins: laud on joint account of capitalist and prospector, a part-
nership. H received money of A, to be invested on joint account in
buying land ; if no investment made, to be returned. Administrator
of A sued B. — Verdict for plaintiff set aside. B notatrustee or agent,
but j)arlner of A. Hill v. vSheibley, 68 Ga. 556 (1882).
Proprietors shariuir profits are partners. A undertood to look up
and bid for desirable lands at tax sales, to procure deeds from the
State, and to i)ut title in B ; who agreed to furnish money for the pur-
chases, and to hold title for both. The^- were to sell the land and,
after repaying H his advances, share the proceeds. A brought ac-
count ; B denmrred. — Decree. Joint owners of land, each exerting
the ])owers of ])roprietors and sharing the profits of aggregate trans-
a<flions. Hunt v. Erikson, 57 IMicli. 330 (1885).
Sharing profits and losses by co-owners, at least in part, makes joint
business. B gave C the use of 54,000 for 1-4 interest in a patent, to be
repaiil solely out of first profits, without recourse to C. C, the sole
and salaried manager, was entitled to retain 1-2 of B's profits until
they amounted to 5'5.ooo. They agreed not to be partners, but co-
owners. C rented a store, and signed the lease as president of the
"C" Co. A sue<i B & C on the lease for balance of rent. — Recov-
ered. Sharing in profits, with a limited share in losses, makes a busi-
ness carried on for joint benefit. Manhattan Brass and Mfg. Co v.
Sears. 45 N. V. 797 (1871), reversing i Sweeney 426.
Cullivatin;r peach trees, and sharing the profits of crops, no part-
nership. B furnished 2.700 trees. C planted and cultivated them on
his farm. He agreed to pick and market the fruit during the life of
trees, at jf)int expense, and account to B for 1-2 net profits. B died,
anil his administrators sold his interest to A, who demanded specific
perfonnance and an account of 1-2 profits. Defence: C surviving
partner, an<l A no standing.— Contract enforced, because no partner-
shin without joint ownership of funds. TransaAion a sale of trees,
and the price 1-2 jjrofits of the fruits. Robbins v. McKnight, i Hal.
Ch. 645, E. & A., N. J. (1S47). ^
2. The control as if owner and sharing profits. A owned saw-mill
and tiniVier ; B conduaed business, receiving 1-3 profits. B paid in-
dividual debt with timber from mill. A sued creditor in assumpsit.
He objected non-joinder of B.— Non-suit, because the control, with
servKes and share in profits, made partnership. Dob v. Halsev, 16
Johns. ,^4. N. Y. (1819). ^ i- y.
Temporary proprietorship sufficient for partnership. B, owner,
executed deed in escrow to C, D et al., for half interest in a mine, to
be dell vered on payment of price within 90 davs. E, manager, bought
tools and supplies for working the mine, and sued C. D etal. for price.
126
Pt. 2, Ch. I. The Test. §51.
Defence of C & D ; Attorneys employed to secvire property and inter-
est given for services. — Recovered. Partners in working mine, though
not proprietors. Manville v. Parks, 7 Col. 128 (1883).
Dealing with the title for the purpose of gain shows
a partnership inter se when the nature of the business
excludes the partners from an)' beneficial interest in the
property itself.
Exerting tlie fimilion of proprietors and sharing tlie profits in alee
partners in a single venture. If partners broilers for sale, and sale
becomes impossible, a partner may buy for himself. B, having an
option to sell 4-5 of a mine, and A, the agent for sale of 1-5, agreed,
in case they effecfled a sale of the lode, to divide the expenses and
share the profits between them. The option was extended to Decem-
ber 10, by putting up a forfeit of 1 1,500. C, the only prospective
purchaser, had forfeited ^2,500 to A & B by his failure to purchase
within a limited time. At the last moment before the option expired,
but after the negotiation with C had failed, B, without A's knowledge,
advanced the price, |;i 7.000 for 4-5 and ^3,000 for 1-5, and took title
himself. Theforfeitof |; 1,500 reduced the cash paid for4-5to 115,500.
A promised B f 1,500 out of his profits, and induced B to give C five
days additional time, but C failed to purchase. Question whether
advance of |; 1,000 by B to owner, when extension obtained, was out of
the 12,500 firm assets or out of his separate property. A brought bill
for 1-2 interest of mine and its produdl. — Bill retained for account of
assets or A's share of ^^2,500 less |;i,5oo, that is |,i,goo less expenses.
Partnership to effedl sale of property belonging to others, without
any interest in the title. B, in buying, did not represent the partner-
ship, for it could not outlast its obje(5l, which had ceased to exist.
The |ir,5oo was saved to firm by B's purchase and the extension of
time for C renewed the business. At best, the |;i,ooo was used, not
to sell, but to buy, the title, a purpose foreign to the partnership.
Kayser v. Maugham, 8 Col. 232 (1885).
a. " Cassaregis, dont I'opinion est si puissaute en droit commercial, fait
" aussi une difference sensible entre la participation et la societe : les
' ' participans ue lui appraissent par comme de vrais associes. Et pour-
"qoi? par le motif donue par Deluca: parce que les participans ne
" sont pas coseigneurs de Paffaire: ' iVon sunt socii, neqiie in jure
'^formali, negotii considerantur condoinini ; sed solum sunt partici-
"■ pes. ' De la cette conclusion : ' Ma.vima est differentia inter socium
'''■ et participem, et sic diversi in jure producuntur effeHus, quorum
" praecipui sunt, ut participes iwn teneantur nisi ad ratam capitalis
"pro quo participant in negotio ; neque ipsi agere possunt contra
' ' debitores societatis, neque conveftiri valent a creditoribus societatis. ' ' '
Troplong, des Socidtes, ^494.
h. "Ne pent constituer qu'une association en participation, et non
"une societe en nomcolledlif quiserait nulle pour defautdepublica-
"tion, lamiseen commun d'operationscommerciales, quel qu'en soit
"I'objet, entre divers commercants, si chacuu des interesses agit en
"son nom seul, sans reveler aux tiers avec lesquels il traite qu'il
"represente d'autres interets que les siens propres." RousSEAU,
Societes commerciales, ^1736.
" D'abord elle est occulte, essentiellement occulte. Quel que soit
"son objet, si elle se mauifeste au public, elle n'est pas une partici-
"pation. * * des I'instant qu'elle ne reste pas concentree dans des
" rapports int^rieurs, elle est une societe colledlive ; le nom de par-
127
(I^i. Thk Tkst. Pt. 2, Ch. I.
•ion est mculeur, il ne lui apparticiil psus." Troploxg, des
■ 11 Hii'i-iifui recouiiu que- le caraclijre essentiel et dominant de la
nartinp.ition (/tail d'Otre occulte, tie ne point se manifester aux
licrs. tic se rcsunicr dans un compte de benefices ou pertes entre
les assocics." Vavasskir, des Societds, ^315.
' ' Priinihr fombinaisoti. Vn navire arrive d' Am^rique a Bordeaux,
churKe do niarchandises. Un ncK'ociant de ce port envoie a son cor-
resiHiii.lant de Havonue le detail de la cargaisou et lui propose
d"ai hcltr avec lui une partie de cafe, qui, suivant toutes Its appar-
cncisde la place, pourra etre reveudue avec de grands avautages, le
prianl de lui faire connaitre, en cas d'affirniative, pour quelle part il
desire entrer dans cette speculation. Le negociaut de Bayonne
repond qu'ilaccepte I'affaire pour un tiers, etqu'ilentrera dans cette
projKjrtiou dans les profits et pertes. I.a-dessus, le negociaut de
liordcaux achele la niarchandise en son noiu, et par-la se fomie une
association en participation, que Ton appelle aussi co»ipte en partici-
pation, parce qu'el le se resout en uu compte entre les deux negocians.
Dans cette position, il est clair que le negociaut bordclais, g^ui aura
achetddu niaitredu navire la partie de cafe, sera stul oblige envers
lui ; le negociaut de Bayonne, au contraire, u'aura coutraCte aucune
obligation ; et si le Bordelais vient i faire faillite, le vendeur n'aura
pas (le recours contra son participant. Dcuxihne combinaison, Je
me suis rendu adjudicataire de la femie de I'octroi d'uue grande
ville; mais, pour me procurer des resources dont j'ai besoin, j'ad-
mets plucieurs capitalistes a participer, avec moi, aux profits et
pertes, nu)yennant qu'ils me fournissent des fonds jusqu' a une cer-
taine somme con venue. Du reste, cette particij)ation doitdemeurer
inconnue; je suis seul oblige comme fermier de la ville; tousles
aclfs se font en mon uom. Ciiiquic)ne coynbinaison. Outrouve en-
fin la siinjjle participation dans I'espece suivante. Deux ou trois
marchands, voyant que le ble est cher en France et bou marcbe a
Odessa, couviennent que Pierre, I'und'eux, ira dans cette ville pour
faire un achat considt^rablede taut de sacs de froment, et pour en-
voyer ensuite ces grains dans le port de Marseille a Joseph, autre
participant, charge d'en faire la revente. Du reste, comme il ne
s'agit que d'une seule affaire determinee, ces marchands ne pren-
nent pas de raison sociale. Un seul achete ce qui est convenu ; un
autre revendseul, et rend compte a ses associes, anonymes pour le
public. Cesdeniersne sont pas engages envers les vendeurs des
Iromens ; ils n'ont pas agi colleclivement. Celui-la seul qui a paru
a contracl^ des obligations; les tiers ne conuaissent pas les autres
et nepeuvent de leur chef les rechercher." Troplong, desSocietes,
?482-3. J.485, ({488. The French cases are colledted by RoussEU, des
Societ<?s, ch. XII. " I.e participant quiagit n'estpasnecessairement,
"comme dans la societe colle<<tive, le mkndataire de celui qui n'agit
pas. Pre-scjue toujours I'afiaire est sieune; il opere en droit soi,
comme dit Savary, et alors on ne pent lerevoquer; car ce serait
vouU.ir lui enlever le domaine de sa chose. Le fermier de I'oAroi
aui a des participans. le negociaut de Bordeux qui achete une portion
de cafe de compte A dcmi avec le negociaut de Bavonne, le marchand
^ui vaarbeterdubled Odessa, tons font leur affaire propre : s'ilsont
-, cest pour partager les gains et les pertes, mais pas pour
' :lt la propnete meme de I'operation. Cependant, il pent
ii;. ., ,:, , , .tr c^ue le participant aclif soit le mandataire de I'autre
pourconduire a fin I'affaire dont les resultats doivent etre partages.
bi 1 icrre, qui va partir pour le Levant sur le navire I'Ajax, est
Pt. 2, Ch. I. The Test. §5-2.
" charge par Paul d'operer a Smyrne, de compte a demi, la vente de
"certaiues marchandises qu'il lui confie, Pierre joue, dans cette
" societe en participation, le role de mandataire de Paul. " Troplong,
des Societes, ^503-4.
§52.
0[]armg tl)e profits bij t\)t proprietors of tl]e stock ronnerts
tl)£ sl)ar£-tak£rs as priunpals, tijrougl] tl)£ imbiuni of property.
The phrase, sharing profits 'as profits,' attempts to
say that the title to a share of the profits depends
upon a corresponding ownership of the firm stock.
As property is at the owner's risk, a loss of it falls
upon him. Dividing the loss is the counterpart of
sharing the profits. He takes the benefit, and he
bears the burden of ownership. To a dealing with
property, as a means of gain, correspond the lia-
bilities incurred in the business. If profits are treated
as the increase of property made by trading with it,
the share-taker would be considered a proprietor, and
suffer any loss caused by the transactions as a de-
crease of his propert}'. It was upon the property-
theory that sharing the profits was conclusive of a
partnership.
Proprietors,, buying and selling slock, partners A & B agreed
to buy eggs with money contributed by each, store them with B, and
each sell and share the profit and loss. A, who performed his part
of the contradl, sued B for ueglecl in taking care of eggs. Demurrer.
—Action lay, though partners. Bohrer v. Drake, t,t, Minn. 408 (1881).
Interest of proprietors in the business and its profits makes partner-
ship. B agreed to lend C & D |;5,030 from titne to time, according
to requirements of their business, manufacfturiug and selling segars,
and let loan remain, as a permanent fund in the business, from one to
five years, at his option ; C & D to devote all their time and skill to
the business, which should be confined to manufacl;uring and selling
segars ; to keep account of all purchases and sales, and from and to
whom, and when, made ; and of all receipts and payments, and to pa)%
every six months, 3-5 profits, with a guarantee of at least 53,000 a year
to B, who should have a lien on all firm property, as security. Breach
129
§52
TnK Tkst. Ft. 2, Ch. 1.
of contraift hy C & D ]>ut :m end to loan, and authorized B to take
IH.SKcssiou of assets, and sell them to satisfy his loan. A sued B on
notes made bv C 6c I) in the business.— Recovered. No repayment
of loan, no rate of interest. C cS: 1) not sole proprietors. Guarantee
for Hsbeiietit. Rosenfield v. Hai^ht, 53 Wisconsin 260 (1881).
Shannt: f>rojHs as pivfyriiiors is partnership. B, owner of planta-
ticm. owed C Ji.ocx). Thev agreed to raise a crop, B furnishing outfit
anil land, and advancing n'loney to pay hands and carry on business ;
C hiring hands, superintending business, and reimbursing B half his
outlav of 51.000. B mortgaged crop to A, and C .sold bales of cotton
in dispute to D.— Judgment for D reversed. Partnership, because,
as proprietors, they looked only to profits. Reynolds v. Pool, 84 N.
C. ^7 ( 1881 ). .Affirmed in mining partnership. Mauney v. Coit, 86
N."C. 463(1882). ^, .,.
\\ ^: C agreed to raise and dismantle sunken steamer, B furnishing
machinery, C funds and labor. The material recovered to be sold by
B on joint account, advances made by C being first repaid. A sup-
plied articles to C, and sued both. — Recovered. Partners. Lynch v.
Thompson. 61 Miss. 354 (1883).
\, H. C, I) & E agreed to cut and sell ice, dedu<5l expenses, in-
cluding their labor, from proceeds, and divide the residue in equal
shares. K, with concurrence of C and D. sold ice to F. A and B,
being dissatisfied with price, demanded account of C, D and E for 2-5
full price, and made F co-defendant. — Bill dismissed as to F. Decree
against C, D and E for acflual price. Partners. Each has jus dis-
ponrtidi, and majority controls. Staples v. Sprague, 75 Me. 458 (1883).
// broker joins in purchase on his own account, and takes an inter-
est instead of a cointnission, he is a partner. A, a merchant in Lon-
don, directed B, a broker at Liverpool, to buy cotton, and allowed him
1-3 interest in profit and loss of adventure, instead of a commission.
The transacftion, which lasted three months, was treated in the cor-
respondence as a joint purchase, and the cotton was stored in build-
ing rented by B. B pledged the cotton to D, who thought B w as the
owner.— A brought trover for 2-3 the cotton. D entitled to it, as B
was a partner, and had the right to pledge. Reed v. Holliugshead, 8
R. cS:C. 878(1825).
.Sharins^ partnership fund and a sum out 0/ profits, make a part-
ner. B advanced /"24,cxk) to C & D, who were in partnership, as
brewers, and the three executed a deed, by which a partnership stock
wa.s created, as their joint property. B had no aliquot share of the
profiLs, but the right to an account, in order to get /'2,ooo or ^■2,400
out of the profits. C & D became bankrupt, and A sued B, as a part-
"^^r.- Liable, because a joint owner of the partnership stock, and
entitled to a sum out of the profits, though not to an aliquot share.
I-:x parte Chuck, 8 Bing. 469 (1S32).
f'roprietary interest in prcjits, coupled icith an advance, makes a
partnership. B lent C & Co. |2,ooo, and took 1-3 of profits in lieu of
interest, stipulating for semi-annual settlements, and an option to
become, by an additional payment, a partner at end of the year. A
sued B as partner. Defence : Share in profits compensation for loan.
-rroMt.s not compensation if partaker also makes advance to firm.
•' , '/' ^y •'"'jj<.i-i--"iui.ici , ajLLu coniroi ana snare tn pronis,
make a partner. B procured, for C & D, a contract for building a
railroad and agreed to give his skill in construAing it. They agreed
to give hini 1-3 net profits made out of the contraa,"and 1-3 net profits
01 operating the road. B assigned his interest under the contxadl to
130
Pt. 2, Ch. I. The Test. §53.
E & F, for |20,ooo. C & D agreed, in consideration that E & F
would raise funds for the enterprise, to dedudl the ^20,000 out of the
1300,000, and share the profits of the contra<5l equally. The business
was carried on in the name of C & D. A, a track-layer, sued the four
on a note given him by C & D. E made defence : Not a partner. —
Liable. He had a joint interest in working the contradl. Voorhees
V. Jones, 5, Dutch. 270 (1865).
§53.
(Si\)t titk to profits ^£pm^s upon otoncrsliip, not upon part-
ner sl]ip.
The right is created by the law of property, not by
the law of relation, and property includes, not only
the tangible stock, but the capitalized services of the
partners. The profits are an incident of dominion,
as rent is an incident of proprietorship in land. They
are the result, or consequence, of business, a produ(5l
of the partnership. The partners share the profits,
because, upon a dissolution of the firm, the members
inherit its property. A division of the firm property,
whether it consists of profits or of stock, puts an end
to the firm. As to that property, the partnership is
dissolved. A partnership in a single transacftion dis-
closes the process. At the instant the partner's right
to share the profits accrues, the partnership ceases to
exist. In every partnership the right to share the
profits of the firm, or its stock, can be enforced only
by a final account, which means a dissolution. The
right to share in the profits is an individual or several
right, which takes effe6l after the joint right is dis-
solved into its constituent parts. Partnership brings
its members into combination, and makes them a unit.
The rights of the partners are so exclusive that the
131
^53. Tin- Test. Pt. 2, Ch. i.
exertion of a several right dissolves the relation. The
ctxalled right to share the profits during the partner-
ship is not a right at all, but a threat. It takes effed
as a condition, reserved at the outset, to sever the re-
lation altogether, unless a partial dissolution is con-
ceded for the occasion. The joint right of ownership
is inconsistent with several rights of ownership in the
same propertyj and cannot co-exist with them. The
individual title, if permitted for convenience, to ex-
clude the joint proprietorship of the firm, is not recog-
nized, except as an indulgence. The sanAion which
gives legal validity to the right makes a dissolution
of the partnership the only means of enforcement.
The right of the partner, therefore, is to dissolve the
firm, in order to get his share of the profits.
The co-incidence of profits is not with partnership,
but with trade. They belong to trade, and they dis-
close their identity with it. As the desire for profits
is the motive which creates the business, they are the
cause of trade, because they are the produ(5l of its
transadlions. The profits became a constituent of
partnership, on account of the field of its operations
being limited to trade. It is the business which is
concerned with profits, and the profits make the trader.
The partner is a trader,^ and as trade is buying and
selling property, he is a proprietor.
The partners have a joint title to both contribution
and assets. The separate titles do not come into ex-
istence until the joint title is exhausted. The part-
ners, as debtors, do not obtain a clear title until their
creditors are paid. Nor can they compete, by means '
of their separate titles, with the firm-creditors, who are i
also subrogated to their separate rights. The credit-
132
i
Pt. 2, Ch. I. The Test. §54.
ors rely upon both the joint and separate titles of their
debtors for satisfaAion. The profits, when shared, are
separate estate, but the partner cannot take or hold
them against the creditors, to whom he pledged his
title. He renounced his separate title in advance, and
postponed his right of property in favor of the creditors
until they were satisfied. This is the pledge of part-
nership.
I. Salary. A took 1-4 profits in lieu of salary. Plaintiff joined him
as partner. — Net partner, because not a principal trader in the busi-
ness. Dissent. — vSharing profits in lieu of salary makes partnership
as to third persons. A, not being principal, could not join as plaintiff;
such right depends on existence of partnership inter sc. But he may
be made defendant as partner quoad alios. Burckle v. Eckhart, 3
Comst. 132 ; s. c. I Denio 337 (1849).
§54.
IpartncrB, b£ing nott]ing but co-proprietors in business, prov-
ing tl)e inliicia of owncrsliip, d)arg£S a principal u)l)o coulti not
otl)crn)is£ be ibentifiei) as a partner.
It is in this way that sharing the profits established
the title of a proprietor, and hence a partnership.^
It makes no difference what distribution the partners
have made of the contributions among themselves. A
partner who is excluded from all participation in the
stock will be none the less a co-owner of it for the pur-
poses of the business. As to third persons, the con-
tributions belong to the firm, and the title is vested in
all the partners.
The suggestion might be thrown out that others
besides partners, upon the same principle, contribute
to the firm stock, and would be entitled to share the
§54. The Test. Pt. 2, Ch. i.
profits as proprietors. If the services of a partner
can be discounted in advance and turned into money
at their ultimate worth, the process is available for
the services of anybody else. The agent, manager,
superintendent, clerk or servant might commute his
services into gold with equal facility, and claim the
profits as a co-proprietor of the stock employed in tlie
business. The answe^- to the suggestion is, that
capitalizing services against a contribution is a ques-
tion of intention. If they are accepted as a contribu-
tion, they invest the person who renders them with
the title and prerogatives of a proprietor.
The position of a proprietor is contrasted with
that of a creditor. The partner renounces all profits
until the creditors are paid. If lie takes profits, he
proclaims his position as a partner, for they are what
remain after all claims are paid. A creditor is not
entitled to the profits, and if he claims a part of the
profits, the demand is inconsistent with his position
as a creditor. The proprietor alone is entitled to the
profits. The primary effed of taking profits is to
exclude all who are paid out of the capital or its pro-
duel, and this leaves only the partners, who are enti-
tled to the profits. It would be an anomaly to break
the connection between the proprietor and his profits.
Yet, apparently, this is done whenever a creditor is
permitted to take a portion of the profits without alter-
ing his relation. It is the existence of this apparent
exception which has produced such confusion and puz-
zled the profession.' It would be an exceptional freak
of the law to invest a creditor with the proprietor's
right of dominion without changing his status as a
i.U
I
Pt. 2, Ch. I. The Test. §54.
creditor. No wonder sucli a mongrel notion could not
be brought into consistency with principle.
The right to take the profits revealed a proprietor.
No one else could touch them, except by his permis-
sion. If any other person did claim them, he would
be compelled to make out his claim from and through
the proprietor. There is but one mode in which this
could be done : The creditor must exert his right in
the name, or by the authority, of the proprietor. The
creditor is the appointee of the proprietor, and exerts
a delegated right. The power is undoubtedly coupled
with an interest, and cannot be revoked, but it is still
nothing but a delegation of authority. By law, the
profits belong to the proprietor, and he, by virtue of
his dominion, empowers the creditor to take them.
This explains the profit-sharing theory, and makes it
intelligible. It explains, also, the creditor's profit-
sharing, and makes it consistent with the theory of
partnership.
The exception, which, however, has been shown to
be only apparent, was suf&cient to prevent the infer-
ence of a partnership from being conclusive, and led
to a rejeAion of the profit-sharing as a test of partner-
ship. The question turned upon the capacity in which
the recipient took the profits. But the capacity is in-
volved in the profits, and cannot be severed from them.
The failure to observe this connection has led to the
exclusion of profits as an element in determining the
capacity of the recipient, and made the ascertainment
of the capacity simply a question of fa6l, independent
of the property element. It is denied that the element
of projDerty enters into the partnership relation. The
law of property is excluded and treated as foreign to
135
§^^^ Thk Tkst. Pt. 2, Cn. i.
the relation. Tlic propert}' involved in a partnership
is regarded as an extraneous fact, without any con-
net5\ion in law with the partnership. The profits, in
this aspecl, have nothing" to do with the law of part-
nership, and the effe(5l of sharing them does not raise
a question of law for the court, but, if any, a question
of facl for the jury.-' As an extraneous fa6l, taking
profits is no more evidence that the recipient is a part-
ner than that he is a creditor. The profits ma}' belong
to a creditor, with as much right as to a partner.^ This
is the conclusion which results from excluding the
property element from the law of partnership, and
from tr3-ing to constru(5l the principles of partnership
out of nothing but the abstract do6lrines of principal
and agent.
Taking profits, therefore, is not an indifferent fa(5l,
which fails to indicate whether the taker is a partner
c)r a creditor; on the contrary, it reveals a proprietor.
The creditor himself can take them only in right of
the proprietor. Therefore, it is not until the creditor
has proved his right to them, by the appointment from
the proprietor, that he is permitted to disavow his title
as a proprietor. The law of property makes him a
partner, unless he can prove that he takes by the
authority of another, who is the proprietor. This is
the principle which underlies the proposition that
sharing the profits \^ prima facie evidence of partner-
ship. The profits, as a matter of evidence, apart
from the element of property, would prove nothing
either wa^^.
1. rndisdoscd principal in a joint venture a dormant partner. B
>)ought coffee on a joint venture with C, who paid his part of the
price. H had the inanaj,'ement of the transadion, and deposited the
coffee wiUi A, who debited B with the advances upon it, and did not
136
Pt. 2. Ch. I. The Test. §54.
kuow of C's interest in the venture. The coffee was sold at a loss,
and a commission in bankruptcy issueci against K, and another
against C A proved for his balance against B, and offered to prove
against C. — Entitled, because C a dormant partner and undisclosed
principal. Ex parte Crellar, i Rose 297 (1812).
Control and interest in stock. A, in China trade, at N. Y., with
branch at Canton, appointed B to take charge of Canton business,
giving him 1-5 profits. Neither could engage in other business at
Canton. B to have his living expenses, but to allow profits to ac-
cumulate in the business. Decree upon account stated between A
and administrator of B. Bill to open, and for account as partner. —
Though partnership, because of control and of interest in stock, i. e.,
labor and share of accumulated profits, bill dismissed, on ground of
laches. Ogden v. Astor, 4 Sandf 311 N. Y. (1S50).
Buying and selling. Judgment against A & B, as endorsers.
Debtor indemnified them, by giving them salt. A sold the salt on
joint account, and applied proceeds in discharge of judgment. He
had given a note of A & B for freight to defendant, who transferred
it to plaintiff, with guarantee of colleRion (not payment). Plaintiff
never enforced payment, supposing B was not a partner, and hence
not liable. B had since become insolvent. Plaintiff, to excuse laches,
denied partnership. — B held a partner, because a joint purchase, and
agreement to share profit and loss of sale. Cumpston v. McNair, i
Wend. 457, N. Y. (1828).
Purchase by one for joint commercial adventure chars;es him as a
partner. A & B took bonds in payment of a debt to them as part-
ners. On dissolution, they divided the bonds, and, being advised by
counsel engaged in litigation about them to buy more, B bought 22
additional bonds in his own name. The litigation was successful,
and B sold out at a profit. A's executors sued B's executors for half
the profits of the transaction. The evidence was : i, a power of attor-
ney given to B by various bondholders, to control the market ; B
signed for 29 bonds owned by himself, and A & B signed jointly for
the 22 bonds in dispute; 2, a document drawn, though not used, to
request a trustee's resignation : A signed for 29 bonds, and again for
the 22, but left a blank for another signature opposite the 22. — Re-
covery. A joint adventure. Wilson v. Cobb, 2 Stew. 361, N. J., E.
& A.' (1878).
2. The Professional perplexity is manifested in the enact-
ment, which makes a lender, who takes profits for his
loan, a cross between a partner and a creditor. ''^ If a
lender, he is entitled to reclaim his loan, like any cred-
itor, and could not be postponed ; if a partner, he could
not reclaim his loan in competition with creditors, or
escape his liability as a partner.
3. In trying to re-adjust the English cases prior to Cox
V. Hickman, to the theory of principal and agent, C. J.
Doe has endeavored to make out that the English judges
confounded the distindlion between law and fa6l. Rut
he lost sight of the property element, which justifies
them, by making tlie question one of law, and within
the judicial province.
Eastman v. Clark, 53 N. H. 276 (1872).
137
§55. Thk Test. Pt. 2, Ch. i.
4. Disregard inpf the li^^^ht of tlie profits, or treatin^r it as
ail /'x^fi/s /(r/ints the courts are at the dead point, and
cannot move until something else is applied as a momen-
tum. vSa\ s C. J. Doe :
"Whether in a ])articuhir case, 'the profit' carries the one nieaning
" or the other, dejK'tuis on the question whether he is a principal or a
" creditor, whidi is tl;e first, last and only question in the case. We
"cannot know in what sense 'the profit' is used by the parties until we
" discover whether A is a j)rincipal or a creditor. How can that be a
"method of answering a question, which is a dedu<5lion from the
"answer, and cannot be known until the answer is obtained? If A
" is a creditor, he is none the more and none the less a creditor by
"rea-son of his being entitled, as a creditor, to one-ninth of 'the
"profit;' if he is a principal, he is none the more and none the less
"a principal by reason of his being entitled, as a principal, to one-
" ninth of 'the profit.' When A and B agree that A shall have one-
" ninth of 'the profit,' they may mean that he is to have it in the
"capacity of, and by virtue of his being, a creditor; they may mean
"that he is to have it in the capacity of, and by virtue of his being, a
"principal. The question is, Which do they mean? The sharing-
" profit test merely repeats the question without answering it. A
" may l)e entitled to one-ninth of a fund called 'profit,' either in the
"capacity of a creditor or in the capacity of a partner, his ambiguous
" right is not a test of the capacity in which he holds it. Taking part
"of the profit is no more the acft of being a partner than it is the test
" of his being a creditor." Eastman v. Clark, 53 N. H. 296 (1872).
a. 28 & 29 Vidl. c. 86.
§55.
^\]t title to profits, like t\)t title to tl)c rontrilnition, is a
piopertn rigl)!, u)l)tcl) taimot be asstvkh atjaiust tije crtbitors
of tl)e fuiti.
Profit.s result from the use of the contribution. It
is, of course, a mistake to represent profits as the
proclucl of nothing but the material capital of the
firm. They are the product of all the faAors which
go to make the business a success. But, as is seen
in the original structure of partnership, the services
are summed up in the fundlion of buying and selling
property. The process is accessory; the property is
1.^8
Pt. 2, Ch. I. The Test. §55.
the principal. The profits have no independent status,
but are merged in the contribution.
It is because the profits are an increment of the
contribution, that the right to them discloses a part-
ner. This is the converse of the proposition that a
partner is a proprietor. What would be thought of a
claim to the contribution, if made by a stranger? He
would claim the attribute of a partner, while he pre-
tended not to be a partner.
Mr. Justice DeGrey, in the passage which has be-
come celebrated,^ meant that the property-right to the
profits was the basis of liability on the part of the
trader. He is a proprietor, and is liable for his deal-
ings as such. The reason, however, which the learned
Justice gave for his statement, betrayed his confusion
of thought. He asserted that taking profits deprived
the creditors of the fund on which they relied for pay-
ment! But this is the exadl result which is excluded
by the terms of the proposition. The creditors can-
not rely on that which does not come into existence
until they have ceased to exist, i. e., are satisfied.
SULPICIUS was the first to point out this absurdity,
which he did in his notes to Scaevola.^
The profits are no more a part of the fund for cred-
itors than losses are. The word 'profits' is a relative
term, and has a meaning only for the partners them-
selves. It is only between them that any portion of
the assets can be deemed profits. The creditor may
demand all the property, or assets, of his debtor-firm,
because they are devoted to the payment of his claim.
Should the partners divide the joint fund among them-
selves, and convert the joint into several titles, the
withdrawal would be a fraud upon the creditor. But
139
555-
TiiK Tkst. Pt. 2, Ch. I.
the proprietors would not be charged because they took
it, or any part of it, as profits. No profit could issue
out of it until the creditor was paid, and after he was
paid the withdrawal would not be a fraud upon him.
The withdrawal does not create an original liability,
but confli(5ls with the liability previously created.
1. /iihrfst, though usurious and payable out of profits, does not make
lender a partner. B bought out his partner, C, who left ;^4,ooo of his
capital with B, upon his agreement to pay 5 p. c. interest and an
annuity of /300 for 7 years. A sued C as a partner. — Not liable.
The extra 7 p. c, though usurious unless payable out of profits, was
not contingent upon them, but a round sum due by B. If C received
profits, his interest limited to a definite amount, and could not charge
him indefinitely. But C had no specific lien on the profits, nor any
interest in them, except through B, who relied upon them as his
means of payment. "If anyone takes part of the profit, he takes
"part of the fund on which the creditor of the trader relies for his
••payment." Grace v. Smith, 2 \Vm. Bl. 997 (1775).
2. " Mucius scribet nou posse societatem coiri, ut aliam damni, aliam
" lucri partem socius ferat. Servius in notatis Mucii ait, nee posse
"societatem ita contrahi : neque enim lucrum intelligitur, nisi omni
" damno deduclo ; neque damnum, nisi omni lucro dedudlo. " D. 17,
" Suppose B, going into the retail flour trade with no capital, hires
" A as clerk for one-ninth of the profit, buys 1,000 bbls. of flour of C
"atfio- a bbl., sells it all at $11. a bbl. in one month, in a store hired
" of D at |ioo. a month, and the business is then closed. A, C & D
"having received nothing, and B having the |ii,ooo, |io,ooo of that
"sum is to be paid to C for the flour. The remaining $1,000 is the
"primary, gross, or sale profit. Deducfl from that gross profit the
";?!(« due I) for rent, and we have I900, the profit out of which the
"deferred creditor A is to be paid for his services as clerk. Dedudl
" from that deferred creditor fund one-ninth of it due A, and we have
"fSoo, the final or net profit of B the principal. I'ntil they are paid,
"A, C & I) are creditors. C and D stand on an equal footing as
"ordinary creditors; the facfl that, in book-keeping, the debt to D
" for rent may lie recorded in the expense account does not affecfl its
" existence as a debt: the debt to A for services niav be recorded in the
"same account. C and D are general, absolute creditors, relying for
"payinent on everything until they are paid: then, ceasing to be
"creditors, tliey rely for payment on nothing. A is a deferred and
I'contmgent creditor, entitled to nothing until C and D are paid,
II and then entitled to nothing, unless some of the gross profit is
"left. C and D, until they are paid, rely for payment on the
I' wliolc of B's property,— upon the |i,ooo gross profit, as well as the
^ rest of the proceeds of the flour. They do not rely on the I900
_ (deferred creditor fund) left after they are paid, nor on the ISoo
(net profit) left after payment of all creditors general and deferred.
_^ " If C IS first paid, he takes part of the fund on which D relies for
payment: ifD is first paid, he takes part of the fund on which C
^_ rehes for payment : but the one first paid does not, by the aA of
recei vmg payment, become liable to the other for taking part of the
T40
Pt. 2, Ch. I. The Test. §.55.
" fund ou which they both rely. That is not the fund of which A is
"to have oue-uinth ; and he is not liable to C and D for not taking
" a share of the fund on which they rely. The fund of which A is to
"have one-ninth is the ^fgoo left after C and D are paid : on that fund
" C and D do not rely ; and A is not liable to them for taking a part
" of the fund ou which they do not rely. He is a creditor, though a
" deferred one ; aud, as creditors, C and D do not become liable to
"each other or to A by properly receiving payment out of the fund
"on which they properly rely for payment, so A does not become
"liable to them by receiving payment out of the fund on which he
" relies.
" But if A, as a joint principal and co-partner, and not as a creditor,
"is entitled to one-ninth of the profit, it is net profit that is meant;
"and if he is entitled to a part of the net profit, he is liable to C and
" D, not because he is entitled to a part of the fund on which they
"rely, — for they do not rely on the net profit; he is liable to them
" because he is a principal. If he is a principal, 'the profit' of which
" he is to have a part means the balance of gross profit left after pay-
"ing all creditors: if he is a creditor, 'the profit' means the balance
" of gross profit left after paying all creditors but himself * *
"In the supposed case, where A is a creditor and not a partner,
"there are three different profit funds, or one profit fund of three dif-
" ferent amounts and with the three different names, — i, |;i, coo gross
"profit, out of which, as well as out of the other |;io,coo, proceeds
"of the flour, the general creditors are to be paid: 2, flgco deferred
" creditor fund left after payment of the general creditors C and D ;
"3, |;8oo net profit, left after payment of the general creditors C and
" D, and the deferred creditor A. An agreement of A and B that A
"is to have one-ninth of the profit, means either that A is to be a
"deferred creditor entitled to one ninth of the gross profit left after
" payment of the general creditors as compensation for his services,
" or that he is to be a joint principal and co-partner with B, entitled
"to one ninth of the net profit. In the former case, 'the profit'
"means neither the gross profit nor the net profit, but the f 900, of
" which the |8oo left after payment of A is the net profit of the busi-
" ness in which B is sole principal: in the latter case, 'the profit'
" means the $900 net profit of the business in which A and B are joint
"principals. The difference is, not in the amount which A is to re-
" ceive, but in the capacity in which he is to receive it. In the one
"case, as a clerk hired by B, and as a creditor of B, he is to receive
"from B, in paj-ment of his deferred debt, one-ninth of the amount
"of B's gross profits left after payment of other creditors : his right
"is a chose in acStion, not a thing actually or constru(flively in his
"possession: the title of the ninth is in B, aud not in A until he is
"paid; — in the other case, as a joint principal, before he receives his
"share, he owns, in common with B, the net profit left alter pay-
" ment of all partnership creditors of A and B : the title is in A and
"B: A owns one-ninth, and B owns eight-ninths. In the one case,
"the net profit is|;8oo: A is a creditor of B, and not a principal:
"B owes him fioo for wages which he can recover in assumpsit at
"common law; — in the other, the net profit is ^900: A isa jointprin-
'"cipal and not a creditor: Bowes him no wages: their net profit
" cannot be ascertained and divided in a common law aAion : for the
"debts contracted by B, within the scope of his authority as agent in
" earning that net profit, A would be liable, did not the existence of
" net profit show that those debts have been paid.
" If A is a clerk and creditor, he receives l^ioo, not as his share of
" the profit of a business in which he is a joint principal, but as com-
141
5^6. The Test. Pt. 2, Ch. i.
-pensution for his services in a l.usiness in which B is sole princi-
••K^ lu- receives one-ninth of the profit, not as profit, but as pay-
•• mint ..I i .Icl.l If A is a principal, he owns one-nmth of the profit
• as j.n.fit. an.l does not receive it as payment of a debt." Eastman v.
Clurk. 5;, N. n. 295 (1S72).
^56
Z\]t Roman stan^ar^ \]Ci3 smv'wtif in tl)c (Common £aru as
tl)c tnpe of partucrsljtp.
The type of partnership handed down by tradition
stands as the model of perfedl fairness, and serves as
the stru(5lure of partnership when the law is called
upon to infer the terms of the contradl. The infer-
ence is drawn from sharing tlie profits, that tlie sliare-
takcr has put a contribution into the firm eqnal in
proportion to the quota whicli he takes out of the
profits (§31, n. i). The inference is merely a state-
ment or expression of the natural terms of tbe adjust-
ment whicli the parties would make if they dealt fairly
by each other in the business. The right to demand
a share in the produ(5l of the partnership relates to the
interest of the share-taker in the capital of the firm.
The claim to profits is founded upon the claimant's
standing in the firm as a partner.' The legal in-
ference is based upon the conne(?tioii between profits
■nd a contribution. If the profits are shared, the
stoci, employed to make the profits is shared like
^*^*"^- •■ It is with reference to the type of partnership
lat thdj contracT: of the parties is interpreted (§36).
le relict. Jqu ^g maintained by the self-interest of the mem-
"-!'>• Tli^.Q^^g]^ ^ partner, the individual has no interest
rom^ l^ijjjsglf a Apijg ^^j^ supplies no new impulse,
'^ 142
PT.2, Ch. I. The Test. ^5b.
and is merely a graft on the individual stock. The partner
looks through the partnership to his ultimate self-interest,
in the vista beyond. The Romans, seeing that the relation
had no support but the self-interest of the members, made
sure of their self-interest by a measurement of each part-
ner's quota, and regulated his share of the profits according
to the amount of his contribution. The partner could not
deny his membership if he would, for his position in the
firm was established at the outset, by investing him with a
correlative proportion of the stock and profits as a member.
The right to share the profits related back to the contribu-
tion, and was contingent upon it. The claim to share in
the profits admitted the partnership, and, as the claim im-
plied a contribution by the claimant, woiild prove that
money which had been put into the firm was intended to
be a contribution.
I. One who takes profits carries the insignia of proprie-
torship. He asserts the title of a proprietor, and he is
taken at his word. The title and the profession are
accepted as a fa6l. But it is argued by those who ignore
the property element involved in partnership that the
fa(5l should be disregarded, as if it had no existence.
There would, in this aspedl, be no legal clue to deter-
mine the question of partnership. It would be left un-
decided, except when the parties had seen fit to disclose
the intention which they entertained in transadling the
business. The illustration given by C. J. DoE shows
how hopeless would be the task, when partnership is
treated as nothing but a case of principal and agent.''
a. 3Son ^l^ering, the genius of legal inspiration, has undertaken to
prove that the selfish instinA can be sublimated in partnership and
other combinations, and utilized as a disinterested motive ; but he
has relegated his proof to a subsequent volume, and until he pro-
duces it the hard headed sense of the Romans will be accepted as the
standard..
Scr 3wecf im 9lec^t, Don Diubc^)^ Son S^^ertng, tool. 1, 1877.
d. ?55, n- 2.
143
j^. The Test. Pt. 2, Ch. i.
§57.
dljc propcrtn-link, or founcction, bdmm contribution anb
profits 1)113 not lu-rn scrcrcii, but stands, at tl)e present ban, as
the tnpc ol partnership.
The law does not require, as it did in the early days
of Rome, that a share in the profits should correspond
to the contribution. But the law does assume such a
correspondence between the profits and the contribu-
tions, if the contra(5l has not made a different adjust-
ment.' The later Roman view, that the parties must
have capitalized the services to make them equal to
the contribution,^ is the accepted basis of the partner-
ship as to third persons. The contributing partner
has agreed to accept the services of his co-partner as
an equivalent for his contribution, and thus converted
the ser\'ices into firm capital. The effe(5l is to invest
tlie partner contributing his services with title to the
firm property. Although the partners, according to
the better opinion which has been set forth (§33), do
not contribute property, but contribute merely the use
of i)roperty to the firm, yet, for strangers, the title is
vested in the firm. If the services of the partner
were capitalized and accepted as a contribution, al-
though they would, at best, entitle him only to a joint
use of his partner's property, yet, for the purposes of
tlie business, they would make him a co-owner of it,
and, on that ground, a co-proprietor of the profits,
whicli are the product of his own labor, and of the
property employed in the business.
The mutual agency of the partners results from
trade, or buying and selling property (§5). If the
property employed in trade did not create an agency
144
Pt. 2, Ch. I. The Test. §57.
in the co-trader, there would be no property clue to
establish the agency. The delegation would be ascer-
tained, like an}' question of authority, only b}- the in-
tention of the principal. ■■ Property owned in common
does not give a part owner authorit}^ over his co-own-
er's purpart (§5) . The fa.<Si might be disputed whether
the property was owned jointl}- or onl}' in common.
Trading with it would settle the controvers}' at the
Common law, because sharing the profits would iden-
tify the proprietors in the contribution through their
shares in the produ6l.^ At the Civil law, the co-pro-
prietorship is not decisive, even in trade, for the pro-
prietors ma}' join in business, and share its profits
and losses without becoming partners (§51 n. c).'' It
is not the identity of interest which charges them as
partners, but the private contrail of the partners.
The Civil law knows nothing of an undisclosed prin-
cipal, and yet his liability is the key to partnership at
the Common law.
The abandonment of the property element would
take away the creditors' hold upon the partnership, and
relegate them to a mental investigation. The exter-
nal fa6l that the party is a co-proprietor, or dealt as
such, is now sufficient to hold him as a partner. Tak-
ing the profits is dealing with the property as a pro-
prietor, for they are the produ6l of the property con-
tributed to the business. The embodiment of the a(5l,
dealing as a proprietor, in matter and substance, is the
tangible fa(5l which singles out the partner, and identi-
fies him with the business.
The effedl of reverting to the intention of the par-
ties as the exclusive test of a partnership would be
undoing the work which has been accomplished dur-
145
^c-7. The Test. Pt. 2, Ch. i.
iug the devclopement of modern partnership in Eng-
land and America, and going back to the primitive
status of partnership at the Civil law." The Common
law made a great stride in advance, when it converted
part!iership into an institute of credit, and enlarged its
scope fnjm a private bargain, which concerns no one
but the partners, to a business establishment, which
invites and commands the trust and confidence of third
persons. The Common law, with its pradlical sagac-
ity, adapted partnership to its modern function, and
gave it a career which was not dreamt of at the Ro-
man law.
It is upon the foundation of property that the mod-
ern structure of partnership is built. The co-proprie-
torship in business identifies the parties in interest,
and justifies the reliance upon the proprietors as prin-
cipals. A(5ling as a proprietor, or taking the profits
of a proprietor, is equivalent to being a proprietor,
and entitles creditors to treat him as such.
1. Syers V. Syers, ^31, n. i.
2. 15 liicf Glcuterun;} b:r "iNanbcctcn, 420-4.
3. Co-owners sharing profits and losses of business transaRions, not
partners. B, in N. Y., a<iree(l to advance inoiie}-, C to buy molas-
ses in his, C's, name, warehouse and ship it in the name of D, who,
Vi\>o\\ delivery of warehouse receipts, or bills of lading, was to pay the
price and expenses, aid draw for the amount on B, who sold the mer-
chandise. Profits and losses divided : B 1-2, C and D each 1-4, butB
and D not disclosed in the transactions. C failed to pay over monev
receive 1 from I) for the purchase of molasses to A, who sued U for
Uie i>rice.— Judgment for I). Parties did not intend a partnership.
I), if an unknown principal, or a purchaser, of C, not liable for his
luisapplication of purchase-money. — Dissent. Shared the losses, and
were co-owners. Chaffaix v. Lafitte, 30 La. An. 631 (1878).
4. Sharing profits indefinitely, without any control ormanas:ement of
the business, makes the share-takers partners, in st>ite of their inten-
tion. B, at Plymouth, agreed with C, at Gosport, to remove to Cowes.
in order lo co-operate as ship agents, for 7 rears, with option bv C to
renew. Each retained i -5 commission for expenses. Then C received
1-2 B's commissions and trade discounts, for recommending him. B
Teceived 1-4 C's commissions and 1-2 p. c. of his trade discounts, and
for ships which he induced to proceed to C, 3-5 commissions and i 1-2
14.6
_e
Pt. 2, Ch. 1. The Test. §57.
p c. trade discounts, with 1-4 storage fees. C stipulated for ware-
house at Cowes, without li's interference, and gave him 1-6 storage
fees. Neither could form other business connections for ship agency
at either port during the term, nor B after the term, at I'ortsmouth or
Gosport. Provision for annual settlements, when accounts were
stated aud balance distributed. Each assumed risk of all losses in
his own business, and stipulated uot to incur liability for losses in
the other's business. A sued C on a contract made by B in his busi-
ness, carried on in his name as ship agent. — Liable, because he shared
in the profits of B's agency indefinitely, aud in spite of the intention
of both parties uot to be partners, but of each to carry on his own
business separately. The partial control exerted b}' C over B's busi-
ness was insufiicientto overcome the intention that he should remain
master of his own business. Waugh v. Carver, 2 H. Bl. 235 (1793).
S/iaiiiig coiniiiissioiis a partnership in consigntnents. A, mer-
chants in London, and B, at Rio, shared, without any dedu(?tior, for
expenses, the commissions on consignments secured by either for thii
other. A paid over remittances for sales made bj- B. A, upou clve
report of a sale by B of the goods consigned to him by C through A's
influence, advanced the price to C, in expe(?tatiou of a remittance
from B. He became bankrupt, and A's assignees in bankruptcy sued
C, to recover the advances. — No recovery, as A & B were partners in
the consignment. Cheap v. Cramond, 4 B, & Al. 663 (1821).
S/iaring profits, with renewal of business. B & C, Americans,
were partners in France, trading with U. S. They dissolved, on ac-
count of war between France and England. B returned to N. Y., C
remained, each agreeing to make and procure consignments to the
other, and to share the profits and coiiimissions. Each retained 2-3
of earnings of his own establishment, and gave 1-3 to the otlier.- — C
liable, as partner in B's establishment, to A for merchandise. Walden
v. vSherburue, 15 Johns. 409, N. Y. (1818).
Sharing pwfits makes partner. B sold out to C & D. two of his co-
partners, who continued the business, and agreed to pay him an
annuity varying with the profits. Joint commission in bankruptcy
issued against the five. A, their assignee, prayed for stay of proceed-
ings under other commissions until B's position was determined.
— Stayed, because he reserved a share of profits in the business, and
decree that B was still a partner. In Colbeck & Co. , ex parte Wheeler,
Buck 48 (1817).
Royalty or profits. A gave B use of fadlory aud supplied cash
capital. A to receive i p. c. a yard profit on produdliou of cloth, not
exceeding 6,000 yards a week. B received, for services, remaining 99
p. c, and the entire profit on number of yards above 6,coo. Business
conducted in B's name. Creditor sued A on order gi\ien by B for
labor. — A liable as partner, because he received, not a royalty, but a
share in the net profits. Everett v. Coe, 5 Denio 180, N. Y. (1848).
The rights of third persons are independent of a partnership con-
trail, and may exist though the contrail should fail. Usujy, -which
would deprive a lender of his bargai^i, doesn't relieve hint from lia-
bility to third persons on the iinla-wful contrafl. B stocked a store,
and C carried on the business. The contracft was to pay B 6 p. c. lor
his loan, and, if the business successful, 25 p. c. out of profits. C con-
fessed judgment to B, for the loan, and he took the stock in execu-
tion. A obtained judgment against C, and enjoined sheriff from pay-
ing over the proceeds of sale to B, on the ground that he was C's
partner. — The contraCl to share profits made B liable, as a partner,
though the contracSl was usurious and void between the partners.
Sheridan v. Medera, 2 Stock. 469 E. & A., N. J. (1855).
M7
$57-
The Test. Pt. 2, Ch. i.
I
iJiHiHCtr/ora huildiiis: operation payable out of proceeds in addi-
tion to a \hare of the profits and losses is not a usurious loan, but a
nmlrihution to a partnership. A furnished fo.ooo, to buy a lot which B
improvi-il l.v a l.uildinj,' operation. H gave his bond to repay the sum,
with interest, out of tlie i)roceeds. A & B shared the profit, in pro-
iK>rli..n of I to 2. A suecl for his share.— Recovered. A partnership,
iiot a usurious loan. Plunkett v. Dillon, 4 Houston 338, Del. (1875).
Sharins^ profits, icithout vieutiouing losses, makes partnership. A
& H, who were doiui,' business as the " Tub Co.," furnished fac-
tory! slock and cainlal, and C nianaijced the business. The sign and
imlited designation of the firm were: Tub Co., A B & Co., A
li C^ ( '. They shared the profits etjually, but said nothing about
losses. Business failed, and A & B demanded an account. Defence :
No jiartnership, because no agreement to share losses. — Partnership.
Agreement to share losses implied from agreement to share profits.
Munro v. Whitman, 8 Hun. 553, N. Y. (1876).
Agreement for half the profits, made in answer to advertisement
for a partner, sufficient for jury to find a partnership. Partner in
"possession a lien on firm stock against a chattel mortgage executed
eforc the partnership. The "A" Lumbering Co. executed a chattel
mortgage to A. The Co. advertised for a partner, and agreed to give
B, who answered the advertisement, 1-2 the profits for carrying on the
business. A, under his mortgage, replevied stock in B's possession. "
Charge : Agreement gave B a lien, whether a partner cr not. — Error.
No lien unless a partner. Agreement, coupled with advertisement,
miglit have been sufficient for jury to find a partnership. Wilcox v.
Mathews, 44 Mich. 192 (18S0).
Tlie principle i.s not confined to partnership, but pre-
vails throughout the law. The profits represent the
projicrty, and are the sum of its usefulness to man.
The property and its resources of enjoyment are con-
vertible terms, because they are one and the same thing,
though looked at in different aspedls. From the time
of Lord Coke and his 'boillourie of salt,' a gift of the
profits has been a sufficient designation to pass title to the
l^roperty. An instance may be taken from a branch of
the law entirely foreign to partnership. The principle
.serves to distinguish vested from contingent legacies :
A bequeathed to B the interest of Pa. state loan, and the principal
when it should be paid by law. B died before pavment of the prin-
cipal. His administrator sold thestock, with aguarantee of the title.
The buyer sued the administrator on his guarantee, in order to test
the title. The court explained the identity of the interest, and
principal : The nature of the fund is single, but its enjoymeut varies
on accr)unt f)f tlie investment. They are different forms of enjoying
the fun<l. the interest, while it was invested, and the principal when
It w.i.s ])aid off. The legatee had a certainty in either aspedl, unaf-
fected J)y the change in form of the fund. The legacy vested the
fund in B at A's death. Schriver v. Cobeau, 4 Watts 130, Pa. (1835).
^ "Deux marchands vont ensemble k une foire, et pour ne pas se
"nurc par une concurrence que les ferait peutetre suracheter, ils
■^ conviennent de faire tons leurs achats en commun pour les partager
ensuite. De fait, chacun d'eux achete separament ce qu'il trouve
148
Pt. 2, Ch. I. The Test. §58.
" d'avantageux ; puis, tout est rapporte en une masse, et Ton fait les
"lots suivant la convention." Troplong, Des Societes, (<487.
5 & 6. n. 3, supva.
§58.
^ misronfcption af tl]e principle inak a rompcnsation out of
profits tl)c proof of a partncrsljip.
The word sharer,' like partner, means one who
shares or divides, and the sequence is that he shares,
or divides, what he owns in conjun(5lion with his co-
proprietors. He shares in the capacity of an owner.
The legal efFe(ft did, at one time, correspond with the
import of the word, and charged the share-taker with
liabilit}^, as a partner, against his intention, and in
spite of his will. He made himself a principal in the
business, and he would not be permitted to avoid the
consequences of his a(5l by disproving a partnership
inter se.
The word "sharing," however, came to be taken in
a loose sense.^ It was held that'a partner is one who,
without reference to property or proprietorship, re-
ceives part of the profits. By this constru6lion, Tom,
Dick and Harry were turned into partners, for no
«)ther reason than that they lent money to a firm, sold
it merchandise, or rendered it services, and were paid
out of the profits. For a wonder, the extravagance of
the conclusion did not lead to a detection of the blun-
der, w^hicli consisted in confounding the distinction
between the two meanings covered by the term ' shar-
ing.' The word palters in a double sense. It means:
I , The part of profits which belongs to its owner; 2, A
149
r
|,8 TiiK Test. Pt. 2, Ch. i.
sum paid by the owner out of profits. In its primary
sense, 'sharing' profits is an incident of ownership, and
is therefore proof of a partnership. In its secondary
sc-nse, the profits shared are the price paid for some-
thing. So fill- from being evidence of partnership, the
share establishes the opposite relation of debtor and
creditor. The cause of the confusion not being de-
tccled, all reasoning on the subjed was corrupted by
the original sin. It recurs in the argument which
makes intention the guide: The wish for gain is the
original motive which calls the partnership forth to
make profits, and the motive is the index of the par-
ties' intention. The profits are the cause, and part-
nership follows as the effed. From the cardinal
proposition, that nothing but profits could make a
partnership, was deduced the corollar}' that no profits
could be shared except by partners. Hence, a shar-
ing in the profits became conclusive evidence of part-
nership. In this argument, apart from a missing
link, which is needed to complete the chain of reason-
ing, the word sharing, in its secondary sense, is given
the effe(5t of its primary meaning. The sharing per-
mitted to a creditor is confounded with the sharing by
virtue of a proprietor's title. ^ The misuse of the word
vitiates the test of partnership.
The link left out is the means of accomplishment,
which must precede the result. The incentive, which
operates upon proprietors, and induces them to join
in business to make profits, may be felt by others,
but it does not stimulate them to contribute the prop-
erty, which is the means employed to make the profits.
The end must not only be desired; it must be willed,
and the objed of the will is the joinder of proprietors
i50
Pt. 2, Ch. I. The Test. ^58.
in business. They will the joinder, which is partner-
ship, as the means to share the profits.
I. A percentage is the usual measure of a quota," but
the ascertainment need not be made by a rate or propor-
tion ; nor need the share be an aliquot part of the profits. ''
A round sum in instalments, taken in turn,^' an annuity,''
a royalty,^ rent,^ or any other way,^ is sufficient, if the
amount, however computed, is payable out of the profits.
2. " The distiucftion between taking profit as profit, and taking it not
as profit but as payment of a debt, is a familiar one, firmly estab-
lished by the aiithorities, but not always explained as clearl}' as it
might be. It is the distindlion between a partner and a creditor
obscurely expressed. Taking a share of the profit as profit, is tak-
ing it as his profit — as profit of his flour business- — as the profit of a
principal, — taking it in the capacity of a principal trader — an owner
of the profit — a partner: taking a part of the profit as payment of a
debt, is taking it in the capacity of a hired man or other creditor.
If A is clerk and creditor, we mean by his share of the profit what
is his when it is paid to him by his employer, but, until then, is his
in a figurative sense only. If he is a clerk and creditor, what is
called his share of the profit belongs, as a matter of absolute legal
title, exclusively to B until he pays it to A, and then belongs ex-
clusively to A : it does not, at any time, belong to A and B in com-
mon, or in any manner indicated by the ordinar}' signification of
the terms 'share of a partner.' But, if A is a joint principal, 'his
share' is 'the share of a partner' in the next profit. The indis-
criminate use of the word 'share,' signifying the amount of his
wages and debt if he is a clerk and creditor of B, and signifying his
ownership of a part of the profit in common with B, if he is a prin-
cipal is a cause of confusion. The distindtion between the two sig-
nifications of 'share,' is the distindlion between a creditor and a
partner." DoE, C. J., Eastman v. Clark, 53 N. H. 297 (1872).
3. The appointee of the proprietor takes through him,
and by virtue of his dominion (S54). The delegation of
power, if proclaimed, excludes the idea of proprietorship
in the recipient. He takes en autre droit. A contrail
to pay over the profits a fortiori exchides a title to them
as proprietor, and establishes a claim for them against
the proprietor. The ideal case of the merchant prince
of New Hampshire and the poor missionary could arise
only under the loose sense given to the word sharing.
" vSuppose a New Hampshire merchant, having gained a sufficient
" estate in trade, and desiring to continue his business for the indus-
" trial and charitable purpose of supporting a missionary in Ceylon,
"gives him a bond to pay him all the future profits of his business;
"and suppose the jDrofits are called 'net profits' in the bond: was
"there ever a court that would hold the missionary liable as a part-
" ner for the goods bought by the merchant in carrying on his busi-
" ness ? It would be evident that they both understood the missionary
' ' to be a creditor and not a partner ; that, by ' net profits ' they meant
151
>5^^
Thk Tkst. Tt. 2, Ch. I.
" the sun)lus of LToss i-rofits left after paying' all other creditors of the
•• busim-ss • and that, in the literal sens«-, there would l)e no net profits
••of "the husiiK-ss. Whv should the missionary he luil;le, especially
••scciiiir he was not to defraud the other creditors, but only to receive
"the hahmcc of profits left after they were all ])aid?" Kastman v.
Clark, 53 N- »• 34» (i«72)-
a ropnntiuion to parhn-r on business for services referred to profts.
' \ vS: 15 partners. a;,'recd to give C " lo p. c. on the business" for his
services as financial manager. Each might furnish capital at 7 p. c.
I'rofU and loss (Uvided: 1-3 to C, 2-3 Ijetween A & B, according to
lime Ihcy respedivelv worked. A & B brought bill against C, who
look no exception lo master's finding that he was a partner.— C's 10
p. c. liniitc'l to profits, because if business done at a lo.ss C would pay
biick 1-3 of commission on the gross amount. Funk v. Plaskell, 132
Mass. 58o(i.SS2).
b. Kx parte Chuck, S Bing. 469 (1832), ^52, n. 1.
c. Tak in ix profits in alternate layers, partnership. B sold a newspaper,
with the" plant, to C, for /150, payable, with interest, in instalments
«luring 7 years. B guaranteed iri5o a year to C, beyond annual in-
stalments, and C accounted for profits exceecUng such ^'150, and up
to /5fXJ. lo B, with right to take surplus over and above ^^'500, if he
lussumed /'250 of fxisting liabilities of the newspaper. A sued B for
jiajier supplied to C. — Liable. Because B & C intended to share the
profits. Barry v. Nesham, 3 C. B. 641 (1841),
d. In Colbeck cS: Co., ex parte Wheeler, Buck, 48 (1817), ^.57 n. 4.
e. Everett v. Coe, 5 Denio 180 (1848), {(57 n. 4.
f. Kent or profits. Corijoration leased its mills to A, and received, in
lieu of rent. 1-4 annual profits, half of which remained in business, at
compouiKl interest, until close of term. Corporation was sued as
n.irtner on bill of exchange given by A. — Liable as to third persons,
m a partnership for a purpose not ultra vires. Catskill Bank v. Gray,
14 Barb. 471 (1851).
A lent B Jr,ooc3, leased him store for a year, with son, C's, services
gratis. B agreed to invest f3,ooo in business, and manage it for a
year, rendering account to C, who should have 1-3 profits, and might
demand re-i)ayincnt of loan and possession of store at close of year. —
A liable as partner, in suit bv creditor. Cushman v. Bailev, i Hill 526
X. Y. (i84.y
g. Surety who shares profits of working: eontrafl, a partner luith con-
IraRors. H was surety for C & D, contradlors for construdlion of a
railroarl. They agreed to give him, for going security, 1-4 clear
profits, also 10 p. c. on advances, and to secure him, by orders on the
company, for money due them. A, a mason, sued B, as a partner of
C iS: 1), for work and labor done. Obtained verdi6l.— Sustained. B's
sharing in ])rofits of working contradl made him a partner. Heyboe
v. Hurge. 9 C. B. 431 (1850).
J/nldintr out ehari^es the party who permits it, although creditor did
not know oftt, as does bargain for rate varyine; with sales. B stipu-
lated to transfer her customers in the coal business to C, and to rec-
ommend others to him; and C agreed, in return, to pay her an an-
nuity and two shillings a chaldron for coal sold to customers whom
she should induce to buy of him. A suedB&Cfor the price of coal.
Evidence showe<l that bills to her customers were made out in the
joint names of B & C, though A did not know it, and did not sell on
152
Pt. 2, Ch. I. The Test. is9-
her credit. — Liable, because she suffered her name to Le heUl out,
though A did not know it when he made the sale. The contrail for
a rate which varied with the sales would also make her a partner.
Young V. Axtell, 2 H. Bl. 242, arq-iiciido (17^4).
Husband entitled to wife's profits, liable as partner, though not
bound by contracl. B, married woman, and C entered into partner-
ship, B contributing her separate estate. A brought a6lion against
B C & D, B's husband, for firm debt. — Recovered. B under disability,
but D, who shared his wife's profits, liable as a partner. Miller v.
Marx, 65 Texas 131 (18S5).
§59.
^3 tl)e nlension of tlje niorii ' sljariug ' tuoulii make aurg-
bo^n a partner mljo fiartook of tl)e profits, tl)c law mas prc-
scrnciJ bn ^el^nncl tl)e effect of a partnersljip, miless tl)c sljarinoi
mas in tl)e mpacitn of a principal or proprietor.
On account of the ambiguity created by letting non-
proprietors, as well as proprietors, ' share ' the profits,
it became necessary to re-establish the distin6lion be-
tween the two kinds of share-takers. The adherence
to precedent, which made the Bar and the Bench cling
to the original e£fe(5l of sharing profits, unless an
exception was forced upon them, served the turn, and
enabled them to tide over, by tradition, the period of
uncertainty. Thus the original meaning of the word
' sharing,' though broken down as its exclusive import,
has nevertheless been preserved. The word retains
its primary signification, until it is overcome b}^ proof
of its use in the secondary sense. The primary mean-
ing prevails, and controls the construction of the term.
The context must destroy this implication of owner-
ship, and substitute a different relation, i. e., of debtor
and creditor, or master and servant, in order to over-
throw the original import of the word.'
^59. TiiK Test. - Pt. 2, Ch. i.
The original meaning of the word has been restored
in the modern definition of a partner: One who shares
the profits 'as profits,' in other words, as a proprietor.
The exceptions established the secondary sense of the
word, or sharing a^ a non-proprietor. But they were
not permitted in derogation of the rule, which em-
bodied the primary meaning, until they were justified
by proof of sharing as a non-proprietor." The result
is expressed in the statement that sharing the profits
makes out 2. prima facie case of partnership, that is to
sav, the law interprets the phrase sharing the profits
in the priniar}^ sense, unless the presumption is re-
butted b}' proof of its use in the secondary sense. '^
If the sharing did not indicate a proprietor, there
would be no reason even for the prima fades. The
sharing would not be evidence of any relation, until
that relation was proved, when the evidence w^ould be
superfluous. The sharing being consistent with the
relation of debtor and creditor, or master and servant,
as well as with that of partners, would not tend to
prove one relation more than another (§54, §55 n. 4).
i Profits presumed to be shared by title of proprietor, unless a different
rii^/it IS proved. A sued B & Co. on promissory note for ^2,700, eu-
•lorscd to him by B cS: Co. Court charj^^ed : i, that demand at place
of husiness, or residence, of a partner was sufficient ; 2, that if C was
interested in the profits of the Inisiness, or represented himself to be
a partner he was liable.— Judgment for A. Sharim? profits /r/w^?
facie evidence of partnership, and unless proof of sharing was in a
difTerent capacity, conclusive. Fourth National Bank of vSt. Louis v.
Altheiiner, 3 S. W. Rep'r 858, Mo. (1887).
2. Tlie exceptions to the rule, that a share in the profits
made the sliare-taker a partner, were based upon the fa6l
tliat the partaker was not a proprietor of the business.
The assent did not share the rank and dominion of the
principal. No one could be a partner who was not a
principal in the business. ='
First. The wa^es or salaries paid to employees are
notliing but stipends for ser\'ices rendered bv them. The
154
I
Pt. 2, Ch. I. The Test. §59.
payment out of profits does not subvert the relation of
master and servant. ^ The change is only in the mode
of payment ; a variable and contingent amount is sub-
stituted for a fixed sum, for the mutual benefit of both
parties. By making the wages dependent upon success
in the business, the servant has an inducement for his
exertions, and the master reduces his outlay.^
A share of the profits in addition to the salary does
not change the relation."
a. Unless a principal in the business, not a partner. A offered to
prove against an insurance company for an annuity. She belonged
to the class which participated in the profits, and they, with the bo-
nusses, were distributed annually. The company amalgamated with
another company, and was ordered to be wound up, but A never
assented to the transfer. Defence: A was a partner. — Proof allowed.
Company was not her agent. She had no voice in the management
or division of the profits, nor could she maintain a bill for an account
of them. In re Engl. & Ir. Ch. & University Ass'ce Societv, i Hem.
&M. 85(1863).
Paiia/cer of profits, unless a principal in the business, is not a part-
ner. B had a government coutracft for grave-stones, and employed
A to superintend work, at ^3 a day and 1-2 the profits. A brought
account, as partner, against B. — Account allowed, but no partnership,
because A was not a principal in the business. Hargrave v. Conroy, 4
C. E. Gr. 281, N.J. (1868).
Burckle v. Eckhart, I53 n. i.
b. Half profits for services no partnership. A rented and stocked a
country grocery, and paid for liquor license issued to B. B managed
the business for 1-2 the profits. His separate creditors levied on the
goods. A replevied. — No partnership. Title exclusively in A. Lamb
V. Grover, 47 Barb. 317, N. Y. (1866).
B furnished capital to start C in business, and gave him 1-2 profits.
A attached stock as propert}' of C. — Dissolved. Cnot a partner, and
property belonged to B. Pond v. Cummins, 50 Conn. 372 (1882).
B employed C, as agent, to sell or let land, giving him 1-2 profits.
B's devisee, A, brought ejectment against C, who claimed title as
partner. — Recovered. C simplv agent. Blight v. Ewing, i Pittsburg
275, Pa. (1856).
c. Profits as part of salary no partnership. A received 1-3 profits in
addition to salarj'. In suit by firm, defendant objected to non-joinder
of A as plaintiff. — Should not join, because not partner. Vanderburgh
V. Hull, 20 Wend 70, N. Y. (1838).
Insurance in B's name, carried on by A, as agent, subje<ft to B's
control. A received salar}^ of ^150 a ^-ear and 1-5 profits, B 4-5 profits
and all losses. If unexpeAed loss occurred after annual division, A
to contribute to pay it, but not beyond his 1-5 profit. A l)rought ac-
count. — Did not lie, because no partnership. Ross v. Parkins, L. R.
20 Eq. 331 (1^75)-
Second. The principle of hiring is not limited to
menial servants, but extends to any employment, in
which the employee is subject to the diredlion and con-
trol of the principal.'' The captain who took command
155
559. '^^"'' Test. Pt. 2, Ch. i.
of a ship diirinf^ a whaling cruise for a share in the
profits, instead of a salary, is an employee, and not a
partner of the owner.'' The cashier and bookkeeper of
an establishment, who received a share of the profits for
his salary, did not become a partner, because the money
payable for his services was the earnings of the busi-
ness.' A clerk employed by a firm to drum up custom-
ers is not one of the heads of the firm, because he shares
the profits of his sales, less his proportion of the general
expenses of the business. He is limited to the faculty
of .selling, and has no other capacity in the business.
The profits do not change his status.*'' The surgeon and
apothecary, who sold out his shop and good-will, stipu-
lating for 1-2 the profits during the year while he intro-
duced his customers and patients to the buyer, is not a
partner.'' He remained in his drug store during the
year, in order to transfer his business to the purchaser.
He did not become a partner by sharing the profits. He
reversed his position as principal, in order to substitute
the vendee as his successor. The interval was not a
joint reign, but simply the beginning of a new dynasty.
An attorney, who took half the profits for his fee, is not
a partner with his client.' The attorney a6ls by the di-
rection and under the control of his client.
The amount of profits the employee bargains for does
not afifecl the relation, except as evidence that the form
of payment is meant to disguise a partnership. A man-
ager, who received 40 p. c. of the profits, would be an
employee, unless other attributes showed him to be a
proprietor of the establishment.^ He had no badge of a
partner, except a share of the profits. He had no au-
thority nor liability, but was subje6l to the diredlion
and control of tlie principal.
d. Salary. A B & C had a contrail to build turnpike. D agreed with
them to construct a portion, dividing profits with them, in propor-
tion to work and expenditure. D brought assumpsit for his share of
profits. Defence: vShould have brought account. — No partnership.
Muzzy V. Whitne}', lo Johns. 226, N. Y. (1813).
e. Sharing profit and loss 0/ cruise no partnership. B, the captain,
had 1-5 the profit and loss of the ship and cargo on a voyage. C, the
owner, sold the ship and cargo while at sea, to D, to secure his ad-
vances. B reported his arrival at Cowes to I), who did not take pos-
session, and alleged, as excuse, that B was a partner. — Bound to take
possession, in order to complete title, and B's share was in payment
of wages. Mair v. Olennie, 4 M. & vS. 240 (1815).
A was captain for 3 years whaling cruise, at 15 p. c. profits. B,
owner, recalled ship before expiration of period, and A sued for
156
I
Ft. 2, Ch. I. The Test. §59.
breach. Defence : Partner. — Recovered. Brown v. Hicks, 24 Fed.
Rep'r Si I (1885).
/, Pro})iisc for share 0/ patent, for assistance in perfecting it, no sub-
stitute for salary as clerk. B had salt works, and A adted as his
cashier and bookkeeper lor 4 years, without any agreement fixing a
salary. Then, according to A's testimony, ^.250 a year was fixed as
his compensation. During the 4 years, A also assisted in perfedling
a patent for manufacfturing salt, and B promised him a small share in
it for his assistance. A offered to prove for 4 years arrears of salary.
— Reje6led below, because A looked to his share in the patent for
remuneration ; above, because, though he was a clerk, the evidence
was insufficient to fix the amount of his salary. Ex parte Hickin, 3
DeG. & S. 662 (1852).
g. Salesman not a partner. A, who had previously employed B to
secure custom, and had given him a commission of 15 p. c. on the
profits of orders secured by him, agreed to share with B the profits of
his orders after dedudling the expenses of procuring and filling them,
and a rateable part of the rent and maintenance of A "s shop, in which
the business was transadled. A sought to prevent B from colledling
draft received in payment of a debt from customers secured by him.
—Defence: Partnership. — B not a partner. Though engaged in the
business, he had no control over it; no right to receive payment for
sales which he secured or negotiated ; he was salaried by A. Sharing
profits is only one of the consequences of partnership. Andrews v.
Pugh, 24 L. J. Ch. 58(1855).
h. Profits may be shared as a salary. B, a surgeon and apothecar}-,
sold his pra(5lice and drug store to A, for ^900, part cash and balance
at end of the year. B, who continued to attend to the business, and
introduced A to his patients and customers, received 1-2 the clear
profits of the business for the year. A sued B for moneys received
by him, — Recovered. No intention to be partners, but B received
the profits as a salary. Rawlinson v. Clarke, 15 M. & W. 292 (1846).
i. Purchase of claims by attorneys for half profits in lieu of fees neither
a partnership nor a trust. B & C, attorneys for A, bought prize-
claims for half profits. A demanded account, judgment for balance
due, and assignment of claims producing less than cost. He arrested
B on execution, as a defaulting trustee. Defence : Partnership which
excludes a breach of trust. — Adlion, in substance, for money had and
received sustained. No partnership and no trust. Prouty v. vSwift,
51 N. Y. 594 (1873).
j. Salary, equal to a share of the prof Is, don't convert manager into a
partner. B & C agreed to give A, as manager, a salary equal to 40
p. c. of their profits, and reserved the right, upon a breach of the
agreement by A, to discharge him after 21 days notice. They ex-
erted the right, and excluded A, who brought bill for injundlion and
specific performance. — Bill dismissed, because sum equal to profits is
not profits. vStocker v. Brockelbank, 15 Jur. 591 ; ^ Mac. & Gord. 250
(1S51).
Third. The exception presents itself in another as-
pect, and verifies the principle by a different applica-
tion. The servant or employee could be indi6led for
larceny, although entitled to a share of the profits. ^ If
a partner, his right to deal with the stock would be a de-
157
§59- '^lii"^ Test. Pt. 2, Ch. i.
fence to the charge. The exception admits that a part-
ner must be a proprietor, and that sharing- the profits
per se does not make him a proprietor.
k. Si'n'ant may be paid by a s/iair of the profits. A owned a colliery,
aud employed B, as a captain, to carry coal to market and sell it,
giving him 2-3 of the diftereuce between the cost price at the mines
aud tUe market price, for his services. B sold coal and embezzled the
price. A indicled him for larceny as a servant. Defence : H joint
owner of the money. — Convicted. B employed by A to take coal to
market and bring back money to him. Sharing profits the mode cf
pavmeut, which did not convert B from a servant into a jjartner.
Hartley's case, Rus. & R. 139 (1807).
Sharins; profit doesn't involve sharing loss, inter se. \\ agreed to
taVe charge of glebe land for A, at 15 sh. a week, until the following
Michclmas, and afterwards at a salary of £2^ a year, and 1-3 clear
annual profits, after deducfling all expenses, rent, labor and interest
on capital. B was indicled as a servant, for embezzling A's property.
Defence: A's partner. — Convi6led. No sharing of loss z;;/'rr.yr. Reg.
V. Wortley, 15 Jurist 1 137 (185 1).
Clerk cuith share of profits liable on capias as trustee. A furnished
capital and B his services for 1-2 the profits. A took B on capias in
suit for money received in the business. Defence: Partnership. —
Capias proper. Profits for services. B held as trustee for A. Mer-
win v. Playford, 3 Rob. 702, N. Y, (1865).
Fourth. The agent for the management of the pro-
prietor's business is but an employee, though he ap-
proaches in dignity a proprietor. As long as he does
not a(5l on his own behalf in condu6ling the business, or
deal with others as a principal, he is not a proprietor. '
The moment he a(5ls for himself, or as if he were the
principal, he becomes, oris liable as, a proprietor. "' The
decision which established the exception did not make
a revolution in the law of partnership, although it is
generally so regarded. The case did not even create
an innovation or mark a new departure in partnership
law." The exception falls within the recognized class
of subordinates, and hardh' deserves a separate classifi-
cation.
A creditor, at one period, was not compelled to exe-
cute a deed and release the debtor who made an assign-
ment, because by taking the debtor's business, and
working it up, he ran the risk of becoming a partner."
This position was not maintained. The taking charge
of the debtor's business was limited to the purpose of
liquidation, and was simply w^orking out the debtor's
debt. There was no profit in the business for the cred-
itor, who worked to relieve the debtor, and secure his
own claim. P It was different if the creditors took the
i.ss
f
Pt. 2, Ch. I. The Test. §59;
debtor's business and carried it on for their own profit,
without a resulting interest to the debtor, after his debts
were satisfied. The going into business made them part-
ners, and the debtor's failure served as the occasion.
The objec?t was to engage in the business, and not merely
to obtain payment of their debts.''
3. Profits prima facie evidence of partncrsliip. By specialty, B lent C
& Co. f 10,000 for one year, stipulating for interest and if amount of
profits of business exceeded |;io,ooo for lo p. c, of such excess. Bond
renewed four years in succession. B received profits under arrange-
ment, and upon his death C & Co. became insolvent. A sued B's
administrator on notes made by C & Co. — Non-suit. I'roilts, as
prima facie evidence of partnership, rebutted by evidence more
consistent with a loan. Meehan v. Valentine, 29 F. Rep'r 276, U. b.
C. C, E. D. Pa. (1886).
Profit called consideration for loan, a partnership, unless excluded
by proof of a different relation. B lent money to C, to buy and sell
cotton, wool and hides, for part profits of business. A sued B for
merchandise. — Recovered. Partnership not negatived by proof of a
different relation. Cothran v. Marmaduke, 60 Texas 370 (1883).
Sharing profits prima facie partnership. A furnislied capital, B
his services, and divided the profits. Both sued C for price of goods
sold in name of A & Co. Defence: C not a partner. — Recovered.
Greenwood v. Brink, i Hun 227, N. Y. (1874).
Share in profits prima facie partnership, and amount not dependent
on contribution to stock. A sued B for account and his quota of loss.
B contributed his services and I64 out of f 9,000. He was entitled to
1-2 the profits. — Liable. A share in profits prima facie partnership,
and need not correspond to contribution to capital. Hodgman v.
Smith, 13 Barb. 302, N. Y. (1852).
/. Creditor receiving payment from profits of business continued under
his management by debtor, is not a partner. B manufadlured ma-
chinery, which was sold on commission by C. Being largely in-
debted to C for advances, B, in order to secure him, surrendei-ed the
control and management of his business to C, until his claim should
be reduced to |io,ooo, and also agreed to contra<5l no debt without
C's consent. C appointed a superintendent to take charge, and B
continued the business imder his diredliou. B gave notes, for ma-
terials, to A, who sued C as a partner. Court charged that carrying
on the business under the arrangement made C a partner. — Reversed,
because there could be no profits while C's claim was unpaid, or if C
did take profits he received a fixed sum, and not a variable amount
of profits, as such. Brundredv. Muzzey, i Dutch. 268, N.J. (1855).
Carrying on debtor's business for creditors' payment does not make
them partners ivith the managers. B failed, and assigned his busi-
ness to C and 4 others, trustees, who carried it on, subject; to the con-
trol of B's creditors. The profits went as B's property, to pay the
creditors, who accepted them in satisfaction, and as soon as they
equaled his debts the business reverted to B. D & E were appointed
trustees, but D never adted, and E resigned, after acSling for 6 weeks.
Subsequently C accepted draft drawn by A for the price of materials
used in the business. A sued D & E, as acceptors. — Not partners.
The sharing profits was a mode of payment, and the trustees were
agents of the debtor, and not of his creditors. Cox v. Hickman S H
L. 268 (i860).
159
§59
The Trst. Pt. 2, Ch. i.
m. Contributions (>y creditors to debtor's business, and sharing the
profit and toss, inaA-e thon partners. R, who bad an oil mill in Bos-
ton, failed, owing A & C, in Boston, and I), in London. By an
aoreenitMit, for one year, subsecjuently extended for two, A imported
seed from Calcutta for the mill, receiving, in payment, B's draft on
D for 1-3, and on C for 1-3, and B's note for the final 1-3. A insured
the seed on the voyage, and on a loss accounted for any surplus to
the other three, and claimed any deficit out of the proceeds of the
mill. D sold the cake, and accounted for the proceeds. Any loss
on the contribution of A, C or D was to be made good out of the pro-
ceeds of the business. B received a salary, and the four divided
profits equally. The three agreed not to sue B while this arrange-
ment lasted, and took a conveyance of his real estate as security.
A imported seed, which fell in price during the voyage. D refused,
in advance, to pay draft for his share of price. B, therefore, was
unable to take the seed. A sold it at a loss, and sued D on the con-
tradl for damages. Defence: Partnership, and A should have de-
manded an account. — A partnership, but contraA to contribute ante-
cedent to the relation. Wills v. Simmonds, 8 Hun 189; 51 How. Pr.
48, N. Y. (1876).
n. Creditors, who let insolvent trade under their inspeHion and con-
trol, and take his receipts, air not his partners. B, a horse dealer,
assigned, for creditors, to A, trustees. The deed allowed B to carry
on the business, at a weekly salary, under the orders of A, who might,
if B disobeyed them, take possession, and the receipts went to A's
account. B continued the business in hjs own name, and contra(5led
new debts. He disobeyed A, who took possession of his stock and
trade. Two days later B committed an acfl of bankruptcy. A claimed
horses in hands of third persons, and B's assignee in bankruptcy in-
terpleaded, on ground that A was B's partner, and liable for debts
contra6led by B under A's direction. — A recovered. He was not a
partner with B, as he had no interest in the profits while B carried
on the business. B was solely interested in them, as a fund for the
payment of his debts. Though A had control of business through B,
who contradled debts in its management, A's exertion of his power
reserved by the deed to take possession of the stock, was not a fraud
upon B's creditors, who knew nothing of the secret arrangement.
Price V. Groom, 2 Exch. 542 (1848).
Creditor bound by assiqntnent, which continues debtor's business,
if only for liquidation. Assignment by C, a debtor, to A, a trustee
for creditors, to wind up C's business, pay expenses, and apply the
proceeds in payment of his creditors. A, in his discretion, might
carry on the trade and employ C to condu6l it. B, creditors of C,
obtained judgment against him, and seized the goods, on the ground
that, as the assignment might charge them as partners, it was void.
A claimed the goods in a feigned issue. — Assignment valid. The
business coiild not be carried on except for liquidation, and the credit-
ors incurred no risk of l:)eing held as partners. Janes v. Whitbread,
II C. B. 406 (1851).
a. Creditor not bound to join in deed of assignment to carry on debt-
or's business for their benefit. Assignment by C, a debtor, to A,
trustee for creditors, who should execute deed. The trustee was to
carry on the business, pay costs, reimburse himself, and divide the
profits among the signers in payment of their claims, and turn over
the surplus to C. B, a creditor, who did not sign deed, obtained
judgment and seized goods which A claimed in a feigned issue. —
160
Pt. 2, Ch. I. The Test. §6o.
Deed invalid as to B, who was not bound to join and incur risk of
being held a partner. Owen v. Body, 5 A. & E. 28 (1836).
p. Cox V. Hickman ; Brundred v. Muzzey, supra.
q. Wills V. Simmonds, supra.
§60.
(J()e Mstinctton bettumi profits auti a sitm equal to profits is
bascii upon sl)aring tl)e protits as a proprietor auti sl)ariiun tljem
as a non-proprietor.
The reasoning to support the distindlion admits this
foundation. The sharing was called a commission,
which might correspond to a rate of profits, but could
not give a right to them. The commission, so the
argument ran, is a debt due hy the partners, not a
joint right with them. The difference between a
commission on the profits and a share in the profits
is measured by the opposition which exists between
a right and an obligation. The sharing is an a(?t
which recognizes a title of ownership, vested in differ-
ent claimants, and gives e£fe6l to the right, by dividing
the fund between them. The a(5l is neither a gift
nor a bargain and sale, and would be designated a
theft, unless the taker could establish a proprietary
right to the fund. No stranger can take a share of
the profits any more than he can take control of the
business. The sharing cannot be made, except among
co-proprietors. In short, the sharing is restricted to a
proprietor, and the non-proprietor has only a claim
against the proprietor.'
Now, add that the charaCler of the a6l is a fixed faCl,
which cannot be altered by phrases, and the result is the
161
§6o. The Test. Pt. 2, Ch. i.
distindlion stated. The efFe6l of the contra6l is a con-
clusion of law, which is paramount to the intention of
the parties. No arrangement can be devised which
will enable a stranger to secure the benefits of a part-
nership without incurring the liabilities of a partner.
The law would not suffer itself to be circumvented by
a subterfuge. The test of sharing the profits, which
established partnership as a conclusion of law, could
not be vitiated by making it a play of words. Calling
a share in the profits a debt, would not make it so,
unless it was a debt in reality. The parties, it must
be borne in mind, do not regulate the matter, but it is
determined by the real chara6ler of the transa6lion.
To permit them to settle the question, and that, too,
by a phrase, would be to put a creditor's right in the
hands of his debtors, and let them juggle with it at
their caprice. The partners cannot change a princi-
pal's position by calling him a creditor. The fa(?t lies
back of language, and the relation is fixed by the fa(5l."
1. A commission on profits is opposed to a share in them. B, manu-
fadlurer, let C, merchant, a store and lumber yard, agreed to pro-
vide labor and material, for shovel handles and other implements, to
be paid for by goods, at retail prices, out of store, which C should
stock and carry on. and, for additional compensation for store and
supplies, a commission of 50 p. c. on the profits of the business. B
bought lumber, for working up implements, from A, who sued C for
price. — Judgment for C. Dunham v. Rogers, i Barr. 255, Pa. (1S45).
Stocker v. Brockelbank, 15 Jur. 591; 3 Mac. & Gord., ^59, n. j.
Share in a sum equal to profits. A employed B as superintendent
in brush fadlory, giving him, in lieu of salary, "sum equal to 1-2
profits." B withheld certain brushes, notes and cash proceeds of
sales. A brought detinue. Defence: Should have brought bill of
account. — No partnership. Brockway v. Burnap, 16 Barb. 309, N. Y.
(1853)-
Employee, at salary measured by profits, not a partner. A, em-
ployed by B & Bro., at a salary to be measured by profits, brought in-
junction to restrain them from mortgaging and selling land bought
with firm funds. — A had no standing to maintain bill, as he was but
an employee. McMahon v. O'Donnell, 5 C. E. Gr. 306, N. J. (1869). .
2. Title to profits not disguised by calling it a claim. B & C, about
to put |io,ooo in D's business, and take 1-3 profits, changed the plan,
and lent D |io,ooo, each taking his note for fo.ooo, payable in 3 years,
I 62
I
Pt. 2, Ch. I. The Test. §6i.
and stipulating for a sum equal to i-6 profits, as compensation for pro-
curing loan. They also aided D in obtaining further funds for the
business, but took no part in the management. A lent D fi 2,000,
and sued B & C as partners. — Liable. Parker v. Canfield, 37 Conn.
251 (1S70).
§6L
6l)arinoi botl) profit anii loss iboes not make partners oftlje
recipients, roljo lio not take as proprietors.
A division of both profit and loss was the conclusive
test of a partnership between the recipients.' The
sharing of profits implied a corresponding burden of
loss, but when the loss was expressly assumed, the
partnership could not be explained away, and the lia-
bility being admitted, there was no obje6t in denying
the relation.
The error of arguing a partnership, however, from
the word sharing, in its indiscriminate sense, extends
to sharing losses. The agreement to share losses has
no effe6l, unless the contractor is a proprietor." Then
it identifies him with the business.^
If the property element is disregarded, the identity
of interest ceases to be a clue to explain the transac-
tions of the parties, and their agreement to divide the
losses would also cease to prove a partnership. The
division might be an independent agreement, and not
indicate that the parties meant to be co-principals and
co-agents in the transadlion.^ The proof of partner-
ship would be limited to the intention of the parties,
and that would be a secret which they might have
every interest to deny.
163
§62. The Test. Pt. 2, Ch. i.
I. "An agreement to share profits and losses may be said to be the
"type of a partnership contra(5t. "Whatever differences of opinion
"there may be as to other matters, it admits of no doubt whatever
" that persons engaged in any trade, business, or adventure, upon the
"terms of sharing profits and losses arising therefrom, are partners
"in that trade, business or adventure." i L,indley, Law of Partner-
ship 19.
2. If not a principal, he is not a proprietor or partner.
§57-
3. If the losses were not shared, the indicia of title to the
property would not be complete, and the profit-sharer
would not take by virtue of a property-right.
Shariui!; profits, and not tosses,- not partnership inter se. A owned
patent. B advanced money to build machine, and stipulated for re-
imbursement and 1-4 receipts from working or sale of machine. He
also bought 1-4 of patent right. On sale, each had refusal of the oth-
er's interest in patent. Neither could bind the other by contract. A
sold machine, and kept the money. B sued him for advances and
conversion. Defence : Partner could not sue co-partner for fraudu-
lent removal of firm property. — No partnership ijiter se, because they
shared nothing but the profits ; B bore all the expenses. Cummings
V. Mills, I Daly 520, N. Y. (1866).
4. Chafifaix v, Lafitte, ^57, n. 3.
§62.
0l)artng tl)e gross proftts ^ocs not make tl^e recipient a
partner.
A division of gross profits may occur between co-
owners who join in a sale, or between two persons
who unite in a purchase and re-sale, where each car-
ries independently the burden of his own purpart, or
between the owner of the thing sold and one who con-
tributes only services. A joint purchase at the Com-
mon law does not make a partnership, nor does a sub-
sequent sale have that effe(fl. On the re-sale, a division
of the gross produ6l is treated like a division of the
article purchased. Each part}^ to the transaAion
164
Pt. 2, Ch. I. The Test. §62.
bears his own expenses, and has no claim for contri-
bution. The proceeds of the sale are substituted for
the thing sold. The process, by itself, does not con-
stitute a partnership, no matter how often it is repeated.
In a partnership, on the other hand, each party is en-
titled to credit, in the settlement, for his contribution
and expenses. Only the net result is divided.
If sharing the gross receipts did make the recipients
partners, it would be on general principles, because the
sharing identifies them as principals in the business.
An analysis shows that they are not identified in in-
terest. Gross profits, in the idiom of lawyers, are
gross returns. Net profits are the excess of returns
over advances; the expenses are deducfted, and the
produ6l is divided. Sharing the gross returns is tak-
ing the benefit of the contribution; it may be capital
stock, or it may be capitalized skill, without account-
ing for any part of it to reimburse the co-partner for
losses or expenses. The share is independent of
profits, and may be taken when there is a loss.^ The
sharing is not measured by the success of the busi-
ness and the sharer's interest in it, but is a sum fixed
by a standard apart from the business. Though the
sum may come out of profits, if they are sufficient,
it will, nevertheless, come out of somebody, though
there be no profits. The fixed amount, which is in-
dependent of the success or failure of the business,
betrays a stranger's interest, and not a principal's.
A proprietor's share springs out of the business, and
varies according to its vicissitudes. A principal who
made no conribution himself, could never take his co-
partner's, and make gain out of his co-partner's loss
and the failure of the business.
165
§62. The Test. Pt. 2, Cii. i.
The exceptiou under discussion affords a verifica-
tion of the proposition, that sharing the profits makes
a partnership between none but co-proprietors. The
gross returns include profits, and should, unless the
profit-sharing, which makes a partnership, was limited
to proprietors, convert the taker into a partner, be-
cause he-hopes to get the profits. This being so, he
should be none the less a partner, because he bargains
for an equivalent out of capital, although there should
be no profits. On the other hand, however, the gross
returns are inconsistent with a co-proprietor's interest
in the business, because his share varies with its suc-
cess or failure.
I. The captain of a barge, who received 2-3 of the advance in price at
the market over the price at the mines, would not be a partner with
the owner of collier)- and boat (f^sg n. /:). The freight is put against
the home price, and the captain's services against the owner's outlay.
The owner pays his own expenses, and the captain includes his in
the 2-3 enhancement. The cost of transportation might exceed the
increase in price, or there might be no increase. Then the captain
would not share profits. If the cost of transportation just equalled
2-3 of the enhancement, the captain would get no profits, while the
owner would get his share in full. There is no sharing of the profits
which are aclually made in all and every event.
Quarryiiig for half proceeds of sale, not joint bejiefit. B, owner,
agreed to quarry marble, deliver it on cars, and pay half cost of trans-
portation to A's mill ; A to build mill, manufadture and sell marble,
and divide proceeds. B's credit failing, A paid claims against him,
with his knowledge, and sued for reimbursement. — Recovered. Pay-
ments at request; no joint benefit or partnership, for B might gain
while A lost. Flint v. Eureka Mfg. Co., 55 Vt. 669 (1S81).
Sharer of gross 1 ct urns vot a partner. B C & D consolidated rival
lines, and joined in runninga single-stage line in the White mountains.
B & C furnished a coach and two six-horse teams, with drivers and
other appointments, and D furnished an equal amount of stock. A
sued for the price of corn sold to B & C. D's defence : Not a partner.
They shared not the profits, but the gross receipts. Court charged that
they were jointly liable for supplies.— Verdict for plaintiff set aside.
I) not a ])rmcipal in the business of B & C. Eastman v. Clark, 53 N.
H. 276 (1S72).
The owner of a lighter and a lighterman were partners if
the)' shared the profits, but master and servant if they shared
the gross returns. '^ The lease of a ferry for 1-2 the gross re-
ceipts did not make the proprietor and lessee partners in
166
Ft. 2, Ch. I. The Test. §62.
carrying on the ferry.'' The expense of keeping up the
lighter and running it might exceed the profits. Then it
would be run at a loss, but the hirer would get his quota,
which would come out of the owner, who had to pa>- for
the expenses. The same would be true of the ferry rented
to the ferryman. The gross receipts divided by the theatre-
owner and the stage manager*^ are thus explained. The
owner would get his rent, although the manager made no
profits out of his management, and the manager would take
his moiet)', although the rent would not pay the expenses of
the building. In either event, the one would make out of
the other's loss.
a. Dry v. Boswell, ^44, n. 3.
b. Gross receipts. A leased ferry to B for 1-2 gross receipts. C's horses
were drowned through negligence of B's employee. C sued A as part-
ner. — No partnership. Heimstreet v. Rowland, 5 Denio 68, N. Y.
(1847)-
c. Gross profits as rejit not partnership. B, owner of theatre, arranged
with C that he should use the theatre, provide a troupe, seledl plays,
and have exclusive control of the management: that B should pay
for printing, advertising and lighting, and should supply door-keep-
ers, scene shifters, supernumeraries and a band. B retained 1-2 the
receipts taken at the door, as payment for the theatre, and C took the
other half B was sued as C's partner, by A's assignee, for infringing
his stage right. — ^Not liable; he shared gross profits, which he took
in lieu of rent. Lyon v. Knowles, 3 B. & S. 556 (1863).
The sailors who ship for a cruise on the lay plan, do not
become partners in the undertaking.'^ They secure the bulk
of the proceeds, but sharing the gross receipts does not asso-
ciate them as a co-operative partnership.
d. A lay voyage does not convert the sailors into partners. A shipped
as a sailor for a whaling voyage, and B, the captain, agreed to give
him, for his services, 1-190 of the oil. A sued for his lay. B applied
for non-suit. — Overruled. A received the proceeds as wages, and not
as a partner. Wilkinson v. Frasier, 4 Esp. 182 (1805).
A carrier who provides the equipment and supplies for
his section of a through line, is not a partner with connect-
ing carrier, if he simply shares the gross receipts of the
business.** But if there is any joint expense, as, for exam-
ple, the payment of tolls out of the aggregate fares colle(5led,
then there is a sharing of net profits, and the carriers become
167
;;62. The Test. Pt. 2, Ch. i.
partners. The expenditures of each, in maintaining his
seclion, is treated as a continuing contribution.^
e. S/aot' proprietors not liable for keep of a separate proprietor' s horses
usecthy them in running their stage-coach line. B, C & D, who owned
a staj^e-coach, agreed to run it on a route and share the profits. Each
supplied horses for a part of the course. A sued C & D for the price
of hay ordered by B for his horses. Judge charged jury to find for
plaintiff, because C & D were benefitted by keeping up B's stock for
the joint service. Barton v. Hanson, 2 Camp. 97. But the instrudliou
was overruled and a new trial ordered. 2 Taunt. 49 (1809).
ConneiHing lines; forwarding no partnership. A & B owned con-
necling lines. A agreed to forward freight and divide receipts accord-
ing to schedule of rates. La'it carrier to advance accrued charges,
upon transfer to him, and collect whole bill on delivery. C made
through shipment. B, as last carrier, sued him for total freight. C
alleged partnership, and set up non-joinder of A, in order to plead
set-off. — Recovered, No set-off against A. He was not a partner,
because only part of earnings or through freights were pooled, and
parties remained independent as to their separate lines. C was liable
to B, because he had accepted goods from B under till of lading which
made total charges payable to B. Merrick v. Gordon, 20 N. Y. 93 (1859).
Connecting lines. Connedling lines. A, B and C, from N. Y. to
San Francisco, via Panama. N. Y. agent sold separate tickets for
each line, and accounted to each line separately ; although advertise-
ment of trip was joint, and announced merely through fare. Each
line bore its own expenses and took its own profits. Line C was pre-
vented, by wreck of steamer, from transporting plaintiff from Isthnms
to Sau Francisco. He sued C for return of whole fare. — Because no
partnership, recovered only fare from Isthmus to San Francisco.
Briggs V. Vanderbilt, 19 Barb. 222, N. Y. (1855).
N. Y. agent of connecfling lines sold through coupon tickets to
Montreal. Traveller kept valise with him in passing over line A, and
checked it on line B to destination. He sued line A for loss of valise.
— No partnership, because lines independent, though connedling.
Straiton v. N. Y. & N. H. R. R., 2 E. D. Smith 184 (1853).
Agreement between railroad company and proprietor of canal to
forward goods and passengers. Fares and freights to be shared, in
proportion to lengths of respedlive lines. Offices maintained, at
joint expense, at termini. Plea of partnership to acSlion of assumpsit
for share of receipts in hands of defendant. — No partnership. Mohawk
& Hudson R. R. v. Niles, 3 Hill 162, N. Y. (1842).
Connecting railroads which share through freight and iintraced
losses, are not partners. A shipped horses by railroad B, which gave
him receipt for through freight. He sued connedling railroad C for
injury. B & C, by contract, each in the joint business bore his own
losses, unless they could not be traced, and then in proportion to his
share of the through freight. Contract excluded.— Verdi6l for C.
Law made each liable for its own negligence, in spite of B's contract
for tlirougji transportation. Contra(5tdid not change law, or enure to
A's benefit, but merely adjusted the losses between B & C. Aigen v.
Boston & Me. R. R., 132 Mass. 423 (1882).
Graf? returns. A & B worked connecSting coach-lines. Each
worked hi.s own line, and sold tickets over total route. Fares divided
in proportion to length of respeftive lines. A sued B in assumpsit
tor balance due. Defence : Partner must bring account.— No part-
168
Pt. 2, Ch. I. The Test. §62.
nership, because no sharing of profits and loss ; merely division of
gross returns. Pattison v. Blan chard, 5 N. Y. 186 (1851).
f. Conneiling lines. A, B & C ran connedling coach lines, each re-
taining all the profits and bearing all the losses of his own se(ft;ion.
When necessary, an extra coach was run through on joint account.
A statement of account, made by a common agent of A and B, showed
that B had received more than his proportion of fares colle<5led. A
brought assumpsit against him for excess. — Suit maintained, because
no partnership, except for extra coach. Wetmore v. Baker, 9 Johns.
307, N. Y. (1812). Approved in Champion V. Bostwick, 18 Wend. 182,
{1837).
ConneBing lines: and eaimings pooled. A & B owned connecting
stage-coach lines. They pooled all fares from through and way pas-
sengers, paid all tolls out of this fund, and divided the residue between
them, in proportion to lengths of respeAive lines. B's coach ran into
C's carriage, and threw C out. He sued A & B, as partners. A denied
partnership. — A liable as partner. The use of each partner's stock is
a sufficient capital. By the agreement, the tolls were the only joint
expense. Sharing aggregate fares, less tolls, is sharing net profits.
Champion v. Bostwick, 11 Wend. 571, s. c. in error; 18 Wend. 175
(1837).
Co-operatton in running a line charges each member of the associa-
tion for the entire route. B, C & D, teamsters, who had been part-
ners for the entire route, divided the course into sedlions, and each
hired the wagon, provided everything necessary to run it over his
seAion, and shared the profits. A sued B & C for damages done by
a driver employed by D. — Liable. Waland v. Elkins, i Stark. 272 ;
s. c. Noland v. Olbins, 13 Petersdorf 106 (1816).
Connefiing lines ivith common agent. A common agent of con-
nedling lines contra6led to transport goods frorii point on line A to
point on line B. Goods lost on line B. Owner sued both jointly.
Proprietor of line A claimed to be forwarders only. — ^Jointly liable on
contracft, though they shared neither profit nor loss. Slocum v. Fair-
child, 7 Hill 292, N. Y. (1843).
If the expense of a vehicle is divided, and a rate paid
for carrying the mail, with a sharing of profit and loss on
other matter, the sharing takes the lead, and fixes a part-
nership between the contractors, although the rate might
pay or be a pure loss.^ The identification in part, indicates
a co-ordination in all.
g. Profits not a wage fund. A agreed to pay B ^,"18 for a cart, and to
carry the mail for ^9 a mile per annum. They shared the profit and
loss of parcel carriage and the expense of keeping cart in repair. On
a separation, A sued B for his f() a mile, and for his share of profits.
Defence : A was a partner. — No recovery. Sharing the profit and
loss makes a partnership, and is not a measure of wages. Green v.
Beasley, 2 Bing. 108, N. C. (1S35).
169
§63. T^HE Test. Pt. 2, Ch. i.
§63.
(^l)c conunission on sales is like a sl)are of tl)e gross returns.
The commission is payable out of the price, whether
the sale was made at a profit or at a loss. Although
paid out of profits, if any were made by the sale, the
commission is inconsistent with equality between the
owner and salesman in condu(5ling the business for
themselves as principals.^ If the commission is given
to fadors or brokers, they have no stake in the busi-
ness, but an interest which might be antagonistic to
its success." If the owner does not limit the price, the
commission might be paid by him out of his capital.
Ulpian puts the case of an owner who authorized another
to sell a set of pearls at a fixed price, and gives him all he
can make if he sells above the limit. ^ Is the seller a partner
with the owner ? PoThier finds the riddle insoluble, except
by a resort to the parties' intention, which may make the
transaction a partnership, or may make it a commission.'*
The intention, which would constitute the parties partners
at the Roman law, must appear in the answer to the ques-
tion : Did the owner intend to make the seller at once a co-
owner with himself in the pearls? If he did so intend, a
partnership was created, because the societas of the Roman
law was nothing but a co-ownership, arising through con-
tradl. The pivotal point, upon which the whole matter
turned, was the responsibility of the parties for a possible
loss of the pearls. If partners, they must share the loss in
proportion to the respe(5live values of their contributions,
and as there is no fixed estimate put upon the contribution
of the seller, and his share of the price was to be determined
upon a sliding scale, the law would apportion the loss
equally, and compel him to reimburse the original owner
for one-half the value. Every partnership, at the Roman
law. implies a contribution. To make the seller a partner,
170
Pt. 2, Ch. I. The Test. §63.
therefore, it was necessary that he should have agreed to
render services, or defray expenses, which the owner should
accept as an equivalent for an interest in the pearls. Story,
with this idea in mind, adopts Duvergier's answer to
PoTHiER : The seller makes no contribution, and therefore
is not a partner.^ As, however, his skill and services may
constitute a contribution, the answer does not settle the con-
troversy. They seem to have supposed that the seller must
make some material contribution, in money or property.
The expenses, if any, would be a material contrijDUtion,
but do they, if advanced by the seller to create a market for
the pearls, lead to the solution of the problem ? Not neces-
sarily. If contributed to the firm, they must be dedudled
from the price, and returned to the seller before a division
of the profits. Such a course, however, is excluded by the
statement. By the case stated, if the seller is put to any
charge for expenses, it must be at his own risk, and be a
part of his stake in the venture. This stake comprises his
skill, his services, and the expenses, and may be advanced
by him under a contradl of agency, in view of the commis-
sion which he expedls to earn. An agreement to reimburse
the expenses would, therefore, determine the question and
establish a partnership. It is certain that the jeweller gave
his services and skill, but it does not appear that he made
any material outlay, for there may have been no expenses.
Expenses, if shown, would have created a presumption of
partnership, unless it was proved that they were not to be
reimbursed. This conclusion is negatived by the statement
of the case. The price fixed by the owner excludes any lia-
bility on his part for expenses. The right to reimbursement
for skill and services, however, depends upon the question
of partnership. They cannot be reimbursed in form ; but,
on the hypothesis of a partnership, if the seller exhausted
his resources, and there was no market for the pearls, the
parties would divide them. On the theory of agency, how-
ever, the owner would retake the pearls. The relation of
partnership would have secured to the jeweler a reimburse-
171
§63. The Test. Pt. 2, Ch. i,
ment for his skill and services, by investing liim with prop-
erly in the pearls. The relation of agency would give the
jeweler no reimbursement for his skill and services. On the
other hand, skill and services being the proper subjedl-mat-
ter of a contribution, although immaterial, had there been
nothing else in the case, would have created a presumption
of partnership, which could be rebutted only by proof of a
contrary intention. The inference to be drawn from the
limit in price fixed for a sale of the pearls is, that the owner
did not intend to part with any portion of his property in the
pearls, and thereby reimburse the seller for his skill and ser-
vices. The skill, services and expenses, therefore, stand
upon the same footing.
At the Common law, the question of partnership turns
upon the rights of third persons, rather than upon the rela-
tion of the partners to each other. The ultimate owner-
ship of the pearls would, therefore, not be a controlling
fadlor. For upon dissolution the owner is always entitled
to reclaim his material capital, or so much of it as the firm
assets will replace without reimbursing the skill and ser-
vices of a co-partner who made no material contribution.
The case would be determined by the position which the
parties assumed towards third persons in the disposition of
the pearls. The liability of the original owner to strangers
upon the contrail of the seller, is the important considera-
tion. Such a liability was, under all circumstances, ex-
cluded at the Roman law, because by its rules no one was
bound by any contracT;, except the nominal parties to it.
But with us, the owner would be liable in any event, and
the question, whether there is a technical partnership, or
not, loses its importance. If it .appeared that the parties
intended to constitute themselves co-owners temporarih',
and for the purposes of the transadlion, so that all expenses
would be charged to a joint account, and only net profits
divided, a partnership would arise ; owner and seller would
be liable, as co-principals. On the other hand, if no such
partnership was intended, and the case stated, as has been
172
Pt. 2, Ch. I. The Test. §63.
remarked, seems to exclude such an intention ; neverthe-
less, upon the assumption of an agency, the same measure
of liability prevails. The owner would be responsible, as
an undisclosed principal, upon the contradt of sale, which
formed the purpose and substance of the agency, though
he would not be bound on any contrail respecfting the ex-
penses which the agent had agreed to defray. The agent,
too, would be responsible on the contrail of sale, as the
nominal promissor. The stranger, therefore, holds both,
and may sue them successively, till satisfadlion is obtained.
There is no reason, except one of procedure, why he might
not sue both in a single adlion. It is said that they cannot
be sued together because they made no joint contrail with
the stranger. They are two principals, but not co-princi-
pals. This is an instance where the phantom of a joint
contrail still controls our practice, although the courts have
at times declared that the notion has ceased to be a part of
our law.®
1. Commission 07i sales no partnership, B, part owuer of mine, had
excise licenses and kept a store in his own name for miners' supplies.
He got C to take the business, buy goods in his own name, and allow
him 5 p. c. of sales to miners. C opened an account with A, a bank.
A's assignee in bankruptcy sued B for amount overdrawn by C.
Holding out and sharing profit and loss negatived as fadls by jury.
Verdidt for B. — New trial refused, because percentage a commission
on sales eflFedted through B's influence over his workmen. Pott v.
Eyton, 3 C. B. 32 (1846).
2. Cominission on sale gives faflor no interest which disqualifies him
as zaitness to prove contraH. A sued B for price of wheat. C received
1 shilling a pound for making sale. B objedted to C as witness to
prove contra6t, on ground of interest. — Competent, because not a
partner, with an interest in the price, but merely a claim against B.
Dixon V. Cooper, 3 Wilson 40 (1768).
Broker's commission, all above a given sum, docs not disqualify
him. A sued B for price of merchandise. C was broker, and had all
proceeds over a certain sum for making the sale. B obje(5led to C as
a witness to j^rove the coutra6l, on the ground of interest. — Compe-
tent, because no interest, as a partner, in goods. Benjamin v. Porteus,
2 H. Bl. 590 (1796).
Percentage on gross sales no partne7'ship. A sold good-will of
business to firm, for i p. c. on gross sales. He also lent firm |;ioo,ooo
at 7 p. c. Creditor of firm sued A as partner. — Not liable, for percent-
age on sales no partnership. Loan did not change the relation. Gib-
son V. Stone, 43 Barb. 285 (1865).
3. "Si margarita tibi vendenda dedero ut, si ea decern vendidisses,
"redderes mihi decem, si pluris, quod excedit tu haberes, mihi
17.^
§64. The Test. Pt. 2, Ch. i.
"videtur, si animo, contraheudae societatis id actum sit, pro socio
"esse aclionem, si minus praescriptis verbis." D. 17, 2, 44.
4. Du contrad de soci^td, cli. I, ?III, 13 6 Oeuvres de Pothier 447-8,
Paris, 1835.
" Si contrahentes auimum habueruut lucri m commune faciendi,
"societas est, in qua alter rem (id est, margaritam), alter operam et
"iudustriam in his circumferendis et vendendis confert. Ouod si
"bunc animum uou habueruut, puta dominus margaritae, qui potuis-
"set ipse earn commode vendere tanti aut etiam pluris, margaritam
" suam (tibi ut benefaceret) tibi veudendam dedit ea lege : hoc casu
"societas uou est; sed contracflus innominatus ex quo nascitur actio
" praescriptis verbis. " Pothier, 6 Pandects 448.
5. Story on Partnership, ^51.
6. :Miller v. Reed, 3 Casey 244, Pa. (1856).
§64.
^L[]t knber is not turncLi into a partner bn partaking of tl)e
profits, for a loan, being once £stabiisl)CL), is tl)e opposite of oton-
ersljip.
Is the distin6lion between a lender and a partner a
question simply of degree ? The lender may measure
his interest by a quota of the profits, or he may take
a share of profits in lieu of interest. How is he dis-
tinguished from a partner? A lender might be in-
duced, by solicitude for his investment, to watch and
see how the business was condu6led. Unless it should
be successfully managed, no equivalent would be re-
ceived for the use of his money, and the loan might
be put in jeopardy. Would the supervision which
he gave to the management of the business, in order
to prote6l his investment, convert him into a partner?
The amount risked in the business might be equal to
a partner's share, or might exceed it. The motive of
self-interest would be as strong to make him control
the business as the motive which impels a partner.
The difference is not to be found in an analysis of the
174
J
Pt. 2, Ch. I. The Test. §64.
motives. It is in the acftion which, they call forth,
that furnishes the test of the relation, by disclosing
the partner's obje<5l. The lender surrenders his prop-
erty to the debtor, and trusts to his character as se-
curity for the loan. The precautions which he takes
to see that the debtor manages his business with suc-
cess, are taken as means of information, to enable the
creditor to a6l promptly, if necessarj^; they are not
adls of control over the debtor in his business, nor an
interference with his management. The partner, on
the contrary, relies upon himself, and keeps his prop-
erty within his control. He does not part, absolutely,
with his title, or trust to anybody else for its recovery.
The question, therefore, turns upon the destination
and control of the fund. If the would-be lender stipu-
lates that the sum lent shall be retained in the busi-
ness, and can enjoin the borrowers from withdrawing
it, he is a partner.^ On the other hand, although the
lender receives a portion of the profits from a particu-
lar business as interest, he has no right to insist that
the sum lent shall remain in the business, in order
that the profits may be earned."
Statutes have been passed, affirming this distin6lion
between a loan and a partnership, and for the purpose
of relieving a lender from all liability to third persons,
by reason of his sharing the profits.^ The courts have
held these provisions to be merely declaratory of the
Common law,'' and have, notwithstanding the statutes,
charged the would-be lender as a partner, wherever it
appeared that he had reserved a right to control the
destination of the fund. On the other hand, these
ena6lments have altered the lender's position for the
worse, by postponing him to all other firm creditors.
175
§64. The Test. Pt. 2, Ch. i.
1. I'oolcy V. Driver, §50, u. 3.
2. S/i a >-i in: profits does not make lender a partner. Firm B C & D, to
keep up a faAory, which they eventually meant to take, advanced
the capital, and discounted its paper on orders approved by them for
manutaAured goods, taking a chattel mortgage to secure the advances.
They stipulated for 1-4 the profits. A sued them for merchandise
supplied to facflor v.— Judgment for defendants. They were merely
financial agents. Cassidy v. Hall, 97 N. Y. 159 (1884) ; McLewee v.
Hall, 103 N. Y. 639 (1886).
Loan for part profits 7iot partnership. By bond, B agreed to lend C,
agent of a corporation, |i5,ooo for one year, and to endorse for him to
the extent of |2,ooo, if B thought C's business required additional
capital, for 10 p. c. net profits and 2 p. c. for each |i,ooo above |5,ooo.
C agreed to condudl business to the best advantage, and to keep ac-
counts, which should be open to B's inspe(5lion. A supplied mate-
rials for works at C's corporation, and brought assumpsit for price
against B & C. — Judgment for defendants. Loan to C, and assump-
sit would not lie. Contrail for court. Boston & Col. Smelting Co. v.
vSmitli, 13 R. I. 27(1883).
This constituent of partnership is some times ignored.
Half profits for loan, zuhich is to be repaid, are taken as compensa-
tion for the debt. Bond executed by B in 1870 to A, for 19,491.77 al-
ready invested in merchandise during 1866, for 1-2 profits made by
trading with it from 1866. B died in 1877. A recovered judgment
in Probate Court, against B's administrator, for principal and 1-2
profits, to wit., 119,885.60, and payments were made on account.
Administrator d. b. n. subsequently moved to quash judgment, on
ground that A was partner, and Probate Court no jurisdidlion. — Judg-
ment sustained. The transadtion not necessarily partnership. Right
to the return of principal and 1-2 profits implied account and inspec-
tion of books, but not right to control or be consulted, iniless B
changed destination of fund. Culley v. Edwards, 44 Ark. 423 (1884).
3. 28 & 29 Vicl. c. 86. Statute of Pa., 6 April, 1870, i P. L. 56.
4. Statute authorizing loa^i without making lender partyier with bor-
rower declaratory of the Common laiu. A sued B as C's partner. B's
affidavit of defence : Agreed to furnish C funds necessary for his
Ijusiness, and receive, after repayment of advances, a share of the
profits ; but never advanced anything or received any profits. Agree-
ment rescinded. Some of items in A's bill furnished before execution
of contract, and the others after its recission. — Affidavit sufficient.
Hart V. Kelly, 2 Norris 286 (1877).
The point did not arise for decision. The defendant
agreed to lend and, besides repayment, to receive a share
of the profits. But some of the debts sued for were con-
tracted before the contrail was executed, and were never
made with the defendant, and some were incurred after
the contradl was rescinded. He was not liable for the
first, as he did not contra6l them, nor were they con-
tracted for him ; he was not liable for the last, because
he had ceased to be a partner when they were contracted,
and a dormant partner is not liable for what is contradled
after he withdraws.
176
Pt. 2, Ch. I. The Test. §64.
Although a stipulation that the advance shall remain in
the business, makes the would-be lender a partner, an agree-
ment, on the other hand, to look only to the firm assets for
payment, has no such effe6l. It is a dogma of the common
law that there is no such thing as a qualified liability.
There must be a debtor who shall be liable, absolutely,
upon his contrail. Every debtor is responsible to the full
extent of his resources, and, though he might charge a por-
tion of his property, by way of preference, he could not limit
his liability to any particular part of his estate. Neverthe-
less, this principle has been waived, and the courts, in
anomalous cases, have enforced a creditor's agreement to
release the partners from any personal obligation for the
debt, except so far as it could be satisfied out of the firm
assets.*^ The Hindu Rajah's case affords a contrast to the
foregoing. The creditor held the debtors in a vice, and
they could do nothing without his permission ; but the ex-
tremity of the business required all his pressure to recover
a loan which had become desperate. The business was se-
questrated, as if on execution, and for the single purpose of
making the debt. He did not receive the profits as a pro-
prietor, although he absorbed them, on account of the prin-
cipal and interest of his debt. The debt arose, originally,
from an undoubted loan, and the Rajah assumed control,
not to secure the retention of his advance in the business,
but to save it from the wreck. ^
a. Throwing good money after bad not partnersliip. B, a creditor of
C & D, agreed to go into a building operation with them, to advance
part of the money and materials, and to look for payment of his ex-
isting debt and of his advances solely to the profits of the operation.
After payment of B's debt and advances, all profits belonged to C &
D. A supplied lumber, and sued B as a partner. — Not liable, because
his objedl was payment, and advances but a means to colle6l prior
debt. Making payment contingent upon profits does not extinguish
the debt, which fastens on the profits as a fund for payment, though
the debtors are released. Kilshaw v. Jukes, 3 B. & S. 847 ; 32 L. J. Q.
B. 217; 9 Jurist N. S. 1231 (1863).
b. Control of business to secure a debt does not establish part7iership.
Hindu Rajah made advances to B & Co., Calcutta shipping mer-
chants, upon condition that they should not order or receive con-
signments, ship or sell goods, withdraw mone}-, transact or alter
business, except by his consent. Shipping documents were at his
177
§64. The Test. Pt. 2, Ch. i.
disposal, and could not be sold or pledged without his consent. All
proceeds to be paid him on account of his debt, and 20 p. c. of profits
as commission, besides 12 p. c, interest on his advances. A, who
dealt with 15 & Co., .sued Rajah as a partner. — Not liable, because he
had no initiative, and his intention to secure a debt. Mollwo v. Court
of Wards, L. R. 4 !'• '^- 4i9 (1872).
The amount of interest, or profits, does not necessarily
make the lender a partner. Should he stipulate for 20 per
cent, interest, or 25 per cent, if profits, the 1-5 and a possi-
ble 1-4 might show the desperation of the borrower, but no
co-operation by the lender."
c. Interest a sum equal to 7-5 profits. B lent C |2o,ooo for two years,
who agreed to pay f4,ooo a year interest, and if that sum did not
equal 1-4 profits, to increase it to that amount. A having sold mer-
chandise to C, who absconded, sued B for the price. — Judgment for
B. Lord v. ProAor, 7 Phila. 630 (1870).
If the profits are in addition to interest, they may be ad-
ditional compensation for the use of the money, and if not
coupled with control of the business, do not establish a
partnership. ^
d. Loan for interest and a share of building operation not a partner-
ship. B lent C, land owner, $50,000, secured by mortgage on the
land, for a building operation, and stipulated lor interest and 1-2
profits. A, who furnished materials for building, sued B. — Judgment
for B. Not a partner. Curry v. Fowler, 87 N. Y. 33 (1881).
An agreement to let the lender take possession, sell the
goods, and share the profits, after reimbursing the loan,
would not make him a partner. The advance closed the
transadlion, and left no room for implied authority.® The
lender held the property as security.
e. Share in profits, given for money advanced for cash purchase, donH
pledge lender's credit as partner. B induced C to lend |2,5oo, to pay
for two carloads of hogs, and agreed to let C take possession, as se-
curity, .ship them to Pittsburgh, and, after reimbursing himself out
of the proceeds of a sale, to take one-half of the net profits. After-
wards, B bought of A 17 hogs on his own credit, to make up the two
carloads, without C's knowledge. B, in pursuance of the agreement,
repaid C in full, as the hogs did not bring enough to repay the ad-
vance. A sued B & C, as partners. C's defence: No partnership. —
Judgment for C. Advance for a cash purchase, and not for use in a
continuous business, which would implv transactions on credit. Har-
vey V. Childs, 28 Ohio vSt. 319 (1876).
A lender may secure himself, as an annuitant, who is paid
out of profits, and not be a partner. He takes no part in the
business. He might receive an annuity, or profits, in return ,
178
Pt. 2, Ch. I. The Test. §65.
for a guarantee of capital requisite to meet insurance liabili-
ties, and be a trustee to impound the receipts until the an-
nuity and family expenditures were provided for, and a re-
serve accumulated, without being a partner. The applica-
tion of the receipts (which were profits, as the brokers paid
over only the balance after the losses were dedu(5led) to
payment was in the debtor's interest, and on his account.^
f. Annuity, or i-:/. profits, no partnership. B advanced ^5,000 to set
up his son, C, in the insurance business. C agreed to pay B /, 500
annuity, or 1-4 the profits, if it appeared that average 1-4 during 3
years exceeded ^500. C subsequently, by marriage settlement, as-
signed the proceeds of his business to B & D, whom he made trustees
to pay his annuity, and to pay the balance for trusts declared by C,
but B was not to be C's partner. A sued B for a loss under a policy
issued by C. — Not liable, because no intention to be partners. BuUen
V. Sharp, L. R. i C. P. 86 (iJ
§65.
®lic amotint of intcreet, or profits, iboes not b£t£rmin£ tl)e
question of partnersl)ip.
The lender may take a quarter, a half, or an^ pro-
portion, of the profits, without affe(5ting his status.
Should he stipulate for a share of the profits, equal to
20 or 25 per cent, interest, or for interest which would
equal 25 per cent, of the profits, the bargain would
show the desperation of the borrower, but no co-opera-
tion by the lender. The interest, in either event,
would not be usurious, because, although it might
exceed the legal rate, if the business was successful,
on the other hand, if the business was unsuccessful,
no interest at all would be paid. The contingency,
which affe6ls the payment of interest, excludes the
question of usury.
If a share of the profits is in addition to legal inter-
est, the loan is usurious ; but inasmuch as the profits
179
§56. The Test. Pt. 2, Ch. i.
arc additional compensation for the use of money, they
do not although usurious, establish a partnership,
when not coupled with control of the business.^
I. Xo account for share of profits if usurious. A advanced B |i6,50o,
' partly on mortgage at 7 p. c. and 1-4 profits of his bottling establish-
ment. A asked for account and receiver, as a partner. Decision be-
low : No partnership, but a loan, and A entitled to an account. — Re.
versed. If not a partner, loan usurious, and account will not lie. B
not estopped bv failure to plead usury, or to objedl to evidence of ^
because competent under the issue, which was partnership, and not a
ban. Arnold v. Angell, 62 N. Y. 508 (1875).
lU.
(Jlic loan bo£S not become a partn£rsl)ip because \\)t interest
is usurious.
Partnership should not be confounded with usury.
In cases where the lender stipulated for such an inter-
est in profits as made his loan usurious, for example,
where the lender took a share of profits, in addition
to the legal rate of interest, the question: What
constitutes a partnership? was at first complicated
with usury. Lord Mansfield made partnership an
asjdum of refuge for a usurer, who might ele6l it to,
escape punishment for his crime. At first, his lord-
ship thought the risk of bankruptcy would inflicT: a
greater evil than the penalty which the law imposed
for usury, and he, therefore, permitted the usurer to
ele(5l a partnership as the worst punishment.^ Subse-
quently, he took away the eledion, and inflided part-
nership absolutely as a penalty for usury. The ad-
judged partner was not permitted to confess, and take
advantage of his own crime, by pleading usury, if its
penalties were less than the liabilities of partnership.^
I So
Pt. 2, Ch. I. The Tkst. §66.
Blackstone rejected this view, and made the distinc-
tion depend upon the form of the transaction. He
said the excess of interest was a fixed rate, which re-
sembled a debt due from another, and could not be
identical with profits, which were variable in amount,
and were the immediate property of the partaker.^ The
difference was between owing and owning, or the dis-
tinction of property. Nevertheless, the form of a loan
does not exclude proof of a partnership, even between
the partners (§50).
It has been held that, although the contraCl is
usurious and, on that account, void between the par-
ties, yet third persons, whose rights are paramount,
may hold the parties as partners.^ But this decision
is based on the assumption that partaking of the
profits, in any form, makes the recipient a partner,
without reference to proprietorship. Properly con-
sidered, third persons acquire no rights against an
individual on the ground of his participation in the
profits, unless he receives them as a proprietor or
partner (§57). When, therefore, it is admitted that,
as between the original parties, the contraCl is in legal
effect a loan, and, on that account, void for usury, the
basis of a liability to third persons is wanting.
The decision of Morse v. Wilson is an application
of the true principle.' The lender in that case stipu-
lated for a share of the profits, in addition to the legal
rate of interest. In an aClion to recover the debt, he
sought to meet the charge of usury, b}^ alleging that
upon the legal effe(5l of the transaction his investment
was really in jeopardy, because, as a partaker of profits,
he was liable to the creditors of the firm. The court,
however, declared that as the advance was to be repaid
181
§56. The Test. Pt. 2, Ch. i.
in any event, the insolvency of the borrower was the
only danger incurred, a risk which every lender takes.
A personal liability of the lender to third persons
would in no way a£fe6l the transa6lion, which remains
a loan, because the borrower and his surety were bound
without regard to the success or failure of the busi-
ness to return the advance, which, by reason of their
responsibility, was not technically in jeopardy. The
risk which relieves from the penalty of usury affe6ls
the investment itself, and makes the right to its re-
covery contingent.^
1. Profits, though in lieu of interest, are not tisurious, because counter-
balanced by losses. A covenanted to lend B ^loo for 4 years, without
interest, if he would board A's daughter, C, for ^10 a year, and take
her into partnership with his wife, giving her an equal share of the
profits and losses. If C died, B agreed to repay principal and interest
to A. Defence to his suit on bond : Covenant usurious. — Risk of C's
bankruptcy equivalent to the penalty for usury. Morriset v. King, 2
Bur. 891 (1759). Note. — Lord Mansfiei^d, afterwards, wouldn't let
lender deny partnership, because he would criminate himself, as a
usurer ; but here he considered bankruptcy worse than usury, and
a sufficient sandlion.
2. Taking usurious interest in trade renders the taker liable as a part-
ner. B bought out his partner, C, and gave him a bond for ^2,485,
amount of his contribution, with interest at 5 p. c, and agreed to pay
him, in addition, ^200 a year for six years, in lieu of profits. C had
the right to inspedl B's books. B became bankrupt, and A sued C
for a debt incurred by B in the business. — Liable, because cont'-aA
usurious, and C could not take advantage of his guilt in order to
escape liability as a partner. Bloxam v. Pell, 2 \Vm. Bl. 999 (1775).
3. Grace v. Smith, I55, n. i.
4. Sheridan v. Medera, ^57, n. 4.
5. Liability to third persons, as a partner, no proteBion against usury.
A lent B ^2,000, for 5 p. c. interest and part of the profits of B's share
in firm of B & Co. Defence to adlion of debt by A against B's surety:
Usury. Answer : A, though not liable for losses between himself and
B &_Co., would be liable to third persons; therefore, his principal
was in jeopardy, and profits equalized his risk.— Notwithstanding a
possible liability to third persons, contradl is a loan, and usurious.
Morse v. Wilson, 4 Term. 353 (1791).
6. Loan for interest and profits out of proceeds pledged, not partne? -
^"'P- B advanced C & D, manufa(fturers, I50 each, secured on 200
lumber wagons, for interest and 1-4 profits out of sales. A sued
B for rent of premises occupied by C & D.— Not liable. Profits meas-
ure of compensation for loan. Richardson v. Hughitt, 76 N. Y. 55
(1879). s ' /
Pt. 2, Ch. I. The Test. §67.
B advanced C |;2,50o to start business, and took chattel mortgage
for loan, 1-2 receipts for compensation, but if not equal to interest C
made up difference. A sued B for goods supplied to C. — Not partner.
Loan payable in any event. Eager v. Crawford, 76 N. Y. 97 (1879).
§67.
(iri)c inference toill be against a partnersl)ip tul^ere tl)e facta are
consistent tuitl) ann otl)er relation.
The reason for this inclination arises from the
unwillingness of the courts to impose the unlimited
liability of a partner, if any other legal relation will
adequately interpret the fa6ls.
(!lo-ou)nersl)ip.
The natural inference from co-ownership, viz., a
passive tenancy in common is not overcome by using
the property in trade, unless it is made a part of the
adlive capital of the firm. Fixed capital may remain
the property of the partners, as tenants in common,
and only the use be contributed to the firm.^ It is in
accordance with this theory of the Common law that
the co-owners of a ship are tenants in common. At
first, the leaning was against letting a ship form part
of a firm's stock. But now, the ship, if fitted out on
joint account, and employed in the business, becomes
partnership stock,^ whether equipped for one or more
voyages'' or for a continuous business.^ A settlement
I after each shipment does not affe6l the question of
' partnership in the ship.'
I. Co-ownership of a vessel^ and partnership in a shippittg adventure.
A & B, merchants, each having a separate business. They had, at
various times, and in various vessels, undertaken shipping adventures
on joint account. They owned the "Phcenix" in common. They
' 183
§6-. The Test. Pt. 2, Ch. i.
c(iuippcd, freighted and sent her off on a voyage. Before her return
to i)orl, R failed, and made an assignment. A then .sent word to
master to sell ship and cargo in a foreign port, and, with the ]Jro-
ceeds, to buy another ship, in A's name, and a cargo, to be shipped
to him as consignee. This was done. The assignees of B brought a
bill for an account for B's half in the proceeds of the Thoenix. A
sought to retain, for general balance of account on previous advent-
ures, and for sums advanced beyond his share in the equipment of
the I'luL-nix. — Not partners in the vessel. Evidence showed only a
I)artuership in the cargo and equipment. For this balance A had a
lien on the proceeds, but not for a general balance. He must pay
out to the assignees, B's share in the vessel, after deducing the ad-
vances ou the equipment. Mumford v. Nicholl, 20 Johns. 611, N. Y.
(1822).
2. Partnership in a vessel. A, B, and several others, had a ship built,
and ran her on joint account. A owned 1-4, and was agent. B was
master. A & B disagreed, and a majority displaced A from the posi-
tion of agent. A asked for an account, a receiver, and an injundlion
against his associates, to prevent them from continuing to run the
craft. Court below allowed them to give security, and refused every
prayer but the one for an account. — It was sufficient, if defendants
gave security. Had they been tenants in common, injunction would
have been granted. Dunham v. Jar^as, 8 Barb. 88, N. Y. (1854).
3. Co-Oivncrs of a ship, though tenants in common of the vessel, are
partners in the earnings of a voyage. A, ct al., co-owners to the ex-
tent of a three-eighths share of the brig "Crimea," sued for ^628.46,
their portion of the freight of a voyage. Defence : i. Set-off of an
equal amount for a claim, which, though invalid, the master had al-
lowed ; 2, Non-joinder of co-owners. — Judgment for A et al. Plaint-
iffs, as partners, could maintain suit under the Code, as non-joinder
of co-partners had not been pleaded in abatement. Master not agent
as to past transadlions, and might have consulted his employers.
Merritt v. Walsh, 5 Tiffany 685 (1865).
4. Co-owners of ship became partners by continuous business compris-
ing a series of voyages. B owned 1-2 and C & D each 1-4 of a ship.
They agreed to run her and divide the net earnings in proportion to
the shares. B assigned his interest in present voyage to A, who sued
C & D. Defence : A's profits counterbalanced by losses on previous
voyages.— Judgment for C & D. Co-owners of ship became partners
by a continuous business, comprising a series of voyages. Williams
v. Lawrence, 47 N. Y. 462 (1872).
5. .Settlements after each shipment not inconsistent tvith partnership.
Agreement by A & Co., in Calcutta, to share profit and loss upon
shipments made to B & Co., in N. Y. Settlement after each ship-
ment. B & Co. assigned for creditors, including certain goods
shipped by A it Co. A & Co. claimed account and the balance.
Uelence : Shipments separate ventures.— Settlements did not break
the continuity of partnership transadlions. Eldridge v. Froost. 6 Rob.
518, N. Y. (i866). ^
The same principles apply to co-ownership in a
patent.'
6. Co-owner of patent not partners in works constructed under the
patent. B & c were interested in a patent for pile-covering, and A,
J 84
Pt. 2, Ch. I. The Test. §67.
employed by B on docks built with the patent, sued R & C. C's de-
fence : Not a partner. — ^Joint interest in patent did not create partner-
ship without a share in profit and loss of building the docks. Boeklen
V. Hardenburgh, 5 J, & Sp. no, N. Y. (1874).
The owners of a race-horse, who kept and trained
him, dividing the expenses and winnings between
them, were not partners. Holding in common an-
swered all the purposes, without resorting to a part-
ship.^
7. Co-ow7iers of a horse. A & B, owners of a race-horse, agreed that
they should keep and train him, and that the expenses and winnings
should be divided equally between them, A sued B for half the ex-
penses. — Recovered, because co-owners, whether partners or not.
French v. Styring, 2 C. B. N. S. 357 (1857).
In the cases discussed, the partnership in the stock
was denied, because co-ownership afforded a sufficient
explanation of the fa(5ls. The Pande6ls contain a case
in which the partnership in the stock was denied, on
the ground that the parties were not co-owners. Ul-
PiAN quotes this case for Celsus' opinion: "Cum
"tres equos haberes et ego unum, societatem coimus,
"ut accepto equo meo quadrigam venderes et ex pretio
"quartam mihi redderes. Si igitur ante venditionem
"equus mens mortuus sit, non .putare se Celsus ait
"societatem manere nee ex pretio equorum tuorum
"partem deberi: non enim habendae quadrigae, sed
"vendendae coitam societatem. Ceterum si id a(5lum
"dicatur, ut quadriga fieret eaque communicaretur
"tuque in ea tres partes haberes, ego quartam, non
"dubie adhuc socii sumus."^ The decision is a con-
sequence of the Roman conception of partnership, to
wit., acquisition of co-ownership by contradl. They
did not intend to become co-owners of the horses, but
did intend to be co-owners of the price. The partner-
ship was, therefore, confined to the sale.
8. D. 17, 2, 58.
185
§67. The Test. Pt. 2, Ch. i.
Sale.
A sale may be the obje(5l which they desire to e£fe(5l.
The owner of cotton, the owner of a ship and the con-
signee, co-operated to effed a sale on joint account,
and shared the proceeds in quotas only as a mode of
repaying the price advanced on the cotton.^ The
farmers who supplied milk to a cheese fadlory, and
shared the profits in proportion to the milk which
they contributed, were not partners.^" They sold the
raw produ6l, and were paid out of the proceeds of the
manufactured article. The farmers took no part in
managing the fa(5lory, which was condu6led wholly by
the cheese-maker. They were not principals, or even
agents, in the business.
9. Joint owners. A owned cotton, B a ship, and C's correspondent
would sell, if made consignee. C advanced to A 1-2 price of cotton,
at port of shipment, A to remain owner of 1-2, B and C each to take
1-4. Return to be naade to C ; loss upon advance made by C, who
sued A in assumpsit for contribution. — Recovered : No partnership;
transaclion a sale on joint account, with peculiar method of repaying
advance on A's share. Peltier v. Sewall, 12 Wend. 386 (1834).
10. _ Sharinjor inarutfaRured prodtiFl in proportion to raw i7tateria I fur-
nished, not partnership. . B, and other farmers, delivered milk to
cheese factory. Each was credited with amount of his milk, and all
was manufa<ftured together, and the factory sold the cheese. Each
farmer was charged with his share of expenses, and received his share
of proceeds, which was in proportion to the milk he furnished. A
-sold B's interest in the chee-se under an execution against him. — Set
Jiside. B not a partner, and had no such interest as could be seized
and sold on aji./a. Butterfield v. Lathrop, 21 Smith 225, Pa. (1872).
These cases illustrate the distindion between the
Common law and the Roman law on the question of
a partnership in selling. At the Roman law, there
might be a partnership in selling, although the par-
ties were not co-owners of the stock, as appears from
the case put by Celsus, supra, for the parties would,
nevertheless, be co-owners of the price, when obtained.
The Common law, on the other hand, permits no part-
186
Pt. 2, Ch. I. The Test. §67.
nership in selling, without a previous buying on joint
account.
Bailment.
The objedl of the parties may be a bailment. The
mode of compensation, by a share of the profits, does
not alter the bailee's position, or give him any title to
the merchandise held by him, but it remains the prop-
erty of the bailor, and is subjedl to execution by his
creditors,"
11. A sharingin the profits a substitute/or bailee' s lien. By agreement,
A bought hides and delivered them to B for tanning. B returned
them to A for sale. The proceeds, after paying freight, 6 1-2 cents a
pound to B for tanning, 7 1-4 p. c. to A for buying hides and selling
leather, were equally divided. Losses were to be borne equally. A
replevied tanned leather in B's hands. Defence : B entitled to pos-
session, as partner and co-tenant in common. — ^Judgment for A.
Hides and leather his separate property, though a partner in the
business. B's share in the profits was in lieu of his lien as bailee.
Moore v. Huntington, 7 Hun 425 (1876).
Buyitig wheat for majiiifaBure, ivith payment and commission out
of sales of the flour, don't make buyer partner with manufaRurer,
Under agreement, A furnished wheat, B & Co. milled it, sold the
flour, and delivered proceeds to A. He retained cost of wheat, 2 1-2
p. c. commission on price of flour sold, and returned residue to B &
Co. They, as members of a dissolved firm, owed C, who levied on the
wheat. A brought replevin against sheriff. — Judgment for plaintiff".
Wheat belonged to A, and B & Co. were his bailees. Johnson v. Mil-
ler, 16 Ohio 431 (1847).
Jactorsl^ip.
The business may be localized, and come nearer a
del credere factorship than a partnership. Sharing
the profits and losses of consignments was adjudged
to be a local fa6lorship, which met all the require-
ments, without introducing the difficulties arising
from a partnership.^'^
12. Local faHorship. B, C & D, grocers, traded, at Titusville, as B C
& Co. E & F, in N. Y. . supplied the store fixtures, paid half the rent,
and consigned the stock, taking a sum equal to half the profits, and
bearing 1-2 the losses. A sold goods to B C & Co., and joined E &
F as defendants in his suit for the price. — ^Judgment for E & F. A
187
§68.
Sub- Partnership.
Pt. 2, Ch. 2.
del a-edcrc fatflorship meets all the requirements, without resorting
to a partnership. Edwards v. Tracy, 12 Sm. 374, Pa. (1869).
CC^ift.
The transadlion may be a gift. The party might
control the business, but not for himself. The ab-
normal position is conceivable. The motive, though
unbusinesslike, might operate, and make the party
acft from disinterestedness, for the benefit of the inex-
perienced partners. Ordinarily, the law would not
consider the motive, but judge by the fa(ft. It is only
the exceptional cases, when the person dealing with
him knew that he was not a6ling for himself, that
would induce the law to enter into the motive.^*
13. Tracy v. McManus, ^48, n. c.
-O-
CHAPTER 11.
SUB-PARTNERSHIP.
§68.
The Roman law has furnished a maxim, Socii mei
socius mens socius 7ion est^ My partner's partner is
not my partner. The maxim expresses a principle
of partnership, important for the determination of the
relation of the partners to each other. The principle,
m its affirmative statement, is called deleHiis personae,
or choice of a partner. The maxim may be admitted as
a dodlrine of the Common law, provided it is under-
stood to imply no more than the proposition that the
188
Pt. 2, Ch. 2. Sub- Partnership. §68.
typical partnership results from the free seledlion of
the partners who choose each other. The application
of the maxim and principle to the societas of the Ro-
man law was absolute, because partnership meant
nothing but joint ownership of property arising
through contrail. The relation comprised only the
reciprocal rights and duties of the partners between
themselves. Their liability to third persons was de-
termined, not by the law of partnership, but by the
general rules which define the responsibility of co-
principals and co-obligors. The maxim first stated
had, therefore, no application to the question of a
partner's liability to third persons. The disposition
to so apply it at the present day results from a mis-
conception of its original import.^ What the common
lawyers call the doArine of partnership is largely made
up of the principles which govern the responsibility
of co-principals and co-obligors. As to that portion
of our partnership law, the maxim can have no appli-
cation. A man's liability as a partner to third per-
sons cannot be dependent upon the deleBus pei^sonae.
A partner, for example, may assign a part of his
interest in the firm to a third person, and share his
profits and losses with him. This constitutes a sub-
partnership, but does not make the assignee a partner
in the firm. The assignment here referred to pre-
supposes the perpetuation of the firm, and the con-
tinuance of the assignor as a member, and is, there-
fore, to be distinguished from the absolute assignment
by a partner of his interest to a stranger, which works
a dissolution of the firm. The knowledge of his co-
partners, and their assent to the assignment, is noth-
ing but an acknowledgement of his right to use, or
189
§68.
Sub-Partnership.
Ft. 2, Ch. 2.
dispose of, his share as he pleases, and does not neces-
sarily involve the reception of the assignee into the
firm. There is no dele^us personae or agreement by
the co-partners to accept the assignee as a partner, or
by him to assume towards them the responsibility of
the relation. On the other hand, a partnership is
created between the assignor and the assignee in re-
spect of the assignor's share in the firm. It is evident
that this partnership is not a relation independent of
the original firm, as is the case where one man is the
common member of two firms, engaged in difterent
branches of business, but is interlocked with the busi-
ness of the principal firm. No profits or losses accrue
to the sub-partnership, except through the business
of the main firm, and the assignee obtains a modified
control over the firm stock by reason of his co-owner-
ship with the assignor of his share. By reason of this
co-ownership, he -would be entitled to prevent his as-
signor and the other partners from diverting the firm
stock from its original destination. This privilege is
not to be denied the assignee, on the ground that the
assignmeut of a partner's share conveys no title to
any portion of the firm assets. It is true that the
assignment of a partner's share conveys no unincum-
bered title to a purpart of the firm stock, but an as-
signee does, nevertheless, become a co-owner of the
firm stock with the original partners, subjedt to their
rights, and to the requirements of the firm. The sub-
partner, however, would have no right to participate
in the management of the business. His contrails
would not bind the firm. But he would be liable as a
co-partner to the creditors of the firm, because he is a
co-proprietor of the firm stock, and interested in the
190
Pt. 2, Ch. 2. Sub-Partnership. §68.
profits and losses of the business. In case of loss, and
of the insolvency of the assignor, the assignee has no
claim for contribution against the other co-partners,
nor have they any recourse against the assignee.
But the liability of the assignee to third persons is
not dependent upon his right to contribution. It fol-
lows from his status as a co-proprietor in the business.
By virtue of the assignment, he has become, to the
extent of his portion, as much a co-proprietor and co-
principal as his assignor, from whom he differs only
in respe6l to the privilege of taking part in the man-
agement of the business, and of the right to enforce
contributions against the other partners. His right
to contribution against his assignors is, of course, un-
doubted.
When the form of a sub-partnership is used to in-
troduce a partner into the firm, he becomes, in all re-
spells, a partner. If, therefore, he did bargain with
the partners for a dire6l share of the profits, and agreed
to bear a corresponding portion of the losses, the right
to control the firm business, with which a sub-partner
has nothing to do, would decide the question.'^
1. D. 50, 17, 47; D. 17, 2, 20.
2. Co-owjter of partner's share not a partner. C, D & E proposed that
B should enter into partnership with them in wool-brokerage, but,
being a purchasing agent of different manufacturers, he refused.
Then they agreed that B should be jointly interested with E in the
firm, and share his profits and losses. The firm had no capital.
When A heard of the agreement, he sued B for salary. — Not a part-
ner. Did not share firm profits, or take part in management of busi-
ness. Burnett v. Snyder, 8i N. Y 550 (1880).
C assigned to B 1-3 of his 1-2 interest in the firm of D & Co., agree-
ing to colledl and hand over 1-3 of his profits, and B agreed to reim-
burse 1-3 of C's losses. A joined B in a suit against D & Co. on the
endorsement of an accommodation note. — Not a partner. No delec-
tus personae, or share of firm profits. Bank v. Norris, 43 L. I. 56 (1886).
Should this do6lrine be maintained, the assignor might
be a dummy, and the assignee would obtain all the ad-
191
§^g. Holding Out. Pt. 2, Ch. 3.
vantages ot" being a partner withont incurring his liabili-
ties.
•?. .lssic;nee oj partner's share i/iay become a partner by consent oj the
co-partners. C, one of three partners, assigned, out of his own interest,
to H 1-8 ot all profits and losses of the firm, to date back from its com-
mencement, in order to make him a partner. B accepted the assign-
ment, and the other partners received him. The business was car-
ried on without changing the firm name or opening new accounts.
A sued on the renewal of a note given for services rendered the firm
before the assignment. — B liable as a partner by relation. Earon v.
Mackey, lo Out. 452, Pa. {1884).
-O
CHAPTER III.
HOLDING OUT.
§69.
j^olliing out tutails a pavtiurBliip liability.
Holding out may occur in tliree ways. A man may
hold himself out as a partner in a firm by his diredl adl
or declaration. He may be held out as a partner of the
a(5lual members, with his consent, or with his knowl-
edge and without his prohibition. That is, a man may
be held out by his consent or by his negligence. In
each of the three cases the measure of responsibility
is the same towards all persons who deal with the firm
on the credit of his name. The distin(5lion, therefore,
which has been taken between a holding out by dired
authority and a holding out by negligence is un-
founded. It has been said that where the holding out
was by the person's authority, consent or connivance,
the presumption is absolute that he was so held out to
192
Pt. 2, Ch. 3. Holding Out. §69.
every customer of the firm ;' if by his own neg^ligence,
then only to such creditors as were misled thereby.
But by no principle of law can a man who is not a
partner be made liable to persons who have in no way
been misled by his aAs, and, on the other hand, there
can be no difference between a(5ls which a;"e the result
of negligence and adfs which are the result of inten-
tion as a source of civil liability.
Where a man takes part in the management of the
business, and a6ls as a partner, he charges himself
with the liability of a partner by his condu(5l. This
is not a typical holding out, for in that case the party
takes no part, and has no interest, in the business. If
he does take part, he is liable as a principal, upon the
contradts to which he is an aAual party, without refer-
ence to his status as a partner inter se?" If an attempt
is made to charge him with liability as a partner, on the
ground that while he was not a party to the contra6t
upon which suit was brought, nevertheless his general
condu(?t as a manager of the firm business, although
unknown to the plaintiff, estopped him from denying
the partnership, no liability would be incurred under
the head of holding out, because the defendant made
no representations to the plaintiff.^ A course of con-
duct: might be evidence tending to show a partnership,^
but it does not amount to a case of holding out, unless
the condu6l was known to the plaintiff. An attempt
to establish a case of holding out involves the admis-
sion that there was no partnership.^
Where a man has allowed his name to be put, 01' to
remain, in the firm designation, he must be liable to
all persons who deal with the firm under that designa-
tion." They necessarily give him credit when they
193
§60. HoLDiNCi Out. Pt. 2, Ch. 3.
deal witli liis name, whether they knew and relied
upon him personally or not. If the individual's name
is not a part of the firm designation, but his connec-
tion with the firm has been indicated by some formula,
as, for instance, by the term 'Co.,' he would be liable
after retirement to every one w^ho dealt with the firm
under the old designation, with knowledge of his con-
nedlion, and without legalnotice of the change, whether
he authorized the remaining partners to use the old
firm name or negle6led to have it altered.^ If the in-
dividual's name is not a part of the firm's designation,
either literally or by a formula, but he is held out as
a partner, either by himself or by the a6lual partners,
without contradiction from him, he is liable only to
those persons who gave the firm credit on the faith of
his supposed connecftion with it; that is to say, those
persons who knew of the holding out, and were igno-
rant of his true relation to the partners.
When it is said, that in order to charge a nominal
partner it is necessary that the customers should have
dealt with the firm on the nominal partner's credit, it
is not meant that the customer should have considered
the financial standing of the nominal partner, but only
that he should have had him in mind as a member of
the firm, and a party to the contrad. If the individ-
ual has allowed his name to be used in the firm desig-
nation, the creditor has a right to conclude that there
is some person in fa6l answering to that name, who
guarantees the performance of the contrad. The in-
dividual answering to that name, if responsible for its
presence there, is the one who is bound for the per-
formance, whether he was personally known to the
creditor, or not, at the time of the contrad.^
194
I
Pt. 2, Ch. 3. Holding Out. §69.
The do(ftrine of holding out implies that the person
whose liability is established in this manner, not only
has no interest in the firm, but takes no a6lual part in
the business. There can not be a case of holding out,
unless there be a person to whom the nominal partner
was held out. Holding out means "representations,"
and they must be made to some one, viz., the plaintiff.
A nominal partner, to differentiate his case, must have
no interest in the firm, or he would be liable on the
general rule, whether known or unknown. He must
not be a party to the contradl by adlual personal inter-
vention in the transadlion, or through an agent, for
then he would be liable as principal or co-contractor,
on the general principles of the law of contrail. ^
Holding out, by its very terms, means that the de-
fendant is neither partner in fa6l nor co-promissor in
form.
Where parties do business under a common desig-
nation, without any agreement of partnership between
themselves, they incur the liability of partners.^" The
case is strengthened where the business is managed
by a common agent. The public is entitled to infer
from the single name a solidarity of interest between
them. Their liability is founded not upon a repre-
sentation of partnership, but upon the faA that they
have authorized a business to be condudled on their
behalf in a manner which implies a partnership."
Where a man's name is used without his consent,
notice to the person making use of the name, not to
use it, or extorting a promise from him to that effe6l,
would not relieve the party held out. The notice
should be given to the customers, not to the party.
Accepting his promise would confirm the impression
195
§69. Holding Out. Pt. 2, Ch. 3.
that the alleged partner relied upon the promise for
his proteclion, and indire6lly authorized the continued
use of his name, by trusting it to the discretion of the
promissor, and by looking to him for indemnity/^
Holding out is not established by proof of public
notoriety, unless the fa(5l is known to the party sought
to be charged as a partner/^ The reputation could not
make out a partnership, or enlarge the scope of a
partnership already established." If general reputa-
tion were introduced as evidence to charge the de-
fendant as a partner, he could rebut it by general
reputation of a dissolution.'' The evidence would be
equally competent for both purposes. Thus, a new
customer, who relied on general notoriety of the de-
fendant's being a partner, might be met by a dissolution
not properly notified, but equally known to the public.
The reputation must be brought home to the party
sought to be charged by it as a partner, before he can
be called upon to refute it.'*^
But the express authority, or dire6lion, given by a
person to use his name, is an announcement of mem-
bership. Admissions and a6ls are equivalent to such
a formal declaration, and commit the person as a part-
ner.'' He has identified himself with the firm, and
cannot extricate himself from it, except by a dissolu-
tion. The transa6lions of the firm will not be invali-
dated, in order to relieve him from the liability v/hich
he has assumed. When the a6lual partners hold out
a third person as their partner, they invest him with
the powers of a partner. A firm note made by him
would bind the firm, himself included, in the hands
of a holder, who did not know who made the note, but
took it on the general credit of the firm.''
196
Pt. 2, Ch. 3. Holding Out. §69.
When a man is held out as a partner by the real
partners, so as to make him liable in person and in
estate, he is entitled to control the firm assets for his
relief. As he does not exert his control by virtue of
any right of ownership, there is no occasion to attribute
to him any share in the property of the iirm.^^
It is an anomaly that one who is not sin juris could
be bound as a partner. But if he does not disaffirm
the partnership when he becomes sui jiiris^ he will be
a partner, and, by relation, from the beginning.""
A defendant may be entitled to objec^t, if a partner
by estoppel is not joined as co-plaintiff. The defend-
ant might have a set-off, or counter-claim, which would
be available only against all the partners."^ If the ser-
vices had been rendered upon the credit of the part-
ner held out, the employee might insist that the part-
ner by estoppel, although without any interest in the
firm, should be joined as a plaintiff, in order to set off
his salary against the firm claim.
A partner by estoppel, it has been decided, cannot
be put into bankruptcy, because he would be charged
indiscriminately for all the firm debts, when he is lia-
ble only for those incurred upon his credit." It is diffi-
cult to comprehend this decision. Bankruptcy is a
branch of equity, and it is the function of a court of
equity to marshal the assets among the claimants, ac-
cording to the character and extent of the claims.
I. A man's name in the firm designation charges hint as partner to
all 'cvho deal with the firm. Secor, Swan & Co. was dissolved, by the
retirement of Wm. H. Secor, the senior partner. The business was
continued by the remaining partners, who bought the use of Charles
F. Secor's name, for faoo, and kept up the trade style of Secor, Swan
& Co. A soldthem goods, but without knowledge of the arrangement,
orof Secor's connexion with the firm. They failed, and A sued Secor,
as defendant. — Recovered. The objedl of the arrangement was to
lend credit to the firm, and effecfl could be given to the agreement
only by holding him liable as a partner. If not liable to all creditors
197
§69. Holding Out. Ft. 2, Ch. 3.
of the firm, he would be liable only to customers who knew of his
connedlion with the firm, but did not know the arrangement by which
he sold his name. Otherwise, if the customers knew the terms of the
arrauijemeut, or if they did not know of his connedlion with the firm,
they could not hold him. He was treated as if an acSlual partner.
PoUiou V. Secor, 6i N. Y. 456 (1875).
2. Manager aEling as a partner does not hold himself otit as a partner.
B, sr, general manager of B & Co., had sole power to contra(5l for
firm. B, sr., negotiated with C, signed contract with firm name, and
gave C firm note for price. B, jr., could not adl in the negotiation,
without B, sr. C dealt with B, sr., as partner. Evidence admitted
that B, sr. "s, name published in DireAory, 1880-1, and 1881-2, as
partner in B & Co. He testified that he did not know the fa6l until
after i^ublication of Dire(ftory for 1880-1, and then refused to take
copy, unless corredlion made. No further effort. A, holder, sued B,
sr., as partner. Court charged thatB, sr., adling as a principal, and
C's believing him to be a partner, would justify verdidl for A. — Re-
versed. Ihmsen V. Lathrop, 8 Out. 365, Pa. (1883).
The reason given by the court for the decision is un-
tenable. The manager, it is true, did only what he was
employed to do ; but he was employed to a(5l as a part-
ner, and exert the fun6lions of a partner. He held him-
self out as a partner, and must look to his employers for
indemnity, if he did it at their request. He identified
himself as a partner, not only by transadling the firm
business, as if he were a principal, but by using the firm
name as if it were his own, without any sign of agency.
He was enabled to assume the firm designation with
effe(ft, because his son's name formed part of it. The
plaintiff, who knew nothing but what the defendant
assumed to do, and actually did, and was not called
upon to pry into the secret arrangement existing be-
tween him and his associates, dealt with the defendant
as a partner. The plaintiff had nothing to do with the
a6lual relation between the defendant and his associates,
because he was not a party to their contrail, and his
right to recover cannot be abridged by its terms. His
claim is independent of the contract, and paramount
to it.
Manager affirm business a partner as to customers, unless he tells
them he afls only as agent. A sued B, C & D, C's wife, for goods
sold B & Co., and also declared, on note given in liquidation by C in
B & Co.'s name, which he habitually signed in the course of his gen-
eral management of the business. C's defence : Adled as agent for
his wife in the management.— Judgment for A. C liable, because he
adled as manager, i/tter alia, signing firm name, without telling A he
^vas not a partner. Dodd v. Bishop, '50 La. An. 1 178 (1878).
Acting as partner siifiicicnt to sustain verdiR, without proof of part-
nership. B got A to manufadlure fanning mills, and told him C, etal.,
were co-owners of the patent-right. A's evidence : C present wben
mills ordered and B's statement made. A applied for payment to C,
198
Pt. 2, Ch. 3, Holding Out. §69.
who put him off until sales could be made. C stated: "we have them
(the mills) to sell." — Verdidt for A, and judgment affirmed. Shafer
V. Randolph, 3 Out. 250, Pa. (1881).
Afling as partner sufficient to justify verdiH. A sued C, as B's
partner. Court charged that unless an adlual partnership between
B & C, verdi<5l should be for C. — As evidence was not sufficient to
show the interest of a partner, or ailing as such — ^Judgment affirmed.
Harris v. Sessler, 3 S. \V. Rep'r 316, Tex. (1887).
3. Signing partnership contraB by viistake not equivalent to holding
out. A sued Bi & B2 as partners. Court admitted evidence of their
contraA, as B Bros., with D, for the construcflion of a reservoir, fol-
lowed by proof that A had furnished them materials for, and used by,
them in eredling the structure. — Error, because no offer to show A
knew of the representation, and a<5led on the faith of it in selling de-
fendants the materials. Denithornev. Hook, 2 Am. 240, Pa. (1886).
The defendant executed the contradl for the construc-
tion of the reservoir by mistake, and no business was
ever done under it. The contrail did not amount, there-
fore, to a partnership zVz/^rj-^. But, as signing the paper
was a transa6lion indicative of partnership intention, the
defendant would have been liable, had the plaintiff
known and relied upon the a6l.
4. Course of conduH. evidence of partnership. A & B were sued, as
partners. A firm-bond had been given by A, and ratified by B. This
a6l, coupled with B's indefinite language and frequent presence at
the place of business, was relied on to prove partnership. — Sufficient.
Conklin v. Barton, 43 Barb. 435, N. Y. (1S64).
5. The plaintiff's effort to charge one as a partner on the
ground of holding out, results, ordinarily, from a de-
fault of evidence to prove actual partnership. He vir-
tually concedes that there is no partnership, and tries
the issue of holding out. To make the plaintiff prove de-
fendant' s secret of a partnership, and, upon a failure,
to let the defendant use the evidence upon that issue to
rebut his liability for representations of partnership,
would make holding out a species of a6lual partnership.
On the contrary, it is the opposite of a partnership inter
se^ and exists only quoad alios.
ContraB inter se and firm' s financial standing irrelevant on the
issue of holding out. A sued B, C & D in assumpsit. D's defence to
A's evidence of admissions, made to him by D before the cause of
adlion arose, that he was a partner: Offer to prove : i, Contradl be-
tween B, C and himself, for management of firm business ; 2, the in-
solvent condition of firm at the date of alleged admission. — Rejedlion
of evidence sustained, and judgment affirmed. Reed v. Kremer, i Am.
482, Pa. (18S6).
The evidence was irrelevant. The issue was not an
acSlual contradl, but admissions, which raised a contradl
by constru6lion of law. The adlual contrail between
199
|6o. Holding Out. Pt. 2, Ch. 3.
the defendant and his associaces would be competent, if
not the best, evidence, upon the issue of partnership
inter sc ; but it would not negative an implied liability
arising from D's representations without any partnership
between them. The insolvent condition of the firm was
also foreign to the issue. The admission was, it is true,
ao-ainst interest, but that feature does not discredit the
testimony.
The public knows nothing of a partner, except by his
acls and declarations. The contradl of partnership is
private, and its terms ne^d not be divulged. The part-
nership contracT; does not affedl the question of holding
out. The contfadl is between the partners. Holding
out is between partners and strangers. Evidence of the
relation subsisting between the parties is incompetent,
because it does not concern creditors, unless it is an ad-
mission of partnership. The domestic secret cannot
prejudice outsiders. They judge by appearances, and
take a man at his word. The a(5ls of a principal are
abundantly sufficient to make out a partner, although
he has no interest in the stock, or profits, of the busi-
ness. The inference, drawn from his a6ls, after they
have been established, is a construdlion of law.
Parbiership contracl no bearing upon the issue of holding out. B,
in pursuance of agreement, sold his stock in trade to C & D, taking
notes, signed by C in C & D's name. A sign, C & D, was put up, and
business carried on for two years. D was seen, occasionally, in the
store, and told E, and others, he was a partner. E, in consequence,
recommended the firm to A, who sold them goods, and, to balance
account, took note of C & D. A sued them in assumpsit as partners.
Defence : Two agreements prior to notes given B, the first between D
and his brother, substituting him in agreement with B ; the second,
agreement of partnership between C and the brother. — Recovered.
" Otherwise two persons," said the Court, "might hold themselves
" out to the world as partners, say to every one that they were part-
"ners, and years afterwards a secret article of partnership between
"the irresponsible partner and another irresponsible person of the
"same surname as the only responsible party, may be produced to
"relieve hitn, and defraud all the creditors of the firm who have
"given credit to it solely on the faith of his name." Drenneu v.
House, 5 Wr. 30, Ta. (1861).
B & C, brewers, who were sued by A, as partners of D, the lessee of
a restaurant, offered their books in evidence to disprove testimony
that work done in fitting up the restaurant was paid for with beer
from their brewery. There was also e\ddence on the part of the
plaintiff that B was present while work on the restaurant was in pro-
gress. — Books rejected. "However competent, this evidence would
'^1 have been between the parties themselves (B, C & D), certainly it
"was not as against the plaintiff (A), who was a stranger to their a6ls."
Ganzer v. Fricke, 7 Sm. 316, Pa. (1S6S).
Pt. 2, Ch. 3. Holding Out. §69.
6. The decision in Pollion v. Secor, supra, n. i, can be explained upon
this ground.
7. Judgment by default against two in a similar case relevant to
charge either as an admission of liability, though it does not prove a
partnership. B & C dissolved, without advertising dissolution. B
made firm note to D, which A, who did not know of the dissolution,
discounted for D. A sued B & C, and offered in evidence the record,
and payment of a judgment by default against B & C on another note
made by B under the same circumstances. Defence : B offered to
testify that he made the note in suit without C's knowledge. — ^Judg-
ment for A. Record relevant, although superfluous ; default an ad-
mission of liability by C to pay similar notes, though it does not
establish a partnership. B's testimony irrelevant. The want of
notice supplied the defedl of authority. City Bank of Brooklyn v.
Dearborn, 20 N. Y. 244 (1859).
8. Supra n. i.
9. A fling as a partner charges one zaho is not a partner. A sued B &
C for goods sold B & Co. C ordered some, and said he would pay for
them. A relied on his representation. C's defence: Not averred to
be a partner, and not one in fa(5l. — Judgment for A. Averment, like
partnership inter se, unnecessary. Entry of charge against firm
sufficient to hold C. Hancock v. Hintrager, 60 Iowa 374 (1882).
Promise estops partner from denying partnership. B, C & D bought
goods of A, to be delivered after the first of the month, on representa-
tion that D would contribute capital, and become a partner on that
date. A sued D, as partner, for price. — Liable on his representation.
Stiles V. Meyer, 7 Lans. 190, N. Y. (1872).
Holding out applies to agents as well as to part-
ners. The agent once held out will be liable in
transacftions of the same generic kind. The limit
in a partner's dealings is defined by the firm busi-
ness.
Holding out agent, and sharing profits with him in one operation,
makes him an agent in similar transaBiotis. A, Loudon merchants,
at B's suggestion, speculated in currants, and, in order to induce B
to exert himself, and to compensate him for his services, A agreed to
give him 1-2 the profits. A opened a separate account, which he
headed joint transadlions with B, for money which he had received
from C, a broker, who filed a cross-bill, to charge A for B's specula-
tions in other commodities. — A was liable for B's operations, because
he held B out as his agent, and gave him half the profits. Pole v.
Leask, 9 Jurist N. S. 829 (1863).
10. Joint name creates partnership liability. B owned a vessel, and
was a common carrier. C, his son, was engaged with him, and they
did business and gave receipts as B & C. A shipped goods by them,
believing that B & C were partners, and sued them in assumpsit for a
loss caused by a collision. C's defence : Not a partner. — Liable, be-
cause held out as a partner. Mershon v. Hobensack, 2 Zab. 372, N.J.
(1850).
Co-operative meat market a partnership. B et al. formed co-opera-
tive association, to buy meat at wholesale and sell it at retail to mem-
bers and others. Subscriptions voluntary, ranging from fifty cents
to five dollars. The only objedl was to dispense with middlemen, and
§69. Holding Out. Pt. 2, Ch. 3.
sell meat directly to customers who paid as usual at the association
market. Officers of association eledted, who appointed agents for
purchase and sale, accountable to them. A sold association meat,
and sued B ct al., pres-ident and treasurer. No evidence of any sub-
scripliou by B ct al., cr of A's knowledge of their membership. — Re-
covered, because partners by using firm designation, though not held
out, and no reliance upon undisclosed principals. Davidson v. Hol-
den, 10 A. Rep'rsis, Conn. (1887).
II. Delegation of business to common agent makes proprietors partners.
B, C, d"& E, each owning a steamboat, employed in carrying freight
and passengers on the Mississippi, appointed F their common agent,
who had managed the transportation business, by the designation of
the F line, for 8 years, when A shipped the merchandise for the loss
of which he sued the four. They transadled no business separately,
had no property in common, and each received the net profits of his
own boat. — ^Judgment for defendants reversed. Joint transa<5lion of
business by common agent charged proprietors, without proof of
plaintiff's reliance upon the fa6l of a partnership between them. Sun
Ids. Co. v. Kountz Line, 122 U. S. S. C. R. 583 (1886).
The decision was corredl ; but the circumstances of
the case amounted to a virtual representation of partner-
ship to the shipper. The agent undoubtedly described
his enterprise as a unit, and included all the boats under
one name, his own. This representation each subsidiary
corporation authorized the agent to make. It was made
by the agent in the case in which suit was brought. The
shipper did not ship by any particular boat ; heshipped by
the Kountz line, and his bill of lading was so signed and
attested by A B, agent of said line. It is a question
of fact who were the "Kountz line." Investigation
showed that the four or five boats were doing business
under that joint title, and they authorized the bills of
lading to be so made out. The statement is that they were
"actually doing bu.siness." This, therefore, is not a
typical case of holding out. It is, rather, analogous to
those cases which refuse to sustain the private agree-
ments of partners respedling their shares of profit and
responsibility against the demands of creditors. All
the different companies, by the manner of conducting
their business, became parties to every contradl. The
contracts were in the name of the Kountz line, and that
title covered every' one of them. They together formed
the Kountz line. They did their business as a unit, so
far as the public and this particular defendant were con-
cerned. _ The principle of the case seems to be, that
where different persons do business under a common
designation, that is to say, under a firm name, if you
please, they become liable in solido upon every contract
Pt. 2, Ch. 3. Holding Out. §69.
taken or entered into under that name, just as they
would be were they a6lually partners, or just as they
would be had all joined expressly, and by their indi-
vidual names, in the contract, whatever the private
arrangement was.
12. Partner must notify customer, or prevent use of Iiis name. B,
knowiug that C did business as B & Co., told C not to use his name,
so as to hurt him, which C promised not to do. A sued B on a prom-
issory note, signed B & Co. by C. — Iviable. B relied on C's indem-
nity. Smith V. Hill, 45 Vt. 372 (1850).
13. Reputation insufficient, unless faB. known by reputed partner. A,
who sued B, C, D & E for a deposit, proved a common report that
they were partners, but not that D & 15 knew of the report. — Judg-
ment against defendants stood against B and C, but replaced by judg-
ment for D & E. Gaffney v. Hoyt, 10 Pac. Rep. 34, Idaho (18S6).
14. No prima facie case of partnership established by reputation. B
contracted a partnership with C and two others, of Chicago, to deal
in Montana furs. C bought groceries from A, showing him articles
of co-partnership, and telling him B would pay for the groceries. A
sued B. — Non-suit. Purchase beyond scope of business. Evidence of
reputation to enlarge its scope, incompetent to make o\xt prima facie
case against B. Taylor v. Webster, 10 Vr. 102 E. & A., N.J. (1878).
15. Public notoriety, if a groimd to charge, is a ground to relieve a
retiring partner. Firm name and sign of B & C was Atlantic Forge
Co. C managed the business in his own name, which was also on the
sign. B withdrew without publishing notice. C took in D, and
changed sign to C & D. A new customer, A, knew of B's connedlion
with the firm by reputation, but not of the dissolution, though it was
a matter of public notoriety. A sued B for goods sold to C. — Judg-
ment for B. Public notoriety, if ground to charge, is a ground to
relieve a retiring partner. Holdane v. Butterworth, 5 Bosw. i, N. Y.
(1859).
16. Declarations become competent if kiiown by alleged partner and not
denied. A sued B & C, as partners, on notes signed by "D, agent."
C denied partnership, but court refused, at his request, to charge that
if B represented to A that C was his partner, and A, on the strength
of these representations, lent them money, and if A told C of the
representations, who made no denial, he would be liable. — Judgment
reversed. Slade v. Paschal, 67 Geo. 541 (18S1).
Plaintijf's evidence of reliance upon defendant competent, if fol-
lowed up by faRs sliowing holding out. B circulated handbills in
his and C, D & Co.'s name, calling for workmen to get out and haul
railroad ties. A sued B, C & D for ties delivered, but effecfted serv-
ice only upon C & D. Evidence admitted: i. That B had said he
was in partnership with C, D & Co., but not in their presence; 2,
Evidence rejected : A's testimonj-, upon whose credit he did the
work, and, 3, admitted that C, D & Co. took charge of ties, and also
their receipt from B, showing his sale to them. — Judgment for A re-
versed: I, incompetent; 2, competent; 3, subsequent to transacftion.
Remel v. Hayes, 83 Mo. 200 (1S84).
Clerk'' s knowledge of holding out imputed to principal. A sued C
on certificate of deposit made with B & Co. Evidence : B's testi-
mony, advertisement of B & C's partnership in banking for five
months in newspaper taken by C, and letters written by B to C under
203
§69. Holding Out. Pt. 2, Ch. 3.
firm letter-heads. C's defence : He could not read, did not know of
advertisement or letter-heads, and clerk read letters to him. — ^Judg-
ment and vcrdicl; for A affirmed. Rizer v. James, 26 Kan. 221 (1881).
17. What evidence is competent to charge the party held
out? Proof of any a^l, or admission, by him that he is
a principal in the business. His name in the firm, on
the sign, firm a6ls or declarations, though not made to
the plaintiff, are sufficient to charge the defendant. He
must disavow and prevent the use of his name. Hold-
ing out is a question of fadl, and belongs to the jury.
Holdiiia; out for jury ; if sufficient evidence, knoum to plaintiff , and
aRcd on by lii)n. Whether husband a principal or agent for his wife,
the nominal partner, for jury. Three brothers, B, C & D, in 1875,
went into partnership in the lumber business. B furnished the capi-
tal, f6,ooo. He sold out, in 1876, to C & D, taking their note for the
f6,ooo, and they agreed to pay the firm debts. The dissolution was
duly advertised, and notice sent to all customers. C assigned his in-
terest to B's wife, E, and died in 1877. D & E gave B their judgment
note for his |6,ooo. B helped to condu6l the business, and ordered
lumber of A, in the firm name. A obtained a verdi(5l against B and D
after striking out E as defendant. — Jury competent to decide question
of lidding out, if sufficient evidence of it, which A knew and relied
on in selling. Jury also decides whether B is a principal or the agent
of his wife, the nominal partner. Burgan v. Gaboon, i Pennypacker
320, Pa. (1881).
Adinissioits. A sued B, co-owner of a steamboat, on a note given
by C & D in adjustment of a loss for goods damaged on the transit
from Pittsburgh to St. Louis. The evidence against B was a bill of
sale by C to E, who said he was a trustee for B, and also B's admis-
sions to others, judgment for A. Hill V. Voorhies, 10 Harris, 68, Pa.
(1853).
In what order must the plaintiff proceed to establish
a partnership? The members form a circle, and the
plaintiff" can begin with any member. The admissions
of the different partners are sufficient, and if each admits
in turn, the relation is established. A declaration of his
menibership, made in a partner's presence, and uncon-
tradidled by him, would be an admission. No partner
can admit, except for himself, but his admission impli-
cates his co-partners as the other parties to the contrail.
As an admission, it binds him, and, as his declaration,
it is evidence against them, if followed up by their ad-
missions, a6ls and declarations.
An admission by one, unless in the other's presence, incompetent to
prove them partners. A sold sheep to B, and subsequently hearing
that C was his partner, sued B & C's administrator for the price. B
denied partnership, but his declarations, made in C's absence, that C
was a partner, were admitted in evidence.— Error. B's declarations
incompetent to prove partnership. Cowan v. Kinney, 33 Ohio St. 442
(1878),
204
Pt. 2, Ch. 3. Holding Out. §69.
Adtnissions of alleged partner incompetent to prove partnership.
A sold goods to B, who failed. A sought to hold C as B's partner,
and prove B's declarations, that C was his partner, and to set aside
C's judgment. C's defence: Only transadlion with B was to let him
coal C's timber for 4-5 of the coal, and holding his note. — Evidence
incompetent to prove partnership. Flanigan v. Champion, i Gr. Ch.
51, N.J. (1838).
Declarations incompetent to charge one as partner if he did not ap-
prove them. A sued B for balance of account. B plead a set-oflF. A
averred that debt set-ofF by B was owing to B & E, as partners, and
offered letters of E to A to establish the partnership. Rejedled. E
not party to suit, and letters not admissions, nor competent evidence,
if not made in B's presence, or ratified by,him. — Verdidl and judgment
for B affirmed. Flournoy v. Epping, 68 Geo. 707 (1882)
Contra. A sued B & C, for merchandise furnished D, whom A
alleged was B & C's partner. B & C denied partnership. A offered
B's letter to D, enclosing business license in name of B & C. Re-
iedled, on ground that declarations of B in C's absence were incom-
petent. — Error. Rogers v. Suttle, igBradwell J63, 111. (1885).
18. Holding out partner charges for his promise of firm acceptance.
A, B & C agreed to go into partnership as soon as B contributed
|6,ooo. In meanwhile, they rented office, put up sign, and got out
letters and bill-heads in firm name. C, for firm, employed agent,
promising to accept draft in plaintiff's favor for agent's services.
Acceptance refused, and plaintiff sued firm as acceptors. A denied
partnership, because B had never contributed |6,ooo, and A had never
authorized use of his name, except by allowing firm sign to be put up.
— vSuflficient evidence of holding out, and agent dealt with them on
faith of partnership. Plaintiff may enforce agent's right. Burns v.
Rowland, 40 Barb. 368,N. Y. (1863).
Firm note charges partner held out. B's share in firm of B & Co.
was sold out by the sheriff, and bought in by C & D, his partners,
who continued the business as B & Co.. employing B at a salary. A
sued B on a firm note made after his interest had been sold. — -Liable,
because he did not forbid the use of his name by the firm. Freeman
V. Falconer, 12 J. & S. 132, N. Y. (1878); 579 (1879).
19. Liability of partner by estoppel entitles him to control interest for
his proteHion. B & C traded as B & Co. C retired, and A, his wife,
took his place, putting in some capital advanced by her father. She
was really adling as trustee for C. She sued B for an account. De-
fence : A trustee for C, and had no standing as partner. — Decree. C
was, of course, the partner in facfl, and his creditors could take A's
nominal interest in firm as his property. But she was liable as osten-
sible partner, and had the right to control the share, which she held
as trustee, for her own prote(5lion. B waived C's joinder as plaintiff
or defendant by denying his interest. N. Y. Statute, Laws, i860, Ch,
90, ^i, ?2, permits married woman to trade on her own account. Bit-
ter V. Ratbman, 61 N. Y. 512 (1875).
Part7ier by estoppel entitled, luith partners infafl, to marshal assets
in relief of their joint liability. Br secretly retired from firm of B
& C, composed of Bi, B2 & C. B2 & C continued to use firm name
of B & C, with Bi's assent. D made a note, which B & C endorsed to
A. At same time D gave B & C a chattel mortgage, as security for
present and future endorsements, and subsequent!}' transferred to
them the mortgaged property -which, they inter alia assigned to E for
creditors. A having recovered judgment against D, maker, and Bi,
B2 & C, endorsers, claimed to be subrogated to B & C's place in re-
205
§6c^. Holding Out. Pt. 2, Ch. 3.
specl to the mortgaged property, in preference to other creditors.
Defence: While Hi, B2 & C were liable on the note, they took no
joint title to mortgaged property, for Bi had retired. Hence no
subrogation, because parties were different. — Subrogated. Mortgage
was given to cover, and did cover, liability. Bufialo City Bank v.
Howard, 35 N. Y. 500 (i886).
Would a partner by estoppel be disqualified on the
ground of interest? He would have no interest in the
business, but he has an interest in the matter in suit.
If an action is brought against the real partners, and a
judgment recovered, btit no satisfaction obtained, he is
liable to the creditor in an independent suit.
20. Failure to deny partnership at age is holding out. B acSled as a
partner with C until nearly of age, and did not disaffirm the partner-
ship at age. A, who sold C goods afterwards on B's credit, sued him
as a partner. — Liable, as he became a partner by failing to disaffirm
the contrail at age. Goode v. Harrison, 5 B. & Al. 147 (1821).
iMarried woman as partner. Partnership between A & B, a mar-
ried woman, continued 6 years after husband's death. B died, and
her executor brought account. Defence: No partnership, because B
a married woman. — Bill sustained. Though no partnership during
coverture, continuing the business after husband's death created a
partnership from the beginning. Everit v. Watts, 10 Paige 85, N. Y.
US43)-
21. Holding out makes partners plaintiffs, as nell as defendants. A
sued C, acceptor on bill of exchange drawn by A & B. C pleaded
non-joinder of B, who was a clerk in A's business, which, however,
was carried on in the name of A & B. — Plea sustained, because B held
out as partner. If C had a set-off against A & B, she could not use it,
unless B joined as plaintiff. Guidon v. Robson, 2 Camp. 302 (1S09).
Contra. Nominal partner need not be joined as co-plaintiff. A
furnished capital and B his labor for half the profits, but without any
interest in the business. A sued C for work and materials furnished
by firm on contracl made by B in the name of A & B. C pleaded
non-joinder of B, and set-off of claim against him. — Adlion main-
tained. B, though nominal partner, had no interest in the contradl.
Bendell v. Hettrick, 3 Jones & Spencer 405, N. Y'. {1S73).
22. Bankruptcy procedure excludes a construElive partnership. A et
al. petitioned to put B et al. in bankruptcy as partners, on the ground
that they held themselves out as dire<5lors of "The W. Bank." The
referee found that B et al. did not know that they were held out as
directors.— Dismissed. If B et al. had been held out with their knowl-
edge, they would be liable to no creditor who did not, in dealing with
the bank, rely upon them ; but if adjudged bankrupts, they would be-
come liable also to creditors of the bank, who did not know of the
holdmg out. In re Murray, 13 Fed. Rep'r550 (1882).
sof
Pt. 2, Ch. 3. Holding Out. §70.
§70.
(^\)e nominal partner man be sixtii nj'itl) t\]t partners in a ^oint
action.
Having established holding out as a ground of lia-
bility, the question arises, how the individual held out
is to be charged. Is he liable in a separate a6lion alone,
or may he be sued with the adlual partners in a joint
a6lion? According to the English view, although
the holding out charges the individual with the lia-
bility of a partner, nevertheless, as there is no part-
nership t'u^er se, and the liability is made to rest upon
the independent ground of estoppel, the adlion must
be several. And further, the remedies are alternate,
and if the creditor has j udgment against the nominal
partner, he cannot afterwards sue the a6lual partners;
if he has judgment against the a6lual partners, he
cannot afterwards sue the individual who has been
held out.' This view involves a mistaken notion of the
effedl of holding out. When a man is charged with
responsibility as a partner, the creditor should have
against him the remedies which may be employed
against any partner. The individual held out must
have been in the contemplation of the creditor a party
to the joint contra6l of the firm, otherwise he would
not be liable. Why, then, should he not be liable in
a joint a(ftion? How can he inje(5l himself into the
joint contrail, and yet escape the joint suit? The
basis for the joint adlion is the joint contra(fl with the
creditor, and it is a matter of no moment by what an-
terior processes the co-promissors made themselves
parties to that contrail. The explanation of the rule
207
^jo. Holding Out. Pt. 2, Cm. 3.
is to be found in the disposition to deduce partnership
liability solely from the partnership agreement. It is
true that persons cannot be made partners between
themselves, except by their own agreement, but the
primary obje(5l of this agreement is the regulation of
the rights and duties of the partners between them-
selves. Their liability to third persons is determined
by the law, and is nothing more than the ordinary re-
sponsibility of the parties to a joint contract. Partners
are not liable to third persons upon their partnership
agreement, but upon obligations incurred independ-
entl}^ in the course of the business. If these obliga-
tions are incurred with the concurrence of all the part-
ners, it is a matter of no moment whether they were
contemplated in the partnership agreement, or not.
Therefore, as to creditors who sue the partners in a
joint a(5lion, the question hinges not upon the nature
of the partnership agreement, but upon the concur-
rence of the partners in the contrail upon which suit
is brought. The partner by estoppel is undoubtedly
a party to this joint contradl, and the creditor should
be enabled to sue him as such, though he had no part
in the partnership agreement.
It is true that partnership is a question of intention,
and that the contra6l upon which partnership liability
is based, is a question of intention, but the intention
which underlies the partnership agreement is different
from, and not necessarily the parent of, the intention
which forms the basis of the obligation to third per-
sons. The confusion arises from the attempt to de-
duce all partnership liability from the original inten-
tion expressed in the partnership agreement. As far
as third persons are concerned, there is no partnership
208
Pt. 2, Ch. 3. Holding Out. §70.
except upon the question of liability. The only part-
nership intention which interests, or concerns, the
creditor, is the intention to do the a(5l upon which the
law, in its function of interpreter, entails the partner-
ship liability. This is the operative intention, in all
cases where the law raises a partnership as to third
persons, whether by defining the effedl of the private
arrangement between the principals (§50) , or the effe(5l
of the public a6ls of any principal, that is, the holding
out. In both cases the man becomes a partner without
the original intention inter se ; in the first case, the
court experiences no difficulty in permitting him to be
sued jointly with his associates, why should the court
hesitate in the second case? Wherever a man has put
himself in the position to incur the partnership lia-
bility, by whatever course he has done so, he becomes,
in all respe6ls, a partner as to third persons, and should
be sued as such.^
I. Cusiotner without notice of change iri firm must eleH. betweeti old
and new members. B & C, trading as B & Co., dissolved 27 July,
1874, by C's retirement, but B continued the business with D, under
the same name. B &. Co. bought, in January, 1878, merchandise of A,
who was an old customer, and did not know of the change. He re-
ceived a circular in February, 1878, annouucing the dissolution and
notifying him of a liquidation by B, and of the continuation. A con-
tinued to sell to B & Co. without changing his account. He took, in
July, 1878, B &Co. 's check for the aggregate balance, which included
the claim against B & C, aud on non-payment sued B & D, who failed
in August, 1878, when he proved for the balance agaiust them in
liquidation. A then sued C for the claim against B & C. — ^Judgment
for C. A bound by his eledlion. C liable only by estoppel, but B &
D the debtors in facfk. Scarf v. Jardine, 7 App. Car. 345 (1882).
The election was between suing the new and continu-
ing partner or the retired and continuing partner. Had
the plaintiff elected to sue the old firm, defendant would
have been deprived of his remedy against the new part-
ner, who was primarily liable as a debtor in fact accord-
ing to the discription of the court.
2. Partner by estoppel liable jointly with partners in facl. A sued B,
C & D, late trading as B & Co., for merchandise sold firm in 1872. B
& C traded in Cincinnati, as B & Co., from 1S66 to 187 1. In 1871, B
209
§71. Executors. Pt. 2, Ch. 4.
sold his interest to C and another son, D, who continued business in
Cincinnati, and also carried on l)usiness in Brookvillc, Indiana. No-
tice of dissolution of old, and formation of new, firm published in
Cincinnati and Brookville. A had no previous dealings with old or
new firm of B & Co. Court, sitting for jury, found for A, and entered
judgment. — Affirmed. Speerv. Bishop, 24 O. St. 59S (1874).
Joint aclion lies ai^aiiist retired, continuing and new partner. A
sued B etal., in assumpsit, for deposits made with them as stock-
holders of "The Citizens Bank." B was a partner during part of
187 1 and 1872, but he failed to give notice of his retirement and sale
of stock. A, who did not know B was a partner, made one deposit
in January, 1871, before B became a partner, and one other in 1873,
after his retirement. Interest was paid on the aggregate. — B liable
with aclual stockholders for deposit made after his retirement. Evi-
dence insufficient for jury to infer B's assumption of deposit made
before he became a partner. Shamburg v. Ruggles, 2 Norris 148. Pa.
(1876).
Partner by estoppel atid partner in fafl jointly liable. B & C gen-
eral partners, D, special partner. B retired, but let C & D continue
business under name of B & C until outstanding notes were paid. A
sued the three for notes given for new business. — Recovered. D, new
partner, liable as well as old partners. Bulkley v. Dingman, 11 Barb.
289, N. Y. (1851).
-O-
CHAPTER IV.
EXECUTORS AND ADMINISTRATORS AS PARTNERS.
§71.
CX partnfrsl)ip mail be matic to surobe a partner's beatl).
^\)t cieeutor, or atiministrator, uioulii toutributc tl)e kteaseii
partner's estate, anb replace i)im in tl)e firm.
Can partners by agreement continue the partner-
ship in spite of a partner's death? In other words,
can a man prolong his existence by agreement after
his physical death, and b}/ means of the contrail per-
petuate the firm, so that it shall continue as if he re-
mamed alive ? If he can, does the executor or admin-
istrator, who succeeds the deceased partner in the firm.
%
Pt. 2, Ch. 4. Executors. §71.
personate him? The executor or administrator, who
takes the partner's place, does not resuscitate him, but,
on the contrar}^, is compelled to assume the position,
because the deceased cannot remain a partner. He
must be exchanged for a person who is in existence,
to acft in the capacity of a partner, and especially to
incur the unlimited liability which is the character-
istic of a partner. Does the change of persons work,
according to the partnership theor}^, a dissolution of
the firm, and make its continuance an impossibility?
These are questions which may be answered as fol-
lows :
The firm, although said to continue, does not sur-
vive, except in form, the partner's death. ^ The exr
ecutor or administrator adds a new constituent in his
personal liabilit}', to the aggregate which constitutes
the firm, and a deceased partner takes away an in-
tegral portion. Nor is one the complement of the
other. If there were but two partners, A & B, who
agreed that the death of either should not dissolve
the firm, and each made the other his executor, what
would the firm gain by the executor's membership to
make up for the loss of the deceased partner? But
in some of the decisions theory and consistency
yield to expedienc3^ The business is the substantial
thing which is continued, and the agreement (or the
testator's dire(5lion) relates to the continuance of the
business. To preserv-e this, the partnership is not
dissolved, as it otherwise would be, by the partner's
death, but the firm, as well as the business, is continued.
The law changes itself for the occasion, and permits
the testator to delegate his capacity as a partner to
his executor, and if the co-partners have, by agree-
§j2. Executors. Ft. 2, Ch. 4.
nient, accepted liim, or au administrator, in advance,
he is the partner's substitute, and becomes a partner
iu turn. The firm, by the agreement, included him
as a member according to its original constitution,
although onl}'- as an alternate for the partner in the
event of his death. The executor, or administrator,
being the partner, the deceased partner's estate is
his contribution. The executor, or administrator
takes the deceased partner's place, and represents him
in the business. The unlimited liability of the estate
naturally continues in the hands of the representa-
tive.' Although a partner, he slSls as a delegate, and
represents the deceased in his capacity to bind the
estate.
1. Executor cannot perpetuate finn after testator' s death. D executed
to B and his executors a bond for C's faithful discharge of his duties
as clerk. B's will diredled A et at., his executors, to carry on his
business. They settled up the accounts for B's lifetime, and made a
new contradl with C, as clerk. He failed to account for his subse-
quent receipts, and A et at. sued D on his bond. — Judgment for D.
He did not contrail for C, as clerk in executor's business, but in B's,
which ended with his death. Barker v. Parker, i T. R. 287 (1786).
2. By cojitrafl firm contmiied after partner's death by administrator.
Testator' s estate liable, and administrator partner. B formed with
C the firm of B, C & Co., which should not be dissolved by death of
either until August following such death, and then should be settled
up by surviving and representatives of deceased partner. B died in-
testate, in Ocflober, and C continued business until next August.
Then C formed new firm of B, C & Co., with D, son and administra-
tor, and E, administrator of B. New firm paid debts of old, and
pledged claim to A, who charged B's administrators as partners be-
tween Odlober and August, and B's estate as debtor. — Recovered.
Claim put holder in shoes of creditors paid. B's whole estate liable,
as no part designated. Administrators partners under agreement for '
interval. Laughliu v. Lorenz, 12 Wright 275, Pa. (1864).
§72.
^3 £qnitti bo€S not spccifualhi enforce tl]e betcaseb partner's
foiitract, or compel l)is eiiecutor to be a partner, tlje ciistributees
become special partners.
Pt. 2, Ch. 4. Executors. §72.
Where the executor or administrator does not a6l,
in spite of the contrail which obliges him to continue
the firm, and the courts have no jurisdi6lion to enforce
his performance of the obligation, there is no partner
to replace the deceased. The surviving partner con-
tinues the firm without a substitute for the deceased
partner.^ The effe(5l of continuing the firm with the
deceased's estate, but without a person to succeed him,
is to introduce a novelty into partnership law. The
fund, or estate, becomes a special contribution, and the
beneficiaries of the estate are special partners. The
privilege of a special partnership is established for a
class. All others must comply with the requirements
of the statutes, which regulate special partnerships;
but the beneficiaries of a deceased partner are not re-
quired to conform to the statutory law. They are
special partners by inheritance.
Can a partner grant his executor a dispensation
from the law by will ? If a partner can get the bene-
fit of the special partnership a(5l by a contracft, why
can he not abrogate the law by his will ? The execu-
tor is nothing but the testator's instrument, and is
obliged to carry out the will or commit a breach of
trust. If there is a contrail to continue the firm, the
executor must a6l, in order to save the estate, which
would otherwise be liable for a breach. The testator
can accomplish the result without an executor ; why
may he not avail himself of an executor? The emer-
gency surely demands an executor. New York and
Maryland have recognized the exigencies of the situa-
tion, and have exonerated from personal liability the
executor who adled under the diredlion of the deceased
partner in continuing the firm.^
213
§73- Executors. Pt. 2, Ch. 4.
1. Finn continued by surviving as appointee of deceased partner.
Administrator caifl reclaim money used by surviving partner as
guardian, but may share dividend ivithfirni creditors. B & C formed
partiiershij) of B & Co. for 5 years, and agreed that if B died within
the period C should carry on the business for himself and B's heirs,
subject to advice and inspection of B's executor or administrator;
money contributed by B to carry interest, biit amount lelt blank. B
died intestate, in 1817, when C was appointed guardian of B's chil-
dren, and A his administrator. A paid over to C, as guardian, sums
which he used in firm business. In 1S19, firm failed, and C assigned
his separate and the joint estate to E, for creditors. A reclaimed
pavments as B's separate estate. D, etal.,firna creditors, contested. —
A entitled only to dividend for B's advances. Executor or admin-
istrator's supervision not condition of firm's continuance, though
equitable jurisdiction in Pennsylvania to control trustee. Gratz v.
Bayard, 11 S. & R. 41, Pa. (1824).
2. Executors of a partner do not become partners by leaving /lis capital
in the firm under the partnership contract. By articles, B & C agreed
that they should carry on business until 1870, and that if B died his
capital of ^20,000 should remain for the benefit of his family. B
died in 1866, and D, his executor, left the i^20,ooo in the business
under the contrail. A sued D, as a partner, for merchandise bought
by the firm after B's death. — D not a volunteer, and exonerated in
carrying out his testator's contracfl. Richter v. Poppenhusen, 39
Howard Pr. 82 (1870).
Executors of a partner do not become partners by leaving his capi-
tal in the firm, if direRed to do so by his ivill. B, a partner, directed
his executors, who were his co-partners, C, his widow, E and D, by
will, not to withdraw his capital from the firm of B, C & Co. D left
B's share in the firm, which was continued by C. E joined the firm,
and D also signed the articles. C died, and by his will firm con-
tinued, his executors, D & E, signing new articles. A, who con-
tradled with the firm after B's death, sued D as a partner, — Not lia-
ble. Executor was merely the instrument of the testator, and
obliged to carry out the will, or commit a breach of trust. Owens v.
Mackall, 2)T^ M'd 372 (1870).
§73.
\
^s \\\t f «cntor, or atimmistrator, mail renounce, anii rannot
be forceti to act, l)e toill not be eiouerateb from liability if Ije boes
act as a partner.
The authorities in general, however, do not admit
any exception. By them personal and unlimited lia-
bility is the incident of a partner, and every person
who acT;s as a partner incurs the liability of a partner.
2 14
Pt. 2, Ch. 4- Executors. §73.
A man cannot divide himself into parts, and become
a partner in one part, or capacity, but not in all. He
must enter the partnership as an individual, or a unit.
The executor, who represents the deceased partner's
estate in the firm, is the only person who could control
the destination of the property, or recover it if stolen.
His ailing in the capacity of executor would none the
less be a(5ling, and commit him, as a partner.^ He is
not permitted to qualify his a6ls, and make them con-
ditional upon his capacity being recognized. The
capacity is disregarded, and the individual is held."
As the testator cannot furnish the personal liability,
his executor will be charged on the slightest indica-
tion that he a6ls for the testator. If the diredlion, or
agreement is to continue the firm, and the executor
does not renounce, he is liable from his position which
compels him to carry out the arrangement.
I. Executors, by leaving the testator's property in the firm, become
partners. The executors left the share of a deceased partner, for the
benefit of his daughter, in the firm, which continued the business
without changing its name. They accounted to her for the profits,
and took no part in the business. A sued them for price of draft
ordered by firm. — Liable, because no one else to represent deceased
partner, or his interest. Suit could be brought for his share, or in-
didtment for theft of it, only by them. They could not bind infant,
or make her a partner. Wightman v. Tonroe, 4 Taunt 412 (1S13).
Executors who leave deceased partner's contribution in firm, and
share the profits, are tenders, unless they co-operate in the management
of the business, ivhen, like others, they become partners. By articles,
B, C, D & E agreed to trade as B & Co. for 3 years from i November,
1S80. If any partner died during the term the balance due him to
remain part of the firm capital. At expiration of partnership, con-
tributions to be repaid before profits divided. D died, in July, 1881,
and F et at. were his executors. D had contributed 115,000. At his
death 117,000 stood to his credit, and remained in the partnership
until it expired, 31 October, 18S3. Surviving partners continued the
business. F et at. examined the firm books, but did not interfere or
participate in the management. In Odlober, 1883, A sold the firm
merchandise, and sued surviving partners and executors of D. — Judg-
ment for F et at. D's capital remained a loan to the firm. Wild v.
Davenport, 7 A. R. 295 (1886).
A fling iti the capacity of executor no protcRion as^ainst liabilitv as
partner. B, C et _al., partners in banking company, each covenanted
to answer for business until his executor sold his shares, or his bene-
21.S
^74- Executors. Pt. 2, Ch. 4.
ficiarit-s became proprietors. B died, and C acTted as his executor in
the ilrm business. No transfer or registration of B's shares. A
liroughtbill against C and the beneficiaries, for debt contracted after
B (bed. — Recovered. The avowal of his capacity does not exempt
executor from individual liability. Labouchere v. Tupper, ii Moore
P. C. 198(1857).
2. If executor aHs as partner under will, or contract, liable as partner.
Stock in City of Glasgow Bank was accepted for cesttiy que trust by A
& B, who had the shares entered to them as trustees. The charter
contained no limitation of liability, and the bank, which was, in ef-
fect, a partnership, failed. A & B, who were charged as contribu-
tories in their own right, applied to be classed as representatives,
and charged only to the extent of the fund. — Refused. Liable per-
sonally, and bank could not accept stockholders with limited lia-
bility. Muir V. City of Glasgow Bank, 4 H. L. 337 (1879).
§74.
3\\ as murf] aa tl]c fjrcctitor, or administrator, replaces fjis
testator, or intestate, ant) incurs tl)e personal anlr unlimited
liabilitn of a partner, tlje amount n)l)icl) \]t contributes of tl)e
tiecebent's estate man be limiteti.
The law is on the lookout for the personal liability
of somebody, but is satisfied when it has found a sub-
stitute for the deceased partner. The representative
capacity of the executor is ignored, and the man be-
hind the mask succeeds to the vacant position. Does
he necessarily involve the whole estate in the busi-
ness, as the partner did in his lifetime? That was a
consequence of the partner's personal liability. The
natural inference is that the whole estate is embarked
in the business, as that corresponds with the deceased
partner's liability at his death. ^ But at that epoch a
legal, as well as a physical, change takes place. The
dissolution extends to the partner's legal fundions.
He becomes a special, and his executor becomes a
general, partner.- The recipients of the estate take
216
Pt. 2, Ch. 4. Executors. §74.
all the benefits, and the executor bears all the bur-
dens. The law makes the testator a special partner
in the firm. As such, he need not let his estate re-
main subject to the risks of the business, but may-
withdraw a portion, and limit the amount which the
executor shall employ in the firm,'* The limit may-
be left to the executor's discretion, which is then per-
sonal, and cannot be exerted by any one else. The
executor is bound by the testator's diredlion, and only
so much of the estate will be charged with the debts
of the firm as the testator has diredled to be put in the
business. The residue will be distributed without
awaiting a termination of the partnership.^ Any con-
tribution made by the executor in excess of the limit
fixed by the testator is a breach of trust, and the prop-
erty so contributed may be recovered from the firm in
preference to other creditors.^ The creditors of the
firm may proceed diredlly against the testator's estate
for satisfaction, so far as it has been pledged by the
contribution for the firm debts."
Will the executor be reimbursed out of the deceased
partner's estate for the losses Avhich he has incurred
on its behalf? The right to indemnity from his
estate would, at least, afford the executor only a par-
tial and inadequate relief. His liability is unlimited
in extent, and might, as it did in the Glasgow Bank
case, sweep away the executor's fortune. The testa-
tor's estate, on the other hand, is a limited fund, and
might not be sufficient to make up the loss, or meet
the outstanding liabilities. Even this modiatm is
taken away when the testator leaves a specified por-
tion of his estate in the firm. The appropriation of
a part, it is interpreted, withholds the residue, and the
217
§74- Executors. Pt. 2, Ch. 4.
executor is not allowed indemnit}^ out of the portion
witlilield by the testator.' The executor risks the
only fund which is pledged for his relief, in the busi-
ness, and although he risks it by the testator's com-
mand, that fa6l does not found a claim against the
residue of his estate.
The settlement in distribution of an interest in the
testator's estate vests the allotment in the beneficiary,
and, by withdrawing it from the firm, takes away the
executor's claim for reimbursement for any subsequent
loss, out of the share.*'
The creditors of an executor may be subrogated to
his position, and assert his right against the testator's
estate.^ Their claim, however, is said to be dependent
upon his equity, and if he had debarred himself from
exerting his right, or forfeited it, they are precluded
by his dereli6lion, and have no access to the estate.^''
But when that obstacle is removed, the claim is recog-
nized as a diredl right against the testator's estate,
and entitles the claimants to administration as cred-
itors of the estate."
1. Contracl to coiiliiine Jirtii, in spite of partner's death, prevents his
restriHinfi^ lyy vjill the liability to a part of his estate. B, father, C,
son, and D, son-in-law, in turning over stock of existing business to
new firm, for the purpose of carrying on the business, provided, by
articles, that firm should not be' dissolved by B's death, but should
be continued by his executor until expiration of term. B agreed to
contribute 12,500 cash, but stipulated for repayment as soon as firm
could spare it, and for interest in cash, after first year, on aggregate
contrilnition. B's contribution amounted to about ^41,000. The
firm indebtedness to, at least, $85,000. B died shortly after executing
articles, and disposed of his whole estate by will, leaving all to C, 1-6
for himself and 5-6 for widow and daughters. C, acting executor,
continued business with D, and pledged assets of B's estate held for
beneficiaries, to A for discounts. Firm insolvent at expiration of
term. — Decree for A. Contracft charged B's entire estate, and he
could not restrict his liability by a will. Blodgett v. Am. Nat. Bank,
49 Conn. 9(x88i).
2. The Societas leonina, or tvpe of an impossible partnership at the
Civil law.
2r8
Ft. 2, Ch. 4. Executors. §74.
3. Partner may, oy will, cotitiniw firm and rcstriil the liability of his
estate to his contribution. B, in uSjo, trading with his son, C, as B
& Co., by will directed C to continue the business of B & Co. until
youngest son 21, or for shorter period if business unprofitable. B
charged his contribution with liabilities of firm after his death, but
direAed that the rest of his estate should not be charged. B died, in
1872, and profits were made and distributed to beneficiaries under
the will. In 1877, firm became insolvent, and A appointed assignee.
The debts were all incurred after distribution of profits. A sued B's
legatees. — ^Judgment for defendants. Jones v. Walker, 103 U. vS. 444
(1880).
4. Executor reimbursed only out of testator's contribution. B, test?.
tor, directed C, his wife, to carry on his business, and A, his trustee,
to advance her ^600, taking her note for the advance, and for the
value of his stock. He made C and A his executors. C incurred au
additional debt of ^768, 55. ^d. to B's estate, and became bankrupt.
A offered to prove for ^600, for f 1,367, 55., valuation of the stock,
and for ^768, 2s. ^d. — Proof of first two items rejeAed, because con-
tributed by testator's dire6lion, but of last item allowed, because in-
demnified only to extent of capital embarked by testator in business.
Bx parte Garland, 10 Ves. 110(1804).
Partner's dispositioji by will of all his estate, although he direBs
co-partner to continue firm for unexpired term, limits liability of de-
ceased par-tner's estate to amount contributed. B & C, by articles, in
1836, entered into partnership for two years. In 1837 B disposed, by
will, of all his real and personal estate, adding a codicil, that C
should continue firm until end of term. B died in 1837. C carried
on business, and failed before expiration of period. A brought bill
against C and against B's executor, D, on note of C & Co., given for
debt incurred subsequent to B's death. B's residuary legatee, inter-
vened and demurred, on ground that B limited liability of his estate
to amount contributed to C & Co. — Demurrer sustained. Burrell v.
Mandeville, 2 How. 560, S. C. (1844).
Will -may fix period of liquidation, and limit testator'' s partnership
liability to his cofitribution during liquidation. By will, B dire<5led
banking business of B, C & Co., with its present capital, to be con-
tinued by C, surviving partner, for 2 years, or period necessary for
liquidation, testator's profits being shared by his beneficiaries, and
empowered C to transact business as if B were living. A, holding
certificate of deposit made after 2 years, brought bill against D, ex-
ecutor and residuary legatee, and C, to charge B's estate. — ^Judgment
for defendants. B's estate liable only for contribution. Authority
to C declaratory. Brasfield v. French, 59 Miss. 632 (1882).
5. Executor's pledge of assets zuhich testator did not contribute to firm
not binding. By his will, B, a partner, direcfled C, his brother and
executor, to continue the firm, and represent B's share, which be-
longed to three parties. C pledged two notes, for |;39,ooo each held
by B, to defendants, for loans to C on behalf of the firm. A, B's ad-
iniuistra-i or de bonis 71011, reclaimed the notes. — Recovered. The
pledge of assets not embarked by B in firm, exceeded C's authority
under the will. Smith v. Ayer, 13 Otto 320. S. C. (1879).
Executor does -not umke co-executors and beneficiaries partners by
continuing testator's estate infirm business, nor bind them by pledging
his stock for the business. B, father, & C, son, partners. B died,
making C, D ct al. executors. I) et at. empowered C to a6l for B's
estate. C continued business without changing firm name, and used
2 I 9
S74-
Executors. Pt. 2, Ch. 4.
B's property, which constitute<l 2-3 of the assets. C pledged stock
of B's estate in bank E, to A, for loans made to firm business. D et
al. contested A"s claim, and E refused to permit transfer. — ^Judgment
for U et al. Firm dissolved by B's death, and C could not embark
B's estate without D et. al.'s consent. A, who knew stock pledged
not for administration of B's estate, but for the business, not a bo}ia
tide holder. I'irst Nat. Bank of Allegheny v. Farmers' Deposit Bank
of PitUburgh, 5 Central Rep'r 505 (1S86).
6. Executor liable first, and then testator's estate. By will, B diredled
C his widow, to carry on his business, unless it should turn out un-
profitable. His executors took possession when it proved a loss, and
A claimed payment for debts incurred by C. — The stock acquired by
C in carrying on the business applied first to payment of her debts,
and the deficiency made up out of testator's assets. Hankey v. Ham-
mock, I Buck, Cases in Bankruptcy, 210; 3 Madd. 14811. (b) (1786).
7. Creditors of executors reimbursed only out of testator' s contribution.
B, testator, directed C, his wife, to carry on his business until young-
est child twenty-one, and gave her the use of his stock in trade. He
authorized 1), liis executors, to increase the capital in the business in
their discretion. D renounced, and C took administration. She
failed, and her creditors sought to come in with B's creditors upon
his estate, or, at least, be substituted for those whom she had paid
out of B's stock. — Refused. None of B's estate liable, except the
stock diredted to be put in business by the will. Cutbush v. Cutbush,
I Beav. 185 (1838).
8. Testator cannot exonerate tlie executor from liability. B gave her
daughters, C and D, each a legacy of _;^2,ooo for life, with remainder
to legatee's children. Testatrix, who held Glasgow bank stock, gave
E and F, trustees, express power, in their discretion, to retain the
shares without any personal liability for loss. E and F, who allotted
the stock to C, and retained it, with her concurrence, as an invest-
ment, claimed indemnity for the liability, which they incurred as
partners, from D. — Disallowed. Distribution of assets severed the
trust, and indemnity limited to investment allotted to C. Liability
resulted from act of E and F, and not from anything done by D, who
was not interested or compelled. Frazer v. Murdock, 6 H. L. 855
(18S1).
9. Reimbursement limited to amount authorized by will, and subjeB
to that amount, beneficiaries may claim against creditors of executor.
No equity exists in a legatee over a creditor, and the intermediate
barrier of an executor's trade, W'hich is only a trust, does not prevent
the recourse over. B directed his executor, C, to continue testator's
busines of a dairyman for the benefit of his family. C took posses-
sion in 1870, and carried on the business in his own name. In 1876
he surrendered the lease, and obtained a renewal in his own name,
of the place of business. In 1879 he pledged the lease, for a loan, to
A, who did not know of C's being an executor. C used ^130 for
himself, and ^66 for the estate. D, the testator's son, claimed ad-
ministration. A recovered judgment against C, and levied on the
stock and leasehold. The parties consented to a sale without preju-
dice. A gave up the lease, to effedl the sale, but claimed his debt
out of the proceeds. His argument: No notice of a trust, and enti-
tled to take the property as C's own. C, also, had authority, as ex-
ecutor, to pledge the leasehold, and A could not be deprived of his
legal possession without payment. — Beneficiaries' equity paramount
Pt. 2, Ch. 4. Executors. §75.
to A's. — Executor personally liable for contiuuing testator's business,
though entitled to indemnity from his estate, if continued by his
will, for debts incurred in carrying on the business for the testator.
C acquired no title by trading in his own name, and beneficiaries'
acquiescence related to his title as trustee. Executor binds assets
only if he deals with them as executor. No execution against him
could seize the trust estate, except for ^66 used on account of it.
Renewal of the lease enured to the trust, and cestuy que trusts^
equity attached at that date. A's equity arose with the pledge.
Court could decree a sale of the freehold without possession of the
lease, by adding a condition that the holder was bound by the sale.
In re Morgan. Pilgrem v. Pilgrem, i8 Ch. D. 93 (1S81).
10. Creditors of executor no right to estate, except through executor.
If executor bars his right of recourse to the testator's estate, credit-
ors who claim through him also excluded. Unless the executor has
intercepted the equity by a default, which bars his right to indemnity
when it exists. If he is excluded from the estate by his miscondu(ft,
the creditors who are subrogated to his claim are unable to get
access to the testator's estate. By will, B dire<5ted C, his executor,
to let D, a nephew, carry on business, under C's supervision, with
D's share, 1-8 of B's estate, and gave D option at majority to take
stock or bring it into hotchpot. C carried on the business himself,
became in default to the estate, and insolvent. A, creditor, sued C
and claimed equitable lien on D's quota employed by B's direction
in trade. — No standing except by bill. But C's default barred his
right and A's equity to the portion of B's estate embarked in trade.
In re Johnson, 15 Ch. D. 548 (1880).
11. Creditor of executor entitled to administration of testator' s estate.
By will, B gave all his estate to C, executors and trustees, to permit
D, his widow, to employ the rents and profits in carrying on his busi-
ness of draper during her lifetime. They renounced, and she took
administration c. t. a., continued the business, and died insolvent.
A, her creditor, claimed administration on B's estate. — Entitled, as
creditor in equity of B. Fairlamb v. Percy, 3 P. & M. 217 {1875).
§75.
<l\)t intention of tl]e partner, an^ of l]is f iterator, determine
l)ou), an^ bp tuljoni, tl)e business sl)all be tarrieti on after a
partner's ^ta\\). ®l)e intention must be ascertainei), as in all
tases, bn tije acts ani) declarations of tl)e parties.
If the executor is unwilling to follow tlie directions
of the testator, and carry out his plans, he can re-
nounce the office, and avoid the risks incident to the
business. If he does not i-efuse to undertake the task,
5-.r. Executors. Pt. 2, Cii. 4.
but assumes it, his position must be fixed. Whether
he makes himself a partner, or not, can be determined
only as the membership of any individual partner is
ascertained. The fadl that the executor derives no
benefit as a partner, but incurs loss as if he were such,
although a strong argument against his being a part-
ner is not conclusive. He might be willing to under-
take the risk, or he might do acT:s which w^ould charge
him as a partner, in spite of his will.
In the attempt to solve the difficulty of the situation,
this view has been taken: The surviving partners
continue the business, although the firm is dissolved
by the death of a partner, and no break is made in the
continuity of the firm transadlions. The deceased
partner does not withdraw his capital, or direct the
business to be wound up; on the contrary, he leaves
his interest undisturbed in the business, which he
wishes to preser\'e, in order to secure his share of the
profits. He appoints an executor to take charge of
that interest, and direcfhs him, in effecft, not to inter-
fere with the continuation of the business by the sur-
viving partners. The executor represents the de-
ceased's interest. The testator meant to withdraw
from the business as a partner, but he also meant to
leave his interest invested in the business, which he
refrained from destroying, in order to keep his invest-
ment produ6live. By this arrangement he ceases to
be a partner, and becomes a lender, receiving a share
of profits, in lieu of interest upon his capital.^
It is far more natural for a testator to appoint an
executor to take charge of an investment than to un-
dertake a partnership, and carry all the liabilities of
the business upon his shoulders, out of pure friend-
Pt. 2, Ch. 4, Executors. §75.
ship for tlie testator. In such a case, the only thing
which the executor could own in the business would
be its debts. As it seems almost incredible that any
executor would assume the task, under such circum-
stances, he should not be made a partner by construc-
tion of law.'-
There is one way, however, in which he can acft with
safety, and escape the liabilities of a partner. He can
enter into a special partnership, and make the testa-
tor's estate his contribution. The statute will prote6l
him, and the decedent's estate will be in the same po-
sition as if he had assumed the liabilities of a partner.^
There is no occasion for his incurring any liability
on behalf of the estate.
1. If executors do not aB, but lend, under zaill, estate not liable nor
executors partners. B, C & D were in partnership, as audlioneers.
Articles provided that firm should continue for seven years, and if a
partner died during period his executors should take his share. B
did die, and subsequently, during term, A commissioned firm to sell
mill, and sued B's executors for the proceeds. — Not liable, because
no contra(5l by executors. Holme v. Hammond, L. R. 7 Exch. 218
(1872).
A, B & C, partners, agreed that A might nominate a partner on his
death; that ^100,000 of his share should be continued in, and be
considered part of, the partnership effedls; that surviving partner
should give bond, to pay said amount, with interest, and permit A's
executors to inspedl books. A died, and his executors assigned his
interest to B & C, taking bond of indemnity against debts. B & C
became bankrupt, and A's executors proved for amount due. — Al-
lowed. A's estate not embarked in business, but a creditor. Ex
parte Edmunds, 11 D. F. &J. 488 (1S62).
2. Executor, who leaves testator's capital in firm, not liable as part-
ner because he fails to compel innnediate liquidation. B, C & D
traded as B, C & Co. B died, and his executor, E, left with them B's
capital, which entitled his beneficiaries to share the profits. E knew
that business was advertised to continue, but took no part in its man-
agement, and repeatedly urged C and D to close the business. The
firm became insolvent, and A sued E, as co-defendant, for debt con-
tracted since B's death. — ^Judgment for E. Avery v. Myers, 60 Miss.
368(1882).
3. For fixed term dissolved by death. A & B contradled partnership
for 10 years. Articles gave heirs, or representatives of deceased
partners, 3 months to eledl to continue association, as general or
special partnership; if no eledlion, a special partnership. A died;
his representatives made no election within 3 months, and brought
223
%ye. Business Contracts. Pt. 2, Ch. 5.
bill for account and receiver. B denied right to dissolve before
expiration of term. — Firm could not continue as special partner-
ship, because statutory requirements not observed. Representa-
tives not having eledled to continue general partnership, death
operated as a dissolution. Surviving partner entitled to wind up
business. Jacquiu v. Buissou, ii How. Pr. 3S5, N. Y. (1S55).
-O-
CHAPTER V.
NATURE OF THE CONTRACT MADE BY THE FIRM IN
TRANSACTING ITS BUSINESS WITH
THIRD PERSONS.
§76.
(Elje partners ma-q be railed bn a colkrtbc name for conoe-
ntence, eircept in legal proceedings.
The firm is not recognized in law as a person, and
can neither sne nor be sued.^ The firm is simply an
aggregate of individnal partners. They are the par-
ties who must be sued.' One partner cannot sue for
the firm claim ; not even if he is the assignee of his co-
partner's interest.^ All the original promisees must
join as plaintiffs.^ Nor can one partner be sued alone,
but all within the reach of process must join as de-
fendants.*
If the firm is organized as an unincorporated asso-
ciation, the articles may provide for suing and being
sued in the company name, or in the name of trustees
appointed to condu61; the business.*^ This is an arange-
ment binding between the partners. The firm, in its
colledlive name, or the trustees, may sue or be sued by
224
Pt. 2, Ch. 5. Business Contracts. §76.
a partner, provided the claim does not involve partner-
ship accounts.7
I. Finn no standitig as a party in U. S. court. A & Co. averred
themselves citizens of Peunsylvauia, and petitioned for removal of
cause from Iowa state court. — Remanded. Citizenship of each partner
requisite to give jurisdi(5lion. Adams v. May, 27 Fed. R. 907, U. S.
Cir. Court (1886).
California. "Associates may be sued by name of Association."
"When two or more persons, associated in any business, tiansatfl
"such business under a common name, whether it comprises the
"names of such persons or not, the associates may be sued by such
"common name, the summons in such case being served on one or
"more of the associates; and the judgment in the adlion shall bind
"the joint property of all the associates, in the same manner as if all
"had been named defendants and had been sued upon their joint
"liability." Cal. Codes and Stats., 1876, ^{^388-389.
Common law form, a suit against individual partners in Calif 07-nia.
A sued B and C, trading as B Bros., defendants, served B, and took
judgment by default against him for want of appearance. A moved
to amend judgment, and make it a judgment against firm, in order
to issue execution against firm assets, as well as separate property of
B. — Refused. Suit against individual partners. Judgment author-
ized by ^414, and other partners might be brought in under II989-
994. Fedor v. Epstein, 10 Pacif R. 785 (1886).
Partnership description surplusage. A and B, having sued as part-
ners trading as B & vSons, and obtained judgment against C, brought
suit to set aside prior judgment, and sale under it to D, on account
of fraud. Defence: No publication, as required by Cal. C. C, ^2466
^2468. — Judgment for plaintiffs. Partnership description surplusage.
Lee V. Orr, 11 Pac. R. 745 (18S6).
Iowa. " Suits may be brought by or against a partnership as such,
"or against all or either of the individual members thereof, and a
"judgment against the firm, as such, may be enforced against the
"partnership property or that of such members as have apppearedor
"been served with notice." Iowa code of 1884, '/2553.
Nebraska. "Associations — F"irms, how named." "Any company
"or association of persons formed for the purpose of carrying on any
"trade or business, or for the purpose of holding any species of
"property in the state, and not incorporated, ma}- sue and be sued
"by such usual name as such company, partnership, or association
"may have assumed to itself or be known by, and it shall not be
"necessary in such case to set forth in the process or pleading, or to
"prove at the trial, the names of the persons composing the com-
"pany." Compiled Statutes of 1885, \2A,.
" Process — Service." " Process against any such company or firm
"shall be served by a copy left at their usual place of doing business
"within the county, with one of the members of such company or
"firm, or with the clerk or general agent thereof, and executions
"is.sued on any judgments rendered in such proceedings shall be
"levied only on partnership property." Ih. i/,25.
" Individual propert}- — How subje<5led." "If the plaintiff, in any
"Judgment so rendered against any company or partnership, shall
"seek to charge the individual property of the persons composing
"such company or firm, it shall be lawful for him to file a bill in
"chancery against the several members thereof, setting forth his
225
§76. Business Contracts. Pt. 2, Ch. 5.
"judgment and the insufficiency of the partnership property to sat-
"isfy the same, and to have a decree for the debt, and an award of
" execution a<;ainst all such persons, or any of them, as may appear to
" have been members of such company by consent of firm." lb. i<27.
Firm a partv only by force of statute. Robert Dick & Son obtained
judgment against company B, in Nebraska. No resident of county
offered as security for costs, nor proof that firm carried on business,
or owned property in the state — Reversed. Compliance with statu-
tory requisitions necessary to maintain suit. B. & M. R. R. v. Dick, 7
Neb. 242 (1878).
Common laiu right unaffeRed by statute. A, B & C, late trading
as A, B & Co., brought suit against D. Demurrer: Plaintiffs no ca-
pacity to sue without showing residence and business, or property, in
state. — Judgment for plaintiff on demurrer affirmed. Smith v. Gregg,
9 Neb. 212 (1879).
Firm assets must be exhausted before execution against separate
partners. A, who recovered a judgment, in Wyoming Territory,
against B and associates, and also a judgment against B, C & Co.,
sued B, C, D, E, F and G, in Nebraska, upon said judgments, as part-
ners in both firms. No proof of Wyoming law, or of insufficiency of
firm assets. — Judgment for defendants. Wyoming law assumed to be
like Nebraska, and firm property primary fund. Ruth v. Lowrey, 10
Neb. 260 (1880).
Non-observance of statutory requisitions cured by judgment. A &
B, non-resident firm, attached corporation and its stockholders, in
Nebraska. No objection raised, in any form, to plaintiff's capacity
and judgment recovered. On appeal, objedlion raised. — Affirmed.
ObjeAion waived. Cady v. Smith, 12 Neb. 628 (1882).
Connecticut. " In mesne process by or against a co-partnership,
"it shall not be necessary to insert the names of the partners, pro-
" vided the partnership name is stated ; and the plaintiff shall have
"the right, within the first three days of the court to which the pro-
" cess is returnable, to amend it, without costs, by inserting the name
"of the partners; and writs returnable before a justice of the peace
"may be amended in the same manner, at any time before the plead-
" ings are closed." Conn. Stats., 1875, p. 400, |i2.
2. Partners must sue by Christian ttam.es. A& B recovered judgment.
— Error. No Christian names. Seely v. Schneck, Pen. 75 (1806);
McCredy V. Vanneman, Pen. 870 (1811); Crandall v. Denny, Pen.
137 (1806) ; Burns v. Hall, Pen. 984 (1812). Though no evidence
that plaintiffs had any Christian names. Tomlinson v. Burke, 5 Hal.
295, N.J. (1829).
3. Interest of partner in a claim cannot be so assigned to co-partner,
that he can sue for the debt in his own name. A sued B's adminis-
trators, on implied assumpsit, for professional services rendered B
between 1S55 and 1880. During the 25 years, A had been a partner
in three law firms, which extended nearly through the entire period.
A was assignee of the interests of his late co-partners. B had paid A
his fee for conducing trials and controversies on the settlement of
each transaction. No pleadings were filed. Defendant's points :
Statute of limitations, and plaintiff's suing alone. VerdiA for A,
^7,000, reduced by court to 135,000. — Judgment reversed. A could
not join with his cause of adlion claims for which he could not sue in
his own name. A could not recover for his services as a whole, but
only on a quantum meruit^ as the right to compensation accrued;
•which, in the absence of agreement, would be from year to year,
like any hiring. A's claim barred at all events, except for last six
226
Pt. 2, Ch. 5. Business Contracts. §76.
years, Mosgrove v. Golden, 5 Out. 605, Pa. (1882) ; citing Horbach v.
Huey, 4 Watts 455, Pa. (1835).
4. Suit in name of claimants. Claim by A, and others, for debt which
B owed A. — No judgment. Though A might be partner, or co-owner
with others, claim should show cause of adlion in plaintiffs. Autin v.
Towusend, Pen. 744 (181 1).
5. All partners must be joined, unless out of jurisdiBion. A & B
summoned, but C ignored. — ^Judgment reversed. All may be sued,
but non-served must be out of jurisdidlion. Ford v. Munson, i South.
93 (1818); Smith V. McDonald, i South. 103 (1818).
6. Procedure ; joinder 0/ partners. A subscribed to stock of unincor-
porated society, under articles which vested whole power of the body
in trustees. Trustees sued him for subscription. Defence : a part-
nership, and all stockholders should have been joined as plaintiffs.
— Though a partner, he was bound by his contrail, which empow-
ered trustees to sue. Cross v. Jackson, 5 Hill 478, N. Y. (1843), rely-
ing on Radenhust v. Bates, 11 Moore 421 ; 3 Bing. 463.
7. Agreejnent of partners enables them to sue a partner in name of a
cotnpany, and his plea, if in bar, anticipates their case, which might
shozu a cause ofaElion independent of firm accounts. B, C et al., trad-
ing in partnership as a company, agreed to sue and be sued in its
name, A. Assumpsit by A against B, for merchandise. Plea in bar :
Unincorporated company can't sue, nor can partner sue co-partner. —
B estopped by his agreement to deny A's right to sue, and evidence
might disclose at the trial a trausa<5lion which did not involve part-
nership accounts. Manufadl'g and Mer. Co. of Sandusky v. Schoolly,
Tappan 223, O. (1818).
Must an infant partner be a party to the a(5lion ? It
is admitted that an infant partner cannot be charged
as a co-defendant. The requirement, that all parties
to a joint contrail must be made parties to the a6lion,
is relaxed in this instance, and the infant, though a
co-promissor, is treated as a cypher. It has been held
that an infant partner must be made a co-plaintiff, be-
cause of his interest in the business, and of a minor's
privilege of enforcing contrails beneficial to himself.'^
This is taking only the plaintiff's side in view. The
defendant might set up a counter-claim, and obtain
judgment upon it, against the plaintiff. The effe6l
would be to charge the infant for a firm debt when he
is exempt from liability for it.
8. Infant partner must join, unless a nominal partner. A & Son
traded as bankers. A, alone, sued C, a customer, for the amount he
227
§76. Business Contracts. Pt. 2, Ch. 5.
had overdrawn his account. C pleaded non-joinder of the sou, who
was a minor. — Sustained, in default of proof that the son had no
property, or interest, as a partner, in the firm. Teed v. Elworthy, 14
East 210 (181 1 ).
Infant partner may join as co-partner in a suit for money lent. B,
an adult, & C, an infant, were in partnership. A, C's father, and B
sued I) for a loan made to D by I? & C. — Judgment for D. He made
no contracl with A, and C is entitled, in a suit for his benefit, to be
co-plaintiff with B by the contracl of partnership, which is not void,
but only voidable. Osburn v. Farr, 42 Mich. 134 (1S79).
Must a uominal partner be j oined as plaintiff ? The
answer depends upon the manner of the holding out.
If the nominal partner is held out with the knowledge
and concurrence of the a(5lual partners, the defendant
may compel his joinder as co-plaintiff, in order to make
available any set-off the defendant might have against
all the partners, including the nominal partner." If,
on the other hand, the nominal partner held himself
out without the knowledge or concurrence of the a6lual
partners, the defendant could not compel his joinder as
co-plaintiff, unless such nominal partner had a(?ted as
the agent of the a6lual partners in the transaction out
of which the suit arose.
9. Supra I69, note 21.*
Should a dormant partner be a party to the ac1:ion ?
He may be sued with the ostensible partner."" The
defendant may compel his joinder as a co-plaintiff,
because he is, in fa6l, a party in interest. Moreover,
as the ostensible partners, when sued alone, may, with
the dormant partner's consent, set-off his claim against
the plaintiff, b}- parity of reasoning the defendant to
a suit by the ostensible partners, should be permitted
to set-off the full amount of a claim which he might
have against them, together with the dormant part-
ner,'^ although the obligation Avas not incurred in the
course of the firm business. But if this be not ad-
mitted, the defendant certainly has the right to set-
228
Pt. 2, Ch. 5. Business Contracts. ^y6.
off such proportion of his counter-claim as corresponds
to the number of ostensible partners. But as the ac-
tion is really prosecuted for the benefit of all, includ-
ing the dormant partner, the defendant should be en-
titled to compel his joinder, in order that the entire
set-off may be made available. The ostensible part-
ners cannot compel a firm creditor to make the dor-
mant partner a co-defendant. They are liable on the
contraA as made.'^ In England, the failure to plead
the non-joinder of the dormant partner in abatement,
is treated as an eleAion, although the defendant did
not know of his connexion with the firm."
10. Dormant liable zvith ostensible partner. B bought merchandise.
A sued B & Co. for price.. — Recovered. Crary v. Williams, 2 Ohio
65 (1825).
11. Dormant may sue as surviving partner^ and defendant sei-ojf firm
debt. A dormant and B ostensible partner. C gave B note for mer-
chandise. B died, and A sued C on the note. He set-off firm debt
to him. — Adlion maintained. Set-off against A, as surviving partner.
Beach v. Hayward, 10 Ohio 455 (1841).
12. Unknown dormant partner need not be joined as co-defendant. A
sued B on his warranty of two horses, sold in his own name to A,
who did not know C was a dormant partner. Defence: Non-joinder
of C. — Recovered. Contrail with B, and A need not join C as co-
defendant, because he did not contrail with, or know C was B's dor-
mant partner. Cookingham v. Tasker, 2 Keyes 454, N. Y. (1866).
Dorjiiant partner need not be wholly unknozvn and inaRive. B, C
and D did business as B & C. A6live members never stated that D
was a partner, and he rarely appeared at the store, though he ad-
mitted, in borrowing money for the firm, that he was a partner; but
his conneilion was not generally known in the community. Busi-
ness cards, with his name as a partner, were printed, but not issued.
A, who was agent of the firm, and ignorant of D's membership, sued
B & C. Defence: Should have joined D. — Recovered, because D a
dormant partner, and unknown when advance made. Dormant
partner need not studiously conceal his conneilion, nor wholly ab-
stain from the business, nor be absolutely unknown as a partner.
North v. Bloss, 30 N. Y. 374 (1S64).
Money paid to one partner, with knozvledge that there were other
partners, gives right to a separate aHion. B, C & D bought coal
land, for |i7,ooo. B employed E to solicit A to join them in buy-
ing the land. E represented that the price was 150,000, and, on
that basis, A contributed |;i,ooo; f4oo would have been his quota if
price |i 7,000. A sued B for obtaining money on false pretence, and
for money had and received. Defence : C and D should be co-
defendants in assumpsit, as they received a portion. — Recovered.
Count for tort disregarded. C and D need not be joined, because,
229
§76. Business Contracts. Pt. 2, Ch. 5.
like dormant partner, unknown to A. Lesley v. Wiley, 47 N. Y. 648
(1872).
13. Kendall v, Hamilton, infra \ 77, n. 3.
EnacSliiient of rule that parties in interest must join
makes it inflexible. N. Y. Code of Procedure, §iiii.
J )or)nant partner must join as co-plaintiff. A sued C for firm claim.
Defence: Non-joinder of dormant partner, B. — Judgment for C. Code
requires joinder of all parties in interest. Secor v. Keller, 4 Duer 414
(iS55)-
Should a special partner be a party to the allien?
He need not join, though he may do so, if he chooses
on account of his ultimate interest in the disposition
of the firm assets upon dissolution/^ There is no
reason to join him as co-defendant, because his lia-
bility is limited to his interest in the firm assets, and
may be seized to satisf}^ a j udgment against tlie gen-
eral partners.
14. special partner a proper, though not a -necessary, party to firm suits.
Firm creditors sued general partners for injuncflion and receiver.
Defence: Non-joinder of special partner. — Decree. Notwithstanding
statute direcfts suits to be brought in name of the general partners,
the special partner is a proper party, because he has an interest in
the ultimate disposition of firm property, but not a necessary party,
because he holds no firm property. Schulten v. Lord, 4 E. D. Smith
206 (1855).
If trading under a fictitious name is made a penal
offence by statute, can the firm recover on its con-
trails ? It is probable that the firm cannot sue if the
contradl in question was made in the course of its
business/^ But if the contradl is merely incidental to
the business of the firm, and of such a nature that no
credit could have been given to the firm name, it is
not invalidated by the statute/''
15. "?r. No person shall hereafter transaA business in the name of a
"partner not interested in his firm, and where the designation 'and
"company," or '& Co.' is used, it shall represent an adlual partner
" or partners."
" ^2. Any person offending against the provision of this a(?t, shall,
upon convi<5lion thereof, be deemed guilty of a misdemeanor and
"be punished by a fine not exceeding |iooo'" Ch. 281, N. Y. Laws,
1833-.
Wife's answering for ' Co.' in husband's firm not violation of stat-
ute against fictitious najnes. A & Co. sued B for price of merchan-
230
Pt. 2 Ch. 5. Business Contracts. §76.
dise. Defetice: 'Co.' represents A's wife, and married womau could
not be partner of her husband. — Judgment for A & Co. Wife a real,
not a fictitious, person. Zimmerman v. Erhard, 83 N. Y. 74 (1S80).
Statute does not prevent firm's offering credit by fictitious name. A
Bros. & Co., book -publishers, of New York city, employed B, as can-
vasser at Buffalo, who executed a bond, with two sureties, C andD, to
J. A & C. A, for performance of his contrac5l. B failed to account for
proceeds of his sales, and A Bros. & Co. brought suit on the bond.
C's defence: Firm designation a violation of s'tatute. — Judgment of
non-suit reversed. Statute aimed at credit obtained by fictitious
name. Gay v. Seibold, 97 N. Y. 472 (1884).
16. Right to firm property not destroyed by trading tinder an untawfiil
name. New York statute forbids trading under a fidlitious name.
A and B traded as carriage makers in the name of A Bros. B retired,
and A continued. He shipped a carriage, marked A Bros., by C's
road, and sued for damage done to it in transportation. Defence : A
engaged in unlawful business. — Recovered. Statute meant to pro-
tedl persons dealing on the credit of the firm. Carrier deals on the
credit of the goods shipped. Wood v. Erie R. R., 72 N. Y. 196 (1878).
Fictitious name does not prevent firm suing for rent. A, B & Co.,
a Philadelphia firm, with a branch in New York, let a portion of
their building in New York to C & Co., for 9 months, at lioo a month.
C & Co. left at end of 4 months. A, B & Co. sued them for rent for
balance of term. Defence: B dead, and plaintiffs transacting busi-
ness under fictitious name. — ^Judgment for A, B & Co. Lease not
part of firm business. Sparrow v. Kohu, 3 E. R. 293 (1S85).
The Civil code of California provides that persons
transacting business in that State under a fictitious
name, or description which does not show the names
of the parties, cannot sue until they have filed and
made formal publication of a certificate of the parties'
names and residences.
17. Certificate of partnership not required for aBion of tort. Firm A
& Co. sued B, constable, for conversion of crop raised by A & Co. on
leased land, on an execution for the debts of C, the landlord, who
was employed, as farmer, by A & Co. — Judgment for A & Co. Ralph
V. Lockwood, 61 Cal. 155 (1S82).
Firm which has not filed or published certificate, may assign a
claim. B & Co., never having filed or published certificate required
by C. C, ^2468, assigned a claim to A, who sued C. Defence: As-
signment made to evade said secSlion. — Judgment for A. Cheney v.
Newberry, 67 Cal. 126 (1S85).
Certificate a prerequisite of suit by firm. Firm sued for price of
merchandise, and alleged the filing of a certificate, required by C. C.
^2468. Denial, and certificate produced did not comply with statu-
tory requirements. — Non-suit. Sweeney v. Stanford, 67 Cal. 635
(18S5)..
Certificate niti.^t precede suit. A & Co. sued B on promissory note,
payable to A & Co. After bringing suit, plaintiffs filed and published
certificate required by statute. Judgment for plaintiffs. — Reversed.
Adtion cannot be begun until certificate is filed. Byers v. Bourret,
64 Cal. 73 (1883).
231
^76. Business Contracts. Ft. 2, Ch. 5.
What is the effedl of trading in an individual part-
ner's name? The presumption in Pennsylvania is,
that commercial paper is given for the firm business ;'*
in England,'" and generally"*^ there is no such presump-
tion, but the paper indicates, according to its form, an
individual transaction until the contrary is proved.
The presumption of a firm transaction may, however,
be rebutted by evidence that the paper was used on
individual account.-^
18. Where a firm transadls business in the name of one
of the partners, is a promissory note in his namQ prima
facie his individual note, or is it chargeable to his
firm? It has been decided in Pennsylvania that, in the
absence of evidence, the presumption of law is, that the
loan was made on the credit of the partnership business.
Commercial paper in individual partner'' s name, if also firm name,
presumed to be for firm. Nathan and Newberry Smith, partners,
carried on business in the name of ' N. Smith.' Nathan's business,
whether for himself or for the firm, was done under the same name.
Nathan drew two checks on a bank, C, for |ii5o each ; the father of
one of the partners drew a note for |;6oo, payable to, and endorsed
by, N. Smith; and Nathan drew a note for |i,i5o, which was en-
dorsed by the father. Nathan then deposited these checks and notes
as collateral security. He borrowed |i, 500 from A, and, at the same
time, drew a check on a bank, D, for |i,5oo, payable to himself, or
bearer. Afterwards, he drew a check on the same bank, D, for
$2,000, payable to bearer, on which A lent him $1,500. On this
check, I288.35 remained due. A's total claim was, therefore, %2,-
088.35 on all the checks together. A brought suit for this amount
against Nathan and Newberry, as partners. Defence : That they
were not liable as partners. — Recovered. Rogers, J., charged (inter
alia): "It is the opinion of the Court that," the loan, "is to be
"considered as made on the faith and credit of the regular lumber
"business in which," Nathan Smith, "was engaged, and not on ac-
" count of any speculation in which he may have been concerned
"on his own account." That is the presumption. Mifflin v. Smith,
17 S. &R. 165(1827).
Supra.
19. Transaction not less individual because partner traded as firm in
his individual name, A sued firm upon two bills, one accepted and
endorsed, and the other endorsed by Wm. Beaston, who traded in
company with C, under the individual name of "AVm. Beaston."
There was no evidence to charge the firm, except the address of the
bills, at the works.^udgment'for defendants. The individual name
prevails in default of evidence to show a partnership transadlion.
Yorkshire Banking Co. v. Beaston, L. R., 4 C. P. D. 204; 5 Id. 109
(1880).
232
_Z_I
Pt. 2, Ch. 5. Business Contracts. §76.
20. Finn trading; in indvidiial name. Firm business done in B's name;
note given by B.— Presumption an individual transadlion. Oliphant
V. Matthews^ 16 Barb. 608, N. Y. (1853).
21
If partner's name Jinn designation, slight evidence of individual,
sufficient to rebut presumption of firm transaFlion. B carried on a
limited partnership, in his individual name, with C and D, two non-
resident partners, and also settled up the business of a prior firm, of
B & Co. The firm failed, and assigned to E for creditors. A claimed
for loans made on memoranda, notes and checks, all signed 'B.' Au-
ditor upon the evidence found that A's claim arose out of transac-
tions with B & Co., or individual transactions with B, and rejedled
claim against firm assets. — Judgment affirmed. Burrough's Appeal,
2 Casey 264, Pa. (1856).
Suppose the individual name was the designation
of two firms. The plaintiff would have 2^ prima facie
case against each firm, and he might prove w^hich
firm adlually received the consideration, although he
had designated the wrong firm in his suit, the descrip-
tion being surplusage. ^^
22. Bank v. Dakin, supra §44, n. 5.
How do separate creditors stand in reference to a
firm which has for its trade-name the individual des-
ignation of a partner? They rank as joint creditors,
and are entitled to take the firm assets in execution."^*
This position is consistent with none but the Penn-
sylvania view, which, in such cases, makes all trans-
actions in the individual partner's name firm business.
23. If firm in individual partner' s name, his separate creditors rank as
firm creditors. B traded in his individual name, and A was his
dormant partner. B confessed judgment for his individual debts,
and sheriff took firm assets in execution. A asked for injuncftion.
Judgment-creditors claimed right paramount to dormant partner
over firm assets. — InjunAion refused. Separate creditors of acflive
partner rank with joint creditors, where he conducts firm business
in his individual name, because creditors know nothing of a firm.
Cammack v. Johnson, i Gr. Ch. 83, N.J. (1839).
Can a partnership exist without a firm name ? Yes,
and suit would be diredlly against the partners, as co-
contracflors. Suit must alwa^'s be brought against
them, even where they have a firm designation."^ If
233
§77- Business Contracis. Pt. 2, Ch. 5.
no name had been adopted, a partner could seledl one,
and use it as the trade-name to bind his co-partners.^
24. McGregor v. Cleveland, supra \\\, n. 6.
25. Austin V. Williams, supra ?44, n. 7.
§77.
^\\t proccbure of tlje Can) fttfrdjant in partncrsl^ip cases roas
not introbuccb at tl)c Common laro.
PartnershiD, introduced into the Common law with
the advent of commerce, was said to be a part of the
Law Merchant, and to be governed by its provisions.
The assertion is not founded on fadl. The common
lawyers did not dream of adapting the process to any
foreign system, or think it worth while to inquire
what the Law Merchant was.
The simple object of the Civilians was to obtain
satisfaction for a claim against a firm, and they natu-
rally enforced the right against the firm assets, and
against the separate partners. The remedies did not
exclude each other, but were concurrent, or cumula-
tive.^ At this late day, the common lawyers are still
groping about, in search of a remedy which will ena-
ble them to procure satisfaction, and not tie them up,
like mummies, in the process. For this purpose, an
effort is being made to introduce the Civil law pro-
cedure, but, thus far, the construction given to the
enactment has frustrated its purpose.' No desire is
evinced to ascertain the Civil law method, and to in-
terpret the statutory language, in accordance with the
process enacted for the purpose of superceding the
234
1
Pt. 2, Ch. 5. Business Contracts. §77.
Common law pradlice. On the contrary, the Common
law formula of a joint contra6l is retained, and worked
into the Civil law process, which is thereby rendered
as useless as the old method.^
I. The process of the Civil law may be illustrated by the
German pracftice, which, like ours, regards the firm as
but a short name for the partners, who are liable to the
extent of their resources. The judgment in a suit
against the firm is, in the first instance, limited in exe-
cution to the joint assets, but may be enlarged and ex-
tended to the individual partners ; when execution upon
it may issue against their separate estates. The part-
ners can make no defence to the judgment. It is only
when, for a reason peculiar to himself, the judgment
would not afFe6l a partner that he can establish an ex-
ception to the operation of the judgment, and relieve
himself and his separate estate from liability.'^ A suit
also lies against the partner, or partners, and, upon a
judgment, execution will issue dire6lly against the
separate estates. The remedies against the firm, and
against the partners, are concurrent, and may be com-
bined ; they are not self-destru(5live, and do not exclude
each other by merging the claim. ^ The facl is kept in
mind that the obje6l of the creditors is not the triumph
of a judgment, but a satisfaction of the debt.
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„ (je jell )■ drafter unter feinem 9Jamen obcr cb er alle unter ber ^-ivnia ber ©efell:
„ fc^aft betangen i»i(I. J^ut er ba§ l^'clUerc, fo laffen fidi biird) bie (itn=
„ iaffung unter ber ^-irnta fdmmtlidie (*'5eielljd)after ein. ^as ti-rfenntnii^
„bringtatso re§ jubicata alien Gefelljc^aftern gegeniiber f)en'pr. Ser
„ ©tdubiger, Uu'lc^er ein obfieglid^eS Urtf)eil erf)dlt, tann tnitf)in entliKber
„ execution in ben <oanb(ung§fonbf^ bcrlangen Pber eine Mlage gesen ben
„einselnen Gefellfdiafter anftellen, nu'ld^e i'njofern al'o actio jubicati
„ bejeid^net merben tann, al-s ber Mlaggrunb bas bie Cieiellfdiaft tierurt^ei=
„ lenbe Grfenntnifg ift. 3^er niit bie'fer illage belangte ©eiellfdiafter fann
„ feine ^saffititegitimation. b. f). feinetSigenfdiaft ats Geiellfd) after, beftreiten
„ unb bie i^erjdbrungcieinrebe a\\^:> 3(rt. 14(i geltenb madien, aufjerbem ftet)en
„ i(;m gegen bie ^subicat^'forberung nnr 311 bie (Sinreben a\\^ jeineni f^n^iellen
„ berMltuife gunt ©Idubiger, {. il bie erceptio compeniationis,
„ Jjacti etc." (Sommentar jum 2(IIgcmeinen Seut|ct)en .'oanbcl^gefeljbuc^,
%xi. Ill, >/..!, ^3p. 403-4. 2)ritte 3(uftage, toon Sr. K-ricbericf) SBon
§ar;n,1879.
b. ,, SBie bemnac^ bieSlage be'3 ©efellfcbaftf^g[dubiger§ gegen bie Coefellfdiaft
„ alg jo[d;e, unb bie i^lage, »»eldie jenem au§ einer 0efeUfd}aft6fd;uIb gegen
„ben einjelnen QJefeKfc^after sufte^t, ang einanber gef^atten iperben miiffen,
„ fo unterfd^eiben fid) im galle cincr (Sonbentnatiou aud) bie tSjccution^s
235
§77. Business Contracts. Pt. 2, Ch. 5,
„ Dbjcctc, inborn bio auf cine .^Kagc ber Icljtgcnanntcn 2trt ergangene iscrur=
,, tluilung nur auf bcTo '|U-iimtiicnnbgcn bc5 bctrcffenben Sociue, bas gegen
„ bic WcKUi'dtaftc-'fivnia gefdllte (irfcnntnif'o allein auf bag ©ocietdtgbermbgen
„ junx iNoUjugc gcbrad)t lucrbeu tann.
,, X'od; ift c-31 inbglid;(;, ba§ au^ ©incr 0e|eUfd;aft§d>ulb jugleid^ mit ber
,,WcicIIfdmft cin,^clnc orbcr alle (^efellfd^after ausgeflagt tt>erben. (Srge^it
,,nun auf cine folriie foiwobt an einen i!crtretcr ber Socictat une an bie ein =
„jclncn cuuti :,ugcitclltc Mlagc cin (irfenntnifs, lue(d)cg juglcid) mit ber
,,'jvirnta bie uiitucrflagtcn WefcU|d)aftcr conbcmnirt, fo tann bie ^'i^angs^
,,yoUftrerfung auf ben iSocictdtgfonbs fo >Die auf bag ^rinatoermbgen ber
,, mityerurtbc'ihen Wenoffcn ol;ne SCeitereg Statt l^aben." 9tenaub, 2)a^
„3iccbtber (5onxntabitgeicafd)aften, pp. 386-7.
2. " Parties." "Any two or :nore persons claiming or being liable
"as co-partners may sue or be sued in the name of their respective
•'firms, if an}' ; and any party to an action may in such case apply by
"summons to a judge for a statement of the names of the persons who
"are co-partners in any such firm, to be furnished in such manner,
"and verified on oath or otherwise, as the judge may dire<5t." Order
"XVI., rule lo.c
" Service of Writ." " Where partners are sued in the name of
"their firm, the writ shall be served either upon any one or more of
" the partners, or at the principal place, within the jurisdidtion, of
"the business of the partnership upon any person having at the time
"of service the control or management of the partnership business
"there." Order IX., rule 6.
"Appearance." "Where partners are sued in the name of their
"firm, they shall appear individually in their own names, but all
" subsequent proceedings shall nevertheless continue in the name of
"the firm." Order XII., rule 12.
"Execution." "Where a judgment is against partners in the
" name of a firm, execution may issue in manner following :
" (a) Against any property of the partners as such.
" (b) Against any person who has admitted on the pleadings that
"he is or has been adjudged to be a partner.
"(c) Against any person who has been served as a partner with
"the writ of summons, and has failed to appear.
"If the party who has obtained judgment claims to be entitled to
"issue execution against any other person as being a member of the
"firm, he may apply to a court or a judge for leave so to dod; and
"the court or judge may give such leave if the liability be not dis-
" puted, or, if such liability be disputed, may order that the liability
"of such person be tried and determined in any manner in which
"any issue or question mav be tried and determined." Order XLII.,
rule 8.e
3. A several contracl not involved infii-m contraB. A accepted drafts
for B & Co., and, upon the firm's failure, recovered judgment for the
amount advanced to pay the bills. vSubsequently, in bankruptcy pro-
ceediiigs, A learned that C was a partner, and after receiving, from
the joint assets, dividends, brought suit against him for the debt, less
the dividends received. C claimed that the judgment merged the
cause of action. — No recovery. Joint contradl, which limited A to a
single remedy. C, if an undisclosed principal, not liable, unless dis-
covered. Kendall V. Hamilton, 4 Appeal Cases 504 (1879).
Judgment as;ainst firm merges claim and i-eleases partner not
made defendant. A sued B & Co. for libel. Defendant appeared as
B, trading as B & Co. A proceeded against B, as the firm, and took
236
Pt. 2, Ch. 5. Business Contracts. ^yy.
judgment by consent. Hearing that C was B's partner, A moved to
amend judgment, and make C co-defendant. — Refused. A no equity.
Lord Selborne : Judgment by consent operates as unconscious re-
lease by A of C. Lord Beackburn : A might set aside judgment
and start pleadings afresh. Lord FiTzGERAED : Judgment fixes B's
liability, which could not be re-judged. Munster v. Cox, 10 Appeal
Cases 680 (1885).
Judgment against one joint contraFtor extinguislies ctaini against
co-contraRor. A sued B & Co. , composed of B and C, for merchan-
dise. After deliver}' of goods, firm dissolved. A, not knowing of
dissolution, drew on B & Co. for price. B accepted for B & Co.
Part payment, and suit for balance, and judgment obtained by de-
fault. Unable to obtain satisfacftion , A sued C, who set up judgment
against B for same cause as a bar. — ^Judgment for C. Judgment
merged cause. Chambefort v. Chapman, 19 Q. B, D. 229 (1887).
Comment: "Why under any rational system of law should an
"unsatisfied judgment against X relieve Y from a joint liability?
"This is a question easier to ask than to answer. The judges who
" decided Kendall v. Hamilton did not profess to answer it." 3 Law
Review 483 (1887).
Claim still single and judgniefit a merger. A sued B, who applied,
under Order XVI., r. 11, for joinder of C and D, his co-partners.
Court refused. — Reversed. The judgment against B would merge
claim, and operate to release C and D under joint contrail theory,
which still subsists, despite the Judicature Acft, and the Orders under
it. Pilley v. Robinson, 20 O. B. D. 155 (1887).
c. Judgment against firin must bind all its members, including partner
not served or appearing. A sued Jno. B & Sons for wrongful execu-
tion upon his property, and effecfted service upon Geo. B. All partners
appeared, except Jas. B. A moved for judgment against Jas. B, for
want of appearance. — Refused. Judgment must follow the writ, and
go against all partners. Jackson v. Litchfield, 8 Q. B. D. 474 (1882).
d. Judgment against firm, binds only partner served. A brought suit,
immediately after B's retirement, against firm, which continued busi-
ness under old name, and, after service upon some partners, obtained
judgment by default. A petitioned to put B in bankruptcy, as part-
ner, though he had not attempted to execute judgment against B
under Order XLH, r. 8, which authorized court to try his liability. —
Dismissed. No judgment afifedling B. Dissent : Judgment binds all
who were partners when the debt was incurred. Ex parte Young, 19
Ch. D. 124 (1881).
e. Judgment against firm binds a partner zvho is not served, except
as to a defence peculiar to him. B, C and D traded as B & C. C en-
dorsed the bill in suit to A, for a transacflion unconne6ted with firm
business. D retired, and B and C continued business. A sued B &
C. Judge, for jury, found as a facft that A meant to sue B & C, not B,
C and D, trading as B & C. — Judgment for D. Had A meant to in-
clude D, summons, like sci. fa. to show cause why execution on
judgment should not issue against D. He could make a defence per-
sonal to himself, though not to original a6lion. Davis v. Morris, 10
Q. B. D. 436 (1883).
But the Common law remedy is not superceded.
AElion lies on juds^ment against fir>n to charge non-served partner.
A sued firm, B & Co., and recovered judgment for price of merchan-
dise. A sued defendants on judgment, alleging their joint and sev-
237
§78. Business Contracts Pt. 2, Ch. 5.
eral liability for debts of B & Co. Defendants demurred, because
Order XLII, r. 8, provides for issue to try partners' liability for judg-
ment. — Judgment for A on demurrer. Order does not supercede
adlion on judgment, in which defendants might deny being partners.
Clark V. Cullen, 9 Q. B. D. 355 12.
§78.
(ill)e contract niaiie bn tl)e partners in tkm transactions is joint
in form, but scBcral in substance.
The basis of the partnership strudlure is the con-
tracl which the partners make for the firm in trans-
acting its business. What is the charaAer of this
contrail? It is an aggregate of contrails, as the firm
is an aggregate of partners. The joint form corres-
ponds to the firm which exists only in its parts.
The severability of the contract appears in the lia-
bility upon it of each partner to the extent of his re-
sources. The liability is recognized in substantive
law, and is denied only in procedure. The moment
a judgment against the partners is recovered, execu-
tion may issue against each, any or all of them, until
satisfadlion is obtained. The execution against one is
no answer to an execution against the others.' Apart
from mesne process, the liability is several as well as
joint. In equity, and in bankruptcy, where there is
no formal procedure, the liability of each partner's
separate estate for the firm debts, is enforced without
hesitp.tion. One separate commission does not ex-
clude a second, nor does a joint commission prevent
recourse to the individual partner.^
I. Finn creditor's right to proceed against separate estate will not be
controlled in equity, except for fraud. C obtained judgment against
firm A & B, and levied on partnership land. He also levied on A's
238
Pt. 2, Ch. 5. Business Contracts. (.79.
land lying in a different county, which A had conveyed to D, as se-
curity for a loan. A and D enjoined C, on the ground that firm land
was sufficient to satisfy his debt, and that co-partners colluded with
C to defraud A. — Injunction continued, because averment of fraud
was not denied by co-partners. But creditor's right admitted to
proceed against separate, as well as joint, estate of partners. Wisham
V. Lippincott, i Stock. 353, N.J. (1S53).
2. " Formerly it was the pra6lice for the creditor of a firm of several
"partners to take out separate commissions against each partner, as
■'well as a joint commission against the whole firm ; the objecft being
"to distribute the assets of the firm under the joint commission, and
"the separate assets of each partner under the separate commission
"issued against him. The modern practice, however, is different;
"for now under a joint adjudication 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 its own
"separate creditors." 2 lyindley 1140; The L,aw and Pracflice of Bank-
"ruptcy, by Orlando F. Bump, 5th ed. p. 53 et seq., 1872.
§79.
^ nctt) formula roaa not ticoiscb to cmbobg tl^c obligation of
partners.
Upon the iutrodudlion of partnership into the Com-
mon law, a new form was required, to express the new
undertaking and embody the partners' contradl. But
the courts preferred to take what they had at hand.
They took the old formula, and made it answer for
the occasion, without introducing any variation, or
adapting it to the new subjeA-matter. The joint ob-
ligation was the uncouth form, which was turned to
account and held to express the firm contract. This
kind of obligation never did correspond to any busi-
ness transadlion,^ and, in place of it, the continental
Countries, which were foremost in trade, have, from the
earliest times, recognized a commercial contract."
The commercial contra(5l has at last become, with us,
the real exponent of the partners' status.
239
§79. Business Contracts. Pt. 2, Ch. 5-
1. Speakiii},' of the effedl, Woodward, J., said: "The technical rule
"of the common law * never had regard to the substance of the
" contraci but ouly to the remedy upon it." "Here according to the
"stricfl rule of the common law there would be a clear right without
"a remedy." "There never was any equity or natural justice in
"such a rule." Bowman v. Kistler, 9 Cas 111-2, Pa. (1859).
2. The proces.s has been described supra ^j'j. The com-
mercial contracft, which charges each partner with un-
limited, or in solido] liability, existed among the Ro-
mans, but was not the ordinary partnership contrail.*
In modern times the exception has become the rule.
The commercial codes of Countries which follow the
Civil law, establish an in solido obligation.^
a. The civil codes describe the ordinary partnership.
Louisiana C. C. 2874: "Ordinary partners are not bound in solido
"for the debts of the partnership, and no one of them can bind his
"partners, unless they have given him authority to do so, either spe-
" cially or by the articles of partnership."
If two partners, each liable to plaintiff for half the debt. A sued B
for work on his plantation and on his steamer, done at C's request.
The evidence showed that B & C were partners. — Recovered half the
debt, under the code. Logan v. Cragin, 27 La. An. 352 (1875).
b. The commercial codes describe the trade partnership, which also
exists at the Common law.
La. C. C. 274. Ordinary partnership. "Commercial partners are
"bound in st)lido for the debts of the partnership."
„3iei ben ^panbclsobtigationen jperben bie SJtitfdiuIbner al§ folibarifd^
„»ermut^et, t»enn nidit barin cine entgegenftcf)enbe SNcreinbarung getroffen
„ift." 3 ^orc^arbt, i^anbel^gefe^e bes GrbballS. Italy C. C. ^40, p. 213.
French Com. Code, I22, 2 lb. p, 533.
„Sie ('<5eie[I|dmfter f)aftcn fiir alle SerbinbUd)!eitcn bet ©eiellfd^aft
„ foUbarifd; unb mit i[;rem ganjen Ssennogen. 2 lb. German Empire C.
C. gii2, p. 330; lb. g28o, p. 363.
„2)ie 3Birfungen ber SoUbaritdt sicifd^en ben ©Iciubigern ftnb: bafe
„ jcber ber Wlaiibiger ba§ 9{ed)t ^lai, bie Oeiammtjafilung ber ^^^orberung gu
„ DCrlangen." 5 lb. Uruguay C. C, § 267, p. 39.
:?ie SBirfungen ber uilibariidien i^aftung jtinfdien ben ©(^ulbnern ftnb:
„ Safe ber GJldubiger bas ^Hec^t f>at, 'tiiw (yefammtbetrag ber g-orberung
,,'oon bemgenigen 5d;ulbner suforbern, iiu'Id^en cr irdMt, nnb tveld;er »er^=
„ fliditet ift, i^m bag ftan^^e ^o be,^al)Ien, pf)ne ta^ er ba§ 3ied}t ber Si^ei;
„ hmg unter "iiw iibrigen t£d;ulbnern beanf>.trud)cn fann." 5 lb. Argentine
Republic, 'i 268, p. 46.
,,2)cr ©Idubiger fann nad) jeiner SBal^I Don alien ©olibarfc^itlbnern ober
„»on einem ber^'elben ba§ Wanje ober nur ein Ihni forbern. 2lud; im le^^
„ teren ^allc blciben fdmmtUd}e ©diulbner fo lange ber)jf(td)tet, bi§ bie ganje
,,5-orberung getilgt ift." 4 lb. Switzerland, C.^C, 'i 163, p. 696.
,,Xiejenigcn, hield)e ber {yeielli'd)aft nid)t angel^oren linb il^re 5Ramen in
„ bie GJei'eUfdiatt'jfirma einfiigen, twerben ber foltbarifd;en .SDaUbarfeit unter-
„ roorfen, unbe^c^abet bet ettua ^la^ greifenben ©trafe." sib. Spain, C. C.
'i 126, p. 25,
240
Pt. 2, Ch. 5. Business Contracts. §80:
§80.
®l)c courts Mi» not rc-mokl tl)c (Hoinmou laui process, in
orticr to aiiapt it to firm transactions, anit, at last, t\]t legis-
lature interDene^ to rectitn tl)c procedure.
The firm contrac?t, however, became identified with
the joint contrail of the common law, and the princi-
ples of partnership were worked out on the rack of
this formula. The amalgamation, as it admittedly-
worked injustice, was not effedled without a protest.
A great commercial lawyer, like Lord Mansfield,
who could not bring himself to the convi(5lion that he
was not a moral being, but only an intelle6lual ma-
chine to grind out the law as he found it, good, bad
or indifferent, tried to re-model the formula and con-
vert it into an equitable process.^ His decision started
a revolution in the procedure, but professional tradi-
tion was inveterate, and stayed for generations the
beneficent ameliorations which he foreshadowed.
It was not until common sense compelled the legis-
lature to intervene, and to keep on intervening, that
the firm contracfl was permitted to create its own form.^
1. Non-joinder of partner as defendajtt waived iinless pleaded in
abateincfit. A sued B, who non-suited plaintiff on evidence at the
trial that he had not joined B's partner, C, as co-defendant. On a
rule to take off the non-suit, argument : B waived defence of C's non-
joinder by not pleading it in abatement. — New trial awarded. Rice
V. Shute, 5 Burr. 261 1 (1770).
2. This change has been accomplished by statute.
"In trials of adlions * brought by partners * it "shall not be neces-
"sary for the plaintiff in order to maintain anv such aAion, to prove
'Hhe co-partnership of the individuals named in such adiion, or to
"prove the Christian or surnames of such partners * but the names
"of such co-partners •■ shall be presumed to be truly set forth *
"provided that nothing herein contained shall prevent the defendant
" from pleading in abatement, as heretofore, or of proving on the
"trial that more persons ought to have been made plaintiffs." Col-
orado Stats, of 1885, ?5.
241
§8i. Business Contracts. Ft. 2, Ch. 5.
"Any one of the associates or his legal representative may be sued
" for the obligation of all." Alabama Code of 1876, ^.2904.
" In all cases of joint obligations and joint assumptions of co-part-
" ners * suit may be brought and prosecuted against any one or more
"of those who are so liable." Kansas Compiled Laws of 1885 (1078)
U-
" Suits may be brought by or against * * all or either of the indi-
" vidual members." Iowa Code of 1884, ^2553.
Nor does the judgment merge the firm claim or debt.
"An adtion or judgment against any one or more of several per-
"sons jointly bound, shall not be a bar to proceedings against the
"other." Id. 2550.
§81.
uTliE joint process £jtinciuisl)ciJ i\]t several liabilitji of tl)e part-
ners.
Look at the Common law, and see how it frustrates,
at every turn, the design of the partners. They were
treated as making a joint contradl. The law admitted
that the firm contrail was the several contraA of each
partner, and enforced performance against any part-
ner. But, though each partner is liable for the whole
debt, the creditor was not permitted to sue him in a
separate adlion. Had this been allowed, subjeA to
the defendant's right to compel a joinder of the co-
partners, for his protection, the confusion, which pro-
duced a chronic miscarriage of justice, would not have
arisen. A joint process was, however, required, in
order to make the adlion correspond, in form, to the
contradl,^ and a judgment against any partner on ac-
count of the form, extinguished the claim against all.
This constru6lion enabled a co-obligor to defeat the
claimant's remedy by confessing judgment. If the
claimant went on to trial against the other obligors,
and obtained judgment, it could not stand, but would
242
Pt. 2, Ch. 5. Business Contracts. §81.
be arrested, because the cause of adlion, being joint,
is merged by a judgment against a single obligor, as
his defence corresponds to the claim, and covers the
total amount of the obligation." Conversely, the ob-
ligor's confession of judgment to a partner would
merge the firm claim, and for the same reason.'^ The
whole debt is due to each partner who represents the
firm.
Not only must the suit be joint, but service must
be effected upon all the obligors, at the cost of releas-
ing those who are not served. In England, where the
plaintiff had sued all the partners, but could not efife6t
service upon all of them, he might proceed to out-
lawry against such as were not served, and having
thus subjedled their goods to his claim, recover judg-
ment against the others. In Pennsylvania, there
never was any process of outlawry. If only one part-
ner could be found, and he was served, the others,
after judgment against him, could not be touched.
The pursuit by the plaintiff of his remedy defeated
his right. ^
1. Both partners must be joined as defendants in a suit for value of
plaintiffs s property which they refuse to return. A sued for a stove
lent to B, which he refused to return on demand. B set up, in his
answer, the non-joinder of his partner, C. Judgment for A, on the
ground that the adlion was trover, and in tort plaintiff could sue
either wrong-doer. — Reversed. Adtion ex contraBu, because plaintiff
claims the value of the stove as a debt, and judgment would not jus-
tify defendant's arrest on a.ca. sa. Slutts v. Chafee, 48 Wis. 617 (1880).
2. Judgment confessed by partfter bars recovery against co-partner. A
sued B & C on a joint contradl. B confessed judgment for 12,631.19,
and A obtained verdidl against C, who went to trial, for ^1,522.88, and
entered judgment. A's argument: C waived eflfecSl of B's confessed
judgment by going to trial, and difference of amounts no reason
against A's claim. — Arrested. Judgment against B final, and merged
cause of aAion, which was joint. Two judgments couldn't stand,
either both separate or one joint and other separate; nor could joint
judgment be for different amounts. B entitled to C's defence. Wil-
liams v. McFall, 2 S. & R. 280, Pa. (1816).
Judgment on a firm claim must be against all the partners. B, C
& D formed a partnership, in January, 1869, for four years, to manu-
243
§82. Business Contracts. Pt. 2, Ch. 5.
fa<5lure wine, and traded in B's individual name. A sold the firm
casks. Aj)ril, 1873, B paid part, and gave his note lor the balance,
of the debt. April, 1S74, A found out that C and I) were partners of
B, and sued tlie three for the firm debt. Judgment was entered
against B, by default, on the note, for I791.77, and, after a trial on
the merits, against C and D on the claim. Appeal : Judgment against
B merged the cause of a(5lion, and discharged C and D. — Reversed.
Two judgments, for different amounts, on the same claim cannot
stand. Judgmeut against B entered without authority, and void,
because on a joint claim. But judgment against C and D void, be-
cause B not included in it. Curry v. White, 51 Cal. 185 (1885).
3. Jiido^mcJit confessed to partner merges firm claim. B confessed
judgment to A, for price of goods bought of A's firm. B moved to
set aside judgment and execution, because A's partners not joined.
— Refused. B discharged from liability to them. Chapin v. Clemit-
son, I Barb. 311, N. Y. (1847).
4. The procedure frustrates the purpose for which it ex-
ists, and annihilates the rights it was devised to prote(5l.
Judgment recovered against partner., after failure to effeB service
on co-partner, releases hitn. A sued B & C on a joint bond. B was
served, but C returned 7ion est inventus. Judgment obtained against
B. A subsequently sued C, who pleaded merger of bond in judg-
ment. — Barred. Neither obligor could be sued on the bond, which
was extinguished by the judgment. Return enabled A to go on
against B, without proceeding to outlawry against C. as in England,
where his estate would go in satisfadlion. A lost his remedy by pur-
suit of it. Downey v. F. & M. Bank, 13 S. & R. 288, Pa. (1825).
§82.
(Jlje legislature of Pennsiilnania partiallti corrcctetr tl^is abuse
of leijal process, bii preDenting, in joint actions, tl)e judgment
against tl)e partners serrcb from merging tl)e claim against
otljers.
At an early date, the legislatures of various states
set about to correct this abuse of legal process.^ A
statute of Pennsylvania, enadled,^ se(5lion i : " In *
suits against co-partners ''' if the writ or process *
is not served on all the defendants, judgment may
be obtained against those ser\'ed, but it shall not be
a bar to recovery in another suit against defendants
not served." By section 2, a confessed is assimilated
244
Pt. 2, Ch. 5. Business Contracts. §82.
to an adverse judgment, and does not prevent recovery
against the non-confessing partner, A statute of
Michigan made a similar provision.''
1. "No judgment rendered against a part only of the defendants in
"an action upon a joint contracSl shall be a bar to any future action
"on said contracfl against such of the defendants upon whom or
" whose estate the suit in the original adlion shall not have been
"served." Rhode Island Public Stats, of 1882, ^29.
"If the name of one or more partners shall, for any cause have
"been omitted in any adlion in which judgment shall have passed
" against the defendants named in the summons, and such omission
"shall not have been pleaded in such acftion, the plaintiff, in case
"the judgment therein shall remain unsatisfied, may by adlion re-
" cover of such partner separately, upon proving his joint liability,
" notwithstanding he may not have been named in the original ac-
"tion; but the plaintiff shall have satisfadlion of only one judgment
"rendered for the same cause of action." N. C. Code of 1883, pp. 83,
"84(4).
" When any writ against joint and several obligors shall be returned
" as to one or more, and non est as to the others, the clerk may renew
"the writ against those upon whom it has not been served, and upon
"service upon the other obligors and return thereof, the obligors may
"pray the court to consolidate the actions, and the court may so con-
"solidate such adlions that no delay shall be caused thereby; but
"judgment shall be entered against the obligor last summoned at the
"same term as against the obligors first summoned, and in no case
"shall delay be occasioned by such consolidation." Maryland Re-
" vised Code of 1878, <;57.
"A judgment rendered against one or more members of a partner-
"ship, * * less than the whole number of partners, * shall not work
"an extinguishment or merger of the cause of acflion on which said
"judgment may have been rendered, as respecfts the liability of the
"partners * not bound by such judgment; and they shall remain
"liable to be sued as if their original responsibility had been joint
"and several; provided, that but one satisfa<flion of the debt or de-
"mand shall be made." lb. ^60.
"Suits may be brought by or against a partnership as such, or
"against all or either of the individual members thereof, and a judg-
"ment against the firm, as such, may be enforced against the part-
" nership property or that of such members as have appeared or been
"served with notice. But a new a(5lion may be brought against the
" other members on the original cause of aclion. " Iowa Code of 1884,
I 2553.
"When a judgment shall be recovered against one or more of sev-
" eral persons jointly indebted upon a contradl, by proceeding as pro-
" vided in sedlion 157'S those who were not originally summoned to
"answer the complaint may be summoned to sliow cause why they
" should not be bound by the judgment, in the same manner as if
"they had been originally summoned." S. C. General Stats, of 1882,
§377-
a. \ 157 made judgment in joint adlion bind partnership property, and
that of served partner, severed judgment, and charged non-served
partner in a separate adlion upon proof of his joint liability.
2. Adl 6 April, 1830, V. L. 277.
245
§83. Business Contracts. Pt. 2, Ch. 5.
3. " I. In adlions against two or more persons jointly indebted upon
"any joint obligation, contradl, or liability, if the process issued
"against all of the defendants shall have been duly served upon
"either of them, the defendant so served shall answer to the plaintiff;
"and in such case the judgment, if rendered in favor of the plaintiff,
"shall be against all the defendants, in the same manner as if all had
' ' been served with process.
"2. Such judgment shall be conclusive evidence of the liability of
" the defendant who was personally served with process in the suit,
" or who appeared therein ; but against everj' other defendant, it shall
"be evidence only of the extent of the plaintiff's demand after the
"liability of such defendant shall have been established by other
"evidence." Compiled Laws of Michigan, 1857, ch. 133. Re-ena6ted
"Mich. Annotated Stats, of 18S2, ^^. 7730-1.
Judgment against some partners not a bar to suit against others
if they were Jiot served. A sued B, C & D, partners, on a firm note,
in U. S. C. C, but obtained service only on C. Defendant offered in
evidence judgment in State court against the three for amount of
note. But only B had not been served in the State proceedings. —
Judgment not a bar. Michigan statute limits judgment to defendant
who is served with process. Mason v. Eldred, 6 Wall. 231 (1879).
§83.
(Jl)e courts of Ipcnnsiilcau'ia rfstricteb i\\t remedial statute to
^otnt actions, anb, ucept in suci) actions, permitted tl)£ juiignunt
against a partner to titinguisl) tl)e claim against l)is co-partner.
The Pennsylvania a6l was restri6led, by judicial in-
terpretation, to the specific mischief pointed out, and
limited, in its remedial operation, to joint a6lions. If
an adlion was brought against one partner, or against
any number less than all, the judgment would be a
bar to the plaintiff's recovery against the co-partners.
The a6l aided a plaintiff who observed the form, and
did his best to obtain judgment against all.^ He was
no longer barred in his pursuit of them, because they
succeeded in evading him. But, at that point the
statutory relief ended. If the plaintiff severed, the
adl did not apply. Taking a partner's confessed judg-
ment for the firm debt, merged the claim.^ A specialty
246
Pt. 2, Ch. 5. Business Contracts. §83.
was equally a merger of the claim. A sealed note,
given by one partner, and accepted by the creditor for
his claim, would bar his subsequent recourse to the
other partner.^
If the plaintiff brought a joint adlion, he might pro-
ceed, if any defendants accepted service, to j udgment
against them, without securing service against all.
The effort to serve was sufSciently shown by placing
the writ in the sheriff's hands without any return be-
ing made by him, no prevention by the plaintiff of
service by the sheriff being shown. ^
1 . Accepting service does tiot make judgment in joint aElion a bar to sub-
sequent stdt against non-served partner. A's summous against B, C
& D, on their sealed note for a firm debt, was accepted by B and C,
but no return made by sheriff as to D. A general award for A. He
subsequently sued D, who objected that specialty merged claim in a
joint debt which was discharged by an award based on the volunteer
acceptance of B and C without any attempt to serve D. — Recovery.
No evidence that A prevented service on D in order to maintain sev-
eral adlions on the joint obligation. Moore v. Hepburn, 5 Barr 399,
Pa. (1847).
2. Takijig confessed judgment from partner merges claim against co-
partner. A took B, a partner's, confessed judgment for the firm's
debt, and also his bond and warrant, which A entered up in a differ-
ent State. Not getting full satisfaAion, A sued C, surviving partner,
who pleaded the judgment and bond in bar. — Claim merged. Adl
1830 remedied failure to get judgment against all defendants in a.joittt
adtion, but did not change law in separate suits. Lewis v. Williams,
6 Wh. 263, Pa. (1841).
3. Creditor, by taking partner's bo)id for firm debt, releases co-paHner.
B & C agreed, in writing, that B shoukl buy wheat with money fur-
nished by C; that B should grind the wheat, and sell the flour; that
the expenses should "be dedu<5led from the proceeds, and the balance
equally divided for profit or loss." B bought wheat, and gave A the
following paper: "Due A for wheat to the amount of 11441.87^.
received by me, B. " Afterwards, B gave A his note, under seal, for
the said sum. On this note under seal, payments to the amount of
$300 were indorsed. A sued B & C, in assumpsit, jointly. Reference
to arbitrators, who reported in favor of A. C appealed from the
award ; B did not. Jury was sworn as to C alone. The above instru-
ments were put in evidence, together with proof of repeated declara-
tions of B and acfts of C, indicating that they were partners. VerdiA
for A, and judgment accordingly. — Reversed. Accepting a specialty
from, or obtaining judgment against, one partner for a firm debt, ex-
tinguishes all claim against the other partners, whether dormant
partners or not. Anderson v. Levan, i W. & S. 334, Pa. (1841).
4. If judgment confessed by partner, death of co-partner discharges his
estate. A's executor brought debt on joint and several bonds against
247
^y^. HusiNESS Contracts. It. 2, Ch. 5.
liolh obligors, 15 & C. B confessed judgment, and, pending suit, C
died. .\ ])rought in his executors on sci. fa. Defence : C's death
discharged his estate. — Judgment for executors. Plaintiff eledled
joint remedv, which was confined, by C's death, to B, the survivor.
Walter v. C;inrich, 2 Watts 204, Pa. (1834).
Moore v. Hepburn, supra n. i.
§84.
^ltl)oiial) tl]c plaintiff ^i^ not know tl)erc mas anotl)er part-
ner, auti uias kept from knowing it bn tl)c precautions of tl)e
partners tl)emselncs, none tl)c less bocs tl)e iu^9mmt against
tl)e ostensible partner operate anb ntinguisl) tl)£ tlaim.
Is there a saving where the plaintiff could not bring
a joint action? For instance, he would not know of
a secret partner's existence, and could not join him
as a defendant. The Mikado's law serves as the
exemplar. ' The fool of a law ' says nothing about the
knowledge of a claimant, or about his intention. The
law works on its own hook. It does not complicate
its movements with the idiosyncrasies of the human
will. If the plaintiff did not know of the dormant
partner's existence, and brought suit against the
known partners, his claim was none the less merged
in the judgment, and the dormant partner escaped all
liability. If the plaintiff could sue again whenever
he discovered a dormant partner, the bar of the stat-
ute of limitations might be impaired!'
When a partner was out of the jurisdidlion, the
plaintiff could not join him as co-defendant in the first
a(?tion. If a subsequent suit could not be brought, and
the absent partner was a citizen of a different state,
another principle of partnership law was subverted.
248
Pt. 2, Ch. 5. Business Contracts. §84.
The separate estate of the foreign partner was not
made available for the firm debts.^
If the suit is joint, but is brought out of the State
(Pa.), the judgment against the partner served would
not bar a subsequent suit in the State (Pa.) against
all the partners. For if the others could not after-
wards be sued in the State (Pa.), a foreign judgment
would have greater effe(5l than a domestic judgment.''
As the defendant in judgment had denied the foreign
jurisdi^lion, the plaintiff was entitled to proceed de
novo in the State (Pa.) . If the law were reversed, and
a domestic j udgment merged the claim, but a foreign
judgment did not, the foreign judgment would bar a
subsequent suit in the domestic forum. The judg-
ment of a sister state is assimilated to a domestic judg-
ment, and is given equal effect.''
1. Judgment against partner pivz'eitts subsequent suit on the claim. A
sued B and C on promissory notes, and obtained judgment. Subse-
quently, ascertaining that D and E were also members of the firm,
he sued all four. D alone was arrested, and pleaded the judgment
in bar. — Judgment for D. Joint contradt basis of suit. Only plea
which goes to personal discharge of a defendant, e. g., infancy, dis-
charge in bankruptcy, or insolvency, or death of a party, severs the
plaintiff's claim. The judgment deprives plaintiff of his right of
acftion against judgment debtors, and precludes suit against co-debt-
ors, who can be sued only jointly with them. Robertson v. Smith, i8
Johns. 459, N. Y. (1821).
Judgment recovered against ostensible partner bars claim, upon
discovery against the dormant partner. A sued Nathan Smith on
note given for price of merchandise, and signed " N. Smith." Judg-
ment obtained, but no satisfacflion. A subsequently discovered that
Newberry Smith was a dormant partner, and sued him for the price.
Defence : Judgment against Nathan a bar, and note taken in satisfac-
tion of claim. Forms of pleading waived by parties, and cause sub-
mitted for decision on its merits. — No equity in A's claim, or new
cause of acStion would accrue upon discovery of dormant partner, and
statute of limitations would not bar the claim. Smith v. Black, 9 S.
& R. 142, Pa. (1S22).
2. vStatute provides for this contingency : "That no plea in abatement
" for the non-joinder of any person as co-defendant shall be allowed
" in any court of common law, unless it shall be stated in such plea
"that such person is resident within the jurisdidlion of the court."
3 & 4 William IV., c. 42.
Defendant's absence from J urisdiBion prevents judgment against
co-defendant from merging joint claim. A, holder of B & C's joint
249
§85-
Business Contracts.
Pt. 2, Ch. 5.
note, sued them before a justice, aud effedled service on B. C, a non-
resident of the county, was not found. Judgment against B being
unsatisfied, A sued B & C, i, to make C party to judgment, and, 2,
enter judgment against him on note. C appealed to C. P., and setup
to I : Acflion brought before days of grace expired ; to 2, cause
merged in judgment. — Judgment for A. Technical, admitted no
substantive, defence. C's absence from jurisdidlion made his non-
joinder a necessity, and judgment did not merge claim, upon which,
notwithstanding judgment, action could be brought by Rev. Stats.
§ 5366. =* Defendant not summoned made party to judgment by action.
Yoho V. McGovern, 42 O. St. 11 (1884).
"^5366. When judgment is rendered in this State on ajointcon-
"tradl or instrument, parties to the action who are not summoned *
"* may be made parties thereto by a6tion in the same court if they
"be summoned in the State."
Iwreign judgment against partner don ' t bar domestic aBion against
co-partners. A attached steamboat, at New Orleans, for supplies fur-
nished at B, the captain's, request, and recovered judgment against
B and the other four Pa. co-owners, whom B represented by La. law.
A subsequently sued all five, at Pittsburgh, for the supplies. Two
were served and made defence: Claim merged in judgment against
B. — Not merged. La. Court had no jurisdiction, except over B, and
if its judgment merged the claim, more efFe<5l would be given to a
foreign judgment in Pa. than to a domestic judgment. Campbell v.
Steele, i Jones 394, Pa. (1849).
Whether judgfnent against a partner releases co-partner depends on
law of the forum. B, C & D drew on A, without funds. A paid,
and sued, and got judgment against B, in Mo., where separate judg-
ment on joint debt is no bar to adlion against the others. A recov-
ered a portion of claim, and, for the balance, sued all in N. Y., where
judgment against one joint-debtor releases the others. — Defence :
Released by Mo. judgment. — ^Judgment for defendants. Mo. judg-
ment no greater effe6l than N. Y. judgment. Suydam v. Barber, 6
Duer34, N. Y. (1856).
§85.
^\\t claim, ill consequence of its being iLtentifieb mitl] tl^e joint
process at lain, lost its cl)aiacter in equity as a rigljt against
eacl) of tl)e fiavtners.
In equity, liow does the claimant stand? All con-
trads are joint and several in equity.' The loss of
his claim against the dormant partner resulted from
the technical procedure of the law, and not from any
remissness of the plaintiff. He brought his a6lion in
i
Pt. 2, Ch. 5. Business Contracts. §86.
compliance with tlie law, and in the only mode he
could sue at all. It is the fun6lion of equity to sup-
plement the defedlive operation of legal process for
the relief of the vi(?tim. The answer to his petition
was startling. The plaintiff has no equity." He
elected, unconsciously, it is true, to proceed against
the ostensible partner, but he has exerted his right,
and he is bound by his choice. The law is equity.^
At first, the contrail was admitted to be joint and
several, at least, in equity; but after the judgment
against a partner was held to extinguish the claim, it
seemed easier to recant the principle, even in equity,
than to impeach the verity of the record.^
1. This principle of equity is now generally adopted at
law, and in most of the States is enforced by statute.
"All contrails which by common law are joint only, shall be con
"strued to be joint and several." Rev. St. Mo. 1879, ? 658.
Dakota Codes, 1884, ^951; Illinois Statutes of 1887, ^5; Kansas
Compiled Laws of 1885 (1075), ^ i.
Joint contrafl also several. Judgment for A against B & C, part-
ners, in Illinois Court. A sued C on the judgment in U. S. C. C.
Demurrer. — Acftion lay. Missouri statute made joint contradl joint
and several. Belleville Sav. Bank v. Winslow, 30 F. 488 (1887).
2. Dornta?it paHner not sued competent, because judgment tvould
release hiin. A brought suit on a note given by B & C. On trial,
obje(5led to testimony of D, a dormant partner. — Competent. Judg-
ment against B & C would extinguish original debt; judgment for
defendants would bar subsequent suit, and equity would not relieve
plaintiff, because he did not know that D was a dormant partner.
Consequa v. Willing, i Peters 301 (1816).
3. Judgment against one partner will not be vacated in order to let
plaintijf charge another with him as a partner. A & Co. obtained
judgment against B, but obtained nothing by execution. They ap-
plied to vacate judgment, in order to proceed also against C, as B's
partner. — Refused. Wilkins v. Budd, i Hal. 153, N.J. ^(1822).
4. Supra ?77, n. 3.
§86.
^\]t bcati) of a partner rcleaseii Ijts estate at latu, autr maibc
it onhj a surctn far tl)e plaintiff's daini in cquitn.
251
§86. Business Contracts. Pt. 2, Ch. 5.
The death of a partner might prevent the claimant
from bringing a joint a6lion. The procedure again
defeated the right. The law adhered to the joint pro-
cess, and could not frame a joint a6lion which would
lie against the living and the representatives of a de-
ceased partner.' The breach of his contrail charged
the partner's estate, but the absence of a remedy made
the law deny this elementary right." The claimant
must sue the living partners, and look only to them
for satisfa(5lion.' As the remedy at law was inade-
quate, owing to its defedlive procedure, and excluded
the claimant from access to his debtor's estate, he was
driven to re-assert his right in equity, where the pro-
cedure does not run away with the right. Equity did
not stickle at the forms of procedure, but it imposed
terms upon the claimant.^ He was entitled to relief
against the deceased partner's estate, but, as the claim
in equity was based upon an inadequacy of the remedy
at law, the claimant must exhaust his legal redress.^
Unless he proved the insolvency of the surviving part-
ners and an absence of firm assets, or exhausted his
remedies at law, he did not qualify himself to demand
relief in equity."
I. Suing executor of deceased, with surviving, partner, error. A sued
B et at., trading as a Brick Co., and joined D, administrator of C, a
deceased partner, on the Co. 's sealed note. Defendants, inter alia,
assigned as error the joinder of C's executors.— Misjoinder. Error,
but S. C. amended record, by striking off administrators as co-de-
fendants-. Objedlion not having been made below, when plaintiffs
could have amended under A(5l 4 Mav, 1852, P. L. 574, S. C. made
amendment. Hoskinsou v. Eliot, 12 Smith 393, Pa. (1869).
No joint remedy against surviving and executor of deceased part-
ner. No resort to deceased partner' s estate until remedy against sur-
vivor exhausted, or his insolvency shown. B & C made'a firm note to
A, who sued B and D, executor of C. Complaint did not aver insol-
vency of B, nor return of execution unsatisfied. D's defence: Com-
plaint shows no cause of action against decedent's estate.— Judgment
for D. Complaint must show insolvency of survivor, or remedy ex-
hausted against him, because the firm fund in the hands of the sur-
252
J
Pt. 2, Ch. 5. Business Contracts. §86.
vivor is primarily liable for firm debts. The surviving and executor
of deceased partner cannot be made co-defendants in a suit at law
under the code. The remedy is against the deceased partner's estate
only in equity. Voorhis v. Childs, 17 N. Y. 355 (1858).
2. LowRiE, C. J.: "It was only because the remedies were defe<5live
"that it (decedent's estate) was before (the statute, 11 April, 1848, ^4
"//{/ra g 88) exempt." loCas. 412.
3. The cause of a6lion against the deceased partner's
estate does not accrue, or the statute of limitations be-
gin to run, until the remedies against the surviving
partner have been pursued.
Short statute of limitatiojis don't bar Jinn creditot-^s suit against
deceased partner's estate. Statute provided that upon executor's ad-
vertisement, creditors must present their claims within six months,
and, if disputed, bring suit within six months. A was firm creditor
of B & C. He only presented his claim, without suing the survivor,
or pro\'ing him insolvent to C's executors, who equivocally disputed
it, and did not include it in their account, which the surrogate con-
firmed. A excepted. Defence: No suit within six months. — Ex-
ception sustained. Claim must be definitely rejedled. Statute runs
only against absolute claims. A's claim contingent until insolvency
of survivor shown, or remedy against him exhausted. A sufficient
amount should be set apart to meet the claim should it become a
charge against C's estate. Hoyt v. Bennett, 59 N. Y. 538 (1872).
4. Surety's estate not charged in equity on account of principal's in-
solvency. A sued executors of C, in 1814, for balance unpaid by B
of specialty debt. B received the loan, and C was surety for its re-
payment. C died in 1807, and B became insolvent. — No equity to
charge C's estate. Weaver v. Shryock, 6 S. & R. 262, Pa. (1820).
5. Deceased partner's estate liable icpon return of executioft against
surviving partner unsatisfied, or by proof of insolvency. B & C, part-
ners. C died, and A recovered judgment for a firm debt against B,
as surviving partner. Execution was returned unsatisfied. A sued
C's executrix. Defence: B had property. — Recovered. Exhausting
legal remedy equivalent to proof of insolvency. Sheriff's return con-
clusive. Pope V. Cole, 55 N. Y. 124 (1873).
6. foinder of a deceased partner's representatizre, as defendant, with
survivor, will, perhaps, be allowed, if the firm is insolvent ; certainly
if both firm and survivor are insolvent. A made advances to B & C,
on cotton shipped by the firm. He sold the cotton for the advances.
I January, 1872, settlement of account showed balance of $62. 54 due
B & C. 27 June, 1872, B died. Though no provision had been made
for it, C continued the business until 29 November, 1875, when the
firm was proved to be insolvent, and C was so in fadt. A sued D, B's
executor, and C for balance of account, and obtained judgment. Ex-
ceptions : Representative of deceased, cannot be joined with surviving
partner. — Not error. Code admits any joinder which could be made
in equity. Insolvency of surviving partner, and of the firm, is suffi-
cient to join deceased partner's representative as co-defendant, even
if insolvency of the firm alone is not suflScient. Anderson v. Pollard,
62 Geo. 46 (187S).
253
^S-j. Business Contracts. Pt. 2, Ch. 5.
§87.
(5l)c Licatl) of a partner pcnbing suit against t[)£ firm also
took auuiij tl)c plaintiff's rigljt to procwb against l)is estate.
The remedy survived only against the living part-
ners. The death could not be suggested of record,
and a sci.fa. issued against the executors, to make
them parties to the original suit.^ The plaintiff could
not join the deceased partner's representatives, even
for conformity.^ By unnecessarily joining them,
plaintiff would not render surviving partner incompe-
tent to testify because plaintiff would be excluded.^
1. If sni-'ivins; partner cotifesses judgment, deceased's estate is dis-
charged. A sued both B & C on a joint and several bail bond. B
died, iu 1823, pending suit, and sci. fa. against his administrators.
Defence: C liable alone as surviving obligor. In 1840, C confessed
judgment for claim, with interest from 1822. No satisfa<5lion. — B's
estate discharged. Finney v. Cochran, i W. & S. 112, Pa. (1841).
2. Firm creditor must sue surviving partner, if solvent, B&Cmade
a note to D, and assigned to A. C died. B and D became his ad-
ministrators. A sued B and D, but did not serve D. Both defend-
ants appeared. Defence : A should first sue B, as survivor. Reply :
Judgment asked against B alone; D joined merely for conformity,
and his appearance irregular, without service. — B, being solvent, no
cause of action against C"s estate, and A must amend, by striking
off D, who had the right to appear without service. Higgins v. Rock-
well, 2 Duer 650, N. Y. (1853).
3. Executors of deceased partners unnecessary parties ; suit should be
against surviving , partners. Surviving partner not disqualified by
joinder of deceased partner' s executors as co-defendants. A brought
ejedlment against B, C & D, partners. Both parties claimed title by
sheriff sales of E's leasehold. A alleged that first sale, to defendants,
was fraudulent, and second sale, to plaintiff, passed the title. A died,
and his administrators were substituted; B died, and his executors
were substituted. Defendants called C to disprove representations
at first sheriff's sale, which took place before the death of either A
or B, to buy in the title for E.— Incompetent, not because A an as-
signor and his administrators assignees under proviso to ?, i of A61
15 April, 1869; Eis assignor of both, plaintiff and defendants; but
because the cause of adlion arose from a tort, or contradl, in A's life-
time, and, therefore, his administrators sue in their representative
capacity, and as "next in interest," under KS. 13 April, 1807, §3.
B's executors not being necessary parties to the ejedlment against
the surviving partners,' the substitution did not render C incompe-
tent. Oram v. Rothermel, 2 Outerbridge 300, Pa. (1881).
254
I
Pr. 2, Ch. 5. Business Contracts. §88.
§88.
M5 of Ipcnns^lrania procilie against a failure of tl)c process
bji tljc bmtl) of a partner penbing suit.
The AS. of II April, 1848, § 4, enadls: " In suit or
" suits which may hereafter be brought against the
" executors or administrators of a deceased co-partner,
" for the debt of a firm, it shall not be necessary to aver
" on the record or prove on the trial, that the surviv-
" ing partner or partners is or are insolvent to enable
" the plaintiff to recover."^
The language does not mean that burden of proof
is shifted from the plaintiff, and that the representa-
tives of the deceased partner may set up the solvency
of the surviving partner as a defence to the suit.^ On
the contrary, the statute gives a dire(5l and immediate
remedy against any or all of the partners or their es-
tates.^
1. P. Iv. 536.
2. Statute gives firm creditor direB remedy against deceased partner' s
estate. A sued D, administratrix of B, who had given A the firm
notes of B & C. A had sued C, as surviving partner, but the verdidl
■was for C. — Judgment for A. Under adl remedy alternative, in ac-
cordance with the "general principle of partnership relation, which
makes the estate of each partner responsible for partnership debts."
Brewster v. Sterrett, 8 Casey 115, Pa. (1858).
3. Remedy against surviving and deceased partner cumulative. B &
C, partners. A recovered judgment against C, surviving partner, and
upon distribution of B's estate in Orphans' Court, claimed payment.
Judgment not disputed as liquidation of claim before auditors and
court below. — Entitled. Remedies made cumulative in order to cor-
real defecft of Common law procedure. Moore's Appeal, 10 Casey 411,
Pa. (1859).
The death of a partner no longer exempt.s his estate
from liability for the firm debts where his co-partner is
solvent, nor does it merely shift the burden of proof
upon his representatives, who can exempt his estate by
proving the surviving partner's solvency; but the de-
ceased partner's estate is liable in the first instance, at
the creditor's option, for the amount of his debt.
255
58S. BusiNKSS Contracts Pt. 2, Ch. 5.
Diurasnt partner's estate liable for fir^n debts. B, C & D, partners,
employed nephew A, at wages, for 17 years. B died; C & D paid
amount due A for ser\'ices. — B's estate liable for its third. Moist's
Appeal, 24 Smith 166, Pa. (1873).
Deceaseil partner's estate liable for firm debts in first instance. B
took C into partnership. C became joint owner of the assets of the
business, and jointly liable for B's debts. B & C gave D a note for
bis claim of $2,666.64. C sold out his interest to E, who succeeded
to C's liabilities. F bought out B, succeeding to his liabilities, and
continued the business with E. E settled with A, to w4iom D had
endorsed the note, by giving four notes of E & F, also signed by B
& C, for the original note, which was to be surrendered when the
four notes were signed by G. He never signed, and A proved the
debt against F's estate. Two of the notes were allowed and paid,
but the others were contested. — Judgment for A. He was not bound
to exhaust the firm's assets in E's hands before proceeding against
F's estate. B's debt became a joint obligation upon his taking C in
partnership, and continued joint through the various changes. Sil-
verman V. Chase, 90 111. 37 (1878).
A subsequent statute enadls: "That in no case *
"on any joint contrail * shall the courts * entertain
" any plea or defence upon the part of any heir * ex-
" ecutor or * administrator that one or more of said *
" contradlors * has deceased since the commencement
"of * suit; but the same shall be proceeded in to
"judgment and execution against the estate of said
"decedent, as though said suit * had been com-
" menced against said decedent alone. "^
This a6l was not limited in its efFe(5l to the mischief
of a joint a6lion; which would be cured by giving the
plaintiff a new suit against the deceased partner's rep-
resentatives. For why put the plaintiff to the delay
and expense of another suit? If no adlion corresponds
to the right, let the courts frame aclions to enforce the
rights which they establish.^ The process of suggest-
ing the death of a party on the record, and of substi-
tuting his representatives, is familiar pradlice, and
dispenses with the circuity of an additional suit. The
embarrassment of the situation was imaginary, and
the joint suit proceeds as if no defendant had died."
256
Pt. 2, Cii. 5. Business Contracts. §88.
Similar ena6lments were made in different States,
to preserve the remedy against the estate of a partner,
if he died before suit had been brought, or judgment
obtained against him/
In equity, joint process against both is feasible, and
the claim no longer survives against the living part-
ner even as a principal with the decedent's estate as
surety, but founds a dire6l remedy against both,*
4. Acl of 22 March, iS6i, P. L. i86.
5. "It shall be the duty of the Supreme Court, at their sessions in
"banc, from time to time, to devise and establish, by rule of court,
"such new writs and forms of proceedings, as in their opinion shall be
"necessary or convenient to the full, direct, and uniform execution
"of the powers and jurisdi6lion possessed by the said Court, or by
"the Courts of Common Pleas, District Courts, Orphans' Courts or
"Registers' Courts." AA i6 June, 1836, ^3, P. L. 786.
Mr. Justice Gordon : "If any serious difficulty should be found to
"occur from the ordinary forms of the writs now in use, this Court
*' can, under the 3d sedlion of the &&. of June, 1836, provide such new
"or modified forms as may be required to meet the exigency. We
"think, however, this will not be found to be necessary." Dingman
V. Amsink, 27 Smith 118, Pa. (1874).
6. y1 partner's death after suit brought is 110 bar to a joint judgment
against his administrators and the surviving partner. A, the holder,
brought assumpsit against the makers of a joint promissory note,
signed with the firm name of B & C. Alter service upon both par-
ties, B died, and his administrators were substituted. Judgment
against B's administrators and C. — Not error. A<fl 22 March, 1861,
P. L. 186, not only recognized the several liability of joint debtors,
and provided a separate remedy after joint process, but worked out
the independent remedies through a joint judgment against the sur-
vivor and the deceased's estate. Sci.fa. siir mortgage, or to revive
judgment, issues against living and the representatives of deceased
defendants. Ac?l June, 1836, \ 3, P. L. 786, would give a new writ
if required. Execution against a decedent's estate is regulated by
A6t 24 February, 1834, and if his real estate is sought to be charged,
the widow and heirs must be brought in by \ 34. Dingman v. Am-
sink, 27 Smith 114, Pa. (1S74).
7. "The representatives of one jointly bound with another for the
"payment of any debt or for performance or forbearance of any adl
"or for any other thing, and dying in the life-time of the latter, may
" be charged by virtue of such obligation in the same manner as such
"representative might have been charged if the obligors had been
"bound severally as well as jointly : Provided, that the plaintiff shall
" first pursue the surviving debtor to final judgment and execution."
Rhode Island Public Stats, of 1882, ^ 28.
"In any adlion founded on any * contraeft or liability of co-part-
" ners, it shall be lawful to sue any one or more of the parties liable
" on such * contract or liability ; and separate suIlS may be brought
257
§88. Business Contracts. Pt..2, Ch. 5.
"against the representatives of such of the parties as have died, or
"joint suits mav lie brought against the representatives of such de-
" ceased parlv and those who are aUve and bound therein." Miss.
" Revised Code of 1880, g 1 134.
"The representatives of one jointly bound with another for the
" pavinent of a debt, or for the performance or forbearance of any adl,
"or for any other thing, and dying in the life-time of the latter, may
"be diarged by virtue of such obligation, in the same manner as
"such representatives might have been charged, if the obligors
"had been bound severally as well as jointly." N.J. Revision of
1709-1877, ?.3. ^ . . , , ,
"All joint obligations and promises, are made joint and several, and
"the debt or obligation shall survive against the heirs and personal
"representatives of deceased obligors, as well as against the surviv-
"ors, and suits may be brought and prosecuted on the same, against
"all or any part of the original obligors, and all or any part of the
"representatives of deceased obligors, as if such obligations and as-
" sumptions were joint and several." Tenn. Code of 1884, ?> 3486.
•' If one of the several obligors or promisors jointly holden by a
"coiitracfl in writing dies, the representatives of such deceased per-
"son, and the surviving obligors or promisors, maybe charged by
"virtue of such contracft in the same manner as if it had been joint
"and several." Vt. Revised Laws of 1880, § 935.
After proceedings against firm as if insolvent, the Statute adds the
proviso: " Nothing herein invalidates the right of claimants to re-
" cover from the surviving partner, or the estate of the deceased
"partner any balances due them after the partnership property is
"exhausted." Maine Revised Stats, of 1883, p. 571, ^3.
" Whenever two or more persons are sued as joint defendants, and
" on the trial the plaintiff fails to prove a joint cause of adlion against
" all, but proves a cause of acftion against one or more of the defend-
" ants judgment may be rendered against him or them against whom
"the cause of acSliou is pending." Minnesota Laws 1873, c. 87; Gen.
St. 1S78, c. 66, >/. 266; Wisconsin Revised Stats, of 1878, l 2885.
" 111 case of the death of one or more of the joint obligors or prom-
"isors, the joint debt or contraA shall and may survive against the
"heirs, executors and administrators of the deceased obligor or
"promisor as well as against the survivors." Kansas Compiled
Laws of 18S5 (1076), \ 2.
"When all the obligors or promisors shall die, the debt or con-
"tracl shall .survive again.st the heirs, executors and administrators
"of all the deceased joint obligors and promisors." lb. (1077) ^3.
"Where two or more persons are jointly bound by bond, promis-
||sory note, or any other writing, whether sealed or unsealed, to pay
'' money or do any other tiling, and one or more of such persons shall
I'die, his or their executors and heirs shall be bound in the same
'/"tanner and to the same extent as if the person so dying had been
'bound .severally as well asjointly." M'd Revised Code of 1878, ^51.
" If a joint obligor be dead when the suit is brought, his representa-
tive inay be sued." lb. <! 53.
^" If either of the obligors, against whom a joint a<5lion shall be
^^ brought, .shall die pending the same, the plaintiff may suggest such
^^death, and the court shall cause the suggestion to be entered of
^^ record, and shall dire6l the clerk to docket an adlion as of the same
^^ term m wliicli tlie suggestion is entered, in the name of the plaintiff
^^ against the obligor so dying; and in such a(5lion the same proceed-
ings shall be had to make the executor or administrator of the de-
258
Pt. 2, Ch. 5. Business Contracts. §89.
"ceased obligor a party thereto, as if the original a<5lion had been
" brought separately against all the obligors." lb. ^ 54.
8. The remedy in equity corresponds to the right. A sued B's executors
for B & C's debt, and, upon C's administration of B's estate, proved
for /"5,i24, 135. A,d. A dividend of 5 per cent, was declared, but be-
fore payment A sued executors of C, testifying that C was B's partner.
Defence: A's testimony incompetent against deceased's adversary;
proof against separate estate res adjudicate!, and bars recourse to sur-
viving partner. — A competent. Proof did not extinguish claim, but
right against C's estate preserved subject to his separate creditors.
In re Hodgson; Beckett v. Ramsdale. 31 Ch. D. 177 (1855).
§S9.
^ statute of Pcnnstilcania seccrcb tl)e iu^c^mcnt, so tl)at it
binbs tl)£ rcpresmtatiut'S of tl)£ Jbecmseb, as uicU as tlje surrining^
partner.
The death of one partner after judgment against
both, releases his personal estate from liability for the
plaintiff's claim, although it has been liquidated and
established by the judgment/ A sci. fa. would not lie
against the personal representatives of the deceased
judgment-debtor, although it was suggested in the
writ that the surviving defendant was insolvent, and
that the plaintiff had no remedy/
In Pennsylvania, an a(5l was passed to rectify the
procedure and make it conform to the right :
Sedlion 3. "Where a judgment shall hereafter be
" obtained against two or more co-partners * the death
" of one or more of the defendants shall not discharge
" his or their estate or estates, real or personal, from
'' the payment thereof; but the same shall be payable
1 " by his or their executors or administrators, as if the
"judgment had been several against the deceased
■' alone."
259
]Si). Business Contracts. Pt. 2, Cii. 5.
Se(5lion 5. " Where a judgment shall be hereafter
*' recovered against one or more of several partners,
" without any plea in abatement, that all the parties
*' to the instrument or contrail on which the suit is
" founded are not made parties thereto such judgment
" shall not be a bar to a recovery in any subsequent
" suit or suits against any person or persons who
" might have been joined in the a6lion in which such
"judgment was obtained, whether the same shall be
"obtained amicably or by adversary process."^
Other States have also provided that a judgment
shall bind a partner's estate in spite of his death/
1. Walter v. Ginrich, supra \ 83, n. 3. There is no reason for any dis-
tin<5lion between the deceased partner's real and personal estate. The
judgment should survive against both, or against neither. Common-
wealth V. Mateer, 16 S. & R. 419, Pa. (1827).
2. Death of partner after jjidgment discharges his personal estate,
though lien continues on his real estate. Sci.fa., in 1845, by Pa., for
A's administrator against administrators of C, surety on administra-
tion bond, who had died since judgment in 1824, against B & C,
which was recovered by creditor of B for his devastavit. B, the prin-
cipal in the bohd, and sole surviving obligor, was insolvent. — C's
personal estate discharged by his death, and lien against his real
estate outlawed. Stoner v. Stroman, 9 W. & 8. 85, Pa. (1845).
3. Aa II April, 1848, P. L. 536.
4. "Joint Debtor Dying. Estate How Liable." " When two or
"more persons are indebted on any joint contra6l, or upon a judg-
"ment founded on a joint contradl, and either of them dies, his
"estate is liable therefor, and the amount thereof may be allowed
" by the commissioners, as if the contradl had been joint and several,
"or as if the judgment had been against him alone." Minn. Stats, of
1878, <Ji9; Wis. ena(5lment substantially the same. Revised Stats, of
1878, <! 3848.
" If any person jointly bound with another in any contrail or by
"judgment, shall die in the life-time of such other obligor, his heir,
"devisee, or representative may be charged in the same manner as
" if the contradl or judgment had been separate against the decedent."
Kentucky, Gen'l Stats! of 188 1, § 8.
" If any of the obligors against whom a joint adlion was brought,
''and judgment obtained thereon, shall die after judgment, the
'I plaintiff may issue a scire facias on said judgment against the ex-
'^'ccutors or administrators of the deceased defendant, and suchjudg-
"meiit shall be had on the scire facias as if the judgment had been
" rendered in a separate adlion." Maryland Revised Code of 1876, iS5-
" "^Y^^" ^^° ^^ more persons shall be indebted on anv joint con-
tradl, or upon a judgment founded on a joint contra^i and either
260
Pt. 2, Ch. 5. Business Contracts. §90.
"of them shall die, his estate shall be liable therefor, and it may be
" allowed by the commissioners, as if the contracflhad been joint and
"several, or as if the judgment had been against him alone, and the
"other parties to such joint contrail may be compelled to contribute
"or to pay the same, if they would have been liable to do so upon
"payment thereof by the deceased." Mich. Annotated Stats, of 1882,
p. 1543. § 5906.
§90.
(Jl)c statutes recognise \\)t stvtrai liabilities of tl^e partners
untierlping tl)e joint form of tl)e contract, ani» make tl)e pro-
cedure conform to tl)e liabilitn mljid) it enforces.
The judgment stands against the defendant, and, as
he is liable for the whole debt individually, the co-
partner is not prejudiced by limiting the judgment
to the defendant. The release of the co-partner by
merger was a fi(5lion of procedure. Nothing but sat-
isfaction of the claim exonerates him, and he cannot
complain, because he is compelled to pay his debt.
The cause of a6lion is severed with the judgment
which establishes it.' The technical crochet, how-
ever, has taken firm hold of the Professional mind,
and it is difficult to eradicate the notion that a part-
ner has a right to repudiate his^ debt in consequence
of the creditor's litigation with his co-partner.^
The release of a joint debtor, or a compromise with
him, enured to the benefit of his co-debtors, on the
joint contrail theor};', and in analogy to the procedure
by which the claim would be enforced.'' Statutes have
also been passed to extirpate this outlying vestige of
the conceit.''
The fiction, to maintain itself, creates an artificial
course of reasoning, which the Profession calls legal
261
t
§Qo. Business Contracts. Pt. 2, Ch. 5.
reasoning, as if the law had appropriated a special in-
telle(5liial process for its pradlitioners. The creditor
asks for payment from his debtors, and the Profession
tells him a judgment, or, in other words, the entry of
his claim on the record of a court, against one of his
debtors, is payment by the others. The creditor
wonders how the procedure, which is but the means
to procure payment from several debtors, who are each
admittedly liable for the whole amount, can pervert
the lawyer's faculty of reason, and make him think
he is talking sense. The Profession is like the parent
who, when his son asked for bread, gave him a stone.
The parable is an answer to the casuistry which, in
the name of justice, substitutes a sham for perform-
ance.
1. statutory severance of judgment severs the cause of aElion. A sued
executors of B, co-maker wth C & D of promissory note for f 1,200.
Defence : B co-surety ■with C for D, and no equity against B's estate,
although C & D insolvent. — Recover^-. A(5l 1848 made joint judgment-
debtor's estate liable, and cause of acftion severed to correspond with
judgment. Bowman v. Kistler, 9 Casey 106, Pa. (1859).
2. Supra \ 77, n. 3.
3. Release of non-served partner extinguishes judgment against co-
partner for firm debt to cxtetit of partner' s quota. B & C, partners, in
Indiana, contra6led debt to A, in Philadelphia. In a6lion brought in
Pennsylvania, judgment taken against B for want of appearance. Re-
turn: " Nihil habef' as to C. Subsequent suit against C in Indiana,
and A released C. B's defence: Release operated as satisfaction of
judgment against him. — Release extinguished moiety of judgment-
debt. Greenwald v. Raster, 5 Norris 45, Pa. (1878).
Partner and firm creditor may stipulate that release shall operate
not to discharge co-partner. A released B and C, on payment of part
due by B, C <S: D, partners, but reserved right against D, whom he
subsequently sued for balance. — Recovered. Apart from Ci\al Code,
'i 1543, A might release B & C. Northern Ins. Co. v. Potter, 63 Cal.
157 (.1883).
Vide note to Bailey v. Edwards, 1 16 English Common Law Reports
761, p. 775 (1866).
4. Pennsylvania A<51 of 22 March, 1862, H 1-5, P. L. 167; Kansas Com-
piled Laws of 1885, Release (1079), ?5; Compromise f-^626-9 1-3) '^A 1-4;
Michigan Annotated vStatutes of 1882, l\ 7783-6; California Civil Code
§1543 ;^ Minnesota Statutes of 1878, I 37 ; Mississippi Revised Code of
1880, ?ioo3; New Jersey vSupplement to Revision of 1 877-S6, ??i-4;
Ohio Re\-ised Statutes of 1884, 'i\ 3162-5 ; Rhode Island Public Statutes
262
Pt. 2, Ch. 5- Business Contracts. §91.
of 1SS2, ^^, 1-6; South Carolina Laws of 1883, §§1-3; Vermont Revised
Laws of 1880, U 936-7 ; Virginia Code of 1873, U H-'^5-
^91.
^[)t debitor mas put to l)ts election bettueen a joint anb a sev-
eral rcniebji, but 1)£ is, on principle, entitleii to eitl)£r, or botl), for
tl)c satisfaction of Ijis claim.
Thedistindtion between a joint and a j oint and several
contrail has been almost obliterated. The Supreme
Court of Pennsylvania, at one time, said that there
were no more joint contrails, and that all joint con-
tra(fl:s had become joint and several.^ This statement,
perhaps, is not strictly accurate. The claim of co-
obligees, whether partners or not, is still joint, and,
while it is now possible to recover against one upon
proof of a promise by two," it is impossible to recover
against one upon proof of his individual promise when
sued in conjun6lion with another. But if the state-
ment were true in its entirety, the change would still
not meet the requirement of the partnership promise.
I The joint and several is fully as technical as the joint
i| contrail, and comes but little nearer an adequate ex-
pression of the firm undertaking.
The difficulty of the subjedl arises from the Common
law abstradlion of a joint obligation. In a common
sense view, if three promise to pay one hundred dol-
lars, there is the promise of A, the promise of B, and
the promise of C, to make this payment. Each guar-
antees to the promisee the receipt of the sum. The
j.j Common lawyers were not satisfied with so simple an
I explanation, but conjured up the abstradlion of a sin-
! 26:
§91. Business Contracts. Pt. 2, Ch. 5.
gle promise made by the three, and different from a
promise by each of the three to pay the single sum.
Owing to this substantive difference between the joint
obligation and the separate obligations of the promis-
sors, it was held that the proof of a joint contradl in a
suit against one established a variance, and put the
plaintiff out of court. In consequence of this theory,
the whole claim was merged in a judgment against
one of several debtors, and the co-debtors were thereby
released, because there could be but one judgment
upon one and the same obligation. A release of one
co-debtor by contrail had the same effe6l, and for the
same reason.
The same mental process is observed among the
civilians, and the best definition of the joint contrail,
as a common feature of both systems of jurisprudence,
is given by RibbEntrop, namely : "A unitary ob-
ligation with a plurality of subjedlive relations.'"
The theory of a joint and several contrail retains this
abstraction in its integrity, and simply adds the
separate promise of each partner as an additional and
alternative security. These separate promises are
alternative to each other and to the joint promise. If
the plaintiff sued one obligor on a joint and several
contrail, the defendant could not plead in bar the non-
joinder of his co-obligors, because of his separate pro-
mise, but if, after judgment, the plaintiff failed to
obtain satisfa6lion, the others were released, on the
ground that the plaintiff had made his eleClion. The
result is that where the plaintiff, out of abundant
caution, has taken the promise of three to pay him
the sum, the fanciful interpretation put by the law
upon his contraft deprives him of the security for
264
PT. 2, Ch. 5. Business Contracts. ^91.
which he bargained. It is no answer to say that he
might have sued them all jointly, for that is to make
a substantive right depend upon the form of pro-
cedure, and why should he be compelled to sue jointly
when he has, in fa6l, a contrail with each. In a suit
against one, the defendant's only privilege is to plead
in abatement the non-joinder of his co-obligors, which
does not effe(fl the substantive right. If the first de-
fendant has waived that privilege, the second defen-
dant would lose it as to the first one, because its pur-
pose had been already accomplished in the judgment
against the first.^
The difiiculty is by no means insuperable. The
law does, in the case of torts, recognize and enforce
an aggregate of obligations for the same performance ;
co-tort feasors are liable jointly, separately, and suc-
cessively, and all that is necessary is to apply to con-
trails the principles which govern in the case of torts.
The theory of the law will then conform to the nature
of the transaction.
1. Change oj note from joint to joint and several immaterial. Ad-
ministrator of A sued B & C, as makers of a joint and several prom-
issory note. B was served, but C was not. B's defence : Note
originally joint, and the words of severalty, "or either of us," inter-
lined after signature. — Recovery. Alteration immaterial, as Acts '30
and '48 have converted joint obligations into joint and several obli-
gations. Miller v. Reed, 3 Casey 244, Pa. (1856).
2. Separate judgment good though claim joint. A sued B & C, on notes
signed with firm name. C's defence : B gave notes for his individual
debt to A.— Judgment against B alone. A appealed. — Affirmed.
Separate judgment good against B, although claim joint. Roberts v.
Pepple, 55 Mich. 367 (1884).
"If all the defendants have been served, judgment may be taken
"against any or either of them severally, when the plaintiff would be
"entitled to judgment against such defendant or defendants, if the
" action had been against them, or any of them alone." Civil Code
of Oregon, ^59, sub-division 3. Identical provision: Wisconsin
Revised vStatutes of 1878, 'i 2884, sub ^ 2.
Joint contract covers several claims. A sued B, C & D, trading as
B & C, for merchandise. C claimed that he contributed capital and
conducted business for his infant son, D. A dismissed acflion as
265
§g2. Business Contracts. Pt. 2, Ch. 5.
aeaiust D, and court, on C's application, against him. — Error. C liable
as partner with B. Suit on joint contract made by three don't pre-
vent judgment against two of them. Miles v. Wenn, 27 Minn. 56
Several liability enforced in joint action. A obtained verdidl
ao-ainst B C, et al., for effecting sale of their land, but B was dead at
the time, and his executors had been substituted as defendants. —
Judgment for B C, et al., notwithstanding verdicft. — New trial. Code
permits judgment in joint a6lion against defendants upon a separate
claim. Fish v. Henarie, 13 Pac. Rep'r. 193, Or. (1886).
3. S)ie9iahir befGorrealobligationen, Don 2)r. Hermann gritting; (Sin=
' leitung, ^^ 2, 1859.
"2)'a^ gjbmifc^e ^Uedjt annerfennt bte 9}lijglic^feit ine^rfacf)er birecter fub--
jectittcr 5Bcsic^ung cmcr Cbtigation." Ueber iitti§ Gonteftation, ''!>.. 52, a.
lion 3)v. ^•. y. .Heller, 1827; ^m Set^re tiow ben Correal Dbltgationen,
^,5; oonSr. Weorg ^sutius Jtibbentrop, 1831.
"Sa fid; bie (Sorrealobligation nl^ ein einjigeS objectibeg obltgatorifcil)e§
3iec^tiocrt)dltnit;, aber init '50Je^rf)eit ber fubjectiben SBejie^ungen." ^rof.
Sr. ^:iinntfrf)art, Kritifd)eistertelial)rffci^ri|t fiir ©efe|gebung unb Died^tSs
l»i[fenfd)aft, 29 SBanb, 513, 514 (1887).
Xie^rbud; ber ''^anbecten, 't 213, i)on S. 2lrnbt§, 9i. b. 2trne§burg,
13th 'edition, 1886.
Sie (Sorrealobligationen, ^.<d,et seq., bon^oS. Seonj S[BeibeI(1873).
Institutes of Justinian, i vol. 472-477. By J. B. Moyle, B.C.L.,
M. A. (1883).
See, in opposition to the theory : Les Obligations en droit Roman ;
Par P. Van Wetter, 2 vol. 290, f, 54 (1882).
Roman Law, 2d edition, pp. 551, et seq. By W. A. Hunter, M. A.,
LL.D (1885).
4. Kendall v. Hamilton (dissent of Lord Penzance), supra \ 77, n. 3.
§92,
forti ftlansfielli iicmonstratcb tljat tl)e iotnt contract tuas scl-
eral, bij pennittinci a Licfcniiant to pleaii vx abatement tl)e non-
joiuLicr of 1)15 co-promissor, ant) bti timninci tijat l)is non-joinkr
tuas a bar to tl)e seoeral action.
How did the change come about which converted
the joint contrail of the Common law into the joint,
though severable, contrail of partners with third per-
sons ? Prior to Rice v. Shute,^ a plea in abatement
could not be sustained in assumpsit, though allowed
in debt, and proof of a joint contract put the plaintiff
266
Pt. 2, Ch. 5. Business Contracts. §92.
out of court. Much less was the failure to plead in
abatement a severance of the joint contrail into
several contra6ls, so as to enable the plaintiff to re-
cover upon one instead of upon all, as a unit without
parts.
The change came about by following the course
which had always prevailed in the acftion of debt.
There non-joinder of any one liable with the defendant
was pleadable in abatement. The debt being the re-
sult of an obligation, was viewed apart from its source
in contrail, and, if demanded from the debtor, should
be paid by him, unless he saw fit to turn the plain-
tiff's suit into a means of enforcing contribution from
his co-debtor in advance, instead of by a subsequent
suit. The absence of a plea in abatement indicated a
willingness to rely upon a subsequent suit for contri-
bution, and the judgment merged the cause of adlion,
which was always single.
If only one partner was sued in assumpsit, he could
not plead his co-partner's non-joinder in abatement
before Rice v. Shute, in 1770, because a joint contra6l
was a totally distin(5l cause of a(5liou, and the plea
went to the merits. It was bad, as amounting to the
general issue, and should be a plea in bar. Proof of
the joint contra6l would defeat the plaintiff's recovery.
A joint contraA is a unit without parts, and not an
aggregate of parts. Though the contrail were joint
and several, suit against one would be an eledlion
which would make the contrail several and preclude
any subsequent a(?tion upon it as joint. Lord Mans-
field's adoption of a plea in abatement broke down
the Common law notion of a joint contradl, and proved
that it contained an aggregate of contradls. The part-
267
§^3- Business Contracts. Pt. 2, Ch. 5,
ucr might, in the first instance, make the plaintiff, be-
cause he had dealt with the firm, join all its members.
But the firm is not a person and makes no contrail. It
is the partners who contract, and each partner contrails
to pay the whole debt. Unless a plea in abatement
is put in, the plaintiff may proceed against any partner
and recover judgment on his contract. This rule
needed further development, for while Lord ManSFIELD
clearly indicated the principle on which the theory of
contradls was to be remodeled, the decision in Rice v.
Shute itself was merely an entering wedge. If the
reasoning of Lord Mansfield is admitted, it follows,
as an inevitable conclusion, that a co-partner may not
plead in a subsequent suit the judgment in bar, be-
cause it merged only the contrail of the defendant in
the original suit, or in abatement, because he cannot
give the plaintiff a better writ.
I. Supra \ 80, n. I.
§93.
(Eliicf Justice fHarsljall carric^ out tl]c prhuiplc, anii l)ell) tliat
tl)c juLiiinicut against a partner mas seceral, an^ bib not imrgc
tl]c claim against l)is co^partncr.
Chief Justice Marshall carried forward the revolu-
tion in the theory begun by Lord MansfiELD. The
claimant, who brought a separate suit against one
partner, on a firm contrail, and obtained judgment,
subsequently brought a joint suit against both. Mar-
shall decided that the judgment on the contract of one
partner could not merge the contradl of his co-partner,
268 J
I
Pt. 2, Ch. 5. Business Contracts. §94.
unless the judgment included the co-partner and
bound him.
I. Judgment against parlner does not merge fin>i contract, but enforces
partner's several liability on it. A, who sued B singly on a note made
by B & C, trading as B, and obtained judgment, sued B & C jointly on
the note. C pleaded the judgment in bar. — Judgment for A. Judgment
on B's contra6t did not merge C's contract. Sheehy v. Mandeville, 6
Cranch 253 (1810).
The judgment against a partner on a firm claim, does not convert it
into a separate claim. The contra<5l was with the firm, and not with
the partner in his individual capacity.
Contra: Firm's claim for iuiproveme7it on land of partner. B & C
were partners. Firm expended money, for its own purposes, in im-
provement of B's land. B confessed judgment to A for a firm debt.
Firm assigned for creditors, and assignee sought to restrain A from
selling, without notice of firm's equitable lien for improvements. — A
enjoined. Firm debt merged in judgment, which covered only B's
separate title. Whether lien embraced all the improvements, or
limited to C's quota, not decided. Averill v. Loucks, 6 Barb. 19,
N. Y. (1849.)
§94.
ull)c mabcrn prarclmrc abmits tl)c scccral catiscs of action, anb
so far Irom forcing a junction in a singk action, requires a ncu)
action against partners tuljo were not scvdcii in tl)£ original suit.
The cause of a6lion is no longer joint. The prac-
tice shows that the old fi(5lion has been superceded
and replaced by a new principle. If service had been
effected upon some partners, the former process was
to bring in the others by an alias or a pluries writ, in
order to make them parties to the original proceeding,
and in order to enter a single judgment against all.'
Now that the judgment does not bar subsequent pro-
ceedings upon the contrail, it was conceived that an
alias or pluries should bring in the other partners in
order to let them into a defence under the original
process. On the contrary, a new writ issues, as if
269
§g4. Business Contracts. Pt. 2, Ch. 5.
based upon an independent cause of aAion." The
separate suit shows that the firm contradl is severable
and not joint.
1. How did the plaintiff declare when all the partners
were not served? He declared against those who had
been served. The declaration set forth the cause of
adlion, and the judgment was based upon the declara-
tion. If the declaration was against more defendants
than the judgment/'' or the judgment against more de-
fendants than the declaration,"^ the error was fatal, except
under statutory provisions.*^ .
a. Judgment against three and declaration against six, bad on error.
A brouj^ht adlion of debt on bond against six. By sheriff's return,
three were summoned. Declaration general against all, and judgment
by default. Amendment and judgment entered against three. — Error.
Judgment on joint claim couldn't stand, except against all. Declara-
tion should be against three who were summoned, with averment of
process against rest, who could not be found. Latshaw v. Steinman, 1 1
S. & R. 357, Pa. (1824).
b. Judgment against two, with declaration against but one, bad on error.
A issued capias against B & C, but sheriff failed to find C. Declara-
tion against B, and alias against C, who also entered bail. Reference
to arbitrators, who made award for A. — Judgment on award reversed,
because declaration was against B, and no claim on the record against
C. Stewart v. Abrams, 7 Watts 448, Pa. (1838).
c. On a declaration against dejendants, judg',nent may be entered
against two served. A sued and declared against B, C & D on a firm
contract. D not served. Evidence failed to prove D a co-contraclor.
Judgment obtained against B and C, who appealed. — Affirmed. A
variance at Common law. Code permits judgment against any defend-
ants served, who are proved liable, and by inference against those
sen'ed when others are not proved liable. Pruyn v. Black, 21 N. Y.
300(1860).
2. Judgment against partner served, and second action against co-part-
ners. A sued B, C & D, joint makers of a note. B was served, but C
& D returned 'not found.' Declaration and judgment by default for
amount of note and interest against B. Alias and plurics summons
against C & D, who averred material alteration, by adding "with inter-
est" after note was made. Evidence to show defendant's assent ex-
cluded. — Error. New suit should be brought against non-served de-
fendants. Statute contemplates judgment in first aclion before second
brought. Myers v. Nell, 4 W. N. 229, Pa. (1877).
After judgment against partners served, "a new adlion may be
brought against the other members on the original cause of adlion."
Iowa Code of 1884, \ 2553.
f
27c
Pt. 2, Ch. 5. Business Contracts. §95.
§95.
®l)e stmvai liability of a partner, so long rcputiiateu, is iicu)
a recogni^cb constituent of tl)e firm liabilitu, ani) tl)ere is no joint
liabilitn iuLiepcnbent of it.
The joint contrail at the Commou law was not
made up of the partners' several contrails, but was
independent of, and not connected with 1:hem. The
judgment confessed for the whole sum, by a single
partner against himself, or recovered against him,
would not merge the firm debt and prevent a joint
atftion.^ The judgment would be several, unless given
in the course of a joint suit, and would not, therefore,
be co-extensive with the firm debt." The separate con-
tract was a different undertaking, not included in the
general contrail of the firm. The relinquishment,
therefore, of the joint contrail furnished a considera-
tion for the several contrail of a partner.^ At present,
the opposite is true. The several obligation of a part-
ner is no longer a separate and independent liability,
apart from the joint obligation of the firm, but forms
part of that obligation, and is included in it.'' The
promise of a creditor to release the outgoing and look
to the continuing partners for payment, is not binding
for want of consideration. The creditor had the sev-
eral liability of the continuing partner already in the
joint obligation.^ In fa(5l, every joint contraA is an
aggregate of the several contrails of the partners.
I. Judgment against single partner for firm debt is several, and will
not stand for firm debt. A sued B & C, partners, before magistrate.
Service effecSled only upon B, and judgment rendered against him. On
appeal, trial ended in verdict and judgment against B. — Reversed.
Judgment erroneous. B not a party to suit, which was joint against
E & C. Craig v. Smith, 15 Pac. Rep'r 337, Col. (18S7).
271
ij^^. Business Contracts. Pt. 2, Ch. 5.
2, The partner represents his co-partners, or the joint
title, and tlie judgment recovered against him, entitles
the creditor to seize and sell the firm property. The
question is : Does the execution correspond to the judg-
ment, or to the claim? In an adverse judgment, the
declaration must be against the partner served, although
for a partnership debt.'' The judgment would appear
onlv against him, and if it included the co-partner,
would be wrong.'' A confessed judgment by one partner
is void as to his co-partner, who may have the entry
against him stricken off the record.*^ The claim, and
not the judgment upon it, is the groundwork of the exe-
cution. The judgment in Ross v. Howell'' entitled the
creditor to proceed, by execution, against the firm assets.
The co-partner had no grievance, because the claim
was for a firm obligation, and not for the separate debt
of the partner. Had the claim been for the individual
debt of the partner, the co-partner could apply to open
the judgment, and be let into a defence, in order to
disprove a debt due by the firm, and redlify the cause
of a(5lion, even after it had!been merged in a judgment.
He never had his day in court to make a defence to the
claim. But as the judgment does not bind his separate
estate under the Pennsylvania pra6lice, and as the part-
ner may admit a debt against the firm, his confession of
judgment will be conclusive that the firm owes the debt
claimed by the plaintiff.
a. Latshaw v. Steinman, supra | 94, 11. a.
b. Stewart v. Abrams, supra \ 94, n. b.
I. If partner confessed judf;ment a_^ainst firm, co-partner may have
his name stricken off, in order to prevent execution a_e:ainst his sepa-
rate estate. C & D were partners. C, in an amicable action, confessed
judgment against himself and D for a firm debt, and in favor of A &
B. Upon the affidavit of D, the court below set aside the judgment,
on the ground that one partner had no power to confess judgment
against the firm, and that it was void as to D, and therefore void as to
C also. On writ of error, it was argued that one partner might employ
counsel, and authorize him to confess a judgment against the firm.
Was a warrant to confess, anything but an equivalent? — Order of court
below, setting aside the judgment, reversed, aud the name of D ordered
to be stricken out of the record, so that the judgment should remain
against C alone. C had transcended a partner's implied power. Bitzer
v. Shunk, I. W. & S. 340, Pa. (1841)
d. f udff men t against partner for firm debt binds firm, but not co-
partner's separate estate. B, the co-partner of C, gave A a judgment
note for a debt of B & C. A entered up the judgment, and levied on
firm property. C claimed that execution should correspond to the
272
Pt. 2, Ch. 5. Business Contracts. §96.
judgment which B had confessed. — C could not prevent A from taking
the firm stock in execution on his judgment against B. Ross v. Howell
3 Norris 129, Pa. (1877).
3. Judgmefit against partner donH merge cause of aBion against firm.
A brought assumpsit against firm B & C on book account. Defendants
put in evidence B's judgment note, for which A receipted as in full, if
paid, for the account. A sued B & C after entering judgment on the
warrant. — Judgment no bar to adlion, not being co-extensive with
claim against both, and receipt disproving intention to receive judg-
ment as satisfa6lion. A61 6 April, 1S30, no application, because judg-
ment not entered in a joint suit. Wallace v. Fairman, 4 Watts 378, Pa.
(1835).
4. A co-partner who is not served with the partner de-
fendant is not within the Pennsylvania a6l of 27 March,
1865, P. L. 38, which allows a partner to compel his
adversary, or the adverse beneficiary of the suit, to
testify, although a suit was on a firm contrail, because
the Pennsylvania a6ls of Assembly have severed the
cause of adlion involved in a firm contradl.
Partner not served not interested in suit. A sued B, executor of C,
for debt contradled by C, D & E. Plaintiff offered D's deposition in
evidence, to prove partnership. — Incompetent, on ground of interest,
and not made competent by acl 27 March, 1865, as adverse beneficiary
of a6lion. Hogeboom v. Gibbs, 7 Norris, 235, Pa. (1878).
5. Promise to release outgoing partner nudum paElunt. B & C dis-
solved, and C continued the business. A, who received notice of dis-
solution and continuance, promised B to release him, and rely on C's
agreement to pay the debt. — No consideration for A's promise. Wals-
trom v. Hopkins, 7 Out. 118, Pa. (1883).
§96.
®l)c firm b^ing a pl)ras£, not a person, its contract is notl^mig
but o\\ aggregate of tl)e contracts iul)icl) tl)c partners make.
The fa(5l is, that the joiutness of the contradl is
nothing but a form. The only contrails that have a
5ubstantive existence, are the individual contracfls of
;he partners. A partner who sued to enforce an in-
lividual claim, might be met b}^ a counter-claim
Lgainst his firm. If the firm debt was not in tbe
273
§g6. Business Contracts, Pt. 2, Ch. 5.
same right, that is, was not a several debt of the
plaintiff, it would not be a set-off against the demand/
The partners may apportion the liabilities between
them, and the agreement being in anticipation of the,
contribution enforced by law, will be upheld as a con-
trail, and an aAion will lie upon it during the part-
nership.'
The Scotch avoided the English pitfall by adopting
the French practice, and did not follow the Common
law formula, based on the joint contradl.^
1. Deceased partner' s debt set-off against firm in suit by surviving part-
ner. The administrator of A, surviving partner of B, sued D, who
pleaded set-off against A & B. — Certificate for D. Firm debt absolute
liability of deceased partner's estate, and might be set-off against his
separate claim. Blair v. Wood, 12 Out. 278, Pa. (1885).
2. Partners'' contraB with each other, to divide the firm debt a7id each
pay his apportioned part, eti/orced at law. A, B, and four others,
were railroad contra6lors, in partnership. The firm owed ^20,000.
The debt was apportioned among the partners : each agreed to pay
his portion, and indemnify his partners to that extent. B's share of
the debt was fs.ooo, which he refused, and which A was compelled,
to pay. A sued to recover the payment made on B's account, on his
contract. — ^Recovered. Though the contradl related to the partners'
liability for a firm debt, and the consideration was their separate es-
tate liability, the law enforced the contradt, because it did not involve
a partnership account. Edwards v. Remington, 51 Wis. 336 (1881).
If a partner contraRs to pay half a firm debt, co-partner may en-
force the payment at law. A & B, in settlement of the partnership
business, divided everything but the r^^sult of a lawsuit, which they
agreed to share equally. A, who paid ihe judgment and costs, sued
B for his half — Recovered. Partners may, by contracft, sever an item
from the partnership account, and sue at law for a breach. Gauger v.
Pautz, 45 Wis. 449 (1S78).
An apportionment is the Civil law rule in non-commercial partner-
ship. Supra \ 79, n. 2,
3. A Treatise on the Law of Partnership and Joint Stock Compa
according t) the Law of Scotland, by Francis Wii<i<iam Cook,
vocate, 1 vol. p. 541 ; 1866.
lanies,
Ad-
*
274
Pt. 2, Ch. 6. Firm Property. §97.
CHAPTER VI.
THE TITLE TO FIRM PROPERTY.
§97.
Ca-otoim'sljip puts a restriction upon tlje otoncra, ta^-extmsm
raitl) tl)e association of title.
The partners' title to firm property is co-ownersliip
in its most complete form.
The simplest form of co-ownership is a tenancy in
common, where each tenant has a separate and com-
plete title to an undivided purpart. No single co-owner
has any right of disposition of the common property
as a whole, nor any right to its exclusive enjoyment.
But he has absolute control over his own interest, and
an independent right to his proportion of the fruits
of the property.
The law affords numerous examples of modifications
of this simple form, in all of which the tendancy is
towards a distindlion of the individual rights. Owner-
ship consists of the exclusive right to enjoyment, and
the exclusive right of disposition. A man's right of
dominion is destroyed p7^o tanto whenever another is
admitted to share the enjoyment in, or exert rights of
disposition over, the property. An easement limits
the enjoyment, and a mortgage impairs the right of
disposition.
The destru6lion of individual rights in the compli-
cated forms of co-ownership consists in this : that the
prerogatives of the several owners interlock, and each
275
§07. Firm Property. Pt. 2, Ch. 6.
obtains a qualified dominion over the purparts of the
others. The case of executors is an illustration, where
each executor may exert the full right of disposition
over the property. But the interlacing of individual
rights, it is obvious, must have a limit, for should it
cover the whole scope of ownership, the confliAing
rights would be self-destru(ftive. Co-ownership would -^
be replaced by a kind of lottery, in which the most
expeditious would take the whole.
Passing from the analytical to the historical point
of view, it will appear that the process of developement
has been from the complex form of co-ownership, in
which individual rights are imperfectly recognized, to
the simple form in which each individual owner's right
of property is complete in itself, and untrammeled by
that of the others.
Two methods existed, at the Common law, for sev-
eral persons to hold property together. They might
be joint tenants, or tenants in common. Both hold
by joint possession, but tenants in common have sepa-
rate titles, while joint tenants hold by a single title.
The terms are antiquated, and out of place, in speaking
of personal property, and especially of merchandise,
because they recall the technical incidents of Feudal
estates; but when stripped of the technical husk, joint
tenancy defines, with exadlitude, the combination of
co-proprietorship with co-possession, which is the gist
of the partnership title, and makes history reveal the
origin and growth of the modern relation.
276
Pt. 2, Ch. 6. Firm Property. §98.
§98.
Joint tenancy represents tl]e transition from tlie familij, or
tribal, title of printitmc lau) to tl)e inbioiliual title ot nioiicrn
times.
In the earliest period there was, practically, no sepa-
rate ownership.^ The property rights of the individual
were enj oyed only in and through the family of which
he was a member. The joint tenancy of the Feudal
law, was a lingering trace of this primitive notion, and
enabled persons to hold property in private ownership,
without at once breaking with the tradition of com-
munal holdings." When the law passed into its ana-
lytical stage, and it became necessary to define the
legal conception of the joint tenancy, the influence of
its origin is seen in the theory of a single, title for the
several tenants. As at first the law denied to the indi-
vidual separate and exclusive property rights, so, at a
later date, the jurist denied to the joint tenant a sepa-
rate and distin6l title. In joint tenancy, at the Com-
mon law, there were many owners and one title. The
tribal relationship excluded private property, and with
it the devolution of property by inheritance. Joint
tenancy accomplished the same thing among the co-
tenants by the principle of survivorship, which was the
result of the single title. This theory of a single title
was an abstraction, which neither embodies the facets
nor meets the requirements of logic. As the institu-
tion of private property became universal, different
habits of thought were developed, and tenancy in com-
mon appeared as a modification of joint tenancy, more
consistent with prevailing ideas. In tenancy in com-
mon there were many owners, each of whom had a
277
§99-
Firm Property.
Pt. 2, Ch. 6.
right of enjoyment covering the whole property, but
with a separate and distin6t title. As a consequence
of the several titles, the right of survivorship was want-
ing in this form of co-ownership. Neither of these
forms was serviceable for anything more than for the
holding of property, and could not, without modifica-
tion, meet the requirements of the partnership rela-
tion. Partnership demands a theory of ownership
which secures to each co-owner the right to dispose of
the whole property. Neither tenancy in common nor
joint tenancy could furnish this essential prerogative.
1. Ancient Law, by Sir Henry Sumner Maine, K. C. S. I, LLD., pp.
260 ^/. 5^^. 6th ed. ; 1876.
2. Elements of Law, by Wilwam Marelby, D. C. L., 3d ed., §516,
■ 1885.
§99.
dlljc partner's titk is an abaptation of joint ttnancji to com-
mercial purposes.
. To meet the requirements of partnership, the Pro-
fession took up the institution of joint tenancy, with
which it was acquainted, and adapted it to the novel
relation. Common lawyers were familiar with the
process of moulding feudal estates to meet the require-
ments of a new legal situation.
The adaptation of joint tenancy to commercial pur-
poses involved an abridgement of some of its incidents,
and an enlargement of others. Survivorship contin-
ued to be recognized,' but only until the close of liqui-
dation." Although the separate title of the partner
was recognized, it could not be made effe6live until
278
m
Pt. 2, Ch. 6. Firm Property. §99.
after dissolution. During the continuance of the firm,
each partner has an estate in the property, which ena-
bles him to convey a good title to any portion of the
firm stock, without reference to the title of his co-
partner. This power of sale is not the result of any
relation of principal and agent between the partners,
but is an incident of the estate. This makes the part-
nership title an example of co-ownership in its most
complete form.
Starting with this fundamental conception, the law
of partnership is a developement of the joint estate.
From this notion of the joint estate the partner de-
rives his powers, and the creditors derive their rights.
The prominence given to the estate in the partnership
plan prepared the way for the derivative rule that the
creditors of the firm were entitled to a preference over
separate creditors in the distribution of firm assets. It
was the firm property embarked in trade, which was
the legal debtor, just as a landed estate when sub-
jedled to the claims of creditors became, in contempla-
tion of law, an independent debtor. The right of the
firm creditors cannot be explained by any theory of
destination, for that is an equitable do6lrine, and in-
sufficient to explain a Common law right. It has
sometimes been asserted that the creditors' privilege
is the result of equitable do6lrines. But, in reality, it
it is simply an instance, in which equity has followed
the law. There is nothing abnormal in making the
firm estate the starting point of partnership law. The
Common lawyers habitually measured a man's ca-
pacity by his estate. According to their habits of
thought, the estate was the principal, and the indi-
vidual the accessory. It is not difficult to understand
279
^loo. Firm Property. Pt. 2, Ch. 6.
this mental bent, when it is remembered that their legal
and social struAure was nothing but methodized land
tenures.
1. Ris^ht o/aflion accrues to surviving joint tenant. A and B, execu-
tors of C, brought writ of account against D, bailiff of C. D's defence :
Non-joinder of executors of C's co-tenant E. D argued : ' If two mer-
chandise in common, and one dies his executors shall have a moiety.'
Plaintiffs replied, that a chattel in possession was not a chattel in ac-
tion, which could be severed, and executors of deceased could not
join survivor. — The writ was adjudged good. The judge, correAing
counsel's statement of the law Merchant, said : "This is the law of
" two merchants, who have goods in common : If one dies the other
"shall have the whole by survivorship." 38 Edward III., p. 7 Ac-
compt : 1365.
2. Lord El,DON speaks of the determination of a partnership "by the
"death of one partner, in which case the law says, that the property
"sur\aves to the others. It survives as to the legal title in many
"cases; but not as to the beneficial interest," Crawshay v. Collins,
"supra §43, n. a: 15 Vesey 227 (1808).
100.
Qll)c rigl)ts of crebitors kpcnb upon X\]t joint estate of \\)i
partners.
It is important to distinguish between the partner's'
joint tenancy or tenancy in common, in order to ascer-
tain the rights of third persons, by seeing whether they
deal with joint owners, or with separate owners.
If the possessors have separate titles, that is to say,
are tenants in common, the possession, though joint, is
by construction of law, the possession of each for a
moiety. Then one who has possession of the prop-
erty holds half for himself and half for his co-part-
ner. The possession is according to the titles.' The
consequence of this severance would be that each
partner would dispose of his own title and deal with
280
t
Pt. 2, Ch. 6. Firm Property. §ioo.
it alone in His firm transactions. If he should adl for
his co-partner's share, it would be as his representa-
tive. The effect of individualizing the partners as to
their titles in firm transa(5lions affects creditors. The
separate creditors of each partner would be brought
to the rank of firm creditors, or, rather, firm creditors
would be put into the position of separate creditors of
each partner.^ It would happen in this wise :
The law recognizes no capacities in an individual.
A partner binds himself by a firm contract in his sep-
arate estate. He becomes a debtor as an individual
as well as a partner. Conversely, on the hypothesis
of a tenancy in common, if he contrails on his indi-
vidual account, he charges his property in the firm.
If this property is owned in severalty, though occu-
pied in common, the separate creditor is entitled to
seize it by execution, and have the purparts set out,
so that he can be satisfied out of his debtor's property.
Both joint and separate creditors have the same right
of access to the partner's quota in the firm and to his
separate estate. They would come in pro rata upon
each fund.^
On the other hand, the joint ownership of firm prop-
erty changes the rights of third persons. Neither part-
ner has the right to deal with any portion of the firm
property, except in a firm transaction. A separate
creditor, too, has no claim to any specific piece of firm
property, for his debtor has no tangible interest in
severalty.'* The firm property belongs, in the first
instance, to the firm creditors, and they also have an
equal right against each partner's separate estate, with
his separate creditors. But how does the right of the
partners to effect a joint ownership, which prefers
281
§ioo. Firm Property. Pt. 2, Ch. 6.
joint creditors and cuts out separate creditors, arise?
It is by the Common law, which created a joint
tenancy. This species of estate survived the Feudal
system, and was adapted to commercial uses.^ By
means of it the refusal to recognize the right to trade
in the capacity of a partner was circumvented, and a
substitute for it was devised. Wherever an individual
is doing business in any particular capacity, or rela-
tion, as partner, executor, trustee or guardian, there
are two methods of measuring his liability. He may
upon one theory of law, be held personally liable to the
full extent of his resources for all adls done by him
in that capacity, or his responsibility may be limited
to the fund over which he has control, as an incident
to his relation. The latter was the persona of the
Roman law, and involved a preference upon the par-
ticular fund in favor of those who had dealt with
him in his special relation. The Common law, in all
cases, took the first view, and refused to recognize any
limited liability whatever. This is what is meant by
saying, the Common law refused to recognize ' a6ling
in a capacity.' As the individual's liability could not
be limited to the particular fund, it followed, con-
versely, that he could create no preference upon that
fund to creditors who had dealt with him in his special
capacity. These creditors stood upon the ^ame foot-
ing with all his other creditors. Some alternative had
to be devised to give the joint creditors of a partner-
ship a preference upon the firm fund. The indivisi-
bility of a person at law made it necessary in lieu of the
legal conception of 2. persona or capacity to find out
an equivalent ; which was done in part by the expedient
of joint tenancy. The Feudal lawyers went to work,
Pt. 2, Ch. 6. Firm Property. §ioo.
in a back-handed way, and started from the point of
view of title. Instead of controlling property by the
person who exerts his capacity, they controlled the
person by the property which he possessed. They
looked at the estate as the principal, at the tenant as
accessor}^, and they ascertained and defined his capa-
city by his interest in the land. Estates arise at law
according to the interests to be subserved. A joint
tenancy resulted from the union of the partners, and
took its chara6ler from the purpose of the joinder.
The contrail creates the relation of partnership, and
invests the partners with an estate by entireties during
the continuance of the firm, that is to say, until the
final settlement of their account.*^ The relation, though
founded upon contrail, exists by virtue of the vested
interests when once established, independent of the
contradl, which served as the occasion and means of
its establishment. Each partner has a vested right,
which no dissolution can destroy, to apply the firm
property to the payment of the firm debts, and the
priority of firm creditors upon partnership funds is
nothing more than the sequestration of this vested
right in their interest. The title is joint in its most
complete form, as explained above, but neither partner
can dispose of the joint property or any portion of it,
or of his individual interest, except in subordination
to the obligations of his relation, and in accordance
with the rules by which it is governed. The separate
creditors are bound to recognize the nature of the
property, and their execution would not hold more
than the debtor could convey.
A separate execution and levy upon the firm prop-
erty create no lien upon the partner's interest. The
2S3
§ioo. Firm Property. Pt. 2, Ch. 6.
separate creditor seizes the firm property that he may
satisfy the technical requirements of the writ, but he
sells only the partner's share in the firm business.
His share in the firm business is his portion of what
remains upon dissolution after all the debts are paid.
This share of the partner is a property right, which
he holds in severalty, and, therefore, an asset for the
payment of his separate debts. But it is not a right
of ownership in severalty, and hence the interest
which he has as co-owner of the firm property eludes
the grasp of his separate creditor, and is exclusively
reserved to answer the claim of the firm creditors until
dissolution has destroyed the joint estate. It is not
stri(5lly true to say that a partner has no tangible in-
terest as owner in the firm property. It is tangible
for firm creditors, and is, in reality, the basis of their
preference. He is undoubtedly a co-owner, logically
speaking, and his right and interest as co-owner must
be separate and peculiar to himself (§53). All that
is meant by the phrase is that a partner's interest, as
owner in the firm propert}^, is not available for his
separate creditors during the continuance of the firm.
The partners, in making their contributions, create
for the firm a new estate. Each partner loses a part
of his exclusive dominion over his contribution, and
his co-partners acquire in it new rights of ownership.
The partners assume the position and exercise the
powers of co-proprietors over an integral stock. They
still own the property as individuals, because the firm
is not distindl from the members who compose it, but
the nature of their estate is changed. The single
partner has no longer any right to the separate enjoy-
ment and control of his contribution, or of any por-
284
II
Pt. 2, Ch. 6. Firm Property. §ioo.
tion of the firm property. His rights as owner are
modified and controlled by the rights of his co-pro-
prietors, which extend to every portion of the stock.
It is this want of absohite and independent owner-
ship which withdraws his interest as co-proprietor
from the grasp of his separate creditors. Were he
absolute owner of his aliquot, though undivided, in-
terest, his separate creditor might sell it on execu-
tion, and the purchaser would succeed the partner as
co-proprietor. This is the case of a tenant in com-
mon. Furthermore, the purchaser would hold the title
free from the firm debts, which would then assume the
position of a lien, and from the claims of the co-part-
ners, because, in the absence of a statutory provision,
a judicial sale discharges all liens, and charges them
upon the debtor's title.' But the sale of a separate part-
ner's interest does not pass a title free from the claims
of the partners and of the firm creditors. Hence it is
evident that the partners have something more than
an equity, and the creditors something more than a
lien. By virtue of their rights as co-propietors, the
partners hold the firm stock for firm purposes in defi-
ance of the separate creditor's attack. Being them-
selves, equally with the debtor partner, owners of
every portion of the firm stock, it is impossible for a
separate creditor to sell the debtor partner's interest
{in the stock itself without infringing upon their title.
The separate creditor may take the only property
right of which the partner remains separate and ab-
solute master, /. ^., his share upon dissolution. But
the firm stock is impregnable to his attack, because
sheltered by the title of the co-partners.**
285
§ioo. Firm Property. Pt. 2, Ch. 6.
1. Tenancy in common enforced by execution splits partners' title into
tnoicties. B issued a separate execution against C, which ^vas fol-
lowed by a joint execution against C and D, but E, the sheriff, made
no second levy under the joint writ. Subsequently, C and D became
bankrupt, and A, their assignee, sued E for selling D's moiety under
the joint writ. Defence: vStock already seized. — The seizure, in
order to sell C's moiety, did not take D's moiety, which remained
by coustrudlion of law in D's possession. Johnson v. Evans, 7 M.
& G. 240 (1844).
2. The Civil lawyers are not less perplexed than the
Common lawyers to find out how to give the firm cred-
itors a preference upon the joint assets. The French
resort to the fidlion of making the firm a person. The
legal person contra(5ls debts, and charges its assets for
payment. If the fidlion had a legal basis for its existence,
and was consistently carried out, a partnership would
become a corporation, i. The firm creditors would take
the firm property, and no separate creditor would have a
claim against it. 2. The firm creditors would have no
claim against the partner's separate estate, which would
be liable only to their individual creditors. 3. The firm
might be bankrupt, without involving the partners in the
proceedings. 4. The firm might be solvent, although all
the partners were bankrupt. 5. The partnership would
not be dissolved by a change of partners.
,,2ol( nun bie :i3ef;auptung, bie <oa"i'Cl'^^9e|cIl[d)aft fet eine juriftifdic
,,~i<cri'on, iriicnb ireld^en iSinn l^abcn, fo niiitfcn awA) bie ©runbfd^e unb
„ /voUicruni-^cn, Uicldie fid) notf>t»enbici aus bent 3Befen bcr juri[tifd;en ^cr=
„ \o\\ cri|cbcn, aiif ftc ^^Inipenbung finben. 93tan ntiifete bemgemd^ auf \oU
„ genbe .V)au>.'»tu-it3C fommen:
1) "Sie Socictdtsglaubiger batten ftcb su ibrer Sefriebigung allerbtngS
„an_ba'5 £octetdte.gut, unb fdilieBcn bafon bie (^(dubiger ber ein^^elnen
,, r^efellfd'iafter au^; aber, nne fdicn oben nngcbeutet, int gleidicm 2lugen=
,,b[\d unb nu'icrtrcnnlid; Hon biefent £afie, ergiebt fid) and):
:^) ,,3^te -lU-iiuitgldubigci- bcfricbigcn fid), ntit 3(uefd,duf5 ber ©ocietatS--
,,gldubiger, au'j bcm 'l^riiiatHcrmbgen ber ein:elnen Slffcciec;.
B) „3)ie (^)eKUi"d.)aft fann in CSoncurc^ gcratbcn, obne bafi iiber bie ein»
„jelncn C^5eKlI'd)aftcr ber tSoneure auc'bridU, bn bie'i2d)u(ben ber 0efe[f=
,,fc^aft bie Diitgiieber, i\v.<^ bcnen fie beftebt, nid)t beriil)ren.
4) „:j}ie ^5efellfd)aft fann [olyent bleiben unb fortbeftef)en, lt>enn auc^
„al(e ftefellfdnnter in (Soncurs fallen.
o) „Xie (^Sefellfdnxft beftebt al§ bie gleic^e mit ifjren 2lctit)en unb ^affiben
„fort, UH'nn fd)on ibre 5Jtitg(ieber ficb Hercinbern.
.,'$'0n ber im gegenirdrtigen 5^anbel5red)te befannten unb f^jejiell au§5
„gebitbeten .'banbelegefellfd^aft gelten abix, allgentetn anerfannt, ganj
„anbere 33eftimmungen, unb biefe Wrunbfdtie ant fie anliienben, bie^e \^x
„inneritet'5 SBefen 3crnid)ten unb fie ,^u eineni Dbllig anbern ^nftitute
„umgcfta[ten."a
a. T^a§ TNcrbdltnifi ber Societdtegldubiger ya ben ^ribatgldubtgern tm Gon--
curte ber pffcnen .'oanbelegefeIlfd)aft, pp. 7-8., Don ^o^anneg'^urlemann,
(Santons^jrocurator, ^iiri'd), 1846.
286
Pt. 2, Ch. 6. Firm Property. §ioo.
What is the polarity of mind of a lawyer who advo-
cates making a partnership by tnrns a corporation and a
number of individuals?" If he comprehended the ele-
mental distindlion of kind, he would not expose his con-
fusion by making the suggestion, but he would disguise
the proposition in the jargon of lawyers, who speak of a
man quo viodo a horse.
h. The Law of Partnership, ch. x. § i., by Theophilus Parsons,
LL.D.
3. The firm creditors are entitled to no privilege, unless
a legal basis exists for the preference. The Civil law
does not furnish any legal ground for the privilege.
The result is a pro rata distribution among all the
creditors, joint and separate, of each partner.
„ G^ frdgt fid;, \xm\\ gef)brt ba§ Okfellfd^aftegut? Sarauf fann nttf)t
„ anbers geantluortet tverben, als ben (ycfcUfcfiaftern pro rata. SBer
„l^aftct fiir @ei'el(jd)att5ic^ulben? Slntinort: bie ©efellfc^aftcr. Siefe
,,I;aften alkn (Srebitoren mit if)ren fdmmtUdien 9ktit)en, liegen biefe
„Jr>o fie Juollen. Ser fragL Ssorjug mufe fo al§ ^sri»ilegium aufgefa^t
„ tDerben. Siefe 2(uffaffung tft baburd) bebingt, "tia^ im gcineinen beutfd;en
,,9?ed)t, unb ber 9fatur ber 'Badji nadi, bic &. feine jur. ^^Mn-foii ift, unb
,, dVi fo[d)e alfo fcin iCermogen unb fcine Sc^ulbcn l^at. ^ebe anbere 3tufs
„faffung bc§ fragl. S^orsugeg, fie mag nun in SBorte gefteibet inerbcn, icie
„fie iPoKe, fiifirt wieber baf)in, bafs bie &. ail eigne ^Jserfon 9ied;te unb
,, iser^)ftidjtungen getrennt Don benjenigen i^rev 3)JitgIicber bahz/'^
c. i^iirtemann, Sag 3Ser!^aItni§, p. 88.
4. Partner's titte as joint tenant runs through the firm stock. A
brought trespass against sheriff and plaintiff in execution against
B's interest in A & B's livery stables for taking possession of the
stock by means of a sheriff's sale. The defendants pleaded "not
guilt}'," and denied A's right to recover without B's joinder.^ — -A
recovered; his title good to all the firm property, and unless B's
non-joinder pleaded in abatement the objecftion is waived. Deal v.
Bogue, 8 Harris, 228, Pa. (1853).
5. Interest 710 bar in. suit against surviving paiiner. Deceased part-
ner not an assignor. B & C, partners. B died. A sued C, as sur-
viving partner, for money lent, aud testified that the loan was made
to B for the firm. Defence : A incompetent, because C is assignee
of B, deceased, and is deprived of his testimony. — A competent. C
not assignee of B, but original joint tenant, with him, of the firm
property. Tremper v. Conklin, 44 N. Y. 61 (1870).
6. The joint estate does not come to an end until a set-
tlement of the account between the partners has been
completed, and the separate interests of the partners
have been ascertained. The Common law process of
execution was inadequate to bring about the ascertain-
ment of a partner's share in the joint property. A sum-
mary remedy was at first permitted. ' ' If there were two
partners, and a * creditor of one got judgment and
287
§ioo. Firm Propp:rty. Pt. 2, Ch. 6.
execution against him, and levied it upon the partner-
ship property, of which the sheriff (although he seized
the whole) sold one-half. If there were three, he sold
one-third; if four, one-quarter. " '^ Lord MansfieLD
corredled and supplemented the process by making an
account in equity incident to the execution. His prac-
tice has become the law. ^ The share may now be sold
without ascertainment, when the purchaser buys the
right to an account, or a pig in the poke,*" or the share
may be ascertained in advance, and the sale will be
made to a purchaser who knows what he is buying. '^
a. A Treatise on the Law of Partnership, p. 342, 2d ed., 1870, by The-
OPHILUS Parsons, LL.D., who reviews the history of the proceedings
on a separate execution, and cites the authorities.
5. Separate execution does not seize specific articles of firm property.
A recoveredjudgment against B and C, and levied on articles belong-
ing to C & D. D interpleaded, and jurj', under instru6tions from
court, gave A 1-2 the property, and assessed its value at II150. Subse-
quently, C sold all to D, for antecedent debt. — Error. C had no title
to any specific articles. Tait v. Mvurphy, 2 S. Rep'r 317 (1887).
c. Purchaser of parttier^s interest gets nothing but a right to an
account. A bought at sheriff's sale B's interest in newspaper estab-
lishment of B & Co., and let it to B, reserving rent. On B's default
in payment of the rent, and his refusal to deliver iip possession, A
brought a bill which court sustained, and also issued a habere fa.,
and afterwards a writ of assistance, which the sheriff executed. — A
entitled to no part of firm property, and proceedings below without
any warrant in law. Durborrow's Appeal, 3 Norris 404, Pa. (1877).
d. Partner's share cannot be sold until ascertained. C levied on stock
of A, B & Co. for B's debt. A enjoined C from selling until B's inter-
est could be ascertained in Chancery. — Firm title a unit, and, until
liquidation, no ascertainment of partner's quota. No sale in chancery
of unknown purpart. Place v. Sweetzer, 16 Ohio 142 (1847) ; Nixon v.
Nash, 12 O. St. 647 (1861).
7. Sale against heir within seven years discharges lien against an-
cestor's estate. B left his estate, by will, to children, C, D, E, F and
G. F died in 1807, lea\ang debts, which H, his executrix, paid. She
applied, in 1810, to O. C, which made sale of F's interest, for the pay-
ment of his debts to I. G also died, without issue, before 1808. In
1808, the interests of C, D and E had been sold separately, at sheriff's
sale, to A, upon judgments recovered against each of them. The lien
of E's debts was discharged by the sheriff's sale. Luce v. Snively, 4
Watts 396, Pa. (1835).
The difference of estate is necessary to prevent the
sale from discharging liens.
Sheriff's sal; against heir passes no title aqainst subseqtient Or-
phans' Court sale of ancestor's estate. Walker died in 1856. His
property descended to his son Samuel, against whom judgment was
recovered, and the property sold at sheriff's sale. In i860, the same
property was sold under decree of O. C— Purchaser at sheriff's sale
had no claim to the land as against one who bought at the O. C. sale.
If heir takes estate subjecSl to debts of the decedent, the heir becomes
I:
Ft. 2, Ch. 6. Firm Property. §ioi,
the debtor instead of the ancestor, and the creditors are co-ordinated.
Horner V. Hasbrouck, 5 \A'right 169, Pa. (1861).
8. Although sale of moiety is fraudulent, sheriff can't sell article.
Undivided title protefls both parts. C, a dealer in kindlingwood,
became indebted before March, and sold out his business to A & B,
making two bills of sale. B paid for his half in cash, A, C's son,
in notes. Creditors of C obtained judgment in June and levied on
horse. Sheriff sold and delivered jiossession. A & B obtained
judgment in trespass against sheriff.- — Affirmed. Sheriff could not
sell, at best, anything but A's interest, as B paid full value, and
delivery of horse charged him. Plaintiff had joint interest, which
sustained adlion, though only in a moiety. Farrell v. Colwell, i Vr.
123, N.J. (1862).
Partner in possession of firm assets after dissolution, a trustee, and
cannot buy at his own sale, even through another. A and B dissolved
in 1861. They owned an uninsured share in the bark "Ocean
Rover," destroyed in 1862 by the "Alabama." In 1865, after A's
insolvency, B, as solvent partner, sold the firm assets at aucflion. A
bid for the share, but it was bought, at B's request, by C, who, undei
a secret agreement, resold to B. The government awarded 1^1564
compensation for the loss. A claimed half the award. — Recovered.
B, a trustee of the late firm's assets, and could not hold under a pur-
chase made by another for him. Jones v. Dexter, 130 Mass. 380
(1881).
§101.
Ipartncrsljip is a status.
By status is meant, in general, the sum of the rights
and duties of an individual in a given, political or social
relation. It may be, and generally is, independent of
contradl, or it ma}^ arise through the consent of the
individual. A man's status as a citizen, or as a father,
does not depend upon contrail. His status as a hus-
band, or a partner, is the result of his consent. As
status is the result, which the law attaches to certain
political or social fa6ls conne6led with the individual,
it cannot, stridlly speaking, be dissolved at will, be-
cause the individual cannot change the fa6ls upon
which his status depends. The citizen cannot alter
birthplace, nor the father overcome the fadl of his
289
§ioi. Firm Property. Pt. 2, Ch. 6.
paternity. The law may and often does provide for
the abrogation of the status upon the subsequent con-
junclion of a different state of fadls.
As the consent of the individual may be an essen-
tial fa6l in the creation of the status, so, too, his
change of purpose may be the effecflual fa6l in bring-
ing about its abrogation. But this is a matter of spe-
cial legal provision. Marriage cannot be dissolved at
will. Partnership may be dissolved at will. But
though partnership may be dissolved at will and the
relation brought to a close through the a6l of the indi
vidual, yet the status, with all its attendant duties
and prerogatives, subsists until it is terminated in a
manner consistent with its original purpose.^ While
the partner may dissolve the firm at will, and compel
immediate liquidation, he cannot, before the final set-
tlement of accounts, impair any of the prerogatives of
his co-partners, or devest himself of any duty by the
simple withdrawal of his consent to the continuance
of the relation. Herein is the difference between
partnership and agency. Agency is not a status, but
a contradlual relation. The prerogatives of an agent
depend upon the continuing consent of his principal,
and cease the instant that consent is withdrawn.
The elevation of partnership into a status, is due
to the presence of a firm estate. Since the rights and
obligations of partners as individuals are measured
by the estate, which is an extraneous fa6l, the notion
of this contractual relation is necessarily subordinated
to the idea of status.^
The partners being merged as individuals in the
firm estate, are enabled to trade in a distin(51: capacity.
The estate is set apart and dealt with by its proprie-
290
Pt. 2, Ch. 6. Firm Property. §ioi.
tors as a separate fund. Any transaction by either
partner, not connected with the estate, does not bind
it, or enable the creditors to proceed against it. The
partners, when ailing for the iirm, are isolated by the
estate from other transa(5lions, and the isolation is
equivalent to giving them capacity to trade as part-
ners, \he. persona of the Roman law. The only quali-
fication is, that in adling as partners they bind their
separate estates, and the firm creditor is not confined
to the firm fund. The withdrawal of the partnership
property from the partner's general estate could not
be accomplished by contraA between the partners.^
The contrail serves as the occasion for the creation
of a status, as in marriage, but the relation, when
created, establishes rights and duties which are para-
mount to the contrail. It is the recognition by the
law of the estate, that severs the partner from himself
as a man.
I. Partner's right to wind up business. A bought out a partner's in-
terest, and was admitted, by continuing partner, to joint liquidation.
A applied for a receiver, because B made settlements without his
consent. — Bill dismissed. A, though admitted to equal rights in
liquidation, was no more than a partner, and could not restridl B's
control over the business. Van Rennsselaer v. Emery, 9 How. Pr.
135, N. Y. (1S54).
Appointnient of receiver not of course in partnership at will. A &
B, partners at will. A brought bill for dissolution and appointment
of a receiver. B denied any cause for a receiver, and A insisted
upon the appointment, as of course. — Refused. In partnership at
will, appointment in court's discretion, and imless cause shown for
taking business out of defendant's hands, chancellor will not break
up business and saddle partnership with costs of settlement in chan-
cerv. Birdsall v. Cole, 2 vStock. Ch. 63, N. J. (1S54).
Di'^solution. Contrail to sell machinery to highest bidder and
divide produFi. On dissolution, partners agreed to divide chocolate
on hand, and soil out machinery for its manufacflure to the highest
bidder. The chocolate was divided into two lots, and then the part-
ners disagreed. A got judgment for his share of the assets against
B. — Reversed. Contra6l not binding until carried out. Konings-
burg V. Launitz, i E. D. Smith, 215, N. Y. (1S51.)
Appointment cf receiver refused unless ground laid. A & B, at F,
in partnership with C & D, at E, dissolved. A & B asked appoint-
ment of receiver, because C &: D misappropriated firm assets at E,
291
$IOI.
Firm Property. Pt. 2, Ch. 6.
and refused to pay notes at bank, for |5io,ooo, or meet A & B for set-
tlement C & D admitted refusal to pay notes, but denied conver-
sion of assets, or refusal to meet A & B.— Appointment refused. No
CN-idence of bad faith. Coddington v. Toppan, ii C. E. Gr. 141,
N.J. (iS75)-
2. Dr. KuNTZE thinks the joint estate of the partners
fonns the legal basis for the transadlions of the busi-
ness, and gives the partnership a standing apart from
the individuals who compose it. The article of Kuntze
is published only in a German legal periodical,^ which
is inaccessible to foreign readers. Dr. Kah thus states
Kuxtze's view:*^
,, Gr fint«ct ba^ ffiefen ber JDirtl^f^attli^en @enoffen[d)aft ipcbcr in ber
„ Socictdt nod? in ber CollectifgefeUfd^aft, fonbcrn in eincr ©tiftunoi: nni-
",,versitas bonoriiin, eincm :^erfonificirtcn pairimonium. Ser 3ied}t^=
','(irunb fiicrfitr bcftefit iinn barin, baf( cmeStbcil'o bet edilper))unct bei ber
',', (i}encfl'eni"d)aft in i[)rem iliermogenebeftanb ru(;c, anbcrntbeilg ibr '^w^d —
''anber-S a\i bci ber Gorporatipn — aiicf; "o^w einem 'Csnbiinbmun erreid}t
" iinb berfolflt tnerben fonne. 5^ag Drganifaticne-^rincip ber luirtf)fd}att=
^^(idjen (yen'offenfd^aft beftebt rtad) 5lun^e in ber a>erbtnbung einer ah-
", ftractcn 9>ennc)gen§)3erjonIid^feit unb ber ©efammtl^anb, conjimda
,, nianus."
a. VI. 3citi'cbritt fiir ba§ gefammte §anbe[§red^t. ©. 220-229.
b. aSeitrage jum 9ied)t ber (Sri»erb§= u. 2Ciririfc^aft§=@cnoffenid}atten, \ii>v.
2r. 33ern^arb it'a^. p. 33. 1882.
3. Dr. HiJRLEM ANN'S position is that as partnership
originated in the Roman law, and has extended with
its development, the principle of its organization must
be found in that system of law. He denies that any
basis exists in the Civil law for a joint estate which will
secure the firm creditors a preference in its distribu-
tion. The right of individuals to set apart property,
and form a joint mass, which should be kept for their
joint creditors, did not exist at the Roman law. i. The
fiction of a person he discards a makeshift. 2. The
privilege of the joint creditors he denies, because it has
no legal foundation. 3. The analogy of the peculiiim
he shows to be far-fetched and unfounded.
„ SledUlid) gebbrten bie ^veeuHen nod) immer %\\\\\ S5ermbgen be§ <pcrrn unb
„ fonnten ton bicfem w^ii) 'iU'lieben eingejogen Jrerben; man netgte fid; aber
„ immer mebt ber Stniidu'su, ben ®f(aiien obcr Sof^n, ntit 9iiidfid;t auf bte
„-^vccu(ien, aU fe(bi"tbered)tigt jn flatten, ^urd} £)anblungen be^ Sflaluni
„ obcr Softness iuurbe ber fe'err, re|>. Sater, gegen ^rttte gar iiidit ber^flid;tet,
„ (e§ >inrD bier bon ben Scliften abge[e(ien), Jpenn nid)t cin befonberer Grunb
,, sur pcribnlid^en S^aft bin^n tarn, %. ^. Sicfebl, in ran versio v.. bgl. Gtnc
„ [trenge :>^urd1fiif)rllng bieu'r ^Jeditsgrunbfdtie Ware iinbillig unb T^art erf dne^
„ ncn. Xer £)err bdtte ba^ 'i^eculium al^ fein Gigentbuni bcbalten unb'bie
„ f^tdubiger bc§ 2{Ia»en leer ipeggefcbidt. 3:er ':)irdtor balf \w\ Gbift. Gt
,, beftimmte, baf5 bie Grcbitoren be^S SflaDen (H)a§ fon biefem gefagt ift, gilt
,, immer and; »om Sobnc) fid[> Jcenigfteng axi bag ^eculium l^alten fiJnnen;
292
M
Pt. 2, Ch. 6. FiRiM Property. ' §ioi.
„ ber .^err foil burd) bic ^•»anbtungcn fciner Untcrgebencn, iticnn nidjt imbe*
,, bingt, hod) fo ireit bic ':15eciilicn reidjcn, ttcr^jflirfitct luerbcn. vco cutftanb bic
,, actio de pcculio. ^^uriftifd; lyar c^S immcr nod; bcr ,ocrr, unidjcin bag
,, Gigcntbum an ben ^Isccutien juftanb, bod; bnrfte cr biefclben ben (irebitorcn
„nid;t ganj borentI;altcn, fonbern nur ben 2:f)eil, nield;cn cr felbft aUfallig
„ licn bent Sf(aBen ,^u forbern f)atte. ^^^tifd) geftaltete fid; bie icad;e \i>, alS
„ gcr;ore ba-S 'ipcculium nid;t mel;r beni £»errn, fonbern bem Sttaben. G§ fd;ien,
,, alio iibe ber .'oerr nur ha<i, 9ied;t <x\\^:>, h^x^^ isermogcn eine^ 9(nbern ju ttieilen,
• ,,unb a(§ ftebe tf;nt zwxprivilegium dedudionis ju fiir baejenige, Jv»as er
„felbft jn forbern l^atte. Setn (S'igentliumSred;! erfcfiien ale ^Tiftributione^
„rcd^t unb 'i|irinilegium. — Sie befd;rdnfcnbe 9iid;tung mad;te Uicitere g^ort^
,, fd;ritte. aSenn ber §err jugab, baft ber ©flabe in cigenem JJame ein
„ $anbel§gelt»erfce trieb^ fo Jinlligte er baburc^ ein, bafs bas '^y.eeulium obcr
„ tvenigftenS ein 2:^eil beefetben baju Dertuenbet, niitbin gri3feern ©efa^ren
„au§ge|el5t luerbe; C'^ ivar baf^er billig, ba^ and; er biefen Gf;ancen au^ge=
„ fe^t fei unb fiir feine g-orberungen nid;t burd; 'h<x?i privilcgimn dednc-
;. „ /'/o;n'5 bollig gefid;ert bleibe. 2)er ^srcitor balf and; f)ier unb beftimmte
; „ in feineni Gbifte, inenn ein (Sftabe mit 3>ornnffen feines i)crrn ^lanblung
„treibe, fo berliere le^terer fein privilcgium dedudionis wwh concurrire
„ bei 9]ertf;eilung ber merx, ober be§ jur fixinblung berirenbeten pcculi- .
,,nins, mit alien iibrigen Cjldubigern bc^ Stlaben. £0 entftanb bie aclio
,, tributoria. Sa'o Gigentf)unx be§ Sevrn dufeert fid; nur nod; in feineni
„ 3)igtribution§recf)te. 'Seibe Itlagen finb au§ berfelben Quelle entf^trungen,
„ru^en auf bemfelben '^srincip, 33egiinftigung ber (Srebitoren be« Stlaben
„ gegcniiber bent £)errn. 2)iefe tft am bebcutenbften bei ber adio tributoria.
„2)er§err inirb baburc^ einem if^-^ra«^;^5 r/-^^//'crgleid;geftcUt; er ber=
,, liert fein ^orabjug^red;!. \. 5. /. quod cum eo, qui in at. pot: ''In
,, tributojia adione domini conditio praccipua non est. id est, quod
,, domino debcfur, non dediccitur, sed ejusdem juris est dommus,
,,cujus et ceteri crcditoresy 2)iefe§ ^srincif) ift in ben ^sanbeften auc^
„ o.\\ bie S^Ji^e be§ S^iteUJ '' De tributoria acticne'" geftellt (/. /. pr. h. t.)
„unb bei (Sntfd;eibung fcf)nneriger ^dlle fte'ts alS 9icrm gebenb ju §iilfe
„genommen. ©0 %. 33. in /. 5. ^. 7 h. t. bon UlfJtan. S)er bent |. 15
„ biefer lex anger;dngte f^ejielle Grunb fann n-efentlid; nid;t§ 2(nbcre§ au§s
„briiden, alg ba$ ber ganjen actio ju 03runb liegenbe ^irinci^). Unb fo
„ ift e§ aucl;. aSdbrenb ber aw bie ©^n^e geftellte ©al5, ber i'^^xx berliere feitt
,,privilegiuin dedudionis wwh ftebe ben anbern Grebitorengleid;, biered,)ts
„ X\<&it Stellung ber (Erebitoren be§ Sflaben su feineni .^crrn be^eid^net,
,,5eigt ber bent §. 15. beigefiigte Grunb {merci viagis quam ipsi credi-
,,dit), ioie fid; ba§ mit 33e3ie^ung auf bie merx int i.'eben fattijd; geftaltc.
„Siefer Cirunb bejieftt fid; ebenfoioof)l allgemein auf alte SBeftimmungett
„ber actio tributoria, al'S nur auf ben betreffenben ?. SKenn ndmlid;
„!otentanb mit eincni ©flaven contraf)irte, fo tmifste er, bafj er gegen il;n
„febft entmeber feine 5(nfpriid;e gar nid;t ober bod; nidit fogleid; flagenb
„Berfolgen tonne, baf3 aucl) ber §err nidit unbebingt l^afte. 9iur bie vierx
,,tonnte if;nt cinige ©arantie geben unb il;n jum Erebitiren ermuntevn,
„ benn au^ biefer muf^te er bejaljlt iocrben. 3)afiir biente ibm bie adio tri-
ifbutoria, unb man fonnte toirtUc^ mit 9ied;t fagen, man crebitire mel;r ber
,, Sanblung al§ bem ©ftaben {merci viagis quam ipsi servo). 6an,^ auf
,, gleid;e SUeife muf5 bei ber actio de peculio gefagt iperben, bie ©Idubiger
,, crcbitiren />6r«//6> magis qjiam ipsi. Sas giit, ioenn ein ©flabe einc
„ ^anblung batte, ganj ebenfo, iine toenn er jittci unb mcl^rere fiatte. Sie
,, (Srebitoren f)attcn fid; natiirlicb an bie merx, riidfid/ttid; Uield;er fie ores
,, bitirten. 3(n bie ©telle bC'S ipsi barf nur ber scrvus ober irer alieni juris
,,ift, auf \><\\ bie actio tributoria alfo fid; bejiebt, gefetjt toerben, burd;au§
,,,'(leiner, ber sui juris ift. Jiir rbmifd;e Kaufleute .y/V; //^r/^, fo Jine fiir
„ unfere ilaufleute, fef^len alle ^unbantente ber actiones de peculio unb
fftfibutoria, 4DeId;e ^auptfdd;lid; finb: bie romifd^ie potestas unb ba§
293
§ioi. Firm Property. Pt. 2, Ch. 6.
,, romiidu- ivcculionfliftcm, imb bie 33c[timmungm berfelbcn i)abm tuir no<i)
,', antiqiiarifdH'y oiiit'crcffe fiir un§. Ser contra^irenbe ilaufmann iwirb
'' fclbft fUiiilnu iH'ipflid^tct iinb nid)t ein Srittcr; er I^aftct unbebingt, md;t
,', blof} fo unit bio w<'/-.r rcid)t/^ ^iirlcmann, S)ag 3]erf)altniJ5, pp. 73-6.
The right to keep distindl, trades carried on by dif-
ferent freeman, who adled for the proprietor, was un-
heard of
" (S--3 tonntc Juol^l nidjt fcltcti fein, bafj ein 5laufmann me^rere ©efd^afte
„ batte iinb fiir jcbc§ bcfonbcrc^nftitorcn. S^a ift abcr leine 3icbe baDon,
',',in^ bie (^Jldubigcr be^j eiiien (Slabtiffement^ Separation mm benjenigen
„be«3nnborn ncrlangen t'onnen, nod; lueniger baHon, ia\i bie 61dubiger einer
,,ein5elneu .vianblung "Se^jaration 'oon ben 5iid)tf)anblungc-'gldubigern beg:
„ I'elben itaufnianns nniprcd;en tonnen. 9iUr l)abm ha einen <5d)nlbner,
,,liH"Id)er unbebingt alien jeinen CSrebitoren ntit feinem ganjen 'i^enni3gen
,, Iiaftet. 2^ie iierl^dltniffe, auf bie [idj befonbers bie ac/io institoria ftii^t,
„ leben noc^ bei un^ fort unb seigen fid} befonbere bei ber §>• ©• 'So um-'
„fiditig iinb bctaiUirt burdigefiii^rt, line im romifd^en 9fed;t, bemertt Xl^ol,
„ ift bie iiel;re Horn ^nftitor lurgenbg, <x\\d) ift faum ein Sa^ berfelben
„ unfern I;eutigen 5i5er^dltniffen luiberftrebenb." §iirlemann, S)a§ a!ert)dtt:
nife, p. 79.
The contrast between the position of a Roman slave
and a modern trader, is pointed out by HurlEmann,
and the analogy relied upon by the advocates of a privi-
lege for the firm creditors confuted.
,,5n jener Stelle Ul))ian§ (1. 5. ^. 15) unb in ber actio tributoria
,,uberbau^3t ift ntd)t ber contraI;irenbe Sftal'e ber S^erflid^tete, fonbern ein
„ fritter, ber iperr: f)eut3utage aber berjenige, ipetc^er IJnf^aber ber £)anb=
„Iung ift. Sort [;aftet ber "g^ri^ rtur big auf ben iBetrag ber ijanblung
,,{merx): bei ung I;aftet ber ^aufmann unbefd;ranft mit feinem ganjen
,, i^ermiigen. Sort ift ber ,5nf)aber ber £)anblung ein alieno juri sub-
,,jediis, ireldHT tein Gigentlium tiat, in ber SJegel nur ein Dont <berrn con:
„cebirte5 peculiuin: jeljt ift ber !^^nl)aber ber £»anbfung ein ^yreier, sui
,, juris, unb biefe ift fein (iigent^uni. Sort ift Don mefireren ^aiibtungen
„(/a<!»<?/-«rt5) bie 9Jebe: li)ir nel;men bafiir nur eine an. Gg finb bort bie
„6. Wl., bie niit 33e3ug auf bie eine £)anbhmg crebitirten, ben £>. @l. ber
„dnbern .Soanblung gegeniiber geftellt: inir >t>oIIen einfad) i>." ®l. ben
„^. ®L gegeniiber ftellen. Sie 33eftininuing, baf? bie tributorifd)e 5llage
„unb bie actio de peculio fid) confumircn, ignoriren iinr, unb laffen, tt>ag
„ auf ber mcrx nidjt gefunben loerben fann, auf bem iibrigen peculiuin
,, fudien unb nad^^olen.— 3luf biefe 9.l"eife gelingt eg uns enbtic^, aug ber
,/4ieftimmung bes romifdien Sieditg, ha'^, toenn\nn Stlabe init Sortinffen
„ feincg feerrn jlvei ober niebrere getrennte <banblungggefd)dftc gefittirt t)at,
„ bie (Srebitoren Separation unb S3efriebigung aug bemjenig'en ©efd^dft
„ toertangen tonnen, riidfid}tlid) beffen fie crebttirt t)aben, fiir unfere %ix-
„f;dltniffe fotgenben Wrunbfal3 absuteiten: SBenn ein greier eine <oanbhmg
„ I^at unbinfoUient Unrb, fo tonnen bie §. @l. Separation unb au'5fd)lief5:
„ lidie iiefrie^ung aug benx .'oanbUmgggute, gegeniiber ben 9iid)tl^anbtungg:
„g[dubigern, fo ioie fiir 9iid)ter^alteneg (Soncurren,^ mit i'etu'rn bei %iX'
,, tinntung beg ^srieatguteg beg Gribarg berlangen Hub bag fo gefdiaffene
„Sing I;eif;t bann ' eine buret) bie berdnberten Sl!erl;daniffe bebingte 2(ug:
„bef)nung ber i^eftimmungen beg rontifdien Dieditg.^ SBoIIte man bei
„ interpretation Don Wefeiien fo berfaf;ren, fo liefte fid) nicf)t abfet)en, iuie
„ n)eit bag fubren luiirbe. :;scber erbenfUd;e Sat?, ben gute ober iible iiaune
„ jufddig m irgenb cinem Hopfe ermeden J»iirtte, fdnbe fo feine Segriinbung
„im ri?miid)en Dledit; abgefe^en batton, bafj bag Sluffinben Don ©runb:
294
Pt. 2, Ch. 6. Firm Property. §io2.
„ fdfeen tm Corpus Juris nod) iud;t geni'igt, beren Mntoenbung im Siebcu ju
„ be^au^jten/^ ^iirlcmann, 2)a^3 aseri)dltni^, pp. 83-4.
HiJRLEMANN smns up the Commercial law, apart from
Codes, in the following propositions :
„ '^ViX ba§ gcmeine beutfd^e §anbe(sred;t fte^en nunmei^r fotgenbe 9iec^t§=
„ grunbfdfte f"e[t :
1) „®ic ^anbelSgefeUfci^aft ift !eine juriftifd^e ^perfon.
„ ®ie \joX al§ jolc^e ireber eigne 3ted)te nod; 3SerbinbHd)t"etten, fonbern bie
„ einjelnen SJUtgliebet bcrfclbcn finb i^, bie in alien iserbdltniffen, tr>etd^e
„ bie @. betreffeii, felbft unb allein al§ bered^tigt unb berpfiid^tet erfc^einen.
2) „®ie ift nad) ben 3UgeIn be§ rbmifd^en 91ed)t§ iiber
„©ocietat, i»ot)on fie eine 2(rt ift, jn beurtt^eilen; fie t)at nnr bas
„ (£igentt)innlid;e, ba^ foUbarifdje aserbinblid]fett aller SJUtglieber al§ 9?egel
„gilt. ^wc biefe (Sigentf)iimlic^!cit finben fic^ 3lnaIogicn im romifd^en
„3Jed)t bet ben Seftimmungen iiber ba§ S^ftitorenDertjdltnif;. Sie aser=
„mutl^ung eincr gegenfcitigen pracpositio institoria fommt ber Sered;tig=
„ung jur girmafii1)rung bollig gteid;.
3) „S)ie ^irnta ber ^anbelSgefellfdiaft ift niditS 2lnbere5.
„aU bie abgefiirste Sejeidpiung aller folibarifd; I)aftenben
„0efeltfd;after.
4) „©o lange ein 3)iitg(ieb folDcnt bleibt, ift aud;> bie £)an=
„be(§gefenfcf)aft fotDent, \\\\^ ber ©oncurg ber le^ern ift nur ber
„ (EoncurS aller einjelnen 9Jtitglteber. Gg gibt alfo fo Diele Goncurfe als
,,3L)Utglieber finb, unb natiirlid} bei jebem eine eigene Soncurgmaffe.
5) ,,%XK bie einjefne (Soncurgtnaff e fallen bie fammt=
,,\\^^'^'^ ©iiter be§ OefeltfcfjafterS, fein Stntl^eil am ©ocietdtg^
„ gut fotcol^l, alg fein iibrigeg, au^er ber ©ocietdt liegenbe^ a>ennogen, bag
,, fog. ^rittatgut.
6) „®ie ©. 01. miiffen il^re ^-orberungen, line bie fog. %. 01., in ben
„ einjelnen ©oncurfen i^rer Sebitoren, ber 0efellfd)after, anmelben. %i\\z
„fonnen f'einen ^^artihilarconcurg berlangen; e§ ftetjt il^nen in e ber
„ein ©e^)aration§red;t nocf) ein ^ribilegium irgenb
„»iutd^er 21 rt ju. 2(Ile Crcbitoron, biejenigen, toeld;e'bcr @efellfd;after
,, al§ Societdt^mitglieb l;at, fotrol)t aUJ beffen %. 01. fommen bier nacf> ber
„ allgemeinen SJegel al§ gleid)bered;tigt jur Sertl;cilung ber ganjen 3JJaffe.
7) ,,Ser3.sort!f;eil berSocietdtggldiibiger griinbetfid^
,, e i n 3 i g unb allein auf bie 6'igentl^iimlic^feit ber neuern .*o. 0., ndm;
„ Iid> auf bie ©olibaritd t ber e fell fd; aft er. Suf'^fgc ^er=
,,felben l^aben bie ©. 01. nid}t nur eincn, fonbern me I) ere ©d)ulbner,
„ unb fie fonnen if)re Sefriebigung in ben (Soncurfen aller ii^rer ©d^ulbner
„fuc^en." §urlemann, Sa§ a^erl^dltni^, pp. 101-2.
102.
|]artner9l]ip, being a status baseii upon tl]e ttrni estate, ^Qtz
not beriDC all its bistiuctiBe features from tl)e tontrart of tlje
parties.
295
j,io:\ Firm Property. Pt. 2, Ch. 6.
Judge Gibson advanced a notion, which makes part-
nership an anomaly in law: The partners seek, by an
agreement between themselves, to bind third persons.
The partnership property is withdrawn from the exe-
cution of a creditor, by a contra6l between a debtor
and a stranger, to which the creditor was not a party.
The partnership forms an exception to principle, and,
as such, is tolerated only in favor of trade.' If it
were not for the partnership's exceptional standing at
law, the creditor of a partner would have a right in
equity to the partnership property on equal terms
with the firm creditors, limited, of course, to the por-
tion of the firm assets which belongs to his debtor.
If Judge Gibson's theory is accepted, and partnership
is nothing but a contra6l, the rights of all creditors
are reduced to equality, and as neither class has a
priority upon the joint, or upon the separate, fund,
distribution should be made without respe(5l to the
creditor's class. But this is unheard of. The joint
estate is, in facl, awarded to the firm creditors, not as
their right, but under the pretext of convenience in
making distribution. The separate creditors are
awarded possession of the separate estate, to the ex-
clusion of the partnership creditors, in order to coun-
terbalance the privilege of the joint creditors to ap-
propriate the firm assets.
The inability of a partner to convey an}^ title to a
specific portion of the firm stock by a sale of his in-
terest, voluntary or adverse, was to Judge Gibson an
anomaly. While compelled to admit the principle as
an established rule of law, he was disposed to deny it
any effe(5l in determining the rights of joint and sep-
arate creditors." A preference given to the joint cred-
296
Pt. 2, Ch. 6. Firm Property. §102.
itor upon the firm fund, was in his view, an unwar-
ranted abridgment of the co-ordinate rights of the
separate creditor.
The conception entertained by Judge Gibson of a
partnership was a tenancy in common. The partners,
as debtors, have nothing to say about the method
which a creditor shall adopt, in order to colle6l his
debt. It is the privilege of the creditor to seledl his
remedy. The debtor has no power to curtail his lia-
bility. The partners could neither restri6l individual
creditors to the separate estate, nor firm creditors to
the joint assets. Both classes of creditors have an
equal right to proceed against either kind of property
which the debtor had. The separate creditor might
go against the firm property, or a moiety of it, as his
debtor's property. The joint creditor might proceed
against the separate estate of his debtor. The only
plan of distribution which would give effect: to the
equal right of every creditor, against his debtor's
property, would be to marshal the assets, pro rata^
among the individuals of both classes, without regard
to the classification of creditors into joint and separate:
the division would be equal from the start.
The reasoning of Judge Gibson furnishes at best a
superficial treatment of the partnership relation and
the rights of joint and separate creditors. By his pro-
cess the joint and separate are reduced to a dead level,
on the ground that the Common law does not recog-
nize the distindlion which subsists between different
interests, or personcE^ when exercised by one person,
though the}' are unconne6led with each other, except
through the link of a common individual. He main-
tained that a partner who trades in a firm charges
297
§io2. Firm Property. Pt. 2, Ch. 6.
himself as an individual, and, in return, the individual
who trades on his separate account charges himself as
a partner. Now, it is true, the actions of the Common
law were incompatible with different parties in one in-
dividual. A man could not be sued as a partner, -but
onh' as an individual. The obstacle, however, as an
incident of procedure, vanishes in Chancer}^, where
forms do not interfere with the administration of
equit}'. There the lack of pcrsojicr is not felt, and
the different interests are accorded a separate recogni-
tion. Back of the levelling which would be brought
about by the oblivion of the Common law procedure
to all distindliou between partnership and individual
interests, is the substantial right of the firm credit-
ors, which is established at laM' and protected in equit3^
Judge Gibson put the firm creditors in a position
not paramount, but subordinate, to the separate cred-
itor. He said the partnership results from a contract.
The partners could not, b}- a contract between them-
selves, restrict their individual creditors to any par-
ticular propert}', nor could the}' create an}- prior right
in the firm creditors. In spite of the contradl, the
individual creditors should be permitted to proceed
against the partners' joint propert}'. If they are ex-
cluded from recourse to the joint estate, wh}- should
not the firm creditors be excluded from the separate
estate? The real equity he maintained was in the
separate creditor. An arbitrar}- a(5l, without his con-
sent, hud cut him off from a portion of his debtor's
proptjrty. He was entitled to be paid out of all, or
any part of, the debtor's estate. If there should be
an .' limitation, the joint creditor ought to be confined
to the joint estate, or, admit that he could also claim
29S
Pt. 2, Ch. 6. Firm Propepty. . §102.
to be paid out of his debtor's separate property ; then
both raust stand upon an equal footing. Such a con-
clusion would make tenancy in common the theory
of partnership property. His do6lrine of marshalling
assets cannot be explained upon any other hypothesis.
His plan of distribution is equality between different
sets of creditors, not according to their class, but
among all the individuals of each cla.ss pro rata.
If the true view of partnership had been carried out,
the paramount rights of the partnership creditors would
have been acknowledged to their full extent. Then
the firm creditors would have had an undisputed right
to all the firm property, and an equal right, with the
separate creditors, to the separate estate. There
would be no abatement, or dedu6lion, of the partner-
ship claims against the separate estate, by reason of
what they had received as a dividend out of the joint
estate. That would be an independent right, in addi-
tion to the claim against his separate assets. The
idea of equality in distribution between the joint and
separate creditors would be inconsistent with the
rights of the parties, which are based upon prece-
dence. The question of equality does not arise until
the paramount claims have exhausted their fund, and
seek satisfaction out of the common fund for both
classes of creditors. The equality of distribution is
limited to the separate estate, and justifies its divi-
sion among all the creditors, joint as well as several,
pro tanto. As this method of administering the as-
sets has not been adopted, the true view of partner-
ship has not prevailed in the plan of marshalling
joint and several assets as finally established. The
i
299
§io2. Firm Property. Pt. 2, Ch. 6.
reason for the departure from the true principle is
stated in §191, ct. seq.
But it is not to be understood that the opposite
view, as developed by Judge Gibson, has maintained
itself By that theory, the separate creditor would go
against the firm property, or a moiety of it, as his
debtor's propert3^ The joint creditor would have no
better claim to it than the separate creditor has, and
both would share their debtor's property between
them. The division would be equal from the start.
A dire(5l access would be given to both classes of cred-
itors against both joint and separate estates.
Underlying the attempts to equalize the distribution
out of both funds is the notion of the individual re-
sponsibility of the partners. There is no distin6lion
between a firm contrail and an individual contra6l, in
the matter of personal liability, and by easy transi-
tion it may be supposed that there should be no dis-
tin6lion made in application of firm and separate
funds to the satisfa6lion of such contrails. The no-
tion, though proper in itself, does not meet the case.
The firm creditor enjoj^s a priority on the firm fund,
not by reason of any difference between his contrail
with the parties and that of a separate creditor, but
by reason of an independent and vested right, which
he has acquired in the firm stock in consequence of
its destination to his use by means of the joint ten-
ancy of the partners.
Equity, by restri6ling each creditor to his special
fund, recognizes the joint tenancy of the partners, and
adopts the Common law rule, that members of a busi-
ness firm do not contribute their separate estates to the
partnership. The partners trade simply in their joint
300
A
Pt. 2, Ch. 6. Firm Property. §102.
capacity. But equity does not intervene to settle the
basis of distribution, unless the partners have two
funds. This is a distinct ground of equity, independ-
ent of partnership.'^ If there is but a single fund, no
conflict arises for a court of equity to adjust, and the
Common law prevails, with its theory of a paramount
claim against the firm stock, and an equal title to the
separate estate of the partners. The theory enables
the firm creditors, if there is nothing but partnership
property, to take it all ; but if there is no firm prop-
erty, to participate in the distribution of the separate
estate with the separate creditors.^ The right of the
separate creditors is a doctrine of Chancery, where a
joint creditor is not permitted to exercise his legal
right except upon terms. The right of the firm cred-
itors, as a paramount class, was asserted, and the re-
striction was made only as a matter of grace to the
separate creditor. The right of pre-eminence existed
at law, and might be enforced.
It is the refusal of the Common law to let individuals
trade in the capacity of partners, without also trading
in the same transaction as individuals, that gives to a
partnership, at Common law, its eccentric features. A
partner pledges not only the contribution which he
makes to the firm stock, but his individual fortune in
addition, by every firm engagement. As he cannot ac5l
in the capacity of a partner simply, but also ac5ls as an
individual, no distinc9:ion can be drawn between his
lliability as a man and his liability as a partner. Had
|the Common law adopted the universal partnership
of the Civil law, in its full extent, and prohibited any
dealings by a partner, except through the firm, the
collision between joint and separate creditors would
301
§io2. Firm Property. Pt. 2, Ch. 6.
not have occurred, for there would be no separate cred-
itors, and no equity of a partner against a firm creditor.
A partner may, however, adl, at Common law, on
his separate account. He is not merged in the firm,
as he is in a universal partnership, by the Civil law.
The right to a6l independently of the firm, enables
him to create liabilities, which charge his separate
estate alone. Equity treats the debts incurred by a
partner on his separate account as the primary bur-
den of the separate estate, a principle unknown to
the Common law, and only recently acknowledged as
a right. At the Common law, joint and separate cred-
itors stood upon an equal footing in reference to the
separate estate, for the partner's personal obligation
was the same in both cases. The prior execution took
the fund. The Common law extension of the firm
estate, so as to include a partner's separate property,
which he did not contribute to the firm, and to sub-
ject it to the claim of firm creditors, is rejedled by
equity, if the privilege confli(5ls with an independent
right against the separate estate. The theory which
charges a partner as an individual, and binds his sepa-
rate estate for a firm indebtedness, is recognized in
equity only when the demand does not clash with a
claim against the partner which arises out of an indi-
vidual transadlion.
1. "That a conlradl which enables the parties to keep a class of their
"creditors at bay, and yet retain the indicia of ownership, should not
I' have been deemed within the statutes of Elizabeth, is attributable
"exclusively to the disposition universally manifested by courts of
"justice to encourage trade." Gibson, J. C, in Doner v. Stauffer, i
Pa., pp. 203-4 (1S29).
2. Separate execution creditors take the proceeds and the purchaser takes
the firm stock. B &C, partners. D etal. had separate executions against
C, iind, 1 1 August, 182-5, levied on the partnership property. A etal.
had separate executions against B, and levied on his share. The firm
property was sold, under these and other executions, to E, for 14,779-
302
Pt. 2, Ch. 6. Firm Property. §102,
A feigned issue was granted, to' find out who was entitled to the pro-
ceeds. D ct al. claimed half the fund. A et al. offered to show that,
I, firm was insolvent at date of D's levy ; 2, Chad no interest, and, 3,
B was entitled to marshal assets in relief of his liability. — ^Judgment
for D et al. affirmed. Gibson, C. J.: "They (the firm creditors) can
" interfere at all, only on the ground of a preference which has regard
"only to the partnership effeAs, and these have not been sold, but
"only the subordinate interest of the partner, which was, stridlly
"speaking, his separate estate. Their recourse, therefore, is neces-
" sarily to the property in the hands of the purchaser. Now had the
"sheriff sold the interest of but one of the partners, the execution
" creditor would have clearly been entitled to the proceeds. But al-
" though he sold the whole stock at one operation, on separate exe-
"cutions against both, there was, in contemplation of law, a separate
"sale of the interest of each. What then would have been the effedl,
"had these sales been made consecutively? The first, in the order
"of time, would have passed the interest of the partner, subjecft to
" the equity of his co-partner, and the execution creditor would have
"been entitled to the price. But this equity, together with the re
"maining interest of the other partner, would have passed by the
"succeeding sale to the same purchaser; the execution creditor, iu
"that instance, also taking the proceeds. * Here * where the
" shares of the partners are united in the same purchaser, every sem-
" blance of partnership equities is at an end. As regards the goods in
"the hands of the pvurchasers, this is conceded." Doner v. Stauffer, i
Pa. Rep. 198 (1829).
"I think," said Judge Sharswood, in criticizing the case, "alto-
"gether too much was conceded when it was conceded that the goods
"could not be followed into the hands of the purchaser. The sheriff
"proceeded irregularly in selling as he did the effects of the firm under
" the separate executions against the partners. But that made no dif-
"ference; he could make no better title by lumping the sale, than
"the writs of execution separately taken authorized him to make.
" Had he sold consecutively the first purchaser would have bought the
" interest of B subjedl to the joint debtors. The price would be pro-
" portioned to the hazard. It is agreed, however, that by so buying
" he did not assume the joint debts so as to become personally liable.
"The goods themselves, whether in his hands or in the hands of the
" other partner, would be liable to execution for the joint debts. ' '
Judge Sharswood has traced Judge Gibson's mis-
conception to its source, and shown that the partner's
equity is founded, not upon the partner's share in
the joint property, but upon his unlimited liability,
which charges his separate estate. The equity enables
him to marshal the firm assets for the discharge of his
liability. The objecfl, as well as the purpose, is to relieve
his separate estate, which was not contributed to the
firm stock, and is, nevertheless, made to answer for firm
debts by reason of the unlimited liability imposed^ by
law upon a partner for all firm engagements. The
equity does not depend upon, and is not fed by the part-
ner's interest in the joint stock, but springs from and is
fed by his separate liability for firm debts. The equity,
303
§102. Firm Property. Pt. 2, Ch. 6.
therefore, is not a vendible commodity. No one is in-
terested in buying exemption from a liability to which
he is not exposed, that is, from another man's debts.
In his exposition of the case, Judge Sharswood said :
" Ou the sale ofC's interest, what passed? The C. J. says, His
"equity to have the joint property applied to pay the joint debts,
"together with his remaining interest. I confess, this is wholly
"unintelligible to me. I cannot conceive of this equity being a
"saleable interest at all, of what value it can be to the purchaser, if,
" as the opinion holds, all claim of the joint creditors ou the goods is
" gone by the second sale, and the purchasers hold them clear and
" discharged, while, however, B &C still remain personally liable for
" the partnership debts. Nor can I understand how on the sale of C's
"interest, B's equity should be so entirely left out of view. He still
"remains personally liable for the debts of the firm, notwithstand-
"ing the sale of his interest, and his equity is equal to C's, to have
"them appropriated to joint debts. I should say then that under
"the second sale of C's interest, what passed and what alone passed,
"was his share subjecfl to the joint debts, exadlly what passed under
"the first sale of B's interest. I should say also that the goods
"themselves would be subjecfl to execution at the suit of tlie joint
"creditors, or the proceeds of them in the hands of the purchaser
"to attachment. If either of the partners were sued, or made to
"pay out of their other property any of the joint debts, I should
"think they would be entitled to subrogation in equity against
"the joint eflfecfls. But the pracftical operation of the doArines set
"forth in the opinion in Doner v. Stauffer would be that the pur-
" chaser, though buying an incumbered title under the first execu-
" tion by the legerdemain of a second sale under an execution against
"the other partner, is thereby vested with an absolute unincum-
"bered title without paying for it, or what is worse, if the second
"purchaser is a different person, he gets a clear title, and by the
"same title clears the title of the first purchaser. Thus, by this pro-
"cess, the separate creditors of the partner last sold out get the full
"price of his share discharged of the debts, though he may be enti-
"tled to little or nothing after the debts are paid, and his partner's
"interest which has been sacrificed by a sale incumbered with an
"uncertainty may be by far the largest. A decision to put the inter-
"est of the partners, as well as the joint creditors, so completely at
"sea, to the mercy of the winds and waves I think, I hope at least,
"will never be made." Mss. Lectures at the University of Pennsyl-
"vania.
Judge Sharswood in this critique discloses his pro-
found and accurate knowledge of the partnership rela-
tion. To dete^l and point out the reason upon which
the partner's equity is founded, in spite of the mislead-
ing decisions upon this qtiestio vexata^ reveal his origin-
ality,-'' not less than do the conspicuous illustrations
®f which Mr, Biddle has given a resume in his address
upon the late Chief Justice of Pennsylvania.^
The decision of Judge Sharswood upon the nature
of the partner's contribution to the firm stock is another
example of his insight into the relation. No authorities
304
\
Pt. 2, Ch. 6. Firm Property. §103.
were furnished to guide him in arriving at a conclusion,
but his comprehension of the inherent strudlure of part-
nership, led him, by intuition, to the result which others
had reached only by dint of study, and refle(5lion. (§34.)
a. Sheriff's sale of partner' s share does not pass his equity. B's inte-
rest in B, C & D, sold on execution to E, who brought account. A
attached stock in hands of C & D for C's debt. A, creditor of B, C
& D, claimed payment of firm debt out of proceeds. Recovered. —
Sharswood, J.: "The idea which he puts forth (C.J. Gibson in
"Doner v. Stauffer) that the equity of the partner to have the part-
" nership effedls applied first to partnership debts, passes itself on the
"sale of that partner's interest to the vendee by execution or other-
"wise, is a curious illustration of the danger of hunting too far for a
"reason. The equity of the partner is solely grounded on his lia-
" bility for the debts, which continue after his interest is devested,
" and is not transferred to his vendee. As the liability of the partner
' ' to answer personally for all the debts of the firm is not extinguished
"by a sale or devesture of his interest, so neither is his equity which
"depends upon it. Here Thompson had an equity, of which the
" partnership creditors can avail themselves; he never gave it up, nor
"did he lose it by the sheriff's sale of his interest. He never con-
"sented to the transfer of the assets to the remaining partners in
"their new firm capacity.'^ Brenton v. Thompson, 20 L. I. 133 Dist.
Court of Phila. (1863).
b. The Judicial CharacSler of Chief Justice vSharswood, an address de-
livered before the Law Association by George W. Bidule, Chan-
cellor of the Association, 1883.
3. 2 White & Tudor's Leading Cases in Equity ; Aldrich v. Cooper,
and notes upon it, p. 228, 4th ed., by Judge J. L'Clarke Hare: 1877.
4. If no firm property, joint creditors share partnei^s separate estate
with his separate creditors. B & C partners, insolvent, assigned for
creditors, B and the firm to A; C to E. B's separate estate amounted
to $27,241.18, and C also had separate estate. The firm assets were
only 16.35, which would be consumed in costs. A brought bill against
partners, and joint and separate creditors, to marshal the assets. — ■
Firm creditors entitled to separte estate equally with separate cred-
itors. Brock V. Bateman, 25 Ohio St. 609 (1874).
§103
(!ll)e lata lias recogni^cb anb Establisl)el» tl)c partners' estate as
a joint tenancn.
Thoijus accrescendi applied, and the title survived
in the living partners.' It did not go, as in tenancy
305
§103. Firm Property. Pt. 2, Ch. 6.
in common, to tlie surviving tenants and to the repre-
sentatives of the deceased tenant.'
A partner can convey no title to his portion of the
firm stock, free from the firm claim, although he may,
in the course of business, sell any propert3^ belonging
to the firm. Hence, it follows that his interest in the
firm stock will not pass by judicial sale under execu-
tion issued at the instance of a separate creditor. A
levy is necessary on an execution for each partner's
interest, and a firm levy is requisite to cover the joint
stock. The seizure, or possession, follows the title,
and if a separate execution issues, it covers only the
debtor partner's interest.'^ The seizure of both part-
ners' interests on separate executions would not carry
the firm title, but leave it unsold, and give to the pur-
chaser of it an incumbered title.'* The separate
execution entitles the purchaser under it only to the
debtor's interest after all the firm debts are paid. He
acquires no immediate right to any portion of the joint
stock, and although he becomes a tenant in common
with the other partners, his right is not immediately
"available. He must first bring an account, in order to
ascertain if there is any balance coming to his debtor
after all the firm debts are paid, and thus ascertain the
amount of his interest. If a separate creditor pro-
ceeded against the debtor partner's property, the law
prevented him from taking it in execution, and made
him sell only his debtor's interest on a dissolution of
the firm. To ascertain what this ultimate interest,
after the joint estate was ended, might be, the law di-
redled an account.^ It was onlj^ when the Common law
machinery was found, upon experience, to be inade-
306
Pt. 2, Ch. 6. Firm Propefty. §103,
quate, that the account was transferred and became a
remedy in equity/
The e£fe<ft of a legal lien is to prevent the aliena-
tion of the property free from the creditor's claim. If
such a lien were accorded to the firm creditors, the
firm stock would become immutable, and the business
would become impossible. An equitable lien, on the
other hand, adapts itself to flu6luating property. The
creditor obtains a prior right to make his debt out of
the joint stock, in its original shape, and through all
its subsequent transformations. The original fund
may disappear, but that by which it is replaced re-
mains, subje6l to the creditor's claim. This equit-
able lien answers the requirements of the partnership.
The partners may sell the stock and renew it by pur-
chases, but the fund, at all times, remains liable to
the claims of firm creditors.
But while the dodlrine of equitable lien is, theoreti
cally, sufficient for the protection of creditors, it does
not explain, historically, the existence of their rights,
These rights of firm creditors have been recognized
at law from the beginning, whereas the equitable lien
is exclusively a do(5lrine of Chancery. The courts
of law secured the priority of firm creditors, not
through' an application of the doArine of lien, either
legal or equitable, but through the instrumentality
of a joint estate. The joint estate became an addi-
tional debtor, independently responsible to firm cred-
itors. The existence of the estate was a fa6l, and the
firm creditors' privilege of recourse to the estate was
not derived from any contrail between the partners,
but was an original right.
507
§103. Firm Property. Pt. 2, Ch, 6.
The Common lawyers were in the habit of consid-
ering the estate apart from the owner. In their
minds, the propert}^, in its physical aspe(5l, often as-
snmed a prominence superior to those abstract rights
and obligations of the owner, which make up the true
legal notion of his estate. As already stated, the
cause of this mental bias was the Feudal method of
dealing with land. The land was the permanent ele-
ment in their social strudlure. The rights of the pos-
sessor, for the time being, never amounted to abso-
lute ownership. Society curtailed his prerogatives
for the benefit of his descendants. The estate was
the continuing patrimony of successive generations.
Land was visible and tangible, the rights of unborn
generations were contingent and shadowy. Natur-
ally, therefore, the mind of the Profession uncon-
sciously gave to the land in its corporeal manifesta-
tion prominence over the abstradl rights of uncertain
and non-existent persons. A good illustration of
this tendency is the e£fe6l of a judgment against co-
debtors. After land was subjeAed to the claims of
creditors, and it was admitted that these claims would
survive against the land after the death of the debtor,
the distincftion between the owner and the land still
remained, to mould a creditor's rights. Ordinarily,
the obligation of the debtor is the primary thought,
and the liability of his property exists only for the
purpose of satisfying that obligation. If the obliga-
tion ceases, the property is freed from the creditor's
claim. If one of two judgment debtors died, his per-
sonal obligation was extinguished, his personal prop-
erty, therefore, was relieved from liability to the cred-
itor, and the debt survived against his co-debtor
308
Pt. 2, Cii. 6. Firm Property. §103.
alone. But if the deceased debtor had been the owner
of real estate, the judgment still remained a lien upon
his land.' The reason for this difference was that,
while the personal property did, the land did not, rep-
resent the personal obligation of the deceased debtor.^
The land was itself an independent debtor. Further
evidence confirming the proposition that the land,
even when subjeAed to debts, did not represent the
personal obligation of the debtor, is found in the
following circumstance: A joint debtor was liable, in
his individual capacity, for the full debt, and while
the judgment was joint, the execution was always
several, and might issue against his personal estate
for the full amount due. Not so with the land. A
joint debtor's land was liable only for his aliquot part
of the debt, and the execution must issue against the
lands of all the joint debtors simultaneously, in order
that contribution might be more surely enforced.
The habits of thought, thus formed, paved the way
by easy transition, to the notion of a firm fund as a
separate and continuing debtor, independent of the
original contrail between the partners and of their
subsequent a6ls, either in charging the fund itself, or
in dealing with their title to it. The reason why this
statement has the appearance of novelty at the present
day, is because lawyers have outgrown the habits
of thought, which characterized their predecessors.
The lawyers of the present da}^ exclude from their
science the objects of the physical world, and con-
fine themselves to the classification of abstract rights
o
and duties.
The estate of the partners enabled them to trade
in the capacity of joint tenants, and gave the debts
309
Uo;^. Firm Property. Pt. 2, Ch. 6.
coutracled for the joint estate a prior claim upon it.
There was no lien, as in the case of a right against
land, nor could there be a lien upon stock, which ex-
isted only for sale. A lien w^ould frustrate the objedl
for which the estate was created. Analogy makes the
claim available according to the nature of the estate.
The partners are not entitled to the statutory ex-
emption out of the firm assets. The exemption is a
personal privilege, and not a firm claim. ^ The law
makes no provision for a destitute partnership. If
the law provided that the firm should have exemption
for its members, the partners' right against the firm
creditors would be as clear as against the separate
creditors, but the exemption is not given to the firm ;
it remains the individual privilege of the debtor.
The title of a partner is recognized at law as co-
extensive with the firm estate. A policy of insurance
given in his own naine for firm property, covers both
interests, unless he limits it to his own share.^" He can
maintain an aAion for firm property," or intervene in
proceedings which affedl the firm title.'^
The bankruptcy proceedings, as originally framed,
recognized the joint estate. The joint and separate
commissions kept the estates distin(5l, and made the
separate claims subordinate to the firm creditors'
rights.'^ The present administration upon a joint com-
mission does not disclose the operation.
I. Til/e of firm property remains iviih surviving partner. B & Son,
manufacturers. B died, April, 1882. C, surviving partner, knowing
firm was insolvent, sold stock, fixtures and machinery to D, a creditor,
in payment of firm debt. A et al. brought creditors' bill to set sale
aside. — Dismissed. Legal title to assets survived to C, who is entitled
to exclusive posses.sion and control of them, and might sell all or any
part of the property of the firm in payment of its debts. Russell v.
Stroud, 12 W. N. 419, C. P. Phila. (1882); afl&rmed by S. C. of Pa.
310
Pt. 2, Ch. 6. Firm Property. §103.
2. The surviving partner is not an assignee of his de-
ceased co-partner, and does not derive his title by devo-
lution or assignment. He is an original owner by vir-
tue of his joint title, which covers the entire firm prop-
erty. Tremper V. Conklin, §100, n. 5.
The death of a partner does not revoke the authority
of an agent employed by the firm. The surviving part-
ner succeeds to, or continues, the firm, and he alone can
revoke the authority.
Authority offir))i agent not revoked by death of a partner. B gave
his note, without consideration, to C & D. They pledged it to A for
a contemporaneous loan. C died, but before his suicide was discov-
ered, F, a clerk, with authority to draw checks, drew out the firm
deposits in A's hands. The firm was insolvent, and A sued B. De-
fence : Set-off of deposits withdrawn since C's death. — Recovered. A
was a holder for value. E's authority did not end, because the right
to withdraw balance and liquidate remained in D, and because E drew
and A paid the checks in ignorance of C's death. D was the only
one who could except to E's acl, on the ground of a revocation of
authority by C's death. Bank of N. Y. v. Vanderhorst, 32 N. Y. 553
(1865).
The joint tenant's release of his share does not bar
execution for a claim, although the release operates as
a merger of the share by relation to the feoflfment which
created the estate.
By release of share joint tenant shall not bar execution. A ob-
tained judgment against B, joint tenant for life with C. B released
his estate to C. A took the land in execution by elegit. C assigned
to D, who surrendered to E, the reversioner. — Though release related
back to original feoffment, and gave C title from that date, he took
subject to IB's life estate, which the law keeps alive for A's benefit.
A grant by joint tenant would bind co-tenant who accepted a release,
although grantor should die, for the release would prevent his taking
by survivorship, and be subject to the grant. Likewise the rever-
sioner, after the extindliou of the tenancy by surrender, takes sub-
jedl to the charge created during its continuance. The Lord Aber-
gavenny's case, 6 Rep. 79 (1608).
3. The partner's right to sell was the ground urged for
claiming that his separate creditor was entitled to attach
firm stock. But the partner's power was to sell for the
finii, and to make the assignment efife^live the attach-
ment should be for a firm claim. Then, though but one
partner should be served, the stock would be liable.
Attachment against one partner takes only his interest. A, in an
adlion against C & D, issued an attachment against C. The firm
failed, and thereafter judgment and execution against C, as a non-
resident, and a sale of his interest to A. C & D assigned for creditors
to B. This action brought to determine who had title to the prop-
erty sold. — The firm assets being insufficient to pay its debts, C's
interest was nothing, and A had no title. As the partner might have
sold the firm goods, and paid the creditor, it was claimed "that the
311
UOT,.
Firm Propektv
Pt. 2, Cn. 6.
law might, do so bv attachment. But the attachment was not against
specific property, or against the firm, but against the partner's inter-
est. To render the analogy complete, the attachment should be
against both ; one .should be ser\'ed, and brought in, and execution
issued against the firm ])roperty. If levied l>efore the assignment,
and soUi, the law would have done what the partners could do.
Staats V. Bristow, 73 N. Y. 264 (1878).
/•/>/// property caunot be conveyed, even by the consent of all the
partners, in payment of their separate debts. B, C, D, K &. 1*', part-
ners, owed A. I'/ and P sold out to B, and he continued the business
with C and D. B mortgaged his interest in the new firm to G, a
separate creditor, who sold him out and bought in his interest. C
mortgaged his interest to H, a separate creditor, who also foreclosed
and bought in. D assigned his interest, without consideration, to I.
A levied upon and sold the stock. No fraudulent intent was found
against the partners. — Entitled to the proceeds. Assignment of firm
assets for separate creditors invalid, though all the partners consent,
unless the residue is sufficient to pay the firm creditors. They have
no lien, but tlie firm title is joint, and the sale of a partner's interest
passes no ])iirpart, and does not destroy his equity. If the buyer got
tlie stock and left the debts on the partners, his equity would be an
iniquity. The sale to a partner is valid, unless the purchaser is in-
solvent, because he remains liable for firm debts, and the assets are
not ])iit out of the creditor's reach. B, C and D may dispose of the
stock for the payment of their firm creditors, but K and Fmay obje<ft
to an assignment for their separate creditors. Menagli v. Whitwell,
52N.Y. 146(1873).
;. By the Kn<.;lisli pradlice 110 sale of a partner's inter-
est is made until an account has been taken, and then the
interest, which is thus expressly subje6l to all the firm
claims, passes to the buyer, who could never pretend
that he bought any firm property. Place v. Sweetzer,
§ 100, note 6, d.
Partner's vendee vo right to possession cf partner's individual
moiety, but limited to account. B & C ran a stage line, owning the
horses and equi]iment. C sold out his un(livide<l half to A, who sued
for possession of it, or for its value. A obtained a verdi6l and judg-
ment for $960. — Reversed. Sale dissolved jiartnersliip, and A not
entitled to co-])ossessiou, but only to an acooinit aiul the value of C's
interest upon a .settlement. B was entitled to retain possession for
liquidation. Miller v. Brigham, 50 Cal. 615 (1875).
.Ittaehmentoffirm property for separate debt a trespass. A <S: B,
partners, sued C in tort for attaching firm property. C justified under
a writ against B. — ^Judgment for ])laintilTs. Seizure and removal of
firm property on mesne process, like an execution, a trespass. Sanborn
v. Royce, 132 Mass. 594 ^1882).
I. The law recognized the partner's estate of joint ten^
ancy, and when a separate creditor proceeded agains^
the debtor partner's property, stopped him from takin
it in execution. The law made him .sell only the debt-
or's interest on a dis.solution of the firm. To a.scertain
what this ultimate interest, after the joint estate was
3 1 2
Pt. 2, Ch. 6. Firm Property. §103.
ended, might be, the law dire(5led an account. It was
only because the Common law machinery was inadequate
that the account became a remedy in equity.''
a. Article on " Executions by separate creditors against
the joint efFedls of the partnership," by Mr. R. Hutch-
inson, 3 So. Law Rev. 250.
7. Sci.fa. must join heir of co-judgment-debtor with surviving debtor,,
in order to enforce the debt against land. A had judgment against B
& C, and afterwards B died. A brought a sci. fa. against the sur-
vivor only. Defence : B left lands and an heir, who must be made a
party. A demurred. — Judgment for A, for the judgment is against the
person. Though by statute A may have sci.fa. and elegit to charge
the land, he may eledl to pursue the personalty. If A ele6t to charge
the land, the charge must be equal, and sci.fa. must issue against C
and the heir of B. After judgment on such a sci.J'a. A may have_/?.
fa. against personalty of the survivor, or elegit against the lands of
both. Smarte v. Edsun, i Lev. 30 (1661). See also note 4 to Trethe-
way V. Auckland, 2 Saunders 51. Sir Wm. Harbert's case, 3 Rep. 14.
8. Death of one of two judgment-debtors throws the obligation wholly
upon the survivor. Judgment was obtained against B & C, who after-
wards died. Then judgment was obtained, by default on sci. fa. to
revive against A, the administratrix of B. A brought audita querela,
averring that B had died in the lifetime of C. — Judgment for A, because
the debt survived. Had any lands been bound by original judgment^
the charge must have been borne equally by the real estate of each.
Creditor must then have brought a sci.fa. against the heir and terre-
tenants. Lampton v. Collingwood, 4 Mod. 315 (1695).
In Penn.sylvania, land being assets for the payment of debts, the
executor or administrator is substituted for the heir, and the lands of
a deceased debtor may be sold on a judgment against him, without a
sci. fa. to bring in the heirs as terretenants. Commonwealth v. Van-
derslice, 8 vS. & R. 452 (1822).
Sci.fa. against surviving, arid personal representatives of deceased,
judgment debtor. A sued B, C, D & E, and E, dying pending suit, ob-
tained judgment against B, C & D. Subsequently, D died, and A
issued sci.fa. against B, C and the executors of D. Defence: Mis-
joinder of adlion. — Judgment for A. ROGERS, J. : "The real estate is
"bound by the judgment, and payment alone will discharge the lien.
"Although I cannot perceive the propriety of the distinction, that the
"judgment survives as to the personalty, but not the realt}-, yet there
"is no question that it has been so adjudged in England and inci-
" dentally in Pa. * If then the judgment be joint, and survives
"against the land, the execution which follows the nature of the
"judgment should be joint also; or, at any rate, against the same
"persons, against whom judgment is rendered. The obje<ft of the
"^r/r^yi/aa^ is to ascertain the sum due, and for the defendants to
"show cause why the plaintiffs should not have execution against the
"survivors, and the lands of the deceased; for in no other way can he
"have the fruits of his judgment. If these principles be correct, and
"they are supported 1)y the highest authority, this defence cannot
" avail the defendants. " Com'wealth v. Mateer 16 S. & R. 416 (1827).
9. Are partners entitled to exemption out of firm prop-
erty? If the exemption is allowed, the title of the
313
§103. Firm Property. Pt. 2, Ch. 6.
partners is several, and not joint, otherwise the separate
claim for exemption would be subje(5l to the paramount
title.'' The notion that as the partners could, but would
not divide the assets between them, the sheriff could
make the partition, and set apart the exemptions out
of the allotments, is based upon separate titles and a
severance of the joint possession according to the titles.^
Saying that the exemption cuts out joint, as well as
separate, creditors, means, unless a tenancy in common
exists, that the exemption is a joint, or firm, claim, and
is preferred to the claims of firm creditors. But exemp-
tion has always been recognized as an individual, and
not a firm, privilege. '^
a. Homestead on firm land not exempt from execution for partner-
ship debts. B & C, manufacturers of tiles, owned in partnership land
on wliich mill was erected for the business. C also built and occu-
pied a house on the firm land. A recovered judgment against firm
and issued execution against the land. C claimed that his home-
stead was exempt. B opposed the exemption. — Judgment for A.
Land treated as firm assets, and C's interest nothing, after firm debts
are paid. Trowbridge v. Cross, 117 111., 109 (1886).
Partners no exemption out of firm property . A obtained judgment
against B, C & D, and levied upon leasehold and machinery belong-
ing to them as partners. B, C & D, who had no separate estates,
claimed the statutory exemptions, but sheriff sold the property, and
paid the proceeds into court. Court below awarded II500 to each, or
one-third of the fund if less than $1,500.— Reversed. Partner has no
separate title to firm property, and, if co-partners sever the joint title,
the exemption attaches by virtue of the contract, and not of the stat-
ute. A"s execution took the joint title out of the partners. Gaylord
v. Imhoff, 26 'Ohio St. 317 (1875).
b. Partner entitled to exemption out of firm stock according to his
share; which the sheriff may allot if the partners do not. B, the
sheriff, seized and took possession of firm stock. A claimed exemp-
tion, as a partner, out of it, and brought trover against B. — Recov-
ered. Partner entitled to exemption out of his share of firm prop-
erty, and if the partners do not aid the sheriff and divide the assets
between themselves, he may make the apportionment. Skinner v.
Shannon, 44 Mich. 86 (1880).
c. Xo exemption out of firm stock. B & C, partners in manufadlure
of cigars, assigned joint and separate estates for creditors. Assignee
surrendered tobacco and tools, part of the firm stock, to C, who claimed
the property as exempt. Substituted assignee sued for breach of as-
signment bond. — Recovered. Property claimed by C belonged to firm
creditors. Prosser v. Hartley, 29 N. W. Rep'r 156 (1886).
Exemption for deceased partner's family out of his share, not out
of firm property. B & C, partners in planting. C died, and D, a
minor child, claimed |i,ooo under Revised Civil Code of La., Article
3276, which secured that amount to D in preference to debts contradled
by C— Disallowed. Firm debts contracted by B & C. Partner's
share subject to firm debts : Art. 2823. Succession of Pilcher, i S.
Reg'r929, La. (1887), note.
314
Pt. 2, Ch. 6. Firm Property. §104.
Cojiveyance by partner to co-partner not withdrawal to cut out tien
creditors. B & C, partners in buying and selling real estate. D at-
tached land of B & C. C then conveyed house and land to B. D
obtained judgment, and, at sale, B claimed premises as prote(fled,
A bought at sale and brought ejedlment against B. — Recovered. Lind-
ley V. Davis, 13 P. Rep'r 118, Min. (1887).
10. A partner' s insurable interest extends beyond his share, and covers
the firm stock. A paid premium for insurance of firm stock, but took
policy in his own name, on agent's assurance that interests of both
A & B would be covered. Defence to A's suit for firm's loss : B's
interest not insured, and A's quota but one-half — Recovered for the
whole loss. A's interest is co-extensive with firm stock. Manhattan
Ins. Co. V. Webster, 9 Smith 227, Pa. (1868).
Interest covers joint title, unless limited to a single share. A, at
Gaudaloupe, & B, at St. Kitts, made a joint shipment to New York.
A insured the cargo for his account, though the policy covered any
other person's interest, in part or in whole. The ship was captured,
and A's portion condemned, but B's portion acquitted. Insurance
J5639.24; A's quota I366. 60. A sued for his half Defence: Policy
covered B's quota, which was lost. — A recovered but a quarter. Law-
rence V. Sebor, 2 Caines 505, N. Y. (1804).
11. Non-joinder of a partner no bar to partner' s recovery of insurance.
A & B insured a cargo, which they shipped on joint account with
C. A & B averred, as plaintiffs, an entire interest in the insurance.
Defence : C taken into the joint concern before insurance effedled. —
Recovered whole insurance. A & B's interest extended throughout
the entire cargo. Page v. Frye, 2 B. & P. 240 (1800).
12. The title carries the right to intervene or recover for
disturbance, and a partner may contest the seizure or
attachment of firm property.
Partner's joint title enables him to contest creditor's lien on pro-
ceeds of a sale by the sheriff of firm goods. A ruled B, the sheriff, to
pay over money raised by sale of C & Co.'s goods. B returned figoo,
proceeds and claims against them by D's execution and A's attach-
ment. C appeared against the rule, and claimed an issue upon A's
lien, because A had not sued or served the firm, or its members. A
objected to C's intervention for the firm. — Obje6tiou overruled. C's
title to firm stock authorizes him to represent the firm, to protedl it.
Wynne v. Millers, 61 Geo. 345 (1878).
13. A Digest of the Laws of Partnership, by Basil Montagu, Esq.,
Chapter VII., i vol., pp. 183, et. seq. : 1822.
§104.
<l\]t lau) rqectcLi a tcuancg m tonimon of \\)t firm propertti.
But the suggestion that the partners are tenants in
common, persistently recurs at all points for discus-
315
{jio4. Firm Property. Pt. 2, Ch. 6.
siou, and again calls in question the settled principle
of partnership at the Common law. The explanation
is this : The relation is assumed, despite of history, to
be defined by contract. The idea of a status, it is
deemed, has been outgrown and superceded, although
partnership was made a fundlion of the Common law
by means of the joint estate. The partners, it is now
said, cannot by contra(5l join titles, and prevent sepa-
rate creditors from proceeding against the titles as
distin(5l. In other words, partners cannot, by con-
trail, withdraw any part of their property from exe-
cution. The rights of the partners, and of their joint
and separate creditors, must be worked out upon the
basis of a contradl. The right of the separate creditor
to his debtor's purpart in the firm property, is pro-
claimed to be equal to the firm creditor's claim against
the debtor's separate estate, and this was formerly the
basisof marshalling assets in Pennsylvania,^ and is at
present the foundation of the bankruptcy rule. The
attempt is to reconstrudl partnership upon a principle
which did not organize the relation at Common law.
It is needless to state that a system cannot be coherent
while the fundamental principle upon which it rests
remains unsettled.
A statute or constitution is sometimes deemed a
mandate that the partner's title to firm property shall
be construed several, and not joint, in order to give
effect; to the enadlment. This construc?tion is made ^1
when the exemption of a partner is granted out of
firm assets,^ or a statutory liability for the negligence ^^k,
of a partner in the firm business is made a lien upon
a specific portion of the firm property as his separate
estate.'^
316
ill
11 1
Pt. 2, Ch. 6; Firm Property. §104.
The purchaser of a partner's interest stepped into
his shoes, and became entitled to joint possession
with the other partners. If the sheriff delivered pos-
session of the firm stock, a co-partner could not recover
for the conversion of the firm property, but only for
his half as a tenant in common. An attachment by
a separate creditor is sustained upon the ground that
the sheriff could seize the firm stock and sell a part-
ner's interest, which would be treated as a moiety.
This is according to the theory of a tenancy in com-
mon, or holding by several titles with joint possession,
which would be severed by execution and the purchaser
vested with defendant's title and possession.^
This • pra6lice is unsound. The sheriff can, it is
true, seize the firm stock, in order to sell a partner's
interest in it. The execution, a fi. fa.^ required a
tangible thing for it to operate upon.^ But the re-
quirement of the writ being satisfied, the sheriff must
not disturb or remove the stock, and can sell only the
partner's interest in it.^ The purchaser acquires no
right to immediate co-possession, but merely a claim
to the balance, if any is coming to the partner, to be
ascertained by an account. A distin6lion has been
made in this respe(5l between the interest of a general
and of a special partner, and it has been said that a
special partner's share can not be taken in execution.
The sheriff could not seize anything in which the
partner had an estate, as owner, absolute or qualified.
The special partner's interest was declared to be a
chose in action, or a claim, but not a property interest
in the stock.'^ He had handed over the stock to the
general partners, who have the exclusive right to its
possession and control. But there is no reason for
317
§104.
Firm Property.
Pt. 2, Ch. 6.
the distincflion. The special partner is a co-owner,
although his property right is not separate and un-
trammeled. His interest is not, generically, different
from that of a general partner. On this ground an
attachment could not be laid upon the firm stock for
a claim against a partner. The attachment would
forbid to the firm the use of its stock, and amount to
an exclusion until the controversy was ended. The
purchaser of a partner's share does not become enti-
tled to co-possession with the other partners, because
the sale dissolves the partnership, and the purchaser
is interested only in the liquidation which the part-
ners are entitled to make, unless they are shown to
be unfit.^ If the sheriff levies on the firm stock, and
sells a partner's interest on separate execution, the
co-partner cannot recover in trover, because he would
have no claim. Nothing passed but the partner's in-
terest; which was liable to execution." But if the
sheriff delivered possession of the firm stock, then the
co-partner could recover for the conversion of the firm
property.^*'
1. Note by Judge J. T. MITCHELL to Northern Bank of Kentucky v.
Keizer, 5 Am. Law Reg., N. S. 75 (1886).
2. Constitution of Georgia provides a homestead for each partner out
of partnership property. B & C, partners. They took title, in the
firm name, to a plantation, which they used in the firm business.
They contracted a debt to A, part in 1871 and part in 1873, for which
he brought suit, and obtained judgment, in 1875. In 1874 they made
a partition of the plantation, which was all the property they owned
in Georgia, as a firm or as individuals, and conveyed a moiety to
each partner in severalty. Each had his moiety appraised and set
apart to him as a homestead, under sections 2002-3 of the Con.stitu-
tion, which allows ^2,000 in realty and |i.ooo in personalty. A
levied upon both homesteads as firm property.— Execution set aside.
A partner is as much entitled to take firm property for a homestead
from the firm creditors as his separate estate from his individual
creditors. Harris v. Vischer, 57 Georgia, 229 (1876).
J. Firin property severed by statute imposing liability for negligence
of partner Railroads B, C & D ran in partnership. A recovered
lUQgment against B for negligence, and levied on locomotive and car,
318
Pt. 2, Ch. 6. Firm Property. §104
property of the firm. C and U enjoined A from selling, on ground
that B's interest less than debts, and joint creditors preferred to A.—
Decree reversed. R. L. Vt., ^3443, subje<5l the rolling stock of rail-
roads to execution, for injury by the corporation. B's quota assumed
to be one-third, and that purpart liable. R. R. Co. v. Bixby, ss Vt.
235 (1882).
4. Sheriff may attach arid hold firm stock for partner' s quota. A, B,
C & D, partners. C withdrew, and D sold out to E. F, the sheriff,
seized the goods under G's attachment against A, B, C & D, and
under C's attachment against A, B & D. A, B & E sued F for the
goods and damages for the detention. Plaintiffs obtained possession
of the goods after adlion brought, and proceeded for damages. — ^Judg-
ment for defendant. Execution against one partner authorizes sheriff
to seize and hold all or part of the firm goods, to sell the partner's
share in the goods seized, and deliver possession to the vendee, as
tenant in common. An attachment simply anticipates the execution,
and is governed by the same principle. Smith v. Orsee, 42 N. Y.
132 (1870).
5. Fi.fa. seizes only tangible property, and does not pass book debts
or good-will. Insanity of partner not a dissolution. Partner canH
buy insane partner's interest at sheriff's sale, at least with firm
funds. Sheriff took in execution on judgments against A for ^'86,
his interest in A & B, during A's temporary insanity, and sold it at
auction to B, who paid for it by a check on the firm deposit, and
charged payment to A's account. At time of sale assets were : out-
standing claims ^2,599 9-'^- 5^- 1 deposit in bank, ^1,499 i^s. 2d.; stock
in trade, ^963 17.^. /\d.\ cash, ^'15 and the good-will. B treated sale
as dissolution, and carried on business as B & Co. A sued B as part-
ner in spite of sale. — Decree. Purchase by B enured to A. Hel-
more v. Smith, 35 Ch. D. 436 (1885).
6. Purchaser of partner's interest at sheriff's sale has no right to pos-
session, and is only quasi tenant in common. A bought a pair of
mares, owned by B, C & D, of B, at private sale after execution had
gone out against B. A also bought the mares at sheriff's sale, and
brought replevin against E, a purchaser of the mares at a subsequent
sheriffs sale of B's interest in the firm. — No title in A to maintain
replevin, which requires right to exclusive possession. A no right
to possession, which belongs to the partners, and is not even tenant
in common. Rensheimer v. Hemingsway, 11 Casey 432, Pa. (i860).
7. Special partner' s interest catinot be sold on execution. B, general,
C, D & E, special partners. Articles provided that, unless C paid at
maturity, certain private notes, and abstained from giving other
paper without co-partners' consent, his interest in profits should
cease, and his contribution be treated as a loan, at 7 per cent. F sued
C on one of the notes, and attached his interest in the firm. Sheriff
sold C's interest to D at public sale, C and D being present, but none
of the stock in view. A, C's administrator, sued D, B & E for ac-
count and C's interest in the firm. — Judgment for defendants. Sale
void. General partner exclusive right to possession. Therefore,
sheriff could not levy on stock in order to sell special partner's inte-
rest, nor deliver possession. Choses in adtion not subje<5l to sale on
execution at Common law. Code provides for sale of stock in cor-
porations ; other debts must be collecfled by the sheriff, and applied
to satisfa6lion of the judgment. A special partner's interest resem-
bles a debt rather than stock in a corporation, and, after the breach
of condition, C's interest became a debt by the articles. C not
319
§i05-
Firm Property.
Pt. 2, Ch. C.
Harris v. Murray, 28 N. Y. 574
estopped h\ his presence at the sale.
11864).
. Miller v. Brigham, ^ 103, n. 5, and cases in ^ loi, n. i.
I. Sheriff ruho takes possession 0/ firm stock and sells a partner's in-
terest in it, does not convert the co-partner's share. B, the owner of
land, agreed to give C 3-4 of the crop for farming it. C formed a
partnership with A, to farm the laud with him, and they shared C's
3-4 equally between them. D obtained judgment against C, and E,
the sheriff, took possession of the crop, and sold C's interest in it.
A sued E for the value of 3-8 of the crop, and obtained judgment. —
Reversed. The sheriff did not sell A's share, but only C's interest,
which was all the purchaser took. Clark v. Cushing, 52 Cal. 617
(1878).
Farrell v. Col well, ^ 100, n. 8.
Sheriff n>ho sells joint property on separate execution, liable for
damages in trespass. A & B sued C, sheriff, for trespass in selling
firm property on execution against B. — Recovered judgment against
C for damages. Bogue v. Steel, i Phil'a R. 90 (1850).
Sheriff who sells firm goods for the separate debt of one partner, is
liable in trover only for the co-partner' s moiety. A & B, partners.
C, a separate creditor of B, issued execution against him, on which
D, the sheriff, sold and delivered to E the firm goods. A sued D, in
trover, for the value of one-half the goods sold. Defence : Non-
joinder of B. If B not joined, the measure of damages, A's interest
after a balance had been struck on a partnership account. — Recov-
ered. A entitled to a moiety of the goods without reference to the
partnership account. The partners hold the stock as tenants in com-
mon. The partner's equity to control his co-partner's share is not a
title upon which he can recover. Walsh v. Adams, 3 Denio, 125,
N. Y. (1846).
§105.
^\\t tfjcorn of marsljalling assets ciclutifs tl)c notion of a
tenancn in coininon.
But the hypothesis of a tenancy in common to ex-
plain partnership, is answered by the fads, without
any argument. The liability of firm stock for a sepa-
rate debt, is not a principle of any court, and no dis-
tribution is made, pro rata, among all the creditors,
but a discrimination is always made between the joint
and the separate classes. The distinction of the law,
I
Pt. 2, Ch. 6. Firm Property. §105.
which classifies the creditors, is recognized as the
basis of all the reasouing about marshalling assets.
It is the admitted advantage at law, of the firm cred-
itor, who can resort to both the joint and the sepa-
rate estate, for the satisfa(flion of his debt, that has
led to the interposition of Chancery. But even courts
of equity have not deprived him of the privilege, or
attempted to deny his right. They were satisfied,
without giving to the individual creditor the exclu-
sive right to the separate estate, to confine the joint
creditor to the firm assets, when any existed, or, if he
resorted to the separate estate, to make him dedu6l,
for the individual creditor, a dividend equivalent to
the dividend declared out of the joint estate.
The individual partners, being liable for the firm
debts not less than for their individual debts, may
be held by the joint creditors. The only restri6lion
which can be put upon the exercise of their right, by
a court of equity, is confining them to the joint fund
in the first instance, so as not to deprive the sepa-
rate creditors of their only fund. This is the ex-
tent of equitable interference. But the allowance of
what the joint creditors had received from the firm
assets implies that the separate creditors also share
the joint assets with the firm creditors. They might
not share it in the first instance, but the moment the
separate estate is touched, they assert the right of par-
ticipation in the joint funds by relation. They date
back to the division of the firm assets, and make the
division not only of them, but of the whole consoli-
dated fund. Though the participation of the separate
creditors in the partnership assets is contingent upon
the joint creditors coming in upon the separate estate,
321
5 105. Firm Property. Pt. 2, Ch. 6.
it is none the less a sharing, by the separate creditors,
of the joint estate. This sharing, however, is based
npon no independent right, or equity, but is a conse-
quence of the control, by Chancery, of the exercise of a
legal right, which it has no jurisdiction to take away.
If Chancery should attempt to accomplish this result
upon equitable principles, and stay the joint creditors
with a joint fund from resorting to the separate estate,
the only means of enforcing their abstention is by
making them share the joint estate with the separate
creditors.
As the effe(ft of the condition imposed by equity
upon the joint creditors, if they resorted to the sepa-
rate estate, was to make them share the joint estate
with the separate creditors, the right of the firm cred-
itors, though not taken awa}^, ceased to be an avail-
able privilege, except when the dividend of the sepa-
rate estate exceeded the rate of the joint estate. The
firm creditors have the right, at law, to come in upon
the separate estate. They would share it equally,
with the separate creditors. As the separate credit-
ors never had any claim upon the joint assets, they
could not ask any allowance out of that fund, and, of
course, no account would be taken of what the joint
creditors had received from the partnership estate.
Both sets of creditors would start as equal claimants
upon the separate fund, and be entitled to an equal
distribution of it. Chancery, therefore, by the terms
which it imposed upon the joint creditors, stripped
their right of half its value. The other half was in
danger of being lost by the lack of an accountant,
who could credit to each partner's interest the proper
proportion of the dividend obtained from the joint
■^22
Pt. 2, Ch. 6. Firm Property. §105.
stock, and carry it to the credit of the separate cred-
itors upon the different separate estates before permit-
ting the joint creditors to participate in the division
of the separate estates. The intricacy of the prob-
lem, which must be solved, in order to equalize the
quota which each creditor was entitled to receive out
of the combined funds, led Chancery to adopt, on
account of its simplicity, the 'rule of convenience,'
which confines each class of creditors to its own estate
in the first instance. The surplus of either estate,
after its special creditors are paid, remains, as at law,
the property of the creditors of the other estate, as
each class has a cross-remainder in the surplus.
The joint creditor's right is not extinguished; it
is subordinate to the right of the separate creditors,
when both have estates for distribution. The allow'
ance of proof by a firm creditor, against a separate
estate, establishes a right, which may be controlled in
its exercise, but cannot be denied as a prerogative.^
The duty, which correlates with the right, exists as a
liability, recognized and imposed by law. The exer-
tion of the right is not interfered with, except when a
jpint fund exists.^ Then, as the firm creditors have
an estate which is exclusively appropriated by law
to the satisfaAion of their claims, the separate estate
is reserved for the individual creditors. No excuse
for limiting the firm creditors to their own fund exists
until such a joint estate, which is available for them,
is forthcoming. They are postponed for the conveni-
ence of distribution, but no embarrassment arises,
unless two funds are to be shared, in common, by
different sets of creditors. The liability of the sepa-
rate fund for joint debts is never denied, as a legal
323
II
§ I OS-
Firm Property.
Pt. 2, Ch. 6.
principle. On the contrary, it is asserted as indis-
putable.^ If the several creditors had a primary right,
or an equitable lien, no law could deprive them of
recourse to the separate fund in the first instance.
Any legislation which frustrated the resort, would
interfere with a vested right, or would take away a
security from the proprietor. The law would make
compensation for such an appropriation. It would
never be done by constru61;ion, or implication. If a
statute should be held to deprive the separate credit-
ors of such a recourse, it would show that no right
existed, but simply a privilege, which the law gave
for its own convenience of administration. Therefore,
no legal right is violated when the joint creditors, in
the absence of a joint fund, share the separate estate
on an equal footing with the separate creditors.
I. The history of marshalling assets shows a contrariety
of views in reference to the partner's title to firm prop-
erty. At first, the firm creditors took the joint assets,
and came in upon the separate assets with the separate
creditors, though not until the separate creditors were
allowed a rate equal to the partner's quota of the joint
estate.
Upon distribution of joint and separate estates, separate creditors
may dedicfl, by way. of preference, from separate estate a rate equal to
dividend received by firm creditors out of joint fund on account of
separate partner' s share. B & C owed debts as partners, and B was
indebted to A on his separate account. B died, and his administrator
c. t. a. had in his hands, for administration, some private property of
B, and also some partnership property of B & C, but not enough to
pay the partnership debts. The question submitted to the court was
whether the separate property should be applied first to the payment
of the debt due to A, or whether the firm creditors should come \npro
rata. — Opinions were delivered seriatim: The majority : The K&. of
19th April, 1794, gives creditors of the same nature an equal share in
the intestate's estate. The creditor has a legal remedy against each
partner for the whole debt. If B were alive, creditors of the firm
might levy their whole debt on his separate estate. It is the partner's
equity that neither has a right to withdraw anything from the joint
stock and ajjply it to his private purposes until the debts are paid.
The separate creditors are entitled to insist that the joint creditors,
after having exhausted the joint stock, shall not take the separate
estate until the separate creditors are made even, according to their
324
Pt. 2, Ch. 6. Firm Property. §105.
debtor's share, because, e.g., one-half of the joint stock was received
from the individual partner's estate. The balance is shared equally
between the joint and separate creditors. The joint creditors gave
credit to the tirni, and the separate creditors to the individual part-
ners. The joint creditors alone contribute to the joint mass, while
both contribute to the separate estate. No credit is given to the
partner which would create a lien ; the partner might sell the next
minute. The joint creditor's equity is not a lien ; but firm stock is
independent, and in addition to an equal .right against the separate
estate. The decision assumed the partners' shares to be equal, and
the joint creditors, having received a dividend of twenty per cent,
from the partnership fund, have therefore received ten per cent, from
B's estate. A, the only separate creditor, was entitled, therefore, to
ten per cent, before the joint creditors could share B's separate estate
with him. Gibson, J. , dissented. Each fund should bear the burden
of its own debts, and if the firm creditors can come on the separate
estate, after the separate creditors have received an equal rate, the
separate creditors should come in on the firm assets, when they are
the largest. Bell v. Newman, 5 S. & R. 78 (1819).
2. Proof involves not only taking part in the ele6lion
of an assignee, to distribnte the fund, but also the ex-
tinguishment of the partner's debt by his discharge in
bankruptcy. The right to prove is, therefore, an ac-
knowledgement of the partner's liability to the full
extent of his resources for the firm debt.
Under Bankrupt Adl of 1800, ? 6, a provision that "the discharge
"should not affedl any person liable as partner with the bankrupt,"
established the joint creditor's right to prove against the separate
estate of a bankrupt partner. Tucker v. Oxley, 5 Cranch 34. The
A(5t of 2 March, 1867, ^33, contains a provision to the same effedl :
" No discharge shall release discharge or affecSt any person liable for
"the same debt with the bankrupt "•'■ as partner."
Joitit creditor may prove against bankrupt partner's separate estate.
B was adjudged a bankrupt. He had a partner, C. D, who was a cred-
itor of B & C, proved his claim, and voted for E, as assignee. A, who
was a separate creditor of B, proved his claim, and voted for F as
assignee. As there was no elecflion, the Register appointed E assignee.
A excepted to D's proof, and demanded the appointment of F. Upon
certificate to court — Proof sustained. The several liability exists as a
constituent of a joint debt, and, therefore, proof allowed by a joint
creditor, against a separate partner, although no participation until
separate creditors are satisfied. In re Webb, 16 Nat. Bk'pt Reg'r, 258
(1875).
Judgment-creditor of a firm, after exhausting its assets at law, may
proceed against the separate estate in equity. B conveyed his real
estate, through a trustee, to his wife, and she conveyed it to his father.
A brought bill, as judgment-creditor of B & C, against B, his wife and
father, to set aside conveyances and take land in execution as B's
property. The defendants demurred, because, i, C was not, and, 2,
B's wife was joined, and, 3, firm assets had not been exhausted. — Over-
j ruled. No cause alleged or relief asked against B. Wife a party to
I fraud. A has a right at law, by virtue of his judgment, to seize B's
separate estate, and equity enforces the legal right. He need not
prove firm's insolvency, but sheriff's return of 'no goods,' shows that
325
§io6. Firm Property. Pt. 2, Ch. 6.
he has exhausted the firm assets and his remedy at law. Randolph v.
Daly, I C. E. Gr. 313, N. J. (1865).
3. Brock V. Bateman, ^ 102, n. 4.
If no joint fund for distribution, firtn creditors share partner's
separate estate luith his individual creditors. B & Sons, bankrupts,
left no more assets than were sufficient to pay the costs of proceedings.
B had separate assets. A, assignee, claimed to come in with separate
creditors of B. — Allowed. 'i 36 U. S. Bankrupt A(5l, 1867, does not
alter the law. In re McEwen, 12 Nat. Bankruptcy Register 11 (1875).
B, who had bought out his co-partner, C, assigned for creditors. No
firm assets, and C insolvent. — Firm creditors admitted to share B's
separate estate with his individual creditois. Alexander v. Gorman,
7 A. Rep'r 243, R. I. (1886).
4. An attachment is allowed, even for a firm claim.
Attachment lies agai7ist a partner on a firm contrail for his sepa-
rate property. B issued attachment against A, who was a partner
with C, in Georgia, but a citizen of . The declaration was against
A alone, on a firm account. A moved for a non-suit, based on the
non-joinder of C. — Refused. Code, 'i 3276, permits attachment against
a partner, if limited to his separate property. Connon v. Dimlop, 64
Ga. 680 (1880).
§106.
(?ri)£ partner's equity is besigneb for \\\t protection of l)is sepa-
rate estate, anii becomes tl)e founi)ation of tirm crebitors' rigljts.
The partner's equity originated in the self-interest
of the man, as opposed to the partner. That motive
induced him to force his co-partner to apply the firm
funds to the firm debts. The stock was devoted to
their payment, and could be used for no other pur-
pose. Though this was the separate partner's work,
done for his own individual benefit, the result was a
distinct advantage to the firm creditors, who were to
be paid out of the funds thus bound by the partner's
equity to their claims. The destination enured to their
benefit, and fixed the charadler of the partnership stock
in correspondence with the nature of the partnership
title. As the firm title was one and indivisible, so the
326
Pt. 2, Ch. 6. Firm Property. §io6.
firm stock was devoted to a single and special pur-
pose. The cliara61:er thus stamped upon the firm
stock, by the partners, became indelible. The part-
ners themselves, though they all united, could not
change the direction which the}^ had given to the
stock, to the creditor's detriment. An independent
and paramount right has been created by the part-
ner's equity, which dissolution itself would not dis-
turb. This right created a new party, with whom the
firm must settle before it could dispose of its goods.
The creditors were not threatened until insolvency
intervened, and, therefore, while the firm was solvent,
the partners could dispose of the stock as they pleased.
If Chancery should exercise control while the firm was
solvent, it would take the management of all the part-
nership) business of the country. But when insolvency
occurred, the rights of creditors would be impaired by
an alienation, unless for full value.* How, if all the
parties unite in applying a portion of the firm stock to
the payment of a separate partner's debt ? This would
be applying the firm assets to extinguish a separate
partner's liability, but it would not relieve him. He
would be liable to a firm creditor, who might have been
paid with those assets, but was not. It is j ust the same
to him, whether his liability is extinguished by pay-
ment of a joint, or by payment of a separate, creditor.
If he could prefer a creditor, he might satisfy his prefer-
ence by dire6ling which creditor should be paid. But
the law says : Adhere to the position you have taken,
and to the estate which you have created, and be con-
sistent with yourself. As the law denies to your part-
ner a title which will enable him to convey any estate
in the firm goods by means of sales not made in the
0^7
^io6.
Firm Property. Ft. 2, Ch. 6.
course of the firm's business, you shall not, while
enjoying this protedlion, unite with him to accomplish
a divertion of the firm stock from its original purpose,
to the prejudice of your creditors. As persons hold
themselves out as partners by their ad, and by the
legal effe(5l of their contradls, so have the partners
lield out that the firm assets were irrevocably devoted
to firm debts. Creditors, knowing the interest which
led to the announcement, and relying upon the pledge,
are prote(5led. The partners might, as between them-
selves, rescind the contradl, and appropriate the stock
to their own individual use. But if they were honest,
they would gain nothing by the divertion, and by pay-
ing separate, instead of joint, creditors; for the joint
would then become separate. The law, however, says
that they cannot revoke the pledge, without an equiva-
lent. The offer was made for the partner's own benefit,
but the pledge was accepted by the creditors, for their
own sake. The bargain cannot be broken, except by
the consent of both parties. The attempt to do so by
the partners is a fraud upon the creditors, which a
court of equit}' will enjoin."
The partner's equity is his right to have the firm
assets applied to the payment of the firm debts, in
exoneration of his separate estate. This prerogative,
though styled an equity, is, in fad, a legal right. It
is a constituent of the partnership contradl, and an
element of the firm estate. It distinguishes a trade
partnership from the brotherhood omnium bonoriim.
Without it, the contribution of a partner might, at
any time, without his consent, be diverted from the
joint purpose to the private relief of his co-partner, 1
and his separate estate might, in this way, be drawn |
328
I
Ft. 2, Ch. 6. Firm Property. §io6.
in to supply a deficiency in the firm fund by the arbi-
trary a6l of his co-partner. The equity is a principle
for the adjustment of the interests of the partners be-
tween themselves. This adjustment is made neces-
sary by the individual liability, which the law im-
poses upon each partner, in spite of himself, and
charges upon his separate estate, as the result of
every firm obligation. Properly considered, the equity
is not the source of the creditor's rights, but the means
employed by the partners to restore among themselves
the equipoise disturbed by the creditors in the pursuit
of their legal rights.
Upon what does the partner's equity rest? Is it
founded upon his interest in the partnership property?
If so, a sale of his interest would carry with it the
equity. The interest in the property would feed the
equity, and when the source of supply was cut off^
nothing would remain to sustain the offspring.^
When, therefore, a partner sold his interest in the
firm, he would lose his right to require the application
of the firm funds to their original purpose. He would
be left with his separate estate at the mercy of the
firm creditors, without any means of compelling his
successor in the possession of the firm stock to dis-
charge the old firm debts. ^
Now, take the other, and the correal, view, that the
interest is one thing, the equity another and a differ-
ent thing. Then there is no necessary connection be-
tween the two rights. They may be severed and ex-
erted, either together or apart. The two may be not
onl}^ disparate, but antagonistic. The interest is a
joint-property right. The equity springs from the
ownership of separate property. The partners are
329
§io6.
Firm Property. Pt. 2, Ch. 6.
liable in their separate estates for the firm debts. The
interest of the partners in the firm property protects
itself But the interest in their separate estates must
be guarded by an equity, which entitles them to have
the firm assets applied to the payment of the firm
debts. The liability, which extends over the entire
individual estates, must be restridled to its appropri-
ate fund. The equity of the partner, therefore, springs
out of his separate-estate liability. His separate estate
might be exhausted in satisfying the firm creditors.
He has, therefore, an independent right which gives
him a motive to compel his co-partners to appropriate
the partnership stock to the payment of the firm debts.
Their payment, while an obligation of the firm, is a
release of the separate estate. Every payment -out
of the firm assets exonerates, to that amount, the
partner's separate estate. The object of the partner
is not to have his separate estate charged with firm
debts. If he sells his interest in the firm, his liabil-
ity is not gone. He remains still a debtor for the firm
debts to the joint creditors. His equity is now his
only reliance. While a partner, his rights of control
enabled him to protedl his separate estate by appro-
priating the firm funds to the payment of firm debts.
Now, that he has left the firm, his immediate right
of intervention and control is gone, with his propria-
tary right as a partner. His right, as an individual
aiid independent proprietor, would be put in jeopardy,
unless his right to see that the firm assets were not
misapplied, survived his connexion with the firm.''
At Common law, the exemption of a deceased part-
ner's estate from liability dispensed with his equity.
As he ceased to be liable for firm debts, he did not
330
Pt. 2, Ch. 6. Firm Property. §io6.
need any equity to protedl his estate. But when
Chancery allowed recourse to his estate, the necessity
for a corresponding equity, to protedl it from being re-
sorted to, while firm assets existed, was re-created, and
was given to him. The executor was vested with the
equity, on behalf of the estate.*^ This privilege was
independent of the deceased partner's interest in the
firm, for it continued in the executor after he had sold
the interest to a third person.' The right, therefore,
did not depend upon the interest which might have
resulted to the estate had it remained part of the in-
heritance.
Consider for a moment the consequences of basing
the rule that firm assets constitute a fund for the pay-
ment of firm debts, upon an interest, instead of upon a
liability. The notion that the partner's equity is a per-
sonal privilege, which he may waive or assert at his
caprice, enables him to cut out the firm creditors at
any instant. The partners agreed to assume an indi-
vidual debt, if execution were postponed. They were
precluded, by the agreement, from setting up an equity
to have the assets appropriated to firm creditors. The
agreement barred the lien, or equity, of the partner.
Though the stock remains liable to seizure, at the in-
stance of firm creditors, until it is actually sold, yet
the firm creditors may be cut out from access to it.
The mere bargain, to dispose of the assets, will be
suf&cient to prevent their executions from taking
effe6l. The parting with his equity by a partner, is
more e£fe6live than the disposal by an owner. If the
owner agreed, to sell his property, but, before the sale
was adlually effe6led, an execution was levied upon
the property, the sale could not take effe6l, except
331
§io6. Firm Property. Pt. 2, Ch. 6.
subje(5l to the execution.* The partners, though, as
owners, they could not dispose of the stock by a direA
bargain, and cut out a firm creditor, may effe6l the dis-
position, b}' an indiredl bargain, and cut him out alto-
gether. The process is simply for the partners to
renounce their equity, and the effecfl of the renuncia-
tion is to convert the joint into separate assets. The
agreement to assume the individual debt, if execution
were postponed, is treated as a lien upon the partner's
equity, and by means of it, is advanced over any lien
of a firm creditor."
The partners could, by a waiver of their equity, em-
ploy the firm funds in the furtherance of an individual
purpose; they might, by original agreement, leave the
entire firm stock in the hands of one partner, as his
personal propert}'. They would then have formed a
partnership, and have sheltered the entire firm capital,
on which they traded, from the prior claims of firm
creditors. The whole idea of waiving the partner's
equity is inconsistent with the theory of partnership.
Men are often made parties by operation of law, with-
out their consent, at the instance of their creditors.
How much more, therefore, shall they be forbidden to
renounce any rights which the creditors may enforce
for their own benefit. It is the creditors who regulate
the rights of the partners, and not the partners who
regulate the rights of the creditors. The attempt to
divert firm property and appropriate it to any other
objea, would be a fraud upon the creditors. The as-
sertion of any individual right, until the firm creditors
are paid, would be inconsistent with tbe partnership
created by law. To make such a partnership depend-
ent for Its existence and its terms upon the caprice of
332
M
Pt. 2, Ch. 6. Firm Property. §io6.
the partners, would destroy it altogether, as a creditor's
partnership, and reduce it to a partnership between the
partners.
The sale on a separate execution conveys only the
partner's interest, which is subjedl to all claims against
the firm. The aggregate interests of all the partners
are also subjedl to the same firm liability, and a pur-
chaser of each and all the partners' interests take a
title encumbered with the firm debts. No specific
property passes by the sale of the partner's interests,
either separate or combined. Where, then, does the
stock go? It remains the property of the firm, and
can be got out of the partnership only by an a6l of
disposition performed by the firm, or by legal pro-
ceedings on behalf of firm creditors. If the partners
conveyed the firm property, it would pass, because
they, as the proprietors, exerted the dominion vested
in them. Whether the conveyance would be a fraud
on their creditors is an independent matter. The
conveyance of interests never could pass the stock.
The partner's equity is the key to the situation, and
his equity is held, in Pennsylvania, to pass with his
interest. The last partner's conveyance, therefore,
of his interest, carries with it the creditor's last hold
upon the partnership stock. Judge Gibson evidently
considered the partner's equity as his separate estate.
The assertion of it enured to the benefit of the firm
creditors, but if the partner did not volunteer to exert
his equity, it remained his individual right, and be-
came extin(?t when his interest, which fed it, was
gone. The liabilit}^ of the partner, which still con-
tinues after a sale of his interest, for the firm debts,
was overlooked as the foundation of his equity. The
333
!
5io6. Firm Property. Pt. 2, Ch. 6.
interest which he had in the stock was regarded as
the foundation for his right to exert a control over the
disposition of the stock. The equity which springs
from the separate liability, and guards the individual
estate, was left out of account. When the interest
was lost, no basis, it was thought, is left for a part-
ner's intervention.''' True enough, he is liable to firm
creditors, and to individual creditors. But the two-
fold liability makes him neutral between the confli6l-
ing claimants. He has no right to do anything
to favor one class of creditors over the other class.
He must let the liabilities stand just as the law
imposed them. It is equity, however, to exonerate the
separate estate, by applying the firm assets to the
pa3'ment of the joint debts. If the partner should
satisfy the firm creditors out of the stock, they would,
to that extent, be out of the way, and the separate
creditors relieved of that amount of competition. No
one would be harmed by keeping a resort to the firm
fund, which would otherwise be lost. The sale of the
interest would, it is true, yield more by reason of its
passing the partner's equity, but this would be using
the equity, not as a protection for firm creditors, but
as a sword, to slay them. The equity could not be
used to effecl: a dispossession of the firm creditors.
The proceeds of a sale of the partner's interest are
separate estate, and his equity is treated as if indis-
solubly connedled with his interest, and sold with it.
The equity, on the contrary, is independent of the
partner's interest, and does not pass by a sale of it.
The equity still exists, to protecT: the separate estate,
and enures to the benefit of the joint creditors, who
are entitled to avail themselves of it. The stock is
334
I
Pt. 2, Ch. 6. Firm Property. §io6
subjecft to a lien, which belongs to the firm creditors.
The conveyance of their interests by the partners
would not effect the stock, nor its incumbrances."
I. How does the theory of joint tenancy affedl the alien-
ation by a partner? The disposition is subjedl to debts,
unless in the course of trade, and in all other cases,
enables the joint creditors to enforce an equitable lien.
If a partner sells his interest in the firm, nothing-
passes by the sale but the seller's share, after the estate
and its liabilities have been settled.'^ If the partner
sells out to his co-partner, the share passes, subjecfl to
the firm debts. The joint creditors should treat the
conveyance as a fraud, if intended to sever the joint
title and convert the firm property into separate estate. ^
a. Partner's interest in exenition only balance after payment of firm
debts. B & C, brickmakers, sold out to A, for 12,500, and let him
brick-yard for one year, at |;ioo rent. Reciting sale and lease, it was
agreed the same day that A should carry on business in his name,
advance 12,000, and furnish everything necessary; that he should
employ B, at $2.25, and C, at |2.oo a day; that A should receive
|2,ooo a year, and lawful interest on his advances, and that he should
reconvey everything when B & C repaid him above sums and an old
mortgage. D, an individual creditor of B, levied on the chattels,
and A enjoined sale. — Maintained. If B a partner, firm debts double
amount of assets, and take precedence. Atwood v. Impson, 5 C. E.
Gr. 151, N.J. (1869).
b. Partner's appropriation, while insolvent, of firm assets to payment
of separate creditors a fraud on firm creditors. B & C partners. In
1874, D took B's notes for loan of |!2,ooo; in 1875, C's note for loan
of 14,700. 7th January, i88r, B & C indebted to D & E, |i4,ooo, and
to A et al., $iT^,ooo, conveyed firm R. E. to D, in part payment of
said notes, and assigned other assets, first to pay D & E in full, and
then A et al. pro rata. A et al. obtained judgment, and on return of
nulla bona, brought bill to avoid conveyance, as a fraud on them. —
Decree. Assignment equivalent to bankruptcy, and conveyance,
while insolvent, a gift to separate creditor. Though firm creditors
no lien on firm assets, entitled to set aside conveyance for fraud.
Goodbar V. Cary, 16 Fed. Rep. 316 (1882).
Menagh v. Whitwell, g 103, n. 4.
If the partner sells out to his co-partner, who agrees
to pay the firm debts, the seller can compel him to apply
the assets to such payment. The sale devested the part-
ner's property interest, but was made subjedl to the firm
debts, so that the partner would continue interested in
the payment of them, in relief of his liability and for the
benefit of firm creditors.
The confusion has arisen from a joint sale by both
partners. Although each sells subje(5l to the joint title,
335
iio6.
Firm Property.
Ft. 2, Ch. 6.
which is paramount to the several titles, the sale by
both leaves no representative of the estate, and unless
it is insolvent, no court has jurisdidlion to take charge
of the licrcditas jacens. There is, however, no lack of
a title-bearer. Either partner may enforce the joint
title after a sale of both partners' interests, in order to
protect his separate estate, and the firm creditors may-
avail themselves of his right. *" They cannot be deprived
of this privilege by the partner's renunciation, because
they are entitled to make him exert his joint right for
their satisfacflion. The conversion of the joint into
separate estate, and the abandonment of the title, is a
fraud upon them. It hinders and delays them, by con-
founding them with separate creditors, even if the sep-
arate partners are solvent.''
c. Sale on separate executions against each partner, passes no title
against joint creditors. B & C sold the joint stock, and applied it
to the payment of the separate debts of each partner. A subsequently
obtained judgment against the firm, and levied on the stock.— Exe-
cution vali \ A's claim paramount to claims of separate creditors.
Person v. »Monroe, i Foster, 462 N. H. (1850).
d. The conveyance by a partner of his share in the
joint stock to his co-partner, if he or his co-partner is
insolvent, is a fraud on the firm creditors. The trans-
fer being voluntary, is a constructive fraud upon them,
and will be set aside without proof of a6lual fraud.
Partner's assignment to co-partner unable to pay firm debts volun-
tary and^ not binding on creditors. B & C, partners. B contributed
l4,ooo, C |2,ooo borrowed money. Business began, i Febuary, 1881.
Firm dissolved, 27 September, 1882. C paid B |4,ooo, and agreed to
pay creditors. He commenced business, and asked an extension by
the creditors, admitting his inability to pay. A et al. brought credit-
ors' bill to set sale aside. — Sale voluntary and not binding on firm
creditors, who are entitled to the assets. Proof of a<5lual fraud nega-
tived. Johnston v. Straus, 26 Fed. Rep. 57 (1882).
2. If the partners assign the stock, why cannot firm
creditors follow the assets, and claim payment? The
joint creditors have no lien on them, and the price stands
for the stock, if an equivalent. If not, and sufficient
property is not left, equity would give the creditors
recourse to the fund.''^ The renunciation by the part-
ner of his equity would not effect his creditors, who
^^\\f?^ ^.o"»c^ by his dispositions in fraud of them.^
Vy hat IS the construdlion of the assignment, if accom-
panied by an agreement of the assignee to pay the
debts. The assignment is made subje^ to the debts.
1 he agreement goes with the assets, and the liability
336
Pt. 2, Ch. 6. Firm Property. §io6.
becomes the assignee's own debt, and not a personal
contrail with the assignor.*'
a. No transfer by partners will release the fund from joint debts, tin-
less the firin was solvent, or an equivalent was received for the assign-
nient, made in good faith, and with the intention to discharge the
assets of original liability. A firm composed of four. One retired,
and the three continued the business with the assets equal to their
liabilities, excepting the large debt due the retiring partner. He re-
entered the firm for a year, stipulating for repayment of his debt,
and the balance, after payment of other debts, to be divided among
his co-partners. This was, in eflfecft, paying a partner with firm assets
when the firm could not pay its creditors. — He was held liable for
the amount withdrawn from the firm assets. Cadwalader, J.:
"The argument on this point assumes that these creditors cannot
"complain of injury suffered from any disposition of the joint prop-
" erty in which all the partners united, if there was a sufficient con-
" sideration for it, as between the immediate parties to it. The as-
" sumption is unwarranted, and, as may be even said, fallacious. The
"existence of a consideration sufficient, as between the parties, does
"not suffice to sustain an adt against creditors whose rights it was
"intended to defeat or frustrate, or, what is the same thing, had a
" tendency to defeat or to frustrate. So the law was held in Twyne's
"case (3 Co., So), and in earlier and later decisions. In this respedt
"the enadtments of the statute 13 Eliz., chapter 5, are declaratory of
"the Common law. The rule of decision is a general one. Its
"diredt application to adls changing the ownership of partnership
"property, so as to frustrate the recourse of the joint creditors of the
"firm to it, is exemplified in many decided cases which have been
"cited, and in more than one of them, was expressly so stated and
" explained. To except such a6ts from the general rule would afford
"an immunity for profligate transfers of joint property in derogation
"of rights of creditors." Potter v. Magee, Pamphlet U. vS. C. C.(i878).
Cadwalader, J., thus states a leading authority : "The cited case
"was that of a retiringpartner whose interest in the joint concern was
" computed upon the estimate of bad and doubtful debts at par. He
" had withdrawn part of his so-called capital before the dissolution
" efFedled by his retirement ; and the rest was afterwards paid to him,
"from time to time, as a debt, by the continuing partners, during four
"years, at the end of which they became bankrupt, with a deficit ap-
" proximately equal to the whole of what he had, before and after the
"dissolution, received under the name of his capital, or of their debt
"to him. He was, at the suit of the assignee in bankruptcy of the
"continuing partners, compelled to refund to their estate so much as
"he had received from them since the dissolution. A decree for an
" account of what he had previously received, beyond his just share,
"was refused, because any such excess was not recoverable by the
" complainant for creditors of the bankrupt partners, though it might
"have been recoverable by creditors of the former firm, if any such
"creditors had been unpaid. Anderson v. Maltby, 4Brown, Ch. 422 ;
"s. c, 2 Ves. Jr. 244."
b. An assignee in bankruptcy of a partner could not reclaim a pay-
ment made by his co-partners, in fraud of creditors, though the firm
assignee could. A firm, C & D, having numerous creditors, of whom
A was one, became embarras,sed, and stopped pa3anent. From that
time, with the tacit assent of D, C, who had put in two-thirds of the
capital, and was a large creditor of the partnership for money lent,
337
5io6. Firm Property. Pt. 2, Ch. 6.
proceeded as if tiie partnership had been dissolved, managed the as-
sets ns if thfv hail been his own, continued business in his own indi-
\-i(lual uanK-.'aiiii proposed to creditors a compromise. To further
this, he paid A a large sum in anticipation of A's share. The neces-
sary number of creditors not consenting, he made a general assign-
ment of ///.>• property for the benefit of his creditors to State assignee.
Then, on j)L-tition of firm creditors, who had got wind of the secret
agreement between A 6c C, C, not the firm, nor D, was decreed a
bajikrupt, and U appointed his assignee. On appeal, A contended
that ]{ could not recover the sum C had paid A, denying fraud, and
setting up the point that 15 was assignee of C, individually, and not
of the firm of C ix.D; that the co-partnership had not been dissolved;
that B did not represent the interest of D, and that D's interest did
not pass to B. — Firm not dissolved; only assignee of partnership
could recover here; B is merely assignee of individual partner. Am-
siuck V. Bean, 22 Wallace 395 (1874).
c. If partner takes firm stock, and agrees with co-partner to pay firm
debts, agreement enures to firm creditors. B assigned the firm assets
to his partner C, who agreed to pay the firm debts. The firm sub-
sequently became bankrupt. Firm creditor A proved against C's sep-
arate estate. — Allowed. The agreement was in addition to partner-
ship liability, and enured to the firm creditors. In re Long, 9 Nat.
Bank'cy Reg'r 227 (1874).
3. It is only the gravity of the situation, which pre-
vents one from considering the transaction a joke.
/*/;■/« creditors barred by partners' distribution of assets arnong
themselves. B, C, D & E, traded as B, C & Co. B bought out C,
and gave D & E 54,ooo in secured notes for their quotas, and, in con-
sideration for the assets, then adequate, undertook to pay the firm
debts. B squandered the assets, and D and E, who became insolvent,
assigned the notes to F", for separate creditors. A, who was surety
for B, C & Co., brought bill for application of money colledled on
the notes to payment of firm liabilities. — Dismissed. |4,ooo in notes
for price, individual property of D & E, as |4,ooo of assets, if dis-
tributed to them, would liave been ; and conversion by partners of
joint into separate estate, bars their equity and creditors'' right, which
depends upon it. Belknap v. Abbott, 11 Ohio St. 411 (1882).
I B, |2,000
Firm assets, |8,ooo divided bet. J,' ^'°°° and nothing left to firm.
D, 2,000 °
I E, 2,000
Firm debts, |8,ooo, unpaid, and separate debts |8,ooo, could be
paid with firm funds.
4- The equity, on the contrary, springs into existence
under the pressure of the partner's liability. This ap-
pears clearly in the case of a partner by estoppel. He
has no property interest, and, therefore, no right to ex-
ert, as proprietor, any control over the firm assets, yet
the holding out creates liability as a partner, and gives
the party held out the partner' s'equity for relief from the
liability imposed upon him by law.**
a. Bitter v. Rathman, §69, n. 19.
Pt. 2, Ch. 6. Firm Property. §io6.
The equity is equally available for the creditors of the
partner by estoppel. ''
b. Buffalo City Bauk v. Howai-d, ^ 69, n. 19.
5. The sale of a partner's share was held to bar his
equity. His right to have the assets applied to the
firm debts passed as an incident to the property as-
signed, as if a privilege of the debtor alone, in which
the beneficiaries had no concern. But, in the language
of Judge Sharswood, "the equity of a partner is solely
"grounded on his liability for the debts, which con-
"tinue after his interest is devested, and is not trans-
" ferred to his vendee. As the liability of the partners
" to answer personally for all the debts of the firm is
"not extinguished by a sale or devesture of his interest,
"so neither is his equity, which depends upon it."*
The titles of the partners were regarded as several, and
an owner may dispose of his own without let or hind-
rance. But, unless a full equivalent is paid, the stock
is given away, and by being subjedled to the purchaser's
separate debts, is taken from the firm creditors. If he
agrees to pay the joint debts, they should be a lien,
which, being founded upon the seller's liability, and in
ease of it, should entitle the creditors to insist upon the
application of the stock to the firm debts. This should
be implied without an indemnity.^ The joint creditor,
it is sometimes said, has no lien, even in equity, to pre-
vent the alienation until he obtains judgment, nor upoi\
personalty, until execution.'^ This is a technical view.
The joint creditors are entitled to the fund by the exclu>
sion of the separate creditors and by the partner's equity,
which appropriates the assets to the firm creditors. '^
a. Breuton v. Thompson, ? 103, n. 2, a.
b. Joint assets charged with firm debts until they are satisfied. A
claimed exemption. The only evidence of separate ownership was his
attorney's testimony that firm of A & Co. had dissolved and divided
the stock. Firm creditors attached the property. State ex ret. A
issued mandamus against B, the constable, to set apart the property
claimed to be exempt. — Dismissed. Assets remain charged with firm
debts. Till's case, 2 Neb. 261 (1874).
C. Separate judgment creditor takes balatice raised by joint execution,
and joint creditor, zcithout judgment, no standing to prevent it. B
& C gave a chattel mortgage on their stock, as partners, to D. A
brought suit, as a firm creditor. B confessed judgment to E, an in-
dividual creditor, who levied on the firm stock. D foreclosed, and
after his debt was paid out of the proceeds of a sale, ^670 remained in
the sheriff's hands for distribution. A enjoined sheriff from paying
339
^j^ I'iRM Propkrtv. Pt. 2, Cn. 6.
jj Injunclioii ilissolvcii. A luwl no standini^, until he ohlaiucd
iudK>"«-"«>t. *^veii to prevent firm from conveyinj^in fraud of creditors;
no (inasi-l'ien on firm i)ropertv against cither partners or individual
crtHlitor. MittniKht v. vSmith, 2 C. Iv. G. 259, N. J. (1865).
jsj^jTK—IIow could specific property pass by execution against a
partner's interest. The I'ojo represented the interests of both part-
ners. Half, or J;vvS. vould not be separate estate, because account
necessary of all items, in order to strike an ultimate balance.
(.'nu-nil/irm creditor no stamiiug to prevent execution by indiviclnal
judiimentcreditors upon Jinn assets. Individual creditors obtained
judgments, and took the firm assets of B & C in execution. A claimed,
as a joint creditor, distribution anu)ng the firm creditors, and de-
man(led an injunciion. — Refu.sed. No slaudiug, ^vithout an execu-
tion, which bound the assets at law. Young v. I'rier, 1 Stock, 465,
NJ- ('^53^ overruling Blackwell v. Rankin, 3 Hal. Ch. 152.
/■'inn creditor teit/iout j/ti(i;>nent no lien on stock. B gave use of
his saw-mill to firm of B ^: C, for ten years. The mill and improve-
ments, erected with funds furnished the firm by A, constituted its
sole capital. .\t end of four years, B assigned for his separate cred-
itors. Assignee sohl premises to I), but B remained in possession.
A, without judgment, demanded a receiver, and application of pro-
cee<ls of unexpired term to firm debts. — A no standing to prevent
disposition made by B with C's consent. Greenwood v. Brodhead, 6
Barb. 593, N. Y. (iSso)-
d. CvinvAi.ADKR, J : " Where joint creditors have a beneficial recourse
"to joint assets, it matters little, to practical intents, whether they
■'have such recourse through a distinct right of their own, or derive
■■ the right through an equity of a i)artueror partners, or acquire it as
" a consequence of the necessary exclusion of the separate creditors.
"The rule of distribution is practically the same in whatever form of
"words the proposition mav be stated." Potter v. Magee, Pamphlet,
p. 21, r. vS. C. C. (1S78).
The notion tliat the partner had relinquished his
equity, and that it pa.ssed with the conve)ance, which
botnid him, led to the conclusion that he retained no
right wl^ich his creditors conld enforce. They must,
therefore, make out a cause of adlion independently of
their debtor. The outstanding^ liabilit)-, however, is
the ground of his equity, and until the debts are satis-
fied he is entitled to exert his control over them for the
purpose of liquidation. The joint creditors are subro-
gated to his rights, and may enforce them.''
r. Ccneral creditor of insolvent firm mav enjoin separate execution
creditor from seiziniT Jinn assets. B cSiC confessed judgments to
their firm creditors, and each partner also confessed judgments to his
separate creditors. Executions were issued on the separate judg-
ments, ami the sheriff levied on the firm stock. A, who, though
without a judgment, was a firm creditor, averred insolvency of the
firm, and enjoined the sherifiF.— Injunction maintained. A joint
creditor, though without judgment or execution, has an e(]uitable
lien, which entitles him to iircveut separate execution creditors from
sej/.mg firm projierty. Thev can take only the interest of the .sepa-
rate partners, and the firm being insolvent, they have nothing.
Blackwell v. Rankin, 3 Hal. Ch. 152, N. J. (1S48).
Pt. 2, Ch. 6. Firm Property. §io6.
If the business is continued, the right is also contin-
ued, except so far as it interferes with the rights of
creditors of the new finn/
f. Lien of deceased partner' s representatives limited to old firm stock,
if they consent to continuance by surviving partners. B & C, inauu-
facflurers. B died, and his widow, D, became administratrix. C died,
and his widow, E, appointed administratrix. Children of B & C con-
tinued business, with administratrix' consent, for eight years, when
firm became a corporation. Upon its assignment for creditors, D and
E claimed a lien in preference to creditors. — Disallowed. Lieu re-
stri(5led to old stock, and continuing partners, in favor of creditors of
new firm. Hoyt v. Sprague, 103 U. S. 613 (1880). The lien enures to
the creditors of original firm. "Lord Eldon said: 'In the case of
" death, it is the equity of the deceased partner that enables the cred-
"itors to bring forward the distribution.' 11 Ves. 6. If the surviving
"partners form a new partnership with other persons, the joint credit-
' ' ors of the old firm can follow the assets of that firm, in order to make
"such assets (including the deceased partner's interest) liable for the
" debts of the old firm, so far as this can be done without a disturbance
"■^ oi bona fide rights of creditors of the new partnership, and of other
" persons. Lord Rosslyn said that the complainants in a bill for this
"purpose, 'are creditors upon the effecfts of the old partnership, not
"upon the efFedls of the new partnership.' Daniel v. Cross, 3 Ves.
"277;" Cadwal.\dhr, J., in Potter V. Magee, p. 22, supra.
6. /deceased partner's equity, efi/orced by the joint creditors, is limited
to applying- assets to payment of firm debts, and not extended to pre-
vent preferences among firm creditors. B, C & D, partners. B died,
December, 1828, aiid E appointed administrator. Firm continued
business until January, 1829, when it became insolvent. D, without
consulting C or E, assigned for preferred creditors, to F. A et at.,
firm creditors, brought bill to avoid assignment. — Dismissed. Sur-
viving partner may prefer, "but deceased partner's representative,"
said Walworth, Chancellor, "has the right to insist that the part-
" nership effects shall be applied to the payment of the debts of the
"firm, as the separate estate of decedent may eventuall}^ be made
"liable for any deficiency." Egberts v. Wood, 3 Paige Ch. 517, N. Y.
(1832).
7. Equity not a property right which passes with the stock. A sold
out to B, who took the joint stock to pay the firm debts and indem-
nify A against them. B became insolvent, and threatened to appro-
priate assets to his own use. A brought injuudtion. B demurred. —
Demurrer overruled and decree. Walworth, Ch. : "It is a well -
"settled principle of equity that the creditors of a partnership concern
"have an equitable right to payment out of the partnership effedls in
"preference to the individual partners." Deveau v. Fowler, 2 Paige
Ch. 400, N. Y. (1S31).
The deceased partner's estate is liable in the first in-
stance,'^ and the equity springs from the liability.
In Pennsylvania the liability extends to a debt due by
the deceased partner to his co-partner.*^
a. Brewster v. Sterrett, \ 88, u. 2.
Deceased parttier's estate liable for firm debts. B & C partners,
dealt in real estate. C left all his property to D, his executor. After
341
§io6. Firm Propp:rty. Pt. 2, Ch. 6.
cxi'fvnioiis ;iiiil altachineiits had issued against the firm estate, B as-
sijs'iifil it for creditors to A, who brought bill to enjoin creditors, and
to compel D to convey him the legal title.— Decree. Shanks v. Klein,
14 Otto 18(1881).
b. Finn creditors may colleB balance due by deceased partner to co-
partner. The assignee for creditors of the sur\iving jjartner claimed
on l)chalf of the joint creditors against the administrators of the de-
cease<l partner for the amount he owed the firm, 116,790.13. The
surviving partner was also indebted to the firm, |ii, 204.68. Both
were insolvent, as well as the firm. — The debt of the partner to the
firm, is a finn asset, for which he must account to his co-partner,
who would first dedudl his own debt to the firm, and claim one-half,
|2,792.72>2. The balance of 1^5,585.45, is due to him on account of
bis share of the firm assets. AlcCormick's Appeal, 5 Sm. 252, Pa.
(1866).
8. Joint execution any time before sale, cuts out separate executions.
Separate executions were issued against both A and B, and subse-
quently an execution against the firm A & B was lodged with the
sheriff, who, in doubt how to sell, took an agreement from counsel
that the sales should be lumped, and the proceeds divided as if the
sales had been made according to law. — ^Joint execution bound each
partner's equity, and a sale or transfer could not release the lien.
Change of title must be before lien attached. Sheriff was boimd to
make lien effedlive by a sale, first, on the joint execution. That is a
lien on the chattels; the separate executions, on the surplus after
payment of firm debts. Coover's Appeal, 5 Casey 9 (1S57).
What gives the court authority to make distribution
upon joint and separate executions? Inconsistent re-
turns by the sheriff, who says he made the money on
both writs. The court has to ascertain how he might
have sold under the writs put in his hands, and then
presumes that he did his duty, or what the law pre-
scribes as the course for realizing under the different
classes of writs.''
a. If sale on joint and sepai-ate executions, proceeds go first to firm
creditors. A issued execution against C, and E issued execiition
agam.st C & D. Subsequently B issued joint execution. Sheriff re-
turned that he had sold property of C & D on all the writs. A claimed
payment, in preference to B, out of proceeds. —Judgment for B. A
no niterest until firm creditors paid. King's Appeal, 9 Barr 124, Pa.
(1848).
How did the courts arrive at the conclusion that the
separate executions made any part of the fund? The
joint executions would be first in order, no matter when
they reached the .sheriff's hands, for until a sale the title
would be subjecl to seizure, and the firm execution would
take the specific property. Instead of saying, however,
tliat the whole fund was raised by the paramount writ,
and leaving the money in the sheriff's hands for other
hnn creditors, the court said, that as the sheriff returned
342
Pt. 2, Ch. 6. Firm Property. §io6.
a sale on all the writs, the balance, after satisfying the
joint executions, was raised by the separate executions.''
b. Sale on joint and separate writs entitles separate creditor to smpltis
after payment of joint executioti. B issued joint execution against
C & B, for |2oo. E issued separate execution against C for 1233.
Constable levied on firm stock under both writs, and sold for I400.
Before sale, D notified constable not to pay over to E any surplus
which should be left after payment of B's claim, because the firm had
assigned surplus to joint creditor A. Constable paid surplus to C, and
A sued constable. — Judgment for defendant. Roop v. Rogers, 5 Watts
193, Pa. (1836).
If a separate creditor levied on the firm stock, which
was insufficient to pay the joint debts, could he be en-
joined from selling? He would be enjoined if nothing
would remain over and above the debts, the separate
creditors would get nothing by the sale.''
c. Firm creditors enforce partner's equity, and confine separate cred-
itors to balance left after firm debts are paid. B, C & I), traded as
B & Co. E and others, separate creditors, attached the firm stock
for an aggregate indebtedness of ^2,452.23. A, who had subsequently
attached the stock, brought a bill to enjoin sheriff and for payment of
a firm debt for 11,328.77. — Decree. " It follows," said Redfield, J.,
"from the admitted fa6l that a partner's interest is only his share of
' ' the surplus after all partnership debts are satisfied, that while a part-
"nership creditor may sell the entire interest in all the tangible prop-
" erty of the firm, the creditors of the separate partner can sell only
"the interest of that partner, which may be something, or nothing, as
■'the concern shall prove solvent, or insolvent, on a final settlement
"of all its concerns. So that in this way the entire property of the
"partnership might be sold upon execution against each separate
" partner, and still nothing accrue to any of the purchasers, since all
"must purchase subject to the claims of all the joint claims. This,
"then, being the rule, it is useless to attempt to exclude the prefer-
"ence of joint creditors, since every sale, upon a separate execution,
" ;««5/ <5»^ w^at/^ subject to their claims, * no rule of English juris-
" prudence is better settled."
" Unless, then, we are prepared to put the law of the State upon a
"different basis from the law of any other State, almost, upon this
"subject, we must recognize the right of these partnership creditors
" to be first paid. It is true, that they prevail here over the separate
"creditors by virtue of a lien, which each partner is supposed to
" have, by implied contract upon all the partnership effecfts, until all
" the partnership debts are paid. This gives him an equity prior to
" that of the separate creditors; and it is only by calling this equity
" to their aid, that the partnership creditors are enabled to maintain
"their claims in this case. But this is not a new principle in equity,
"for one man to prevail in a suit, not by his own superior equity,
"but in consequence of that which resides primarily in some
"third party, who is, indeed, generally a necessary party to the bill.
"This is the case where a creditor claims to have the benefit of se-
" curities put in the hands of his debtor by some other debtor, the
" two debtors standing, perhaps, in the same relation to the creditor,
"but one being principal and the other surety as between them-
" selves. So, too, in all cases where one holds funds, which are ulti-
§io6. Firm Property. Pt. 2, Ch. 6.
• malflv to ^o ill a particular channel, equity will interfere on behalf
"of the i)arly ultimately to be benefitted by such appropriation, not-
" withstandinji he may not be a party to the original transadlion.
"This is ahva\s more or less the case, when a court of equity inter-
" feres in marshalling assets."
'• It is upon this very principle of the law of partnership, that each
"partner is Iwund for the whole debt oi the partnership, and so, as
"to the share of the other partners, is virtually a surety, that a court
"of equitv will suffer one partner to maintain a lien upon the co-
" partnership property, until he is released from such suretyship,
"when all the debts of the firm are paid. Nor is there anything
"singular in enabling partnership creditors to enforce this lien,
"which is thus created upon the partnership funds in favor of the
"creditors of the partnership, although not created principally for
"their benefit, but for the security of the other partners. This is
"but carrying out the most familiar principles of the law of principal
"and surety, as well between themselves, as between each and their
"common creditor. Authorities might be multiplied upon this
"point both in England and this country." Washburn v. Bank of
Bellow's Falls, 19 Vt. 278 (1S47).
The principle alluded to by Judge Re;dfiei<d is called the dodlrine
oi c.\ parte Waring: "The Rule ex Parte Waring," by Arthur
Clement Eddis, B. A., Barrister at Law: 1876.
The Court, in other instances, has assumed the task
of distributing a fund among all the creditors entitled,
although by virtue of no writ, except the one under
which the sale was made.*^ In the absence of an in-
solvent court on adverse process, a distribution should
be made by the Common Pleas. The balance could be
retained for other firm creditors, who are entitled to the
proceeds, and not handed over to separate creditors, who
are entitled to nothing until the joint creditors are paid
in full.
d. Court marshals assets not only among execution creditors, but
among all creditors. B, who had a simple contracft claim against C,
deceased, obtained judgment against his administrator D, and en-
tering it de terris, sold lands which belonged to C's estate. A had a
specialty claim, for which he demanded payment to the exclusion of
B. — Decree for A. Administrator guilty of devastavit, if he permits
execution to be levied out of personal property, to the prejudice of
])rcferred claimants. But he could not prevent "the judgment credit-
ors from taking the land. The courts, however, will not permit the. I
proceeds to be distributed until notice has been given, in order tori|
enable those who have preferred claims to come in and be paid.*^
The Agricultural & Mfrs. Bank v. Stambaugh, 13 S. & R. 299, Pa.
(1825).
Penalty 0/ official bond distributed pro rata among creditors without
reference to date of execution. B, administrator, "gave official bond, '
for ?2o,ooo, to Commonwealth. A recovered judgment for penal sum,
and his claim was liquidated at |7, 162.75. The claims against admin-l
istrator exceeded $20,000. — A entitled only \.opro rata, and court con-fe j
trolled executions. Wetherill v. Commonwealth, 17 W. N. 104, Pa.l|
(1885J. ■
344
Pt. 2, Ch. 6. Firm Property. §io6.
If the sheriff makes a return that he has made the
money on a particular writ, can the court marshal the
fund among other execution creditors? The return
cannot be contradidled. A levy on a partner's interest
was cut out by a firm execution, although there was no
firm, and the defendant in the execution owned the
property.®
e. Sheriff's return of property sold on a partiailar writ conclusive. A,
an individual judgment creditor of B, issued,/?, yh:. against him, and
to this writ the sheriff returned that " he had levied all the interest
of B in the business and property of B & Sons, and subsequently sold
said property as that of B & Sons under execution against the firm."
The fund arising from the sale under execution against the partner-
ship, was referred to an auditor for distribution. Before him, A
claimed the amount of his judgment out of the proceeds, and offered
evidence to show that no partnership existed, but that the property
belonged to B alone. — The auditor could not inquire into the exist-
ence of the partnership, and A was concluded by the return to his
writ, and estopped from making any claim to the fund. Bogue's
Appeal, 2 Norris loi, Pa. (1876).
How is the fund marshalled between separate execu-
tions when the sale is lumped? According to the shares
of the respe(5live partners defendant. If one is creditor
of his co-partners, the separate creditor of the creditor
partner will take the fund.^
f. Separate executions satisfied according to respective partner" s share.
B invested in the partnership of B & C, over |;i 7,000 more than C.
On the same day separate executions were issued by A against C, and
by D against B ; but before sale, E issued execution against the firm.
Appeal from auditor's distribution of proceeds. — E should be paid
first, and then D to exclusion of A, because B's advance in excess of
proceeds of sale. Cooper's Appeal, 2 Casey 262 Pa. (1856).
The confusion arising from the sheriff's seizure of the
firm stock for separate, as well as for joint, claims was
obviated in Pennsylvania by a statute.^ The a6l was
passed to authorize the sale by ayf. fa. of the rights,
claims or credits of a firm, but the language was com-
prehensive, and the courts gladly utilized it to get rid
of the snarl introduced into the law by Doner v. Stauflfer.
A special yf.y«. was authorized to sell a partner's interest
without levying on the firm stock. If twojf. fas. issue,
the first in the Common law, and the second in the statu-
tory form, the second will take precedence.'^ The sheriff
was not bound to execute the first, but if he did, it was
only in subordination to the second. If neither writ
is in the statutory form, the writ which effe6led the sale
and made the money will take the proceeds, although
345
5io6. Firm Property. Pt. 2, Ch. 6.
execution liad been levied under the earlier writ. No
lieu is acquired by an execution in the discarded form.'
g. S April, 1S73, P. L. 65.
h. Sfxrcittl Ji./a. under A^, /S73, to sell partner's interest in a firm,
necfssary to holdshcr.jf or create a lien. A obtained judgment against
B <•/<;/., 9 June, 1875, md issued y?.ya. to I), the sheriff, on that date.
On gjulv, 1.S75, K obtained judgment against B et al., and, 14 July,
i,S75. issued afi. fa. to 1), which direcfled him to levy upon B's inter-
est in firms of I' & Co. and G & Co., each having its chief place of
business in the county. D sold B's interest on it's fi. /a., and paid
the i)roceeds into court, which awarded them to E, and the S. C.
artinned the award. A then sued D.— Judgment for D. Sheriff not
bound to levy on B's partnership interests until he received a special
fi.fii. under S April, 1873, P. L. 05, and could not do it or appropriate
the jjroceeds of a sale on E's execution. Hare v. Commonwealth, 11
Norris 141 (1875).
I. If neither execution for sale of partfier's interest in a firm follows
requirement of 8 April, iSjj, proceeds go to the writ which raised
them by a sale. A's fi. fa. was levied in August, 1878; B's als.fi. fa.
was levied in September, and partnership interest of D in D & Co.
sold 30 September, 1878, for |8oo. A issued, 28 September, 1878,
vend, e.x-., and E, sheriff, returned, in Ocftober, that he had sold on
A's writ, and he paid the proceeds into court, which awarded them
to A. — Reversed. Neither execution complied with the statutory
requirement. A's execution, therefore, created no lien, and the sale
was not made on A's writ, because it had been returned, and z'end. ex.
issued two days before the sale was made. The proceeds belong to B,
as the sale was made on his writ. Kain's Appeal, 11 Norris 276 (1879).
May a partner di.spo.se of his title by anticipation,
and retain no share of the partnership stock, so that
the separate execution against the capitalist partner
would cut out the firm execution? It was so held, while
the stock remained unchano-ed,Jbut any sales and replen-
isliint^ would be on joint credit, and convert the stock
into partnership property. '^
/ York Co. Bank's Appeal, ^, 25, u. 3.
/• Walter's Appeal, ? 25, u. 5.
9. Would execution on a judgment confessed by a firm
for a partner's separate debt cut out a subsequent joint
execution for a firm debt? The firm owns its assets,
and may di.spose of them as it likes. Even its promise
to pay a separate execution devotes the joint assets to
the separate claim in preference to a joint execution."
Why could this not be done if pavment of the sepa-
rate execution would render the firm insolvent? The
payment of a partner's individual debt is no consid-
eration to the firm, and is a gift which can be made
only when sufficient property is left to pay all the firm
346
Pt. 2, Ch. 6. Firm Property. §io6.
debts. ^ Does the title pass? The title passes, because
the firm is bound by its own a6l, although a fraud upon
its creditors, and they are the only ones who can take
advantage of the fraud to impeach the transfer. Could
an assignee for creditors set aside the fraudulent dispo-
sition? It was held not,*^ though the reason was defec-
tive, and no longer obtains.*^
a. Co7ifessed jiidg-inent by firm, when insolvent, for separate debt of
partner cuts out firm creditors. A lent B, partner of C, |2,2oo, and
loan remained B's individual debt for 5 years. Then B & C confessed
judgment to A for the debt. A year afterwards, the firm failed. A
feigned issue to try title to proceeds of firm assets between A and firm
creditors. — Judgment for A. The firm creditors had no standing to
impeach the transaction, because they derived all the right they had
from the partners, who made the change. The insolvency of the firm
did not affecft the validity of the substitution, because the partners
could prefer creditors, and therefore create or pay debts up to the date
when insolvency was declared. Siegel v. Chidsey, 4 Cas. 279, Pa.
(1857).
Agreemejit to appr-opriate firm assets to separate debt gives it pre-
cedence over subseqiient execiition againstfirm. D obtained judgment
against B, and issued execution against B's interest in B & C. C
promised to pay the amount of execution thus levied on firm effedls,
if sheriff would forbear. Ket at., firm creditors, levied on stock, and,
upon distribution of proceeds, claimed priority. — Judgment for D.
Promise by C gave separate debt a preference over subsequent levy
for the obligation contradled by the firm. The promise was treated
as an agreement to devote the joint property to the separate debt.
Snodgrass' Appeal, i Harris 471 (1850).
b. Insolvent firm can'' t pay separate debt with joint stock. A was cred-
itor of B & C, succeeded by B, C & D, who, when insolvent, deliv-
ered goods to A, in satisfaction of his claim. Evidence that D also
was indebted to A. Creditors of B, C & D seized and sold the goods
in A's possession. A sued sheriff. — Court charged that unless jury
found a debt from D, the payment was fraudulent, not because of pre-
ference, but because an insolvent firm cannot pay separate debts of
one partner with joint stock. Walsh v. Kellv, 42 Barb. 98 ; s. c. 27
How. Pr. 559 N. Y. (1864).
Under agreement for indemnity, creditors of old firm co-ordinated
with creditors of nezu. Partners may pay separate debts with firm
property only in proportion to their shares. C & D bought out B,
and agreed to pay the firm debts. Three months later, C & D failed,
and having unequal shares in the firm stoek, assigned to E to pay (i)
debts of C & D, and (2) their separate debts, without reference to
partner's quotas. A, though creditor of old firm, claimed, by virtue
of agreement with B, to be a creditor of new firm, and brought bill
to set aside assignment. — Could not objedl to preference of creditors
of new firm, but distribution of stock among separate creditors of C
& D, without reference to partner's share, avoided the assignment.
Smith v. Howard, 20 How. Pr. 121 N. Y. (1859).
Assignment by continuing firm for separate and prior firm debts,
which it assumed, and for partner's administration funds, which it
used, is not fraudulent, unless 110 separate debts. B & Co. bought
out B & C, and agreed to jjay the firm debts. B & Co. failed, and
347
Sio;.
Firm Property. Pt. 2, Ch. 6.
assiened to A. to pay (0 a creditor of B & C, (2) money used by B as
adumiistrator in B cS: Co., (3) individual board bills assumed by B &
Co an<l (4 ) their separate creditors. The goods were seized and sold
bv it N: Co.'s creditors, and A sued them for the price. Defence:
VssiLMinieiii fraudulent, on account of preference and appropriation
io separate debts.— Recovered. Debts of prior firm and of individual
partners became debts of continuing firm. Absence of separate debts
rebutted presumption of fraud. Turner v. Jaycox, 40 N. Y. 470 (1869).
c. ^Issi^nce, agent 0/ assignor, not of creditors. B took all efFedls of
finn, \\ &. C, and agreed to pay its debts. He subsequently formed a
limited partnership with two other persons, in which he was the gen-
eral partner. He then transferred certain demands of B & C to A,
as security for private debt, and on same day made a general assign-
ment for benefit of his creditors to D. Suit was brought by A to
recover money coUedled by D on claims assigned to A by B. — The
appropriation to A was valid as to creditors of B & C, though the
special partners or the creditors of the limited partnership might set
it aside, because the assignment is made void by statute. The as-
signees for creditors stand in the shoes of the assignor, and cannot
impeach his transacflion. Bullitt v. M. E. Church, 2 Casey 108, Pa,
(1856).
d. Amsink v. Bean, supra n. 2, b.
U07.
^hc boctrine of bestination, as applieb to partncrsl)ip, is an
outiirouitl) of tl)c partner's ioint tenancn for rDl)ul) it is tt)e wtxi
cquitn cquinalcnt.
In the application of this dodrine, the destination
given to the firm property originally by the partners
makes a court administer it as firm assets, and no
transfer by partners will release the fund from the
joint debts, unless the firm was solvent, or an equiva-
lent was received for the assignment made in good
faith, and with the intention to discharge the assets
of the original liability. In a leading case, the firm
was composed of four. One retired, and the three
continued the business, with assets about equal to
their liabilities, excepting the large debt to the retir-
ing partner. He re-entered the firm for a year, stipu-
348
Pt. 2, Ch. 6. Firm Property. §107.
lating for re-payment of his debts, and the balance,
after payment of other debts, to be divided among his
co-partners. This was, in efife(5l, paying a partner
with the firm assets, when the firm could not pay its
creditors. He was held liable for the amount with-
drawn from the firm assets.' The right of the credit-
ors is derived from the partner's equity to have the
good applied to payment of firm debts. The assignee
in bankruptcy of the firm could reclaim a payment
made by his co-partners, in fraud of creditors." On
dissolution, one partner made over the firm assets to
his co-partner, who agreed to pay the firm debts, and
indemnify him against them. The funds transferred
enabled him to pay, and "Wis personal obligation enured
to the creditors in addition to their claim against the
firm. They might come in upon his separate estate,
like his individual creditors.'' If the firm stock is sold,
and the proceeds applied to a partner's individual debt,
the sale is void against firm creditors, and the stock is
subject to their execution.'* Unless the firm is solvent,
neither partner can make or accept an assignment of
firm property for his individual account.' If the trans-
fer would make the firm insolvent, the assignment is
void.
1. Potter V. Magee, \ io6, ii. 2, a.
2. Amsinck v. Dean, \ 106, n. 2, b.
3. In re Long, ? 106, n. 2, c.
When a partner sells otit, the assets go to the nczu firvi, snbje£l to the
prior firm' s debts. A partner retired, and his co-partners continued
the business with the firm assets, and assumed the debts of the old
firm, executing a joint bond of indemnit}'. — The retired partner's
liability continued ])rimarilv for the old firm's debts, and he was en-
titled to subrogation for the debts which he was compelled to pay,
not only against the individuals who executed the bond, but against
the firm. Frow, Jacobs & Co.'s Estate, 23 vSmitli 459, Pa. (1873).
The contrary had been decided as the law of Pennsylvania, prior
to this decision. A firm of five members was succeeded by three of
them, and later by an assignment of one's share, of two. Then the
two assigned all their stock for the benefit of their creditors. The
349
§io8.
Firm Property.
Pt. 2, Ch. 6.
creditors of the first two firms claimed a share in the fund. — Excluded,
as their equities nnist be worked out through the partner's lieu, which
ha»l been renounced. Limiting a partner to the payment of the firm
debts, is his co-partner's equity, but not the creditors, who have no
lien on the stock. A change of the assets by the partners puts an end
to the creditors' preference. A sale by a partner to his co-partner in
consideration of his payment of the firm debts, is a. perso>ial contraA,
and creates no lien. If the co-partner disposes of the assets, and does
not pay the firm liabilities, the preference of the firm creditors en-
grafted on his equity dies with its stock. Baker's Appeal, 9 Harris 76,
I'a. (i«53i-
Menagh v. Whitwell, J 103, n. 4; Goodbar v. Cary, ?. 106, n. i, d ;
l-'crson V. Monroe, i 106. n. i, c; Johnston v. Straus, g 106, n. i, d.
Parttu-rscautioi ivithdraw property, unless solvent. B & C, partners
in brickmaking, with lease of a colliery. Embarrassed by suits, they
tried to raise money, but failing to obtain credit, B assigned to C, who
ujulertook to carrv on the business and indemnify B against debts.
Firm creditor brought bill to avoid assignment. — Decree. WEST-
BrKV, Lord Ch. : "Taking •* the principle of law which is embodied
"in the Statute of Eliz., c. 5, and applying that to the transadlion, I
" think that it was not competent for one to make or for the other to
" accept an assignment of that description, both of them being insolv-
" ent at the time." Ex parte Mayou, 4 DeG. J. & S. 664 (1865).
§108.
^lI)c preference gicen to fTtm treMtors can not be aplauui) on
anij tl)eonj of crctiit, nor bn anntl]ing but ioint tenancg.
Leaving out of view the historical fa(5t that equity
simply supplied its process for the ascertainment of
a partner's share upon a determination > of the joint
estate/ various theories have been suggested to account
for the course of distribution in equity. They natu-
rally do not go to the source of the change, and explain
the cause which brought about the departure from the
contracT; .system. The notion of credit, that as the
joint creditors relied upon the firm assets, the sepa-
rate creditors looked to the separate estate for pay-
ment, is an assumption.' It contradidls the experience
which imputes to every man a knowledge of the law.
350
Pt. 2, Ch. 6. Firm Property. §io8.
The credit would depend upon the estate the debtor
had. The partners have joint and separate estates,
which are both subject to the firm's debts. The credit
would, of course, be given in reliance upon both
estates. The partner has a resulting interest in the
firm after all its debts are paid, and his separate es-
tate, which is also subje(5l to the firm debts. His
creditor could expe6l nothing from the partner's share
until the firm creditors had been satisfied, and he could
share only the separate estate with them, unless in-
solvency supervened, which, under the makeshift rule
of convenience, would give him a paramount title to
the separate fund. The credit given to a debtor is not
the cause of his estate, but a consequence of his pos-
sessing the means to pay the debt.
The Roman lawyers, as might have been antici-
pated, worked out the equities of each class of credit-
ors without inconsistency, and on principle. Their
starting point was that the joint debts created or in-
creased the partnership fund, while the separate debts
formed or enlarged the individual partner's estate.
From this origin of the funds, an equity, it was con-
ceived, arises, which appropriates them, upon insol-
vency, to the creditors, who, respe6lively, contributed
to create them. This rule was sustained by analogy
to the law of sale. The price, with the civilians,
stood for the merchandise, and if the consideration
was not paid, the property might be reclaimed, al-
though the sale had been completed, by delivery to
the buyer. The contrail, though executed, was re-
scinded by non-payment.'^ They followed the prop-
erty, as equity lawyers do a trust fund, as long as its
• identity could be traced. When the property lost its
351
§io8.
Firm Property.
Pt. 2, Ch. 6.
distin(5live charaAer, and became merged in tlie mass
of the debtor's estate, the creditor was entitled to an
equivalent out of the mass for his property, which
could be identified on account of the debtor's conver-
sion of it into something else. The equity springs
from a recognized liability. The firm stock stood in
the place of the thing sold, and the creditors whose
advances had increased the stock in the place of the
seller.^ No such analog}^ exists at the Common law
to explain this feature of partnership. The Civil
law theory of sale does not prevail at the Common
law. The specific property sold and delivered to the
buyer cannot be reclaimed in any event. The owner-
sliip is vested in him by the sale. Insolvency does
not devest his title to any property; much less does
it revest the debtor's title in the former owner. The
insolvent, by his inability to meet his liabilities, is
not the less, but all the more, a debtor. He owes to
his creditors not the property itself, nor any other
asset, but merely the price of the property. The
debt is personal, without any lien or preference for
its payment out of the debtor's estate. The individ-
ual partner is, however, not less liable for a firm debt
than is the firm itself. The several liability of the
partners is no less a constituent of the partnership
obligation than is their joint obligation. Both spring
from the root of partnership. The joint creditors,
therefore, are entitled, at law, to share the separate
estate of a partner with his individual creditors. The
firm creditors are not dependent upon any equity for
their preference in the distribution of the partnership
assets. They have an independent right, which arises
out of the partnership relation, and exists both at law
352
Pt. 2, Ch. 6. Firm Property. 5^io8
and in equity.'' Apart from the diredl liability of the
individual partner for the debts of the firm, his share
also is subjecft to them. No title vests in him until
the firm debts are paid in full. His creditors, who
stand in his shoes, so far from being on an equal foot-
ing with the firm creditors, have no claim against the
partnership fund, so long as a single firm creditor is
in existence. The individual partners, being liable
for the firm debts not less than for their individual
debts, may be held by the joint creditors. The
only restri(?tion which can be put upon the exercise
of their right by a court of equity, is confining them
to the joint fund in the first instance, so as not to de-
prive the separate creditors of their only fund.*" If
the partnership assets are iiot sufficient to pay the
joint debts, then the firm creditors are entitled to
come in upon the separate estate. They would share
it equally with the separate creditors. As the sepa-
rate creditors never had any claim upon the joint as-
sets, they could not ask any allowance out of that
fund, and, of course, no account would be taken of
what the joint creditors had received from the part-
nership estate. Both sets of creditors would start as
equal claimants upon the separate fund, and be enti-
tled to an equal distribution of it. If the amount
which the joint creditors had received from the firm
assets should be dedu(5led from their claims against
the separate estate, or an equal amount allowed the
separate creditors before distribution were made, the}^
would, in fa6l, share the joint estate with the joint
creditors. It would not be a division between them in
the first instance, but the moment the separate estate
is touched, the individual creditors assert the right to
353
liio8. Firm Property. Pt. 2, Ch. 6.
participate in the joint funds by relation. They date
their claims back to the distribution of the firm assets,
and make the division not only of them, but of the
whole consolidated fund. Though the participation
of the separate creditors in the partnership assets is
contingent upon the joint creditors coming in upon
the separate estate, it is none the less a sharing, by
the separate creditors, of the joint estate. The debtor
pays his debt (in part) out of his creditors' estate.
The rule of convenience, as it is called, established
in bankruptcy, and followed in equity, runs counter
to the principle of partnership liability. At first, the
joint creditors could come in upon the separate fund
onl}' upon condition that they surrendered an equi-
valent, if it had been received from the joint estate.®
They retained, after the repeal of their privilege to
resort to both funds, an independent and exclusive
right to the firm assets, but they lost the right, which
the}' had previously enjoyed in addition, to resort to
the separate fund on equal terms with the individual
creditors. The principle of this adjustment was that
each class of creditors should be remanded to its dis-
tinclive fund, because the separate creditors owned
the individual partner's estate by as good a right as
the joint creditors were entitled to the partnership
estate.' The logic of the change made itself felt, and
pracT;ice, in due season, embodied the precept, by cre-
ating a right in the separate creditors to take the sur-
plus of the joint estate, after the partnership credit-
ors had been paid in full, in return for their access to
the separate estate after the individual creditors had I
been satisfied. The right of the separate creditor
lacks not only the support of a legal liability, which [
354
Pt. 2, Ch. 6. Firm Property. §io8.
comes in aid of a joint creditor and upholds his right,
but the legal liability negatives any exclusive right
in the separate creditor. The joint creditors are co-
OAAOiers of the separate estate. Nevertheless the legal
liability is annihilated, and the right of the partner-
ship creditors in the separate fund is extinguished.
1. The history of the method adopted to proceed against
a debtor-partner's share of the joint property by execu-
tion at law, and the modification of the process under
the influence of equity is accurately stated by ' F. F. ' in
an article entitled : "The legal and equitable rights of
' ' individual and partnership creditors ; with reference
"to the taking in execution of partnership property for
"the debt of a partner," published in 26 American
Jurist 55 : 1841.
2. Potter V. Magee, § 106, n. 2, a ; Washburn v. Bank, ^ 106, n. 8, c.
3. At the Roman law the price was a condition of the
sale, and, without payment of it, the property did not
pass from the seller to the buyer. Though credit might
be given or security taken, instead of payment, the na-
ture of the transa(5lion was then a sort of tacit mortgage
of the property for the price.
„ 3]on ber ©c^Iiefeung be§ 5lauf^ ift bie ©rfiilhing beffelben ju unter=
„ frfieiben. ©iefe gefdiiel^et bon ©eiten be§ 3Serfdufer-3 burd; bie auf gefdft=
,, ntdfeige 9(rt betriirfte Uebergabc ber ©adie, bon ©eiten be^J ^duferl aber
,,burrf) bie 33e3af)[ung be§ ^aufge(be§. 3>on biefer (Srfiillung l^angt bie
,,Uebertragiirtg be§ Gigentl^utnS ab/' 16 ©tiicf, (Srlduterung ber"^]pan=
becten. g 988.
4. The modern Civil law does not revert to the Roman
conception of a sale, although there is a reminiscence
of the primitive theory in the J2cs scparatioiiis main-
tained by some authors, on the ground that the mer-
chandise should return to the unpaid seller, and not go
to and enrich a stranger. Speaking of a trader who car-
ried on business at different places, Ulpian said : ^''Ae-
^'' qiiissimitm puto separativi tribiitionejn faciendain^ ne
' ' ex altcrius re merceve alii indemncsjiant^ alii dammmi
^'' sentianty D. 14, 4, 16.
©trcitig ift, ob eine Separation imb ni3tf;igenfal(§ ein ^sarticu(arconcur§
iiberall eintreten barf, tpo ein Xf)ci( bc--^ IseVmbgensi, trtelcfier fe^jarirt unb
@egenftanb eincS ^articuIarconcurfeS lycrbeu foil, ein eigenc§ Don "xaw ^t-
fe^en al§ foW}c§ anerfanteS G)iitercor^.nio [univcrsitas imiiii) auCMuacfit,
unb bie J-orbcrungen ber cytdubigcr mit eincr fold)cn Giitcrmaffe tn einem
355.
§io8. Firm Property. Pt. 2, Ch. b.
bo'oiibiTcn iU-il'iUtmifc )"tclH'ii, uhh'ou tic cui5Clncii in Den ©efc^en ciaal;n=
ten ii-piUiUioiKMiiUc bivii iU'Upiclc bil&ctcn.
eim^c biial^ai t>m lln^ ttcUcii als WrunDfa^) auf; ber ^^articularcon^
v-uro ftnK't m aUcn (fallen )tatt, >uo bcftunnttc O^ilaubicjcr 311 ciner bcftimnu
ten, alo cm ciiicnco (>Hucriorpu'o ihmi Dcni iibngcn ^iNcmibgcn nbsutrcnm-n:
ben unb jur iU-fricMiiung bcr an bicjclbt jtatijinccnbcn Jorfccrungcn nidit
jicnuvicnbcu 'iU-rnu\jonvina|)c in cmcni lold'cu iici-faJircn [tcl'en, taf; fie bie
^evamtion beri'elben I'on bcni ubngea UNenncgcn icd)lUc{; Derlangen
fiMuien. CO id nanuntlidi tin Ojlaubiijern cince Maujnianne, ircldicr
ine^)rere jietrennte .VMinblungen babe, bas iceparationeredn ju geftatten.
Mallliiae's Coulroverseu-Lexikon des riJmischeu Civilrechls, 171,
where llie authorities are collected.
5. /('/«/ crcdilors, after exhausting fir-m assets, come in for balance
on partner' s separate real estate pari passu with his separate credit-
ors. B, C S: I), traded as B & Sons. I. borrowed |5,oco of E, and
title deeds of land held by B, and contradl for purchase of land were
deposited for preparation of mortgage to secure loan. B died before
mortgage executed. Then C died. Heirs of B & C executed mortgage
to E. \ et al., firm creditors, enjoined D, and prayed for receiver
to take land bargained for, and land held by B, disputing equitable
mortgage. — Decree. Land separate property of B, but equitable
mortgage not proved. Firm creditors unsati.'^fied by firm assets, pro-
ceed for balance against separate estate with separate creditors.
Simpson, C. J.: "We think the true do<5lrine is, as stated by the
"Circuit Judge with respedt to the right of the separate creditor, if
" any equity exists in his behalf, such as two funds * to threw the
"co-partnership creditors on the partnership assets in the first in-
" stance, but after the partnership assets have been fully and fairly
"exhausted, to come in pro ?-«/«■ with the separate creditor. This
"seems to be the weight of authority with us. Besides a debt con-
"tracled by a co-partnership, is not only a debt of the firm, hut a
"debt in substance of each individual member of the firm, and the
" property of the firm, and of eacli member, is liable for it. But the
"property of the firm is not liable for the separate debt of a mem-
|'1x;r; only the interest of the member is liable, which is nothing
"until the firm debts are paid. So that, because a co-partntrship
"creditor has an exclusive claim upon the firm property, it dees not
" follow tiiat a separate creditor should have an exclusive claim upon
"the separate property. In the first place, the efiedl; of the ccntradl
j'is to pledge as a ba.sis of credit, both partnership and private prop-
yl erty; in the second case, the separate property alone gives the
[^"■^d't. And, as to partnership property, there is no separate prop-
"erty until the debts are paid, which is liable to both partnership
"and separate debts by contradl." Hutzler v, Phillips, i S. E. Rep'r
502, S. C. fi887).
Firm creditor enforces partner's separate liability as a constituent
of partnership. Equity controls exercise of right when creditor has
joitit and separate funds, and separate creditor only separate estate.
B & C, partners, as B & Co. Firm creditor, D, attached C's property
for finn debt. A. creditor of C, brought bill to prevent any part of
proceeds from being paid to D, and to establish a preference. Both
partners bankrupt, and no firm assets.— Dismissed. Separate creditor
has a nght to his debtor-partner's estate onlv when there are both
joint and separate funds, on the ground that the firm creditor should
resort first to the joint fund, and exhaust it, before taking the sepa-
.356
6
\
Pt. 2, Ch. 7. Firm Land. §109.
rate creditor's only fund. The bankruptcy rule not a principle, but
a rule of thumb. Bardwell v. Perry, 19 Vt. 292 (1847).
7. Bell V. Newman, ^ 105, n. 1.
8. Firm creditors not entitled to share separate estate luith separate
creditors for balance unpaid by joint dividend. B & C, partners,
assigned for creditors to A. Subsequently, B assigned for his cred-
itors to A & D, and C for his to E. F~irm dividend 1 1 per cent. Firm
creditors claimed payment out of B's separate estate for amounts not
paid by joint assets. A and B asked instruction of court. — Firm
creditors excluded. Davis v. Howell, 20 Am. Law Reg'r N. S. 461, N.
J., (1861), with note, reviewing the authorities, by Prof. H:eNRY
Wade Rogers.
-O-
CHAPTER VII.
§109.
THE TITLE TO PARTNERSHIP LAND.
^\\t boctrincs of equitable conversion an^ of equitable lien are
tl)e eipcLiients a^opte^ to onercome tl)e obstacle of tenure in making
lanb a firm asset.
Land, being the original mould of Bnglish. law, so
far from yielding the tenets of its tenure to the inno-
vations of a partnership, impressed upon it, as has
been remarked, a charac^ter foreign to the relation.
A joint tenancy is the best expression of the partner-
ship title to land, as well as to personalty. The notion
of a tenancy in common, as the legal expression of
the title to personal property vested in a partnership,
has not yet entirely let go its hold upon the Profes-
sional mind. It was repugnant to Common law in-
stin(?ts that land should be an article of trade at all.
And for this reason it has taken longer to eradicate
the notion of tenancy in common in partnership land,
and replace it by the theory of a joint title. The
357
§ioQ^ Firm Land. Pt. 2, Ch. 7.
real estate owned by a firm was held in common, and
the legal title vested in the partners, as tenants in
coiniiioii. Upon the death of a partner, his moiety
descended to his heir, who was not bound by the
partnership debts, but inherited the purpart clear of
all liabilities. The destination given to the property
by the partners, was, in this manner, defeated, by
making the legal effe6l of tenure override the par-
tics' will. The rights of the firm, in real estate, had
to be worked out in subservience to the exigencies of
the legal title. A long development of equitable ideas
was required, in order to make intention the control-
ling facl, which subordinated the estate to the purposes
for which it was created. The transition, from the
Feudal notion of tenancy in common to a theory which
gives full effe6l to the partnership title, and adjusts it
to the partners' interest, was effe6led, in some cases,
by the fi(5lion of a conversion, which makes personalty
of the land, and, in other cases, by the do6lrine of an
equitable lien, which gives the firm and its creditors
a paramount right to the land. The lien could be de-
feated only by an incumbrance upon a partner's title,
which was concurrent with the acquisition of the title;
such an incumbrance was recognized in equity, as well
as at law. The legal and equitable would prevail over
the merely equitable lien. The theory of lien was
suggested by and worked out through the partner's
equity, to have the land applied to the payment of the
firm debts. By this equity a partner is restrained
from using the land, except for the firm.
As soon as creditors were permitted to proceed
against their debtors' land, they subjeded to their
claims lands held in joint tenancy. If the claim was
358
Pt. 2, Ch. 7. Firm Land. §109.
against one co-tenant, his interest might be taken,
and if the claim was against both, then the whole
estate. This may be seen in an early case, where the
claim, though originally against one joint tenant,
subsequently became, by the acftion of the parties, a
claim against both, and a charge upon the whole
estate.^
The title of the partners, though made subjeA to
the debts of the firm, was not controlled beyond the
exigencies of the partnership. The land, when
cleared of the firm liabilities, remained vested in the
partners." They held, however, not in the proportion
of their interests in the partnership, but in the equal
division of tenants in common,^ The theory of a
conversion re6lifies this defeA. In England, this
theory has been adopted, without qualification; so
that upon dissolution the land or its proceeds are
diverted from the heir, and given to the personal rep-
resentatives.^ The result of making the conversion
extend beyond the requirements of the partnership,
was to call forth a readlion against the fiAion itself.
The abuse of the principle served as the argument
against its use. The counter-current disclosed itself
in the decisions which sought every pretext to escape
an application of the fi6lion, although the equity of
the partnership was acknowledged and enforced. The
facT: that the purchase-money did not come direAly
from the firm, notwithstanding the purchase was
made for it ; or, on the other hand, that the price was
paid b}^ the firm, but the use was not declared for it,
v/as suf&cient to prevent a conversion. In either
event, the firm had the equity, and the legal title was
controlled to give it e£fe6l ; but not by means of a con-
359
SlCX).
Firm Land. Pt. 2, Ch. 7.
version. Nor if the partners were given mortgages b}^
will, and they purchased the equity of redemption with
firm money, or the devise was of a fee to them, did the
land, although used for the firm, change into person-
altv. The right of the firm to the land is, neverthe-
less, recognized in equity, and the courts reverted, in
giving effe(5l to the title, to the alternative of an equit-
able lien. The reason for giving full recognition to
the dominion of the firm, by converting its property
into personal estate, which meets the requirements
of the firm, is identical with the principle of the deci-
sions which establish a conversion. It is the after-
eflfecl of altering the course of descent, which deters
the courts from resorting to a ficftion which interferes
with the canons of devolution, without any legal jus-
tification.'' The do6lrine of equitable lien and of con-
version, are both mere expedients. If the right of the
firm is conceded, why should there be any hesitation
in giving full efifecl to the title? How the title came
to the firm, is of no consequence. The fadi of im-
portance, the point upon which everything turns, is
that the firm has the title. The mode of acquisition
is a preliminary incident, which could have no bear-
ing upon the right, when once possessed. What has
the acquisition, when effe^led, to do with the right of
property? There is no room in law, or in reason, for
the antagonism of two theories to regulate the same
right.
The dodlrine of con version is brought in closer accord
with the requirements of partnership by reconverting
the personalty into land, the moment the objeAs for
which it was converted are accomplished and the part-
nership is wound up.' The fidion, when thus man-
360
I
Pt, 2, Ch. 7. Firm Land. ^109.
aged, does not interfere with the devolution of the
property as land. The title would pass to the part-
ners, unaffe(5led by any separate judgments recovered
against them, or separate incumbrances created by
them, during the partnership. The land would be
after-acquired, and, as such, would not be bound by
the lien of a judgment.' The difhculty with the theory
is in defining the moment when the re-conversion
shall take place, when the rights of creditors, heirs,
grantees, or others claiming through the individual
partner, shall attach to his interest in the real estate.
If, at the moment of dissolution, by death or otherwise,
the title is still encumbered with outstanding claims ;
if, at the final settlement of account, this is an indefi-
nite period, and the title to the real estate may be
held in abeyance for years. How could the devise by
a partner pass the land, and the reconversion relate to
the decedent's death, when the will could not, by law^
convey subsequently-acquired land? The decedent
would either die intestate, or the land would pass as
personal estate. The devisee would not acquire the
land, even if the title could, by legerdemain, shift
from the distributees, upon a subsequent reconver-
sion, as he must establish his right to take at the in-
stant of his testator's death. The subsequent shift-
ingf, thouofh it were feasible, W'Ould be too late.** The
fiAion should not be allowed to prevent a devolution
upon the decedent's death. As a creature of equity,
the conversion should be controlled by equity. The
land might vest in interest upon the partner's death,
though not in possession until a reconversion could
be effedled by a settlement of the partnership accounts.
This would be inconsistent with the theory which
361
§iog^ Firm Land. Pt. 2, Ch. 7.
treats a partner's share in firm real estate upon a re-
conversion as after-acquired land.
A judgment against a partner doesn't bind firm
lands, and, it has been held, when a reconversion
takes place, that the land is a new acquisition,
which, being subsequent to the entry of judgment, is
not bound by its lien. But it has also been held that
if a partner died, and subsequently a reconversion
took place, his widow would be entitled to dower."
The title would relate back to the husband and part-
ner's life-time, and no one could claim except through
him. If the widow's dower did not attach, neither
would the heirs be entitled to the inheritance. They
nuist claim through their ancestor, and as he could
acquire only as a living, and not as a dead man, be-
cause all his rights devolved upon his death, the title
must relate back and vest in him while alive. It is
subje6l, therefore, to all the incidents and dedudlions
which would have affedled it if he had been living
wlien it vested in him. Why, then, would not a judg-
ment wliich was entered against him during his life-
time, bind the title at the moment of reconversion?
Certainly not for the reason that the land is after-ac-
quired, for if in any instance the title is carried back
by relation, the hypothesis of after-acquired land
is overthrown. If this relation is allowed for the
widow and heirs, why not for the creditors ? Might the
tUle have been personal at the owner's death, and
been changed afterwards? Then property would be
shifted from executors to heirs without any notice,
and by matter in pais. The devolution must be to
one class or to the other. It could not be first to one
362
Ft. 2, Ch. 7. Firm Land. §109.
and then to the other, dependent upon some extrane-
ous event.
1. Lord Abergavenny's Case, ^ 103, n. 2.
2. Title to finn real estate. Partnership owned land. B left his share
to his daughter, who died. Her husband assigned his interest to A,
who claimed the whole share as personalty. — Title to partnership
land passes as realty to heirs of deceased partner. A acquired only
husband's courtesy. Buckley v. Buckley, 11 Barb. 43, N. Y. (1850).
3. Title to firin real estate. Partnership held land. No mutual cov-
enants, but intention to use it for firm purposes. Land sold on mort-
gages, executed by the partners. Wifeof A joined in mortgages. The
surplus was claimed by assignee, and by A's heir, and by his widow. —
Widow allowed dower in a moiety, though husband had a two-thirds
interest in the firm. Each partner's title was subjedl to co-partner's
equity, but proceeds remained realty, and hence widow took dower.
Smith V. Jackson, 2 Edwards Ch. 28, N. Y. (1833).
4. The intention of the partners, which devotes the
land to the firm is not limited to the efFedl between the
partners themselves, but is extended beyond the scope
of their purpose, and alters the real nature of the prop-
erty without any legal reason.
Partnership land, subjefl to taxatio7i as personalty, unless re-C07i-
verted by contraH of partners. Partner, who afterwards retired,
bought with firm funds and for the firm use land, which, upon retire-
ment, he conveyed to B & C, the continuing partners, as joint prop-
erty. B, by will, gave C option to buy his share at price fixed by
last stock-taking, and to buy or rent his share of firm land. A, tax
gatherer, claimed probate duty upon ^22,150, price C paid executors
of B's widow for his share of said land. — Recovered. Land subjedl
to taxation as personalty. B's will could not re-convert asset into
land. Binding contra6l requisite to effedl withdrawal. Att'y Gen'l
V. Hubbuck, 10 Q. B. D. 488 (1883) ; 13 O. B. D. 275 (1884).
5. Law of Partnership, by Andrew BissET, Esq., Barrister at Law, pp.
47-56: 1847.
A covenant or agreement was, therefore, required to
convert the lands into jDartnership assets. Coles v. Coles,
§14, n. 2.
But, in time, the intention of the partners replaced all
formal requirements, and any acquisition of land for the
firm was sufficient to give it the beneficial title.
Land used by nurserymen in partnership as nursery farm, becaine
partnership stock, zuhefher acquired by descent or by purchase. B en-
gaged in the nursery business with his sons, C, D & E, devised his
estate, including good-will of business to them, as tenants in common.
They completed a purchase, negotiated by him for a farm, and took
title as tenants in common. C & D bought out E, for ^^52,500, mort-
gaging the land for ^23,000, and paying balance, ^"29,000 out of B's
estate. C died, and his widow and administratrix brought bill for
administration, children claimed distribiition, and heir-at-law the
lands. — Lands converted in personalty, and mortgages payable exclu-
.363
5 IOC). Firm Land. Pt. 2, Ch. 7.
Nivclv out of personal estate. Property involved in partnership busi-
ness Wcanic iirni propertv. Jamks, L. J. : "It seems to me immaterial
•'how it may have been acquired by the surviving partners, whether
"by descent or devise, if in facl, it was substantially involved in the
••business." Watererv. Waterer, L. R. 15, Eq- 402 (1873).
6. In tlii.s country the control over the land for the pur-
jx)ses of the business, is exerted without making a
break or change in the course prescribed by law for the
devolution of real estate. The courts, therefore, are
nt)t restrained from giving efifecft to the equity of the
partners, or of the firm creditors by the relu6lance
which they would naturally feel if they were compelled
to interfere with the canons of descent. The laws of
descent remain intadl and unafife6led by the devotion
of the land to partnenship uses. The eflfedl of deciding
the question, whether land is firm assets or not, apart
b>' itself freed from the consideration of its ultimate
devolution, is to simplify the answer, which is thereby
limited to a single point: Did the partners intend to
make the land available for partnership purposes? The
intention, if disclosed in any mode, is sufficient to pro-
duce the result.
[Aind taken for a firm debt is firm property. B & C took land in
payment for a firm claim. Deed to them as tenants in common.
Land inventoried on the books as firm property, and assigned b}- the
finn for its creditors. A ct at., creditors of B, brought billto set aside
assignment as a fraud on them. — Dismissed. If tenants in common,
assignment for firm creditors void as to separate creditors. If land
belonged to firm, assignment valid. If bought with firm funds, it is
a f|uestion of facl: whether the land is separate or firm property. If
taken for a firm debt, the presumption is against a withdrawal of cap-
ital and .separate titles. Collumbv. Read, 24 N. Y. 505 (1862).
7. Conveyancing in Pennsylvania is founded on the
lien of a judgment being limited to the defendant's title
at the date of its entr}-.
Juds^mcnt does not bind after -acquired land. B confessed judg-
ment to A in 1S04. B bought a house and lot after entrv of judgment
and ultiniately becoming insolvent, assigned the house and lot to C
for creditors, in 1S06. Judgment on set. fa. in 1807 against P, and
terre tenant. Premises sold on vend ex. in 1808.— C entitled to pro-
ceeds^ Colhoun v. Snider, 6 Binnev 135, Pa. (1813).
Judirmeni against partner does not bind his interest in partnership
(and In a partnership to buv and sell lands. A, B & Co. took title
in the name of trustees. A judgment against A & B.— It did not
birnl their equitable estate, although that is subjedl to the lien of a
juflgnicnt in Pennsylvania. The judgment against a partner does
^1 /""^. ^°'' ^^^ separate debt, nor, if confessed, for a firm
aet>t. J he partner's interest is a share in the net proceeds. Kra-
mer V. Arthurs, 7 Barr 165, (1847).
364
Pt. 2, Ch. 7. Firm Land. §109.
If the firm could not sell as well as mortgage clear
of liens, it could not sell at all.
Fir}n land not bound by judgment against partner for his quota of
price. B, C iSi D bought land for the linn, and took a deed to them-
selves as partners. B confessed judgment for his quota of the price
to E, the vendor. Subsequently. B, C & D mortgaged the land to
A, vi'ho claimed the jiroceeds of sale of the land under a foreclosure
of his mortgage. — Held, that the mortgage was a paramount lien.
The title was in the partners, not as tenants in common, and B had
no tangible interest until a settlement of the joint estate; and the
fatl that the judgment was confessed for purchase-money, made no
difference. Lancaster Bank v. My ley, i Harris 544, Pa. (1850).
If the judgments against a partner would bind his
share of the firm land, the obje6l of the partnership
would be defeated.
fudgment against partner does not bind his interest in firm land.
A, B (& Co. bought land as partnership property. Part of the price
was paid, though B gave a judgment note for his quota, and a mort-
gage was given for the balance. B sold out his share to his co-part-
ners, and they conveyed the premises before a set. fa. was brought
to revive the judgment. — The judgment did not attach B's share,
which passed clear of its lien to co-partners and their grantees.
Meily v. Wood, 21 Sm. 488, Pa. (1872).
8. The right once vested could not be devested by a
subsequent dissolution and liquidation.
The notion that a firm can endure, in spite of a part-
ner' s death, is not tenable (Ch. I V). The representatives
may become partners, and contribute the deceased part-
ner's estate ; but his personal liability is at an end, and
their liability is, if enforced, a new and different con-
stituent. The attempt to carry out the notion ends in
confusion. The deceased partner's title would not pass
upon his death, but would be suspended upon a subse-
quent and contingent event ; and yet it does pass, and
must pass immediately upon his death. Nor can there
be a provisional descent or distribution in the alternative
subjedl to a recall and reversal of the course of devolu-
tion.
Death of partfier does not re-convert his share of firm land, espe-
cially if articles continue partnership in spite of his death. B et at.,
manufa(5lurers of iron in partnership, owned plant and adjoining land.
Articles provided for firm's continuance in spite of a partner's death,
and substituted his representatives. B died, leaving widow, C, and
three children. C's second husband, A, brought bill and claimed,
under her will, 1-3 of B, 1-5 interest in the partnership furnace. D and
other children of B, claimed his share as real estate. — Decree. Land
not re-converted on B's death, but remained converted during con-
tinuance of firm. Leaf's Appeal, 9 Out. 505, Pa. (1884).
9. Partner's widow takes dower in husband's share of partnership
land. A & B, equal partners, owned land, some of which had been
365
I
5iiQ, Firm Land. Pt. 2, Ch. 7.
coiivfVC(l to them as tenants in common, but all of which was pur-
chiiset'l with the money of the firm, and held by it as partnership
property. A died. Hy a decree of Orphans' Court, expressly re-
luoving all doubts as to lands conveyed to the firm as tenants in com-
uiun, and not as partners, the firm lands were sold to B. Under a
settlement with those interested in A's estate, B took the lands, subjedl
to the liabilities of the firm, for #25,000 paid to A's representatives.
.\'s widow claimed one-third, absolutely, on the ground of the con-
version, which made the land personalty. — Entitled to dower, an
interest for life. In fiRioue juris semper subsistit aequitas; hence
the conversion of the realty ends when the purpose of the conver-
sion is attained. Firm real estate is personalty for the payment of
firm debts. The time of reconversion is the moment the partnership
is wound up, and it is determined that the real estate is no longer
partnership stock, nor required for its purposes. Foster's Appeal, 24
Smith 399, Pa. (1874)-
§no.
£a^^ inati be ma^c a firm asset n)itl)Out resort to om fiction.
The confusion just pointed out is the result of re-
sorting to a fiction in order to make land a firm asset.
It is not necessary to declare land to be personalty in
order to subje^l it to the requirements of the firm
business. All that is necessary is to apply to land
the principles which govern the partnership relation.
If it is obje6led that there is a necessary conflict be-
tween partnership principles and some of the rules
which govern the title to land, the answer is that this
confli(5l is not abrogated by the interje(5lion of a fic^tion.
Why not do, without disguise, what is done in fadl;
that is, mould the rules which govern real estate to
the requirements of the partnership relation. Such
a course would certainl}^ be more consistent with the
dignity of legal reasoning.
After all, what is meant by the statement that land
becomes personal property? It simply means that
the title is controlled as a firm asset. The incidents
366
PT. 2, Ch. 7. Firm Land. §110.
of land remain iinclianged. It can be proceeded
against, dealt with, conveyed, encumbered, or devised
only according to the rules which govern land.
The land, in spite of its conversion in equity, re-
tains all the physical and legal incidents of real
estate. The legal holder is merely converted into a
trustee for the partnership. The heir might as well
be the depositary of the legal title as was his ances-
tor the partner. The land is not changed in any of
its properties. It serves as a qualification for a mem-
ber of parliament. The partners, in selling, have a
vendor's lien for the purchase-money. The land is
taxed as real estate, and is exempt from the taxa-
tion laid upon personal property. The sheriff could
not sell the land on ayf.y^., without an inquisition.
A division of the partner's share would require a par-
tition. The title must be conveyed according to its
nature as land. A deed or mortgage of it could be
made by a partnership only in the form of a convey-
ance and by a joinder of all the jDartners. It is within
the statute of frauds. If a conversion affedled the legal
attributes of the land, it might be sold by a consta-
ble, who has no power to touch real estate, or a part-
ner might sell it as a chattel, without consulting his
co-partner. Upon the death of a partner, the land
would go to the survivor, who would be compelled
merely to account for it as an asset.
The title in any or in all the partners, as individu-
als, will be controlled for the firm. The destination
of the land controls the title, and no partner can with-
draw his share from the firm or prevent the firm's use
of the land until a settlement.^ Where equity is not
available in Common-law a(5lions, proof of the fadl
367
^,io. Firm Land. Pt. 2, Ch. 7.
would enable the firm to secure the enjoyment of land,
if the title was in the partners as individuals. The
firm claim would depend upon the partner's mutual
covenants, or upon an inadequate remedy at law to
raise an equity, which Chancery would enforce. A
partner who put the title of land, bought with firm
funds, in his wife, prevented his co-partner's suit at
law, and gave him a right to enforce the firm title in
equit}'.^ If a purchaser refused to accept a deed of
the surviving partner, he could compel the co-part-
ner's heir to join in the deed. The equitable title
being vested in the firm, the legal title would be con-
trolled for the beneficiary, even after descent cast.'' A
partner could compete with the separate creditor of
his co-partner. If the balance of account in favor of
the partner would absorb the proceeds of the land,
the separate creditor would be excluded.
The separate creditor acquires no lien by means of
a judgment against his debtor upon the equitable title
of the firm. Nor does an execution or attachment
add anything to the creditor's standing. His process
is without avail, because it is against the legal title,
which is subordinated to the equitable estate;^
The improvements made by a firm upon the sepa-
rate property of a partner, belong to the firm. The
consideration which moved from the firm makes the
title-holder a trustee, and prevents him from appro-
priating the land without making compensation for
the outlay. A foundry ereded upon the land of a
partner was destroyed during the partnership, and it
was rebuilt with firm funds. The equitable title to
the increase caused by the struAure was in the firm,
368
Pt. 2,Ch. 7- Firm Land. §iio.
and it could make the partner account for the en-
hancement.'^
The partner holding title has it in his power to
convey to a bona fide purchaser, and to pass a good
title against the firm. The purchaser would take
clear of the firm, unless he had notice of its title be-
fore he contracted his claim.' Notice of the firm title
would prevent a purchaser from claiming against it,
and make him take subjeCl to it.* If he had not paid
the whole purchase-money, he would account to the
firm for the balance." A separate creditor could be
compelled to sell subjecft to the firm title.'"
If a partner delivers firm stock to his separate
creditor, who accepts it in the belief that the propert}^
belonged to the individual debtor, he does not acquire
title against the firm." No consideration moved to the
firm for the transfer. The partner could not give
away firm stock, and his appropriation of it to his
separate debt is equivalent to a gift by the firm. The
disposition by the title-holder of partnership land
stands upon a different footing. The legal title is
vested in the partner. He exerts the right which
corresponds to his title. The purchaser, \i bona fide ^
relies upon the legal investiture of title. The firm
stock is personalty, and parties deal with the posses-
sor at their risk. They cannot assume, but must
prove his capacity to dispose of the property.
I. Land survives upon the partner's death to his co-
partners for a settlement.
Land purchased by the firm becomes firm property, though the con-
veyance be made to the partners in common. The agent of B, C &
Co. bought lands with firm money, for firm purposes, but had the
deed made to the partners as individuals. Land was used in accord-
ance with original intention. C, a member of the firm, died shortly
before the land was sold on a purchase-money mortgage. A, who
was also a partner with B, C & Co., and his executor, claimed
V
jjjy Firm Land. Pt. 2, Ch. 7.
uliciuot shares in surplus, after payment of the mortgage, in lieu of
their purparts in the land, as executor of C, and in his personal ca-
nncitv H t<: Co., the continuing firm, also claimed the excess as
partiiership assets'— Awarded to B & Co. Abbott's Ap])eal, 14 Wright
2.U. I'a. (1865)-
2 Equity, to make co-partner and 7vifc account for lands bought with
firm funds, not barred by statute of limitations. A brought bill for
account against co-partner B, who had bought land with firm funds,
and put title in his wife. B demurred. — Overruled. A had no ade-
(lualc remedy at law, and statute of limitations no bar, if A an equity,
and not a legal right. Partridge v. Wells, 3 Stew. 176, N. J. (1878).'
3. Land equitable assets. Land bought for firm. B took title in his
own name, conveyed to A undivided half, and died, leaving child, C.
A sold a portion to D, to raist money for payment of firm debts. D
refused to accept deed, because A owned but an undivided half. A
brought bill for specific performance, and made C a (o-defendant, to
compel him to join in executing the deed. — Decree. Equitable title
and control in A, as sur\-iving partner. C trustee of his moiety for
firm. Between partners and creditors, firm land treated as person-
alty. Delmonico v. Guillaume, 2 Sandf. Ch. 366, N. Y. (1845).
4. iMnd equitable assets of firm. A & B, partners, took land, sub-
jecl to mortgage, in payment of firm claim. On dissolution, A paid
firm debts to extent of |5,ooo in excess of his proportion. A sepa-
rate creditor recovered judgment against B. The premises were sold
under the mortgage. A recovered one-half the surplus as owner,
ami claimed reimbursement out of the other half in exclusion of
sey)arate creditor.— Recovered, because land belonged, in equity, to
the firm, though held by the partners as tenants in common. A was
subrogated to rights of firm creditors. Buchan v. Sumner, 2 Barb.
Ch. 165, N. Y. (1847).
5. Shanks v. Klein, ^ 106, n. 7, a.
6. Clark's Appeal, ^,29, n. 4.
The evidence must show improvements made by or
for firm.
./ partner's real estate not contributed to firm, unless the substance
of its transaHions. B, in 1869, took his sons, C and D, into business.
They traded as B's Sons. He built a brewery and fitted it up on his
land. The firm failed in 1872, and assigned for creditors. B also as-
signed for his separate creditors. E, firm assignee, petitioned that
I", B's separate assignee should account for real estate. — ^Judgment
for I". No proof that B contributed the premises to firm. Goepper
V. Kinsinger, 39 Ohio St. 429 (1883).
. 7. At least, if .secured by mortgage. *|
Mortgage of partner's land luithout notice carries firm improve-
ments. A & B were partners as nurserymen. Firm planted trees
upon B's land. At a .sale of the land on a mortgage given by B, A
gave notice of his claim for half the value of trees.— Notice to pur-
chaser of no avail, unless mortgagee had notice when the mortgage
was executed. Trees would not have been fixtures between the part-
""" Kmg V. Wilcomb, 7 Barb. 263, N. Y. (1849).
^D
8.
Equitable title of firm to land binds purchaser with notice. B, C,
i> A: E. partners, as glass manufadlurers. The land for the glass-
works was bought with firm funds, though title was taken in individ-
370
Pt. 2, Ch. 7. Firm Land. §iii.
ual names. B & C convej'ed an undivided 1-2 of the land to F, who
had knowledge of firm's equity. Four days later, the firm assigned
for benefit of creditors, and assignee contested F's title. F had
knowledge of firm's equitable claim, and took subjedl to it. Mat-
tock V. James, 2 Beas. 126, N. J. (i860).
9. Improvements in partner'' s land, made with firm goods, belong to
firm. Devoney v. Mahoney, ^ 28, n. 3.
10. Where a firm creditor had accepted a judgment against
the partner holding title, his claim was merged in an
individual judgment, and yet he did not have the rights
of a separate judgment-creditor, because his claim,
having been joint, was a credit to the firm, and not a
reliance upon the separate title.
Averill v. Loucks, ^93, n. i.
II. Separate creditor paid with firm goods liable for price. B paid pri-
vate debt to C with goods of firm, A & B. A bought out B, and sued
C for price. Defence : No knowledge of firm title. — Recovered.
Knowledge immaterial, because C paid no consideration to firm, and
did not deal on the firm credit. Geery v. Cockroft, i J. &. Sp. 146,
N. Y. (1871).
§111.
If tl]c lanb belonc(s to tlie firm m\)\k \\)t fitlc is in one or more
of tl)e partners, a purcljaser tuitl)out notice may rein on tl)e legal
title, but creditors can rein onln on tl)e substantial ou)nersl)ip.
Land is not marshalled for the joint and separate
lien-holders. Marshalling does not extend to liens, but
they bind the land according to the dates of record.^
The effe(9: of the lien depends upon the language
of the title papers. A firm may take title to land in
either of two ways : The deed may be made to the
partners as a firm, for example, to A and B, trading as
A & Co. Then they will hold the land as firm stock.-
The conveyance puts the title in the firm, and exempts
it from individual control or disposition by a partner,
and from separate liens. Or the deed may be made
371
§111. Firm Land. Pt. 2, Ch. 7.
simply to the partners. Tlieu they will hold as indi-
viduals, and the separate liens will bind the legal title.''
A judgment-creditor of the firm could not be restrained
from proceeding by execution against the separate
partner's real estate."* He does not relinquisli the
privilege secured by his judgment, by making proof
in bankruptcy, for the claim is based upon the judg-
ment." The separate creditor's equity is conceded, if
at all, only against unsecured claims, and would not
avail to marshal a judgment-lien.
If the title is in the firm, it is bound by a judgment
obtained against the firm,® and the partner's separate
real estate is also bound by the judgment.^ A judg-
ment against the firm takes precedence of a subse-
quent judgment against a partner upon his moiety,
where the partners hold real estate as tenants in com-
mon.'^ The judgment against the firm binds each
partner's land from the entry of the j udgment. If the
legal title is vested in one partner, though the land
was bought with firm money, and for firm use, and
judgments existed against the co-partner, and subse-
quent judgments against the firm, firm-creditors would
take the proceeds. Neither set of claimants could
avail themselves of the legal title, and the firm cred-
itors are preferred, because the equitable ownership
was in the firm.'' If the co-partner sought to prove a
title as tenant in common, the partner might rebut
it, by proving a firm title in equity. If the legal title
was in both partners as tenants in common, the sepa- ■
rate creditors of each partner would have a legal claim,
but, although they also had a lien, the equity of the
firm creditors would, elsewhere than in Pennsylvania,
cut them out.'" lu Pennsylvania, no partner has the
372
Pt. 2, Ch. 7. Firm Land. §iii.
right to contradi(5l the legal title after a lien has at-
tached.'^ Land held by partners, as tenants in com-
mon, was put into their partnership business, which
consisted in buying and selling land. The articles
of co-partnership were in writing. They sold the land,
and received part of the purchase-money. The bal-
ance was attached by a separate creditor, under his
judgment in the purchaser's hands. The attachment
was an election to treat the fund as personalty, which
could be proved by parol to be partnership assets ; but
the proceeds stood in the place of the title, which was
bound by the lien/^
A judgment against a partner does not bind his
quota of the land when the title is put in the firm.
His share is only an ultimate balance of account, and
entitles him to no part of any specific asset. The
judgment would not have anything to bind until the
balance was struck, and then the portion of land would
go to him as a new acquisition.^^
Land will be marshalled between joint and separate
creditors. The partner's right should enure to the
creditors, and entitle them to claim the land where
the firm has the equitable title, as a partner should be
subrogated to the creditors whom he has paid and be
reimbursed out of the equitable title of the firm to land
held in common. The mortgage by a partner of his
separate estate for a firm debt makes the land security
for a joint claim, and, to the extent of the mortgage,
firm assets between joint and separate creditors."
After the liens against the title-holder are satisfied,
the land will be marshalled in favor of the equitable
owner. A purchaser from a partner of land bought
with firm assets, and for firm purposes, is made to pay
373
§111, Firm Land. Pt. 2, Ch. 7.
the balance of the price to the firm, although the legal
title is in the vendor.'"
1. \o fHiifshallitig of judgmenl-cr editor' s lien. D took real estate of
each partner in execution on his judgment against B & C. B subse-
tiucntlv assigned, ior creditors, to A, and B & C also assigned for
crftlit<)rs, to K. C was insolvent. A & E enjoined D, on ground
( I ) estopped by proof of claim luider assignment against B & C ; (2)
could not tike separate estate until separate creditors paid in full.
C's answer: Claim made expressly on judgment, and no relinquish-
ment of any privilege secured by his judgment. Injunction dis-
solved. Equitable rule can't deprive C of the lieu of his judgment.
Howell V. Teel, 2 Stew. 490, N. J. (1878). Note by Reporter.
2. LauiTer v. Cavett, \ 10, n. 2.
3. Nothiug but record title in firm a bar to judgment against a part-
ner. A recovered judgment against B, 19 OcSlober, 1876, forl511.11.
23 0(flober, 1S76, firm of B & C, engaged in buying and selling real
estate, assigned for creditors, to D. 29 September, 1881, A brought
sci.fa. to revive. D's affidavit of defence: B no interest, except as
a ])artner in the real estate, which "was all the property of the part-
nership," and not sufficient to pay its lien creditors.— Judgment for
want of a sufficient affidavit. Fatfls not set forth: i, deed vesting
title in firm; 2, coutradl, recorded, by partners to hold real estate as
firm stock, or, 3, notice to individual creditor of firm title before debt
contracled. Revival would prejudice nothing. Kepler v. Erie Dime
Savings & Loan Co., 5 Out. 602, Pa. (1882).
Supra, u. I.
4. Wisbam V. Idppincott, ? 79, n. i.
5. Howell V. Teel, supra n. i.
6. Judgment against the firm binds its real estate. B & C, for loans
made to the firm, gave judgment notes to A et at., and they entered
them up against tlie firm, w^hich owned real estate. The assignee
in bankruptcy sold the real estate, and claimed the proceeds, which
Aet. at., disputed with him. The register ruled out the judgment
creditors, because no lien could attach to firm real estate, which is
personal property. — ^Judgment for A et. at. Firm real estate retains
Us incidents for lien of judgment, as well as by mortgage. In re
Codding, 9 Fed. Reporter 849 (1881).
7. Judgment against fir^n binds partner's separate real estate. D et al. ,
firm creditors, recovered judgmeut against B & Co., in 1852. A, sep-
arate creditor of B, recovered judgment against him, and sold his
land. A claimed priority out of proceeds. — Judgment for D et al.
Priority of record lien determines who takes precedence in payment.
Cumming's Appeal, i Casey 268, Pa. (1855).
8. Equitable title bought for a firm, and ivith its money, is bound by
judgment against a partner, zvhere articles do not call for a convey-
ance to the firm. A, B, C & D, partners, by articles, in 1872, agreed
to buy of Iv, for themselves, their heirs and assigns, a tradl of land
for their lumber business. D did not sign the articles, and no deed
was made. The land was used in the business, and part payment
made with finn funds. Judgments were recovered against C & D.
The firm, 1875, agreed to .sell the tradl to F, who refused the title.
In 1876 the firm assigned their interest to E, and all brought specific
374
Pt. 2, Ch. 7. ■ Firm Land. §111.
performance. — Decree, with deducfbions of judgments against C & D.
E agreed to convey to the four, and his renouncing D's covenant for
payment would not alter the conveyance. Holt's Appeal, 2 Outer-
bridge 257, Pa. (1881).
9. Separate judgment against partncrnot holding title, gives 110 lien.
B, partner with C, purchased land with firm money, taking the title
in his own name. The land was intended for firm purposes, and
so used. A recovered judgment against C, his private debtor, and
subsequently B confessed judgment to D, a firm creditor. Other firm
creditors had judgments against the firm on which executions issued.
The proceeds of sheriff's sale were paid into court for distribution. —
The lot was partnership property, and the partners were not tenants
in common. The judgment of A was no lien. At most he could only
have sold C's interest, and that was personal and not subje6l to a lien.
Proceeds awarded to firm execution-creditors. Erwin's Appeal, 3 Wr.
535, Pa. (1861).
ID- Judgineiit against separate partners holding legal title to firm land
bind o)ily their iyiterests after firm debts, though subsequently con-
traced, are paid. B & C, partners, bought and used for firm, land,
taking title as tenants in common. A recovered a judgment in 1871,
and another in 1876, against B and C for separate liabilities. Subse-
quently D obtained judgment against B & C for a firm debt. Upon
C's death and insolvency of firm, A claimed priority by virtue of his
statutory liens. — Judgment for D. A's liens subjecft to D's equity to
apply assets to firm debts. Page v. Thomas, 43 Ohio St. 38 (1885).
II. Where the deed is made to the partners as individu-
als, without more, they will hold as tenants in common,
and no equity will arise to the firm, although the con-
sideration may have moved from the partnership, and
the property have been used for firm purposes, and im-
proved with firm funds. No oral evidence will be ad-
mitted to contradict the record, to transfer title and
affe6l creditors.
Record settles zvhethcr land is joint or separate. E & B held land
during partnership as tenants in common. C, on judgment against E
for a private debt, levied on and sold moiety of the land which he
had sold to D. A, a creditor of the firm E & B, claimed paramount
title, offering parol evidence to prove that, while the deed was to
E & B as tenants in common, it was purchased with partnership funds
for partnership purposes, and E had retired, leaving land to B for
settlement of firm debts ; urging that being firm property, by a re-
sulting trust, according to the principles of equity, it was pledged
to partnership creditors, and that lien of separate creditors should
be subordinated to equities of the partners. — vSuch evidence is forbid-
den by Statute of P^rauds and recording acfts; the part performance
claimed will not avail. The intention to rebut the deed must also
,^e by deed. The partners owned the money, and might appropriate
it to themselves as individuals, and it was their intention to do
this in the present case, because there was no assertion on the deed
of a partnership taking. D took E's interest without reference to
the partnership liabilities. Hale v. Henrie, 2 Watts 143, Pa. (1834).
Land was bought by A & B, partners, as individuals, and the first
instalment of the price was paid by them. C then joined the firm,
and the balance of the price v.?.s paid by the new firm. The part-
^,,2. Firm Land. Pt. 2, Ch. 7.
iitTsliip funds were also expended in making improvemenls on the
premises. It was agreed that C should have one-third ot the prop-
^.riv. The jjarol agreement vested no title in him as an individual,
and did not raise a "resulting title in the firm. Lefevre's Appeal, 19
Smith 22, I'a. (1X71)-
12. tieddes' Appeal, 3 Norris 482, Pa. (1877).
13- i '09. 'loles 7 and 9.
Rirltitr's i>iortf!^as;e 0/ his land for fir })i -makes it pro tanto firtn
assets. Lands of B & Co., in Wisconsin, were encumbered by B's
debts, incurre<l before C joined him in the business. To obtain an
extension ol the indebtedness, B & Co. exchanged notes with D & Co.,
and C gave a mortgage on his land in New Jersey as collateral security.
The mortgage was assigned to A, who brought bill for the claim, and
H's alienee brought cross-bill to restrain him. Defence : IMortgage for
balance of debt and Wisconsin land should be exhausted first. C, a
surelv for B (S: Co., and should compel sale of Wisconsin lands. The
debt B's separate obligation. — A entitled to decree. Payment of B's
debt enured to firm of B & Co., and C not a suretj'. Tiffany v. Craw-
ford, I McCart. Ch. 278, N. J. (1862).
15. Devoney v. Mahoney, 'i 28, n. 3.
14
§112,
;3lpart from tl^c rule in |)ennsTilt)ania, v:s\\txt, nn^er a recorb-
snstcni, tl)e creiiitars arc mtitleii to rtlti upon tl)e legal title, tljerc
is no reason to eiduiie proof tl)at tl)e equitable title belongs to tl)e
firm.
,The original method of converting land into firm
assets was by mutual stipulation in the partnership
articles. Without a contrad, the land would be held
in common.' Subsequently, conversion became a
question simply of intention, and all evidence of in-
tention became competent.' Taking land by the part-
ners for a firm debt establishes a firm ownership.
Although they might intend to take separate titles,
and hold in common, yet taking the land in satisfac-
tion of a firm debt would disprove a withdraM^al, be-
cause the title would be acquired in the transadlion
376
Pt. 2, Ch. 7- Firm Land. §112.
of firm business. If land held by one partner is pur-
chased with firm money, the inference is that the title
belongs to the firm, which paid for it.^ Using land
by the firm, and improving it with firm funds, make
it firm property.'^
The consideration for a deed to the partners can
always be enquired into. The legal title, standing in
them as tenants in common, does not correspond to
their interests as partners in the firm stock. Their
interests are not necessarily equal in amount, but
vary, according to the quotas of the partners. Nor
are they ascertained by a balance of account, struck
upon a computation of all the assets. The interests
of the partners in the land are fluctuating, although
their shares in the partnership are equal. Fixed
quotas of the land, therefore, would not represent the
interests of the partners, even when they had equal
shares in the firm.
The question arises : Is the creditor entitled to his
debtor's equity? The creditor of a firm would stand
in his debtor's shoes, and take the proceeds of its real
estate. Would the separate creditor be wronged b}^
the appropriation? He gets all that his debtor had;
is a creditor entitled to more ? The separate creditors
have no standing to interfere with the partnership in
the exertion of its right of dominion over land held for
the firm by the individual partners.'^ The debt of a
partner is not a lien upon the legal title. The claim
does not attach itself to any property of the debtor, but
remains simply his personal obligation. Without a
definite hold upon the land, how can a separate cred-
itor prevent the real owner from retaking it? More-
over, the debt does not outrank a firm debt, even upon
377
^112. Firm Land. Pt. 2, Ch. 7.
the debtor's separate estate, but stands merely upon a
footing of equality. The creditor, too, knew that he
had no preference over firm creditors when he gave the
debtor credit.
The payment of the purchase-money out of part-
nership funds establishes the beneficial ownership in
the firm, although the conveyance is made to the part-
ners, as individuals." The argument, that the part-
nership might do what it pleased with its own, and
had manifested its will to give away the land by the
deed, proves too much. No resulting trust would
arise in equity, if this argument should prevail. In
all cases, the deed might be treated as a donation, and
the enquiry into the consideration would be immate-
rial. If the legal title stood in one partner, the consid-
eration would be still more controlling, for the title
could not remain in him without defrauding his co-
partner, who paid his proportion of the price,^
Notice brought home to the separate creditors takes
away their right to hold against the firm creditors.^
A bill by the firm to assert its equity, would be lis
pendens^ and prevent a separate creditor of the part-
ner holding the legal title from claiming against the
firm.'" Even a purchaser" or mortgagee,^' with knowl-
edge of the firm's equitable title, would take subje(5l
to it, unless he is vested with a right by statute. The
enactment gives him a positive right, which notice
does not take away.
The wife of a deceased partner has no right to dower
m land held by her husband, in common with his co-
partners, for the firm. The dower is subjeA to the
paramount title of the firm, and the husband's interest
in the firm assets may not, on a settlement, amount
37S
Pt. 2, Ch. 7. Firm Land. §ii3,
to anything/^ The firm creditors cut out the widow
of a partner. She is dowable of what he leaves at his
death. The debts accrued during his life-time, and
he leaves only the balance after the debts are paid.'^
If the partner was married before he went into part-
nership, the debts attached after the dower; but the
land is only the surplus after the payment of debts. ^'^
The dower attaches subje(5l to the firm's equitable
title, or it awaits a reconversion of the land, according
to the theory which prevails of the firm title to real
estate. In New York, dower attaches pending the
firm, and follows the legal title. As the legal title is
a tenancy in common of partnership land, the widow
takes dower but in a moiety, although her husband
had a two-thirds interest in the firm.^*^ In New York,
also, her interest attaches under the equitable lien.
The dower, in either event, is a life estate in the land,
and not an absolute right in the personal estate. Con-
versely, the husband's curtesy is limited to a life in-
terest in the share of a partnership left by a father to
his married daughter.'^
The partner holding title for the firm can convey
it without his co-partner joining in the deed. He can
alien it for firm purposes, with the same efifedl as he
can dispose of personal assets.'*^ A partner could not
assign a lease made to his co-partner, because no legal
title is vested in him, which he could assign.^" He
might sell, it seems, his share of firm real estate, sub-
je6l to his co-partner's equity. He sells out his interest
in land, which is specific, as he sells out his share of the
personal assets. He cannot be restrained from sell-
ing out, although the sale of his interest in the prop-
erty might result in breaking up the business.'-''
379
5 1, 2, Firm Land. Pt. 2, Ch. 7.
1. Coles V. Coles, J 14, n. i.
At the present day, a contradl would extend the con-
version and assimilate land to personalty, by making
it, with the personal assets, the joint and primary fund
for the payment of debts.
Jiv coiilniil partners may convert hnid into a chattel, liable in the
first, and not mcrclv in the second, instance for firm debts. B & C, by
oontxacl. made land joint assets. C, by will, repeated terms, giving B
power to dispose of land for settlement of business. B conveyed land
in satisfaclion of firm del)t without reference to power. A et al., heirs
of C, l)rout;ht ejeclment. — ^Judgment for defendant. Contradl and will
converted land, and made it liable as well as personalty in first instance
for firm debts. Davis v. Smith, 2 S. Rep'rSgy, Ala. (1887).
2. \ 109, n. 5.
3. '',, 109, n. 6.
4. Partner who receives commission from co-partners for furnishing
purcliasc-money to buy laud for firm, holds title as trustee. A having
option to buy laud, formed partnership with B & C to divide the tracr
and sell off lots for building. C agreed to advance the purchase-
money, and received commission for obtaining it from A & B. He
took notes from B for reimbursement in part. Profits, A 4-10, and B &
C eacli 3-10. C took title for security, and after selling part of tradl,
B & C refused to continue business with A, and excluded him. A
brought partition.— Decree. C trustee for A's quota, 4-10. Tenney
V. Simpson, 15 P. Rep'r 187, Kan. (1887).
The New York statute prohibits a concealment of the
beneficial ownership in land, and prevents a trust from
resulting to the purchaser, if he puts the legal title in
another.'' The adl does not apply, if the title is taken
in tlie other's name without the purchaser's knowledge.
Tlie beneficial ownership will then result to him.
Partner takins; tide to land without co-partners'' knowledge bought
for the firm, and with its funds, is a trustee of the land as personalty.
.V bought city lots with firm money, but without co-partners' knowl-
edge, took title in his individual name. They w ere entered on the
books as firm property, and the taxes and encumbrances were paid
by the funds, and entered to the credit of the firm. A died, and his
heirs brought partition for the lots among themselves. The co-part-
ners and the heirs of another deceased partner claimed the land as
partnership property. Defence : By New York statute, vendee not
trustee for another who pays the price.— A bought the land for the
partnership, and w^as a trustee for the firm during its continuance,
and after dissolution for the partners and their heirs, i. Statute
speaks of different persons. Vendee, as partner, paid part of the
price. 2. There is equitable conversion of land bought for the firm,
and the purchasing partner becomes a trustee of personalty. Fair-
child v. Fairchild, 64 N. Y. 471 (1876).
a. I R. S. 728, ?5i.
The distindlion taken by the court, that the partner,
or partners taking title as individuals, were not differ-
ent persons within the meaning of the statute, is criti-
380
I
f
Pt. 2, Ch. 7. Firm Land. §113,
cised by Mr. Guy C. H. CorliSvS," and the point did
not arise in the case, as the co-partners were not aware
of the fa(5l that the partner had taken title in his indi-
vidual name. Their ignorance of the fadl, brought the
case within the saving of sedlion 53.
a. Partnership Real Estate, 32 Alb. Lawjourn. 2S4, 304, 326 (1885).
5. Land used by firm and itnproi'ed with its funds becomes Jirtn prop-
erty, which partner ho/ding title cannot assign for creditors. A & B
partners. B contributed lands, which were used for firm business,
retaining title in his name ; but the lands should belong to firm when
A completed certain payments. A made some payments, and firm
money was expended in improving the lands. B sold out to C, whom
A received as partner. C assigned for creditors, lands to D, goods to
E, without A's knowledge. A enjoined. — Decree. Lands partnership
property, but assignment invalid, because partner cannot delegate his
discretion. Demmy v. Colt, 3 Sandf. 284, N. Y. (1850).
Black's Appeal, ? 11, n. i.
6. Judgment against partner holding title of firm land, no lien against
firm creditors. B & C, in 1874, bought land with firm funds, but B
took title. The land was conveyed, in 1876, when firm was insolvent,
to D, who sold to A, the wife of B. Under judgments against B, the
land was seized. A enjoined his creditors. — Decree. Land firm prop-
erty, and plaintiff derived title from firm. Judgment against B gave
no lien, and separate creditors entitled only to excess after payment
of firm debts. Bowen v. Billings, 13 Neb. 439 (1882).
The partner's lien would prevail against the separate
creditors, even with judgments, and exclude them from
the firm land.
Partner may be creditor of firm, and has equitable lien 07i firm,
land held in individual name of partner. A contributed ^15,000,
and B, C & D, iron manufadlurers in Pennsylvania, contributed the
same amount in tools and machinery, which they transferred to New
Jersey, where the firm bought land, taking title in the individual
names of the partners, and eredled buildings. B, C & D confessed
judgment to their individual creditors, who sold the firm land and
stock in New Jersey. A claimed that his debt was an equitable lien,
which was paramount to the confessed judgments. — .\ entitled, as a
firm creditor, to be paid out of proceeds before judgment creditors
of individual partners. L^hler v. Semple, 5 C. E. Gr. 288, N. J.
(1869).
7. Title of land in partners, as tenants in common, results to firm,
which pays the price. Account to date, and maybe made up anew,
if book inadequate. A & B, partners. Land bought for firm place of
business, and paid for in part, and mortgaged for balance by firm.
Title taken by A & B as tenants in common. A brought adlion for
distribution and account. From B's bookkeeping, balance for A $100,
but not corre<5l, and, by agreement, experts opened a new set of books.
They found balance of f8,6oo.35, including a payment of naortgage
since aAion brought, and charging B premium of |i,796, which he
had not paid for becoming partner. — Decree. Land belonged to firm.
Expert books a necessity. Mortgage properly included in account,
and if premium antecedent to partnership, no demurrer to complaint.
Roberts V. Eldred, 15 P. Rep's 16, Cal. (1S87).
381
h
5ii2. Firm Land. Pt. 2, Ch. 7.
8 Parttitts co-oivncrs of land not Jinn assets. B & C were partners.
U had title to house subjetfl to mortgage; house never used for Lrm;
question: Whether bought with firm money. B conveyed, without
cousideration, to his mother, and died. C assigned, for firm creditors,
his interest in the house. Assignee sold the interest of D. Surplus
of sale mider mortgage was claimed by mother and by D. — If house
purchased with firm money, C owned a moiety, which would go to
his separate creditors, because use of firm funds for purchase, not
made for firm purposes, was a withdrawal. B's deed a prima facie
fraud upon creditors. C was estopped by his approval, but his cred-
itors might disregard the conveyance. If B & C had no separate
creditors, the surplus goes to firm creditors, and under assignee's
deed to D. Cox v. McBurney, 2 Sandf. 561, N. Y. (1849).
9. Matlack v. James, I no, n. 8.
10. fiill In' firm for lands held by individual member, lis pendens, and
affefls subsequent purchaser with notice. A et at. brought bill for
lands as firm property, though title was held by B. C recovered
judgment against B, and sold the lands at sheriff's sale to D, who
brought ejectment. A enjoined him from proceeding. — Maintained.
Bill lis pendens, and construdlive notice to purchaser. Ettenborough
v. Bishop, II C. E. Gr. 262, N. J. (1875).
11. Matlack v. James, ^ no, n. 8.
An heir could assert no title, because he is a volun-
teer.
Juds;vient against surviving and executor of deceased partner
charges firm land in hands of heirs. B executed bond to A in name
of B & C. C died, appointing B his executor, and A obtained judg-
ment against B personally, and de bonis testatoris, and upon return
of milla bona, brought bill to satisfy debt out of firm land. — Decree.
Logan V. Greenshaw, 25 P'ed. Rep'r 299 (1885), and note.
12. Landlord's claim for rent of firm pretnises has priority over lien
of separate partner's mortgage of his interest. Firm of B & C were
lessees of a mill. B mortgaged his interest in mill and machinery to
A, who filed a bill to foreclose, and claimed priority over rent, which
had accrued since date of mortgage. — Disallowed. Rent a firm debt,
which was paramount to A's individual debt. Mortgage of a part-
ner's interest, unlike an assignment, does not work a dissolution.
Mechanics' Bank v. Godwin, i Hal. Ch. 334, N. J. (1846).
13. Land bought with firm funds, and used exclusively for firm pur-
poses, not liable to dower by widoiv of partner indebted to firm. B
and his co-partner, who had agreed that at dissolution firm property
should be sold for firm debts, bought land and eredled buildings
upon it for their brass and iron foundry Creditors recovered judg- -j
ments against them, and took the premises in execution. B, who :»)
had 1-5 of the profits, died, indebted to the firm. A, B's widow, t
brought bill for dower.— Dismissed. B's beneficial interest subjedl \t
to firm debts, and his possession a technical seizin which gave wife
no right to dower. Agreement converted land into personal estate.
Greene v. Greene, i Ohio 535 {1823).
14. Debts a lien on partnership land, and paramount to dower. B & C,
m partnership as builders, bought land with firm funds. B died in-
testate, and at his death the firm required this land for payment of
Us debts. A, B's widow, claimed dower. Statutory dower limited
to husband's estate of inheritance.— Disallowed. Firm debts con-
382
Pt. 2, Ch. 7. Firm Land. §112.
stitute a lien, which dates from the acquisition of title, and enures
to creditors as well as co-partners. Sumner v. Hampton, 8 Ohio
328-365(1838).
Dower in partnership lands subjeSl to equitable claims betzveen
partners. B & C owned firm lands. B died, leaving his widow, A,
and heirs. A claimed dower. — Entitled to assignment. Land bought
with iirtn funds, or for firm use, retains, subjecft to equitable claims
between partners, its legal incidents. Campbell v. Campbell, 3 Stew.
415. N. J. (1879).
Code which endows widow of any legal or equitable estate possessed
by husband at any time during marriage, does not extend to land held
for firm. B & C formed partnership to speculate in lands. Trustee
took title, and each subscriber shared profits in proportion to his con-
tribution. Death of member did not dissolve partnership, but substi-
tuted representatives. A bought land of trustee, B's widow claimed
dower. — Judgment for A. Mallory v. Russell, 32 N. W. Rep. 102, Iowa
(1887).
Widow not entitled to doiver in land held by husband for his firm.
Firm B & C bought saw-mill property, and paid for it with firm
funds, but took title as individuals. B died, and the firm was insol-
vent. A, widow of B, claimed dower. — Disallowed. Firm creditors
entitled to land. Paige v. Paige, N. \V. Rep'r 360, Iowa (1887).
15. The dower of the widow, which the decedent could
not at the Common law cut out during his lifetime by
any lien, is cut out by the creditor's title. Yet the
widow's interest attached at marriage, and the heir's
title does not begin until the decedent's death. The
debts operate ipso faflo^ as a diminution of the estate,
and leave the dower as an interest only in the residue.
The heir during the decedent's lifetime had no inter-
est, and when he acquired, at his ancestor's death, the
title, it had already been diminished by the amount of
debts against the decedent. Noakes v. Smith, i Yeates
238, Pa. (1793).
After the firm uses are exhausted, how does the land
go? It goes back to the partners, and vests in them as
land, giving the widow of a deceased partner dower,
and not a third outright, and goes to the heirs and not
to the personal representatives. *
a. Foster's Appeal, \ 109, n. 9.
16. In New York, dower attaches, pending the firm, to
the partner's title, which is deemed separate, on the
theory of a tenancy in common ; so that the widow has
a legal right, and her dower is also an equity. The
legal and equitable right prevail over the equitable lien
of the firm creditors. '"■ /
a. Smith V. Jackson, \ 109, n. 3. ^
17. Buckley v. Buckley, § 109, n. 2.
383
I
$ii.V
Firm Land. Pt. 2, Ch. 7.
18 Partner liolJini^ Icj^al title to real estate for the firm, has the same
Pourr over it as over firm personalty. 15 conveyed an undivided half
of real estate to C, and look him in as partner. The firm being in.sol-
vent C eonveved the said moiety to D, in part payment ol a firm
debt' Upon dissolution, B & C conveyed the premises to A, the re-
ceiver, who l)rouKht bill against D fo." a reconveyance. Argument:
Real estate j)ersonal property, and subjedled to partner's equitable
lieii, and conveyance must be by both partners, under seal. Partner
holding legal title for one-half, holds moiety of it for himself, and
moiety for his co-partner.— Judgment for D. Partner holding legal
title for the firm has the same power over it as over finn personalty,
and his conveyance for firm purposes passes the title free of the
firm's e(iuity. If trustee to co-partner for a moiety of one-half, the
separate deeds of both partners to D would leave one-half of the
tracl unconveyed; but joint deed not necessary to convey firm title.
Van Brunt v. Applegate, 44 N. Y. 544 (1871).
19. .Issif^nment, thoiiffh for firm, must be executed by lessee. B & C
were partners. B was lessee of premises used by the firm. C assigned
the lease for a firm debt. A claimed possession under assignment.
No evidence that lease belonged to firm. — Only lessee can assign.
i^uer}': Is evidence of firm title competent in acSlion at law? Otis v.
Sill, « Barb. 102, N. Y. (1849).
20. Partner has the right to sell his share affirm real estate, subjeH. to
co-partner's equity. A, B & C, hotel proprietors in partnership. C
sold his interest in firm real estate to D. A and B sued to avoid the
conveyance, because it injured firm credit. — Judgment for defendants.
Partners, unlike creditors, have no control over co-partner's disposi-
tion, which is always subjedl to the partner's equity. Treadwell v.
Williams, 9 Bosw. 649, N. Y. (1862).
§H3.
Jn pcnnsnlnania tl)c legal title is uscli to protect not onlp
iuLioimeut-treiiitors toljo are not U)itl)in tl)e rerorbing acta, but
also general crebitors ot tl)e title-l)oliicr. yllje title cannot be
sl)iftcLi, to tijeir fircjubice, bn parol eDibence.
As the deed is evidence of the partners' intention,
they should put the title either in the firm, or in the
partners as tenants in common. If no intention is
expressed, they will take as tenants in common. The
facl that partnership money is used to make the pur-
chase, will not change the title, for they may prefer
to own as individuals. Nor will using the land for
384
If t
Pt. 2, Ch. 7. Firm Land. §113.
firm purposes overcome the form of the conveyance.
The purchase, either with firm funds or for firm pur-
poses alone, does not contradi6l the deed, which con-
veys the title to both. The means to procure the
property, or the mode of its enjoyment, is not the test
'of ownership. If both are combined, they do not
negative the intention declared by the deed, that the
property belongs to the grantees, as the parties to the
instrument. The price and the use, together do not
show that the purchasers took in the capacity of part-
ners, or that the title vested in them as partners for
the business undertaken by them. The natural in-
ference, that they took like ordinary grantees, which
is the legal effe6l of the grant arising from its terms,
can not be overcome or explained by parol."
May the partnership, by its derelicftion create in
the separate creditor a right by estoppel, which the
debtor did not possess? If the firm induces a credit
by holding out a partner as the owner of property,
which belonged to the firm, the partnership cannot
assert its title against the creditor of the partner.
The title which the partnership suffered to stand in
the partner's name, cannot be shifted by parol evi-
dence, after the rights of his creditors have attached.
The firm cannot assert an equity without doing equity
to the separate creditors whom it misled.^
The title might be put in the names of all the part-
ners, as tenants in common, or in the name of one,
or of any member less than all. It is the creditors
of the legal holder of the land who are protedled
against a change of title. No other separate credit-
ors could obje6l to the equity of the firm, or of its
385
5i , , Firm Land. Pt. 2, Ch. 7.
creditors. The title of the firm would prevail over
any partner who did not hold the legal title.''
The foundation for this argument is, that the cred-
itor contrails upon the faith of his debtor's record-
title, which is pledged for the debt. The law creates
uo such pledge.^ But the creditor knew, it is said,
that, upon insolvency, the law sets apart the property
vested in his debtor for his individual creditor, and
excludes the firm creditor from recourse to it. The
pinch, ever}^ creditor knows, is not during the solv-
ency of the firm, when there are assets to pay all
the debts, and when there is no thought of resorting
to the separate estate. The competition arises only
when the assets are insufficient, and then, in time of
need, the separate creditor knows that he can look
with assurance to his debtor's estate for satisfacftion.
The right of severance, which the 'rule of conveni-
ence' establishes upon insolvency, creates a distin6l
preference in favor of the separate creditor, and gives
him a lien upon the estate. He is invested with a
right which enables him to enjoin the partnership
from intruding upon his allotted field.
The argument begs the question in dispute. It
assumes that the title belongs to the individual part-
ner. If he merely holds the title for the firm, his
creditors can abstra6l it from the firm or its cred--
itors with as little show of right as he could appro-
priate it for himself. Upon insolvency the rights of
the joint and separate creditors are fixed. The com-
mission operates as a general execution, and a joint
is paramount to a separate levy, and intercepts the
firm title, at any time prior to a sale."
386
Pt. 2, Ch. 7. Firm Land. §113.
The argument did not originate in partnership law,
but was transplanted by analogy from the do6lrine of
the lien of a decedent's debts. The peculiar do6lrine
of Pennsylvania, which makes land an asset for the
payment of debts, accounts for the anomaly in partner-
ship land. In Pennsylvania judgment-creditors w^ere
assimilated to purchasers and mortgagees, who con-
tradled on the faith of the record title/ The judgment-
creditors were not protected by the recording a(5ls, which
apply only to deeds and mortgages, but they were pro-
te(5led against any shifting of title, without notice, by
parol evidence.^ The inference from giving the judg-
ment a lien was inevitable that the debtor pledged his
title when the debt was contraAed, not when the judg-
ment was entered. His creditor, therefore, acquired
a lien, which existed, apart from the judgment, and
took effe6l without reference to it.
I. Land is not floating capital, and, unless involved in
the business, by being the substance of its transa(5lions,
does not become firm property. ^67,
The deed settles the question of title to the land. If
the partners are the grantees, they will hold the title as
tenants in common. The title does not result to the
firm, when it pays the price and uses the land for its
business.''^ The firm could appropriate its money to the
partners as individuals, and the investment would be a
withdrawal by the partners of property from the firm.^
There is nothing in the price aud use to rebut the title
declared in the deed.*^ Parol evidence is incompetent to
convert the title, and vest it in the firm.
Parol evidence, though incompetent to change the
legal title, is admitted, to show whether the firm or a
co-partner is the beneficial owner.
a. Title in partner makes land separate estate. A & B owned land,
purchased with partnership assets, conveyed to A as an individual.
It was used in carryincr on the partnership business, and while it was
so employed, A transferred to B one-fifth part of it, which represented
his interest in the firm. Upon bankruptcy of firm, in controversy
between creditors of firm and individual members. — Held, resulting
387
§113-
Firm Land. Pt. 2, Ch. 7.
trust if any ceased to exist on conveyance to B ; land became pri-
vate 'nropcrt'v according to record. A & B held as tenants in com-
mon hence 'separate creditors entitled to preference. In re C. Zug
& Co., 34 Legal Int. 402 (ib??)-
b Use of land does not make the proceeds firm assets, especially if di-
videdamor.^ partners. B, partner in railroad construction firm, con-
vfved undivided parts of a slate quarry to his partners. They worked
the (luarrv, and subsequently sold it, making the price payable to
each in equal parts. B received payment, and A claimed two parts,
havini,' bou^'ht out a co-partner's quota. Defence of B's administra-
tors • buarry partnership property.— Recovered. No evidence that
quarrv bought with firm funds, and if used for firm, sale and divi-
sion of price a withdrawal. Shafer's Appeal, 10 Out. 49, Pa. (1884).
c. Hale V. Henrie, <! in, n. 11.
If the title is taken in the individual name of a part-
ner, it will not result to the firm for the benefit of a co-
partner. The possession is explained by the use, that
is, to carry on the business. The title need not, for that
purpose, be vested in the firm, but might remain in the
buying partner.*^
d. Lefevre's Appeal, ? iii, n. 11.
The title would not be shifted by parol from an indi-
vidual to a firm, which he forms to transadl business on
the land. The co-partner's going into possession with
him did not exclude him, and answer for a feudal in-
vestiture, but was consistent with his ownership, as the
possession might be limited to doing business on the
land. There is no part-performance to take the transfer
out of the statute of frauds, because the possession is
joint and the owner is not excluded.**
e. McCormick's Appeal, \ 10, n. 8; Foster's Appeal, g 109, n. 9.
A decree of court, which sold, as firm property, the
title taken by the partners as tenants in common, would
not convey the land. The decree could not invest the
firm with the individual partner's title, or estop any
one not a party to the bill from disregarding the sale,
and proceeding against the record title. ^
/. Record title in partner fixes right of separate creditors. D & B, who
held land, used for partnership purposes, as tenants in common, re-
ceived C into the firm, and conveyed to him one-third interest in the
land. B died, decree for an account, a receiver appointed, and, on
petition of B's administrator, court sold land to pay firm debts. A,
had entered judgment against C, which bound his title as an individual,
though he received it on coming into the firm as partner.— Sale could
not pass title to real estate sold as firm property, but which did not
really belong to the partnership. The parties to proceedings in
equity were estopped from denying that the land belonged to the
388
MX
Pt. 2, Ch. 7. Firm Land. §113.
firm, and their interests passed by the sale ; but as to all not parties
to bill, it remained, so far as sale was concerned, an open question
whether or not the land was partnership assets. But a verdi6t and
the paper title had determined this in the negative, and title to C's
share did not pass, Foster v. Barnes, 31 Sm. 377, Pa. (1876).
2. Contrail to buy land as tenants in couivion vests title in individuals,
thoughfirui furnished the money, and firm i}>iprovcd premises for its
business. B & C, partners, contracted for land, and ere<5ted a building
upon it, for the clothing business, which the firm carried on. The
money for the purchase and improvement was furnished by the firm.
The contraA w-as upon payment, to convey to B & C, their heirs and
assigns, the lot in fee. No deed was made. A obtained judgment
against B. — A's lien bound by B's moiety. Erb's Estate, i Pearson
98, Pa. (1856).
3. If the title is vested in the partners as tenants in com-
mon, the separate creditors contrail, it is held, on the
faith of the record-title, which cannot be changed with-
out their knowledge. A partner could not, by a judg-
ment against his co-partner, devest any part of the
moiety on the ground that the partnership account
showed a balance in favor of the plaintiff partner.*^
g. Judgment-creditor of partner holding title proteBed against any
shifting of title to firm by parol. A & B, partners, bought lots adjoin-
ing their place of business with firm funds, but took title as tenants
in common. A recovered judgment against B on a settlement of
partnership accounts, and claimed payment out of fund raised by
sheriff's sale under a subsequent judgment recovered against the
firm. — The judgment-creditors of the title-holder were not protedled
by the recording acfls, which apply to deeds and mortgages, but they
were protected against a shifting of the title without notice, by parol
evidence. Ebbert's Appeal, 20 Sm. 79, Pa. (1871).
A moiety descends, upon the partner's death, to his
representative, and the surviving partner has no claim
to administer the proceeds, even if the only creditors
are firm creditors.*^
h. Land descends to representative, and surviving partner no right to
administer proceeds, even if there are only firvi crcditojs. B & C,
partners in lumbering, bought land, with firm mone}^ for partnership
use, but took title as tenants in common. C died intestate, and his
administrator, D, obtained O. C. order of sale for payment of debts.
The only debts were partnership debts. A, the assignee in bank-
ruptcy of B, claimed proceeds. — Proceeds awarded D. O. C. sold
estate of C, not of the partnership. A has no standing. Jones' Appeal,
20 Smith 169, Pa. (1871).
Demmy v. Colt, 3 Sandf. 2S4, N. Y. (1850).
4. The fa(5ls of Erwin's Appeal' do not raise a resulting
trust to the firm against creditors of the holder of the
legal title. The contest was between the creditors of
the firm and the creditors of the partner who did not
389
§ij. Firm Land. Pt. 2, Ch. 7.
hold the leo-al estate. Of course, between them, the firm
title prevailed. It was a domestic affair between the
partners themselves, who were entitled to the land, and,
as they had the right to it, their creditors were also en-
titled to come upon it as a firm asset. It was disputed
to be for firm purposes, and hence no resulting trust to
the firm, but a resulting trust as to a moiety to the other
partner, whose creditors, therefore, would be entitled
to half the proceeds of a sale. The law of Pennsylvania,
therefore, is that the legal title governs, not only as to
mortgagees and purchasers, but also as to creditors,
against any resulting trust to the firm, and Erwin's
Appeal forms no exception to the rule. The principle
for this policy is that the partners can invest as they
please. Taking title in the name of a partner, or in part-
ners, as tenants in common, indicates the firm's eledlion
to hold not as a firm. If the partner makes the invest-
ment in his own name, although the a6l is a fraud, never-
theless as the co-partners made him their partner and
agent, his act within the powers of the combined mem-
bers of the firm will commit them against bona fide
dealers with him.
t. \ III, n, 9.
If sufficient to change the title at all, the evidence
must shift it to the firm. The transfer to the partners
as tenants in common, would be but a stage in its pro-
gress, for the same evidence which took the title to the
partners, as individuals, would carry it on, and vest it
in them as a finn. If the use was a joint user, but not for
a partnership-purpose, then the title would result to the
co-partner, as to a moiety. The same amount of evi-
dence is required to alter the title in either case; the
price or the use would show a common, or a firm equity,
which will control the legal title.
5. ^ "The analojijy * is all in favor of requiring express or construdlive
I' notice lo a purchaser or mortgagee of the land to affeA him with
II such a trust, and against it in the case of a general or judgment-
al creditor. Such a one trusts the general credit of his debtor, and
II not any specific property, and pra^ically the man who sells goods
or lends money to another rarely searches the recorder's ofl&ce to
'see whether he has declared a trust of the property he holds."
Sharswood, J., Calkett v. Thomas, i Phila. 463 (1853).
6. Though subsequent, a joint execution, if levied prior to a sale on
^^■parale executions, cuts them out. B obtained judgment, August,
'^\^ aRamst I). C also obtained judgment against E, September i,
each before a Justice of the Peace. F, constable, seized firm stock of D
390
Pt. 2, Ch. 7- Firm Land. §113.
& E, for sale September 7. D & E gave A, September 4, a judgment-
note, which he entered up September 6. A issued execution Septem-
ber 7, before F, who sold, under separate writs, to A. G, sherift, sold
stock, September 22, to H, and delivered possession. A sued G for
trespass. — Judgment for G. Interests of D and of E intercepted by
joint levy before sale. Seinble. After sale of separate interests, no
joint stock left. Richards v. Allen, 44 Leg. Int. 432, Pa. (1887).
7. The A61 of 1798, which limited the lien of a judg-
ment upon revival to five years, was read into the A(5l
of 1897, to prevent the lien of a decedent's debts from
again becoming indefinite in duration upon prosecution
by the creditor of his claim, according to the provisions
of the A61. The ground' for extending the statutory
language, which was confined to bona jide purchasers,
was that the title, if it descended to the heir, would, in
the language of the preamble, be 'insecure' for the
creditors who dealt with him, inasmuch as it would be
subjedl to recall by the creditors of the ancestor. ^
j. The re-enadlment of the Adl 19 April, 1794, §11, 3 Smith's Laws
144, states the reason for the provision in the preamble to be that
" inconvenience may arise from the debts of deceased persons remain-
"ing alien on their lands and tenements an indefinite time after their
"decease, whereby bona Jide purchasers may be injured and titles
"become insecure." A61 4 April, 1797, 3 Smith's laws 297-8.
The preamble referred to two classes, who would be affetfhed by un-
known liens. They were, first, bofia jide purchasers, who could not
know what they were buying until the liens were ascertained ; and,
second, the heirs or volunteers who succeeded to the decedent's title.
The heirs deal as owners; they have the possession, and hold them-
selves out to their creditors, who would be misled by a title which is
insecure, because subjedl to recall at the suit of the ancestor's cred-
itors.
The lien, assimilated to the judgment, in turn moulded
the charadler of the judgment by the principle of the
lien. The lien arose in the days when Pennsylvania
was a Province, and when the main resource of the
colonists was land. They dealt on the credit of the
land.
The shifting of title by parol, after the title-holder
had incurred debts, was the mischief to be remedied by
the creation of a lien. He was deemed to own only
what remained after his debts were dedudled, like the
ancestor who transmitted only this balance to his heir.
If a partner held the legal title, his creditors must be
satisfied before the firm could assert its title in equity.
The beneficial title of the firm consisted only of the
residue after all the separate debts of the partner had
been dedudled.
391
(5j,^. Powers. Pt. 2, Ch. 8.
8. Jud^nent-creditors are prote(5led like purchasers and
incuiubrances, although not within the recording a(5ls.''
/■. The Acl of 18 March, 1775, mentions only " purchasers and mort-
gagees. " Preamble and first sedlion, i Smith Laws 422-3.
-o-
CHAPTER VIII.
THE IMPLIED POWER OF A PARTNER.
§114.
3 partner [)as tl]£ autljoritg to sdl tl)e firm stock in tl)£ course
of tratie.
The power is a necessary prerogative of a partner,
because the purpose of partnership is buying and sell-
ing. The sale of all the firm stock might be sustained
as a valid exercise of a partner's authority. If the
stock were out of style, the custom of trade might
justify closing out at a single sale the antiquated
merchandise, which could not be retailed to advantage.
The stock might be replaced by articles or materials
of superior fitness for the business. The stock might
be perishable, or a forced sale imminent. In such an
emergency it is better to entrust an unrestricted power
of sale to one in interest than to allow the goods to
perish for want of such power, or to let it be exerted
by a stranger. The question, however, depends upon
the condition of the business, and upon the usage of
merchants in reference to such a state of business.
The authority is by no means absolute, and must be
justified by exceptional circumstances, as it is the
Pt. 2, Ch. 8. Powers. §114,
exertion of an exceptional power/ To make such an
unusual transa6lion the standard, and to give a part-
ner general authority to sell the whole stock, would
break down the safeguards established by the habits
and customs of business men, who are the most com-
petent judges and experts in reference to the due
exercise of the power.^ The attempt to define the
power by statute, establishes a hard and fast rule upon
the subje6l, and either prohibits the sale or allows it
under any and all circumstances.^
1. Partner must join if accessible, or sale void. A & B were partners
in the publication of a newspaper. A short time before the partner-
ship was to expire, A filed a bill in equity against B, alleging disa-
greement as to the settlement of firm affairs, and praying for a
receiver and an injuncftion against B. B filed an answer, averring
willingness to buy A's share, and objedting to the appointment of a
receiver. Soon after, B sold to C the newspaper and everything per-
taining to it, and delivered possession. Supplementary bill by A,
prayed for an injuncflion to restrain C from publishing the paper and
renewing his other prayers. Answer by B. — Sale decreed void ; per-
petual injundlion granted; and receiver appointed. B appealed.
Decree affirmed. Sloan v. Moore, i Wright 217, Pa. (i860).
2. Firm may recover on policy, though partner has, without author-
ity, assigned firm stock. A & B insured firm property with C&B
in A's presence, but without his consent, assigned the property to D,
with intent to dissolve the firm and form a company. Arrangement
not consummated. A & B sued C for loss by fire. — Recovered. As-
signment void as to A. Kimball v. Hamilton Fire Ins, Co., 8 Bosw.
495, N. Y. (1861).
Partner may sell entire stock in consideration of an agreement to
pay a firm debt. B & C, partners for three years, bought goods of D
on credit, with A & E as sureties. D took, in addition, a chattel mort-
gage on the goods for the price. After three months, though firm
solvent, B assigned, without C's knowledge, all the firm stock to A,
whc undertook to pay D. When C heard of the sale, he objedled,
and put D in possession. A brought replevin — Recovered. A part-
ner has authority to assign any, or all, the stock for the payment of
debts. Dissent. — Partner cannot break up the business by a sale of
all the stock. Graser v. Stellwagen, 25 N. Y. 315 (1862).
Contra. Partner has power to sell whole firm stock for payment of a
debt, without consulting co-partner. B & C, partners, at Evergreen,
wereindebt. B, while at Mobile, without C's knowledge, soldoutfirm
stock to A & Co., who were creditors of the firm, in payment of the
debt. Conflict of evidence as of C's ratifying sale. D, sheriff, at in-
stance of^other creditors, attached stock. A & Co. sued D and his
sureties for damages. — Recovered value of stock at seizure, and inter-
est to trial. Ellis v. Allen, 2 S. Rep'r 676, Ala. (1887).
393
|jj^ Powers. Pt. 2, Ch. 8.
1 Partner's pozvrr of sale extends to entire stock of firm. A & B,
partners for dealing in cattle. B sold the whole brand to C. A sued
H and C for conspiracy to defraud him of his stock. If Court found
that C believed B had authority to sell— Judgment for C. Civil Code,
l 24 "10, subdivision 3, enables partner to sell whole stock of merchan-
dise"! 'Crites v. Wilkinson, 65 Cal. 559 (1884).
§115.
(Tlic limit of tl)e piircl)asing poracr of a partner is ktermtmti
bii tl)c usual course of business among firms of tl)c gicen rlass.
Buying and selling are correlative elements of trade.
A partner's right to buy, like the right to sell, is co-
extensive with the usage established in the particular
trade. This is the foundation of the partner's power
to buy.' Third persons, dealing with one partner as
the representative of the firm, are charged with notice
of the nature and extent of the firm's business, and
the partner cannot bind the firm upon a contracft for-
eign to its purpose, or largely in excess of its prima
facie resources. There is a point where the extent
of the firm business becomes a question of its nature ;
it becomes simply a question of degree. A partner in
a small retail house cannot bind his firm upon con-
trails for a wholesale business. Ordinarily, the firm
stock is furnished by the contributions of the part-
ners, and must be replaced as it is sold. If the whole
firm stock has been sold out, any partner may replace
it, in order to carry on the business, for in the excep-
tional instances, as well as in the ordinary course of
trade, the right to buy always corresponds with the
right to sell.
394
Pt. 2, Ch. 8. Powers. §115.
Suppose parties sign articles of co-partnersliip, and
agree that contributions shall be made in kind, and
afterwards a partner purchases, on the firm credit,
the goods which he agreed to contribute. Ordinarily,
the firm is not liable for the price of a partner's con-
tribution, but this principle applies only where the
contribution was bought in the name of the single
partner, or previous to the existence of the firm. In
the case stated, the firm would clearly be liable to the
innocent seller, for although the articles did not con-
template the purchase in question, yet the firm was
established by the signing of the articles, and, at that
time, each partner acquired all the prerogatives, and
assumed all the responsibilities, incident to the rela-
tion. The purchase, being in the line of the firm
business, bound the firm, for the partners are liable
for the fraudulent a6ls of their co-partner, to all per-
sons who innocently deal with him on their credit."
A partner's implied power to buy enables him to
bind his co-partner for the price of goods bought, in
spite of a restriction against any purchase which is
not made for cash. The seller's knowledge of the
restri(5lion will not prote(5l the co-partner. Nothing
but a return of the goods will relieve him from liability
for the price. The receipt of the goods by the part-
ner, and his use of them in the firm business, charges
the partners for the benefit which they derived from
the increase of the firm stock. It is not requisite that
the co-partner's separate estate should derive any
benefit from the purchase. He is liable for the price,
because he did not disavow the sale and return the
goods, as he was entitled to do.'*
395
{ii6. Powers. Pt. 2, Ch. 8,
1. The poiver of a partner to purchase in the name of the firm, is the
correlative of his poivcr to sell the firm stock. B & C were partners
ill harness-making. V, bought of A a great number of bits to be
made up into bridles, which he carried away himself; but, instead of
bringing to the shop, he pawned them. A sued B & C in assumpsit.
—Recovered. Lord Ellenborough: "Unless the seller is guilty
"of collusion, a sale to one partner is a sale to the partnership, with
"whatever view the goods may be bought, and to whatever purposes
"thev may be applied. I will take it that [B] here meant to cheat
"his co-partner; still the seller is not on that account to suffer. He
"is innocent; and he had a right to suppose that the individual adled
"for the partnership.' Bond v. Gibson, i Camp. 185 (1808).
2. .\spinwall v. Williams, \ 17, n. i.
3. Partner restriRed to buying for cash, charges co-partner for pur-
chase on credit, if merchandise went into firm stock. B & C's busi-
ness was buying and selling sewing machines. C, active partner, and
B, capitalist. C restridled by agreement to buying for cash. A, with
knowledge of restri(ftion, sold machines on credit to firm, and upon
its failure sued B for balance of account. Court charged that unless
B was benefitted by the purchases, he was not liable. — Reversed.
B charged by addition to firm stock, although his separate estate
was not increased. Johnston v. Bemheim, 86 N. Car. 339 (1882 ).
§116.
^ partner's implied autljoritti is limited to simple contracts.
The right of a partner to contract for his co-partners
arose from trade, which enabled him to sell his co-
partner's share. As negotiation is incident to a sale,
a contrail is included in the transadion, as a part of
it. The right is defined by trade, and must be exerted
in the usual form, that is, by simple contradl, which
includes commercial paper.
If agency is the principle which gives a partner
the power to adl for his firm, what is the limit of the
partner's agency? The transaction, it is said, must
be within the scope of the business undertaken by
the firm, and the authority to do anything incident
396
Pt. 2, Ch. 8. Powers. §ii6.
to the business is implied, as a part of the undertak-
ing. The statement, though it is corre(5l as a sum-
mary of the extent of his authority, does not bring
out into prominence the barrier which confines a part-
ner to the firm business. The counter-interest which
necessitates the limitation upon the partner's power,
is the liability of his co-partners, in their separate
estates, for the firm liabilities. The moment a part-
ner overleaps the boundary which circumscribes the
firm business, he calls forth into the arena his co-
partner, who is impelled, by his separate interest, to
contest the claim against the firm, and who is invested
with a full standing in equity by virtue of his inde-
pendent right.
The restri(5lion imposed by the partnership, which
limits a partner's authority to transa(5lions within the
province of the firm, is legal. The co-partner is not
liable, at law, for any a(5l done beyond the range of part-
nership business, and his defence would be, that the
adl was ultra vires. The independent right of a co-
partner to prote6l his individual estate, and confine
the firm creditor in the first instance to the firm fund,
is equitable. The law does not discriminate between
the joint and separate estates, but charges both upon
a firm obligation. It is the equity of the co-partner
to repel the liability from his separate estate which
prevents an immediate recovery. The right of the
claimant to charge the firm assets is admitted, but
when he advances against the separate estate, his
right is met and counterbalanced by the co-partner's
equity. The result is a collision of rights.
Should the firm be recognized as a distin(5l person,
which exists apart from its members, the collision of
397
5ii6. Powers. Pt. 2, Ch. 8.
rights would come to an end. The partnership cred-
itor would look to his debtor, the firm, for satisfac-
tion, and the creditor's equity could be circumscribed
to the partnership funds. The partner would be
charged in his capacity of partner, but would not be
charged as an individual, and his separate estate
would not be liable for firm debts. The interference
between the right of the partner and the right of the
firm creditor is created by confounding the distindlion
which the Romans made between a partnership bo7io-
runi univcrsoriim and a business firm, or the distinc-
tion between different capacities. With all rights and
duties in common, the partners in a brotherhood are
merged in the fraternity, and cease to exist apart from
it. They can do nothing, except through the firm;
can acquire no independent rights, and can have no
separate estate. In such a partnership, the rights
and liabilities of the partners are co-extensive with
the firm. But a partnership for gain is an association
for a limited objecfl. The partner is identified with
the firm only to the extent of the undertaking. In
all other transac1:ions, he is a stranger to the firm.
The Common law ignores his situation, and imputes
to him a liability, which is independent of the firm,
on the assumption that he has contributed, not only
a portion, but the whole of his estate to the firm.
Furthermore, the collision would be obviated, if the
partners were allowed to set apart property for firm
assets. By devoting funds to a special purpose, the
debtor's right would be established, to withdraw prop-
erty from at least subsequent creditors, and prevent
them from taking it in execution for the satisfaAion
of their claims. The right to withdraw property is
398
Pt. 2, Ch. 8. Powers. §117.
exceptional, and the Civilians instance onl}^ the/^^w-
litwi of the Roman law to justify the segregation.^
I. Supra \ loi, n. 3.
§117,
^ partner rannot binb Ijis firm bri a specialty
The seal, which precludes an inquiry into the con-
sideration, takes away, by anticipation, the co-part-
ner's defence to the claim. Each partner is entitled
to make a defence. The judgment, if obtained against
the firm, binds each partner's separate estate, becomes
a lien upon his land, and entitles the plaintiff to take
his personal property in execution without first ex-
hausting the firm assets.
An exception has been established, which permits
a partner to bind the firm by a seal. An executed
contract, it is said, which discharges the firm, may
be made under seal, for example, a partner's assign-
ment of a mortgage in payment of a firm debt, or his
release of it under seal. The firm is not bound be-
cause of the seal in such cases, but the transa6lion is
valid without the seal.^
A partner is forbidden by law to use a seal in firm
trans anions. He can add nothing to his capacity by
means of a seal, as it is an abuse of his position and
a usurpation. The law is consistent, and recognizes
in the seal only its worthlessness. If the' transaction
is valid when taken by itself, it will stand apart from
the seal, which is disregarded as surplusage. A re-
399
5ii7. Powers. Pt. 2, Ch. 8.
lease is 110 exception' To admit the validity of a release
by a partner withont the receipt of payment, would
enable him to give away all the firm assets by a
feigned sale, followed by a release of the price. It is
the receipt of the money which extinguishes the debt,
and unless payment accompanies the release, it ope-
rates as a gift. As the seal does not enlarge the part-
ner's capacity, the release does not empower him to
give away the firm property.
The implied authority of a partner is limited to
contra(5ls which do not anticipate the eventual lia-
bility of his co-partners, and charge them with liabil-
ity as individuals in the first instance. No partner
can deprive his co-partner of his defence to an adlion,
and commit him in advance. Hence, a seal, which
admits a consideration, and excludes a defence to a
claim, cannot be attached by a partner. The seal can
stand, and not avoid the instrument only when it is
surplusage. In the release of a debt, the payment is
satisfaction ; the deed is simply evidence of the trans-
action. If no payment were made, and a release
nevertheless given, it would not bind the co-partner.
He is entitled to make a defence to any claim against
the firm, and cannot be precluded in advance of a
hearing or investigation of the claim. The deed would
not be simply evidence of the transadtion ; it would
be equivalent to charging the firm with a like amount.
The reason why a partner cannot execute a bond in
the firm name, is because it might operate as a gift,
by preventing the firm from disputing the considera-
tion.' But if a partner could make a release which
would discharge the firm debtor without payment, he
could make a gift.
400
Pt. 2, Ch. 8. Powers. §117.
An executed contraA imposes no additional obliga-
tion upon the firm, and is, on that account, sustained.
The deed is but evidence, and does not affe(5l the trans-
adlion. Is a power of attorney an executed contradl?
In form it is a deed. What is the engagement? Take
a power of attorney, which accompanies a certificate
, of stock. The power of attorney enables the trans-
feree of the certificate to have himself invested with
the rights of a stockholder by the corporation. If the
certificate invested him with the rights of a stock-
holder, why would a power of attorney be necessary ?
The necessity of a power of attorney shows that the
certificate does hot invest the holder with the rights
of a corporator. The power of attorney binds the
maker, until it is exercised, to let the grantee use the
grantor's rights. The covenant is to let another do,
or in other words, to do something by another, as an
agent or attorney. Such a covenant is executory.
Can an executor}'- covenant fail to charge the cove-
nantor? If it cannot, a partner has no implied power
to execute the instrument. The executory contradl
cannot be changed by a seal. If a seal is attached, it
must be disregarded, as surplusage. No implied au-
thority exists to add a seal, and if express authority is
given to contract, the seal is rejeAed. The only way
to retain the seal, is by the authority of the co-partners
to the use of it. Then the deed is executed by all
the partners, and no question of its being sustained
by commercial usage, and the partner's implied au-
thority under it, arises. The denial of e£Pe(5l to a
seal, when the right to contrail exists, shows that no
deed can stand. The transaction stands simply b}^
virtue of the express authority, and the deed goes for
401
5ij- Powers. Pt. 2, Ch. 8.
nothing. If implied authority should be relied on,
it would be to sustain the transa(5lion, and disregard
the deed. This is unsafe, unless the thing is done.
When the transaction is finished, and nothing remains
to be done, it is feasible to pronounce upon the a6l,
and declare it valid, independent of its legal embodi-
ment. No point is decided but the chara(5ler and
effecl of the transadlion itself. It is different when
the adl is prospective. Then the legal form in which
the undertaking is embodied, becomes the test of its
validit}'. The transa<ftion cannot be severed from its
legal integument, and judged apart by itself; the
construction is no longer of the transaAion, but of the
legal instrument which embodies it. The legal effeA
of the instrument is now the point of decision. If an
instrument of the class could not be executed by a
partner, without exceeding his authority, then the
transa(flion, which depends on the instrument, is in-
valid.
Partner has implied authority to assign mortgage as security for
firm debt. B, C & D, trading as B, C & Co., recovered judgment
against E, and levied on his wife's land. E and wife mortgaged the
land, as security for this judgment, to B, C & D. B assigned, in the
finn name, all its claims to F, as security for debt, and sealed the
assignment. It was not recorded. Subsequently C & D assigned
their interest in the mortgage to G. A claimed, as his assignee, 2-3
of proceeds raised by sale under a different mortgage. — F entitled to
fund. Record unnecessary, l)ecause no trust, and creditors not con-
cerned in controversy between different assignees. Mortgage not in
purparts to B, C & D, but accessory to firm debt. As assignment an
executed contract which discharged the firm, the seal was surplus-
age. Dubois' Appeal, 2 Wright, 231, Pa. (1861).
Partner may assign a finn judgment. After dissolution members'
repurchase of firm judgment presumably as partners. A, B & C,
partners, recovered judgment against D, in 1857. In 1859 they as-
signed for creditors. Judgment was sold by assignee at r.u6tion, and
bought m for partners by E, but never marked to anybody's use. C
died, and B, acting for himself and r.s attorney for A. assigned the
judgment to !•, in 1S66. In 1874 H assigned the judgment to A, who
sued I) upon it.— Judgment belonged to F. Firm, though dissolved
by insolvency and assignment, having owned judgment originally as
partners, presumably intended to repurchase it as such. Therefore,
402
Pt. 2, Ch. 8. Powers. §117.
B could, as partner, assign, and E had no title. Thursby v. I^idger-
wood, 69 N. Y. 198 (1877J.
Partner may assign mortgage of firm. B & C, partners. Mort-
gage assigned by B to A, who foreclosed. — Decree. ISIortgage secur-
ity for debt, and either partner could assign. Moses v. Halfield, 3
S. E. Rep'r 538 (1887).
2. Partner'' s release without consideration, void. A & B, who had
been partners, sued C for merchandise. B released the debt, and in-
dorsed on summons in firm-name, that all claims embodied in the
trust had been settled. The understanding between A & B was that
A should coUecft the debts, B being insolvent. No money paid for
release, and it did not appear what, if any, consideration was given.
— Judgment for plaintiff. Release void. Beatson v. Harris, 60 N. H.
83 (1884); s. c. 19 Cent. Iv. I. 275 and note.
Yet it is stated, in an endless array of cases, that a
release is an exception to the rule that a partner cannot
bind his co-partner by a seal.
a. Release by partner bars aftion by firm. A & B dissolved, making
A liquidating partner. He released firm claim against C, in order to
get benefit of his assignment for creditors. A6tion by A & B. A
offered to prove that each received moiety of claim, that B forbade
A to sign, and that acTiion was brought for B's use. — Non-suit. Tes-
timony irrelevant. . Release barred the action. Salmon v. Davis, 4
Binn. 375, Pa. (1812).
Release the exception to rule that partner can't bind firm by a seal.
Parke v. Smith, 4 W. & S. 290, Pa. (1842).
"A Pra6tical Treatise on the Law of Partnership," by John Coll-
YER, Barrister at law, \ 468, 5th Am., from 2d Eng., Ed. : 1861.
"The Power of One Partner to Bind the Firm by a Sealed Instru-
ment," by J. M. L. 9 Am. Law Reg'r 265, 1870.
"The Law of Partnership," by Clement Bates, ^383: 188S,
3. If an outgoing- partner releases a firm debtor, the co-
partners may disregard the release and recover from
the debtor, or may sue the outgoing partner for the
debt. The suit would operate as a satisfaction of the
release, and discharge the debtor.
If outgoing partner releases firm claim, co-partners may sue him
or the debtor. A & B bought out C. D & E, firm debtors, having
knowledge of the dissolution, took a receipt from C in exchange for
a receipt which they gave him for his separate debt. A & B sued C
for amount of D & E's debt to firm. — Recovered. A & B might affirm
C's acflion, and recover of him. Though adlion might release D & E,
they were not released by the exchange of receipts. Ross v. West,
2 Bosw. 390, N. Y. (1858).
4. Bond and warrant of attorney executed by partner in firm name,
do not bind co-partner ignorant of the obligation. B executed a bond
and warrant of attorney to D, a bank, for a loan, and obtained from
individual partners signatures of their firms as principals, though
the signers intended them to be only sureties, among them, A & C,
signed by C. B died. D entered up judgment against all of the
obligors, and subsequently sued B's administrator, who confessed
judgment. Not obtaining satisfaction, D levied on lands of A, and
he brought bill to enjoin a sale. — Decree. Bond bound only indi-
403
§ii8. Powers. Pt. 2, Ch. 8. J
viduals who signed the firm names. McKee v. Bank of Mt. Pleas-
ant, 7 Ohio 463 {1836).
§118.
lll|)ftl)cr a seal will be \xtattif as enrplusage, or as conrcrting '
tl)c ciccutorn contract into a spccialtij, ticprntis upon tl)e question
uihctl)cr tl)c case innobes a general rule or is conttneti to a par-
ticular instance.
The courts could say, they would consider the
transacT:ion by itself, and disregard its legal panoply.
They have said it in regard to executory contradls
made by express authority.' The reason is obvious.
The principal keeps the control of his a<5lions. The
agent may bind him by the a6l, but not by any other
of the same class. If the delegation can be limited
to a single transaction, the authority covers it by ex-
press reference. There is no danger of making the
authority extend to other adls not contemplated, as it
would if the authority was implied from the relation
of the parties. The severance of the contra(5l from
its integument, cannot be effec^led where implied au-
thority is in question. The authority extends to a
cla.ss of transactions, and cannot be confined to a sin-
gle transa(5lion. The a(5l cannot be individualized
and interpreted by itself. The law generalizes, and
lays down a principle of adion, which governs all
cases.- A man ads in a single instance. If the seal
might be disregarded, and the transadion construed
as if done without a deed, because the ad belonged
to a class which a partner could perform, no legal
404
Pt. 2, Ch. 8. Powers. ^ii8.
effe6l would be given to the instrument. The classi-
fication of documents by the law, according to the
dignity and solemnity of the adl, which it embodied,
would be undone. If a specialty could not operate
as a deed, it would take effecft as a contradl, and no
merger or conversion of the agreement into a cove-
nant with its different legal charadleristics would take
place. The risk of charging the co-partners would
be removed by taking away the seal, and leaving a
simple contradl, which a partner can make, by virtue
of his implied power.^ But as the law did not create
the distinction between contracts and specialties solely
for the sake of partners, neither can it vitiate the dis-
tindlion merely to facilitate their transaAions.
I. If the firm gives the partner authority to make the
contradl, his making it under seal will not vitiate the
contrail. It will be sustained according to the author-
ity given, and the excess will be disregarded. The
seal will be surplusage.^
a. If a^enl /las express authority to contraEl, a seal is disregarded as
surplusage. A sold B oil rights, or leases, in West Virginia, for a
price which was payable in instalments. B authorized C, his agent,
to procure an extension, which C obtained for 60 days, by giving B's
note for I750 as a bonus. C sealed the note. A sued B upon it in
assumpsit. — Recovered. Seal surplusage. Jones v. Horner, 10 Smith
214, Pa. (1S69).
2. The partner has no implied authority to bind his firm
by a contract under seal. The seal changes the char-
a6ler of the obligation, precludes any inquiry into the
consideration, and takes away the benefit of the statute
of limitations.'*
b. Pariner no itnplied authority to make executory contraH uttder
seal. A & B sued C & D in debt for failure to deliver petroleum ac-
cording to a contra(fl which D sealed without C's authority. — Charge,
that no such authority implied, affirmed. Schmertz v. Shreeve, 12
Smith 457, Pa. (1869).'
3. The implied authority was held sufficient in Illinois
to sustain the contrail made in pursuance of it. The
seal being disregarded, the authority existed to make
405
§!,(). Powers. Pt. 2, Ch. 8.
the contract, and the execution corresponded to the
power.''
<-. S^ii^ surplusas^e under partner's implied authority. Lender may
' disregard a specialty executed by a partner for a loan, and recover it
in assumpsit. B executed a joint and several note, under seal, in B
& C's, and also in B's name to D, for money lent the firm, with war-
rant of attorney attached, to confess judgment. A sued the firm in
assumpsit. C's defence : B no authority to bind firm by specialty ;
which converted the note into a deed, and being givenat the time
of loan merged the simple contradl. — Recovered. B's implied au-
thority to borrow for the firm enabled him to bind it for the loan.
The action not on the specialty. The seal disregarded as surplusage.
Walsh V. Lennon, 98 111. 27 (:88i).
§119.
2. partner cannot tnttx an appearance for tl)e firm, so as to
binb l)is co-partner.
The question depends upon the relation of attorney
and client. The authority would, it was held at one
time, be implied from the official recognition of an at-
torney's standing in court. He could bind, it was
said, any one whom he assumed to represent. The
vi6lim must look for redress to the attorney. This
was the English pradice, established by some early
cases in disregard of a decision, in 1785, by Lord
M.\NSFiELD. Recently the soundness of Lord Mans-
field's position has been recognized, and the attorney
has been stripped of any authority which has not
been conferred upon him by a client.^
The requirement of service upon all the partners
throws light upon the question of a partner's right
to appear for the firm. The service is the initial step
to bind the partner's separate estate. Without a ser-
vice upon him the judgment does not extend to a
406
Pt. 2, Ch. 8. Powers. §119.
partner or aifeA him. If a partner could appear for
his co-partner, why could he not accept service for
him? The fadl that no attempt is made by a part-
ner to accept service for his co-partner, is an admis-
sion that the authority is not implied. The creditor
gets all the satisfa6lion he can obtain by access to the
firm assets, and by exhausting the defendant, or sev-
ered partner^
I. Payment, though by court, under judgment in a£iion by attorney
for plaintiff, who never authorized attorney, is not a bar to a subse-
quent recovery. A sued B in assumpsit. He pleaded a former re-
covery, when B paid the money into court, and A's attorney of record
received the money out of court. A denied employing the attorney.
— A had judgment. Robson v. Eaton, i T. R. 62. Lord Mans-
field.
The credit of corre(5ling the blunder belongs to the
writer, who signs himself 'E. W.,' of a critique upon
the position taken by the courts with reference to the
" Retainer of Attorneys. " 37 Law Mag. 72, 1847.
No costs infliRed upon plaintiff before aflion stayed, which attor-
ney did not have plaintiff's authority to bring. A, plaintiff, applied
for stay of proceedings, because the adlion was brought without his
authority or knowledge. The attorney was insolvent. Defence:
Court would not relieve, unless attorney insolvent, and then only on
payment of costs. — A6lion stayed without pa3'ment of costs. Rob-
son V. Eaton conflidls with Salkeld, upon which practice is founded
and overrules it. Reynolds v. Howell, L,. R. 8 Q. B. 398.
In Ohio, before the change in England, the judges
refused to let an attorney steal clients, because he was
an officer of the court.'' The Supreme Court of the
United States has expressed a didluni to this effe(5l, but
the fadls did not call for a decision of the point. The
partner appeared for his co-partner, who was not subject
to the jurisdiction, and after the firm was dissolved. **
Vide comment by Mr. Wm. Green, in i Virginia Law
Journal 127 (1877). New York'^and Penns^/lvania '^ fol-
low the obsolete English practice, by which the a(5lion
will not even be stayed, unless the misrepresented client
pays the costs.
a. Judgment, though tmwarranted appearance bv attorney, void. A
was sued, with B & C as co-defendants, but was' not served. B & C
employed an attorney, who appeared and pleaded for A by mistake.
Judgment went against A, and he brought a bill for a new trial.—
Dismissed. Adequate remedy at law, as judgment would be set aside
as void on his application. 'Critchfield v. Porter, 3 Ohio 519 (1828).
407
§119.
Powers. Pt, 2, Ch.
I). I'artticr cannot authorize an attorney to appear for his co-partner,
at least, if the co-partner is not subjefl to the jurisdiclion of the court,
or if after dissolution, li, in Illinois, was in partnership with C. in
NfW York. A sued them in New York for a firm debt, though alter
ilu- dissolution. C employed an attorney, and A recovered judg-
ment. He brought suit in Illinois on the judgment.— Judgment for
plaintiff reversed. New Y'ork court had no jurisdiction over B. C
had no authoritv to employ an attorney, or enter an appearance for
B during the partnership, much less after its dissolution. Service
measures the lack of implied authority; for judgment binds only a
served partner and firm assets, but not non-served partner's separate
estate. Hall v. Lanning, i Otto 160 (1875).
<• fudgment confessed by unauthorized attorney binds defendant until
he disproves cause of aflion. B, an attorney for the drawer, agreed
to enter special bail for A, the acceptor, who had not employed him,
and subsequently confessed judgment against A. Defence: Judgment
void. — ^Judgment maintained as security, but A let into a defence.
Denton v. Noyes, 6 Johns. 295, N. Y. (1810).
d. Attorney may appear, at husband's request, for a married woman,
confess judgment without warrant and pass her title by the sheriff's
sale. B joined C, her husband, and executed a mortgage of her laud
to D. To a sci.fa., which he sued out, E appeared as attorney for B
and C, at C's request, and waived service. E subsequently confessed
judgment. B died. To a sci.fa. to revive, C appeared in person, and
confessed judgment individually, and as administrator of B. The
premises were sold on a lev. fa. to F. Ejedlment by A, heir of B and
C. against grantees of F. A's claim: Without sem'ice, B not bound
to appear. Her warrant necessary to confess judgment, and she
couldn't execute one. No title passed under void judgment. No
defendant, as C not administrator and B dead, when ^rz'.ya. issued
to revive. Defence: Husband can employ attorney for wife, original
judgment sufficient, and administrator joined on sci. fa. only for
regularity. C entitled, and presumed to be administrator. — Judg-
ment for defendants affirmed. Attorney, as an officer of court, may
api)ear for any competent person, and want of authority don't inval-
idate judgment. Wife entitled to service only for her separate estate,
but husband may appoint attorney for her title, which he represents.
B's death made her separate estate. C's interest established when
original judgment is entered. A not entitled, as heir is unable to
make any defence which she could not have made on sci.fa, Evans
V. Meylert, 7 Harris 402, Pa. (1862).
j-Ittorney can steal a client. In a joint suit A was returned 'nihil
hahct,' and B 'served,' An attorney appeared for both, and Judgment
was entered against them. A moved to set aside execution against
him. — Refused. Appearance sufficient to support judgment. M'Cul-
lough V. Guetner, i Binn. 214, Pa. (1807).
2. Gibson, C.J. : "For a partnership debt, the entire property in the spe-
" cific thing must be sold, even in a judgment against one of the part-
"ners; l)ecause through the medium of the execution, the law com-
II pels him to make the same application of the joint funds to the
||jomt debts, that it was, undoubtedly, competent for him to make
"voluntarily. The sheriflF levies and sells the entire property, be-
ll cause the partner defendant has no specific share that may be levied
II and solrl separately; and even were that otherwise, yet, unless the
II sale should work a dissolution of the partnership /);o tanto, the re-
"mainder would not be the property of the other partners individu-
408
Ft. 2, Ch. 8. Powers. ^120.
"ally, but of the firm, and liable to execution by any other joint
" creditor ; so that the sheriff might as well go on and levy the whole
" at once. Besides, as the other partners would be liable to contri-
"bution, their remaining interest in the effects sold, being carried
" into the partnership account, would entitle them to a credit exactly
" equal to what should be necessary to reimburse the partner defend-
"ant the loss of his individual share; so that the efiect of selling a
"part or the whole, would, as lietween the partners themselves, be
" exacflly the same, nothing being gained by the sale of an undi-
" vided interest but the embarrassment incident to a joint ownership
"by the purchaser and the firm." Taylor v. Henderson, 17 S. & R.
453, Pa. (1828.)
§120.
Qi partner cannot submit a tlrm claim to arbitration.
On principle, the reason for denying to a partner
the right to appear in an adlion, prevents him from
submitting a claim for his co-partner to arbitration.
The propriety of adjusting firm claims without liti-
gation is obvious, and if the separate liability of the
co-partner was not involved in the award, there would
be no doubt about the right. In fa6l, unless a co-
partner can defend his co-partner, he cannot sue for
him. Bringing suit involves the risk of a counter-
claim, which might turn the judgment against the
plaintiffs, and charge their separate estates. As a
partner can sue for a firm, unless the defendants ob-
je6l to the non-joinder of his co-partner, it would
seem natural that a partner might also defend or
submit for his co-partner. But the remedy is worked
out in a different way. The submission or appear-
ance binds the party, and also the firm assets, which
he represents, but does not bind the co-partner's sep-
arate estate.^
409
§I20.
Powers. Pt. 2, Ch. 8.
Though a suit against a firm would require service
upon all the partners, in order to make them parties
to the action, and bind them by the judgment, a part-
ner would seem to have the authority to enter an ap-
pearance for his co-partners, or in a State where arbi-
tration enters into the system of procedure, to submit
a controversy to arbitration. The proof, or liquida-
tion of the claim by legal process, may be an incident
of the business, and is within the province of a part-
ner. This is recognized to its full extent in States
where no execution can issue against the separate
estate of a non-consenting partner under a judgment
or award so obtained against the firm. As the reason
which restrains a partner from prejudging a claim does
not exist, he is empowered to settle the controversy
himself, and to confess judgment for the amount
against the firm.'
I. The leading case in Pennsylvania did not warrant
any decision beyond this,* as the fadls limited the deci-
sion to the firm assets. Even in the last case, although
the opinion ignores the distinction and charges the part-
ner by a judgment on a submission by a co-partner, the
decision, in spite of the sweeping language, is limited
to firm property.''
a. C.J. Gibson's dicflum as^ainst submission by partner. 7 W. & S. 143.
Partner's adi)iission binds him, and suhjeEls the firm stock to execu-
tion. A, for A &. Co., and B, for B & Co., sulmiitted by parol the
accounts between the firms to arbitrators, and made their award final,
upon which execution might issue. They awarded I847.82 to plaint-
ifts, who issued a capias, and arrested B, and he gave bail, but his co-
jiarlners could Jiotbe found. — B's submission bound him, and enabled
jilaiutiffs to take firm assets without a distriuf^as, or outlawry, as in
Kngland, against non-served yjartners. Decision general, and based
M\ ])artner's right to appear for co-partners. Taylor v. Coryell, 12 S.
&R. 243, Pa. (1824).
b. Partner who buys out co-partner may submit to arbitration. B sold
out to C, who assumed firm debts. He submitted A's claim to arbitra-
tion, and A sued B & C— Recovered. Authority to submit inferred
fron^i B's sale of his interest. Becker v. Boon, 61 N. Y. 317 (1874.)
Partner implied authority to submit by parol. A sued B & C on a
parol award made by arbitrators upon 'B's submission for the firm.
410
ft. 2, Ch. 8. Powers. §121.
C denied B's authority, if they were partners, to submit the contro-
versy to arbitration. The jury found a partnership. — ^Judgment for
plaintiff. Partner has inipUed authority to make submission for co-
partner. Gay V. Waltman, 8 N. 453, Pa. (1879).
Partner 710 implied authority to submit firm claim to arbitration.
A & B sued D alleging breach of coutracft to co-operate iu driving logs.
D's defence : B submitted controversy to arbitrators, and awarded D.
Recovered. B no implied authority to submit claim to arbitration.
Walker v. Bean, 34 Minn. 427 (1886).
Partner'^ submission of firm claim to arbitration does not bind co-
partners, who may recover in spite of partner' s bar as co-plaintiff. B,
C & D, partners. Suits brought before and after dissolution and con-
solidated, and B against C's protest submitted the controvery to arbi-
tration. — Award not binding upon C & D, who could recover on firm
title, although B had disabled himself Fanchon v. Bibb Furnace Co.,
2 S. Rep'r 268, Ala. (1887).
2. Judgment confessed by partner after dissolution, and a sale of firm
stock to co-partner, subjeFls it to execution. B & C dissolved partner-
ship, B selling out to C, who indemnified him against firm debts.
Two months afterwards B confessed judgment to A, and took C's
separate property and the firm stock in execution. C moved to strike
off judgment against him. — Rule alsolute. Judgment bound B, sub-
jedted assets, although transferred to C and no longer firm stock, to
execution, with no less effedl than if the judgment had been against
both A & B. Mair v. Beck, 4 E. Rep'r 855, Pa. (1889).
DefcEl in partner' s confessed judgment against firm cured by knoiul-
edge of subsequent lien-holder. B & C, partners. B confessed judg-
ment in partnership name for firm debt to A, and subsequently con-
fessed judgment in names of both partners to himself, as guardian for
D. A postponed, because Judgment Index did not show who were
his debtors. — Reversed, because D had knowledge of A's judgment.
Adlual equivalent to construdtive notice. Hamilton's Appeal, 7 Out.
368, Pa. (1883).
§121
(^Q.i\) partner rcpresmts tl)e firm in tl)e transaction of its
business anb ran binD l)is to-partner bn ^w ainnission.
At the Common law a partner was disqualified by-
interest from testifying in reference to the partner-
ship. If sued, he could not testify that another was
his partner, because his testimony would charge the
other with one-half the debt.' If the other was sued
the partner might testify to his own membership, but
411
§121. Powers. Pt. 2, Ch. 8.
this would be an admission, not testimony.^ If three
contradled to buy merchandise, and the first sued the
second for advances, the third would be an incompe-
tent witness. He might admit his own membership,
but his testimony that the second was also a mem-
ber, would change the liability of the witness from a
half into a third. The preliminary fa(5l of partner-
ship must be established before he is constituted a
partner, and is vested with the power to bind his co-
partner by an admission.^
When the disqualification of interest was removed
by statute, an exception was made to the abrogation
in reference to transa6lions which aJBfecfled a deceased
partner. In Pennsylvania the death of an individual
excluded testimony against his estate in actions by
or against executors, administrators, guardians or as-
signees.^ The deceased partner was regarded by the
Pennsylvania courts in interpreting the statute as an
assignor, and upon his death his share devolved by
operation of law upon his co-partner. The quota re-
ceived by assignment of law disqualified the surviving
partner, who, to the extent of the quota, represented
the deceased partner. New York, on the contrary,
repudiated, upon this point, the theory of separate
titles in the partners. The surviving partner takes
upon his co-partner's death the whole estate, not by
devolution or assignment from his co-partner, but by
virtue of the original joint title, which covers the en-
tire firm property.^
Might the surviving partner in Pennsylvania tes-
tify to a contract made by him either before or after
his co-partner died? An Ad of Assembly' permits a
"party," and an amendment' permits a "person," to
4T2
Pt. 2, Ch. 8. Powers. §121.
testify to anything occurring since the co-partner's
death in an allien by or against his representatives.
The courts refused to let the plaintiff, in an adlion
against the surviving partner, prove a contradl made
with the deceased partner, because the plaintiff would
make out his own case, and the deceased could not
reappear to contradi(5l it.^ If the transactions were
with the partner who survived, but were performed
before his co-partner died, the courts excluded the tes-
timony.^" But a subsequent a(5l admits the testimony
of a party to transacftions between him and the sur-
viving partner," It might be a quibble whether a con-
tract could be proved as made with a surviving part-
ner. But it is not probable that the adverse party
would be excluded, if the contra6l was made wath the
partner who survived, although made before the co-
partner died. The reason for the enadlment would
control its interpretation.
If the contrail was made with the partner who sur-
vived, but before his co-partner died, a third person,
for example, a dormant or special partner, would be
incompetent. The adl of 1878 speaks of "parties to
the record," and does not admit any other person to
testify generally to transadlions with the surviving
partner. A co-partner, who is not sued with the part-
ner defendant, is not, within the acl which allows a
partner to compel his adversary, or the adverse bene-
ficiary of the suit to testify,'" although the suit was on
a firm contra6l. Where the bar of interest is removed
between adverse parties on the record, one partner
cannot testify in a suit against the firm for the plain-
tiff. He is not adverse to his co-partner, who would
be charged by his testimony for half the debt."'
413
§121. Powers. Pt. 2, Ch. 8.
A recent statute has attempted to restate the pro-
visions of the prior a(5ls."
1. Meason v. Kaine, § lo, n. 6.
2. Drennen v. House, supra I 69, n. 5.
3. Supra I 10, n. 6.
4. After the relation is established, any admission made
by one partner, within the scope of the firm business,
binds his co-partner.
Joint note made by one, charges makers only if partnership which
gives him implied authority. A sued B, C & D, trading as B & Co.,
and offered in evidence a ncte of B & Co., in B's handwriting. — In-
competent until partnership proved, which would give B implied au-
thority. Tellers V. Muir, Pen. 749, N.J. (1811).
Evidence 0/ partnership makes partner's admission binding. A &
E employed B, C & D as their attorneys, and A sued them as partners,
for money collected. B and C neither denied nor admitted partner-
ship, but did deny all other averments of the bill. D admitted part-
nership and employment. A put in evidence an assignment by E to
his attorneys, B, C & D, of all his interest in the claim to be collected ;
and the complaint in the acflion to colle<£t, which was signed B, C &
D, attorneys. — Evidence competent to prove partnership and to make
B's admission bind the firm. Fogerty v. Jordan, 2 Rob. 319, N. Y.
(1S64).
Court decides if evidence 0/ joint interest sufficient to admit declara-
tions 0/ one against the other alleged partner. B and C owned a gold
mine. A testified that B asked him if he had seen C, who, he told
him, was at the hotel, and that B said, if you will sell lumber right
we will take a good deal. A went to the hotel and made a contract
with C for the lumber. The conversation with C admitted as evidence
of partnership against B. — Competent. Hilton v. McDowell, 87 N. C.
364(1882).
5. The di.sqnalification of interest was abrogated with
this proviso : " This A61 shall not apply to actions by
" or against executors, administrators or guardians, nor
"where the assignor of the thing or contracfl in a(5lion
"may be dead." Adl 15 April, 1869, P. L. 30.
6. Supra ? 100, n. 5.
7. ' ' Where the assignor of the thing or contradl in adlion
"may be dead, no interest or policy of law shall exclude
"any party to the record from testifying to the matters
"occurring since the death of the person whose estate
" through a legal representative is a partv to the record. ' '
Act 9 April, 1870, P. L. 40.
8. Amendment subsritutes "or person," for the first
"party to the record." A61 11 May, 1881, P. L. 20.
^- PJainliff suing surviving partner cannot testify as to transactions
between himself and deceased partner. A brought assumpsit against
414
Pt. 2, Ch. 8. Powers. i,i2i,
B, C & D, partners. On A's motion, the name of C was stricken
from the record. After the cause was at issue B died. The jury were
sworn as to D onlj^, as surviving partner. At the trial, A was per-
mitted to testify as to transadlions between himself and B. — Error.
But qucere whether his testimony as to transactions between himself
and D alone, would be competent. Hanna v. Wray, 27 Smith 27, Pa.
(1874)-
Surviving partner cannot testify as to contra^ of deceased partner
zvith defendant. A, surviving partner of A & C, brought assumpsit
against B. A testified as to the making of the contrail, and the de-
livery of the goods, but admitted that the contradt was not made in
his presence. — B incompetent to show what was the verbal contracfl
with C, but was, at least, competent to refute A's testimony. Gavit
v. Supplee, 2 W. N. C. 561, Pa. (1876).
Plaintiff suing surviving, incompetent to prove contraH made with
deceased partner. A, a surviving partner, brought assumpsit against
B, surviving partner in another firm, for putting case around organ
in a church. Defence: That the order had been given by C, who
had no connedtion with B's firm. A proved, by D, a contra<5l made
by deceased member of B's firm with deceased member of A's firm.
B was offered as a witness to prove "that the defendant's firm never
"ordered the case, which is the subjecfl of the suit, and that the same
" was not, in facft, delivered to them." — B incompetent. Stanbridgev<
Catanach, 2 Norris 368, Pa. (1877).
10. Plaintiff suing surviving partner incompetent to prove contra^ with
partner, who survived, if made during co-partner's lifetime. A sued
the firm of B & Co., which consisted of B, active partner, and C,
silent partner. Writ was served on both B and C. C died after the
commencement of the adlion, and his death was suggested upon the
record. At the trial, A's deposition was offered in evidence, especially
to prove transadlions between A & B. Obje(5lion : That under the
Adl of 1869, A was incompetent as a witness, for C was dead. Depo-
sition admitted. But afterwards, sur rule for new trial. — New trial
granted on the ground that to admit A's deposition was error. ' 'Hanna
" v. Wray, Gavit v. Supplee, and the more recent case of Stanbridge
"v. Catanach, establish that a deceased partner is an assignor to his
"surviving partner within the letter of the exceptions to the A&. of
" 1869. It is true that this case differs from all those cited, because,
"here, the evidence given was only of transactions between the sur-
"viving partner and the plaintiff; and there, the evidence was as to
" transactions between the deceased partner and the witnesses. It is
"also true, that in both Hanna v. Wray and Gavit v. Supplee, the
"Supeme Court intimates that the difference is material, but we do
" not think that it is for us to depart from the principles announced.
" In all the cases cited it is held that a deceased partner is an assignor,
"and Hanna v. Wray decides that devolution of a deceased partner's
' "liability to a surviving defendant, is an assignment within the
"meaning of the exception." Noble v. Mortimer, 4 W. N. C. 300, Pa.
(1877).
11. In a<5lions "brought by or against surviving partners,
" no interest or policy of law shall exclude any party to
" the record from testifying to matters having occurred
' ' between the surviving partner and the adverse party on
"the record." A61 25 May, 1878, P. L. 153.
415
§122. Powers. Pt. 2, Ch. 8.
12 In suit a (gainst partner plaintiff cannot call co-partner, because not
a parly ot'^ adverse beneficiary of suit. A el at. brought assumpsit
against H, the executor of C, for a debt alleged to have been con-
tracfled bv C, D & E, as partners. At the trial the deposition of I)
■was offered in evidence by the plaintiff, inter alia, to prove the part-
nership. — In the Supreme Court, Paxson, J., said: "The witness
" (I)) being incompetent on the ground of interest, he was not made
" competent by the Adl of 27 March, 1865, * * for the reason that
"he is neither an adverse party on the record, nor a person for whose
"immediate and adverse benefit such adlion was instituted, prose-
" cuted or defended. " Hogeboom's v. Gibbs, 7 Norris 235, Pa. (1879).
By the terms of the A(5l of 1865, above referred to, it is enadled:
"That any party, in any civil adliou, or proceeding, whether at law,
"or in equity, may compel any adverse party, or any person for
"whose immediate and advv°rse benefit such adlion, or proceeding is
"instituted, prosecuted or defended, to testify, as a witness in his
"behalf, in the same manner, and subjecfl to the same rules, as other
"witnesses: Provided, however, That no party shall be allowed to
" compel an answer to a bill of discovery, from an adverse party, and
"also, to compel him to testify." A<51 of 27 March, P. L. 38.
Partner an incompetent witness to prove firm liability, because of
right to t07itribtition. B gave A his separate note for an alleged firm
debt of B & C. A sued both, and called B to prove that note was
given for firm debt. Objection by C: Ad 1847 removes bar of inter-
est only between parties adverse on the record. — Sustained. B's tes-
timony-would charge C for contribution, and B is not adverse to C on
the record. Rich v. Hasson, 4 Sandf. 115, N. Y. {1850).
14. The disqualification of interest is not abrogated: "Nor where any
"party to a contra<5l in adlion is dead * or his right thereto or therein
" has passed * by adl of the law to a party on the record, who represents
"his niterest in the subjedl in controversy, shall any sur\'iving or
"remaining party to such * contra(5l, or any other person whose in-
"terest shall be adverse to the said right of such deceased * party be
" a competent witness to any matter occurring before the death of
"said party * unless the proceeding is by or against the surviving
" or remaining partners * of such deceased * party, and the matter
"occurred between such surviving or remaining partners * and the
"other party on the record, or between such surviving or remaining
"partners and the person having an interest adverse to them, in
"which case any person may testify to such matters." Adl 23 May,
1887, 'i 5, P. L. 158.
13
§122
^ partner's confcaseb jubgincnt toill not binb \)\q to -partner.
The judgment is restrided in its operation, so as
to bind only the firm assets and the partner who con-
fessed. The analogy was followed up of a jugment
416
Pt. 2, Ch. 8. Powers. §123.
where service was obtained upon one partner and not
upon the others. The firm stock is sold under the
judgment, and also the separate estate of the served
or confessing partner.^ The other partners may have
the judgment against them stricken off the record,
so that no execution can be issued against their sep-
arate estates.^ They are not necessary as defendants
in the judgment to enable the execution-creditor to
take the firm assets.^
The joint or separate chara(5ler of the judgment
would be determined by the claim. If a partner's
confession of judgment should intercept any inquiry,
the court would, it can hardly be doubted, open the
judgment upon the co-partner's application and let
him prove that the plaintiff had no claim against the
firm. Execution would be stayed in the meantime.^
The execution would conform to the judgment, which
is general, and, except by the special yz.y^, under the
Pennsylvania A61 of 1873, would make no distin6lion
between a separate and a joint claim. Unless the char-
a6ler of the judgment was ascertained, it would be
held to embody a debt against the partner as a repre-
sentative, and the execution would seize the firm title
vested in him and sell it.
The reason why New York and Louisiana permit
a partner to confess a judgment against the firm is,
that the judgment is confined by the laws of those
States to the firm assets, and does not bind the co-
partner's separate estate.^
A judgment confessed by a partner will not revive
a lien barred by the statute of limitations. The part-
ner, if a liquidating partner, can only continue an
existing liability; he cannot create a new obligation."
417
I
§122. Powers. Pt. 2, Ch. 8.
Evidence which tends to show that the judgment
was confessed to defraud firm creditors puts the judg-
ment-creditor upon proof of his bona fides. He must
prove the consideration.'
1. Confessed judgtnent by a partner authorizes sheriff to seize and sell
firm stock. D,"of the firm of C & U, amicably confessed judgment
ajjainst the firm, and in favor of E for |^50o, upon which execution
issued, was placed in the hands of B, the sheriff, and was levied on
the defemlauts' personal property. To relieve the property levied,
1> paid B the amount of the execution in notes of a bank, which
about that time failed, and the notes became worthless. A rule was
obtained by A, the assignee of E, to show cause why the judgment
should not be opened and vacated as to C ; and upon B to return his
fo.j'a. and bring the money into court. Judgment was set aside as
to C ; and B returned the fadls as to the worthless notes. The court
below instrucled the jury to find for B. — On writ of error, reversed.
B received the notes as cash, and must account for them as cash ;
but to whom? not to C, unless the money was made out of his sepa-
rate estate, which does not appear. "A partner has power to dis-
"po.se of the joint effecfts by his separate act; and that he may not
"bind the firm by .submission to arbitration, or confession of a judg-
"ment, is because it would bind the persons and separate estates of
"the members, and thus transcend the limits of partnership author-
"itv. * * .\ judgment may be recovered against a less number than
"all the members; if there be not a plea in abatement; and the
"effecls of the partnership may, consequently, be seized in exe-
"cution of it." The judgment may be confessed. The New York
praClice restrains the execution, in a case like this, "to the joint
"effecls, and the separate estate of the partner personally bound;
"and certainly the objects of the law may be lawfully attained by
"it." In this case, it appears that the money was paid by the part-
ner to release the partnership property. A is therefore entitled to
recover his whole demand, for he is entitled to all that was not made
from (!'s separate estate. Harper v. Fox, 7 W. &S. 142, Pa. (1S44).
2. Bitzer V. Shunk, supra §95, n. 2, c.
3. Confessed jitd,^tnent by a partner and e.vecuiion under it constitute a
lien prior to subsequent execution on judgment recovered against the
finn. C & I), partners, were indebted to B & Co., and C executed a
bond in the name of C & D for the amount of the firm debt, to B &
Co., with power of attorney to confess judgment. Judgment on this
bond was accordingly entered against C & D ; execution issued, and
the sheriff sold the personal property of C & D, partners. In a dis-
tribution of the proceeds, .\ &: Co., subsequent creditors, who had re-
covered judgment regularly against the firm, claimed the fund.
About the same time the judgment of B & Co. was vacated as to D,
on the ground that he had not authorized the confession. The au-
ditor appointed to distribute the proceeds of the sheriff 's sale, awarded
priority to B & Co.'s execution, and his report was confirmed by the
court below. A & Co. appealed.— Decree aflSrmed. "That one part-
"ner cannot confess a judgment against another partner, even for a
" partncship debt, is a conceded legal principle, but it by no means
" follows that an execution upon a judgment so given, levied upon
418
Pt. 2, Ch. 8. Powers. §122.
"the personal property of the firm, would be postponed at the in-
" stance of a subsequent execution-creditor of the same firm. * * So
"far as the judgment affedts only the property of the firm it is good,
"if obtained in the firm name, against any representative of the firm,
"and there is no reason why it should not be, for the individual
I "partner has full power and authority to apply the property direcSlly
F "to the payment of the debt. He may even assign the whole of the
[ "partnership effecfts for a dona fide partnership purpose (6 W. & S.
"301), and what he can do by his own acft, he may cause to be done
"by operation of law. " The rule was not intended to prevent the
"use, by an individual member, of the firm property, for partnership
"purposes, but to prohibit partnership effe6ls from being misapplied,
" and also to protedl the persons and separate estates of the partners
"from being bound by adts not contemplated by the articles of co-
" partnership." Grier v. Hood, i Casey 430, Pa. (1855).
4. Execution against firm stock corresponds to judgment confessed by
partner for firm claim. A, the co-partner of B, gave C a judgment
note for a debt of A & B, and C entered up judgment and levied on
firm property. B claimed that execution should correspond to the
judgment which A had confessed. — B could not prevent C from
taking the firm stock in execution on his judgment against A. Ro€S
V. Howell, 3 Norris 129, Pa. (1877).
5. If not a lessee, partner not liable, after dissolution, for rent on a lease
exceeding a year. Rescission of sale fornon-payment of price, revests
title in seller, subject to intervening judgment against buyer. Part-
ner in commercial business has implied power to confess judgment.
A sold steamer to B & C, for |i4,ooo, payable |i,5oo down, and bal-
ance in instalments. B was captain, and C business manager. B, as
captain, and for owners, confessed judgment, |i5,7oo, for supplies fur-
nished by D, who seized the boat in execution. C ratified the judgment.
The next day A and B & C rescinded the sale, B & C returning the
steamer, without reclaiming the advance, and A taking possession
without a demand for the use of the boat. A claimed to set aside the
execution, because title reverted to him clear of incumbrance. B's
confession of judgment exceeded his power. — Execution enforced.
A regained title, subjedl to the intervening judgment, by the confes-
sion which B, as partner in a commercial business, bound the firm
without C's ratification of the judgment. Wilmout v. Ouachita Belle,
23 La. An. 607 (18S0).
6. Confession of judgment cannot revive a firm debt which is barred
by the statute of limitations. It can only ajfell an existing claim. B,
a liquidating partner, confessed judgment in name of the firm in
favor of A, the plaintiff in an amicable acftion. — The judgment did
not operate as a release and discharge of C, B's co-partner, who re-
fused to confess judgment, but he may be sued under the A(fl of 6th
April, 1830 {supra i 82). But the confession of judgment cannot
revive against the co-partner a debt which the statute of limitations
has barred. B could only continue existing liability, he could not
create a new obligation. Kauffman v. Fisher, 3 Grant 302, Pa. (1S60).
7. Creditors may impeach judgment confessed against the firm to de-
fraud them. B, C & D, partners. Firm made a note to B. He
endorsed it to A, his brother, and induced C to join in confessing
judgment against the firm for it to A. The parties knew that the firm
was insolvent. A issued execution, and bought in the firm goods,
li bought in and took possession of the same goods, under a subse-
quent execution against the firm. A brought trover against E. De-
419
§123-
Powers. Pt. 2, Ch. 8.
fence : Offer of evidence that note had been paid, and of testimony
bv C, of conversations with B, admitting that the note was assigned
aiul jiulgincut confessed to defraud firm creditors. Evidence com-
petent, and sufficient to put A to proof of a bonajide purchase. Davis
V. Newkirk, 5 Deuio92, N. Y. (1847).
§123.
(ill)c limit of a partner's autljoritti to borroru 10 ^xtii b^ i\)t
amount ii)l)icl) is usual in business of X\\t class.
The lender must find out the business, and the
normal extent of it, at his peril. If the jury should
find that the loan exceeds that standard, the firm
would not be liable fi^r its repayment. If the sum is
within the range of amount ordinarily raised by trades
or business of the same kind, the fa(5l that the part-
ner appropriated the money to his own use does not
relieve the firm from liability for it.
The power to borrow arises from trade, which con-
sists of buying and selling. The firm capital may
have been absorbed in the purchase of property which
cannot be immediately resold. A partner must have
authority to borrow the money required to preserve
tbe firm property, and make it available for the firm
business.
The power to pledge results from the power to bor-
row, when joined with the power to sell. The pledge
is a composite transa6lion. It involves a dealing
with the title to the property, and to that extent is
derived from the power of sale. The title is not
aliened for a price, but for a loan which must be re-
paid, and to that extent the validity of the trausadion
results from the power to borrow. ^
420 .IT
I
Pt. 2, Ch. 8. Powers. §124.
Chattel mortgage by partner of all the firm stock in payment of a
firm debt valid. B & C took D into partnership. B & C mortgaged
all firm property to E for delit. A obtained judgment against firm,
garnisheed E, and denied that E was a creditor of new firm. D's
evidence, that firm had dissolved before mortgage executed, rejected.
— Judgment for E. Partner's mortgage of all firm property for some
firm debts not an assignment for creditors in Iowa, and within part-
ner's implied authority. So. White Lead Co. v. Haas, 33 N. W^ 657,
Iowa(iS87). Re-hearing refused. 25 N. W. 493, Iowa (1887).
§124.
^ partner mag make, ^rato, accept or en^or0e commercial paper
He may accept a draft on the firm in his individual
name, and his acceptance will be for the firm upon
which the draft is drawn. ^ A partner cannot be pre-
vented from binding the firm by commercial paper.
Any restri6lion would be unavailing, as commercial
paper is an incident to the business." A partner
could bind his firm in advance by a promise to give
commercial paper. A reliance upon the promise
would charge the firm, especially if such a promise
had been made before, and had been fulfilled.^ Part-
ners in different firms can exchange accommodation
paper. They can in this way raise money apparently
upon a transaction between two firms, although, in
fadl, the transaAion is a fi6lion.^
If a partner induced the plaintiff to indorse his
note by the assurance that it was for the firm, and
his co-partner endorsed it, the plaintiff could recover
from the firm. Although in form an individual trans-
adlion of the separate partners, the loan was made to
the firm, and the a(?tion was not on the note, but for
money paid to the firm's use.^ A partner's note may
be shown at the trial to be for a loan to the firm. The
421
§124-
Powers. Pt. 2, Ch. 8.
presumption that the note embodied an individual
transaction may be rebutted, and the firm charged.
If the loan was made to the firm, the individual note
would not be satisfa6lion, unless accepted as such.''
1. Partner's individual acceptance of a draft on the firm binds it. A
tS: B, who sold goods to C & D, drew on them for the price. D, in his
individual name, accepted the draft, which the bank discounted. A
^c B, who were compelled to take up the draft, sued C & D on it. —
Recovered. Tolman v. Hanrahan, 44 V/is. 133 (1878).
2. Partner may bind firm by making notes in its name. B & Co., in
the shoe trade, at Boston, for.-aed a partnership with C & D, at Bing-
hampton, to conduct a tannery there, and sell the leather in Boston,
and agreed not to contract debts, except by mutual consent. B & Co.
made notes in the name of the aggregate firm, payable to B & Co.,
and endorsed them to A, who brought suit upon them. — Recovered.
Nothing on the paper to put A upon enquiry. Blodgett v. Weed, 119
Mass. 215 (1875).
3. Managing partner may bind his co-partner by promising his signa-
ture to renewal of firm note. B, managing partner, to effedl a loan,
induced A to endorse a note signed by B, b}- representing that it was
on firm account, and would be signed by his partner, C. C did sign
the note, but not the renewals, which were endorsed on the same
representation. A sued B & C. C's defence : Renewal payment in
law, of original note, and A surety for B, and not for B & C, — Re-
covered. A, who was entitled to rely on B's representation, did not
relinquish firm liability. McKee v. Hamilton, 33 Ohio St. 7 (1877).
4. 'Kiting' by partner valid if for firm benefit, B, for B, C & D, ex-
changed commercial paper with E, in order to raise money for firm.
B drew on B, C & D in favor of E, who endorsed draft to A. The}'^
accepted it in return for E's acceptance. A sued B, C & D. A's
claim: Bo7iafide\io\di^r for value; exchange for mutual accommoda-
tion, and within partner's implied authority. Denied, and the paper
a fraud on C and I), unless they assented to it. They did not use E's
acceptance. — Recovered. Exchange, if for firm benefit, binding.
Gano v. Samuel. 14 Ohio 593 (1846).
5. Accommodation endorser may recover from the firm on a note made
by partner and endorsed by co-partner after the plaintiff's endorse-
ment, by showing that plaintiff endorsed for the firm. B & C, part-
ners. C made a note to A, and induced him to endorse it, by telling
him that it was for the firm and would be endorsed by B. It was
endorsed by B, and discounted by bank, which recovered from A.
He sued B & C. B defaulted, and C objedled to any evidence to
charge the firm. — Admitted. AcT;ion not on the note, but for money
paid to firm's use. .\ endorsed for defendants' accommodation, and
at their request. Thev received the proceeds, which were used in
the finn business. Thayer v. Smith, 116 Mass. 363 (1874).
6. Taking pawner's individual note does not exclude evidence that
the loan was made to the firm. A sued B, sur\-iving partner of C,
and averred that C borrowed |i,500 for the firm, and gave his indi-
vidual note for the loan. B demurred.— Recovered. The note,
♦hough evidence of a loan to C, as an individual, is not conclusive.
422
Pt. 2, Ch. 8. Powers. §125.
and might be rebutted at the trial. The note would not be substituted
for the firm debt, unless accepted in satisfadlion of it. Hoeflinger v.
Wells, 47 Wis. 62S (1879).
§125.
^ partner cannot make acconiniobation paper in tlie firm name,
eitl)cr for l)is own use or for tl)e use of a tl)irii persoi.
That is, any one taking such paper with a knowl-
edge of its charadler, would he precluded from recov-
ering.^ The endorser of an individual note for the
accommodation of the firm, could not retain the pledge
subsequently received for his endorsement. The note
disclosed an individual transaction, and the endorser
has no claim on the firm."^ The offer of an individual
note with the assertion that the paper was for a firm
transa(5lion and the change to a firm note at the par-
ty's request, might be notice of an individual matter.
If the partner had represented in the first application
that he wanted to negotiate the note for his individual
account, and then had changed the paper to a firm
note, with a corresponding change in the representa-
tion, the party who was asked to endorse would be
sufficiently notified.^ If a partner offers a third per-
son's note with the firm's endorsement, in consequence
•of a demand for security for a personal loan, the taker
could not hold the firm. The transadlion would dis-
close an accommodation by the firm, and that would
exceed the partner's authority.*
Aside from the form of commercial paper, anything
that discloses a transa6lion for the individual account
of the partner would be sufficient to put a taker on
4^3
§125- Powers. Pt. 2, Ch. 8.
inquiry, because the partner lias authority to ne-
gotiate commercial paper only for the firm account.
Either formal notice or fa6ls from which a court and
jury would infer an individual transadlion would be
sufficient."
If firm notes are fraudulently negotiated, a party
to the fraud cannot be compelled to pay and recall
them. The holder has a legal right to recover on the
notes, and the firm's remedy against the fraudulent
negotiator at law is adequate.^
1. Partner cannot give accommodation endorsement. No separate
judgment in joint aflion. B gave A & Co. his note, with B & Co.'s
endorsement. A & Co. knew that the endorsement had been made
by B, as an accommodation. A & Co. sued B & Co. — Non-suited.
Without proof o:' B's authority, no joint contra<5t. Separate judgment
against B impossible at Common law in a joint adlion. Fielden v.
Lahens, 9 Bosw. 436, N. Y. (1862).
2. Form of commercial paper is notice to accommodation endorser.
B applied to D for accommodation endorsement for his firm of B &
C. I), without examining the paper, endorsed B's individual note.
B delivered to D a canal boat belonging to firm, as security. B had
note discounted, and D was compelled to take it up. A obtaiutd
judgment agaiust the firm, and took canal boat in execution. A
bought boat at constable 's sale, and brought replevin against D's
vendee. — Recovered. D was not a firm creditor, but took the fim
boat for an individual partner's debt. D could not assert that his
endorsement was for the firm, inasmuch as he was bound to read the
note before he endorsed it. Uhler v. Browning. 4 Dutch 79, N. J.
(1859)-
3. Substitution of jirm, for individual, note at endorser's request not
notice of individual transaction if partner represented that /le nego-
tiated for the jirm. D, of the firm C & D, informed A of a contem-
plated change in the firm, "and that he might want a favor" of him.
C, subsequently, retired, and E became D's partner. D afterwards
called on A, and asked him to endorse two notes drawn by himself
individually. On inquiry, A was told that the notes were for C, for
the balance of the stock; that the new firm, D & E, had bought the
goods; and that the only reason the notes were in D's name was, that _
he did not know it would make anv difference in the security of the ■
endorser. A was satisfied that the firm D & E was solvent, and there- 11
upon, at his suggestion, new notes were drawn by D, in the name of
the firm D & E, and endorsed to A. D used the notes for his own
purposes, and not for the benefit of the firm, which became bankrupt,
and assigned to B. A, who had been obliged to take up the notes,
proved his claims before the Register, but the Court belov/ rejedled
themon the ground that A was not a bona fide holder without notice
of facts affecfliug their validity.— Reversed, and claims allowed. A's
only knowledge of the transaclion came from the representations of
424.
Pt. 2, Ch. 8. Powers. §126,
D, that the transacHrion was stricflly pertinent to the partnership busi-
ness, and, therefore, within the scope of either partner's power.
"There must be knowledge of facfts impeaching the validity of the
notes." There was no such knowledge on the part of A. "The
" notes having been drawn by one partner, in the firm name, appar-
"ently in the course of partnership dealing, and without notice of
"faAs from which the appellant was bound to infer that they were
" made without authority, or that a misapplication of them was con-
"templated, he is a bona fide holder of them, and is entitled to their
"allowance as debts against the bankrupt partnership." Bush v.
Crawford, 29 Leg. Int. 363 (1872).
4. Firm endorsement given by a partner for a loan on his individual
account is notice to the taker. B applied to A for an advance on cot-
ton to be shipped by D. A asked for security, and B brought D's
note to B & C's order, and endorsed their name. — No recovery against
C. Notice to lender that partner pledged the firm credit for a trans-
adlion foreign to the firm business. Newman v. Richardson, 9 Fed.
Reporter 865 (1881).
5. Partner'' s denial that a renewal note was made for a firm debt, or by
his authority, puts plaintiff to proof of both fa£ls. A sued B, D & E
for note of 114,673. E pleaded 7ion est factum, and alleged : That A
sold cotton to B, C & Co., succeeded by B & D, who gave a note for
the price to A. D renewed the note, in the name of B, D & E, in
anticipation of its formation. D renewed the note again, in the
name of the partnership, B, D & E, after it was formed. A knew,
when the notes were renewed that B & D were insolvent, and that E
was solvent. — Judgment for E. E's averment put A to the proof of
D's authority to bind E by the note. Bryan v. Tooke, 60 Ga. 437
(1878).
6. Equity will compel collusive holder of firm note made by partner,
to cancel it, but not to pay it in the hands of bona fide purchaser,
though liable to indemnify firm. B fraudulently made and delivered
three firm notes to C, who knew of the fraud. C endorsed one of
the notes to D, a bona fide purchaser. Firm dissolved, and a receiver
appointed. D brought suit against the firm on his note. A, B's part-
ner, brought bills against B & C, to compel C to cancel the note held
by D. — C compelled to cancel his note, but not to pay the note of D,
who had an absolute right at law, against A & B. A's remedy at law
was adequate to recover from B & C after he had paid D's note. Ful-
ler V. Percival, 126 Mass. 381 (1879).
§126.
(iTIlc autliontn of a partner to bin^ \\\t firm bri rommcrcial
paper is tietmeii not bn tl)e principles of partnersljtp, but bg tl)e
principles peculiar to commercial paper.
425
§126. Powers. Pt. 2, Ch. 8.
A partner's authority to make commercial paper
in the firm name is limited to transa6lions between
the firm and third persons. He never represents the
firm except in dealing with third persons. A partner
ina\' advance money to his firm in excess of his con-
tribution, and take the firm note in acknowledgment, or
the firm may permit the partner to use their credit as
accommodation endorsers in an individual transadlion.'
But, properly speaking, neither of these transa6lions
form part of the firm business. They are stridlly
between the partners dealing wdth each other as sep-
arate individuals. In neither case, therefore, can the
j^artner have any implied authority to sign the firm
name. On partnership principles, therefore, when-
ever a note in the firm name is made payable to a
partner, the taker would be charged with notice of
the partner's want of authority to sign the firm name.
On the other hand, if the note of an individual part-
ner is made payable to the firm and endorsed in the
firm name, the taker from the individual partner is
notified that the endorsement is for the accommoda-
tion of the individual maker. The endorsement can
have no other effedl, because a partner has no reserve
credit to pledge for the firm.^ Such a note might cover
a withdrawal by the maker of a part of his contribu-
tion, but then the co-partners would be the proper
custodians of the paper, and the maker would have
no right to endorse it for the firm. The result is that
upon partnership principles in all such cases the form
of commercial paper should put the taker and any
subsequent holder upon enquiry as to the authority
of the partner to attach the firm signature.' But in
this respedl the do6lrines of partnership have been
42.6
Ft. 2, Ch. 8. Powers. §126.
modified by the rules which govern commercial paper.
Commercial paper is habitually drawn in so many
different forms and so seldom corresponds in form to
the real nature of the transa(5lion that the courts dis-
regard the form altogether,^ A partner by means of
commercial paper may, therefore, do all that the firm
itself could do, and there is no limit to his authority.^
In absence of a6lual notice that the transa6lion is for
his individual benefit, his putting the firm signature
to comercial paper creates in all cases a firm lia-
bility.^ The interjedlon of this docftrine into the law
of partnership operates as a practical extension of the
partner's implied authority.
The partner, as such, has no authority to make use
of the common name, except for a common purpose.
This rule gives him the firm name for his private
use, and in effe6l, makes each partner an agent for
his co-partners, not only in the partnership, but in
all trans a^lions. There is no limit to a partner's au-
thority to bind his co-partners, by making, or endors-
ing, commercial paper. Though the firm name has
been misused by a partner, he, nevertheless, had the
right to use it; and while the misuse of the name
prevents a recovery from the firm by a holder, who
took the paper with notice and without the concurrence
of all the partners, its negotiation afterwards, if for
value and without notice, is not afiecfted by the orig-
inal want of authority. The a(5l was within the power
of all the partners, and though the exertion of this
joint power by a single partner was sufficient to in-
validate the paper in the hands of one, who knew the
circumstances and dealt with any number of partners
less than the whole, the validity of the paper is not
427
§126. Powers. Pt. 2, Ch. 8.
aflfedled in the hands of a hoiia fide purchaser, who
relied upon the paper as a due exercise of its power
by the firm."
1. The use of firm credit, without authority, has the
same eifedl.
Parlnfr's endorsement in firm name for his separate debt makes
him liable to reimburse co-partner who pays his quota to get a settle-
ment, and thereby release his separate estate from firm executions. A
&: B were partners. B endorsed C's note, but afterwards substituted A
& B's endorsement without A's knowledge or consent. A's property
being under execution for a firm debt, B refused to settle with cred-
itors unless A paid his one-half of the note, and released B from all
liability on account of it. A paid one-half and brought bill to re-
cover it from B. — Recovered. B's endorsement for firm exceeded
his riglit as a partner, and bound B to indemnify A for the payment
of B's debt. B's refusal to get A's separate estate released Irom the
joint execution by means of a settlement with the creditors, unless
he would assume B's debt, was putting pressure upon A, and made
his payment a matter of compulsion. Smith v. Loring, 2 Ohio 440
(1825).
2. Acceptance by partner in individual name for firm, does not create
a separate debt. B & C, partners. D drew on firm for price of mer-
chandise, and B accepted thus: B & Co, B. After B's death, bill was
endorsed to A, who claimed administration upon B's estate as a cred-
itor. B died insolvent. — Dismissed. A not a separate, but a firm cred-
itor. In re Barnard, 32 Ch. D. 44 (i?
3. But the form of an individual transadlion would be
overcome, at any rate, so that the bona fide holder could
charge the firm upon the paper in spite of its form. If
the form was notice, it would affect everybody who took
the paper, not only the taker, but the holder for value.
The form would not be exhausted by a single operation,
but would continue to act upon all who took the paper.
Common partner drawing firmnote to his order, and endorsing it with
his name and luith name of second firm, indicates a firm IransaHion,
B, of the firms B & C and B, C & Co., drew a promissory note pay-
able to his own order, signed the firm name B & C, and endorsed it
with his own name, andwith the name of the firm B, C & Co. A
l>ecanie the holder of the note, which was at its maturity protested
for non-payment, and sued B, C & Co. as endorsers. — Recovered.
Ihmsen v. Negley, r Casey 297, Pa. (1855).
4- yo form of commercial paper by partner notice of individual trans-
aclion. Actual notice must be given of dissolution to customers of
the firm. B made note to his own order, and after endorsing it, ob-
tanied C's endorsement. When B took the note to bank, A, for dis-
count, he said it was made on account of firm B & D, and A required
the firm endorsement, which B made. The firm had dissolved, and
published notice, but A had not adlual knowledge. A, who had pre-
viously discounted notes for the firm, sued D. Defence : Form of |
paper/iyiwa/aaV an individual transadlion, and consent of all part-
428
Pt. 2, Ch. 8, Powers. §127.
ners must be proved. — Recovered. Adlual notice of dissolution to
A necessary Form of paper no notice. Bank of Commonwealth v.
Mudgett, 44 N. Y. 514 (1871).
5. Par titer's accommodation endorsement charges firm. B & C, part-
ners. A held two firm notes, each of Is, 000. C gave firm notes in
exchange for D's notes, which C endorsed to A, in order to take up
the original notes. A sued B & C on endorsement. — Judgment for
A. Mutual accommodation might be for firm benefit. Steuben Co.
Bank V. Alberger, loi N. Y. 202 (18S6).
6. Firm note in hands of a partner, even though endorsed by a
stranger, is prima facie a firm asset. B made a note in name of B &
C, payable to D, and induced him to give an accommodation endorse-
ment. B gave the note to A, in payment of an individual debt. A
sued firm, and obtained judgment by default. C got judgment
opened, to let him into a defence. — Judgment entered for C. Form
of paper, and B having possession of it, raised presumption that
note was a firm asset, and should put A on enquiry. He could recover
only by proof that note had been negotiated by endorser in the mar-
ket. Then the presumption that B held it as a firm asset would be
rebutted. Mecutchen v. Kennady, 3 Dutch. 230, N. J. (1858).
§127.
^\\t form of commerrial paper, unconiuctcb mitt) otI)cr cir-
cumstaiucs, conce^s no notice to tl)e first or subsequent takers
of tl)e nature of tl)e transaction, or of tl)e purpose for u)l)icl) tl)e
partner l)as e^ecuteb it.
The note of a partner to tlie firm indicates, appar-
ently, his debt to the firm, and when he places upon
it the firm endorsement, there may be ground for sup-
posing that his objedl is his own accommodation. On
the other hand, a note of the firm to the partner, when
endorsed by him, apparently indicates an attempt on
his part to use their credit for his private advantage.
But these indications are not conclusive. In both
cases, he may be using his name for their benefit.
Commercial paper may be drawn in various ways for
the accomplishment of the same purpose. A partner
429
^J2-. Powers. Pt. 2, Ch. 8.
has a right to raise money for the firm by giving its
name as maker or as endorser, and no one can say
that his objed is illegitimate when he adopts any one
of the various forms sandlioned by the custom of
business.' The form of commercial paper frequently
does not express the actual transa6lion between the
parties to it.' The only things that are fixed and cer-
tain are the obligations of the makers and endorsers
to the holder for value.
A partner's individual note, with the firm endorse-
ment, made by a co-partner, and the blanks filled out
by the partner when he negotiated it to the plaintiff,
was no notice that the partner was the principal
debtor. If the note was merely a blank form with
the firm signature by a partner, the taker would re-
cover, although he had knowledge that it was filled
out by a partner in a different firm and negotiated by
him. No notice would avail to relieve the firm if a
partner used its name on commercial paper.^
In the hands of a subsequent holder without no-
tice, the paper of a partnership, whatever its form, is
good, but there may be circumstances in the case
which sufficiently inform the first taker that the
paper is not given for a partnership purpose, as if, for
example, the partner should give a firm note, or his
own note with the firm endorsement, to pay his indi-
vidual debt. It has been held in Pennsylvania that if
the partner makes a note payable to a stranger, who
endorses it, and then the partner's firm endorses it,
the taker from the partner sees that the endorsement
by the stranger is an accommodation, and he should
infer that the firm endorsement was given for the bene-
fit of the individual partner.^
430
Pt. 2, Ch. 8. Powers. §127.
But it is questionable whether this circumstance
should be given the e£fe6l indicated. The stranger
may as reasonably be supposed to be an accommoda-
tion endorser for the firm as for the partner. Where
a man brings to bank for discount his own note, regu-
larly endorsed by the payee, it is clear the irregular
endorsement was for the maker's accommodation,
but when a partner is the maker and his firm the
endorser, the partner represents both himself and his
firm, and who shall say in what capacity he has the
note discounted. A partner may make a firm note
payable to himself and endorse to and for a second
firm, of which he is also a member, without raising
any suspicion that he is using the second firm's
endorsement for his individual advantage. He can
both make and endorse firm paper, and the interme-
diate link of making the note payable to himself and
endorsing it over to the second firm, is simply express-
ing his agency, and is no more than making the note
payable to the second firm in the first instance.*
Where neither the firm nor the partner is the pri-
mary debtor, but a stranger is, and the firm's liabil-
ity on the paper is prior to the partner's, the form in-
dicates a partnership transa6lion. The firm drew on
a stranger, who accepted the draft, which was payable
to the partner and endorsed by him. The taker held
the firm.'' A partner's individual note to his firm,
endorsed by it and also by second firm, was sold by a
broker for the first firm. The buyer recovered from
the second firm.^
I. Firm bound by custom of keepm^ bank account and givino; checks
in one partner's name. No fraud for this partner to give co-partner
a blank firm check. B, C & D, partners, kept bank account and drew
checks in B's name, but did other business in name of B & C. B
431
|i2^. Powers. Ft. 2, Ch. 8.
signed a blank check in favor of D, who filled in the amount and
endorsed to A, as a firm check, and for a firm debt. After dissolu-
tion, A sued the three. C's defence : Blank check a fraud on the
firm'. Check in 15's name presumably on his credit. — Credit upon
which check received a question of fadl, and delivering blank check
to partner no fraud on the firm. Crocker v. Colwell, 46 N. Y. 212
(1.S71).
Partner's individual note, endorsed by firui and negotiated by him,
not notice to taker of an individual transaflion. B made his individ-
ual note payable to his firm, C, D & Co., and C endorsed for the firm.
The date and rate of interest were left blank, and filled up in A's
presence by B, when he negotiated the note to A. In a suit by A, B
made default, and D, the surviving partner, requested the court to
charge that the form of the note and the circumstances of its nego-
tiation by B were notice to / of an accommodation endorsement. —
Refusal sustained. Partner's authority to make firm paper, includes
the right to insert the date and rate of interest. Making the note in
his individual name might be for the firm, and not for his individual
benefit. Wait v. Thayer, 118 Mass. 473 (1875).
2. The forms which would give notice, if not prevented
by more important considerations, of an individual
transadlion for the partner's benefit, are three. First:
If a note is made by a partner in favor of the firm, and
endorsed by the firm, the taker should know that the
endorsement is for the maker's accommodation, and be-
yond any partner's authority. Second : If the partner
makes a note payable to a stranger, who endorses it, and
then the partner's firm endorses it, the taker might see
an accommodation endorsement by the firm of a part-
ner's individual debt."* Third : An irregular endorse-
ment, which is construed as an accommodation, because
not made in the regular course of negotiation. The finn
endorsement made by a partner before the payee had
endorsed, should not charge the firm, if the principles
of partnership governed the matter, because the paper
did not come regularly to the firm by the payee's en-
dorsement; but as the firm's endorsement means some-
thing, it would be an accommodation.*"
a. Infra Tanner v. Hall.
b. Partner drawing bill to his own order, endorsed by firm and then
by drawer, would be notice of an accommodation. B drew on E & F
for I400. C endorsed the bill in the name of his firm, B, C & Co. D
added his own endorsement, took the bill to the agents of the bank,
A, who discounted it, and paid D the proceeds. At maturity, the bill
was presented to E & F, and as they had no funds, was protested;
and notice given to the endorsers. A then sued B, C & Co.— B, C &
Co. not liable. Lowrie, C. J.,: "The very form of this bill is
''prima facie evidence that [B, C & Co.] are accommodation en-
^ dorsers for [D]. * * The law does not presume that one partner
" IS agent for his co-partners to endorse as surety for others, or out-
432
Pt. 2, Ch. 8. Powers. §127.
" side the sphere of ordinary mercantile partnerships." Bowman v.
The Cecil Bank, 3 Grant :i^, Pa. (1859).
3. The firm signature to blayik form 0/ draft, no notice of accommo-
dation. B signed a blank form of draft in the name of B & C, and
delivered it to D, who, in the presence of A, filled in the amount,
payable to his own order, the name of his firm as drawee, and ac-
cepted for his firm. B & C had dissolved, but A, who did not know
it, discounted the draft, and sued C. Defence : Draft in hands of D,
one of acceptors, notice of accommodation by B & C. The blank
form was notice of no consideration to the firm of B & C. — Judgment
for A. Possession of the form by D was sufficient evidence of his
authority to fill it up, as agent appointed by B for the firm of B & C.
4. The form of commercial paper would, but for the
superceding of partnership principles by the law of
commercial paper, show who were principals and who
were accommodation parties, and give notice to the
holder of its chara6ler. As a partner has no right to
use the firm credit for his separate advantage, if he
does appropriate the asset, he exceeds his authority,
and would not on partnership principles charge his co-
partners. When the commercial paper shows that the
partner is the primary debtor, and the firm only his
surety, the taker would be apprized by the form, if
given its legitimate eflfe6l, that he was conniving with
the partner who is using the firm name for his individ-
ual benefit, in order to defraud his co-partners.^
a. Partner's note to stranger, and after stranger'' s endorsement, firm
endorsement by partner, who got it discounted, sufficient notice to put
taker on inquiry. B, of the firm of B & C, drew his separate promis-
sory note in favor of D, E & Co., procured their endorsement of it,
added the endorsement of his own firm, and had it discoimted by a
bank, F, which sent it to another bank, G, for colle<5lion, having
placed the proceeds to his separate account. The note being returned,
was endorsed to A by the President of the bank F, and A sued B & C
on the note. — Judgment for B & C. A partner has authority to bind
his firm by adls within the scope of its business, but by no other a(5ls
without the express or implied sanction of his co-partners. Where
such authority is express, there can be no difficulty; to deduce it
from circumstances is less easy. A partner cannot pay his separate
debt with joint funds, though the creditors may not suspedl a misap-
plication. "The case may be different where partnership paper is
"paid or pledged for a debt incurred, on the faith of it, by a partner
"or a stranger. If it pass into the hands of a bona fide holder for
"value, or be paid to the vendor of an article dealt in by the firm,
"the debt will be treated as if it had been incurred by the partner-
" ship. The difficulty is, to determine * * between bona fides and
"'mala fides. The latter may certainly be imputed to a holder who
" omits to inquire into the true nature of a transadlion which does
"not fall in with the current of trade. * * The endorsement of ac-
" commodation paper, is not the ordinary business of a partnership ;
"nor is it a necessary or legitimate incident of it;" although, if
433
Cj28. Powers. Pt. 2, Ch. 8.
such has been the custom of the firm, the custom may give authority
to the partners to continue it. It was not this firm's custom. The
fact that B "had drawn ostensibly for his separate accommodation,
ifliciently indicated that his firm's endorsement was also for his
Ikith the bank and A were affedled with notice that the transadlion
was a separate one. Tanner v. Hall, i Barr 417, Pa. (1845).
c Common partner's drawing note in name and to order of one firm,
and endorsins^ it in name of both, indicate a firm transaBion. C, a
partner in the firms of B & C and C & D, drew a promissory note in
the name and to the order of B & C, and endorsed it with the names
of both firms. A discounted the note for C & D, and placed the pro-
ceeds to their credit. C dre-v out the money and used it. A sued B
& C on the note. — Recovered. Miller v. Consolidation Bank, 12
Wright 514, Pa. (1865).
6. I^raft bv firm to partner's order, and endorsed by him, indicates, by
its form, a partnership transaflion. B, of the firm of B & C, made
a draft to his own order in the name of the firm, and endorsed it
with his own name. The draft was accepted by the parties on whom
it was drawn, was discounted by A, and the proceeds paid to B. It
was protested at maturity for non-payment, and A sued B & C. — Re-
covered. Haldeman v. Bank of Middletown, 4 Casey 440, Pa. (1857).
7. Individual note drawn by common partner to one firm, and endorsed
bv it and by second firm, not interpreted by its form. D, a partner in
the firms of B & Co. and C & Co. , made, in his own name, a note to the
order of C & Co., endorsed it with the names of both firms, and
placed it in the hands of E, a note-broker, to negotiate for C & Co.
E sold it to A, who made no inquiries concerning it, and at its ma-
turitv sued B & Co. — Recovered. Moorehead v. Gilmore, 27 Smith 118,
Pa. {'1874).
§128.
<l\)t fact tl]at tl)c firm rcceircti tl]c coiisiberation mill not cl)ang
tl]c cl)aracter of an intiitiibual transaction. -'•
If a note made by an individual partner was not al-
leged to be for the firm, but the loan was applied to
the firm business, the endorser could not recover from
the firm. He had notice of an individual transadlion,
and no cause of adion exists against the firm.' A
^member of two firms who made to his co-partner a
434
J
Pt. 2, Ch. 8. Powers. §128.
note of the other firm for an individual debt, did not
charge them, although by not paying the debt, the
money belonging to the creditor was used in the sec-
ond firm's business, because the co-partner knew his
partner was the debtor, and if the second firm used
the money which should have been paid, it was an
advance made by the debtor and not by the creditor,^
If one partner makes and another endorses a note,
the application of the proceeds will not charge the
firm on the note. The original contrail was not
made by the firm, and the subsequent alteration can-
not alter the contra(5l.^
If the partner does not represent that he is borrow-
ing money for the firm, and gives the lender his indi-
vidual note for the loan, the note embodies the trans-
action, and the lender has no recourse except against
the maker, unless it clearly appears that the loan was
made to the firm, and that the note was collateral.
1. Surety on note made by partner in individual name no claim
against firm. A endorsed notes made in B, managing partner's
name, on his representation that they were for B & C. B applied
the proceeds to firm business. A proved B's insolvenc}', and claimed
judgment against C. — No cause of action. Form of note showed an
individual transadlion. Peterson v. Roach, 32 Ohio St. 374 (1877).
This decision applies the principles of partnership,
instead of commercial paper, and makes the form notice
of an individual transa(5lion, in spite of the representa-
tion made at the time that the note was negotiated on
behalf of the firm. The representation supercedes no-
tice implied by the form.
Partner'' s note binds firm if made for its business. B procured D's
endorsement of B & C's paper for firm, but bank preferred to dis-
count B's paper with D's endorsement. Upon insolvency, B assigned
certain firm claims to secure D, but C assigned all the firm claims to
A. — D entitled. Endorsement for firm though note individual, and B
could pay it with firm assets. Hopkins v. Thomas, 28 N. W. Rep'r
147, Mich. (1881).
2. Partner taking note of different firm from common member for his
separate debt, cannot charge the firm. A & B, contradtors and part-
ners. A & C, manufacSturers and partners. A gave B a note of A &
C, for a loan to A individually. — Though he used it in the firm of A
435
§J29. Powers. Pt. 2, Ch. 8.
& C they would not be liable without consent. Would become debt
of finn to A, not to B. Clay v. Cottrell, 6 Harris 408, Pa. (1852).
3 Partner's note a separate contrail, unchanged by application ofpro-
ceeds to the firm. B, C, D & E were partners in conducing a flour
mill. B made, and C endorsed a note to F, who endorsed it for value
to A. B applied the proceeds to payment of firm debts. B & C were
both' indebted to the firm for arrears of contribution. A sued. D &
E defended.— Judgment for I) & E. Money bona fide lent on credit
of maker and endorser. vSubsequent application does not alter orig-
inal contradl. The indebtedness of B & C to the firm only explain
their giving the note. National Bank of Salem v. Thomas, 47 N. Y. 15
(1871).
§129.
^ partner cannot guarantee tl]e bebt of a tl)iri5 person, xtnless
sml) a guarantu is an indkut to tl)e busineea of tl)e firm.
A partner cannot guarantee, on behalf of his firm,
the liability of a third person.^ A single partner could
assign a firm mortgage. The assignment, as an exe-
cuted contrail, discharged a firm debt, and the seal was
surplusage." He can assign a firm j udgment. It is an
asset which any partner might sell. But he could not
guarantee payment of the judgment, not even if the
guaranty was necessar}^ for its negotiation. The ne-
cessity is a reason for securing the concurrence of all
the partners, not for dispensing with it. A judgment,
though assigned and guaranteed by a partner for value,
does not entitle the buyer to sue the firm upon the
guaranty. The partner who gave the guaranty is in-
dividually bound, without proof that it was made on his
separate account, because beyond his power as a part-
ner. The guarantee is void, though the assignment
would be valid. ^
If a note were given, not by the immediate debtoi
but by the debtor's debtor, might the creditor take
436
Pt. 2, Ch. 8. Powers. §129.
without inquiry and assume that the firm received
the consideration ? Or may a partner give firm paper
for a co-partner's debt? It would be easy for the part-
ners to exchange the firm paper for their individual
debts, and thus charge each other's debts upon the
firm without directly giving the firm obligation for
their own debts. The debts of its members might
compel it to assume them in order to save itself; or
the firm might be broken up before it started, as the
creditor would have it in his power to put the assets
in the hands of a receiver. The exigency would be
overwhelming; still the necessity does not establish
a partner's right to undertake the payment of a debt
foreign to the firm. Unless the debt can be brought
within the range of partnership business, the indi-
vidual partner has no implied authority to assume it.
The guaranty of a judgment, though necessary to
enable the firm to sell it, did not authorize a partner
to guarantee the payment.'* If the authority arises
out of the business undertaken by the firm, there is
no limit to the extent to which a partner may charge
the firm. The assumption of a debt might be out of
all proportion to the profits expelled from the firm
business, and the co-partner should at least have the
option to say whether he preferred to renounce the
business, or to run it subject to additional liabilities
imposed upon it from without, and not the result of
the business transadlions themselves. The extent
of the business may be elastic, according to the part-
ner's discretion, and the liabilities will correspond to
the grant of power, and also be vague and indefinite;
yet they will grow diredlly out of the nature of the
business, and not be a burden cast or shifted upon it
437
§129. Powers. Pt. 2, Ch. 8.
from a different business. Such a load should be left
to the firm's election. If they prefer to shoulder the
debt and stagger under it, rather than relinquish the
obje(5ls of the firm, they must concur in assuming
the indebtedness. The alternative of abandoning the
business, rather than be charged with antecedent or
foreign liabilities is at least always open to the part-
ners.'^
1. Partner's guaranty, thous^^h in firm name, binds him, but not the
firm. A & B hesitated to sell merchandise to C, when D, in the name
of D & E, guaranteed payment. Exception to charge : ThatD could
pledge the firm credit without E's knowledge. — Judgment for plaint-
iffs reversed. Partner's adls beyond the scope of firm business, are
presumed to be on his individual account, though done in the firm
name. vSutton v. Irwine, 12 S. & R. 13, Pa. (1824).
Partner's endorsement to pay creditors of old firm not binding. B,
of the firm B, C & D, endorsed in the name of the firm, a note to pay
A a debt of the former firm B, E & Co., of which C was not a mem-
ber. A brought suit. — C not liable. The court below affirmed one
of the defendant's points, to the effe<fl that in the absence of evidence
that the endorsement was made with the authority and assent of C,
A could not recover against him. The court above approved the
answer, and added: "The plaintiffs took the note in payment of the
"old debt of the fonner firm, and therefore knew that [B] was adling
"without implied authority of C as a partner in the new firm, and
"there is no evidence of his assent to [B's] adt." Riegle v. Irwin,
34 Leg. Int. 447, Pa. (1877).
Partner may create, but not assume, a liability. Inconsistent de-
fences are good as alternatives, though one is inconsistettt with
plaintiff's claim. A & B sued F, to recover payment of a note made
by C for firm A, B & C to his own order, and endorsed to F, which
F endorsed to a bona fide holder, and plaintiffs paid. Claim : C gave
note to F, for debt of a different firm, without plaintiff's consent.
Defences : i, Horse bought for C's prior firm, whose assets A, B & C
purchased as successors; also, C's representation that debt was as-
sumed by his second firm, which took the horse and used it in the
business. 2, Also, horse bought by C for A, B & C, and their note
given for the price. Defences excluded. — Reversed. Defendant en-
titled to prove the 2d defence. Kaiser v. Fendrick, 2 Outerbridge 528,
Pa. (18S1). so,
Nor doe.s a guaranty to a partner enure to the firm.
Guaranty to partner does not enure to firm. B, under contradl, in
his own name, furnished firm goods to C, and D guaranteed payment
toB. Firm .\&B sued Don his guaranty.— Judgment for D. Though
C might be liable for the price to A & B, D bound only by his con-
traa. Not liable to A, because contra6l with B ; not liable to B, be-
cause goods furnished by A & B. Barnes v. Barrow, 61 N. Y. -^q
(1874).
2. Supra ? 117, n. i.
438
Pt. 2, Ch. 8. Powers. §130.
3. Partner cannot guarantee payment of judgment which he assigns.
B & C, partners, recovered judgment against D. B, for value, and
in the name of the firm, assigned the judgment to A, and guaranteed
its payment. A tried to recover the money on the judgment, but D
was unable to pay. A then sued B & C. Defence: No authority
shown by C to B to execute the guaranty, which was not in the course
of partnership business. In the court below, judgment for defend-
ants. — On writ of error, affirmed. Smith, J. : "The true criterion,
"whether the adl of one partner makes the other responsible, seems
"to be, whether the a6l was or was not done according'to the usual
"course of business." Hamill v. Purvis, 2 P. &W. 177, Pa. (1830).
4. Liquidating partner may assign firm judgment, but cabinet guar-
antee its payment. B & C, partners, recovered judgment against D
et at. They released D, and dissolved. C, liquidating partner, as-
signed judgment to A, and covenanted for firm that all defendants
continued liable. D alone was solvent. A sued B for amount of
judgment. — Not liable upon the covenant, though the assignment
was valid. Bennett v. Buchan, 61 N. Y. 225 (1874).
5. Firm not liable on its acceptance given by partner for his individ-
ual debt. B & C were partners. On the maturity of an acceptance
in his own name in favor of A, B, in part satisfadlion, gave A another
bill, and accepted it in the name of the firm, but without any author-
ity from C. A sued the firm on the bill. — No recovery. If one part-
ner gives the firm's acceptance in discharge of his own separate debt,
the presumption is, that he does so without the authority of his co-
partner. If that fa6l had not been part of the plaintiff's case, he
might have relied on a partner's implied authority to bind the firm.
Leverson v. Lane, 13 C. B. N. S. (106 E. C. L.), 278 (1862).
§130.
Set-off is a mcbinm of equitji. ^quitg Msrcgarbs proccbuu,
anil ]3ermit3 a set-off toljerroer tl)e befenlrant l)as a claim against
tl)£ plaintiff. '
In Pennsylvania, any liquidated claim may be set
off, though arising out of a different transa6lion from
that in controversy. Partners might set off their
moiety of a promissory note made by the plaintiff and
owned by them in common with a stranger in an
ac^lion for the price of merchandise.^
The firm is nothing but the partners, and as the
partner is liable for the whole debt, which he may be
439
§1^0. Powers. Pt. 2, Ch. 8.
compelled b}^ execution to pay out of his separate
estate, he can set off his claim against it. If not per-
mitted to do so, he might be forced to pay the debt to
an insolvent creditor, from whom he could not subse-
quently colledl his claim. A partner may avail him-
self of this right of set-off when sued alone, or in
conjnnclion with his co-partners.
An assignment by the partner of his claim to the
firm is not requisite.^ The separate estate is exposed
by the suit to the creditor's claim, and may be used
to satisfy it. The firm cannot require the partner to
allow them to set-off his private claim against the
demand of a firm creditor, for that w^ould compel an
increase of his contribution. On the other hand, the
partner may consent to the firm's use of his private
claim as a set-off, in which case he advances his claim
to the firm, and identifies the claim with the firm prop-
erty.^ A partner represents in his own person the
whole title to firm propert}', and also the entire lia-
bilit}' for a firm debt. Consequently, when sued alone,
or in conjundlion with his co-partners, he may always
use his private claim to pay the firm's debt, for the debt
and the claim are substantially in the same right.
The partner's right to make the advance to the firm
by setting off his claim against the firm debt, does not
depend upon his right to contribution against his co-
partners for the advance, but the right of contribution
is a consequence of the right to make the advance.
1. Set-off of half plaintiff's debt, due to defendants and a stranger.
AS: Co., for the use of D, brought acflions on the case, for goods
sold and delivered, against B & C, who pleaded set-off and payment
with leave, and offered in e\'idence, a promissory note of A & Co.,
payable to the order of E & Brother, and endorsed by E & Brother
wnthout recourse." B & C proved themselves co-owners with F of
the not^ V had, in a previous suit, set-off his share against A & Co.
— Set-off allowed. Woodward, J., : "It is true the note could not
440
Pt. 2, Ch. 8. Powers. §130.
"be divided for the purpose of adlion, but it may be a defence under
"the equitable plea of set-off." Smith v. Myler, lo Harris 36, Pa.
(1853)-
By Common law, the joint right of adlion inhered in
the partners. All must join in the suit, and one could
not sue for all. A partner's express assignment would
not invest his co-partner with the joint right of adlion.*
a. Partners cannot empower co-partners to sue. A, B & C, partners in
stage line, and D kept stage-office. On settlement, partners directed,
D to pay receipts to A. He brought assumpsit for money had and
received. Claim: Promise resulted from ownership as to one owner
after payment to co-owners of their quotas. — Judgment for D. No
property in specific money, as it could not be followed; but a chose
m adtion, which could not be assigned without debtor's consent; nor
had debtor consented to change his creditors, as he did by severing
the debt, when he paid quotas of co-owners. Horbach v. Huey, 4
Watts 455, Pa. (1835).
As the reason for a joinder no longer exists, a partner
may represent the firm with or without an assignment
from his co-partner.^
b. Assignment by firm to partner enables him to sue in joint name,
B assigned his interest in firm claim to A, and died. A sued in joint
name. Defence: Plea in abatement ; non-joinder of B's executors. —
Judgment for A. Matherson v. Wilkinson, 8 Atlantic Rep'r 84, Me.
(1887).
2. The Civil law seems to require an assignment.
,,SCirb bie ©efellfcfiatt unter ifircr Jytrma berftagt, fo fann fie mit einer
„i^r gegen ben J^Iager 5uftef)enben (yegenfDrberun(\ con^jenfiren. Db fie
,,bagegen bie ^ribatforberimg eineS ifirer ©efellfd^after in Stufrerfinung
,, bringen fann, ift beftritten.— (S§ ii:)trb bie§ urn bc5.»ptl(en bcjabt, tneil
,,burd) bie Slugftagung bergtnna bie fdmmtltcf)en ©efellfcfiafter mit»erflagt
,,feien. 9(lletn eg iDurbc berett§ gejeigt (^ 57), ba^ bie gegen bie (yeiel(=
„ fcf)aft ahS formelle (Sinf)eit gerid}tete j^tage unter ben 50m ein iiiitiscon:
„ fortium ganj anberer %xi icic bagjenige begri'tnbet, it>eW}e§ baburd) ent;
„fte^t, ba^ ein ©Idubiger bie einjetnen (55 efellfcb after jufammen nerflagt.
,,3luc^ ift bie G5efe(Ifd;aft al§ folate nid;t bered^ttgt, fiber bas '^srinatner:
„mbgen if)rer 53iitg(ieber, felbft jur 5:ilgung 'oi^w ©ocietdt^fdiulben ju ber;
„ fiigen, ntdl;renb ber 01dubiger tnetdjer feine SBefriebigung aiu3 bem @efell=
,,fd)aft'gfonb'3 fud)t, fid) auf jene^ SBermogen nid)t fcrtrcifcn ju (affen
„brauc^t. !Demnad> fann bie unter ibrer %\xxna ferflagte CicfcIIfdiaft mit
,,^riBatforberungen ber cinjelnen socii nid}t compcnfi'ren. 'l^i^^i) berr^dlt
„e§ fic§ anber§, n)enn bie '^vrinatforbcrung be§ (^efcUfd;after§' auf bie
,, 0efeUfd)aft itbertragen n^orben ift — eine Ueberunnsung, bie 93tl^uf§ ber
,,3Bettfd)(agung nod) md^renb be§ 3ied>tsftreit§ burd) ben bie Societdt ber=
,,tretenben Socius f)infidit[id} eine§ ibm ge^origen 3(nf^.n-ud)§ gefdie^en
,, fann.^^ 3i e n a u b, ,, Sa§ 3ied)t ber Gommabitgefellfd^aft," s. 437,
3. Plaintiff cannot credit a partner's claim on account of the firm's
debt, without partner's consent. A claimed feoo of B & C, and de-
dudled ^128 which he owed B & C, and |;ioo which he owed B. De-
fendants asked non-suit, because claim beyond justice's jurisdicftion.
— Entitled to non-suit. Defendants could not set-off B's claim, and
plaintiff can't without their consent. Williams v. Hamilton, i South.
220, N. J. (1818).
441
§13^-
Powers. Pt. 2, Ch.
I)ic r^JcfcUfcf'aft luirb untcr i^rer ^irma Dertlagt. ®ie
fann mit ciiicr WcfcUidiaft^SforbcnnuT compenftrcn, abet md)t mit ber
" iri»atforbcvuiui cinci cinsclncn C'icKilfdutftcr'o, bcnn Uiennglcid; burd) bie
" ^lac\i ticijcii bic WoKlIfAaft fammtlidic ('■icfcUidrnftcr belaiuit finb, \o finb fie
" bod) niir mit iU",iclniiiii auf ibre iicfcUi'duiftlidie ivcrbinbuiu^ bclangt. Sie
"fonnoii |id) babcr nudMUir tmter ber Aivina ber WcicUfdiaft einlaffcn unb
" fbiiucn luir bicjcniiicii 3icd)te auc-iUH'ii, uu'ld^c ilincii ale 6cfeU[diaftern
"^uftcbcu. ^Jll>3 iold)e abcr babcix fie uidit bie Sie-'pofition§befuc(niB iiber
'[cin.uiin 'iU-iiKituermiJfl.'it eiiies (^5e|ell|d)after'g geborenbes i^ermogenftiicf,
], fie ionncii alfo cine \!;ri»atforbevung bes eiusclnen (ycfeUi'diattevs tiH'ber
'leinflageii noc^ compcnsando geltetiD madden. (Sbenfoiuenig ti)nnen fie
^!abor biC'3 rHoc^it aii$ bcu naif bent cyefeUfd^aftsiHTtrag "ttw cinselnen
',' (>)c)cUid)aftern' obliegenbeii iierpttiditungeu ableitcn. '^\v<xx Unirbe,
'jiH'im ber einjelne (^kfellfitafter ber (ye[cUfd)aft Derpflic^tct tocire, %vx
,, ,'^aMimg ber fteiclli*aft<-utulb leinen 2(ntf)ei( in ber 2lrt beijutragen,
",,\><\i er ilin au5 jeineiu '^(rbatyermogen jaf)lte, bi^3 jum Setrag biefes
^^Jlntbcil^'mit ber "^riinitforberuug be^ einjelnen 05efellfd)aftcr5 gegen
Libert Mldgcr compenfirt inerben fbnnen. 23ei ber Sanbelsgefellfc^aft ift
„ nber eine fotd^e i?erpf(id;tung ber einjelnen ©efcllfdjaftcr ber ©efell:
,, fcbaft gcgeniiber nid^t uprbanben. ^ie ©efellfc^after braud^en iiber
,,ibre I'ertragcMndftigc tSintage au§ iftrem ^sriuatwermbgen 5u gefellfd^aft:
,, lidu'ix ,^i»edcu nid)t '^^i ©eringfte su eericenben be,v norsufdiiefjen.
,,(3. 'i3emerf. ju 9(rt. 92, li 3.) Sie f)aben baber (x\\^ inebefonbere leine
,, (i-injablungcu jiir ,-]a(iIung lu>n GefcUid)afts.idniIben ju mad;en, noc^
,,nH'nn cine CJefeUidiaftsfdiuIb au§ ber (3efel(fd;aft§caffe bejafilt ift, 'x>zv.
,,58etrag berfelben biefer Gaffe ju erfe^en, e§ fel;lt batter ber ©efellt'diaft an
,,jebem rlicdjtCnirunb, ber gegen fie geric^teten illage bie ^sri»atforberung
,,cinc^ibrcr lifitgtieber entgegen ju fe^en. — 2^ie Jyrage iinrb iibrigens Don
,,praftiid)er SJU'beuting nur fiir ben ^yall, bafe ber 0efeUfd)after bie 33enu§=
,,ung feincr APrberung jur Gompenfation Deriveigert; bcnn in ber Ueber=
,,Iaf5ung ber ^yorberung ;;ur Gcmpenfation ift eineGeffion entttatten (f. o.
,, ^]Jote 4), unb bie 0efeUfd;aft ift %\\x (Som^enfation ber cebirten gorberung
,,bered)tigt" (f. o. I 4). 33 on Sal^n, „6ommentar jum 2tll. Seutfd^en
„§anbcl59efe^buc^,^' 2(rt. 121, \1 .
A PARTNER SUED FOR A FIRM DEBT MAY SET-OFF A FIRM CLAIM
WITHOUT HIS CO-PARTNER'S PERMISSION.
He might have taken money out of the firm ex-
chequer, and paid the firm debt. He accomplished
the same result by applying the claim, which is an
asset of the firm, to the discharge of its obligation.
Moreover, if compelled to pay the debt, he could re-
cover from his co-partners contribution, which he
merely anticipates by the set-off.^
As set-off is a medium of equity, the law searches
out the party interested, and gives the benefit, or detri-
ment, of set-off to him.^
4. ,Gr !ann cine (^efeUfdiaftgforbcrung gegen Sen .ftlager jur 6ompcn=
station brmgen. 3)ernburg crflart bieg fiir jweifeUog nur, luenn ber
442
Ft. 2, Ch. 8. Powers. . §130,
„be!lagte ©efellfc^after Don ber i^crtrctung ber ©efcUfd;aft nid;t au^i--
„jd)IoBcn ift, ift jebod} gencigt, aud; bent Hon ber asertretung 2luJ.ge--
„icf)loffenen biefe ik'fugnife becMuegen jii3uge[tef)en, mii berfelbe bered^tigt
„ieintnuffe, ju feinem e*ul5 alle ber WeieUfdniftj-fd^ulb inl;drtrenben (irj
„ce))ttonen bor3uid;u^eii, ju lueldjeu and; bic (ionpenfationscinrebe gel^ore.
„ gjlciner 2(nfid)t nad) ift and) t;ier siinfdien bem toon ber ajiertrctung augge--
„fc^loffen unh bem nid}t au§gefd;loffen (^Jefellfdjafter nid}t ju itnterfd;eiben.
„ ®cr 3{ed)t^grunb, auf toeld^ein bie ^ulcifeigt'eit ber Gompenfation beruf)t,
„ ift ber bent ©efelifc^after, UHid;er eine @efeU|d;aft§fd;uIb jat)!!, gegen bie
„ ©efellfd^aft jufte^enbe Siegrefe unb biejer ift ber gleid^e fiir alle ©efells
„f^after. 2)ie (Sigen[d;aft al<i ifertreter ber ©eiellfd^aft tann fiir ben in
„eigenem Diamen betangten 0efelIfd;after nid)t in S8etrad;t fommen."
Von Hahn, Art. 121, ^ 8 (b).
5. At law, the firm could not set off a partner's claim
against the joint creditor, because the claims were not
by and against the same plaintiff and defendant,^ The
form, however, might be controlled by the fadl. Part-
ners could set-off their deposit against a note made by
one and endorsed by the other, if and because discounted
for the firm.*^
a. Partner cannot set-off his individual claim against plaintiff '' s claim
against firm. A, as B's trustee, sued C & D for price of fruit sold
them. They pleaded set-off of A's note to D for f/.ooo. C died after
plea filed. — Disallowed. Set-off determined by right at the time of
bringing suit, not at the trial, when D was surviving partner. John-
son V. Kaiser, 11 Vr. 286, N. J. (1878).
b. Firm deposit set-off against vote, separate itt fortn but discounted
for the firm. B made his note to C, his co-partner, and he endorsed
it. D, a banker, discounted the note for the firm. B & C notified D,
upon his failure to set off their deposit against the note, and he pro-
mised to make the off-set. D assigned for creditors, to A, who sued
B & C. Defence: Set-off. — Allowed. The note, though in form, a
separate, was in substance, a firm obligation, and the set-off was mu-
tual. Joint suit admitted mutuality. Smith v. Felton, 43 N. Y. 418
(1870).
A PARTNER CAN SET-OFF HIS INDIVIDUAI. CI.AIM AGAINST A FIRM
LIABILITY, WHEN SUED ALONE, OR IN CONJUNCTION WITH HIS CO-PART-
NERS.
He owes the firm debt individually, and if he choses
jto appropriate his separate property to paying what
is also the firm's debt, the co-partners could not obje6l,
if they would,*^ The partner owes the firm debt to the
plaintiff, and the plaintiff owes the partner a debt.
One extinguishes the other. A supercargo sued the
co-owners of a ship, to the use of his assignees, for
his services on the voyage. One defendant set off a
443
§130. Powers. Pt. 2, Ch. 8.
judgment against the supercargo recovered before the
assignment."
6. Co-obligors were sued by the assignee of the obligee.
The debt of the real owner of the bond, for whom the
assignee held it to one of the obligors, was set-off against
the plaintiff. Wrenshall v. Cook, 7 Watts 464, Pa.
(1838).
7. Stewart v. Coulter, 12 S. & R. 252, Pa. (1825).
Contra, if proceedings at law where the obstacles are
in the forms of procedure ;'' but the technical objedlions
do not defeat the set-off in equity. **
a. A pa litter can't set-off /its separate claim in a suit against the firm.
Executors of A sued B & C for services, as manager of iron works.
Evidence offered, by way of set-off, of A's agreement with B, to pay
any debt coutradled by C, and of C's contratfting a debt for £11. —
Rejected. Separate claim of partner not allowed as a set-off in a
suit against them for a firm debt. Brown v. Thompson, Coxe 2 N.J.
(1790J.
b. Obstacles to set-off at law do not prevail in equity. B attached C, and
D intervened. C settled with B, and enjoined D from proceeding,
claiming that D was indebted to him for advancing D's share in dif-
ferent enterprise undertaken by them. D admits advances, but
claims adjustment by partnership accounts. — Maintained. Set-ofF
available m equity, without technical objecflions. Dungan v. Miller,
4 C. E. Gr. 219, N.J. (1868).
If A FIRM SUES ITS DEBTOR, HE CANNOT SET-OFF A CLAIM WHICH HE
HAS AGArNST ONE OF THE PARTNERS.
The plaintiff's claim belongs to both partners, and
is indivisible ; the defendant's claim is separate against
a single partner. As the firm does not owe the debts
of its members, the defendant cannot make it pay
them by means of a set-off.^
The partners are liable severally, because they in-
cur diredl obligations to third persons, who enforce
the contradls. They do not acquire severally, because
nobody but themselves is involved in the transaction,
and they have excluded each other, except for the firm
balance. Hence the debt is not one to each partner.
It is an asset of the firm, and if the assets were divisi-
444
Pt. 2, Ch. 8. Powers. §130.
ble, and owned in quotas b}^ the partners, it would be
set ofif against each, according to his aliquot share."
8. Separate debt of partner cannot be set-off against a firm claim. A
bought out B & C, and sued firm debtor, D, for balance of account.
D included in account separate charges against B. — Items stricken
out. Billings V. Meigs, 53 Barb. 272, N. Y. (1869).
The German Code prevents the set-off by a firm debtor
of his claim against a partner during the partnership.*
This results as Renaud points out, *" from the recognition
of partnership property, which would, if the set-off
were allowed, be misappropriated to the payment of a
partner's individual debt.
After a dissolution of the partnership, the German
Code admits the set-off, if there has been a division of
the assets, against the share of the debtor partner.*^
. a. ., giue (Som^jenfation jicifc^en g^orberungen ber ©efeHf^aft unb ^ribatj
,, forberungen be§ Q5ei'eUf(|)aft§[rf)uIbncr§ gegen einen einjelnm ©eiellfdfiafter
,,finbet iDd^renb ber 3)auer bcr (McfcUic^aft tpeber ganj nod) tf)eil>»eiffe
„ ftatt; nad) 3Uifl5§ung ber ©eiellid^aft t[t fie juld^ig, t»mn unb injotoeit
„bie (yefoUfd^aftgforbcnmg bem GcfcUfdjaftcr bei ber 3tusetnanberfe^ung
„uber>Dieien ift." ,,2111. Seutfc^. ^anbelggefe^bud}," 2lrt. 121.
b. „S)ie ©onberung be§ @efea[c^aft§t)ermogen§ bon ^ribatbermogen ber
,,ein5elnen 0efelIf(^after au^ert fid) abet l»etter barin, baf, eine Gonn^enfa--
,, tion 5ir»ifdjen Jorberungeu ber 0efellfd)aft unb 1>riimtforberungen be§
,, 6efeUfd)aft5i"d)uIbner gegen einen einselnen (5)eje[l|d;)after iudi^renb ber
,,Sauer ber ©efetlfd^aft treber ganj noc^ t^eitireife Statt finbet." 3le=
uaub, .?. 436.
c. ,,3'ia^ Sluflofjung ber ©efellfd^aft, etc. %a. nad^ i4 eine
,, an einen OJefellfdiafter cebirte ©efelffc^aft^forbcrung aud) n^dl^renb ber
„2)ciuer ber ©efeltfc^aft toon bem ©ejcllfdnifter gegen bie ^J-orberung
„ feineg ^^rt»atg(dubiger§ aufgeredniet liierben tann, fo iriirbe bie 33emer!=
„ung Sernburg'g bO'* ber Sdilu^fah nidit gliidUd) gefafet fei, julreffenb
,, fein, \w\\\\ nid)t bie eigentlidie iiebeutung biefe^i ®atie§ barin %\\ fud)en
,,tt)dre, ba^ bie 6om^)enfation aud) nad; 9(uf(b§ung ber @e|eU=
,,fd)aft unjuldfeig bteibt, fo lange bie betreffenbe Jyc^r^'fi^""^ "prf) W^^
,,ungetbeitten ©efellfcbaftSbennbgen gef;5rt. (5^ Gntfpridit bie§ bollig bem
„in 21rt. 119 au«geft)rod)enen '^rinci^." Von Hahn, Art. 121, \. 5.'
9. Smith V. Myler, supra n. i.
The partner may set-off a firm claim against his individual
debt, if his co-partners consent to the appropriation.
They can do with their own what they please, and
may devote it to paying off a partner's debt. If the
firm consents to the partner's use of its claim, he
may apply it by way of set-off against his separate
445
§i-jo. Powers. Pt. 2, Ch. 8.
debt. He owns the claim by a joint title, and no one
but his co-partner can objecfl to the application. "*
The defendant partner could not make the set-ofF
without the consent of his co-partners. The plaintiff
in such a case would not be entitled to rely, as Re-
NAUD states," upon the implied authority of the part-
ner, who does not a(fl on behalf of the firm, and the
use of the firm asset to pay his private debt is notice
to the plaintiff, who, as an individual creditor, partici-
pates in the fraudulent misappropriation of the firm
asset.
10. Co-makers of a promissory note, who were sued by
the payee, set-off a debt due by the plaintiff to a differ-
ent firm, of which the defendants were partners, their
co-partners having consented. Tustin v. Cameron, 5
Wharton 379, Pa. (1840).
Firrn clerk's recognition of a partner's agreement to set-off firm
debt against his individual debt binds firm. C hauled wood for A,
who agreed to pay hiui in goods from store of A & B. A received
first load, and firm clerk received the three other loads. A & B sued
C for balance, less three loads received by their clerk. — Bound to
credit the four loads, as firm clerk adled on basis of A's contra<ft.
Hood v. Riley, 3 Gr. 127, N. J. (1835).
II. ,, fflirb ein C^efeUfc^after au§ ctner ^srtt)atfcf»ulb Belangt, fo !ann er mit
,, finer ^vorbontnfl, treldie ber ©efeUi'd)att (^cc^en ben ^(ciger juftcl^t, bann
„mdU cpmyenfiren ipenn er bon ber 5lscrtretiing ber Societcit atiSgeidjIoffen
,,ift, ba ilim iibcr einen \i>\A)ixi 5ai5ifi»ni*, ungead}tet er Vcjtxi an'bemfelben
„I'at, feinerlei Tic-pofttion sutbmmt. ^*,ft er bagegcn tion ber 9ie)3rdfenta«
„tion ber Wefe(I(ri>aft nidit au'Sgcfditoffen, fo iff er jur Gotn^.tenjation mit
„ber gan^en (^iekllidmftoforberung' obne ^iidfid}t baraitf, ob bie 2Bett-
„ )di(agimg im "sntereffc ber Spcictiit liegt, urn be^anllcn berec^tigt, ixKiler
„3^rttteu gegeniiber ein unbe[d}ranfte§ a.serfiigungs-red}t iiber ben ©efell^
„ idjaftefonbs fiat. 3ii>ar tnirb tiiergegen geltenb gemad}t, ee fijnne ber
„rejjrdKntntion5berecbtigtc WefelUdiafter nn'r im Sfamen ber Societdt iiber
„bereu A-orbcrung berfiigen; eine joldie Serfiigung liege aber nid^t ttorunb
„fei nidit mi3g(id), iwcnn ber in eigenem 9famen\icrfiagte socius auf bie
,,AUnge fid) einlaffe. SlKein i^ !ann baraue einer ^sri'batfd}iilb belangte
„ f^efeUfdiafter fo fern er Hon ber Jkrtretung ber ©ocietat nidit anegc-
„fdi(offen lit, fid; Tfamens (e^erer eine ©efelifd^afteforberung iibertiHifen,
„ iim fie alebann ,uir (Som^jenfation ju benuhen, ja cbne fortnIid}e Ueber=
„etn?ei5ung im ^famen ber ©efeUfd}a|t juftimmen, 'i:(xS^ beren gorberung
„vxx aBettfd)Iagung bemil^t tuerbe. 3Unaub, .?. 489.
In an action by a partner, the defendant may set-off a ci^aim
AGAINST THE FIRM.
446
\
Pt. 2, Ch. 8. Powers. * §130;
The partner owes the debt (defendant's claim) , as
an individual, and he cannot objecft to pay it when
made a set-off to his separate claim.'"
12. ,,^IagtenbUcf) etn (MeicUfcf^after cine ^ribatforberung gegen Written ein,
„fo t'ann biefer eine il;m gegcn bie ©efellfdiaft juftefjenbe gorberung mit
,,-bem ganjm 23etragc ui 3lufrec^nung bringen, tneil ber berflagte feinen
,, DoUen 'Jlnf^ruc^ ftagettteifc gegen ben socius geltenb madden fbnnte. 2lu§
,,bem namlicfien ©runbc ftnbet eine Gom^enfation gegen cinen (Somman--
„bitiften Jt)iernur infonieit ©tatt, atg bieferfiir bieSeteUjrf^aftsfd^utb birect
„bem Gldubiger f^aftet." :;}ienaub, 5^. 439-40.
A SURVIVING PARTNER CANNOT SET-OFF A FIRM CI.A1M AGAINST HIS
INDIVIDUAL DEBT.
Originally, he could do it, because the firm's rights
of adlion survived to him alone, '^ although the a6l
would be a breach of the relation." Now, however,
since the deceased partner's estate is charged with
the firm debts, the surviving partner should not be
permitted to use the firm claims by way of set off,*'^
At the death of the partners the rights of their cred-
itors become fixed, and a claim not previously estab-
lished is unavailable for set-off.^"
13. A surviving partner could set-off his individual debt
against a firm debt, or a firm against an individual debt,
because the rights of allien survived to him. Hender-
son V. Lewis, 9 S. & R. 379, Pa. (1823).
14. But this is a breach of the relation, i Lindley, Law
of Partnership, 529.
15. The claims remain distin6l.
Separate claim of partner will not keep open and running an account
between firm and stranger. A, as surviving partner, sued C for items
barred by statute of limitations. C had set up a counter claim against
A individually, not yet outlawed. — ^Judgment for C. The accounts
were not mutual, so as to give A benefit of the date of C's last item.
Eldridge v. Smith, 144 Mass. 35 (1887).
16. Equality of distribution prevents a set-off after the death of the
parttier. On the death of a surviving partner, his execators at-
tached the property of a iirm debtor in the hands of a bank, and ob-
tained judgment against the garnishee. The garnishee attempted to
set-off a claim against the firm on an endorsement which fell due
after the surviving partner's death. — Disallowed. An unlawful pre-
ference. Distribution must be eqiial among the creditors of dece-
dents. Cramond v. Bank of U. S., i Binn. 64, Pa. (1803).
447
§i^o. Powers. Pt. 2, Ch. 8.
A I'ARTNER WHO IS SUED FOR A FIRM DEBT CAN SET-OFF HIS CO-
PARTNER'S CLAIM AGAINST THE PLAINTIFF, IF THE CO-PARTNER CON-
SENTS.
The authority to make the set-off must be ex-
press. No such power will be implied, for that
would enable a partner to increase arbitrarily his co-
partner's contribution. A creditor may enforce the
several liability of the co-partner in the first instance,
but the partner has no right to compel the payment
of a firm debt out of the separate estate of his co-
partner, except by way of contribution to a payment
previously made by himself.
The partner, if compelled in the separate action to
pay more than his share of the firm debt, is entitled
to contribution, and, therefore, he in fa(5l represents
his co-partner for the excess. By allowing the set-
off, the co-partner who was not joined simply pays a
debt for which he would ultimately be liable. If a
partner should refuse to avail himself of such a set-
off when offered by his co-partner, he would deprive
himself of his right to contribution for the payment
which he had needlessly made. Where the partner
who is sued has already paid more than his propor-
tion of the firm debts, it would be important for him
to compel the application of his co-partner's claim to
the satisfadlion of the firm obligation. He could not
accomplish this end by the machinery of the Common
law. A plea in abatement for the non-joinder of his
co-partner would not serv^e his purpose. That would
enable him to fix the liability, but not to control the
separate property of his co-partner. Yet he would
have a clear equity available in a Court of Chancery.
But there must be some proceeding in which the part-
448
Pt. 2, Ch. 8. Powers. §131.
nership account and all the parties are before the
court.
§131.
^n assignimnt for creditors is not tuttl^in a partner* 9 torn-
No such assignment by a single partner is allowed,
except when his co-partner is out of the jurisdiction,
and cannot be consulted, and then only if an adverse
sale is impending/ Under such circumstances, the
authority is implied to a partner who may exert the
power, as he represents his co-partners, rather than
let a stranger exert the power and e£fe6l a forced sale,
which might sacrifice the stock."
The partner, it is said, by such an assignment,
delegates his capacity to the assignee, and this dele-
gation is, by the general principles of partnership,
beyond his authority.^ The corre6lness of this rea-
soning may be questioned. The assignment does
not involve the delegation of a partner's capacity, for
the assignee becomes a trustee for creditors, and not
merely a substitute for the partner. The assignee, it is
true, does, in part, discharge the function of a partner,
inasmuch as he applies the assets of the firm to the
payment of its debts. But the sheriff would perform
the same fundlion. True, he only executes an adverse
process, but the difference between the effeCl of an exe-
cution and of an assignment in this respe6l is only
apparent, for it is not maintained that a partner can
appoint an assignee, except to forestall an execution.
449
§1^1. Powers. Pt. 2, Ch. 8.
A partner can not prejudge the expediency of an a(ft
which may involve the existence of the firm, and the
financial career of its members, unless it is obvious
that there was no alternative. In such a dilemma, it
is proper that the discretion should be exercised by
one identified with the business rather than by a hos-
tile creditor.^
In considering this question, it must be borne in
mind that a partner is clothed with a power similar in
kind and greater in extent in those jurisdidlions where
he is permitted to confess a judgment under which the
firm assets may be sold, because this power has never
been made dependent upon the absence of his co-
partner or the inability to consult him.^ An assign-
ment for creditors by a partner is permitted only as a
means of forestalling adverse proceedings, and thus
becomes a protedlion to the firm ; but a confession of
judgment is a surrender of the firm to a hostile cred-
itor.
I. Sloan V. Moore, Supra ? 115, n. i.
Power to assif;7i for creditors not implied in any number of part-
ners less than all. A beiug^ iu Europe on firm business, B & C notified
him of embarrassment, and asked him to return. He dispatched a
letter, which was received, saying he w as en route. He was delayed
by stress of weather, and nine days before his arrival B & C assigned
for creditors to D. A brought bill for dissolution account, injun^ion
and receiver. — Decree. No authority to assign in anticipation of A's
return. Wetter v. Schlieper, 4 E. D. Smith 707 N. Y. (1858).
All partners must join in assignment for creditors. In absence
of co-partners, D and E, on business, one in Cuba, the other iu Cali-
fornia, B and C assigned to A, for creditors, with preferences. F levied
on goods in hands of A, ^who sued to recover.— -Judgment for F. No
emergency to justify assignment by less than all co-partners. Pettee
V. Orser, 6 Bosw. 123, N. Y. (i860).
A partner may, of course, assign his separate estate
for the satisfadion of the firm creditors.
Partner m insolvent firm viav convcv his separate property in satis-
failwn of a firm debt. B, member of insolvent firm, conveyed his
separate property, to certain firm creditors, in satisfacTiion ; then firm
made assignment. Assignee sought to include convevance as part of
assignment.— Dismissed. Partner may apply his separate property
450
Pt. 2, Ch. 8. Powers. §131.
to pay any firm creditor in full. Elgin Watch Co. v. Meyer, 30 Fed.
Rep'r 659, Mo. (1887).
. If partner absconds, co-partner may assign for creditors. B & C,
partners, mortgaged firm stock to D, creditor of B. Then B ab-
sconded, and C assigned, for creditors, to A, with preference to mort-
gagee. After A took possession, sheriff levied on goods, and A sued
him to recover possession. — Recovered. Assignment good, though
preference void. Kemp v. Carnley, 3 Duer 1, N. Y. (1853).
Assignment by partner for creditors allowed to savefrm stock from
adverse and forced sale by execution creditor. C & D were partners
in coach-building, and contradled debts. A levy was made on their
stock in trade, consisting, inter alia oi unfinished carriages. D there-
upon ran away, and left the country. To save loss, C execiited a bill
of sale of the entire stock to A and the other creditors. The sheriff, B,
then gave up the stock to A and others, who took it, employed v^ork-
men, among them C himself, and carried on the business. Then an
execution issued, at the suit of E, against C & D, which was put into
the hands of B, who, being indemnified by E, levied on the property
in the possession of A and others, as the property of C & D, and sold
it. A et al. brought trespass against B. Defence : That the bill of
sale was illegal, because of the entire stock, and by C alone, especially
as it was under seal, and, further, that the employment of C by the
plaintiffs was part of the consideration of the transfer, and in-validated
it. First point ruled against the defendant. Second point ruled for
the defendant, if the jury should believe the fadt. But verdi<fl fcr
plaintiff, and judgment accordingly. — Affirmed. ROGERS, J.: "It is
"a general principle of the law of partnership, that the partners are
"bound by what is done by each other in the course of the partner-
" ship business. * * * Among the powers most ordinarily exercised
"by partners, is \!a.& jus disponendi. * * * it is admitted he can
" sell part without the acflual consent of his associates, and the policy
"of limiting that right is not very apparent, when the transa6tion is
" conducfled in good faith ; still less in a case like the present when
" the arrangement is most clearly for the benefit of the firm. * '^ *
"When the assignment is bona fide, I cannot doubt the power of one
"partner to transfer the whole as well as a part of the partnership
"effedls. * * * The fa<ft of fraud was left by the Court to the jury,
"and they have found that the contrail was bona fide. Deckard v.
Case, 5 Watts 22, Pa, (1836.).
, Partner can't assign for creditors without co-partner'' s consent, and
intervening attachment takes precedence. B & C were insolvent, and
B published dissolution. He assigned for creditors, to D, and filed the
assignment. Later in the daj', A attached firm property. D had
previously consented to be trustee, but the assignment was not de-
livered to him, nor did he know of it, until after the attachment, when
he at once accepted the appointment. C, though in town, was not
consulted by D when he made the assignment. When informed of
it, C at first hesitated, but subsequently consented to it. Parties
agreed to let D sell the property attached and hold the proceeds in
its place. A disputed them with D. — A recovered. Assignment not
an ordinary firm transaction. B not a6ling as, but appointing, an
agent. He could not assign for creditors without C's concurrence,
and intervening attachment cut out the assignment. Holland v.
Drake, 29 Ohio St. 441 (1876).
One partner cannot assign for creditors. B assigned firm stock to
C, for creditors, without knowledge of co-partner, A, who enjoined
451
^2. Powers. Pt. 2, Ch. 8.
p ^ C.— Decree. Partner cannot delegate his discretion. Hayes v.
Heycr! 3Samlf. 293, N. Y. (1849). -^ ^ , // ^ a
Partner no power to assign Jar creditors if co-partners at hand. A
maiority of partners assigned for creditors. It would appear that the
minoritv were consulted.— Assignment invalid. Partner may assign
all finn'stock to firm creditors, but not appomt a trustee, i. c, a third
utrson who will control co-partners in liquidation. He cannot dele-
cate his own authority, nor deprive his co-partners of power. Fisher
V. Murray, i H. D. vSmith 341, N. Y. (1850).
The partner can neither delegate his own or limit his
co-par tner'-s capacity. An agent could not exert the
co-i)artner's rights. Thus a clerk can not create an in-
dci)cndent liability against the firm,^ but he may carry
out a contracl made by them.*"
a. Agent cannot use partner's naine for firm. B was managing clerk,
with authority to give notes for firm. He signed a partner's name
and subscribed his own initials to a note given to A on firm account.
B so signed notes before, and paid them with firm money, but with-
out the knowledge or authority of the partner, or of the firm. A sued
on the note. Defence: A firm transaction. — Liable, becau.se note not
given in firm name, and no implied authority to a6t for firm in a part-
ner's name. Palmer v. Stephens, i Deuio 471, N. Y. (1845).
b. Hood v. Riley, supra n. 10.
4. Assignment or mortgage of entire firm stock void, unless with
consent of all the partners. B & C, partners, insolvent. C made, 8
November, 1886, firm note to A, for 12,529.31, for merchandise, due
9 November, 1886, secured by chattel mortgage of all the firm prop-
erty. A foreclosed. Defence : Partners agreed, 6 November, 1886,
to assign for creditors, to D. Assignment prepared by attorney, and,
9 November, B executed it for the firm. D accepted. — Judgment for
D. Assignment made with C's concurrence valid. Mortgage without
B's assent void. Osborne v. Barge, 29 Fed. Rep'r 725 (1887).
5. Supra \ 122.
§132.
(Tlic assignment for crebitors bn a partner \z prima facie a
liiisolutiou of tl)c tu'm.
An assignment for tlie benefit of creditors is not
necessarily a dissolution of the firm. The stock goes
to the assignee.' The good-will belongs to the cred-
itors, if it is an asset. The partnership might go on
if not only the business itself, but also the name which
452
Pt. 2, Ch. 8. Powers. §132.
individualized the firm passed to its creditors. If
the}', like the creditors in Cox v. Hickman, or a Scotch
bankruptcy, took possession of the firm and ran it for
their own benefit, the partnership would be suspended
during the interval. They would not be restrained
from the use of the firm name, or from any solicita-
tion of the firm customers. Without either or both
of these constituents, the firm would be in suspense.
But the assignment is not equal, in its e£Fe6l, to a
bankruptcy, and need not dissolve the firm.^ If the
debts are paid off by the assignee a right may result to
the firm or to the partners, who can then proceed to
trade again.
It is a question of intention for the jur^^ If to re-
sume after a settlement, a subsequent bankruptcy
would stand; if a dissolution intended, no firm exists
to be put into bankruptcy.^' The result is that, upon a
re-assignment of any surplus to the partners, a former
creditor would compete with new creditors of the re-
suscitated firm.
1. Unless restric5led to the firm stock, the assignment
also carries the separate estate of the partners.
Partners' assignment for creditors not confined to firm property by
construction. A & B assigned all their property for creditors, describ-
ing themselves as a firm, and stipulating for a release. — Sustained,
because not in terms confined to firm property. Orr v. Ferrell, 5 S.
W. Rep. 490, Texas (18S7).
2. But \\\^ prima fades is often taken for the invariable
efifecT:.^
a. Assignment for creditors dissolves firm. A & B assigned for cred-
itors, who accepted their dividend as payment. Certain articles men-
tioned in the assignment as by law exempt, were returned to the part-
ners who had contributed them, respectively, A brought bill for
account against B. — Dismissed. Firm dissolved by assignment, and
I nothing to account for. Wells v. Ellis, 63 Cal. 243 (1885).
A partner may make an assignment for creditors. Whether assign-
ment zi'orks a dissolution, or not, for jury. B, C, D & E, partners.
B made an assignment of all firm property, to F, for creditors. Sub-
sequently, B, b and E assigned to G, for creditors. D continued
business, under old firm name of D & Co. H, of firm H S: I, signing
453
§133- Powers. Ft. 2, Ch. 8.
petition for himself and co-partuer, obtained a commission in bank-
ruptcy against the four partners. A sued the firm for an old debt.
Defence: Bankruptcy. A attached petition and denied firm exist-
ence. — Validity of bankruptcy proceedings depends on the effedl of
assignments. If firm dissolved, no joint commis.sion could issue; if
firm continued, the proceedings regular. Question for jury, whether
the assignments meant to close firm transadlions for the future, as
well as for the past. Pleasants v. Meng, i Dall. 380, Pa. (1788).
§133.
^\]t aiitl)oritB of a partner cannot be restricted bg l)is co-
partners.
Each partner has authority to a^l for the firm, and
the co-partners' forbidding him does not devest him
of his authority, although notice of the prohibition
is given to the person who is dealing with the part-
ner.'
The insolvency of a partner does not deprive him
of the right to manage the business. The solvent
partner cannot claim that insolvency is equivalent to
death, and invests him with the rights of a surviving
partner. The insolvent partner cannot be ousted
from his control, except for cause shown.^ A partner
cannot by notice revoke his co-partner's authority to
coUedl a firm claim. The authority is not subject to
the partner's control, even upon insolvency and dis-
solution,' There is no supremacy among partners,
but they are all equals.
The partner's right is incident to the business. He
may lease premises for the firm.^ Each attorney ex-
erts the powers of all in legal transadions.^ A part-
ner may re-deliver goods upon a return of the firm
notes given for the price. The merchandise returned
454
Pt. 2, Ch. 8. Powers. §133.
satisfies the debt, although the insolvency of the firm
prevents it from satisfying its other creditors.*^
1. Partner's authority in firm business cannot be restriSled by a co-
partner. B, C & D, partners. B drew on A for the firm use, and
gave a written indemnity in the firm name. C, in A's presence, dis-
sented from the indemnity, but subsequently applied the proceeds of
the acceptance to the payment of rent on a lease, taken in his own
name, of the store occupied by the firm. A sued B, C & D. — Recov-
ered. B had implied authority to bind the firm by the indemnity, in
spite of C's dissent. Wilkins v. Pearce, 5 Denio 541, N. Y. (1848).
2. Insolvency does not deprive partner oj joint control. A etal., being
insolvent, dissolved partnership with B, and sued him for account and
receiver. B's defence: Solvent, and entitled to liquidation, like a
surviving partner. — Decree. Analogy too remote, but B might be
appointed receiver if unimpeachable. Hubbard v. Guild, i Duer 662,
N. Y. (1853).
3. Partner cannot revoke, by notice, co-partner's authority to colle£l
firm claim. A & B were co-owners of a ship, and partners in the
cargo. B, as ship's husband, insured ship and cargo in his own name,
with C, for whom it might concern; policy payable to himself.
There was a total loss. C paid B a portion, and was then notified,
by A, to pay no more to B, because he was insolvent, and A was in-
terested in the payment. C did, however, pay the balance to B, and
A sued for it. — Judgment for C. Neither dissolution nor insolvency
incapacitates a partner from receiving firm money. Notice by co-
partner inefieclual, because stranger did not know the state of part-
nership account. Gillilan v. Ins. Co., 41 N. Y. 376 (1869).
4. Partner may bind the firm for rent of premises necessary for the
business. B took a lease of brewery for 10 years. He became bank-
rupt during the third year, and C obtained from the assignee an as-
signment of the term to C & D, though without D's knowledge, and
C contrafted for the firm_ to pay the rent. C & D occupied the
premises, and, upon dissolution, both executed an assignment of the
lease. A, as lessor, brought assumpsit against C & D for the rent. —
Recovered. Renting brewery without B's authority is an incident
of the business, and ratified by D's subsequent recognition of it.
Stillman v. Harvey, 47 Conn. 26 (1879).
5. Attorneys in partnership delegate authority of all to each member.
Counsel signed bill as A & B. Defendants objected to joint signa-
ture. — Sufficient. Rule to restrain attorneys, but control of firm
reached the members, and each has authority of all. Hampton v,
Coddington, i Stew. 557, N. J. (1887).
6. A partner may re-deliver goods in return for the price, although
his firm is embarrassed. A sold coal to firm, which was embarrassed,
and gave notes for the price. B, a partner, gave A a bill of sale for
the coal which was lying on the wharf. The next day sheriff levied
on the coal, and A replevied, and obtained verdicfl for 152,866.43.
Judge charged that A had authority to re-deliver coal in satisfadlion
of the debt. — Sustained. Boswell v. Green, i Dutch. 391, N.J. (1856).
455
§U4-
Powers. Pt. 2, Ch. 8.
§134.
13ii acirecnicnt, tl)c partners mag restrict tlje autl]oritg of a
partner bctiuccn tl)ejnscbcs.'
Outsiders are not affeded by the arrangement," un-
less notice of it is brought home to them,^ and then
slight evidence will be deemed sufficient to make out
a waiver of the restriction.'' A partner who was for-
bidden to buy except fcr cash, bought on credit. The
seller knew of the restriAion, but as the co-partner
knew of the sale, his failure to dissent was deemed a
waiver. His assent was not necessary.'^
1. Limitation of liability by agreement inter se. Uniucorporated
society provided by its constitution that fund alone should be liable,
without recourse to members, and that its officers should not contradl,
except upon this basis. They did, nevertheless, contracft with A,
without reservation. A sued the members as partners. He could
not aver execution of authority in conformity to articles, but he
mij^lit recover on a quajittun meruit. Sullivan v. Campbell, 2 Hall
271, N. Y. (1829).
2. ContraFl between partners does not affefl creditors. B & C gave A firm
note, and dissolved partnership. B undertook, as liquidating part-
ner, to assume outstanding debts, and gave C note for his share. A
sued firm. C set iip B's assumption of A's debt. — No defence. Gul-
ick V. (Vulick, i Harr. 186, N. J. (1837).
Cu<:toin controls secret agreements. By articles A could not con-
tracfl without consent of B, his co-partner. A did so contraA, and, in
a suit against firm, B set up want of authority. — Liable. Frost v. Han-
ford, I E. D. Smith 540, N. Y. (1852).
Agreement to rcstrifl liability to amount contributed ineffe5lual:
A & B, with 20 others, agreed to equip a steamboat, and run her be-
tween two ports oil joint account, to contribute to expenses in instal-
ments, and share the profit and loss in proportion to their subscrip-
tions, though they restricted the loss of each party to the amount of
his subscription. B, on A's demand, promised 'to pay his second
instalment. A who had advanced money for expenses, sued B for
his quota. B asked for non-suit. — Refused, because B's promise
made him liable on account stated, though he was a partner, and A
could not sue him on partnership account. Brown v. Tapscot, 6 M.
&W. 119(1840).
3. ContraH of partners inter se binds stranger with notice of it. Agree-
ment between B, C & D, that D should neither participate in the
profit or loss, nor be liable as a partner. A, who had notice of the
agreement, sued D, as a partner.— Not liable to A, because he knew
of the arrangement. Alderson v. Pope, i Camp. 404, note (1811).
4. Johnston v. Bernheim, stcpra \ 115, n. 3.
456
Pt. 2, Ch. 8. Powers. ^0135.
5. Partner's afl in excess of authority validated by co-partner's knowl-
edge. B contributed ^2,000, and limited his liability to that amount.
C managed the business, and could buy only for cash. He bought on
credit, of A, who knew of the arrangement, but with B's knowledge,
A sued B. — Liable, because he knew of the purchase. Mason v. Part-
ridge, 66 N. Y. 633 (1876).
§135.
^\)t partners maw ratifp tl)e act of a co-partner in txttss of
l]is autl)orit2, if i)one in tl)e name of tl)e firm.
A ratification implies that the a(5l ratified was done in
the name of the principal. If so done, the subsequent
ratification binds the principal, whether he received
any benefit from the transaction or not. If the con-
trail was not made in the name of the principal, his
subsequent adoption of it would not make him liable
on the promise without a new consideration.
It is often said that the a6l ratified must have been
done on behalf of the principal. The meaning of this
phrase must be that the a6l was done in the name of
the principal.^ In so far as any different signification
is given to it, the phrase is incorre6l. The promissor
in entering into a contrail in his own name, may in-
tend that a third person shall have the benefit of the
engagement. If the third person has previously au-
thorized the contrail, he is liable to the promissee as
an undisclosed principal. But if there was no prece-
dent authority, there is no way to make the third per-
son liable to the promisee on the contra(5l. There is
no opportunity for ratification, because the want of
authority can never be supplied by ratification, unless
the promisee contemplated the third person as the
principal at the time the contrac^t was made. The
457
§1^^. Powers. Pt. 2, Ch. 8.
reason is that ratification is not merely an expedient
for charging a principal with liability, but is a means
of confirming a man as party to a contra6l made in
his name, but without his authority. By ratification
the principal becomes in fa6l, as well as in name, a
party to the contracT;, and he not only incurs its bur-
dens, but may compel performance by the other party.
Tlie proposition is not that a man is liable because he
has ratified, but that where the adl is done in his name,
he has the right to ratify and take the benefit with
the burden. But a man can have no right to in-
trude himself as a party into a contrail made with- j
out reference to him. For this a(5tion the testimony I
of the nominal promissor is inadmissible to prove his
secret intention that a third person should have the
benefit of the contract. Conversely, therefore, the
other party to the contra(5l can have no right against
a third person upon proof of such secret intention,
and its subsequent adoption by him as the intended
beneficiary. Such a transa6lion can take effed only
as a new contrail. The promissee may sue an un-
disclosed principal upon the equitable ground that
he was the real party in interest, but must prove that
the defendant, though undisclosed, was, in fa6l, the
principal at the time the contract was made. The de-
fendant might plead any set-off he had against the
promissee, as the agent might have done had suit
been brought against him. The undisclosed princi-
pal has no right against the other party to the con-
trail, except through the agent. The liability of the
undisclosed principal is equitable, not contradlual,
and the rule does not apply unless he was the party
in interest at the time the contrad was made. If the
458
^
Pt. 2, Ch. 8. Powers. §135.
evidence shows that the defendant did not become in-
terested in the contrail until after it was made, he
could not be held upon the equitable ground that he,
in fa(5l, caused the plaintiff to part with the considera-
tion, nor upon the contrail to which he was not a
party.
The a(5l of a partner, in excess of his implied au-
thority as agent of the firm, binds him, because he
warrants his authority to do the ad:. But his co-part-
ners are not bound, unless they adopt the a6l in ex-
cess of authority as their own a6l.' As the a6l is on
behalf of all the partners, the adoption by each is
based on the adoption of all. Unless they all make
the adl: their own, by adopting it, the adoption by a
single partner will not bind him, because he does not
intend to assume the individual liability for the ultra
vires a6l, but only to share it with his fellow-prin-
cipals, on whose behalf the a6l was done. Unless
they also adopt the a(?t, the condition upon which he
adopted it is not fulfilled, and he is not bound."^ He
consented, as one of the firm, to embrace the a6l
within its province, but to enlarge the scope of the
partnership requires the consent of all the partners."*
It is not to be presumed that the partner who adopted
the a(5t meant to assume the entire responsibility
himself, alone. He was willing to extend the part-
nership, so as to cover this a6l, if his co-partners
agreed to it. They could not do it, unless all con-
curred. The a6l would not be duly authorized unless
every partner adopted the a(5l, and thus brought it
within the limits of the partnership business. The
adl was done on behalf, not of a single partner, but
on behalf of all. The ratification could be only by
459
§135- Powers. Pt. 2, Ch. 8.
all. Ratification b}- one partner would not corre-
spond to the autliorit}' assumed and meant to be rati-
fied.
The partner who does not join in a specialty executed
for the firm may, nevertheless, be bound in any one of
four ways? i. He may authorize his co-partner to
execute the specialty for him, and in his name. 2,
He may be present at the execution of the specialty,
know of the transa(?tion , and not dissent. 3, He
may subsequently ratify the transaction. In these
three cases he is bound by the covenants. In the first
case the precedent authority, and in the third case the
subsequent ratification, may be given by parol.^ In
the second case the failure to dissent is equivalent to
aclual execution.^ 4, He may authorize the adl in
question, but not its embodiment in a specialty. In
this case he will be bound, not by the covenant, but
by the contra6l, and the seal will be disregarded, as
surplusage.^
The argument is frequently nrged, that a partner
should have the power to bind the firm by a seal, be-
cause the authority does not exceed the power which
he exercises by means of commercial paper.^ This
reasoning betrays an ignorance of the exceptional
privilege conferred upon the partner by commercial
law. As has been pointed out, the power to bind the
firm by commercial paper does not spring from the
relation, but is superinduced by rules which are in-
consistent with partnership, and which supercede its
principles.
I. A finn may ratify the a(5l of a partner which is ultra
vires. The ratification operates not simply as evidence
460
Pt. 2, Ch. 8. Powers. §135.
of original authority, but as a substitute for the want
of authority.'^
a. Partner may ratify co-partner's unauthorized use of firm credit.
B & C, attorneys, iti partuership. B made his individual note to B
& C, and endorsed it, in their name, for his separate debt. A dis-
counted the note, with knowledge. When informed of the note, C
promised to pay it. A sued B & C. — Recovered. A ratification,
which is not evidence of original authority, but a substitute for want of
authority. Commercial Bank of Buffalo v. Warren, 15 N.Y. 577 (1837).
Execution of specialty by partner prevents a bill to nform it in
Chancery. B & Co. settled with A & Co., giving judgment-note for
balance due, signed B & Co. [i^.s.] by B [i..s.]. A & Co. issued exe-
cution against B, who was insolvent and out of jurisdi(5tion. Then
brought bill to reform the note according to both parties' intention,
which charged firm of B & Co. — Dismissed, because A & Co. ratified
the legal constru6lion of the note, which, otherwise. Chancery would
have reformed. McNaughten v. Partridge, 11 Ohio 223 (1842).
2. Partners executing specialty in firm nam,e was bound by the deed.
B, C & D were partners. B wrote a note payable to A, and D sealed
it. C was not present, but the note was in the name of the firm. A
sued B and D. — Recovered. Woodward, J., said: "The jury found
"that the two parties sued, sealed or assented to the sealing of this
" note, and it is in nowise material that they used the name of a firm
"in which [C], who was not present or assenting, was a partner. By
"whatever name they call themselves, the defendants are liable ac-
" cording to the tenor of the instrument they signed." Potter v.
McCoy, 2 Casey, 458 Pa. (1856).
3. If the scope of the business is enlarged, the partners
must add the constituent power, and all must ratify the
a6l in excess of authority. If not, none of the partners
are bound, not even the ratifying partners.*
a. Roberts' Appeal, supra \ 24, n. 8.
4. If the firm exceeds the scope of the business for which
the partnership was formed, the consent of every mem-
ber must be obtained, in order to justify the firm in
undertaking the new business.*
a. Partners can do no aB beyond the scope oj the business unless
all consent. The stockholders of an unincorporated society passed
resolutions by unanimous vote, changing their previous articles of
agreement. vSubsequently, a portion of the stockholders signed new
articles, under which the original articles were again put in force.
Some of those who did not sign these articles asked an injun<5lion
from the court to prevent this. — Injuncflion granted. All must con-
sent to any change in the articles of the association. And until that
is done, any change is beyond the scope of the business, which any
of the stockholders, being tenants in common, can stop by an injunc-
tion. Ivivingston v. Lynch, 4 Johns. Ch. 573, N. Y. (1820).
5. The partners may ratify by parol a specialty executed
by a co-partner.* But subsequent assent is also an ac-
461
^ij-. Powers. Pt. 2, Ch. 8.
knowledgment of the deed which is executed in the firm
name and on its behalf.
a. Co-parlncrs not present when the contracl is sealed by the partner
in the name of the Jinn, may afterwards ratify it by parol. A sued
H iS: C on an agreement under seal executed by B in the name of the
firm. C was absent when the agreement was executed, but the firm
enjoyed the benefits of the contradl, and C paid A's agent money due
under it. A brought covenant. — Recovered. Strong, J. : " Con-
"cede now, that knowledge of the thing alleged to have been rati-
" fied, is essential to ratification. Existence ot that knowledge, like
"that of any other facl, may be inferred from circumstances. * * *
"Surely there was some e^^dence of knowledge of an existing con-
"tracl;,'and of a contrail with [A], and of assent to it. * * * And if
" [C] knew of the coutradl, tL'eu his subsequent use of the machine,
"and payment for that use, were a<5ls of ratification." Jones v. Bat-
tin, 6 Casey 84, Pa. (1857).
k'atijicaiion of partner's ultra vires contraB by aEls. B employed
.\ in matters beneficial to firm of B & C, but not striAly in the line
of its business. C paid A money for expenses, and had consultations
\%-ith him in reference to the business. A sued firm for services.
Defence by C : B had no authority to employ A on firm account.^
Judgment for A. C's conduct a ratification. Holmes v. Kortlander,
31 N. W. Rep'r 532, Mich. (1S87J.
6. The assent of a partner who is present at the execution
of a specialty makes it his a6l.^ He, in effecSl, directs
the performance.
Presence of partner at execution of deed by co-partjier for the firm
makes the deed his aH. B 6c C were partners, and B, in the presence
of C, who assented to, and authorized the transaction, assigned cer-
tain bonds to D, by an instrument under seal and in the name of the
firm. There was a covenant in the instrument that in case the
amount of the bonds could not be recovered : "We do promise and
agree and pay the amount thereof," etc. A, the executor of D,
brought covenant against B & C. C appeared and pleaded nott est
factum. — A recovered. Fichthorn v. Boyer, 5 Watts 159 (1836).
7. The requirement that the authority to attach a seal
should be delegated by deed is relaxed. But unless
subsequently ratified, the a(5l would bind the firm, not
as a deed, but as a simple contradl.''
a. Though the deed of a partner may be ratified by parol after execu-
tion, it is still necessary that the precedent authority, if relied on, should
be under seal. A brought covenant against B, C & D, partners, trad-
mg as B & Co., upon an agreement under seal, executed by B in the
name of the firm, but not in the presence of C & D. — No recovery.
GiBsox, C. J. : "A thing done in the presence of another, and at his
||request, is his inmiediate a(5l. * * * Que may adopt as his own, a
"seal affi::ed by another without his authority, or even against his
•|will, and the deUvery being his immediate acl, makes the instru-
'|ment his immediate deed. The law is fixed and certain, that the
"authority of any agent to bind by deed, can in no case or under
"any circumstances, be by parol." Hart v. Withers, i P. & W. 285,
Pa. (1 830).
Contra, Gram v. Seton, Infra, next note.
462
Pt. 2, Ch. 8. Powers. §136.
8. Authority to execute deed ratified by parol. B signed and sealed a
charter party, in firm name of B & C, without any special authority
from C. B & C atfled under the instrument, but when A sued them,
to compel payment of balance due, C's defence: N^oit est faHuin.^
Judgment for A. Necessities of business demand recognition of part-
ner's authority to attach seal without warrant of attorney. Previous
permission or subsequent assent makes deed bind co-partner. To
establish previous permission, presence at time of execution not
essential. Analogy of commercial paper. Remed}', covenant. lyike
co-lessees, who, if one lessee signs lease, and both occupy under it,
are liable in covenant. Gram v. Seton, i Hall 262, N. Y. (1828).
§136,
^n infant partner must disaffirm at ntaioritn, in or^cr to
escape past ani) future liabilitu tor l)is acts as aw infant.
The peculiarity of ratification by an infant is, that
his continuance of the business after attaining ma-
jority is treated as an afS.rmance of all the transact
tions of the firm during his infancy.^ This conclusion
is suggested by the analogous and admitted principle
that where an infant retains, after majority, the prop-
erty, which he might return, he becomes liable for the
price. ^ The analogy is not perfe(?t, because by con-
tinuing in the firm he retains no physical property
which might be handed over to a firm creditor. But
he retains the benefit of his position as a partner and
co-proprietor of the business. The firm business is the
produ6l, among other things, of the contrails made
during minority. If then the infant does not dissolve
at majority, and notify the firm creditors of his retire-
ment from the firm, besides rendering himself liable
on the firm contrails made during his membership,
he becomes liable on the subsequent contrails of the
firm.^ The firm customers, have dealt with him as a
partner and have known that he was a co-proprietor
463
§136. Powers. Pt. 2, Ch. 8.
in the firm, possessed of the benefits of the firm busi-
ness. The obligation upon him to notify the firm
customers of his retirement from the firm at major-
ity, is analogous to his obligation to return property
bought during infancy, if still in his possession.
A\'ithout such notice he must be considered as retain-
ing the proprietorship of the firm business, and there-
fore, as continuing to be a partner. If he adopts the
firm contradls, his partnership embraces the period of
his infancy when they were made. The ratification
carries with it the precedent authority, and thus es-
tablishes his position as a partner from the beginning.
The partnership must be dissolved by the usual notice
brought home to the customers.
Suppose the infant partner upon majority repudi-
ated the partnership, and reclaimed his contribution
of $10,000, and the only assets of the firm were goods
of that value, sold in one lot by a vendor, who claimed
payment of the price. Is the infant preferred to the
unpaid seller and allowed to take the assets away
from him without payment? The infant would take
the merchandise from his co-partner, who could not
resist his demand. The creditor could not prevent it.
He sold to the infant and adult partners, but could
recover only from the adult. The infant's taking the
goods would not be a retention which would charge
him for the price, because he would not take them
under his contrail with the seller, but under his con-
tracl with his co-partner, which he might avoid at age.
The goods became the property of the partners by
virtue of the sale, and, thus converted into firm assets,
lost their identity. The infant reclaims them as rep-
resenting his contribution."
464
Pt. 2, Ch. 8. Powers. §136.
1. Co7iti)iui7tg partnership after Diajority charges infant parttier on
previous firm contraRs. B, in partnership with C, a minor, gave a
note to A, for a firm debt, without C's knowledge. After coming
of age, C continued the business, paying debts of the firm, colleAing
money on its account, giving receipts in the firm name, and joining
in suits upon firm claims. Subsequently, learning of the note, he
repudiated and refused to pay it. A sued on the note. — Judgment for
A. Miller V. Sims, 2 Hill 479, So. Car. (1S34).
2. Retention, after majority, of property which might be returned,
affirmance of infant's contrail. Two infants, B and C, bought ahorse
and plough of A. After B's majority, and while C was still a minor,
they sold the horse, and bought another with the purchase-money.
They retained the plough three years after both obtained majority.
A sued them for the price of the horse and plough. Defence: In-
fancy. — Recovered. Retaining the plough after majority an affirm-
ance of the entire contrail. Boyden v. Boyden, 9 Met. 519, Mass.
(1845).
3. Infant' s failure to announce dissolution at majority charges him
for subsequent contrails of the firm. B, a minor, in partnership with
C. At majority, B dissolved, but gave no notice to firm customers.
A sold the firm goods on C's order, supposing B to be still a partner,
and sued B & C for the price. B's defence : Infancy. — Judgment for
A, because no notice of dissolution. Goode v. Harrison, 5 B. & Aid.
147 (1821).
4. The infant is entitled to reclaim his contribution
either before or at majority.'' There is no foundation
for denying to an infant the right to disaffirm before
majority. *" If the contribution is lost in the business,
the infant has no right against his co-partners for in-
demnity.*' He cannot recover indemnity, because by
contributing to the partnership he has not devested
himself of his property right. He merely admitted his
co-partners to co-ownership with himself. The loss of
his contribution is the result of his own a(ft. When
he reclaims his contribution from the partnership fund,
he devests his co-partners of their co-ownership with
him in his contribution.
a. Lifatit partner may recover his contribution. B induced A, an in-
fant, to contribute |i,ooo to partnership b> representing business as
profitable. It tvirned out unsuccessful. A sued B to recover contri-
bution, less |ii2 received from the business, averring minority and
fraudulent representations. Defence : Gist of adlion, fraud, and suit
should be ex fl'i'/z^7c).— Judgment for A. Minority sufficient to re-
scind. Misrepresentation matter of aggravation, and adlion prop-
erly ex contractu. Sparman v. Keim, 83 N. Y. 245 (1880).
b. An infant's rights under a partnership contraB are in suspense.
The contraB becomes valid, or void, by relation, upon infant's adop-
tion or rejeHion. A, an infant, formed a partnership with B, con-
tributing |ioo. After three months, A left, because B would not
give him a salary in lieu of a share in the business. A subsequently
returned, and continued in the business for nine months, when he
465
§137. Powers. Pt. 2, Ch. 8.
withdrew and sued for his contribution, with interest and for his ser-
vices, judgment for B. A cannot anticipate his election to affirm
or disallirm the partnership contradl, but must await his majority.
Dutton V. Brown, 31 Mich. 182 (1875J.
c. Infant partner cannot recover contribution or compensation. A,
infant, contributed |ioo to partnership with B, adult, and gave his
services to business for a year and seven months, when he dissolved,
and sued B for his contribution and for compensation for services. —
Judgment for B. Contribution was not a payment to B, but remained
in joint possession, like other partnership property, of A & B. The
services were rendered in the joint interest. B not liable without ex-
press promise. Page v. Morse, 128 Mass. 99 (1880).
§137.
^n infant mati tnitv a firm, but as I)e is not bating b« \)\3
contract of partncrsl)ip, eitl)cr to l)is partners or to tljirb per-
sons, l)is position as a partner is lieteriuineLi entireb bg l)is
propcrtn ric[l)ts.
The contradls of a firm are not binding upon an in-
fant partner.^ The firm does not acquire by virtue of
the contra6l of partnership a joint title, so as to subje(5l
the infant's contribution or interest in the firm fund to
the claims of firm creditors. The interest of the infant
is always that of a tenant in common, because he is not
liable to an account. He may reclaim his share of the
firm property at any time on his title as co-tenant, irre-
speclive of the state of account between himself and
his co-partners.
There are, however, anomalous cases which enforce
an infant partner's contra(fl: to the extent of maintain-
ing the co-partner's control over the infant's contri-
bution, and subjeding his interest in the funds of the
firm to its debts." These cases proceed upon the no-
tion that the partners hold the firm property by a
466
1
Pt. 2, Ch. 8. Powers. §137.
joint title as in ordinary cases, and that the infant
having invested his co-partners with this joint title
cannot afterwards dispute his own a6l. But an in-
fant's deed is no less voidable than his promise. His
adl creating a joint title can have no greater validity
than his assent to a joint contracfl. For this reason
he may rescind the partnership contract and reclaim
his portion of the partnership property at any time,
without waiting until he has attained his majority.^
If the firm could retain his contribution until he
reached majority, his a(?t during the interval would
be binding, not voidable. If at majority an infant
does dissolve the partnership, and reclaim his con-
tribution, this cannot be distorted into an affirmance
of the relation, even though he receives from his co-
partners a payment as profit for the use of his con-
tribution.'*
His claim to recover the premium paid for admis-
sion into a partnership stands upon a different footing.
In such a case his position is that of a buyer. He
pays the price of a valuable privilege and enters upon
its enjoyment. Having thus received the considera-
tion he cannot reclaim the price.'^ In the contra6l
between the parties it is not contemplated that a
premium for admission to the partnership shall be
paid backf but a partner always retains a qualified
ownership of his contribution, and has the right to
re-take it upon a distribution. The rights of an infant
with respedl to his ct)ntribution resemble his right to
a sum of money paid as a deposit to secure his per-
formance of a contrail. He may disaffirm the contraA
and recover the sum deposited. He has never in re-
ality parted with title to the deposit.
467
gf^;. Powers. Pt. 2, Ch. 8.
1. Infant partner not bound by firm contrail. A, aged 19, -went iino
partliershi]) with B & C. Within a year, he sold out his share to B.
1), the holder of notes given by the firm while A was a partner, re-
covered judgment, and levied on A's property. A obtained injunc-
tion.— Maintained. Vansyckle v. Rorbach, 2 Hal. Ch. 234 N. J.
(1847).
2. Infant partner bound by assigntnent of firm property. B was in-
fant partner in a firm which assigned for creditors. He affirmed the
deed at majority. A claimed, as firm creditor, to set aside assign-
ment, because infant's privilege to disaffirm equivalent to a reserva-
tion, and avoided the deed. — Disallowed, i. No reservation in the '
assignment. 2. B's privilege personal, and he had affirmed. 3. As-
signment of firm goods valid without confirmation, because only
separate property of firm inf.mt exempted from execution. Yates v.
Lyon, 61 N. Y. 344 (1874).
Advance chattel Diortgage executed by infant partners is ratified
by receipt of advatce'^ after one attains majority a7!d passes, at least,
his interest. A & B, minors, were in partnership as provision deal-
ers. They executed a chattel mortgage for meat already bought, and
for purchases to be made. Most of the meat was delivered after B's
majority, and $50 was paid on account. Firm dissolved, and B sold
out his interest to A. Mortgage foreclosed, and A replevied the
goods. — Judgment for defendant. B ratified the mortgage, by re-
ceiving the consideration, which was executory, after he became of
age, when he had the capacity to bind the firm by a chattel mort-
gage. B's confirmation of the mortgage made it pass, at least, his
interest in the property, and deprived A of the exclusive right of
possession necessary to maintain replevin. Keegan v. Cox, 116 Mass.
289(1874). The above decision might be sustained upon the point
of procedure.
3. .Supra I 136, n. 4.
4. Infant does not ratify partnership by enforcing payment of note
for contribution and share of profits given on dissolution of partner-
ship dm-ing minority. B, minor, contributed fgoo to partnership
with C, adult. B & C dissolved before B's majority. C gave B note
for |i, 000, secured by mortgage in full for B's contribution and share
in the profits, and agreed to pay the firm debts. Subsequently B be-
came msolvent. After majority, B proved for |i,ioo against his
estate and foreclosed the mortgage. A, firm creditor, sued B & C.
B's defence : Minority. Reply : Ratification.— Judgment for B. Dana
V. Stearns, 3 Cush. 372 Mass. (1849).
5. Infant cannot recover premium for admission to partnership. A,
mfaut, paid 12,900 premium for admission to partnership with B & C,
remained in firm for more than one year, until firm failed, and then,
being still a minor, disaffirmed, and held B & C for premium.— Judg-
ment for B & C. Adams v. Beall, 8 A. Rep'r 664 (1887).
6. Partner purchasing interest in business not credited in account with
price as a contribution. By articles, A put |i,ooo as capital in B's
restaurant, $500 down, balance to be retained by B out of A's share
ot profits A brought account. B contended that the money was the
price paid him for a half interest in the business, for which payment
A was not entitled to credit in account as a contribution. The books
snowed no credit to A for cash payment, and no charge against B for
sums subsequently taken from profits.— Dismissed. Evidence com-
petent to show mistake in articles. Isles v. Tucker, 5 Duer 393, N.
468
I
Pt. 2, Ch. 8. Powers. §138.
§138.
!3l married tuoman, cicept u)l)ere sl)e is evempt from l)cr com-
mon latu Msabilitii, camxot contract as a partner.
If a married woman replaced her husband as a part-
ner she could maintain account. Though a trustee
for husband, she is entitled to a partner's rights and
interest, subje6l to the execution of his separate cred-
itors.^
If a married woman is a partner her husband could
not testify where interest excludes a witness. The
husband is identified with his wife in interest and is
disqualified. -
A husband is liable for his wife's ante-nuptial part-
nership debts, although he does not acquire her per-
sonal property by marriage.^
A husband can trade as the agent of his wife and
his minor son. His prior creditors cannot claim pay-
ment out of the firm assets. The wife would be en-
titled to her goods, and the father need not make the
minor son account for his profits in order to pay the
father's creditors.^
The ratification by a married woman after discover-
ture relates back, and validates all the transa(5lions of
the firm.^
I. Married woman may aH as partner for her Jnisband. B & C traded
as B & Co. C retired, and A, his wife, took his place. She brought
' account. — Maintained. Trustee for C, who should sue. As C was
the real partner, his separate creditors might seize A's interest in the
firm. A, being liable as ostensible partner, entitled to a partner's
rights. Bitter v. Rathman, 6i N. Y. 514 (1870).
Wife may compete with husband's firm creditors. A advanced
^500 from iier separate estate to her husband, B. Firm B & C used
and gave firm notes for it. A proved against firm. — Allowed. 45 &
46 Vidl., c. 75, s. 3, which excluded wife's proof if loan to husband
for trade, or business carried on by him, or otherwise, did not apply
if husband used as partner. In re Neff 19 Q. B. D. 88 (1887).
469
§i^c). Liabilities. Pt. 2, Ch. 9.
2. Husband of partner incompetent witness. Suit against A. B, a
married woman, was his dormant partner. B's husband, an employee
of A, was admitted to testify. A obje(fted, and brought bill of excep-
tions.— Krror. Jackson v. Miller, i Dutch. 90, N. J. (1855).
3. Husband liable for wife's afite-nuptuai partnership debts. B, a
married, and C, a single woman, coutradled, as partners, a debt to A,
for merchandise. U married C, and A sued B, C, and D. — Recovered.
D liable for C's ante-nuptual partnership debts. Alexander v. Mor-
gau, 31 Ohio St. 546 (1877).
4. Husband agent for wife ; son infant partner. B, insolvent, bought
stock, as agent for C, his wife, who relinquished dower in payment.
B traded as her agent for four years, then joining his son, D, 19 years
old, as partner, traded two years, when they stopped. A, prior sepa-
rate creditor of B, brought account for B's share, claiming : i, Assets ;
2, D's sers'ices belonged to B. — Dismissed. C could trade and make
B her agent. B could emancipate D, who ratified partnership after
age. Assets belong to creditors of the business, profits to B & D.
Penn v. Whitehead, 17 Gratt 503, Va. (1867).
5. Everett v Watts, supra ^69, n. 20.
-O-
CHAPTER IX.
THE LIABILITY OF A PARTNER.
§139.
CJl partner must ansEDcr for tl)c tort of l]ts co-f artuer com-
mittf L) in tl)£ course of tl)c business.
He is liable for the damages caused by tHe tort.
The transadion must be one which the partner may
perform in the business. Securities pledged with a
firm, but withheld by a partner for his independent
account, charged the co-partners for the conversion.'
The partner received them for the firm; which was
bound to restore them upon payment of the debt for
which they were pledged. The partners are bound
470
PT. 2, Ch. 9. Liabilities. §139.
by a co-partner's receipt, although given for merchan-
dise which was not delivered to the firm, if money has
been lent upon the faith of the representation." A
gambling contra6l prohibited by law cannot be en-
forced by the partners, although the co-partner made
it in the course of the business.^ A partner who is-
sues execution on a firm judgment charges his co-
partners, if its enforcement is an abuse of legal pro-
cess.^
The conversion of another's property by a partner
to the use of his firm resembles a loan, in this respe6l,
that it adds funds to the firm capital, and, therefore, a
loan is said to underlie the tort. The innocent part-
ner, who receives the benefit of the misappropriation,
is, on this ground, charged for the property upon an
implied contrail.'' Wherever the damages recovera-
ble for a tort are assimilated to the damages for a
breach of contracft, the identity of the transa6lion is
assumed. The confusion has been already pointed
out (§48, n. 2).
1. Partner retaining securities for debt of custotner to different firm,
ofivhich he had beeti a member, charges co-partners for the conversion.
A, the assignee of D, brought trover against B and C, trading as B &
Co., for the conversion of six promissory notes, drawn by various per-
sons in favor of D. The notes had been deposited vdth B & Co. , by
D, and were to be delivered up when certain goods were deposited in
their stead. Demand was made on B alone, C not being present, and
he refused to give them up, although the goods had been deposited.
At the trial it appeared that B had formerly been a partner in the
firm of E & B, and that as a balance was due that firm from D, B
claimed a right to retain the notes. C requested the Court to charge
the jury "That if they believe * * * that [B] detained the notes
<<* * * on behalf of [E & B], and not in behalf of B& Co., C is not
"liable," but the Court said: "The law is not so, but just the con-
"trary. The defendants being partners, and the notes in question
"having been delivered to [B] for purposes connecfted with the busi-
"ness of the partnership, the conversion of one was, in point of law,
"the conversion of both." Verdidl and judgment for A. — Affirmed.
Nisbet v. Patton, 4 Rawle 120, Pa. (1833).
2. Partner' s fraud in giving receipt for merchandise not delivered,
estops the firm against one who lent on the faith of the misrepresen-
471
§i^o. Liabilities. Pt. 2, Ch. 9.
tation. B & C, partners in an elevator. B gave D receipts for grain
never delivered, and went with D to A, and represented to A that
the grain was on hand, whereupon A lent D money on the receipts.
A sued B (S: C for the grain, or its value and damages. Defence- B
had no power to give fraudulent receipts. He could no more enlarge
his power than create a power by representation. Trover would not
lie for grain which had no existence. — Recovered. B's representa-
tion not on the point of his power. He misrepresented the external
fatts on which a lawful exercise of his power depended. The fadls
were within the scope of his authority. B & C estopped from ob-
jecting to a count in trover by the representations made. Dissent:
Unless trover could have been brought, B& C not bound by estoppel.
No conversion of property, which complaint alleges has no exi.st-
ence. Griswold v. Haven, 25 N. Y. 595 (1872).
3. Firm cannot recover on contraH. for an illegal consideration. B
emploved C, partner with D in the commission business, to buy
ODtions in grain, under an agreement that B should take no grain,
but settle with C for the differences. C dealt for the firm according
to the trade custom, but D had no knowledge of the transadlion. B
lost, and settled with C & D. by giving them the note of a third
person made to him, and by guaranteeing its payment, which note
they endorsed to A, before its maturity, and he sued B on the guar-
anty. Defence: Illegal consideration for the guaranty. — Recovered.
Partner's want of knowledge did not make consideration legal.
Tenney V. Foote, 95 111. 99 (1880).
4- Firm liable for partner^ s tort in enforcing avoidjtidgnient. B mort-
gaged a horse to A, who let B retain possession. Firm C & D ob-
tained judgment against B, which was void, on account of the judge's
consanguinity with C. C directed sheriff to levy on the horse. A
sued C & D for the conversion. Defence: Tort, if any, was C's
alone. — Recovered. C was adting for the firm. His wrong was the
a(?l of both, and incident to the exercise of his authority to colledl
the debt by legal process. Chambers v. Clearwater, i Keyes 310, N.
Y. (1S64).
5. Guillou V. Peterson, iufra \ 141, n. i.
6. Innocent partner liable for co-partner'' s tort if founded on contrail.
A employed firm B & C, physicians and surgeons, to set his leg, and
sued them for C's negligence in performance. B demurred. — Adlion
lay against both. C's tort in firm business charged B, because founded
on coutraa. Whittaker v. Collins, 34 Minn. 299 (1885).
§140.
1
If \\)t firm 13 merelfl tl^e occasion for a partner's fort, but
not tl)c agencg in its commission, tl)e co-partners are not liable. .
If money is left with solicitors for investment at
their discretion, and one of them embezzles it, his co-
472
I
Ft. 2, Ch. 9. Liabilities. §140.
partner is not liable for the amount, because custom
does not justify an investment by solicitors, except
with tbe lender's approval, upon submission of tbe
investment to bim/ A partner who takes advantage
of his position, and induces a customer to withdraw
his claim from the firm, and entrust it to him, will
aA, in colledling it, as an individual. His tort in
dealing with the claim will not charge his co-partners.^
The partners define the limits of the business, which
they undertake, and each partner in transacting the
business a(5ls for all.^ If he commits a tort while add-
ing within the scope of the business, he charges his
co-partners, who take the risk of working with a
human instrument, imperfect in its moral quality, and
are affected by the imperfect quality of their agent.
The test is: Was the tort committed in the prosecu-
tion of the business ?"*
The libel by a newspaper, for example, hardly ad-
mits of explanation. It is not necessary for the paper
to be a vehicle of calumny in order to charge the pro-
prietor for a libel by the editor. The colle6lion of
news is the business, and the choice of material is the
editor's fundlion.-^
I. Firm of solicitors not liable for embezzlement of money left 'vith
a partner for investment at their discretion. A became possessed
of ^3.000, ^,1,300 of which she advanced to B & C, who were in
partnership as solicitors, to be invested by them in the mortgage
of an advowson. They signed a written undertaking to execute a
legal mortgage of the advowson to her when the transadlion should
be completed. A, subsequently, handed the remaining ^1,700 to C,
on the representation by him alone that it would be invested in the
mortgage of real estate. B died. A was fraudulently induced by C
to constitute him, by deed, sole trustee of the ^3,000, with power to
invest it as he thought proper, without being answerable for any loss.
No legal mortgage of the ^1,300, but it was paid off to C under the
authority of the deed of trust, and with the ^1,700 (which C had
never invested), was spent by C. C paid A interest on the funds until
he died insolvent. A then filed a bill against the executors of B and
C. — B's estate liable for the ^1,300. In regard to the /'i,7oo, Sir R.
473
§1^0. Liabilities. Pt. 2, Ch. 9.
Malins, v. C, said: "It is clear that one partner has no authority
"to bind the other partners by borrowing money, unless it is bor-
" rowed in the usual course of business, and for business purposes. * *
"The iKiynicnt of tbo sum of /" 1,700 to [C] was altogether outof the
"ordinary course of business, and the partner cannot * * * be liable
for it." it was not tlie custom of the business to receive funds for
investment at the discretion of the solicitor. Plumer v. Gregory, L.
R., iS Kq. 621 (1874).
The plaintiff, who seeks to charge the innocent part-
ners, must make out that the business of solicitors has
been enlarged, so as to include that of a scrivener, or
that they were aware of the transa(?tions.
So.'in'/ors' business not embracing custody of bonds, partner' s taking
charge of them, though ostensibly for partnership, does not charge
co-partners, unless they authorize such extension of business. B, C
&. D, solicitors in partnership. A, executor of E, deposited bonds
with B, who accounted for them during life of E's widow, and dealt
with beneficiaries. B absconded, having misappropriated the bonds.
C died. A sued D. Evidence showed that B used his position in
firm to deal with the beneficiaries, but not that the partners enlarged
the range of the business to authorize B to take charge of the bonds.
—Judgment for D. Cleather v. Twisdeu, 28 Ch. D. 340 (18S4).
2. If partner induces customer to withdraw securities from firm^
and let him make investment, co-partner not charged by his embez-
zlement of proceeds. B, C and others were partners in the banking
business. C advised A, customer, to sell some Dutch stock, telling
her the firm could procure for her better security, and that he had
one in view. He said the money was, in fa<5l, wanted by his own
sou who was in trade. A sold the stock, and paid the money into
the bank, giving C a check to draw it out and invest it. He drew it
out, misapplied it, and absconded, the interest having been regularly
carried to A's account in the meantime in the books of the bank,
but by whom did not clearly appear. All this took place in the
banking-house, and A had no acquaintance or dealings with C, ex-
cept as a banker and member of the firm. C's co-partners did not
appear to have known of the transaction at the time they took place,
but they did before C absconded. A filed a bill against B and others
to render them liable for the amount embezzled by C. — Bill dismissed.
Bi.shop V. The Countess of Jersey et al., 2 Drewry 143 (1854).
If partner collects note for strariger, conversion of proceeds does not
charge the firm. A sued B & C for promissory note sold firm. De-
fence : Note given B for collecftion, and B was not firm's agent in the
transaction. Judge requested to instrudl jury: If L received note for
collecftion, his conversion of proceeds to his own use did not charge
the firm.— Error not to give the instnidliou. Linn v. Ross, i Harr.
55. N. J. (1837).
3- Partner liable for co-parttier' s tort zvithin scope of business. B
bought, of A, tobacco for firm of B & C, and gave note of a third per-
son, which he fraudulently represented to be good. C, learning the
fact, failed to disown it. A brought case against B & C for deceit.—
Recovered. C liable in case or assumpsit. Moreover, C's failure to
disavow made him a party. Hawkins v. Appleby, 2 Sandf. 421, N. Y.
(1849).
Partner individually liable for co-partner's fraud. B & C, solicit-
ors, in partnership, with separate places of business. B absconded
474
Pt. 2, Ch. 9. Liabilities. §140.
with funds received in his branch of A for investment. A proved
against firm in bankruptcy. C obtained his discharge. A sued C for
the debt. — Recovered, because debt arose from fraud. Cooper v.
Prichard, 75 L. T. 91 (1883). Criticised, because C's individual fraud.
do. 95.
Solicitors chaj-ged by partner who -misrepresented that he tnade
specific invest->nent for customer. B and C were in partnership as
solicitors. C represented to A that a sum of money which A had
paid into the joint account of the firm for the purpose of investment,
had been invested in the selected mortgage. Afterwards B & C dis-
solved partnership, and A's account was transferred to C. C became
bankrupt, and A found that, though C had regularly paid interest on
the money, the investment had not, in facfl, been made, but that C
had appropriated the money to his own use. A filed a bill against
B to make him liable for the sum. Defence: That B was ignorant
of the transadlion, and had never derived any benefit from it. — B
liable. Cottenham, L. C. : "Whether the defendant knew of the
" transacflion or not, he certainly had the means of knowing it. But
" neither is necessary ; for the duty of laying out the money was in
"the ordinary course of the business of the firm; and they had un-
"dertaken it. * * * The misrepresentation was, probably, made for
"a fraudulent purpose; but the consequence is a merely civil liability;
"and as one partner may certainly bind another as to any matter within
" the limits of their joint business, so he may by an aA which, though
"not constituting a contra(?l by itself, is, in equity, considered as
"having all the consequences of one." Blair v. Bromley, 2 Phil.
Ch. 354 (1847)-
Co-tort feasors are liable jointly, separately and suc-
cessively without reference to partnership.
Frq.ud charges culprits with absolute liability. A sued B & C for
sum in excess of settlement made between them for sales of land
effedted through their joint executions, on the ground that items in
account were fraudulent. The facft denied and not partners — Judg-
ment for A. Liable in solido, if not partners. Baldy v. Bracken-
ridge, 2 S. Rep'r4io, La. (1887).
Partner and stranger liable jointly for fraud on firm. B invested
funds of B & C in land for his own account, and conveyed to D, an
accomplice, and under circumstances of fraud, by D upon B. A, ex-
ecutor of C, sued B & D, jointly, to recover the money of B and the
land of D. — Judgment for A. D's fraud upon B immaterial, but both
join in upholding a title which is a fraud on C. Wade v. Rusher, 4
Bosw. 537, N. Y. (1859).
4, Newspaper firm liable for libel published by editing proprietor.
Partners published newspaper, which reported a church trial, and
libelled the clergyman, who sued them. Innocent partner liable,
because libelling, though not a necessity, an incident to the business.
Lothrop V. Adams, 135 Mass. 469 (1882).
Partner's libel must groiv out of firm business, or will not charge
innocent co-part7ier. A returned a table because unsuitable to B, C
& D, trading as a furniture company. The table was exposed in front
of the shop, with this placard : ' ' Taken back from ' ' Dr. A ' ' who could
" not pay for it ; to be sold at a bargain." A tore the placard off, but
another was put up, which substituted "would" for "could," and
added: "Moral: Beware of dead-beats." A requested B, in D's
presence, to remove the placard, and D replied, that the man who
placed it there had gone to dinner. A sued B, C & D. Court diredled
475
^i^i. Liabilities. Pt. 2, Ch. 9.
venlicfl for defendants. — Reversed. Sufficient evidence against B
and D for jury. Libel not sufficiently connecfled with business to
charge C. Woodling V.Knickerbocker, 31 Minn. 268 (1883).
This libel might be treated either as an advertisement
which might induce customers to stop and buy the ta-
ble, which, on account of the personal incident re-
counted, would be sold cheap. Or the libel might have
been a personal spite, and not for the purpose of effecfl-
ing a sale of the table. The Court took the latter view,
and refused to charge the innocent partner for the venom
of his co-partner.
§141.
®r«9t funbs put bw a partner in l)is firm t[)ax%t l)is ro-
partners for tl)e misappropriation.
The ccstuy que tj^iist may waive the tort and proceed
in assumpsit.' Where the tort of a partner consists in
the unlaw^ful appropriation of the property of another,
the defrauded party's primary right is for restitution.
The Common law a(5lions were originally designed to
give effedl to this primary right, but they became, in
time, a medium for the recovery of a mone}^ compensa-
tion. The modification of the process changed the
right and enlarged the opportunity for recovery. The
whole estate of the tort-feasor might be taken to com-
pensate the owner of the misappropriated property.
An action to enforce a personal and unlimited liability
has taken the place of a proceeding to recover the pos-
session of specific property. The equitable rule for fol-
lowing trust funds, is a survival of this natural and
primary right of restitution. A right of restitution
can not be made available except against the property
itself, or a fund into which it has passed. When a
476
Pt. 2, Ch, 9. Liabilities. §141.
partner has made a misappropriation of a stranger's
property, and an attempt is made to hold the firm
liable, if the plaintiff asks for restitution, he can en-
force his right only against that fund which was
increased by the misappropriation, that is, the firm
assets.'*
If, on the other hand, the plaintiff is entitled to
compensation at the hands of all the partners, this
liability charges their separate estates as well as the
firm funds. But the co-partners are protedled in their
separate estate from the owner's demand for restitution.
The individual estate was never contributed to the firm
stock, and remains the individual property of the co-
partners. They are in a better position than a pur-
chaser for value without notice, as they do not require
any aid to fortify their title. It is the dominion of an
independent proprietor who has an absolute right at
law. To expropriate them, would be a fraud without
any palliation. Equity recognizes the separate estate
as unconne6led with the firm, and allows no claimant
to come upon it, unless he can establish a liability of
the proprietor. A firm contrail does create such an
obligation, but only to the extent of the partner's
agency. The liability for restitution of misappro-
priated property is not charged against the innocent
partner, unless the fund can be traced to his posses-
sion, though he may be charged in his individual ca-
pacity, with damages, for the tort of his co-partner.
As soon as the obligation was recognized at law,
that compensation should be made, instead of restitu-
tion, there was no way to limit, by means of the Com-
mon law adlions, the claim to recovery from the firm
■estate.
477
§141. Liabilities. Pt. 2, Ch. 9.
If there were no separate creditors, the firm credit-
ors might proceed against the separate estate, and the
ccstuY que trust might obtain the firm assets. He
might proceed first, or he might exclude the joint
creditors, by claiming restoration, or an equivalent
in value, before allowing their claims. The effedl
would be to throw them upon the separate estate for
satisfaction. Indirectly, the cestuy que trust would
be reimbursed out of th*^ separate estate, to which he
could not resort diredlly. If restitution in full were
made, the separate estate would be charged with that
amount, at the suit of the firm creditors, from whom
it had been taken away. If the cestuy que trust re-
ceived only a dividend, the joint creditors would be
thrown upon the separate estate for the rate, instead
of for the principal. In either event, the separate
partner would pay the joint creditors what they had
lost by the reclamation of the cestuy que trust ; who
might, therefore, be allowed, so far as the partner is
concerned, to resort to the separate estate in the first
instance. To the separate creditor it makes no dif-
ference, for he excludes the joint creditors until he is
satisfied, in any event.
I . Cestuy que trust may sue innocent partner in contraRfor trust funds
converted by trustee partner to firm use. B, of Philadelphia, and C,
I) and E, of New York city, entered into a special partnership in
November, 1866, as C, D & Co., to transact in New York the business
of buying and selling stocks on commission, making loans, colledl-
ing promissory notes, drafts, and bills of exchange. In November,
1S71, by an omission to publish, B became a general partner, accord-
ing to New York law ; though l)Oth he and his partners thought him a
special partner only. B carried on in Philadelphia a business of his
own. I) was also executor of the executor will of F, and as such re-
ceived bonds, etc., of great value. The partnership agreement stipu-
lated that the general partners should not enter into speculations of
any kind. C, D & F, nevertheless, did so without B's knowledge;
and I), with the approval of C and E, used, in speculations, securi-
ties belonging to F's estate. The speculations resulted iii the insol-
vency of the firm, and the securities were used to pay the losses. B
478
Pt. 2, Ch. 9. Liabilities. §141.
did not know that the trust property had been used, till the failure
of the firm ; but he did know of a loan of securities which had been,
on another occasion, made by D to the firm. A, the administrator
c. t. a. of the estate of F, brought assumpsit against B, C, D and E.
B alone was serv^ed. In the court below, judgment of non-suit. In
the court above ; — -Judgment reversed, and procedendo awarded. The
question was whether there was sufficient evidence to entitle the case
to go to the jury. C, D and E were clearly liable upon the fadls.
Paxson, J.: "It remains to consider the question of [E's] liabilitv.
"The right of the plaintiff to waive the tort, and sue in assumpsit for
"money had and received, is too well settled to need either tirgument
"or the citation of authority. It is alleged, however, that [B] is not
"liable, for the reason, among others, that 'by the terms ot the part-
"uership articles, he was liable only to the extent of the capital he
"had contributed, and the terms of these articles were known to [D]
"when the securities were delivered for use.' * * [D] was not acft-
" ing for his cestuy que trust when he loaned these securities to his
"firm, * * and they are not to be affedled with his knowledge. * *
"It is said, however, that [B] is not liable, for the further reason
"that the power of one partner to bind the others is, at most, an
"implied power; that each partner is the agent of hir co-partners
" only when acfting in the scope of his power, and in the usual course
"of the business of the firm; and that when his agency is denied or
" forbidden by his co-partner, with notice to the party assuming to
"deal with him, as agent of the firm, his adl is not that of the firm,
"but his individual acft only. As an abstracft principle this is corre<ft.
"* * * It does not apply to this case as it stood before the jury when
"the judgment of non-suit was entered. The cause has teen argued
"upon the theory that the securities were borrowed for the purpose
"of using the money in wild speculations prohibited by the agree-
"ment of partnership. The evidence is not so. The money was
"used in the business of the firm, carrying stocks for their custom-
"ers, etc. * * * Our owm books are meagre in authority upon the
"question of the responsibility of a firm under such circumstances.
" It has been largely discussed in England. * * * It was attempted
"to distinguish the English cases from the one in hand. * * * i am
"unable to see the distincflion. The wrong done here on the pait
"of the firm was in converting the securities. It is manifest that
"they had the custody of them for [D], and collected the interest
"and dividends for him. Afterwards they borrowed the securities
"from [D]. This did not authorize their conversion. It imposed
"an obligation to return them in specie. If sold, it was the duty of
" the firm to have carried the proceeds to [D's] credit as executor.
" [But they were used to pay debts for which B, as a general partner,
"was liable.] It is entirely in the course of the regular business
"of the firm to pay its own debts. * * * Here, the securities telong-
" ing to the estate were sold by the firm, with knowledge of the true
'•ownership, and the proceeds used to pay its debts. This * * *
"would make [B] liable without notice or knowledge en l.is part of
"the borrowing of the securities, or their conversion by his partners.
"But even if we treat [B] as a special partner, so far rs [F's] estate
"is concerned, this judgment must be reversed. * * * [For] he knew
"in April, iS6S, that his firm had borrowed ^28,000 of the securities
"* * * from the executor. * * * [Such knowledge] was ample to
"put [B] upon inquiry as to the nature of the transacflions of his
"firm, and if he chose to sleep upon such a disclosure, he has no
" one to blame but himself. * * * We are of opinion that the case
479
§i^|2. Liabilities. Pt. 2, Ch. 9-
"should li^ve gone to the jury." Guillou v. Peterson, 31 Leg. Int.
112 (1H74); « Norris 163, Pa. (1879).
2. /'ar/fur's tort diarizes innoceiit co-partner who shares the proceeds.
\ & H, merchants in Rochester, were in the habit of consigning
merchandise to & D, commission merchants, in N. Y. They also
gave commercial paper, which C & D used and met with proceeds
of consignments. C wrote to A without D's knowledge that |i6,ooo
worth of -V iV 15's paper, which was, in fa6t, outstanding, had not been
used, because payable at C & D's office, and asked for additional
notes payable at bank to meet indebtedness of A & B in current
paper. C & D, after negotiating the notes and using the proceeds
m their business, failed, and were discharged in bankruptcy. A & B
sued them for tort in procuring the notes which A & B were compelled
to pay. — Recovered. C's fraud charged D for damages, and bankruptcy
discharge did not extinguish the liability. Strang v. Bradner, 114
U.S. 555(1884).
§142,
^ spcrtal partner, tofio becomes a general partner bri neglect,
is also liable u)l)eu tl)e firm, bn its negligence, is guiltn of a tort.
He ought to have complied with the requirements
of law, aud cannot set up his dereliAion of duty as a
protecT:ion, for that would be to take advantage of his
own wrong. If the double negligence releases him
from liability, the second tort does not aggravate, but
neutralizes, the first. The taking no part in the
business does not exonerate a partner, for then a
donnant partner would escape liability for torts com-
mitted by the firm. The principal answers for the
discretion which he has given his agent. This is the
test of liability in contrail, as well as in tort. How
can the law, which makes the special a general part-
ner, release him from the liability of a principal?
The liability for each other is the ground-work of
partnership. Take away the solidarity, and no part-
nership exists. He would be a scapegoat, says Judge
480
Pt. 2, Ch. 9. Liabilities. §143.
Thompson. Isn't that the o£&ce of a partner? To
bear the sins of his co-partner, rather than visit them
upon innocent strangers? The law makes him a
general partner from the time he fails to comply with
the requirements which secured his prote(5lion.
The liability for tort may be independent of title.
Take a kind of tort which creates no increase, or bene-
fit, to the joint estate. How is the deli6l to be brought
home to the innocent partner? With no fund to be
followed, or equivalent in value to be reimbursed, the
fadlor of title is eliminated, as a test. The liability
must be resolved upon the theory of partnership, with-
out the aid of any collateral principle. If committed
in the exercise of a discretion delegated by the firm,
the tort is charged direAl}^ to the innocent partner,
as the result of his mandate.
I. Tort of partner does not charge co-partner who becomes such by con-
struflio?! 0/ taw. In an a6tion for causing the flooding of plaintiff"'s
coal-mine, brought against B, C and D individually, who were carry-
ing on business under a limited partnership, C and D being general
partners, and B special partner, it was sought to charge B, by proof,
that he had done some aS. which rendered him liable as a general
partner. — But the court decided that as he was not a managing part-
ner, employing workmen and dire<?ting their operations, proof of an
adl having no relation to the trespass sued for, which might make
him liable for firm debts, did not establish that trespass against him,
or raise the presumption of his assent and consequent liability; and
hence it was error to instru6l the jury that if the special partner had
made himself a general partner, and the acft complained of was done
by the agents of the firm, and assented to by one of the partners, the
special partner was equally liable with the other, and the verdidl
must be against both. McKnight v. Ratcliff, 8 Wright 156, Pa. (1863).
143.
^ partner is liable criminalls for Ijis misappropriation of firm
propertn.
481
§144-
Change of Partners. Pt. 2, Ch. 10.
At the Commou law he was not liable criminally
for the misappropriation of firm property, because he
was a co-proprietor, and clothed with the title. A man
could not steal from himself. Recent statutes have
made the fraudulent misappropriation of firm prop-
erty, or misuse of firm credit by a partner, a crime,
punishable by fine and imprisonment.^
1. 31 & 32 Vi<5l., c. 116, i I, 1868. Supra \ i6, n. i.
Aa of Pa., 3 June, 1885, P. L. 60.
-O
CHAPTER X.
CHANGE OF PARTNERS.
§144.
^cts bone prcniouslji bp tl)c firm bo not cl)arge \\\t incoming
partner, nor toulb l)c ratifg tijan, because tl]en mere not lione on
his bcljalf.
The firm was not his agent at the time. Joining
the firm and carrying out its previous contrails do
not create any liability to the promisees or creditors
of the firm.'
If the firm contraAed for an engine, and the incom-'
ing partner inspected and joined in accepting it, he
would not be liable for its price. There would be no
implied contrail, for the express contradl excludes it,
and the delivery was made upon the express contrad
to which he was no party .^ The incoming partner
may be charged upon ,3 or may enforce,'' a severable
482
Pt. 2, Ch. io. Change of Partners. §i44-
contrail of the firm. A new contrail might be im-
plied. If the plaintiff agreed to supply A with bricks
at so much a thousand, and B went into partnership
with A, B might be held liable for the bricks subse-
quently delivered, because, although the rate was
fixed by the original contraA, each purchase would
be a distin6l contracfl.^
The incoming partner makes himself liable for the
prior debts of the firm only by an agreement with its
creditors, and for a consideration, Bntering the firm
does not charge him, and an agreement with the part-
ner does not enure to the creditors.** An incoming
bought out a retiring partner in a newspaper, and
suit was brought for paper supplied before and after
his entrance into the firm. Payments had been made
on the aggregate debt. The incoming partner was
not liable.^
1. Incoming partnernoi liable for contraH of his predecessor. A&B
agreed to sell D all the feed, bran, shorts and screenings made at their
mill during one year. B sold out during the year, to C. D paid for
feed, &c., delivered by A & B. Afterwards, A & C stopped delivering,
and sued D for price of feed, &c.,so far delivered by them. Defence:
Failure to complete contracSt. — Judgment for A & C. Contra(fl severa-
ble according to consideration. D's counter-claim for breach of con-
tradl is against A&B. Parmalee v. Wiggenhorn, 6 Neb. 322 (1877).
2. Helsby, v. Mears, 5 B. & C. 504.
3. Incoming partner liable on implied contrail for debts subsequently
accruing under express contrail ivhich is severable. A granted a
license to a firm, reserving royalties. Afterwards, B entered the firm.
A sued the firm, including B, for royalties subsequently accruing. —
Recovered. He was not bound on the express contract, but having
received the benefit of the consideration, he is liable upon an implied
contradt, which corresponds to the terms of the express contracft, for
the benefit which he has derived. Rogers v. Riessner, 30 Fed. Rep'r
525 (1887).
4. Incoming partner cannot sue on specialties previously given to the
firm, but viay sue 07i parol renewal. A&B, partners, 1877-8, insured
their stock in company D, by two policies, for one year. No. i
contained a covenant for perpetual continuance on payment of an-
nual premium. No. 2 had no covenant for continuance. After-
wards, A&B paid the premiums for renewals until 1882, when C en-
tered the firm, which continued to pay the renewal premiums until
4S3
§1^4- Change of Partners. Pt. 2, Ch. 10.
18S6, when the loss occurred. A, B & C sued D in assumpsit for the
loss '—Recovered for loss under policy No. 2, because each renewal
was by parol, and enured to the firm which paid the consideration.
Judgment for D under policy No. i, because continued as a specialty
by its own terms. Firemen's Ins. Co. v. Floss, 10 A. Rep'r 139, Md.
(18S7).
5. Incoming partner charged on new contracl implied on severance of
running conlracl with Jinn. A, in 1847, agreed with B to supply
him with bricks whenever he wanted them, for 2S.y. per i ,oco, ready
money. In 1S4S, B and C became partners; and after that, B, from
time to time, ordered bricks of A, which w ere used for partnership
purposes. A sued B & C in debt for goods sold. B suflered judgment
by default. Qplttaded nunquain indebitatus. — Verdict for A. Fkle,
J.': "If this had been a coutracT: with the defendant B to supply him
"with a certain number of bricks at so much per thousand, that would
"not make a subsequent partner liable; but this is only that in all
" future contracts the bricks shall be charged at 28.?. ready money.
"Every order is a new contracl." Dvke v. Brewer, 2 Car. & K. 828
(1849).
6. firm creditors cannot enforce the contraFt of in ccniivg partner to pay
the debts of the firm without becoming parties to the contraB and
giving a new consideration. A & B, partners, bought of C & D, a
one-quarter interest in their plaster mill and quarries by a ccntradl in
writing, which contained provisions declaring that A & B became part-
ners of the old firm of C&D, and were bound for one-fourthof its debts.
The creditors of the old firm, C&D, threatened to sue the four upon
note of C & D. A & B brought bill against C&D and their creditors
to reform in contract, upon the ground of mistake, by striking out
the provisions mentioned, and to enjoin suits by the creditors. — De-
cree, as to reforming contrail. Creditors were not parties to that
contracl, and it was not made for their benefit, though they might
sue if they could prove partnership of the four. The written con-
tradl would be only evidence, and the parties made it speak the truth.
Wheat v. Rice, 97 N. Y. 296 (1884).
7. Incoming, replacing retired partner, not liable with continuing
partners for goods supplied before and after his entrance, though pay-
ments had been made on aggregate indebtedness. B & C, partners in
puljlishing a newspaper, opened an account with A, a dealer in paper.
Subsequently, C, by an agreement in writing, sold his interest in the
business to D, who therein assumed, and agreed to pay C's indebted-
ness. B & D continued publishing ; and A continued to supply them
wth paper. The debt of the old firm to A was I194, of the new
firm, I36.40. A brought assumpsit against B & D for both bills. D
filed affidavit of defence to portion contradled by B & C, and ten-
dered judgment for the $36.40, with interest. At the trial, D asked
the Court to charge that he could not be held for any of these items,
except those contracfled after he became a partner. The Court, how-
ever, said that if the jury should find the above fa<5ls in reference to
the arrangement between C & D, A could recover. Verdidl accord-
ingly, and judgment for A.— In error, reversed. A was a stranger to
the coutradt between C&D, and to the consideration. He did noti
agree to release C, nor to accept D as his debtor. Furthermore,-
there was no evidence that B & D agreed to be jointly liable for the,
debt ofthe old firm. To the present acflion against them jointly, each
might answer: "I did not so agree with my co-defendant." Kountz ,
V. Holthouse, 4 Norris 235, Pa. (1877).
484
If
i.
\
Pt. 2, Ch. 10. Change of Partners. §145.
§145.
It appears from tl)e autljaritics tijat tl]c necessity of noxiation
is being graliualln superceLiCLt bi) t\]t tljtorw of trust ani> ton-
sibtxat'ion.
The incomiug partner has received a fund charged
with a trust in favor of outstanding creditors. Having
received a consideration for his promise, he becomes
himself an original debtor, and his undertaking is not
within the statute of frauds, notwithstanding the fa6l
that his assignor remained liable for the debt. The
property, treated as a trust fund, subjedls him to a
dire6l a6lion by the creditors; treated as a considera-
tion, deprives him of the benefit of the statute of
frauds. It must result from this change that when a
retiring partner assigns his interest to his co-partners,
or to a stranger, upon an agreement to be protected
against the debts of the firm, the remaining and the
incoming partners are liable to creditors, who have
not released the retiring partner. The arrangement,
it has been held, creates a trust which stops the statute
of limitations.^ But this last position is untenable, for
j the trust is not dire6l and continuing, exclusively
cognizable in equity or between trustee and cesttiy que
trusty and, therefore, is within the statute of limita-
tions.-
The effe6l of a partner's retirement without wind-
ing up the business is a transfer of his interest and
title to the continuing partners.
I. Succeeding firm's agreement to pay debts charges assets with a trust
for old firm creditors. A, B & C, partners, solvent, but indebted to
D. A, in 1877, sold his interest to E, and new firm agreed to pay A
13,500, and pay firm debts and indemnify him. In 1879 firm became
involved, and to protecft A against D's claim, assigned A securities
which he turned over to D. The transfer held an adl of insolvency.
485
§146. Change of Partners. Pt. 2, Ch. 10.
A, being compelled to pay D, sued for reimbursement out of assets of
original firm. — Recovered. New firm, taking the stock and agreeing
to pay debts, made the assets a trust fund for creditors of the old firm.
A, therefore, not barred by statute of limitations. Bowman v. Spald-
ing, 2 S. W. Rep'r 911, Ky. (1687).
2. Trust, unless dircfl ami continuing , exclusively cognizable in equity
and betzcccn trustee and ccstuy que trust, barred by statute of limita-
tions. R ct al., 13 November, 1872, executed promissory note, pay-
able on demand to C, for |2, 200. B died, and 29 August, 1877, Dtook
out letters testamentary. A, executor of C, on 15 August, 1884, with-
out prior notice, cited D to file his account, and upon its confirmation
and appointment of auditor to distribute the balance of 15,088.55,
which widow, as distributee, had received, presented the note. De-
fence : Statute of limitations. — Claim barred by six years. Fund in
administration not a technical trust. York's Appeal, 17 N. Y. 17, 33,
Pa. (1886).
§146,
ull]e retiring partner remains bounb to tl)e firm creditors until
tl)nj release l)im.
So far as the personal obligation of the retiring
partner is concerned, a novation is always necessary
in order to relieve him. The liabilities of the firm
represent the rights of third persons, and they, and
not the debtors, are the proprietors, whose consent
is essential to any modification of claims against
the firm. The retiring partner may assign his in-
terest to his co-partners, and had he incurred no debt
by reason of his share in the partnership, the assign-
ment would be simply a transfer of property. But
he has incurred debts while a partner. The creditor
has the right of dominion over his claim, and he
may agree to the transfer and novation, which give
him a different debtor in the place of the original
firm. An exchange of debtors would be sufiicient
consideration to sustain the creditor's contradl to
486
Pt. 2, Ch. io. Change of Partners. §146.
make the substitution. The agreement between the
partners does not control the creditor. He is the
master of the situation. The termination of the
partnership does not affe^l him or disturb past trans-
adlions,^ The dissolution relates only to the future.
The law raises no presumption that the creditor
discharges a retiring partner's liability. The fa6l
must be made out. Taking security, unless it merges
the debt, might be collateral. The taking as satisfac-
tion must be proved. The retired partner is released
if the creditor accepts a new partner as debtor in his
stead.^
The creditor does not release the retiring partner
unless he accepts the continuing firm's obligation as
a substitute. The creditor who takes the note of a
new firm trading under the name of the old, does not
release the retiring member, unless he knew of the
change, and meant to substitute the new for the old
obligation.^
1. Partners remain liable after dissolution on contraHs made during
the partnership. B & C, partners, received A's goods to sell on com-
mission. B retired, and C sold the goods. A sued B & C for the pro-
ceeds. — Judgment for A. The joint undertaking preceded dissolu-
tion, and was not discharged by it. Briggs v. Briggs, 15 N. Y. 471
(1857).
2. Finn creditor'' s acceptance of new partner^ s obligation, releases re-
tiring partner. B & C, partners, indebted to A. B assigned to D,
who assumed the firm debts. A assented to the novation, and after-
wards sued B & C. Defence by B : Release. — Judgment for B. No-
vation sufficient consideration for release. Loucks v. Martin, 9 A.
Rep'r 279, Pa. {1887).
3. Retiring partner liable until notice given. B & C owed A, when
C, Sr., retired. B formed partnership with C, Jr., under same name
of B & C. A, without notice of the change, took a note of B & C in
satisfadlion. He sued B & C, Sr.— Recovered, because no notice. A
question to witness: Was it note of new or old firm? — Inadmissible,
because a mixed question of law and fadl. Hervey v. Van Pelt, 4
Bosw. 60, N. Y. (1859).
Partner by estoppel 7iot bound by co-partner's admissions. B C, D
C, & E C, traded as C & Co. B C retired. Remaining partners con-
tinued the business as C & Co. A, an old customer, who had no no-
487
§1^-. Change of Partners. Pt. 2, Ch. 10.
tice of B C's retirement, sued the three for a debt subsequently
incurred, and offered the firm books in evidence. Objedlion that B C
was not a partner when entry made, and, therefore, not bound by it.
— Objecliou sustained. Pringle v. Leverich, 97 N. Y. 181 (1884).
§147.
iiljc liabilitti of tl]e retiring partner for tl^c outstantiing i^ebts
of tl)e firm is tl]c foimiiation of l)ig rigljt in equity to present tl]e
continuing fiartncr from tiiDerting tl)e assete, anb not leauing
enongl) to meet tl]e tiebts.
His equitable lien is an implied term of the sale.^
He proceeds to enforce the original destination of the
firm stock by bill on behalf of himself and of the cred-
itors.' The firm creditors have a right to follow the
fund in the hands of the new firm, but they have no
priority over the creditors of the new firm. On the
other hand, the creditors of the new firm have no
priority over the creditors of the old firm, notwith-
standing the change in the title. Both sets of cred-
itors share the assets upon an equal footing. The
right of firm creditors is not derived through the
partners, and hence is not destroyed by a change in
the personnel of the firm. For the purposes of their
priority, the firm fund, and not the partners, is con-
sidered the debtor, and the firm fund remains the
same in the hands of the new partners. This fund
ma\^ become subje(5l to the claims of new creditors in
the hands of the new firm, just as it might have done
in the hands of the old firm, had there been no change
of partners. For this reason the creditors of the new
Pt. 2, Ch. io. Change of Partners. §148.
firm compete witli the creditors of the old firm in the
distribution of the assets. Neither set of creditors
is entitled to priority, because both have the same
debtor.'
1. Retiring partner may compel application of assets of firm to the
payment of its debts. A sold out to his co-partner B, a minor. B
agreed to pay the firm debts and indemnify A. B refused to pay firm
debts on the ground of infanc}', and assigned the assets to C, with-
out consideration. A brought bill for injun6lion, receiver, and to com-
pel the application of the assets to the payment of the firm debts.
Defence: Infancy. — Decree. Infant could not retain the property
without performing the condition upon which he received the sole
title. Kitchen V. Lee, ii Paige Ch. 107, N. Y. (1844).
Contra. Retiring pariner no equity to ^narshal assets for his relief
Articles of a banking association provided that the assignee of stock
and remaining partners should exonerate retiring partners from old
debts contraAed before or after his assignment. A paid profits and
debts against the firm, a few contradled before, but most after his re-
tirement. Other debts were still outstanding, and A brought bill
against his assignee and the continuing partners to compel them to
appropriate the assets, which were sufficient on his retirement, though
subsequently put in the hands of a receiver to pay the indebtedness.
— Dismissed. Acflion at law adequate remedy. Clarke's Appeal, 1 1
Out. 436, Pa. (1884).
This decision disregards the partner's equity, which
entitles him to marshal the assets for the relief of his
liability.
2. Retiring partner tnust proceed by bill, and not intervene in aFtion
between conti^iuing partners. A sold out his interest in A & B to C,
who continued business with B, they to use firm assets in paying old
firm debts. C sued B for dissolution and account. A intervened, be-
cause B & C insolvent, and assets of old firm not applied according to
covenant. — A bill necessary to prote6l equity of A and old firm cred-
itors. Dayton v. Wilkes, 5 Bosw. 655, N. Y. (1859).
3. Creditors of old and new firm share the assets pro rata. B, C & D,
partners, indebted to A. D died. B & C continued the business, and
became indebted to E. Upon insolvency A claimed the whole fund.
E asked to share the fund.— Judgment for E. B & C were bound in
equity to apply the assets to payment of A, but the fund was subse-
quently increased by E's credit, and he is entitled to 2^pro rata share.
Filley v. Phelps, 18 Conn. 294 (1847).
§148.
®l]c rontinuinci firm is not an assignee for creditors, unless
It becomes insolvent.
489
§148. Change of Partners. Pt. 2, Ch. 10.
Such a construdlion would contradi(5l the continu-
ance of the business, and imply its winding up.^ The
retiring partner cannot specifically enforce the con-
tract with the continuing partner, who takes the stock
and agrees to pay the firm debts. Neither the retir-
ing partner nor the firm creditors have any standing
to control the disposition of firm assets until the mar-
gin of insolvency is reached, when the disposition
would expose the retired partner to the debts provided
for by the assets. While the continuing firm is solvent
the remedy of the retiring partner at law is adequate,
but when insolvency supervenes, his equity will sus-
tain a bill on behalf of himself and of the firm creditors
to marshal the assets in ease of his liability.^
The continuing partner's agreement to indemnify
the retiring partner against firm debts is a separate
obligation, collateral to the partnership, and in ease
of its liability. The claim for indemnity is subjedl
to the set-off of any indebtedness of the outgoing
partner to the indemnifying partner.^ Any subse-
quent purchaser from the indemnifying partner, if he
assumes the firm debts, becomes liable on the indem-
nity.^
1. Agreement by purchaser of firm stock to pay firm debts does not
make him assignee for creditors. B, C & D sold out to E. F sued
firm, which compromised by each giving individual note for his quota.
B paid his note and assigned his claim to A, who sued E, assignee
for creditors, on alleged oral agreement to pay firm debts from assets
and profits.— Judgment for E. A could enforce an assignment for
creditors only by a creditor's bill. Colgrove v. Fallmadee, 6 Bosw.
289, N. Y. (i860).
2. Deveau v. Fowler, supra \ ro6, n. 7.
3. Bond of indemnity to retiring partfier subject to set-off of his indi-
vidual debt to obligor. B & C, partners. B had overdrawn his ac-
count. C sold out to D, who continued business with B, and took his
note for quota of overdraft due to C's account. D bought out B, and
gave him a joint and several bond of indemnity against firm debts,
with E as surety. D endorsed note to E. B assigned bond to A, who
490
I
Pt. 2, Ch. io. Change of Partners. §149.
was creditor of B & D. A sued D & E on the bond, and E set-oflF the
note. — Set-off allowed. The covenant was to B, and not to firm cred-
itors. The note was an individual debt of B, and a proper set-off.
Merrill v. Green, 55 N. Y. 270 (1873).
4. Promise of purchaser of firm assets to pay firm debts not within
statute of frauds. A sold out his interest in firm to B & C for I700,
they paying firm debts. B sold out to C, also subjedl to same debts.
C sold to D on same terms. A sued D. Defence : Statute of frauds. —
Recovered. Purchase of assets pledged for claim. Townsend v.
Long, 27 Smith, 143, Pa. (1874).
§149.
^txt must be a mro partner to make i\\t uouation binbing.
The contradl of a creditor with the partners to re-
lease the retiring, and look only to the continuing
partner for the firm debt, is void for want of consider-
ation.'
The novation was formerly recognized as having a
consideration in the substitution of a several for the
joint contra6l." But now that the joint contrail of
the firm is held to include the several contrails of the
partners, there is no consideration for the creditor,
who acquires no additional obligation.
The New York cases present a modification of this
dodlrine. The retiring partner becomes a surety for
the continuing partner, and, by giving creditors notice
of the dissolution, and of the continuing partner's
agreement to discharge the firm debts, secures to him-
self all the rights of a surety.^
1. Walstrom v. Hopkins, supra ?95, n. 5.
2. Wallace v. Fairman, supra | 95, n. 3.
3. Agreement that continuing partfter shall pay firm debts, does not
make retiring partner a surety unless communicated to firm creditor.
B, C, D & E, partners, took a lease of premises for firm business. D &
E retired, and B & C agreed to pay the subsequent rent. Landlord A
491
§150-
Change of Partners. Pt. 2, Ch. 10.
was notified of the retirement, but not of the agreement of B & C to
pav the entire rent. A took notes of B & C for subsequent arrears,
with the understanding that he did not thereby release D & E. A
sued B, C, D & E for the rent. Defence by D & E: Agreement made
Ihcni sureties, and A released them by taking note of B & C— Judg-
ment for A. Agreement made D & E sureties as between the part-
ners, but not as to A, who was not notified of the agreement. More-
over, the extension was not absolute, but was conditional upon the
assent of D & E, which was never given. D & E, therefore, were
not released. Palmer v. Purdy, 83 N. Y. 144 (1880).
§150.
iri]c incoming partner receiving tljc assets unber an agreement
to pan tl)E oIli tirm iiebts becomes liable to tkm ereliitors in a
personal action.
The transfer of the firm assets to the incoming
partner under an agreement to pay the old firm debts,
is in substance a payment to him for the benefit of a
stranger; that is, the old firm creditor. This makes
the incoming partner a trustee of the assets in the
interest of the firm creditor. The trust is enforced
at law by an adlion of assumpsit, which involves the
personal liability of the trustee. The judgment ob-
tained against him is for a firm debt, and its primary
purpose is to subje6l the assets in the hands of the
new firm to the claims of the old firm creditors. Its
secondary e£fe6l is to fix an ultimate liability upon
the separate estate of the incoming partner, thus ac-
complishing, by means of the procedure and by indi-
redlion, a result which could not have been accom-
plished diredll}^ without proof of a novation, in which
the personal obligation of the incoming partner was
substituted for that of the outgoing partner, with the
consent of the firm creditor.'
492
Pt. 2, Ch. II. The Relation. §151.
If the continuing partner indemnifies tlie retiring
partner against scheduled creditors, the indemnity
enures to the specified creditors, and the assets are
appropriated to their claims."
1. The transfer of jinn assets is a consideration for incoming part-
ner' s promise made to firm creditor to pay fij^m debts. B, after giving
a note to A for merchandise, took C, D & E into partnership, the
assets exceeding his debts by 150,000, and they agreed to assume the
debts. The firm, in a letter, acknowledged the note as a firm debt,
and, later, included it in statement of its liabilities. A sued firm. —
Recovered. White v. Thielens, 10 Out. 173, Pa. (1884).
2. Transfer of assets sufficient consideration for assuming the debts,
and this consideration enured to firm creditor. B & C sold out to
stranger, D, who assumed the debts, which were scheduled and de-
ducted from the amount of the assets as a basis of the sale. A, creditor
of B & C, sued D. — Recovered. A acquired beneficial interest in the
assets by the transfer, and may enforce the promise, Elton v. Perken-
piue, I E. Rep'r 637, Pa. (1855).
-O-
CHAPTER XI.
THE RELATION OF PARTNERS.
§151.
(ill]£ relation of partnersljip requires tljat tl)c partners sl)oulb
act totuarlis eaci) otl)er loitl) tl)e utmost goob faitl).'
The history of partnership shows that the exaAion
of uberiHma fides was based upon the closeness and
intimacy of the relation (§ i, § 2). But at the present
•day the requirement is not founded upon blood, friend-
ship or affe6lion. The partnership does not derive its
force from sentiment. The nexus of partnership is
property, and the interest of the partners springs
from and is bound up in the firm estate. The func-
493
Sji^i. The Relation. Pt. 2, Ch. ii.
tious of the partners are summed up in the process
of buying and selling property (§7). In title and
in fundion the partners are identified, and this iden-
tification justifies the continued application of the
maxim. Each stands for and replaces the other. A
partner, therefore, must a6l in reference to the busi-
ness for the firm. If he tries to acfl for himself the
law brings his a6l into consistency with the relation,
and makes it enure to the firm.^ This is the ground-
work of the maxim. It is upon this principle that
a partner who competes with the firm by transact-
ing business of the same kind on his own account,'^
or makes use of the firm property,^ or of his position^
in the firm, to secure a separate advantage is com-
pelled to share with his co-partners the profits thus
acquired. But on the other hand, a partner's engaging
in a different business, although it might constitute
a breach of the articles and furnish a ground for an
injunclion against the partner, or for a dissolution of
the firm, would not entitle his co-partners to share his
profits earned in the independent business.^
I. Good faith requires a disclosure of all the informa-
tion possessed by a partner in regard to the business.
Surviving partjiev's account as ti-ustee for deceased partner's share
must furnish exact information of the business condition, or his pur-
chase, based on the account, will be set aside. B & C, partners. Arti-
cles provided that, in spite of a partner's death, the business should
be continued until i May, 1876. B died, 17 November, 1875. A, ad-
ministrator, brought bill for account, not only up to B's death, but to
I May, 1876, and averred that in reliance upon C's statement of the
value of B's interest, $14,578.85, and of a subsequent depreciation of
the stock, he sold out to C for 19,582.32, and that he had discovered
that the statement was false. C pleaded a settlement of account after
full investigation, and a purchase at A's instance upon his terms, fol-
lowed by A's recovery of judgment for the price and payment thereof
^y C.— Plea sustained. Harrison v. Farrington, 15 Stew. 353, N. J.
(1885). At the hearing C did not prove such a complete and detailed
account as would enable A to understand the exa<5l value of B's share.
C told A that the stock depreciated, though inventory increased |4,ooo
between B's death and i May, 1876. C did not know whether this re-
494
Pt. 2, Ch. II. The Relation. §151.
suited from increase of stock or of values. — Plea not proved. C, a
trustee of B's share. lo A. Rep'r 105 (18S7).
One partner' s exaFling indemnity from another against miscofiduf?
0/ their co-partner without communicating an explained discrepancy
in his account, not a breacli of good faitli. A, B & C, bankers in part-
nership. C desired to give B the superintendence of the business.
A refused, unless C would indemnify him any loss by the acft or omis-
sion of B. C gave A bond of indemnity. A knew at the time of a
discrepancy in the account between the bank and one of itt. New
York correspondents, a matter which B had in charge. A did not
know of any fraud, or that this irregularity might not be explained.
B misappropriated firm funds, and A sued C on the bond. Defence :
Breach of good faith in withholding information of the discrepanc}-.
^^udgment for A. Requiring bond sufficient notice of distrust.
Pardee v. Markle, 17 W. N. 211, Pa. (1886).
This decision hardly meets the standard of good faith
required of partners in their dealings with each other in
reference to the firm business. Each partner is bound to
make a clean breast of everything. He is not the judge
who can determine the importance of any suspicious
circumstance, but must communicate it and not leave
his co-partner to surmise the reason for his conducl.
2. Partner can acquire no separate property in the business which the
firm carries on. B formed a mining partnership in 1874, with C and D,
which continued until 1878, he furnishing the capital and they pros-
pering and locating mining properties. C and D located three mines
and certain coal lands, which they reported to B, and bought him out
for I400. The day of purchasing his share they consummated a sale
of tlie coal lands, for |i,8oo. During 1876 and 1877, they discovered
four more mines, which they sold, after 1878, for ^12,000. A de-
manded account for his third of the proceeds. — Decree. Entitled to
all discoveries made during the partnership. Jennings v. Rickard, 15
' Pac. Rep'r 677, Cal. (1887).
3. Purchaser of article for firtn with individual goods must share his
profits with co-partner. A & B were partners, dealing in lapis calam.i-
naris. B was a shopkeeper, and paid the miners for the lapis cala-
viinaris with goods from his shop. In his account with A, he charged
him as for cash paid to the amount of the price of the goods. A
claimed that B must divide with him the profit made on the sale of
the goods. — Decree. Sir John Leach, V. C. : "It is a maxim of
"courts of equity that a person who stands in a relation of trust and
"confidence to another, shall not be permitted, in pursuit of his
"private advantage, to place himself in a situation which gives him
"a bias against the due discharge of that trust or confidence." It
"was B's duty to buy the lapis calaminaris at the lowest possible
price, but when "he obtained it by barter for his own shop goods,
"he had a bias against the fair discharge of his duty to the plaintiff.
"The more goods he gave in barter for the article purchased, the
"greater was the profit which he derived from dealing in store
"goods, and as this profit belonged to him individually, and as the
"saving by a low price of the article purchased was to be equally
" divided between him and the plaintiff, he had plainly a bias against
"the due discharge of his trust or confidence towards the plaintiflf."
Burton v. Wookey, 6 Mad. Ch. 367 (1822).
495
§!-!_ Thk Relation. Pt. 2, Ch. ii.
I\trtmr compel ins; with firm in supplying meal lo government ac-
coufttiihli- for his profits. A & B agreed to acSt as partners in obtain-
ing contracts for the supply of provisions for the troops in Ireland.
Hut H made secret arrangements with other persons to share the
profits of any similar contradls they might take. A filed a bill, inter
alia, for an account of the profits made by E from such secret partner-
shit)S. H atlmilted the faCts, but denied A's right on the ground that he
r H] had never agreed not to enter into such contradls. — Lord Chancel-
lorllRADY concluded thus: "I think, therefore, there are questions
"arising on this view of the case which can hardly be satisfacflorily
"di.sposed of without further inquiry, and that I should send the
"case into the office without prejudicing it as to the length I ought
"to go, or saying that the petitioner is absolutely entitled to any-
" thing' in respea of these contradls. " Lock v. Lynam, 4 Irish Ch.
188(1854).
Partner cannot carry on independent business, which tn any parti-
cular is in competition with his firm. A, B, C & D v^^ere in partner-
ship as sugar refiners. B was managing partner, and made all the
purchases of sugar. He carried on an independent business as a
sugar dealer, and was able to buy to great advantage. Accordingly,
in 1851, he bought a quantity at a time when he thought it likely to
rise, and it having risen, and the firm being in want of some, he sold
it to the firm at a profit, but at the fair market price of the day. A
complained on the ground that they were refiners, not speculators.
B took offence and cancelled the transacftion, but continued to specu-
late, and, unknown to his partners, sold his own sugars occasionally
to the firm, but always at the market prices. In this w-ay he made
great profits. A filed a bill against him and the other co-partners to
compel an account, claiming that the firm was entitled to the profits
B had made. — B accountable. Bentley v. Craven, 18 Beavan 75 (1853).
4. Co-owner of trading ship accountable for profits made by trading
cm his own account. B, part owner and master of a ship, made a long
voyage, touching at several ports and trading on the joint account of
himself and the co-owners. He sold the ship at Sydney, and soon
after made large purchases of wool, in part of which C & Co., had
an interest. The wool was consigned to D, E & Co. A and others,
co-owners of the ship, claimed that the wool was purchased with
partnership property, on partnership account, and belonged to the
partnership. B insisted that besides acting as master of the ship,
and trading on the joint account, he had a right to trade, and did
trade on his separate account ; and that with the profits of such sepa-
rate trading he bought the wool in question. A having already ob-
tained an injunction against D, E & Co., asked for an injunAion to
restrain B from receiving the wool. — Injuncftion granted. Gardner
V. M'Cutcheon, 4 Beavan 534 (1842).
Collateral business secured by a partner through his position in the
firm, enures to the firm, ifgermajie to its purpose. A, B and others
agreed to carry on the business of a common carrier between London
and Falmouth, a separate portion of the road being allotted to each,
and It having been stipulated also that no partnership should exist
between them. B for himself and the other parties agreed with the
Mint to carry coin from London to Falmouth and intervening towns.
Afterwards he made another agreement -with the Mint to carrv other
com to places not on the road. A and the others claimed shares of
the profits made out of the second contradl— All the parties were en-
titled to share in the profits. Russell v. Austwick, i Sim. Ch. 52
(1826).
496
. 2, Ch. II. The Relation. ^152.
Contracl secured by partner by means of his position in firm, entires
to the firm. A and others were partners with B, in the coal busi-
ness, under the name of B & Co. C enabled D, a clerk in the
office of B & Co., to get a government contrail for coal, with B as
his surety. D assigned the contrac?t to an association of coal com-
panies. Between these companies there was a memorandum signed
by B in his own name, and signed also by all the companies who
were parties. At meetings of the association, each company was
represented by one of its members ; B attended, but none of his
partners. All the other parties treated the transaAion as if the firm
of B & Co. was one of the members, and, in fact, their understanding
was that the original contrail had been awarded to the firm. The
arrangement was, that the parties should all furnish coal to the asso-
ciation in various proportions, at twenty-five cents above the market
price ; the association then delivered the coal to the government,
and the profit or loss was to be shared by the parties in proportion
to the coal furnished. B & Co. sold coal to the association, and B,
after settlement with the government, received one-sixth of the
profits made by the association. He divided with C, but none of the
profits ever came into the hands of the firm. B died, and A et at.
filed a bill against his executors, for an account and payment, aver-
ring that B's share was received by him for the use of the partner-
ship. Master reported in favor of defendants; report confirmed;
appeal. — Decree reversed. Thompson, C. J. : "In the absence *
"* * of special provisions, each partner is in a fiduciary' relation
"to his co-partners, and must devote all his energies for the promo-
" tion of the firm exclusively, and account for all moneys received
" by him in and through its legitimate business. These being the
"duties and obligations of every member of a partnership, he who
"claims exemption from them must show that it exists either in the
" terms of the organization, or by the assent of all his co-partners."
Bast's Appeal, 20 Smith 301, Pa. (1872).
. Partner's b^-each ofi articles not to engage in other business gives firm
no right to his profit, nnless he co^npetes with firm, A Bros., com-
posed of A, B & C, were salt merchants and brokers for seven years.
By articles, C and D covenanted not to engage in any business ex-
cept on account of A Bros. For the last two years C was dormant
partner with his son D, in the manufacture of salt, and at end of seven
years became ostensible partner. A and B brought bill for C's profits
in salt manufadlure. — Dismissed. Breach of covenant's remedy, in-
junAion or dissolution and damages, not profits of business, because
not competing with firm business. Dean v. MacDowell, 8 Cli. D. -^45
(1877).
§152
In bmlings luitl] tl)irb persons, tl)e autl)oritn of mcl) partner
is Umiteb bn tl)e equal pou)cr of l)is co-partner; in questions of
bomestic administration, tl)e inaioritn tontrols.
497
5i;^2. Thk Relation. Pt. 2, Ch. ii.
The fundamental principle of partnership is equality
between tlie partners, and each partner unites in him-
self all the attributes of the firm. When he is ailing
alone, strangers are entitled to deal with him on this
basis. But the partnership relation implies the una-
nimity of the partners; therefore, in contrails with
third persons, a prohibiting partner may avoid lia-
bilit}' b}' notifying them of his dissent and refusal to
be bound.' But where the question arises between the
partners themselves, and relates to the administration
of the firm business, the will of the majority controls.
Third persons, whose rights are incidentally involved,
must respedl the determination of the majority." This
doclrine establishes a modus Vivendi^ and prevents a
partner from frustrating the purpose of the firm. He
is alwa^-s sufiicientl}^ prote6led by his right to dissolve
if dissatisfied with the management. If the matter in
dispute involves a material alteration of the constitu-
tion of the partnership, unanimity is required.
I. /'ar/ner's collusive sale passes no title. Partner may coioiterinand
/lis co-partner's sale before delivery. B & C. partners "in marble busi-
ness. D, father of C, while engaged in removing marble was notified
by B to desist. D removed the marble, alleging a sale to him b}' C.
A, assignee of B & C, brought trover. By plaintiff's evidence maVble
taken was worth 51,411. Charge: If sale collusive, void; if not, title
passed. Verdidl, fo, 243.30. A released all above 11,838, to hold his
verdict.— Judgment affirmed. Jury found sale collusive. Dictum,
V.'s dissent revoked C's agency. Yeager v. Wallace, 7 Smith 565, Pa.
(1868).
Partner may revoke co-partner's implied authority to buy by notice
to seller. B was dormant partner of C. C bought goods of A on
joint account, and proposed to give joint note for price. B declined
to be bound by purchase and sign note as a principal debtor, but did
sign It as endorser. A sued B & C as makers. Defence by B : He
had refuse(l to be bound by the purchase. Instruction to jury : B's
rei^usal to sign note as maker relieved him from liability as co-princi-
P^'-— Krror. New trial. Court should have instrudled jury that if B
refused to be bound by the purchase, and not merely refused to sign
the note as maker, the verdi(5l should be for B. Leavitt v. Peck, 2
Conn. 124 (1819).
Partner may, by twti/yins^ seller, escape liabilitv for co-partner's
vt A^S' ^"^"^"S^ floods received by firm. B, C.'D & E, partners.
U and E managed the business. B notified A not to sell to D and
498
Pt. 2, Ch. II. The Relation. §153.
E without an order from him. A sold without order, and the goods
were used by the firm. A sued B, C, D & E for the price. B's de-
fence : Revocation of authority. — Judgment for B. Feigley v. Spone-
berger, 5 \V. & S. 564, Pa. (1843). The goods should have been re-
turned to exonerate defendant. Johnston v. Bernheim, supra \ 1 15,
n. 3.
2. Partner prevented frotn frustrating business, and bound by majority
management. A, B ct at. had a ship built, and ran her on joint ac-
count. A owned 1-4, and was agent; B was master. A and B disa-
greed, and a majority displaced A from the position of agent. A
asked for an account, a receiver, and an injun6lion against his asso-
ciates to prevent them from continuing to run the boat. — Dismissed,
except for an account. Defendants allowed to run the boat upon
giving security to A. Dunham v. Jarvis, 8 Barb. 88, N. Y. (1850).
Majority controls in partnersliip organized as joint stock company.
In a newspaper firm organized as a joint stock company, with fifty
shares of capital stock ; the majority held 27, and the minority 23,
shares. The majorit}^ at a regular meeting, hy resolution, displaced
the publisher and elecled one of their number, A, in his place. A et
at. brought bill to enjoin former publisher and minority from inter-
fering with A's management. — Decree. Peacock v. Cummings, 10
Wright 434, Pa. (1864)'.
§153.
IDuring tl]e partncrsl]ip, litigation bctroeen t[]e partners 10
suspenbeli.
A partner can not sue his co-partner on a firm
transadlion. Nothing but a final balance, after all
the assets and liabilities of the firm have been taken
into account, would show what the defendant owed,
if he owed anything. A settlement of the account
must be made between them. No balance in favor
of the plaintiff would show that he could recover the
amount from his co-partner. A similar amount might
stand to the defendant's credit, and the two accounts
would balance each other. The assets might be in
the plaintiff's hands, and he might be the debtor, in
spite of the accounts. The ultimate balance, after
every item and asset has been brought into account,
is the only basis of a settlement.*
499
§123. '^^^ Relation. Pt. 2, Ch. ii.
Tradiug as a company would not enable the firm
to sue the members for advances in the business. As
a partnership, the company cannot sue until the ac-
counts are settled, although it had taken a promissory
note for the amount advanced.' The prohibition ap-
plies to ever3'thiug which is an item in the account.
It applies to freight earned on a voyage by partners
in the vessel. The fa(51; of partnership settles the
question, and shows that the freight is an item in the
firm account.' If co-owners, the voyages would be
distinct, and each trip would be a different transac-
tion.
1. Balance struck infirm books showing value of each partner' s share,
not a settlement affinal account upon which assumpsit will lie. A, B,
C & D were partners in trade. During the year ]86o, A died. At the
end of the year, the surviving partners balanced their books, and hav-
ing ascertained how much was due to each of the members of the firm,
credited the estate of A with the amount that would have been his, if
living. In January, 1869, A's administrator brought assumpsit to re-
cover this sum as a debt due by the partnership. The Court diredled
the jury to find a verdict for the plaintiff", reserving the point whether
the jilaintiff" was entitled to recover. The verdicl: was accordingly for
the plaintiff for 521,725.44. — But judgment was afterwards entered for
the defendant on the point reserved non obstante vercdiHo. Judge
H.^Rii: "The point (whether the adlion could be maintained on the
"above account and balance) has frequently been before the courts,
"and always decided in the negative. For, as the objedl of such an
"accounting is to ascertain what is due or coming to each of the
"parties from the assets of the firm, it cannot be interpreted as a
"guarantee that the assets will be adequate to pay the debt. * * *
" It may be that a partner who stands, on the face of the account, as
"a creditor, has the bulk of the property of the firm in his hands,
"and would, if it were turned into cash, be largely a debtor. " And
the Supreme Court affirmed the decision, adding: "Whether an ex-
" press promise to pay be essential, or an implication of a promise
"will arise from a settlement and balance struck, it is immaterial;
"all the authorities coinciding, that to support assumpsit, there
"mu.st be a settlement and balance found due to the other partner
1^' who sues for it. * * * Clearly, therefore, the suit should have
"been account render, or a bill in equitv for an account." Fergu-
son V. Wright, II Smith 258, Pa. (1869).
2. Member of partnership cannot sue for an advance without an ac-
count. A & B subscribed to a projected joint stock companv. The .
company needing money, the firm of A, B & C lent them /a.ooo on
their promissory note, which coming due, suit was brought.— A & B,
partners in the company, and, therefore, the suit would not lie. Per-
nng V. Hone, 4 Bingham 28 (1826).
500
Pt. 2, Ch. II. Thk Relation. §154.
3. Partner cannot sue for his share of profits 'without an account. A
& B owning one-third of a sloop, brought debt against the co-owners
for one-third of the freight earned in sailing the vessel. They ob-
tained verditl and judgment in the lower court. — In the upper court,
reversed. The demand, from its nature, brings into controversy an
unsettled partnership account, which cannot be determined in this
form of adlion. Young v. Brick, Pennington 663, N. J. (1810).
§154.
^ partner tul)o Ijas paib a firm bebt, raimot flahu as against
\\\% partner to be subrogated to tl)e creator iDl)oni l)e l)as paib.
He acquires no right against his co-partner by pay-
ment of the firm debt until a final settlement, and the
creditor will not be compelled to assign the claim
upon a tender of the debt by the creditor of a partner,
in order that he may use the claim to colle6l the debt
out of the co-partner. Indiredlly, the partner would
thus enforce from his co-partner repayment of the debt
before a final settlement.^
I. Partner paying judgment against firm cannot have it marked to
his use. A iSi B, partners, gave C a judgment-note for ^600, which he
entered up, December 26, 1S74. On November 17, 1875, he caused exe-
cution to be issued and levied upon the real and personal estate of B
alone. D, a creditor of B, tendered C the full amount of his judg-
ment, interest and costs, if he would stay the writ and mark the
judgment to his use. C consented on condition that he might be
allowed to release A from the payment. D refused this, and B & D
petitioned the Court for a nale on C to show cause why he should not
accept the money, stay the execution, and mark the judgment to D's
use. The lower court granted the petition, and decreed that C should
assign to D, without recourse, that U might receivfe and collecfl from A
the amount to which he would be entitled by subrogation or by way
of contribution. — Error. Paxson, J. : "The radical error of the de-
" cree made by the Court below, consists in the facl that it attempts
"to work out the equities between A and his partner B in a summary
" manner. Where one partner has paid a partnership debt, he is not
" entitled to subrogation against his co-partner until an account has
"been settled between them. In what other way can it be ascer-
" tained which is the creditor, and which the debtor partner? How
" can it be ascertained, upon the execution, how much of the debt A
501
§i^(^_6. The Relation. Pt. 2, Ch. h.
• ' ouKht to pay ? Clearly, this cannot be done without a settlement
"of the partnership accounts." Fessler's Appeal, 3 W. N. C. 71, Pa.
(l^-Jb).
Uul subrogation is permitted between different firms with a com-
mon member. Laughlin v. Lorenz, supra 72, note 2.
§1.55,
vl partner cannot sue l)is co -partner during tlje partncrsl)ip
for niismanagement in transc*ctinci tl)e business.
The miscondu6l cannot be accounted for until the
affairs are wound up, although it might accelerate an
adjustment by furnishing the ground for a dissolu-
tion/
1. Neglis;e7ice furnishes no ground of aElion independent of account.
A, B & C were joint owners of a sloop. B, without A's knowledge,
.sold or lent the anchor and cable belonging to the sloop, for want of
which the sloop went adrift and was lost in the ice. A sued B for
his mismanagement. — The state of demand does not raise a sufficient
ground to support an adlion. Patterson v. Burton, Pennington 717, N.
j. (i8io).
§156,
^ set-off liocs not at)ail be tuieen partners, except as incii^ental
to tl)c account tor a settlement.
The claim must be liquidated to be available as a
set-off.'
A partner cannot set off the co-partner's quota of
a firm debt. The firm debt must be first liquidated,
and then the co-partner's share of it ascertained. This
requires an account.^ A partner can not set off his
co-partner's unliquidated share of firm liabilities
502
J
Pt. 2, Ch. II. The Relation. §156.
against the price of the co-partner's share. The bal-
ance depends upon a settlement of the account, the
sale being made subject to the firm debts.^ If the
price is paid in stock, and not in cash, the debt is de-
du6led from the a6lual value of the stock, and not
from its nominal or par value. ^ If a partner sues a
co-partner on his note, he could not set-off an unliqui-
dated balance of account, especially if there was a
third partner, because the account would involve him
in the settlement, and would not be simply between
the plaintiff and defendant.^
The partners must be parties to the adjustment.
The debtor to a partner and creditor of the co-partner
cannot make his settlement depend upon the balance
of the partnership account. Equity would not take
the account as accessory to the suit between one part-
ner and a stranger to save a payment by the co-part-
ner, if the partner's balance should be in his favor."
1. Unliquidated balance on partnership account no set-off. A sued B
on a promissory note. B attempted to set-off an unsettled claim
arising out of partnership between himself and A. — Disallowed, be-
cause partnership accounts must be settled in equity. Love v. Rhyne,
86 No. Car. 572 (1882).
1/ in anion against firm the debt is denied, partner cannot set-off
separate claim. A sued B & C, for services which were to have been
paid in money and board. Firm denied the debt. B offered to set
up a counter claim against A for board. — Disallowed, because having
denied original debt, counter claim could not arise out of the trans-
adlion. Jenkins v. Barrow, 35 N. W. Rep'r 510, Iowa (1887).
2. Unsettled partnership account no set-off against claim of co-partner.
A sued B on a separate claim. B attempted to set-oxf a balance of
account in firm, of which B & C were members. — Disallowed, be-
cause no account had been taken. Wood v. Brush, 13 Pac. Rep. 627,
Cal. (1887).
3. Partner's advances to pay firin debts not a set-off against a note for
the price of CO- partner's share, unless partnership account settled. B
bought out C's interest in C & D, subjecft to the firm debts, and gave
him in payment a note for ^250. D & E signed it, without consider-
ation, as sureties, on an agreement that D would take C's share, sub-
jedl to the firm debts, if B did not wish to keep it. D did take it. C
died, and A, his widow, sued D & E on the note. D's defence: C
died insolvent and indebted to D, JJ358.40, for half the firm's debts
503
ji;^,^,. The Relation. Pt. 2, Ch. ii.
paid by D. Firm debts still outstandiug, -which D would have to
pay, amounted to|i,cK)o, aud extent of firm assets, $200. — Recovered.
1) could not set-off against the note payments made on firm account,
because the balance could be ascertained only by a settlement. Tom-
linsou V. Nelson, 49 Wis. 679 (1880).
rartncr cannot set-off co-partner's quota of a firm debt in a dhrU
atlion. Must bring account. A sold out his share of the firm prop-
erty to B, and sued him on his note for the price. B admitted the
claim, but set-off two items of charge for services of his sons to the
firm, euiployed by B upon A"s promise to procure other employees
to do ecjuivalent services. A excepted to B's evidence, because it
constituted a variance from the declaration in set-ofF. — Sustained.
The charges are not claims of B against A, but of B against the firm.
A can be charged with his quota of the items only in an adlion of
account. A direcl suit for a partnership claim does not lie between
partners even after di.ssolution. Dodd v. Tarr, 116 Mass. 287 (1874).
4. Partner may recover his quota of price 'for sale by co-partner of
whole firm stock. A contributed land, and B took title for firm. B,
without A's consent, assigned firm property to corporation for 6000
shares of its capital stock, A sued for his quota, less number of
shares which, at par, equalled his debt to B. — Judgment for A for his
share of price, but payment of his debt in stock at par disallowed.
Cheeseman v. Sturges, 6 Bosw. 520, N. Y. (i860).
5. Unliquidated balance of partnership account not a subjeH. of set-off,
because a confusion of parties. B, C & D, partners. B gave his note
to C, who endorsed it to E. E assigned the note, after its maturity,
to .\, in consideration of certain shares of stock, to be transferred
when the note was paid. A sued B on the note. Defence : A not a
holder for value, because no consideration passed until note was paid.
Set-off, unliquidated balance of partnership account against C. — Re-
covered. Consideration sufficient. Set-ofF disallowed, because coun-
ter claim unliquidated, and not between B & C alone. B's only ex-
pedient would be a cross-a<5lion, with D as a party, by which a set-
tlement of the partnership accounts could be efFedled. The equitable
character of tlie set-off would be no objecflion. Cummings v. Mor-
ris, 25 N. Y. 625 (1862).
6. No balance of a partnership account is available as a set-off, even
by the partners' consent, unless they are parties to the proceed inzs for
a settlement. B & C, partners in 2,700 sheep. B sold 1200 to D, for
|3,ooo. D paid |i,50o, and resold 600 sheep to C, for 11,575, and it
was agreed by the three that the debtor should be ascertained by the
partnership account. C owed D and D owed B. If B, in the part-
nership settlement, owes C, C need not pay D, but can set-ofF B's
debt against D's claim. B assigned A, who had knowledge of the
arrangement, and he sued D for |i,5oo, the balance due. By agree-
ment of counsel, a reference was made to ascertain the state of the
partnership account, in order to carry out the arrangement. The
referee found that C was indebted to B, and accordingly, that A might
recover. — Reversed. No adjustment of partnership accounts will be
instituted in any collateral proceedings, unless the members of the
firm are made parties to the settlement. Young v. Hoglan, 52 Cal,
467 (1877).
504
Pt. 2, Ch. II. The Relation. §157.
§157.
^n accptiou is mabc to tl)c proljibition of suits bettofcn part-
ners iul)£ii t\)t^ \)am statcb an account.
This is equivalent to a settlement, and makes a final
balance by agreement of the parties. Such an agree-
ment will sustain an a(5lion of debt/ or assumpsit ;-
though not an a6lion on the case/ because it involves
a tort.
If a settlement was made, assumpsit would lie with-
out an express promise to pay the balance. It would
be implied in consequence of the settlement,^
1. Partner may sue co-partiier in debt after settlement and division of
assets for balance still due by reason of mistake in addition. A owned
a peach orchard, and agreed to market the crops with B, each taking
one-half the profits and paying one-half the expenses. They real-
ized 12,000, and divided the profits. A sued for I56, on the ground
of a mistake in addition of the items of accounts. B pleaded the
settlement in bar. — ^Judgment for A, as a partner may sue his co-
partner on an account stated. Jaques v. Hulit, i Harr. 38, N. J. (1837).
2. Assumpsit lies on balance struck and express promise to pay. A
brought assumpsit against B & C on certain accounts, one of which
was a balance due him on a statement and settlement of certain stage
accounts, in which transadlion they and others had been partners.
The payment of this balance had been assumed by B & C. The de-
fendants pleaded the partnership, under which they claimed the
adlion was not maintainable. — AcStion sustained. "If there has been
"a dissolution of the partnership, a settlement, a balance struck,
"and an express promise to pay, an a<?tion maybe maintained."
Gulick V. Gulick, 2 Green 578, N. J. (1835).
3. Partner cannot sue in case for his share of profits. A sued his part-
ner in trespass on the case for one-half profits of business. — If any
adlion could have been maintained for the cause set forth, it should
have been an a<ftion of debt, and not trespass on the case. Dunham
V. Rappleyea, i Harrison 75, N. J. (1837).
4. Anion lies for balance due on settlement without express promise.
B & C, partners. A, who was B's separate creditor, attached funds
of B in the hands of C. There was evidence that after the attach-
ment C had stated that he had |;620 of B, as balance of partnership
account. Defence by garnishee : Partnership and no account stated.
— Judgment for A. Evidence of admission justified jury in inferring
a settlement. The law implied a promise. Knerr v. Hoffman, 15
Smith 126, Pa. (1870).
505
§1^8. The Relation. Pt. 2, Ch. ii.
§158.
vlucitl)cr cvfcptiou is made, u)l)icl) prows tl)£ rule, because it
is iuitl)in tl)c principle of tl)e proljibitiou: ^nn transaction u)l)icl)
is iniicpcniicnt of tl)e tirni accounts, man be tl)e subject of a suit bu
a partner aqainst i)is cc-partner.
The exception covers a partner's liability for his
contribution. The liabilit}^ is antecedent to his mem-
bership, and may be enforced by his co-partners in
an action at law.' Any transaction between partners
wliicli is not part of the partnership business, is for-
eign to the account, and may be the subjedl of a suit
at law." An account is also unnecessary where the
partnership consists of a single transa(5lion,'' or where
the firm business has been settled, the debts paid, the
propert}^ distributed or exhausted, and the a(?tion is for
contril)ution upon a limited number of transadlions.^
1. yhlion lies at law by partner against co-partner for his contribu-
tion. A ic R bought an interest in a sloop in common. A, who paid
the price, and also the license fee, sued B for his half Defence : A
partnership, and no acfliou at law. — Action lay. No partnership ac-
count involved in suit Reeves v. GofF, Pen. 609, N. J. (1S09).
Joint stock company a partnership. Trustees of unincorporated
srjciety sued stockholder on his contradl of subscription. He set up
partnership, and that trustees should bring account. — Stockholders
declared partners, but suit maintained, because contradl of subscrip-
tion antecdent to partnership. Townsend v. Goewey, iq Wend. 424,
N. Y. (1S38).
2. Coles V. Coles, supra ? 13, n. 2.
/'artner may recover loans from firm in -which his co-partner is a
mcmlwr. B borrowed money of A, his partner, for B, C & D, and
gave firm notes for loans. A sued B, C & D. B served, but C & D
not found.— Judgment for A, ^16,038. 36. Subsequently sci. fa. served
on C & D, and court excluded B's admission that loans were made
by .\ for C & D, under charge that A couldn't recover because B a
member of both firms. Judgment for C & D.— Reversed. Notes
make a contracfl between A and B, C & D, and entitle him to sue
without reference to A & B. Contra^ could not be varied by parol.
Moore v. Gano, 12 Ohio 300 (1843).
3. Parltier may .<;ne at law for his share of the profits in a single irans-
atlion ivithout a previous accounting. A sued his co-partner B, alleg-
ing partnership in a single transadlion, its close and B's appropria-
506
Pt. 3, Ch. II. The Relation. §159.
tion of the profits. Defence : Account necessary. — ^Judgment for A.
Pettingill v. Jones, 28 Kan. 749 (1882).
Partner in single transaHion zvIkj has advanced sum as capital
may sue his co-partner at laze for balance due. A & B partners in
ai single venture. A advanced price, and then sold contrary to B's in-
stru6tions, and compromised debt. A sued B for his proportion of
loss, but he repudiated transa(5lion. — Liable, as partner : A entitled to
exercise his own discretion in selling. Cunningham v. Littlefied, i
Edw. Ch. 104, N. Y. (1831).
4. Partner may sue co-partner for contribution upon advance without
a settlement. A paid joint note and sued his partner B for contribu-
tion. No outstanding claims by or against firm, and no assets left.
Defence : Note for firm business, A kept accounts and no settlement.
— ^Judgment for A. Claim, contribution to over-advance recoverable
without account, if upon a limited number of transadlions. Clarke
V. Mills, 13 P. Rep'r 569, Kan. (1887).
Massachusetts and Pennsylvania rule against general authorities.
§159.
^\\t account stanba upon tl)e same footing as otl)er litigation.
As a general rule, account does not lie during the
continuance of the partnership, because a complete ac-
count implies a termination and settlement of all firm
transadlions. But the distincflion which is applied to
other litigation between partners, also applies to an
account. An account may be had of all transadlions
which may be isolated from the general business of
the firm, and the settlement of which does not neces-
sarily involve a dissolution of the firm,' This segrega-
tion may arise from the nature of the transadlion, or
may have been brought about by the contract of the
parties.
I. CoL,LYERon Partnership, ^30, and notes.
Article by Tracy G0UI.D, Esq., 21 Albany Law Journal 168 (1880).
507
5i6o. Thk Relation. Pt. 2, Ch. ii.
^\]t form of prorciinrc raises a barrier against a partner
auing l)is fuin, or r'/tr z'crsa.
The firm could not recover in a suit at law upon a
claim against a member, because there is no person
who can institute proceedings and adl in the litigation
as a party plaintiff. The partners are the only plaint-
iffs who can sue for the firm, and they must all join
in the a6lion. The absurdity would then be pre-
sented of a person being both plaintiff and defendant
in one and the same suit. He would, in his capacity
of plaintiff, ask judgment against himself in the ca-
pacity of defendant.'
The law tolerates no such incoherence. The con-
sequences which follow from the partnership being
an aggregate of the partners, are carried out with con-
.sistcnc}'. As no debt could be colle(fled by the firm
from a member, or vice versa, no attempt to enforce
collection is made. The claims of the firm against
its members, or their claims against the firm, are not
computed among the assets of either the joint or of
the separate estate. Being uncolledlible, the debts
have no legal or equitable existence.
I. Partner cannot sue co-partner on a firm obligation. A's name was
entered, as a subscriber, on B, a company's books, and scrip was
issued to him, which he sold before the company's deed was exe-
cuted. A never signed the deed. He sued C, a member, on a note
j,nyen by the proje(?lors, which was altered, without authority, from
joint into joint and several. — No recovery, as A w-as a partner, and
also liable on the note. Perring v. Hone, '4 Bing. 20 (1826).
508
I
Pt. 2, Ch. II. The Relation. §i6i.
§1B1.
^u !3lct of ^sseinbln in |3cnnsrilDauia rfinoBcb tl)e obstacle
of pl■ofe^ul•c, auLi alloiucLi fiartntrs to bt boti) plaiutitTs auL> be-
fcuLiauts in tl)c same action.'
The A61 does not enable a partner to sue his firm.
An independent plaintiff is required, who is not also
liable on the contradl which he seeks to enforce. The
evil is more extensive than the remedy provided.
The limited scope and technical chara6ler of the stat-
ute make the form of procedure control the right.
A party who was a co-promissor in a joint contradl,
and at the same time was the promissee, could not
sue his co-contradlors on the promise at law, because
they could plead in abatement his non -joinder as co-
defendant.' This evil can be cured by nothing less
than a procedure which will enable the plaintiff to
recover his claim in spite of his being, in form, one
of the contractors who agree to pay it. This should
be the case wherever the claim does not, from its na-
ture, involve an account, and where it is possible to
ascertain, by simple division, the sum due to the
plaintiff from his associates. If there was a joint
promise of all, including the plaintiff, as promissor,
to the plaintiff, as promissee, he may recover from his
associates the amount promised, less his quota. It
depends upon the nature of the claim whether the
plaintiff can have a judgment against his associates
in solido^ or a judgment against each for his rateable
portion.'^ No mere difficulty of procedure should de-
prive the plaintiff of his aClion at law. This view has
received the san6lion of the English courts, and there
509
§i6i. Thk Relation. Pt. 2, Ch. ii.
the a(5lion at law is permitted when the contra6l may
be interpreted as a claim by the beneficiar}^ against
the co-contracT;ors, excluding himself as a debtor-
contraclor/ This constrnc^tion gives effe(5l to the
contrail.' If the plaintiff was meant to contribute to
the payment out of a fund, as, for example, out of
profits, his quota would be deducl;ed from the claim.
The co-contra(5lors might not be liable unless a fund
arose, or they might be liable in any event. The
plaintiff's claim might be limited according to his
share, or a guarantee might be intended.
In a suit at law under the statute between two firms
with a common member execution is confined to the
joint estate." Wherever the procedure allows suits at
law between firms with a common member, the execu-
tion is necessarily confined to the firm assets. This
is the result of the statute in Pennsylvania, and. of the
pra6lice in New York.'
1. The Pennsylvania statute provides : "ThatnoaAion * brought
"by partners * against partners * shall abate, or the right of such
"partners * plaintiffs to sustain their action be defeated by reason
"of one or more individuals Vjeing, or having been members of both
" firms, or being or having been parties plaintiffs, and also of parties
"defendants in the same suit, * but the same shall proceed to trial
"and judgment as though the parties plaintiffs and defendants were
"separate and distindl persons." 14 April, 1838, P. L. 457.
2. Party joining iti promise cannot sue his co-promissors. A, B, C,
and others covenant with A that he shall go to Mexico, and explore
and work some mines there for three years for |5,ooo a year. A
brings an a<5ljon of covenant against B, C and the rest for his salary.
The defendants plead non-joinder of A, to which A denmrs. — A had
no a(ftion at law. He had none under the law prior to the A<51 of
1838, and it is well settled that that statute only applies to contradls
where one or more of the parties plaintiffs are not bound by the
agreement which they seek to enforce. A can only obtain redress
in equity. Price v. vSpencer, 7 Phila. 179 (1870). In Equity, 40 L. I.
76, Pa. (1873).
3. Raiguel's Appeal, infra \ 162, n. i, a.
4- Parties contracting for performance to one of them may be sued by
htm. A signed an agreement with B, and others, for exhibition of
his dwarf at their expense, though A furnished stage-dresses. They
had 3-4 and he 1-4 clear profits. A was also employed by B, et at. A
510
I
Pt. 2, Ch. II. The Relation. §i6i.
brought trover for his stage-dreSvSes. Plea : Non-joinder of A as co-
defendant. — Recovered. A was a separate coutracftor, and did not
agree to pay himself Bryant v. Wardell, 2 Exch. 479 (1848).
5. One of several may sue his associates on the protnise of all to him.
A, B, C, D, E & F agreed, in writing, that A should go to California
and sele6l a mine, to be bought on joint account. They each sub-
scribed lioo to pay his expenses to California, and his compensation
was left open. A made the trip and seledled the mine, but his asso-
ciates abandoned the speculation. A brought bill against his associ-
ates for compensation and expenses. Defence : Subscription limit
of liability. — Decree. Plaintiff may recover five-sixths of sum which
will repay expenses and be a fair compensation. Duff v. Maguire, 107
Mass. 87 (187 1 ).
6. If the same person is Joined ivith plaintiff and defendant, the execu-
tion is limited to the joint assets. A was a member of both the firms
A, B & C and A & D. The firm A, B & C obtained judgment against
the firm of A & D, and after some preliminaries, not pertinent to the
statement of the case, issued a.fi.fa. The sheriff returned nulla bona
as to the joint property of A & D, and a levy on the personal property
of D. D moved to set aside the levy, because A was both plaintiff and
defendant, and the judgment, if valid at all, was only so against the
partnership effects of A & D. The lower Court set aside the levy. —
Judgment affirmed. Gibson, C. J. : "The adlion authorized by the
"Statute (1838) may readily be condudled to judgment; but how
"could it be thought that a writ of execution might be applied to
"the persons or the separate estate of the individuals who compose
"the debtor firm, without doing injustice to some of them, or pro-
"ducingsome whimsical absurdity, it would require all the ingenuity
" of the person who framed the a6l to explain. It was enacted be-
" fore the abolition of imprisonment for debt: and to have allowed
"the judgment authorized by it the full common law effedl, would
■' have subjecfled one of the defendants to arrest on his own execution,
"but still with the means of regaining his liberty by ordering, in his
" capacity of plaintiff, his body to be set at large in its capacity of de-
"fendant; an operation which would have discharged the debt. The
"same absurdity would appear in the seizure of the separate estate if a
"party plaintiff in satisfaction of his own execution. It might be
"avoided, indeed, by direfting the sheriff to seize the property of the
"other defendant which, though it would be less absurd, would be
"more unjust. * vSay that only a moiety of the debt shall be thus
"levied, and you mitigate the injury, but do not prevent it; for the
"ultimate justice of the case would depend not on the apparent duty
"of equal contribution in the first instance, but on the balance of the
"partnership accounts, which a court of law is incompetent to ascer-
"tain. * What effecft, then, must we give to such a judgment?
" Its office is obviously to settle the general question of indebtedness
"between firm and firm, and it was, doubtless, intended to be fol-
" lowed by execution ; but when we subject the joint effects to seizure,
"we do, perhaps, all that was contemplated. That the adlion was
"considered as a proceeding between firms as independent bodies,
"having an existence distin6l from the individuals who compose
" them, seems clear ; for the solecism of an adlion brought by a man
" against himself for the purpose of self-execution, could scarcely have
"been entertained by the Legislature. The levy was therefore prop-
"erly set aside, and D's separate property cannot be seized until the
"accounts are taken and the equities settled between the defend-
"ants." Tassey v. Church, 6 W. & S. 465, Pa, (1843).
511
ej52. '^HK Relation. Pt. 2, Ch. ii.
Firms •icilh a common member may sue each other as if corpora-
lioti^ A, H & C, were indebted to C, D & E, on account stated. A
& R sued'c I) &'k for the amount, averring that C was not joined
as plaintifT, 'because he refused his consent. Defence: Account ne-
cessaVv to determine each partner's position.— Recovered. "Let the
"debtor firm pay its debt, and the creditor firm after receiving their
"debt adjust their individual equities among themselves. Equity
"treats a co-partnership firm for purposes of trial as an artificial
"body, a quasi corporation." Cole v. Reynolds, i8 N. Y. 74 (1858).
§162,
But sucl) firms art not linutEi) for rciJresa to an action nnkr
tl)c statute; tl)nj man still resort to equitn.'
The difficulty, however, does not arise from pro-
cedure, and is not obviated by a resort to a remedy
in equity. The obstacle is equally formidable in
equity.- The common member of two firms must be
put by the decree in one firm or the other.
If he is held a plaintiff, he may be the debtor in the
defendant firm, and a decree might enable him to com-
pel his co-partners, w^ho are alread}^ his creditors in
the defendant firm, to pay an additional debt for him.
He might colle(5l the debt out of their separate estate,
or he might turn around and pay it himself by setting
off his debt, release his co-partners defendants, com-
pound the debt, or delay its colleAion, at his discre-
tion, and the only redress of his plaintiff co-partners
would be an account.
If he is made a defendant, he is excluded from the
plaintiff firm by his co-partners, although he is enti-
tled to a share of its property and to a joint control
in the business. He is compelled to pay his co-part-
ners in the plaintiff firm, not their quota of the claim,
512
Pt. 2, Ch. II. The Relation. §163.
but the whole amount, which is more than they could
receive if it was his individual debt. They might
collect all from him ; they might seize and sell his
separate estate to pa}^ the debt. He might be a cred-
itor of his co-partners, and yet they would coUedl
more out of him instead of setting off what they owed
him in payment of the claim.
I. If a decree against his co-partners for a misappro-
priation of the assets to their separate debts would set-
tle and close up the firm transa6lions, the court will
dispose of the case, although the mutual rights of the
wrong-doing partners in respecft of the contribution to
the payment of this decree, are left unadjusted for a
subsequent bill.''
a. Suit ill equity between firm witli a common member not superceded
by statutory remedy. Firm of B & C dissolved, and new firm of A,
B & C formed. Without A's consent the assets of the new firm were
applied by B & C to the payment of the debts of the old firm of B & C.
A brought a bill against B & C for his share of the sum misappro-
priated. The transa6lions of both firms had been closed, and the ac-
count settled. This suit involved the only unsettled item. — Decree:
"Prior to A61, 14 April, 1838, the firm of A. B & C could not have
"maintained an adlion against the firm of B & C. The appropriate
" remedy of A would have been a bill to account. * * * Until either
" B or C pay this debt, for which they are jointl}- and severally liable,
"what they respedlively owe each other, cannot be ascertained and
" settled. The A(5l of 1838, which gave the remedy at law, could not
"take away the previously existing remedy in equity." Wentworth
v. Raiguel, 9 Phila. 275 (1873); s. c. Raiguel's Appeal, 50 vSmith 234,
Pa. (1876).
2. Article entitled : " Suits Between Firms with a Common Member. "
5 Am. Law Rev. 47 (1870).
Partner in two firins makes dissolution condition of an account.
A & B brought bill against A <S: C to enforce of a bill of exchange
made to plaintiff by defendants. — Dismissed. Account between firms
would not disclose A's standing with both B and C. If A, the debtor
in defendant firm, he shouldn't collect what he owes from C by means
of association with B ; nor if debtor in plaintiff firm should he receive
what belongs to B. Equity does nothing by halves, and account in-
volves dissolution. Rogers V. Rogers, 5 Iredell's Eq. 31, No. Car. (1847).
§1B3.
Qll)c equities of eact) inliiDibual plaintiff or befeni)aut must be
astertaineb aub tuorkeb out, altl)ougl) tl)is innobes a dissolution
of boll) firms.
513
§163. The Relation. Pt. 2, Ch. ii.
The first thing to find out is what each partner is
entitled to. Other equities than an account between
the firms are involved. The creditor-firm might be in-
debted to the common member. He should not then
pay over an additional sum, and increase the firm's
delDt to him, but set off his claim. The debtors may
not owe the debt in equal amounts, or the creditors
be entitled to equal parts of it. A settlement of the
accounts between the partners of each firm must be
made ; but a general account cannot be taken without
dissolving the firm. The balance of account shifts
until the ultimate balance, upon a disposition of all
the assets, is ascertained. If the firm be regarded as
a person, the remedy would avail, as the common
member would be identified with either firm, and his
equities would enure to it, and his liabilities could
not be severed from it and enforced apart by an exe-
cution against his separate estate. If any settlement
short of a dissolution is made, all the courts can do is
to omit an adjustment between the partners and let
the plaintiff firm proceed against the defendant's firm
assets alone.'
If a succeeding firm pays, at request, the debts of
a prior firm, and then sues for reimbursement, it
would be subrogated to the rights of the creditors
whom it had paid. But suppose there was a common
member of both firms and no subrogation. The
plaintiff would be restrided to the firm assets, so far
as the common member was concerned. Would he
be entitled to go against the separate estate of the
other partner? A & B are succeeded by B & C upon
A's death. A was indebted to A & B, $12,000. B
was indebted to A & B, $36,000. B & C sued A &
514
Pt. 2, Ch. II. The Relation. §163.
B for money lent. If the plaintiffs sought to treat
A's debt of $12,000 as an asset of his firm, could they
enforce its colle6lion until B had paid his debt of
$36,000? Could not A's representatives set off this
debt against $12,000 of B's debt, and claim that A
owed his firm nothing? This is the Scotch plan,
which has been unconsciously applied in Pennsyl-
vania.^ If the common membership of B in both
firms would prevent any recovery against his sepa-
rate estate, the answer is, that what he owes his firm
is joint, or partnership assets, and not his separate
estate. It is not the balance after deducing what A
owes the firm ($12,000), or $24,000, but both debts of
the partners, or $48,000, which are the firm asset.
If B's debt could not be colle(5led, then A's debt,
which involves the same adjustment of accounts,
could not be collected by the firm to repay its debt.
Although McCormick's Appeal makes the debt of
each partner to his firm partnership assets, yet that
notion confli(5ls with the refusal of the courts to settle
the partners' accounts in suits between firms with a
common member. The Scotch plan is inconsistent
with the principle which prohibits any collection of
claims between the joint and separate estates upon in-
solvency, and which is based upon the impossibility of
settling the partner's accounts without a dissolution
of the firm. All the courts could do was to omit ad-
justment between the partners, and let the plaintiff
proceed against the firm assets alone. By Judge Ag-
NEw'S theory, the firm assets are made to depend upon
the partner's accounts, and then the plaintiff cannot,
logically, touch even firm assets.
515
i
^j5^ The Relation. Pt. 2, Ch. ii.
, A',, suit behiurn firms zcit/i common ^nember A & B, partners as
<;liin carpenters repaired a ship owned by B & C. B failed and as-
signed liis share to C, releasing all interest in this claim to A, who
su-dBSiC C's defence: When B relinquished to C one-half interest
tn'ship^ie agreed to repair ship. His knowledge of this duty con-
structix'e notice to his partner A, and negatived a promise by C to
mv — hulmnent for C. Notwithstanding assignment, C may treat
thi's'as a partnership claim of A & B, admit liability of B & C as co-
owners to A & B ; then A might make C party to aclion for account
airaiust B and make C liable for any balance due on the account to
the extent of the cost of the repairs. But this is simply an aclion
of debt bv one firm against another, and yet necessarily raises equi-
ties between the parties. If inequitable that B should colledl this
monev from C, A cannot claim through B. A's objection that C
could'not set-off claim for want of mutuality met by A's incapacity
to sue on firm claim on account of common member. In equity
A must show that this money is due B on settlement of account be-
tween B ii: C. A might show that B improperly withdrew money
from A isL B, and Equity would marshal assets, but no such case
proved. Englis v. Furnis, 4 E. D. Smith 5S7, N. Y. (1855).
2. Partner's debt to his firm is a firm asset on insolvency. A & B were
partners. B died, and soon after A made an assignment of all the
firm property for the benefit of its creditors. The assignee claimed
against B's administrators for 116,790.13, the amount he owed the
firm. A was also indebted to the firm to the amount of $11,204.68.
Both A and B, as well as the firm, were insolvent. — The debt of the
partner to the firm is a firm asset for which he must account to his
co-partner, who would first dedudl his own debt to the firm, and
claim one-half, $2,792.72>^, the balance of $5,585.15 as due on account
of his share of the firm assets. McCormick's Appeal, 5 Smith 252,
Pa. ( 1 866).
§164.
iLl]c effect of alloiDmg a single person to tra^e as a partner
in i)itTcrent firms is to acknoiuletige tiifferent capacities in a single
inlnniLiual.
But the tenet of the Common law was the indivisi-
bility, not the divisibility, of a person. A capacity
was recognized only when it was embodied in a per-
son.
Ill tlie main business of partnership the Common
law adhered to this position, which could not be as-
saulted in front, and had to be turned by a flank
516
Pt. 2, Ch. II. The Relation. §164.
movement. It has been shown that the firm estate
served, under the tradition of the Common law, as an
equivalent for the separate capacities of partners (§5,
103) . So, in this minor point of partnership, as the law
is now developing, the common member is acquiring
distindl capacities by means of the different business
enterprises in which he is engaged.' This applies
only to cases in which the two lirms are not composed
of entirely the same members.
Partnership, from its origin, has been considered a
relation of persons, and comprehends the total capacity
of each partner. No restriction can be imposed upon
his power, for he enters into the partnership as a man,
and, as such, he is an individual who cannot be sev-
ered into parts. As he cannot divide himself into
sections, he is unable to trade in different capacities,
and must enter into partnership as a unit, or not at
all. The delegation of authority is absolute, and
cannot be restri6led by any contra(?t between the part-
ners. Hence there cannot be two partnerships com-
posed of the same partners. The fa6l that each busi-
ness is distinct, that it is carried on in a locality apart,
and has no dealing with the other, does not make any
difference." Three partners might conduct a hotel in
Philadelphia, and might also be cotton factors in New
Orleans; each partner could exert the powers of all,
and bind the firm, in spite of any allotment of the
partners to either business. The distribution of func-
tions would be a domestic arrangement which could
not affedl strangers. The two trades could not be
kept apart without dividing the capacity of each part-
ner, and apportioning the fragments to each business.
As the capacity, like its possessor, is indivisible, the
517
§164. The Relation. Pt. 2, Ch. ii.
different trades are consolidated into an aggregate
business, and any partner may disregard the sub-
divisions, which cannot tramel his powers, for they
are co-extensive with the undertaking.
Thus a banker's general lien, if the firm, com-
posed of the same members, embraces distin(51: houses
alike in name, extends to the securities pledged with
each house; though if the firms vary in name, the
implication of separate control must be rebutted by a
convention expressed, or if tacit based upon full
knowledge of the relation, in order to create an ulte-
rior general lien.'
A partnership within a partnership, or collateral to
it, has less pretension to independence, or to recogni-
tion.^ Should some of the partners in the coal busi-
ness constru61; and run a railroad, would each business
be kept apart, or would both be consolidated into a
single business? Let the original firm consist of
three partners, then let the firm join in the new busi-
ness as one party, with one of the members as the other
party. How are the parts to be distributed in the new
business? Would the terms of the original partner-
ship be extended to the new enterprise, and regulate
both as departments of a common undertaking? The
shares might, by the original plan, be equal, but the
new arrangement would give the individual member
a share of one-half as a party, and also one-third of
the other half, as a partner in the firm, which entered
as a single party into the new business. Nothing
would prevent both plans of distribution from taking
effecfl between the partners, but this domestic arrange-
ment would not prevent a consolidation of the firm.
518
Pt. 2, Ch. II. The Relation. §164.
Each partner would have power to bind his co-part-
ners in either branch of the business.
It has been asserted that the creditor's equity at the
Civil law was a jits separationis. They might insist
that the stock of each business should be kept to-
gether as a whole, iinivcrsitas rermn^ and that the
debts should be paid .out of the assets."^ But the in-
stances in the Digest of a contest between different
classes of creditors, related to slaves and sons under
paternal power who were allowed to do business on
their own account. If either carried on distindl
trades, the creditors of each business could insist
upon a severance, and demand satisfadlion out of
the stock to which they gave credit. ** No credit could
l3e given to the person, and therefore, the creditors'
only reliance was upon the fund. The stock was ap-
plied as an aggregate to the total indebtedness.^
The reason is obvious, if Ulpian had not stated it.
The price of the stock is unpaid. Until an equiva-
lent for it has been rendered, no stranger, though he
is also a creditor of the debtor, has any equity to ap-
propriate the stock. His claim is legal and against
the person of his debtor, but not equitable and against
the fund. The liabilit}'- of the debtor to him exists,
but the merchandise which he endeavors to seize was
not the produ6l of his credit, but of the credit given
by another. The equity goes to the substance of the
transadlion, the liability stays in the form.
I. Equity admits a suit between firms with a comition member with-
out a general accounting. B & C were indebted to A & B. A, sur-
viving and liquidating partner of A & B, offered to prove in bank-
ruptcy against B & C. — Allowed. By reason of A's independent
right. The firms are treated as distindl persons. In re Buckham, lo
Nat. Bank Rep'r 20 5 (1874).
Discharge iti bantiruptcy for firm and, separate liabilities does not
release common member from debts of another firm. B was a part-
519
§165. The Relation. Pt. 2, Ch. ii,
iier in two firms, B & C aud B & D. The firm o£E & D filed a petition
in bankruptcy to be relieved from their debts, firm and individual,
and were discharged. A then brought an adtiou against B & C on a
bill accepted by them. B pleaded his discharge. Judgment for B. —
Reversed. B's discharge did not release him from liability as a mem-
ber of firm of B & C. Perkins v. Fisher, 80 Ky. 11 (1882J.
2. Siiutt' partners doitig business at different places under different
names, remain one firm. Two brothers, B & C, traded in London,
as their father's Sons, and in Oporto, Portugal, as Brothers. Bills
drawn by the Brothers, and accepted by the Sons, were proved against
the Portugal firm by the holder. Claim : The contracts were distincfl,
as each firm could be held upon its oyvn. — There were no two firms,
but only one firm doing business, under two names, at different
places. Ex. parte Banco de Portugal, 11 Ch. D. 317 (1879); Banco de
Portugal v. Waddell, 5 App'l Cas. 161 (1880).
3. Hanker s general lien covers collaterals pledged with the firm trad-
ing under a different name in another locality. B pledged collaterals
with C, D & E, bankers, in Philadelphia, trading as C & D, for a
loan. B also pledged other collaterals for another loan with them in
New York, where they traded as C, D & E. The proceeds of the col-
laterals with C & D in Philadelphia exceeded the debt by 1:55,000;
proceeds of collaterals with C, D & E, in New York, fell short of
debt, $57,000. C & D, with B's knowledge and assent, mingled the
securities, and afterwards sold them all for the aggregate debt. A,
assignee in bankruptcy of B, brought bill against C & D, inter alia,
to recover surplus value of the securities in Philadelphia over the
amount of the Philadelphia loan. — Claim disallowed. Sparhawk v.
Drexel, i W. N. 560, Pa. (1875).
4. Part cannot prove in bankruptcy against the whole. B, C & D,
partners in Toronto, trading as B & C, sold goods to A, B, C, D & E,
trading as E & Co., at Syracuse, and drew on E for the price. E ac-
cepted, and an understanding was proved that E & Co. should pay
the acceptance. A discounted the paper for B & C, and took an as-
signment of their claim against E & Co. A oflfered to prove for the
acceptance against the estate of E & Co. in bankruptcy. — Disallowed.
Could not prove on the acceptance, because not in firm name. Could
not prove on the assignment of B & C's claim, because all the mem-
bers were partners with E in E & Co. In re Savage, 16 Nat. Bank
Rep'r 368 (1878).
5- Dig. 14, 4, 5, 16.
6. The actio tributoria furnished the means to enforce the severance.
^ Cours de Droit Romain, par Charles Maynz, Professeur de droit a
I'Universite de Liege, 4eme edition, 1877, \ 111, No. 5.
14 fyiiicf' 276-8.
7. HiJRLEMANN, supra \\o\, n. 3.
§165. \
^ partner, in l)is boublc position of proprietor anb creditor
of tl)e firm funti, Ijas a priority oBcr Ijis co-partners for I)i3
520
Pt. 2, Ch. II. The Relation. §165.
Each partner has a lieu on the firm assets for any
advance he has made to the firm, or for any outlay on
its behalf.' From his position he cannot, stri6lly
speaking, be a creditor of his co-partners; his ad-
vances and outlays cannot be recovered until the
account between them has been stated, and if the
assets of the firm are absorbed by the debts, he has
only a right against his co-partners for contribution,
and not for reimbursement of the entire amount ad-
vanced. Inasmuch as he has no claim against his co-
partners for repayment in full of his advances, or
outlay, at all events, the portion which represents his
share is put at the risk of the business, and in conse-
quence he may stipulate against his co-partners and
the firm fund for any rate of interest, without incur-
ring the penalties of usury." Upon distribution, he is
entitled to priority for the full amount of the advance
or outlay before anything can be awarded to the part-
ners on account of their shares in the firm property.^
In relation to the firm fund, therefore, his claim is as
much a debt of the firm, although deferred, as is the
claim of a third person; his lien stands upon the same
footing as the lien of an ordinary firm creditor.^ In
addition, however, to the rights of a creditor, he may
exercise, in his own behalf, his right as a partner, to
apply the firm assets to the payment of his firm debt.
1. Partner has lien on firm assets for advances to firm, but none for
advances to co-partner. A lield title for himself, B, C & D, of a
quarry, which was sold out under a mortgage. Sheriff held surplus
of |4,ooo for distribution. A sought, by bill, reimbursement of his
advances to firm, and also for advances to B, used in the firm. De-
fendants, attaching creditor of B and his assignee. — A recovered his
advances to firm, but had no equitable lien on B's interest. Hill v.
Beach, i Beas. 31, N. J. (1858).
2. Partner' s promise to pay for withdrawals interest in excess of legal
rate not usurious. A, B .S: C, partners, contributed $10,000 each to
banking capital, stipulating for 6^2 per cent, interest, and agreeing
521
§i66. The Relation. Pt. 2, Ch. ii.
to pay 10 per cent, on average overdralts if allowed during partnership.
C overdrew for 550,000. and belore his death the notes and renewals
were charged up. He gave A as trustee for firm, his bond and mort-
gage for amount with 10 per cent, interest. A foreclosed. Defence:
l^'siiry.— Decree. Not a loan, payable absolutely; but profits contin-
gent upon risk of business discounted. The advance by or to partner
not a loan or debt. Selllement subjedl to state of firm accounts. If
profits exceed rate of 10 per cent, partner pays nothing, if less, he
pays 10 per cent. He chances the risk. A's withdrawal deprives
partners of fund whicn makes profits. He guarantees stipulated
amount and insures them a certain amount of gain against a loss of
capital. The notes and renewals were forms of banking business,
but did not affe6l characfler of advance ; mortgage security for amount.
Payne v. Freer, 91 N. Y. 43 (1883).
3. luterest on overdrafts by partner not allowed until dissolution. A
& H nianufa6lured steel from 1854 to 1874, and owned mills, ma-
chinery and real estate. On A's death, his executrix brought ac-
count. IMaster allowed interest on over advances to B, 172,400, after
dissolution, but no interest until dissolution. — Affirmed. Overdrafts,
perhaps, not made with A's knowledge, as account unsettled. After
dissolution, B should have settled accounts,' and is charged with in-
terest Buckingham v. Ludlam, 2 Stew. 345 E. A., N.J. (1878).
4. Advance by partner to firm carries interest without express agree-
ment. A, a railroad contraAor, construdled a road in partnership
with B, an engineer. Thev had no capital, and relied on loans for
temporary means. They were paid in bonds, stock and cash. A ad-
vanced 590,000 for firm, with B's knowledge, and the master allowed
interest on the advance. B objeAed to allowance, and charged A
with loss caused by negotiating bonds for firm. — Interest allowed
without agreement for advance by partner, and no charge for exer-
tion of discretion in selling firm assets. Morris v. Allen, i McCart.
Ch. 44, N.J. (1S61).
Partner entitled to interest on advance to firm, and may mingle
firm Jitnds loilli his Oivn if no loss results. A contributed |i,ooo, and
B jhe rest of the capital,' to build a State prison. B also advanced
527.064 for firm use, and deposited the funds, with his own, in bank.
A brought account. B claimed interest on his advance — Allowed.
Mingling firm and individual funds presumably with A's knowledge,
and paused no loss. P.arker v. Mayo, 129 Mass. 517 (1880).
Uhler V. Semple, supra ^112, n. 6.
§1B6,
<i:!}c conBcrsiou brj a partner of firm propertn to liig onm use
is a frauLi upon l)is co-partners, anb entitles tl]em to recocer from
l]is separate estate tl)e amount abstractet).'
^ As the embezzlement i.s equivalent to stealing, a
bill in equity would lie, to compel restitution.' The
522
i'T. 2, Ch. II. The Relation. §i66.
separate estate need not be increased by the tort.
The funds might have been lost in stock speculations.
The partner would have been relieved by the ex-
tinguishment of his debts, and have received a benefit
from the diversion of firm assets. But though he had
given, or thrown, them away, the right of dominion,
which he exerted, was sufficient to charge him with
the tort. The stealing was the wrong, without refer-
ence to the purpose for which the a6l was committed,
or the subsequent disposition of the property stolen.
The increase of an estate by means of a tort, is a rea-
son to charge a stranger who shares the estate.^ No
reason is necessary to charge the tort-feasor himself.
The a6l which he committed establishes his guilt, and
any collateral argument is surplusage.^
1. The employment of firm funds in traiisa6lions which
do not form part of the business, amounts to a conver-
sion.'*
a. Partner's employment of firm capital in a new partnership which
he forms for his firm with a third person, charges the partner for a
conversion of the fund to his own use. A contributed |6,ooo and B
^4,000, to buy and sell cotton. B went to Memphis, but not finding
any, formed a partnership on account of A & B, though without A's
knowledge, with C, a cotton buyer, and gave him |;ig,ooo to buy in
Arkansas. C sent back word that he had been robbed by the Con-
federates. B returned, and paid A f 1,000, and he sued B for |^5,ooo.
Verdi6l for A. — Judgment affirmed. B's entering into partnership
with C, and giving him the firm capital, amounted to a conversion
of it to his own use. Reis v. Hellman, 25 Ohio St. 180 (1S74).
2. An injun(5lion will lie to prevent the partner's fraudu-
lent removal of firm stock.''
a. Fraudulent removal of stock by co-partner ground for injunBion,
not for arrest. A asked for order of arrest against his co-partner, B,
upon affidavits showing fraudulent removal of goods. — Refused.
Remedv, injundlion and receiver. Cary v. Williams, i Duer 667, N.
Y. (1S53).
3. A stranger who cooperates with a partner in efie6ling
the conversion, is jointly liable for the wrong.*
No one can dispute the firm's right but a purchaser
for value. A volunteer must account for the property,
and for its proceeds.''
523
§j(,- The Relation. Pt. 2, Ch. ii.
a. Wailc V. Rusher, sit/>r(7 I 140, n. 3.
b. I'irm funds used bv partner followed into his investments. A, B,
C & n cneaj^ed in leather business. D kept books, and was firm
financier. On his death, co-partners discovered that he had a])pro-
priated i«io3,o<x) firm assets. He bought lands, and put title in his
wife. lie insured his life lor |;40,ooo, and assigned the policy to her.
A H iS: C charged widow, as trustee. — She claimed insurance, and
re-tendered premiums. — Trustee ex 7naleficio. Assignee paid no con-
siileration, and stood in D's shoes. vShaler v. Trowbridge, i Stew.
595. N- J- (i«77)-
4. Ill a banking firm, the city and managing partner took
firm a.ssets, and lost them in stock speculations. The
firm creditor sought to recover, in equity, from his
separate estate, for this diversion of partnership funds.
The abstractions were concealed, and not entered in the
firm books. ^
a. Partner's abslraclion and use of firm funds, without authority, in
stork speculation charc^ed against his separate estate. Clerk's knowl-
edge not notice to co-partner. B, banker, took, in i860, A into busi-
ness. .\ contributed no capital, had no experience, and took no part
in the management. B abstracted firm funds, to pay losses in stock-
speculation, and concealed his thefts by fictitious entries in the books.
In 1.S70, B committed suicide. A being bankrupt, his trustee proved
on behalf of A & B's joint estate, against B's separate estate. De-
fence : Separate estate not increased by B's thefts, and clerk's knowl-
edge of entries notice to A. — .\llowed. Separate estate exonerated
from liability by fraudulent payments out of joint assets, and clerks
not likely to communicate to A items direcled by managing partner.j
Lacey v. 'Hill, 4 Ch. D. 237 (1876) ; s. c. 3 App. Cas. 94 (1877).
I
U67.
^ partner ml]a appropriates firm assets for 1)13 mbicibnalU
account, cominits aw act U)l)icl) is ul/ra vires.
The a6l iu excess of his authority created, it waj'
thought, a right in his co-partner to recover a nioiet);
by a separate a6lion. The injury was outside of th(
partnership, and against his co-partner, as an indi
vidual. The acl effected, /r^ laiifo^ a dissolution, anc
the co-partner, as a tenant in common, had an indi
vidual right of adion.' The tort, however, is agains;
524
Pt. 2, Ch. II. The Relation. §167.
the firm, and is not a separate injury against the co-
partner.
The theory of a tenancy in common, or of several
titles in the partners, at first mystified the remedy.
The partners were required to join their titles in order
to maintain an adlion. A barrier presented itself in
the partner who committed the wrongful a6l. He
could not take advantage of his own wrong, and
bring a suit to avoid his a6l. Without his joinder,
the a(5tion would not lie.^
The attack, however, was made upon the firm, and
its title, if impeached, could be reinstated by any repre-
sentative of the firm. The joint title is devested only
by an a(5l performed on behalf of the firm, and a dispo-
sition for any other purpose does not afife(fl the title.
The doctrine of estoppel is misapplied. It is the re-
cipient of firm assets who is estopped by thp fraud,
because he gives no consideration for them to the firm,
and not the partner who made them over to him.* The
partner reclaims the property for the firm, and joins in
thea6lion with his innocent co-partner for conformity.*
The fa6l that the partner uses the firm funds to sat-
isfy his separate debt, does not give the creditor any
right to retain the property. He can acquire a title
only by giving a consideration to the firm.'^ Though
all the partners appropriated the firm stock to their
separate debts, the concert of a(5lion would not justify
the disposition, or devest the firm title."
The technical obstacle is removed when the firm is
insolvent. The creditors then have a dire6l remedy
against the recipient.^ The disposition is a fraud
upon them. The assignee for creditors also repre-
525
^lO;. '^'"^' Relation. Pt. 2, Ch. n.
sents tlicni, and may recover the property from any
alienee who cannot make out a title from the firm.
The partner is also liable to his co-partner for his
fraudulent acl in misusing the firm assets." He must
reimburse him for expenditures caused by the misap-
propriation, and compensate him for any injury which
the business may sustain.
I. Money paid for independent elaini out of finn funds recovered in
separate ad ions. A & B vi ere partners. A & C were sureties on D's
1)on(l. C (lied, and B became his executor. A & B paid the bond
out of firm funds. A sued D for moiety. Defence: B should join. —
Recovered. A liable at law, and C's estate in equity. Quotas pre-
sumed equal, and payment severed according to liability of each. No
joinder required in suit for moiety at law. Gould v. Gould, 8 Cow.
l68 (1S2S); s. c. 6 Wend. 263, N. Y. (1830).
A partner's use of finn paper for his individual debt
was a fraud on his co-partners, and not on the firm.
They must sue for their quotas of loss. Dissent, be-
cause fraud on firm, which had the title and should
sue.''
a. Separate creditors taking firm note from debtor partner a several
fraud on co-partners in pioportion to their shares. A, B, C & D
were partners. B gave to E, for a separate debt, his individual
note, with the firm's endorsement. Bank discounted it for E. Firm
dissolved, and receiver paid the bank. A & F bought out the inter-
ests of B, C & D, and took from receiver an assignment of the estate
in his hands. A & F sued E for fraud. — ^Judgment for E. His fraud
a separate injury to each partner in proportion to his share in the
firm, and founds no joint cause of a<5lion in favor of the firm, nor of
the plaintiffs as assignees of the firm. — Dissent: E's fraud committed
against the firm, and payment by receiver gave him, as trustee for
creditors, a cause of adlion, which passed by his assignment. Cal-
kins V. Smith, 48 N. Y. 614 (1872).
2. If a partner endorsed the receipt of his claim on _
note held by the firm, they could not recover without
admitting the receipt. The partner is estopped to deny
his a6l, and his estoppel bars a joint suit.'*
a. Credit friven for individual debt on note to firm, is payment whicU
cannot recovered back. C & D gave a note to A & B. B was individu-
ally indebted to C & D. and endorsed a receipt of his debt of $700.
on the note. A & B sued for the full amount— Could not recover,;
unless they allowed the credit. B, as co-plaintiff, could not take ad-
vantage of liis own wrong, and his estoppel bars the joint suit*"
Craig V. Hulschizer, 5 Vr. 363, N.J. (1871).
Any receipt by a partner would bar his firm's re-
cover>-. The partner could not be co-plaintiff.**
526
Pt. 2, Ch. II, The Relation. §167.
b. A partner's receipt, given for a debt to the firm, in payment of his
individual debt to the firm creditor, bars the firm by precluding a
joint aBion to recover the claim. B owed A & D. A gave B a receipt
for his debt to the firm, in payment of a debt due by A to B, for gro-
ceries. A & D sued B in assumpsit. — ^Judgment for B. Any relief of
the firm against a partner's fraud in paying his individual debt with
firm assets, must be in equity ; he cannot be a co-plaintiff at law.
Homer V. Wood, ii Cush. 62, Mass. (1853).
3. Fraudulent receipt given by one of two trustees to a joint debtor no
bar to joint suit. A & B, trustees, sued D for a debt. He produced a
receipt given him by A. Plaintiffs proved that the receipt was a fraud
onXhe cestuy que trust, aud obtained a verdicfl. Defence: A estopped
by his own fraud as much when co-plaintiff as if sole plaintiff. Though
D is equal in ^uiXt potior est conditio possidetttis. — Verdicfl sustained.
D the party estopped by his fraud, because he could not set it up
against B. Receipt is only prima facie evidence of payment. Skaife
V. Jackson, 3 B. & C. 421 (1824).
4. If a firm debtor credited the debt on his judgment
against the partner with his consent, the joint title
would be unajSfe(5led by the credit, and the firm might
recover. ^
a. Record credit of firtn claim by plaintiff on jtidgtn en t against part-
ner no bar to firm aElion. A & B sued C for merchandise. C had
credited his debt to the firm, with B's consent, upon a judgment
against B. — Action sustained. Misappropriation void, and joint title
unaflFe6led. Purdy v. Powers, 6 Barr 492, Pa. (1847.)
If a partner receipts for a firm claim in payment of
his individual debt, the firm can recover in spite of his
receipt. The firm title is not aflfe(5led by the receipt.''
b. Payment by partner of his separate debt <vith partnership receipt,
no bar to firm assignee's recovery. B owed C & Co. |ii2.o6 for lum-
ber. A, C & Co.'s assignee, sued B. Defence: Firm receipt given
by C in payment of his individual debt to B for groceries. — Recov-
ered. C could be co-plaintiff to reclaim firm title, which was not
affedled by his attempt to appropriate the claim to his individual
debt. Thomas v. Pennrick, 28 Ohio St. 55 (1878).
5. The firm can recover assets paid in satisfadlion of a
separate debt. Although the separate creditor did not
know of the firm's title, yet, as he did not pay a con-
sideration, he acquired no title.''
a. Geery V. Cockroft, supra ?iio, n. 11.
Amount of partner's individual note, endorsed by firm
creditor, and paid back through his endorsement, not a set-off against
his claim. A brought account against his co-partner, B. C & D,
trustees of E, sold his claim against A & B to F. Against the claim a
firm creditor opposed a set-off". C & D had received A's note, payable
to their order, endorsed it, and had it discounted by G, a bank. A had
drawn a check on the firm deposit, to pay the note, and had endorsed
the check and sent it, with an individual check, to H C & Co. H,
without C or D's knowledge, endorsed the firm check, and delivered
it to G. He returned the note to A. This payment of A's individual
527
§167. The Relation. Pt. 2, Ch. n.
debt to E's estate out of firm funds was offered as a set-off against F's
claim.— Disallowed. G, and not C & D, held the note, and received
the check in ])ayment. G, as a bona fide purchaser, could not be com-
pelled lo refund' the firm assets, lor he could not be reinstated after he
had surrendered the note and released the endorsers. They did not
receive the firm funds, although the title passed through them, and by
the payment escape only a contingent liability. Moriarty v.Bailey,46
Coini.'592 (1879).
If Arm property is taken in execution, and sold for a
separate debt, all the partners can sue for the trespass. '^
b. Scmblc : Partner co-plaintiff in trespass for sale of firm property for
his separate debt. D, separate creditor of C, levied on and sold firm
l)roperty of A, B & C. They sued D, E, sheriff, and F, auctioneer,
for the trespass. Defence, made after trial: Joinder of A. — Recov-
ered. Objeolion too late. A, probably, a proper party. Bates v.
James, 3 Ducr 45, N. Y. (1854).
If the firm note includes a separate debt, the payee
can recover on the note, but only the firm debt, not
the separate debt, though included in the note/
c. Payee of firm note may recover on it the firm debt, but not a sepa-.
rate debt also included in the note. C made a note in the name of B,
C & Co., to A, who brought suit upon it. B's defence: Part of con-
sideration a debt existing before B joined the firm. — Recovered, be-
cause A did know when B became a partner, and cause of acSlion is
the note and not the consideration. But consideration being in part
for the separate debt of the other partners, was a fraud on B, and
barred A's recovery upon the note to that extent. Guild v. Belcher,
1 19 Mass. 257 (1876).
Contra: The separate debt of all the partners paid with
firm funds could not be recovered by the firm. The debt
was due from each partner, and they had no equity to
recover it.*^ If a partner pays his individual debt with
firm funds, his co-partner was estopped from reclaim-
ing the payment by receiving payment of his debt out
of the firm a.ssets."
d. A separate debt of all the partners, paid out of firm assets, can-
not he recovered by the firm. On dissolution, four of the partners
continued the business, and retained the bookkeeper, A, to whom the
old finn owed $161.90. A carried this amount to his own credit on
the books of the new firm, B & vSons. At the end of the first year,
A claimed a balance due him of 1300, in which he included the I161.90,
without knowledge of B & Sons. They gave him a note for |ioo,
and paid him |2oo in cash. A sued B & Sons on the note, and for
subsequent salary. The defendants having ascertained that I161.90
was due A by the old firm, denied any liabilitv on the note, and re-
clamied the I61.90 paid him in cash.' Court below gave B & Sons
judgment on the note, but allowed plaintiff to retain the'|6i.90. De-
fendants appealed.— Judgment affirmed. Defendants, as partners in
old firm, were liable, jointly and severally, for its debt, and had no
equity to reclaim it. Strong v. Miles, 45 Conn. 52 (1877).
528
Pt. 2, Ch. II. The Relation. §i68.
e. Partner waives co-partner' s payment of his individual debt with
firm funds by receiving them in payment of his own individual debt.
B was managing partner of firm, A, B & C, railroad contradlors, who
dissolved and made B liquidating partner. The title to firm real
estate was in D, a railroad company, which conveyed upon B's order.
A notified D not to convey, but, on that date, conveyance was made
to E, both D and B thinking that A consented to this deed, which
was made as security for B's debt to E. D owed firm |2 2,000, and B
transferred one-third of the claim to A, in payment of an individual
debt. B had advanced more money for firm debts than the value of
this lot. A's assignee brought account, and asked to have the lot ap
plied as partnership assets. — Dismissed. Though payment of indi-
vidual debt with firm assets, prima facie, fraudulent, presumption
may be rebutted. A receipt of firm claim for his individual debt
estops him from objecting to B's use of firm property to pay his sepa-
rate debt. Corwin v. Suydam, 24 Ohio St. 209 (1873).
7. If the firm is insolvent when its fnnds are used to
pay the separate creditor, the firm creditor may recover,
because it is a fraud on him.*
a. Menagh v. Whitwell, supra \ 103, n. 4.
If a partner transfers firm assets for his separate debt,
the firm creditors may recover them. The firm title
does not pass, and the firm creditors are entitled to sue.''
b. Partner's transfer of firm assets for his separate debt, a fraud on a
firm creditor, who may recover the assets direFtly from the assignee.
B & C, partners. B transferred judgments and notes of the firm, for
his separate debt, to D, without C's knowledge. The firm was in
debt, and became insolvent. E, a firm creditor, obtained judgment,
and attached the proceeds colle<fled by D, and in his hands as gar-
nishee. — Judgment for E's claim, which was less than the amount
colle6led by D. The firm title did not pass by D's transfer in fraud
of the joint creditors. Hartley v. White, 13 N. 31, Pa. (1880).
8. If a partner uses the firm-name for a separate debt,
and the co-partner has to pay a moiety of the debt to
release his separate estate from execution, he can re-
cover the payment from his partner. The payment
would be under sufficient duress to entitle him to reim-
bursement.^
a. Smith v. Loring, supra 1 126, n. i.
§16S.
^0 a partner tul)o uses t[]c firm crebit, or firm ftinbs, in pap-
mcnt of l)is intiiribual inbebtebness, commits a fraub upon tt)£
firm 1)13 co-partner is not bounb to Mssent.
529
§i68. The Relation. Ft. 2, Ch. ii.
If a partner converts firm funds to his own use,
this is a fraud upon his co-partners, for which, in
some jurisdidions, he is liable to a criminal prose-
cution for embezzlement (§ 143); but he is everywhere
responsible to his co-partners in a civil adlion for such
a sum as upon his own account he is shown to have
abstradled in excess of his share in the firm prop-
erty.
Should the creditor be notified by the co-partner of
his dissent from the diversion of the firm funds to the
payment of the creditor's separate claim? It was said
that notice was superfluous, because the creditor had
knowledge of the diversion. This is true, and the co-
partner need not notify the creditor of the fa(5l which
he already knew. Nor must the co-partner give notice
of his dissent. It was held at one time in Pennsylvania
that unless a protest against the diversion was made,
the inference would be drawn of an assent by the co-
partner, which would charge the firm.* But this posi-
tion is not sound; he need not forbid the transa(5lion.
If a partner gives firm paper for his individual debt,
the co-partner is not bound by his unlawful adl, which
is invalid without being repudiated."
An order drawn by a partner upon a debtor to the
firm, and handed by the partner to his individual
creditor, would not proted him in the possession of
the asset against the firm.' The individual creditor,
who took possession under the firm order, knew he
was getting firm assets in payment of his private
debt, and he could not retain them against a reclama-
tion by the firm.
'• Partner on learning that co-partner has given firm note to pay in-
dividual debt must disavow. B & C were partners; D was their
clerk. C was indebted to A, and, upon a settlement with A, gave
530
Pt. 2, Ch. II. The Relation. §i68.
him a note signed in the store, and in the presence of C, by D, in the
name of the firm. B was absent, but he afterwards knew of the
transaction, and did not dis$ent. A sued B on the note, as surviving
partner, after the death of C. — Recovered. Shippen, P. J., in the
court below charged, inter alia, "And if the defendant knew of this
" transaction, as by the books of the firm he should know, and did
" not early disavow it, he may be bound by it." Foster v. Andrews,
2 P. & W. i6o, Pa. (1830).
2. Partner not bound, when subsequently informed of the fa^, to re-
pudiate a firm note given, without his knowledge, by co-partner for
his individual debt. B & C, partners. C gave a firm note to A, for
|i,ooo. B's defence : Note given to A for C's debt, contracted before
B «Sc C formed the partnership. Court charged, that if C's giving the
note was not known to B at the time, he must, when afterwards in-
formed of it, repudiate the note within a reasonable time, or be
bound by it. — Error. If B did not know of the note when it was
given, he would not be charged, although he was subsequently in-
formed and did not repudiate it. Reuben v. Cohen, 48 Cal. 543 (1874).
3. Partner having knowledge of co-partner' s application of firm funds
to payment of individual debt not bound to disavow. A, of the firm
A & D, was separately indebted to the firm B & C, and E was in-
debted to A & D. A drew an order in the name of his firm, in favor
of B & C, on E, for bricks, which were delivered. After an imsuc-
cessful aClion against E on his original indebtedness, A & D sued
B & C, in order to follow the property in their hands, on the ground
that they received it mala fide. Defence : That D was apprised of
the order before the bricks were delivered, and did not give notice to
the defendants that he would not be bound by it. — Recovered. Gib-
son, C. J.: "Want of notice not to deliver, might have been ground
"of defence by [E]; but why should [D] have to give notice to the
" defendants of what they already knew.'* In Northouse v. Parker,
" I Camp. 82, it v/as held that notice would be superfluous where the
"faCt is known. The defendants knew that [D] was not liable for
" [A's] debt, and they had no reason to presume that [D] would con-
"sent to have it paid out of the partnership effects, to the prejudice
"of himself and the joint creditors. They aCted at their peril, and
"with their eyes open. * * * The defendants had no ground to pre-
" sume that [D] had authorized [A] to draw in their favor, for there is
"no circumstance in the case to found a presumption, and it was their
"business to inquire. If they took [A's] word for it, they must take
"the consequences. When told of the order before the bricks were
"delivered, [D] told [E] that it was wrong. But if the defendants
"gave a receipt for the separate debt, or delivered up the security
" for it when the order was drawn, notice would have been too late to
"save them ; and if they did not, a recovery in this suit would leave
'their right of recourse to [A] iutaCt, and the parties would be re- ,
"mitted to the position which justice requires them to occupy. In
"any aspedl, whatever, the defendants have no case." McKinney v.
Brights, 4 Harris 399, Pa. (1S51).
§169. The Relation. Pt. 2, Ch. ii.
§1B9.
ijlic joint title is impaired bij tl)e misappropriation, ant man
bf rc-fstablisl)CL) bp ann rcprcscntatinc of tl)e tirm.
(Tlic partners, Ijouiener, man ratitn tl)e appropriation of a crebit
or asset bn a partner to l)is ini^iniimal use.
It" the partner does not consent, although aware of
the payment by a co-partner of his separate debt with
the iirm assets, suit can be maintained to recover them.
An action lies to reclaim the assets, as the firm title
was never devested by a joint a6l of the partners, or
for their account.'
A firm note for one partner's individual debt, al-
though made by another partner, would not bind the
firm. The note would be a guarantee, and, as such,
must be made by all the partners."
The partners may validate the transa(51;ion by rela-
tion, so that the title passes, and subsequent insolv-
ency, it is said, will not devest it.^
1. Firm may recover assets paid by partner for his separate debt,
although the co-partner had notice and did not dissetit. B, a phy-
sician , attended C, who was a partner in the firm of A & C. B
agreed with C to buy firm goods, which were to be set-off, pro tanto,
to his bill for medical attendance. B bought goods accordingly, and
the set-ofT was acftually made. A knew that B was bujing on these
conditions, but "was not, however, a party to the above agreement,
and did not consent thereto," After C's death, A sued B for the
amount of goods bought. — Recovered. A had not consented. GoR-
DO.N, J.: "But this consent is exactly what is necessary in order to
"bind a firm to an arrangement by which the partnership assets are
" to be taken to pay an individiial debt. * * * Knowledge alone
"would not be sufficient to bind the other members of the firm
" * * * Every one is bound to know that a partner has no right to
''appropriate partnership property to the payment of his individual
"debts, and if one so deals with him, he must run the risk of the
" mterposition of partnership rights." Todd v. Lorah, 25 Smith 155,
Pa. (1874).
2. Leverson v. Lane, supra ^ 129, n. 5.
3- Partner may ratify co-partner' s payment of his individual debt with
firm funds. C, a member of a firm, transferred to B, his separate
creditor, a note belonging to the firm. C then filed a petition iu
Pt. 2, Ch. II. The Relation. §170.
bankruptcy under the United States Bankruptcy Acft of igtli August,
1841, which was then in force, and his partners afterwards, but be-
fore a decree, assented to the transaction with B. Suit was brought
by the surviving partners and by the assignee in bankruptcy against
B for money had and received. — No recovery. BELL, J.: "It is settled
"law, that a partner cannot pay his private debts by an application of
"the partnership property without the assent of his companions. But
"he may do so with their consent; and a subsequent ratification of
"the act is equivalent to a precedent authority." The provisions of
the Bankruptcy Act did not interfere with the operation of the rule
in this case. Anshutz v. Fitzsimmons, 9 Barr 180, Pa. (1848).
§170.
(iilie iraiiii must be committed acjainst tl)c firm.
A preference made to a separate creditor on an
assignment for firm creditors is void.
The preference does not vitiate the assignment, but
will be stricken out by a creditors' bill.' A pro rata
distribution of the surplus among the separate credit-
ors would be a fraud upon the separate creditors of
the partner who was entitled to the larger share, but
the fraud would not affect the assignment of the firm
for its creditors."
If the continuing firm assumes the debts of the old
firm, including them among the liabilities would not
vitiate the assignment for creditors. Any debts duly
assumed become the debts of the firm, as if originally
contra6led by it.^ The assignment of the firm assets
by a retiring partner to his co-partner for the payment
of firm debts would not make them the separate debts
of the continuing partner. Firm creditors cannot by
such an assignment be deprived of their priority on
the firm fund. The purport of the decision is simply
that the assignment does not enable the creditor to
533
gjyo. The Relation. Pt. 2, Ch. n.
elc(5l the assignee as his separate debtor, and come in
on their separate estate in addition to the firm fund."
1. J'rfftrtiur to separate creditor, though void, does not vitiate firm
assii^nmeut, which can be attacked only by creditor's bill. B & C
assigned to D, with preferences for certain firm creditors, and for a
creditor of D Firm judgment creditor, A, brought bill to avoid
assignment, because of a preference to B's separate creditor. — Dis-
missed. I , Preference to separate creditor void, but does not vitiate
assignment; 2, Firm creditor cannot attack assignment, except by
credilor'.s bill. Conversely, preference to firm creditor in assignment
is good, because separate property is not a trust fund, though prima-
rily liable for separate debts. Nicholson v. Leavitt, 4Sandf. 252, N. Y.
(1850).
2. .Issignment valid against firm creditors, though void against sepa-
rate creditors. B&C assigned to D all "their" real and personal
estate, for payment of: ist, firm debts, among them, rents; 2d, sepa-
rate debts pro rata. Their individual indebtedness was unequal. C
had no individual property, and B had a leasehold. A, who was
judgment-creditor of the firm, sued B, C & D, to set aside assignment
as fraudulent. — Judgment for defendants. "Their" limited assign-
ment to firm assets and excluded leasehold, which was B's separate
property. "Rents" referred to premises occupied by firm. Equal
distribution among separate creditors would be a frai:d on them, but
did not afifedl firm creditors. Morrison v. Atwell, 9 Bosw. 503, N. Y.
(1862).
Assignment may bind firm creditors, though separate creditors may
avoid it. B&C assigned firm stock to D, to pay firm debts, and out
of surplus separate debts, pro rata. Their separate liabilities were
une(jual in amount. Firm creditor A attacked assignment as a fraud
on separate creditors.^udgment for B, C & D. Assignment valid,
except as to separate creditors. Scott v. Guthrie, 10 Bosw. 408, N. Y.
(1863).
3. Turner v. Jaycox, supra \ 106, n. 9, b.
4. Firm creditors cannot by notice cleH to become separate creditors
of continuing partner, and avail themselves of his indemnity against
firm debts to the retiring partner. B sold the firm assets to his part-
ner, C, who, in return, gave him a bond to pay the firm debts.
vShortly afterwards, a warrant is.sued against the joint and separate
estates of B & C. Before publication, A, the holder of firm paper,
notified B & C that he eledled to take C as his debtor, and avail him-
self of C's bond of indemnity. — vSeparate proof against C rejecfled.
C's bond did not enure to A's'benefit. No contradl by C to substitute
his separate liability for the firm debt ; nor any consideration for such
a contradl. Against C's separate creditors the contra<5l would be
fraudulent as a preference. Wild v. Dean, 3 Allen 579, Mass. (1862).
As partner's assignment of firm assets to co-partner upon his
agreetticnt to pay the firm debts, does not convert them into his sepa-
rate debts, non-joinder of the assigning partner is a bar to the firm
creditor's bill. A, wife of B, brought a bill against C, to recover
loans made to the firm of B & C, which was solvent, and averred B's
assignment of the assets to C upon his agreement to pav the firm
debts. C demurred, because B was not made a party.— Demurrer
sustained. The assignment would not convert the joint debt of B &
C into a separate debt of C. Fowie v. Torrey, 125 Mass. 289 (1881).
534
Pt. 2, Ch. II. The Relation. §171.
Contra : Creditor of old firm does not become a creditor of new
firm, which takes the assets and assumes the debts of the old. D sold
out to his co-partners, B & C, who assumed the debts. They subse-
quently assigned their joint and separate estates, to pay their debts.
A proved .'or li.ooo, as creditor of B, C & D. — Rejedled. The con-
trail to p:iy was with D, and A couldn't sue on it. He didn't release
B, C & D and substitute B & C by contradl with each firm. If a
separate creditor of each partner, he should exhaust the old firm's
assets. S>;ull v. Alter, i Harr. 147, N.J. (1837).
§171.
(ill)c paftiur is tl)e proprietor of l]is %\\oxt, anb \\t map ibis-
pose of Ins interest in tl)e business as \\t pleases. %t mag sell,
assign, mortgage or plebge it.'
If the alienation is absolute, the result is a disso-
lution of the firm. The power is undoubted, in spite
of the consequences of its exercise. If, on the other
hand, the alienation is qualified, as in the case of an
assignment of a portion of the share, or in the case
of a pledge or mortgage, a dissolution does not ensue.^
The alienee does not take immediate possession of his
interest, but leaves the partner in temporary posses-
sion and control of the share. As soon as he does
assert his right to take possession, a dissolution fol-
lows. A partner's share is always intangible; no
manual possession can be delivered. The alienee's
rights are enforceable only in equity, and his stand-
ing is equally good, whether at the time of aliena-
tion the partner held his share in actual enjoyment
or in expectancy only.^
The assignment must be of his share in the partner-
ship, in whole or in part, not his share in a single
transa6lion of the firm, or in a single piece of firm
property, whenever this is allowed, its assignment is
535
I
}j,-i The Relation. Tt. 2, Ch. n.
subjecl to the co-partner's general equity, that is to
an account/ Assignment carries future,) but not ac-
cniL-cl, profits/ 1
1. Incoming partner not affefled by unrecorded chattel mortgage,
which binds only share of mortgagor. B, trading as the "Furniture
Works," executed to A for a debt contradled in the business a chattel
mortgage, which was not recorded at the time. C bought a half-in-
terest in the works, agreed to pay half the mortgage debt, and car-
ried on business in partnership with B. C sold out his share to D,
E &. !•', who replaced him in the firm. A brought biH against B, C,
D, K & F, to charge B & C personally for the debt,, and to subject the
machinery of the works to A's mortgage. — ^Judgment for all defend-
ants, except B and C. Mortgage not a lien, and bound only B's share,
which, on a settlement, turned out to be nothing. Promise of C to B
enured to A's benefit. Ringov. Wing, 5 S. W. Rep'r 787, Ark. (1887).
2. Assignment of share. A, B, C & D were partners. D sold portion
of his share to defendant, who partook of profits with him. Judg-
ment against firm paid by A, B & C. C sued for contribution. — De-
fendant not liable, because not a partner. Had he been a partner,
plaintiff must have brought account. Murray v. Bogert, \\ Johns
318, N. Y. (1817).
3. Collins' Appeal, itfra \ 172, n. 2.
4. I'artfier cannot assign his interest in a particular firm transaElion.
R & C owed D I156, and D owed C |;i2o. C discharged the firm debt
by a receipt for his individual claim, and by a payment of the balance
in cash. C drew a firm check for fisS, and after dissolution paid, if
to his individual creditor. A, without B's knowledge. A sued B & C.
B defended. — C's authority at an end before check issued. A, no
standing as assignee of C's claim against B on the transaction with
D, because the claim could not be separated from the general part-
nership account. Gale V. Miller, 54 N. Y. 536 (1874).
Partner has the right to sell his share of firm real estate, stibjeB to
co-partner's equity. A, B & C, hotel proprietors in partnership. C
sold his interest in firm real estate to D. A & B sued to avoid the
conveyance, because it injured firm credit. Judgment for defend-
ants. Partners, unlike creditors, have no control over co-partner's
disposition, which is always subject to the partner's equity. Tread-
well V. Williams, 9 Bosw. 649, N. Y. (1S62).
Contra : /fs// it proceeds only against serz'ed parhier, judgtnentdoes
not bind firm property. Mortgage of separate paiiner' s interest infirm
land good against subsequent judgment against firm. B, C, D, E &
F, mining partners. B and C mortgaged their interests, seven-tenths
to A. _ Subsequently G sued the five partners for supplies furnished
the mine, served all but P, and F, and recovered judgment against the
five. Execution dire<5led against firm assets and separate estates of
served partners. Sale under judgment. G bought mortgaged prop-
erty. A foreclosed, and having bought in the property," brought
eje(ftment against G.— Recovered. No firm title passed under judg-
ment, because all partners not .served, and proceedings not under
Code Civil Procedure, ^ ;,S8. The title, had it passed, would still
have been subjeA to the mortgage. The purchaser could be subro-
gated to the judgment creditor's right against the firm only in equity
536
Pt. 2, Ch. II. The Relation. 1^172.
and b)- its process. Golden State &c. Iron Works v. Imvidsor., it;
Pac. Rep'r 20, Cal. (1S87).
The preference obtained by the mortgagee over the
firm creditors in this last case, results from treating the
partners as tenants in common of the firm property.
Upon the theory of joint tenancy, the judgment would
have been equally good, but it would have been post-
poned to the claims of the joint creditors.
5. Sale of partner's share carries fuitnw but not past, dividends, B,
C, D & E, partners in joint stock company. B assigned his interest
to A. Then a dividend was declared on the stock. A assigned to E,
and sued C, D & E for the dividend. — Recovered. Transfer of stock
to E carried future, but not past, dividends. Harper v. Raymond, 3
Bosw. 29, N. Y. (1858).
i
§172.
!2l partiur mag mortgage or btsposc of l)is sl)arf absolutely.
The right of a partner to dispose of his share, like
any other property, is undisputed. The subje6l-mat-
ter is incapable of manual delivery, but the assign-
ment will be sustained in equity.^ In like manner a
mortgage of a partner's interest is valid in equity,
and gives the mortgagee a priority over the other sep-
arate creditors of the mortgagor. The mortgage may
be given in anticipation of the partnership, and will
become a valid lien as soon as the relation is estab-
lished. A partner's assignment of his share to his
creditor as security, operates as a mortgage rather
than a pledge. The mortgagee has full control of the
share for his own protedlion.^
I. Assignment to co-partner valid, though prohibited to stranger. A,
B & C's coutradl of partnership provided that a partner should not
have power to assign his share to any persons, or to let them inspe<ft
the firm books, or interfere with its business, and made any such as-
signment void as to other co-partners, who might disregard it. B
secretly assigned his share to C, but retained the title. Upon B's
537
I172. The Relation. Pt. 2, Cn. ri.
death A sued C, as trustee for firm. — Decree for C. No covenant not
to iissigu, and restriction against assignment to strangers. Cassels v.
Stewart, 6App. Cas. 64 (1881).
2 PleJ'^e orassii^nmenl of a share in a projected partnership is valid
' in equity against claim of other creditors. G was special partner in
G, H li: Co. B and C were general partners, D and E clerks, with guar-
anteed salaries and a share in profits above amounts guaranteed. G
stipulated for interest, at 12 percent., in lieu of profits, and for repay-
ment of his capital in any event. Not observing statutory require-
ments, he became liable as a general partner. Firm paid its debts
in full. A obtained in C. P. a decree, in settlement against B, C, D
and E, jointly and severally, for 147,192.70, coupled with adiredlion
that among themselves, B and C should pay, viz.: B, $26,411.15, and
C, 120,781.65. E was charged with 118,352.39, as his proportion of
firm debts, without reference to G's claim. E died, and G claimed
in O. C, payment of 147,192.70 out of E's estate. The fund in O. C.
for distribution was the proceeds of E's share in F, a partnership
limited. A claimed the proceeds of E's share in F, by a pledge or
assignment made before F was formed, to secure a loan for E's con-
tribution. — O. C. divided the fund between A and G. Balance due G,
B & Co. by E, was his separate debt, and A's joint and several claim
also became, by his eledlion, E's separate debt. Assignment imper-
fect, there being no partnership in existence for it to operate on, and
it being dependent on assignor's will. His executors' preference of
A would be a fraud on G. Hulse's Estate,' 12 Phila. 130 (1878). 11
W. N. 449 (1882). A appealed. Argument: i, Assignment for value
of a share in a projedled partnership invests assignee with right to
specific performance, and loan for contribution converts assignor into
a trustee. Assignment could not be a fraud on G, because he was an
antecedent creditor, who stands in E's shoes. 2, G not a separate cred-
itor, because E's debt was due in part to himself and the balance to
his partners, according to their shares. But G is simply a firm cred-
itor, who holds E as surety for B, C and D, and if A is a partner, he is
bound by the articles which relieved E from all firm obligations.
Defence: Contemplated special partnership abandoned for a partner-
ship limited, and no delivery of share, though feasible, made to A
by E. No specific performance against E, if living, except to per-
fect pledge or assignment, and upon E's refu.sal. But enforcement
would destroy E's control of partnership limited. G claimed E's
share, not as collateral security, but as satisfadlion. He becomes a
purchaser for value by the extin<5lion of his debt pro tanto. After
E's death, the rights of claimants are fixed. 3, C. P. decree made
debt of E to G joint and several, though not a partnership debt, and
A could claim as a separate creditor. — Reversed. By the C. P. decree,
G's claim against E had been made E's several debt, and its origin has
become immaterial. A being a separate creditor can claim only his
pro rata share with the other unpreferred creditors. A has a valid
lien in equity upon the fund by virtue of his mortgage, which gives
him a priority. Collins' Appeal, ii Out. 590, Pa. (1885).
IS
Part III.
(^\}t principles accorliing to rutjici) tl)e business is mounb up.
CHAPTER I.
THE REASONS FOR A DISSOLUTION.
§173.
Qi\]t business u)ill not be broken up mitljout ai!iequate tause.
(l[|)e fact of partnersl]ip must be establisljeb anb tl]e iniscl)ief be
irreparable to justifn a dissolution.
Dissolution occurs as a matter of course upon the
death of a partner/ upon the marriage of a single
woman, and upon the sale of a partner's interest,
whether voluntary or upon execution.^
The partnership relation is suspended, but not dis-
solved, by the lunacy of a partner and by war. "*
In the cases enumerated, the dissolution occurs
without judicial intervention, just as if the partners
had dissolved the firm by agreement. In other cases
the Court, upon cause shown, will decree a dissolu-
tion.'' Before the Court makes a decree, the fadl of
partnership must be established,^ and a sufiicient
cause must be shown ;*^ nothing will be done before
answer.'
The causes admitted to be sufficient are: First ^ A
failure of the undertaking. After the non-success of
the business has been demonstrated by ac^tual expe-
539
5i^^ Dissolution. Pt. 3, Ch. i.
riciicc, or by any sound test, no court will make a
partner go on and sink money in a hopeless venture,
although the agreed term of partnership has not ex-
pired/
Srcond, Miscondud which excludes the plaintiff
from his joint control over the business. No mere
incompatibility of temper will be sufficient, unless it
results in exclusion."'
Third, Insolvency of the partner defendant is a
sufficient ground.'" Insolvency, or insufficient assets
to pay one's debts, is not a dissolution of a firm. There
ma}' be a tiding over of the deficiency, and a solvent
state be established. Until the insolvency ceases to
be latent, and becomes overt, causing a suspension of
business, there is no dissolution of the firm.
Fourth, Lunacy: If partnership is a relation at
will, why couldn't a partner put an end to the con-
tract for the lunacy of his co-partner? The putting
him in a committee would be a sort of civil death,
and a finding of lunacy by a commission would estab-
lish his non-existence. But without either, which,
would raise the presumption of dissolution, the lunacy
would be sufficient ground to justify a dissolution, if j
desired b}' the sane partner."
Fifth, The abandonment of the business by a part-i]
ner is a ground for dissolution.'"
I. Death of a common member dissolves both firms, and prevents sur-
■Ainni; partners from carry ins;- out a eon/ rafl between the firms. B!
& C, partners as lumber dealers in Chicago, and also with D in a!
saw-mill, at ■Muske.ifoii. D and B & C agreed that lumber should be
sent from the mill to B & C, who should account for the lumber at:
market price, and sell it. B died, ii July, 1871, and D went on send-l
ing lumber to C, who did not, as required bv statute, close up the
business, but continued B & C's name. 9 October, 1871," Chicago
fire destroyed contents of lumber-yard, causing a loss, above insur-
ance, of $43,782.19. A, B's executrix, brought bill for account
agamst C's administrators.— Decree. C liable' for lumber which he
540
d
Pt. 3, Ch. I. Dissolution. §173.
had received from D, or bought from others, after B's death ; but not
for the lumber on hand at B's death. OHver v. Forrester, 96 111. 315
(1880).
2. The sale of a share in a partnership for a fixed term,
or at will, is only prima /ade evidence of dissolution.
Part}ier's sale of his share. A & B were partners. B bought A out
and assumed the debts, and subsequently re-sold to C, who likewise
assumetl the indebtedness, and paid part of it. A applied for a re-
ceiver. — Bill dismissed. A had no right over the property after a sale
of his interest. Weber v. Defor, 8 How. Pr. 502, N. Y. (1853).
Note to Waller & Davis, 21 Am. L. Reg'r N. S. 711 (1882J, by Mak-
SH.A.LI, B. El.WELL, Esq.
3. After dissolution, notice of protest to one partner still sitfficiejit.
War dissolves a firm as to future, but not as to past, transaclions, but
docs not revoke an as:ency to complete a tra7isa£lion already begun. A
& B, in New Orleans, dissolved. Notes of third persons were taken
by B, as his portion of the assets. He lent the notes to C, who bought
A's share of stock, and gave them in part payment. The notes were
endorsed A & B, and C added endorsement of C & D, a new firm, to
which C contributed the stock purchased of A. Articles made part-
nership between C & D contingent upon B's joining the firm, but C
& D carried on business for a month, when C returned to his home,
in New York, having first made E his attorney, inter alia, to receive
notice of protest. B never did join. The war broke out immediately.
The notes were protested, and notice served on D and E. After the
war, A sued C. Defence : Endorsement not binding, because no
partnership; if binding, the contraA was suspended by the war ; if a
partnership, it was dissolved, and notice should be served on each
partner. E's agencv revoked by the war. — C's endorsement bound
him, whether a partner or not. A might sue, although a prior en-
dorser. Dissolution referred only to the future. The position of the
parties to the endorsement continued unchanged, and even after dis-
solution notice to one was notice to all. E's agency not revoked.
Hubbard v. Matthews, 54 N. Y. 43 (1873).
4. Supra vSloan v. Rloore, ^ 114, n. i.
5. No decree for receiver until partnership established. A brought
bill against B to recover firm property, and asked for receiver and
injun&on. Evidence as to partnership was conflidling — Dismissed,
because the fa6l of partnership was in doubt. Goulding v. Bain, 4
Sandf 716, N. Y. (1852).
6. Court ivill not decree dissolution without cause shozvn. Partnership
for five years. Motion to dissolve. No cause proved. — Motion re-
fused. Henn v. Walsh, 2 Edw Ch. 129, N. Y. (1S33).
7. The defendant partner has a right to the possession
and control, which will not be taken away from him
withoiit sufficient ground, and not until after answer."
If the answer denies the plaintiff's partnership in a
branch of the business, the injun(5lion, when justified,
will be restricted to the partnership l)usine.ss, which is
admitted.^
%. Court ivill not enjoin managing parfvrr before ansicer. A cultivated
plants, and B sold them in New York. .\ asked for preliminary in-
541
ji-. Dissolution. Ft. 3, Ch. i. ^^
junclioii, alleging that B refused to account, and would not permit
him to iusped: the books. — Refused. B had, by the arrangement,
charge of .^^ales and proceeds. His funcflion would not be disturbed
before answer. Petit v. Chevelier, 2 Beas. i8i, N. J. (i860).
b. \o injnnRion if partnership dissolved. A & B engaged in mining.
A who was entitled to dissolution, enjoined B. He denied partner-
ship in "separating works" for smelting the ore mined. — Injun<5lion
dissolved against "separating works," and regulated as to mining,
so that they mi^ht take out ore. Wilson v. "Fichter, 3 Stock Ch. 71,
N.J. U>S55)'-
8. Failure of undertaking ground for dissolution. Three persons
owned an island in the Carribbean Sea. They sold half to B for
|;3c),ocH), raised a working '^apital of |2o,ooo, and gave him full man-
agement and control of the island, for sale or lease on joint account.
B sold out to A, who bought an additional fourth, the remaing fourth
having been bought by C. A applied for dissolution and account.
The operation failed within a year and a half, and the concern lost
115,000. C was individually indebted to A for |2o,ooo. C objected
tliat the undertaking could not be abandoned, except by mutual con-
sent, until the land was sold or leased. — Dissolution. As no period
had been fixed for its duration, the partnership was only at will.
Wood V. Warner, 2 McCart. 81, N. J. (1862).
Losses hivond stipulated contribution justify partner in dissolzdng
partnership. In 1871, by articles, B agreed with A, to furnish capi-
tal of ^5,000, and improvements necessary to carry on a grist-mill,
and to pay A |20o a month, and enough more to give him one-half
net profits. Business was to continue until 1875, unless it did not pay
expenses bv 1873. |5,ooo sunk by 1872, and B closed up the busi-
ness. A sued for salary to 1873, and for profits. — Verdidl for salary
sustained, but set aside for prospective profits, as B not bound to sink
more than $5,000. Hill v. Smally, 8 Vr. 103, N. J. (1874).
9. Failure of enterprise and partner's miscondun ground for dissolu-
tion before expiration of tertn. A & B, each contributed $4,000 to a
partnership for twenty-five years, to manufadlure lead-pencils. Within
a year the business proved a failure, although A had advanced $200,
000. B bought materials in excess, secretly carried off stock and
sold it, suffered judgments against the firm, and had its assets taken
by execution without A's knowledge. A refused to advance more
capital, and B had none. A obtained injuncftion, and B moved to dis-
solve it. — Injuncftion continued, and receiver appointed. Profits, the
object of partnership, couldn't be made without capital or co-opera-
tion of partners. B's misconducfl an independent ground. A also
entitled.as a creditor, as he couldn't sue at law. Seighortner v. Weis-
senborn, 5 C. E. Gr. 172, N.J. (1869).
10. Insolvency of partner ground for appointment of receiver. A & B
dissolved, and A enjoined B on charge of fraud and of insolvency,
and asked for receiver. B claimed to have advanced $20,000, but
was unable to show items, though he kept books. — Appointed. B's
insolvency sufTicient ground for appointment of receiver, and his
.suspicious claim additional reason. Randell v. Morrell, 2 C. F. Gr.
343, N.J. fiS66).
11. Lunacy of one partner gives either partner the right to dissolve.
A &. B went into partnership for a term of fourteen years, either part-
ner to have the right to dissolve, on notice, at the end of seven years,
viz., March 31, 1874. A became insane. Bgave notice of dissolution
542
I
Pt. 3, Ch. I. Dissolution. §174-
September 17, 1873, but, on 28 March, 1874, withdrew the notice.
Subsequently, A, by his next friend, brought bill to dissolve and for
a receiver, on the ground of A's permanent insanity. Defence : A
has not been judicially declared a lunatic. — Decree. B could not
withdraw his notice of dissolution ; but if he could, Equity would still
decree dissolution in the interest of a lunatic, and appoint a receiver
pending the appointment of a committee. The sane partner has no
right to sole control where lunacy of the other intervenes to alter the
position of the parties. Jones v. Lloyd, L. R. 18 Eq. 265 (1874).
12. Absconding partner not necessarily co-defendant. Attachment on
mesne process creates lien. A attached B, debtor of C & D, and
efFedled service upon C, who then took benefit of insolvent law. D
absconded. — Creditor's lien by attachment cut out assignee. D's ab-
sconding justified suit and judgment against C alone for firm debt.
Thomas v. Brown, 10 Atlantic Rep'r 713, Md. (1887).
§174.
<B)t umc^M of a partner for a Mssolution tarxBtii bji []is ro-
partner before tl)e term l)a3 eipireb is an action for tlje injurg.^
He may recover damages for the breach of the con-
;ra(5l, and they will be measured by the profits made
luring the preceding months of the partnership, and
lot mitigated by the plaintiff's profits made in a new
)usiness begun before the term expired.^
I. But subject to adlion for damages, a partnership for
a term may be dissolved at will.* Article entitled:
" Power of partner to withdraw at will from partnership
entered into for a definite period," by Benjamin F. Rex,
Esq., 23 Am. L. Reg'r 689, 1884.
a. Partnership for term may be dissolved at will. Local item suffi-
cient notice for non-customer. B & C made in July a contracfl for
partnership business as jewelers, at Ishpennig, for one year, and
began business in August. At end of Ocftober, B took possession of
stock, and had item put in local column of newspaper announcing
dissolution. C subsequently bought merchandise in Chicago of A,
who had no previous dealings with the firm, and gave him note in
suit for price. — ^Judgment for B. Dissolution at will, in spite of
term. Notice sufl&cient. Solomon v. Kirkwood, 55 Mich. 256 (1884).
2. Damages for dissolution. By articles, three months' notice required
for dissolution. B dissolved without notice, and A sued for damages.
— Recovered. Measure of damages prospedlive profits of past six
543
§175. Dissolution. PT.3, Ch. 2.
mouths and not mitigated by A's profits iu another business during
the three months. Bayley v. Smith, lo N. Y. 489 (1853).
-O-
CHAPTER II.
HOW DLSSOLUTION IS BROUGHT ABOUT.
§175. i
Notice of bissolutiou must be %\vm, aapt uiljeu causcb bg
kati),' in or tier to terminate a partner's implieb autlioritt} to
binti Ijis CO -partner.- '
No special form of notice is fixed by law, but any
information given for the purpose and understood to
be intended for notice, will answer the requirement.'
Need not be by publication or advertisement.'*
1. Dissolution by death requires no notice. Prior to the death of a
partner the firui employed the plaintiff to furnish iron work for a
cotton and woollen fa^lorj-. The work w-as begun in his life-time. —
A general contracfl for work at a given rate is excluded, as it might
be indefinite in amount. The deceased partner's estate is liable for
pending work, if specific in charadler, until the job is completed
under a contract entered into during his life-time, but not for any
other contradl entered into by his partners on behalf of the firm.
Caldwell v. Stileman, i Rawle 212, Pa. (1S29).
2. Note given by partner to firm creditor without notice 0/ dissolution,
binds a partner. After dissolution, B gave note in firm name of B &
C to A, who had no notice of dissolution. Defence by C : B's au-
thority ceased at dissolution. — ^Judgment for A. Note charged B,
because no notice of dissolution. Clement v. Clement, 35 N. W.
Rep'r 17, Wis. (1887).
3. Notice of dissolution need not be formal. Judge charged that casual
conversation in the street was not notice of dissolution, unless un-
derstood to be intended for notice. — Reversed. Any adlual notice is
sufficient. Davis v. Keyes, 38 N. Y. 94 (1868).
Assifrtiment for creditor by surviving partner, exceeds his power,
but cannot be attacked collaterally if approved by court. B, partner of
C & D died, making E his executor. C & D assigned for creditors
in a Louisiana court, which accepted assignment and appointed F
syndic A attached stock in United States Marshal's custody for
544
t
'
Pt. 3, Ch. 2. Dissolution. §176.
firm debt. F applied to dissolve attachment, and E joined in oppo-
sition. — Dissolved. Surviving partners have no power in Louisiana
to dispose of firm property which is held in common by executor
and survivors ; but decree accepting assignment a judgment which
could not be collaterally attacked. Tua v. Carriere, 117 U. S. R. 201
(1886).
Note to Uhl v. Harvey, by W. W. Thornton, Esq., 21 Am. L.
Reg'r 127 (1882).
§176.
Sl)e kinb of notice mries tuitl) t\)t class of persons to be no-
tifieli.
They may be classified as follows : First^ The
new customers. Second^ The old customers. Third ^
The customers of particular partners.^
An advertisement at the place where the business
is carried on, is sufficient notice for persons who have
I had no dealings with the firm."
1. The lease by a firm is not a trade contrail;, and
charges only the acftual occupants.
Retiring partner not bound to notify lessor. A let premises for
three years to B, C & D, with option to renew. During the term, D
sold out to B & C. Then C sold to F, who formed a new partnership
with B. They held over one year, and then gave up the premises to
A, who refused to accept the surrender, and sued B, C & D for the
rent, as upon a renewal of the term. — ^Judgment for C & D. By dis-
solution and departure, C & D freed themselves from liability or
connedlion with the premises for more than the expiring term. By
receipt of rent from B & E, A acknowledged a change of tenants.
James v. Pope, 19 N. Y. 324 (1859).
2. As to strangers they are not entitled to any personal
notice of the dissolution, but are bound by the fa6l.
They could not rely upon information obtained by en-
quiry, that the defendant was a partner. "^
a. New customer can't hold retired partner, though dissolution made
without advertisement, and business contiriued with an incoming
partner of the same name. B & C dissolved, and notified all cus-
tomers, but did not advertise the dissolution. B"s son took his place,
and the new firm continued the business as B & C, using the bill-
heads with B, Sr.'s, name on them. A, who knew nothing of the
bill-heads, inquired of neighboring firms, and was told that B, Sr.,
was the partner. A sued B, Sr. , upon a firm note, taken from C, for
545
5i--. Dissolution. Pt. 3, Ch. 2.
merchandise sold to B & C, in reliance upon this information ; B, Sr.,
defended.— Not liable. Cook v. Penrhyn Slate Co., 36 Ohio 135
Sotice of dissolution published and sent to customers sufficient to ^
tt'nuiuale partnership. Dissolution of B & Co. was published in
London Gazette, and the notice sent to all the customers of the firm.
C. a partner, carried on business as B & Co. A sued B on draft of
new lirni of B & Co. — Not liable. Publication gave sufficient notice
of dissolution. Newsome v. Coles, 2 Camp. 617 (1811).
§177.
Custoiiicrs of tl)e firm must \)<xm actual notice of tl)e bisso-
lution.'
The only safe course would be to send a circular to
the customers, and get an acknowledgement of its
receipt, as a(5lual notice must be brought home to
every customer of the firm. Mailing a copy of the
advertisement, announcing the dissolution, would be
prima facie notice; but if the receipt of the advertise-
ment were denied, proof of adlual notice would be
necessary, in order to exonerate the partner for the
acis of his co-partners since the dissolution."
A customer is one who deals diredly with the firm.
The purchaser of firm paper is not a customer, and
the habit of discounting firm paper does not make
him a customer.'^
Customers dealing with the firm upon the credit
of a person who suffered himself to be held out as a
partner, must be notified.' The other customers of
the firm could not hold him, either with or without
notice.'
I. Xotice 0/ dissolution must be brought home to old customers. A &
C were partners as stone-masons. A sold B quarrying tools to be
paid for with stone. B afterwards delivered the stones to A, who ac-
546
Pt. 3, Ch. 2. Dissolution. §177.
cepted them, and used them for his own purposes. Before B deliv-
ered the stones, the firm dissolved, but B never received adlual no-
tice. A & C brought assumpsit against B, to the use of C, for the
price of the tools. A letter was oftered in evidence, announcing the
dissolution, mailed to the address of the defendant, a customer, who
had previously dealt with the firm, and no return of the letter from
the dead-letter office. Notice by post is restricted to commercial
paper, and don't extend to other business relations. With corrobora-
tive evidence it might be sufiicient for jury to infer actual notice, but
nothing short of actual notice will exonerate partners.— Judgment
reversed. (Sharswood, J., dissented from the point as to notice of
dissolution). Kenney v. Altvater, 27 Smith 34, Pa. (1S74).
Actual notice of the dissolution is required to every custodier 0/ the
Jinn. The father was in a firm, and his son was adting in his place.
The father bought out the other members, and gave the business to
his son, who a<5led as he had previously. Ihe firm name was changed
from Newcomet & Co. to W. N. Newcomet, but the creditors of the
old firm relied upon its continuance and did not observe the change
in the checks. — They were entitled to notice, though a stranger
would not have been. Newcomet v. Brotzman, 19 Smith 185, Pa. (1S71).
2. Mailing advertisement not notice of dissolution if receipt denied.
B, C & D, trading in Toledo as B, C & Co., employed E as purchas-
ing agent in Detroit. D retired, published dissolution in Detroit,
and mailed advertisement to F. B & C continued to employ E, who
swore he never received it, and gave him a note for services, subse-
quent to dissolution. He endorsed to A, who sued the three. D's
defence: Mailing advertisement sufficient notice. — Recovered. No-
tice to old customers must be actual. Mailing affords presumption
which is rebutted by denial. Austin v. Holland, 69 N. Y. 571 (1877).
3. Purchaser of firm paper from a third person, is not a custovter of
the firm, and is entitled to general, not personal, notice of dissolu-
tion. B retired from the firm, B, C & Co., without advertising disso-
lution. B gave accommodation note, in firm name, to D, who knew
of the retirement. A, who had previously bought the film's paper,
discounted the note for D. A sued B, C & Co. — ^Judgment for A.
Though prior dealings in firm paper did not make A an old customer,
he was entitled to general notice by advertisement. City Bank oi
Brooklyn v. McChesney, 20 N. Y. 240 (1859).
4. Notice of dissolution necessary to prevent firm's incurring liability.
B & vSons, who ran a stage line, dissolved in 1825, but the members
retained shares in the company, which continued the business. B
requested gate-keeper of A to pass stages over turnpike, and charge
. toll to B &' Sons. A rendered account to B & Sons for 1825 and 1826.
B died, and A sued sons as sur\'iving partners, and obtained verdidl.
— Sustained. Plaintiff had no notice of dissolution. Princeton &
Kingston Turnpike Co. v. Gulick, i Harr. 161, N. J. (1837).
The name of a partner in the firm designation is an
announcement which even,^ customer of the firm relies
on as a representation of membership.
Ostensible partner must give aRual notice of dissolution, even to
CJistomers who did not knoxv of his connexion ivith the firm. B & C
signed certificates, as bankers, in .State Department. In 1S65, C sold
out to B. Dissolution was noted on the certificate, and advertised.
A made deposits before and after dissolution, and rate of interest was
increased on Vjoth in 1870. A, who received no a(5lual notice of dis-
547
ji-g Dissolution. Pt. 3, Ch. 3.
solution, hearinij that C had been a partner, sued him for principal
and increased interest. Defence: Publication equivalent to notice.
Increase in rate of interest on previous deposit unauthorized, and
subseuuent deposits B's sole debt. — Recovered. C having been an
ostensible partner, liable after dissolution, because he failed to give
aclual notice. Howell v. Adams, 68 N. Y. 315 (1877).
5. . / nexu customer cannot charge a partner after dissolution. B en-
tered at a Trenton banking-house, signatures of B & C, to give his
brother, C, credit, in 1S43. C kept a country store on land near
Trenton, but broke up business, and shipped his stock to Philadel-
phia. Eleven years afterwards, he drew a note in name of B & Co.,
and had it discounted by bank A, in Philadelphia. A sued B. De-
fence : No partnership. — Had there been a partnership, A was not a
customer, and not entitled to notice of dissolution. F. & M. Bank v.
Green, i Vr. 366, N. J. (1863).
— O-
CHAPTER III.
THE EFFECT OF DISSOLUTION.
§178.
^\)t Liissolution/^r se puts an enlt to a |3artner's autljoritg
to binti l)is co-fiartncrs.^
As a partner's authority continues until dissolution,
it is necessary to prove a dissolution, in order to take
away the partner's right to continue the business. If
the business is broken up by a sale of the stock and
a removal from the city of one partner, the remaining
partners can bind him by commercial paper. The
suspension might be temporary, although succeeded
by another firm at the old stand." %
A partner, upon dissolution, is fu7i5lus officio,^ and
has no authority to charge his co-partners by a con-
trail. If he made a firm note in order to raise money
548
I
Pt. 3, Ch. 3. Dissolution. §178.
to pay firm debts, the other partners would not be
liable on the note, even if the proceeds were expended
in paying the firm debts. By a dissolution the part-
ners do not become simply joint debtors, or joint cred-
itors, but remain partners as to past transactions, and
third persons are entitled to treat them as such.^ The
change in their position a£fe(5ls onl}^ future a(5ls,
whether entirely new or modification of former trans-
aAions."'
He could not admit a firm debt already barred by
the statute of limitations, or restore a firm obligation
by his acknowledgement.® Nor would part payment
by a joint debtor affeCl his co-obligor.'
1. .-/ dissolutio?i by a sheriff's sale revokes the mutual agency, and
neither partner can deprive his co-partner of the statutory proteRion
by an acknoiuledgement of the firm debt. B & C, partners, bought
flour of A, and gave firm note for the price. Firm was sold out by
sheriff, in 1S52. In 1S55, B renewed note to A in the firm name.
About i860, A sued B & C. Defence by C : Statute of limitations. —
Judgment for C. Execution dissolved the firm, and no assets for
liquidation. B's authoritv had expired. Reppert v. Cohnn, 12 Wright,
248, Pa. (1864).
After dissolution appearance of partner for his co-partner is not
binding. After A & B dissolved. B authorized attorney to enter ap-
pearance for firm in suit by C ; who obtained judgment. A & B
brought bill to avoid judgment. — Dismissed as to B. Judgment
opened as to A. who was let into a defence. Templar v. Bank, 26
Fed. Rep'rsSo (1886).
2. Notice of dissolution not imputed to creditor. B & D, at Portland,
succeeded B & C in business, and entered collections and payments
made for B & C in their books. A's bank, which had discounted B
& C's note on loth May, 1S34, sued on the last renewal, dated 28th
October, 1836, which E endorsed for accommodation, and the bank
discounted. At the trial, the judge imputed knowledge of the disso-
lution to E, who endorsed the renewal, but not the original note, and
to the bank. The transfer of business would not escape an^-body in
Portland.— Error. The court could not infer the facft of dissolution,
and the knowledge of it must be brought home to the taker of the
original note. The business ir.-rht be onlj- suspended, and did not
continue for liquidation. B, as liquidating partner, could make the
note. Brown v. Clark, 2 Harris 469, Pa. (1850).
3. After dissolution, partner cannot bind his co-partner by admission .
C sold out to B. who gave note to A in name of B & C. A sued on
the note. Defence by C : Dissolution, and notice to A. On trial A
called B. who testified to dissolution and notice to A before note was
given. In rebuttal : A read in evidence an unsigned paper in B's haud-
549
§iy8. Dissolution. Pt. 3, Ch. 3.
writing, stating that A had no notice of dissolution when note was
given. Judgment for A. — Reversed. Paper incompetent to bind C,
as an acimission, because B's authority ceased upon dissolution ;
incompetent to contradi(5l B's testimony in chief, because A could
not impeach his own witness. Nichols v. White, 85 N. Y. 531 (1881).
4. A partner may 7iei^otiate firm paper with stranger's accommodation
endorsement until dissolution, ajid afterwards if no notice. B en-
dorsed blank form of promissory note for C & D, partners for term
of three years. B brought bill for dissolution, and C answered that
he too wished to dissolve. Then C filled up form as a firm note, and
delivered it to A for a firm debt. B's defence: Firm dissolved by
answer, and C no authority to make note. — Judgment for A. No
dissolution until decree, and B liable in either event, unless A knew
that endorsement was made for the benefit of C & D as a going firm.
Smith V. Mulock, i Roberts 569, N. Y. (1863).
Creditors with notice of dissolution cannot hold the firm on a note
made by an other than a liquidating partner. A partnership asso-
ciation carried on a country store as "The Farmer's Union," and A
sued the company on a note given by B, a member, for money lent
and used to pay its debts. Defendants offered to prove a dissolution
with A's knowledge of it, and that B was not liquidating partner.
RejecT:ed and verdict for A. — Judgment reversed. Without authority
conferred by the co-partners, no member of the dissolved firm, ex-
cept the liquidating partner, can bind them even for a settlement of
the business. McCowin v. Cubbison, 22 Smith 358, Pa. (1872).
5. After dissolution either partner may colleFl fir^n claim.. C retired
without selling his interest, and settled firm claim of 11,525 against
U for I700. A became receiver, and sued D for whole sum, alleging
that D had notice of C's retirement. — ^Judgment for A for 11125. — No-
tice immaterial. C not having sold his interest, might collect firm
claim. Jury found settlement fraudulent to extent of ^125. Fettretch
V. Armstrong, 5 Rob. 339, N. Y. (1868).
Demand of one partner on firm note sufficient. B & C gave firm
note to A, with D as endorser. No place of payment named. Firm
put in bankruptcy. Notary made demand at last place of business,
and of B personally. A sued D. Defence : Should have made de-
mand of C also. — Recovered. If co-makers, not partners, demand
must be made of all ; but if partners, demand of one sufficient. Gates
V. Beecher, 60 N. Y. 518 (1875).
Partners may divide claims, and, if debtors assent to severance, '
one partner may sue alone. On dissolution, debtor to firm which
divided its claims between the partners, A & B, promised to pay A.
He sued for the debt.— Entitled to recover. Blair v. Snover, 5 Hal.
15.^, N.J. (1828).
Partners may sever obligation to pay creditors, and thev will be
bound by the severance. B & C, partners. B retired, and sold out for
$700, to C, wlio took the firm assets of fg.ooo. Each agreed to pay
his half of the firm debts, which were about |i,500. C believed him-
self solvent, but it appears after about five months that he was in-
solvent at the time. A, appointed receiver of B & C, and also of C,
applied to set aside chattel mortgages and assignment for his credit-
ors.— Judgment for defendants. Sale in good faith a severance of
assets, and agreement of each partner to pay half the debts a sub-
stitute for his equity. Stanton v. Westover, loi N. Y. 265 (1886).
^ ,r°-^^^^''^ acknowledgement of debt not binding on co-partner after
dissolution. B & C gave note to A, in 1816, and shortly after dis-
550
Pt. 3, Ch. 3. Dissolution. §179.
solved. In 1824, A sued on the note. B pleaded Statute of Limita-
tions. C let judgment go by default against himself, and testified on
trial that the note was due and unpaid. — Judgment for B. Levy v.
Cadet, 17 S. & R. 126, Pa. (1827).
7. Partial payment by partner after dissolution and notice, does not
toll Statute of Limitations agaitist co-partner. B & C gave note to
A in 1864. Partnership dissolved in that year. A received notice of
the dissolution in July, 1868. C made payments on account of the
note, in June, 1868, July, 1870, and November, 1871. In 1876, A
brought suit on the note. Defence by B : Statute of Limitations. —
Judgment for B. Mayberry v. Willoughby, 5 Neb. 368 (1877).
§179.
ISpon a Mssolution, tl)e ioiut title is iiicibcb into separate
titles.
But the dissolution must be consummated. When
a contra6l is made to divide the assets, and it is fol-
lowed by a separation of them into lots, neither part-
ner acquires title until the contradl is executed. Each
partner must deliver one lot to the other.^
I. Konigsburg v. Launitz, supra 'i loi, n. i.
Firm title not changed into separate ownership until agreement for
dissolution executed. A & B, jewelers, agreed to dissolve partner-
ship, and divided the assets between them. B refused to sign agree-
ment, and A obtained injundlion, but B sold assets, and refused to pay
proceeds to receiver. On attachment for contempt, B claimed to have
sold only his separate property. — Committed. Title to firm prop-
erty not superceded until agreement executed. Fitzgerald v. Christl,
5C. E. Gr. 90, N.J. (1869).
551
§i8o. Receivership. Pt. 3, Ch. 4.
CHAPTER IV.
THE APPOINTMENT OF A RECEIVER.
§180.
(Tlic appointment of a vtttmx in not a ncassarg consequence
of a iiissolution bij juiiicial tiecree.
Unless cause is shown why the business should be
taken out of the hands of a partner, he will be al-
lowed to wind up the business on account of his ex-
perience and of expense saved to the firm/
vSufficient ground to displace a partner, who is
entitled to administer, is a pre-requisite for ^he ap-
pointment of a receiver. Unless he adls in bad faith,
violates his agreement, attempts to break up the busi-
ness, or is insolvent, his right will not betaken away.
Bad faith or fraud will deprive him of the right. A
partner, like any owner, may prevent waste by a co-
partner.^
If the court cannot effedl a liquidation by one part-
ner, or the business itself should be continued in
order to preserve a valuable good- will, the partners
are given a chance to compete for the business, which
is sold to the highest bidder. The assets are valued
according to what they are worth to the partner con-
tinuing the business at the old stand.'
I. Appoint)nent of receiver not made, of course, against zvill of capi-
talist partner. A & B, partners at will. B advanced capital, and
business carried on in his name. A enjoined B from excluding him, |
and demanded appointment of receiver. B denied exclusion. — In-
junAion dissolved, and appointment refused. No reason for taking
business out of B's hands. He owned the capital and stock, and,
therefore, reason for appointment of receiver, i. e., equal rights of
partners don't apply. Cox v. Peters, 2 Beas. 39. N. J. {1S60).
^Unprofitableness of business ground for dissolution, but not for a
receiver. A enjoined B and asked for appointment of receiver. B
552
Pt. 3, Ch. 4. Receivership. U81.
denied cause for injun(5lion, aud claimed right to settle up business
himself. Injundlion dissolved, and appoinment refused. If business
unprofitable, expense saved by partner's liquidation. Moiesv. O'Neill,
8 C. E. Gr. 207, N.J. (1873).
2. BirdsaP v. Cole, supra ^ loi, n. i.
iVo receiver appointed unless partner has violated agreement. B
owned site, and sold half to A, and they built and furnished a paper-
mill. A enjoined B, because he sold paper on own account, refused
ip formation, and carried off firm books. B explained that A gave
him a mortgage for I400, but finding on statement of account that
debt was |i,ooo, agreed to let B sell goods on own account, to make
up balance. — Appointment of I'eceiver refused. Parkhurst v. Muir,
3 Hal. Ch. 307 (1848). On reference to master, he is limited to account
since settlement, unless bill amended to pray account from begin-
ning. 3 Hal. Ch. 555, N. J. (1S49).
3. Evidence of partner' s intention to break up business ground for ap-
pointment of receiver. A enjoined B, his co-partner, who transferred
his separate personal property to his son, and gave notice of the trans-
fer to a commercial agency, with intent, A alleged, of impairing firm
credit, and A asked for receiver. — Appointed. Other fadls, not denied,
also showed B's intention to break up the business. Sutro v. Wag-
ner, S C. E. Gr. 388, N. J. (1873).
Conversiojt of firm assets and withholding information, ground
for appointt>ient of a receiver, if believed. A charged that B con-
verted assets to his own use, while A was insane, withheld informa-
tion, and did not keep corredl accounts. B denied A's insanity, and
all fraud. — Fa<5ls supported A's equity below, B's defence above.
Doughty V. Doughty, 3 Hal. Ch. 227, N. J. (1848).
4. Injundlion by co-owner to prevent waste, and security for his share
of remits. A & B owned a printing-office. B used it for printing paper.
A brought bill for division, or sale of property, an accounts of rents
and profits, andinjundlion against B's injuring premises.— Injun<5lion
to prevent waste and security for rents from B. Low v. Holmes, 2
C. E. Gr., N.J. (1864).
5. On dissolution court will compel partners to bid for the stock and
good-will. Brothers in partnership fell out, and business couldn't be
conducted with comfort or advantage. The court below appointed a
receiver. — Reversed. The Supreme Court, in order to preserve the
business established by the joint enterprise and contribution, gave it
to the highest bidder. Slemmer's Appeal, 8 Smith 168, Pa. (1868).
§181.
^\)t appointment of a receber is a matter of course against tlje
, Dentiee of a partner's sl]are.
The vendee was never sele(5led by the plaintiff, and
has no claim to manage the business.^
553
§i82. Receivership. Pt. 3, Ch. 4.
The vendee of a partner has less right than his
vendor to ask for the appointment of a receiver, as he
bins only a right to compel a settlement, and not a
right of joint control;" but if he made out a sufficient
jrround for the appointment the court would put a
receiver in the defendant partner's place.
1. Appointment of receiver, of course, against partner" s vendee. A &
W agreed to manufadlure cotton, and to contribute equally. They
bought mill for |i,ooo. A paid |6oo, B I125, and agreed to make up
diiTerence. B sold out to C, who knew B had not paid up his quota.
C claimed 1-2, and took possession of and manufadlured shingles. B
was insolvent, and C refused to pay any debts. A enjoined him, and
asked for a receiver. — Appointment. A plain case. Heathcot v. Ra-
venscroft, 2 Hal. C. 113, N. J. (1847).
Van Reusalaer v. Emery, supra 'i loi, n. i.
2. Purchaser of a partner's interest no better claim, to injunBion or re-
ceiver than a partner. A, B & C, manufacflurers under a patent. Firm
property worth |2 1,000, liabilities |i 6,000. B had put in and drawn
out ;f 10,000, and C had withdrawn 118,000. Judgment obtained against
C, and his interest sold by sheriff to A, for I30. A asked injundlion
and receiver. — Refused. Though sale dissolved partnership, B might
settle up business. His charge, that A was not a bona fide purchaser,
and that he conspired with C to break up business, to deprive B of
patent, would prevent aid to them by chancellor. Reuton v. Chap-
lain, I Stock. 62, N. J. (1852).
§182
vl pnrtner maij forfeit 1)13 rigl)! to tl)e appointment of a w-
cciofr bn lacljes.
Unless the application is made at once upon the
happening of the cause, the plaintiff is deemed to
have waived his right to insist upon it as a ground
for the appointment.*
I . Laches aeprives comtlainant of right to appointment of receiver. A
brought bill against B, April 9, and notified him of application to be
made for receiver, Ajjril 16. Counsel agreed to let the matter go over,
and A notified B, July 31, of renewal to be made August i. B required
adequate notice —Refused. Delay a ground for non-appointment.
Tibbals v. Sargeaut, 1 McCart. 449, N. J. (1862).
554
Pt. 3, Ch. 5. Liquidation. §183-4.
CHAPTER V.
LIQUIDATION.
§183.
Qi[)t onln roari to binb tl)e partners after bissolution is bji
proof tl)at tl)e partner is entitleti to keep tl)e firm in eiistence for
tlje purpose of settlement.
This is the fun6lion of a liquidating partner.
I. McCowinv. Cubbison, supra ^ 178, n. 4.
Soliciting trade from receiver an interference. B appointed re-
ceiver of A & B. A's son, who had been employed by firm, took list
of customers and solicited trade, announcing appointment as a break-
up of the firm business. — -Committed for contempt in interfering with
receiver, who kept the business as a going concern. Heln.ore v.
Smith, 25 Ch. D. 449 (1885).
§184.
®l]e liqnibating partner Ijas tl]e firm's capacity to l>o n)l)at is
requisite for a settlement of tl)e business.
He is the firm for liquidation. He may sell on
credit.^ As he continues the firm for liquidation, he
may exert the firm's discretion.^ Commercial paper
is an incident to the liquidation.^ He can make a
chattel mortgage where the seal is treated as surplus-
age."
In New York the liquidating partner is denied the
capacity to make commercial paper. From the limita-
tion of his power, it resulted that his note merged the
firm debt and precluded the creditor's recovery against
the other partners."^ Elsewhere a note in his name is
555
§184. Liquidation. Pt. 3, Ch. 5.
simply ambiguous. The form is not notice by con-
struction of law of an individual transadlion, but the
character of the paper is a fac1: for the jury." The
note might be in his capacity of liquidating partner,
when the firm would receive the proceeds, or it might
be his individual contrail, which both parties intended
;is a substitute for the firm contra6l.
I. Liquidating partner may iclt on credit. On dissolution of a firm,
composed of A, B, C & D, carriage makers, C & D were made liqui-
datiii}^ partners. They sold a carriage to a hack-driver on credit.
A & B surcharged them with the loss incurred by this sale. No cus-
tom of the firm was proved of making sales on credit, and although
occasional sales were so made, a chattel mortgage or lease was ordi-
narily taken, where the law permitted it, as security. — Surcharge
stricken out. The liquidating partner's discretion is unlimited in
making a settlement of the business. Although an error of judg-
ment, the sale on credit was made in good faith. Petry's Appeal, ii
W. N. 512, Pa. (1882).
3. Surviving partner tnay exert an option to reneiv a lease to the firm.
A & B, partners, took a lease for three years from C, with an option
to renew for two years. B died, and A exerted the option, but C re-
fused to extend the term, and A sued for breach. Defence : A could
renew only as a partner, and by so doing he would be enabled, after
dissolution, to charge the firm for rent. — Judgment for A. He suc-
ceeded to all firm rights, and his relations to B's estate do not con-
cern the lessor. Betts v. June, 51 N. Y. 274 (1873).
3. Partnership without a term is at will. A partner need not con-
tribute for stock taken bv his co-partners in a corporation projefled
with his concurrence, to develop the firm's interest. After dissolution
a partner is not trustee for his co-partners, unless he makes profits by
transa^ing the same business. Partner mav discount firm paper to
repay his advances. A, B & C, partners, sold half a patent right for
Xew York and New Jersey, to D, and agreed with him to form a cor-
poration for working the territory. D arranged with B & C to assess
theprice which he paid, upon each, according to his share of the corpo-
rate stock. The projecl fell through. A retired from the firm, and
bought up D's half and also the firm's half of an independent claim-
ant from the original patentees. A did business in New York and
New Jersey, but at a loss. To repay his advances to the firm, he had
Its notes discounted, and charged it with the discount. A brought
account against B & C— As duration of the firm was not fixed, A was
not liable for breaking it up. He could not be charged the price he
paid for C's lialf of the patent right, nor could B & C be allowed the
amounts which tl:ey suljscribed to the proje<fted corporation. The
discount paid by A was allowed. Fletcher v. Reed, 125 Mass. 312
(1881).
Partner's denial of liability on commercial paper made in firm
name. puts burden on plaintiff. B & C dissolved, and bv notice au-
thorized either partner to use the firm name in liquidation. B took
m settlement from D, a firm debtor, a note payable to the order of
556
Pt. 3, Ch. 5. Liquidation. §185.
B & C, in liquidation, and endorsed it in like manner to A, who
sued B & C, as endorsers. Defence by C : Endorsement not made in
liquidation. Charge: Burden of proof on C. — Reversed. On denial
of liability, burden of proof on A. Woodson v. Wood, 37 Alb. Law
Journal, 389 Va. (1888).
4. Partner tnay bi)id firtn by a chattel mortgage after dissolution, if
mortgagee has notice of it. B made a note, and executed a chattel
mortgage, in B & C's name, to E, for a firm debt, November, 1877.
The firm dissolved in 1876. In December, 1877, C sold to D horses,
which had belonged to the firm. A, E's assignee, for value, replevied
the horses. Defence: Note and mortgage made after dissolution,
without C's knowledge, and after title to horses had vested in C. —
Recovered. B could bind firm by a chattel mortgage, because the
seal is surplusage, and as E had no notice of the dissolution, he could
rely upon B's authority. Woodruff v. King, 47 Wis. 261 (1879).
5. Satisfaflion of firm debt by individual note of liquidating partner.
B, as liquidating partner of B, C & D, gave A his individual note
for a firm note, which B took up and destroyed. He credited him-
self on the firm books with the payment of the debt. B, not paying
in full, A sued B, C & D for the balance of the original claim. —
Judgment for C & D. A took B's note in satisfa<5lion of the firm
note, and the change of debtors was sufficient consideration for the
substitution. Waydell v. Luer, 3 Denio 410, N. Y. {1846).
6. fury tnust find whether note of liquidating partner was given on
firm or on separate account. B, C & D dissolved in May, and ap-
pointed B liquidating partner He made in August, but ante-dated,
notes in his name, payable to the firm, and endorsed them in its
name A, who discounted them, had no previous transactions with
the firm. The evidence was confliAing as to the proceeds. A sued
all, and C and D made defence. Court charged for defendants, be-
cause form of commercial paper was notice to A of an individual
transaAion . — Reversed. The appointment of B as a liquidating part-
ner made his individual name ambiguous, and if used for the firm and
proceeds of notes went in liquidation, C and D were bound. Court
could not take the question away from the jury. Lloyd v. Thomas,
29 Smith 68, Pa. (1875).
§185.
If no liquidating partner is appointe^, anp partner roljo con-
tinues tl)e business cau binb l)is co-partners for a liqui^ation.
As the partners could prevent any co-partner from
continuing the business except by their authority or
appointment, his a6ling will bind them/ In Pennsyl-
vania, giving commercial paper is an incident to the
liquidation.^
557
|i86_7. Liquidation. Pt. 3, Ch. 5.
I When no li<juuialing partner appointed, either partner may ail.
A & B, partuc-s. After dissolution B compromised firm claim against
C a'&. B sued C. Defence : Compromise and release. Reply: B's
authority ceased with dissolution.— Judgment for C. There being no
li(iuiilating partner, either might acT:. Hawn v. Land & Water Co.,
i6 v. Rep'r 196, Col. (1887).
2. Unless partners prevent co-partner from aFling as liquidati^ig part-
ner, t/iey will be bound by him, although they did not appoint him.
B, C (S: f) sold their works, ceased business and dissolved in the spring
of 1873, without appointing a liquidating partner. D was also partner,
managing direcflor and member of discount committee in banking
firm ; A, which discounted two notes for D, made by and to him in B,
C & D's name, and endorsed by him, and a third note, endorsed by
D, in B, C & D's name; all made and discounted in 1875. A sued B
and C.— Recovered. As the charge denied A's right to recover, un-
less D was liquidating partner, verdict settled that defendants knew
D acled as such, and did not objedl. Fulton v. Central Bank of Pitts-
burgh, II Norris 112, Pa. (1879).
§186.
Z\)t riglit to liquibatc tl]c bushuss passes xmi\) i\\t ntiring
partner's interest.
The appointment of the continuing partner is part
of the security for his advance of the retiring part-
ner's interest in the firm.^
I. Right to liquidate by contrail. A advanced to B, retiring partner,
his capital, and agreed to assume the debts, colle(5l the credits and
make a settlement. B, for value received, released C, a firm debtor,
•who had notice of the dissolution. A sued C, and he set up the re-
lease. — Recovered. B's assignment of interest until settlement, as
security for advance and assumption of debts, carried his right of
control. Gram v. Caldwell, 5 Cow. 489, N. Y. (1826).
§187.
^\\t power of settling up tl)e business, if committed to o
stranger, is renocable, ns it is not rouplcii toitl) <x\\ interest, n)l)ile
tl)e potuer of a liquidating partner is irrevocable.
558
Pt. 3, Ch. 5. Liquidation. §188.
The distin(5lion between making a partner and mak-
ing a stranger the agent for liquidation, reveals itself
in the release of a firm debtor. If made by a partner,
it revokes, by implication, the agent's power ;^ but it
does not affe6l the liquidating partner." On the con-
trary, the release itself is void, because the co-partner
usurps the prerogative of the liquidating partner, who
is the firm, for a settlement of its affairs.^
1. stranger'' s right to liquidate revocable. Upon dissolution partners
appointed A, a stranger, by an irrevocable power of attorney, for
liquidation. A sued a firm debtor, who set up a release by B. Debtor
had notice when he took the release of the dissolution, and appoint-
ment of A. — No recovery. Authority, though in terms irrevocable,
was revoked by release, because power not coupled with an interest.
Napier v. McLeod, 9 Wend. 120, N. Y. (1832).
2. Gram v. Caldwell, supra \ 186, n. i.
3. Appointment 0/ liquidating partner irrevocable. Upon dissolution,
B was appointed liquidating partner. A, without cause of complaint,
sought to resume control, or have a receiver appointed. — Bill dis-
missed, because appointment irrevocable. Hayes v. Heyer, 4 Sandf.
Ch. 485, N. Y. (1847).
§188.
^\]t liqutbating partner is not fntitkb to compensation for l)is
stxmits.
He is a partner, and no partner is entitled to com-
pensation for his services.^ But he can employ a
clerk, and pay him a salary for services.^
The surviving partner may recover compensation
for carrying on the business for the deceased partner's
estate; but this is no exception to the rule which pro-
hibits compensation to the liquidating partner.' Con-
tinuing the business is not liquidation.
I. Liquidating partner not entitled to compensation, and charged in-
terest on colleSlions mingled ivith his own funds. A & B, carpenters,
559
§189. Liquidation. Pt. 3, Ch. 5.
erecfled buildings in partnership. Kacli agreed to devote his whole
time and labor to the work, and pay his own expenses. On a settle-
ment, A claimed interest on coliedtions made by B, as liquidating
partner, which he mingled with his own funds and used in his indi-
vidual business. B demanded compensation for his services rendered
before the partnership began and after it terminated. B had made
contracts for buildings and worked on them, before forming the part-
nership with A. — A recovered interest, and B not allowed compensa-
tion. The work already done might have been an inducement for A
to enter into partnership with B, and the firm continues, even after
dissolution, until its affairs are wound up. Dunlap v. Watson, 124
Mass. 305 (1878).
Partners, -if appointed receivers, are entitled to coinpensation only
as such, aHhoua^h the articles stipulate for compensation to the part-
ners for their services. Plaintiff's attorney in the settlement has no
claim upon the joint fund for a fee. C & D, partners. Articles pro-
vided a percentage to each partner as compensation for his services.
C left his share to two children, A and B, who acfted for all of them.
C's widow elected to take against his will, and this caused a dissolu-
tion. Court appointed A and D, receivers, at a salary to be fixed by the
master. D demanded compensation according to the articles, in ad-
dition to his salary as receiver. A claimed a fee for his attorney in
winding up the business. — Extra compensation to D disallowed, and
A's attorney no claim. Lennig v. L,ennig, 11 W. N. 18, Pa. (1S81).
2. Liquidating partner entitled to no commissions for services, but
may pay clerk for his services. A & B, upon dissolution, made B li-
quidating partner. A brought account, which was refused, and mas-
ter refused a compensation, but allowed C I500 for services. — A enti-
tled to 3 per cent, commission on colledlions, and C to nothing.
Hutchinson v. Onderdonk, 2 Hal. Ch. 277, N. J. (1847). On appeal,
C's claim of I500 allowed. Onderdonk v. Hutchinson, 2 Hal. Ch. 632
E. & A. (1849).
3. Though contpensation not allowed surviving partner for winding
up business, he is entitled to be paid for continuing business for bene-
fit of deceased partner' s estate, and ivith his representative" s concur-
rence. The stock in trade of A & B consisted of patents for weapons,
machinery for manufaAuring, and government contra6ts to supply
them. A died, and B continued the business, in order, with assent
of A's administratrix, to fulfill existing contradts, and made new ones
to work up the stock on hand. A's administratrix brought account,
and B claimed compensation.— Allowed. Though B not entitled to
compensation for winding up the business, he is for continuing it, if
advantageous and with the concurrence of the deceased partner's
representative. Schenkle v. Dana, 118 Mass. 237 (1875).
§189.
^\\t general creditor l^as a stanbing to wntrol tl)e liquibating
partner.
560
Pt. 3, Ch. 5- Liquidation. §190.
The creditor, though without a judgment, has an
interest in the administration of the assets, as they
constitute a trust fund for the creditors.'
I. Firm creditor zviihout judgment may restrain liquidating partner
from, wasting assets. B, after dissolution, ousted C from possession
of firm stock. C asked for account and receiver, but afterwards with-
drew his bill. A, who was a general, but not a judgment creditor
of firm, sought to enjoin B from wasting the assets, and to have a re-
ceiver. — Decree. Firm assets a trust fund for creditors, and undis-
puted claim equivalent to judgment. Dillon v. Horn, 5 How. Pr. 35
N. Y. (1850).
§190
^\\t liquidating partner mill be bisplaceb onltt bw proof of tl]e
necessity for a receiver.
A partner will naturally have more interest in the
administration of the business than a stranger would
have, and by his services the expenses of a receiver
are saved to the firm.'
I. Liquidating partner not displaced without proof of necessity for a
receiver. A sold out to B & C, who continued the firm business.
They agreed to pay his share, and let him have access to the books,
and colleA debts. A asked for an account and a receiver, because he
had received no instalment of the price or account of the debts col-
le<5led. His affidavit set forth that he required possession of the
books, as evidence to prove his case, and that two policies on the
lives of large debtors to the firm would be forfeited if premiums were
not paid promptly. Counter affidavits of B & C : That sufficient debts
had not been colle(5led to pay outstanding claims, which had been
met by B & C's advances; that A had access to the books, and had
colledled debts. — Refused, Defendants in possession under agree-
ment with plaintiff, and no mismanagement or denial of access shown.
Defefldants had more interest to keep policies alive than a receiver
would have. The expense of a receivership would be an extra bur-
den. HoflFman v. Steinbeisser, 11 W, N. 383, C. P. No. 4, Pa. (1881).
561
^1(^1. Marshalling Assets. Pt. 3, Ch. 6.
CHAPTER VL
MARSHALLING THE ASSETS.
§191.
What constitutes the relation, has been the riddle;
but the stuuibling-block of partnership is marshalling
the assets. No principle being admitted which would
settle the basis for distribution, the law could be noth-
ing but a chaos. The rule which has finally been
settled in cases of insolvenc}^ is that the firm credit-
ors take the firm assets equally, and the separate
creditors take the separate assets. Each class is, of
course, entitled to its share in an}^ surplus arising
from the fund of the other. The rule has its origin
at law, but has received its greatest development in
Equit}'.
The theories which have been suggested to account
for the course of distribution in equity, do not go to
the source of the change, and explain the cause which,
brought about the departure from the Common law
system. The notion of credit, tbat as the joint cred-
itors relied upon the firm assets, the separate creditors
looked to the separate estate for payment, is an as-
sumption. It contradicts the experience which im-
putes to every man a knov/ledge of the law. The
credit would depend upon the estate which the debtor
had. The partners have joint and separate estates,
which are both subject to the firm debts. The credit
would, of course, be given in reliance upon both
estates. The partner has a resulting interest in the
.562
Pt. 3, Ch. 6. Marshalling Assets. §191.
firm after all its debts are paid, and his separate estate,
which is also subje6l to the firm debts. His creditor
could expecft nothing from the partner's share, until
the firm creditors had been satisfied, and he could only
share the separate estate with them, unless insolvency
supervened, which would give him a paramount title
to the separate fund. The credit given to a debtor is
not the cause of his estate, but a consequence of his
possessing the means to pay the debt.
The Civil law is invoked to illustrate the credit
theory according to which each fund is the inducement
to the credit given to the debtor in his corresponding
capacity. It is true that at the Civil law the creditors
of a particular business had a prior claim to its fund,
but this arose from the analogy to the law of sale in
that system (§108). They obtained this priority not
because they had given credit on the faith of the fund,
but because the sums they had advanced, or the goods
they had delivered, had passed into, or produced, the
fund.
There were instances at the Civil law of credit given
to a particular fund, as, for example, to the peailium
the property of a slave, or of a son who was not sni
juris. In these instances credit must necessarily
have been given to the fund, and not to the individual,
for the slave, or son, was incapable of incurring an
obligation, except in respe6l of his peculium. Hence,
no reliance can be placed upon this illustration, and
the authorities, as might be expelled, are explicit in
making the distinction between them and the case of
a debtor who is a freeman.' The credit theory will
never be true in our law until, as in the case of the
peculium.^ the debtor is relieved from all personal re-
56.^
I
§i()2. Marshalling Assets. Ft. 3, Ch. 6.
sponsibility to the firm and separate creditors, except
iu resped of the different funds which they respe6l-
ively claim.
I. lUattbiac: „ Gontrowerkn = iicjriton bes jTibmifc^en Gibilrec^t^/^ 171,
where the authorities are coUedled. Supra \ io8, n. 4.
§192
Jinn rrcMtors nmtj redaim patimcut mabe to X\\t separate
crctiitors fioiu tl)e firm assets.
Upon insolvency, the assets of a firm belong to its
creditors.' Any appropriation of the property to a
different purpose is a fraud upon them. If the part-
ners devote the firm assets to the payment of their
individual debts, they defraud the firm creditors. The
separate creditor could not claim payment out of the
firm assets," nor can he retain firm property wrong-
fully diverted to the payment of his claim. The firm
may compel the restitution of all that the separate
creditor has received from the firm assets.^
I. Surviving partner cannot prefer fir^n creditor. Partner C died and
B assigned whole stock and lease to D, to manage, sell, and apply
proceeds to his claim against firm, and the choses in acflion to E in
payment of his claim. Firm creditor A sued B, D & E, to set aside
transfers as a fraud on creditors. — Judgment for A. B could not give
preference of .stock, because not sole owner, and law prevents C's ex-
ecutor or administrator from giving preference of choses in a(5lion,
because though having the legal title and the sole right to sue, he is
a trustee in equity for C's share. Loeschick v. Addison, 3 Rob. 331,
N. Y. (1S65).
If all the partners are living and unite in making
a payment or .skiving security to a firm creditor, the a6l
is good, although the firm is insolvent.*
a. Partners, though insolvent, can prefer creditor, and secure him by
chattel mortgage of firm stock. B & C, partners, executed chattel
mortgage on firm .stock for |2o to A. Firm insolvent. Attachments
issued against B & C. A sued D, sheriflF, for seizing stock. Evi-
564
Pt. 3, Ch. 6. Marshaixing Assets. §192.
dence did not show extent of A's claim. — ^Judgment for A. Without
proof that mortgage for private debt, or in excess of firm indebted-
ness, court cannot invalidate transa<5tion. Rothell v. Grimes, 35 N.
W. 392 (1887).
2. Firtn creditor, who is a stranger, has priority over a partner-cred-
itor, unless stranger relinquishes his privilege. A & B kept a livery-
stable in partnership. C advanced them |5,ooo, to buy stock, and
took their joint and several bond. A advanced |; 1,600 to the firm,
and took B's bond. A and C agreed that proceeds of execution issued
by either should be divided rateably. Both obtained judgment, and
issued execution the same day, though A first. A claimed priority.
— No right against C, except by his agreement. Linford v. Linford,
4 Dutch. 113, N.J. (1859).
Blackwell v. Rankin, supra, 'i 106, n. 5, c.
The priority will be lost if judgment against firm
assets is given in favor of a separate creditor and no
objedlion be made by the partner in time/
a. Firm creditor, especially if a subsequent creditor, cannot contest a
judgment which gives firm assets to a separate creditor. B, a cred-
itor of D, attached C for his debt to firm D & E before a justice, who
gave B judgment for half the debt. A, a subsequent creditor of D &
E, attached C, who paid A the other half, but he claimed the whole, —
Judgment for garnishee. Though justice's apportionment of firm
asset illegal, E did not appeal. A could not attack the judgment col-
laterally, even if he had been a creditor at the date of B's attach-
ment. Howard V. McLaughlin, 2 Outerbridge 440, Pa. (1881).
3. Smith V. Ivoring, supra, I 126, n. i.
Where firm is made liable on its note, given by partner for his debt,
the firings assignee in bankruptcy may prove for the amount against
separate estate. B drew a note in firm name of B & C, had it dis-
counted, and used the money for a private purpose. B died and the
firm became insolvent. A, firm's assignee in bankruptcy, offered to
prove against B's separate estate for full amount of note. Master
cut down claim to the amount of dividend anticipated from firm fund
on account of the note. A excepted. — Report of master affirmed.
Baker v. Dawbarn, 19 Grant's Ch. 113 (Up. Can.), (1872).
If the withdrawal of firm assets for private use was
made prior to insolvency and in good faith, restitution
will not be enforced in bankruptcy.^
a. Open withdrawal of firm funds by partner not a fraud on firm,. B
received the proceeds of a firm sale, and after entering same on firm
books, in due form, transferred the item on the books to his individ-
ual account, without his co-partner's knowledge. Firm was solvent
at the time. On insolvency. A, the assignee in bankruptcy of firm,
offered to prove against B's separate estate for the amount withdrawn.
— Disallowed. The withdrawal, though unauthorized, was not fraud-
ulent, because open and not in expedlation of insolvency. In re
Hamilton, i Fed. Rep 'r 800 (1880).
565
T
§193. Marshalling Assets. Pt. 3, Ch. 6.
§193.
yrquitii boes not intfrtjcne to settle tl)c basis of distribution,
unless a contlict aists betmeeu tl)e bitferent classes of creditors
to sl)ave in tl)e Liiuision of tl)e two fun^s.
li' there is but a single fund, no confli6^ arises for a
court of equity to adjust, and the Common law pre-
vails, with its theory of a paramount claim in the firm
creditors to the firm fund, and a co-ordinate right with
the separate creditors if there be no firm fund. The
theory enables the firm creditors, if there is nothing
but partnership property, to take it all; but if there
is no firm property, to participate in the distribution
of the separate estate with the separate creditors.^
The right of the joint creditors against the separate
estate subsists in chancery, in spite of the preference
which equity gives to the separate creditors.^ No
thought is entertained of taking away the joint cred-
itor's right to hold the separate estate for the satisfac-
tion of his debt. On the contrary, the right is as well
established in equity as at law. Unless the exertion
of the right would interfere witb the claims of the
separate creditors, it would prevail, and take the es-
tate.'
I. In re McEwen, supra I 105, n. 3.
A partner's discharp;e in bankruptcy bars a firm debt if no firm
estate. B & C gave their firm note to A. B was adjudged a bank-
rupt on petition of his separate creditors. B filed a schedule of his
debts, including the note to A, who had not claimed a dividend, but
resisted the discharge on grounds not stated. A's objections were
overruled, and B was discharged. There was no firm estate. A re-
leased C from his liability on the note for a payment of less than one-
half, and sued B for one-half. Defence: A's claim was barred by the
discharge.— Judgment for B. There being no firm estate, A might
have proved against B's separate estate ; hence, his claim is barred
by the discharge. Curtis v. Woodward, 58 Wis. 499 (1883).
Firm creditors share in separate estate when there are no firm as-
sets. B & C were insolvent. The firm estate amounted to |i. 19, which
.566
Ft. 3, Ch. 6. Marshalling Assets. §194.
was subsequently absorbed in costs. C had no estate. B's estate
amounted to 11,177.36. Claims proved against the firm amounted to
|2,20o ; against B's estate to 11,133.67. The firm creditors offered to
prove against B's estate. — Allowed. The rule for marshalling assets
between the separate and firm creditors applies only when there are
two funds. Harris v. Peabody, 73 Me. 262 (1881).
Fivin creditors may share in estate of deceased partner when there
is no firm fund. On death of B, A, who was a creditor of B & C,
offered to prove against B's separate estate in the hands of his admin-
istrator. Neither the firm nor C had any assets, — Allowed. Hio^-
gins V. Rector, 47 Texas 361 (1877).
2. Equity will not disturb the prior lien of a judgment against the
firm upon separate real estate in favor of separate judgment-creditor.
D sued B & C for a firm debt. C died pending suit, and D recovered
judgment against B. A obtained judgment against B for a separate
debt, and on the ground that B's real estate could not pay both judg-
ments, asked that D should be compelled to resort to the real estate
of C, deceased. — Judgment for D. Securities are marshalled in equity,
only where claims are against a common debtor; or, perhaps, where
the co-debtor has a claim, for his own sake, that his associate pay the
joint debt. Not the case with partners, even as to half the debt (as
might be the rule between co-debtors), because the accounts are
undetermined. Only equitable assets are marshalled in chancery.
Equity never disregards a legal priority, and D's judgment against
the firm is a prior lien on B's separate estate. Meech v. Allen, 17
N. Y. 300 (1858).
3. Randolph v. Daly, supra \ 105, n. 2.
§194.
^\\t fquitp of \\\t firm crcbitors rests upon tf)e partners' rec-
ognneb liabilitn at laiu.
The personal liabilit}^ of a partner for tlie firm debts
is the foundation of his equity, which enables him to
control the application of the firm assets for the relief
of his separate estate. This equity is not a contrac-
tual right, but is an incident of the relation, and
continues after the contrail of partnership has been
superceded by a dissolution of the firm. The equit}^
of the firm creditors has been described as a derivative
right, a mere application of the partners' equity.' But
if the partner's equity is founded upon the partner-
567
t;n^. Marshalling Assets. Pt. 3, Ch. 6.
ship contracl, and the firm creditors' equity is a mere
derivative right, then the firm creditor's equity is de-
rived from the contract between the partners, a conclu-
sion ^vhich cannot be admitted at law.^ Both premises,
however, are untrue. The partner's equity, as has
been shown (§ 106), is not founded on contrac^t, but
on liabilit3\ The firm creditors' equity is not de-
rivative through the partners, but is original, by vir-
tue of the position given by the law to the joint fund
as the primary debtor.^
The destination given by the partners to the stock
wliicli they contribute to the firm, and employ in the
business, has been called the foundation of the firm
creditors' equity. The statement is true as an ab-
stra(5lion. The destination is the ultimate cause of
the privilege. The dodlrine of destination, however^
is an equitable principle of modern origin, and can
not consistently be made the basis of an ancient and
acknowledged legal right. Unless the equity had a
support at law, the legal rights of the separate cred-
itors would override and destroy it (§ 107). The part-
ners cannot by a contrail withdraw property from
their creditors. A contraA does not bind anybody
but the parties to it.
It is the Common law theory of estates, which ena-
bles the partners to segregate property and deal with
it as a distin^l: mass, apart from the residue of their
possessions. The traditional method is to create a
joint estate, in analogy to the joint tenancy of land/
It is by virtue of the joint estate that the partners
trade in a distindl capacity." Apart from the estate,
the Common law does not permit a person to a6l in a
single capacity (§ 108).
568
I
Pt. 3, Ch. 6. Marshalling Assets. §194.
1. Transfer by firm of its assets to partner bars creditors' equity, and
partner's transfer for past debt a valuabte consideration. B & Co.,
indebted to A & Co., and to others, transferred all the firm stock and
credits to B, who had advanced money to B & Co., and he agreed to
pay its debts. B assigned most of the assets to C, his lather, lor a
past debt. A & Co., who recovered judgment against B & Co., but
obtained no satisfadtion by execution, brought bill for payment out
of assets in C's hands. — Dismissed. Creditors' equity lost with firm's
equity, by transfer to B, and his assignment for past debt a valuable
consideration. Wilcox v. Kellogg, ii Ohio 394 (1842).
2. Partner's equity not subjefi to execution. E attached the stock of
B, C & D as non-residents. Attachment set aside against D, because
resident. Pending attachment, D, with consent of B & C, sold all
firm property to A, and distributed proceeds among creditors of the
firm, excluding E. Sheriff, F, took bond of indemnity from E, and
sold the entire property attached. A sued E and F for conversion. —
Recovered one-third of price. Attachment covered only interests of
B & C, and sheriff could not sell their right, to have D's applied to
payment of firm debts. Berry v. Kelley, 4 Rob. ic6, N. Y. (1866).
Belknap v. Abbott, supra \ 106, n. 3.
3. Firm creditors^ priority not lost ivhere one partner takes the assets
and assumes the debts. B & C disagreed, and the arbitrators awarded
the firm assets to B, who was to pay the firm debts. D, who was a
separate creditor of B, levied on the funds, then A, who was a firm
creditor, did the same. The sheriff paid the money to D, as the
prior execution. A sued the sheriff for a misapplication. — ^Judgment
for A. The firm creditors' legal and independent right was not de-
stroyed by the award and consequent transfer to B. His right does
not rest on any lien or equity of the partners between themselves.
Tenney v. Johnson, 43 N. H. 144 (1864).
Sale of firm assets by partners to pay a separate debt passes no title
against firm creditors, where buyer k7iows the purpose of the sale. B
& C were indebted to D. B was indebted to E for his contribution
to firm. B & C sold all the stock to A, and took a note, which was
indorsed to E for payment of B's debt. A knew the purpose of the
sale. Under writ of F, a firm creditor, G, the sheriff, levied on the
goods in A's hands, and sold the same. A sued G for trespass. —
Judgment for G. The sale was a fraud on firm creditors, who have
an original and independent right to the firm fund. Person v. Mon-
roe, 21 N. H. 462 (1850).
See another statement of this case, supra \ 106, n. \, c.
4. Firm title good, though partner insolvent when he entered into part-
nership in his zvife's name, and her title a fraud on creditors. A, in-
solvent hotelkeeper, acfted as his wife's agent, and did business with
B, under firm of A & B, the wife being A. Bill by his creditors to
take hotel property at Long Branch. — Not entitled. Real estate be-
longed to firm, though title in partners as tenants in common. Bulk
of indebtedness contracted in improving premises. Mortgage by part-
ners for individual debt good, if firm solvent. National Bank Metro-
polis v. Sprague, 5 C. E. Gr. 13, N. J. (1869).
5. If sheriff takes a bailment receipt for surrender of firm goods, seized
on separate execution, bailee is exonerated by showing nothing left
for separate creditors. A, the sheriff, seized goods of B & Co., on a
separate execution against B, but surrendered them to C, upon his
declaration in the receipt that they were free from encumbrances,
569
§1(^5. Marshalling Assets. Pt. 3, Ch. 6.
that he wouhl keep them safely, return them to A on demand, and
save him harmless. C returned them to B & Co., who were insolvent
at the time, but did not go into bankruptcy until more than four
months afterwards They were discharged in bankruptcy. A sued
C upon his receipt.— Judgment for C. The goods did not belong to
B, and C was exonerated in surrendering them to B & Co. The re-
ceipt was not an indenmity which would estop C, but a bailment,
and A had no right to take the goods, or to retain them. Lewis v.
Webber, ii6 Mass. 450 (1875).
§195.
(fquihi i)ocs not kstron, but controls, t\)t firm cretiitor's
rights against tl)c separate estate.
The several liability of the partners is no less a
constituent of the partnership obligation than is their
joint liability. Both spring from the root of partner-
ship.' The enforcement of the several liability to its
legal extent might exclude the creditors of the indi-
vidual partner from any share in the distribution.
The joint creditors could exhaust the separate estate
first. Equity interfered to prevent this result, and
limited the joint creditors to the joint fund in the first
instance (§108).^
The joint creditors retained, after the equitable re-
peal of their privilege to resort to both funds, an in-
dependent right to the firm assets, but they lost the
right, which they had previously enjoyed in addition,
to resort to the separate fund on equal terms with the
individual creditors.'' Before this rule was established
they were allowed to come in upon the separate fund
only upon C(mdition that they surrendered an equiva-
lent for what they had received from the joint estate.'*
570
Pt. 3, Ch. 6. Marshalling Assets. §196.
1. In re Webb, supra 'i 105, n. 2.
One who lends partners their entire capital is a firm creditor. B &
C borrowed money to begin business of Cs sister, A, and both signed
the note. A subsequently lent them additional funds, and they exe-
cuted notes and a mortgage for the entire loan. Firm creditors con-
tested A's right to firm assets. — A entitled. If loan a joint adl for
firm, superadding partners' several liability does not change it. Car-
son V. Byers, 21 Reporter 232, Iowa, (1885).
2. Bardwell v. Perry, supra \ 108, n. 6.
3. After receiving a dividend from the firm assets, creditor of partners
by a joint and several bond is excluded from their separate estates.
Joint commission issued against B & C, partners, and a separate com-
mission against B. A obtained a dividend on his joint and several
bond out of the joint estate, and then claimed against B's separate
estate, with his individual creditors. — Disallowed. At law, creditor
might proceed against each debtor's estate until satisfaclion, but not
in bankruptcy, because there distribution must be equal. Ex parte
Bond, I Atk. 98 (1745).
4. Bell V. Newman, supra I 105, n. i.
Firm creditors -may not share in separate estate until separate cred-
itors have received a dividend equal to that received from firm assets.
B, C & D gave their note with the separate endorsements of B & C
to A. The firm and all the partners became insolvent. A obtained
a dividend of 31 per cent, from firm estate, and proved for remainder
against the separate estate of B, and claimed a dividend. This fund
would not pay B's separate creditors more than 30 per cent. — Disal-
lowed. The separate creditors of B must first receive 31 percent.,
and then A may come in on an equal footing with them. B's indi-
vidual endorsement on the firm note gives A no standing as a sepa-
rate creditor after eledling to treat themselves as firm creditors, in
taking a dividend from firm fund. Fayette Nat. Bank of Lexington
V. Keuney, 49 Ky. 133 (1880).
§196.
^qtiTtji bo£0 not restrict tl)e firin crcbitors, txiv^i tul)£n X\\v^
l)ttDC a joint funit.
The restri6lion was heralded as the establishment
of a principle which remanded each class of creditors
to its distin6live fund.
There is no such principle. The rule of conveni-
ence (§105), which was adopted in bankruptcy pro-
ceedings, does, in e£fe(5l, limit each class of creditors
571
5it)7. Marshalling Assets. Pt. 3, Ch. 6.
to its particular fund, when there are two funds to be
apportioned between them (§108), but the rule does
not come into operation until the firm creditors pos-
sess a joint fund. The right of the firm creditors is
general against all the property of the partners, and
the claim, even in bankruptcy, corresponds to the
right.' The exertion of the right is controlled only
when, and because, it would deprive the separate cred-
itors of any fund.^
I. The several liability exists as a constituent of a joint
debt, and, therefore, proof is allowed by a joint creditor
against the separate partner, though no participation
is permitted until the separate creditors are satisfied.
In re Webb, supra § 105, n. 2.
2. Finn's assignee in bankruptcy cannot prove against separate estate
for partner' s debt to firm, if no fraud, ivhere separate creditors will
not be paid in full. B & C were declared bankrupts on their own
petition, and B on petition of his separate creditors. A, assignee for
firm, offered to prove against B's separate estate for B's debt to firm.
There was no proof of fraudulent misapplication of firm funds by-
partner, and there had been no settlement of account between the
partners. B's separate estate would not pay his separate creditors in
full. — Proof disallowed ; because debt not fraudulent and separate
assets insufficient to pay separate creditors. In re Lloyd, 22 Fed. Rep.
90(1884).
II
I
§197.
^\]t restriction protects noticing but \\)t separate estate.
The bankruptcy rule which has adopted this equit-F
able restridion, says the separate partner is not liable
for firm debts out of his separate estate until the sepa-
rate debts are paid.^ Does that mean : No firm creditor's
claim shall compete with a separate creditor's claim?:
If a partner's debt to his firm is a firm asset, then the
firm creditor could take it without competing, because
572
„ Pt. 3, Ch. 6. Marshalling Assets. §197.
tlie debt, not being part of the separate estate, would
not belong to the separate creditor." Does the sepa-
rate debt of a partner to his co-partner come within
the prohibition ? It seems not. The liability of each
partner exists for the firm debts. Any shifting of
the separate assets from one partner to another after
insolvency, is an interference with the firm creditors'
rights.^ But the change can prejudice them only
when but for this payment there would have been
a surplus, over and above the separate debts in the
estate of the debtor partner. If the plaintiff part-
ner recovers as a separate creditor of his co-partner,
and the debtor partner has not more than enough to
pay his own separate creditors, the firm creditors are
not damnified, and might be benefited. For if the
plaintiff had no separate creditors, the increase of his
separate estate would then give the firm creditors an
additional fund for the payment of their debts. If he
had separate creditors, they might be paid, and a sur-
plus created, by means of the separate credit thus col-
le6led. There is no difficulty in a firm creditor get-
ting the surplus, after the separate creditors are paid,
without availing himself of the rule of convenience.
I. Between firm creditor and separate creditor, both subsequent to a
joint creditor ivith mortgages against joint and separate estate, equity
will marshal the separate assets in fa vor of the separate creditor. Pay-
ment by the firm creditor of the joint creditor's claim., prevents en-
forcement of his -mortgage against the separate estate. B & C mort-
gaged firm property, and B mortgaged his separate estate to D, for a
loan made by him to the firm. B made a second mortgage of his in-
dividual property to his separate creditor, E. E attached C's inter-
est in the firm property for a separate claim against him. B con-
veyed his moiety of the firm property to C. A issued attachment
against B & C for a firm debt, obtained service on B, and judgment
against him. E obtained judgment in his attachment, and levied
upon C's undivided interest. E bought D's claim, took an assign-
mient of his mortgages, and brought bill to foreclose. A levied under
his attachment upon the firm property not covered by E's attach-
ment. A paid amount due E by decree in foreclosure of firm mort-
gage, and brought bill to be subrogated to D's rights as mortgagee
573
§i^y. Marshalling Assets. Pt. 3, Ch. 6.
against the firm property, and against the separate estate of B. The
firm's eiiuitv of redemption possessed no value to satisfy A's attach-
ment, unless U's claim was apportioned between the mortgages and
a part collected from B's separate estate. — Dismissed. Firm mort-
gage principal, and B's mortgage surety for D's claim. Equity would
not enforce payment of B's first mortgage until the firm property was
exhausted, and enable A to colledl his attachment debt out of the
firm assets in opposition to B's second mortgagee, E, who claimed
that B's separate estate should be reserved for his separate debts.
But .\'s payment of D's claim to his assignee, E, extinguished the
debt, and if A were subrogated to D's rights, he could not enforce B's
first mortgage, since it was merely surety for D's debt, which was
extinguished. National Bank v. Gushing, 53 Vt. 321 (1881).
Joint and several creditor, by bond of partners, may eleH in bank-
ruptcv the Jinn or ike separate estate. B & C, partners, were liable
on a joint and several bond to A, who issued a joint commission
against them in bankruptcy. — He could not issue a separate commis-
sion, as he was bound by his eledlion. Ex parte Banks, i Atk. 106
{1740J.
2. Fir)n creditors may Jollow Jinn assets mortgaffed by partner Jor his
separate debt. B & C dissolved, and B took the assets and agreed to
pay debts. B exchanged the assets for a tradl of land, taking title in
his wife's name, and subsequently mortgaging the tradl for protedlion
of his separate creditor, D, who had notice. Firm creditor. A, brought
bill to subject the land to payment of firm debts. — Decree. B's course
a fraud on firm creditors. Renfrow v. Pearce, 68 111. 125 (1878).
Firm creditors may prove against estate oj partner who has Jraudu-
lently overdrawn his account. B was manager for B & C. He drew
out 2r6oo,ooo for his own purposes, and concealed the faA by false
entries. A, and other firm creditors, offered to prove in bankruptcy
against B's separate estate, for this overdraft. — Allowed, on the ground
of the fraud. Read v. Bailey, L. R. 3 App, Cas. 94 (1877).
3. For this reason separate creditors can not compete
with the firm creditors in the distribution of the firm
fund.
Separate creditors can not prove against Jinn assets Jor partner's
loan to firni. Separate creditor of B offered to prove against assets
of B & C for amount of a loan from B to firm. B's estate insufficient
to pay his creditors in full. — Disallowed, because no fraudulent trans-
fer of assets after insolvency. Rogers v, Meranda, 7 O. St. 179 (1857).
§198.
3 partner's claim against l)is co-partner, tl]OU(jl) tn^epen^ent
of tl)c funi, can not be enforccb bn separate crei)itors of cwbitor
partner wljile tirm ^ebta are unpaii).
574
Pt. 3, Ch. 6. Marshalling Assets. §198.
The separate estate is not recognized as having any
right, except what the rule of convenience or of bank-
ruptcy gives it. If the separate estate belongs to its
creditors, certainly a debt from the co-partners is an
individual asset, and should be included in the sepa-
rate estate. If the separate estate had an independent
right of its own, the claim could not be ignored, and
would be enforced. But the claim is met by a firm
creditor's claim, also, against the co-partners, which
competes for their separate estate. Though the part-
ner's creditors have a preference over the firm credit-
ors upon his separate estate, the firm creditors have
a priority upon the separate estate of his co-partners.
The rule does not exonerate anything from the im-
mediate liability for the firm debts, but the debtor's
own estate. If he took part of his co-debtor's estate,
he would have a preference over the firm creditors
upon another's estate. This the rule does not give
him.^ It makes no difference that he is a separate
creditor of his co-debtor. The firm creditor holds him
as a debtor, and excludes him as a claimant from any
fund, except his separate estate, which the rule ex-
empts in the first instance, by a demand for satisfac-
tion. If he does not pay the firm debt, he cannot cut
out the firm creditor by taking the funds of a co-debtor,
who would pay the debt. He shall not be a dog in the
manger. The reason why he cannot colled; his debt
for his separate creditors, to the prejudice of the firm
creditors, is that he owes it himself, out of his separate
estate. The reason for the prohibition ceases when
the separate estates of both partners are insolvent;
then the firm creditor does not compete with either
class of separate creditors, and has no right or interest
575
§nj9. Marshalling Assets. Pt. 3, Ch. 6.
to prevent the shifting of separate assets from the
estate of one partner to that of another.'
1, Mthough separate creditors may not enforce their
ch\iins a<,^ainst the estate of a co-partner in competition
with the firm creditors for an indebtedness prior to in-
solvency, they may recover from the firm estate any
amount drawn by the firm creditors from their own
separate fund, in contravention of the rule of conveni-
ence.''
a. Separate creditors have a Hen on joint estate for amount diverted
from separate estate after insolvency, to pay joint creditors. Firm
creditors of B & C ele<5led to be separate creditors of dormant partner
B, and took so much from separate estate of B that there was a surplus
on joint estate. A, creditor of B, claimed a lien on that surplus to
extent of separate estate of B taken for joint debts. Creditors of C
demanded an equal di^^sion. — Decree for A. Ex parte Reid, 2 Rose
84(1814).
2. Partner may prove against separate estate of co-partner if no firm
creditors. C, fraudulently, gave notes in firm name of A, B & C, for
his private use, and, without authority, A and B paid the notes in
hands of bona fide purchaser, and all other firm debts, and then of-
fered to prove against C's estate in bankruptcy for the amount of the
notes. — Allowed, because no competition with firm creditors. Ex
parte Young, 2 Rose 40 (1814).
§199.
if \\]txt tuoulb be no surplus for tl)e firm crcbitors out of i\\t
co-partner's separate estate, tl)e partner m%\)i recouer on a con-
tract intiepeniient of tl)e firm.
The several liability of each partner is a firm asset.
Hence, no partner can sue his co-partner and with-
draw part of the firm's resources. He would compete
with his own creditors and take away their fund.
But if there would be no surplus after the separate
creditors were paid, the partner would be merely a
separate creditor of his co-partner, and, like the sepa-
576
Pt. 3, Ch. 6. Marshalling Assets. §200.
rate creditors, would be entitled to the co-partners
separate estate/
If a partner has a separate claim, which he can
enforce against his co-partner, can the joint creditors
attach, or be subrogated to the right? If he colledled
the debt, it could be seized by them to satisfy their
debt, and on an execution, any right, however remote
or contingent, may be sold. The debt, when collected,
is not exempted from execution by the joint creditors.
The money belongs to the partner as his property,
and is subje(5l to all claims against him. His sepa-
rate creditors alone are entitled to dispute the joint
creditors' right, and if they do not exist, or intervene,
no reason prevents the joint creditors from seizing
the money.
I. Two partners become bankrupt. One is indebted
to the other on a contra6l, independent of firm. He
may prove against the separate estate of the other, if it
is clear that there will be no surplus of his separate
estate for firm creditors. The liability of a partner
prevents his proceeding against his co-debtor and ex-
hausting him while the creditors of both are unsatis-
fied. Ex. p. Topping 4 D. J. & S. 551 (1865).
§200.
tDI)erc one partner lias boiicil)t out l]is co-partner, tl^e firm
crebitora ma^, bg substitution, become l)is separate creditors
upon tl)e agreement of purcl]ase.
A sells out to B, who gives his bond for the price
and covenants to pay the firm debts, B fails, and A
assigns his separate estate to pay the firm debts. The
assignee cannot sue on the bond, unless the firm cred-
577
§203. Marshalling Assets. Pt. 3, Ch. 6.
itors give up the joint estate. The assignee repre-
sents the joint creditors. They cannot come on the
separate estate of B. They are entitled to the firm
assets in the first instance, but they cannot have both
the firm assets and the price. The firm creditors are
excluded from the separate estate, unless they are con-
verted into separate creditors by accepting the assign-
ment of A, as a substitute for, or in satisfadlion of the
firm liabilit}'. They might make such a novation,
and then they would be separate creditors of B upon
the contradl of purchase, and might, like any other
separate creditors, come in on the separate estate of
the purchaser, B, whose indemnity and obligation to
pay the price are part of A's separate estate.^ The
creditors could not ele6l to be separate creditors, and
not joint. It is not a matter of ele<5lion; but the as-
signment might be accepted as a substitute, and in
the assignment was the claim against B. The sub-
rogation is to this separate claim of A against B and
his separate estate.
The firm creditors can enforce by subrogation the
covenant of indemnity in addition to the obligation
to pay the price." In the covenant of indemnity is
B's original liability to pay the firm debts in another
fiyrm, but the change of form corresponds to a change
in substance. B's obligation to pay the firm debts has
become his separate liability to A, which the firm cred-
itors may enforce by virtue of their substitution to A's
rights. Take a case for illustration : The firm liabili-
ties amount to $50,000, the firm assets to $5 ,000. The
price for which B gives with covenant of indemnity
is $10,000. The amount of A's separate property,
exclusive of his claim on the fund, is $10,000, making
578
Pt. 3, Ch. 6. Marshalling Assets. §200.
a nominal total of $20,000 as the amount of his sepa-
rate estate, which he assigned to the firm creditors.
B's separate debts amount to $20,000. His separate
assets amount to $25,000. As the firm creditors have
adopted the contra6l between A & B, the firm fund
of $5,000 becomes a part of B's separate estate and
must be added, making a total of $30,000. All claim-
ants are now separate creditors of B, and the claims
against his estate are as follows: i, His original sep-
arate creditors, $20,000. 2, The claims of A, which
are now enforced by the firm creditors, and are classi-
fied under two heads: <2, $10,000, the price of A's
interest in the firm. ^, His claim for indemnity,
^20,000, making a total indebtedness of $50,000,
which would give a dividend of 60 per cent, to both
sets of separate creditors, giving to B's original sepa-
rate creditors $12,000, and to the firm creditors,
$18,000. The dividend to the firm creditors is in
addition to the $10,000 cash which they received
under A's assignment, and makes a total dividend
upon their special claim of $28,000, or 56 per cent.
The firm creditors have not proved for the full amount
of the firm against the estate of B, but only for the
amount of A's claim against B. If they had claimed
the firm fund and repudiated the contrail between A
& B, they would have been excluded from B's sepa-
rate estate, and have received but $15,000.
I. Transfer by the firm of its assets to partner, bars creditors' equity,
ana partner's transfer for past debt a vatuable consideration. B &
Co., indebted to A & Co., and to others, transferred all the firm stock
and credits to B, who had advanced money to B & Co., and he agreed
to pay its debts. B assigned most of the assets to C, his father, for
a past debt. A & Co., who recovered judgment against B & Co., but
obtained no satisfaction by execution, brought bill for payment out
of assets in C's hands. — Dismissed. Creditor's equity lost with firm's
579
§2()i. Marshalling Assets. Pt. 3, Ch. 6,
equity, by transfer to ]}, and bis assignment for past debt a valuable
consiilera'tion. Wilcox v. Kellogg, il Ohio 394 (1842).
Buffalo City Bank v. Howard, supra ^69, n. 19.
2. Where a continuing partner assumes the debts, his assignee /or
' creditors must apply the assets to the discharge of the firm liabilities
in preference to the separate claims against the continuing parttier,
A was B's son and agent. He lent B's money in his own name to
firm C, D .S: E. D and E sold out to C, who agreed to pay the firm
debts. A, with knowledge of the arrangement, took C's note, and
also lent C other moneys of his own. C made payments on account.
He assigned to 1', for creditors. The deed made no discrimination
between the debts of C and the debts of the firm, but made certain
preferred debts, including the note and A's private advances to C
In consideration of F's assigning to A, and of C's satisfying the gen
eral creditors, A re-established C in business, and bought up all the
preferred claims. A assigned to D, as security, an undivided inter-
est in the claim thus consolidated against C. I) & E were also in-
cluded among the preferred creditors. A purchased their claim, and
in consideration of a discount, released them from all the firm debts,
B was unknown, and A was considered principal in all these trans-
actions. B applied the assets to payment in full, of all his expendi-
tures in the purchase of claims under agreement, and applied C's
partial payments in discharge, not of the note, but of his total loan
prior to C's failure. A sued D & E, as B's executor, on her claim.
Defence : D and E, by the sale to C, became sureties to the fund which
A was bound to apply in discharge of their liabilities. The release
by A included D and E's debt to B. — ^Judgment for D and E. C's par-
tial payments should have been applied to the earliest of the claims
which A represented, thus reducing the note. A, as holder of the
fund, was bound to apply it in discharge of debts for which D and E
remained liable in preference to A's original or purchased claims
against C alone. Chapman v. Thomas, 4 Keyes 210, N. Y. (1868)
§201.
Partners ran not compete niitl] firm crebitors in enforcinj
flainis betiuccn tl)emsel»es; but mail compete u)itl) otl)er eeparati
erebitors.
The equity of a partner, on a balance of account, tc
be reimbursed his over-advances to a co-partner is not
an independent claim, and, as against firm creditors
gives the creditor partner no standing as a separate
creditor.* He could rank as a separate creditor onl}
when all the firm debts were paid. Until they wen
I
[Pt. 3, Ch. 6. Marshallincx Assets. §2oi.
satisfied, he would have no equity or claim against
his debtor co-partner. The right of the partner comes
jminto existence only upon the satisfa(5lion of all the firm
creditors ; it springs out of their ashes.^ But when the
firm creditors are satisfied, then the partner has a lien
upon the firm fund for his advances, and may enforce
his right against the separate creditors of the co-
partner.' If the firm fund will not satisfy the part-
ners' claim, they may prove against the separate
estate of their co-partner.*
1. Partner cannot prove against co-partner's separate estate for over-
advances until finn creditors are paid. B & C, partners, failed, and
A was made assignee in bankruptcy for firm and separate estates. B
had advanced to the firm f 20,000 in excess of C's contributions. C's
separate estate was sufficient to pay his creditors in full. The firm
estate would pay 40 cents on the dollar. Thereupon A asked per-
mission to prove against C's separate estate for the amount of this
claim, on an equal footing with the separate creditors, and to distrib-
ute the dividend thus obtained amongthejoint creditors. — Disallowed.
B could not be a creditor on firm account until all firm creditors were
paid. In re McLean, 15 Nat. B'kr'cy Reg. 341 (1876).
2. Pariftcr ivho has paid all firm creditors may prove against co-part-
ner's separate estate. B having paid all the debts of B & C, offered
to prove for balance of partnership accounts against C's estate, in
competition with separate creditors. — Proof allowed. Ex parte Tay-
lor, 2 Rose 175 (1814).
But there is no rule of law which prevents the wife
of a partner competing with other firm creditors, if the
firm is indebted to her separate estate.
Wife may compete with husband's firm creditors. A advanced
^500 from her separate estate to her husband, B. Firm B & C used
and gave promissory notes for it. A proved against firm. — Allowed.
Statute 45 & 46 Vidl., c. 75, s. 3, which excluded wife's proof, if loan
to husband for trade, or business carried on by him, or otherwise, did
not applv, if husband used the monev as a partner. In re Neff, 19 Q.
B. D. 88'(iS87).
3. Security to a partner for firm debt not a fraud on subsequent individ-
ual creditors. B coutradled to build a culvert, but couldn't raise the
money. He applied to C, who refused a chattel mortgage as security,
but went into partnership, contributing cash against B's implements
and tools, which he promised to mortgage as additional security to
C. B misappropriated C's contribution, and C, being unable to ob-
tain security, abandoned the contract. B then undertook the work
alone. A obtained judgment, and attached B's commission under
the contracft, and also brought bill to avoid assignment by B to C. —
Dismissed. B indebted to A on firm account. Stamets v. Quinn, 1 1
C. E. Gr. 383, N. J. (1876).
581
\
§202. MaRvSHALLING ASSETS. Pt. 3, Ch. 6.
4. J^arttiers have a lien on firm fund for the balance due on settlement,
and are also separate creditors of debtor partner for the amount. A,
B ^: C, partners. On settlement of the accounts, C was indebted to
A andB. C, who had possession of all partnership funds, became
bankrupt on petition of his separate creditors. An order was made
to kcej) separate estate of C distindl iroin estate of A, B & C. The
firm fund yielded a surplus, which A and B claimed. — Decree for A
and B, and if the surplus does not discharge C's balance of indebted-
ness, A and B may prove against his separate estate. Ex parte Ter-
rell, Buck 345 (1819).
§202.
^\]t bf bt of a partner to \\]t tirm is not an asset of \\\t ftrm.
What are the assets ? The answer varies according
to the different conceptions which prevail of partner-
ship. In the commercial aspe^l the firm is a distindl
person, who exists apart from the members composing
the union. The accounts are kept with the firm,
which deals as a person with the partners. All debts
are charged up on the firm books, and the separate
accounts of the partners show the balance which
would be colle(5led upon a settlement by the partner
in whose favor the account stood. The commercial
method of liquidation is the simplest, but it ignores
the law which governs the relation. The person by
whom a settlement of the accounts is effedled is a
myth of trade, and does not exist at law. The ac-
counts vanish in the presence of a court, with the per-
sonality in which they centred. A partner cannot, at
law, contrail an indebtedness to his firm, for part of the
debt would be due to himself and the balance would be
due to his co-partners. The claim of the firm is re-
solved into separate claims of the partners, which are
subjedl to the paramount rights of creditors.
582
Pt. 3, Ch. 6. Marshalling Assets. §202.
The Scotch plan lets the firm colledl a debt due it
by a partner, subjedl to a set-off of his share of the
claim, but does not let a partner colledl a debt due
him by the firm.'
Why is the right all on one side? and why have
the partners no right against the firm ? The explana-
tion of the anomaly lies in the several liability of the
partners. Liable to the extent of their individual re-
sources for the debts of the firm, they can recover
nothing from it, and must contribute to pay its debts.
This is the legal theory of partnership. The partner
who seeks to collect his debt from the firm is met by
the joint creditors' right to collect their debts out of
his separate estate. The debt which he reclaims for
his separate estate is in their possession. He cannot
take the fund away from them, and it will be appro-
priated according to their legal right. The right and
possession coincide. He has an equal right, but the
title is vested in them."
If the amount which a partner owes a firm may be
colle6led by it, in order to marshal its assets, the
right of set-off by him of a co-partner's debt does not
affe6l the firm creditors. They are paramount claim-
ants, and override the domestic claims of the partners
between themselves. The right of the firm to collect
a debt from a member, if once recognized, establishes
the firm creditor's right, and he may disregard the set-
offs between the partners, and colle61: the full indebt-
edness from each partner, though the firm itself is
entitled only to the balance after dedu6ling the coun-
ter-claim. The asset is firm property, and not sepa-
rate estate, however much the prospe(ft of realizing
separate estate out of the partner's interest, is dimin-
5£3
k
'■202. Marshalling Assets. Pt. 3, Ch. 6.
ished by excluding a set-off. The interest of a partner
is his share after all firm debts are paid. He could
not acquire separate estate by virtue of his interest
while any firm debt remained unpaid. The partner's
equity does not refer to an adjustment of accounts by
the members, but applies to a diversion, by either
partner, of firm assets. The members can restrain
the misapplication of joint funds to any purpose which
is foreign to the firm business. But the joint creditor
needs no equity to resort to firm assets, as they con-
stitute the normal funds to satisfy his debt. He may
even exhaust the partners' separate estates, and it is
only the independent right of a separate creditor
which can prevent his recourse to them. It is only
separate assets, which have not come into the firm,
that the separate creditor can claim. As to property
belonging to the firm, the separate creditor has no
standing, either to claim or interfere with it.
Take an illustration : A & B are succeeded by B
& C upon A's death. A was indebted to A & B
$12,000; B was indebted to A & B $36,000. B & C
reclaimed money lent to A & B. If the claimants
sought to treat A's debt of $12,000 as an asset of his
firm, could it enforce its collection until B had paid
his debt of $36,000? Could not A's representative
set off this debt against $12,000 of B's debt, and claim j
that A owed his firm nothing? If the common mem-
bership of B in both firms would prevent any recovery
against his separate estate, the answer is, that, under
McCormick's Appeal, what he owes his firm is joint^
or partnership, assets, and not his separate estate. It
is not the balance after deducing w^hat A owes the
firm ($12,000), that is $24,000, but both debts of the
584
I
Pt. 3, Ch. 6. Marshalling Assets. §203.
partners, or $48,000, which is the firm asset. If B's
debt could not be colle6led, then A's debt, which in-
volves the same adjustment of accounts, could not be
collected by the firm to repay its debt. Although
McCormick's Appeal makes the debt of each partner
to his firm partnership assets, yet that notion con-
flicts with the refusal of the courts to settle the part-
nership accounts in suits between firms with a common
member. The Scotch plan is inconsistent with the
exclusion of the separate estate, which was based upon
the impossibility of settling the partners' accounts
without a dissolution of the firm.
1. McCormick's Appeal, supra I io6, n. 7, a.
This was originally the English plan, but was aban-
doned, without any explanation, probably, as most
changes in the law occur, by the unconsciousness of the
judge who decided the point, of the previous course of
decision. Lord Blackburn : Read v. Bailey, supra
§ 197, n. 2.
2. Separate creditors can not prove against firm fund for over advances
by their debtor partner to the firin. B & C were indebted to B in the
sum of |i 7,000. Firm assigned to D for benefit of creditors ; likewise
B and C each made separate assignments to D. A, and other separate
creditors of B, claimed a right to prove against the firm estate for the
debt to B. — Disallowed, because B could not compete with firm cred-
itors, and his separate creditors could have no higher right. The
privilege extended to firms with a common member does not apply to
an individual partner. Houseal's Appeal, 9 Wr. 484, Pa. (1863).
§203.
If tl)c surT)it)ing partner toas in^cbte^ to l]is firm, tl)£ nreb-
itors tuouli) not be pre^enteii bij tl)is iuiiebtebness from rollccting
%i\x iJebts out of tl)e beceaseb partner's estate.
They ignore the state of accounts between the part-
ners, and come in upon either partner's estate by a
585
1
§203. Marshalling Assets. Pt. 3, Ch. 6.
title paramouut, which cuts out any mere partnership
or domestic claims. Take the fadls of Laughlin v.
Lorenz (§71, n. 2) : The surviving partner was also
a member of the succeeding firm, which, at request,
paid the prior firm's debts, and was subrogated to the
place of the creditors whom it paid. The surviving
partner being a common member of both firms, noth-
iug but the first firm's assets could be taken to satisfy
the debts, if the second firm claimed payment. But the
creditors were, pradlically, the claimants, and they are
not limited to the firm assets, but may exhaust the
separate estates. The surviving partner's debt to the
first firm was an asset of that firm, which it alone
could collect. The surviving partner, who repre-
sented the firm, did not pay, or make himself pay it,
and his executors did not pay it either. The execu-
tors of the first deceased partner might probably have
an account against them, and enforce the payment,
but no one else could. If the suit had been by the
second firm, no recourse could have been had to this
asset, because it depends upon the domestic account
of the original firm. A final settlement was neces-
sary to ascertain the amount due. Nor could the de-
ceased partner's estate have been compelled to pay the
debt, for the decedent's estate was not less separate
than the debt due to the firm by the surviving part-
ner. This difficulty was overcome by subrogation,
which put the second firm in the shoes of the credit-
ors whom it paid, and gave it diredl recourse to the
separate estates of the partners.
586
Pt. 3, Ch. 6. Marshalling Assets. §204.
§204.
Qll]e exemption at lato of a bccmsei) partner's estate roonlli not
entitle Ijis representative to recover Ijis sl)are from tl)e surniving
partner in competition toitl) creditors.
To put a case: When a partner died, his separate
estate was formerly exempt, at law, from liability
for firm debts. Could his executor recover on a con-
trail that on the death of a partner his share should
be paid him? No; the deceased partner's estate is
liable in equity, and while it continues liable no re-
covery can be had against his co-partners. The lia-
bility for firm debts estops him from taking away,
or diminishing, the joint fund devoted to their pay-
ment. The creditors have the deceased partner's
estate, in addition to the joint fund, but their pri-
ority is limited to the firm assets. They are deprived
of a preference by the amount which the separate part-
ner's estate gets.^ How if the recovery is obtained out
of the other partner's separate estate? Then his sep-
arate creditors are deprived, to that extent, of their
priority. The deceased partner's share is a right
limited to the joint assets. If they were, at his death,
worth $15,000, he would, as one of them, be entitled
to $5,000. Would he be anything but a deferred joint
creditor? After all the joint creditors were paid, he
would be entitled to recover, out of the surplus joint
assets, his share." Suppose there were no joint assets
left; could he proceed against the separate partner's
estate? Not on the ground that the absence of joint
assets entitles a joint creditor to come in on equal
terms with the separate creditors on the separate es-
tates, because there was a joint estate, though it had
587
§204. Marshalling Assets. Pt. 3, Ch. 6.
been exhausted in paying the other joint creditors.
Perhaps the payment of those firm debts before bank-
ruptcy supervened might be considered as leaving no
joint funds, and, therefore, letting the deceased part-
ner's estate come in on the separate estates of his co-
partners with their separate creditors. If the deceased
partner's share was what he was entitled to at the
time of his death, then that amount was due from his
co-partners, and if by their mismanagement the firm
funds were wasted, they ought to make it up, indi-
vidually, and they would be liable to pay out of their
separate estate. The deceased partner would thus be
a separate creditor, and entitled to come in with sepa-
rate creditors. If the share were estimated in advance
and valued at, say, $5,000, then if at the partner's
death there was nothing after the debts were paid, the
co-partners would, nevertheless, be liable in their sepa-
rate estates, because they guaranteed that amount,
and, consequently, were liable for it, and if there was
no joint estate out of which they could pay the amount
the}^ must make it up out of their separate estates.
The bankruptcy rule, being a creature of statute, is
superceded by the enadlment of any lien inconsistent
with it.'
1 . Ai^ree^ncnt between partners is subordinate to firm creditors' claim.
I{, C & D, partners, agreed that on death of one his share should be
paid his estate in instalments. B died, but before payment co-part-
ners became bankrupt. A, executor of B, offered to" prove against
firm fund.— Disallowed. The separate assets in hand may be kept
from the firm creditors, Imt no claims against the firm or a co-partner
can be enforced. The liability of a partner for the firm debts con-
tmues. although his separate estate is exonerated in the first instance.
Nanson v. Gordan, L. R. i App. Cas. 195 (1876).
2. Retiring partner may prove for price of his interest, in competition
with ne-M firm's creditors. B, C & D, partners, agreed, by articles,
^°^*^ o" K's death a part of his capital should remain in the business,
and be secured by bond of surviving partners, to B's executor. After
B s death, C and D executed a bond to A, executor of B, to secure the
588
Pt. 3, Ch. 6. Marshalling Assets. §205.
said sum, and A executed to C and D an assignment of all B's inter-
est, on condition that they should assume and pay the joint debts.
C & D paid all the joint debts of B, C & D, and became bankrupt
A offered to prove against the firm estates of C & D. The joint
creditors of C & D resisted. — Decree for A, who was entitled to a
dividend pari passu with the other creditors of C & D. Ex parte
Edmonds, 4 D. F. & J. 488 (1862).
3. The United States, zvhen a firm creditor, may demand payment out
of partners^ separate estates, without resorting to firm fund. B, C,
D, E, F, G and H, residents of the United States, composed the firm
of B & Co., and, together with I, J and K, residents of England, com-
posed the firm B, I & Co. The latter firm owed the United States
^132,610. B & Co. were adjudged bankrupts, and L, was made as-
signee of the firm and separate estates. The United States, without
first proving its claim, filed a bill against L and the members of B &
Co., to subjedl the separate estates of the seven partners to the pay-
ment of its claim as a preferred debt. The bill did not aver that B,
I & Co. were insolvent ; the answer averred that such was not the
case, and, furthermore, that the United States was amply secured by
collateral. — Decree for the United States. The government has no
claim on the joint fund of B & Co., but may enforce its priority
against the separate estates of the resident partners, who, being prin-
cipal debtors upon the liability of B, I & Co., can not require the
United States to resort to its collateral, or to the solvent estates of
non-resident partners. United States v. Lewis, 13 Nat. B'kr'tcy Reg.
33 (1876).
§205.
^ common member furnisl]es no basia for marsl)QUmg X\\t
assets of different firms.
At Common law, when two firms with a common
member became liable for the same debt upon inde-
pendent contrails, for example, as drawers and ac-
ceptors of commercial paper, or as principals and
guarantors, the creditor has a separate a(?tion against
each firm, and might have judgments successively
against both, notwithstanding the fa(5l that by this
procedure judgment was a(51:ually entered twice against
the common member for the same debt.' The reason
of this rule is founded on the notion of a joint con-
tradl, which was regarded as something impersonal
589
5205. Marshalling Assets. Pt. 3, Ch. 6,
distindl from the individual promises of the co-debtors
(§91). The promise of the common member, to-
gether with his co-partners in one firm, was the basis
of an independent obligation, distin(5l from his prom-
ise to pay the same debt made in conjunction with
his co-partners in the other firm. Although by this
means two judgments might be obtained against the
common member for the same debt, and execution
might issue against the property of both firms, or
either of them, there could be but one satisfaction.
The same rule applied where there was a promise by
a firm, and the additional and subsidiary promise by
one, or more, individual members of the firm, or vice
versa.
The question arose in bankruptcy, in the form of
an attempt to make double proof. Although double
proof was allowed in conformity to the creditor's legal
status, equity controlled the exercise of the legal
right, and compelled the creditor to eleCl, and gave
him a dividend only out of a single fund.^ , This is
but a different application of the rule of marshalling
assets between the joint and separate creditors of a
firm. The only difference is in the matter of eleClion.
The joint creditor, who is nothing else, has no elec-
tion, and is confined to the firm fund, although the
individual partner is ultimately liable in his separate
estate for the joint debt. But in the case under dis-
cussion the joint creditor, in addition to the firm obli-
gation, has a formal independent promise of the part-
ner, either alone or in conjundion with a third person.
Yet the common partner was the controlling faClor
m the reasoning by which Courts of Equity arrived
at the dodlrine of eledion. If double proof were ad-
590
PT. 3, Ch, 6. Marshalling Assets. §205.
mitted, Equity, it was supposed, could not disregard
the fa(5l that the creditor held two funds of the same
debtor as security for his claim, and that there were
different sets of creditors respectively claiming these
funds. Equity, therefore, it was thought, would be
compelled to marshal both funds with respe6l to this
common claim. If this were not done, it would be
impossible to ascertain the equitable portion which
each fund should contribute to pay the common claim,
and the common creditor might, by proving against
both funds, have his claim paid in full, while the
creditors of the different funds received only a divi-
dend, although creditors of the common partner
equally with himself. This marshalling of the as-
sets was impossible, because the creditors of the dif-
ferent funds stood upon no common basis. An
equitable division of the common creditor's claim be-
tween the two funds was impossible without a uniform
rate of dividend, and a uniform rate was impossible,
because there was no single fund to distribute among
all the creditors.
When courts of Equity found that there could be
no marshalling of the two funds, with respe6l to the
common claim, they compelled the common creditor
to ele6l which fund he would pursue.^ The ele(5lion
was not the consequence of any equitable principle.
It was an arbitrary rule, which deprived the common
creditor of his legal right. The creditor of one fund
was enriched at his expense, without any correspond-
ing relief to the creditor of the other fund.
The Bankrupt A(fts of England* and of the United
States^ have changed the pra(5lice, by giving promi-
nence to the presence of the other partner, who is not
591
§205. Marshalling Assets. Pt. 3, Ch. 6.
a common debtor. These statutes allow double proof
in the cases under discussion. The statutes do not
apply where the double obligation is purely nominal,
that is to say, where the same persons are trading
under different firm names, and although the contradl
seems to express the promise of two distin6l firms, it
is, in reality, nothing but the double promise of the
same individuals/'
At the present day, in America it is unnecessary to
recur to the notion of a joint contrail in order to
make available the creditor's right against the funds
of both firms in an a6lion at law. He might get
judgment against the partners in one firm, and then
bring an adlion against those partners of the second
firm whom he had not sued as members of the first
firm. His judgment against them would enable him
to take the assets of the second firm in execution.
I. "At Common Law, where no bankruptcy intervened,
" if a man had a claim for ^100 arising out of a contradi
"in which two firms or two sets of persons were con-
"cerned, one individual being common to both firms,
"as, for instance, if a firm consisting of A & B drew
" on a firm consisting of B & C, there is no doubt what-
"ever that the man would have had his adlion against
" A & B as drawers, to recover his ;^ioo, and his adlion
"against B & C as acceptors ; and if he recovered judg-
" ment upon either one or other of those, he could have
"levied his execution against the estates of both the
"contracting parties, and the faCt that one of the con-
"tra6lin<( parties who had contradled, say as acceptor
"of the bill, was also a person who had contracted as
"drawer for the same sum of money, would have had
"no effecl upon his right to issue execution against the
"estate and property of the firm B & C, who had ac-
" cepted the bill." Lord Blackburn, Read v. Bailey,
supra § 197, n. 2.
592
_ffi
Pt. 3, Ch. 6. Marshalling Assets. §205.
2. In bankruptcy, ' ' Though there might be proof
"against each of the estates, yet there was not to be
"a dividend received from each of those estates; the
"creditor must eleS: which he would go against. '■
"Where there are not two separate firms (made distin6l
' ' persons by the bankruptcy a(5ls) the old (bankruptcy)
"rule would remain untouched that the creditor must
"eledl which estate he would go against." Ready.
Bailey, supra § 197, n. 2.
3. Deceased partner'' s executor may prove against firm, if firm cred-
itors disclaim proof against his separate estate. A, in partnership
with executor of his brother B, trading as A & B, dissolved in 1875,
and died in 1S78. B's executor coutiuued under old name. No
debts of the firm of which A was a member were presented, except
beneficiaries of B, who proved against executor, who continued busi-
ness, aud disclaimed proof against A's estate. A's executor proved
for his contribution, which he left as a loan. ObjecSlion, because co-
debtor with B's executor for the debt to B's beneficiaries. — Allowed.
Proof would clearly stand until beneficiaries proved against A's estate.
Andrews v. Wilcoxon, 25 Ch. D. 505 (1884).
4. The Bankrupt Adls of 1861, § 152, and of 1869, §37,
provide for contradls by two firms or by an individual
and a firm. The language is : " Firms ^ in whole or
"in part composed of the same individuals " or a ' sole
"contractor' who is also one of the joint contractors."
- "One firm," said Lord Blackburn, " is A, B & Cand
" the other is A & B. There * you may say that firm
" A & B 'in the whole ' formed part of the firm A, B &
"C."
Lord Cairns : "Whereas formerly there would have
"been a right on the part of a creditor to come and
"say — I will prove against C for the debt which he has
"contracted, and I will come upon C's estate, and I will
"prove against A's estate for the contraCl which A en-
" tered into — and where the rule of bankruptcy to which
" I have referred said, Though it chances that B is com-
"mon to each of these contraCts, though B is a con-
" tra(5lor with A in one contraCl, and B is a contractor
"with C in the other contraCl, yet you shall not come
"upon the estate of both A and C, you must eleCl
"which you will take, the Legislature by these enaCt-
"ments said, The faCt that the firms with whom you
"have contracted have a partner in common, or are in
"whole or in part in common, shall no longer prevent
"your proving against both." Read v. Bailey, supra
% 197, n. 2.
593
|2u5. Marshalling Assets. Pt. 3, Ch. 6.
' ' There may be another case : A, B & C may be trad-
"inj^ as one firm, and the whole of those may not be
" fonnd in the other firm, only two of them or only one
•'of them may be fonnd in the other firm, that wonld
"come nnder the words 'in part.' There may be,
"thirdly, the case of a sole trader, who is found also
" trading; in a firm with other persons. " Read v. Bailey,
supra % ic^-j, n. 2.
If tlie common member of two, or more, firms is him-
self the only connedling link between them, he cannot
join their respedlive transactions in a single account.
A common member cannot include the transa^ions of successive
finns in a single account. A, partner in A & Co., composed succes-
sively (i) of himself, and sub-firm, B & Co., composed of B, C, D &
E; (2) of himself and sub-firm, B & Co., late B, C, D & F; (3) of
himself and sub-firm C & Co., composed of C, D & F. A brought
bill against all his present and past co-partners, alleging that each
sub-firm had defrauded him, and that the accounts had been kept
continuously. Defendants demurred, because bill multifarious.—
Denmrrer sustained. Each combination formed a new firm, and the
business of each firm was a distincfl transacflion. Sanborn v. Dwinell,
135 Mass. 236 (1883).
5. " When the bankrupt at the time of the adjudication is liable upon
"any bill of exchange, promissory note or other obligation in respe(5l
" of distinct contracts as a member of two or more firms, and carrying
"on separate and distin(5l trades and having distinct estates to be
"wound up in bankruptcy, or as a sole trader and also as a member
"of a firm, the circumstance that such, firms are in whole or in part
" comjjosed of the same individuals or that the sole contraAor is also
" one of the joint * contra6lors shall not prevent proof and receipt
"of dividend in respect of such distindl contra6ls against the estates
" rtspecftively liable upon such contradts." U. S. Rev. Stat. ^5074;
Adl of March 2, 1867, ch. 176, I 21.
6. Partner' s firm canH prove against agent doing business for part-
ner or undiscovered principal. A & B traded as A & Co. A trans-
adled the business in England, and B in Canada. A established E in
business as E} & Co , advancing him money and selling him goods.
B ascertained relation and ratified it. Upon bankruptcy of both
firms, A & Co. proved for ^7,490 115. "jd. against E & Co. — Disal-
lowed. A undisclosed principal of E, and could not prove against
himself. In re Wakeham, 13 Ch. D. 43 (1884).
Firm creditors 0/ bankrupt share his English estate only after de-
dueling dividend received abroad. B traded in England as B & Co.,
and in Brazil, as B, C cSc Co. A, holder of B, C & Co. 's drafts, accepted
by B & Co. upon the bankruptcy of B, proved against B, C & Co. in
Brazil, and received a dividend. lie then proved in England. — Enti-
tled to share with English creditors, only after deducing dividend
received from debtor in Brazil. Ex parte Wilson, L. R., 7 Ch. 490
(1872).
Double proof inadmissible where all the partners of one firm are
members of another. B & C, partners in England, and B, C & D,
partners in Brazil, dealt with each other. B, C & D, drew on B & C,
in favor of A, who thought the firms were distincfl. B & C accepted
.594
Pt. 3, Ch. 7. Account. §206.
draft. Both firms became bankrupt. A proved in Brazil against B,
C & D, and received a dividend. He claimed the right to sue B &
C in England, on the ground that after paying the debts the surplus
of neither fund would go to the other. — Rejedted. Goldsmid v. Cos-
grove, 7 H. L. 785 (1859).
Lord Cairns' argument, based upon the Bankrupt
Adls, was this : The surplus would go to the individual
partners, B, C & D. The shares of C and D would not
belong to them as partners in the firm of C & D, but as
individuals, and would be the separate estate of B and
of C. The creditors of B, C & D would not take both
the joint and separate estates of their debtors within the
bankruptcy rule. They would not even take the joint
and separate estates as independent securities under the
practice which allows both to be pledged to a creditor
by express engagement, apart from the implied liability
incurred by partners on a contra(5l made in the trans-
adlion of firm business. They would simply take two
joint, but diflFerent, estates in satisfadlion of their claims.
The result would be the same if the order of proof had
been reversed, and a dividend had been received from
B & C. The surplus would not go to the firm of B, C
& D, but be divided between B and C as individuals.
It would become the separate estate of B and of C.
-O
CHAPTER VII.
ACCOUNT.
§20(5.
®l)e account is an epitome of tlje partncrsl^ip.
The nature of the account corresponds with the
business undertaken by the partners. The account
involves a settlement of all the transactions of the
firm from its commencement. The principles which
595
§2o6. Account. Pt. 3, Ch. 7.
govern the partnership relation are summed up in
the account, and furnish the rules for adjusting the
differences between the partners. The account, there-
fore, is nothing but the application of the principles
already laid down under the different heads of this
work.
All the transadlions of the firm are upon joint ac-
count, and present no clear line of cleavage by which
can be ascertained the rights or liabilities of a partner
as against his co-partners in each case. Moreover, no
single adl stands alone, but each is bound up with all
the preceding and subsequent transadlions of the firm.
Before a partner's standing as a creditor, or debtor, of
his co-partners can be ascertained, it is necessary to
resolve ever}'- transadlion into its constituent parts,
and establish the position of each partner as debtor,
or creditor, in respe(?t to that transaction, and the
amount of his debit, or credit. A balance taken of
the aggregate of these debits and credits will fix the
standing of each partner as debtor, or creditor, of
each of his co-partners, and the amount to which he
is entitled upon distribution of the common fund, if
there is any.' The necessity for resolving the firm
transa6lions into their constituent parts is due to the
fa(51: that the form of the transa6lion between the part-
ner and his firm does not correspond to its charader.
For example, a partner in a firm of three nominally
borrows $1,500 from his firm, but, in fad, he borrows
from his co-partners $1,000, or $500 apiece. A loan
to the firm would be subjed to a like analysis. A
summary of these analyses is the firm account. The
necessity for the account arises from the fad that it
IS the only process which can be made co-extensive
596
Pt. 3, Ch. 7. Account. §207.
with the business, and can e£fe6l a full settlement of
all its transa6lions."
1. Account gives defendant-partjier every advantage he could obtain by
a cross-bill. A brought partner's bill for account. B filed cross-bill,
charging false entries by A; his conversion of firm funds to his own
use, and his buying up claims against firm at 50 per cent, since re-
ceiver had been appointed. A demurred. — Sustained, and cross-bill
dismissed. B could set up, by way of defence to the original bill, all
he seeks by cross-bill. Johnson v. Butler, 4 Stew. 35, N. J. (1879).
2. Partner cannot me co-partners on a firm transaRion without account.
A sued his co-partners, B and C, for collusive settlement of firm claim
for less than its amount. Defence : Account necessary to show A's
interest. A obtained judgment for his aliquot share of the loss. — Re-
versed. Sweet V. Morrison, 7 E. Rep'r 389, N. Y. (18S6),
Murra}' v. Bogert, supra ^ 171, n. 2.
Purchase of partner's share may get his advance by settlement, but
can't carry on business. A enjoined B, who, at first, advanced A's
co-partner, C, and tlicn bought him out, and excluded A from busi-
ness. B claimed stock at valuation and right to carry on business at
mill. — Stock delivered to him and business closed up, receiver stating
account. Wolbert v. Harris, 3 Hal. Ch. 605, N.J. (1849).
§207*
^\\z basis for \\\t acrount is tl)c ^oint propcrtri or estate of \\\t
partners, tl)eir responsibilitp for tl]c obligations of t[)e firm, anb
tl]e c|oob faiti) required m its transactions.
The contribution, with its inherent increment, re-
verts to the contributing partner. The property of
the firm starts with the contributions of the partners.
The theory which fixes the character of the contribu-
tion determines the questions arising in reference to
the reimbursement of the capital, and to the payment
of interest upon it.^ If the contribution remains the
separate property of the contributing partner, in spite
of the fa6l that the firm holds the legal title during
the continuance of the partnership, his co-partners
incur no liability to make good the firm capital in
597
§207. Account. Pt. 3, Ch. 7.
case it is lost or impaired. The contribution was at
his own risk. He cannot claim interest, since he looks
to the profits for a return upon his capital. Under any
theory the contribution is always returned before
there can be a distribution of the assets.
The partner contributing fungible property can re-
claim only a like amount. A partner contributing
specific property recovers it in specie, together with
any enhancement which has not resulted from the
intervention of the firm, subjedl to a deduction for any
improvements made, or value conferred through the
agency of the firm.
The profits are a part of the joint property, and
must be included in the account.^ Of course, no
partner is deemed to guarantee the earning of profits
to his co-partners ; nor is he, in general, to be charged
for not producing them. But the managing partner
is bound to show why no profits have accrued. If he
refuses to do this, there arises a doubt as to whether
the want of success was not due to his own culpable
mismanagement or neglect, which would form the
basis of a debit against him.'' On the other hand, one
partner may guarantee to his co-partner a certain
share in the profits. These agreements will be sus-
tained and enforced in the account.'^
I. Creditors may compel payment of contribution by special partner.
B was special partuer, and C & D general partners. B never paid in
his capital. Firm failed, and C & D assigned to A for creditors. A
brought hill against B to compel payment of capital.— Decree. Un-
P^ijl contribution a common fund, which partners or creditors may
colledt, especially as it would be exhausted in payment of debts.
Robinson v. Mcintosh, 3 E. D. Smith 221, N. Y. C1854).
Partners' quotas preliminary to account, and one's answer to co-
partner's bill stating them prima facie evide?ice. A brought bill for
settlement against B & C, alleging that the three were equal partners.
B admitted partnership, but denied equal shares, claiming 4-9 and
conceding A 2-9. — Answer responsive, and fixed quotas. Eaton's Ap-
peal, 16 Sm. 483, Pa. (1870).
Hartman v. Woehr, supra 'i 19, n. 8.
598
Pt. 3, Ch. 7. Account. §208.
2. Whether vioney piil in a concern is a loa?i or a contribution is settled
by mortgage subsequently created for the sum. B, proprietor of a
patent, applied to A, who advanced ^1,000 to develope it. No se-
curity for loan, nor any arrangement for payment of principal or in-
terest. They took a joint lease of premises, and B transacfted business
as B &. Co. A made additional advances, and B & Co. received £(i a
week out of the proceeds of the business. Subsequently, B mort-
gaged his patent to A, to secure his advances. He took a new lease
in place of the original, which they surrendered, and sublet to B. He
became bankrupt, and A proved for his mortgage debt. — Allowed, as
A was, apparently, B's surety, and not his principal. Ex parte Mac-
millan, 24 L. T. 143 (1871).
Contribution a debt of firm, and each partner liable for his quota.
A agreed to furnish the capital, and B his services, for the business,
and share the profits equally. A's administrator sued B for the ad-
vances, but obtained judgment for only half, less firm assets. — Af-
firmed. Debt primarily of firm, and each partner liable only for
half. Turner v. Turner, 5 S. W. Rep'r457 (1887).
3. Continuing business after expiration of term a renewal. A was
dormant partner, for a specified term, with B, who carried on busi-
ness in his individual name. A's capital was not refunded at expira-
tion of term, and B continued the business. A brought account for
profits made after expiration of term. — Entitled, because continuing
the business was a renewal. Parsons v. Hayward, 4 De G. F. & J.
474 (1862).
4. Managing partner bound to prove why he didn't make profits. A
was partner with B, her brother-in-law. A furnished fixed capital ;
the floating capital was raised on joint credit. The losses were to be
shared equally. B had exclusive management of business, and agreed
to devote his utmost exertions to make it profitable. Business was
apparently successful, and ended by mutual consent. A brought bill
for account, and claimed profits, or proof that profits could not be
made. — Maintained. B not exonerated by showing amount received,
amount on hand, and expenditures, with proof of general integrity,
but bound to show why he had not made profits. Stidger v. Rey-
nolds, 19 Ohio 351 (1841).
5. Grant v. Bryant, supra I 35, n. 2.
§208.
|3rioritp upon bistribution is gicm to abBances anb improDc-
mcitts.
An advance made by a partner to his firm is assimi-
lated to a loan, but, as it is impossible to isolate the
a6l from the other transactions of the firm, and
hence there is no legal process to recover the loan,
599
I
§2o8. Account. Pt. 3, Cii. 7,
the advance must remain in the firm until dissolution,
and be included in the account. By reason of its
charadler as a loan, the advance is repaid before any
distribution of profits or of capital/ This priority of
an advance over profits and capital is called tlie lien
of the lending partner in reference to the claims of
his co-partners and their separate creditors." The
advance carries interest at any rate agreed upon, and
is not obnoxious to the penalty of usury, because his
quota of the sum advanced, and interest, is necessarily
at the risk of the business.^
.V withdrawal is the converse of an advance. Any
property of the firm in the hands of one partner,
either by way of detention of profits or of withdrawal
of capital, is an item of debit against h.im.^ The with-
drawal may occur with the knowledge and consent of
the co-partners, or it may be an unauthorized conver-
sion of firm property.'^' If a partner is entitled to with-
draw his annual living expenses, but fails to do so
during any year, he can not claim a credit for the
amount in the account.'' The firm has no lien on the
separate estate of a partner for sums unlawfully with-
drawn by him, but such sums are a preferred charge
on his interest in firm property.'^ If one partner with-
draws his whole share, the other partner may claim
interest on his capital and profits left in the business.**
I, Partner's advances payable out of firm assets at aHual value. A,
for 1-3 interest, contributed land, and B money, for 2-3 interest, and
subsequently made advances. B, who held title to land, conveyed
whole property of firm to a corporation, organized to carry on busi-
ness, for 6,000 shares of its capital stock. A claimed 1-3, subjedl to
an account.— Entitled to 1-3, less his proportion of advances, esti-
mated in stock at acSlual, not nominal, value. Cheeseman v. vSturges,
6 Bosw. 520, N. Y. (i860).
Partner's lien for advances. B & C, partners, in 1876, for 3 years.
B contributed the use of his ])lates and option to buy them at valuation
of ^92,769. 17, for a 2-3 interest, C contributed the stock of a publishing
600
1
Pt. 3, Ch. 7. Account. §208.
business, 31129,519.87, for 1-3 interest. C indebted at the time, in the
aggregate 1:62,750.82, to 20 different creditors, among them P., ^15,050.
Articles provided, less current expenses, for payment at dissoluticn of
C's debts, and for equal division of the surplus assets between B <S: C.
Profits, 129,990.87, divided during the term. At expiration, assets
available for creditors were |i8,i 10.61. But B had advanced ;5^6,556.6i
to C, for his creditor, and claimed a preference for this advance, with
interest. He also retained assets to pay his debt of |i5,05o in full.
Ketal., creditors of C, brought bill to enforce the articles. — Decree. A
/>;'ora/'a distribution awarded amongC's creditors, B included, afterE's
lien for advances had been satisfied. Zell's Appeal, i Am. 532 (1886).
Wood V. Scoles, supra ^35, n. i
2. Partner may folloiv stock diverted by co-partner. B, without A's
knowledge, sold out their joint stock in Mo., and took the proceeds to
Cal., where he carried on business. A went after B to recover his
share, took a note for part, and attached B's stock for the balance. C,
who sold merchandise to B, knowing nothing of A, intervened, and
denied A's right. — Judgment for A. B's a(5t a dissolution of Mo. part-
nership at A's eledlion. C, therefore, B's separate creditor, and A en-
titled, if not to a preference, at least to a claim as a creditor. Strong
V. Stapp, 15 Pac. 835 (1887).
Hill V Beach, supra \ 165, n. i.
3. If partnership deed is alleged to be part of usurious scheme, thefaH
must be proved by verdiH. A & B agreed, by deed, to be partners for
10 years. A advanced ^20,000, and B covenanted to provide an equal
amount, to pay A ^2,000 a year out of profits, or capital, indemnify
him against loss, and repay ^"20,000 at end of term. B had exclusive
management of business. At expiration of period, A sued B for
^20,000, and interest. Plea, that deed was executed as part of a
usurious agreement. — Usurious scheme, though averred, was not
found as a fa6l by jury, and was, therefore, ignored. A was liable,
as a partner, to third persons, under the deed, and was also a partner
with B, though not liable to him for contribution to pay firm debts.
Gilpin V. Enderby, 5 B. & Aid. 955 (1822).
4. Buckingham v. Ludlam, supra </ 165, n. 3.
Partner, if stakeholder for co-partners, must pay interest if he uses
the joint funds. A held firm money pending account between his
co-partners, B and C; each notified him not to pay over to the other.
Master charged him interest on this balance. — Sustained. If money
held in readiness to pay B and C as soon as they settled the account,
no interest ; but A used it, and must pay interest for use. Coddington
V. Idell, 3 Stew. 540, N. J. (1879).
5. Fraudulent vendee of co-partner proper party iji account. A sued
B for injunction and receiver, and fraudulent sale of firm property to
C, and made C co-defendant, who denied fraud and objecfted that his
joinder introduced new cause of action and made complaint multifari-
ous. — Decree: If sale set aside, must account with the partners.
Webb v. Helion, 3 Rob't 625, N. Y. (1864).
6. Living expenses. Articles permitted A to withdraw from firm what
was necessarv for his private expenses. In settlement, A sought to
charge firm with rent of a house owned and occupied by himself dur-
ing continuance of partnership, and with the cost of furnishing it. —
Disallowed. Question not what is required for A's maintenance, ac-
cording to his station. His claim limited to current expenses, so far
as his private means were insufficient. Failure to withdraw in any
601
§209. Account. Pt. 3, Ch. 7.
year proof of ability to maintain himself. Stoughton v. Lynch, 6
Johns. Ch. 467, N. Y. ( 1815).
7. If partnership denied, no ifijunnion to 7-estrain alienation of land
' bought -with alleged Jinn funds ; Partner no lien for a withdrawal.
A & n nianufadlured j^as in partnership. B, who had no means, and
was, in fact, insolvent, bought lands, and put the title in C, his wife's
naTiic. He died, and A enjoined C from disposing of the lands. C
denied purchase with firm funds, and moved to dissolve. — Dissolved ;
because the facl of purchase with firm funds denied. Query : Has A
a lien, as partner, on l?'s individual land, conveyed in fraud of cred-
itors?' General creditor has not, until he obtains judgment, and part-
ner who paid him would stand in his shoes. Holdredge v. Gwynne,
3 C. E. Or. 26, N. J. (1S66).
Land bought with firm funds, and used exclusively for firm pur-
poses, not liable to doiver by widow of partner indebted to firm. B
and his co-partner, who had agreed that at dissolution firm property
should be sold for firm debts, bought land and eredled buildings upon
it for their brass and iron foundry. Creditors recovered judgments
against them, and took the premises in execution. B, who had 1-5
of the profits, died, indebted to the firm. A, B's widow, brought bill
for dower. — Dismissed. B's beneficial interest subjecft to firm debts,
and his possession a technical seizin, which gave wife no right to
dower. Agreement converted land into personal estate. Greene v.
Greene, i Ohio 535 (1853).
8. ftidgment against part?ier who has assigried his interest to co-part-
ner. A enjoined B. A had contributed |6,ooo, and B $2,000, and B
claimed subsequent advance of |3,ooo. On settlement, balance due A
$30,000, and deficiency of assets to pay him f8,ooo. B promised to
make up deficit, and, as he did not, firm dissolved. B assigned his
interest to A, in payment, but subsequently refused to deliver up
assets, on ground that statement, made by him as basis of settlement,
showed A received interest on profits and on interest. — Maintained.
B's interest gone, and allowance of interest on what left in business.
Large v. Ditmars, 12 C. E. Gr. 283, N. J. (1876).
§209,
Z\)t goob-tuill is property anb an asset of \.\)t partnersl]ip.
The good-will of a business is the property of the
firm, since it is the result of the joint labors of the
partners.' If the good-will is sold by a partner, he
must account to the firm for the proceeds. If he has
secured to himself, after dissolution, the exclusive
enjoyment of the good-will, he is charged with its
value in the account." This might arise in various
602
Pt. 3, Ch. 7. Account. §209.
ways ; for instance : When a partner continues the
business of the firm, or where the firm carried on
business upon the premises belonging to one partner,
of which he has become repossessed at dissolution,
he must capitalize the good-will, and account for its
value. This is the condition upon which he may re-
sume the possession of his property. The good-will,
in this respe(5l, resembles the improvements made by
the firm upon the property of a partner.
The Courts will not permit the good-will to be sac-
rificed upon dissolution, and, in order to preserve it,
will, if necessary, compel the partners to bid against
each other for its exclusive enjoyment.*
I. The reputation of the firm remains the common
property of the partners after dissolution. No single
partner has the right to style himself successor to the
late firm. This reputation is not part of the good-will,
and does not pass with it without special agreement.*
a. Partner who has purchased the good-will cannot style himself suc-
cessor to the fir in. Dentists, who pradliced as A & B, dissolved part-
nership, B buying the fixtures and unexpired lease of premises. He
put up a sign: "successor to A & B." A applied to enjoin the ap-
propriation of firm name. — Injun<5lion granted. Good-will of stand
passed, but reputation of firm remained property of both members.
Morgan v. Schuyler, 79 N. Y. 490 (1879).
On the other hand, the partner who has sold out to
his co-partner, including the good-will, may compete
with his former co-partner in the same business, pro-
vided he does not use the late firm name, or style him-
self its successor.^
b. Part?ier selling good-will may compete with firm. B sold out to
his co-partner, A, including good-will, receiving some firm claims in
settlement, and then set up a rival establishment near by, in his own
name. A sent him decov orders, addressed to firm, and enquiring
whether B succeeded them. He filled orders, enclosing his individual
card, but never answered the question. — A's injuniftion refused. B
entitled to compete if he did not use firm name, or style himself suc-
cessor. He might open letters addressed to firm, as he was interested
in firm claims. ' White v. Jones, i Rob't 321, N. Y. (1863).
Parltier selling good-will forfeits price if he tries to destroy the
business. Use of firm name a trade-mark, -vhich passes by sale of good-
will and covenant of seller not to tise rm name. B sold out to A aU
603
§jo9. Account. Pt. 3, Ch. 7.
the assets and the j^ood-will of the firm B & Co., covenanting not to
use the firm name. B took mortgages and notes in part payment.
He started business for himself, imitated the firm names, brands,
bill-heads, cards; held himself out as successor of the firm, and en-
ticed away firm customers and employees, A brought bill to restrain
B's assignment of notes and mortgages, and to have his damages
declared a payment. — Decree. Although the assets and good-will
were sold in the lump, evidence admissible to show value of good-
will and the damages resulting from B's condudl. The right to old
firm name as a trade-mark passed by the assignment. Burkhardt v.
Burkhardt, 42 Ohio vSt. 474 ( 18H5).
If the <^ood-will is assigned to one of the partners, it
inchides the right to vise a trade-mark, even though the
trade-mark be the name of the selling partner f but if
no disposition is made of the good-will, both partners
retain the right to use the firm trade-mark and to manu-
facture and sell under a firm patent,"^
c. If partner's name a trade-mark, it passes with the good-will. Soap
manufaclurer, C, who used his name as a trade-mark for 'Mineral'
and for 'Pumice' soap, formed a partnership with A, contributing,
with the implements of manufacture and the fixtures, the good-will
of the business. Upon dissolution, C sold out all his interest in firm
property and assets to A & B, who enjoined him from trading as suc-
cessor to the firm, — Decree. C's name conne<fted with soap indicated
a formula for its manufacflure, and passed with the good-will of the
business. C might use his name, but not to interfere w ith customers
of A & B. Hoxie v. Clianey, 143 Mass. 592 (1887).
d. Trade-mark or patent for firm business part 0/ good-will, which
each partner may use if undisposed of on dissolution. A & B, who
had manufactured fanning mills at X for ten years, dissolved, each
taking part of the stock and implements of manufaclure. A enjoined
B from manufacfluring and selling the mills with an improvement
which lie had {)atented during the continuance of the firm, and the
name of which he called his trade-mark.- — Dismissed. Improvement
a part of good-will, and, being undisposed of, each might manufacfture
and sell it. provided he did not charge the other by his transacflions.
Smith V. Walker, 57 Mich. 459 (1885).
2. Continuing partner must account to the firm for full value of good-
will. B excluded A from firm, and continued the business himself
A brought bill for account of profits and good-will. — Decree. A re-
covered his share of the profits and one-half the value of the good-
will, which was appraised at fgoo. Sheppard v. Boggs, 9 Neb. 257
(1879)-
3. vSlemmer's Appeal, supra \ 180, n. 5.
I^etiring partner has no right to appropriate the good-will. A was
publisher and B the editor of a journal, styled 'Household Words.'
B dissolved, and announced, by advertisement, that Household
Words would be discontinued, and that he had transferred himself
and all the editorial staff to a new journal, the publication of which
he was about to begin, entitled All' the Year Round. A enjoined B
from announcing the discontinuance of Household Words. — Injunc-
tion continued. B was ordered to limit the announcement to his own
retirement. Right to use the name Household Words was ordered to
be sold on firm account, and brought ^3,550. Bradburv v. Dickens,
27 Beav. 53 (1859).
604
.
Pt. 3, Ch. 7. Account. §210.
§210
^11 payments mabt in Mscljarine of firm obligations are items
of trciiit, citept obligations r.r delicto^ in u)l)icl) tl)e partner
ilainiing tl)c crc^it luas an accomplice.
The obligations of the partners for a6ls done in the
course of the business may arise either from contrails
or from torts. The liability incurred by a partner on
the contrails of the firm is not necessarily an item of
credit in the account, unless he assumes the obliga-
tion to pay the entire debt.' The account implies the
previous discharge of firm obligations.' An outstand-
ing debt, unless assumed by one partner, is no part
of the account between them, because, while each is
liable for his quota, no partner has paid his part of
the debt. If, however, a partner has subje(51;ed the
firm to contra(5lual liability by an unauthorized a6l,
and the obligation has been discharged with firm
funds, the item is properly a debit against the part-
ner's share. The same thing is true where the firm
has been made responsible for the tort of a partner,
and has paid the damages. If the co-partners were
accomplices in the tort, no partner will be debited with
any portion of that outlay.
If one partner has been compelled to pay a debt of
the firm, whether arising ex contractu or ex delicto^
his disbursement is an item of credit to him in the
account, and is, in facft, an advance.' Compensation
for services is, of course, not allowed as a credit, with-
out an express agreement,^
If, however, the partner who paid out of his separate
estate the damages recovered against the firm in an
acftion ex delicto was himself privy to the tort, he
605
§2io. Account. Pt. 3, Ch. 6.
cannot claim credit for the disbursements, because the
law will not allow a co-tortfeasor to enforce contribu-
tion, either dire6lly or indirectly.
I Administrator of partner may recover his share, giving indemnity
at^ainst contingent liabilities. B. C & D, partners. B died, and A,
his administrator, sued C for admitted balance in his hands. Defence:
I, Contested claims outstanding against the firm; 2, bad debts; 3,
suit against city for a firm claim. — Recovered, less a sufficient sum
retained to cover B's share of bad debts, upon giving a refunding re-
ceipt against claim and costs of litigation. Roberts v. Law, 4 Sandf.
642, N. Y. (1S51).
2. Retiring partner liable for his share of bad debts. A, B & C bought
out D, and indemnified him against all except his proportion of the
bad deljts. They sued him for his share of such debts. —Liable. Bu-
chanan V. Cheeseborough, 2 Duer 238, N. Y. (1856J.
3. Partner may claim credit in account for amounts advanced in pay-
ment of firin debts, together with interest. Profits earned after dis-
solution by death on pending contra fls, no part of the account when
executors of deceased partner have sold out to survivor. Executors
of deceased partner, B, sold out to surviving partner, A, the stock,
fixtures, patent rights and lease of warehouse, A assuming the rent
and wages of employees which accrued after testator's death. In a
bill by A, for account, he claimed credit for amounts advanced in
payment of firm debts, with interest on advances. B's executors
claimed the profits made on pending contracfls under the patents. —
Claim of A allowed ; of B's executors rejected. Sale carried out-
standing contrails. Collender v. Phelan, 79 N. Y. 366 (1879).
If notes for partner' s share of firm indebtedness are endorsed by firm
after dissolution without a co-partner' s k?iowledge, ail: does not release
him. A et al., B et al., and C et at., went into partnership in pork-
packing for the season. After dissolution, as the bank refused B et.
al.'s notes for their share of firm indebtedness without security, the
firm endorsed them in C et al.'s absence. A et al. and B et al., who
paid the notes, demanded account and contribution from C et al. —
Recovered. Although there could be no recovery on the notes
against the firm, payment by plaintiffs was of original firm debt.
Gardiner v. Conn, 34 Ohio St. 187 (1877).
4. y1 partner may recover costs of litigation for firm, but not compen-
sation for his services in condufling litigation, unless bv express
agreement. D joined A, B & C, engaged in furnishing volunteers for
arrny, and each party took 1-2. They furnished 24 soldiers, and re-
ceived a city bond of I400 and $2,50 scrip for each man. D converted
certificates into bonds, and paid over |8,ooo to A, B & C. City repu-
diated contract, and holders sued. D, adling for firm, joined plaintiffs
in test suits, and paid over |4,7oo on account of money colledted by
him to A and B, having bought out C's share. A and B brought ac-
count, p claimed (i) compensation for services in litigation and (2)
costs of litigation.— Without express agreement, no right to compen-
sation for services rendered the firm, but entitled to be reimbursed
costs of litigation. Coddington v. Idell, 2 Stew. 504, N. J. (1878).
A surviving partner has, in general, no better claim
to compensation than any other ; but his claim has been
606
Pt. 3, Ch. 7. Account. §211.
allowed when he has been compelled to continue the
business at his own risk in order to preserve the joint
property/'
a. Surviving who continues business in the joint ititerest of hiviscif and
deceased partner's estate entitled to compensation. A, surviving
partner of B, continued business to protecft good-will, with a view to
sell the establishment as a going concern. After a sale of the estab-
lishment, B's executor brought account, and claimed a share of the
proceeds of the good-will. A demanded compensation for his ser-
vices as manager since B's death. — Allowed. A continued business
at his own risk, for the joint benefit in which the executors claimed
their share. Cameron v. Francisco, 26 Ohio St. 190 (1875).
§211.
^\\t profitB^ or lasses, of an illegal transaction, or business,
forms no part of tl)e account.
No partner can demand an account of an illegal
transa6lion, whether it constitutes a part^ or the entire
business of the firm.^ The fa(5l that the transaction
is closed, the profits capitalized, and transmuted into
a different kind of property, as, for example, the in-
vestment of money in mortgages, does not alter the
situation.' The property, in whatever form, remains
the product of the illegal business. But a distinc-
tion may properly be taken, when the partners invest
their illegal profits in a new and lawful enterprise
which they conduA on joint account. The account
which might be demanded of this new business will
involve nothing but lawful a(5ls, and will not include
the division of the proceeds of the illegal business,
because that was accomplished when the partners set-
tled their respedlive interests in the new venture.
Where a partner has paid his contribution with
trust funds, and the cestuy que trust has reclaimed
607
§211. Account. Pt. 3, Ch. 7.
them from the firm assets, the contributing partner
is debited with this amount, as in the case of a with-
drawal. If the innocent partner has been compelled
to pa}' the ccstuy que trusty he may claim credit for his
disbursement. But if privy to the embezzlement, he
could not claim credit for his payment, because that
would be asking contribution from his co-tortfeasor.
1. Xo account can be demanded where the business was in part illegal.
A it \\ were partners in business as merchants, and traded largely,
though not exclusively, in contraband cotton ; all the business was
done with Confederate money. After the war, A brought bill for an
account. — Dismissed. The business was partly illegal, and a separa-
tion of the lawful items from the unlawful was impossible. P'urther-
more, as the balance, if any, must have been expressed in Confederate
mouev at the time of dissolution, and as that currency has been
blotted out, there could be no recovery. Lane v. Thomas, 37 Tex.
157 (1872),
2. Illegal partnership a defence to purifier'' s bill for account. B, an
attorney, agreed to give A, his clerk, 1-3 of profits, in lieu of salary,
but A was not to be a partner. A brought bill for account. B de-
murred, on ground that an answer might criminate him, under 22
CtCO. 2 C. 46, s. II, by showing a partnership with C, who was not an
attorney. — Sustained. Tench v Roberts, 6 Madd. Ch. 145 (1S19).
Lotteries, though lawful in State granting the franchise, not lawful
in a different State by comity. A brought bill, as partner, for dis-
covery and account against B, of lottery business, which had been
carried on for 3 years under franchises granted by four States. — Dis-
missed. Comitv would not make a nuisance lawful. Watson v.
Murray, 8 C. E. Gr. 257, N.J. (1872).
Partners may lawfully agree upon a minimum price in firm con-
trails. A & B, partners, agreed not to furnish recruits for less than
I500 per man. A brought account against B. Defence : Agreement
against public policy, because it prevented competition. — Decree. If
objecl of partnership to prevent underbidding, as individuals, the
combination would be unlawful, but A & B did not contemplate any
particular public offer, nor any conspiracy to control prices. Marsh
v. Russell, 66 N. Y. 288 {1S76J.
Partners in an illegal business can't compel an account of gains
made b-^ co-partner in competition with firm. A and B were partners
foi trading in cotton beyond the union lines, and bought certain cotton
in conjundion with C. While the cotton was ou'the ocean, C be-
came alarmed for its safety, and B secretly bought his interest, for
I3.500- The cargo arrived safely, and sold for a sum which gave B
a large profit on the share purchased of C. After settlement, A dis-
covered the fa(5ts, and brought bill against B, to compel an accounting
for the secret profit, — Dismissed, because the business was illegal.
Dunham v. Presby, 120 Mass. 285 (1876).
3. Contra. When the profits of an illes;al business are ifivested in lawful
property, the law protefls the partner's shares. A & B, partners,
bought up soldiers' claims for laud warrants, contrary to A<51 of Con-
608
Pt. 3, Ch. 7- Account. §212.
gress. B managed the business, and converted the lands into money
and mortgages. By concealing the real value of the assets, he bought
out A's interest for a song. A brought bill for an account and divi-
sion. — Decree. The business was closed and the capital converted
into different assets, and B could not deprive his partner of his lawful
snare. Brooks v. Martin, 2 Wall. 70 (1874).
§212.
(^vtvvi abvax\ta%t %aintb bu a bread) of goob faitl) is a firm
asset, auit tmvvi loss a cljarge against tl]e mronci-boer.
The breach of good faith between the partners may
occur through a breach of the partnership contrail, or
a violation of the duty implied by the relation. The
duties implied by the relation cover not only transac-
tions which take place during the continuance of the
firm, but also transadlions which lead to the formation
of the partnership, and which arise out of its dissolu-
tion. But the breach of good faith must clearly ap-
pear/
Any loss or damage which results to the firm, or
to a partner in his separate estate, by reason of a vio-
lation of the express or implied provisions of the part-
nership agreement, is an item of charge against the
wrong-doer, and of credit to the injured partner.^ For
example, the premature dissolution of a partnership
entered into for a definite term, or a failure to make a
contribution as agreed.^ The fraud by which a part-
ner is induced to enter a firm would charge the wrong
609
^212. Account. Pt. 3, Ch. 7.
doer for indemnity against any losses or liabilities in-
curred in the business. This indemnity is an item in
the account."
A partner is chargeable in the account with any
profit made by him in competition with the firm with-
out his co-partner's consent. The unlawful competi-
tion may occur where the partner secretly engages on
his own account in the same kind of business as his
firm. Also where he has dealings with his firm either
as buyer or seller, and withholds information which
would affedl the price, or where he seeks to retain a
profit secured by means of his position,^ or where he
obtains a secret profit out of purchases, or sales which
he makes on behalf of the firm." If the partner is,
without objedliou, a common member of two firms in
the same line of business, his partners in one firm
cannot require him to account for his profits in the
other. If the two firms deal with each other in good
faith, the common member cannot be charged by his
partners in one firm with any profit which accrued to
the other firm out of the transadlion; but if the com-
mon member, in the interest of one firm, withholds
from his co-partners in the other information which
aflfe6ls the transaction, he is chargeable with the entire
loss suffered in consequence of the suppressed informa-
tion.
The principles just stated apply to the liquidation
of a partnership as well as to a going concern.
If, in the settlement of the partnership business,
one partner gains an advantage over another, and gets
more than his due share, by reason of a mistake, or
by withholding information which would affedl the
division of the assets, the settlement will be opened,
610
['T. 3, Ch. 7- Account. i;2i2.
md the partner surcharged with the amount of his
^idvantage.^
Where a partner has, during the continuance of the
5rm, prepared the way for entering into a transaction
in the line of the firm business, and dissolves for the
purpose of securing the benefit to himself, he is
:hargeable in the account for any profit gained.^
:. Partner, who is trustee for deceased partner, may buy his share at
expiration of partnership. A & B, partners. A died, and his will
dire(5ted the main business to be continued for one year, according to
the articles. A made B and C trustees for his heirs, with power to
sell and re-invest his property. B sold a branch house in St. Louis,
and subsequently bought i-6 of the purchaser, and continued the
branch in partnership with him. At end of the year A's share in the
main business was appraised, and B bought it at the valuation. A's
heirs and devisees asked to set aside conveyances, and compel the
trustees to carry on the business for A's estate. — No evidence that
when the branch was sold B intended to buy it back, and entitled tc?
buy A's share in the main business at the appraised value after the
year. No claim for good-will. Rammelsberger v. Mitchell, 29 Ohio
St. 22 (1875).
I. Breach 0/ agreement not to engage in trade outside the partnership
gives right to damages, but not to profits of independent business. A
and B entered into partnership, the articles providing that neither part-
ner should engage in trade outside the partnership. B did so engage
in another firm of B & Co., and after B's death A claimed, as against
B's heirs, to be entitled to an equal division in the share of B in the
profits of B & Co. — Rejedled, and judgment for B's heirs. Afiirmed
on appeal. B's violation of the partnership agreement might give
rise to an a6lion for damages by A, but as he would not have been
liable for the debts of B & Co., he could not claim to be a partner
therein, even unaware. Murrell v. Murrell, t^^i La. 1233 (18S1).
I. Damages for dissotut ion. By articles, three months' notice required
for dissolution. B dissolved without notice, and A sued for damages.
— Recovered. Measure of damages prospedlive profits for ensuing
three months, estimated by reference to profits of past six months,
and not mitigated by A's profits in another business, begun during
the three months. Bagley v. Smith, 10 N. Y. 489 (1853).
\. If partner breaks contraFl, Chancery will date dissolution from
breach, and award subsequent profits to co-partner. A had a contradl
with State to construdl a canal. B & C agreed to furnish capital, in
|3,ooo instalments, for an equal interest in the undertaking, and
stipulated to be reimbursed, capital and costs, out of State payments
before any division. B received a payment, which he concealed from
A, and used with C in speculation. A, discovering the facfl, notified
them of dissolution, and proceeded with the work alone, and made
profits. A brought bill. — Decree. Dissolution dated from notice,
and subsequent profits belonged to A, who furnished labor and con-
tra(5l, while B & C did not furnish contribution of $3,000. Durbin v.
Barber, 14 Ohio 311 (1846).
611
§212. Account. Pt. 3, Ch. 7.
5. Fraud in forming partnership gives an assignable claim to corredl
a sttllfincnt. B sold C 1-2 of vessel at cost, and C became his partner
in tradinj^ adventure. After final settlement, C discovered misrepre-
sentation of cost, and assigned his claim to A, who sued to vacate
settlement and recover cost. — Recovered. Sheldon v. Wood, 2 Bosw.
267, N. Y. (1857).
6. I'ossibility of reneruat of lease a firtn asset after dissolution. A&
B dissolved and, after bidding with each other for the lease of firm
premises with right of renewal, came to no conclusion. B took a
renewal in his own name. A filed l)ill for account. — Decree. B must
account to firm for value of lease. The possibility of renewal a firm
asset in litiuidation. Johnson's Appeal, 5 Am. 129, Pa. (i886j.
If .some of the partners are lessees, and not the firm,
they alone are entitled to exercise the option to renew,
and may retain its value.
Option of lessees, ivho are partners, torenew a lease, does not enure
to firm for benefit of co-partners. B & C, in 0(5lober, i860, leased a
quarrv, for three years from January' i, 1861, with the option to re-
new. In December, i860, they formed a partnership with A, for
working stone, to continue for three years, and for so much longer as B
& C continued lessees of the quarry. A clause prevented the lessees
from assigning. B & C were bound to furnish the firm with stone
quarried, at cost. They refused to exercise their option to renew,
and, in December, 1863, formed a new partnership with other mem-
bers, taking a different lease. A brought a bill to enforce a continu-
ance of the partnership for six years, and compel B & C to exert the
option to renew for benefit of firm. — Dismissed. Lease did not belong
to firm, at law or in equity. No agreement for it, express or implied,
but left in defendants by contract, which bound them to work quar-
ries. Also a prohibition against assignment to firm. Defendants
had right to refuse to renew, though for purpose of getting rid of A, as
continuance at their option. Phillips v. Reeder, 3 C E. Gr. 95, N. J.
(1866). I
7. The secret gains made by partner, who aFled as agent for dealers]
with firm, must be accounted for to co-partner. A, manufadlurer of
machinery, at Patterson, and B, merchant, at New York, went into
partnership, in 1859, ^"<i continued until 1872, when they organized
a corporation, the A & B Manufacturing Co., though without dissolv-
ing the partnership. In 1876, A brought account for secret profits
made by B in transacfliug the business. He plead Statute of Limita-
tions. — No bar. B adled for both buyer and seller, and rendered A
liable for his accounts. The profits, when received, might be shared
by A. Todd v. Rafferty, 3 Stew. 254, N. J. (1878).
8. Though equity denied by answer, injunclio)t may be continued. B,
to save A's separate property from sale on a mortgage, bought it. On
dissolution, B's title to mortgage was recognized, but A subsequently
enjoined him from selling under it, alleging fraud in settlement, and
firm title to mortgage. B denied, in his answer, A's equity. — Injunc-
tion maintained, though upon condition that A should pay sum into
court. Murray v. Elston, 8 C. E. Gr. 127, N. J. (1872).
9. Lease, secretly renewed by partner, a firm asset. A, B, C and D,
partners at will, took a lease from E, for 5 years, in firm name, B &
Co., with an understanding that E would renew. September nth,
B, C and D secretly secured a renewal, and on the i8th notified A of
dissolution on January ist. A assigned to B, C and D all his interest
61 2
Pt, 3, Ch. 7. Account. §213;
in the partnership, except his claim for and the vahie of 1-4 the lease.
Defence : Evidence of conversation between B, C and E, that B and
C intended to dissolve at the time of renewal, and that E had renewed
without reference to any prior agreement. — ^Judgment for A. Lease
renewed before notice of dissolution a firm asset, whether lessor
bound to renew or not. A's percentage, under code, allowed upon
his 1-4 interest as the amount in controversy. In an account, suc-
cessful party might recover percentage upon the whole fund. Struth-
ers V. Pearce, 51 N. Y. 357, 365 (1873).
§213.
(^[)t account mar) be barrel bn tl)e Statute of Cimttations oi
bn lacl]£s.
The a6lion for an account may be subjedled to the
bar of the Statute of Limitations.^ The Statute does
not run from dissolution, but from the date of the last
firm transa(flions.'" Although the Statute does not in
terms refer to the adlion, yet the right to an account
may be lost in Equity by delay." The partnership
relation is not a technical trust, and the right to
account comes, properly, within the equitable rule
against laches.
1. Partner's bill for account barred by Statute of Limitations. Upon
dissolution, in 1853, A & B agreed to submit all differences to arbitra-
tion. The arbitrators met in i860, and B attended. A brought bill
for account in 1867, and averred that when B attended, in i860, he
refused to proceed, and promised to appear again in three mouths,
but never appeared again. The arbitrators declined to a(5l. B denied
his promise to attend again afterwards, and pleaded Statute of Limita-
tions. — A bar in Equity as well as at law. Cowart v. Perrine, 3 C. E.
Gr. 457, N.J. (1867).
2. Statute of Limitations runs betiueen partners o?ily front settlement
of account. A traded in his individual name, and B was a dormant
partner. They dissolved in 1872. C brought suit against A, which
ended in 1876,'in a judgment for A, who, in 1878, brought bill against
B for account. Defence : Statute of Limitations, and interest on ad-
vances. — Recovered. Statute runs only from settlement of outstand-
ing claims, or, at least, presumption of payment. No interest allowed
without agreement. Prentice v. Elliott, 72 Geo. 154 (1883).
613
§214. Account. Pt. 3, Ch. 7.
T. Parhirr's bill for account barred by his laches. A & B, country
merchants, dissolved partnership in 1852, and made B liquidating
partner. A was indebted to B, and C was his suret}', to whom A
assijjned his interest, in i860. The debt was gradually paid oflF, the
last instalment to B's executors, in 1872, the year he died. In 1874,
C, who had been employed by B, and had access to the books, brought
account. — Refused. Laches not to bring bill when full equity could
be administered to both parties. Stout v. Seabrook, 3 Stew. 187, N.
J. (1S78).
21d,
(transactions not connected luitl) tljc tirm business are eiclubeb
from tl)e account.
The exclusion of what does not pertain to the part-
nership business is involved in the adaptation of the
account to the firm transadlions.^
On this ground the separate transadlions of a part-
ner have no place in the account.^
1. Balance of partnership account a set-off to jiidgtnent against indi-
vidual partner. B & C, partners. B conveyed of his land an undi-
vided half to C, and took bond and mortgage for price, and assigned
them to A. Before assignment to A, C obtained judgment against B
for balance of partnership account. A foreclosed. C's defence: Set-
off of judgment, — Judgment allowed as a set-off. The mortgage being
an independent transaction, did not form an item in the partnership
account. Reid v. Gardiner, 65 N. Y. 578 (1875).
2. Partner should bring cross-bill, and set up account in a different
pcirtnership in his answer. A brought account against B, for run-
ning stage line under contradl with U. S. B set up A's indebtedness
to him on individual account, and out of a farm owned by A, B & C,
and out of which C was also indebted to B. — No set-off. No connec-
tion between U. S. mail route and firm, except horses fed with
products of farm, and farm received manure in return. Brewer v.
Norcross, 2 C. E. Gr. 219, N. J. (1865).
Account between individual partners excluded from firm account.
Profits m a partnership, made in 1865, were to be shared thus: A
i-io, B 4-10 and C 5-10, with pro^^sion for quarterlv accounts. At
end of 1872, B promised A 4-10, and 3-8 for 1873. In'1876 B brought
account against A and representatives of C, uho had died. A claimed
in the settlement his allowance bv B for 1873, which was excluded as
an independent transadtion between A and B. Subsequently A sued B
upon his promise. Defence: Claim was without consideration, in-
volved m partnership account, and barred by former adjudication.—
Recovered ; right reserved by original decision, which excluded claim;
614
Pt. 3, Ch. 7- Account. §215.
promise supported by consideration of A's remaining in firm, and
share for 1873 ascertained by quarterly accounts. Emery v. Wilson,
79 N. Y. 78(1879).
§215.
^ kci'K for an account is not essential.
The partners may anticipate the law and settle
their own affairs without the aid or intervention of
legal process.^ This may be accomplished by agree-
ment, or by submitting the settlement to arbitration.'
Either method is available for the partners.
In a settlement made out of Court, the terms are
interpreted in accordance with the rights, duties and
obligations of the relation.'^ It is assumed that the
partners meant to carry out the original purpose in
the settlement, as well as in the transactions of the
joint business.
The construction put upon the submission to arbi-
tration is in favor of a retention by the Court of its
j uiisdiClion.'* The partners must exclude the judicial
control by positive stipulation, or the Courts will not
refuse their aid to reClify an error of the arbitrators.
I. Account stated binds the partners, though unsigned. By articles,
B was to keep the books and render periodical accounts. A, in 181 2,
assented to, but did not, sign the accounts which B rendered, and
partnership was dissolved. In 1826, A demanded an account from
B's executors, on the ground of fraud and misappropriation. De-
fence: Account stated. — Want of signature immaterial. Account
conclusive, except for last year. Heartt v. Corning, 3 Paige 566, N.
Y. (1832).
Balance sheet, struck by a partner, competent evidence against him,
though unsigned. A & B were partners. They dissolved, and A sued
B for ^314, his share of partnership balance. A offered in evidence
balance sheet, in B's handwriting, though without his signature. B
claimed, as set-ofF, ^802, a debt lost by A's negligence, as liquidating
partner. — Balance sheet competent evidence, and set-off allowed, if
B's negligence proved. Jessup v. Cook, i Hal. 434, N. J. (1798)-
615
L
§215- Account. Pt. 3, Cn. 7.
2. niscrction conferred by articles to submit not controlled, unless
'partner ehari^inf^ fraud makes out prima facie case. Articles between
A, H X: C piovi(ieil that if business was not managed or did not result
to B's satisfaction, be might dissolve and refer difference to arbitra-
tion. H gave partners required notice of dissolution and arbitration.
.\ brought bill to prevent dissolution and reference. He charged B
with fraud.— Dismissed, and reference ordered. Discretion of part-
ner charged with fraud, who wished public trial, not controlled, but
only of partner charging fraud. Russell v. Russell, 14 Ch. D. 471
(iSSo)
The partner who relies upon a settlement must prove
that it has been made.
If answer sets up stipulations of settlement, defendant must prove
them. A & H dissolved partnership. A brought account, on ground
of no settlement. B set up, by answer, A's agreement to take assets,
pay debts, and assume all liability. He averred collecflions by A,
and his liability on the settlement notes. — No sufficient evidence of
the terms stated by B in his answer of the settlement. Account
ordered. Dickey v. Allen, i Gr. Ch. 40, N. J. (1838).
3. Settlement opened to make partner, who competed with firm, account
for profits. A, B, C, T) et at., stationers. C and D secretly bought
plates and copyright in their own names, paying with firm money.
They sold copies to the firm at a profit, and charged the expenditures
to a printer as seller. A and B, on discovering these fa<5ls, sought to
open a settlement. — Allowed. Transaction a fraud, because C and D
competed with the firm. They were allowed price of plates and
copyright, which were awarded to firm. Herrick v. Ames, 8 Bosw.
115,' N. Y. (1861).
Agreement that partner' s debt to firm shall be taken out of surplus
is not a release if there be no surplus. A was liquidating partner. B,
his co-partner, was indebted to the firm. They arranged that A
should take amount of B's indebtedness out of his share of the sur-
plus, after paying debts. There being no surplus, A sued B for his
indebtedness. Defence: Discharged by the agreement. — Recovered.
ContracT: interpreted not as a novation, but as a plan of distribution
on basis of partner's continuing liability. Sayre v. Peck, i Barb, 464,
N. Y. (1847).
Settlement between partners binding, unless fraud. Evidence dis-
proved fraud in settlement, and showed full opportunity for examina-
tion by A.— Binding. Murray v. Elstou, 9 C. E. Gr. 310, N.J. (1873).
Affirmed. E. & A. 9 C. E. Gr. 589.
Partners cannot rescind settlement accepted by third person. A, in
settlement with B, agreed to take the assets and give up mortgage
of C, contributed by B. A sued C on mortgage, and objedted to
evidence of agreement until completed by delivery.— Judgment for
C. Knowledge of settlement and acceptance by C binds A and B
without delivery of possession. Benson v. Tilton, 58 N. H. 137 (1877).
Award, allotting one business to each partner, not enforced until
cash consideration paid. A & B, who traded as merchants, and also
as tailors, dissolved, and submitted to arbitration. Tailor store, with
Its debts, awarded to A ; other business, with its debts, to B, and A
ordered to pay B 1470. A brought injuncftion to prevent sale of his
property to satisfy judgments for debts arising out of B's business.
B answers that A had not paid the cash. — A no equity as surety until
he paid the I470. Ruuyon v. Brokam, i Hal. Ch. 340, N. J. (1846).
616
Ji
I
Pt. 3, Ch. 7. Account. ^216.
4. Arbitratioti clause does not otist court' s jiirisditlion. Articles pro-
\aded for settlement of disputes between partners by arbitration. A
dissolved, and demanded an account and a receiver. — Entitled to a
decree. Kapp v. Barthan, i E. D. Smith 622, N. Y. (1852).
lurisbictiou of tl]c arcount.
A Probate Court's jurisdic1:ion over a deceased part-
ner's estate does not justify an account, which involves
a settlement of the shares of all the partners. The
competence of the Court is measured by the deceased
partner's share. The co-partners are not amenable to
the jurisdiction. It is only by consent of all the part-
ners that the Probate Court can exercise jurisdi6lion
over the partnership, and make it accessory to the
single partner's estate.*
The jurisdidlion of the account depends on the
domicile of the partners, not the forum to which they
must resort to colledl their assets."
I. Orphan's Court has no jurisdiction of claims arising front unset-
tled partnership account. B & C, partners. B died, and C assigned
" to A for benefit of creditors. A offered to prove against estate in
hands of B's administrator for alleged balance of unsettled firm ac-
count due C. — Dismissed, for want of jurisdidlion. Ainey's Appeal,
II W. N. C. 568, Pa. (1882).
Where Orphans' Court has assumed jurisdiflion of a partnership
account with consent of all parties, its decree will stand. A, B & C,
partners. B died, and A became his administrator. Without objec-
tion on the part of C, A undertook to settle the partnership affairs
in his account as administrator. He stated an account, showing that
B had no interest in firm. This view was contested by heirs of B,
and, on final account, auditor reported against A for 123,800. A ex-
cepted, on the ground that O. C. had no jurisdiction of partnership
matters. Thirteen years had elapsed between A's first and final ac-
counts. — Decree for heirs of B. After so long a time A could not
question a jurisdidlion he had himself invoked with consent of all.
Brown's Appeal, 8 Nor. 139, Pa. (1879).
Orphans' Court ivill not try title to fund in its hands where claim
rests on an unsettled partnership account. The administrator of B
sold all the goods, stock, fixtures, &c., of B's business. A claimed
617
§2l6.
Account. Pt. 3,011.7.
one-half of fund obtained as partner of B. The facl of partnership
WIS denied.— Decree for B's administrator. The court can not try
the (luestion of partnership. If there was a firm, its accounts must
be settled in another forum. Bentley's Est., i6 Phila. 263, Pa. (1883).
Orphan's Court can not enforce specific perjormance of a contraB.
between partners in a firm transafiion. B took title to land as trustee
for C, who furnished c ish consideration, agreed to share the profits,
and convey a moiety after re-imbursing C his outlay. C assigned
his interest to A, and B died. A asked O. C. for specific performance
under Act 16 June, 1S36, P. L. 792, which gives jurisdidlion to compel
conveyance if contract by deed, and A<51 24 Feb., 1834, P. L. 75. giv-
ing mode of proceeding. — Dismissed. O. C. no jurisdidlion if firm
account involved. Walker's Appeal, 4 Pennypacker 452, Pa. (1884J.
Attachment of partner's interest infirm credit gives court nojiiris-
diflion over foreign co-partners to enforce a settlement. B recovered
judgment against A in West Va., sued him upon the judgment in
Ohio, and attached a debt due from C to A & Co. A, though a non-
resident, appeared and demurred to the attachment. — Dissolved. The
credit attached belonged to A & Co., and A's interest gives Ohio no
jurisdiclion to compel foreign co-partners to settle their accounts.
Garnishee could not dissolve attachment on ground that he held no
property of A. B entitled to prove A's property in C's hands, and
then jurisdidlion z'w reyn, but court had obtained jurisdicflion in per-
so nam by A's appearance. Myers v. Smith, 29 Ohio St. 120 (1876).
618
NDEX.
ABANDONMENT of business, ground for a dissolution. §173 and n. 12,
ABUSE of legal process, by partner charges co-partner. § 139, n. 4, v.
TORT.
ACCEPTING SERVICE.
Appearance by partner like ; partner may not accept service for co-
partner. \ 119. Acceptance of service by partner in joint suit no objec-
tion, and judgment does not merge claim. ^83.
ACCOUNT.
The account is an epitome of partnership. It sums up and applies all
its principles in order to adjust the trausaAions between the partners.
The account is the only process which is co-extensive with the partner-
ship business. \. 206. Although it is the remedy for the settlement of all
the transactions of the firm, yet it may be brought for any trausaclions
which may be isolated from the general business, and which do not in-
volve a dissolution of the firm. The isolation may result from the nature
of the transa<5lion or from the contradl of the parties. \ 159. The account
gives every advantage that could be obtained by a cross-bill. \ 206, n. i.
A partner cannot sue his co-partners for a firm transa6lion without an
account. \ 206, n. 2. The account being adapted to firm transactions, ex-
cludes transacflions on individual account. ^214, n. i & 2. An account
stated binds the partners, though unsigned. §215, n. i. A balance sheet
is evidence against a partner who prepared it. ^215, n. i.
The basis for the account is: i, The firm property; 2, The partners'
liability; 3, Good faith in the business. ^207. The partners enforce the
contribution. \ 207, n. i. The partners' quotas must be ascertained for
distribution. I. 206, n. i. The question of loan or contribution must be
ascertained. If a lender took no security and made no bargain for repay-
ment of principal and interest, a mortgage made afterwards to cover the
loan and subsequent advances would indicate the lender's position. ^. 207,
n. 2. The theory of the contribtition determines how it will be considered
I in the adjustment. | 207, u. 2. The profits form part of the property,
and are identified with it. \ 101 . A managing partner may in account
be made to show why the business was not a success. His management
619
Index.
requires explanation, as profits was the objedl of the partnership. ? 206,
n. 4
If the partner uses firm paper to pay his individual debt, co-partner's
payment of half to release his separate estate entitles him to reimbnrse-
mcnt. i.126, n. I. v. Commercial Paper.
A breach of good faith, resulting in loss or damage to the firm or co-
partner in his separate estate, is an item of charge against the wrong-doer
and of credit to the injured partner. If dissolution is made by a partner
before the period fixed, the co-partner may recover damages for the breach
of contract, and they will be measured by the profits made during the pre-
ceding months of the partnership, and not mitigated by the plaintiff's
profits made in a new business begi?n before the term expired. ^ 212, n. 3.
I'raud in forming the partnership is ground to correct a settlement. ^ 212,
n. 5. Competition in business, v. Good Faith.
The decree for account may be anticipated by a settlement or by sub-
mission to arbitration. ^ 214, n. 3. Partner cannot take away co-partner's
discretion to submit by charging him with fraud, unless he makes out a
prima facie case. \ 215, n. 2. The settlement is interpreted according to
the principle of the relation. Agreement to take debt out of surplus is not
construed to be a release of the stock if no surplus. \ 215, n. 3. The set-
tlement is binding, and can not be rescinded if accepted by third persons.
The allotment of a business to each partner is not enforced until owelty is
paid. ^215, n. 3. Laches will bar the suit for a settlement. The Statute
of Limitations would be an adequate bar. \ 213, n. i. After a settlement
the Statute runs between the partners. \ 213, n. 2. The period which will
bar a partner's claim for an account is the ordinary limitation of six years.
^ 213, n. 3. The agreement to submit partnership differences to arbitration
is not construed liberally to oust the jurisdiction of the courts to decree
an account and appoint a receiver. The construdlion is in favor of juris-
diclion by the courts, and the differences are referred to such as arise
during the partnership, and do not extend to controversies arising out
of the settlement upon dissolution. ^215, n. 3. The jurisdi(flion of the
account depends on the domicils of the partners. The attachment of a
partner's interest in a firm claim would not give jurisdidlion over the
firm, in order to enforce a settlement of its business for the benefit of the
separate creditor. ^ 216, n. 2. Though if the parties were in the jurisdic-
ion, the court might treat the attachment as a method to compel the
partner to make a settlement of the firm accounts, in order to ascertain
what, if anything, was coming to him which the creditor would be enti-
tled to claim in satisfaction of his attachment. This seemed to be the
Pennsylvania view if the attachment was mesne and not final process.
The Orphans' Court has no jurisdidlion over the partnership account, by
reason of the deceased whose estate is before it for distribution being a
partner, unless the co-partners consent to submit the account to adjudi-
cation. ^ 216, n. I.
620
II
Index,
action. v. procedure.
ACTS OF PARTNERSHIP, v. Holding Out. Evidence.
ADVANCES.
The privilege which a partner has, who advances money to his firm, or
makes outlays on its account, is a lien on the firm assets, § 165, n. I,
which must be paid before the co-partners can take anything, \ 165, n. 3,
or the separate creditors can come upon the fund. The lien does not
avail against firm creditors. \ 201, n. i & 3. The lien is only of a partner
upon the firm stock, and does not include an advance to a co-partner.
The separate creditors of the co-partner are entitled to a preference in the
distribution of his estate. \ 165, n. i ; §201, n. 4. As a co-proprietor, the
advancer cannot be a lender to the firm, and his advance cannot be col-
ledted. The advance is assimilated to a loan, \ 165, n. 4, which carries
interest as incident to the debt, without an express agreement, only as an
item in the account upon a dissolution. But interest will be colledted,
even from a stakeholder, pending an account between his co-partners,
unless he proves readiness to pay on demand, and no employment of the
money in the interval. \ 297, u. 4. If the firm had no capital, the partner
advancing it is entitled to recover interest. He would not forfeit his in-
terest by mingling the advance with his own funds in bank, if no loss
occurred by the deposit in his individual account. § 165, n. 4. The ad-
vancer's share of the loan is put at the risk of the business, and to the
extent of this portion is contingent. It must remain in the business until
a dissolution, and be included in the account. \ 208. For this reason he
may stipulate for any rate of interest, without committing usury. \ 165,
n. 2. The partner's lien for advances has a preference over the lien of the
separate creditors. \ 202, n. 3. Also on the land held by the partners as
tenants in common, though for the firm, in N. J., and generally; but in
Pa. the record title in the partners would give their separate creditors the
preference. ^112, n. 6, If overdrafts, which are the converse of advances,
are made without a settlement, interest would begin to run from dissolu-
tion, when, at least, accounts should have been settled. \ 165, n. 3. In
addition to the rights of a lender, the advancing partner is entitled to
marshal the assets for his payment. A partner could get firm paper dis-
counted to reimburse himself his advances. He would not be defrauding
creditors, as he has precedence over them. \ 184, n. 3. The purchaser of
a partner's share can obtain his advances upon a settlement. \ 206, n. 2.
The liability to pay debts, unless assumed, does not entitle partner to
reimbursement as for an advance. ?2io, n. i & 2. But the amount of
firm debts paid by him he may recover without interest, 'i 210, n. 3. A
partner may recover the costs of litigation, but not the expenses of con-
ducing the litigation, unless by agreement. ?2io, n. 4. A surviving
partner may recover compensation for carrying on the business for the
deceased partner's estate ; because they were not rendered for liquidation,
621
Index.
but for continuing the business for the deceased partner's estate. This
IS an exception to the rule which prohibits compensation to the surviving
partner for his ser^-ices. I 210. n. 4, a. Partner may recover payment of
damages caused by co-partner's tort, or excess of authority, unless pri\-y
to it. i. 210. Partner's lien for advances cuts out judgments against co-
partner holding title. | 1 12, n. 6. A suri-iving partner has a lien for his
advances, i. 15, n. 2. v. Mining Partnership.
AGENCY.
The test of partnership, if the property element is excluded. This is
an error, because the capacity is iuvolved in and measured by property.
The principal in a business or partnership is a proprietor. The principal
apart from the business or partnership is not a partner. Agency the re-
sult, not cause, of partnership. Partner's title empowers him to intervene
to protecl firm property, i. 103, n. 12. v. Property. Husband, wife's agent.
Partner's implied agency measured by the business, agent's by the charac-
ter of transaclion. J, 69, n. 9. Agency, unlike status, revocable, g 10. v.
Status. Cestuy que trust's eleclion not founded on agency. § 42. v. Trust
Funds.
APPEARANCE.
Partner cannot employ attorney to appear for the firm. :>. Partners.
V. Accepting Service. Attorney officer of court, and may appear for any
one. Only redress against attorney. Judgment would not be stayed with-
out payment of costs. >,. 119, n. i. In New York, opened to let defendant
into a defence, but not avoided. ^ 119, n. i, c.
APPORT. V. CONTRIBUTION.
APPORTIONMENTof Assets and Liabilities, z/. CONTRIBUTION, v.
DIVISION.
ARBITRATION.
Not construed to oust jurisdiclion of courts. ? 215, n. 3. v. Account.
May anticipate account. ^212. f. Account. Partner cannot submit firm
claim to arbitration, because a judgment on the award would bind co-
partner's separate estate. ^ 120. If judgment restricted, as in N. Y., to
firm assets, submission by partner valid. ? 120, n. i, b. Partner buying
out co-partner can submit, because award would bind only him and the
assets. Like a confessed judgment which binds only firm stock. § 120,
□ . 2.
AREA. ? 8. V. SUBJECT-MATTER.
ARETIN. Title to Contribution. ? 34, n. i.
ARNTS, L. von Amesburg, Civil Law indivisible contradl. 'i 91, n. 3.
622
<l
Index.
ASSETS.
In the adjustment of account between the firm and its members upon
insolvency, the rule is, that nothing can be colledted, either by the firm
from its members or by a partner from the firm. But a single case in
Pennsylvania permitted a set-oflf between the partners of their debts to
the firm, and awarded the balance to the creditor partner's assignee. ^ io6,
n. 7, b. Marshalling Assets. i\ Marshalling. Partner's debt to firm, if
incurred by fraud, may be collected. ^ 197, n. 2. v. Marshalling. Part-
ner's debt to firm not an asset, and no set-off of debts between partners,
because firm creditors paramount and firm collects both. | 202. As part-
ners parties in all litigation, no partner can sue firm (i. e., self and co-part-
ners) nor firm (i. e. self and co-partners) sue him. Both claims excluded
as assets of joint and separate estates. If collected, assets (joint and sepa-
rate) would depend on a balance of account. Distribution upon execution.
V. Execution.
ASSIGNEE of a Partner, v. CHOICE of a Partner. Suit by. J. 76, n.
3. V. PROCEDURE.
ASSIGNMENT.
Of firm claim to let assignee sue when firm filed no certificate. ? 76, n.
17. V. Procedure. By partner of stock, unless for equivalent, does not
exclude creditors from recourse to fund. If assignee agrees to pay debts,
the agreement enures to the firm creditors, who may enforce application
to firm debts. ^ 106, n. 2 & 5. The partner's transfer of his interest to his
co-partner does not cut out separate creditors, if he is insolvent, unless for
sufficient value. The joint tenant at the Common law could neither re-
lease nor surrender his estate so as to cut out creditors. The technical
relation back to the creation of the estate, or merger of it in the reversion,
was not permitted to defeat the claims against the joint tenant's interest,
i 103, n. 2. Assignee of a partner interested only in liquidation, v. Exe-
cution. Partner may assign firm stock to avoid adverse sale if co-partner
cannot be consulted. 1 114. v. Powers. Assignment of mortgage in pay-
ment an executed contract which discharged firm. ^ 117. v. Powers.
Partner may assign a judgment, but not guarantee its payment. § 117. v.
Powers. For creditors, v. Powers. By firm to pay separate debts, v.
Diversion of Stock. The assigment for creditors does not involve the
delegation of a partner's capacity. The assignee becomes rather a trustee
for the creditors than a substitute for the partner. In the function of ap-
plying the assets, he does not exceed the duties of the sheriff. The assign-
ment is less than a confessed judgment. <; 131- Assignment for creditors
an agency for payment. ? 59. The assignment of the whole stock would,
prima facie, dissolve the firm, but the fact might be rebutted by evidence.
If the partners mean to resume business after paying the debts, the assign-
ment would not be a dissolution. Then a subsequent bankruptcy would
stand , if a dissolution, no firm exists to be put into bankruptcy. '<•. 103.
623
Index.
The prefereuce made to a separate creditor in the assignment for firm
creditors does not vitiate the assignment. The preference is void, and
would be stricken out by a creditor's bill. ^ 170. n. i. A pro rata dis-
tribution of the surplus among the separate creditors would not avoid a
firm assignment for creditors, although the distribution would be a fraud
on the separate creditors of the partner entitled to the larger share. § 170,
u. 2. Purchaser of firm stock who agrees to pay the debts is not an as-
signee for creditors. 1 148, n. i. Neither retiring j^artner nor firm creditor
has any standing until the margin of insolvency is reached. Then the ex-
posure to the debts raises the equity to marshal the assets to discharge the
liability. \ 148, n. 2. The indemnity charges any subsequent purchaser of
the assets. ^ 100, n. 9, b. The assignment of firm assets, with agreement
to pay firm debts, does not enable firm creditors to ele6l assignee partner
as his separate debtor. I 170, n. 4. Assignment of partner's share, v.
Powers. Purchaser of partner's share cannot carry on business. ?. 206, n.
2. The sale must be of the partner's interest, for he has no separate
property in any specific asset, or, if a particular piece of property is as-
signed, the sale must be subjeA to account, and cannot be separated from
it. This is simply selling his interest, and he can never be restrained from
selling out, although it might result in breaking up the business. ^ 171, n.
4. The partner's assignment of his share as security operates as a mort-
gage, which binds the assets when the partnership is established. \ 172,
n. 2. Assignee of a partner becomes a co-proprietor, and resembles a
dormant partner. \ 68. Surviving partner not an assignee, but original
owner by joint title. \ 121 & 100, n. 5. Partner can not sue as assignee
of co-partner, although he represents firm. ? 76, n. 3. v. Procedure,
ATTACHMENT, v. EXECUTION.
Attachment of partner's interest in a firm claim to compel a settlement
not to acquire jurisdiction. ? 216, n. 2. v. Account. Attachment for a
partner's debt does not aflfeA firm lands. ? 10. Partner's power to sell
does not give separate creditor right to attach firm stock. \ 103, n. 3. v.
Powers.
ATTORNEY.
Attorney taking halfprofits for fee not a partner. | 59, n. 2, j. Attorneys
could recover a fee for services in a court in which one partner was not
admitted to pradtice. The right to the fees belongs to the firm, and al-
though the .services were rendered by one partner, his co-partner would,
in theory, render an equivalent in some other department of the business.
AUTHORITY, v. POWERS. \ 160, I 163. v. PROCEDURE.
BAILMENT
At the Common law, property partook of the nature of bailment. 1 4. V.
Property. A bailee has no power to sell. \ 4, n. 2. Bailment might be
624
i
Index.
substituted for partnership. The property might be bought by one, and
held by another for manufadlure, and they might share the profits of the
transadlion. | 67, and n. ii.
BANKRUPTCY,
Partner by estoppel put into. ^ 69, n. 22. Proof in, does not deprive
judgment creditor of his priority, g m, n. 5. z/. Land. Separate liability
for joint debts enforced in bankruptcy. I79. v. Contract. Bankruptcy
rule a makeshift of convenience. \ 196. v. Marshalling. Repealed by
inconsistent statute, 'i 204, u. 3. v. Marshalling. Bankruptcy proceed-
ings originally discriminated joint from separate estates by the commis-
sions, 'i 103. Double proof. \ 205, n. 6. v. Marshalling. Bankruptcy rule
protedls only the separate estate. \ 197. v. Marshalling. If no surplus
after paying partner's separate debts, co-partner can enforce individual
claim. 1 198. V. Marshalling. Payment of firm debts would enable part-
ner to enforce individual claim against co-partner. §201, n. 2. v. Mar-
shalling. Discharge in bankruptcy of innocent partner does not bar suit
against him for co-partner's tort. \ 149, n. 3. v. Tort.
BATES' Special Partnership. \ 37, n. 2. Release by partner binds firm,
1 117, n. 2, a.
BEGINNING Partnership, v. COMMENCEMENT of
BENEFICIAL ASSOCIATION, v. GAIN.
BENEFIT. V. GAIN.
BIBLE, The. v. f.37, u. /.
BIDDLE, Geo. W. A memorial address by, upon the judicial career of
the late C. J. Sharswood. ^102, n. 2, b.
BILLS AND NOTES, v. COMMERCIAL PAPER.
BISSET, Andrew. Partnership laud. | 109, n. 5.
BLACKBURN, Lord, Marshalling between firms with a common mem-
ber. At Common law double claims. Bankrupt Adls restored the
Common law rule, 'i 205, n. i, 2, 4. Scotch plan of collecfling debts by
firm from members, the original English method. '^ 202, n. i.
BLACKSTONE, regarded usury as a debt. \ 66.
BONA FIDES, v. GOOD FAITH.
BORCHARDT. Commercial Codes. Contribution becomes property of
the firm. \ 30, n. i. Equivalent for contribution upon dissolution.
?28, n. I.
BORROWING. Limit of partner's power fixed by usage of business.
I 123. V. Powers.
625
Index.
BRACTON. Inference of copyholds from emancipation. ? 4, n. i. v.
Property.
BRADLKY, Mr. J. Argument that ursurpation of franchise equal to a
charter. J 37, n. 1 .
BRAMWELL, Lord. Account of limited liability, 'i 26, n. 4.
BRAVARD — VEYRIERES. Tontine not partnership, g 16 & n. 4.
BUILDING, Partnership in. ^ 11 & n. 2.
BUMP, Orlando F. Joint adjudication b}- modern pracflice includes dis-
tribution of separate estates, j^ 77, n. 3.
BUSINESS CONTRACT, v. CONTRACT.
BUYING AND SELLING did not make partnership in land. | 8 & n. i.
BUYING.
Partner's Capacity for, v. Powers. Trade gave right to buy and sell.
No Partnership in. The association for buying without selling, does
not constitute a partnership. The Common law was familiar with joint
purchases to hold. The purchase for division excludes the idea of mak-
ing a joint profit; each purchaser realizes his profit separately in the en-
hancement of the price of his purpart. | 7, n. i ; | 49, n. 3. Only limit
to partner's power to buy lies in the proportion which goods bear to the
needs of the business. Oi5- z'. Powers.
CADWALLADER, J. Assignment by partners, unless for value, entitles
creditors to reclaim stock. ? 106, n. 2, a. Partner's renunciation of his
equity would not affedl creditors. § 106, n. 2, b. Joint creditors' privi-
lege not dependent upon a technical lien. ^ 106, n. 5, d. Privilege fol-
lows the stock. ? 106, n. 5,_/!
CAIRNS, Lord. Marshalling assets between firm with a common mem-
ber. Bankruptcy allows double proof. Argument when not allowed.
? 205, n. 4, 6. ; ? 64, n. 3. Partners using trust funds become trustees
ex nialeficio. ? 42, n. 2.
CALIFORNIA
Has changed Common law procedure, and allowed suit against partners
in firm name. \ 76. v. Procedure. California Code prohibts fictitious
name, and requires certificate of publication. \ 76. Release of partner
and not of co-partners. ^90. v. Procedure.
CANONS OF DESCENT, v. DESCENT.
CAPACITY AS PARTNER.
Common law admits no capacities in an individual, § 164, though the
common member seems to be acquiring capacities by different trades.
'i 164, n. I. Partners cannot announce that they are adling in the capacity
626
1
i
Index.
of partners, and thus charge only the stock which might be devoted to the
business. The Common law did not admit anv limitation of liabilitv, and
charged the individual without reference to his assumed restri(5lion to a
special fundlion. The suggestion of giving the partner a separate ca-
pacity arose through Feudal tradition, which accustomed lawyers to
measure a man by his estate, and made it the legal fadlor in the transac-
tion. Partner's capacity to buy, sell or pledge, v. Powers. Partners can-
not deprive co-partner of authority, even by notice to third persons who
are about to deal with him. ? 133, n. i. Insolvency does not incapacitate
him to adl as a partner, 'i 133, n. 2, 3. The partner's authority is incident
to, and co-extensive with, the business. | 133, n. 4, 5, 6. Partner may
re-deliver goods on return of firm notes. The merchandise satisfies the
debt, though the insolvency of the firm prevents it from satisfying its
other creditors. Partners can restridl their liabilities by contradl between
themselves. They cannot bind each other by contradl, but not third per-
sons. >/. 134.
CAR-TRUST, a partnership. ? 16, n. 6.
CASE, of Pollion v. Secor, 'i 69, n. i, explained, \ 60, n. 6. v. Holding
Out. Cox V. Hickman, assignment for creditors. ? 59. Hart v. Kelly,
not a decision. \ 64, n. 3.
CASSAREGIS. Sharing profit and loss without partnership. \ 51, n. a.
CELSUS. Quadriga, 'i 67, n. 7.
CERTIFICATE
Of publication, when required by statute, must be filed before suit, but
firm may assign claim or sue for tort without certificate. ^ 76, n. i. v.
Procedure.
CHANGE OF PARTNERS.
The incoming partner is uot liable for aAs done before he entered the
firm. He cannot ratify them, for they are not done in his name or by his
authority. Carrying out previous contracts of the firm does not charge
him on them, \ 144, n. 2, but if the contrail can be severed in interest
and apportioned according to the consideration, that is, a new contrail
implied for the part performed since he joined, he will become liable.
\ 144, n. 1,3, 4, 5. His contradl with the partners does not enure to
creditors. \ 144, n. 6. They are the parties who must contract with him.
\ 144, n. 7. The theory of novation is being replaced by that of trust and
consideration. By the consideration the incoming partner becomes an
original debtor, and his contract is not within the Statute of Frauds,
although his assignor remains liable for the debt. The fund received
charges him with a trust for the creditors who can sue him in a diredl
adlion. 'i 145, I 150. The trust is barred by the Statute of Limitations.
§ 145. Charging as trustee the incoming partner who takes the assets and
627
Index.
«>jrees to pay the firm debts, results in imposing an ultimate liability upon
his separate estate. This by novation could have been accomplished only
by substituting the personal obligation of the incoming for the outgoing
partner. <! 150, n. J. If the debts are scheduled, the effect of the assignee's
contracfl to pay them is to make the specified debts liens upon the fund,
and equity will enforce payment out of the assets in the assignee's hands.
!}. 150. Novation remains, however, as the means to relieve a retiring
partner, i 146, u. i. Running contradls continue to bind the retiring
partner. The contract charged the partner, and the fulfilment of it is
not a new obligation created after his retirement, 'i 146. An exchange
of partners is sufficient consideration for a release. ^ 146, n. 2. Taking
security is ambiguous, either collateral or in satisfadlion, and substitu-
tion must be proved. A note in the unchanged name of the firm does
not release the retiring partner, unless the creditor knows of the change
and means to substitute the new for the old obligation. ^ 146, n. 3. The
retiring partner's liability for the outstanding debts is the foundation of
his equit}' to prevent a diversion of the assets. | 147 & n. 1. The equita-
ble lien is a term of the sale. He enforces the destination by joining a
creditor's bill, i! 147, n. 2. z^. Marshalling. The creditors of the new and
of the old firm come in upon the assets on equal terms. § 147, n. 3. A new
partner is necessary to make a novation binding. The creditors had the
several contracts of the old partners in the business contract of the firm.
By the technical formula the joint was different from the several contradl,
and, as a substitute, furnished a consideration. ^ 149. Notice to creditors
by retiring makes him surety of continuing partner in New York. The
receipt of rent would be a substitution of the new firm, if the landlord
knew of the change and accepted rent of the new firm, especially if the
term had expired. <! 149, n. 3.
CHOICE OF A PARTNER.
The choice of a partner is the right to seledl him. Consent is the tie,
and without it there is no partnership. This choice relates, and should
be confined, to the relation between the partners. It has been errone-
ously extended so as to affecl third persons. They don't care what the
partners agree to. Investing an assignee with a right to control the firm
property would make him a partner towards third persons. If he be-
comes a co-proprietor, he is like a dormant partner. If the sub-partner
is intended to be a partner, he becomes one in spite of the form, 'i 68.
No choice of partners in a mining partnership. ^15. t^'. Mining Partner-
ship.
CIVIL LAW PROCESS. ^^77, n. i. t/. Procedure, CONTRACT, v.
Contra6l. of SET-OFF. ^ 130, n. 8, 9, 12. v. Set-OfF.
CLAIM. V. CONTRACT.
628
Index.
CLERK.
Clerk's knowledge of employer's a<fls and declarations imputed to
principal. | 69, n. 16. v. Holding out. Not between partners. ^ 167, n.
4. Firm's guarantee of faithful performance by clerk, 'i 71, n. i. v. Ex-
ecutor. He cannot create liabilities against the firm, but he may carry out
contradls made by the firm. I 130, n. 10. May be employed by liquidating
partner. 1 178. v. Liquidation.
CLUB. § 16, n. I. V. GAIN.
CODE, Napoleon. Adopted Felicius' definition of partnership. ? r6, n.
d. ratio of profits to contribution. >/, 36, n. 2.
COKE, Lord. Land not subjedl of partnership, g 8. Profits equal to
property. ? 57, n. 4.
CO. LITT. Statement that Law Merchant no part of Common law. <! 11,
'', n. w.
COLLYER, John. Release by partner. J 117, n. n, a. Accounts of iso-
lated transadlions during partnership. (! 159, n. i.
COMITY.
Special partnership recognized by. The recognition includes the im-
munity of special partners. The failure to meet the statutory require-
ments of record and cash payment would not forfeit the privilege, if not
constituents of the partnership at the domicil. The law of the domicil
also regulates the process against a special partnership, although the law
of the forum is different. ^ 37, a.
COMMENCEMENT OF PARTNERSHIP.
The intention of the parties determines the commencement of the busi-
ness. Partnership would not be frustrated if war intervened before adlual
commencement of the business by citizens of belligerent countries. It is
not war which suspends the relation, but it is the interdicflion of com-
merce, and, in the meantime, adls of business might establish a partner-
ship. By performing the acfts the parties show that they have waived
preliminary conditions. But a partner could not begin and establish
partnership by an adl in excess of his authority. Thus the authority to
endorse commercial paper did not justify the endorsement of forged pa-
per, and bind co-partner, as a legitimate adl of business. Though the
contra6l of partnership was not acfhed on, one party could pledge his co-
partner's credit. The contrail formed a partnership until rescinded, al-
though not carried into efifetfl, but abandoned. ^17.
COMMERCE. Interdidlion of ^ 17, n. 3. v. Commencement of Part-
nership.
629
Index.
COMMKRCIAL CONTRACT. Nature and remedies for breach of. :'.
Contxacl. :'. Procedure.
COMMERCIAL PAPER.
Joint payees of commereial paper at first held to be partners. The
joinder on commercial paper by the owners was a joint act in trade. .\s
loni; as the paper was used only as an instrument of trade, the joinder as
payees was proof of partnership in the document, 'i 6. The cases have
Ijcen explained thus : The acceptor was said to be estopped, because he
had accepted the paper after it had been endorsed by only one payee.
But the ruling was changed by the faci that commercial paper outgrew
the limits of trade, and became a convenient instrument, which was used
by persons not engaged in trade. Being no longer confined to trade, a
joinder on commercial paper is not proof of a joint acT; in trade. Hence,
a payee could not endorse for his co-payee, i. 6.
Nothing but partnership creates implied power to bind by promissory
note. ii49, n. i. The authority of a partner is defined not by partnership
principles, but by Commercial law. There is no authority implied be-
tween the firm and its members, but only between the firm and third per-
sons. .\ny paper by the partner to his firm, or by the firm to a partner,
should, on partnership principles, be notice of an accommodation, and
give the holder notice. But the forms are disregarded in business, and
the law has followed usage, and charges the firm without reference to the
form of the paper. ^ 124, n. 6; | 126, n. 4. As no restridlion can be ini-
jMDsed on the partner, and he can charge the firm by firm paper for his
individual use, there is no limit to his power. ^ 126. No argument from
jKiwer given by commercial paper. ^ 135. If a partner used the firm name
for his separate debt, and the co-partner had to pay a moiety of the debt
to release his separate estate from execution, he could recover payment
from the partner. The payment would be under a duress suflficient to
entitle him to reimbursement, i 126, n. i. The acceptance by a partner
of a draft upon his firm charges him as well as the firm, so that he has no
additional credit to pledge. ?. 126, n. 2. Note charges partner held out.
? 69, n. 18. V. Holding Out.
Partner may get firm paper discounted to repay himself his advances.
? 184, n. 3. 2: Advances. Partner may accept a draft on the firm in his
individual name, ?. 124, n. i, and a partner's note can be shown at the
trial to be for a loan to the firm. § 124, n. 6. A partner can not be re-
stricted in using commercial paper, because it is incident to business.
? 124, n. 2. A partner's promise to give commercial paper would bind
the firm. </ 124, n. 3. Partners in different firms can exchange commer-
cial paper for mutual accommodation. ^ 124, n. 4. If one partner makes
and another endorses a note, the application of the proceeds would not
charge the firm on the note, ?. 128, n. 3, but if the credit was given to the
firm the loan could be recovered from it. 'i 124, n. 5. A partner cannot
make accommodation paper in firm name. No one taking such paper,
630
Index.
with knowledge, cau recover. ). 125, 11. 1. The endorser of such paper
cannot retain pledge received for his endorsement. \ 125, n. 2. Tarty to
fraud in negotiating firm notes will not be compelled to recall them. The
remedy is against the firm, which can recover at Common law. ?, 125, u. 6.
Anything which discloses to lender an individual transa(5lion should
put him on inquiry. \ 1 25, n. 5. The change of individual to firm paper
at suggestion of endorser would be notice, ^125, n. 3, or third person's
note with firm endorsement in answer to demand for security lor a per-
sonal loan, i 125, n. 4. If the partner makes a note payable to a stranger
who endorses it, and then the partner's firm endorses it, the taker sees an
accommodation endorsement by the firm of a partner's individual debt.
\ 127, n. 4. Notes of partner endorsed bj' firm and negotiated by him, are
no notice of individual transacflion. \ 127, n. i & 2. A firm note made by
a partner in two firms to and endorsed by himself and the second firm, is
not notice that the paper was not for the second firm's benefit. \ 126, n. 3.
\ 127, n. 5. Partner's exchange of firm notes for a stranger's notes, which
partner endorsed to take up original firm notes, is binding. ^,126,0.5.
Firm note endorsed by a stranger presumed a firm asset if partner holds
it, unless endorser had negotiated it in the market. <; 126, n. 6. Usage for
single partner to keep bank account and give checks makes blank check
to co-partner available for him to negotiate in firm business. \ 127, n. i.
If the firm draws on a stranger, who accepts the draft, which is payable
to the partner and endorsed by him, the taker holds the firm. \ 127, n. 6.
Dissolution ends the power to use commercial paper, even for liquida-
tion. \, 178, n. 3, 4, 5. Except in Pennsylvania, liquidating partner no
power to issue commercial paper, 'i 184, v. Liquidation. Partners
charged on commercial paper though not parties to it. ^,44, n. S. v.
Name. English statute makes parties signing bills and notes alone lia-
ble. This ena6lment alters the law, by excluding the parties in interest,
who could always be sued. \ 76. Analogy for commercial paper deceptive,
because power exceptional. \ 135. Firm creditors cannot set-off payment
of partner's individual debt against bona fide holder of firm paper. ■(; 167,
n. 5 (t. If firm note included a separate debt, payee can recover but only
the amount due by the firm. ? 167, n. 5. c. If partner gives firm paper for
his individual debt, co-partner need not repudiate transadlion. '^. 168, n.
I & 2; § 169, n. I. V. Tort. No implied power to bind firm by commercial
paper in non-commercial partnerships, v. Trust Funds. Mining partner
cannot bind firm by commercial paper. \ 15, n. 4. v. Mining partnership.
Partners liability on though not parties. ^44. z/. Name. If in partner's
individual name, question for jury whether firm or individual transadlion.
\ 1S6, n. 6. V. Liquidation. Partnership must be established to justify
commercial paper. ? 49, n. i. v. Powers.
COMMERCIAL PARTNERSHIP, v. TRADE.
COMMISSION on sales not evidence of partnership. ? 63. v. Evidence
Commission on profits. \ 60.
631
Index.
C(>MM(»N A('.KNT of Different Principals. 5; 69, n. 11. v. HOLDING
OIT.
COMMON I.AW TROCESS. r. PROCEDURE, z/. CONTRACT.
COMMON MEMBER
Furnishes no basis for marshalling assets, l 205. v. Marshalling. By
subrogation surviving escapes payment and enforces payment from de-
ceased partner's estate. ^203. y. Marshalling. Litigation, when allowed
between firms with a common member, results in limiting execution to
joint assets. \ 161, n. 7. Obstacle inherent, and not only in procedure.
Ktjuity compelled to put common member in plaintiff or defendant firm.
'</. 163. Only basis a settlement of both firms. \. 164. Seems to be acquir-
ing capacities by different trades. \ 164, n. I. Like a Roman slave, who
had no caput, not like Roman freeman. \ 164, n. 5, 6, 7.
COMPANY, Distinction between, and Corporation, v. SPECIAL PART-
NERSHIP.
COMPENSATION. Liquidating partner has no right to, \ 186, \ 188.
Compensation for management by firm which used trust funds con-
tributed by trustee partner, v. Trust Funds.
COMPETITION. Partner cannot compete with firm. §151, ? 212. v.
Good Faith.
COMPOSITION. V. RELEASE.
CONDUCT, General, evidence of partnership, i! 69, n. 4. v. Holding Out.
CONFESSED JUDGMENT, v. JUDGMENT.
CONNECTICUT has changed Common law process by statute, and made
firm a party. iJ 76, u. i. v. Procedure.
CONNECTING LINES. i>62, n. i. e. z;. EVIDENCE.
CONSENT.
A partner may be bound without his consent, although partnership
arises from consent. The consent refers to his co-partners, and the con-
tracft by which he forms the relation with them. He is not bound to
strangers by consent or on the partnership contrail. That is foreign to
them ; they sue him for his adt. The doing a joint acfl charges the adlors
as co-principals. If parties intend to aA like partners to secure an end
without being partners, they are liable as partners. The effeA of their
joining charges them in spite of the intention or agreement not to be
partners. §45. Effedl of domicil on co-partner's authority. I 184, n. 3. f.
Liquidation.
632
Index,
consideration
Implied for services at request between members of a family. ^ 2, n. 2.
V. Family Relation. Additional partner consideration for release of re-
tiring partner, g 146, n. 2. The promise bj- continuing partner to pay
the firm debts is not consideration for the release of the retiring partner.
'''/. 95. V. Contract. Validit}- of release depends not upon the seal, but
upon the receipt of the consideration. ? 117, n. 2. Title to land results to
firm from payment of price. ^112, n. 7. z'. Land. Denial of partner's au-
thority puts holder to proof of consideration, ii 184, n. 3. Consideration
for contract of partnership. | 23. v. Partnership; supports indemnity to
co-partner, 'i 49, n. 3, a & b.
CONSPIRACY. Agreement not to bid above limit for recrints. ^ 21 1. n. 2.
CONTINUING PARTNER.
V. Change of Partners. May sever contract. >/. 144, n. 3. v. Change of
Partners. His liquidation may be the security for price of retiring part-
ner's share. ^ 186. v. Liquidation. If insolvent, retiring partner or firm
creditor may enforce agreement to pay debts. <; 147, n. 2. v. Marshalling.
Continuing may set-ofif debt of retiring partner. {(84, n. 3. :■. Set-Off.
CONTRACT.
Construdtion of contradl of partnership for court. ^ 21. v. Partnership.
Contra<ft binding until rescinded, although not adted upon. ^17, n. i. r-.
Commencement.
Right to make contra<5l result of power to sell, which is a constituent of
trade. ^ 3. v. Powers. How does the law charge parties on a contract when
they have made none? The law implies a contradl in order to enforce the
duty. The partners have joined in a transadlion, and the law assumes they
contra(5led to perform the adl together, and then charges them for the
breach of the implied contradl, which has nothing to do with the partner-
ship contradl. ? 46. This contradl is imputed not only in joint adls, but is
implied in all joint receipts, occupation, use or possession of property.
1 47. The efFedl of implying a contradl as the remedy for a tort, 'i 48, n.
2. V. Tort.
The contradl which partners make in transadling business is joint ni
form but severable in fadl. ^ 78. This appears in the execution. Also in
equity and bankruptcy the personal liability is enforced, but the Common
law process prevents the enforcement in the first instance. The Common
law did not furnish a remedy for the commercial contradl, or adapt one
to the business engagement, but proceeded as if it was the old joint con-
tradl. ^ 79. Joint contradl admitted of but one judgment, and unless
plaintiff could effect service upon all, he lost his recourse against the
non-served partners. ^ 81. v. Procedure. The commercial contradl en-
forces payment from all the contradlors. The ordinary contradl, at the
Civil law, apportions the liability among them, and that was the rule at the
633
Index.
Roman law, but the commercial coutradl, in all countries, is in solido.
The joint contra^ gradually got severed. The wedge was inserted by
Lord Mansfikld. He m;ide the defendant waive a joinder unless he
pleaded in abatement. This ruling admitted several contrails, and if it
had been carried out would have given several remedies. ^80. This
change has been effedled by statute in Colorada, Alabama, Kansas and
Iowa. The defendant's right would have been protedled by a plea of
non-joinder. That would make a co-partner also subjedl to execution,
and enforce contribution in advance. |8i. The effedl of joint contract
upon procedure, v. Procedure. The distindlion between a joint and a
joint and several contra(5l, it was decided, has been obliterated; but co-
obligees must join, and suit against two would not justify judgment
against one on his individual contrail. The joint and several contradt is
no better than the joint contradl. The abstra6lion of a joint obligation,
which is not made up of the individual obligations of the partners, is the
ficlion which produces the mischief. The judgment would be a merger
of the contracfl, although the plaintiff eledled to sue one. This fiAion
exists at the Civil law, and is fully discussed by German authors. The
change was effected by converting this joint contradl into the several con-
tracts of the partners. Lord Mansfiei^d's allowance of the plea in abate-
ment acknowledged a several liability of each partner to suit. \ 92 The
severance was carried forward by C. J. Marshall, who said that if the
judgment merged the claim, the judgment must bind the co-partner. \ 93.
The modern procedure shows that the severance is complete, because a new
and independent suit is brought against the other partners after judgment.
The former method showed a joint cause co-extensive with the defend-
ants; the declaration against any but the defendants served was bad. Now
there is no bringing in of other defendants, but a new suit lies against
them. That the joint contracfl is severed, appears from this: The relin-
quishment of the joint contradl formerly served as consideration for a sev-
eral contract, but now it does not. The plaintiff already has the separate
coutra(5t in the joint contract, which is an aggregate of all the contradls
of the partners. \ 95. The business contradl is simply an aggregate of the
partners' contradls ; the jointness is only a form like the firm, the real con-
tradls are by the partners. ^96. This appears in set-off. A partner suing
to enforce a separate claim is subjedl to a set-off of the firm debt, which is
thus several, and corresponds to the claim. ^96, n. i.
If the parties apportion the claim, they can enforce it at law. The law
divides their liability, and will recognize their doing what it imposes as a
duty. \ 96, n. 2. A mining coutracl charges the retiring partner. § 146,
n. 1. V. Change of Partners, or deceased Partner. \ 175, u. i. A contradl
severed and apportioned according to the consideration. § 144, n. 3, 4, 5.
V. Change of Partners. Common law charged common member upon
contradls of both firms. \ 205. v. Marshalling. Tort erroneously assimi-
lated to a contradl. ''/, 139, n. 6. v. Tort.
634
Index.
contribution.
The eflFedl of a contribution is to show that the contributor is a proprie-
tor of the firm stock, and a proprietor is a partner. ^ 4. The contribution
need not consist of material property ; it might consist of skill and ser-
vices, if the co-partner accepted them as an equivalent. Nothing pre-
vents the partners from waiving a contribution ; but their waiver does
not affecfl third persons who treat every partner as contributing, and on
that account owning the firm stock. ^ 4. Loan for contribution. ^ 19. v.
Loan. Partners might buy directly as a firm for their contributions. If the
purchase was made on firm credit, without any intermediate and separate
ownership, the firm would be liable for the price. If each purchase of-
fered as a contribution is subje6l to acceptance by the co-partners, the
seller could not hold the firm. The purchase, unless accepted for a con-
tribution, would not become a contribution. ^ 19.
A partner contributes the use of his property during the partnership,
but not the property, unless it is necessary for the business. This is
shown in real estate, where it does not form the substance of the firm
business. The title remains in the partner. This is generally the case
with fixed capital. The reason why merchandise vests in the firm is be-
cause the use alone would be inconsistent with trade. Buying and sell-
ing involves ownership, as a loan involves title in the borrower. The
transfer is inevitable for the partnership business and for third persons.
Although not made for the partners inter se, yet the efifedl is a legal trans-
fer of title. Hence, forming a partnership avoids a policy which prohibits
a change of title. A partner cannot retain the title to his contribution.
It was once so held, but the ruling is inconsistent with partnership. If
the original stock did belong to the contributing partner, the stock which
replaced it would belong to the firm on whose credit it was bought, and
the seller would have no vendee's lien on the new stock. The firm to
which the contribution belongs during the partnership bears the decrease
and gets the increase in value of the contribution during that period.
This is also the German and Austrian rule. The rule is extended to
fixed capital which does not become firm property, if the addition cannot
be separated from the original contribution. The improvement would be
attributed to the firm which enhanced the propert)' by its business or its
funds. The partners' agreement, however, would change the rule and
enable the contributing partner to withdraw his contribution and secure
the enhancement for himself, unless the firm had made improvements
with its funds, and he had not objedled. Then the court would treat his
acquiescence as a waiver of his individual claim. ^ 28. Although the use
is contributed, and the property passes to the firm by the necessity of the
business, yet the title will be held by the contributing partner between
himself and his co-partner. The contribution becomes firm property only
for the exigencies of the business. ? 29. The inclination of the court is
in favor of making the contribution firm property. As the leaning is to-
635
Index.
wards vesting the contribution in the firm, slight evidence will be suffi-
cient to carry it to the firm. An ultimate share in the proceeds of a mine.
if sold, carried the mine into the firm, 'i 30.
The English theory of contribution is that it becomes firm property out
aud out. If the contribution was lost, the property, being shared like
the profits, would be lost by all the partners. Upon this theory one
partner .should not make up any part of his co-partner's loss of contribu-
tion. The loss would be borne by all as proprietors. The English, how-
ever, do not consistently adhere to the view which they have taken. The
partners share the assets, not in proportion to their shares of the profits,
but according to their contributions. By the Massachusetts theory, the
contribution is a debt, and each partner must repay it, like any firm debt,
in proportion to his share of the profits. If a partner is insolvent, or out
of the jurisdiction, the solvent partners, or the partners amenable to pro-
cess make up the insolvent or absent partner's quota of liability. But
the debt theory is not carried out. There can be no debt during the
partnership, for the lender cannot sue himself for its recovery. The
Massachusetts courts make the contribution revert to the partner at the
dissolution, though a lender has no right to take possession of the prop-
erty which belongs to his debtor without legal process. The loan does not
carry interest, 'i 31. The Massachusetts theory is adopted in some other
States. In Georgia, the agreement of a partner upon dissolution to take
the assets and pay the debts, charged him with liability for his contribu-
tion, which was ranked as a firm debt. In Illinois and Indiana, the
partners were charged to make up a partial loss of contribution, accord-
ing to their shares of the profits. The method of sharing the loss of con-
tribution, suggested by Judge HOFFMAN, was this: Each partner lo£es
his contribution which he risks in the business. If a partial loss, the
distribution of loss is in proportion to the contribution. After the con-
tributions are exhausted by debts, the loss is divided among the partners
in proportion to their shares in the profits. New York did not adopt the
division of loss according to contributions, but enforced the liability of
each partner to pay the loss of contribution. An agreement might restore
the correct method of sharing the loss, but, unless unequivocal, the courts
will not let it supercede the established rule. An agreement to share the
depreciation of stock like the profits, did not prevent the inference of
sharing a loss of the stock in that proportion. The only State which car-
ries out the debt theory consistently is Germany. The German code makes
the contribution carry interest from the start. ■^32. The original theory
was that the property in the contribution remains the separate estate of the
contributing partner, subjeA only to the temporary transfer to the firm
during its continuance. It was owing to a curious oversight that this
theory was not maintained. Pothier, for some idiosyncrasy, did not
adopt it, and the French codifiers followed him. The Germans followed
the French Code. ^33. Pennsylvania is the only State which divides the
loss of capital in proportion to the contributions. Judge Sharswood is
636
Index.
entitled to the distinction of re-discovering, without historical aid, the
nature of the contribution in a partnership. He apprehended at once, by
legal instinct, the character of the contribution. In unearthing this funda-
mental principle, he exhibited a profound knowledge of the partnership
relation, 'i 34. He showed equal insight in detecfting the source of a part-
ner's equity. ^ 102, n. 2. A partial loss of contribution is distributed in
Pennsylvania according to the contributions. They, being separate prop-
erty, are lost in whole or in part by the owners. The English do not show
any confidence in either theory which they have adopted. A slight change
by contract will induce the courts to recur to the division of the loss by
the contributions. An agreement to divide the assets according to the
partners' interest in them was sufficient to measure the loss by the con-
tributions. Massachusetts disregards its debt theory with equal facility.
The guarantee of profits for the first year relieved the partner guaranteed
from all liability for his co-partner's contribution of |75,ooo. An agree-
ment for an interest in the ship and cargo, invested the supercargo with
title to the property contributed by his co-partner. ^ 35. The ratio of
profits may not be fixed by agreement. Then the share of profits will
not serve as the standard to measure the loss of contribution. But in the
absence of contract, the law may divide the shares among the partners
according to their number. This is the hard and fast rule of the German
Code, and under it the sharing of the loss will include the contributions.
The French code provides for the sharing of the profit and loss in default
of agreement, according to the contributions. The English method does
not regulate the subjedl by law, but leaves the fadl for ascertainment by
the jury, which finds what share each partner should have of the profits.
This introduces the experts in each trade, and fixes the share by usage and
custom. It is only in default of any evidence that the division by heads is
adopted. 1 36,
There is nothing peculiar about a special partner's contribution, except
that it must be actually made. ^ 37. If property contributed by a partner
■was not owned by him, the owner could reclaim it, unless he authorized
the partner to make use of the property. Then his use of it in the firm
would make it his debt, and not the debt of his firm. § 38. v. Trust Funds.
Contribution in services, 'i 54. v. Profits. Profits as increment of con-
tribution, i 54, and ground to charge partaker as a partner. | 55. v. Profits.
The correlation of profits and contribution is not inconsistent with the
theory that the partnership has only the use of the contributions, for the
use carries the ownership during the partnership. ^ 57. Contribution of
deceased partner's estate. 1 74. v. Executor. Contribution by infant
partner and its recovery. | 137. v. Infant. Assets marshalled according
to theory of contribution. ?, 207. The loss of contribution entitles part-
ner to consider business a failure and dissolve. ? 173 & n. 8. Contribu-
tion might be bought on firm credit. ^ 115. Services capitalized if ac-
cepted as a contribution. § 54. v. Profits.
637
Index.
CONVERvSION
Uf Assets. V. Torts. Conversion of stock by sheriff, v. Execution. Of
Land. v. Land. Out and Out. v. Marshalling.
CONVEYANCE.
Firm not a party, but deed to partners trading as and mortgage by them
thus trading sufficient, g 1 1 1 , n. 2. v. Land. Joinder of partner in deed of
conveyance, i! 112, n. 18. Pennsylvania method. ^. 109, n. 7. v. Land.
COOK, Francis W. Advocate. Scotch pracflice. ? 96, n. 3.
CO-OWNERSHIP.
Natural inference from law of tenure. ? 67. Raises no inference of
partnership, v. Evidence. i\ Division a sale. v. Sale."
COJ'RINCIPALS.
Parties who deal as co-principals, though not in trade, may render
themselves jointly liable. The joint purchase, use, or possession of prop-
erty charges them for each other's acfts, without reference to partnership.
§ 44, V. Consent, v. ContraA.
CORPORATION.
Parties trading in corporate form are partners. The directors and offi-
cers are agents of the stock-holders, who are the principals. Anything
done within the scope of the business charges them as partners. Defa£lo
corporation, v. That heading. Ultra vires contradls of. v. Ultra Vires.
Acceptance by, of beneficial legislation, v. Legislation. Judicial dis-
crimination in favor of corporations and against special partnership.
Distin(flion between, and Company. v. Special Partnership.
COTTENHAM, L. C. Firm charged by tort of partner. \ 140, n. 3.
CREDITORS.
V. Marshalling, v. Execution. Separate creditor acquires no title by
transfer from debtor partner, because firm receives no consideration.
\ no. Could not claim proceeds of land if account showed no balance
in his debtor's favor. ? 1 10. v. Land. Separate creditors protedled by
legal title, if vested in their debtor. ? 113. z^. Land. Creditor has a
standing to control liquidating partner. \ 189. v. Liquidation. Bill lies
to enforce continuing partner's agreement with retiring partner to pay
firm debts. I 147, n. 2. v. Marshalling. Creditors of new and old firm
co-ordinated. <! 147, n. 3. z/. Marshalling. Partner creditor of co-partner
for balance of account. ? 201, n. 4. v. Marshalling. Creditors subrogated
to retiring partner's right, if they renounce joint estate. \ 200. v. Mar-
shalling. Creditors have nothing to do with profits, term confined to
partners. ?55.
638
Index.
credit-theory. >, 107. r. preference.
cropper. i 12, n. i. v. landlord & tenant,
CROPS, Title to. § 12. v. LANDLORD & TENANT.
DAMAGES.
Recoverable for breach of contract by dissolution before period fixed,
measured by the profits made during the preceding months of the part-
nership, and not mitigated by plaintiff 's profits made in a new business
before the term expired. ^212, n. 3. Damages converted into a debt by
assimilation of debt to contract. ^ 140, n. 3. v. Tort.
DA VIES, S. D. Receipt of merchandise ground of contradl implied by
law. 1 44, n. 2.
DEATH
Of a partner dissolves partnership without notice. ^ 175, n. i ; ^ 173, n. i.
Death released deceased partner, and carried over claim against co-partner.
V. Procedure. Equity gave relief only after legal remedies were exhausted.
1 86. Adlion also carried over. I 87. Dire<5l remedy against deceased
partner's estate in Pennsylvania, ^ 88, and in England. ^ 88. n. 8. Death of
partner introduces equality of distribution, and prevents any subsequent
setoff which would result in apreference. '•'/.lya. n. 13, 14, 15&16. z^.Set-Off.
DEBIT. Firm debt to partner cannot be colledled in competition with
creditors, because partner also a debtor, 'i 202, n. 2. v. Marshalling.
DECEASED PARTNER
Liable for firm debts. ^74, n. i. r/. Executor. His debt set-off against firm
claim in suit by surviving partner, ^,96, n. i, for balance of firm debt to
co-partner. 1 106, n. 7, b. Deceased partner's estate liable for compensa-
tion to surviving partner who carries on business for it. g 210, n. 4, a. v.
Advance. When estate liable only in equity, withdrawal prohibited.
^ 204. V. Marshalling. Deceased partner's debt set-off in suit by surviv-
ing partner. § 96, n. i. v. Contradl.
DECLARATIONS of Partnership, v. HOLDING OUT. v. EVIDENCE.
Declaration in adlion against less than all. § 94, n. i.
DECREASE of contribution during partnership. 1 28. v. CONTRIBU-
TION.
DEED to or by firm. v. CONVEYANCE.
DE FACTO CORPORATION.
The members of a de fa5lo corporation are not exempt from liability as
partners on any legal ground. Claiming exemption does not confer it.
639
Index.
Ifsclf-iiicori)oratiou is effedled uuder general statutes, aud the statutory
requiremeuts arc not complied with, the organization is defedlive, and
fails to create a corporation. The applicants remain partners. The argu-
ment advanced by MORAWETi, for the recognition of a de /aBo corpora-
tion was this: Ultra vires acls should charge the members of a legal
corporation as partners, if the adts of a de fa£lo corporation charged its
members with partnership liability. The answer to this argument is two-
fold : I, Ultra vires contradls do not exist; 2, As an ultra vires tort is not
an excess of power, but an incident of the business, the wrong would not
be authorized. If in excess of the power delegated, the tort would bind
the tort-feasors, (i 24. Illegal corporations favored by courts, and special
partnership discountenanced, v Special Partnership.
DkGRAY, Mr. Justice. Proprietor a partner. Erred in calling profits a
fund for creditors, g 55 & n. i .
DELECTUS Personae. <> 68. v. CHOICE of a Partner.
DESCENT, Course of, changed in England, not in America, by conver-
sion of land, 'j, 109.
DESTINATION.
The doctrine is founded on the joint tenancy of the partners in the firm
stock, and prevents any disposition, unless the firm is solvent or an
equivalent was received for the assignment. The creditors stand in the
partner's place, and enforce his right for the satisfacflion of their claims.
The assignee for creditors represents them. A partner who takes the
assets and agrees to indemnify his retiring partner against them, charges
himself separately, in addition to his joint obligation, so that the firm
creditors become also his separate creditors. The firm stock, if assigned
for a separate debt, remains subjedl to the execution of the joint creditors.
? 107. Enforced by retiring partner, v. Change of Partners. Not founda-
tion, though ultimate cause of firm creditors' right against joint assets.
§ 99. V. Marshalling Assets.
DISAGREEMENT of partners not a ground for dissolution, unless it
amounts to exclusion. ? 173 & n. 9.
DISPOSITION. V. SALE.
DISSOLUTION.
Dissolution occurs, as a matter of course, upon, i, the death of a part-
ner; 2, the marriage of a single woman, and, 3, the sale, voluntary or
enforced, of a partner's interest. <i 173, n. i & 2. The relation is sus-
pended, I, by the lunacy of a partner and, 2, by war. In other cases the
court will dissolve the partnership by decree, for the following causes : I,
A failure of the undertaking ; 2, the exclusion , 3, the insolvency ; 4, the
lunacy, of a partner ; 5, the abandonment of the business. ? 173 & n. 8-12.
640
Index.
Notice of dissolution must be given, except when caused by death, but
no particular form of notice is required. ^ 175, n. 3 & 4. The notice va-
ries, according to the parties to be notified. A single advertisement at
the place where the business is conducted would be sufficient for new
customers, who are bound by the simple announcement. ^ 176, n. 2. The
old customers are entitled to notice, and it nmst be brought home to them.
^ 1 77, n. I & 2. The holder of firm paper is not an old customer, although
in the habit of discounting it. 1 177, n. 3. Customers crediting the nomi-
nal partner must be notified of his retirement. The other firm customers
could not hold him. 1 175, n. 4 & 5.
In effect, dissolution revokes the partner's agency. As he can bind his
co-partners until dissolution, it must be proved. ^ 178, n. i & 2. When
established, the power to use commercial paper ceases, except for liqui-
dation. § 178, n. 3, 4 & 5. He cannot acknowledge or revive by part-
payment a debt barred by Statute of Limitations. ^ 178, n. 6 & 7. The
dissolution severs the joint title into several titles, but the division must
be completed in fadt. | 179. n. i. Damages may be recovered for a dis-
solution in violation of the contradl. ?2i2, n. 3. v. Account, v. Distri-
bution. V. Marshalling. Partner's absolute disposition of his share a
dissolution. § 171, n. 2.
DISTRIBUTION.
c'. Marshalling. Depends upon the property rights of the partners,
and they can be ascertained only by the theory of contribution which
obtains. The profits are an increment. The partners' quotas and the
charadler of the advance are preliminaries. ^ 207. v. Account.
DIVERSION OF STOCK.
A partner's separate debt is no consideration for assignment by an in-
solvent firm. The firm can use its stock only to meet its own liabilities.
A preference for special creditors would be void, but it would not avoid
the assignment for creditors. The permission of an assignment to sepa-
rate creditors in the proportion of the partners' shares is according to the
New York theory of a tenancy in common. | 106, n. 9, b. The assignee
for creditors could set aside the disposition as a fraud upon the cred-
itors. The retiring partner's equity prevents the continuing partner's
diversion of assets. § 147, n. i. z/. Change of Partners. Using firm assets
for separate account, v. Torts. Diversion of joint to separate estate, v.
Marshalling. Assets diverted to payment of partner's separate debt may
be recovered by assignee in bankruptcy. ? 192, n. 3. v. Marshalling.
Partners may consent to appropriation. ? 192, n. 3, a.
DIVISION by partners of claims or debts anticipates the law, and is
enforced. ^ 96, n. 2 ; ^ 178, u. 5.
641
Index.
DOE, c. J.
Partnership agency. Partners co-principals. ? 44, n. i ; ? 58. Made
partiiersliip question of fa<5l, not of law. Ignored that partnership is a
conclusion of law from the fadls. \ 54, n. 3. Admits that without prop-
erty as basis of partnership, the profits indicate nothing, 'i 54, n. 4. Profits
not a fund for creditors, 'i 55, n. 2. Sharing in double sense, \ 58, n. 2, by
creditor confounded without sharing by a proprietor. \ 58, n. 3.
DORMANT PARTNER.
As co-plaintiff or co-defendant. ^ 54, n. i ; ^ 76 & n. 3 ; \ 77, n. 3. v.
Procedure. The commercial type of undisclosed prin»ipal. 'i 26. At the
Common law, non-joinder of dormant partner an unconscious eledlion to
release him. ? 76. v. Procedure. Enacflment of rule that parties in inter-
est should join, compels joinder of dormant partner, which is inconsistent
with the nature of the relation. \ 76, n. 13. His not being joined released
him, although he kept plaintiff from knowing of his existence. \ 84. v.
Procedure. No dormant partner at the Civil law. I51. Superceded by
special partner. \ 3. v. Special Partnership.
DOUBLE PROOF. Restored in bankruptcy. ? 205 & n. 6. Against
trustee-partner and against firm. \ 48, n. 3.
DOWER.
Land held for firm not subjecfl to dower of title-holder's widow. \ 208,
n. 7. Attaches to partner's interest in firm land upon re-conversion, \ 109,
V. Land. No dower out of firm land. \ 112, n. 13, 14. v. Land. In Penn-
sylvania, widow cut out by lien of a decedent's debts. \ 112, n. 15. In
New York, husband a tenant in common, and widow with both legal and
equitable lien, has a preference over creditors, 'i 112, n. 16. v. Land.
DUAL POSITION of partner. I 99, I 100, ? 1 16.
DUR.A.NTON. Contribution measure of profits. ^136. Profits by Civil law
necessary" to contribution. \ 37, n. 3.
DURATION OF PARTNERSHIP.
Partnership, striAly speaking, cannot outlast a partner's death, because
a change of partners necessarily creates a new relation. But the business
is continued, and that is .spoken of as a continuance of the firm. The
introduction or lo.ss of a member changes the liability imposed by law.
A guarantee for a clerk's faithful performance could not be enforced by
executor, though testator dire<5led him to continue business, f 71.
DURESS. Liability for partner's separate debt makes payment under
duress. \ 167, n. 8, a.
DUVERGIER'S constru<flion of the pearl case. I 63.
642
J!
Index.
EDDIS, Arthur Clement. Do(5lrine of ex parte Waring. ? 106, n. 8, c.
ELDON, Lord. Survivorship in partnership limited to legal title, and
not extended to beneficial. \ 100, n. 2.
ELECTION,
Unconscious, to release unknown partner by not joining him as a party.
77, n. 3. V. Procedure. Equity put creditor of common member to his
ele<5lion. \ 205. v. Marshalling. Cestuy que trust's election to follow
funds or take interest. I 42. v. Trust Funds.
ELLENBOROUGH, Lord. Power to buy corresponds to power to sell
firm stock. ^ 115, n. i.
ENGLISH
Theory and practice in reference to contribution. ^ 31 ; <! 35 n. i. v. Con-
tribution. In default of evidence, share of profit and loss an inference of
fadl. i; 36 & n. 5. Process. | 77 & n. 2 ; ^96.
EQUITABLE LIEN.
The control of the stock by means of an equitable lien would be suffi-
cient for the protedtion of creditors. But, historically, the creditors'
rights are legal, not equitable, and arise from the joint estate. ^ 103. v.
Marshalling.
EQUITY.
Partner's. The partner's equity is the right to have the firm assets ap-
plied to the payment of the firm debts. The equity was thought to be
founded upon the property interest of the partner. When he lost his in-
terest in the property, either by voluntary or adverse sale, the equity was
held to pass with the interest. Judge Sharswood held that the equity
was founded upon the partner's liability. The unlimited liability of a
partner is a construcftion of law, not an obligation intended by the part-
ners, and equity relieved the partner against the outstanding liability.
? 102. V. Change of Partners. The destination by partners of stock to the
business fixed its character and created a joint estate, which was pledged
to firm creditors, and could not be converted to any other purpose without
the consent of the firm creditors. The partners, if insolvent, could not
sell, except for value. Each partner has the right to prevent any diversion,
and this right is called his equity, because the remedy is generally equita-
ble. The right is to protedl his separate estate, which might be called
upon to make up the loss caused by a diversion. The firm creditors
avail themselves of his equity to enforce the distribution among them-
selves as the beneficiaries. As the objecft of the equity is tb protedt the
partner's separate estate, his legal liability for the firm debts in his sepa-
rate capacity is the foundation of this right, 'i 106. n. 5 & 7, also v. Execu-
tor. If the equity was founded upon his property right, parting with his
643
Index. .
interest would leave him exposed to unlimited liability for the firm debts, |
and at the same time deprive him of the control over the stock w liicb
should be marshalled for his relief. A nominal partner who has no prop- i
erty interest, would, by this theory, have no equity. § io6, n. 4. But if j
held out as a partner, the firm creditors would be preferred to the indi- |
vidual creditors of the contributing partner. As the partner held out
would be entitled to marshal the assets for his relief, the firm creditors 1
would, through his right, be entitled to the assets. ?, 69, n. 19. The right I
cannot be relinquished or waived, for the creditors are parties to the j
arrangement, and the bar, like an alienation, would be a withdrawal and 1
a fraud upon them. >/. 106. Retiring partner's continued liability for the |
firm debts is the foundation of his equity. ^ 147 & n. i. v. Change of j
Partners, z: Marshalling. Equity's restricflion of creditor to one of two \
funds the origin and extent of marshalling joint and separate assets, v. j
Marshalling. Firm creditors do not depend on the partner's equity for
recourse to firm stock. They have an independent right, ? 194, n. 3. v.
Marshalling. Equity will not open judgment to bring in after-discovered
dormant partner. | 85. z/. Procedure. Set-off is a medium of equity. ? 130,
n. 4. 5. 7-
ESTATE.
The estate prevents separate creditors from seizing their debtor-partner's
share. His dominion as owner is controlled by his co-proprietors, whose
rights prevent any withdrawal, and exclude the separate creditors, who
stand in the partner's shoes. 1 100. The joint estate gives a status. v.
Status. The joint estate survived upon a partner's death. The property,
as well as the claims, survived to the co-partner, and did not go to the
deceased partner's representatives. <! 99 & n. i ; § 103. The surviving
partner did not take as a new acquisition, but by original title, which
related back to the beginning of the estate. This was recognized in
reference to real estate, as soon as the liability for debts attached to real
estate at the Common law. Source of creditor's control of firm stock.
§ 103. V. Equitable Lien. Estate personified. ^ 103.
ESTOPPEL, Partner by. v. HOLDING OUT.
EVIDENCE.
Of Partnership. Proprietorship shows the title of a principal in the
business, f. Property. Profits show ownership, z/. Profits. The capacity
of a principal, if the only clue to partnership, would make the relation a
question of intention or a state of mind. The legal effedl of the distinction
between a principal who is not, and a principal who is, a proprietor is im-
portant. Irthe proprietor is a partner, the evidence of his proprietorship
establishes his position by law ; if proprietorship does not prove him to be
a partner, the law does not regulate his status, but it is a question of fadl
for the jury. The firima/anes, which infers a partnership from exerting
644
Index.
he right to take profits, proves that the law determines his standing. The
i>rima fades stand until it is proved that the right was not exerted by
/irtue of a title to the profits, but by appointment from the proprietor. >,, 54.
3n the theory of principal and agent, partnership is a question of the
jartners' secret intention, i'. Property. With intention as the test, the
iffedl would be that partnership, which has become an establishment of
aredit, would be reduced again to the standard of a bargain, or of a private
irrangement between the partners, and the public benefit of an institute
jf credit would be destroyed, 'i 57. The inference of property from shar-
ing the profits is not peculiar to partnership ; it is the general rule of law,
ind applies in partnership as elsewhere. The confusion arose from the
term "sharing:" The sharing by a proprietor and the sharing by a non-
proprietor. The first was partnership, the second was the opposite of part-
aership. If sharing is the inducement to partnership, it must involve the
contribution to a joint business for the purpose of making them. The
means (a partnership) must be willed as well as the result desired, •i; 58.
The law was preserved by denying the eff"e6l of a partnership unless the
sharing was by a proprietor. The discrimination was efTedted by exceptions
which were classified, and which amounted simply to the re-establishment
of the original effe<5l of sharing the profits as proprietor. The exceptions
were : ist. Payment of wages or salary out of profits ; 2d, Payment of em-
ployee, or extension of hiring to any subordinate ; 3d, Managing, or carry-
ing on, business for the principal, if not also for the manager. The
exceptions are A-erified by Criminal law, which sustains indi(5lnient agair.st
member of any class, although he claims to be a partner. Cox v. Hickman
does not establish any new position. The creditors carry on the business
for the debtor after reimbursing their debts; if they carry it on for their ow n
benefit, they become partners. This is the distindlion between an assign-
ment for creditors and a sale to them by the debtor. ^59. The foundation
of the distincftion taken between sharing profits and receiving a sum equal
to a share of profits is the proprietorship of a partner. The position of a
claimant was distindlly expressed by disavowing a right to the profits, and
by presenting a claim against the proprietor for an allowance by him of a
sum corresponding to a given share of profits. This form of statement was
abused, by using it as a pretext to disguise the real position of the proprie-
tor, who thus escaped liability. The pretence is not sandtioned bj- law.
The court will investigate and find out the real nature of the arrangement,
and if a proprietan,'- title exists to the profits, no phrases will change the
fadl. I 60. The efFe<5l of sharing both profit and loss was said to prove a
partnership, without any doubt. Eut sharing the loss is conclusive of
partnership only upon the principle that a proprietor is a partner. If not
necessarily a proprietor, the agreement of principals might be to share tl;e
loss and yet keep the business independent. They might share the losses
and yet not be liable for the miscoudu(5l of the principal, who failed to pay
money received for the transadlion, but misappropriated it. The other
principals would not be liable for the price. ? 61. The courts never con-
645
Index.
sidered Rross profits as evidence of partnership, l)ecause the proceeds rep-
resent tlie merchandise sold, and, if divided, give each party a purpart.
They hoKl the producl as they held the merchandise. This view is cor-
re<fl, for the gross profits do not identify the participants with the business.
The captain who received 2-3 difference, or advance, of price for coal be-
tween price at the mines and at the market, would not be a partner with the
owner of the boat and colliery. The owner pays his own expenses, and
the captain includes his in the 2-3 enhancement. The cost might exceed
the increase in price, or there might be no increase. Then the captain
would not share profits. If the cost of transportation just equaled the 2-3
enhancement, the captain would get no profits, while the owner would get
his share in full. The facl that sharing gross returns is held not to make
a partner verifies proprietorship as the test of partnership, because the
stipulation for sharing grossreturnsif by a non-proprietor, would include
profits, and bargaining for an equivalent out of capital, although no profits
were made, should make one all the more a partner if profit-sharing,
though by a non-proprietor, were the test of partnership. But if only by
a proprietor, then there would be no sharing, unless profits were made.
Connecting lines are considered as independent, unless the proprietors
share the expenses of the entire route. That would unite them in inter-
est in the transportation, and charge each for the other. ^, 62. If there was
no common expense, they would be independent. A commission on sales
is interpreted in the same way. The commission discloses no identity of
interest. The broker might sell at his principal's loss. The pearl case of
Ulpian was a commission to sell at a limit. The agent and owner were
not partners, because agent not co-owner, or would have been reimbursed '
his skill, services and expenses by a share in the pearls. At Common law,
both would be liable, but would not be partners, because they did not share
the expenses, 'i 63. A lender is not a partner, although he takes profits
instead of interest for his loan. A loan is the opposite of an interest in
the property. The lender gives up his title, and looks to the debtor for
the return of an equivalent amount. The partner retains his title.
The effect of the statutes, which authorize a loan without making the
lender a partner, is to declare the law, not to change it. The clue to de-
termine the difference between a loan and a partnership is the control
over the money. If relinquished to the borrower, it is a loan ; if retained
by the alleged lender, it is a partnership. The statutes which postpone
the lender, who stijjulates for a share of the profits, create a deferred loan.
The privilege is granted on the condition of a postponement in case of a
competition with other creditors. A loan can be made to a particular i
fund without any personal debtor. This has been allowed in other
branches of law, and extended to partnership. The creditor renounces
his right to hold the partner, and looks only to the profits for payment. | ♦
In the Hindu Rajah's case the original transadlion was a loan, and the 1 j
creditor sequestrated the debtor's property, as if by execution. The i7
amount of interest or profits does not make the lender a partner. The ill
646
Index.
amount indicates the desperation of the borrower rather than the in-
tention of the capitalist to become a partner. A stipulation for both
interest and profits would not charge the capitalist. The profits might
be additional compensation for the use of money, and if no control was
exerted over it, would not necessarily charge the capitalist. The lender
might, under some circumstances, control the property. The control
might be for his protedliou, and be a security for the loan. A single
transaction which could mislead no third persons, because completed by
the one operation, might thus be carried through by the creditor. A
creditor might guarantee the capital for a business and take profits with-
out becoming a partner, although he adled as a trustee in the distribution
of the fund, 'i 64. The stipulation for interest equal to 25 per cent, of
profits, or profits equal to 25 per cent, of interest, would not be usurious.
The interest or profit itself is contingent upon earning profits. If no
profits were made, nothing would be recoverable, and this risk of loss is
equalized by the excess of the legal rate. {; 65. v. also jj 66, n. 6.
A usurious contract would prevent the creditor from being a partner.
If a lender, he is not a proprietor. Taking profits in addition to, or in
excess of, interest does not charge the recipient as a partner, unless he is
a proprietor. This does not apply to holding out. Holding out is in-
dependent of any arrangement between the parties. The risk of lia-
bility to third persons would not justify a contradl for interest in excess
of the legal rate. The loan is not contingent upon the success or failure
of the business. The debtor also gives his personal liability ; (if he did
not, there would be no usury. <i 64, n. a ; ^ 64, n. c). The risk of liability
to third persons does not arise from sharing profits, unless by a proprietor,
and if it arises from holding out, that is independent of the contradl. <( 66.
The inference is against a partnership if effedl can be given to the fadls
without establishing a partnership. The reason of this construdlion is
the reludlance to impose the unlimited liability of a partner, unless it
cannot be avoided. Co-ownership excludes a partnership, because hold-
ing or tenure is the Common law theory of property, and is not superceded,
except by trade necessity. This extends to other property than land. It
was applied to ships, and extended to any fixed capital. To convert such
capital into firm assets requires something more than using it. The parties
must show their intention to convert it into firm property. The Roman law
did not make this distindliou. There the contra(5l regulated the question.
The parties might sue co-owners, and not partners, if they so stipulated.
They made up a team, but retained the ownership of their respecSlive
horses, because they contracfled to sell in partnership. Inference of sale.
Z'. Sale. Of bailment, z'. Bailment. Of fadlorship. r-. Factorship. Of a
gift, V. Gift. ? 67.
Managing business, or general condudt as partner, evidence of partner-
ship. V. Holding Out. Motives for partnership, as well as contradl,
incompetent on the issue of holding out. v. Holding nut. .Any actor
admission by one that he is a principal in the business is competent to
647
Index.
charge him. The facfl of holding out is for the jury. Whether a late
partner becomes a partner again by reason of his wife's receiving a de-
ceased partner's share was for the jury, who determined whether he adled
for himself or as agent of his wife. There is no order in which partners
must be proved. The contra<fl between them implies that an admission
bv one should be a declaration against the others ; but it is not given any
elTecl until, and unless, followed up by a<5ls and admissions by the others.
The admission, however, of partnership between A & B by A in B's pres-
ence would charge B if he did not deny the statement. ^69. Plaintiff
cannot compel co-partner not sued to testify as adverse. He is not an
adverse party, or an adverse beneficiary of the suit. He is liable in a
different suit. ^95, n. 4.
Surviving partner not disqualified by joinder of deceased's representa-
tives, ? 87, n. 3. V. Procedure. Husband of wife, a partner, disqualified
by interest, v. Married Woman. Evidence of firm title to real estate.
V. Land. Issue of partnership, v. Liability. Surviving partner not an
assignee of deceased partner, so as to exclude testimony of opposite party
as to transactions with deceased. ? 121. Contra, in Pennsylvania. Evi-
dence that judgment confessed to defraud creditors puts judgment-creditor
to ^Tooi oi bona fides, 'i 122, n. 9. v. Powers.
EXCEPTIONS
To the rule that sharing the profits is a test, prove the rule. The princi-
ple of the exceptions is that sharing by a non-proprietor is not partner-
ship. The sharing profits must be by a proprietor. \ 59.
EXCLI'SION of partner from the business is a ground for dissolution.
§ 173 & n. 9.
EXECUTED CONTRACT. ^117. v. ASSIGNMENT.
EXECUTION.
The Common law execution takes the partner's interest, and the pos-
session under the levy is referred to the title. Therefore a sale of the firm
title would not pass it without a joint levy, even though the sheriff held
a joint writ and thought a second seizure of the stock already seized under
the separate writ unnecessary. The sheriff cannot seize the partner's
share, but he can seize the stock in order to sell the partner's interest in
it. The execution (a fi. /a.) required a tangible thing for it to operate
upon, and unless something could be seized, nothing could be sold. The
requirement of the writ being satisfied, the sheriff must not disturb or re-
move the stock, and can sell only the partner's interest in the stock. The
purchaser acquires no right to co-possession, but merely a claim for an
account, to ascertain the balance, if any, coming to the partner. ? 104, n.
5 & 6. .\ separate execution entitles the purchaser only to the debtor's inter-
est after all the firm debts are paid. His right must be defined by an ac-
648
Index.
ocunt. The Common law at first direAed an account, but subsequently
relinquished the ascertainment of the interest to Equity, 'i 103. By the
Chancery pradlice, a sale could not be made until the defendant's interest
was ascertained. ? 103, n. 5. The sheriff seizes the stock for the purpose of
making an inventory, but becomes a trespasser if he removes the property.
He sells the partner's interest in the goods. A special partner has an in-
terest, though it was thought not to be tangible, because he had renounced
his control over the firm stock. <i 104, v. Special partnership. A joint
execution, at any time before a sale, intercepts the title, i; 106, n. 8. The
sheriff's pra6lice of selling on all the writs in his hands, compelled the
court to decide how the proceeds would have been raised and distributed
had the sheriff done his duty. (^ 106, n. 7. If the sale is lumped on sepa-
rate executions, the distribution is made according to the shares of the
respedlive partners. §106, n. 8,/. The proper course, in Pennsylvania,
would have been to hold the fund raised by a sale of the firm stock on a
joint execution for the general body of creditors. This is the established
course of practice where the court must make a pro rata distribution of
assets. The sale under an execution might reasonably be treated as an
admission of insolvency, and justify the court in impounding the funds.
There is no excuse for handing them over to the separate creditors without
exadling proof that no firm debts exist. \ 106, n. 8, </ & b. The separate
creditor could be enjoined from selling, if the assets would not realize
more than sufficient to pay the firm debts. \ 108, n. 8, c. The mistake of
letting a separate execution seize and sell any part of the stock has been
corrected in Pennsylvania, by turning to account a statute passed to sell
the intangible assets of a firm which a fi. fa. could not seize. \ 106, n. g.
The confusion arising from the sheriff's seizure of firm stock for sepa-
rate as well as joint claims, is obviated by the use made of the Adt 8 April,
1873, P. L. 65. A special yi. fa. issues to sell a partner's interest without
levying on the firm stock. Xi'vNO fi. fas., the first in Common law, the
second in statutory form, the second will take precedence. The sheriff is
not bound to execute the first, and if he does, it is only in subordination
to the second. If neither is in the statutory form, then the writ which
made the money will take it, although execution had been levied under
an earlier writ, no lien being acquired by the earlier form, i) 16S, n. /, g,
h & i. The reason why the purchaser of a partner's interest does not step
into his shoes and become entitled to co-posses.sion with the other partners,
is that the sale dissolves the partnership, and the purchaser is interested
only in the liquidation which the partners are entitled to make, unless
they are shown to be unfit. If the sheriff levies on firm stock, and sells
a partner's interest on a separate execution, the co-partner would have no
claim to recover in trover, as nothing passed but the partner's interest,
which was liable to execution ; unless the sheriff delivered possession of
the firm stock, then, by the true theory, the co-partner could recover for
the conversion of the firm property, but by New York law he could re-
cover only for his half as a tenant in common. The equity to control
649
Index.
a partner's share for firm jiurposes is not equivalent to a joint title over
the firm stock, i! 105, n. 9-10. Separate execution creates no lien upon
partner's share, v. Lien. An attachment could not be laid upon the
firm stock for a claim against a partner. The attachment would forbid to
the firm the use of its stock, and amount to an exclusion until the con-
troversy was ended, though sustained in New York, on the ground that
the sheriff could seize the stock and sell the partner's interest, which
would be a moiety. This is according to the theory of a tenancy in com-
mon, or holding by several titles with joint possession, which would be
severed by execution, and the purchaser vested with the defendant's title
and possession. I 104, n. 4. Tenancy in common makes execution sever
joint title, v. Property. Partner's executing firm judgment, if an abuse
of legal process, charges co-partner. 1 139, n. 4. v. Tort.
The stock must be subje<5lto execution at the instance of the firm cred-
itors, and no private agreement can withdraw it from them, especially
where replaced by sale and re-purchase. ^ 106, n. 8, y & k. The firm,
when insolvent, could no more confess judgment for a partner's separate
debt than for a stranger's. Much less would an agreement to appropriate
firm assets to the payment of a separate debt give it precedence over a firm
debt. ? 106, n, 9, a. Firm stock sold on separate execution can be recov-
ered by all the partners. ^ 167, n. 5, b.
EXECUTOR.
Under direction of the will, an executor or, under articles, an adminis-
trator, becomes a partner. He becomes liable for all the debts incurred
during his administration. Equity, however, cannot enforce the articles,
and compel the representative to become a partner. He may renounce.
Then the surviving partner would continue the business, without any
substitute for the deceased partner. ^ 72. The effedl of letting an execu-
tor, or administrator, take the deceased partner's place, is that the de-
ceased partner's estate becomes a contribution, made by the beneficiaries,
who thus become special partners by inheritance, y^ 74. In New York
and Maryland the executor, or administrator, who aAs under the direc-
tion of the testator, or under articles, is exonerated from liability, ? 72,
but elsewhere the general rule is that the executor, or administrator, in-
curs personal and unlimited liability as a partner. He represents the
deceased, and is the only one who can control the destination of the assets.
He cannot qualify his liability. If the diredlion, or agreement, imposes
the duty, he would commit a breach of trust if he did not acSt; yet he
need not administer, for he can renounce. The moment he does admin-
ister, liability attaches. ^73. If the executor, or administrator, becomes
a partner, this may relieve the deceased partner's estate. It enables him
to limit his contribution to part of his estate. His representative could
not contribute any other part of the deceased partner's estate. This would
be a breach of trust, and the beneficiaries might reclaim the funds. The
representative will not be reimbursed for his loss incurred on behalf of the
650
Index.
deceased partner. The contribution is the Hmit of the deceased partner's
liability, even if he a6ls lauder testamentary diredlion, or the articles would
oblige him to act. If the representative allotted part of the contribution
to a beneficiary, he could not charge the recipient for a loss which he was
subsequently compelled to pay. The allotment is a withdrawal. Execu-
tor's creditors can be subrogated to his rights against deceased partner's
estate. To the extent of deceased's liability, i. e., for the portion of his
estate contributed, the representative's creditors may come upon the de-
ceased partner's estate. If creditor is prevented by default from access to
deceased partner's contribution, executor's creditors are affecfled by his
exclusion. They cannot assert his equity. The set-off pradtically extin-
guishes his claim. The creditor of the executor is a creditor of the de-
ceased partner, and, as such, may claim administration on his estate. § 74.
The representative's position is ascertained like that of any partner. The
natural inference is that he leaves the estate in the firm as a loan or in-
vestment, but if he contradidls this inference he will be charged. ^ 75 (§ 73,
n. I,). The representative can escape any liability, and yet continue the
business, by entering into a special partnership and making the deceased
partner's estate his contribution, § 75. Executor enforces partner's equity,
now that deceased partner's estate is liable for firm debts. § 106, n. 6 & 7.
Executor of deceased may be joined in suit with surviving partner. § 88.
EXEMPTION, not allowed out of firm property. ? 103.
FACTORSHIP.
A fadtorship might exclude a partnership. The consignees might answer
for the solvency of their vendees, and thus bear all the losses of the busi-
ness. The consignors, by releasing half the loss, do but relinquish a right
in favor of the consignees, who are thereby exonerated from full liability.
The favor shown the consignees in this exemption, and in fitting up their
store, is not evidence of partnership. | 67 & n. 12.
FAIL,URE, a ground for dissolution. ? 173 & n. 8. v. Contribution.
FAMILY RELATION.
Though the family relation rebuts the presumption of a consideration
for services rendered at request, and partnership is now a contract founded
on consideration, yet its original character clings to the relation, which
grew up in the middle ages as a family affair, and a consideration is im-
plied for a partnership between members of a family as much as if they
were strangers. <; 2 & n. 2.
FARMING in Partnership. U 2. z^. SUBJECT-MATTER.
FELICII'S. Definition of partnership. \ 16, n. d.^
FEUDAL theory of property injected into partnership, I 3, v. Partnership,
and measured partner's capacity by his property. \ 99, 'i 100.
651
Index.
FICTITIOUS name, use of, though prohibited, don't prevent recovery,
unless credit acquired by it. v. Procedure, v. Name.
FI. FA., Kinds and what leviable under, z/. EXECUTION.
FIRM
Not a party, except in States which have changed Common law by statute.
\ 76. V. Procedure. Different firms, if composed of same individuals,
treated as one, no matter how far apart, and a general lien covers aggre-
gate stock. <! 164, n. 3.
FIRM CREDITOR.
A general creditor may enjoin a separate execution creditor from seiz-
ing firm assets. His equity gives him a lien, or interest, to protedl the
assets. \ 106, n. 5. It was so held in New Jersey at first, but this ruling
was superceded, and his right made to depend on a legal lien, which does
not exist without an execution upon the assets. \ 106, n. 5, i? & c. The
joint creditors exclude the separate creditors, and enforce the partner's
equity. \ 106, n. 5, ^.
FIXED Capital does not become firm property. §25. v. Contribution.
? 67. V. Co-Ownership.
FITTING, Dr. Hermann. Civil law indivisible contradl. §91, n. 3.
FOREIGN JUDGMENT, z^. JUDGMENT.
FORMATION of Partnership, Fraud in, ground for corredling .settlement.
{(212, n. 5. z;. Account.
FRATERNITY, A, or Brotherhood, is not a partnership at the Common
law. i/ 16.
FRAUD.
V. vStatute of Frauds. No diverting firm assets to separate use. v. Torts.
In formation of partnership, ground to open statement. ^212, n. 5. v.
Account. Partner to fraud in negotiating firm paper. § 125, n. 6.
FRENCH
Fi<5lion of partnership as a corporation. \ 100, n. 2 & a; § loi. v. Status.
No joint estate for firm, fi6lion of personality a makeshift, privilege of
joint creditors unfounded, analogy of />^tM/z«;« groundless, and credit to
stock because no person. I 164, n. 7. ^ loi, n. 3. Firm creditors no privi-
lege, and distribution should he pro rata among joint and separate credit-
ors. <; 100, n. 3.
652
Index,
french process.
V. Procedure. By French law a civil partnership may be for any benefit;
a commercial partnership, for gain. \ i6. Contribution firm property.
\ 33, n. I. V. Contribution.
FiJSSElv, Dr. Fred. Fransc. Distin(5tion between corporation and com-
pany. I 37, n. d.
GAIN.
It is not every benefit which is sufiicient to serve as the objedl of a part-
nership. It must be gain. This is because partnership came into the
Common law through trade, which has gain for its objedt. At the Civil
law, any benefit is sufiicient, e. g., a park for recreation. But this being a
kind of partnership derived by tradition from the Roman law, is discrimi-
nated from the commercial partnership, which is regulated by the com-
mercial codes, and which resembles our trade partnership. A masonic
lodge is not a partnership, but a social or beneficial association. If money
is accumulated by a club, the members do not become partners by rea.son
of the joint fund. It is an incident, not a controlliug element, of the
association. An association for mutual protedlion, or mutual insurance,
is not a partnership. The purpose of the association is not gain, but
security against loss. Every association for gain, which is not a corpora-
tion, is a partnership. On this ground a car-trust is held to be a partner-
ship. \ i6.
GENERAL conducft as a partner. \ 69, n. 4.
GEORGIA adopts the Massachusetts debt-theory of the contribution.
\ 32. V. Contribution.
GERMAN LAW,
In reference to enhancement or decrease in value of contribution during
partnership. \ 28. v. Contribution. Carried out theory of contribution
as a debt. ? 32. f. Contribution. Ofjoint estate. ^29. v. Status. German
Code. \ 30, n. 8, 9. v. Set-Off". Profit and loss divided, in absence of
agreement, by heads. German Commercial Code. \ 36. Process. \ 77, n.
GIBSON,
Judge, accounted for partnership as an anomaly tolerated as an exception
to principle, and only as an indulgence to trade. Partnership nothing but
a contra6l. If the firm creditors excluded the separate creditors from the
joint estate, he thought the separate creditors thus deprived of a right
should exclude the joint creditors from the separate estates. ^ 102. The
partner's equity a property right. \ 102, n. 2 ; ? 106. Partner's authority
to appear, or employ attorney, like his accepting service, 'i 119, n. 2.
Cannot submit to arbitration. \ 120, n. i, a.
653
Index.
GIFT.
The transa<ftioTi might be a gift, instead of a partnership. The motive,
ordinarily, would not be considered, but where the parties with the one
who acfled for the donees knew of the intention, it might be given eflfecft.
567.
GLUCK.
The purpose classified partnership. § i, n. 3. Services capitalized for
contribution. ^. 57, n. 2. The nature of a partner's contribution. ^33, n. i.
GOLDvSCHMIDT, Dr. L. Buying and selling is the type of trade. § 7
n. 5-
GOOD FAITH.
The utmost good faith was originally exa<5led of the partners in their
dealings with each other, on account of the intimate relation of kindred.
At the present day, property identifies the partners in interest, and limits
the application of the maxim. In reference to property, a partner must
make a clean breast of his knowledge. ? 151, n. i. The property interest
he acquires belongs to his co-partners, i 151, n. 2, whether he competes
with the firm business, 'i 151, n. 3, uses the firm property, § 151, n. 4, or
his position in the firm, ^ 151, n. 5, to secure a separate gain. But en-
gaging in a different business is not a breach of the relation, though it
may be of the articles, and furnish ground for an injundlion, or a dissolu-
tion, 'i 151, n. 6; ^212, n. 2. A partner cannot transadl business of the
same kind apart from the firm, without sharing the profits of the inde-
pendent business with his co-partners. If secretly done, and in competi-
tion with the firm, the partner will be held a trustee for his co-partners.
The partner cannot make a profit in his secret and independent business
which does not enure to the firm. ? 131, n. 3. A settlement would be
opened to make the competing partner account, j; 212, n. 3. The credit of
the firm cannot be used by him, without converting the benefit derived
from its use to the co-partners. He cannot make separate contradts after
a joint one by the firm. He cannot deal with the firm, because his inter-
est will be adverse, to make more for himself as one party to the bargain
than as one of the firm, or of the other party. He cannot use the advan-
tage given him by the firm to make a separate transacSlion for his indi-
vidual benefit, 'i 151, n. 4, 5 ; >!2i2, n. 8. He cannot buy property used
by the firm, or renew leases without being a trustee for his co-partner.
!l2i2, n. 2, 7, 9. He can, however, deal with his firm at arm's length,
and, on the footing of a stranger, by an open course of transaAions, which
show a full knowledge and concurrence by both parties to an independent
business carried on apart from the firm business, though involving diredl
dealings with the firm. The loss or injury resulting from the breach of
good faith is an item of the account. ? 212. v. Account. If partners
brokers, and sale impossible, one may buy for himself. ? 51, n. 2. Part-
654
Index.
ners in mining partnership deal at arm's length as to individual titles.
^ 15, n. 4. V. Mining Partnership.
GOOD- WILL.
Item of account. \ 209. The good-will is an asset, the produdl of the
partners' joint labor. \ 209. The professional reputation is not part of the
good-will, and does not pass by the sale of it. \ 209, n. i, a. The partner
who has sold the good-will may compete with the firm, if he does not use
the name. He will be restrained from using the name. \ 209, n. i, b.
The good-will carries a trade-mark, though it is the name of the selling
partner. \ 209, n. i, c. If good-will unsold, both partners retain the right
to use the trade mark, 'i 209, n. \,d. Neither partner can appropriate the
good-will, and it will be sold for joint account. \ 209, n. 2. If partners
disagree, they will be made to bid against each other for the good-will.
\ 209, n. 3. Continuing partner must account for value of good-will. \ 209,
n. 2.
GORDON, J., shows that present pracflice justifies joining executor of
deceased with surviving partner. \ 88, n. 5 & 6.
GOULD, Tracy. Account lies for isolated transadlion during partnership.
\ 159, n- I-
GROSS PROFITS, Sharing. ? 62. v. EVIDENCE.
GROSS RETURNS, Sharing, 'i 62. v. EVIDENCE.
GOW. Explanation of partner's liability for his contribution. ? 20, n. i.
GREEN, WM. Partner's power to employ attorney. \ 119, n. i.
GUARANTEE
By firm ends with death of a partner. ^ 72, n. i. v. Duration of Partner-
ship. A partner cannot charge his firm for the debt of a third person, or
of his co-partner. The firm note for one partner's debt made by another
would not bind the firm. It would be a guarantee, and, as such, must be
made by all the partners. \ 129. The firm might be compelled either to
pay a partner's debt or be broken up, but the choice of going out of busi-
ness is left. \ 129. A partner in selling a judgment could not guarantee
its payment. The guarantee would be void, though the assignment
would be valid. \ 129, n. 4.
HAHN, Dr. Friederich von. German process. § 77, n. i , a ; ? 130, n. 2, 4,
8, c. V. Set-Off.
HAMILTON,
G. F., Esq. \ 41, n. 4. v. Trust Funds. Mathematical demonstration of
partner'sliability for trust funds contributed by trustee-partner. <^42, n. 4.
655
Index.
HAMMOND, Anthony. The test of joinder is an interest in the contra<5l.
(^44, u. I. Liability of joint contradlors, §44, n. i, of tort-feasors. §47,
n. I.
HARE, Judge J. I. Clarke. The joint liability of the Common law. § 44,
n. I. Creditor's possession of two funds basis of marshalling firm assets.
'i 102, n. 3.
HEIR of deceased partner must convey to purchaser from firm, g no, n.
3. V. Land.
HINDU RAJAH'S case, 'i 64, n. 3, b. v. EVIDENCE.
HISTORY OF PARTNERSHIP.
Partnership grew up at the Roman law. At first, the faniilia was a
partnership. This accounts for societas omnium honor um, and for the
dotSlrine of the strictest good faith in the relation. The relation of patron
and client introduced the voluntary element, and led to the distindlion be-
tween coinmunitas and societas. Farming the public revenues led to the
trade partnership, the only kind which has survived. ? i. Partnership
continued during the middle ages, and trade was carried on generally by
the members of a family, like the Rothchilds at the present day. In a
predatory period the nearness of kin re-established the confidence which
existed in partnership among the Romans. | 2.
HOFFMAN, Judge, took the corre<fl view of the contribution. ^ 32 & n.
1 ; ^ 33, n. I ; ^34, n. i. v. Contribution.
HOLDING OUT.
There are three ways for holding out : i. By the party's diredl authority;
2, by his consent ; 3, by his knowledge that he is held out, and his failure to
prohibit the holding out. His liability does not vary in these cases. It has
been said so, but there can be no different measurement of damages for a
man's consent, or for his negligence, because the liability arises from the
injury to a person misled by the party charged. Holding out is representa-
tion of membership. A party who parted with nothing because of his reli-
ance upon the holding out, suffered no injury from it, and hence has no title
to compensation. Managing the business, or adting as a partner, is not
stricT;ly a holding out. Holding out is where the party takes no part and
has no interest in the business. The manager is held liable, on the ground
tliat he performs the fundlions of a partner, and will be held by his express
adls, or by his general coudu6l. He nmst notify parties dealing with him of
his subordinate employment, in order to be exonerated. General conduct
as a partner would not charge the party, unless the third person contracted
with knowledge of and in reliance upon the course of conduct. The rep-
resentation must be to the plaintiff. Evidence of conduct is competent,
but it must be known and relied upon by plaintiff. If not, he cannot avail
himself of the adls indicative of partnership. They can be explained and
656
Index.
shown to be mistakes. One charged as partner could not give evidence
that his contradl was for management of the business, and that the firm
was insolvent, in answer to his alleged admission of partnership. The
contracft between him and the partners was foreign to third persons, and
his motives to make, or not to make, it are excluded with the contradl.
The unlikelihood of his making the contradl is part of the issue of part-
nership between the partners under the contradl, apd that is foreign to
third persons. The contradl of partnership is excluded, because it is a
secret which creditors cannot use in order to charge the partners. It is
generally upon a failure to prove partnership that the creditors resort to
the liability without partnership inter se. Having frustrated the creditors
by withholding articles, the partners should not be able to defeat them
again by producing the articles. The exclusion should be mutual ; if the
partners can withhold, the creditors should exclude. If the contradl of
partnership, and the inducements to it are excluded, the defendants could
not introduce their books in order to show the relation in fadl. They are
incompetent for the same reason. The question is independent of and
paramount to the relation in fadl. The adls, or representations, of the
defendant have misled the plaintiff, and it is too late to explain the con-
dudl. Moreover, the prior explanation should have been made to the
plaintiff. The explanation by arrangement between the partners does
not reach him. The case of Pollion v. Secor ma}' be explained by charg-
ing a man for his name in the firm designation. Everyone dealing with
the firm relies upon a partner behind the name, and, upon finding him,
holds him without anything more. The fadt of holding out is proved by
any adl once done and accepted by the defendant. Judgment paid by
defendant for a note, like one upon -vyhich plaintiff sues, is evidence sufii-
cient to charge defendant. The promise to become a partner would charge
the promissor. The representation for the future would be equal to a
representation in the present. The difference between the holding out
as to a partner and as to an agent is only as to the extent of the agency.
The partner's liability is defined and limited by the business. The agent's
.would vary according to the variety of his transadlions. If there is no
individual name in the firm designation, all are liable who trade under
the common designation. This is established by evidence. The credit
would be given to all who thus traded when ascertained. The name cov-
ers and charges the parties using it. The effedl of employing a common
agent is that his business becomes the business of each employer, and
charges them jointly for his transadlions. If one held out notifies the
party holding him out to desist, that is not sufficient to exonerate him
from liability. The notice to the party holding out would imply giving
him authority to continue the use of the name. The reliance would be
put on the party holding the other out. The notice must be diredl to the
third persons. Reputation of partnership is not sufficient to charge one.
Adls, admissions and declarations are representations to the plaintiff, who
relies on them. He cannot rely on reports. Nor if partnership were es-
657
Index.
tablished could its scope be defined by reputation. The reputation could
not enlarge, any more than create, a partnership. If admitted as a ground
to charge, it %vould also be competent to discharge a defendant. If the
plaintiff relied on reputation, and the defendant proved a dissolution
equally circulated, the plaintiff would be met by his own kind of evi-
dence. The defendant's knowledge of the reputation and declarations,
and his failure to deny them, would be competent evidence of partnership
against him. A clerk's knowledge of acts and declarations would charge
his employer, who put the clerk in his place, and relied upon him. Hold-
ing out may anticipate partnership. The party might promise for the
future and conditionally, but the plaintiff would rely upon his promise,
and consider the condition waived, or disregard it. The condition is a
private matter between the partners, which might be waived by them. A
note would charge a partner held out, as well as the partners in fadl. A
partner by estoppel acquires the right to marshal the firm assets (also
{( 103, n. 4). He is liable for the firm debts, and the liability entitles him
to see that the assets are applied to relieve him from the liability. A
married woman, where competent to be a partner, is allowed, on this
ground, to marshal the assets. The right to marshal the assets enures to
her creditors. The creditors are entitled, although subrogation would
not be available. Firm had a mortgage to secure a note, partner retired,
and mortgaged property taken. Holder obtained judgment against all,
and asked to be subrogated to continuing partner's place to get the prop-
erty. Difference of parties the objedlion. But allowed to enforce right
of all against the property. Defendant may insist that partner by holding
out shall be co-plaintiff. The defendant might have a set-off which would
be available only against all the partners, that is, the partner by holding
out naight have made the contract for himself and the other partners, and
the defendant would have to hold the firm through the partner by estoppel.
A partner by estoppel may be put into bankruptcy. This was denied, be-
cause all the creditors would hold him liable when he is liable only to
those who knew and credited him. But this position is not sound, for
Equity can marshal the assets. The nominal partner can be sued with the
partners in fadl. In England it is held that he cannot. The joint contradl
was not entered into by him. He stands apart, and must be sued alone,
or, at least, not with a new partner, because he is unconnedled with him.
This is making the partnership contrail the measure of a partner's lia-
bility, whereas the relation inter 5<?is foreign to the question. It is not a
fadl that no cases can be found which permit the joinder of partners by
estoppel with the partners in facl. The praAice in America is certainly to
join all. <J69. Joinder of nominal partner as co-plaintiff, z/. Procedure.
Admission by co-partners don't bind partner held out. \ 146, n. 3.
HOLT, Lord. Partner's right to buy. I 5, n. i.
HUNTER, Dr. W. A. Civil law indivisible contradl. ^91, n. 3.
658
Index,
hurlemann,
Johannes. Cantonsprocurator. View of partner'a title to firm property,
of French notion of partnership as a corporation. ^. loi, n. 3. v. Status.
Credit to peculium because slave or son incurred no liability. § 164 & n. 7.
HUSBAND, wife's agent, 'v. EVIDENCE.
HUTCHINSON, R. Account preliminary to sale on execution. | 103, n.
6, a.
^l^ering, bon. By contribution partner becomes disinterested, and works
fcrr co-partner. I 56, n. a.
ILLEGAL BUSINESS
Excluded from account, v. Account. No account lies for unlawful trans-
actions. A partnership for a lottery would not be recognized bj' comity.
The business would constitute a nuisance, g 211, n. 2. If part of business
illegal, as trading in contraband merchandise, an account would not lie
for the legal part. | 2 1 1 , n. i . A partner cannot compel an account of gains
made by competition with illegal business. The ill'egality is a defence to
the bill. I 21 1, n. 2. The investment of proceeds does not purge the trans-
aAion of its unlawful characSler. Contra, I211, n. 3. Partners agreeing
not to bid more than a given price for recruits not a conspiracy to control
price, or illegal. ^ 211, n. 2. Partner's contradl for options in grain does
not charge co-partner, though firm business. ?, 139, n. 3. v. Torts.
ILLINOIvS apportions liabilit}^ for partial loss of contribution by the share
of profits. I 32. t'. Contribution.
IMPROVEMENTS to real estate by the firm. ?; no, n. 6. v. Land. ? 28.
V. Contribution.
INCOMING PARTNER, v. Change of Partners. Cannot ratify. ? 144,
u. 2, 7. V. Ratification.
INCORPORATION.
Carrying on business jointly until incorporation charges the parties as
partners, though the United States Supreme Court held that the member-
ship might be only a qualification of an incorporator.
INCREASE of contribution during partnership. ? 28. v. Contribution.
INDEPENDENT name of partner the firm designation, v. Name.
INDIANA makes the share of profits the measure of liability for a partial
loss of contribution. § 32. v. Contribution.
INDUSTRY, Partnership in. ? 7. v. MANUFACTURING.
659
Index.
INFANT
As co-plain tifl. g 76. i'. Procedure. The continuance of the business after
majority is a ratification of all firm transadlions during infancy, ^ 136, u.
1, in analogy to the principle which charges infant for price of property
retained after majority, 'i 136, n. 2. Analogy not perfedt, because no
physical property which might be handed over to firm creditor; but
infant retains his position as partner and co-proprietor of business, which
is the product of the contra<5ts made durimg minority. Infant's failure to
dissolve, and notify creditors of dissolution, also charges him for subse-
quent contracts of the firm. ^ 136, n. 3. Infant may reclaim his contri-
bution, though not his deposit made a price of admission, against his co-
partner, ? 137, but not indemnity, for he retains co-ownership of the
property, and its loss results from his own adl. When he reclaims con-
tribution, he devests his co-partners. § 136, n. 4. If assets equalled in-
fant's contribution, he could take them in competition with creditors,
i! 136. Infant's position as partner determined entirely by his property
rights. The firm acquires no right by the partnership contradl, and in-
fant is not bound by the business contracts of the firm. The cases which
charge him proceed on the theory that he invests his co-partners with
title and is bound by his adl. But his deed is not less voidable than his
promise. ^ 137, n. 2, 3.
INSOLVENCY.
Proper method of distribution on execution if. v. Execution. Ground
for dissolution, 'i 173, n. i, a. Of firm makes payment of separate debt a
fraud on firm creditors. ?. 167, n. 7, c ; § 103, n. 4. v. Tort.
INSTITOR. ?ioi, n. 3. v. STATUS. 1 191. v. MARSHALLING.
INSURANCE, Mutual, v. Gain. By partner covers stock, unless lim-
ited to his share. \ 103, n. 10, 11. j
INTENTION
Not equivalent to contra6l. \ 23. Without property as a qualification, the
secret intention of the parties would be the only guide to a partnership.
V. Property. Intention sujeScient now to make land firm assets. \ 109, n.
56; ^112, n. I. V. Land. c
INTEREST.
Amount or rate for loan. v. Evidence. On advances, v. Advances.
Excess of when not usurious. ? 165, n. 2. t'. Advances. On contribution.
?32. I'. Contribution. Measured by profits not usurious. | 65; ^64, n. 3,
b. In addition to profits, v. Evidence.
IOWA
Code makes firm a party. \ 76, n. i. v. Procedure. Prevents judgment
against one partner being a bar to recovery from the others. \ 82. v. Pro-
cedure.
660
Index.
ISSUE of partnership. §44. t'. LIABILITY.
ISSUE of partnership as to creditors excludes evidence of partnership
contradl and motives of parties. § 69, n. 5. v. Holding out.
JAMES, Lord Justice. Considered trustee-partner's use of trust funds as
a loan to the firm. §40, n. 2.
JOINDER.
The only joinder recognized by the Common law, was joint ownership
and joint possession. Neither owner nor possessor could alien or mort-
gage his co-tenant's share, for only the possession or title was in common.
\ 5. Joinder in suit enforced by the technical joint contradl. \ 81. Inter-
mediate joint business until incorporation, v. Incorporation. Legal
excuses for non-joinder, v. Parties. Joinder of surviving and executor
of deceased partner presents no difficulty. ?88.
JOINT AND SEVERAL CONTRACT, not an improvement of the joint
contrail. ■^91.
JOINT CONTRACT,
A fidlion, which frustrates the process. §81. v. Procedure. Independent
principals cannot be sued together, because no joint contradt. \ 63.
JOINT CREDITORS.
Preference derived from joint estate, v. Property. Right to assets, v.
Firm Creditors. Preference, v. Joint Tenancy.
JOINT DEBTORS, Partners become by dissolution. §178.
JOINT ESTATE.
V. Property. Cause of partner's capacity and firm creditor's right to the
stock. \ 194, n. 4, 5. V. Marshalling. Legal basis of joint creditors' pri-
ority. § 99 ; \ 107. V. Preference.
JOINT PURCHASE.
If purchasers agree to pay by quotas, they are not jointly liable. The
purchases are separate, and each is liable only for his part. A joint pur-
chase charges each purchaser for the whole price, which is apportioned
among them, subsequently, by contribution, or, if any are insolvent,
among the solvent purchasers. If one purchaser gave the note of himself
and co-purchaser for the price, his co-purchaser is not liable on the note
The authority is limited to payment, and even postponement by commer-
cial paper exceeds the authority. A promise, though less than payment,
is not implied. \ 49.
JOINT TENANCY, adapted to commercial uses. ?99. v. Property.
661
Index,
judgment.
If against fimi, limited in first instauce to joint assets. ? 77. v. Tro
cedurc. By Civil law process enlarged so as to bind partners, unless thc\
have i)ersonal defences, but by English law releases partners not served.
:'. Procedure. Judgment against one merges cause against several. ^ 77 ;
don't bind partner's ultimate share of firm land, because it goes to
him as new acquisition. ^ 109. v. Land. vSeparate judgment don't bin<l
firm land, ii 1 10, n. 5. Judgment against the firm binds its land and that
of the separate partners from date of entry. I 11 1, n. 6, 7, 8 & 9. v. Land.
In other States than Pennsylvania, judgment against a partner binds only
his interest in land after firm debts are paid. ^ 1 11, n. 10. Except against
lonafide purchasers, land is marshalled for firm creditors. \ 1 1 1 , n. 15. v.
Land. Judgment against title-holder is not a lien against firm creditors.
^ 112, n. 6. Notice of firm title sufiicient for purchaser or mortgagee.
? 112, n. 10, II, 12. Judgment against separate partner holding title, cut
out by co-partner's lien for advances. ^ 112, n. 6. Partner cannot confess
judgment against co-partners. They can have it stricken off against them,
\ 122, n. 2, but execution takes firm assets. 1 122, n. i, 2. Character of
judgment, i. e., joint or separate, fixed by the claim. \ 121, n. 4. If judg-
ment limited to firm assets, as in New York and Louisiana, partner may
confess judgment. ^ 122, n. 5. v. Powers. Evidence that judgment was
confessed to defraud creditors, puts judgment-creditor to proof of bona
fides. \ 122, n. 9. V. Powers. Judgment in process modeled on Civil
law process, limited in first instauce to firm assets. \ 76, n. i. If special
partner a party, judgment would bind his separate estate. \ 76, n. J4.
Foreign assimilated to domestic judgment. \ 84. v. Procedure, Equity
will not open judgment to let plaintiff bring in dormant partner. \ 85. v.
Procedure. At Common law, on death of partner, sci.fa. would not lie
on the judgment against his representatives, although survivor insolvent.
A(fls were passed to recTiify this process and bring them in. \ 89. v. Pro-
cedure. Severing judgment severed cause of action, and gave independ-
ent right against each partner. \ 90. v. Procedure. Partner executing
judgment, if abuse of legal process, charges co-partner. \ 139, n. 4. v.
Tort. Credit of firm claim on judgment against partner don't bar firm's
recovery. </ 167, n. 4. a. The character of the judgment is ascertained by
the claim ; if separate, the judgment is separate ; if joint, the judgment is
joint. ? 95. Merger of claim by. v. Contradl. At first, death of co-
judgment-debtor apportioned lien on land. ? 103. Partner may assign, but
not guarantee payment of, judgment. \ 129, n. 4.
JUDICATURE, ACT and
JUDICIAL ORDERS, adopting Civil law process, v. Procedure.
JURY.
Partnership for jury, unless by contradl in writing. ? 21. v. Partnership.
Whether husband became partner by wife's share, or her agent, for jury.
^69, n. 17.
662
\
Index,
JUS SEPERATIONFS. ? 164; I loi, n. 3.
KANSAS
Joins sur\nving and executors of deceased partner in acSHon. \ 88. v.
Procedure. Releaseof one, and not of other, partner. ? 90. z*. Procedure.
KELLER. Dr. F. L. Civil law indivisible contract, iigi, u. 3.
KENTUCKY charged deceased judgment-debtor's estate. ?. 89. v. Pro-
cedure.
KL^NTZE, Dr. Einil. Theory of joint estate in German law. ^ loi, n. 2.
V. Status.
LACHES deprives partner of right to demand appointment of receiver.
\ 182. V. Receiver.
LADD, J. Coutracl implied by law as a substitute for duty. \ 46, n. i.
LAND.
Land was not merchandise, and not the subjecl-matter of partnership.
The intention which united the act of buying with the acl of selling could
not convert land into an article of traffic. The buj'ing and selling re-
mained two distindl acfts, unconnecfted, in spite of the intention to fuse
them, by reason of the ponderability of land. ^ 8 & n. i. Oral partnership
to deal in land. | 10. v. Statute of Frauds. When title is put in one or
both partners, evidence is competent to prove the equity of the firm, subject
to the separate claims of the title-holder. § 11, u. i. Originally, mutual
covenants were required, in order to make land an article of merchandise,
and trading in it a partnership. Now the law gives eflfecl to the purpose
of the partners, no matter how their intention is manifested, but does not
change the natural character of the land, unless the parties disclose such
an intention. \ 13. Laud as contribution, v. Contribution. If land is
conveyed to a firm, the title vests as personal property. Trade converts
the land into merchandise, and makes it an article of traffic. A stipulation
was originally required to convert land into firm assets, and mutual cove-
nants were made in the partnership articles. Without a contra<5l, the land
would be held in common, and each partner could sue his co-partner for
his share of the price realized b}- its sale. ? 109, n. 5; ? 112, n. i. Subse-
quently the purpose of the partners became sufficient, without any agree-
meiit. The right of the firm now depends upon intention, and evidence
of intention is competent to establish the firm title. ? 109, n. 5. The
partners taking land for a firm debt would establish a firm ownership.
Taking title by the partners might be intended as a separation, and a
holding as tenants in common, but taking the land in satisfaction of a
firm debt would disprove a withdrawal, because the title was acquired
in the transaction of firm business. \ 109, n. 6. The fi(ftion of a con-
663
Index.
version, like that of an equitable lieu, is unuecessary. The firm has
the control of the land for its purposes, no matter how it acquired title.
'i 109. The ficl.ion was forced in England, and made to change the land
iulo personalty, not only for the partnership, but altogether. The change
shifted the property from the heir to the personal representatives upon
the expiration of the partnership. The conversion being uncalled for
after the partnership was over, a re-adlion took place against the arbitrary
interference with the laws of descent. In America, no such alteration of
the canons of descent has been attempted. ^ 109, n. 6. The statement
that laud becomes personal property, means that the title is controlled as
a firm asset, but the incidents of land remain. In Pennsylvania, convey-
ancing is founded on the lien of a judgment being limited to the defend-
ant's title at the date of its entry. A judgment against a partner does not
bind his quota of the firm land. His share is only an ultimate balance
of account, and entitles him to no part of any specific asset. The judg-
ment would not have anjlhing to bind until the balance is struck, and
then the portion would go to him as a new acquisition. If a judgment
was recovered against a firm in which the partners held real estate as
tenants in common, and subsequently judgment was recovered against a
partner, the judgment against the firm would take precedence on his
moiety, because the lien binds each partner's land from the entry of judg-
ment. I 109, n. 7. After the firm uses are exhausted, the land goes back
to the partners, and vests in them as land, giving the widow of a deceased
partner dower, and not a third outright, and goes to heirs, and not to per-
sonal representatives. Thefi(5lion of re-conversion has been applied to pre-
vent a judgment from binding the land of a partner after the firm purposes
had been subserved. Yet the heir's title relates back to the partner's death,
and the widow's dower attaches at that instant. If the title relates back
for devolution upon the heir, and for transmission to the widow, the rela-
tion should take place for the creditor. ^ 109. If the partner holding title
should convey it to his wife, the co-partner's remedy would not be barred
by the Statute of Limitations. The remedy at law would be inadequate,
and a bill would lie to compel an account and a re-conveyance. | no, n. 2.
The heir of a deceased partner could be compelled to execute a convey-
ance to a purchaser from the firm. ^ 1 10, u. 3. The separate creditor could
not claim payment out of the proceeds of land if on a settlement of account
no balance was due to his debtor. ^ no, n. 4. No separate judgment or
lien binds the firm title, nor does execution or attachment affedl it. ? no,
n. 5. Improvements made by the firm belong to it, and cannot be taken
by the partner holding title, without compensation. ?iio, n. 6. If he
mortgages or sells the land, the title will pass, under the mortgage, to a
bona fide taker, 'i no, n. 7. Notice, however, will prevent the mortgagee,
or vendee, from taking title to the improvements. \ 1 10, n. 8. In personal
property the separate creditor cannot claim title on the ground that he
thought the property belonged to the partner, because he paid no consid-
664
Index.
eration ; but in land the title may be conveyed if no notice of firm title.
'i no.
There is no marshalling of liens. Therefore, the lien of a joint judg-
ment-creditor will not be controlled so that a separate judgment-creditor
can be paid out of the partner's land first. Equity cannot devest the lien,
but follows the law. <S iii, u. i. Nor can Equity restrain a judgment-
creditor from proceeding by execution against the separate partner's real
estate, 'i i ii, n. 4. The creditor, however, does not lose his privilege by
proving against the firm in bankruptcy. §111, n. 5. The firm cannot
take title, as it has no existence except in the partners. But a deed to
A & B, trading as A & Co., is recognized as a conveyance for the firm,
and makes the land firm assets. ? iii. n. 2. If the deed is simply to
the partners, they take title as individuals, and judgments against them
bind the land in Pennsylvania. |iii, n. 3, 11. Judgment against the
firm binds its title, and also land of the individual partners. The lien
dates from the entry of judgment upon the record, and cuts out a subse-
quent judgment against the separate partners. ^ 11 1, n. 6, 7, 8, 9. In
Pennsylvania, apart from judgments against the title-holder and the
lien, the land is marshalled, like personalty, among the joint and sepa-
rate creditors. Thus, if A held the title, the land would be marshalled
between the creditors of B and the creditors of A & B. § iii, n. 9. In
other States than Pennsylvania, the judgment against a partner, although
he holds the title, binds only his interest, and is cut out by debts of the
firm subsequently incurred. § in, n. 10. The partner's mortgage for a
firm debt makes his land firm stock to that extent. ^ in, n. 16. Except
SLgSLinstdonaJide purchasers, who did not know of the firm title, the land
is marshalled for the firm creditors, ^iii, n. 15. A partner's lien for
advances has a preference over the lien of the separate creditors of a co-
partner in land held by him for the firm, g 112. n. 6. v. Advances.
The use of land for the firm, or the purchase or improvement of it with
firm funds, is competent evidence to show the title to be in the firm. ? 1 12,
n. 3. The employment of a partner to raise the purchase-money to buy
land for the firm, would make him a trustee. The purchase-money be-
longed to the firm which paid the commission for getting it. ? 112, n. 4.
Judgment against the title-holder is not a lien against the firm creditors.
■? 112, n. 6. The co-partner's lien for advances cuts out judgment against
the partner holding title. § 112, n. 6. The title results to the firm if it
pays the price. ? 1 12, n. 7. Notice of the firm title is sufficient to exclude
the claims of separate creditors, and make a purchaser, or mortgagee, take
subjedl to the title. § 112, n. 10, 11, 12. The widow of a partner is not
dowable out of firm land. The substantial interest is in the firm, and the
partner's seizin is technical, which gives no right against the firm credit-
ors. ? 112, n. 13, 14. In Pennsylvania, where the title is superior to firm
creditors, the widow is cut out by the theory of the lien of a decedent's
debts. ? 112, n. 15. In New York, dower, which attaches on account of the
tenancy in common, is legal, but the firm creditors are both legal and
665
I
Index.
equitable. ? 112, n. 16. A single partner could convey real estate which
was held for both partners r.s tenants in common, though for the firm use,
but in Pennsylvania he could not pass title without his co-partner's join-
iu" in the deed. ■^ 112, n. 18. Partner can sell his interest in real estate,
Uiough not, it should seem, specifically, for he has no quota until the bal-
ance is struclc. <i 112, n. 20.
The record system in Pennsylvania charges the title-holder and ignores
the beneficial owner. The deed is taken as the embodiment of the parties'
intention. If the grant is made to the partners, they take as tenants in
common. Neither purchasing the land with firm funds nor using it for
firm purposes, nor both combined, will overcome the form of the convey-
ance. The deed cannot be coutrc'di<5ted by parol. Not only purchasers
and mortgagees rely upon the record-title, but creditors are assumed to
contract with reference to the debtor's title. The notion did not originate
in Partnership law, but was taken from the lien of a decedent's debts. In
that branch of law, judgment creditors, though not protedled by the re-
cording acts, are protedled against any shifting of title by parol evidence.
The inlerence from giving the judgment a lien was that the creditor
contrac'led on the faith of the record, and then had a lien without refer-
ence to his judgment. ? 113.' No use results against the legal title, but
apart from the title-holder, the use will result to the real owner. § 113,
n. 4.
LANDLORD AND TENANT.
v. Subjedt-Matter. The title to the crops is in the tenant. By the gen-
eral rule, he has possession for his term, and this invests him with title
to the crops, as incident to his possession. The landlord's creditors could
get at his share by attachment, or any process which did not interfere
with the tenant's possession, but notified him to hold, or pay over, the
landlord's share when set apart to them, and not to him. An execution
and sale of the landlord's share of the growing crops during the term
would not pass a title. The execution does not sever the title, as if the
law acted for the tenant who neglected to set apart the landlord's share.
A cropper is not a tenant who is entitled to possession. He is paid foi
his labor in kind out of the crops, and has no right to possession, or title
to any part of the crop until it is paid to him. All the States do not treat
the tenant as entitled to possession. Massachusetts and New York treat
the landlord and tenant as co-occupants, with sufficient title in the land
to proteA their interests in the crops. If the tenant converts the land-
lord's share, trover would lie for the conversion against the co-occupant.
Each, or both, might sue the stranger for a trespass or conversion. All
might assert the title, or, if one's share was sought to be taken, he would
have special cause for suit. They could agree for a division, and exclude
a joint suit. ^12.
666
Index,
law merchant,
Does not regulate partnership. §3. Created power to sell co-partner's
share. ^ 5. Did not charge contributor who took no part in management
with unlimited liability. ^ 37.
LEGISLATION.
Acceptance of legislation in its favor by a Pennsylvania corporation,
subsequent to the Constitution of 1874, might take away rights acquired
by previous contradls with the State. The corporation would be reduced
to the condition. of corporations incorporated under general statutes, and
would be subjedl to the control of the legislature. | 24, n. 10.
LEIST, Dr. B. W. Origin of partnership, g i & n. 2.
LENDER. V. EVIDENCE.
LIABILITY, PARTNER'S.
By the contradl which partners make in transadting firm business, they
bind themselves as men not less than as partners. The law can make no
limitation upon this universal liability, and recognizes no liability in one
capacity, i. e., as partner, and not in another, i.e., as an individual. The
contract was treated as a Common law formula. The partners were at
first treated as making a joint, and subsequently a joint and several, con-
tra(5l. On the question of liability, partners are nothing but joint obligors.
V. Consent, v. Contradl. If partnership is simplj- a species of the|Common
law joint obligation, the effedt is that on the question of a partner's lia-
bility no partnership need be alleged, or proved, in order to charge him
with liability. The denial of partnership would be irrelevant ; it would
not answer the charge, which might be made out, without proof of part-
nership, by showing any joint transadlion. A plaintiff should be on his
guard against accepting the issue of partnership, or not, because the issue
would narrow his claim and shift the bmrden upon him of proving a part-
nership, in order to recover, when that might not have been necessary.
\ 44. The question of partnership is important in reference to the powers
of a partner. The partnership creates implied powers to carry on the busi-
ness, and proof of partnership becomes essential to one who relies upon
the exertion of such powers. ? 49, n. i. Taking profits by creditors does
not charge them as partners, because the)' are not proprietors, v. Profits.
No limitation of liability at Common law. v. Capacity as partner. Lia-
bility to creditor as a partner no answer to a charge of usury, because a
personal debtor. \ 66.
LIBEL of editor charges co-partner. ? 140, n. 4. v. Torts.
LIEN.
For a partner's advances. ? 165. v. Advances. A separate execution
does not create a lien on the partner's share. The execution seizes and
667
Index.
sells his right, title and interest, like any defendant's in execution, but
the property being vested in the firm, the partner's share is nothing tangi-
ble, and depends on an ultimate balance of account, g 104, n. 6; ^ 100, n.
4. Partner's lien on firm assets for his advances, v. Advances. Liens
not marshalled. ''/. iii, n. i. General lien covers stocks of different firms
composed of the same members, because but one firm in law. ^164, u. 3.
LIMITATION.
Statute of. Bars acflion for, and adlion upon, a settlement. I 213. v.
Account. The trust imposed upon the purchaser of firm assets who agrees
to pay the debts is within the Statute. ^ 145 & n. i & 2. Neithel" acknowl-
edgement or part payment tolls Statute against co-partner. I 178, n. 6 & 7.
Adlion for land conveyed to wife of partner not barred by. ^iio, n. 2.
Partner's confessed judgment will not revive debt barred by Statute of
Limitations. ^ 122, n. 6. v. Powers. Alleged excuse for making judg-
ment bar remedy against dormant partner. ^84, n. i. v. Procedure.
LIMITED liability, v. Special Partnership.
LINDLEY,
Lord. States that the Legislature introduced limited liability. \ 37, n. b.
Firm a bona fide purchaser of trust funds from trustee-partner. \ 40, n. i.
Sharing profit and loss a partnership. \ 61. n. i. Set-off of individual
debt by surviving partner a breach of the relation. § 130, n. 14.
LIQUIDATED claim a set-off. v. Set-Off.
LIQUIDATION.
The partnership is continued after dissolution only for liquidation.
1 183. The liquidating partner represents the firm for this purpose. \ 184.
The effecl of a partner's denial of his co-partner's authority to make com-
mercial paper is to put the holder upon proof of consideration if received
from the co-partner, and of his authority. >, 184, n. 3. The liquidating
partner's note was held to merge the firm debt, and precluded the credit-
or's recovery against the other partners, but, unless the note was treated
as an individual contradl, which was made by both parties to supercede
the firm contract, the note should be considered as a firm note, made in
his capacity of liquidating partner. ? 184, n. 3. This resulted from the
New York decisions, which deny the liquidating partner's capacity to
make commercial paper, and precluded the natural construdlion. The
form in other States is not notice of an individual transadlion, but the
charaaer of the paper is for the jury. I 184, n. 6. If no liquidating part-
ner .s appointed, any partner could ac<l, and unless the co-partners prevent
him from adlmg, they will be bound for his liquidation. I 185. The liqui-
dation by continuing partner is part of his security for the price of retiring
partner sshare.? 186. The appointment of a partner is irrevocable, because
coupled with an interest ; the appointment of a stranger is revocable, and
668
Index.
a release by a partner extinguishes the debt, although the debtor had
notice of the appointment. J 187. This does not apply to a judicial ap-
pointment, nor to the appointment by contracfl made as security for the
advance of the retiring partner's interest in the firm. ^ 186. A liquidating
partner is not entitled to compensation for his services, though he may
employ clerks, at salaries, to assist him. If the articles provide for com-
pensation to partners, the surviving partner who was appointed receiver
by the court could recover only for his services as official liquidator. I 188.
The general creditor, though without a judgment, has a standing to con-
trol the liquidating partner. 1 189. The liquidating partner will be dis-
placed only by the necessity for a receiver. | 190. Distribution, v.
Distribution. A purchaser of a partner's share is interested only in liqui-
dation. V. Execution. A surviving is pradtically a liquidating partner.
The rights survive, but the beneficial interest goes to deceased partner's
representatives. ^ 130, n. 13, 14, 15, 16.
LITIGATION
Between Partners. No adlion lies during the partnership. A suit would
involve a settlement of every item in the account, and a dissolution. </ 153,
n. I. Trading in corporate form does not avoid the difficulty, 1 153, n. 2,
wJiich underlies any partnership business. 1 153, n. 3. Partner's payment
of a firm debt does not entitle him to subrogation, for he is not entitled
to repayment until a final adjustment, </ 154, n. i, though subrogation is
permitted between firms with a common member. ^ 154, n. i. A partner
cannot sue his co-partner for mismanagement during the partnership.
The damages enter into the account, 'i 155, n. i. No set-off avails between
partners. The claim is not liquidated, ? 156, n. i. A partner has no
quota of a firm debt to be set-off. | 156, n. 2. A partner cannot set-off his
advances made to pay firm debts against the price of his co-partner's share.
The account must be settled before the co-partner's share could be ascer-
tained, and this is still more necessary if there is a third partner. >,. 156,
n. 5. The account will not be taken as accessory to any other litigation.
The partners must be parties to the proceeding. ^. 156, n. 6. The account
stated is a settlement by agreement, and equivalent to an account.
If a balance has been agreed upon, assumpsit will lie without an express
promise to pay the balance. The promise would be implied as a conse-
quence of the settlement. ? 157, n. 2, 4. The balance struck might be
shown to be erroneous. ? 157, n. i. Debt would He to recover the bal-
ance, but not case, which involves an unliquidated claim. ? 157, n. 3.
The prohibition does not affedl an independent transa(?lion which is not
involved in the firm account. A partner may sue his co-partner upon such
a claim, for they are strangers in reference to it, e. g. , a contribution which
is antecedent to the firm. ? 158, n, i. Partner may sue firm of which his
co-partner is a member for loans. The transacflion is foreign to plaintiff's
partnership. § 158, n. 2. If partnership consists of a single transa(5lion, a
partner may, without an account, sue his co-partner for a share of the
669
Index.
profits. 1 158, n. 3, or if no other partnership business remains to be set-
tled, i 158, n. 4. Account during partnership governed by same principle.
J 159. V. Account.
LOAN
To partner for his contribution, does not make lender creditor of the firm.
The firm creditors would cut him out. If the lender obtained judgment,
the consideration could be investigated, and the judgment set aside as
fraudulent against firm creditors. ^19. Loan for share of profits. ^64.
i: Evidence. Loan without any personal debtor. §64, n. 3, a. v. Evi-
dence. Loan without, or even with, control. \ 64, n. 3, b. v. Evidence.
LOSS. Sharing loss said to be conclusive of partnership, \ 6i, but not
unless by proprietor. <( 61 ; 'j. 57.
LOTTERY. ? 211. n. 2. v. Illegal Business.
LOWRIE, C. J. p-ailure of redress against each partner and his estate
result of procedure. \ 86, n. 2.
LUNWCY of a partner suspends the partnership. \ 173. Ground for a dis-
solution. 'I'f, i-jT, & n. II.
MAINE continues firm debt against deceased partner's representatives.
{! 88. v. Procedure.
MAINE, Sir Henry Sumner, LL. D. Joint ownership original type of
property, ii 98, n. 1.
MALINS, V. C. Solicitors investing client's money without submitting
securities for approval. ^ 140, n. i.
MANAGING
Business, evidence of partnership, v. Holding Out. Makes partner ex-
plain his failure to earn profits, g 206, n. 4. v. Account. Managing busi-
ness by dire<ftion of proprietor. <( 59, n. 2. 4th Exception. Managing
needs explanation. ^ 69, n, 2.
MANSFIELD.
Partnership a refuge for usurer. ^66, n. i. Remodelled procedure. §88,
n. I. Effect of his admitting a plea in abatement. ^ 92. Attorney no power
to represent without authority. ^ 119.
MANUFACTURING.
Partnership in. The manufaclurers might carry on the industry in part-
nership, and .sell the goods on separate account. ? 7 & n. 6.
MARKBY, Dr. \Vm. Joint tenancy transition from commercial to indi-
vidual ownership. ? 98 & n. 2.
670
Index.
MARRIAGE of a woman partner dissolves the partnership. ? 173.
MARRIED WOMAN,
A partner, v. Wife. Right to marshal! assets, v. Holding Out. Unless
exempt from Common law liability, a married woman cannot contracfl as a
partner. She can acft as agentof her husband, assert his rights, and become
subjedl to execution by separate creditor. ^ 138, n. i. If a partner, her
husband is disqualified by interest from testifying. Ji 138, n. 2. A hu.sband
is liable for his wife's ante-nuptial partnership debts, although he does
not acquire her property by marriage. | 138, n. 3. A husband can trade
as agent ot his wife, and his separate creditors are postponed to firm cred-
itors. § 138, n. 4. The ratification by a married woman after discoverture
relates back and validates all firm transadlions. ^ 138, n. 5. A married
woman may marshal the assets in relief of her liability as a partner. | 69,
n. 19. Wife of partner taking title must re-convey to co-partner. ?iio,
n. 2. V. Land,
MARSHALL, C J., carried out revolution in procedure begun by Mans-
field. ^93 & n. I. V. Contra(fl.
MARSHALLING ASSETS.
The liability of a nominal partner entitles him to marshal the assets in
relief of his liability. ^ 69, n. 19. v. Holding out. Among joint and
separate creditors of partners trading in individual partner's name. v.
Procedure. The exclusion of firm creditors from the separate estate in
the first instance arose from the equitable doArine of two funds. Chan-
cery restriAed the joint creditor to one fund when he had two in order
to let the separate creditors have one. If the joint creditors came on the
separate fund, they had to allow the rate received from the joint estate to
the separate creditor. This involved a sharing of the joint estate by the
separate creditors, though not in the first instance, and only by relation.
From this equitable adjustment resulted the practical exclusion of the
joint creditors from the separate estates which thus reserved for separate
creditors gave them a standing in opposition to the joint creditors. But
the separate creditors' right is not acknowledged at law, and exists only
in equity, for if there are no joint funds, the joint creditors assert their
right to come on the separate estates, and equity has no ground to interfere
with the exercise of the legal right. ^ 102; i 193, n. i. The Pennsylvania
vagary of marshalling assets arose from overlooking the historical origin
of the relation and trying to work it out from contradl. ^ 104. The clas-
sification of creditors, or dividing them into joint or separate, reveals the
system of marshalling which prevails. The opposite theory would ex-
clude any joint fund, and let the firm creditors compete with the separate
creditors of each partner. 1 105. But the existence of a joint fund and
the liability of the separate estate for the joint debts are never denied,
but constantly a(fted upon. Equity interferes only to restridl the exer-
671
Index.
cise by the firm creditor of his legal right, and can do this only by im-
posing a condition, or putting him, as it is expressed, on terms. He can
share the separate fund only upon the condition that he first permits the
separate creditors to take a dividend equal to the rate which the joint
fund yielded. The effecfl of this interference by equity involves a divi-
sion of the joint fund between the joint and separate creditors, if the
firm creditors proceed again§t the separate estate. It is this pradtical re-
sult which has led to the bankruptcy rule, and which explains its origin
and acceptance. If equity can indirectly bring about an allotment of the
assets, why not make it outright and at the start ? </ 105.
In Pennsylvania the assets were originally marshalled by letting the
firm creditors take the joint assets, and also come in upon the separate
assets with the separate creditors, though not until the separate creditors
were allowed a rate equal to the partner's quota of the joint estate. § 105,
n. I. The right of the joint creditors to resort to the separate estate
when they have no available joint fund, i. e., no solvent partner, or the
joint fund is exhausted in costs, is acknowledged, ^ 105, n. 2, 3, and is
inconsistent with any exclusive right of the separate creditors. ? 105.
Marshalling assets shows the want of principle. The practical neces-
sity of keeping the stock from the execution of separate creditors had to
be admitted in all Countries. The legal reason for the exclusion has not
been adequate to explain it, and the rights which result from it to the
joint creditors. Partnership exists, and its existence can be maintained
only by preserving the stock for firm creditors. If separate creditors
could seize and sell it the firm would be broken up without any partner-
ship justification. The theory that joint and separate creditors have equal
access to both the joint and separate estate means either a severance of
the title and no joint stock, or the brotherhood which makes all the prop-
erty of each partner the common stock of the fraternity. But the busi-
ness partnership is not a societas omnium bonoruni, nor can it manage to
trade with stock, which belongs to the separate partners. § 191. Thepecu-
liiim gave a person not sui juris the right to trade exclusively upon the
credit of the fund, but a person sui juris had no such privilege. The in-
siitor, or agent to manage a business, was well known, but no mention is
made of limiting a principal's liability to any particular business when car-
ried on by means of an iiistitor. \ 191. The analogy of sale, which might
help to segregate the stock at the Roman law, would not avail at the Com-
mon law. ? 191. A firm creditor could relinquish his priority by agree-
ment with the separate creditor, but the separate creditor has no right
except by his contract. ^192, n. 2. A surviving partner is a trustee for
all the firm creditors, and cannot prefer one of them. \ 192, n. i. It has
been held that all the partners might prefer a creditor, although the firm
was insolvent. \ 192, n. i, a. That a subsequent judgment creditor of the
firm could not contest a prior separate j udgment which took the assets. § 192
n. 2, a. But firm assets diverted to payment of a separate debt may be re-
covered by the assignee in bankruptcy from the partner's separate estate.
672
Index.
^ 192, n. 3, A withdrawal, however, by a partner, though without his co-
partner's knowledge, will stand, if not made in expecftation of insolvency.
§ 192, n. 3. The right of the joint creditor against the separate estate sub-
sists in chancery, as is seen in the lien of a judgment again.st the firm land;
it cuts out the separate judgment creditor, and will not be disturbed for his
benefit. § 193, n. 2.
The unlimited liability imposed by law upon a partner who contributes
only a portion of his property to the firm, induced a re-ac5lion against the
excess of liability. This was the work of equity, which controlled the
exercise of the legal right, when it invaded the estate which the partner
did not contribute to the firm, 'i 195, that is, when equity, by its princi-
ples, had cognizance of the distribution. ^ 196. The firm creditors do not
depend upon the partner's equity and the partnership contra<5t, but have
an independent and a diredl recourse to the joint stock. ^ 194, n. 3. The
destination made by the partners of the stock creates the joint estate, and
thus enables them to trade with it. The creditors contract upon the faith
of the estate. The destination is the remote cause of the firm creditors'
right, but they acquire the lien by dealing with the partners. ^ 194, n. 4,
5. The partner's debt to his firm is not collecfted upon insolvency, un-
less incurred by fraud, then it is, and the firm creditors can enforce pa}-
ment or restitution. 1 197, n. 2. The bankruptcy rule protects only the
separate estate. If a firm creditor is secured by a firm mortgage and by
a partner's individual mortgage, a general creditor cannot pay the debt
and be subrogated so that he can come against the partner's separate
estate in preference to his separate creditor. Paying the firm debt extin-
guished the mortgage, which was collateral to it, and the assets are mar-
shalled according to the class of creditors. ^ 197, n. i. A partner might
enforce his individual claim from his co-partner if no surplus would re-
main for the firm creditors after the debtor-partner's separate creditors are
paid, 'i 197. The firm creditors might be subrogated to the creditor part-
ner's claim. But not if the surplus and the enforcement would be a com-
petition with firm creditors. For the partner is himself liable to the firm
creditor, and precluded from interfering with the collecftion of his claim,
which he should, but does not, pay. ? 198. If both partners are insolvent,
the firm creditor would have no surplus, and they might colledt debts from
each other. 1 198, n. i, a. Firm creditors may be subrogated to place of re-
tiring partner, and enforce his rights as seller, if they renounce the joint
estate. But they cannot claim the price he received and also the assets
for which it was paid. ^200. Payment of all the firm debts would enable
the partner to enforce his claim against the co-partner. ^ 201, n. 2. Part-
ner is a separate creditor of his co-partner for balance of partnership ac-
count. §201, n. 4. The debt of a partner to the firm is not an asset, and
if it were, could not be set-off against a co-partner's debt, for the firm
creditors are paramount, and would collect both. ? 202. The debt of the
firm to a partner could not be colledled, because he owes the firm creditors
in his individual capacity, and can not compete with them while he fails
673
I
Index.
to pay them. ^, 2u2, n. 2. If the surviving partner is indebted to his firm,
and joins a succecling firm, he could not be compelled by the subsequent
firm to pay bus debt to his original firm, nor could the deceased partner's
estate be t'oiiipelled to pay his indebtedness; but if the succeeding firm is
subrogated to the creditors whom it has paid, it may colledl the deceased
partner's indebtedness, although it does not colleA the surviving partner
and common member's debt. \ 203. When the deceased partner's estate
was exempt at law from liability for firm debts, the executor could not
recover the share. The estate being liable in equity, could not compete
with firm creditors by withdrawing the assets pledged to them. If the
payment of the deceased partner's share was guaranteed by his co-partners,
or firm assets were lost by their tiismanagement, he could enforce the
separate liability in competition with their separate creditors, provided
the firm creditors were paid. \ 204. The bankruptcy rule being statutory,
is repealed by any legislation inconsistent with it. \ 204, n. 3. The Com-
mon law disregarded the common member on the joint contracfb formula,
and made him liable on the contradls of both forms. Equity put the
creditor to an election between the two, although it had no ground to
deprive the creditor of his independent remedies, and the objedl of equal-
izing the distribution could not be attained. The Bankrupt acSls have
restored the right to double proof. In America the remedies might ex-
haust the different members in succession, 'i 205. The argument against
election under the superceded rule, was that the surplus went not to the
other firm, but to the individuals, and no eledtion is enforced in bank-
ruptcy between the joint and separate estates. \ 205, n. 6. Partner may
marshal assets to reimburse his outlays on behalf of the firm. \ 184, n. 3.
:-. Advances. If the continuing partner who has agreed to pay the firm
debts is insolvent, the retiring partner, or the firm creditors, could enforce
the agreement. A bill in equity would lie for the creditor's equity. \ 147,
n. 2. Retiring partner's liability founds his equity. ? 147, n. i. Creditors
of new and old firm share assets. ^ 147, n. 3. Separate creditors rank as
joint creditors when firm transacts business in name of individual part-
ner. \ 76, n. 23. V. Procedure.
MARYLAND
Corre<5led Common law process against partners. § 82. v. Procedure.
Maryland pracflice suggested death of partner on record and substitutes
representative of deceased with surviving. \ 88. v. Procedure : also after
judgment. \ 89. v. Procedure.
MASONIC Lodge, v. GAIN.
MASSACHUSETTS, debt theory of contribution. ?3i. v. Contribution.
Not consistently maintained. ? 35, n. 2, 3.
MATTHIAE. Differences of opinion among Civilians as to joint and
separate creditors' standing. \ 108, n, 4.
674
Index.
MAYNTZ, Prof. Charles, aflio tributoiia. >,. 165. n. 6.
MEASURE of damages, for breach of contraifl in dissolving parttiership.
^212, n. 3. V. Damages.
MERCHANT, LAW.
The Common law did not adopt the Law Merchant. ^ 3 ; ? 77. By the
Law Merchant the concurrence of ownership and management was neces-
sary to create the unlimited liability of a partner. The contribution did
not charge him with liabilit}- unless he took part in managing the business.
§ 3. Covert attempt was made to introduce Law IMerchant by getting rid
of the doclrine peculiar to the Common law of an undisclosed principal.
?. 26.
MEREDITH. Argument that sale includes pledge. ^4, n. i.
MERGER of claim in judgment, v. Contracfl.
MICHIGAN
Prevents judgment against the partner from merging claim against co-
partner. I 82. V. Procedure. Death of co-judgment debtor does not ex-
onerate his estate. ? 89. i'. Procedure. Release of partner and not of
co-partner. § 90. v. Procedure.
MINING PARTNERSHIP
Is a distincfl species of partnership. There is no choice of partners, and
owning a share of the firm property makes the owner a partner. The
purchaser of an interest becomes liable, like a partner, for all the debts
of the firm. There is no limit to the liability of a mining partner.
He has a lien for his advances to the firm. Any purchaser of an interest
assumes that debt as well as the debts to the firm creditors. A court
does not interfere with the management of a mining partnership for the
same reason that it appoints a receiver of a commercial partnership.
Nothing but the threatened destrudlion of the business will induce a court
to intervene. The partners deal at arm's length with each other in refer-
ence to their separate titles, and one partner could compete with the firm
and buy out his co-partner's individual title. A mining partner's au-
thorit}^ is defined by the requirements of the mining business. ? 15.
MINNESOTA
Severs joint cause of acflion and gives remedy against any obligor. ? 88.
7.'. Procedure. After judgment. <: 86. z'. Procedure. Release of partner,
not of co-partner, l 90. v. Procedure.
MISCONDUCT not ground for dissolution, unless it excludes the co-
partner. I 173 & n. 9.
MISE. I'. CONTRIBUTION.
675
Index.
MISSISSIPPI Provides remedy against surviving and representatives of
deceased ])arlutrr. ?. yS. v. Release of partner, not of co-partner. ^90.
:'. Procedure
M ITCIIKLL. Judge J. T. States old rule in Pennsylvania formarshalling
joint auU separate assets. ^ 104, n. i.
MULLOY. Trade gives partners capacity. ? 35, n. 3.
MONTAGU, Basil. Separate commissions under old practice kept assets
distinct, and made separate subjedt to joint debts. ^103, n. 13.
MORAWKTZ. Argument iox defadlo corporation. (< 24, n. 6. 9.
MOTIVES
Of partnership incompetent evidence, \ 69, n. 5, except where parties
dealt with knowledge. \, 67. Motive might be to establish co-partners in
business. ^46, n. 3. v. Partnership.
MOYLE, J. B. Civil law indivisible contradl. <;9i, n. 3.
Ml'TUAL COVENANTS to make land assets, 'i 105, n. 5; §112, n. i. v.
Land.
MUTUAL INSURANCE, or Proteclion. ? 16, n. 2. v. GAIN.
NAME.
No firm name necessary in legal proceedings. The name is surplusage,
for the reason given [v. Co-Principal and Liability) that the question of
liability is independent of the firm, and may exist without a partnership.
? 44. .-^ partner can sign his co-partner's name. He represents his co-
partner, and if the partners have not adopted a firm name a partner may
sele(5t one for them. \ 17. Partners may trade w'ithout a firm name, and
in joint ventures, especially, by two or more firms, this is the usual
method. .\ firm name would be as inconvenient as unnecessary. Partners
may be charged on commercial paper, though not parties to the instru-
ment. \ 44. Name of partner in firm designation charges him. v. Hold-
ing Out. If partner's individual name the firm designation, the presump-
tion in Pennsylvania, and elsewhere ; if the designation of two firms, cred-
itor's choice. >/, 76. V. Procedure. No name necessary, and surplusage
in legal proceedings. \ 76. v. Procedure. Partners who agree to sue and
be sued in a firm name cannot objeft if sued in that name. ? 76, n. 7. v.
Procedure. T'se of fitftitious name, though prohibited, does not prevent
recovery, unless credit acquired by the name. ? 76, n. 15, 16 & 17. If
individual name the firm designation, presumption in Pennsylvania that
commercial paper on firm account ; elsewhere on individual account. \ 76,
". iS, 19, 20, 21. If individual name designation of two firms, creditor
may eleft. ? 76. n. 22. v. Procedure.
676
Index.
napoleon, code
Adopted Felicius' definition of partnership, ? i6, n. 6, d. Divides profit
and loss, in default of agreement, according to qontributions, ^36 & n. 2.
Makes contribution firm property. §31, n. 3; §33, n. i.
NEBRASKA statutes make firm a party. ? 76, n. i. v. Procedure.
NEGLIGENCE, v. TORT.
NEW JERSEY provides remedy against deceased partner's representa-
tives. I 88. Release of partner, not co-partner. ? 90. v. Procedure.
NEW YORK
Opens judgment obtained by unauthorized appearance, but does not avoid
it. I 119. Forbids fidlitious, and requires acflual, names of partners. ■§76,
n. 15.
NOMINAL partner's equity, see Equity. Sued with partners in fa<5l. v.
Holding Out. As co-plaintifF. z^. Procedure. Not bound by co-partner's
admission, 'i 146, n. 3.
NON-COMMERCIAL PARTNERSHIP, v. Trade. Mining partner no
power to bind firm by commercial paper. ? 15, n. 4. v. Mining ])art-
nership.
NORTH CAROLINA corredled the Common law procedure. ? 82. v.
Procedure.
NOTES. V. COMMERCIAL PAPER.
NOTICE
By retiring partner to creditors makes him surety for continuing partners
in New York. v. Change of partners. Notice to third person revokes
implied authority of co-partner, v. Powers. No notice required upon
dissolution by death of a partner. ? 175 & n. i. Notice to different kinds
of customers, v. Dissolution. Notice to party holding out, implied dele-
gation of authority. | 69, n. 12.
NOVATION. V. CHANGE OF PARTNERS.
OHIO did not recognize attorney's appearance without authority. ? 119,
n. I, a. Release of partner, not of co-partner. ^90. v. Procedure.
OPTION
To become partner. The option when exerted, does not make the option-
holder a partner by relation, unless the privilege was equivalent to a
diredl control of the business. The natural inference is that the partner-
ship begins when the option is exerted, and the relation to the com-
mencement of the business must be proved. | 18.
677
Index.
ORAL CONTRACT of Partnership. ? lo. v. STATUTE OF FRAUDS.
ORPHANS' COURT. No jurisdidlion over partnership by reason of its
distribution of a deceased partner's estate. ^. 216 & n. i. v. Account.
OSTENSIBLE partner cannot compel joinder of dormant partner as co-
defendant. I 76. V. Procedure.
OUTGOING PARTNER, v. CHANGE OF PARTNERS.
OVERDRAFTS. 1 165, n. 3. v. ADVANCES.
PARSONS. JAMES. Tort confounded with contradl. I 47, n. a &. b.
PARSONS, Dr. Theophilus. Partnership both corporation and aggregate
of individuals. § 100, n. 2, b.
PARTIES.
The legal excuses for non-joinder are infancy, discharge in bankruptcy
or insolvency, absence from the jurisdidtion, or lost by statute. ^ 84, n. i.
V. Procedure. Surviving and executor of deceased partners may be joined.
? 88. V. Procedure. The partners are the parties in all litigation, and as
a partner cannot be both plaintiff and defendant, no claim by or against
the firm is colledled. § 160. v. Procedure.
PARTNER.
A proprietor, for by the Common law the possession of property did
not give the possessor the authority to sell. The purchaser must prove
authority from the owner, or ownership by the vendor. It was necessary,
therefore, that third persons should treat a partner as a proprietor. ^ 4.
Property measures partner's capacity. ^ 99, et seq. v. Agency.
PARTNER'S EQUITY, v. EQUITY.
PARTNERSHIP.
The natural division of the subjedl : i, Entering into partnership or
the relation ; 2, The principles which regulate it in aAion, and 3, By
which the business is wound up. At Roman law, a contradt between the
partners in which third persons had no interest ; at Common law, the in-
terest of third persons is the main subject of attention. The Common
law does not, as the Roman law did, regulate the private bargain of the
partners. Partnership came into the Common law through trade. ? i. v.
Trade. The Common law introduced a change in the characfter of the re-
lation, and interjected the feudal notion, that property was the principal
thing, and man the accessory. \ 3. The contradl, if written, is for the
court ; if oral, for the jury, who then find the terms of the contradl, and
the court decides the legal eflFedl. \ 21. If the fadls are uncontradi<5led,
the court excludes the jury. Intention is not equivalent to a contradl of
partnership. There is room for penitence or reconsideration. There is
678
Index.
no consideration or binding agreement. ? 23. Partnership as qualifica-
tion for incorporation, v. Incorporation. Partnership involves title to
firm stock, v. Contribution. A partnership in the profits and not in the
stock, is a misnomer. The partner is paid out of the profits, but is not a
proprietor, and therefore, not a partner, but only an employee. The legal
aspecfl of the partnership is the relation as it affecl:s third persons. ^ 48.
This has not been recognized, because the origin of partnership was be-
tween the partners. But in modern law, the domestic arrangement is
not controlled by law, but left to the partners. They can adjust the
terms to suit themselves. ? 48. One may own all the stock, or lend a
co-partner, without renouncing the right to repayment, and profits maybe
additional to interest. \ 48, u. 2. Profits maj' be given for the loan of one's
name or credit ; all without being partners between themselves. \ 48, n. 3.
A partner could indemnify his co-partner. The coutracfl w-as thought to
lack consideration, but the contracft of partnership supports the particu-
lar provisions. <*49, n. 3, a & i^. A partner might aqj: wholly for his co-
partners, and not have any interest in the business. His motive might
be to establish them in business. ^ 49, n. 3, c. There is no partnership in
buying apart from selling. \ 7, n. i. v. Buying. In manufacfluring. ? 7, n. 6.
V. Manufacturing. When the arrangement between the partners is brought
before the court, the law interprets the provisions, in order to give effecl
to all. If inconsistent with each other, the general purpose controls the
minor provisions. ^50. The constituent elements of partnership are:
The destination of the stock, which involves control and prevents diver-
sion to another objedl ; accounting for the disposition and management,
which implies such destination ; sharing profits and agreement to devote
oneself to the management of the business. The eccentric chara<5ler
of partnership at the Common law is caused by the dual position of the
partners. They contribute stock, which is the estate pledged to credit-
ors. The law, however, does not limit their engagements to the stock,
but by imposing an unlimited liability, charges all their separate prop-
erty also for the firm debts. The partner's contra<5ls bind him as an in-
dividual, and charge his separate estate. ?99; ^ 100, n. I. Thus, his cred-
itors come into competition with the firm creditors. \ 102. Relation
founded on status, not contra<5l. \ 104. Definition of partnership in
French code. \ 16, n. 6, d. Partnership extends beyond trade. It has out-
grown trade, and now embraces manufadluring, which is not a trade, but
an industry, and extends to any "business," which parties join in trans-
acting \ 7. The original constituents of buying and selling need not co-
exist in the business of a partnership. Neither buying nor selling need
be an element of the partnership business. \ 7.
PARTNER'S NAME as firm designation, v. NAME.
PAXSON, J. Cesttiy que trust may waive tort, and sue in assumpsit for
trust funds. I 141, n. i.
PAYEES. Joint payees of commercial paper, v. Commercial Paper.
679
Index.
PECVLIL'M. r. MARSHALLING ASSETS,
PENNSYLVANIA,
Constitution of, prohibiting special legislation, lyj, n. 2. Only State
which divides the loss of capital according to the contribution. I 34. A
partial loss of capital is also distributed according to the contribution.
i 35. Pennsylvania pracftice for pro rata distribution of assets, v. Exe-
cution. Pennsylvania conveyancing. \ 109, n. 7. v. Land. Record-sys-
tem controls firm title to land, and prevents marshalling assets. \ 113. v.
Land. Vagary of marshalling assets, t'. Marshalling. Pennsylvania lets
attorney of court represent others and bind them by judgment. ^.119. v.
Powers. Partners no power to submit firm claims to arbitration. Fadls
in case limited decision to firm assets. ^120, n. i,a&^. Surviving part-
ner an assignee of deceased partner, and excludes testimon}- against his
estate. ^121. Trading in individual name presumed on firm account.
\ 76, n. 18, 21. V. Procedure. Distribution to separate creditors as well as
joint confirms Pennsylvania view. \ 76, n. 23. v. Procedure. Pennsylva-
nia corrected process by preventing judgment in joint adlion from merging
claim against non-served partners. \ 82. v. Procedure. If adlion not
joint, judgment still merged claim. \ 83. v. Procedure. Acceptance of
service did not cause judgment to merge claim. \ 83. v. Procedure.
Pennsylvania passed adl to bring in representatives of deceased judg-
ment-debtor. </ 89. V. Procedure. Release of partner without releasing
co-partner. \ 90. v. Procedure. Plaintiff permits partner to be plaintiff
and defendant. ?i6i, n. i. v. Procedure. Pennsylvania allowance of
compensation to firm for management of business when called to account
for trust fund. v. Trust funds.
PERSONAL REPRESENTATIVE, v. EXECUTOR.
PLEDGE.
Partner's right to. v. Powers. To mortgage share in future partnership.
V. Powers. Power to pledge results from the power to sell and to borrow.
S123.
POTHIER. Title to contribution. \ 34, n. i. ConstmAion of pearl case.
1 63, n. 4.
POWER.
A partner's power to sell his co-partner's share of the firm stock, arose
from trade, partnership being an organ of trade. All a partner's powers
are derived from this right, apart from commercial paper. 1 126. The
power to sell, which' is the badge of dominion, carries the right to make
any contracfl with reference to a sale, and the correlative power to buy
for a co-partner involves the right to contradl for a purchase. Any con-
tract, therefore, with reference to the trade is within a partner's power.
S3. The business gives the partners power to represent each other.
680
Index.
Trade is the grouudwork of partnership, aud the firm is an instrument
of trade. The authority is implied by and limited to trade. A joint
purchase, which involved a joint sale, would not nece.'^sarily be a part-
nership transaAion. The objedl might not be gain, but might be sharing a
loss, § 49, or a division of property, v. Joint purchase. Powers of part-
ners derived through the joint estate, v. I'roperty. v. Capacity as Partner.
The partner's right to sell gives the separate creditor no ground to at-
tach firm stock. The right is to sell for the firm, and the attachment
must be for a firm claim. \ 103, n. 3. If each partner sold his interest,
the firm creditors would not be cut out. The sale must be joint, or the
firm title will not be devested, but remain subjedl to the execution of firm
creditors. Implied power depends on partnership, and unless established ,
none exists to bind by commercial paper. ^49, n. 1. The business of
buying and selling gives a partner the power to sell the firm stock. >f, 5.
The authority of a partner might extend to a sale of the entire stock. If
made in the course of trade, the sale might be sustained as a valid exercise
of a partner's authority. The stock might be old style and better replaced
by new. In Pennsylvania the assignment of the whole stock was sustained,
because the co-partner had absconded, and by the assignment the stock was
saved from an adverse and forced sale by the execution creditor. But un-
less absent, the co-partners must be consulted, or the sale will be invalid.
\ 1 14. The right to buy corresponds to the right to sell. As to the extent
of his correlative right to buy : He may buy articles which the firm is ac-
customed to vse in its business, without reference to the actual use which
he makes of them. The only limit to the amount of merchandise which he
may buy is to be found in the proportion which the goods bear to the de-
mands of the business. Ordinarily contributions are made before the
business is begun, but if not, aud a partner bought on credit, what he
agreed to contribute, the firm would be charged. A restridlion will not de-
prive a partner of the power, unless enforced by the co-partner, who rescinds
the sale and returns the goods. 1 1 15. The authority is implied from trade,
which enables a partner to sell his co-partner's share. A contract made
in negotiating a sale is part of it, and thus any dealings for the purpose
of buying and selling are included in the business. The agency is de-
fined, it is said, by the scope of the business. But the principle which
enforces the limitation of the partner's power, springs from the co-part-
ner's equity. The law extends the business contraifl, and makes it
embrace the separate estate of the co-partner. As he did not contribute
this fund to the firm, he is prompted by his self-interest to prevent any
further invasion of his private domain than that sancflioned by the law.
He disputes any obligation which does not arise necessarily out of the
business transadlions of the firm, because the obligation, unless im-
peached, would charge his separate estate. ? 116. A partner cannot bind
his firm by a specialty, because the seal precludes an inquiry into the
consideration, and takes away by anticipation the co-partner's defence to
the claim. Each partner is entitled to make a defence, because the judg-
681
tuc
Index.
_ 111 binds his separate estate iu the first iustance. An executed contradl is
said to be an exception, because it does not charge, but discharges the firm.
\ single partner assigned a firm mortgage. The assignment, as an executed
contract, discharged a firm debt, and the seal was surplusage. §117, n. i.
He can ^sigu a firm judguient. The judgment is a firm asset, which any
partner or the assignee for creditors might sell, aud, if bought in, would re-
vert to the firm, \ 117, n. i- A release does not bind the firm ; the seal does
not preclude enquiry. Unless there is a debt, the specialty would create an
obligation, in order to extinguish it. The transaction depends, therefore,
for its validity, upon the consideration received by the firm, and not upon
the show of a consideration contained in a seal. ^117, n. 2. The phrase,
* a partner may release a debt, ' carries the point in its tail. The debt must
be proved to exist before the power's arises. A partner could not give a
bond and warrant for a loan made to his firm. The bond would be his
individual obligation, and the judgment entered on the warrant would
not bind the separate estates of his co-partners. \ 117, n. 4. A power of
attorney accompanying a certificate of stock, though executed, is to ena-
ble the holder to substitute himself for the principal. The adl is not past,
but future, and therefore does not stand by itself, but requires the seal to
supportit. '^117. The reason a partner has no implied authority to perform
the adl by a sealed instrument, is that the specialty changes the character
of the contract. The Statute of Limitations is different. The implication
would be general, and not limited to a single transacStion. \ 118. The
right, however, is inferred from an express power delegated to perform
the acl. The express authority sandlions the a6l, and the seal is disre-
garded as surplusage. There is no risk of extending the authority to bind
the firm by specialty, or of disregarding the seal in the whole class of
specialties made by a partner for his firm. What would be gained by
saying a partner could execute specialties for his firm, but that they would
be disregarded as specialties, and treated as simple contra<5ls? It is sim-
pler to say at once that he must make simple contradls, in order to bind
the firm. \ 118. A partner can still, in some States, employ an attorney
to appear for the firm. It is now held in England that he cannot, and the
earlier pracflice, which was established in ignorance of Lord M.\nsfield's
decision, has been disregarded. The only redress of the firm would be
against the attorney, if solvent, and even then astay of proceedings would
not be granted, except upon payment of costs. \ 119, n. i. In New York
the judgment obtained by an unauthorized appearance will be opened to
let the firm into a defence, but will not be set aside as void. \ 119, n. i, c.
In Pennsylvania, the character of an attorney, as an oflBcer of the court,
gives him authority to represent anybody. ^119, i, d. Ohio refused to
follow the English practice before it was discarded in England. \ 119, n.
I, a. The corredtion was first pointed out iu England by "E. W.," in
1847. The power to appear by attorney by a partner corresponds to the
service upon him, and no claim has ever been made that a partner could
accept service for his co-partner. \ 1 19. A partner cannot submit firm
682
Index.
claims, or debts, to arbitration, even if the agreement is by parol. The
contrary ruling injPennsylvania was limited by the fadls of the first case
to bind the firm assets, and even in the last case, in spite of the compre-
hensive language, the opinion refers to firm property. <; 120. The effedt
of the judgment upon the separate estate is the explanation. In States
where the judgment is limited to firm assets, a partner may submit.
Therefore, in New York the purchaser of a partner's share can submit
a disputed claim to arbitration. The sale of the share empowers the
buyer to represent the interest which is co-extensive with the firm prop-
erty. As the award would bind only firm assets in New York, a part-
ner can always submit to arbitration. § 120, n. i b. It is like a confessed
judgment, which is limited in execution to the assets of the firm. \ 120,
n. 2. After the partnership is established, a partner can bind his co-part-
ner by an admission made in the transaction of the firm business. The
surviving partner is no*^ an assignee of his deceased partner, so as to ex-
clude the testimony of the opposite party in reference to transactions with
the deceased partner. The surviving partner does not derive his title b}-
assignment from his co-partner, but is an original owner by virtue of his
joint title, 'i 121. In Pennsylvania the deceased partner is treated as the
assignor, and the surviving partner as the assignee, and the death of a
person excludes testimony against his estate in a<5lions by or against ex-
ecutors, administrators, guardians or assignees. The disqualification has
been curtailed by statute. | 121. A partner cannot confess judgment
against his co-partners, and they can have the judgment stricken off
against them. \ 122, n. 2. But, in analogy to the service upon one part-
ner, the firm assets can be taken in execution under a judgment confessed
by a partner. ? 122, n. i, 2. The joint or separate chara(5ler of the judg-
ment would be fixed by the claim, which would be the only means of as-
certainment, except where the special 7?. y2z. under the Pennsylvania acl
of 1873 shows the distinclion between a joint and separate claim. ^ 122,
n. 4. Where the judgment is confined to the firm assets, as in New York
and Louisiana, a partner may confess judgment against the firm, because
he does not charge his co-partner's separate estate, 'i 122, n. 5. Therefore
a judgment confessed by a partner will not revive a lien barred by the
Statute of Limitations. ? 122, n. 6. Evidence that judgment confessed to
defraud creditors puts judgment-creditor to proof of bona fides. § 122, n.
9. The limit of a partner's power to borrow is fixed by the usage of
business. ^ 123. The power to pledge results from the power to sell and
to borrow. § 123. A partner as a proprietor has the power of disposition
over his share. ^171. If absolute, a dissolution results ; if qualified, it
does not. § 171. n. 2. The alienation is not accompanied by delivery
of manual possession, and the alienee's rights are available only in Equity.
^171, n. 3 ; I 172. Partner's sale of his interest. ^ 171, n. 4 ; ? 172, n. i.
lK Assignment. A partner can sell his interest in real estate, though he
has no quota until a balance is struck. ^ 112, n. 20. v. Land. Partner-
ship creates implied powers to carry on the business, v. Liability. Power
6S3
Index.
of liquidation to a partner, coupled with an interest, is irrevocable. ^ 187,
V. Liquidation. Power of mining partner measured by the business. ^ 15,
n. 4. Z'. Mining Partnership. Partner may sign his co-partner's name,
or sele<5l a firm name, i 17- v- Name.
PREFERENCE
Of firm creditors. The priority can be explained only by the joint ten-
ancy of the partners. The credit theory which charges the fund, because
it is the proceeds of sales made by the creditors to the firm, is misapplied
at the Common law, where the sale transfers the title and makes the price
an independent claim. Insolvency does not rescind the contra<5l of sale,
and restore the property to the seller. At the Roman law the sale was
conditioned upon payment of the price, and the failure to pay might raise
an equity to follow the proceeds into the fund. The debt of a partner
charges both his joint and his separate estate. His debt not contradled
in the business, charges only his separate estate. The separate estate is
charged in each case, the joint only in the first. The joint creditor is
confined to his firm debtor only in equity, and on the ground that he had
two funds for the satisfaction of his claim. The regulation of his right
bj- equity and making recourse to the separate estate depend upon an
allowance of an equivalent for the partial payment received from the
joint estate, led to the notion that the separate creditors had a right to
the separate estate, similar to the joint creditors' right to the joint estate.
Making the joint creditors share the joint estate with the separate credit-
ors before they could touch the separate estate, seemed an acknowledg-
ment of the separate creditors' right to the separate estate. ^ 107.
PRICE. Title to land results to firm from payment of price. gii2, n. 7.
V. Land. v. Consideration.
PRINCIPAL AND AGENT, v. AGENCY.
PRINCIPAL. V. CO-PRINCIPAL.
PROBATE COURT. Its jurisditflion over a deceased partner's estate
does not extend to the partnership account. ^ 216 & n. i. v. Account.
PROCEDURE.
The firm is not recognized as a party in legal proceedings. The part-
ners are the only parties. A firm could not aver citizenship and main-
tain suit in United States Court. ? 76. Some States, however, permit
the firm to be a party, e. g., California, Iowa, Nebraska, and Conne(5licut.
But then the statutory process does not supercede the Common law form
in which the designation is surplusage. In a suit against the firm the
judgment is limited in the first instance to firm assets. A partner, it is
said, cannot sue in his own name, as assignee of his co-partner ; but he rep-
resents the firm, including his co-partner's interest, not less than his own.
684
Index.
If parties agree to sue and be sued in the name of an association, they caw-
not obje6l, if sued in that name ; though suit, if it involved the partnership
account, would not be maintained. An infant need not be a co-plaintiff,
as he might be charged even as plaintiff by a counter-claim. A nominal
partner must be co-plaintiff if held out with the concurrence of the actual
partners; if not, the defendant could not compel his joinder as co-plaint-
iff. A dormant should be a co-plaintiff, as only by his joinder could the
defendant recover his counter-claim. The ostensible partners when sued
cannot compel the plaintiff to join the dormant partner as co-defendant,
because they are liable on the contract as they made it. The Common
law rule which still obtains in England, was that the non-joinder of a
dormant partner, though unknown, discharged him. It was an uncon-
scious eledlion. The effedl of an enactment requiring the parties in in-
terest to join, was to compel the joinder of a dormant partner under all
circumstances. A special partner may, it is said, join as a partner on ac-
count of his interest, though his control is suspended during partnership ;
but this may be doubted, for judgment against a special partner would
bind his separate estate. If the use of a fidlitious name is prohibited,
the partners using it may nevertheless recover, unless credit was acquired
by the name. A iirm could recover the price of merchandise for negligence
of carrier, for rent of building, and enforce clerk's bond for faithful per-
formance. If a certificate is required as a preliminary, it must be filed,
or suit can not be maintained; but the firm may assign the claim, or re-
cover for a tort without a certificate. The effedl of trading in name of
individual partner varies in different States. In Pennsylvania the pre-
sumption is that the transa(flion was on behalf of the firm ; in England,
and elsewhere, the presumption is that the transacftion was on individual
account. If the individual name is the designation of two firms, the cred-
itor may hold either. The separate creditors rank as joint creditors in
the distribution of the assets. This confirms the Pennsylvania view that
all transa6lions are on firm account. Partnership can exist without any
designation. The designation is surplusage and the individuals are the
partners. | 76. English statute which permits suit against any but par-
ties to bills and notes, excludes partner, v. Commercial paper. The
Common law did not adopt the Civil law process, nor enquire what it
was. The Civil law process resembles the Common law remed}' for torts.
The remedies are concurrent, or successive and cumulative. If judgment
is against the firm alone, it ran be enlarged so as to bind the partners,
except where they have a personal defence. The English have recently
tried to introduce the Civil law method by judicial orders under the
Judicature A61. But the Common law method has not been superceded ;
it still subsists beside the new method. The effe<5l of the construdtion put
upon the orders is that the partners at the time the debt was incurred are
the parties to the suit, and a judgment against one merges the cause of
a6lion, and releases the others, exadlly as it did before the orders. This
construdlion makes the new process as ineffectual as the old. The pro-
685
Index.
cedure under the joint contradl frustrated a recovery. § 77. If any defend-
ant confessed judgment, or gave a specialty to plaintiff, or he recovered
judgment against one or more, he extinguished his claim against all
others. Although the plaintiff could not effecl service upon all, his ina-
bility did not make any diflference ; the non-served partner was relieved
from the liability by the judgment against the served. This result was
worse in Pennsylvania than in Kugland, because the English had the
process of outlawry, and the non-served partner's goods could be taken.
^Si. In correcting the procedure Pennsylvania began by preventing the
judgment in joint actions from merging the claim against the non-served
partners. § 82. Other States, e. g., Rhode Island, North Carolina, Mary-
land, Iowa, South Carolina, and Michigan, corrected the procedure. If
the action was not joint, the Pennsylvania statute did not relieve the
plaintiff. If he took a confessed judgment the cause merged, and the
other partners were released. A specialty or death extinguished the
claim. ^ S3. If, however, the suit was joint the judgment did not merge
the claim. The acceptance of service was no objedlion, nor no return by
the sheriff as to the non-served partner. But the fadl that the plaintiff
did not know of another partner's existence, and was kept from knowing
it by the dormant partner, was no excuse for not joining him. ^ 84. The
legal reason given for this decision was that the Statute of Limitations
would be frustrated ! But it does not run until discovery, especially when
knowledge was prevented by the defendant. The legal excuses for the non-
joinder of a defendant were infancy, discharge in bankruptcy or insol-
vency, absence from the jurisdidlion, or lost by statute. If the judgment
is in a different State the enforcement is regulated by the law of the forum.
\ 84. Originally the claim was joint and several in equity. \ 85. Now
equity would not open the judgment to let the plaintiff bring in another
partner, not even if a dormant partner. Death extinguished the claim
against the deceased partner's estate. Death carried the claim over against
the sur\nvor, who alone was liable to pay it. \ 86. Equity relieved the
plaintiff only, if the legal remedy is exhausted, and deceased was not a
surety. Then there was no joint remedy against surviving and represen-
tatives of deceased partner. There was no remedy at law, and a remedy
in equity only after the legal remedies had been tried and produced noth-
ing. ^86. If a partner died pending suit, the plaintiff proceeded against the
surviving partner alone. ^87. The plaintiff could not join the executors
of the deceased partner, even for conformity. If the surviving partner
confessed judgment the claim was extinguished. If the executors were
made parties, they would be disregarded as parties, and as suit would be
between plaintiff and surviving partners, joining executors of deceased
would not disqualify surviving partner as a witness. Pennsylvania pro-
vided against this extingiiishment of the claim by the death of a partner.
It gave a dire<5l recourse against the deceased partner's estate. \ 88. The
creditor can recover against either surviving or deceased partner, and
judgment for survivor don't bar suit against deceased, and recovering a
686
Index.
judgment against surviving don't prevent recourse to deceased's estate.
The interpretation of the Pennsylvania statute is not that the burden of
proving insolvency of the surviving partner, and no firm assets is shifted
to the defendant. That question of equity is excluded altogether, and a
legal right is given against the deceased partner's estate. If a partner
dies pending suit, the statute provides that the suit shall proceed against
the deceased partner alone. The plaintiff may either bring a new suit or
suggest the death and proceed by substituting the executor, or adminis-
trator. Statute of 1836 enables courts to frame a suit in which executor, or
administrator, should be joined ; but a statutory provision is unnecessary,
for pra(5lice justifies the process. Other States have enaAed provisions like
Pennsylvania, e. g., Rhode Island, Mississippi, New Jersey, Tennessee,
Vermont, Maine, Minnesota, Wisconsin, Kansas, and Maryland. Adiredl
recourse is now conceded in England, and the right admitted. At Common
law, if a partner died after judgment against himself and his co-partners,
asci.fa. would not lie against the deceased partner's reprsesentatives,
although the surviving partner is insolvent. § 89. In order to redlify this
defeA, Pennsylvania passed an a<5l to bring in the representatives and
prevent judgment from being a bar to subsequent suit against other part-
ners. Other States passed adls to this efifecfl, e. g., Minnesota, Kentuck}',
Maryland and Michigan. ^ 89. The severance of the judgment severed
the cause of adlion. In a suit against the executors of a deceased co-
maker, who was surety for the other makers, of a promissory note, the
defence of suretyship was of no avail, because there was an independent
cause of action against the deceased partner's estate. | 90. If the plaintiff,
releases a partner, the effedl is an extinguishment of his quota of the joint
debt. The plaintiff could stipulate to release the partner altogether, it is
said, and yet retain his right to recover the full amount for his co-partners,
but this would be unjust. Statutes have enabled the plaintiff to compound
and release a partner without releasing his co-partners, e. g. Pennsylva-
nia, Kansas, Michigan, California, Minnesota, New Jersey, Ohio, Rhode
Island, South Carolina, Vermont, and Virginia. Distinction between the
joint and the joint and several contrails, v. Contra<5l. Severance of
process, v. Contradl. The Scotch did not follow the English procedure ;
they adopted the French process, which is the general Civil law course.
For account, v. Account. The partners are the parties to any litiga-
tion by or against a firm. Hence no partner can sue or be sued by his
firm, for if this were permitted he would appear as both plaintiff and de-
fendant in the same case. As a consequence of this form of the process,
no debt can be colle6led by the firm of a member, or vice versa, and such
claims are excluded from the assets of either the joint or the separate
estates. ? 160. A Pennsylvania statute permits partners to be both plaint-
iffs and defendants in the same adlion. | 161, n. i. The courts, in con-
struing the acfl, limited its operation to a seizure of firm property, and did
not give it any effedl to take the separate estate of a partner in execution.
^ 161, n. 6. It provided a remedj' for suits between firms with a common
687
Index.
nteiiilKr. The adl does not enable a partner to sue his firm or his co-
contraclors, but is construed to require an independent plaintiff, who is
not also liable on the contract which he is entitled to enforce, i i6i, n. 2.
There is, however, no difficulty in a joint contradl being enforced by one
of the joint contradlors against his co-contra<5lors. The intention to ena-
ble one to recover his claim, in spite of his being in form one of the con-
tractors who agrees to pay it, furnishes the interpretation. ^ 161, n. 4, 5.
The effecl of allowing suits between firms with a common member is to
limit execution to the firm assets. I 161, n. 7. Redress is not confined to
legal procedure, but may be equitable, and the remedy in equity is not su-
perceded by a statutory process. The obstacle, however, does not come
from procedure, but is inherent. The common member must be made either
plaintiff or defendant, and neither position is compatible with his twofold
membership, which requires a settlement of his interest in both firms.
(! 163. It is only through a settlement of the accounts of both firms that
the ultimate balance can be ascertained, and his portion of it. | 164. If
partners could set-off against each other the debts they owed the firm, as
decided by I^IcCormick's Appeal, the distinction between joint and sepa-
rate estates would be unsettled, and made to depend upon the account.
? 163. The Common law does not admit capacities in an individual, and
the faculty was acquired in partnership by means of the joint estate. ^, 164.
The common member seems to be acquiring distindl capacities by means
of the different trades he undertakes. ^ 164, n. i. Different firms com-
posed of entirely the same members are always treated as a single firm,
no matter how far apart they transacfl business. ^ 164, n. 2. Thus, a gen-
eral lien in one branch covers the assets in the other. ?, 164, n. 3. A par-
tial identity of members gives less title to recognition. ^ 164, n. 4. A
trader did not obtain distinct capacities by reason of his different business
undertakings. It was only the slave who had a separate recognition in
each business, because he had no caput. \ 164, n. 5, 6. 7.
PROCESS. V. PROCEDURE.
PROFESSIONAL REPUTATION, not part of good-will. I 209, n. i a.
PROFITS.
Partnership in the profits and not in the stock, v. Partnership. Shar-
ing profits indicates a partnership. It shows that the title belongs to the
participants, v. Property. By virtue of his ownership he takes the fruits
of his property. This is the original doctrine, and, though misunderstood
and misapplied, is true to-day. ^52. That profits result from ownership,
and not from partnership, appears in this : The title to profits is a separate
right, which arises only when the joint title ends. The several owners
then become entitled to the profits. Before that severance the partners
are owners of assets, but not of profits. Profits are co-extensive with
trade, and as partnership is an agency of trade, the result of its fundlion
688
Index.
is profits. All trade is undertaken for profit. Sharing profits during part-
nership is accounted for not as a right, but as an indulgence. There
could be no enforcement of it. An action would not lie by a partner
against his co-partner, and a bill would end in a dissolution. The pro-
prietorship affords a facility in proving a partnership, because it shows
that one interested, or acliug, as a proprietor is a principal in the busi-
ness. I 53. It might be impossible to prove him a principal, except
through the property identification. The services of others are not capi-
talized, and they are not made partners by sharing the profits, because the
acceptance of the services as an equivalent for a material contribution de-
pends upon the agreement of the partners. The fa<5t, however, that con-
tribution may be in services will charge the one rendering services as a
partner if he acls as a partner, and inter alia shares the profits, unless he
can disprove that he a<5led as a partner, and show that his condudt was
consistent with the position of a subordinate employe. The profit-shar-
ing is explained by virtue of the title of ownership, v. Property. No one
but a proprietor can take profits. Hence the inference of partnership
from sharing profits. If, however, the arrangement lets a non-proprietor
take profits, it must be by a delegation from the proprietor. By disre-
garding the proprietor's appointment by which the appointee took profits,
it resulted that the distinction between sharing by a proprietor and by a
non-proprietor was overlooked, and both profits and property were ex-
cluded as evidence of partnership. ^ 54. Profits are not independent of
firm property. They are the increment of the contribution, and form part
of it. No one could claim profits who could not claim a contribution.
Profits are not, like the contribution, a fund on which creditors rely for
paj'tnent. Profits do not exist as such until the debts are paid. The word
has no meaning, except between partners. This was first pointed out by
SuivPicius. The profits could not, as a part of the contribution or assets,
be said to belong to the creditors, so that taking profits would deprive
creditors of the fund to which they were entitled. The assets would be-
long to the creditors, and a withdrawal would be a fraud on them, but
the profits would not exist. The proprietors would be charged, because
they took the assets away from the creditors ; the withdrawal would charge
them, but they would not be charged as proprietors because they took
profits included in the assets. That reasoning would establish an anterior
liability, whereas the liability for a withdrawal is subsequent, and pre-
supposes a prior liability. The question of proprietorship is in dispute,
and the liability for a withdrawal begs the question by assuming a pro-
prietorship. §55. At. the Roman law, the profits and the contribution
correlated at first in fadl, and then in theory. At the Common law, they
are presumed to correspond in default of evidence, 'i 56. Not inconsistent
with the theory of firm having only the use of the contribution.s. v. Con-
tribution. History of profit-sharing as evidence of partnership, v. Evi-
dence. Amount of profits stipulated for loan. 7'. Evidence. By general
law, profits are equivalent to the property. ^ 57, n. 4. Partnership iu
689
Index.
profits and not. in the stock, a misnomer, g 27. Profits made by use of trust
funds. Z'. Trust Inmds.
PROMISE TO BECOME PARTNER, v. HOLDING OUT.
PROOF OF PARTNERSHIP, v. EVIDENCE OF PARTNERSHIP.
PROPERTY.
At the Common law property partook of the nature of bailment. The
title was to hold, not to sell. If anything else than tenure was claimed,
it must be proved and would not be inferred. Thus, when disposition
was established as an incident of litle, if the proprietor authorized a sale,
this did not include a pledge. The authority was express to do some,
thing, e. g., sell, which was not originally involved in the idea of property,
hence the authority was limited to its terms. There was a difference of
opinion upon this inference of authority, arising from a general delega-
tion, as is seen in Bracton's inference of contradls for service from the
power to manumit and enfeoff. | 4.
Property affecfts the question of partnership, because it is the medium
through which the partners are connedled, and because it forms the sub-
stance of their transacftions. ^51. Property is, therefore, the distin-
guishing trait of a partner. The co-proprietor in trade is a partner. The
profits only point him out, because the proprietor has a title to the profits.
V. Profits If the firm business does not require ownership, then the adls
by which the partners exert all the powers they have, are equivalent to
proprietorship. If one adls as owner, this is proprietorship as to third
persons. This effeA does not follow at the Civil law, because no one but
the contracting party is bound. The party interested must seek his re-
dress from the contra(5lor, and the contracflor must look to the interested
party for contribution. At the Civil law, there is no undisclosed principal
or dormant partner who can be sued. Profits are an increment of the prop-
erty contributed, and sharing is an indication of the partner, v. Profits.
It is the property which gives the partners mutual agency. They buy
and sell it. The agency is implied from the fundlion they undertake.
Agency is a result of partnership, not a cause of it. Buying and selling
property together would not prove the traders co-principals if the prop-
erty element was excluded, for they might be co-owners of the property
and of the profits without considering themselves co-principals. They
would be independent principals, and each liable for himself, but not for
each other. This is the dodlrine of Chaffaix v. Lafitte, and Eastman v.
Clark. The creditors could hold them jointly only by proof of their inten-
tion, which is a secret, to be joint principals in the transadlion. Sharing
profits as proprietor, or as non-proprietor, v. Evidence.
The title required for firm property was a mutual restricflion of owner-
ship, short, however, of total association of title. ? 97. Joint tenancy an-
swered to bridge over the gap between communal holding and modern
690
Index.
individual title, by the fi(5lion of a single title. Trade added the power to
dispose of the joint property, as the Feudal joint tenancy was limited to
holding the property. ^ 98. Joint tenancy was adapted to commercial
purposes. Survivorship continued, but it was limited to the duration of
the partnership. The separate titles of the partners, though recognized,
were postponed until the expiration of the partnership, when the joint
title was severed. The power of sale arose from the joint estate, not
from mutual agency. ^ 99. It results from making the joint estate the
source of the partner's powers that firm creditors have a legal priority
over the separate creditors of a partner. The right is not founded upon
an equity, but has a legal basis. The joint creditors would not have a
preference if the partners were tenants in common, because the titles
would be several, although the possession was joint and the possession
would be according to the titles. ^ 100. This would benefit the separate
creditors. They could seize and set apart each partner's quota of firm
stock, in spite of the co-occupation. The firm creditors would be sepa-
rate creditors of each partner, and on a distribution all would come in
with the separate creditors. The only difi"erence between joint and sepa-
rate creditors would be that the joint creditors would compete for each
separate estate, while the separate creditors would be limited to their sin-
gle debtor. The joint creditors would exclude the separate creditors, if
the title was joint. Neither partner could charge the joint estate, except
by a firm transadlion, and the creditors in firm transacftious would hold
the estate as a pledge. The joint creditors have in addition an equal right
with the separate creditors to each partner's separate estate. Title and
claim survive upon death of partner, v. Estate. The joint estate pre-
vents any debts, unless in the course of business, and enables firm credit-
ors to enforce the prohibition. ^ 106, n. i. A partner's sale of his share
is subje<5l to the debts ; if to a co-partner, and intended to sever the joint
title and convert it into co-partner's separate estate, the sale is a fraud
upon the firm creditors. If all the partners join in selling, the creditors
may assert the joint title, or make the partner exert his right for their
benefit. § 106, n. i.
PROPRIETOR. V. PROPERTY.
PROTECTION, MUTUAL, v. GAIN.
PURCHASER from partner of land, not of personalty, takes title, unless
he has notice of firm title. § no.
PURCHASERS, v. Joint purchasers. Purchaser of partner's share in-
terested only in liquidation, z/. Execution. §181. z'. Settlement. | 206,
n. 2. V. Advance.
PURCHASES.
If each partner bought on separate credit, the seller could hold the firm.
The firm is the undisclosed principal, and is liable for the price. Pur-
chases for contribution, v. Contribution.
69 I
Index.
PUNTSCIIART, Dr. Civil law indivisible contradl. igi, n. 3.
QUALIFICATION as I'artner lor Incorporator, v. Incorporation.
MAISOy SOCIAL. V. NAME.
RATIFICATION.
Act must be on behalf of principal, hence, incoming partner cannot
ratify, i 144, n. 2 &. 7. Binds principal, if adl done in his name, though
he received no benefit and without a new consideration. \ 135, n. i. Pre-
vious but not subsequent authority would charge an undisclosed princi-
pal, who enforces the contract through the agent. The ratified contradl
makes the principal independent of agent, and not subjedl to equities
between him and the other party to the contradl. The intention to be a
principal cannot be ratified; nothing but a new contradl will bind him.
\ 135. Partner's adl in excess of his authority binds him, but not his co-
partners, unless they adopt it. \ 135, n. 2. If on behalf of all, all must
ratify, or no one will be bound. \ 135, n. 3. The enlargement of the busi-
ness, like its creation, requires the constituent authority of all. \ 135, n. 4.
Partner, who does not join in executing specialty for the firm, may be
bound : i, By express authority to co-partner to execute specialty in his
name. 2, By his presence at the execution without dissent. 3, By sub-
sequent ratification. In these cases he is bound by the covenants. In the
first case precedent authority, and in the third subsequent ratification may
be given by parol, 'i 135, n. 5, 6. 4, The adl may be authorized, but not
by seal. The principal is bound by the contradl, but not by the cove-
nants without a previous authority by deed. \ 135, n. 7. The argument for
a partner to bind his firm by specialty, because he can by commercial
paper, is misplaced. Commercial paper is governed by principles in con-
flidl with partnership principles, 'i 135. Infant's ratification by continu-
ing business, v. Infant.
RECEIVER.
A partner will not be superceded, unless for cause, by a receiver. The
firm saves the expense, and has the partner's experience. An owner
has the right to prevent waste by his co-owner, and security would be re-
quired, e. g., for injuring printing office. If liquidation cannot be effiedled
by either partner, the business will not be sacrificed, but put up at audlion
among the partners. ? 180. As the vendee of a partner has no right of joint
control, but only a right to enforce a settlement, the appointment of a
receiver is a matter of course against him. ^181. Laches will deprive a
partner of his right lo demand the appointment of a receiver. \ 182. Will
not be appointed to displace liquidating partner, without cause. ? 190. v.
Liquidation. A receiver is not appointed for a mining partnership as
readily as for a commercial partnership. \ 15, n. 2. v. Mining Partnership.
692
Index.
RECORD-SYSTEM in Pennsylvania supercedes marshalling real estate.
(J 113. V. Land.
REDFIELD, Judge. Partner's equity enures to firm creditors, and sepa-
rate creditor no right, unless surplus for him. ^ 106, n. 8, c.
RELATION, Partnership by. v. Option. Relation between partners by
consent, v. Choice of Partner.
RELEASE
By partner binds his co-partners only if he receives payment, i! 117, n. 2.
Creditor, by statute, may release partner and retain right against co-part-
ner. ^ 90. I'. Procedure,
REMEDIES, v. PROCEDURE.
RENAUD.
Achilles. By Law Merchant, contribution the limit of partner's liability.
§ 3, n. I. Contribution a debt, ^ 33, and limited liability in special partner-
ship confined to partners taking no part in the management. ^ 37, n. c. Set-
off. ^ 77, n. I, b. \ 130, n. II. Assignment by partner to co-partner, 'i 130,
n. I, A ; \ 130, n. 8, b, 11, 12.
REPRESENTATIONS
Of i'artnership. v. Holding Out. Partner's receipt for merchandise not
delivered binds co-partner if third person relied on his representation.
§ 139, n. 2. V. Tort.
REPRESENTATIVES. Personal, v. EXECUTOR.
REPUTATION, z/. Holding Out. Professional, not part of good-will. v.
Good-Will.
RESTITUTION, v. TORT. v. TRUST *FUNDS.
RESTRICTION
Of partner's power, v. Powers. Notice to third persons revokes co-part-
ner's implied authority. V. Powers. Partner's restriction will not deprive
co-partner of power to buy stock, unless enforced by partner who returns
goods. ^ 115 & n. 3. Restri6lion to firm business is imposed in order to
prevent the unlimited liability from charging the separate estate. ?ii6.
V. Powers, Continuing may set off debt of retiring partner. \ 48, n. 3. v.
Set-Oflf.
RETIRING PARTNER.
V. Change of Partners. Sale of his share entitles continuing partner to
liquidation. \ 186. v. Liquidation. Retiring partner may enforce agree-
ment to pay firm debts. \ 147, n. 2. v. Marshalling. Liability founds his
equity. § 147, n. i. v. Marshalling. Notice by retiring partner makes
him surety in New York. v. Change of partners.
69.1
Index.
RHODI": ISLAND corredled Commou law procedure. ^82; <i 88. f. Pro-
cedure.
RIBBKNTROP. Indivisible contradl of Civil law. ^91 & n. 3.
ROGIvRS, Prof. Henry Wade. Firm creditors excluded from competition
with separate creditors for balance of debt, 'i 109, u. 8.
ROMAN TYPE
Of parlnersnip. v. Profits. Roman law distindlion between co-owner-
ship or sale and partnership, v. Sale. Civil or commercial contract.
:•. Contracl. Not affeCted by teuure and partnership in holding, or in
selling according to contra<5l. i/67, n. 7. Roman partnership a bargain
between the partners, 'i i. v. Partnership. Partner acquired capacity by
a trade only if not siii juris, 'i 164, n. 5, 6, 7. At Roman law, profits and
contributions correlated at first in fa6l, and then in theory, 'i 56. Roman
law analogy of sale used to account for firm stock. ? 107. v. Preference.
Contrast between Roman and Common law sale. § 67. v. Sale.
ROUSSEAU.
French civil partnership not confined to profits, but extends to any
benefit which can be estimated in money, f^ 16, n. a &.d. Contribution, an
advance, 'if. 31, n. 3. At Civil law, parties to contradl alone liable, § 51, n.
b, and no undisclosed principal. §51, n. c.
SAIvE.
A sale might be a substitute for partnership. A shipment was made for
the joint account of owner, carrier and consignee, who became co-owners.
The division was a sale, and advance on original owner's share a payment;
recoverable if more than received for it. | 67. So, sale of trees for one-
half profits of cultivating them during life of trees. § 51 n. i. The raw
product could be sold to a manufacturer for a corresponding share of the
manufactured produdl. This was the case of farmers who sold milk and
received cheese. This is in contrast with the Roman law. The partner-
ship was in selling alone by Roman law, and the partners would be co-
owners of the price. At the Common law they would be co-owners of
the property and not be made partners by the sale. | 67. Partner's power
to sell. V. Powers. A sale by a debtor to his creditors. ? 59. Analogy
of sale at Civil law to create a firm stock. § 191. z'. Marshalling. Part-
ner's right of disposition over his share. §171; if absolute, a dissolu-
tion ; if qualified, not. '^, 171, n. 2. Alienation not accompanied with deliv-
ery, but carried out in equity. | 171, n. 3; g 172. Partner may sell his
share of real estate, though no quota. § 112, u. 20. Analogy of sale at
Roman law accounts for firm stock. 1 107. v. Preference. Partner's sale
of his share to defraud creditors, or sale by all partners, enables creditors
to assert joint title. 2 106, n. i.
6q4
Index.
SCHMIDT, Fred. Gus. Ad. Partnership in middle ages a family relation.
§2, n. I.
SCOTCH PROCESS. ^96. v. PROCEDURE.
SEAL. Partner caunot bind the firm by a seal, 'i 117. v. Powers. But
if express authority, the seal will be disregarded. ^ 118. v. Powers.
SELBORNE, Lord. Judgment against partner unconscious release of co-
partners. l^^, n. 3.
SEPARATE CREDITORS
Postponed to joint creditors by joint estate, v Property, v. Estate. Lien
for partner's advance don't extend to advance made co-partner and cut
off separate creditor's preference. '''/. 165, n. 1. v. Advance. Partner's ac-
ceptance of draft on firm does not enable holder to prove against his
separate estate. I 126, n. 2. v. Commercial Paper.
SEPARATE ESTATE, v. PROPERTY.
SEPARATE PURCHASERS, v. JOINT PURCHASERS.
SEPARA TIONIS JUS. ^ 164. v. ST A TUS.
SERVICE
Limits extent of judgment. ^ 122, n. 2. Service required by statute. §76.
V. Procedure. Services capitalized if accepted as a contribution. \ 54. v.
Profits. Set-oflf of non-served partner's claim. \ 130. v. Set-Off.
SHARING Profits, v. PROFITS. Sharing Losses, v. EVIDENCE.
SET-OFF.
V. Contrail. In Pennsylvania any liquidated claim may be set oflF.
Equity disregards procedure, and permits a set-off whenever the defend-
ant has a claim against the plaintiff, although no adlion could be brought
on the claim. The Common law ignored the interest as the ground of
set-off, and adhering to the technical form, did not permit a partner to
represent a firm claim, even by assignment. \ 130, n. i. The partner's
liability in his separate estate for a firm claim, entitles him to set off a
private claim against the plaintiff, rather than pay the plaintiff's joint
claim, and then sue him for the private claim. The firm has no right to
compel the partner to make the set-off, for that would be to enforce an ad-
ditional contribution. If made, it is an advance. No assignment by the
partner is requisite. Contra Civil law. ? 130, n. 2. The right does not
depend upon contribution, but contribution follows from the advance on
behalf of the firm. ^ 130.
I . Partner sued for a firm claim may set off a firm claim without co-
partner's permission. The set-off avoids circuity by anticipating the
contribution which co-partner would be compelled to make if partner
695
Index.
paid the debt out of his separate estate. This is also the Civil law. At
law, separate could not be set ofiF against joint claim, or vice versa, but
set-ofT is an equitable medium. \ 130, 4, 5, 7.
2. .\ partner sued alone, or with co-partner for a firm claim, can set oflF
his individual claim. He owes the debt none the less, because his co-
partners also owe it. ''/. 130, n. 6.
3. A debtor sued by a firm cannot set off a claim which he has against
one partner. The partners own jointly, and no part belongs to a single
partner. Hence, a separate debt is not payable out of firm property.
This is German Code and Civil law pradlice. \ 130, n. 8, 9.
4. The partner may set oflf a firm claim against his individual debt, if
his co-partners consent. The co-partners can pay a partner's debt if they
like. \ 130, n. 10. Renaud's opinion that partner has implied authority
to use firm claim. \ 130, n. 11.
5. Defendants may set off a firm claim against a partner's separate suit.
The partner is individually liable for the firm debt, and the defendant
may enforce the liability by set-off. ?.i3o, n. 12. Also Civil law.
6. A surviving partner cannot set off a firm claim against his individ-
ual debt. Although all rights survived, yet the beneficial interest resulted
to the deceased partner's representative. The surviving partner is in
reality a liquidating partner, and the application would be a misappro-
priation, unless made with the consent of the deceased partner's repre-
sentative. The death of partner introduces equality of distribution, and
prevents any subsequent set-off which would result in a preference. ?I30,
13, 14, 15 & 16.
7. A partner sued for a firm debt can set off his co-partner's claim
against the plaintiff, if the co-partner consents. The defendant repre-
sents the co-partner's interest in firm property. If offered by co-partner
and refused, partner could not subsequently claim contribution. If part-
ner has paid more than his proportion, it is important for him to com-
pel co-partner to let him use it. ? 130. The indemnifying partner may set
off the indebtedness of the outgoing partner. \ 148, n. 3.
Set-off between partners forms item of account, v. Litigation. Defend-
ant may set off deceased partner's debt in suit by surviving partner. \ 96,
n. I. V. Contra6l. Partners cannot set off against each other what they
owe the firm, because creditors are paramount and may colledt both. \ 202.
V. Marshalling. Firm creditors cannot set off payment of individual part-
ner's debt against bona fide holder of firm paper. 1 167, n. 5, a.
SETTLEMENT.
Interpreted according to partnership principles, \ 215. Must be proved.
§215, n- 1. Completed, is binding. ? 215, n. 3. May anticipate account.
§212. Suit for, and suit after, barred by limitation. \ 213. v. Account.
Should carry interest. \ 165. Purchaser of partner's share entitled to.
\ 206, n. 2. V. Advances.
696
Index,
severance
Of title enforced by coustrucftion, to give effect to exemptiou granted by
Constitution, or to compensation decreed by statute for negligence. <! 104,
n. 2, 3. Severance of joint contradl. v. Contracfl.
SHARSWOOD, C. J.
Corredled C, J. Gibson's error, and traced partner's equity to his lia-
bility, l 102, n. 2 &a ; l 106, n. 5. Re-discovered by legal instinA the na-
ture of partner's contribution. ^ 34, n. i ; \ 102, n. 2. Credit on record-title
in Pennsylvania, 'i 113, n. 5. Notice of dissolution. \ 177, u. i.
SIMPSON, C. J. Joint creditors have priority on firm estate and equal
right with separate creditor against individual estate. \ 108, n. 5.
SISTER STATE JUDGMENT, v. JUDGMENT.
SLAVE, carrying on different trades. I loi. v. ST A TUS.
SMITH, J. Guarantee by partner. \ 129, n. 3.
SMITH, Jeremiah, Esq. Special partnership the acknowledgement of
limited liability. \ 26, n. 5.
SOCIAL CLUB. V. GAIN.
SOLICITORS, INVESTING, l 139, n. 2. v. TORT.
SOUTH CAROLINA
Prevents judgment against one partner from merging claim against co-
partners. I 82. V. Procedure. Release of partner, not of co-partner. ^ 90.
V. Procedure.
SPECIAL PARTNER.
Not joined as party in legal proceedings. He may, it is said, join, but
judgment would bind his separate estate. \ 76, n. 14. v. Procedure. A
special partner's share could not be taken in execution, it was. said, be-
cause the sheriff could not seize anything in which the special partner
had an interest. The stock belongs to the general partners, who have
the exclusive right to its possession and control. The special partner
might have a chose in adlion or a claim, but not a property interest in the
stock. \ 104, n. 7. This ruling shows the kind of treatment to which the
special partner is always exposed, v. Special Partner. Tort of general,
charges special partner who has failed to observe statutory requirements
as construed by the courts. \ 142. v. Torts. Beneficiaries of deceased a
partner. Special partnership by inheritance, v. Execution.
SPECIAL PARTNERSHIP.
Special partnership is a kind of partnership. It expresses the princi-
ple of partnership at the Civil law, and is a form of the relation. But
697
Index.
it is opposed to the Common law, which charges a dormant partner on
account of his property interest, as well as an adlive partner, with liabil-
ity. Special partnership couflidls with the Common law theory, and if
recognized, supercedes to the extent it reaches the dormant partnership.
^3. Special partner's couLribution. {! 37, v. Contribution-. A special
partnership should be encouraged, because the managing partners are
liable to the extent of their resources. This liability restrains them from
speculation and risk. The members of a corporation are all exempt from
unlimited liability, and the officers incur no personal Hability. They
speculate with the property of others without individual risk. The dis-
couragement given by the courts to special partnership did not curtail
the limitation of liability; it had the opposite effedl, and extended the
immunity by legislation. The result was that the Legislature made no
discrimination and exempted all incorporators, instead of exempting only
those who took no part in the management. There was a further result.
The exemption of all incorporators made the joint stock company seem like
a corporation. The distindlion between a private and a public enterprise
was obliterated, and a franchise was granted for a private undertaking.
The State, in weariness, abandoned the granting of charters, and allowed
self-incorporation. Thus, the State has deprived itself of its prerogative,
and cannot grant a franchise for a public use when it is necessary. The
courts show favor to corporations, even if illegal and disfavor to special
partnerships. If a corporation is sued, the plaintiff must prove its failure
to comply with the statutory requirements. If a special partner is sued,
he must prove that he has complied with the statutes. The scope of the
special partnership statutes is simply to notify third persons, who is the
special partner, and the amount of his contribution. The special part-
nership is recognized as a type of partnership. A foreign special part-
nership is interpreted by the law of its domicil, and foreign process regu-
lates adlions where they are brought. The statutory requirements should
be construed to preserve, not destroy, special partnership. Non-compli-
ance with the terms, unless they are constituents of partnership, should
not make the special a general partner. \ 37.
SPECIALTY. Partner cannot bind firm by deed. §117. z^. Powers. How
ratified, v. Ratification.
ST A TUS.
The sum of the rights and duties of the partners in the relation, is
called the status of partnership. The status may be created by contracSl,
like marriage or sale. The contraa is the occasion or door, and the con-
summation or conveyance establishes rights in rem. Agency is not status
and permanent, but is revocable. If the joint estate did not give part-
ners a .r/fl/?/j, they could not withdraw the property from execution, issued
by a separate creditor. A contradl would not bind third persons. The
status is recognized by excluding separate creditors until the firm is
wound up. Among the civilians, Kuntze suggests the joint estate as
698
Index.
the ground for the joint creditors' preference. ^loi, n. 2. Hurlemaxn's
view is that the Roman law recognized no joint estate and no preference.
A privileged creditor would be compelled to make out his priority. The
French notion of a corporation he exposes as a makeshift, not applied,
except to give the firm creditors a privilege, and then abandoned. The
basis for the theory at the Roman law was the trading by a slave, who
did not charge his master, and, therefore, could charge only the stock.
This is inapplicable to freemen, who charge their person by all contracfls
and obligations. The extent of the segregation was only to limit credit-
ors of slaves carrying on different trades to the particular trade they dealt
in with them. That position was not recognized in a freeman carrying
on diflferent trades through an institor. There was no such classification
of creditors or Jus separationis, although that form of agency was fully
developed at the Roman law. ^loi, u. 3.
STATUTE OF FRAUDS.
Third persons do not enforce the contradl of purchasers of land on joint
account by suing for the price. They do not proceed on the contradl,
but upon the authority delegated to the purchaser by his co-purchasers.
The purchaser's bond and mortgage would not merge the vendor's claim
for the purchase-money. It would be like the deed to him, subjedl to the
rights of the co-partners. The Statute of Frauds requires a writing, and an
oral partnership would be prevented by the statute. The obvious appli-
cation of the statute is to a contradl between vendor and vendee, but the
Statute also applies to an agreement between joint purchasers. The vendor
may seek by oral proof to enforce a written contradl of sale against a part-
ner of the vendee, or the vendee's partner may seek by oral proof to avail
himself of a written contradl to enforce a conveyance from the vendor. The
statute prohibits the enforcement in both cases, if the contradl between the
vendee and his partner is executory. If the vendee's partner had paid his
contribution, he could enforce the contradl of sale. The contribution has
made him a proprietor, and as such entitles him as an undisclosed princi-
pal to enforce the contradl. If a partner sues the vendee, his right to
recover depends upon the payment of his contribution. The payment
raises a resulting trust to him. The universal dodlrine of the courts is
that a trust results to a partner from payment of the consideration.
Nothing but a statute, as, for example, in Michigan, would prevent a
trust from arising from a payment of the price. A partial payment of the
contribution invests him with this right. It was thought at one period
that a definite quota must be paid, but now any part will be sufiicient to
enable him to enforce the contradl to the extent of his interest. A partner
may be charged on an executed oral contradl with the vendee. He is a
full partner, and as such is liable for everything done in the course of the
business. If the owner of land orally agrees to take a partner into busi-
ness with him, the statute prevents the enforcement of the contradl. The
possession taken by the partner is not exclusive, and does not oust the
699
Index.
owiur, who shares the possession. The statute was a substitute for the
feutliU investure which gave notice of the title. All the more if the pos-
session could be explained by the business, which did not involve a disposi-
tion of the land as an asset of the firm, but was used for the site of business
transactions. If an agent, to buy laud for himself and others, buys for him-
self, opinions vary on the point whether the principals can compel him to
convey to them or not. By most, payment of the consideration is regarded
as the test, but by some the breach of confidence raises a trust by implica-
tion. The question does not affedl partnership. The vendee is himself a
principal, and his agency arises only after the formation of the partner-
ship. The refusal to share with the co-principal is purely a breach of
contradl. A contract to share the proceeds of real estate is not affected by
the statute. 1 he proceeds made by a sale of land, or the produdl of its
cultivation does not involve the title. ? lo. The promise of the purchaser
of firm assets to pay the debts is not within the Statute of Frauds, 'i 148,
n. 9.
STATUTES.
Statute requiring joinder of parties in interest prevents dormant part-
nership, v. Procedure. Preventing suit against anj' but parties signing
bills and notes excludes partners, v. Commercial Paper. O21, u. 5, 7,
8, 10, II, 12, 14 (1873, <5 122, n. 4); ? 161, n. I ; i; 211, n. 2 : | 161,
Alabama. Code of 1876, sec. 2904. ^530, n. 3.
California. Codes and Statutes of 1876, sec. 388-9. i. 76, n. I.
Civil Code, sec. 1543. ^90, n. 3, 4.
Colorado. Statutes of 1885, sec. 5. ? 80, n. 2.
Connedlicut. Statutes of 1875, p. 400, sec. 12. i< 76, n- i.
Dakota. Code of 1884, sec. 951. ^.85, n. i.
English. 384 Wm. IV. c. 42. i. 84, n. 2.
28 & 29 ViA. c. 86. ii 31, n. I ; ^ 55, n. 4, a ; 'i 64, n. 3.
31 & 32 " c. 116, s. I. i! 16, n. I.
" " " (1868). 'i 143, n. I.
36 & 37 " c. 66. Judicature Act and judicial orders under it.
[?77, n- 2.
Illinois. Statutes of 1887, sec. 5. i? 85, n. i.
Iowa Code of 1884, sec. 2553. i; 76, n. i ; ? 80, n. 2 ; ii 82, n. i ; <i 94, n. 2.
Sec. 2550. ? 80, n, 2.
Kansas. Compiled Laws of 1885 (1075), sec. i, <; 85, n. i.
(1076), " 2, i 88. n. 7.
(1077), " 3- 'i8H, n. 7.
(1078), •' 4. i;8o, n. 2.
(1079), " 5, ^90, n. 4.
(3626, 91-4) i-4iJ 90, u. 4.
Kentucky. General Statutes of 1881, sec. 8. ^89, n. 4.
Louisiana. Civil Code, sec. 274. § 79, n. 2, a ; 2 79, n. 2, 5.
700
Index.
Ohio. Revised Statutes of 1884, sees. 3162-5. ? 90, n. 4.
•' 5366, § 84, n. 2.
Oregon. Civil Code, sec. 59, sub-div. 3. § 91. n. 2.
Maine. Revised Statutes of 1883, p. 571, sec. 3. ^ 88, n. 7.
Maryland. Revised Code of 1876, sec. 55. ? 89, n. 4.
1878,
51- V
n. 7.
Michigan.
Minnesota.
Mississippi.
n. 4.
1878, sec. 53. I 88, n. 7.
" 54, <i88, n. 7.
" 57. <i82, n. I.
" " 60, I 82, n. I.
General Statutes, sec. 5569. ^ 10, n. 5.
Compiled Laws of 1857, ch. 153. ^ 82, n. 3.
Annotated Statutes of 1882, p. 1543, sec. 5906. ^ S
" " " sec. 7730-1. (^82, n. 3.
" 7783-6. <!90, n. 4.
Laws of 1873, c. 87. ^ 88, n. 7.
General Statutes of 1878, sec. 19. <> 89, n. 4.
" 37. ^90, n. 4.
" c. 66, sec. 266. ^88, n. 7.
Revised Code of 1880, sec. 1134. 'i 88, n. 7.
" " " " 1003. ^ 90, u. 4.
Missouri. Revised Statutes of 1879, sec. 658. ^ 85, n. i.
Nebraska. Compiled Statutes of 1885, sees. 24-25-27. ? 76, n. i.
New Jersey. Revision of 1709-1877, sec. 3. ^88, n. 7.
Supplement to Revision of 1872-86, sees. 1-4; ^90, n. 4,
New York. Code of Procedure, sec. mi, ^76, n. 13.
Revised Statutes, 728, sec. 51. 1 112, n. 4, a.
Laws of 1853, ch- 281. 'i 76, n. 15.
North Carolina. Code of 1883, pp. 83-84 (4). ^82, n. i.
Pennsylvania. Constitution of 1874, Art. Ill, sec. 7. ^ 37, n. 3, e.
Adt of 8 March, 1775, i Sm. Laws 422-3.
" 4 April, 1797, 3 " 297-8.
" 13 " .807. <i87, n. 3.
" 6- " 1830, P. L- 277. ^82, n. I.
" 6 " 1830, " iigs, n. 3.
" 24 February, 1834. | 88, n. 6.
" 21 March, 1836, P. L. 243. ^. 26, n. 2.
" 16 June, 1836, sec. 3, P. L. 786. §88, n. 5, 6.
" 14 April, 1838, P. L. 457. 1 161, n. i.
" II '•■ 1848, sec. 4, P. L. 536. 'i 88, n. I ; <; 89, n. 3.
" 4 May, 1852, P. L. 574. ^86, n. i.
" 22 March, 186:, " 186. >ii6, n. i ; §88, n. 4, 6.
" 22 " 1862, sees. 1-5, P. L. 167. §90, II. 4.
" 27 " 1865, P. L. 38. i!i6, n. i; §95, n. 4; §122,
[n. 12.
" 15 April, 1869, " 30. § 121, u. 5.
'i 113, n. 8, k.
l 113, n. 7. j.
701
Index.
Pennsylvania. Acfl of 15 May, 1869. 1 87, n. 3.
" 6 April, 1870, I P. L. 56. 264, n. 3.
" 9 " " " 40. §121, n. 7.
" 8 " 1873, " 65. l\o(>,n.S,g,h,i.
" 25 May, 1878, " 153. ^ 16, n. I ; 'i 121, ti. li.
" 9 " 1881, " 70. §121, n. 8.
" 3 June, 1885, " 60. ^143, n. I.
" 23 May, 1887, sec. 5, P. L. 158. § 121, n. 14.
" 27 March, " 38. ^ 121, n. 12.
Rhode Island. Public Statutes of 1882, sec. 29. ^.82, n. i.
" 28. ?88, n. 7.
" " " " 1-6. §90, n. 4.
South Carolina. General Statutes of 1882, sec. 397. ? 82, n. i.
Laws of 1888, " 1-3. I90, n. 4.
Tennessee. Code of 1884, sec. 3486. §88, n. 7.
United States. Revised Statutes, sec. 5074.
Adl of March 2, 1867, ch. 176. ? 21.
Vermont. Revised Laws of :88o, sees. 936-7. g 90, n. 4.
" 1882, " 935. §80, n. 7.
Virginia. Code of 1873, sees. 14-15. §90, n. 4.
Wisconsin. Revised Statutes of 1878, sec. 2884, sub. 2. §91, n. 2.
" " " " 2S85. ?88, r.. 7.
" 3848. ?89n. 4.
STOCK. A necessity in practice -without reference to theory, ^igi. V.
Marshalling.
STORY. Opinion of Ulpiax's pearl case. § 63, n. 5.
STRACCHA. Insurance not partnership. ^ 16, n. 3.
STRONG, J. Partners not present may ratify deed of co-partner. ^ 135,
n. 5, a.
SUBJECT-MATTER.
The domain of partnership is not confined to any commodities, it ex-
tends to all. ? 8. V. Land. The relation of landlord and tenant excluded
an agricultural partnership, but the parties are not prevented from farm-
ing in partnership; if they prefer to farm in partnership the law will
carry out their preference. ? 12 & n. 2. Sharing the profit and loss of the
agricultural business, however, does not raise the inference of a partner-
ship. Nothing would seem to subvert the relation of landlord and tenant,
except a distinct agreement to farm in partnership. ? 12.
SUB-PARTNERSHIP. ? 68. v. CHOICE OF A PARTNER.
SUBROGATION.
V. Holding out. Creditors of deceased partner's representative entitled
to subrogation to extent of deceased's contribution, v. Executor. Firm
702
Index.
creditors subrogated to retiring partner's place, if they renounce joint
estate. ^200. z'. Marshalling. By subrogation surviving partner and coni-
mou member may escape payment, and enforce collection out of deceased
partner's estate, 'i 203. v. Marshalling. If trustee-partner puts trust funds
into firm, and they are used to pay firm debts, cestiiy que trust will be sub-
rogated to the place of the creditors paid. \ 139, n. 5.
SULPICIUS. Profits not a fund for creditors. \ 55, n. 2.
SURVIVAL of title and claims upon partner's death, v. Estate.
SURVIVING PARTNER
When entitled to compensation. \ 210, n. 4, a. v. Advance. A trustee
for firm creditors. \ 192, n. i. v. Marshalling. By subrogation escapes
paying and enforces payment out of deceased partner's estate. ?. 203. v.
Marshalling. Not assignee of deceased, but original co-tenant. |i2i.
Survivorship of title and claims incident to joint estate for duration of
partnership. ^ 99, n. i; \ 103. In effe(fi:, a liquidating partner, and cannot
set off firm claim against his individual debt, 'i 130, n. 13, 14, 15, 16. v.
Set-off. Deceased partner's debt set off against surviving partner. \ 96,
n. I. V. Contradl.
SWIFT, Dean. Travesty of legal interpretation. ^.37, n. 3.
TENANCY IN COMMON
Of firm property, v. Property. Judge Gibson's theory of partnership
property was a tenancy in common, which co-ordinates all creditors, joint
and several, not by classes, but as individuals. \ 102. Joint title severed
by execution, v. Execution. In New York separate execution severs
title on the theory of a tenancy in common, v. Execution. Tenancy in
common would break up the joint estate. \ 100. For a<5l in excess of
authority. \ 167, n. i. v. Tort.
TENANT. V. LANDLORD AND TENANT.
TENNESSEE provides for suit against surviving and representative of
deceased partners. \ 88.
THIRD PERSONS, Partnership as to, the normal partnership. \ 48.
THOMPSON, J. Partner by construdlion, not liable for co-partner's
tort. I 142, n. I.
THORNTON, W. W. Notice of dissolution, 'i 175, n. 2.
TITLE.
Title to contribution, v. Contribution. To profits, v. Profits. To firm
property, v. Property. Title severed by Constitution or statute, v. Sev-
erance. Joint title resolved into several titles by dissolution. ? 179. Title
703
Index.
vested iu partner may be shown to be in firm. § ii, n. i. Origin of firm's
title. J 98, S 99. Title not devested from the firm unless by joint adl of
partners, 'i. 167.
TORT.
If tlie acquisition of property was by a tort, the remedy at law originally
was restitution, as it is now in Equity. But the legal process resulted in
an obligation to pay an equivalent in money. This transformed the right
and passed the title, substituting a debt for the property. The obligation
to pay the price became a firm liability, which charged each partner and
his separate estate. The tort, however, should not be assimilated to a
contracfl. They are antipodes, and the result in partnership is to victimize
the innocent partner for his co-partner's fraud, which is personal, g 48, n. 2.
The firm which has failed to file a certificate may, nevertheless, recover
for a tort. v. Procedure. Remedy for tort model for breach of coutradl.
V. Procedure. A partner is liable for the tort of his co-partner committed
in the course of the business, and for the damages caused b}- his tort.
Withholding for a separate debt securities pledged with the firm, charges
co-partner for the conversion. §139, n. i. Partner liable for receipt by
co-partner for merchandise not delivered, if money lent on the faith of
the representation. ^ 139, n. 2. A partner's contradl for options in grain
does not charge a co-partner, though that is the firm business. ^ 139, n. 3.
A partner charges his co-partners by executing a firm judgment, if held
an abuse of legal process. 1 139, n. 4. If trustee-partner puts funds into
the business, and debts are paid with them, the cestuy que trust will be
subrogated to the place of the creditors who are paid. \ 139, n. 5. The tort
is erroneously assimilated to a contracl. g 139, n. 6. But if the firm is only
the occasion, not the agency, for its commission, the co-partners are not
liable. A solicitor who invests without submitting the security to his
client does not charge his co-partner, as the business of solicitors is lim-
ited to submitting proposed investments to their clients for acceptance or
rejection. The business of a scrivener must be added to that of solicitors
to control investment. Taking advantage of his position to induce a
customer to withdraw an investment and entrust it to him, will not charge
his co-partner for its loss. \ 139, n. 2. The discharge in bankruptcy of inno-
cent partner does not bar recovery for tort of his co-partner. The damages
are converted into a debt, which charges both partners as individuals and
their separate estates. \ 149, n. 3. Co-tort-feasors liable jointly, severally,
and successively, whether partners or not. ^,140, n. 3; ?2o8, n.5. The libel
of an editor will charge the proprietor, not because calumny is the business
of a newspaper, but because the editor sele^s the materials . ? 140, n . 4 . The
hbel must be identified with the business. A partner's vindidliveness,
which might have vented itself anywhere, would not charge his co-partner
?i4o, n.4. Tort by converting trust funds, z/. Trust Funds. A special
partner who becomes liable as a general partner bv his negle^ to comply
with the statute, is liable for the tort of his co-partners. It was thought
704
Index.
unjust to visit him with liability, because it was made out ihrougb two
stages, but the real reason must have been thereluclance to enforce the liiii-
cal construdlion given to the acfl establishing a special partnership. ^.142.
A partner's conversion of firm property to his own use, entitles his co-
partners to reclaim the amount abstracted from his separate estate, and
a bill lies for the restitution. gi66, n. 2. The separate estate need not be
increased, for the appropriation is sufficient to charge him. <;i66, n.3.
Nothing but the guilt is required, 'i 166, n. 4. The receipt of property is a
reason to charge a stranger. §208, n. 5. If the firm funds are used for a
purpose beyond the partnership, the partners were made to recover sepa-
rately. The a6l by a partner in excess of his authority created, it was
held, a right of the co-partner to recover a moiety by a separate adlion.
§167, u. I. A partner's use of firm paper for his individual debt was held
to be a fraud, not on the firm, but on his co-partners, who must sue for
their quotas of the loss. There was a dissent, because the title was in the
firm, which should sue. ^ 167, n. i. So, if a partner endorsed the receipt
of his debt on a note held by the firm, they could not recover without ad-
mitting the credit. ^ 167, u. 2. Any receipt by a partner had the efre6t to
bar the firm's recovery, because the partner could not be co-plaintiff.
§167, n. 2. But these rulings are erroneous. The injury was against
the firm, and its title is not devested without an act performed on its be-
half. It is the recipient who is estopped by the fraud, because he gave
no value for the property to the firm. § 167, n. 3. If the firm debtor has
credited the debt on his judgment against the partner, with his consent,
the joint title is unafFe<5led by the credit, and the firm may recover, i/167,
n. 4, a. If a partner receipts for a firm claim in payment of his individual
debt, the firm can recover in spite of his receipt. The firm title is not
affedled by the receipt, 'i 167, n. 4, b. If the partner transfers firm assets
for his separate debt, firm creditors may recover them. The firm title
did not pass, 'i 167, n. 7, d. If a partner's debt is paid with firm funds,
the joint creditors cannot set oflF the payment against a note in the hands
of a bona fide purchaser. I167, n. 5, a. If the firm property is taken in
execution for a separate debt and sold, all the partners can sue for the
trespass. ^ 167, n. 5, b. If a firm note includes a separate debt the payee
can recover on the note, but only the firm debt, not the separate debt,
though included in the note. ? 167, n. 5, c. It has been held that if the
separate debt of all the partners is paid with firm funds, it cannot be re-
covered by the firm, because the debt was due from each of the partners,
and they have no equity to recover it. ^167, n. 5, d. And if a partner
pays his individual debt with firm funds, that his co-partner can be
estopped from reclaiming the payment by receiving payment of his debt
out of the firm assets. ?i67, n. 5, e. If the firm is insolvent when its
funds are used to pay the separate creditor, the firm creditors may re-
cover, because the fraud is upon them. i>i67, n. 7, « & {5103, n. 4, Part-
ner, under liability for co-partner's separate debt, pays under duress.
^167, n. 8, a. If a partner gives firm paper for his individual debt, the
705
Index.
co-parintr need not repudiate the trausadlion. He is not bound by the
ijarlner's uulawtul ad, which is invalid without being repudiated. >;i6S,
n 1 ^^ 2; '/.169, u. I. The partners may consent after the appropriation
of the credit or asset by a partner to his individual use, and the trans-
aclion will become valid. ^.i6g, n. 3. Partner may claim credit for a loss
or injury caused by co-partner's tort. ^210. v. Advances.
TRADE.
Trade is made up of the two operations of buying and selling, fused into
a single act by the intention. Partnership came into the Common law as
an organ of trade, and it was the trade-necessity that gave a partner the
right to sell or pledge his co-partner's share. The Common law knew
only joint ownership, or joint possession, and neither owner nor possessor
could alien or mortgage his co-tenant's share, for only the title or posses-
sion was in common. Partnership has extended beyond trade ; it has out-
grown trade, and now embraces manufacfluring, which is not a trade, but
an industry, and extends to any 'business' which parties join in transacft-
ing. The original constituents of buying and selling need not co-exist in
the business of partnership. Neither buying nor selling need be an ele-
ment of the partnership business. There might be a partnership simply
in the ereclion of a building, without any intention of selling the structure.
•/. 11. The efFecl of extending partnership so as to include a business which
is not trade, is to modify the principles of trade which regulate partner-
ship. ? 13. The adlual requirements of the business undertaken, judged
by its type, or kind, furnish the limit of a partner's power in a non-com-
mercial partnership. This was the method by which a trade-partnership
was developed from the principles of trade applied to joint traders. A
partner in a sheep ranch could not sell the sheep or the ranch. Sheep-
raising being the objedl of the partnership, no power is implied, except
such as is necessary for that purpose. ? 14. In a partnership to conduA
a theatre, one partner could not bind his co-partner by a promissory note
given in connedlion with the business. Commercial paper is not neces-
sary for the management of a theatre. If lawyers are in partnership,
neither can issue commercial paper. Profits co-extensive with trade. ? 53.
V. Profits. If trustee-partner puts trust funds into firm, and they are used
to pay debts, cesiuy que trust will be subrogated to place of creditors paid.
\ 139. n. 5.
TRADE-MARK. v. GOOD-WILI..
TROPLONG.
Insurance not partnership. ? 16, n. 3. Cites Straccha. § 16, n. c. Na-
ture of partner's contribution. 1 33, n. i. Cites Cassaregis for sharing
profits and losses without partnership. >(, 51, n. a. Parties to contradl alone
liable at Civil law. ?5i,n. (J. No undisclosed principal at Civil law. §51,
n. c.
706
Indkx.
trust funds.
If a partner uses trust fuuds in the business, the cestuy que trust may
eledl to take the profits earned by his money instead ol' interest. \\i.
This right cannot be founded on the trustee's agency. A legal invest-
ment is ordered and a speculation is prohibited by law. The violation
of law in both aspects is a breach of trust. If the co-partners are aware
of the trustee-partner's breach of trust, they become trustees ex male-
ficio, and liable with him for the profits made by the use of the trust
funds. An eccentric notion obtains, which limits the profits to the trus-
tee-partner's share derived from the use of the trust fund. Charging him
for his co-partner's share would, it was said, inflicft a penalty, and not
simply make him account for what he has received. The theory is
not tenable on partnership principles. To separate firm stock and ap-
portion aliquot parts among the partners would work a pro tanio disso-
lution. The trustee-partner is made both a stranger and a member of the
firm. The profits, as accretions, become firm assets, and can be taken
only from the trustee-partner, who has no separate title to any part of
them. The theory is also inconsistent with the partnership principle that
the profits are derived from the aggregate contributions, and not from
any part of them. The trustee-partner's contribution is equalized by cor-
responding contributions by his co-partners, and his share comes from
the whole capital stock. Hamilton has demonstrated this by figures.
Take three partners with equal contributions and profits. Trustee takes
1-3 : If 1-3 of each contribution, he would get the 1-3 out of his co-partners'
contributions by reason of his contribution, so that he should account
foi the 2-3 on the same principle he does for the 1-3. A dedudlion or
allowance is made for compensation to the firm for its management, be-
fore the trustee-partner is charged for his share of the profits. Although
partners are not compensated, except through the profits, yet before they
are charged for the profits the courts allow them compensation for ser-
vices. The compensation is often guess-work. In Pennsylvania a rough
estimate is made, and one-third of the profits is allowed for management.
The difficulty of ascertaining the profits which are made by means of the
trust fuuds, is no reason for not investigating the account. The court
would abnegate its function, if it denied the right, and would put a pre-
mium upon the breach of trust. ^43. The contribution does not become
a fixed fa6tor in the making of profits. It is a facftor which varies with
the kind of business, and must be calculated according to the business.
The theory of the Common law actions for taking property was resti-
tution, but in time the process changed by accepting an equivalent in
money for the property. Compensation became the standard of recovery.
Following trust funds is a substitute for the early legal remedies. The
funds can be traced only to the property increased by the funds, e. g., the
firm assets. But the misstep of applying the maxim that the cestuy gur
trust mav waive the tort .niid sue in assumpsit, repeated the Common law
707
Index.
siihslilution (if a contradl for a tort. The conlract binds the partners as
imlividuals, as well as partners, and thus enlarged the liability by charg-
ing the innocent co-partner for the embezzlement of his partner, as he
had been charged for the damage of the partner's torts. The result is not
iuiportanl, because firm creditors can proceed against the separate estate,
and thus inilirectly enable the cestiiy que trust to share it, by getting more
out of the joint assets. ^141. Trust imposed on incoming partner by re-
ceipt of assets, v. Change of Partners. Firm as purchaser for value of
trust funds. ^<4o &. n. i. v. Lindley.
lliERRI.^lA FIDES, v. GOOD FAITH.
ULPIAN. Pearl case. ^. 63, n. 3. Analogy of sale, argument for firm cred-
itor's privilege. 2 108, n. 4, price being unpaid. I 164.
I'/. TR^l I IRES. Contracts of a partnership can be ratified, but not
of a corporation. A61 is excess of authority as pi'o tanlo dissolution.
V. Tort.
UNDISCLOSED PRINCIPAL.
Attacked as the Common law obstacle to the limited liability of the
Law Merchant, but the precedent was too firmly established to be up-
rooleti. {) 26. Owner of pearls in Ulpian's case. 2 63. No undisclosed
principal at the Civil law. ^57. Previous, not subsequent, authority
requisite to charge undisclosed principal. ^135.
UNLIMITED LIABILITY, a principle of the Common law. ? 44.
USURIOUS LOAN
Inconsistent with partnership. ?,66;i!67. z/. Evidence. Partner's advance at
any rate of interest, being in part at the risk of the business, is not usurious.
i<i65,n. 2. t'. Advance. Usury excludes partnership. ?,66. Interest measured
by profits, not usurious. ^65. Risk of liability to creditors, not excuse
for excess. ^66.
VAVASSEUR, A.
In dealing with land, presumption against partnership. § 131. Parties
to contracl alone liable, i. 51, n. b. Insurance might be carried on in
partnership. ? 16, n. 5. Nature of partner's contribution. | 33, n. i.
VERMONT permits surviving and representative of deceased partner to
be sued together. ? 88. i'. Procedure. Release of partner, not of co-
partner. ^90. V. Procedure.
VIRGINIA. Release of partner does not release co-partner. ^90. z/. Pro-
cedure.
WAIVER.
The conditions made as preliminaries of a partnership, are waived by
carrying on the business. ^.17, n. 3. Partner's waiver of co-partner's con-
70S
Index.
tribution would not afifedl third persons. ^.4. v. Contribution. Waiver
of tort and election of coutra<5l. §47.
WALWORTH, CH.
Partner's equity founded not on property, but on liability. ^ 106, n. 7.
Deceased partner's representatives assert bis privileges. \ 106, n. 6.
WAR, Outbreak of. does not prevent commencement of partnership. ^17,
n. 3. 7'. Commencement. Suspends partnership. ^173, n. 3.
WEIBEL, Jos. Leonz. Civil law indivisible contradl. ^91, n. 3.
WESTBURY, Lord. Withdrawal by partners, unless solvent, a fraud on
creditors. \ 107, u. 5.
WETTER, P. Van. Civil law indivisible contraA. \^\, n. 5.
WIFE, partner, employing husbands v. Evidence.
WISCONSIN severs joint cause of aclion, and provides remedy against
any obligor. \ 88. v. Procedure.
WITHDRAW^\L
Of profits as a ground to charge one with the liability of a partner, t.
Profits. Allotment by executor to beneficiary a withdrawal, v. Bxecu-
tor. Partner cannot relinquish his equity, v. Equity. By partner, while
firm solvent, v. Marshalling. If withdrawal allowed for necessary ex-
penses, the measure is the amount necessary to eke out maintenance, and
the failure to withdraw for any year is an admission that it was not needed.
\ 208, n. 6. Partner having paid creditors, no lien on co-partner's land,
conveyed in fraud of creditors in New Jersey, unless he has acquired a
lien by judgment. §208, n. 7. If partner withdraws all his capital, co-
partner is entitled to the interest and to the profits. \ 208, n. 8. The with-
drawal by a partner, without his co-partner's knowledge, will stand, if not
made in expedlation of insolvency. ?i92, n. 3. Withdrawal of contribu-
tion. ?28 V. Contribution. Allotment of share in deceased partner's
estate to beneficiary, a withdrawal by executor. \ 74, n. 8. v. Executor.
Taking land for firm debt negatives a withdrawal. 2 109. n- 6. v. Land.
Deceased partner's estate could not be withdrawn on account of liability at
law. \ 204. V. Marshalling. Withdrawal of assets not ground to charge
profit-sharer as partner. § 55. v. Profits.
WOODWARD, J.
Joint obligation of Common law not a business contracfl. i! 79, n. 1
Set-ofF. ^ 130. n. i. Partner binds himself individually by executing deed
for firm. \ 135, n. 2.
—FIMS—
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